Final Results

RNS Number : 9501I

Dart Group PLC

23 June 2011

 



DART GROUP PLC

PRELIMINARY UNAUDITED RESULTS FOR YEAR ENDED 31 MARCH 2011

Dart Group PLC (the 'Group'), the Aviation and Distribution Group, announces its preliminary results for the year ended 31 March 2011.  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 2011.  Group turnover increased to £543m (2010: £435m) and profit before tax amounted to £26.2m (2010: £22.2m) with earnings per share of 12.2p (2010: 11.1p).  Underlying profit before tax and before specific IAS 39 fair value movements was £25.9m (2010: £19.1m).

In consideration of the Group's current trading performance, the Board recommends a final dividend of 0.83p per share (2010: 0.75p).  If approved at the Group's Annual General Meeting to be held on 8 September 2011, this dividend will be payable on 21 October 2011 to shareholders on the Group's register at the close of business on 16 September 2011.  The associated ex-dividend date will be 14 September 2011.

Profitability increased in Aviation, primarily due to increasing load factors, but decreased in Distribution, due to start-up costs at its new North West distribution centre and the rationalisation of its container operations.

Capital expenditure for the year was £68.0m (2010: £32.1m).  This expenditure related principally to long term maintenance spend on aircraft airframes and engines and the freehold acquisition of the distribution centre at Heywood, near Manchester, "the Hub".  Net cash flow from operating activities amounted to £113.8m (2010: £73.2m), driven principally by improved forward bookings at Jet2.com and Jet2holidays, the Group's ATOL bonded tour operator.

As at 31 March 2011, the cash position amounted to £106.8m (2010: £52.2m), including money market deposits, at which point Jet2.com had received circa £135m of advance payments from customers in respect of future flights.

Aviation

Our strategy is to understand and meet the holiday needs of our Northern based customers.  We fly carefully scheduled flights to high volume leisure destinations, offering "friendly low fares" to seat only customers and "package holidays you can trust" to Jet2holidays' customers. 

Both products meet the demand for real value in these difficult and uncertain economic times.  Higher utility prices, the rising cost of food and fuel, and employment uncertainty, are all taking their toll on leisure spend.  Both our seat only and package holiday products are absolutely geared to meet the holiday needs of value seeking customers.

To ensure we continue to deliver the right product, we are working hard to build our customer data capture and analysis capabilities which, coupled with our substantial in-house IT development expertise, means that we can progressively improve the tailoring of our leisure products, both seat only and packages, to meet our customers' needs, both present and future.  Customer demand will lead our strategy - understanding the needs of our customers is key and we believe we are making great progress along this exciting and interesting path.

Aviation revenues rose by 28% as a result of increased passenger volumes and the growth of Jet2holidays. This revenue growth was achieved despite the disruption to Jet2.com's flying programme caused by the eruption of volcano Eyjafjallajӧkull in April and May 2010, which resulted in the cancellation of over 400 flights.  The overall profit impact as a result of this disruption is estimated at £3m, comprising refunded flight revenues, compensation claims and the repatriation of customers who were stranded overseas, together with an estimate of lost revenues, offset by variable operating cost savings on cancelled flights.  In January 2011, we reluctantly took the decision to cease services to Sharm El Sheikh, Hurghada and Tunisia due to political unrest, re-directing the capacity to Western Mediterranean resorts.

During the financial year the company flew 135 routes from its Northern bases to 51 destinations.  Our unique proposition of "great flight times", "22 kg baggage allowance", "allocated seating" and "loyalty points for free flights" helped us to raise our overall load factor to 85% (2010: 80%).  In March 2011 we commenced operations from our eighth Northern base, Glasgow, with services to nine popular sun destinations.  This contributed to a 26% overall increase in network seat capacity for summer 2011. 

We are particularly pleased to report the progress of Jet2holidays which is gaining encouraging sales momentum.  We carried nearly 98,000 of our own package holiday customers on our flights during the past year, and we are now working to double that number for the current financial year. 

Our packages encompass the flight, transfer and accommodation, with "3 star" and "4 star", "half board" and "all inclusive" packages being the top sellers.  The company now has over 800 directly contracted hotels in leading Eastern and Western Mediterranean resorts.  We are determined to develop these relationships further in order to deliver our "best value" product.  There are major opportunities to cross sell between our flight only and package holiday customers and we look forward to the continued growth of both.

