I am pleased to report on the Group's trading for the year ended 31 March 2009 - a successful year for the Group. Although turnover grew only slightly to £439m (2008 - £429m), profitability was improved, principally through stronger trading performance in Jet2.com. Profit before tax amounted to £33.5m (2008 - £11.8m), with earnings per share of 19.3p (2008 - 6.2p). Underlying profit before tax, before specific IAS 39 fair value movements, would have been £28.8m (2008 - £3.9m). In the light of Summer 2009 trading the Board has concluded that it is appropriate to resume payment of a dividend at a level of 0.71p per share payable, subject to shareholder approval on 21 September 2009.
Capital expenditure for the year ended 31 March 2009 was £27.9m (2008 - £38.5m), with the reduction principally related to the phasing of long-term maintenance spend on engines and airframes. As at 31 March 2009, the Group's net cash position amounted to £11.8m, which represents a significant improvement from 31 March 2008, at which time the Group had net debt of £17.2m.
All of Jet2.com's expected fuel requirements for its passenger operations have been hedged for the year ending 31 March 2010, as have nearly all of the Group's forecast US$ and Euro requirements. Neither Jet2.com's freight operations nor Fowler Welch-Coolchain currently have any material exposure to oil price risk as this is substantially covered in their commercial contracts.
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Jet2.com, the Group's leisure airline, focused its development in 2008/9 on a wider range of leisure sun routes, with new leisure routes added, principally from Leeds and Manchester. In order to match supply with expected market demand Jet2.com managed down overall capacity both in Summer 2008 and in Winter 2008/9. Summer seat capacity was reduced by 21% with some city routes being discontinued and Winter capacity was reduced by 49% in recognition of the economic downturn, principally through reduction in flight frequencies to Western Mediterranean destinations. Encouragingly, the business continues to win awards - a recent customer satisfaction survey conducted by Which? identified Jet2.com as having the highest level of satisfaction amongst UK short haul carriers.
The Group's tour operator, Jet2holidays.com, grew more slowly than hoped for, with 36,128 passengers in the year (2007/8 - 34,339), booked through internet sales, telephone sales via our UK based call centre and via travel agencies. We are working hard to grow this segment of our aviation business, packaging attractive hotels with Jet2.com scheduled flights and offering flexible holidays to a wide range of destinations.
The Jet2.com in-house developed reservation system, which went live in February 2008, was further developed during the year, with the introduction of a number of enhancements including online seat assignment, a "shopping basket" facility for multiple purchases and a specific travel agency portal. The introduction of our own reservation system allows us to tailor the system constantly to meet customer needs quickly and effectively, improving the shopping experience and consequently generating additional non-ticket revenues.
Our passenger charter airline operations had a very strong year, as a result of both increased market demand and additional aircraft availability. The Group's freight operations continue to deliver a significant revenue stream; in particular the night flights for Royal Mail on "Quick Change" aircraft allow us to maximise the use of the Group's aircraft through day and night time operations.
Looking forward, Jet2.com will continue to focus its growth in the leisure sector of the airline market. The continuing development of its in-house IT capabilities is recognised as beingparticularly important to ensure that both its scheduled flights and holiday offerings meet the evolving demands of its growing customer base. The Group also intends to continue to work closely with the travel trade in making its flight and holiday offerings more accessible to all forms of distribution.
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The Group's logistics operation, Fowler Welch-Coolchain, primarily provides an integrated supply chain solution to supermarkets and their suppliers as well as food manufacturers, growers and importers. Its capabilities include both chilled and ambient distribution together with warehousing and pick-to-order services. It offers national coverage from a network of eight distribution and storage operations.
Revenues for the year ended 31 March 2009 decreased by 6%, principally as a result of customer losses at the beginning of the year. Whilst the cost base was reduced, reflecting both the flexible nature of the business and action taken during the year to improve efficiency, profitability was impacted. "Manhattan", the Company's new warehouse management system was introduced at our Spalding site in the year, providing real-time online visibility of stock levels as well as inbound and outbound movements.
During the year, Fowler Welch-Coolchain continued to ensure that it operated the optimum mix of own and sub-contractor vehicles and drivers. The company continues to invest in new technology with the introduction of further dual fuel vehicles and double deck trailers, together with further investment in its driver training initiatives. These investments are expected to continue to deliver a reduction in both operating costs and carbon emissions.
It is our intention to continue to grow this operation both organically and by selective acquisition, should attractive opportunities arise to add skills or scale.
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I am sad to report that Jim Welch, President of Fowler Welch-Coolchain, passed away in January of this year. Jim was the founder of Fowler Welch Limited. He retired from active involvement in Fowler Welch, but retained a passion for and real interest in the business, being a source of both inspiration and valuable advice. His former business partner, Maurice Fowler, sadly also passed away in January this year. On behalf of all our colleagues, we send sincere condolences to their families and are hugely grateful for the vision and hard work that led to the creation and success of Fowler Welch.
All our businesses have earned a reputation for high quality customer service from their customers. This can only be achieved through the dedication and hard work of all of the Group's operational and administrative staff in Fowler Welch-Coolchain, Jet2.com and Jet2holidays.com. Our businesses are customer-focused and operationally demanding at all hours of the day. We are grateful to all and look forward to continuing to grow our business together.
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We expect to grow both our businesses cautiously in the year ahead, given current market conditions. In Fowler Welch-Coolchain, we will also evaluate acquisition opportunities as these arise and continue to develop the business infrastructure.
We will invest in the development of the aviation business, through a growing focus on leisure flights and package holidays, increasingly to longer haul destinations. In the current trading environment, the key to success will be to continue to focus on matching flight schedules and frequencies to market demand. With our expected fuel requirements fully hedged and a carefully tailored flying programme, we are well placed to deliver satisfactory financial performance in this financial year in difficult trading conditions.
29 July 2009
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