JET2 PLC Dart Group PLC, the Leisure Travel and Distribution & Logistics Group ('the Group'), announces its unaudited interim results for the half year ended 30 September 2015. These results are presented under International Financial Reporting Standards ('IFRS').
Financial highlights | Half year ended 30 September 2015 (Unaudited) | Half year ended 30 September 2014 (Unaudited) | Change |
Group revenue | £1,024.0m | £902.2m | 14% |
Group operating profit (underlying1) | £147.1m | £89.4m | 65% |
Operating profit margin (underlying1) | 14.4% | 9.9% | 4.5ppts |
Group operating profit | £147.1m | £72.4m | 103% |
Operating profit margin | 14.4% | 8.0% | 6.4ppts |
Profit before tax (underlying1) | £146.8m | £88.7m | 66% |
Profit before tax | £146.8m | £71.7m | 105% |
Basic earnings per share (underlying1) | 79.82p | 48.25p | 65% |
Basic earnings per share | 79.82p | 38.93p | 105% |
Interim dividend per share | 0.90p | 0.75p | 20% |
Note 1: Underlying profit references are stated excluding separately disclosed items (note 6) | |||
I am pleased to report on the Group's trading performance for the half year ended 30 September 2015 in our two businesses, 'Leisure Travel' - incorporating Jet2holidays, our ATOL protected package holidays operator and Jet2.com, the North's leading leisure airline - and 'Distribution & Logistics', comprising Fowler Welch, one of the UK's leading logistics providers.
In what has proven to be an exceptional summer season, Group operating profit increased 65% to £147.1m (2014 underlying: £89.4m)and profit before tax by 66% to £146.8m (2014 underlying: £88.7m).
The increase in Group operating profit reflects consistently strong summer trading in our Leisure Travel business coupled with our Distribution & Logistics business performing ahead of last year. However, increased losses are to be expected in the second half of the year as our expanding Leisure Travel business invests in additional aircraft, advertising and people in readiness for the summer 2016 season.
The Group generated increased net cash flow from operating activities of £199.8m (2014: £93.2m), reflecting the improved Leisure Travel trading performance. Total capital expenditure of £60.9m (2014: £25.5m)included the purchase of one Boeing 737-800, pre-delivery payments for new aircraft, the majority of which have been financed, deposits for new aircraft and continued investment in the long-term maintenance of our aircraft fleet.
Cash and money market deposits increased by £144.0m in the half (2014: £68.1m), resulting in total cash held at the reporting date of £446.8m (2014: £331.8m), which included advance payments from Leisure Travel customers of £183.7m (2014: £145.0m).
Basic earnings per share increased to 79.82p from an underlying 48.25p in 2014. In view of the outlook for the full year, the Board has decided to pay an increased interim dividend of 0.90p per share (2014: 0.75p). The dividend will be paid on 1 February 2016 to shareholders on the register at 4 January 2016.
Leisure TravelThe Group's Leisure Travel business specialises in the provision of ATOL licensed package holidays by its tour operator Jet2holidaysand scheduled leisure flights by its airline Jet2.com,to high volume leisure destinations in the Mediterranean, the Canary Islands and to European Leisure Cities.
Leisure Travel revenue grew by 15% to £951.7m (2014: £824.1m)at an operating profit margin of 15% (2014 underlying: 11%), resulting in operating profit growth of 64% to £143.6m (2014 underlying: £87.8m).
Summer 2015 trading has been strong with demand for our package holidays continuing to grow as Jet2holidaystook 0.94m (2014: 0.77m)customers on holiday, an increase of 22%, representing 42% (2014: 33%)of overall flown customers. Our important flight-only product was enjoyed by 2.65m passengers in the period (2014: 3.07m). All of our customers flew with Jet2.com, enabling us to provide a seamless holiday experience.
Jet2.comflew a total of 4.53m passengers in the six months to 30 September 2015 (2014: 4.62m), a slight decrease of 2% over the same period last year against a backdrop of careful seat capacity management. As a result of this and buoyant customer demand, the business achieved a record average load factor of 94.1% (2014: 91.8%)alongside a significant increase in average net ticket yield of 16%. The average price of a package holiday grew 5%.
Non-ticket revenue per passenger grew 4% to £32.55 (2014: £31.35). We continue to optimise this revenue stream through our customer contact programme, which focusses on pre-departure online sales of hold bags, advanced seat assignment, pre-ordered meals, travel insurance and car hire, and through in-flight sales of meals, drinks, snacks, cosmetics, perfumes and duty free products.
The Leisure Travel business expanded its fleet to 59 aircraft for summer 2015 (summer 2014: 55)with commensurate increases in pilots, engineers and cabin crew. We will continue to develop our customer-focused flying programme into summer 2016, which will include the addition of two new destinations - Girona and Naples.
