TIDMDPA
RNS Number : 1606X
DP Aircraft I Limited
26 August 2015
DP AIRCRAFT I LIMITED ('the Company')
UNAUDITED CONDENSED CONSOLIDATED INTERIM REPORT
Period from 1 JANUARY 2015 to 30 JUNE 2015
COMPANY OVERVIEW
DP Aircraft I Limited (the 'Company') was incorporated
with limited liability in Guernsey under The Companies
(Guernsey) Law, 2008 as amended, on 5 July 2013 with registered
number 56941.
The Company was established to invest in aircraft. The
Company is a holding company, and makes its investment
in aircraft through four wholly owned subsidiary entities,
DP Aircraft Guernsey I Limited, DP Aircraft Guernsey II
Limited, DP Aircraft Guernsey III Limited and DP Aircraft
Guernsey IV Limited (collectively and hereinafter, the
'Borrowers'), each being a Guernsey Incorporated company
limited by shares, and two intermediate lessors, an Irish
incorporated private limited company and a UK incorporated
private company (together the 'Lessors'). The Company and
its subsidiaries (the Borrowers and the Lessors) comprise
the Group.
Pursuant to the Company's Prospectus dated 27 September
2013, the Company offered 113,000,000 Ordinary Preference
Shares (the 'Shares') of no par value in the capital of
the Company at an issue price of US$1.00 per Share by means
of a Placing. The Company's Shares were admitted to trading
on the Official List of the Channel Islands Stock Exchange
and to trading on the Specialist Fund Market of the London
Stock Exchange on 4 October 2013. As the ISA Regulations
were amended last year so that shares traded on the Specialist
Fund Market are now eligible in their own right for inclusion
in an ISA, on 27 May 2015, the Company delisted its Shares
from the Official List of the Channel Islands Stock Exchange.
On 5 June 2015, the Company offered 96,333,333 Ordinary
Preference Shares (the 'New Shares') of no par value in
the capital of the Company at an issue price of US105.89
cents per Share by means of a Placing. The Company's New
Shares were admitted to trading on the Specialist Fund
Market of the London Stock Exchange on 12 June 2015.
In total there are 209,333,333 Ordinary Preference Shares
in issue with voting rights.
INVESTMENT OBJECTIVE & POLICY
The Company's investment objective is to obtain income
and capital returns for its Shareholders by acquiring,
leasing and then, when the Board considers it appropriate,
selling aircraft (the 'Asset' or 'Assets').
To pursue its investment objective, the Company uses the
net proceeds of placings and other equity capital raisings,
together with loans and borrowings facilities, to acquire
aircraft which will be leased to one or more international
airlines.
THE BOARD
The Board comprises three independent non-executive directors.
The Directors of the Board are responsible for managing
the business affairs of the Company in accordance with
the Articles of Incorporation and have overall responsibility
for the Company's activities, including portfolio and risk
management, while the asset management of the Group is
undertaken by DS Aviation GmBH & Co. KG (the 'Asset Manager').
THE ASSET MANAGER
The Asset Manager has undertaken to provide the asset management
services to the Company under the terms of an asset management
agreement but does not undertake any regulated activities
for the purpose of the UK Financial Services and Markets
Act 2000.
DISTRIBUTION POLICY
The Company aims to provide Shareholders with an attractive
total return comprising income, from distributions through
the period of the Company's ownership of the Assets, and
capital, upon any sale of the Assets. The Company targets
a quarterly distribution in February, May, August and November
of each year. The target distribution is 2.25 cents per
Share per quarter. This is a target level of dividends
only and should not be treated as an assurance or guarantee
of performance or a profit forecast.
Fact Sheet - DP Aircraft I Limited
Ticker DPA
Company Number 56941
ISIN Number GG00BBP6HP33
SEDOL Number BBP6HP3
Traded SFM
SFM Admission Date 4 October 2013
Share Price 105.0 cents as at 20 August 2015
106.0 cents as at 30 June 2015
Country of Incorporation Guernsey
Current Shares in Issue 209,333,333
Administrator and Company Secretary Dexion Capital (Guernsey) Limited
Asset Manager DS Aviation GmbH & Co. KG
Auditor and Reporting Accountant KPMG, Chartered Accountants
Corporate Broker Canaccord Genuity Limited
Aircraft Registration EI-LNA
EI-LNB
HS-TCC
HS-TQD
Aircraft Serial Numbers 35304
35305
36110
35320
Aircraft Type and Model B787-8
Lessees Norwegian Air Shuttle ASA
Thai Airways International Public
Company Limited
Website www.dpaircraft.com
HIGHLIGHTS
PROFIT BEFORE TAX
Profit Before Tax of 4.26 cents per Share for the interim accounting
period from 1 January 2015 to 30 June 2015 (4.367 cents per Share
1 January 2014 to 30 June 2014).
No tax arises on the profit of the Company as it is Guernsey
resident where the standard rate of income tax for companies
is nil. Therefore the Profit Before and After tax in the period
of US$5,226,004 (2014: US$4,934,920) is the same.
NET ASSET VALUE ('NAV')
The NAV (post the interim dividends) was 100.71 cents per Share
as at 30 June 2015 (95.262 cents per Share as at 30 June 2014).
Although the fair values of the derivatives and associated debt
liabilities will move over their terms, at maturity the derivatives
will reduce to nil and the fair value of the associated debt
liabilities will equate to their amortised cost.
As at 30 June As at 31 December
2015 2014
US Cents per US Cents per
Share Share
NAV including swap liabilities 0.98466 0.93575
NAV excluding swap liabilities 1.00713 0.98151
INTERIM DIVIDENDS
Dividends were declared on:
20 January 2015 for the period ended 31 December 2014 of 2.25
cents per Share, paid 13 February 2015;
20 April 2015 for the period ended 31 March 2015 of 2.25 cents
per Share, paid 18 May 2015; and
17 July 2015 for the period ended 30 June 2015 of 2.25 cents
per Share, paid on 14 August 2015.
OFFICIAL LISTING
The Company's Shares were first admitted to trading on the Official
List of the Channel Islands Stock Exchange and to trading on
the Specialist Fund Market of the London Stock Exchange on 4
October 2013. The Company's Shares were delisted from the Official
List of the Channel Islands Stock Exchange on 27 May 2015.
PLACING OF SHARES
On 12 June 2015, 96,333,333 Shares were issued at a price of
105.89 cents per Share pursuant to a Placing Agreement, dated
5 June 2015, between the Company, DS Aviation, JS Holding (DS
Aviation and JS Holding together the 'Asset Manager Parties')
and Canaccord Genuity (the Company's Corporate Broker) whereby
Canaccord Genuity acted as agent for the Company, to procure
subscribers for Shares under the Placing of shares at the Issue
Price (the 'Placing'). The Placing raised gross proceeds of US$102.0m.
AQUSITION OF AIRCRAFT
Two additional aircraft were purchased on 18 June 2015 with the
equity from the Placing and from new borrowings. Due to the timing
of the purchases, the impact on net profit was minimal as at
and for the period ended 30 June 2015.
CHAIRMAN'S STATEMENT
I am pleased to present Shareholders with the interim report
of the Company for the six month period to 30 June 2015.
There were two major corporate actions during the period to 30
June 2015.
Prospectus
On 5 June 2015 the Company published a new Prospectus in connection
with the placing of 96,333,333 new ordinary preference shares
of no par value at 105.89 cents per share. The Placing was issued
to raise gross proceeds of US$102m, the net proceeds of which
were used by the Company to finance the acquisition of two additional
(MORE TO FOLLOW) Dow Jones Newswires
August 26, 2015 08:30 ET (12:30 GMT)
Boeing 787-8 aircraft. The Placing was issued in full and announced
to the market on 10 June 2015, with the new shares admitted to
trading on the Specialist Fund Market on 12 June 2015.
Additional Aircraft
The two additional assets were purchased in June from AerCap
Ireland Capital Limited with attached leases to Thai Airways
International Public Company Limited.
This was a welcome opportunity and I wish to express my thanks
to the Asset Manager and to the Board for their commitment and
dedication in the execution of the transactions.
The total shareholder return for the period was 4.26 cents compared
to 4.367 cents for the same period last year and the continued
performance of the Lessors enabled the Company to meet its quarterly
dividend targets as described in the Highlights section.
