Interim Results

RNS Number : 5176J
Dart Group PLC
04 December 2008
 






DART GROUP PLC


Interim Results 



Dart Group PLC ('the Group'), the aviation and distribution group, announces its interim results for the half year ended 30 September 2008. These results are presented under International Financial Reporting Standards (IFRS). 


Highlights


  • Turnover up 8% to £272.8 million (2007: £252.9m)


  • Pre-tax profits up 97% to £36.3m (2007: £18.4m)


  • Underlying pre-tax profits up 175% to £33.5m (2007: £12.2m)


  • Aviation load factors increased to 80.4% (2007:74.0%)


  • £20.3m cash generated from operating activities (2007: £0.5m outflow)


Chairman's Statement

I am pleased to report on the Group's trading for the six months ended 30 September 2008.  The Group delivered a profit before tax of £36.3m, an increase of 97% on last year (2007: £18.4m).  

On an underlying basis (excluding the Specific IAS39 mark to market adjustments), profit before tax amounted to £33.5m (2007: £12.2m). This significant improvement in trading performance was principally driven by Jet2.comthe Group's low-cost leisure airline, and reflects both improved yields and load factor.  Underlying EBITDA increased by 77% to £52.7m (2007: £29.9m).

Net cash flow from operating activities o£20.3m was generated in the period (2007: £0.5m outflow), despite the seasonal reduction in the level of customer advance payments, which peaked in March Capital expenditure in the first half amounted to £9.5m (2007: £16.0m) primarily relating to the overhaul of the Group's aircraft engines.  

Notwithstanding these strong results, the Board has decided, after careful consideration, not to pay an interim dividend, maintaining a cautious approach in recognition of current economic conditions.

Jet2.com

Jet2.com has focused on its core leisure routes from its bases in the North (Belfast, Blackpool, Edinburgh, Leeds Bradford, Manchester and Newcastle).  The company operates 30 aircraft of which 29 (21 Boeing 737-300s and 8 Boeing 757-200s) are owned by the Group. The 235 seat Boeing 757-200, with its 3,500 nm range, enables us to serve popular Eastern Mediterranean, Red Sea and Canary Island destinations very cost effectively whilst still offering competitive economics to traditional Western Mediterranean resorts. The performance of this aircraft is also demonstrated by the operation of a series of direct flights to New York, the first of which took off from Leeds Bradford International Airport in early November.

We flew 2.3m scheduled passengers in the 6 months to 30 September 2008 (20072.6m) with the number of routes served being reduced slightly to 74 (200777).  We were able to increase both yields and load factors by focusing on flying popular routes, at departure times convenient to our customers.

Ancillary revenues are continually being developed with gross revenue per passenger increasing to £15.17 during this half year (2007: £8.60).  The introduction of our new in-house developed reservation system in February has enabled us to make it easier for our customers to purchase extra services such as seat assignment or Jet2Pluswhich gives airport lounge access, priority check-in and a pre-ordered meal.  Further enhancements continue to be introduced by our commercial and IT teams. Additionally, travel trade interfaces have been developed to build significantly the sales distribution channels available to the airline, in contrast to other low-cost operators.  This allows easy access to Jet2.com's seat inventory for travel agents and tour operators, either directly or via third party integration, and has been well received by the travel trade.  Jet2.com has also introduced a loyalty scheme in November, designed to reward our regular travellers.  We see this as the first stage of a considerable cross marketing opportunity with great potential for future development.

Our freight and passenger charter business continues to thrive, making the most of both the enlarged 757 fleet and the passenger and freight capabilities of our 737 'Quick Change' aircraft. We continue to build our presence in this important market, with charter revenues growing by 70% in the first half of the year.  

Costs were carefully managed in the period. Our fuel efficiency programme is now achieving a 4% improvement in our fuel utilisation.  We have also started to see the full benefit of the maintenance arrangements entered into with Pratt & Whitney for our Boeing 737 engines.  

