Doric Nimrod 2 Regulatory News (DNA2)

Listing

Specialist Fund Segment of the London Stock Exchange's Main Market

Ticker

DNA2

Share Price

182 pence (as at 30 September 19)171 pence (as at 19 November 2019)

Market Capitalisation

GBP 295.4 million (as at 19 November 2019)

Current / Future Anticipated Dividend

Current dividends are 4.5 pence per quarter per share (18 pence per annum) and it is anticipated this will continue until the aircraft leases begin to terminate in 2023

Dividend Payment Dates

April, July, October, January

Currency

Sterling

Launch Date/Price

14 July 2011 / 200 pence

Incorporation and Domicile

Guernsey

Aircraft Registration Numbers (Lease Expiry Dates including the 2 year extension)

A6-EDP (14 October 2023),A6-EDT (2 December 2023),A6-EDX (1 October 2024),A6-EDY (1 October 2024),A6-EDZ (12 October 2024),A6-EEB (9 November 2024),A6-EEC (30 November 2024)

Asset Manager

Doric GmbH

Corporate and Shareholder Advisor

Nimrod Capital LLP

Administrator

JTC Fund Solutions (Guernsey) Ltd

Auditor

Deloitte LLP

Market Makers

finnCap Ltd,

Investec Bank,

Jefferies International Ltd,

Numis Securities Ltd,

Shore Capital Ltd,

Winterflood Securities Ltd

SEDOL, ISIN, LEI

B3Z6252, GG00B3Z62522, 213800ENH57LLS7MEM48

Year End

31 March

Stocks & Shares ISA

Eligible

Website

www.dnairtwo.com

MSN

Delivery Date

Flight Hours

Flight Cycles

Average Flight Duration

077

14/10/2011

35,241

4,184

8 h 25 min

090

02/12/2011

32,934

5,337

6 h 10 min

105

01/10/2012

30,585

4,865

6 h 15 min

106

01/10/2012

33,213

3,829

8 h 40 min

107

12/10/2012

32,474

3,763

8 h 40 min

109

09/11/2012

29,427

4,628

6 h 20 min

110

30/11/2012

29,626

4,781

6 h 10 min

1 Apr 2019 to

1 Apr 2018 to

Notes

30 Sep 2019

30 Sep 2018

GBP

GBP

INCOME

A rent income

4

48,082,215

45,548,185

B rent income

4

18,266,980

18,266,980

Bank interest received

60,870

64,171

66,410,065

63,879,336

EXPENSES

Operating expenses

5

(1,744,363)

(1,714,867)

Depreciation of Aircraft

10

(23,140,129)

(26,006,678)

(24,884,492)

(27,721,545)

Net profit for the Period before finance costs and foreign exchange losses

41,525,573

36,157,791

Finance costs

11

(8,574,113)

(10,001,225)

Net profit for the Period after finance costs and before foreign exchange losses

32,951,460

26,156,566

Unrealised foreign exchange loss

7

(24,255,465)

(33,026,212)

Profit / (Loss) for the Period

8,695,995

(6,869,646)

Other Comprehensive Income

-

-

Total Comprehensive Income / (Loss) for the Period

8,695,995

(6,869,646)

Pence

Pence

Earnings / (Loss) per Ordinary Preference Share for the Period - Basic and Diluted

9

5.03

(3.98)

30 Sep 2019

31 Mar 2019

Notes

GBP

GBP

NON-CURRENT ASSETS

Aircraft

10

735,322,802

758,462,933

Financial assets at fair value through profit or loss

-

176,039

735,322,802

758,638,972

CURRENT ASSETS

Accrued income

4,532,896

7,771

Receivables

13

63,795

52,497

Cash and cash equivalents

17

29,486,205

28,236,268

34,082,896

28,296,536

TOTAL ASSETS

769,405,698

786,935,508

CURRENT LIABILITIES

Borrowings

15

84,454,333

80,363,628

Deferred income

7,840,789

7,840,789

Payables - due within one year

14

57,196

64,522

92,352,318

88,268,939

NON-CURRENT LIABILITIES

Borrowings

15

203,462,970

231,338,802

Deferred income

153,399,113

140,337,025

Financial liabilities at fair value through profit or loss

52,060

-

356,914,143

371,675,827

TOTAL LIABILITIES

449,266,461

459,944,766

TOTAL NET ASSETS

320,139,237

326,990,742

EQUITY

Share capital

16

319,836,770

319,836,770

Retained earnings

302,467

7,153,972

320,139,237

326,990,742

 Pence

 Pence

Net Asset Value per Share based on 172,750,000 (Mar 2018: 172,750,000) shares in issue

185.32

189.29

1 Apr 2019 to

1 Apr 2018 to

30 Sep 2019

30 Sep 2018

Notes

GBP

GBP

OPERATING ACTIVITIES

Profit / (loss) for the period

8,695,995

(6,869,646)

