TIDMFJET
RNS Number : 1117H
Fastjet PLC
30 July 2019
fastjet Plc
("fastjet" the "Company" and together with its subsidiaries the
"Group")
(AIM: FJET)
Interim Results for the six months to 30 June 2019
fastjet, the African value airline for everyone, announces its
unaudited Interim Results for the six months to 30 June 2019,
together with its strategic and operational developments.
The table below shows the financial performance highlights of
the fastjet Group for the period to 30 June 2019.
(Unaudited) (Unaudited)
H1 2019 H1 2018
US$'000 US$'000
Re-presented*
Revenue 19,731 14,479
Expenses from continuing activities (24,221) (23,559)
----------- --------------
Loss from continuing activities after tax (4,490) (9,080)
Loss from discontinued activities net of
tax (5) (5,525)
----------- --------------
Loss for the period after tax (4,495) (14,605)
Loss per share from continuing activities
(US$) (0.001) (0.020)
Cash balance at period end 3,415 3,312
------------------------------------------ ----------- --------------
Presentation of results
* On 26 November 2018, the Group sold its holding in fastjet Air
TZ (BVI) Limited, which further held 49% in fastjet Airlines
Limited. In addition, the Board further resolved to close the
Guernsey structure which consisted of dormant entities. The 2018
Interim Results have therefore been re-presented to report fastjet
Air TZ (BVI) Limited, fastjet Airlines Limited and the dormant
entities as discontinued operations.
Financial highlights
-- Revenue from continuing operations increased by US$5.3m mostly driven by the following:
- Fedair acquisition in October 2018 which resulted in
additional revenue of US$5.8m during the first half of 2019;
- 19% increase in revenue from fastjet Zimbabwe to US$12.1m (H1
2018: US$10.2m) driven by an increase in revenue per passenger and
an increase in revenue per Available Seat Kilometres ("ASK");
and
- fastjet Mozambique revenue reduced by US$2.3m compared to H1
2018, driven by a decrease in capacity following the decision taken
to scale back operations to mitigate losses in Mozambique. Fastjet
Mozambique scaled back frequency on routes to reduce overall
capacity supply and additionally aligned the schedules with LAM.
The Board expects the trading losses in Mozambique to be far less
in the remaining six months of the year compared to the first half
of 2019.
-- Operating expenses reduced by US$0.7m compared to the six
month period to 30 June 2018 as a result of:
- Additional operating expenses of US$5.6m following the acquisition of FedAir;
- Reduction in operating expenses of US$2.5m due to fastjet
Mozambique's decrease in capacity flown; and
- Lower Central costs of US$2.5m after closing of fastjet
Tanzania operations and the restructuring of Head Office
functions.
Operational Headlines
-- Increase in revenue per passenger of 38% year on year;
-- Decrease in load factor of 16% year on year, driven primarily
by substantial RTGS$ ticket price increases and overall Zimbabwean
economy pressures;
-- Increase in fastjet Zimbabwe revenue despite the difficult
trading conditions following the introduction of a new currency
which effectively devalued the existing currency up to 8.4 times
its previous value at official rates and pushing inflation rates to
176%;
-- fastjet Mozambique scaled back frequency on routes to reduce
overall capacity supply following the entry of a competitor coupled
with two category 5 cyclones at the beginning of 2019, all of which
served to suppress demand. This prompted fastjet Mozambique to
deepen its relationship with LAM through a code sharing
arrangement;
-- FedAir remained resilient and generated marginal operating
profits for the first half of the year despite the negative impact
of the Cape Town water crisis and the 2019 elections on the South
African tourism market;
-- Decentralisation of operations into country commenced January 2019; and
-- Network on-time performance at an 87% monthly aggregate.
Commenting on the results, fastjet Chief Executive Officer Nico
Bezuidenhout said:
"It is pleasing to note the improved results for the first half,
seasonally the weakest period of the year, as they illustrate the
positive impact the Company's stabilisation efforts have had on the
financial performance of the business.
Key metrics such as revenue per available seat kilometre showed
a year-on-year improvement of 39% in H1 2019; this is now 140%
higher than the corresponding period in 2016.
In addition to our improved financial results we were also
pleased to win again Best Low-Cost Carrier in Africa at the Paris
Air Show last month, demonstrating our continued commitment to
delivering exceptional service for our customers.
Whilst the stabilisation process, now concluded, was no-doubt
painful, it is encouraging to see the benefit in improved financial
results and a stronger foundation for the future. I would like to
thank our shareholders, employees, suppliers and customers for
their continued support over the past year."
