RNS No 2964m
DART GROUP PLC
24 June 1999
DART GROUP PLC
PRELIMINARY RESULTS
FOR THE YEAR ENDED 31 MARCH 1999
CHAIRMANS STATEMENT
I am pleased to report a further year of good progress for the
Group. Profit before tax for the year to 31 March 1999 has
risen to #6.11m (1998 - #5.13m) on turnover of #105.7m (1998 -
#87.8m). Earnings per share were 12.91p (1998 - 11.19p). The
company follows a progressive dividend policy and accordingly
the Board recommends a final dividend of 3.0p (1998 - 2.5p)
making a total dividend of 4.27p for the year (1998 - 3.65p),
an increase of 17%. The dividend will be payable on 26 August
1999 to shareholders on the register on 9 July 1999.
During the year, capital expenditure amounted to #19.9m (1998
- #26.3m). This related primarily to the completion of the
Airbus A300 Eurofreighter programme, ongoing aircraft
maintenance and further investment in the infrastructure of
the Fowler Welch temperature-controlled distribution business.
It is encouraging to note the reduction in the Groups net
debt position which fell to #7.1m (1998 - #13.8m). Gearing at
31 March 1999 was 36% (1998 - 82%). Interest cover was a
healthy 7 times.
The Group has two operating divisions - Distribution and
Aviation Services.
DISTRIBUTION DIVISION
The two companies in the division, Fowler Welch and Channel
Express (CI), specialise in the physical distribution of fresh
produce and horticultural products to supermarkets and
wholesale markets throughout the United Kingdom, Northern
Ireland and Eire and operate both owned and contracted-in
temperature-controlled vehicles.
During the year Fowler Welch has won substantial distribution
business and has started a new continental European service.
The main Fowler Welch operating site in Spalding,
Lincolnshire, has been further expanded and a new leased
40,000 sq.ft. temperature-controlled consolidation centre in
Portsmouth commissioned. Operations commenced from
Portsmouth on 1 May 1999. Fowler Welch has also established
itself in Kent, an important growing and importing county, by
leasing space in purpose-built premises.
Fowler Welch expects to continue to strengthen its presence in
key growing and importing areas to enable it to service fully
the produce and horticultural distribution needs of its
customers and to offer complementary temperature-controlled
services. The major new Portsmouth storage and consolidation
facility will enable the company to improve its services to
southern England growers and importers, as well as providing
ideal facilities for Channel Island flower and produce growers
whose products are transported from the Islands by Channel
Express (CI).
The handling and efficient and timely distribution of these
highly perishable goods on behalf of demanding growers,
wholesalers and supermarkets requires experienced and
dedicated management and staff. Fowler Welch and Channel
Express (CI) have proved to be successful at developing
facilities, information systems and services to meet, and
often exceed, their customers service expectations.
The Group is committed to investing in this divisions
continued growth, both organically and, where appropriate,
with well-targeted and considered acquisitions.
AVIATION SERVICES DIVISION
The two companies in the Aviation Services Division are our
cargo airline, Channel Express (Air Services), and our freight
management and forwarding company, Benair Freight
International.
Channel Express (Air Services) operates twelve owned cargo
aircraft on services throughout Europe and to the Middle East
on behalf of express parcel companies, postal authorities,
forwarders and other airlines. Additionally aircraft are
leased in as required.
The companys aircraft offer its customers a range of payloads
with 6 tonne capacity Fokker F27s, 15 tonne capacity Lockheed
Electras and 45 tonne capacity Airbus A300B4 Eurofreighters.
The company took delivery of a further two Eurofreighters
during the financial year and these, together with the first
of its type, are primarily operated on behalf of European
express parcel companies, providing services to their European
sortation hubs at Cologne, Liege and Brussels airports.
Since the Group placed the first order for the conversion of
an Airbus A300B4 from a passenger aircraft into a freighter
in 1996, several aircraft leasing companies have also ordered
the type. The Group does not, therefore, presently intend to
purchase further Airbus A300s but will lease in additional
aircraft for its operation as required.
