Wizz Air Holdings Plc Annual report and accounts 2018 1 CONTENTS Strategic report Financial highlights 4 Company overview 5 Chairman’s statement 7 Chief Executive’s review 9 Selected statistics 15 Financial review 17 Key statistics 24 Principal risks and uncertainties 25 Governance Corporate governance report 31 Compliance with the UK Corporate Governance Code 32 Management of the Company 35 Report of the Chairman of the Audit Committee 44 Report of the Chairman of the Nomination Committee 47 Directors’ remuneration report 48 Corporate responsibility 61 Directors’ report 66 Company information 69 Statement of Directors’ responsibilities 70 Independent auditors’ report 71 Accounts and other information Consolidated statement of comprehensive income 78 Consolidated statement of financial position 79 Consolidated statement of changes in equity 80 Consolidated statement of cash flows 82 Notes forming part of the financial statements 83 References to “Wizz Air”, “the Company”, “the Group”, “we” or “our” in this report are references to Wizz Air Holdings Plc, or to Wizz Air Holdings Plc and its subsidiaries, as applicable. Wizz Air Holdings Plc Annual report and accounts 2018 2 STRATEGIC REPORT Wizz Air Holdings Plc Annual report and accounts 2018 3 STRATEGIC REPORT FINANCIAL HIGHLIGHTS 2018 2017 Financial year € million € million Change Total revenue 1,948.0 1,571.2 +24% Profit for the year* 275.1 225.3 +22% Profit margin 14.1% 14.3% (0.2)ppt Financial year 2018 2017 Change Passengers** 29.6m 23.8m +25% Year-end fleet 93 79 +18% Number of employees (average)*** 3,686 3,033 +22% * In 2017 the Company presented two profit measures: the IFRS profit for the period and the ‘underlying’ profit for the period. The latter included adjustments for exceptional items. As explained in Note 9 to the consolidated financial statements, the adoption of IFRS 9 has removed the principal cause of such exceptional items and the Company is therefore not disclosing a separate underlying profit measure for 2018. The comparison in this table is made to the underlying profit in 2017 as this presents the best like for like measure. ** Booked passengers. *** Including rented pilots. * Years F13 – F17 show ‘underlying’ net profit, a non-statutory profit measure used by the Company until the F18 financial year when the adoption of IFRS 9 made it obsolete. Further detailed in Note 9. ** F14 and F15 CASK include exceptional items. 2018, F18, FY18 and FY 2018 in this document refer to the financial year ended 31 March 2018. 2017, F17, FY17 and FY 2017 in this document refer to the financial year ended 31 March 2017. Equivalent terms are used for prior financial years. Wizz Air Holdings Plc Annual report and accounts 2018 4 STRATEGIC REPORT COMPANY OVERVIEW Wizz Air’s Presence Number of routes operated from CEE* countries as at 31 March 2018: Poland 143 Romania 117 Hungary 59 Bulgaria 39 Lithuania 29 Macedonia 27 Serbia 18 Ukraine 16 Bosnia and Herzegovina 14 Latvia 12 Czech Republic 8 Moldova 8 Georgia 7 Slovakia 6 Montenegro 2 Slovenia 2 Croatia 1 * Central and Eastern Europe, or CEE, is a region comprised of Albania, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Georgia, Hungary, Kosovo, Latvia, Lithuania, Macedonia, Moldova, Montenegro, Poland, Romania, Russia, Serbia, Slovakia, Slovenia and Ukraine. Wizz Air Holdings Plc Annual report and accounts 2018 5 STRATEGIC REPORT COMPANY OVERVIEW CONTINUED Milestones and Achievements FY 2018 } Wizz Air started operations in the following new locations: Tirana (Albania), Sarajevo (Bosnia and Herczegovina), Osijek (Croatia), Frankfurt (Germany), Athens (Greece), Astana (Kazakhstan), Prishtina (Kosovo), Agadir (Morocco), Tromso (Norway), Faro (Portugal), St Petersburg (Russia) and Lviv (Ukraine). } Emphasising its position as Bulgaria’s largest airline, Wizz Air announced its title sponsorship of the Sofia Marathon on the eleventh birthday of its Sofia, Bulgaria, base. } ‘WIZZ Youth Challenge” took place during the financial year, a business case-study challenge for students, attracting almost 400 entries from across Europe and beyond, with the final 40 teams attending a two- day final in Budapest. } Major expansion was announced at London Luton with the opening of the Company’s first Western European base in June 2018 and, later, following the acquisition of a portfolio of additional slots and parking stands at London Luton, the application to start a new airline Wizz Air UK Limited, increasing the based fleet to eight aircraft from summer 2018. } The Company placed an additional order for ten Airbus A321ceo aircraft powered by Pratt & Whitney’s V2500 engine to be delivered in 2018 and 2019. } At the end of 2017 Wizz Air signed, as part of an airline group initiative, its and also Airbus’ largest ever A320 family aircraft order, ordering for itself 146 A320neo family aircraft, with deliveries starting in 2021, and securing a stable flow of new aircraft until 2026. } Wizz Air introduced a new cabin bag policy allowing passengers