TIDMJET2
RNS Number : 5209E
Jet2 PLC
08 July 2021
Jet2 plc
PRELIMINARY UNAUDITED RESULTS FOR YEARED 31 MARCH 2021
Jet2 plc (formerly Dart Group plc), the Leisure Travel group
(the "Group" or the "Company"), announces its preliminary results
for the year ended 31 March 2021. These results are presented in
accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006.
-- In what has proven to be a period of unparalleled operational
and financial challenges, the Group made a loss before FX
revaluation and taxation from continuing operations of GBP373.8m
(2020: pre-exceptional profit before FX revaluation and
taxation from continuing operations of GBP264.2m).
-- As a result of the impact of Covid-19, our 'Own Cash' balance
(excluding advance customer deposits) and its careful preservation
became a top priority, the Board adapting quickly to the
challenges presented by taking considered but decisive actions
to minimise losses and reduce cash burn.
-- Jet2 plc 's strong financial foundations and previously
positive long-term operational and financial performance,
enabled rapid access to GBP1.0bn of additional funding in
the financial year primarily through Shareholder and Bank
support, for which we are very grateful.
-- As a result, our year end liquidity position remained strong
with a total cash balance of GBP1,379.0m, (2020: GBP1,387.5m),
a decrease of 1% and an 'Own Cash' position of GBP1,061.7m
(2020: GBP520.4m), an increase of 104%.
-- Since 31 March 2021, the Group has further enhanced its
liquidity by signing a new unsecured GBP150.0m term loan
maturing in September 2023, and also announced the successful
issuance of GBP387.4m of senior unsecured Convertible Bonds
due in 2026, positioning the Company for a strong recovery
as lockdown restrictions are lifted, through fleet growth
and fleet renewal opportunities. Consequently, as at 4 July
2021, the Group had a total cash balance of GBP1,908m and
an 'Own Cash' position of GBP1,460m, this after having processed
over GBP1.4bn in refunds to customers since the pandemic
began.
-- Extensive international travel restrictions meant our aircraft
were fully grounded for approximately 29 weeks of the financial
year and operated a significantly reduced programme when
flying was permitted. Consequently, our flying programme
concentrated on those routes where we could achieve a positive
financial contribution, supported by our quick to market,
flexible operating model.
-- As a result, Jet2.com flew a total of 1.32m single sector
passengers, a decrease of 91% (2020: 14.62m). Jet2holidays
package holiday customers represented 58% (2020: 52%) of
the overall mix of flown passengers at 0.37m customers (2020:
3.77m), a decrease of 90%.
-- We believe opportunities for financially strong, resilient
and trusted operators will only increase. Bookings for Summer
22, for which package holiday bookings are displaying a
materially higher mix of the total are encouraging and with
the vaccination progress being made, we are optimistic that
Summer 22 will be a considerable improvement on both Summer
20 and Summer 21.
-- We are confident that once normality returns, our Customers
will be determined to enjoy the wonderful experience of
a well-deserved Jet2 holiday and that Jet2.com and Jet2holidays
will continue to have a thriving future, taking millions
of UK holidaymakers annually, to the Mediterranean, the
Canary Islands and to European Leisure Cities and that Jet2
plc will emerge from this crisis an even stronger company.
OUR CHAIRMAN'S STATEMENT
When the financial year began, very few people could have
foreseen the prolonged impact of the Covid-19 pandemic. Having
delivered record financial results for the financial year ended 31
March 2020 and with strong advance booking momentum ahead of Summer
2020, plus a healthy 'Own Cash' (excluding advance customer
deposits) position, our UK Leisure Travel Business - which
encompasses Jet2holidays, our acclaimed ATOL licensed package
holidays operator and Jet2.com, our award-winning airline - was
well placed to deliver another year of strong performance.
However, in what has proven to be a period of unparalleled
operational and financial challenges, the pandemic has had an
unprecedented impact on Jet2 plc and the Leisure Travel industry as
a whole.
Extensive restrictions on international travel imposed by the UK
Government, meant our aircraft fleet was fully grounded for
approximately 29 weeks of the financial year and operated with a
significantly reduced programme when flying was permitted.
Consequently, Jet2.com flew a total of 1.32m single sector
passengers, a decrease of 91% (2020: 14.62m). Jet2holidays package
holiday customers represented 58% (2020: 52%) of the overall mix of
flown passengers at 0.37m customers (2020: 3.77m), a decrease of
90%. The passenger volume reduction contributed directly to a
decrease in revenue of 89% to GBP395.4m (2020: GBP3,584.7m) and
consequently a loss before FX revaluation and taxation from
continuing operations of GBP373.8m (2020: pre-exceptional profit
before FX revaluation and taxation from continuing operations of
GBP264.2m ).
After accounting for net FX revaluation gains of GBP3.9m and
profits of GBP28.6m from two months' trading and the subsequent
sale of Fowler Welch , our non-core Distribution & Logistics
business, total loss before taxation including discontinued
operations was GBP341.3m (2020: pre-exceptional profit before
taxation of GBP261.6m ).
Basic earnings per share from total operations decreased to
(151.2p) (2020: 77.9p). In consideration of the ongoing impact of
Covid-19, the Board does not recommend the payment of a final
dividend (2020: 0.0p per share), resulting in a total dividend for
the year of 0.0p per share (2020: 3.0p).
Strategy
"We take people on holiday!"
Jet2holidays is the UK's largest package holiday operator to
many Mediterranean and Canary Islands leisure destinations and
Jet2.com is the UK's 3rd largest airline by number of passengers
flown. Our "Customer First" strategy has remained consistent and is
what has driven Jet2's continuing success. The delivery of great
service is at the core of Jet2holidays and Jet2.com brand values as
we recognise that, whether taking end-to-end Real Package Holidays
from Jet2holidays(R), or a holiday flight with Jet2.com, the
delivery of an attractive and memorable holiday experience
engenders loyalty and repeat bookings.
On 11 November 2020, we were very pleased to announce our tenth
UK operating base at Bristol Airport, from which we successfully
commenced flying operations on 2 July 2021, with the required
aircraft and crews primarily sourced from our existing fleet and
colleagues. This means that holidaymakers in the South West can now
look forward to something they have not experienced before - our
award-winning customer service and their Real Package Holidays from
Jet2holidays(R).
The combined power of our proposition, product and people is
what will fuel our ongoing success, as we constantly seek to
improve our Customers' holiday choice, experience and enjoyment,
giving us the greatest opportunity to retain and attract new
customers - the key to continuing profitable growth!
Our long-term ambition therefore remains - To become the UK's
Leading and Best Leisure Travel Business.
Further information on the calculation of this measure can be
found in Note 8.
2021 Key Performance Highlights
Liquidity
At 1 April 2020, the Group had a strong and carefully managed
balance sheet with an 'Own Cash' balance of GBP520.4m and a total
cash balance of GBP1,387.5m.
As a result of the impact of Covid-19, our 'Own Cash' balance
and its careful preservation became a top priority. The Board
adapted quickly to the challenges by taking considered but decisive
actions to minimise losses and reduce cash burn . We reduced
operating costs and discretionary spending and cancelled or
deferred future additional aircraft deliveries.
In addition, Jet2 plc 's strong financial foundations and
previously positive long-term operational and financial
performance, has enabled rapid access to GBP1.6bn of additional
funding since the outset of Covid-19.
This liquidity has been raised from a diversified range of
funding sources including: the utilisation of our GBP65m Revolving
Credit Facility; the drawing down of the Bank of England's Covid
Corporate Financing Facility ("CCFF") of GBP199m; the financing of
unencumbered owned mid-life aircraft for GBP102m; the sale of
Fowler Welch, our non-core Distribution & Logistics business,
for gross proceeds of GBP99m; plus two oversubscribed equity
placings raising gross proceeds of GBP594m, for which we are
grateful to our Shareholders for their support.
