Preliminary Results

RNS Number : 5675K

Dart Group PLC

26 June 2014

 



DART GROUP PLC

PRELIMINARY UNAUDITED RESULTS FOR YEAR ENDED 31 MARCH 2014

Dart Group PLC (the "Group"), the Leisure Airline, Package Holidays and Distribution & Logistics Group, announces its preliminary results for the year ended 31 March 2014.  These results are presented under International Financial Reporting Standards ("IFRS").

CHAIRMAN'S STATEMENT

It gives me great pleasure to report that the Group delivered a strong trading performance in the year ended 31 March 2014.  Operating profit increased by 30% to £49.2m (2013: £37.9m) and pre-tax profit by 4% to £42.1m (2013: £40.5m).  Growth in earnings per share was 14% to 24.68p (2013: 21.73p).

We have a progressive dividend policy and in consideration of the Group's improved trading performance and liquidity, the Board is recommending a final dividend of 2.14p per share (2013: 1.33p) bringing the total proposed dividend to 2.74p per share for the year to 31 March 2014 (2013: 1.87p), an increase of 47%. The final dividend, which is subject to shareholder approval at the Company's Annual General Meeting on 4 September 2014, will be payable on 17 October 2014 to shareholders on the register at the close of business on 12 September 2014.

The performance in the year reflects the continuing success of the Group's Leisure Travel businesses.

Jet2holidays, the Group's package holiday business, almost doubled the number of customers enjoying its great value holidays to 830,019 (2013: 417,390). This growth is a reflection of the successful development of the Jet2holidays product, which offers packages encompassing flights, transfers and accommodation ranging from budget self-catering, to five-star luxury hotels.  As a result, Jet2holidays' operating profit increased by 122% to £14.4m (2013: £6.5m) as turnover increased 103% to £496.2m (2013: £244.8m).

Turnover in Jet2.com, the Group's Leisure Airline, increased by 16% to £643.1m (2013: £556.2m) as demand for seats, supported by Jet2holidays, resulted in another year of improved load factors and increased net ticket yields.  Though operating profit increased by 17% to £31.2m (2013: £26.7m), profit before tax reduced to £23.9m (2013: £29.3m) due to adjustments associated with the revaluation of US dollar cash balances and certain ineffective hedges.

Our important and long-established Distribution & Logistics business, Fowler Welch, achieved a profit before tax of £3.3m (2013: £4.4m). This result was attained despite an inconsistent first half to the year when the business was adversely affected by an unexpectedly varied profile of seasonal volumes required by its supermarket customers during late July, August and September, requiring extra resource to uphold service levels.

Net cash flow from operating activities amounted to £130.8m (2013: £150.3m). The Group continues to invest to ensure that it maintains its growth trajectory.  Capital expenditure during the year was £83.5m (2013: £79.7m), and principally related to long-term maintenance spend on aircraft and engines, the acquisition of two Boeing 737 aircraft, and investment in our new flight crew training centre, incorporating three flight simulators.

As at 31 March 2014, the Group's cash balances, including money market deposits, had grown by £42.8m (2013: £68.9m) to £263.7m (2013: £220.9m), which included £286m (2013: £253m) of advance payments from customers in respect of their future flights and holidays. 

The Group's cash and money market deposits include £140.7m (2013: £145.8m) which is restricted by its merchant acquirers as collateral against a proportion of forward bookings paid for by credit or debit card.  These balances are considered to be restricted until the respective customers have travelled.

Leisure Travel - Leisure Airline and Package Holidays

Good progress has been made in our Leisure Travel businesses over the year.  We added 32 new routes connecting our Northern UK bases with our holiday destinations, primarily popular Mediterranean and Canary Island resorts and great Leisure Cities.

Of our 2.8 million departing customers, over 830,000 purchased a Jet2holidays package, making us the third largest CAA licensed, ATOL bonded holiday company in the UK.  The all-inclusive package holiday represents great and dependable value, and is a long-established and popular product, with special attraction for customers on a tight budget in these difficult economic times.

Our low deposit, 22kg baggage allowance and family friendly flight times all contribute to the attraction of our package holidays product.  And we ensure that we deliver a holiday that our customers can both look forward to and remember with pleasure - the flights with Jet2.com, carefully organised coach transfers, attractive hotels with good facilities, and friendly representatives in resort. 

During the summer of 2013 Jet2.com operated 53 aircraft from its eight Northern UK bases and achieved an improved load factor of 91%.  The fleet has grown to 55 for summer 2014 with the addition of 5 leased Boeing 737-800's and a reduction in the number of short-term chartered aircraft.  We will continue to increase our fleet conservatively and in line with the healthy demand for our products.

Whilst price is certainly a crucial factor in the choice of a package holiday or holiday flight, the all round product is what is anticipated and remembered.  We believe our focus on our product is second to none and that we have a great future in this attractive business. 

