TIDMDNA
RNS Number : 9043O
Doric Nimrod Air One Limited
12 August 2014
DORIC NIMROD AIR ONE LIMITED (THE "COMPANY")
CORRECTION TO ANNUAL FINANCIAL REPORT ANNOUNCEMENT
The following amendments have been made to the "Annual Financial
Report" announcement released on 30 July 2014 at 16:30 under RNS
Number 7798N16.
Four paragraphs with regard to the Notes to the Financial
Statements were omitted due to a formatting error.
Note 2(k) - Property, plant and equipment - Aircraft now
includes the below wording:
"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."
"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 the risks specific to the Asset for
which the estimates of future cash flows have not been
adjusted."
Note 2(l) Financial liabilities now includes the below
wording:
"The Company derecognises financial liabilities when, and only
when, the Company's obligations are discharged, cancelled or they
expire."
Note 3 Critical Accounting Judgement, Operating lease
commitments - Company as lessor now includes the below wording:
"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
their 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."
All other details remain unchanged. The full corrected Annual
Financial Report can be found below.
For further information about this announcement contact:
JTC (Guernsey) Limited Tel: +44 (0) 1481 702 400
Secretary
Doric Nimrod Air One Limited
Annual Financial Report
From 1 April 2013 to
31 March 2014
Summary Information 1
Company Overview 2
Chairman's Statement 4
Asset Manager's Report 8
Directors 15
Service Providers 17
Management Report 21
Directors' Report
Audit Committee Report 23
33
Independent Auditor's Report 39
Statement of Comprehensive Income 43
Statement of Financial Position 44
Statement of Cash Flows 45
Statement of Changes in Equity 46
Notes to the Financial Statements 47
Key Advisers and Contact Information 71
Company Facts
Listing Special Fund Market of the London Stock
Exchange and Channel Islands Securities
Exchange
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Ticker DNA
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Share Price 114.00p (as at 31 March 2014)
114.125p (as at 25 July 2014)
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Market Capitalisation GBP 48.5 million (as at 31 March 2014)
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Aircraft Registration A6-EDC
Number
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Current/Future Anticipated Current dividends are 2.25p per quarter
Dividend per share (9p per annum) and it is
anticipated this will continue until
the aircraft lease begins to terminate
in 2022.
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Dividend Payment Dates April, July, October, January
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Currency Sterling
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Launch Date/Price 13 December 2010 / 100p
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Incorporation and Domicile 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) Limited
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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
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Year End 31 March
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Stocks & Shares ISA Eligible
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Website www.dnairone.com
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Doric Nimrod Air One Limited (LSE:DNA) ("DNA" or the "Company")
is a Guernsey company incorporated on 8 October 2010, and admitted
to the Official List and to trading on the Channel Islands Stock
Exchange ("CISX") and the Specialist Fund Market of the London
Stock Exchange ("SFM") on 13 December 2010. On 20 December 2013 the
Royal Court of Guernsey approved the scheme of arrangement ("the
scheme") between CISX and The Channel Islands Securities Exchange
("CISE"). In accordance with the scheme, the business of CISX has
been acquired by CISE. All securities that were listed on the
Official List of CISX have been transferred and are now listed on
the Official List of CISE.
The Company's total issued share capital currently consists of
42,450,000 Ordinary Preference Shares ("Shares") which were
admitted to trading at an issue price of 100 pence per Share. As at
25 July 2014, the latest practicable date prior to publication of
this report, the Shares are trading at 114.125 pence.
Investment Objectives and Policy
The Company's investment objective is to deliver an income
return and a capital return for its shareholders (the
"Shareholders") by acquiring leasing and then remarketing a single
aircraft. The Company purchased one Airbus A380-861 Aircraft,
manufacturers' serial number 016 (the "Asset") in December 2010,
which it leased (the "Lease") to Emirates Airlines ("Emirates"),
the national carrier owned by The Investment Corporation of Dubai
based in Dubai, United Arab Emirates.
Distribution Policy
The Company aims to provide its 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.
The Company receives income from the lease rentals paid by
Emirates pursuant to the Lease. The Lease payments received by the
Company from Emirates cover repayment of the debt and all interest,
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.
Future dividend payments are anticipated to continue 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.
There can be no guarantee that dividends will be paid to
Shareholders and, if dividends are paid, as to the timing and
amount of any such dividend. There can also be no guarantee that
the Company will, at all times, satisfy the solvency test required
to be satisfied pursuant to section 304 of the Companies (Guernsey)
Law 2008 ("Guernsey Law") enabling the directors to effect the
payment of dividends.
Performance Overview
All payments by Emirates have to date been made in accordance
with the terms of the lease.
In accordance with the Distribution Policy the Company declared
four dividends of 2.25 pence per Ordinary Preference Share during
the financial year to 31 March 2014 and two dividends of 2.25 pence
per Ordinary Preference Share after the reporting period.
Return of Capital
If and when the Company is wound up (pursuant to a shareholder
resolution, including the liquidation resolution) the Company
intends to return to Shareholders the net capital proceeds upon the
eventual sale of the Asset subject to compliance with the relevant
laws (including any applicable requirements of the solvency test
contained therein).
Liquidation Resolution
Although the Company does not have a fixed life, the articles of
incorporation (the "Articles") require that the directors convene a
general meeting of the Company six months before the end of the
term of the Lease where an ordinary resolution will be proposed
that the Company proceed to an orderly wind-up at the end of the
term of the Lease and the directors will consider (and if
necessary, propose to Shareholders) alternatives for the future of
the Company, including re-leasing the Asset, or selling the Asset
and reinvesting the capital received from the sale of the Asset in
another aircraft.
I am very pleased to present shareholders with the Company's
third annual financial report, covering the period from 1 April
2013 until 31 March 2014 ("the Period") .
I am glad to report that during the Period the Company has
continued to perform well and declared quarterly dividends as
expected.
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 (the "Asset"),
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.
The Company's Asset Manager, Doric GmbH, continues to monitor
the lease and to report regularly to the Board. Nimrod Capital LLP,
the Company's Placing Agent as well as its Corporate and
Shareholder Advisory Agent, continues to liaise between the Board
and Shareholders, and to distribute quarterly fact sheets and
interim management statements.
During the calendar year 2013 overall global air traffic
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, and was mainly driven by solid economic growth in the
emerging regions. Less mature air travel markets continued to
expand significantly faster than the more mature ones. In general,
increasing air travel was consistent with the pick-up in economic
growth around the globe.
Emirates has also continued to perform well flying more
passengers than ever before carrying 44.5 million people to 142
destinations in 80 countries on six continents during the last
financial year 2013/14. Passenger load factors remain high and the
airline has ordered more wide bodied planes (including a further 50
A380's) to cope with its forecast increasing demand.
At the end of April 2014 the A380 had 10 operators with 128
planes in service. There were undelivered orders of some 195 A380s
at that point in time.
According to Airbus, until March 2014 the worldwide A380 fleet
had accumulated 1.3 million flight hours in close to 155,000
commercial flights. The number of passengers who flew aboard an
Airbus A380 was 55 million. Currently the A380 operates between 35
airports and every five minutes an A380 takes off or lands at these
destinations.
The Board recognise Emirates are the sole lessee of the Asset,
and in the event that Emirates default on the rental payments it is
unlikely the Company will be able to meet its targeted dividends
or, in the case of ongoing default, continue as a going concern. We
do not believe this is a likelihood at this moment in time given
the current and historical performance of Emirates and its current
financial position.
In economic reality, the Company has also performed well. Four
interim dividends were declared in the year and future dividends
are targeted to be declared and paid on a quarterly basis. However,
the financial statements do not, in the Board's view, properly
convey this economic reality due to the accounting treatments for
foreign exchange, rental income and finance costs.
International Financial Reporting Standards require that
transactions denominated in US Dollars (including, most
importantly, the cost of the aircraft) are translated into sterling
at the exchange rate ruling at the date of the transaction whilst
monetary items (principally the outstanding borrowings) are
translated at the rate prevailing on the reporting date. The result
is that the figures sometimes show very large mismatches which are
reported as unrealised foreign exchange differences.
On an on-going basis and assuming the lease and loan payments
are made as anticipated, such exchange differences do not reflect
the commercial substance of the situation in the sense that the key
transactions denominated in US Dollars are in fact closely matched.
Rental income received in US Dollars is used to pay loan repayments
due which are likewise denominated in US Dollars. US Dollar lease
rentals and loan repayments are furthermore fixed at the outset of
the Company's life and are very similar in amount and timing.
In addition to this, rental income receivable is credited evenly
to the Statement of Comprehensive Income over the planned life of
the Company. Conversely, the methodology for accounting for
interest cost means that the proportion of the loan repayments
which is treated as interest, and is debited to the Statement of
Comprehensive Income, varies over the course of the loan with a
higher proportion of interest expense recognised in earlier periods
- so that the differential between rental income and interest cost
(as reported in the Statement of Comprehensive Income) reduces over
the course of 12 years. In reality however the amount of rental
income is fixed so as to closely match the interest and principal
components of each loan repayment instalment and allow for payments
of operating costs and dividends.
An annual review is required of the residual value of the Asset
as per IAS 16 Property, Plant and Equipment which defines residual
value as "the estimated amount that an entity would currently
obtain from disposal of the asset, after deducting the estimated
costs of disposal, if the asset were already of age and in the
condition expected at the end of its useful life." The Company's
estimation technique is to make reference to the current forecast
market value, not the amount that would currently be achieved, and
so this value is not a direct application of the IAS 16 definition
of residual value. The Company has engaged three internationally
recognised expert appraisers to provide the Company with third
party consultancy valuation services. The Company has also received
reports from Doric, who have confirmed it has no reason to question
the methodology used within the appraisal reports to determine the
residual value and that they do not believe the appraisals show a
fundamental movement in the anticipated residual value of the plane
since it was acquired. Thus Doric has advised they do not believe
the estimate of residual value need be changed for the Period. Upon
review of the professional advice they have received, the Board is
of the opinion that, the current estimate of the residual value of
the Asset is a reasonable approximation of the residual value
within the IAS 16 definition of residual value given a comparable
asset is not available.
On behalf of the Board, I would like to thank our service
providers for all their help and assistance and all shareholders
for their continued support of the Company.
Charles Wilkinson
Chairman
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.
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 March 2014, a total
of 2,819 flight cycles were registered. Total flight hours were
23,573. 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 Doric Nimrod Air One Limited ("the Company"). 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 programme 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 prevent future failures 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". In May 2013 the Company took ownership of a new engine
(P550349) that EA agreed to replace in exchange for
the damaged one.
The A380 (MSN 016) owned by the Company visited Auckland, London
Heathrow, Hong Kong, Manchester, Moscow, Toronto and Sydney during
the financial year ended on 31 March 2014.
1. 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) every 24 months or 12,000 flight
hours, whichever comes first. 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.
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.
EASA released its latest Airworthiness Directive in May 2013,
outlining which modification need to be made and the respective
compliance terms. The wing rib feet modifications 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 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 4 February 2014 and was completed on 28 March 2014. The
modification works were being conducted by Sabena Technics (in
Bordeaux, France).
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 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 firm
start into the year 2014. RPKs in the first quarter of the current
calendar year increased by 5.6% above the same period the year
before, but stagnated in March compared to February. In general,
accelerating air travel markets during the last months are
consistent with a pick-up in economic growth across the globe.
