FJET.L Regulatory News (FJET)

fastjet Plc

("fastjet" or the "Company")

(AIM: FJET)

Final results for the year to 31 December 2015

2 June 2016

fastjet, the low-cost African airline, announces its audited final results for the year ended 31 December 2015.

The table below shows the financial performance of the fastjet Group continuing activities excluding the legacy Fly 540 Angola CGU.

Financial highlights

· Revenue on continuing activities up 21%

· Negative cash flow from operating activities US$(36.9m) (2014: US$(27.2m))

· Equity fund raise in April 2015 of US$75m before expenses

Operational highlights

· Passenger numbers up 32% to 787,771

· fastjet Tanzania load factor down 6.6 percentage points to 66.7%

· fastjet Tanzania aircraft utilisation up 10% to 11.2 hours during peak months

· Named Africa's Leading Low-Cost Airline 2016 at the World Travel Awards

Strategic highlights

· fastjet Zimbabwe commenced services

· Flights from Tanzania to Kenya approved

· Further rationalisation of legacy operatives including disposal of Fly 540 Ghana and Fly 540 Angola classified as abandoned

· Rationalisation of route network progressing well

· Search for new Chief Executive Officer well advanced

Colin Child, fastjet Executive Chairman, commented: "2015 was a year of change and challenge for fastjet. We made progress in developing our Tanzanian operations, launching fastjet Zimbabwe and expanding into Kenya but revenues were impacted by a weakening Tanzanian economy and Tanzanian Shilling exchange rate and political uncertainty in the country. As a consequence of these macroeconomic pressures, consumer spending fell and this had a negative effect on ticket sales in the second half of the financial year.

"We've taken action to mitigate the effects of this prolonged downturn and have reduced operating costs and overheads by rationalising certain routes, reducing frequencies on particular routes and eliminating other underperforming services and this is progressing well.

"2016 will be focused on developing existing routes and operations consistent with the Group's long term vision of becoming the first true pan-African low-cost airline. The airline continues to reduce operating costs and overheads and to match capacity to the lower demand now forecast in pursuit of a path to profitability in the medium term.

"Despite the challenges faced in 2015, we are starting to see the benefits of our short term actions and remain confident in our long term strategy where the need for low cost pan-African air travel is evident. The Board believes that fastjet is in a position to move forward from the experiences of 2015 and will benefit from the first mover advantage as the network develops".

fastjet's report and accounts for the year ended 31 December 2015 ("2015 Report and Accounts"), notice of the Annual General Meeting ("AGM") and the form of proxy, are expected to be posted to shareholders shortly.

A copy of the 2015 Report and Accounts will be available to view and download shortly from the Company's website: www.fastjet.com

For more information, contact:

NOTES TO EDITORS

About fastjet Plc

fastjet Plc is the holding company of the low cost airline fastjet which commenced flights under the fastjet brand in Tanzania in November 2012. By adhering to international standards of safety, quality, security and reliability; fastjet has brought a new flying experience to the African market at unprecedented low prices. Utilising its fleet of Airbus A319s, fastjet is implementing the low-cost model across Africa with a long-term strategy to become the continent's first low-cost, pan-Africa airline.

The results of the first quarter 2016 customer satisfaction surveys showed that an average of 73% of customers were likely to recommend fastjet to a friend. In developing its strong brand and identity, fastjet has won and been nominated for a number of awards, including Africa's Leading Low-Cost Airline 2016 at the 23rd World Travel Awards, winning three Transform awards for the rebrand and launch of fastjet, the award for "Brand Strategy of the Year" at 2014's Drum Marketing Awards in London, and the Transport Innovator Award at the 8th Transport Africa Awards 2015 in Johannesburg.

fastjet Plc is quoted on the London Stock Exchange's AIM Market.

For more information see www.fastjet.com

Preliminary Statement

2015 was a year of change and challenge for the Company. While some significant successes and progress were made on achieving our vision to become the first truly pan-African low cost airline, challenging market conditions and poor financial performance overshadowed this.

Financial performance

The Group has reported a loss after tax for the year of US$21.9m (2014: loss after tax US$72.1m) on revenues up 17% at US$65.1m (2014: US$55.4m). The results for the year are complicated by the disposal of the legacy Fly 540 Ghana operations and the accounting treatment of the legacy Fly 540 Angola operations which are more fully described in the Financial Review below. The Group operating loss for the year excluding the Fly 540 Angola CGU and the discontinued operations was US$37.9m (2014: US$43.9m) which was greater than expected and reflects a difficult economic environment and weak exchange rates in our key markets.

fastjet's reliance on domestic and international routes within and from Tanzania meant that prolonged macroeconomic pressures in the country in 2015 had an adverse effect on revenues. These included a weakening of the Tanzanian economy and political uncertainty in the lead up to and immediately following the governmental elections in October 2015. This led to a downturn in governmental and civil service spending as well as in consumer spending which had a negative effect on fastjet ticket sales in the second half of the financial year.

