TIDMDNA
RNS Number : 4555P
Doric Nimrod Air One Limited
01 October 2013
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT
FOR PUBLICATION, RELEASE, OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,
IN, OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR ANY
JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL. THE INFORMATION
CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR
SALE IN THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR ANY
JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS
UNLAWFUL.
DORIC NIMROD AIR ONE LIMITED
Announcement of Asset Manager's Report
1 October 2013
Doric Nimrod Air One Limited (the "Company"), a
Guernsey-domiciled company, is pleased to present the quarterly
Fact Sheet in respect of the period from 1 July 2013 to 30
September 2013.
Doric GmbH, the Company's Asset Manager, has provided the
Company with this commentary on the Company's airplane and a copy
of their report is appended below for the benefit of
shareholders.
*****
On the invitation of the directors of the Company, the following
commentary has been provided by Doric GmbH as Asset Manager of the
Company and is provided without any warranty as to its accuracy and
without any liability incurred on the part of the Company, its
directors and officers and service providers. The commentary is not
intended to constitute, and should not be construed as, investment
advice. Potential investors in the Company should seek their own
independent financial advice and may not rely on this communication
in evaluating the merits of an investment in the Company. The
commentary is provided as a source of information for shareholders
of the Company but is not attributable to the Company.
QUARTERLY FACT SHEET
DORIC NIMROD AIR ONE LIMITED
LSE: DNA
CISX: DNA
The Company
Doric Nimrod Air One Limited ("the Company") is a Guernsey
domiciled company which listed on the Specialist Fund Market of the
London Stock Exchange and the Channel Islands Stock Exchange on 13
December 2010. The Company has purchased one Airbus A380-861
aircraft, manufacturer's serial number (MSN) 016, which it has
leased for an initial term of 12 years, with fixed lease rentals
for the duration, to Emirates Airlines, the national carrier owned
by the Investment Corporation of Dubai, based in Dubai, United Arab
Emirates.
Investment Strategy
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 receives income from
the lease and its directors are targeting a gross distribution to
shareholders of 2.25 pence per share per quarter (9p per annum). It
is anticipated that income distributions will continue to be made
quarterly.
Company Facts (30 September 2013)
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Listing LSE and CISX
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Ticker DNA
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Share Price 118.5 pence
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Market Capitalisation GPB 50 million
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Aircraft Registration A6-EDC
Number
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Anticipated Dividend 2.25p per quarter (9p per annum)
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Anticipated Dividend Payment April, July, October, January
Dates
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Currency GBP
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Launch Date/Price 13(th) December 2010 / 100p
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Incorporation Guernsey
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Asset Manager Doric GmbH
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Corp & Shareholder Advisor Nimrod Capital LLP
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Administrator Anson Fund Managers Limited
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Auditor Deloitte LLP
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Market Makers Shore Capital Ltd
Winterflood Securities Ltd
Jefferies International Limited
Numis Securities Limited
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SEDOL, ISIN B4MF389 , GG00B4MF3899
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Year End 31(st) March
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Stocks & Shares ISA Eligible
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Website www.dnairone.com
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1. The Doric Nimrod Air One Airbus A380
The Airbus A380 with the 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 2013, a total
of 2,574 flight cycles were registered. Total flight hours were
21,401. This equates to an average flight duration of approximately
eight hours and 20 minutes.
In September 2013 the Australian Transport Safety Bureau (ATSB)
released an investigation report, involving an engine formerly
owned by the Company. As previously reported, the engine (serial
number P550121) experienced an uncommanded in-flight shutdown
during climb out of Sydney on 11 November 2012 while it was
installed on another A380 of the Emirates fleet. A break-up and
dislodgement of some high pressure turbine (HPT) nozzles were
identified as the root cause. At that point in time, manufacturer
Engine Alliance (EA) was already aware of the issue in general and
an exchange program with redesigned nozzles was underway. Nozzle
exchange was planned for the next workshop visit of the Company's
former engine. After the incident, EA has intensified its efforts
to solve the issue with several measures, including enhanced real
time trend monitoring during flight and mandatory inspection
intervals for HPT nozzles. According to the ATSB, "the associated
risks to the safety of continued flight were relatively low". The
Company took ownership of a new engine (P550349) that EA agreed to
replace in exchange for the damaged one.
The A380 owned by the Company visited Auckland, Jeddah, London
Heathrow, Manchester, and Toronto during the third quarter of
2013.
Maintenance status
Emirates maintains its A380 aircraft fleet based on a
maintenance programme according to which minor maintenance checks
are performed every 1,500 flight hours, and more significant
maintenance checks (C checks) at the earlier of 24 months or 12,000
flight hour intervals. The second C check of the aircraft took
place in the Emirates engineering facility at Dubai International
Airport in November 2012. The next heavy maintenance check will be
the 6-year check (which will include the third C check) scheduled
for November 2014.
Emirates bears all costs (including maintenance, repair and
insurance) relating to the aircraft during the lifetime of the
lease.
