TIDMDTG
RNS Number : 9201K
Dart Group PLC
13 July 2017
DART GROUP PLC
PRELIMINARY UNAUDITED RESULTS FOR YEARED 31 MARCH 2017
Dart Group PLC, the Leisure Travel and Distribution &
Logistics group ("the Group"), announces its preliminary results
for the year ended 31 March 2017. These results are presented under
International Financial Reporting Standards ("IFRS").
Financial Highlights for 2017 2016 Change
the Year Ended 31 March
Unaudited Audited
-------------------------- ------------ ------------ -------
Revenue GBP1,729.3m GBP1,405.4m 23%
-------------------------- ------------ ------------ -------
Operating profit GBP103.0m GBP105.0m (2%)
(1.5
Operating profit margin 6.0% 7.5% ppts)
-------------------------- ------------ ------------ -------
Underlying profit before
taxation (1) GBP101.0m GBP105.5m (4%)
Underlying profit before (1.7
taxation margin 5.8% 7.5% ppts)
-------------------------- ------------ ------------ -------
Profit before taxation GBP90.1m GBP104.2m (14%)
Profit before taxation (2.2
margin 5.2% 7.4% ppts)
-------------------------- ------------ ------------ -------
51.80 60.22
Basic earnings per share p p (14%)
-------------------------- ------------ ------------ -------
Proposed final dividend 3.897 3.100
per share p p 26%
Resulting total dividend 5.272 4.000
per share p p 32%
-------------------------- ------------ ------------ -------
[1] Underlying profit before taxation is defined as profit
before taxation stated before foreign exchange revaluation
losses
* Group Revenue increased by 23% to GBP1,729.3m (2016:
GBP1,405.4m) as strong Leisure Travel customer demand and resilient
ticket pricing for the summer 2016 season gave way to heavier price
discounting in the second half of the year to achieve the planned
growth in customer volumes.
* Profit before taxation reduced by 14% to GBP90.1m (2016:
GBP104.2m). This result includes considerable investment to launch
our two new Jet2.com operating bases at Birmingham and London
Stansted Airports and also includes a GBP10.9m charge for foreign
exchange revaluation losses (2016: GBP1.3m). Before accounting for
these revaluation losses, underlying profit before taxation reduced
by 4% to GBP101.0m (2016: GBP105.5m).
* In consideration of these results, the Board is recommending a
final dividend of 3.897p (2016: 3.100p), bringing the proposed
total dividend to 5.272p per share for the year ended 31 March 2017
(2016: 4.000p).
* Distribution & Logistics profit before tax decreased by
GBP0.9m to GBP4.5m (2016: GBP5.4m) on improved revenues of
GBP163.5m (2016: GBP144.0m), as profit margins were impacted by
very competitive market conditions, particularly in the ambient
sector, and a GBP0.4m bad debt write-off relating to a customer who
went into administration.
* From the financial year starting 1 April 2018, the Group will
implement a Discretionary Colleague Profit Sharing Scheme. The
profit share will be calculated at the rate of 5% of profit before
taxation, excluding foreign currency revaluations and other
exceptional items, for the respective Leisure Travel or
Distribution & Logistics businesses. This scheme is intended to
reward those colleagues who do not already participate in a
performance related bonus or commission scheme and who have been
continuously employed for at least 12 months. The first payment
will be made in July 2019.
* Both our Leisure Travel and Distribution & Logistics
businesses have made satisfactory starts to the new financial year.
Given visibility on current forward bookings and the recent
successful launch of our new operating bases at Birmingham and
London Stansted Airports, the Board expects to meet current market
expectations of underlying profit before taxation for the year
ending 31 March 2018.
* Despite the considerable uncertainty around "Brexit"
negotiations, we believe that the UK Government recognises the
importance of aviation services and similarly, European countries
appreciate the value that British tourists bring to their
respective economies. Therefore, for the long-term, we remain
confident in the resilience of our Leisure Travel business.
CHAIRMAN'S STATEMENT
I am pleased to report the Group's trading performance for the
year ended 31 March 2017.
Profit before taxation reduced by 14% to GBP90.1m (2016:
GBP104.2m). This result includes considerable investment to launch
our two new Jet2.com operating bases at Birmingham and London
Stansted Airports and also includes a GBP10.9m charge for foreign
exchange revaluation losses (2016: GBP1.3m). Before accounting for
these revaluation losses, underlying profit before taxation reduced
by 4% to GBP101.0m (2016: GBP105.5m). Basic earnings per share fell
by 14% to 51.80p (2016: 60.22p).
In consideration of these results, the Board is recommending a
final dividend of 3.897p per share (2016: 3.100p), which will bring
the total proposed dividend to 5.272p per share for the year (2016:
4.000p), an increase of 32%. This final dividend is subject to
shareholders' approval at the Company's Annual General Meeting on 7
September 2017 and will be payable on 27 October 2017 to
shareholders on the register at the close of business on 22
September 2017.
The profit performance in the year primarily reflects the
continuing investment in, and success of, the Group's Leisure
Travel business, which combines both Jet2.com, our leisure airline
and Jet2holidays, our package holidays provider.
