TIDMDNA
RNS Number : 7739K
Doric Nimrod Air One Limited
12 April 2018
QUARTERLY FACT SHEET
31 March 2018
DORIC NIMROD AIR ONE LIMITED
LSE: DNA
The Company
Doric Nimrod Air One Limited ("the Company") is a Guernsey
domiciled company, which is listed on the Specialist Fund Segment
(SFS) of the London Stock Exchange's Main Market. The Company has
purchased one Airbus A380-861 aircraft, manufacturer's serial
number (MSN) 016, which it has leased for an initial term of 12
years, with fixed lease rentals for the duration, to Emirates
Airline ("Emirates"), the national carrier owned by the Investment
Corporation of Dubai, based in Dubai, United Arab Emirates.
Investment Strategy
The Company's investment objective is to obtain income returns
and a capital return for its shareholders by acquiring, leasing and
then selling a single aircraft. The Company receives income from
the lease, and targets a gross distribution to the shareholders of
2.25 pence per share per quarter (9p per annum). It is anticipated
that income distributions will continue to be made quarterly.
The total return for a shareholder investing today (31 March
2018) at the current share price consists of future income
distributions during the remaining lease duration and a return of
capital at dissolution of the Company. The latter payment is
subject to the future value and the respective sales proceeds of
the aircraft, quoted in US dollars and the USD/GBP exchange rate at
that point in time. Since launch, three independent appraisers have
provided the Company with their future values for the aircraft at
the end of each financial year. The latest appraisals available are
dated the end of March 2017. The table below summarises 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.
The contracted lease rentals are calculated and paid in US
dollars to satisfy debt interest and principal, and in sterling to
satisfy dividend distributions and Company running costs, which are
in sterling. The Company is, therefore, insulated from foreign
currency market volatility during the term of the lease.
With reference to 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
Appraisals
The implied return figures are not a forecast and
assume the Company has not incurred any unexpected
costs.
Aircraft value at lease expiry according to
* Prospectus appraisal USD 110 million
* Latest appraisal(1) USD 104 million
==============================================================================================
Per Share Income Distributions Return of Capital Total Return(2)
(rounded)
--------------------- --------------------------- ---------------------------
Prospectus Latest Prospectus Latest
Appraisal Appraisal(3) Appraisal Appraisal(3)
--------------------- ----------- -------------- ----------- --------------
Prospectus
FX Rate(4) 45p 161p 153p 206p 198p
------------- --------------------- ----------- -------------- ----------- --------------
Current
FX Rate(5) 45p 182p 173p 227p 218p
------------- --------------------- ----------- -------------- ----------- --------------
(1) Date of valuation: 31 March 2017
(2) Includes future dividends
(3) Average of the three appraisals as at the Company's
fiscal year-end in which the lease reached the end
of its 12-year term
(4) 1.5900 USD/GBP
(5) 1.4013 USD/GBP (31 March 2018)
II. Company Facts (31 March 2018)
Listing LSE
---------------------------- ---------------------------------
Ticker DNA
---------------------------- ---------------------------------
Current Share Price 102.0p (closing)
---------------------------- ---------------------------------
Market Capitalisation GBP 43.3 million
---------------------------- ---------------------------------
Initial Debt USD 122 million
---------------------------- ---------------------------------
Outstanding Debt USD 46.2 million (38% of Initial
Balance Debt)
---------------------------- ---------------------------------
Current/Future Anticipated 2.25p per quarter (9p per
Dividend annum)
---------------------------- ---------------------------------
Earned Dividends 63p
---------------------------- ---------------------------------
Current Dividend
Yield 8.82%
---------------------------- ---------------------------------
Dividend Payment April, July, October, January
Dates
---------------------------- ---------------------------------
Cost Base Ratio(1) 1.5% (based on average share
capital)
---------------------------- ---------------------------------
Currency GBP
---------------------------- ---------------------------------
Launch Date/Price 13 December 2010 / 100p
---------------------------- ---------------------------------
Remaining Lease Duration 4 years 9 months
---------------------------- ---------------------------------
Incorporation Guernsey
---------------------------- ---------------------------------
Aircraft Registration A6-EDC (16.12.2022)
Number (Lease Expiry
Date)
---------------------------- ---------------------------------
Asset Manager Doric GmbH
---------------------------- ---------------------------------
Corp & Shareholder Nimrod Capital LLP
Advisor
---------------------------- ---------------------------------
Administrator JTC Fund Solutions (Guernsey)
Ltd
---------------------------- ---------------------------------
Auditor Deloitte LLP
---------------------------- ---------------------------------
Market Makers Canaccord Genuity Ltd,
finnCap Ltd,
Jefferies International Ltd,
Numis Securities Ltd,
Shore Capital Ltd,
Winterflood Securities Ltd
---------------------------- ---------------------------------
SEDOL, ISIN B4MF389, GG00B4MF3899
---------------------------- ---------------------------------
Year End 31 March
---------------------------- ---------------------------------
Stocks & Shares ISA Eligible
---------------------------- ---------------------------------
Website www.dnairone.com
---------------------------- ---------------------------------
(1) Calculated as Operating Costs / Average Share Capital as per
the latest published Half Yearly Financial Report.
