TIDMFJET
RNS Number : 2201S
Fastjet PLC
29 September 2017
fastjet Plc
("fastjet" or the "Company") (AIM: FJET)
Interim Results for the six months to 30 June 2017
29 September 2017
fastjet, the low-cost African airline, announces its unaudited
Interim Results for the six months to 30 June 2017, together with
strategic and operational developments to date in 2017.
The table below shows the financial performance of the fastjet
Group for the period to 30 June 2017.
H1 2017 H1 2016
US$ US$
------------------------------- ------- -------
Revenue 21.2m 33.1m
Operating loss from continuing
activities (13.2)m (31.0)m
Loss per share from continuing
activities (HEPS) (0.046) (0.47)
------------------------------- ------- -------
Highlights
-- New executive team; Board reconstituted
-- Stabilisation Plan substantially completed; fastjet now
well-positioned for targeted geographic expansion
-- Losses down 57% year on year
-- Negative cash flow from operating activities reduced to US$(21.4m) (2016: US$(25.6m))
-- On track to achieve target of cash flow break-even by Q4 17
-- On 29 June 2017, fastjet purchased its brand from easyGroup Holdings Ltd for $2.5m
Operational headlines
-- Fleet adjustments delivering clear benefits
Ø Revenue per seat up 30% year on year
Ø Load factors up 18% year on year
-- Move of fastjet's headquarters from UK to Africa completed
-- Growing passenger flows from the Emirates Interline agreement
-- Named Africa's Leading Low-Cost Airline 2016 at the World
Travel Awards and Best LCC in Africa at 2017 Skytrax World Airline
Awards
Commenting on the results, fastjet Chief Executive Officer Nico
Bezuidenhout, said: "The first six months of 2017 was both a
rewarding and challenging period for fastjet.
"I am pleased with the considerable progress made during the
period, with significant cost reductions across the business, the
successful migration of fastjet's headquarters from Gatwick to
South Africa and a renewed commercial impetus that, as expected, is
delivering real benefits. We have focused on successfully
implementing the Stabilisation Plan announced a year ago, while
simultaneously examining potential commercial opportunities.
"As the Stabilisation Plan was delivered, improvements in
distribution, reach and marketing efficiency drove yield and
volume, and efficiencies in average fares, distribution channels
and currency mix were achieved. This resulted in cost efficiencies
and revenue improvement with a 30% increase in revenue per
available seat. Average load factors for the period were 65.4%, up
from 47.8% in the first half of 2016.
"Our re-fleeting plan is on track and by the end of the year
fastjet will have replaced its fleet of A319s with three Embraer
E145 and two Embraer E190 aircraft and have launched in at least
one new market in the region. fastjet has taken full brand
ownership of its trademarks and identity from easyGroup, empowering
the business to further mould itself into an Africa-appropriate,
relevant and operationally-suited business.
"I am proud of our achievements, which have occurred in a
relatively short timeframe. While there remains a lot of work to be
done, our initiatives are delivering clear, positive results and we
are on track to achieve our target of cash flow break-even by the
fourth quarter of this year. Having stabilised the business, we are
looking forward with confidence to the next stage of fastjet's
development and geographic expansion."
For more information, contact:
fastjet Plc Tel: +27 (0) 10 070
5151
Nico Bezuidenhout, Chief
Executive Officer
Michael Muller, Chief Financial
Officer
UK media - Citigate Dewe Tel: +44 (0) 20 7638
Rogerson 9571
Angharad Couch
Eleni Menikou
Toby Moore
Nick Hayns
GM Marketing Communication Tel: +27 (0) 10 007
- Hein Kaiser 5151
For investor enquiries please
contact:
Liberum Capital Limited Tel: +44 (0) 20 3100
- Nominated Adviser and 2222
Broker
Clayton Bush
Jill Li
Neil Elliot
NOTES TO EDITORS
About fastjet:
fastjet is a multi-award winning (including Skytrax World
Airline Awards Best Low-Cost Airline in Africa 2017) low-cost
African airline for everyone. It began flight operations in
Tanzania in November 2012, flying passengers from Dar es Salaam to
just two domestic destinations - Kilimanjaro and Mwanza. Today,
fastjet's route network includes Tanzanian domestic routes from its
Dar es Salaam base to Kilimanjaro, Mbeya, and Mwanza, and
international routes from Tanzania to Lusaka in Zambia and Harare
in Zimbabwe. fastjet also began flight operations from its Zimbabwe
base in October 2015, and now flies domestically from Harare to
Victoria Falls, Harare to Dar es Salaam and internationally from
both Harare and Victoria Falls to Johannesburg in South Africa. The
airline has flown over 2.5 million passengers with an impressive
aggregate 94% on-time performance, establishing itself as a
punctual, reliable, and affordable low-cost carrier.
This announcement contains inside information for the purposes
of the Market Abuse Regulation. fastjet Plc is quoted on the London
Stock Exchange's AIM Market.
