Annual Report 2004 - ShareData · PDF fileJoint Chairman and Managing Director’s Report...

Annual Report 2004

Content

Joint Chairman and Managing Director's Report

Five-Year Review

Group Value Added Statement

kulula.com

Corporate Governance

British Airways

Report of the Independent Auditors

Statement of Responsibility by the Board of Directors

Statement of the Company Secretary

Report of the Directors

Balance Sheet

Income Statement

Statement of Changes in Equity

Cash Flow Statement

Accounting Policies

Notes to the Annual Financial Statements

Notice of Annual General Meeting

Share Price Performance

Shareholder Analysis

Form of Proxy

Administration

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K-3657 [www.kashangroup.com]

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! A forward cover exchange loss wasincurred on the acquisition of threeBoeing B737-300 aircraft that wereacquired during the year. This hasbeen reflected as an exceptionalitem of R16.7 million at year end.

Aircraft FleetThe depressed international aircraftvalues, along with the stronger rand,have provided an ideal opportunity forComair to further upgrade its fleet tomore efficient and stage 3 noisecompliant aircraft.

In September, October and NovemberComair took delivery of three BoeingB737-300 aircraft from Qantas. Whilethis acquisition has increased theaircraft fixed costs on the IncomeStatement, the increase has been morethan offset by the operating efficiencyof these aircraft, which reducesComair�s exposure to the exchangerate and oil price variations. The BoeingB737-300s are stage 3 noise compliantand offer improved revenue earningpotential by providing 30% morecapacity than similar Boeing B737-200aircraft. Comair is investigatingopportunities to take further advantageof the current aircraft market andexchange rate by accelerating its fleetreplacement programme.

At mid year Comair contracted withSafair to terminate the leases on threeBoeing B737-200 aircraft and replacethese with four MD82 aircraft. TheMD82 aircraft became available toComair on the favourable suspensionof the commercial agreement betweenComair and Safair, whereby Comairshared equally in the profits or losseson five MD82 aircraft that are owned bySafair and were leased to third parties.The MD82 aircraft have beenconfigured with 150 seats, which, alongwith lower operating costs, result in animproved cost per seat compared to theBoeing 737-200 aircraft that theyreplaced.

At year end Comair�s fleet comprisedtwo Boeing B737-200 basic aircraft thatwere retired after the Balance Sheetdate; eight 100 seater B737-200 aircraft,of which six are owned; three 140seater leased B737-400 aircraft; three130 seater owned B737-300 aircraft;and four 150 seater leased MD82aircraft. The fleet comfortably exceedsthe requirements of the anticipatednoise abatement regulations.

kulula.com BrandThe introduction of the more efficientMD82 fleet assisted in further reducingkulula.com�s cost per seat, therebysupporting its leading position in thelow fare market. Extra frequencieswere added on the Johannesburg-CapeTown and Johannesburg-Durbanroutes, and kulula.com commenced asuccessful service on the Johannesburg-George route.

In partnership with Protea Hotels,kulula.com added the sale ofkulula.beds to its flights and cars,thereby providing the facility for akulula.com client to compile acomplete and cost effective travelpackage on-line.

British Airways BrandThe British Airways operationcontinued to excel as the leadingpremium brand airline in SouthernAfrica. The airline�s commitment toservice excellence was endorsed by itsbeing voted the best domestic airlinefor the fourth time by the Association ofSouth African Travel Agents (ASATA),and through the winning of the ACSAFeather Award for the best domesticairline out of Johannesburg and CapeTown.

British Airways continues to offer 40%more legroom than other domesticairlines, LOFO (last on first off) baggageand British Airways Executive Clubfrequent flyer programme as some ofits leading market benefits. Theintroduction of e-ticketing has heraldedthe era of efficient and paperless travelarrangements for the brand.

During the year the airline grewcapacity across the network throughupgrading three of its fleet to BoeingB737-300 aircraft.

Flight OperationsSafety standards remain an imperativefor the company, and Comair onceagain received an unconditional ratingfrom the British Airways Plc safetyaudit team. Comair also successfullyparticipated in an ACSA emergencysimulation exercise to test itsemergency procedures.

At year end Comair had secured thepurchase of a second flight simulator ata cost of R21 million for the training ofBoeing 737-300 and -400 flight crew.

Apart from achieving a significantsaving on training costs and greaterefficiency, the simulator will provide asource of revenue through the leasingof spare simulator capacity to otherairlines, a number of which are alreadyusing our existing flight simulatorfacilities.

Black EconomicEmpowermentMindful of the imperative to redress thehistorical, social and economicinequalities of the past, as well as toachieve sustained presence andownership in business by historicallydisadvantaged South Africans, Comairhas actively participated in thedevelopment of the BEE charter forTransport. Comair has made progresstowards the targets set in the DraftAviation Scorecard, includingemployment equ i t y, t ra in ing ,management, social responsibility andprocurement.

ProspectsComair expects to see continuedreductions in its cost base through amore efficient fleet, reduced sellingcosts and improved productivity.

The fuel price, which comprises 25% ofComair�s costs, remains of concern,and may require a further increase tothe fuel surcharge collected on ticketsales in order to adequately addressrampant dollar oil prices. However,increased ticket prices also have thepotential to reduce passenger demand.While the fleet replacementprogramme will reduce exposure to theoil price and exchange rate,approximately 40% of costs areexpected to remain hard currencybased.

Profits will ultimately depend on thelevel of competition in the market, andon the extent to which revenue can begrown to cover potential cost increasesas well as deliver an acceptable profitmargin. On current trends the Boardexpects reasonable prospects for afurther improvement in operating profitfor the 2005 financial year.

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Joint Chairman and

Managing Director�s

Report

It is our view that the Government shouldreview the effective compliance of its ownpolicy which commits it to a reduction inits direct involvement in the provision of airservices. This policy was documented byGovernment in a White Paper, but was onlybriefly pursued with the sale of a strategicequity stake in South African Airways,which was repurchased after a shortperiod due to the failure of Swissair.

Both the state owned South AfricanAirways and our company have beennegatively impacted by a stronger rand inrespect of aircraft values and exchangelosses, as reflected in the results for thisyear. It is of concern, however, that theGovernment has found it necessary, on atleast two occasions during the lasteighteen months, to issue guarantees forthe hedge commitments of South AfricanAirways, whilst its policy commits it to theprinciple of equal treatment and thepromotion of a level playing field.

Exceptional ItemsThe exceptional items below have arisen asa result of the continued depressedinternational aircraft values and thestrength of the rand.! As a result of the fleet replacement

programme, one of the older aircraftwas withdrawn from service during theyear, and a further two were withdrawnat the start of the 2005 financial year.These aircraft, along with two that werewithdrawn in the prior financial year,have been written down to nil value asan exceptional item at a cost of R15 million.

! Failure of aircraft values to adequatelyrecover since September 2001 hasresulted in a prudent decision to writedown the value of Comair-owned stage2 noise level Boeing 737-200 aircraftthat remain in operation. The effect ofthis is an impairment write down ofR100 million that will achieve a fairrealisable book value on these aircraftat the end of their intended operation inthe Comair fleet.

! A foreign currency translation loss ofR5.1 million was incurred on the US$4million aircraft deposits held withBritish Airways. These deposits relateto options that were to be exercisedsubsequent to the balance sheet date.Comair has elected not to exercisethese options as the underlying aircraftprices were negotiated prior toSeptember 2001 and no longer supporta positive investment value. Thebalance of these deposits has beenexpensed at year end as an exceptionalitem of R24.7 million.

Earnings Review2004 presented a year of unprecedentedcompetition in the market for domestic airtravel, characterised by over-capacity andaggressive pricing. Despite a significantdecline in yields, Comair achieved an 8%turnover increase on substantialpassenger gains of 31% and growth inmarket share. Capacity grew by 19% alongwith improved seat occupancy levels.Under the circumstances, the operatingprofit of R40.7 million and headlineearnings per share of 12.1 cents (prior yearoperating profit of R11.9 million andheadline earnings per share of 6.8 cents)are a creditable achievement.

The stronger rand reduced operating costsin the second half of the year. This benefitwas partially offset by the increase in thedollar price of fuel over the same periodand a reduction in rand yields from dollarbased sales. Comair implemented a fuelsurcharge on British Airways ticket salesto partially recover the effect of theabnormal fuel price, but the benefit of thisrecovery will only be reflected in the 2005financial year.

Cash generated by operations remainedstrong at R63.3 million (prior year R66.7 million), resulting in a cash balanceof R210 million at year end (prior year R168 million).

In view of the positive cash flow fromoperations, the Directors have resolved todeclare a dividend of 2.0 cents per share(prior year 2.0 cents) to all shareholders.

Trading environmentAirline operators in the private sector havestruggled for a considerable time tocompete against the state owned SouthAfrican Airways, leading to several airlinefailures since deregulation. However,Comair has consistently achieved agrowing market share under its BritishAirways brand, and more recently under itskulula.com brand, despite the perceivedpredatory conduct on the part of SouthAfrican Airways that has now led tocomplaints filed with the CompetitionCommission regarding abuse ofdominance in terms of the CompetitionsAct.

The Competition Tribunal is currentlyhearing a referral from the CompetitionCommission regarding the abuse ofdominance by South African Airways. Afavourable ruling would provide for animproved trading environment and apossible claim for damages.

Group income statementRevenue 1,474,549 1,365,907 1,284,962 1,160,000 977,036 Operating expenses 1,433,804 1,354,003 1,273,104 1,086,157 825,229 Operating profit 40,745 11,904 11,858 73,843 151,807 Aircraft deposit translation loss (5,120) (11,604) - - - Aircraft deposit write-off (24,752)Aircraft impairment write-down (115,106) (35,000) - - - Aircraft forward cover exchange loss (16,658)Sun Air investment settlement - (3,600) - - - Profit on disposal of aircraft - - - 25,483 1,970 (Loss)/profit from operations (120,891) (38,300) 11,858 99,326 153,777 Net investment income / (expense) (15,257) 987 (1,085) 8,706 12,863 (Loss)/profit before taxation (136,148) (37,313) 10,773 108,032 166,640 Taxation 39,448 14,386 4,539 (15,070) (46,735)(Loss) / Profit for the year (96,700) (22,927) 15,312 92,962 119,905 Outside shareholders income - - - - 8 (Loss) / Earnings attributable toordinary sharholders (96,700) (22,927) 15,312 92,962 119,913

Group balance sheet at 30 June

AssetsProperty, plant and equipment 343,927 295,452 334,304 309,989 186,600 Loan to share incentive trust - - 14,040 14,000 15,120 Unlisted investments - 115,035 96,226 80,493 67,331 Deferred taxation 31,435 (8,017) (26,629) (31,168) (28,284)Current assets 316,639 293,623 344,894 372,881 383,834

692,001 696,093 762,835 746,195 624,601

Equity and liabilitiesShare capital and reserves 234,236 339,050 383,933 402,221 338,659 Interest-bearing liabilities 190,787 21,331 171,460 181,237 135,490 Current liabilities 266,978 335,712 207,442 162,737 150,452

692,001 696,093 762,835 746,195 624,601

Salient featuresOperating margin 2.8% 0.9% 0.9% 6.4% 15.5%Earnings margin -6.6% -1.7% 1.2% 8.0% 12.3%Earnings per share (cents) (24.2) (5.7) 3.8 23.2 30.1 Headline earnings per share (cents) 12.1 6.8 3.8 23.2 30.1 Dividends per share (cents) 2.0 2.0 2.0 8.0 7.0Weighted ordinary shares issued (�000) 399,431 399,434 399,407 399,395 399,250Weighted ordinary shares in issue 420,000 420,000 420,000 420,000 420,000Adjustment in respect of consolidation of share trust -20,569 -20,566 -20,593 -20,605 -20,750

2004 2003 2002 2001 2000R�000 R�000 R�000 R�000 R�000

Wealth Created

Group Revenue 1,474,549 - 1,365,907 - Cost of materials and services 1,237,891 - 1,164,464 - Value added 236,658 - 201,443 - Income from investments 29,223 - 30,685 - Total value added 265,881 100% 232,128 100%

Wealth Distributed

EmployeesSalaries, wages and related benefits 202,270 65% 176,336 76%

Providers of capitalInterest on loans 44,480 14% 29,698 13%Dividends to shareholders 7,989 3% -

GovernmentTaxation income (39,448) -13% (14,386) -6%

Re-invest in the group 50,590 31% 40,480 17%Depreciation including impairment of assets 147,290 63,380 Attributable loss (96,700) (22,900)

265,881 100% 232,128 100%

2004 % 2003 %R�000 R�000

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Group Value Added

Statement

for the year ended 30 June 2004

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Five-Year Review


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The financial statements of the Companyhave been prepared on the �GoingConcern� basis and the Board is of the viewthat the Company has adequate resourcesto continue operating for the foreseeablefuture.