Movement in deferred income

1,233,326

1,255,368

Movement in rental income received in advance

-

(1,069,187)

Interest received

(60,870)

(64,171)

Accrued interest

7,771

-

Depreciation of Aircraft

10

23,140,129

26,006,678

Loan interest payable

11

7,834,843

9,611,697

Movement in interest rate swap

11

228,099

(121,643)

Increase in payables

(7,326)

(208,879)

Decrease in receivables

(11,298)

(88,846)

Foreign exchange movement

7

24,255,465

33,026,212

Amortisation of debt arrangement costs

11

511,171

511,171

NET CASH FROM OPERATING ACTIVITIES

65,827,305

61,988,754

INVESTING ACTIVITIES

Interest received

60,870

64,171

Decrease in short-term investments

-

(436,239)

NET CASH FROM / (USED IN) INVESTING ACTIVITIES

60,870

(372,068)

FINANCING ACTIVITIES

Dividends paid

8

(15,547,500)

(15,547,500)

Repayments of capital on borrowings

(41,920,233)

(37,606,962)

Repayments of interest on borrowings

(7,658,692)

(9,344,640)

NET CASH USED IN FINANCING ACTIVITIES

(65,126,425)

(62,499,102)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

28,236,268

24,440,324

Increase / (decrease) in cash and cash equivalents

761,750

(882,416)

Effects of foreign exchange rates

488,187

464,169

CASH AND CASH EQUIVALENTS AT END OF PERIOD

17

29,486,205

24,022,077

Notes

Share

Retained

Capital

Earnings

Total

GBP

GBP

GBP

Balance as at 1 April 2019

319,836,770

7,153,972

326,990,742

Total Comprehensive Income for the period

-

8,695,995

8,695,995

Dividends paid

8

-

(15,547,500)

(15,547,500)

Balance as at 30 September 2019

319,836,770

302,467

320,139,237

Share

Retained

Total

Capital

Earnings

GBP

GBP

GBP

Balance as at 1 April 2018

319,836,770

11,544,395

331,381,165

Total Comprehensive Loss for the period

-

(6,869,646)

(6,869,646)

Dividends paid

8

-

(15,547,500)

(15,547,500)

Balance as at 30 September 2018

319,836,770

(10,872,751)

308,964,019

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 (together "Subsidiaries") (together the Company and the Subsidiaries are known as the "Group").

The Company was incorporated in Guernsey on 31 January 2011 with registered number 52985. The address of the registered office is given on page 44. Its share capital consists of one class of ordinary preference shares ("Shares") and one class of subordinated administrative shares ("Administrative Shares"). The Company's Shares have been admitted to trading on the Specialist Fund Segment (the "SFS") of the London Stock Exchange.

The Company's investment objective is to obtain income returns and a capital return for its holders of Shares of the Company ("Shareholders")by acquiring, leasing and then selling (each an "Asset" or "Aircraft" and together the "Assets" or "Aircraft"). The principal activities of the Group are set out in the Chairman's Statement on pages 5 to 6 and Interim Management Report for period from 1 April 2019 until 30 September 2019 (the "Period") on pages 13.

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 the International Accounting Standard 34 Interim Financial Reporting as adopted by the European Union ("EU"), and applicable Guernsey law. The financial statements have been prepared on a historical cost basis.

This report is to be read in conjunction with the annual financial report for the year ended 31 March 2019 which is prepared in accordance with the International Financial Reporting Standards ("IFRS") as adopted by the EU and any public announcements made by the Group during the interim reporting period.

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for the adoption of new and amended standards as set out below:

(b) Adoption of new and revised Standards

New and amended IFRS Standards that are effective for the current period

The following Standard and Interpretation issued by the International Accounting Standards Board ("IASB") and International Financial Reporting Standards Interpretations Committee ("IFRIC") has been adopted in the current period. The adoption has not had any impact on the amounts reported in these financial statements and is not expected to have any impact on future financial periods:

·; IFRS 16 Leases - The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16's approach to lessor accounting substantially unchanged from its predecessor, IAS 17. Accordingly, the Company is not required to make any adjustments on transition to IFRS 16 and accounts for its leases in accordance with IFRS 16 from the date of initial application.

New and Revised Standards in issue but not yet effective

At the date of approval of these financial statements there were no standards and interpretations in issue but not yet effective, which were considered to be material to the Group.

(c) Basis of Consolidation

The Consolidated Financial Statements incorporate the results of the Company and its Subsidiaries. The Company owns 100 per cent. 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.

(d) Taxation

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

(e) Share Capital

Shares are classified as equity. Incremental costs directly attributable to the issue of Shares are recognised as a deduction from equity.

(f) Expenses

All expenses are accounted for on an accruals basis.