Asset Manager's Comment
1. The Doric Nimrod Air One Airbus A380
The Airbus A380 is registered in the United Arab Emirates under
the registration mark A6-EDC. For the period from original delivery
of the aircraft to Emirates in November 2008 until the end of
February 2018, a total of 4,936 flight cycles were logged. Total
flight hours were 41,080. This equates to an average flight
duration of eight hours and 19 minutes.
The A380 owned by the Company visited Auckland, Bangkok, Dubai,
Melbourne, Milan, New York and Sydney during the first quarter of
2018.
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 36 month or 18,000 flight hour
intervals, whichever occurs first. The increased C check interval
allows for a higher aircraft availability due to lower
downtime.
Emirates bears all costs (including for maintenance, repairs and
insurance) relating to the aircraft during the lifetime of the
lease.
2. Market Overview
2017 saw global revenue passenger kilometres (RPKs) grow by 7.6%
compared to the previous year. As a result, 2017 was another year
of above-trend passenger growth, surpassing the ten-year average
pace of 5.5%. This momentum in global passenger traffic has
continued into 2018, assisted by positive economic conditions.
Nevertheless, the International Air Transport Association (IATA)
anticipates a moderate slowdown in full-year growth as the stimulus
to demand from lower airfares has been fading. RPK growth in 2018
is forecast to be 6.0%, mainly due to the increase in input costs
such as fuel prices and labour costs.
In 2017, industry-wide available seat kilometres (ASKs)
increased by 6.4% compared to 2016. As a result of the RPK growth
exceeding this, the global passenger load factor (PLF) rose by 1.0
percentage points to 81.5% compared to the previous year, achieving
a record high for a calendar year. All regions except the Middle
East experienced an increase in PLF in 2017.
The market share of Middle Eastern airlines fell in 2017 for the
first time since 1997. It was the only region to experience a
slowdown in its full-year international RPK growth rate (down from
11.8% in 2016 to 6.4% in 2017) following a challenging first half
of the year, which included the now-lifted ban on personal
electronic devices on flights and the proposed travel bans to the
US. The seasonally adjusted passenger traffic numbers did however
recover somewhat during the second half of the year. IATA's January
2018 Air Passenger Market Analysis report showed passenger traffic
was trending upwards at an annualized pace of 1%.
In 2017, Asia/Pacific-based operators recorded the highest RPK
growth rate with 10.2%. Europe experienced the second highest
growth rate with 8.2%, followed by Latin America with 7.0%. The
Middle East and Africa achieved growth rates of 6.4% each, while
North America saw a growth rate of 4.2%.
For 2018, IATA forecasts an industry-wide net profit of USD 38.4
billion, the highest nominal net profit on record. This comes
despite rising unit costs, which are partially offset by the rise
in achieved load factors. Fuel prices, the single largest operating
cost for airlines, are expected to increase to USD 73.8 per barrel
and represent 20.5% of average operating costs in 2018, an increase
of 1.8 percentage points compared to the previous year.
(c) International Air Transport Association, 2018. Air Passenger
Market Analysis December 2017, Economic Performance of the Airline
Industry 2017 End-year report, Air Passenger Market Analysis
January 2018. All Rights Reserved. Available on the IATA Economics
page.
3. Lessee - Emirates Key Financials
In the first half of the 2017/18 financial year ending on 31
March 2018, Emirates recorded revenue of USD 12.1 billion (AED 44.5
billion), a 6% increase compared to the first half of the previous
financial year. Net profit increased by approx. 111% to USD 452
million (AED 1.7 billion) during the same period. This came despite
strong downward pressure on margins from increased competition,
rising oil prices and weak economic and uncertain political
realities in many parts of the world. His Highness (HH) Sheikh
Ahmed bin Saeed Al Maktoum, chairman and chief executive of
Emirates, attributes the positive result to the capacity
optimisation and efficiency initiatives across the company, steady
business growth and a more favourable foreign exchange situation
compared to the same period last year.
During the period, Emirates carried 29.2 million passengers, up
4% compared to the same period in the previous fiscal year.
Capacity for passengers, measured in ASKs, increased by 3%, while
passenger traffic carried, measured in RPKs, grew by 5%. This
resulted in the passenger seat factor rising by 1.9 percentage
points to 77.2%.
As of 30 September 2017, the balance sheet totalled USD 33.0
billion (AED 121.1 billion), down 4% from USD 33.1 billion (AED
121.6 billion) compared to the previous financial year. Total
equity grew by 4.8% to USD 10.0 billion (AED 36.8 billion), giving
the company an equity ratio of nearly 30.4%. Emirates had a cash
balance of USD 4.0 billion (AED 14.7 billion) at the end of the
period, down by USD 254 million (AED 0.9 billion) compared to the
previous financial year.