KPIs | Half year ended 30 Sept 15 | Half year ended 30 Sept 14 | Half year end change | Year ended 31 Mar 15 |
Owned aircraft at the reporting date | 45 | 44 | 2% | 44 |
Aircraft on operating leases at the reporting date | 12 | 10 | 20% | 11 |
Leisure Travel sector seats available (capacity) | 4.81m | 5.03m | (4%) | 6.63m |
Leisure Travel passenger sectors flown | 4.53m | 4.62m | (2%) | 6.05m |
Leisure Travel load factor | 94.1% | 91.8% | 2.3ppts | 91.2% |
Flight-only passenger sectors flown | 2.65m | 3.07m | (14%) | 4.05m |
Package holiday passenger sectors flown | 1.88m | 1.54m | 22% | 2.00m |
Package holiday customers | 0.94m | 0.77m | 22% | 1.00m |
Net ticket yield per passenger sector (excl. taxes) | £93.09 | £79.99 | 16% | £79.87 |
Average package holiday price | £625.78 | £593.26 | 5% | £590.69 |
Non-ticket revenue per passenger sector | £32.55 | £31.35 | 4% | £30.91 |
Advance sales made as at the reporting date | £376.3m | £266.8m | 41% | £580.3m |
Distribution & Logistics
Our distribution business, Fowler Welch, is one of the UK's leading providers of distribution and logistics services to the food industry supply chain, serving retailers, processors, growers and importers through its distribution network.
The business operates from eightprime 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. Ambient (non-temperature-controlled) consolidation and distribution services are provided at Desborough, Northamptonshire and at Heywood near Bury, Greater Manchester. It also operates two regional distribution sites at Washington, Tyne and Wear and at Newton Abbott, Devon.
Fowler Welchrevenue reduced by 7% to £72.3m (2014: £78.1m)primarily due to lower fuel costs which are passed on to customers. However, operating profit increased by £1.9m to £3.5m (2014: £1.6m), as operating margins improved by 2.8ppts to 4.8%.
Fowler Welchand its partner have continued to develop their joint venture operation, Integrated Service Solutions ('ISS'), which provides a full range of fruit ripening and packing services to the produce sector for locally grown and imported fruits at Fowler Welch's Teynham facility. Throughput and revenue are increasing as the mix of product and the productivity of the various packing lines improves.
KPIs | Half year ended 30 Sept 15 | Half year ended 30 Sept 14 | Half year end change | Year ended 31 Mar 15 |
Warehouse space (square feet) | 847,000 | 847,000 | - | 847,000 |
Number of tractor units in operation | 420 | 450 | (7%) | 467 |
Number of trailer units in operation | 637 | 640 | - | 655 |
Miles per gallon | 9.2 | 9.4 | (2%) | 9.2 |
Fleet mileage | 19.5m | 21.4m | (9%) | 41.5m |
Outlook
With winter 2015/16 Leisure Travel bookings continuing to perform in line with expectations and notwithstanding the important post-Christmas booking period that is still to come, the Board is optimistic that current market expectations for the full year will be achieved.
Philip Meeson
Chairman
19 November 2015
For further information please contact:
Dart Group PLC Philip Meeson, Group Chairman and Chief Executive | Tel: 0113 239 7817 |
Gary Brown, Group Chief Financial Officer | |
Smith & Williamson Corporate Finance Limited Nominated Adviser David Jones | Tel: 020 7131 4000 |
Canaccord Genuity - Joint Broker Guy Marks / Mark Whitmore | Tel: 020 7523 8000 |
Arden Partners - Joint Broker Christopher Hardie | Tel: 020 7614 5900 |
Buchanan - Financial PR Richard Oldworth | Tel: 020 7466 5000 |
Dart Group PLC
Notes to the consolidated financial statements
For the half year ended 30 September 2015 (Unaudited)
1. General information
The Group's financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union ('Adopted IFRS'). The Group's financial statements consolidate the financial statements of Dart Group PLC and its subsidiaries.
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 2015 does not constitute statutory accounts as defined in s435 of the Companies Act 2006. The financial statementsfor the year ended 31 March 2015 were prepared in accordance with IFRS and have been delivered to the Registrar of Companies. The report of the auditor on those financial statementswas 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 year ended 31 March 2015 have been audited. The comparative figures for the half year ended 30 September 2014 are unaudited.
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 monthly aviation fuel swaps to hedge its exposure to foreign exchange rates and aviation fuel price volatility. It also uses forward EU Allowance contracts and 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 the variability in cash flows of a recognised asset or liability, or 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 operating profit, balance sheet and cash flows through to 31 March 2018.