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 the first
quarter of 2014 traffic in the Middle East increased by 13.3%
compared to the same period the year before. At the lower end North
America has been replaced by Africa where RPKs contracted by
0.5%.
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.
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 year-end order backlog
increased to 5,559 aircraft with a cumulative 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
Emirates announced its 26(th) consecutive year of profit and
company-wide growth for the financial year ended on 31 March 2014,
despite competitive pressure and a global economic environment that
is only slowly recovering.
Revenue reached a record high of USD 22.5 billion, up by 13%
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 regions with
USD 6.5 billion, up 14.1% from 2012/2013. Gulf and Middle East (up
16.6% to USD 2.3 billion), Europe (up 16.3% to USD 6.4 billion) and
Africa (up 15.1% to USD 2.1 billion) saw the most significant
growth rates, reflecting new destinations as well as increased
frequency and capacity to these regions.
The airline posted a net profit of USD 887 million, representing
an increase of 43% over last year's results. With a share of nearly
40% fuel remains the largest operating cost category. Compared to
last financial year, the average price of jet fuel was slightly
lower relieving the carrier's bottom line. Due to the growing fleet
Emirates' fuel bill increased by 10% to reach USD 8.4 billion.
Total operating costs showed a smaller increase (+11.5%) than the
revenues (+13%) in the financial year 2013/2014 resulting in a
profit margin of 3.9%.
As of 31 March 2014 the balance sheet total amounted to USD 27.7
billion, an increase of 7.2% from the previous year. Total equity
increased by 10.6% to USD 6.9 billion with an equity ratio of
25.1%. The equity ratio is defined as total equity/balance sheet
total. The current ratio was 0.84; therefore the airline would be
able to meet most of 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 8.6
billion and revenues received in advance from passenger and freight
sales (USD 3.1 billion). As of 31 March 2014 the carrier's cash
balance reached USD 4.5 billion.
Emirates continued with its growth plan and saw the largest
increase in Available Tonne Kilometres (ATKs) in the airline's
history during the financial year 2013/2014.
Between April 2013 and March 2014, as compared to the prior
financial year, the airline's ASKs increased by 14.6%. Measured in
RPKs passenger traffic grew by 14.2%, resulting in an average
passenger load factor of 79.4%. This is slightly below the 79.7%
reached in the period before. A record 44.5 million passengers flew
with Emirates between April 2013 and March 2014 - an increase of
13.1% compared to the previous period.
The airline received 24 widebody aircraft, including 16 Airbus
A380s, 6 Boeing 777-300ER and 2 Boeing 777F freighters during the
financial year ended on 31 March 2014. At the Dubai Air Show in
November 2013 Emirates signed contracts with Airbus and Boeing for
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. By that year Emirates expects to have more than 250
widebody aircraft in the air serving some 70 million passengers a
year.
The airline 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 30 April 2014 Emirates has 213 widebody aircraft in
operation, with firm orders for another 224 aircraft, including 93
A380s, 58 Boeing 777-300ER and 120 Airbus A350. The airline
operates the world's largest fleets of Airbus A380s and Boeing
777-300ER. During the financial year 2013/2014 Emirates raised USD
3.3 billion in new funding mainly to secure its on-going fleet
expansion. The carrier benefited from a variety of financing
structures to meet its refinancing needs, including a second
Enhanced Equipment Trust Certificate (EETC) issue by a lessor
(Doric Nimrod Air Three Ltd.).
With its increased fleet and resources, Emirates launched nine
new destinations during the last financial year. In May 2014
Emirates operated flights to 141 destinations in 80 countries on
six continents. During the calendar year 2013 the airline's fleet
travelled more than 751 million kilometres, circling the globe over
18,000 times and carrying over 43 million passengers. As of May
2014 the airline operates nearly 3,200 flights per week.
In the current financial year the airline envisage adding at
least another five passenger routes including Abuja (Nigeria),
Brussels, Chicago, Kano (Nigeria) and Oslo.
Source: Ascend, Emirates
4. Aircraft - A380
At the end of April 2014 Emirates had a fleet of 47 A380s which
serve 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, even though it
was Emirates' first destination when the airline commenced flights
to the UK back in 1987. Furthermore Emirates announced an upgrade
of service from Dubai to Kuwait with the introduction of the A380
starting in July 2014. Dallas is scheduled to complement the list
of A380 destinations in October 2014. The carrier remains by far
the largest A380 operator in terms of aircraft number. Emirates has
an additional 93 aircraft of this type on firm order.
At the end of April 2014, the global A380 fleet consisted of 128
planes that were in service with ten operators: Emirates (47 A380
aircraft), Singapore Airlines (19), Qantas (12), Deutsche Lufthansa
(11), Air France (9), Korean Airways (8), China Southern Airlines
(5), Malaysia Airlines (6), Thai Airways (6) and British Airways
(5). There are 195 outstanding orders for Airbus A380s at the end
of April 2014 as yet undelivered. Qantas, Air France and Virgin
Atlantic have announced various postponements from the original
delivery dates of their part of these unfilled orders, which
concerns 16 of these aircraft . Deutsche Lufthansa has cancelled
options to buy three aircraft following a fleet planning revision
in 2013.
According to the manufacturer, a number of new operators will
receive their 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.
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.
In February 2014 Doric Lease Corp Management Limited, which had
been formed in 2013, changed its name to Amedeo Management Limited.
Amedeo aims to be a dedicated and actively managed widebody
aircraft acquisition and leasing business , with a specialised
focus on the A380. It confirmed an order for twenty A380s at the
Singapore Air Show in February 2014 with the aim of leasing these
planes on to commercial airlines.
According to Airbus, the worldwide A380 fleet has accumulated
around 1.3 million flight hours in close to 155,000 commercial
flights until March 2014. The number of passengers flying aboard an
Airbus A380 to date is approximately 55 million.
Source: Airbus, Ascend, Bloomberg, Emirates
Charles Edmund Wilkinson - Chairman (Age 71)
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.
Charles is currently Chairman of Doric Nimrod Air Three Limited
and Chairman of the Audit Committee of Doric Nimrod Air Two
Limited, and a Director of Premier Energy and Water Trust PLC (a
listed investment trust), and of Landore Resources Ltd, a Guernsey
based mining exploration company. He is resident in Guernsey.
Norbert Bannon (Age 65)
Norbert Bannon is chairman of a large UK DB pension fund, a
major Irish DC pension scheme and is a Director of and advisor to a
number of other financial companies . He is on the board of the UK
subsidiary of a major Canadian bank and is Chairman of Doric Nimrod
Air Two Limited and Chairman of the audit committee of Doric Nimrod
Air Three Limited.
He has extensive experience in international finance having been
CEO of banks in Singapore and New York. He was CEO of Ireland's
largest venture capital company and was Finance Director and Head
of Risk at AIB Capital Markets, which he left in 2002. He has
worked as a consultant on risk issues internationally.
He earned a degree in Economics from Queens University Belfast,
studied at Stanford Graduate School of Business and is a Chartered
Accountant.
Geoffrey Alan Hall (Age 65)
Geoffrey Hall has extensive experience in asset management,
having previously been Chief Investment Officer of Allianz
Insurance plc, a major UK general insurance company and an
investment manager at HSBC Asset Management, County Investment
Management, and British Railways Pension Funds. Geoffrey is also
currently a Director of Doric Nimrod Air Two Limited and Doric
Nimrod Air Three Limited.
Geoffrey earned his masters degree in Geography at University of
London. He is an associate of the UK Society of Investment
Professionals (CFA Institute of the UK).
John Le Prevost (Age 62)
John Le Prevost is the Chief Executive Officer of Anson Group
Limited and Chairman of Anson Registrars Limited (the Company's
Registrar). He has spent 30 years working in offshore trusts and
investment business during which time he was Managing Director of
County NatWest Investment Management (Channel Islands) Limited,
Royal Bank of Canada's mutual fund company in Guernsey and Republic
National Bank of New York's international trust company. John is a
Director of BlueCrest AllBlue Fund Limited, a FTSE 250 listed fund
of hedge funds and of Guaranteed Investment Products I PCC Limited,
Guernsey's largest protected cell company. He is a Director of a
number of other companies associated with Anson Group's business as
well as being a trustee of the Guernsey Sailing Trust. John is also
currently a Director of Doric Nimrod Air Two Limited and Doric
Nimrod Air Three Limited. He is resident in Guernsey.
Management and the Delegation of Functions
The directors, whose details are set out in pages 15 to 16 are
responsible for reviewing the business affairs of the Company in
accordance with the Articles and the Prospectus and have overall
responsibility for the Company's activities including all business
decisions, review of performance and authorisation of
distributions. All of the directors are independent and
non-executive. The Company has delegated management of the Asset to
Doric GmbH ("Doric" or the "Asset Manager"), which is a Company
incorporated in Germany and regulated by the Bundesanstalt für
Finanzdienstleistungsaufsicht, as outlined in more detail below
under the heading Asset Manager. The directors delegate secretarial
and administrative functions to JTC Fund Managers (Guernsey)
Limited ("JTC" or the "Secretary & Administrator") which is a
company incorporated in Guernsey and licensed by the Guernsey
Financial Services Commission for the provision of administration
services.
Asset Manager
Doric has been appointed by the Company to provide asset
management services to the Company. Pursuant to the Asset
Management Agreement, Doric will: (i) monitor Emirates' and any
subsequent lessees' performance of its obligations under the Leases
and any subsequent leases respectively (which shall include the
obligations relating to the maintenance of insurance cover); (ii)
provide the Company with information regarding alternatives with
respect to any potential sale or re-lease of the Assets; (iii)
carry out mid-lease inspections of the Assets; (iv) provide the
Company with asset monitoring reports describing the state and any
material changes to the state of the Assets; and (v) liaise, as and
when necessary, with lenders, on all matters relating to the loan,
as required.
Doric has further undertaken that it will dedicate sufficient
time and resources as the Company reasonably believes is required
from time to time to fulfil any contractual arrangements it enters
into with the Company.
Doric Partners LLP ("Doric LLP"), a limited liability
partnership incorporated in England and Wales and Amedeo Services
(UK) Limited ("Amedeo") have been appointed by the Company,
pursuant to the Amended Liaison Services Agreement to act as
Liaison agents. Doric LLP has been appointed to (i) coordinate the
provision of
services by Doric to the Company under the Asset Management
Agreement; and (ii) facilitate communication between the Company
and Doric.
Doric is the holding company of the Doric Group of companies and
provides for the fund administration and asset management services
of the Doric Group.
The Doric Group is a leading provider of products and services
for investors in the fields of aviation, shipping, renewable energy
and real estate. The Doric Group has an international presence,
with offices in Germany, the United States and the United Kingdom,
and a multinational team which offers access to extensive
relationship networks and expert asset knowledge. One of the firm's
core competencies is its asset management expertise, which is an
integrated part of all Doric transactions and a cornerstone of the
business.
The Doric Group is also a member of ISTAT, the International
Society of Transport Aircraft Trading.
The aircraft portfolio currently managed by the Doric Group is
valued at US$7 billion and consists of 36 aircraft under
management. These aircraft include commercial jet airliners ranging
from the Airbus A320 family, through the Boeing 777 and Airbus
A330/A340 family, up to the Airbus A380.
The Doric Group has 22 Airbus A380 aircraft currently under
management and is therefore considered well positioned to perform
the technical asset management of this aircraft type.
