Doric Nimrod 2 Regulatory News (DNA2)

DORIC NIMROD AIR TWO LIMITED

Annual Financial Report

The Board of Doric Nimrod Air Two Limited is pleased to announce its results for the period from date of incorporation (31 January 2011) to 31 March 2012.

Doric Nimrod Air Two Limited (LSE: DNA2/DN2C) ("DNA2" or the "Company") is a Guernsey company incorporated on 31 January 2011.

Pursuant to the Company's Prospectus dated 30 June 2011, the Company offered its shares for issue by means of a placing and on 14 July 2011, raised approximately £136 million by the issue of Ordinary Preference Shares at an issue price of £2 each. The Company's Ordinary Preference Shares were admitted to trading on the Specialist Fund Market of the London Stock Exchange and the Channel Islands Stock Exchange on 14 July 2011. Subsequently during the period under review from incorporation on 31 January 2011 to 31 March 2012 (the "Period") the Company raised a total of approximately £188.5 million from a C share fundraising (the "C Share Issue"), which closed on 27 March 2012 with the admission of 100,250,000 Convertible Preference Shares to trading on the Specialist Fund Market of the London Stock Exchange and the Channel Islands Stock Exchange.

The Company's total issued share capital currently consists of 72,500,000 Ordinary Preference Shares and 100,250,000 Convertible Preference Shares (together the "Shares").

The purpose of the Company is to purchase a total of seven Airbus A380-800 aircraft (each an "Asset"), which will be leased to Emirates Airlines, the national carrier owned by the Investment Corporation of Dubai, based in Dubai, United Arab Emirates. The net proceeds from the recent C Share Issue are to be used together with appropriate financing from the recent issue of Pass Through Certificates Series 2012-1 (the "Certificates") by Doric Nimrod Air Finance Alpha Limited, to add to the two A380 aircraft that the Company acquired in the fourth quarter of 2011 and the third aircraft expected to be delivered to Emirates in the third quarter of 2012. The four additional Airbus A380s are expected to be acquired and leased to Emirates between September 2012 and November 2012.

The Company has four wholly-owned subsidiaries; MSN077 Limited, MSN090 Limited, MSN105 Limited and Doric Nimrod Air Finance Alpha Limited ("Doric Alpha") which each hold or will hold the Assets for the Company.

The first Asset was acquired by MSN077 Limited on 14 October 2011, for a purchase price of US$234 million. Upon delivery, MSN077 Limited entered into the first operating lease with Emirates, pursuant to which the first Asset has been leased to Emirates for an expected initial term of 12 years, with fixed lease rentals for the duration. 

The second Asset was acquired by MSN090 Limited, on 2 December 2011 for a purchase price of US$234 million. MSN090 Limited has entered into the second operating lease with Emirates pursuant to which the second Asset has been leased to Emirates for an expected initial term of 12 years, with fixed lease rentals for the duration. 

The third Asset is to be acquired by MSN105 Limited for a purchase price of US$234 million, with delivery anticipated for the third quarter of 2012. MSN105 Limited has entered in to the third operating lease with Emirates, pursuant to which the third Asset will be leased to Emirates for an expected initial term of 12 years, with fixed lease rentals for the duration.

In order to complete the purchase of the relative Assets, MSN077 Limited, MSN090 and MSN105 Limited entered into separate loan agreements, each of which will fully amortise with quarterly repayments in arrears over 12 years (together the "Loans"). A fixed rate of interest applies to the Loans. MSN077 Limited drew down US$151,047,509 under the terms of the first loan agreement to complete the purchase of the first Asset and MSN090 Limited drew down US$ 146,865,575 in accordance with the second loan agreement to finance the acquisition of the second Asset. The first loan agreement, second loan agreement and the third loan agreement are on materially the same terms.

The fourth, fifth, sixth and seventh Assets are to be acquired by Doric Alpha using the proceeds of the C Share Issue together with the proceeds of the recent offering of the Certificates and these Assets will also be leased to Emirates. The Certificates, with an aggregate face amount of approximately $587.5 million were admitted to the official list of the UK Listing Authority and to the London Stock Exchange on 12 July 2012.

Investment Objectives and Policy

The Company's investment objective is to obtain income returns and a capital return for its shareholders by acquiring, leasing and then selling aircraft. The Company will receive income from the lease rentals paid by Emirates pursuant to the leases. It is anticipated that income distributions will be made quarterly.

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 the sale of the Assets.

The Company will receive income from the lease rentals paid by Emirates pursuant to the relevant leases. It is anticipated that income distributions will be made quarterly, subject to compliance with applicable laws and regulations. The Company currently targets a distribution of 3 pence per Ordinary Preference Share per quarter and, following the acquisition of the third Asset, will target a distribution of 4.5 pence per Ordinary Preference Share per quarter.

Prior to the anticipated conversion of the Convertible Preference Shares into Ordinary Preference Shares (the "Conversion"), the Company expects to pay dividends to the holders of Convertible Preference Shares reflecting income received from the lease rentals paid by Emirates pursuant to the relevant operating leases with respect to the fourth to seventh Assets. The Company is targeting a distribution of 0.75 pence per Convertible Preference Share per quarter once the fourth Asset has been acquired, rising to 4.125 pence per Convertible Preference Share once the seventh Asset has been acquired (a lower target than the post conversion target described below for the reason that, at the time of Conversion, the seventh Asset is likely not to have been owned and generating rental revenues for a full quarter).

Post Conversion it is anticipated that the Company will continue to target a distribution equivalent to the pre conversion distribution of 4.5 pence per Ordinary Preference Share per quarter.

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 (the "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 respective Lease.