For the purposes of their assessment of the appropriateness of the preparation of the Group's unaudited interim financial statements on a going concern basis, the Directors have considered the current cash position, the availability of banking facilities, forecasts of future trading through to 31 March 2018, including performance against financial covenants, and the assessment of principal areas of uncertainty and risk.
Having considered the points outlined above, the Directors have a reasonable expectation that the Group will be able to operate within the levels of available facilities and cash for the foreseeable future. Consequently, they continue to adopt the going concern basis in preparing the financial statements for the half year ended 30 September 2015.
3. Adoption of new and revised standards
The following new or revised International Financial Reporting Standards and IFRIC interpretations will be adopted, where applicable, for the purpose of preparing future financial statements. The Group does not anticipate that the adoption of these new or revised standards and interpretations will have a material impact on its financial position or results from operations.
International Financial Reporting Standards | Applies to periods beginning after | |
Disclosure Initiative (Amendments to IAS 1) | January 2016 | |
IFRS 15 Revenue from Contracts with Customers | January 2018 | |
IFRS 15 prescribes a new model of revenue recognition in relation to contracts with customers so that revenue reflects the consideration to which an entity expects to be entitled given an exchange for contracted goods or services. This is a converged standard on revenue recognition which replaces IAS 18 'Revenue', IAS 11 'Construction contracts' and related interpretations. The Group is currently assessing the impact of the new standard. | ||
IFRS 9Financial Instruments | January 2018 | |
4. Segmental information
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.
The Group's operating segments have been identified based on the internal reporting information provided to the CODM in order for the CODM to formulate allocation of resources to segments and assess their performance. The Group has two operating segments: Leisure Traveland Distribution & Logistics.
The Leisure Travel business serves its customers' demand for package holidays in, and flights to, high volume leisure destinations in the Mediterranean, the Canary Islands and European Leisure Cities. Resource allocation decisions are based on our entire route network and the deployment of the 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.
Group eliminations include the removal of inter-segment assets and liabilities.
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 currently appropriate to aggregate the operating segments for reporting purposes and therefore both of the identified operating segments are disclosed as reportable segments for the half year ended 30 September 2015.
Revenue from reportable segments is measured on a basis consistent with the income statement and is principally generated from within the UK, the Group's country of domicile.
Leisure Travel | Distribution & Logistics | Group eliminations | Total | |
£m | £m | £m | £m | |
Half year to 30 September 2015 (Unaudited) | ||||
Turnover | 951.7 | 72.3 | - | 1024.0 |
EBITDA | 197.3 | 4.6 | - | 201.9 |
Operating profit | 143.6 | 3.5 | - | 147.1 |
Finance income | 1.3 | - | - | 1.3 |
Finance costs | (1.6) | - | - | (1.6) |
Revaluation of derivative hedges | - | - | - | - |
Revaluation of foreign currency balances | - | - | - | - |
Net financing costs | (0.3) | - | - | (0.3) |
Profit before taxation | 143.3 | 3.5 | - | 146.8 |
Taxation | (28.7) | (0.6) | - | (29.3) |
Profit after taxation | 114.6 | 2.9 | - | 117.5 |
Assets and liabilities | ||||
Segment assets | 952.9 | 80.3 | (5.7) | 1,027.5 |
Segment liabilities | (687.7) | (29.8) | 5.7 | (711.8) |
Net assets | 265.2 | 50.5 | - | 315.7 |
Other segment information | ||||
Property, plant and equipment additions | 60.7 | 0.2 | - | 60.9 |
Depreciation, amortisation and impairment | (53.7) | (1.1) | - | (54.8) |
Share based payments | - | - | - | - |
Leisure Travel | Distribution & Logistics | Group eliminations | Total | |
£m | £m | £m | £m | |
Half year to 30 September 2014 (Unaudited) | ||||
Turnover | 824.1 | 78.1 | - | 902.2 |
Underlying EBITDA | 129.2 | 2.7 | - | 131.9 |
Underlying operating profit | 87.8 | 1.6 | - | 89.4 |
Finance income | 1.1 | - | - | 1.1 |
Finance costs | (0.6) | - | - | (0.6) |
Revaluation of derivative hedges | (1.8) | - | - | (1.8) |
Revaluation of foreign currency balances | 0.6 | - | - | 0.6 |
Net financing costs | (0.7) | - | - | (0.7) |
