TIDMDTG
RNS Number : 4400S
Dart Group PLC
09 July 2020
DART GROUP PLC
PRELIMINARY UNAUDITED RESULTS FOR YEARED 31 MARCH 2020
Dart Group plc, the Leisure Travel group ("the Group"),
announces its preliminary results for the year ended 31 March 2020.
These results are presented under International Financial Reporting
Standards ("IFRS"), as adopted by the EU.
* In what was a record year for the Group, Profit before hedge
ineffectiveness, FX revaluation and taxation from continuing
operations increased by 50% to GBP264.2m (2019: GBP175.6m). After
accounting for a net exceptional charge of GBP108.4m due to hedge
ineffectiveness as a direct result of Covid-19 (2019: GBPnil) and
GBP8.1m loss on foreign exchange revaluations (2019: GBP9.1m loss),
Profit before taxation from continuing operations decreased by 11%
to GBP147.7m (2019: GBP166.5m).
* Our performance for the financial year reflects the growing
success of our Leisure Travel products - package holidays with our
acclaimed package holidays operator, Jet2holidays, and holiday
flights with our award-winning scheduled airline, Jet2.com - which
has led to continuing strong customer demand for both.
* Despite the fact that Jet2.com had to suspend its flying
programme in mid-March due to the travel restrictions imposed by
governments across Europe as a result of the spread of Covid-19,
the Leisure Travel business still achieved overall single sector
flown passenger growth of 14% to 14.62m (2019: 12.82m), which
contributed to an increase in revenue of 21% to GBP3,584.7m (2019:
GBP2,964.4m)
* Demand for our Real Package Holidays(TM) continued to grow, as
Jet2holidays took 3.77m (2019: 3.17m) customers on package
holidays, an increase of 19%, with our flight-only product enjoyed
by 7.06m (2019: 6.49m) single sector passengers, a growth of
9%.
* Our balance sheet and liquidity position strengthened to a
year end total cash balance of GBP1,387.5m, (2019: GBP1,274.3m), an
increase of 9% and an 'own cash' position (excluding customer
deposits) of GBP520.4m (2019: GBP368.4m), an increase of 41%.
* As announced on 24 April 2020 and in consideration of the
ongoing impact of Covid-19, the Board does not recommend the
payment of a final dividend (2019: 7.4p per share), meaning a total
dividend for the year of 3.0p per share (2019: 10.2p), a decrease
of 71%.
* Since 31 March 2020, the Group has enhanced its liquidity
position to deal with the effects of Covid-19 by: securing
eligibility for GBP300.0m of funding under the Bank of England's
Covid Corporate Financing Facility (CCFF); completing a successful
share Placing raising gross proceeds of GBP171.7m; and selling its
Distribution & Logistics business, Fowler Welch, for a gross
cash consideration of GBP98.0m.
* The Group still faces challenges as a result of the Covid-19
pandemic and therefore maintaining a healthy cash position remains
our top priority. We have taken significant actions to improve our
available liquidity over the last three months and will continue to
do so, to ensure that we are best placed to respond swiftly as UK
government travel restrictions are relaxed and customer confidence
recovers. We remain confident that once normality returns, our
Customers will be determined to enjoy the wonderful experience of a
well-deserved Jet2 holiday and that Jet2.com and Jet2holidays will
continue to have a thriving future, taking millions of UK
holidaymakers annually, to the Mediterranean, the Canary Islands
and to European Leisure Cities.
OUR CHAIRMAN'S STATEMENT
Although the Leisure Travel industry is facing unprecedented
challenges due to the Covid-19 pandemic, I am pleased to report on
the record performance for the financial year ended 31 March 2020
of our UK Leisure Travel business - encompassing Jet2holidays, our
acclaimed ATOL (*) licensed package holidays operator and Jet2.com,
our award-winning airline - which provides a strong foundation to
underpin the business's success going forward.
Despite the fact that Jet2.com had to suspend its flying
programme in mid-March 2020 due to the travel restrictions imposed
by governments across Europe as a result of the spread of Covid-19,
the Leisure Travel business still achieved overall single sector
flown passenger growth of 14% to 14.62m (2019: 12.82m), which
contributed to an increase in revenue of 21% to GBP3,584.7m (2019:
GBP2,964.4m) and a Profit before hedge ineffectiveness, FX
revaluation and taxation from continuing operations of GBP264.2m
(2019: GBP175.6m), an increase of 50%.
Exceptional item - The impact of Covid-19 means that both the
flying and holiday programmes expected to be operated in the first
half of the financial year ending 31 March 2021, are significantly
lower than that on which the hedging programme for jet fuel and
foreign currency was originally based. As a consequence, the Group
has recorded a net exceptional charge of GBP108.4m relating to
ineffectiveness on a proportion of its hedging instruments in the
financial year ended 31 March 2020 results.
After accounting for this net exceptional charge, statutory
Profit before taxation from continuing operations declined by 11%
to GBP147.7m (2019: GBP166.5m).
After the exceptional charge, basic earnings per share from
continuing operations reduced by 18% to 74.97p (2019: 91.86p). As
announced on 24 April 2020 and in consideration of the ongoing
impact of Covid-19, the Board does not recommend the payment of a
final dividend (2019: 7.4p per share), meaning a total dividend for
the year of 3.0p per share (2019: 10.2p), a decrease of 71%.
Strategy
" We take people on holiday!"
Jet2holidays is now the UK's largest tour operator to many
Mediterranean and Canary Islands leisure destinations and Jet2.com
is the UK's 3rd largest airline by number of passengers flown. Our
"Customer First" strategy has remained consistent and is what has
driven Jet2's continuing success. The delivery of great service is
at the core of Jet2holidays and Jet2.com brand values as we
recognise that, whether taking end-to-end Real Package Holidays(TM)
with Jet2holidays, or a holiday flight with Jet2.com, the delivery
of an attractive and memorable holiday experience engenders loyalty
and repeat bookings.
The combined power of our proposition, product and people is
what will fuel our ongoing success, as we constantly seek to
improve our customers' holiday choice, experience and enjoyment,
giving us the greatest opportunity to retain and attract new
customers - the key to continuing profitable growth!
Our long-term ambition therefore remains - To be the Leading UK
Leisure Travel Business.
2020 Key Performance Highlights
-- The aircraft fleet expanded to 100 for summer 2019 (summer
2018: 90), with 3 new destinations added: Chania in Crete; Izmir in
Turkey; and Bourgas in Bulgaria, supplemented by increased
frequency of flying to many popular Mediterranean, Canary Island
and European Leisure City destinations.
-- In October 2019, the business acquired a portfolio of
primarily peak summer airport slots at Manchester, Birmingham and
London Stansted airports, to further improve our customers'
experience through more attractive flight departure timings.
Continuing to develop our network, we also acquired additional
slots to the Greek Islands, allowing the introduction of new
services to Kalamata, Santorini and Mykonos, plus increased flight
frequency to some of our most sought-after Greek destinations.
-- Our balance sheet and liquidity position strengthened to a
year end total cash balance of GBP1,387.5m, an increase of 9%
(2019: GBP1,274.3m), and an 'own cash' position (excluding customer
deposits) of GBP520.4m, an increase of 41% (2019: GBP368.4m).
Post Year End Highlights
-- On 14 May 2020, the Group was confirmed as an eligible issuer
for the Bank of England Covid Corporate Financing Facility ("CCFF")
and has put in place a GBP300.0m commercial paper programme to
facilitate issuance under it. The CCFF is designed to support
liquidity among larger businesses who are capable of demonstrating
that they make a material contribution to the UK economy and are
able to display sound financial health, equivalent to an investment
grade rating, prior to the economic shock caused by the Covid-19
pandemic. This facility, which matures 12 months following draw
down, will be used to provide standby liquidity, should that be
required, and is currently unutilised.
-- On 21 May 2020, the Group completed a Placing of 29.78
million new ordinary shares at a price of 576.5 pence per share,
representing 20 per cent. of the then existing ordinary share
capital of Dart Group plc, raising gross proceeds of GBP171.7m. The
Placing was significantly over subscribed and the shares were
placed at no discount to the prevailing market share price.
-- The sale of our Distribution & Logistics business, Fowler
Welch, for a gross cash consideration of GBP98.0m was also
completed on 31 May 2020.
Customers
We know that taking a holiday is one of the most important
family experiences of the year and we relish the trust our
customers place in us to give them a fantastic holiday experience.
Despite the current challenges of Covid-19, going forward we remain
committed to doing our very best to ensure that each of our
customers "has a lovely holiday" that can be both eagerly
anticipated and fondly remembered, supported by our core principles
of being family friendly, offering value for money and giving a
truly VIP customer service.
Colleagues
The health and wellbeing of our colleagues is, of course, of
paramount importance, and during this difficult period even more
so. We are incredibly proud of how quickly and positively they have
responded to the new ways of remote working as a result of the
lockdown imposed by the UK Government. I would like to take this
opportunity to thank all our colleagues for their hard work,
dedication and commitment. It was therefore with great regret that
we have recently had to propose a number of redundancies amongst
colleagues to match our re-sized flying programmes for this summer
and winter 20/21 and for flying in the financial year ending 31
March 2022.