Post the financial year end on 31 May 2021, Jet2 plc signed a
new unsecured GBP150m term loan maturing in September 2023 with its
supportive Banking group. In addition, on 3 June 2021, the Company
announced the successful issuance of GBP387m of senior unsecured
Convertible Bonds due in 2026 carrying a coupon of 1.625%, the
offering for which was heavily oversubscribed. The proceeds of the
issuance of the bonds will be used to strengthen Jet2 plc's
liquidity further and position the Company for a strong recovery as
lockdown restrictions are lifted, through fleet growth and fleet
renewal opportunities.
Customers
We relish the trust our Customers place in us to give them a
fantastic holiday experience and, notwithstanding the pandemic, our
"Customer First" strategy has remained consistent. We have taken
great pride in refunding our Customers promptly when their holidays
or flights have unfortunately had to be cancelled, although many
have opted to reschedule their bookings . The Group have processed
over GBP1.4bn in refunds since the pandemic began, with our now
virtual contact centre, ably supported by our social media and
customer service teams, working tirelessly in this regard. We were
duly recognised by both the UK Civil Aviation Authority, as the
only UK airline to have been consistently processing cash refunds
quickly, and Which? who said that, "Jet2 processed refunds without
quibble when requested by customers".
More recently, Which? assessed the flexible booking policies of
more than 80 holiday companies to see how well they look after
their customers if lockdowns or quarantine restrictions affect
their plans and described us as 'rated highly'. Additionally, they
list Jet2holidays as the highest-rated Which? Recommended Provider,
which is why we continue to be awarded that prestigious
accolade.
We know that there is enormous pent-up demand for our holiday
flights and ATOL protected package holidays and that customers want
nothing more than to get away on one of the most important family
experiences of the year. We also know that in times of uncertainty
customers look to operators they can trust and who offer them the
best value for money.
As a result of our unwavering focus to do what is right for our
Customers, we are confident that once normality returns, they will
be even more determined to enjoy the wonderful experience of a
well-deserved Jet2 holiday. We remain completely committed to doing
our very best to ensure that when the time comes, each of our
customers "has a lovely holiday" that can be both eagerly
anticipated and fondly remembered, supported by our core principles
of being family friendly, offering value for money and giving a
truly VIP customer service.
Colleagues
Our Leisure Travel business has its foundations firmly rooted in
providing truly memorable holiday experiences for our Customers.
Whether in the UK or Overseas, our colleagues' ability to excel in
their roles whilst continuously displaying our Company's 'Take Me
There' values (Be Present; Create Memories; Take Responsibility;
and Work As One Team ), is of paramount importance. This "Customer
First" approach has enabled us to attain many awards over the years
which recognise our outstanding customer service. And, whilst the
past year has seen a very different focus for our colleagues due to
the unexpected and prolonged impact of Covid-19, we will always
consider them our most valuable asset.
Though many colleagues have regrettably not been actively
required to work this year, many others have worked tirelessly
throughout these difficult times. We are very proud of the way in
which our Contact Centre and Customer Service teams have dealt with
the huge number of cancellations forced upon the business and also
how quickly and positively our support offices colleagues
transitioned to a home working model - the efficiency and
engagement levels have been extremely positive.
For Summer 2020, we had planned for growth which was underpinned
by strong advance bookings. Unfortunately, as a result of Covid-19,
things did not continue as planned and consequently, we had to take
some very difficult decisions as we right sized for a significantly
impaired Summer 2020 flying programme and a cautious approach to
flying for Summer 2021. Sadly, this meant it was necessary to make
546 valued colleagues redundant from across our business.
The Board's aim throughout the pandemic has been to support our
colleagues as fully as possible, ensuring that we communicate with
them regularly and reassure them appropriately, protecting as many
jobs as possible whilst understanding the anxieties and concerns
faced by them. Though we have been hugely appreciative of the UK
Government's Coronavirus Job Retention Scheme ("CJRS"), the Board
also implemented a generous bespoke salary plan which saw the
Company "top up" the CJRS funding to provide further financial
support for our loyal colleagues to enable them to cope through
these difficult times.
I would therefore like to take this opportunity to sincerely
thank all our colleagues for continuing to Work As One Team and
being dedicated to our business and our Customers throughout these
unprecedented times.
And, despite the ongoing immediate challenges, I am confident
that once normality returns we will have colleagues who are engaged
and committed to carry on delivering the outstanding "Customer
First" service that means so much to our Customers, and which has
contributed immeasurably to our long-term success.
The Board
The Board recognises that it is responsible for the long-term
success of the Group and is accountable to shareholders for its
proper management. The Board's composition is regularly reviewed to
ensure that it maintains the appropriate balance of skill set,
background and experience, to enable it to oversee the execution of
the Group's strategy.
As a result, and following a rigorous search process, we were
delighted to welcome Robin Terrell to the Board on 14 April 2020 as
an independent non-executive director. Robin brings extensive
experience in leading online and retail businesses and has very
relevant financial knowledge given his qualification as a chartered
accountant and his recent position as Chair of the Audit Committee
of William Hill plc.
Additionally, following the sale of our Distribution &
Logistics business, in September 2020, the Company changed its name
to Jet2 plc, reflecting the continued focus on its longer-term
strategy of growing its leisure travel business. We were delighted
to announce the appointment of Stephen Heapy (Chief Executive
Officer of Jet2.com and Jet2holidays) to Chief Executive Officer of
Jet2 plc. We are also very fortunate to be extremely well supported
by our Group Chief Financial Officer, Gary Brown. I remain the
Executive Chairman.
Culture and Stakeholders
The Board and senior management team remain focused on
generating long-term shareholder value by making decisions that
ensure the foundations of the business remain strong and
sustainable in an ever-changing marketplace.
We recognise the importance of strong relationships with our
many stakeholders in helping to realise our growth plans. For
example, for many years we have held an annual supplier conference
where we have focused on how we, and our supplier partners, can
work together effectively to build mutually beneficial long-term
relationships. T his cooperative spirit enabled us to have positive
discussions to reduce monthly outgoings or restructure contracts
during the early stages of the pandemic.
Despite the pandemic, we recognise that paying our suppliers,
including of course our hotel partners , on time and in full is
vital for their financial well-being. Under the 'Duty to report on
payment practices and performance' legislation, the average time
taken to pay supplier invoices during the year was 34.0 days (2020:
25.3 days). We continue to take pride in supporting all our
suppliers through our industry leading payment record.
We engage with our shareholders and institutional investors
regularly including at results presentations, individual investor
meetings and at the Annual General Meeting. We were pleased to gain
overwhelming support and participation for both our equity
placings, and the engagement with shareholders that we undertook
meant that we could explain the Board's position and answer any
questions they had. These equity fund raisings have played a vital
role in ensuring we remain a successful and sustainable company in
the future.
The Executive Directors and certain senior managers within the
organisation regularly engage with senior members of the UK
Government and regulatory bodies. Contact this past year has very
much focused on the extensive travel restrictions imposed as a
result of the pandemic and trying to ensure that restrictions are
proportionate and risk-based. Additionally, the Chief Executive
Officer engages with governments and business and tourism bodies in
all our destination countries, at both a national and regional
level.
Finally, we continue to place particular emphasis on our
corporate culture to help achieve our goals, as epitomised by our
'Take Me There' brand values. We were delighted that the rules of
the CJRS allowed us to continue providing 'Take Me There' training
even whilst colleagues were not required to work, which enabled us
to keep these values and the passion for our brand alive - the
active fulfilment of these values has been essential to our
accomplishments to date and will remain integral to our future
success.
Sustainability
The Group takes its environmental obligations seriously. Jet2
plc endeavours to operate in the most efficient and environmentally
responsible way possible, minimising both emissions and carbon
intensity (emissions per unit of product delivered). We believe
that efficient operations also help to minimise our environmental
impact on noise and air quality pollutants.
