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Unaudited Interim Results for the six months ended 31 December 2014 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 Interim Results for the six months ended 31 December 2014 and
cash dividend declaration
Performance review
In the absence of growth in the domestic market, Comair’s capacity remained
consistent with that of last year. Revenue grew by 5%, attributable to a 3%
increase in average yield and a 2% increase in occupancy. The declining dollar
oil price benefitted the Company towards the end of the reporting period, but
was offset by a further 9% average weakening of the exchange ratecompared to
the previous year, which affects 48% of our costs. The net effect for the half
was an increase in operating expenses of 2%.
Earnings per share and headline earnings per share grew to 37.6 cents (prior
period earnings and headline earnings per share of 34.3 cents). The cash
balance at 31 December 2014 was R688 million after investing R149 million
in the purchase of the five Boeing 737-400's mentioned below, and early
settlement of aircraft and simulator funding amounting R73 million.
The Company continues to progress with its fleet upgrade programme, and retired
a further two Boeing 737-300 aircraft, which were replaced with one Boeing
737-800 for operation in the British Airways fleet. We also purchased three
Boeing 737-400 aircraft that were on lease to Comair, and two pre-owned Boeing
737-400 aircraft. The above changes will complete the retirement of the Boeing
737-300 fleet.
Prospects
The domestic passenger market remains below the 2008 peak volume and we do not
anticipate any near-term recovery in local consumer spending. While the decline
in the oil price has provided welcome relief, we are of the view that it will
increase in the second half of the year. The current swap price in the
market for the 12 months ahead is averaging $65 to $75 per barrel, indicating
market expectations of a recovery in the price of oil. The impact of the lower
fuel price is anticipated to equal approximately 3% of total cost for the full
financial year and we are seeing related downward pressure on ticket prices.
Comair hedged 26% of its fuel consumption for the second half at an average price
of $82 per barrel. The mark-to-market valuation was taken to the Cash Flow Hedge
Reserve and will be released against the underlying cost as the hedges mature.
The ongoing upgrades to our fleet remain the best solution to the expected
recovery in the fuel price, while also providing an improved customer
proposition, and, along with improved technology-driven operating processes,
will ensure that we maintain a healthy lead over our competitors. Our travel
business, flight training facility, catering business and airport lounges also
show opportunities for further growth.
The above outlook has not been reviewed and reported on by Comair’s external
auditors and does not constitute an earnings forecast.
Cash Dividend Declaration
Following on the strong performance of the first six months, notice is hereby
given that a gross interim cash dividend of 5.00000 cents per share (prior year
cash dividend of 5.00000 cents) was declared payable to ordinary shareholders
and “A” shareholders (unlisted shares). The “A” shareholders are now entitled
to participate in dividends in terms of a black economic empowerment transaction
approved by ordinary shareholders by way of a special resolution passed at the
General Meeting held on 14 September 2006. The dividend was declared out of
income reserves.
Dividends will be subject to a local dividend tax rate of 15% or 0.75000
cents per share, resulting in a net dividend of 4.25000 cents per 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 used as part of this declaration. The Company’s tax reference number is
9281/874/7/1/0 and the number of shares in issue at the date of this declaration
is 440,263,099 ordinary shares and 29,067,766 “A” shares (unlisted shares).
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, 13 March 2015
Shares commence trading (ex dividend) Monday, 16 March 2015
Record date (date shareholders recorded in books) Friday, 20 March 2015
Payment date Monday, 23 March 2015
Share certificates may not be dematerialised or rematerialised between Monday,
16 March 2015 and Friday, 20 March 2015, both days inclusive.
Directors’ resignations and appointment
There were no Director appointments or resignations during the interim period
under review.
Basis of preparation
In terms of the Listings Requirements of the JSE Limited, the Group has prepared
its 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 adopted accounting policies.
Prior period restatement
Comair offers travel and holiday package services using advanced technology,
both locally and internationally, to consumers directly and via the retail
travel trade. This business forms part of the non-airline segment of the Group
and is disclosed as such in the Segmental Report. In terms of IAS 18 – Revenue,
Comair acts as an agent for the collection of revenue on certain travel packages
and these amounts, net of inventory costs, should be accounted for as commission
received. In the financial year ended 30 June 2014 gross amounts were included
in revenue, and the associated inventory costs were included in operating
expenses, which gives rise to the restatement.
The restatement has no impact on the profit of the Group and reflects as a
reduction in both revenue and operating expenses amounting to R379 million in
the Statement of Comprehensive Income for the year ended 30 June 2014.
Change in Accounting Estimates
Arising from the fleet upgrade programme, the Board re-assessed the
estimated residual values and useful lives of the Boeing 300 and Boeing 400
fleets, resulting in additional depreciation of R97 million in the current
reporting period. Aircraft are depreciated over their useful lives on a
component basis, taking into account residual values technological innovation,
planned maintenance programmes and forecast retirement dates.