For the winter season, Jet2.com has managed down its overall scheduled capacity reflecting a prudent approach in the current economic environment.  Popular new destinationsincluding CroatiaTurkey and the Red Sea, have been added for next summerwith increased flying from Manchesterwhilst overall capacity will be maintained at levels similar to those of summer 2008.

Jet2holidays.com, our ATOL protected tour operator, which offers a complete leisure package, was launched in February 2007. This operation has sold over 25,000 holidays in the half year to September 2008 and it is expected that it will make an increasingly significant contribution to the airline's passenger numbers over the coming years. We believe that Jet2holidays.com will become a favoured choice for our leisure customers by meeting our customers' demand for a package holiday from their local airport on Jet2.com scheduled services.  

Fowler Welch-Coolchain

The Group's logistics company, Fowler Welch-Coolchain, provides an integrated supply chain solution to supermarkets and their suppliers, food manufacturers, growers and importers.  Services provided from its distribution centres in Spalding (Lincs), Teynham (Kent), Washington (Tyne & Wear), Stockport (Cheshire) and Portsmouth (Hampshire) include both chilled and ambient storage and distribution together with value adding and pick to order warehousing operations.  The company also has important port operations in Sheerness and Southampton.

Operating margins have been impacted slightly in the first six months of the year, due to a slight downturn in sales, resulting mainly from the loss of two accounts, which have been more than replaced by business wins during the period, the most notable of these being both transport and warehousing services on behalf of Tulip Limited, and the addition of store deliveries on behalf of Tesco from our Washington distribution centre.  A new warehouse management system has now been implemented in Spalding and is delivering operational efficiencies and improvemanagement information to the benefit of the company and its customers. This project will be rolled out throughout the company's operations in the coming months.  


Continued investment in driver training has resulted in improved year on year fuel efficiency, and will be further enhanced by the re-introduction of a leading vehicle brand, not part of the fleet in recent years.  The expanded use of double-decker trailers gives both operating efficiencies and a positive impact on our carbon footprint.  We have also contributed to a major UK retailer's supply chain efficiencies by storing and delivering product units designed for direct in-store display, enabling cost savings and environmental sustainability.  

In August 2008, 10 acres of additional land adjacent to the Spalding site were secured. This will facilitate further expansion at this important site, consistent with the Group's approach to provide for future growth; a similar purchase having been made in Teynham in 2001.

The performance of the ambient business, acquired in April 2006, continues to improve; volumes have increased with both organic and new business growth, and further opportunities for development exist in this sector.  In line with expectations, a positive contribution for the full year is anticipated from this operation.  

Fowler Welch-Coolchain is a successful business with considerable growth prospects in both its chilled and ambient warehousing and distribution sectors. It is well positioned to exploit opportunities arising from the general economic downturn, with substantially all of its core activities being based around the food industry.  The company is well protected from oil price volatility, applying a variable weekly surcharge to reflect variations in purchase prices.

Outlook 

On an underlying basis, we would expect second half trading to be in line with last year.  Jet2.com forward booking levels remain encouraging for the winter and Fowler Welch-Coolchain continues to perform in line with the Board's expectations. We expect a more challenging trading environment next year and will continue to manage the business cautiously in the light of current economic conditions

Philip Meeson,

Chairman          4 December 2008


www.dartgroup.co.uk

Enquiries:

 Philip Meeson, Chairman  

Mobile: 07785 258666 

Andrew Merrick, Group Finance Director  

Mobile: 07788 565358

 

Andy Pedrette, Smith & Williamson Corporate Finance Limited (Tel: 020 7131 4000)



Consolidated Profit and Loss Account (unaudited)

For the half year ended 30 September 2008

 

 
 
Half year to 30 September 2008
Half year to 30 September 2007
Year to 31 March 2008
 
 
Before Specific IAS 39 mark to market adjustments
 
Specific IAS 39 mark to market adjustments
 
 
IFRS
Before Specific IAS 39 mark to market adjustments
 
Specific IAS 39 mark to market adjustments
 
 
IFRS
Before Specific IAS 39 mark to market adjustments
 
Specific IAS 39 mark to market adjustments
 
 
IFRS
 
Note
£m
£m
£m
£m
£m
£m
£m
£m
£m
 
 
 
