JET2 PLC 16th July 2015
DART GROUP PLC
PRELIMINARY UNAUDITED RESULTS FOR YEAR ENDED 31 MARCH 2015
Dart Group PLC, the Leisure Travel and Distribution & Logistics group ("the Group"), announces its preliminary results for the year ended 31 March 2015. These results are presented under International Financial Reporting Standards ("IFRS").
Financial Highlights | Year ended 31 March 2015 (Unaudited) | Year ended 31 March 2014 (Audited) | Change |
Group turnover | £1,253.2m | £1,120.2m | +12% |
Group operating profit (underlying1) | £50.6m | £49.2m | +3% |
Operating profit margin (underlying1) | 4.0% | 4.4% | (0.4ppts) |
Group operating profit | £33.6m | £49.2m | (32%) |
Operating profit margin | 2.7% | 4.4% | (1.7ppts) |
Profit before tax (underlying1) | £57.2m | £42.1m | +36% |
Profit before tax | £40.2m | £42.1m | (5%) |
Basic earnings per share (underlying1) | 31.72p | 24.68p | +29% |
Basic earnings per share | 22.42p | 24.68p | (9%) |
Proposed final dividend per share | 2.25p | 2.14p | +5% |
Resulting total dividend per share | 3.00p | 2.74p | +9% |
Table note 1: "Underlying" references throughout are stated excluding separately disclosed items (see note 7)
CHAIRMAN'S STATEMENT
I am pleased to report that the Group has seen a small improvement in trading performance for the year ended 31 March 2015, as underlying operating profit increased by 3% to £50.6m (2014: £49.2m). Underlying profit before tax has risen by 36% to £57.2m (2014: £42.1m). However, after accounting for an exceptional provision of £17.0m, in relation to possible passenger compensation claims for historical flight delays under Regulation (EC) No 261/2004, Group profit before tax, fell by 5% to £40.2m (2014: £42.1m). Whilst underlying basic earnings per share increased by 29% to 31.72p (2014: 24.68p) , after accounting for the exceptional provision, basic earnings per share reduced by 9% to 22.42p.
In consideration of the Group's improved underlying trading performance, the Board is recommending a final dividend of 2.25p per share (2014: 2.14p) which will bring the total proposed dividend to 3.00p per share for the year to 31 March 2015 (2014: 2.74p) , an increase of 9%. The final dividend, which is subject to shareholder approval at the Company's Annual General Meeting on 3 September 2015, will be payable on 16 October 2015 to shareholders on the register at the close of business on 11 September 2015.
The increase in underlying Group operating profit reflects improved trading and continued investment in our Leisure Travel business which combines both our package holiday (Jet2holidays) and flight-only (Jet2.com) products. This was despite the slower trading at the start of the financial year, as reported in our Preliminary Results Announcement of 26 June 2014.
Our Leisure Travel business took a total of 3.0m departing package holiday and flight-only customers to sun, city and ski destinations during the year, an increase of 8%. The growing demand for our package holiday product led to those customers making up 33% of the total (2014: 30%) , resulting in both increased Leisure Travel revenues and aircraft load factors. As a result, turnover in our Leisure Travel business increased by 14% to £1,101.5m (2014: £967.0m) whilst underlying operating profit increased by 3% to £46.9m (2014: £45.6m) .
Our Distribution & Logistics business, Fowler Welch , achieved a profit before tax of £3.3m (2014: £3.3m ) after £0.4m of start up losses from its new joint venture at Teynham, Kent, which commenced operation in May 2014, storing, ripening and packing stone-fruit and exotic and organic fruits.
The Group generated net cash flow from operating activities of £116.1m (2014: £130.8m) out of which capital expenditure of £76.4m (2014: £83.5m) was incurred, primarily on long-term maintenance spend on aircraft and their engines and the purchase of two Boeing 737-800 aircraft for summer 2015 flying. The Group's capital investment was funded by internally generated EBITDA.
As at 31 March 2015, the Group's cash balances and money market deposits had increased by £39.1m (2014: £42.8m) to £302.8m (2014: £263.7m) which included advance payments from Leisure Travel customers of £318.7m (2014: £285.8m ) in respect of their future holidays and flights.
Leisure Travel
Our Leisure Travel business takes both our package holiday and flight-only customers to high volume leisure destinations in the Mediterranean, the Canary Islands and to European Leisure Cities. We fly to 55 destination airports, serving 364 holiday resorts from our 7 Northern UK departure bases. Our customer volumes allow us to serve many destinations daily and others several times a week during the spring, summer and autumn months, offering a great choice of variable duration holidays at attractive prices. Whether our customers have arranged their own accommodation, or buy a complete package holiday from us, we recognise that this is one of the most important family experiences of the year and we do our best to ensure that we deliver a holiday that can be both eagerly anticipated and fondly remembered.
The business has contractual relationships with over 2,400 hotels, committing to room allocations from as few as 4 beds a night, to over 300. We often place substantial deposits to ensure we have a dependable and competitive room offering in the most attractive hotels. Our buying power ensures we have a wide range of great value 2 and 3-star to 5-star hotel products for both families on a budget and those wanting more pampering. We employ substantial numbers of representatives in resort to look after our customers, backed up by 24-hour customer helplines giving practical assistance in the event of problems. Together with our airport-to-hotel coach transfer services, everything is organised to make our customers' holiday easy and carefree.
To support our package holidays growth, our commercial centre in Leeds employs nearly 700 commercial, marketing, revenue, IT and finance colleagues, including our 200+ strong call centre for sales and customer support. Our package holiday business, especially, gives us the opportunity to concentrate our efforts and enthusiasm into delivering a product that delights our customers. A great holiday experience engenders loyalty and many repeat bookings are made shortly after our customers return.