Underlying profit before taxation | 87.1 | 1.6 | - | 88.7 |
Separately disclosed items | (17.0) | - | - | (17.0) |
Profit before taxation | 70.1 | 1.6 | - | 71.7 |
Taxation | (14.6) | (0.3) | - | (14.9) |
Profit after taxation | 55.5 | 1.3 | - | 56.8 |
Assets and liabilities | ||||
Segment assets | 737.3 | 76.7 | (6.4) | 807.6 |
Segment liabilities | (540.8) | (32.9) | 6.4 | (567.3) |
Net assets | 196.5 | 43.8 | - | 240.3 |
Other segment information | ||||
Property, plant and equipment additions | 24.2 | 1.3 | - | 25.5 |
Depreciation, amortisation and impairment | (41.4) | (1.1) | - | (42.5) |
Share based payments | (0.2) | - | - | (0.2) |
Leisure Travel | Distribution & Logistics | Group eliminations | Total | |
£m | £m | £m | £m | |
Restated year ended 31 March 2015 (Audited) | ||||
Turnover | 1,101.5 | 151.7 | - | 1,253.2 |
Underlying EBITDA | 116.0 | 5.5 | - | 121.5 |
Underlying operating profit | 46.9 | 3.3 | - | 50.2 |
Finance income | 1.7 | - | - | 1.7 |
Finance costs | (1.1) | - | - | (1.1) |
Revaluation of derivative hedges | 1.6 | - | - | 1.6 |
Revaluation of foreign currency balances | 4.8 | - | - | 4.8 |
Net financing income | 7.0 | - | - | 7.0 |
Underlying profit before taxation | 53.9 | 3.3 | - | 57.2 |
Separately disclosed items | (17.0) | - | - | (17.0) |
Profit before taxation | 36.9 | 3.3 | - | 40.2 |
Taxation | (6.7) | (0.7) | - | (7.4) |
Profit after taxation | 30.2 | 2.6 | - | 32.8 |
Assets and liabilities | ||||
Segment assets | 923.3 | 84.2 | (6.5) | 1,001.0 |
Segment liabilities | (813.7) | (36.6) | 6.5 | (843.8) |
Net assets | 109.6 | 47.6 | - | 157.2 |
Other segment information | ||||
Property, plant and equipment additions | 74.4 | 2.0 | - | 76.4 |
Depreciation, amortisation and impairment | (69.1) | (2.2) | - | (71.3) |
Share based payments | (0.1) | - | - | (0.1) |
5. Earnings per share
The calculation of earnings per share is based on the following:
Half year to 30 September 2015 Unaudited | Half year to 30 September 2014 Unaudited | Year to 31 March 2015 Audited | |||
Underlying profit for the period (£m) | 117.5 | 70.4 | 46.4 | ||
Profit for the period (£m) | 117.5 | 56.8 | 32.8 | ||
Weighted average number of ordinary shares: | |||||
in issue during the period used to calculate basic earnings per share | 147,181,935 | 145,907,224 | 146,278,585 | ||
in issue during the period used to calculate diluted earnings per share | 148,281,860 | 148,032,833 | 147,734,230 |
6. Separately disclosed items
Separately disclosed items are presented in the middle column of the half year ended 30 September 2014 and year ended 31 March 2015 Consolidated Income Statement in order to assist the reader's understanding of the underlying business performance and to provide a more meaningful presentation. In each case, the right hand column presents the results for the period showing all gains and losses recorded in the Consolidated Income Statement.
EU Regulation 261
Both the half year ended 30 September 2014 and the year ended 31 March 2015 Consolidated Income Statements include a separately disclosed, exceptional provision of £17.0m, in relation to possible passenger compensation claims for historical flight delays under Regulation (EC) No 261/2004.
7. Net financing (costs) / income
Half year to 30 September 2015 Unaudited | Half year to 30 September 2014 Unaudited | Year to 31 March 2015 Audited | |||
Finance income - interest receivable | 1.3 | 1.1 | 1.7 | ||
Finance costs - borrowings | (1.6) | (0.6) | (1.1) | ||
Revaluation of derivative hedges - change in fair value of ineffective cash flow hedges | - | (1.8) | 1.6 | ||
Revaluation of foreign currency balances | - | 0.6 | 4.8 | ||
Net financing (costs) / income | (0.3) | (0.7) | 7.0 |
8. Dividends
The declared interim dividend of 0.90p per share (2014: 0.75p)will be paid, out of the Company's available distributable reserves, on 1 February 2016, to shareholders on the register at 4 January 2016. 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.
9. Taxation
The tax charge for the period of £29.3m (2014: £14.9m)reflects an estimated effective tax rate of approximately 20% (2014: 21%).
A reduction in the UK corporation tax rate from 21% to 20% (effective from 1 April 2015) was substantively enacted on 2 July 2013. In the Budget on 8 July 2015, the Chancellor announced additional planned reductions to 18% by 2020, which will reduce the business's future tax charge accordingly.
10. Reconciliation of net cash flow to movement in net cash
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11. 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.
12. 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.
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