During the period to date and in accordance with the Distribution Policy DNA declared three dividends, one of 2.00 pence per Ordinary Preference Share and then two of 3.00 pence per Ordinary Preference Share. Future dividend payments are anticipated to continue to be declared and paid on a quarterly cycle on the basis specified above under Distribution Policy and subject to compliance with applicable laws and regulations.

Return of Capital

In respect of any Asset, following the sale of that Asset, the Directors may, as they deem appropriate at their absolute discretion, either (i) return to Shareholders the net capital proceeds, or (ii) re-invest such proceeds in accordance with the Company's investment policy.

Further, the Company intends to return to Shareholders net capital proceeds if and when the Company is wound-up (pursuant to a Shareholder resolution, including the Liquidation Resolution below), subject to compliance with the Articles and the applicable laws (including any applicable requirements of the solvency test contained therein).

Liquidation Resolution

Although the Company does not have a fixed life, the Articles require that the Directors convene a Liquidation Proposal Meeting in June 2025 where a Liquidation Resolution will be proposed that the Company proceed to an orderly wind-up. In the event that the Liquidation Resolution is not passed, the Directors will consider alternatives for the Company and shall propose such alternatives at a general meeting of the Shareholders, including re-leasing the Assets (to the extent the Assets have not already been disposed of in the market), or selling the Assets and applying the capital received from the sale of those Assets to: (i) if applicable, the repayment of the Loans, the New Loans and/or the Bonds; and (ii) reinvestment in other aircraft.

I am pleased to present shareholders with the Company's first consolidated financial report covering the period from incorporation until 31 March 2012.

Admission of 72,500,000 Ordinary Preference Shares of the Company to trading on the Specialist Fund Market of the London Stock Exchange and listing on the Channel Islands Stock Exchange took place on 14 July 2011(the "Placing"). The issue price under the Placing was 200 pence each. On 27 March 2012 the Company issued 100,250,000 Convertible Preference Shares (the "C-Share Placing"). The issue price under the C-Share placing was 200 pence each.

I am pleased to report that, notwithstanding the turbulence in the financial markets, the Company has performed well and has already declared quarterly dividends as targeted to the shareholders.

The Company's investment objective is to obtain income returns and a capital return for its shareholders by acquiring, leasing and then selling aircraft. The Company intends to use the net proceeds of the Placing and three separate loans, each of approximately US$150 million, to fund the purchase of three Airbus A380-800 aircraft. The Company acquired the first and second aircraft, respectively through its wholly owned subsidiaries MSN077 and MSN090 Limited, on 14 October 2011 and 2 December 2011 each for the sum of US$234 million. Upon delivery the subsidiaries also entered into an aircraft operating lease with Emirates Airlines. The aircraft have been leased to Emirates for an initial term of twelve years with fixed lease rentals for the duration. The debt portion of the funding will fully amortise over the twelve years of the lease, leaving the aircraft unencumbered at the conclusion of the lease. All payments thus far by Emirates have been made in accordance with the term of the leases.

The Company expects to acquire the third aircraft by the third quarter of 2012. Once the three assets have been acquired and leased, the Company will target a distribution to Shareholders of 4.5p per share per quarter (this would represent a dividend yield of 9% on the initial placing price of 200p per Ordinary Preference Share).

The Company further intends to use the net proceeds of the C-Share Placing together with debt of approximately $600 million to fund the purchase of four additional Airbus A380-800 aircraft, and to lease them to Emirates Airlines in the fourth quarter of 2012. Once these four additional aircraft have been acquired the Company will target a distribution of 4.5p per C-share per quarter, equating to 9 per cent per annum on the issue price of the C-shares. Following this, it is intended to convert the C-shares into Ordinary Preference Shares.

The lessee has performed well over the period. Despite the turmoil in the global economy, international passenger air traffic remained robust (though air freight traffic was more subdued). Emirates continue to report strong performance. This was greatly aided by the airline's ability to adjust flight schedules swiftly, and redeploy aircraft about the network, thus optimising revenue. The airline operates with a remarkably high passenger seat factor whilst at the same time increasing seat capacity.

The lease payments received by the Company from Emirates cover repayment of the debt 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. The Company's Asset Manager, Doric Asset Finance & Verwaltungs GmbH, continues to monitor the lease performance and reports regularly to the Board. Nimrod Capital LLP, the Company's Placing and Corporate and Shareholder Advisory Agent, continues to liaise between the Board and Shareholders, which includes distribution of quarterly fact sheets and the interim management statements.

There is much work to be done in the coming months to finalise the purchases and leasing of the remaining aircraft, and the Board together with Doric and Nimrod, are fully focused on achieving the Company's objectives.

On behalf of the Board I would like to thank all Shareholders for their continued support of the company.

Norbert Bannon

Chairman

1. Assets

The Company has completed the purchase of two Airbus A380 aircraft, bearing manufacturer's serial numbers (MSN) 077 and 090, both leased to Emirates for an initial term of 12 year with fixed lease rentals for the duration.

The first aircraft was acquired by MSN077 Limited on 14th October 2011 for a purchase price of USD 234 million. The second aircraft was acquired by MSN090 Limited, on 2nd December 2011 for a purchase price of USD 234 million. In order to complete the purchase of the first two aircraft, MSN077 Limited and MSN090 Limited entered into two separate loans, each of which will be fully amortised with quarterly repayments in arrear over 12 years.

The third aircraft is expected to be acquired by a separate wholly-owned subsidiary of the Company (MSN105 Limited) by September 2012 for a purchase price of USD 234 million. The Company intends to purchase the third aircraft using a mixture of debt and current cash reserves.

