Interim Results

RNS Number : 4320N

Fastjet PLC

28 September 2012

 



28 September 2012

FastJet Plc

("FastJet" or "the Company"; AIM: FJET)

Interim Results

FastJet Plc announces its unaudited interim results for the six months ended 30 June 2012.

HIGHLIGHTS

·      Strategic positioning of FastJet for launch as a low cost carrier for Africa

·      Completion of acquisition of Lonrho Plc's aviation division

·      Execution of initial 10-year Brand Licence with Sir Stelios Haji-Ioannou's easyGroup

·      Ed Winter appointed as Director and CEO

·      Fund-raising of £5.5 million (US$8.5 million) completed in July 2012

·      First Airbus A319 leased for FastJet launch in November 2012

·      FastJet to be launched in Tanzania, followed shortly thereafter in Kenya

FastJet's Executive Chairman, David Lenigas, commented on these results:

"In this six-month period FastJet's prospects have been transformed through the acquisition of Lonrho's aviation business.  Following significant market due diligence and with the guidance of Sir Stelios's easyGroup we now have in place the strategy for the creation of an exciting low cost carrier focused on Africa, one of the world's most rapidly developing markets.

The Company's first flight under the FastJet brand is planned for November. We have a world class management team with a great depth of aviation experience and all the components are coming together for a successful launch."

Ed Winter, CEO of FastJet, commented: 

"Worldwide experience has demonstrated the economic and social transformation that low cost carriers bring. FastJet will be the first pan-African low cost carrier, and the more we look at the scale of the African opportunity, the more excited we become about the prospects for the Company and for the markets we will serve."

For further information, please contact:

FastJet Plc                                                       Tel:  + 44 203 651 6355
David Lenigas

Ed Winter

Richard Blakesley

WH Ireland                                                      Tel:  + 44 207 220 1666
James Joyce

Nick Field

Citigate Dewe Rogerson                                  Tel:  + 44 207 638 9571

Angharad Couch

Sally Marshak

Eleni Menikou

CHAIRMAN'S STATEMENT

Review of developments

On 13 June 2012 the Company published an admission document and on 29 June 2012, at a general meeting of the Company's shareholders, resolutions were passed approving the Lonrho Aviation acquisition and the acquisition of a further 49.98% economic interest in Fly540 Kenya (together "the Acquisition"). The Acquisition was completed thereafter.

On 8 May 2012, the Company announced that it had entered into a brand licence with Sir Stelios Haji- Ioannou's easyGroup, under which it had agreed to licence the FastJet brand from easyGroup subject to certain conditions including the completion of the Acquisition (the "Brand Licence"). Under the Brand Licence the Company agreed to issue to easyGroup shares equal to 5% of the Company's diluted share capital and options over a further 10% of the Company's diluted share capital. Sir Stelios and easyGroup also agreed to provide consultancy services to FastJet for the duration of the Brand Licence. easyGroup has the right to appoint two directors to the Board of FastJet whilst the Brand Licence is in force.

Board appointment

Following the general meeting held on 29 June 2012 we were delighted to welcome to the Board Ed Winter who was also appointed Chief Executive Officer of the Company.  Ed has vast experience in the low cost aviation business, as a founder of Go and former COO of easyJet, as well as a long history in the broader airline industry as a pilot and senior manager with British Airways. His knowledge and leadership will be a great asset to the Company as we launch and grow FastJet. Ed is one of the two easyGroup nominees to the Board.

Financial review

The Lonrho Aviation transaction has been accounted for as an acquisition by the Company and as such the results for the six months to 30 June 2012 reflect only two days of trading of the acquired business.

On 2 July 2012 the Company announced it would change its accounting reference date from 30 June to 31 December. The current reporting period was therefore extended to cover the 18 months to 31 December 2012, with the results for this period to be published before 30 April 2013.

Given the nature of the acquired businesses it was also decided that the Group would report in US Dollars.