Outlook
As explained by the Asset Manager in its report, starting on
page 7, the International Air Transport Association (IATA) has
raised its projections for global net profits in 2015 from USD
25.0 billion to USD 29.3 billion; expects air travel to grow
by 6.7 per cent; forecasts that 1 per cent. of global GDP will
be spent on air transport over the year, representing an amount
in excess of USD 760 billion; and believes that both total employment
and productivity will rise by more than 3 per cent.
This news bodes well for the remainder of the year.
Your board of directors is available via the Company Secretary,
whose details can be found at the end of this report.
Jon Bridel
Chairman
ASSET MANAGER'S REPORT
Overview and Development - The Aviation Market
The positive outlook for the airline industry has strengthened
as the year has gone on. The International Air Transport Association
(IATA) has raised its projections for global net profits in 2015
from USD 25.0 billion to USD 29.3 billion; expects air travel
to grow by 6.7 per cent.; forecasts that 1 per cent. of global
GDP will be spent on air transport over the year, representing
an amount in excess of USD 760 billion; and believes that both
total employment and productivity will rise by more than 3 per
cent.
European airlines have had to deal with high levels of competition
and significant regulatory costs. Nevertheless, the region has
achieved the second highest load factors and is generating solid
growth. IATA expects net profits for European airlines to grow
to USD 5.8 billion in 2015. In May 2015, international air travel
for European carriers increased by 5.9 per cent compared to the
same month in the previous year.
Air traffic in the Asia-Pacific region is forecast to grow by
8.1 per cent in 2015 and net profit to increase to USD 5.1 billion.
With Revenue Passenger Kilometres (RPK) in the first five months
of 2015 growing by 8.6 per cent. on the same period last year,
and Available Seat Kilometres (ASK) increasing by only 6.7 per
cent. over the equivalent period, this had a positive impact
on load factors. According to Airbus (Global Market Forecast
2015-2034), the Asia-Pacific region will continue to take the
lead in world traffic over the next 20 years. Currently, this
region has a 29 per cent. share of world traffic measured in
RPK.
Lower crude oil prices have had a positive impact on the aviation
business, but this has been offset to a large extent by the strength
of the US Dollar. However, airlines remain prudent, and IATA's
air passenger market analysis of May 2015 shows that airlines
have been adding capacity at a slower rate than the expansion
in demand, leading to improved load factors. In any event, given
the uncertainty as to future oil prices, aircraft benefitting
from the latest technology, such as the Dreamliner Boeing B787,
will stay in strong demand.
The long-term outlook remains positive for both the aviation
market and the levels of demand for new aircraft. According to
their latest published market outlooks, both Boeing (Current
Market Outlook 2015-2034) and Airbus remain of the opinion that
passenger fleets will double by 2034. Airbus estimates that the
current aircraft fleet of around 19,000 will grow to 38,500 aircraft
in 2034 and that wide-body aircraft will represent 55 per cent.
of value. According to IATA, around 1,700 aircraft valued at
USD 180 billion will be delivered to commercially operating airlines
in 2015 to replace older aircraft and to further the growth of
the global fleet. Boeing forecasts that 54 per cent. of twin
aisle aircraft deliveries over the next twenty years will be
within the 200-300 seat category. On top of that, Boeing estimates
annual growth rates of airline traffic (RPK) at 4.9 per cent.
on average over the next 20 years. The manufacturer made its
forecast based upon the assumption of an average annual increase
of 3.1 per cent. in global GDP over the same period.
IATA has calculated that the aviation sector provides 58 million
jobs as well as USD 2.4 trillion in GDP. In 2015, it is anticipated
that 3.5 billion passengers and nearly 55 million tonnes of cargo
will be transported by air - over half of all international tourists
and a third of world trade travels in this way. All these numbers
emphasise the importance of the aviation and airline market in
connecting people and supporting global trade and economic growth.
The Assets - Four Dreamliner Boeing 787-8s
As at 5 June 2015, a total of 1,105 Dreamliner B787s had been
ordered from 60 customers, and 283 aircraft of these had been
delivered to 31 operators. 50 Dreamliners were ordered in the
first half of 2015 and, with a current backlog of around 800
aircraft orders and production fully sold out until 2019, it
is clear that the aircraft remains in high demand. The Dreamliner
Boeing 787 still ranks alongside the Airbus A350 (which entered
into commercial service on 15 January 2015) as the latest technological,
mid-size wide-body aircraft available in the market.
The advantages of the Boeing 787 are numerous. Alongside lower
operational costs and a better environmental performance, the
aircraft has interchangeable engines and shares a common pilot
type rating with Boeing 777 aircraft. Furthermore the Boeing
787, especially the B787-8, is a suitable aircraft for point-to-point
routes and a market opener. Worldwide, there are over 55 new
non-stop markets connected with the B787.
Since DP Aircraft I Limited took title of both LNA and LNB in
2013, Norwegian has met all of its lease obligations in full.
The same applies to Thai Airways where title transfer of TQC
and TQD took place this June. Both carriers operate their aircraft
in a two-class configuration. Norwegian's cabins provide 32 premium
economy plus 259 economy seats, while Thai Airways' cabins offer
seating for 24 business ("Royal Silk Class") and 240 economy
passengers. Whereas Norwegian uses its B787 aircraft to serve
Bangkok and destinations in the U.S., Thai Airways currently
deploys its B787s on routes within the Asia-Pacific region as
well as to and from destinations in Australia.
The Lessees
Norwegian Air Shuttle ASA
Norwegian Air Shuttle is the first low-cost carrier offering
non-stop flights from Scandinavia to the U.S. In 2014, the airline
transported nearly 24 million passengers. As at 30(th) June 2015,
the carrier operated 434 scheduled routes to 130 destinations
in 39 countries. This includes 18 non-stop long-haul routes between
Europe and the U.S., as well as Thailand. In autumn 2015, Norwegian
will add three new long-haul destinations from the UK and Scandinavia,
operating flights to Puerto Rico, St. Croix (in the US Virgin
Islands) and Las Vegas. In May 2016, Norwegian will open a new
route between London-Gatwick and Boston. The total fleet comprises
100 aircraft at the end of the second quarter 2015. The carrier
was awarded "Europe's Best Low Cost Airline" and "World's Best
Low Cost, Long Haul Airline" by Skytrax in 2015.
In the second quarter of 2015, ASKs and RPKs increased by 8 per
cent. and 15 per cent. respectively compared to the same period
in the preceding year. The load factor increased by 5 percentage
points to 85 per cent. and operating revenues increased by 16
per cent. EBITDAR (excluding other gains and losses) improved
by 122 per cent. The operating profit for the first quarter was
NOK 520.5 million (USD 66.1 million) compared to an operating
loss of NOK 85.1 million (USD 13.9 million) over the equivalent
period, while net profit increased by 153 per cent. Ancillary
revenues per scheduled passenger increased in the same period
by 14 per cent. At 30 June 2015, cash and cash equivalents amounted
to NOK 3,045.4 million (USD 386.9 million). In June 2015, Norwegian
Air Shuttle transported 7 per cent. more passengers than in the
same month in the previous year. Furthermore the unit revenue
(Revenue per ASK) increased by 6 per cent.
Norwegian's Q2 2015 results have been affected by the weak Norwegian
currency but this has been outweighed by the lower fuel price.
The load factor of long-haul operations was 91 per cent. and
passenger numbers have more than doubled compared to the equivalent
period last year. Norwegian's strongest passenger growth was
at London Gatwick. Since starting long-haul operations two years
ago with two B787 aircraft, the carrier has transported 1.7 million
passengers on routes to and from Bangkok and the United States.
In April 2015, Norwegian took delivery of its eighth B787-8.
The carrier will receive another four Dreamliners in 2016, three
in 2017 and a further two B787s in 2018 so that it will operate
a fleet of 17 Boeing Dreamliner 787s by the end of 2018. Last
but not least, Norwegian is targeting growth of 30 per cent.
in ASKs on its long-haul routes by the end of this year and expects
positive contribution from long-haul operations going forward.
(MORE TO FOLLOW) Dow Jones Newswires
August 26, 2015 08:30 ET (12:30 GMT)
Thai Airways International
Thai Airways International Public Company Limited is a global
full-service carrier with 55 years of experience, and is one
of the founding members of the Star Alliance airline alliance.