Doric Alpha, a wholly-owned subsidiary of Doric Nimrod Air Two Limited, has issued Class A and Class B enhanced equipment trust certificates (the "Certificates") with an aggregate face amount of approximately $587.5 million. Doric Alpha intends to use the proceeds from the offerings to finance the acquisition of four new Airbus A380 aircraft to be leased to Emirates scheduled to be delivered from September 2012 to November 2012.

The Class A certificates, with a face amount of approximately $434 million, will bear interest at an annual rate of 5.125% and will have a final expected distribution date of November 30, 2022. The Class B certificates, with a face amount of approximately $154 million, will bear interest at an annual rate of 6.500% and will have a final expected distribution date of May 30, 2019.

Moody's Investors Service rated the Class A Certificates A3 and the Class B Certificates Baa3.

Amongst its 169 aircraft in operation as of March 2012, Emirates has a fleet of 21 A380s which currently serve 16 destinations worldwide: Auckland, Bangkok, Beijing,

Hong Kong, Jeddah, Kuala Lumpur, London Heathrow, Manchester, Munich, New York JFK, Paris, Rome, Seoul, Shanghai, Sydney and Toronto. In the second half of 2012 Emirates is planning to launch A380 flights to Melbourne, Tokyo and Amsterdam. Emirates has an additional 69 of this model on firm order for delivery through 2017.

Recent visits of the two A380s already owned by the Company (MSN 077 and 090) included London, Kuala Lumpur, Munich, New York and Sydney.

Aircraft Utilization

For the period from original delivery of the Airbus A380 with MSN 077 to Emirates in mid-October 2011 until the end of May 2012, a total of 369 flight cycles were registered. Total flight hours were 3,062. This is equal to an average flight duration of approximately 8.3 hours.

For the period from delivery of the Airbus A380 with MSN 090 to Emirates in early December 2011 until the end of May 2012, a total of 435 flight cycles were registered. Total flight hours were 2,417. This is equal to an average flight duration of almost 5.6 hours.

Maintenance status

Emirates maintains its A380 aircraft fleet based on a maintenance program according to which minor maintenance checks are performed every 1,500 flight hours and more significant maintenance checks (so called C checks) every 24 months or 12,000 flight hours, whichever comes first. The first C check of the A380 with MSN 077 is likely to occur in October 2013 and the first C check of the A380 with MSN 090 is likely to occur in December 2013. The asset manager plans to inspect the A380s with MSN 077 and MSN 090 during winter 2012/2013.

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

Hairline Cracks

Since late 2011, hairline cracks have been discovered in a small number of L-shaped metal brackets within the wing structure of some A380s. There are about 2,000 brackets (known as rib-skin attachments or wing rib feet) in each wing, which attach the wing's upper and lower skins to ribs running throughout the wing. The aircraft remain fully airworthy and pose no risk to flight safety as affirmed by European Aviation Safety Agency ("EASA") and Airbus.

In recent months Airbus has traced the source of the cracking in A380 wing structures to the choice of a less flexible aluminum alloy used to make the wing brackets, stresses involved during assembly when fitting portions of the wing together plus thermal fatigue during flight at very low temperatures.

In February 2012, EASA issued an updated airworthiness directive ("AD") in relation to the wing rib feet cracks, which called for all A380s in operation to be checked for cracks in the brackets that attach to the wing's ribs before reaching 1,300 flights. Aircraft already approaching or beyond the threshold were ordered to perform the checks and repairs almost immediately.

In late June EASA issued a new AD pertaining to wing rib feet cracks on the Airbus A380 aircraft, which now also specifies repeat inspections of A380 aircraft at defined intervals. This will allow A380 aircraft to continue flying until a permanent fix for wing rib feet cracking has been incorporated in the aircraft. The length of the applicable inspection interval is determined by the location within the wing where previous wing rib feet repairs have been made and the type of repair that has been previously made. Depending on this, an inspection interval of between 560 and 1200 flight cycles is required. After performing this repeat inspection, the follow-on repeat inspections shall have an inspection interval of 560 flight cycles.

Airbus has developed a permanent fix to wing rib feet cracking, which is currently being certified by EASA. A retrofit modification will be installed on in-service aircraft, while a production modification will be applied for new aircraft. The retrofit is expected to become available in late 2012/early 2013. A further AD is anticipated which will instruct A380 operators to implement the retrofit. At that time, the retrofit

will be installed in existing A380s. New aircraft with the production modification are expected to be delivered beginning in early 2014. The permanent fix developed by Airbus will preserve the full design service life of the A380 aircraft.

Airbus has confirmed that it may take up to 8 weeks to incorporate the permanent fix in the A380. Another option is for the fix to be gradually accomplished during regularly scheduled "heavy checks" when the aircraft is two, four, and six years of age. To implement the repair gradually, some extra days would be added to each two to three week "heavy check". Aircraft operators are expected to choose between the various repair solutions depending on their fleet planning and flight schedules.

Due to the relatively small number of flight cycles the two A380s owned by the Company (MSN 077 and 090) are not yet close to approaching the threshold of 1,300 flight cycles and hence have not been inspected yet. It is anticipated that inspections will be performed in line with scheduled maintenance activities for each aircraft.

All the repair works will be covered by the applicable manufacturer's warranties. In the meantime airlines with A380s on lease will continue to operate the aircraft and their lease rental obligations will remain absolute and unconditional on these events.

2. Market Overview

The International Air Transport Association (IATA) released its revised industry outlook in June 2012 according to which global industry profits are still expected to reach USD 3.0 billion this year, unchanged from the last update in March. A fall in oil prices, stronger than expected growth in passenger traffic and a bottoming out of the freight market are driving some improvements in the profitability outlook. However, this is offset by the continued European sovereign debt crisis, which has led markets to expect a further deterioration and damage to economic growth.