For more information, contact:
fastjet Plc Tel: +27 (0) 10 070 5151
Nico Bezuidenhout, Group Chief Executive
Officer
Mark Hurst, Group Deputy Chief Executive
Officer
Kris Jaganah, Group Chief Financial
Officer
UK media - Citigate Dewe Rogerson Tel: +44 (0) 20 7638 9571
Angharad Couch
Toby Moore
Nick Hayns
For investor enquiries please contact:
Liberum Capital Limited - Nominated Tel: +44 (0) 20 3100 2222
Adviser and Broker
Andrew Godber
Clayton Bush
James Greenwood
William Hall
NOTES TO EDITORS
About fastjet:
fastjet is a multi-award-winning African value airline that
began flight operations in 2012. Its awards include, Leading
African Low-Cost Carrier World Travel Awards 2016, 2017, 2018 and
2019, and Skytrax World Airline Awards Best Low-Cost Airline in
Africa 2017. Today, Fastjet connects Zimbabwe by flying between
Harare and Victoria Falls, Harare and Bulawayo. It also offers
flights from Harare and Victoria Falls to Johannesburg in South
Africa. In November 2017 fastjet also began fastjet branded
domestic flights in Mozambique using one Embraer E145, a 50-seater
aircraft operated by Solenta Aviation Mozambique. As part of a
codeshare agreement entered into with LAM - Mozambique Airlines
fastjet is able to offer its customers flights between Maputo,
Tete, Beira and Quelimane.
Since commencing operations fastjet has flown over 3 million
passengers and has established itself as a punctual, reliable, and
affordable low-cost carrier.
This announcement is released by fastjet Plc and contains inside
information for the purposes of Article 7 of the Market Abuse
Regulation (EU) 596/2014 ("MAR") and is disclosed in accordance
with the Company's obligations under Article 17 of MAR.
For the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055 this announcement is being made on behalf
of fastjet Plc by Kris Jaganah, Chief Financial Officer.
fastjet Plc is quoted on the London Stock Exchange's AIM
Market.
For more information see www.fastjet.com
Business Review
During the first half of 2019 fastjet executed its
decentralisation strategy and focused its efforts on the new
operating environment in Zimbabwe following the introduction of a
new domestic currency effective 22 February 2019. fastjet
Mozambique scaled down its route network following the entry of a
new competitor and, to effectively compete in the Mozambique
market, entered into a new code share agreement with LAM the
national carrier.
Fleet
Following the December 2018 capital raise and the acquisition of
Federal Airlines in October 2018, fastjet currently operates and/or
utilises the following fleet types and aircraft within each
market:
Zimbabwe: Three Embraer ERJ145, 50-seat jets, servicing all
domestic Zimbabwean routes as well as the core cross border routes
to South Africa;
Mozambique: One Embraer ERJ145, 50-seat jet, operating under the
Solenta Aviation Mozambique airline licence and operational
certificates, as fastjet Mozambique; and
South Africa: Unscheduled shuttle operations, predominantly with
two PC-12, eight Cessna C208B Grand Caravans and two Raytheon
Beechcraft 1900D.
Organisation and Board Changes
The Group head office pursued its decentralization strategy and
appointed a Chief Executive Officer and a Chief Commercial Officer
for fastjet Zimbabwe in Q2 2019.
Kris Jaganah joined the Board of Directors on 05 April 2019
following his appointment as Chief Financial Officer of the
Group.
Following the resignation of Nico Bezuidenhout on 01 July 2019,
Mark Hurst, currently Deputy Group CEO, will take up the position
of acting CEO, working closely with Nico for the handover, and
thereafter assume the Group CEO role until such time as a permanent
replacement CEO is appointed.
Nico Bezuidenhout will leave the Group effective 30 September
2019 but will remain an Executive Director and the active Group CEO
until such time.
Revenue generating initiatives
As a value driven airline, fastjet continues to take a more
flexible approach to the traditional low-cost carrier model, with
market specific nuances impacting significantly on the traditional
Western perception of affordable air travel. Local culture demands
and requirements are being better heard and understood and
adjustments made accordingly.
During the first half of the year fastjet implemented the
Flexi-Flyer program appealing to the corporate market. This allows
additional luggage at no extra cost, unlimited ticket changes and a
fast track check in and aircraft boarding.
In addition, fastjet is reviewing its distribution networks to
enable accessibility to more passengers in the key markets it
operates in.
Further enhancements to the Company's website have had positive
effects on inbound online traffic. This, in tandem with the
upgraded reservation system, has led to a stronger fastjet brand
and a user friendly consumer experience, which has seen increases
in organic traffic and direct searches.
Operational Review
fastjet has maintained its high operational standards in
relation to safety, quality, security and reliability. As a result
of this the airline is well regarded in the marketplace, as
evidenced by being named "Africa's Leading Low-Cost Airline" at the
World Travel Awards in both 2018 and 2019, followed by Best African
Low-Cost Carrier at the 2019 Skytrax World Airline Awards.
fastjet has also maintained elevated levels of brand awareness.
It remains the second most followed African airline on Facebook and
has the largest presence on Instagram amongst its market peers. The
Group intends to continue building on these successes to improve
sales and customer service using social media channels.
