Half-year Report

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 30 September 2018	Half year ended 30 September 2017 Restated	Change
Revenue	£2,247.1m	£1,652.5m	36%
Operating profit	£350.1m	£208.6m	68%
Operating profit margin	15.6%	12.6%	3.0ppts
Profit before FX revaluation & taxation	£339.4m	£201.9m	68%
Profit before FX revaluation & taxation margin	15.1%	12.2%	2.9ppts
Profit before taxation	£337.4m	£216.2m	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 £350.1m (2017: £208.6m) and Group profit before foreign exchange revaluation and taxation increased by 68% to £339.4m (2017: £201.9m).
*	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 £88.9m (2017: £83.0m), as management continued to focus on developing existing and new business opportunities.

As a result, Group operating profit increased by 68% to £350.1m (2017: £208.6m) and Group profit before foreign exchange revaluation and taxation increased by 68% to £339.4m (2017: £201.9m).

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 £423.8m (2017: £257.2m), driven by the Leisure Travel trading performance.  Total capital expenditure of £132.1m (2017: £90.4m) 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 £132.7m (2017: £109.0m) 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 £389.0m (2017: £242.1m) to £1,397.6m (2017: £931.1m), which included advance payments from Leisure Travel customers of £520.7m (2017: £376.8m) in respect of their future flights and holidays.  Net cash, stated after borrowings of £937.4m (2017: £574.2m), was £460.2m (2017: £356.9m), 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™ 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 £88.02 (2017: £75.55) was 17% higher compared to the challenging market in the prior year.  The average price of a Jet2holidays package holiday grew by 7% to £689 (2017: £645).

Non-ticket retail revenue per passenger grew by 9% to £23.83 (2017: £21.83).  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 £2,158.2m (2017: £1,569.5m) at an operating profit margin of 16% (2017: 13%), resulting in operating profit growth of 69% to £347.8m (2017: £206.2m).

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 ended 30 September 2018	Half year ended 30 September 2017 Restated	Half year end change	Year ended 31 March 2018 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 per passenger sector (excl. taxes)	£88.02	£75.55	17%	£73.01
Average package holiday price	£689	£645	7%	£633
Non-ticket revenue per passenger sector *	£23.83	£21.83	9%	£22.52
Advance sales made as at the reporting date	£991.2m	£744.2m	33%	£1,486.5m

*    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 £88.9m (2017: £83.0m) 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 £2.3m (2017: £2.4m).

Key Performance Indicators	Half year ended 30 September 2018	Half year ended 30 September 2017	Half year end change	Year ended 31 March 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 Philip Meeson, Executive Chairman	Tel:              0113 239 7817
Gary Brown, Group Chief Financial Officer
Smith & Williamson Corporate Finance Limited Nominated Adviser David Jones / Katy Birkin	Tel:              020 7131 4000
Canaccord Genuity - Joint Broker Ben Griffiths / Antony Isaacs	Tel:              020 7523 8000
Arden Partners - Joint Broker Steve Douglas	Tel:              020 7614 5931
Buchanan - Financial PR Richard Oldworth	Tel:              020 7466 5000

Dart Group plc

Condensed Consolidated Income Statement (Unaudited)

for the half year ended 30 September 2018

	Note		Half year ended 30 September 2018 £m		Half year ended 30 September 2017 £m Restated		Year ended 31 March 2018 £m 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 ended 30 September 2018 £m		Half year ended 30 September 2017 £m Restated		Year ended 31 March 2018 £m 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 2018 £m		30 September 2017 £m Restated		31 March 2018 £m 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 ended 30 September 2018 £m		Half year ended 30 September 2017 £m Restated		Year ended      31 March 2018 £m 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 capital	Share premium	Cash flow hedging reserve	Other reserves	Retained earnings	Total equity
	£m	£m	£m	£m	£m	£m
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 £100,000 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 Standards			Applying to accounting 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 Standards	Applying to accounting 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 2018	Leisure Travel	Distribution & Logistics	Group eliminations	Total
	£m	£m	£m	£m
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 2017	Leisure Travel Restated	Distribution & Logistics	Group eliminations	Total Restated
	£m	£m	£m	£m
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 Travel Restated	Distribution & Logistics	Group eliminations	Total Restated
	£m	£m	£m	£m
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 to 30 September 2018		Half year to 30 September 2017 Restated		Year to 31 March 2018 Restated
Profit for the period (£m)	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 £60.7m (2017: £39.0m) 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 31 March 2018	Cash flow	Exchange differences	Accrued interest	At 30 September 2018	At 30 September 2017
	£m	£m	£m	£m	£m	£m
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 2017	30 September 2017	30 September 2017
		As restated	IFRS 15 Adjustments	As originally reported
		£m	£m	£m
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 ended	Half year ended	Half year ended	Half year ended
	30 September 2017	30 September 2017	30 September 2017	30 September 2017
	As restated	Accrued revenue restatement*	IFRS 15 Adjustments	As originally reported
	£m	£m	£m	£m
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 2018	31 March 2018	31 March 2018
		As restated	IFRS 15 Adjustments	As originally reported
		£m	£m	£m
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 2018	31 March 2018	31 March 2018	31 March 2018
	As restated	Accrued revenue restatement	IFRS 15 Adjustments	As originally reported
	£m	£m	£m	£m
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.

 

END

 

 

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