REG - Jet2 PLC - Half-year Report
24/11/2022 07:01
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RNS Number : 4094H Jet2 PLC 24 November 2022
Jet2 plc
Interim Results
Jet2 plc, the Leisure Travel group ("the Group" or "the Company"), announces
its unaudited interim results for the half year ended 30 September 2022.
Group financial highlights Half year ended Half year ended Half year end Half year ended
30 September 30 September change 30 September
2022 2021 2019
Unaudited Unaudited Unaudited
Revenue £3,567.6m £429.6m 730% £2,615.2m
Operating profit / (loss) £516.6m (£170.4m) 403% £365.0m
Profit / (loss) before FX revaluation and taxation* £505.0m (£195.1m) 359% £349.8m
Profit / (loss) before taxation £450.7m (£205.8m) 319% £339.7m
Profit / (loss) for the period after taxation £356.0m (£163.5m) 318% £278.6m
Basic earnings per share 165.9p (76.2p) 318% 187.0p
Interim dividend per share 3.0p - 100% 3.0p
* Further information on the calculation of this measure can be found in Note
4.
· Despite a difficult return to normal operations, Group profit before foreign
exchange revaluation and taxation increased to £505.0m (2021: £195.1m loss),
which was also 44% ahead of the 2019 pre-Covid performance. Total profit for
the period after taxation was £356.0m (2021: £163.5m loss).
· Seat capacity increased 14% against Summer 2019 and buoyant customer demand
resulted in the business achieving an average load factor of 90.7% (2019:
93.1%). Higher margin Package Holiday customers mix of total departing
passengers was 65.9%, up 13.1ppts against Summer 2019 (2019: 52.8%).
· Flight-only ticket yield per passenger sector at £105.00 (2021: £73.27) was
43% higher than the prior period, due to changes in the mix of destinations
flown, notably to those in the Eastern Mediterranean, and strong consumer
demand meaning fewer promotional offers were required.
· Our operations were directly impacted by the broader disruption seen across
the aviation sector and its supply chains in mid-summer as was widely reported
in the media, which has resulted in significant delay and compensation costs
in excess of £50.0m.
· Overall liquidity improved significantly with a total cash balance (including
money market deposits) at the half year end of £2,830.7m, an increase of 39%
(2021: £2,036.9m). Our 'Own Cash' position (excluding customer deposits) of
£1,968.6m increased 29% (2021: £1,524.3m).
· In mid-October 2022, we were delighted to announce that we had entered into an
agreement to purchase a further 35 new firm ordered Airbus A320/A321 neo
aircraft with the ability to extend up to 71 aircraft. With its previous
orders, the Group now has a total of 98 firm ordered Airbus A320/A321 neo
aircraft, which could eventually extend up to 146 aircraft, and critically has
certainty of supply well into the next decade.
· With Winter 2022/23 bookings encouraging and pricing remaining robust, but
recognising that the important post-Christmas booking period is still to come,
we are presently on track to exceed current average market expectations for
Group profit before FX revaluation and taxation for the year ending 31 March
2023.
· Looking ahead, the Group faces input cost pressures including fuel, carbon, a
strengthened US dollar and wage increases, plus investment to ensure our
Colleagues can thrive and have a balanced lifestyle, further underpinning our
operational resilience. This leads us to conclude that margins may come under
some pressure.
· The Right Product for Tougher Times - our well-established truly variable
duration holidays and wide ranging product portfolio will provide customers
with plenty of choice and flexibility to be able to tailor their holiday plans
to meet their individual budgets. As a result, we remain confident that our
Customers' eagerness to take their much valued and anticipated holidays will
remain high.
Chairman's Statement
I am pleased to report on the Group's trading for the half year ended 30
September 2022, which encompasses Jet2holidays, our acclaimed ATOL licensed
package holidays provider, and Jet2.com, our award-winning leisure airline.
Results for the half year
Despite a difficult return to normal operations, primarily due to the lack of
planning and preparedness of many airports and associated suppliers, and
having absorbed substantial associated disruption costs, Group profit before
foreign exchange revaluation and taxation increased to £505.0m (2021:
£195.1m loss), which was also 44% ahead of the 2019 pre-Covid performance.
Total profit for the period after taxation was £356.0m (2021: £163.5m loss).
Our Leisure Travel business has continued its encouraging recovery following
the reopening of international travel in early 2022. Strong customer demand,
in particular for package holidays, plus a robust pricing environment and
considered cost control, have underpinned a substantially improved financial
performance compared to recent Covid impacted summer seasons, but also against
pre-Covid Summer 2019.
