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Annual Report 2001
w w w . b a . c o . z a
Comair Limited
Comair cover - 23772 9/28/01 12:21 PM Page 1
Visit us online at www.ba.co.za
Administration
Comair operating as British AirwaysPO Box 7015, Bonaero Park, 1622 South Africa
Sales/administration Telephone (011) 921-0111
Reservations (011) 921-0222
Groups (011) 921-0333
Passenger Services Johannesburg International
Airport (011) 975-9128
Telefax (011) 973-1659/973-3913. Telex 7-46738
Air CARGO (011) 390-2841
Cape TownTerminal 4 and 5
Cape Town International Airport
Private Bag X13, Cape Town
Cape Town International Airport, 7525
Telephone (021) 936-9000. Telefax (021) 934-4729
Port ElizabethPort Elizabeth Airport
PO Box 3222, Humewood, 6013
Telephone (041) 508-8099. Telefax (041) 508-8007
Reservations (041) 508-8000
HarareShop F1 Travel Plaza
Landela House, 29 Mazoe Street, Harare
PO Box 66293, Kopje, Harare
Telephone/Telefax (092634) 73-7200 (092634) 73-9878
DurbanDurban International Airport
PO Durban International Airport, Durban, 4029
Telephone (031) 450-7000. Telefax (031) 408-1808
WindhoekSanlam Centre, 10th Floor
154 Independence Avenue
PO Box 20800, Windhoek
Telephone (09264) 61-248528. Telefax (09264) 61-248529
Victoria Falls1 Flamelily Court Fox Road, Victoria Falls, Zimbabwe
Telephone (09263) 13 5825/2053. Telefax (09263) 13 5825
British Airways Executive ClubTelephone (011) 880-6719. Toll free 0800-11-3833
Telefax (011) 442-6989
G R A P H I C O R2 3 7 7 2
Financial Highlights 2
Executive Management 3
Joint Chairman and Managing Director’s Report 4
Five-year Review 8
Group Value Added Statement 9
Corporate Governance 10
Report of the Independent Auditors 12
Statement of Responsibility by the Board of Directors 13
Statement of Company Secretary 13
Report of the Directors 14
Income Statements 16
Balance Sheets 17
Statement of Changes in Equity 18
Cash Flow Statements 19
Accounting Policies 20
Notes to the Annual Financial Statements 21
Notice of Annual General Meeting 28
Share Price Performance 32
Analysis of Shareholding 32
Administration Inside back cover
Proxy Form Loose
Contents
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Adding new destinations for your convenience
We can fly you to key destinations around southern Africa, and with British
Airways you can cover the globe.
Lusaka
Johannesburg
Durban
Port ElizabethCape Town
Windhoek
Victoria Falls
Constant innovation
Customers on our British Airways services can now enjoy 40% more legroom, valet parking
at Johannesburg International and quality onboard food made from only the freshest ingredients.
Now anyone can fly
kulula.com is our latest innovation, a no-frills airline that heralds a new era of
affordable travel for all.
Best airline in South Africa - again
For the second consecutive year British Airways has been voted the best domestic and
international airline. Why? Because our passion for customer service drives every employee, every
day, every flight.
Harare
Comair Limited
Comair foldout 23772 9/28/01 12:13 PM Page 2
Adding new destinations for your convenience
We can fly you to key destinations around southern Africa, and with British
Airways you can cover the globe.
Lusaka
Johannesburg
Durban
Port ElizabethCape Town
Windhoek
Victoria Falls
Constant innovation
Customers on our British Airways services can now enjoy 40% more legroom, valet parking
at Johannesburg International and quality onboard food made from only the freshest ingredients.
Now anyone can fly
kulula.com is our latest innovation, a no-frills airline that heralds a new era of
affordable travel for all.
Best airline in South Africa - again
For the second consecutive year British Airways has been voted the best domestic and
international airline. Why? Because our passion for customer service drives every employee, every
day, every flight.
Harare
Comair Limited
Comair foldout 23772 9/28/01 12:13 PM Page 2
Adding new destinations for your convenience
We can fly you to key destinations around southern Africa, and with British
Airways you can cover the globe.
Lusaka
Johannesburg
Durban
Port ElizabethCape Town
Windhoek
Victoria Falls
Constant innovation
Customers on our British Airways services can now enjoy 40% more legroom, valet parking
at Johannesburg International and quality onboard food made from only the freshest ingredients.
Now anyone can fly
kulula.com is our latest innovation, a no-frills airline that heralds a new era of
affordable travel for all.
Best airline in South Africa - again
For the second consecutive year British Airways has been voted the best domestic and
international airline. Why? Because our passion for customer service drives every employee, every
day, every flight.
Harare
Comair Limited
Comair foldout 23772 9/28/01 12:13 PM Page 2
Adding new destinations for your convenience
We can fly you to key destinations around southern Africa, and with British
Airways you can cover the globe.
Lusaka
Johannesburg
Durban
Port ElizabethCape Town
Windhoek
Victoria Falls
Constant innovation
Customers on our British Airways services can now enjoy 40% more legroom, valet parking
at Johannesburg International and quality onboard food made from only the freshest ingredients.
Now anyone can fly
kulula.com is our latest innovation, a no-frills airline that heralds a new era of
affordable travel for all.
Best airline in South Africa - again
For the second consecutive year British Airways has been voted the best domestic and
international airline. Why? Because our passion for customer service drives every employee, every
day, every flight.
Harare
Comair Limited
Comair foldout 23772 9/28/01 12:13 PM Page 2
Adding new destinations for your convenience
We can fly you to key destinations around southern Africa, and with British
Airways you can cover the globe.
Lusaka
Johannesburg
Durban
Port ElizabethCape Town
Windhoek
Victoria Falls
Constant innovation
Customers on our British Airways services can now enjoy 40% more legroom, valet parking
at Johannesburg International and quality onboard food made from only the freshest ingredients.
Now anyone can fly
kulula.com is our latest innovation, a no-frills airline that heralds a new era of
affordable travel for all.
Best airline in South Africa - again
For the second consecutive year British Airways has been voted the best domestic and
international airline. Why? Because our passion for customer service drives every employee, every
day, every flight.
Harare
Comair Limited
Comair foldout 23772 9/28/01 12:13 PM Page 2
Your comfort and safety comes first
We are introducing a fleet of state-of-the-art 737-400 aircraft for optimum passenger comfort and safety.
Proud to carry our nation’s heroes
British Airways is proud to be the official carrier of the Springbok rugby team, both locally
and internationally. We are also the official carrier of all major provincial rugby teams.
Training the nation’s finest
Our cadet pilot training programme provides sponsored comprehensive flight
training to candidates from previously disadvantaged backgrounds. These
candidates will be trained in our new 737 flight simulator.
Special services for Executive Club Executive Club, our frequent flyer programme, offers members the
opportunity to earn free flights by flying on British Airways and partner airlines, as
well as by utilising the services of our credit card, car rental and hotels partners. Gold
and silver members can access our global network of Terraces lounges. Our special
services team will take extra care of our members at the airport.
Building enduring relationships
We understand that air travel is an intrinsic part of modern business. Together,
we will structure the package that maximises your corporate travel budget.
Comair foldout 23772 9/28/01 12:13 PM Page 1
Your comfort and safety comes first
We are introducing a fleet of state-of-the-art 737-400 aircraft for optimum passenger comfort and safety.
Proud to carry our nation’s heroes
British Airways is proud to be the official carrier of the Springbok rugby team, both locally
and internationally. We are also the official carrier of all major provincial rugby teams.
Training the nation’s finest
Our cadet pilot training programme provides sponsored comprehensive flight
training to candidates from previously disadvantaged backgrounds. These
candidates will be trained in our new 737 flight simulator.
Special services for Executive Club Executive Club, our frequent flyer programme, offers members the
opportunity to earn free flights by flying on British Airways and partner airlines, as
well as by utilising the services of our credit card, car rental and hotels partners. Gold
and silver members can access our global network of Terraces lounges. Our special
services team will take extra care of our members at the airport.
Building enduring relationships
We understand that air travel is an intrinsic part of modern business. Together,
we will structure the package that maximises your corporate travel budget.
Comair foldout 23772 9/28/01 12:13 PM Page 1
Your comfort and safety comes first
We are introducing a fleet of state-of-the-art 737-400 aircraft for optimum passenger comfort and safety.
