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1TM - 1time holdings Limited - PROVISIONAL AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010 1time holdings Limited Incorporated in the Republic of South Africa (Registration number: 1999/017536/06) Share code: 1TM ISIN: ZAE000102026 ("1time" or "the Company" or "the Group") PROVISIONAL AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010 HIGHLIGHTS Revenue growth 4.6% Passenger growth 6.7% Cash generated from operations R145.0 million Headline earnings R 46.3 million Consolidated condensed statement of financial position Figures in Rand Audited Audited as at as at 31 31 December December2010 2009
Assets Non-current assets 473 235 139 459 552 905 Current assets 169 167 096 188 999 814 Non-current assets held for 6 653 100 21 209 842 sale Total assets 649 055 335 669 762 561 Equity and liabilities Capital and reserves 150 787 190 165 922 331 Non-current liabilities 64 758 407 124 084 819 Deferred taxation 49 224 679 36 411 483 Current liabilities 384 285 059 343 343 928 Total equity and liabilities 649 055 335 669 762 561 Number of shares in issue 210 000 000 210 000 000 Net asset value per share 71.8 79.0 (cents) Net tangible asset value per 68.9 71.2 share (cents)
Consolidated condensed income statement Figures in Rand Audited for Audited for the year ended the year ended 31 December2010 31 December
2009 Gross revenue 1 308 244 783 1 251 061 344 Operating costs (1 194 177 220) (1 095 645 708) Earnings before disclosable 114 067 563 155 415 636 items Depreciation (54 917 991) (43 167 260) Impairment of assets (49 558 877) (50 491 031) Negative goodwill - 19 891 361 Profit/(Loss) on sale of 1 049 893 (4 887 298) asset Foreign exchange gain 11 068 500 16 621 929 Operating profit 21 709 088 93 383 337 Finance costs (36 065 558) (32 983 935) Interest received 3 509 229 4 722 355 Loss/(Profit) before taxation (10 847 241) 65 121 757 Taxation (253 189) (19 029 677) Loss/(Profit) after taxation (11 100 430) 46 092 080 Non-controlling interest 12 264 651 (5 223 757) Profit attributable to owners 1 164 221 40 868 323 of the parent Reconciliation to headline earnings Profit attributable to owners 1 164 221 40 868 323 of the parent Impairment of assets 46 079 941 50 491 031 (Profit)/Loss on sale of (902 908) 4 887 298 asset after taxation Negative goodwill - (13 612 425) Headline earnings 46 341 254 82 634 227 attributable to owners of the parent Weighted average number of 210 000 000 210 000 000 shares in issue Headline earnings per share 22.07 39.35 (cents) Earnings per share (cents) 0.55 19.46 Consolidated condensed statement of comprehensive income Figures in Rand Audited Audited for the for the year ended year ended 31 December 31 December
2010 2009 (Loss)/Profit after taxation (11 100 430) 46 092 080
Other comprehensive income: Net loss on aircraft (4 034 711) (27 798 502) revaluations Total comprehensive (15 135 141) 18 293 578 (loss)/income Total comprehensive (loss)/income attributable to: Non-controlling interest (12 264 651) 5 223 757 Owners of the parent (2 870 490) 13 069 821 (15 135 141) 18 293 578 Consolidated condensed statement of changes in equity Figures in Rand Audited Audited for the for the year ended year ended 31 December 31 December
2010 2009 Opening balance 165 922 331 144 619 890 Non-controlling interest at - 3 008 863 acquisition Total comprehensive loss - Non-controlling interest (12 264 651) 5 223 757 - Owners of the parent (2 870 490) 13 069 821 Total 150 787 190 165 922 331 Consolidated condensed statement of cash flows Figures in Rand Audited Audited for the for the year ended year ended
31 December 31 December 2010 2009 Cash and equivalents at the 50 328 678 6 534 243 beginning of the year Cash flows from operating 131 058 115 224 204 589 activities Cash generated from operations 144 988 972 232 779 534 Interest received 3 509 229 4 722 355 Finance costs (14 180 772) (13 315 589) Taxation paid (3 259 314) 18 289
Cash flows from investing (92 772 154) (131 177 606) activities Cash flows from financing (64 529 735) (49 232 548) activities Cash and equivalents at the end 24 084 904 50 328 678 of the year Consolidated segment report Figures in Rand Audited Audited for the for the year ended year ended 31 December 31 December