IATA expects that 2012 will mark a second successive year of declining airline profits. In 2010 the industry's profits peaked at USD 15.8 billion, before dipping in 2011 to USD 7.9 billion net profit. Although airlines face the common challenges of high fuel prices and economic uncertainty, the regional picture is diverse. Compared with the previous forecast in March 2012, North American and Latin American

carriers are expected to see improved prospects. But the outlook for European, Asian-Pacific and Middle Eastern carriers has been downgraded, with European losses now expected to be USD 1.1 billion (nearly double the previously forecast USD 600 million loss).

World GDP growth, a key driver of airline profitability, is expected to be 2.1% in 2012. That is slightly better than the anticipated 2.0% growth forecast in March. But this is still a slower growth environment than last year, and one in which airlines will struggle to recover cost increases. Historically, the airline industry has fallen into losses (at a global level) when world GDP growth drops below 2.0%.

Given the actual slower economic growth environment it has been notable that up to April passenger demand, measured in revenue passenger kilometers, continued to expand at an above-trend rate of 6.0%. The strongest markets have been those linked with Asia, Latin America, and the Middle East, where economies have been more robust. However, a weaker second half of the year is expected as deepening problems in Europe damage confidence. Even so, the strength of travel demand in the first part of this year has caused an upward revision to the forecast for air travel growth to 4.8% from 4.2% in the previous forecast.

Source: IATA

3. Lessee - Emirates Key Financials and Outlook

Emirates revenue reached a record high of USD 16.9 billion in the 12 months ended 31 March 2012, an increase of 16% from the previous financial year. Passenger revenue climbed 18% year-on-year, to USD 13.3 billion due to the overall expansion of passenger numbers as well as higher fares.

Geographically, East Asia and Australasia remains Emirates' most important region in terms of revenue, accounting for almost 30%, just ahead of Europe. The carrier's revenue base is increasingly diffused globally, particularly with the introduction of several new routes into North and South America and the development of African destinations.

Despite this strong revenue growth, the stifling cost of jet fuel impacted Emirates' bottom line with the airline's profit dropping to USD 409 million, representing a decrease of 72% over last year's record results. Fuel costs increased by 44.4% compared to the preceding year to USD 6.6 billion, representing about 40% of Emirates' total operating costs. Emirates Chairman and CEO, Sheikh Ahmed bin Saeed Al Maktoum, stated that if fuel prices remained where they were in the previous financial year, the net profit "would have again soared to a new record high".

These solid financial results not only represent Emirates 24th consecutive year of profit, but the carrier was also able to strengthen its cash position with an increase of 11.6% to USD 4.2 billion. Emirates Net Asset as at 31 March 2012 were AED 21,466 million (approximately equivalent to US$5,844 million at the date of this report).

Emirates received 22 new aircraft during the course of the past financial year including 14 Boeing 777-300ERs, two Boeing 777Fs (freighters) and six A380s from Airbus, the highest number of aircraft received in a single year of operation. With an increased fleet, Emirates launched 11 new destinations in 2011/2012 including a strong focus on North America and South America in the final quarter with Rio de Janeiro, Buenos Aires, Seattle and Dallas-Fort Worth all launching between January and March 2012. The Emirates fleet, one of the youngest in the industry, carried a record number of almost 34 million passengers at an 80% passenger load factor to a network of 122 destinations in 72 countries. As of 31 March 2012 Emirates has 169 aircraft in operation, with firm orders for another 223 passenger aircraft, including 69 A380.

Most recently the carrier added a new route to Ho Chi Minh City in June. This will be followed by new services to Barcelona and Lisbon in July and Washington DC in September.

Employee numbers at the airline stand at around 42,500 and Emirates plans to recruit more than 4,000 workers this year.

Source: Emirates

4. Aircraft - A380

At the end of May 2012, the global A380 fleet consisted of 75 planes that were in service with eight operators: Emirates (21 A380 aircraft), Singapore Airlines (17), Qantas (12), Deutsche Lufthansa (9), Air France (7), Korean Airways (5), China Southern Airlines (3) and Malaysia Airlines (1).

Malaysia Airlines was the latest operator to take delivery of the 75th aircraft of the type at the end of May 2012. Thai Airways is scheduled to receive its first Airbus A380 in the second half of 2012. This will bring the total number to nine worldwide operators. The in-service fleet is expected to approach 100 aircraft by the end of 2012.

Sources: IATA, Boeing, Airbus

Norbert Bannon - Chairman (Age 63)

Norbert Bannon is a Director of the Irish and UK subsidiaries of a major Canadian bank. He has been approved by the Central Bank of Ireland and by the UK's Financial Services Authority. He is the Chairman of two large pension schemes and is Chairman of the Audit Committee of Doric Nimrod Air One Limited. He is a Director of and Advisor to a number of financial Companies in the UK and Ireland.

He has extensive experience in international finance having been CEO of banks in Singapore and New York. He was Managing Director of Ireland's largest venture capital company and was Finance Director and Chief Risk Officer of AIB Capital Markets Plc. which he left in 2002. He has worked as consultant to a number of international companies.

He earned a degree in economics from Queens University, studied at Stanford Graduate School of Business and is a Chartered Accountant.

Charles Edmund Wilkinson (Age 69)

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. He is currently Chairman of Doric Nimrod Air One Limited. He is also a Director of Premier Energy and Water Trust Plc., a listed Investment Trust and Landore Resources Ltd, a Guernsey based mining exploration Company.