Proud to carry our nation’s heroes
British Airways is proud to be the official carrier of the Springbok rugby team, both locally
and internationally. We are also the official carrier of all major provincial rugby teams.
Training the nation’s finest
Our cadet pilot training programme provides sponsored comprehensive flight
training to candidates from previously disadvantaged backgrounds. These
candidates will be trained in our new 737 flight simulator.
Special services for Executive Club Executive Club, our frequent flyer programme, offers members the
opportunity to earn free flights by flying on British Airways and partner airlines, as
well as by utilising the services of our credit card, car rental and hotels partners. Gold
and silver members can access our global network of Terraces lounges. Our special
services team will take extra care of our members at the airport.
Building enduring relationships
We understand that air travel is an intrinsic part of modern business. Together,
we will structure the package that maximises your corporate travel budget.
Comair foldout 23772 9/28/01 12:13 PM Page 1
Your comfort and safety comes first
We are introducing a fleet of state-of-the-art 737-400 aircraft for optimum passenger comfort and safety.
Proud to carry our nation’s heroes
British Airways is proud to be the official carrier of the Springbok rugby team, both locally
and internationally. We are also the official carrier of all major provincial rugby teams.
Training the nation’s finest
Our cadet pilot training programme provides sponsored comprehensive flight
training to candidates from previously disadvantaged backgrounds. These
candidates will be trained in our new 737 flight simulator.
Special services for Executive Club Executive Club, our frequent flyer programme, offers members the
opportunity to earn free flights by flying on British Airways and partner airlines, as
well as by utilising the services of our credit card, car rental and hotels partners. Gold
and silver members can access our global network of Terraces lounges. Our special
services team will take extra care of our members at the airport.
Building enduring relationships
We understand that air travel is an intrinsic part of modern business. Together,
we will structure the package that maximises your corporate travel budget.
Comair foldout 23772 9/28/01 12:13 PM Page 1
Your comfort and safety comes first
We are introducing a fleet of state-of-the-art 737-400 aircraft for optimum passenger comfort and safety.
Proud to carry our nation’s heroes
British Airways is proud to be the official carrier of the Springbok rugby team, both locally
and internationally. We are also the official carrier of all major provincial rugby teams.
Training the nation’s finest
Our cadet pilot training programme provides sponsored comprehensive flight
training to candidates from previously disadvantaged backgrounds. These
candidates will be trained in our new 737 flight simulator.
Special services for Executive Club Executive Club, our frequent flyer programme, offers members the
opportunity to earn free flights by flying on British Airways and partner airlines, as
well as by utilising the services of our credit card, car rental and hotels partners. Gold
and silver members can access our global network of Terraces lounges. Our special
services team will take extra care of our members at the airport.
Building enduring relationships
We understand that air travel is an intrinsic part of modern business. Together,
we will structure the package that maximises your corporate travel budget.
Comair foldout 23772 9/28/01 12:13 PM Page 1
1
Financial Highlights
2
389 777
97
513 498
98
608 997
99
977 036
00
1 160 000
01
Revenue(R’000)
24 418
97
67 286
98
81 932
99
119 913
00
92 962
01
Attributable earnings(R’000)
6,1
97
16,9
98
19,5
99
28,6
00
22,1
01
Earnings per share(cents)
1,1
97
3,3
98
5,0
99
7,0
00
8,0
01
Dividends per share(cents)
June 2001 June 2000 % change
Revenue (R’000) 1 160 000 977 036 19
Operating profit (R’000) 99 326 153 777 (35)
Attributable earnings (R’000) 92 962 119 913 (22)
Earnings per share (cents) 22,1 28,6 (22)
Headline earnings per share (cents) 22,1 28,6 (22)
Dividend per share (cents) 8,0 7,0 14
Executive Management Team
3
From left to right – Back row: Peter Marx, Bert van der Linden, Gidon Novick, Derek Borer, Erik Venter, Glenn Orsmond, Nic Vlok.
Middle row: Piet van Hoven (Managing Director), Eve Liebetrau, Martin Moritz (Deputy Chairman), Stuart Cochrane, Charlie Newell,
Dave Novick (Chairman).
Executive directorsDave Novick CA(SA) (Chairman), Martin Moritz BCom, LLB (Deputy Chairman), Piet van Hoven (Managing Director), Peter Marx
(Flight Operations Director), Glenn Orsmond BCom, CA(SA) (Financial Director), Bert van der Linden (Sales and Marketing
Director), Nic Vlok BSc (Elec) Eng, MBL (Technical and IT Director)
Non-executive directorsDavid Hyde MSc (Eng), CEng, FRAes, DIC, ACGI, Meyer Kahn BA Law MBA DCom(hc) SOE, Dawn Mokhobo BA Social Science,
Rodney Sacks HDip Law, HDip Tax, Dr Peter Welgemoed BCom (Hons), MCom, DCom, Dick Wyatt BSc
Earnings reviewComair performed credibly to achieve
R93 million attributable earnings in a
year of unprecedented challenges and
tough trading conditions. This translates
to 22,1 cents headline earnings per share
representing a 22% decrease on the
28,6 cents reported last year. The year
was characterised by cost pressures
caused by high fuel prices and the
significantly weaker Rand while revenue
suffered from general market
overcapacity, poor yields in the first half
and a stagnant domestic air traffic market
resulting in an average 60% load factor
for the year.
The 19% turnover growth achieved for
the year on higher yields and passenger
growth is encouraging. In particular, yield
growth achieved in the second half has
restored the historically low Comair
break-even load factors and has
contributed towards offsetting the impact
of the R90 million fuel price increases
incurred during the year. Excluding the
exceptional profit earned on the sale of
an aircraft, the operating profit increased
from R25,1 million in the first half to
R48,7 million in the second half.
For the year under review, the Company
changed its depreciation policy to
comply with generally accepted
accounting practice for depreciation. In
terms of the new policy, the Company
depreciates its aircraft assets on a
systematic basis to the estimated residual
value after each asset’s planned useful
life. This change had a R6,4 million
positive impact on the current year
earnings, R9,6 million for the previous
year and a prior year positive retained
income adjustment of R30,4 million.
This policy remains conservative with the
aircraft fleet at year end having a market
value significantly above the disclosed
net book value.
In view of the Company’s considerable
cash holdings, a final cash dividend of
8,0 cents per share has been declared
representing a 14% increase on the
7,0 cents reported last year.
The partial utilisation of cash resources
and debt finance to fund the
R113 million net capital expenditure
incurred during the year contributed
towards the lower net investment income
earned for the period.
Aircraft f leet
The aircraft fleet currently comprises six
Boeing 727-200 aircraft and eleven
Boeing 737-200 aircraft, of which ten
aircraft are owned, six held through
operating leases and one aircraft through
a finance lease.
The fleet evaluation study referred to in
last year’s annual report has been
completed. In terms of the Company
fleet plan, the six Boeing 727-200
aircraft will be phased out in the second
half of the June 2002 financial year to be
replaced with five stage three noise
compliant Boeing 737-400 aircraft and
one Boeing 737-200 aircraft.
The fleet change is not expected to
have a material impact on earnings in the
Joint Chairman and Managing Director’s Report
4
5
medium term with fixed aircraft cost
increases for aircraft rentals and
financing costs being offset by operating
cost savings. The fleet change has been
motivated by a variety of factors:
• In terms of expected noise abatement
regulations, Stage two aircraft will have
a non-addition rule from the year 2003
to be fully phased out by end 2010.
• The Boeing 737-400 aircraft to be
acquired are expected to appreciate in
value in Rand terms to strengthen
Comair’s balance sheet in the longer
term.
• The fuel efficient Boeing 737-400
aircraft will significantly reduce the
Company’s exposure to fuel price
volatility.
• The standardised Boeing 737 fleet
achieved will improve operational
efficiencies derived from better aircraft
scheduling, a common pilot pool and
local pilot training.
• The modern aircraft will ensure Comair
is able to offer a competitive quality
product.
Subsequent to year end, Comair
contracted to acquire the five Boeing
737-400 aircraft from British Airways
Plc. It is planned to finance three aircraft
on balance sheet at a cost of USD66
million and two aircraft off balance sheet
through Rand based operating leases.
Market environment
During the year, to maintain a
competitive timetable, the Company
increased capacity by 8% largely through
the introduction of a thirteenth daily
return flight on the Johannesburg Cape
Town route. The Johannesburg Ndola
route was also introduced through a wet
lease arrangement with Zambian Air
Services.
