TIDMDTG
RNS Number : 3997H
Dart Group PLC
15 November 2018
DART GROUP plc
Interim Results
Dart Group plc, the Leisure Travel and Distribution &
Logistics Group ("the Group"), announces its unaudited interim
results for the half year ended 30 September 2018. These results
are presented under International Financial Reporting Standards
("IFRS").
Group financial highlights Half year ended Half year ended Change
30 September 30 September
2018 2017
Restated
------------------------------------------------ ---------------- ---------------- --------
Revenue GBP2,247.1m GBP1,652.5m 36%
------------------------------------------------ ---------------- ---------------- --------
Operating profit GBP350.1m GBP208.6m 68%
------------------------------------------------ ---------------- ---------------- --------
Operating profit margin 15.6% 12.6% 3.0ppts
------------------------------------------------ ---------------- ---------------- --------
Profit before FX revaluation & taxation GBP339.4m GBP201.9m 68%
================================================ ================ ================ ========
Profit before FX revaluation & taxation margin 15.1% 12.2% 2.9ppts
------------------------------------------------ ---------------- ---------------- --------
Profit before taxation GBP337.4m GBP216.2m 56%
================================================ ================ ================ ========
Profit before taxation margin 15.0% 13.1% 1.9ppts
------------------------------------------------ ---------------- ---------------- --------
Basic earnings per share 186.15p 119.47p 56%
================================================ ================ ================ ========
Interim dividend per share 2.8p 1.5p 87%
------------------------------------------------ ---------------- ---------------- --------
Figures shown for the half year ended 30 September 2017 have
been restated to reflect the adoption of IFRS 15 in the current
year. Further information can be found in Notes 3 & 12.
* Summer 2018 has proven to be a particularly strong season
for our Leisure Travel business, as demand for both our flight-only
offering from Jet2.com and our higher margin package holiday
product from Jet2holidays proved buoyant throughout.
* Group operating profit increased by 68% to GBP350.1m (2017:
GBP208.6m) and Group profit before foreign exchange revaluation
and taxation increased by 68% to GBP339.4m (2017: GBP201.9m).
* However, increased losses are to be expected in the second
half of the year as we continue to invest in additional aircraft
and marketing, together with the increasing cost of retaining
and attracting wonderful colleagues in readiness for further
flying programme expansion at all our operating bases in the
summer 2019 season.
* With winter 2018/19 Leisure Travel bookings in line with expectations
and notwithstanding the important post-Christmas booking period
that is still to come, the Board expects current market expectations
for the year ending 31 March 2019 to be met.
* Looking ahead, significant cost pressures such as fuel and
other operating charges, plus the necessary continued investment
in our products and operations including that required to
retain and attract colleagues, are emerging headwinds. This,
coupled with the overall uncertain UK economic outlook particularly
related to Brexit and how it may impact on consumer spending,
means we remain unclear how demand will develop in the medium
term.
* However, our strategy for the long term remains consistent
- to grow both our flight-only and package holiday products.
On the assumption that the UK Government secures a pragmatic
and balanced Brexit agreement with the EU, the outlook remains
bright and we continue to have confidence in the resilience
of both our Leisure Travel and Distribution & Logistics businesses.
Chairman's Statement
I am pleased to report on the Group's trading performance for
the half year ended 30 September 2018 in our two businesses,
"Leisure Travel" - incorporating Jet2.com, our award-winning
airline and Jet2holidays, our acclaimed ATOL licensed package
holidays operator - together with "Distribution & Logistics",
comprising Fowler Welch, one of the UK's leading logistics
providers.
Summer 2018 has proven to be a particularly strong season for
our Leisure Travel business, as demand for both our flight-only
offering from Jet2.com and our higher margin package holiday
product from Jet2holidays proved buoyant throughout.
Revenue in our Distribution & Logistics business also grew
by 7% to GBP88.9m (2017: GBP83.0m), as management continued to
focus on developing existing and new business opportunities.
As a result, Group operating profit increased by 68% to
GBP350.1m (2017: GBP208.6m) and Group profit before foreign
exchange revaluation and taxation increased by 68% to GBP339.4m
(2017: GBP201.9m).
However, increased losses are to be expected in the second half
of the year as we continue to invest in additional aircraft and
marketing, together with the increasing cost of retaining and
attracting wonderful colleagues in readiness for further flying
programme expansion at all our operating bases in the summer 2019
season.
In the first half, the Group generated increased net cash flow
from operating activities of GBP423.8m (2017: GBP257.2m), driven by
the Leisure Travel trading performance. Total capital expenditure
of GBP132.1m (2017: GBP90.4m) included the purchase of further new
Boeing 737-800NG aircraft, investment in the long-term maintenance
of our existing fleet, the purchase of a 5(th) flight simulator for
our training centre in Bradford and infrastructure projects at
Fowler Welch.
New loans totalling GBP132.7m (2017: GBP109.0m) were drawn down,
as the Group secured commercial debt funding for the purchase of
its new aircraft. As a result, the Group's cash and money market
deposit balances increased in the first half by GBP389.0m (2017:
GBP242.1m) to GBP1,397.6m (2017: GBP931.1m), which included advance
payments from Leisure Travel customers of GBP520.7m (2017:
GBP376.8m) in respect of their future flights and holidays. Net
cash, stated after borrowings of GBP937.4m (2017: GBP574.2m), was
GBP460.2m (2017: GBP356.9m), an increase of 29%.
Basic earnings per share increased to 186.15p (2017: 119.47p).
In view of the outlook for the full year, the Board has decided to
pay an increased interim dividend of 2.8p per share (2017: 1.5p).
The dividend will be paid on 4 February 2019 to shareholders on the
register at 28 December 2018.
