2015 integrated - comair · certificate of company secretary ... the group is organised into two...

2015

ANNUAL REPORTintegrated

1 Integrated Annual Report 2015Comair Limited

Report profile ..........................................................................................................................................2

Who we are and what we do ....................................................................................................................5

Group value-added statement ..................................................................................................................9

Chairman and CEO’s report ......................................................................................................................10

Core values .............................................................................................................................................14

Group objectives .....................................................................................................................................15

Strategic intent ........................................................................................................................................16

Internal control and risk management .........................................................................................................19

Sustainable development report ................................................................................................................24

Corporate governance .............................................................................................................................53

Audit Committee report ............................................................................................................................62

Remuneration report ................................................................................................................................65

Social and Ethics Committee report ...........................................................................................................68

Report of the Directors .............................................................................................................................70

Statement of responsibility by the Board .....................................................................................................75

Certificate of Company Secretary ..............................................................................................................76

Independent Auditors’ report .....................................................................................................................77

Statements of Financial Position ................................................................................................................78

Statements of Profit or Loss ......................................................................................................................79

Statements of Profit or Loss and Other Comprehensive Income ...................................................................79

Statements of Changes in Equity ...............................................................................................................80

Statements of Cash Flows ........................................................................................................................81

Accounting Policies ..................................................................................................................................82

Notes to the Financial Statements .............................................................................................................92

Notice of Annual General Meeting (AGM) ....................................................................................................125

Share price performance ..........................................................................................................................136

Shareholder analysis ................................................................................................................................137

Contents


Report profile

Scope, boundary and reporting cycle

This Integrated Annual Report of the Comair Group (the Group)

presents the economic, social and environmental performance

of the Group’s airline and non-airline businesses in respect of its

operations in South Africa only, as well as the financial results

of the Group for the financial year 1 July 2014 to 30 June 2015.

Whilst the performance of the Group’s associates is discussed

in this report, the report focuses more on the performance of its

subsidiaries, since their contribution to the Group’s performance

is more significant. This report does not cover the performance or

issues facing the Group’s suppliers in its supply chain, outsourced

operations such as, but not limited to, its fleet maintenance, or

its leased facilities. These limitations are not considered material

enough to impair the completeness of this report.

Other than stated below and as detailed in this Integrated Annual

Report, there have been no other restatements of previously

reported information nor have there been changes to the basis

of calculations or to the assumptions and techniques applied in

compiling the data presented in this Report.

Reclassification of comparatives

The Group offers travel and holiday package services using

advanced technology, both locally and internationally, to consumers

directly as well as via the retail travel trade. This business forms

part of the non-airline segment of the Group and is disclosed as

such in the Segmental Report. In terms of IAS 18 – Revenue, the

Group acts as an agent for the collection of revenue on certain

travel packages and these amounts, net of inventory cost, should

be accounted for as commission received. In the financial year

ended 30 June 2014 gross amounts were included in revenue,

and the associated inventory costs were included in operating

expenses. The representation had no impact on the profit of the

Group. The effect is a reduction in both revenue and operating

expenses amounting to R379 million in the Statements of Profit

and Loss for the year ended 30 June 2014 (see note 29).

Change in accounting estimates

Aircraft are depreciated over their useful lives on a component

basis, taking into account residual values where appropriate.

Management has re-assessed the estimated residual values and

useful lives of the Boeing 300 and Boeing 400 fleets, in line with the

Group’s strategy of continuous fleet upgrading. Factors such as

technological innovation, planned maintenance programmes and

forecast retirement dates have been taken into account, resulting in

additional depreciation of R95 million in the current reporting period.

Change in segmental classification

The Group is organised into two main business segments: Airline

and non-airline. Previously non-airline comprised the travel

business, property investments, simulator business and SLOW

in the City Lounge. Airport lounges were initially established at

the main Airports Company of South Africa (ACSA) airports to

improve customer experience and were therefore included in

the airline segment. However, the lounge business has since

evolved into a self-sustainable business, generating third party

lounge revenue and can now be considered independent of the

airline segment and will be reported as non-airline for segmental

reporting purposes (see note 29).

The Integrated Annual Report is sent to shareholders, who are recorded

as such in the Group’s Securities Register, on Friday, 23 October 2015,

and is available on the Group’s website at www.comair.co.za. Printed

copies are available on request from the Group Company Secretary.

This is the Group’s fifth Integrated Annual Report. The prior period’s

Integrated Annual Report, which covered the period 1 July 2013 to

30 June 2014, was published on 29 September 2014 and is also

available on the Group’s website.

Reporting principles

The content of this report is driven by those issues that have the

greatest potential to affect the Group’s ability to operate. We

consider a broad range of external and internal factors, including

the outcome of various stakeholder engagement processes driving

the Group’s integrated reporting process, when deciding which

issues are of the utmost importance to address. Whilst this report

attempts to highlight the report issues raised and the outcomes of

these various engagement processes, the content of this report

predominantly focuses on the information deemed relevant to the

Group’s shareholders and potential investors.


The information included in this report aims to provide shareholders

and investors with a good understanding of the significant

economic, social and environmental risks and opportunities the

Group faces in the short and medium term, as well as the Group’s

response in order to ensure its ability to create and sustain value

for its shareholders and investors in the long term. In addition,

the Group attempts to explain its efforts to reduce its impact on

the environment and the societies in which it operates.

This Report was prepared in accordance with International Financial

Reporting Standards, the Financial Reporting Guides issued by the

Accounting Practices Committee, the Listings Requirements of the

JSE, as well as the requirements of the Companies Act (Act No. 71 of

2008), as amended. The Group’s reporting on sustainable development

is guided by the Sustainability Reporting Guidelines of the Global

Reporting Initiative (GRI) and the International Integrated Reporting

Council’s Integrated Reporting Framework’s Guiding Principles.

The Group has applied the majority of the principles contained in the

King Code of Governance Principles and King Report on Governance

(King III).The Group’s application of the principles of King III, as well

as the few instances of non-compliance, are recorded and explained

in the Group’s King III register, which is continuously updated and

published on the Group’s website, www.comair.co.za. A summary of

the King III checklist is included in the Corporate Governance section

of this report. The Group’s reporting on sustainable development

was done in accordance with GRI G3.1.

Our stakeholders

The Group’s commitment to its stakeholders to conduct its business

in a sustainable way and to respond to their needs is entrenched

in its core values. The nature of the Group’s business implies a

close relationship with its stakeholders such as, but not limited to:

• those customers who purchase the Group’s products and

services and to whom it must provide, amongst other things,

a safe, secure and reliable service;

• its employees, who are responsible for providing a safe,

secure and reliable services to its various customers;

• suppliers who form an integral part of the Group’s ability to

provide a safe, secure and reliable service;

• government, regulatory and industry bodies since the

industry in which the Group operates is subject to extensive

government and regulatory oversight;

• the community in an attempt to improve the lives of fellow

South Africans;

• the media who play an important role in the Group’s

engagement with stakeholders; and

• its investors as one of the main objectives of the Group is to

create wealth for its investors as reflected in the stakeholder

diagram set out above.

Without regular communication with its various stakeholder groups,

the Group would not be able to deliver its products and services in

a safe, secure or reliable way. Of the stakeholder groups identified in

the diagram above as part of the Group’s regular business activities,

select stakeholder groups are considered to be more significant

in determining the Group’s ability to operate and generate value.

Risk management

The Group follows a comprehensive and integrated risk management

process where the identification and management of risk forms part

of the Executive Management business plan. The Board, through

the Group’s Risk Management Committee, actively monitors this

process. For more information on the Group’s risk management

process, refer to the Internal Control and Risk Management Report

on pages 19 to 23 of this report.

* Considered to be significant stakeholder groups

Customers*Communities

Media

Investors*Employees and trade unions*

Industry associations*

Government and regulatory

bodies*

Suppliers*


Significant events during the reporting period

No significant events occurred during the period or after the

end of the reporting period, which may have an impact on the

Groups operation.

Noteworthy developments during the reporting period include:

• The Group finalised and wound up its BEE transaction

with the Thelo Aviation Consortium Proprietary Limited (the

Consortium). In terms of the BEE transaction, the Company

issued 74 117 647 ‘A’ shares at a par value of 1 cent each

to the Consortium, details of which were set out in a Circular

to Shareholders dated 23 August 2006 and was approved

by shareholders by way of a special resolution passed in

September 2006. The BEE transaction commenced in 2006

and ended in 2014 (the Final Date). In terms of the BEE

transaction, on or after the Final Date the Company had

a call option to re-acquire a certain number of ‘A’ shares

based on certain hurdle balances that had to be met by the

Consortium in accordance with a formula which was detailed

in the Circular to Shareholders. The Company exercised

the call option, leaving the Consortium with 29 067 766

‘A’ shares. Following the issue of the remaining ‘A’ shares

to the Consortium, these ‘A’ shares in terms of the BEE

transaction, were to be converted to ordinary shares on a

one for one basis and listed on the JSE. With the approval

of the JSE, 29 067 766 ordinary shares were listed on the

JSE and issued to the Consortium, resulting in the issued

share capital of the Company increasing from 440 263 099

ordinary shares to 469 330 865 ordinary shares.

• The Group, at it operations building, developed and built a

state of the art cabin crew training facility.

• The Group has increased its equity stake in OR Tambo

Hospitality Holdings Proprietary Limited, previously known

as Protea Hospitality Proprietary Limited.

No significant changes regarding the Group’s size, structure or

ownership, apart from the foregoing, occurred during the reporting

period compared to previous financial years. Therefore there are

no significant changes from previous reporting periods in the

scope, boundary, or measurement methods applied in this Report.

External audit and assurance

The Group’s Financial Statements, set out on pages 78 to 124,

were audited by its independent external auditors, Grant Thornton

Johannesburg Partnership in accordance with International

Standards of Auditing. The report of the independent auditors is

included on page 77.

Grant Thornton Johannesburg Partnership provided limited

assurance over selected key performance indicators and specific

disclosures as set out in this Integrated Annual Report. Based on

the work Grant Thornton Johannesburg Partnership performed,

nothing has come to our attention that causes us to believe that

the selected key performance indicators or specific disclosures

in the 2015 Integrated Annual Report for the year ended 30 June

2015 have not been fairly stated.

For a better understanding of the scope of Grant Thornton’s

assurance process, reference should be made to their Assurance

Statement, which can be obtained from the Group Company

Secretary, or accessed via the Group’s website, www.comair.co.za.

Preparation of the Annual Financial Statements

Kirsten King CA(SA) was responsible for the preparation of the

Annual Financial Statements.

Contact us

We welcome the opinions and suggestions of all our stakeholders.

All opinions, suggestions and questions should be directed to the

Group Secretary, Derek Borer. Please find our contact details on

page 140 of this report.


Who we are and what we do

Comair Limited (the Group) is a South African company listed on

the Johannesburg Stock Exchange since 1998, offering scheduled

and non-scheduled airline services within South Africa, sub-Saharan

Africa and the Indian Ocean Islands as its core business.

The Group has operated successfully in South Africa since

1946 and is the only known airline to have achieved operating

profits for 69 consecutive years, with a safety record which is

internationally recognised.

The Group operates its scheduled airline services under two (2)

brands, namely the kulula brand and the British Airways brand

under license from British Airways Plc. During the period under

review the Group operated 42 736 sectors (one way flights) and

carried 5 140 599 passengers, as opposed to 43 246 sectors

and 5 196 507 passengers during the prior reporting period. A

diagram reflecting all the destinations to which the Group’s two

airline brands provided airline services during the period under

review is set out below. The Group’s headquarters are based

at 1 Marignane Drive, Bonaero Park, Kempton Park and whilst

it operates flights destined for locations outside of South Africa,

the Group’s operations are based in South Africa.


kulula.com and British Airways, operated by Comair, are our

airline-related brands, while the balance of the brands are non-

airline brands.

As at 30 June 2015, the Group employed 2 072 permanent fulltime

employees over its various operating platforms in South Africa as

opposed to 2 006 permanent fulltime employees as at 30 June 2014.

In addition to providing scheduled and non-scheduled airline services,

the Group also offers the following non-airline related services:

• A travel and holiday packaging service using advanced

technology to deliver travel and holiday packages to many

destinations both locally and internationally to consumers

directly and to the retail travel trade. Through acquisitions,

expansion and partnerships, the Group has established one

of the country’s largest and broadest digital travel distribution

networks. The brands under the Group’s Travel and Holiday

Package banner include kulula holidays, MTBeds, African

Images and African Dream Holidays and the Group also

has a Harvey World Travel Holiday Retail Travel Agency. The

Group continues to form partnerships with industry leaders

in travel reward and recognition programmes as part of its

objective to continuously expand and grow this business.

• In 2009, the Group launched its SLOW Lounges and currently

operates SLOW Lounges at O.R. Tambo International Airport

in both the domestic and international terminals, Cape

Town International Airport domestic terminal, King Shaka

International Airport domestic terminal and SLOW in the

City in Sandton, Johannesburg. The SLOW Lounges have

set a global standard for airport lounges, providing a perfect

sanctuary from the fast pace of travel and modern life, and

have won numerous awards for their creative excellence.

Demand for the lounges has increased and the Group has

extended and refurbished its SLOW Lounge at Cape Town

International Airport, and is in the process of expanding the

SLOW Lounge in the international terminal at O.R. Tambo

International Airport.

• The Group launched its own catering unit in 2012 under

the Food Directions brand and provides on-board catering

services to the kulula and British Airways flights, giving the

Group control and flexibility in terms of cost and product

offering.

• In addition to training Comair’s own pilots, the Comair

Training Centre (CTC) offers a full range of aviation-related

ground school subjects and flight simulator training for the

full range of Boeing 737 type aircraft. The CTC also provides

a variety of ancillary subjects as well as cabin crew and flight

dispatcher training. In collaboration with Avion de Transport

Regional (ATR), the CTC is the host for the ATR Reference

Training Centre which offers simulator training for pilots of

ATR turboprop aircraft. The CTC has a client base of airlines

from numerous African countries, as well as the likes of the

Middle East, South America, Indo-Asia and the Far East.

• During the period under review, the Group commenced with

the design and development of a purpose-built cabin crew

training facility which will be used to train not only the Group

cabin crew, but also third party cabin crews.

The diagram below sets out the various brands of the Group.


Organisation structure

(1) Kulula Air Proprietary Limited trading as SLOW in the City100%

(6) OR Tambo Hospitality Proprietary Limited49%

(2) Alooca Properties Proprietary Limited100%

(4) Holiday Tours Proprietary Limited100%

(7) Commuter Handling Services Proprietary Limited40%

(9) Churchill Finance Services 23 Limited100%

(3) Aconcagua 23 Properties Proprietary Limited100%

(5) Imperial Air Cargo Proprietary Limited100%

(8) Comair Mozambique Limitada49%

(10) Comair Catering Proprietary Limited

(11) Highly Nutritious Food Company Proprietary Limited

100%

56%


(1) Kulula Air Proprietary Limited

Holds the liquor licences in respect of all of the Company’s Lounges and looks after various service agreements relating to the

Airport Lounges and SLOW in the City

(2) Alooca Properties Proprietary Limited

Property owning company which owns a number of properties in Rhodesfield surrounding the Company’s operations building

(3) Aconcagua 32 Investments Proprietary Limited

Property owning company which owns the property on which the Company’s operations building is situated

(4) Holiday Tours Proprietary Limited

An outbound tour operating company offering holiday packages to destinations outside of South Africa

(5) Imperial Air Cargo Proprietary Limited

A cargo and freight company providing cargo and freight services in South Africa. The company is currently dormant and will be

remained Comair Air Cargo Proprietary Limited

(6) OR Tambo Hospitality Proprietary Limited

Property owning company (previously known as Protea Hotel OR Tambo Proprietary Limited), which owns the building that

constitutes Protea Hotel O.R. Tambo Airport. The Group increased its shareholding in this Company to 49% with the increase

in shareholding being effective 1 July 2014

(7) Commuter Handling Services Proprietary Limited

Provides ramp handling services in South Africa to various airlines

(8) Comair Mozambique Limitada

The company is currently dormant

(9) Churchill Finance Services 23 Limited

A company established in Mauritius for the purposes of financing the acquisition of aircraft. This company is dormant and is in

the process of being deregistered

(10) Comair Catering Proprietary Limited

Holds the liquor licence in respect of the Company’s catering business and looks after various service agreements relating to

the catering operation, but will, from the next reporting period, house the Company’s catering business

(11) Highly Nutritious Food Company Proprietary Limited

The company provides food items to Comair’s catering Division and 3rd party retailers.

Apart from Comair Mozambique Limitada, which is registered in Mozambique, and Churchill Finance Services 23 Limited, which is

registered in Mauritius, all of the Group’s subsidiaries and associates are registered in South Africa.

The Group’s affiliated businesses performed well over the period under review and made a meaningful contribution to profits,

although they make up a small percentage of its turnover. In addition, they are exposed to immaterial risks and pose no threat to the

completeness principle.


Group value-added statementfor the year ended 30 June 2015

2015 2014

R’000 % R’000 %

Wealth created

Group revenue 5 890 746 6 282 219

Cost of materials and services (4 262 848) (4 794 443)

Value added 1 627 898 1 487 776

Interest income 40 428 32 149

Total value added 1 668 326 1 519 925

Wealth distributed 1 043 738 964 327

Community investment 2 199 0 1 623 0

Employees

Salaries, wages and related benefits 832 050 50 738 003 49

Providers of capital

Interest on loans 72 930 4 77 340 5

Dividends paid to shareholders 79 938 5 70 295 5

Government

Taxation expense 56 621 3 77 066 5

Wealth retained 624 588 555 598

624 588 38 555 598 37

Accumulated profits 624 588 555 598

1 668 326 100 1 519 925 100


Chairman and CEO’s report

Group performance

As Chairman and Chief Executive Officer, it is our privilege to

oversee and lead an airline that has grown from its infancy in

1946, to the Group known today, operating scheduled airline

services in South Africa, sub-Saharan Africa and the Indian Ocean

Islands using twenty five aircraft made up of eleven B737-800s,

twelve B737-400s and two B737-300s. During the year under

review, the airline operated 42 736 sectors, carrying approximately

5.1 million passengers and employing 2 088 staff members.

We remain firmly committed to our vision of offering an exceptional

travel experience in the most efficient way. Our focus on delivering

on our strategic intent will enable us to continue to create long-term

shareholder value. The Group’s reputation and focus on safety,

customer service and efficiency has built a sustainable foundation to

accommodate growth opportunities and ensure that we continue to

play a major role in the Southern African aviation and travel industry.

The airline industry

The aviation industry worldwide is recognised for its operating

challenges. It is an industry that is capital intensive, has small

profit margins and is highly regulated. A consistent theme across

the global airline industry is one of poor returns on investment,

protected competition and low barriers to entry. The industry is

a soft target for taxes, volatile costs and increased regulation.

The volatile fuel price, and in South Africa, our volatile exchange

rate, requires airlines to constantly innovate and improve on

operating efficiency. Worldwide, the industry has recognised the

need for radical change to ensure sustainability and profitability.

Considering the above, Comair has a unique record of delivering

operating profits for 69 years in succession.

Our top priorities are to continuously improve our customer service,

control costs and increase business efficiencies. In this regard,

we have adopted an approach not dissimilar to many successful

airlines worldwide, of acquiring and operating larger but more fuel

efficient aircraft and implementing a new generation information

technology platform, enabling us to deliver greater efficiencies

and new commercial opportunities.

We are firmly committed to the local aviation industry and to

working with government and other relevant authorities to ensure:

• The maintenance of a safe, reliable, competitive and commercially

viable air transport sector, where all operators are afforded

equal treatment by government;

• The provision of an air transport infrastructure that is affordable

and consistent with the requirements of the air transport

sector and the travelling public; and

• The provision of air travel at costs that are affordable to

South African consumers and are in line with internationally

accepted airline service standards and practices.

Strategic priorities

During the period under review, we concentrated on the following

strategic priorities:

• Maintaining revenue in a depressed economic environment,

combined with increased competition in the form of new

entrants to the market, sparking an irrational pricing response

by our existing, protected competitors during the second

half of the financial year. Revenue was maintained to cover

and manage costs without ever compromising on providing

a safe, secure and reliable airline service;

• Constantly delivering on our promise to customers;

• Enhancing our new, enterprise-wide IT platform;

• Upgrading our fleet, including the investment in new aircraft,

the next deliveries of which will take place in August and

October 2015 and February and November 2016;

• Continually monitoring and responding to changes to our

macro operating environment; and

• Providing employment security to all of our employees.

We have delivered against these priorities during the period

under review.

Performance against objectives

Financial performance

The 2015 financial year provided a basket of challenging variables,

with a very strong profit in the first half followed by a more mundane

second half. The first half started with an unprecedented collapse in


the oil price, resulting in a drop in the price of jet fuel from a high of

R9.50 per litre to R7.30 by December, and R6.50 by year end. This

decline granted relief to the dramatic cost escalation of previous years.

We benefitted from revenue growth of 5% in the first half of the year.

The second half of the year saw two new competitors enter the

market with very aggressive, but more than likely unsustainable

pricing. Comair was, out of necessity, drawn into the fray in order

to retain its slice of a market that had still not recovered to 2008

volumes. As a result of this, any savings achieved on the price of

fuel were returned to our customers by way of significantly reduced

ticket prices, with a consequent reversal of the revenue growth

experienced in the first six months. Despite the new capacity in

the market, Comair maintained its passenger volumes, largely

due to the strength of the kulula.com and British Airways brands

and our ongoing attention to service.

The year closed with no growth in revenue compared to the previous

year, and a 1% saving in operating costs. Despite an increase

in operating profit, profit for the year reflects a 17% reduction,

resulting in earnings per share of 47.8 cents (prior year 58.4 cents).

Cash of R147 million was invested in the acquisition of three

previously leased Boeing 737-400 aircraft and two pre-owned

Boeing 737-400s, all for operation in the British Airways fleet.

These aircraft have replaced the 737-300 fleet which will be

fully retired by December. The newer aircraft afford improved

fuel efficiency and reduced maintenance demands, while at the

same time improving passenger comfort. Early settlement was

also concluded on aircraft and simulator funding amounting to

R115 million. Cash on hand at year end was R849 million, much

in line with the prior year balance of R868 million.

Shortly after the initial collapse of the oil price, Comair took out

hedges on approximately 26% of its fuel demand, amounting to

500 000 barrels, at an average price of $82. While this appeared

to be a prudent move at the time, the onward decline of the oil

price during the year proved that history does not necessarily

provide a good precedent, and we had to write back a hedging

loss of R61 million against the fuel expense. At year end there

remain 160 000 barrels hedged at an average of $82, representing

10% of our fuel demand for the 2016 financial year. The last of

these hedges expire in December 2015. Recent developments

in the global demand for oil, and the remaining global production

capacity, have deterred us from any further hedging activity.

The Black Economic Empowerment transaction concluded by Comair

and the Thelo Consortium in 2007, matured in September 2014,

and created realised value of R152 million for the participants.

The ‘A’ shares arising from the transaction were converted to

29 067 766 ordinary shares on 21 April 2015. The weighted effect

of the additional shares is a reduction in the 2015 earnings per

share of 3 cents. The Group continued to invest in its transformation

initiatives, including its pilot cadet programme, airport learnerships,

enterprise development and social responsibility, and thereby

maintained its level 4 B-BBEE score.

Customer experience

We continued to focus on our customers through the application

of feedback surveys, customer journey mapping, service metrics

and extensive training programmes for front-line staff. Operating

performance remained good, with on-time departures meeting

our threshold target of 85% across both the British Airways and

kulula.com brands.