Jet2.com flew a total of 7.10m passengers (one-way passenger
sectors) (2016: 6.07m), to and from popular sun, city and ski
destinations during the year, an increase of 17%. Demand for our
real package holidays continued to grow as Jet2holidays took 1.73m
customers on package holidays (2016: 1.22m), an increase of 42%,
representing 49% of overall flown passengers (2016: 40%). Our
important flight-only product was enjoyed by 3.64m passengers in
the year (2016: 3.63m). Average airline ticket yields at GBP86.65
(2016: GBP91.11) and average load factors at 91.5% (2016: 92.5%)
were respectively 5% and one percentage point lower than those
achieved in the prior year. The average price of a package holiday
was GBP617 (2016: GBP616). As a result, revenue in our Leisure
Travel business increased by 24% to GBP1,565.8m (2016:
GBP1,261.4m).
In July and September 2016, we were delighted to announce
Birmingham and London Stansted Airports as our 8th and 9th UK
operating bases. Operations at both commenced on 30 March 2017,
providing customers with a combined 58 new routes to Mediterranean
and Canary Island holiday destinations. We believe both bases have
great potential for our holiday business, further strengthening our
position in the Midlands and enabling us to serve, for the first
time, customers in North & East London and the East of
England.
Our Distribution & Logistics business, Fowler Welch,
achieved revenue growth of 14% to GBP163.5m (2016: GBP144.0m),
primarily due to new contracts which commenced during the year.
However, operating profit fell by GBP0.9m to GBP4.5m (2016:
GBP5.4m) as operating margins were impacted by very competitive
market conditions, particularly in the ambient sector, and a
GBP0.4m bad debt write-off relating to a customer who went into
administration.
The Group generated increased net cash from operating activities
of GBP331.3m (2016: GBP243.9m). Total capital expenditure of
GBP473.9m (2016: GBP213.5m) included the purchase of new and
mid-life Boeing 737-800NG aircraft and pre-delivery payments, which
have been substantially financed, for further new aircraft
deliveries. We also invested in a new engineering facility at
Manchester Airport, added a fourth flight simulator to our training
centre in Bradford and continued to invest in the long-term
maintenance of our aircraft fleet, whilst at Fowler Welch we
completed the extension to our Teynham distribution centre.
As at 31 March 2017, the Group's cash and money market deposit
balances had increased by GBP277.0m (2016: GBP109.2m) to GBP689.0m
(2016: GBP412.0m) which included advance payments from Leisure
Travel customers of GBP553.9m (2016: GBP385.8m) in respect of their
future holidays and flights. Net cash (stated after borrowings) was
GBP168.5m (2016: GBP321.1m).
I am also very pleased to announce that from the financial year
starting 1 April 2018, the Group will implement a Discretionary
Colleague Profit Sharing Scheme. This Scheme is intended to reward
those colleagues who do not already participate in a performance
related bonus or commission scheme and who have been continuously
employed for at least 12 months. The profit share will be
calculated at the rate of 5% of profit before taxation, excluding
foreign currency revaluations and other exceptional items, for the
respective Leisure Travel or Distribution & Logistics
businesses, and will be paid in proportion to each colleague's
basic salary. The first payment will be made in July 2019 following
the audit of the financial results for the year ending 31 March
2019.
Leisure Travel
We take people on holiday! Our leading UK Leisure Travel
business specialises in scheduled holiday flights by our
award-winning leisure airline, Jet2.com, to 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.
In summer 2016, Jet2.com operated 63 aircraft from our then
seven Northern UK airport bases to 63 destinations, serving 440
holiday resorts, including the addition of three new destinations:
Girona in Spain, Naples and Berlin. With the commencement of
operations from Birmingham and London Stansted Airports and the
addition of two new destinations, Costa de Almeria in Spain and
Halkidiki in Greece, the aircraft fleet has increased to 75 for
summer 2017, with a commensurate increase in pilots, engineers and
cabin crew.
Whether taking a holiday flight with Jet2.com, or an end-to-end
real package holiday with Jet2holidays, we recognise that this is
one of the most important family experiences of the year. Our core
principles therefore are to be family friendly, offer value for
money and give great service, so each of our customers "has a
lovely holiday".
Passengers travel on Jet2.com operated aircraft, ensuring that
we carefully control the quality of the flight experience. Our
passenger numbers allow us to serve many of our destinations daily
and others several times a week during the spring, summer and
autumn months, enabling us to offer a great choice of variable
duration holidays at affordable prices, whilst optimising load
factors which are consistently above 90%.
For those passengers who have arranged their own accommodation,
our flights offer competitive fares, convenient flight times,
allocated seating and a 22kg baggage allowance. At check-in, we aim
to deliver a speedy and friendly experience with customer helpers
on hand to assist, whilst on board, our cabin crew and pilots are
intent on ensuring that the holiday starts and finishes with a
relaxed and pleasant flight.
Our real package holidays give us the opportunity to deliver a
memorable experience to which we add value through innovation and
customer service - the delivery of great service is at the heart of
Jet2.com and Jet2holidays brand values. To underpin these values,
we deliver a company-wide engagement programme called 'Take Me
There', to ensure that every colleague in the business has received
training on the importance of delivering service excellence at
every point in our customers' journey.
Over 41% of our package holidays were sold on an all-inclusive
basis offering 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 times
of economic uncertainty.
Over the last 10 years, we have carefully developed
relationships with over 2,900 hotels. We often place substantial
deposits to secure a dependable and competitive room offering in
the most attractive hotels, always ensuring that we are satisfying
our customers' need for choice and quality. Encompassing a wide
range of great value 2 to 5-star accommodation, catering for young
& old and families alike, many hotels have adjacent waterparks
and other great attractions included in the package, adding
enjoyment and interest to the overall holiday experience. And in
June 2017, we launched Jet2Villas, so our customers can now enjoy
the freedom of a great value Villa Holiday wrapped up in one
package, with Jet2.com flights, accommodation and car hire all
included.