It is our intention to launch our Sustainability Strategy in
September this year and we are putting in place stretching but
pragmatic targets which will have meaningful positive impacts,
starting the journey towards our Net Zero 2050 pledge and ensuring
our Customers can enjoy Real Package Holidays from Jet2holidays(R)
or scheduled holiday flights with Jet2.com that are increasingly
more environmentally sustainable.
Outlook
Though the continuing successful rollout of vaccines in the UK
and the momentum in Europe are encouraging, the first three months
of the new financial year have seen little change in the
significant challenges facing the Leisure Travel industry. The
Government's Global Travel Task Force report in early April was
disappointing as it lacked depth and detail, whilst the subsequent
'traffic light system' only served to confuse rather than clarify
for consumers.
However, the recent announcement of an expanded 'green watch
list' and the potential relaxing of restrictions for those who are
double vaccinated to be able to travel to amber list destinations
without having to quarantine on return, was a welcome step in the
right direction, demonstrating that the UK Government is committed
to reopening international travel.
That said, Group performance for the financial year ending 31
March 2022 is very much dependent on the level of flying permitted
for the remainder of Summer 21 and performance in the second half
of the financial year, periods for which we still have limited
visibility. Unsurprisingly given the continuing short-term
uncertainty, customers are booking significantly closer to
departure for Summer 21; and, although bookings to date for Winter
21/22 are satisfactory, they have slowed more recently given the
ongoing speculation around international travel.
Bookings for Summer 22, for which package holiday bookings are
displaying a materially higher mix of the total, are encouraging
and with the vaccination progress being made, we are optimistic
that Summer 22 will be a considerable improvement on both Summer 20
and Summer 21.
We believe opportunities for financially strong, resilient and
trusted operators will only increase as restrictions are lifted.
Given the significant actions we have taken to carefully protect
our cash balance and to improve our available liquidity and with
our Own Cash balance as at 4 July 2021 of GBP1,460m, we are well
placed to respond swiftly as the remaining UK Government travel
restrictions are finally relaxed and customer confidence
recovers.
We are confident that once normality returns, our Customers will
be determined to enjoy the wonderful experience of a well-deserved
Jet2 holiday and that Jet2.com and Jet2holidays will continue to
have a thriving future, taking millions of UK holidaymakers
annually, to the Mediterranean, the Canary Islands and to European
Leisure Cities and that Jet2 plc will emerge from this crisis an
even stronger company.
____________________
Philip Meeson
Executive Chairman
8 July 2021
BUSINESS & FINANCIAL REVIEW
The Group's financial performance for the year ended 31 March
2021 is reported in accordance with International Accounting
Standards in conformity with the requirements of the Companies Act
2006.
Summary Income Statement 2021 2020 Change
GBPm GBPm
Unaudited
Revenue 395.4 3,584.7 (89%)
Net operating expenses (731.5) (3,291.7) 78%
Exceptional item - hedge ineffectiveness - (108.4) 100%
------------------------------------------------- ----------- ---------- -------
Operating (loss) / profit (336.1) 184.6 (282%)
Net financing expense (excluding Net FX
revaluation gains / (losses)) (38.5) (29.5) (31%)
Profit on disposal of property, plant and
equipment 0.8 0.7 14%
------------------------------------------------- ----------- ---------- -------
(Loss) / profit before FX revaluation and
taxation (373.8) 155.8 (340%)
Net FX revaluation gains / (losses) 3.9 (8.1) 148%
------------------------------------------------- ----------- ---------- -------
(Loss) / profit before taxation from continuing
operations (369.9) 147.7 (350%)
Profit before taxation from discontinued
operating activities 2.1 5.5 (62%)
Profit on disposal of discontinued operations 26.5 - 100%
(Loss) / profit before taxation (341.3) 153.2 (323%)
Net financing expense (including Net FX
revaluation gains / (losses)) 34.6 37.6 8%
Depreciation 163.7 204.5 20%
Exceptional item - hedge ineffectiveness - 108.4 100%
Pre-exceptional EBITDA from continuing
operations* (171.6) 498.2 (134%)
================================================= =========== ========== =======
* Pre-exceptional EBITDA is included as an alternative
performance measure in order to aid users in understanding the
underlying operating performance of the Group. Further information
can be found in Note 8.
Customer Demand & Revenue
The extensive restrictions imposed on international travel by
the UK Government in response to Covid-19 have had a devastating
effect on air travel generally, with no flying operations for large
parts of the financial year resulting in the Group's financial
performance being severely impacted.
After grounding our aircraft fleet in mid-March 2020, we were
pleased to be able to resume operations on 15 July 2020 after
travel restrictions were lifted for an approved list of countries,
enabling us to provide as many of our Customers as possible with
their well-deserved and eagerly anticipated Real Package
Holidays(TM).
The rapid reimposition of travel restrictions for Mainland
Spain, the Canary Islands and the Balearics in late July, saw us
successfully re-focus our flying programme to Eastern Mediterranean
destinations, supported by our quick to market, flexible operating
model. And, despite the many subsequent changes in UK Government
guidance, Jet2.com continued to demonstrate its operational
flexibility, constantly amending its flying programme to
concentrate on those destinations which generated a positive
financial contribution. We retain that flexibility to react quickly
as travel restrictions ease over the coming months.
As we entered the Winter 20 season in November, the flying
operation was impaired by further UK lockdowns and, subsequently,
from 28 December 2020 to the end of the financial year, no flying
was conducted as the UK as a whole entered a third national
lockdown and the UK Government deemed international travel
illegal.
These extensive and prolonged restrictions meant that Jet2.com
flew a total of 1.32m (2020: 14.62m) single sector passengers
during the financial year, a decrease of 91%. C ustomers choosing
our end-to-end package holiday products decreased by 90% to 0.37m
(2020: 3.77m), with package holiday customers representing 58% of
overall flown passengers (2020: 52%). The uncertainty created by
the numerous changes in travel restrictions resulted in an average
load factor of 66.0% compared to the prior year of 92.2%.
Average flight-only ticket yield per passenger sector at
GBP95.24 (2020: GBP85.59) was 11% higher than the prior year,
primarily due to the increased mix of Eastern Mediterranean
destinations. Conversely, the average price of a Jet2holidays
package holiday decreased by 2% to GBP676 (2020: GBP687),
reflecting the many special offers received from hoteliers and
passed onto our Customers in pricing.
Non-Ticket Retail Revenue per passenger sector grew by 17% to
GBP29.10 (2020: GBP24.91) as a result of the mix of longer flights
to the Eastern Mediterranean, increased take-up of extra leg room
and advanced seat assignment, plus the provision of our successful
in-flight retail service, a product which our customers have come
to expect and enjoy.
As a result, overall Group Revenue decreased by 89% to GBP395.4m
(2020: GBP3,584.7m).
Net Operating Expenses
At the start of the pandemic the business undertook considered
but swift action, putting mitigation measures in place to remove
cost and reduce associated cash burn, which included: approximately
80% of our UK colleagues initially being put on temporary leave of
absence ('furloughed') which made full use of the grants available
under the UK Government's Coronavirus Job Retention Scheme ("
CJRS"), with similar schemes also in place for many of our overseas
colleagues; the cancellation or deferral of future additional
aircraft deliveries; deferral of non-critical capital expenditure;
and the freezing of recruitment and discretionary spending. In
addition, we also had positive discussions with many suppliers to
reduce our monthly outgoings. Despite the CJRS totalling GBP97.9m
in the year, our monthly salary bill remained a substantial
proportion of our overall costs and therefore, we asked all
colleagues (including, of course, Directors) to take an ongoing pay
cut. Additionally, performance related bonuses earned for the
financial year ended 31 March 2020, plus the Discretionary
Colleague Profit Share Scheme, were not paid.
Though lower levels of flying activity resulted in reduced
operational variable costs, certain fixed costs were carried at
lower than normal productivity levels, as the business was right
sized ahead of its proposed Summer 2021 flying programme.