Whilst there is no doubt that several of our customers have
experienced a less buoyant trading climate this year, I am
pleased to say that demand for the companys cargo aircraft
services remains firm.
Channel Express (Air Services) has recently opened a European
marketing office in Cologne and sees considerable
opportunities to expand its operations in continental Europe
and to the Middle East.
Benair Freight International has traditionally strong general
cargo management and forwarding links with North America and
the Far East. The company also has a niche business importing
and distributing tropical and cold-water fish. Whilst Benair
has been successful in increasing the volumes of goods it has
managed on behalf of its customers during the year yields have
been depressed, especially to and from the Far East. The
company should benefit considerably from the expected economic
upturn in this region. In the meantime, Benair continues to
provide a personal and efficient service which is increasingly
appreciated by an expanding customer base.
The activities of each of our companies are more fully
detailed in the Review of Operations which follows this
statement.
The current years trading has commenced satisfactorily and we
aim to develop and grow in each area of our operations. Our
progress to date, and the potential for future growth, are
very much a reflection of the expertise and loyalty of the
Groups management and staff. I am extremely grateful for
all their support and hard work.
PHILIP MEESON
CHAIRMAN
REVIEW OF OPERATIONS
DISTRIBUTION
Fowler Welch
The past twelve months has been a particularly exciting and
successful period for Fowler Welch. Substantial new
supermarket business has been won and, at the same time, the
distribution network has been strengthened and enhanced by the
introduction of new operating centres and the expansion of
existing sites. To complement these developments, a new
continental European service has been introduced this year,
further widening the scope of the companys activities.
The company specialises in the distribution of fresh produce
and a wide range of flowers and horticultural products to
supermarkets and wholesale markets throughout the UK mainland,
Northern Ireland and Eire. From its consolidation centres
around the country, a 24 hours a day, 7 days a week
distribution process is controlled by a loyal and experienced
workforce which, nationally, manages over 300,000 sq.ft. of
temperature-controlled warehousing and a large fleet of
modern, temperature-controlled road vehicles.
Much of the past year has been spent developing the companys
operational infrastructure in geographical areas that are
strategically important to the development of its market
sector. This will enable Fowler Welch to extend the range of
services offered, cater for the growth in existing business
and to allow for future expansion.
The main consolidation centre at Spalding has seen a
considerable increase in fresh produce and horticultural
business undertaken for UK supermarkets. An important new
contract from Safeway has been won and there has been further
growth in the work already undertaken for Tesco. As a
consequence, it has been necessary to extend the Spalding
premises further by an additional 13,000 sq.ft. of temperature-
controlled warehousing which became fully operational in May
1999, bringing the total temperature-controlled space at the
site to around 170,000 sq.ft.
At Selby, North Yorkshire, the company has taken over the
entire transport operations of English Village Salads, a
subsidiary of Geest and a supplier to all the major UK
supermarket chains. As a consequence, Fowler Welch has been
successful in acquiring the J. Sainsbury contract for the
national distribution of perishable products from the
Humberside region which is managed through the Selby centre.
The companys two strategically important Cambridgeshire sites
at Yaxley and Earith maintain their valuable contributions to
the company through their organic growth in the distribution
of pre-packed, locally-grown and imported produce.
Fowler Welch has recognised for some time that a presence in
Kent, one of the souths most important growing and importing
regions, is a natural extension to its distribution chain.
After careful evaluation of the available options, the company
established an operating site at Sheerness Produce Terminal
near Sittingbourne in the Spring of 1999. This terminal,
owned by Mersey Docks and Harbour Company, is the most modern
of its kind in the country with over 300,000 sq.ft. of fully
climate-controlled warehousing and pre-packing facilities.
As well as successfully securing a new distribution contract
from a major supplier, Fowler Welch is working closely with
the terminal operators to attract further new business to the
benefit of both parties.
After considerable detailed planning, the companys new 40,000
sq.ft. consolidation centre at Portsmouth opened for business
on 1 May 1999. The leased, purpose-designed building is
fully temperature-controlled and features multi-compartment
stores with state-of-the-art cooling equipment, sixteen
loading docks with temperature-sealed doors and sophisticated
handling systems. A separate 8,000 sq.ft. office block on
site will accommodate administrative and other support staff.