In summer 2017, over 450 customer helpers will be employed in
our holiday resorts to look after our customers, backed up by
24-hour helplines to give practical assistance in all
eventualities. Together with our airport-to-hotel transfer
services, everything is organised to make our customers' holidays
easy and carefree. Our Resort Flight Check-In service, introduced
at many hotels in summer 2016, has proven to be extremely popular
and has been expanded to over 150 hotels for summer 2017. This
service allows Jet2holidays customers to check-in their baggage for
their return flight at their hotel, letting them enjoy their final
day, bag and hassle free.
Having built a strong brand and reputation in the North of the
UK for providing 'package holidays you can trust', we are committed
to achieving the same reputation for providing wonderful holidays
from our new bases at Birmingham and London Stansted Airports.
Sustained levels of investment in product, brand and customer
service excellence, plus the delivery of an attractive end-to-end
product, which has proved its resilience over a number of years,
gives us the greatest opportunity to retain and attract customers.
We therefore believe we have a great future in the UK Leisure
Travel marketplace.
Distribution & Logistics
Our distribution business, Fowler Welch, is one of the UK's
leading providers of food supply chain services, serving retailers,
processors, growers and importers through its distribution network.
A full range of added value services is provided, including the
packing of fruits, storage and case-level picking and an
award-winning national distribution network.
The business operates from nine prime UK distribution sites,
with major temperature-controlled operations in the key produce
growing and importing areas of Spalding in Lincolnshire; Teynham
and Paddock Wood in Kent and Hilsea near Portsmouth. Further
regional distribution sites are located at Nuneaton near Coventry,
Washington, Tyne and Wear and at Newton Abbott, Devon. Ambient
(non-temperature-controlled) consolidation and distribution
services are provided at Heywood near Bury, Greater Manchester and
Desborough, Northamptonshire.
During the first half of the year, the business completed a
50,000 square foot extension to its Teynham facility. This
demand-led capacity increase enabled the expansion of Fowler
Welch's joint venture fruit ripening and packing business,
Integrated Service Solutions (ISS), and builds capacity for further
revenue opportunities at the site 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.
In June 2016, a transport and distribution solution for Dairy
Crest Limited based at Nuneaton in the Midlands, a new region for
the business, was introduced to the network. Following a seamless
implementation, which included the transfer of Dairy Crest
colleagues and fleet to Fowler Welch, the business contributed
positively in the year. This operation provides an important
additional revenue stream and adds to the geographical reach of our
significant chilled distribution services.
Fowler Welch has a strong and experienced management team and a
skilled workforce that prides itself on high standards of customer
service, price competitiveness and an ability to provide flexible
and innovative solutions, critical qualities in a sector where both
supplier and retailer supply chains are perpetually evolving to
meet consumers' ever-changing shopping habits.
We are therefore pleased that several of the business
initiatives laid in place by management are now coming to fruition
and we remain encouraged by the many opportunities still available.
We believe there is a bright, interesting and profitable future
ahead for Fowler Welch.
Outlook
Both our Leisure Travel and Distribution & Logistics
businesses have made satisfactory starts to the new financial year.
Given visibility on current forward bookings and the recent
successful launch of our new operating bases at Birmingham and
London Stansted Airports, the Board expects to meet current market
expectations of underlying profit before taxation for the year
ending 31 March 2018.
Looking further ahead, there remains considerable uncertainty
around "Brexit" negotiations and the effect these could have, both
on our freedom to fly and on our customers' ability to travel to
our leisure destinations. This is unsettling; however, we believe
that the UK Government recognises the importance of aviation
services, and similarly, European countries appreciate the value
that British tourists bring to their respective economies.
Therefore, for the long-term, we remain confident in the resilience
of our Leisure Travel business and we are encouraged by the
increasing proportion of customers choosing our great value, real
package holidays, which are not easily replicated by
non-specialists, and have proven particularly popular in
challenging economic times.
Philip Meeson
Executive Chairman
13 July 2017
BUSINESS AND FINANCIAL REVIEW
The Group's financial performance for the year ended 31 March
2017 is reported in line with International Financial Reporting
Standards ("IFRS"), as adopted by the EU.
Summary Income Statement Unaudited Audited Change
2017 2016
GBPm GBPm
-------------------------------- ----------
Revenue 1,729.3 1,405.4 23%
Net operating expenses (1,626.3) (1,300.4) (25%)
-------------------------------- ---------- ---------- -----------
Operating profit 103.0 105.0 (2%)
Net financing (costs) /
income (2.0) 0.5
-------------------------------- ---------- ---------- -----------
Group profit before FX
revaluations and taxation 101.0 105.5 (4%)
Net FX revaluation losses (10.9) (1.3)
Group profit before taxation 90.1 104.2 (14%)
Net financing costs (including
net FX revaluations) 12.9 0.8
Depreciation 87.0 88.7 (2%)
-------------------------------- ----------
EBITDA 190.0 193.7 (2%)
================================ ========== ========== ===========
Operating profit margin 6.0% 7.5% (1.5 ppts)
Group profit before FX
revaluations & taxation
margin 5.8% 7.5% (1.7 ppts)
Group profit before taxation
margin 5.2% 7.4% (2.2 ppts)
EBITDA margin 11.0% 13.8% (2.8 ppts)
-------------------------------- ---------- ---------- -----------
Strong customer demand and resilient ticket pricing for the
summer 2016 season gave way to heavier price discounting in the
second half of the year to achieve the planned growth in customer
volumes for the Leisure Travel business. This customer volume
increase, plus a 14% increase in Distribution & Logistics
revenue to GBP163.5m (2016: GBP144.0m), resulted in Group revenue
increasing by 23% to GBP1,729.3m (2016: GBP1,405.4m).