As at 31 March 2015, Thai Airways (including its subsidiary Thai
Smile) had an active fleet of 93 aircraft. The fleet consists
of 20 narrow-body aircraft and 73 wide-body aircraft, of which
4 aircraft are Boeing 787-8s. The carrier transported more than
19 million passengers in 2014. The airline serves over 70 international
and domestic destinations across four continents. The flag carrier
of the Kingdom of Thailand is market-listed and majority-owned
by the Thai Government (51.03 per cent). Thai Airways is a member
of IATA as well as IOSA certified (IATA Operational Safety Audit
- the benchmark for global safety management in airlines). Moreover,
Thai Airways is rated a four star airline by Skytrax.
Thai's network as at 28(th) March 2015 served 66 international
destinations in 34 countries and 7 cities within Thailand. Its
subsidiary Thai Smile served 10 regional routes. As a result
of its dense network within Thailand and South-East Asia as well
as a result of its rewarded service, Thai Airways attracts a
high percentage of holiday travellers. Moreover, owing to its
aforementioned excellent service and customer-orientation the
airline is also attracting the higher yield traveller segment
of international, less price-sensitive, business customers. In
2015, Thai Airways was placed first in "World's Best Airline
Lounges Spa Facility" by the Skytrax World Awards.
The results for the first quarter of 2015 show that ASKs increased
by 4.5 per cent. whereas RPKs grew by 12.3 per cent and consequently
the load factor increased by 5.3 percentage points compared to
the equivalent quarter in the previous year. Operating revenues
increased by 3.4 per cent. while operating expenses decreased
by 11.71 per cent. EBIT was THB 5,825 million (USD 171.6 million)
and net profit augmented to THB 4,541 million (USD 133.8 million).
However, the net profit was influenced by gains on foreign exchange
as well as by an impairment charge because of the phase out of
12 aircraft. In May 2015 compared to the same month in the previous
year, the number of carried passengers increased by 13.4 per
cent. and cabin load factor grew by more than 6 percentage points.
ASKs remained stable and RSKs increased by 11 per cent. in this
period.
The airline's recently implemented restructuring plan is intended
to improve both profitability and cost-efficiency as well as
customer-orientation. Thai Airways has started to offer Wi-Fi-connectivity
on board selected aircraft and has increased the free baggage
allowance. Further initiatives which have already been implemented
include the reduction of the fleet and its complexity, as well
as the adjustment of the network and the discontinuation of unprofitable
routes. Currently the carrier operates a fleet of five B787-8s
which form part of the move towards fleet restructuring and modernisation.
Thai Airways plans to increase its Dreamliner fleet to eight
aircraft in 2017.
DS Aviation GmbH & Co. KG
Member of Dr. Peters Group
Stockholmer Allee 53
44269 Dortmund, Germany
DIRECTORS
The current Directors of the Company were appointed on 9 July
2013 and are as follows:
Jonathan (Jon) Bridel, Non- Executive Chairman (50)
Jon is a Guernsey resident and is currently a non-Executive Director
of Alcentra European Floating Rate Income Fund Limited, Starwood
European Real Estate Finance Limited, The Renewables Infrastructure
Group Limited and Sequoia Economic Infrastructure Income Fund
Limited, which are all listed on the Main Market of the London
Stock Exchange. Other companies of which he is a director include
Aurora Russia Limited and Fair Oaks Income Fund Limited. Jon
was previously Managing Director of Royal Bank of Canada's investment
businesses in the Channel Islands and served as a Director on
other RBC companies including RBC Regent Fund Managers Limited.
Prior to joining RBC, Jon served in a number of senior management
positions in banking, specialising in credit and corporate finance
and private businesses as Chief Financial Officer in London,
Australia and Guernsey, having previously worked at Price Waterhouse
Corporate Finance in London.
Jon graduated from the University of Durham with a degree of
Master of Business Administration, and holds qualifications from
the Institute of Chartered Accountants in England and Wales (1987)
where he is a Fellow, the Chartered Institute of Marketing and
the Australian Institute of Company Directors. Jon is a Chartered
Marketer and a member of the Chartered Institute of Marketing
and the Institute of Directors and a Chartered Fellow of the
Chartered Institute for Securities and Investment.
Didier Benaroya, Non- Executive Director (64)
Having previously worked as the founder and senior partner of
the Transportation Group and the managing director of Paine Webber,
Didier has extensive experience in the transportation industry.
He is currently resident in the UK and is the founder and a director
of Numera Limited and Numera Services Limited, which has advised
investors, lessors, banks, operating lease companies and airlines
on aircraft and airline related transactions (including leasing,
financing and restructuring) since 1995. Didier holds a BS in
Economics, an MS in Mathematics and Applied Computer Science
from the University of Paris, and an MBA from Northwestern University's
Kellog School of Management.
Jeremy Thompson, Non- Executive Director (59)
Jeremy is a Guernsey resident with sector experience in finance,
telecoms, aerospace & defence and oil & gas. Since 2009 Jeremy
has been a consultant to a number of businesses which includes
non-executive directorships of investment vehicles relating to
the BT pension scheme. He is also a non-executive director of
private equity funds and of the Investment Manager of a London
listed solar energy fund. Between 2005 and 2009 he was a director
of multiple businesses within a private equity group. This entailed
an active participation in private, listed and SPV companies.
Prior to that he was chief executive officer of four autonomous
businesses within Cable & Wireless PLC (operating in both regulated
and unregulated markets), and earlier held MD roles within the
Dowty Group. Jeremy currently serves as chairman of the States
of Guernsey Renewable Energy Team and is a commissioner within
the Alderney Gambling Control Commission and is also a member
of the Guernsey Tax Tribunal panel. Jeremy received a B.Sc. from
Brunel University, London and was awarded an MBA from Cranfield
University. He was an invited member to the UK's senior defence
course (RCDS). Jeremy has been awarded the Institute of Directors'
Certificate and Diploma in Company Direction and is a member
of the Institute of Directors. He is currently studying for an
M.Sc in Corporate Governance.
STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES
In preparing these unaudited condensed consolidated interim financial
statements, the nature of the risks and uncertainties borne of
the group were the same as those that applied to the consolidated
financial statements as at, and for the period ended 31 December
2014.
Asset risk
The Company's Assets comprise four Boeing 787-8 aircraft. The
Boeing 787-8 remains a relatively newly developed generation
of aircraft; there is currently insufficient experience and data
available to be able to give a complete assessment of the long-term
use and operation of the aircraft; the Company is exposed to
the used aircraft market of the 787-8, which is untested.
Market risk
The airline industry is particularly sensitive to changes in
economic conditions and is highly competitive; risks affecting
the airline industry generally could affect the ability of Norwegian
and/or Thai Airways (or any other lessee) to comply with their
obligations under the Leases (or any subsequent lease).
There is no guarantee that, upon expiry of the Leases, the Assets
could be sold for an amount that will enable Shareholders to
realise a capital profit on their investment or to avoid a loss.
Costs regarding any future re-leasing of the assets would depend
upon various economic factors and would be determinable only
upon an individual re-leasing event.
Key personnel risk
The ability of the Company to achieve its investment objective
is significantly dependent upon the expertise of certain key
personnel at DS Aviation; there is no guarantee that such personnel
will be available to provide services to the Company for the
scheduled term of the Leases or following the termination of
any of the Leases. However, Key Man clauses within the Asset
Management agreement do provide a base line level of protection
against this risk.
Credit risk & Counterparty Risk
Norwegian Air Shuttle ASA's ('Norwegian') stated strategy of
providing low-cost long haul flights is untested and may not
be successful; failure of this strategy, or of any other material
part of Norwegian's business, may adversely affect Norwegian's
ability to comply with its obligations under the Leases. Any
failure by Norwegian to pay any amounts when due would have an
adverse effect on the Group's ability to comply with its obligations
under loan agreements, could ultimately have an impact on the
Company's ability to pay dividends and could result in the Lenders
enforcing their security and selling the relevant Asset or Assets
on the market potentially negatively impacting the returns to
investors. In mitigation, Norwegian is the second largest airline
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August 26, 2015 08:30 ET (12:30 GMT)
in Scandinavia and the third largest low-cost airline in Europe.
Thai Airways International Public Company Limited ('Thai Airways')
is an international full-service flag carrier. There is no guarantee
that the business model of Thai Airways will be successful. Failure
of any material part of the business model of Thai Airways may
have an adverse impact on its ability to comply with the new
leases. Thai Airways was founded in 1960 and is the national
carrier of the Kingdom of Thailand. The Company's paid up capital
amounted to approximately US$663.53m. as at 31 December 2014.