The current poor domestic load
factors limit the opportunities for
further capacity expansions under the
British Airways brand during the next
financial year.
For the June 2001 financial year
Comair’s passenger volumes grew in line
with the total domestic market growth to
maintain Comair’s market share. With
yields restored to profitable levels, the
major concerns relate to the current flat
domestic passenger demand.
The turmoil in Zimbabwe has had a
severe impact on tourism which impacted
negatively on our Victoria Falls
operations. Our operations in Zambia
have however performed satisfactorily.
Flight operations
During the year, Comair successfully
acquired and brought into service a
Boeing 737 flight simulator acquired
from British Airways Plc at a cost of
R18 million. The resultant ability to train
pilots at home base will achieve pilot
efficiencies, direct training cost savings
and provide a source of revenue by
leasing spare simulator capacity to third
parties.
Human resources
As part of Comair’s commitment to
employment equity and the development
of skills, a cadet pilot training
programme has been introduced for high
potential candidates from disadvantaged
backgrounds. The programme provides
sponsored flying training to candidates
who will graduate as commercial pilots.
In the spirit of promoting training and
development in the industry Comair also
regularly offers practical experience and
work exposure to Travel and Tourism
students from various universities and
training institutions around the country.
Customer service
In support of Comair’s vision of being
Southern Africa’s leading airline, a major
customer service initiative was launched
for all staff in the Company. The Galaxy
programme comprised a training and
communications intervention aimed at
heightening awareness and skill in all
areas of customer service, with particular
emphasis on airline punctuality.
For the second year in a row, Comair was
rated the best domestic airline by the
Association of Southern African Travel
Agents and received the Airports
Company award for the best domestic
airline at Johannesburg and Cape Town
airports.
British Airways was also selected as the
official domestic and international carrier
of the Springbok Rugby team.
The focus on service excellence and
product innovation for all elements of
the British Airways branded product
remains our competitive advantage to
achieve further market share growth.
These service elements include on time
departures and efficient friendly check-
in and on-board services. Product
innovations include superior leg room,
quality meals, excellent frequent flyer
benefits and quality airport lounges.
kulula.com
Subsequent to the financial year end,
Comair, in line with worldwide trends,
launched a “no frills” air service under
the brand kulula.com which commenced
operations on 1 August 2001 on the
Johannesburg Cape Town route. The
initial set-up costs were not material
with the air service being operated with
a leased Boeing 727 aircraft. It is
anticipated that the “no frills” model will
grow the overall domestic market by
appealing to a substantial sector of that
market which could not previously afford
to fly. This is encapsulated by the logo
“Now anyone can fly”. A successful
marketing campaign contributed towards
the promising initial results and it is
expected to introduce further capacity
into kulula.com during the June 2002
financial year.
A key objective of the kulula.com air
service is to achieve a set cost lower
than any potential competitor.
Satisfactory margins are achievable
through a mix of low cost, high volumes
and low yields. Low cost is achieved by
stripping out many product elements
offered by a full service airline with
passengers paying for on-board services
and, most importantly, establishing an
internet-based sales and distribution
6
Joint Chairman and Managing Director’s Report (continued)
7
system. Currently, over 50% of
kulula.com bookings are being made
directly through the internet.
Prospects
Operating margins are expected to
remain under pressure for the June 2002
financial year as domestic airlines strive
to maintain load factors in a declining
market. The benefits of lower crude oil
prices have been negated by the weaker
Rand to maintain continued pressure on
costs. kulula.com is also not expected to
make a material contribution to profits in
its first year of operations. A combination
of these factors makes it difficult to
forecast earnings for the June 2002
financial year.
In the long term, however, Comair’s low
cost structure relative to its competitors
combined with its excellent product
places the airline in a unique position to
grow load factors to benefit from any
economic upturn that may materialise.
kulula.com operating in the “no frills”
market is expected to contribute
significantly to profits in the medium to
longer term.
Appreciation
We wish to express our appreciation to
our loyal customers and trade for their
continued support.
Our thanks and appreciation are due to
members of the Board, management and
employees for their contributions
towards the results achieved during a
difficult trading year. In particular, we
wish to thank the retiring board members
Simon Walker, Carl Michel and Richard
Daw for their valuable contributions. We
welcome to our Board Dick Wyatt and
David Hyde of British Airways Plc and
look forward to the expertise and
experience they will bring to the Board.
We pay tribute to the late Justice
CS Margo who served on the Comair
Board of Directors for fourteen years.
His knowledge was vast, his energy and
enthusiasm for aviation was incredible
and will be greatly missed.
Group income statementRevenue 1 160 000 977 036 608 997 513 498 389 777
Operating profit before exceptional items 73 843 151 807 98 883 87 243 35 738
Profit on sale of aircraft 25 483 1 970 – – –
Operating profit 99 326 153 777 98 883 87 243 35 738
Net investment income 8 706 12 863 34 743 9 498 2 618
Net income before taxation 108 032 166 640 133 626 96 741 38 356
Taxation (15 070) (46 735) (40 059) (34 834) (13 937)
Net income after taxation 92 962 119 905 93 567 61 907 24 419
Sun Air investment written off – – (11 627) – –
Share of associate company income – – – 5 377 –
Outside shareholders’ income – 8 (8) 2 (1)
Earnings attributable to ordinary shareholders 92 962 119 913 81 932 67 286 24 418
Note: Previous year figures have been restated in accordance with the new aircraft depreciation policy.
Group balance sheetAssetsFixed assets 309 989 186 600 185 733 108 989 113 743
Loan to share incentive trust 14 000 15 120 15 120 15 120 –
Unlisted investments 80 493 67 331 56 823 17 877 835
Current assets 372 881 383 834 264 574 157 870 52 254
777 363 652 885 522 250 299 856 166 832
Equity and liabilitiesShare capital and reserves 368 621 309 259 218 747 160 380 90 974
Outside shareholders’ interest – – 507 39 265
Long-term liability 181 237 135 490 133 261 6 584 –
Deferred taxation 31 168 28 284 20 158 11 159 16 836
Current liabilities 196 337 179 852 149 577 121 694 58 757
777 363 652 885 522 250 299 856 166 832
Salient featuresOperating margin 6,4% 15,5% 16,2% 17,0% 9,2%
Profit margin 8,0% 12,3% 15,4% 12,1% 6,3%
Earnings per share (cents) 22,1 28,6 19,5 16,9 6,1
Headline earnings per share (cents) 22,1 28,6 22,3 16,9 6,1
Dividends per share (cents) 8,0 7,0 5,0 3,3 1,1
Weighted ordinary shares issued (’000) 420 000 420 000 420 000 399 000 399 000
Current ratio (times) 1,90 2,13 1,77 1,30 0,89
Gearing ratio 49% 44% 61% – –
Five-year Review f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 1
2001 2000 1999 1998 1997
R’000 R’000 R’000 R’000 R’000
8
Wealth createdGroup revenue 1 160 000 977 036
Cost of materials and services 916 190 712 884
Value added 243 810 264 152
Income from investments 37 114 37 413
Total value added 280 924 100% 301 565 100%
Wealth distributedEmployeesSalaries, wages and related benefits 129 782 46% 98 942 33%
Providers of capitalInterest on loans 28 408 10% 24 550 8%
Dividends to shareholders 33 600 12% 29 400 10%
GovernmentTaxation 15 070 5% 46 735 15%
Re-invested in the Group 74 064 27% 101 938 34%
Depreciation 14 702 11 425
Retained income 59 362 90 513
280 924 100% 301 565 100%
Group Value Added Statement f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 1
9
2001 2000
R’000 % R’000 %
Comair is committed to the principles of
good corporate governance through the
establishment of appropriate reporting
and control structures within the
Company. The Company strives to
substantially comply in all material
respects with the King Report’s Code of
Corporate Practices and Conduct.
Financial statementsThe directors are responsible for the
preparation of the annual financial
statements in a manner which fairly and
accurately presents the state of affairs
and the results of the Company and
Group. The directors are responsible for
adopting sound accounting practices, for
maintaining an adequate and effective
system of internal controls and
accounting records, and for the
safeguarding of assets.
Audit committeeThe Company has an audit committee,
chaired by a non-executive director,
which meets periodically and operates in
terms of formally approved guidelines.
The audit committee also reviews the
effectiveness of the Company’s system of
internal control as reported on by an
internal audit function. The independent
auditors’ appointment is recommended
by the committee and considered
annually by the shareholders.