Investment

In addition to the Boeing 737-400 aircraft mentioned above,

during the year we made substantial investments in expanding and

upgrading our SLOW Lounges at Cape Town International Airport

and expanding our SLOW Lounge in the international terminal at

O.R. Tambo International Airport. We have, in addition, invested

in and built a Cabin Crew Training Facility at our operations base

in Rhodesfield.

We will be taking delivery of four new Boeing 737-800 aircraft

in the 2015/2016 calendar years, due for delivery in August and

October 2015 and February and November of 2016. All of the

aforementioned aircraft are currently designated to replace existing

aircraft as part of our ongoing fleet upgrade programme.

Market environment

Partnerships

Partnerships are still the cornerstone of our business. We continue

to work closely with the travel agent community in distributing

our products. Our relationship with Discovery Vitality has grown

and now includes local, regional and international flights, holiday

packages as well as car rental and hotels for Vitality members.

We have extended our First National Bank/Rand Merchant Bank

relationship with further investment in the SLOW Lounge at Cape

Town International Airport. We are currently in the process of

upgrading and increasing the size of our SLOW Lounge in the

International Terminal at O.R.Tambo International Airport. Europcar

is one of our strongest partners, and together we are the largest

online seller of car rental in South Africa.


Brands

Our brands continue to perform well in the market. kulula.com

is the market leader in affordable, easily accessible air travel and

continues to grow in the cost conscious business and leisure

market. kulula.com has become one of South Africa’s iconic

consumer brands and is estimated to be South Africa’s largest

online retailer by annual sales value.

Our British Airways (BA) brand has continued to grow in the

corporate and public sectors as well as in the inbound tourist

markets. The BA loyalty programme, Executive Club, the SLOW

Lounges and our investment in our new catering products,

have all helped grow the appeal of this brand. Our relationship

with British Airways Plc remains strong, with BA and ourselves

seeing great potential to grow our partnership further into

Africa. Our SLOW Lounge brand has built great equity amongst

business travellers.

Competition Tribunal claim

As previously reported, the Competition Tribunal ruled in our

favour in our case against SAA for its anti-competitive travel agent

incentives and its abuse of dominance. We were also successful

on the appeal which SAA lodged, and have issued a multi-million

Rand summons against SAA for damages related to this claim.

This matter is scheduled to be heard in the High Court of South

Africa during April 2016.

State funding of SAA

Comair’s entry onto the main South African routes, and its ongoing

sustainability, relies on the commitments made by government in

various policies and legislation to create a pro-competitive aviation

industry. Failure by government and the state-owned airlines to

adhere to these principles, including the ongoing state funding

of SAA, has led to an uneven playing field for competitors. The

resulting, often irrational, commercial behaviour by the state-owned

airlines remains the most disruptive challenge to the sustainability

of the domestic industry, and to our delivery on our obligations

to our customers, employees and shareholders.

As previously reported, the Group found it necessary to challenge, by

way of an action before the South African High Court, the R5 billion

state guarantee provided by government to South African Airways.

This challenge was on the basis that such funding was contrary to

government’s domestic aviation policy, the Constitution, the Public

Finance Management Act (Act No. 1 of 1999) as amended, the

Promotion of Administrative Justice Act (Act No. 3 of 2000) and

the SAA Act (Act No. 5 of 2007). The matter was brought before

the North Gauteng High Court during the period under review

and, unfortunately for the Group, the matter was dismissed by

the Court without a cost order having been made. Despite having

reservations about the decision, the Group has decided not to

take the decision on appeal.

Affiliate businesses

Our affiliate businesses performed well over the period and we

continued to look for aligned business opportunities. While these

businesses make up a small percentage of our turnover, they

are making an increasing contribution to our profits. Specifically,

our online travel business, lounges and flight training business

performed well during the year.

Corporate governance

We aim to be a good corporate citizen and maintain the highest

standards of integrity and ethics in our dealings with our stakeholders.

To ensure that we offer the best possible airline service and

are regarded as the airline of choice for all travellers within our

operating environment, we manage and control our business

by implementing governance procedures and ensuring that we

identify and manage our risks effectively.

Sustainability

We are committed to managing our business in a sustainable

way. This means considering not only the Group’s financial

performance and risk profile, but also its social, environmental

and economic impact. Included in the Integrated Annual Report

is our Sustainable Development Report, which provides our

shareholders with information regarding the significant social and

environmental risks and opportunities that have an impact on our

ability to create long-term value for our stakeholders. In addition,

we explain our effort to reduce our impact on the environment

and the societies in which we operate.

People

We continue to attract the best talent in the business and continually

invest in their wellbeing and development.

We are also very fortunate to have a highly experienced and dedicated

management team that has a wealth of experience in the industry.

Training

Training and skills development is a major priority to ensure

that we are able to provide a quality service to our customers.


We spent approximately 3.09% of payroll during the period

under review to support our commitment to training and skills

development. Further details are set out in our Sustainable

Development Report.

Society

We are a committed corporate citizen and, together with our

staff, endeavour to improve the lives of fellow South Africans.

We try to make a meaningful impact on our local communities

by attempting to alleviate some of their socio-economic

challenges. Further details in this regard are set out in our

Sustainable Development Report.

Environment

We are committed to protecting the environment, conserving natural

resources and utilising resources in an effective and responsible

way by adopting sound environmental practices in our business and

industry. We are also committed to improving our environmental

performance by attempting to reduce the adverse impact that

aviation has on the local and global environment. Further details

are set out in our Sustainable Development Report.

Transformation

The Group continued to progress with its transformation programme,

as reflected in the most recently issued broad-based black

economic empowerment (B-BBEE) certificate. The industry is still

faced with significant challenges in attracting an adequate number

of matriculants, with higher grade mathematics and science

from previously disadvantaged groups, for training in aviation

specialised skills. Further details are set out in the Sustainable

Development Report.

Looking ahead

We remain concerned with the weak economic growth and the

consequent impact of overcapacity on the domestic aviation

market. Fundamentals dictate that a correction in market capacity

is likely. Furthermore, the new visa regulations applied to South

Africans and foreign tourists travelling with children, has impacted

negatively on our cross-border tourist destinations, and we are

actively participating in the drive for a more favourable dispensation.

We are focused on implementing technology solutions to enhance

our operating performance, customer service experience and

revenue generating opportunities. The pace of development in

distribution technology is relentless, and the Group is intent on

extracting the maximum benefit from its customer information

data in order to improve its service offering and the marketing of

relevant products to its various customer segments. We are also

developing new software applications for use on-board the aircraft

and on the ground to facilitate more efficient operating procedures.

In August and October 2015 we took delivery of two of the next

four new Boeing 737-800s from Boeing. The remaining two of

which will be delivered in 2016. The delivery of eight Boeing 737-8

MAX aircraft remain on schedule for 2019 to 2021. The ongoing

upgrades to the fleet will continue to improve operating efficiency

which at the same time enhances the revenue potential per flight.

Despite the challenges of the industry and the additional capacity

arising from potential new competitors, the Group’s much improved

infrastructure and continued focus on customer service bode well

for reasonable results in the year ahead.

Appreciation

Our sincere appreciation goes to every person within the Comair

Group who contributed to the ongoing success of the Group during

the year under review. This includes our Directors, management

and employees. Special thanks are extended to our customers

and other stakeholders who have chosen to use our services or

provide services to us.

We also thank all the public sector departments and agencies

that we have worked with this year for their shared commitment

to our objectives.

ER Venter P van Hoven

CEO Chairman

20 October 2015 20 October 2015


Core values

The Group and its employees support the following core values:

Our customers

In our dealings with our customers, we aim to:

• Reflect the image of the company;

• Deliver a safe and quality service;

• Regard everyone who is dependent on our outputs as a customer;

• Meet the expectations of our customers;

• Measure customer satisfaction levels;

• Respect our customers’ rights to confidentiality; and

• Accept responsibility for customer service.

Mutual trust and respect

We aim to:

• Share information to the benefit of the Group;

• Listen with empathy;

• Communicate openly and honestly;

• Display respect for the individual and his/her dignity;

• Solve problems on a win-win basis for all parties;

• Greet and acknowledge one another;

• Maintain ethical standards;

• Exhibit respect for the individual and his/her dignity; and

• Commit to sustainable transformation addressing the inequalities of the past.

Performance driven

We seek to always:

• Set objectives and give regular performance feedback;

• Ensure that each employee knows what is expected of him/her and what our standards are;

• Give recognition to those to whom it is due;

• Continuously strive to improve our operating efficiencies;

• Eliminate activities that do not add value;

• Base appointments and promotions on competence and performance; and

• Offer each employee the opportunity to develop his/her potential.

Team approach

We:

• Promote positive team behaviour;

• Ensure the participation of all role players; and

• Exhibit responsible, fair, honest and effective leadership.


Group objectives

Creating shareholder value

• We will continue to optimise operating efficiencies and grow the profitability of the business.

• We will continue to optimise our cost base, without compromising safety, reliability and customer services.

• We will always look to make investments that will provide incremental growth based on sound investment principles.

Commitment to quality

• We will strive to be trusted by all our stakeholders.

• We will always ensure that we provide a safe, secure and reliable service.

• We will always strive to improve customer satisfaction levels.

Managing risk

• We will continue to ensure that our risks are meticulously managed.

• We will adopt a proactive approach to ensure compliance with regulatory and legislative change.

Leading as a responsible corporate citizen

• We are committed to managing our business in a sustainable way and upholding high standards of ethics and corporate governance

practices.

Provide growth and development opportunities for employees

• We strive to maintain a corporate culture that provides a working environment which is conducive to employee engagement and

productivity and which assists us to attract and retain a talented workforce.

• We will provide continuous training and development opportunities to our employees, ensuring that their skills and competencies

are relevant and appropriate to our business and the delivery of exceptional service to our customers.

• We will strive to be an employer of choice, recognising that market competition for competent resources is increasing.

Operating effectiveness

• We will continue to develop core competencies across our operating environment.

• We will continue to look for cost-saving initiatives and look to create synergies over our existing and future operations.

• We wish to position ourselves as the airline of choice.


Strategic intent

Cycle of Success

The Group’s Cycle of Success illustrates its strategic intent and purpose, the business model it follows, its vision as well as the action

pillars that underpin its core values.

A diagram reflecting the Group’s Cycle of Success is set out below.

Purpose

The Group’s purpose, ‘We Lift You Up’, drives our aspiration to lift people up in an inspiring, empowering, passionate and innovative

way, to render a positive impact in the world. The Group’s Cycle of Success depicts how all elements of its business connect to realise

its purpose. It also reiterates the behaviour that employees must embrace to fulfil the Cycle of Success.


The Group believes that:

By lifting myself up,

I can lift my colleagues up,

To lift our customers up,

To lift investors up,

To lift society up,

To lift nations up,

To lift the world up,

To lift myself up.

Business model

The business model is not unique to the Group or the airline

industry. The challenge lies in making sure that the Group achieves

the ‘cycle’ for sustainability and growth. It means that with the

right equipment and people, the Group can deliver an awesome

travel experience to its customers. If our customers are happy,

they will keep coming back and when they keep coming back,

our investors will continue to invest in the Group. This will allow

the Group to be more resilient to change and together we can

move forward in a sustainable way.

Vision

The Group’s vision is to “deliver an awesome travel experience in

the most efficient way, and be prepared for growth opportunities”.

It is an aspirational description of what the Group would like to

achieve and is intended to serve as a clear guide for choosing

current and future courses of action. The Group’s vision does

not fit the typical mantra that you would hear echoed by other

organisations. As a Group we went a step further and dug deep to

look at our core objectives and tried to define the impact of these

objectives on our stakeholders where the Group’s business has

an influence. The Group acknowledges that the aviation industry

is volatile and its future is difficult to predict. The Group therefore

looks to define behaviour that will allow it to succeed in every

opportunity it decides to take on.

Action pillars and values

The four action pillars and Think Vision values guides the Group’s

business model.

Action pillars

The four action pillars are as follows:

Innovation

The Group has a professional approach to everything it does or

presents and is committed to a consistent high standard. It is

committed to offering world-class products and services in the

most efficient way. As a market leader, the Group stays up to

date with current trends and can relate and communicate to the

public, customers, investors, suppliers and employees.

Leadership

The Group is a well led and managed South African company. It

leads by example and represents courage and humility. The Group

behaves in a responsible way towards the public, customers,

investors, suppliers and employees.

Integrity

Safety and security underpin everything the Group does. The

Group reflects poise and reassurance and is trusted by the public,

customers, investors, suppliers and employees.

Passion for service

The Group is committed to operational efficiency and value. It

understands and anticipates the needs of its customers, investors,

suppliers and employees.


Think Vision values and principles

The Think Vision formula for success identifies those values and principles that are beneficial (top line) to the Group as well as those values and

principles that should be eliminated which could be detrimental (bottom line) to the Group.

We encourage our employees to apply these values and principles.

Governance of the business

The Group’s governance structures are focused on maintaining and building a sustainable business and being a responsible corporate citizen. The

key elements of these governance structures include:

• Providing a safe, secure, reliable and quality airline service (refer to the Sustainable Development Report for more information);

• Maintaining principles of good corporate governance, integrity and ethics (see the Corporate Governance Report for more information);

• Maintaining effective risk management and internal controls (see the Internal Control and Risk Management Report for further information);

• Engaging with stakeholders and responding to their reasonable expectations (see the Report Profile and Sustainable Development Report for

more information);

• Managing the business in a sustainable manner (see the Sustainable Development Report for more information); and

• Offering employees a good working environment and competitive remuneration packages, based on the principles of fairness and affordability

(see the Sustainable Development Report and the Remuneration Report for more information).

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The Group is committed to maintaining principles of good corporate

governance to ensure that its business is managed in a responsible

manner with integrity, fairness, transparency and accountability.

Internal control over financial reporting

Internal controls and risk management systems in relation to the

Group’s financial reporting process are in place. During the period

under review, there were no material changes in risk management

and internal control systems.

Internal control framework

The Group continues to review its internal control processes

to ensure it maintains a strong and effective internal control

environment. During the period under review, the effectiveness

of the process was regularly reviewed by the Risk Management

Forum and Audit Committee. For further information on the Group’s

internal controls, please refer to page 60 of this report.

Risk management

Effective risk management is critical to the Group’s operations and

is crucial to its continued growth and success. In order to achieve

its objectives and create shareholder value, the Group does take

risks, but fully understands and effectively manages the risks it

takes in order to minimise loss and maximise opportunities. The

objective of risk management is to establish an integrated and

effective risk management framework where important risks are

identified, quantified and managed. In order to give effect to same,

the Group follows a comprehensive risk management process,

which involves identifying, understanding and managing the risks

associated with its various businesses. As the Group, through its

various business units, is exposed to a wide range of risks, some

of which may have serious consequences, the identification of

risk and its management forms part of Executive Management’s

business plan. Risk registers are used to identify, assess and

monitor the risks faced by the Group and are prepared by each

business department. The risk registers are combined into a Group

risk register by the Risk Management Forum and are prepared,

discussed and assessed by the Risk Management Committee,

which in turn reports to the Board. The Group prioritises risks

based on the likelihood of the risk occurring, the impact of the risk

and mitigating factors. Each risk is categorised as high, medium

or low. The Risk Management Forum, comprising the CEO,

Chief Risk Officer, Chief Audit Executive and certain Executive

Management, meets at least four (4) times per year to assess

and consider the risks associated with the Group’s operations.

The Risk Committee also reviews the risk management process.

Given the rapid growth of its business over the past few years

and a constantly changing risk environment, the Group has been

reviewing how far the risk management framework continues

to meet its risk management requirements. This work is largely

complete and the Group will be rolling out some improvements

to ensure greater integration of processes and consistency in

rating risk across the different parts of our operations in the next

reporting period.

In addition to the foregoing, the Group recognises the need for

its employees and stakeholders to have a confidential reporting

process (‘whistle blowing’) covering fraud and other risks. In line

with its commitment to transparency and accountability, the

Group takes action against employees and others who are guilty

of fraud, corruption and other misconduct. Procedures are in

place for the independent investigation of matters reported and

for appropriate follow-up action.

The Board believes that the risks described below are the ones

that may have the most significant impact on the Group’s ability

to achieve its objectives as set out earlier in this report.

Debt funding

The Group is exposed to a variety of financial risks, including

market risks, credit risks, capital risks and liquidity risks. The

Board approves prudent financial policies and delegates certain

responsibilities to Executive Management, who directly control

day-to-day financial operations and who operate within clearly

defined parameters.

The Group carries substantial debt that needs to be repaid. The

ability to finance on-going operations, committed aircraft orders and

future fleet growth plans is vulnerable to various factors, including


institutional appetite for secured aircraft financing. The Group

attempts to maintain substantial cash reserves and committed

financing facilities to mitigate the risk of short-term interruptions

to the aircraft financing markets. The Group in addition continually

monitors its cash position and further undertakes long-term

planning of its capital requirements.

For more information regarding the Group’s response to this risk,

see the Annual Financial Statements in this report.

Currency fluctuations

The Group reports in South African Rand, the exchange rate of

which varies relative to other currencies. A significant portion of the

Group’s costs are incurred in foreign currencies, mainly the United

States Dollar. The movement of these currencies could have a

positive or negative impact on the Group’s income, expenses and

profitability. Unrealised and realised currency gains or losses may

distort the Group’s financial accounts. The Group does, however,

have a natural hedge in place, by virtue of its foreign currency

revenue, thereby decreasing its net foreign currency exposure.



Oil price fluctuations

As with foreign currencies, the Group incurs substantial costs

with regard to the purchase of fuel for its aircraft. The Group has

a policy to hedge a conservative portion of its fuel requirements

based on various instruments available and where this is achievable.



Safety of passengers and employees

A multitude of processes and structures are in place to monitor

and report on aviation safety, quality and security within the

Group and its operating environment. The Group maintains an

International Air Transport Association (IATA) Operational Safety

Audit (IOSA) registration, thereby ensuring the implementation

of global best practice in managing its operational safety, and is

audited by British Airways Plc as well as the South African Civil

Aviation Authority.


see the Sustainable Development Report in this report.

Aircraft safety

Maintenance of the Group’s fleet of aircraft is regulated by the

South African Civil Aviation Authority and, in certain instances,

the Federal Aviation Authority of the United States, and the

European Aviation Safety Authority. While the Group outsources

the maintenance of its fleet of aircraft and engines to the likes of

South African Airways Technical, Israeli Aircraft Industries, and

ST Aerospace Engines Pte Limited, it maintains an oversight

function over all these entities and ensures that it maintains a

good relationship with the South African Civil Aviation Authority.

The Group, in addition, runs a safety management system to

address all aspects of aviation and ground safety.



Brand reputation

The Group’s brands have significant commercial value. Erosion of

the brands may adversely impact its position with its customers

and could ultimately affect future revenue and profitability. The

Group’s Executive team regularly monitors customer satisfaction

through monthly surveys, customer reports, as well as media

monitoring, including social media. Furthermore, continuous

improvements are made to the Group product offering in order

to mitigate this risk. The Group allocates substantial resources to

safety, security, on-board product and new aircraft.



Non-beneficial increases in airline tickets

There is an extremely high correlation between the volume of air

travel and the average price of airline tickets in the domestic market.

In the past, various state-owned suppliers to the aviation industry

have implemented tariff increases for users that were significantly

greater than the rate of inflation and which threatened to constrict

the size of the market for air travel. Whilst tariff increases effective

1 April 2014 were more or less in line with the Consumer Price

Index (CPI), the cumulative effect of previous increases had the

effect of restricting the size of the market for air travel. However, the

Regulating Committee for the Airports Company of South Africa and

Air Traffic Navigation Services published a draft permission paper

for public comment in the Government Gazette on 22 May 2015,

which could result in a reduction in charges, which will naturally be

welcomed by the airline industry. The closing date for receipt of

comments was set for 29 May 2015. The effective date of the final


permission when published was 1 April 2015, with implementation

of same expected to be on 1 October 2015. There is also talk of

government imposing carbon taxes on airline tickets. Furthermore,

the Consumer Protection Act (Act No. 68 of 2008) has, to a limited

degree, impacted on airline commercial practices, which possibly

could lead to an increase in ticket prices. As such, increases in

ticket prices do not benefit the airline, and the consequential

constraint on demand will negatively impact industry revenue.


see the Sustainable Development Report and the Annual Financial

Statements in this report.

Political and economic developments

The state of the local economy impacts on the profitability of the

aviation industry, and the political climate affects the number of

visitors from overseas to the Southern African region. Strikes and

labour disruptions by suppliers to the Group have the potential to

constrain the operation of the airline. The Group monitors global

and local trends in order to adapt its business strategy accordingly.

Political instability in any country into which the Group operates

its services could also affect the Group. The Group therefore

undertakes risk assessments before embarking on new routes

in Africa and internationally, and continually reviews those risks,

and is assisted in this regard through its Licence Agreement with

British Airways Plc and through its membership of the International

Air Transport Association.


see the Sustainable Development Report and Annual Financial


Economic and business environment

The Group’s revenues are sensitive to the economic and business

environment, and can be affected by a downturn in the general

economic and business environment. The Group therefore

continually monitors developments in this environment for trends

and early warning indicators. Executive Management and the

Audit Committee regularly review the Group’s revenue forecasts.




Competition

The market in which the Group operates is highly competitive,

and this is augmented by the fact that the country’s biggest airline

is owned by the state. Direct competition is faced from other

airlines on the routes the Group operates and from other modes

of transport. Competitor capacity growth in excess of demand

growth could materially impact the Group’s margins. Some

competitors have other competitive advantages, such as being

funded and supported through government interventions. Fare

discounting by competitors has historically had a negative effect

on the Group’s results because a response is generally required

to competitor fares to maintain passenger volumes. The Group

has a strong market position, a good alliance with British Airways

Plc and a diverse customer base to address this risk.

For more information regarding the Group’s response to this

risk, see the Sustainable Development Report and the Corporate

Governance Report in this report.

Legislation and regulation

Regulation of the airline industry is increasing and covers many of

the Group’s activities such as safety, security, traffic rights, slot

control access and environment controls. In order to mitigate

these risks, the Group attempts, amongst other things, to maintain

a good working relationship with the government departments

it interacts with, the Airports Company South Africa and other

regulatory and industry bodies. Air service licensing legislation

restricts the percentage of voting rights that may be held in the

Group by non-South African residents. If the stipulated foreign

ownership requirements are exceeded, the Group could face

having it operating licence/s suspended or cancelled. To mitigate

this particular risk, the Group continually monitors its foreign

shareholding component to ensure that it does it not exceed the

permissible ownership levels.



Technical innovation

Technology forms an integral part of the Group’s business. While

the Group’s British Airways brand is, to a large extent, dependent

on developments implemented by British Airways Plc, the kulula

brand is not, and the Group devotes significant resources to

information technology in respect of this brand, including the

development of new products and services, as well as analysing


emerging trends in information technology and consumer behaviour.

The Group during 2012 embarked on one of the single biggest

business transformations in its history whereby a suite of integrated

solutions, procured from Sabre Airline Solutions, including a new

reservations platform for kulula.com, was implemented. The

transition to the new platform provides the organisation with an

integrated solution that will in the medium to long term result in

greater efficiencies, improved and wider distribution capabilities

and the benefit of access to a global Sabre user community that

is constantly reviewing processes and developing new products.

Nevertheless, the Group is always faced with managing the risk

presented by new technology, new developments by its competitors

or the speed of development.