The majority shareholding is owned by the Ministry of Finance
and the Thai Government Savings Bank. Thai Airways is also listed
on the stock exchange of Thailand.
Liquidity risk
In order to finance the purchase of the Assets, the Group has
entered into four separate Loan Agreements pursuant to which
the Group has borrowed an amount of US$159,600,000 from Norddeutsche
Landesbank Girozentrale ('Nordbank') and US$157,000,000 from
DekaBank Deutsche Girozentrale ('DekaBank'). Pursuant to the
Loan Agreements, the Lenders are given first ranking security
over the Assets. Under the provisions of each of the Loan Agreements,
the Borrowers are required to comply with loan covenants and
undertakings. A failure to comply with such covenants or undertakings
may result in the relevant Lenders recalling the relevant Loan.
In such circumstances, the Group may be required to sell the
relevant Asset to repay the outstanding relevant Loan.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that to the best of their knowledge and
belief that:
-- the unaudited Interim Report has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted by the
EU;
-- the unaudited Interim Report (comprising the Chairman's
Statement, the Asset Manager's Report and the Statement
of Principal Risks and Uncertainties) meets the requirements
of an interim management report, and includes a fair review
of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules,
being an indication of important events that have occurred
during the interim accounting period from 1 January 2015
to 30 June 2015 and their impact on the condensed set of
financial statements; and a description of the principal
risks and uncertainties for the remaining six months of
the full financial reporting period; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules,
being related party transactions that have taken place during
the interim accounting period from 1 January 2015 to 30
June 2015 and that have materially affected the financial
position or performance of the entity during that period;
any changes in the related parties transactions described
in the last annual report that could have a material effect
on the financial position or performance of the enterprise
in the first six months of the current financial year.
GOING CONCERN
After making enquiries, the Directors have a reasonable expectation
that the Group has adequate resources to continue in operational
existence for the foreseeable future. The Directors believe the
Group is well placed to manage its business risks successfully
with the cooperation of the Asset Manager.
By order of the Board
Jon Bridel
Chairman
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT
OR LOSS AND COMPREHENSIVE INCOME
for the period 1 January 2015 to 30 June 2015
1 January 1 January 5 July 2013
to to to
30 June 30 June 2014 30 June 2014
2015
Notes US$ US$ US$
Revenue
Lease rental income 4 15,783,513 14,959,499 21,214,901
Expenses
Asset management fees 5 (270,690) (249,996) (362,897)
General and administrative
expenses 5 (361,023) (309,085) (1,199,144)
Depreciation and amortisation 6 (5,932,156) (5,425,170) (8,137,755)
---------------------------------------------------------- ------------------------------------ ----------------------- --------------------------- ------------------------------------------
(6,563,869) (5,984,251) (9,699,796)
Operating profit 9,219,644 8,975,248 11,515,105
Share based disposal
fee 17 (114,000) - -
Finance costs 7 (3,882,019) (4,041,196) (5,867,026)
Finance income 7 822 870 3,075
---------------------------------------------------------- ------------------------------------ ----------------------- --------------------------- ------------------------------------------
Net Finance Costs (3,995,197) (4,040,326) (5,863,951)
Unrealised foreign exchange gain 1,557 (2) 9
Profit for the period 5,226,004 4,934,920 5,651,163
------------------------------------------------------------------------------------------------ ----------------------- --------------------------- ------------------------------------------
Other Comprehensive Income
Items that are or may be reclassified
to profit or loss
------------------------------------------------------------------------------------------------ ----------------------- --------------------------- ------------------------------------------
Cash flow hedges - Changes in
Fair Value 468,563 (3,124,486) (3,774,973)
------------------------------------------------------------------------------------------------ ----------------------- --------------------------- ------------------------------------------
Total Comprehensive Income for
the period 5,694,567 1,810,434 1,876,190
------------------------------------------------------------------------------------------------ ----------------------- --------------------------- ------------------------------------------
US$ US$ US$
Earnings per Share for the period
- Basic and diluted* 0.0426 0.04367 0.05001
------------------------------------------------------------------------------------------------ ----------------------- --------------------------- ------------------------------------------
In arriving at the Total Comprehensive Income for the period,
all amounts above relate to continuing operations.
*
1 January - 30 June 2015
The earning per Share has been calculated based on the profit
for the period of $5,226,004 divided by the weighted average
number of shares outstanding over the reporting period of 122,580,110.
1 January - 30 June 2014
(MORE TO FOLLOW) Dow Jones Newswires
August 26, 2015 08:30 ET (12:30 GMT)
The earnings per Share has been calculated based on the profit
after tax of $4,934,920 divided by the 113m shares in issue since
4 October 2013 on the basis that the Group only commenced its
operations from that date.
The notes form part of these financial statements
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
as at 30 June 2015
30 June 2015 31 December
2014
(Unaudited) (Audited)
Notes US$ US$
NON-CURRENT ASSETS
Property, Plant and Equipment - Aircraft 6 451,485,700 225,556,091
Intangible Asset - Aircraft Lease
Premium 6 52,160,708 25,035,907
503,646,408 253,621,998
CURRENT ASSETS
Cash and cash equivalents 9 7,578,969 5,046,920
Restricted cash 8 19,663,388 7,442,092
Trade and other receivables 10 1,201 29,933
---------------------------------------------------------------------------------------------------------------- ------- --------------------------- ------------------------------------------
Total Current Assets 27,243,558 12,518,945
TOTAL ASSETS 530,889,966 266,140,943
---------------------------------------------------------------------------------------------------------------- ------- --------------------------- ------------------------------------------
EQUITY
Share Capital 11 210,658,785 110,885,220
Hedging Reserve 14 (4,703,050) (5,171,613)
Retained Earnings 166,730 25,726
---------------------------------------------------------------------------------------------------------------- ------- --------------------------- ------------------------------------------
Total Equity 206,122,465 105,739,333
NON-CURRENT LIABILITIES
Loans and Borrowings 12 275,072,352 135,629,715
Maintenance reserves 12 6,398,793 1,042,092
Security deposits 12 13,264,420 6,400,000
Share based payment provision 14 114,000 -
Derivative instrument liability 14 4,703,050 5,171,613
Total Non-Current Liabilities 299,552,615 148,243,420
CURRENT LIABILITIES
Loans and borrowings 13 21,574,459 *10,866,081
Rent received in advance 13 2,619,456 1,122,764
Trade and other payables 13 1,020,971 *169,345
---------------------------------------------------------------------------------------------------------------- ------- --------------------------- ------------------------------------------
Total Current Liabilities 25,214,886 12,158,190
TOTAL LIABILITIES 324,767,501 160,401,610
---------------------------------------------------------------------------------------------------------------- ------- --------------------------- ------------------------------------------
TOTAL EQUITY AND LIABILITIES 530,889,966 266,140,943
---------------------------------------------------------------------------------------------------------------- ------- --------------------------- ------------------------------------------
*US$333,067 previously included in Trade and other payables has
been re-analysed to Loans and Borrowings
These Financial Statements were approved by the Board of Directors
on 25 August 2015 and signed on its behalf by:
Jon Bridel Jeremy Thompson
Chairman Director
The notes form part of these financial statements
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the period 1 January 2015
to 30 June 2015
1 January 5 July 2013
to to
30 June 2015 30 June 2014
US$ US$
OPERATING ACTIVITIES
Profit for the period 5,226,004 5,651,163
Adjusted for:
Depreciation and amortisation 5,932,156 8,137,755
Amortisation of deferred loans
and borrowings 80,893 114,960
Finance costs 3,801,126 5,867,026
Changes in:
Increase/(decrease) in maintenance
reserves 5,356,701 812,545
Increase/(decrease) in security
deposits 6,864,420 6,400,000
Increase/(decrease) in rent
received in advance 1,496,692 1,160,189
Increase/(decrease) in trade
(MORE TO FOLLOW) Dow Jones Newswires
August 26, 2015 08:30 ET (12:30 GMT)
and other payables 560,608 460,582
Increase/(decrease) in cash settled share 114,000 -
based payment
Decrease/(increase) in receivables 28,732 (724)
NET CASH FLOW FROM OPERATING
ACTIVITIES 29,461,332 28,603,496
------------------------------------------------------------------------------------------ ----------------------------- --------------------------- ----------------------------------------------
INVESTING ACTIVITIES
Purchase of Aircraft (255,956,566) (265,041,612)
Restricted cash (12,221,296) (7,212,545)
NET CASH FLOW FROM INVESTING