(g) Interest Income

Interest income is accounted for on an accruals basis.

(h) Foreign Currency Translation

The currency of the primary economic environment in which the Group operates (the functional currency) is Pound Sterling ("Sterling" or "£") which is also the presentation currency.

Transactions denominated in foreign currencies are translated into Sterling 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 Consolidated Statement of Comprehensive Income.

(i) 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 three 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.

(j) 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.

(k) 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 as the loan and Equipment Notes interest has been fixed and the fixed A and B rental income under the operating leases with Emirates (the "Leases") means that the rents should be sufficient to repay the debt and provide surplus income to pay for the Group's expenses and permit payment of dividends. Accordingly, the Directors have adopted the going concern basis in preparing the Consolidated Financial Statements. Management is not aware of any material uncertainty that may cast significant doubt upon the Group's ability to continue as a going concern.

(l) 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 lessee. The Assets are shown as non-current assets in the Consolidated 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.

(m) Property, Plant and Equipment - Aircraft

In line with IAS 16 Property Plant and Equipment, each Asset is initially recorded at the fair value of the consideration paid. The cost of the Asset is made up of the purchase price of the Asset plus any costs directly attributable to bringing it into working condition for its intended use. Costs incurred by the lessee in maintaining, repairing or enhancing the Aircraft are not recognised as they do not form part of the cost to the Group. Accumulated depreciation and any recognised impairment losses are deducted from cost to calculate the carrying amount of the Asset.

Depreciation is recognised so as to write off the cost of the each Asset less the estimated residual value over the estimated useful life of the Asset of 12 years, using the straight line method. The estimated residual value of the seven planes ranges from £72.3 million to £75.5 million (2018: £67.2 million to £70.1 million). Residual values have been arrived at by taking the average amount of three independent external valuers and after taking into account disposition fees. The Directors consider that the use of forecast base values excluding inflation best approximates residual value as required by IAS 16 Property, Plant and Equipment. The depreciation method reflects the pattern of benefit consumption. The residual value is reviewed annually and is an estimate of the fair amount the entity would receive today if the Assets were already of the age and condition expected at the end of their 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 these Assets. Depreciation starts when the Asset is available for use.

At each audited Consolidated Statement of Financial Position date, the Group reviews the carrying amounts of its Aircraft 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). Further details are given in note 3.

Recoverable amount is the higher of fair value less costs to sell and the 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 periods. A reversal of an impairment loss is recognised immediately in profit or loss.

(n) Financial instruments

A financial instrument is recognised when the Group becomes a party to the contractual provisions of the instrument. Financial liabilities are derecognised if the Group's obligations, specified in the contract, expire or are discharged or cancelled. Financial assets are derecognised if the Group's contractual rights to the cash flows from the financial assets expire, are extinguished, or if the Group transfers the financial assets to a third party and transfers all the risks and rewards of ownership of the asset, or if the Group does not retain control of the asset and transfers substantially all the risk and rewards of ownership of the asset.

Under IFRS 9, on initial recognition, a financial asset is classified as measured at:

- Amortised cost;

- Fair value through other comprehensive income ("FVOCI"); or

- Fair value through profit or loss ("FVTPL").

The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. The Group only has financial assets that are classified as amortised cost.

i) Financial assets held at amortised cost

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

- it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. These assets are subsequently measured at amortised cost using the effective interest method. The effective interest method calculates the amortised cost of financial instruments and allocates the interest over the period of the instrument.

The Group's financial assets held at amortised cost include trade and other receivables and cash and cash equivalents.

The Group assesses on a forward looking basis the expected credit losses associated with its financial assets held at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

ii) Financial liabilities held at amortised cost

Financial liabilities consist of payables and borrowings. The classification of financial liabilities at initial recognition depends on the purpose for which the financial liability was issued and its characteristics. All financial liabilities are initially measured at fair value, net of transaction costs. All financial liabilities are recorded on the date on which the Group becomes party to the contractual requirements of the financial liability. Financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

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 Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire.

iii) Financial Assets and Financial Liabilities at fair value through profit or loss

(a) Classification

The Group classifies its derivative i.e. the interest rate swap, as financial assets or financial liabilities at fair value through profit or loss. These financial assets and financial liabilities are designated by the Board of Directors at fair value through profit or loss. The Group does not classify any derivatives as hedges in a hedging relationship.

(b) Recognition/derecognition

Financial assets or liabilities are recognised on the trade date - the date on which the Group commits to enter into the transactions. Financial assets or liabilities are derecognised when the rights to receive cash flows from the investments have expired or the Group has transferred substantially all risks and rewards of ownership.

(c) Measurement

Financial assets and financial liabilities at fair value through profit or loss are initially recognised at fair value. Transaction costs are expensed in the Statement of Comprehensive Income. Subsequent to initial recognition, all financial assets and financial liabilities at fair value through profit or loss are measured at fair value. Gains and losses arising from changes in the fair value of the 'financial assets or financial liabilities at fair value through profit or loss' category are presented in the Statement of Comprehensive Income in the year in which they arise.