2010 2009 Consolidated revenue Airline 1 147 538 372 1 039 912 340 Charter 8 920 263 9 566 259 Saftech 264 861 076 288 859 528 Aeronexus 900 000 45 049 474 Inter-segment revenue (113 974 928) (132 326 257) Total 1 308 244 783 1 251 061 344 Segment result Airline 140 214 113 152 759 868 Charter 1 979 352 (430 876) Saftech (26 420 441) 2 086 755 Aeronexus 95 192 1 899 078 Eliminations (1 800 653) (899 189) Earnings before disclosable 114 067 563 155 415 636 items Finance costs (36 065 558) (32 983 935) Interest received 3 509 229 4 722 355 Impairment of assets (49 558 877) (50 491 031) Foreign exchange gain 11 068 500 16 621 929 Profit/(Loss) on sale of asset 1 049 893 (4 887 298) Negative goodwill - 19 891 361 Depreciation (54 917 991) (43 167 260) Taxation (253 189) (19 029 677) Loss/(Profit) after taxation (11 100 430) 46 092 080 Commentary GROUP PERFORMANCE The Group achieved mixed results for the financial year ended 31 December 2010. 1time airline performed well with R66.9 million headline earnings (2009: R94.3 million). Safair Technical (Proprietary) Limited ("Safair Technical"), the aircraft maintenance business, performed poorly with a R22.6 million attributable headline loss. - Group revenue increased by 4.6% supported by higher passenger volumes and higher yields in tough market conditions; - Safair Technical incurring a R22.6 million headline loss compared to a R8.1 million headline loss in 2009; - airport charges for ACSA and ATNS increased by 36% increasing airport charges by R40 million; and - average fuel prices increased by 9.7% for the year costing the Company an additional R36 million. Cash flow generated from operations remained strong at R145.0 million and was mostly used to acquire aircraft and reduce debt. The continued strengthening of the Rand to the US Dollar is reflected in the impairment loss in the income statement which relates to the US Dollar based aircraft valuations. This is partly offset by the translation currency gains earned on foreign debt. 1TIME AIRLINE The airline increased gross revenue by 10.3% from R1 040 million in 2009 to R1 148 million in 2010 despite difficult trading conditions. The airline maintained its status as the fastest growing airline for seven years in a row increasing passenger volumes by 6.7% from 1 800 000 in 2009 to 1 921 000 in a flat market. Capacity increased by only 5% to increase the average load factor to 82%. The African growth strategy has proved successful with the Zanzibar, Livingstone and Maputo routes all performing well along with the eight domestic destinations currently serviced by 1time. The 2010 FIFA World Cup had no material impact on airline earnings for the period. While demand increased in June and July this was fully offset by abnormally poor demand during May and August. Revenue growth for 2011 will be focused on growth on current routes, expanding into Africa as and when these rights become available and introducing air services from Lanseria airport subject to market conditions. 1time charters division 1time charters performed well during the World Cup offering charter air services to foreign supporters, groups and tour operators. Fleet capacity in the second half was however constrained as the fleet was deployed towards our African growth strategy in the airline. 1time holidays division 1time holidays increased revenue from R4.2 million in 2009 to R14.9 million in 2010. Further revenue growth is expected during 2011 particularly as we focus on selling holiday packages to our African destinations that are currently serviced by 1time. Aircraft fleet The airline operates a fleet of twelve standardised MD80 aircraft operating over 1300 flights a month. Our fleet review process included international comparatives and has indicated that the MD80 type aircraft continues to offer the lowest seat kilometer cost in the domestic market combined with a premium carrier service experience. A longer term fleet renewal plan is being investigated and the Group is currently in talks with the major aircraft manufacturers. SAFAIR TECHNICAL Management plans and expectations at Safair Technical were not realized during the year. The R22.6 million headline attributable loss is due to a variety of factors: - Continued strengthening of the Rand has severely impacted operating margins as most revenue is charged in US Dollars. - once off costs incurred relating to an employee reduction programme reducing head count from over 700 at the start of the 2010 financial year to under 500 by year end. - third party maintenance revenue which was expected during the final quarter of 2010 was only realised in the first quarter of 2011.