Liaison Agent
Amedeo Services (UK) Limited has been appointed by the Company,
pursuant to the Liaison Services Agreement, to, where requested by
the Board, participate in Board meetings, assist in the review of
all asset management matters and provide advice in all asset
management related matters. Amedeo Services (UK) Limited is part of
the Amedeo group of companies.
The Amedeo group is primarily involved in the operating lease
and management of widebody aircraft. In February 2014 at the
Singapore Air Show, Amedeo confirmed an order for twenty A380
aircraft. Amedeo is a member of ISTAT, the International Society of
Transport Aircraft Trading.
Corporate and Shareholder Adviser
Nimrod Capital LLP (which is authorised by the Financial Conduct
Authority) has been appointed as the Corporate and Shareholder
adviser by the Company.
Nimrod Capital LLP was founded in 2008 as an entirely
independent organisation which specialises in generating and
sourcing interesting investment funds, themes and solutions managed
by experts in their fields for the professional investor
marketplace. It has launched eight listed investment companies
since its formation and it also provides investment, marketing,
distribution and advisory services to investment companies and
their Board and managers.
Nimrod, together with Doric and Emirates, was awarded the
"Innovative Deal of the Year 2010" by the international aviation
magazine Airfinance Journal in recognition of the innovative
financing of an Airbus A380 leased to Emirates by the first stock
market listed aircraft investment vehicle Doric Nimrod Air One
Limited.
Secretary & Administrator
Formed in 1987, JTC Group is a multi-jurisdictional, independent
provider of corporate, fund and private client services, with
significant global experience and GBP23.8 billion (US$39.7bn)
assets under administration.
With a highly qualified and multilingual workforce of nearly 300
employees, JTC Group operates from 18 jurisdictions around the
world with offices in Argentina, Brazil, BVI, Guernsey, Jersey,
Luxembourg, New Zealand, Switzerland, UK and USA (a representative
office), as well as alliance offices in the Cayman Islands, Cyprus,
Hong Kong, Indonesia, Labuan, Malaysia, Netherlands and
Singapore.
JTC Fund Managers (Guernsey) Limited ("JTC") is a Guernsey
incorporated company and provides administration and secretarial
services to the Company pursuant to an Administration and
Secretarial Agreement. In such capacity, JTC is responsible for the
general secretarial functions required by the law and ensures that
the Company complies with its continuing obligations as well as
advising on the corporate governance requirements and
recommendations as applicable to a company listed on the CISE and
admitted to trading on the SFM. JTC was formerly known as Anson
Fund Managers Limited which was acquired by JTC Group in December
2013.
The Administrator is also responsible for the Company's general
administrative functions such as the calculation of the net asset
value of Shares, the maintenance of accounting and statutory
records and any reporting required under the Foreign Account Tax
Compliance Act of the United States of America.
Review
The Board keeps under review the performance of the Asset
Manager, Liaison Agent, Corporate and Shareholder Adviser and the
Secretary & Administrator and the powers delegated to each
service provider. In the opinion of the Board the continuing
appointments of the service providers on the terms agreed is in the
best interest of shareholders as a whole.
A description of important events which have occurred during the
Period, their impact on the performance of the Company as shown in
the financial statements and a description of the principal risks
and uncertainties facing the Company are given in the Chairman's
Statement, Asset Managers Report and the notes to the financial
statements contained on pages 47 to70 and are incorporated here by
reference.
Going Concern
The Company's principal activities are set out within the
Company Overview on page 2. The financial position of the Company
is set out on pages 43 to 46. In addition, Note 17 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 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.
Responsibility Statement
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, as adopted by the
European Union, give a fair, balanced and understandable view of
the assets, liabilities, financial position and profits of the
Company and performance of the Company; and
(b) This Management Report includes or incorporates by reference
a fair review of the development and performance of the business
and the position of the Company, together with a description of the
principal risks and uncertainties that it faces; and
(c) The Annual Report taken as a whole is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Company's performance, business model
and strategy; and
(d) The Annual Report includes information required by the CISE
and for ensuring the Company complies with the relevant provisions
of the Disclosure and Transparency Rules of the UK Listing
Authority.
Charles Wilkinson Norbert Bannon
Chairman Chairman of the Audit Committee
The directors present their report and financial statements of
the Company for the period from 1 April 2013 to 31 March 2014 (the
"Period").
Principal Activities
The principal activity of the Company is to acquire, lease and
then sell a single aircraft. The directors do not envisage any
change in these activities for the foreseeable future. A
description of the activities of the Company in the period under
review is given in the Asset Manager's Report on pages 8 to 14.
Status
The Company is a Guernsey domiciled company the Ordinary
Preference Shares of which are admitted to the Official List of the
CISE and to trading on SFM. Its registered number is 52484. The
Company operates in accordance with the Companies (Guernsey) Law,
2008, as amended (the "Law").
Results and Dividends
The results of the Company for the Period are set out on pages
43 to 46.
The Company declared the following dividends during the period
from 1 April 2013 to date as follows:
Quarter End Announcement Dividend per
Date Share (pence)
Final interim for
financial period
ended 31 March 2013 31 March 2013 2 April 2013 2.25
First interim for
financial period
ended 31 March 2014 30 June 2013 2 July 2013 2.25
Second interim for
financial period 30 September
ended 31 March 2014 2013 1 October 2013 2.25
Quarter End Announcement Dividend per
Third interim for Date Share (pence)
financial period
ended 31 March 2014 31 December 2013
7 January 2014 2.25
Final interim for
financial period
ended 31 March 2014 31 March 2014 1 April 2014 2.25
First interim for
financial period
ended 31 March 2015 30 June 2014 1 July 2014 2.25
The Company aims to continue to pay quarterly dividends of 2.25
pence per Ordinary Preference share, in line with the distribution
policy. There is no guarantee that any future dividends will be
paid.
Directors
The directors in office are shown on pages 15 to 16, and all
directors remain in office as at the date of signature of these
financial statements. Mr John Le Prevost was appointed as
non-executive Director of the company effective 13 January 2014.
Further details of the Director's responsibilities are given on
pages 26 to 32.
Anson Registrars Limited is the Company's Registrar, Transfer
Agent and Paying Agent. John Le Prevost is a Director and
controlling shareholder of Anson Group Limited, the holding company
of Anson Registrars Limited.
Other than the above no Director has a contract of service with
the Company, nor are any such contracts proposed.
The following interests in shares of the Company are held by
directors and their connected persons:
Number of Ordinary Preference
Shares
Charles Wilkinson 100,000
Geoffrey Hall 45,000
Other than the above share holdings and Mr Le Prevost's interest
in Anson Registrars Limited, none of the Directors nor any persons
connected with them had a material interest in any of the Company's
transactions, arrangements or agreements during the period and none
of the Directors has or has had any interest in any transaction
which is or was unusual in its nature or conditions or significant
to the business of the Company, and which was effected by the
Company during the reporting period.
At the date of this report, there are no outstanding loans or
guarantees between the Company and any Director.
There were no material related party transactions which took
place in the financial period, other than those disclosed in the
Directors' Report and at Note 20 to the financial statements.
Substantial Shareholdings
The Company has been notified of the following substantial
interests in accordance with Chapter 5 of the Disclosure and
Transparency Rules, in the Company's share capital.
There have been no material changes in the below list of
substantial holdings since 24 July 2014, being the latest
practicable date prior to publication of this report.
Registered Holder % of Total Voting Number of Ordinary
Rights Shares
BNY (OCS) Nominees Limited 13.46% 5,714,000
HSBC Global Custody Nominee
(UK) Limited 10.60% 4,500,000
State Street Nominees Limited 12.43% 5,274,838
Nortrust Nominees Limited 25.84% 10,967,500
Corporate Governance
Statement of Compliance with the UK Corporate Governance
Code
As a Guernsey company with shares admitted to the SFM, the
Company is not obliged to adopt the UK Corporate Governance Code.
The Company has, however, voluntarily committed to comply with the
UK Corporate Governance Code. A copy of the UK Corporate Governance
Code is available for download from the Financial Reporting
Council's web-site (www.frc.org.uk). Companies which report against
the UK Corporate Governance Code are also deemed to meet the
requirements of the GFSC Code.
Save for departing from the requirements to: (i) have a chief
executive (since the Company does not have any executive
directors); (ii) have a senior independent Director (since the
Company considers that each Director who is not Chairman can
effectively fulfil this function); (iii) have a remuneration
committee (given the small size of the exclusively non-executive
and independent Board); (iv) have a nomination committee (given the
small size of the exclusively non-executive and independent Board);
(v) appoint the directors for a term of six years (given the term
of the Leases is twelve years) and (vi) have an internal audit
function (as the Company has no executives or employees of its
own), the Company is not presently aware of any departures from the
UK Corporate Governance Code.
Board Responsibilities
The Board comprises four directors, who meet quarterly to
consider the affairs of the Company in a prescribed and structured
manner. Biographies of the directors appear on pages 15 to 16
demonstrating the wide range of skills and experience they bring to
the Board. All the Directors are non-executive and independent. The
Board regularly reviews the balance, knowledge and effectiveness of
the Board, to identify if any additional experience or skills are
needed and to ensure that the current directors have sufficient
available time to undertake the tasks required and remain
independent. When considering the composition of the Board the
directors will be mindful of diversity and meritocracy.
To date no director of the Company has resigned. Directors are
able and encouraged to provide statements to the Board of their
concerns and ensure that any items of concern are recorded in the
Board minutes.
All directors receive an annual fee and there are no share
options or other performance related benefits available to them.
All directors are paid a fee of GBP15,000 per annum and the
Chairman is paid an additional fee of GBP5,000 per annum. The
Chairman of the Audit Committee is paid an additional GBP3,000 per
annum.
Board meetings are held at least four times per year to consider
the business and affairs of the Company for the previous quarter,
at which meetings the directors also consider and if thought
suitable, approve the payment of a dividend in accordance with the
Company's Distribution Policy. A further two regular meetings are
held each year to consider and approve the Company's financial
statements as well as to consider the business and affairs of the
Company during the preceding financial period and going forward
thereafter.
Between these meetings the Board keeps in contact by email and
telephone as well as meeting to consider specific matters of a
transactional nature. Additionally the directors hold strategy
meetings with relevant advisors in attendance as appropriate.
The directors are kept fully informed by the Asset Manager and
Secretary of all matters that are relevant to the business of the
Company and should be brought to the attention of the directors
and/or Shareholders. All directors have direct access to the
Secretary and the Secretary is responsible for ensuring that Board
procedures are followed and that there are good information flows
both within the Board and between Committees and the Board. The
directors also have access to the advice and services of the Asset
Manager and Corporate and Shareholder Advisory Agent and may also,
in the furtherance of their duties, take independent professional
advice at the Company's expense.
During the Period the Board met six times per the regular
schedule of meetings outlined above. The director's attendance is
summarised below:-
Director Board Meetings during
the Period and/or
since appointment
------------------- -----------------------
Charles Wilkinson 5 of 6
------------------- -----------------------
Norbert Bannon 6 of 6
------------------- -----------------------
Geoffrey Hall 6 of 6
------------------- -----------------------
John Le Prevost 0 of 1
------------------- -----------------------
Audit Committee
The directors are all members of the Audit Committee, with
Norbert Bannon acting as Chairman. The Audit Committee has regard
to the Guidance on Audit Committees published by the Financial
Reporting Council in September 2012. The Audit Committee examines
the effectiveness of the Company's and service provider internal
control systems as appropriate, the annual and half-yearly reports
and financial statements, the auditor's remuneration and
engagement, as well as the auditor's independence and any non-audit
services provided by them.
