Final Results

RNS Number : 1296E

Dart Group PLC

14 July 2016

 

DART GROUP PLC

PRELIMINARY UNAUDITED RESULTS FOR YEAR ENDED 31 MARCH 2016

Dart Group PLC, the Leisure Travel and Distribution & Logistics group ("the Group"), announces its preliminary results for the year ended 31 March 2016.  These results are presented under International Financial Reporting Standards ("IFRS").

Financial Highlights	Year ended 31 March 2016 (Unaudited)	Year ended 31 March 2015 (Audited)	Change
Group revenue	£1,405.4m	£1,253.2m	+12%
Group operating profit (Underlying1)	£105.0m	£50.2m	+109%
Operating profit margin (Underlying1)	7.5%	4.0%	+3.5 ppts
Group operating profit	£105.0m	£33.2m	+216%
Operating profit margin	7.5%	2.6%	+4.9 ppts
Profit before tax (Underlying1)	£104.2m	£57.2m	+82%
Profit before tax	£104.2m	£40.2m	+159%
Basic earnings per share (Underlying1)	60.22p	31.72p	+90%
Basic earnings per share	60.22p	22.42p	+169%
Proposed final dividend per share	3.10p	2.25p	+38%
Resulting total dividend per share	4.00p	3.00p	+33%

 1:   The "Underlying" prior year results are stated excluding a separately disclosed exceptional provision of £17.0m, in relation to possible passenger compensation claims for historical flight delays.

 

*   Group revenue increased 12% to £1,405.4m (2015: £1,253.2m) while Group operating profit increased 109% to £105.0m (2015 Underlying: £50.2m), reflecting strong trading in our Leisure Travel business together with an improved performance from the Group's Distribution & Logistics business.

*   Profit before tax grew 82% to £104.2m (2015 Underlying: £57.2m) and Basic earnings per share increased 90% to 60.22p (2015 Underlying: 31.72p).

*   In consideration of the Group's encouraging results, the Board is recommending a final dividend of 3.10p (2015: 2.25p), bringing the proposed total dividend to 4.00p per share for the year ended 31 March 2016 (2015: 3.00p).

 

*   Leisure Travel revenue grew 15% to £1,261.4m (2015: £1,101.5m) reflecting increased yields from both our flight-only and package holidays products and a 22% increase in package holiday customers, who represented 40% of total departing passengers (2015: 33%).

 

*   Distribution & Logistics improved its profit before tax by £2.1m to £5.4m (2015: £3.3m) on reduced revenues of £144.0m (2015: £151.7m) as lower fuel costs were passed on to customers.

 

*   The current financial year has started well in both our Leisure Travel and Distribution businesses.  Although we were disappointed at the result of the recently held referendum on whether the UK should remain in the EU, we are confident that our customers will need our specialist food distribution services and will be keen to travel from our rainy islands to the sun spots of the Mediterranean, The Canaries and to European Leisure Cities.

CHAIRMAN'S STATEMENT

I am pleased to report the Group's strong trading for the year ended 31 March 2016. Operating profit increased by 109% to £105.0m (2015 Underlying: £50.2m) and profit before tax by 82% to £104.2m (2015 Underlying: £57.2m).  Growth in basic earnings per share was 90% to 60.22p (2015 Underlying: 31.72p).

In consideration of the Group's encouraging results, the Board is recommending a final dividend of 3.10p per share (2015: 2.25p) which will bring the total proposed dividend to 4.00p per share for the year (2015: 3.00p), an increase of 33%.  This final dividend is subject to shareholders' approval at the Company's Annual General Meeting on 8 September 2016 and will be payable on 21 October 2016 to shareholders on the register at the close of business on 16 September 2016.

The increase in profitability reflects the strength of the Group's Leisure Travel business, which combines both Jet2.com, our leisure airline and Jet2holidays, our package holidays provider, together with an improved performance from Fowler Welch, our Distribution and Logistics business.

Revenue in our Leisure Travel business increased by 15% to £1,261.4m (2015: £1,101.5m) and operating profit improved by 112% to £99.6m (2015 Underlying: £46.9m) as over 3.0m departing customers took a flight or package holiday to our sun, city and ski destinations during the year.

Jet2.com flew a total of 6.07m passenger sectors (2015: 6.05m) and achieved an average load factor of 92.5% (2015: 91.2%) alongside an increase in average net ticket yield of 14%.  Jet2holidays took 1.22m customers (2015: 1.00m) on holiday, an increase of 22%, representing 40% of departing customers (2015: 33%).

To meet our programme of aircraft fleet replacement and our planned Leisure Travel business growth, on 3 September 2015 we were delighted to announce an agreement with Boeing to purchase 27 new Boeing 737-800NG aircraft, and subsequently in December 2015, an agreement to purchase a further 3 new aircraft.  These aircraft will be delivered between September 2016 and April 2018. 

Fowler Welch improved its profit before tax by £2.1m to £5.4m (2015: £3.3m) on reduced revenues of £144.0m (2015: £151.7m) as lower fuel costs were passed on to customers.

The Group generated increased net cash flow from operating activities of £243.9m (2015: £116.1m).  Total capital expenditure of £213.5m (2015: £76.4m) included the purchase of three used Boeing 737-800NG aircraft, one for summer 2015 and two for summer 2016, deposits and pre-delivery payments for the new Boeing aircraft order, and continued investment in the long-term maintenance of our existing fleet of aircraft and engines.  The new aircraft pre-delivery payments have been substantially financed.

