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COM
COM
COM - Comair Limited - Audited abridged group results for the year
ended 30 June 2011
Comair Limited
(Incorporated in the Republic of South Africa)
Reg. No. 1967/006783/06
ISIN Code: ZAE000029823 Share Code: COM
("Comair" or the "Group" or the "Company")
AUDITED ABRIDGED GROUP RESULTS FOR THE YEAR ENDED 30 JUNE 2011
Earnings review
A particularly weak fourth quarter made this a tough year for our
business and the global aviation industry in general. Despite strong
growth of 19% in turnover, profit for the year declined by 14% and
earnings per share by 28%. External factors certainly played their part
- a 20% increase in the average price of jet fuel, crippling
escalations in airport charges and a stagnant local economy. Our
performance over the period was thus below our expectations and short
of our medium term objective of a 10% profit margin. While cash
generation remained strong, investment in flight simulator equipment
and deposits on new aircraft resulted in a reduction in the year-end
cash on hand from R374 million to R234 million.
Our affiliated businesses performed well over the period, particularly
our on-line travel business and flight training business. While these
businesses comprise a small percentage of our turnover, they are making
an increasing contribution to our profits.
Service
We continue to attract the best talent in the industry and to invest in
their well-being and development in order to deliver superior customer
service.
Our on-time performance suffered for a few months during the year, but
has subsequently exceeded our target of 85% after the introduction of
additional aircraft.
BA and kulula were voted the number one and two business airlines in
the annual Sunday Times Top Brands Survey. The introduction of our SLOW
airport lounges at all major airports has been very well accepted by
our business travelers. Post year end we launched SLOW in the City, our
new concept lounge and business facility, opposite the Gautrain station
in Sandton
Efficiency
During the year we introduced a further 3 new generation Boeing 737-800
aircraft into our kulula fleet. Our order of further new aircraft from
Boeing due for delivery mid-2012, will result in kulula operating the
newest and most efficient fleet in the domestic industry. Over the past
5 years our fuel usage per seat has declined by 23%.
We are implementing a leading enterprise system solution from Sabre,
that will improve our revenue potential as well as improving staff
productivity and efficiency through better rostering, and the
automation of administrative functions.
Growth
While we did add capacity in the local market over the period, post
World Cup there has been little revenue growth in the market. As a
result, while we have grown market share, our average selling price
declined putting pressure on our margins. Subsequent to year end we
have adjusted our capacity on certain routes. Our expansion from
Lanseria over the past few years is likely to slow due to the Gautrain
services to Oliver Tambo International Airport, and the addition of a
competitor at Lanseria. Flexibility in capacity remains essential in
the uncertain economic environment.
During the year we entered into a joint operation with Solenta
Aviation, a quality operator of smaller gauge (50-70 seat) aircraft.
Our joint business was launched with daily flights from Johannesburg to
Nelspruit. Subsequent to year end we started further routes from
Lanseria airport to Gaborone, Botswana and Maputo, Mozambique. Early
indications are that this new venture will allow us to successfully
access smaller, lucrative routes both in South and Southern Africa.
Looking ahead
Our outlook for the next year is one of caution. We are anticipating a
flat travel market due to a weak economy and ongoing financial pressure
on consumers. A stubbornly high oil price and unaffordable airport fees
will be, unavoidably, passed on in the form of higher ticket prices,
putting further pressure on the consumer. We have adjusted capacity on
certain routes in anticipation of this. We will further strengthen our
competitive position by reducing costs and improving productivity,
whilst maintaining our unwavering focus on customer service.
Dividends
Due to the uncertain economic outlook, the Directors have resolved to
not declare a cash dividend (prior year: 5 cents).
Directors` appointments
(a) Gavin James Halliday, of British Airways Plc., was appointed
as a non-executive director on 1 May 2011.
(b) Jacob Meyer Kahn was appointed as the lead independent director
on 6 June 2011.
Annual General Meeting
The Annual General Meeting of shareholders of Comair will be held at
its SLOW in the City lounge in Sandton on Wednesday, 9 November 2011 at
12h00.