The Audit Committee considers the nature, scope and results of
the auditor's work and reviews annually prior to providing a
recommendation to the Board on the re-appointment or removal of the
auditor. When evaluating the external auditor the Audit Committee
has regard to a variety of criteria including industry experience,
independence, reasonableness of audit plan, ability to deliver
constructive criticism, effectiveness of communication with Board
and the Company's service providers, quality control procedures,
management of audit process and added value beyond assurance in
audit opinion.
Auditor independence is maintained through limiting non-audit
services to specific audit-related work that falls within defined
categories. For example certain agreed upon procedures in respect
of the company's calculations should it undertake a C share
conversion, the provision of advice on the application of IFRSor
formal reports for any Stock Exchange purposes. All engagements
with the auditor are subject to pre-approval from the Audit
Committee and fully disclosed within the Annual Financial Report
for the relevant period. A new lead audit partner is appointed
every five years and the Audit Committee ensures the auditor has
appropriate internal mechanisms in place to ensure its
independence. The Audit Committee has recommended to the Board that
the re-appointment of Deloitte LLP as the Company's external
auditor be proposed to Shareholders at the 2014 Annual General
Meeting. The Audit Committee will consider arranging for the
external audit contract to be tendered in 2022 (being 10 years from
the initial appointment) with the aim of ensuring a high quality
and effective audit.
The Audit Committee meets at least twice annually, shortly
before the Board meets to consider the Company's half-yearly and
annual financial reports, and reports to the Board with its
deliberations and recommendations and also has an annual planning
meeting with the Auditor. The Audit Committee operates within
clearly defined terms of reference based on the Institute of
Chartered Secretaries and Administration recommended terms and
provides a forum through which the Company's external auditor
reports to the Board. The Audit Committee can request information
from the Company's service providers with the majority of
information being directly sourced from the Asset Manager,
Secretary & Administrator and the external auditor. The terms
of reference of the Audit Committee are available upon request.
Each year the Board examines the Audit Committee's performance
and effectiveness, and ensures that its tasks and processes remain
appropriate. Key areas covered included the clarity of the
committee's role and responsibilities, the balance of skills among
its members and the effectiveness of reporting its work to the
Board. The Board is satisfied that all members of the Committee
have relevant financial experience and knowledge and ensure that
such knowledge remains up to date.
Overall the Board considered the Audit Committee had the right
composition in terms of expertise and has effectively undertaken
its activities and reported them to the Board during the year.
Internal Control and Financial Reporting
The Board is responsible for the Company's system of internal
control and for reviewing its effectiveness. The Board confirms
that there is an on-going process for identifying, evaluating and
monitoring the significant risks faced by the Company.
The internal control systems are designed to meet the Company's
particular needs and the risks to which it is exposed. Accordingly,
the internal control systems are designed to manage rather than
eliminate the risk of failure to achieve business objectives and by
their nature can only provide reasonable and not absolute assurance
against misstatement and loss.
The Board on an annual basis conducts a full review of the
Company's risk management systems including consideration of a risk
matrix which covers various areas of risk including corporate
strategy, accuracy of published information, compliance with laws
and regulations, relationships with service providers and business
activities.
Asset Management services are provided by Doric GmbH.
Administration and Secretarial duties for the Company are performed
by JTC.
The directors of the Company clearly define the duties and
responsibilities of their agents and advisors. The appointment of
agents and advisers is conducted by the Board after consideration
of the quality of the parties involved and the Board monitors their
on-going performance and contractual arrangements. The Board also
specifies which matters are reserved for a decision by the Board
and which matters may be delegated to its agents and advisers.
Bribery
The directors have undertaken to operate the business in an
honest and ethical manner and accordingly take a zero-tolerance
approach to bribery and corruption. The key components of this
approach are implemented as follows:
-- The Board is committed to acting professionally, fairly and
with integrity in all its business dealings and relationships.
-- The Company will implement and enforce effective procedures to counter bribery.
-- The Company requires all its service providers and advisors
to adopt equivalent or similar principles.
Dialogue with Shareholders
All holders of Ordinary Preference Shares in the Company have
the right to receive notice of, and attend, the general meetings of
the Company, during which members of the Board will be available to
discuss issues affecting the Company.
The primary responsibility for Shareholder relations lies with
the Company's Corporate and Shareholder Advisory Agent. In
addition, the directors are always available to enter into dialogue
with Shareholders and the Chairman is always willing to meet major
shareholders as the Company believes such communication to be
important. The Company's directors can be contacted at the
Company's registered office or via the Secretary.
Statement of Directors' Responsibilities
The directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations.
The Law requires the directors to prepare financial statements
for each financial year. Under the Law they have elected to prepare
the financial statements in accordance with International Financial
Reporting Standards ("IFRS") as adopted by the EU and applicable
law.
The financial statements are required by law to give a true and
fair view of the state of affairs of the company and of the profit
or loss of the Company for that period.
In preparing these financial statements, the directors are
required to:
-- Ensure the Annual report taken as a whole is fair,
transparent and understandable and provides information necessary
for shareholders to assess the Company's performance;
-- properly select and apply accounting policies;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- provide additional disclosures when compliance with the
specific requirements in IFRSs are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance; and
-- make an assessment of the Company's ability to continue as a going concern.
The directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure that
the financial statements comply with the Law. They have general
responsibility for taking such steps as are reasonably open to them
to safeguard the assets of the Company and to prevent and detect
fraud and other irregularities.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in Guernsey governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Disclosure of information to the auditor
The directors who held office at the date of approval of this
Directors' Report confirm in accordance with the provisions of
Section 249 of the Law that, so far as they are each aware, there
is no relevant audit information of which the Company's Auditor is
unaware; and each director has taken all the steps that he ought to
have taken as a director to make himself aware of any relevant
audit information and to establish that the Company's Auditor is
aware of that information.
Auditor
Deloitte LLP have expressed their willingness to continue in
office as Auditor and the Audit Committee has recommended their
reappointment. A resolution proposing their reappointment will
therefore be submitted at the Company's forthcoming general
meeting.
Charles Wilkinson Norbert Bannon
Chairman of the Board Chairman of the Audit Committee
Signed on behalf of the Board on 2014
Director
MEMBERSHIP
Norbert Bannon - Chairman of the Audit Committee
Charles Wilkinson - Chairman of the Board
Geoffrey Hall - Director
John Le Prevost - Director
KEY OBJECTIVE
The provision of effective governance over (i) the
appropriateness of the Company's financial reporting including the
adequacy of related disclosures, (ii) the performance of the
Company's external auditor, (iii) monitoring of the systems of
internal controls operated by the Company and (iv) the Company's
principal service providers and the management of the Company's
regulatory compliance activities.
RESPONSIBILITIES
-- reviewing the Company's financial results announcements and
financial statements and monitoring compliance with relevant
statutory and listing requirements;
-- reporting to the Board on the appropriateness of the
Company's accounting policies and practices including critical
accounting policies and practices;
-- advising the Board on whether the annual report and accounts,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Company's
performance, business model and strategy;
-- overseeing the relationship with the external auditor;
-- monitoring the systems of internal controls operated by the
Company and by the Company's principal service providers; and
-- reviewing the effectiveness of the external audit process.
COMMITTEE MEETINGS
We meet at least twice a year. We report to the Board as part of
a separate agenda item, on our activities and on matters of
particular relevance to the Board in the conduct of their work.
During the Period we formally reported to the Board on two
occasions.
MAIN ACTIVITIES OF THE COMMITTEE DURING THE YEAR
We assisted the Board in carrying out its responsibilities in
relation to financial reporting requirements, compliance and the
assessment of internal controls. We also managed the Company's
relationship with the external auditor.
FAIR, BALANCED AND UNDERSTANDABLE
Following the publication of the revised version of the UK
Corporate Governance Code, which applies to Financial Years
commencing on or after 1 October 2012, the Board requested that we
advise them on whether we believe the annual report and accounts,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Company's
performance, business model and strategy.
FINANCIAL REPORTING AND SIGNIFICANT ISSUES
Our primary role in relation to financial reporting is to
review, with our service providers and the external auditor, the
appropriateness of the half-year and annual financial statements,
the significant financial reporting issues and accounting policies
and disclosures in the financial statements. The Committee has
considered the key audit risks identified as being significant to
the 2014 accounts and the most appropriate treatment and disclosure
of any new significant issues identified during the audit and
half-year reviews as well as any recommendations or observations
made by the external auditor. To aid our review we considered
reports prepared by external service providers, including Doric and
Nimrod, and reports from the external auditor on the outcome of
their annual audit. The significant issues considered by the
Committee in relation to the 2014 accounts and how these were
addressed are detailed below:
Significant issues for the How the Committee addressed these
Period significant issues
----------------------------------- -------------------------------------------------
Residual value of aircraft
assets
The Company has engaged three internationally
The non-current asset of recognised expert appraisers to provide
the Company comprises a the Company with third party consultancy
single Airbus A380 aircraft valuation services. All appraisers
("the Asset"). An annual have used similar methodologies to
review is required of the derive their opinions on the current
residual value of the Asset market values and future values.
as per IAS 16 Property, In the absence of used sales data
Plant and Equipment, which for the Asset, appraisers are heavily
defines residual value as reliant on databases containing historical
"the estimated amount that data points of aircraft sales relating
an entity would currently to large commercial aircraft. Interpretation
obtain from disposal of of historical data is the basis for
the asset, after deducting the current market value and provides,
the estimated costs of disposal, together with the expected developments
if the asset were already in the future, the foundation for
of an age and in the condition their opinions on future values.
expected at the end of its Furthermore, the appraisers' valuations
useful life." The Company's take into account specific technical
estimation technique is and economic developments as well
to make reference to the as general future trends in the aviation
current forecast market industry and the macro-economic outlook.
value, not an estimate of Compared to the previous financial
the amount that would currently period, the view expressed by the
be achieved, and so this appraisers on the market for Airbus
is not a direct application A380 aircraft and their value retention
of the IAS 16 definition. during the future years has not materially
This approach has been taken changed.
because a current market
value in today's prices The Committee has also received reports
for a twelve year old A380 from Doric. Doric has confirmed it
does not exist at the reporting has no reason to question the methodology
date. used to determine the residual value
and that they do not believe the
appraisals show there has been a
fundamental movement in the anticipated
residual values of the planes since
they were acquired. Thus Doric has
advised that the estimate of residual
value does not need to be changed
for the Period.
Upon review of the advice they have
received from Doric and the appraisers,
the Committee is of the opinion that,
the current estimate of the residual
valuation of the Asset is a reasonable
approximation of the residual value
within the IAS 16 definition given
a comparable asset is not available.