As at 31 March 2016, the Group's cash and money market deposit balances had increased by £109.2m (2015: £39.1m) to £412.0m (2015: £302.8m) and included advance payments from Leisure Travel customers of £385.8m (2015: £318.7m), in respect of their future holidays and flights.

Leisure Travel

We take people on holiday!  Our Leisure Travel business specialises in scheduled flights by our airline Jet2.com to holiday destinations in the Mediterranean, the Canary Islands and to European Leisure Cities and the provision of ATOL licensed package holidays by our tour operator Jet2holidays.

Our core principles are to be family friendly, offer value for money and give great customer service.  For those customers who have arranged their own accommodation, our flights offer competitive fares, convenient flight times, allocated seating and a 22kg baggage allowance.  Our package holidays, however, give us the opportunity to deliver an 'end-to-end' experience to which we add value through innovation and customer service.  Importantly, our customer volumes allow us to serve many destinations daily and others several times a week during the spring, summer and autumn months, and enable us to offer a great choice of variable duration holidays at affordable prices. 

Real package holidays take considerable organisation and attention to detail.  Jet2holidays employs over 900 colleagues contracting and administering hotels, managing the finances and providing operational support.  The business has contractual relationships with over 2,700 hotels, encompassing a wide range of great value 2 to 5-star hotel products, catering for young & old and families alike.  Many have adjacent waterparks and other great attractions included in the package, adding enjoyment and interest to the overall holiday experience.

Nearly 40% of our package holidays were sold on an all-inclusive basis.  The all-inclusive package offers a 'Defined Price' for the whole holiday experience, including flights, transfers, meals, alcohol for the adults and ice lollies for the kids.  This is a resilient, great value offering for families on a tight budget and is particularly attractive for challenging economic times.  And to ensure that each of our customers has a happy holiday experience we employ nearly 300 representatives in holiday resorts, backed up by 24-hour customer helplines, to give practical assistance in all eventualities.

The last day of a holiday can often be stressful and with this in mind the business has introduced its "In-resort Flight Check-in" service at many hotels.  This allows Jet2holidays customers to check-in their baggage for their return flight home at their hotel, allowing them to enjoy their final day, bag and hassle free.

On 7 July 2016 we were very pleased to announce that from April 2017 we will be offering our flights and package holidays from Birmingham Airport - our eighth UK aircraft base.  We know that there is strong demand for our services in the Midlands.

During the financial year, Jet2.com operated 59 aircraft from our then seven Northern UK airport bases to 61 destinations, serving 379 holiday resorts and added three new destinations, Antalya, Kefalonia and Malta.  The fleet has grown to 63 aircraft for summer 2016, with a commensurate increase in pilots, engineers and cabin crew.  To ensure we have well trained colleagues to support continued growth, our flight simulator and training centre in Bradford has recently taken delivery of a fourth flight simulator.

We are fully focused on our package holidays offering and its inherent higher margin and are encouraged that sales continue to grow, outstripping the market, as our reputation for providing 'package holidays you can trust' develops.  We ensure that the customer is at the heart of everything we do as we strive to provide wonderful holidays through sustained investment in product, brand and customer service.  We believe we have a great future in the Leisure Travel marketplace.

Distribution & Logistics

Fowler Welch is one of the UK's leading providers of distribution and logistics services to the food industry supply chain, serving retailers, processers, growers and importers across its network of nine sites, encompassing circa 900k square foot of warehouse space.

Our major temperature-controlled operations are in the key produce growing and importing areas of Spalding in Lincolnshire, Teynham and Paddock Wood in Kent and Hilsea near Portsmouth, with two further regional distribution sites located at Washington, Tyne and Wear and at Newton Abbot, Devon.  Ambient (non-temperature-controlled) consolidation and distribution services are provided at Heywood near Bury and Desborough, Northamptonshire.

In May 2014, Fowler Welch, together with our partner Direct Produce Supplies Limited, a leading supplier of fruits to multiple retailers, commenced a joint venture business, "Integrated Service Solutions" (ISS) at our Teynham facility in Kent.  This provides a full range of fruit ripening and packing services to the produce sector.  I am very pleased to report that the business is now contributing positively towards overall Group profitability and feeding considerable volumes of packed fruits into our distribution system.

To meet the growing operational needs of ISS and to provide more distribution space at Teynham, which serves local Kent growers and is located close to the port of Dover and the Channel Tunnel - main arteries for fruit and produce imported into the UK, an extension of the facility was completed on 9 July 2016, adding over 50k square foot of much needed capacity.

On 6 June 2016 Fowler Welch agreed a contract with Dairy Crest Limited, to take over its Nuneaton based UK distribution.  On this date, the Dairy Crest fleet of 51 tractor units, along with associated distribution colleagues transferred to Fowler Welch.  This provides an important additional revenue stream, which will be developed by the integration of the Dairy Crest and Fowler Welch fleets and the achievement of supply chain efficiencies.

The improvement in profitability and operating margins achieved in the year are expected to continue.  By developing its revenue streams and delivering value adding, innovative supply-chain services, we believe the outlook for Fowler Welch is encouraging.