In addition, the Tanzanian Shilling exchange rate declined by 24% during 2015 against the US Dollar, fastjet's reporting currency. As a consequence, although revenue per passenger in Tanzanian Shillings increased by 11% during the year, once translated into US Dollars, it resulted in an 8% decline in revenue per passenger.

As a result of the operating loss for the year, the Group incurred a significant operating cash outflow. The Group also invested during the year including the acquisition of an owned aircraft. The Group's cash balance at the year end was US$28.9m (2014: US$1.4m). Since the year end trading has not improved as much as anticipated and further negative cash flows have resulted in the cash balance declining to US$13.7m at 30 April 2016.

Despite the increase in revenues in 2015, the Directors believe that the current economic and trading outlook in fastjet's markets remains uncertain. As a consequence, the Group expects to continue to experience significant challenges in achieving the increased sales revenue and growth required to be cash flow positive in the short term. Notwithstanding this, the Directors have adopted the Going Concern basis in preparing these Financial Statements. Further details are set out in the Going Concern statement below and in Note 1 of the Financial Statements.

Since the year end, the Company has been notified that its subsidiary and legacy entity fastjet Aviation Limited (formerly Lonrho Aviation (BVI) Limited) has been served with a draft order for a creditor instructed liquidator to be appointed under the Insolvency Act 2003 (British Virgin Islands). fastjet Aviation Limited is the intermediate parent company of Fly 540 Angola. The Directors do not believe that there is recourse to fastjet Plc for any of the liabilities of fastjet Aviation Limited. This is set out in more detail in Note 6.

Strategic Developments

In April 2015 fastjet completed an equity fund raise of US$75m before expenses to support the Company's development. This additional cash provided working capital for expansion and funded the acquisition of aircraft.

Following the fund raise, the fastjet fleet of Airbus A319s doubled in size, from three to six aircraft. This included our first owned aircraft, which was purchased for cash and delivered into service in September 2015, and two additional aircraft acquired under lease agreements.

Launching a second fastjet airline was an important achievement with fastjet Zimbabwe being granted its Air Operators Certificate (AOC) in October 2015. fastjet Zimbabwe commenced services between Harare and Victoria Falls three times a week. In January 2016 the airline was issued with a Foreign Operators Permit by the South African authorities to operate flights between Harare and Johannesburg in South Africa.

Expanding fastjet services into Kenya marked an important milestone in fastjet's strategic development. In December 2015, after extensive discussions, fastjet secured clearance from the Kenyan government to operate flights between Tanzania and Kenya under the Bilateral Air Services Agreement (BASA) between the two countries. fastjet Tanzania currently operates flights between Dar es Salaam and Nairobi which are not only key travel destinations and two of the busiest airports in the region, but also hubs with extensive regional and international networks.

Through its stimulation of the market, fastjet is already the leading airline in Tanzania, and the Company believes that the Nairobi route presents a long term growth opportunity for the airline. We believe that offering potential customers an alternative and affordable means of transport on this route will over time stimulate the market as it has done in Tanzania.

As the aviation market in Africa is not yet liberalised, securing route rights is, at present, a challenging and time consuming process which varies from country to country. Delays in securing these rights had an adverse effect on the implementation of our 2015 business plan, resulting in lower revenues and greater losses than previously expected. The effects of such delays are expected to continue in 2016.

In the short term our focus is on revenue generation, through improved marketing and promotional activity, and on progressing our cost reduction programme. In addition we will continue to match capacity with demand. Following a recent review of the routes we operate, supported by external consultants, we are rationalising our routes, reducing frequencies on certain routes and eliminating other underperforming services. As part of this process, the Company announced in April 2016 that it had delayed its application for a Zambian AOC to the final quarter of 2016, pending further review of the network.

Also in April 2016, fastjet agreed the early termination of the lease on one of its A319 aircraft. The aircraft, which was scheduled to come to the end of its lease term in October 2016, came out of service immediately. With the leases on a further two of our aircraft coming to an end during 2016 we are taking the opportunity to reassess the size and type of our aircraft to ensure that the fleet we operate is efficient, cost effective and appropriate for our routes.

In order to capture further operating efficiencies, we are also reviewing the support functions of the business in order to align them more closely with our operations and markets.