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 Interim
Financial Reporting, the AC 500 standards as issued by the Accounting
Standards Board and the requirement of the Companies Act, 2008. 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 Statement of Audited at Audited at
Comprehensive Income 30 June 30 June
2011 2010
R`000 R`000
Revenue 3,587,754 3,009,544
Operating expenses (3,311,147) (2,723,009)
Operating profit before 276,607 286,535
depreciation
Depreciation (158,835) (142,542)
Profit before interest, 117,772 143,993
dividend,taxation and profit and
loss of associates
Investment income 23,184 32,751
Interest expense (35,255) (45,859)
Share of profit (loss) of 762 (6,814)
associates
Profit before taxation 106,463 124,071
Taxation (29,466) (34,364)
Profit after tax attributable to 76,997 89,707
the equity holders of the parent
Fair value adjustment on cash (511) 17,640
flow hedge
Total comprehensive income for 76,486 107,347
the year attributable
to the equity holders of the
parent
Earnings per share (cents) 15.9 22.0
Headline earnings per share 15.9 22.0
(cents)
Diluted earnings per share 15.9 21.8
(cents)
Diluted headline earnings per 15.9 21.8
share (cents)
Dividends per share 0.0 5.0
Actual number of shares in issue 489,176 489,176
Weighted ordinary shares in 481,484 408,295
issue (`000)
Diluted weighted ordinary shares 482,464 412,327
in issue (`000)
Reconciliation between earnings
and headline earnings
Profit after taxation 76,997 89,707
attributable to equity holders
of the parent
Headline earnings after tax 76,997 89,707
Abridged Group Statement of Audited at Audited at
Financial Position 30 June 30 June
2011 2010
ASSETS
Property, plant and equipment 1,315,357 991,853
Investment in associates 61,550 75,887
Goodwill 3,668 -
Available-for-sale-investments - 153,000
Current assets 723,046 801,833
2,103,621 2,022,573
EQUITY AND LIABILITIES
Share capital and reserves 800,521 725,275
Interest-bearing liabilities 274,245 188,976
Deferred taxation 97,258 78,463
Current liabilities 931,597 1,029,859
2,103,621 2,022,573
Net asset value per share 166.3 154.1
(cents)
Audited at Audited at
30 June 30 June
2011 2010
Abridged Group Statement of Cash
Flows
Cash and cash equivalents at the 374,277 309,220
beginning of the period
Cash from operations and 181,090 247,107
investment income
Dividends paid (23,598) (20,040)
Taxation (paid) received (45,414) 1,258
Cash utilised in investing (135,564) (252,836)
activities
Cash (Utilised)Generated by (116,760) 89,568
financing activities
Cash and cash equivalents at the 234,031 374,277
end of the period
Abridged Group Segment Report
Segmental Revenue
Airline 3,538,766 2,978,411
Non-airline 48,988 31,133
3,587,754 3,009,544
Segmental Results
Airline 261,492 272,834
Non-airline 15,115 13,701
Profit before taxation and 276,607 286,535
depreciation
Depreciation - Airline (155,859) (142,139)
Depreciation - Non-airline (2,976) (403)
Profit before interest, dividend 117,772 143,993
and taxation
Total assets per segment
Airline 1,991,594 1,965,959
Non-airline 112,027 56,614
Total assets 2,103,621 2,022,573
Abridged Group Statement of
Changes in Equity
Opening Balance 725,275 517,722
Rights issue - 115,978
Total comprehensive income for 76,486 107,347
the period
Dividends paid (23,598) (20,040)
Equity settled share-based 3,428 3,428
payment adjustment
Net effect of Share Trust 18,930 840
activities
Closing Balance 800,521 725,275
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
Mr. D Novick (Chairman) Mr G Novick (Joint CEO) Mr. E Venter (Joint
CEO)
13 September 2011
Sponsor
RAND MERCHANT BANK (A division of First Rand Bank Limited)
Date: 13/09/2011 12:00:02 Produced by the JSE SENS Department.
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