 
 
 
 
 
 
 
 
Turnover
3
272.8
-
272.8
252.9
-
252.9
429.3
-
429.3
Net Operating Expenses
 
(237.9)
2.8
(235.1)
(238.9)
6.2
(232.7)
(425.7)
7.9
(417.8)
Other operating income
 
1.0
-
1.0
0.2
-
0.2
2.0
-
2.0
Operating Profit
 
35.9
2.8
38.7
14.2
6.2
20.4
5.6
7.9
13.5
Finance Income
 
2.4
-
2.4
1.9
-
1.9
2.7
-
2.7
Finance Costs
 
(4.8)
-
(4.8)
(3.9)
-
(3.9)
(5.7)
-
(5.7)
Net financing costs
 
(2.4)
-
(2.4)
(2.0)
-
(2.0)
(3.0)
-
(3.0)
Profit on ordinary activities before taxation
33.5
2.8
36.3
12.2
6.2
18.4
3.9
7.9
11.8
Taxation
6
(10.3)
(0.8)
(11.1)
(3.0)
(1.6)
(4.6)
(0.8)
(2.3)
(3.1)
Profit for the period
 
23.2
2.0
25.2
9.2
4.6
13.8
3.1
5.6
8.7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share - total
4
 
 
 
 
 
 
 
 
 
 - basic
 
16.39p
 
17.81p
6.48p
 
9.78p
2.15p
 
6.18p
 - diluted
 
16.39p
 
17.81p
6.44p
 
9.72p
2.12p
 
6.13p
 
 
 
 
 
 
 
 
 
 
 
Earnings per share – continuing operations
 
 
 
 
 
 
 
 
 
 - basic
 
16.39p
 
17.81p
6.48p
 
9.78p
2.15p
 
6.18p
 - diluted
 
16.39p
 
17.81p
6.44p
 
9.72p
2.12p
 
6.13p
 
 
 
 
 
 
 
 
 
 
 
 
 


Consolidated Balance Sheet (unaudited)

As at 30 September 2008

 

 
30 September 2008
 
£m
30 September 2007
 
£m
31 March 2008
 
£m
Non-current assets
 
 
 
Goodwill
6.8
6.8
6.8
Property, plant and equipment
186.3
184.9
193.4
Derivative financial instruments
6.0
0.3
1.6
Deferred tax assets
2.4
6.2
2.8
 
201.5
198.2
204.6
 
 
 
 
Current assets
 
 
 
Inventories
0.3
0.2
0.3
Trade and other receivables
47.9
42.4
50.0
Derivative financial instruments
6.6
2.6
13.7
Cash and cash equivalents
0.4
4.1
4.0
 
55.2
49.3
68.0
 
 
 
 
Total Assets
256.7
247.5
272.6
 
 
 
 
Current liabilities
 
 
 
Trade and other payables
118.6
108.9
147.1
Borrowings
7.6
-
-
Derivative financial instruments
2.1
11.5
5.9
 
128.3
120.4
153.0
 
 
 
 
Non-current liabilities
 
 
 
Other non current liabilities
6.2
-
2.9
Borrowings
-
36.1
21.2
Derivative financial instruments
4.1
8.2
2.5
Deferred tax
19.9
16.4
18.6
 
30.2
60.7
45.2
 
 
 
 
Total Liabilities
158.5
181.1
198.2
 
 
 
 
Net Assets
98.2
66.4
74.4
 
 
 
 
Capital and reserves
 
 
 
Called up share capital
1.8
1.8
1.8
Share premium account
9.3
9.3
9.3
Cash flow hedging reserve
8.6
(3.8)
10.0
Profit and loss account
78.4
59.1
53.1
Other reserves
0.1
-
0.2
Total shareholders’ equity
98.2
66.4
74.4




Consolidated Cash Flow Statement (unaudited)

For the half year ended 30 September 2008

 

 
 