We also intend to adopt a more flexible approach to our implementation of the low-cost carrier model to ensure it is tailored to meet the specific needs of our markets. This, together with the ongoing benefit of our short term actions, means we remain confident in our long term strategy to capitalise on the opportunity in Africa where the need for low cost pan-African air travel is evident. The Board believes that fastjet is in a position to move forward from the experiences of 2015 and will benefit from the first mover advantage as the network develops.

The Board of Directors

During 2015 and since the year end there have been a number of changes in the composition of the Board.

In January 2016 Lisa Mitchell joined the board as Chief Financial Officer, bringing more than 20 years' experience as a senior finance officer in the natural resources and pharmaceutical sectors with experience across both East and West Africa.

Following the announcement on 14 March 2016 of Ed Winter's resignation from the Company as Chief Executive Officer, I have assumed the Executive Chairman's role until a new Chief Executive Officer joins the Board. The search for a new Chief Executive Officer is well advanced.

The Board would like to thank all the Directors who have served on the Board during 2015 and all our staff whose commitment and hard work have led to a number of achievements in the face of numerous challenges.

Outlook

As previously announced the downturn in our markets and impact on passenger numbers have been more prolonged than originally forecast. The seasonal increase in passenger numbers experienced in prior years during the first quarter has not occurred in 2016 reflecting this prolonged downturn. Accordingly, fastjet expects to report a trading loss and to remain cash flow negative in 2016.

The focus in 2016 will be on the development of existing routes and operations consistent with the Group's long term vision of becoming the first true pan-African low-cost airline. fastjet continues to reduce operating costs and overheads and to match capacity to the lower demand now forecast in pursuit of a path to profitability in the medium term.

Based on current forecasts, the Company has sufficient funds to meets its operational requirements for the foreseeable future. However, these forecasts are sensitive inter alia to changes in passenger numbers, yields and foreign exchange rates. Accordingly, the Board is considering a range of funding strategies in the short term, including asset sales, and expects to raise further funds in the near future to provide additional headroom and to ensure the Company has the resources to fund future growth as markets improve.

Operational Review

fastjet Tanzania

fastjet is the leading airline at Dar es Salaam airport and in Tanzania.

Over 775,000 passengers were carried in 2015 by fastjet Tanzania, a year on year increase of 30%. However, fastjet did experience several months of lower than expected passenger numbers in the second half of 2015, largely due to the economic and political climate. The impact of the decline of the Tanzanian Shilling against the US Dollar was felt in the second and third quarters of 2015 as higher import prices impacted the local economy. Combined with cuts in government and civil service spending, fastjet noticed a dramatic downturn in consumer spending and, consequently, ticket sales suffered in the second half of the financial year. This has continued into 2016.

Aircraft utilisation reached a high of 11.2 block hours per day per aircraft during 2015 and, on average, 92% of flights arrived on time.

In December 2015 fastjet Tanzania announced it had been granted approval by the Kenyan government to operate flights between Kenya and Tanzania. This was a significant achievement for the airline. Flights between Dar es Salaam and Nairobi were launched in January 2016. However, ticket sales on this route have been lower than anticipated as fastjet experienced delays in setting up its distribution channels and competitors reduced their fares.

fastjet Zimbabwe

Although the process of securing the Air Operator's Certificate (AOC) in Zimbabwe took longer than expected, the first aircraft to be utilised in the Zimbabwean operation arrived in Harare in August 2015 and flights commenced between Harare and Victoria Falls in October 2015.

In February 2016, following designation of fastjet Zimbabwe by the Zimbabwe government on the Bilateral Air Service Agreements (BASA) from Zimbabwe to other countries, fastjet launched flights between Harare and Johannesburg. In March 2016 flights between Victoria Falls and Johannesburg commenced. Punctuality in the first months of operation has been encouraging, with 91% of flights arriving on time.

Objectives for 2016

2016 will see a focus on our existing core routes, of revenue generation through marketing and promotional activity, the ongoing cost reduction programme and managing cashflow. The fleet will be reduced as aircraft reach the end of their leases and we match capacity with demand. As announced in April 2016 the lease on one aircraft has been terminated, reducing the fleet to five. A further two aircraft are expected to come to the end of their leases in the final quarter of 2016. Additional aircraft will be added to the fleet as appropriate. Continued investment in strategically important routes will be maintained while new routes will be considered on a selective basis.