Outlook

We have a resilient Leisure Travel business.  Our strategy is to grow both our flight-only and package holidays products.  However, pleasingly, the sales of our higher margin package holidays continue to outperform the market and to provide an increasingly larger proportion of the departing passengers on our flights.  At the end of the financial year, package holidays represented 40% of our departing passengers (2015: 33%) and this trend is continuing in this new financial year.  The provision of real package holidays is not easily replicated by non-specialists.  As discussed earlier in this statement, the Group dedicates significant resources to deliver an innovative and industry leading product.  These holidays, especially all-inclusive packages, which give families certainty of price, have proven particularly successful in challenging economic times.

The current financial year has started well in both our Leisure Travel and Distribution businesses.  Although we were disappointed at the result of the recently held referendum on whether the UK should remain in the EU, we are confident that our customers will need our specialist food distribution services and will be keen to travel from our rainy islands to the sun spots of the Mediterranean, The Canaries and to European Leisure Cities.

Philip Meeson

Chairman

14 July 2016

 

BUSINESS AND FINANCIAL REVIEW

The Group's financial performance for the year ended 31 March 2016 is reported in line with International Financial Reporting Standards ("IFRS"), as adopted by the EU, which were effective at 31 March 2016.

Summary Income Statement
		Unaudited 2016 Total	Audited 2015 Before separately disclosed items	Audited 2015 Separately disclosed items (see note 7)	Audited 2015 Total	Change (2016 vs. 2015 before separately disclosed items)
		£m	£m	£m	£m
Revenue		1,405.4	1,253.2	-	1,253.2	12%
Net operating expenses		(1,300.4)	(1,203.0)	(17.0)	(1,220.0)	(8%)
Operating profit		105.0	50.2	(17.0)	33.2	109%
Net financing income		0.5	0.6	-	0.6	(17%)
Revaluation of derivative hedges		-	1.6	-	1.6	(100%)
Net FX revaluation (losses)/gains		(1.3)	4.8	-	4.8	(127%)
Net financing (costs)/income		(0.8)	7.0	-	7.0	(111%)
Group profit before tax		104.2	57.2	(17.0)	40.2	82%
Net financing costs / (income)		0.8	(7.0)	-	(7.0)	111%
Depreciation		88.7	71.3	-	71.3	24%
EBITDA		193.7	121.5	(17.0)	104.5	59%
	Operating profit margin	7.5%	4.0%	-	2.6%	3.5 ppts
	Group profit before tax margin	7.4%	4.6%	-	3.2%	2.8 ppts
	EBITDA margin	13.8%	9.7%	-	8.3%	4.1 ppts

A strong summer season for the Leisure Travel business was followed by a better than expected winter, as customer demand for our flight-only and package holidays remained buoyant.  Net ticket yields and average package holiday prices showed healthy increases, resulting in the business increasing its revenue by 12% to £1,405.4m (2015: 1,253.2m).

An improved forward booking position entering summer 2015, consistent demand and the continuing growth of our higher margin package holidays product as a percentage of overall sales all contributed to the Group's improved operating profit of £105.0m, more than double the previous year's underlying result of £50.2m.  On a statutory basis, operating profit increased by 216% from £33.2m, after an exceptional charge of £17.0m in the previous year. 

Net financing costs of £0.8m (2015: income £7.0m) included a net £1.3m charge in relation to the revaluation of foreign currency and pre-delivery payment loan balances held at the reporting date (2015: income £4.8m).

As a result, the Group achieved a statutory profit before tax of £104.2m (2015 Underlying: £57.2m).  Group EBITDA increased by 59% to £193.7m (2015 Underlying: £121.5m).

The Group's effective tax rate of 15% (2015: 18%) was lower than the headline rate of corporation tax of 20% due to its decreasing deferred tax liability.  Earnings per share increased by 90% to 60.22p (2015 Underlying: 31.72p).  Overall basic earnings per share increased by 169% from 22.42p after adjusting for the exceptional provision of £17.0m charged in the previous year.

Summary of Cash Flows
	Unaudited 2016	Audited 2015	Change
	£m	£m
EBITDA	193.7	104.5	85%
Other P&L adjustments	0.1	0.1	-
Movements in working capital	61.0	19.1	219%
Interest and taxes	(10.9)	(7.6)	(43%)
Net cash generated from operating activities	243.9	116.1	110%
Purchase of property, plant & equipment	(213.5)	(76.4)	(179%)
Movement on borrowings	81.9	(0.8)	10,338%
Other items	(3.1)	0.2	(1,650%)
Increase in net cash and money market deposits	109.2	39.1	179%

Net cash generated from operating activities was £243.9m (2015: £116.1m) out of which capital expenditure of £213.5m (2015: £76.4m) was incurred.  The Group generated a net cash inflow^(a) of £109.2m (2015: £39.1m), resulting in a year end cash position, including money market deposits, of £412.0m (2015: £302.8m).  The Group continues to be funded, in part, by payments received in advance of travel from its Leisure Travel customers, which at the reporting date amounted to £385.8m (2015: £318.7m).   

Of these customer advances, £68.5m (2015: £97.5m) was considered restricted by the Group's merchant acquirers as collateral against a proportion of forward bookings paid for by credit or debit card.  These balances become unrestricted once our customers have travelled.  The business also had £5.2m (2015: £51.7m) of cash placed with various counterparties in the form of margin calls to cover out-of-the-money hedge instruments.

Summary Balance Sheet
	Unaudited 2016	Audited 2015	Change
	£m	£m
Non-current assets (c)	426.6	302.1	41%
Net current assets(b)	288.9	252.4	14%
Deferred revenue	(767.5)	(580.3)	(32%)
Other liabilities	(36.7)	(19.4)	(89%)
Derivative financial instruments	(4.6)	(100.4)	95%
Cash and money market deposits	412.0	302.8	36%
Total shareholders' equity	318.7	157.2	103%

(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.