In response to the recent tragic events in Tunisia, we organised a rapid rescue operation to contact and repatriate nearly 700 of our package holidaymakers, who wished to return to the UK. The continuing tensions in Greece have also demanded our attention and presence. Senior staff were on site in Tunisia and Greece within hours of events unfolding, to ensure our customers' needs were met, backed up by our Leeds based emergency response organisation and teams. In this age of political and economic uncertainty more consumers are becoming aware of the wider benefits of a package holiday - where the tour operator has the responsibility for their wellbeing.
During the year, our airline operation expanded the fleet to 59 aircraft for summer 15 flying (summer 14: 55 aircraft) with commensurate increases in pilots, engineers and cabin crew. And, in May 2014 we were delighted to inaugurate our new flight simulator and training centre in Bradford. The centre provides a bespoke training facility for those pilots, engineers and cabin crew and will equip us with well trained colleagues as we continue to grow over the coming years.
Jet2holidays is now the UK's third largest ATOL licensed package holidays tour operator. Whilst our flight-only product remains very important, we believe our growing package holiday business has tremendous future potential. The package holiday is a very popular product, among young and old and families alike. Organising enjoyable and dependable holidays for our customers gives us the opportunity to personally delight them and for us to reap commensurate rewards in the future.
Distribution & Logistics
Our distribution business, Fowler Welch , is one of the UK's leading providers of distribution and logistics services to the food industry supply chain, serving retailers, processers, growers and importers through its distribution network.
The business operates from eight 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. Ambient (non-temperature-controlled) consolidation and distribution services are provided at Desborough, Northamptonshire and at Heywood near Bury, Greater Manchester. It also operates two regional distribution sites at Washington, Tyne and Wear and at Newton Abbot, Devon.
Fowler Welch has a strong and experienced management team and a skilled workforce that prides itself on its high standards of customer service, critical in an arena where "just in time" optimum levels of on-shelf stock availability at retailers' stores are essential to satisfy and retain supermarket customers and their suppliers.
Increasingly, key customers are looking for creative, added value innovation from their service providers that can help their own supply chains to become more efficient. In May 2014, Fowler Welchcommenced a joint venture operation at its Teynham facility in Kent, to provide a full range of fruit ripening and packing services to the produce sector for locally grown and imported fruits. The operation uses the latest technology and market-leading grading, sorting and packing equipment to ensure that cost efficient, high quality standards are achieved for its customers. The packed product is then delivered through the Fowler Welch distribution network. This extension of the range of services available to Fowler Welch customers is a key strategic step.
We remain encouraged by the many business opportunities available to Fowler Welch . Though the marketplace remains extremely competitive, we believe that through its price-competitive, operational expertise, its dedication to achieving high service levels, and its ability to present customers with added value, innovative solutions, the outlook for Fowler Welch is encouraging.
Outlook
Both our Leisure Travel and Distribution & Logistics businesses have got off to a good start to the new financial year, with strong demand for holidays and distribution business wins. Notwithstanding the tragedy in Tunisia and uncertainties in Greece, we are optimistic that Group performance for the financial year to 31 March 2016 will exceed current market expectations. Looking further ahead, we note the considerable increase in capacity planned by several low cost airlines over the next few years. We believe the continued expansion of our package holiday product, together with the development of our directly contracted sun and city hotel portfolio differentiates our Leisure Travel business, giving us confidence for our continued profitable growth.
Chairman16 July 2015
The Group's financial performance for the year to 31 March 2015 is reported in line with International Financial Reporting Standards ("IFRS"), as adopted by the EU, which were effective at 31 March 2015.
Summary Income Statement | ||||||
Unaudited 2015 Before separately disclosed items | Unaudited 2015 Separately disclosed items | Unaudited 2015 Total | Audited 2014 Total | Change | ||
£m | £m | £m | £m | |||
Turnover | 1,253.2 | - | 1,253.2 | 1,120.2 | 12% | |
Net operating expenses | (1,202.6) | (17.0) | (1,219.6) | (1,071.0) | (14%) | |
Operating profit | 50.6 | (17.0) | 33.6 | 49.2 | (32%) | |
Share of loss in joint ventures | (0.4) | - | (0.4) | - | - | |
Net financing income | 0.6 | - | 0.6 | - | - | |
Revaluation of derivative hedges | 1.6 | - | 1.6 | (3.3) | 148% | |
Revaluation of foreign currency balances | 4.8 | - | 4.8 | (3.8) | 226% | |
Net financing income/(costs) | 7.0 | - | 7.0 | (7.1) | 199% | |
Group profit before tax | 57.2 | (17.0) | 40.2 | 42.1 | (5%) | |
Share of loss in joint ventures | 0.4 | - | 0.4 | - | - | |
Net financing income & Revaluations | (7.0) | - | (7.0) | 7.1 | (199%) | |
Depreciation | 71.3 | - | 71.3 | 60.7 | 17% | |
EBITDA | 121.9 | (17.0) | 104.9 | 109.9 | (5%) | |
Operating profit margin | 4.0% | - | 2.7% | 4.4% | (1.7ppts) | |
Group profit before tax margin | 4.6% | - | 3.2% | 3.8% | (0.6 ppts) | |
EBITDA margin | 9.7% | - | 8.4% | 9.8% | (1.4 ppts) | |
A slower than anticipated start to the financial year in our Leisure Travel business gave way to stronger consumer demand for both our package holidays and flight-only products in the late summer market, a momentum which continued through winter. As a result, the business achieved increased volumes of customers plus a small improvement in yields which contributed to the Group's 12% increase in turnover to £1,253.2m (2014: £1,120.2m) . The Distribution & Logistics business experienced a reduction in turnover of 1%.