For more information see www.fastjet.com
Business Review
The first half of 2017 saw fastjet implement the Stabilisation
Plan, a five-point plan designed to stabilise the business while
simultaneously delivering revenue growth and a significant
reduction in the Group's cost base. Under the Plan, the company is
targeting a cash flow break-even position by Q4 2017.
During the first six months of 2017, the implementation of the
Stabilisation Plan saw fastjet build a stable platform to achieve
its strategic objectives. Delivery against the key objectives and
metrics of the plan to date has been very encouraging, despite
significant challenges.
Rationalisation of Routes
The rationalisation of fastjet's route schedule and network was
initiated in order to match capacity with demand. Frequencies on
underperforming routes have been reduced, while some direct
services have been replaced or incorporated as an extension to
other existing services. Plans for further expansion of the network
were postponed, pending the satisfactory performance of all
existing routes.
Fleet
The Group's fleet was reduced as a result of aircraft being
returned as their leases expired, or earlier return where
appropriate. The majority of the A319 fleet were returned following
lease expiration / early return with a single unit remaining in
Tanzania, scheduled for release from service by the middle of Q4
2017.
At the beginning of the Stabilisation Plan implementation
process, it was concluded that the capacity requirements of the
business required an alternative aircraft type, with materially
lower operating costs, which would be more appropriate for
fastjet's markets. Accordingly, the Group decided to replace its
fleet with mixed capacity and market-relevant aircraft.
The Embraer E145 50 seat and Embraer E190 104 seat aircraft were
identified as appropriate aircraft types for fastjet's services.
These are expected to yield an approximate 15% cost reduction for
fuel, maintenance, handling and navigation charges. The transition
from the existing A319 aircraft to the replacement fleet was
initially arranged through short term wet leases (aircraft, crew,
maintenance and insurance). The first aircraft under a wet lease
agreement came into service in Tanzania at the end of September
2016 and in Q1 2017 in Zimbabwe, and fastjet-branded E145 aircraft
were successfully deployed in Zimbabwe in Q2 2017. The introduction
of Embraer E190 aircraft is scheduled for Q4 2017 in Tanzania.
Organisation
The restructuring and reorganisation of the Group's operating
entities started in late 2016 with the first six months of 2017
seeing full implementation against the requirements of the
Stabilisation Plan. Unnecessary duplication and excess resources
were eliminated and a more streamlined, cost efficient and
appropriate organisation structure set in place. Throughout,
fastjet has maintained its high standards of quality, safety and
regulatory compliance.
The relocation of the Group head office from Gatwick, UK, to
Johannesburg, South Africa, has been completed and key staff
appointed, including a new Chief Commercial Officer, Chief
Financial Officer, and General Managers of Marketing and
Communication, Revenue Management and Pricing, Channels and
Distribution, and Sales and Finance.
The Board was reconstituted with Rashid Wally, a highly
experienced commercial and aviation professional, joining as
Chairman. Chief Financial Officer Michael Muller also joined the
Board, with Nico Bezuidenhout as Chief Executive Officer. Peter
Hyde also joined as an independent non-executive director.
Revenue generating initiatives
fastjet continues to take a flexible approach to the traditional
low-cost carrier model that is more appropriate for the business at
its current stage of development and the markets in which it
operates. As a result, greater flexibility was introduced into
fastjet's pricing models.
A more coordinated approach to fastjet's marketing and public
relations campaigns, which saw the introduction of new marketing
and PR initiatives designed to improve fastjet's market presence
and generate additional revenues, delivered solid results.
fastjet's established social media presence has proved to be a
powerful brand-building mechanism and will continue to form a key
part of the Group's improved marketing and communication programme
as it offers a cost-effective, promotional channel for generating
ticket sales.
For fastjet to improve its direct channels of distribution, the
upgrading of its Central Reservations System began at the end of
the Q1 2017 with completion scheduled for Q4 2017. It is important
that fastjet maintains technology systems that facilitate
innovation and responsiveness to the varied needs of its customers
in the respective markets it serves.
A key focus of the Stabilisation Plan and future commercial
activity is to improve the distribution of fastjet's offering
through both trade and direct channels to stimulate revenue growth.
Last year, fastjet introduced distribution through Amadeus, one of
the leading Global Distribution Systems (GDS), with the foundations
of further GDS distribution partnerships with other major market
players entering planning and implementation during the second
quarter of 2017. Sales through GDS greatly improve fastjet's reach
as an estimated 80% of African air travel continues to be sold
through travel agents. The Marketing and Sales function also
continues to collaborate on various initiatives that further engage
and embed fastjet and its offering to the industry.
Milestones
The wide-ranging five pillars of the Stabilisation Plan include
key metrics by which the Board continually measures the
implementation and impact of initiatives developed by
management.
1. Reconstituted management team and organisational structure.
2. Reduce costs through network and fleet adjustments, overhead
reduction and supplier management.
a) Network rationalisation saw fastjet align frequency to demand
levels and cull deeply loss-making routes.
b) Fleet realignment by matching fleet size and aircraft to
market characteristics with standardised fleet per base and
improved asset utilisation.
