Final Results
Dart Group PLC
17 June 2004
For Immediate Release 17 June 2004
DART GROUP PLC
PRELIMINARY RESULTS FOR YEAR ENDED 31 MARCH 2004
Dart Group PLC, the aviation services and distribution group, announces its
preliminary results for the year ended 31 March 2004.
CHAIRMAN'S STATEMENT
I am pleased to report on the Group's trading for the year ended 31 March 2004.
Profit before tax, excluding goodwill amortisation, amounted to £9.0m (2003 -
£7.9m). Turnover was £228.2 m (2003 - £198.2m). Earnings per share before
the amortisation of goodwill were 17.91p (2003 - 15.78p). The Board is
recommending an unchanged final dividend of 4.26p, taking the total dividend for
the year to 6.11p (2003 - 6.11p). The dividend, if approved, will be payable on
20 August 2004 to shareholders on the register on 25 June 2004.
Capital expenditure amounted to £28.4m (2003 - £36.4m) and mainly related to the
expansion and upgrade of the Boeing 737-300 fleet.
Net borrowings at 31 March 2004 were £15.0m (2003 - £28.2m) which represents
gearing of 37% (2003 - 76%). The Group continues with its policy of matching
long-term US Dollar assets, namely Boeing 737-300 aircraft, with US Dollar
liabilities. Interest cover was 25.1 times (2003 - 8.5 times). The Group has
negligible exposure to rising fuel prices in the year to 31 March 2005 as its
fuel requirements are either substantially hedged or subject to pricing
adjustments with its contract customers.
The Group has continued to build its business-to-business services in both its
Aviation Services and Distribution Divisions. At the same time, considerable
energy is being put into the development of Jet2.com - our low cost scheduled
passenger airline business. The activities of the Group's two divisions are
more fully described in the Review of Operations that follows this statement.
Aviation Services
The Group now owns 14 Boeing 737-300 aircraft and is currently negotiating to
acquire further aircraft of the type for operation by Channel Express (Air
Services). Four of these are being converted to 'Quick Change' (QC)
configuration which allows the aircraft to be transformed from a passenger
carrier to a containerised freighter in less than 40 minutes. By the autumn
these aircraft will be operating for Royal Mail at night whilst flying passenger
charters during the day.
Seven Boeing 737-300 passenger aircraft are operating Jet2.com (a trading name
of Channel Express) low cost services to 11 European business and leisure
destinations primarily from Yorkshire's Leeds Bradford International Airport.
The company expects to carry in excess of 1 million passengers on these services
during the coming financial year and to progressively add further aircraft to
this fleet.
The low cost airline market is competitive and no doubt there will be some fall
out amongst the less experienced carriers. However, we believe that with Channel
Express' low operating cost base and our careful aircraft acquisition policy,
Jet2.com should succeed in this market. Our immediate focus is to continue to
build our operations in the North of England.
The agreement to operate Boeing 737-300QCs at night for Royal Mail also gives
the long term stability needed to enable Channel Express to develop its daytime
passenger charter business. These modern jet aircraft are replacing smaller
turboprop aircraft that the company has operated for Royal Mail for many years
and will, we believe, provide an efficient and reliable air service to this
important customer.
Channel Express also operates four Airbus A300B4 'Eurofreighters' primarily on
behalf of express parcel companies, flying packages nightly from the UK, Ireland
and Italy to and from these customers' European hubs. Three Fokker F27s operate
on behalf of freight forwarders and newspaper publishers. This is a successful
business which we are always seeking to develop.
I am also delighted to report the continued growth of Benair Freight
International, the Group's freight forwarder. The company continues to make a
valuable contribution to the Group's operations and its progress is encouraging.
Distribution
The Group's produce and horticulture distribution company, Fowler
Welch-Coolchain, based in Spalding, Lincolnshire, and Teynham, Kent, has had a
challenging year during which it has continued its restructuring in order to
reduce its operating costs. Unfortunately, the company was recently unsuccessful
in a re-tender by Sainsbury's for its UK primary produce and horticulture
distribution (from supplier to regional distribution centre). The loss of the
Sainsbury's business, which was carried out on a shared user basis, together
with pricing pressures in the Division's European and Channel Islands'
businesses will lower the Distribution Division's profits for the current year.
However, I am pleased to report that Fowler Welch-Coolchain's management is
enthusiastically working to replace the turnover, endeavouring to both increase
business with other existing customers and win new contracts.
The collection, sorting, storing and delivery of fresh produce and horticulture
remains an attractive, staple business and is important to the overall strength
of the Group. The resilience and experience of the Distribution Division's
management and operational teams gives us confidence that, despite these
difficulties, the longer term outlook for the division is encouraging and we
look forward to brighter days ahead.