(b)    Stated excluding cash and cash equivalents, money market deposits, deferred revenue and derivative financial instruments.

(c)    Stated excluding derivative financial instruments.

The Group is continuing to meet the UK Civil Aviation Authority's required levels of "available liquidity", which is defined as free cash plus available undrawn banking facilities.

Total shareholders' equity increased by £161.5m (2015: reduced £24.4m) as profit after tax of £88.8m (2015: £32.8m) was augmented by favourable movements in the cash flow hedging reserve, a result of the reversal of adverse net mark-to-market balances on jet fuel and currency forward contracts held at the end of the previous financial year.

During the financial year the Group entered into an agreement with Boeing to purchase 30 new Boeing 737-800NG aircraft to meet its programme of aircraft fleet replacement and planned Leisure Travel growth.  These aircraft have an approximate list price of USD 2.9 billion, however the Group has negotiated significant discounts from this price.  The aircraft will be funded through a combination of internal resources and debt and will be delivered between September 2016 and April 2018. 

Segmental Performance - Leisure Travel

The Group's Leisure Travel business which incorporates Jet2.com,our leading leisure airline and Jet2holidays, our ATOL licensed package holidays operator, takes customers on holiday to the Mediterranean, the Canary Islands and to European Leisure Cities.

Planning efforts were concentrated on improving flight departure times, our hotel product and increasing the mix of package holiday customers, resulting in a 22% increase to 1.22m customers (2015: 1.00m) choosing a full package holiday, 40% of total departing passengers (2015: 33%).  The remaining 1.81m departing passengers chose a flight only (2015: 2.02m).

The average load factor for the year of 92.5% (2015: 91.2%) was supplemented by a 14% increase in net ticket price per passenger to £91.11 (2015: £79.87).  The average price of a package holiday increased by 4% to £616.30 (2015: £590.69), reflecting not only increased flight ticket yields but also an increasing number of customers choosing 4 and 5-star packages as the variety of hotels we offer continues to grow.

Non-ticket retail revenue per passenger increased by 3% to £31.98 (2015: £30.91).  This revenue stream, which is primarily discretionary in nature, continues to be optimised through our customer contact programme as we focus on Pre-Departure Sales (principally hold bags and advanced seat assignment) and In-Flight Sales (pre-ordered meals, drinks, snacks, cosmetics and perfumes) and ancillary products (car hire and travel insurance).

As a result, total Leisure Travel revenue grew by 15% to £1,261.4m (2015: £1,101.5m) whilst operating profit grew 112% to £99.6m (2015 Underlying: £46.9m).

The delivery of a smooth customer booking journey is of paramount importance to the business whichever booking channel is chosen.  As customers' online browsing and purchasing habits evolve, our websites and mobile applications are continuously developed and refined by our team of software developers to ensure that the search and booking experience is as effortless and efficient as possible, whether the customer uses a PC, tablet or mobile phone.  Approximately half of our package holidays are sold online via Jet2holidays.com, whilst 99% of our flight-only seats are booked on the Jet2.com website.

Our customer contact centre in Leeds employs over 300 sales and customer service advisors.  Demanding service levels are maintained to ensure that customers' calls are answered swiftly. Our sales colleagues are trained to handle calls in a friendly and informative manner and to have an intimate knowledge of our products, so that customers' individual needs can be catered for and to maximise opportunities for sales conversion.  Currently 17% of package holiday bookings are made through our call centre.  Once a booking has been made, our pre-travel services team takes over, answering queries and ensuring that customers are updated with post-booking information or provided with any further pre-travel assistance as required.

A third of our package holiday sales come through high street travel agents, who are considered very valuable and important distribution partners for the business.  Our packages are sold by major travel agent chains, key multiple retailers, homeworker companies and independent agents.

As it has grown, our Leisure Travel business has continually invested in marketing and in improving customer service standards.  Jet2holidays benefits from its breadth of hotel choice and a family-focused approach, which includes free child places at hundreds of hotels and a consistently low deposit.  Repeat bookings from satisfied customers and our continuing investment in product and in marketing has paid dividends with bookings for summer 2016 on course to surpass last year, whilst at the same time brand awareness continues to improve as a result of our broad marketing strategy.

During the year, Jet2.com expanded its route network, operating a total of 227 routes (2015: 217).  Jet2CityBreaks, which offers a packaged flight and hotel product in leading European Leisure Cities proved popular as increasing numbers of customers took the opportunity to visit some of Europe's most exciting city destinations.

Investment in our attractive product and depth of service offering, together with the growing opportunity to cross-sell between flight-only and package holiday customers means the business remains confident of delivering its growth plans.