ACTIVITIES (268,177,862) (272,254,157)
------------------------------------------------------------------------------------------ ----------------------------- --------------------------- ----------------------------------------------
FINANCING ACTIVITIES
Dividend paid (5,085,000) (5,085,000)
Share issue proceeds 102,007,365 113,000,000
Share issue costs (2,233,800) (5,994,469)
New loans and borrowings 157,000,000 159,600,000
Loan principal repaid (4,993,655) (6,637,631)
Financing costs (3,843,175) (5,867,026)
Deferred loans and borrowings
facility costs (1,603,156) (1,839,391)
------------------------------------------------------------------------------------------ ----------------------------- --------------------------- ----------------------------------------------
NET CASH FLOW FROM FINANCING
ACTIVITIES 241,248,579 248,466,483
------------------------------------------------------------------------------------------ ----------------------------- --------------------------- ----------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING 5,046,920 -
OF PERIOD
Increase in cash and cash equivalents 2,532,049 4,815,822
CASH AND CASH EQUIVALENTS AT END OF PERIOD 7,578,969 4,815,822
------------------------------------------------------------------------------------------------------------------------- --------------------------- ----------------------------------------------
The notes form part of these financial statements
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
for the period 1 January 2015 to
30 June 2015
Ordinary Retained Hedging Reserve Total
Shares Earnings
Share Capital
US$ US$ US$ US$
Balance at 1 January
2015 110,885,220 25,726 (5,171,613) 105,739,333
Total Comprehensive Income for
the period
Profit for the period - 5,226,004 - 5,226,004
Other comprehensive income - - 468,563 468,563
------------------------------------------------------------------ ------------------------------------- -------------- --------------------------- ----------------------------------------------
Total comprehensive income - 5,226,004 468,563 5,694,567
------------------------------------------------------------------ ------------------------------------- -------------- --------------------------- ----------------------------------------------
Transactions with Shareholders
Issue of ordinary shares 102,007,365 - - 102,007,365
Share issue costs (2,233,800) - - (2,233,800)
Dividends - (5,085,000) - (5,085,000)
------------------------------------------------------------------ ------------------------------------- -------------- --------------------------- ----------------------------------------------
Balance as at 30 June
2015 210,658,785 166,730 (4,703,050) 206,122,465
------------------------------------------------------------------ ------------------------------------- -------------- --------------------------- ----------------------------------------------
for the period 5 July 2013 to 30
June 2014
Ordinary Retained Hedging Total
Shares Earnings Reserve
Share Capital
US$ US$ US$ US$
Balance at 5 July 2013 - - - -
Total Comprehensive Income for
the period
Profit for the period - 5,651,163 - 5,651,163
Other comprehensive income - - (3,774,973) (3,774,973)
------------------------------------------------------------------ ------------------------------------- ---------------------- ------------------- ----------------------------------------------
Total comprehensive income - 5,651,163 (3,774,973) 1,876,190
------------------------------------------------------------------ ------------------------------------- ---------------------- ------------------- ----------------------------------------------
Transactions with Shareholders
(MORE TO FOLLOW) Dow Jones Newswires
August 26, 2015 08:30 ET (12:30 GMT)
Issue of ordinary shares 113,000,001 - - 113,000,001
Share issue costs (2,114,781) - - (2,114,781)
Dividends - (5,085,000) - (5,085,000)
------------------------------------------------------------------ ------------------------------------- ---------------------- ------------------- ----------------------------------------------
Balance as at 30 June
2014 110,855,220 566,163 (3,774,973) 107,646,410
------------------------------------------------------------------ ------------------------------------- ---------------------- ------------------- ----------------------------------------------
On 20 January 2015, the Company declared an interim dividend, in
respect of the period ended 31 December 2014, of 2.25 cents per
Share, to holders of Shares on the register at 30 January 2015.
The ex-dividend date was 29 January 2015, with payment made 13
February 2015.
On 20 April 2015, the Company declared an interim dividend, in
respect of the period ended 31 March 2015, of 2.25 cents per Share,
to holders on the register at 1 May 2015. The ex-dividend date
was 30 April 2015, with payment made 18 May 2015.
The notes form part of these financial statements
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
for the period 1 January 2015 to 30 June 2015
1. GENERAL INFORMATION
The unaudited interim condensed consolidated financial statements
('financial statements') incorporate the results of the Company
and that of wholly owned subsidiary entities, DP Aircraft Guernsey
I Limited, DP Aircraft Guernsey II Limited, DP Aircraft Guernsey
III Limited and DP Aircraft Guernsey IV Limited (collectively
and hereinafter, the 'Borrowers'), each being a Guernsey Incorporated
company limited by shares and two intermediate lessors (the
'Lessors'), an Irish incorporated private limited company and
UK incorporated private limited company. DP Aircraft Guernsey
III Limited, DP Aircraft Guernsey IV Limited and DP Aircraft
UK Limited were all incorporated in June 2015.
DP Aircraft I Limited (the 'Company') was incorporated on 5
July 2013 with registered number 56941. It was admitted to trading
on the Specialist Fund Market of the London Stock Exchange on
5 July 2013. The Company was listed on the Channel Islands Stock
Exchange until 27 May 2015, at which point the Directors chose
to de-list.
96,333,333 Ordinary Preference Shares (the 'New Shares') of
no par value in the capital of the Company were issued and admitted
to trading on the Specialist Fund Market of the London Stock
Exchange on 12 June 2015.
The issued Share Capital of the Company comprises 209,333,333
Ordinary Preference Shares of no par value and one Subordinated
Administrative Share of no par value.
The Company's investment objective is to obtain income and capital
returns for its Shareholders by acquiring, leasing and then,
when the Board considers it appropriate, selling aircraft.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Basis of Preparation
The unaudited interim condensed consolidated financial statements
("financial statements") for the period 1 January 2015 to 30
June 2015 have been prepared in order to comply with the rules
of the Specialist Fund Market of the London Stock Exchange whereby
the Company must produce annual and half yearly reports.
The Directors are of the opinion that the affairs of the Group
are suitably structured to enable the Going Concern basis to
be adopted in the preparation of these financial statements.
The financial statements have been prepared in accordance with
International Accounting Standard 34 (Interim Financial Reporting)
issued by the International Accounting Standards Board ('IASB')
and adopted by the EU ('IAS 34'), the Disclosure and Transparency
Rules ('DTR's') of the UK's Financial Conduct Authority ('FCA')
and applicable Guernsey law.
The financial statements have been prepared on the basis of
the policies set out in the Group's annual financial statements
as at, and for the period ended 31 December 2014. The financial
statements do not include all of the information and disclosures
required in the annual financial statements, and should be read
in conjunction with the Group's annual financial statements
as at, and for the period ended 31 December 2014. The financial
statements as at, and for 31 December 2014 are available on
the Company's website or from the Company Secretary. The Directors
assessed the 2011-2013 IFRS Improvement Cycle adopted during
the period and concluded that they had no effect on the financial
statements.
A number of new standards, amendments to standards and interpretations
are effective for annual periods beginning after 1 January 2015,
and have not been applied in preparing these financial statements.
Those which may be relevant to the Group are set out below.
The Group does not plan to adopt these standards early.
The Group has considered the impact of any new applicable requirements
for the period ended 30 June 2015 and determined that the accounting
policies applied by the Group in these condensed consolidated
interim financial statements are the same as those applied by
the Group in its consolidated financial statements as at, and
for the period ended, 31 December 2014.
b) Basis of measurement
The financial statements have been prepared on the historical
cost basis except for certain financial instruments that are
measured at fair value through profit or loss. The financial
statements are prepared in United States Dollars (US$), rounded
to the nearest Dollar, which is the functional currency of the
Company and its subsidiaries and presentation currency of the
Group. In preparing these financial statements, the significant
judgements made by the Directors in applying the Company's accounting
policies and the key sources of estimation uncertainty are disclosed
in note 3.
c) Basis of consolidation
The financial statements include the results of the Company
and that of its wholly owned subsidiaries, DP Aircraft Guernsey
I Limited, DP Aircraft Guernsey II Limited, DP Aircraft Guernsey
III Limited, DP Aircraft Guernsey IV Limited, DP Aircraft Ireland
Limited and DP Aircraft UK Limited (the 'Group').