Whilst our higher margin package holidays product increased as a
percentage of overall sales, contributing positively to the Group
trading performance, increased losses in the second half of the
year, primarily due to the considerable investment to launch the
two new operating bases at Birmingham and London Stansted Airports,
resulted in Group operating profit reducing by 2% to GBP103.0m
(2016: GBP105.0m).
Net financing costs of GBP12.9m (2016: GBP0.8m) included a
GBP10.9m charge (2016: GBP1.3m) for foreign exchange revaluation
losses, arising from US dollar denominated debt used to fund the
acquisition of aircraft, and other foreign currency denominated
balances. The revaluation of the US dollar aircraft debt cannot be
naturally offset against the value of the aircraft, which is fixed
in pounds sterling at the point of acquisition in order to comply
with the requirements of IFRS.
As a result, the Group achieved a statutory profit before
taxation of GBP90.1m (2016: GBP104.2m). Group EBITDA decreased by
2% to GBP190.0m (2016: GBP193.7m).
The Group's effective tax rate of 15% (2016: 15%) was lower than
the 20% headline rate of corporation tax due to certain deferred
tax liability reductions. Basic earnings per share reduced by 14%
to 51.80p (2016: 60.22p).
Summary of Cash Flows Unaudited Audited Change
2017 2016
GBPm GBPm
------------------------------ ---------- -------- -------
EBITDA 190.0 193.7 (2%)
Other P&L adjustments 0.4 0.1 300%
Movements in working capital 147.9 61.0 142%
Interest and taxes (7.2) (10.9) 34%
------------------------------ ---------- -------- -------
Net cash generated from
operating activities 331.1 243.9 36%
Purchase of property, plant
& equipment (473.9) (213.5) (122%)
Movement on borrowings 424.4 81.9 418%
Other items (4.6) (3.1) (48%)
------------------------------ ---------- -------- -------
Net increase in cash and
money market deposits 277.0 109.2 154%
============================== ========== ======== =======
Net cash generated from operating activities was GBP331.1m
(2016: GBP243.9m), out of which capital expenditure of GBP473.9m
(2016: GBP213.5m) was incurred. New loans totalling GBP515.6m
(2016: GBP82.8m) were taken up, as the Group secured both
commercial debt and finance lease funding for the purchase of its
new Boeing 737-800NG aircraft deliveries, offset by GBP91.2m (2016:
GBP0.9m) of aircraft pre-delivery loan repayments. This resulted in
a net cash inflow (a) of GBP277.0m (2016: GBP109.2m) and a year-end
gross cash position, including money market deposits, of GBP689.0m
(2016: GBP412.0m). Net cash, stated after borrowings of GBP520.5m
(2016: GBP90.9m), was GBP168.5m (2016: GBP321.1m).
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 GBP553.9m (2016: GBP385.8m). Of
these customer advances, GBP82.9m (2016: GBP68.5m) 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. At the reporting date, the business had no cash placed
with counterparties in the form of margin calls to cover
out-of-the-money hedge instruments (2016: GBP5.2m).
Summary Balance Sheet Unaudited Audited Change
2017 2016
GBPm GBPm
---------------------------------- ---------- -------- -------
Non-current assets (b) 813.3 426.6 91%
Net current assets (c) 533.9 372.3 43%
Cash and money market deposits 689.0 412.0 67%
Deferred revenue (1,078.0) (767.5) (40%)
Borrowings (520.5) (90.9) (473%)
Other liabilities (53.5) (29.2) (83%)
Derivative financial instruments 47.2 (4.6)
Total shareholders' equity 431.4 318.7 35%
================================== ========== ======== =======
(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 derivative financial instruments.
(c) Stated excluding cash and cash equivalents, money market
deposits, deferred revenue, borrowings and derivative financial
instruments.
The Group continues to exceed 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 GBP112.7m (2016:
GBP161.5m) which comprised profit after taxation of GBP76.7m (2016:
GBP88.8m) and a favourable movement in the cash flow hedging
reserve. This movement was a result of the reversal of adverse
mark-to-market balances on jet fuel forward contracts and
in-the-money currency forward contracts held at the end of the
previous financial year which matured in the year, and a further
net in-the-money movement on all derivative types held, which
mature after the reporting date.
During the financial year, the Group entered into an agreement
with Boeing to purchase a further four new Boeing 737-800NG
aircraft with an approximate list price of US$0.4 billion, to meet
its programme of aircraft fleet replacement and planned Leisure
Travel growth. The terms for these aircraft are substantially the
same as those approved by the Board for 30 aircraft ordered from
Boeing in 2015, the Company having negotiated significant discounts
from the list price. These aircraft are expected to be funded
through a combination of internal resources and debt and will be
delivered between August 2018 and January 2019.
Segmental Performance - Leisure Travel
Overall flown passengers in the Leisure Travel business
increased by 17% to 7.10m (one-way passenger sectors) (2016: 6.07m)
as 1.73m customers (2016: 1.22m) chose our great value package
holiday product, an increase of 42%, whilst 3.64m (2016: 3.63m)
passengers chose our important flight-only product. Package holiday
customers now represent 49% of overall flown customers (2016:
40%).