Leisure Travel Financials
		Unaudited 2016 Total	Audited 2015 Before separately disclosed items	Audited 2015 Separately disclosed items (see note 7)	Audited 2015 Total	Change (2016 vs. 2015 before separately disclosed items)
		£m	£m	£m	£m
Revenue		1,261.4	1,101.5	-	1,101.5	15%
Net operating expenses		(1,161.8)	(1,054.6)	(17.0)	(1,071.6)	(10%)
Operating profit		99.6	46.9	(17.0)	29.9	112%
				-
Net financing income		0.5	0.6	-	0.6	(17%)
Revaluation of derivative hedges		-	1.6	-	1.6	(100%)
Net FX revaluation (losses)/gains		(1.3)	4.8	-	4.8	(127%)
Net financing (costs) / income		(0.8)	7.0	-	7.0	(111%)
Profit before tax		98.8	53.9	(17.0)	36.9	83%
Net financing income & Revaluations		0.8	(7.0)	-	(7.0)	111%
Depreciation		86.4	69.1	-	69.1	25%
EBITDA		186.0	116.0	(17.0)	99.0	60%
	Operating profit margin	7.9%	4.3%	-	2.7%	3.6 ppts
	Profit before tax margin	7.8%	4.9%	-	3.3%	2.9 ppts
	EBITDA margin	14.7%	10.5%	-	9.0%	4.2 ppts
	Leisure Travel KPIs
				Unaudited 2016	Audited 2015	Change
	Owned aircraft at 31 March			45	44	2%
	Aircraft on operating leases at 31 March			14	11	27%
	Number of routes operated during the year			227	217	5%
	Leisure Travel sector seats available (capacity)			6.56m	6.63m	(1%)
	Leisure Travel passenger sectors flown			6.07m	6.05m	0.3%
	Leisure Travel load factor			92.5%	91.2%	1.3 ppts
	Flight-only passenger sectors flown			3.63m	4.05m	(10%)
	Package holiday passenger sectors flown			2.44m	2.00m	22%
	Package holiday customers			1.22m	1.00m	22%
	Net ticket yield per passenger sector (excl. taxes)			£91.11	£79.87	14%
	Average package holiday price			£616.30	£590.69	4%
	Non-ticket revenue per passenger sector			£31.98	£30.91	3%
	Average hedged price of fuel (US$ per tonne)			$674	$922	27%
	Fuel requirement hedged for 2016/17			99%	98%	1.0 ppt
	Advance sales made as at 31 March			£767.5m	£580.3m	32%

Segmental Performance - Distribution & Logistics

The Group's distribution business, Fowler Welch, is one of the UK's leading temperature-controlled logistics providers to the food industry supply chain, serving retailers, processors, growers and importers across its network of nine distribution sites.  A full range of added value services is provided, including storage, case-level picking and the packing of fruits, together with an award winning national distribution network.

Revenue reduced by 5% to £144.0m (2015: £151.7m) primarily due to lower fuel costs which were passed onto customers. The business performed well operationally as varying seasonal volumes were handled efficiently.  Further gains were made as a result of a concentrated focus on fleet utilisation. In addition, Fowler Welch's joint venture, Integrated Service Solutions, which stores, ripens and packs stone-fruit and exotic and organic fruits at Teynham, Kent contributed positively to the overall result.

Fowler Welch's Kent operations, at its Teynham and Paddock Wood distribution centres, sit in the heart of that county's fruit growing areas and their proximity to both the port of Dover and the Channel Tunnel make them ideally positioned to provide packing and distribution services for local growers and for fruit and produce imported from across the Channel.  The 50,000 square foot extension of the Teynham depot has now been completed adding much needed capacity for further revenue opportunities and the expansion of our joint venture fruit packing business.

Spalding, our key distribution centre in the major growing county of Lincolnshire, delivered improved underlying revenue^(a).  This increase was generated both through existing and new customer volume growth.

The Heywood "Hub", Fowler Welch's 500,000 square foot ambient (non-temperature-controlled) shared user storage and distribution centre, located near Bury, Greater Manchester, saw underlying revenue^(a) decrease by 17% year-on-year, reflecting declines within its customer base.  Following a review of the site's product profile and increased sales efforts this valuable site is attracting further new customers.

The Hilsea depot, which is located near to Portsmouth International Port, had a strong year with encouraging underlying revenue^(a) growth of 9.0%.  New contract wins and growth with existing customers underlined the strength of the range of warehousing, consolidation and distribution services offered.

The dedicated site at Desborough, Northamptonshire, providing distribution services to a major confectionery manufacturer, renewed its contract for a further three years.  Investment in state of the art trailers which can be automatically unloaded or used as a conventional trailer will add value for both this customer and Fowler Welch over the new three year term.  Our regional distribution sites at Washington, Tyne and Wear and at Newton Abbot, Devon provide direct store delivery services on behalf of leading retailers to over 100 stores every day.

Continued focus on building a quality revenue pipeline and developing creative added value services for its customers remains fundamental to Fowler Welch's growth strategy.  Following the reporting date, the business completed and successfully implemented a 10 year commercial venture to provide a transport and distribution solution for Dairy Crest Limited.  This has increased the core vehicle fleet of Fowler Welch by approximately 10%.  

Based at Dairy Crest's National Distribution Centre at Nuneaton near Coventry, a new region for the business, we expect the operation to progressively expand using Dairy Crest's products as the initial volume, as it is integrated into the Fowler Welch distribution network.

With its strong and committed team, an enhanced national network of sites and the expertise and flexibility to operate effectively in both the temperature-controlled (chill and produce) and ambient arenas, Fowler Welch has a strong operational foundation.  The continued addition of better quality revenue streams, supplemented by added value, innovative supply services to key customers, such as those recently implemented for Dairy Crest and our joint venture fruit packing business, provide us with continued confidence for the company's future profitable growth.

(a)    References to "underlying revenue" are stated excluding fuel supplement income, which is linked to recognised industry indices.

