TIDMJET2
RNS Number : 4094H
Jet2 PLC
24 November 2022
Jet2 plc
Interim Results
Jet2 plc , the Leisure Travel group ("the Group" or "the
Company"), announces its unaudited interim results for the half
year ended 30 September 2022.
Group financial highlights Half year ended Half year ended Half year end Half year ended
30 September 30 September change 30 September
2022 2021 2019
Unaudited Unaudited Unaudited
------------------------------------------------ ---------------- ---------------- -------------- ----------------
Revenue GBP3,567.6m GBP429.6m 730% GBP2,615.2m
================================================ ================ ================ ============== ================
Operating profit / (loss) GBP516.6m (GBP170.4m) 403% GBP365.0m
================================================ ================ ================ ============== ================
Profit / (loss) before FX revaluation and GBP505.0m (GBP195.1m) 359% GBP349.8m
taxation*
================================================ ================ ================ ============== ================
Profit / (loss) before taxation GBP450.7m (GBP205.8m) 319% GBP339.7m
================================================ ================ ================ ============== ================
Profit / (loss) for the period after taxation GBP356.0m (GBP163.5m) 318% GBP278.6m
================================================ ================ ================ ============== ================
Basic earnings per share 165.9p (76.2p) 318% 187.0p
================================================ ================ ================ ============== ================
Interim dividend per share 3.0p - 100% 3.0p
------------------------------------------------ ---------------- ---------------- -------------- ----------------
* Further information on the calculation of this measure can be
found in Note 4.
-- Despite a difficult return to normal operations, Group profit
before foreign exchange revaluation and taxation increased
to GBP505.0m (2021: GBP195.1m loss), which was also 44% ahead
of the 2019 pre-Covid performance. Total profit for the period
after taxation was GBP356.0m (2021: GBP163.5m loss).
-- Seat capacity increased 14% against Summer 2019 and buoyant
customer demand resulted in the business achieving an average
load factor of 90.7% (2019: 93.1%). Higher margin Package
Holiday customers mix of total departing passengers was 65.9%,
up 13.1ppts against Summer 2019 (2019: 52.8%).
-- Flight-only ticket yield per passenger sector at GBP105.00
(2021: GBP73.27) was 43% higher than the prior period, due
to changes in the mix of destinations flown, notably to those
in the Eastern Mediterranean, and strong consumer demand
meaning fewer promotional offers were required.
-- Our operations were directly impacted by the broader disruption
seen across the aviation sector and its supply chains in
mid-summer as was widely reported in the media, which has
resulted in significant delay and compensation costs in excess
of GBP50.0m.
-- Overall liquidity improved significantly with a total cash
balance (including money market deposits) at the half year
end of GBP2,830.7m, an increase of 39% (2021: GBP2,036.9m).
Our 'Own Cash' position (excluding customer deposits) of
GBP1,968.6m increased 29% (2021: GBP1,524.3m).
-- In mid-October 2022, we were delighted to announce that we
had entered into an agreement to purchase a further 35 new
firm ordered Airbus A320/A321 neo aircraft with the ability
to extend up to 71 aircraft. With its previous orders, the
Group now has a total of 98 firm ordered Airbus A320/A321
neo aircraft, which could eventually extend up to 146 aircraft,
and critically has certainty of supply well into the next
decade.
-- With Winter 2022/23 bookings encouraging and pricing remaining
robust, but recognising that the important post-Christmas
booking period is still to come, we are presently on track
to exceed current average market expectations for Group profit
before FX revaluation and taxation for the year ending 31
March 2023.
-- Looking ahead, the Group faces input cost pressures including
fuel, carbon, a strengthened US dollar and wage increases,
plus investment to ensure our Colleagues can thrive and have
a balanced lifestyle, further underpinning our operational
resilience. This leads us to conclude that margins may come
under some pressure.
-- The Right Product for Tougher Times - our well-established
truly variable duration holidays and wide ranging product
portfolio will provide customers with plenty of choice and
flexibility to be able to tailor their holiday plans to meet
their individual budgets. As a result, we remain confident
that our Customers' eagerness to take their much valued and
anticipated holidays will remain high.
Chairman's Statement
I am pleased to report on the Group's trading for the half year
ended 30 September 2022, which encompasses Jet2holidays, our
acclaimed ATOL licensed package holidays provider, and Jet2.com,
our award-winning leisure airline.
Results for the half year
Despite a difficult return to normal operations, primarily due
to the lack of planning and preparedness of many airports and
associated suppliers, and having absorbed substantial associated
disruption costs, Group profit before foreign exchange revaluation
and taxation increased to GBP505.0m (2021: GBP195.1m loss), which
was also 44% ahead of the 2019 pre-Covid performance. Total profit
for the period after taxation was GBP356.0m (2021: GBP163.5m
loss).
Our Leisure Travel business has continued its encouraging
recovery following the reopening of international travel in early
2022. Strong customer demand, in particular for package holidays,
plus a robust pricing environment and considered cost control, have
underpinned a substantially improved financial performance compared
to recent Covid impacted summer seasons, but also against pre-Covid
Summer 2019.