Tremendous progress continues to be made with the development of our in-house sales and reservation systems for both Jet2.com and Jet2holidays.  Our industry leading IT team has enabled us to build a fast and very customer friendly sales platform for both our flight only and package products.  Our revenue and IT teams work closely together to deliver additional customer focussed services including choice of seating, meals, onboard entertainment and car hire.  Together, these yielded £25.39 in additional retail revenue per passenger during the last financial year (2010: £21.12).  Both Jet2.com and Jet2holidays revenues will benefit from our continued IT innovations and associated retail product developments. 

As we build our customer focussed leisure brand, information on all customer purchases and trends is constantly being gathered from bookings, questionnaires, surveys and focus groups.  This is collated by our data management team and forms the basis of our continually evolving future strategy.  Overall we believe we have the right formula of innovation and differentiation for continued development and success in a tough and competitive trading environment.

Distribution

The Group's leading logistics business Fowler Welch, which specialises in the distribution of chilled and ambient foods on behalf of leading supermarkets and their suppliers, has experienced challenges during a year of considerable growth and development.  Our new 50,000 pallet capacity Heywood distribution centre, the Hub, which is located near Bury on the M62, north of Manchester, was opened with its enhanced facilities, IT infrastructure and layout alterations, all being ready for business prior to Christmas.  However, a combination of factors led to operational challenges and higher than anticipated operating costs in the initial months to ensure that customer service was protected.  These early development issues have now been resolved.  The Hub is now set to become the focal point for our ambient business with a strong sales pipeline and improving financial performance.  There are very significant opportunities for growth at this site over the coming years. 

Overall our distribution revenues grew by 18% year on year, as a result of both new business wins and additional volumes, although operating margins have suffered from increased costs.  Our Washington, Kent, South Coast and European operations each performed satisfactorily, although margins remained under pressure.  Our main Spalding distribution centre had a more challenging period of trading and a weaker financial performance.  Fowler Welch was careful to protect customer service at the expense of contribution in a challenging period of trading.  The outcome of this has been the securing of additional business, as a direct result of the achievement of generally satisfactory service levels, especially during the very severe weather disruption during the Christmas trading period.

Fowler Welch (Containers) Limited (formally Bawdsey Haulage) experienced difficult trading conditions in the container market, which led to the review and subsequent closure of our container operation in Felixstowe, whilst retaining a significant presence in the container market at our Kent, Spalding and Alconbury sites.  Although reduced in scale, Fowler Welch (Containers) will retain the ability to provide a full service to its customers.

Following the success of our Tesco Express store distribution operations from Washington in the North East, we are delighted to have secured the business to develop a similar distribution operation to service Tesco's smaller stores in the South West.  A newly leased site in Newton Abbot, Devon, will come on stream in the first half of this financial year to service Devon and Cornwall.  We expect this to be the basis of further business expansion in the South West. 

Considerable progress is being made in developing IT infrastructure across the business.  The efficient Manhattan warehouse system has been fully implemented, yielding significant operational improvements.  Further work is now being carried out to choose a solution to upgrade our transport management capabilities in this financial year, thereby giving greater transparency for managing fleet resources and enhancing the service we offer to our customers.  The investment in fleet telemetry and management, coupled with the continual selection of increasingly efficient vehicles and the expansion of our double-deck trailer fleet, will generate both fuel savings and operating efficiencies and further improve our carbon footprint.

Over the past few years, the company has significantly expanded its operations, widening its customer base and building a considerable position in the ambient distribution market, alongside its leading chilled distribution operations.  We are now taking the opportunity to strengthen the senior management team in order that we fully capitalise on the potential of our distribution infrastructure, network, expertise and our reputation.

Our Staff

I believe we all understand and appreciate the financial challenges being experienced by our customers.  To succeed in these difficult times, we have to deliver the best possible service at the lowest possible price.  Fowler Welch, Jet2.com and Jet2holidays each depends on our customers' satisfaction for continuing and, hopefully, increasing business.  I count on everyone's support in delivering this together in the coming months.

Outlook

We hope to grow both our businesses in the year ahead, despite the continuing uncertain economic climate.  Fowler Welch has significant business development opportunities throughout its operations and particularly, of course, in the North West.  We have expanded our leisure airline for summer 2011 with four additional aircraft, a new base at Glasgow and a growing package holiday programme.

Both businesses have started the year reasonably satisfactorily, although we expect these challenging economic conditions to continue to impact on yields in the Aviation sector for the foreseeable future.