Short term objectives for 2016 are:

· Driving increased passenger numbers, improved yields and revenue growth

· Focus on cost control and managing overheads

· Disciplined use of capital and cash management

· Matching capacity with demand

Principal risks and uncertainties

The Group is subject to various operating risks, including those that derive from the nature of the aviation industry and from operating in Africa. Risk assessment and evaluation is an essential part of the Group's planning and an important aspect of the Group's internal control system.

As more fully described in the Going Concern statement in the Financial Review below, there are a number of material uncertainties that may cast significant doubt upon the Group's and the parent Company's ability to continue as a going concern. The Group is exploring its strategic options to strengthen the balance sheet and improve its cash reserves and is considering a range of funding strategies in the short term, including asset sales and additional equity financing. As at the date of approval of these Financial Statements, no commitment has been made or received for any future financing and there can be no certainty that additional funding will ultimately be raised.

The risk management and internal control systems encompass the Company's policies, culture, organisational behaviour, processes and systems. The Group has a risk management framework and process that identifies and monitors its principal risks regularly identifying and associating mitigating actions to those risks.

The Board ensures a robust assessment of the risks in relation to the business model and strategy and ability to continue to meet this strategy in light of the risks and associated mitigating actions.

Financial Review

fastjet Group

The Company recorded a loss for the year of US$21.9m in 2015 (2014: US$72.1m). The profit from discontinued activities of US$19.4m (2014: US$14.1m loss) relates to the disposal of the legacy Fly 540 Ghana Limited ("Fly 540 Ghana") and its aircraft, held in a separate entity, (together the cash generating unit, "Fly 540 Ghana CGU"). Although this disposal was for a nominal amount, the profit on discontinued activities in 2015 reflects the removal of the net liabilities of the Fly 540 CGU from the fastjet Group as it is no longer consolidated.

The loss from continuing activities of US$41.3m includes the legacy Fly 540 Sociedade de Aviacao Civil S.A. ("Fly 540 Angola") and its aircraft, held in a separate entity, (together the cash generating unit, "Fly 540 Angola CGU"). As more fully described below, Fly 540 Angola has been abandoned and, although still required to be consolidated, its results are shown separately within the Income Statement to allow clearer presentation of the underlying fastjet performance.

Group revenue increased by 17.5% to US$65.1m (2014: US$55.4m) reflecting a 32% increase in total passenger numbers to 787,771 in 2015 (2014: 597,432). However, revenues were adversely affected by the weakening of the Tanzanian Shilling against the US Dollar, our reporting currency. As a consequence, although revenue per passenger in Tanzanian Shillings improved by 11% year on year, when translated into US Dollars this represents an 8% decrease in reported revenue per passenger. 

Year on year costs, excluding the Fly 540 Angola CGU and before exceptional items, increased by 22% to US$103.0m (2014: US$84.4m). The increase in costs was due to the fleet growth, higher utilisation of aircraft and the additional costs associated with regulatory approvals and establishing new bases.

The loss after tax for the year for the continuing businesses, excluding the Fly 540 Angola CGU, reduced by 18% to US$36.2m loss (2014: US$44.4m loss).

Non-trading financial performance

Discontinued operations

In June 2015, fastjet disposed of its legacy interest in the Fly 540 Ghana CGU in line with the Company's strategy to exit from territories it operated in prior to the establishment of the fastjet brand in Tanzania and elsewhere.

Following the disposal of the Fly 540 Ghana CGU, its financial results, assets and liabilities are no longer consolidated into the fastjet Group's financial statements.

Upon the disposal of the Fly 540 Ghana CGU, the cumulative amount of the exchange differences relating to that operation, historically recognised in other comprehensive income and accumulated in the separate component of equity, were recycled from other comprehensive income to profit or loss (as a reclassification adjustment) when the profit/(loss) from discontinued activities was recognised in accordance with IAS21.48. The reclassification forms part of the profit/(loss) from discontinued activities shown within the Income Statement, but that is then offset against the amounts in the Statement of Other Comprehensive Income. Profit/(loss) from discontinued activities of the Fly 540 Ghana CGU in 2015 was US$19.4m (2014: US$14.1m loss). This matter is more fully described in Note 3.

Abandoned operations

At 31 December 2014 the Company intended and expected to sell the legacy Fly 540 Angola CGU business and, accordingly, the entity was classified as "held for sale". Neither the entity nor the aircraft were sold during 2015 and, due to changes in circumstances, it is no longer considered probable that a sale will be achieved. Therefore it is no longer appropriate for the Fly 540 Angola CGU to be accounted for as "held for sale".