Board Changes
The Board recognises that it is responsible for the long-term
success of the Group and is accountable to shareholders for its
proper management. The Board's composition is regularly reviewed to
ensure that it maintains the appropriate balance of skill set,
background and experience, to enable it to oversee the execution of
the Group's strategy by management.
As a result, and following a rigorous search process, we were
delighted to welcome Robin Terrell to the Board on 14 April 2020 as
an independent non-executive director. Robin brings extensive
experience in leading online and retail businesses and has very
relevant financial knowledge given his qualification as a chartered
accountant and his position as Chairman of the Audit Committee of
William Hill plc.
Culture and Stakeholders
The Board and senior management team remain focused on
generating shareholder value by making decisions that ensure the
foundations of the business remain strong in an ever-changing
marketplace and continue to drive sustainable long-term profitable
growth. We recognise the importance of strong relationships with
our many stakeholders in helping to realise our growth plans.
Additionally, we continue to place particular emphasis on our
corporate culture to help achieve our goals, as epitomised by our
brand values, known internally as 'Take Me There' to: Be Present;
Create Memories; Take Responsibility; and Work As One Team. The
active fulfilment of these values has been essential to our
accomplishments to date and will remain integral to our future
success.
Looking Ahead
We still face challenges as a result of the Covid-19 pandemic
and therefore maintaining a healthy cash position remains our top
priority. We have taken significant actions to improve our
available liquidity in the last three months and will continue to
do so, to ensure that we are best placed to respond swiftly as UK
Government travel restrictions are relaxed and customer confidence
recovers. We remain confident that once normality returns, our
Customers will be determined to enjoy the wonderful experience of a
well-deserved Jet2 holiday and that Jet2.com and Jet2holidays will
continue to have a thriving future, taking millions of UK
holidaymakers annually, to the Mediterranean, the Canary Islands
and to European Leisure Cities.
OPERATIONAL PERFORMANCE
Our performance for the financial year reflects the growing
success of our Leisure Travel products - package holidays with our
tour operator, Jet2holidays , and holiday flights with our
scheduled airline, Jet2.com - which has led to continuing strong
customer demand for both.
During the year, Jet2.com flew a total of 14.62m (2019: 12.82m)
flight-only and package holiday single sector passengers, a growth
of 14%. Demand for our Real Package Holidays(TM) continued to grow,
as Jet2holidays took 3.77m (2019: 3.17m) customers on package
holidays, an increase of 19%, with our flight-only product enjoyed
by 7.06m (2019: 6.49m) single sector passengers, a growth of
9%.
Taking a holiday is one of the most important and rewarding
family events of the year and the end-to-end Real Package
Holidays(TM) experience allows us to add greater value at each
point in our customers' journey. We believe that sustained
investment in our "Customer First" proposition will ensure we
continue to deliver consistently attractive holiday experiences,
giving us a wonderful opportunity to delight our customers from
start to finish, time and time again.
We have also learnt, that even when times are tough and
disposable incomes tight, one of the very last discretionary items
to be sacrificed is the family holiday. Therefore, we have an
operating model, product portfolio and hotel supply chain that are
able to provide a variety of holiday experiences, plus a wide
choice of holiday durations, accommodation and board basis, all
vital ingredients to cater for our customers' differing budget
requirements.
As a vertically integrated leisure travel provider, we are fully
in control of our airline seat supply. Together with o ur overall
customer volumes, this allows us to optimise load factors which are
consistently above 90% whilst serving many destinations daily, and
others several times a week, offering a great choice of truly
variable duration holidays at affordable prices, delivering the
flexibility that today's holidaymakers require.
A differentiated product offering and continued innovation helps
to make sure we are truly reflecting diversity in our product
range, allowing us to meet our customers' evolving
expectations:
-- Our core Beach product offering is continually reviewed and
refreshed, always ensuring that we satisfy our customers' desire
for choice and quality, whilst carefully expanding our resorts
presence. Encompassing a wide range of great value 2 to 5-star
accommodation, catering for the young, not so young and families
alike, many have adjacent waterparks and other great attractions
included in the package, adding enjoyment and interest to the
overall holiday experience.
-- Jet2Villas(TM) our ATOL protected Jet2.com flight + 22kg
baggage + car + villa package launched in June 2017, enjoys all the
package perks of Jet2holidays, but with the freedom of a villa
holiday. With a choice of over 2,400 properties ranging from
individual self-catering villas with private pool, to hotel resort
villas that make the best of both worlds, this product has proven
more popular as each season passes.
-- Our Indulgent Escapes(TM) brand encompasses an exclusive
collection of five-star hotels for those who want additional luxury
and refinement, each property having been hand-picked for its
unique appeal to different tastes and interests. This luxury
holiday product, which is richly distinctive, has unsurpassed
standards of service, décor and attention to detail, and continues
to resonate with customers, both existing and new.
-- Jet2CityBreaks(R) , which offers an ATOL protected Jet2.com
flight + hotel package to over 35 stunning European Leisure Cities,
continues to grow profitably at an encouraging rate.
-- In November 2019, we launched a brand-new product, Vibe by
Jet2holidays(R) , specifically crafted for the growing millennial
market, an audience which is often more about mindset than age or
demographic. Whilst the new proposition focuses on younger
customers and millennials, it has been tailored to meet the demands
of a broad audience, including first-time holidaymakers, 'bucket
listers', and the over-25s experience-driven market. To meet
demand, Vibe by Jet2holidays(R) has grouped an extensive collection
of hotels across almost 50 resorts into four groups or 'Vibes':
-- Iconic Vibe: A collection of standout, cutting-edge, stylish
and internationally-renowned hotels, with some of the hottest
A-list DJs playing each year;
-- Party Vibe: Great value hotels in the heart of the best party
resorts, perfect for those looking for less of the frills but more
of the thrills;
-- Pure Vibe: Staying in is the new going out with Pure Vibe, as
this selection of hotels allows customers to enjoy pool parties,
live performances and daytime DJs at their hotel; and
-- Chilled Vibe : For luxury lovers, these hotels offer
sophistication and exclusive extras and are perfect for poolside
lounging, ideal for capturing and posting on Instagram.
We have great hopes for this new product and believe that many
of its customers today will become the Jet2holidays families of the
future!
Our hotel portfolio for summer 2019 extended to over 4,000
(summer 2018: over 3,400 hotels) with 40% of our package holidays
sold on an all-inclusive basis. This is a particularly resilient,
great value offering for families managing to a tight budget,
offering a 'Defined Price' for the whole holiday experience,
including flights, transfers, meals, drinks for the adults and ice
lollies for the kids - especially attractive in these times of
economic uncertainty.
End-to-end Real Package Holidays(TM) are not easily replicated
by non-specialists and take considerable organisation and attention
to detail. In summer 2019, we employed nearly 700 in-resort
customer helpers, backed up by 24-hour UK customer helplines, to
give practical assistance in all eventualities. Together with
convenient airport-to-hotel transfer services, everything is
organised to make our customers' holidays easy and carefree.
Additionally, behind the scenes, Jet2holidays employs over 1,200
colleagues developing product, marketing our brand, contracting
& administering hotels, managing the finances, IT
infrastructure and websites, and providing operational support -
each and every one contributing an invaluable part to the process
of ensuring that our customers have a fantastic holiday
experience.
In July 2019, Jet2holidays was recognised as a Which?
Recommended Provider for "taking the bar for package holidays and
raising it through the roof". Completed by thousands of Which?
members, the survey is compiled based on several qualitative
factors including, accommodation; customer service; description
versus reality; the holiday representative; the organisation of the
holiday; and value for money. In addition, Jet2.com was also
recognised as a Which? Recommended Provider for the fourth
consecutive year. We are very proud that our efforts to provide
wonderful holiday experiences have been acknowledged in this
way!
Of course, direct feedback from our loyal customers remains the
most effective means of ensuring we continue to challenge ourselves
to improve our overall holiday offering - there is always more we
can do as we learn, evolve and grow . Pleasingly, our Net Promoter
Scores for the rolling 12 month period to 31 March 2020 were
consistently above +70 for both Jet2holidays and Jet2.com and our
rebooking rates above 50% for the same period, a clear endorsement
of the VIP experience we offer!
In summer 2019, Jet2.com flew 100 aircraft (summer 2018: 90
aircraft) from our nine UK bases. Jet2.com continues to lead the
way in On-Time Performance ("OTP"), with monthly data published by
OAG (the world's leading travel intelligence company) showing that
we were the most punctual UK airline in 2019, as well as being
placed in the Top 20 airlines in the world for OTP. In addition, we
were very proud to be recognised in the Top 10 Airlines of the
World and as both Best Airline - UK and Best Airline - Europe, at
the TripAdvisor Travellers' Choice Awards 2019.
(*) ATOL, which is managed by the UK Civil Aviation Authority
('CAA'), is a statutory licensing scheme which also provides
financial protection to consumers of licensable air travel. As a
licensing scheme it ensures that only businesses regarded as
financially robust and fit can sell licensable travel, and as a
financial protection scheme, it ensures that if an ATOL holder
fails, affected consumers are able to complete their holiday and be
repatriated or, if they cannot get away, receive a full refund.