Systems security and availability risk

The Group is dependent on information technology (IT) systems for

most of its principal business processes. The failure of a key system

may cause significant disruption and/or result in lost revenue. System

controls, disaster recovery and business continuity arrangements

exist to mitigate the risk of a crucial system failure. The Group has

launched several initiatives to cover not only information system

security and availability risk, but also IT governance in accordance

with the requirements of King III. The Board appointed a Chief

Information Officer, and the Group has, in addition, implemented

software dealing with IT systems security. No security breaches

occurred during the period under review. The Group’s Information

Technology Department worked closely with its service providers

to ensure that a better than 99% up time was achieved on the

Group’s networks and customer facing systems.


risk, see the Corporate Governance Report and Annual Financial


Landing fees and security charges

Airport taxes, landing fees and security charges represent a

significant operating cost to the Group and have an impact on

operations. Whilst certain of these charges are passed on to

passengers by way of surcharges and taxes, others are not.

The Group regularly engages with various industry bodies and

government in an attempt to keep these costs under control.




Employee relations

A large number of the Group’s employees in South Africa are

members of trade unions. The Group strives to maintain a good

working relationship with the trade unions, has recognition

agreements in place and enters into substantive negotiations

annually. The Group further has a strike action plan in place.



Key supplier risk

The Group is dependent on suppliers for some principal business

processes. The failure of a key supplier to deliver contractual

obligations may cause significant disruption to operations. A close

relationship is maintained with key supporters in order to ensure

awareness of any potential supply chain disruption. The Group

further continually monitors its key suppliers.



Fraud (credit card, cash, system)

The Group has implemented a number of risk mitigants to cover

credit card, cash and systems fraud, such as, but not limited

to, the implementation of Cybersource software as well as the

planned implementation of 3D Secure in respect of credit card

fraud; strict controls and authorisation frameworks for use of Travel

Bank, strict controls over who has access and transfer rights;

regular password changes in respect of bank accounts and daily

bank reconciliations; and procedures for immediate investigation

of discrepancies in cash reconciliations. The Risk Management

Committee and, where appropriate, the Audit Committee, consider

any incidents of fraud and corruption.


risk, see the Corporate Governance Report and Annual Financial


State funding of South African Airways

As previously reported, the Group launched a legal challenge in

the High Court of South Africa against government’s R5 billion

guarantee provided to SAA on the basis that such action was

contrary to government’s domestic aviation policy implemented

just prior to the deregulation of the South African skies to create

an equal playing field amongst domestic competitors, and in

contravention with, amongst others, the Public Finance Management

Act (Act No. 1 of 1999), as amended. The matter was heard


during the period under review and the Group’s legal challenge

was dismissed by the North Gauteng High Court without a cost

order being made. The Group will continue to monitor the state’s

funding of the national carrier.




Broad-based black economic empowerment

The Company recognises the importance of implementing a

B-BBEE Programme that addresses the inequality of the past,

and regularly reviews its B-BBEE Strategy so as to ensure that the

Group remains an integral part of the political, social and economic

community in South Africa. In addition, the International Air Services

Licensing Council and Domestic Air Services Licensing Council

reviews the B-BBEE score of companies applying for licences.


see the Sustainable Development Report.

Skills shortages

The training, employment and retention of skilled staff remains a

major challenge, with particular regard to pilots from previously

disadvantaged groups. The Group has attempted to address this

challenge through its Cadet Pilot Training Programme and through

its policy of having its pilots sign training bonds in an attempt to

ensure that they remain in the employ of the Group for a certain

period of time to cover the cost of their training.


see the Sustainable Development Report.

Effectiveness of the risk management process and system of internal control

The Board, via the Audit and Risk committees, regularly receives

reports on and considers the activities of the internal and external

auditors. The Board, via the Audit and Risk committees, is satisfied

that there is an effective risk management process in place and that

there is an adequate and effective system of internal control to mitigate

the significant risks faced by the Group to an appropriate level.


Sustainable development report

Introduction

Comair Limited (the Group) is firmly committed to managing its

business in a sustainable way and upholding high standards

of ethics and corporate governance practices. The benefits

of delivering on these commitments are many. Through our

sustainability efforts we maintain our business integrity, maintain

and improve the confidence, trust and respect of our stakeholders

and increase our ability to attract and retain staff. Aviation is an

economically vital activity generating employment and wealth

across the world and it is thus important that we develop a truly

sustainable industry.

The Group’s track record on delivering growth and creating long-

term value is testament to its strategy of being a long-term player

and delivering a sustainable business. While growth, profitability and

creating value are certainly major strategic drivers, these cannot

be achieved unless we offer a safe, secure, reliable and quality

product; value our employees by following fair labour practices

and offering fair remuneration; provide training and development

opportunities; respect the communities in which we operate and

contribute to the wellbeing of society; and care for and manage

our impact on the environment.

It is evident from our profile that we operate in a highly regulated

environment. We manage the risks effectively, as reported in our

Corporate Governance and Internal Control and Risk Management

Reports, and despite the many challenges faced by the airline

industry, we are confident that we are involved in a growing and

sustainable business, delivering value to all our stakeholders in

the short, medium and long term.

Through its sustainability efforts, the Group believes that it will:

• Maintain its business integrity;

• Continue to create shareholder value by growing the business;

• Effectively manage its risks;

• Create a good working environment, attracting and retaining

a talented workforce; and

• Effectively manage and minimise its impact on the environment.

Awards

The Group received the following external recognitions and

achievements during the period under review:

British Airways

• The Sunday Times Top Brands Awards – first in the Business

category;

• The Sunday Times Top Brands Awards – second in the

Consumer category;

• SA Customer Satisfaction Index research – first position for

overall customer satisfaction regarding domestic carriers; and

• South Africa Travel Online Travel Awards – Best Cabin Crew

(South Africa).

kulula.com

• The Sunday Times Top Brands Award – second place in the

Business category;

• The Sunday Times Top Brands Award – fourth place in the

Consumer category;

• Airline Ratings.com – awarded “Best Low Cost Airline” for

the Middle East/Africa region, in the International Airline

Excellence Awards;

• SA Customer Satisfaction Index research – second position

for overall customer satisfaction regarding domestic carriers;

• South Africa Travel Online Travel Awards – Best Airline (South

Africa); and

• AirlineRatings.com – Recognised as one of the top 10 safety

low-cost carriers in the world.

Comair Limited

• ACSA Feather Award for Best Safety Service Provider in

respect of its catering operations.

Route network

Comair Limited is a South African Group operating scheduled

and non-scheduled airline services as its core business under

both its kulula and British Airways brands (licence from British

Airways Plc) in South Africa, sub-Saharan Africa and the Indian

Ocean Islands, as well as providing other travel-related services,

airline pilot training facilities and operating airline lounges. The

British Airways and kulula brands operate flights into sub-Saharan

Africa and the Indian Ocean Islands, with the kulula brand offering

flights through codeshare arrangements acting as the marketing

carrier and, although they do advertise their flights for sale through

global distribution systems and the internet, the majority of its

revenue is earned in South African Rand. During the period under

review, the Group operated 42 736 flights and carried 5 140 599


customers, as opposed to having operated 43 246 flights and

carried 5 196 507 customers in the previous reporting period.

Diagrams reflecting all the destinations to which the Group’s two

brands provided scheduled air services during the period under

review are set out below.

kulula.comkulula.com codeshare

kulula.com route network

Note: The service between O.R. Tambo International Airport and Nairobi in Kenya is operated on a codeshare basis using Kenya Airways Aircraft.

Note: The codeshare agreement between kulula.com and Air France is a one way codeshare, enabling Air France customers the ability to purchase a single Air France ticket and connect seamlessly onto kulula’s domestic route network.

British Airways route network

LONDON AND THE WORLD

HARARE

MAURITIUS

DURBAN

PORT ELIZABETHCAPE TOWN

JOHANNESBURG

British Airways (Plc)British Airways (operated by Comair)

WINDHOEK

VICTORIA FALLSLIVINGSTONE

KENYAFRANCE

DURBAN

EAST LONDON

GEORGECAPE TOWN

JOHANNESBURG(O.R. Tambo and Lanseria)


Management approach

The Group Sustainable Development Manager is Mr Derek Borer,

the Company Secretary, who, as part of the Social and Ethics

Committee, is responsible for the compilation of the Sustainable

Development Report. The Social and Ethics Committee is also

responsible for developing and reviewing the Group’s policies

with regard to social and economic development, good corporate

citizenship and for making recommendations to the Board and/or

management on matters within its mandate (See the Social and

Ethics Report for more information in this regard). The content of

this Sustainable Development Report is driven by the material risks

and opportunities facing the Group ability to achieve its objectives,

as set out in the Internal Control and Risk Management Report. In

addition, this Sustainable Development Report aims to explain the

stakeholder engagement process undertaken by the Group, as

well as disclose the key topics raised as a result of this process,

and the Group’s response in this regard.

Engagement with stakeholders

The Group’s commitment to its stakeholders to conduct its

business in a responsible and sustainable way and to respond to

their needs is entrenched in its values. The nature of its business

requires close engagement with its stakeholders, including but

not limited to customers, employees and trade unions, suppliers,

government and authorities, industry associates, investors and

the media. Communication with stakeholders is important to

maintaining the Group’s reputation as a trusted and reliable

provider of airline and related services. One of the Group’s main

objectives is to deliver “an awesome travel experience in the most

efficient way”, thus becoming the premier domestic and regional

airline in sub-Saharan Africa and the airline of choice for travellers

within the its operating environment. The Group, in addition, values

the importance of its brands, namely British Airways, kulula and

SLOW, as well as its travel, catering and training brands, and

has taken the necessary legal steps to protect them. A diagram

reflecting the Group’s brands is set out on page 6 of this Integrated

Annual Report.

The Group, having regard for the importance and power of

social media, adopted a Social Media Strategy enabling two-way

communication with customers via this platform. Through the

use of sophisticated software, the Group is able to monitor all

social media platforms, and consolidates all direct and non-direct

customer feedback in real-time, enabling it to better manage

brand performance and consistency. The social media platforms

used by the Group are Twitter, Facebook, YouTube and Google+

(Google Plus).

There have been no incidents of material non-compliance with

any applicable regulations or legislation concerning marketing

communication during the period under review.

No requests for information were received in terms of the South

African Promotion of Access to Information Act (Act No. 2 of 2000).

As part of its ongoing operations, the Group frequently engages

with various stakeholder groups. It defines stakeholders as “anyone

who affects or is affected by the Group”, and in deciding which

stakeholder groups to concentrate its engagement efforts on, it

considered the significance of the various stakeholder groups in

the achievement of its objectives. Only those significant stakeholder

groups that could fundamentally impact the ability of the Group

to achieve its objectives were engaged.

Customers

Providing a safe, secure, reliable and quality experience on both of

the Group’s airline brands, as well as in its travel-related business,

is core to the Group’s business and it therefore strives to deliver “an

awesome travel experience in the most efficient way” and hence

be recognised as the airline of choice for all travellers within its

operating environment. The Group continually measures customer

satisfaction through various surveys and integrated social media

monitoring, to identify areas for improvement, in order to ensure

it provides a quality service. No issues of a material or significant

nature were raised by customers.

The Group does monthly research on its brands to determine its

performance and to identify areas that need improvement. The

result of the research undertaken is shared amongst relevant

staff members, where concerns raised are addressed. Please

refer to the section in the Sustainable Development Report under

Customer Experience for more information on the research tools

used and the performance of each of the Group’s airline brands.

To enhance the quality of its service the Group provides access to

its airline lounges, known as SLOW Lounges. These lounges are

located at O.R. Tambo International Airport (in both the domestic

and international terminals), Cape Town International Airport (in

the domestic terminal), King Shaka International Airport (in the

domestic terminal) and SLOW in the City, situated opposite the

Gautrain station in Sandton. SLOW Lounges are open to qualifying


customers (for example, Gold and Silver Executive Club Members,

business class customers, the Group’s VIP guests and FNB and

RMB qualifying clients). The concept of the SLOW lounges is

based on the theme that time always plays a significant part in

people’s lives. Modern day life places numerous demands on

people’s time and there is generally not enough of it. SLOW was

created as a space to get their time back on their own terms,

as, for a few moments they get a chance to catch their breath

and relax. The Group wanted to ensure that within the busy

airport environment, it developed a space and offering that was

conducive to relaxation, comfort and convenience. This is evident

in the technologies, furnishings and the freshly prepared food

and beverage choices delivered through its friendly efficient staff

in the lounges. Since the introduction of the SLOW Lounges the

Group has received many accolades, awards and compliments

from the industry and customers. Demand for the Lounges has

increased and the Group recently embarked on an expansion

programme for the lounges. The Cape Town Domestic Lounge

was revamped and made bigger during the period under review.

The Group is currently increasing the the size of the International

Airport Lounge at O.R. Tambo International Airport, with the new,

increased Lounge due to open in November/December 2015. The

extension of this Lounge will afford the Company the opportunity

to allow other international airlines who have contracted with the

Group the opportunity to experience the SLOW concept and will in

addition accommodate the growth of the Group’s, and RMB and

FNB customer volumes going forward. The Group also plans to

extend and revamp the Domestic Airport Lounges at O.R. Tambo

International Airport. The Group will also shortly be opening a new

SLOW Lounge concept at Lanseria International Airport.

The Group actively participates in the British Airways Plc Executive

Club frequent flyer programme, as well as offering a co-branded

kulula credit card as follows:

British Airways Executive Club

The Executive Club is British Airways Plc’s global frequent flyer

programme, designed to recognise and reward loyal members,

making their travel more enjoyable and rewarding. Executive

Club members earn Avios, which are the Executive Club loyalty

currency, when they fly with British Airways, a partner airline, or

on one of the oneworld® alliance partners. The amount of Avios

earned depends on the distance flown, the cabin travelled in,

the type of ticket purchased and the Executive Club tier status.

Members can also collect Avios with British Airways’ worldwide

hotel, car rental, financial and shopping partners, even when they

are not flying. In addition to accumulating Avios, members also

earn Tier Points. Tier Points allow members to move through the

various tier levels, starting on Blue then Bronze, then Silver and

finally Gold Executive Club status. As members progress from

one tier level to the next they are able to enjoy additional benefits

associated with each tier level such as, but not limited to, airline

lounge access, dedicated check-in processes and priority waitlists.

The kulula credit card

The kulula credit card is a Visa credit card which is issued, owned,

financed and administered by FirstRand Bank Limited, which is

an authorised financial services and registered credit provider.

Customers earn kulula moolah when using their kulula credit

card to purchase various qualifying goods and services. kulula

moolah can be used to pay for or towards any kulula flights. kulula

moolah is a virtual currency with 1 kulula moolah equating to R1.

Magazines

The Group prints two on-board magazines, namely, Highlife SA

for its British Airways brand, and khuluma for its kulula brand, as

well as a magazine titled SLOW for the SLOW Lounges. These

magazines cover a number of subjects, including pertinent information

relating to the lifestyle interests of the Group’s customers, as well

as information about the Group and its business. Twelve editions

are printed per year of each magazine title (one per month). The

circulation for HighLife SA is 16 000 per month, for khuluma 21 000

per month and for the SLOW magazine 5 500 per month. The

magazines, other than the SLOW magazine, are made available

on-board the aircraft and HighLife SA is also available in the SLOW

Lounges. Other mediums of communication with customers and

potential customers include direct e-mail communications to the

Group’s respective customer databases, on-board announcements

and advertising campaigns (including radio, TV, outdoor, print

and online) as well as social media channels such as Facebook,

Twitter, Google+ and YouTube.

British Airways Plc

The Group entered into a Licence Agreement with British Airways Plc

(BA) in the 1996 calendar year in terms of which it was granted a licence

to operate flights using BA intellectual property and in accordance

with the BA style of business, tweaked to meet local conditions. In

terms of the Licence Agreement, BA provides other services to the

Group, such as, but not limited to, access to the BA frequent flyer

programme. As mentioned above, the Licence Agreement has been

in operation for almost 19 years and has, in the Group’s view, been

highly beneficial to both BA and the Group. Notwithstanding the


Licence Agreement with BA, the Group itself remains actively and

effectively in control of the airline services it provides.

Group employees

An integral part of the Group’s business is the people it employs.

The Group strives to be an employer of choice and invests

significantly in this relationship. Paying attention and responding

to employee needs through effective communication and sound

employee relations is critical to the maintenance of a stable and

engaged workforce. Employees are treated with respect, receive

fair remuneration and are involved in the day-to-day running of

the business and have access to the Group’s e-mail facility and

intranet. The Group communicates with its employees in a variety

of ways including, but not limited, to:

• The My Comair intranet which provides a platform to inform

employees of current news and events; newsletters from the

CEO; classifieds; corporate information; social responsibility

feedback; a library of standard templates to assist employees

in the performance of their responsibilities; policies and

procedures; standard forms for leave and employee travel

benefits; as well as travel and related specials made available

to employees, which the Group has been able to secure from

various suppliers;

• Direct e-mails to employees;

• Newsletters to employees from the CEO known as Plane Talk;

• We Lift You Up communication which explains the Group’s

employee value proposition;

• Ad hoc marketing communications in respect of the Group’s

two brands;

• Ad hoc IT communications known as IT Talk;

• Ad hoc communications from the Human Resources

Department covering matters relating to employee relations,

recruitment, organisational development, training, remuneration

and benefits and employee wellbeing;

• Interactions with employees through various workplace

forums, such as the Employment Equity Forum;

• Business Talk with Erik, a quarterly forum for Middle and

Senior Managers to engage with the CEO and Executive

team on topical matters relating to the business.

The Group, in addition, has the following programmes in place

for all employees:

• We Lift You Up: This is designed to create a business

understanding amongst employees in order to obtain their

commitment to the Group’s Cycle of Success, as set out

in its Strategic Intent document. In the financial year under

review, the focus was on the Employee Value Proposition

(Employer vs. Employee Obligations);

• Think Vision: This is the Group’s formula for success and

was formulated in consultation with employees. The Think

Vision formula constitutes the values and principles that

determine the Group’s success and provides guidance to its

employees in their day-to-day thinking and decision-making;

• Catalyst Awards: This is a reward and recognition programme

that encourages employees to implement the Think Vision

philosophy and to inspire other employees to do the same.

Employees may be nominated for Catalyst Awards by their

peers, managers or customers, for living one or more of the

Think Vision values;

• The Precious Cargo Programme: This was created to

assist employees with balancing the demands of work and

family life. Details of this programme are dealt with further

on in the report;

• Tip Offs Anonymous: This is an anonymous whistle-blowing

facility to enable employees to report any unethical activities.

• On Track: This is a performance management programme

giving employees clarity as to what is expected of them

and measuring their performance in respect of certain key

performance indicators;

• Take Off: This is a leadership development programme with

the aim of identifying and developing employees who the

Group believes can fill key leadership positions;

• Supervisory Development Programme: This is a programme

developed for junior to middle management for succession

planning at the airports.

Trade unions

As at 30 June 2015, approximately 35% (734 of 2 072) of the Group’s

fulltime permanent employees in South Africa were members of trade

unions compared to 43% (864 of 2 006 employees) as at 30 June

2014. The Group strives to maintain good working relationships with

the trade unions, where it has recognition agreements in place and

enters into substantive negotiations annually. These negotiations mainly

focus on salary increases and improvements to employment conditions.

As at 30 June 2015, union membership was as follows compared

with 30 June 2014:


2015 2014

Solidarity 223 179

United Association of South Africa (UASA) 372 167

South African Aviation and Allied Workers Union (SAAAWU) 0 362

Comair Pilots Association (which is affiliated to the Airline Pilots Association of South Africa) 139 156

There was no strike action during the period under review. However,

during salary negotiation with cabin crew, they threatened to go

on strike and were granted the required certificate to do so. The

Group and the union were able to resolve the dispute amicably

and avoid strike action, and a three year salary agreement was

signed. During the period under review, SAAWU was deregistered

due to its reduced membership figures. In addition, a number of

airport staff joined UASA and are currently engaging with the Group

regarding the signing of a recognition agreement.

Other than the above-mentioned, no other material or significant

issues were raised by employees or trade unions during the

period under review.

Human rights

The United Nations Global Compact is an international initiative

that addresses human rights, labour, environmental and corruption

issues through a commitment to ten principals derived from the

Universal Declaration of Human Rights. The information set out

below provides a brief overview of the Group’s implementation

of the ten principles, as further dealt with in this report:

• Business should support and respect the protection of

International Proclaimed Human Rights: The Group’s

human rights policy is part of the Guidelines to the Code

of Ethics. Human rights principles are incorporated in the

Group’s labour relations policies and practices and corporate

social responsibility initiatives;

• Business should make sure that it is not complicit

in human rights abuses: The Group adheres to this

principle through its compliance with all applicable

legislation and takes the issue of human rights into account

when deciding whether or not to conduct business in

foreign countries;

• Business should uphold the freedom of association and

effective recognition of the right to collective bargaining:

The Group recognises the rights of employees to collective

bargaining and to freedom of association in accordance

with all relevant South African labour legislation. It maintains

constructive relationships with all representative unions

who enjoy consultative and negotiating rights on issues of

employee rights and mutual interests;

• The elimination of all forms of forced and compulsory

labour: All the Group’s employees are sourced from the open

labour market. Employees are provided with employment

contracts and are free to resign at any time;

• The effective abolition of child labour: The Group does

not make use of child labour and does not support the use

of child labour in any form whatsoever. It does in certain

instances provide employment opportunities for school

leavers, provided that such persons meet the International

Labour Organization’s employment age requirements;

• The elimination of discrimination in respect of employment

and occupation: The Group is committed to compliance

with the intent and spirit of employment equity legislation in

the workplace. It is further committed to meeting its targets

to achieve an equitable representation of race and gender in

the workplace. An analysis of the Group’s employment equity

status is set out later in this Sustainable Development Report;

• Businesses should support a precautionary approach

to environmental challenges: This will be the fifth time the

Group reports on its emissions in terms of the Corporate

Accounting and Reporting Standards of the Green House

Gas Protocol. Its environmental performance is set out later

in this Sustainable Development Report;

• Undertake initiatives to promote greater environmental

responsibility: The Group’s undertakings in this regard are

set out later in this Sustainable Development Report;

• Encourage the development and diffusion of environmentally

friendly technologies: The Group is committed to developing

and diffusing environmentally friendly technologies where

both a clear benefit and business case can be made for the

introduction of this technology, such as, but not limited to,

the new fleet of aircraft introduced into service, which is more

environmentally friendly, as set out later in this Sustainable

Development Report;

• Businesses should work against corruption in all its forms,

including exploitation and bribery: The Group’s commitment

to combating corruption is embodied in its Code of Ethics, as

detailed in the Corporate Governance Report. Allegations of

fraud and corruption are rigorously investigated and where

sufficient evidence exists, appropriate disciplinary action is

enforced, including the dismissal of offending employees.


Suppliers

The Group is dependent on a number of suppliers who form

an integral part of its ability to provide a safe, secure, reliable

and quality service. It attempts to build long-term relations with

suppliers who are of vital importance to it, based on the principle

of mutual trust and respect. Regular meetings are held with

suppliers to ensure continuity of service. It further relies on its

suppliers to deliver products and services in line with its own

standards. Other criteria also play an import role in selecting

suppliers, such as compliance with international and local quality

and safety standards, price, stability of the organisation, support

network and technical capacity, and the B-BBEE status of South

African suppliers. Any form of purchase incentive is prohibited.

Employees involved in the purchasing of equipment are bound by

strict ethical principles, ensuring that high standards of integrity

are maintained in the supplier relationship.

No material or significant issues were raised by suppliers during

the period under review.

Government and authorities

The Group remains committed to working with government and

other relevant authorities to ensure:

• The maintenance of a safe, reliable, competitive and commercially

viable air transport sector where all operators are afforded

equality of treatment by government and the authorities;

• The provision of air transport infrastructure that is affordable

to and consistent with the requirements of the air transport

sector and the travelling public;

• The provision of air travel at a cost that is affordable to South

African consumers and in line with internationally accepted

airline service standards and practices; and

• An increase in the number of Black airline pilots as well as

greater participation by Black people in the aviation industry

in line with the revised B-BBEE targets.