The business made considerable investment well ahead of Summer
2022, retaining over 8,000 loyal colleagues throughout the pandemic
and significantly topping up the Coronavirus Job Retention Scheme
funding on a sliding scale basis up to 100% of salary for the
lowest paid, recruiting and training seasonal colleagues in good
time, making substantial marketing investments, plus early and
meaningful salary increases for all colleagues. This left us very
well prepared for our summer operation and also enabled Jet2.com to
earn the accolade of being the only UK airline not to cancel a
flight during July and August 2022, according to leading travel
intelligence company, OAG.
For the reporting period, seat capacity increased 14% against
Summer 2019 and buoyant customer demand resulted in the business
achieving an average load factor of 90.7% (2019: 93.1%), with
package holiday customers displaying a materially higher mix of the
total departing passengers at 65.9%, up 13.1ppts against Summer
2019 (2019: 52.8%).
Despite our Colleagues working incredibly hard and consistently
going the extra mile to take our Customers on their long-awaited
holidays, unfortunately some customers still faced frustrating
delays as our operations were directly impacted by the broader
disruption seen across the aviation sector and its supply chains as
was widely reported in the media. Regrettably, this resulted in
Jet2 incurring delay, compensation and customer expenses
reimbursement costs in excess of GBP50.0m under UK (EU) Regulation
261/2004 ("EU261/2004") which was materially higher than in Summer
2019.
In addition, our inflight retail financial performance was
weaker than expected, due to product supply chain issues early in
the summer season, plus poor onboard product availability caused by
resource constraints at our third party inflight retail
provider.
Given these very challenging circumstances, the Board is hugely
appreciative of all our Colleagues' tremendous efforts and support
over recent months.
As is typical for the business, losses are to be expected in the
second half of the financial year, as we continue to invest in:
additional aircraft; marketing to ensure we optimise our pre-Summer
2023 forward booking position; retaining increasing numbers of
colleagues through the winter months to ensure maximum operational
resilience ahead of next summer; and attracting new colleagues in
readiness for further expansion of our exciting package holiday and
flight-only offerings for Summer 2023, in line with our planned
growth targets.
Interim Dividend
Basic earnings per share increased to 165.9p (2021: (76.2p)) and
in view of the current full year outlook, the Board has decided to
pay an interim dividend of 3.0p per share (2021: GBPnil). The
dividend will be paid on 3 February 2023 to shareholders on the
register at 30 December 2022, with the ex-dividend date being 29
December 2022.
Sustainability
The Group continued to implement its Sustainability Strategy
with the vision to become "the leading brand in sustainable air
travel and package holidays". All of our airline emissions not
already covered by mandatory carbon pricing mechanisms, namely the
UK and EU Emissions Trading Schemes (ETS), have been offset during
the period. In addition, the Group is actively negotiating access
to Sustainable Aviation Fuel through various channels. More
detailed information on the Group's Sustainability Strategy can be
found at www.jet2plc.com/sustainability .
Post reporting date events
The strength of our recovery post Covid reinforces our view that
we have a great future in the leisure travel industry.
Consequently, we were delighted to announce in mid-October 2022
that we were building upon our previous aircraft order with Airbus
of up to 75 A321 neo aircraft (63 now firm ordered) and entering
into an agreement to purchase a further 35 new firm ordered Airbus
A320/A321 neo aircraft with the ability for this to extend up to 71
aircraft. The A321 neo aircraft provides additional environmental
and operating benefits through lower fuel consumption per passenger
and therefore lower emissions and is, in our opinion, on a per
passenger basis, the most fuel efficient and sustainable aircraft
in its class today. In addition, this latest order further supports
our determination to sustainably grow our successful business and
expand our fleet in line with the demand for our award--winning
package holidays and flights, whilst also giving the ability to
retire less efficient earlier aircraft models.
These latest firm ordered aircraft deliveries stretch over three
years until 2031, and at base price represent a total value of
approximately $3.9 billion, with a total transaction value for up
to 71 aircraft of approximately $8.0 billion, though the Company
has negotiated significant discounts from the base price.
The Group now has 98 firm ordered Airbus A320/A321 neo aircraft,
which could eventually extend up to 146 aircraft and critically has
certainty of supply well into the next decade. The Company will
retain flexibility in determining the most favourable method of
financing the aircraft, which will be through a combination of
internal resources and debt.
Outlook - The Right Product for Tougher Times
With Winter 2022/23 bookings encouraging and pricing remaining
robust, but recognising that the important post-Christmas booking
period is still to come, we are presently on track to exceed
current average market expectations for Group profit before FX
revaluation and taxation for the year ending 31 March 2023.
Looking ahead, current seat capacity for Summer 2023 is
approximately 5% higher than Summer 2022 (and approximately 20%
higher than Summer 2019) with bookings at this very early stage
encouraging, average load factors broadly in line with Summer 2019
at the same point and pricing strong.
However, the Group faces input cost pressures including fuel,
carbon, a strengthened US dollar and wage increases, plus
investment to ensure our Colleagues can thrive and have a balanced
lifestyle, further underpinning our operational resilience. This
leads us to conclude that margins may come under some pressure, but
encouragingly the strength of our recovery post Covid underlines
our belief that customers truly cherish their weeks away in the sun
and want to be properly looked after throughout their holiday
experience.