In integrated approach to Leisure Travel revenue management, a focus on operational efficiency and considered cost investment ensured the Group delivered an improved underlying operating profit, which grew by 3% to £50.6m (2014: £49.2m) . Following a Supreme Court ruling delivered on 31 October 2014, which refused Jet2.com permission to appeal against the Court of Appeal's earlier judgment in the case of Huzar v Jet2.com Limited, relating to flight delay compensation under Regulation (EC) No 261/2004, the Group made an exceptional provision of £17.0m which led to operating profit falling by 32% to £33.6m.
Net financing income of £7.0m (2014: cost £7.1m) included £1.6m in relation to mark-to-market adjustments on certain ineffective derivative hedges and a positive £4.8m adjustment owing to the revaluation of foreign currency balances held at year end. These mark-to-market adjustments reflect the maturing of certain hedges which, at the previous year end date, were deemed to be surplus to requirements. This was due to a disparity between the monthly phasing of those transactions and the Group's 2014/15 US dollar and euro requirement being hedged. The foreign currency revaluation principally relates to a US dollar surplus following a decision to deliver summer 2014 airline capacity growth by leasing aircraft, rather than the original intention of buying. This surplus is expected to be utilised during the year ending 31 March 2016.
As a result, the Group achieved a statutory profit before tax of £40.2m (2014: £42.1m). Underlying Group EBITDA increased by 11% to £121.9m (2014: £109.9m) .
The Group's effective tax rate of 18% (2014: 15%) was lower than the headline rate of corporation tax of 21% as a consequence of reductions made in relation to its decreasing deferred tax liability. Underlying basic earnings per share increased by 29% to 31.72p (2014: 24.68p) . However, after accounting for the exceptional provision of £17.0m, overall basic earnings per share reduced by 9% to 22.42p.
In consideration of the Group's improved underlying trading performance, the Board is recommending a final dividend of 2.25p per share (2014: 2.14p) . On 20 November 2014 the Board declared an interim dividend of 0.75p per share (2014: 0.60p) , which, coupled with the proposed final dividend, equates to a full year dividend of 3.00p per share (2014: 2.74p) .
Summary Cash Flow | |||
Unaudited 2015 | Audited 2014 | Change | |
£m | £m | ||
EBITDA | 104.9 | 109.9 | (5%) |
Other P&L adjustments | 0.1 | 0.4 | (75%) |
Movements in working capital | 18.7 | 26.6 | (30%) |
Interest & taxes | (7.6) | (6.1) | (25%) |
Net cash generated from operating activities | 116.1 | 130.8 | (11%) |
Purchase of property, plant & equipment | (76.4) | (83.5) | 9% |
Other items | (0.6) | (4.5) | 87% |
Increase in net cash and money market deposits | 39.1 | 42.8 | (9%) |
The Group generated net cash flow from operating activities of £116.1m (2014: £130.8m) out of which capital expenditure of £76.4m (2014: £83.5m) was incurred. Capital expenditure as a % of EBITDA fell to 73% (2014: 76%) as the Group invested in the long-term maintenance of its aircraft and engines and acquired two Boeing 737-800 aircraft for its summer 2015 flying programme.
The Group generated net cash inflows(a) of £39.1m in the year (2014: £42.8m) , resulting in a year end cash position, including money market deposits, of £302.8m (2014: £263.7m ). 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 £318.7m (2014: £285.8m) .
Note (a): Cash flows are reported including the movement of 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.
Of these customer advances, £97.5m (2014: £133.3m) was considered restricted by the Group's merchant acquirers as collateral against a proportion of forward bookings paid for by credit or debit card. These balances become unrestricted once our customers have travelled. The business also had £51.7m (2014: £7.4m) of cash placed with various counterparties in the form of margin calls to cover out-of-the-money hedge instruments, primarily a result of the drop in the price of crude oil. The majority of these out-of-the-money positions are anticipated to run off through summer 2015 as the hedged instruments mature.
The Group is also required by the UK Civil Aviation Authority to maintain certain levels of "available liquidity", which is defined as free cash plus available undrawn banking facilities.
Summary Balance Sheet | |||
Unaudited 2015 | Audited 2014 | Change | |
£m | £m | ||
Non-current assets | 303.6 | 298.8 | 2% |
Net current assets(b) | 175.6 | 145.2 | 21% |
Deferred revenue | (580.3) | (484.9) | (20%) |
Other liabilities | (44.5) | (41.2) | (8%) |
Cash and money market deposits | 302.8 | 263.7 | 15% |
Total shareholders' equity | 157.2 | 181.6 | (13%) |
Note (b): stated excluding cash and cash equivalents, money market deposits and deferred revenue.
Total shareholders' equity reduced by £24.4m as profit after tax of £32.8m (2014: £35.9m) was exceeded by adverse movements in the cash flow hedging reserve, a result of the net mark-to-market movements on jet fuel and currency forward contracts.
Segmental Performance - Leisure Travel
The Group's Leisure Travel business which incorporates Jet2holidays , our ATOL licensed package holidays operator and Jet2.com , the North's leading leisure airline, concentrates on high volume leisure destinations in the Mediterranean, the Canary Islands and European Leisure Cities.
The businessincreased its departing customer numbers by 8% to 3.02m (2014: 2.81m ). Of those, 1.00m (2014: 0.83m) chose our great value package holiday product, a growth of 20%, with the remaining 2.02m (2014: 1.98m) choosing to enjoy a flight only. Our customers continue to demand value and consistent quality, together with excellent customer service and therefore, the growth in our package holiday customers, to 33% of the total (2014: 30%), is particularly pleasing.