----------------------------------- -------------------------------------------------
Recording foreign exchange In assessing foreign exchange, the
gains/losses Committee has considered the issue
at great length and are of the opinion
International Financial that, on an on-going basis and assuming
Reporting Standards require the lease and loan payments are made
that transactions denominated as anticipated, such exchange differences
in US Dollars (including, do not reflect the commercial substance
most importantly, the cost of the situation in the sense that
of the Asset) are translated the key transactions denominated
into Sterling at the exchange in US Dollars are in fact closely
rate ruling at the date matched. Rental income received in
of the transaction whilst US Dollars is used to pay loan repayments
monetary items (principally due which are likewise denominated
the outstanding borrowings) in US Dollars. US Dollar lease rentals
are translated at the rate and loan repayments are furthermore
prevailing on the reporting fixed at the outset of the Company's
date. The resultant figures life and are very similar in amount
sometimes show very large and timing.
mismatches which are reported
as unrealised foreign exchange The Committee concluded that the
differences. matching of the lease rentals to
settle loan repayments therefore
During the Period the Company mitigates risks by foreign exchange
has recorded significant fluctuations.
foreign exchange rate gains
due to the appreciation The Committee has carefully considered
of Sterling against US Dollars the disclosure in Note 17 (b) to
and the consequent reduction the financial statements to ensure
in the Sterling value of that the reality of the Company's
the US Dollar denominated foreign exchange risk exposure is
debt. properly explained.
----------------------------------- -------------------------------------------------
Risk of default by Emirates The Committee received quarterly
on lease rentals receivable reports from Doric which comment
on the performance of Emirates. Doric
Emirates are the sole lessee have advised that Emirates has continued
of the Asset. Should Emirates to perform well, flying more passengers
default on the rental payments, than ever before. Passenger load
it is unlikely the Company factors remain high and the airline
will be able to meet its has ordered more wide bodied planes
targeted dividends or, in (including a further 50 A380's) to
the case of ongoing default, cope with its forecast increasing
continue as a going concern. demand.
The Committee concluded that it would
continue to receive quarterly reports
from Doric on the performance of
Emirates and would continue to monitor
Emirate's overall performance.
The Committee has carefully considered
the disclosure in Note 17 (c) to
the financial statements to ensure
that this concentration of credit
risk is properly reflected
----------------------------------- -------------------------------------------------
GOING CONCERN
After making enquiries, the Committee has a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. The Committee
believe the Company is well placed to manage its business risks
successfully as the interest on the Company's loan has been fixed
and the fixed rental income under the operating lease means that
the rents 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 Committee has adopted the going
concern basis in preparing the financial information.
INTERNAL CONTROL
In November 2013 the Company's appointed Administrator, Anson
Fund Managers Limited, was acquired by JTC Group Limited and the
Administrator changed its name to JTC Fund Managers (Guernsey)
Limited. The Committee has made due enquiry of the purchaser about
the implications of this acquisition on the systems and controls
affecting the administration of the Company's affairs. We were
informed that, for the foreseeable future, the same staff, systems
and controls will be used in the continuing administration of the
Company's affairs.
INTERNAL AUDIT
The Company has no employees and operates no systems of its own,
relying instead on the employees and systems of its external
service providers. The Board has therefore taken the decision that
it would be of insufficient benefit for the Company to engage an
internal auditor.
EXTERNAL AUDIT
The effectiveness of the external audit process is dependent on
appropriate audit risk identification at the start of the audit
cycle. We receive from Deloitte a detailed audit plan, identifying
their assessment of the key risks. For the Period the primary risks
identified were in respect of valuation and ownership of the
aircraft; the recording of lease rental income; and accounting for
fixed rate debt using the effective interest rate method.
Using our collective skills we assess the effectiveness of the
audit process in addressing the matters raised through the
reporting we receive from Deloitte at the year-end. In particular
we formally appraise Deloitte against the following criteria:
-- Independence
-- Ethics and Conflicts
-- Knowledge and Experience
-- Challenge
-- Promptness
-- Cost
-- Overall quality of service
In addition we also seek feedback from the Administrator on the
effectiveness of the audit process.
For the Period, we were satisfied that there had been
appropriate focus on the primary areas of audit risk and assessed
the quality of the audit process to be good. The Committee
discussed their findings with Deloitte and agreed how future
external audits could be improved.
We hold meetings with the external auditor to provide additional
opportunity for open dialogue and feedback from the Auditor. If
felt necessary we meet with the external auditor without the
Administrator being present. Matters typically discussed include
the Auditor's assessment of business risks and management activity
thereon, the transparency and openness of interactions with the
Administrator, confirmation that there has been no restriction in
scope placed on them by the Administrator on the independence of
their audit and how they have exercised professional
scepticism.
APPOINTMENT AND INDEPENDENCE
We consider the reappointment of the external auditor, including
the rotation of the audit partner, each year and also assess their
independence on an ongoing basis.
The EU and Competition Commission have issued draft proposals in
respect of audit tendering and mandatory rotation of auditors that
are yet to be finalised. The Committee will continue to monitor
developments around these proposals and will formulate a policy in
respect to audit tendering and rotation at the appropriate
time.
The external auditor is required to rotate the audit partner
responsible for the audit every five years. The current lead audit
partner has been in place since October 2012.
Deloitte has been the Company's external auditor since October
2012. We have provided the Board with its recommendation to the
shareholders on the reappointment of Deloitte as external auditor
for the year ending 31 March 2015. Accordingly a resolution
proposing the reappointment of Deloitte as our auditor will be put
to the shareholders at the 2014 Annual General Meeting. However, we
keep this matter under review.
There are no contractual obligations restricting our choice of
external auditor. We continue to consider the audit tendering
provisions outlined in the revised UK Corporate Governance Code, of
which we are very supportive.
NON-AUDIT SERVICES
To further safeguard the objectivity and independence of the
external auditor from becoming compromised, we have a formal policy
governing the engagement of the external auditor to provide
non-audit services. No changes have been made to this policy during
the year. This policy specifies that Deloitte should only be
engaged for non-audit services where there is considered to be a
very low threat to auditor independence.
Deloitte is prohibited from providing all other services without
our prior approval. In reaching such a determination we will take
into consideration whether it is in the best interests of the
Company that such services should be supplied by the Company's
external auditor (rather than another service provider) and, if so
whether any safeguards regarding auditor objectivity and
independence in the conduct of the audit should be put in place,
whether these would be effective and how such safeguards should be
disclosed.
COMMITTEE EVALUATION
Our activities formed part of the review of Board effectiveness
performed in 2013.
An internal evaluation of our effectiveness was carried out in
November 2013.
Yours faithfully
Norbert Bannon
Chairman of Audit Committee
Opinion on financial statements of Doric Nimrod Air One
Limited
In our opinion the financial statements:
-- give a true and fair view of the state of the company's
affairs as at 31 March 2014 and of its profit for the year then
ended;
-- have been properly prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European
Union; and
-- have been prepared in accordance with the requirements of the
Companies (Guernsey) Law, 2008.
The financial statements comprise the Statement of Comprehensive
Income, the Statement of Financial Position, the Statement of Cash
Flows, the Statement of Changes in Equity and the related notes 1
to 20. The financial reporting framework that has been applied in
their preparation is applicable law and IFRSs as adopted by the
European Union.
Going concern
We have reviewed the directors' statement on page 21 that the
company is a going concern. We confirm that:
-- we have concluded that the directors' use of the going
concern basis of accounting in the preparation of the financial
statements is appropriate; and
-- we have not identified any material uncertainties that may
cast significant doubt on the company's ability to continue as a
going concern.
However, because not all future events or conditions can be
predicted, this statement is not a guarantee as to the company's
ability to continue as a going concern.
Our assessment of risks of material misstatement
The assessed risks of material misstatement described below are
those that had the greatest effect on our audit strategy, the
allocation of resources in the audit and directing the efforts of
the engagement team:
Risk How the scope of our audit responded
to the risk
--------------------------------------- ---------------------------------------
Measurement of aircraft assets
The company's accounting policy We have challenged management's
is to measure its aircraft asset estimate of aircraft residual
at depreciated historic cost value by inspecting relevant
less impairment. The asset is supporting evidence including
being depreciated on a straight-line forecast valuations obtained
basis over the term of the lease by the company from expert aircraft
to an estimated residual value valuers and the terms of the
at the end of that period. The aircraft lease agreements. We
estimation of residual value have considered the qualifications
is a key source of judgment in and experience of the valuers
preparing the financial statements. engaged by management. We have
The risk is that the selected also considered the adequacy
residual value is not appropriate of the disclosure related to
or is not properly applied in this estimation uncertainty set
calculating depreciation. out on page 53.
--------------------------------------- ---------------------------------------
Revenue recognition
The company's lease of its aircraft We have considered whether the
has been classified as operating classification of the lease as
leases and as such rental income an operating lease is appropriate
should be recognised on a straight-line with reference to the lease terms
basis over the lease term, which and the nature of the asset.
differs from the profile of actual
rental payments. In addition, We have developed independent
the majority of lease rentals expectations of lease income
are receivable in US Dollars balances for the year based on
and must be appropriately translated total lease rentals receivable,
into the Sterling functional the lease term and foreign exchange
and presentation currency. The rates during the year.
risk is that revenue is not properly We have also recalculated deferred
recorded in accordance with these rental recognised as a liability
requirements. in the Statement of Financial
Position.
------------------------------------------ ----------------------------------------
Accounting for fixed rate debt
The company has obtained fixed We reviewed the debt amortisation
interest rate debt to part-finance schedules prepared by management
the acquisition of its aircraft to calculate the effective interest
asset. rates on the loans and checked
The loan is amortised by regular their consistency with the repayment
repayments over their term and schedules and if any arrangement
is carried at amortised cost costs had been appropriately
with interest expense recognised incorporated.
at the effective interest rate.
The risk exists that the effective We obtained direct confirmation
interest rate has not been accurately from the lead arranger of the
calculated or applied. loan facility of the principal
balance outstanding and recalculated
accrued interest using the effective
interest rate.
We developed an expectation of
the interest charges for the
period using the average outstanding
principal balance during the
period, the effective interest
rate and foreign exchange rates
during the year.
------------------------------------------ ----------------------------------------
Our audit procedures relating to these matters were designed in
the context of our audit of the financial statements as a whole,
and not to express an opinion on individual accounts or
disclosures. Our opinion on the financial statements is not
modified with respect to any of the risks described above, and we
do not express an opinion on these individual matters.
Our application of materiality
We define materiality as the magnitude of misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality both in planning the scope of our
audit work and in evaluating the results of our work.
We determined materiality for the company to be GBP0.9 million,
which is approximately 2% of total shareholder's equity.
We agreed with the Audit Committee that we would report to the
Committee all audit differences in excess of GBP18,000, as well as
differences below that threshold that, in our view, warranted
reporting on qualitative grounds. We also report to the Audit
Committee on disclosure matters that we identified when assessing
the overall presentation of the financial statements.
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the
company and its environment, including internal control, and
assessing the risks of material misstatement. Audit work to respond
to the risks of material misstatement was performed directly by the
audit engagement team.
Matters on which we are required to report by exception
Adequacy of explanations received and accounting records
Under the Companies (Guernsey) Law, 2008 we are required to
report to you if, in our opinion:
* we have not received all the information and
explanations we require for our audit; or
* proper accounting records have not been kept; or
* the financial statements are not in agreement with
the accounting records.
We have nothing to report in respect of these matters.
Our duty to read other information in the Annual Report
Under International Standards on Auditing (UK and Ireland),
we are required to report to you if, in our opinion, information
in the annual report is:
* materially inconsistent with the information in the
audited financial statements; or
* apparently materially incorrect based on, or
materially inconsistent with, our knowledge of the
company acquired in the course of performing our
audit; or
* otherwise misleading.