3. Improve revenue through distribution reach, brand leverage and service delivery.
a) Improvement of distribution reach and marketing efficiency to drive yield and volume.
b) Efficiencies in average fares, distribution channels and currency mix implemented.
c) Revenue per seat up 30% on last year.
d) Load factors now at 65.4% (H1 2017) vs 47.8% (H1 2016).
4. Reduce and eliminate cash losses and achieve cashflow break-even by Q4 2017.
a) Fundamentally restructured overheads and fixed costs along with key supplier agreements.
b) An estimated US$5.4m reduction in overhead costs.
c) Cost per passenger kilometre down by over 21% with overall cost reduced by 46% year on year.
d) Headcount down from 286 full time employees to 216.
e) Headquarters successfully relocated to South Africa.
f) Net loss down >50% on last year (to $13.2m).
g) Cash resources stand at US$4m.
5. Grow from a stable base.
Tanzania
a) Tanzania presently accounts for circa 80% of Group Revenue
b) fastjet is the largest airline in Tanzania and is now profitable pre inter-company cost.
c) The exit of the A319 and entry of two E190s will increase
capacity and drive cost efficiency.
d) Full brand ownership, following the purchase rights from
easyGroup, will allow turbo-prop aircraft to be deployed, enabling
expansion in Tanzania on certain routes.
Zimbabwe
a) Currently circa 20% of Group Revenue.
b) Gauge reduction saw a rapid load factor increase with current
market share on Johannesburg-Harare static at 37% following recent
capacity increases
c) Monthly cash flow break-even in Zimbabwe has been maintained
since August 2017 with measures taken to reduce in-country cash
accumulation.
Operational Review
fastjet has continued to maintain its high operational standards
in relation to safety, quality, security and reliability. This has
resulted in the airline being highly regarded in the marketplace,
as evidenced by being named "Africa's Leading Low-Cost Airline" at
the 23(rd) World Travel Awards in April 2016, followed by Best
African Low-Cost Carrier at the 2017 Skytrax World Airline Awards.
fastjet has maintained elevated levels of brand awareness and
remains the second most followed African airline brand on Facebook.
The Group intends to build on these successes to improve sales and
customer service using social media channels. The airline also
relaunched its in-flight magazine "Smart Travel" and renamed it
"Places" under a new publishing, editorial and advertising
team.
fastjet's multi-lingual call centre continues to serve our
customers and, with significant cost reductions achieved during the
first half of 2017, its operation and service yield has further
supported the Stabilisation Plan. The call centre covers the
Tanzania, Zambia, Zimbabwe and South African markets and has
improved service levels and sales conversions in each.
fastjet Tanzania
fastjet is the leading airline in Tanzania and, as a direct
result of the Stabilisation Plan, saw the Revenue per Available
Seat Kilometre increase by 26% year on year. fastjet Tanzania
carried over 220,000 passengers and grew load factors from an
average of 49% in H1 2016 to 67% in H1 2017.
fastjet Tanzania has maintained its 'On Time Arrival'
performance of 92%, while aircraft utilisation averaged 10.7 block
hours per day per aircraft (H1 2016: 11.07).
Route revenue performance increased significantly because of the
suspension of certain loss-making routes, reduction in capacity and
revenue generation focus from the commercial team.
fastjet Zimbabwe
In the first half of 2017 fastjet Zimbabwe carried over 50,000
passengers, representing an average load factor of 60%, up from a
prior year average of 36%. In April 2017, fastjet Zimbabwe returned
its A319 aircraft, and began operating with an E145. The
introduction of E145 aircraft in Zimbabwe had a material impact on
load factors, which rose to 96% in its first month of
operations.
Revenue per Available Seat Kilometre improved by almost 90% as a
result of reduced capacity and revenue generating initiatives.
In line with the Stabilisation Plan, fastjet suspended flights
between Victoria Falls and Johannesburg in February 2017. These
flights were reintroduced with a changed aircraft gauge (A319 to
E145) at the end of June 2017 with operations commencing in July,
enabling a successful commercial realignment, as per the
Stabilisation Plan. Peak day frequency additions between Harare and
Victoria Falls were also successfully introduced during the period
under review.
Punctuality in the first six months of operation has been
encouraging, with 91% of flights arriving on time.
fastjet Zimbabwe further developed its distribution channels and
significantly grew its travel agent network during the first six
months of 2017. The airline now engages electronically with the
trade and its customers, along with high engagement campaigns and
physical outreach initiatives.