Board of DirectorsThe Company has a unitary boardstructure. The composition of the Board ofComair is set out on page 16. The roles ofthe Chairman and Managing Director areseparate. The non-executive Directors,with a strong independent element, are ofsufficient number to ensure that no singleindividual has unfettered power ofdecision-making and authority. As at 30June 2004, the Board comprised of fourindependent non-executive directors, threenon-executive directors and five executivedirectors, as defined in the listingrequirements of the JSE SecuritiesExchange SA.

The Board is considered to beappropriately skilled with regard to itsresponsibilities and the activities of theCompany. The skills and experienceprofiles of the Board members are regularlyreviewed, to ensure an appropriate andrelevant Board composition.

The Board retains full and effective controlof the Company and is accountable andresponsible for its performance and affairs.The Board is accountable to allstakeholders for exercising leadership,integrity and judgement in pursuit of thestrategic goals and objectives of theCompany. The Board�s primary functionsinclude, amongst others:

! Determining and providing strategicdirection to the Company

! Adoption of strategic plans andensuring that same, through theExecutive Directors, are communicatedto the applicable management levels

! Approving the annual business planand budget compiled by management

! Approving the Company�s financialstatements and interim reports

! Appointing the Managing Director andensuring that succession is planned

! Evaluating the viability of the Companyon a �going concern� basis

! Identifying and continually reviewingkey risks as well as the mitigationthereof by management

! Approving major capital expenditureand significant acquisitions anddisposals, and

! Monitoring non-financial aspectspertaining to the business of theCompany.

IntroductionCorporate governance is the ethicalframework of business philosophy. This isevidenced throughout Comair, where,integrity, professionalism and corporatecitizenship are entrenched within theCompany�s values.

Under the stewardship of the Board, anopen governance process is managed,through which stakeholders may deriveassurance that the Company is beingmanaged in an ethical and disciplinedmanner according to risk parametersbased on the principles of transparency,accountability, responsibility and fairness.

Statement of ComplianceThe Board is of the opinion that throughoutthe financial year under review, it has,other than as set out below, complied in allmaterial aspects with the principles ofKing II and the provisions as set out in theListing Requirements of the JSE. To thebest of its knowledge and belief, areas ofnon-compliance are as follows:

! While the Chairman of the Board is anon-executive director, he is notconsidered to be independent.

! Executive Directors have no fixed-termcontracts of employment. Notwith-standing same, one-third of theDirectors are required to retire byrotation every year and if eligible areconsidered for re-appointment at theCompany�s Annual General Meeting.

Code of EthicsThe Company has a strong culture ofentrenched values, which forms thecornerstone of the expected behaviour ofthe Company towards its stakeholders.These values are embodied in a writtendocument known as the Company Code ofEthics. The Code is continually evaluatedand updated and commits Directors andemployees to the highest standards ofbehaviour when dealing with stakeholders,both internal and external.

Financial Reporting and GoingConcernThe Directors are responsible for thepreparation of the annual financialstatements in a manner that fairly andaccurately represents the state of affairsand results of the Company. The Directorsare responsible for adopting soundaccounting practices, maintainingadequate accounting records andensuring an effective system of internalcontrols for the safeguarding of assets.


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procedures are reviewed andupdated when necessary.

Remuneration CommitteeThe members of this Committee, whichmembers also serve and act as theNominations Committee, are all Non-Executive Directors with the majoritybeing independent. The ManagingDirector attends meetings by invitationonly and is not entitled to vote. TheManaging Director does not participatein discussions regarding his ownremuneration. The Committee mettwice (2 times) during the financial yearunder review. The composition of thecommittee and attendance at meetingsis set out below.

Composition of Committee andAttendanceMembership AttendanceChairman:RC Sacks 1/2Members:JM Kahn 2/2D Hyde (1) 1/1L Cromwell Griffiths (2) 2/2Notes:(1) Resigned effective 16.02.04(2) Appointed effective 16.02.04

The remuneration policy and theexecution thereof is the responsibility ofthe Remuneration Committee. Non-Executive Directors qualify for anannual director�s fee. The fee isaugmented for services as Chairpersonon any of the Committees. These feesare reviewed annually. One of theCompany�s aims is to attract and retaincompetent and committed executiveemployees where performance needsto be recognised and encouraged.Remuneration is reviewed atappropriate intervals to motivateemployees to perform to the requiredstandards. Remuneration is reviewedat appropriate intervals and is linked tothe Company's and individual'sperformance. The fees for Non-Executive Directors and theremuneration packages for ExecutiveDirectors for the past year are disclosedon page 17.

Amongst others, the mainresponsibilities of the RemunerationCommittee are to:

! Determine the Company�s generalpolicy on remuneration as well asspecific policies in respect ofExecutive Directors and ExecutiveManagement remuneration

! Review and determine remunerationpackages for Executive Directorsand Executive Managementincluding but not limited to basicsalary, annual bonuses, benefits,performance based incentives,share incentive scheme awards andpensions

! Review the Company�s Code ofEthics

! Annually review the general level ofremuneration for Directors of theBoard as well as its committees andrecommend proposals in thisrespect for approval by shareholdersat general meetings

! Make recommendations in respectof awards from the Comair ShareIncentive Scheme, and

! Review employment equity andskills development plans.

Discharge of ResponsibilitiesThe Board is of the view that theCommittees have discharged theirresponsibilities for the financial yearunder review in compliance with theirterms of reference.

Risk ManagementEffective risk management is critical tothe Company�s operations. TheCompany therefore follows acomprehensive Risk Managementprocess, which involves identifying,understanding and managing the risksassociated with its various businesses.As the Company, through its variousbusiness units, is exposed to a widerange of risks, some of which may haveserious consequences, the identificationof risk and its management forms partof Executive Management�s businessplan. The Audit and Risk Committeealso reviews the risk managementprocess.

Internal ControlThe Board is responsible for ensuringthat the Company implements andmonitors the effectiveness of itssystems of internal control. Theidentification of risk and theimplementation and monitoring ofadequate systems of internal control tomanage both financial and operationalrisk are delegated to the InternalAuditor, who in turn makesrecommendations to ExecutiveManagement as well as to the Auditand Risk Management Committee.

While all internal control systems dohave inherent shortcomings, theCompany�s internal control system isdesigned to provide reasonableassurances as to the reliability offinancial information and in particularthe financial statements, as well as tosafeguard, verify and maintainaccountability of its assets and todetect fraud and potential liability,while complying with applicable lawsand regulations.

The Company�s External Auditorsconsider the internal control systems ofthe Company as part of their audit andadvise of deficiencies where identified.

Internal AuditThe internal audit function is anindependent appraisal mechanismwhich evaluates, amongst other things,the Company and Group�s internalcontrol procedures, d isclosureprocedures and information andinformation systems, so as to ensurethat these function effectively.

External AuditThe Company�s external auditors areFisher Hoffman PKF Inc. Theindependence of the external auditorsis recognised. The Audit and RiskCommittee meets with externalauditors to review the scope for theexternal audit, and any other auditmatters that may arise. The externalauditors attend Audit and RiskCommittee Meetings and haveunrestricted access to the Chairman ofthe Committee.

Relations with ShareholdersThe Company uses its best endeavoursto maintain dialogue with itsshareholders and other interestedparties. The Company also meets withits institutional shareholders, generallytwice a year, after the release of itsannual and interim results. TheCompany�s website contains the latest,as well as historical, financial and otherinformation about the Company,including the Company�s financialreports. The Board encouragesshareholders to attend its AnnualGeneral Meeting, notice of which iscontained in the Annual Report, atwhich shareholders have theopportunity to put questions to theBoard.

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The Managing Director, who reports tothe Board, is responsible for therunning of the day-to-day business ofthe Company and for theimplementation of policies andstrategies adopted by the Board. TheExecutive Directors and ExecutiveManagers of the Company�s variousbusiness units and subsidiaries assisthim in this task.

The Company Secretary is responsiblefor providing the Board collectively, andeach Director individually, withguidance on the discharge of theirresponsibilities in terms of thelegislation and regulatory requirementsof the Republic of South Africa. TheDirectors of the Company keep theCompany Secretary advised of all theirdealings in securities. The CompanySecretary monitors that the Directorsreceive approval from the Chairman ora designated Director, for any dealingsin securities and ensures adherence toclosed periods for share trading. TheDirectors have unlimited access to theservices of the Company Secretary.

The Board has created an Audit andRisk Management Committee, aNominations Committee and aRemuneration Committee, as set outbelow, to enable the Board to properlydischarge its duties andresponsibilities and to effectively fulfilits decision making process. The Boardand its Committees are supplied withrelevant and timely informationenabling them to discharge theirresponsibilities.

Board CommitteesThe Board Committees have specificterms of reference, appropriately skilledmembers, independent non-executivedirector membership, ExecutiveDirectors and Executive Managementparticipation and access to specialistadvice when considered necessary.

Audit and Risk ManagementCommitteeThe members of this committee are allNon-Executive Directors with themajority of the members beingindependent. All members are

financially literate and all possesssubstantial business and financialexpertise. The Committee meets atleast three (3) times per year. Bothinternal and external auditors haveunrestricted access to the Committee.

The Chairman of the Board, ManagingDirector, Financial Director, internalauditor and external auditors attend theAudit and Risk ManagementCommittee meetings by invitation. TheCommittee held three (3) meetingsduring the financial year under review.

Composition of Committee andAttendanceMembership AttendanceChairman:PJ Welgemoed 3/3Members:RC Sacks 1/3D Hyde (1) 2/3L Cromwell Griffiths (2) 2/3KI Mampeule (3) 2/3Notes:(1) Resigned effective 16.02.2004(2) Appointed effective 16.02.2004(3) Appointed effective 01.11.2003

The Committee, amongst other things,identifies and evaluates exposure tofinancial risk, the adequacy of internalcontrols and provides effectivecommunication between Directors,management and the internal andexternal auditors. The mainresponsibilities of the Audit and RiskCommittee are, amongst others, to:

! Review and recommend to theBoard for approval the Company�sannual report, interim reports andresults announcement

! Review and evaluate theeffectiveness and performance ofthe external auditors as well as thescope, adequacy and costs ofaudits to be performed

! Evaluate and approve the externalauditors� plans, findings andreports

! Review, evaluate and approve theactivities, scope, adequacy andeffectiveness of the Company riskmanagement functions

! Evaluate the effectiveness of theinternal auditing function, includingits activities, scope and adequacyand receive and approve theinternal audit plan, internal auditreports and material changes tosame

! Evaluate procedures and systemsincluding, but not limited to,internal controls, disclosure

controls and the internal auditfunction, and

! Monitor the ethical conduct of theCompany and Group.

Nominations CommitteeThe members of this Committee, whichmembers also serve on theRemuneration Committee, are all Non-Executive Directors with the majority ofthe members being independent.

This Committee, as well as theRemuneration Committee, considersthe issue of succession planning atExecutive Director and ExecutiveManagement level. The ManagingDirector, in consultation with the BoardChairperson, Remuneration Committeeand Nominations Committee, isresponsible for ensuring that anadequate succession plan is in place.