Geoffrey Alan Hall (Age 63)

Geoffrey Hall has extensive experience in Investment Management. He has previously been Chief Investment Officer at Allianz Insurance Plc., a major UK insurance company, as an Investment Manager at HSBC Asset Management, County Investment Management, and British Railways Pension Funds. He is currently an Investment Consultant to Cumberland Place Investment Management, and also Chairman of WHEB Asset Management, a major firm in sustainability investing.

Geoffrey earned his masters degree in geography at the University of London. He is an associate of the Society of Investment Professionals (the CFA Society of the UK).

Management and the Delegation of Functions

The Directors, whose details are set out in page 15 are responsible for reviewing the business affairs of the Company in accordance with the Articles of Incorporation 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 Directors previously delegated the management of the Assets to Doric Asset Finance Limited ("Doric"). The Directors now delegate the management of the Assets to Doric Asset Finance & Verwaltungs GmbH (the "Asset Manager" or "DAFV"), which is a Company incorporated in Germany and regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht. The Directors delegate secretarial and administrative functions to Anson Fund Managers Limited ("Anson" or the "Secretary & Administrator") which is a Company incorporated in Guernsey and licenced by the Guernsey Financial Services Commission.

Asset Manager and Lease and Debt Arranger

The Company has replaced the original Asset Management Agreement with Doric with two new agreements: (i) the Asset Management Agreement pursuant to which DAFV will assume Doric's asset management services under the original Asset Management Agreement; and (ii) the Agency Agreement pursuant to which Doric Asset Finance GmbH & Co KG ("Doric KG") will assume Doric's agency services under the original Asset Management Agreement. DAFV has been appointed by the Company to provide asset management services to the Company. Pursuant to the Asset Management Agreement, DAFV will: (i) monitor Emirates' and any subsequent lessees' performance of its obligations under the respective operating leases and any subsequent lease 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 loans, as required.

DAFV 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 KG has been appointed by the Company, pursuant to the Agency Agreement, to assist the Company, and act as the Company's agent, in relation to the arrangement, negotiation, review, approval, execution and management on behalf of the Company of the acquisition of the Assets, the borrowings of the Company relating to the acquisition of the Assets, and the operating leases. Doric Partners LLP has been appointed by the Company, pursuant to the Liaison Services Agreement, to: (i) coordinate the provision of services by DAFV and Doric KG to the Company under the Asset Management Agreement and the Agency Agreement, as relevant; and (ii) facilitate communication between the Company and DAFV or Doric KG.

Doric KG is a subsidiary of DAFV. DAFV is the holding company of the Doric Group of Companies and provides for the fund administration and asset management services of the Doric Group. Doric Partners LLP is a limited liability partnership incorporated in England and Wales.

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 DAFV transactions and a cornerstone of the business. The Doric KG team has a long track record of offering investment opportunities with positive long-term performance.

The Doric Group is also a member of ISTAT, the International Society of Transport Aircraft Trading.

Since its establishment in March 2005, the Doric Group has built up an asset management portfolio of USD 5.5 billion as of March 2012, which is expected to grow by an additional USD 1.4 billion up to more than USD 6.9 billion during the course of 2012.

The Doric Group's aircraft portfolio is valued at about USD 4.4 billion and consists of 29 aircraft under management. These aircraft include young, modern and efficient

commercial jet airliners ranging from the Airbus A320 family (8), through the Boeing 777 (6) and Airbus A330/A340 family (3), up to the Airbus A380 (12).

Doric is the largest asset manager of leased A380s and the 3rd largest asset manager of widebody aircraft (Airline Magazine in February 2012).

Corporate and Shareholder Adviser

Nimrod Capital LLP (which is authorised by the Financial Services 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 six listed investment companies since its formation and it also provides investment, marketing, distribution and advisory services to investment companies and their Board and managers.

Secretary & Administrator

The Secretary & Administrator carries out the general secretarial functions required by the "Law and ensures that the Company complies with its continuing obligations as a company with shares admitted to trading on the Specialist Fund Market of the London Stock Exchange and the Channel Islands Stock Exchange. Additionally the Secretary & Administrator also carries out the Company's general administrative and accounting functions such as preparation of Management Accounts, calculation of the Net Asset Value, processing the Company's invoices within the parameters authorised by the Directors and the maintenance of accounting records.

Review

The Board keeps under review the performance of the Asset Manager, Doric KG, Doric Partners LLP, Nimrod Capital LLP and the Secretary & Administrator and the powers delegated to each service provider. In the opinion of the Board the continuing appointments of the Asset Manager, Doriv KG, Doric Partners LLP, Nimrod Capital LLP and Secretary & Administrator on the terms agreed is in the interest of shareholders as a whole.

A description of important events which have occurred during the financial 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 is given in the Chairman's Statement, Asset Manager's Report and the notes to the financial statements contained on pages 6 to 55 and is incorporated here by reference.

Going Concern

The Company's principal activities are set out within the Company Overview on pages 1 to 5. The financial position of the Company is set out on page 31. In addition, Note 18 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. 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 21 to the financial statements.

After making reasonable enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the 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 true and fair 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.

Charles Wilkinson

Chairman of Audit Committee

The Directors present their report and financial statements of the Company for the period from incorporation on 31 January 2011 to 31 March 2012 (the "Period").

Principal Activities and Business Review

The principal activity of the Company is to acquire, lease and then sell 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 and Convertible Preference Shares of which were admitted to trading on the Specialist Fund Market of the London Stock Exchange and on the Channel Islands Stock Exchange on 14 July 2011 and 27 March 2012 respectively. Its registered number is 52985. 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 30 and 31.

The Company paid dividends during the period to date as follows:

The Company aims to continue to pay quarterly dividends in line with the Distribution Policy detailed on page 4. There is no guarantee that any future dividends will be paid.