Leisure Travel
We take people on holiday! Our UK Leisure Travel business
specialises in scheduled holiday flights by Jet2.com, and ATOL
licensed package holidays by Jet2holidays, to destinations in the
Mediterranean, the Canary Islands and to European Leisure
Cities.
Passenger volumes for summer 2018 have been strong as our
important flight-only product was enjoyed by 4.38m passengers
(2017: 3.52m), a growth of 24%, whilst demand for our Real Package
Holidays(TM) strengthened, with Jet2holidays taking 2.31m customers
on package holidays (2017: 1.81m), an increase of 28%, representing
51.0% (2017: 50.7%) of overall flown customers.
Jet2.com flew a total of 8.93m flight-only and package holiday
passengers (one-way passenger sectors) (2017: 7.14m) to and from
sun, city and ski destinations, an increase of 25% and slightly
ahead of the 24% seat capacity increase. As a result, average load
factors improved by 1.2ppts to 94.4% (2017: 93.2%) which included
encouraging performances from our two new operating bases at London
Stansted and Birmingham airports.
Average flight-only ticket yield per passenger sector at
GBP88.02 (2017: GBP75.55) was 17% higher compared to the
challenging market in the prior year. The average price of a
Jet2holidays package holiday grew by 7% to GBP689 (2017:
GBP645).
Non-ticket retail revenue per passenger grew by 9% to GBP23.83
(2017: GBP21.83). This revenue stream, which is primarily
discretionary in nature, continues to be optimised through our
customer contact programme as we focus on continually developing
our customer services.
Overall, Leisure Travel revenue grew by 38% to GBP2,158.2m
(2017: GBP1,569.5m) at an operating profit margin of 16% (2017:
13%), resulting in operating profit growth of 69% to GBP347.8m
(2017: GBP206.2m).
The fleet expanded to 90 aircraft for summer 2018 (summer 2017:
75) with commensurate increases in pilots, engineers and cabin crew
and we will continue to develop our holiday focused flying
programme into summer 2019.
Key Performance Indicators Half year Half year Half year Year
ended ended end change ended
30 September 30 September 31 March
2018 2017 2018
Restated Restated
---------------------------------- -------------- -------------- ------------ ------------
Number of routes operated
during the period 304 260 17% 306
Leisure Travel sector seats
available (capacity) 9.47m 7.66m 24% 11.27m
================================== ============== ============== ============ ============
Leisure Travel passenger
sectors flown 8.93m 7.14m 25% 10.38m
================================== ============== ============== ============ ============
Leisure Travel load factor 94.4% 93.2% 1.2ppts 92.2%
================================== ============== ============== ============ ============
Flight-only passenger sectors
flown 4.38m 3.52m 24% 5.37m
================================== ============== ============== ============ ============
Package holiday customers 2.31m 1.81m 28% 2.50m
================================== ============== ============== ============ ============
Flight-only ticket yield GBP88.02 GBP75.55 17% GBP73.01
per passenger sector (excl.
taxes)
================================== ============== ============== ============ ============
Average package holiday price GBP689 GBP645 7% GBP633
================================== ============== ============== ============ ============
Non-ticket revenue per passenger GBP23.83 GBP21.83 9% GBP22.52
sector *
================================== ============== ============== ============ ============
Advance sales made as at GBP991.2m GBP744.2m 33% GBP1,486.5m
the reporting date
---------------------------------- -------------- -------------- ------------ ------------
* Presentation of the Non-ticket revenue per passenger sector
KPI has been adjusted for the impact of IFRS 15 and also to remove
certain non-ticket revenue items included within the Average
package holiday price KPI.
Distribution & Logistics
Our distribution business, Fowler Welch, is one of the UK's
leading providers of food supply-chain services, serving retailers,
processors, growers and importers through its distribution network.
A full range of value added services is provided, including the
packing of fruits, storage and case-level picking, and an
award-winning national distribution network.
The business operates from nine prime UK distribution sites,
with major temperature-controlled operations in the key produce
growing and importing areas of Spalding in Lincolnshire; Teynham
and Paddock Wood in Kent; and Hilsea near Portsmouth.
Further regional distribution sites are located at Nuneaton in
the Midlands; Washington, Tyne and Wear; and at Newton Abbott,
Devon. Ambient (non-temperature-controlled) consolidation and
distribution services are provided at Heywood near Bury, Greater
Manchester; and Desborough, Northamptonshire.
In the reporting period, Fowler Welch revenue grew by 7% to
GBP88.9m (2017: GBP83.0m) as new business was secured. Ambient
performance was weaker than anticipated and varying Chilled volume
profiles at certain depots led to some inefficiencies as customer
service levels were maintained. However, the performance of
Integrated Service Solutions (ISS), Fowler Welch's joint venture
operation, which ripens, grades and packs a variety of stone fruit,
berries and exotic fruits, continued to be encouraging as it
contributed an increased share of profit year on year. As a result,
the business achieved a first half operating profit of GBP2.3m
(2017: GBP2.4m).
Key Performance Indicators Half year Half year Year
ended ended ended
30 September 30 September Half year 31 March
2018 2017 end change 2018
---------------------------- -------------- -------------- ------------ ----------
Distribution Centre space
(square feet) 897,000 897,000 - 897,000
============================ ============== ============== ============ ==========
Number of tractor units
in operation 533 499 7% 515
============================ ============== ============== ============ ==========
Number of trailer units
in operation 802 731 10% 742
============================ ============== ============== ============ ==========
Miles per gallon 9.8 9.9 (1%) 9.7
============================ ============== ============== ============ ==========
Total fleet mileage 25.6m 23.9m 7% 49.4m
---------------------------- -------------- -------------- ------------ ----------
Outlook
With winter 2018/19 Leisure Travel bookings in line with
expectations and notwithstanding the important post-Christmas
booking period that is still to come, the Board expects current
market expectations for the year ending 31 March 2019 to be
met.
