TIDMDNA
RNS Number : 8355R
Doric Nimrod Air One Limited
22 November 2012
Doric Nimrod Air One Limited
Half-Yearly
Financial Report
From 1 April 2012 to 30 September 2012 (Unaudited)
Contents
1. Summary Information 2
2. Chairman's Statement 3
3. Interim Management Report and Responsibility Statement 4
4. Directors 6
5. Asset Managers Report 7
6. Unaudited Financial Statements 12
7. Notes to Financial Statements 16
8. Advisers and Contact Information 35
Doric Nimrod Air One Limited
SUMMARY INFORMATION
Company Overview
Doric Nimrod Air One Limited (LSE:DNA) ("DNA" or the "Company")
is a Guernsey company incorporated on 8 October 2010, and admitted
to trading on the Specialist Fund Market of the London Stock
Exchange and the Channel Islands Stock Exchange on 13 December
2010.
The Company's total issued share capital currently consists of
42,450,000 Ordinary Preference Shares which were admitted to
trading at an issue price of 100 pence per Ordinary Preference
Shares. As at 20 November 2012, the latest practicable date prior
to publication of this report, the Shares are trading at 126.5
pence per Ordinary Preference Shares.
Investment Objectives and Policy
The Company's investment objective is to obtain income returns
and a capital return for its Shareholders by acquiring, leasing and
then selling a single aircraft.
The Company has purchased one airbus A380-861 aircraft,
manufacturer's serial number 016 (the "Asset") which has,
initially, been leased to Emirates Airlines, the national carrier
owned by the Investment Corporation of Dubai, based in Dubai,
United Arab Emirates.
The Company aims to provide Shareholders with an attractive
total return comprising income, from distributions through the
period of the Company's ownership of the Asset, and capital, upon
the sale of the Asset.
Performance Overview
All payments by Emirates, the Lessee, have to date been made in
accordance with the terms of the Lease.
During the period under review and in line with the Distribution
policy DNA declared two interim dividends of 2.25 pence per
Ordinary Preference Share and one dividend of 2.25 pence per
Ordinary Preference Share after the reporting period.
Future dividend payments are anticipated to be declared and paid
on a quarterly cycle and as per the Prospectus are targeted at 2.25
pence per Ordinary Preference Share per quarter subject to
compliance with applicable laws and regulations.
Doric Nimrod Air One Limited
CHAIRMAN'S STATEMENT
I am very pleased to present shareholders with the Company's
half yearly financial report, covering the period from 1 April 2012
until 30 September 2012.
Notwithstanding the extreme turbulence and uncertainty within
the global economy, and international markets, I am glad to report
that the Company has performed well. During the period, and in line
with the targeted distribution policy outlined in the Company's
Prospectus, the Company has declared two interim dividends of 2.25p
per Ordinary Preference Share, and two further dividends of 2.25
pence per Ordinary Preference Share after the reporting period.
Future dividend payments are anticipated to be declared and paid on
a quarterly basis.
The Company's 42,450,000 shares were admitted to trading on the
Specialist Fund Market of the London Stock Exchange plc and listed
on the Channel Islands Stock Exchange on 13 December 2010. The
Company's investment objective is to obtain income returns and a
capital return for its shareholders by acquiring, leasing and then
selling a single aircraft. The Company purchased one Airbus
A380-861, aircraft manufacturer's serial number 016, which it
leased to Emirates Airlines, the national carrier owned by the
Investment Corporation of Dubai, based in Dubai, United Arab
Emirates.
A senior secured finance facility provided by Westpac, in the
amount of $122m provided the monies along with the placing proceeds
for the acquisition of the aircraft. On the purchase of the plane,
the Company entered into a lease with Emirates for an initial term
of 12 years, with fixed lease rentals for the duration. The debt
portion of the funding will be fully amortised over the 12-year
term of the lease, with the aim of leaving the aircraft
unencumbered on the conclusion of the lease.
Both the aircraft and the lessee performed well over the period.
Despite the turmoil in the global economy, passenger air traffic
grew, although at a lower rate than in the recent past. Emirates
continues to report strong performance, greatly aided by the
airline's ability to adjust flight schedules swiftly, and redeploy
aircraft about the network, thus optimising revenue, albeit that
profit figures were adversely impacted by the high cost of jet
fuel.
The lease payments received by the Company from Emirates cover
repayment of the debt, as well as income to pay dividends to
shareholders. Emirates bears all costs (including maintenance,
repair and insurance) relating to the aircraft, during the lifetime
of the lease. The aircraft is equipped with four Engine Alliance
7200 power plants. The Company's Asset Manager, Doric GmbH,
continues to monitor the lease and reports regularly to the Board.
Nimrod Capital LLP, the Company's Placing and Corporate and
Shareholder Advisory Agent, continues to liaise between the Board
and shareholders, which includes distribution of quarterly
factsheets and the interim management statements.
Doric Nimrod Air One Limited
CHAIRMAN'S STATEMENT (CONTINUED)
On behalf of the Board, I would like to thank all shareholders
for their continued support of the Company.
Charles Wilkinson
Doric Nimrod Air One Limited
INTERIM MANAGEMENT REPORT
from 1 April 2012 to 30 September 2012 (the "Period")
A description of important events that have incurred during the
Period, their impact on the performance of the Company as shown in
the financial statements and description on the principle risks and
uncertainties of the remaining six months of the annual financial
year is given within the Chairman's Statement and the Notes to the
Financial Statements contained on pages 16 to 34 and is
incorporated here by reference.
There were no material related party transactions which took
place in the period, other than those disclosed at Note 21 of the
Notes to the Financial Statements.
Going Concern
The Company's principal activities are set out within the
Company Overview on page 1. The financial position of the Company
is set out on pages 12 to 15. In addition, Note 18 to the financial
statements includes the Company's objectives, policies and
processes for managing its capital; its financial risk management
objectives and its exposures to credit risk and liquidity risk. The
Loan interest rate has been fixed and the fixed rental income under
the Operating Lease means that the rent should be sufficient to
repay the Loan and provide surplus income to pay for the Company's
expenses and permit payment of dividends.
After making reasonable enquiries, and as described above the
Directors have a reasonable expectation that the Company has
adequate resources to continue in its operational existence for the
foreseeable future. Accordingly, they continue to adopt the going
concern basis of accounting in preparing these annual financial
statements.
Doric Nimrod Air One Limited
INTERIM MANAGEMENT REPORT (CONTINUED)
Responsibility Statements
The Board of directors jointly and severally confirm that, to
the best of their knowledge:
(a) The financial statements, prepared in accordance with
International Financial Reporting Standards, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company; and
(b) This Interim Management Report includes or incorporates by reference:
a. An indication of important events that have occurred during
the Period, and their impact on the financial statements;
b. a description of the principal risks and uncertainties for
the remaining six months of the financial year; and
c. confirmation that there were no related party transactions in
the Period that have materially affected the financial position or
the performance of the Company during that period.
Charles Wilkinson Norbert Bannon
Chairman Chairman of Audit Committee
Doric Nimrod Air One Limited
DIRECTORS
Charles Edmund Wilkinson (Chairman)
Charles Wilkinson is a Solicitor who retired from Lawrence
Graham LLP in March 2005. While at Lawrence Graham, he specialised
in Corporate Finance and Commercial Law, latterly concentrating on
Investment Trust and Fund work. He is currently Chairman of the
Audit Committee of Doric Nimrod Air Two Limited. He is also a
Director of Premier Energy and Water Trust Plc., a listed
Investment Trust and Landore Resources Ltd, a Guernsey based mining
exploration Company.
