| Wed 17 Sep 2008, 9:00 | | COM - Comair Limited - Audited Group Results For The Year Ended 30 June 2008 |
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COM
COM
COM - Comair Limited - Audited Group Results For The Year Ended 30 June 2008
And Notice Of Annual General Meeting
Comair Limited
(Incorporated in the Republic of South Africa)
Reg. No. 1967/006783/06
ISIN Code: ZAE000029823 & Share Code: COM
("Comair" or "the Company" or the "Group")
AUDITED GROUP RESULTS FOR THE YEAR ENDED 30 JUNE 2008 AND NOTICE OF ANNUAL
GENERAL MEETING
Earnings Review
The trading environment that we experienced during the second half of the
financial year has been the toughest in the history of the industry. The oil
price, always a major factor in our performance, reached levels that very few
had predicted and now represents over half of our costs. In the past six months
more than 30 airlines around the world ceased operations and the International
Air Transport Association (IATA) has predicted that the global airline industry
will lose over $6 billion this calendar year. In these circumstances we did well
to continue our proud record of 63 years of uninterrupted operating profits. We
salute the skilled, committed and energetic Comair team of 1,781 people who
delivered these results.
Our earnings were severely impacted by the exceptionally high oil price,
particularly during the second half of the financial year. Top line growth was
strong and increased by 21% to R2,7 billion for the year, attributable to volume
and yield growth on both our British Airways and kulula brands. The earnings
decline of 43%, from R109 million to R62 million, was driven primarily by a
R380 million increase in our fuel bill. Cash generation remained strong and
allowed significant investment in our new fleet, which delivered much-improved
fuel efficiency.
The commitment of our people to customer service ensured that even though the
overall market did not grow during the year, both our brands grew strongly. Our
British Airways brand improved it`s key metric of `overall satisfaction with
British Airways` from 73% last year to 78% and also performed exceptionally well
against other British Airways short-haul services from around the world. During
the year we upgraded our Club (business class) product, including a revamp of
our meal service. The new high-quality meals have been very well accepted and
allowed us to grow our share of the business market. On the kulula side, on our
key metric of `satisfaction with the kulula experience` we achieved a score of
92% in our first full year of the survey. We did however fall short of our on
time performance target due to our fleet replacement programme and the changing
of maintenance service providers, both of which have now been completed. On
baggage delivery we achieved a baggage loss/damage rate of less than 1 bag per
5,000 carried.
Prospects
We have continued to grow our successful kulula services out of Lanseria
airport, where the ease and convenience of the experience has been very well
accepted by our business and leisure travellers. Our strong infrastructure
and airline expertise has provided opportunities for us to commercially deploy
these to the benefit of other African airlines. The progression to Africa of
the global trend to privatise loss-making national carriers, as well as our
government`s `Airlift strategy`, to open up flight access in Southern
Africa, has provided further scope for us to grow in Africa.
Our new travel business progressed well during the year with the launch of the
first on-line travel packages in South Africa. We estimate the size of the
travel market in South Africa to be in excess of R50 billion. By leveraging our
leading technology and strong brands, we are very well positioned to be a major
player in the on-line travel space. We are also, with strong partnerships,
extending the kulula brand and on-line platform into the cellular and financial
services offerings.
High inflation, a slower economic growth rate and the credit crunch will impact
on customer volumes. This might be mitigated to some extent by the build up to
the 2010 Soccer World Cup tournament for which we are well positioned.
The efficiencies that we have achieved from our new fleet, and that we
anticipate from our efficiency drive, will continue to strengthen our position
in the industry, but could be offset by the crude oil price, rand/dollar
exchange rate and uncompetitive behaviour of our state-owned competitors.