The increased mix of package holiday customers is particularly
pleasing, as the longer duration, end-to-end holiday experience
allows greater value to be added through product innovation and
service at each point in the customer's journey. Delighting the
customer from start to finish lends itself to brand loyalty and
retention and a better quality of recurring revenue and
profitability, compared to the more impulsive, price sensitive,
shorter duration, flight-only product.
Resilient ticket pricing in the first half of the year gave way
to a much sharper pricing environment in the second half, as
overall net ticket price per passenger reduced by 5% to GBP86.65
(2016: GBP91.11). The average load factor achieved was 91.5% (2016:
92.5%). The percentage of customers taking all-inclusive package
holidays grew from 39% to 41% of total holiday customers, whilst an
increasing number chose higher value 4 and 5-star packages as the
variety of hotels we offer continued to grow, demonstrating the
quality and resilience of the package holiday product. However,
price was invested to drive the increased package holiday customer
volumes and market share, which led to the average price of a
package holiday remaining stable at GBP617 (2016: GBP616).
Non-ticket retail revenue per passenger increased by 3% to
GBP33.01 (2016: GBP31.98). 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 24% to
GBP1,565.8m (2016: GBP1,261.4m).
We continue to invest for the long-term success of the business
and believe that both our new UK operating bases at Birmingham and
London Stansted Airports have great potential for our holiday
business. Therefore, although trading performance was bolstered by
the 17% increase in overall customer volumes, the investment in
promotional advertising and the early recruitment of staff to
provide a resilient operation ahead of the launch of the two new
operating bases, together with the more competitive pricing
environment in the second half, meant Leisure Travel operating
profit reduced by 1% to GBP98.5m (2016: GBP99.6m).
For many families, booking a holiday is the most important
purchase of the year and we recognise that every customer is
different and their buying habits unique. Therefore, continuously
investing in IT development to deliver a smooth customer journey is
of paramount importance to the business, whichever of our three
booking channels is chosen.
Technology and how the customer interacts with it is perpetually
evolving. Over half of our package holidays are sold online via
Jet2holidays.com, whilst 97% of our flight-only seats are booked
directly on the Jet2.com website. Increasingly, customers are
looking to engage with the overall brand and product experience
when making an online booking. Recognising this, the business
continues to invest in personalising content and imagery, therefore
improving the overall customer experience and engagement and
ensuring that conversion rates remain strong, whether the customer
uses a PC, tablet or mobile phone.
The business also recognises that human interaction is important
for many customers when making such an important purchase, to
ensure their individual needs are catered for. Currently 17% (or
approximately 300,000) of our package holiday customers book
through our customer contact centres in Leeds and Manchester, which
employ over 300 sales and customer service advisers. Our sales
colleagues have an intimate knowledge of our products and are
trained to handle calls in a friendly and informative manner. 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.
Just under a third of our package holiday sales come through
independent travel agents, who are considered very valuable and
important distribution partners for the business. Our packages are
sold by major high street travel agent chains, key multiple
retailers, homeworker companies and independent agents.
Product innovation supported by a broad, imaginative marketing
strategy helps to ensure that Jet2 is front of mind when a customer
considers booking a holiday.
-- 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 GBP60 deposit.
-- Jet2CityBreaks, which offers a packaged flight and hotel
product in attractive European Leisure Cities, continued to prove
popular as passenger numbers grew in the year.
-- Our recently launched villa proposition, Jet2Villas, means
our customers can now enjoy the freedom of a great value Villa
Holiday wrapped up in one package with Jet2.com flights,
accommodation and car hire all included.
-- Our Resort Flight Check-In service introduced at many hotels
in summer 2016, has proven to be extremely popular and has been
expanded to over 150 hotels for summer 2017.
In common with the rest of the UK package travel industry, we
have seen an increase in illness-related claims from UK consumers.
We believe that many of these claims are questionable and we are
working very closely with our hotel partners and the authorities on
this issue. We will continue to actively lobby the UK Government
for changes to legislation and are seeing some success in this
area.
Looking forward, we will continue to invest to build brand and
product awareness in our core markets, underpinned by strong and
creative marketing campaigns and a keen focus on customer service.
We remain confident that with considered investment, we are
building a sustainable business that will have a bright future in
the UK leisure travel market for many years to come.