Government financial assistance

The Group received no financial assistance from government, nor

did it make any contribution towards any political party.

Government, regulatory and industry bodies

The airline industry is subject to extensive government and

regulatory oversight relating to, amongst other things, safety,

security, licensing traffic rights and consumer protection. The

Group regularly communicates and interacts with governmental,

regulatory and industry bodies. During the period under review,

the Group was the subject of a complaint laid by Safair Operations

Proprietary Limited (FlySafair) with the Air Services Licensing Council,

directed against the level of the Group’s current foreign-owned

shareholding. The information relating to the FlySafair complaint

is set out on page 31 of this report.

Government and regulatory bodies

Department of TransportThe Department of Transport (DoT) is responsible for providing

secretarial support to the two licensing councils, the Airports

Company of South Africa (ACSA) and the Air Traffic and Navigation

Services Company (ATNS) and the Regulating Committee; for

ensuring entity oversight over the ATNS and ACSA and the South

African Civil Aviation Authority (SACAA); for conducting bilateral air

service negotiations with foreign governments; and for managing

aviation industry involvement in major events. The Group interacts,

co-operates with and provides feedback to the DoT in all these areas.

It strongly supports the concept of a deregulated and competitive

domestic airline industry where all airlines are required to comply

with applicable aviation legislation and compete fairly and equally

with one another for market share. During the period under review,

the Group continued with its efforts to ensure that the applicable

requirements contained in South African Air Services Licensing

Legislation are complied with via engagement with the DoT and

the two licensing councils mentioned below.

The Group continued its participation in the Airlines Association of

South Africa (AASA) initiative to assist the DoT and other government

departments to promulgate legislation to fully implement the Cape

Convention and Aircraft Equipment Protocol (The Convention) into

South African law. Unfortunately, during the year under review, limited

progress was made with this initiative. As all South African airlines will

benefit from discounted aircraft financing rates once the Convention

is fully implemented. The Group will continue to help AASA to lobby

government to introduce the necessary legislative amendments.

International Air Services Council International air services operated by South African carriers

between South Africa and other countries remain regulated with

respect to traffic rights, frequency and capacity. The International

Air Services Council (IASC) is the authority responsible for issuing

licences to South African operators wishing to operate air services


to regional and international destinations. During the period under

review, the Group received a request from this council to provide

it with details of its Licence Agreement with British Airways. The

Group is currently engaging with the council in this regard, and

maintains an excellent working relationship with this council.

Air Services Licensing Council Domestic air services within SA have been de-regulated since

1990. Therefore the Air Services Licensing Council’s (ASLC)

responsibilities are restricted to the issuing of air service licences

to new applicants, ensuring the safety and reliability of air services

operated within South Africa and adjudicating complaints of non-

compliance with the Air Services Licensing Act (Act No. 115 of

1990), as ammended. As the Group has held and maintained a

Class I and Class II Air Service Licence, amongst others, for many

years, it only appears infrequently before the council to either

answer questions on its published annual financial results, to

amend certain details on its licence, or to respond to complaints

from interested parties. In November 2013, the Group successfully

interdicted FlySafair from launching its new scheduled low cost

operation as a result of not having complied with the legislated

shareholding requirements.

As mentioned above, FlySafair lodged a complaint with the ASLC

against the Group’s domestic air service licence during the previous

reporting period. The complaint consists of the allegation that the

Group breached the Air Services Licensing Act by failing to apply

for a licence amendment after undertaking a share repurchase

programme, and secondly that when a ‘look through’ construction

is applied to the Group’s current foreign shareholding component,

the amount of this shareholding slightly exceeds the restrictions

specified in the said Act. In September 2014, the Group and Safair

appeared before the ASLC to make their respective submissions

on the complaint. The ASLC deferred making a final decision on

the complaint and requested further information on the Group’s

shareholding. Detailed submissions were provided by the Group to

the ASLC. At the end of November 2014, without having reached

a decision on the Safair complaint, the terms of appointment of

the members of the ASLC expired. New members to the ASLC

were only appointed by the Minister of Transport in March 2015,

and in July 2015 the new members of the ASLC issued the

Group with a notice requesting it to provide, within a period of

120 days, some further shareholding information. The Group is

currently engaging with the new members of the ASLC to satisfy

and resolve the matter in an amicable way.

South African Civil Aviation Authority The South African Civil Aviation Authority (SACAA) is the body

responsible for controlling and regulating civil aviation safety and

security in South Africa. As safety and security is the Group’s

number one priority, it interacts and co-operates on a regular

basis with the SACAA to ensure that it maintains, and in some

areas exceeds, the safety and security standards required by

the SACAA. Besides the usual interaction between the Group

and the safety regulator during the period under review, the

Group’s involvement with the SACAA centred on consulting with

the regulator to revise the process set out in the Civil Aviation

Regulations (CAR) for the imposition of administrative penalties to

take into account voluntary incident reporting in terms of Safety

Management Systems and ‘just culture’ considerations. The Group,

together with other industry participants, compiled a proposed

amendment to the CAR which is currently being considered by the

Regulating Committee. In addition, the process to develop a more

user friendly requirement in line with international best practice for

the carriage of special needs passengers, as reported last year,

continued during the period under review. As an interim measure,

whilst the regulations are being amended, the Group obtained

an exemption from the SACAA to allow certain special needs

passengers to travel without an able-bodied assistant subject to

a medical practitioner certifying that an assistant is not required.

In addition to the foregoing, the Group is currently assisting the

SACAA with crew resource management training for its general

aviation pilots. It is also assisting the SACAA with the design and

implementation of performance-based navigation approaches in

SA and the surrounding region.

Human Rights Commission of SAIn November 2014, the Group received a complaint from the Human

Rights Commission (HRC) alleging that the Group had violated the

human rights of a particular person by refusing to allow his seizure

alert dog to travel with him in the cabin. The Group’s policy only

allows for the carriage of service dogs trained by the Guide Dogs

Association of South Africa or any other suitably accredited training

organisation. In this case, the dog was self-trained by the owner. The

carriage of service dogs is not currently regulated by the SACAA.

The Group has made detailed submissions to the HRC as to why

certain self-trained dogs are not permitted to travel in the cabin,

and is still awaiting a final decision on the matter from the HRC.


Airports Company of SA Most large airports in South Africa are owned and operated by Airports

Company of South Africa (ACSA). On an operational level, the Group

interacts with the ACSA on a continuous basis and maintains a fulltime

representative in ACSA Airport Management Centre at O.R. Tambo

International Airport. The Group, together with AASA, also engages

with ACSA on the important issues of airport user charges and the

standard of service provided by ACSA to airport users. During the

period under review, the Group, via AASA, participated in consultations

to agree to a Business Plan for both ACSA and ATNS for the next

permission period, being 2015/16–2019/20.

In May 2015, the Regulating Committee published a draft Permission,

putting forward a 42.5% decrease in tariffs for the 2015/16 year,

followed by increases of 4.1% and 15.8% for the 2016/17 and 2017/18

years respectively. An increase of 15.9% would apply in 2018/19

and 4% in 2019/20. ACSA has objected to same and is currently

engaging the Regulator on why it believes that the proposed tariff,

especially that for the 2015/16 year, will weaken its credit profile and

increase its borrowing costs. The Final Permission Determination is

expected towards the end of the 2015 calendar year.

Air Traffic and Navigation Services Company Air traffic and navigation services in South Africa are provided by

the Air Traffic and Navigation Services Company (ATNS). During

the period under review, the Group had regular interaction with the

ATNS on operational issues and maintained a good relationship

with the ATNS. The Group did, however, object to the ATNS

requiring a substantial increase in the amount of the standing

credit guarantee provided by it to the ATNS. Under protest, the

Group has agreed to provide the increased guarantee, but will

continue to engage with the ATNS regarding this issue.

National Consumer Commission The Group has co-operated with the National Consumer Commission

(NCC) by providing expeditious responses on all consumer complaints

referred to it by the NCC, as well as through participating in NCC-

initiated conciliation proceedings with consumers whose complaints

are not initially resolved. Almost all consumer complaints are dealt

with directly between the Group and the consumer. No significant

complaints were received during the period under review, and almost

all complaints were resolved to the satisfaction of the consumer

with no complaints having been referred to the National Consumer

Tribunal. The Group, via the AASA, has further co-operated with

the NCC through the development of a draft Airline Industry Code,

intended to provide guidance on how the airline industry will deal

with specific airline-related consumer matters and compensation

issues. The draft Code has been submitted to the NCC and a

response thereon is awaited.

Industry bodies

Airlines Association of South Africa

The Airlines Association of South Africa (AASA) was formed to

promote and protect the interests of its member airlines operating

within the Southern African region. The Group actively participates

in both the activities and management of the Association. It believes

that the Association is vital to ensuring a healthy and commercially

successful airline sector in Southern Africa. The Group supports

AASA by providing it with data and information on a variety of

airline issues; by giving feedback and comment on AASA position

papers and submissions; and by participating in the various AASA

delegations that attend important stakeholder meetings. During

the period under review, the Group continued participating in the

AASA initiative to develop more friendly regulations for the carriage

of special needs passengers in line with international best practice.

An airline proposal on new ‘special needs’ regulations has been

formulated and will be submitted to the SACAA later this calendar

year. The Group, together with AASA and other industry players, also

worked closely on various health- and immigration-related matters.

The International Air Transport Association

The International Air Transport Association (IATA) is an association

representing approximately 260 airlines or approximately 83% of

all air traffic around the world. It is responsible for promoting safe,

reliable, secure and economical air services and fostering inter-

airline co-operation. IATA also operates the airline clearing house in

Geneva, which processes and allocates financial credits and debits

between member airlines as well as administering IATA Operational

Safety Audit (IOSA). The Group maintains its membership of IATA,

participates in the clearing house and undergoes a bi-annual IOSA

audit. The Group will be preparing itself for its sixth IOSA audit,

due to take place in February 2016. As part of the previous IOSA

audit, the Group was audited against 998 standards and in this

regard the auditing organisation made no findings, which is a huge

compliment to the Group.

Investors

The Group’s main objective is to create value for its shareholders.

Reports to its shareholders are aimed at providing a clear

understanding of the Group’s financial, economic, social and

environmental performance, both positive and negative. Policies


are in place to ensure that communications with shareholders are

made available timeously and simultaneously.

The Group endeavours to maintain dialogue with its shareholders

and other interested parties in the investor community and meets

with its institutional shareholders twice a year, after the release of its

annual and interim results. The Group’s website, www.comair.co.za,

contains the latest, as well as historical, financial and other information

about the Group, including its Integrated Annual Reports. The Board

encourages shareholders to attend its Annual General Meeting, notice

of which is contained in this Integrated Annual Report, at which

shareholders have the opportunity to put questions to the Board.

No material issues or topics were raised by investors during the


Community

The Group is a committed corporate citizen and, together with its

employees, endeavours, wherever possible, to improve the lives

of fellow South Africans. It believes that social responsibility is a

duty, privilege and obligation to help those less fortunate and to

make some impact on society in general. For more information

regarding the Group’s engagement with the community, refer to

the section dealing with its community involvement on page 45

of this report.

Media

The media plays an important role in the Group’s engagement

with all its stakeholders. The Group interacts on a regular basis

with the media by issuing press releases to both the corporate and

trade media, as well as granting media interviews to share news

on developments related to the Group. No material or significant

issues were raised by the media during the period under review.

The Group’s objective is to position it in the media as a trusted

player in the airline industry – a ‘champion’ of the people; to position

its management as leaders on industry issues; to educate the

media about its business and how the industry operates; and to

broaden the Group’s profile amongst the travel industry media.

The Group’s response to material risks and opportunities identified

Issues impacting on the Group, its strategic direction and its ability to operate and create value

Commitment to safety and quality

Commitment to safety and quality of service

The Group is committed to providing a safe, secure, reliable and

quality service to its customers, and aims to deliver “an awesome

travel experience in the most efficient way” and hence be regarded

as the airline of choice for corporate and individual travellers in all the

areas and regions in which it operates. The safety and security of its

customers is of paramount importance, and it therefore ensures that

a strong culture of safety and security exists among all employees,

which goal is supported by a well-defined reporting and management

process to ensure that all safety and security issues are dealt with

thoroughly and effectively. This is formally documented in a Safety

Management Manual that has been accepted by the SACAA. In

addition, the Group maintains an IOSA registration and has been

audited and has passed all audits, with the next bi-annual IOSA

audit due in February 2016. The Company received unqualified

audit ratings from British Airways Plc, the Boeing Company and

the SACAA. The Group’s Simulator Training Facility has have been

audited by external airlines interested in making use of the Simulator

Training Facility and we accordingly have numerous airlines and

other users currently making use of the facility. Avions de Transport

Regional (ATR) conducted an audit of the Group’s Simulator Training

Facilities in the 2011 calendar year and the Group passed the audit

with flying colours.

Security of customers is achieved by applying measures such as,

but not limited to, ensuring that all customers, including the Group’s

airline crew, prior to entering the secure area of the airport, are

screened together with their carry-on baggage; all baggage and

cargo being placed in the hold of the aircraft is screened; and

no aircraft departs, with certain exceptions, unless the customer

together with his/her baggage is on board the aircraft.

The key safety and quality of service priorities applied by the

Group are detailed below.

Implementation of the IATA IOSA Programme

The IOSA Programme is an internationally recognised and accredited

evaluation system designed to assess the operational management

and control systems of an airline. All members of IATA are IOSA

registered and must remain registered to maintain IATA membership.

The Group’s approach to aviation safety is one of oversight and

audit as defined within the context of the eight disciplines of the

IOSA audit structure, namely, organisational management, flight,

dispatch, maintenance, cabin, ground (‘airport’), cargo, and security.


The Group has participated in the IOSA Programme since 2006

and has successfully undergone five unqualified audits.

Implementation of runway safety measures

Safety statistics show that runway excursions and incursions are

the most common type of accident or incident reported annually.

In response to this, ACSA has established consultative forums,

in the form of local runway safety teams, at each ACSA airport.

The Group actively participates in such forums. It also provides

operational guidance to the Lanseria Airport management team

on their airport runway upgrade programme and associated

infrastructure.

Training on preventing loss of control

The Group incorporates loss of control inflight training as part

of its continuous pilot training curriculum. Various exercises are

practiced during such training. In addition to the foregoing, the

Group has also:

• Introduced a Flight Crew Fatigue Risk Management System

during the period under review, the purpose of which is to

monitor and regulate the risk of fatigue among the Group’s

pilots and cabin crew; and

• Re-evaluated its cockpit and pilot recruitment procedures

following the Germanwings incident and is relatively confident

that it has put in place all possible risk mitigants to prevent a

similar incident occurring on the Group’s airline operations.

Implementation of safety management system

The Group has a safety management system (SMS) to address all

aspects of aviation and ground safety. The purpose of the SMS is

to ensure that safety management protocols are in place and to

ensure that risks affecting safety are controlled and appropriately

mitigated against. The Director of Operations monitors the Group’s

performance against defined objectives and the Board reviews

the aviation safety goal matrix at its quarterly meetings.

Quality of equipment

As mentioned above, the Group’s goal is to provide a safe, secure,

reliable and quality service to its customers. It therefore strives to

procure the best and latest equipment and technology affordable

to it in providing such services.

Maintenance of its fleet of aircraft is regulated by the SACAA and,

as the Group leases a number of aircraft from foreign-owned

leasing companies, the Federal Aviation Authority of the United

States and the European Aviation Safety Authority. The Group

also ensures compliance with airworthiness directives issued by

the manufacturers of the equipment. Its buildings, plant and other

equipment are maintained to a high standard to ensure a safe

and user-friendly environment for its employees and customers.

The Group has, in the past financial year, made the following

investments in respect of equipment, plant and buildings:

• Continuously invested in maintaining the safety and reliability

of its aircraft. The Group subcontracts the maintenance of

its aircraft and engines to South African Airways Technical

Proprietary Limited, Israeli Aircraft Industries and ST Aerospace

Engines Pte;

• With the successful implementation of a businesswise airline

enterprise reservation system from Sabre Airline Solutions

in June 2012 at a cost of approximately R52 million, the

Group continued to improve the system with new modules

and updated technology as and when required during the

period under review. This system has and will continue

to deliver substantial improvements in revenue integrity,

inventory management and optimised ticket pricing, as well

as improved crew and airport staff productivity;

• Made a substantial investment towards the acquisition of a

new fleet of Boeing 737-800 New Generation aircraft which, in

addition to having delivered substantial fuel savings compared

to the B737-400 fleet, also has a greater revenue generating

potential with its increased seating capacity, and requires

less maintenance downtime. The Group took delivery of

four new Boeing 737-800 aircraft during the 2013 reporting

period and will be taking delivery of a further four new Boeing

737-800 aircraft during the 2015 and 2016 calendar years. In

addition, the Group has entered into a purchase agreement

with Boeing for the purchase of eight Boeing 737 Max aircraft,

due for delivery between 2019 and 2021;

• Successfully extended and upgraded the SLOW Lounge at

Cape Town International Airport at a cost of approximately

R22 million. The Group is currently expanding its International

Airport Lounge at O.R. Tambo International Airport at an

approximate cost of R20 million. In addition, the Group will

be opening a new SLOW Lounge concept at the Lanseria

International Airport in next reporting period;

• Purchased various properties in and around the vicinity of

Cape Town International Airport at an approximate cost of

R25 million. It intends to develop the properties purchased


into offices, catering facilities and store rooms to house its

employees who need not be at the airport; and

• The Group is currently building a state-of-the-art cabin crew

training facility at is operations facility in Rhodesfield at a cost

of approximately R7.5 million, which will open for cabin crew

training in August 2015.

Customer experience

The Group recognises that in order to be a truly customer-

centric airline, it needs to consistently listen to its customers’

needs. The Group continuously seeks the best and most

reliable tools to measure customer satisfaction levels in

respect of both its British Airways and kulula brands. The

Group utilises the Global Performance Monitor (GPM) tool

for the British Airways brand and the Voice of the Customer

(VoC) feedback tool for kulula.

British Airways

The Group conducts monthly on-board research amongst randomly

selected customers. The research methodology is in line with

the GPM. The overall customer satisfaction performance of the

British Airways brand during the period under review is reflected

in the table below.

The Group acknowledges that there are areas for improvement

and plans are in place to ensure continuous improvement.

British Airways overall performance July 2014–June 2015

Cabin Crew 79%

Likelihood to travel British Airways again 78%

SLOW Lounge environment 78%

Overall satisfaction with British Airways 77%

Check-in process 77%

Likelihood of recommendation 75%

SLOW Lounge Team 73%

SLOW Lounge refreshments 72%

Departure process 68%

Value for money

Meal/refreshments service

64%

Cabin environment 59%

58%


Fly with us again

Jul 2014 Aug 2014 Sep 2014 Oct 2014 Nov 2014 Dec 2014 Jan 2015 Feb 2015 Mar 2015 Apr 2015 May 2015 Jun 2015

100%87%87%85%83%86%89%

85%87%87%87%86%87%90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

In and during the second and third quarters of the 2014 calendar

year, the South African Customer Satisfaction Index surveyed 1 269

consumers about their satisfaction with South African airlines. The

industry as a whole was rated at a score of 69.5 out of 100, with

the British Airways and kulula brands holding the top positions.

In this regard, British Airways brand scored 75 out of 100 and

the kulula brand 71.5 out of 100.

Broad-based black economic empowerment

The Board views the Group’s business as an integral part of the

political, social and economic community in South Africa and is

committed to sustainable transformation as part of its Business

Strategy. The Group recognises the importance of implementing a

broad-based black economic empowerment (B-BBEE) Programme

that addresses the inequality of the past through a dedicated and

ongoing process, and regularly reviews its B-BBEE Strategy with

the aim of effecting improvement across all seven pillars of the

B-BBEE scorecard, as detailed later in this report. The Group is

also required to provide both the International Air Services Council

and Air Services Licensing Council with its verification certificate

and Employment Equity Plan when making application for licences

or amendments to same.

The Group’s verification audit for the 2014 and 2015 financial

years were carried out by Grant Thornton. The comparisons of

the results of both audits are contained in the following table:

Element Indication WeightingScore2015

Score2014

Ownership Black ownership 20 18.74 17.73

Management control

Black top management 10 2.75 3.75

Employment equity

Black managers 15 2.74 2.66

Skills development

Black training spend 15 10.02 10.60

Preferential procurement

Procurement spend 20 17.10 13.28

Enterprise development

Investment in Black-owned enterprises 15 15.00 15.00

Socio-economic development

Socio-economic contribution 5 5.00 3.38

Total point 100 71.35 66.40

The assessment indicates that the Group achieved a total of

71.35 in 2015 compared to a total of 66.40 in 2014. The B-BBEE

recognition level for the Group was maintained at a Level 4. The

Group, however, significantly improved its scores in the areas

of preferential procurement and socio-economic development.

Equity ownership

The Group concluded a BEE transaction during the 2007 financial year,

pursuant to which shares equivalent to 15% of its post-transaction

issued share capital were issued to a Black Empowerment Consortium

kulula.com

As mentioned above, kulula uses the VoC tool. The VoC tool

receives real-time feedback from customers which is used to

ensure that the kulula.com brand remains responsive to customer

needs. The feedback reflects the customer’s perception of the

service received at different customer touch points, which in turn

informs decisions on how the brand can better serve customers.

While there are areas for continuous improvement, it is encouraging

to note that 87% of customers are likely to fly with kulula again.


known as Thelo Aviation Consortium Proprietary Limited (Thelo

Aviation Consortium), led by Thelo Aviation Investments Proprietary

Limited (Thelo Aviation Investments). As noted in this Integrated Annual

Report, the BEE transaction came to an end during the financial period

under review, with the Thelo Aviation Consortium having been issued

29 067 766 ordinary shares, which shares were subsequently sold

by the Thelo Aviation Consortium members. As the Thelo Aviation

Consortium shares were only listed after 31 March 2015, they were

not taken into account in determining equity ownership.

There was also an increase in the ownership score between the

2014 and 2015 financial years due to an increase in the public’s

purchase of the Group’s shares in the market.

The Group, on its listing in 1998, implemented a share incentive

scheme for all permanent employees, including previously

disadvantaged employees, to enable them to purchase shares in

the Group. This scheme, as a result of certain tax changes, has to

a large extent become dormant. The Group Shareholder Analysis

is set out on pages 137 to 139 of the Integrated Annual Report.

Management control

The Group’s BEE Consortium has representation on its Board,

with two of the Consortium members, Mr Ronald Sibongiseni Ntuli,

as the Non-executive Joint Deputy Chairman of the Board and

Mr Khutso Ignatius Mampeule as an independent Non-executive

Director, serving on the Board.

Currently three of the Group’s 13 Directors (23.07%), excluding

the alternate Director, are previously disadvantaged persons,

which is the same as in the previous financial year. At Executive

Management level (which includes both Top Management and

Senior Management), two members (20%) of the ten member

Executive Committee are previously disadvantaged persons,

which is the same as for the previous financial year.

Employment equity

The Group’s focus on employment equity is in line with its overall

Transformation Strategy.

The overall race distribution of the Group’s employees in South Africa

as at 30 June 2015 compared to 30 June 2014 is set out below:

At 30 June 2015 At 30 June 2014

White (females and males)

714 employees (constituting 34% of the total number of employees)

737 employees (constituting 37% of the total number of employees)

African, Coloured, Indian (designated females and males)

1 359 employees (constituting 66 % of the total number of employees)

1 269 employees (constituting 63% of the total number of employees)

Reflected below is the summarised Employment Equity (EE) Report

(EEA2) submitted online on 12 January 2015 as required in terms

of Section 22 of the Employment Equity Act (Act No. 55 of 1998),

as well as the Group’s workforce profile as at 30 June 2015.

