REG - Jet2 PLC - Final Results
07/07/2022 07:17
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RNS Number : 5831R Jet2 PLC 07 July 2022
Jet2 plc
PRELIMINARY UNAUDITED RESULTS FOR YEAR ENDED 31 MARCH 2022
Jet2 plc, the Leisure Travel group (the "Group" or the "Company"), announces
its preliminary results for the year ended 31 March 2022. These results are
presented in accordance with UK-adopted international accounting standards and
applicable law.
* Overall liquidity improved significantly with total cash balances (including
money market deposits) at the year-end of £2,228.5m (2021: £1,379.0m), an
increase of 62%. 'Own Cash'† which excludes customer deposits increased by
2% to £1,083.8m (2021: £1,061.7m).
* Although seat capacity increased to 7.01m (2021: 2.00m), and average load
factor % increased to 69.2% (2021: 66.0%), fragile consumer confidence arising
from the three-weekly UK Government "traffic light" reviews during Summer 21,
meant customer bookings were significantly closer to departure than normal,
leading to a reduction in average flight-only ticket yield per passenger
sector of 29% year on year.
* As a result, Jet2.com flew a total of 4.85m single sector passengers, an
increase of 267% (2021: 1.32m). Jet2holidays package holiday customers
represented 51% (2021: 58%) of the overall mix of flown passengers at 1.29m
customers (2021: 0.37m), an increase of 249%.
* Group operating loss reduced by 4% to £323.9m (2021: £336.1m) and Group loss
before foreign exchange revaluation and taxation increased by 1% to £376.2m
(2021: £373.8m).
* In order to meet the future anticipated growth of our Leisure Travel business
and to refresh our existing aircraft fleet, we were delighted to enter into
agreement with Airbus for up to 75 new A321 neo aircraft, of which 60 are now
firm orders.
* Pleasingly, over 35% of our Summer 22 bookings are completely new customers to
Jet2 and package holiday bookings are displaying a materially higher mix of
the total up 13ppts. Average load factors are only 1.4ppts behind Summer 19
(against the 14% increase in seat capacity), whilst pricing remains robust.
* Although we invested well ahead of the Summer 22 season to ensure we had
adequate resources to be able to operate efficiently, we have been directly
impacted by the broader disruption seen across the aviation sector and its
supply chains. Many Suppliers have been woefully ill-prepared and poorly
resourced for the volume of customers they could reasonably expect,
inexcusable, bearing in mind our flights have been on sale for many months and
our load factors are quite normal.
* Consequently, Group performance for the financial year ending 31 March 2023
very much depends on how quickly the broader aviation sector returns to some
level of stability, as well as strength of bookings for the remainder of
Summer and the second half of the financial year, a period for which we still
have limited visibility.
* In the medium term, inflationary pressures coupled with the uncertain UK
economic outlook for consumers, lead us to conclude that prices are likely to
come under some pressure. However, we believe we have the right product for
these tougher times.
* The end-to-end package holiday is a higher yielding, resilient and popular
product in difficult economic times and the control of our own seat supply and
our frequency of flying, allow us to offer truly variable duration holidays,
critical in allowing our Customers the ability to flex their holiday
arrangements to suit their individual budgets. Our 'Customer First' ethos runs
deep throughout our company culture with 'People, Service, Profits' our
guiding principles.
* With our healthy Own Cash position, well-capitalised Balance Sheet and having
retained much of our knowledgeable and skilled pre-Covid colleague base, the
Group remains well-positioned to grow its leisure travel offering. And, for
the long-term, with our customer focused approach and Right Product for these
Tougher Times, we believe that opportunities for us to grow share as a
financially strong and trusted package holiday provider will only increase.
† Further information on the calculation of this measure can be found in
Note 8.
OUR CHAIRMAN'S STATEMENT
Back in April 2020 it was hard to imagine a scenario where the Leisure Travel
industry would suffer such a prolonged period of extraordinary financial and
operational challenges. However, the Covid-19 pandemic and its far-reaching
consequences have tested us all.
Fortunately, the many decisive actions taken during the previous financial
year meant the business entered the new financial year in April 2021 with a
healthy 'Own Cash'(†) (excluding advance customer deposits) balance from
which to make considered decisions, meaning our UK Leisure Travel Business -
which encompasses Jet2holidays, our acclaimed ATOL licensed package holidays
provider and Jet2.com, our award-winning airline - was well placed to weather
a further period of difficult trading conditions, but was also able to respond
swiftly once travel restrictions were finally relaxed and customer confidence
began to recover.
Appreciation
Before commencing the detailed Statement, I want to record the Board's huge
appreciation for all our Colleagues' tremendous support and efforts over
recent months, which have enabled Jet2.com and Jet2holidays to take our
Customers on their holidays. This has been achieved despite the currently very
challenging airport, onboard and in-destination working environments, which
have been exacerbated by many of our Suppliers' failure to adequately plan and
resource for the post-Covid operational start up, as has been widely reported
in the media.
Broadly, most of our 10 UK Base Airports have been woefully ill-prepared and
poorly resourced for the volume of customers they could reasonably expect, as
have other suppliers, such as Onboard Caterers and providers of Airport PRM
(Passengers with Reduced Mobility) services. Inexcusable, bearing in mind our
flights have been on sale for many months and our load factors are quite
normal.
Theirs and the Ground Handling suppliers' often atrocious customer service,
long queues for Security Search, lack of Staff and congestion in Baggage
Handling Areas, and the consequent airport congestion, together with the
frequent lack of onboard catering supplies, have each contributed to a very
much poorer experience at the start and finish of our Customers' holidays than
they were entitled to expect. Inevitably, these customer-facing challenges
have put extra pressure on our Colleagues, both in the UK, onboard our
aircraft and in our holiday destinations.
This difficult return to normal operations has occurred simply because of the
lack of planning, preparedness and unwillingness to invest by many Airports
and associated Suppliers.
As a result, Jet2.com and Jet2holidays management colleagues have worked hard
to fully involve themselves in our operations and to ensure that our
Colleagues are supported, encouraged, rewarded and properly appreciated. In
this respect, we are very pleased to have awarded all our Colleagues a total
pay increase of 8% with a further £1k to be paid to all Colleagues at the end
of Summer 22.
We sincerely thank all our Colleagues for the support they have given and are
giving our Company and our Customers at this, regrettably, very challenging
time.
† Further information on the calculation of this measure can be found in
Note 8.
Results for the financial year
Though the successful rollout of vaccines in the UK and Europe throughout 2021
signalled progress towards normality, the first three months of the financial
year were very similar to those of the prior year, with extensive
international travel restrictions imposed by the UK Government and the Group
not permitted to operate any scheduled flights from 1 April to 24 June 2021.