Directors

The Directors in office are shown on page 15 and all directors remain in office as at the date of signature of these financial statements. Further details of the Director's responsibilities are given on pages 22 and 27.

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:

Other than the above share transactions, 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.

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 as at the date of this report. As Ordinary Preference Shares and Convertible Preference Shares have identical voting rights they are combined for the purposes of substantial interest disclosures.

Corporate Governance

Statement of Compliance with the UK Corporate Governance Code

The Guernsey Financial Services Commission ("GFSC") has issued a new Corporate Governance Code (the "Code") which came into effect on 1 January 2012. The Company is, however, not required by Guernsey law to comply with the Code, as it is not regulated by the GFSC.

The Company has, however, voluntarily committed to comply with the UK Corporate Governance Code. Companies which report against the UK Corporate Governance Code are also deemed to meet the requirements of the Code.

Save for departing from the requirements to: (i) have a chief executive (since the Company will 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 three Directors, who have quarterly meetings to consider the affairs of the Company in a prescribed and structured manner. Biographies of the Directors appear on page 15 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.

To date no director of the Company has resigned. However, 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 currently paid a fee of £19,000 per annum and the Chairman is paid an additional fee of £6,000 per annum. The Chairman of the Audit Committee is paid an additional £4,000 per annum. Upon the acquisition by the Company of the third Asset, the Directors will be entitled to receive an additional fee of £4,000 per annum.

Upon the acquisition of Doric Alpha and in respect of their capacity as directors of this subsidiary (or subsidiaries of Doric Alpha) owning the fourth to seventh Assets, the non-executive Directors will receive an additional fee of £25,000 per annum for each Director and the Chairman will receive an additional fee of £30,000 per annum. The chairman of the audit committee will receive an additional £5,000 for per annum his services in this role.

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. Between these quarterly meetings the Board keeps in contact by email and telephone as well as meeting to consider specific matters of a transactional nature. Additionally it holds strategy meetings with its relevant advisors 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. There is regular contact with the Secretary who is responsible to the Board for ensuring that Board procedures are followed.

The Directors also have access to the advice and services of the Asset Manager, Corporate and Shareholder Advisory Agent and the Secretary.

The Directors may also, in the furtherance of their duties, take independent professional advice at the Company's expense.

During the Period the Board met nine times. Of those nine meetings two were quarterly board meetings and seven were ad hoc meetings in respect of the listing of the Company's shares, issue of the C Shares or in respect of matters in connection with the acquisition of the Assets. The director's attendance is summarised below:-

Audit Committee

The directors are all members of the Audit Committee, with Charles Wilkinson acting as Chairman. The Audit Committee has regard to the Guidance on Audit Committees published by the Financial Reporting Council in October 2008 and December 2010. The Audit Committee examines the effectiveness of the Company's internal control systems, 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 prior to providing a recommendation to the Board on the re-appointment or removal of the auditor. The Audit Committee receives information from the Secretary and the external auditors in respect of the audited financial statements prior to making a recommendation to the Board.

The Audit Committee meets at least twice annually, being before the Board meets to consider the Company's half-yearly and annual financial reports. The Audit Committee operates within clearly defined terms of reference and provides a forum through which the Company's external auditors report to the Board. The terms of reference of the Audit Committee are available upon request of the Secretary.

During the Period the Audit Committee met once and all three members attended this meeting.

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 ongoing 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 a semi-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.

Administration and Secretarial duties for the Company are performed by Anson. Asset Management services are provided by DAFV. Each has its own internal control systems.

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 ongoing 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.

Dialogue with Shareholders

All holders of 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 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:

·; 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. A resolution proposing their reappointment will be submitted at the forthcoming General Meeting to be held pursuant to section 199 of the Law.

Signed on behalf of the Board on 19 July 2012

Charles Wilkinson

Chairman of Audit Committee

We have audited the consolidated financial statements of Doric Nimrod Air Two Limited for the period from incorporation on 31 January 2012 to 31 March 2012 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Cashflows, the Consolidated Statement of Changes in Equity and the related notes 1 to 21. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

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 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.

Respective responsibilities of directors and auditor

As explained more fully in the Statement of Directors' Responsibilities, 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.

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.

If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

·; give a true and fair view of the state of the Group's affairs as at 31 March 2012 and of its profit for the period then ended;

·; have been properly prepared in accordance with IFRSs as adopted by the European Union; and

·; have been prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion:

·; proper accounting records have not been kept; or

·; the financial statements are not in agreement with the accounting records; or

·; we have not received all the information and explanations we require for our audit.

John Clacy FCA

for and on behalf of Deloitte LLP

Chartered Accountants and Recognised Auditor

St Peter Port, Guernsey

Date...20 July 2012.

Doric Nimrod Air Two Limited (the "Company")

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the period 31 January 2011 to 31 March 2012

In arriving at the results for the financial period, all amounts above relate to continuing operations.

There are no recognised gains or losses for the period other than those disclosed above.

The notes on pages 34 to 55 form an integral part of these financial statements

Doric Nimrod Air Two Limited (the "Company")

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 March 2012

The Financial Statements were approved by the Board of directors and authorised for issue on 19 July 2012 and are signed on its behalf by:

Charles Wilkinson

Director

The notes on pages 34 to 55 form an integral part of these financial statements

Doric Nimrod Air Two Limited (the "Company")

CONSOLIDATED STATEMENT OF CASH FLOWS

For the period ended 31 March 2012

The notes on pages 34 to 55 form an integral part of these financial statements

Doric Nimrod Air Two Limited (the "Company")

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the period ended 31 March 2012

The notes on pages 34 to 55 form an integral part of these financial statements

Doric Nimrod Air Two Limited (the "Company")

Notes to the Consolidated Financial Statements

As at 31 March 2012

1 GENERAL INFORMATION

The consolidated financial statements incorporate the results of Doric Nimrod Air Two Limited (the "Company"), MSN077 Limited, MSN090 Limited, MSN105 Limited and Doric Nimrod Air Finance Alpha Limited (the "Subsidiaries") (together known as the "Group").