Summarised Employment Equity EEA2 Report as at 12 January 2015

Total number of employees (including employees with disabilities) in each of the occupational levels

Occupational level

Male Female Foreign nationalsTotal

A C I W A C I W Male Female

Top management 0 0 0 2 0 0 0 1 0 0 3

Senior management 0 0 0 6 0 0 0 1 0 0 7

Professionally qualified and experienced specialists and mid-management 6 3 2 141 6 3 6 45 0 0 212

Skilled technical and academically qualified workers, junior management, supervisors, foremen and superintendents 130 73 54 193 321 163 110 276 2 3 1 325

Semi-skilled and discretionary decision-making 62 18 12 16 203 47 33 44 1 0 436

Unskilled and defined decision-making 2 1 0 0 24 2 0 0 1 0 30

Total permanent 200 95 68 358 554 215 149 367 4 3 2 013

Temporary employees 2 0 0 0 6 0 0 0 0 1 9

Grand total 202 95 68 358 560 215 149 367 4 4 2 022

Key: A = African, C = Coloured, I = Indian, W = White


Summarised Employment Equity Report as at 31 July 2014

Total number of employees with disabilities only in each of the occupational levels

Occupational level



Top management 0 0 0 0 0 0 0 0 0 0 0

Senior management 0 0 0 0 0 0 0 0 0 0 0

Professionally qualified and experienced specialists and mid-management 0 0 0 2 0 0 0 0 0 0 2

Skilled technical and academically qualified workers, junior management, supervisors, foremen and superintendents 1 2 0 2 2 0 1 1 1 0 10

Semi-skilled and discretionary decision-making 1 0 0 1 1 0 0 0 0 0 3

Unskilled and defined decision-making 0 0 0 0 0 0 0 0 0 0 0

Total permanent 2 2 0 5 3 0 1 1 1 0 15

Temporary employees 0 0 0 0 0 0 0 0 0 0 0

Grand total 2 2 0 5 3 0 1 1 1 0 15


Workforce profile as at 30 June 2015 for South African employees

Occupational level



1. Top management 0 0 0 0 0 0 1 0 0 3

2. Senior management 0 0 0 6 0 0 0 1 0 0 7

3. Professionally qualified 10 2 4 144 6 4 6 47 1 1 225

4. Skilled technical 126 76 52 191 336 164 110 268 3 2 1 328

5. Semi-skilled 82 24 11 13 227 53 31 39 0 0 480

6. Unskilled 2 0 0 0 24 0 0 0 1 0 27

Not defined 0 1 0 0 0 1 0 0 0 0 2

Total permanent 220 103 67 356 593 222 147 356 5 3 2 072

5. Semi-skilled 0 0 0 0 0 0 0 1 0 0 1

Total non-permanent 0 0 0 0 0 0 0 1 0 0 1

Grand total220 103 67 356 593 222 147 357 5 3 2 073


The Group is implementing the following action plans to improve

representation by previously disadvantaged groups:

• Recruitment and selection: Active steps have been

taken to target and appoint suitably qualified persons from

the designated groups. The Group is fully committed to

increasing the representation amongst and diversity of its

workforce. It has an established EE Forum with whom it

consults at regular intervals on progress toward achieving

the EE Plan. Due to the targeted efforts made by the Group

during the year, the number of previously disadvantaged

employees increased to 65% compared to 63% during the

previous reporting period. The percentage includes pilots

and technicians, professions where the aviation industry is

faced with a particular challenge to achieve a more equitable

representation. The employment and retention of pilots from

previously disadvantaged groups remains a major challenge.

Notwithstanding the foregoing, the Group has increased its

pilot pool of previously disadvantaged groups by 3% since

the implementation of its EE Plan in 2011;


• An electronic, web-based recruitment tool was implemented:

This has resulted in various enhancements to the Group’s

recruitment initiatives and process. In a period of months,

close to 11 000 people have registered their curriculum

vitaes on the system;

• Job profiling, job evaluation and grading: All jobs in the

Group have been evaluated and assigned job grades. This

enables the provision of a logical graded hierarchy and

pay structure, as well as valid benchmarking of positions

and remuneration, both internally and externally. This has

significantly improved transparency with regard to recruitment

and the filling of vacancies, as well the remuneration policy

within the Group. The remuneration policy is consistently

applied to all positions in the Group. Further, through the

job profiling process, the critical competencies for each job

have been identified and mapped, which has facilitated the

development of personal development plans per employee; and

• The Group has established an electronic EE monitoring

system: This tracks in real time the EE profile and the Group’s

progress towards achieving its EE targets.

The Group’s five-year EE Plan (2011–2016), reflecting the numerical

goals/targets that it has set and hopes to achieve, is set out below.

Level EE goal% SA black

target

Budget head count

Male Female Foreign nationals Total

A C I W A C I W M F M F

Top management

2011

0%

2 0 0 0 2 0 0 0 0 0 0 2 0

2016 2 0 0 0 2 0 0 0 0 0 0 2 0

Senior management

2011

30%

12 0 0 2 8 0 0 0 2 0 0 10 2

2016 10 1 0 1 5 1 0 0 2 0 0 7 3

Mid management

2011

17%

205 4 2 0 145 0 3 6 45 0 0 151 54

2016 195 14 3 1 121 12 2 1 41 0 0 139 56

Junior management

2011

76.9%

1 292 128 74 42 197 311 152 95 289 0 3 441 850

2016 1 276 241 34 18 131 555 80 42 175 0 0 424 852

Semi-skilled 2011

86%

421 67 20 13 22 118 68 28 84 1 0 123 298

2016 444 87 12 7 27 203 29 16 63 0 0 133 311

Unskilled 2011

89%

25 1 0 0 0 23 0 0 0 0 1 1 24

2016 27 4 1 0 1 16 2 1 3 0 0 6 22

Disabled employees

2011 10 2 0 0 3 2 1 1 1 0 0 5 5

2016 32 5 0 0 2 12 2 1 10 0 0 7 25


Skills development

The Group’s commitment to providing a quality air service means that

skills development is a priority. The Group invested approximately

R21 million (compared to R16.3 million in the prior financial year) or

approximately 3% (which is approximately the same for the prior

financial year) of payroll in support of its commitment to training

and skills development. See the section dealing with the Group’s

training and development initiatives on page 44 for more details.

Preferential procurementThe Group is committed to the concept of preferential procurement.

It relies on its suppliers to deliver products and services in line

with its required standards, such as, but not limited to quality

and safety of the product and timeous delivery and availability of

supply, and, where possible, it enters into service level agreements

with such suppliers in an attempt to ensure that such standards

are met and maintained. Other important factors play a role in

selecting suppliers, including, but not limited to compliance with

local and international laws and regulations (particularly those

related to aviation), good quality service and products, reliability

and stability, cost effectiveness, support networks, with particular

reference to suppliers of aircraft parts, components and fuel and

the availability of products and services. The B-BBEE status of

South African suppliers is also taken into account.

While the Group attempts to source products and services from

South African suppliers, this is not always possible, having regard

to the nature of its business, where the acquisition of aviation

equipment or specialised airline branded products needs to be

procured and sourced from foreign companies, based mainly in


Europe and the United States of America. The proportion of spend

with foreign suppliers varies significantly year-on-year due to the

capital value of spend on aircraft, aircraft engines and aircraft

spares. For the period under review, and excluding spend on the

leasing and purchase of aircraft, aircraft engines and aircraft spares,

the Company spent approximately 87% of its total procurement

spend with South African suppliers.

In the period under review, the Group substantially increased

its score for preferential spend from 13.28 to 17.02 points. It

will continue to focus on channelling procurement through to

black-owned qualifying small enterprises and exempted micro

enterprises. It is also improving its systems to more accurately

reflect its data collection with respect to preferential procurement.

Enterprise development

The Group scored full points for enterprise development, mainly

as a result of a loan that was provided to Imperial Air Cargo

Proprietary Limited, a black empowered company, as well as

the funding and setting up by the Group of an academy which

grooms unemployed school leavers for entry into the workforce.

Socio-economic development

The success of the Group’s Corporate Social Investment Strategy

and initiatives is reflected in the fact that it scored full marks in this

category. The Group has several social development initiatives in

place including a number of programmes to support and assist

the community throughout the country on a variety of initiatives.

Current partnerships include:

• A partnership with the Red Cross War Memorial Children’s

Hospital in the Western Cape through which the Group has

donated air tickets for the transport of sick children and

their immediate family members to and from the hospital as

well as the transportation of specialised medical personnel

to hospitals in South Africa where their expertise may be

required, in addition to making a cash donation;

• The Group has also donated air tickets to Wings and Wishes

for the purpose of transporting children in need of life-saving

medical treatment.

Further details on the Group’s corporate social investment strategies

and initiatives are dealt with on page 45 of this report.

Economic impact

The Group, like many other companies, has many impacts on

its stakeholders through, amongst others, the creation of wealth;

creation of employment opportunities; remunerating its employees

fairly, being competitively based on industry standards; and its

corporate social investment. Kindly refer to the Group’s Value-

added Statement as set out on page 9. The Group’s economic

impacts are driven and influenced by the following factors.

Access to affordable flights

The airline industry is fraught with many challenges involving,

but not limited to, the cost of equipment, oil price and currency

fluctuations, airport charges and taxes and, consequently,

access to affordable flights. For this reason the Group was

the first in South Africa to launch a low fares airline, making air

travel affordable for a larger portion of the population that would

previously not have flown. To enable it to continue to offer access

to affordable flights, the Group continuously looks at ways in

which to improve its efficiency and cost effectiveness, such as,

but not limited to:

• Implementing a progressive fleet replacement programme:

By operating more modern and fuel efficient aircraft, it

has achieved a consistent reduction in the cost of aircraft

maintenance as well as the amount of fuel used per seat;

• The introduction of a comprehensive Fuel Savings Programme

with the co-operation of its pilots;

• The weight of an aircraft impacts on fuel burn, and the Group

has, through the installation of lightweight seats and catering

equipment, substantially reduced aircraft weight;

• The Group has maximised the use of available technology

to reduce airline distribution costs through the use of the

internet and by introducing self-service check-in for customers,

thereby eliminating the use of traditional paper tickets;

• The Group’s Flight Operations Department, working with Air

Traffic Control and Navigation Services, has developed the

most efficient routing of aircraft between airports and has

developed more efficient landing approach profiles resulting

in substantial fuel savings; and

• The Group has set up its own catering department known

as Food Directions, thereby reducing the cost of on-board

catering, while at the same time ensuring a better quality of

catering for customers.


Public-private partnerships

The Group believes that public-private partnerships (PPPs) and

other joint initiatives with government could have a meaningful

role in ensuring access to affordable airfares. It continuously looks

at opportunities for PPPs, however, no PPPs were entered into

during the period under review.

Social impact

The Group’s objective to create and sustain value for all its

stakeholders is impacted by its ability to achieve its goal of being an

employer of choice and creating a positive impact on society as a

whole. How it ensures that it achieves these goals is set out below.

The Company’s employees

Employee composition and turnover rate

The success of the Group is dependent on the commitment of

its 2 088 employees to deliver a safe, secure, reliable and quality

service. The composition of its employees in South Africa is made

up as follows:

Workforce composition by employment type

2015 financial year end


Permanent employees 2 072 2 006

Temporary employees 1 5

Workforce composition per gender



Male 751 727

Female 1 322 1 284

Workforce composition per age distribution



Number of employees younger than 30 683 666Number of employees between 30 and 50 1 239 1 177Number of employees older than 50 151 168

Note 1: Of the Group’s total number of permanent employees, it has eight foreign nationals in its employ which increased from seven in the 2014 financial year. All these foreign nationals are employed in South Africa.

Note 2: The total number of employees, as set out above, excludes 15 of the Group’s permanent employees who are employed in Zimbabwe.

While the Group does not maintain data on turnover rate by age

Group and gender, its staff attrition rate during the 2015 financial

year was 9.7% as opposed to 12.4% in the prior reporting period.

Employee remuneration

The Group offers fair salaries and competitive benefits to its

employees based on the principles of equity and fairness. Further

details of its remuneration policies are set out in the Remuneration

report on pages 65 to 67.

Remuneration and reward guidelines serve to create a platform

for fair and transparent human resource practices so as to ensure

consistency and non-discrimination among employees and thereby

eliminate any form of subjectivity or favouritism. The Group’s position

on salaries is to remunerate at the median of the applicable salary

band. However, salary progression for new employees will range

from the lower quartile to the median and from the median to the

upper quartile for scarce/high risk/critical skills.

The Group offers employee benefits to its permanent employees

employed in South Africa. Where possible, due to legal parameters,

it also offers employee benefits to its permanent employees employed

in Zimbabwe. The Group has a defined contribution pension scheme

in place for its permanent employees in South Africa, which is an

umbrella scheme known as The Superfund, administered by Old

Mutual. In addition, it offers its permanent employees in South Africa

risk benefits in the form of death and disability benefits, which scheme

is administered by Discovery Life. The Group’s permanent employees in

South Africa contribute 7% towards retirement funding, with the Group

contributing 10% to cover both retirement funding and risk benefits.

A medical aid scheme is also in place for permanent employees in

South Africa, which scheme is administered by Discovery Health.

The Group contributes 50% of the cost in respect of the Discovery

Essential Comprehensive Plan for such permanent employees. An

equal value is contributed to permanent employees in Zimbabwe.

The Group also provides post-retirement medical aid funding, which

equates to 50% of the Essential Saver Plan.

Labour relations

The Group’s aim is to create and maintain sound labour relations,

which support its goal of being the employee of choice in the

South African airline industry. The Group regularly reviews its

employment conditions and policies. It tries to ensure that all

employees are made aware of their benefits and this information

is furnished to employees during induction sessions and via the


Group’s intranet, newsletters sent directly to staff by the Group,

Old Mutual and Discovery, and other communication methods

referred to earlier in the report.

The Group was not subject to any strikes during the period under

review. Its disciplinary and grievance procedures are communicated

to new employees as part of their induction into the Group and

are also available to all employees to ensure that they are aware

of the process in place to lodge grievances, should they have

the need to do so.

The percentage of the Group’s employees represented by trade

unions or collective bargaining agreements is reflected on page

28 of this Sustainable Development Report.

The minimum notice periods for employees, as set out in the

employees’ letters of appointment, are as follows:

Pilots: 3 months

All other employees: 4 weeks

Top and Senior Management enter into employment contracts

with the Group which are subject to termination on four weeks’

notice and are not subject to any fixed term or form of restraint.

Performance management

The Group’s performance management philosophy aims to

ensure that all employees are aligned to deliver against the Cycle

of Success and strategic objectives. As the Group continues to

embrace the opportunities it encounters in the market, it remains

critical to ensure that all employees have the capacity to develop

and perform against Group objectives, now and in the future.

This applies to every level in the organisation and focuses on

both Group and divisional performance, as well as individual

performance. Employees are provided with regular feedback to

support continued development, both in role as well as towards

future career opportunities. The emphasis is on quality, face-to-face

discussions on performance, and aims to contribute to a culture

of giving and receiving constructive and developmental feedback.

The performance management process is ever evolving, as is the

business, and the Group has embarked on a drive to optimise

the practice through three key pillars namely:

• The refinement of the mechanisms used to measure

performance;

• The education of management to reiterate the criticality of

performance management to the achievement of the Group’s

Cycle of Success; and

• The procurement of a ‘best in class’ talent solution that will

increase the availability of information to inform decision-

making and take the focus off the ‘paperwork’ and onto the

value of the feedback.

Through the performance management process, the Group aims

to create an environment in which individuals obtain direction,

guidance and feedback in order to perform optimally. The practice of

performance management also forms the basis for recognising the

Group’s talent and investing in the development of future leaders.

Talent management

The management of talent is considered to be a key differentiator

of the Group in comparison to its domestic competitors. It will

continue to invest in the development of talent and leadership

capacity through the continuous education of leadership on the

effective delivery of an integrated talent management process.

The Group will utilise innovative methods to support the building

of a talent mindset and to create the platform to enhance the

attraction, retention and development of talent.

The Group’s leadership framework will be a key driver of effective

leadership behaviour and for identifying and developing future

leadership that will support its sustainability as it continues to grow.

Recruitment and retention of skilled staff

The recruitment and retention of the right calibre of employee is

vital to enable the Group to deliver on its goal of becoming the

airline of choice. It acknowledges that its ability to recruit and

retain skilled employees is a critical factor in driving the Group’s

performance in the intensely competitive and dynamic business

environment in which it operates.

The employment and retention of pilots remains a major challenge

to the Group, particularly pilots from previously disadvantaged

groups. As part of its commitment to transformation and skills

development in the aviation industry, the Cadet Pilot Programme

sponsors individuals from previously disadvantaged groups to obtain

their commercial pilots licences. The cost to sponsor each cadet

is approximately R400 000. Once the cadets graduate from the

programme, they are placed with selected commercial operators

to obtain sufficient flying experience to enable consideration for

employment with the Group. The Group, in addition, having regard


to the fact that each pilot that joins the Group has to be trained

to fly on its aircraft, requires that the pilots sign training bonds, to

ensure that they remain in the employ of the Group for a certain

period to cover the cost of such training.

The Group’s recruitment and selection practices are carried out

in accordance with all applicable labour legislation and are based

on the principles of fairness, transparency and consistency. This

is achieved through the use of objective and validated tools,

including, but not limited to, competency-based interviews and

psychometric assessments. The recruitment and selection process

entails achieving a balance between employing the best person for

the position and the achievement of the numerical goals, as set

out in the Group’s EE Plan, to achieve an equitable representation

of designated groups in all occupational levels within the Group.

Diversity and equal opportunities

The Group is committed to non-discriminatory treatment in all of its

employment practices and to providing equal opportunities to all

employees, and does not accept any form of unfair discrimination

based on gender, race, nationality or religion. Its employment

policies, including hiring, training, working conditions, compensation

and benefits, promotion, termination and retirement are based on

individual qualifications. It treats its employees equally, irrespective

of gender, age, race, sexual orientation, disability or other status

unrelated to performing the job. The Group’s focus on diversity

and EE is in line with its overall transformation objectives and this

is dealt with in the section of this report relating to B-BBEE. During

the financial year under review no incidents of discrimination were

observed or reported.

Health and safety at work

The Group pays special attention to health and safety in the

workplace so as to ensure that there is a safe environment for its

employees, customers and invitees. The health of its employees

is important to ensure the sustainability of the Group.

During the period under review, 24 minor incidents were reported

(as opposed to 20 in the previous reporting period) which injuries

ranged from slipping on wet floors, falling incidents and other minor

incidents. There were no fatalities during the period under review.

The Group’s CEO ensures that all health and safety duties are

discharged as a shared responsibility throughout the organisation –

from appointing occupational health and safety representatives who

know their functions, to positively enforcing monthly inspections

and attending Health and Safety Committee meetings on a monthly

basis. The occupational health and safety representatives conduct

monthly inspections within their departments and annual audits

are conducted by the Quality Assurance Department, which

ensures compliance with the Occupational Health and Safety Act

(Act No. 85 of 1993) and identifies any further risks and/or trends.

Health and Safety Committee

The Group pays due regard to the health and safety of its employees

and strives to provide employees, customers and stakeholders

with a clean and safe working environment. Safety incidents and

damage are reported though a safety management system. A

formal structure exists within each department to allow safety issues

to be addressed. The Group has an open reporting culture and

encourages the reporting of all incidents. Safety representatives

are appointed in each department and trained in various areas of

health and safety. The Group has a Health and Safety Committee

that meets at regular intervals to discuss pertinent issues. The Group

is fully compliant with the Occupational Health and Safety Act.

Staff welfare

Balancing the demands of work and family life is not always easy,

and it was with this in mind that the Group entered into a contract

with Independent Counselling Advisory Services (ICAS) and the

Group’s Precious Cargo Wellness Programme was born. ICAS

provides a confidential 24-hour a day, 365-day a year personal

support and information service for employees and their families

to call for help in dealing with everyday situations and more

serious concerns. In this regard, the Group has set up an on-site

clinic, manned once a month by a registered psychologist, at

the Group’s Head Office, Operations Department, O.R. Tambo

International Airport and Cape Town International Airport. The

service, provided by ICAS, includes telephone consulting, face-to-

face counselling, life management services and HIV counselling.

In addition, employees have access to e-Care services, which

is an online comprehensive health portal providing valuable and

interactive resources on a wide range of topics approved by

qualified health professionals. During the reporting period, 49%

of the staff made contact telephonically with the ICAS advisors

and 20% made use of the counselling services.

In addition, health and wellness days are held for all employees

to attend, which enables them to get health checks done at their

place of work. These health checks include blood pressure, height,

age, weight and HIV/AIDS tests.


The Group’s HIV/AIDS Programme forms part of the Precious

Cargo Wellness Programme and allows all employees to undergo

voluntary HIV testing and, if need be, counselling. Employees

who test positive are referred for additional counselling through

the programme, and are provided with medical support through

the Group’s medical aid scheme. The Group runs HIV awareness

workshops which allow employees the opportunity to learn more

about HIV and AIDS.

Training and skills development

The Group’s training programmes are focused on improving its

human capital, improving business processes and procedures,

maintaining and promoting quality service delivery in all aspects

of its business and alleviating, within affordable boundaries, skills

shortages amongst pilots.

Employee training

The Group makes a significant investment in training, investing

approximately 3.09% (which is similar to the previous financial

year) of payroll on training.

The Group has implemented the following training programmes:

• Take Off: As part of its succession planning, a leadership

development programme called Take Off, has been running

for six consecutive years. The programme is delivered in

conjunction with the Gordon Institute of Business Science

(GIBS), which is underwritten by the University of Pretoria. As

part of this programme, the Group’s potential future leaders are

identified and undertake courses covering several key areas

of business management in a mini-MBA styled programme.

157 employees have completed the programme to date, with

a further 24 employees currently involved in the programme;

• Cadet Pilot Training Programme: The Group remains

committed to its Cadet Pilot Training Programme, and two

cadet pilots were recruited during the period under review.

Since the initiation of the programme, 13 cadets have obtained

their commercial pilot licences, six of whom are currently

employed by the Group, while some of the others have

been employed at other smaller airlines to obtain sufficient

flying experience to qualify for employment as a pilot with the

Group. The Department of Transport has commended the

Group on the programme, having regard to the challenges

faced by the aviation industry in recruiting and training cadets

from previously disadvantaged groups;

• Workplace Experiential Learning (WEL): During the period

under review, the Group was involved with various tertiary

education providers to provide students in the travel-related

disciplines offered by such tertiary education facilities with

six months’ WEL experience. Ten students from the Durban

University of Technology completed six months’ WEL at King

Shaka International Airport, while 17 students from the University

of Johannesburg completed their WEL at O.R. Tambo International

Airport, with all subsequently being offered employment as

Customer Service Agents by the Group. Five students from the

Cape Town University of Technology completed their WEL at

Cape Town International Airport and four students completed

their WEL at Lanseria International Airport;

• Skills Development: The Group contributed R7.2 million

towards skills development in the country in the form of the skills

levy which is paid to the Department of Labour as compared

to R6.2 million contributed during the prior reporting period.

The Group commenced a Skills and Enterprise Development

initiative with Carpe Diem Kaleidoscope on the East Rand in

2013. To date, 56 learners have completed the programme,

93% of whom have been employed as Customer Service

Agents at O.R. Tambo International Airport;

• Supervisory Development Programme (SDP): This programme

is modelled on the GIBS Take Off Programme, and was

developed for Middle Management (supervisors) ground staff

at the airports to develop to the next level of management.

