TIDMDNA
RNS Number : 6461D
Doric Nimrod Air One Limited
10 October 2018
QUARTERLY FACT SHEET
30 September 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 (30 September
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 2018. The table No I below summarises the
total return components, calculated on different exchange rates and
using the appraised value of the aircraft, which is the average of
valuations provided by three independent external appraisers and
quoted in US dollars. This residual value at lease expiry takes
inflation into account and is the most reliable estimate available
in the Company's Asset Manager's opinion. Due to accounting
standards, the value used in the Company's financial reports
differs from this disclosure as it excludes the effects of
inflation and is converted to sterling at the prevailing exchange
rate on the reporting date (e.g. 31 March 2018).
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 101 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) 41p 161p 148p 202p 189p
--------------------- ----------- -------------- ----------- --------------
Current FX
Rate(5) 41p 193p 180p 236p 221p
--------------------- ----------- -------------- ----------- --------------
(1) Date of valuation: 31 March 2018
(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) 1.3030 USD/GBP (30 September 2018)
II. Company Facts (30 September 2018)
Listing LSE
Ticker DNA
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Current Share Price 112p (closing)
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Market Capitalisation GBP 47.5 million
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Initial Debt USD 122 million
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Outstanding Debt Balance USD 39.8 million (33% of Initial Debt)
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Current/Future Anticipated 2.25p per quarter (9p per annum)
Dividend
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Earned Dividends 67.5p
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Current Dividend Yield 8.04%
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Dividend Payment Dates April, July, October, January
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Cost Base Ratio(1) 1.5% (based on average share capital)
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Currency GBP
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Launch Date/Price 13 December 2010 / 100p
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Remaining Lease Duration 4 years 3 months
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Incorporation Guernsey
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Aircraft Registration A6-EDC (16.12.2022)
Number (Lease Expiry Date)
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Asset Manager Doric GmbH
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Corp & Shareholder Advisor Nimrod Capital LLP
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Administrator JTC Fund Solutions (Guernsey) Ltd
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Auditor Deloitte LLP
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Market Makers Canaccord Genuity Ltd,
finnCap Ltd,
Jefferies International Ltd,
Numis Securities Ltd,
Shore Capital Ltd,
Winterflood Securities Ltd
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SEDOL, ISIN B4MF389, GG00B4MF3899
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Year End 31 March
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Stocks & Shares ISA Eligible
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Website www.dnairone.com
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(1) Calculated as Operating Costs / Average Share Capital as per
the latest published Annual 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
August 2018, a total of 5,178 flight cycles were logged. Total
flight hours were 43,003. This equates to an average flight
duration of around eight hours and 20 minutes.
The A380 owned by the Company visited Bangkok, Melbourne, Milan,
Munich, Sydney, and Tokyo during the third 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
Growth in passenger traffic, measured in global revenue
passenger kilometres (RPKs), has remained in line with the forecast
of the International Air Transport Association (IATA). The industry
body expected the pace of RPK growth to slow slightly during this
calendar year relative to that of last year. This is largely due to
upward pressure on airline input costs, particularly from higher
fuel prices, which has translated into a reduced boost to demand
from lower airfares. Nevertheless, RPKs increased by 6.9% over the
first seven months of 2018 compared to the same period in 2017,
continuing the above-trend RPK growth.
Industry-wide capacity, measured in available seat kilometres
(ASK), increased by 6.1% during the first seven months of this
year, resulting in a 0.7 percentage point increase in worldwide
passenger load factors (PLFs) to 81.9% compared to the same period
last year. Between January and July 2018, passenger load factors of
Middle East based carriers remained unchanged at 74.7%.
RPK growth in the Middle East has increased by 4.7% since the
beginning of the year. While the region has been adversely impacted
by a number of policy measures in recent years, including the
temporary ban on portable electronic devices and travel
restrictions for certain categories of passengers, IATA notes that
there are tentative signs of a pick-up in the upward trend in
passenger volumes, which could develop in the coming months.
Asia/Pacific-based operators remain the top performers in
overall market demand. Through July 2018, RPKs increased by 9.7%
compared to the previous period. Latin America ranked second with
6.4% followed closely by Europe with 6.3%. North America saw an
increase of 5.1%. Africa experienced the slowest growth at a rate
of 2.8%.
In 2018, IATA forecasts that airlines' fuel bill will increase
to USD 188 billion representing 24.2% of average operating costs.
IATA expects an average price of USD 70 per barrel for jet fuel for
this year, according to its mid-year report released in June, as
jet fuel prices continue to rise with oil prices.
(c) International Air Transport Association, 2018. Air Passenger
Market Analysis July 2018 Economic Performance of the Airline
Industry, 2018 Mid-Year Report. All Rights Reserved. Available on
the IATA Economics page.
3. Lessee - Emirates Key Financials
In the 2017/18 financial year ending on 31 March 2018, Emirates
recorded its 30(th) consecutive year of profit with a net result of
AED 2.8 billion (USD 762 million), an improvement of 124% compared
to the previous financial year, leading to a profit margin of 3.0%.
Despite continuing political challenges impacting traveller demand
and fare adjustments due to a highly competitive business
environment, Emirates increased its revenue to AED 92.3 billion
(USD 25.2 billion). This was aided by the decline of the US dollar
against currencies in most of Emirates' key markets, which had an
AED 661 million (USD 180 million) positive impact on the airline's
bottom line.
Emirates' overall passenger traffic continued to grow during the
2017/18 financial year. The airline carried a record 58.5 million
passengers (a 4% increase over last financial year) and achieved a
passenger load factor of 77.5% compared to last year's 75.1%. The
increase in the passenger load factor was the result of capacity
management in response to political uncertainty and strong
competition in many markets despite a moderate 2% increase in seat
capacity.