Our 'Customer First' ethos runs deep throughout our company
culture with 'People, Service, Profits' our guiding principles -
great and attentive service is where we excel. In addition, our
well-established truly variable duration holidays and wide ranging
product portfolio which includes the All Inclusive Package - all in
cost certainty and a wonderful product for challenging economic
times - will provide customers with plenty of choice and
flexibility to be able to tailor their holiday plans to meet their
individual budgets. As a result, we remain confident that our
Customers' eagerness to take their much valued and anticipated
holidays will remain high.
Our long-term ambition remains to be the UK's Leading and Best
Leisure Travel business . W ith our customer focused approach and
Right Product for these Tougher Times, we are confident that as a
financially strong and much trusted holiday provider, our Customers
will continue to be keen to travel with us from our Rainy Island,
to the sun spots of the Mediterranean, the Canary Islands and to
European Leisure Cities.
Philip Meeson
Executive Chairman
24 November 2022
Business and Financial Performance
Customer Demand & Revenue
Following the reopening of international travel in early 2022,
our Leisure Travel business has been able to operate to all its
popular high-volume leisure destinations allowing us to provide our
Customers with their well-deserved and eagerly anticipated Real
Package Holidays from Jet2holidays(R).
Overall bookings, though a little later than normal, remained
consistently strong. As a result, passenger numbers for the period
increased by 632% to 11.20m (2021: 1.53m), with customers choosing
our end-to-end package holiday product rising 755% to 3.76m (2021:
0.44m) and single sector passengers choosing our flight-only
product growing by 431% to 3.82m (2021: 0.72m). Consequently,
higher margin package holiday customers represented 65.9% of
overall flown passengers (2021: 53.0%).
Pleasingly, average load factor achieved was 90.7% (2021: 57.3%)
on a 361% increase in seat capacity to 12.35m (2021: 2.68m),
underlining the popularity of our leisure travel product and the
resurgence in consumer confidence to travel.
Flight-only ticket yield per passenger sector at GBP105.00
(2021: GBP73.27) was 43% higher than the prior year, due to changes
in the mix of destinations flown, notably an increase to those in
the Eastern Mediterranean, and strong consumer demand meaning fewer
promotional offers were required.
The average price of a Jet2holidays package holiday increased 5%
to GBP782 (2021: GBP748) reflecting inflationary increases in costs
and favourable pricing driven by destination mix and robust
consumer demand.
Non-Ticket Retail Revenue per passenger sector declined 17% to
GBP25.79 (2021: GBP30.97) primarily due to early season product
supply chain issues and resource constraints at Jet2.com's third
party in-flight retail supplier which affected onboard product
availability and consequently impacted in-flight retail revenues.
Pleasingly, as we enter the Winter 2022/23 season this disruption
has largely abated, and availability levels are now approaching the
high standards our customers have come to expect and enjoy.
As a result, overall Group Revenue increased 730% to GBP3,567.6m
(2021: GBP429.6m).
Net Operating Expenses
Higher levels of flying activity resulted in an associated 536%
increase in direct operating expenses (including direct staff
costs) to GBP2,654.9m (2021: GBP417.2m), significantly lower than
the revenue growth, this despite the severe operational disruption
experienced in mid-summer 2022 due to the lack of planning and
investment by many airports and associated suppliers. This
disruption caused flight delays in excess of three hours deemed
eligible under EU261/2004, to be over 700% higher than 2019 and has
resulted in significant delay and compensation costs in excess of
GBP50.0m.
Further, GBP108.0m was invested in brand and direct marketing
activity as the business ramped up operations post-pandemic and
sought to optimise load factors for Summer 2022 and drive customer
bookings for Winter 2022/23 and Summer 2023.
As a result, net operating expenses in total increased by 409%
to GBP3,051.0m (2021: GBP600.0m).
Operating Profit
Overall Group operating profit was GBP516.6m (2021: GBP170.4m
loss) which was also 42% ahead of 2019.
Net Financing Expense
Net financing expense (excluding Net FX revaluation losses)
decreased by GBP13.2m to GBP12.1m (2021: GBP25.3m), with additional
interest incurred on the GBP387.4m convertible bond issuance and
GBP150.0m term loan, more than offset by finance income earned on
the Group's higher average cash balances, which was further boosted
by recent interest rate increases.
Group profit before foreign exchange revaluation &
taxation
As a result, Group profit before foreign exchange revaluation
and taxation increased to GBP505.0m (2021: GBP195.1m loss), which
was also 44% ahead of 2019. Total profit for the period after
taxation was GBP356.0m (2021: GBP163.5m loss).
Cash Flow & Liquidity
In the first half of the financial year, the Group generated
cash from operating activities of GBP787.0m (2021: GBP248.4m) ,
primarily a result of significantly improved EBITDA together with
working capital benefits from the increased operational
activity.