Inspections
The asset manager Doric inspected the aircraft during the
above-mentioned C check in November 2012. The aircraft's physical
condition was good and consistent with its age. After four years in
service at that time, the passenger cabin has undergone some
significant refurbishment work, including replacement of soft
furnishings and floor coverings.
Hairline Cracks
In late 2011, hairline cracks were detected in a small number of
L-shaped metal brackets (known as wing rib feet) within the wing
structure of some A380s. The aircraft remains fully airworthy and
the hairline cracks pose no risk to flight safety as affirmed by
the European Aviation Safety Agency (EASA) and Airbus.
As previously reported, EASA released its latest Airworthiness
Directive in May 2013, outlining which modifications need to be
made and the respective compliance terms. The wing rib feet
modification programme for Emirates' aircraft is essentially
managed by Airbus. All modification activities will be covered by
the applicable manufacturer's warranties. Emirates decided to
embody all modifications in one step. Airbus is confident that the
downtime required to incorporate the permanent fix might be reduced
from the originally planned eight weeks to six weeks. Subject to
changes in Emirates' timeline it is currently envisaged to
implement the final fix for MSN 016 from mid-January to mid-March
2014. The modification work on the A380 owned by the Company will
be completed by Ameco Beijing (Aircraft Maintenance and Engineering
Corporation). Some aircraft of Emirates' A380 fleet have already
been modified and returned to commercial service.
2. Market Overview
Between January and July of the current year, passenger demand,
measured in revenue passenger kilometres (RPKs), expanded by 4.8%
compared to the same period in the previous year. The industry
remains on a growth path, which started in the fourth quarter of
2012. In recent months the development of passenger markets were
positively influenced by the economic recovery of the Eurozone,
where an 18-month-long recession came to an end. At the same time,
economic growth in China has slowed with noticeable impact on air
traffic. During the course of the year, airlines have increased
their capacities carefully and available seat kilometres (ASKs)
showed a smaller growth rate than the revenue passenger kilometres.
Overall, the passenger load factor during the first seven months of
this year was 79.5% on average. This is an increase of 0.6%-points
compared to the same period the year before. According to the
latest traffic forecast released by the International Air Transport
Association (IATA) in September 2013, RPKs are expected to grow by
5.0% this year and 5.8% in 2014.
Regional growth patterns continue to be uneven. Between January
and July 2013 Middle East airlines increased their RPKs by 10.9%
compared to the previous year's period. The slowest growth was
again observed in North America with an increase in RPKs of 2.0%
compared to the same period in the previous year. Growth in Latin
America further lost ground and is in the meantime the third
slowest growing region worldwide just ahead of Europe.
After freight-tonne-kilometres (FTKs) had contracted in February
and March 2013, air freight markets have started to show signs of
renewed growth with slightly improving air freight volumes during
the last few months. Between January and July 2013 FTKs increased
by 0.2% compared to the same period the year before. Global
business confidence has slightly improved and a pickup in export
orders has been noticed. It remains to be seen if these
developments are sustainable since the signs of improving
macroeconomic conditions - in particular in the US and Europe -
need to translate into growing demand for Asian manufactured
products shipped by aircraft to these regions. In Asia Pacific,
which is pivotal for the further development of air freight demand,
FTKs have still been shrinking.
Expenses for jet fuel are expected to remain on a high level
during 2013 with an average price of USD 126.4 per barrel, a slight
relief compared to the previous forecast in June 2013 of USD 127.4
per barrel. The share of fuel costs would amount to 31% of
airlines' total operating costs. A decade ago, the share was 14%
and has more than doubled since then.
IATA released its latest industry outlook in September 2013
according to which global industry profits are expected to reach
USD 11.7 billion this year. This is slightly lower than IATA's June
2013 estimate of USD 12.7 billion after air transport markets and
airline profits improved slower than expected during the last few
months. For 2014 IATA expects net profits of USD 16.4 billion,
based on a global gross domestic product (GDP) growth rate of 2.7%.
GDP is highly correlated with the profit development in the
industry.
Source: IATA
3. Lessee - Emirates Key Financials and Outlook
As previously reported, Emirates announced its 25(th)
consecutive year of profit and company-wide growth for the
financial year ending 31 March 2013.
Revenue reached a record high of USD 19.9 billion, up by 17%
compared to the previous financial year, and continues to be well
balanced with no region contributing more than 30%. East Asia and
Australasia remained the highest revenue contributing region with
USD 5.7 billion, up 15% from 2011/2012. Europe (up 18% to USD 5.5
billion) and the Americas (up 24% to USD 2.3 billion) saw the most
significant growth, reflecting new destinations as well as
increased frequency and capacity to these regions.
The airline posted a net profit of USD 622 million, representing
an increase of 52% over last year's results. Although Emirates'
fuel bill increased by 15% to reach USD 7.6 billion, total
operating costs showed a smaller increase (+16%) than revenue
(+17%) in the financial year 2012/2013.
As of 31 March 2013 the balance sheet total amounted to USD 25.8
billion, an increase of 23% from the previous year. Total equity
increased by 7.3% to USD 6.3 billion with an equity ratio of 24.3%.