Financial Review
fastjet Group
H1 2017 H1 2016
US$m US$m
Revenue: fastjet Tanzania 16.6 30.5
fastjet Zimbabwe 4.6 2.6
Total 21.2 33.1
Operating
loss: fastjet Tanzania (10.1) (23.9)
fastjet Zimbabwe (3.5) (5.1)
Central 0.6 (2.0)
Total operating loss from continuing
activities (13.0) (31.0)
Profit from discontinued activities
net of tax - 16.3
(Loss) for the period after
tax (13.2) (15.0)
Key performance indicators
The Directors consider the following to be the key performance
indicators when measuring underlying operational performance:
Measure H1 2017 H1 2016 Movement
Passenger numbers 270 836 397 258 -32%
Revenue per Passenger
(US$) 78,14 82,83 -6%
Seats Flown 414 439 831 793 -50%
Available Seat Kilometres 653 054
(ASK) 315 907 707 843 -52%
Load Factor 65% 48% 18%
Revenue per ASK (US cents) 6,70 5,04 33%
Cost per ASK (US cents) 10,87 9,77 -11%
Cost per ASK ex. Fuel
(US cents) 9,08 8,07 -13%
Aircraft Utilisation
(Hours) 9,7 10,1 -4%
Aircraft Utilisation
at June end (Hours) 11,8 10,6 11%
Aircraft Utilisation
in Peak Month (Hours) 11,8 10,6 11%
Continuing Activities
The Group recorded a loss after tax for the period of US$13.2m
(H1 2016: loss US$31.0m).
Group revenue decreased year on year to US$21.2m (H1 2016:
US$33.1m) as a direct result of the effects of the Stabilisation
Plan. Whilst overall passenger numbers and capacity decreased year
on year, the revenue per available seat kilometer increased by 33%,
showing significantly improved revenue management.
Costs for continuing activities in the first six months of 2017
reduced by 46% as a result of the reduction in capacity, and
overall cost reduction initiatives. Significant progress was made
with the high level of overhead costs which was reduced by 37% year
on year. Included in this was the closure of the Gatwick head
office and subsequent relocation to Johannesburg, South Africa,
which was substantially completed by June 2017.
Discontinued Activities
During 2016, the Company was notified that the subsidiary and
legacy entity fastjet Aviation Limited (formerly Lonrho Aviation
(BVI) Limited) had been served with an order for a creditor
instructed liquidator to be appointed over fastjet Aviation Limited
in accordance with the Insolvency Act 2003 (BVI). fastjet Aviation
Limited is the intermediate parent company of the sub-group which
included Fly 540 Angola and, formerly Fly 540 Ghana. The deemed
disposal of fastjet Aviation Limited has resulted in a profit from
discontinued operations of US$18.0m for the prior year (see note
4).
Cash management
In the last quarter of 2016 the Board initiated a Stabilisation
Plan which is ongoing and is now embedded within the business.
Careful management of the Company's cash resources paired with a
more flexible approach to the traditional low-cost carrier model
are already yielding benefits in terms of efficiency and cash
conservation. Proceeds from the proposed placing announced today
will further strengthen the Company's cash flow position.
Exchange rates
During the first half of 2017, the Tanzanian Shilling exchange
rate against the US Dollar has been relatively stable. The company
continues to monitor exchange rates.
Post balance sheet event
On 29 September 2017, the Company issued a proposed placing to
raise gross proceeds of not less than US$28m with agreements
reached to facilitate fastjet's Brand entry into the South African
and Mozambique markets; to acquire beneficial use of three
aircraft; and to create an employee benefit trust.
Going Concern
There are risks associated with operating in Africa including
but not limited to political, judicial, administrative, taxation or
other regulatory matters. Many countries in Africa, including those
in which the Group currently operates, may in the future experience
severe socio-economic hardship and political instability, including
political unrest and government change.
The commitment of local business people, government officials
and agencies and the judicial system to abide by legal requirements
and negotiated agreements may be more uncertain, creating
particular concerns with respect to licenses and agreements for
business which may be susceptible to delay, revision or
cancellation, as a result of which legal redress may be uncertain
or delayed.
The Stabilisation Plan implemented in 2016 has had the desired
effect of reducing capacity and increasing revenue, cutting loss
making routes and leading to an overall reduction in overheads. The
revenue for H1 2017 is 36% less than the corresponding prior year
period, mainly due to reduction in capacity.
Overall losses decreased by 57% year on year, and the Company is
on track for a cash-flow break-even in Q4 2017.
As described above and in Note 4, fastjet Aviation Limited and
its sub group no longer forms part of the Group's consolidated
accounts. The Directors do not believe that there is recourse to
fastjet Plc for any of the liabilities of FAL and do not expect the
settlement of any intercompany balances as the entities concerned
are unlikely to have sufficient funds to settle them. Accordingly,
the forecasts do not include any cash outflows in respect of the
liabilities of FAL. However, loan notes of cUS$10.3m issued by
fastjet Airlines Limited to FAL, which were previously eliminated
on consolidation, now form an external liability of fastjet
Airlines Limited and accordingly are included in the Group's
Balance Sheet as a Non-Current Liability.