Looking ahead, significant cost pressures such as fuel and other
operating charges, plus the necessary continued investment in our
products and operations including that required to retain and
attract colleagues, are emerging headwinds. This, coupled with the
overall uncertain UK economic outlook particularly related to
Brexit and how it may impact on consumer spending, means we remain
unclear how demand will develop in the medium term.
However, our strategy for the long term remains consistent - to
grow both our flight-only and package holiday products. On the
assumption that the UK Government secures a pragmatic and balanced
Brexit agreement with the EU, the outlook remains bright and we
continue to have confidence in the resilience of both our Leisure
Travel and Distribution & Logistics businesses.
Philip Meeson
Executive Chairman
15 November 2018
For further information, please contact:
Dart Group plc Tel: 0113 239 7817
Philip Meeson, Executive Chairman
Gary Brown, Group Chief Financial
Officer
Smith & Williamson Corporate Finance Tel: 020 7131 4000
Limited
Nominated Adviser
David Jones / Katy Birkin
Canaccord Genuity - Joint Broker Tel: 020 7523 8000
Ben Griffiths / Antony Isaacs
Arden Partners - Joint Broker Tel: 020 7614 5931
Steve Douglas
Buchanan - Financial PR Tel: 020 7466 5000
Richard Oldworth
Dart Group plc
Condensed Consolidated Income Statement (Unaudited)
for the half year ended 30 September 2018
Note Half year Half year Year
ended ended ended
30 September 30 September 31 March
2018 2017 2018
GBPm GBPm GBPm
Restated Restated
------------------------------------- ----- -------------- -------------- ----------
Revenue 5 2,247.1 1,652.5 2,380.0
Net operating expenses (1,897.0) (1,443.9) (2,253.8)
------------------------------------- ----- -------------- -------------- ----------
Operating profit 5 350.1 208.6 126.2
Finance income 5.2 2.1 4.8
Finance expense (17.4) (8.8) (21.1)
Net FX revaluation (losses) /
gains (2.0) 14.3 20.0
------------------------------------- ----- -------------- -------------- ----------
Net financing (expense) / income (14.2) 7.6 3.7
Profit on disposal of property,
plant and equipment 1.5 - 0.3
------------------------------------- ----- -------------- -------------- ----------
Profit before taxation 337.4 216.2 130.2
Taxation 8 (60.7) (39.0) (23.1)
Profit for the period 276.7 177.2 107.1
(all attributable to equity shareholders
of the parent)
============================================ ============== ============== ==========
Earnings per share 6
- basic 186.15p 119.47p 72.16p
- diluted 185.55p 118.88p 71.83p
------------------------------------- ----- -------------- -------------- ----------
Dart Group plc
Condensed Consolidated Statement of Comprehensive Income
(Unaudited)
for the half year ended 30 September 2018
Half year Half year Year
ended ended ended
30 September 30 September 31 March
2018 2017 2018
GBPm GBPm GBPm
Restated Restated
------------------------------------------- -------------- -------------- ----------
Profit for the period 276.7 177.2 107.1
Other comprehensive income /
(expense)
------------------------------------------- -------------- -------------- ----------
Cash flow hedges:
Fair value gains 109.2 21.8 50.6
Less gains transferred to income
statement (21.7) (59.9) (58.7)
Related taxation (charge) / credit (16.9) 7.2 1.5
Revaluation of foreign operations 0.8 - 0.7
-------------------------------------------- -------------- -------------- ----------
71.4 (30.9) (5.9)
Total comprehensive income for
the period
(all attributable to equity shareholders
of the parent) 348.1 146.3 101.2
============================================ ============== ============== ==========
Dart Group plc
Condensed Consolidated Statement of Financial Position
(Unaudited)
at 30 September 2018
30 September 30 September 31 March
2018 2017 2018
GBPm GBPm GBPm
Restated Restated
----------------------------- ------------- ------------- ----------
Non-current assets
Goodwill 6.8 6.8 6.8
Property, plant and
equipment 1,176.4 827.4 1,083.0
Derivative financial
instruments 19.3 3.7 23.7
------------------------------ ------------- ------------- ----------
1,202.5 837.9 1,113.5
----------------------------- ------------- ------------- ----------
Current assets
Inventories 1.9 1.7 1.8
Trade and other receivables 206.0 171.5 258.2
Derivative financial
instruments 118.2 39.5 64.3
Money market deposits 485.2 445.2 220.2
Cash and cash equivalents 912.4 485.9 788.4
------------------------------ ------------- ------------- ----------
1,723.7 1,143.8 1,332.9
----------------------------- ------------- ------------- ----------
Total assets 2,926.2 1,981.7 2,446.4
------------------------------ ------------- ------------- ----------
Current liabilities
Trade and other payables 435.2 330.6 159.9
Deferred revenue 529.0 385.0 806.0
Borrowings 85.8 128.5 88.6
Provisions 55.7 45.4 41.7
Derivative financial
instruments 1.3 11.4 40.7
------------------------------ ------------- ------------- ----------
1,107.0 900.9 1,136.9
----------------------------- ------------- ------------- ----------
Non-current liabilities
Deferred revenue 2.6 1.7 1.3
Borrowings 851.6 445.7 718.0
Derivative financial
instruments 8.3 22.7 8.2
Deferred taxation 94.6 44.3 68.2
------------------------------ ------------- ------------- ----------
957.1 514.4 795.7
----------------------------- ------------- ------------- ----------
Total liabilities 2,064.1 1,415.3 1,932.6
------------------------------ ------------- ------------- ----------
Net assets 862.1 566.4 513.8
============================== ============= ============= ==========
