I am pleased to report on the Group's
trading for the year ended 31 March 2012.
Turnover grew by 26% to £683m (2011:
£543m) and profit before tax amounted to
£28.1m (2011: £26.2m). Earnings per share
increased 31% to 16.01p (2011: 12.20p).
In consideration of the Group's current
trading performance, the Board recommends
a final dividend of 0.89p per share (2011:
0.83p). If approved at the Annual General
Meeting to be held on 6 September 2012,
this dividend will be payable on 19 October
2012 to shareholders on the register at the
close of business on 14 September 2012.
The associated ex dividend date will be
12 September 2012.
The significant growth in turnover reflects
expansion in both Jet2.com, the Group's
Leisure Airline, and Jet2holidays, our package
holiday business, which more than doubled its
passenger numbers in the year. Profits in the
Leisure Airline fell, despite capacity and load
factor growth, mainly due to increased jet fuel
prices which we were not able to pass on to
our customers. Jet2holidays, which goes from
strength to strength, recorded a profit before
tax of £2.5m on the back of a 140% increase in
turnover. Our important and long-established
Distribution & Logistics business, Fowler Welch,
improved operating margins after a year of
investment and restructuring in 2010/11
and returned a profit before tax of £3.9m.
Capital expenditure for the year was £47.3m
(2011: £68m), which related principally to
long term maintenance spend on aircraft and
engines, the acquisition of five 737-300 aircraft,
and investment in refrigerated trailers and
site infrastructure at Fowler Welch. Net cash
flow from operating activities amounted to
£94.5m (2011: £113.8m), reflecting principally
lower growth in Jet2.com forward bookings,
in line with lower 2012 capacity increases.
As at 31 March 2012, the Group's cash
balance, including money market deposits,
was £152m (2011: £106.8m), at which point
Jet2.com and Jet2holidays had received circa
£180m (2011: £135m) of advance payments
from customers in respect of future trips.
Leisure Airline & Package Holidays
Times are tough and money is short,
but it seems that our Northern UK
customers are still keen to take their family
holidays and visit great leisure cities.
Over the past year we have carefully
concentrated on building our services to
high volume leisure destinations, focusing
on commercial and political risk-free
Mediterranean and Canary Island resorts and
leading leisure break cities. Over 60 summer
routes are now operated to Spain alone; the
number one destination for UK holiday makers.
In the year to 31 March 2012, Jet2.com
operated 145 routes from our eight Northern
bases, to 49 destinations. We flew 4.3
million scheduled service passengers and
sold over 200,000 package holidays. We
expect to increase our passenger numbers
by approximately 10% and to double the
number of package holidays sold in the
current financial year. On 31 March 2011 we
opened our eighth base at Glasgow airport,
flying seven routes for that summer. This
has now grown to 14 routes for summer
2012. We also added an additional aircraft
to both our East Midlands and Newcastle
bases and our first two 189 seat 737-800s
into Manchester, enabling capacity growth.
Our high volume, seat-only business gives
us a great platform on which to develop
our package holiday product. Jet2holidays
packages together the flight, transfer and
hotel into one great value product, with
over 65% of these packages sold on an
"all inclusive" (which includes all meals
and beverages) or "half board" basis.
Our average package holiday price is around
£500 per person, a relatively large family
purchase for a sophisticated product which
engenders a connection with the customer
and hopefully loyalty to the brand.
The certainty of spend that a fully inclusive
package holiday gives is very attractive in
these difficult times. Our product continues
to evolve with the introduction of new family
friendly hotels and free child places. We directly
contract, and therefore have a relationship with,
over 1,200 hotels. We have holiday reps in
resorts – great service is an essential ingredient
in growing our customer focused business.
Our flights offer "friendly low fares" with family
friendly departure times, allocated seating, a
22kg baggage allowance and loyalty points for
free flights – we want a flight with Jet2.com to
be a great start to the leisure break.
Our research tells us that whether a customer
buys a seat-only or takes a package holiday
with us they generally return very satisfied
and are likely to recommend us to their family
and friends. This enables us to grow repeat
business from our existing customers, as
well as welcoming new customers through
We devote great effort to knowing and better
understanding our customers, their needs
and their future travel intentions. Using a
bespoke data management system, we've
created a single customer view that enables
us to target and personalise our direct
marketing campaigns and ensure they are
timely and relevant. Using the latest e-mail
and print technology, as well as a programme
of intelligent data mining and modelling,
we've enhanced all of our direct customer
communications to ensure they resonate, and
we've seen the success of this investment
with much improved conversion rates.
And, whilst a customer's previous travel history
is always a great indicator of what they may
do next, we've gone a step further by enriching
our data with a robust insight programme.
This captures customer feedback on their
booking, ground and in-flight experience, as
well as destinations, hotels and future travel
plans, all of which is used to help us further
refine and enhance our customer proposition.
Whilst the summer leisure business thrives,
the winter has grown progressively quieter
as the economy has tightened. This has
resulted in 80% of our leisure travel turnover
occurring in the seven months from
April – October. Ski destinations provide
important winter utilisation for our aircraft.