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 Interim Group Results were prepared by:
Kirsten King
Financial Director
Comair Limited
Condensed Results
Comair Limited
Group
Unaudited Unaudited Audited
six months six months year restated
31 Dec 31 Dec 30 June
2014 2013 2014
R'000 R'000 R'000
----------------------------------------------
Condensed Group Statements of
Comprehensive Income
Revenue 3,126,877 2,963,143 5,903,219
Operating expenses (2,658,833) (2,598,023) (5,198,457)
----------------------------------------------
Operating profit before
depreciation, impairment and
profit on sale of assets 468,044 365,120 704,762
Depreciation (225,312) (131,981) (290,747)
Reversal of Impairment - - 2,235
Profit on sale of assets - - 524
----------------------------------------------
Profit from operations 242,732 233,139 416,774
Interest income 22,209 17,301 32,149
Interest expense (38,668) (38,485) (77,340)
Share of profit (loss) of
associates 948 (1,060) 2,327
----------------------------------------------
Profit before taxation 227,221 210,895 373,910
Taxation (63,649) (57,455) (109,059)
----------------------------------------------
Profit for the period 163,572 153,440 264,851
Other comprehensive income: Items
that may be reclassified
subsequently to profit or loss
Effects of cash flow hedge (79,621) - -
----------------------------------------------
Total comprehensive profit for
the period attributable to equity
shareholders of the parent 83,951 153,440 264,851
----------------------------------------------
Earnings per share (cents) 37.6 34.3 58.4
Headline earnings per share (cents) 37.6 34.3 57.8
Diluted earnings per share
(including "A" shares) (cents) 35.2 34.3 56.1
Diluted headline earnings per
share (including "A" shares)
(cents) 35.2 34.3 55.6
Dividends per share paid 13.0 10.0 15.0
Actual number of shares in
issue ('000) 440,263 440,263 440,263
Weighted ordinary shares in
issue ('000) 435,270 447,380 453,856
Diluted weighted ordinary shares
in issue ('000) 464,338 447,755 471,851
Group
Unaudited Unaudited Audited
six months six months year restated
31 Dec 31 Dec 30 June
2014 2013 2014
R'000 R'000 R'000
----------------------------------------------
Reconciliation between earnings
and headline earnings
Earnings attributable to the
equity holders of the parent 163,572 153,440 264,851
Less: IAS 16 profit on disposal
of property, plant and equipment
after taxation - - (524)
Less: IAS 16
reversal of Impairment to loans
to associates - - (2,235)
Add: tax effect of profit on
disposal - - 147
----------------------------------------------
Headline earnings attributable
to ordinary shareholders 163,572 153,440 262,239
----------------------------------------------
Condensed Group Statements of
Financial Position
ASSETS
Property, plant and equipment 2,700,119 2,610,403 2,545,033
Intangible assets 25,922 36,291 31,106
Investments in associates 7,560 990 6,612
Goodwill 3,668 3,668 3,668
Current assets 1,442,668 1,176,040 1,436,929
----------------------------------------------
4,179,937 3,827,392 4,023,348
----------------------------------------------
EQUITY AND LIABILITIES
Share capital and reserves 1,096,096 976,758 1,067,970
Interest-bearing liabilities 1,169,073 1,238,125 1,183,072
Deferred taxation 175,313 158,332 167,689
Share-based payments 25,277 4,250 21,666
Current liabilities 1,714,178 1,449,927 1,582,951
----------------------------------------------
4,179,937 3,827,392 4,023,348
----------------------------------------------
Net asset value per share (cents) 251.8 224.4 245.3
Group
Unaudited Unaudited Audited
six months six months year restated
31 Dec 31 Dec 30 June
2014 2013 2014
R'000 R'000 R'000
----------------------------------------------
Condensed Group Statements of
Cash Flows
Cash and cash equivalents at the
beginning of the period 867,703 778,045 778,045
Cash from operations and
investment income 222,616 459,396 1,043,147
Taxation paid (27,521) (24,191) (76,664)
Cash (utilised in) investing
activities (375,214) (366,271) (610,842)
Cash generated by (utilised in)
financing activities 780 (152,112) (265,983)
----------------------------------------------
Cash and cash equivalents at the
end of the period 688,364 694,867 867,703
----------------------------------------------
Condensed Group Segmental Report
Segmental revenue
Airline 3,072,065 2,918,091 5,819,632
Non-airline 54,812 45,052 83,587
----------------------------------------------
3,126,877 2,963,143 5,903,219
Segmental results
Airline 434,100 353,088 681,552
Non-airline 33,944 12,032 23,210
----------------------------------------------
Operating profit before
depreciation, impairment and
profit on sale of assets 468,044 365,120 704,762
Depreciation – Airline (222,994) (129,670) (285,734)
Depreciation – Non-airline (2,318) (2,311) (5,013)
Reversal of Impairment – Airline - - 2,235
Profit on sale of assets – Airline - - 524
----------------------------------------------
Profit before interest, dividend
and taxation 242,732 233,139 416,774
----------------------------------------------
Unaudited Unaudited Audited
six months six months year restated
31 Dec 31 Dec 30 June
2014 2013 2014
R'000 R'000 R'000
----------------------------------------------
Segmental assets – Airline 3,986,959 3,655,388 3,875,108
Segmental assets – Non-airline 192,978 172,004 148,240
Segmental liabilities – Airline (3,008,538) (2,745,942) (2,825,314)
Segmental liabilities –
Non-airline (75,302) (104,693) (130,064)
Segmental capital additions –
Airline (excluding borrowing
costs capitalised) 192,968 428,047 510,381
Segmental capital additions –
Non-airline 246 255 668
Condensed Group Statements of
Changes in Equity
Opening balances 1,067,970 1,021,200 1,021,200
Profit for the period 163,572 153,440 264,851
Equity settled share-based
payment adjustment 857 1,714 3,428
Repurchase of Comair shares - (151,102) (151,213)
Cash flow hedge reserve (79,621) - -
Dividend paid (56,682) (48,494) (70,295)
Net effect of share trust
activities - - (1)
----------------------------------------------
1,096,096 976,758 1,067,970
----------------------------------------------
By order of the Board
P van Hoven (Chairman) E Venter (Chief Executive Officer)
16 February 2015
Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Release date
17 February 2015
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