Norbert Bannon (Chairman of the Audit Committee)
Norbert Bannon is a Director of the Irish and UK subsidiaries of
a major Canadian bank. He has been approved by the Central Bank of
Ireland and by the UK's Financial Services Authority. He is the
Chairman of two large pension schemes and is Chairman of Doric
Nimrod Air Two Limited. He is a Director of and Advisor to a number
of financial Companies in the UK and Ireland.
He has extensive experience in international finance having been
CEO of banks in Singapore and New York. He was Managing Director of
Ireland's largest venture capital company and was Finance Director
and Chief Risk Officer of AIB Capital Markets Plc. which he left in
2002. He has worked as consultant to a number of international
companies.
He earned a degree in economics from Queens University, studied
at Stanford Graduate School of Business and is a Chartered
Accountant.
Geoffrey Alan Hall
Geoffrey Hall has extensive experience in Investment Management.
He has previously been Chief Investment Officer at Allianz
Insurance Plc., a major UK insurance company, as an Investment
Manager at HSBC Asset Management, County Investment Management, and
British Railways Pension Funds. He is currently an Investment
Consultant to Cumberland Place Investment Management, and also
Chairman of WHEB Asset Management, a major firm in sustainability
investing.
Geoffrey earned his masters degree in geography at the
University of London. He is an associate of the Society of
Investment Professionals (the CFA Society of the UK).
Doric Nimrod Air One Limited (the "Company")
ASSET MANAGERS' REPORT
1. The Asset
The Airbus A380 with manufacturer's serial number (MSN) 016 is
registered in the United Arab Emirates under the registration mark
A6-EDC. For the period from original delivery of the aircraft to
Emirates in November 2008 until the end of August 2012, a total of
2,038 flight cycles were registered. Total flight hours were
16,760. This is equal to an average flight duration of
approximately eight hours.
Amongst its 184 aircraft in operation as of August 2012,
Emirates has a fleet of 23 A380s which currently serve 19
destinations worldwide: Amsterdam, Auckland, Bangkok, Beijing, Hong
Kong, Jeddah, Johannesburg, Kuala Lumpur, London Heathrow,
Manchester, Munich, New York JFK, Paris, Rome, Seoul, Shanghai,
Sydney, Toronto and Tokyo. In the last quarter of 2012 Emirates is
planning to launch A380 flights to Melbourne, Moscow, and
Singapore. The carrier is the largest A380 operator in the world
and has now carried more than 10 million passengers and has flown
more than 150 million kilometers since the double decker was
introduced to its fleet in August 2008. Emirates has an additional
67 of this model on firm order for delivery through 2017.
Recent visits of the A380 owned by the Company (MSN 016)
included Auckland, Jeddah, Tokyo, Manchester and Sydney during the
third quarter of 2012.
Maintenance Status
Emirates maintains its A380 aircraft fleet based on a
maintenance program according to which minor maintenance checks are
performed every 1,500 flight hours and more significant maintenance
checks (so called C checks) every 24 months or 12,000 flight hours,
whichever comes first. The next C check is expected to fall due in
the last quarter of 2012. Emirates bears all costs (including
maintenance, repair and insurance) relating to the aircraft during
the lifetime of the lease.
Inspections
The next inspection of the aircraft by the Asset Manager is
scheduled during the aforementioned C check later in 2012.
Hairline Cracks
Since late 2011, hairline cracks have been discovered in a small
number of L-shaped metal brackets within the wing structure of some
A380s. There are about 2,000 brackets (known as rib-skin
attachments or wing rib feet) in each wing, which attach the wing's
upper and lower skins to ribs running throughout the wing. The
aircraft remain fully airworthy and pose no risk to flight safety
as affirmed by European Aviation Safety Agency (EASA) and
Airbus.
Since the occurrence of the issue, Airbus has traced the source
of the cracking in A380 wing structures to the choice of a less
flexible aluminum alloy used to make the wing brackets, stresses
involved during assembly when fitting portions of the wing together
plus thermal fatigue during flight at very low temperatures.
Doric Nimrod Air One Limited (the "Company")
ASSET MANAGERS' REPORT (CONTINUED)
In February 2012, EASA issued an updated airworthiness directive
(AD) in relation to the wing rib feet cracks, which called for all
A380s in operation to be checked for cracks in the brackets that
attach to the wing's ribs before reaching 1,300 flights. The
aircraft owned by the Company (MSN 016) was inspected in March
2012. The cracks detected on this occasion were repaired. The
aircraft has since returned to normal commercial service.
In late June EASA issued a new AD pertaining to wing rib feet
cracks on the Airbus A380 aircraft, which specified repeat
inspections of A380 aircraft at defined intervals. This will allow
A380 aircraft to continue flying until a permanent fix for wing rib
feet cracking has been incorporated in the aircraft. The length of
the applicable inspection interval is determined by the location
within the wing where previous wing rib feet repairs have been made
and the type of repair that has been previously made. Depending on
this, an inspection interval of between 560 and 1,200 flight cycles
is required. After performing this repeat inspection, the follow-on
repeat inspections shall have an inspection interval of 560 flight
cycles.
Airbus has developed a permanent fix to wing rib feet cracking,
which is currently being certified by EASA. A retrofit modification
will be installed on in-service aircraft, while a production
modification will be applied for new aircraft. The retrofit is
expected to become available in late 2012/early 2013. A further AD
is anticipated which will instruct A380 operators to implement the
retrofit. At that time, the retrofit will be installed in existing
A380s. New aircraft with the production modification are expected
to be delivered beginning in early 2014. The permanent fix
developed by Airbus will preserve the full design service life of
the A380 aircraft.
Airbus has confirmed that it may take up to 8 weeks to
incorporate the permanent fix in the A380. Another option is for
the fix to be gradually accomplished during regularly scheduled
"heavy checks" when the aircraft is two, four, and six years of
age. To implement the repair gradually, some extra days would be
added to each two to three week "heavy check". Aircraft operators
are expected to choose between the various repair solutions
depending on their fleet planning and flight schedules.
All the repair works will be covered by the applicable
manufacturer's warranties. In the meantime airlines with A380s on
lease will continue to operate the aircraft and their lease rental
obligations will remain absolute and unconditional on these
events.
2. Market Overview
The International Air Transport Association (IATA) released its
latest industry outlook in June 2012 according to which global
industry profits are expected to reach USD 3.0 billion this year. A
temporary fall in oil prices, stronger than expected growth in
passenger traffic and a bottoming out of the freight market have
been driving some improvements in the profitability outlook.
However, this is offset by the continued European sovereign debt
crisis and uncertainties related to the economic growth
outlook.
Doric Nimrod Air One Limited (the "Company")
ASSET MANAGERS' REPORT (CONTINUED)
IATA expects that 2012 will mark a second successive year of
declining airline profits. In 2010 the industry's profits peaked at
USD 15.8 billion, before dipping in 2011 to USD 7.9 billion net
profit. Although airlines face the common challenges of high fuel
prices and economic uncertainty, the regional picture is diverse.
Compared with the previous forecast in March 2012, North American
and Latin American carriers are expected to see improved prospects.
But the outlook for European, Asian-Pacific and Middle Eastern
carriers has been downgraded, with European losses expected to
reach USD 1.1 billion.
World GDP growth, a key driver of airline profitability, is
expected to be 2.1% in 2012. That is slightly better than the
anticipated 2.0% growth forecast in March. But this still
represents a slower growth environment compared to last year, and
one in which airlines will struggle to absorb cost increases.
Historically, the airline industry has fallen into losses (at a
global level) when world GDP growth drops below 2.0%.