The Committee met twice (2 times)during the financial year under review.The composition of the Committee andattendance at meetings are set outbelow:

Composition of Committee andAttendanceMembership AttendanceChairman:RC Sacks 1/2Members:JM Kahn 2/2D Hyde (1) 1/1L Cromwell Griffiths (2) 2/2Notes:(1) Resigned effective 16.02.2004(2) Appointed effective 16.02.2004

Amongst others, the mainresponsibilities of the NominationCommittee are to:

! Make recommendations on theappointment of new executive andnon-executive directors

! Make recommendations on thecomposition of the Board generallyand the balance between Executiveand Non-Executive Directors

! Review plans for succession andensure their adequacy, for theChairperson, Managing Directorand Executive Directors

! Review the Board structure, sizeand composition and makerecommendations with regard toany adjustments deemednecessary, and

! Ensure that formal boardappointment policies andprocedures are followed and thatsuch appointment policies and


(continued)

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listening forums�. Customer issues arereported at Board level, and theCompany diligently addresses customerconcerns in order to deliver to thehighest standards of customer service.

Community The DoT has set a target of 2,5% ofturnover per annum for communityupliftment. In view of operatingconditions and profit margins, theprivate sector has responded with aproposal of 0,5% of profit after tax.

Notwithstanding, as a conscientiouscorporate citizen, the Companyendeavours wherever possible toimprove the lives of fellow SouthAfricans.

The Company believes that socialresponsibility should not just be seenas a budgeted write-off but rather as aduty and an obligation to help thoseless fortunate and to make a positiveimpact on society in general.

It is exactly this attitude among its staffthat has ensured that the Company hasbeen able to provide assistance to thefollowing organisations over the years:

He�atidHe�atid is an organisation dedicated tothe development of South Africanleaders through international exposure.Its programmes are designed toaddress the shortage of skilled leadersin South Africa by exposing itsparticipants to international casestudies. The He�atid programmes havedeveloped a core group of Blackleaders who have made significantcontributions to their communities.

MaAfrika TikkunMaAfrika Tikkun�s mission is to make ameaningful difference todisadvantaged communities in thefields of inter alia Education by way ofstrategic partnerships for Crèches,Primary and Senior School tutoring,Agricultural and Leadership trainingetc., and Health and Welfare by way ofhealth facilities and improvements,Senior Citizen feeding schemes,housing and other projects.

CIDA An organisation with which BritishAirways is proud to be associated, isthe CIDA City Campus, with whom theairline has been involved for close onthree years. Through the involvementof the British Airways brand, CIDA is

able to offer accessible, quality, highereducation at a low cost to SouthAfricans.

CIDA was designed to develop thinkersand leaders in an effort to rejuvenatethe economy of South Africa byleveraging the finest knowledge andskills that exist in the country. Thecarrier�s assistance includes flights forlecturers from around the country toJohannesburg (and to Cape Townwhere the new campus has justopened) to ensure that students receivethe highest level of education fromexperts. In addition, some of themanagement members at BritishAirways actively offer assistance asacademic volunteer facilitators. Theyconcentrate mainly on business andmarketing studies.

Africa Book Connection (ABC)In line with its focus on education, theBritish Airways brand has recentlybecome involved with the Africa BookConnection (ABC). To address theshortage of textbooks in the countryand the availability of books because ofthe costs involved, ABC launched alarge-scale multi-media campaignaimed at sourcing relevant usedtextbooks from the general public.Furthermore, ABC has takenresponsibility for distribution tolibraries in every tertiary educationalinstitution in South Africa. BritishAirways assists ABC in solving thetextbook crisis by creating publicawareness and sponsoring flights forABC Board Members to attendmeetings around the country to securefinancing.

Project Starfish / Reach for aDreamIn the three short years of kulula.com�sexistence, it has sponsored varioussporting and cultural events. Theseinclude assistance to numerousschools around the country with fund-raising activities for school books,libraries, sporting and gym equipmentand even computers.

kulula.com is also involved in acommunity project known as �ProjectStarfish�, where it has assisted manychildren who were abandoned andorphaned because their parents hadcontracted HIV/AIDS. Children wereflown to Durban to experience the sunand sea sand and realised their dreamof flying in an aeroplane for the veryfirst time. �Project Starfish� has been

running for more than a year, and thefeedback from the children is extremelymotivating.

The Reach for a Dream Foundation,Hospice and the HIV PaediatricFoundation have all been assisted bykulula.com with air tickets for theirrespective fundraising events.

Safety and securityA strong culture of safety and securityexists within the Company, which issupported by well-defined reporting,and management processes thatensure any issues are dealt withthoroughly and effectively.

The safety and security of staff andcustomers remains a number onepriority and safety standards remainparamount. The Company once againreceived extremely favourable auditratings from both British Airways PLCand the South African Civil AviationAuthority.

Health and safetyWithin the Company there is a strongculture of health and safety with wellmanaged reporting, recording andnotification systems.

The Company strives to provide itsEmployees with a clean, safe workingenvironment. The Company hasappointed individuals who areresponsible for ensuring that theCompany complies with its obligationsunder the Occupational Health andSafety Act.

Safety incidents and damage arereported through the safetymanagement system. A formalstructure exists to allow safety issues tobe addressed within each department.The Company has an open reportingculture and encourages the reportingof all incidents.

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Black EconomicEmpowermentThe Company recognises theimportance of implementing aw e l l - balanced Black EconomicEmpowerment (BEE) programme thataddresses the inequality of the pastthrough a dedicated and ongoingprocess. While the Company has madegreat progress in addressing some ofthe significant BEE imperatives, it isaware that the task of transformation isby no means complete.

From an ownership perspective, theCompany is continuously looking toprovide opportunities for previouslydisadvantaged individual (PDI) groupsto acquire ownership in the Company.Evidence of this commitment is that in1998, at the time of the Company�slisting on the JSE Securities ExchangeSA, 9,5% of the Company�s issuedshare capital was sold to a BlackEmpowered company known asCoordinated Network Investments (Pty)Ltd (CNI). Unfortunately, CNIsubsequently disposed of itsshareholding in the Company.

Apart from the ownership perspective,the Company is of the view that, inorder to sustain its businessperformance into the future, the profileof the Company�s employees at alllevels needs to reflect thedemographics of the country moreaccurately. Employment equity andaffirmative action are viewed asbusiness imperatives which are merelyguided by legislation. The Company iscommitted to redressing the inequitiesof the past, identifying and developingtalented PDIs and ultimately ensuringthat its management levels are morerepresentative of the South Africanpopulation at large.

From a Human Resource point of view,the Company is also committed totraining and educating its employeesso as to equip them with the necessaryskills to perform the functions theyhave been employed to perform. On-going in-house training takes placethroughout the Company to ensure thatemployees are adequately skilled toperform the functions they have beenemployed to perform.

EnvironmentThe Company is committed toimprov ing i t s env i ronmenta lperformance and reducing the adverseimpact of its activities on the global andlocal environment. For the airlineindustry, two key issues are: the localenvironmental impact of aircraft noiseand emissions around airports; and theglobal climate change effect of carbondioxide and other aircraft emissions.

Airport impact: a balancedapproachIn terms of noise management, theCompany supports the InternationalCivil Aviation Organisation�s (ICAO�s)recommended �balanced approach�.

We believe that a similar �balanced�approach, using a combination ofinstruments, can also be taken tomanaging local air quality.

Aircraft noiseAnnoyance and sleep disturbance arethe most commonly reported adverseeffects of aircraft noise. The Companyconsiders that the key policy objectiveshould be to reduce or limit the totalnumber of people exposed to highlevels of aircraft noise, in order tomaintain or improve overall quality oflife.

Existing regulation and a long history ofvoluntary action have already had theimpact of internalising external costs ofcurrent aircraft noise to a large extent.International standards pertaining toaircraft noise and agreements on thephasing out of older aircraft haveplayed a major part in this, supportedby operating restrictions including theuse of airspace, night restrictions andairport ground operations.

The Company has, over the past twoyears, started with its fleet replacementstrategy including the acquisition ofthree Boeing B737-400 and threeBoeing B737-300 aircraft. The stage 3noise compliant aircraft will replace itsBoeing B737-200s as noise abatementregulations are imminent. The newaircraft are not only quieter, but alsooffer better performance and fueleconomy, thus assisting the Companyin reducing exposure to fuel pricefluctuations.

Further environmental benefits includereduced noise on takeoff and landing,decreased engine emissions in flightand reduced engine maintenancerequirements.

Social PerformanceOur peoplePersonnel are the most importantassets of the Company and focus ismaintained on the attraction, retentionand development of the bestemployees. Emphasis is placed onleadership training and development atall levels within the Company.

The Company�s stability and itssuccess to date can largely be ascribedto its people. The Company�smanagement team is a group ofexperienced and highly skilled airlineprofessionals who are dedicated torunning a successful operation.

Skills DevelopmentContinual development and learning isregarded as being a means ofachieving competitive advantage.

Regular bimonthly seminars, to whichguest speakers are invited, alsocontribute to keeping the managementteam up to date in terms of changesand new developments in the industryand business in general. It is thepassion of the Company�s people todeliver service excellence that hasmade both the organisation�s brands,British Airways and kulula.com,household names. The company�sservice culture can be ascribed torigorous recruitment and selection anda commitment to continuous trainingand development of all staff members.The Company spends well in excess of5% of payroll on training anddevelopment of its staff, ensuring thatthe highest standards of safety andservice are maintained.

In addition to recurrent pilot training,the Company runs extensive internaltraining programmes for cabinattendants, airport and call centre staff,the majority of whom are new in the jobmarket.

The Department of Transport�s (DoT�s)target for this dimension is 5% of thetotal payroll. The DoT has furtheragreed that all training costs can betaken into consideration whencalculating the contribution. In view ofthe amount and associated costs ofmandatory training, Comair shouldhave no difficulty in achieving andmaintaining this target.

Our customersIn order to best understand ourcustomers� needs the Company listensto their views at regular �customer


(continued)

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Audit OpinionIn our opinion, the financial statementsfairly present, in all material respects, thefinancial position of the Company and theGroup at 30 June 2004, and the results oftheir operations and cash flows for the yearthen ended, in accordance with SouthAfrican Statements of Generally AcceptedAccounting Practice and in the mannerrequired by the Companies Act in SouthAfrica.

Fisher Hoffman PKF (Jhb) Inc.Chartered Accountants (SA)Registration number 1994/001166/21Registered Accountants and Auditors

Johannesburg6 September 2004

To the members of ComairLimitedWe have audited the annual financialstatements and group annual financialstatements of Comair Limited set out onpages 15 to 30 for the year ended 30 June2004. These financial statements are theresponsibility of the Company�s Directors.Our responsibility is to report on thesefinancial statements based on our audit.

ScopeWe conducted our audit in accordancewith Statements of South African AuditingStandards. Those standards require thatwe plan and perform the audit to obtainreasonable assurance that the financialstatements are free of materialmisstatement.

An audit includes:

! Examining, on a test basis, evidencesupporting the amounts anddisclosures in the financial statements;

! Assessing the accounting principlesused and significant estimates made bymanagement; and

! Evaluating the overall financialstatement presentation.

We believe that our audit provides areasonable basis for our opinion.

Report of the

Independent Auditors

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Statement of

Responsibility by the

Board of Directors

The financial statements have beenaudited by the independent accountingfirm, Fisher Hoffman PKF (Jhb) Inc., whichwas given unrestricted access to allfinancial records and related data,including minutes of all meetings ofshareholders, the Board of Directors andcommittees of the Board. The Directorsbelieve that all representations made to theindependent Auditors during the auditwere valid and appropriate.

The financial statements which appear onpages 15 to 30 were approved by the Boardof Directors on 6 September 2004 andsigned on its behalf.