An integrated approach to revenue and demand management between the two products, plus the growing proportion of flying to the Canary Islands and Eastern Mediterranean, contributed to an improved load factor of 91.2% (2014: 91.0%) ; a 2% increase in net ticket price per passenger to £79.87 (2014: £78.39) ; and a 3% increase in the average price of a package holiday to £591 (2014: £572) . The continued development and refinement of the Jet2holidays hotel products, ranging from 2-star self-catering through to luxury 5-star all-inclusive accommodation, plus an increasing number of people choosing 4 and 5-star packages, resulted in improved gross margin per package holiday compared to the prior year.
Non-ticket revenue per passenger, which is primarily discretionary in nature, increased by 5% to £30.91 (2014: £29.49) . This revenue stream continues to be optimised through our customer contact programme as we focus on pre-departure (primarily hold bags and advanced seat assignment), in-flight (pre-ordered meals, drinks, snacks, cosmetics and perfumes) and ancillary products (car hire and travel insurance).
As a result, total Leisure Travel turnover grew by 14% to £1,101.5m (2014: £967.0m) whilst underlying operating profit grew 3% to £46.9m (2014: £45.6m) .
Approximately 52% of our package holidays are sold online via Jet2holidays.com , 17% of holiday bookings are made through our call centre, based at our commercial centre in Leeds, and the balance via high street and online travel agents, whilst our flight-only seats are booked on the Jet2.com website. Technology and how the customer uses it, is perpetually evolving, and our websites and mobile applications are continuously developed and refined to ensure that the search and booking experience is as smooth as possible whether the customer uses a PC, tablet or mobile phone. Increasingly, customers are looking to engage with the overall brand and product experience rather than merely making a booking. Recognising this, the business has invested in content management systems which provide the customer with personalised content and imagery from the moment they land on the website home page, improving the overall customer experience, engagement and ultimately, conversion.
A smooth customer journey and experience are paramount whichever booking channel is chosen. Further investment has been made in our call centre to both handle the increasing volume of customer calls and to improve response times. Similarly, we are developing our post booking information and assistance to customers, and have bolstered our pre-travel services teams.
Sales through travel agents remains an important distribution channel for the business, and our package holidays can be booked through all major travel agent chains, key multiples, homeworker companies and independent agents.
The delivery of great customer service is at the heart of our brand values. To ensure that every employee understands this ethos, the business has continued to invest in its all-employee engagement programme "Take Me There", with each and every colleague receiving training on the importance of delivering customer service excellence at every point in our customers' journey.
During the year our leisure airline Jet2.com expanded its route network, operating a total of 217 routes (2014: 205) . We also strengthened our cities product with the introduction of Jet2CityBreaks - offering a packaged flight and hotel product in leading European Leisure Cities. Being mindful of the weak demand environment experienced in early summer 2014, Jet2.com has tightened seat capacity on certain routes during early summer 2015; peak summer capacity, however, remains unchanged. Consequently, the airline will fly 239 routes to 55 destinations.
Sustained levels of investment in product, brand and customer service excellence, plus the delivery of an attractive end-to-end product engenders loyalty and repeat bookings and gives us the greatest opportunity to retain and attract customers, both existing and new. As a result, the business expects to see further growth in customer numbers and revenues.
Leisure Travel Financials | |||||||
Unaudited 2015 Before separately disclosed items | Unaudited 2015 Separately disclosed items | Unaudited 2015 Total | Unaudited 2014 Total | Change | |||
£m | £m | £m | £m | ||||
Turnover | 1,101.5 | - | 1,101.5 | 967.0 | 14% | ||
Net operating expenses | (1,054.6) | (17.0) | (1,071.6) | (921.4) | (16%) | ||
Operating profit | 46.9 | (17.0) | 29.9 | 45.6 | (34%) | ||
Net financing income | 0.6 | - | 0.6 | 0.3 | 100% | ||
Revaluation of derivative hedges | 1.6 | - | 1.6 | (3.3) | 148% | ||
Revaluation of foreign currency balances | 4.8 | - | 4.8 | (3.8) | 226% | ||
Net financing income/(costs) | 7.0 | - | 7.0 | (6.8) | 203% | ||
Profit before tax | 53.9 | (17.0) | 36.9 | 38.8 | (5%) | ||
Net financing income & Revaluations | (7.0) | - | (7.0) | 6.8 | (203%) | ||
Depreciation | 69.1 | - | 69.1 | 58.6 | 18% | ||
EBITDA | 116.0 | (17.0) | 99.0 | 104.2 | (5%) | ||
Operating profit margin | 4.3% | - | 2.7% | 4.7% | (2.0 ppts) | ||
Profit before tax margin | 4.9% | - | 3.3% | 4.0% | (0.7 ppts) | ||
EBITDA margin | 10.5% | - | 9.0% | 10.8% | (1.8 ppts) | ||
Leisure Travel KPIs | |||||||
2015 | 2014 | Change | |||||
Owned aircraft at 31 March | 44 | 44 | - | ||||
Aircraft on operating leases at 31 March | 11 | 6 | 83% | ||||
Number of routes | 217 | 205 | 6% | ||||
Leisure Travel sector seats available (capacity) | 6.63m | 6.16m | 8% | ||||
Leisure Travel passenger sectors flown | 6.05m | 5.61m | 8% | ||||
Leisure Travel load factor | 91.2% | 91.0% | 0.2 ppts | ||||
Flight-only passenger sectors flown | 4.05m | 3.95m | 3% | ||||
Package holiday passenger sectors flown | 2.00m | 1.66m | 20% | ||||
Package holiday customers | 1.00m | 0.83m | 20% | ||||
Net ticket yield per passenger sector (excl. taxes) | £79.87 | £78.39 | 2% | ||||
Average package holiday price | £590.69 | £571.53 | 3% | ||||
Non-ticket revenue per passenger sector | £30.91 | £29.49 | 5% | ||||
Average hedged price of fuel (US$ per tonne) | $922 | $961 | 4% | ||||
Fuel requirement hedged for 2015/6 | 98% | 99% | (1 ppts) | ||||
Advance sales made as at 31 March | £580.3m | £484.9m | 20% | ||||
Segmental Performance - 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, processors, growers and importers across its network of eight sites, strategically located to meet demand. A full range of added value services is provided including storage, case-level picking and packing and an award winning national distribution network.