During the course of 2012, passenger demand, measured in revenue
passenger kilometers, continues to expand, but at a below-trend
rate. According to IATA, average annualized rate grew by
approximately 3% since January 2012. Due to the recent
deterioration in business confidence in a number of major
economies, IATA expects a further slowdown of growth during the
next months. In its latest Global Market Forecast, published in
September 2012, Airbus predicts a compound average growth rate of
4.7% per annum for worldwide passenger traffic until 2031.
Sources: IATA, Airbus
3. Lessee - Emirates Key Financials and Outlook
The aircraft is leased to Emirates for an initial term of 12
years, with fixed lease rentals for the duration.
Emirates revenue reached a record high of USD 16.9 billion in
the 12 months ended 31 March 2012, an increase of 16% from the
previous financial year. Passenger revenue climbed 18%
year-on-year, to USD 13.3 billion due to the overall expansion of
passenger numbers as well as higher fares.
Geographically, East Asia and Australasia remains Emirates' most
important region in terms of revenue, accounting for almost 30%,
just ahead of Europe. The carrier's revenue base is increasingly
diffused globally, particularly with the introduction of several
new routes into North and South America and the development of
African destinations.
Despite this strong revenue growth, the high cost of jet fuel
impacted Emirates' bottom line with the airline's profit dropping
to USD 409 million, representing a decrease of 72% over last year's
record results. Fuel costs increased by 44.4% compared to the
preceding year to USD 6.6 billion, representing about 40% of
Emirates' total operating costs. Emirates Chairman and CEO, Sheikh
Ahmed bin Saeed Al Maktoum, stated that if fuel prices remained
where they were in the previous financial year, the net profit
"would have again soared to a new record high".
Doric Nimrod Air One Limited (the "Company")
ASSET MANAGERS' REPORT (CONTINUED)
Emirates balance sheet total as per 31(st) March 2012 was USD 21
billion - an increase of 18% from last year. Total equity increased
by more than 3% to USD 5.85 billion with an equity ratio of 28%.
The current ratio is 0.98; therefore the airline would be able to
meet its current liabilities by liquidating all of its current
assets. Significant items on the liabilities side of the balance
sheet are finance leases in the amount of USD 5.44 billion and
revenues received in advance from passenger and cargo sales (USD
2.58 billion). These solid financial results not only represent
Emirates' 24(th) consecutive year of profit, but the carrier was
also able to strengthen its cash position by 11.6% to USD 4.2
billion.
For the current financial year 2012/13 36 new aircraft are
scheduled for delivery, including 12 Airbus A380, 20 Boeing
777-300ER and four freighters. This would be the highest number of
aircraft received in a single year of operation. With an increased
fleet, Emirates has already launched 12 new destinations in 2012
(Rio de Janeiro, Buenos Aires, Dublin, Lusaka, Harare, Dallas,
Seattle, Ho Chi Minh City, Barcelona, Lisbon, Erbil, Washington
DC). Adelaide, Algiers, Lyon, Phuket and Warsaw will join the
extensive network of Emirates over the course of the next few
months. Emirates is also responding to stronger passenger demand on
some existing routes. A second A380 service into Paris will start
in January 2013. All five daily flights into London Heathrow will
be served by A380s from the beginning of February 2013.
In the 2011/2012 financial year, the Emirates fleet, one of the
youngest in the industry, carried a record number of almost 34
million passengers at an 80% passenger load factor to a network of
126 destinations in 74 countries. As of 31 August 2012 Emirates has
184 aircraft in operation, with firm orders for another 226
aircraft, including 67 A380.
In July 2012 Emirates was awarded with 'World's Best Airline
Inflight Entertainment 2012' award for the eighth consecutive year.
Based on more than 18 million airline passenger votes from over 100
different nationalities, consultancy company SKYTRAX identified
industry-leading airlines in a number of categories. Emirates 'ice'
(which stands for information, communications and entertainment)
inflight entertainment system offers over 1,400 channels and is
being continuously enhanced. Emirates has also rolled out WiFi
internet connection on its entire A380 fleet.
On 6 September 2012 lessee Emirates and Qantas announced a
global aviation partnership that will see the Australian carrier
move its hub for European flights to Dubai from Singapore. The
10-year codeshare agreement is enhanced by integrated network
collaboration with coordinated pricing, sales and scheduling as
well as a benefits sharing model. Emirates will benefit from a
major feed for its European, African and Middle Eastern
destinations, while gaining access to Qantas' strong network in
Australia, which offers nearly 5,000 weekly flights to more than 50
destinations. Subject to regulatory approvals, the partnership
arrangements are planned to take effect in April 2013. Neither
airline will take equity in the other.
Doric Nimrod Air One Limited (the "Company")
ASSET MANAGERS' REPORT (CONTINUED)
Both airlines will jointly offer 98 weekly flights between
Australia and Dubai. Four daily services from Sydney and Melbourne
to Dubai will be serviced by A380s. With Emirates flying the
largest fleet of A380s in the world with 23, combined with Qantas'
12 A380s for a total of 35, many onward flights to Europe including
London, Paris, Moscow, Amsterdam, Munich and Rome will also be
serviced by A380s. Qantas will make use of Dubai International's
Terminal 3 including the dedicated A380 facility, which will start
operations in early 2013 with 20 aircraft contact gates, all of
them capable of accommodating one A380.
Sources: Emirates, The Airline Analyst
4. Aircraft - A380
At the end of August 2012, the global A380 fleet consisted of 81
planes that were in service with eight operators: Emirates (23 A380
aircraft), Singapore Airlines (18), Qantas (12), Deutsche Lufthansa
(10), Air France (8), Korean Airways (5), China Southern Airlines
(3) and Malaysia Airlines (2).
Thai Airways received its first Airbus A380 at the end of
September with another three deliveries due in December. Two more
will follow in 2013. The Thai flag carrier will become the ninth
operator of A380s worldwide. Since the inaugural flight of the
first Airbus A380 in October 2007, the worldwide fleet with
currently eight operators has accumulated over 600,000 flight
hours, performing more than 72,000 revenue flights. Average
utilization across this total fleet is 13-plus flight hours per
day.
Sources: Airbus, Ascend
STATEMENT OF COMPREHENSIVE INCOME
for the period ended 30 September 2012
1 Apr 2012 to 8 Oct 2010 to
Notes 30 Sep 2012 30 Sep 2011
GBP GBP
Income
A rent income 4 4,254,527 9,610,433
B rent income 4 2,255,738 4,321,632
Bank interest received 2,503 -
--------------- ---------------
6,512,768 13,932,065
Expenses
Operating expenses 5 (266,321) (468,732)
Depreciation of Asset 9 (1,915,699) (2,721,747)
--------------- ---------------
(2,182,020) (3,190,479)
Net profit for the
period before finance
costs and foreign exchange
gains / (losses) 4,330,748 10,741,586
--------------- ---------------
Finance costs 10 (1,960,238) (3,139,996)
Unrealised foreign
exchange gain / (loss) 633,416 (1,445,976)
--------------- ---------------
Profit for the period 3,003,926 6,155,614
--------------- ---------------
Other Comprehensive
Income - -
--------------- ---------------
Total Comprehensive
Income for the period 3,003,926 6,155,614
=============== ===============
Pence Pence
Earnings per Share
for the period - Basic
and Diluted 8 7.08 14.50
--------------- ---------------
In arriving at the results for the financial period, all amounts
above relate to continuing operations.