Capital expenditure of GBP65.3m (2021: GBP60.6m) reflected
pre-delivery payments made for the Group's Airbus A321 neo order,
plus continued investment in the long-term maintenance of our
existing aircraft fleet. The investment in the electrification of
ground services equipment and other vehicles continues apace, as
older less efficient models reach the end of their useful lives. In
addition, as a consequence of our recent aircraft orders and to
further underpin our growth ambitions, we took the opportunity to
purchase premises at Cheadle, near Manchester Airport, which will
become our second flight simulator training centre, building on the
success of our first facility near Bradford which commenced
operation in 2014. This new centre will provide a bespoke training
facility for pilots, engineers and cabin crew and will continue to
equip us with well-trained colleagues as we grow over the coming
years.
Net cash used in financing activities was GBP138.7m (2021:
GBP467.8m net cash generated), which included repayment of the
existing GBP65.0m Revolving Credit Facility.
As a result, overall liquidity improved significantly with a
total cash balance (including money market deposits) at the half
year end of GBP2,830.7m, an increase of 39% (2021: GBP2,036.9m).
Our 'Own Cash' position (excluding customer deposits) of
GBP1,968.6m increased by 29% (2021: GBP1,524.3m).
Renegotiation of Revolving Credit Facility Agreement ("RCF")
Since the half year end, the Group has successfully renegotiated
its RCF, welcoming one new financing partner, National Westminster
Bank plc, alongside our three existing supportive relationship
banks: Barclays Bank plc; HSBC UK Bank plc; and Lloyds Bank plc.
The new RCF provides the Group with unsecured available facilities
of up to GBP300m, an increase of GBP200m on its previous RCF. On
signature and having considered the Group's current liquidity
position and medium-term liquidity requirements, the Board decided
to repay in full the Group's GBP150.0m term loan, which was due to
mature in September 2023, with the new RCF remaining undrawn.
Importantly, the new RCF will be sustainability-linked from April
2023, incorporating the Group's key climate metric - gCO(2) per
passenger km aircraft fuel burn.
The strength of our balance sheet means the Group is well
positioned to capitalise on the growth opportunities that we
believe exist for our exciting business and also provides it with
necessary financial resilience should circumstances become more
challenging.
Key Performance Indicators Half year Half year Half Half year
ended ended year end ended
30 September 30 September change 30 September
2022 2021 2019
---------------------------------------- -------------- -------------- ---------- --------------
Leisure Travel sector seats available
(capacity) 12.35m 2.68m 361% 10.82m
======================================== ============== ============== ========== ==============
Leisure Travel passenger sectors
flown 11.20m 1.53m 632% 10.07m
======================================== ============== ============== ========== ==============
Leisure Travel average load factor 90.7% 57.3% 33.4ppts 93.1%
======================================== ============== ============== ========== ==============
Flight-only passenger sectors flown 3.82m 0.72m 431% 4.75m
======================================== ============== ============== ========== ==============
Package holiday customers 3.76m 0.44m 755% 2.71m
======================================== ============== ============== ========== ==============
Package holiday customers % of total
passenger sectors flown 65.9% 53.0% 12.9ppts 52.8%
======================================== ============== ============== ========== ==============
Flight-only ticket yield per passenger GBP105.00 GBP73.27 43% GBP88.87
sector (excl. taxes)
======================================== ============== ============== ========== ==============
Average package holiday price GBP782 GBP748 5% GBP702
======================================== ============== ============== ========== ==============
Non-ticket revenue per passenger GBP25.79 GBP30.97 (17%) GBP24.62
sector
======================================== ============== ============== ========== ==============
Advance sales made as at 30 September GBP1,665.5m GBP1,311.9m 27% GBP1,206.3m
---------------------------------------- -------------- -------------- ---------- --------------
Certain information contained in this announcement would have
been deemed inside information as stipulated under the UK version
of the EU Market Abuse Regulation (2014/596) which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018, as
amended and supplemented from time to time, until the release of
this announcement.
For further information, please contact:
Jet2 plc Tel: 0113 239 7692
Philip Meeson, Executive Chairman
Gary Brown, Group Chief Financial
Officer
Cenkos Securities plc Tel: 020 7397 8900
Nominated Adviser
Katy Birkin / Camilla Hume
Canaccord Genuity Limited Tel: 020 7523 8000
Joint Broker
Adam James
Jefferies International Limited Tel: 020 7029 8000
Joint Broker
Ed Matthews
Buchanan Tel: 020 7466 5000
Financial PR
Richard Oldworth / Toto Berger
Notes to Editors
-- Jet2holidays is the UK's largest package holidays provider
to many Mediterranean and Canary Islands leisure destinations
and Jet2.com is the UK's third largest airline by number
of passengers flown.
-- Jet2 currently operates from 10 bases across the UK - London
Stansted, Manchester, Birmingham, Bristol, East Midlands,
Leeds Bradford, Edinburgh, Glasgow, Newcastle and Belfast
International.