Philip Meeson

Chairman

 

23 June 2011

 

BUSINESS AND FINANCIAL REVIEW

The Group comprises two principal operating businesses, Aviation and Distribution, which trade in separate market segments.

2010/11 performance

The Group's financial performance for the year to 31 March 2011 is reported in line with International Financial Reporting Standards (IFRS), as adopted by the EU, which were effective at 31 March 2011.

Underlying Group profit before tax increased from £19.1m to £25.9m in the year ended 31 March 2011, reflecting an improved trading environment for the Group's Aviation operations and a year of investment in Fowler Welch, the Group's logistics business.  Overall turnover increased by 25%, with growth in both businesses, including the establishment of an additional base for Jet2.com at East Midlands airport and business wins in Fowler Welch.  Underlying EBITDA of £64.2m (2010: £52.6m) is up 22% on last year, driven by both overall business growth and improved load factors in the Aviation operations.

The Group's effective tax rate for the year of 34% (2010: 30%) is higher than the headline corporation tax rate as a result of the impact of the acquisition of our new North West property on our deferred tax liabilities.

The Group generated net cash inflows of over £54m in the year, resulting in a positive net cash position, including money market deposits, of £106.8m (2010: £52.2m) as at 31 March 2011.  The Group's cash generation was principally driven by the Aviation division which saw an increase in forward bookings in the latter part of the year, reflecting the 26% expansion of the summer programme.  Capital expenditure increased from £32.1m to £68.0m in the year, driven by both a significant increase in long term aircraft maintenance expenditure, with an above average number of engines falling due for overhaul in the year, and the acquisition of "the Hub", Fowler Welch's new North West distribution centre.

The Group's balance sheet continued to strengthen, driven by both profit performance in the year and cash generation from advance bookings.  The resultant increase in shareholders' equity, the improved cash position and the increase in non-current assets are the principal changes in the balance sheet from the previous year end.  The business continues to be funded in part by customer payments received in advance of flights and holidays taken.  The deferred revenue growth reflects stronger customer forward booking performance for the forthcoming summer relative to the previous year.

Segmental performance

Aviation

The Aviation division comprises the Group's leisure airline, tour operation and associated commercial activities, trading under the Jet2.com and Jet2holidays.com brands.  The Company operates 24 Boeing 737-300 aircraft, including eight Quick Change aircraft, twelve Boeing 757-200 aircraft, and two Boeing 737-800 aircraft from its home base of Leeds Bradford International Airport, and Belfast, Blackpool, East Midlands, Edinburgh, Glasgow, Manchester and Newcastle airports.

Jet2.com added two leased Boeing 757-200 aircraft and two leased Boeing 737-800s to the fleet towards the end of the financial year to enable the development of Glasgow as a new base and the expansion of East Midlands, Manchester, and Newcastle operations.

The Aviation division is supported by a number of revenue streams.  Seat only sales represent the majority of aviation revenues, sold direct over the internet, via the high street and online travel trade.  Seats are also sold in the form of allocations to third party tour operators.  The business also derives significant revenues from its whole plane passenger charters and its contract with Royal Mail for the overnight transportation of UK first class mail utilising the Group's Quick Change aircraft.  An increasing proportion of airline seats are now sold as part of a holiday package by the Group's ATOL bonded tour operator Jet2holidays.

During the year ended 31 March 2011 we carried over 3.6 million scheduled and charter passengers, with more than 5% of these having purchased a Jet2holidays package.

The Aviation division saw improved financial performance, despite the eruption of the Eyjafjallajӧkull volcano in April and May 2010, which impacted profitability by circa £3m.  In particular we saw increased customer demand for both flights and packages in the summer months, enabling higher load factors to be achieved across the network.  Our seventh UK base, East Midlands, contributed profitably to this performance with an initial programme of seven routes.  Winter performance suffered as a consequence of reduced demand for ski trips and by the cancellation of all flying to Tunisia and Egypt from February onwards.  Aviation PBIT increased by 84% to £23.4m with a 28% increase in revenue to almost £400m.  Overall, costs increased by 25%, reflecting a combination of business growth, increasing fuel costs and the continued weakness of sterling.

During the year, Jet2.com continued its careful development of the scheduled airline network, expanding the programme from Newcastle and Manchester, largely by adding flights to tried and trusted Jet2.com destinations.  New destinations added to the network in 2010 were Madeira, Monastir, Bergerac, Kos, Gran Canaria and Reus.  35 new routes were added in total from our Northern bases, including seven winter routes.