As Fly 540 Angola has not maintained books of account or records during 2015, there are no employees, no local office and there has been no operational activity during the period, the entity is regarded as having been "abandoned". Although the entity is classified as abandoned for the year ended 31 December 2015, the assets and liabilities are required, in accordance with accounting standard IFRS 5, to be consolidated in the Group financial statements owing to deemed "control" of the entity by the Group. The comparative results in 2014 have been restated to show the Fly 540 Angola CGU within continuing operations.

The Company does not believe it has any liability to settle the liabilities of the Fly 540 Angola CGU and as such the assets and liabilities have been consolidated but are disclosed separately to allow clearer presentation of the underlying fastjet balance sheet. As the figures are presented on a consolidated basis, intercompany balances have been eliminated. This is set out in more detail in Note 3.

As a result of the Fly 540 Angola CGU's abandoned status, it has not been possible for KPMG to undertake audit procedures on its accounting records. This represents a limitation in audit scope and consequently KPMG's audit report carries a qualification in respect of this.

Post balance sheet event

The Company has, since the year end, been notified that the subsidiary and legacy entity, fastjet Aviation Limited (formerly Lonrho Aviation (BVI) Limited) has been served with a draft order for a creditor instructed liquidator to be appointed over fastjet Aviation Limited in accordance with the Insolvency Act 2003 (BVI). The case is to be heard on 6 June 2016. fastjet Aviation Limited is the intermediate parent company of the sub-group which included Fly 540 Angola and, formerly Fly 540 Ghana. The Directors do not believe that there is recourse to fastjet Plc for any of the liabilities of fastjet Aviation Limited. This is set out in more detail in Note 6.

Exceptional items

There were no exceptional items within the continuing fastjet operations in 2015 although the Fly 540 Angola CGU reported an exceptional item in respect of the impairment of fixed assets.

During 2014, the Company experienced several significant exceptional costs. In April 2014, the agreement between the Company and easyGroup Holdings Limited ("easyGroup") for management assistance for aviation advisory services was terminated by the issue of 94,287,227 shares at 1.6p per share at a total non-cash cost of approximately US$2.5m at the date of issue of the shares. Additionally, further to a review of the carrying value of intangible assets, the Company made the decision to impair the full capitalised value of both the Brand Licence Agreement with easyGroup and the fastjet Tanzania Air Operators Certificate (AOC), with non-cash adverse impacts on the income statement of US$8.9m and US$1.9m respectively.

Fuel cost

fastjet purchased its fuel at prevailing market prices from January to September 2015. From October 2015 to March 2016 the Company entered into a fixed price contract which removed the risk of volatility around the fuel price for an agreed volume. Approximately 75% of the total fuel uplift for this period was fixed. The Board will keep its fuel price hedging strategy under review.

fastjet Tanzania

fastjet Tanzania's revenues increased by 20% to US$64.6m (2014: US$53.8m) driven by a 30% increase in passenger numbers over 2014. This passenger growth was achieved through the addition of two aircraft over the period and improved aircraft utilisation which grew to a high in December 2015 of 11.2 block hours per day from 10.2 block hours per day in December 2014. However, notwithstanding this revenue increase, the business reported an operating loss before exceptional items of US$24.2m for the year (2014: US$22.5m) largely due to increased costs arising from the additional capacity.

Exchange rate changes in 2015

The steep decline in the Tanzanian Shilling exchange rate against the US Dollar throughout 2015 had an adverse impact on the economy in the third quarter resulting in fewer than expected passengers flying. In addition, although revenue per passenger in Tanzania improved by 11% year on year in local currency, when translated into US Dollars, our reporting currency, revenue per passenger fell by 8%.

fastjet Zimbabwe

fastjet Zimbabwe commenced services in October 2015. It reported revenues of US$0.3m (2014: US$ nil) and an operating loss before exceptional items of US$4.0m for the year (2014: US$ nil).

Key performance indicators

The Directors consider the following to be the key performance indicators when measuring underlying operational performance. These measures relate to the operating performance of fastjet Tanzania only and do not include fastjet Zimbabwe which did not commence operations until Q4 2015:

Funding

A placing on 1 April 2015 successfully raised £50.0m (US$75.0m) before expenses from institutional and other investors as well as fastjet management. The proceeds of the placing have been utilised in providing working capital to existing and new operations in Tanzania and Zimbabwe and the acquisition of an aircraft.

Going Concern

The Group meets its date to day working capital requirements from its cash resources. As at 30 April 2016, the Group has no committed facilities and has cash balances of US$13.7m within the continuing Group excluding Angola.

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 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 Group has operated at a loss and incurred a significant operating cash outflow since the placing on 1 April 2015. While total revenues of the Group have increased year on year due to increased passenger numbers, the Directors consider that the current economic outlook in the countries in which fastjet operates presents significant challenges for the Group to achieve the increased sales revenue and growth required to be cash flow positive in the short to medium term.

