21st June 2012
Preliminary Results Announcement 2012
Dart Group PLC (the “Group”), the Leisure Airline, Package Holidays and Distribution
& Logistics Group, has announced its preliminary results for the year ended
31 March 2012. These results are
presented under International Financial Reporting Standards (“IFRS”).
CHAIRMAN'S STATEMENT
I am pleased to report on the Group's trading for the
year ended 31 March 2012. Turnover grew
by 26% to £683m (2011: £543m) and profit before tax amounted to £28.1m (2011:
£26.2m). Earnings per share increased
31% to 16.01p (2011: 12.20p).
In consideration of the Group's current trading
performance, the Board recommends a final dividend of 0.89p per share (2011:
0.83p). If approved at the Annual
General Meeting to be held on 6 September 2012, this dividend will be payable
on 19 October 2012 to shareholders on the register at the close of business on
14 September 2012. The associated ex
dividend date will be 12 September 2012.
The significant growth in turnover reflects expansion
in both Jet2.com, the Group's
leisure airline and Jet2holidays, our package holiday business, which more than doubled its passenger numbers in the year. Profits in Leisure Airline fell, despite
capacity and load factor growth, mainly due to increased jet fuel prices which
we were not able to pass on to our customers.
Jet2holidays, which goes from strength to strength, recorded a
profit before tax of £2.5m on the back of a 140% increase in turnover. Our important and long-established
Distribution & Logistics business, Fowler Welch, improved operating
margins after a year of investment and restructuring in 2010/11 and returned a
profit before tax of £3.9m.
Capital expenditure for the year was £47.3m (2011: £68.0m),
which related principally to long term maintenance spend on aircraft and
engines, the acquisition of five 737-300 aircraft, and investment in
refrigerated trailers and site infrastructure at Fowler Welch. Net cash flow from operating activities
amounted to £94.5m (2011: £113.8m), reflecting principally lower growth in Jet2.com
forward bookings in line with lower 2012 capacity increases.
As at 31 March 2012, the Group's cash balance, including
money market deposits, was £152.0m (2011: £106.8m) at which point Jet2.com
had received circa £180m (2011: £135m) of advance payments from customers in
respect of future trips.
Leisure Airline and Package Holidays
Times are tough and money is short, but it seems that our
Northern UK customers are still keen to take their family holidays and visit
great leisure cities.
Over the past year we have carefully concentrated on building
our services to high volume leisure destinations, focussing on commercial and
political risk free Mediterranean and Canary Islands resorts and leading
leisure break cities. Over 60 summer
routes are now operated to Spain alone, the number one destination for UK
holiday makers.
In the year to 31 March 2012, Jet2.com operated 145
routes from our eight Northern bases to 49 destinations. We flew 4.3 million scheduled service
passengers and sold over 200,000 package holidays. We expect to increase our passenger numbers
by approximately 10% and to double the number of package holidays sold in the
current financial year. On 31 March 2011
we opened our eighth base at Glasgow airport, flying 7 routes for that summer
which has now grown to 14 routes for summer 2012. We also added 1 additional aircraft to both
our East Midlands and Newcastle bases and our first two 189 seat 737-800’s into
Manchester, enabling capacity growth.
Our high volume, seat-only business gives us a great
platform on which to develop our package holiday product. Jet2holidays packages together the
flight, transfer and hotel into one great value product, with over 65% of these
packages sold on an “all inclusive” (which includes all meals and beverages) or
“half board” basis. Our average package
holiday price is around £500 per person, a relatively large family purchase for
a sophisticated product which engenders a connection with the customer and
hopefully loyalty to the brand.
The certainty of spend that a fully inclusive package holiday
gives is very attractive in these difficult times. Our product continues to evolve with the
introduction of new family friendly hotels and free child places. We directly contract, and therefore have a
relationship with, over 1,200 hotels. We
have holiday reps in resorts – great service is an essential ingredient in
growing our customer focussed business.
Our flights offer “Friendly Low Fares” with family
friendly departure times, allocated seating, a 22kg baggage allowance and
loyalty points for free flights - We want a flight with Jet2.com to be a great
start to the leisure break. Our research
tells us that whether a customer buys a seat only or takes a package holiday
with us they generally return very satisfied and are likely to recommend us to
their family and friends. This enables
us to grow repeat business from our existing customers as well as welcoming new
customers through recommendation.
We devote great effort to knowing and better understanding
our customers, their needs and their future travel intentions. Using a bespoke data management system, we've
created a single customer view that enables us to target and personalise our
direct marketing campaigns and ensure they are timely and relevant. Using the latest e-mail and print technology,
as well as a programme of intelligent data mining and modelling, we've enhanced
all our direct customer communications to ensure they resonate, and we've seen
the success of this investment with much improved conversion rates.
And, whilst a customer's previous travel history is always a
great indicator of what they may do next, we've gone a step further by
enriching our data with a robust insight programme. This captures customer feedback on their
booking, ground and in-flight experience, as well as destinations, hotels and
future travel plans, all of which is used to help us further refine and enhance
our customer proposition.