Overall scheduled airline seat capacity was increased by 7% in the year ended 31 March 2011.  This careful route and capacity management, coupled with some improvement in customer demand, resulted in load factors increasing to 85% (2010: 80%), with yields also increasing to £52.42 from £48.69 in the previous year.

Load factor performance was underpinned by the ongoing development of the airline's yield management system and by the sale of seat allocations to third party tour operators, particularly on newer routes.  The loyalty programme continues to prove popular with our customers, with over 330,000 customers now having earned points towards free Jet2.com flights.

Retail revenues continue to be a very important source of income for the leisure airline business, allowing low fares to be maintained.  Retail revenue per passenger increased from £21.12 to £25.39 in 2010/11, this being generated from a number of sources including hold baggage charges for a sector leading 22kg weight allowance, online seat assignment, extra leg room seats, on board sales, and commissions on car hire.  Customers can both pre-order hot meals and watch the latest movie releases on board.  Using our customer information analytics capability, we are able to target customers through pre-departure communications in a very tailored way to generate additional retail sales. 

The business devotes considerable in-house IT resources to develop its airline and holidays reservation systems to improve the booking experience for customers and optimise retail revenues.  In the last quarter of the year, unique visitors to the Jet2holidays.com site increased by 50% year on year with a 31% increase in Jet2.com site visitors.  The Jet2.com reservation system has also been enhanced to offer customers the opportunity to acquire bundles of optional retail products at discounted pricing.  We provide the travel trade with a bespoke link to the Jet2.com reservation system to facilitate flight bookings.

Jet2.com's passenger and freight charter operations increased revenues by 9% in the year.  The passenger charter activity provides flights for many different end users, including tour operators, specialist holiday providers, the MoD, and in support of promotional, sporting and other events, enabling the business to improve utilisation of aircraft outside peak periods.  We operated over 800 passenger charter flights during the year including taking over 2,000 Fulham supporters to the Europa Cup final in Hamburg in May 2010 and 20 Hajj flights to Jeddah in October and November.  The Royal Mail contract, for which night mail flights are undertaken every weekday from six UK airports, continues to be serviced with industry leading punctuality, enabling the Royal Mail to meet its universal service obligation. 

Jet2.com continued to improve fuel efficiency during the year, with a programme aimed at reducing both fuel burn and associated emissions.  The company has a significant checklist of actions, which include efficient aircraft loading, route optimisation, and lower aircraft flying speeds, supported by the flight planning system and supplemented by ongoing engineering activity.

In order both to save costs, and improve customer service, we brought customer handling in-house at Manchester for summer 2010, with Blackpool and Newcastle following for summer 2011.  We are also now undertaking all the passenger handling operations for our customers at Alicante airport, our fourth self handling base in Spain, the others being Malaga, Murcia and Palma. 

Jet2holidays, the package holiday arm of the Aviation business grew significantly with almost 98,000 package holidays customer departing in the year, all on Jet2.com flights, a 52% increase on the previous year.  In order to improve the product range, pricing and the quality of the offering to our customers, the vast majority of accommodation is now secured directly with carefully chosen hotels by our in-house contracting team.

The Jet2holidays.com website is continually being developed to improve the quality of both the customer and the trade booking experience which has resulted in significantly higher conversion levels year on year.  The business also introduced a more sophisticated yield management tool in order to facilitate much more tailored holiday pricing.  During the year, we secured a distribution agreement with both the Co-operative Travel Group and TUI to sell Jet2holidays through their retail outlets.  Our in-house call centre and direct bookings made through online travel trade sites are also important elements of the distribution mix. 

Distribution

The Group's distribution business, Fowler Welch, is one of the UK's leading logistics providers serving UK retailers, importers and manufacturers.  The business operates from twelve strategically located distribution centres and offers a range of logistics solutions including storage, case pick-to-order and national distribution of both temperature-controlled and ambient products.

In May 2010, the business completed the purchase of a 500,000 sq. ft. freehold distribution centre on 22 acres of land in Heywood, Greater Manchester.  The acquisition of these premises, the Hub, increased our stockholding capacity within our ambient business from circa 17,000 to 50,000 pallets.  Further space is available at this site for the development of temperature-controlled storage, enabling the provision of a chilled distribution facility in the North West should customers require it.