The notes on pages 16 to 34 form an integral part of these financial
statements
STATEMENT OF FINANCIAL POSITION
as at 30 September 2012
30 Sep 2012 31 Mar 2012
Notes GBP GBP
NON-CURRENT ASSETS
Aircraft 9 108,454,225 110,369,924
------------------- ------------
CURRENT ASSETS
Cash and cash equivalents 4,481,066 4,484,057
Receivables 12 2,112 7,632
------------------- ------------
4,483,178 4,491,689
TOTAL ASSETS 112,937,403 114,861,613
=================== ============
CURRENT LIABILITIES
Borrowings 14 5,965,261 5,829,257
Payables - due within
one year 13 109,147 53,234
------------------- ------------
6,074,408 5,882,491
NON-CURRENT LIABILITIES
Borrowings 14 59,803,843 63,446,167
Deferred Income 1,719,512 1,286,991
------------------- ------------
TOTAL LIABILITIES 67,597,763 70,615,649
=================== ============
TOTAL NET ASSETS 45,339,640 44,245,964
------------------- ------------
EQUITY
Share premium 15 39,016,728 39,016,728
Retained earnings 6,322,912 5,229,236
------------------- ------------
45,339,640 44,245,964
------------------- ------------
The Financial Statements were approved by the Board of Directors
and authorised for issue on 20 November 2012
and are signed on its behalf by:
Charles Wilkinson Norbert Bannon
Chairman Chairman of the Audit Committee
The notes on pages 16 to 34 form an integral part
of these financial statements
STATEMENT OF CASH FLOWS
for the period ended 30 September 2012
Period ended 8 Oct 2010 to
30 Sep 2012 30 Sep 2011
GBP GBP
OPERATING ACTIVITIES
Profit for the period 3,003,926 6,155,614
Amortisation of advance
rental 432,521 -
Interest received (2,503) -
Depreciation of Aircraft 1,915,699 2,721,747
Loan interest 1,954,221 3,139,996
Increase in payables 55,913 138,862
Decrease / (increase)
in receivables 5,520 (4,207)
Amortisation of debt
arrangement costs 6,017 -
Foreign exchange movement (633,049) 1,415,742
NET CASH FLOW FROM OPERATING
ACTIVITIES 6,738,265 13,567,754
---------------- ------------------------
INVESTING ACTIVITIES
Purchase of Aircraft - (115,159,172)
Interest received 2,503 -
NET CASH FLOW FROM INVESTING
ACTIVITIES 2,503 (115,159,172)
---------------- ------------------------
FINANCING ACTIVITIES
Dividends paid (1,910,250) (1,910,250)
Repayments of capital
on borrowings (2,888,725) (4,053,819)
Repayments of interest
on borrowings (1,944,784) (3,121,538)
Proceeds on issue of
shares - 39,625,022
Share issue costs - (949,544)
New bank loans raised - 76,729,560
Costs associated with
loans raised - (72,500)
NET CASH FLOW FROM FINANCING
ACTIVITIES (6,743,759) 106,246,931
---------------- ------------------------
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 4,484,057 -
(Decrease) / increase
in cash and cash equivalents (2,991) 4,655,513
CASH AND CASH EQUIVALENTS
AT END OF PERIOD 4,481,066 4,655,513
---------------- ------------------------
The notes on pages 16 to 34 form an integral
part of these financial statements
STATEMENT OF CHANGES IN EQUITY
for the period ended 30 September 2012
Notes Share Revenue Total
Capital Reserve
GBP GBP GBP
Balance as at 1 April 2012 39,016,728 5,229,236 44,245,964
Total Comprehensive Income
for the period - 3,003,926 3,003,926
Dividends paid 7 - (1,910,250) (1,910,250)
----------------------- --------------------------- -------------------------
Balance as at 30
September
2012 39,016,728 6,322,912 45,339,640
----------------------- --------------------------- -------------------------
Notes Share Revenue Total
Capital Reserve
GBP GBP GBP
Balance as at 8 October
2010 - - -
Total Comprehensive Income
for the period - 6,155,614 6,155,614
Share issue proceeds 15 39,625,022 - 39,625,022
Share issue costs 15 (949,544) - (949,544)
Fair value adjustment
on share issue 15 341,250 (341,250) -
Dividends paid 7 - (1,910,250) (1,910,250)
----------------------- --------------------------- -------------------------
Balance as at 30
September
2011 39,016,728 3,904,114 42,920,842
----------------------- --------------------------- -------------------------
The notes on pages 16 to 34 form an integral part
of these financial statements
Notes to the Financial Statements
for the period ended 30 September 2012
1 GENERAL INFORMATION
Doric Nimrod Air One Limited ( the "Company") was incorporated
in Guernsey on 8 October 2010
with registered number 52484. Its share capital consists
of one class of Ordinary Preference Shares
and one class of Subordinated Administrative Shares. The
Company's Ordinary Preference Shares
have been admitted to trading on the Specialist Fund Market
("SFM") of the London Stock Exchange ("LSE") and are listed
on the Channel Islands Stock Exchange ("CISX").
The Company's investment objective is to obtain income
returns and a capital return for its
Shareholders by acquiring, leasing and then selling a single
aircraft.
2 ACCOUNTING POLICIES
The significant accounting policies adopted by the Company
are as follows:
(a) Basis of preparation
The financial statements have been prepared in conformity
with IFRS, as adopted by the European
Union, which comprise standards and interpretations approved
by the International Accounting
Standards Board ("IASB") and International Financial Reporting
Interpretations Committee ("IFRIC")
and applicable Guernsey law. The financial statements have
been prepared on a historical cost basis.
Changes in accounting policies and disclosure
The following Standards or Interpretations that are expected
to affect the Company have been
Issued but not yet adopted by the Company. Other Standards
or Interpretations issued by the IASB and IFRIC are not
expected to affect the Company.
IFRS 7 Financial Instruments: Disclosures - amendments
to transition disclosures effective for
annual periods beginning on or after 1 January 2015.
IFRS 9 Financial Instruments - Classification and Measurement
of financial assets effective for
annual periods beginning on or after 1 January 2015.
IAS 1 Presentation of Financial Statements - amendments
to revise the way other comprehensive
income is presented effective for annual periods beginning
on or after 1 July 2012 as well as
amendments resulting from annual improvements for annual
periods beginning o or after 1 January 2013.
Notes to the Financial Statements
for the period ended 30 September 2012
2 ACCOUNTING POLICIES (continued)
(a) Basis of Preparation (continued)
IAS 16 Property, Plant & Equipment - amendments resulting
from annual improvements for annual
periods beginning on or after 1 January 2013.
IAS 32 Financial Instruments: Presentation - amendments
to application guidance on the offsetting of
financial assets and financial liabilities effective for
annual periods beginning on or after 1 January 2014.
IAS 34 Interim Financial Reporting - amendments resulting
from annual improvements for annual
periods beginning on or after 1 January 2013.
The Directors have considered the above and are of the opinion
that the above Standards and
Interpretations are not expected to have an impact on the
Company's financial statements except for
the presentation of additional disclosures and changes to
the presentation of components of the
financial statements. These items will be applied in the
first financial period for which they are required.
(b) Taxation
The Company has been assessed for tax at the Guernsey standard
rate of 0%.
(c) Share capital
Ordinary preference shares (the "Shares") are classified
as equity. Incremental costs directly attributable to the
issue of Shares are recognised as a deduction from equity.
(d) Expenses
All expenses are accounted for on an accruals basis.
(e) Interest Income
Interest income is accounted for on an accruals basis.
(f) Foreign currency translation
The currency of the primary economic environment in which
the Company operates (the functional
currency) is Great British Pounds ("GBP") which is also
the presentation currency.
Transactions denominated in foreign currencies are translated
into GBP at the rate of exchange ruling
at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies
at the reporting date are translated
into the functional currency at the foreign exchange rate
ruling at that date. Foreign exchange
differences arising on translation are recognised in the
Statement of Comprehensive Income.