To support our growth and the infrastructure needed to deliver our package holidays we entered into a lease, in March 2013, for 72,000 square feet of high grade office space, near the centre of Leeds, to house our commercial and administrative teams together with our large call centre.  Our operational teams remain at Leeds Bradford International Airport - close to the action and to the customer.

In September 2013 we purchased premises in nearby Bradford to develop a flight simulator centre for pilot and cabin crew training.  Hitherto, we have used third party providers for the simulator training which pilots have to undertake prior to flying an aircraft type and biannually thereafter.  This has been a £9.2 million investment which will ensure high professional standards for our nearly 600 pilots.  Pilot training commenced at the centre in May 2014.  At the same time, we have expanded our pilot and engineering apprentice schemes - taking 30 apprentices yearly - a great investment in the future of Jet2.com.

In January 2014 we were pleased to renew our agreement with Royal Mail for the operation of six night mail flights, every weekday, from our operational bases.  We utilise our Boeing 737-300 QC ("Quick Change") aircraft which are converted from passenger to freighter configuration in less than 40 minutes.  They then fly UK domestic freight services to enable Royal Mail to achieve their next day delivery targets.

There has been considerable interest in an appeal hearing before the Court of Appeal relating to a claim for compensation, made by Mr Ronald Huzar, under EU Regulation 261 in respect of a Jet2.com flight which was delayed due to a technical defect. In line with guidance published by the UK Civil Aviation Authority and other European National Enforcement Bodies, Jet2.com maintained that the technical defect was an "extraordinary circumstance" which relieved it of the obligation to pay compensation. In a judgment given on 11 June 2014, the Court of Appeal held that the technical defect was not an extraordinary circumstance and that compensation is payable. Jet2.com is not leaving the matter there and is seeking ultimate resolution by appealing to the Supreme Court, which may involve, instead or in addition, reference to the Court of Justice of the European Union.

Mr Huzar and his family were delayed on return from their holiday near Malaga in Spain, in October 2011. A replacement aircraft was positioned to Malaga to ensure our customers returned home as soon as possible.  During the delay, Jet2.com fully met its duty of care obligations, providing food and hotel accommodation to all customers on the affected flight.

Distribution & Logistics

Our distribution business Fowler Welch is a leading provider of supply chain logistics, particularly temperature controlled, to retailers and their suppliers, growers, importers and manufacturers.

The Company operates from nine UK distribution sites, with major operations in the key produce growing and importing areas of Spalding in Lincolnshire, Teynham in Kent and Hilsea near Portsmouth.  Fowler Welch also operates a 500,000 square foot ambient (non-temperature controlled) consolidation and distribution centre near Bury, Greater Manchester. 

The Company's mission is to ensure that by close co-operation with its supermarket customers and their suppliers, the retailer's shelves are continually supplied with fast moving produce and prepared foods, whatever the levels of variability in demand.  These levels often vary considerably on a daily basis and may be influenced by many factors, including sporting and social events, such as the World Cup, public holidays and weather suitable for BBQ's !

There is a wealth of experience and expertise within Fowler Welch that ensures the mission is achieved and this has been recognised by its customers, including recently when it was awarded "Carrier of The Year" by Asda for the third year in succession. 

During the past year there has been significant growth in the Company's sales pipeline with revenues progressively coming on-stream during the current financial year.  While existing business is being vigorously developed we are particularly pleased to announce that Fowler Welch has recently entered into a Memorandum of Understanding for a joint venture to store, ripen and pack stone-fruit, and exotic and organic fruits, at its Teynham facility.  Our partner in this venture is a leading supplier of fruit, from the UK and around the world, to the multiple retailers.

Following processing and packing, the fruit will be delivered to Fowler Welch's customers through its distribution network.  The overall effect is to widen the scope of our business in Kent.  In anticipation of the growth potential at Teynham, which is close to the port of Dover and the Channel Tunnel freight terminal, and therefore situated not only in Kent, "The Garden of England" but on a main artery for imported fruits and produce to the UK, Fowler Welch has obtained planning permission for the substantial development and expansion of the site, which is anticipated to take place in the coming year. 

We are pleased that the many business initiatives laid in place by the vigorous management of the Distribution Division are now coming to fruition. Given these developments we believe there is a bright, interesting and profitable future ahead.

Outlook

Taking people on holiday, whether through the sale of a flight or a full holiday package, and the distribution of produce and prepared foods sold by supermarkets, are much-needed, high-potential businesses.  Our scale, experience and competitiveness in each sector gives us optimism in our outlook for the long-term growth of the Group.

In relation to the current financial year, we are finding demand for leisure travel, this summer, to the markets we serve, less buoyant than we would have hoped for and market pricing weak.  This may be due to the weather, the World Cup, or because the financial recovery hasn't yet taken hold in our home territory, the North of the UK.