3. SIGNIFICANT JUDGEMENTS AND ESTIMATES

In the application of the Group'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 ongoing 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.

The following are the critical judgements and estimates that the Directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements.

Estimates

Residual Value and Useful Life of Aircraft

As described in note 2 (m), the Group depreciates the Assets on a straight line basis over the estimated useful life of the Assets after taking into consideration the estimated residual value. IAS 16 Property, Plant and Equipment requires residual value to be determined as an estimate of the amount that the Group would currently obtain from disposal of the Asset, after deducting the estimated costs of disposal, if the Asset were of the age and condition expected at the end of its useful life. However, there are currently no aircraft of a similar type of sufficient age for the Directors to make a direct market comparison in making this estimation. After consulting with the Company's Advisors, the Directors have concluded that forecast base values (determined annually) for the Aircraft at the end of its useful life (excluding inflationary effects) best represents residual value, as required by a strict interpretation of relevant accounting standards. In estimating residual value, the Directors refer to forecast base values (excluding inflationary effects) for the Asset obtained from three independent expert aircraft valuers.

The estimation of residual value remains subject to uncertainty. If the estimate of residual value had decreased by 20 per cent. with effect from the beginning of this period, the net profit for the period and closing shareholders' equity would have decreased by approximately £3.3 million (30 Sep 2018: £6.6 million). An increase in residual value by 20 per cent. would have had an equal but opposite effect. This reflects the range of estimates of residual value that the Directors believe would be reasonable at this time. The useful life of each Asset, for the purpose of depreciation of the asset under IAS 16, is estimated based on the expected period for which the Group will own and lease the Aircraft. The Board of Directors expects that the Aircraft will have a working life far in excess of this period.

Judgements

Operating Lease Commitments - Group as Lessor

The Group has entered into operating leases on seven (30 Sep 2018: seven) 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 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 a lease at the end of the initial term of 10 years an early termination payment equal to the present value of the Sterling rent that would have been payable for the extension term of 2 years would be due.

Impairment

As described in note 2 (m), an impairment loss 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 review the carrying amount of its Assets at each audited Statement of Financial Position date and monitor the Assets for any indications of impairment as required by IAS 16 Property, Plant and Equipment and IAS 36 Impairment of Assets.

In assessing value-in-use, the estimated future cash flows expected to be generated by the assets (ie the income streams associated with the lease and the expected future market value of the Aircraft at the end of the lease) 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 Assets.

In determining fair value less costs of disposal, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. Such valuation reflects the highest and best use of the Assets given the fact that the Aircraft are held for use in a leasing business.

Factors that are considered important which could trigger an impairment review include, but are not limited to, significant decline in the market value beyond that which would be expected from the passage of time or normal use, significant changes in the technology and regulatory environments, evidence from internal reporting which indicates that the economic performance of the Assets are, or will be, worse than expected.

The Board together with the Asset Manager believed that it was prudent to conduct an impairment test as at the 31 March 2019 year end as the below items may result in pricing changes for the current portfolio of Aircraft:

·; As further Airbus A380 aircraft reach comparable 12 year ages and exit their first lease agreements further market data may become available to Doric and the asset valuers.

·; Lack of publicly available secondary market data for the specific aircraft.

·; Changing technologies, market innovation and changes to key production programs as well as the success and / or failure as well as the timing of new aircraft model launches.

·; Information regarding Airbus cancellation of the A380 programme, creating uncertainty as to the liquidity of the future market for sale or re-lease.

The assessment was performed by comparing the net book value of the Aircraft to the higher of its respective fair value less costs to sell and value-in-use. In determining the value-in-use, the gross value of future contractual cash flows including a residual value assumption was discounted to present value, using the Group's discount rate, as the cash flows are contractual. Any assumptions with regards to issues in counterparty credit risk would be reflected in the discount rate used to calculate the net present value of future contractual cash flows. There are no indications at this time that Emirates will default or that any of the Aircraft will not be marketable post lease. In determining the fair value less costs to sell, the current market value of the Aircraft was used, less estimated costs to dispose of the Aircraft.

The Asset Manager considered that 6.5 per cent. was the most appropriate discount rate for the following reasons;

·; the discount rate should be a rate commensurate with what a normal market participant would consider to be the risk inherent in the assets; and

·; the Aircraft are with Emirates, who are considered to have a low credit risk profile.

Based on the impairment review performed, the Directors were of the opinion that no impairment loss was required to be recognised at 31 March 2019.