And, although the UK Government's decision to allow quarantine-free travel to
Amber list destinations for those fully vaccinated from 19 July 2021 was a
welcome step in the right direction, the limited number of Green destinations
and fragile consumer confidence arising from the three-weekly Government
"traffic light" reviews undertaken throughout the period, meant that customer
bookings were significantly closer to departure than normal which put
considerable pressure on pricing. Despite these challenges, the Group was able
to progressively tailor its flying programme as further destinations became
unrestricted and maintain a disciplined focus on cash generative flying.
The removal of the "traffic light" system in early October heralded a brief
hiatus from the impact of the virus as October and November flying operations
were relatively unhindered, though this short-lived stability was derailed by
the emergence of the Omicron variant in late November 2021 which led to the
reimposition of international travel restrictions until early January 2022.
The progressive easing of restrictions since, which culminated in the removal
of Covid related formalities including passenger locator forms during March
2022, meant the performance for both February and March was much improved and
trending towards historic seasonal norms as customer confidence to travel
strengthened.
Consequently, Jet2.com flew a total of 4.85m single sector passengers (2021:
1.32m) in the year with Jet2holidays package holiday customers representing
51% (2021: 58%) of the overall mix of flown passengers at 1.29m customers
(2021: 0.37m). The passenger volume growth contributed directly to an increase
in revenue to £1,231.7m (2021: £395.4m) and consequently a loss before FX
revaluation and taxation of £376.2m† (2021: £373.8m†).
After accounting for net FX revaluation losses of £12.6m (2021: £3.9m gain),
total loss before taxation from continuing operations was £388.8m (2021:
£369.9m).
† Further information on the calculation of this measure can be found in
Note 8.
Dividend
Basic earnings per share from continuing operations were (147.0p) (2021:
(166.9p)) and in consideration of the losses incurred, the Board does not
recommend the payment of a final dividend (2021: nil). The dividend policy
will continue to be monitored by the Board during the 2023 financial year.
Strategy
"We take people on holiday!"
Jet2holidays is the UK's largest package holiday provider 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®, or a holiday flight with
Jet2.com, the delivery of an attractive and memorable holiday experience
engenders loyalty and repeat bookings.
Our long-term ambition is: To be the UK's Leading and Best Leisure Travel
business. To further underpin this strategy and to broaden our geographic
reach, we were delighted to successfully commence operations from our new
Bristol base on 2 July 2021. The enthusiastic feedback we have received from
our new Bristol customers for our customer-centric leisure travel product
offering has been hugely encouraging, and we look forward to continuing to
grow in the South West of the UK.
Further, in late August and October 2021, we were delighted to announce that
in order to meet the future anticipated growth of our Leisure Travel business
and to refresh our existing aircraft fleet, we had entered into an agreement
with Airbus to purchase 51 new firm ordered A321 neo aircraft. We subsequently
exercised 9 of our associated purchase rights to take the firm ordered total
to 60 aircraft, with agreed flexibility to extend the order up to 75 aircraft.
The firm ordered aircraft are due for delivery between 2023 and 2029, and at
list price represented a total value of approximately $8.1bn, with a total
transaction value for up to 75 aircraft of approximately $10.1bn, though the
Company negotiated significant discounts from the list price.
We are delighted to have placed this order with Airbus and will be proud to
operate this aircraft, the first of which arrives in early 2023. The A321 neo
which has more seats than other aircraft in its class, 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. The Group will retain flexibility in determining the most favourable
method of financing the aircraft, which it expects will be through a
combination of internal resources and debt.
This order underlines 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. The introduction of the A321 neo will continue
to ensure that our Customers have a wonderfully comfortable and enjoyable
experience as they travel with us for their well-deserved Real Package
Holidays from Jet2holidays® or on scheduled holiday flights with Jet2.com.
Liquidity
The Group began the financial year with a strong and carefully managed balance
sheet with an 'Own Cash' balance of £1,061.7m† and a total cash balance of
£1,379.0m.
On 3 June 2021, the Group announced the successful issuance of £387.4m of
guaranteed senior unsecured convertible bonds due in 2026 carrying a coupon of
1.625%, the offering for which was significantly oversubscribed. The initial
conversion price was set at £18.06 representing a premium of 40% above the
reference share price of £12.90. The proceeds of the issuance strengthened
Jet2 plc's liquidity further and positioned the Company for a strong recovery,
through fleet growth and fleet renewal opportunities. Additionally, the Group
also secured a new £150.0m term loan, which matures in September 2023, from
its supportive relationship banks.
Given its strong liquidity position, helped in part by the progressive easing
of travel restrictions early in 2022, the Group comfortably repaid its £200m
Bank of England Covid Corporate Financing Facility ("CCFF") in March 2022.
Consequently, at 31 March 2022, the Group had a healthy 'Own Cash' balance of
£1,083.8m† and a total cash balance (including money market deposits) of
£2,228.5m.
† Further information on the calculation of this measure can be found in
Note 8.
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 firmly believe the way in which our Company responded to the pandemic will
be remembered by our Customers, and we are very proud of the way in which we
looked after our Customers in refunding over £1.7bn of their advance deposits
in a timely and accurate manner.
There is no better measure of how well we are performing in this regard than
recognition from the consumer champion Which? and its members. As well as
continuing to receive prestigious Which? Recommended Provider status for
Jet2.com, Jet2holidays and Jet2CityBreaks, Which? also recognised Jet2.com for
having the best record on delivering timely and accurate customer refunds for
holiday cancellations during the pandemic. Additionally, Jet2.com and
Jet2holidays have recently been named Travel Brand of the Year 2022, (for the
second time in five years) by Which? - acknowledgement of the way we have
treated our Customers, both during the pandemic and following the reopening of
international travel.
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. Even during
the most uncertain period in late Summer 2021, our Customers' desire to travel
remained intact as we saw bookings soar as destinations were able to reopen,
this despite onerous testing obligations and the threat of quarantine.
We also know that in times of uncertainty customers look to operators they can
trust and who offer them the best value for money. Therefore, ahead of Summer
2022, we have been resolutely focused on delivering the same industry-leading
levels of customer service that our Customers expect, investing considerable
sums in recruiting and training colleagues well in advance of our peak flying
programme operation to ensure the minimum of disruption and the best possible
passenger experience.
As a result of our unwavering focus to do what is right for our Customers, we
are confident they will be even more determined to enjoy the wonderful
experience of a well-deserved Jet2holiday. We remain completely committed to
doing our very best to ensure that 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.
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!
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 set us apart and enabled us to be consistently
recognised as an industry leader for our outstanding customer service.
In order for the Board to support our Colleagues as fully as possible, the
Group continued its use of the UK Government's Coronavirus Job Retention
Scheme ("CJRS") until its cessation in September, for which it received grants
of £30.1m (2021: £97.9m) in the financial year. These amounts continued to
be supplemented by our generous bespoke salary plan which saw the Group
substantially "top up" the CJRS funding on a sliding scale basis up to 100% of
full contractual salary for the lowest paid, to provide further financial
support for our loyal Colleagues. Subsequently, and as our operations began to
show signs of recovery, we were pleased to welcome back colleagues and were
also able to restore full contractual rates of pay.
