Doric Nimrod 3 Regulatory News (DNA3)

QUARTERLY FACT SHEET

30 September 2015

DORIC NIMROD AIR THREE LIMITED

LSE: DNA3

The Company

Doric Nimrod Air Three Limited ("the Company") is a Guernsey domiciled company, which was listed on the Specialist Fund Market (SFM) of the London Stock Exchange and the Channel Islands Stock Exchange on 2 July 2013 with the admission of 220 million Ordinary Shares ("the Equity") at an issue price of 100p per share. The market capitalisation of the Company was GBP 229.9 million as of 30 September 2015.

Investment Strategy

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

The Company acquired four Airbus A380 aircraft by the end of November 2013. Since delivery, each of the four aircraft has been leased to Emirates Airline ("Emirates") - the national carrier owned by the Investment Corporation of Dubai, based in Dubai, United Arab Emirates - for an initial term of 12 years with fixed lease rentals for the duration. In order to complete the purchase of the aircraft, DNA Alpha Ltd ("DNA Alpha"), a wholly owned subsidiary of the Company, issued two tranches of enhanced equipment trust certificates ("the Certificates" or "EETC") - a form of debt security - in July 2013 in the aggregate face amount of USD 630 million. DNA Alpha used the proceeds from both the Equity and the Certificates to finance the acquisition of the four new Airbus A380 aircraft.

The Company receives income from the leases and its directors are targeting a gross distribution to the shareholders of 2.0625p per share per quarter (amounting to a yearly distribution of 8.25% based on the initial placing price of 100p per share).

The total return for a shareholder investing today (30 September 2015) at the current share price consists of future income distributions during the remaining lease duration and a return of capital at dissolution of the Company. The latter payment is subject to the future value and the respective sales proceeds of the aircraft, quoted in US dollars and the USD/GBP exchange rate at that point in time. Since launch three independent appraisers provide the Company with their future values for the aircraft at the end of each financial year. The latest appraisals available are dated the end of March 2015. The table below summarizes the total return components, calculated on different exchange rates and using the average value of the aircraft as provided by the three independent external appraisers. Regarding the following two tables, there is no guarantee that the aircraft will be sold at such a sale price or that such capital returns would be generated. It is also assumed that the lessee will honour all its contractual obligations during the entire anticipated lease term.

I. Implied Future Total Return Components Based on Appraisals1

II. Company Facts (31 March 2015)

1 See final sentences of Investment Strategy

Asset Manager's Comment

1. The Assets

In November 2013, the Company completed the purchase of all four Airbus A380 aircraft, bearing manufacturer's serial numbers (MSN) 132, 133, 134 and 136. All four aircraft are leased to Emirates for an initial term of 12 years from the point of delivery with fixed lease rentals for the duration.

The A380s owned by the Company recently visited Amsterdam, Auckland, Houston, London Heathrow, Milan, Melbourne, Munich, New York JFK, Perth, Singapore, Sydney, and Zurich. Aircraft utilisation for the period from delivery of each Airbus A380 until the end of August 2015 was as follows:

Maintenance Status

Emirates maintains its A380 aircraft fleet based on a maintenance programme according to which minor maintenance checks are performed every 1,500 flight hours, and more significant maintenance checks (C checks) at 24 month or 12,000 flight hour intervals, whichever occurs sooner. Emirates bears all costs (including for maintenance, repairs and insurance) relating to the aircraft during the lifetime of the leases.

Inspections

Results of the inspection completed for MSN 132 during its first C check in June 2015 show that the aircraft was physically in very good condition consistent with its relatively young age. There is evidence that the aircraft has been well maintained and cleaned regularly. Extensive refurbishment work was going on during the check. Emirates invests considerable time and effort in maintaining a high cabin standard.

In August and September 2015 the asset manager undertook physical inspections of MSNs 133, 134 and 136 while they underwent their first C check at Emirates' engineering facility at Dubai International Airport. The aircraft were physically in a very good condition consistent with their relatively young age. There is evidence that they have been well maintained and cleaned regularly. Seat covers, floor coverings and carpets in the passenger cabin were replaced.