Our Staff
Throughout the Group's operations, we are fortunate to have excellent teams of
hardworking and enthusiastic staff. The Group particularly prides itself on its
high standard of operations in demanding service businesses. Training and
health and safety are regarded as particularly important and we are fortunate to
have excellent support in both these areas from which we all benefit. I would
like to thank every member of our staff for their continuing contribution to the
Group's development and growth.
Outlook
As I stated last year, the business-to-business trading environment is very
price sensitive with each of our customers under their own profit pressures.
However, I believe that both the Aviation Services and Distribution Divisions,
with their increasingly competitive cost bases, are well placed to win new
business and improve profits.
I am pleased to report that current trading is in line with our budgets and that
I am cautiously optimistic for the year ahead.
Philip Meeson
Chairman 17 June 2004
For further information about Dart Group PLC and its subsidiary companies please
visit our website, www.dartgroup.co.uk
REVIEW OF OPERATIONS
Aviation Services
The Group has now taken delivery of 12 ex-Ansett Airlines of Australia Boeing
737-300 series passenger aircraft which have joined the two Boeing 737-300 Quick
Change (QC) aircraft previously purchased from Lufthansa. The ex-Ansett
aircraft were purchased at post-September 11, 2001 prices and should represent
excellent long-term investments.
Arrangements have been made with Israel Aircraft Industries (IAI) of Tel Aviv
for, initially, four of the ex-Ansett aircraft to be converted to freighter or
QC configuration. The Group holds options for a number of further conversions.
The remarkable QC concept allows the aircraft to be transformed from a very
smart passenger carrier to a containerised freighter in less than 40 minutes.
Two of these converted aircraft have now been re-delivered to us by IAI and have
joined our existing QC aircraft on nightly Royal Mail services.
The Royal Mail aircraft will be based at Stansted, Edinburgh, Belfast, Exeter
and Leeds Bradford airports allowing the company to build upon its already
successful daytime passenger programmes. The Stansted-based aircraft has a
well-established charter schedule whilst the two aircraft based in Edinburgh fly
on behalf of a Scottish airline. The Belfast and Leeds Bradford aircraft will
be flying Jet2.com services - the Belfast aircraft already operates services to
Prague. There is a growing demand from charterers for these attractive aircraft
and it is our belief that this is a good long-term business for the company.
The Boeing 737-300 is proving to be efficient and reliable and is able to meet
all current environmental legislation. The commonality of one type materially
improves aircrew and engineering efficiency and is certainly one of the keys to
delivering cost-effective and competitive services. We intend to expand the
Boeing 737 fleet to meet the demands of the freight and passenger contract
charter business and Jet2.com. We will take the opportunity to purchase where
pricing is attractive, or will lease aircraft from lessors if the costings work
for us.
Channel Express has, for some time, successfully operated four 45 tonne payload
Airbus A300B4 'Eurofreighters', two of which are owned by the Group, with two
leased in. These aircraft fly on behalf of two leading European overnight
express parcel delivery companies from Ireland, the UK and Italy to these
companies' hubs in Germany and Belgium. The two leased aircraft are contracted
by us from their owners on flexible terms to coincide with our commitments to
our customers. The aircraft currently meet existing noise regulations; however,
some airports are indicating that they will require operators to meet more
stringent noise standards, not yet generally in force, for night operations.
To achieve these, Channel Express has been working with the aircraft's
manufacturer, Airbus Industrie, and the engine manufacturer, General Electric
Aircraft Engines, to improve the aircraft's performance in this respect. The
outcome of this will be important to the company and should be known in the
fourth quarter of this year.
Channel Express also operates Fokker F27 freighter aircraft on behalf of Royal
Mail, newspaper publishers and on the company's scheduled services to the
Channel Islands. The Royal Mail requirement for containerised jet aircraft and
increased competition on freight services to the Channel Islands has led to the
retirement of two Fokker F27s during the year. The remaining aircraft provide
a valuable return to the company and it is hoped that they will continue in
service for a considerable time to come.
Channel Express, trading as Jet2.com, commenced low cost scheduled services to
Amsterdam from Leeds Bradford International Airport, Yorkshire, in February
2003. Services were increased that summer to include Alicante, Barcelona,
Malaga, Milan, Nice, Palma, Prague, and, in the winter, Geneva for skiing.
Reduced frequencies were operated during the winter with services to Milan
discontinued. Belfast, Faro, Murcia and Venice have been added this year with
all destinations being served daily or twice daily except Faro and Venice which
are served four times per week. On 29 April 2004, a service to Prague from
Belfast commenced using the Belfast-based Boeing 737 QC aircraft.