Managing Director Chairman6 September 2004 6 September 2004

The Directors are responsible for thepreparation, integrity and fair presentationof the financial statements and otherfinancial information included in thisreport.

The financial statements, presented onpages 15 to 30, have been prepared inaccordance with South African Statementsof General ly Accepted AccountingPractice, and include amounts based onjudgements and estimates made bymanagement.

The going-concern basis has been adoptedin preparing the financial statements. TheDirectors have no reason to believe that theCompany or the Group will not be goingconcerns in the foreseeable future basedon forecasts and available cash resources.The financial statements support theviability of the Company and the Group.

Statement of the

Company Secretary

I, Derek Henry Borer, the Company Secretary of Comair Limited, certify that all returnsrequired of a public company have, in respect of the financial year under review, beenlodged with the Registrar of Companies and that all such returns are true, correct and upto date.

DH BorerCompany Secretary6 September 2004

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included. The dividend payment will bemade on Monday, 4 October 2004.

Share CapitalThere have been no changes in theauthorised share capital, issued sharecapital or share premium account duringthe year under review. The unissued sharesare under control of the directors until thenext Annual General Meeting.

SubsidiariesDetails of the Company�s sole subsidiary,Commuter Handling Services (Pty) Limitedare recorded in the notes to the annualfinancial statements. The subsidiaryprovides airport ramp handling services forComair at cost.

Accounting PoliciesDuring the year the company changed itsaccounting policy with respect to theemployee share incentive trust. Thechange was effected in order to providemore appropriate presentation. The groupnow consolidates the share incentive trustand the shares owned by the trust areaccounted for as treasury shares. Thecomparative amounts have beenappropriately restated. This change hasreduced the weighted number of shares inissue for the computation of earnings pershare and headline earnings per share.

The Directors have pleasure in presentingtheir report, which forms part of the auditedfinancial statements of the Company andthe Group for the year ended 30 June 2004.

Nature of the businessComair Ltd provides domestic and regionalair services in the Southern Africanmarket, trading under the brand names ofBritish Airways and kulula.com. The airlineoperates a fleet of nineteen jet aircraft.

Financial ResultsFull details of the financial results are setout on pages 15 to 30 of the AnnualFinancial Statements for the year ended 30 June 2004.

DividendsThe Directors of Comair have resolved todeclare a dividend (Dividend number 6) of2.0 cents per share (prior year: 2.0 cents pershare) to all shareholders. The last day totrade (cum the dividend) in order toparticipate in the dividend will be Thursday,23 September 2004. The shares willcommence trading �ex� dividend from thecommencement of business on Monday, 27September 2004 and the record date isFriday 1 October 2004. Share certificatesmay not be de-materialised or re-materialised between Monday, 27 September2004 and Friday, 1 October 2004, both days


Directors� Interest in Share CapitalThe Directors of the Company held the following direct and indirect interests in the issued share capital of the Company at30 June 2004

2004 2003 2004 2003 2004 2003Beneficial Beneficial Non- Non- Total Per- Total Per-

Beneficial Beneficial Shares centage Shares centageDirect Indirect Direct Indirect Direct Indirect Direct Indirect

D Novick - 81137408 - 73679123 - - - - 81137408 19,318 73679123 17,543MD Moritz - 81137408 - 73679123 - - 81137408 19,318 73679123 17,543P van Hoven 3049097 6155550 3049097 6155550 - - - - 9204647 2,192 9204647 2,192GS Novick 307800 - - - - - - - 307800 0,073 - -ER Venter 19400 - - - - - - - 19400 0,0005 - -MN Louw 1000 - - - - 1000 - - -PJ Welgemoed 104200 - 104200 - - - - - 104200 0,025 104200 0.025*DH Borer 327500 - - - - - - - 327500 0,078 - -

TOTAL 3808997 168430366 3153297 153513796 - - - - 172239363 41,010 156667093 37,303

*Alternate DirectorThere have been no changes in the Directors� interests in share capital from 30 June 2004 to the date of posting of this annual report.

Special ResolutionsSince the publishing of the last annual report, the Company passed 1 (one) special resolution at its Annual General Meeting,held on 27 October 2003, namely a special resolution as contemplated in terms of sections 85(2) and 85(3) of the CompaniesAct (Act 61 of 1973) as amended, i.e. a general approval to repurchase shares. Other than the aforegoing, no other specialresolutions were passed.

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Name, Age, Qualification

Donald NovickAge: 66CA (SA)Martin Darryl MoritzAge: 59(B Com; LLB)Pieter van HovenAge: 60Bertrandus Johannes van derLindenAge: 56Rodney Cyril SacksAge: 54H Dip Law, H Dip TaxDr Peter Johannes WelgemoedAge: 61B. Com (Honours); M.Com; D. ComJacob Meyer KahnAge: 65BA (Law), MBA (UP); DCom (hc), SOEGidon Saul NovickAge: 34BCom; CA (SA); MBAMartin Nicolaas LouwAge: 49B.MilErik Rudolph VenterAge: 34BCom; CA (SA)

Khutso Ignatius MampeuleAge: 39BA; MSc; MBALloyd Cromwell-GriffithsAge: 59ATPLDerek Henry BorerAge: 42BCom; LLB

Dawn Nowceba MerleMokhoboAge: 55BA Social ScienceGlenn Wayne OrsmondAge: 42BCom; CA (SA)David HydeAge: 67MSC (Eng); C. Eng; FRAes;DIC; ACGI

Business Address

1 Marignane Drive Corner Atlas RoadBonaero Park, Kempton Park, 1619


1 Marignane Drive Corner Atlas RoadBonaero Park, Kempton Park, 16191 Marignane Drive Corner Atlas RoadBonaero Park, Kempton Park, 1619

Suite 101, 1010 Railroad Street,Corona, California, USA

3 Montagne Avenue High CapeDevil's PeakCape Town, 8001

SABMiller Plc, 1st Floor, No 2 JanSmuts Avenue, BraamfonteinJohannesburg, 2001




C/O Lefa Group Holdings (Pty) Ltd,Unit 46, Themi Office Park,Calderwood Road, Lonehill 2062British Airways Plc, The CompassCentre, Heathrow AirportMiddlesex TW6 1JA, UK1 Marignane Drive, Corner Atlas RoadBonaero Park, Kempton Park, 1619

MBM Change Agents (Pty) Ltd, 1stFloor, Bradenham Hall North MellisOffice Park, Autumn Street, Rivonia,21281 Marignane Drive, Corner Atlas RoadBonaero Park, Kempton Park, 1619

British Airways Plc, Waterside,Harmondworth, England, UB7 0GB

Four (4) BoardMeetings held

during the year:Attendance

4

4

4

4

2 of 4

4

4

4

4

4

3 of 3

2 of 2

4

0 of 0

0 of 0

3 of 3

Occupation

Non-ExecutiveChairman

Non-Executive DeputyChairman

Managing Director

Service DeliveryDirector

Independent Non-Executive Director



Commercial Director:Kulula, (Appointed01/07/2003)Director FlightOperations, (Appointed01/07/2003)Commercial DirectorBritish Airways Brand(Appointed 01/07/2003)Financial Director(Appointed 20/08/2003)Independent Non-Executive Director(Appointed 01/11/2003)Non-ExecutiveDirector (Appointed16/02/2004)Alternate Director toBertrandus Johannesvan der Linden

Independent Non-Executive Director(Resigned 11/07/2003)

Financial Director(Resigned 20/08/2003)

Non-ExecutiveDirector (Resigned16/02/2004)

Nationality

Board of DirectorsThe names, ages, qualifications, nationality, business addresses, attendance at BoardMeetings and occupations of the Directors of Comair who served during the financial yearunder review, is set out below.

The following Directors resigned during the financial year under review:

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Share incentive schemeExecutive directors participate in a share incentive scheme with the following allocations to July 2003 and as at 30 June 2004

Allocated to 1 July 2003 Allocated as at 30 June 2004Average Average

Number Price Number Price

P van Hoven 1,092,498 0.88 3,092,498 0.80BJ van der Linden 697,054 0.88 2,197,054 0.79GW Orsmond 388,741 0.88 226,341 0.88ER Venter 224,293 0.88 1,974,293 0.76GS Novick 212,488 0.88 1,962,488 0.76MN Louw 43,000 0.88 1,043,000 0.76DH Borer 274,800 0.88 774,800 0.80

Total 2,615,074 9,452,674

Note:1. The balance (226 341) of GW Orsmond�s share options lapsed 30 September 2003, according to the rules of the option

scheme.2. A total of 16,336,906 options have been issued to employees through the share incentive scheme, and 4,231,934 options

remained available for issue at year end.

Directors� remuneration

For services as Package Performance Pension Other Total 2004 Total 2003directors and (1) related (2) and Medical (4)

related committee (3) work.R�000 R�000 R�000 R�000 R�000 R�000 R�000

Executive

P van Hoven - 1,083 - 177 1,260 1,393BJ van der Linden - 840 - 139 979 1,078GW Orsmond - 184 - 22 139 345 993ER Venter - 721 - 96 817GS Novick - 728 - 91 819MN Louw - 773 - 91 864DH Borer - 486 - 79 565

- -- 4,815 - 695 139 5,649 3,464

Non-Executive

PJ Welgemoed 95 - - - - 95 75JM Kahn 85 - - - - 85 65KP Mampeule 80 - - - - 80RC Sacks 85 - - - - 85 65

345 - - - - 345 205

345 4,815 - 695 139 5,994 3,669

Notes:(1) �Package� includes the following regular payments made in respect of the financial year while actively employed: cash

salary, entertainment and vehicle allowances, and the deemed tax value of company-owned vehicles provided asperquisites.

(2) �Performance related� refers to incentive rewards in respect of the financial year ended 30 June 2004 and paid in August 2005.

(3) �Pension and Medical� includes the regular payments made for pension fund, medical aid contributions and risk benefits.(4) �Other� refers to termination payments.(5) Remuneration receivable by the directors of Comair will not vary as a result of any proposed issue for cash or repurchase

of shares.


(continued)

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Revenue 1,474,549 1,365,907 1,472,896 1,366,001

Operating Expenses 11 (1,433,804) (1,354,003) (1,432,010) (1,353,983)

Operating profit before exceptional items 40,745 11,904 40,886 12,018 Aircraft deposit translation loss (5,120) (11,604) (5,120) (11,604)Aircraft deposit write-off (24,752) - (24,752) - Aircraft impairment write-down (115,106) (35,000) (115,106) (35,000)Aircraft forward cover exchange loss (16,658) - (16,658) - Sun Air investment settlement - (3,600) - (3,600)Loss before taxation (120,891) (38,300) (120,750) (38,186)

Net investment income / (expense) 12 (15,257) 987 (15,391) 914

Loss before taxation (136,148) (37,313) (136,141) (37,272)

Taxation 13 39,448 14,386 39,452 14,386

Loss for the year (96,700) (22,927) (96,689) (22,886)

Earnings per share (cents) 14 (24.2) (5.7)Headline earnings per share (cents) 14 12.1 6.8

Group Company

2004 2003 2004 2003Note R�000 R�000 R�000 R�000

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Balance Sheet

at 30 June 2004

Assets

Non current assets 343,927 295,452 357,366 308,620 Property, plant and equipment 1 343,927 295,452 336,127 287,221 Loan to share incentive trust 2 - - 13,320 13,583 Investment in subsidiary 3 - - 7,919 7,816

Current assets 348,074 400,641 344,561 398,281 Inventory 5 12,480 12,963 12,480 12,963 Trade and other receivables 93,939 64,544 93,149 64,246 Aircraft deposits - 47,596 - 47,596 Unlisted Investments - 115,035 - 115,035 Deferred taxation 9 31,435 (8,017) 31,435 (8,017)Taxation 19 22 22 22 Cash 210,201 168,498 207,476 166,436