Unfortunately, therefore, in view of the current visibility we have of our remaining summer 2014 forward bookings, we now expect the current year operating profit outturn to be lower than previous market expectations.

Philip Meeson

Chairman

26 June 2014

 

 

BUSINESS & FINANCIAL REVIEW

The Group currently comprises three operating businesses, Leisure Airline, Package Holidays and Distribution & Logistics.  The Leisure Airline and Package Holidays operations are working progressively closer together to provide a range of Leisure Travel services to our Northern UK customer base.

Group financial performance 2013/14

The Group's financial performance for the year to 31 March 2014 is reported in line with International Financial Reporting Standards ("IFRS"), as adopted by the EU, which were effective at 31 March 2014.

Summary Income Statement
		2014	2013	Change
		£m	£m
Turnover		1,120.2	869.2	29%
Net operating expenses		(1,071.0)	(831.3)	29%
Operating profit		49.2	37.9	30%
Net financing income		-	0.6	-
Revaluation of derivative hedges		(3.3)	2.0	(265%)
Revaluation of foreign currency balances		(3.8)	-	-
Group profit before tax		42.1	40.5	4%
Net financing income & revaluations		7.1	(2.6)	373%
Depreciation		60.7	45.5	33%
EBITDA		109.9	83.4	32%
	Operating profit margin	4.4%	4.4%	-   ppts
	Group profit before tax margin	3.8%	4.7%	(0.9) ppts
	EBITDA margin	9.8%	9.6%	0.2  ppts

The Group's turnover increased 29% from the prior year to £1,120.2m (2013: £869.2m), driven by higher Package Holidays volumes and increased yields in both our Leisure Airline and Package Holidays businesses.

Continued focus on revenue, operational efficiencies and careful investment resulted in operating profit growth of 30% to £49.2m (2013: £37.9m).  The year on year improvement is analysed by segment below:

Segment	£m	£m
2013 operating profit		37.9
Leisure Airline	+4.5
Package Holidays	+7.9
Distribution & Logistics	(1.1)
Change		+11.3
2014 operating profit		49.2

Net financing costs of £7.1m comprised £3.3m in relation to mark to market adjustments taken on certain ineffective derivative hedges and £3.8m relating to the revaluation of US dollar currency balances held at year end.  As a result, the Group's statutory profit before tax increased by 4% to £42.1m (2013: £40.5m).

EBITDA increased by 32% to £109.9m (2013: £83.4m), which was slightly higher than operating profit growth.

The Group's effective tax rate of 15% (2013: 23%) was lower than the headline rate of corporation tax of 23% as a consequence of legislation enacted in the year. This legislation reduces the UK corporation tax rate to 20% from 1 April 2015, resulting in a reduction of the Group's deferred tax liability.

Basic earnings per share increased by 13.6% to 24.68p (2013: 21.73p), as profit after taxation increased 15% from £31.2m to £35.9m.

After taking into consideration the liquidity in the business at the end of the financial year, the Board is recommending a final dividend of 2.14p per share (2013: 1.33p).  On 22 November 2013 the Board declared an interim dividend of 0.60p per share (2013: 0.54p), equating to a full year dividend of 2.74p per share (2013: 1.87p).

Summary Cash Flow
	2014	2013	Change
	£m	£m
EBITDA	109.9	83.4	32%
Other P&L adjustments	0.4	0.4	-
Movements in working capital	26.6	71.5	(63%)
Interest & taxes	(6.1)	(5.0)	(22%)
Net cash generated from operating activities	130.8	150.3	(13%)
Investing activities(a)	(83.5)	(79.7)	(5%)
Other items	(4.5)	(1.7)	(165%)
Increase in net cash/money market deposits	42.8	68.9	(38%)

Net cash generated from operating activities was £130.8m (2013: £150.3m).  Capital expenditure increased from £79.7m to £83.5m, principally the result of increased expenditure on the long term maintenance of aircraft.  The airline also purchased two Boeing 737s and invested in its own flight crew training centre, including three flight simulators.  The Group's capital expenditure as a % of EBITDA reduced to 76% (2013: 96%), as the business continued to fund growth organically.

The Group generated net cash inflows^(b) of £42.8m in the year (2013: £68.9m), resulting in a year end cash position, including money market deposits, of £263.7m (2013: £220.9m).  Total cash received from Jet2holidays and Jet2.com customers in advance of their trips, amounted to £286m (2013: £253m) at that time. 

The year end cash position included £140.7m (2013: £145.8m) 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 respective customers have travelled.

The Group is required by the UK Civil Aviation Authority to maintain certain levels of "available liquidity", which is defined as free cash plus available facilities. 

The Group refinanced its bank facilities in early July 2013 with funding lines incorporating a £50.0m revolving credit facility committed until the end of August 2017 and a £10.0m bank loan facility maturing at the end of August 2017.