Distribution & Logistics Financials
	Unaudited 2016	Audited 2015	Change
	£m	£m
Revenue	144.0	151.7	(5%)
Operating expenses	(138.6)	(148.4)	7%
Operating profit	5.4	3.3	64%
Net financing costs	-	-	-
Profit before tax	5.4	3.3	64%
Depreciation	2.3	2.2	5%
EBITDA	7.7	5.5	40%
Operating profit margin	3.8%	2.2%	1.6 ppts
Profit before tax margin	3.8%	2.2%	1.6 ppts
EBITDA margin	5.3%	3.6%	1.7 ppts

Distribution & Logistics KPIs
	Unaudited 2016	Audited 2015	Change
Warehouse space as at 31 March (square foot)	847,000	847,000	-
Number of tractor units in operation	428	467	(8%)
Number of trailer units in operation	629	655	(4%)
Miles per gallon	9.1	9.2	(1%)
Annual fleet mileage	39.0m	41.5m	(6%)

Gary Brown

Group Chief Financial Officer

14 July 2016

For further information please contact:

Dart Group PLC Philip Meeson, Group Chairman and Chief Executive	Tel:             0113 239 7817
Gary Brown, Group Chief Financial Officer
Smith & Williamson Corporate Finance Limited Nominated Adviser David Jones / Ben Jeynes / Russell Cook	Tel:             020 7131 4000
Canaccord Genuity - Joint Broker Guy Marks	Tel:             020 7523 8000
Arden Partners - Joint Broker Christopher Hardie	Tel:             020 7614 5900
Buchanan - Financial PR Richard Oldworth	Tel:             020 7466 5000

 

 

COnsolidated income statement

for the year ended 31 March 2016

	Unaudited results for the year ended  31 March 2016					Audited results for the year ended 31 March 2015
	Total					Results before separately disclosed items			Separately disclosed items				Total
			£m			£m			£m				£m
Revenue			1,405.4			1,253.2			-				1,253.2
Net operating expenses			(1,300.4)			(1,203.0)			(17.0)				(1,220.0)
Operating profit			105.0			50.2			(17.0)				33.2
Finance income			2.4			1.7			-				1.7
Finance costs			(1.9)			(1.1)			-				(1.1)
Revaluation of derivative hedges			-			1.6			-				1.6
Net FX revaluation (losses)/gains			(1.3)			4.8			-				4.8
Net financing (costs) / income			(0.8)			7.0			-				7.0
Profit before taxation			104.2			57.2			(17.0)				40.2
Taxation			(15.4)			(10.8)			3.4				(7.4)
Profit for the year			88.8			46.4			(13.6)				32.8
(all attributable to equity shareholders of the parent)
Earnings per share
- basic			60.22 p			31.72 p			(9.30)p				22.42 p
- diluted			59.89 p			31.40 p			(9.20)p				22.20 p

 

Consolidated statement of comprehensive income

for the year ended 31 March 2016

		Unaudited year ended 31 March 2016 £m		Audited year ended 31 March 2015 £m
Profit for the year		88.8		32.8
Other comprehensive income / (expense)
Cash flow hedges:
Fair value gains / (losses) in year		19.0		(98.7)
Add back losses transferred to income statement in year		76.9		32.0
Related tax (charge) / credit		(19.2)		13.1
		76.7		(53.6)
Total comprehensive income / (expense) for the period		165.5		(20.8)
(all attributable to equity shareholders of the parent)

 

 

Consolidated Statement of Financial Position

at 31 March 2016

		Unaudited 2016		Audited 2015
		£m		£m
Non-current assets
Goodwill		6.8		6.8
Property, plant and equipment		419.8		295.3
Derivative financial instruments		15.2		1.5
		441.8		303.6
Current assets
Inventories		1.1		2.0
Trade and other receivables		503.9		365.6
Derivative financial instruments		49.3		27.0
Money market deposits		70.0		65.5
Cash and cash equivalents		342.0		237.3
		966.3		697.4
Total assets		1,408.1		1,001.0
Current liabilities
Trade and other payables		109.4		85.7
Deferred revenue		766.4		579.6
Borrowings		83.4		0.8
Provisions		23.3		28.7
Derivative financial instruments		64.5		103.8
		1,047.0		798.6
Non-current liabilities
Other non-current liabilities		0.1		0.5
Deferred revenue		1.1		0.7
Borrowings		7.5		8.2
Derivative financial instruments		4.6		25.1
Deferred tax liabilities		29.1		10.7
		42.4		45.2
Total liabilities		1,089.4		843.8
Net assets		318.7		157.2
Shareholders' equity
Share capital		1.8		1.8
Share premium		12.4		11.9
Cash flow hedging reserve		(3.7)		(80.4)
Retained earnings		308.2		223.9
Total shareholders' equity		318.7		157.2