The Board is pleased that its investment in fully supporting colleagues during
this turbulent period has resulted in a team 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.
Whilst the past two years 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. We truly believe in the principle of:
People, Service, Profits and no praise is high enough for our Colleagues who
remained resolutely loyal and helped us navigate this most difficult of
periods. I would therefore like to take this opportunity to sincerely thank
all our talented, committed and passionate colleagues who represent our 'Take
Me There' values every day for continuing to Work As One Team and being
dedicated to our business and our Customers throughout these unprecedented
times.
The Board
The Board recognises that it is responsible for the long-term success of the
Group, for its proper management and is accountable to shareholders in
generating long-term shareholder value by making decisions that ensure the
foundations of the business remain strong and sustainable in an ever-changing
marketplace.
The efficient size and composition of our Board, together with the breadth of
experience across the Group's Executive and Non-Executive Directors, allowed
us to respond quickly and effectively to the many complex challenges we faced
during the last two years, ensuring the business has emerged from the pandemic
period in as strong a position as possible.
Nevertheless, the Board's composition is regularly reviewed to ensure that it
maintains an appropriate balance of skill sets, background and experience to
enable it to oversee the execution of the Group's strategy and we will
continue to explore options to add further diversity to our Board structure in
order to take the Company forward.
Culture, Suppliers and Stakeholders
We recognise the importance of strong relationships with our many stakeholders
in helping to realise our growth plans. 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 and, notwithstanding the current operational challenges with our
Airport and Catering suppliers, these strong relationships are proving crucial
as we head towards our peak flying operation in Summer 2022.
We also recognise that paying our suppliers, including of course our hotel
partners, on time and in full is vital for their financial well-being and we
continued to do so throughout the pandemic. Under the 'Duty to report on
payment practices and performance' legislation, the average time taken to pay
supplier invoices during the year was 23.9 days (2021: 31.7 days) for Jet2.com
Limited and 27.5 days (2021: 34.7 days) for Jet2holidays Limited.
We engage with our shareholders and institutional investors where appropriate
and regularly meet at results presentations, individual investor meetings and
at the Annual General Meeting.
The Executive Directors and certain senior managers within the organisation
regularly engage with senior members of the UK Government and regulatory
bodies, with contact this past year continuing to be focused on the removal of
travel restrictions imposed as a result of the pandemic. 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.
Sustainability
Jet2 plc endeavours to operate in the most efficient and sustainable way
possible, minimising both emissions and carbon intensity (emissions per
passenger kilometre). Efficient operations also help to minimise our
environmental impact in terms of both noise and air quality pollutants.
Consequently, between 2011 and 2019, Jet2 plc reduced its CO2 emissions per
passenger kilometre from 83.1g to 67.0g, a reduction of more than 19% and in
2018, as published by Atmosfair Index, was ranked 11(th) best airline in the
world in this regard.
Nonetheless, as a socially and environmentally responsible airline and package
holiday provider, we recognise our future growth must continue to be
sustainable. Therefore, in September 2021, we were very pleased to publish our
comprehensive Sustainability Strategy with the vision to be "the leading brand
in sustainable air travel and package holidays".
As part of our Jet2 Net Zero 2050 commitment, in addition to the significant
new Airbus A321 neo investment, Jet2 will offset emissions not currently
covered by existing carbon pricing mechanisms (UK and EU Emissions Trading
Schemes), thereby taking full responsibility for all its carbon emissions. By
going above and beyond regulatory requirements, Jet2 will see a significant
drop in net emissions in the coming months and years. Jet2 have also worked
with their offsetting partner, Vertis, to carefully select how to enact their
carbon offsetting programme to maximise its real-world impact, focusing on the
development of renewable energy to accelerate the global transition away from
fossil fuels. The Group has also committed to using a percentage of UK
produced Sustainable Aviation Fuel.
Further, by 2023, 50% of our Ground Support Equipment will be zero carbon and
we will have reduced single use plastics on our aircraft by 80% as compared to
2019 - equivalent to removing 11 million items per annum!
Finally, Jet2holidays will also act on the environmental impacts in its supply
chain by enabling Customers to make more sustainable accommodation choices
through its hotel sustainability labelling system. More detailed information
on the Group's Sustainability Strategy can be found at
www.jet2plc.com/sustainability (http://www.jet2plc.com/sustainability)
We believe that achieving these goals will represent significant steps on our
journey to offer sustainable holidays to all our valuable Customers.
Outlook - The Right Product for Tougher Times
Inflationary pressures coupled with the uncertain UK economic outlook for
consumers, lead us to conclude that in the medium term prices are likely to
come under some pressure. However, we believe we have the right product for
these tougher times.
The end-to-end package holiday is a higher yielding, resilient and popular
product in difficult economic times and the Mediterranean and Canary Islands
are evergreen destinations where people absolutely want to go. The control of
our own seat supply and our frequency of flying, allow us to offer truly
variable duration holidays, critical in allowing our Customers the ability to
flex their holiday arrangements to suit their individual budgets.
And, the All Inclusive Package is a wonderful product for challenging economic
times - all-in holiday cost certainty in a 'one click' purchase - perfect for
those budget conscious customers!
Customers want to be looked after throughout their holiday experience and
great and attentive service is where we excel. Our 'Customer First' ethos runs
deep throughout our company culture with 'People, Service, Profits' our
guiding principles. This results in happy, well paid and motivated Colleagues
who will continue to provide great service and thereby produce sustainable
long-term profits.
In the meantime, our Leisure Travel business has made a satisfactory start to
the new financial year, with on sale seat capacity for Summer 22 approximately
14% higher than Summer 19.
Overall demand for our leisure travel products has continued to strengthen,
but with customers booking a little later than normal. Pleasingly, over 35% of
our Summer 22 bookings are from completely new customers to Jet2.
Additionally, package holiday bookings remain encouraging displaying a
materially higher mix of the total up 13ppts and average load factors for the
Summer 22 season are currently only 1.4ppts behind Summer 19 at the same point
(against the 14% increase in seat capacity) whilst pricing remains robust.
We are currently fully hedged for jet fuel for Summer 22 and 75% hedged for
Winter 22/23 in line with our normal policy.
However, although we invested well ahead of the summer season to ensure we had
adequate resources to be able to operate efficiently and we also self‐handle
at many of our key airport bases, we have been directly impacted by the
broader disruption seen across the aviation sector and its supply chains. As
stated previously, inexcusably, many Suppliers simply did not plan, prepare or
invest for a normal summer season and are now suffering from the difficult
employment market which has meant us incurring additional costs to recover the
consequent disruption to our flying programme.
Consequently, Group performance for the financial year ending 31 March 2023
very much depends on how quickly the broader aviation sector returns to some
level of stability, as well as strength of bookings for the remainder of
Summer and the second half of the financial year, a period for which we still
have limited visibility.
