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COM
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Comair Limited - Audited Group Results for the year ended 30 June 2006
and dividend announcement
Comair Limited
Reg. No. 1967/006783/06
Incorporated in the Republic of South Africa
ISIN Code: ZAE000029823
Share Code: COM
(Comair or "the Company")
Audited Group Results for the year ended 30 June 2006 and dividend announcement
Earnings Review
In our 60th year of operation Comair can report a solid performance for the year
ended 30 June 2006 despite unprecedented high oil prices. This maintains what we
believe to be a world record as being the only airline to have achieved
operating profits for 60 consecutive years.
This year we also celebrate 10 years as a British Airways franchise, a
partnership that has helped us become the business airline of first choice in
the country. We also celebrate the 5th birthday of kulula.com, South Africa"s
first and leading low fare airline. kulula.com has revolutionised air travel and
attracted almost 6 million customers to date, while becoming the country"s
biggest on-line retailer.
We have focused our efforts this year on growing our revenue base, while further
reducing our controllable costs, aided by our fleet replacement programme
whereby we continue to introduce more modern and cost efficient aircraft. The
market continued to grow strongly during the year on the back of the fast
growing middle class in South Africa as well as a buoyant economy. Our growth
in passenger volumes, to over 3 million customers, exceeded the market growth
and resulted in record turnover and occupancy levels.
Our strong brands helped us achieve a 15% growth in turnover to R2 billion which
we converted to an attributable profit of R79 million (prior year: R73 million),
despite an operating cost escalation of R149 million arising from the increased
price of fuel. Fuel as a proportion of total costs increased from 25% in the
prior year to 32% this year. Headline earnings per share increased by 8% to 20
cents per share. Cash generated by operations remained strong at R222 million,
leaving us with a cash balance of R319 million at year end (prior year R216
million).
Prospects
We expect to see continued tough trading conditions for the next 12 months. Our
major challenges are the high fuel price, pressure on yields and ongoing state
support of our main competitor, including uncertainty as to the final form of
their proposed low fare airline. A weaker rand and potential slowing down of the
economy would put further pressure on profits. We will continue to realise cost
efficiencies and revenue opportunities from our fleet replacement programme and
will be looking to further diversify our revenue base through travel related
opportunities.
Dividends
The Directors have resolved to declare a dividend (Dividend number 8) of 7.0
cents per share (prior year: 7.0 cents per share) to all shareholders. The last
day to trade (cum the dividend) in order to participate in the dividend will be
Friday, 29 September 2006. The shares will commence trading "ex" dividend from
the commencement of business on Monday, 2 October 2006 and the record date is
Friday, 6 October 2006. Share certificates may not be de-materialised or re-
materialised between Monday, 2 October 2006 and Friday, 6 October 2006 both days
included. The dividend payment will be made on Monday, 9 October 2006.
Basis of preparation
In terms of the listing requirements of the JSE Limited, the Group is required
to prepare its consolidated financial statements in accordance with
International Financial Reporting Standards ("IFRS") as from 1 July 2004. These
results have been prepared in accordance with IFRS and IAS34 - Interim Financial
Reporting. Previously the group reported in terms of South African Statements
of Generally Accepted Accounting Practice.
Opening balance sheets at 1 July 2004 and 1 July 2005 have been restated
accordingly. The comparative income statement for the year ended 30 June 2005 at
that date has also been restated. The effect of the transition from South
African Statements of Generally Accepted Accounting Practice to IFRS on the
group"s financial position, financial performance and cash flows is summarised
below.
IFRS 2 - Share based payments
The fair value of share options granted has been charged against income over the
relevant option vesting periods.
IAS16 - Property, Plant and Equipment
Costs relating to the overhaul of aircraft components were previously expensed
as maintenance. These costs are now capitalised and subsequently expensed as
depreciation. The effect is an increase in the depreciation charge, with a
commensurate decrease in the aircraft maintenance expense.