The company has built its reputation around a flexible service offering that meets the strict time-sensitive and multi-temperature supply chain requirements of UK retailers.  On a daily basis, Fowler Welch collects suppliers' products, which are then consolidated with product picked from stock holding in the Company's warehouses before delivery.  This activity has increased in the year to approximately 1.5 million cases of various fast moving consumer goods handled on a weekly basis.

Overall, Fowler Welch operating profit reduced by £4.6m year on year principally as a result of relocation to the Hub, reduced operating efficiency, and weakness in the container market, leading to closure of the Felixstowe site.  The switch to the Hub during the year impacted profitability by circa £2m as a result of both one-off dual running costs and the step-up in the cost base associated with this larger facility.  Elsewhere in the network, operational efficiency was impacted by the reduced availability of sub-contractors and increased short term vehicle hire costs. 

The container market proved challenging throughout the financial year, with reduced volumes seen across all ports and over capacity in the marketplace which led, inevitably, to a softening of distribution rates and a significant downturn in the trading position of our container operations.  Since the year end, the decision has been taken to close our Felixstowe site whilst retaining significant customer volumes which will be serviced through our Kent, Spalding and Alconbury operating bases.

Distribution revenue increased by 18% in the year through a combination of growth with existing customers and substantial new business wins.  In particular, we continued to increase the volume of deliveries for Tesco's smaller store formats from our Washington site, and have added ambient delivery volumes with both Asda and Morrisons.  Fowler Welch also gained considerable new business and volume growth from a number of leading food producers.

Overall our vehicle fleet increased 15% to 391 vehicles, with additional vehicles being added to the majority of sites reflecting increased volumes and a reduction in sub-contractor availability.  Driver numbers increased to 596 from 497 in the previous year.  The trailer fleet remained static at circa 600 as we improved the tractor to trailer ratio.  We have taken the decision to purchase a significant proportion of our refrigerated trailer fleet in the future and commenced this programme with a purchase of 30 trailers in January 2011.  

During the year, the company focused its infrastructure investment on the Hub, which included the establishment of a fuel bunkering facility, vehicle wash, further loading bays and the implementation at this site of the Manhattan warehouse management system.  The Hub was fully operational in time for Christmas after which the previous leasehold Stockport site was decommissioned.  Significant work was undertaken in the remainder of the year to maximise the operational efficiency of this site.

Fowler Welch continues to maximise CO₂ efficiency through a combination of investment in vehicle telemetry, which has increased overall fleet visibility and control to reduce empty running; deployment of double deck trailers; and further optimisation of vehicle journey length.  Our fleet replacement programme for both tractor and trailer units continues to evaluate the marketplace to ensure the optimum fuel efficient equipment is procured including EURO VI specification tractor units, further improving the business' carbon footprint.

The business has continued to promote a culture of green action and awareness across all activities. For example, the division has made substantial investments in new warehouse doors and loading bays which deliver increased thermal efficiency and lower energy costs for chilled warehouse operations.  Ongoing driver training continues across all sites, encompassing regular defensive driver assessments that in turn deliver fuel efficiency improvements.  

The additional warehousing capacity secured and the company's growing reputation as a quality, low cost end-to-end service provider, offering national as well as regional solutions, will enable the business to continue to grow organically through existing and new customer relationships.  Following the investment in the last twelve months, profitability in our Distribution business is expected to improve in the year to 31 March 2012.

 

www.dartgroup.co.uk

Enquiries:

Philip Meeson, Chairman	Mobile: [phone]
Andrew Merrick, Group Finance Director	Mobile: [phone]
Andy Pedrette / Siobhan Sergeant Smith & Williamson Corporate Finance Limited	020 7131 4000

For further media enquiries:

Contact the Press Office on 0113 243 1355 or email [e-mail] 

 

Consolidated Group Income Statement

for the year ended 31 March 2011

		Unaudited Year ended 31 March 2011			Audited Year ended 31 March 2010
		Results before specific fair value movements	Specific fair value movements (1)	Results for the year	Results before specific fair value movements	Specific fair value movements (1)	Results for the year
Continuing operations		£m	£m	£m	£m	£m	£m
Turnover		542.9	-	542.9	434.5	-	434.5
Net operating expenses		(516.3)	0.3	(516.0)	(415.1)	3.1	(412.0)
Operating profit		26.6	0.3	26.9	19.4	3.1	22.5
Finance income		1.3	-	1.3	1.9	-	1.9
Finance costs		(2.0)	-	(2.0)	(2.4)	-	(2.4)
Net financing costs		(0.7)	-	(0.7)	(0.5)	-	(0.5)
Profit on disposal of fixed assets		-	-	-	0.2	-	0.2
Profit  before taxation		25.9	0.3	26.2	19.1	3.1	22.2
Taxation		(8.8)	(0.1)	(8.9)	(5.6)	(1.0)	(6.6)
Profit for the year (all attributable to equity shareholders of the Parent)		17.1	0.2	17.3	13.5	2.1	15.6
Earnings per share (2)
- basic				12.20p			11.06p
- diluted				11.68p			10.62p
Non-GAAP measures
Underlying earnings per share (3)
- basic		12.03p			9.54p
- diluted		11.52p			9.17p