Summary Balance Sheet
	2014	2013	Change
	£m	£m
Non-current assets	298.8	276.9	8%
Net current assets(c)	145.2	150.7	(4%)
Deferred revenue	(484.9)	(407.5)	(19%)
Other liabilities	(41.2)	(54.4)	24%
Cash and money market deposits	263.7	220.9	19%
Shareholders' equity	181.6	186.6	(3%)

Net assets reduced by £5.0m due to profit after tax of £35.9m (2013: £31.2m) being negated by adverse movements in the cash flow hedging reserve, as a result of mark to market movements on US dollar and jet fuel forward contracts.

Note (a):  Increase in money market deposits of £22.5m (2013: £47m reduction) is presented as cash.

Note (b): Cash flows are reported including the movement of money market deposits (cash deposits with maturity of more than three months from point of acquisition) to give readers an understanding of total cash generation.  The consolidated Group Cash Flow Statement reports net cash flow excluding these movements.

Note (c): stated excluding cash and cash equivalents, money market deposits and deferred revenue.

Segmental performance

Leisure Travel - Leisure Airline

The Leisure Airline business trades under the Jet2.com brand and operates scheduled flights to a range of leisure destinations from its bases at Belfast International, Blackpool, East Midlands, Edinburgh, Glasgow, Leeds Bradford, Manchester and Newcastle airports.

Total Leisure Airline turnover, including sales of seats to Jet2holidays, increased by 16% to £643.1m (2013: £556.2m).  A 14% capacity increase, targeted at high volume Mediterranean and Canary Island leisure destination routes, resulted in a 16% increase in flown passenger sectors to 5.61 million (2013: 4.84 million).  Careful capacity management and a growing mix of "Far Sun" flying yielded a 5% increase in net ticket price per passenger to £78.39 (2013: £74.66) and improved load factors at 91% (2013: 90%).  This load factor improvement was in part underpinned by the sale of seats to Jet2holidays which represented 30% (2013: 17%) of the airline's total seat sales in the year.

Retail revenue (non-ticket revenue) grew to £32.14 per passenger (2013: £30.96), a result of continued focus on pre-departure (primarily hold bags and advanced seat assignment), in-flight (pre-ordered meals, drinks, snacks and perfumes) and ancillary product (car hire and travel insurance) sales.  Retail revenue performance continues to be optimised through our customer contact programme and dynamic pricing, ensuring that customers are offered the best products and value for their particular needs.

Although operating expenses grew by 16%, this increase was predominantly activity-related.  As a result, operating profit increased by 17% to £31.2m (2013: £26.7m).   

During the year, Jet2.com expanded its route network, operating a total of 205 routes (2013: 173).  Jet2.com has further increased seat capacity by 13% for summer 2014, growth continuing to be focused on high volume leisure destinations. The airline will fly 229 routes to 51 destinations in 18 different countries in 2014/15.

The delivery of great customer service is at the heart of Jet2.com brand values. To ensure that every employee understands this ethos, a company-wide employee engagement programme called 'Take Me There' is delivered, ensuring every colleague in the business has received training on the importance of delivering customer service excellence at every point in our customers' journey.

Leisure Airline
	2014	2013	Change
	£m	£m
Turnover	643.1	556.2	16%
Operating expenses	(611.9)	(529.5)	(16%)
Operating profit	31.2	26.7	17%
Net financing (costs) / income	(0.2)	0.6	(133%)
Revaluation of derivative hedges	(3.3)	2.0	(265%)
Revaluation of foreign currency balances	(3.8)	-	-
Profit before tax	23.9	29.3	(18%)
Net financing costs / (income) and revaluations	7.3	(2.6)	381%
Depreciation	58.4	43.1	35%
Leisure Airline EBITDA	89.6	69.8	28%
Operating profit margin	4.9%	4.8%	0.1 ppt
Profit before tax margin	3.7%	5.3%	(1.6 ppts)
EBITDA margin	13.9%	12.5%	1.4 ppts

KPIs
	2014	2013	Change
Number of owned aircraft at 31 March	44	42	5%
Number of leased aircraft at 31 March	6	4	50%
Number of routes	205	173	18%
Seats available (capacity)	6.16m	5.38m	14%
Flown passenger sectors	5.61m	4.84m	16%
Load factor	91.0%	90.0%	1 ppt
Net ticket yield	£78.39	£74.66	5%
Retail revenue per passenger	£32.14	£30.96	4%
Average hedged price of fuel (US$ per tonne)	$961	$979	2%
Percentage of estimated annual fuel requirement hedged for the next financial year	99%	99%	-
Advance sales made at year end date	£172.8m	£176.0m	(2%)
Average staff numbers	2,825	2,288	23%

Leisure Travel - Package Holidays

Jet2holidays, the Group's package holiday brand, is an integral part of the Group's leisure travel activities, working closely with Jet2.com to provide ATOL protected holidays to a wide range of destinations from our eight Northern UK airports.