The Company was incorporated in Guernsey on 31 January 2011 with registered number 52985. Its share capital consists of one class of Ordinary Preference Shares ("Ordinary Shares"), one class of Convertible Preference Shares ("C Shares") and one class of Subordinated Administrative Shares ("Admin Shares"). The Company's Ordinary Shares and C Shares have been admitted to trading on the Specialist Fund Market ("SFM") of the London Stock Exchange ("LSE") and are listed on the Channel Islands Stock Exchange ("CISX").

The Company's investment objective is to obtain income returns and a capital return for its Shareholders by acquiring, leasing and then selling aircraft.

2 ACCOUNTING POLICIES

The significant accounting policies adopted by the Group are as follows:

(a) Basis of Preparation

The consolidated 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.

During the period the Company issued a separate class of shares, being C Shares, and therefore these consolidated financial statements have been produced in a format that details the assets attributable to each class of shares. The Ordinary Share and C Share information in these financial statements represents additional information. The total columns constitute the financial statements of the Group prepared in conformity with IFRS as adopted by the European Union.

Changes in accounting policy and disclosure

The following Standards or Interpretations that are expected to affect the Group have been issued but not yet adopted by the Group as shown below. Other Standards or Interpretations issued by the IASB and IFRIC are not expected to affect the Group.

IFRS 7 Financial Instruments:Disclosures - amendments enhancing disclosures about transfers of financial assets effective for annual periods beginning on or after 1 July 2011.

IFRS 9 Financial Instruments - Classification and Measurement of financial assets effective for annual periods beginning on or after 1 January 2015.

Doric Nimrod Air Two Limited (the "Company")

Notes to the Consolidated Financial Statements

As at 31 March 2012

2 ACCOUNTING POLICIES (continued)

(a) Basis of Preparation (continued)

IFRS 10 Consolidated Financial Statements effective for annual beginning on or after 1 January 2013.

IFRS 13 Fair Value Measurement effective for annual periods beginning on or after 1 January 2013.

IAS 1 Presentation of Financial Statements - amendments to revise the way other comprehensive income is presented effective for annual periods beginning on or after 1 July 2012.

IAS 32 Financial Instruments: Presentation - amendments to application guidance on the offsetting of financial assets and financial liabilities effective for annual periods beginning on or after 1 January 2014.

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 Group'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) Basis of consolidation

The consolidated financial statements incorporate the results of the Company and its Subsidiaries. The Company owns 100% of all the shares in the Subsidiaries, and has the power to govern the financial and operating policies of the Subsidiaries so as to obtain benefits from their activities.

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

(c) Taxation

The Company and its Subsidiaries have been assessed for tax at the Guernsey standard rate of 0%.

(d) Shares capital

Ordinary Shares and C Shares, together known as ("Shares") are classified as equity. Incremental costs directly attributable to the issue of Shares are recognised as a deduction from equity.

(e) Expenses

All expenses are accounted for on an accruals basis.

(f) Interest Income

Interest income is accounted for on an accruals basis.

Doric Nimrod Air Two Limited (the "Company")

Notes to the Consolidated Financial Statements

As at 31 March 2012

2 ACCOUNTING POLICIES (continued)

(g) Foreign currency translation

The currency of the primary economic environment in which the Group operates (the functional currency) is Great British Pounds ("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.

(h) 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 3 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.

(i) Segmental Reporting

The directors are of the opinion that the Group is engaged in a single segment of business, being acquiring, leasing and selling various Airbus A380-861 aircraft (together the "Assets" and each an "Asset").

(j) 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 despite the current economic climate. Accordingly, the directors have adopted the going concern basis in preparing the consolidated financial statements.

(k) Leasing and rental income

The leases relating to the Assets have been classified as operating leases as the terms of the leases do not transfer substantially all the risks and rewards of ownership to the lessees. The Assets are shown as non-current assets in the Statement of Financial Position. Further details of the leases are given in Note 12.

Rental income and advance lease payments from operating leases are recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and amortised on a straight-line basis over the lease term.

Doric Nimrod Air Two Limited (the "Company")

Notes to the Consolidated Financial Statements

As at 31 March 2012

2 ACCOUNTING POLICIES (continued)

(l) Property, plant and equipment - Aircraft

In line with IAS 16 Property Plant and Equipment, the Assets are initially recorded at the fair value of the consideration paid. The cost of the asset is made up of the purchase price of the Assets plus any costs directly attributable to bringing it into working condition for its intended use. Accumulated depreciation and any recognised impairment loss are deducted from cost to calculate the carrying amount of the Assets.

Depreciation is recognised so as to write off the cost of the Asset less the estimated residual value of £80.7 million per aircraft 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 Group's ownership of the these assets. Depreciation starts when the asset is available for use.

At each balance sheet date, the Group reviews the carrying amounts of its Assets to determine whether there is any indication that those assets have suffered an 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 an 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.

(m) 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.

Doric Nimrod Air Two Limited (the "Company")

Notes to the Consolidated Financial Statements

As at 31 March 2012

2 ACCOUNTING POLICIES (continued)

(m) Financial liabilities (continued)

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.

(n) 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, the Asset Manager and the Auditors 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 on-going 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.