692,001 696,093 701,927 706,901

Equity and Liabilities

Capital and reserves 234,236 339,050 247,544 352,633 Share capital 7 3,994 3,994 4,200 4,200 Share Premium 8,042 8,042 8,456 8,456 Accumulated profits 222,200 327,014 234,888 339,977

Non-current liabilities 190,787 21,331 190,787 21,331 Interest-bearing liabilities 8 190,787 21,331 190,787 21,331

Current liabilities 266,978 335,712 263,596 332,937 Trade payables 222,514 181,408 220,347 179,874 Provisions 10 16,166 18,814 14,951 17,573 Interest-bearings liabilities 8 28,298 135,490 28,298 135,490

692,001 696,093 701,927 706,901

Group Company

2004 2003 2004 2003Note R�000 R�000 R�000 R�000

Income Statement


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Cash from operating activities 22,076 48,628 19,992 46,837 Cash receipts from customers 1,445,155 1,413,309 1,443,993 1,413,713 Cash paid to suppliers (1,381,875) (1,346,628) (1,382,255) (1,348,337)Cash generated by operations 15 63,279 66,681 61,738 65,376 Net investment expense paid 16 (33,212) (19,306) (33,346) (19,381)Taxation (paid)/refunded (2) 9,242 - 9,242 Cash available from operating activities 30,065 56,617 28,392 55,237 Dividends paid (7,989) (7,989) (8,400) (8,400)

Cash utilised in investing activities (42,637) (41,309) (41,478) (40,314)Addition to property, plant and equipment (195,992) (24,710) (194,847) (21,567)Proceeds on disposal of property, plant and equipment 266 181 258 - Net cost of share trust purchases (125) (84)Aircraft deposits utilised / (paid) 17,724 (16,696) 17,724 (16,696)Proceeds on disposal of unlisted investments 135,490 135,490 Investment in subsidiary - - (103) (2,051)

Cash generated / (utilised) by financing activities 62,264 (14,638) 62,527 (14,181)

Decrease in loan to share incentive trust - - 263 457 (Decrease) / increase in interest bearing liabilities 62,264 (14,638) 62,264 (14,638)

Net (decrease) / increase in cash 41,703 (7,319) 41,041 (7,658)

Cash at the beginning of the year 168,498 175,817 166,435 174,093

Cash at the end of the year 210,201 168,498 207,476 166,435

Group Company

2004 2003 2004 2003Note R�000 R�000 R�000 R�000

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Statement of changes

in Equity

Group

Balance at 1 July 2002 as previously reported 4,200 8,456 371,277 383,933 Change in accounting policy - consolidation of share trust (206) (415) (13,263) (13,884)

Balance at 1 July 2002 restated 3,994 8,041 358,014 370,049 Loss for the year (22,927) (22,927)- as previously reported (22,900) (22,900)- adjustments in respect of consolidation of share trust (27) (27)Dividend Paid - - (7,989) (7,989)- as previously reported (8,400) (8,400)- adjustments in respect of consolidation of share trust 411 411 Shares purchased by share trust (2) (3) (220) (225)Shares sold by share trust 2 4 136 142

Balance at 30 June 2003 restated 3,994 8,042 327,014 339,050

Loss for the year - - (96,700) (96,700)Dividend Paid - - (7,989) (7,989)Shares purchased by share trust (5) (11) (504) (520)Shares sold by share trust 5 11 379 395

Balance at 30 June 2004 3,994 8,042 222,200 234,236

Company

Balance at 30 June 2003 4,200 8,456 339,977 352,633 Loss for the year - - (96,689) (96,689)Dividend Paid - - (8,400) (8,400)

Balance at 30 June 2004 4,200 8,456 234,888 247,544

Share Share Accumulated TotalCapital Premium Profit

R�000 R�000 R�000 R�000


Cash Flow Statement


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InvestmentsInvestments (which are notsubsidiaries or associates) are initiallymeasured at cost including transactioncosts. They are subsequently stated atfair value. Fair value of unlistedinvestments is determined by thedirectors.

Unrealised changes in the fair values ofinvestments are taken directly to equity.

InventoryInventory is stated at the lower of costand net realisable values. Cost isdetermined on the first-in-first-outbasis.

Financial InstrumentsIn terms of the Company�s riskmanagement policy, the Company mayutilise forward exchange contracts tomanage exposure to foreign currencyfluctuations.

Financial Instruments are initiallymeasured at cost, which includestransaction costs. Trade and otherreceivables are stated at cost lessprovision for doubtful debts. Cash andcash equivalents are recognised at fairvalue. Interest bearing borrowings arerecognised at cost.

Retirement and MedicalFundsCurrent contributions to the Group�sdefined contribution retirement fundsare based on current service andcurrent salary and are recognised inthe results for the year. Post-retirementmedical aid contributions are chargedagainst income in the year theybecome payable.

Share Incentive TrustThe group consolidates the shareincentive trust and the shares owned bythe trust are accounted for as treasuryshares.

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Accounting Policiesstatements, allowing for the effect of taxlosses carried forward. A deferred taxasset is recognised when it is probable thatthe related tax benefit will be realised.

Property, Plant and EquipmentFreehold property, aircraft and relatedequipment, vehicles, furniture, computersand flight simulator equipment aredepreciated on a systematic basis, whichis estimated to amortise the assets to theiranticipated residual values over theirplanned useful lives.

Property, plant and equipment are stated atcost less accumulated depreciation. Thecarrying values are assessed on an annualbasis and only written down if there areimpairments in value.

Aircraft modifications are capitalised onlyto the extent that they materially improvethe value of the aircraft from which furtherfuture economic benefits are expected toflow. Maintenance and repairs whichneither materially add to the value of assetsor appreciably prolong their useful lives arecharged against income.

Depreciation ratesFreehold Property 2%Aircraft and related equipment 4%Motor Vehicles 20%Furniture and equipment 10%Computer equipment 20%Flight Simulator equipment 20%

Leased AssetsLeases, whereby the lessor providesfinance to the Group with the asset assecurity and where the Group assumessubstantially all the benefits and risks ofownership, are classified as finance leases.Assets acquired in terms of finance leasesare capitalised and depreciated over theuseful life of the asset. The capital elementof future obligations under leases isincluded as a liability in the balance sheet.Each lease payment is allocated betweenthe liability and finance charges so as toachieve a constant rate on the financebalance outstanding. The interest elementof the instalments is charged againstincome over the lease period.

Leases of assets to the Group under whichall risks and rewards of ownership areeffectively retained by the lessor, areclassified as operating leases. Paymentsmade under operating leases are chargedagainst income on a straight line basisover the period of the lease.

Principal Accounting PoliciesThe annual financial statements areprepared in accordance with South AfricanStatements of Generally AcceptedAccounting Practice, the going-concernprinciple, and using the historical costbasis except where otherwise stated.

The accounting policies adopted andapplied are set out below and are, in allmaterial respects, consistent with those ofthe prior year, except as indicated inchanges in accounting policies.

Revenue RecognitionRevenue comprises all airline-relatedrevenue earned. Revenue arising from the provision oftransportation services to passengers isrecognised on an accrual basis in theperiod in which the services are rendered.

Dividends are recognised in the period inwhich the receipt is established.

Basis of ConsolidationThe Group annual financial statementspresent the consolidated financial positionand changes therein, operating results andcash flow information of the Company andits subsidiaries. The results of thesubsidiaries are included from theireffective dates of acquisition to theireffective dates of disposal. All inter-company transactions and balances areeliminated on consolidation.

Foreign CurrencyForeign currency transactions arerecorded at the exchange rate ruling on thetransaction dates. Assets and liabilities designated in foreigncurrencies are translated at rates ofexchange ruling at the balance sheet date.Profits or losses arising are included in theincome statement.

Deferred TaxationDeferred taxation is provided on thecomprehensive basis and is calculated atcurrent rates using the balance sheetliability method. The deferred taxationliability represents the amount of income tax and capital gains tax payable in futureperiods in respect of items of income andexpenditure and capital gains which arerecognised for income tax purposes inperiods different from those in which theyare brought to account in the financial

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2. Loan to Share Incentive TrustThis loan relates to Comair Share Incentive Trustacquisition of 21 million ordinary shares at 72 centsper share on 30 June 1998. The term of the loan is unspecified and it bears no interest. - - 13,320 13,583

3. Investment in SubsidiarySubsidiary - Commuter Handling Services (Pty)Ltd102 shares a t cos t ( 100% shareho ld ing ) 1 1 Loan 9,158 9,055 Provision for diminution (1,240) (1,240)Interest is charged at 15% per annum and thereare no fixed repayment terms.

7,919 7,816

4. Unlisted InvestmentsAmber (Pty) Ltd preference shares5 549 shares at R10 000 per share at cost 55,490 55,490 55,490 55,490 Preference shares were redeemed on 31 May 2004Add dividend accrued 80,000 59,545 80,000 59,545 Investments redeemed (135,490) (135,490)Current portion - (115,035) - (115,035)Total book value - - - -

Total valuation of unlisted investments 115,035 115,035

5. InventoryAircraft spares 8,780 8,781 8,780 8,781 Catering equipment and consumables 3,700 4,182 3,700 4,182

12,480 12,963 12,480 12,963

6. Aircraft DepositsOpening balance 47,596 30,900 47,596 30,900 Deposits made - 28,300 - 28,300 Deposits utilised (17,724) (17,724)Aircraft deposit write-off (24,752) (24,752)Foreign exchange translation adjustment (5,120) (11,604) (5,120) (11,604)

- 47,596 - 47,596

7. Share CapitalAuthorised:1000 000 000 ordinary shares of 1 cent each 10,000 10,000 10,000 10,000 1000 000 000 �N� ordinary shares of 0.01 cent each 100 100 100 100 1000 000 preference shares of 1 cent each 10 10 10 10

10,110 10,110 10,110 10,110 Issued:420 000 000 ordinary shares of 1 cent each 4,200 4,200 4,200 4,200 Adjustment in respect of consolidation of share trust (206) (206) - -

3,994 3,994 4,200 4,200

Group Company

2004 2003 2004 2003R�000 R�000 R�000 R�000

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1. Property, Plant and EquipmentProperty and Buildings

Cost 9,915 9,910 9,915 9,910 Accumulated depreciation (1,700) (1,218) (1,700) (1,218)Book Value 8,215 8,692 8,215 8,692

Aircraft and Flight Simulator EquipmentCost 516,988 395,532 505,686 385,096 Accumulated depreciation (191,767) (119,404) (188,076) (116,881)Book Value 325,221 276,128 317,610 268,215

Vehicles and EquipmentCost 31,558 28,896 26,487 23,843 Accumulated depreciation (21,067) (18,264) (16,185) (13,529)Book Value 10,491 10,632 10,302 10,314

Total Property, Plant and Equipment 343,927 295,452 336,127 287,221

Property, Plant and Equipment- Reconciliation of carrying value

Property and BuildingsCarrying value at the beginning of the year 8,692 7,789 8,692 7,783 Additions 5 1,366 5 1,368 Depreciation (482) (463) (482) (459)Carrying value at the end of the year 8,215 8,692 8,215 8,692

Aircraft and Flight Simulator EquipmentCarrying value at the beginning of the year 276,128 317,430 268,215 311,401 Additions 192,892 18,445 191,787 15,345 Disposals (20) (181) - - Depreciation (28,673) (24,566) (27,286) (23,531)Impairments (115,106) (35,000) (115,106) (35,000)Carrying value at the end of the year 325,221 276,128 317,610 268,215

Vehicles and EquipmentCarrying value at the beginning of the year 10,632 9,085 10,314 8,495 Additions 3,095 4,898 3,055 4,854 Disposals (207) - (206) - Depreciation (3,029) (3,351) (2,861) (3,035)Carrying value at the end of the year 10,491 10,632 10,302 10,314

Total Property, Plant and Equipment 343,927 295,452 336,127 287,221

Property and buildings owned consist of Er f 1092, 1 0 9 6 B o n a e r o Pa r k e x t e n s i o n 2 a n d E r f 9 3 1 , Bonaero Park extension 1, acquired on 21 June 1994 for R 230,000 and subsequently improved to the value of R 6,796,807.