Six Months ended 30 September
Year ended
 
 
2008
 
£m
 
2007
 
£m
31 March 2008
£m
 
 
 
 
 
 
Cash flows from operating activities
 
 
 
 
 
Profit before taxation from continuing operations
36.3
 
18.4
11.8
 
 
 
 
 
 
Adjustments for:
 
 
 
 
 
Finance income
 
(2.4)
 
(1.9)
(2.7)
Finance costs
 
4.8
 
3.9
5.7
Profit on disposal of property, plant and equipment
 
-
 
-
(1.3)
Depreciation
 
16.6
 
15.6
30.3
Equity settled share based payments
 
0.1
 
0.2
0.2
Fair value adjustments
 
(2.6)
 
(6.2)
(7.9)
Operating cash flows before movements in working capital
 
52.8
 
30.0
36.1
Increase in inventories
 
-
 
-
(0.1)
Increase / (decrease) in trade and other receivables
2.3
 
1.6
(6.5)
(Decrease) / increase in trade and other payables
(33.9)
 
(29.5)
12.9
Cash generated from operations
 
21.2
 
2.1
42.4
Interest received
 
1.0
 
-
0.1
Interest paid
 
(2.3)
 
(1.5)
(4.4)
Tax received / (paid)
 
0.4
 
(1.1)
(0.5)
Net Cash generated / (used) from operating activities
20.3
 
(0.5)
37.6
Cash flows from investing activities
 
 
 
 
 
Proceeds from sale of property, plant and equipment
-
 
0.1
-
Purchase of property, plant and equipment
 
(9.5)
 
(16.0)
(38.5)
Proceeds from disposal of discontinued operations
-
 
-
1.5
Net Cash used in investing activities
 
(9.5)
 
(15.9)
(37.0)
Cash flows from financing activities
 
 
 
 
 
Net proceeds from issue of share capital
 
-
 
0.1
0.1
Net (repayments) of proceeds from borrowings
(22.0)
 
18.1
3.2
Equity dividends paid
 
-
 
(2.0)
(2.9)
Net Cash (used) / generated from financing activities
(22.0)
 
16.2
0.4
Effects of exchange rate changes
 
-
 
0.4
(0.9)
Net (decrease) / increase in cash and cash equivalents
(11.2)
 
0.2
0.1
Cash and cash equivalents at beginning of period
4.0
 
3.9
3.9
Cash and cash equivalents at end of period
 
(7.2)
 
4.1
4.0

 

 




Consolidated Statement of Changes in Equity (unaudited)

For the half year ended 30 September 2008

 

 
Share
Capital
Share Premium
Cash Flow Hedging Reserve
Retained Earnings
Other
Reserves
Total Reserves
 
£m
£m
£m
£m
£m
£m
 
 
 
 
 
 
 
Balance at 1 April 2007
1.8
9.2
0.9
47.1
-
59.0
 
 
 
 
 
 
 
Fair value movements on cash flow hedges
-
-
(6.5)
-
-
(6.5)
Deferred tax relating to cash flow hedges
-
-
1.8
-
-
1.8
Issue of shares under share option scheme
-
0.1
-
-
-
0.1
Share based payments
-
-
-
0.2
-
0.2
Profit for the period
-
-
-
13.8
-
13.8
Dividends paid
-
-
-
(2.0)
-
(2.0)
 
 
 
 
 
 
 
Balance at 30 September 2007
1.8
9.3
(3.8)
59.1
-
66.4
 
 
 
 
 
 
 
Fair value movements on cash flow hedges
-
-
19.5
-
-
19.5
Deferred tax relating to cash flow hedges
-
-
(5.7)
-
-
(5.7)
Currency translation differences
-
-
-
-
0.2
0.2
Loss for the period
-
-
-
(5.1)
-
(5.1)
Dividends paid
-
-
-
(0.9)
-
(0.9)
 
 
 
 
 
 
 
Balance at 31 March 2008
1.8
9.3
10.0
53.1
0.2
74.4
 
 
 
 
 
 
 
