Doric Nimrod Air One : Quarterly Fact Sheet

QUARTERLY FACT SHEET

31 March 2017

DORIC NIMROD AIR ONE LIMITED LSE: DNA The Company

Doric Nimrod Air One Limited ("the Company") is a Guernsey domiciled company, which is listed on the Specialist Fund Segment (SFS) of the London Stock Exchange's Main Market. The Company has purchased one Airbus A380-861 aircraft, manufacturer's serial number (MSN) 016, which it has leased for an initial term of 12 years, with fixed lease rentals for the duration, to Emirates Airline ("Emirates"), the national carrier owned by the Investment Corporation of Dubai, based in Dubai, United Arab Emirates.

Investment Strategy

The Company's investment objective is to obtain income returns and a capital return for its shareholders by acquiring, leasing and then selling a single aircraft. The Company receives income from the lease, and its directors are targeting a gross distribution to the shareholders of 2.25 pence per share per quarter (9p per annum). It is anticipated that income distributions will continue to be made quarterly.

The total return for a shareholder investing today (31 March 2017) at the current share price consists of future income distributions during the remaining lease duration and a return of capital at dissolution of the Company. The latter payment is subject to the future value and the respective sales proceeds of the aircraft, quoted in US dollars and the USD/GBP exchange rate at that point in time. Since launch, three independent appraisers have provided the Company with their future values for the aircraft at the end of each financial year. The latest appraisals available are dated the end of March 2016. The table below summarizes the total return components, calculated on different exchange rates and using the average value of the aircraft as provided by the three independent external appraisers. Regarding the following two tables, there is no guarantee that the aircraft will be sold at such a sale price or that such capital returns would be generated. It is also assumed that the lessee will honour all its contractual obligations during the entire anticipated lease term.

The contracted lease rentals are calculated and paid in US dollars to satisfy debt interest and principal, and in sterling to satisfy dividend distributions and Company running costs, which are in sterling. The Company is, therefore, insulated from foreign currency market volatility during the term of the lease.

1. Implied Future Total Return Components Based on Appraisals1

   The implied return figures are not a forecast and assume the Company has not incurred any unexpected costs. Aircraft value at lease expiry according to
   per Share	Income Distributions	Return of Capital		Total Return3
   Prospectus Appraisal		Latest Appraisal4	Prospectus Appraisal	Latest Appraisal4
   Prospectus FX Rate5	54p	161p	157p	215p	211p

   • Prospectus appraisal USD 110 million

   • Latest appraisal2USD 107 million

   Current FX Rate6	54p	204p	199p	258p	253p
   1 See final sentences in the second paragraph of Investment Strategy 2 Date of valuation: 31 March 2016 3 Includes future dividends 4 Average of the three appraisals as at the Company's fiscal year-end in which the lease reached the end of its 12-year term 5 1.5900 USD/GBP 6 1.2488 USD/GBP (31 March 2017)

2. Company Facts (31 March 2017)

Listing	LSE
Ticker	DNA
Current Share Price	115.5p (closing)
Market Capitalisation	GBP 49 million
Initial Debt	USD 122 million
Outstanding Debt Balance	USD 58.5 million (48% of Initial Debt)
Current/Future Anticipated Dividend	2.25p per quarter (9p per annum)
Earned Dividends	54p
Current Dividend Yield	7.79%
Dividend Payment Dates	April, July, October, January
Total Expense Ratio	1.5% (based on Average Net Assets)
Currency	GBP
Launch Date/Price	13 December 2010 / 100p
Remaining Lease Duration	5 years 9 month
Incorporation	Guernsey
Aircraft Registration Number (Lease Expiry Date)	A6-EDC (16.12.2022)
Asset Manager	Doric GmbH
Corp & Shareholder Advisor	Nimrod Capital LLP
Administrator	JTC Fund Solutions (Guernsey) Ltd
Auditor	Deloitte LLP
Market Makers	Jefferies International Ltd, Numis Securities Ltd, Shore Capital Ltd, Winterflood Securities Ltd
SEDOL, ISIN	B4MF389, GG00B4MF3899
Year End	31 March
Stocks & Shares ISA	Eligible
Website	www.dnairone.com

Asset Manager's Comment

1. The Doric Nimrod Air One Airbus A380

   The Airbus A380 is registered in the United Arab Emirates under the registration mark A6-EDC. For the period from original delivery of the aircraft to Emirates in November 2008 until the end of February 2017, a total of 4,324 flight cycles were logged. Total flight hours were 36,360. This equates to an average flight duration of eight hours and 25 minutes.

   The A380 owned by the Company visited Bangkok, Hong Kong, Johannesburg, London Heathrow, Melbourne, Milan, New York JFK, and Sydney during the first quarter of 2017.

   Maintenance Status

   Emirates maintains its A380 aircraft fleet based on a maintenance programme according to which minor maintenance checks are performed every 1,500 flight hours, and more significant maintenance checks (C checks) at 24 month or 12,000 flight hour intervals, whichever occurs first.

   Emirates bears all costs (including for maintenance, repairs and insurance) relating to the aircraft during the lifetime of the lease.

   Inspections

   Doric, the asset manager, undertook a records audit in March 2017. The final report was not available at the editorial deadline.