In the six months to 30 June 2012 the Group made a loss from continuing activities after tax of US$2.11 million (0.69c per share).  This compares with a loss from continuing activities of US$0.41 million for the six months to 31 December 2011 (0.62c per share), and with a loss of US$0.11 million for the year to 30 June 2011 (0.25c per share).

The Group had only one day of income from continuing activities during the period, and the majority of the losses represent management, consultancy and administrative expenses as well as costs associated with the Acquisition.

The results of Lonrho Aviation (BVI) Limited for the six months ended 30 June 2012 are separately disclosed in note 6 of this interim results statement.

In July and August 2012 Fly540 passenger numbers were well ahead of last year's levels, with 120,346 passengers carried versus 87,943 for the same period last year although profitability has been below management's expectations. The new management team has identified certain potential liabilities which it is taking action to address, however these legacy issues will not impact on the ability of management to implement its strategy, and the launch of FastJet branded services remains fully on track with first flights beginning in November. In addition, whilst its clear focus is on the launch of the FastJet brand, the Board is also taking decisive action to improve operational and financial performance at Fly540 whilst services continue under that brand.

On the 30 June 2012 balance sheet, the fair values of acquired assets, liabilities and goodwill have been determined on a provisional basis pending the finalisation of the valuation of the tangible and intangible assets and the related deferred taxes.

Issue of options to directors

On 31 July 2012 the Company announced that it had granted options to Ed Winter over 40 million ordinary shares.  These options have an exercise price of 5p and have various exercise conditions related to performance targets based on passenger numbers, geographic expansion, profitability and share price performance over the next five years.

Outlook

FastJet will launch its new low-cost services in November, with the first aircraft secured to commence operations from Dar es Salaam in Tanzania. As previously announced we plan to build the FastJet fleet to around 15 aircraft during 2013.  This should lead to significant growth in the revenue capacity of the business, with each new aircraft capable of carrying approximately 250,000 passengers per year.

In anticipation of launch a substantial amount of preparation work has been completed already in the areas of operations, sales and marketing, recruiting, IT and regulatory matters to ensure the FastJet launch meets its stated commitment to world class standards. The head office team has been strengthened considerably in recent weeks with the hiring of key individuals with strong global airline backgrounds.

The next few months will represent further transformation for the company as we move from planning to implementation and growth of the FastJet business model. The Board is confident that it has in place the right strategy and the right team to build a successful and profitable future for our shareholders.

David Lenigas

Executive Chairman

28 September 2012

Consolidated statement of comprehensive income

		6 months to 30 June 2012	6 months to 31 December 2011	Year to 30 June 2011
		US$'000	US$'000	US$'000
	Note	(Unaudited)	(Unaudited, restated)	(Audited, restated)
Revenue		347	-	-
Operating charges		(2,430)	(414)	(108)
Operating loss		(2,083)	(414)	(108)
Finance income		-	-	-
Finance charges		(23)	-	-
Loss from continuing activities before tax		(2,106)	(414)	(108)
Tax charge		-	-	-
Loss from continuing activities after tax		(2,106)	(414)	(108)
(Loss)/profit from discontinued activities		-	(46)	40
Loss and total comprehensive income for the period		(2,106)	(460)	(68)
Attributable to: Shareholders of the parent company Non-controlling interests		(2,131) 25	(460) -	(68) -
		(2,106)	(460)	(68)
Loss per share (basic and diluted) (US cents)	3
From continuing activities From discontinued activities		(0.69) -	(0.62) (0.06)	(0.25) 0.09
Total		(0.69)	(0.68)	(0.16)