However, volumes in this sector have
decreased, so our strategy of reducing our
ski flight frequencies and concentrating on
weekend flights has proved sensible. We are
pleased to introduce Grenoble as our fourth
dedicated ski destination for this winter.
Our innovative passenger charter sales group
makes an important commercial contribution
to winter aircraft utilisation. They organise
shopping trips to New York, fly pilgrims to
Jeddah for the Hajj and arrange flights for
cruise, sports, ski and corporate charter
customers from across Europe. This year we
operated charters to destinations as far afield
as Brazil, Canada, Florida and Sri Lanka.
The Company has flown night mail flights
for Royal Mail since 1980, helping them to
ensure First Class mail achieves next day
delivery throughout the UK. Under our current
contract, which commenced in 2004, we have
operated 16 night mail flights each weekday
night with our Boeing 737 "Quick Change"
aircraft, which have been specially converted
to be able to carry mail in containers,
following the day's passenger flights. Our
last flight under the present contract is in
October 2014. Royal Mail is tendering the
contract during this financial year, with the
result expected in the first quarter of 2013.
We take a careful and considered view of
expansion in our Leisure Airline business,
especially in the current economic climate.
However, we are certainly optimistic for our
continued growth in the holiday market.
We hope to renew our contract with Royal
Mail but, should that not be possible, we
believe that organic growth will compensate
in terms of maintaining the current level
of employment and profitability.
Distribution & Logistics
In both good times and hard times
Fowler Welch, our important Distribution &
Logistics business, is always busy ensuring that
chilled and fresh foods are on supermarket
The business is one of the UK's leading,
long established companies in this field.
It operates from approximately 850,000 sq ft
of owned temperature-controlled and
ambient distribution centres in Spalding,
Lincolnshire; Teynham, Kent; and Bury,
Greater Manchester, with smaller sites
at Washington, Tyne and Wear; Newton
Abbot, Devon; Alconbury, Cambridgeshire;
and Portsmouth, Hampshire. In Holland,
our European operation is our gateway for
produce and flowers from around the world.
Fowler Welch is a specialist business with
long term relationships with leading
supermarkets and their suppliers,
for whom we are proud to provide a
dependable and flexible logistics service.
Following a degree of reorganisation in
the previous financial year, I am pleased to
say that turnover for the year to 31 March
2012 grew by 6%. Continuing operating
efficiencies have led to an improvement in
operating margins, which is ongoing in the
current year. Our container haulage operations
have been successfully downsized – the
Felixstowe site was closed and let out, with the
business now being centred on a new site at
Alconbury, Cambridgeshire. These operations
are now making a positive contribution.
Our 50,000 pallet ambient consolidation
centre ("the Hub") at Heywood near Bury,
Greater Manchester had a difficult period of
initial trading and operations when it was
opened in 2010. The operations at the site
have now been streamlined, resulting in a
considerable improvement in operational and
financial performance over the last 12 months.
This successful turnaround culminated with
the award from ASDA of "carrier of the year"
in February 2012; a great achievement.
Considerable new business has been
secured and in addition, there is a strong
pipeline of new clients for the future.
A new, small distribution centre at Newton
Abbot, Devon, was opened in July for TESCO,
replicating a similar operation performed by
Fowler Welch at its Washington, Tyne and
Wear site. We transport TESCO's products in
double deck trailers to Newton Abbot, where
they are redistributed in smaller loads for
delivery to TESCO express stores in the South
West. This operation has consistently delivered
high service levels, although we need to
gain additional customers in order to build
volumes and achieve significant profitability.
Encouragingly, we believe that the region offers
good potential for future further growth.
Our 25 acre Spalding distribution centre
is the largest in our business, with a long
history of service in this key produce area.
The site specialises in the storing, picking and
consolidation of fresh produce on behalf of
importers and packers, as well as major food
processors and manufacturers. During the year
there was a substantial increase in warehouse
capacity through redevelopment, and this is
now fully occupied, following both contract wins
and increased business from existing customers.
As a supplier to the fast moving consumer
goods ("FMCG") sector, Fowler Welch has
to react to significant changes in volumes
constantly and sometimes within lead times of
just a few hours. The business has a reputation
for its ability to deliver in these circumstances
and its IT systems play a vital part in
facilitating the necessary speed of decision
making. We are committed to continually
investing in and developing our operational IT
systems to ensure they are leading edge.
During the year, we both selected and
implemented a new fleet management
software solution and upgraded our warehouse
management systems and associated
hardware to ensure we have a robust and
dependable IT infrastructure.
Fowler Welch is a great logistics business in
a demanding but vital market place. Our ability
to invest, coupled with excellent facilities and
long industry experience, and a determined
management team, puts the Company in good
shape for future profitable growth.
We plan to grow each of our businesses in
the year ahead. Fowler Welch has a number
of business development opportunities
throughout its network and is benefiting from
recent wins in the North West. Jet2holidays is
set for further growth in the current year, with
forward bookings at encouraging levels. We
have expanded Jet2.com's flying programme
by 10% for summer 2012, although margins
remain challenging in this sector.
We are encouraged both by these business
opportunities and by the start we have made
to the current year but in the current economic
environment we are cautious in respect of
23 July 2012