Nine supervisors at O.R. Tambo International Airport, nine

at Cape Town International Airport and 13 at King Shaka

International Airport have completed the programme; and

• Cabin Crew Training Facility: The Group has developed a

new purpose-built Cabin Crew Training Facility at its Operations

Centre in Rhodesfield. This facility will be used to train both the

Group’s cabin crew as well as cabin crews of third parties.

In addition to the aforementioned, the Group has provided training

and development courses to its employees in areas such as, but

not limited to, passenger handling, Group orientation, passenger

check-in, dangerous goods, customer service, station emergency

awareness, aviation safety and security, fares and ticketing, customer

experience, safety and emergency procedures, type-rating for

pilots in respect of the aircraft types operated by the Company

and crew resource management training, so as to ensure that the

highest standards of safety, security and service are maintained

throughout the Group. In total, 1 591 employees participated in

training and development courses during the period under review.


Investing in the community

The Group is a committed corporate citizen and, together with

its staff, endeavours, wherever possible, to improve the lives of

fellow South Africans. It believes that social responsibility is a

duty, privilege and an obligation to help those less fortunate and

to make a positive impact on society in general. In this regard,

the Group has assisted the community as follows:

The Red Cross War Memorial Children’s Hospital Trust

During the previous reporting period, the Group formed a

partnership with and made donations to the Red Cross Children’s

Hospital Trust to assist sick children needing medical assistance

at the Red Cross War Memorial Children’s Hospital. The Group’s

contribution comprised R500 000 worth of flight tickets to be used

to transport children, as well as their parents/family members to

and from the hospital to receive medical treatment. The flight ticket

contribution can also be used by certain staff members from the

hospital who need to travel for work purposes. In addition to the

flight ticket contribution, the Group has made a cash donation of

R500 000 to the hospital, which was used towards the building

of a new accommodation facility for the parents and caregivers

of the children receiving treatment at the hospital.

Food and Trees for Africa

This project was launched in 2007 to raise money to care for the

environment, while also offsetting the Group’s carbon emissions

through the sustainable greening of townships in South Africa. This

year, the Group was unable to collect donations from customers

directly due to its new Sabre Reservation System not offering this

facility, but it continued with its investment in Food and Trees for

Africa and donated R200 000 worth of air tickets to this worthy

cause during the period under review.

Smile Foundation

The Group continued to put smiles on children’s faces by donating

R250 000 in the form of air tickets to the Smile Foundation which is

dedicated to transforming the lives of children with facial conditions.

Casual Day

The Group sold stickers on board its flights in support of the

Casual Day charity, and raised approximately R6 850.

Diabetes SA

To promote awareness of diabetes, the Group worked with

Diabetes SA by providing free exposure in khuluma (kulula’s on

board magazine), and during the month of November the kulula

cabin crew wore the official diabetes badge to promote World

Diabetes Day.

Cycle of Life

The Group donated prizes in the form of air tickets in the amount

of R57 000 to Cycle of Life to assist with the DSTV Mitchell’s

Plain Festival.

Wings and Wishes

This organisation flies critically ill children from all over the country

to various hospitals for life-saving surgery and medical care.

The Group provided air tickets to this organisation to the value

of R500 000 to assist in transporting such children during the


Primestars Marketing

The company specialises in facilitating youth development

programmes for high school learners from underprivileged

communities. By supporting this programme, the Group is

supporting initiatives that educate disadvantaged learners. The

Group sponsored air tickets to the value of R300 000 for this

worthy cause.

QuadPara Association of South Africa

This is a new initiative, through which the Group sponsored air

tickets to the value of R250 000. In addition, it made a cash

donation of R200 000 to be used towards nominated outreach

programmes of the QuadPara Association of South Africa.

Environmental impact

The Group’s ability to operate and create and sustain value is

largely driven by its environmental impact. It is therefore committed

to protecting the environment, conserving natural resources and

utilising resources in an effective and responsible way, by adopting

sound environmental practices in its business.

Responsible aviation starts with safety and security, and that is

the Group’s fundamental duty to its customers and colleagues.

Its responsibilities also extend to the impact that it has on the

environment.

This section of the report deals with the environmental performance

of the Group and reflects its carbon footprint based on the

Corporate Accounting and Reporting Standard of the Greenhouse

Gas Protocol (GHG Protocol). The organisational boundary of the

report is reflected in the table below.


Organisational entity Comair Limited

Operational control 100%

Operational boundary Operational control

Reporting period 1 July 2014 to 30 June 2015

Base year 2011

Methodology GHG Protocol Corporate Accounting and Reporting Standard

Number of permanent employees 2 079

Number of sites 17

Square metreage of facilities 22 044 m2

KPI: passengers carried 5 140 599

As mentioned at the outset, this report deals only with the

Group and its operations in South Africa and does not deal with

its associated companies. The report includes the compulsory

reporting requirements of the GHG Protocol by quantifying the

Group’s emissions that are categorised as Scope 1 and Scope 2

and includes selected Scope 3 emissions and fugitive emissions

as optimal information.

The activities listed in the table below have been reported on.

Scope 1 Scope 2 Scope 3

(a) Mobile fuel combustion in Group-owned/leased aircraft and Group-owned/leased vehicles

Purchased electricity (electricity usage)

Water useMaterial useWaste disposalWell to tank emission (fuel and energy-related activity)

(b) Stationary fuel combustion in Group-owned assets (generators and catering equipment)

Environmental objectives

The Group’s environmental objectives focus on assessing and

minimising its impact on the environment and are currently aimed at:

• Identifying and complying with environmental legislation

and regulations;

• Identifying and managing all risks relating to the Group’s

impact on the environment with regard to water use, energy

use and conservation and emissions and climate change;

• Creating environmental awareness amongst all employees;

• Limiting aircraft noise without compromising safety; and

• Linking fuel saving initiatives to an environmental saving

objective.

These objectives enable the Group to identify aspects of its

business that could have an effect on the environment with a

view to reducing such impact, and it works closely with aviation

policymakers in South Africa to influence the development and

implementation of effective environmental regulations. In addition,

the AASA has established an Environmental Committee to co-

ordinate and drive initiatives that have to be undertaken by the

Group, other member airlines and aviation service providers so

as to achieve the international and domestic goals of reducing

GHG emissions.

The Group’s Chief Executive Officer is responsible for ensuring

compliance with these goals and delegates this responsibility to

Senior Managers within the Group.

Environmental management risk assessment

The Group is committed to ensuring that it complies with

environmental legislation and regulations applicable to it. The

main environmental impact being managed is the utilisation of

fuel and oil which have a direct effect on its carbon emissions.

The Group assesses the risks faced by it associated with climate

change, which include:

• Regulatory risks: Compliance with environmental legislation;

and

• Physical risks: Interruption to supply and fuel shortages and

the risks associated with load shedding in South Africa.

No fines or sanctions were imposed upon the Group for non-

compliance with any environmental laws or regulations during


Emissions

Climate change is the most urgent and significant sustainability

issue. The vast majority of the Group’s climate impact (approximately

99%) results from GHG emissions released through the burning of

fossil-based jet fuel in aircraft engines. The international community

aims to limit GHG concentrations in the atmosphere so that global

temperatures do not increase by more than 2°C by 2050. The

Group wishes to ensure that it makes a fair contribution towards

achieving this aim.

Globally, aviation produces around 700 million tons of carbon

dioxide (CO2) per year, which represents approximately 2% of total

manmade emissions. This share is projected to grow. The aviation


industry is extremely vulnerable to climate change response policies,

especially where these involve the pricing of carbon emissions.

On the other hand, the industry has to contribute its fair share

to efforts to limit climate change. Slowing down aviation growth

to reduce carbon emissions is in no-one’s interest. It will create

unemployment and undermine efforts to reduce poverty. As it

currently stands, it is estimated that tourism sustains one in every

12 jobs globally and contributes approximately 9% of worldwide

gross domestic product. Aviation is not only a key enabler of

tourism, but also of trade, investment and global integration.

However, while slowing down aviation growth is not an option,

being complacent and doing nothing is not one either, as the

growth of emissions will not be environmentally and economically

sustainable. The Group therefore welcomes the progress made at

the ICAO General Assembly in October 2010 where 190 member

states agreed to the aspiration of achieving carbon neutral growth

from 2020. This is in line with the global airline industry vision

for a sector-wide approach to enabling carbon neutral growth

by 2020 and a huge reduction in net emissions by 2050. The

Group supports a framework for reducing aviation emissions

based on carbon trading that is applied equally to all airlines and

all industries as a whole, i.e. the burden on aviation should not

be disproportionate to that of other economic sectors. Aviation

cannot be the ‘cash cow’ of the climate regime. There is also a

firm belief that sustainable bio-jet fuels will play a pivotal role in

helping to meet the carbon emission targets. In this regard there

are still hurdles to overcome, which are mainly commercial in

nature, and the need to establish a level playing field for suppliers

to produce aviation bio-jet fuel against road transportation and

other energy products.

British Airways Plc, the Group licensor in respect of its BA brand

and a shareholder, is playing a leading role within the aviation

industry in developing and promoting proactive schemes for a

post-Kyoto aviation policy. They believe that CO2 emissions from

international aviation must be integrated within a global agreement

and that this must be done in a way that ensures equal treatment

of all airlines. The Group supports the approach adopted by British

Airways Plc and is committed to improving its environmental

performance and reducing the adverse impact that its activities

have on the local and global environment.

Insofar as the Group’s emissions are concerned, its GHG inventory,

by scope and expressed in metric tonnes of carbon dioxide

equivalent (CO2e) is detailed in the tables and graphs below, with

comparatives between the financial year in question and the base

year, where applicable. The Group also reflects its GHG Inventory

for the 2014 financial year.

Inventory 2015Total GHG emissions by source

Emission source by scope % of footprint Tonnes of CO2e % change from 2011

Scope 1 direct emissions 82% 540 162.63 1%

Stationary fuel combustion <1% 87.74 35%Mobile fuel consumption 82% 540 074.89 1%Scope 2 indirect emissions 1% 7 688.76 7%

Purchased electricity 1% 7 688.76 7%Total Scope 1 and 2 emissions 547 851.39 1%

Scope 3 indirect emissions 17% 111 393.26 NM1

Fuel- and energy-related activities 17% 111 348.38 NM1

Material use <1% 25.41 NM1

Water use <1% 19.22 11%Waste disposal <1% 0.26 NM1

Total Scope 1, 2 and 3 emissions 659 244.65 NM1

1 The reason for non-measurement is that a comparison is not appropriate due to the addition of Scope 3 emissions since 2011.

Out of Scope emissionsAs there was no recharge of airconditioning gas at the premises and any re-installation of airconditioning units come fully recharged,

there is no out of scope emissions to report on.


Emission Intensities

Emission intensities Tonnes of CO2e % change from 2011

All Scopes footprint per passenger 0.13 9%Aviation fuel footprint per passenger 0.10 9%All Scopes footprint per employee 317.10 NM1

Scope 1 and 2 footprint per employee 263.52 5%Site specific emissions per m2 0.39 45%2

1 Comparison not appropriate due to the addition of Scope 3 emission sources since 2011.

2 Site specific emissions include stationary fuel combustion and electricity.

2014/15 GHG Inventory by Emission Source Tonnes of CO2e

Scope 1

Stationary fuel combustion

Purchased electricity

Material use

Mobile fuel combustion

Fuel- and energy-related activities

Water use

Waste disposal

0 100,000 200,000 300,000 400,000 500,000 600,000

Scope 2

Scope 3

Mobile fuel combustion (primarily aviation fuel) remains the largest emission impact making up 82% of the total footprint and 99% of

Scope 1 and Scope 2 emissions. While aviation emissions increased marginally (0.2%), passengers carried decreased (1.1%).

Stationary fuel combustion emissions, while immaterial, have increased by 14% from the previous financial year due to the growth in

the Group’s catering facilities. This growth has also increased purchased electricity by 8% from the previous year.

Fluctuations in material use (paper) and waste disposal emissions have had a negligible effect on scope totals.

The total GHG inventory of the Group for the 2015 financial year was 659 244.65 metric tonnes of CO2e made up as follows:

Direct emissions (Scope 1)Scope 1 emissions

Emission source Unit of measure Emission factor Consumption Tonnes of CO2e

Mobile fuel consumption: aircraft kg Various 169 608 694 539 563.08Mobile fuel consumption: vehicles lt Various 201 331 511.81Stationary combustion: generator fuel use and LPG fuel use

lt Various 34 745 55.04kg Various 11 114 32.70

Total Scope 1 540 162.63


The direct emissions reflected above are broken down as follows:

Detailed breakdown of mobile fuel combustion in Company owned/leased vehicles/aircraft

Emissions Source Unit of measure Consumption kg CO2e per unit Tonnes of CO2e

Mobile fuel combustion Company owned and controlled assets Aviation Turbine Fuel kg 169 608 694 3.181223 539 563.08Diesel (100% mineral diesel) lt 129 659 2.67614 346.99Petrol (100% mineral petrol) lt 71 672 2.29968 164.82Total 540 074.89

Detailed breakdown of stationary fuel combustion


Stationary fuel combustion Company owned and controlled assets Diesel (100% mineral diesel) lt 2 226 2.67614 5.96LPG lt 32 519 1.50938 49.08LPG kg 11 114 2.942-64 32.70Total 87.74

Scope 2 emissionsDetailed breakdown of purchased electricity


Purchased electricity Purchased electricity kWh 7 612 635 1.01 7 688.76Total 7 688.76

Scope 3 emissions Detailed breakdown of Scope 3 emissions

Emission Source Unit of measure Consumption kgCO2e per unit Tonnes of CO2e

Fuel related well- to-tank activities Stationary fuel combustion

Diesel (100% mineral diesel) lt 2 226 0.57960 1.29LPG lt 32 519 0.18960 6.17LPG kg 11 114 0.36970 4.11Mobile fuel combustion

Aviation Turbine Fuel kg 169 608 964 0.65580 111 229.38Diesel (100% mineral diesel) lt 129 659 0.57960 75.15Petrol (100% mineral petrol) lt 71 672 0.45040 32.28Material use

Paper: Primary Material Production Tonnes 27.06 939.0000 25.41Water use

Water Supply kl 55 868 0.34400 19.22Waste disposal

Paper Tonnes 12.36 21.0000 0.25Total 113 393.26


GHG Inventory 2014

GHG Inventory 2014 Scope 1 Scope 2 Scope 3 Total

Metric tonnes of CO2e 539,293.08 7,146.53 111,132.57 657,572.18

The total GHG Inventory of the Group for the 2014 financial year was 657,572.18 metric tonnes of CO2e made up as follows:

Direct emissions (Scope 1)Scope 1 emissions

Emission source Unit of measure Consumption Tonnes of CO2e

Mobile fuel consumption lt/kg 169 469 918 539 216.08 Stationary fuel combustion lt 50 373 77 Total 539 293.08

The direct emissions reflected above are broken down as follows:

Detailed breakdown of mobile fuel combustion in Group’s owned/leased aircraft and owned/leased vehicles


Aviation Fuel kg Various 169 354 931 538 924.33 Diesel lt Various 73 916 197.29 Petrol lt Various 41 071 94.46 Total 539 216.08

Detailed breakdown of stationary fuel combustion (generator, gas)


Diesel lt Various 1 134 3.03 LPG lt Various 49 239 73.97 Total 77

Indirect emissions (Scope 2)

Detailed breakdown of electricity


Purchased Electricity kWh 1.03 kg 6 983 381 7 146.53 Scope 3 emissionsDetailed breakdown of Scope 3 emissions

Emission source Unit of measureEmission factor KgCO2e per unit Consumption Tonnes of CO2e

Fuel related well-to-tank activities Mobile fuel combustion Aviation Fuel kg 0.6550 169 354 931 111 012.16Petrol lt 0.45040 41 071 18.5Diesel lt 0.57850 73 916 42.76Stationary fuel combustion

Diesel lt 0.57850 1 134 0.66LPG lt 0.18890 49 239 9.29Material use

Paper t 956 31.09 29.72Water use

Water supply kl 0.34410 56 184 19.33Paper, closed loop disposal method t 21 6.93 0.15Total 111 132.57


In comparing our GHG Inventory for 2015 with 2014, it must be

noted that:

1. The major reason for the increase in Scope 1 emissions is

due to the following factors:

(a) While the increase in aircraft fuel consumption between

the 2015 and 2014 periods was negligible, the increase

could be attributed to weather conditions, aircraft diversions

during the 2015 period and tankering of fuel.

(b) The increase in the stationary fuel combustion was due

to the Group increasing the size of the SLOW Lounges

and catering division as well as increased load shedding

during the reporting period.

2. The major reason for the increase in the Scope 2 emissions

during the period under review could be attributed to the

Group having increased the size of the premises it owns and

leases, as well as metre readers being installed in a number

of premises, where same did not previously exist.

3. The major reason for the increase in the Scope 3 emissions

is as a result of the increase in the size of the SLOW Lounges

and catering facilities, as well as load shedding that occurred

during the reporting period. It must be noted that well-to-tank

activities account for upstream Scope 3 emissions associated

with the extraction and refining of raw fuel sources to the

Group’s aircraft, prior to the combustion.

In order to reduce the effect that the Group has with respect to

Scope 1, Scope 2 and Scope 3 emissions, it has:

• Over the years, implemented a fleet replacement programme

and during the period under review operated 11 Boeing

737- 800 New Generation aircraft, 12 Boeing 737-400 aircraft

and two Boeing 737-300 aircraft. It will during the course of

the next two financial years be taking delivery of a further four

Boeing 737-800 New Generation aircraft. These new aircraft

will replace the older B737-400 aircraft. It has also entered

into an agreement with the Boeing Company to purchase

eight B737 MAX aircraft for delivery between 2019 to 2021.

These aircraft are an upgrade to the B737-800 aircraft and

will offer even better performance, fuel efficiency and lower

engine emissions, as well as, being quieter than the older

generation B737 aircraft. Since the introduction of the new

Boeing 737-800 aircraft, the average fuel burn per passenger

is now approximately 30 kg per passenger.

• The new 737-800 use approximately 6% less fuel per seat

than the older 737-800 aircraft and 24% less fuel per seat

relative to the 737-400 aircraft. In addition, the Group will be

placing “Scimitar” split winglets on all the B737-800 aircraft

it owns, which should result in a further 2% reduction in fuel

consumption on the Group’s owned B737-800 aircraft.

• Implemented a programme to reduce weight on board the aircraft,

approximately four years ago, by implementing a paperless

cockpit, reducing the amount of potable water carried on board

the aircraft and reducing the weight of the aircraft galleys and

thus reducing the fuel used on board the aircraft.

• In conjunction with Air Traffic Control, has, where possible,

implemented a Continuous Descent Approach to achieve

fuel efficiency and reduce the impact of noise.

• Where such stands are assigned to us by ACSA, used fixed

ground power units as opposed to auxiliary power units to

reduce fuel consumption and noise.

• Attempted to reduce the impact of noise, as annoyance and

sleep disturbance are the most commonly reported adverse

effects of aircraft noise. The Group’s objective is to try to

reduce or limit the total number of people exposed to high

levels of aircraft noise. Current regulations and voluntary

actions by the Group, such as phasing out its older aircraft,

ensuring that all its engines are stage 3 noise compliant, as

well as restrictions on the use of airspace, night-time flying

and ground operations restrictions, have, to a large extent,

resulted in reduced aircraft noise.

• Is currently investigating implementing various energy saving

initiatives with regard to electricity consumption such as, but

not limited to, changing all light fittings and globes to more

energy efficient ones.

• Implemented a number of initiatives to reduce water

consumption, including the use of borehole water at its

head office and operational buildings. Other initiatives to

reduce water consumption include employee awareness,

monitoring of uncontrolled leakages and monitoring garden

irrigation cycles.

• In conjunction with its pilots, designed and implemented a

comprehensive fuel savings programme according to best

practice while taking local operating conditions into account.

This has already resulted in a further 1.4% reduction in fuel

consumption across its fleet. The Boeing 737-800 aircraft

have also reduced the Group’s fuel burn per passenger as

it has the capacity to carry 21 more passengers and burns

200ℓ per hour less fuel than the Boeing 737-400 aircraft.


Waste management and recycling

The Group implemented a programme to recycle paper and this

is the third year in which it has been able to measure the tonnage

of the paper recycled. The comparative measurement is included

in its carbon footprint measurement.

The Group outsources the maintenance of its aircraft and aircraft

engines to third party suppliers as detailed earlier in this report.

These third party suppliers dispose of waste arising from the

maintenance of the aircraft and aircraft engines, including radioactive

material, in accordance with their own policies and procedures

relating to waste management and recycling.

Refuse removal in the Group complies with South African laws

and regulations.

Compliance

To the best of the Group’s knowledge and belief there have been

no incidents of material non-compliance with any environmental

laws or regulations and no fines were imposed on it during the


Glossary of terms used in this environment impact section

Boundaries The inventory boundaries to determine which emissions are accounted for and reported. Boundaries include

organisational, operational, geographic and business unit structures.

Carbon footprint The total greenhouse gas emissions caused directly and indirectly by an organisation, typically over a period

of 12 months.

CO2e Carbon dioxide equivalent is the standardisation of all greenhouse gases to reflect its warming equivalent

to CO2. This is used to evaluate different greenhouse gases against a common basis.

Direct emissions GHG emissions from facilities or sources owned or controlled by the Group, e.g. generator, company-

owned vehicles, etc.

Emissions The release of greenhouse gases into the atmosphere.

Emission factor Conversion factor to translate activity data, e.g. tonnes of fuel consumed, into emission data.

GHG Greenhouse gases. Under the GHG Protocol standard six gases are accounted for, namely carbon

dioxide, methane, nitrous oxide, hydrofluorocarbons, per fluorocarbons and sulphur hexafluoride.

GHG Inventory A listing of the GHG emissions and sources that are attributable to the Group.

GHG Protocol GHG Protocol Corporate Accounting and Reporting Standard.

Indirect emissions Emissions that are a consequence of the operations of the Group, but occur at sources owned or controlled by

another company.

Operational boundary The boundary to establish the operations and sources of emissions included in the GHG Inventory.

Organisational boundary The boundary to establish business units or entities of an organisation included in the GHG Inventory. An

equity or control approach can be taken.

Reporting period The period of time, typically a calendar or financial year, which the report covers.

Scope 1 emission Direct emission from Group-owned or controlled equipment, vehicles or aircraft.

Scope 2 emission Indirect emission from the consumption of purchased electricity.

Scope 3 emission Indirect emission from other activities associated with the activities of the Group, e.g. commuting travel,

business air travel and paper or water consumption.



Introduction

The Group is subject to the Listings Requirements of JSE Limited

(JSE) as well as the requirements of the Companies Act (Act No. 71

of 2008), as amended (Companies Act). The Group supports the

governance principles and guidelines contained in the King Code

of Governance Principles and King Report on Governance (King

III) and is comfortable that effective controls have been put in

place and complied with.

Compliance with the JSE Listings Requirements and the Companies

Act is monitored by the Group’s Company Secretary and Compliance

Officer and reported to the Board.

The Group is committed to maintaining principles of good

corporate governance to ensure that its business is managed in

a responsible manner with integrity, fairness, transparency and

accountability. The Board supports the governance principles

and guidelines contained in the Companies Act, the JSE Listing

Requirements and King III.

Statement of compliance

In terms of the JSE Listings Requirements, the Group is required to

report in respect of King III for its financial year ended 30 June 2015.