Revenues decreased by 1% to £151.7m (2014: £153.2m) as the full year impact of closing its European operating base and a small regional support hub in 2014, plus the effect of lower fuel prices passed onto customers, were largely offset by new contract wins and organic growth. Operationally, the business performed well, handling seasonal volumes efficiently, though regulatory changes resulted in an industry-wide driver shortage which led to increased driver costs. These factors, in addition to considered cost investment, resulted in operating profit increasing by 3% to £3.7m (2014: £3.6m) .
The Heywood Hub, Fowler Welch 's 500,000 square foot ambient (non-temperature-controlled) shared user storage and distribution site located near Bury, Greater Manchester, increased revenues by 6% year-on-year , as it gained a number of new customers.
Spalding, our key distribution centre in the major growing region of Lincolnshire, built revenues by 18% year-on-year despite the fall in fuel prices. This was primarily due to the first full year of a new contract with a Danish-owned pork product processor for whom Fowler Welch provides a specialist distribution service.
The regional distribution sites at Washington, Tyne and Wear and at Newton Abbot, Devon provide direct store delivery services on behalf of retailer distribution networks and combined, make time-sensitive deliveries to over 100 stores every day.
The recently refurbished Hilsea depot, which is located near to Portsmouth International Port, had a mixed year. New contract wins and growth with existing customers underlined the strength of the range of warehousing, consolidation and distribution services offered, but these were negated by the loss and associated closure costs of its Canary Islands tomatoes distribution contract. Further consolidation and distribution opportunities have been secured for the year ahead and these, together with the new contracts already implemented, see the site well placed for 2015/16.
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 provide distribution services for this important local industry and for businesses importing fruit and produce from across the English Channel.
During the year, operations commenced at Integrated Service Solutions ("ISS "), Fowler Welch's new joint venture, which stores, ripens and packs stone-fruit, and exotic and organic fruits at Teynham using the latest technology and market-leading grading, sorting and packing equipment. Fowler Welch's share of post-tax start-up losses of £0.4m was anticipated. The operation continues to develop with volumes and throughput increasing and margins encouraging, as the mix of product and the productivity of the various packing lines improve. With volumes now committed for 2015/16, the operation is expected to generate a positive return in the coming 12 months. Since the reporting date the business has been granted planning approval to extend the Teynham site in order to maximise ISS 's and other opportunities. We expect this project to be completed in the first half of 2016.
Continued focus on building a quality revenue pipeline and developing creative added value services for its customers , remains fundamental to Fowler Welch's growth strategy. In addition, further opportunities to increase the efficiency of the Fowler Welch distribution network are also being identified as it gains enhanced operational visibility through Enterprise, the new distribution, planning and transport operating system.
With its strong and committed team, a well positioned national network of sites and the expertise and flexibility to operate effectively in both the temperature-controlled (chill and produce) and ambient arenas, Fowler Welch has a strong operational foundation. The continued addition of better quality revenue streams supplemented by added value, innovative supply services to key customers, such as those recently implemented by ISS , means the outlook for Fowler Welch is encouraging.