Despite the looming economic difficulties, for the long term we continue to
believe that opportunities for us to grow share as a financially strong and
trusted package holiday provider will only increase. With our customer focused
approach, and Right Product for these Tougher Times we are confident that 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
7 July 2022
BUSINESS & FINANCIAL REVIEW
The Group's financial performance for the year ended 31 March 2022 is reported
in accordance with UK-adopted international accounting standards and
applicable law.
Summary Income Statement 2022 2021 Change
£m £m
Unaudited
Revenue 1,231.7 395.4 212%
Net operating expenses (1,555.6) (731.5) (113%)
Operating loss (323.9) (336.1) 4%
Net financing expense (excluding Net FX revaluation (losses) / gains) (53.4) (38.5) (39%)
Profit on disposal of property, plant and equipment 1.1 0.8 38%
Loss before FX revaluation and taxation (376.2) (373.8) (1%)
Net FX revaluation (losses) / gains (12.6) 3.9 (423%)
Loss before taxation from continuing operations (388.8) (369.9) (5%)
Profit before taxation from discontinued operating activities - 2.1 (100%)
Profit on disposal of discontinued operations - 26.5 (100%)
Loss before taxation (388.8) (341.3) (14%)
Net financing expense (including Net FX revaluation (losses) / gains) 66.0 34.6 (91%)
Depreciation 158.3 163.7 3%
EBITDA from continuing operations* (164.5) (171.6) 4%
* 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
As a result of the continuing impact of the Covid-19 pandemic, for large
periods of the financial year the Group faced significant operational
challenges, being unable to operate its aircraft fleet to anywhere near full
potential, which has resulted in its financial performance being severely
impacted.
With no scheduled flying activity from 1 April 2021, we were pleased to be
able to resume limited flying operations to Jersey on 24 June, and
subsequently to the Balearic Islands and Madeira in early July. Following the
UK Government's decision to allow quarantine-free travel to Amber list
destinations for the fully vaccinated from mid-July 2021, Jet2.com and
Jet2holidays broadened its Summer 21 flying programme to 37 leisure
destinations, though this still only represented approximately 55% of
pre-Covid Summer 19 capacity.
The dissolution of Green and Amber lists from 4 October 2021 saw the business
flex its flying programme in order to optimise performance, and as a result,
passenger sectors flown and average load factors in October and November 2021
increased markedly. However, the improving conditions were short-lived as the
emergence of the Omicron variant and subsequent reimposition of international
travel restrictions, both served to dampen customer confidence and negatively
affected December 2021 and January 2022 financial performance.
Pleasingly, as international travel restrictions were progressively lifted
from early January 2022, the Group's financial performance for both February
and March was much improved and trending towards historic seasonal norms as
customer confidence to travel steadily improved.
As a result, during the financial year Jet2.com flew a total of 4.85m (2021:
1.32m) single sector passengers, an increase of 267% with customers choosing
our end-to-end package holiday products increasing by 249% to 1.29m (2021:
0.37m).
Although the mix of package holiday customers dropped by 7ppts to 51% of
overall flown passengers (2021: 58%), this was a direct result of the
uncertainty created by the numerous changes in travel restrictions which
resulted in customer booking behaviour displaying a pronounced move to very
short lead times from departure.
Consequently, ticket prices were heavily discounted to drive average load
factors and generate positive financial contribution which played to the
shorter lead time, more price sensitive flight-only product. As a result,
average flight-only ticket yield per passenger sector at £67.90 (2021:
£95.24) was 29% lower than the prior year with average load factor showing a
slight increase to 69.2% (2021: 66.0%), though materially down on the
pre-Covid level of 92.2% in 2020.
Conversely, the average price of a Jet2holidays package holiday increased by
2% to £689 (2021: £676), reflective of heavily discounted hotelier prices in
the previous year which were passed on to consumers.
Non-Ticket Retail Revenue per passenger sector grew by 4% to £30.28 (2021:
£29.10) due to an increased take-up of advanced seat assignment and hold
baggage. Additionally, our successful in-flight retail service, a product
which our Customers have come to expect and enjoy, performed strongly, in part
assisted by changes to passenger duty-free allowances that came into effect
from 1 January 2021, plus the limited opening of retail outlets at many of our
airport bases.
As a result, overall Group Revenue increased by 212% to £1,231.7m (2021:
£395.4m).
Net Operating Expenses
Higher levels of flying activity resulted in an associated 145% increase in
direct operating expenses (including direct staff costs) to £1,099.3m (2021:
£449.6m). Additionally, the Group continued to take mitigating actions where
appropriate to control costs and associated cash burn, including the continued
use of the Coronavirus Job Retention Scheme ("CJRS") to support those
colleagues who were unfortunately unable to work, claiming grants of £30.1m
(2021: £97.9m) until its cessation in September. These amounts continued to
be substantially "topped up" to provide further financial support for our
loyal Colleagues.
The increase in operational activity in the second half of the year meant that
we were able to progressively welcome back colleagues and also to remove
temporary pay cuts which had been in place for approximately 18 months.
Additionally, as the business planned for recovery well ahead of its proposed
Summer 22 flying programme, the Group invested significant monies in the
recruitment and training of colleagues to support its operational requirements
and also in marketing to drive forward bookings to ensure the business was as
well-placed as possible to capitalise on pent-up consumer demand.
As a result, net operating expenses increased by 113% to £1,555.6m (2021:
£731.5m).
Operating loss
Overall Group operating loss for the year was £323.9m (2021: £336.1m).
Net Financing Expense
Net financing expense of £66.0m (2021: £34.6m) is stated after finance
income of £5.1m (2021: £2.0m), which improved 155% due to the increase in
central bank interest rates in the second half of the financial year. Finance
expenses of £58.5m (2021: £40.5m) increased primarily due to the Group's
convertible bond issuance in June 2021, which resulted in an additional
expense of £13.6m (2021: £nil), the remainder being interest on the £200m
Covid Corporate Financing Facility ("CCFF") which was drawn down in March 2021
and a new term loan of £150m secured in May 2021.
In addition, a net FX revaluation loss of £12.6m (2021: £3.9m gain) resulted
from the year end revaluation of foreign currency denominated monetary
balances, along with FX movements from the crystallisation of prior year
ineffective derivatives.
Statutory Loss for the Year
As a result, the Group made a statutory loss before taxation from continuing
operations of £388.8m (2021: £369.9m), at a loss per flown passenger of £80
(2021: loss per flown passenger of £280), with the reduction in loss per
flown passenger on the prior year due to the more efficient absorption of
fixed costs as a result of the increased flying activity.
Taxation
The Group recorded a tax credit of £73.4m (2021: £70.4m), with an effective
tax rate of 19% (2021: 19%). The Finance Bill enacted on 10 June 2021 detailed
a proposed increase in the rate of corporation tax from 19% to 25% from 1
April 2023 and consequently, the Group has provided for all deferred tax
expected to reverse beyond this effective date at 25% (2021: 19%).