Jet2 plc
Condensed Consolidated Income Statement (Unaudited)
for the half year ended 30 September 2022
Note Half year Half year Year
ended ended ended
30 September 30 September 31 March
2022 2021 2022
GBPm GBPm GBPm
------------------------------------------- ----- -------------- -------------- ----------
Revenue 3,567.6 429.6 1,231.7
Net operating expenses 6 (3,051.0) (600.0) (1,555.6)
------------------------------------------- ----- -------------- -------------- ----------
Operating profit / (loss) 516.6 (170.4) (323.9)
Finance income 20.5 1.7 5.1
Finance expense (32.6) (27.0) (58.5)
Net FX revaluation losses (54.3) (10.7) (12.6)
------------------------------------------- ----- -------------- -------------- ----------
Net financing expense (66.4) (36.0) (66.0)
Profit on disposal of property,
plant and equipment 0.5 0.6 1.1
Profit / (loss) before taxation 450.7 (205.8) (388.8)
Taxation 8 (94.7) 42.3 73.4
Profit / (loss) for the period
(all attributable to equity shareholders
of the Parent) 356.0 (163.5) (315.4)
------------------------------------------- ----- -------------- -------------- ----------
Earnings per share
- basic 7 165.9p (76.2p) (147.0p)
- diluted 7 150.8p (76.2p) (147.0p)
------------------------------------------- ----- -------------- -------------- ----------
Jet2 plc
Condensed Consolidated Statement of Comprehensive Income
(Unaudited)
for the half year ended 30 September 2022
Half year Half year Year
ended ended ended
30 September 30 September 31 March
2022 2021 2022
GBPm GBPm GBPm
---------------------------------------------- -------------- -------------- ----------
Profit / (loss) for the period 356.0 (163.5) (315.4)
Other comprehensive income / (expense)
---------------------------------------------- -------------- -------------- ----------
Cash flow hedges:
Fair value gains 178.1 64.7 225.2
Net amount transferred to Consolidated
Income Statement (139.2) 18.7 22.4
Cost of hedging reserve - changes in fair
value 2.9 1.6 (8.0)
Related taxation charge (13.8) (15.4) (46.5)
Revaluation of foreign operations 7.8 0.9 -
35.8 70.5 193.1
Total comprehensive income / (expense)
for the period
(all attributable to equity shareholders
of the Parent) 391.8 (93.0) (122.3)
============================================== ============== ============== ==========
Jet2 plc
Condensed Consolidated Statement of Financial Position
(Unaudited)
at 30 September 2022
30 September 30 September 31 March 2022
2022 2021 GBPm
GBPm GBPm
Restated*
Non-current assets
Intangible assets 26.8 26.8 26.8
Property, plant and equipment 867.2 843.9 845.2
Right-of-use assets 535.0 464.2 491.9
Derivative financial instruments 32.9 9.5 20.5
----------------------------------- ------------- ------------- --------------
1,461.9 1,344.4 1,384.4
---------------------------------- ------------- ------------- --------------
Current assets
Inventories 20.9 0.8 8.5
Trade and other receivables 180.8 124.2 185.8
Derivative financial instruments 201.6 68.2 186.3
Money market deposits 1,624.8 941.1 1,181.0
Cash and cash equivalents 1,205.9 1,095.8 1,047.5
3,234.0 2,230.1 2,609.1
---------------------------------- ------------- ------------- --------------
Total assets 4,695.9 3,574.5 3,993.5
----------------------------------- ------------- ------------- --------------
Current liabilities
Trade and other payables 660.7 231.3 217.8
Deferred revenue 877.7 516.2 1,173.4
Borrowings 263.2 332.3 134.5
Lease liabilities 95.9 73.4 74.8
Provisions and liabilities 94.3 49.3 41.8
Derivative financial instruments 24.8 33.0 39.6
2,016.6 1,235.5 1,681.9
---------------------------------- ------------- ------------- --------------
Non-current liabilities
Deferred revenue 7.7 9.3 15.7
Borrowings 669.0 881.6 857.2
Lease liabilities 556.8 480.9 503.7
Provisions and liabilities 35.3 20.4 22.3
Derivative financial instruments 3.8 13.3 3.5
Deferred taxation 114.4 10.9 12.6
----------------------------------- ------------- ------------- --------------
1,387.0 1,416.4 1,415.0
---------------------------------- ------------- ------------- --------------
Total liabilities 3,403.6 2,651.9 3,096.9
----------------------------------- ------------- ------------- --------------
Net assets 1,292.3 922.6 896.6
=================================== ============= ============= ==============
Shareholders' equity
Share capital 2.7 2.7 2.7
Share premium 19.8 19.8 19.8
Cash flow hedging reserve 181.1 24.1 155.2
Cost of hedging reserve (3.4) 2.1 (5.5)
Other reserves 59.1 52.2 51.3
Retained earnings 1,033.0 821.7 673.1
Total shareholders' equity 1,292.3 922.6 896.6
=================================== ============= ============= ==============
*The ageing of Provisions and liabilities for the period ended
30 September 2021 have been restated as detailed in Note 11
Jet2 plc
Condensed Consolidated Statement of Cash Flows (Unaudited)
for the half year ended 30 September 2022