Distribution & Logistics Financials | |||
Unaudited 2015 | Audited 2014 | Change | |
£m | £m | ||
Turnover | 151.7 | 153.2 | (1%) |
Operating expenses | (148.0) | (149.6) | 1% |
Operating profit | 3.7 | 3.6 | 3% |
Share of loss in joint ventures | (0.4) | - | - |
Net financing costs | - | (0.3) | - |
Profit before tax | 3.3 | 3.3 | - |
Share of loss in joint ventures | 0.4 | - | - |
Net financing costs | - | 0.3 | - |
Depreciation | 2.2 | 2.1 | 5% |
EBITDA | 5.9 | 5.7 | 4% |
Operating profit margin | 2.4% | 2.3% | 0.1 ppts |
Profit before tax margin | 2.2% | 2.2% | - |
EBITDA margin | 3.9% | 3.7% | 0.2 ppts |
Distribution & Logistics KPIs | |||
2015 | 2014 | Change | |
Warehouse space (square feet) | 847,000 | 847,000 | - |
Number of tractor units in operation | 467 | 450 | 4% |
Number of trailer units in operation | 655 | 640 | 2% |
Miles per Gallon | 9.2 | 8.9 | 3% |
Annual fleet mileage | 41.5m | 42.6m | (3%) |
16 July 2015
For further information please contact:
Dart Group PLC Philip Meeson, Group Chairman and Chief Executive | Tel: 0113 239 7817 |
Gary Brown, Group Chief Financial Officer | |
Smith & Williamson Corporate Finance Limited Nominated Adviser David Jones | Tel: 020 7131 4000 |
Canaccord Genuity - Joint Broker Mark Whitmore | Tel: 020 7523 8000 |
Arden Partners - Joint Broker Christopher Hardie | Tel: 020 7614 5900 |
Buchanan - Financial PR Richard Oldworth | Tel: 020 7466 5000 |
COnsolidated income statement
for the year ended 31 March 2015
Note | Unaudited results for the year ended 31 March 2015 | Audited results for the year ended 31 March 2014 | ||||||||||||||
Results before separately disclosed items | Separately disclosed items | Total | Total | |||||||||||||
£m | £m | £m | £m | |||||||||||||
Turnover | 3 | 1,253.2 | - | 1,253.2 | 1,120.2 | |||||||||||
Net operating expenses | 4 | (1,202.6) | (17.0) | (1,219.6) | (1,071.0) | |||||||||||
Operating profit | 3 | 50.6 | (17.0) | 33.6 | 49.2 | |||||||||||
Share of loss in joint ventures | (0.4) | - | (0.4) | - | ||||||||||||
Finance income | 1.7 | - | 1.7 | 1.4 | ||||||||||||
Finance costs | (1.1) | - | (1.1) | (1.4) | ||||||||||||
Revaluation of derivative hedges | 1.6 | - | 1.6 | (3.3) | ||||||||||||
Revaluation of foreign currency balances | 4.8 | - | 4.8 | (3.8) | ||||||||||||
Net financing income/(costs) | 5 | 7.0 | - | 7.0 | (7.1) | |||||||||||
Profit before taxation | 57.2 | (17.0) | 40.2 | 42.1 | ||||||||||||
Taxation | (10.8) | 3.4 | (7.4) | (6.2) | ||||||||||||
Profit for the year (all attributable to equity shareholders of the parent) | 46.4 | (13.6) | 32.8 | 35.9 | ||||||||||||
Earnings per share | ||||||||||||||||
- basic | 6 | 31.72 p | (9.30) p | 22.42 p | 24.68 p | |||||||||||
- diluted | 6 | 31.40 p | (9.20) p | 22.20 p | 24.28 p | |||||||||||
for the year ended 31 March 2015
Unaudited results for the year ended 31 March 2015 £m | Audited results for the year ended 31 March 2014 £m | |||||
Profit for the year | 32.8 | 35.9 | ||||
Effective portion of fair value movements in cash flow hedges | (98.7) | (33.8) | ||||
Net change in fair value of effective cash flow hedges transferred to profit | 32.0 | (16.9) | ||||
Taxation on components of other comprehensive income | 13.1 | 11.5 | ||||
Other comprehensive income and expense for the period, net of taxation | (53.6) | (39.2) | ||||
Total comprehensive income and expense for the period (all attributable to equity shareholders of the parent) | (20.8) | (3.3) | ||||
at 31 March 2015
Unaudited 2015 | Audited 2014 | ||||||
£m | £m | ||||||
Goodwill | 6.8 | 6.8 | |||||
Property, plant and equipment | 295.3 | 291.6 | |||||
Derivative financial instruments | 1.5 | 0.4 | |||||
303.6 | 298.8 | ||||||
Inventories | 2.0 | 3.1 | |||||
Trade and other receivables | 365.6 | 285.9 | |||||
Derivative financial instruments | 27.0 | 1.4 | |||||
Money market deposits | 65.5 | 52.5 | |||||
Cash and cash equivalents | 237.3 | 211.2 | |||||
697.4 | 554.1 | ||||||
Total assets | 1,001.0 | 852.9 | |||||
| Current liabilities | |||||||
Trade and other payables | 85.3 | 107.0 | |||||
Deferred revenue | 579.6 | 484.5 | |||||
Borrowings | 0.8 | 0.8 | |||||
Interest in joint ventures | 0.4 | - | |||||
Provisions | 28.7 | 2.4 | |||||
Derivative financial instruments | 103.8 | 35.0 | |||||
798.6 | 629.7 | ||||||
Non-current liabilities | |||||||
Other non-current liabilities | 0.5 | 10.3 | |||||
Deferred revenue | 0.7 | 0.4 | |||||
Borrowings | 8.2 | 9.0 | |||||
Derivative financial instruments | 25.1 | 2.2 | |||||
Deferred tax liabilities | 10.7 | 19.7 | |||||
45.2 | 41.6 | ||||||
Total liabilities | 843.8 | 671.3 | |||||
Net assets | 157.2 | 181.6 | |||||
| Shareholders' equity | |||||||
Share capital | 1.8 | 1.8 | |||||
Share premium | 11.9 | 11.4 | |||||
Cash flow hedging reserve | (80.4) | (26.8) | |||||
Retained earnings | 223.9 | 195.2 | |||||
Total shareholders' equity | 157.2 | 181.6 | |||||
consolidated cash flow statement
for the year ended 31 March 2015
Unaudited 2015 | Audited 2014 | |||
Cash flows from operating activities | £m | £m | ||
Profit on ordinary activities before taxation | 40.2 | 42.1 | ||
Finance income | (1.7) | (1.4) | ||
Finance costs | 1.1 | 1.4 | ||
Revaluation of derivative hedges | (1.6) | 3.3 | ||
Revaluation of foreign currency balances | (4.8) | 3.8 | ||