Significant cost reductions have been achieved following the
decentralisation strategy. The call centre functions covering
Zimbabwe and South Africa are now performed in-house in Zimbabwe
which has led to improved service levels and sales conversions in
both markets.
fastjet Zimbabwe
fastjet Zimbabwe is the leading airline brand in Zimbabwe. In
the first half of 2019, fastjet Zimbabwe carried 78,742 passengers
on 2,579 flights with an average load factor of 61%, down from a
prior year average of 65%. Revenue per passenger increased by 35%
following the "right pricing" of the ticket seats in the second
half of 2018 and onwards.
Revenue per Available Seat Kilometre improved by an impressive
29% due to increased yields as a result of the above "right
pricing" strategy.
fastjet Zimbabwe now operates four daily return flights between
Johannesburg and Harare, double daily between Harare and Victoria
Falls, double daily between Harare and Bulawayo and three times per
week (seasonally) between Johannesburg and Victoria Falls.
fastjet Zimbabwe has plans to further increase frequencies on
these four key routes and is also looking at adding additional
regional destinations for deployment in Q4 2019 (subject to
receiving designations and route approvals) and then consistently
throughout 2020.
fastjet's Zimbabwe operation, which accounted for 67% of Group
revenue in FY2018, remains sensitive to currency volatility and the
frequently changing and volatile local environment that currently
exists in Zimbabwe.
fastjet Zimbabwe has maintained a good 'On Time Arrival'
performance of 88%, while aircraft utilisation averaged 6.33 block
hours per day per aircraft (H1 2018: 8.8 block hours). In the first
half of 2019, fastjet Zimbabwe reduced frequencies on certain week
days between Harare and Johannesburg and Harare and Victoria Falls,
which were traditionally weaker flights that did not contribute
positive margin to operating results.
On 22 February 2019, the Reserve Bank of Zimbabwe formally
announced the introduction of a new domestic currency which
effectively devalued its domestic US dollar denominated assets and
liabilities, including cash balances. At the same time they
introduced an interbank exchange rate of RTGS$ 2.500 = US$1.00.
Since March 2019, because of the above changes, the RTGS$ to US$
exchange rates via interbank market have devalued significantly
from the starting RTGS$2.500 to a current interbank rate of RTGS$
8.900 as of 24 July 2019. This has driven a significant increase in
costs of all supplies in country, with resultant inflation running
at 176% in RTGS$ terms. Our RTGS$ ticket pricing has been updated
regularly throughout the first half of 2019 taking into account a
stable baseline US$ ticket pricing model converted at the
prevailing RTGS$: US$ exchange rates.
On 26 June 2019, an official (s35 of exchange control
regulations statutory instrument 109 of 1996) announcement was made
by the Reserve Bank of Zimbabwe of the removal of multi-currency,
with the RTGS$ / bond notes as the only legal tender in the country
except for international airlines. fastjet Zimbabwe currently sells
the majority of its tickets in RTGS$, US$, and South African Rand.
Since March 2019, Fastjet has had access to the interbank market
for its foreign currency requirements.
fastjet Mozambique
During December 2018, competition in the local Mozambique market
intensified following the entry of Ethiopian Airlines as a domestic
carrier. This increase in aircraft and capacity supply, coupled
with two category 5 tropical cyclones at the beginning of 2019
which served to suppress demand, prompted fastjet to scale back
frequency on routes, reduce overall capacity supply and deepen its
relationship and partnership with LAM. The two carriers place their
airline designator codes on each other's services, align schedules
and remove duplication. Therefore, passengers will have an
increased choice of fastjet-coded services, with a reduced
financial exposure to the Company.
The Group continues to closely monitor the loss evolution of its
Mozambique operations, both in context of demand (negative economic
impact of natural disasters offset by pending gas extraction coming
on-stream) and supply (LAM partnership and Ethiopian Airlines
Market entry) considerations.
The Board expects the trading losses in Mozambique to be far
less in the remaining six months of the year, compared to the first
half of 2019.
The fastjet Mozambique losses represent a significant
operational challenge to the Group. The Board has taken action to
minimize such losses whilst recognizing that it is strategically
important to retain fastjet brand visibility in the country in
expectation of the considerable increase in passenger demand in
2020 onwards. This demand will be driven by the commencement of oil
and gas infrastructure build projects in the northern areas of
Mozambique.
fastjet South Africa
FedAir has remained resilient and generated marginal operating
profits for the first half of the year, even though the South
African tourism market has experienced a slight decrease in tourist
arrivals. This trading pattern is in line with historical trends
over several prior years, with the majority of operating profit
being generated in the second half of each year, driven by tourist
arrivals during the European, US, and Asian summer holiday
season.
South Africa represents the largest domestic aviation market on
the African continent and is the largest trading partner to both
Zimbabwe and Mozambique, whilst also being an important tourist
source market for both these countries.
FedAir provides an operating platform for the fastjet brand to
enter the domestic South African Market in addition to presenting
opportunities to gain synergies in back-office functions.
In preparing FedAir to have the ability to operate a fastjet
branded airline on its own in South Africa in 2020, should the
Board strategically decide this, the Group has registered one of
the ERJ145s on the FedAir aircraft operating certificate ("AOC").