to bring a large item of hand baggage free of charge. } The Company continued expanding its ancillary service offering by introducing new services such as the “Fare Lock”, “Flexible Travel Partner”, and “Trip Planning” platform. } Wizz Air won the title of European Airline of the Year by Aviation 100 and was also recognized at Sky Awards as Best Low-Cost Airline and Passengers’ Most Preferred Choice for its great performance on the Bulgarian market in 2017. } The Wizz Air Pilot Academy, a part-sponsored cadet training programme, commenced in December 2017 with initial plans to train 150 cadet pilots a year, as part of the Company’s strategy to ensure a sufficient supply of pilots of the right quality. } Vienna was announced as Wizz Air’s 27th base and Austria its 44th country in the network starting with five brand new Airbus A320 family aircraft. } An additional 14 brand new Airbus A320ceo family aircraft joined the Company’s fleet, taking the total to 93 aircraft at the end of the financial year. FY 2019 to date } Rating agencies Moody’s and Fitch initiated coverage of the Company assigning investment grade level, Baa3 and BBB ratings respectively. } The group’s new UK airline, Wizz Air UK Limited, started operations upon successfully receiving its UK Air Operator Certificate and Operating License. Wizz Air Holdings Plc Annual report and accounts 2018 6 STRATEGIC REPORT CHAIRMAN’S STATEMENT Performance Overview I am delighted to report another strong year at Wizz Air. The 2018 financial year saw the Company yet again achieve market leading growth while continuing to deliver one of the highest profit margins of all European airlines. Despite the challenging business conditions facing the European airline industry during the year, Wizz Air carried 29.6 million passengers, an increase of 24.7% year-on-year. Central to our long-term growth plans is our ability to grow passenger numbers profitably while retaining tight control over costs, which we delivered by growing both revenues and profit. In FY2018, Wizz Air revenues grew 24.0% and net profit grew 22.1%, translating into a net profit margin of 14.1%, a performance which few airlines in Europe can match. Strategy Profitable capacity growth and a dedication to achieving the lowest possible operating costs are, and will remain, the key focus for Wizz Air. Together, they allow us to continue to take advantage of the significant growth opportunity in Central and Eastern Europe which remains the Company’s core market region. Nonetheless, the Company’s agility and cost focus mean that it is well placed to take advantage of commercial opportunities as they arise and which lead in FY2018 to the announcement of two Western European bases in London Luton and Vienna. The strategy has led to increasing and impressive financial strength which, during FY2018, enabled the Company to deliver a number of other important milestones: } More than 100 new routes were announced, building our core markets as well as expanding our footprint outside the CEE and widening our customer base. } Launching a brand new UK airline, Wizz Air UK Limited, confirming our commitment to the UK market and significant investment in Luton. } Ordering a total of 156 new Airbus A320 family aircraft to ensure an enviable committed pipeline of latest- technology, ultra-efficient aircraft deliveries until 2026 and so providing a firm foundation for future growth. } Receiving investment-grade ratings from both Moody’s and Fitch, confirming the strength and prospects of our business and financial position. We believe that, as one of Europe’s fastest growing airlines and with our unique position in Central and Eastern Europe, our ultra-low-cost base,our ever expanding diversified network the corporate agility which allows us to respond quickly to market opportunities and our commitment to driving our operating costs ever lower, Wizz Air is well placed to continue to grow profitably to meet industry challenges and consolidate its market leading position and, so, continue to deliver significant growth and create long-term value for our stakeholders. Governance/Board Changes As a Board, we recognise that our ability to create value for our stakeholders is heavily linked to our commitment to high standards of corporate governance. The Board and I feel we have the right balance of skills, experience and backgrounds to oversee the execution of our strategy and, when necessary, challenge the management team. We have once again carried out an internal evaluation of the Board’s performance and, during the 2019 financial year, we shall once again run an externally-facilitated board appraisal process, taking note of highlighted development areas to ensure ongoing high standards. We are also delighted to have recently announced the appointment of Stephen Jones as Executive Vice President and Deputy Chief Executive Officer. Stephen is responsible for Wizz Air's commercial, marketing and information technology organizations and reports directly to our CEO.