The business made considerable investment well ahead of Summer 2022, retaining
over 8,000 loyal colleagues throughout the pandemic and significantly topping
up the Coronavirus Job Retention Scheme funding on a sliding scale basis up to
100% of salary for the lowest paid, recruiting and training seasonal
colleagues in good time, making substantial marketing investments, plus early
and meaningful salary increases for all colleagues. This left us very well
prepared for our summer operation and also enabled Jet2.com to earn the
accolade of being the only UK airline not to cancel a flight during July and
August 2022, according to leading travel intelligence company, OAG.
For the reporting period, seat capacity increased 14% against Summer 2019 and
buoyant customer demand resulted in the business achieving an average load
factor of 90.7% (2019: 93.1%), with package holiday customers displaying a
materially higher mix of the total departing passengers at 65.9%, up 13.1ppts
against Summer 2019 (2019: 52.8%).
Despite our Colleagues working incredibly hard and consistently going the
extra mile to take our Customers on their long-awaited holidays, unfortunately
some customers still faced frustrating delays as our operations were directly
impacted by the broader disruption seen across the aviation sector and its
supply chains as was widely reported in the media. Regrettably, this resulted
in Jet2 incurring delay, compensation and customer expenses reimbursement
costs in excess of £50.0m under UK (EU) Regulation 261/2004 ("EU261/2004")
which was materially higher than in Summer 2019.
In addition, our inflight retail financial performance was weaker than
expected, due to product supply chain issues early in the summer season, plus
poor onboard product availability caused by resource constraints at our third
party inflight retail provider.
Given these very challenging circumstances, the Board is hugely appreciative
of all our Colleagues' tremendous efforts and support over recent months.
As is typical for the business, losses are to be expected in the second half
of the financial year, as we continue to invest in: additional aircraft;
marketing to ensure we optimise our pre-Summer 2023 forward booking position;
retaining increasing numbers of colleagues through the winter months to ensure
maximum operational resilience ahead of next summer; and attracting new
colleagues in readiness for further expansion of our exciting package holiday
and flight-only offerings for Summer 2023, in line with our planned growth
targets.
Interim Dividend
Basic earnings per share increased to 165.9p (2021: (76.2p)) and in view of
the current full year outlook, the Board has decided to pay an interim
dividend of 3.0p per share (2021: £nil). The dividend will be paid on 3
February 2023 to shareholders on the register at 30 December 2022, with the
ex-dividend date being 29 December 2022.
Sustainability
The Group continued to implement its Sustainability Strategy with the vision
to become "the leading brand in sustainable air travel and package holidays".
All of our airline emissions not already covered by mandatory carbon pricing
mechanisms, namely the UK and EU Emissions Trading Schemes (ETS), have been
offset during the period. In addition, the Group is actively negotiating
access to Sustainable Aviation Fuel through various channels. More detailed
information on the Group's Sustainability Strategy can be found at
www.jet2plc.com/sustainability (http://www.jet2plc.com/sustainability) .
Post reporting date events
The strength of our recovery post Covid reinforces our view that we have a
great future in the leisure travel industry. Consequently, we were delighted
to announce in mid-October 2022 that we were building upon our previous
aircraft order with Airbus of up to 75 A321 neo aircraft (63 now firm ordered)
and entering into an agreement to purchase a further 35 new firm ordered
Airbus A320/A321 neo aircraft with the ability for this to extend up to 71
aircraft. The A321 neo aircraft provides additional environmental and
operating benefits through lower fuel consumption per passenger and therefore
lower emissions and is, in our opinion, on a per passenger basis, the most
fuel efficient and sustainable aircraft in its class today. In addition, this
latest order further supports our determination to sustainably grow our
successful business and expand our fleet in line with the demand for our
award‐winning package holidays and flights, whilst also giving the ability
to retire less efficient earlier aircraft models.
These latest firm ordered aircraft deliveries stretch over three years until
2031, and at base price represent a total value of approximately $3.9 billion,
with a total transaction value for up to 71 aircraft of approximately $8.0
billion, though the Company has negotiated significant discounts from the base
price.
The Group now has 98 firm ordered Airbus A320/A321 neo aircraft, which could
eventually extend up to 146 aircraft and critically has certainty of supply
well into the next decade. The Company will retain flexibility in determining
the most favourable method of financing the aircraft, which will be through a
combination of internal resources and debt.
Outlook - The Right Product for Tougher Times
With Winter 2022/23 bookings encouraging and pricing remaining robust, but
recognising that the important post-Christmas booking period is still to come,
we are presently on track to exceed current average market expectations for
Group profit before FX revaluation and taxation for the year ending 31 March
2023.
Looking ahead, current seat capacity for Summer 2023 is approximately 5%
higher than Summer 2022 (and approximately 20% higher than Summer 2019) with
bookings at this very early stage encouraging, average load factors broadly in
line with Summer 2019 at the same point and pricing strong.