As a result, net operating expenses reduced by 78% to GBP731.5m
(2020: GBP3,291.7m).
Operating (loss) / profit
Overall Group operating loss for the year was GBP336.1m (2020:
pre-exceptional operating profit of GBP293.0m).
Net Financing Expense
Net financing expense of GBP34.6m (2020: GBP37.6m) is stated
after finance income of GBP2.0m (2020: GBP14.5m), the year-on-year
decrease a result of reduced interest rates. Interest payable of
GBP40.5m (2020: GBP44.0m) predominantly related to structured
aircraft finance and IFRS 16 lease interest expense.
In addition, net FX revaluation gains of GBP3.9m (2020: GBP8.1m
loss) resulted from the year end revaluation of foreign currency
denominated monetary balances along with FX movements from the
crystallisation of prior year ineffective derivatives and current
year ineffective currency derivatives.
Discontinued Operations
On 31 May 2020, the Group sold its non-core Distribution &
Logistics operating business, Fowler Welch which was previously
classified as held-for-sale and as a discontinued operation having
satisfied the conditions under IFRS 5 - Non-current Assets Held for
Sale and Discontinued Operations. The related profit after taxation
for the two month period from discontinued operating activities was
GBP1.8m (2020: GBP4.4m for the twelve month period).
In addition, a profit of GBP26.5m (2020: nil) was generated on
disposal of these discontinued operations, for which the Group did
not incur a corporation tax charge.
Statutory Loss for the Year
As a result, the Group made a statutory loss before taxation
from continuing operations of GBP369.9m (2020: pre-exceptional
statutory profit before taxation of GBP256.1m).
Taxation
The Group recorded a tax credit of GBP70.4m compared to an
expense of GBP36.1m in 2020. The Group's effective tax rate of 19%
(2020: 24%) was in line with the 19% headline rate of corporation
tax. The Finance Bill published on 11 March 2021 detailed a
proposed increase in the rate of corporation tax from 19% to 25%
from 1 April 2023. However, as this legislation was not
substantively enacted at 31 March 2021, the Group has provided for
deferred tax at 19% (2020: 19%).
Statutory Net Loss for the year and Earnings Per Share
The Group made a statutory loss after taxation from continuing
operations of GBP299.5m and basic earnings per share decreased to
(166.9p).
Other Comprehensive Income and Expense
The Group had other comprehensive income of GBP20.5m (2020:
GBP44.9m expense); the change compared to the prior year is
primarily due to the transfer to the Consolidated Income Statement
of prior year cashflow hedge losses on out-of-the-money fuel
derivatives.
Cash Flows and Financial Position
Over the last twelve months, the Group has successfully
undertaken major cost reduction and cost avoidance measures,
alongside maintaining a balance sheet with significant liquidity
and managing cash burn to minimum levels.
The following table sets out condensed cash flow data and the
Group's cash and cash equivalents:
Summary of Cash Flows 2021 2020
GBPm GBPm Change
Unaudited
EBITDA from continuing operations (171.6) 498.2 (134%)
EBITDA from discontinued operating
activities 4.7 20.9 (78%)
Other Income Statement adjustments (2.1) (0.4) (425%)
-------------------------------------- ---------- -------- ---------
Operating cash flows before movement
in working capital (169.0) 518.7 (133%)
Movements in working capital (556.7) (21.5) (2,489%)
Payment on settlement of derivatives (101.6) - (100%)
Interest and taxes (7.5) (54.1) 86%
-------------------------------------- ---------- -------- ---------
Net cash (used in) / generated from
operating activities (834.8) 443.1 (288%)
Purchase of intangibles - (26.8) 100%
Purchase of property, plant and
equipment (37.4) (211.3) 82%
Movement on borrowings 286.2 27.0 960%
Movement on lease liabilities (69.2) (99.7) 31%
Proceeds on issue of shares 580.4 0.1 100%
Proceeds from sale of discontinued
operations (net of cash disposed) 76.0 - 100%
Other items (22.4) (6.5) (245%)
-------------------------------------- ---------- -------- ---------
Net (decrease) / increase in cash
and money market deposits (a) (21.2) 125.9 (117%)
====================================== ========== ======== =========
(a) Cash flows are reported including the movement on money
market deposits (cash deposits with maturity of more than three
months from point of placement) to give readers an understanding of
total cash generation. The Consolidated Cash Flow Statement reports
net cash flow excluding these movements.
Net Cash (Used in) / Generated From Operating Activities
Operating losses from continuing operations of GBP336.1m (2020:
GBP184.6m profit), primarily offset by depreciation of GBP166.1m
(2020: GBP218.7m) and exceptional hedge ineffectiveness of GBPnil
(2020: GBP108.4m), resulted in an operating cash outflow of
GBP169.0m (2020: GBP518.7m inflow).
In addition, movements in working capital, including settlement
of derivatives recorded as ineffective in the previous year,
resulted in further cash outflows of GBP658.3m (2020: GBP21.5m),
primarily due to the business holding lower customer cash receipts
as a result of reduced forward bookings, whilst additional cash was
expended to refund customers for cancelled flights or holidays.
Overall, the Group absorbed GBP834.8m of cash in its operating
activities (2020: GBP443.1m cash generated).
Net Cash Generated From / (Used In) Investing Activities
Total capital expenditure of GBP37.4m (2020: GBP211.3m) related
to business critical expenditure including continued investment in
the long-term maintenance of our existing aircraft fleet and the
acquisition of an A321 flight simulator following the addition of
our first Airbus aircraft to the fleet. In addition, the Group sold
its non-core Distribution & Logistics business for gross cash
consideration of GBP99.5m.
Net Cash Generated From / (Used In) Financing Activities
In response to Covid-19, the Group negotiated payment deferrals
with certain of its aircraft financiers resulting in a reduction in
capital repayments to GBP14.9m (2020: GBP38.0m) on aircraft loans.
Additionally, financing agreements were completed on twelve
unencumbered owned mid-life Boeing 737-800NG aircraft resulting in
cash inflows of GBP102.4m (2020: GBPnil) whilst repayments of
GBP69.2m (2020: GBP99.7m) were made on existing aircraft and
property leases.
The liquidity position was further strengthened as two
oversubscribed equity share placings were completed in May 2020 and
February 2021 raising combined net proceeds of GBP580.4m.
Additionally, in March 2021, Jet2 plc was re-confirmed as an
eligible issuer for the UK Government's Covid Corporate Financing
Facility ("CCFF") and fully drew down this funding of GBP198.7m
(2020: GBPnil). This short-term facility matures in March 2022.
Other items totalling an outflow of GBP22.4m (2020: GBP6.5m) are
primarily driven by the effect of foreign exchange rate changes on
the Group's cash balances.
Overall, this resulted in a net cash outflow from total
operations of GBP21.2m (2020: GBP125.9m inflow) and a year end
gross cash position of GBP1,379.0m (2020: GBP1,387.5m). Net cash,
stated after borrowings and lease liabilities decreased by 74% to
GBP60.7m (2020: GBP229.1m).
At the reporting date, the Group had received payments in
advance of travel from its Leisure Travel customers amounting to
GBP317.3m (2020: GBP867.1m), and had increased its 'Own Cash'
balance by 104% to GBP1,061.7m (2020: GBP520.4m).
There were no (2020: GBPnil) cash restrictions from Merchant
Acquirers and GBP8.3m (2020: GBP39.8m) was placed with
counterparties in the form of margin calls to cover
out-of-the-money hedge instruments and as collateral in respect of
adverse currency movements on aircraft loans in comparison to their
underlying asset value.