Leisure Travel Financials Unaudited Audited Change
2017 2016
GBPm GBPm
-------------------------------- ---------- ---------- -------
Revenue 1,565.8 1,261.4 24%
Net operating expenses (1,467.3) (1,161.8) (26%)
-------------------------------- ---------- ---------- -------
Operating profit 98.5 99.6 (1%)
Net financing (costs) /
income (2.0) 0.5
-------------------------------- ---------- ---------- -------
Profit before FX revaluations
and taxation 96.5 100.1 (4%)
Net FX revaluation losses (10.9) (1.3)
-------------------------------- ---------- ---------- -------
Profit before taxation 85.6 98.8 (13%)
Net financing costs (including
net FX revaluations) 12.9 0.8
Depreciation 84.5 86.4 (2%)
-------------------------------- ---------- ---------- -------
EBITDA 183.0 186.0 (2%)
================================ ========== ========== =======
(1.6
Operating profit margin 6.3% 7.9% ppts)
Profit before FX revaluations (1.7
& taxation margin 6.2% 7.9% ppts)
(2.3
Profit before taxation margin 5.5% 7.8% ppts)
(3.0
EBITDA margin 11.7% 14.7% ppts)
-------------------------------- ---------- ---------- -------
Leisure Travel KPIs Unaudited Audited Change
2017 2016
---------------------------------- ------------ ---------- -------
Number of routes operated
during the year 235 227 4%
Leisure Travel sector seats
available (capacity) 7.76m 6.56m 18%
Leisure Travel passenger
sectors flown 7.10m 6.07m 17%
(1.0
Leisure Travel load factor 91.5% 92.5% ppt)
Flight-only passenger sectors
flown 3.64m 3.63m -
Package holiday passenger
sectors flown 3.46m 2.44m 42%
Package holiday customers 1.73m 1.22m 42%
Net ticket yield per passenger
sector (excl. taxes) GBP86.65 GBP91.11 (5%)
Average package holiday GBP617 GBP616 -
price
Non-ticket revenue per passenger
sector GBP33.01 GBP31.98 3%
Average hedged price of
fuel (per tonne) $467 $674 (31%)
Fuel requirement hedged (2.0
- next 12 months 97% 99% ppts)
Advance sales made as at
31 March GBP1,078.0m GBP767.5m 40%
---------------------------------- ------------ ---------- -------
Segmental Performance - Distribution & Logistics
Revenue at Fowler Welch increased by 14% to GBP163.5m (2016:
GBP144.0m) primarily due to the new Dairy Crest operation at
Nuneaton which commenced in June 2016. Seasonal peaks were well
managed and a further important improvement in vehicle miles per
gallon was delivered from a continued focus on driver training and
operational efficiency. The underlying performance of the business
was encouraging, though lower than anticipated revenue at our
Heywood ambient operation and a bad debt write off following the
demise of a major poultry supplier, affected the profit in the
year.
Revenue at our Spalding operation in Lincolnshire increased by
2%. This 156,000 square foot depot is one of the largest chilled
food consolidation hubs in the UK and is the largest chilled site
in the Fowler Welch network. Combining a consolidation service for
fresh produce and chilled foods, the site picks over 41 million
cases per annum and delivers approximately 50,000 pallets of food
each week on behalf of local Lincolnshire growers and producers.
From the heart of this important growing region, Fowler Welch
delivers to all major retailers, successfully managing significant
volume uplifts for Valentine's Day, Mothering Sunday, Easter,
Halloween and Christmas.
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. Integrated Service Solutions (ISS), Fowler
Welch's joint venture that ripens, grades and packs a variety of
stone fruit, berries and exotic fruits, achieved another year of
growth as operations from the new 50,000 square foot extension at
the Teynham depot commenced successfully in July 2016.
The Hilsea depot, which is located near to Portsmouth
International Port, had another encouraging year with revenue
growth of 10%. New volumes were secured from several existing
customers, demonstrating the importance of this region in supplying
salads, herbs and vegetables to UK retailers and underlining the
strength of the range of warehousing, consolidation and
distribution services offered.
The new Dairy Crest operation at Nuneaton, near Coventry,
contributed positively in the year and we expect the operation to
progressively expand as it is more fully integrated into the
broader Fowler Welch distribution network.
The Heywood 'Hub', Fowler Welch's 500,000 square foot ambient
(non-temperature controlled) shared user storage and distribution
centre near Bury, Greater Manchester saw a second year of depressed
revenues, down 4% year-on-year. This revenue reduction reflected
the highly competitive nature of the ambient grocery distribution
market. Following increased sales efforts, the business was
successful in securing several smaller contracts toward the end of
the financial year and a material new contract commenced in the
first quarter of the current financial year.
The dedicated site at Desborough, Northamptonshire, which
provides distribution services to a major confectionery
manufacturer, implemented new bespoke state-of-the-art trailers
that can automatically load at production facilities as well as
operate as conventional trailers, demonstrating our principles of
listening, responding and delivering. Similarly, the regional
distribution sites in Washington, Tyne & Wear and Newton Abbot,
near Exeter continued to provide high quality direct store delivery
services to over 100 supermarkets.
The further development of services along the supply chain is
contributing to a strong pipeline of growth opportunities with both
existing and new clients. These added value services, combined with
the core competency of consolidating multiple clients to provide
the critical mass for efficient distribution, give confidence in
the continued profitable growth of Fowler Welch.