Consolidated statement of changes in equity

	Share Capital	Share premium	Share option reserve	Merger reserve	Other reserves	Retained earnings	Non-controlling Interests	Total equity
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Balance at 1 July 2011	700	666	22	955	-	(2,028)	-	315
Shares issued	4,107	10,431	-	-	-	-	-	14,538
Share issue costs	-	(991)	124	-	-	-	-	(867)
Share based payments	-	-	22	-	-	-	-	22
Share options lapsed	-	-	(8)	-	-	8	-	-
Share options adjustment	-	-	10	-	-	(10)	-	-
Other transactions with owners	-	-	-	-	-	(96)	-	(96)
Transactions with owners	4,107	9,440	148	-	-	(98)	-	13,597
Foreign exchange difference	(24)	(23)	-	-	-	50	-	3
Realised on disposal of subsidiary	-	-	-	(955)	-	955	-	-
Comprehensive loss	-	-	-	-	-	(460)	-	(460)
Balance at 31 December 2011	4,783	10,083	170	-	-	(1,581)	-	13,455
Shares issued	15,795	60,024	-	-	-	-	-	75,819
Shares to be issued	-	-	-	-	12,782	-	-	12,782
Transactions with owners	15,795	60,024	-	-	12,782	-	-	88,601
Recognised on business combination	-	-	-	-	-	-	(11,533)	(11,533)
Foreign exchange difference	50	106	2	-	-	4	-	162
Comprehensive income	-	-	-	-	-	(2,131)	25	(2,106)
Balance at 30 June 2012	20,628	70,213	172	-	12,782	(3,708)	(11,508)	88,579

Consolidated BALANCE SHEET		At 30 June 2012	At  31 December 2011	At 30 June 2011
		US$'000	US$'000	US$'000
		(Unaudited)	(Unaudited, restated)	(Unaudited, restated)
Assets
Goodwill		53,799	-	-
Other intangible assets		27,005	-	-
Property, plant and equipment		42,113	-	-
		122,917	-	-
Current assets
Inventories		3,092	-	-
Cash and cash equivalents		16,217	13,542	5
Trade and other receivables		18,921	16	8
Assets held for sale		38,230 -	13,558 -	13 690
Total assets		161,147	13,558	703
Equity
Called up equity share capital		20,628	4,783	700
Share premium account		70,213	10,083	666
Share option reserve		172	170	22
Merger reserve		-	-	955
Retained earnings		(3,708)	(1,581)	(2,028)
Other reserves		12,782	-	-
Equity attributable to shareholders of the parent company		100,087	13,455	315
Non-controlling interests		(11,508)	-	-
Total equity		88,579	13,455	315
Liabilities
Non-current liabilities
Loans and borrowings		1,770	-	-
Obligations under finance leases		24,431	-	-
Trade and other payables		290	-	-
Deferred tax		3,743	-	-
		30,234	-	-
Current liabilities
Bank overdrafts		10,221	-	-
Loans and borrowings		3	-	-
Obligations under finance leases		5,580	-	-
Trade and other payables		23,888	103	47
Other financial liabilities		2,642	-	-
Liabilities associated with assets held for sale		42,334 -	103 -	47 341
Total liabilities		72,568	103	388
Total liabilities and equity		161,147	13,558	703

Consolidated statement of cash flows

		6 months to 30 June 2012	6 months to 31 December 2011	Year to 30 June 2011
		US$'000	US$'000	US$'000
		(Unaudited)	(Unaudited, restated)	(Audited, restated)
Operating activities
Result for the period		(2,106)	(461)	(68)
Loss on disposal of subsidiary		-	89	-
Depreciation and amortisation		28	-	10
Finance charges		23	-	-
(Increase)/decrease in receivables		(557)	(8)	169
Increase/(decrease) in trade and other payables		301	29	(8)
Share option charges		-	22	18
Net cash flow from operating activities		(2,311)	(329)	121
Investing activities
Net overdraft acquired in business combination		(5,430)	-	-
Sale of subsidiary net of costs		-	166	-
Purchase of property, plant and equipment		-	-	(11)
Net cash flow from in investing activities		(5,430)	166	(11)
Financing activities
Proceeds from the issue of shares		-	13,673	5
Loan repayments		-	-	(97)
Interest paid		(23)	-	-
Finance lease payments		-	-	(3)
Net cash flow from financing activities		(23)	13,673	(95)
Net movement in cash and cash equivalents		(7,764)	13,510	15
Foreign currency difference		218	5	1
Opening net cash		13,542	27	11
Closing net cash		5,996	13,542	27

Classified on the balance sheet as: Cash and cash equivalents		16,217	13,542	5
Bank overdrafts		(10,221)	-	-
Assets held for sale		-	-	22
Closing net cash		5,996	13,542	27

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 2012.  This is an additional interim period due to the Company having extended its accounting reference date by six months to 31 December 2012, following its acquisition of Lonrho's Aviation division as outlined in the Chairman's Statement. It has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting". 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.