The JSE Listings Requirements require all JSE-listed companies

to comply with certain principles of King III and to report on

the application of the King III principles in accordance with the

‘apply or explain’ approach of King III. While the vast majority

of King III principles were applied by the Group for the duration

of the period under review, those principles that have not been

complied with are explained in the King III Application Register

referred to below. The Group currently maintains an overall AAA

compliance rating as assessed by the Global Platform for Intellectual

Property (TGPIP) Governance Assessment Instrument, licensed

by the Institute of Directors SA. A summary King III check list is

included at the end of this Corporate Governance Report. The

full King III Application Register appears on the Group website at

www.comair.co.za.

Code of ethics

The Group has a strong culture of entrenched values, which

forms the cornerstone of the behaviour expected of it towards its

stakeholders. These values are embodied in a written document

known as the Group Code of Ethics. Conducting business in an

honest, fair and legal manner is a fundamental principle of the

Group. Ethical behaviour has always been a fundamental guiding

principle and management continually focuses on establishing

a culture of responsibility, fairness, honesty, accountability and

transparency. The Group has adopted a Guide to the Code of

Ethics to further explain to employees what constitutes ethical

conduct and to provide guidance on how to make ethically

correct decisions.

Confidential reporting process

The Group recognises the need for a confidential reporting

process (whistle blowing) covering fraud and other risks. In line

with its commitment to transparency and accountability, it takes

action against persons who are guilty of fraud, corruption and

other misconduct. Any employee or external stakeholder is able

to report wrongdoing on a confidential and anonymous basis to

an independent service provider, which ensures that all calls are

treated confidentially. The number of calls or e-mails received

during the reporting period was seven (7). All calls and e-mails

were followed up by the Group and, where necessary, appropriate

action was instituted.

Corruption

The Group has a no-tolerance approach with regard to unethical

conduct, in particular to fraud and corruption. Strict policies

relating to gifts and donations received from third parties are in

place compelling employees or management to declare same.

The Group further prohibits the making of donations to political

parties, unless same have been pre-approved by the Board. No

donations to political parties were made by the Group during the


The Risk Management Committee and, where appropriate, the

Audit Committee, consider any incidents of fraud and corruption.


Any material incidents of fraud or corruption are reported to the

Risk Management Committee and, where appropriate, to the

Audit Committee. There were no incidents of corruption or fraud

brought to the attention of the Risk and Audit committees.

In order to prevent credit card fraud, the Group implemented

a card-not-present fraud detection and prevention programme

known as Cybersource in 2010. In the 2012 financial year, the

Group experienced spikes in card-non-present credit card fraud

as a result of the implementation of its new information technology

platform known as Sabre. To counter same, system developments

were implemented on the Cybersource Programme and the Group

has since been able to maintain significantly reduced credit card

chargebacks by 80% since 2012.

This reduction has been achieved by a combination of systems

and controls including:

• The Cybersource Fraud Detection System being enabled to

make the necessary verification call prior to confirmation of

the flight booking;

• System development enabling the transmittal of the credit card

CVV number to banks, enabling them to conduct additional

verification checks on the credit card; and

• Constant monitoring and regular amendment of the parameters

and rules within Cybersource, based on fraudulent behaviours

and trends.

The Payments Association of South Africa (PASA) continues

to drive its enforcement of 3D Secure on all card-not-present

transactions. Online retailers (excluding airlines), went live with

3D Secure in February 2014. The results and feedback from this

activation have not been very positive, and the Group remains

concerned about the readiness of the inter-banking systems and

communication networks to cope with the additional volumes of

electronic messaging, come the activation of 3D Secure within the

airline industry. The airline industry accounts for approximately 80%

of all online sales in South Africa. Activation of 3D Secure in the

airline environment could therefore result in significant strain on the

inter-banking systems and communication networks. The Group,

regardless of the aforementioned concerns, has completed the

development work for implementation of 3D Secure and remains

committed to this initiative in its bid to reduce its exposure to fraud.

Competition

The Group supports and adheres to the relevant competition

laws applicable to it. No legal action for anti-competitive conduct,

anti-trust or monopoly practices was instituted against the Group


The Competition Commission, based on a complaint received

from one of the Group’s competitors, is currently investigating

the Group’s travel agent incentive schemes and its involvement

as an affiliated member of the Oneworld Alliance. The Group

formally responded to the Competition Commission in respect

of the complaints. As mentioned, the Competition Commission

is currently investigating the complaint and no legal action has

been brought in this respect to date.

Compliance

Compliance with all relevant laws, regulations or codes is integral

to the Group’s risk management approach. There were no

significant non-compliance by, nor significant fines, nor non-

monetary sanctions or prosecutions against the Group during


Customer privacy and information security

Information security policies are in place throughout the Group

regulating, inter alia, the processing and protection of own and

third party information.

Legitimate requests for information can be made in terms of the

Promotion of Access to Information Act (Act No. 2 of 2000). No

requests for information were made in terms of the Act.

The Protection of Personal Information Act (Act No. 4 of 2013),

has been passed in South Africa, but the date of implementation,

apart from a few enabling sections, has yet to be determined. The

Act will require further actions on the part of the Group to ensure

privacy of personal information. The Group will put measures in

place to ensure that it will be able to comply with the requirements

of the Act.

There were no complaints regarding breach of customer privacy

or loss of customer data against the Group during the year.

Financial reporting and going concern

The Directors are responsible for the preparation of the Annual

Financial Statements in a manner that fairly and accurately represents

the state of affairs and results of the Group. The Directors are

responsible for adopting sound accounting practices, maintaining

adequate accounting records, ensuring an effective system of internal

controls and for safeguarding of assets. The financial statements


of the Group have been prepared on the going concern basis and

the Board is of the view that the Group has adequate resources

to continue operating for the foreseeable future.

Board of Directors

Composition of the Board

The Group has a unitary Board structure. The composition of the

Board is set out on page 72. The roles of the Chairman and the Chief

Executive Officer (CEO) are separate. The Non-executive Directors,

with a strong independent element, are of sufficient number to ensure

that no single individual has unfettered power of decision-making

and authority. As at 30 June 2015, the Board comprised eight

independent Non-executive Directors, two Non-executive Directors

and four Executive Directors (including the alternate Directors) as

required in the Listings Requirements of the JSE.

The Board is considered to be appropriately skilled with regard to

its responsibilities and the activities of the Group and is involved

in all material business decisions, enabling it to contribute to the

strategic and general guidance of management and the business.

Newly appointed Directors are informed of their fiduciary duties

and in this regard are provided with a Director’s Manual which

contains guidelines regarding their duties and responsibilities as

Directors. The skills and experience profiles of the Board members

are regularly reviewed to ensure an appropriate and relevant

Board composition.

Dealing in securities

The Group has a formal policy in place to ensure that the Directors

and Senior Management do not trade in the Group’s shares during

price-sensitive or closed periods. In terms of the policy, closed

periods commence from the last day of the financial year or the

last day of the end of the first six-month period of the financial year

up to the day after the publication of the annual or interim results.

Directors are required to obtain approval from the Chairman or a

designated Director before dealing in any securities.

Conflict of interest

All Board members and the Group Company Secretary are required

to disclose their shareholding in the Group, other directorships

and potential conflicts of interest. Where potential conflicts of

interest exist, Directors are expected to recuse themselves from

relevant discussions and decisions. In addition, employees within

the Group are obliged to disclose any conflicts of interest.

Role and function of the Board

The Board retains full and effective control of the Group and is

accountable and responsible for the performance and affairs of

the Group. All material resolutions have to be approved by the

Board. The Board is accountable to all of the Group’s stakeholders

for exercising leadership, integrity and judgment in pursuit of the

strategic goals and objectives of the Group. Formal requirements

specifying the responsibilities of and type of conduct expected

from the Directors, the Group Company Secretary, the Chairman

and the CEO are set out in the Group’s Board Charter, which is

reviewed annually. The Board’s primary functions include:

• Determining the Group’s vision;

• Determining and providing strategic direction to the Group;

• Adopting strategic plans and ensuring that same, through

the Executive Directors, are communicated to the applicable

management levels and further ensuring that the objectives,

as set out in the Strategic Plan, are met;

• Approving and evaluating the Annual Business Plan

and Budget compiled by management and monitoring

Management on the implementation of the approved Annual

Budget and Annual Business Plan;

• Approving the Group’s Financial Statements and interim

reports;

• Appointing the CEO, who reports to the Board and ensuring

that succession is planned;

• Determining Director selection and evaluation;

• Evaluating the viability of the Group on a going concern basis;

• Ensuring that the Group has appropriate risk management,

internal control and regulatory compliance procedures in

place. It further identifies and continually reviews key risks

as well as the mitigation thereof by management;

• Approving of major capital expenditure and significant

acquisitions and disposals;

• Monitoring non-financial aspects pertaining to the business

of the Group;

• Monitoring of compliance with laws, regulations and the

Group’s Code of Ethics;

• Ensuring that the remuneration of Directors and Executive

Managers occurs in accordance with the Group’s remuneration

policy;

• Identifying and managing potential conflicts of interest;

• Setting principles for recommending the use of external

auditors for non-audit services;

• Establishing Board committees with clear terms of reference

and responsibility;


• Defining levels of authority and delegating required authority

to the committees and management;

• Considering and, if appropriate, declaring payment of dividends

to shareholders;

• Evaluating the effectiveness of the Board and its committees;

• Conducting an evaluation of the Group Company Secretary;

and

• Ensuring the creation of sustainable shareholder value.

To fulfil their responsibilities adequately, Board members and

members of the sub-committees receive Board and sub-committee

agendas ahead of any meeting. In addition, Directors have

unrestricted access to timely financial and other information relating

to the Group, as well as free access to Senior Management and

the Group Company Secretary. During the financial year under

review, the Board received presentations from various Senior

Executive Managers, enabling it to explore specific issues and

developments in greater depth.

Induction of new Directors and independent advice

Newly appointed Directors are informed of their fiduciary duties

by the Group Company Secretary. They also receive information

on the JSE Listings Requirements and the obligations therein

imposed upon Directors and are informed of any amendments

to legislation and regulations.

Individual Directors may, after consulting with the Chairman or

the CEO, seek independent professional advice, at the expense

of the Group, on any matter connected with the discharge of his/

her responsibilities as a Director.

Board evaluations

The Board conducts informal evaluations of its performance.

During the evaluation process, it identified improved sustainability

management and governance of information technology as areas

requiring attention.

Board meetings and attendance

The Board meets at least four (4) times a year with the proviso that

additional meetings could be called when certain important matters

arise and measures exist to accommodate resolutions that have

to be approved between meetings. Details of attendance at Board

meetings are provided on page 72 of this Integrated Annual Report.

Retirement and re-election of Directors

Under the Group’s Memorandum of Incorporation (MOI), a third of the

Directors retire by rotation each year and are eligible for re-election by

shareholders at the Annual General Meeting. Details of the Directors

retiring by rotation are set out in the Notice of Annual General Meeting.

The appointment of Directors is a function of the entire Board, based

on recommendations made by the Nominations Committee.

Chairman

The Group’s Chairman, Mr P van Hoven, is an independent

Non-executive Director. In addition to playing a key role within

the Group, he provides guidance to the Board as a whole and

ensures that the Board is efficient, focused and operates as a

unit. He acts as a facilitator at Board meetings to ensure a flow of

opinions, and attempts to lead discussions to optimal outcomes

in the interests of good governance.

The CEO

The CEO, who reports to the Board, is responsible for the running

of the day-to-day business of the Group and for the implementation

of policies and strategies adopted by the Board. The Executive

Directors and Executive Managers of the various business units

and subsidiaries assist him in this task.

The Group Company Secretary

The Group Company Secretary plays a pivotal role in the continuing

effectiveness of the Board, ensuring that all Directors have full and

timely access to the information that helps them to perform their duties

and obligations properly, and enables the Board to function effectively.

The Group Company Secretary is responsible for providing

guidance to the Board collectively and to the Directors individually

with regard to their duties, responsibilities and powers.

The Group Company Secretary’s key duties with regard to the

Directors include, but are not limited to, the following:

• Collating and distributing relevant information, such as

corporate announcements, investor communications and

any other developments affecting the Group or its operations;

• Inducting new Directors, including briefing them on their

fiduciary and statutory duties and responsibilities (including

those arising from the JSE Listings Requirements);


• Providing regular updates on effective and proposed

changes to laws and regulations affecting the Group and/

or its businesses; and

• Monitoring Directors’ dealings in securities and ensuring

that prior approval to deal in securities is obtained from the

Chairman or another designated Director.

The Group Company Secretary reports to the CEO and has a

direct channel of communication to the Chairman. He meets with

the Chairman before each Board and Annual General Meeting to

prepare for and discuss important issues.

He is responsible for the functions specified in Section 88 of the

Companies Act (Act No. 71 of 2008), as amended. All meetings

of shareholders, Directors and Board committees are properly

recorded as per the requirements of the Act. The removal of the

Group Company Secretary would be a matter for the Board as

a whole.

The Group Company Secretary is an alternate Director of the

Company, and a Director of some of the Group’s subsidiaries.

The Board is of the opinion that, in view of the fact that the

Group Company Secretary is an alternate Director of the Group,

an arm’s length relationship may not be feasible. However, the

Board annually evaluates the competency and effectiveness of

the Company Secretary as required in terms of the JSE Listings

Requirements. The Board carried out a formal review of the

competence, qualification and experience of the Group Company

Secretary during the period under review. The Board is satisfied

that no conflict of interest exists in that, during the period under

review, notwithstanding the fact that the Group Company Secretary

is an alternate Director, he has served the Board purely in his

capacity as Group Company Secretary and is not considered for

voting on Board resolutions. The Board is further satisfied that the

Group Company Secretary is competent and has the requisite

qualifications and experience to effectively execute his duties and

has done so during the period under review.

Executive Management

The Group’s Executive Management Committee meets on a regular

basis to consider, inter alia, investment opportunities, operational,

financial and other aspects of strategic importance to the Group.

Executive Managers have specific roles and responsibilities with

specific reference to their authority levels.

Board committees

The Board has created an Audit Committee, Risk Management

Committee, Nominations Committee, Remuneration Committee

and a Social and Ethics Committee, as set out below, to enable it

to properly discharge its duties and responsibilities and to effectively

fulfil its decision-making process. The Board and its committees

are supplied with relevant and timely information enabling them

to discharge their responsibilities.

While the Board remains accountable for the performance and affairs

of the Group, it does delegate certain functions to the committees

and management to assist it in carrying out its functions, duties

and responsibilities. The Chairman of each committee reports to

the Board at each Board meeting.

The Chairman of each committee, other than the Social and Ethics

Committee, which has a Non-executive Director as its Chairman, is

an independent Non-executive Director and is requested to attend

the Group’s Annual General Meeting to answer any questions

posed by shareholders. In addition, all members of the committees,

other than the Social and Ethics Committee and Nominations

Committee, are independent Non-executive Directors.

The Board committees have specific terms of reference, appropriately

skilled members, membership by Non-executive Directors who act

independently, Executive Directors and Executive Management

participation and access to specialist advice when considered

necessary.

Audit Committee

The role of the Audit Committee is to review the Group’s financial

position and make recommendations to the Board on all financial

matters and internal controls. The committee also reviews the

nature and extent of non-audit services provided by the external

auditors to ensure that the fees for such services do not become

so significant as to call into question their independence. The

Chairman of the committee reports on the committee’s activities

at each Board meeting.

The members of this committee are independent Non-executive

Directors. All members are financially literate and all possess

substantial business and financial expertise and comply with Section

94 and Regulation 42 of the Companies Act. The committee meets

at least three (3) times per year. Both internal and external auditors

have unrestricted access to the committee.


The Chairman of the Board, CEO, Financial Director, Chief Audit

Executive (CAE) and external auditors attend the Audit Committee

meetings by invitation. The committee held four (4) meetings


Composition of the committee and meeting attendance

Membership Attendance

Chairman:

Dr PJ Welgemoed 4/4Members:

Mr KI Mampeule 3/4Ms WD Stander 2/4Mr GJ Halliday 4/4Mr HR Brody 3/4

The committee, amongst other things, identifies and evaluates the

adequacy of internal controls and provides effective communication

between Directors, management and the internal and external

auditors. The responsibilities of the Audit Committee are contained

in a formal mandate from the Board (terms of reference) which is

reviewed annually. Its main responsibilities include:

• Performing the statutory functions of an Audit Committee

in terms of the Companies Act (Act No. 71 of 2008), as

amended, and other functions delegated by the Board;

• Reviewing and recommending to the Board for approval

the Group’s Annual Integrated Report, interim reports and

results announcement;

• Nominating and approving the terms of engagement and

remuneration of registered auditors who, in the opinion of

the committee, are independent of the Group, and ensuring

that their appointment complies with the provisions of the

Companies Act, King III and other legislation relating to their

appointment;

• Reviewing and evaluating the effectiveness and performance

of the external auditors as well as the scope, adequacy and

costs of audits to be performed and report thereon to the

Board and shareholders;

• Evaluating and approving the external auditors’ plans, findings

and reports;

• Receiving and dealing appropriately with any concerns or

complaints, whether received internally or externally, dealing

with the Group’s accounting practices and internal audits,

the Financial Statements, internal financial controls or related

matters;

• Monitoring and evaluating the performance of the Financial

Director;

• Identifying and evaluating exposure to financial risks;

• Evaluating the effectiveness of the internal auditing function,

including its activities, scope and adequacy, and receiving

and approving the Internal Audit Plan, internal audit reports

and material changes to same;

• Evaluating procedures and systems including, but not limited

to, internal controls, disclosure controls and the internal audit

function;

• Considering legal matters which could financially affect the

Group; and

• Recommending principles for the use of external auditors

for non-audit services and ensuring that the fees for such

services do not become so significant as to call into question

their independence.

The committee’s report, describing how it discharges its statutory

duties and the additional duties assigned to it by the Board, is

included in this Integrated Annual Report on pages 62 to 64.

Risk Management Committee The role of the Risk Management Committee is to review the

risks facing the Group’s business and to ensure compliance

with all required legislation, regulations and codes affecting the

business. The members of this committee, who also serve as

members of the Audit Committee, are independent Non-executive

Directors. The committee meets at least three (3) times per year.

The Chairman of the Board, CEO, Financial Director, CAE and

external auditors (where appropriate) attend committee meetings

by invitation. The committee held four (4) meetings during the

reporting period.



Chairman:

Dr PJ Welgemoed 4/4Members:

Mr KI Mampeule 3/4Ms WD Stander 2/4Mr GJ Halliday 4/4Mr HR Brody 3/4


The main responsibilities of the Risk Management Committee

are, amongst others, to:

• Oversee the development and annual review of the Risk

Management Policy and Plan for recommendation to the

Board for approval;

• Monitor implementation of the Risk Management Policy and

the Plan;

• Make recommendations to the Board concerning the levels

of tolerance and appetite and ensure that risks are managed

within the levels of tolerance and appetite as approved by

the Board;

• Ensure that the Risk Management Plan is widely disseminated

throughout the Group and integrated in the day-to-day

activities of the Group;

• Ensure that risk management assessments are performed

on a continuous basis;

• Ensure that frameworks and methodologies are implemented

to increase the possibility of anticipating unpredictable risks;

• Ensure that management considers and implements appropriate

risk responses;

• Liaise closely with the Audit Committee to exchange information

relevant to risk;

• Review reports concerning risk management that are to

be included in the Integrated Report to ensure that such

reporting is timely, comprehensive and relevant;

• Evaluate procedures and systems introduced including,

without limitation, the Company’s information technology

systems.

For more information regarding the Group’s risk management and

the material issues facing it that have been identified as a result

of its risk management procedures, refer to the internal control

and risk management report on pages 19 to 23.

Nominations Committee

The members of this committee are all Non-executive Directors

who act independently.

This committee, as well as the Remuneration Committee, considers

the issue of succession planning at Board and Executive Management

level. The CEO, in consultation with the Board Chairman and

Remuneration and Nominations committees, is responsible for

ensuring that adequate succession plans are in place.

The committee met once during the financial year under review.

The composition of the committee and attendance at meetings

are set out below.



Chairman:

Mr P van Hoven 1/1Members:

Mr JM Kahn 1/1Mr KI Mampeule 1/1Mr MD Moritz 1/1

Amongst others, the main responsibilities of the Nomination

Committee are to:

• Make recommendations on the appointment of new Executive

and Non-executive Directors;

• Make recommendations on the composition of the Board

generally and the balance between Executive and Non-

executive Directors;

• Review plans for succession and ensure their adequacy, for

the Chairman, the CEO and Executive Directors;

• Review the Board structure, size and composition and make

recommendations with regard to any adjustments deemed

necessary; and

• Ensure that Board appointment policies and procedures

are formal and transparent and a matter for the Board as a

whole, and that such appointment policies and procedures

are reviewed and updated when necessary.

Remuneration Committee

The members of this committee are all independent Non-executive

Directors. The CEO attends meetings by invitation only and is

not entitled to vote. The CEO does not participate in discussions

regarding his own remuneration. The committee met twice during

the financial year under review. The composition of the committee

and attendance at meetings is set out below.



Chairman:

Mr JM Kahn 2/2Members:

Mr RC Sacks 1/2Mr P van Hoven 2/2Ms WD Stander 1/2

The remuneration policy and the execution thereof is the responsibility

of the Remuneration Committee.


The fees for Non-executive Directors and the remuneration

packages of Executive Directors for the financial year under

review are disclosed in the Remuneration report on page 67 of

this Integrated Annual Report. As recommended by King III, the

Group’s Remuneration Policy was approved by its shareholders

at its last Annual General Meeting, held on 5 November 2014, by

way of a non-binding advisory vote.

Amongst other things, the main responsibilities of the Remuneration

Committee are to:

• Determine the Group’s general policy on remuneration as

well as specific policies in respect of Executive Directors’

and Executive Managers’ remuneration;

• Review and determine remuneration packages for Executive

Directors and Executive Management, including but not limited

to basic salary, annual bonuses, benefits, performance-based

incentives and Share Incentive Scheme awards;

• Annually appraise the performance of the CEO;

• Annually review the general level of remuneration of the Directors

of the Board, as well as its committees and recommend

proposals in this respect for approval by shareholders at

the Annual General Meeting; and

• Make recommendations in respect of awards from the Comair

Share Incentive Scheme.

Social and Ethics Committee

The role and responsibilities of the committee are codified in a

mandate from the Board (terms of reference), which is reviewed

annually. The members of this committee consist of independent

Non-executive Directors, Executive Directors and Senior Executives

of the Group, who are suitably experienced. The Chairman of

the Board, Financial Director, CAE, representatives from other

assurance providers, professional advisors and Board members

are entitled to attend committee meetings. The committee met

four times during the period under review. The composition of the

committee and attendance at meetings is set out below.


Membership AttendanceChairman:Mr MD Moritz 4/4Members:Mr ER Venter 4/4Mr DH Borer 4/4Mr KI Mampeule 4/4Ms KV Gorringe 4/4Ms EA Liebetrau 4/4Ms WD Stander 2/4

The main responsibilities of the Social and Ethics Committee are,

amongst others, to:

• Assist the Board in ensuring that the Group is compliant with

all legislation and other requirements relating to social and

economic development and remains a good corporate citizen

by monitoring the sustainable development performance of

the Group; and

• Perform the statutory functions of a Social and Ethics

Committee in terms of the Companies Act (No. 71 of 2008),

as amended and other functions delegated to it by the Board.

The committee’s report, describing how it discharged its statutory

duties, is included in this Integrated Report on pages 68 to 69.

Discharge of responsibilities

The Board is of the view that the committees discharged their

responsibilities for the financial year under review in compliance

with their terms of reference.

Internal control

Internal control systems

The Board has responsibility for ensuring that the Group implements

and monitors the effectiveness of its systems of internal control. The

identification of risk and the implementation and monitoring of adequate

systems of internal control to manage both financial and operational

risk are delegated to the CAE, who in turn makes recommendations

to Executive Management as well as the Audit Committee.