However, the Group faces input cost pressures including fuel, carbon, a
strengthened US dollar and wage increases, plus investment to ensure our
Colleagues can thrive and have a balanced lifestyle, further underpinning our
operational resilience. This leads us to conclude that margins may come under
some pressure, but encouragingly the strength of our recovery post Covid
underlines our belief that customers truly cherish their weeks away in the sun
and want to be properly looked after throughout their holiday experience.
Our 'Customer First' ethos runs deep throughout our company culture with
'People, Service, Profits' our guiding principles - great and attentive
service is where we excel. In addition, our well-established truly variable
duration holidays and wide ranging product portfolio which includes the All
Inclusive Package - all in cost certainty and a wonderful product for
challenging economic times - will provide customers with plenty of choice and
flexibility to be able to tailor their holiday plans to meet their individual
budgets. As a result, we remain confident that our Customers' eagerness to
take their much valued and anticipated holidays will remain high.
Our long-term ambition remains to be the UK's Leading and Best Leisure Travel
business. With our customer focused approach and Right Product for these
Tougher Times, we are confident that as a financially strong and much trusted
holiday provider, our Customers will continue to be keen to travel with us
from our Rainy Island, to the sun spots of the Mediterranean, the Canary
Islands and to European Leisure Cities.
Philip Meeson
Executive Chairman
24 November 2022
Business and Financial Performance
Customer Demand & Revenue
Following the reopening of international travel in early 2022, our Leisure
Travel business has been able to operate to all its popular high-volume
leisure destinations allowing us to provide our Customers with their
well-deserved and eagerly anticipated Real Package Holidays from
Jet2holidays®.
Overall bookings, though a little later than normal, remained consistently
strong. As a result, passenger numbers for the period increased by 632% to
11.20m (2021: 1.53m), with customers choosing our end-to-end package holiday
product rising 755% to 3.76m (2021: 0.44m) and single sector passengers
choosing our flight-only product growing by 431% to 3.82m (2021: 0.72m).
Consequently, higher margin package holiday customers represented 65.9% of
overall flown passengers (2021: 53.0%).
Pleasingly, average load factor achieved was 90.7% (2021: 57.3%) on a 361%
increase in seat capacity to 12.35m (2021: 2.68m), underlining the popularity
of our leisure travel product and the resurgence in consumer confidence to
travel.
Flight-only ticket yield per passenger sector at £105.00 (2021: £73.27) was
43% higher than the prior year, due to changes in the mix of destinations
flown, notably an increase to those in the Eastern Mediterranean, and strong
consumer demand meaning fewer promotional offers were required.
The average price of a Jet2holidays package holiday increased 5% to £782
(2021: £748) reflecting inflationary increases in costs and favourable
pricing driven by destination mix and robust consumer demand.
Non-Ticket Retail Revenue per passenger sector declined 17% to £25.79 (2021:
£30.97) primarily due to early season product supply chain issues and
resource constraints at Jet2.com's third party in-flight retail supplier which
affected onboard product availability and consequently impacted in-flight
retail revenues. Pleasingly, as we enter the Winter 2022/23 season this
disruption has largely abated, and availability levels are now approaching the
high standards our customers have come to expect and enjoy.
As a result, overall Group Revenue increased 730% to £3,567.6m (2021:
£429.6m).
Net Operating Expenses
Higher levels of flying activity resulted in an associated 536% increase in
direct operating expenses (including direct staff costs) to £2,654.9m (2021:
£417.2m), significantly lower than the revenue growth, this despite the
severe operational disruption experienced in mid-summer 2022 due to the lack
of planning and investment by many airports and associated suppliers. This
disruption caused flight delays in excess of three hours deemed eligible under
EU261/2004, to be over 700% higher than 2019 and has resulted in significant
delay and compensation costs in excess of £50.0m.
Further, £108.0m was invested in brand and direct marketing activity as the
business ramped up operations post-pandemic and sought to optimise load
factors for Summer 2022 and drive customer bookings for Winter 2022/23 and
Summer 2023.
As a result, net operating expenses in total increased by 409% to £3,051.0m
(2021: £600.0m).
Operating Profit
Overall Group operating profit was £516.6m (2021: £170.4m loss) which was
also 42% ahead of 2019.
Net Financing Expense
Net financing expense (excluding Net FX revaluation losses) decreased by
£13.2m to £12.1m (2021: £25.3m), with additional interest incurred on the
£387.4m convertible bond issuance and £150.0m term loan, more than offset by
finance income earned on the Group's higher average cash balances, which was
further boosted by recent interest rate increases.