Distribution & Logistics Unaudited Audited Change
Financials
2017 2016
GBPm GBPm
------------------------------- ---------- -------- -------
Revenue 163.5 144.0 14%
Net operating expenses (159.0) (138.6) (15%)
------------------------------- ---------- -------- -------
Operating profit 4.5 5.4 (17%)
Net financing costs - - -
-------------------------------
Profit before taxation 4.5 5.4 (17%)
Depreciation 2.5 2.3 9%
------------------------------- ---------- -------- -------
EBITDA 7.0 7.7 (9%)
=============================== ========== ======== =======
(1.0
Operating profit margin 2.8% 3.8% ppt)
(1.0
Profit before taxation margin 2.8% 3.8% ppt)
(1.0
EBITDA margin 4.3% 5.3% ppt)
------------------------------- ---------- -------- -------
Distribution & Logistics Unaudited Audited Change
KPIs
2017 2016
-------------------------- ---------- -------- -------
Warehouse space as at 31
March (square feet) 897,000 847,000 6%
Number of tractor units
in operation 487 428 14%
Number of trailer units
in operation 669 629 6%
Miles per gallon 9.3 9.1 2%
Annual fleet mileage 40.5m 39.0m 4%
-------------------------- ---------- -------- -------
Gary Brown
Group Chief Financial Officer
13 July 2017
For further information please contact:
Dart Group PLC Tel: 0113 239
Philip Meeson, Executive 7817
Chairman
Gary Brown, Group Chief
Financial Officer
Smith & Williamson Corporate Tel: 020 7131
Finance Limited 4000
Nominated Adviser
David Jones / Katy Birkin
Canaccord Genuity Tel: 020 7523
Joint Broker 8000
Bruce Garrow / Ben Griffiths
Arden Partners Tel: 020 7614
Joint Broker 5900
Christopher Hardie
Buchanan Tel: 020 7466
Financial PR 5000
Richard Oldworth
COnsolidated income statement
for the year ended 31 March 2017
Unaudited Audited
Results Results
for the for the
year ended year ended
31 March 31 March
2017 2016
GBPm GBPm
----------------------------- ------------ ------------
Revenue 1,729.3 1,405.4
Net operating expenses (1,626.3) (1,300.4)
------------------------------ ------------ ------------
Operating profit 103.0 105.0
Finance income 3.1 2.4
Finance costs (5.1) (1.9)
Net FX revaluation losses (10.9) (1.3)
------------------------------ ------------ ------------
Net financing costs (12.9) (0.8)
Profit before taxation 90.1 104.2
Taxation (13.4) (15.4)
------------------------------ ------------ ------------
Profit for the year 76.7 88.8
all attributable to equity
shareholders of the parent
============================= ============ ============
Earnings per share
- basic 51.80p 60.22p
- diluted 51.48p 59.89p
------------------------------ ------------ ------------
Consolidated statement of comprehensive income
for the year ended 31 March 2017
Unaudited Audited
year ended year ended
31 March 31 March
2017 2016
GBPm GBPm
------------ ------------
Profit for the year 76.7 88.8
Other comprehensive income
/ (expense)
Cash flow hedges:
Fair value gains in year 36.5 19.0
Add back losses transferred
to income statement in year 15.3 76.9
Related taxation charge (9.9) (19.2)
------------ ------------
41.9 76.7
Total comprehensive income
for the period 118.6 165.5
all attributable to equity
shareholders of the parent
============ ============
Consolidated Statement of Financial Position
at 31 March 2017
Unaudited Audited
2017 2016
GBPm GBPm
Non-current assets
Goodwill 6.8 6.8
Property, plant and equipment 806.5 419.8
Derivative financial instruments 9.3 15.2
822.6 441.8
---------- --------
Current assets
Inventories 1.2 1.1
Trade and other receivables 707.8 503.9
Derivative financial instruments 74.7 49.3
Money market deposits 200.3 70.0
Cash and cash equivalents 488.7 342.0
---------- --------
1,472.7 966.3
---------- --------
Total assets 2,295.3 1,408.1
---------- --------
Current liabilities
Trade and other payables 136.3 109.4
Deferred revenue 1,076.3 766.4
Borrowings 129.6 83.4
Provisions 38.8 23.3
Derivative financial instruments 15.9 64.5
---------- --------
1,396.9 1,047.0
---------- --------
Non-current liabilities
Other non-current liabilities - 0.1
Deferred revenue 1.7 1.1
Borrowings 390.9 7.5
Derivative financial instruments 20.9 4.6
Deferred tax liabilities 53.5 29.1
---------- --------
467.0 42.4
---------- --------
Total liabilities 1,863.9 1,089.4
---------- --------
Net assets 431.4 318.7
========== ========
Shareholders' equity
Share capital 1.8 1.8
Share premium 12.5 12.4
Cash flow hedging reserve 38.2 (3.7)
Retained earnings 378.9 308.2
Total shareholders' equity 431.4 318.7
========== ========
consolidated statement of cash flows
for the year ended 31 March 2017
Unaudited Audited
2017 2016
GBPm GBPm
Profit on ordinary activities
before taxation 90.1 104.2
Finance income (3.1) (2.4)
Finance costs 5.1 1.9
Net FX revaluation losses 10.9 1.3
Depreciation 87.0 88.7
Equity settled share based
payments 0.4 0.1
Operating cash flows before
movement in working capital 190.4 193.8
(Increase) / decrease in
inventories (0.1) 0.9
Increase in trade and other
receivables (203.1) (138.3)
Increase in trade and other
payables 27.6 16.6
Increase in deferred revenue 310.5 187.2
Increase / (decrease) in
provisions 13.0 (5.4)
Cash generated from operations 338.3 254.8
Interest received 3.1 2.4
Interest paid (3.6) (1.9)
Income taxes paid (6.7) (11.4)
Net cash from operating
activities 331.1 243.9
---------- --------
Cash flows used in investing
activities
Purchase of property, plant
and equipment (473.9) (213.5)
Proceeds from sale of property,
plant and equipment - 0.2
Net increase in money market
deposits (130.3) (4.5)
Net cash used in investing
activities (604.2) (217.8)
---------- --------
Cash from financing activities
Repayment of borrowings (91.2) (0.9)
New loans advanced 515.6 82.8
Proceeds on issue of shares 0.1 0.5
Equity dividends paid (6.6) (4.6)
Net cash from financing
activities 417.9 77.8
---------- --------
Effect of foreign exchange
rate changes 1.9 0.8
Net increase in cash in
the year 146.7 104.7
Cash and cash equivalents
at beginning of year 342.0 237.3
Cash and cash equivalents
at end of year 488.7 342.0
========== ========
Consolidated statement of changes in equity
for the year ended 31 March 2017
Share Share Cash Retained Total
capital premium flow earnings shareholders'
hedging equity
reserve
GBPm GBPm GBPm GBPm GBPm
--------- --------- --------- ---------- ---------------
Audited Balance
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
Audited Balance
at 31 March
2016 1.8 12.4 (3.7) 308.2 318.7
Total comprehensive
income for the
year - - 41.9 76.7 118.6
Issue of share
capital - 0.1 - - 0.1
Dividends paid
in the year - - - (6.6) (6.6)
Share based
payments - - - 0.6 0.6
Unaudited Balance
at 31 March
2017 1.8 12.5 38.2 378.9 431.4
========= ========= ========= ========== ===============
Notes to the consolidated financial statements
for the year ended 31 March 2017
1. Accounting policies and 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 Board of Directors in accordance with
International Financial Reporting Standards ("IFRS"), as adopted by
the European Union ("Adopted IFRS").