The current ratio was 1.12; 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 included finance leases in the amount of USD 7.4 billion and
revenues received in advance from passenger and freight sales (USD
2.9 billion). As of 31 March 2013 the carrier's cash balance
reached USD 6.7 billion.
Emirates continued with its growth plan and during the financial
year 2012/2013 saw the largest increase in capacity in the
airline's history, receiving 34 wide-body aircraft, including ten
Airbus A380s and four freighters. As of 31 August 2013 Emirates has
204 aircraft in operation, with firm orders for another 190
aircraft, including 54 A380s, 61 Boeing 777-300ER and 50 Airbus
A350-900 XWB. The airline operates the world's largest fleets of
Airbus A380s and Boeing 777-300ER.
As of September 2013 Emirates operates flights to 135
destinations in 77 countries on six continents. New routes launched
so far this year include Warsaw, Algiers, Tokyo Haneda and
Stockholm. Until the end of the calendar year, Emirates plans to
add another four destinations: Clark International Airport
(Philippines), Conakry (Guinea), Sialkot (Pakistan) and Kabul
(Afghanistan). At the beginning of 2014 Kiev (Ukraine) and Taipei
(Taiwan) will join the global network of the Dubai-based
carrier.
In September 2013 Emirates Group released its third Environment
Report for the financial year 2012/13 ending on 31 March 2013
according to which the fuel consumption per one hundred passenger
kilometres decreased by one percent to 4.07 litres. This is nearly
16% below the IATA industry average forecasted for 2012 and the
result of the relatively young fleet that Emirates is operating.
The airline's average fleet age is six years, half of the IATA
average. Since fuel consumption and carbon dioxide emissions are
closely correlated, Emirates fleet of modern and fuel efficient
aircraft, like the Airbus A380, has emitted nearly 17% less carbon
dioxide per passenger kilometre than the IATA average. Emirates
fleet's CO(2) emissions per one hundred passenger kilometres
decreased by one percent to 100.6 grams compared to the business
year before. For its efforts to reduce noise impact on surrounding
communities, Emirates was awarded with the "Fly Quiet" Award at San
Francisco Airport (SFO) in 2013 for the second time in a row, after
its Flight Operations Performance team had tested different
take-off and climb routes, the usage of longer runways and
favorable pathways to take advantage of headwinds. Just four years
ago, Emirates' noise footprint was ranked second to last among
airlines serving SFO.
Source: Emirates
4. Aircraft - A380
Emirates has a fleet of 36 A380s which currently serve 20
destinations worldwide: Amsterdam, Auckland, Bangkok, Beijing, Hong
Kong, Jeddah, Kuala Lumpur, London Heathrow, Manchester, Melbourne,
Moscow, Munich, New York JFK, Paris, Rome, Seoul, Shanghai,
Singapore, Sydney and Toronto.
On 1 August 2013 Emirates celebrated the fifth anniversary of
the first A380 joining its fleet. Since the inaugural flight to New
York that day, more than 18 million passengers flew aboard an
Emirates A380 on 20,000 round trips travelling 265 million
kilometres. The airline is using its flagship on short haul as well
as long haul routes: The longest non-stop route within the network
is Dubai to New York, covering 11,023 kilometres during a flight of
thirteen and a half hours. Between Hong Kong and Bangkok Emirates
is operating the shortest A380 route with a distance of 1,900
kilometres and an estimated flying time of roughly two and a half
hours. According to Tim Clark, the airline's President, "Emirates
has changed the face of air travel with this remarkable
aircraft".
Over the next few months, Emirates plans to extend its A380
route network to Brisbane (1 October 2013), Los Angeles (2 December
2013), Mauritius (16 December 2013), Zurich (1 January 2014) and
Barcelona (1 February 2014).
At the end of August 2013, the global A380 fleet consisted of
108 planes in service with another 153 still on order with new and
existing operators. The currently ten operators are Emirates (36
A380 aircraft), Singapore Airlines (19), Qantas (12), Deutsche
Lufthansa (10), Air France (8), Korean Airways (7), China Southern
Airlines (5), Malaysia Airlines (6), Thai Airways (4) and British
Airways (1). The British flag carrier commenced its commercial A380
service between London and Los Angeles on 24 September 2013. Qatar
Airways will become the eleventh airline to join the club of A380
operators when it takes delivery of this aircraft in 2014.
According to Airbus, the worldwide fleet has accumulated over
one million flight hours in more than 120,000 commercial flights.
The number of passengers flying aboard an Airbus A380 to date is 44
million.
Source: Airbus, Ascend, Emirates
Contact Details
Company
Doric Nimrod Air One Limited
Anson Place, Mill Court,
La Charroterie, St Peter Port,
Guernsey GY1 1EJ
Tel: +44 (0) 1481 722260
Website: www.dnairone.com
Corporate & Shareholder Advisor
Nimrod Capital LLP
3 St. Helen's Place
London EC3A 6AB
Tel: +44 (0) 20 3355 6855
Website: www.nimrodcapital.com
END OF ANNOUNCEMENT
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The company news service from the London Stock Exchange
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