Management has implemented various measures to restore profitability for 2011. These include: - strict staff cost controls and managing headcount on a "fit for purpose" basis; - renegotiating loss making maintenance contracts; and - concluding an Letter of intent ("LOI") with Safair Operations (Proprietary) Limited ("Safair Operations") subsequent to year end in terms of which debt is significantly reduced to achieve interest and rental costs savings as noted under subsequent events. BASIS OF PREPARATION AND ACCOUNTING POLICIES The accounting policies applied in the preparation of these condensed financial statements, which are based on reasonable judgments and estimates, are in accordance with International Financial Reporting Standards ("IFRS"), the disclosure requirements of IAS 34 - Interim Financial Reporting and are consistent with those applied in the annual financial statements for the year ended 31 December 2009. These audited consolidated condensed financial statements as set out in this report comply with the Companies Act, 1973 (Act 61 of 1973), as amended, and the Listings Requirements of JSE Limited. AUDIT OPINION These condensed consolidated results for the year ended 31 December 2010 have been audited by the Groups auditors, SAB&T Chartered Accountants Incorporated and their unqualified audit report is available for inspection at 1time`s registered office. SUBSEQUENT EVENTS BEE transaction As announced on SENS on 7 March 2011, the Company concluded a BEE transaction with Oakleaf Investments 59 (Proprietary) Limited ("Oakleaf") (incorporating Mtha Aviation (Proprietary) Limited ("Mtha") and SKMT Sunrise Investment Group (Proprietary) Limited ("Sunrise")) effective 2 March 2011 in terms of which Oakleaf subscribed for 70 million ordinary shares in 1time for cash at 70.16202 cents per share, raising R49.1 million cash for the Group. The BEE transaction represents a 25% BEE equity stake in 1time. Mtha Aviation is an aviation focused group, headed by Busiwe Maqungo. The capital raised from the BEE Transaction will be deployed towards the 1time airline`s growth strategies. Our solid BEE credentials place the airline in a good position to acquire rights to further African routes. We are particularly pleased that Sipho Twala, our Chairman and founding shareholder of 1time has also participated in the BEE transaction through his directorship at Sunrise. Safair Technical restructuring The Company has concluded a LOI with Safair Operations (owners of 28% of Safair Technical) in terms of which Safair Operations assume responsibility for R51.8 million of Safair Technical`s debt in exchange for the cession of certain lease agreements and the sale of assets at book value. The transaction significantly improves gearing in the Group and is earnings enhancing. BOARD OF DIRECTORS The Board is pleased to welcome Blacky Komani as a non executive director and Busiwe Maqungo as an executive director to the 1time board effective 4 March 2011. Blacky brings a wealth of leadership expertise in the travel and tourism sector while Busiwe fills a key role in achieving human resource development and transformation objectives. DIVIDEND POLICY The Board has adopted a dividend policy of a minimum of eight times cover moving into the 2011 financial year. This has resulted from the successful BEE Transaction as detailed in the Subsequent Events paragraph above PROSPECTS For the airline we expect a tough trading environment for 2011. High oil prices will put pressure on yields which will in turn negatively impact overall market volumes. We are confident however that our low cost advantage will enable us to continue offering the lowest prices and best service. Further passenger growth is expected on current routes and new services into Lanseria and Africa. Cost savings achieved in Safair Technical will be the main driver to achieve a significant improvement in 2011. While the high oil prices and strong Rand environment is expected to place margins under pressure during 2011 we are pleased that the BEE Transaction and Safair Technical restructuring combined with our low cost advantage places the Group in a strong position for 2010. By order of the Board Glenn Orsmond Sipho Twala Chief Executive Officer Chairman 17 March 2011 CORPORATE INFORMATION Non-executive directors: S M Twala (Chairman)*; T R Matsinhe*; G L Wishart; B Komani, M L Sinclair (Alternative) * - Independent Executive directors: G W Orsmond (Chief Executive Officer); R L James; M J Kaminski; B Maqungo; M Snyman (Financial Director) Company secretary: Merchantec Capital Registered address: 16 Quality Street, Isando Postal address: PO Box 7110, Bonaero Park, 1622 Telephone: 011 086 8100 Facsimile: 0866 492 712 Web address: www.1timeholdings.co.za Transfer secretaries: Computershare Investor Services (Proprietary) Limited Sponsor: Merchantec Capital Auditors: SAB&T Chartered Accountants Incorporated Date: 17/03/2011 12:06:24 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