The Directors have prepared detailed forecasts and projections for the Company to June 2017. These include revenue, profit and cash flow forecasts on a route by route basis.

As set out in Note 6, Events after the balance sheet date, fastjet Aviation Limited (formerly Lonrho Aviation (BVI) Limited) has been issued with a draft order for a creditor appointed liquidator to be appointed under the Insolvency Act 2003 (British Virgin Islands). The Directors do not believe that there is recourse to fastjet Plc for any of the liabilities of fastjet Aviation Limited 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 fastjet Aviation Limited.

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

· Reducing the current cost base

The Directors believe, on the basis of current financial projections and funds available, that the Group has sufficient resources to meet its operational needs over the relevant period, being until June 2017 although the headroom over available cash resources is not large. The Directors have also prepared sensitised cash flow forecasts which indicate that the Group will need to raise additional funding if the Group does not substantially achieve those forecasts.

The Group is at an advanced stage in the recruitment of a new CEO and is exploring its strategic options to strengthen the balance sheet and improve cash reserves and is considering a range of funding strategies in the short term, including asset sales and additional equity financing. The Directors are confident that, with a new CEO and a revised business plan, additional funding will be available. However, as at the date of approval of these financial statements, no commitment has been made or received for any future financing and there can be no certainty that additional funding will ultimately be raised.

In preparing these Financial Statements, the Directors continue to adopt the going concern basis, notwithstanding the expected need for further funding.

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.

Consolidated income statement

*fastjet Group continuing activities excluding the Fly 540 Angola CGU (see Note 3).

Consolidated statement of comprehensive income

All items in other comprehensive income will be re-classified to the Income Statement.

Non-controlling interests for 2015 are US$ Nil as there was no profit or loss within the Fly 540 Angola legal entity for the period. Losses in the Fly 540 Angola CGU operation, which are not included in Fly 540 Angola legal entity, result from aircraft ownership.

Consolidated balance sheet

*fastjet Group continuing activities excluding the Fly 540 Angola CGU (see Note 3).

The Fly 540 Angola CGU column above identifies the assets and liabilities in the Angola CGU excluding intercompany balances between Fly 540 Angola and the rest of the Group - see Note 3.

Consolidated cash flow statement

Closing cash balances held at 31 December 2015 include bank balances of US$ Nil (2014: US$5,000) and overdrafts of US$ Nil (2014: US$4.4m) disclosed within "assets held in disposal groups" on the consolidated balance sheet.

Closing cash balances held at 31 December 2015 include bank balances of US$54,000 (2014: US$54,000) and overdrafts of US$975,000 (2014: US$975,000) disclosed as held by Angola CGU on the consolidated balance sheet.

Cash balances at 31 December 2015 include US$54,000 (2014: US$161,000) of cash not available for use by the Group, being US$54,000 (2014: US$54,000) held in Angola where the government restricts movement of currency, and US$ Nil (2014: US$107,000) being other amounts held in trust.

Consolidated statement of changes in equity

Notes to the Group financial statements

1. Significant accounting policies

fastjet Plc is the Group's ultimate parent company. It is incorporated in England and Wales. The Company's shares are quoted on the AIM market of the London Stock Exchange.

Basis of preparation

The preliminary results announcement for the year ended 31 December 2015 has been prepared by the Directors based upon the results and position which are reflected in the statutory accounts. The statutory accounts are prepared in accordance with International Financial Reporting Standards as adopted by the European Union (Adopted IFRS).

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2015 or 2014 but is derived from those accounts both of which have been audited. Statutory accounts for 2014 have been delivered to the registrar of companies, and those for 2015 will be delivered in due course. The auditor's report on the accounts for the year ended 31 December 2014 was unqualified. The auditor's report on the accounts for the year ended 31 December 2015 carries a qualification in respect of a limitation in audit scope relating to the Fly 540 Angola business and also includes an emphasis of matter paragraph in relation to the going concern basis, further details of which are set out below.

Going concern

The Group meets its date to day working capital requirements from its cash resources. As at 30 April 2016, the Group has no committed facilities and has cash balances of US$13.7m within the continuing Group excluding Angola.

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 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 Group has operated at a loss and incurred a significant operating cash outflow since the placing on 1 April 2015. While total revenues of the Group have increased year on year due to increased passenger numbers, the Directors consider that the current economic outlook in the countries in which fastjet operates presents significant challenges for the Group to achieve the increased sales revenue and growth required to be cash flow positive in the short to medium term.