Group profit before foreign exchange revaluation & taxation
As a result, Group profit before foreign exchange revaluation and taxation
increased to £505.0m (2021: £195.1m loss), which was also 44% ahead of 2019.
Total profit for the period after taxation was £356.0m (2021: £163.5m loss).
Cash Flow & Liquidity
In the first half of the financial year, the Group generated cash from
operating activities of £787.0m (2021: £248.4m), primarily a result of
significantly improved EBITDA together with working capital benefits from the
increased operational activity.
Capital expenditure of £65.3m (2021: £60.6m) reflected pre-delivery payments
made for the Group's Airbus A321 neo order, plus continued investment in the
long-term maintenance of our existing aircraft fleet. The investment in the
electrification of ground services equipment and other vehicles continues
apace, as older less efficient models reach the end of their useful lives. In
addition, as a consequence of our recent aircraft orders and to further
underpin our growth ambitions, we took the opportunity to purchase premises at
Cheadle, near Manchester Airport, which will become our second flight
simulator training centre, building on the success of our first facility near
Bradford which commenced operation in 2014. This new centre will provide a
bespoke training facility for pilots, engineers and cabin crew and will
continue to equip us with well-trained colleagues as we grow over the coming
years.
Net cash used in financing activities was £138.7m (2021: £467.8m net cash
generated), which included repayment of the existing £65.0m Revolving Credit
Facility.
As a result, overall liquidity improved significantly with a total cash
balance (including money market deposits) at the half year end of £2,830.7m,
an increase of 39% (2021: £2,036.9m). Our 'Own Cash' position (excluding
customer deposits) of £1,968.6m increased by 29% (2021: £1,524.3m).
Renegotiation of Revolving Credit Facility Agreement ("RCF")
Since the half year end, the Group has successfully renegotiated its RCF,
welcoming one new financing partner, National Westminster Bank plc, alongside
our three existing supportive relationship banks: Barclays Bank plc; HSBC UK
Bank plc; and Lloyds Bank plc. The new RCF provides the Group with unsecured
available facilities of up to £300m, an increase of £200m on its previous
RCF. On signature and having considered the Group's current liquidity position
and medium-term liquidity requirements, the Board decided to repay in full the
Group's £150.0m term loan, which was due to mature in September 2023, with
the new RCF remaining undrawn. Importantly, the new RCF will be
sustainability-linked from April 2023, incorporating the Group's key climate
metric - gCO(2) per passenger km aircraft fuel burn.
The strength of our balance sheet means the Group is well positioned to
capitalise on the growth opportunities that we believe exist for our exciting
business and also provides it with necessary financial resilience should
circumstances become more challenging.
Key Performance Indicators Half year ended Half year ended Half year end change Half year ended
30 September 2022 30 September 2021 30 September 2019
Leisure Travel sector seats available (capacity) 12.35m 2.68m 361% 10.82m
Leisure Travel passenger sectors flown 11.20m 1.53m 632% 10.07m
Leisure Travel average load factor 90.7% 57.3% 33.4ppts 93.1%
Flight-only passenger sectors flown 3.82m 0.72m 431% 4.75m
Package holiday customers 3.76m 0.44m 755% 2.71m
Package holiday customers % of total passenger sectors flown 65.9% 53.0% 12.9ppts 52.8%
Flight-only ticket yield per passenger sector (excl. taxes) £105.00 £73.27 43% £88.87
Average package holiday price £782 £748 5% £702
Non-ticket revenue per passenger sector £25.79 £30.97 (17%) £24.62
Advance sales made as at 30 September £1,665.5m £1,311.9m 27% £1,206.3m
Certain information contained in this announcement would have been deemed
inside information as stipulated under the UK version of the EU Market Abuse
Regulation (2014/596) which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018, as amended and supplemented from time to time, until
the release of this announcement.
For further information, please contact:
Jet2 plc Tel: 0113 239 7692
Philip Meeson, Executive Chairman
Gary Brown, Group Chief Financial Officer
Cenkos Securities plc Tel: 020 7397 8900
Nominated Adviser
Katy Birkin / Camilla Hume
Canaccord Genuity Limited Tel: 020 7523 8000
Joint Broker
Adam James
Jefferies International Limited Tel: 020 7029 8000
Joint Broker
Ed Matthews
Buchanan Tel: 020 7466 5000
Financial PR
Richard Oldworth / Toto Berger
Notes to Editors
· Jet2holidays is the UK's largest package holidays provider to many
Mediterranean and Canary Islands leisure destinations and Jet2.com is the UK's
third largest airline by number of passengers flown.