Summary Statement of Financial Position 2021 2020
GBPm GBPm Change
Unaudited
----------------------------------------- ---------- -------- -------
Non-current assets (a) 1,326.3 1,492.7 (11%)
Net current assets / (liabilities)
(b) 2.5 (138.7) 102%
Cash and cash equivalents 1,379.0 1,387.5 (1%)
Deferred revenue (322.4) (745.2) 57%
Borrowings (756.2) (485.7) (56%)
Lease liabilities (562.1) (672.7) 16%
Deferred taxation (36.7) (78.7) 53%
Derivative financial instruments (66.2) (191.5) 65%
Net assets held for sale - 66.4 (100%)
----------------------------------------- ---------- -------- -------
Total shareholders' equity 964.2 634.1 52%
========================================= ========== ======== =======
(a) Stated excluding derivative financial instruments.
(b) Stated excluding cash and cash equivalents, deferred
revenue, borrowings, lease liabilities and derivative financial
instruments.
Total shareholders' equity increased by GBP330.1m (2020:
GBP56.2m) primarily comprising the net proceeds of share placings
of GBP580.4m offsetting a loss after taxation of GBP271.2m (2020:
GBP116.0m profit), and a favourable movement of GBP23.9m (2020:
GBP48.8m adverse) in the cash flow hedging and cost of hedging
reserves, largely a result of the settlement of prior year
out-of-the-money jet fuel forward contracts and less volatility in
commodity prices at the current year end.
Events Subsequent to 31 March 2021
On 31 May 2021, Jet2 plc signed a new unsecured GBP150.0m term
loan maturing in September 2023, as further liquidity to enhance
its balance sheet capability and flexibility.
In addition, on 3 June 2021, Jet2 plc announced the successful
issuance of GBP387.4m of senior unsecured Convertible Bonds due in
2026, carrying a coupon of 1.625% per annum. The bonds will be
convertible into new and/or existing ordinary shares of the Company
if the initial conversion price set at GBP18.06, representing a
premium of 40% above the reference share price of GBP12.90, is
exceeded prior to June 2026.
The proceeds of the bond issuance will be used to strengthen
Jet2 plc's liquidity further and position the Company for a strong
recovery as lockdown restrictions are lifted, through fleet growth
and fleet renewal opportunities.
These transactions, together, further improve the ability for
Jet2.com and Jet2holidays to capitalise on any upturn opportunities
as the international travel market re-opens.
We will continue to take every step necessary to preserve cash
and enhance liquidity to ensure both Jet2.com and Jet2holidays are
equipped to deal with this most challenging of trading environments
and also best positioned for a full return to operations in a
stable financial position, to the benefit of all stakeholders.
___________________________
Gary Brown
Group Chief Financial Officer
8 July 2021
Leisure Travel Key Performance Change
Indicators 2021 2020
---------------------------------------- ------------ ------------ -------
Number of routes operated during
the year 224 355 (37%)
Leisure Travel sector seats available
(capacity) 2.00m 15.85m (87%)
Leisure Travel passenger sectors
flown 1.32m 14.62m (91%)
(26.2
Leisure Travel load factor 66.0% 92.2% ppts)
Flight-only passenger sectors flown 0.56m 7.06m (92%)
Package holiday customers 0.37m 3.77m (90%)
Flight-only ticket yield per passenger
sector (excl. taxes) GBP95.24 GBP85.59 11%
Average package holiday price GBP676 GBP687 (2%)
Non-ticket revenue per passenger
sector GBP29.10 GBP24.91 17%
Average hedged price of fuel (per
tonne) $483 $629 (23%)
Advance sales made as at 31 March GBP1,162.4m GBP1,679.2m (31%)
---------------------------------------- ------------ ------------ -------
For further information please contact:
Jet2 plc
Philip Meeson, Executive Chairman
Gary Brown, Group Chief Financial 0113 239
Officer 7692
Cenkos Securities plc
Nominated Adviser 020 7397
Katy Birkin / Camilla Hume 8900
Canaccord Genuity
Joint Broker 020 7523
Adam James 8000
Jefferies International Limited
Joint Broker 020 7029
Ed Matthews 8000
Buchanan
Financial PR 020 7466
Richard Oldworth 5000
This announcement may include statements that are, or may be
deemed to be, "forward-looking statements" (including words such as
"believe", "expect", "estimate", "intend", "anticipate" and words
of similar meaning). By their nature, forward-looking statements
involve risk and uncertainty since they relate to future events and
circumstances, and actual results may, and often do, differ
materially from any forward-looking statements. Any forward-looking
statements in this announcement reflect management's view with
respect to future events as at the date of this announcement. Save
as required by applicable law, the Company undertakes no obligation
to publicly revise any forward-looking statements in this
announcement, whether following any change in its expectations or
to reflect events or circumstances after the date of this
announcement.
COnsolidated income statement (unaudited)
for the year ended 31 March 2021
Results for Results for
the the
year ended year ended
31 March 2021 31 March 2020
GBPm GBPm
Revenue 395.4 3,584.7
Net operating expenses (731.5) (3,291.7)
Exceptional item - hedge ineffectiveness - (108.4)
------------------------------------------ --------------- ---------------
Operating (loss) / profit (336.1) 184.6
Finance income 2.0 14.5
Finance expense (40.5) (44.0)
Net FX revaluation gains / (losses) 3.9 (8.1)
------------------------------------------ --------------- ---------------
Net financing expense (34.6) (37.6)
Profit on disposal of property, plant
and equipment 0.8 0.7
(Loss) / profit before taxation (369.9) 147.7
Taxation 70.4 (36.1)
------------------------------------------ --------------- ---------------
(Loss) / profit for the year from
continuing operations (299.5) 111.6
Profit after taxation from discontinued
operating activities* 1.8 4.4
Profit on disposal of discontinued 26.5 -
operations*
------------------------------------------ --------------- ---------------
Profit for the year from discontinued
operations* 28.3 4.4
------------------------------------------ --------------- ---------------
(Loss) / profit for the year (271.2) 116.0
all attributable to equity shareholders
of the Parent
========================================== =============== ===============
Earnings per share from continuing operations
- basic (166.9p) 75.0p
- diluted (166.9p) 74.8p
Earnings per share from total operations
- basic (151.2p) 77.9p
- diluted (151.2p) 77.8p
----------------------------------------------- --------- ------
* The Group has classified its Distribution & Logistics
segment as a discontinued operation as detailed in Note 7.
Consolidated statement of comprehensive income (UNAUDITED)
for the year ended 31 March 2021
Year ended Year ended
31 March 31 March
2021 2020
GBPm GBPm
------------------------------------------ --------------- -----------
(Loss) / profit for the year (271.2) 116.0
Other comprehensive (expense) / income
Items that are or may be reclassified
subsequently to profit or loss:
Cash flow hedges:
Fair value losses (23.6) (68.6)
Add back losses transferred to income
statement 55.0 5.0
Cost of hedging reserve - changes in
fair value (1.9) 2.9
Related taxation (charge) / credit (5.6) 11.9
Revaluation of foreign operations (3.4) 3.9
------------------------------------------ --------------- -----------
20.5 (44.9)
Total comprehensive (expense) / income
for the year (250.7) 71.1
all attributable to equity shareholders
of the Parent
========================================== =============== ===========
Total comprehensive (expense) / income
for the year arises from:
Continuing operations (279.0) 66.7
Discontinued operations* 28.3 4.4
------------------------------------------ --------------- -------------
Total comprehensive (expense) / income (250.7) 71.1
========================================== =============== =============
* The Group has classified its Distribution & Logistics
segment as a discontinued operation as detailed in Note 7.