Allowing optimum levels of quality service, this is now the
companys main southern distribution centre for the Channel
Islands and imported flowers and produce. It also offers
exciting opportunities for the company to attract new business
from the Hampshire and West Sussex regions as well as via the
ports of Southampton and Portsmouth.
At the beginning of 1999, Fowler Welch increased its range of
customer-focused services with the introduction of a
continental European service. This arm of the business has
been established under a recently-appointed senior executive
well known to the company and with many years industry
experience of continental operations. Using a new dedicated
fleet of continental specification vehicles, the company runs
a regular service collecting horticultural products from
Holland for UK delivery on behalf of British supermarkets,
returning with a variety of perishable products. The service
is still under careful development but is already making a
worthwhile contribution.
Although "primary" distribution from supplier to a
supermarkets distribution centre is the core business of
Fowler Welch, the move towards combining this with "secondary"
deliveries to supermarket stores has been developed
successfully, achieving greater efficiency within the
distribution process. This has led to cost savings for the
company and its customers through the consolidation of loads
thereby helping the environment by reducing vehicle mileage.
Longer opening hours by the retailers is creating the need for
the continuous replenishment of their shelves. To cater for
this, the supermarkets now require a wider selection of
products to be carried on the same vehicle with more frequent
deliveries to stores. Fowler Welch sees this as an
opportunity to expand the range of temperature-controlled
products it distributes thereby increasing the volumes handled
through its network.
A number of high-level management appointments have been made
during the year, bringing to the company valuable specialist
industry expertise. The company is also reaping the rewards
of its in-house and external training programmes, which have
nurtured career development within the organisation, as well
as allowing the additional staff recruited to support the
expanded operations to become active members of the team as
quickly as possible.
Channel Express (CI)
Maintaining its position as an important link between Fowler
Welchs UK operations and the Channel Islands, Channel Express
(CI) provides the Islands growers with a vital air, sea and
road service to the mainland markets. The companys
returning freight services deliver consumer goods, fresh and
chilled foodstuffs, mail and national newspapers to local
communities in both Guernsey and Jersey.
With the move from Bournemouth of the Fowler Welch southern
horticulture and produce distribution operation, Portsmouth
has become the consolidation point for Channel Islands
perishables which arrive via this port. It is now possible
to sort and despatch consignments more quickly and achieve
earlier arrival times at markets. These spacious premises
also offer opportunities for Channel Islands growers to
exploit new and innovative marketing methods.
The Groups air service will continue to operate from
Bournemouth on the Channel Islands route, maintaining the
network link for the important express delivery service
provided by the company for parcels and similar traffic to the
Islands.
The Distribution Division is now well equipped to provide its
customers with a high quality, flexible service and is ready
to continue to exploit the growth potential of its position
as market leader in its attractive and specialist distribution
sector.
The developments and expansion plans that have been put in
place, along with careful investment in the latest information
technology and communications systems, give the companies a
competitive edge when seeking to retain existing business and
setting out to attract new contracts. The year ahead should
see further progress and growth being achieved throughout the
division.
AVIATION SERVICES
Channel Express (Air Services)
Regrettably the company suffered a fatal aircraft accident on
12 January 1999 when one of its Fokker F27s crashed on the
approach to Guernsey airport whilst carrying newspapers to the
Island. Sadly both members of the aircrew were killed and
some damage occurred on the ground. The Air Accident
Investigation Board has yet to publish its final report on the
accident. However the company believes there has been no
implication of any mechanical defect with the aircraft.
Obviously, an accident such as this greatly affects everyone
concerned, both directly and indirectly, with our operation.
Our thoughts and condolences continue to be with Captain
Martin Bulgins and First Officer Ian Rhodes families,
friends and colleagues .
Channel Express (Air Services) operated eight Fokker F27s,
four Lockheed Electras and three Airbus A300 Eurofreighters
for much of the financial year, together with the Groups last
remaining Dart Herald, which retired in March 1999. This was
the last of twelve Heralds owned and operated over twenty
years.