The Directors have also considered a number of risks in
preparing these forecasts including inter alia:
-- Achieving forecast passenger numbers and yield
-- Aviation fuel prices, which are currently not hedged
-- Adverse currency exchange rate movements
-- Achieving successful Brand entry into the South African and Mozambican markets
The Directors believe, based on current financial projections,
inclusive of the proposed placing and funds available, that the
Group will have sufficient resources to meet its operational needs
over the relevant period, being until September 2018. Accordingly,
the Directors continue to adopt the going concern basis in
preparing these Interim Results.
The matters described above represent material uncertainties
that may cast significant doubt upon the Group's and the parent
Company's ability to continue as a going concern and, therefore, to
continue realising its assets and discharging its liabilities in
the normal course of business. The financial statements do not
include any adjustments that would result if the basis of
preparation proved inappropriate.
Current Trading and Outlook
Although the trading environment remains challenging, the
benefits of the Stabilisation Plan are now being realized with the
initiatives yielding positive results. The proposed placing and
measured expansion signal a new phase of the fastjet's development,
and the Company is confident about the future.
Nico Bezuidenhout Michael Muller
Chief Executive Officer Chief Financial
Officer
Condensed consolidated income statement
6 months 6 months 12 months
ended 30 ended 30 ended 31
June June December
2017 2016 2016
US$'000 US$'000 US$'000
Note (Unaudited) (Unaudited) (Audited)
Revenue 21,162 33,072 68,538
Cost of sales (26,060) (51,781) (95,422)
Administrative costs (8,095) (12,275) (37,026)
-------------------------------- ---- ----------- ----------- ----------------
Group operating loss (12,993) (30,984) (63,910)
-------------------------------- ---- ----------- ----------- ----------------
Operating loss (12,993) (30,984) (63,910)
Finance Income 22 20 30
Finance charges (212) (299) (1,943)
-------------------------------- ---- ----------- ----------- ----------------
Loss from continuing activities
before tax (13,183) (31,263) (65,823)
Taxation - (90) (175)
-------------------------------- ---- ----------- ----------- ----------------
Loss from continuing activities
after tax (13,183) (31,353) (65,998)
Profit from discontinued
activities net of tax 4 - 16,339 17,953
(Loss) for the period (13,183) (15,014) (48,045)
-------------------------------- ---- ----------- ----------- ----------------
Attributable to:
Shareholders of the parent
company (13,183) (35,452) (68,483)
Non-controlling interests - 20,438 20,438
-------------------------------- ---- ----------- ----------- ----------------
Total (13,183) (15,014) (48,045)
Earnings/(loss) per share
(basic and diluted) (US
dollars) 2
From continuing activities (0.04) (0.47) (0.84)
From discontinued activities - (0.06) (0.03)
-------------------------------- ---- ----------- ----------- ----------------
Total (0.04) (0.53) (0.87)
-------------------------------- ---- ----------- ----------- ----------------
Condensed consolidated statement of comprehensive income
6 months 6 months 12 months
ended 30 ended ended 31
June 30 June December
2017 2016 2016
US$'000 US$'000 US$'000
(Unaudited) (Unaudited) (Audited)
(Loss)/ Profit for the period (13,183) (15,014) (48,045)
Foreign exchange translation
differences (1,900) 435 (194)
Translation reserve taken
to income statement on disposal
of subsidiary - 15 15
--------------------------------- ----------- ----------- -----------------
Total other comprehensive
income/(expense) for the
period (1,900) 450 (179)
--------------------------------- ----------- ----------- -----------------
Total comprehensive expense (15,083) (14,564) (48,224)
--------------------------------- ----------- ----------- -----------------
Attributable to:
Shareholders of the parent
company (15,083) (35,002) (68,662)
Non-controlling interests - 20,438 20,438
--------------------------------- ----------- ----------- -----------------
Total comprehensive expense (15,083) (14,564) (48,224)
--------------------------------- ----------- ----------- -----------------
All items in other comprehensive
income will be re-classified to the
Income Statement
Condensed consolidated
balance sheet
30 June 30 June 31 December
2017 2016 2016
US$'000 US$'000 US$'000
(Unaudited) (Unaudited) (Audited)
Non-current assets
Other intangible assets 5 2,888 510 312
Property, plant and
equipment 369 12,763 465
Other non-current trade
and other receivables 780 2,054 780
----------------------------------- ----------- ----------- -----------
4,037 15,327 1,557
Current assets
Cash and cash equivalents 8,107 3,870 3,607
Trade and other receivables 6,664 8,587 10,835
17,772 12,457 14,442
----------------------------------- ----------- ----------- -----------
Total assets 18,809 27,784 15,999
----------------------------------- ----------- ----------- -----------
Equity
Called up equity share
capital 3 147,064 144,923 145,324
Share premium account 152,774 108,366 127,185
Reverse acquisition
reserve 11,906 11,906 11,906
Retained earnings (325,759) (280,191) (312,956)
Translation reserve 1,743 4,272 3,643
----------------------------------- ----------- ----------- -----------