Half year Half year Year ended
ended ended 31 March
30 September 30 September 2022
2022 2021 GBPm
GBPm GBPm
----------------------------------------------- -------------- ---------------- -----------
Profit / (loss) before taxation 450.7 (205.8) (388.8)
Net financing expense (including Net FX
revaluation losses) 66.4 36.0 66.0
Hedge ineffectiveness - 0.8 0.8
Depreciation 98.1 81.6 158.3
Profit on disposal of property, plant and
equipment (0.5) (0.6) (1.1)
Equity settled share-based payments 3.9 - 3.3
Operating cash flows before movements
in working capital 618.6 (88.0) (161.5)
(Increase) / decrease in inventories (12.4) 0.2 (7.5)
Decrease / (increase) in trade and other
receivables 5.0 4.1 (35.5)
Increase in trade and other payables 438.7 161.2 151.8
(Decrease) / increase in deferred revenue (303.7) 203.1 866.7
Increase / (decrease) in provisions and
liabilities 52.8 2.6 (9.5)
Payment on settlement of derivatives - (15.5) (15.5)
Cash generated from operations 799.0 267.7 789.0
Interest received 20.5 1.7 5.1
Interest paid (24.3) (21.0) (43.5)
Income taxes (paid) / refunded (8.2) - 0.4
Net cash generated from operating activities 787.0 248.4 751.0
----------------------------------------------- -------------- ---------------- -----------
Cash flows used in investing activities
Purchase of property, plant and equipment (65.0) (60.6) (107.9)
Purchase of right-of-use assets (0.3) - (0.5)
Proceeds from sale of property, plant and
equipment 0.6 0.6 1.1
Net increase in money market deposits (443.8) (941.1) (1,181.0)
Net cash used in investing activities (508.5) (1,001.1) (1,288.3)
----------------------------------------------- -------------- ---------------- -----------
Cash flows (used in) / generated from
financing activities
Repayment of borrowings (100.4) (25.2) (259.5)
New loans advanced - 147.9 147.9
Payment of lease liabilities (38.3) (35.0) (67.5)
Proceeds on issue of convertible bonds - 380.1 380.1
Net cash (used in) / generated from financing
activities (138.7) 467.8 201.0
----------------------------------------------- -------------- ---------------- -----------
Net increase / (decrease) in cash in the
period 139.8 (284.9) (336.3)
Cash and cash equivalents at beginning
of period 1,047.5 1,379.0 1,379.0
Effect of foreign exchange rate changes 18.6 1.7 4.8
----------------------------------------------- -------------- ---------------- -----------
Cash and cash equivalents at end of period 1,205.9 1,095.8 1,047.5
=============================================== ============== ================ ===========
Jet2 plc
Condensed Consolidated Statement of Changes in Equity
(Unaudited)
for the half year ended 30 September 2022
Share Share Cash Cost Other Retained Total
capital premium flow of hedging reserves earnings shareholders'
hedging reserve equity
reserve
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- --------- --------- --------- ------------ ---------- ---------- ---------------
Balance at 31 March
2021 2.7 19.8 (44.2) 0.8 (0.1) 985.2 964.2
Total comprehensive
expense - - 68.3 1.3 0.9 (163.5) (93.0)
Issue of convertible
bonds(1) - - - - 51.4 - 51.4
Balance at 30 September
2021 2.7 19.8 24.1 2.1 52.2 821.7 922.6
Total comprehensive
expense - - 131.1 (7.6) (0.9) (151.9) (29.3)
Share-based payments - - - - - 3.3 3.3
Balance at 31 March
2022 2.7 19.8 155.2 (5.5) 51.3 673.1 896.6
Total comprehensive
income - - 25.9 2.1 7.8 356.0 391.8
Share-based payments - - - - - 3.9 3.9
Balance at 30 September
2022 2.7 19.8 181.1 (3.4) 59.1 1,033.0 1,292.3
========================= ========= ========= ========= ============ ========== ========== ===============
(1) In June 2021, senior unsecured convertible bonds were issued
generating gross proceeds of GBP387.4m. The equity component of
these bonds was valued at GBP51.4m and recognised in other
reserves. The remaining balance held in other reserves relates to
foreign exchange translation differences arising on revaluation of
non-sterling functional currency subsidiaries of the Group, which
totalled GBP7.7m at 30 September 2022.
Jet2 plc
Notes to the consolidated interim report
for the half year ended 30 September 2022 (Unaudited)
1. General information
Jet2 plc is a public limited company incorporated and domiciled
in England and Wales. The Company's ordinary shares are traded on
the AIM market of the London Stock Exchange. The address of its
registered office is Low Fare Finder House, Leeds Bradford Airport,
Leeds, LS19 7TU.
The Group's interim financial report consolidates the financial
statements of Jet2 plc and its subsidiaries.
This interim report has been prepared and approved by the
Directors in accordance with UK-adopted international accounting
standards and applicable law ("Adopted IFRS"). It does not fully
comply with IAS 34 - Interim Financial Reporting, which is not
currently required to be applied by AIM companies.