Outlook
The beginning of the new financial year has brought significant
challenges for the entire Leisure Travel industry. The decisions
and actions we have taken since have been guided by our commitment
to maintain our responsible balance sheet management and carefully
protect our cash balance, to enable the business to exit the
Covid-19 period in a stable commercial position and to be able to
capitalise on the upturn opportunity when it arrives.
Group performance for the financial year ending 31 March 2021 is
largely dependent on the level of flying permitted for the
remainder of the summer 2020 period, as well as performance in the
second half of the 2021 financial year, periods for which we
currently still have limited visibility.
Despite the uncertainty, our current monthly load factors for
winter 20/21 are satisfactory and summer 2021 bookings, which are
showing a materially increased package holiday mix, are
encouraging.
Despite today's uncertainties our business model remains
unchanged - we will continue to dedicate significant resources to
provide Real Package Holidays(TM) and deliver wonderful holiday
experiences with priceless memories, ensuring that the customer
remains at the centre of everything we do. We believe that we have
the right customer-focused strategy to grow both our package
holiday and flight-only products. Whilst flight-only remains very
important, our higher margin package holiday business has
tremendous further potential as our reputation for providing
'package holidays you can trust'(TM) strengthens. This gives us
every confidence that with our focused approach, our Customers will
continue to be keen to travel with us from our Rainy Island to the
sun spots of the Mediterranean, the Canary Islands and to European
Leisure Cities and Jet2 will emerge from this crisis an even
stronger company.
Philip Meeson
Executive Chairman
9 July 2020
BUSINESS & FINANCIAL REVIEW
The Group's financial performance for the year ended 31 March
2020 is reported in line with International Financial Reporting
Standards ("IFRS"), as adopted by the EU.
Summary Income Statement 2020 2019
GBPm GBPm Change
Unaudited Restated**
Revenue 3,584.7 2,964.4 21%
Net operating expenses (3,291.7) (2,759.9) (19%)
---------------------------------------------------- ----------- ------------ ---------
Operating profit (excluding hedge ineffectiveness) 293.0 204.5 43%
Net financing expense (excluding net FX
revaluation losses) (29.5) (31.2) 5%
Profit on disposal of property, plant and
equipment 0.7 2.3 (70%)
---------------------------------------------------- ----------- ------------ ---------
Profit before hedge ineffectiveness, FX
revaluation and taxation 264.2 175.6 50%
Hedge ineffectiveness (108.4) - (100%)
Net FX revaluation losses (8.1) (9.1) 11%
---------------------------------------------------- ----------- ------------ ---------
Profit before taxation from continuing
operations 147.7 166.5 (11%)
Profit before taxation from discontinued
operations 5.5 4.1 34%
Profit before taxation 153.2 170.6 (10%)
Net financing expense (including net FX
revaluation losses) 37.6 40.3 7%
Depreciation 204.5 160.2 (28%)
Hedge ineffectiveness 108.4 - (100%)
EBITDA from continuing operations* 498.2 367.0 36%
==================================================== =========== ============ =========
Operating profit margin (excluding hedge
ineffectiveness) 8.2% 6.9% 1.3 ppts
Profit before hedge ineffectiveness, FX
revaluation and taxation margin 7.4% 5.9% 1.5 ppts
Profit before taxation margin from continuing (1.5
operations 4.1% 5.6% ppts)
EBITDA margin from continuing operations 13.9% 12.4% 1.5 ppts
---------------------------------------------------- ----------- ------------ ---------
* EBITDA is included as an alternative performance measure in
order to aid users in understanding the underlying operating
performance of the Group and growth in profitability of the
operations. Further information can be found in Note 10.
** Figures shown for the year ended 31 March 2019 have been
restated as detailed in Note 9.
Customer Demand & Revenue
Despite Leisure Travel customer booking trends for the summer
2019 season being later than in previous years, the growing
awareness and appreciation of our leisure travel products meant
that overall demand for both our higher margin package holiday
product from Jet2holidays and our flight-only offering from
Jet2.com remained resilient.
Jet2.com flew a total of 14.62m (2019: 12.82m) single sector
passengers to and from sun, city and ski destinations, an increase
of 14% and only slightly behind the seat capacity increase of 15%.
As a result, average load factors were a healthy 92.2% as compared
to the prior year of 92.8%. C ustomers choosing our end-to-end
package holiday product increased by 19% to 3.77m (2019: 3.17m),
while single sector passengers choosing our important flight-only
product increased by 9% to 7.06m (2019: 6.49m). Encouragingly,
package holiday customers represented 52% of overall flown
passengers (2019: 49%).
Early summer 2019 experienced increased levels of promotional
pricing to drive customer demand, succeeded by progressively
stronger bookings in later summer and into the second half of the
year, in part aided by a reduction in overall market seat capacity
on short and medium haul beach routes.
Seizing this opportunity, Jet2.com expanded its route network by
carefully replacing part of the market capacity reduction with
incremental profitable flying, with customer demand remaining
buoyant and associated ticket pricing strengthening. Consequently,
a verage flight-only ticket yield per passenger sector at GBP85.59
(2019: GBP81.79) was 5% higher than the prior year.
The mix of customers taking shorter duration package holidays
increased by 1ppt versus the prior year, with those choosing
all-inclusive holidays increasing by 3ppts, as families opted for
our great value 'Defined Price' offering. In addition, the mix of
higher value 4 & 5-star packages improved by 2ppts. Together
with increased airline ticket pricing and inflationary hotel room
rate increases, the overall average price of a Jet2holidays package
holiday increased to GBP687 (2019: GBP669).
Non-ticket retail revenue per passenger sector increased by 3%
to GBP24.91 (2019: GBP24.07) primarily due to a strong in-flight
retail sales performance for both existing and new products. 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.
As a result, overall Group revenue grew by 21% to GBP3,584.7m
(2019: GBP2,964.4m), ahead of the growth in passenger numbers.
Net Operating Expenses
The Travel Industry in general faces many cost pressures in
relation to fuel, carbon and other operating charges, together with
the necessary continued investment in our own products and
operations, including that required to attract and retain
colleagues. As a result, total operating expenses (excluding the
hedge ineffectiveness exceptional expense) increased by 19% to
GBP3,291.7m (2019: GBP2,759.9m), ahead of both the passenger and
activity increase.
The principal areas of cost increase ahead of activity were:
-- Fuel and Carbon - a result of increased jet fuel and carbon costs per tonne;
-- Agent commission - strategic investment with our travel agent
partners resulted in the mix of trade bookings as a proportion of
total bookings growing by 4ppts to over 28%, with an increase in
associated commission levels paid;
-- Colleague costs - w e are keen to create the right
environment for all our colleagues to thrive and are committed to
delivering a balanced lifestyle. To achieve this, for our aircraft
crews we launched our "Lifestyle 2020" programme, which was
implemented in 2019 and continued into 2020. The substantial
financial investment that this programme requires underlines our
commitment to be a career airline of choice for all; and
-- Depreciation - a result of incremental depreciation on
right-of-use assets plus ongoing investment and renewal of the
aircraft fleet.
Operating Profit
The increasing mix of higher margin package holiday customers is
pleasing, as we continued to focus on improving cross-selling
conversion from flight-only to package holidays on our website and
through our broader marketing messaging. Additionally, the Real
Package Holidays(TM) proposition lends itself to brand loyalty and
retention, resulting in a better quality of recurring revenue and
profitability in comparison to the more impulsive, price-sensitive,
flight-only product.
Though operating profit in the first half of the financial year
grew modestly by 3%, s trong customer demand and pricing, plus
incremental profitable flying and carefully controlled cost
investment in readiness for the proposed expansion of the summer
2020 flying programme, meant o perating losses (excluding hedge
ineffectiveness) for the second half of the year decreased by 53%
to GBP68.5m (2019: GBP146.9m).
As a result, overall Group operating profit (excluding hedge
ineffectiveness) for the year increased by 43% to GBP293.0m (2019:
GBP204.5m).
Net Financing Expense
Net financing expense of GBP37.6m (2019: GBP40.3m) is stated
after finance income of GBP14.5m (2019: GBP10.7m), the year-on-year
increase due to higher average cash balances and favourable
interest rates, and interest payable of GBP44.0m (2019: GBP41.9m),
related to structured aircraft finance and IFRS16 lease interest
expense. In addition, net FX revaluation losses of GBP8.1m (2019:
GBP9.1m loss) were incurred, arising from the year end revaluation
of foreign currency denominated monetary balances.
Discontinued Operations
At the year end date, the business was in active discussions to
sell its Distribution & Logistics business, Fowler Welch, and
having satisfied the conditions under IFRS5 - Non-current Assets
Held for Sale and Discontinued Operations, this business which
achieved a profit before taxation of GBP5.5m (2019: GBP4.1m), is
classed as a discontinued operation.
Pre-Exceptional Statutory Profit for the Year
As a result, the Group achieved a statutory pre-exceptional
profit before taxation from continuing operations of GBP256.1m
(2019: GBP166.5m), an increase of 54%.