In the 2017 calendar year Emirates grew its fleet by 21 new
aircraft, with 9 A380s and 12 Boeing 777-300ERs. Eleven aircraft
were retired during the course of the year. As of 31 March 2018,
its fleet totalled 254 passenger aircraft and 14 freighters, with
an order book consisting of 222 orders for new aircraft, including
the latest order for 20 additional Airbus A380 aircraft as well as
a further 16 on option. A memorandum of understanding to order 40
Boeing 787-10 aircraft has not yet been finalized.
With Newark (USA, via Athens), Zagreb (Croatia) and Phnom Penh
(Cambodia) Emirates added three passenger destinations to its
global network in 2017. In the first quarter of 2018, the airline
announced plans to expand its network to include a nonstop
Dubai-Newark service from June 2018, a daily Dubai-Denpasar
(Bali)-Auckland (New Zealand) service from June 2018 and a daily
Dubai-Sao Paulo (Brazil)-Santiago (Chile) service from July 2018.
Emirates has also announced adjustments to some route frequencies,
such as a reduction in frequencies to New York JFK and increases in
frequencies to Orlando and Fort Lauderdale.
In January 2018, the governments of the United Arab Emirates and
Tunisia restored aviation relations after a diplomatic incident
centred on security concerns, which forced the suspension of
Emirates services to the north African state in December 2017.
Following the restoration of services to Tunisia, Emirates and
Etihad Airways announced a co-operation pact covering aviation
security matters. The agreement is intended to take advantage of
synergies between the two United Arab Emirates companies.
In March 2018, Emirates successfully executed a USD 600 million
Sukuk issuance. A Sukuk is similar to a Western style bond, except
that the structure ensures that it is compliant with Sharia
(Islamic religious law) which prohibits interest. The airline will
use the proceeds from the issuance for general corporate purposes
including aircraft financing and working capital. The stock
exchange listed certificates were priced at a profit rate of 4.50%
and will be amortized over ten years with legal maturity in March
2028.
Source: CAPA, Emirates, FlightGlobal
4. Aircraft - A380
With the addition of Tokyo-Narita, Casablanca, Sao Paulo,
Johannesburg and Nice the airline grew its A380 network by five new
destinations during the course of 2017. As of the end of March
2018, Emirates operated a fleet of 102 A380s, which currently serve
46 destinations within its global network via its hub in Dubai.
A380 destinations include: Amsterdam, Auckland, Bangkok, Barcelona,
Beijing, Birmingham, Brisbane, Casablanca, Christchurch,
Copenhagen, Dusseldorf, Frankfurt, Guangzhou, Hong Kong,
Johannesburg, Kuala Lumpur, Kuwait, London Gatwick, London
Heathrow, Los Angeles, Madrid, Manchester, Mauritius, Melbourne,
Milan, Moscow, Mumbai, Munich, New York JFK, Nice, Paris, Perth,
Prague, Rome, San Francisco, Sao Paulo, Seoul, Shanghai, Singapore,
Sydney, Taipei, Tokyo, Toronto, Vienna, Washington, and Zurich.
As of the end of March 2018, the global A380 fleet consisted of
219 commercially operated planes in service. The thirteen operators
are Emirates (102), Singapore Airlines (17), Deutsche Lufthansa
(14), Qantas (12), British Airways (12), Korean Air Lines (10),
Etihad Airways (10), Air France (10), Qatar Airways (9), Malaysia
Airlines (6), Thai Airways (6), Asiana Airlines (6), and China
Southern Airlines (5). Another four were temporarily parked: two
for lease return preparations and two were returned to their
lessor. Following its redelivery from Singapore Airlines (SIA)
earlier this year, the second A380 to come off lease has been
placed into temporary storage in France whilst its engines are
reportedly on short terms leases to Rolls Royce. The number of
undelivered A380 orders stood at 108 and no longer includes a six
aircraft order from Virgin Atlantic, which has been cancelled after
the delivery was postponed multiple times.
In February 2018, Emirates firmed up an order for an additional
20 Airbus A380 plus an option for another 16 aircraft with
deliveries starting from early 2020 onwards. Emirates, which is
currently using both Engine Alliance and Rolls-Royce engines, is
evaluating the engine options for this order. HH Sheikh Ahmed bin
Saeed Al Maktoum explained: "Our customers love it, and we've been
able to deploy it on different missions across our network, giving
us flexibility in terms of range and passenger mix."
Airbus also announced that it intends to reduce the A380 output
to six per year from 2020 onwards in order to sustain the programme
and keep losses from the production of this aircraft compressed.
The production rate, which is planned at 12 A380s to be delivered
this year, will follow with a decrease of eight by 2019 and six by
2020. Tom Enders, Airbus' departing chief executive, explained that
he anticipates further A380 orders in the future from existing or
new operators, specifically in Asia and, particularly, China.
Enders states that the A380 is currently being under-represented in
China, but would ideally suit such a market.
Source: Emirates, FlightGlobal
http://www.rns-pdf.londonstockexchange.com/rns/7739K_-2018-4-12.pdf
Contact Details
Company
Doric Nimrod Air One Limited
Dorey Court, Admiral Park
St Peter Port
Guernsey GY1 2HT
Tel: +44 1481 702400
www.dnairone.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 One 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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April 12, 2018 11:50 ET (15:50 GMT)
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