ABRIDGED GROUP INCOME 2006 2005 %
STATEMENT
R"000 R"000 change
Revenue 1,973,245 1,713,583 15%
Operating Expenses (1,840,099) (1,602,833) 15%
Profit from operations 133,146 110,750 20%
before interest
Net investment expense (17,272) (12,144)
Profit from ordinary 115,874 98,606
activities before taxation
Taxation (37,074) (25,863)
Attributable profit 78,800 72,743
ABRIDGED GROUP BALANCE 2006 2005
SHEET
R"000 R"000
ASSETS
Property, plant and 503,455 419,894
equipment
Deferred Taxation - 6,094
Unlisted Investment 67,320 45,900
Current assets 488,777 335,945
1,059,552 807,833
EQUITY AND LIABILITIES
Capital and reserves 368,061 308,274
Non-current liabilities 296,281 177,740
Deferred taxation 5,128 -
Current liabilities 390,082 321,819
1,059,552 807,833
ABRIDGED GROUP STATEMENT OF CHANGES IN
EQUITY
Opening balance 308,274 234,558
Attributable profit 78,800 72,743
Dividend paid (27,960) (7,989)
Gain from cash flow hedges 13,287 9,269
Shares purchased by Share (13,199) (1,024)
Trust
Shares sold by Share trust 8,859 717
Closing balance 368,061 308,274
ABRIDGED GROUP CASH FLOW 2006 2005
STATEMENT
R"000 R"000
Cash at the beginning of 215,672 210,201
the year
Cash generated by 222,695 228,429
operations
Net interest expense (17,272) (12,144)
Taxation (paid)/ refunded (21,659) 14
Dividends paid (27,960) (7,989)
Additions to property, (159,730) (140,010)
plant and equipment
Proceeds on disposal of 54 7,058
property, plant and
equipment
Net cost of share trust (4,340) (307)
purchases
Aircraft deposits 10,452 (10,452)
utilised/(paid)
Acquisition of preference (21,420) (45,900)
share investments
Cash generated / (utilised) 122,487 (13,228)
by financing activities
Cash at the end of the year 318,979 215,672
HEADLINE EARNINGS PER SHARE
Earnings attributable to 78,800 72,743
ordinary shareholders
Less profit on disposal of - (7,057)
property, plant and
equipment
Headline earnings 78,800 65,686
attributable to ordinary
shareholders
SALIENT FEATURES
Earnings per share (cents) 19.7 18.2
Headline earnings per share 19.7 16.4
(cents)
Diluted earnings per share 19.5 17.9
(cents)
Diluted headline earnings 19.5 16.2
per share (cents)
Net asset value per share 92.2 77.2
(cents)
Dividend per share (cents) 7.0 7.0
declared
Weighted ordinary shares in 399,412 399,441
issue ("000)
Depreciation (R"000) 76,161 64,042
Interest expense (R"000) (34,300) (23,713)
Capital Commitments
Comair has committed to
purchase another 84 000
preference
shares in KWJ Investments
at a cost of R1020 per
share in
bi-annual installments of
R10 710 000 with the last
installment due
30 June 2010.
IFRS RECONCILIATION Previously IRFS Prior
reported Adjustment Year
Restated
Prior year Profit 76,063 (3,325) 72,738
Prior period adjustment 5
Prior year profit restated 72,743
Earnings per share (cents) 19.0 (0.8) 18.2
Headline earnings per share 17.2 (0.8) 16.4
(cents)
Diluted earnings per share 18.7 (0.8) 17.9
(cents)
Diluted headline earnings 17.0 (0.8) 16.2
per share (cents)
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
12 September 2006
Company Secretary: Transfer Office
D. Borer Computershare Investor Services
2004 (Pty) Ltd
1 Marignane Drive 70 Marshall Street
Bonaero Park, 1619 Johannesburg, 2002
P.O.Box 7015, Bonaero P.O. Box 61051, Marshalltown,
Park, 1622 2107
Sponsor : Nedbank Capital
Date: 13/09/2006 07:01:09 AM Produced by the JSE SENS Department
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