Equity attributable to shareholders
of the Parent Company (12,272) (10,724) (24,898)
------------------------------------ ----------- ----------- -----------
Non-controlling interests - - -
----------------------------------- ----------- ----------- -----------
Total equity (12,272) (10,724) (24,898)
----------------------------------- ----------- ----------- -----------
Liabilities
Non-current liabilities
Loans and other borrowings 4 7,413 10,631 8,102
Trade and other payables - 1,764 1,558
----------------------------------- ----------- ----------- -----------
7,413 12,395 9,660
Current liabilities
Loans and other borrowings 4 2,110 - 1,127
Provisions 5,625 - 3,784
Trade and other payables 15,582 25,719 25,844
Taxation 351 394 482
----------------------------------- ----------- ----------- -----------
23,668 26,113 31,237
----------------------------------- ----------- ----------- -----------
Total liabilities 31,081 38,508 40,897
----------------------------------- ----------- ----------- -----------
Total liabilities and
equity 18,809 27,784 15,999
----------------------------------- ----------- ----------- -----------
Condensed consolidated cash flow statement
6 months 6 months 12 months
ended 30 ended 30 ended 31
June June December
2017 2016 2016
US$'000 US$'000 US$'000
(Unaudited) (Unaudited) (Audited)
Operating activities
Result for the period (13,183) (15,014) (48,045)
Tax charge /(credit) - 90 175
Profit on disposal of aircraft - - 2,913
Loss on disposal of other
property, plant and equipment - 40 37
Profit on disposal of subsidiary - (17,148) (17,953)
Depreciation and amortisation 145 902 1,152
Finance (income)/charges (126) 804 967
Increase in trade and other
receivables 3,929 (2,596) (1,025)
Increase in trade and other
payables (12,512) 6,956 8,778
Tax paid - - -
Share option charges 380 399 665
--------------------------------- ----------- ----------- --------------
Net cash flow from operating
activities (21,367) (25,567) (52,336)
Investing activities
Purchase of intangibles (130) (82) (82)
Disposal of discontinued
operation net of cash disposed
of - 921 921
Sale of property, plant and
equipment - 92 7,846
Purchase of property, plant
and equipment - (119) (69)
--------------------------------- ----------- ----------- --------------
Net cash flow from in investing
activities (130) 812 8,616
Financing activities
Proceeds from the issue of
shares 26,661 - 19,220
Interest paid (212) (277) (755)
Finance lease payments - - -
--------------------------------- ----------- ----------- --------------
Net cash flow from financing
activities 26,449 (277) 18,465
Net movement in cash and
cash equivalents 4,952 (25,032) 25,255
Foreign currency difference (452) (13) (53)
Opening net cash 3,607 28,915 28,915
--------------------------------- ----------- ----------- --------------
Closing net cash 8,107 3,870 3,607
--------------------------------- ----------- ----------- --------------
Condensed consolidated statement of changes in equity
Reverse Non-controlling
Share Share Premium Acquisition Translation Retained Interests Total
Capital Reserve Reserve Earnings Equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 31
December 2015 144,923 108,366 11,906 3,822 (245,138) (20,438) 3,441
Share based payments - - - - 399 - 399
----------------------- ------- ------- ------ ----- --------- -------- --------
Transactions with
owners - - - - 399 - 399
Foreign exchange
difference - - - 435 - - 435
Translation reserve
taken to income
statement on disposal
of subsidiary - - - 15 - - 15
Profit for period - - - - (35,452) 20,438 (15,014)
----------------------- ------- ------- ------ ----- --------- -------- --------
Balance at 30
June 2016 144,923 108,366 11,906 4,272 (280,191) - (10,724)
----------------------- ------- ------- ------ ----- --------- -------- --------
Shares issued 401 18,819 - - - - 19,220
Share based payments - - - - 266 - 266
----------------------- ------- ------- ------ ----- --------- -------- --------
Transactions with
owners 401 18,819 - - 266 - 19,486
Foreign exchange
difference - - - (629) - - (629)
Translation reserve - - - - - - -
taken into income
statement on disposal
of subsidiary
Loss for the year - - - - (33,031) - (33,031)
----------------------- ------- ------- ------ ----- --------- -------- --------
Balance at 31
December 2016 145,324 127,185 11,906 3,643 (312,956) - (24,898)
----------------------- ------- ------- ------ ----- --------- -------- --------
Shares issued 1,740 25,589 - - - - 27,329
Share based payments - - - - 380 - 380
----------------------- ------- ------- ------ ------- --------- --------
Transactions with
owners 1,740 25,589 - - 380 - 27,709
Foreign exchange
difference - - - (1,900) - - (1,900)
Translation reserve - - - - - - -
taken into income
statement on disposal
of subsidiary
Loss for the year - - - - (13,183) -(13,183)
----------------------- ------- ------- ------ ------- --------- --------
Balance at 30
June 2017 147,064 152,774 11,906 1,743 (325,759) -(12,272)
----------------------- ------- ------- ------ ------- --------- --------
On 6 June 2016 a Liquidator was appointed to fastjet Aviation
Limited. Control of fastjet Aviation Limited and its subsidiaries
has therefore been transferred to the liquidator so this entity no
longer forms part of the Group consolidated accounts with effect
from this date.