In addition, these values were tested for their sensitivity to the discount rate and the residual value, the following being the two largest inputs into the calculation:

·; Discount rates at -1 per cent. and +1 per cent. intervals have been tested on either side of the Group discount rate (6.5 per cent.); and

·; A reduction of the residual value used in the calculation by 10 per cent. and 20 per cent. respectively.

The sensitivity test exhibited that the recoverable amount was greater than the net book value at the 2019 financial year end for the Aircraft, except when using an 8.5 per cent. or higher discount rate and a 20 per cent. or higher reduction in residual value, a situation the Asset Manager considers highly unlikely. As such, no impairment is identified.

The Board has considered the carry book value of its Aircraft and discussed whether in light of recent announcements since 1 April 2019, whether an impairment review needs to be carried out again at this juncture. On the advice of its Asset Manager, the conclusion reached was that whilst it would be wise not to lay too great a reliance on the current carry book value as a measure of net asset value for investment purposes, there were still too few new data points available on which a new appraisal at this time can be justified. The Company will again be carrying out a full and thorough appraisal of residual values come the next March financial year end.

4. RENTAL INCOME

1 Apr 2019 to

1 Apr 2018 to

30 Sep 2019

30 Sep 2018

GBP

GBP

A rent income

49,750,958

47,238,971

Revenue received but not yet earned

(18,738,083)

(18,012,021)

Revenue earned but not yet received

13,138,205

12,390,100

Amortisation of advance rental income

3,931,135

3,931,135

48,082,215

45,548,185

B rent income

17,831,562

17,831,562

Revenue earned but not yet received

438,821

438,821

Revenue received but not yet earned

(3,403)

(3,403)

18,266,980

18,266,980

Total rental income

66,349,195

63,815,165

Rental income is derived from the leasing of the Assets. Rent is split into A rent, which is received in US dollars ("$") and B rent, which is received in Sterling. Rental income received in US dollars is translated into the functional currency (Sterling) 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 lease on an annual basis. In addition, advance rentals received have also been spread over the full term of the leases.

5. OPERATING EXPENSES

1 Apr 2019 to

1 Apr 2018 to

30 Sep 2019

30 Sep 2018

GBP

GBP

Corporate shareholder and advisor fee (note 22)

422,864

413,558

Asset Management fee (note 22)

1,022,472

999,972

Liaison agency fees (note 22)

5,794

5,644

Administration fees

94,510

97,864

Bank interest and charges

811

935

Accountancy fees

16,257

15,923

Registrars fee (note 22)

7,839

5,259

Audit fee

23,425

23,550

Directors' remuneration (note 6)

93,217

82,143

Directors' and Officers' insurance

15,904

18,619

Legal and professional expenses

31,854

31,473

Annual fees

1,186

5,205

Travel costs

1,615

3,379

Other operating expenses

6,615

11,343

1,744,363

1,714,867

6. DIRECTORS' REMUNERATION

Under their terms of appointment, each Director is paid a fee for their services as a director of the Company at a fee of £48,000 per annum, except for the Chairman, who receives £59,000 per annum and the Chair of Audit, who receives £57,000 per annum.

1 Apr 2019 to

30 Sep 2019

GBP

1 Apr 2018 to

30 Sep 2018

GBP

Cash at bank

488,187

464,169

Deferred income

(7,295,870)

(13,090,374)

Borrowings

(17,447,781)

(20,400,007)

(24,255,465)

(33,026,212)

8. DIVIDENDS IN RESPECT OF EQUITY SHARES

Dividends in respect of Shares

1 Apr 2019 to

30 Sep 2019

 GBP

 Pence per

 share

First interim dividend

7,773,750

4.50

Second interim dividend

7,773,750

4.50

15,547,500

9.00

Dividends in respect of Shares

1 Apr 2018 to

30 Sep 2018

GBP

 Pence per

 share

First interim dividend

7,773,750

4.50

Second interim dividend

7,773,750

4.50

15,547,500

9.00

9. EARNINGS / (LOSS) PER SHARE

Earnings / (Loss) per Share (''EPS'' / ''LPS'') is based on the net profit for the Period attributable to the Shareholders of £8,695,995 (30 Sep 2018: net loss for the period of £6,869,646) and 172,750,000 (30 Sep 2018: 172,750,000) Shares being the weighted average number of Shares in issue during the Period.

There are no dilutive instruments and therefore basic and diluted EPS / (LPS) are identical.

10. PROPERTY, PLANT AND EQUIPMENT - AIRCRAFT

Aircraft

GBP

COST

As at 1 Apr 2019

1,039,148,191

As at 30 Sep 2019

1,039,148,191

ACCUMULATED DEPRECIATION

As at 1 Apr 2019

280,685,260

Depreciation charge for the period

23,140,129

As at 30 Sep 2019

303,825,389

CARRYING AMOUNT

As at 30 Sep 2019

735,322,802

As at 31 Mar 2019

758,462,933

The Group believes that the use of forecast base values excluding inflation best approximates residual value as required per IAS 16 Property, Plant and Equipment (refer to note 3). The Group is depreciating its Aircraft so as to ensure that the carrying value of its Aircraft at the termination of its respective leases equals the uninflated residual dollar value determined at 31 March 2019 in accordance with the methodology set out in note 3, translated into sterling at the exchange rate prevailing at 31 March 2019.