In particular, we are required to consider whether we have
identified any inconsistencies between our knowledge acquired
during the audit and the directors' statement that they consider
the annual report is fair, balanced and understandable and
whether the annual report appropriately discloses those matters
that we communicated to the audit committee which we consider
should have been disclosed. We confirm that we have not identified
any such inconsistencies or misleading statements.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities
Statement, the directors are responsible for the preparation
of the financial statements and for being satisfied that they
give a true and fair view. Our responsibility is to audit
and express an opinion on the financial statements in accordance
with applicable law and International Standards on Auditing
(UK and Ireland). Those standards require us to comply with
the Auditing Practices Board's Ethical Standards for Auditors.
We also comply with International Standard on Quality Control
1 (UK and Ireland). Our audit methodology and tools aim to
ensure that our quality control procedures are effective,
understood and applied. Our quality controls and systems include
our dedicated professional standards review team and independent
partner reviews.
This report is made solely to the company's members, as a
body, in accordance with Section 262 of the Companies (Guernsey)
Law, 2008. Our audit work has been undertaken so that we might
state to the company's members those matters we are required
to state to them in an auditor's report and/or those further
matters we have expressly agreed to report to them on in our
engagement letter and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company's members
as a body, for our audit work, for this report, or for the
opinions we have formed.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the company's circumstances and have been
consistently applied and adequately disclosed; the reasonableness
of significant accounting estimates made by the directors; and the
overall presentation of the financial statements. In addition, we
read all the financial and non-financial information in the annual
report to identify material inconsistencies with the audited
financial statements and to identify any information that is
apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of
performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report
John Clacy FCA
for and on behalf of Deloitte LLP
Chartered Accountants and Recognised Auditor
St Peter Port, Guernsey
30 July 2014
Year ended Year ended
Notes 31 Mar 2014 31 Mar 2013
GBP GBP
Income
A rent income 4 8,414,370 6,766,120
B rent income 4 4,508,388 3,558,847
Bank interest
received 2,938 4,307
---------------------------- -----------------------------
12,925,696 10,329,274
Expenses
Operating expenses 5 (574,543) (538,705)
Depreciation of
Asset 9 (3,814,408) (3,831,398)
---------------------------- -----------------------------
(4,388,951) (4,370,103)
Net profit for the period
before finance costs
and foreign exchange
losses 8,536,745 5,959,171
---------------------------- -----------------------------
Finance costs 10 (3,685,507) (3,957,600)
Unrealised foreign exchange
profit / (loss) 5,355,280 (3,381,260)
---------------------------- -----------------------------
Profit / (loss) for
the period 10,206,518 (1,379,689)
---------------------------- -----------------------------
Other Comprehensive
Income - -
---------------------------- -----------------------------
Total Comprehensive
Income / (loss) for
the period 10,206,518 (1,379,689)
============================ =============================
Pence Pence
Earnings per Share
for the period
- Basic and Diluted 8 24.04 (3.25)
---------------------------- -----------------------------
In arriving at the results for the financial period, all
amounts above relate to continuing operations.
The notes on pages 47 to 70 form an integral part of these
financial statements
31 Mar 2014 31 Mar 2013
Notes GBP GBP
NON-CURRENT ASSETS
Aircraft 9 102,097,492 106,538,525
----------------------- ------------------------
CURRENT ASSETS
Cash and cash equivalents 4,243,823 4,580,076
Receivables 12 8,065 5,441
----------------------- ------------------------
4,251,888 4,585,517
TOTAL ASSETS 106,349,380 111,124,042
======================= ========================
CURRENT LIABILITIES
Borrowings 14 6,287,637 6,528,741
Deferred income 5,988,058 4,969,675
Payables - due within
one year 13 118,253 116,783
----------------------- ------------------------
12,393,948 11,615,199
NON-CURRENT LIABILITIES
Borrowings 14 48,523,639 60,463,068
48,523,639 60,463,068
TOTAL LIABILITIES 60,917,587 72,078,267
======================= ========================
TOTAL NET ASSETS 45,431,793 39,045,775
----------------------- ------------------------
EQUITY
Share Premium 15 39,016,728 39,016,728
Retained Earning 6,415,065 29,047
----------------------- ------------------------
45,431,793 39,045,775
----------------------- ------------------------
Pence Pence
Net asset value per Ordinary
Share based on 42,450,000 shares
in issue 107.02 91.98
The Financial Statements were approved by the Board of directors
and authorised for issue on 2014 and are signed on its behalf by:
Director
The notes on pages 47 to 70 form an integral part of these financial
statements
Year ended Year ended
31 Mar 2014 31 Mar 2013
GBP GBP
OPERATING ACTIVITIES
Profit / (loss) for the
period 10,206,518 (1,379,689)
Movement in deferred income 864,056 3,682,684
Interest received (2,938) (4,307)
Depreciation of Asset 3,814,408 3,831,398
Loan interest 3,370,324 3,949,696
Increase in payables 1,470 63,549
(Increase) / decrease
in receivables (2,624) 2,191
Amortisation of debt arrangement
costs 315,183 7,904
Foreign exchange (profit)
/ loss (5,355,280) 3,381,260
NET CASH FLOW FROM OPERATING
ACTIVITIES 13,211,117 13,534,686
----------------------- -------------------------
INVESTING ACTIVITIES
Interest received 2,938 4,307
NET CASH FLOW FROM / (USED
IN) INVESTING ACTIVITIES 2,938 4,307
----------------------- -------------------------
FINANCING ACTIVITIES
Dividends paid (3,820,500) (3,820,500)
Repayments of capital on
borrowings (6,232,057) (5,799,472)
Repayments of interest
on borrowings (3,416,070) (3,945,022)
NET CASH FLOW USED IN FINANCING
ACTIVITIES (13,468,627) (13,564,994)
----------------------- -------------------------
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 4,580,076 4,484,057
Decrease in cash and cash
equivalents (254,573) (26,001)
Exchange rate adjustments (81,680) 122,020
CASH AND CASH EQUIVALENTS
AT END OF YEAR 4,243,823 4,580,076
----------------------- -------------------------
The notes on pages 47 to 70 form an integral part of these financial
statements
Notes Share Revenue Total
Capital Reserve
GBP GBP GBP
Balance as at 1 April 2013 39,016,728 29,047 39,045,775
Total Comprehensive Income
for the period - 10,206,518 10,206,518
Dividends paid 7 - (3,820,500) (3,820,500)
----------------------- ----------------- ---------------
Balance as at 31 March 2014 39,016,728 6,415,065 45,431,793
----------------------- ----------------- ---------------
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 Loss
for the period - (1,379,689) (1,379,689)
Dividends paid 7 - (3,820,500) (3,820,500)
----------------------- ----------------- ---------------
Balance as at 31 March 2013 39,016,728 29,047 39,045,775
----------------------- ----------------- ---------------
The notes on pages 47 to 70 form an integral part of these
financial statements
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 and are listed on the Channel Islands Securities
Exchange ("CISE").
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 have been adopted
in the current year. Their adoption has not had any impact
on the amounts reported in these financial statements and
is not expected to have any impact on future financial periods:
IFRS 7 Financial Instruments: Disclosures - amendments relating
to the offsetting of assets and liabilities effective for
annual periods beginning on or after 1 January 2013.
IFRS 13 Fair Value Measurement effective for annual periods
beginning on or after 1 January 2013.
2 ACCOUNTING POLICIES (continued)
(a) Basis of Preparation (continued)
IAS 1 - Presentation of Financial Statements - amendments
resulting from Annual Improvements effective for annual periods
beginning on or after 1 January 2013.
IAS 16 Property Plant & Equipment - amendments resulting
from Annual Improvements effective for annual periods beginning
on or after 1 January 2013
IAS 32 Financial Instruments: Presentation - annual improvements
effective for annual periods beginning on or after 1 January
2013.
The following Standards or Interpretations, which 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 requiring
disclosures about the initial application of IFRS9 effective
for annual periods beginning on or after 1 January 2015 (or
otherwise when IFRS 9 is first applied).
IFRS 9 Financial Instruments - accounting for financial liabilities
and derecognition.
IFRS 10 Consolidated Financial Statements, IFRS 11 Joint
Arrangements and IFRS 12 Disclosure of Interest in Other
Entities - effective for annual periods beginning on or after
1 January 2014
IAS 16 Property, Plant and Equipment - amendments resulting
from Annual Improvements effective for annual periods beginning
on or after 1 July 2014.
IAS 24 Related Party Disclosures - amendments resulting from
Annual Improvements effective for annual periods beginning
on or after 1 July 2014.
IAS 36 Impairment of Assets - amendments arising from Recoverable
Amount Disclosures for Non-Financial Assets effective for
annual periods beginning on or after 1 January 2014.
2 ACCOUNTING POLICIES (continued)
(a) Basis of Preparation (continued)
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 Sterling
(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.
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 three months from the start of the deposit and highly
liquid investments readily convertible 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 rents 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. the Board 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.
2 ACCOUNTING POLICIES (continued)
(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. Costs incurred
by the lessee in maintaining, repairing or enhancing the
aircraft are not recognised as they do not form part of the
costs to the Company. Accumulated depreciation and any recognised
impairment loss are deducted from cost to calculate the carrying
amount of the Asset.
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 the 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
2 ACCOUNTING POLICIES (continued)
(l) Financial liabilities
Financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs. Financial
liabilities are 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.
(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 the financial statements.
3 SIGNIFICANT JUDGEMENTS AND ESTIMATES (Continued)
KEY SOURCES OF ESTIMATION UNCERTAINTY
Residual value and useful life of the 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. IAS 16 Property, Plant and Equipment requires residual
value to be determined as an estimate of the amount that would
be obtained from disposal today if the Asset were of the age
and condition expected at the end of its useful life. However,
there are currently no aircraft of a similar type of sufficient
age for the Directors to make a direct market comparison in
making this estimation. After consulting with the Asset Manager,
the Directors have concluded that a forecast market value
for the aircraft at the end of its useful life (including
inflationary effects) best approximates residual value. In
estimating residual value, the directors have made reference
to forecast market values for the aircraft obtained from 3
expert aircraft valuers. The estimation of residual value
remains subject to inherent uncertainty. If the estimate of
residual value had been decreased by 20% with effect from
the beginning of this year, the net profit for the year and
closing shareholders' equity would have been decreased by
approximately GBP1.1 million. An increase in residual value
by 20% would have been an equal but opposite effect. This
reflects the range of estimates of residual value that the
Directors believe would be reasonable at this time. The useful
life of the Asset is estimated based on the expected period
for which the Company will own and lease the aircraft.
CRITICAL ACCOUNTING JUDGEMENT
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 their 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.
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 Intangible Assets.
4 RENTAL INCOME
Year ended Year ended
31 Mar 2014 31 Mar 2013
GBP GBP
A rent income 9,465,182 9,686,019
Revenue received but
not yet earned (1,050,812) (2,919,899)
---------------------------- -----------------------------
8,414,370 6,766,120
B rent income 4,321,632 4,321,632
Revenue earned but not
yet received 186,756 -
Revenue received but
not yet earned - (762,785)
---------------------------- -----------------------------
4,508,388 3,558,847
Total rental income 12,922,758 10,324,967
---------------------------- -----------------------------
The total rental income for the prior period is net of an
adjustment of GBP2,802,862 in relation to income accounted
for in the period ended 31 March 2012 attributable to the
prior year.
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 the lease.
