REPORT & ACCOUNTS 2012 | Report 2012 & Accounts Report & Accounts 2012 | 3 21738-04 31/07/2012 Proof 9s | REPORT & ACCOUNTS 2012 Dart Group PLC (“the Group”) is a Leisure Airline, Package Holidays and Distribution & Logistics group specialising in: zz the operation of scheduled and charter flights by Jet2.com to leisure destinations throughout Europe; zz the provision of ATOL protected package holidays by its tour operator Jet2holidays; and zz the distribution, by Fowler Welch, of fresh produce, temperature-controlled and ambient products to supermarkets and wholesale markets throughout the United Kingdom. 4 | 21738-04 31/07/2012 Proof 9s REPORT & ACCOUNTS 2012 | Highlights Contents Turnover (£m) 683.0 BUSINESS OVERVIEW 542.9 Chairman’s Statement 2 429.3 439.3 434.5 Business and Financial Review 6 GOVERNANCE Directors and Senior Management 16 2008 2009 2010 2011 2012 Directors’ Report 17 65.9 Report on Directors’ Remuneration 22 EBITDA (£m) 64.2 62.9 Corporate Governance Statement 26 52.6 Statement of Directors’ Responsibilities 28 37.2 FINANCIAL STATEMENTS Independent Auditor’s Report 29 Consolidated Group Income Statement 30 2008 2009 2010 2011 2012 Consolidated Group Statement of Comprehensive Income 31 158.9 Consolidated Balance Sheet 32 Net assets (£m) 147.9 Consolidated Group Cash Flow Statement 33 115.5 93.4 Consolidated Group Statement of Changes in Equity 34 74.4 Notes to the Consolidated Financial Statements 35 Company Balance Sheet 65 Notes to the Company Financial Statements 66 2008 2009 2010 2011 2012 SUPPLEMENTARY INFORMATION 256.8 Advance sales at year end (£m) Glossary of Terms 73 177.1 Secretary and Advisers 74 121.4 Financial Calendar 75 96.9 95.1 Notice of Annual General Meeting 76 2008 2009 2010 2011 2012 FINANCIAL HIGHLIGHTS AND CONTENTS | 1 21738-04 31/07/2012 Proof 9s | REPORT & ACCOUNTS 2012 Chairman’s Statement I am pleased to report on the Group’s As at 31 March 2012, the Group’s cash Our average package holiday price is around trading for the year ended 31 March 2012. balance, including money market deposits, £500 per person, a relatively large family Turnover grew by 26% to £683m (2011: was £152m (2011: £106.8m), at which point purchase for a sophisticated product which £543m) and profit before tax amounted to Jet2.com and Jet2holidays had received circa engenders a connection with the customer £28.1m (2011: £26.2m). Earnings per share £180m (2011: £135m) of advance payments and hopefully loyalty to the brand. increased 31% to 16.01p (2011: 12.20p). from customers in respect of future trips. The certainty of spend that a fully inclusive In consideration of the Group’s current Leisure Airline & Package Holidays package holiday gives is very attractive in trading performance, the Board recommends these difficult times. Our product continues Times are tough and money is short, a final dividend of 0.89p per share (2011: to evolve with the introduction of new family but it seems that our Northern UK 0.83p). If approved at the Annual General friendly hotels and free child places. We directly customers are still keen to take their family Meeting to be held on 6 September 2012, contract, and therefore have a relationship with, holidays and visit great leisure cities. this dividend will be payable on 19 October over 1,200 hotels. We have holiday reps in 2012 to shareholders on the register at the Over the past year we have carefully resorts – great service is an essential ingredient close of business on 14 September 2012. concentrated on building our services to in growing our customer focused business. The associated ex dividend date will be high volume leisure destinations, focusing Our flights offer “friendly low fares” with family 12 September 2012. on commercial and political risk-free friendly departure times, allocated seating, a Mediterranean and Canary Island resorts and The significant growth in turnover reflects 22kg baggage allowance and loyalty points for leading leisure break cities. Over 60 summer expansion in both Jet2.com, the Group’s free flights – we want a flight withJet2.com to routes are now operated to Spain alone; the Leisure Airline, and Jet2holidays, our package be a great start to the leisure break. number one destination for UK holiday makers. holiday business, which more than doubled its Our research tells us that whether a customer passenger numbers in the year. Profits in the In the year to 31 March 2012, Jet2.com buys a seat-only or takes a package holiday Leisure Airline fell, despite capacity and load operated 145 routes from our eight Northern with us they generally return very satisfied factor growth, mainly due to increased jet fuel bases, to 49 destinations. We flew 4.3 and are likely to recommend us to their family prices which we were not able to pass on to million scheduled service passengers and and friends. This enables us to grow repeat our customers. Jet2holidays, which goes from sold over 200,000 package holidays. We business from our existing customers, as