Jet2.com aims to give a comfortable, friendly service at the lowest possible
price with seating allocated at check in. The market is competitive with low
cost services also currently offered from Newcastle, Teesside, Manchester,
Liverpool and East Midlands all of which are within reach of our customers in
the North of England. Additionally, from 2005, low cost services will be
available from the former Finningley Air Force base near Doncaster. Faced with
this competitive market place, it is important that we make every effort to give
our customers a really low cost, friendly service from their convenient local
airport. Sales are supported by large-scale price led promotions via the
company's website, on local radio and poster sites, and in regional and national
press.
Jet2.com achieved a satisfactory load factor for the year to 31 March 2004 and
made a positive contribution to Channel Express after all costs and expenses.
Currently, 94% of the company's bookings are made via its website - please view
this at www.jet2.com.
The Group intends to build on this successful start to low cost services from
Leeds Bradford by increasing frequencies and destinations from that airport and
thereby consolidating Jet2.com's position in the North of England.
Through its Parts Trading division, Channel Express also supplies aircraft parts
both for its own operations and to other operators. Previously focusing on the
Airbus A300, the introduction of the Boeing 737-300 has given Parts Trading new
opportunities to support the type and it has played an invaluable role in the
aircraft's successful introduction into service.
Benair Freight International, the Group's freight forwarder, has offices located
at London Heathrow, Manchester, East Midlands, Newcastle and Singapore airports
together with a worldwide agency partner network. Benair, with its expertise in
air, sea and road freight, had a successful year with record sales and profits.
Progress was made in both the general freight and ornamental fish importing
and distribution businesses and in increasing its USA business with the
appointment of a dynamic new agent, with offices throughout the USA. It is also
encouraging to note the growth in the company's aircraft spare parts logistics
business where Benair has an increasing number of aviation customers.
Distribution
The temperature-controlled distribution market continues to grow with the
volumes of produce, horticulture, chilled foods and beverages expected to
increase faster than frozen foods for the foreseeable future.
The Group's temperature-controlled distribution business, Fowler
Welch-Coolchain, was formed by the merger of Fowler Welch, based in Spalding in
Lincolnshire, and Coolchain, based in Teynham and Paddock Wood in Kent. The
Lincolnshire region is largely a produce growing area within which several
leading chilled prepared foods suppliers, who are customers of the company, are
also based, whilst Kent is, of course, traditionally the centre of the country's
fruit growing and packing industry. Today, both are also focal points for the
importation, storage, packing and distribution of produce and fruit.
Fowler Welch-Coolchain is well positioned to serve these markets. The company
has extensive temperature-controlled facilities at both Spalding and Teynham, a
large fleet of modern distribution vehicles and an experienced workforce.
During the 1990s, the supermarkets progressively took control of their logistics
supply chains from their suppliers in order to gain economies of scale and
greater distribution efficiency. Consequently, whilst in the early 1980s up to
20 companies might tender for supermarket distribution contracts - today,
following a period of consolidation in the temperature-controlled distribution
industry, this has reduced to three or four. Fowler Welch-Coolchain's main
customers have been Tesco, Sainsbury's and Safeway. We hope that the
acquisition of Safeway by Morrisons earlier this year will offer Fowler
Welch-Coolchain new opportunities with this highly successful retailer whose
business has, thereby, dramatically expanded.
Fowler Welch-Coolchain's services are operated on a shared user basis with
common collections from suppliers and common use of its facilities, thereby
providing a cost-effective UK distribution service to the supermarkets' regional
distribution centres and sometimes direct to store.
Needless to say, there are continual pricing pressures when working for these
competitive customers, although volumes handled have also progressively
increased. Service levels are demanding, with peaks at Easter, during the
summer months, when the consumption of salads and fruit is at its highest, and
pre-Christmas. Servicing such peaks is, of course, challenging and expensive,
particularly at Christmas. Consequently, the control of costs has been and
continues to be a major challenge to the company, whilst delivering promised
standards throughout the year. During the past financial year, Fowler
Welch-Coolchain has increased its business with Tesco, entered into formal
contracts with Safeway for produce distribution in the UK and to the Channel
Islands and has been in a continuous dialogue about the level of and terms under
which future business with Sainsbury's would be undertaken.
Unfortunately, having recently been awarded considerable extra Sainsbury's
business in the Cambridgeshire area, this customer re-tendered its national
produce and horticulture distribution and Fowler Welch-Coolchain was
unsuccessful in retaining it. Regrettably, therefore, our business with
Sainsbury's for the distribution of their produce and horticulture products will
cease on 3 July 2004.