Consolidated Statement of Financial Position (UNAUDITED)
at 31 March 2021
2021 2020
GBPm GBPm
---------------------------------- -------- --------
Non-current assets
Intangible assets 26.8 26.8
Property, plant and equipment 836.6 931.8
Right-of-use assets 462.9 534.1
Derivative financial instruments 9.4 25.1
----------------------------------- --------
1,335.7 1,517.8
---------------------------------- -------- --------
Current assets
Inventories 1.0 1.3
Trade and other receivables 133.8 294.1
Derivative financial instruments 23.5 53.9
Cash and cash equivalents 1,379.0 1,387.5
Assets held for sale* - 128.2
----------------------------------- -------- --------
1,537.3 1,865.0
---------------------------------- -------- --------
Total assets 2,873.0 3,382.8
----------------------------------- -------- --------
Current liabilities
Trade and other payables 69.8 366.4
Deferred revenue 278.0 736.0
Borrowings 322.5 104.4
Lease liabilities 67.1 76.2
Provisions and liabilities 62.5 67.7
Derivative financial instruments 58.3 216.5
Liabilities held for sale* - 61.8
----------------------------------- -------- --------
858.2 1,629.0
---------------------------------- -------- --------
Non-current liabilities
Deferred revenue 44.4 9.2
Borrowings 433.7 381.3
Lease liabilities 495.0 596.5
Derivative financial instruments 40.8 54.0
Deferred taxation 36.7 78.7
----------------------------------- --------
1,050.6 1,119.7
---------------------------------- -------- --------
Total liabilities 1,908.8 2,748.7
----------------------------------- -------- --------
Net assets 964.2 634.1
=================================== ======== ========
Shareholders' equity
Share capital 2.7 1.9
Share premium 19.8 12.9
Cash flow hedging reserve (44.2) (69.6)
Cost of hedging reserve 0.8 2.3
Other reserves (0.1) 3.3
Retained earnings 985.2 683.3
Total shareholders' equity 964.2 634.1
=================================== ======== ========
* As at the year ended 31 March 2020, the Group classified its
Distribution & Logistics segment as a discontinued operation,
with its associated assets and liabilities held for sale, as
detailed in Note 7.
consolidated statement of cash flows (UNAUDITED)
for the year ended 31 March 2021
2021 2020
GBPm GBPm
(Loss) / profit from continuing operations
before taxation (369.9) 147.7
Profit from discontinued operations before
taxation* 28.6 5.5
Net financing expense (including Net
FX revaluation (gains) / losses) 34.8 38.8
Hedge ineffectiveness (1.7) 108.4
Depreciation 166.1 218.7
Profit on disposal of discontinued operations* (26.5) -
Profit on disposal of property, plant
and equipment (0.8) (0.9)
Equity settled share-based payments 0.4 0.5
Operating cash flows before movement
in working capital (169.0) 518.7
------------------------------------------------- -------- --------
Decrease / (increase) in inventories 0.3 (0.3)
Decrease / (increase) in trade and other
receivables 160.3 (7.9)
(Decrease) / increase in trade and other
payables (296.4) 172.8
Decrease in deferred revenue (422.8) (194.7)
(Decrease) / increase in provisions and
liabilities (2.0) 8.6
Movement in assets held for sale 3.9 -
Payment on settlement of derivatives (101.6) -
------------------------------------------------ -------- --------
Cash (used in) / generated from operations (827.3) 497.2
------------------------------------------------- -------- --------
Interest received 2.0 14.5
Interest paid - of which GBP21.8m (2020:
GBP23.5m) relates to leases (36.7) (40.5)
Income taxes refunded / (paid) 27.2 (28.1)
Net cash (used in) / generated from operating
activities (834.8) 443.1
------------------------------------------------- -------- --------
Cash flows generated from / (used in)
investing activities
Purchase of intangibles - (26.8)
Purchase of property, plant and equipment (36.2) (210.3)
Purchase of right-of-use assets (1.2) (1.0)
Proceeds from sale of discontinued operations 76.0 -
(net of cash disposed)
Proceeds from sale of property, plant
and equipment 2.5 2.5
Net decrease in money market deposits - 50.0
Net cash generated from / (used in) investing
activities 41.1 (185.6)
------------------------------------------------- -------- --------
Cash generated from / (used in) financing
activities
Repayment of borrowings (14.9) (38.0)
New loans advanced 301.1 65.0
Payment of lease liabilities (69.2) (99.7)
Proceeds on issue of shares 580.4 0.1
Equity dividends paid - (15.5)
Net cash generated from / (used in) financing
activities 797.4 (88.1)
------------------------------------------------- -------- --------
Net increase in cash in the year 3.7 169.4
Cash and cash equivalents at beginning
of year 1,400.2 1,224.3
Effect of foreign exchange rate changes (24.9) 6.5
Cash and cash equivalents at end of year 1,379.0 1,400.2
------------------------------------------------- -------- --------
- From continuing operations 1,379.0 1,387.5
------------------------------------------------- -------- --------
- From discontinued operations* - 12.7
================================================= ======== ========
* The Group has classified its Distribution & Logistics
segment as a discontinued operation as detailed in Note 7.
Consolidated statement of changes in equity (UNAUDITED)
for the year ended 31 March 2021
Share Share Cash flow Cost Other Merger Retained Total
capital premium hedging of hedging reserves reserve earnings shareholders'
reserve reserve equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- --------- --------- ---------- ------------ ---------- --------- ---------- ----------------
Balance at
31 March
2019 1.9 12.8 (18.5) - (0.6) - 582.3 577.9
Total
comprehensive
income - - (51.1) 2.3 3.9 - 116.0 71.1
Issue of
share capital - 0.1 - - - - - 0.1
Dividends
paid in the
year - - - - - - (15.5) (15.5)
Share-based
payments - - - - - - 0.5 0.5
Balance at
31 March
2020 1.9 12.9 (69.6) 2.3 3.3 - 683.3 634.1
Total
comprehensive
income - - 25.4 (1.5) (3.4) - (271.2) (250.7)
Issue of
share capital 0.8 6.9 - - - 572.7 - 580.4
Reserves
transfer (572.7) 572.7 -
Share-based
payments - - - - - - 0.4 0.4
Balance at
31 March
2021 2.7 19.8 (44.2) 0.8 (0.1) - 985.2 964.2
================= ========= ========= ========== ============ ========== ========= ========== ================
Notes to the UNAUDITED PRELIMINARY ANNOUNCEMENT
for the year ended 31 March 2021
1. Accounting policies and general information
Basis of preparation
The financial information in this preliminary announcement has
been prepared and approved by the Board of Directors in accordance
with International Accounting Standards in conformity with the
requirements of the Companies Act 2006 ("Adopted IFRS").
Whilst the information included in this preliminary announcement
has been prepared in accordance with Adopted IFRS, the financial
information contained within this preliminary announcement for the
years ended 31 March 2021 and 31 March 2020 does not itself contain
sufficient information to comply with Adopted IFRS and nor does it
comprise statutory financial statements within the meaning of
section 434 of the Companies Act 2006.
The financial information for 2020 is derived from the statutory
accounts for the year ended 31 March 2020, which have been
delivered to the Registrar of Companies. The Auditor has reported
on the year ended 31 March 2020 accounts; their report:
i. was unqualified;
ii. did not include a reference to any matters to which the
Auditor drew attention by way of emphasis without qualifying
their report; and
iii. did not contain a statement under section 498 (2) or (3)
of the Companies Act 2006.
The statutory accounts for the year ended 31 March 2021 will be
finalised on the basis of the financial information presented by
the Board of Directors in this preliminary announcement and will be
delivered to the Registrar of Companies in due course.
The 2021 Annual Report and Accounts (including the Auditor's
Report) will be made available to shareholders during the week
commencing 9 August 2021. The Jet2 plc Annual General Meeting will
be held on 2 September 2021.
The financial information has been prepared under the historical
cost convention except for all derivative financial instruments,
which have been measured at fair value.
The Group's financial information 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
cash flows through to 31 March 2024.
For the purpose of assessing the appropriateness of the
preparation of the Group's accounts on a going concern basis, two
financial forecast scenarios have been prepared:
-- A base case which assumes flying restarts in July 2021 with a
gradual ramp up of flying operations for the Summer 21 season,
initially running at reduced average load factors; and
-- Due to the continuing uncertainty of how Government imposed
travel restrictions will evolve, a downside scenario was modelled
to assess the liquidity position of the Group in an extended "no
fly" period through to 1 April 2022, followed by a rapid ramp up to
a full flying programme in Summer 2022 thereafter.
