TIDMDNA
RNS Number : 1105E
Doric Nimrod Air One Limited
04 April 2014
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT
FOR PUBLICATION, RELEASE, OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,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
4 April 2014
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 January 2014 to 31 March
2014.
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
CISE: 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 ("Emirates"), 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
the 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 (31 March 2014)
Listing LSE and CISE
------------------------------- ------------------------------------
Ticker DNA
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Share Price 116.0p
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Market Capitalisation GBP 49.2 million
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Aircraft Registration A6-EDC
Number
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Current/Future Anticipated 2.25p per quarter (9p per annum)
Dividend
------------------------------- ------------------------------------
Dividend Payment Dates April, July, October, January
------------------------------- ------------------------------------
Currency GBP
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Launch Date/Price 13 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 JTC Fund Managers (Guernsey) Ltd
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Auditor Deloitte LLP
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Market Makers Shore Capital Ltd/
Winterflood Securities Ltd/
Jefferies International Ltd/
Numis Securities Ltd
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SEDOL, ISIN B4MF389, GG00B4MF3899
------------------------------- ------------------------------------
Year End 31 March
------------------------------- ------------------------------------
Stocks & Shares ISA Eligible
------------------------------- ------------------------------------
Website www.dnairone.com
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Asset Manager's Comment
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 February 2014, a
total of 2,815 flight cycles were registered. Total flight hours
were 23,547. This equates to an average flight duration of
approximately eight hours and 20 minutes.
The A380 owned by the Company visited Brisbane, Moscow, Munich,
New York JFK, Rome and Sydney during the first quarter of 2014.
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) and is due
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 remain 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. The downtime required to
incorporate the permanent fix has in some cases been reduced from
the originally planned eight weeks down to 51 days. The Company has
been notified by Emirates that the implementation of the final fix
for MSN 016 started on the 4 February 2014 and is scheduled to be
completed on 2 April 2014. The modification work is being conducted
by Sabena Technics (in Bordeaux, France). More than a third of the
35 A380s operated by Emirates, which require this modification,
have until now undergone the complete modification.
2. Market Overview
During 2013 passenger demand, measured in revenue passenger
kilometres (RPKs), expanded by 5.2% compared to the year before.
This number represents exactly the average historical growth rate
over the last 30 years. Market development during 2013 was mainly
driven by a solid economic growth in the emerging regions. Less
mature air travel markets continued to expand significantly faster
than the more mature ones. The industry also experienced a strong
start into the year 2014. RPKs during January were 8.0% above the
same month the year before. In general, accelerating air travel
markets during the last months are consistent with a pick-up in
economic growth across the globe. Between January and December 2013
airlines increased their capacities, measured in available seat
kilometres (ASKs), by 4.8%. With some exceptions, the operators
remained careful in their capacity planning. Overall the growth
rate of RPKs exceeded the ASK increase.
The average passenger load factor during the year 2013 was
79.5%. This is an increase of 0.4%-points compared to the year
before. From a historic perspective passenger load factors remain
stable on a high level. In 2014 worldwide passenger load factors
could exceed 81% for the first time in the industry's history.
According to the latest traffic forecast released by IATA in March
2014, RPKs are expected to grow by 5.8% in 2014 and 6.7% in 2015.
Outlook for 2015 was slightly downgraded by 0.2%-points since the
previous publication from December 2013.
A regional breakdown reveals that the Middle East airlines were
once more the best-performing in terms of RPK growth with a plus of
11.4% during 2013. The Asia/Pacific region grew by 7.1%. The most
modest growth was again observed in North America with 2.3%. This
growth pattern is continuing in the current year. During January
2014 traffic in the Middle East increased by 17.2% compared to the
same period the year before. At the lower end North America has
been replaced by Africa which showed only a modest growth of 2.1%
in January.
In 2013 air freight markets slowly recovered from their
downsizing the year before. Flown freight-tonne-kilometres (FTKs)
increased by 1.4%. Growth picked up mainly during the second half
of the year. Eurozone's emergence from recession and an accelerated
growth in world trade supported this encouraging development. But
load factors and hence utilization of the available freight
capacities remain a challenge to the industry. The average load
factor for 2013 was only 45.3%. Well performing markets for
passenger traffic result in an increase of belly capacity. Hence
available freight-tonne-kilometres (AFTKs) increased by 2.6% during
the year. The Middle East and Latin America were the only regions
where demand growth for air freight exceeded additional supply.
Nevertheless, in January 2014 air freight volumes were the highest
since mid-2010. It is expected that the slow recovery will
continue, in line with the growth of industrial production.
Historical evidence that freight demand is increasing twice as fast
as the industrial production is currently not observable. For 2014
IATA expects a worldwide FTK growth of 4.0%.
IATA released its latest industry outlook in March 2014
according to which global industry profits are expected to reach
USD 18.7 billion in 2014. This is slightly lower than IATA's
December 2013 estimate of USD 19.7 billion. The main driver of this
downward revision is an adjusted projection for oil price
development, which has been increased by USD 3.50 per barrel for
geo-political reasons such as the latest developments in the
Ukraine. But according to IATA's General Director and CEO, Tony
Tyler, the general outlook to the industry is positive. Expected
GDP growth, which is closely linked to airlines profitability, is
largely driven by developed economies after some key emerging
economies like India and Brazil face economic challenges.
During 2013 Airbus delivered more aircraft to its customers than
ever before. At the same time the European aircraft manufacturer
received new orders for 1,503 aircraft. At the year-end order
backlog increased to 5,559 aircraft with a cumulated list price of
more than USD 800 billion. This is a new record to the aviation
industry.