Fowler Welch-Coolchain has also seen increasing competition in its European
division which resulted in the loss of a major customer. However, this has
largely been offset in volume terms by the gain of significant business from
American Airlines. This leading airline has contracted Fowler Welch-Coolchain
to transport large volumes of produce and horticulture from Holland to its main
hubs at London's Heathrow and Gatwick airports from where it is flown to the USA
for onward distribution. We are very pleased to be working with American
Airlines and hope to grow our business with them and other leading importers of
produce in the years ahead.
The distribution of imported fresh produce is likely to be of increasing
importance to the company as its supermarket customers progressively source from
abroad, either direct from growers or via co-operatives. Considerable
opportunities exist for Fowler Welch-Coolchain to build upon the volumes of
produce and fruit that it transports direct from the major growing areas in
mainland Europe. This European capability, together with the company's
strategically positioned UK storage facilities and distribution network, offers
real opportunities for growth in this sector.
Fowler Welch-Coolchain has taken the opportunity to expand its services from UK
deep water ports with the haulage of containers of produce to supermarket
suppliers, who import, process and package produce and fruit. This is seen as
an important area for growth for the company. An office has recently been opened
at the Port of Bristol to service its increasing number of inbound fruit ships.
The company also recently renewed its contract to distribute Canary Islands
fresh produce imported through the port of Southampton. This represents a
considerable volume of business between October and May.
Channel Express (CI) provides air and sea services to and from Guernsey and
Jersey. The traditional Channel Islands industries of flower and produce
growing are in decline and, consequently, volumes in these sectors are reducing.
However, they are being replaced by increasing amounts of horticultural
products, health foods and other goods exported as a result of the Islands'
vibrant mail order business. It is also encouraging to report that Channel
Express (CI) is working closely with its sister company, Benair, to provide a
one stop shop for the import and export of international freight to and from the
Islands.
For further information contact:
Dart Group PLC Tel: 01202 597676
Philip Meeson,
Group Chairman and Chief Executive Mobile: 07785 258666
Mike Forder,
Group Finance Director Mobile: 07721 865850
Group Profit And Loss Account
for the year ended 31 March 2004
Notes 2004 2003
£'000 £'000
Turnover
Continuing operations 1 228,200 198,176
Net Operating Expenses
Continuing operations, excluding goodwill amortisation (219,195) (189,354)
Goodwill amortisation (497) (497)
Total continuing operations (219,692) (189,851)
Operating Profit
Continuing operations, excluding goodwill amortisation 9,005 8,822
Goodwill amortisation (497) (497)
Total continuing operations 8,508 8,325
Profit on disposal of fixed assets (continuing operations) 365 82
Net interest payable (353) (989)
Profit on ordinary activities before taxation 8,520 7,418
Taxation (2,868) (2,499)
Profit on ordinary activities after taxation 5,652 4,919
Dividends (2,099) (2,094)
Retained profit for the year 3,553 2,825
Earnings per share
- basic 4 16.46p 14.33p
- basic, excluding the amortisation of goodwill 4 17.91p 15.78p
- diluted 4 16.43p 14.27p
Statement of Total Recognised Gains and Losses
2004 2003
£'000 £'000
Profit on ordinary activities after taxation 5,652 4,919
Exchange (loss)/gain on foreign equity investment (63) 8
5,589 4,927
Balance Sheets
at 31 March 2004
Group Company
2004 2003 2004 2003
Note £'000 £'000 £'000 £'000
Fixed assets
Intangible assets 7,780 8,277 - -
Tangible assets 75,264 73,484 78,915 66,264
Investments - - 20,671 18,279
83,044 81,761 99,586 84,543
Current assets
Stock 2,216 2,452 - -
Debtors 31,221 31,043 3,731 5,783
Cash at bank and in hand 13,362 6,940 3,004 3
46,799 40,435 6,735 5,786
Current liabilities
Creditors: amounts falling due
within one year (55,793) (48,496) (61,021) (42,082)
Net current liabilities (8,994) (8,061) (54,286) (36,296)
Total assets less current liabilities 74,050 73,700 45,300 48,247
Creditors: amounts falling due after
more than one year (25,093) (30,444) (24,943) (30,364)
Provision for liabilities and charges (8,293) (6,112) (8,145) (5,778)
(33,386) (36,556) (33,088) (36,142)
Net assets 40,664 37,144 12,212 12,105
Capital and reserves
Called up share capital 1,718 1,716 1,718 1,716