Chairman: Peter Welgemoed
Members: Rodney Sacks
Dick Wyatt
RemunerationcommitteeThe remuneration committee, comprising
three non-executive directors, reviews
and approves the remuneration and
terms of employment of executive
directors and executive management.
Chairman: Rodney Sacks
Members: David Hyde
Meyer Kahn
Board of DirectorsThe Board of Directors meets regularly
and monitors the performance of
executive management through review of
financial reports and provides strategic
guidance for management. The roles of
Chairman and Managing Director have
been separated. The Group Secretary
ensures that statutory and other pro-
cedures are followed and can only be
removed from his duties by means of a
directors’ resolution. The Board is consti-
tuted to ensure a fair balance between
executive and non-executive directors.
Non-executivedirectorsNon-executive directors offer
independent judgement of executive
management and, apart from their fees
and, in some cases, shareholding, there
are no extraneous factors that materially
affect their judgement. Their fees are
paid under a laid-down tariff that reflects
their committee time and levels of
responsibility.
Employment equityComair is committed to achieving the
goals of employment equity legislation
and has incorporated the principle of
employment equity into its strategic
vision and business strategy.
Code of EthicsA Code of Ethics has been implemented
as part of the corporate governance of
the Group. The code commits the Group
to the highest standards of behaviour
when dealing with all stakeholders.
Corporate Governance
10
11
Comair Limited’s new Operations Centre and Flight Training Centre was completed in May 2001.
Report of the Independent Auditors
12
To the members of ComairGroupWe have audited the annual financial statements and
Group annual financial statements of Comair Limited set
out on pages 14 to 27 for the year ended 30 June 2001.
These financial statements are the responsibility of the
Company’s directors. Our responsibility is to report on
these financial statements based on our audit.
ScopeWe conducted our audit in accordance with statements
of South African Auditing Standards. Those standards
require that we plan and perform the audit to obtain
reasonable assurance that the financial statements are
free of material misstatement. An audit includes:
• Examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements;
• Assessing the accounting principles used and
significant estimates made by management; and
• Evaluating the overall financial statement
presentation.
We believe that our audit provides a reasonable basis for
our opinion.
Audit opinionIn our opinion, the financial statements fairly present, in
all material respects, the financial position of the
Company and the Group at 30 June 2001, and the
results of their operations and cash flows for the year
then ended in accordance with generally accepted
accounting practice and in the manner required by the
Companies Act.
FFiisshheerr HHooffffmmaann PPKKFF ((JJHHBB)) IINNCC
Chartered Accountants (SA)
Registration number 1994/001166/21
Registered Accountants and Auditors
Johannesburg
27 August 2001
Statement of Responsibility by the Board of Directors
13
The directors are responsible for the preparation,
integrity and fair presentation of the financial statements
and other financial information included in this report.
The financial statements, presented on pages 14 to 27,
have been prepared in accordance with generally
accepted accounting practice, and include amounts
based on judgements and estimates made by
management.
The going-concern basis has been adopted in preparing
the financial statements. The directors have no reason
to believe that the Company or the Group will not be
going concerns in the foreseeable future based on
forecasts and available cash resources. The financial
statements support the viability of the Company and
the Group.
The financial statements have been audited by the
independent accounting firm, Fisher Hoffman PKF (JHB)
INC, which was given unrestricted access to all financial
records and related data, including minutes of all
meetings of shareholders, the Board of Directors and
committees of the Board. The directors believe that all
representations made to the independent auditors
during the audit were valid and appropriate.
The financial statements, which appear on pages 14 to
27, were approved by the Board of Directors on
27 August 2001 and signed on its behalf.
Chairman Managing director
27 August 2001 27 August 2001
Statement of Company Secretary
I, Derek Henry Borer, being the Company Secretary of
Comair Limited, certify that all returns required of a
public company, have in respect of the year under
review been lodged with the Registrar of Companies and
that all such returns are true, correct and up to date.
D H Borer
Company Secretary
27 August 2001
Report of the Directors
14
The directors have pleasure in presenting their report
which forms part of the audited financial statements of
the Company and of the Group for the year ended
30 June 2001.
Nature of the businessComair Limited, trading as British Airways, provides
scheduled air services in Southern Africa between
Johannesburg and Cape Town, Durban, Port Elizabeth,
Harare, Victoria Falls, Lusaka and Windhoek, as well
as between Cape Town and Durban. Aircraft lease
services are provided on the Johannesburg Ndola route.
The airline currently operates a fleet of seventeen jet
aircraft.
Financial resultsFull details of the financial results for the year ended
30 June 2001 are set out on pages 14 to 27.
DividendsThe directors of Comair have resolved to declare a
dividend of 8,0 cents per share to all shareholders.
The last day to trade (“CUM” the dividend) in order to
participate in the dividend will be Friday, 14 September
2001. The share of Comair will commence trading “EX”
the dividend from the commencement of business on
Monday, 17 September 2001 and the Record Date will
be Friday, 21 September 2001. Dividend cheques will
be posted and electronic dividend payments made to
shareholders on 25 September 2001.
Share capitalThere have been no changes in the authorised share
capital, issued share capital, or the share premium
account during the year under review.
SubsidiariesDetails of the Company’s sole subsidiary, Commuter
Handling Services (Pty) Limited, are recorded in the
notes to the annual financial statements. The interest in
the subsidiary contributed a profit of R2 417 (2000:
R1 341 507 loss) towards the Group after tax earnings.
Events subsequent to year endSubsequent to year end, Comair launched a “no frills”
air service which successfully commenced operations on
the Johannesburg Cape Town route on 1 August 2001
utilising a leased Boeing 727-200 aircraft. Set-up costs
were not material. The air service is not expected to
have a material impact on earnings in the June 2002
financial year.
The Company has committed to acquiring five Stage 3
noise-compliant Boeing 737-400 aircraft from British
Airways Plc. The aircraft will be phased in during the
second half of the June 2002 financial year to replace
the Boeing 727 fleet. It is planned to acquire two aircraft
through Rand-based operating leases and to finance
three aircraft on balance sheet at a cost of US$66 million.
The fleet change is not expected to have a material
impact on earnings.