Critical judgements and estimates in applying the Company's accounting policies.

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.

Doric Nimrod Air Two Limited (the "Company")

Notes to the Consolidated Financial Statements

As at 31 March 2012

3 SIGNIFICANT JUDGEMENTS AND ESTIMATES (continued)

Residual value and useful life of Asset

As described in note 2 (l), the Company depreciates the Assets on a straight line basis over the estimated useful life of the Assets and taking into consideration the estimated residual value. In making its judgement regarding residual value estimates the directors considered previous sales of similar aircraft and other available aviation information. The useful life of the asset is estimated based on the expected period for which the Company will own and lease the aircraft.

Operating lease commitments- Company as lessor

The Group has entered into operating leases on two Assets. The Group 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 these assets and thus accounts for the contracts as operating leases.

The Group has determined that the operating leases on the Assets are 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 respective lease at the end of the initial term of 10 years a penalty equal to the remaining 2 years would be due.

Impairment

As described in note 2 (l), 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

Doric Nimrod Air Two Limited (the "Company")

Notes to the Consolidated Financial Statements

As at 31 March 2012

4 RENTAL INCOME (continued)

Rental income is derived from the leasing of the Assets. 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 over the term of the leases on an annual basis. In addition, advance rentals received have also been spread over the full term of the leases.

5 OPERATING EXPENSES

6 DIRECTORS' REMUNERATION

Under their terms of appointment, each Director is paid a fee of £19,000 per annum by the Company, except for the Chairman, who receives £25,000 per annum. The Chairman of the audit committee also receives an extra £4,000 per annum.

Doric Nimrod Air Two Limited (the "Company")

Notes to the Consolidated Financial Statements

As at 31 March 2012

7 DIVIDENDS IN RESPECT OF EQUITY SHARES

Dividends in respect of Ordinary Shares

8 EARNINGS PER SHARES

Earnings Per Share ('EPS') for Ordinary Shares and C Shares are based on the net gain for the period attributable to Ordinary Shareholders of £7,261,161 and 72,500,000 Ordinary Shares, and on the net gain attributable to C Shareholders of £nil and 100,250,000 C Shares, being the weighted average number of Ordinary Shares and C Shares in issue during the period.

The directors are of the opinion that calculating EPS using 72,500,000 Ordinary Shares and 100,250,000 C Shares follows the substance of IAS 33 Earnings per Share, paragraph 26 as the transactions prior to the Placing did not result in a corresponding change in the Company's resources.

There are no dilutive instruments and therefore basic and diluted earnings per Share are identical.

9 NAV PER SHARE

NAV per Ordinary Share is based on the total net assets attributable to Ordinary Shareholders of £139,712,723 and 72,500,000 Ordinary Shares. NAV per C Share is based on the total net assets attributable to C Shareholders of £188,046,347 and 100,250,000 C Shares.

Doric Nimrod Air Two Limited (the "Company")

Notes to the Consolidated Financial Statements

As at 31 March 2012

10 PROPERTY, PLANT AND EQUIPMENT - AIRCRAFT

Under the terms of the Asset lease in MSN077 Limited and MSN090 Limited, the lessee has the option to purchase the Asset at the end of the lease term at the Current Market Value (as determined by three appraisers each jointly appointed by the Company and the lessee).

The Group can sell the assets during the term of the leases (with the lease attached and in accordance with the terms of the transfer provisions contained therein).

Under IAS 17 the direct costs attributed in negotiating and arranging the operating lease has been added to the carrying amount of the leased asset to be recognised as an expense over the lease term.

11 FINANCE COSTS

Doric Nimrod Air Two Limited (the "Company")

Notes to the Consolidated Financial Statements

As at 31 March 2012

12 OPERATING LEASES

The amounts of minimum lease receipts at the reporting date under non cancellable operating leases are detailed below:

The Operating leases are for two Airbus A380-861 Aircraft. The terms of the leases are as follows:

MSN077 Limited - term of lease is for 12 years ending October 2023. The initial lease is for 10 years ending October 2021, with an extension period of 2 years ending October 2023, 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.

MSN090 Limited - term of the lease is for 12 years ending December 2023. The initial lease is for 10 years ending December 2021, with an extension period of 2 years ending December 2023, 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 the lessee has the right to exercise an option to purchase the Asset if the Group 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.

13 RECEIVABLES

The above carrying value of receivables is equivalent to the fair value.

Doric Nimrod Air Two Limited (the "Company")

Notes to the Consolidated Financial Statements

As at 31 March 2012

14 PAYABLES (amounts falling due within one year)

The above carrying value of payables is equivalent to the fair value.

15 BORROWINGS

The loan for MSN077 Limited was arranged with Westpac Banking Corporation ("Westpac") for USD 151,047,059 and, runs for 12 years until October 2023 and has an effective interest rate of 4.590%.

The loan for MSN090 Limited was arranged with Australia and New Zealand Banking Group Limited ("ANZ") for USD 146,865,575 and runs for 12 years until December 2023 and has an effective interest rate of 4.5580%

Each loan is secured on one Asset. No breaches or default occurred in the period. The loans are either fixed rate over the term of the loan or have an associated interest rate swap contract issued by the lender in effect fixing the loan interest over the term of the loan.

Transaction costs of arranging the loans have been deducted from the carrying amount of the loans and will be amortised over their respective lives.

In the directors' opinion, the above carrying values of the bank loans are approximate to their fair value.

Doric Nimrod Air Two Limited (the "Company")

Notes to the Consolidated Financial Statements

as at 31 March 2012

16 SHARE CAPITAL AND PREMIUM

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 Shares, C Shares or Administrative Shares.