The business has once again doubled its customer numbers and as a result turnover increased 103% to £496.2m (2013: £244.8m) as 830,019 customers enjoyed a great value package holiday in the year (2013: 417,390).

The focus on high volume, leisure destinations and in particular "Far Sun" destinations such as those in the Canary Islands and the Eastern Mediterranean has improved gross margin per holiday.  This improvement is also in part a reflection of the continued development of the Jet2holidays product which offers packages encompassing flights, transfers and accommodation, ranging from budget self-catering, to five-star luxury hotels, with all-inclusive and three and four-star packages being particularly popular.

The increasing scale of the business has enabled operating profits to increase by 122% to £14.4m (2013: £6.5m).

Approximately 50% of Jet2holidays are sold over the Internet, 20% from the business's UK-based call centre, and the balance via high street and online travel agents.  Sales through the travel agents remain an important channel and Jet2holidays can be booked through all major travel agent chains, key multiples, homeworker companies and independents in the North of the UK, each being proactively supported and nurtured.

The award-winning Jet2holidays.com website and our new and developing Jet2holidays mobile applications are continuously tailored to improve the quality of both the customer and the travel agents' booking experience.  Website visits are considerably higher than the previous year and conversion rates remain strong.  During the year we also moved our Jet2.com call centre back into the UK from South Africa, consolidating it into our Jet2holidays call centre in our new offices in Leeds, enabling a consistent customer experience between the Jet2.com and Jet2holidays brands.

Looking forward to the year ending 31 March 2015, the business will continue to build brand and product awareness in its core markets, underpinned by strong and creative marketing and its focus on excellent customer service.  Investment in TV advertising, intelligent use of social media and other online channels of communication, in addition to cross-selling between Jet2holidays and Jet2.com, will attract new customers and, importantly, generate valuable repeat business.

Package Holidays
	2014	2013	Change
	£m	£m
Turnover	496.2	244.8	103%
Operating expenses	(481.8)	(238.3)	(102%)
Operating profit	14.4	6.5	122%
Net financing income	0.5	0.3	67%
Profit before tax	14.9	6.8	119%
Net financing income	(0.5)	(0.3)	(67%)
Depreciation	0.2	0.3	33%
Package Holidays EBITDA	14.6	6.8	115%
Operating profit margin	2.9%	2.7%	0.2 ppts
Profit before tax margin	3.0%	2.8%	0.2 ppts
EBITDA margin	2.9%	2.8%	0.1 ppts
KPIs
	2014	2013	Change
Passenger numbers	830,019	417,390	99%
Advance sales made at year end date	£312.1m	£231.5m	35%
Average staff numbers	261	136	92%

Distribution & Logistics

The Group's distribution business, Fowler Welch, is one of the UK's leading logistics providers to the food industry supply chain, serving retailers, growers, importers and manufacturers across its network of nine sites, strategically located to meet demand for its services. A full range of added value services is provided including storage, case level picking and an award winning national distribution network.

Revenues reduced in the year by 1.3% to £153.2m (£155.2m) primarily as a result of the decision to close our European operating base in Holland plus a small regional support hub.  The business was also adversely affected by the unexpectedly varied profile of seasonal volumes for its supermarket customers during late July, August and September, which required extra resource to uphold service levels.  These factors, together with investment made in people and infrastructure to support future growth, meant that operating profits reduced 23% to £3.6m (2013: £4.7m) which included a £0.4m charge for closure costs.

Fowler Welch is bringing its vast experience of short distribution lead times gained from its chill and produce operations to the ambient (non temperature controlled) sector, with revenues up by over 4% year-on-year at Heywood, the ambient shared user storage and distribution site near Bury, Greater Manchester.  New revenues have been secured from a growing customer base and further contracts secured for implementation in the 2014/15 financial year.  This operation is now fully established, a fact underlined by the operational team being awarded "Primary Carrier of the Year" by ASDA for the third consecutive year.

Spalding, our key distribution centre in the major growing region of Lincolnshire, grew revenues by 2.5% year on year.  Further growth in the current financial year will stem from new substantial contracted volumes, including a recently secured long term commitment from Tulip, a Danish-owned food producer employing around 8,000 people in the UK.  This contract provides a specialist distribution service for hanging meat, supplying processing plants across the UK.

Our recently expanded and refurbished Hilsea depot, which is well located near to Portsmouth International Port, has seen customers take advantage of its full range of warehousing, consolidation and distribution services.  Further consolidation and distribution opportunities are being targeted for the year ahead.

