Dart Group PLC – Half-year Report

Dart Group plc, the Leisure Travel and Distribution & Logistics Group (“the Group”), announces its unaudited interim results for the half year ended 30 September 2019.  These results are presented under International Financial Reporting Standards (“IFRS”), as adopted by the EU.  

Group financial highlights	Half year ended 30 September 2019	Half year ended 30 September 2018 Restated	Change
Revenue	£2,615.2m	£2,247.1m	16%
Operating profit	£365.0m	£354.4m	3%
Operating profit margin	14.0%	15.8%	(1.8ppts)
Profit before FX revaluation & taxation	£349.8m	£340.2m	3%
Profit before FX revaluation & taxation margin	13.4%	15.1%	(1.7ppts)
Profit before taxation	£339.7m	£331.7m	2%
Profit before taxation margin	13.0%	14.8%	(1.8ppts)
Basic earnings per share	187.0p	183.0p	2%
Interim dividend per share	3.0p	2.8p	7%

Figures shown for the half year ended 30 September 2018 have been restated to reflect the adoption of IFRS 16 in the current year. Further information can be found in Notes 3 & 11.

 

·     In what has proven to be a satisfactory first half of the financial year, Group operating profit increased by 3% to £365.0m (2018: £354.4m) and Group profit before foreign exchange revaluation and taxation  increased by 3% to £349.8m (2018: £340.2m).

·     The modest increase in overall Group profitability reflected a later customer booking pattern in our Leisure Travel business, with customer demand strengthening throughout the summer season.

·     As is typical for the business, losses are still to be expected in the second half, as we continue to invest in readiness for further flying programme expansion at several of our UK operating bases in the summer 2020 season.

·     Pleasingly, profitability in our Distribution & Logistics business grew by 23% to £2.7m (2018: £2.2m), as the strategy of generating margin-enhancing new business opportunities plus improved operational effectiveness paid dividends.

·     With Leisure Travel bookings continuing to strengthen and notwithstanding the important post-Christmas booking period that is still to come, the Board now expects current market expectations for Group profit before FX revaluation and taxation for the year ending 31 March 2020 to be significantly exceeded.

·     In view of the outlook for the full year, the Board has decided to pay an increased interim dividend of 3.0p per share (2018: 2.8p). 

·     Looking further ahead, whether the currently encouraging consumer demand for our products remains buoyant in the medium term is unclear, as we believe that much will depend on the UK Government securing a pragmatic and balanced Brexit agreement with the EU. In addition, the Travel industry in general continues to be subject to a range of cost pressures in relation to fuel, foreign exchange, carbon and other operating charges. These, together with the necessary continued investment in our own products and operations, including that required to attract and retain colleagues, are headwinds that our Leisure Travel business faces.

·     Our strategy for the long term remains consistent – to grow both our flight-only and package holiday products. With our Customer focused approach and clear market positioning, 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 2019 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.

In what has proven to be a satisfactory first half of the financial year, Group operating profit increased by 3% to £365.0m (2018: £354.4m) and Group profit before foreign exchange revaluation and taxation increased by 3% to £349.8m (2018: £340.2m).

The modest increase in profitability reflected a later customer booking pattern in our Leisure Travel business, as customer demand strengthened throughout the course of the summer season.

Pleasingly, profitability in our Distribution & Logistics business grew by 23% to £2.7m (2018: £2.2m), as the strategy of generating margin-enhancing new business opportunities plus improved operational effectiveness paid dividends.

In the first half, the Group generated increased net cash flow from operating activities of £512.5m (2018: £442.9m), predominantly driven by the Leisure Travel trading performance.  Total capital expenditure of £72.1m (2018: £132.1m) included additional aircraft, continued investment in the long-term maintenance of our existing aircraft fleet, together with technology and infrastructure projects across the Group. Property, plant and equipment additions also includes the establishment of non-cash right of use assets of £18.9m under the recently implemented IFRS16 – Leases.

As a result, the Group’s cash and money market deposit balances increased in the first half by £381.4m (2018: £389.0m) to £1,655.7m (2018: £1,397.6m). Net cash stated after borrowings and lease liabilities of £1,200.5m (2018: £1,095.5m), was £455.2m (2018: £302.1m), an increase of 51%.

As is typical for the business, losses are still to be expected in the second half, as we continue to invest in additional aircraft and their associated infrastructure, together with the increasing cost of retaining and attracting colleagues in readiness for further flying programme expansion at several of our UK operating bases in the summer 2020 season.

At the reporting date, the Group had received payments in advance of travel from its Leisure Travel customers amounting to £643.5m (2018: £520.7m), had no cash restricted by its merchant acquirers and had no cash placed with counterparties in the form of margin calls to cover out-of-the-money hedge instruments (2018: £nil). In addition, the Group continues to comfortably exceed the UK Civil Aviation Authority’s ‘liquidity threshold test’.

Basic earnings per share increased to 187.0p (2018: 183.0p). In view of the outlook for the full year, the Board has decided to pay an increased interim dividend of 3.0p per share (2018: 2.8p).  The dividend will be paid on 3 February 2020 to shareholders on the register at 27 December 2019.