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 leases have been added to the carrying amount of the leased asset and therefore will be recognised as an expense over the lease term. The costs have been allocated to each Aircraft based on the proportional cost of the Asset.

Refer to note 3 for details on the impairment review and sensitivities conducted.

11. FINANCE COSTS

1 Apr 2019 to 30 Sep 2019

1 Apr 2018 to 30 Sep 2018

GBP

GBP

Amortisation of debt arrangements costs

511,171

511,171

Loan interest

7,834,843

9,611,697

Fair value adjustment on financial assets and liabilities at fair value through profit and loss

228,099

(121,643)

8,574,113

10,001,225

12. OPERATING LEASES

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

30 September 2019

Next 12

months

1 to 5 years

After 5 years

 Total

GBP

GBP

GBP

GBP

Aircraft - A rental receipts

97,255,789

213,071,003

-

310,326,792

Aircraft - B rental receipts

35,663,124

143,482,934

-

179,146,058

132,918,913

356,553,937

-

489,472,850

31 March 2019

Next 12

months

1 to 5 years

After 5 years

 Total

GBP

GBP

GBP

GBP

Aircraft - A rental receipts

94,493,629

245,193,774

1,518,840

341,206,243

Aircraft - B rental receipts

35,663,124

145,593,346

15,721,150

196,977,620

130,156,753

390,787,120

17,239,990

538,183,863

The operating leases are for seven Airbus A380-861 aircraft. The terms of the leases are as follows:

MSN077 - term of the 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 at the end of the initial 10 year lease term must be paid even if the option is not taken.

MSN090 - 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 at the end of the initial 10 year lease term must be paid even if the option is not taken.

MSN105 - term of the lease is for 12 years ending October 2024. The initial lease is for 10 years ending October 2022, with an extension period of 2 years ending October 2024, in which rental payments reduce. The present value of the remaining rentals in the extension period at the end of the initial 10 year lease term must be paid even if the option is not taken.

MSN106 - term of the lease is for 12 years ending October 2024. The initial lease is for 10 years ending October 2022, with an extension period of 2 years ending October 2024, in which rental payments reduce. The present value of the remaining rentals in the extension period at the end of the initial 10 year lease term must be paid even if the option is not taken.

MSN107 - term of the lease is for 12 years ending October 2024. The initial lease is for 10 years ending October 2022, with an extension period of 2 years ending October 2024, in which rental payments reduce. The present value of the remaining rentals in the extension period at the end of the initial 10 year lease term must be paid even if the option is not taken.

MSN109 - term of the lease is for 12 years ending November 2024. The initial lease is for 10 years ending November 2022, with an extension period of 2 years ending November 2024, in which rental payments reduce. The present value of the remaining rentals in the extension period at the end of the initial 10 year lease term must be paid even if the option is not taken.

MSN110 - term of the lease is for 12 years ending October 2024. The initial lease is for 10 years ending October 2022, with an extension period of 2 years ending October 2024, in which rental payments reduce. The present value of the remaining rentals in the extension period at the end of the initial 10 period lease term must be paid even if the option is not taken.

At the end of each 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 Group 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

30 Sep 2019

31 Mar 2019

GBP

GBP

Prepayments

21,888

16,585

Sundry debtors

35,912

35,912

Interest receivable

5,995

-

63,795

52,497

14. PAYABLES (amounts falling due within one year)

30 Sep 2019

31 Mar 2019

GBP

GBP

Accrued administration fees

18,393

18,456

Accrued audit fee

23,425

28,110

Other accrued expenses

15,378

17,956

57,196

64,522

15. BORROWINGS

30 Sep 2019

31 Mar 2019

GBP

GBP

Bank loans

123,501,249

134,276,763

Equipment Notes

169,302,642

182,823,428

292,803,891

317,100,191

Associated costs

(4,886,588)

(5,397,761)

287,917,303

311,702,430

Current portion

84,454,333

80,363,628

Non-current portion

203,462,970

231,338,802

Notwithstanding the fact that £41.9 million (31 March 2019: £78.2 million) debt was repaid during the Period, as per the Consolidated Statement of Cash Flows, the value of the borrowings has only decreased by £23.8 million (31 March 2019: £50.1 million) due to the 5.7 per cent. decrease in the Sterling / US dollar exchange rate for the period from 1 April 2019 to 30 September 2019.