The companys aircraft fly on behalf of express parcel
companies, postal authorities, freight forwarders and other
airlines. Additionally, many "ad hoc" charters are
undertaken, often at short notice, to meet the needs of
customers with urgent shipments. Typically these flights are
carried out for manufacturers who operate just in time stock
replenishment systems and are facing shortfalls in their
surface supply chains.
Whilst the company has strong commercial operations in the UK,
especially on behalf of the Royal Mail and newspaper
publishers, for whom papers are delivered daily to the Channel
Islands, its operations for the express carriers are centred
on their European sortation and distribution hubs at Brussels
Airport for DHL, Liege Airport for TNT and Cologne Airport for
UPS. These hubs are linked by nightly air and road services
to cities throughout Europe offering time-definite express
parcel deliveries.
Reliability and high service standards are essential to the
success of this business and Channel Express (Air Services)
particularly prides itself on being one of the leading
suppliers of cargo aircraft services to this dynamic industry.
In order to market the companys services in Europe more
effectively, a sales and marketing office was opened in
Cologne on 1 September 1998. This is run by the Regional
Manager - Europe. It is intended to build upon what is
already a successful sales operation and, at the same time,
explore the potential for entering into alliances with other
European carriers where opportunities exist for our aircraft
types in their markets.
In September the Group took delivery of its third A300B4
Eurofreighter and so completed its programme for the
conversion of three of the type from passenger aircraft into
freighters. The smooth introduction into service and
excellent reputation our Eurofreighters have obtained for
reliability is a considerable achievement by a dedicated team
of aircrew, operations, engineering and administrative
personnel.
Together with the three operating Eurofreighters, the Group
purchased two older Airbus A300B2 aircraft at the time of
their retirement from service by Air France. These aircraft
have been dismantled to provide spare parts and engines, both
for our own aircraft and for those of other operators. In
order to service this market, Channel Express (Air Services)
has established a new internal operating division called
"Parts Trading", staffed by experienced company employees.
This operation has commenced trading promisingly and the aim
is to develop its business by expanding its support of Airbus
and other aircraft types over the coming years.
The Groups three Lockheed Electras continue to give reliable
service to our express parcel and postal authority customers.
During the year the Electra fleet has been supplemented with
aircraft leased from other carriers. The type is especially
valuable for night operations since, unlike its "hush-kitted"
jet competitors, it comfortably conforms with the
International Civil Aviation Organisation "Chapter 3" noise
limitations and is readily accepted at the European airports
which place operating restrictions on noisier types.
The F27 fleet has had a busy year. Unlike the other fleets, it
has experienced a high turnover of pilots which has made the
operation of the type more difficult than it would otherwise
have been. To counter this we have had to undertake an unusual
amount of aircrew training through the year. Our training
staff work extremely hard to give quality ground-school,
simulator and flying training and it is particularly
commendable that the dedication of our aircrew and flight
operations staff has enabled the company to fulfil its
contractual commitments in sometimes difficult circumstances.
Throughout the year the company has continued to develop its
information technology, operational and engineering systems.
Channel Express (Air Services) will continue to expand its
reliable and cost effective freighter aircraft services
throughout Europe and to the Middle East. The company also
believes there will be opportunities to work in partnership
with Fowler Welch and to offer a seamless service
transporting products destined for UK supermarkets by air and
road from their foreign suppliers.
Benair Freight International
The past year has been one of considerable progress for Benair
Freight International, the Groups freight management and
forwarding company. In October 1998, the company extended
its operations in the UK by opening an office and warehouse
facility in Newcastle-upon-Tyne. This operation
supplements the companys existing branches at London Heathrow
and Manchester airports and a newly relocated facility at East
Midlands Airport.
During the year, Benair has looked to expand its horizons
beyond the wholly-owned subsidiary in Singapore and its
related companies in Hong Kong and Malaysia to form closer
relationships with partners in other Far Eastern countries,
the Middle East and the Americas and to develop its core air,
sea and road freight services.