Mid-way through the year, new business was introduced at the Company's Desborough operation in Northamptonshire, balancing flows and increasing two-way vehicle utilisation.  Further opportunities to increase the efficiency of the Fowler Welch distribution network are being identified as we gain enhanced operational visibility through Enterprise, our new distribution, planning and transport operating system.

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 also provide distribution services for fruit and produce imported from across the English Channel.  Fowler Welch has recently entered into a Memorandum of Understanding for a joint venture to store, ripen and pack stone-fruit, and exotic and organic fruits at Teynham.  These services will be performed using the latest technology and market-leading grading, sorting and packing equipment to ensure the highest of standards are achieved for the joint venture's customers. The packed product will then be delivered to customers through the Company's distribution system.

In view of the planned expansion of activities at Teynham, planning permission has been obtained to extend the distribution centre.  This investment will be progressed in line with actual growth of the volumes at the site.

Though the marketplace remains extremely competitive and price-focused, the outlook for Fowler Welch is encouraging. A well positioned national network of sites, focus on its core activities of added value services, a new joint venture and its growing reputation in the ambient arena will continue to support the development of a strong revenue pipeline.

Distribution & Logistics
	2014	2013	Change
	£m	£m
Turnover	153.2	155.2	(1%)
Operating expenses	(149.6)	(150.5)	1%
Operating profit	3.6	4.7	(23%)
Net financing costs	(0.3)	(0.3)	-
Profit before tax	3.3	4.4	(25%)
Net financing costs	0.3	0.3	-
Depreciation	2.1	2.1	-
Distribution & Logistics EBITDA	5.7	6.8	(16%)
Operating profit margin	2.3%	3.0%	(0.7 ppts)
Profit before tax margin	2.2%	2.8%	(0.6 ppts)
EBITDA margin	3.7%	4.4%	(0.7 ppts)

KPIs
	2014	2013	Change
Warehouse space (square feet)	847,000	847,000	-
Number of tractor units in operation	450	450	-
Number of trailer units in operation	640	640	-
Miles per gallon	8.9	8.7	2%
Fleet mileage per annum	42.6m	43.4m	(2%)
Average staff numbers	1,388	1,335	4%

For further information contact:

Dart Group PLC Philip Meeson, Group Chairman and Chief Executive Gary Brown, Group Chief Financial Officer	Tel: [phone]
Smith & Williamson Corporate Finance Limited Nominated Adviser Andy Pedrette / David Jones	Tel: [phone]
Canaccord Genuity - Joint Broker Peter Stewart / Mark Whitmore	Tel: [phone]
Arden Partners - Joint Broker Christopher Hardie	Tel: [phone]
Buchanan - Financial PR Richard Oldworth	Tel: [phone]

 

COnsolidated group income statement

for the year ended 31 March 2014

		Unaudited results for the year ended 31 March 2014				Audited results for the year ended 31 March 2013
		£m				£m
Turnover		1,120.2				869.2
Net operating expenses		(1,071.0)				(831.3)
Operating profit		49.2				37.9
Finance income		1.4				1.6
Finance costs		(1.4)				(1.0)
Revaluation of derivative hedges		(3.3)				2.0
Revaluation of foreign currency balances		(3.8)				-
Net financing costs		(7.1)				2.6
Profit before taxation		42.1				40.5
Taxation		(6.2)				(9.3)
Profit for the year (all attributable to equity shareholders of the parent)		35.9				31.2
Earnings per share
- basic		24.68 p				21.73 p
- diluted		24.28 p				21.44 p

Consolidated group statement of comprehensive income

for the year ended 31 March 2014

		Year ended 31 March 2014 Unaudited £m		Year ended  31 March 2013 Audited £m
Profit for the year		35.9		31.2
Effective portion of fair value movements in cash flow hedges		(33.8)		(3.3)
Net change in fair value of effective cash flow hedges transferred to profit		(16.9)		-
Taxation on components of other comprehensive income		11.5		0.6
Other comprehensive income and expense for the period, net of taxation		(39.2)		(2.7)
Total comprehensive income for the period all attributable to owners of the parent		(3.3)		28.5

 

 

Consolidated balance sheet

at 31 March 2014

		Unaudited 2014		Audited 2013
			£m	£m
Non-current assets
Goodwill			6.8	6.8
Property, plant and equipment			291.6	269.1
Derivative financial instruments			0.4	1.0
			298.8	276.9
Current assets
Inventories			3.1	1.3
Trade and other receivables			285.9	226.2
Derivative financial instruments			1.4	22.2
Money market deposits			52.5	30.0
Cash and cash equivalents			211.2	190.9
			554.1	470.6
Total assets			852.9	747.5
Current liabilities
Trade and other payables			107.0	92.0
Deferred revenue			484.5	407.1
Borrowings			0.8	0.8
Provisions			2.4	2.1
Derivative financial instruments			35.0	4.2
			629.7	506.2
Non-current liabilities
Other non-current liabilities			10.7	11.4
Borrowings			9.0	7.7
Derivative financial instruments			2.2	0.3
Deferred tax liabilities			19.7	35.3
			41.6	54.7
Total liabilities			671.3	560.9
Net assets			181.6	186.6
Shareholders' equity
Share capital			1.8	1.8
Share premium			11.4	10.7
Cash flow hedging reserve			(26.8)	12.4
Retained earnings			195.2	161.7
Total shareholders' equity			181.6	186.6