Whilst the summer leisure business thrives, the winter has
grown progressively quieter as the economy has tightened. This has resulted in 80% of our leisure
travel turnover occurring in the 7 months from April – October. Ski destinations provide important winter
utilisation for our aircraft. However, volumes
in this sector have decreased, so our strategy of reducing our ski flight
frequencies and concentrating on weekend flights has proved sensible. We are pleased to introduce Grenoble as our 4th
dedicated ski destination for this winter.
Our innovative passenger charter sales group makes an
important commercial contribution to winter aircraft utilisation. They organise shopping trips to New York, fly
pilgrims to Jeddah for the Hajj and arrange flights for cruise, sports, ski and
corporate charter customers from across Europe.
This year we operated charters to destinations as far afield as Brazil,
Canada, Florida and Sri Lanka.
The Company has flown night mail flights for Royal Mail
since 1980, helping them to ensure First Class mail achieves next day delivery
throughout the UK. Under our current
contract, which commenced in 2004, we have operated 16 night mail flights each
weekday night with our Boeing 737 “Quick Change” aircraft, which have been
specially converted to be able to carry mail in containers, following the day's
passenger flights. Our last flight under
the present contract is in October 2014.
Royal Mail is tendering the contract during this financial year, with
the result expected in the first quarter of 2013.
We take a careful and considered view of expansion in our
Leisure Airline business, especially in the current economic climate. However, we are certainly optimistic for our
continued growth in the holiday market.
We hope to renew our contract with Royal Mail but, should that not be
possible, we believe that organic growth will compensate in terms of maintaining
the current level of employment and profitability.
Distribution & Logistics
In both good times and hard times Fowler Welch, our
important Distribution & Logistics business is always busy ensuring that
chilled and fresh foods are on supermarket shelves.
The business is one of the UK's leading, long established
companies in this field. It operates
from approximately one million square feet of owned temperature-controlled and
ambient distribution centres in Spalding, Lincolnshire; Teynham, Kent; and
Bury, Greater Manchester with smaller sites at Washington, Tyne and Wear;
Newton Abbot, Devon; Alconbury, Cambridgeshire and Portsmouth, Hampshire. In Holland, our European operation is our
gateway for produce and flowers from around the world.
Fowler Welch is a specialist business with long term relationships with
leading supermarkets and their suppliers, for whom we are proud to provide a
dependable and flexible logistics service.
Following a degree of reorganisation in the previous
financial year, I am pleased to say that turnover for the year to 31 March 2012
grew by 6%. Continuing operating
efficiencies have led to an improvement in operating margins, which is on-going
in the current year. Our container
haulage operations have been successfully downsized - the Felixstowe site was
closed and let out, with the business now being centred on a new site at
Alconbury, Cambridgeshire. These
operations are now making a positive contribution.
Our 50,000 pallet ambient consolidation centre ("the Hub") at Heywood near Bury,
Greater Manchester had a difficult period of initial trading and operations
when it was opened in 2010. The operations
at the site have now been streamlined resulting in a considerable improvement
in operational and financial performance over the last 12 months. This successful turnaround culminated with
the award from ASDA of “carrier of the year” in February 2012. A great achievement. Considerable new business has been secured
and in addition there is a strong pipeline of new clients for the future.
A new, small distribution centre at Newton Abbot, Devon, was
opened in July for TESCO, replicating a similar operation performed by Fowler
Welch at its Washington, Tyne and Wear site. We transport TESCO's products in double deck
trailers to Newton Abbot, where they are re-distributed in smaller loads for
delivery to TESCO express stores in the South West. This operation has consistently delivered
high service levels, although we need to build volumes to achieve significant
profitability. Encouragingly, we believe
that the region offers good potential for future further growth.
Our 25 acre Spalding distribution centre is the largest in
our business, with a long history of service in this key produce area. The site specialises in the storing, picking
and consolidation of fresh produce on behalf of importers and packers as well
as major food processors and manufacturers.
During the year there was a substantial increase in warehouse capacity
through re-development and this is now fully occupied following both contract
wins and increased business from existing customers.
As a supplier to the fast moving consumer goods (“FMCG”) sector, Fowler Welch reacts to
significant changing volumes constantly and sometimes within lead times of just
a few hours. The business has a
reputation for its ability to deliver in these circumstances and its IT systems
play a vital part in facilitating the necessary speed of decision making. We are committed to continually investing in
and developing our operational IT systems to ensure they are leading edge.
During the year, we both selected and implemented a new
fleet management software solution and upgraded our warehouse management
systems and associated hardware to ensure we have a robust and dependable IT infrastructure.
Fowler Welch is a great logistics business in a demanding but vital
market place. Our ability to invest,
together with its excellent facilities and long industry experience, coupled
with a determined management team, puts the Company in good shape for future
profitable growth.
Outlook
We plan to grow each of our businesses in the year
ahead. Fowler Welch has a number
of business development opportunities throughout its network and is benefiting
from recent wins in the North West. Jet2holidays
is set for further growth in the current year, with forward bookings at
encouraging levels. We have expanded Jet2.com's
flying programme by 10% for summer 2012, although margins remain challenging in
this sector.
We are encouraged both by these business opportunities and
by the start we have made to the current year but in the current economic
environment we are cautious in respect of profit growth.
Philip Meeson
Chairman
21st June 2012