Depreciation | 71.3 | 60.7 | ||
Share of loss in joint ventures | 0.4 | - | ||
Equity settled share based payments | 0.1 | 0.4 | ||
Operating cash flows before movements in working capital | 105.0 | 110.3 | ||
Decrease / (increase) in inventories | 1.1 | (1.8) | ||
Increase in trade and other receivables | (79.4) | (59.7) | ||
(Decrease) / increase in trade and other payables | (24.7) | 10.3 | ||
Increase in deferred revenue | 95.4 | 77.5 | ||
Increase in provisions | 26.3 | 0.3 | ||
Cash generated from operations | 123.7 | 136.9 | ||
Interest received | 1.7 | 1.4 | ||
Interest paid | (1.1) | (1.4) | ||
Income taxes paid | (8.2) | (6.1) | ||
Net cash from operating activities | 116.1 | 130.8 | ||
| Cash flows used in investing activities | ||||
Purchase of property, plant and equipment | (76.4) | (83.5) | ||
Proceeds from sale of property, plant and equipment | - | 0.2 | ||
Net increase in money market deposits | (13.0) | (22.5) | ||
Net cash used in investing activities | (89.4) | (105.8) | ||
| Cash used in financing activities | ||||
Repayment of borrowings | (0.8) | (8.7) | ||
New loans advanced | - | 10.0 | ||
Proceeds on issue of shares | 0.5 | 0.7 | ||
Equity dividends paid | (4.2) | (2.8) | ||
Net cash used in financing activities | (4.5) | (0.8) | ||
| Effect of foreign exchange rate changes | 3.9 | (3.9) | ||
| Net increase in cash in the year | 26.1 | 20.3 | ||
| Cash and cash equivalents at beginning of year | 211.2 | 190.9 | ||
| Cash and cash equivalents at end of year | 237.3 | 211.2 | ||
for the year ended 31 March 2015
Share capital | Share premium | Cash flow hedging reserve | Retained earnings | Total shareholders' equity | |||||
£m | £m | £m | £m | £m | |||||
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 | ||||
Audited as at 31 March 2014 | 1.8 | 11.4 | (26.8) | 195.2 | 181.6 | ||||
Total comprehensive income for the year | - | - | (53.6) | 32.8 | (20.8) | ||||
Issue of share capital | - | 0.5 | - | - | 0.5 | ||||
Dividends paid in the year | - | - | - | (4.2) | (4.2) | ||||
Share based payments | - | - | - | 0.1 | 0.1 | ||||
Unaudited as at 31 March 2015 | 1.8 | 11.9 | (80.4) | 223.9 | 157.2 |
for the year ended 31 March 2015
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, which have been stated at fair value.
Whilst the information included in this preliminary announcement has been computed in accordance with Adopted IFRS, this announcement does not itself contain sufficient information to comply with Adopted IFRS. Dart Group PLC expects to publish full financial statements in early August 2015.
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 price volatility. Such derivative financial instruments are stated at fair value.
Going concern
The Directors have prepared financial forecasts for the Group, comprising operating profit, balance sheets and cash flows through to 31 March 2018.
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 banking facilities, the Group's net current liability position, and forecasts of future trading through to 31 March 2018, 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 2015.
3. Segmental reporting
Business segments
The Chief Operating Decision Maker ("CODM") is responsible for the overall resource allocation and performance assessment of the Group. The Board of Directors approves major capital expenditure, assesses the performance of the Group and also determines key financing decisions. Consequently, the Board of Directors is considered to be the CODM.
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. Previously, the Leisure Airline, Package Holidays and Distribution & Logistics businesses were determined to represent operating segments. However, the Leisure Airline and Package Holidays businesses have been working progressively closer together as one Leisure Travel business and, following on from changes in the operational structure of the business, internal financial reporting to the CODM now represents one Leisure Travel operating segment. Consequently, the Group now has two operating segments: Leisure Travel and Distribution & Logistics.
The Leisure Travel business serves its customers' demand for package holidays in, and flights to, high volume leisure destinations in the Mediterranean and the Canary Islands and to popular European Leisure Cities. Resource allocation decisions are based on the entire route network and 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 the results of individual distribution centres within the network.
Group eliminations include the removal of inter-segment asset and liability balances.
Following the identification of the operating segments, the Group has assessed the similarity of their characteristics. Given the different performance targets, customer bases and operating markets of each, it is not currently appropriate to aggregate the operating segments for reporting purposes and, therefore, both are disclosed as reportable segments for the year ended 31 March 2015:
· 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, profit before and after tax, and EBITDA. Turnover from reportable segments is measured on a basis consistent with the income statement. Turnover 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 turnover.