Shareholders' equity
Share capital 1.9 1.8 1.9
Share premium 12.9 12.7 12.7
Cash flow hedging reserve 102.2 7.3 31.6
Other reserves 1.5 - 0.7
Retained earnings 743.6 544.6 466.9
Total shareholders'
equity 862.1 566.4 513.8
============================== ============= ============= ==========
Dart Group plc
Condensed Consolidated Statement of Cash Flows (Unaudited)
for the half year ended 30 September 2018
Half year Half year Year
ended ended ended
30 September 30 September 31 March
2018 2017 2018
GBPm GBPm GBPm
Restated Restated
------------------------------------------ -------------- ---------------- ----------
Profit on ordinary activities
before taxation 337.4 216.2 130.2
Finance income (5.2) (2.1) (4.8)
Finance expense 17.4 8.8 21.1
Net FX revaluation losses / (gains) 2.0 (14.3) (20.0)
Depreciation 72.0 60.8 111.6
Profit on disposal of property,
plant and equipment (1.5) - (0.3)
Equity settled share-based payments - - 0.4
Operating cash flows before movements
in working capital 422.1 269.4 238.2
Increase in inventories (0.1) (0.5) (0.6)
Decrease / (increase) in trade
and other receivables 52.2 34.1 (52.6)
Increase in trade and other payables 226.0 163.5 27.8
(Decrease) / increase in deferred
revenue (275.7) (210.6) 209.9
Increase in provisions 13.0 7.5 4.5
Cash generated from operations 437.5 263.4 427.2
Interest received 5.2 2.1 4.8
Interest paid (15.1) (8.3) (17.2)
Income taxes (paid) / received (3.8) - 0.1
Net cash generated from operating
activities 423.8 257.2 414.9
------------------------------------------- -------------- ---------------- ----------
Cash flows used in investing activities
Purchase of property, plant and
equipment (132.1) (90.4) (411.1)
Proceeds from sale of property,
plant and equipment 1.6 - 0.3
Net increase in money market deposits (265.0) (244.9) (19.9)
Net cash used in investing activities (395.5) (335.3) (430.7)
------------------------------------------- -------------- ---------------- ----------
Cash flows from financing activities
Repayment of borrowings (44.9) (34.0) (128.8)
New loans advanced 132.7 109.0 458.2
Proceeds on issue of shares - 0.2 0.3
Equity dividends paid - - (8.0)
Net cash from financing activities 87.8 75.2 321.7
------------------------------------------- -------------- ---------------- ----------
Effect of foreign exchange rate
changes 7.9 0.1 (6.2)
Net increase / (decrease) in cash
in the period 124.0 (2.8) 299.7
Cash and cash equivalents at beginning
of period 788.4 488.7 488.7
Cash and cash equivalents at end
of period 912.4 485.9 788.4
=========================================== ============== ================ ==========
Dart Group plc
Condensed Consolidated Statement of Changes in Equity
(Unaudited)
for the half year ended 30 September 2018
Share Share Cash flow Other Retained Total
capital premium hedging reserves earnings equity
reserve
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- --------- --------- ---------- ---------- ---------- --------
Balance at 1 April
2017 1.8 12.5 38.2 - 378.9 431.4
Total comprehensive
income - - (30.9) - 174.2 143.3
Issue of share capital - 0.2 - - - 0.2
IFRS 15 Restatement:
Brought forward retained
earnings - - - - (11.5) (11.5)
Total comprehensive
income - - - - 3.0 3.0
Balance at 30 September
2017 -
as restated 1.8 12.7 7.3 - 544.6 566.4
Total comprehensive
income - - 24.3 0.7 (63.5) (38.5)
Dividends paid - - - - (8.0) (8.0)
Share-based payments - - - - 0.4 0.4
Issue of share capital 0.1 - - - - 0.1
IFRS 15 Restatement:
Total comprehensive
income - - - - (6.6) (6.6)
Balance at 31 March
2018 -
as restated 1.9 12.7 31.6 0.7 466.9 513.8
Total comprehensive
income - - 70.6 0.8 276.7 348.1
Issue of share capital - 0.2 - - - 0.2
Balance at 30 September
2018 1.9 12.9 102.2 1.5 743.6 862.1
============================ ========= ========= ========== ========== ========== ========
Dart Group plc
Notes to the consolidated interim report
for the half year ended 30 September 2018 (Unaudited)
1. General information
The Group's financial statements consolidate the financial
statements of Dart Group plc and its subsidiaries and have been
prepared and approved by the Directors in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union ("Adopted IFRS").
This interim financial report does not fully comply with IAS 34
Interim Financial Reporting, which is not currently required to be
applied by AIM companies.
2. Accounting policies
Basis of preparation of the interim report
The unaudited consolidated interim financial report for the half
year ended 30 September 2018 does not constitute statutory accounts
as defined in s435 of the Companies Act 2006. The financial
statements for the year ended 31 March 2018 were prepared in
accordance with IFRS and have been delivered to the Registrar of
Companies. The report of the auditor on those financial statements
was unqualified, did not contain an emphasis of matter paragraph
and did not contain any statement under s495(2) nor (3) of the
Companies Act 2006. In this report, the comparative figures for the
half year ended 30 September 2017 and the year ended 31 March 2018
have been restated for the impact of IFRS 15 and the revised
presentation of accrued and deferred revenue - see notes 3 & 12
for further details.
The financial statements have been prepared under the historical
cost convention except for all derivative financial instruments,
which have been measured at fair value.
The Group's financial statements are presented in pounds
sterling and all values are rounded to the nearest GBP100,000
except where indicated otherwise.