(1) In order to assist the reader to understand the underlying business performance, the Group discloses separately within the income statement specific IAS 39 fair value movements. (refer to Notes to the Group Financial Statements Note 2 "Basis of Preparation").

(2) Earnings per share is calculated in accordance with IAS 33, 'Earnings per share'.

(3) Underlying earnings per share excludes specific IAS 39 fair value movements.

 

Consolidated Group Statement of Comprehensive Income

for the year ended 31 March 2011

	Year ended 31 March 2011 Unaudited £m	Year ended  31 March 2010 Audited £m
Profit for the year	17.3	15.6
Exchange differences on translating foreign operations	-	-
Effective portion of fair value movements in cash flow hedges	21.3	10.6
Net change in fair value of effective cash flow hedges transferred to profit	-	0.1
Taxation on components of other comprehensive income	(5.3)	(3.0)
Other comprehensive income and expense for the period, net of taxation	16.0	7.7
Total comprehensive income for the period all attributable to owners of the parent	33.3	23.3

 

Consolidated Group Balance Sheet

at 31 March 2011

	Unaudited 2011	Audited  2010
	£m	£m
Non-current assets
Goodwill	6.8	7.0
Property, plant and equipment	222.2	191.4
Derivative financial instruments	19.7	2.9
	248.7	201.3
Current assets
Inventories	0.8	0.3
Trade and other receivables	74.1	66.8
Derivative financial instruments	39.7	18.8
Money market deposits	8.5	-
Cash and cash equivalents	98.3	52.2
	221.4	138.1
Total assets	470.1	339.4
Current liabilities
Trade and other payables	243.8	181.9
Borrowings	0.7	0.3
Derivative financial instruments	24.7	9.4
	269.2	191.6
Non-current liabilities
Other non-current liabilities	9.9	6.6
Borrowings	8.7	0.3
Derivative financial instruments	-	0.3
Deferred tax liabilities	34.4	25.1
	53.0	32.3
Total liabilities	322.2	223.9
Net assets	147.9	115.5
Shareholders' equity
Share capital	1.8	1.8
Share premium	9.6	9.3
Cash flow hedging reserve	25.6	9.6
Retained earnings	110.9	94.8
Total shareholders' equity	147.9	115.5

Consolidated Group Cash Flow Statement

for the year ended 31 March 2011

	Unaudited 2011	Audited 2010
	£m	£m
Cash flows from operating activities
Profit on ordinary activities before taxation	26.2	22.2
Adjustments for:
Finance income	(1.3)	(1.9)
Finance costs	2.0	2.4
Profit on disposal of property, plant and equipment	-	(0.2)
Depreciation	37.1	33.0
Impairment of goodwill	0.2	-
Equity settled share based payments	0.4	0.3
Net financial derivative close out costs	(1.8)	6.0
Specific fair value movements	-	(2.8)
Operating cash flows before movements in working capital	62.8	59.0
(Increase)/decrease in inventories	(0.5)	0.1
Increase in trade and other receivables	(7.3)	(21.8)
Increase in trade and other payables	63.6	40.0
Cash generated from operations	118.6	77.3
Interest received	0.1	-
Interest paid	(1.6)	(2.4)
Income taxes paid	(3.3)	(1.7)
Net cash from operating activities	113.8	73.2
Cash flows from investing activities
Purchase of property, plant and equipment	(68.0)	(32.1)
Business acquisitions	-	(0.5)
Proceeds from sale of property, plant and equipment	0.1	0.3
Net increase  in money market deposits	(8.5)	-
Net cash used in investing activities	(76.4)	(32.3)
Cash flows from financing activities
Repayment of borrowings	(0.6)	(0.4)
New loans advanced	9.4	-
Proceeds on issue of shares	0.3	-
Equity dividends paid	(1.6)	(1.5)
Net cash from financing activities	7.5	(1.9)
Effect of foreign exchange rate changes	1.2	1.4
Net increase in cash in the year	46.1	40.4
Cash and cash equivalents at beginning of year	52.2	11.8
Cash and cash equivalents at end of year	98.3	52.2