FedAir will support the fastjet Zimbabwe operation on an aircraft,
crew, maintenance and insurance basis ("ACMI") going forward and
effective from July 2019. This allows FedAir to gain its own
operational airline expertise on the ERJ145 fleet and further
replaces any long-term support or dependencies on Solenta Aviation
(South Africa) for additional aircraft and crew supply.
Financial Review
Re-presented*
H1 2019 H1 2018
US$'000 US$'000
(Unaudited) (Unaudited)
------------------- ------------------------ ------------ -------------
Revenue:
fastjet Zimbabwe 12,126 10,244
fastjet Mozambique** 1,874 4,235
FedAir 5,731 -
Total 19,731 14,479
Operating profit
/ (loss): fastjet Zimbabwe (1,430) (3,203)
fastjet Mozambique (2,383) (2,697)
FedAir 90 -
Central (767) (3,180)
Discontinued operations (5) (5,525)
Operating loss for the period after tax (4,495) (14,605)
------------ -------------
** fastjet Mozambique reduced revenue driven by the Board's
decision to reduce activities to avoid the active ticket price war
between LAM and Ethiopian airlines as they both competed
aggressively and at below unit cost levels to gain and / or retain
market share.
Key performance indicators
The Directors consider the following to be the key performance
indicators when measuring underlying operational performance:
Scheduled Airline Services (Continuing Operations)
Measure H1 2019 H1 2018 Movement
(Re-presented)
*
--------------------------------- ----------- --------------- --------
Passenger numbers 92,089 119,087 -23%
Revenue per Passenger (US$) 145 107 36%
Seats Flown 149,350 162,600 -8%
Available Seat Kilometres (ASK) 110,805,400 146,199,750 -24%
Load Factor 62% 73% -11pp
Revenue per ASK (US cents) 12.04 8.73 38%
Cost per ASK (US cents) 16.17 16.25 0%
Cost per ASK ex. Fuel (US cents) 11.10 13.27 -16%
Aircraft Utilisation (Hours) 5.69 8.40 -32%
Aircraft Utilisation at June
end (Hours) 4.84 8.76 -45%
Aircraft Utilisation in Peak
Month (Hours) 6.45 8.76 -26%
* Note: 2018 comparatives figures were re-presented to exclude
fastjet Tanzania.
Unscheduled Airline Services (FedAir)
Measure H1 2019 H1 2018 Movement
-------------------------------------- -------- -------- ---------
Passenger numbers - Shuttle 16,369 - n/a
Passenger numbers - Charter 6,465 - n/a
Revenue per passenger (US$) - Shuttle 138 - n/a
Revenue per passenger (US$) - Charter 209 - n/a
The Group recorded a loss after tax for the period of US$4.5m
(H1 2018: loss US$14.6m).
Group revenue increased year on year by 36% to US$19.7m (H1
2018: US$14.5m). This is attributable mostly to the acquisition of
Federal Airlines in October 2018.
Cash position
Cash balances during the period decreased from US$6.6m to
US$3.4m incurred mostly due to the following:
- Funding of Mozambique operations;
- Deregistration of Tanzania aircraft - US$1.25m paid to
Tanzanian CAA and airport authorities;
- Settlement of the loan with SSCG Africa Holdings - US$1.25m repaid on the 10 June 2019; and
- Devaluation of the newly introduced currency in Zimbabwe.
Exchange rates
On 22 February 2019 the Reserve Bank of Zimbabwe formally
announced the introduction of a new domestic currency which
effectively devalued its domestic US dollar denominated assets and
liabilities including cash balances. At the same time they
introduced an interbank exchange rate of RTGS$ 2.500 = US$1.00.
Since March 2019, because of the above changes, the RTGS$ to US$
exchange rates via interbank market have devalued significantly
from the starting RTGS$2.500 to a current interbank rate of RTGS$
8.900 as of 24 July 2019. This has driven a significant increase in
costs of all supplies in country with resultant inflation running
at 176%.
On 26 June 2019, an official (s35 of exchange control
regulations statutory instrument 109 of 1996) announcement was made
by the Reserve Bank of Zimbabwe of the removal of multi-currency,
with the RTGS$/ bond notes as the only legal tender in country
except for international airlines.
Post balance sheet event
The Directors are not aware of any material events which
occurred after the reporting date and up to the date of this
report.
Going Concern
The Group has in recent years operated at a loss and incurred a
further operating cash outflow during the first half of 2019. The
Group reviewed its current operating model in 2018 and took the
following initiatives to reduce cash outflow:
- Divestment from Tanzania;
- Downsizing and restructuring of Head Office;
- Conversion of debt into equity;
- Acquisition of leased aircraft for shares;
- Restructuring of legacy debts;
- Localisation of services in Zimbabwe;
- Route optimisation; and
- Increase in fares to match costs.
There are risks associated with operating in Africa including
but not limited to political, judicial, administrative, fiscal and
other regulatory matters. Many countries in Africa, including those
in which the Group currently operate, 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 concerns
with respect to licences 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 Directors continue to adopt the going concern basis
notwithstanding the expected need for further funding and assumed
ability to extract hard currency funds from Zimbabwe in the
foreseeable future.