Fair value movements on cash flow hedges
-
-
(1.9)
-
-
(1.9)
Deferred tax relating to cash flow hedges
-
-
0.5
-
-
0.5
Currency translation differences
-
-
-
-
(0.1)
(0.1)
Issue of shares under share option scheme
-
-
-
-
-
-
Share based payments
-
-
-
0.1
-
0.1
Profit for the period
-
-
-
25.2
-
25.2
 
 
 
 
 
 
 
Balance at 30 September 2008
1.8
9.3
8.6
78.4
0.1
98.2
 
 

 

        

Notes to the consolidated financial statements (continued)

For the half year ended 30 September 2008 (unaudited)


1.  General information 


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

The interim report for the six months ended 30 September 2008 was approved by the Board of Directors on 3 December 2008


2.  Accounting policies 


Basis of preparation


The financial statements have been prepared under the historical cost convention, except for all derivative financial instruments which have been measured at fair value. In addition this interim financial report does not comply with IAS 34, Interim Financial Reporting, which is not currently required to be applied under AIM rules.

All accounting policies, presentation and methods of computation are consistent with those described in the Group's financial statements for the year ended 31 March 2008.


The financial information contained in this statement does not constitute the Company's statutory accounts for the year ended 31 March 2008. Those accounts, which were prepared under IFRS, have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985.


The Group's financial statements are presented in pounds sterling and all values are rounded to the nearest £100,000 except where indicated otherwise.


3.  Segmental information


For management purposes the Group is divided into two main segments, Aviation Services and Distribution. These divisions are the basis on which the Group reports its primary segmental information in the day-to-day management of the business. The following is an analysis of the Group's revenue by operating segment. All of the segmental revenue reported is from external customers.

 

Segmental Revenues
Half year to
30 September 2008
 
£m
Half year to
30 September 2007
 
£m
Year to
31 March 2008
 
£m
Aviation Services
215.6
194.1
308.8
Distribution
57.2
58.8
120.5
 
272.8
252.9
429.3

 



  4.  Earnings per share

The calculation of earnings per share is based on the following:

 

 
Half year to
30 September
2008
Half year to
30 September
2007
 
Year to
31 March
2008
Profit for the period (£m)
25.2
13.8
8.7
 
 
 
 
Weighted average number of ordinary shares in issue during the period used to calculate basic earnings per share
141,065,694
141,004,913
141,029,664
 
 
 
 
Weighted average number of ordinary shares in issue during the period used to calculate diluted earnings per share
141,065,694
141,915,649
143,092,396


5.  Dividends


No dividends have been paid or proposed during the six month period to 30 September 2008 (2007: £2.0m).


6.  Taxation


The tax charge for the period of £11.1 million is calculated by applying an estimated effective tax rate for the year to 31 March 2009 to the profit for the period.


7.  Reconciliation of net cash flow to movement in net debt

 

 
Half year to
30 September
2008
 
£m
Half year to
30 September
2007
 
£m
Year to
31 March
2008
 
£m
 
 
 
 
(Decrease) / increase in cash in the period
(11.2)
(0.2)
0.1
Cash (inflow) / outflow from (increase) / decrease in net debt in the period
22.0
 
(18.1)
(3.2)
Change in net debt resulting from cash flows in the period
10.8
(18.3)
(3.1)
Other non cash changes
(0.8)
0.4
0.1
Net debt at beginning of period
(17.2)
(14.1)
(14.2)
Net debt at end of period
(7.2)
(32.0)
(17.2)



8.  Contingent liabilities


The Group is in litigation in the US against Sutra Inc and Novak Niketic, who provided use of the reservation system operated by Jet2.com until February 2008, in relation to the termination of the use of this system. An unspecified counterclaim has been lodged which is being vigorously defended by the Group in respect of which the Directors estimate approximately $2.5m liability in the unlikely event that the counterclaim is successful.


9.  Other matters


This report will be posted on the Company's websitewww.dartgroup.co.uk and copies are available from the Company Secretary at the registered office of the Company, Low Fare Finder House, Leeds Bradford International Airport, Leeds LS19 7TU.


 


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