Group Company

2004 2003 2004 2003R�000 R�000 R�000 R�000

Notes to the Annual

Financial Statements


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11. Operating ExpensesOperating expenses are stated after incorporating the following items

Audit fees 282 217 258 217

Depreciation - aircraft assets 28,673 24,566 27,286 23,531 Depreciation - other fixed assets 3,511 3,814 3,343 3,494 Impairment of Aircraft assets 115,106 35,000 115,106 35,000 Deposit Write-off 24,752 - 24,752 -

Directors emoluments 5,994 6,319 5,994 6,319 - for services as Directors 345 245 345 245 - for managerial and other services 4,954 5,581 4,954 5,581 - retirement and medical benefits 695 493 695 493

Rentals under operating leases 151,086 133,762 149,750 132,449 - property rentals 7,135 5,115 6,037 4,088 - aircraft rentals 143,457 126,680 143,457 126,680 - equipment and vehicle rentals 494 1,967 256 1,681

Staff costs 202,270 176,337 183,952 159,071 (Profit) on disposal of property, plant and equipment (64) - (52) - Exchange differences 18,499 5,476 18,499 5,476

12. Net Investment Income/(Expense)Interest expense (44,480) (29,698) (45,410) (29,664)Interest income 8,768 11,876 9,564 11,769 Preference dividend income 20,455 18,809 20,455 18,809

(15,257) 987 (15,391) 914

13. TaxationNormal tax - current 4 - - Normal tax - prior year - (2,792) - (2,792)Deferred tax - current (39,452) (14,386) (39,452) (14,386)Deferred tax - prior year 3,196 3,196 STC - prior year overprovision (404) (404)

(39,448) (14,386) (39,452) (14,386)

Reconciliation of taxation rate % % % % South African normal tax rate (30.0) (30.0) (30.0) (30.0)Taxation effect of:Exempt income (15.0) (15.1) (15.1) (15.1)Disallowable expenditure 16.0 0.0 16.1 0.0 Prior year adjustments 6.5 6.5

(29.0) (38.6) (29.0) (38.6)

Group Company

2004 2003 2004 2003R�000 R�000 R�000 R�000

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8. Interest Bearing LiabilitiesChurchill Finance Services 23 LimitedAircraft finance lease agreement which is payablein equal quarterly payments of R10 852 239.The last payment is due on 30 September 2010.Interest is calculated at 13% per annum.Three aircraf t mortgages serve as collateralcovering security (net book value R169 million). 192,980 - 192,980 -

Laroc Aviation LimitedAircraft finance lease agreement which is payable in equal quarter ly payments of R4 665 959.The last payment is due on 31 August 2004.Interest is calculated at 13% per annum.An aircraft mortgage serves as collateral coveringsecurity (Net Book value R19 million). 4,561 21,331 4,561 21,331

African Merchant Bank (AMB) loanAircraft financing and working capital loan fromAMB of which interest, charged at 19% per annum,was repayable in six monthly instalments of R13 720 640. The capital balance was repaidin full on 31 May 2004.Two aircraf t mortgages ser ved as col lateralcovering security. - 135,490 - 135,490

Nedbank instalment sale agreementFlight simulator instalment sale agreement fromNedbank, payable by 20 quarterly instalments, w i th the l as t payment due on 1 Ju l y 2009 . Interest is charged at prime -2%. The agreementprovides flexible settlement terms. 21,544 - 21,544 -

Sub-total 219,085 156,821 219,085 156,821 Less short-term portion (28,298) (135,490) (28,298) (135,490)

- - 190,787 21,331 190,787 21,331

9. Deferred TaxationOn temporary differences arising from:Property, Plant and Equipment (23,931) (53,355) (23,931) (53,355)Provisions 20,768 12,929 20,768 12,929 Prepayments (1,845) (2,879) (1,845) (2,879)Losses 36,443 35,288 36,443 35,288

31,435 (8,017) 31,435 (8,017)

10. ProvisionsLeave pay 13,646 11,963 12,431 10,722 Bonuses 2,520 6,851 2,520 6,851

16,166 18,814 14,951 17,573

Group Company

2004 2003 2004 2003R�000 R�000 R�000 R�000

Notes to the Annual Financial

Statements (continued)


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17. Retirement BenefitsPost-retirement benefitsThe Group contributed to several retirement funds,all of which are governed by the Pension Funds Act, 1956. The funds cover the majority of its employees and are all defined contribution schemes. Contributions paid byGroup companies are charged against income as incurred.

An actuarial valuation was performed on the Comair Pension Fund in July 2003, for the year ended June2003. The fund was reported to be actuarially sound.

Post-retirement medical aid benefitsThe Group companies subsidise the post-retirement medical aid contributions of certain pensioners. These subsidies, which are not significant, are charged toincome in the year they become payable.

18. Operating Lease CommitmentsCommitments for year oneProperty and buildings 6,612 4,103 6,612 4,103 Aircraft 143,776 134,711 143,776 134,711

150,388 138,814 150,388 138,814

Commitments for year two to fiveProperty and buildings 27,821 21,450 27,821 21,450 Aircraft 497,330 439,146 497,330 439,146

525,151 460,596 525,151 460,596

Commitments after year fiveProperty and buildings 15,971 21,559 15,971 21,559 Aircraft 93,108 189,864 93,108 189,864

109,079 211,423 109,079 211,423

Total operating lease commitments 784,619 810,833 784,619 810,833

19. Cash EncumberedThe Company has pledged cash investments totalling R20 million (2003 - R30 million) in respect of aircraft lease obligations.

20. Borrowing PowersThere are no restrictions on the Group�s borrowing power.

21. Capital CommitmentsThe company has committed to capital expenditure of R900 000 relating to the installation of a flight simulator.

Group Company

2004 2003 2004 2003R�000 R�000 R�000 R�000

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14. Headline EarningsEarnings attributable to ordinary shareholders (96,700) (22,927) (96,689) (22,887)Add back Aircraft impairment write down 115,106 35,000 115,106 35,000 Add back Sun Air Investment Settlement - 3,600 - - 3,600 Add back Aircraft deposit translation loss 5,120 11,604 5,120 11,604 Add back Aircraft deposit write-off 24,752 24,752 Headline earnings attributable to ordinary shareholders 48,278 27,277 48,289 27,317

Weighted ordinary shares in issue (�000) 399,431 399,434 Weighted ordinary shares in issue 420,000 420,000 Adjustment in respect of consolidation of share trust (20,569) (20,566)

Earnings per share (cents) (24.2) (5.7)Headline earnings per share (cents) 12.1 6.8

15. Cash Generated by Operations(Loss) / Profit from operations (120,891) (38,300) (120,750) (38,186)Depreciation 32,182 28,380 30,629 27,025 Aircraft impairment write-down 115,106 35,000 115,106 35,000 Aircraft deposit write-off 24,752 - 24,752 - Profit on disposal of assets (64) - (52) - Cash from operations before working capital changes 51,085 25,080 49,685 23,839 Decrease (increase) in working capital 12,195 41,601 12,053 41,537 - Inventory 483 1,772 483 1,772 - Accounts receivable (29,395) 48,885 (28,903) 49,196 - Accounts payable 41,106 (9,056) 40,473 (9,431)

63,279 66,681 61,738 65,376

16. Net Investment Income (Paid) / ReceivedInterest paid (40,779) (31,182) (41,709) (31,150)Interest received 7,567 11,876 8,363 11,769 Preference dividend received - - - -

(33,212) (19,306) (33,346) (19,381)

Group Company

2004 2003 2004 2003R�000 R�000 R�000 R�000




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22. Financial Risk ManagementInterest rate riskThe company is exposed to interest rate risk as it borrowsand places funds. This risk is managed by placing fundson short term deposit.

Credit riskCredit risk relates to potential exposure on bank and calldeposits and loans and trade receivables. At the balancesheet date, the company did not consider there to be anysignificant concentration of credit risk which has not beenadequatley provided for.

Liquidity riskThe company manages liquidity risk by monitoring forecastcash flows and ensuring that adequate cash resourcesand unutilised borrowing facilities are maintained.

Foreign currency riskThe company undertakes certain transactionsdenominated in foreign currency which therefor haveexposure to exchange rate variations. The Companymanages exchange rate exposure using forewardexchange contracts. Where appropriate, open positionsare maintained. The following uncovered foreign currencyamounts are included in the financial statements at theclosing rate at year end : net liabilities of US$900,472 andnet receivables of GBP5,542,160.

23. Related Party TransactionsBritish Airways Plc holds indirectly 18.3% of the issued shares of the company, and provides various services to the company on an arms length basis.




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4. To authorise the directors to re-appoint Fisher Hoffman PKF (JHB)Inc as the independent auditors of theCompany for the ensuing year and todetermine the remuneration of theauditors.

As special business, to consider and, ifdeemed fit, pass with or withoutmodification, the following resolutions,those numbered 5, 6, 7, and 9 as OrdinaryResolutions, and number 8 as a SpecialResolution.

Ordinary ResolutionsControl of authorised but unissuedshares

5. �RESOLVED THAT the authorised butunissued shares in the capital of theCompany be and are hereby placedunder the control and authority of thedirectors of the Company and that thedirectors of the Company be and arehereby authorised and empowered toallot, issue and otherwise dispose ofsuch shares to such person orpersons on such terms andconditions and at such times as thedirectors of the Company may fromtime to time and in their discretiondeem fit, subject to the provisions ofthe Companies Act (Act 61 of 1973) asamended (�the Act�), the Articles ofAssociation of the Company and theJSE Securities Exchange South Africa(�JSE�) Listings Requirements, whenapplicable.�

Approval to issue shares for cash

6. �RESOLVED THAT the directors of theCompany be and they are herebyauthorised by way of a generalauthority, to issue all or any of theauthorised but unissued shares in thecapital of the Company for cash, asand when they in their discretiondeem fit, subject to the Act, theArticles of Association of theCompany, the JSE ListingsRequirements, when applicable, andthe following limitations, namely that

6.1 the equity securities which are thesubject of the issue for cash must beof a class already in issue, or wherethis is not the case, must be limited tosuch securities or rights that areconvertible into a class already inissue;

6.2 any such issue will only be made to�public shareholders� as defined inthe JSE Listings Requirements and

This document is important andrequires your immediate attention.

Comair LimitedRegistration number 1967/006783/06Incorporated in the Republic of SouthAfrica(�Comair� or �the Company�)ISIN Code: ZAE000029823 Share Code: COM

Notice of Annual GeneralMeetingIf you are in any doubt as to what actionyou should take arising from the followingresolutions, please consult yourstockbroker, banker, attorney, accountantor other professional adviser immediately.

Notice is hereby given that the AnnualGeneral Meeting of shareholders of Comairwill be held at the Premier ConferenceCentre, Retail Level, Domestic Terminal,Johannesburg International Airport onFriday, 29 October 2004 at 12h00 for thefollowing business:

1. To consider and adopt the AnnualFinancial Statements of the Companyfor the year ended 30 June 2004together with the reports of thedirectors and auditors containedtherein.

2. That the directors� remunerationpolicy as set out in the remunerationreport contained in the reports andaccounts for the year ended 30 June2004 be and is hereby approved.

3.1 To re-elect the following directors ofthe Company:

3.1.1 B.J. van der Linden3.1.2 Dr. P.J. Welgemoed

who retire by rotation at the AnnualGeneral Meeting, but, being eligible,offer themselves for re-election.

3.2 To re-elect the following directors ofthe Company:

3.2.1 K.I. Mampeule3.2.2 L. Cromwell Griffiths

who were appointed as directors ofthe Company on 1 November 2003and 6 February 2004 respectively andwho retire at the Annual GeneralMeeting, but, being eligible, offerthemselves for re-election.

A brief curriculum vitae in respect of eachdirector referred to in 3.1 and 3.2 appearson page 35 of this annual report.