The Directors believe, based on current financial projections
and funds available and expected to be made available, that the
Group will have sufficient resources to meet its operational needs
over the relevant period, being at least until year end.
Accordingly, in preparing these Financial Statements, the Directors
continue to adopt the going concern basis. However, the headroom of
available cash resources is minimal, and the projections are very
sensitive to any assumptions not being met.
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.
The key assumptions applied by the Directors in the preparation
of the detailed cash flow forecasts which form the basis of this
forecast are:
- Load factors will average 74% for second half of 2019, which
is traditionally stronger than the first half;
- Introduction of new initiatives to drive ex South Africa passengers;
- Focused, country-centric marketing by the commercial teams;
- Majority of revenue generated in US$ and ZAR;
- Mozambique operating expenses reducing following revised terms with Solenta; and
- Exchange rates: fastjet cashflows are exposed to movements in
the RTGS$ and ZAR. In its forecasting fastjet has assumed that the
key exchange rates remain at current levels.
The Directors have considered a number of risks in preparing
these forecasts, including inter alia:
- Not achieving forecast passenger numbers and load factors;
- An increase in aviation fuel prices, which are currently not hedged;
- Adverse currency exchange rate movements; and
- Ability to successfully remit cash from Zimbabwe.
Current Trading and Outlook
Although the trading environment remains challenging the Board
is confident of the long-term prospects of the market. The airline
has a clear plan, rigid in its implementation but flexible enough
to adapt to changing market conditions.
Nico Bezuidenhout Kris Jaganah
Chief Executive Officer Chief Financial Officer
Condensed consolidated income statement
(Re-presented)* 12 months
6 months ended 6 months ended ended 31
30 June 2019 30 June 2018 December 2018
US$'000 US$'000 US$'000
(Unaudited) (Unaudited) (Audited)
---------------------- ------------------------------------- ------------------------------------- --------------
Revenue 19,731 14,479 38,514
Cost of sales (18,341) (17,428) (50,273)
------------------------------------- ------------------------------------- --------------
Gross profit / (loss) 1,390 (2,949) (11,759)
Administrative costs (4,912) (6,333) (13,774)
Operating loss (3,522) (9,282) (25,533)
Exceptional items (22,106)
Finance income 72 1,208 431
Finance charges** (1,040) (1,006) (10,641)
------------------------------------- ------------------------------------- --------------
Loss from continuing
activities before
tax (4,490) (9,080) (57,849)
Taxation - - (324)
Loss from continuing
activities after tax (4,490) (9,080) (58,173)
Loss from
discontinued
activities net of
tax (5) (5,525) (6,867)
Loss for the period (4,495) (14,605) (65,040)
------------------------------------- ------------------------------------- --------------
Attributable to:
Shareholders of the
parent company (4,495) (14,605) (65,040)
Non-controlling
interests - - -
------------------------------------- ------------------------------------- --------------
Loss per share
(basic and diluted)
(US$)
From continuing
activities (0.001) (0.020) (0.080)
From discontinued
activities (0.000) (0.010) (0.010)
---------------------- ------------------------------------- ------------------------------------- --------------
Total (0.001) (0.030) (0.090)
---------------------- ------------------------------------- ------------------------------------- --------------
* Note: 2018 comparatives figures were re-presented to exclude
fastjet Tanzania.
** Includes net foreign exchange losses in Zimbabwe of US$753k
for the period ended 30 June 2019.
Condensed consolidated statement of comprehensive income
(Re-presented)*
6 months ended 6 months ended 12 months ended
30 June 2019 30 June 2018 31 December 2018
US$'000 US$'000 US$'000
(Unaudited) (Unaudited) (Audited)
------------------------------------------------------------- ----------------- ---------------- ------------------
Loss for the year (4,495) (14,605) (65,040)
----------------- ---------------- ------------------
Items that may be reclassified to profit or loss: -
- Exchange differences on translation of continuing
operations 65 (1,806) 73
- Exchange differences on translation of discontinued
operations - - (5,491)
Total other comprehensive income / (expense) for the year 65 (1,806) (5,418)
----------------- ---------------- ------------------
Total comprehensive expense (4,430) (16,411) (70,458)
----------------- ---------------- ------------------
Attributable to:
Shareholders of the parent company (4,430) (16,411) (70,458)
Non-controlling interests - - -
------------------------------------------------------------- ----------------- ---------------- ------------------
Total comprehensive expense (4,430) (16,411) (70,458)
------------------------------------------------------------- ----------------- ---------------- ------------------
* Note: 2018 comparatives figures were re-presented to exclude
fastjet Tanzania.
