2001

Flight Centre Limited shareholders set for $50 million dividend

Australia's leading travel retailer, Flight Centre Limited, has announced plans for a special dividend payment and substantial share issue to shareholders. Flight Centre Limited chairman Norm Fussell today said the company planned to return up to $50 million in retained profits to shareholders through a one-off dividend payment of 60 cents per share. Mr Fussell said shareholders would then be given the opportunity to reinvest the dividend payment in the company by participating in the concurrent one-for-forty rights entitlement to new shares at $23.50 per share. "This dividend payment represents a significant return of value and will allow Flight Centre Limited shareholders to take advantage of the new share offer," Mr Fussell said. "Stakeholders can reinvest the dividend payment in the new shares to maintain their shareholding and an equivalent dividend income stream, or can take the special dividend as a one-off payment, effectively diluting their shareholding. "Given the remarkable ongoing success the company has achieved and the value for money it has delivered to shareholders, we expect most will reinvest the payment into new shares. "Flight Centre Limited's founders and directors see the share offer as a very good investment and a vote of confidence in the company's future and will take up their rights entitlement in full." Flight Centre Limited floated on the Australian Stock Exchange in 1995 and has since enjoyed remarkable success and ongoing growth. In less than six years, its share price has increased from 95 cents to more than $26. Two months ago, the company announced a $27.83 million operating profit before tax for the six months to December 31 - a 15.9% increase on the corresponding half year's result. Flight Centre Limited chief executive officer Graham Turner said the dividend payment would see the company return profit to shareholders in a "tax-effective" manner. He said the company would like to achieve another year of double-digit profit growth in the 2000-2001 financial year. "However, the traditionally stronger months of May and June are still ahead of us, so it is too early to predict the full year's result," he said. "The profits in the last two months of the previous financial year (1999-2000) were very strong and it will not be easy to significantly surpass them as the market in Australia is in turmoil because of the domestic airfare war, the low dollar and the economic slowdown. "At the end of April, profit before tax will be approximately 13% ahead of last year on a year-to-date basis. In Australia, growth in the results to date has been slower than we would have liked, but the company's established overseas operations have continued to trade well. The United States operation has reduced it's losses in the past 4 months and is trading in line with budget expectations." Mr Fussell said the special dividend would be payable on May 29, 2001 to shareholders on the register at May 17, 2001. He said the timing of the payment meant investors would receive the dividend fully franked to 34%, rather than 30%, the rate that would apply after July 1 2001. After making the one-off special dividend payment, the company planned to continue with its existing dividend policy of distributing 45 to 55% of the group's after tax net profit, Mr Fussell said. "In broad terms, this 50 percent profit pay-out ratio has allowed the company to reinvest cash reserves into shop and business growth." ABN AMRO Morgans Corporate Limited and Wilson HTM Corporate Services Limited will underwrite the rights issue. A Prospectus containing the rights issue offer will be distributed to shareholders and shareholders wishing to take up their entitlements under the rights issue will need to complete the entitlement and acceptance form that will be in or will accompany the prospectus.