Statutory Net Loss for the year and Earnings Per Share
The Group made a statutory loss after taxation from continuing operations of
£315.4m (2021: £299.5m) and basic earnings per share were (147.0p) (2021:
(166.9p)).
Other Comprehensive Income and Expense
The Group had other comprehensive income of £193.1m (2021: £20.5m); the
change compared to the prior year is primarily due to significant increases in
the valuation of in-the-money fuel derivatives that the Group has entered into
for the forthcoming financial year.
Cash Flows and Financial Position
The Group has maintained a strong balance sheet with significant liquidity and
also secured additional financing to underpin its growth aspirations and to
refresh certain of its aircraft fleet.
The following table sets out condensed cash flow data and the Group's cash and
cash equivalents:
Summary of Cash Flows 2022 2021
£m £m Change
Unaudited
EBITDA from continuing operations (164.5) (171.6) 4%
EBITDA from discontinued operating activities - 4.7 (100%)
Other Income Statement adjustments 3.0 (2.1) 243%
Operating cash flows before movements in working capital (161.5) (169.0) 4%
Movements in working capital 966.0 (556.7) 274%
Payment on settlement of derivatives (15.5) (101.6) 85%
Interest and taxes (38.0) (7.5) (407%)
Net cash generated from / (used in) operating activities 751.0 (834.8) 190%
Purchase of property, plant and equipment and right-of-use assets (108.4) (37.4) (190%)
Movement on borrowings 268.5 286.2 (6%)
Movement on lease liabilities (67.5) (69.2) 2%
Proceeds on issue of shares - 580.4 (100%)
Proceeds from sale of discontinued operations (net of cash disposed) - 76.0 (100%)
Other items 5.9 (22.4) 126%
Net increase / (decrease) in cash and money market deposits ((a)) 849.5 (21.2) 4107%
(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 Statement of Cash Flows reports net cash flow excluding these
movements.
Net Cash Generated From / (Used in) Operating Activities
Operating losses from continuing operations of £323.9m (2021: £336.1m),
primarily offset by depreciation of £158.3m (2021: £166.1m), resulted in an
operating cash outflow of £161.5m (2021: £169.0m).
In addition, movements in working capital and settlement of derivatives
resulted in cash inflows of £950.5m (2021: £658.3m outflows), principally
due to holding more customer cash deposits from much improved forward bookings
and an increase in trade and other payables as the business geared up ahead of
its Summer 22 flying programme. After net interest payments of £38.0m,
overall the Group generated £751.0m of cash in its operating activities
(2021: £834.8m cash absorbed).
Net Cash (Used In) / Generated From Investing Activities
Total capital expenditure of £108.4m (2021: £37.4m) predominately 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.
Net Cash Generated From Financing Activities
On 3 June 2021, the Company announced the successful issuance of £387.4m of
senior unsecured convertible bonds due in 2026 carrying a coupon of 1.625%,
the offering for which was heavily oversubscribed, plus a new unsecured
£150.0m term loan maturing in September 2023 from its supportive relationship
banks.
Repayments of borrowings and lease liabilities amounted to £327.0m (2021:
£84.1m) including the Covid Corporate Financing Facility ("CCFF") of
£200.0m, which was repaid in full in March 2022.
Other items totalling an inflow of £5.9m (2021: £22.4m outflow) are largely
driven by the effect of foreign exchange rate changes on the Group's cash
balances.
Overall, this resulted in a net cash inflow from total operations of £849.5m
(2021: £21.2m outflow) and a year-end gross cash position (including money
market deposits) of £2,228.5m (2021: £1,379.0m). Net cash, stated after
borrowings and lease liabilities increased by 985% to £658.3m (2021:
£60.7m).
At the reporting date, the Group had received payments in advance of travel
from its Leisure Travel customers amounting to £1,144.7m (2021: £317.3m) and
had increased its 'Own Cash' balance to £1,083.8m (2021: £1,061.7m).
At the reporting date, the Group had no cash restrictions from Merchant
Acquirers (2021: £nil) or margin calls (2021: £8.3m).
Summary Statement of Financial Position 2022 2021
£m £m Change
Unaudited
Non-current assets ((a)) 1,363.9 1,326.3 3%
Net current (liabilities) / assets ((b)) (87.6) 2.5 (3604%)
Cash and money market deposits 2,228.5 1,379.0 62%
Deferred revenue (1,189.1) (322.4) (269%)
Borrowings (991.7) (756.2) (31%)
Lease liabilities (578.5) (562.1) (3%)
Deferred taxation (12.6) (36.7) 66%
Derivative financial instruments 163.7 (66.2) 347%
Total shareholders' equity 896.6 964.2 (7%)
(a) Stated excluding derivative financial instruments.
(b) Stated excluding cash and cash equivalents, money market deposits,
deferred revenue, borrowings, lease liabilities and derivative financial
instruments.
Total shareholders' equity decreased by £67.6m (2021: £330.1m increase)
which included the loss after taxation of £315.4m (2021: £271.2m). This was
partially offset by gains within the cash flow hedging and cost of hedging
reserves of £193.1m, notably fair value movements on in-the-money fuel
derivatives, coupled with a £51.4m equity component of the convertible bond,
representing the embedded derivative that allows for the conversion of the
bond into equity.
With our strong Own Cash position, a well-capitalised Balance Sheet and having
retained much of our knowledgeable and skilled pre-Covid colleague base, the
Group remains well-positioned to grow its leisure travel offering and believes
it has lost none of the positive momentum or customer loyalty which it had
when it entered the pandemic period back in April 2020.