consolidated group cash flow statement

for the year ended 31 March 2014		Unaudited 2014		Audited 2013
Cash flows from operating activities		£m		£m
Profit on ordinary activities before taxation		42.1		40.5
Adjustments for:
Finance income		(1.4)		(1.6)
Finance costs		1.4		1.0
Revaluation of derivative hedges		3.3		(2.0)
Foreign exchange losses		3.8		-
Depreciation		60.7		45.5
Equity settled share based payments		0.4		0.4
Operating cash flows before movements in working capital		110.3		83.8
(Increase) / decrease in inventories		(1.8)		0.1
Increase in trade and other receivables		(59.7)		(108.5)
Increase in trade and other payables		10.3		29.2
Increase in deferred revenue		77.5		150.3
Increase in provisions		0.3		0.4
Cash generated from operations		136.9		155.3
Interest received		1.4		1.4
Interest paid		(1.4)		(1.1)
Income taxes paid		(6.1)		(5.3)
Net cash from operating activities		130.8		150.3
Cash flows used in investing activities
Purchase of property, plant and equipment		(83.5)		(79.7)
Proceeds from sale of property, plant & equipment		0.2		-
Net (increase) / decrease in money market deposits		(22.5)		47.0
Net cash used in investing activities		(105.8)		(32.7)
Cash flows from financing activities
Repayment of borrowings		(8.7)		(0.8)
New loans advanced		10.0		-
Proceeds on issue of shares		0.7		0.9
Equity dividends paid		(2.8)		(2.1)
Net cash used in financing activities		(0.8)		(2.0)
Effect of foreign exchange rate changes		(3.9)		0.3
Net increase in cash in the year		20.3		115.9
Cash and cash equivalents at beginning of year		190.9		75.0
Cash and cash equivalents at end of year		211.2		190.9

 

Consolidated group statement of changes in equity

for the year ended 31 March 2014

		Share capital		Share premium		Cash flow hedging reserve		Retained earnings		Total reserves
		£m		£m		£m		£m		£m
Audited as at 1 April 2012		1.8		9.8		15.1		132.2		158.9
Total comprehensive income for the year		-		-		(2.7)		31.2		28.5
Issue of share capital		-		0.9		-		-		0.9
Dividends paid in the year		-		-		-		(2.1)		(2.1)
Share based payments		-		-		-		0.4		0.4
Audited as at 31 March 2013		1.8		10.7		12.4		161.7		186.6
Total comprehensive income for the year		-		-		(39.2)		35.9		(3.3)
Issue of share capital		-		0.7		-		-		0.7
Dividends paid in the year		-		-		-		(2.8)		(2.8)
Share based payments		-		-		-		0.4		0.4
Unaudited as at 31 March 2014		1.8		11.4		(26.8)		195.2		181.6

 

Notes to the consolidated financial statements

for the year ended 31 March 2014

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 ('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 that have been measured at fair value.

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 July 2014.

The Group uses forward foreign currency contracts and aviation fuel swaps to hedge exposure to foreign exchange rates and aviation fuel price volatility. The Group also uses forward EU Allowance contracts and forward Certified Emissions Reduction contracts to hedge exposure to Carbon Emissions Allowance volatility following the need for the Group to join the EU Emissions Trading Scheme from 1 January 2012. Such derivative financial instruments are stated at fair value.

Going concern

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, the Group's net current liability position - driven principally by continued investment in our aircraft fleet - and forecasts of future trading through to 31 March 2017, 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 level of available facilities and cash for the foreseeable future. As such, they continue to adopt the going concern basis in preparing the financial statements for the year ended 31 March 2014.

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.  The Group considers that the Board of Directors is the CODM.

The Group's operating segments have been identified based on the internal reporting information provided to the CODM in order for the CODM to formulate allocation of resources to segments and assess their performance.  From such information, Leisure Airline and Package Holidays (working progressively closer together as one Leisure Travel business) and the Distribution & Logistics business have been determined to represent operating segments.

The Leisure Airline and Package Holidays businesses are based on serving our customers' demand for package holidays in, and flights to, high volume leisure destinations in the Mediterranean, the Canary Islands and great Leisure Cities across Europe.  Resource allocation decisions are based on our entire route network and, in the case of Leisure Airline, the deployment of the 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 individual distribution centres within the network.