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 2017 (see note 7).
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.
The Group uses forward foreign currency and interest rate
contracts and aviation fuel swaps to hedge exposure to foreign
exchange rates, interest 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 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, profit before and after taxation,
balance sheets and cash flows through to 31 March 2020.
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 and sensitised forecasts of
future trading through to 31 March 2020, 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 2017.
2. 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 holiday
flights by its airline Jet2.com to 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 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 appropriate to aggregate the operating
segments for reporting purposes and, therefore, both are disclosed
as reportable segments for the year ended 31 March 2017:
-- 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 taxation. Revenue
from reportable segments is measured on a basis consistent with the
Consolidated 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 Distribution Group Total
Travel & Logistics eliminations
Unaudited GBPm GBPm GBPm GBPm
Year ended 31 March
2017
Revenue 1,565.8 163.5 - 1,729.3
Operating profit 98.5 4.5 - 103.0
Finance income 3.0 0.1 - 3.1
Finance costs (5.0) (0.1) - (5.1)
Net FX revaluation losses (10.9) - - (10.9)
---------- ------------- -------------- ----------
Net financing costs (12.9) - - (12.9)
Profit before taxation 85.6 4.5 - 90.1
Taxation (12.5) (0.9) - (13.4)
---------- ------------- -------------- ----------
Profit after taxation 73.1 3.6 - 76.7
========== ============= ============== ==========
Assets and liabilities
Segment assets 2,214.2 86.1 (5.0) 2,295.3
Segment liabilities (1,838.6) (30.3) 5.0 (1,863.9)
---------- ------------- -------------- ----------
Net assets 375.6 55.8 - 431.4
========== ============= ============== ==========
Other segment information
Property, plant and
equipment
Additions 468.7 5.2 - 473.9
Depreciation, amortisation
and impairment (84.5) (2.5) - (87.0)
Share based
Payments (0.3) (0.1) - (0.4)
Leisure Distribution Group Total
Travel & Logistics eliminations
Audited GBPm GBPm GBPm GBPm
Year ended 31 March
2016
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 costs (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)
3. Net operating expenses
Unaudited Audited
2017 2016
GBPm GBPm
Direct operating costs
Accommodation costs 512.9 344.0
Fuel 203.4 208.9
Landing, navigation and third
party handling 141.2 132.8
Maintenance costs 63.1 62.4
Other direct operating costs 56.7 45.6
Aircraft and vehicle rentals 54.7 38.5
Subcontractor charges 44.2 38.2
Agent commission 37.5 29.0
In-flight cost of sales 25.1 19.2
Staff costs 257.2 204.4
Depreciation of property, plant
& equipment incl. aircraft and
engines 87.0 88.7
Other operating charges 144.9 89.7
Other operating income (1.6) (1.0)
Total net operating expenses 1,626.3 1,300.4
========== ========
4. Net financing costs
Unaudited Audited
2017 2016
GBPm GBPm
Finance income 3.1 2.4
Interest payable on aircraft
and other loans (4.3) (1.9)
Interest payable on obligations (0.8) -
under finance leases
Net FX revaluation losses (10.9) (1.3)
---------- --------
Net financing costs (12.9) (0.8)
========== ========
5. Earnings per share
Unaudited Audited
2017 2016
No. No.
Basic weighted average number
of shares in issue 148,079,465 147,454,373
Dilutive potential ordinary
shares: employee share options 896,191 809,398
------------ ------------
Diluted weighted average number
of shares in issue 148,975,656 148,263,771
============ ============
Unaudited Audited
Year to Year to
Basis of calculation - earnings 31 March 31 March
(basic and diluted) 2017 2016
Profit for the purposes of calculating GBP76.7m GBP88.8m
basic and diluted earnings
Earnings per share - basic 51.80p 60.22p
Earnings per share - diluted 51.48p 59.89p
6. Financial information
The financial information set out above does not constitute Dart
Group PLC's statutory accounts for the years ended 31 March 2017 or
31 March 2016. The financial information for 2016 is derived from
the statutory accounts for the year ended 31 March 2016, which have
been delivered to the Registrar of Companies. The Auditor has
reported on the year ended 31 March 2016 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 2017 will be
finalised on the basis of the financial information presented by
the Board of Directors in this preliminary announcement and will be
delivered to the Registrar of Companies in due course.
7. Annual report and accounts
The 2017 Annual Report and Accounts (including the Auditor's
Report) will be made available to shareholders during the week
commencing 14 August 2017. The Dart Group PLC Annual General
Meeting will be held on 7 September 2017.
8. 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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