Derivative financial instruments and hedging
The Group uses forward foreign currency contracts and interest
rate and aviation fuel swaps to hedge its exposure to foreign
exchange rates, interest rates and aviation fuel price volatility.
The Group also uses forward EU Allowance contracts and forward
Certified Emissions Reduction contracts to hedge exposure to Carbon
Emissions Allowance price volatility. Such derivative financial
instruments are stated at fair value.
Where a derivative financial instrument is designated as a hedge
of a highly probable forecast transaction, the effective portion of
the gain or loss on the hedging instrument from the inception of
the hedging relationship is recognised directly in the cash flow
hedging reserve within equity. Any ineffective portion is
recognised within the Consolidated Income Statement.
For all other cash flow hedges, the recycling of the cash flow
hedge is taken to the Consolidated Income Statement in the same
period in which the hedged transaction begins to affect profit or
loss.
Going concern
The Directors have prepared financial forecasts for the Group,
comprising profit before and after taxation, balance sheets and
cash flows through to 31 March 2021.
For the purpose of assessing the appropriateness of the
preparation of the Group's unaudited interim report on a going
concern basis, the Directors have considered the current cash
position, the availability of banking facilities, and sensitised
forecasts of future trading through to 31 March 2021, including
performance against financial covenants and an assessment of the
principal areas of risk and uncertainty.
Having considered the points above, the Directors have a
reasonable expectation that the Group as a whole has adequate
resources to continue in operational existence for the foreseeable
future. Consequently, they continue to adopt the going concern
basis in preparing the unaudited interim report for the half year
ended 30 September 2018.
3. New IFRS effective in the current year
The following amendments to IFRS became mandatorily effective in
the current year.
International Financial Reporting Applying to accounting
Standards periods
----------------------------------
beginning after
---------------------------------- -----------------------
IFRS 15 Revenue from Contracts with
Customers January 2018
------------------------------------- -------------
The Group has adopted IFRS 15 in its interim report for the half
year ending 30 September 2018 and has applied the fully
retrospective transition method, with the comparative year and
opening net assets (as at 1 April 2017) restated. This new standard
supersedes all existing revenue requirements in IFRS. Its core
principle is that an entity should recognise revenue to depict the
transfer of promised goods or services to customers in an amount
that reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services.
IFRS 15 discusses whether a contract contains more than one
distinct good or service. In light of this guidance, the Group
considered whether its package holidays offering contained more
than one promised service, and concluded that a package holiday
constituted delivery of one distinct performance obligation
including flights, accommodation, transfers and other
holiday-related services.
Under IFRS 15, revenues are recognised when a performance
obligation is satisfied, which happens when control of the goods or
services underlying the particular performance obligation is
transferred to the customer. The impact of this for Leisure Travel
is to defer the recognition of certain non-ticket revenue streams
to the date of departure rather than the date of booking. The
performance obligations for Distribution & Logistics have been
considered, and there are no changes in the timing of revenue
recognition as a result of implementing IFRS 15.
In addition, a proportion of flight delay compensation payments
made to customers, previously recorded wholly within net operating
expenses, are now offset against revenues. This presentational
change has reduced revenue where the performance obligation has not
been fully satisfied, but has a net nil impact on the overall
profit for the period.
The impact on the Group financial statements for the half year
ended 30 September 2017 and for the year ended 31 March 2018 is
shown in detail in note 12 to this interim report.
IFRS 9 Financial Instruments January 2018
----------------------------- -------------
The Group has adopted IFRS 9 in its interim report for the half
year ending 30 September 2018. This new standard replaces current
guidance provided by IAS 39 on classification and measurement of
financial assets and liabilities. In addition, IFRS 9 includes new
requirements for general hedge accounting and impairment of
financial assets.
Under IFRS 9, all recognised financial assets within scope are
required to be subsequently measured at amortised cost or fair
value. The classification of each financial asset is based on
whether the business model of the Group is to hold assets to
collect contractual cash flows or to benefit from changes in the
fair value of assets. The Group financial statements have not been
impacted by this change.
The impairment model under IFRS 9 reflects expected credit
losses, as opposed to only incurred credit losses under IAS 39. The
Group has applied the practical expedient afforded by IFRS 9 in
calculating credit losses and therefore has not recorded any
changes to its current impairment calculations.
Finally, under IFRS 9, greater flexibility has been introduced
to the types of transactions eligible for hedge accounting. This
new guidance is aligned with the Group's current hedging policy and
therefore does not result in any material changes.
Overall, there is no impact on the Group's net assets or profit
for the period on transition to IFRS 9.
4. New IFRS and amendments to IAS and interpretations
The International Accounting Standards Board ("IASB") has issued
the following standards and interpretations, with an effective date
after the date of this interim report. The Group continues to
evaluate the potential impact of their adoption as described
below.
International Financial Reporting Applying to accounting
Standards periods
----------------------------------
beginning after
---------------------------------- -----------------------
IFRS 16 Leases January 2019
---------------------------------- -----------------------
The Group will adopt IFRS 16 in its financial statements for the
year ending 31 March 2020. IFRS 16 replaces IAS 17 and removes the
requirement for lessees to report on finance and operating leases
separately.
Under IFRS 16, the Group will distinguish between leases and
service contracts based on whether there is an identified asset
controlled by the Group. Control exists if the customer has the
right to obtain substantially all of the economic benefit from the
use of the asset and the right to direct the use of that asset.
Where control exists, the Group will be required to recognise a
right-of-use asset and also a lease liability, rather than
accounting for operating lease payments through profit and
loss.
Upon application of the new standard, the Group expect to
capitalise all aircraft and properties currently accounted for as
operating leases. As a result, the Group will incur depreciation
charges on these assets and interest charges on the associated
lease liabilities, in place of the operating lease charges
currently incurred.