___________________________
Gary Brown
Group Chief Financial Officer
7 July 2022
Leisure Travel Key Performance Indicators 2022 2021 Change
Number of routes operated during the year 329 224 47%
Leisure Travel sector seats available (capacity) 7.01m 2.00m 251%
Leisure Travel passenger sectors flown 4.85m 1.32m 267%
Leisure Travel load factor 69.2% 66.0% 3.2 ppts
Flight-only passenger sectors flown 2.36m 0.56m 321%
Package holiday customers 1.29m 0.37m 249%
Flight-only ticket yield per passenger sector (excl. taxes) £67.90 £95.24 (29%)
Average package holiday price £689 £676 2%
Non-ticket revenue per passenger sector £30.28 £29.10 4%
Average hedged price of fuel (per tonne) $715 $483 48%
Advance sales made as at 31 March £2,396.0m £1,162.4m 106%
For further information please contact:
Jet2 plc 0113 239 7692
Philip Meeson, Executive Chairman
Gary Brown, Group Chief Financial Officer
Cenkos Securities plc 020 7397 8900
Nominated Adviser
Katy Birkin / Camilla Hume
Canaccord Genuity 020 7523 8000
Joint Broker
Adam James
Jefferies International Limited 020 7029 8000
Joint Broker
Ed Matthews
Buchanan 020 7466 5000
Financial PR
Richard Oldworth
COnsolidated income statement (unaudited)
for the year ended 31 March 2022
Results for the Results for the
year ended year ended
31 March 2022 31 March 2021
£m £m
Revenue 1,231.7 395.4
Net operating expenses (1,555.6) (731.5)
Operating loss (323.9) (336.1)
Finance income 5.1 2.0
Finance expense 5 (58.5) (40.5)
Net FX revaluation (losses) / gains (12.6) 3.9
Net financing expense (66.0) (34.6)
Profit on disposal of property, plant and equipment 1.1 0.8
Loss before taxation (388.8) (369.9)
Taxation 73.4 70.4
Loss for the year from continuing operations (315.4) (299.5)
Profit after taxation from discontinued operating activities - 1.8
Profit on disposal of discontinued operations - 26.5
Loss for the year (315.4) (271.2)
(all attributable to equity shareholders of the Parent)
Earnings per share from continuing operations
- basic 6 (147.0p) (166.9p)
- diluted 6 (147.0p) (166.9p)
Consolidated statement of comprehensive income (UNAUDITED)
for the year ended 31 March 2022
Year ended Year ended
31 March 31 March
2022 2021
£m £m
Loss for the year (315.4) (271.2)
Other comprehensive income / (expense)
Items that are or may be reclassified subsequently to profit or loss:
Cash flow hedges:
Fair value gains / (losses) 225.2 (23.6)
Net amount transferred to Consolidated Income Statement 22.4 55.0
Cost of hedging reserve - changes in fair value (8.0) (1.9)
Related taxation charge (46.5) (5.6)
Revaluation of foreign operations - (3.4)
193.1 20.5
Total comprehensive expense for the year (122.3) (250.7)
(all attributable to equity shareholders of the Parent)
Total comprehensive (expense) / income for the year arises from:
Continuing operations (122.3) (279.0)
Discontinued operations - 28.3
Total comprehensive expense (122.3) (250.7)
Consolidated Statement of Financial Position (UNAUDITED)
at 31 March 2022
2022 2021
£m £m
Restated
Non-current assets
Intangible assets 26.8 26.8
Property, plant and equipment 845.2 836.6
Right-of-use assets 491.9 462.9
Derivative financial instruments 20.5 9.4
1,384.4 1,335.7
Current assets
Inventories 8.5 1.0
Trade and other receivables 185.8 133.8
Derivative financial instruments 186.3 23.5
Money market deposits 1,181.0 -
Cash and cash equivalents 1,047.5 1,379.0
2,609.1 1,537.3
Total assets 3,993.5 2,873.0
Current liabilities
Trade and other payables 217.8 69.8
Deferred revenue 1,173.4 278.0
Borrowings 134.5 322.5
Lease liabilities 74.8 67.1
Provisions and liabilities 41.8 48.2
Derivative financial instruments 39.6 58.3
1,681.9 843.9
Non-current liabilities
Deferred revenue 15.7 44.4
Borrowings 857.2 433.7
Lease liabilities 503.7 495.0
Provisions and liabilities 22.3 14.3
Derivative financial instruments 3.5 40.8
Deferred taxation 12.6 36.7
1,415.0 1,064.9
Total liabilities 3,096.9 1,908.8
Net assets 896.6 964.2
Shareholders' equity
Share capital 2.7 2.7
Share premium 19.8 19.8
Cash flow hedging reserve 155.2 (44.2)
Cost of hedging reserve (5.5) 0.8
Other reserves 51.3 (0.1)
Retained earnings 673.1 985.2
Total shareholders' equity 896.6 964.2
The ageing of Provisions and liabilities shown for the year ended 31 March
2021 have been restated as detailed in Note 9.
consolidated statement of cash flows (UNAUDITED)
for the year ended 31 March 2022
2022 2021
£m £m
Loss from continuing operations before taxation (388.8) (369.9)
Profit from discontinued operations before taxation - 28.6
Net financing expense (including Net FX revaluation losses / (gains)) 66.0 34.8
Hedge ineffectiveness 0.8 (1.7)
Depreciation 158.3 166.1
Profit on disposal of discontinued operations - (26.5)
Profit on disposal of property, plant and equipment (1.1) (0.8)
Equity settled share-based payments 3.3 0.4
Operating cash flows before movement in working capital (161.5) (169.0)
(Increase) / decrease in inventories (7.5) 0.3
(Increase) / decrease in trade and other receivables (35.5) 160.3
Increase / (decrease) in trade and other payables 151.8 (296.4)
Increase / (decrease) in deferred revenue 866.7 (422.8)
Decrease in provisions and liabilities (9.5) (2.0)
Movement in assets held for sale - 3.9
Payment on settlement of derivatives (15.5) (101.6)
Cash generated from / (used in) operations 789.0 (827.3)
Interest received 5.1 2.0
Interest paid (43.5) (36.7)
Income taxes refunded 0.4 27.2
Net cash generated from / (used in) operating activities 751.0 (834.8)
Cash flows (used in) / generated from investing activities
Purchase of property, plant and equipment (107.9) (36.2)
Purchase of right-of-use assets (0.5) (1.2)
Proceeds from sale of discontinued operations (net of cash disposed) - 76.0
Proceeds from sale of property, plant and equipment 1.1 2.5
Net increase in money market deposits (1,181.0) -
Net cash (used in) / generated from investing activities (1,288.3) 41.1
Cash generated from financing activities
Repayment of borrowings (259.5) (14.9)
New loans advanced 147.9 301.1
Payment of lease liabilities (67.5) (69.2)
Proceeds on issue of shares - 580.4
Proceeds on issue of convertible bonds 380.1 -
Net cash generated from financing activities 201.0 797.4
Net (decrease) / increase in cash in the year (336.3) 3.7
Cash and cash equivalents at beginning of year 1,379.0 1,400.2
Effect of foreign exchange rate changes 4.8 (24.9)
Cash and cash equivalents at end of year 1,047.5 1,379.0
Consolidated statement of changes in equity (UNAUDITED)
for the year ended 31 March 2022
Share Share premium Cash flow hedging reserve Cost of hedging reserve Other Merger reserve Retained earnings Total shareholders' equity
capital Reserves
£m £m £m £m £m £m £m £m
Balance at 1.9 12.9 (69.6) 2.3 3.3 - 683.3 634.1
31 March 2020
Total comprehensive expense - - 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 2.7 19.8 (44.2) 0.8 (0.1) - 985.2 964.2
31 March 2021
Total comprehensive expense - - 199.4 (6.3) - - (315.4) (122.3)
Share-based payments - - - - - - 3.3 3.3
Issue of convertible bonds(1) - - - - 51.4 - - 51.4
Balance at 2.7 19.8 155.2 (5.5) 51.3 - 673.1 896.6
31 March 2022
¹ In June 2021, senior unsecured convertible bonds were issued generating
gross proceeds of £387.4m. The equity component of these bonds was valued at
£51.4m and recognised in other reserves.
