2007/082006/072005/062004/052003/042002/03Key Documents

Dart Group PLC Company Reports

Chairman's Statement

I am pleased to report on the Group’s continuing positive trading performance for the year ended 31 March 2018.

Profit before taxation which includes a £20.0m gain for foreign exchange revaluations (2017: £10.9m loss) increased by 49% to £134.6m (2017: £90.1m). Before accounting for these revaluation gains, profit before FX revaluations and taxation increased by 13% to £114.6m (2017: £101.0m). Basic earnings per share increased by 44% to 74.59p (2017: 51.80p).

In consideration of these results, the Board is recommending a final dividend of 6.0p per share (2017: 3.897p), which will bring the total proposed dividend to 7.5p per share for the year (2017: 5.272p), an increase of 42%. This final dividend is subject to shareholders’ approval at the Company’s Annual General Meeting on 6 September 2018 and will be payable on 26 October 2018 to shareholders on the register at the close of business on 21 September 2018.

The increased profits reflect the continuing strong demand for our Leisure Travel products – holiday flights with our leading leisure airline Jet2.com and package holidays with our ATOL (*) protected tour operator Jet2holidays. Our important flight-only product was enjoyed by 5.37m passengers in the year (2017: 3.64m), a growth of 48%, whilst demand for our Real Package Holidays™ continues to grow, as Jet2holidays took 2.50m customers on package holidays (2017: 1.73m), an increase of 45%.

During the year, Jet2.com flew a total of 10.38m flight-only and package holiday passengers (one-way passenger sectors) (2017: 7.10m), primarily to and from sun, city and ski destinations, an increase of 46%. Average load factors, including from our popular new operating bases at Birmingham and London Stansted airports, increased to 92.2% (2017: 91.5%). Our customer volumes allow us to serve many 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.

Average airline ticket yields at £73.65 (2017: £86.65) were 15% lower than the prior year against a 45% increase in seat capacity and very competitive pricing in summer 2017. Some price investment was also made to support demand at the two new operating bases in their first seasons of operation. However, the average price of a Jet2holidays package holiday grew by 3% to £633 (2017: £617) and as a result, revenue in our Leisure Travel business increased by 42% to £2,223.2m (2017: £1,565.8m).

Our Distribution & Logistics business, Fowler Welch, achieved revenue growth of 3% to £168.6m (2017: £163.5m). However, profit before taxation fell by £0.1m to £4.4m (2017: £4.5m), as additional operational support was provided to a key customer over the Christmas period, while varying retailer demand and shorter production runs, led to cost pressures at our fruit ripening and packing joint venture, Integrated Service Solutions (ISS).

We are very pleased that the financial year ending 31 March 2019 sees the start of our Discretionary Colleague Profit Sharing Scheme, to reward those colleagues who do not already participate in performance related bonus or commission schemes and who have been employed for at least 12 months at each financial year end. 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 and Distribution & Logistics businesses. We are delighted to be sharing our success with our wonderful colleagues!

Leisure travel

We take people on holiday! Our UK Leisure Travel business specialises in the provision of scheduled holiday flights by our award-winning leisure airline, Jet2.com, and ATOL licensed package holidays by our acclaimed tour operator, Jet2holidays, to destinations in the Mediterranean, the Canary Islands and to European Leisure Cities.

Whether taking a holiday flight with Jet2.com, or Real Package Holidays™ with Jet2holidays, we recognise that this is one of the most important family experiences of the year. We therefore do our very best to ensure each of our customers “has a lovely holiday” that can be both eagerly anticipated and fondly remembered, supported by our core principles of being family friendly, offering value for money and giving great customer service.

We know that a great holiday experience, which creates wonderful memories, engenders loyalty and repeat bookings for our Real Package Holidays™, to which we can add value through innovation and customer service. We continually strive to improve our customers’ choice, experience and enjoyment and believe that sustained investment in our products, brands and customer service excellence, plus the consistent delivery of an attractive holiday experience, gives us the greatest opportunity to retain and attract new customers – the key to continuing profitable growth.

In the past year we have expanded our hotel portfolio to over 3,400 hotels (summer 2017: over 2,900 hotels), often placing substantial deposits to secure dependable and competitive room offerings in the most attractive properties. Encompassing a wide range of great value 2 to 5-star accommodation, catering for the young, not so young and families alike, many have adjacent waterparks and other great attractions included in the package, adding to the overall holiday experience.