15
Company Secretary D H Borer
1 Marignane Drive
Bonaero Park
1619
Directorate shareholdingThe beneficial direct and indirect interests of directors
holding in excess of 1% of the issued shares of Comair
Limited as at financial year-end are as follows:
2001 2000
Number of ordinary
shares 156 562 893 165 723 313
Percentage
shareholding (%) 37,3 39,5
Directors Appointed ResignedD Novick – Chairman 30 June 1970
M D Moritz – Deputy Chairman 15 February 1979
P van Hoven – Managing Director 10 November 1973
R C Sacks 3 July 1981
B J van der Linden (Neth.) 3 July 1981
The Hon. Justice C S Margo 3 November 1987 Deceased
Dr P J Welgemoed 1 November 1994
N Vlok 11 September 1995
P R Marx (Br.) 6 December 1999
G W Orsmond 6 December 1999
S E J Walker (Br.) 16 February 2000 5 March 2001
C H Michel (Br.) 16 March 2000 5 March 2001
D N M Mokhobo 18 April 2000
J M Kahn 1 May 2000
R W Daw (Br.) 5 March 2001 5 August 2001
R M Wyatt (Br.) 5 March 2001
D Hyde (Br.) 27 August 2001
Revenue 1 160 000 977 036 1 158 460 975 315
Operating profit before
exceptional item 73 843 151 807 73 782 151 777
Profit on disposal of aircraft 25 483 1 970 25 483 1 933
Operating profit 1 99 326 153 777 99 265 153 710
Net investment income 2 8 706 12 863 8 762 12 928
Net income before taxation 108 032 166 640 108 027 166 638
Taxation 3 (15 070) (46 735) (15 070) (46 735)
Net income after taxation 92 962 119 905 92 957 119 903
Outside shareholders’ interest – 8 – –
Earnings attributable to ordinary
shareholders 92 962 119 913 92 957 119 903
Headline earnings per share (cents) 4 22,1 28,6
Earnings per share (cents) 4 22,1 28,6
Income Statements f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 1
Group Company
2001 2000 2001 2000
Notes R’000 R’000 R’000 R’000
16
Balance Sheets a t 3 0 J u n e 2 0 0 1
17
AssetsNon-current assets 404 482 269 051 403 699 267 675
Fixed assets 7 309 989 186 600 307 961 183 979
Loan to share incentive trust 8 14 000 15 120 14 000 15 120
Investments 9 80 493 67 331 81 738 68 576
Current assets 372 881 383 834 372 635 382 981
Inventory 10 8 391 7 393 8 391 7 329
Accounts receivable 87 907 60 587 87 905 60 720
Taxation 9 355 – 9 355 –
Cash and cash equivalents 267 228 315 854 266 984 314 932
777 363 652 885 776 334 650 656
Equity and l iabil it iesCapital and reserves 368 621 309 259 368 605 309 248
Share capital 11 4 200 4 200 4 200 4 200
Share premium 8 456 8 456 8 456 8 456
Retained income 355 965 296 603 355 949 296 592
Non-current liabilities 212 405 163 774 212 405 163 774
Long-term liability 12 181 237 135 490 181 237 135 490
Deferred taxation 31 168 28 284 31 168 28 284
Current liabilities 196 337 179 852 195 324 177 634
Accounts payable 152 671 129 370 151 657 127 154
Aircraft maintenance provision 10 066 15 892 10 067 15 892
Dividends 33 600 29 400 33 600 29 400
Taxation – 5 190 – 5 188
777 363 652 885 776 334 650 656
Group Company
2001 2000 2001 2000
Notes R’000 R’000 R’000 R’000
GroupBalance at 1 July 1999 4 200 8 456 175 657 188 313
Net profit for the year – – 119 913 119 913
Prior year adjustment – – 30 433 30 433
Dividend paid – – (29 400) (29 400)
Balance at 30 June 2000 4 200 8 456 296 603 309 259
Net profit for the year – – 92 962 92 962
Dividend paid – – (33 600) (33 600)
Balance at 30 June 2001 4 200 8 456 355 965 368 621
CompanyBalance at 1 July 1999 4 200 8 456 175 656 188 312
Net profit for the year – – 119 903 119 903
Prior year adjustment – – 30 433 30 433
Dividend paid – – (29 400) (29 400)
Balance at 30 June 2000 4 200 8 456 296 592 309 248
Net profit for the year – – 92 957 92 957
Dividend paid – – (33 600) (33 600)
Balance at 30 June 2001 4 200 8 456 355 949 368 605
Statement of Changes in Equity f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 1
Share Share Retained
capital premium income Total
R’000 R’000 R’000 R’000
18
Cash Flow Statements f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 1
19
Cash from operating activities 17 117 113 813 17 626 112 776
Cash receipts from customers 1 121 294 973 009 1 119 889 967 957
Cash paid to suppliers (1 051 574) (806 544) (1 049 719) (802 598)
Cash generated by operations 13 69 720 166 465 70 170 165 359
Net investment income received 14 2 160 2 355 2 217 2 421
Taxation paid 15 (25 363) (34 007) (25 361) (34 004)
Cash available from operating activities 46 517 134 813 47 026 133 776
Dividends paid 16 (29 400) (21 000) (29 400) (21 000)
Cash utilised in investing activities (112 610) (10 321) (112 441) (9 948)
Additions to fixed assets (152 146) (49 384) (151 977) (48 679)
Proceeds on disposal of assets 17 39 536 39 063 39 536 39 000
Investment in unlisted companies – – – (269)
Cash generated by financing activities 46 867 2 230 46 867 2 230
Decrease in loan to share incentive trust 1 120 – 1 120 –
Increase in long-term borrowings 45 747 2 230 45 747 2 230
Net (decrease)/increase in cash
and cash equivalents (48 626) 105 722 (47 948) 105 058
Cash and cash equivalents at the
beginning of the year 315 854 210 132 314 932 209 874
Cash and cash equivalents at the
end of the year 267 228 315 854 266 984 314 932
Group Company
2001 2000 2001 2000
Notes R’000 R’000 R’000 R’000
Group Company
2001 2000 2001 2000
Notes R’000 R’000 R’000 R’000
Accounting Policies
20
The financial statements are prepared on the historical
cost basis and incorporate the following principal
accounting policies in compliance with generally
accepted accounting practice in South Africa.
Revenue
Revenue comprises all airline-related revenue earned
and is recognised when the transportation service is
provided.
Foreign currencies
Foreign currency transactions are recorded at the
exchange rate ruling on the transaction dates. Assets and
liabilities designated in foreign currencies are translated
at rates of exchange ruling at the balance sheet date, or
the forward rates where applicable. Exchange differences
arising are taken to income.
Deferred taxation
Deferred taxation is provided using the balance sheet
liability method. Full provision is made for all temporary
differences between the taxation base of an asset or
liability and its balance sheet carrying amount. Deferred
taxation assets are raised in respect of assessed losses
where it is probable that future taxable profits will be
available in the foreseeable future.
Fixed assets
Freehold land and buildings are stated at cost and are
not depreciated.
Aircraft and related equipment, vehicles, furniture,
computers and other equipment are depreciated on a
systematic basis, which is estimated to amortise the
assets to their anticipated residual values over their
planned useful lives. Expenditure relating to aircraft and
related equipment is capitalised to the extent that it
improves the condition of the asset beyond its original
assessed standard of performance.
Inventory
Inventory is stated at the lower of cost and estimated net
realisable value. Cost is determined on the first-in first-
out basis.
Aircraft maintenance
Aircraft maintenance is charged to the income statement
based on a contracted comprehensive maintenance rate
per hour flown as charged by the maintenance provider.
Known costs for maintenance contract exclusions are
provided for in an aircraft maintenance provision based
on time expired to incurring the cost.
Retirement funds
Current contributions to the Group’s defined
contribution retirement funds are based on current
service and current salary and are recognised in the
results for the year.
Medical funds
Medical aid contributions are recognised as an expense
in the period during which the employees render
services to the Group. Post-retirement medical aid
contributions are charged against income in the year
they become payable.
Notes to the Annual Financial Statements f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 1
21
1. Operating profitOperating profit is stated after incorporating
the following items:
Audit fees 202 186 180 165
Depreciation – aircraft assets 11 289 8 943 11 289 8 747
Depreciation – other fixed assets 3 413 2 482 2 649 1 833
Directors’ emoluments 6 064 4 280 6 064 4 280
– for services as directors 181 183 181 183
– for managerial and other services 4 787 3 715 4 787 3 715
– retirement and medical benefits 1 096 382 1 096 382
Rentals under operating leases 32 218 28 112 32 218 27 513
– property rentals 2 170 786 2 170 311
– aircraft rentals 29 853 27 066 29 853 27 066
– equipment and vehicle rentals 195 260 195 136
Profit on disposal of fixed assets 25 483 1 970 25 483 1 933
2. Net investment incomeInterest expense (28 408) (24 550) (28 261) (24 340)
Interest income 7 158 17 041 7 067 16 897
Preference dividend income 29 956 20 372 29 956 20 371
8 706 12 863 8 762 12 928
Group Company
2001 2000 2001 2000
R’000 R’000 R’000 R’000
22
Notes to the Annual Financial Statements ( c o n t i n u e d )
3. TaxationSouth African normal tax
Current 8 065 35 946 8 065 35 946
– prior year underprovision – 260 – 260
8 065 36 206 8 065 36 206
Deferred 4 252 7 863 4 252 7 863
– as previously stated – 3 752 – 3 752
– previous year adjustment – 4 111 – 4 111
Secondary tax on companies 2 753 2 666 2 753 2 666
15 070 46 735 15 070 46 735
Reconciliation of rate of taxation % % % %
South African normal tax rate 30,0 30,0 30,0 30,0
Adjusted for: (18,6) (3,6) (18,6) (3,6)
Disallowable expenditure 0,1 0,1 0,1 0,1
Permanent differences (18,7) (3,7) (18,7) (3,7)
Secondary tax on companies 2,5 1,6 2,5 1,6
Effective rate 13,9 28,0 13,9 28,0
4. Headline earningsEarnings attributable to ordinary shareholders 92 962 119 913 92 957 119 903
Weighted ordinary shares in issue 420 000 420 000
Earnings per share (cents) 22,1 28,6
Headline earnings per share (cents) 22,1 28,6
5. Dividend paidOrdinary:
– Final dividend of 8,0 cents per share (2000 : 7,0 cents) 33 600 29 400 33 600 29 400
Group Company
2001 2000 2001 2000
R’000 R’000 R’000 R’000
23
6. Retained incomeBalance at the beginning of the year as previously reported 296 603 175 657 296 592 175 656
Prior year adjustment (note 18) – 30 433 – 30 433
Balance at the beginning of the year as restated 296 603 206 090 296 592 206 089
7. Fixed assetsProperty and buildings
Cost 6 736 6 506 6 574 6 428
Accumulated depreciation (761) (714) (661) (636)
Book value 5 975 5 792 5 913 5 792
Aircraft and related equipment
Cost 329 510 204 093 327 642 202 277
Accumulated depreciation (38 431) (31 199) (37 497) (30 483)
Book value 291 079 172 894 290 145 171 794
Vehicles and equipment
Cost 27 466 19 250 22 390 14 434
Accumulated depreciation (14 531) (11 336) (10 487) (8 041)
Book value 12 935 7 914 11 903 6 393
Total fixed assets 309 989 186 600 307 961 183 979
Fixed assets – reconciliation of carrying value
Property and buildings
Carrying value at the beginning of the year 5 792 6 206 5 792 6 206
Additions 230 20 146 20
Disposals – (415) – (415)
Depreciation (47) (19) (25) (19)
Carrying value at the end of the year 5 975 5 792 5 913 5 792
Group Company
2001 2000 2001 2000
R’000 R’000 R’000 R’000
24
Notes to the Annual Financial Statements ( c o n t i n u e d )
7. Fixed assets (continued)
Aircraft and related equipmentCarrying value at the beginning of the year 172 894 172 906 171 794 171 900
Additions 143 484 45 940 143 431 45 650
Disposals (13 791) (37 009) (13 791) (37 009)
Depreciation (11 508) (8 943) (11 289) (8 747)
Carrying value at the end of the year 291 079 172 894 290 145 171 794
Vehicles and equipmentCarrying value at the beginning of the year 7 914 6 621 6 393 4 841
Additions 8 431 3 365 8 400 2 947
Disposals (263) (97) (263) –
Depreciation (3 147) (1 975) (2 627) (1 395)
Carrying value at the end of the year 12 935 7 914 11 903 6 393
Total fixed assets 309 989 186 600 307 961 183 979
8. Loan to Comair Share Incentive Trust
This loan relates to the Comair Share Incentive Trust acquisition
of 21 million ordinary shares at 72 cents per share on 30 June 1998.