Notice of Annual General

Meeting

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7.6 Clause 17.3 of the trust deed isamended by adding the followingwords at the end thereof, namely:

�� or within such further period(not exceeding 12 ( twelve)months) as the trustees may inconsultation with the directorsdetermine.�

Special Resolution Number 1Approval to repurchase shares

8. �RESOLVED THAT, as a generalapprova l contempla ted insections 85(2) and 85(3) of the Act,the acquisitions by the Company,and/or any subsidiary of theCompany, from time to time of theissued ordinary shares of theCompany, upon such terms andconditions and in such amountsas the directors of the Companymay from time to time determine,but subject to the Articles ofAssociation of the Company, theprovisions of the Act and the JSEListings Requirements from timeto time, when applicable, and -

8.1 the repurchase of securities beingeffected through the order bookoperated by the JSE tradingsystem and done without any priorunderstanding or arrangementbetween the Company and thecounter party;

8.2 this general authority shall only bevalid until the Company�s nextannual general meeting, providedthat it shall not extend beyond 15(fifteen) months from the date ofpassing of this special resolution;

8.3 in determining the price at whichthe Company�s ordinary sharesare acquired by the Company interms of this general authority, themaximum premium at whichsuch ordinary shares may beacquired will be 10% (ten per cent)of the weighted average of themarket price at which suchordinary shares are traded on theJSE, as determined over the 5(five) trading days immediatelypreceding the date of therepurchase of such ordinaryshares by the Company; and

8.4 acquisitions of ordinary shares inthe aggregate in any one financialyear may not exceed 20% (twentyper cent) of the Company�s issued

ordinary share capital from thedate of the grant of this generalauthority.�

The reason and effect for specialresolution 1 is to authorise theCompany by way of a general authorityto acquire its own issued shares and/orits holding company on such terms,conditions and such amountsdetermined from time to time by thedirectors of the Company by thelimitations set out above.

The directors, after considering theeffect of a repurchase of up to 20% ofthe Company�s issued ordinary shares,are of the opinion that if suchrepurchase is implemented:

! the Company and the Group will bein a position to repay its debt in theordinary course of business for thenext 12 months;

! the consolidated assets of theCompany, fairly valued inaccordance w i th Genera l l yAccepted Accounting Practice, willbe in excess of the consolidatedliabilities of the company for thenext 12 months;

! the ordinary capital and reserves ofthe Company and the Group will beadequate for the next twelvemonths;

! available working capital will beadequate to continue theoperations of the Company and theGroup for the next 12 months;

! the Company may not enter themarket to proceed with therepurchase until the Company�ssponsor, Nedbank Capital, adivision of Nedbank Limited, hasconfirmed the adequacy of theCompany�s working capital for thepurposes of undertaking arepurchase of shares in writing tothe JSE;

! the Company may only undertake arepurchase of securities if, aftersuch repurchase, it still complieswith paragraphs 3.37 to 3.41 of theJSE Listings Requirementsconcerning shareholder spread;

! the Company or its subsidiary maynot repurchase securities during aprohibited period as defined inparagraph 3.67 of the JSE ListingsRequirements;

! when the Company hascumulatively repurchased 3% of theinitial number of the relevant classof securities, and for each 3% inaggregate of the initial number of

that class acquired thereafter, anannouncement will be made; and

! the Company may only appoint oneagent to effect any repurchase(s) onits behalf.

Other disclosure in terms of theJSE Listings Requirements Section11.26

The JSE Listings Requirements requirethe following disclosure, some of whichis elsewhere in the annual report ofwhich this notice forms part:

Directors and management - page 16;Major shareholders of Comair - page 37;Director�s interests in securities - page 15; Share capital of the company - page 25;

Litigation statement

In terms of section 11.26 of the JSEListings Requirements, the directors,whose names are given on page 16 ofthe annual report of which this noticeforms part (�the annual report�), are notaware of any legal or arbitrationproceedings, including proceedingsthat are pending or threatened, thatmay have or have had in the recentpast, being at least the previous 12months, a material effect on thegroup�s financial position.

Directors� responsibilitystatement

The directors, whose names are givenon page 16 of the annual report,collectively and individually accept fullresponsibility for the accuracy of theinformation pertaining to thisresolution and certify that to the best oftheir knowledge and belief there are nofacts that have been omitted whichwould make any statement false ormisleading, and that all reasonableenquiries to ascertain such facts havebeen made and that this resolutioncontains all information required by lawand the JSE Listings Requirements.

Material change

Other than the facts and developmentsreported on in the annual report, therehave been no material changes in theaffairs or financial position of Comairand its subsidiaries since the auditorssigned off on the financials.

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not related parties, unless the JSEotherwise agrees;

6.3 the number of shares issued forcash shall not in the aggregate inany one financial year exceed 15%(fifteen per cent) of theCompany�s issued share capital ofordinary shares. The number ofordinary shares which may beissued shall be based on thenumber of ordinary shares inissue at the date of suchapplication less any ordinaryshares issued during the currentfinancial year, provided that anyordinary shares to be issuedpursuant to a rights issue(announced and irrevocable andunderwritten) or acquisition(concluded up to date ofapplication) may be included asthough they were shares in issueat the date of application;

6.4 this authority is valid until theCompany�s next annual generalmeeting, provided that it shall notextend beyond 15 (fifteen) monthsfrom the date that this authority isgiven;

6.5 a paid press announcementgiving full details, including theimpact on the net asset value andearnings per share, will bepublished at the time of any issuerepresenting, on a cumulativebasis within 1 (one) financial year,5% (five per cent) or more of thenumber of shares in issue prior tothe issue; and

6.6 in determining the price at whichan issue of shares may be made interms of this authority post thelisting of the Company, themaximum discount permitted willbe 10% (ten per cent) of theweighted average traded price onthe JSE of those shares over the30 (thirty) business days prior tothe date that the price of the issueis determined or agreed by thedirectors of the Company.

This Ordinary Resolution is required,under the JSE Listings Requirements,to be passed by achieving a 75%majority of the votes cast in favour ofsuch resolution by all members presentor represented by proxy and entitled tovote, at the annual general meeting.�

Amendments to the ComairShare Incentive Trust7. �RESOLVED THAT with effect from

the date of passing of thisresolution the provisions of thedeed constituting the ComairShare Incentive Trust adopted bythe Company on 18 June 1998shall be amended as follows:

7.1 Clause 1.2.20 is amended bydeleting the words ��which,irrespective of the actual dateupon which the offer is made, willbe on 1 March or 1 September ineach year.�

7.2 Clause 1.2.23 is amended bydeleting the words ��which,irrespective of the actual dateupon which the option is granted,will be on 1 March or 1 Septemberin each year.�

7.3 Clause 16.2.7(b) shall be amendedby deleting the words �...whethersuch option falls on 1 January orJuly.�

7.4 Clause 16 is amended by insertingthe following new clauses, namelyclauses 16.8 and 16.9 at the endthereof, as follows:

�16.8 Notwithstanding anything tothe contrary contained in thisclause 16, all and any optionsgranted and offers made toemployees at any time on or after29 October 2004 shall -16.8.1 in respect of an option,

be exercisable as follows,namely as to:

16.8.1.1 25% (twenty five per cent)thereof on or after the 3rd( th i rd ) ann iversar ycalculated as from theoption date;

16.8.1.2 25% (twenty five per cent)thereof on or after the 4th( four th) anniversar ycalculated as from theoption date;

16.8.1.3 5 0 % ( f i f t y p e r c e n t )thereof on or after the 5th( f i f t h ) a n n i v e r s a r ycalculated as from theoption date.

it being recorded that nobeneficiary shall beentitled to exercise anoption in respect of anynumber of shares whichcomprise less than 25%(twenty five per cent) ofthe percentage inquestion [as contem-plated in clause 16.8.1.1to 16.8.1.3 (both inclusive)]

16.8.2 in respect of an offer, ber e l e a s e d t o t h eb e n e f i c i a r y b y t h esecretary or the trusteesin the following tranches:

16.8.2.1 as to 25 % (twenty five percent) thereof on or afterthe 3rd (third) anniversaryof the offer date;

16.8.2.2 as to 25% (twenty five percent) thereof on or afterthe 4th (fourth) anniversaryof the offer date;

16.8.2.3 as to 50% (fifty per cent)thereof on or after the 5th(fifth) anniversary of theoffer date;

16.8.3 save as contained inclause 16.8, be governedin all respects by theremaining provisions ofc lause 16 muta t i smutandis and, in thecase of any conflict orinconsistency betweenthe remaining provisionsof this clause 16 and theprovisions of clause 16.8in relation to such offer oroption, the provisions ofthis clause 16.8 shallprevail.

16.9 Except to the extent thatthe context requiresotherwise, any referencein this trust deed toclause 16.2.7 and/orclause 16.2.8 shall beread as including acorresponding referenceto clause 16.8 in relationto options granted oroffers made on or after 29October 2004."

7.5 Clause 17.2 is amended by addingthe following words at the endthereof, namely:

�� or within such further period(not exceeding 12 (twelve)months) as the trustees may inconsultation with the directorsdetermine.�


Meeting (continued)

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Directors Standing forElection or Re-Election

1. Bertrandus Johannes van derLinden(Age : 56)

Bert joined Comair in 1968 at RandAirport. In 1973, he was promoted toTraffic Manager and was responsiblefor Sales, Marketing and Operationalduties. In 1979, he became theCommercial Manager of Comair andwas made the Chairman of the SouthAfrican Tourism and Safari Associationand Tourism Liaison council. In 1981,he was appointed to the Board ofComair where he was actively involvedin changing the Company fromoperating in a regulated environmentinto a deregulated environment. Hewas also responsible for Sales andMarketing and is currently ServiceDelivery Director, responsible for allpassenger operations includingCatering and all ground operationactivities. He was elected Chairman forthe Airlines Association of SouthernAfrica for the year 2003/4.

2. Dr Peter J Welgemoed(Age : 61)(B.Com, B.Com-Hons, M.Com,D.Com).

In 1971 Dr Welgemoed obtained aDoctorate in Transport Economics atthe Rand Afrikaans University. In 1974,he was appointed Professor andChairman of the Department ofTransportation Economics, and asDirector of the Research Centre forP h y s i c a l D i s t r i b u t i o n a n dTransportation Studies at RandAfrikaans University. Thereafter heserved on various boards of directors ofcompanies involved in transportationand banking. In September 1989 hewas appointed Deputy Minister ofMineral and Energy Affairs and PublicEnterprises. In 1991 he was appointedas a Member of the Cabinet, with theportfolio of Minister of Transport and in1992 as Minister of Transport and ofPost and Telecommunication. In 1998he was appointed as the ExecutiveChairman of the Board of Market Power(S.A.) in South America. He controlledthe daily operations of the Group inChile, Argentina and Uruguay from theHead Office in Santiago. At present isinvolved in private business throughDirectorships and Consultancy.

3. Khutso Ignatius Mampeule(Age : 39)(BA, MSc, MBA)

Khutso matriculated from Pax HighSchool (Polokwane) in 1982. He holdsthree degrees from U.S. tertiaryinstitutions, namely, a BA fromLawrence University, an MSc fromCarnegie-Mellon University, and anMBA from the University of Phoenix.

In September 1995, he joinedTransnet/Spoornet as an AssistantRegional Manager and was appointedas an Executive Manager in November1996. From May 1999 he served as theCEO of Transnet subsidiary, SA ExpressAirways. In 2001 he was appointed asChief Executive of Old MutualEmployee Benefits, a position he helduntil October 2003. He is currently theExecutive Chairman of Lefa GroupHoldings, a BEE Investment andConsulting Company. He serves on theboards of South African Civil AviationAuthority, Mission Aviation Fellowshipand Mine Waste Solutions. He is amember of World Wide Fund for Nature(WWF) SA and Young Presidents�Organisation.