strength to strength, recorded a profit before expect to increase our passenger numbers well as welcoming new customers through tax of £2.5m on the back of a 140% increase in by approximately 10% and to double the recommendation. turnover. Our important and long-established number of package holidays sold in the Distribution & Logistics business, Fowler Welch, current financial year. On 31 March 2011 we We devote great effort to knowing and better improved operating margins after a year of opened our eighth base at Glasgow airport, understanding our customers, their needs investment and restructuring in 2010/11 flying seven routes for that summer. This and their future travel intentions. Using a and returned a profit before tax of £3.9m. has now grown to 14 routes for summer bespoke data management system, we’ve 2012. We also added an additional aircraft created a single customer view that enables Capital expenditure for the year was £47.3m to both our East Midlands and Newcastle us to target and personalise our direct (2011: £68m), which related principally to bases and our first two 189 seat 737-800s marketing campaigns and ensure they are long term maintenance spend on aircraft and into Manchester, enabling capacity growth. timely and relevant. Using the latest e-mail engines, the acquisition of five 737-300 aircraft, and print technology, as well as a programme and investment in refrigerated trailers and Our high volume, seat-only business gives of intelligent data mining and modelling, site infrastructure at Fowler Welch. Net cash us a great platform on which to develop we’ve enhanced all of our direct customer flow from operating activities amounted to our package holiday product. Jet2holidays communications to ensure they resonate, and £94.5m (2011: £113.8m), reflecting principally packages together the flight, transfer and we’ve seen the success of this investment lower growth in Jet2.com forward bookings, hotel into one great value product, with with much improved conversion rates. in line with lower 2012 capacity increases. over 65% of these packages sold on an “all inclusive” (which includes all meals and beverages) or “half board” basis. 2 | CHAIRMAN’S STATEMENT 21738-04 31/07/2012 Proof 9s REPORT & ACCOUNTS 2012 | And, whilst a customer’s previous travel history weekend flights has proved sensible. We are night with our Boeing 737 “Quick Change” is always a great indicator of what they may pleased to introduce Grenoble as our fourth aircraft, which have been specially converted do next, we’ve gone a step further by enriching dedicated ski destination for this winter. to be able to carry mail in containers, our data with a robust insight programme. following the day’s passenger flights. Our Our innovative passenger charter sales group This captures customer feedback on their last flight under the present contract is in makes an important commercial contribution booking, ground and in-flight experience, as October 2014. Royal Mail is tendering the to winter aircraft utilisation. They organise well as destinations, hotels and future travel contract during this financial year, with the shopping trips to New York, fly pilgrims to plans, all of which is used to help us further result expected in the first quarter of 2013. Jeddah for the Hajj and arrange flights for refine and enhance our customer proposition. cruise, sports, ski and corporate charter We take a careful and considered view of Whilst the summer leisure business thrives, customers from across Europe. This year we expansion in our Leisure Airline business, the winter has grown progressively quieter operated charters to destinations as far afield especially in the current economic climate. as the economy has tightened. This has as Brazil, Canada, Florida and Sri Lanka. However, we are certainly optimistic for our resulted in 80% of our leisure travel turnover continued growth in the holiday market. The Company has flown night mail flights occurring in the seven months from We hope to renew our contract with Royal for Royal Mail since 1980, helping them to April – October. Ski destinations provide Mail but, should that not be possible, we ensure First Class mail achieves next day important winter utilisation for our aircraft. believe that organic growth will compensate delivery throughout the UK. Under our current However, volumes in this sector have in terms of maintaining the current level contract, which commenced in 2004, we have decreased, so our strategy of reducing our of employment and profitability. operated 16 night mail flights each weekday ski flight frequencies and concentrating on CHAIRMAN’S STATEMENT | 3 21738-04 31/07/2012 Proof 9s | REPORT & ACCOUNTS 2012 Chairman’s Statement Distribution & Logistics This successful turnaround culminated with During the year, we both selected and the award from ASDA of “carrier of the year” implemented a new fleet management In both good times and hard times in February 2012; a great achievement.