The forecasts consider the current cash position and an
assessment of the principal areas of risk and uncertainty as
described in more detail in the Group's Annual Report and Accounts,
paying particular attention to the impact of Covid-19.
In addition to forecasting the cost base of the Group, both
scenarios incorporated full use of the UK Government's Coronavirus
Job Retention Scheme up until its current conclusion on 30
September 2021 and assume that the Group's GBP200m Covid Corporate
Financing Facility ("CCFF") is repaid on maturity in March
2022.
The Directors have also considered: the liquidity actions taken
since 31 March 2021, being the signing of a new unsecured GBP150.0m
term loan maturing in September 2023 and the issuance of a
convertible bond of GBP387.4m maturing in June 2026; plus the
availability of banking facilities and their associated revised
covenant measurements.
The Directors concluded that given the combination of a closing
cash balance of GBP1,379.0m at 31 March 2021, together with the
additional actions taken to increase liquidity since the year end
and the forecast monthly cash utilisation, that under both the base
and downside scenarios, the Group would have sufficient liquidity
throughout a period of 12 months from the date of approval of the
financial statements at the end of July 2021. In addition, the
Group is forecast to meet its revised banking covenants at 30
September 2021 and 31 March 2022 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 financial statements. For this reason, they
continue to adopt the going concern basis in preparing the
financial statements for the year ended 31 March 2021.
Accounting policies
The accounting policies adopted are consistent with those
described in the Annual Report and Accounts for the year ended 31
March 2020, aside from those described below which are in addition
to the policies previously disclosed.
Government Grants
Government grants are recognised where there is reasonable
assurance that the grant will be received. Grants that compensate
the Group for expenses incurred are recognised in the Consolidated
Income Statement in the relevant operating expenses line in the
periods in which the expenses are recognised.
Loans provided and/or guaranteed by governments that represent
market rates of interest are recorded at the amount of the proceeds
received and recognised within Borrowings. All existing loans are
considered to be at market value.
Reserves
The merger reserve represents the total premium to nominal value
of share issues effected by way of a Jersey cash box structure,
offset by incremental transaction costs. During the year, the Group
made two such share placings totalling 64,948,548 of ordinary
shares at a total premium to nominal value of GBP585.8m and
incurred GBP13.1m of incremental transaction costs, resulting in a
net total premium of GBP572.7m. The Group has applied merger relief
under the Companies Act 2006 and recognised a merger reserve of
GBP572.7m which represents this net premium realised. Following the
liquidation of the Jersey cashbox entities, this merger reserve has
become distributable. As a result, the Group has chosen to transfer
this amount to its Retained Earnings reserve.
2. New IFRS and amendments to IAS and interpretations
The following amendments to IFRS became mandatorily effective in
the current year and did not have a material impact.
Applying to
International Financial Reporting Standards accounting periods
beginning after
----------------------------------------------------- --------------------
IAS 1 - Presentation of Financial Statements January 2020
IAS 8 - Accounting Policies, Changes in Accounting January 2020
Estimates and Errors - Definition of material
IFRS 3 - Business Combinations - Definition of January 2020
business
Revised conceptual framework for financial reporting January 2020
IFRS 16 - Leases - Amendments in relation to June 2020
Covid-19 related rent concessions
----------------------------------------------------- --------------------
In respect of the amendment to IFRS 16 - Leases - published by
the IASB on 28 May 2020, the amendment provides lessees with an
exemption from assessing whether a Covid-19 related rent concession
is a lease modification. Lessees applying the exemption have to
account for the rent concessions as if they were not lease
modifications. The amendments are available for rent concessions
reducing lease payments due on or before 30 June 2022.
The following amendments to IFRS have an effective date after
the date of these financial statements.
Applying to
International Financial Reporting Standards accounting periods
beginning after
-------------------------------------------------------- --------------------
New standards
IFRS 17 - Insurance Contracts January 2023
Amendments to existing standards
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 January 2021
and IFRS 16 - Interest Rate Benchmark Reform
Phase 2
Reference to the Conceptual Framework - Amendments January 2022
to
IFRS 3
Property, Plant and Equipment: Proceeds before January 2022
Intended Use - Amendments to IAS 16
Onerous Contracts - Costs of Fulfilling a Contract January 2022
- Amendments to IAS 37
Classification of Liabilities as Current or Non-current January 2023
- Amendments to IAS 1
-------------------------------------------------------- --------------------
The application of these standards and interpretations is not
expected to have a material impact on the Group's reported
financial performance or position.
In respect of the amendments to Interest Rate Benchmark Reform,
the only interest rate benchmarks which the Group are exposed to
and that are subject to reform are LIBOR and US LIBOR. These
exposures relate to the Revolving Credit Facility, Aircraft
Financing and any associated interest rate swaps.
The Group is closely monitoring the market and output from the
various industry working groups managing the transition to new
benchmark interest rates. This includes announcements made by LIBOR
regulators (including the Financial Conduct Authority (FCA))
regarding the transition away from LIBOR to Sterling Overnight
Index Average Rate (SONIA).
3. 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 Group disposed of its
Distribution & Logistics segment in May 2020; consequently, the
information presented to the CODM for the purpose of resource
allocation and assessment of the Group's performance now relates to
its Leisure Travel segment as shown in the Consolidated Income
Statement.
The results of the Distribution & Logistics segment are
presented in Note 7 (i) along with the relevant segment information
for its contribution to the Group's performance during two months
of the financial period in Note 7 (ii).
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are eliminated
on consolidation.
Leisure Travel other segment 2021 2020
information
GBPm GBPm
Unaudited
--------------------------------- ---------- ----------
Intangible additions - 26.8
Property, plant and equipment
additions 36.2 207.9
Right-of-use additions 5.1 55.9
Depreciation of property, plant
and equipment (115.2) (134.2)
Depreciation of right-of-use
assets (48.5) (70.3)
Share-based payments (0.4) (0.5)
Asset and liabilities
Segment assets 2,873.0 3,254.6
Segment liabilities (1,908.8) (2,686.9)
----------------------------------- ---------- ----------
Net assets 964.2 567.7
----------------------------------- ---------- ----------
4. Net operating expenses
2021 2020
GBPm GBPm
Unaudited
------------------------------------------------- ---------- --------
Direct operating costs:
Accommodation costs 113.0 1,340.0
Fuel 79.9 359.1
Landing, navigation and third-party handling 34.3 329.5
Maintenance costs 25.7 100.2
Aircraft rentals - 31.8
Agent commission 9.0 81.4
In-flight cost of sales 8.2 57.4
Other direct operating costs 2.3 132.8
Staff costs including agency staff 224.2 444.7
Depreciation of property, plant and equipment 115.2 134.2
Depreciation of right-of-use assets 48.5 70.3
Other operating charges 71.2 210.3
------------------------------------------------- ---------- --------
Total net operating expenses (excluding
hedge ineffectiveness) 731.5 3,291.7
Exceptional item - Hedge ineffectiveness - 108.4
------------------------------------------------- ---------- --------
Total net operating expenses 731.5 3,400.1
================================================= ========== ========
In the financial year ended 31 March 2020, the Group recorded
hedge ineffectiveness of GBP108.4m as an exceptional item in order
to highlight the quantum of this balance to the users of the
financial statements.
For the year ended 31 March 2021, the impact of hedge
ineffectiveness is significantly lower and as a result has been
recorded either within net operating expenses or within Net FX
revaluation gains dependent on the nature of the underlying hedge
instrument.
5. Net financing expense
2021 2020
GBPm GBPm
Unaudited
---------------------------------------- ---------- -------
Finance income 2.0 14.5
Interest payable on aircraft and other
loans (17.8) (17.6)
Interest payable on lease liabilities (22.7) (26.4)
Net foreign exchange revaluation gains
/ (losses) 3.9 (8.1)
---------------------------------------- ---------- -------
Net financing expense (34.6) (37.6)
======================================== ========== =======
6. Earnings per share from continuing operations
Basic earnings per share is calculated by dividing the (loss) /
profit from continuing operations attributable to the equity owners
of the Parent Company by the weighted average number of ordinary
shares in issue during the year.