Leisure Travel | Distribution & Logistics | Group eliminations | Total | |
£m | £m | £m | £m | |
Unaudited Year ended 31 March 2015 | ||||
Turnover | 1,101.5 | 151.7 | - | 1,253.2 |
Inter-segment turnover | - | - | - | - |
Turnover | 1,101.5 | 151.7 | - | 1,253.2 |
Underlying EBITDA | 116.0 | 5.9 | - | 121.9 |
Underlying operating profit | 46.9 | 3.7 | - | 50.6 |
Share of loss in joint ventures | - | (0.4) | - | (0.4) |
Finance income | 1.7 | - | - | 1.7 |
Finance costs | (1.1) | - | - | (1.1) |
Revaluation of derivative hedges | 1.6 | - | - | 1.6 |
Revaluation of foreign currency balances | 4.8 | - | - | 4.8 |
Net financing income | 7.0 | - | - | 7.0 |
Underlying profit before taxation | 53.9 | 3.3 | - | 57.2 |
Separately disclosed items | (17.0) | - | - | (17.0) |
Profit before taxation | 36.9 | 3.3 | - | 40.2 |
Taxation | (6.7) | (0.7) | - | (7.4) |
Profit after taxation | 30.2 | 2.6 | - | 32.8 |
Assets and liabilities | ||||
Segment assets | 923.3 | 84.2 | (6.5) | 1,001.0 |
Segment liabilities | (813.7) | (36.6) | 6.5 | (843.8) |
Net assets | 109.6 | 47.6 | - | 157.2 |
Other segment information | ||||
Property, plant and equipment additions | 74.4 | 2.0 | - | 76.4 |
Depreciation, amortisation and impairment | (69.1) | (2.2) | - | (71.3) |
Share based payments | (0.1) | - | - | (0.1) |
Leisure Travel | Distribution & Logistics | Group eliminations | Total | |
£m | £m | £m | £m | |
Unaudited Year ended 31 March 2014 | ||||
Turnover | 967.0 | 153.2 | - | 1, 120.2 |
Inter-segment turnover | - | - | - | - |
Turnover | 967.0 | 153.2 | - | 1, 120.2 |
EBITDA | 104.2 | 5.7 | - | 109.9 |
Operating profit | 45.6 | 3.6 | - | 49.2 |
Finance income | 1.4 | - | - | 1.4 |
Finance costs | (1.1) | (0.3) | - | (1.4) |
Revaluation of derivative hedges | (3.3) | - | - | (3.3) |
Revaluation of foreign currency balances | (3.8) | - | - | (3.8) |
Net financing costs | (6.8) | (0.3) | - | (7.1) |
Profit before taxation | 38.8 | 3.3 | - | 42.1 |
Taxation | (5.6) | (0.6) | - | (6.2) |
Profit after taxation | 33.2 | 2.7 | - | 35.9 |
Assets and liabilities | ||||
Segment assets | 775.8 | 84.4 | (7.3) | 852.9 |
Segment liabilities | ( 639.2 ) | (39.4) | 7.3 | (671.3) |
Net assets | 136.6 | 45.0 | - | 181.6 |
Other segment information | ||||
Property, plant and equipment additions | 82. 5 | 1.0 | - | 83.5 |
Depreciation, amortisation and impairment | (58. 6 ) | (2.1) | - | (60.7) |
Share based payments | (0. 3 ) | (0.1) | - | (0.4) |
4. Net operating expenses | ||||||
Unaudited 2015 | Audited 2014 | |||||
£m | £m | |||||
Direct operating costs: | ||||||
Fuel | 233.3 | 222.7 | ||||
Landing, navigation & third party handling | 137.7 | 119.3 | ||||
Aircraft and vehicle rentals | 33.7 | 37.9 | ||||
Maintenance costs | 58.0 | 46.8 | ||||
Subcontractor charges | 41.0 | 40.4 | ||||
Accommodation costs | 283.9 | 227.3 | ||||
Agent commission | 22.5 | 19.0 | ||||
In-flight cost of sales | 20.3 | 16.9 | ||||
Other direct operating costs | 42.7 | 39.8 | ||||
Staff costs | 190.6 | 168.0 | ||||
Depreciation of property, plant and equipment incl. aircraft and engines | 71.3 | 60.7 | ||||
Other operating charges | 68.3 | 72.7 | ||||
Other operating income | (0.7) | (0.5) | ||||
Net operating expenses before separately disclosed items | 1,202.6 | 1,071.0 | ||||
Separately disclosed items | 17.0 | - | ||||
Total net operating expenses | 1,219.6 | 1,071.0 | ||||
5. Net financing income / (costs)
Unaudited 2015 | Audited 2014 | ||
£m | £m | ||
Finance income - interest receivable | 1.7 | 1.4 | |
Finance costs - borrowings | (1.1) | (1.4) | |
Revaluation of derivative hedges: | |||
- Derivatives ineligible for cash flow hedge accounting | - | (1.4) | |
- Changes in fair value of ineffective cash flow hedges | 1.6 | (1.9) | |
1.6 | (3.3) | ||
Revaluation of foreign currency balances | 4.8 | (3.8) | |
Net finance income / (costs) | 7.0 | (7.1) |
6. Earnings per share
Unaudited 2015 | Audited 2014 | ||||||||
Basic weighted average number of shares in issue (No.) | 146,278,585 | 145,300,720 | |||||||
Dilutive potential ordinary shares: employee share options (No.) | 1,455,645 | 2,402,809 | |||||||
Diluted weighted average number of shares in issue (No.) | 147,734,230 | 147,703,529 | |||||||
Basis of calculation - earnings (basic and diluted) | |||||||||
Profit for the purposes of calculating basic and diluted earnings | £32.8m | £35.9m | |||||||
Earnings per share - basic | 22.42p | 24.68p | |||||||
Earnings per share - diluted | 22.20p | 24.28p | |||||||
7. Separately disclosed items
Separately disclosed items are presented in the middle column of the year ended 31 March 2015 Consolidated Income Statement in order to assist the reader's understanding of underlying business performance and to provide a more meaningful presentation. The right hand column presents the results for the year showing all gains and losses recorded in the Consolidated Income Statement.
EU Regulation 261
The full year results include a separately disclosed exceptional provision of £17.0m, in relation to possible passenger compensation claims for historical flight delays under Regulation (EC) No 261/2004.
8. Financial information
The financial information set out above does not constitute Dart Group PLC's statutory accounts for the years ended 31 March 2015 or 31 March 2014. The financial information for 2014 is derived from the statutory accounts for the year ended 31 March 2014, which have been delivered to the Registrar of Companies. The auditor has reported on the year ended 31 March 2014 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 2015 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies in due course.
9. Annual report and accounts
The 2015 Annual Report and Accounts (together with the Auditor's Report) will be made available to shareholders no later than 10 August 2015. The Dart Group PLC Annual General Meeting will be held on 3 September 2015.
This information is provided by RNS
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