Exceptional Item
The Group operates under a clear set of treasury policies
approved by the Board. The aim of our well-established hedging
policy has been to reduce short-term volatility in earnings by
hedging up to a maximum of 90 per cent. of projected jet fuel, euro
and US dollar requirements for the next twelve months. The impact
and timing of Covid-19 means that both the flying and holiday
programmes expected to be operated in the first half of the
financial year ending 31 March 2021 are significantly lower than
that on which the hedging programme for jet fuel and foreign
currency was originally based and therefore the Group has recorded
a net exceptional charge of GBP108.4m relating to hedge
ineffectiveness.
Taxation
The Group recorded a tax expense of GBP36.1m compared to
GBP29.9m in 2019. The Group's effective tax rate of 24% (2019: 18%)
was higher than the 19% headline rate of corporation tax, as
legislation substantively enacted on 17 March 2020 means the UK tax
rate, which was previously advised as 17%, will remain at 19% from
1 April 2020 onwards. As a result, Deferred tax has been provided
at 19% (2019: 17%).
Statutory Net Profit for the year and Earnings Per Share
Having accounted for the exceptional item, the Group achieved a
statutory profit after taxation from continuing operations of
GBP111.6m (2019: GBP136.6m). Basic earnings per share decreased by
18% to 74.97p (2019: 91.86p).
Other Comprehensive Income and Expense
The Group had Other comprehensive expense of GBP44.9m (2019:
GBP51.4m), the change compared to the prior year driven primarily
by movements in the fair value of open hedge instruments, as
reflected in the balance of the cash flow hedging reserve in
equity. The hedging reserve excludes those open jet fuel and
foreign currency hedges that were classified as ineffective at 31
March 2020 and were therefore recognised as an exceptional item in
the Consolidated Income Statement.
Cash Flows and Financial Position
The following table sets out condensed cash flow data and the
Group's cash and cash equivalents for 2020 and 2019:
Summary of Cash Flows 2020 2019
GBPm Unaudited GBPm Change
Restated
EBITDA from continuing operations 498.2 367.0 36%
EBITDA from discontinued operations 20.9 18.3 14%
Other Income Statement adjustments (0.4) (1.9) 79%
Movements in working capital (21.5) 136.3 (116%)
Interest and taxes (54.1) (36.7) (47%)
------------------------------------- --------------- ---------- --------
Net cash generated from operating
activities 443.1 483.0 (8%)
Purchase of intangibles (26.8) - (100%)
Purchase of property, plant and
equipment (211.3) (302.3) 30%
Movement on borrowings 27.0 94.1 (71%)
Movement on lease liabilities (99.7) (4.6) (2067%)
Other items (6.4) (4.5) (42%)
------------------------------------- --------------- ---------- --------
Net increase in cash and money
market deposits (a) 125.9 265.7 (53%)
===================================== =============== ========== ========
(a) Cash flows are reported including the movement on money
market deposits (cash deposits with maturity of more than three
months from point of placement) to give readers an understanding of
total cash generation. The Consolidated Cash Flow Statement reports
net cash flow excluding these movements.
Cash Flow Generated From Operating Activities
The Group generated net cash from operating activities of
GBP443.1m (2019: GBP483.0m), driven by the pre-exceptional trading
performance of the Leisure Travel business which resulted in EBITDA
improving by 36% to GBP498.2m. In contrast with 2019, when growing
forward bookings increased cash flows by GBP132.6m, in 2020 this
was a cash outflow of GBP194.7m as bookings declined sharply due to
the Covid-19 pandemic, with flying operations suspended from
mid-March 2020 and all flights and holidays departing prior to 1
May 2020 cancelled. This outflow was partially offset by an
increase in payables of GBP152.7m for flights and holidays
cancelled shortly before the year end which had either not yet been
refunded, or credit notes not yet redeemed until post 31 March
2020. As a result, the previously positive contribution to
operating cashflow from movements in working capital in 2019 of
GBP136.3m, reversed to an outflow of GBP21.5m, a year-on-year
reduction of GBP157.8m.
Net Cash Used In Investing Activities
The business invested GBP26.8m in the acquisition of a portfolio
of primarily peak summer airport slots, at Manchester, Birmingham
and London Stansted airports, plus certain Greek Island slots to
further improve our customers' experience through more attractive
flight departure timings and continue to develop the network. In
addition, total capital expenditure of GBP211.3m (2019: GBP302.3m)
included additional aircraft, continued investment in the long-term
maintenance of our existing aircraft fleet, replacement of ground
operations equipment at our UK and overseas bases, plus technology
and infrastructure projects across the Group.
Net Cash From Financing Activities
In late March 2020, due to the Covid-19 pandemic, the Group
prudently drew down GBP65.0m (2019: GBPnil) of its revolving credit
facility. The Group also made capital repayments of GBP38.0m (2019:
GBP65.1m) on aircraft loans and repaid GBP99.7m (2019: GBP73.7m) of
its aircraft, vehicles and property leases.
Overall, this resulted in a net cash inflow from total
operations of GBP125.9m (2019: GBP265.7m) and an improved year-end
gross cash position, including money market deposits, of
GBP1,387.5m (2019: GBP1,274.3m). Net cash, stated after borrowings
and lease liabilities increased by 259% to GBP229.1m (2019:
GBP63.9m).
At the reporting date, the Group had received payments in
advance of travel from its Leisure Travel customers amounting to
GBP867.1m (2019: GBP905.9m), and had increased its 'own cash'
balance excluding customer deposits by 41% to GBP520.4m (2019:
GBP368.4m). There were no cash restrictions from merchant acquirers
and GBP39.8m (2019: GBPnil) was placed with counterparties in the
form of margin calls to cover out-of-the-money hedge instruments.
In addition, t he Group continued to comfortably exceed the UK
Civil Aviation Authority's 'liquidity threshold test'.
Summary Statement of Financial Position 2020 2019
GBPm Unaudited GBPm Change
Restated
----------------------------------------- --------------- ---------- -------
Non-current assets (a) 1,492.7 1,506.7 (1%)
Net current (liabilities) / assets
(b) (138.7) 50.2 (376%)
Cash and money market deposits 1,387.5 1,274.3 9%
Deferred revenue (745.2) (939.9) 21%
Borrowings (485.7) (452.0) (7%)
Lease liabilities (672.7) (758.4) 11%
Deferred taxation (78.7) (80.6) 2%
Derivative financial instruments (191.5) (22.4) (755%)
Net assets held for sale 66.4 - 100%
----------------------------------------- --------------- ---------- -------
Total shareholders' equity 634.1 577.9 10%
========================================= =============== ========== =======
(a) Stated excluding derivative financial instruments.
(b) Stated excluding cash and cash equivalents, money market
deposits, deferred revenue, borrowings, lease liabilities and
derivative financial instruments.
Total shareholders' equity increased by GBP56.2m (2019:
GBP75.9m) primarily comprising profit after taxation of GBP116.0m
(2019: GBP139.9m), dividends paid of GBP15.5m (2019: GBP13.1m) and
an adverse movement of GBP48.8m (2019: adverse GBP50.1m) in the
cash flow hedging and cost of hedging reserves, largely a result of
out-of-the-money jet fuel forward contracts held at the end of the
financial year.
Net Assets Held For Sale
At the year end date, having satisfied the conditions under
IFRS5 - Non-current Assets Held for Sale and Discontinued
Operations, the net assets of the Distribution & Logistics
operation were classed as Assets and Liabilities held for sale on
the Statement of Financial Position and totalled GBP66.4m.
Adoption of IFRS 16 - Leases
The Group adopted IFRS 16 from 1 April 2019 applying the full
retrospective method of transition and has restated the 2019
financial statements. The full detail and impacts of this change
are explained in Notes 2 and 9 to this preliminary
announcement.
Events Subsequent to 31 March 2020
At 31 March 2020, the Group had a strong and responsibly managed
balance sheet with a total cash balance of GBP1,387.5m and an 'own
cash' balance excluding customer deposits of GBP520.4m. However, as
a result of the Covid-19 pandemic and its unprecedented impact, our
cash balance and the careful preservation of it, has now become our
top priority.
A considered but swift response saw cost mitigation measures put
in place including: approximately 80% of our UK colleagues being
put on temporary leave of absence ('furloughed') in order to make
full use of the grants available under the UK Government's
Coronavirus Job Retention Scheme ("JRS") with similar schemes also
in place for many of our overseas colleagues; the cancellation of
all twelve summer-only third-party leased aircraft; deferral of
non-critical capital expenditure; the freezing of recruitment and
discretionary spending and the termination of arrangements with
contractors. In addition, we have also had positive discussions
with many of our suppliers to reduce our monthly outgoings.
Despite the JRS, our monthly salary bill remains a substantial
proportion of our overall costs and therefore, with huge reluctance
and after much thought, we asked all colleagues (including
Directors) to take a pay cut for the nine-month period from 1 April
2020 until 31 December 2020. Additionally, performance related
bonuses earned for the financial year ended 31 March 2020 plus the
Discretionary Colleague Profit Share Scheme, will not be paid.
We further strengthened our cash position in May 2020, by
completing an over-subscribed share Placing of 20% of the then
issued share capital of the Company for gross proceeds of GBP171.7m
and also completing the sale of our Distribution & Logistics
business, Fowler Welch, for a gross cash consideration of GBP98.0m.