2. Market Overview

From January to July 2015 passenger demand, measured in revenue passenger kilometres (RPKs), increased by 6.5% compared to the year before. The recent softening in economic growth has had no adverse impacts on RPK volumes so far. Lower fares were fueling demand in air travel, particularly in the leisure travel segment. But according to an IATA press release citing Tony Tyler, IATA's Director General and CEO, slowing global trade and stock market volatility may lead to some turbulence in the coming months. Nevertheless, expectations for 2015 are broadly positive, due to the continuing low oil price environment. In its latest forecast released in June IATA expects an RPK growth of 6.7% for the current year - an increase of 0.8 percentage points compared to last year's growth rate. Between January and July 2015 airlines increased their capacities, measured in available seat kilometres (ASKs), by 6.0%. The Middle East (+15.5%) and Asia/Pacific (+7.2%) were the most active regions in terms of capacity growth. The only shrinking market was Africa again.

The average passenger load factor in the first seven months of this year was 80.1%. This is an increase of 0.4 percentage points compared to the same period the year before. IATA expects an average worldwide passenger load factor of 80.2% for the full year 2015.

A regional breakdown reveals that the Middle East airlines continue to outperform the overall market in 2015. Until the end of July RPKs increased by 12.4% compared to the first seven months in 2014. Asia/Pacific-based operators followed with 9.1%. Latin America grew by 6.4% and Europe by 5.1%. North American market participants recorded 3.6% more RPKs. Africa shrank by 1.3%.

After a sharp decline in oil prices starting in the autumn of 2014, IATA has revised its fuel price target several times in the recent past. In its latest outlook, released in June, the industry association expects an average price per barrel of USD 78 during this year. Fuel is the single largest operating cost of airlines and has significant effects on the industry's profitability. Comparatively low oil prices could drive the average share of fuel costs in operating expenses down to 28%. This could result in a significant boost of the industry-wide net profit to an estimated USD 29.3 billion in 2015. The net profit margin of 4.0% would be the highest for more than a decade.

© International Air Transport Association, 2015. Air Passenger Market Analysis July 2014 / Air Passenger Market Analysis July 2015 / Economic Performance of the Airline Industry, 2015 mid-year report. All Rights Reserved. Available on IATA Economics page.

3. Lessee - Emirates Key Financials

Emirates recorded steady performance and significant growth during the 2014/15 financial year which ended on 31 March 2015. Revenue, including other operating income, reached a record high of USD 24.2 billion, up by 7.5% compared to the previous financial year.

The airline posted a net profit of USD 1.2 billion, representing an increase of 40% over last year's results. This was Emirates' 27th consecutive year of profit and one of the best performances to date according to His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive of Emirates Airline and Group. Nonetheless the company faced many global and operational challenges. Revenues were impacted by flight plan adjustments made to address the Ebola outbreak in Africa, armed conflicts in several regions, and the 80-day runway upgrading work at Dubai International Airport. Emirates' net profit was impacted by the strong rise of the US dollar against many revenue generating currencies of the airline. The bottom line has improved due to a significant drop in jet fuel prices during the second half of the 2014/15 financial year. Overall, the airline's fuel bill decreased by 6.5% compared to the period before and currently represents 34.6% of operating costs, remaining the biggest component for the carrier.

As of 31 March 2015, the balance sheet total amounted to USD 30.3 billion, an increase of 9.6% compared to the beginning of the financial year. Total equity increased by 11.1% to USD 7.7 billion with an equity ratio of 25.4%. The current ratio stood at 0.80, meaning the airline would be able to meet most of its current liabilities by liquidating all of its current assets. Significant items on the liabilities side of the balance sheet included current and non-current borrowings and lease liabilities in the amount of USD 13 billion. As of 31 March 2015, the carrier's cash balance was USD 4.6 billion, down by USD 88 million compared with the beginning of the 2014/15 financial year.

During the 2014/15 financial year the airline's ASKs increased by 9.1%. Measured in RPKs passenger traffic grew by 9.4%, resulting in an average passenger load factor of 79.6%. This is above the 79.4% reached in the prior period. A record 49.3 million passengers flew with Emirates between 1 April 2014 and 31 March 2015 - an increase of 10.7% compared to the previous financial year.

During the 2014/15 financial year Emirates took delivery of 24 wide-body aircraft including 12 Airbus A380s, 10 Boeing 777-300ERs and two Boeing 777 freighters. Ten older aircraft were phased out. As of 31 March 2015 the carrier's average fleet age was 75 months, compared to the industry average of 140 months.