Our market leading Resort Flight Check-In® service, which allows Jet2holidays’ customers to check-in their bags at their hotel before going to the airport for their flight home, continues to be extremely popular. As a result, we have expanded the service to over 250 hotels for summer 2018 (summer 2017: over 180 hotels) in 9 key holiday destinations – Alicante; Fuerteventura; Gran Canaria; Lanzarote; Larnaca; Majorca; Malaga; Paphos; and Tenerife.

Jet2Villas, our new ATOL protected Jet2.com flight + car + villa package was launched in June 2017 and offers a range of over 1,600 self-catering villas, many with a private pool, in more than 30 European beach destinations, all at very competitive prices and for just a £60 per person deposit! Jet2CityBreaks, which offers a packaged flight + hotel in attractive European Leisure Cities also continues to grow profitably at a very encouraging rate.

And, in summer 2018, over 600 customer helpers will be employed in 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.

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 service, with customer helpers on hand to assist. We carefully control the quality of the flight experience, with passengers travelling on Jet2.com operated aircraft with our cabin crew and pilots intent on ensuring that the holiday starts and finishes with a relaxed and pleasant flight.

In summer 2017, Jet2.com operated 75 aircraft (summer 2016: 64) and we were very pleased to be recognised as the Top UK Airline for Punctuality of flights running on time over the previous 12 months, by the world’s leading travel intelligence company OAG.

We have continued to develop our customer-focused flying programme into summer 2018 where the aircraft fleet has increased to 90, with a commensurate increase in pilots, engineers and cabin crew. 

The delivery of consistently great service is very much at the heart of Jet2.com and Jet2holidays brand values and to underpin this, we enthusiastically promote a company-wide engagement programme called ‘Take Me There’, ensuring every colleague in the business has received training on the importance of delivering service excellence at each point in our customers’ journey. We are therefore very pleased to have been recognised in the latest UK Customer Satisfaction Index published by the Institute of Customer Service, as the highest ranked airline and package tour operator for customer service and by TripAdvisor as the only UK and European airline ranked in the Top 10 Airlines in the World.

Jet2holidays has now grown to be the UK’s second largest ATOL licensed package holidays tour operator. Whilst our flight-only product remains very important, we believe our expanding package holiday business has tremendous potential. Consistently organsing high quality, enjoyable, dependable and memorable holidays for our customers and delighting them from start to finish, engenders brand loyalty and repeat bookings. This, together with sustained investment in product and service, leads us to believe we have a great future in the UK Leisure Travel marketplace.

(*) ATOL, which is managed by the Civil Aviation Authority (‘CAA’), is a statutory licensing scheme which also provides financial protection to consumers of licensable air travel. As a licensing scheme it ensures that only businesses regarded as financially robust and fit can sell licensable travel, and as a financial protection scheme it ensures that if an ATOL holder fails, affected consumers are either repatriated or receive a replacement holiday or a refund.

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 value added 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 year, the business benefited from the first full year of its Dairy Crest operation at Nuneaton, which commenced in June 2016. This operation adds to the geographical reach of our significant chilled distribution services and contributed positively in the year.

Fowler Welch continues to focus on growing its revenue pipeline and developing existing and new business opportunities. The development of innovative value adding solutions for its customers was recently recognised, as Fowler Welch won The Grocer Gold Logistics Supplier of the Year Award 2018. With its well-positioned supply chain network, a strong and experienced management team, a skilled workforce that prides itself on high standards of customer service, price competitiveness and an ability to provide flexible and innovative solutions, we are encouraged by the opportunities available for Fowler Welch.

Outlook

Demand for our leisure travel products has strengthened since the start of the new financial year and given current forward bookings we expect that Group profit before foreign exchange revaluations and taxation for the financial year ending 31 March 2019, will substantially exceed current market expectations.

Looking further ahead, emerging cost pressures coupled with the overall uncertain UK economic outlook, particularly related to Brexit and how it may impact on consumer spending, means we remain unclear how demand will develop in the medium term.

For the long term however, our strategy remains consistent – to grow both our flight-only and package holiday products. Real Package Holidays™ take considerable organisation and attention to detail and are not easily replicated by non-specialists.

The Group dedicates significant resources to deliver an innovative and industry leading product and together with our scale, experience, competitiveness and customer focused approach, we believe we have a strong and resilient Leisure Travel business.

Philip Meeson
Executive Chairman

12 July 2018