Notes to the UNAUDITED PRELIMINARY ANNOUNCEMENT
for the year ended 31 March 2022
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 UK-adopted
international accounting standards and applicable law ("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 2022 and 31
March 2021 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 2021 is derived from the financial statements
for the year ended 31 March 2021, which have been delivered to the Registrar
of Companies. The Auditor has reported on the year ended 31 March 2021
financial statements; 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 financial statements for the year ended 31 March 2022 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 2022 Annual Report & Accounts (including the Auditor's Report) will be
made available to shareholders during the week commencing 8 August 2022. The
Jet2 plc Annual General Meeting will be held on 1 September 2022.
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 £100,000 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 2025.
For the purpose of assessing the appropriateness of the preparation of the
Group's financial statements on a going concern basis, two financial forecast
scenarios have been prepared for the 12 month period following approval of
these financial statements:
· A base case which assumes an unhindered flying operation, utilising
an aircraft fleet of 104 at pre-pandemic load factors above 90%, and includes
significant cost increases in fuel and carbon; and
· A downside scenario with load factors reduced by 10ppts between July
and October 2022 to reflect a possible reduction in demand. In addition, the
Group has incorporated a two month period of no flying followed by two months
of flying at reduced average load factors over the winter months to reflect
the potential impact of the emergence of a new Covid variant.
The forecasts consider the current cash position, which is after repayment of
the £65m Revolving Credit Facility in April 2022, and an assessment of the
principal areas of risk and uncertainty as described in more detail in the
Group's Annual Report & Accounts, paying particular attention to the
impact of Covid-19 and cost of living pressures. The Directors have also
considered the headroom in the downside scenario described above in light of
the current trading environment as referred to in the Chairman's Statement.
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. Whilst the maturity of the £150m
term loan in September 2023 occurs outside of the 12-month going concern
period, the Group's longer term viability forecasts incorporate the repayment
of this facility.
The Directors concluded that, given the combination of a closing cash balance
(including money market deposits) of £2,228.5m at 31 March 2022 together with
the forecast monthly cash utilisation, under both 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 2022. In addition, the
Group is forecast to meet its banking covenants at 30 September 2022 and 31
March 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 financial statements. For this
reason, they continue to adopt the going concern basis in preparing the
financial statements for the year ended 31 March 2022.
Accounting policies
The accounting policies adopted are consistent with those described in the
Annual Report & Accounts for the year ended 31 March 2021, aside from
those described below which are in addition to the policies previously
disclosed.
Convertible bonds
Convertible bonds are compound financial instruments, and as a result their
liability and equity components are presented separately in accordance with
IAS 32 - Financial Instruments: Presentation.
On issuance of the convertible bonds, the initial fair value of the liability
component is determined using a market rate for an equivalent non-convertible
instrument. This amount is classified as a financial liability measured at
amortised cost (net of transaction costs) until it is extinguished on
conversion or redemption, with amortisation recorded through net financing
expense in the Consolidated Income Statement.
The remainder of the proceeds raised on issuance of the convertible bonds is
allocated to the conversion option that is recognised in equity; this equity
component is not remeasured in subsequent years, until redemption of the
liability or conversion into shares.
Transaction costs related to the convertible bond issuance are recorded
proportionally against the corresponding liability and equity components.
Carbon
Trade and other payables
Free carbon allowances are received under the EU and UK Emissions Trading
Schemes ("ETS"). The Group records the shortfall between the free allowance
and its mandatory carbon obligations under both EU and UK ETS within trade and
other payables.
These mandatory ETS liabilities are measured using the annual weighted average
of purchased ETS allowances and carbon forward contracts where these are
already in place. If there are insufficient carbon forward contracts at the
point of emission, these liabilities are accrued using a market price of the
relevant ETS allowance at this date.
In addition, from 1 January 2022 in line with its Sustainability Strategy, the
Group has voluntarily offset all carbon emissions not already covered in its
ETS obligations, including covering its free allowances. The cost of voluntary
carbon emission offsetting is recorded in the Consolidated Income Statement
when the flight occurs with a corresponding liability in trade and other
payables.
These voluntary carbon offsetting liabilities are accrued using the purchase
price on a first-in first-out basis where there are already sufficient
purchase commitments for relevant offsetting schemes or by using a weighted
average market price for such schemes where purchase commitments are not yet
in place.
Inventories
Carbon emissions credits purchased in advance are recorded in inventories at
their historic cost and are not subsequently revalued as they are held for own
use. When the Group settles its carbon obligations, the balances held in
inventories and trade and other payables are derecognised. At 31 March 2022,
the value of carbon emission allowances held in inventories exceeded the
amounts accrued in trade and other payables.
2. New and amended accounting standards and interpretations
The following amendments to IFRS became mandatorily effective in the current
year and did not have a material impact.
International Financial Reporting Standards Applying to accounting
periods
beginning after
IAS 38 - Intangible Assets - IFRS IC decision on Configuration or March 2021
Customisation Costs in a Cloud Computing Arrangement
IFRS 16 - Leases - Extension of amendments in relation to Covid-19 related April 2021
rent concessions
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 - Interest Rate January 2021
Benchmark Reform Phase 2
IAS 38 - Intangible Assets
The publication details how to account for configuration and customisation
costs in cloud computing arrangements and whether they should be capitalised
as an intangible asset or a prepayment in the Statement of Financial Position,
or if they are required to be expensed when incurred. The Group has cloud
computing contracts, but the IFRS IC decision had no material impact on the
financial statements of the Group due to the limited use of such software.
IFRS 16 - Leases
The amendment to IFRS 16 - Leases - published by the IASB on 28 May 2020, and
subsequently revised on 31 March 2021, 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.
Interest Rate Benchmark Reform
The only interest rate benchmarks which the Group was exposed to and that were
subject to reform are LIBOR and US LIBOR. These exposures related to the
Revolving Credit Facility, aircraft financing and any associated
floating-to-fixed interest rate swaps. The Group renegotiated the terms of its
LIBOR financing agreements during the financial year to Sterling Overnight
Index Average Rate (SONIA). The impact of this was not material.
The Group continues to engage with those financing partners to which it has US
LIBOR exposures to transition these agreements to the Secured Overnight
Financing Rate ("SOFR") ahead of the 30 June 2023 deadline. The Group's USD
denominated borrowings and lease liabilities at 31 March 2022 that are subject
to the transition are £517.2m. The impact of this is not expected to be
material.
The following are the new and amended accounting standards that have an
effective date after the date of these financial statements and are not
expected to have a material impact on the Group's reported financial
performance or position.