The Group continues to evaluate the impact of applying the new
standard.
5. Segmental reporting
Business Segments
The Chief Operating Decision Maker ("CODM") is responsible for
the overall resource allocation and performance assessment of the
Group. The Board of Directors approves major capital expenditure,
assesses the performance of the Group and also determines key
financing decisions. Consequently, the Board of Directors is
considered to be the CODM.
For management purposes, the Group is organised into two
operating segments: Leisure Travel and Distribution &
Logistics. These operating segments are consistent with how
information is presented to the CODM for the purpose of resource
allocation and assessment of their performance and as such, they
are also deemed to be the reporting segments.
The Leisure Travel business specialises in the provision of
scheduled holiday flights by its airline, Jet2.com, and ATOL
licensed package holidays by its tour operator, Jet2holidays, to
leisure destinations in the Mediterranean, the Canary Islands and
to European Leisure Cities. Resource allocation decisions are based
on the entire route network and the deployment of its entire
aircraft fleet.
The Distribution & Logistics business is run on the basis of
the evaluation of distribution centre-level performance data.
However, resource allocation decisions are made based on the entire
distribution network. The objective in making resource allocation
decisions is to maximise the segment results rather than the
results of the individual distribution centres within the
network.
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are
eliminated.
Following the identification of the operating segments, the
Group has assessed the similarity of their characteristics. Given
the different performance targets, customer bases and operating
markets of each, it is not appropriate to aggregate the operating
segments for reporting purposes and, therefore, both are disclosed
as reportable segments for the half year ended 30 September
2018:
-- Leisure Travel, which incorporates the Group's leisure
airline, Jet2.com, and its ATOL licensed package holidays operator,
Jet2holidays; and
-- Distribution & Logistics, incorporating the Group's logistics company, Fowler Welch.
The Board assesses the performance of each segment based on
operating profit, and profit before and after taxation. Revenue
from reportable segments is measured on a basis consistent with the
Consolidated Income Statement.
Revenue is principally generated from within the UK, the Group's
country of domicile. Segment results, assets and liabilities
include items directly attributable to a segment, as well as those
that can be allocated on a reasonable basis.
No customer represents more than 10% of the Group's revenue.
Segment revenue reported below represents revenue generated from
external customers. There was no intersegment revenue in the
current year (2017: nil).
Half year to 30 September Leisure Distribution Group Total
2018 Travel & Logistics eliminations
---------------------------------
GBPm GBPm GBPm GBPm
--------------------------------- ---------- ------------- -------------- ----------
Revenue 2,158.2 88.9 - 2,247.1
Operating profit 347.8 2.3 - 350.1
Finance income 5.2 - - 5.2
Finance expense (17.4) - - (17.4)
Net FX revaluation losses (2.0) - - (2.0)
--------------------------------- ---------- ------------- -------------- ----------
Net financing expense (14.2) - - (14.2)
Profit on disposal of property,
plant and equipment 1.5 - - 1.5
--------------------------------- ---------- ------------- -------------- ----------
Profit before taxation 335.1 2.3 - 337.4
Taxation (60.3) (0.4) - (60.7)
--------------------------------- ---------- ------------- -------------- ----------
Profit for the period 274.8 1.9 - 276.7
================================= ========== ============= ============== ==========
Assets and liabilities
Segment assets 2,840.3 90.3 (4.4) 2,926.2
Segment liabilities (2,039.7) (28.8) 4.4 (2,064.1)
--------------------------------- ---------- ------------- -------------- ----------
Net assets 800.6 61.5 - 862.1
================================= ========== ============= ============== ==========
Other segment information
Property, plant and equipment
additions 130.7 1.4 - 132.1
Depreciation, amortisation
and impairment (70.5) (1.5) (72.0)
Share-based payments - - -
Half year to 30 September Leisure Distribution Group Total
2017 Travel & Logistics eliminations
Restated Restated
-------------------------------
GBPm GBPm GBPm GBPm
------------------------------- ---------- ------------- -------------- ----------
Revenue 1,569.5 83.0 - 1,652.5
Operating profit 206.2 2.4 - 208.6
------------------------------- ---------- ------------- -------------- ----------
Finance income 2.1 - - 2.1
Finance expense (8.8) - - (8.8)
Net FX revaluation gains 14.3 - - 14.3
------------------------------- ---------- ------------- -------------- ----------
Net financing income 7.6 - - 7.6
------------------------------- ---------- ------------- -------------- ----------
Profit before taxation 213.8 2.4 - 216.2
Taxation (38.6) (0.4) - (39.0)
------------------------------- ---------- ------------- -------------- ----------
Profit for the period 175.2 2.0 - 177.2
=============================== ========== ============= ============== ==========
Assets and liabilities
Segment assets 1,900.6 86.2 (5.1) 1,981.7
Segment liabilities (1,392.0) (28.4) 5.1 (1,415.3)
------------------------------- ---------- ------------- -------------- ----------
Net assets 508.6 57.8 - 566.4
=============================== ========== ============= ============== ==========
Other segment information
Property, plant and equipment
additions 88.8 1.6 - 90.4
Depreciation, amortisation
and impairment (59.6) (1.2) - (60.8)
Year ended 31 March 2018 Leisure Distribution Group Total
Travel & Logistics eliminations
Restated Restated
---------------------------------
GBPm GBPm GBPm GBPm
--------------------------------- ---------- ------------- -------------- ----------