Diluted earnings per share is calculated by dividing the (loss)
/ profit from continuing operations attributable to the equity
owners of the Parent Company by the weighted average number of
ordinary shares in issue during the year, adjusted for the effects
of potentially dilutive instruments.
In accordance with IAS 33 - Earnings per Share, the Group shows
no dilutive impact in respect of its share options and Deferred
Awards for the year ended 31 March 2021 as their conversion to
ordinary shares would decrease the loss per share from continuing
operations.
2021
Unaudited 2020
Earnings Weighted EPS Earnings Weighted EPS
Earnings GBPm average pence GBPm average pence
per share number number
from continuing of shares of shares
operations millions millions
---------------------- --------- ----------- -------- --------- ----------- -------
Basic EPS
(Loss) /
profit attributable
to ordinary
shareholders (299.5) 179.4 (166.9) 111.6 148.9 75.0
---------------------- --------- ----------- -------- --------- ----------- -------
Effect of dilutive instruments
Share options
and Deferred
Awards - - - - 0.2 (0.2)
Diluted EPS (299.5) 179.4 (166.9) 111.6 149.1 74.8
---------------------- --------- ----------- -------- --------- ----------- -------
7. Discontinued Operations
On 31 May 2020, the Group sold its Distribution & Logistics
operating segment, Fowler Welch. The Distribution & Logistics
segment was previously classified as held-for-sale and as a
discontinued operation.
The profit after taxation for the two month period from
discontinued operating activities was GBP1.8m (2020: GBP4.4m for
the twelve month period).
In addition, a profit of GBP26.5m (2020: nil) was generated on
disposal of these discontinued operations, for which the Group did
not incur a corporation tax charge.
This results in a total discontinued earnings per share of 15.8p
(2020: 3.0p).
(i) Results of discontinued operations
2021 2020
GBPm GBPm
Unaudited
------------------------------------------ ---------- --------
Revenue 27.6 166.8
Net operating expenses (25.3) (160.3)
------------------------------------------ ---------- --------
Operating profit 2.3 6.5
Net financing expense (0.2) (1.2)
Profit on disposal of property, plant
and equipment - 0.2
Profit before taxation from discontinued
operating activities 2.1 5.5
Taxation (0.3) (1.1)
Profit after taxation from discontinued
operating activities 1.8 4.4
Profit on disposal of discontinued 26.5 -
operations (Note 7 (ii))
------------------------------------------ ---------- --------
Total profit after taxation from
discontinued operations 28.3 4.4
========================================== ========== ========
Earnings per share
- basic 15.8p 3.0p
- diluted 15.8p 3.0p
------------------------------------------ ---------- --------
2021 2020
Unaudited
Earnings per share Earnings Weighted average EPS Earnings Weighted EPS
from discontinued number of average number
operations shares of shares
GBPm millions Pence GBPm millions Pence
--------------------------- --------- ----------------- ------ --------- ---------------- ------
Basic EPS
Profit attributable
to ordinary shareholders 28.3 179.4 15.8 4.4 148.9 3.0
--------------------------- --------- ----------------- ------ --------- ---------------- ------
Effect of dilutive
instruments
Share options and - - - - 0.2 -
Deferred Awards
Diluted EPS 28.3 179.4 15.8 4.4 149.1 3.0
--------------------------- --------- ----------------- ------ --------- ---------------- ------
(ii) Segmental results of discontinued operations
Distribution & Logistics other 2021 2020
segment information
GBPm GBPm
Unaudited
--------------------------------- ---------- -------
Property, plant and equipment
additions 0.1 2.4
Right-of-use additions - 25.0
Depreciation of property, plant
and equipment (0.4) (2.4)
Depreciation of right-of-use
assets (2.0) (11.8)
Asset and liabilities
Segment assets - 128.2
Segment liabilities - (61.8)
---------------------------------- ---------- -------
Net assets - 66.4
---------------------------------- ---------- -------
(iii) Effect of disposal on financial position of Group
2021
GBPm
Unaudited
Consideration received (net of sale
costs) 94.6
Less: Cash disposed of (18.6)
------------------------------------- -----------
Proceeds from sale of discontinued
operations
(net of cash disposed) 76.0
Net Assets disposed of:
Goodwill 6.8
Property, plant and equipment 37.2
Right-of-use assets 34.9
Inventories 0.6
Trade and other receivables 33.4
Trade and other payables (25.6)
Deferred revenue 0.2
Lease liabilities (36.2)
Provisions and liabilities (0.7)
Deferred taxation (1.1)
------------------------------------- -----------
Net Assets 49.5
Profit on disposal of discontinued
operations 26.5
------------------------------------- -----------
(iv) Cash flows from discontinued operations
2021 2020
GBPm GBPm
Unaudited
--------------------------------------- ---------- -----------
Net cash generated from operating
activities 8.0 18.4
Net cash used in investing activities (0.1) (1.4)
Net cash used in financing activities (2.0) (11.7)
Net increase in cash in the period 5.9 5.3
Cash and cash equivalents at
beginning of period 12.7 7.4
--------------------------------------- ---------- -----------
Cash and cash equivalents at
disposal / end of period 18.6 12.7
8. 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.
Pre-exceptional (loss) / profit before FX revaluation and
taxation
Pre-exceptional (loss) / profit 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
and exceptional items.
Pre-exceptional EBITDA from continuing operations
Pre-exceptional Earnings before interest, tax, depreciation and
amortisation (EBITDA) from continuing operations is included as an
alternative performance measure in order to aid users in
understanding the underlying operating performance of the
Group.
These can be reconciled to the IFRS measure of (loss) / profit
before taxation as below:
2021 2020
GBPm GBPm
Unaudited
----------- ------
(Loss) / profit before taxation (369.9) 147.7
Exceptional item - hedge ineffectiveness - 108.4
Net FX revaluation (gains) / losses (3.9) 8.1
----------- ------
Pre-exceptional (loss) / profit before
FX revaluation and taxation (373.8) 264.2
Net financing expense (excluding Net
FX revaluation (gains) / losses) 38.5 29.5
Depreciation 163.7 204.5
----------- ------
Pre-exceptional EBITDA from continuing
operations (171.6) 498.2
=========== ======
Pre-exceptional (loss) / profit before taxation including
discontinued operations is shown to illustrate the results before
taxation of the full Group and calculated as shown below:
2021 2020
GBPm GBPm
Unaudited
----------- ------
(Loss) / profit before taxation (from
continuing operations) (369.9) 147.7
Profit before taxation from discontinued
operating activities 2.1 5.5
Profit on disposal of discontinued operations 26.5 -
Exceptional item - hedge ineffectiveness - 108.4
----------- ------
Pre-exceptional (loss) / profit before
taxation including discontinued operations (341.3) 261.6
----------- ------
9. Post Balance Sheet Events
On 31 May 2021, Jet2 plc signed a new unsecured GBP150.0m term
loan maturing in September 2023, as further liquidity to enhance
its balance sheet capability and flexibility.
In addition, on 3 June 2021, Jet2 plc announced the successful
issuance of GBP387.4m of senior unsecured Convertible Bonds due in
2026, carrying a coupon of 1.625% per annum. The bonds will be
convertible into new and/or existing ordinary shares of the Company
if the initial conversion price set at GBP18.06, representing a
premium of 40% above the reference share price of GBP12.90, is
exceeded prior to June 2026.
The proceeds of the bond issuance will be used to strengthen
Jet2 plc's liquidity further and position the Company for a strong
recovery as lockdown restrictions are lifted, through fleet growth
and fleet renewal opportunities.
10. Market Abuse Regulation (MAR) Disclosure
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.
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END
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