· Jet2 currently operates from 10 bases across the UK - London Stansted,
Manchester, Birmingham, Bristol, East Midlands, Leeds Bradford, Edinburgh,
Glasgow, Newcastle and Belfast International.
Jet2 plc
Condensed Consolidated Income Statement (Unaudited)
for the half year ended 30 September 2022
Note Half year ended Half year ended Year
30 September 30 September ended
2022 2021 31 March
£m £m 2022
£m
Revenue 3,567.6 429.6 1,231.7
Net operating expenses 6 (3,051.0) (600.0) (1,555.6)
Operating profit / (loss) 516.6 (170.4) (323.9)
Finance income 20.5 1.7 5.1
Finance expense (32.6) (27.0) (58.5)
Net FX revaluation losses (54.3) (10.7) (12.6)
Net financing expense (66.4) (36.0) (66.0)
Profit on disposal of property, plant and equipment 0.5 0.6 1.1
Profit / (loss) before taxation 450.7 (205.8) (388.8)
Taxation 8 (94.7) 42.3 73.4
Profit / (loss) for the period 356.0 (163.5) (315.4)
(all attributable to equity shareholders of the Parent)
Earnings per share
- basic 7 165.9p (76.2p) (147.0p)
- diluted 7 150.8p (76.2p) (147.0p)
Jet2 plc
Condensed Consolidated Statement of Comprehensive Income (Unaudited)
for the half year ended 30 September 2022
Half year ended Half year ended Year
30 September 30 September 2021 ended
2022 £m 31 March
£m 2022
£m
Profit / (loss) for the period 356.0 (163.5) (315.4)
Other comprehensive income / (expense)
Cash flow hedges:
Fair value gains 178.1 64.7 225.2
Net amount transferred to Consolidated Income Statement (139.2) 18.7 22.4
Cost of hedging reserve - changes in fair value 2.9 1.6 (8.0)
Related taxation charge (13.8) (15.4) (46.5)
Revaluation of foreign operations 7.8 0.9 -
35.8 70.5 193.1
Total comprehensive income / (expense) for the period 391.8 (93.0) (122.3)
(all attributable to equity shareholders of the Parent)
Jet2 plc
Condensed Consolidated Statement of Financial Position (Unaudited)
at 30 September 2022
30 September 2022 30 September 2021 31 March 2022
£m £m £m
Restated*
Non-current assets
Intangible assets 26.8 26.8 26.8
Property, plant and equipment 867.2 843.9 845.2
Right-of-use assets 535.0 464.2 491.9
Derivative financial instruments 32.9 9.5 20.5
1,461.9 1,344.4 1,384.4
Current assets
Inventories 20.9 0.8 8.5
Trade and other receivables 180.8 124.2 185.8
Derivative financial instruments 201.6 68.2 186.3
Money market deposits 1,624.8 941.1 1,181.0
Cash and cash equivalents 1,205.9 1,095.8 1,047.5
3,234.0 2,230.1 2,609.1
Total assets 4,695.9 3,574.5 3,993.5
Current liabilities
Trade and other payables 660.7 231.3 217.8
Deferred revenue 877.7 516.2 1,173.4
Borrowings 263.2 332.3 134.5
Lease liabilities 95.9 73.4 74.8
Provisions and liabilities 94.3 49.3 41.8
Derivative financial instruments 24.8 33.0 39.6
2,016.6 1,235.5 1,681.9
Non-current liabilities
Deferred revenue 7.7 9.3 15.7
Borrowings 669.0 881.6 857.2
Lease liabilities 556.8 480.9 503.7
Provisions and liabilities 35.3 20.4 22.3
Derivative financial instruments 3.8 13.3 3.5
Deferred taxation 114.4 10.9 12.6
1,387.0 1,416.4 1,415.0
Total liabilities 3,403.6 2,651.9 3,096.9
Net assets 1,292.3 922.6 896.6
Shareholders' equity
Share capital 2.7 2.7 2.7
Share premium 19.8 19.8 19.8
Cash flow hedging reserve 181.1 24.1 155.2
Cost of hedging reserve (3.4) 2.1 (5.5)
Other reserves 59.1 52.2 51.3
Retained earnings 1,033.0 821.7 673.1
Total shareholders' equity 1,292.3 922.6 896.6
( )
*The ageing of Provisions and liabilities for the period ended 30 September
2021 have been restated as detailed in Note 11
Jet2 plc
Condensed Consolidated Statement of Cash Flows (Unaudited)
for the half year ended 30 September 2022
Half year ended Half year ended Year ended
30 September 2022 30 September 2021 31 March
£m £m 2022
£m
Profit / (loss) before taxation 450.7 (205.8) (388.8)
Net financing expense (including Net FX revaluation losses) 66.4 36.0 66.0
Hedge ineffectiveness - 0.8 0.8
Depreciation 98.1 81.6 158.3
Profit on disposal of property, plant and equipment (0.5) (0.6) (1.1)
Equity settled share-based payments 3.9 - 3.3
Operating cash flows before movements in working capital 618.6 (88.0) (161.5)
(Increase) / decrease in inventories (12.4) 0.2 (7.5)
Decrease / (increase) in trade and other receivables 5.0 4.1 (35.5)