The term of the loan is unspecified and bears no interest. 14 000 15 120 14 000 15 120
9. Investments (unlisted)Subsidiary – Commuter Handling Services (Pty) Limited
69 shares at cost (67% shareholding) 1 1
Loan 2 586 2 586
Provision against investment (1 342) (1 342)
The loan is interest free and there are no fixed repayment terms. 1 245 1 245
Amber (Pty) Limited preference shares
5 549 shares at R10 000 per share at cost 55 490 55 490 55 490 55 490
Add dividend accrued 25 003 11 841 25 003 11 841
80 493 67 331 80 493 67 331
Total valuation of unlisted investments 80 493 67 331 81 738 68 576
Group Company
2001 2000 2001 2000
R’000 R’000 R’000 R’000
25
10. InventoryAircraft spares 5 523 5 201 5 523 5 201
Catering equipment and consumables 2 868 2 192 2 868 2 128
8 391 7 393 8 391 7 329
11. Share capitalAuthorised
1 000 000 000 ordinary shares of 1 cent each 10 000 10 000 10 000 10 000
1 000 000 000 “N” ordinary shares of 0,01 cent each 100 100 100 100
1 000 000 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
4 200 4 200 4 200 4 200
12. Long-term liabil it iesAfrican Merchant Bank loan (AMB)
Aircraft financing and working capital loan from AMB of which
the capital is repayable in full on 31 May 2004. The interest is
payable every six months at 19% per annum. Two aircraft
mortgages serve as collateral covering security as per note 7. 135 490 135 490 135 490 135 490
Laroc Aviation Limited
Aircraft finance lease agreement which is payable in equal
quarterly payments of R4 665 959. The last payment is due
on 31 August 2004. Interest is calculated at 13% per annum. 45 747 – 45 747 –
181 237 135 490 181 237 135 490
Group Company
2001 2000 2001 2000
R’000 R’000 R’000 R’000
13. Cash generated by operationsOperating profit 99 326 153 777 99 265 153 710
Depreciation and other non-cash items 14 702 11 425 13 938 10 580
Outside shareholders’ loan movement – (499) – –
Decrease in aircraft maintenance provision (5 826) (256) (5 825) (256)
Provision against subsidiary investment – – – 1 342
Profit on disposal of fixed assets (25 483) (1 970) (25 483) (1 933)
Cash from operations before working capital changes 82 719 162 477 81 895 163 443
Decrease/(increase) in working capital (12 999) 3 988 (11 725) 1 916
– Inventory (998) (3 741) (1 061) (3 677)
– Accounts receivable (28 702) (9 798) (27 187) (13 164)
– Accounts payable 16 701 17 527 16 523 18 757
69 720 166 465 70 170 165 359
14. Net investment income receivedInterest paid (21 792) (24 550) (21 645) (24 340)
Interest received 7 157 17 041 7 067 16 897
Preference dividend received 16 795 9 864 16 795 9 864
2 160 2 355 2 217 2 421
15. Taxation paidUnpaid at the beginning of year (5 190) (586) (5 188) (581)
Current year charge (10 818) (38 611) (10 818) (38 611)
Unpaid/(prepaid) at end of year (9 355) 5 190 (9 355) 5 188
(25 363) (34 007) (25 361) (34 004)
16. Dividends paidUnpaid at the beginning of year (29 400) (21 000) (29 400) (21 000)
Charged in income statement (33 600) (29 400) (33 600) (29 400)
Unpaid at end of year 33 600 29 400 33 600 29 400
(29 400) (21 000) (29 400) (21 000)
Notes to the Annual Financial Statements ( c o n t i n u e d )
Group Company
2001 2000 2001 2000
R’000 R’000 R’000 R’000
26
27
17. Proceeds on disposal of assetsNet book value of assets disposed 14 053 37 093 14 053 37 067
Profit realised on disposal 25 483 1 970 25 483 1 933
Proceeds 39 536 39 063 39 536 39 000
18. Prior year adjustmentThe depreciation policy was revised during the year in order to comply with AC 123. Fixed assets are depreciated at rates
deemed suitable to reduce the depreciable amount of the assets over their planned useful lives to their residual values.
The change in accounting policy had a positive effect on the earnings for the current year of R9,1 million (R6,4 million
after tax) and for the previous financial year the positive earnings impact was R13,7 million (R9,6 million after tax). The
effect on prior year adjusted retained earnings was an increase of R43,5 million (R30,4 million after tax).
19. 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 substantially, all of which is covered by defined contribution schemes. Contributions
paid by Group companies are charged against income as incurred.
An actuarial valuation was performed on the Comair Pension Fund in March 2001 for the year ended June 2000. 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 to income in the year they become payable.
20. Capital commitmentsSubsequent to the financial year-end Comair has contracted to acquire five Boeing 737-400 aircraft from British Airways
Plc. It is planned to finance three aircraft on balance sheet at a cost of US$66 million. Two aircraft will be acquired
through Rand-based operating leases.
21. Lease commitmentsThe Group lease commitments for next year are R16,7 million (R30 million).
22. Cash encumberedThe Company has pledged cash investments totalling R11 million in respect of aircraft and property rental obligations.
23. Borrowing powersThere are no restrictions on the Group’s borrowing power.
Group Company
2001 2000 2001 2000
R’000 R’000 R’000 R’000
Notice of Annual General Meeting
28
Notice is hereby given that the Annual General Meeting
of Members of Comair Limited will be held at the
Comair Board Room, Comair Head Office, 1 Marignane
Drive, Corner Atlas Road, Bonaero Park, Kempton Park,
1619, on Friday, 26 October 2001, at 12:00 for the
following purposes:
1. To consider the Annual Financial Statements for
the year ended 30 June 2001.
Ordinary resolutions2.1 To appoint directors in place of Messrs D Novick,
B J van der Linden and Dr P J Welgemoed, who
retire by rotation at the Annual General Meeting
but, being eligible, offer themselves for
re-election.
2.2 Mr R M Wyatt was appointed as Director of the
Company on 5 March 2001, and Mr D Hyde was
appointed as a Director of the Company on
6 August 2001, and in terms of the Articles of
Association of the Company retire at the meeting,
but being eligible, offer themselves for re-election.