 

consolidated statement of cash flows

for the year ended 31 March 2016

		Unaudited 2016		Audited 2015
Cash flows from operating activities:		£m		£m
Profit on ordinary activities before taxation		104.2		40.2
Finance income		(2.4)		(1.7)
Finance costs		1.9		1.1
Revaluation of derivative hedges		-		(1.6)
Net FX revaluation (losses)/gains		1.3		(4.8)
Depreciation		88.7		71.3
Equity settled share based payments		0.1		0.1
Operating cash flows before movements in working capital		193.8		104.6
Decrease in inventories		0.9		1.1
Increase in trade and other receivables		(138.3)		(79.4)
Increase / (decrease)  in trade and other payables		16.6		(24.3)
Increase in deferred revenue		187.2		95.4
(Decrease) / increase in provisions		(5.4)		26.3
Cash generated from operations		254.8		123.7
Interest received		2.4		1.7
Interest paid		(1.9)		(1.1)
Income taxes paid		(11.4)		(8.2)
Net cash from operating activities		243.9		116.1
Cash flows used in investing activities
Purchase of property, plant and equipment		(213.5)		(76.4)
Proceeds from sale of property, plant and equipment		0.2		-
Net increase in money market deposits		(4.5)		(13.0)
Net cash used in investing activities		(217.8)		(89.4)
Cash used in financing activities
Repayment of borrowings		(0.9)		(0.8)
New loans advanced		82.8		-
Proceeds on issue of shares		0.5		0.5
Equity dividends paid		(4.6)		(4.2)
Net cash from / (used in) financing activities		77.8		(4.5)
Effect of foreign exchange rate changes		0.8		3.9
Net increase in cash in the year		104.7		26.1
Cash and cash equivalents at beginning of year		237.3		211.2
Cash and cash equivalents at end of year		342.0		237.3

 

Consolidated statement of changes in equity

for the year ended 31 March 2016

		Share capital		Share premium		Cash flow hedging reserve		Retained earnings		Total  shareholders' equity
		£m		£m		£m		£m		£m
Audited Balance at 31 March 2014		1.8		11.4		(26.8)		195.2		181.6
Total comprehensive income for the year		-		-		(53.6)		32.8		(20.8)
Issue of share capital		-		0.5		-		-		0.5
Dividends paid in the year		-		-		-		(4.2)		(4.2)
Share based payments		-		-		-		0.1		0.1
Audited Balance at 31 March 2015		1.8		11.9		(80.4)		223.9		157.2
Total comprehensive income for the year		-		-		76.7		88.8		165.5
Issue of share capital		-		0.5		-		-		0.5
Dividends paid in the year		-		-		-		(4.6)		(4.6)
Share based payments		-		-		-		0.1		0.1
Unaudited Balance at 31 March 2016		1.8		12.4		(3.7)		308.2		318.7

 

 

Notes to the consolidated financial statements

for the year ended 31 March 2016

1.   General information

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

2.   Basis of preparation

The financial statements have been prepared under the historical cost convention except for all derivative financial instruments, which have been stated at fair value.

Whilst the information included in this preliminary announcement has been computed in accordance with Adopted IFRS, this announcement does not itself contain sufficient information to comply with Adopted IFRS.  Dart Group PLC expects to publish full financial statements in August 2016 (see note 9).

The Group utilises foreign exchange forward contracts and monthly fuel swaps to hedge its exposure to movements in euro and US dollar exchange rates, and its exposure to jet fuel price movements that arise through its Leisure Travel activities.  The Group also uses forward EU Allowance contracts and forward Certified Emissions Reduction contracts to hedge exposure to Carbon Emissions Allowance price volatility.  Such derivative financial instruments are stated at fair value.

Going concern

The Directors have prepared financial forecasts for the Group, comprising operating profit, balance sheets and cash flows through to 31 March 2019.

For the purpose of assessing 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 banking facilities, the Group's net current liability position, and sensitised forecasts of future trading through to 31 March 2019, including performance against financial covenants and the assessment of principal areas of uncertainty and risk.

Having considered the points outlined above, the Directors have a reasonable expectation that the Company and the Group will be able to operate within the levels of available banking facilities and cash for the foreseeable future.  Consequently, they continue to adopt the going concern basis in preparing the financial statements for the year ended 31 March 2016.   

3.   Segmental reporting

Business segments

The Chief Operating Decision Maker ("CODM") is responsible for the overall resource allocation and performance assessment of the Group.  The Board of Directors approves major capital expenditure, assesses the performance of the Group and also determines key financing decisions.  Consequently, the Board of Directors is considered to be the CODM.

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 CODM for the purpose of resource allocation and assessment of their performance and as such, they are also deemed to be the reporting segments.

The Leisure Travel business specialises in scheduled flights by its airline Jet2.com to holiday destinations in the Mediterranean, the Canary Islands and to European Leisure Cities and the provision of ATOL licensed package holidays by its tour operator Jet2holidays.  Resource allocation decisions are based on the business's entire route network and the deployment of its entire aircraft fleet.

The Distribution & Logistics business is run on the basis of the evaluation of distribution centre-level performance data.  However, resource allocation decisions are made based on the entire distribution network.  The objective in making resource allocation decisions is to maximise the segment results rather than the results of the individual distribution centres within the network.

Group eliminations include the removal of inter-segment asset and liability balances.

Following the identification of the operating segments, the Group has assessed the similarity of their characteristics.  Given the different performance targets, customer bases and operating markets of each, it is not currently appropriate to aggregate the operating segments for reporting purposes and, therefore, both are disclosed as reportable segments for the year ended 31 March 2016:

·     Leisure Travel, which incorporates the Group's ATOL licensed package holidays operator, Jet2holidays and its leisure airline, Jet2.com; and

·     Distribution & Logistics, incorporating the Group's logistics company, Fowler Welch.

The Board assesses the performance of each segment based on operating profit, and profit before and after tax.  Revenue from reportable segments is measured on a basis consistent with the income statement.  Revenue is principally generated from within the UK, the Group's country of domicile.