3. SIGNIFICANT JUDGEMENTS AND ESTIMATES
The preparation of financial statements in conformity with IFRS
requires that the Directors make estimates and assumptions that
affect the application of policies and reported amounts of assets
and liabilities, income and expenses. Such estimates and associated
assumptions are generally based on historical experience and
various other factors that are believed to be reasonable under
the circumstances, and form the basis of making the judgements
about attributing values of assets and liabilities that are
not readily apparent from other sources.
The Company depreciates the aircraft assets and amortises the
related lease premium on a straight line basis over the remaining
lives of the leases and taking into consideration the estimated
residual value. In making a judgement regarding these estimates
the Directors consider previous sales of similar aircraft and
other available aviation information. The Company engages three
Independent Expert Valuers each year to provide a valuation
of the assets and takes into account the average of the three
valuations provided. The Company expects that, in performing
their valuations, the Independent Expert Valuers have regard
to factors such as the condition of the assets, the prevailing
market conditions (which may impact on the resale value of the
aircraft), the leases (including the scheduled rental payments
and remaining scheduled term of the leases) and the creditworthiness
of the lessee. Accordingly, any early termination of the leases
would impact on the valuation of the lease premium and may impact
on the valuation of the aircraft. The aircraft residual value
is based on appraised residual values.
4. LEASE RENTAL INCOME
(MORE TO FOLLOW) Dow Jones Newswires
August 26, 2015 08:30 ET (12:30 GMT)
1 January 1 January 5 July 2013
to to to
30 June 2015 30 June 2014 30 June 2014
US$ US$ US$
Lease rental income 15,783,513 14,959,499 21,214,901
----------------------------- --------------------------- ----------------------------------------------
Total lease rental income 15,783,513 14,959,499 21,214,901
------------------------------------------------------------------------------- ----------------------------- --------------------------- ----------------------------------------------
For the majority of the period, lease rental income was derived
from a single customer in Europe - 94.02% (2014: 100%).
5. ASSET MANAGEMENT, GENERAL AND ADMINISTRATIVE EXPENSES
1 January 1 January 5 July 2013
to to to
30 June 2015 30 June 2014 30 June 2014
US$ US$ US$
Asset management fees 270,690 249,996 362,897
General and Administrative 361,023 309,085 1,199,144
Total operating expenses 631,713 559,081 1,562,041
------------------------------------------------------------------------------- ----------------------------- --------------------------- ----------------------------------------------
6. PROPERTY, PLANT, EQUIPMENT & INTANGIBLE ASSETS
AIRCRAFT
Boeing 787-8 Boeing 787-8 Total
Serial No: 35304 Serial No:
& 35305 36110 & 35320
COST US$ US$ US$
As at 1 January 2015
- Aircraft 238,020,000 - 238,020,000
Additions -June 2015
- Aircraft - 231,180,654 231,180,654
As at 31 December 2014 238,020,000 - 238,020,000
-------------------------------------------------------------- ---------------------------------------------- --------------------------- ----------------------------------------------
As at 30 June 2015 238,020,000 231,180,654 469,200,654
-------------------------------------------------------------- ---------------------------------------------- --------------------------- ----------------------------------------------
ACCUMULATED DEPRECIATION
As at 31 December 2014 12,433,909 - 12,433,909
-------------------------------------------------------------- ---------------------------------------------- --------------------------- ----------------------------------------------
Charge for the period
- Aircraft 4,973,564 307,481 5,281,045
As at 30 June 2015 17,407,473 307,481 17,714,954
CARRYING AMOUNT
-------------------------------------------------------------- ---------------------------------------------- --------------------------- ----------------------------------------------
As at 31 December 2014 225,586,091 - 225,586,091
-------------------------------------------------------------- ---------------------------------------------- --------------------------- ----------------------------------------------
As at 30 June 2015 220,612,527 230,873,173 451,485,700
-------------------------------------------------------------- ---------------------------------------------- --------------------------- ----------------------------------------------
INTANGIBLE ASSETS - LEASE PREMIUM
Boeing 787-8 Boeing 787-8 Total
Serial No: 35304 Serial No:
& 35305 36110 & 35320
COST US$ US$ US$
As at 1 January 2015
- Lease Premium 29,581,300 - 29,581,300
Additions-June 2015
- Lease Premium - 24,775,912 24,775,912
As at 31 December 2014 29,581,300 - 29,581,300
-------------------------------------------------------------- ---------------------------------------------- --------------------------- ----------------------------------------------
As at 30 June 2015 29,581,300 24,775,912 54,357,212
-------------------------------------------------------------- ---------------------------------------------- --------------------------- ----------------------------------------------
ACCUMULATED DEPRECIATION
As at 31 December 2014 1,545,393 - 1,545,393
-------------------------------------------------------------- ---------------------------------------------- --------------------------- ----------------------------------------------
Charge for the period
- Lease Premium 618,157 32,954 651,111
(MORE TO FOLLOW) Dow Jones Newswires
August 26, 2015 08:30 ET (12:30 GMT)
-------------------------------------------------------------- ---------------------------------------------- --------------------------- ----------------------------------------------
As at 30 June 2015 2,163,550 32,954 2,196,504
-------------------------------------------------------------- ---------------------------------------------- --------------------------- ----------------------------------------------
CARRYING AMOUNT
-------------------------------------------------------------- ---------------------------------------------- --------------------------- ----------------------------------------------
As at 31 December 2014 28,035,907 - 28,035,907
-------------------------------------------------------------- ---------------------------------------------- --------------------------- ----------------------------------------------
As at 30 June 2015 27,417,750 24,742,958 52,160,708
-------------------------------------------------------------- ---------------------------------------------- --------------------------- ----------------------------------------------
The Boeing 787-8 is a newly developed generation of aircraft
and the Company is exposed to the used aircraft market of the
787-8 which is untested. Due to the new type of design, in particular
in respect of innovative materials and technology, there is
currently insufficient experience and data available to be able
to give a complete assessment of the long-term use and operation
of the aircraft. There is a risk that the newly developed materials
may be found to be less efficient or durable than expected and
thereby may lead to higher maintenance and repair costs. Under
the terms of the Leases, the cost of repair and maintenance
of the Assets will be borne by Norwegian in respect of the first
and second assets and by Thai Airways in respect of the third
and fourth assets. However, upon expiry or termination of the
Leases, the cost of repair and maintenance will fall upon the
Group. Therefore upon expiry of the Leases, the Group may bear
higher costs and the terms of any subsequent leasing arrangement
(including terms for repair, maintenance and insurance costs
relative to those agreed under the Leases) may be adversely
affected, which could reduce the overall distributions paid
to the Shareholders.
The estimated residual value of the Boeing 787-8 Assets as at
the end of their respective leases in 2025 and 2027 will be
re-evaluated by independent experts for each annual financial
accounting period end. The residual value will depend upon a
variety of factors including actual or anticipated fluctuations
in the results of the airline industry, market perception of
the airline industry, general economic and social and political
development, changes in industry conditions, fuel prices or
rates of inflation. For the interim report, the directors determined
a residual valuation as at and for the official valuation in
respect of the accounting period ended 31 December 2014. The
NordLB loans entered into by the Company to complete the purchase
of the first and second aircraft are cross collateralised on
the first and second aircraft. The DekaBank loans entered into
by the Company to complete the purchase of the third and fourth
aircraft are cross collateralised on the third and fourth Aircraft.
The First Loan and the Second Loan (the NordLB loans) are secured
by way of security taken over each of the first aircraft and
the second aircraft. The Third and Fourth Loans (the DekaBank
loans) are secured by way of security taken over each of the
third and fourth aircraft. The first and second assets are operated
by Norwegian. The third and fourth assets are operated by Thai
Airways.