Consolidated Group Statement of Changes in Equity (unaudited)

for the year ended 31 March 2011

	Share capital	Share premium	Cash flow hedging reserve	Retained earnings	Other reserves	Total reserves
	£m	£m	£m	£m	£m	£m
Balance at 1 April 2009	1.8	9.3	1.9	80.4	-	93.4
Total comprehensive income for the year	-	-	7.7	15.6	-	23.3
Dividends paid in the year	-	-	-	(1.5)	-	(1.5)
Share based payments	-	-	-	0.3	-	0.3
Balance at 31 March 2010	1.8	9.3	9.6	94.8	-	115.5
Total comprehensive income for the year	-	-	16.0	17.3	-	33.3
Issue of share capital	-	0.3	-	-	-	0.3
Dividends paid in the year	-	-	-	(1.6)	-	(1.6)
Share based payments	-	-	-	0.4	-	0.4
Balance at 31 March 2011	1.8	9.6	25.6	110.9	-	147.9

NOTES TO THE GROUP FINANCIAL STATEMENTS

1.  General information

The Group's Financial Statements consolidate the Financial Statements of Dart Group PLC and its subsidiaries. The Group's Financial Statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards ('IFRSs') as adopted by the European Union ('Adopted IFRSs').

2.  Basis of preparation

The financial statements have been prepared under the historical cost convention except for all derivative financial instruments that have been measured at fair value and disposal groups held for sale that have been measured at the lower of fair value less costs to sell and their carrying amounts prior to the decision to treat them as held for sale.

Whilst the financial information included in this preliminary announcement has been computed in accordance with IFRS as adopted by the European Union, this announcement does not itself contain sufficient information to comply with IFRS. The Company expects to publish full financial statements in August 2011.

In order to allow a better understanding of the financial information presented, and specifically the Group's underlying business performance, the Group presents its income statement in three columns such that it identifies: (i) results excluding specific IAS 39 fair value movements; (ii) the effect of specific IAS 39 fair value movements; and (iii) results for the year. For the purpose of clarity, in the explanation of the basis of preparation applied in these consolidated financial statements, we describe these columns as the 'left hand column', the 'middle column' and the 'right hand column' respectively.

The Group uses forward foreign currency contracts, forward carbon contracts, currency option products and aviation fuel swaps to hedge exposure to foreign exchange rates and aviation fuel price volatility. Such derivative financial instruments are stated at fair value.

Ineffectiveness in qualifying cash flow hedges under IAS 39 can arise as a result of the difference between the contractual profile of a hedge and the profile of transactions defined as the hedged item. IAS 39 requires ineffectiveness in qualifying cash flow hedges to be recorded in the income statement, and therefore the Group records this ineffectiveness in the left hand column when it relates to a cash flow hedge.

IFRS compliant hedge documentation was not in place prior to 1 April 2007. Movements in the fair value of derivatives in existence at this time, along with subsequent fair value movements on these cash flow hedges that would have qualified for hedge accounting had the documentation requirement been met, are separately presented in the middle column to assist the readers understanding of underlying business performance and to provide a more meaningful presentation.  For the avoidance of doubt, references to underlying performance refer to the left hand column.

The right hand column presents the results for the year showing all gains and losses recorded in the Consolidated Group Income Statement.

The financial information in this announcement is presented in pounds sterling and all values are rounded to the nearest £100,000, except where indicated otherwise.

The accounting policies adopted are consistent with those described in the Annual Report and Accounts for the year ended 31 March 2010.

Going concern

The Directors have prepared financial forecasts for the Group, comprising operating profit, balance sheet and cash flows to 31 March 2014.

For the purposes of their assessment of the appropriateness of the preparation of the Group's accounts on a going concern basis, the Directors have considered the current cash position, the availability of bank facilities and forecasts of future trading. The Directors have assessed the underlying assumptions and principal areas of uncertainty within these forecasts, in particular those related to market and customer risks, cost management, working capital management and treasury risks. A number of these are subject to market uncertainty and impact financial covenants. Recognising the potential uncertainty, the Directors have considered a range of actions available to mitigate the impact of these potential risks should they crystallise and have also reviewed the key strategies which underpin the forecast and the Group's ability to implement them successfully.