3. To authorise the directors to determine the
remuneration of the auditors and to appoint them
for the ensuing year.
4. To place the unissued shares of any class in the
capital of the Company under the control of the
directors, who shall be authorised to allot such
shares at such prices, on such terms and condi-
tions and at such times as they deem fit, subject to
the provisions of the Companies Act, No. 61 of
1973, as amended, and the rules and requirements
of the Johannesburg Securities Exchange (JSE);
5. To grant the directors the specific authority, in
terms of the requirements of the JSE, to issue the
unissued shares of any class in the capital of the
Company for cash as and when suitable
circumstances arise, subject to the following
limitations:
(a) that this authority shall not extend beyond the
date of the next Annual General Meeting or
beyond 15 (fifteen) months from the date of
this Annual General Meeting, whichever is the
earlier;
(b) that a paid press announcement giving full
details, including the impact on net asset value
and earnings per share, will be published at the
time of any issue representing, on a
cumulative basis within one year, 5% or more
of the number of shares of that class in issue
prior to the issues;
(c) that issues for cash in aggregate in any one year
will not exceed 10% of the number of shares of
any class in the Company’s issued share capital,
provided further that such issues shall not in
aggregate in any three-year period exceed 15%
of the Company’s issued share capital; and
(d) that in determining the price at which an issue
of shares will be made in terms of this
authority, the maximum discount permitted
will be 10% of the average closing price of the
shares in question, as determined over
30 (thirty) days prior to either the date of the
paid press announcement or, where no
announcement is required and none has been
made, the date of issue of the shares.
As more than 35% of the Company’s issued shares
are in the hands of the public as defined by the
JSE, the approval of a 75% majority of votes cast
by shareholders present or represented by proxy
at this meeting is required for this resolution to
become effective.
6. That the Trust Deed constituting the Comair
Share Incentive Trust (“the Trust”) signed by the
first trustees thereof on 18 June 1998 at
Johannesburg, as amended by a resolution of the
Company passed in general meeting on
29
21 October 1998 at Bonaero Park and by a
resolution of the Board of Trustees of the Trust
passed at a meeting of the Board of Trustees held
at Bonaero Park on the 28th day of September
1998 (“the Trust Deed”) be amended in the
manner contemplated in paragraph 2 hereof,
subject in all respects to the suspensive conditions
contemplated in paragraph 1 hereof.
1. The coming into effect of the amendments to the
trust deed contemplated in paragraph 2 hereof
(“the amendments”) are subject in all respects to
the fulfilment of the following suspensive
conditions, namely that –
1.1 the JSE Securities Exchange South Africa
approves, insofar as may be necessary, the
amendments; and
1.2 the Board of Trustees of the Comair Share
Incentive Trust approve the amendments.
2. Subject to the resolutions in this paragraph
2 becoming unconditional in accordance with
paragraph 1 hereof, the Trust Deed shall be
amended with effect from 26 October 2001,
as follows:
2.1 Clause 16.2.7 of the Trust Deed shall be
amended to read:
16.2.7 may, in the case of an option granted
to a beneficiary who has been in the
employ of the Company for not less
than 1 (one) year as at the option
date in question, be exercised
as follows:
16.2.7.1 33,1/3% (thirty three and
one third per cent) thereof
on or after the 1st (first)
anniversary calculated as
from the option date;
16.2.7.2 33,1/3% (thirty three and
one third per cent) thereof
on or after the 2nd (second)
anniversary calculated as
from the option date;
16.2.7.3 33,1/3% (thirty three and
one third per cent) thereof
on or after the 3rd (third)
anniversary calculated as
from the option date,
it being recorded that –
(a) no beneficiary shall be entitled to exercise an
option in respect of any number of shares
which comprise less than 33,1/3% (thirty
three and one third per cent) of the percentage
in question (as contemplated in clauses
16.2.7.1 – 16.2.7.3 [both inclusive]);
(b) if a beneficiary fails to exercise an option in
respect of any tranche of shares as at any date
stipulated in this clause 16.2, he/she will be
entitled to do so on any succeeding option
date, whether such option falls on 1 January or
1 July, on a cumulative basis;
(c) if the relevant provisions of clause 17 are
applicable, then notwithstanding the
provisions of this clause 16.2, the secretary or
the trustees shall, subject to the provisions of
clause 18, forthwith, against payment of the
stamp duty, if any, payable thereon, release
such shares to the beneficiary concerned or
his/her executor or the legal representative of
the beneficiary, as the case may be;”.
2.2 Clause 16.2.8 of the trust deed shall be
amended to read:
16.2.8 may, in the case of an offer granted to
a beneficiary who has been in the
Notice of Annual General Meeting
30
employ of the Company for not less
than 1 (one) year as at the offer date in
question, be accepted in full within
90 (ninety) days of such offer date, in
respect of the entire tranche of scheme
shares, against payment of the share
debt in respect thereof in full, together
with the stamp duty, if any, payable
thereon, provided that the secretary or
the trustees shall only release such
shares together with any capitalisation
shares and dividends linked thereto in
the following tranches:
(a) as to 33,1/3% (thirty three and
one third per cent) thereof on or
after the 1st (first) anniversary of
the offer date;
(b) as to 33,1/3% (thirty three and
one third per cent) thereof on or
after the 2nd (second)
anniversary of the offer date;
(c) as to 33,1/3% (thirty three and
one third per cent) thereof on or
after the 3rd (third) anniversary
of the offer date;
provided that if the relevant provisions
of clause 17 are applicable, then,
notwithstanding the provisions of this
clause 16.2.8, the secretary or trustees
shall, subject to the provisions of
clause 18, forthwith release such
shares from retention in terms of this
clause 16.2.8 to the beneficiary
concerned or his/her executor, as the
case may be”.
2.3 An additional clause 16.7 shall be inserted
into the Trust Deed, and shall read as follows:
16.7
16.7.1 All and any options granted and offers
made to employees at any time prior
to 26 October 2001 and validly
existing and of full force and effect as
at 26 October 2001 shall, (“the
existing options and offers” or “the
existing options” and “the existing
offers”), notwithstanding the date on
which such offers or options were so
granted or made, be governed in all
respects by the provisions of clause
16.2.7 or 16.2.8 hereof, as the case
may be.
16.7.2 Accordingly, notwithstanding the dates
on which –
16.7.2.1 the existing options were, at
the time of their issue,
capable of being exercised; or
16.7.2.2 the shares subject to the
existing offers were, at the
time of their issue, capable of
being released, as the case
may be, the employees to
whom the existing options
have been granted or existing
offers have been made shall
be entitled to exercise such
options or procure the release
of the shares subject to such
offers within the time period
contemplated in clause
16.2.7 or 16.2.8, as the case
may be.
16.7.3 Any employee to whom an existing
option has been granted or an existing
offer has been made shall be entitled,
on any option date or offer date, as the
31
case may be, which occurs on or after
26 October 2001, to exercise such
portion of the existing options or
procure the release of such portion of
the shares comprising existing offers as
is contemplated in terms of the
provisions of clause 16.2.7 or 16.2.8
hereof, as the case may be, having
regard to the date on which the
existing option was granted or the
existing offer made. Thereafter, in the
case of existing options, such
employee shall be entitled to exercise
such options on any succeeding option
date, whether such option date falls on
1 January or 1 July, on a cumulative
basis, in accordance with the
provisions of clause 16.2.7(b)”.
7. Derek Henry Borer be and is hereby authorised
on behalf of the Company to sign all documents
and all and any acts whatsoever as may be
necessary in order to give effect to the special and
ordinary resolutions.
Special resolutionsTo consider and, if deemed fit, pass the following special
resolution with or without modification in the manner
required by the Companies Act, No. 61 of 1973 (as
amended):
8. Special resolution number 1Resolved that the Company hereby approves, as a
general approval as contemplated in Section 85(2)
and Section 85(3) of the Companies Act, 61 of
1973 (as amended) (“the Companies Act”), the
acquisition by the Company from time to time of
issued shares of the Company, upon such terms
and conditions and in such amounts as the
directors of the Company may from time to time
decide, but subject always to the provisions of the
Companies Act and the Listings Requirements
from time to time of the JSE, which approval shall
endure until the forthcoming annual general
meeting of the Company (whereupon this
approval shall lapse unless it is renewed at the
aforementioned annual general meeting, provided
that it shall not extend beyond 15 (fifteen)
months after the date of registration of this
Special Resolution No. 1).