The amounts below detail the future contractual undiscounted cash flows in respect of the loans and equipment notes, including both the principal and interest payments, and will not agree directly to the amounts recognised in the Consolidated Statement of Financial Position:

30 Sep 2019

31 Mar 2019

GBP

GBP

Amount due for settlement within 12 months

97,090,281

94,337,592

Amount due for settlement after 12 months

221,143,848

254,241,591

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

The loan to MSN090 Limited was arranged with The Australia and New Zealand Banking Group Limited ("ANZ") for $146,865,575 and runs for 12 years until December 2023 and has an effective interest rate of 4.558 per cent.

The loan to MSN105 Limited was arranged with ICBC, BoC and Commerzbank for $145,751,153 and runs for 12 years until October 2024 and has an effective interest rate of 4.780 per cent.

Each loan is secured on one Asset. No significant breaches or defaults 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 order to finance the acquisition of the fourth, fifth, sixth and seventh Assets, Doric Nimrod Air Finance Alpha Limited ("DNAFA") used the proceeds of the May 2012 offering of Pass Through Certificates (the "Certificates"). The Certificates have an aggregate face amount of approximately $587.5 million, made up of "Class A" certificates and "Class B" certificates. The Class A certificates in aggregate have a face amount of $433,772,000 with an interest rate of 5.125 per cent. and a final expected distribution date of 30 November 2022. The Class B certificates in aggregate had a face amount of $153,728,000 with an interest rate of 6.5 per cent. and were repaid on 30 May 2019. There is a separate trust for each class of Certificates. The trusts used the funds from the Certificates to acquire equipment notes. The equipment notes were issued to Wilmington Trust, National Association as pass through trustee in exchange for the consideration paid by the purchasers of the Certificates. The equipment notes were issued by DNAFA and the proceeds from the sale of the equipment notes financed a portion of the purchase price of the four Airbus A380-861 aircraft, with the remaining portion being financed through contribution from the Company of the C Share issue proceeds. The holders of the equipment notes issued for each aircraft will have the benefit of a security interest in such aircraft.

In the Directors' opinion and with reference to the terms mentioned, the above carrying values of the bank loans and equipment note are approximate to their fair value.

16. SHARE CAPITAL

The Share Capital of the Group is represented by an unlimited number of shares of no par value being issued or reclassified by the Group as Shares, C Shares or Administrative Shares (together the "Share Capital".

Issued

Administrative

Shares

Shares

C Shares

Issued shares as at 30 Sep 2019 and 31 Mar 2019

2

172,750,000

-

Issued

Administrative

Shares

Shares

C Shares

Total

GBP

GBP

GBP

GBP

Share Capital

Total Share Capital as at 30 Sep 2019 and as at 31 Mar 2019

2

319,836,770

-

319,836,770

Members holding Shares are entitled to receive and participate in any dividends out of income attributable to the Shares; other distributions of the Group available for such purposes and resolved to be distributed in respect of any accounting period; or other income or right to participate therein.

Upon winding up, Shareholders are entitled to the surplus assets attributable to the Shares class remaining after payment of all the creditors of the Group. Members have the right to receive notice of and to attend, speak and vote at general meetings of the Group.

On 6 March 2013, 100,250,000 C Shares were converted into Shares with a conversion of 1:1.

The holders of Administrative Shares are not entitled to receive, and participate in, any dividends out of income; other distributions of the Group available for such purposes and resolved to be distributed in respect of any accounting period; or other income or right to participate therein. On a winding up, holders are entitled to a return of capital paid up on them after the Ordinary Shares have received a return of their capital paid up but ahead of the return of all additional capital to the holders of Shares.

The holders of Administrative Shares shall not have the right to receive notice of and no right to attend, speak and vote at general meetings of the Group, except for the Liquidation Proposal Meeting (general meeting convened six months before the end term of the Leases where the Liquidation Resolution will be proposed) or if there are no Shares in existence.

17. CASH AND CASH EQUIVALENTS

30 Sep 2019

31 Mar 2019

GBP

GBP

Cash at bank

16,402,127

15,383,001

Cash deposits

13,084,078

12,853,267

29,486,205

28,236,268

Cash and cash equivalents are highly liquid, readily convertible and are subject to insignificant risk of changes in value.

18. FINANCIAL INSTRUMENTS

The Group's main financial instruments comprise:

(a) Cash and cash equivalents that arise directly from the Group's operations;

(b) Loans secured on non-current assets; and

(c) Interest rate swap

19. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

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

The following table details the categories of financial assets and liabilities held by the Group at the reporting date:

30 Sep 2019

31 Mar 2019

GBP

GBP

Financial assets

Interest rate swap

-

176,039

Financial assets at fair value through profit or loss

-

176,039

Cash and cash equivalents

29,486,205

28,236,268

Receivables (excluding prepayments)

41,907

35,912

Financial assets at amortised cost

29,528,112

28,272,180

Financial liabilities

Interest rate swap

52,060

-

Financial liabilities at fair value through profit or loss

52,060

-

Payables

57,196

64,522

Debt payable

292,803,891

317,100,191

Financial liabilities measured at amortised cost

292,861,087

317,164,713

The Group has adopted IFRS 13, 'Fair value measurement' and this standard requires the Group to price its financial assets and liabilities using the price in the bid-ask spread that is most representative of fair value for both financial assets and financial liabilities. An active market is a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

The level of the fair value hierarchy of an instrument is determined considering the inputs that are significant to the entire measurement of such instrument and the level of the fair value hierarchy within those inputs are categorised.