Condensed consolidated balance sheet
As at As at Year ended
30 June 2019 30 June 2018 31 December 2018
US$'000 US$'000 US$'000
(Unaudited) (Unaudited) (Audited)
----------------------------------------------------------- ---- -------------- -------------- ------------------
Non-current assets
Intangible assets 6,393 3,000 6,384
Property, plant and equipment 15,473 42,458 16,561
-------------- -------------- ------------------
21,866 45,458 22,945
-------------- -------------- ------------------
Current assets
Inventory 139 - 138
Cash and cash equivalents 3,415 3,312 6,573
Trade and other receivables 3,767 12,542 4,409
Loan to Annunaki 5 - 1,090
Other financial assets - 11,000 -
7,326 26,854 12,210
Total assets 29,192 72,312 35,155
============== ============== ==================
Equity
Share capital 192,077 150,752 192,077
Share premium account 215,050 209,216 215,004
Treasury shares (288) (288) (288)
Shares in lock-up transactions - (14,237) -
Reverse acquisition reserve 11,906 11,906 11,906
Retained earnings (407,792) (352,951) (403,297)
Translation reserve (4,930) (1,385) (4,997)
-------------- -------------- ------------------
Equity attributable to shareholders of the Parent Company 6,023 3,013 10,405
Non-controlling interests - - -
-------------- -------------- ------------------
Total equity 6,023 3,013 10,405
-------------- -------------- ------------------
Liabilities
Non-current liabilities
Loans and other borrowings 4,177 19,273 3,767
Obligations under finance leases - 25,975 -
Deferred tax liability 3,761 - 3,746
-------------- -------------- ------------------
7,938 45,248 7,513
-------------- -------------- ------------------
Current liabilities
Loans and other borrowings 756 708 2,709
Obligations under finance leases - 3,418 -
Trade and other payables 14,475 19,857 14,528
Taxation - 68 -
-------------- -------------- ------------------
15,231 24,051 17,237
-------------- -------------- ------------------
Total liabilities 23,169 69,299 24,750
-------------- -------------- ------------------
Total liabilities and equity 29,192 72,312 35,155
============== ============== ==================
Condensed consolidated cash flow statement
(Re-presented)*
6 months ended 6 months ended
30 June 2019 30 June 2018 12 months ended 31 December 2018
US$'000 US$'000 US$'000
(Unaudited) (Unaudited) (Audited)
------------------------------------------- ----------------- ---------------- ---------------------------------
Operating activities
Loss for the year (4,495) (14,605) (65,040)
Adjustments for non-cash items:
Loss from discontinued activities 5 5,525 6,867
Equity-settled share-based payment -
released - - 11,317
Equity-settled share-based payment -
services received - 2,334 5,254
Amortisation of other intangible assets - - 1,034
Impairment of FedAir Brand Licensing
Agreement - - 4,609
Impairment of goodwill - - 1,499
Impairment of air operations certificate - - 2,979
Impairment of fastjet Plc brand - - 1,220
Impairment of FedAir brand - - 108
Lease rental arrears on the aircraft
converted into equity - - 495
Finance income 239 (1,208) (431)
Finance charges - 1,006 10,641
Depreciation of aircraft 1,131 - 692
Depreciation of other property, plant and
equipment 235 215 111
Share option charges - 192 281
Tax expense (continuing operations) - - 324
Changes in working capital:
Decrease in trade and other receivables 339 (6,347) 1,405
(Decrease) in trade and other payables 317 (7,557) (14,672)
----------------- ---------------- ---------------------------------
Cash utilised in operating activities (2,229) (20,445) (31,307)
----------------- ---------------- ---------------------------------
Cash generated from operating activities of
discontinued activities - (5,342) 1,426
Interest received - - 124
----------------- ---------------- ---------------------------------
Net cash utilised in operating activities (2,229) (25,787) (29,757)
----------------- ---------------- ---------------------------------
Investing activities
Purchase of subsidiary (net of cash
acquired) - - (2,412)
Purchase of intangibles - (285) (526)
Purchase of property, plant and equipment (240) (152) (627)
Disposal of discontinued operation (net of
cash disposed) - - (84)
Investing activities from discontinued
operations - (32) (41)
----------------- ---------------- ---------------------------------
Net cash flow from investing activities (240) (469) (3,690)
----------------- ---------------- ---------------------------------
Financing activities
Proceeds from the issue of shares (net of
expenses) - - 24,668
Loan received - SAHL - 12,000 12,000
Loan received - SSCG - - 2,000
Loan advanced - Annunaki (726) - (5,000)
Loan repayment - SSCG (1,250) - -
Proceeds from loan - Annunaki 1,366 - -
Interest paid (124) (3) (1,642)
Instalment sale liabilities repayments (313) - (177)
Finance lease obligations repayments - (2,415) (2,284)
Loan notes and interest paid - discontinued
operations - (702) (1,234)
Net cash flow from financing activities (1,047) 8,880 28,331
----------------- ---------------- ---------------------------------
Net movement in cash and cash equivalents (3,516) (17,376) (5,116)
Effect of exchange rate changes on cash 358 609 (8,390)
Opening net cash 6,573 20,079 20,079
----------------- ---------------- ---------------------------------
Closing net cash 3,415 3,312 6,573
================= ================ =================================
* Note: 2018 comparatives figures were re-presented to exclude
fastjet Tanzania.