Increase in trade and other payables 438.7 161.2 151.8
(Decrease) / increase in deferred revenue (303.7) 203.1 866.7
Increase / (decrease) in provisions and liabilities 52.8 2.6 (9.5)
Payment on settlement of derivatives - (15.5) (15.5)
Cash generated from operations 799.0 267.7 789.0
Interest received 20.5 1.7 5.1
Interest paid (24.3) (21.0) (43.5)
Income taxes (paid) / refunded (8.2) - 0.4
Net cash generated from operating activities 787.0 248.4 751.0
Cash flows used in investing activities
Purchase of property, plant and equipment (65.0) (60.6) (107.9)
Purchase of right-of-use assets (0.3) - (0.5)
Proceeds from sale of property, plant and equipment 0.6 0.6 1.1
Net increase in money market deposits (443.8) (941.1) (1,181.0)
Net cash used in investing activities (508.5) (1,001.1) (1,288.3)
Cash flows (used in) / generated from financing activities
Repayment of borrowings (100.4) (25.2) (259.5)
New loans advanced - 147.9 147.9
Payment of lease liabilities (38.3) (35.0) (67.5)
Proceeds on issue of convertible bonds - 380.1 380.1
Net cash (used in) / generated from financing activities (138.7) 467.8 201.0
Net increase / (decrease) in cash in the period 139.8 (284.9) (336.3)
Cash and cash equivalents at beginning of period 1,047.5 1,379.0 1,379.0
Effect of foreign exchange rate changes 18.6 1.7 4.8
Cash and cash equivalents at end of period 1,205.9 1,095.8 1,047.5
Jet2 plc
Condensed Consolidated Statement of Changes in Equity (Unaudited)
for the half year ended 30 September 2022
Share Share premium Cash flow hedging reserve Cost of hedging reserve Other reserves Retained earnings Total shareholders' equity
capital
£m £m £m £m £m £m £m
Balance at 31 March 2021 2.7 19.8 (44.2) 0.8 (0.1) 985.2 964.2
Total comprehensive expense - - 68.3 1.3 0.9 (163.5) (93.0)
Issue of convertible bonds(1) - - - - 51.4 - 51.4
Balance at 30 September 2021 2.7 19.8 24.1 2.1 52.2 821.7 922.6
Total comprehensive expense - - 131.1 (7.6) (0.9) (151.9) (29.3)
Share-based payments - - - - - 3.3 3.3
Balance at 31 March 2022 2.7 19.8 155.2 (5.5) 51.3 673.1 896.6
Total comprehensive income - - 25.9 2.1 7.8 356.0 391.8
Share-based payments - - - - - 3.9 3.9
( )
Balance at 30 September 2022 2.7 19.8 181.1 (3.4) 59.1 1,033.0 1,292.3
(1) In June 2021, senior unsecured convertible bonds were issued generating
gross proceeds of £387.4m. The equity component of these bonds was valued at
£51.4m and recognised in other reserves. The remaining balance held in other
reserves relates to foreign exchange translation differences arising on
revaluation of non-sterling functional currency subsidiaries of the Group,
which totalled £7.7m at 30 September 2022.
Jet2 plc
Notes to the consolidated interim report
for the half year ended 30 September 2022 (Unaudited)
1. General information
Jet2 plc is a public limited company incorporated and domiciled in England and
Wales. The Company's ordinary shares are traded on the AIM market of the
London Stock Exchange. The address of its registered office is Low Fare Finder
House, Leeds Bradford Airport, Leeds, LS19 7TU.
The Group's interim financial report consolidates the financial statements of
Jet2 plc and its subsidiaries.
This interim report has been prepared and approved by the Directors in
accordance with UK-adopted international accounting standards and applicable
law ("Adopted IFRS"). It does not fully comply with IAS 34 - Interim Financial
Reporting, which is not currently required to be applied by AIM companies.
2. Accounting policies
Basis of preparation of the interim report
This unaudited consolidated interim financial report for the half year ended
30 September 2022 does not constitute statutory accounts as defined in s435 of
the Companies Act 2006. The financial statements for the year ended 31 March
2022 were prepared in accordance with UK-adopted international accounting
standards and applicable law and have been delivered to the Registrar of
Companies. The report of the auditor on those financial statements was
unqualified, did not contain an emphasis of matter paragraph and did not
contain any statement under s495(3) nor (4) of the Companies Act 2006.