7. FINANCE INCOME AND EXPENSE 1 January 1 January 5 July 2013
to to to
30 June 2015 30 June 2014 30 June 2014
US$ US$ US$
Finance income 822 870 3,075
----------------------------------------------------------------------- ------------------------------------- --------------------------- ----------------------------------------------
822 870 3,075
Loan interest paid & payable (2,130,729) (2,154,700) (3,165,114)
Deferred loan and borrowings
facility costs (80,895) (76,640) (114,960)
----------------------------------------------------------------------- ------------------------------------- --------------------------- ----------------------------------------------
Total interest at effective
interest rate (2,211,624) (2,231,340) (3,280,074)
Swap interest paid & payable (1,670,395) (1,809,856) (2,586,952)
----------------------------------------------------------------------- ------------------------------------- --------------------------- ----------------------------------------------
Total finance income and
expense (3,881,197) (4,040,326) (5,863,951)
----------------------------------------------------------------------- ------------------------------------- --------------------------- ----------------------------------------------
8. RESTRICTED CASH As at 30 June As at 31 December
2015 2014
US$ US$
Security Deposits 13,264,520 6,400,000
Maintenance reserves 6,398,868 1,042,092
19,663,388 7,442,092
----------------------------------------------------------------------- ------------------------------------- --------------------------- ----------------------------------------------
Credit Ratings:
As of 19 June 2015, the long term credit rating of NordLB is
A3 (Moody's)
As of 19 June 2015, the long term credit rating of DekaBank
is Aa3 (Moody's)
9. CASH AND CASH EQUIVALENTS As at 30 June 2015 As at 31 December
2014
(MORE TO FOLLOW) Dow Jones Newswires
August 26, 2015 08:30 ET (12:30 GMT)
US$ US$
NordLB 1,510,483 1,510,342
DekaBank 2,241,967 -
Royal Bank of Scotland
International - Call 3,826,519 3,536,578
----------------------------------------------------------------------- ------------------------------------------------------------------ ----------------------------------------------
Total cash and cash equivalents 7,578,969 5,046,920
----------------------------------------------------------------------- ------------------------------------------------------------------ ----------------------------------------------
10. TRADE AND OTHER RECEIVABLES As at 30 June 2015 As at 31 December
2014
US$ US$
Directors' and officers'
insurance prepaid 937 22,148
Other 264 7,785
Total receivables & prepayments 1,201 29,933
----------------------------------------------------------------------- ------------------------------------------------------------------ ----------------------------------------------
11. SHARE CAPITAL
Subordinated Ordinary Total
Administrative Preference
Share Shares
US$ US$ US$
Administrative share issued
on incorporation July 2013 1 - 1
Shares issued pursuant to
a Placing
October 2013 - 113,000,000 113,000,000
Share issue costs - (2,114,781) (2,114,781)
------------------------------------------------------------------------------- ----------------------------- --------------------------- ----------------------------------------------
Total share capital as at
31 December 2014 110,885,219 110,885,220
Shares issued pursuant to
a Placing
June 2015 - 102,007,365 102,007,365
Share issue costs - (2,233,800) (2,233,800)
Total share capital as at
30 June 2015 1 210,658,784 210,658,785
------------------------------------------------------------------------------- ----------------------------- --------------------------- ----------------------------------------------
Subject to the applicable company law and the Company's Articles
of Incorporation, the Company may issue an unlimited number
of shares of par value and/or no par value or a combination
of both.
113,000,000 Shares were issued pursuant to the Placing Agreement
between the Company, DS Aviation, JS Holding (DS Aviation and
JS Holding together the 'Asset Manager Parties') and Canaccord
Genuity (the Company's Corporate Broker) whereby Canaccord Genuity
acted as agent for the Company, to procure subscribers for Shares
under the initial placing of shares at the Issue Price.
96,333,333 Shares were issued pursuant to the Placing Agreement,
dated 5 June 2015, between the Company, DS Aviation, JS Holding
(DS Aviation and JS Holding together the 'Asset Manager Parties')
and Canaccord Genuity (the Company's Corporate Broker) whereby
Canaccord Genuity acted as agent for the Company, to procure
subscribers for Shares under the placing of shares at the Issue
Price.
The Subordinated Administrative Share is held by DS Aviation
GmbH & Co. KG, (the Asset Manager).
Holders of Subordinated Administrative Shares are not entitled
to participate in any dividends and other distributions of the
Company. On a winding up of the Company the holders of the Subordinated
Administrative Shares are entitled to an amount out of the surplus
assets available for distribution equal to the amount paid up,
or credited as paid up, on such shares after payment of an amount
equal to the amount paid up, or credited as paid up, on the
Ordinary Shares to the Shareholders. Holders of Subordinated
Administrative Shares shall not have the right to receive notice
of and have no right to attend, speak and vote at general meetings
of the Company except if there are no Ordinary Shares in existence.
Without prejudice to the provisions of the applicable company
law and without prejudice to any rights attached to any existing
shares or class of shares, or the provisions of the Articles
of Incorporation, any share may be issued with such preferred,
deferred or other rights or restrictions, as the Company may
be ordinary resolution direct, or, subject to or in default
of any such direction, as the Directors may determine.
Although not utilised in the reporting accounting period, the
Directors were entitled to issue and allot Ordinary Shares as
well as C Shares immediately following the Placing for cash
or otherwise on a non-pre-emptive basis.
12. NON-CURRENT LIABILITIES As at 30 June As at 31 December
2015 2014
US$ US$
NordLB - First loan 65,652,040 68,450,386
NordLB - Second loan 65,929,970 68,673,833
DekaBank - Third loan 72,933,214 -
DekaBank - Fourth loan 73,456,265 -
(MORE TO FOLLOW) Dow Jones Newswires
August 26, 2015 08:30 ET (12:30 GMT)
----------------------------------------------------------------------------------------------------- ------------------------------------ ----------------------------------------------
277,971,489 137,124,219
Deferred loans and borrowings facility
fees (2,899,137) (1,494,504)
----------------------------------------------------------------------------------------------------- ------------------------------------ ----------------------------------------------
275,072,352 135,629,715
Security deposit refundable to Norwegian
and Thai Airways 13,264,420 6,400,000
Maintenance reserves 6,398,793 1,042,092
Share based payment provision 159,869 -
Fair Value of Derivatives 4,703,050 5,171,613
----------------------------------------------------------------------------------------------------- ------------------------------------ ----------------------------------------------
Total non-current liabilities 299,598,484 148,243,420
----------------------------------------------------------------------------------------------------- ------------------------------------ ----------------------------------------------
Loans
The Company utilised each of the equity Placing Proceeds and
the proceeds of four separate Loans, two of US$79,800,000 each
and two of UD$78,500,000 each to fund the purchase of four Boeing
787-8 aircraft since inception of the Company.
Structure and term
The committed term of each Loan is from the drawdown date until
the date falling twelve years from the Delivery Date of the
relevant Asset. Each Loan will be amortised with repayments
every month in arrears over the term in amounts as set out in
a schedule agreed by the Company and the Lenders. Amortisation
will be on an annuity-style (i.e. mortgage-style) basis.
Interest
First and Second Loans
Interest on each Loan is payable in arrears on the last day
of each interest period, which is one month long (the 'Interest
Period'). Interest on each Loan accrues at a floating rate of
interest which is calculated using LIBOR for the length of the
Interest Period and a margin of 2.6 per cent per annum (the
'Loan Margin') ('Loan Floating Rate'). For the purposes of calculating
the Loan Floating Rate, if on the date when LIBOR is set prior
to the beginning of an Interest Period it is not possible for
LIBOR to be determined by reference to a screen rate at the
time that LIBOR is to be set for that Interest Period (a 'Market
Disruption Event'), the amount of interest payable to each affected
Loan Lender during the Interest Period will be the aggregate
of each Lender's cost of funds during that monthly period and
the Loan Margin. If any amount is not paid by the Borrower when
due under the Loan Transaction Documents, interest will accrue
on such amount at the then current rate applicable to the Loan
plus 2.0 per cent per annum. The Group has entered into ISDA-standard
hedging arrangement with Norddeutsche Landesbank Girozentrale
as hedging provider in connection with the Loans, in order to
provide for a fixed interest rate of 5.06% and 5.08% to be payable
in respect of the Loans throughout the whole term.
Third and Fourth Loans
The terms and conditions of the Third and Fourth Loans are substantially
the same as those of the First and Second Loans save that the
loans are set with fixed rates and there is no hedging applied.
The fixed rates applied are 4.2408% and 4.097%.
Cross Collateralisation
Each of the First Loan and the Second Loan (the NordLB loans)
is secured by way of security taken over each of the First Asset
and the Second Asset. In the event of a default on either of
the NordLB loans, NordLB may enforce security over both the
First Asset and the Second Asset.
