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Unaudited Condensed Interim Results for the six months ended 31 December 2013 and cash dividend declaration
Comair Limited
Incorporated in the Republic of South Africa
Registration number: 1967/006783/06
Share code: COM
ISIN: ZAE000029823
(“Comair” or “the Company” or “the Group”)
Unaudited Condensed Interim Results for the six months ended 31 December 2013
and cash dividend declaration
Performance review
Revenue grew by 23%, mainly attributable to the 15% increase in capacity arising
from the replacement of Boeing 737-300s with the larger 800s. The four new
Boeing 737-800s that were introduced into the kulula fleet during the comparative
period, contributed for the full six months of the first half of the current
financial year. In September 2013 Comair also implemented its first Boeing 737-800
into the British Airways fleet.
Ticket prices were driven by the weakening of the Rand. The exchange rate resulted
in a 14% escalation in the fuel price relative to the comparative period,
and also adversely affected US Dollar-based maintenance costs. By December
the jet fuel price had reached a new high, 225% up on its previous stable
level of R4 per litre in 2010.
Earnings per share and headline earnings per share grew to 34.3 cents (prior
period earnings per share and headline earnings per share of 16.4 cents).
Cash generation was strong, resulting in a cash balance of R695 million at
31 December 2013 after making the following investments: During the period Comair
continued with pre-delivery payments towards its next four new Boeing 737-800s
for delivery in late 2015 and 2016. The company also invested R140 million in
cash for the purchase of a previously owned 737-800, with the balance funded
through a revolving credit facility. R151 million of cash was used to repurchase
10% of the share capital of the company at an average share price of 308.5 cents
per share in accordance with the mandate granted at the Annual General Meeting of
30 October 2013.
Prospects
The domestic passenger market continues to show year-on-year shrinkage of
approximately 5%, compounding on similar shrinkage in the prior year. The
continued devaluation of the Rand has driven the Rand price of fuel and
Dollar-based technical services to record levels. We therefore do not foresee
early growth in market volumes as ticket prices will remain at the levels
necessary to recover such escalating costs. We do not anticipate any
near-term recovery in local consumer spending.
The additional capacity provided by our fleet upgrade programme, as well as
similar increases introduced by the state-owned airlines, has resulted in
greater capacity in the domestic market than existed prior to the exit of our
privately owned competitors in 2012. The resulting negative effect on seat
occupancy levels has kept competitive pressure on ticket pricing. The expected
entry of further airlines into the market will exacerbate the overcapacity.
However, our new aircraft provide the best solution to the rising fuel price,
with an improved customer proposition. This, along with improved, technology-
driven operating processes, will ensure that we maintain a healthy lead over the
profitability of our competitors. Our travel business, flight training facility,
catering business and airport lounges also show opportunities for further growth.
We remain well placed for the full 2014 financial year, despite a further 12%
increase in the fuel price since December, driven mainly by the depreciation of
the Rand. Our current after tax profit margin of 5% leaves scope for further
improvement, as it remains below the average of 7% for the Transport and
Logistics sector as published by the Department of Trade and Industry.
The above outlook has not been reviewed and reported on by Comair’s external
auditors and does not constitute an earnings forecast.
Dividend
Following on the strong performance of the first six months, and
notwithstanding that the Company does not normally pay an interim
dividend, notice is hereby given that a gross interim cash dividend of
5.0 cents per ordinary share has been declared payable to shareholders. The
dividend has been declared out of income reserves.
The dividend will be subject to a local dividend tax rate of 15% or 0.75 cents per
ordinary share, resulting in a net dividend of 4.25 cents per ordinary share, unless
the shareholder is exempt from paying dividend tax or is entitled to a reduced rate in
terms of the applicable double tax agreement. No STC credits were available to be
utilised as part of this declaration. The Company’s tax reference number is
9281/874/7/1/0 and the number of ordinary shares in issue at the date of this
declaration is 440,263,099.
In accordance with the provisions of Strate, the electronic settlement and custody
system used by the JSE Limited, the relevant dates for the dividend are as follows:
Event Date
Last day to trade (cum dividend) Friday, 7 March 2014
Shares commence trading (ex dividend) Monday, 10 March 2014
Record date (date shareholders recorded in books) Friday, 14 March 2014
Payment date Monday, 17 March 2014
Share certificates may not be dematerialised or rematerialised between Monday, 10 March
2014 and Friday, 14 March 2014, both days inclusive.
Directors’ resignations and appointment
Mr Atul Gupta, a Non-executive Director, resigned as Board Member on
12 November 2013.
Mr Hubert Brody was appointed to the Board as an independent Non-executive
Director on 1 January 2014.
Mr Yasas Sri-Chandana, our Financial Director, resigned from the Board on
15 January 2014 to pursue opportunities in Australia. Erik Venter will be
assuming the role of financial director in addition to his role as CEO while the
company identifies a new incumbent for the position of financial director.
Basis of preparation
In terms of the Listings Requirements of the JSE Limited, the Group has prepared
its Condensed Consolidated Interim Results in accordance with International Financial
Reporting Standards, including IAS 34 Interim Financial Reporting, the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and
the requirements of the Companies Act, Act No. 71 of 2008. The accounting
policies used in the preparation of these results are consistent in all material
aspects with those applied in the prior reporting period. During the current interim
period the Group adopted those standards and interpretations in issue and effective
for the interim period. The impact of adopting these new and amended standards and
interpretations has not had a significant impact on the Group's accounting policies
adopted.