The interim financial report has been prepared under the historical cost
convention except for all derivative financial instruments, which have been
measured at fair value. The accounting policies applied within this interim
report are consistent with those detailed in the Annual Report & Accounts
for the year ended 31 March 2022.
The Group's interim financial report is presented in pounds sterling and all
values are rounded to the nearest £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 projected cash flows
through to 31 March 2025.
For the purpose of assessing the appropriateness of the preparation of the
Group's interim financial report on a going concern basis, two financial
forecast scenarios have been prepared for the 12-month period following
approval of these financial statements:
· A base case which assumes a full unhindered Summer 2023 flying programme,
utilising an aircraft fleet of 112 at average load factors above 90%, although
at lower gross profit margins than Summer 2022 to reflect rising fuel, carbon
and other associated inflationary cost increases that may not be fully passed
onto consumers; and
· A downside scenario assuming reduced consumer demand resulting in materially
lower average load factors, but with no restrictions on flying to any of the
Group's destinations.
The forecasts consider the current cash position, which is after the early
repayment of the £150.0m term loan in October 2022, and an assessment of the
principal areas of risk and uncertainty, paying particular attention to the
impact of the current UK macro-economic environment and 'cost of living'
pressures on our customers.
In addition to forecasting the cost base of the Group, both scenarios
incorporated the funding of future aircraft deliveries with our
well-established aircraft financing partners, and no mitigating actions taken
to defer uncommitted capital expenditure.
The Directors concluded that given the combination of a closing cash balance
(including money market deposits) of £2,830.7m at 30 September 2022, together
with the forecast monthly cash utilisation that, under both scenarios, the
Group would have sufficient liquidity throughout a period of 12 months from
the date of approval of this interim financial report. In addition, the Group
is forecast to meet its banking covenants at 31 March 2023 and 30 September
2023 under both scenarios.
As a result, the Directors have a reasonable expectation that the Group as a
whole has adequate resources to continue in operational existence for a period
of 12 months from the date of approval of the interim financial report. For
this reason, they continue to adopt the going concern basis in preparing the
unaudited interim report for the half year ended 30 September 2022.
3. New accounting standards
The following revision to accounting standards became effective from January
2021.
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 - Interest Rate
Benchmark Reform Phase 2
The Group renegotiated the terms of its LIBOR financing agreements to Sterling
Overnight Index Average Rate (SONIA) during the year to 31 March 2022.
The Group continues to engage with those financing partners to which it has US
LIBOR exposures on its aircraft financing and any associated floating-to-fixed
interest rate swaps, to transition these agreements to the Secured Overnight
Financing Rate ("SOFR") ahead of the 30 June 2023 deadline. The impact of this
is not expected to be material.
4. Alternative performance measures
The Group's alternative performance measures are not defined by IFRS and
therefore may not be directly comparable with other companies' alternative
performance measures. These measures are not intended to be a substitute for,
or superior to, IFRS measurements.
Profit / (loss) before FX revaluation and taxation
Profit / (loss) before FX revaluation and taxation is included as an
alternative performance measure in order to aid users in understanding the
underlying operating performance of the Group excluding the impact of foreign
exchange volatility.
Profit / (loss) before FX revaluation and taxation is calculated as below:
Half year ended Half year ended Year ended
30 September 30 September 31 March
2022 2021 2022
£m £m £m
Profit / (loss) before taxation 450.7 (205.8) (388.8)
Net FX revaluation losses 54.3 10.7 12.6
Profit / (loss) before FX revaluation and taxation 505.0 (195.1) (376.2)
'Own Cash'
'Own Cash' comprises cash and cash equivalents and money market deposits and
excludes advance customer deposits. It is included as an alternative measure
in order to aid users in understanding the liquidity of the Group.
Half year ended Half year ended Year ended
30 September 30 September 31 March
2022 2021 2022
£m £m £m
Cash and cash equivalents 1,205.9 1,095.8 1,047.5
Money market deposits 1,624.8 941.1 1,181.0
Deferred revenue (885.4) (525.5) (1,189.1)
Trade and other receivables 23.3 18.2 44.4
Trade and other payables - (5.3) -
'Own Cash' 1,968.6 1,524.3 1,083.8
Trade and other receivables relates to invoicing of amounts due from travel
agents in respect of package holiday deposits and balance payments.
Trade and other payables relates to refund credit notes issued and cash
refunds not yet paid out for flights and holidays cancelled prior to the
period end.
5. Segmental reporting
IFRS 8 - Operating segments requires operating segments to be determined based
on the Group's internal reporting to the Chief Operating Decision Maker
("CODM").