Each of the Third Loan and the Fourth Loan (the DekaBank loans)
is secured by way of security taken over each of the Third Asset
and Fourth Asset. In the event of a default on either of the
DekaBank loans, DekaBank may enforce security over both the
Third Asset and the Fourth Asset.
This cross collateralisation means that a default on one loan
places both of the relevant aircraft at risk. Following the
enforcement of security and sale of the aircraft, the remaining
proceeds, if any, may be substantially lower than investors'
initial investment in the Company.
13. AMOUNTS PAYABLE WITHIN ONE YEAR As at 30 As at 31 December
June 2015 2014
US$ US$
NordLB loan payable - First Loan 5,525,849 5,395,952
NordLB loan payable - Second Loan 5,417,983 5,290,344
DekaBank loan payable - Third Loan 5,566,787 -
DekaBank loan payable - Fourth Loan 5,043,734 -
Interest payable 291,018 333,067
Deferred loan costs (270,912) (153,282)
-------------------------------------------------------------------------------------------------------------- --------------------------- ----------------------------------------------
Total loans and borrowings 21,574,459 10,866,081
Rent received in advance 2,619,456 1,122,764
Accruals and other payables 1,020,971 169,345
Total trade and other payables 1,020,971 169,345
-------------------------------------------------------------------------------------------------------------- --------------------------- ----------------------------------------------
25,214,886 12,158,190
-------------------------------------------------------------------------------------------------------------- --------------------------- ----------------------------------------------
14. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
The First and Second Loans from NordLB are at variable rates
and therefore their carrying value is approximate to their fair
value. The Group has entered into ISDA-standard hedging arrangement
with Norddeutsche Landesbank Girozentrale as hedging provider
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in connection with the Loans, in order to provide for a fixed
interest rate of 5.06% and 5.08% to be payable in respect of
the Loans throughout the whole term.
The Third and Fourth Loans from DekaBank are at fixed rates.
The Loans were drawn during June 2015, therefore the carrying
value is approximate to their fair value.
The fair value measurements for the Loans and borrowings have
been categorised as level 3 fair values based on the inputs
to the valuation technique used (i.e. the inputs are not based
on observable market data). The Directors have determined that
the fair value of all of the financial assets and liabilities
not measured at fair value approximate their carrying value
at the balance sheet date due to their short term nature and
with the exception of loans and borrowings as stated above,
the remaining assets and liabilities are considered to be within
level 2 of the fair value hierarchy.
A number of the Group's accounting policies and disclosures
require the determination of fair value, for financial and non-financial
assets and liabilities. Fair value is the price that would be
received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement
date. Fair values have been determined for measurement and /
or disclosure purposes based on the following methods. Where
applicable, further information about the assumptions made in
determining fair values is disclosed in note 2.
The Company's derivatives, the interest rate swaps with NordLB,
are valued by NordLB as calculation agent. Loans from NordLB
are at variable interest rates based on a repayment schedule
as agreed between the Group and NordLB; the loans from DekaBank
are at fixed interest rates. The Directors confirm that the
Lessees are meeting payment of lease rentals without impairment,
enabling the Company to meet its loan repayment obligations
and dividend distributions. The Directors believe it is appropriate
to fair value the Loans at par.
NordLB's valuation technique is discounted cashflows using market
rates allowing for credit risk. These valuation techniques maximise
the use of observable market data where it is available and
rely as little as possible on entity specific estimates. If
all significant inputs required to fair value an instrument
are observable, the instrument is included in level 2.
As at 30 June Next 12 months 2 to 5 years After 5 years Total
2015 US$ US$ US$ US$
Interest rate
swaps (3,193,128) (10,006,705) (5,183,273) (18,383,106)
------------------- --------------- ------------- -------------- -------------
As at 31 December Next 12 months 2 to 5 years After 5 years Total
2014 US$ US$ US$ US$
Interest rate
swaps (3,347,370) (10,705,549) (6,240,160) (20,293,079)
------------------- --------------- ------------- -------------- -------------
As at 30 June 2015, the aggregate loss on the fair value of
the Swaps was US$4,703,050
(31 December 2014 US$5,171,613).
Credit Risk - Thai Airways
Thai Airways as lessee and provider of income and DekaBank as
provider of the Third and Fourth Loans and borrowings, cash
and restricted cash are additional risks to those disclosed
in the annual financial statements as at and for the period
ended 31 December 2014. The Lessee does not maintain a credit
rating. The long term credit rating of DekaBank was Aa3 as at
19 June 2015 (Moody's).
15. OPERATING SEGMENT
The Company is engaged in one operating segment, being acquiring,
leasing and subsequent selling of Aircraft. The geographical
location of the Assets of the Group is Ireland, where the Assets
are registered. The income arising from the lease of the Assets
originates from two lessees, one in Norway one in Thailand.
16. RELATED PARTY TRANSACTIONS
The key management personnel (deemed to be the non-executive
Directors, Jon Bridel, Didier Benaroya and Jeremy Thompson),
are remunerated for their services at agreed fee rate. Until
and including 17 May 2015, the directors were remunerated at
a fee for each Director of GBP20,000 per annum (GBP25,000 for
the Chairman) in relation to the Company plus GBP5,000 per annum
for acting as director in relation to each of the Borrowers.
In addition the two directors of the Lessor who are based in
Ireland will receive a fee of EUR6,000 in aggregate per annum
and the Director who sits on the board of the Lessor will receive
a fee of GBP10,000 per annum.
A review of the director remuneration was discussed during February
2015 in view of the proposed forthcoming fund raising. The Board
agreed that in the event of the earlier of the Thai acquisition
proceeding or 1(st) July 2015, the Directors remuneration would
increase to reflect the additional duties and commitments being
undertaken currently by the Chairman and Audit Chairman. With
effect from 18 May 2015, the Directors remuneration was increased
as follows: the Chairman of the Board's annual fee by GBP2,500
per annum and the Audit Committee Chairman's fee by GBP2,500
per annum. The base directors' fee would therefore be GBP20,000
with GBP22,500 for Audit Chairman and GBP27,500 for Chairman.
For the period ended 30 June 2015 the directors' remuneration
was Mr Bridel: US$37,239, Mr Benaroya: US$41,469 and Mr Thompson:
US$33,324.
It was also confirmed that all directors would be entitled to
receive a one-off additional payment of GBP5,000 for each new
prospectus issued whether or not the fund raise was successful.
It was noted that should new Guernsey and Irish subsidiary companies
be established as a result of the new leasing arrangements with
Thai, each director duly appointed to the boards of each of
the new subsidiary companies would each receive GBP5,000 per
annum for their services from the closing date of the transaction
and Mr Benaroya would receive GBP10,000 as director of the lessor
company where more responsibility and input was required relative
to the Guernsey subsidiaries.
For the period from inception to 30 June 2014 the Directors'
remuneration totalled US$166,715. For the period 1 January 2014
to 30 June 2014 the Directors' remuneration totalled US$134,357
with US$45,587 outstanding to be paid. Expenses were refunded
in the amount of US$5,451. As at the date of this report Mr
Bridel, jointly with his wife, held 7,500 Ordinary Shares and
Mr J Thompson held 15,000 Ordinary Shares.
In accordance with the Prospectus issued in June 2015, the Asset
Manager was paid an arrangement fee of US$777,000 in respect
of the Thai acquisition.
17. MATERIAL CONTRACTS
Asset Management Agreement
The Asset Management Agreement has been amended to provide a
new calculation methodology for the Disposal Fee with effect
from the acquisition of the New Assets. Under the new methodology,
a Disposal Fee will only become payable at the point at which
all four of the Assets have been sold after expiry of the Fourth
Thai Lease in December 2026. The fee will be calculated as a
percentage of the aggregate net sale proceeds of the four Assets,
such percentage rate depending upon the Initial Investor Total
Asset Return per Share being the total amount distributed to
an initial investor by way of dividend, capital return or otherwise
over the life of the Company. If each of the Existing Assets
and New Assets are sold subsequent to the expiry of their respective
leases, the percentage rate shall be nil if the Initial Investor
Total Asset Return per Share is less than 205 per cent.; 1.5
per cent. if the Initial Investor Total Asset Return per Share
equals or exceeds 205 per cent. but is less than 255 per cent.;
2.0 per cent. if the Initial Investor Total Asset Return per
Share equals or exceeds 255 per cent. but is less than 305 per
cent.; or 3.0 per cent. if the Initial Investor Total Asset
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