In addition, we secured eligibility for up to GBP300.0m of funding
from the Bank of England under the UK Government's Covid Corporate
Financing Facility (CCFF). This facility, which matures 12 months
following draw down, will be used to provide standby liquidity,
should that be required, and is currently unutilised.
More recently, we have had to reassess and reduce our flying
programmes for the remainder of 2020 and for 2021, the overall
effect being the need to sadly propose a number of colleague
redundancies across our business.
Despite these difficult decisions, we will continue to take
every step necessary to preserve cash and enhance liquidity to
ensure both Jet2.com and Jet2holidays are equipped to deal with
this most challenging of trading environments and also best
positioned for a return to operations in a stable financial
position, to the benefit of all stakeholders.
______________________
Gary Brown
Group Chief Financial Officer
9 July 2020
Leisure Travel Key Performance Indicators 2020 2019 Change
------------------------------------------- ------------ ------------ -------
Number of routes operated during the
year 355 329 8%
Leisure Travel sector seats available
(capacity) 15.85m 13.81m 15%
Leisure Travel passenger sectors flown 14.62m 12.82m 14%
(0.6
Leisure Travel load factor 92.2% 92.8% ppts)
Flight-only passenger sectors flown 7.06m 6.49m 9%
Package holiday customers 3.77m 3.17m 19%
Flight-only ticket yield per passenger
sector (excl. taxes) GBP85.59 GBP81.79 5%
Average package holiday price GBP687 GBP669 3%
Non-ticket revenue per passenger sector GBP24.91 GBP24.07 3%
Average hedged price of fuel (per tonne) $629 $604 4%
Advance sales made as at 31 March GBP1,679.2m GBP1,734.5m (3%)
------------------------------------------- ------------ ------------ -------
For further information please contact:
Dart Group plc
Philip Meeson, Executive
Chairman
Gary Brown, Group Chief 0113 239
Financial Officer 7817
Cenkos Securities plc
Nominated Adviser
Katy Birkin/Russell Cook/Harry 020 7397
Hargreaves 8900
Canaccord Genuity
Joint Broker 020 7523
Adam James 8000
Arden Partners
Joint Broker
Paul Shackleton/Daniel 020 7614
Gee-Summons 5900
Buchanan
Financial PR 020 7466
Richard Oldworth 5000
This announcement may include statements that are, or may be
deemed to be, "forward-looking statements" (including words such as
"believe", "expect", "estimate", "intend", "anticipate" and words
of similar meaning). By their nature, forward-looking statements
involve risk and uncertainty since they relate to future events and
circumstances, and actual results may, and often do, differ
materially from any forward-looking statements. Any forward-looking
statements in this announcement reflect management's view with
respect to future events as at the date of this announcement. Save
as required by applicable law, the Company undertakes no obligation
to publicly revise any forward-looking statements in this
announcement, whether following any change in its expectations or
to reflect events or circumstances after the date of this
announcement.
COnsolidated income statement (unaudited)
for the year ended 31 March 2020
Results
for the Results Results
year ended Exceptional for the for the
31 March item year ended year ended
2020 - Hedge 31 March 31 March
Pre - exceptional ineffectiveness 2020 2019
GBPm GBPm GBPm GBPm
Restated**
---------------------------------- ------------------- ----------------- ------------ ------------
Revenue 3,584.7 - 3,584.7 2,964.4
Net operating expenses (3,291.7) (108.4) (3,400.1) (2,759.9)
---------------------------------- ------------------- ----------------- ------------ ------------
Operating profit 293.0 (108.4) 184.6 204.5
Finance income 14.5 - 14.5 10.7
Finance expense (44.0) - (44.0) (41.9)
Net FX revaluation losses (8.1) - (8.1) (9.1)
---------------------------------- ------------------- ----------------- ------------ ------------
Net financing expense (37.6) - (37.6) (40.3)
Profit on disposal of
property, plant and equipment 0.7 - 0.7 2.3
Profit before taxation 256.1 (108.4) 147.7 166.5
Taxation (56.7) 20.6 (36.1) (29.9)
---------------------------------- ------------------- ----------------- ------------ ------------
Profit for the year
- from continuing operations 199.4 (87.8) 111.6 136.6
Profit for the year
- from discontinued operations* 4.4 - 4.4 3.3
Profit for the year 203.8 (87.8) 116.0 139.9
---------------------------------- ------------------- ----------------- ------------ ------------
all attributable to equity shareholders
of the parent
======================================================= ================= ============ ============
Earnings per share from continuing operations
- basic 74.97p 91.86p
- diluted 74.84p 91.58p
----------------------------------------------- ------- -------
* The Group has classified its Distribution & Logistics
segment as a discontinued operation as detailed in Note 7.
** Figures shown for the year ended 31 March 2019 have been
restated as detailed in Note 9.
Consolidated statement of comprehensive income (UNAUDITED)
for the year ended 31 March 2020
Year ended Year ended
31 March 31 March
2020 2019
GBPm GBPm
Restated**
----------------------------------------- --------------- ------------
Profit for the year 116.0 139.9
Other comprehensive (expense) / income
Items that are or may be reclassified
subsequently to profit or loss:
Cash flow hedges:
Fair value losses (68.6) (37.9)
Add back losses / (gains) transferred
to income statement 5.0 (23.6)
Cost of hedging reserve - changes in 2.9 -
fair value
Related taxation credit 11.9 11.4
Revaluation of foreign operations 3.9 (1.3)
----------------------------------------- --------------- ------------
(44.9) (51.4)
Total comprehensive income for the year 71.1 88.5
all attributable to equity shareholders
of the parent
========================================= =============== ============
Total comprehensive income for the year
arises from:
Continuing operations 66.7 85.2
Discontinued operations* 4.4 3.3
----------------------------------------- --------------- --------------
Total comprehensive income 71.1 88.5
========================================= =============== ==============
* The Group has classified its Distribution & Logistics
segment as a discontinued operation as detailed in Note 7.
** Figures shown for the year ended 31 March 2019 have been
restated as detailed in Note 9.
Consolidated Statement of Financial Position (UNAUDITED)
at 31 March 2020
2020 2019 2018
GBPm GBPm GBPm
Restated** Restated**
---------------------------------- -------- ------------ ------------
Non-current assets
Intangible assets 26.8 - -
Goodwill - 6.8 6.8
Property, plant and equipment 1,465.9 1,499.9 1,242.8
Derivative financial instruments 25.1 4.1 23.7
----------------------------------- --------
1,517.8 1,510.8 1,273.3
---------------------------------- -------- ------------ ------------
Current assets
Inventories 1.3 1.6 1.8
Trade and other receivables 294.1 319.8 258.2
Derivative financial instruments 53.9 50.0 64.3
Money market deposits - 50.0 220.2
Cash and cash equivalents 1,387.5 1,224.3 788.4
Assets held for sale 128.2 - -
---------------------------------- -------- ------------ ------------
1,865.0 1,645.7 1,332.9
---------------------------------- -------- ------------ ------------
Total assets 3,382.8 3,156.5 2,606.2
----------------------------------- -------- ------------ ------------
Current liabilities
Trade and other payables 366.4 217.0 159.9
Deferred revenue 736.0 937.1 806.0
Borrowings 104.4 37.7 59.7
Lease liabilities 76.2 114.5 81.0
Provisions and liabilities 67.7 54.2 45.9
Derivative financial instruments 216.5 55.0 40.7
Liabilities held for sale 61.8 - -
---------------------------------- -------- ------------ ------------
1,629.0 1,415.5 1,193.2
---------------------------------- -------- ------------ ------------
Non-current liabilities
Deferred revenue 9.2 2.8 1.3
Borrowings 381.3 414.3 287.6
Lease liabilities 596.5 643.9 548.0
Derivative financial instruments 54.0 21.5 8.2
Deferred taxation 78.7 80.6 65.9
----------------------------------- -------- ------------
1,119.7 1,163.1 911.0
---------------------------------- -------- ------------ ------------
Total liabilities 2,748.7 2,578.6 2,104.2
----------------------------------- -------- ------------ ------------
Net assets 634.1 577.9 502.0
=================================== ======== ============ ============
Shareholders' equity
Share capital 1.9 1.9 1.9
Share premium 12.9 12.8 12.7
Cash flow hedging reserve (69.6) (18.5) 31.6
Cost of hedging reserve 2.3 - -
Other reserves 3.3 (0.6) 0.7
Retained earnings 683.3 582.3 455.1
Total shareholders' equity 634.1 577.9 502.0
=================================== ======== ============ ============
* The Group has classified its Distribution & Logistics
segment as a discontinued operation as detailed in Note 7.