Revenue 2,211.4 168.6 - 2,380.0
Operating profit 121.8 4.4 - 126.2
--------------------------------- ---------- ------------- -------------- ----------
Finance income 4.8 - - 4.8
Finance expense (21.1) - - (21.1)
Net FX revaluation gains 20.0 - - 20.0
--------------------------------- ---------- ------------- -------------- ----------
Net financing income 3.7 - - 3.7
Profit on disposal of property,
plant and equipment 0.3 - - 0.3
--------------------------------- ---------- ------------- -------------- ----------
Profit before taxation 125.8 4.4 - 130.2
Taxation (22.4) (0.7) - (23.1)
--------------------------------- ---------- ------------- -------------- ----------
Profit for the period 103.4 3.7 - 107.1
================================= ========== ============= ============== ==========
Assets and liabilities
Segment assets 2,364.8 86.5 (4.9) 2,446.4
Segment liabilities (1,910.6) (26.9) 4.9 (1,932.6)
--------------------------------- ---------- ------------- -------------- ----------
Net assets 454.2 59.6 - 513.8
================================= ========== ============= ============== ==========
Other segment information
Property, plant and equipment
additions 405.2 5.9 - 411.1
Depreciation, amortisation
and impairment (108.9) (2.7) - (111.6)
Share-based payments (0.3) (0.1) - (0.4)
6. Earnings per share
The calculation of earnings per share is based on the
following:
Half year Half year Year to
to to 31 March
30 September 30 September 2018
2018 2017 Restated
Restated
----------------------------------------------------- -------------- -------------- ------------
Profit for the period (GBPm) 276.7 177.2 107.1
-------------- -------------- ------------
Weighted average no. of ordinary
shares in issue:
* used to calculate basic earnings per share 148,643,358 148,325,869 148,415,077
* used to calculate diluted earnings per share 149,120,814 149,057,472 149,097,339
----------------------------------------------------- -------------- -------------- ------------
7. Dividends
The declared interim dividend of 2.8p per share (2017: 1.5p)
will be paid out of the Company's available distributable reserves
on 4 February 2019, to shareholders on the register at 28 December
2018. In accordance with IAS 1, dividends are recorded only when
paid and are shown as a movement in equity rather than as a charge
to the Income Statement.
8. Taxation
The taxation charge for the period of GBP60.7m (2017: GBP39.0m)
reflects an estimated effective tax rate of approximately 18%
(2017: 18%). The current UK corporation tax rate of 19% became
effective on 1 April 2017. A reduction in the rate to 17%
(effective from 1 April 2020) was substantively enacted on 15
September 2016.
9. Reconciliation of net cash flow to movement in net cash
At At At
31 March Exchange Accrued 30 September 30 September
2018 Cash flow differences interest 2018 2017
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------- ---------- ------------ -------------- ----------- -------------- --------------
Cash and cash
equivalents 788.4 116.1 7.9 - 912.4 485.9
Money market deposits 220.2 265.0 - - 485.2 445.2
Borrowings due
within one year (88.6) 8.3 (4.1) (1.4) (85.8) (128.5)
Borrowings due
after one year (718.0) (96.1) (37.5) - (851.6) (445.7)
----------------------- ---------- ------------ -------------- ----------- -------------- --------------
Net cash 202.0 293.3 (33.7) (1.4) 460.2 356.9
======================= ========== ============ ============== =========== ============== ==============
10. Contingent liabilities
The Group has issued various guarantees in the ordinary course
of business, none of which are expected to lead to a financial gain
or loss.
11. Other matters
This report will be posted on the Group's website,
www.dartgroup.co.uk and copies are available from the Group Company
Secretary at the registered office address: Low Fare Finder House,
Leeds Bradford International Airport, Leeds, LS19 7TU.
12. Impact of IFRS 15: Revenue from contracts with customers
The following tables summarise the impact of IFRS 15 on
previously reported consolidated financial statements. The nature
of these adjustments is described in more detail in note 3 to this
interim report.
Consolidated Income Statement
for the half year ended 30
September 2017
--------------------------------- ---------------------------------------------------------
Half year ended Half year ended Half year ended
30 September 30 September 30 September
2017 2017 2017
As restated IFRS 15 Adjustments As originally
reported
GBPm GBPm GBPm
--------------------------------- ---------------- -------------------- ----------------
Revenue 1,652.5 (11.4) 1,663.9
Net operating expenses (1,443.9) 15.1 (1,459.0)
---------------------------------- ---------------- -------------------- ----------------
Operating profit 208.6 3.7 204.9
Finance income 2.1 - 2.1
Finance expense (8.8) - (8.8)
Net FX revaluation gains 14.3 - 14.3
---------------------------------- ---------------- -------------------- ----------------
Net financing income 7.6 - 7.6
Profit on disposal of property, - - -
plant and equipment
--------------------------------- ---------------- -------------------- ----------------
Profit before taxation 216.2 3.7 212.5
Taxation (39.0) (0.7) (38.3)
Profit for the period 177.2 3.0 174.2
================================== ================ ==================== ================
Total comprehensive income
for the period 146.3 3.0 143.3
============================= ====== ==== ======
Consolidated Statement of Financial Position
at 30 September 2017
Half year Half year Half year Half year
ended ended ended ended
30 September 30 September 30 September 30 September
2017 2017 2017 2017
-----------------------------
As restated Accrued revenue IFRS 15 Adjustments As originally
restatement* reported
-----------------------------
GBPm GBPm GBPm GBPm
----------------------------- ------------- ---------------- -------------------- --------------
Non-current assets
Goodwill 6.8 - - 6.8
Property, plant and
equipment 827.4 - - 827.4
Derivative financial
instruments 3.7 - - 3.7