5 OPERATING EXPENSES
Year ended Year ended
31 Mar 2014 31 Mar 2013
GBP GBP
Management fee 105,139 102,263
Asset management fee 278,459 257,063
Administration fees 61,380 61,143
Accountancy fees 10,533 10,273
Registrars fee 9,053 8,837
Audit fee 22,400 15,000
Directors' remuneration 56,250 53,000
Directors' and Officers' insurance 8,099 7,981
Legal & professional expenses 4,420 4,053
Annual fees 5,921 500
Sundry costs 7,069 9,929
Other operating expenses 5,820 8,663
-------------------------- -----------------------------
574,543 538,705
-------------------------- -----------------------------
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.
7 DIVIDENDS IN RESPECT OF EQUITY SHARES
Year ended
31 Mar 2014
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
----------------------------- --------------------------------------
Year ended
31 Mar 2013
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 profit for the period attributable to Shareholders
of GBP10,206,518 (31 March 2013: loss of GBP1,379,689) and on 42,450,000 (31 March 2013: 42,450,000)
Shares being the weighted average number of Shares in issue during the period. There are no
dilutive instruments and therefore basic and diluted earnings per Share are identical.
9 PROPERTY, PLANT AND EQUIPMENT - AIRCRAFT
Aircraft
COST GBP
As at 1 Apr 2013 115,159,172
Reclassification to borrowing transaction costs (626,625)
---------------------------
As at 31 Mar 2014 114,532,547
===========================
ACCUMULATED DEPRECIATION
As at 1 Apr 2013 8,620,647
Charge for the year 3,814,408
---------------------------
As at 31 Mar 2014 12,435,055
===========================
CARRYING AMOUNT
As at 31 Mar 2014 102,097,492
===========================
As at 31 Mar 2013 106,538,525
===========================
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 to purchase the Asset at an independently appraised market value.
Under IAS 17 Leases the direct costs attributed in negotiating and arranging the Lease have
been added to the carrying amount of the Asset and will be recognised as an expense over the
lease term.
During the period GBP626,625 has been reclassified to borrowing transaction costs. Previously
this was incorrectly classified as aircraft costs.
10 FINANCE COSTS
31 Mar 2014 31 Mar 2013
GBP GBP
Amortisation of debt arrangement costs 315,183 7,904
Loan interest 3,370,324 3,949,696
----------------------- --------------------------
3,685,507 3,957,600
----------------------- --------------------------
11 OPERATING
LEASES
The amounts of minimum future lease receipts at the reporting date
under non cancellable operating leases are detailed below:
31 Mar 2014 Next 12 2 to 5 After 5 years Total
years
months
GBP GBP GBP GBP
Aircraft- A rental
payments 9,162,207 36,648,864 19,987,671 65,798,742
Aircraft- B rental
payments 4,321,632 17,286,528 17,403,840 39,012,000
------------------ ------------------ -------------------- ---------------------
13,483,839 53,935,392 37,391,511 104,810,742
------------------ ------------------ -------------------- ---------------------
31 Mar 2013 Next 12 2 to 5 After 5 years Total
years
months
GBP GBP GBP GBP
Aircraft- A rental
payments 10,048,056 40,192,454 31,112,304 81,352,815
Aircraft- B rental
payments 4,321,632 17,286,528 20,360,298 41,968,458
------------------ ------------------ -------------------- ---------------------
14,369,688 57,478,982 51,472,602 123,321,273
------------------ ------------------ -------------------- ---------------------
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 2020, 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.
12 RECEIVABLES
31 Mar 2014 31 Mar 2013
GBP GBP
Prepayments 8,054 5,419
Sundry debtors 11 22
8,065 5,441
------------------------- ---------------------------
The above carrying value of receivables is equivalent to
the fair value.
13 PAYABLES (amounts falling due within one year)
31 Mar 2014 31 Mar 2013
GBP GBP
Accrued administration
fees 6,050 6,129
Accrued audit fee 15,200 16,400
Accrued management fees 93,540 91,482
Other accrued expenses 3,463 2,772
118,253 116,783
------------------------- ---------------------------
The above carrying value of payables is equivalent to the
fair value.
14 BORROWINGS
TOTAL TOTAL
31 Mar 2014 31 Mar 2013
GBP GBP
Bank loan 55,174,320 67,043,411
Transaction costs (363,044) (51,602)
54,811,276 66,991,809
---------------------- ------------------------
Amount due for
settlement within
12 months 6,287,637 6,528,741
====================== ========================
Amount due for
settlement after
12 months 48,523,639 60,463,068
====================== ========================
The loan was arranged with Westpac Banking Corporation ("Westpac")
for USD 122,000,000, 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. 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 its life.
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.
15 SHARE CAPITAL (continued)
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 31 March 2014 2 42,450,000
--------------------- ----------------------------
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 31 March
2014 39,016,726
Subordinated Administrative Shares
Shares issued 6 December 2010 2
----------------------------
Total share premium as at 31 March
2014 39,016,728
============================
15 SHARE CAPITAL (continued)
Members holding Ordinary Preference Shares are entitled to receive,
and 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, and 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 and 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 has been 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.
16 FINANCIAL INSTRUMENTS
The Company's main financial instruments comprise:
(a) Cash and cash equivalents that arise directly from the 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 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 Company at the reporting date:
17 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
31 Mar
2014 31 Mar 2013
GBP GBP
Financial assets
Cash and cash equivalents 4,243,823 4,580,076
Receivables 11 22
------------------------- ---------------------------
Loans and receivables at amortised
cost 4,243,834 4,580,098
------------------------- ---------------------------
Financial liabilities
Accrued expenses 118,253 116,783
Loans payable 54,811,276 66,991,809
------------------------- ---------------------------
Financial liabilities measured
at amortised cost 54,929,529 67,108,592
------------------------- ---------------------------
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 14, 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.
17 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
(b) Foreign currency risk
The Company's accounting policy under IFRS requires the
use of a GBP historic cost of the Asset 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 11) 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:
31 Mar 2014 31 Mar 2013
GBP GBP
Bank loan (USD)
- liabilities (55,174,320) (67,043,411)
Cash and cash equivalents
(USD) - assets 2,111,224 2,375,888
=================== ====================
The following table details the Company's sensitivity
to a 15 per cent appreciation of 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:
17 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
in profit and equity where GBP strengthens 15 per cent
against USD. For a 15 per cent weakening of GBP against
USD, there would be a comparable but opposite impact on
the profit and equity
(b)
Foreign currency risk (continued)
USD impact
GBP
Profit or loss 6,921,273
Assets (275,377)
Liabilities 7,196,650
=========================
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.
(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:
31 Mar 2014 31 Mar 2013
GBP GBP
Receivables 11 22
Cash and cash equivalents 4,243,823 4,580,076
4,243,834 4,580,098
------------------------- ---------------------------
17 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
(c) Credit Risk (continued)
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 it 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 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.
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.
17
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
(d) Liquidity Risk (continued)
The table below details the residual contractual maturities
of financial liabilities:
31 March
2014 1-3 3-12 1-2 years 2-5 years over 5
months months years
GBP GBP GBP GBP GBP
Financial
liabilities
Payables
- due within
one year 118,253 - - - -
Loans payable 2,304,332 6,912,995 9,217,326 27,651,979 23,860,671
----------------- ------------------------ -------------------------- ------------------------------- -------------------------
2,422,585 6,912,995 9,217,326 27,651,979 23,860,671
----------------- ------------------------ -------------------------- ------------------------------- -------------------------
31 March
2013 1-3 3-12 1-2 years 2-5 years over 5
months months years
GBP GBP GBP GBP GBP
Financial
liabilities
Payables
- due within
one year 116,783 - - - -
Loans payable 2,527,136 7,582,724 10,108,543 30,325,629 33,749,149
----------------- ------------------------ -------------------------- ------------------------------- -------------------------
2,643,919 7,582,724 10,108,543 30,325,629 33,749,149
----------------- ------------------------ -------------------------- ------------------------------- -------------------------
(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, by interest rate refinancing period:
17 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
(e) Interest rate risk (continued)
31 March
2014 Less than Fixed interest Non-interest Total
1 month Bearing
GBP GBP GBP GBP
Financial
assets
Receivables - - 8,065 8,065
Cash and cash
equivalents 4,243,823 - - 4,243,823
Total financial
assets 4,243,823 - 8,065 4,251,888
----------------------- ------------------------- ----------------------- -------------------------
Financial
liabilities
Accrued expenses - - 118,253 118,253
Loans payable - 54,811,276 - 54,811,276
Total financial
liabilities - 54,811,276 118,253 54,929,529
----------------------- ------------------------- ----------------------- -------------------------
Total interest
sensitivity
gap 4,243,823 54,811,276
----------------------- -------------------------
31 March
2013 Less than Fixed interest Non-interest Total
1 month Bearing
GBP GBP GBP GBP
Financial
assets
Accrued
income - - - -
Cash and cash
equivalents 4,580,076 - - 4,580,076
Total financial
assets 4,580,076 - 5,441 4,585,517
----------------------- ------------------------- ----------------------- -------------------------
Financial
liabilities
Accrued expenses - - 116,783 116,783
Loans payable - 66,991,809 - 66,991,809
Total financial
liabilities - 66,991,809 116,783 67,108,592
----------------------- ------------------------- ----------------------- -------------------------
Total interest
sensitivity
gap 4,580,076 66,991,809
----------------------- -------------------------
17 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
(e) Interest rate risk (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 31 March 2014 would have been GBP21,219
greater (31 March 2013: GBP22,900) 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 31 March 2014 would have been GBP21,219
lower (31 March 2013:GBP22,900) 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 1 April 2014 a further dividend of 2.25 pence per Ordinary
Preference Share was declared and this was paid on 25 April
2014.
On 1 July 2014 a further dividend of 2.25 pence
per Ordinary Preference Share was declared and
this was paid on 24 July 2014.
20 RELATED PARTIES
Nimrod Capital LLP ("Nimrod") is the Company's Placing Agent
and Corporate and Shareholder Adviser. In consideration for
Nimrod acting as placing agent in the Share placing, the
Company agreed to pay Nimrod, on admission to trading of
the Shares, a placing commission equal to 0.43 per cent of
the initial gross proceeds of the placing. 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 year, the Company incurred GBP105,574 (31 March
2013: GBP104,443) of expenses with Nimrod, of which GBP26,726
(31 March 2013: GBP26,138) was outstanding to this related
party at 31 March 2014.
20 RELATED PARTIES (CONTINUED)
Until 12 March 2012 Doric Asset Finance Limited ("DAFL")
was the Company's Asset Manager. DAFL received a fee on admission
to trading of the Shares equal to 1.14 per sent of the initial
gross proceeds of the placing and issue of the Company's
bank loan. From 12 March 2012, Doric GmbH ("Doric") has been
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 and 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 costs, fees and expenses) Doric should
receive 3 per cent. of the Realised Value of the Asset.
During the year, the Company incurred GBP262,846 (31 March
2013: GBP257,063) of expenses with Doric, of which GBP66,814
(31 March 2013: GBP65,344) was outstanding to this related
party at 31 March 2014.