Subsequent events
No matters have occurred between the reporting date and the date of approval of
the interim financial statements which would have a material effect on these
financial statements.
These Unaudited Condensed Interim Group Results were prepared by:
Erik Venter
Financial Director and CEO
Comair Limited
Condensed Results
Comair Limited
Group
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Unaudited Unaudited Audited
6 months 6 months Year
31 Dec 2013 31 Dec 2012 30 June 2013
R'000 R'000 R'000
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Condensed Group Statements of
Comprehensive Income
Revenue 2 963 143 2 411 335 5 386 581
Operating expenses (2 598 023) (2 176 919) (4 765 356)
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Operating profit before
depreciation, impairment and
profit on sale of assets 365 120 234 416 621 225
Depreciation (131 981) (110 113) (241 582)
Impairments - - (6 817)
Profit on sale of assets - - 984
--------------------------------------------------------------------------------
Profit from operations 233 139 124 303 373 810
Interest income 17 301 7 523 20 217
Interest expense (38 485) (23 499) (61 641)
Share of (loss) profit of
associates (1 060) 426 (1 725)
--------------------------------------------------------------------------------
Profit before taxation 210 895 108 753 330 661
Taxation (57 455) (29 625) (103 135)
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Total comprehensive income
for the period attributable to
ordinary shareholders of
the parent 153 440 79 128 227 526
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Earnings per share (cents) 34.3 16.4 47.0
Headline earnings per share (cents) 34.3 16.4 47.9
Diluted earnings per share (cents) 34.3 16.4 47.0
Diluted headline earnings per
share (cents) 34.3 16.4 47.8
Dividends per share (cents) 10.0 0.0 5.0
Actual number of shares in
issue ('000) 440 263 489 176 489 176
Weighted ordinary shares in
issue ('000) 447 380 483 028 483 650
Diluted weighted ordinary
shares in issue ('000) 447 755 483 055 484 177
Reconciliation between earnings
and headline earnings
Earnings attributable to
ordinary shareholders 153 440 79 128 227 526
Less: IAS 16 profit on disposal of
property, plant and equipment - - (984)
Add: IAS 16 impairment to assets - - 4 817
Add: Tax effect of profit on
disposal - - 276
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Headline earnings attributable
to ordinary shareholders 153 440 79 128 231 635
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Condensed Group Statements of
Financial Position
ASSETS
Property, plant and equipment 2 610 403 2 381 578 2 314 082
Intangible assets 36 291 51 307 41 475
Investments in associates 990 9 293 2 050
Goodwill 3 668 3 668 3 668
Current assets 1 176 040 1 101 409 1 244 581
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3 827 392 3 547 255 3 605 856
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EQUITY AND LIABILITIES
Share capital and reserves 976 758 895 303 1 021 200
Interest bearing liabilities 1 238 125 1 258 360 1 133 767
Deferred taxation 158 332 120 562 135 696
Share-based payments 4 250 - 4 250
Current liabilities 1 449 927 1 273 030 1 310 943
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3 827 392 3 547 255 3 605 856
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Net asset value per
share (cents) 224.4 185.4 211.1
Unaudited Unaudited Audited
6 months 6 months Year
31 Dec 2013 31 Dec 2012 30 June 2013
R'000 R'000 R'000
----------------------------------------------
Condensed Group Statements
of Cash Flow
Cash and cash equivalents
at the beginning of the period 778 045 246 095 246 095
Cash from operations and
investment income 459 396 262 672 913 224
Taxation (paid) refunded (24 191) 9 158 (82 530)
Cash utilised in investing
activities (366 271) (24 449) (104 441)
Cash (utilised in) generated
by financing activities (152 112) 35 904 (194 303)
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Cash and cash equivalents
at the end of the period 694 867 529 380 778 045
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Condensed Group Segmental Report
Segmental revenue
Airline 2 918 091 2 378 148 5 232 260
Non-airline 45 052 33 187 154 321
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2 963 143 2 411 335 5 386 581
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Segmental results
Airline 353 088 222 419 596 907
Non-airline 12 032 11 997 24 318
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Operating profit before
depreciation, impairment and
profit on sale of assets 365 120 234 416 621 225
Depreciation – Airline (129 670) (107 731) (236 342)
Depreciation – Non-airline (2 311) (2 382) (5 240)
Impairment – Airline - - (6 817)
Profit on sale of assets – Airline - - 984
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Profit from operations 233 139 124 303 373 810
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Segmental assets – Airline 3 655 388 3 376 252 3 421 093
Segmental assets – Non-airline 172 004 171 003 184 763
Segmental liabilities –
Airline (2 745 729) (2 552 405) (2 477 695)
Segmental liabilities –
Non-airline (104 905) (99 547) (106 961)
Segmental capital additions –
Airline (excluding borrowing
costs capitalised) 428 047 1 041 035 1 093 702
Segmental capital additions –
Non-airline 255 2 398 432
Condensed Group Statements of
Changes in Equity
Opening balances 1 021 200 814 461 814 461
Total comprehensive income for
the period 153 440 79 128 227 526
BEE share-based payments 1 714 1 714 3 428
Repurchase of Comair shares (151 102) - -
Dividend paid (48 494) - (24 215)
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976 758 895 303 1 021 200
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By order of the Board
P van Hoven (Chairman) E Venter (Chief Executive Officer)
11 February 2014
Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Date: 11/02/2014 12:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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