Share premium account 7,702 7,674 7,702 7,674
Profit and loss account 31,244 27,754 2,792 2,715
Shareholders' funds - equity interests 2 40,664 37,144 12,212 12,105
Group Cash Flow Statement
for the year ended 31 March 2004
2004 2003
Note £'000 £'000
Net cash inflow from operating activities 3 36,111 33,713
Returns on investment and servicing of finance (551) (989)
Taxation (506) (2,283)
Capital expenditure and financial investment (26,019) (36,209)
Equity dividends paid (2,099) (2,094)
Cash inflow/(outflow) before financing 6,936 (7,862)
Financing (2,471) 13,734
Increase in cash in the year 4,465 5,872
Reconciliation of net cash flow to movement in net debt
Note 2004 2003
£'000 £'000
Increase in cash in the year 4,465 5,872
Cash outflow/(inflow) from decrease/(increase) in net debt in
the year 2,501 (13,719)
Change in net debt resulting from cash flows 6,966 (7,847)
Exchange differences 6,169 2,183
Net debt at 1 April (28,167) (22,503)
Net debt at 31 March (15,032) (28,167)
1. Turnover
2004 2003
£'000 £'000
Distribution 112,076 119,154
Aviation Services 116,124 79,022
228,200 198,176
Turnover arising within:
The United Kingdom and the Channel Islands 222,804 192,072
Mainland Europe 4,368 5,077
The Far East 1,028 1,027
228,200 198,176
Turnover to third parties by destination is not materially different to that by
source and relates to continuing activities.
Analyses of profit before taxation and net assets between the different segments
of the Group are not given as, in the opinion of the directors, such analyses
would be seriously prejudicial to the commercial interests of the Group.
2. Reconciliation of movements in shareholders' funds
Group Company
2004 2003 2004 2003
£'000 £'000 £'000 £'000
Profit for the year 5,652 4,919 2,179 2,357
Dividends (2,099) (2,094) (2,099) (2,094)
3,553 2,825 80 263
Currency translation differences (63) 8 (3) 5
Issue of shares under share option schemes 30 15 30 15
Net addition to
shareholders' funds 3,520 2,848 107 283
Opening shareholders' funds 37,144 34,296 12,105 11,822
Closing shareholders' funds 40,664 37,144 12,212 12,105
3. Reconciliation of operating profit to net cash flow from operating
activities
2004 2003
£'000 £'000
Operating Profit 8,508 8,325
Depreciation 18,759 15,341
Amortisation of goodwill 497 497
Decrease in stock 236 55
(Increase) in debtors (309) (1,164)
Increase in creditors 8,480 10,651
Exchange differences (60) 8
Net cash inflow from operating activities 36,111 33,713
4. Earnings per share
The calculation of basic earnings per share is based on earnings
for the year ended 31 March 2004 of £5,652,000 (2003 - £4,919,000) and on
34,344,692 shares (2003 - 34,323,441) being the weighted average number of
shares in issue for the year.
The calculation of basic earnings per share, excluding the
amortisation of goodwill, is based on earnings of £6,149,000, as calculated
below, for the year ended 31 March 2004 (2003 - £5,416,000) and on
34,344,692 shares (2003 - 34,323,441) being the weighted average number of
shares in issue for the year.
2004 2003
£'000 £'000
Profit on ordinary activities after taxation 5,652 4,919
Amortisation of goodwill 497 497
6,149 5,416
The diluted earnings per share is based on earnings for the year ended 31 March
2004 of £5,652,000 (2003 - £4,919,000) and on 34,403,760 ordinary shares (2003 -
34,464,530) calculated as follows:
2004 2003
000's 000's
Basic weighted average number of shares 34,345 34,323
Dilutive potential ordinary share:
Employee share options 59 142
34,404 34,465
5. The financial information for the years ended 31 March 2003 and
2004 does not constitute statutory accounts, as defined in Section 240 of
the Companies Act 1985, but is based on the statutory accounts for the
years then ended. Statutory accounts for the year ended 31 March 2003, on
which the auditors issued an unqualified opinion pursuant to Section 235 of
the Companies Act 1985, have been filed with the Registrar of Companies.
Statutory accounts for the year ended 31 March 2004, on which the auditors
issued an unqualified opinion pursuant to Section 235 of the Companies Act
1985, will be filed with the Registrar of Companies in due course.
6. The proposed final dividend of 4.26 pence per share will, if
approved, be payable on 20 August 2004 to shareholders on the Company's
register at the close of business on 25 June 2004.
7. The 2004 Annual Report and Accounts (together with the Auditors
Report) will be posted to shareholders on 12 July 2004. The Annual General
Meeting will be held on 5 August 2004.
This information is provided by RNS
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