2. Market Overview

   During 2016, passenger demand, measured in revenue passenger kilometres (RPKs), increased by 6.3% compared to the year before. Adjusted for the extra day, as 2016 was a leap year, traffic grew by 6.0%. Growth was well ahead of its 5.5% ten-year-average. The first half of the previous year was characterized by a combination of high-profile terrorist attacks, political instability in many parts of the world and subdued economic activity. However, passenger demand significantly improved between June and December 2016. According to the International Air Transport Association (IATA), passengers adapted to the uncertain environment. The moderate upturn in the global economic cycle was another contributing factor, which let RPKs grow at an annualized pace of nearly 9% in the second half of 2016. That development persisted beyond the end of 2016 with the strongest start to the year since 2005. In January 2017, RPKs grew by 9.6% compared to the same month the year before. For the full year, IATA expects a demand growth of 5.5%, according to a report released in March. However, there is uncertainty whether lower airfares will continue to fuel demand as in the recent past. As oil prices have significantly increased, since their 12-year low point reached in January 2016, further leeway for lower-priced tickets is limited. For this reason, the strength of the economic cycle will play an important role for the pace of global passenger growth during the course of this year.

   Passenger load factors were pushed to 80.5% during the calendar year 2016, the highest annual average on record, improving marginally on the record set in 2015. With minus 1.6 percentage points, the Middle East recorded the largest decline in load factors as the added capacity outstripped brisk demand. In January 2017, a worldwide passenger load factor of 80.2% was recorded, an improvement of 1.2 percentage points compared to the same month the year before and close to an all-time high. IATA estimates an average worldwide passenger load factor of 79.8% for this year.

   In 2016, a regional breakdown reveals that Middle East airlines, including Emirates, continued to outperform the overall market demand again last year. RPKs increased by 11.2% compared to the year 2015. Asia/Pacific-based operators ranked second with 9.1%, followed by Africa with 6.5%. Europe grew by 4.6%. Latin American and North American market participants recorded RPK growth of 3.6% and 3.2% respectively.

   Fuel is the single largest operating cost of airlines and has a significant impact on the industry's profitability. According to its latest report released in December, IATA expected an average fuel price of USD 52.1 per barrel in 2016. This would be 22% lower compared to the previous year. Jet fuel prices have started to rise with oil prices, and IATA forecasts an average price of USD 64.9 per barrel of jet fuel for this year. Fuel costs in 2017 are set to represent 18.7% of average operating costs, a 0.5 percentage point reduction from 2016. This is significantly below the recent peak of 33.2% in 2012-13. Slower GDP growth and rising costs have led to a downward revision of IATA's 2016 airline industry profitability to USD 35.6 billion. This is still the highest absolute profit generated by the airline industry and the highest net profit margin (5.1%) to date. For 2017, Alexandre de Juniac, IATA's Director General and CEO, expects a "very soft landing" with an industry net profit of USD 29.8 billion.

   © International Air Transport Association, 2017. Air Passenger Market Analysis December 2016 / Air Passenger Market Analysis January 2017/ Press Release No. 11: Passenger Demand Growth Hits Five-Year Peak in January. All Rights Reserved. Available on the IATA Economicspage.

3. Lessee - Emirates Key Financials

In the first half of the 2016/17 financial year ending on 31 March 2017, Emirates made a net profit of USD 214 million - a decrease of 75% compared to the same period in the previous year. The net profit margin was 1.9%. Revenue for the period reduced slightly by 1% to USD 11.4 billion. During the report period, Emirates experienced an unfavourable currency environment. The US dollar continued to strengthen against most other major, revenue-generating currencies, and increased competition resulted in lower average fares.

Emirates' operating costs significantly benefited from the lower oil price. Fuel costs were on average 10% lower compared to the same period last year. The share of operating costs, compared with the first six months of last year, decreased from 28% to 24%. Emirates' total operating costs increased by 5% against the overall capacity increase of 9%.

As of 30 September 2016, the balance sheet total amounted to USD 30.9 billion, a decrease of 5% compared to the beginning of the financial year. Total equity increased by 4.6% to USD 9.2 billion with an equity ratio of 29.9%. The current ratio stood at 0.77, meaning the airline would be able to meet about three-quarters of its current liabilities by liquidating all its current assets. Significant items on the liabilities side of the balance sheet included current and non-current borrowings and lease liabilities in the amount of USD 12.4 billion. As of 30 September 2016, the carrier's cash balance was USD 3.2 billion, down by USD 2.2 billion compared to the beginning of the financial year. This also included the repayment of two bonds in the total amount of more than USD 1.1 billion.

During the first half of the 2016/17 financial year, Emirates continued to increase its capacity for passengers (measured in ASK) by 12%. At the same time, the airline recorded 8% more RPKs than in the same period the previous year. As a result, the passenger load factor dropped by 3 percentage points to 75.3%. This key indicator is almost identical to the average passenger load factor in the Middle East of 75.4%. Emirates carried 28 million passengers between 1 April and 30 September 2016, 9% up from the same period last year.

In March 2017, Emirates' president Tim Clark provided guidance on the results for the financial year ending on March 31, 2017: Full-year results are expected to be below those of the 2014/15 and 2015/16 financial years, during which the carrier generated a net income of USD 1.24 billion and USD 1.94 billion respectively. Responding to an increased volatility of the business environment Emirates is undertaking a "major exercise" to adjust its business amid changing customer demand. "The world is in a high degree of volatility for all sorts of reasons. And the way people travel, their decision to be travelling, the amount of money they are prepared to pay, new entrants coming to the market … this is all changing." Clark also said Emirates is evaluating the future deployment of narrow body aircraft. But a strategic decision has not been made so far.

During the calendar year 2016, the airline received 36 wide body aircraft, consisting of 20 Airbus A380 and 16 Boeing 777-300ER. At the same time, 29 older aircraft were retired. At year end, the fleet had an average age of 5.0 years, well below the industry average of over 11 years. Emirates