All figures are stated in US dollars (US$'000) as that is the normal currency for reporting in the aviation sector.  Prior year figures have been restated accordingly.

The accounting policies applied are consistent with those of the last annual financial statements for the year ended 30 June 2011 except where new policies have been adopted as required in response to the fundamental change in the Company's activities, again as outlined in the Chairman's Statement.  The financial statements for the year ended 30 June 2011 were prepared in accordance with IFRS as adopted for use in the European Union, and the auditor gave an unqualified opinion containing no statement under either Section 498(2) or (3) of the Companies Act 2006 in respect of those financial statements. Those financial statements have been filed with the Registrar of Companies.

Application of the Group's accounting policies in preparing these interim financial statements requires management to make judgements and estimates that affect the reported amount of assets and liabilities, revenues and expenses. Actual results may ultimately differ from these estimates.

FastJet plc is incorporated in England & Wales. The Company's shares are listed on the AIM Market of the London Stock Exchange.

2.  Acquisition

On 29 June 2012 the Company acquired Lonrho Aviation for total consideration of US$86.2m taking the form of 1,150,537,455 new shares issued at 4.8p (Sterling) per share  A further US$4.7m in cash and shares was paid to the vendors of the 49.98% economic interest in Fly540 Kenya which was acquired at the same time.  The reasons for the acquisition are outlined in the Chairman's statement.  On completion of the acquisition, the company holds the majority of the shares and voting rights in, and therefore had effective control of, all entities that made up Lonrho Aviation.  

The fair values of net assets acquired, intangible assets recognised under IFRS3, and consideration are set out below.  All fair values are provisional based on management's best estimate at the date of preparation of the interim results statement.  The fair values are provisional due to the proximity of the acquisition to the date of the reporting period.

		Book value US$'000	Fair value adjustments US$'000	Provisional fair value US$'000
Intangible assets Brand Air operator's certificates Other intangible assets		- 5,461 141	1,956 18,860 587	1,956 24,321 728
Property, plant and equipment
Aircraft		45,129	(5,766)	39,363
Other property, plant and equipment		2,749	-	2,749
Current assets
Inventories		4,392	(1,300)	3,092
Cash and cash equivalents Trade and other receivables		4,792 18,472	- -	4,792 18,472
Current liabilities Non-current liabilities Deferred tax		(39,684) (26,637) (267)	- 146 (3,476)	(39,684) (26,491) (3,743)
Net assets		14,548	11,007	25,555
Goodwill recognised Non-controlling interests recognised				53,799 11,533
Consideration				90,887

Goodwill represents the excess of the fair value of the consideration paid compared to the fair value of net assets acquired less the fair value of non-controlling interests, and reflects those assets that do not qualify for separate recognition under IFRS3, for example the acquired workforce and industry knowhow, and the synergistic gains arising from the business combination.

Had the acquisition occurred on 1 January 2012, revenues of the enlarged group would have been US$31,366,000 and the loss before tax would have been US$14,311,000 for the six months ended 30 June 2012.

3.  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. In view of the losses from continuing activities, the share options in issue have no dilutive effect.

4.  Share capital

Shares issued during the period were solely as consideration for the acquisition of Lonrho Aviation as mentioned above.

5.  Subsequent events

On 24 July 2012 the Company announced it has raised £5.5m ($8.5m) by the placing of 137,500,000 new shares, and at the same time secured an additional £5m ($7.8m) equity financing facility.

On 2 August 2012 the Company announced that it had issued 93,327,995 new shares, and 207,395,455 options to easyGroup Holdings Limited, a company controlled by Sir Stelios Haji-Ioannou, as agreed in the exclusive FastJet brand agreement.     