Notes to the Financial Statements
for the period ended 30 September 2012
2 ACCOUNTING POLICIES (continued)
(g) Cash and cash equivalents
Cash at bank and short term deposits which are held to
maturity are carried at cost. Cash and cash
equivalents are defined as call deposits, short term deposits
with a term of no more than 3 months from
the start of the deposit and highly liquid investments
readily converted to known amounts of cash and
subject to insignificant risk of changes in value.
(h) Segmental reporting
The Directors are of the opinion that the Company is engaged
in a single segment of business, being
acquiring, leasing and selling of one Airbus A380-861 aircraft
(the "Asset").
(i) Going concern
After making enquiries, the Directors have a reasonable
expectation that the Company has adequate
resources to continue in operational existence for the
foreseeable future. The Directors believe the
Company is well placed to manage its business risks successfully
despite the current economic climate
as the interest on the Company's loan has been fixed and
the fixed rental income under the operating lease means
that the rent should be sufficient to repay the loan and
provide surplus income to pay
for the Company's expenses and permit payment of dividends.
Accordingly, the Directors have adopted
the going concern basis in preparing the financial information.
Management is not aware of any
material uncertainty that may cast significant doubt upon
the Company's ability to continue as a going concern.
(j) Leasing and rental income
The lease relating to the Asset has been classified as
an operating lease as the terms of the lease do
not transfer substantially all the risks and rewards of
ownership to the lessee. The Asset is shown as a
non-current asset in the Statement of Financial Position.
Further details of the lease are given in Note 11.
Rental income and advance lease payments from the operating
lease are recognised on a straight-line
basis over the term of the lease. Initial direct costs
incurred in negotiating and arranging an operating
lease are added to the carrying amount of the leased asset
and recognised on a straight-line basis over
the lease term.
(k) Property, plant and equipment - Aircraft
In line with IAS 16 Property Plant and Equipment, the Asset
is initially recorded at the fair value of the
consideration paid. The cost of the asset is made up of
the purchase price of the Asset plus any costs
directly attributable to bringing it into working condition
for its intended use. Accumulated depreciation
and any recognised impairment loss are deducted from cost
to calculate the carrying amount of the
Asset.
Notes to the Financial Statements
for the period ended 30 September 2012
2 ACCOUNTING POLICIES (continued)
Property, plant and equipment - Aircraft
(k) (continued)
Depreciation is recognised so as to write off the cost
of the Asset less the estimated residual value
of GBP69.2 million over the estimated useful life of the
Asset of 12 years, using the straight line method. The
depreciation method reflects the pattern of benefit consumption.
The residual value is reviewed annually and is the amount
the entity would receive currently if the asset were already
of the age and condition expected at the end of its useful
life. Useful life is also reviewed annually
and for the purposes of the financial statements represents
the likely period of the Company's
ownership of these assets. Depreciation starts when the
asset is available for use.
At each balance sheet date, the Company reviews the carrying
amounts of its Asset to determine
whether there is any indication that the Asset has suffered
any impairment loss. If any such indication exists, the
recoverable amount of the Asset is estimated to determine
the extent of the
impairment loss (if any).
Recoverable amount is the higher of fair value less costs
to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present
value using a pre-tax
discount rate that reflects current market assessments
of the time value of money and risks
specific to the Asset for which the estimates of future
cash flows have not been adjusted.
If the recoverable amount of the Asset is estimated to
be less than its carrying amount, the carrying
amount of the Asset is reduced to its recoverable amount.
An impairment loss is recognised immediately in profit
or loss.
Where an impairment loss subsequently reverses, the carrying
amount of the Asset is increased to
the revised estimate of its recoverable amount, but so
that the increased carrying amount does not exceed the
carrying amount that would have been determined had no
impairment loss been
recognised for the Asset in prior years. A reversal of
an impairment loss is recognised immediately
in profit or loss.
(l) Financial liabilities
Financial liabilities, including borrowings, are initially
measured at fair value, net of transaction
costs and subsequently measured at amortised cost using
the effective interest method, with interest expense recognised
on an effective yield basis.
The effective interest method is a method of calculating
the amortised cost of the financial liability
and of allocating interest expense over the relevant period.
The effective interest rate is the rate that exactly discounts
estimated future cash payments through the expected life
of the financial
liability, or, where appropriate, a shorter period, to
the net carrying amount on initial recognition.
The Company derecognises financial liabilities when, and
only when, the Company's obligations
are discharged, cancelled or they expire.
Notes to the Financial Statements (Continued)
for the period ended 30 September 2012
2 ACCOUNTING POLICIES (continued)
(m) Net asset value
In circumstances where the Directors, as advised by the
Asset Manager, are of the opinion
that the net asset value ("NAV") or NAV per Share, as
calculated under prevailing accounting standards, is not
appropriate or could give rise to a misleading calculation,
the Directors, in
consultation with the Administrator and the Asset Manager
may determine, at their discretion,
an alternative method for calculating the value of the
Company and shares in the capital of the Company, which
they consider more accurately reflects the value of the
Company.
3 SIGNIFICANT JUDGEMENTS AND ESTIMATES
In the application of the Company's accounting policies,
which are described in note 2, the Directors are required
to make judgements, estimates and assumptions about the
carrying
amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated
assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results
may differ from these estimates.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which
the estimate is revised if the revision affects only that
period, or in the period of the revision and future periods
if the revision affects both current and future periods.
The following are the critical judgements and estimates,
that the Directors have made in the process of applying
the Company's accounting policies and that have the most
significant effect on the amounts recognised in financial
statements.
Residual value and useful life of Asset
As described in note 2 (k), the Company depreciates the
Asset on a straight line basis over the estimated useful
life of the Asset and taking into consideration the estimated
residual value. In making its judgement regarding residual
value estimate the Directors considered previous sales
of similar aircraft and other available aviation information.
The useful life of the Asset is estimated based on the
expected period for which the Company will own and lease
the aircraft.
Notes to the Financial Statements (Continued)
for the period ended 30 September 2012
3 SIGNIFICANT JUDGEMENTS AND ESTIMATES (continued)
Operating lease commitments- Company as lessor
The Company has entered into a lease on the Asset. The Company
has determined, based
on an evaluation of the terms and conditions of the arrangements,
that it retains all the significant risks
and rewards of ownership of this asset and accounts for
the contract as an operating lease.
The Company has determined that the operating lease on the
Asset is for 12 years based on an initial
term of 10 years followed by an extension term of 2 years.
Should the lessee choose to exit the
lease at the end of the initial term of 10 years, a penalty
equal to the present value of the remaining 2 years lease
rentals would be due.
Issue of initial shares
As described in note 15, Shares issued prior to the public
Placing were accounted for at the fair value of
the Shares on the date of issue. The Directors estimated
the value of these Shares issued based on the
anticipated launch price and their assessment of the respective
dates of issue and the probability of a
successful launch. The difference between fair value and
actual cash proceeds is shown as a
movement in reserves in the Statement of Changes in Equity.
Impairment
As described in note 2 (k), impairment exists when the carrying
value of an asset or cash generating unit
exceeds its recoverable amount, which is the higher of its
fair value less costs to sell and its value in use.
The Directors monitor the assets for any indications of
impairment as required by IAS 16 Property, Plant
and Equipment and IAS 36 Impairment of Assets.