2. Accounting policies
Basis of preparation of the interim report
This unaudited consolidated interim financial report for the
half year ended 30 September 2022 does not constitute statutory
accounts as defined in s435 of the Companies Act 2006. The
financial statements for the year ended 31 March 2022 were prepared
in accordance with UK-adopted international accounting standards
and applicable law and have been delivered to the Registrar of
Companies. The report of the auditor on those financial statements
was unqualified, did not contain an emphasis of matter paragraph
and did not contain any statement under s495(3) nor (4) of the
Companies Act 2006.
The interim financial report has been prepared under the
historical cost convention except for all derivative financial
instruments, which have been measured at fair value. The accounting
policies applied within this interim report are consistent with
those detailed in the Annual Report & Accounts for the year
ended 31 March 2022.
The Group's interim financial report is presented in pounds
sterling and all values are rounded to the nearest GBP100,000
except where indicated otherwise.
Going concern
The Directors have prepared financial forecasts for the Group,
comprising profit before and after taxation, balance sheets and
projected cash flows through to 31 March 2025.
For the purpose of assessing the appropriateness of the
preparation of the Group's interim financial report on a going
concern basis, two financial forecast scenarios have been pr epared
for the 12-month period following approval of these financial
statements :
-- A base case which assumes a full unhindered Summer 2023 flying
programme, utilising an aircraft fleet of 112 at average load
factors above 90%, although at lower gross profit margins than
Summer 2022 to reflect rising fuel, carbon and other associated
inflationary cost increases that may not be fully passed onto
consumers; and
-- A downside scenario assuming reduced consumer demand resulting
in materially lower average load factors, but with no restrictions
on flying to any of the Group's destinations.
The forecasts consider the current cash position, which is after
the early repayment of the GBP150.0m term loan in October 2022, and
an assessment of the principal areas of risk and uncertainty,
paying particular attention to the impact of the current UK
macro-economic environment and 'cost of living' pressures on our
customers.
In addition to forecasting the cost base of the Group, both
scenarios incorporated the funding of future aircraft deliveries
with our well-established aircraft financing partners, and no
mitigating actions taken to defer uncommitted capital
expenditure.
The Directors concluded that given the combination of a closing
cash balance (including money market deposits) of GBP2,830.7m at 30
September 2022, together with the forecast monthly cash utilisation
that, under both scenarios, the Group would have sufficient
liquidity throughout a period of 12 months from the date of
approval of this interim financial report. In addition, the Group
is forecast to meet its banking covenants at 31 March 2023 and 30
September 2023 under both scenarios.
As a result, the Directors have a reasonable expectation that
the Group as a whole has adequate resources to continue in
operational existence for a period of 12 months from the date of
approval of the interim financial report. For this reason, they
continue to adopt the going concern basis in preparing the
unaudited interim report for the half year ended 30 September
2022.
3. New accounting standards
The following revision to accounting standards became effective
from January 2021.
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 -
Interest Rate Benchmark Reform Phase 2
The Group renegotiated the terms of its LIBOR financing
agreements to Sterling Overnight Index Average Rate (SONIA) during
the year to 31 March 2022.
The Group continues to engage with those financing partners to
which it has US LIBOR exposures on its aircraft financing and any
associated floating-to-fixed interest rate swaps, to transition
these agreements to the Secured Overnight Financing Rate ("SOFR")
ahead of the 30 June 2023 deadline. The impact of this is not
expected to be material.
4. Alternative performance measures
The Group's alternative performance measures are not defined by
IFRS and therefore may not be directly comparable with other
companies' alternative performance measures. These measures are not
intended to be a substitute for, or superior to, IFRS
measurements.
Profit / (loss) before FX revaluation and taxation
Profit / (loss) before FX revaluation and taxation is included
as an alternative performance measure in order to aid users in
understanding the underlying operating performance of the Group
excluding the impact of foreign exchange volatility.
Profit / (loss) before FX revaluation and taxation is calculated
as below:
Half year Half year Year ended
ended ended 31 March
30 September 30 September 2022
2022 2021
GBPm GBPm GBPm
-------------- -------------- -----------
Profit / (loss) before taxation 450.7 (205.8) (388.8)
Net FX revaluation losses 54.3 10.7 12.6
Profit / (loss) before FX revaluation
and taxation 505.0 (195.1) (376.2)
============== ============== ===========
'Own Cash'
'Own Cash' comprises cash and cash equivalents and money market
deposits and excludes advance customer deposits. It is included as
an alternative measure in order to aid users in understanding the
liquidity of the Group.
Half year Half year Year ended
ended ended 31 March
30 September 30 September 2022
2022 2021
GBPm GBPm GBPm
-------------- -------------- -----------
Cash and cash equivalents 1,205.9 1,095.8 1,047.5
Money market deposits 1,624.8 941.1 1,181.0
Deferred revenue (885.4) (525.5) (1,189.1)
Trade and other receivables 23.3 18.2 44.4
Trade and other payables - (5.3) -
-------------- --------------
'Own Cash' 1,968.6 1,524.3 1,083.8
============== ============== ===========
Trade and other receivables relates to invoicing of amounts due
from travel agents in respect of package holiday deposits and
balance payments.
Trade and other payables relates to refund credit notes issued
and cash refunds not yet paid out for flights and holidays
cancelled prior to the period end.