** Figures shown for the year ended 31 March 2019 and 31 March
2018 have been restated as detailed in Note 9.
consolidated statement of cash flows (UNAUDITED)
for the year ended 31 March 2020
2020 2019
GBPm GBPm
Restated**
Profit on ordinary activities before taxation
from continuing operations 147.7 166.5
Profit on ordinary activities before taxation
from discontinued operations* 5.5 4.1
Finance income (14.5) (10.7)
Finance expense 45.2 43.5
Net FX revaluation losses 8.1 9.1
Hedge ineffectiveness 108.4 -
Depreciation 218.7 172.8
Profit on disposal of property, plant and
equipment (0.9) (2.3)
Equity settled share based payments 0.5 0.4
Operating cash flows before movement in
working capital 518.7 383.4
----------------------------------------------- -------- ------------
(Increase) / decrease in inventories (0.3) 0.2
Increase in trade and other receivables (7.9) (61.6)
Increase in trade and other payables 172.8 60.3
(Decrease) / increase in deferred revenue (194.7) 132.6
Increase in provisions and liabilities 8.6 4.8
Cash generated from operations 497.2 519.7
----------------------------------------------- -------- ------------
Interest received 14.5 10.7
Interest paid - of which GBP23.5m (2019:
GBP23.9m) relates to leases (40.5) (39.6)
Income taxes paid (28.1) (7.8)
Net cash generated from operating activities 443.1 483.0
----------------------------------------------- -------- ------------
Cash flows used in investing activities
Purchase of intangibles (26.8) -
Purchase of property, plant and equipment (211.3) (302.3)
Proceeds from sale of property, plant and
equipment 2.5 3.5
Net decrease in money market deposits 50.0 170.2
Net cash used in investing activities (185.6) (128.6)
----------------------------------------------- -------- ------------
Cash from financing activities
Repayment of borrowings (38.0) (65.1)
Payment of lease liabilities (99.7) (73.7)
New loans advanced 65.0 159.2
New lease liabilities - 69.1
Proceeds on issue of shares 0.1 0.1
Equity dividends paid (15.5) (13.1)
Net cash from financing activities (88.1) 76.5
----------------------------------------------- -------- ------------
Net increase in cash in the year 169.4 430.9
Cash and cash equivalents at beginning of
year 1,224.3 788.4
Effect of foreign exchange rate changes 6.5 5.0
Cash and cash equivalents at end of year 1,400.2 1,224.3
----------------------------------------------- -------- ------------
Cash and cash equivalents at end of year
- from continuing operations 1,387.5 1,216.9
Cash and cash equivalents at end of year
- from discontinued operations 12.7 7.4
* The Group has classified its Distribution & Logistics
segment as a discontinued operation as detailed in Note 7.
** Figures shown for the year ended 31 March 2019 have been
restated as detailed in Note 9.
Consolidated statement of changes in equity (UNAUDITED)
for the year ended 31 March 2020
Share Share Cash Cost Other Retained Total shareholders'
capital premium flow of hedging reserves earnings equity
hedging reserve
reserve
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ --------- --------- --------- ------------ ---------- ---------- --------------------
Balance at 31 March
2018
- as originally
reported 1.9 12.7 31.6 - 0.7 482.0 528.9
Effect of transition
to IFRS 15 - - - - - (15.1) (15.1)
Effect of transition
to IFRS 16 - - - - - (11.8) (11.8)
Balance at 31 March
2018
- as restated** 1.9 12.7 31.6 - 0.7 455.1 502.0
Total comprehensive
income - - (50.1) - (1.3) 139.9 88.5
Issue of share capital - 0.1 - - - - 0.1
Dividends paid in
the year - - - - - (13.1) (13.1)
Share based payments - - - - - 0.4 0.4
Balance at 31 March
2019
- as restated 1.9 12.8 (18.5) - (0.6) 582.3 577.9
Total comprehensive
income - - (51.1) 2.3 3.9 116.0 71.1
Issue of share capital - 0.1 - - - - 0.1
Dividends paid in
the year - - - - - (15.5) (15.5)
Share based payments - - - - - 0.5 0.5
Balance at 31 March
2020 1.9 12.9 (69.6) 2.3 3.3 683.3 634.1
======================== ========= ========= ========= ============ ========== ========== ====================
** Figures shown for the year ended 31 March 2019 have been
restated as detailed in Note 9.
Notes to the UNAUDITED PRELIMINARY ANNOUNCEMENT
for the year ended 31 March 2020
1. Accounting policies and general information
Basis of preparation
The financial information in this preliminary announcement has
been prepared and approved by the Board of Directors in accordance
with International Financial Reporting Standards, as adopted by the
European Union ("Adopted IFRS") and with those parts of the
Companies Act 2006 applicable to companies reporting under
IFRS.
Whilst the information included in this preliminary announcement
has been prepared in accordance with Adopted IFRS, the financial
information contained within this preliminary announcement for the
years ended 31 March 2020, 31 March 2019 and 31 March 2018 does not
itself contain sufficient information to comply with Adopted IFRS
and nor does it comprise statutory financial statements within the
meaning of section 434 of the Companies Act 2006.
The financial information for 2019 is derived from the statutory
accounts for the year ended 31 March 2019, which have been
delivered to the Registrar of Companies. The Auditor has reported
on the year ended 31 March 2019 accounts; their report:
i. was unqualified;
ii. did not include a reference to any matters to which the
Auditor drew attention by way of emphasis without qualifying their
report; and
iii. did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
In this report, the comparative figures for the year ended 31
March 2019 have been restated for the impact of IFRS 16 - see Note
9 for further details.
The statutory accounts for the year ended 31 March 2020 will be
finalised on the basis of the financial information presented by
the Board of Directors in this preliminary announcement and will be
delivered to the Registrar of Companies in due course.
The 2020 Annual Report and Accounts (including the Auditor's
Report) will be made available to shareholders during the week
commencing 10 August 2020. The Dart Group plc Annual General
Meeting will be held on 3 September 2020.
The financial information has been prepared under the historical
cost convention except for all derivative financial instruments,
which have been measured at fair value.
The Group's financial information is presented in pounds
sterling and all values are rounded to the nearest GBP100,000
except where indicated otherwise.
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 2023.
For the purpose of assessing the appropriateness of the
preparation of the Group's accounts on a going concern basis,
multiple financial forecast scenarios of increasing severity have
been prepared. Three "no fly" scenarios were produced being: a base
case, restarting flying on 1 September 2020; restarting flying on 1
January 2021; and restarting flying on 1 April 2021. All three
scenarios assume a gradual ramp up of flying operations, initially
running at reduced average load factors and net ticket yields,
significantly below historic levels.
The forecasts consider the current cash position, the
availability of banking facilities and an assessment of the
principal areas of risk and uncertainty, paying particular
attention to the impact of Covid-19.
The forecasts also incorporate the following actions taken since
31 March 2020 which have improved overall liquidity:
-- Full use of the grants available under the UK Government's
Coronavirus Job Retention Scheme;
-- On 14 May 2020, the Group were confirmed as an eligible
issuer for the Bank of England Covid Corporate Financing Facility
("CCFF") and put in place a GBP300.0m commercial paper programme to
facilitate issuance under it. The CCFF is designed to support
liquidity among larger businesses who are capable of demonstrating
that they make a material contribution to the UK economy and are
able to display sound financial health, equivalent to an investment
grade rating, prior to the economic shock caused by the Covid-19
pandemic. The forecast scenarios assume that the CCFF will be drawn
down in the final quarter of 2020;
-- On 21 May 2020, the Group completed a Placing of 29.78
million new ordinary shares at a price of 576.5 pence per share,
raising gross proceeds of GBP171.7m; and
-- On 31 May 2020, the Group completed the sale of its
Distribution & Logistics business, Fowler Welch for a gross
cash consideration of GBP98.0m.
Due to the level of uncertainty of how the operations of the
business may emerge from the Covid-19 pandemic, the Directors also
modelled a further "no fly" scenario through to 1 August 2021 to
assess the liquidity position over the entire going concern period
of at least 12 months from the date of signing of this report. In
addition to forecasting the fixed cost base of the Group, the
scenario also considered the impact of movements in euro and US
dollar exchange rates and the price of jet fuel. The Directors
concluded that given the combination of a closing cash balance of
GBP1,387.5m at 31 March 2020, together with the additional actions
taken to increase liquidity since the year end and the forecast
monthly cash utilisation, the Group would have sufficient liquidity
throughout this period.
As a result, the Directors have a reasonable expectation that
the Group as a whole has adequate resources to continue in
operational existence for a period of 12 months from the date of
approval of the financial statements. For this reason, they
continue to adopt the going concern basis in preparing the
financial statements for the year ended 31 March 2020.
2. 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 16 - Leases January 2019
------------------ -------------
The Group has adopted IFRS 16 for the year ended 31 March 2020.
IFRS 16 replaces IAS 17 - Leases and removes the requirement for
lessees to report on finance and operating leases separately. The
Group has applied the fully retrospective transition method
available under IFRS16, with the comparative year and opening net
assets (as at 1 April 2018) restated.
Under IFRS 16, the Group distinguishes between leases and
service contracts based on whether there is an identified asset
controlled by the Group. Control exists if the lessee has the right
to obtain substantially all of the economic benefit from the use of
the asset (the cash flows generated by that asset) and the right to
direct the use of that asset as if it were their own. Where control
exists, the Group is required to recognise a right-of-use asset and
an opposing discounted lease liability, rather than accounting for
operating lease payments through the Income Statement.