4 RENTAL INCOME
TOTAL
1 Apr 2012 8 Oct 2010
to to
30 Sep 2012 30 Sep 2011
GBP GBP
A rent income 4,781,970 9,610,433
Revenue received but not
yet earned (527,443) -
-------------------- -------------------------
4,254,527 9,610,433
-------------------- -------------------------
B rent income 2,160,816 4,321,632
Revenue earned but not
yet received 94,922 -
-------------------- -------------------------
2,255,738 4,321,632
-------------------- -------------------------
Total rental income 6,510,265 13,932,065
-------------------- -------------------------
Notes to the Financial Statements (Continued)
for the period ended 30 September 2012
4 RENTAL INCOME (continued)
Rental income is derived from the leasing of the Asset.
Rent is split into A rent, which is received in US
Dollars ("USD") and B rent, which is received in GBP. Rental
income received in USD is translated into
the functional currency (GBP) at the date of the transaction.
A and B rental income receivable will decrease / increase
respectively, 10 years from the start of
each lease. An adjustment has been made to spread the actual
total income receivable evenly over the term of lease. In
addition, advance rentals have also been spread evenly over
the full term of the lease.
5 OPERATING EXPENSES
1 Apr 2012 8 Oct 2010
to to
30 Sep 30 Sep
2012 2011
GBP GBP
Management fee 50,563 104,932
Asset management fee 127,813 197,917
Administration fees 30,577 53,751
Accountancy fees 5,112 7,644
Registrars fee 4,386 7,052
Audit fee 10,000 12,500
Directors' remuneration 26,500 43,525
Directors' and Officers'
insurance 4,020 6,651
Legal & professional
expenses 1,279 12,415
Annual fees 750 3,718
Sundry costs 3,545 8,678
Other operating expenses 1,776 9,949
----------------------- --------------------
266,321 468,732
----------------------- --------------------
6 DIRECTORS' REMUNERATION
Under their terms of appointment, each Director is paid
a fee of GBP15,000 per annum by the Company,
except for the Chairman, who receives GBP20,000 per annum.
The Chairman of the audit committee also receives an extra
GBP3,000 per annum.
Notes to the Financial Statements (Continued)
for the period ended 30 September 2012
DIVIDENDS IN RESPECT OF EQUITY
7 SHARES
30 Sep 2012
GBP Pence per
share
First interim payment 955,125 2.25
Second interim payment 955,125 2.25
------------------- ----------------------
1,910,250 4.50
------------------- ----------------------
8 Oct 2010 to
31 March 2012
GBP Pence per
share
First interim payment 955,125 2.25
Second interim payment 955,125 2.25
Third interim payment 955,125 2.25
Fourth interim payment 955,125 2.25
------------------- ----------------------
3,820,500 9.00
------------------- ----------------------
8 EARNINGS PER SHARE
Earnings per Share ('EPS') is based on the net gain for
the period attributable to Shareholders of
GBP3,003,926 and 42,450,000 Shares being the weighted average
number of Shares in issue during
the period. The Directors are of the opinion that calculating
EPS using 42,450,000 Shares follows
the substance of IAS33 Earnings per Share, paragraph 26
as the share transactions prior to the Placing
did not result in a corresponding change in the Company's
resources. There are no dilutive instruments
and therefore basic and diluted earnings per Share are identical.
Notes to the Financial Statements (Continued)
for the period ended 30 September 2012
PROPERTY, PLANT AND EQUIPMENT-
9 AIRCRAFT
Aircraft
COST GBP
As at 1 Apr 2012 115,159,172
Additions -
As at 30 Sep 2012 115,159,172
===========================
ACCUMULATED DEPRECIATION
As at 1 Apr 2012 4,789,248
Charge for the period 1,915,699
---------------------------
As at 30 Sep 2012 6,704,947
===========================
CARRYING AMOUNT
As at 1 Apr 2012 110,369,924
===========================
As at 30 Sep 2012 108,454,225
===========================
The Company cannot sell the asset during the term of the
lease without terminating the lease or Special
Termination Events (as defined by the lease) occurring.
If at the end of the lease the Company makes
the choice to sell the Asset rather than leasing it out
again, Emirates will be given first refusal on the Asset.
Under IAS 17 'Leases' the direct costs attributed in negotiating
and arranging the operating lease has been added to the
carrying amount of the leased asset and will be recognised
as an expense over the
lease term.
10 FINANCE COSTS
1 Apr 2012
to 8 Oct 2010 to
30 Sep 2012 30 Sep 2011
GBP GBP
Amortisation of debt arrangement 6,017
costs -
Loan interest 1,954,221 3,139,996
--------------------------- ---------------------------
1,960,238 3,139,996
--------------------------- ---------------------------
Notes to the Financial Statements (Continued)
for the period ended 30 September 2012
11 OPERATING LEASES
The amounts of minimum future lease receipts at the reporting
date under non cancellable operating leases
are detailed below:
After 5
30 September 2012 Next 12 2 to 5 years Total
months years
GBP GBP GBP GBP
Asset- A rental payments 9,442,699 37,770,995 34,763,719 81,977,413
Asset- B rental payments 4,321,632 17,286,528 23,886,288 45,494,448
------------- ------------- ---------------- ---------------
13,764,331 55,057,523 58,650,007 127,471,861
------------- ------------- ---------------- ---------------
2 to 5 After 5
31 March 2012 Next 12 years years Total
months
GBP GBP GBP GBP
Asset- A rental payments 9,464,963 37,859,854 44,310,534 91,635,351
Asset- B rental payments 4,321,632 17,286,528 28,207,920 49,816,080
------------- ------------- ---------------- ---------------
13,786,595 55,146,382 72,518,454 141,451,431
------------- ------------- ---------------- ---------------
The operating lease is for an Airbus A380-861 Aircraft.
The term of the lease is for 12 years ending
November 2022. The initial lease is for 10 years ending
November 2010, with an extension period of 2
years ending November 2022, in which rental payments reduce.
The present value of the remaining
rentals in the extension period must be paid even if the
option is not taken.
At the end of the lease term the lessee has the right to
exercise an option to purchase the Asset if the
Company chooses to sell the Asset. If a purchase option
event occurs the Company and the lessee will
be required to arrange for a current market value appraisal
of the Asset to be carried out by three
independent appraisers. The purchase price will be equal
to the average valuation of those three
appraisals.
Notes to the Financial Statements (Continued)
for the period ended 30 September 2012
12 RECEIVABLES
30 Sep 2012 31 Mar 2012
GBP GBP
Prepayments 2,090 7,610
Sundry debtors 22 22
2,112 7,632
---------------------- -----------------------
The above carrying value of receivables is equivalent to
its fair value.
PAYABLES (amounts falling due
13 within one year)
30 Sep 2012 31 Mar 2012
GBP GBP
Accrued administration fees 5,831 6,053
Accrued audit fee 12,000 20,000
Accrued management fees 90,071 25,000
Other accrued expenses 1,245 2,181
109,147 53,234
---------------------- -----------------------
The above carrying value of payables is equivalent to its
fair value.
14 BORROWINGS
TOTAL TOTAL
30 Sep 2012 31 Mar 2012
GBP GBP
Bank loan 65,822,593 69,334,930
Transaction costs (53,489) (59,506)
65,769,104 69,275,424
---------------------- -----------------------
Amount due for settlement within
12 months 5,965,261 5,829,257
====================== =======================
Amount due for settlement after
12 months 59,803,843 63,446,167
====================== =======================
The loan was arranged with Westpac Banking Corporation ("Westpac")
for USD 122,000,000 and runs
for 12 years until December 2022, and has an effective interest
rate of 5.4950%, which is the same as
the contractual fixed interest rate.
Notes to the Financial Statements (Continued)
for the period ended 30 September 2012
14 BORROWINGS (continued)
The loan is secured on the Asset. No breaches or defaults
occurred in the period.