The CODM is responsible for the overall resource allocation and performance
assessment of the Group. The Board of Directors approves major capital
expenditure, assesses the performance of the Group and also determines key
financing decisions. Consequently, the Board of Directors is considered to be
the CODM.
The information presented to the CODM for the purpose of resource allocation
and assessment of the Group's performance relates to its Leisure Travel
segment as shown in the Consolidated Income Statement.
The Leisure Travel business specialises in offering package holidays by its
ATOL licensed provider, Jet2holidays, to leisure destinations in the
Mediterranean, the Canary Islands and to European Leisure Cities, and
scheduled holiday flights by its airline, Jet2.com. Resource allocation
decisions are based on the entire route network and the deployment of its
entire aircraft fleet. All Jet2holidays customers fly on Jet2.com flights, and
therefore these segments are inextricably linked and represent the only
segment within the Group.
Revenue is principally generated from within the UK, the Group's country of
domicile. No customer represents more than 10% of the Group's revenue.
6. Net operating expenses
Half year ended 30 September 2022 Half year ended 30 September 2021 Year ended
31 March
2022
£m £m £m
Direct operating costs:
Accommodation 1,415.6 170.4 473.5
Fuel 324.5 42.5 132.8
Landing, navigation and third-party handling 271.4 47.6 139.5
Agent commission 103.9 10.1 29.5
Carbon 57.3 3.4 11.0
Aircraft rentals 53.9 - 0.6
Maintenance 52.1 17.4 38.7
In-flight cost of sales 45.0 9.4 28.9
Other direct operating costs 181.0 30.1 53.6
Staff costs including agency staff 288.1 127.2 313.2
Depreciation of property, plant and equipment 65.9 56.2 105.2
Depreciation of right-of-use assets 32.2 25.4 53.1
Other operating charges 160.1 60.3 176.0
Total net operating expenses 3,051.0 600.0 1,555.6
7. Earnings per share
Basic earnings per share is calculated by dividing the profit / (loss)
attributable to ordinary shareholders by the weighted average number of
ordinary shares in issue during the period.
Diluted earnings per share is calculated by dividing the profit / (loss)
attributable to ordinary shareholders by the weighted average number of
ordinary shares in issue during the period, adjusted for the effects of
potentially dilutive share options and Deferred Awards, along with the
potential conversion of the convertible bonds to ordinary shares at maturity
in June 2026. In accordance with IAS 33, these were not included in the
calculation of diluted earnings per share for the half year ended 30 September
2021, as they were anti-dilutive.
Half year ended 30 September 2022 Half year ended 30 September 2021
Earnings Weighted average number of shares EPS Earnings Weighted average number of shares EPS
£m millions Pence £m millions Pence
Basic EPS
Profit / (loss) attributable to ordinary shareholders 356.0 214.6 165.9 (163.5) 214.6 (76.2)
Effect of dilutive instruments
Share options and Deferred Awards - 4.6 (3.5) - - -
Convertible bonds 7.0 21.5 (11.6) - - -
Diluted EPS 363.0 240.7 150.8 (163.5) 214.6 (76.2)
8. Taxation
The taxation charge for the period of £94.7m (2021: £42.3m credit) reflects
an estimated effective tax rate of approximately 21% (2021: 21%).
9. Dividends
The declared interim dividend of 3.0p per share (2021: £nil) will be paid out
of the Company's available distributable reserves on 3 February 2023, to
shareholders on the register at 30 December 2022, with the ex-dividend date
being 29 December 2022. In accordance with IAS 1, dividends are recorded only
when paid and are shown as a movement in equity rather than as a charge to the
Consolidated Income Statement.
10. Contingent liabilities
The Group has issued various guarantees in the ordinary course of business,
none of which are expected to lead to a financial gain or loss.
11. Restatement of prior year interim financial report
The Group has restated its Provisions and liabilities to better reflect the
timing of when its leased aircraft maintenance obligations fall due, having
previously recognised the full balance as a current liability.
Provisions totalling £20.4m previously reported as current liabilities have
been restated and presented as non-current liabilities. This has resulted in
current provisions reducing from £69.7m to £49.3m at 30 September 2021 and
non-current provisions increasing from £nil to £20.4m. Consequently, total
current liabilities decreased from £1,255.9m to £1,235.5m and total
non-current liabilities increased from £1,396.0m to £1,416.4m.
12. Other matters
This report will be posted on the Group's website, www.jet2plc.co
(http://www.jet2plc.co) m and copies are available from the Group Company
Secretary at the registered office address: Low Fare Finder House, Leeds
Bradford Airport, Leeds, LS19 7TU.
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