Dividends
Due to the difficult trading environment, the Company has prudently decided to
maintain its cash reserves and has chosen to not pay a dividend. (prior year: 9
cents)
Directors` resignation and appointment
Mr. Lloyd Cromwell Griffiths resigned as a director on 14 February 2008
Ms. Wrenelle Doreen Stander was appointed as a director on 18 June 2008
Contingent Liability
Subsequent to year end the Company has received an inquiry from the South
African Revenue Service (SARS) relating to the 2004 year of assessment. The
Company has made provision for R 10 million through the taxation charge in the
financial statements, and in addition SARS has queried taxation relating to the
deduction of interest of approximately R 15 million. The Company is evaluating
its position in this regard.
Annual General Meeting
The Annual General Meeting of shareholders of Comair Limited will be held at the
Comair Operations Building, corner Fortress and Whirlwind Roads, Rhodesfield,
Kempton Park, 1619 on Thursday 30 October 2008 at 12h30. The annual report
will be posted by 30 September 2008
Basis of preparation
In terms of the listing requirements of the JSE Limited, the Group has prepared
its consolidated financial statements in accordance with International Financial
Reporting Standards including IAS 34 and in terms of the Companies Act. The
accounting policies used in the preparation of these results are consistent in
all material aspects with those used for the prior comparative period.
Abridged Group Income
Statement
2008 2007
R `000 R `000
Revenue 2,688,488 2,211,743
Operating expenses 2,576,364 2,041,975
Profit from operations 112,124 169,768
Net investment expense (8,276) (10,228)
Share of loss of (350) (2,064)
associates
Profit before taxation 103,498 157,476
Taxation (41,695) (48,313)
Attributable earnings 61,803 109,163
Earnings per share 15.4 27.3
(cents)
Headline earnings per 15.4 25.2
share (cents)
Diluted earnings per 14.9 25.0
share (cents)
Diluted headline 14.9 23.0
earnings per share
(cents)
Weighted ordinary shares 400,740 399,517
in issue (`000)
Diluted weighted 414,233 437,080
ordinary shares in issue
(`000)
Depreciation (R `000) 102,857 87,141
Interest expense (R 37,668 35,145
`000)
2008 2007
R `000 R `000
Headline earnings
Earnings attributable to 61,803 109,163
ordinary shareholders
Deduct profit on - (8,432)
sale of subsidiary
Deduct profit on - (64)
sale of property, plant
and equipment
Headline earnings 61,803 100,667
attributable to ordinary
shareholders
Abridged Group Balance
Sheet
ASSETS
Property, plant and 866,750 676,029
equipment
Available-for-sale 110,160 88,740
investments
Investment in associates 56,113 13,404
Current assets 409,406 366,112
1,442,429 1,144,285
EQUITY AND LIABILITIES
Share capital and 459,942 425,531
reserves
Interest-bearing 360,333 259,952
liabilities
Deferred taxation 44,717 20,766
Current liabilities 577,437 438,036
1,442,429
1,144,285
Abridged Group Cash Flow
Statement
Cash and cash equivalents at the 242,024 318,979
beginning of the period
Cash from operations 172,439 305,499
and investment income
Dividends paid (36,067) (27,959)
Taxation paid (28,180) (33,001)
Cash utilised in (358,057) (288,736)
investing activities
Net effect of share 665 (1,435)
trust activities
Sale of "A" Class - 741
Shares to BEE partner
Increase/ (decrease) 132,180 (32,064)
in interest-bearing
liabilities
Cash and cash equivalents at the 125,004
end of the period 242,024
Abridged Group Statement of
Changes in Equity
2008 2007
R `000 R `000
Opening Balance 425,531 368,061
BEE Share Deal 741
Attributable Profit 61,803 109,163
Dividends paid (36,067) (27,959)
Equity settled share- 6,856 -
based payment
adjustment
Net effect of share 665 (1,434)
trust activities
Net change in hedging 1,154 (23,041)
reserve
Closing Balance 459,942 425,531
Audit Opinion
These financial statements have been audited by PKF (Jhb) Inc. and their
unqualified audit report is available for inspection at the registered office of
the Company.
By order of the Board
D. Novick (Chairman) G. Novick (Joint CEO) E. Venter (Joint CEO)
17 September 2008
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 17/09/2008 09:00:01 Produced by the JSE SENS Department.
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