The reason for and effect of the passing of this
Special Resolution is so as to enable the Company
to acquire its own issued shares from time to time
upon the terms and conditions and in the amounts
as the directors may from time to time decide,
subject to certain statutory provisions.
Other business9. To transact such other business as may be
transacted at an annual general meeting.
A member entitled to attend, to speak and vote is
entitled to appoint a proxy or proxies to attend,
speak and on a point to vote in his/her stead and
the person so appointed need not be a member. A
form of proxy is enclosed for this purpose and
should be forwarded to reach the principal place
of business of the Company (1 Marignane Drive,
Corner Atlas Road, Bonaero Park, Kempton Park,
1619 [PO Box 8050, Bonaero Park, 1622]) not
less than 48 hours before the time fixed for the
holding of the meeting.
By order of the Board
Derek Borer
Company Secretary
27 August 2001
Market price (cents per share)
Closing (30 June) 165 260
High 275 310
Low 117 180
Closing price/earnings ratio 7,5 9,1
Number of shares in issue
At year-end (millions) 420 420
Weighted average (millions) 420 420
Volume of shares traded (millions) 70,9 68,6
Volume of shares traded to number in issue (%) 16,9 16,3
Value of shares traded (millions) 130,7 139,4
Share Price Performance
2001 2000
R’000 R’000
Number of Number
shareholders % shares
32
Analysis of shareholding
Portfolio size1 – 1 000 1 692 70,6 489 993
1 001 – 5 000 467 19,5 1 370 053
5 001 – 10 000 116 4,8 902 581
10 001 – 50 000 78 3,3 1 310 035
50 001 – 100 000 9 0,4 649 990
100 001 and over 33 1,4 415 277 348
2 395 100,0 420 000 000
ShareholdersIndividuals 2 263 94,5 4 628 590
Companies 25 1,0 79 054 180
Staff share incentive trust 1 0,0 20 595 416
Institutions, nominees and trusts 106 4,4 315 721 814
2 395 100 420 000 000
Proxy Form
PROXY FORM FOR ANNUAL GENERAL MEETINGCOMAIR LIMITED(Reg. No. 1967/006783/06)
Incorporated in the Republic of South Africa(“Comair” or the Company)
For use at the Annual General Meeting of shareholders to be held at Bonaero Park on 26 October 2001 at 12:00 (“theAnnual General Meeting”).I/We being a shareholder of the Company hereby appoint (see note 1)
(Please print)
1. or failing him/her
2. or failing him/her
3. The Chairman of the Annual General Meetingas my/our proxy to vote for me/us at the annual general meeting which will be held in Bonaero Park on 26 October 2001at 12:00, at the Comair Head Office, 1 Marignane Drive, Corner Atlas Road, Bonaero Park, Kempton Park, 1619, for thepurpose of considering, and, if deemed fit, passing, with or without modifications, the resolutions to be proposed thereatand at each adjournment or postponement thereof, and to vote for/or against the resolutions and/or abstain from votingin respect of the shares in the issued share capital of the Company registered in my/our name/s (see note 2) as follows
RESOLUTIONS For Against Abstain
1. Resolutions to appoint Directors
D NOVICK
B J VAN DER LINDEN
P J WELGEMOED
R W WYATT
D HYDE
2. Resolution to appoint and determine the auditors’ remuneration.
3. Resolution to grant authority to the directors to issue the unissued shares of the Company.
4. Resolution authorising the issue of shares for cash other than by way of rights issue
5. Resolution to amend the provisions of the Comair Share Incentive Trust
6. Resolution authorising Derek Henry Borer to give effect to Special and Ordinary Resolutions
7. Special Resolution No.1. Acquisition by the Company of its issued shares
And generally to act as my/our proxy at the said Annual General Meeting.
(Tick whichever is applicable. If no direction is given, the proxy holder will be entitled to vote or abstain from voting as theproxy holder deems fit.)
Signed at on 2001
Signature
assisted by me (where applicable)
Number of shares held
Ordinary
A member entitled to attend, speak and vote is entitled to appoint a proxy/ies to attend, speak and, on a poll, vote inhis/her stead, and such proxy need not also be a member of the Company.
Notes
1. A shareholder may insert the name of a proxy or names of two alternative proxies of the shareholder’s choice in the
space/s provided, with or without deleting “the Chairman of the Annual General Meeting”, but any such deletion must
be initialled by the shareholder. The person whose name appears first on the proxy form or whose name has not been
deleted, will be entitled to act as proxy to the exclusion of those whose names follow.
2. A shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes
exercisable by that shareholder in the appropriate space/s provided. Failure to comply with the above will be deemed
to authorise the proxy to vote or abstain from voting at the Annual General Meeting as he/she deems fit in respect of
all shareholders’ votes exercisable thereat. A shareholder or his/her proxy is not obliged to use all the votes
exercisable by the shareholder or by his/her proxy or cast them in the same way, but if the total of the votes cast and
in respect of which abstention is recorded, may not exceed the total of the votes exercisable by the shareholder or by
his/her proxy.
3. Any alteration or correction made to this proxy form must be initialled by the signatory/ies.
4. Documentary evidence establishing the authority of a person signing this proxy form in a representative capacity must
be attached to this form unless previously recorded by the transfer secretaries of the Company or waived by the
Chairman of the Annual General Meeting.
5. The completion and lodging of this form will not preclude the relevant shareholders from attending the Annual
General Meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof,
should such shareholder wish to do so.
6. The Chairman of the Annual General Meeting may accept or reject any proxy form which is completed and/or
received other than in accordance with these notes and instructions, provided that he/she is satisfied as to the manner
in which the shareholder wishes to vote.
7. Proxy forms must be lodged with or posted to the Company’s registered office (2nd Floor, FHS House, 15 Girton
Road, Parktown, 2193 [Postnet suite 200, Private Bag X30500, Houghton, 2041]) to be received not later than 48
hours (excluding Saturdays, Sundays and public holidays) before the time appointed for the holding of the Annual
General Meeting.
Visit us online at www.ba.co.za
Administration
Comair operating as British AirwaysPO Box 7015, Bonaero Park, 1622 South Africa
Sales/administration Telephone (011) 921-0111
Reservations (011) 921-0222
Groups (011) 921-0333
Passenger Services Johannesburg International
Airport (011) 975-9128
Telefax (011) 973-1659/973-3913. Telex 7-46738
Air CARGO (011) 390-2841
Cape TownTerminal 4 and 5
Cape Town International Airport
Private Bag X13, Cape Town
Cape Town International Airport, 7525
Telephone (021) 936-9000. Telefax (021) 934-4729
Port ElizabethPort Elizabeth Airport
PO Box 3222, Humewood, 6013
Telephone (041) 508-8099. Telefax (041) 508-8007
Reservations (041) 508-8000
HarareShop F1 Travel Plaza
Landela House, 29 Mazoe Street, Harare
PO Box 66293, Kopje, Harare
Telephone/Telefax (092634) 73-7200 (092634) 73-9878
DurbanDurban International Airport
PO Durban International Airport, Durban, 4029
Telephone (031) 450-7000. Telefax (031) 408-1808
WindhoekSanlam Centre, 10th Floor
154 Independence Avenue
PO Box 20800, Windhoek
Telephone (09264) 61-248528. Telefax (09264) 61-248529
Victoria Falls1 Flamelily Court Fox Road, Victoria Falls, Zimbabwe
Telephone (09263) 13 5825/2053. Telefax (09263) 13 5825
British Airways Executive ClubTelephone (011) 880-6719. Toll free 0800-11-3833
Telefax (011) 442-6989
G R A P H I C O R2 3 7 7 2
Financial Highlights 2
Executive Management 3
Joint Chairman and Managing Director’s Report 4
Five-year Review 8
Group Value Added Statement 9
Corporate Governance 10
Report of the Independent Auditors 12
Statement of Responsibility by the Board of Directors 13
Statement of Company Secretary 13
Report of the Directors 14
Income Statements 16
Balance Sheets 17
Statement of Changes in Equity 18
Cash Flow Statements 19
Accounting Policies 20
Notes to the Annual Financial Statements 21
Notice of Annual General Meeting 28
Share Price Performance 32
Analysis of Shareholding 32
Administration Inside back cover
Proxy Form Loose
Contents
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Annual Report 2001
w w w . b a . c o . z a
Comair Limited
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