Transaction costs of arranging the loan have been deducted
from the carrying amount of the loan and
will be amortised over their respective lives.
In the Directors' opinion, the above carrying value of the
bank loan is approximate to its fair value.
15 SHARE CAPITAL
The Share Capital of the Company is represented by an unlimited
number of shares of no par value
being issued or reclassified by the Company as Ordinary Preference
Shares or Subordinated
Administrative Shares.
Issued Subordinated
Administrative
Shares Shares
Shares issued at incorporation - 1
Shares issued 11 October
2010 - 4,000,000
Shares issued 1 December
2010 - 1,000,000
Shares redeemed 1 December
2010 - (2,175,001)
Shares issued 6 December
2010 2 -
Shares issued in Placing - 39,625,000
----------------------- ---------------------------
Issued share capital as at
30 September 2012 2 42,450,000
----------------------- ---------------------------
Notes to the Financial Statements (Continued)
for the period ended 30 September 2012
SHARE CAPITAL
15 (continued)
Issued
GBP
Ordinary
Preference
Shares
1,825,000 Shares issued prior to Placing-
Fair value 91,260
1,000,000 Shares issued prior to Placing-
Fair value 250,010
39,625,000 Shares issued in Placing 39,625,000
Share issue costs (949,544)
----------------------------
Issued share capital as at 30 September
2012 39,016,726
Subordinated Administrative
Shares
Shares issued 6 December 2010 2
----------------------------
Total share capital as at 30 September
2012 39,016,728
============================
Members holding Ordinary Preference Shares are entitled
to receive, or participate in, any dividends
out of income; other distributions of the Company available
for such purposes and resolved to be
distributed in respect of any accounting period; or other
income or right to participate therein.
On a winding up, members are entitled to the surplus assets
remaining after payment of all the creditors
of the Company. Members have the right to receive notice
of and to attend, speak and vote at general
meetings of the Company.
The holders of Subordinated Administrative Shares are not
entitled to receive, or participate in, any
dividends out of income; other distributions of the Company
available for such purposes and resolved to
be distributed in respect of any accounting period; or other
income or right to participate therein. On a
winding up, holders are entitled to a return of capital
paid up on them after the Ordinary Preference
Shares have received a return of their capital paid up but
ahead of the return of all additional capital to
the holders of Ordinary Preference Shares.
Holders of Subordinated Administrative Shares shall not
have the right to receive notice of and shall have no right
to attend, speak or vote at general meetings of the Company,
except for the Liquidation Proposal Meeting (general meeting
convened six months before the end term of the lease where
the
Liquidation Resolution will be proposed) or if there are
no Ordinary Preference Shares in existence.
A fair value adjustment arose on the issue of 1,825,000
and 1,000,000 Ordinary Preference Shares for
which the consideration was GBP10 and GBP10 respectively.
The fair value adjustment of GBP341,250 was
adjusted through reserves in the period to 30 September
2011.
The Ordinary Preference Shares are not puttable instruments
as the holder does not have the right to
put the Shares back to the Company for cash or another financial
instrument.
Notes to the Financial Statements (Continued)
for the period ended 30 September 2012
16 FINANCIAL INSTRUMENTS
The Company's main financial instruments comprise:
Cash and cash equivalents that arise directly from the
(a) Company's operations; and
(b) Loan secured on non current asset.
17 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company's objective is to obtain income and returns
and a capital return for its Shareholders by
acquiring, leasing and then selling a single aircraft.
The following table details the categories of financial
assets and liabilities held by the Group at the
reporting date:
30 Sep 2012 31 Mar 2012
GBP GBP
Financial assets
Cash and cash equivalents 4,481,066 4,484,057
Receivables 22 22
----------------------- -----------------------------
Financial assets measured
at amortised cost 4,481,088 4,484,079
----------------------- -----------------------------
Financial liabilities
Accrued expenses 109,147 53,234
Loans payable 65,769,104 69,275,424
----------------------- -----------------------------
Financial liabilities
measured 65,878,251 69,328,658
----------------------- -----------------------------
at amortised cost
The main risks arising from the Company's financial instruments
are capital management risk, foreign
currency risk, credit risk, liquidity risk and interest
rate risk. The Board regularly review and agrees
policies for managing each of these risks and these are
summarised below:
(a) Capital management
The Company manages its capital to ensure that the Company
will be able to continue as a going
concern while maximising the return to Shareholders through
the optimisation of the debt and equity
balance. The Company is not subject to any externally imposed
capital requirements.
The capital structure of the Company consists of debt,
which includes the borrowings disclosed in note
15, cash and cash equivalents and equity attributable to
equity holders, comprising issued capital and
retained earnings. The Company's Board of Directors reviews
the capital structure on a bi-annual basis. Equity includes
all capital and reserves of the Company that are managed
as capital.
Notes to the Financial Statements (Continued)
for the period ended 30 September 2012
17 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
(b) Foreign currency risk
The Company's accounting policy under IFRS requires the
use of GBP historic cost of the Assets and
the value of the USD loan as translated at the spot exchange
rate on every balance sheet date. In
addition, USD operating lease receivables are not immediately
recognised in the balance sheet and are
accrued over the period of the lease. The Directors consider
that this introduces artificial variance due
to the movement over time of foreign exchange rates. In
actuality, the USD operating lease receivables
should offset the USD payables on amortising loans. The
foreign exchange exposure in relation to the
loan is thus largely naturally hedged.
Lease rentals (as detailed in Notes 4 and 12) are received
in USD and GBP. Those lease rentals
received in USD are used to pay the loan repayments due,
also in USD. Both USD lease rentals and loan
repayments are fixed and are for similar sums and similar
timings. The matching of lease rentals to settle
loan repayments therefore mitigates risks caused by foreign
exchange fluctuations.
The carrying amounts of the Company's foreign currency denominated
monetary assets and liabilities at
the reporting date are as follows:
Liabilities Assets
GBP GBP
Bank loan (USD) 65,822,593 -
Cash and cash equivalents
(USD) - 2,261,206
================================= =============================
The following table details the Company's sensitivity to
a 15 per cent appreciation of in GBP against USD. 15 per
cent represents the Directors' assessment of the reasonably
possible change in foreign
exchange rates. The sensitivity analysis includes only outstanding
foreign currency denominated monetary items and adjusts
their translation at the period end for a 15 per cent change
in foreign currency rates. A positive number below indicates
an increase in profit and other equity where GBP strengthens
15 per cent against USD. For a 15 per cent weakening of
the GBP against USD, there would be a comparable, but opposite,
impact on the profit and other equity.
USD impact
GBP
Profit or loss 8,290,618
Assets (294,939)
Liabilities 8,585,556
=================================
On the eventual sale of the Asset, the Company may be subject
to foreign currency risk if the sale was
made in a currency other than GBP. Transactions in similar
assets are typically priced in USD.
Notes to the Financial Statements (Continued)
for the period ended 30 September 2012
17 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
(c) Credit Risk
Credit risk refers to the risk that a counterparty will
default on its contractual obligations resulting in
financial loss to the Company.
The credit risk on cash transactions are mitigated by transacting
with counterparties that are regulated
entities subject to prudential supervision, or with high
credit ratings assigned by international credit
rating agencies.
The Company's financial assets exposed to credit risk are
as follows:
30 Sep 31 Mar
2012 2012
GBP GBP
Receivables 22 22
Cash and cash
equivalents 4,481,066 4,484,057
4,481,088 4,484,079
---------------------------- -----------------------
Surplus cash is held in accounts with Barclays and Westpac
Banking Corporation, which have credit
ratings given by Moody's of A3 and Aa2 respectively.