Group eliminations include the removal of seat sales by Leisure Airline to the Package Holidays business and the removal of intersegment asset and liability balances.

Following the identification of the operating segments, the Group has assessed the similarity of the characteristics of the operating segments.  Given the different performance targets, customer bases and operating markets of each of the operating segments it is not currently appropriate to aggregate the operating segments for reporting purposes and therefore all three of the identified operating segments are disclosed as reportable segments for the year ended 31 March 2014:

·     Leisure Airline, comprising the Group's scheduled leisure airline, Jet2.com;

·     Package Holidays, comprising the Group's ATOL protected tour operator, Jet2holidays; and

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

The Board assesses the performance of each segment based on operating profit, profit before and after tax, and EBITDA.  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 ten percent of the Group's revenue.

Distribution & Logistics		Leisure Airline		Package Holidays		Group eliminations		Total
	£m	£m		£m		£m		£m
Unaudited year ended 31 March 2014
Turnover	153.2	643.1		496.2		-		1,292.5
Inter-segment turnover	-	-		-		(172.3)		(172.3)
Turnover	153.2	643.1		496.2		(172.3)		1,120.2
EBITDA	5.7	89.6		14.6		-		109.9
Operating profit	3.6	31.2		14.4		-		49.2
Finance income	-	0.9		0.5		-		1.4
Finance costs	(0.3)	(1.1)		-		-		(1.4)
Revaluation of derivative hedges	-	(3.3)		-		-		(3.3)
Revaluation of foreign currency balances	-	(3.8)		-		-		(3.8)
Profit before taxation	3.3	23.9		14.9		-		42.1
Taxation	(0.6)	(2.3)		(3.3)		-		(6.2)
Profit after taxation	2.7	21.6		11.6		-		35.9
Assets and liabilities
Segment assets	71.0	502.7		736.6		(457.4)		852.9
Segment liabilities	(32.7)	(381.3)		(714.7)		457.4		(671.3)
Net assets	38.3	121.4		21.9		-		181.6
Other segment information
Property, plant and equipment additions	1.0	82.3		0.2		-		83.5
Depreciation, amortisation and impairment	(2.1)	(58.4)		(0.2)		-		(60.7)
Share based payments	(0.1)	(0.2)		(0.1)		-		(0.4)
Audited year ended 31 March 2013
Turnover	155.2	556.2		244.8		-		956.2
Inter-segment turnover	-	-		-		(87.0)		(87.0)
Turnover	155.2	556.2		244.8		(87.0)		869.2
EBITDA	6.8	69.8		6.8		-		83.4
Operating profit	4.7	26.7		6.5		-		37.9
Finance income	-	1.3		0.3		-		1.6
Finance costs	(0.3)	(0.7)		-		-		(1.0)
Revaluation of derivative hedges	-	2.0		-		-		2.0
Profit before taxation	4.4	29.3		6.8		-		40.5
Taxation	(1.4)	(6.2)		(1.7)		-		(9.3)
Profit after taxation	3.0	23.1		5.1		-		31.2

Distribution & Logistics		Leisure Airline		Package Holidays		Group eliminations		Total
	£m	£m		£m		£m		£m
Audited year ended 31 March 2013
Assets and liabilities
Segment assets	72.9	535.5		527.4		(388.3)		747.5
Segment liabilities	(37.6)	(394.3)		(517.3)		388.3		(560.9)
Net assets	35.3	141.2		10.1		-		186.6
Other segment information
Property, plant and equipment additions	0.9	78.7		0.1		-		79.7
Depreciation, amortisation and impairment	(2.1)	(43.1)		(0.3)		-		(45.5)
Share based payments	(0.1)	(0.2)		(0.1)		-		(0.4)

4.   Earnings per share

	Unaudited 2014		Audited 2013
	No.		No.
Basic weighted average number of shares in issue	145,300,720		143,618,691
Dilutive potential ordinary shares: employee share options	2,402,809		1,926,331
Diluted weighted average number of shares in issue	147,703,529		145,545,022
	Unaudited year to 31 March 2014		Audited year to 31 March 2013
Basis of calculation - earnings (basic and diluted)	£m		£m
Profit for the purposes of calculating basic and diluted earnings	35.9		31.2
Earnings per share - Total
- basic	24.68p		21.73p
- diluted	24.28p		21.44p

5.   Financial information

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 March 2014 or 31 March 2013. The financial information for 2013 is derived from the statutory accounts for the year ended 31 March 2013 which have been delivered to the Registrar of Companies. The auditor has reported on the year ended 31 March 2013 accounts; their report was:

i.     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 2014 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.   Annual report and accounts

The 2014 Annual Report and Accounts (together with the Auditor's Report) will be posted to shareholders in late July 2014.  The Annual General Meeting will be held on 4 September 2014.

 

END

 

 

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