The Group has capitalised all aircraft and properties previously
accounted for as operating leases under IAS 17. Operating lease
expenses are replaced by depreciation charges on the right-of-use
assets recognised, and interest expenses as the discount on the
lease liability unwinds. As permitted, the Group has elected not to
apply the requirements of IFRS 16 for either short-term leases
(contracts with a duration of 12 months or less) or leases of
low-value assets (defined by the Group as below GBP5,000). Instead
of recognising a right-of-use asset and lease liability, the
payments in relation to these are recognised as an expense in
profit or loss on a straight-line basis over the lease term.
Under IFRS 16, the Group has recognised all contractual
maintenance obligations which are not dependent on the use of the
asset in the value of the right-of-use asset at inception, and
these costs are depreciated over the lease term. Contractual
obligations associated with the maintenance condition on redelivery
of aircraft are recognised as right-of-use assets with the
associated liability held in provisions.
The lease term corresponds to the duration of the contracts
signed, except in cases where the Group is reasonably certain that
it will exercise contractual extension options.
The Group incurred foreign exchange gains / losses on its US
dollar and euro denominated leases as a result of the
implementation of IFRS 16 as lease liabilities and provisions have
been treated as monetary items and retranslated at the period end
exchange rate, whereas right-of-use assets are treated as
non-monetary items and therefore remain at their translated values
on inception.
The impact on the Group financial statements for the year ended
31 March 2019 and for the year ended 31 March 2018 is shown in
detail in Note 9.
3. Segmental reporting
IFRS 8 Operating Segments requires operating segments to be
determined based on the Group's internal reporting to the Chief
Operating Decision Maker. 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 Board of
Directors (the Chief Operating Decision Maker) for the purpose of
resource allocation and assessment of their performance and as
such, they are also deemed to be the reporting segments.
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are eliminated
on consolidation.
Unaudited Leisure Distribution Group Total
Year ended 31 March 2020 Travel & Logistics* eliminations
GBPm GBPm GBPm GBPm
--------------------------------- ---------- -------------- -------------- ----------
Revenue 3,584.7 166.8 - 3,751.5
Operating profit (excluding
hedge ineffectiveness) 293.0 6.5 - 299.5
Hedge ineffectiveness (108.4) - - (108.4)
--------------------------------- ---------- -------------- -------------- ----------
Operating profit 184.6 6.5 - 191.1
Finance income 14.5 - - 14.5
Finance expense (44.0) (1.2) - (45.2)
Net FX revaluation losses (8.1) - - (8.1)
--------------------------------- ---------- -------------- -------------- ----------
Net financing expense (37.6) (1.2) - (38.8)
Profit on disposal of property,
plant and equipment 0.7 0.2 - 0.9
--------------------------------- ---------- -------------- -------------- ----------
Profit before taxation 147.7 5.5 - 153.2
Taxation (36.1) (1.1) - (37.2)
--------------------------------- ---------- -------------- -------------- ----------
Profit after taxation 111.6 4.4 - 116.0
================================= ========== ============== ============== ==========
Assets and liabilities
Segment assets 3,254.6 128.2 - 3,382.8
Segment liabilities (2,686.9) (61.8) - (2,748.7)
--------------------------------- ---------- -------------- -------------- ----------
Net assets 567.7 66.4 - 634.1
================================= ========== ============== ============== ==========
Other segment information
Intangible additions 26.8 - - 26.8
Property, plant and equipment
additions 263.8 27.4 - 291.2
Of which right-of-use additions 55.9 25.0 - 80.9
Depreciation, amortisation
and impairment (204.5) (14.2) - (218.7)
Share based payments (0.5) - - (0.5)
* The Group has classified its Distribution & Logistics
segment as a discontinued operation as detailed in Note 7.
Leisure Distribution Group Total
Year ended 31 March 2019 Travel & Logistics eliminations
GBPm GBPm GBPm GBPm
Restated Restated Restated
--------------------------------- ---------- ------------- -------------- ----------
Revenue 2,964.4 178.7 - 3,143.1
Operating profit 204.5 5.7 - 210.2
Finance income 10.7 - - 10.7
Finance expense (41.9) (1.6) - (43.5)
Net FX revaluation losses (9.1) - - (9.1)
--------------------------------- ---------- ------------- -------------- ----------
Net financing expense (40.3) (1.6) - (41.9)
Profit on disposal of property,
plant and equipment 2.3 - - 2.3
--------------------------------- ---------- ------------- -------------- ----------
Profit before taxation 166.5 4.1 - 170.6
Taxation (29.9) (0.8) - (30.7)
--------------------------------- ---------- ------------- -------------- ----------
Profit after taxation 136.6 3.3 - 139.9
================================= ========== ============= ============== ==========
Assets and liabilities
Segment assets 3,035.8 120.7 - 3,156.5
Segment liabilities (2,518.2) (60.4) - (2,578.6)
--------------------------------- ---------- ------------- -------------- ----------
Net assets 517.6 60.3 - 577.9
================================= ========== ============= ============== ==========
Other segment information
Property, plant and equipment
additions 389.1 9.2 - 398.3
Of which right-of-use of asset
additions 140.6 6.3 - 146.9
Depreciation, amortisation
and impairment (160.2) (12.6) - (172.8)
Share based payments (0.3) (0.1) - (0.4)
4. Net operating expenses
2020 2019
GBPm GBPm
Unaudited Restated
------------------------------------------------- ---------- ---------
Direct operating costs:
Accommodation costs 1,340.0 1,102.9
Fuel 359.1 279.0
Landing, navigation and third-party handling 329.5 279.4
Maintenance costs 100.2 105.0
Aircraft and vehicle rentals 31.8 31.0
Agent commission 81.4 59.8
In-flight cost of sales 57.4 46.5
Other direct operating costs 132.8 110.3
Staff costs including agency staff 444.7 370.3
Depreciation of property, plant and equipment 204.5 160.2
Other operating charges 210.3 215.5
------------------------------------------------- ---------- ---------
Total net operating expenses (excluding
hedge ineffectiveness) 3,291.7 2,759.9
Hedge ineffectiveness 108.4 -
------------------------------------------------- ---------- ---------
Total net operating expenses 3,400.1 2,759.9
================================================= ========== =========
5. Net financing expense
2020 2019
GBPm GBPm
Unaudited Restated
----------------------------------------- ---------- ---------
Finance income 14.5 10.7
Interest payable on aircraft and other
loans (17.6) (16.3)
Interest payable on lease liabilities (26.4) (25.6)
Net foreign exchange revaluation losses (8.1) (9.1)
----------------------------------------- ---------- ---------
Net financing expense (37.6) (40.3)
========================================= ========== =========
6. Earnings per share from continuing operations
Basic earnings per share is calculated by dividing the profit
from continuing operations attributable to the equity owners of the
parent company by the weighted average number of ordinary shares in
issue during the year.
Diluted earnings per share is calculated by dividing the profit
from continuing operations attributable to the equity owners of the
parent company by the weighted average number of ordinary shares in
issue during the year, adjusted for the effects of potentially
dilutive instruments.
2020 2019
Earnings Weighted EPS Earnings Weighted EPS EPS
GBPm average pence GBPm average pence pence
number number
of shares of shares
--------------------- --------- ------------ ------- --------- ------------ --------- --------------
As originally
Restated Restated reported
Basic EPS
Profit attributable
to ordinary
shareholders 111.6 148,859,836 74.97 136.6 148,698,533 91.86 95.63
--------------------- --------- ------------ ------- --------- ------------ --------- --------------
Effect of dilutive instruments
Share options
and deferred
awards - 267,887 (0.13) - 455,530 (0.28) (0.30)
Diluted EPS 111.6 149,127,723 74.84 136.6 149,154,063 91.58 95.33
--------------------- --------- ------------ ------- --------- ------------ --------- --------------
7. Discontinued Operations
At the year-end date, the business was actively progressing the
sale of its Distribution & Logistics business, Fowler Welch,
and having satisfied the conditions under IFRS5 - Non-current
Assets Held for Sale and Discontinued Operations, this business
segment is classed as a discontinued operation.
The Distribution & Logistics segment was not previously
classified as held-for-sale or as a discontinued operation.
Results from discontinued operations
The profit after taxation for the period from the discontinued
operation was GBP4.4m (2019: GBP3.3m). The operating performance of
the Distribution & Logistics segment is detailed within Note
3.
Cash flows from / (used in) discontinued operations
2020 2019
GBPm GBPm
---------------------------------------------- ------- -------
Net cash generated from operating activities 18.4 18.2
Net cash used in investing activities (1.4) (1.6)
Net cash used in financing activities (11.7) (14.3)
---------------------------------------------- ------- -------
Net increase in cash in the period 5.3 2.3
Cash and cash equivalents at beginning of
period 7.4 5.1
---------------------------------------------- ------- -------
Cash and cash equivalents at end of period 12.7 7.4
---------------------------------------------- ------- -------
8. Assets and liabilities held for sale
On 31 May 2020, the Group sold its entire Distribution &
Logistics operating segment.