There is a contractual credit risk arising from the possibility
that the lessee may default on the lease
payments. This risk is mitigated, as under the terms of
the lease agreements between the lessee and the
Company, any non payment of the lease rentals constitutes
a Special Termination Event, under which
the lease terminates and the Company may either choose to
sell the asset or lease the Asset to another
party.
At the inception of the lease, the Company selected a lessee
with a strong balance sheet and
financial outlook. The financial strength of Emirates is
regularly reviewed by the Board and the Asset
Manager.
(d) Liquidity Risk
Liquidity risk is the risk that the Company will encounter
difficulty in realising assets or otherwise raising
funds to meet financial commitments. The Company's main
financial commitments are its ongoing
operating expenses and loan repayments to Westpac.
Ultimate responsibility for liquidity risk management rests
with the Board of Directors, which established
an appropriate liquidity management framework at the incorporation
of the Company, through the
timings of lease rentals and loan repayments. The Company
manages liquidity risk by maintaining
adequate reserves, banking facilities and borrowing facilities,
by monitoring forecast and actual cash
flows, and by matching profiles of financial assets and
liabilities.
Notes to the Financial Statements (Continued)
for the period ended 30 September 2012
(d) Liquidity Risk (continued)
The table below details the residual contractual maturities
of financial liabilities. The amounts below are
contractual undiscounted cash flows, including both principal
and interest payments, and will not agree
directly to the amounts recognised in the statement of financial
position.
1-3 months 3-12 months 1-2 years 2-5 years over 5 years
GBP GBP GBP GBP GBP
Financial liabilities
Payables - due within
one year 109,147 - - 109,147 109,147
Loans payable 2,374,885 3,590,375 9,499,542 28,498,626 25,447,999
--------------- ------------------------- ---------------------
2,484,032 3,590,375 9,499,542 28,607,773 25,557,146
--------------- ------------------------- ------------------------------- ---------------------- ---------------------
(e) Interest rate risk
Interest rate risk arises from the possibility that changes
in interest rates will affect future cash flows. It is
the risk that fluctuations in market interest rates will
result in a reduction in deposit interest earned on
bank deposits held by the Company. The Company mitigates
interest rate risk by fixing the interest rate on the loan
and the lease rentals.
The following table details the Company's exposure to interest
rate risks:
Fixed
Less than interest Non-interest Total
1 month Bearing
GBP GBP GBP GBP
Financial assets
Receivables - - 2,112 2,112
Cash and cash
equivalents 4,481,066 - - 4,481,066
Total financial
assets 4,481,066 - 2,112 4,483,178
------------------------- ------------------------- --------------------------- --------------------
Financial liabilities
Accrued expenses - - 109,147 109,147
Loans payable - 65,769,104 - 65,769,104
Total financial
liabilities - 65,769,104 109,147 65,878,251
------------------------- ------------------------- --------------------------- --------------------
Total interest 4,481,066 65,769,104
------------------------- -------------------------
sensitivity gap
Notes to the Financial Statements (Continued)
for the period ended 30 September 2012
17 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Interest rate risk
(e) (continued)
If interest rates had been 50 basis points higher throughout
the period and all other variables were held constant,
the Company's profit for the period and net assets attributable
to Shareholders as at 30 September 2012 would have been
GBP11,203 greater due to an increase in the amount of interest
receivable on the bank balances.
If interest rates had been 50 basis points lower throughout
the period and all other variables were held constant,
the Company's profit for the period and net assets attributable
to Shareholders as at 30
September 2012 would have been GBP11,203 lower due to a
decrease in the amount of interest receivable on the bank
balances.
18 ULTIMATE CONTROLLING PARTY
In the opinion of the Director's, the Company has no ultimate
controlling party.
19 SUBSEQUENT EVENTS
On 11 October 2012, a further dividend of 2.25 pence per
Ordinary Preference Share was declared and
this was paid on 30 October 2012.
20 RELATED PARTIES
Nimrod Capital LLP ("Nimrod") is the Company's Placing
Agent and Corporate and Shareholder Adviser. The Company
pays to Nimrod for its services as Corporate and Shareholder
Adviser a fee
of GBP100,000 per annum (adjusted annually for inflation
from 2012 onwards, at 2.25 per cent. per annum)
payable quarterly in arrears.
During the period, the Company incurred GBP51,165 (30 September
2011: GBP588,254) of expenses with
Nimrod, of which GBP26,165 (31 March 2012: GBP25,000) was
outstanding to this related party at 30
September 2012. GBPnil (30 September 2011: GBP504,859)
of expenses have been deducted from equity as a launch
cost.
Doric GmbH ("Doric") is the Company's Asset Manager. The
Company pays Doric a management and
advisory fee of GBP250,000 per annum (adjusted annually
for inflation from 2012 onwards, at 2.25 per cent. per
annum), payable quarterly in arrears. Doric will also receive
a fee for its sales and remarketing services upon disposition
of the Asset and subsequent winding up of the Company (the
"Disposition Fee"). This will be payable by the Company
out of the proceeds of sale and will follow an incentivised
structure. Doric will not be entitled to the Disposition
Fee (but for the avoidance of doubt will be entitled to
reimbursement for properly incurred costs and expenses)
if Shareholders do not recover 100 pence per share net
of all costs, fees and expenses upon the winding up of
the Company. If Shareholders receive between 100 pence
per share and 150 pence per share (inclusive) (in each
case net of all cost, fees and expense) upon the winding
up of the Company, Doric should receive a Disposition Fee
of 2 per cent. of the Realised Value of the Asset. If Shareholders
receive more than 150 pence per share (net of all cost,
fees and expense) Doric should receive 3 per cent. of the
Realised
Notes to the Financial Statements (Continued)
for the period ended 30 September 2012
20 RELATED PARTIES
Value of the Asset.
During the period, the Company incurred GBP127,812 (30
September 2011: GBP1,463,004) of expenses with
Doric, of which GBP63,906 (31 March 2012: GBPnil) was outstanding
to this related party at 30 September
2012. GBPnil (30 September 2011: GBP1,325,000) of expenses
have been capitalised as direct costs
attributable to bringing the Asset into working condition
and have been added to the carrying amount
of the Asset.
Doric Nimrod Air One Limited
ADVISORS & CONTACT INFORMATION
Key Information
Exchange Specialist Fund Market
Ticker of the LSE/ CISX
Listing Date DNA
Fiscal Year End 13 December 2010
Base Currency 31 March
ISIN GBP
SEDOL GG00B4MF3899
Country of Incorporation B4MF389
Guernsey -- Registration
number 52484
Management and Administration
Registered Office Company Secretary and
Administrator
Doric Nimrod Air One Limited Anson Fund Managers Limited
Anson Place P.O. Box 405, Anson Place
Mill Court Mill Court
La Charroterie La Charroterie
St Peter Port St Peter Port
Guernsey GY1 EJ Guernsey GY1 3GF
Asset Manager Liaison Agent
Doric GmbH Doric Partners LLP
BerlingerStrasse 114 5 Royal Exchange Building
Offenbach London
63065 Germany EC3V 3NL
Placing and Corporate Registrar
and Shareholder
Advisory Agent
Nimrod Capital LLP Anson Registrars Limited
4 The London Fruit and PO Box 426, Anson Place
Wool Exchange Mill Court, La Charroterie
Brushfield Street St Peter Port
London E1 6HB Guernsey GY1 3WX
Solicitors to the Company Advocates to the Company
(as to English Law) (as to Guernsey Law)
Herbert Smith LLP Mourant Ozannes
Exchange House 1 Le Marchant Street
Primrose Street St Peter Port
London EC2A 2HS Guernsey
GY1 4HP
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGGAUGUPPGQP
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