4. Lloyd Cromwell Griffiths(Age : 59)(ATPL)

After flying training in Canada, Lloydoperated in the Canadian Arctic,becoming Chief Pilot of LambairChurchill. In 1973 he joined BritishAirways and 9 years later formed theteam which created the Highland(Scottish) Division of British Airwaysintroducing new working, cost effectivepractices to ground and air staff.Following the setting up of a similaroperation in Berlin in 1986 Lloyd movedon to London in 1991 to becomeCommercial Manager of BritishAirways Boeing 757/767 and finally,General Manager Flight Operationsbefore becoming an Executive Directorof British Airways in 2001. He alsoserves on the Board of MAF Europe.

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The directors of the Company have nospecific intention to effect theprovisions of Special Resolutionnumber 1 but will, however, continuallyreview this position having regard toprevailing circumstances.

Ordinary ResolutionAuthorisation for DH Borer to signnecessary documents to give effect toresolutions

9. �RESOLVED THAT Derek HenryBorer be and is hereby authorisedon behalf of the Company to signall documents as may benecessary in order to give effect tothe Special and OrdinaryResolutions.�

Other Business10. To transact such other business

as may be transacted at anAnnual General Meeting.

Voting and Proxies

A shareholder entitled to attend andvote at the annual general meeting isentitled to appoint a proxy or proxies toattend, speak and vote in his/her stead.A proxy need not be a shareholder ofthe Company. For the convenience ofregistered shareholders of theCompany, a form of proxy is enclosedherewith.

The attached form of proxy is only to becompleted by those shareholders whoare:

! holding Comair ordinary shares incertificated form; or

! are recorded on the electronic sub-register in �own name�dematerialised form.

Shareholders who have dematerialisedtheir shares through a CentralSecurities Depository Participant(�CSDP�) or broker and wish to attendthe annual general meeting, mustinstruct their CSDP or broker to providethem with a Letter of Representation, orthey must provide the CSDP or brokerwith their voting instructions in termsof the relevant custody agreement/mandate entered into between themand the CSDP or broker.

Forms of proxy must be lodged with orposted to the Company�s principleplace of business, 1 Marignane Drive,Corner Atlas Road, Bonaero Park,Kempton Park, 1619 (PO Box 8050,Bonaero Park, 1622) or the transfersecretaries to be received not later than48 hours (excluding Saturdays,Sundays and public holidays) beforethe time appointed for the holding ofthe Annual General Meeting, beingFriday, 29 October 2004, at 12h00. Anyshareholder who completes and lodgesa form of proxy will nevertheless beentitled to attend and vote in person atthe annual general meeting.

By order of the Board

Derek H. BorerCompany Secretary

8 September 2004Bonaero Park


Meeting (continued)

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Shareholder Analysis

1. DistributionType of Shareholder Number of Numbers of % of Total

Shareholders Shares owned

Individuals 2931 13 400 524 3,191Limited Companies 7 102 296 595 24,356(Pty) Ltd Companies 69 166 919 522 39,743Close Corporations 32 584 000 0,139Trusts 83 27 195 860 6,475Investment Companies 47 88 710 589 21,121Pension /Provident Funds 7 19 651 337 4,679Other 36 1 241 573 0,296

TOTAL 3212 420 000 000 100,000

2. Holdings of 5% or more

Diamar Investments (Pty) Ltd 81 137 408 19,318Telmore Investments (Pty) Ltd 81 137 408 19,318Britair Holdings Limited 77 000 000 18,333Alan Gray Group(through various funds and investment companies with no fund or investment company holding more than 4,933% of the total issued share capital of the Company) 66 094 809 15,257

3. Public Shareholders� Spread (including geographical area)

Type of Shareholder

Directors 172 239 363 41,010 172 239 363 41,010Non-PublicBritair Holdings Limited 77 000 000 18.333 77 000 000 18,333Comair Share Incentive Trust 20 579 562 4,900 20 579 562 4,900PublicResident 134 480 890 32,019 134 480 890 32,019Non-Resident 15 700 185 3,738 15 700 185 3,738

TOTAL 327 299 815 77,929 92 700 185 22,071 420 000 000 100,000

The spread of public shareholders in terms of paragraphs 4.25, 4.26 and 4.27 of the Listing Requirements of The JSE SecuritiesExchange South Africa at 30 June 2004 was 35,757% represented by 3 202 shareholders holding 150 181 075 Ordinary Sharesin the Company.

Number of % ofShares Shareholding

Number of Shareholders Number of Shareholders Total Shareholdersin South Africa other than in South Africa

Nominal % Nominal % Nominal %Number Number Number

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Market Price (cents per share)Closing (30 June) 76c 90cHigh 120c 100cLow 67c 56c

Closing Price / Earning Ratio 6.3 13.2

Number of Shares in IssueAt year end (millions) 420 420Weighted Average (millions) 420 420

Volume of Shares traded (millions) 67,9 21.5

Volume of Shares traded to number in issue 16,20% 5,12%

2004 2003

Share Price Performance

Notes Form of Proxy

Form of Proxy for Annual General Meeting

Comair LimitedRegistration number 1967/006783/06 I Incorporated in the Republic of South Africa I (�Comair� or �the Company�)ISIN Code: ZAE000029823 I Share Code: COM

The form of proxy is only to be completed by those shareholders who are:! holding Comair ordinary shares in certificated form; or! are recorded on the electronic sub-register in �own name� dematerialised form.Shareholders who have dematerialised their shares through a Central Securities Depository Participant (�CSDP�) or broker andwish to attend the annual general meeting, must instruct their CSDP or broker to provide them with a Letter of Representation,or they must provide the CSDP or broker with their voting instructions in terms of the relevant custody agreement/mandateentered into between them and the CSDP or broker.Forms of proxy must be lodged with or posted to the Company�s principle place of business, 1 Marignane Drive, Corner AtlasRoad, Bonaero Park, Kempton Park, 1619 (PO Box 8050, Bonaero Park, 1622) or the transfer secretaries to be received not laterthan 48 hours (excluding Saturdays, Sundays and public holidays) before the time appointed for the holding of the AnnualGeneral Meeting, being Friday, 29 October 2004, at 12h00. Any shareholder who completes and lodges a form of proxy willnevertheless be entitled to attend and vote in person at the annual general meeting.

I/We (Block Letters)

of (address)

Telephone: (Work) (area code) Telephone: (Home) (area code)

being a holder of [ ] certificated shares and �own-name� dematerialised shares of the Company and entitled to [ ] votes hereby appoint (see Note 1):(Please print)1. or failing him/her

2. or failing him/her 3. the Chairman of the Annual General Meeting

as my/our proxy to vote for me/us at the Annual General Meeting which will be held for the purpose of considering, and, ifdeemed fit, passing, with or without modifications, the resolutions to be proposed thereat and at each adjournment orpostponement thereof, and to vote for/or against the resolutions and/or abstain from voting in respect of the shares in the issuedshare capital of the Company registered in my/our name/s (see note 2 ) as follows:

Number of votesFor Against Abstain

1 To consider and adopt the Annual Financial Statements

2 To approve the director�s remuneration policy

3 To re-elect the following directors:

B.J. van der Linden

P.J. Welgemoed

K.I. Mampeule

L. Cromwell Giffiths

4 To re-appoint and determine the auditor�s remuneration

5 Ordinary Resolution to grant authority to the directors to issue the unissued shares of the Company

6 Ordinary Resolution authorising the general issue of shares for cash other than by way of a rights issue

7 Ordinary Resolution to amend the provisions of the Comair Share Incentive Trust

8 Special Resolution Number 1: General Repurchase by Comair of its issued shares

9 Ordinary Resolution authorising Derek Henry Borer to give effect to Special and Ordinary Resolutions

and generally to act as my/our proxy at the said Annual General Meeting.(Please indicate with an �X� whichever is applicable. If no instruction is given, the proxy holder will be entitled to vote orabstain from voting as the proxy holder deems fit.)

Signed at on this day of 2004

Signature/s

assisted by me (where applicable)

Each shareholder is entitled to appoint one or more proxies (who need not be a shareholder/s of the Company) to attend, speakand vote in place of that shareholder at the Annual General Meeting.

Please read the notes on the reverse side hereof

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Notes to the Form of Proxy Administration

6. The Chairman shall be entitled to decline toaccept the authority of a person signing theproxy form:

(a) under a power of attorney(b) on behalf of a company

unless that person�s power of attorney orauthority is deposited at the principal place ofbusiness of the Company as set out in Note 3not less than 48 hours before the holding of theAnnual General Meeting.

7. An instrument of proxy shall be valid for anyadjournment or postponement of the AnnualGeneral Meeting, unless the contrary is statedtherein, but shall not be used at the resumptionof an adjourned Annual General Meeting if itcould not have been used at the Annual GeneralMeeting from which it was adjourned for anyreason other than that it was not lodgedtimeously for the meeting from which theadjournment took place.

8. A vote cast or act done in accordance with theterms of a form of proxy shall be deemed to bevalid notwithstanding

(a) the death, insanity or any other legaldisability of the person appointing theproxy; or

(b) the revocation of the proxy; or(c) the transfer of a share in respect of which

the proxy was given,

unless notice as to any of the above-mentionedmatters shall have been received by theCompany at its principal place of business asset out in Note 3 or by the Chairman of theAnnual General Meeting if not held at theprincipal place of business of the Company,before the commencement or resumption (if adjourned) of the Annual General Meeting atwhich the vote was cast or the act was done orbefore the poll on which the vote was cast.

9. A minor must be assisted by his/her parent orguardian unless the relevant documentsestablishing her/her legal capacity are producedor have been registered by the Company�stransfer secretaries.

10. Where shares are held jointly, all joint holdersare required to sign the form of proxy.

11. Any alteration or correction made to this form ofproxy must be initialled by the signatory/ies.

1. A certificated shareholder or �own-name�dematerialised shareholder may insert thenames of two alternative proxies of theshareholder�s choice in the space provided, withor without deleting �the Chairman of the AnnualGeneral Meeting�. The person whose nameappears first on the form of proxy and whosename has not been deleted will be entitled andauthorised to act as proxy to the exclusion ofthose whose names follow.

2. A shareholder�s instructions to the proxy mustbe indicated by the insertion of an �X� in theappropriate box provided. Failure to complyherewith will be deemed to authorise the proxyto vote or to abstain from voting at the AnnualGeneral Meeting as he/she deems fit in respectof all the shareholder�s votes exercisablethereat. Where the proxy is the Chairman, suchfailure shall be deemed to authorise theChairman to vote in favour of the resolutions tobe considered at the Annual General Meeting inrespect of all the shareholder�s votesexercisable thereat.

3. The completion and lodging of this form will notpreclude the relevant shareholders fromattending the Annual General Meeting andspeaking and voting in person thereat to theexclusion of any proxy appointed in termshereof, should such shareholder wish to do so.Forms of proxy must be lodged with or posted tothe Company�s principle place of business, 1 Marignane Drive, corner Atlas Road, BonaeroPark, Kempton Park, 1619 (PO Box 8050,Bonaero Park, 1622) or the transfer secretariesto be received not later than 48 hours before theannual general meeting, being Friday, 29October 2004 at 12h00.

4. The Chairman of the Annual General Meetingmay accept or reject any form of proxy which iscompleted and/or received other than inaccordance with these notes and instructions,provided that the Chairman is satisfied as to themanner in which the shareholder wishes to vote.

5. Documentary evidence establishing theauthority of a person signing this form of proxyin a representative or other legal capacity suchas a power of attorney or other written authoritymust be attached to this form unless previouslyrecorded by the transfer secretaries of theCompany or waived by the Chairman of theAnnual General Meeting.

Registered office

2nd FloorFHS HOUSE

15 Girton RoadParktown

2193

Transfer secretaries

Computershare Investor Services 2004 (Pty) Ltd70 Marshall Street

Johannesburg2001

Annual Report 2004 - ShareData · PDF fileJoint Chairman and Managing Director’s Report...

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