Notes to the interim results
1. Basis of preparation and accounting policies
The financial information set out in this interim results
statement is for the six months to 30 June 2017. The interim
financial information has not been audited and does not constitute
statutory accounts within the meaning of section 434 of the
Companies Act 2006. The comparatives for the 12-month period ended
31 December 2016 are not the Group's full financial statements for
that period. A copy of the financial statements for that period has
been delivered to the Registrar of Companies. The report of the
auditor was (i) qualified in respect of the appropriateness of
evidence to support the carrying value of assets of US$1.4m and
liabilities of US$18.1m relating to Fly 540 Angola, (ii) included a
reference to an emphasis of matter in which the auditor drew
attention, without qualifying their report, in respect of Going
concern, and (iii) did not contain a statement under section 498
(2) or (3) of the Companies Act 2006.
These financial statements are prepared applying the recognition
and measurement requirements of IFRSs as adopted by the EU but not
in compliance with IAS34.
The Directors have considered the appropriateness of the going
concern basis of preparation in view of their plans for the Group.
The conclusion of a successful capital raise is required for the
company to continue as a going concern
The Stabilisation Plan implemented in 2016 has had the desired
effect of reducing capacity and increasing revenue, cutting loss
making routes and leading to an overall reduction in overheads. The
revenue for H1 2017 is 36% less than the corresponding prior year
period, mainly due to reduction in capacity.
Overall losses decreased by 57% year on year, and the Company is
on track for a cash-flow break-even in Q4 2017.
As described above and in Note 4, fastjet Aviation Limited and
its sub group no longer forms part of the Group's consolidated
accounts. The Directors do not believe that there is recourse to
fastjet Plc for any of the liabilities of FAL and do not expect the
settlement of any intercompany balances as the entities concerned
are unlikely to have sufficient funds to settle them. Accordingly,
the forecasts do not include any cash outflows in respect of the
liabilities of FAL. However, loan notes of cUS$10.3m issued by
fastjet Airlines Limited to FAL, which were previously eliminated
on consolidation, now form an external liability of fastjet
Airlines Limited and accordingly are included in the Group's
Balance Sheet as a Non-Current Liability.
The Directors have also considered a number of risks in
preparing these forecasts including inter alia:
-- Achieving forecast passenger numbers and yield
-- Aviation fuel prices, which are currently not hedged
-- Adverse currency exchange rate movements
-- Achieving successful Brand entry into the South African and Mozambican markets
The Directors believe, based on current financial projections,
inclusive of the proposed placing and funds available, that the
Group will have sufficient resources to meet its operational needs
over the relevant period, being until September 2018. Accordingly,
the Directors continue to adopt the going concern basis in
preparing these Interim Results.
The matters described above represent material uncertainties
that may cast significant doubt upon the Group's and the parent
Company's ability to continue as a going concern and, therefore, to
continue realising its assets and discharging its liabilities in
the normal course of business. The financial statements do not
include any adjustments that would result if the basis of
preparation proved inappropriate.
2. Earnings/loss per share
The loss per share is calculated using the loss figures as
stated in the statement of comprehensive income divided by the
weighted average number of shares in issue. The weighted average
number of shares in issue during the six months to 30 June 2017 was
283 726 974 (2016: 66,422,096). In view of the losses from
continuing activities, the share options in issue have no dilutive
effect.
3. Share capital
On 24 January 2017, 239,082,993 new ordinary shares of 1 pence
each were issued at 16.3 pence per share by way of a placing to new
and existing institutional shareholders raising gross proceeds of
$28.8m ($26.7m after expenses) and consideration shares of $19.2m
issued to Solenta.
4. Discontinued activities
In recent periods, the Group has been exiting its legacy Fly 540
businesses. In H1 2015, the Fly 540 Ghana CGU was disposed of and
has been accounted for within Discontinued Activities. During 2015
the Group was unsuccessful in disposing of the Fly 540 Angola CGU
which was accounted for as an "abandoned activity" within the 2015
full year accounts. Following the appointment of a liquidator to
fastjet Aviation Limited, the intermediate parent company of the
sub-group which included Fly 540 Angola, the entity no longer forms
part of the Group's consolidated accounts. Consequently, the Fly
540 Angola CGU is required to be accounted for as a discontinued
business and the comparative results have been restated.
The profit from discontinued activities net of tax in the
consolidated income statement comprises:
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
US$'000 US$'000 US$'000
Fly 540 Ghana CGU - - -
Fastjet Aviation Ltd including
Fly 540 Angola CGU - 16,339 17,953
----------------------------------- -------------- ------------ ----------------
Profit from discontinued
activities net of tax - 16,339 17,953
----------------------------------- -------------- ------------ ----------------
The profit from discontinued activities arises on the removal of
the net liabilities of the CGU from the Group.