Condensed consolidated statement of changes in equity
Shares Reverse
Share Share Treasury in lock-up Acquisition Translation Retained
Capital Premium Shares transactions Reserve Reserve Earnings Equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------------- -------- -------- -------- ------------- ------------ ----------- --------- --------
Balance at 01
January 2018 150,752 209,216 (288) (16,571) 11,906 421 (338,538) 16,898
Share based payments - - - - - 192 192
Share services
received - - - 2,334 - - 2,334
Transactions
with owners - - - 2,334 - - 192 2,526
------------------------- -------- -------- -------- ------------- ------------ ----------- --------- --------
Loss for the
year - - - - - - (14,605) (14,605)
Other comprehensive
income - - - - - (1,806) - (1,806)
Total comprehensive
loss for the
year - - - - - (1,806) (14,605) (16,411)
------------------------- -------- -------- -------- ------------- ------------ ----------- --------- --------
Balance at 30
June2018 150,752 209,216 (288) (14,237) 11,906 (1,385) (352,951) 3,013
------------------------- -------- -------- -------- ------------- ------------ ----------- --------- --------
Shares issued
net of issuance
costs 41,325 5,788 - - - - - 47,113
Share based payments - - - - - - 89 89
Share services
received - - - 2,920 - - - 2,920
Share services
released - - - 11,317 - - - 11,317
------------------------- -------- -------- -------- ------------- ------------ ----------- --------- --------
Transactions
with owners 41,325 5,788 - 14,237 - - 89 61,439
------------------------- -------- -------- -------- ------------- ------------ ----------- --------- --------
Loss for the
year - - - - - - (50,435) (50,435)
Other comprehensive income:
- Exchange differences
on translation
of continuing
operations - - - - - 1,879 - 1,879
- Exchange differences
on translation
of discontinued
operations recycled
to income statement - - - - - (5,491) - (5,491)
------------------------- -------- -------- -------- ------------- ------------ ----------- --------- --------
Total other comprehensive
loss - - - - - (3,612) - (3,612)
------------------------- -------- -------- -------- ------------- ------------ ----------- --------- --------
Total comprehensive
loss for the
year - - - - - (3,612) (50,435) (54,047)
------------------------- -------- -------- -------- ------------- ------------ ----------- --------- --------
Balance at 31
December 2018 192,077 215,004 (288) - 11,906 (4,997) (403,297) 10,405
------------------------- -------- -------- -------- ------------- ------------ ----------- --------- --------
Share costs converted
into equity 48 48
Transactions
with owners - 48 - - - - - 48
------------------------- -------- -------- -------- ------------- ------------ ----------- --------- --------
Loss for the
year - - - - - - (4,495) (4,495)
Other comprehensive
income - - - - - 65 - 65
------------------------- -------- -------- -------- ------------- ------------ ----------- --------- --------
Total other comprehensive
income - - - - - 65 - 65
------------------------- -------- -------- -------- ------------- ------------ ----------- --------- --------
Total comprehensive
loss for the
year - - - - - 65 (4,495) (4,430)
------------------------- -------- -------- -------- ------------- ------------ ----------- --------- --------
Balance at 30
June 2019 192,077 215,052 (288) - 11,906 (4,932) (407,792) 6,023
------------------------- -------- -------- -------- ------------- ------------ ----------- --------- --------
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 2019. 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 twelve-month period
ended 31 December 2018 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.
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 Group has in recent years operated at a loss and incurred a
further operating cash outflow during the first half of 2019. The
Group reviewed its current operating model in 2018 and took the
following initiatives to reduce cash outflow:
- Divestment from Tanzania;
- Downsizing and restructuring of Head Office;
- Conversion of debt into equity;
- Acquisition of leased aircraft for shares;
- Restructuring of legacy debts;
- Localisation of services in Zimbabwe;
- Route optimisation; and
- Increase in fares to match costs.
There are risks associated with operating in Africa including
but not limited to political, judicial, administrative, fiscal and
other regulatory matters. Many countries in Africa, including those
in which the Group currently operate, 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 concerns
with respect to licences 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 Directors continue to adopt the going concern basis
notwithstanding the expected need for further funding and assumed
ability to extract hard currency funds from Zimbabwe in the
foreseeable future.
The Directors believe, based on current financial projections
and funds available and expected to be made available, that the
Group will have sufficient resources to meet its operational needs
over the relevant period, being at least until year end.
Accordingly, in preparing these Financial Statements, the Directors
continue to adopt the going concern basis. However, the headroom of
available cash resources is minimal, and the projections are very
sensitive to any assumptions not being met.
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.
The key assumptions applied by the Directors in the preparation
of the detailed cash flow forecasts which form the basis of this
forecast are:
- Load factors will average 74% for second half of 2019, which
is traditionally stronger than the first half;
- Introduction of new initiatives to drive ex South Africa passengers;
- Focused, country-centric marketing by the commercial teams;
- Majority of revenue generated in US$ and ZAR;
- Mozambique operating expenses reducing following revised terms with Solenta; and
- Exchange rates: fastjet cashflows are exposed to movements in
the RTGS$ and ZAR. In its forecasting fastjet has assumed that the
key exchange rates remain at current levels.