This has allowed Benair to introduce its "Connects" product,
the first of which is a guaranteed time-definite service to
and from Hong Kong for freight of any size.
Benair has, for many years, had a very significant niche
business in the importation of tropical, marine and cold-water
fish that requires considerable specialised knowledge. The
company provides a complete distribution service from the
overseas source to its UK customers. Although Benair is
already a major force in the UK market for ornamental fish,
considerable opportunities for expansion of its services, both
in scope and scale are believed to be achievable.
Throughout the year continuing investment has been made in
information technology improvements, freight handling
facilities and staff training to provide a solid platform for
future expansion. Benair is increasingly being recognised
as a high quality employer within the international freight
management industry and its growing and loyal customer base is
a direct reflection of its personal and efficient service.
The company is well placed to take advantage of any future
improvements in the Far East and continental European
economies and to work with Channel Express (Air Services) and
Fowler Welch to provide seamless international services.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 March 1999
1999 1998
Notes (audited) (audited)
#000 #000
TURNOVER 1 105,730 87,809
Net operating expenses (98,920) (82,174)
_______ ______
OPERATING PROFIT 6,810 5,635
Surplus on disposal of fixed
assets 299 57
Net interest payable (1,004) (567)
______ _____
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION 6,105 5,125
Taxation (1,936) (1,522)
______ ______
PROFIT ON ORDINARY ACTIVITIES
AFTER TAXATION 4,169 3,603
Dividends (1,380) (1,178)
______ ______
RETAINED PROFIT FOR THE YEAR 2,789 2,425
====== ======
EARNINGS PER SHARE 5
- basic 12.91p 11.19p
- diluted 12.78p 11.11p
====== ======
STATEMENT OF TOTAL
RECOGNISED GAINS AND LOSSES
1999 1998
#000 #000
Profit on ordinary activities
after taxation 4,169 3,603
Foreign exchange loss on
foreign equity investment (15) (57)
_____ _____
4,154 3,546
===== =====
CONSOLIDATED BALANCE SHEET
at 31 March 1999
1999 1998 *
Notes (audited) (audited)
#000 #000 #000 #000
FIXED ASSETS
Tangible assets 38,820 36,111
Investments 106 106
_____ _____
38,926 36,217
CURRENT ASSETS
Stock 1,435 1,478
Debtors 14,122 12,433
Cash at bank and in hand 9,147 6,597
_____ _____
24,704 20,508
CURRENT LIABILITIES
CREDITORS: amounts falling
due within one year (25,867) (19,281)
_____ _____
NET CURRENT (LIABILITIES)
/ASSETS (1,163) 1,227
_____ _____
TOTAL ASSETS LESS CURRENT
LIABILITIES 37,763 37,444
CREDITORS: amounts falling
due after more than
one year (14,942) (18,277)
PROVISION FOR LIABILITIES
AND CHARGES (3,251) (2,408)
_____ _____
(18,193) (20,685)
_____ _____
19,570 16,759
====== ======
CAPITAL AND RESERVES
Called up share capital 1,617 1,614
Share premium account 4,564 4,530
Profit and loss account 2 13,389 10,615
_____ _____
SHAREHOLDERS FUNDS -
equity interests 19,570 16,759
====== ======
* As Restated
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 1999
1999 1998
Notes (audited) (audited)
#000 #000
NET CASH INFLOW FROM
OPERATING ACTIVITIES 3 24,480 14,388
RETURNS ON INVESTMENT AND
SERVICING OF FINANCE (1,004) (567)
TAXATION (512) (1,037)
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT (15,091) (22,762)
EQUITY DIVIDENDS PAID (1,217) (1,078)
______ ______
CASH INFLOW/(OUTFLOW) BEFORE
MANAGEMENT OF LIQUID RESOURCES
AND FINANCING 6,656 (11,056)
MANAGEMENT OF LIQUID RESOURCES (4,549) -
FINANCING (4,106) 14,333
______ ______
(DECREASE)/INCREASE IN CASH
IN THE YEAR (1,999) 3,277
===== =====
RECONCILIATION OF NET CASH FLOW
TO MOVEMENT IN NET DEBT 1999 1998
#000 #000
(Decrease)/increase in cash in
the period (1,999) 3,277
Cash used to increase liquid
resources 4,549 -
New finance leases in period - (1,309)
Cash outflow/(inflow) from
decrease/(increase) in
net debt in the period 4,143 (14,276)
_____ ______
Change in net debt in the period 6,693 (12,308)
Net debt at 1 April (13,765) (1,457)
______ ______
Net debt at 31 March (7,072) (13,765)
===== ======
NOTES
1. TURNOVER
Year to Year to
31 March 31 March
1999 1998
(audited) (audited)
#000 #000
Distribution 44,942 37,696
Aviation Services 60,788 50,113
________ ________
105,730 87,809
======== ========
Turnover arising within:
The United Kingdom
and the Channel Islands 104,663 86,547
The Far East 1,067 1,262
________ ________
105,730 87,809
======== ========
Analyses of profit before taxation and net assets between
the different segments of the Group are not given as,
in the opinion of the directors, such analyses would
be seriously prejudicial to the commercial interests
of the Group. Turnover to third parties by destination
is not materially different to that by source.