5. Segmental reporting
IFRS 8 - Operating segments requires operating segments to be
determined based on the Group's internal reporting to the Chief
Operating Decision Maker ("CODM").
The CODM is responsible for the overall resource allocation and
performance assessment of the Group. The Board of Directors
approves major capital expenditure, assesses the performance of the
Group and also determines key financing decisions. Consequently,
the Board of Directors is considered to be the CODM.
The information presented to the CODM for the purpose of
resource allocation and assessment of the Group's performance
relates to its Leisure Travel segment as shown in the Consolidated
Income Statement.
The Leisure Travel business specialises in offering package
holidays by its ATOL licensed provider, Jet2holidays, to leisure
destinations in the Mediterranean, the Canary Islands and to
European Leisure Cities, and scheduled holiday flights by its
airline, Jet2.com. Resource allocation decisions are based on the
entire route network and the deployment of its entire aircraft
fleet. All Jet2holidays customers fly on Jet2.com flights, and
therefore these segments are inextricably linked and represent the
only segment within the Group.
Revenue is principally generated from within the UK, the Group's
country of domicile. No customer represents more than 10% of the
Group's revenue.
6. Net operating expenses
Half year Half year Year ended
ended 30 ended 30 31 March
September September 2022
2022 2021
GBPm GBPm GBPm
Direct operating costs:
Accommodation 1,415.6 170.4 473.5
Fuel 324.5 42.5 132.8
Landing, navigation and third-party
handling 271.4 47.6 139.5
Agent commission 103.9 10.1 29.5
Carbon 57.3 3.4 11.0
Aircraft rentals 53.9 - 0.6
Maintenance 52.1 17.4 38.7
In-flight cost of sales 45.0 9.4 28.9
Other direct operating costs 181.0 30.1 53.6
Staff costs including agency staff 288.1 127.2 313.2
Depreciation of property, plant
and equipment 65.9 56.2 105.2
Depreciation of right-of-use assets 32.2 25.4 53.1
Other operating charges 160.1 60.3 176.0
Total net operating expenses 3,051.0 600.0 1,555.6
=========== =========== ===========
7. Earnings per share
Basic earnings per share is calculated by dividing the profit /
(loss) attributable to ordinary shareholders by the weighted
average number of ordinary shares in issue during the period.
Diluted earnings per share is calculated by dividing the profit
/ (loss) attributable to ordinary shareholders by the weighted
average number of ordinary shares in issue during the period,
adjusted for the effects of potentially dilutive share options and
Deferred Awards, along with the potential conversion of the
convertible bonds to ordinary shares at maturity in June 2026. In
accordance with IAS 33, these were not included in the calculation
of diluted earnings per share for the half year ended 30 September
2021, as they were anti-dilutive.
Half year ended 30 September Half year ended 30 September
2022 2021
Earnings Weighted EPS Earnings Weighted EPS
average number average number
of shares of shares
GBPm millions Pence GBPm millions Pence
Basic EPS
Profit / (loss)
attributable
to ordinary shareholders 356.0 214.6 165.9 (163.5) 214.6 (76.2)
--------------------------- --------- ---------------- -------- --------- ---------------- ----------
Effect of dilutive
instruments
Share options
and Deferred
Awards - 4.6 (3.5) - - -
Convertible bonds 7.0 21.5 (11.6) - - -
Diluted EPS 363.0 240.7 150.8 (163.5) 214.6 (76.2)
--------------------------- --------- ---------------- -------- --------- ---------------- ----------
8. Taxation
The taxation charge for the period of GBP94.7m (2021: GBP42.3m
credit) reflects an estimated effective tax rate of approximately
21% (2021: 21%).
9. Dividends
The declared interim dividend of 3.0p per share (2021: GBPnil)
will be paid out of the Company's available distributable reserves
on 3 February 2023, to shareholders on the register at 30 December
2022, with the ex-dividend date being 29 December 2022. In
accordance with IAS 1, dividends are recorded only when paid and
are shown as a movement in equity rather than as a charge to the
Consolidated Income Statement.
10. Contingent liabilities
The Group has issued various guarantees in the ordinary course
of business, none of which are expected to lead to a financial gain
or loss.
11. Restatement of prior year interim financial report
The Group has restated its Provisions and liabilities to better
reflect the timing of when its leased aircraft maintenance
obligations fall due, having previously recognised the full balance
as a current liability.
Provisions totalling GBP20.4m previously reported as current
liabilities have been restated and presented as non-current
liabilities. This has resulted in current provisions reducing from
GBP69.7m to GBP49.3m at 30 September 2021 and non-current
provisions increasing from GBPnil to GBP20.4m. Consequently, total
current liabilities decreased from GBP1,255.9m to GBP1,235.5m and
total non-current liabilities increased from GBP1,396.0m to
GBP1,416.4m.
12. Other matters
This report will be posted on the Group's website,
www.jet2plc.co m and copies are available from the Group Company
Secretary at the registered office address: Low Fare Finder House,
Leeds Bradford Airport, Leeds, LS19 7TU.
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END
IR FLFLDLILVFIF
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