As of 31 August 2015 Emirates had 238 wide-body aircraft in operation. Emirates is the world's largest operator of wide-body passenger aircraft. The number of Emirates' orders yet to be delivered stood at 269 aircraft. The airline operates the world's largest fleets of Airbus A380 and Boeing 777-300ER aircraft. As part of the fleet renewal programme, Emirates is to phase out ten aircraft by the end of the current fiscal year. Between 1 April 2015 and 31 March 2016 it is expected that 26 aircraft will have entered into service, two more than in the same period the year before.

In August 2015 Emirates announced it will commence flights to Panama City from 1 February 2016 on. The daily service with a scheduled flight time of 17 hours and 35 minutes will become the world's longest non-stop flight and the airline's first destination gateway to Central America. Currently the network counts 149 destinations in 81 countries.

Source: Ascend, Emirates

4. Aircraft - A380

As of September 2015 Emirates operated a fleet of 67 A380s which currently serve 34 destinations from its Dubai hub: Amsterdam, Auckland, Bangkok, Barcelona, Beijing, Brisbane, Dallas, Dusseldorf, Frankfurt, Hong Kong, Houston, Jeddah, Kuwait, London Gatwick, London Heathrow, Los Angeles, Madrid, Manchester, Mauritius, Melbourne, Milan, Mumbai, Munich, New York JFK, Paris, Perth, Rome, San Francisco, Seoul, Shanghai, Singapore, Sydney, Toronto and Zurich.

The increasing number of A380 joining the fleet allows Emirates to increase its capacities in line with customer demand, but without the need for adding further frequencies at slot-constraint airports. Seven years after London became Emirates' second A380 destination, all eight daily flights to London will be operated by A380s from 1 January 2016 on. During the last five years alone, the carrier has increased its capacities into London by a quarter. Also from the beginning of next year, another European financial centre will benefit from Emirates increasing A380 capacities. A second daily A380 flight to Frankfurt (Germany) will be launched. Currently the service is operated by a Boeing 777-300ER. According to Hubert Frach, Emirates' Divisional Senior Vice President, Commercial Operations West, this step will provide more A380 to A380 connectivity. Starting from 1 December 2015 a further Boeing 777-300ER flight will be replaced by an A380. Emirates announced it will add its fourth daily A380 service to the Thai capital, Bangkok.

The global A380 fleet consisted of 171 commercially used planes in service in September 2015. The thirteen operators are Emirates (67 A380 aircraft), Singapore Airlines (19), Deutsche Lufthansa (14), Qantas (12), Air France (10), Korean Airways (10), British Airways (9), Malaysia Airlines (6), Thai Airways (6), China Southern Airlines (5), Qatar Airways (5), Asiana (4) and Etihad Airways (4).

In August 2015 Airbus finally confirmed that the first delivery of an Airbus A380 to the Russian carrier Transaero will be delayed past the end of this year. The determination of new delivery dates is still in process. Aeroflot is about to acquire Transaero, which had ordered four A380 aircraft in total.

In September 2015 the number of undelivered A380 orders stood at 147.

Emirates' president Tim Clark believes that the second-hand market for the Airbus A380 will be a good opportunity for carriers to explore the economic capabilities of the jet: "It's clear to me that there are carriers interested in the A380 that can't afford one." He believes the second-hand market for the type will be "fairly strong", especially as passenger demand increases with a recovering global economy. In April 2015 Tim Clark said that used A380s present a "very good value proposition" for customers who "want to come in at a slightly lower price".

Source: Ascend, Emirates

Contact Details

Company

Doric Nimrod Air Three Limited

Frances House, Sir William Place

St Peter Port

Guernsey GY1 4EU

Tel: +44 1481 702400

www.dnairthree.com

Corporate & Shareholder Advisor

Nimrod Capital LLP

3 St Helen's Place

London EC3A 6AB

Tel: +44 20 7382 4565

www.nimrodcapital.com

Disclaimer

This document is issued by Doric Nimrod Air Three Limited (the "Company") to and for the information of its existing shareholders and does not in any jurisdiction constitute investment advice or an invitation to invest in the shares of the Company. The Company has used reasonable care to ensure that the information included in this document is accurate at the date of its issue but does not undertake to update or revise the information, including any information provided by the Asset Manager, or guarantee the accuracy of such information.

To the extent permitted by law neither the Company nor the Asset Manager nor their directors or officers shall be liable for any loss or damage that anyone may suffer in reliance on such information. The information in this document may be changed by the Company at any time. Past performance cannot be relied on as a guide to future performance. The value of an investment may go down as well as up and some or all of the total amount invested may be lost.