On the basis of the current liquidity position, the forecasts and these considerations, the Directors have assessed future covenant compliance and headroom for the foreseeable future and concluded that it is appropriate for the financial statements for the year ended 31 March 2011 to be prepared on a going concern basis.

3.  Earnings per share

Earnings per share is presented both before specific IAS 39 fair value movements and after specific IAS 39 fair value movements in order to allow a better understanding of the financial information presented, and specifically the Group's underlying business performance.

	Unaudited 2011	Audited 2010
	No.	No.
Basic weighted average number of shares in issue	141,558,080	141,117,098
Dilutive potential ordinary shares:
Employee share options	6,260,822	5,739,785
Diluted weighted average number of shares in issue	147,818,902	146,856,883

Basis of calculation - earnings (basic and diluted)	Unaudited 2011	Audited 2010
	£m	£m
Profit before specific IAS 39 fair value movements	17.1	13.5
Specific IAS 39 fair value movements	0.2	2.1
Profit after specific IAS 39 fair value movements for the purposes of calculating basic and diluted earnings	17.3	15.6

		Year to 31 March 2011		Year to 31 March 2010
		Before specific IAS 39 fair value movements	After specific IAS 39 fair value movements	Before specific IAS 39 fair Value movements	After specific IAS 39 fair Value movements
		Unaudited	Unaudited	Audited	Audited
Earnings per share - Total
- basic		12.03p	12.20p	9.54p	11.06p
- diluted		11.52p	11.68p	9.17p	10.62p

4.  Segmental Reporting

Business segments

Segment reporting is presented in respect of the Group's business segments which are also the primary reportable segments, as the Group's risk and rates of return are affected predominantly by the different services provided.

Year ended 31 March 2011	Distribution	Aviation	Unallocated	Total
Continuing	£m	£m	£m	£m
Revenue	144.2	398.7	-	542.9
EBITDA1	4.6	59.6	-	64.2
Operating profit1	2.8	23.8	-	26.6
Profit on disposal of property, plant and equipment	-	-	-	-
Finance income	-	-	1.3	1.3
Finance costs	-	(0.4)	(1.6)	(2.0)
Underlying profit/(loss) before taxation1	2.8	23.4	(0.3)	25.9
Specific fair value movements2	-	0.3	-	0.3
Profit/(loss) before taxation	2.8	23.7	(0.3)	26.2
Taxation	-	-	(8.9)	(8.9)
Profit/(loss) for the year after taxation	2.8	23.7	(9.2)	17.3

Year ended 31 March 2010	Distribution	Aviation	Unallocated	Total
Continuing	£m	£m	£m	£m
Revenue	122.5	312.0	-	434.5
EBITDA1	8.4	44.2	-	52.6
Operating profit1	7.4	12.0	-	19.4
Profit on disposal of property, plant and equipment	-	0.2	-	0.2
Finance income	-	0.5	1.4	1.9
Finance costs	-	-	(2.4)	(2.4)
Underlying profit/(loss) before taxation1	7.4	12.7	(1.0)	19.1
Specific fair value movements2	-	3.1	-	3.1
Profit/(loss) before taxation	7.4	15.8	(1.0)	22.2
Taxation	-	-	(6.6)	(6.6)
Profit/(loss) for the year after taxation	7.4	15.8	(7.6)	15.6

Note 1: stated excluding specific IAS 39 fair value movements
Note 2: specific IAS 39 fair value movements relate to fuel and FX derivatives, entered into for the purposes of the Aviation business, for which IFRS compliant hedge documentation was not in place prior to 1 April 2007 

5.  The financial information set out above does not constitute the Company's consolidated statutory accounts for the periods ended 31 March 2011 or 31 March 2010.  Statutory accounts for the period ended 31 March 2010 have been delivered to the Registrar of Companies, and those for the period ended 31 March 2011 will be delivered following the Company's Annual General Meeting.  The auditors, KPMG Audit Plc, have reported on the accounts for the year ended 31 March 2010; their reports were unqualified and did not contain statements under section 498(2) or (3) of the Companies Act 2006 or equivalent preceding legislation. The statutory accounts for 2011 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the registrar of companies in due course.

6.  The 2011 Annual Report and Accounts (together with the Auditor's Report) will be posted to shareholders no later than 4 August 2011.  The Annual General Meeting will be held on 8 September 2011.

 

 

END

 

 

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