----------------------------- ------------- ---------------- -------------------- --------------
837.9 - - 837.9
----------------------------- ------------- ---------------- -------------------- --------------
Current assets
Inventories 1.7 - - 1.7
Trade and other receivables 171.5 (357.5) - 529.0
Derivative financial
instruments 39.5 - - 39.5
Money market deposits 445.2 - - 445.2
Cash and cash equivalents 485.9 - - 485.9
----------------------------- ------------- ---------------- -------------------- --------------
1,143.8 (357.5) - 1,501.3
----------------------------- ------------- ---------------- -------------------- --------------
Total assets 1,981.7 (357.5) - 2,339.2
----------------------------- ------------- ---------------- -------------------- --------------
Current liabilities
Trade and other payables 330.6 - (20.7) 351.3
Deferred revenue 385.0 (350.4) 31.0 704.4
Borrowings 128.5 - - 128.5
Provisions 45.4 - - 45.4
Derivative financial
instruments 11.4 - - 11.4
----------------------------- ------------- ---------------- -------------------- --------------
900.9 (350.4) 10.3 1,241.0
----------------------------- ------------- ---------------- -------------------- --------------
Non-current liabilities
Deferred revenue 1.7 (7.1) - 8.8
Borrowings 445.7 - - 445.7
Derivative financial
instruments 22.7 - - 22.7
Deferred taxation 44.3 - (1.8) 46.1
----------------------------- ------------- ---------------- -------------------- --------------
514.4 (7.1) (1.8) 523.3
----------------------------- ------------- ---------------- -------------------- --------------
Total liabilities 1,415.3 (357.5) 8.5 1,764.3
----------------------------- ------------- ---------------- -------------------- --------------
Net assets 566.4 - (8.5) 574.9
----------------------------- ------------- ---------------- -------------------- --------------
Shareholders' equity
Share capital 1.8 - - 1.8
Share premium 12.7 - - 12.7
Cash flow hedging
reserve 7.3 - - 7.3
Other reserves - - - -
Retained earnings 544.6 - (8.5) 553.1
Total shareholders'
equity 566.4 - (8.5) 574.9
----------------------------- ------------- ---------------- -------------------- --------------
* In both comparative periods, accrued revenue is now presented
offset against deferred revenue. This presentation has been amended
in line with standard industry practices and aids the usability of
the financial statements.
Consolidated Income Statement
for the year ended 31 March
2018
--------------------------------- ------------ -------------------- --------------
Year ended Year ended Year ended
31 March 31 March 31 March
2018 2018 2018
As restated IFRS 15 Adjustments As originally
reported
GBPm GBPm GBPm
--------------------------------- ------------ -------------------- --------------
Revenue 2,380.0 (11.8) 2,391.8
Net operating expenses (2,253.8) 7.4 (2,261.2)
---------------------------------- ------------ -------------------- --------------
Operating profit 126.2 (4.4) 130.6
Finance income 4.8 - 4.8
Finance expense (21.1) - (21.1)
Net FX revaluation gains 20.0 - 20.0
---------------------------------- ------------ -------------------- --------------
Net financing income 3.7 - 3.7
Profit on disposal of property,
plant and equipment 0.3 - 0.3
---------------------------------- ------------ -------------------- --------------
Profit before taxation 130.2 (4.4) 134.6
Taxation (23.1) 0.8 (23.9)
Profit for the period 107.1 (3.6) 110.7
================================== ============ ==================== ==============
Total comprehensive income
for the period 101.2 (3.6) 104.8
============================= ====== ====== ======
Consolidated Statement of Financial Position
at 31 March 2018
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2018 2018 2018 2018
As restated Accrued revenue IFRS 15 Adjustments As originally
restatement reported
GBPm GBPm GBPm GBPm
----------------------------- ------------ ---------------- -------------------- --------------
Non-current assets
Goodwill 6.8 - - 6.8
Property, plant and
equipment 1,083.0 - - 1,083.0
Derivative financial
instruments 23.7 - - 23.7
1,113.5 - - 1,113.5
----------------------------- ------------ ---------------- -------------------- --------------
Current assets
Inventories 1.8 - - 1.8
Trade and other receivables 258.2 (679.2) - 937.4
Derivative financial
instruments 64.3 - - 64.3
Money market deposits 220.2 - - 220.2
Cash and cash equivalents 788.4 - - 788.4
1,332.9 (679.2) - 2,012.1
----------------------------- ------------ ---------------- -------------------- --------------
Total assets 2,446.4 (679.2) - 3,125.6
----------------------------- ------------ ---------------- -------------------- --------------
Current liabilities
Trade and other payables 159.9 - (12.4) 172.3
Deferred revenue 806.0 (675.4) 30.8 1,450.6
Borrowings 88.6 - - 88.6
Provisions 41.7 - - 41.7
Derivative financial
instruments 40.7 - - 40.7
1,136.9 (675.4) 18.4 1,793.9
----------------------------- ------------ ---------------- -------------------- --------------
Non-current liabilities
Deferred revenue 1.3 (3.8) - 5.1
Borrowings 718.0 - - 718.0
Derivative financial
instruments 8.2 - - 8.2
Deferred taxation 68.2 - (3.3) 71.5
795.7 (3.8) (3.3) 802.8
----------------------------- ------------ ---------------- -------------------- --------------
Total liabilities 1,932.6 (679.2) 15.1 2,596.7
----------------------------- ------------ ---------------- -------------------- --------------
Net assets 513.8 - (15.1) 528.9
----------------------------- ------------ ---------------- -------------------- --------------
Shareholders' equity
Share capital 1.9 - - 1.9
Share premium 12.7 - - 12.7
Cash flow hedging reserve 31.6 - - 31.6
Other reserves 0.7 - - 0.7
Retained earnings 466.9 - (15.1) 482.0
Total shareholders'
equity 513.8 - (15.1) 528.9
----------------------------- ------------ ---------------- -------------------- --------------
13. Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
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 BIBRTMBTBBLP
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