The Directors have prepared detailed forecasts and projections for the Company to June 2017. These include revenue, profit and cash flow forecasts on a route by route basis.

As set out in Note 23, Events after the balance sheet date, fastjet Aviation Limited (formerly Lonrho Aviation (BVI) Limited) has been issued with a draft order for a creditor appointed liquidator to be appointed under the Insolvency Act 2003 (British Virgin Islands). The Directors do not believe that there is recourse to fastjet Plc for any of the liabilities of fastjet Aviation Limited 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 fastjet Aviation Limited.

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

· Reducing the current cost base

The Directors believe, on the basis of current financial projections and funds available, that the Group has sufficient resources to meet its operational needs over the relevant period, being until June 2017 although the headroom over available cash resources is not large. The Directors have also prepared sensitised cash flow forecasts which indicate that the Group will need to raise additional funding if the Group does not substantially achieve those forecasts.

The Group is at an advanced stage in the recruitment of a new CEO and is exploring its strategic options to strengthen the balance sheet and improve cash reserves and is considering a range of funding strategies in the short term, including asset sales and additional equity financing. The Directors are confident that, with a new CEO and a revised business plan, additional funding will be available. However, as at the date of approval of these financial statements, no commitment has been made or received for any future financing and there can be no certainty that additional funding will ultimately be raised.

In preparing these Financial Statements, the Directors continue to adopt the going concern basis, notwithstanding the expected need for further funding.

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.

Restatement of prior year

As set out above and in the Strategic Report the Group has, during the year, abandoned the Fly 540 Angola CGU operation. In the 2014 Financial Statements the Fly 540 Angola CGU was classified as a discontinued operation. However, as the Fly 540 Angola CGU was not sold during 2015, it no longer meets the definition of a discontinued operation and has been reclassified as an "Abandoned Operation". As required by IFRS 5, the Fly 540 Angola CGU has been included within continuing operations for both 2015 and 2014 and the 2014 comparatives have therefore been restated (see Note 3).

2. Segmental reporting

The Group's continuing business comprises that of airline services. That business operates across a number of different geographical territories, all within Africa. Accordingly, these geographical territories are the basis for the Company's segmental reporting disclosure.

The results of fastjet Plc head office and the Group's several holding companies are disclosed under the heading 'Central'.

The accounting policies of these segments are in line with those set out in Note 1.

The Board monitors the performance of the business units and the overall group. It monitors loss after tax and its individual components and therefore these are disclosed above. Assets and liabilities are not reported by business unit. Central also includes start-up costs for fastjet Zambia for obtaining an AOC. This has subsequently been deferred as announced on 14 April 2016.

3. Discontinued and Abandoned Activities

During 2015 fastjet progressed its programme of rationalising the loss making legacy Fly 540 portfolio acquired from Lonrho in 2012.

In 2014 fastjet had ceased operating its loss making Fly 540 businesses in Ghana and Angola. These were shown as discontinued operations in the 2014 financial statements, with the assets and liabilities shown as held for sale.

In June 2015, fastjet disposed of its interest in Fly 540 Ghana. fastjet Aviation Limited, the former intermediate parent company of Fly 540 Ghana, had provided a legacy guarantee in respect of certain liabilities of Fly 540 Ghana that had not been discharged at 31 December 2015. 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.

Following the disposal of Fly 540 Ghana, its financial results, assets and liabilities are no longer consolidated into the fastjet Group's financial statements.

Fly 540 Angola, for the reasons set out below, no longer forms part of a disposal group and therefore the Fly 540 Angola CGU has been restated into continuing operations and shown separately in the primary statements as follows:

The discontinued operations at 31 December 2014 have been restated to show only the Fly 540 Ghana CGU as discontinued.

Discontinued Activities

At the 2014 year end the Fly 540 Ghana CGU was classified within "assets held in disposal groups classified as held for sale" as summarised in the table below. Fly 540 Ghana was disposed of during 2015.

The profit/(loss) on the discontinued Fly 540 Ghana operations on the Consolidated Income Statement is analysed as follows:

The Group Statement of Cash Flows contains the following elements related to discontinued operations:

The aggregate payroll costs were nil (2014: $623,000).

Valuation of assets and liabilities in disposal groups classified as held for sale (as restated)

At the 2014 year end the Directors assessed the assets and liabilities of the discontinued business (being the Fly 540 Ghana CGU) and these are presented as impaired to their likely value on sale.