The Directors have considered a number of risks in preparing
these forecasts, including inter alia:
- Not achieving forecast passenger numbers and load factors;
- An increase in aviation fuel prices, which are currently not hedged;
- Adverse currency exchange rate movements; and
- Ability to successfully remit cash from Zimbabwe.
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 2019 was
3,800,824 881 (2018:522,408,205). In view of the losses from
continuing activities the share options in issue have no dilutive
effect.
3. Share capital
There has been no issue of shares during the six months ended 30
June 2019.
4. Related Parties
Solenta:
Solenta Aviation Holdings Limited ("SAHL") is currently a 59.34%
shareholder in fastjet Plc and provides aircraft leasing and
related services to the Group.
During 2017 fastjet Plc entered into various agreements with
SAHL and/or its subsidiaries which included (i) an option to
purchase FedAir, (ii) FedAir brand licence agreement, (iii) a
restraint of trade agreement with SAHL group.
During 2018 fastjet Plc entered into a loan agreement with
SAHL.
On 07 October 2018 Parrot Aviation and fastjet Plc exercised
their option to purchase the shareholding of FedAir, which at the
time of purchase was owned 67.60% by Solenta Investment Holdings
Proprietary Limited, a subsidiary company of SAHL.
The amounts included in the balance sheet for these items are as
follows:
6 months ended 6 months ended Year ended
30 June 2019 30 June 2018 31 December 2018
SAHL group entity US$'000 US$'000 US$'000
-------------------------------------------- ------------------- --------------- --------------- -----------------
Current assets
Other financial assets SAHL - 11,000 -
Non-current liabilities
Long term loan SAHL 2,010 - 2,000
Current liabilities
ATR 72-600 accrual(1) AL&M - 10,946 -
Accruals 512 157
SAHL 44 - -
* Solenta Aviation Holdings Limited
SAM
* Solenta Aviation Mozambique Limitada 114 - -
Trade payables
* Solenta Aviation Holdings Limited SAHL 36 - 97
* Solenta Aviation Mozambique Limitada SAM 1,971 301 857
* Solenta Aviation (Pty) Limited PTY 2,431 - 570
Equity
Equity-settled share-based payment SAHL - 16,571 -
transactions
(1) AL&M is a subsidiary company of the ACIA Aero Capital
Limited ("AACL") group, which is not part of the SAHL group of
companies. However, a 1.24% shareholder of SAHL also owns shares of
AACL and, via this relationship, AL&M has been reflected as a
related party for total transparency purposes.
On 1 November 2017 Solenta Aviation Mozambique Limitada ("SAM")
and fastjet Mozambique Limited ("FAM") entered into an agreement by
which Solenta Mozambique S.A supplies to fastjet Mozambique Limited
all the required flight operations activities and functions,
administration and management support, administration support for
the purpose of settlement of operations and related billing,
maintenance activities and operations, supervision of fuel
uplifting provided by the third-party suppliers, supervision of
airside ground handling activities provided by the third party
suppliers and airside oversight of asset security. The amounts
relating to this are reflected in the table above.
Additionally, fastjet Plc entered into a brand licence agreement
with SAM to allow SAM to operate on its AOC the fastjet brand.
There have been no transactions during the year with SAM in regard
to this agreement.
The amounts included in the Income Statement in relation to
transactions with the SAHL group of companies during the year were
as follows:
6 months
ended 6 months ended
30 June 2019 30 June 2018 Year ended
SAHL group entity US$'000 US$'000 31 December 2018 US$'000
---------------------------------------- ------------------ ------------- -------------- -------------------------
Crew, Maintenance, Insurance and other
services SAM 2,214 - 3,059
Aircraft operating dry leases SAHL - 6,479 2,400
Aircraft operating dry leases - share
release component SAHL - 2,920 5,254
Crew and Maintenance services PTY 2,282 - 5,924
Interest charges - SAHL loan SAHL 58 - 628
Raising fee - SAHL loan SAHL - - 240
Liberum Capital Limited:
Liberum is fastjet's nominated advisor and currently holds a
5.52% shareholding in fastjet. The following were the transactions
that took place between Liberum and fastjet during the year:
6 months ended 6 months ended
30 June 2019 30 June 2018 Year ended
US$'000 US$'000 31 December 2018 US$'000
------------------ ------------------ ------------------ -------------------------
Professional fees 57 62 2,469
------------------ ------------------ -------------------------
Directors:
Mark Hurst, the fastjet Group Deputy CEO with effect from 01
January 2019, is also a Director of ACIA Aero Capital Limited and
certain of its subsidiaries.
Transactions with subsidiaries:
Transactions with Group companies have been eliminated on
consolidation and are not disclosed separately under related
parties above.
5. Post balance sheet events
The Directors are not aware of any material events which
occurred after the reporting date and up to the date of this
report.
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 news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR MMGZNMLFGLZZ
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