6.  Financial statements of Lonrho Aviation (BVI) Limited

In accordance with the AIM Rules for Companies relating to the acquisition by the Company of Lonrho Aviation (BVI) Limited the consolidated statement of comprehensive income, balance sheet and statement of cash flows of Lonrho Aviation (BVI) Limited for the six months to 30 June 2012 are presented below.

Consolidated statement of comprehensive income

		6 months to 30 June 2012			15 months to  31 December  2011
		US$m			US$m
		(Unaudited)			(Unaudited)
Revenue		31.4			57.3
Operating charges		(43.9)			(73.0)
Operating loss		(12.5)			(15.7)
Finance income		-			0.1
Finance charges		(2.1)			(2.8)
Loss from continuing activities before tax		(14.6)			(18.4)
Tax credit		-			1.3
Loss from continuing activities after tax		(14.6)			(17.1)
Loss from discontinued activities		-			(1.9)
Loss and total comprehensive income for the period		(14.6)			(19.0)
Attributable to:
Shareholders of the parent company		(12.3)			(14.4)
Non-controlling interests		(2.3)			(4.6)
		(14.6)			(19.0)
Consolidated balance sheet				At 30 June 2012	At  31 December 2011
				US$m	US$m
				(Unaudited)	(Unaudited)
Assets
Goodwill				0.1	0.1
Other intangible assets				5.5	6.2
Property, plant and equipment				47.9	52.9
Deferred tax				-	1.3
				53.5	60.5
Current assets
Inventories				4.4	4.4
Cash and cash equivalents				4.8	3.9
Receivables				18.3	14.7
				27.5	23.0
Total assets				81.0	83.5
Equity
Called up equity share capital				-	-
Share premium account				84.5	39.5
Translation reserve				(0.8)	(0.8)
Retained earnings				(56.9)	(41.6)
Equity attributable to shareholders of the parent company				26.8	(2.9)
Non-controlling interests				(12.4)	(9.9)
Total equity				14.4	(12.8)
Liabilities
Non-current liabilities
Loans and borrowings				1.8	1.6
Obligations under finance leases				24.6	26.7
Trade and other payables				0.3	35.2
Deferred tax				0.3	0.3
				26.9	63.8
Current liabilities
Bank overdrafts				10.2	8.2
Loans and borrowings				-	-
Obligations under finance leases				5.6	5.7
Trade and other payables				23.9	18.6
				39.7	32.5
Total liabilities				66.6	96.3
Total liabilities and equity				81.0	83.5

 Consolidated statement of cash flows

		6 months to 30 June 2012 US$m (Unaudited)	15 months to 31 December 2011 US$m (Unaudited)
Operating activities
Loss for the period		(14.6)	(19.0)
Depreciation and amortisation		2.5	2.7
Finance charges		2.1	2.5
Foreign exchange loss		-	0.3
Loss on disposal of fixed assets		1.7	-
Increase in inventories		-	(2.9)
Increase in receivables		(3.6)	(5.7)
Increase in trade and other payables		12.0	9.2
Income tax		1.3	(1.3)
Cash generated/(absorbed) by operations		1.4	(14.2)
Interest paid		(2.1)	(2.5)
Net cash from operating activities		(0.7)	(16.7)
Investing activities
Proceeds from the sale of property, plant and equipment		2.3	3.2
Purchase of property, plant and equipment		(0.7)	(7.4)
Acquisition of intangibles		-	(6.8)
Net cash flow from investing activities		1.6	(11.0)
Financing activities
Loan advances		0.2	27.7
Finance lease payments		(2.2)	(3.3)
Net cash flow from financing activities		(2.0)	24.4
Net movement in cash and cash equivalents		(1.1)	(3.3)
Foreign currency difference		-	(0.1)
Opening net cash		(4.3)	(0.9)
Closing net cash		(5.4)	(4.3)

Classified on the balance sheet as: Cash and cash equivalents		4.8	3.9
Bank overdrafts		(10.2)	(8.2)
Closing net cash		(5.4)	(4.3)

Copies of this interim report will be available shortly on the company's website: www.fastjet.com

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