Segment results, assets and liabilities include items directly attributable to a segment, as well as those that can be allocated on a reasonable basis.  No customer represents more than 10% of the Group's revenue. 

	Leisure Travel	Distribution & Logistics	Group eliminations	Total
Unaudited Year ended 31 March 2016	£m	£m	£m	£m
Revenue	1,261.4	144.0	-	1,405.4
Operating profit	99.6	5.4	-	105.0
Finance income	2.4	-	-	2.4
Finance costs	(1.9)	-	-	(1.9)
Net FX revaluation losses	(1.3)	-	-	(1.3)
Net financing income	(0.8)	-	-	(0.8)
Profit before taxation	98.8	5.4	-	104.2
Taxation	(14.5)	(0.9)	-	(15.4)
Profit after taxation	84.3	4.5	-	88.8
Assets and liabilities
Segment assets	1,331.6	82.2	(5.7)	1,408.1
Segment liabilities	(1,065.0)	(30.1)	5.7	(1,089.4)
Net assets	266.6	52.1	-	318.7
Other segment information
Property, plant and equipment additions	210.6	2.9	-	213.5
Depreciation, amortisation and impairment	(86.4)	(2.3)	-	(88.7)
Share based payments	(0.1)	-	-	(0.1)

	Leisure Travel	Distribution & Logistics	Group eliminations	Total
Audited Year ended 31 March 2015	£m	£m	£m	£m
Revenue	1,101.5	151.7	-	1,253.2
Underlying operating profit	46.9	3.3	-	50.2
Finance income	1.7	-	-	1.7
Finance costs	(1.1)	-	-	(1.1)
Revaluation of derivative hedges	1.6	-	-	1.6
Net FX revaluation gains	4.8	-	-	4.8
Net financing income	7.0	-	-	7.0
Underlying profit before taxation	53.9	3.3	-	57.2
Separately disclosed items	(17.0)	-	-	(17.0)
Profit before taxation	36.9	3.3	-	40.2
Taxation	(6.7)	(0.7)	-	(7.4)
Profit after taxation	30.2	2.6	-	32.8
Assets and liabilities
Segment assets	923.3	84.2	(6.5)	1,001.0
Segment liabilities	(813.7)	(36.6)	6.5	(843.8)
Net assets	109.6	47.6	-	157.2
Other segment information
Property, plant and equipment additions	74.4	2.0	-	76.4
Depreciation, amortisation and impairment	(69.1)	(2.2)	-	(71.3)
Share based payments	(0.1)	-	-	(0.1)

4.   Net operating expenses
		Unaudited 2016			Audited 2015
		£m			£m
Direct operating costs
Fuel		208.9			233.3
Landing, navigation and third party handling		132.8			137.7
Aircraft and vehicle rentals		38.5			33.7
Maintenance costs		62.4			58.0
Subcontractor charges		38.2			41.0
Accommodation costs		344.0			283.9
Agent commission		29.0			22.5
In-flight cost of sales		19.2			20.3
Other direct operating costs		45.6			42.7
Staff costs		204.4			190.6
Depreciation of property, plant and equipment including aircraft and engines		88.7			71.3
Other operating charges		89.7			68.3
Other operating income		(1.0)			(0.3)
Net operating expenses before separately disclosed items		1,300.4			1,203.0
Separately disclosed items (note 7)		-			17.0
Total net operating expenses		1,300.4			1,220.0

5.   Net financing (costs) / income

	Unaudited 2016		Audited 2015
	£m		£m
Finance income	2.4		1.7
Finance costs	(1.9)		(1.1)
Revaluation of derivative hedges (cash flow hedge ineffectiveness)	-		1.6
Net FX revaluation (losses)/gains	(1.3)		4.8
Net financing (costs) / income	(0.8)		7.0

6.   Earnings per share

	Unaudited 2016		Audited 2015
	No.		No.
Basic weighted average number of shares in issue	147,454,373		146,278,585
Dilutive potential ordinary shares: employee share options	809,398		1,455,645
Diluted weighted average number of shares in issue	148,263,771		147,734,230

	Basis of calculation - earnings (basic and diluted)		Year to 31 March 2016				Year to 31 March 2015
	Profit for the purposes of calculating basic and diluted earnings		£88.8m				£32.8m
	Earnings per share - basic		60.22p				22.42p
	Earnings per share - diluted		59.89p				22.20p

7.   Separately disclosed items

Separately disclosed items are presented in the middle column of the year ended 31 March 2015 Consolidated Income Statement in order to assist the reader's understanding of underlying business performance and to provide a more meaningful presentation.  The right hand column presents the results for the year showing all gains and losses recorded in the Consolidated Income Statement.

EU Regulation 261

The prior year results include a separately disclosed exceptional provision of £17.0m, in relation to possible passenger compensation claims for historical flight delays under Regulation (EC) No 261/2004. 

8.   Financial information

The financial information set out above does not constitute Dart Group PLC's statutory accounts for the years ended 31 March 2016 or 31 March 2015.  The financial information for 2015 is derived from the statutory accounts for the year ended 31 March 2015, which have been delivered to the Registrar of Companies.  The auditor has reported on the year ended 31 March 2015 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.

The statutory accounts for the year ended 31 March 2016 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.

9.   Annual report and accounts

The 2016 Annual Report and Accounts (together with the Auditor's Report) will be made available to shareholders during the week ending 12 August 2016.  The Dart Group PLC Annual General Meeting will be held on 8 September 2016.

10. 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.

 

END

 

 

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