The aircraft used in the Ghanaian operations were impaired as at 31 December 2014 based upon the Directors' estimation of the likely proceeds; this was classified as a level two estimate under IFRS 13. The aircraft used by the Ghanaian operation was again impaired in 2015 and subsequently sold in 2015.

The other assets in the disposal group have been impaired in full, and liabilities held at book value. These estimates are classed as level three under IFRS 13.

Fly 540 Ghana Limited was sold for US$1 on 19 June 2015. The profit on discontinued activities in 2015 reflects the removal of the net liabilities of the Fly 540 CGU from the fastjet Group as it is no longer consolidated.

Abandoned Activities

Fly 540 Angola

During 2014 the Company intended to sell Fly 540 Angola and it was classified as an 'asset held for sale' as that company and aircraft asset were actively being marketed and the sale was expected within 2015. Accordingly, at the 2014 balance sheet date, the assets and liabilities of Fly 540 Angola and Fly 540 Ghana (which was also an 'asset held for sale') were aggregated and disclosed on the consolidated balance sheet as 'assets held for sale' along with the aircraft used by the operations.

However, a sale of Fly 540 Angola has not been achieved and it is the Directors' opinion that the possibility of sale is no longer likely and therefore no longer continues to qualify as an 'asset held for sale'. As Fly 540 Angola CGU has not maintained books of account or records during 2015, there are no employees, no local office and there has been no operational activity during the period, the entity is regarded as having been "abandoned". As the Group has deemed "control" the Fly 540 Angola CGU remains consolidated within the fastjet Group Financial Statements in accordance with IFRS 5. The assets and liabilities as at 31 December 2015 have been carried forward from 2014 and adjusted for transactions during 2015 involving other Group companies.

The 2014 comparative figures have been restated to disclose Fly 540 Angola and its aircraft as a continuing business.

Exceptional items in 2015 and 2014 relate to the impairment of aircraft and other fixed assets.

Set out below are the results and balance sheet for the Fly 540 Angola CGU:

Fly 540 Angola CGU is part of the legacy sub-group of which fastjet Aviation Limited (formerly Lonrho Aviation (BVI) Limited) is the intermediate holding company.

Further information on fastjet Aviation Limited is included in Note 6 Events after the balance sheet date.

4. Tax

A reconciliation of the tax expense to the reported losses is given below:

At 31 December 2015 the Group had accumulated tax losses of approximately US$117m (2014: US$96m) available for offset against future taxable trading profits. The ability to utilise these tax losses is uncertain in some jurisdictions and therefore the Directors consider it inappropriate to recognise this potential deferred tax asset until such time as the Group begins to generate taxable profits against which the losses will be utilised.

5. Loss per share

Loss per share is calculated by dividing the loss for the period attributable to equity shareholders in the Parent Company (as stated in the income statement) by the weighted average number of shares in issue during the period. 

On 21 April 2015 the Company issued 1 new ordinary share of £1 for each 100 existing ordinary share held at that date following a share consolidation.

The weighted average number of shares in issue during the period, adjusted for the 2015 share consolidation, was 51,286,617 (2014: 13,155,362). The loss for the purposes of basic earnings per share being the net loss attributable to the equity holders of the parent was US$41,312,000 for continuing operations and a profit of USD$19,371,000 for discontinued operations (2014 restated: US$52,545,000 loss continuing, US$13,329,000 loss discontinued).

The options and warrants in issue have no dilutive effect in either period because the Group incurred a loss on continuing and discontinued activities in both years.

6. Events after the balance sheet date

On 13 April 2016 the Company announced that, as part of the rationalisation of routes to match current demand with capacity, it had delayed its application for a Zambian AOC to the final quarter of 2016 pending further review of the network.

On 23 April 2016, fastjet Plc became aware that fastjet Aviation Limited (formerly Lonrho Aviation (B.V.I.) Limited) had been served with a Draft Order for a creditor instructed liquidator to be appointed over fastjet Aviation Limited in accordance with the Insolvency Act 2003 (British Virgin Islands). The case is to be heard on 6 June 2016. On the appointment of a liquidator, control of fastjet Aviation Limited would pass to the liquidator and fastjet Plc would no longer consolidate the assets and liabilities of fastjet Aviation Limited and Fly 540 Angola, its 100% owned subsidiary. The intercompany balances previously eliminated on consolidation would thereupon be recognised, however, It is not at this time practicable to estimate the final outcome if the liquidation were to happen.

On 29 April 2016 the Company announced it had agreed the early termination of the lease on one of its A319 aircraft as part of its ongoing review of its routes and fleet in order to match current demand with capacity. The aircraft, which was scheduled to come to the end of its lease term in October 2016, came out of service immediately.