International Financial Reporting Standards Applying to accounting periods beginning after
New standards
IFRS 17 - Insurance Contracts January 2023
Amendments to existing standards
Amendments to IFRS 3 - Business Combinations - Reference to the conceptual January 2022
framework
Amendments to IAS 16 - Property, Plant and Equipment - Proceeds before January 2022
intended use
Amendments to IAS 37 - Provisions, Contingent Liabilities and Contingent January 2022
Assets - Costs of fulfilling a contract
Amendments to IAS 1 - Presentation of Financial Statements - Disclosure of January 2023
accounting policies
Amendments to IAS 1 - Presentation of Financial Statements - Classification of January 2023
liabilities as current or non-current
Amendment to IAS 12 - Income Tax - Deferred tax related to assets and January 2023
liabilities arising from a single transaction
Amendments to IAS 8 - Accounting Policies, Changes in Accounting Estimates and January 2023
Errors - Definition of accounting estimates
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 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 Group disposed of its Distribution & Logistics segment in the previous
year; 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 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
continuing 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.
4. Net operating expenses
2022 2021
£m £m
Unaudited
Direct operating costs:
Accommodation 473.5 113.0
Landing, navigation and third-party handling 139.5 34.3
Fuel 132.8 79.9
Maintenance 38.7 25.7
Agent commission 29.5 9.0
In-flight cost of sales 28.9 8.2
Aircraft rentals 0.6 -
Other direct operating costs 64.6 2.3
Staff costs including agency staff 313.2 224.2
Depreciation of property, plant and equipment 105.2 115.2
Depreciation of right-of-use assets 53.1 48.5
Other operating charges 176.0 71.2
Total net operating expenses 1,555.6 731.5
5. Net financing expense
2022 2021
£m £m
Unaudited
Finance income 5.1 2.0
Interest expense on aircraft loans (16.0) (15.1)
Interest expense on other loans (7.7) (2.7)
Interest expense on convertible bond (13.6) -
Interest expense on lease liabilities (21.2) (22.7)
Net foreign exchange revaluation (losses) / gains (12.6) 3.9
Total net financing expense (66.0) (34.6)
6. Earnings per share from continuing operations
Basic earnings per share is calculated by dividing the loss 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 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, Deferred Awards and convertible bonds
for the years ended 31 March 2022 or 31 March 2021 as their conversion to
ordinary shares would decrease the loss per share.
2022 2021
Unaudited
Earnings per share Earnings Weighted average number of shares EPS Earnings Weighted average number of shares EPS
£m millions pence £m millions pence
Basic EPS
Loss attributable to ordinary shareholders (315.4) 214.6 (147.0) (299.5) 179.4 (166.9)
Effect of dilutive instruments
Share options and Deferred Awards - - - - - -
Convertible bonds - - - - - -
Diluted EPS (315.4) 214.6 (147.0) (299.5) 179.4 (166.9)
7. Convertible bonds
On 3 June 2021, the Group announced the launch of an offering of £387.4m of
guaranteed senior unsecured convertible bonds due in 2026. Settlement and
delivery of the convertible bonds took place on 10 June 2021. The total bond
offering of £387.4m covers a five-year term beginning on 10 June 2021 with a
1.625% per annum coupon payable semi-annually in arrears in equal instalments.
The bonds are convertible into new and/or existing ordinary shares of Jet2
plc. The initial conversion price was set at £18.06 representing a premium of
40% above the reference share price on 3 June 2021 of £12.90. If not
previously converted, redeemed or purchased and cancelled, the bonds will be
redeemed at par on 10 June 2026.
The convertible bonds are deemed to be a compound financial instrument, with
their accounting treatment as detailed in Note 1. Accordingly, £328.7m was
initially recognised as a liability in the Statement of Financial Position on
issue and £51.4m was recognised in equity, representing the conversion
option. These two amounts are net of transaction costs of £7.3m, which were
allocated proportionally between the components, with £6.3m recorded against
the liability and £1.0m recorded against equity.
Further detail of the judgement and estimate taken in the initial recognition
of these convertible bonds is disclosed in the Group's Annual Report &
Accounts.
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.
Loss before FX revaluation and taxation from continuing operations
Loss before FX revaluation and taxation from continuing operations 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.
EBITDA from continuing operations
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 before taxation from
continuing operations as below:
2022 2021
£m £m
Unaudited
Loss before taxation from continuing operations (388.8) (369.9)
Net FX revaluation losses / (gains) 12.6 (3.9)
Loss before FX revaluation and taxation from continuing operations (376.2) (373.8)
Net financing expense (excluding Net FX revaluation losses / (gains)) 53.4 38.5
Depreciation of property, plant and equipment 105.2 115.2
Depreciation of right-of-use assets 53.1 48.5
EBITDA from continuing operations (164.5) (171.6)
'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.
2022 2021
£m £m
Cash and cash equivalents 1,047.5 1,379.0
Money market deposits 1,181.0 -
Deferred revenue (1,189.1) (322.4)
Trade and other receivables 44.4 5.9
Trade and other payables - (0.8)
'Own Cash' 1,083.8 1,061.7
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 year end.
9. Restatement of prior year financial statements
Year ended Provisions and Year ended
31 March 2021 liabilities 31 March 2021
restatement*
As restated As originally reported
£m £m £m
Non-current assets
Intangible assets 26.8 - 26.8
Property, plant and equipment 836.6 - 836.6
Right-of-use assets 462.9 - 462.9
Derivative financial instruments 9.4 - 9.4
1,335.7 - 1,335.7
Current assets
Inventories 1.0 - 1.0
Trade and other receivables 133.8 - 133.8
Derivative financial instruments 23.5 - 23.5
Cash and cash equivalents 1,379.0 1,379.0
1,537.3 - 1,537.3
Total assets 2,873.0 - 2,873.0
Current liabilities
Trade and other payables 69.8 - 69.8
Deferred revenue 278.0 - 278.0
Borrowings 322.5 - 322.5
Lease liabilities 67.1 - 67.1
Provisions and liabilities 48.2 (14.3) 62.5
Derivative financial instruments 58.3 58.3
843.9 (14.3) 858.2
Non-current liabilities
Deferred revenue 44.4 - 44.4
Borrowings 433.7 - 433.7
Lease liabilities 495.0 - 495.0
Provisions and liabilities 14.3 14.3 -
Derivative financial instruments 40.8 - 40.8
Deferred taxation 36.7 - 36.7
1,064.9 14.3 1,050.6
Total liabilities 1,908.8 - 1,908.8
Net assets 964.2 - 964.2
Shareholders' equity
Share capital 2.7 - 2.7
Share premium 19.8 - 19.8
Cash flow hedging reserve (44.2) - (44.2)
Cost of hedging reserve 0.8 - 0.8
Other reserves (0.1) - (0.1)
Retained earnings 985.2 - 985.2
Total shareholders' equity 964.2 - 964.2
* The Group has restated its Provisions and liabilities to better reflect the
timing of when its aircraft maintenance obligations fall due, having
previously recognised the full balance as a current liability.
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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