Total operating costs increased by 7% over the previous
financial year, largely due to the 15% increase in the average
price of jet fuel during the financial year. Including a 3% uplift
in line with capacity expansion, the airline's fuel bill increased
by 18% to AED 24.7 billion (USD 6.7 billion) compared to the
previous financial year. Fuel now accounts for 28% of operating
costs, compared to 25% in the 2016/17 financial year, and it
remains the largest cost category for the airline.
As of 31 March 2018, Emirates' balance sheet amounted to AED
127.6 billion (USD 34.8 billion), an increase of 5% compared to the
previous financial year. Total equity increased by 5.6% to AED 37.0
billion (USD 10.1 billion) due to higher profit which was partially
offset by dividend payments to the owners amounting to AED 1.0
billion (USD 272 million). The equity ratio remained stable at
nearly 29%. The airline's cash balance amounted to AED 20.4 billion
(USD 5.6 billion) at the end of the period, up by AED 4.7 billion
(USD 1.3 billion) compared to the previous financial year. Proceeds
from the Sukuk financing of AED 2.2 billion (USD 600 million)
issued in the last quarter of the financial year have been invested
in short term bank deposits and will be used to finance aircraft
deliveries in 2018/19.The current ratio stood at 0.84, meaning the
airline would be able to meet over 80% of its current liabilities
by liquidating all its current assets. Changes on the liabilities'
side of the balance sheet included the financing of seven new
aircraft and the Sukuk issue, which were offset by repayments of
finance lease liabilities, bonds and term loans.
Maintaining its strategy to operate a young and efficient fleet,
Emirates received 17 new aircraft, comprising of eight A380s and
nine Boeing 777-300ERs. During this time, eight older aircraft were
phased out, leading to a total fleet count of 268 at the end of
March. This fleet roll-over resulted in an average fleet age of 5.7
years. Due to the more moderate fleet renewal pace compared to the
previous year, the figure increased by around 6 months. Funding has
come from the Japanese structured finance market in conjunction
with debt from a wide-ranging group of institutions in China,
France, the United Kingdom, and Japan. Emirates raised over AED 3.7
billion (USD 1 billion) during the year from this source. Emirates
has also refinanced a commercial bridge facility (due to
non-availability of ECA cover) of AED 3.8 billion (USD 1.0 billion)
using a finance lease structure for five A380 aircraft, accessing
an institutional investor and bank market base from Korea, Germany,
the United Kingdom, and the Middle East. In total, Emirates raised
AED 17.9 billion (USD 4.9 billion) using a variety of financing
structures.
In July 2018 Emirates and JetBlue announced the expansion of
their codeshare on flights to Mexico City with new flights from
both Boston and New York JFK. The announcement followed the close
of a years-long dispute between the Gulf carriers and the US
mainline carriers over open skies agreements. According to
FlightGlobal, Emirates markets more than 3,200 flights weekly
operated by Alaska Airlines and JetBlue under existing codeshare
agreements. Emirates also plans to extend its partnership with
Qantas-affiliated Jetstar Group through a codeshare covering
domestic services in Vietnam as well as flights from Ho Chi Minh
City to Singapore, Bangkok, and Australia.
As of 1 October 2018 Emirates will resume a daily service to
Edinburgh, the second most visited city by tourists in the United
Kingdom (UK) and the capital of Scotland. This will bring the
number of destinations serviced in the UK to eight.
Source: ch-aviation, CNN, Emirates, FlightGlobal
4. Aircraft - A380
As of mid-September 2018, Emirates operated a fleet of 105
A380s, which currently serve 47 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, Houston, 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 Narita, Toronto, Vienna,
Washington, and Zurich. In October 2018 Emirates will add Hamburg
and Osaka to its A380 network.
As of mid-September 2018, the global A380 fleet consisted of 226
commercially operated planes in service. The fourteen operators are
Emirates (105), Singapore Airlines (19), Deutsche Lufthansa (14),
Qantas (12), British Airways (12), Korean Air Lines (10), Etihad
Airways (10), Air France (10), Qatar Airways (10), Malaysia
Airlines (6), Thai Airways (6), Asiana Airlines (6), China Southern
Airlines (5) and Hi Fly (1). Another two are listed as in storage.
In addition, two A380s are earmarked for part-out after the owners
of the aircraft voted for such a solution. The number of
undelivered A380 orders stood at 101.
In July 2018 the Portuguese wet-lease operator Hi Fly showcased
its A380 at the Farnborough International Airshow. After being in
service with Singapore Airlines for more than ten years, this is
the first A380 ever to be placed through the secondary market.
Since then it has been flying for carriers such as Thomas Cook
Airlines Scandinavia, Norwegian and Air Austral to destinations in
Europe, North America, and the Indian Ocean. The said aircraft is
managed by Doric, the asset manager of the Company.
August 2018 marked the tenth anniversary of Emirates' first ever
A380 flight. Over the last decade the airline has carried more than
105 million passengers on 115,000 A380 flights, clocking the
equivalent to 39,000 trips around the globe. While constantly
adding new A380s to its fleet, the Dubai-based operator counts more
than 80 daily departures from its hub, including the world's
shortest and the world's longest A380 non-stop route.
Emirates has announced it will operate the A380 between Dubai
and St. Petersburg for a limited period in October this year. The
decision was made in response to increased demand for travel during
the autumn school holidays and marks the first time an A380 has
operated to St. Petersburg.
Source: Emirates, FlightGlobal, Hi Fly
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 news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
STRBUBDGRBBBGIG
(END) Dow Jones Newswires
October 10, 2018 11:30 ET (15:30 GMT)
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