2. PROFIT AND LOSS ACCOUNT
Year to Year to
31 March 31 March
1999 1998
(audited) (audited)
#000 #000
Balance at the beginning of
the year 10,615 8,247
Retained profit for the year 2,789 2,425
Currency translation differences (15) (57)
________ ________
13,389 10,615
======== ========
3. RECONCILIATION OF OPERATING PROFIT
TO NET CASH FLOW FROM OPERATING ACTIVITIES
Year to Year to
31 March 31 March
1999 1998
(audited) (audited)
#000 #000
Operating profit 6,810 5,635
Depreciation 15,315 9,269
Decrease/(increase) in stock 43 (701)
(Increase)/decrease in debtors (1,689) 14
Increase in creditors 4,016 228
Exchange differences (15) (57)
________ ________
24,480 14,388
======== ========
4. The financial information for the years ended 31 March
1998 and 1999 do not constitute statutory accounts, as
defined in Section 240 of the Companies Act 1985, but are
based on the statutory accounts for the years then ended.
Statutory accounts for the year ended 31 March 1998, on
which the auditors issued an unqualified opinion pursuant
to Section 235 of the Companies Act 1985, have been filed
with the Registrar of Companies. Statutory accounts for
the year ended 31 March 1999, on which the auditors
issued an unqualified opinion pursuant to Section 235 of
the Companies Act 1985, will be filed with the Registrar
of Companies in due course.
5. Earnings per share are calculated on the profit on
ordinary activities after taxation for the financial year
and on 32,299,341 (1998: 32,202,480) shares, being the
weighted average number of shares in issue during the
year.
6. The proposed final dividend of 3.0 pence (net) per share
will, if approved, be payable on 26 August 1999 to
shareholders on the Companys register at the close of
business on 9 July 1999.
7. The 1999 Annual Report and Accounts (together with the
Auditors Report) will be posted to shareholders on 9
July 1999. The Annual General Meeting will be held
on 5 August 1999.
8. Year 2000 Compliance Statement
The Group is fully aware of the serious implications of
disruption to business operations as a result of Year
2000 date problems.
Given the complexity of the problem, it is not possible
for any organisation to guarantee that no Year 2000
problems will remain. The Groups compliance plans are
well advanced. The Group believes that all of its
business critical internal computer systems are now fully
millennium compliant and all of the appropriate
replacement of both hardware and upgrades of software has
now taken place.
The Group has embarked upon an audit of its mission
critical suppliers to ensure that they too have fully
dealt with Year 2000 issues and there will be no
disruption to the service they supply to Group companies.
The Group has also drawn up detailed contingency plans
which will be continually updated and revised to minimise
any possible disruption to its business.
As a result of the action the Group has taken and will
take customers, suppliers and investors can have every
expectation that its businesses will continue to function
in such a way that no disruption to either its own or its
clients businesses will result from the Year 2000
problem.
END
FR FLGZVRFDLLMM
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