| Tue 28 Aug 2001, 0:00 | | Comair - Audited Group Results |
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Comair Limited
(Registration No. 1967/006783/06)
Share Code: COM ISIN Code: ZAE000029823
Operating as
BRITISH AIRWAYS
Audited Group Results
for the year ended 30 June 2001
Earnings review
Comair performed credibly to achieve R93 million attributable earnings in a
year of unprecedented challenges and tough trading conditions. This
translates to 22,1 cents headline earnings per share representing a 22%
decrease on the 28,6 cents reported last year. The year was characterised by
cost pressures caused by high fuel prices and the significantly weaker rand
while revenue suffered from general market overcapacity, poor yields in the
first half and a stagnant domestic air traffic market resulting in an
average 60% load factor for the year.
The 19% turnover growth achieved for the year on higher yields and passenger
growth is encouraging. In particular, yield growth achieved in the second
half has restored Comair's historically low breakeven load factors and has
contributed towards offsetting the impact of the R90 million fuel price
increase incurred during the year. Excluding the exceptional profit earned
on the sale of an aircraft, the operating profit increased from R25,1
million in the first half to R48,7 million in the second half.
For the year under review, the Company changed its depreciation policy to
comply with generally accepted accounting practice for depreciation. In
terms of the new policy, the Company depreciates its aircraft assets on a
systematic basis to the estimated residual value after each asset's planned
useful life. This change had a
R6,4 million positive impact on the current year earnings, R9,6 million for
the previous year and a prior year positive retained income adjustment of
R30,4 million. This policy remains conservative with the aircraft fleet at
year-end having a market value significantly above the disclosed net book
value.
In view of the Company's considerable cash holdings, a final cash dividend
of 8,0 cents per share has been declared representing a 14% increase on the
7,0 cents paid last year.
The partial utilisation of cash resources and debt finance to fund the R113
million net capital expenditure incurred during the year contributed towards
the lower net investment income earned for the period.
Events subsequent to year-end
Subsequent to year-end, Comair launched a "no frills" air service,
kulula.com, which successfully commenced operations on the Johannesburg Cape
Town route on
1 August 2001 utilising a leased Boeing 727-200 aircraft. Set-up costs were
not material.
The Company has committed to acquire five Stage 3 noise compliant Boeing 737-
400 aircraft from British Airways Plc. The aircraft will be phased in during
the second half of the June 2002 financial year to replace the Boeing 727
fleet. It is planned to acquire two of the Boeing 737-400 aircraft through
rand-based operating leases and to finance the other three aircraft on
balance sheet at a cost of USD66 million. The fleet change is not expected
to have a material impact on earnings.
Dividends
The directors of Comair have resolved to declare a dividend of 8,0 cents per
share to all shareholders. The last day to trade ("cum" the dividend) in
order to participate in the dividend will be Friday, 14 September 2001. The
share of Comair will commence trading "ex" the dividend from the
commencement of business on Monday,
17 September 2001 and the record date will be Friday, 21 September 2001.
Dividend cheques will be posted and electronic dividend payments made to
shareholders on 25 September 2001.
Prospects
Operating margins are expected to remain under pressure for the June 2002
financial year as domestic airlines strive to maintain load factors in a
declining market. The benefits of lower crude oil prices have been negated
by the weaker rand to maintain continued pressure on costs. Kulula.com is
not expected to make a material contribution to earnings in its first year
of operations. These combined factors make it difficult to forecast earnings
for the June 2002 financial year.
In the longer term, however, Comair's low cost structure combined with its
excellent product places the airline in a unique position to grow load
factors to benefit from any economic upturn that may materialise in the
premium market. Kulula.com operating in the "no frills" market is expected
to significantly contribute to profits in the medium to longer term.
By order of the board
D Novick P van Hoven
Chairman Managing Director
27 August 2001
Company secretary: D Borer, 1 Marignane Drive, Bonaero Park, 1619,
PO Box 7015, Bonaero Park, 1622
Transfer office: Mercantile Registrars Limited, 11 Diagonal Street,
Johannesburg, 2001, PO Box 1053, Johannesburg, 2000
Abridged group income statement
2001 2000 %
R'000 R'000 change
Revenue 1 160 000 977 036 19
Operating profit before
exceptional item 73 843 151 807 (51)
Profit on sale of aircraft 25 483 1 970
Operating profit 99 326 153 777 (35)
Net investment income 8 706 12 863 (32)
Net income before taxation 108 032 166 640 (35)
Taxation (15 070) (46 735) (68)
Net income after taxation 92 962 119 905 (22)
Outside shareholders' interest - 8
Earnings attributable to ordinary
shareholders 92 962 119 913 (22)
Abridged group balance sheet
Assets
Fixed assets 309 989 186 600
Loan to share incentive trust 14 000 15 120
Unlisted investments 80 493 67 331
Current assets 372 881 383 834
777 363 652 885
Equity and liabilities
Share capital and reserves 368 621 309 259
Long-term liability 181 237 135 490
Deferred taxation 31 168 28 284
Current liabilities 196 337 179 852
777 363 652 885
Abridged statement of changes in equity
Opening balance 309 259 188 313
Net profit for the year 92 962 119 913
Prior year adjustment - 30 433
Dividends paid (33 600) (29 400)
Closing balance 368 621 309 259
Abridged group cash flow statement
Cash and cash equivalents at the
beginning of the year 315 854 210 132
Cash generated by
operating activities 71 880 168 820
Taxation and dividends (54 763) (55 007)
Cash utilised in investing
activities (112 610) (10 321)
Cash generated by
financing activities 46 867 2 230
Cash and cash equivalents at the
end of the year 267 228 315 854
Salient features
Headline earnings per
share (cents) 22,1 28,6 (22)
Earnings per share (cents) 22,1 28,6 (22)
Dividends per share (cents) 8,0 7,0 14
Operating margin 8,6% 15,7%
Dividend cover 2,8 4,1
Weighted ordinary shares
issued ('000) 420 000 420 000
Depreciation (R'000) 14 702 11 425
Interest expense (R'000) 28 408 24 550