JTC Fund Managers (Guernsey) Limited ("JTCFMGL") (formerly
Anson Fund Managers Limited) is the company's administrator
and secretary. Anson Registrars (UK) Limited is the UK Transfer
Agent. Until 29 November 2013, John Le Prevost was a Director
of Anson Fund Managers Limited and Anson Administration (UK)
Limited. He is a Director of Anson Registrars Limited, the
company registrar, transfer agent and paying agent. During
the year GBP79,949.58 (31 March 2013: GBP80,072.40) of costs
were incurred with these related parties, of which GBP6,572.18
(31 March 2013: GBP6,644.50) was outstanding as at 31 March
2014.
Key Information
Exchange
Ticker
Listing Date
Fiscal Year End
Base Currency
ISIN
SEDOL
Country of Incorporation
Management and Administration
Registered Office
Doric Nimrod Air One Limited
PO Box 156
Frances House
Sir William Place
St Peter Port
Guernsey GY1 4EU
Asset Manager
Doric GmbH
BerlinerStrasse 114
Offenbach am Main
63065 Germany
Placing and Corporate and Shareholder Advisory Agent
Nimrod Capital LLP
3 St Helen's Place
London, England
EC3A 6AB
Solicitors to the Company (as to English Law)
Herbert Smith LLP
Exchange House
Primrose Street
London, England
EC2A 2HS
Specialist Fund Market of the LSE/CISE
DNA
13 December 2010
31 March
GBP
GG00B4MF3899
B4MF389
Guernsey - Registration number 52484
Company Secretary and Administrator
JTC (Guernsey) Limited
PO Box 156
Frances House
Sir William Place
St Peter Port
Guernsey GY1 4EU
Liaison Agent
Amedeo Services (UK) Limited
5 Royal Exchange Buildings
London, England
EC3V 3NL
Lease and Debt Arranger
Doric Asset Finance GmbH & Co KB
Berlinerstrasse 114,
63065 Offenbach am Main,
Germany
Advocates to the Company (as to Guernsey Law)
Mourant Ozannes
1 Le Marchant Street
St Peter Port
Guernsey
GY1 4HP
Registrar
Anson Registrars Limited
PO Box 426, Anson House
Havilland Street
St Peter Port
Guernsey GY1 3WX
Auditor
Deloitte LLP
Regency Court
Glategny Esplanade
St Peter Port
Guernsey
GY1 3HW
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE
ATTENTION. If you are in any doubt as to any aspect of the
proposals referred to in this document or as to the action you
should take, you are advised to consult your stockbroker,
solicitor, accountant, or other professional adviser. If you have
sold or otherwise transferred all your shares in Doric Nimrod Air
One Limited, please pass this document together with the
accompanying documents to the purchaser or transferee, or to the
person who arranged the sale or transfer for transmission to the
person who now holds shares in Doric Nimrod Air One Limited.
DORIC NIMROD AIR ONE LIMITED
(Incorporated and registered in Guernsey with company number
52484)
NOTICE OF GENERAL MEETING
NOTICE IS HEREBY GIVEN that the GENERAL MEETING of the voting
Members of Doric Nimrod Air One Limited (the "Company") will be
held at Frances House Sir William Place St Peter Port Guernsey GY1
4EU on 1 October 2014 at 10.30 a.m., to consider and, if thought
fit, pass the below resolutions.
Ordinary Resolutions:
1. To receive the Annual Financial Report for the period ended 31 March 2014.
2. To appoint Deloitte LLP as Auditor to the Company, to hold
office from the conclusion of this meeting until the conclusion of
the next general meeting to be held in 2015 under section 199 of
the Companies (Guernsey) Law 2008, as amended, and to authorise the
Directors to determine their remuneration.
BY ORDER OF THE BOARD Registered Office:
JTC Fund Managers (Guernsey) Limited PO Box 156
Secretary Frances House
Sir William Place
25 July 2014 St Peter Port
Guernsey
GY1 4EU
Notes:
1. A shareholder will only be entitled to attend and vote at
this General Meeting if they are registered as holders of Shares as
at the close of business on 29 September 2014 or, if the General
Meeting is adjourned, as at 48 hours before the time of any
adjourned General Meeting. This record time is being set for voting
because the procedures for updating the registers of members for
each class of shares held in uncertificated form require a record
time to be set for the purpose of determining entitlements to
attend and vote at shareholder meetings.
2. A member entitled to attend and vote at the General Meeting
is entitled to appoint one or more proxies to vote instead of them.
A proxy need not be a member of the Company. Completion and return
of the form of proxy will not preclude members from attending or
voting at the General Meeting if they so wish.
3. More than one proxy may be appointed provided each proxy is
appointed to exercise the rights attached to different shares.
4. In accordance with the provisions of E.2.1 of the UK Code of
Corporate Governance it should be noted that a vote withheld is not
a vote in law and will not be counted in the calculation of the
proportion of the votes for and against each resolution.
5. A Form of Proxy is enclosed for use at the General Meeting.
The Form of Proxy should be completed in accordance with the
instructions set out therein and sent, together with the power of
attorney or other authority, if any, under which it is signed, or a
notarially certified copy of such power or authority, so as to
reach the Company's agent, for this purpose being, Anson Registrars
Limited, PO Box 426 Anson House, Havilland Street, St Peter Port,
Guernsey GY1 3WX not less than 48 hours before the time for holding
the General Meeting.
6. If the General Meeting falls to be adjourned because it is
not quorate, it will be adjourned to the same time and place five
business days later or to such other day and/or time and/or place
as the directors of the Company may determine, whereupon those
shareholders then present in person, by their representative or by
proxy, shall form the quorum. In the event of any such adjournment
the Company will announce the adjournment via a regulatory
information service but no notification will be sent directly to
shareholders.
7. Where there are joint registered holders of any shares such
persons shall not have the right of voting individually in respect
of such shares but shall elect one of their number to represent
them and to vote whether in person or by proxy in their name. In
default of such election the person whose name stands first on the
register of shareholders shall alone be entitled to vote.
8. On a poll votes may be given either personally or by proxy
and a shareholder entitled to more than one vote need not use all
his votes or cast all the votes he uses in the same way.
9. Any corporation which is a shareholder may by resolution of
its board of directors or other governing body authorise such
person as it thinks fit to act as its representative at the General
Meeting. Any person so authorised shall be entitled to exercise on
behalf of the corporation which he represents the same powers
(other than to appoint a proxy) as that corporation could exercise
if it were an individual shareholder.
10. As at 25 July 2014 (the latest practicable date prior to the
printing of this notice) the Company's issued share capital with
voting rights consisted of 424,500,000 Ordinary Preference Shares
of no par value, all carrying one vote each per share.
11. Copies of the following documents are available for
inspection at the registered office of the Company during usual
business hours on any weekday (weekends and public holidays
excluded) and will be available for inspection at the place of the
General Meeting for 15 minutes before and during the General
Meeting itself:
(a) a copy of the Company's Annual Financial Report for the year
ended 31 March 2014;
(b) copies of the non-executive directors' appointment letters;
and
(c) the Articles of Incorporation.
EXPLANATORY NOTES TO THE NOTICE OF GENERAL MEETING
At the General Meeting there are two ordinary resolutions which
shareholders will be asked to consider and, if thought fit,
approve. An explanation of each of these Resolutions is given
below. All resolutions are proposed as ordinary resolutions. An
ordinary resolution requires more than 50 per cent. of votes cast
at the General Meeting relating to that resolution to be cast in
favour of it for the resolution to be passed.
ORDINARY RESOLUTIONS
Resolution 1: Annual Report and Accounts
For each financial year the directors are required to present
the directors' report, the audited accounts and the auditors'
reports to shareholders at a general meeting. Shareholders are
asked to receive the annual report and accounts of the Company for
the financial year ended 31 March 2014. The Companies (Guernsey)
Law 2008 requires that the accounts and reports are laid before the
General Meeting.
Resolution 2 Appointment of Auditor
Following the previous general meeting of the Company the
appointment of the Auditor was to continue until the conclusion of
the next general meeting to be held in 2014, under section 199 of
the Companies (Guernsey) Law 2008. Deloitte LLP have indicated that
they are willing to continue to be the Company's Auditor for the
next year. You are asked to approve their re-appointment and to
authorise the directors of the Company to determine their
remuneration.
DORIC NIMROD AIR ONE LIMITED
(Incorporated and registered in Guernsey with company number
52484)
FORM OF PROXY
Please read the Notice of General Meeting and the notes below
before completing this form.
For use by holders of voting shares at the general meeting of
Doric Nimrod Air One Limited (the "Company") convened for 10.30
a.m. on 1 October 2014, and at any adjournment thereof.
I/WE............................................................................................(Block
Letters)
OF
..........................................................................................................(Block
Letters)
being [a] member[s] of the Company, hereby appoint the Chairman
of the Meeting *or....................................as my/our
proxy to vote for me/us on my/our behalf, as directed below on the
Resolutions to be proposed at the General Meeting of the Company to
be held on 1 October 2014 at 10:30 a.m., and at any adjournment
thereof.
*Note: If it is desired to appoint as proxy any person other
than the Chairman of the Meeting, his/her name and address should
be inserted in the relevant place and reference to the Chairman of
the meeting deleted and the alternation initialled.
I/WE direct the proxy to vote on the Resolutions as follows:
Ordinary Resolutions: FOR AGAINST WITHHELD
------------------------------------------------- ----- --------- ----------
1. To receive the Annual Financial Report
for the period ended 31 March 2014.
------------------------------------------------- ----- --------- ----------
2. To appoint Deloitte LLP as Auditor
to the Company, to hold office from the
conclusion of this meeting until the conclusion
of the next general meeting to be held
in 2015 under section 199 of The Companies
(Guernsey) Law, 2008, as amended, and
to authorise the directors to determine
their remuneration.
------------------------------------------------- ----- --------- ----------
Please indicate with an X in the appropriate space how you wish
your vote to be cast. On receipt of the form duly executed and in
the absence of a specific direction, your proxy will vote or
abstain as he or she thinks fit on the resolutions.
Signed: ........................................
Dated:.......................................................
Notes:
1. If it is desired to appoint as proxy any person other than
the Chairman of the General Meeting, his/her name and address
should be inserted in the relevant place and reference to the
Chairman of the meeting deleted and the alteration initialled.
2. If the shareholder is a corporation, this form must be
executed under its common seal or under the hand of its duly
authorised officer or attorney.
3. Where there are joint registered holders of any shares such
persons shall not have the right of voting individually in respect
of such shares but shall elect one of their number to represent
them and to vote whether in person or by proxy in their name. In
default of such election the person whose name stands first on the
register of shareholders shall alone be entitled to vote.
4. Any alterations to this form of proxy should be initialled by the person who signs it.
5. The Form of Proxy should be completed in accordance with the
instructions set out therein and sent, together with the power of
attorney or other authority, if any, under which it is signed, or a
notarially certified copy of such power or authority, so as to
reach the Company's agent, for this purpose being, Anson Registrars
Limited, PO Box 426 Anson House, Havilland Street, St Peter Port,
Guernsey GY1 3WX not later than 10.00 a.m. on 29 September
2014.
6. Completing and returning a form of proxy will not prevent a
member from attending in person at the meeting and voting should he
or she so wish.
7. Should you wish to vote in respect of a specific number of
shares please indicate with that number in place of an X in the
appropriate space.
8. A shareholder entitled to exercise more than one vote need
not cast all his or her votes in the same way.
9. In accordance with the provisions of E.2.1 of the UK Code of
Corporate Governance it should be noted that a vote withheld is not
a vote in law and will not be counted in the calculation of the
proportion of the votes for and against each resolution.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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