The hierarchy is broken down into three levels based on the observability of inputs as follows:

Level 1: Quoted price (unadjusted) in an active market for an identical instrument.

Level 2: Valuation techniques based on observable inputs, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: Valuation techniques using significant unobservable inputs.

The interest rate swap is the only financial instrument held at fair value through profit or loss and is considered to be level 2 in the Fair Value Hierarchy.

30 Sep 2019

Financial liability at fair value

Notional amount

Maturity

GBP

USD

Interest Rate Swap

MSN090 Loan

(52,060)

22,332,736

04 Dec 2023

31 Mar 2019

Financial asset at fair value

Notional amount

Maturity

GBP

USD

Interest Rate Swap

MSN090 Loan

176,039

26,206,638

04 Dec 2023

The main risks arising from the Group's financial instruments are capital management risk, foreign currency risk, credit risk, liquidity risk and interest rate risk. The Board regularly reviews and agrees policies for managing each of these risks and these are summarised below:

(a) Capital Management

The Group manages its capital to ensure that the Group will be able to continue as a going concern while maximising the return to Shareholders through the optimisation of the debt and equity balance.

The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 15, cash and cash equivalents and equity attributable to equity holders, comprising issued capital and retained earnings.

The Group's Board of Directors reviews the capital structure on a bi-annual basis.

Equity includes all capital and reserves of the Group that are managed as capital.

No changes were made in the objectives, policies or processes for managing capital during the Period (None for the period from 1 April 2018 to 30 September 2018).

(b) Foreign Currency Risk

The Group's accounting policy under IFRS requires the use of a Sterling historic cost of the assets and the value of the US dollar debt as translated at the spot exchange rate on every Statement of Financial Position date. In addition US dollar operating lease receivables are not immediately recognised in the Consolidated Statement of Financial Position and are accrued over the period of the leases. The Directors consider that this introduces an artificial variance due to the movement over time of foreign exchange rates. In actuality, the US dollar operating leases should offset the US dollar payables on amortising loans. The foreign exchange exposure in relation to the loans is thus almost entirely hedged.

Lease rentals (as detailed in notes 4 and 12) are received in US dollar and Sterling. Those lease rentals received in US dollar are used to pay the debt repayments due, also in US dollar (as detailed in note 15). Both US dollar lease rentals and debt repayments are fixed and are for similar sums and similar timings. The matching of lease rentals to settle debt repayments therefore minimises risks caused by foreign exchange fluctuations.

The carrying amounts of the Group's foreign currency denominated monetary assets and liabilities at the reporting date are as follows:

30 Sep 2019

31 Mar 2019

GBP

GBP

Debt (US dollar) - Liabilities

(292,803,891)

(317,100,191)

Financial (liabilities) and assets at fair value through profit or loss

(52,060)

176,039

Cash and cash equivalents (US dollar) - Asset

7,556,511

9,572,709

The following table details the Group's sensitivity to a 25 per cent. (31 March 2019: 25 per cent.) appreciation and depreciation in Sterling against the US dollar. 25 per cent. (31 March 2019: 25 per cent.) represents the Directors' assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 25 per cent. (31 March 2019: 25 per cent.) change in foreign currency rates. A positive number below indicates an increase in profit and other equity where Sterling strengthens 25 per cent. (31 March 2019: 25 per cent.) against the US dollar. For a 25 per cent. (31 March 2019: 25 per cent.) weakening of the Sterling against the US dollar, there would be a comparable but opposite impact on the profit and other equity:

30 Sep 2019

31 Mar 2019

GBP

GBP

Profit or loss

57,059,888

61,470,289

Assets

(1,500,890)

(1,949,749)

Liabilities

58,560,778

63,420,038

On the eventual sale of the Assets, the Company will be subject to foreign currency risk if the sale is made in a currency other than Sterling. Transactions in similar assets are typically priced in US dollars.

(c) Credit Risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.

The credit risk on cash transactions is mitigated by transacting with counterparties that are regulated entities subject to prudential supervision, or with high credit ratings assigned by international credit rating agencies.

The Group's financial assets exposed to credit risk are as follows:

30 Sep 2019

31 Mar 2019

GBP

GBP

Interest rate swap