At 31 March 2020, the disposal assets (and directly associated
liabilities) for the Distribution & Logistics segment, stated
at book value, were as follows:
2020
GBPm
------------------------------------------------ ------
Goodwill 6.8
Property, plant and equipment 74.4
Inventories 0.6
Trade and other receivables 33.7
Cash and cash equivalents 12.7
------------------------------------------------ ------
Transfer to Assets held for sale 128.2
------------------------------------------------ ------
Trade and other payables 21.9
Lease liabilities 38.2
Provisions and liabilities 0.6
Deferred taxation liabilities 1.1
------------------------------------------------ ------
Transfer to Liabilities directly held for sale 61.8
------------------------------------------------ ------
9. Restatement of prior year information
The following tables summarise the restatement of previously
reported financial information.
Consolidated Income Statement Year ended Year ended Year ended Year ended
for the year ended 31 March 31 March 31 March 31 March 31 March
2019 2019 2019 2019 2019
As restated Discontinued IFRS 16 As originally
activities Adjustments reported
GBPm GBPm GBPm GBPm
--------------------------------- ------------ ------------- ------------- --------------
Revenue 2,964.4 (178.7) - 3,143.1
Net operating expenses (2,759.9) 173.0 6.8 (2,939.7)
---------------------------------- ------------ ------------- ------------- --------------
Operating profit 204.5 (5.7) 6.8 203.4
Finance income 10.7 - - 10.7
Finance expense (41.9) 1.6 (7.2) (36.3)
Net FX revaluation losses (9.1) - (6.5) (2.6)
---------------------------------- ------------ ------------- ------------- --------------
Net financing expense (40.3) 1.6 (13.7) (28.2)
Profit on disposal of property,
plant and equipment 2.3 - - 2.3
---------------------------------- ------------ ------------- ------------- --------------
Profit before taxation 166.5 (4.1) (6.9) 177.5
Taxation (29.9) 0.8 1.2 (31.9)
Profit for the year
- from continuing operations 136.6 (3.3) (5.7) 145.6
---------------------------------- ------------ ------------- ------------- --------------
Profit for the year
- from discontinued operations 3.3 3.3 - -
---------------------------------- ------------ ------------- ------------- --------------
Profit for the year 139.9 - (5.7) 145.6
---------------------------------- ------------ ------------- ------------- --------------
all attributable to equity shareholders
of the parent
================================================ ============= ============= ==============
Total comprehensive income
for the year 88.5 - (5.7) 94.2
---------------------------------- ------------ ------------- ------------- --------------
Depreciation included in
net operating expenses (160.2) 12.6 (41.3) (131.5)
================================== ============ ============= ============= ==============
The impact of IFRS16 is:
-- to capitalise right-of-use assets in respect of aircraft and
properties previously accounted for as operating leases under IAS
17;
-- to replace operating lease expenses, within net operating
expenses, with depreciation charges on the right-of-use assets
recognised, and interest expenses, within finance expense, as the
discount on the lease liability unwinds; and
-- to reclassify pre-existing IAS17 finance leases of GBP531.1m
from Borrowings into Lease liabilities in the Statement of
Financial Position
The impact of IFRS 15 on the year ended 31 March 2018 is:
-- to defer the recognition of certain non-ticket revenue
streams to the date of departure rather than the date of booking,
resulting in a reduction in revenue and an increase in deferred
revenue;
-- to apportion the revenue associated with package holidays
over the duration of the holiday, where it was previously
recognised on departure, resulting in a reduction in revenue and an
increase in deferred revenue. The costs of a package holiday are
also apportioned over the duration of the holiday, resulting in a
reduction in net operating expenses and a decrease in accruals;
and
-- to offset a proportion of flight delay compensation payments
made to customers, previously recorded wholly within net operating
expenses, against revenue up to the full value of the ticket price,
resulting in a reduction in revenue and a reduction in net
operating expenses.
Consolidated Statement of Financial Position
at 31 March 2019
Year ended Year ended Year ended
31 March 31 March 31 March
2019 2019 2019
As restated IFRS 16 As originally
Adjustments reported
GBPm GBPm GBPm
---------------------------------- ------------ ------------- --------------
Non-current assets
Goodwill 6.8 - 6.8
Property, plant and equipment 1,499.9 214.2 1,285.7
Derivative financial instruments 4.1 - 4.1
1,510.8 214.2 1,296.6
---------------------------------- ------------ ------------- --------------
Current assets
Inventories 1.6 - 1.6
Trade and other receivables 319.8 - 319.8
Derivative financial instruments 50.0 - 50.0
Money market deposits 50.0 - 50.0
Cash and cash equivalents 1,224.3 - 1,224.3
1,645.7 - 1,645.7
---------------------------------- ------------ ------------- --------------
Total assets 3,156.5 214.2 2,942.3
---------------------------------- ------------ ------------- --------------
Current liabilities
Trade and other payables 217.0 - 217.0
Deferred revenue 937.1 - 937.1
Borrowings 37.7 (36.7) 74.4
Lease liabilities 114.5 114.5 -
Provisions and liabilities 54.2 7.9 46.3
Derivative financial instruments 55.0 - 55.0
1,415.5 85.7 1,329.8
---------------------------------- ------------ ------------- --------------
Non-current liabilities
Deferred revenue 2.8 - 2.8
Borrowings 414.3 (494.4) 908.7
Lease liabilities 643.9 643.9 -
Derivative financial instruments 21.5 - 21.5
Deferred taxation 80.6 (3.5) 84.1
1,163.1 146.0 1,017.1
---------------------------------- ------------ ------------- --------------
Total liabilities 2,578.6 231.7 2,346.9
---------------------------------- ------------ ------------- --------------
Net assets 577.9 (17.5) 595.4
================================== ============ ============= ==============
Shareholders' equity
Share capital 1.9 - 1.9
Share premium 12.8 - 12.8
Cash flow hedging reserve (18.5) - (18.5)
Other reserves (0.6) - (0.6)
Retained earnings 582.3 (17.5) 599.8
---------------------------------- ------------ ------------- --------------
Total shareholders' equity 577.9 (17.5) 595.4
================================== ============ ============= ==============
Consolidated Statement of Financial Position
at 31 March 2018
Year ended Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March 31 March
2018 2018 2018 2018 2018
As restated IFRS 16 IFRS 15 Accrued Revenue As originally
Adjustments Adjustments Restatement reported
(1)
GBPm GBPm GBPm GBPm GBPm
----------------------------- ------------ ------------- ------------- ---------------- --------------
Non-current assets
Goodwill 6.8 - - - 6.8
Property, plant and
equipment 1,242.8 159.8 - - 1,083.0
Derivative financial
instruments 23.7 - - - 23.7
1,273.3 159.8 - - 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 2,606.2 159.8 - (679.2) 3,125.6
----------------------------- ------------ ------------- ------------- ---------------- --------------
Current liabilities
Trade and other payables 159.9 - (12.4) - 172.3
Deferred revenue 806.0 - 30.8 (675.4) 1,450.6
Borrowings 59.7 (28.9) - - 88.6
Lease liabilities 81.0 81.0 - - -
Provisions and liabilities 45.9 4.2 - - 41.7
Derivative financial
instruments 40.7 - - - 40.7
1,193.2 56.3 18.4 (675.4) 1,793.9
----------------------------- ------------ ------------- ------------- ---------------- --------------
Non-current liabilities
Deferred revenue 1.3 - - (3.8) 5.1
Borrowings 287.6 (430.4) - - 718.0
Lease liabilities 548.0 548.0 - - -
Derivative financial
instruments 8.2 - - - 8.2
Deferred taxation 65.9 (2.3) (3.3) - 71.5
911.0 115.3 (3.3) (3.8) 802.8
----------------------------- ------------ ------------- ------------- ---------------- --------------
Total liabilities 2,104.2 171.6 15.1 (679.2) 2,596.7
----------------------------- ------------ ------------- ------------- ---------------- --------------
Net assets 502.0 (11.8) (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 455.1 (11.8) (15.1) - 482.0
----------------------------- ------------ ------------- ------------- ---------------- --------------
Total shareholders'
equity 502.0 (11.8) (15.1) - 528.9
============================= ============ ============= ============= ================ ==============
(1) In previous years, balance payments not yet due or invoiced
for package holidays were recognised on booking within trade
receivables, with a corresponding balance in deferred revenue. As
these payments are not yet due, an adjustment has been made to
remove the receivable for balance payments not yet due or invoiced
and the associated entry in deferred revenue. This amended
presentation is in line with standard industry practices.
10. Alternative performance measures
The Group's alternative performance measures are not defined by
IFRS and therefore may not be directly comparable with other
companies' alternative performance measures. These measures are not
intended to be a substitute for, or superior to, IFRS
measurements.
Profit before hedge ineffectiveness, FX revaluation and
taxation
Profit before hedge ineffectiveness, FX revaluation and taxation
is included as an alternative performance measure in order to aid
users in understanding the underlying operating performance of the
Group excluding the impact of foreign exchange volatility and the
hedge ineffectiveness.
EBITDA
Earnings before interest, tax, depreciation and amortisation
(EBITDA) is included as an alternative performance measure in order
to aid users in understanding the underlying operating performance
of the Group and growth in profitability of the operations.
Both measures are reconciled to the IFRS measure of profit
before taxation as part of the Summary Income Statement within the
Business and Finance Review.
11. 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
FR FLFLSDFITIII
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