Fly 540 Ghana
In June 2015 fastjet disposed of its interest in Fly 540 Ghana
following which, its financial results, assets and liabilities are
no longer consolidated into the fastjet Group's financial
statements. The Fly 540 Ghana CGU is included within discontinued
activities.
There was no profit or loss on the discontinued Fly 540 Ghana
CGU for the period under review.
Fly 540 Angola
On 6 June 2016 a liquidator was appointed to Fastjet Aviation
Limited, the intermediate parent company of the sub-group which
included the Fly 540 Angola CGU. Upon this appointment, control has
now been transferred to the liquidator so the entity no longer
forms part of the Group consolidated accounts with effect from this
date. The Fly 540 Angola CGU now meets the definition of a
discontinued business and the comparative results have been
restated.
A further consequence of FAL sub-group no longer being
consolidated is recognition of intercompany loans and balances.
This includes US$10.3m unsecured loan notes issued by fastjet
Airlines Limited (fastjet Tanzania) to FAL, together with accrued
interest, which are shown within "non-current & Current
liabilities" on the Group Balance Sheet as at 31 December 2016.
Interest on these unsecured loan notes is accrued at 4% and the
first instalment of the loan note repayment by fastjet Airlines
Limited is due on 2 October 2017.
The effect of the disposal of individual assets and liabilities
of fastjet Aviation Limited entity which includes the Fly 540
Angola CGU is as follows:
Angola Aircraft Other fastjet Total
Operations Aviation
Ltd entities
US$,000 US$,000 US$,000 US$,000
Property, plant
and equipment - 4,719 - 4,719
Trade and other
Receivables 1,364 - 940 2,304
Cash and cash
equivalents 54 - - 54
Bank overdrafts (975) - - (975)
Obligations
under finance
leases - (14,933) - (14,933)
Trade and other
payables (17,139) - (1,824) (18,963)
--------------------- -------------------- ----------------- ----------------------- ----------------
Total (16,696) (10,214) (884) (27,794)
--------------------- -------------------- ----------------- ----------------------- ----------------
6 months ended 6 months 12 months
30 June 2017 ended ended
US$'000 30 June 31 December
2016 2016
US$'000 US$'000
Revenue - - -
Operating costs - (282) (282)
------------------------------------- ------ ------------ ----------------
Operating loss before
exceptional items - (282) (282)
Exceptional items - impairment - - -
------------------------------------- ------ ------------ ----------------
Operating loss after exceptional
items - (282) (282)
Finance charge - (527) (527)
------------------------------------- ------ ------------ ----------------
Loss Before Tax - (809) (809)
------------------------------------- ------ ------------ ----------------
Net liabilities no longer
consolidated - 27,794 27,794
Crystallisation of loan
notes to fastjet Aviation
Limited from fastjet Airlines
Limited - (10,631) (9,017)
Transfer from foreign
exchange reserve - (15) (15)
------------------------------------- ------ ------------ ----------------
Profit/(loss) for the
period - 16,339 17,953
------------------------------------- ------ ------------ ----------------
fastjet Aviation Limited had provided legacy guarantees in
respect of certain liabilities of Fly 540 Ghana and Fly 540 Angola
that had not been discharged at 31 December 2016. However, the
Directors do not believe that there is any recourse to fastjet Plc
in respect of the original liabilities or by fastjet Aviation
Limited in respect of its guarantee of them.
As fastjet Aviation Limited is no longer consolidated within the
Group's financial statements loan notes issued by fastjet Airlines
Limited (fastjet Tanzania) to fastjet Aviation Limited and the
accrued interest, which had previously been eliminated on
consolidation, become an external liability for fastjet Tanzania
and therefore are classified as a current and non-current liability
for fastjet Tanzania. The loan notes terms are for a period of 10
years and accrue interest annually at 4%. The first repayment is
due on 2 October 2017.
5. Related Party Transactions
Up to 29 June 2017, the Company licensed the fastjet brand from
easyGroup Holdings Limited ("easyGroup") under a 10-year Brand
License agreement dated 3 May 2012 (the "Agreement").
The Agreement provides for an annual royalty payment of 0.5% of
total revenue, subject to a minimum royalty payment of US$ 500,000
per annum. The royalty payments were indexed annually in accordance
with US CPI. The present value of the minimum royalty payments was
capitalised as a component of brand license costs.
On 29 June 2017, the Company purchased the fastjet Brand from
the easyGroup for $2.5m, which was settled on 25 August 2017.
The Group has related party transactions with subsidiaries which
are eliminated on consolidation.
6. Events after the balance sheet date
On 29 September 2017, the company issued a proposed placing to
raise gross proceeds of not less than US$28m with agreements
reached to facilitate fastjet's Brand entry into the South African
and Mozambique markets; to acquire beneficial use of three
aircraft; and to create an employee benefit trust.
Copies of these interim financial statements will be available
to view and download shortly from the Company's website
www.fastjet.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GRGDCBUDBGRC
(END) Dow Jones Newswires
September 29, 2017 03:56 ET (07:56 GMT)
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