Source: Airbus, IATA
3. Lessee - Emirates Key Financials and Outlook
Emirates' annual report for the financial year 2013/2014 is
expected to be released in May 2014. In the first six months of the
current financial year (ending on 30 September 2013) revenue
reached a record high of USD 10.8 billion, up by 12% compared to
the same period in the financial year before. According to His
Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief
Executive of Emirates, "the global business environment continues
to be challenging". Nevertheless the lessee increased its net
profit by 2% to USD 475 million. However persistent high fuel
prices and an unfavorable currency exchange environment burden the
airline's profits.
As of 30 September 2013 the balance sheet total amounted to USD
25.1 billion, a decrease of 3% from the end of last financial year.
Total equity increased by 7.9% to USD 6.8 billion with an equity
ratio of 27%. The current ratio was 1.01; therefore the airline
would be able to meet its current liabilities by liquidating all of
its current assets. As of 30 September 2013 the carrier's cash
balance reached USD 4.3 billion, therefore liquidity decreased by
USD 2.4 billion within six months. This was largely caused by bond
repayments and injections back into the business to fund new
aircraft, engines, spares and other projects.
In the first half of the current financial year, Emirates
continued to invest in and expand its employee base, increasing its
overall staff count by 12.4% to over 51,900 compared with 30
September 2012.
In 2013 Emirates received 24 new aircraft including freighters.
Nine new passenger routes have been launched; Warsaw, Algiers,
Tokyo Haneda, Stockholm, Clark, Milan-New York, Conakry, Sialkot
and Kabul. Hanoi, Chicago, Kano in Nigeria and Quito in Ecuador
have been launched as cargo only destinations. At the Dubai Air
Show in November 2013 the lessee signed contracts with Airbus and
Boeing in a combined value of USD 99 billion (list prices)
consisting of 150 Boeing 777X and another 50 Airbus A380. According
to the operator, the first 25 of the additional A380 will come into
service before the first quarter of 2018. Deliveries for 777Xs are
scheduled to start in 2020. Emirates is not only heavily investing
in new aircraft, but it is also running the world's largest paint
hangar owned by an airline. Twice the size of a football field, the
facility operates 24 hours a day, seven days a week. Between
January and December 2013 Emirates completed 21 "make-overs"
comprising paint stripping and repaint of complete aircraft.
According to the airline, the first A380 which entered into service
in August 2008 will be due for a repaint in 2015.
As of February 2014 Emirates operates flights to 141
destinations in 80 countries on six continents. During the last
calendar year the airline's fleet travelled more than 751 million
kilometres, circling the globe over 18,000 times and carrying over
43 million passengers. In the first six months of the current
business year until September 2013 the lessee offered 16.9% more
ASKs than a year ago. At the same time demand increased by 16.1%.
Notwithstanding the tremendous growth Emirates is able to match
supply and demand in order to keep the load factor at high levels.
During the first half of the current financial year, passenger load
factor averaged 79.2%.
Source: Emirates
4. Aircraft - A380
As of February 2014 Emirates has a fleet of 45 A380s which
currently serve from their Dubai's hub 26 destinations worldwide:
Amsterdam, Auckland, Bangkok, Barcelona, Beijing, Brisbane, Hong
Kong, Jeddah, Kuala Lumpur, London Gatwick, London Heathrow, Los
Angeles, Manchester, Mauritius, Melbourne, Moscow, Munich, New York
JFK, Paris, Rome, Seoul, Shanghai, Singapore, Sydney, Toronto and
Zurich. London Gatwick became an A380 destination only recently.
But it was Emirates' first destination when the airline commenced
flights to the UK back in 1987.
At the end of February 2014, the global A380 fleet consisted of
124 commercially used planes in service. The currently ten
operators are Emirates (45 A380 aircraft), Singapore Airlines (19),
Qantas (12), Deutsche Lufthansa (10), Air France (9), Korean
Airways (8), China Southern Airlines (5), Malaysia Airlines (6),
Thai Airways (6) and British Airways (4). According to manufacturer
Airbus, a record number of new operators will receive their first
aircraft in the current calendar year. Qatar Airways will join the
club of A380 operators first, followed by South-Korean based Asiana
Airlines and Skymark Airlines of Japan. United Arab Emirates' flag
carrier Etihad Airways is expected to receive the first A380 by the
close of this year.
The order book for A380 aircraft has expanded considerably over
the last two quarters. In November 2013 Emirates announced at the
Dubai Air Show to buy another 50 A380s in addition to the 90
already ordered. In February 2014 widebody leasing company Amedeo
firmed up an order of 20 A380s. No operator has so far been
confirmed for these aircraft. This brings the number of unfilled
orders at Airbus to 199 aircraft by the end of February 2014.
In January 2014 the Indian Ministry of Civil Aviation lifted the
ban for A380 operations at Indian airports. Four major
international airports including New Delhi and Mumbai have already
been equipped to handle the superjumbo. It is expected that major
A380 operators like Emirates, Deutsche Lufthansa and Singapore
Airlines will use their aircraft for flights to India in the
future. Services will be subject to traffic entitlements within
bilateral agreements.
According to Airbus, the worldwide A380 fleet has accumulated
around 1.2 million flight hours in close to 150,000 commercial
flights. The number of passengers flying aboard an Airbus A380 to
date is over 50 million. Currently the A380 operates between 35
airports and every five minutes an A380 takes off or lands at these
destinations.
Source: Airbus, Ascend, Bloomberg, Emirates
Contact Details
Company
Doric Nimrod Air One Limited
Frances House, Sir William Place
St Peter Port
Guernsey GY1 4EU
Tel: +44 1481 702400
www.dnairone.com
Corporate & Shareholder Advisor
Nimrod Capital LLP
3 St Helen's Place
London EC3A 6AB
Tel: +44 20 7382 4565
www.nimrodcapital.com
END OF ANNOUNCEMENT
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