While all internal control systems do have inherent shortcomings, the

Group’s internal control system is designed to provide reasonable

assurance as to the reliability of financial information, in particular the

Financial Statements, as well as to safeguard, verify and maintain

accountability of its assets and to detect fraud and potential liability,

while complying with applicable laws and regulations.

The Group’s external auditors consider the internal control systems

of the Group as part of their audit, and advise of deficiencies

when identified.

Internal audit

The internal audit function is an independent appraisal mechanism

which evaluates the effectiveness of the applicable operational activities,

the attendant business risks and the systems of internal control,

so as to bring material deficiencies, instances of non-compliance

and development needs to the attention of the Audit Committee,


external auditors and operational management for resolution. The

CAE co-ordinates with the external auditors so as to ensure proper

coverage and minimise duplication of effort. Internal audit plans

are tabled at the Audit Committee meetings and follow up audits

are concluded in areas where weakness is identified. The Internal

Audit Plan, approved by the Audit Committee, is based on risk

assessments which are of a continuous nature, so as to identify not

only existing and residual risk, but also emerging risks and issues

highlighted by the committee and Senior Executive Management.

External audit

The independence of the external auditors is recognised. The

Audit Committee meets with external auditors to review the

scope of the external audit, and any other audit matters that may

arise. The external auditors attend Audit and Risk Committee

meetings and have unrestricted access to the Chairmen of the

committees. The Audit Committee is responsible for nominating

the Company’s external auditors and determining the terms

of engagement.

Investor relations

The Board is committed to keeping shareholders and the investor

community informed of developments in the Group’s business. For

further information in this regard, please refer to the Sustainable

Development Report.

Summarised King III checklist

Comair Limted – 1967/006783/06 IoDSA GAI score Applied/partially applied/not applied

+ Chapter 1: Ethical leadership and corporate citizenship AAA Applied+ Chapter 2: Board and directors AAA Applied+ Chapter 3: Audit committees AAA Applied+ Chapter 4: The governance of risk AAA Partially not applied+ Chapter 5: The governance of information technology AAA Applied+ Chapter 6: Compliance with laws, rules, codes and standards AAA Applied+ Chapter 7: Internal audit AAA Applied+ Chapter 8: Governing stakeholder relationships AA Partially not applied+ Chapter 9: Integrated reporting and disclosure AAA AppliedOverall score AAA

Key: AAA – Highest application AA – High application BB – Notable application B – Moderate application C – Application to be improved L – Low application

The full King III Application Register appears on the Group website at www.comair.co.za


Audit Committee report

This report is presented by the Group’s Audit Committee,

approved by the Board and the shareholders, in respect of the

financial year ended 30 June 2015. It is prepared in accordance

with the recommendations of King III and the requirements of the

Companies Act (Act No. 71 of 2008), as amended, and describes

how the committee has discharged its statutory duties in terms

of the Companies Act and the additional duties assigned to it by

the Board in respect of the financial year ended 30 June 2015.

Audit Committee mandate

The committee has adopted a formal mandate setting out its

responsibilities and functioning, that has been approved by the Board

and which is reviewed annually. The committee has conducted its

affairs in compliance with this mandate and is satisfied that it has

fulfilled all its statutory duties and duties assigned to it by the Board

during the financial year under review as further detailed below.

Composition and meetings

The committee consists of five (5) independent Non-executive

Directors and meets at least three (3) times per annum.

The Chairman of the Board, CEO, Financial Director, Chief Audit

Executive (CAE) and external auditor attend committee meetings

by invitation.

During the year the committee held four (4) meetings.

Committee members, qualifications and meeting attendance

NameDate of

appointment Qualifications Attendance

Dr PJ Welgemoed 28/03/1996 BCom (Hons), MCom, DCom

4/4

Mr KI Mampeule 05/09/2005 BA, MSc, MBA 3/4Ms WD Stander 15/09/2008 BA (Hons),

MBA2/4

Mr GJ Halliday 06/06/2013 BA (Hons), MBA

4/4

Mr HR Brody 09/06/2014 BAcc (Hons) 3/4

The Board re-appointed the committee members, which

appointments are subject to the shareholders re-electing the

committee members at its Annual General Meeting to be held

on 3 December 2015.

Role and function of the committee

The roles and functions of the committee, including its statutory

duties, are set out in the Corporate Governance Report on pages

57 to 58 of this Integrated Annual Report.

The committee is satisfied that it has fulfilled all its statutory

duties, including those prescribed by the Companies Act and

those assigned to it by the Board during the financial year under

review. In addition, the committee did not receive or deal with

any concerns related to matters listed in Section 94(7)(g)(i)–(iv)

of the Companies Act.

External audit

The committee has, during the period under review, nominated

external auditors, Grant Thornton Johannesburg Partnership

(GT), approved its fee and determined its terms of engagement.

The appointment will be presented to shareholders of the Group

at the Annual General Meeting for approval. The committee has

further satisfied itself that GT is accredited and appears on the

JSE’s List of Accredited Auditors and that the designated auditor,

Theunis Schoeman, is not disqualified from acting as such. The

committee has further satisfied itself that the external auditors,

GT, are independent of the Group as contemplated in Sections

90(2)(b), (c) and 94(8) of the Companies Act.

A formal policy governs the process whereby the external auditors

are considered for non-audit-related services. The committee

approved the terms of the policy for the provision of non-audit

services by the external auditors and approved the nature and

extent of non-audit services that the external auditors may provide.

During the period under review, the external auditors did provide

non-audit services to the Group, namely in the form of tax advice

and assurance on selected information in this Integrated Annual

Report and they attended to the Group’s verification audit on

its B-BBEE scorecard. The use of the external auditors for such

services was pre-approved by the committee.


Internal financial control

The committee is responsible for assessing the Group’s system of

internal financial control, has considered reports from the internal

and external auditors and has satisfied itself with the adequacy and

effectiveness of the Group’s system of internal financial control.

Expertise and experience of the Financial Director and finance function

The committee performed a review of the Financial Director

and the finance function and is satisfied with the expertise and

experience of the Financial Director and the appropriateness of

the finance function.

Internal audit

Internal audit forms an integral part of the Group’s risk management

process and system of internal control. The committee is satisfied

with the independence, quality and scope of the internal audit

function. Mr Sean Percival Miller was appointed as CAE, and

has developed a sound working relationship with the committee

in that he:

• Provides an objective set of eyes and ears across the Group;

• Provides assurance and awareness on risks and controls

specific to the Group and the industry in which he is involved;

• Has positioned himself as a trusted strategic adviser to the

committee;

• Confirms to the committee at least once a year the independence

of the internal audit function; and

• Communicates regularly with the committee Chairman.

Further details of the Group’s internal audit function are contained

in the Corporate Governance Report on pages 60 to 61. The

committee has considered and recommended the Internal Audit

Charter for approval by the Board. The CAE’s Annual Audit Plan

was approved by the committee.

Risk management

The Board has assigned oversight over the Group’s risk management

function to the Risk Management Committee. The members of

the Audit Committee are also members of the Risk Management

Committee. The committee fulfils an oversight role over financial

reporting risks, internal financial controls and fraud risk as it relates

to financial reporting and safety and security issues. Further

details of the Company’s risk management function can be found

in the Corporate Governance and the Internal Control and Risk

Management reports.

The committee is satisfied that the system as well as the process

of risk management is effective.

Financial Statements

The committee has reviewed the financial statements of the

Group and is satisfied that they comply with International Financial

Reporting Standards.

Compliance

The committee is responsible for reviewing any major breach of

relevant legal, regulatory and other responsibilities. The committee is

satisfied that there has been no material non-compliance with laws

and regulations during the period under review. Notwithstanding

the foregoing, a company known as Safair Operations Proprietary

Limited submitted a complaint to the Domestic Air Services

Licensing Council on the grounds that the Company’s foreign

shareholding component does not comply with the provisions

of the Air Services Licensing Act (No. 83 of 1995). The council,

subsequent to a meeting held on 10 July 2015, issued a notice

requesting the Group to explain within a period of 120 days some of

its shareholding information and to provide additional shareholding

documentation. The Group is seeking to satisfy the requirements

of council and to resolve this matter in an amicable way.

Going concern

The committee, based on an assessment received from Executive

Management, is of the view that the Group will be a going concern

for the foreseeable future.

Duties assigned by the Board

The committee fulfils an oversight role over the Group’s Integrated

Annual Report and the reporting process, including the system of

internal financial control. It is responsible for ensuring that the internal

audit function is independent and has the necessary resources,

standing and authority to enable it to effectively discharge its

duties. The committee also oversees co-operation between the

internal and external auditors, and serves as a link between the

Board and their functions.


Whistle-blowing

The committee is satisfied that all instances of whistle blowing

have been appropriately dealt with during the period under review.

Sustainability reporting

The committee recommended to the Board the appointment of

GT, an external independent assurance provider, to perform an

assurance engagement with the purpose of expressing a limited

assurance opinion in terms of ISAE 3000 on whether selected key

performance indicators and specific disclosures, as contained in

the Integrated Annual Report, have been fairly stated and meet

reasonable reporting expectations. The assurance statement can

be accessed via the Company’s website, www.comair.co.za.

The committee has considered the Group’s sustainability information,

as disclosed in the Integrated Annual Report, and has assessed

its consistency with operational and other information known to

committee members and for consistency with the Annual Financial

Statements. The committee is satisfied that the sustainability

information is reliable and consistent with the financial results.

Recommendation of this Integrated Annual Report for Board approval

The committee recommended this Integrated Annual Report for

approval by the Board.

The committee is satisfied that it has complied with all its legal,

regulatory and other responsibilities during the period under review.

Dr PJ Welgemoed

Chairman: Comair Limited Audit Committee

20 October 2015


Remuneration report

The Group has a dedicated Board Committee that, inter alia,

determines the governance of remuneration matters, the Group’s

remuneration philosophy, remuneration of Executive Directors and

Senior Managers, as well as the compensation of Non-executive

Directors, which is ultimately approved by the shareholders.

Detail on the mandate, composition and attendance of meetings

held by the Remuneration and Nominations committees are set

out in the Corporate Governance Report.

Remuneration approach

The Group’s remuneration policy aims to ensure that it remunerates

Directors and Senior Managers in a manner that supports the

achievements of its strategic objectives, while attracting and

retaining scarce skills and rewarding high levels of performance.

The remuneration offered by the Group needs to be competitive

in order to attract, retain and incentivise high calibre staff.

The remuneration philosophy is based on the following principles:

• Affordability;

• Internal fairness; and

• External fairness.

The remuneration approach that furthermore guides the level

of salaries of all Directors and Senior Management is aimed at:

• Ensuring that no discrimination occurs;

• Recognising exceptional and value-adding performance;

• Encouraging team performance and participation;

• Promoting cost-effectiveness and efficiency; and

• Achieving the strategic objectives of the Group.

In order to balance external equity with affordability and to

ensure that market-related salaries are offered to staff, the Group

participates in several salary surveys and uses that information

for benchmarking purposes.

Remuneration structures

Management remuneration structures comprise fixed and variable

components:

• Fixed pay: base salary and benefits; and

• Variable pay: short-term merit bonus and a long-term

executive incentive scheme based on Group profits before

tax and the Group’s share price performance (payable every

three years).

Fixed pay

Base salary

Market data is used to benchmark individual salary levels for

Directors and Senior Managers. This information, combined with

the individual’s performance assessment, is the key consideration

for the annual salary reviews.

Retirement benefits

The Group offers membership to a defined contribution pension

fund to all permanent employees in South Africa. This fund is

part of an umbrella arrangement known as the Superfund and is

administered by Old Mutual.

Other benefits

This includes benefits, such as medical aid, risk benefits insurance

(i.e. death and disability), to permanent employees in South

Africa, and leave.

Pilots

Pilots are currently guaranteed a 13th cheque.

Variable pay

Short-term incentives

Executive Directors and Senior Managers participate in a short-term

cash-based management incentive scheme. Payment in terms

of the short-term incentive scheme depends on the achievement

against key performance criterion, namely, profit after tax and is

subject to three (3) components:


• Achievement by the qualifying employee of key performance

indicators (40%);

• Group profit performance (40)%; and

• 20% of the bonus is payable at the discretion of the Board.

The payment of any short-term incentive to Executive Directors

and Senior Managers is subject to Board approval.

Employees who do not participate in the short-term incentive

scheme would be entitled to a 13th cheque or a portion thereof

based on personal performance and company affordability and

a discretionary amount based on the Group’s performance. This

does not apply to pilots, who are guaranteed a 13th cheque.

Long-term incentive scheme (1 December 2012–30 September 2015)

Executive Directors and designated Senior Managers who were

in the employ of the Group on or prior to 31 December 2012

and who are still in the employ of the Group as at 30 September

2015, participate in the long-term executive incentive scheme.

The purpose of the scheme is to retain talent and to reward

participants of the scheme based on the Group’s performance.

It comprises two components:

• Profit-linked component (35%): In terms of this component

of the scheme, 7% of the aggregated headline profits before

tax (excluding profits from damages awards and profits

from new business ventures that are not managed by the

participants), made by the Group during the 2013, 2014 and

2015 financial years in excess of R250 million, but capped to a

maximum of R17.5 million, would be allocated to participants

in the scheme in proportion to their basic salary versus the

combined basic salary of the participants in the scheme; and

• Share price-linked component (65%): This component is based

on the trade weighted average share price of the Group for

the six months to 30 June 2015, with the bonus payable to

participants being the difference between the Group share

price as determined on 30 June 2015 and a share price of

R1.50, but capped to a maximum of R32.5 million.

Executive Directors’ remuneration

Remuneration of Executive Directors is compared to the market

for comparable roles in companies of a similar size.

The annual bonus payable to Executive Directors in terms of the

short-term management incentive scheme is limited to 100% of

their annual base salary.

The long-term incentive scheme came to fruition with both the

profit-linked and share price-linked components having been met,

and the incentive associated therewith was paid to Executive

Directors and designated Senior Managers still in the employ of

the Group as at 30 September 2015.

Executive Directors have standard service contracts with no fixed

duration, no restraint and with a one-month notice period.

Details of the remuneration of individual Executive and Non-

executive Directors are set out in the Report of the Directors on

pages 73 to 74.

Non-executive Directors’ remuneration

Non-executive Directors do not receive any benefits or share

options from the Group, apart from Directors’ fees, which fees

were approved by shareholders at the Group’s Annual General

Meeting on 5 November 2014. The Non-executive Directors

fees for the year ended 30 June 2015 are included in the joint

remuneration payable to the Group’s Non-executive Directors, as

indicated in Special Resolution Number 1 in the Notice of Annual

General Meeting to be held on 3 December 2015.

The Directors’ fees per meeting, for the financial years ended

30 June 2014 and 30 June 2015, as well as the proposed fee per

meeting for the financial year ending 30 June 2016, are set out in

the table below. Members of the committees are also remunerated

for their participation in these committees.


Directors’ fees

Approved annual fee for the year ended 30 June 2014

Approved annual fee for the year ended 30 June 2015

Proposed annual fee for the year ended 30 June 2016

Chairperson: Board 1 200 000 1 280 000 1 348 200

Vice-Chairperson: Board 350 000 374 500 393 225

Member: Board 150 000 160 500 168,525

Approved fee per meeting for the year ended

30 June 2014

Approved fee per meeting for the year ended

30 June 2015Proposed fee per meeting for the year ended 30 June 2016

Chairperson: Audit Committee 13 000 13 910 14 606

Member: Audit Committee 6 500 6 955 7 303

Chairperson: Risk Committee 13 000 13 910 14 606

Member: Risk Committee 6 500 6 955 7 303

Chairperson: Nominations Committee 13 000 13 910 14 606

Member: Nominations Committee 6 500 6 955 7 303

Chairperson: Social and Ethics Committee 13 000 13 910 14 606

Member: Social and Ethics Committee 6 500 6 955 7 303

Chairperson: Remuneration Committee 13 000 13 910 14 606

Member: Remuneration Committee 6 500 6 955 7 303

Chairperson: Pension Fund 13 000 13 910 14 606


Social and Ethics Committee report

The Social and Ethics Committee assists the Board in ensuring that

the Group is and remains a good and responsible corporate citizen

by monitoring the Group’s sustainable development performance,

and performing the statutory functions required of a Social and

Ethics Committee in terms of the Companies Act (Act No.71 of

2008), as amended, as well as the additional functions assigned

to it by the Board. The responsibilities and functioning of the

committee are governed by a formal mandate approved by and

subject to annual review by the Board. The committee is satisfied

that it has fulfilled all its statutory duties, as well as those duties

assigned to it by the Board during the financial year under review.

The composition and number of meetings held or to be held by

the committee is set out in the Group’s Corporate Governance

Report in this Integrated Annual Report on page 60.

The committee is responsible for developing and reviewing the

Group’s policies with regard to social and economic development,

good corporate citizenship and reporting on the Group’s sustainable

development performance and for making recommendations to

the Board and/or management on matters within its mandate.

The committee performs a monitoring role in respect of the

sustainable development performance of the Group relating,

amongst others, to:

• Environmental, health and public safety, which includes

occupational health and safety;

• Broad-based black economic empowerment and employment

equity;

• Labour relations and working conditions;

• Consumer relationships (advertising, public relations and

compliance with consumer protection laws);

• Training and skills development of the Group’s employees;

• Management of the Group’s environmental impacts;

• Ethics and compliance; and

• Corporate social investment.

The committee is satisfied with the Group’s performance in each

of the areas listed above and as further reported in the Sustainable

Development Report of this Integrated Annual Report.

The committee’s monitoring role includes the monitoring of

relevant legislation, other legal requirements or prevailing codes

of good practice, specifically with regard to matters relating to

social and economic development, good corporate citizenship,

the environment, health and public safety as well as labour

and employment.

The committee is further responsible for annually reviewing, in

conjunction with Executive Management, the Group’s material

sustainability issues. The committee must also review and approve

the sustainability content included in this Integrated Annual Report.

During the past financial year, the following reports relating to

the committee’s functions were produced by management and

reviewed by the committee:

• The Group’s standing with respect to consumer relations

and compliance with consumer protection laws;

• The Group’s compliance with applicable advertising and

marketing laws; and

• The Group’s record of sponsorship, donations and

charitable giving.

• The Group’s B-BBEE audit and status.

Each of the above-mentioned reports was analysed in depth and

in one case, namely in the area of donations and charitable giving,

management was requested to identify one particular charitable

cause with whom an ongoing relationship could be created. This

resulted in the Group concluding an arrangement with the Red

Cross War Memorial Children’s Hospital in Cape Town in terms of

which the Group is providing free travel to patients at the hospital

and made a donation of R500 000 during the current financial

year to assist with the construction of new accommodation for

family visiting or staying over with patients. This relationship with

the Red Cross War Memorial Children’s Hospital is expected

to continue into the future. All the reports were subsequently

also approved by the Board, upon the recommendation of the

committee. The committee is satisfied with the Group’s standing

in the areas reviewed and that the current level of combined

assurance provides the necessary independent assurance over

the quality and reliability of the information presented.


The committee is required to report through one of its members

to the Group’s shareholders on matters within its mandate at the

Group’s Annual General Meeting. Shareholders will be referred

to this report, read together with the Sustainable Development

Report, at the Annual General Meeting on 3 December 2015.

MD Moritz

Chairman: Social and Ethics Committee

20 October 2015


Report of the Directors

The Directors take pleasure in presenting their report, which forms

part of the Annual Financial Statements of the Group for the year

ended 30 June 2015.

Nature of business

The main business of the Group is the provision of domestic and

regional air services in the Southern African market, trading under

the names of British Airways and kulula. In addition to the foregoing,

the Group provides other travel-related services, undertakes third

party flight simulator and crew training, operates airline lounges

and currently provides airline catering for its own services, as well

as limited third party catering.

General review of main activities

The Group currently operates a fleet of 25 aircraft flying to the

destinations as set out on page 5 of this Integrated Annual Report.

The Directors have performed the solvency and liquidity test

required by the Companies Act, the outcome of which is that the

Group is a going concern with adequate resources to continue

operating for the foreseeable future.

Financial results

Full details of the financial results are set out on pages 78 to 124

of this Integrated Annual Report for the year ended 30 June 2015.

Dividends

Notice is hereby given that a gross cash dividend of 10 cents per

ordinary share has been declared payable to shareholders. The

dividend has been declared out of income reserves.

The dividend will be subject to a local dividend tax rate of 15%

or 1.5 cents per ordinary share, resulting in a net dividend of

8.5 cents per ordinary share, unless the shareholder is exempt from

paying dividend tax or is entitled to a reduced rate in terms of the

applicable double tax agreement. The Company’s tax reference

number is 9281/874/7/1/0 and the number of ordinary shares in

issue at the date of this declaration is 469 330 865.

In accordance with the provisions of Strate, the electronic settlement

and custody system used by the JSE Limited, the relevant dates

for the dividend are as follows:

Event Date

Last day to trade (cum dividend) Friday, 16 October 2015Shares commence trading (ex dividend) Monday, 19 October 2015Record date (date shareholders recorded in books)

Friday, 23 October 2015

Payment date Monday, 26 October 2015

Share certificates may not be dematerialised or rematerialised

between Monday,19 October 2015 and Friday, 23 October 2015,

both days inclusive.

Share capital

The authorised share capital of the Group remained unchanged


BEE scheme

During the period under review, the Group finalised and wound up its

BEE transaction with Thelo Aviation Consortium Proprietary Limited,

details of which scheme were set out in a Circular to Shareholders

dated 23 August 2006 and approved by shareholders by way

of a special resolution in September 2006. As part of the BEE

transaction, the Company, with the approval of the JSE, converted

29 067 766 ‘A’ class shares to ordinary shares to Thelo Aviation

Consortium Proprietary Limited, from its authorised share capital.

Share buy-back and issues for cash

Other than the issue of ordinary shares mentioned above, the

Group did not buy-back nor issue any ordinary shares for cash


Issued share capital

Following the winding up of the BEE transaction, as mentioned

above, the Group’s issued share capital has increased from

440 263 099 ordinary shares of 1 cents each to 469 330 865

ordinary shares of 1 cents each.


Subsidiaries and associates

Details of the Group’s subsidiaries and associates are recorded in

notes 5 and 7 of this Integrated Annual Report on pages 96 to 100.

Subsequent events

The Directors are not aware of any matter or circumstances arising

since the end of the period under review that would significantly

affect or have a material impact on the financial position of the Group.

Directors’ interest in share capital

The following Directors of the Group held direct and indirect

interests in the issued share capital of the Group at 30 June 2015

as set out below.

There has been a change in the Directors’ interests in share

capital from 30 June 2015 to the date of posting of this Integrated

Annual Report, in that Mr MN Louw purchased 89 268 Comair

ordinary shares on 22 September 2015, taking his direct beneficial

holdings to 201 000 ordinary shares, and Mr ER Venter purchased

968 271 Comair ordinary shares on 2 October 2015, taking his

direct beneficial holdings to 2 500 154 ordinary shares.

2015 2014

DirectorDirect

beneficialIndirect

beneficialHeld by

associatesTotal

shares %Direct

beneficialIndirect

beneficialHeld by

associatesTotal

shares %

Mr MD Moritz - 50 000 000 9 462 50 009 462 10.66 - 50 000 000 9 462 50 009 462 11.35Mr P van Hoven 204 647 - - 204 647 0.04 204 647 - - 204 647 0.05Mr ER Venter 1 531 883 - - 1 531 883 0.33 1 531 883 - - 1 531 883 0.35Mr MN Louw 111 732 - - 111 732 0.03 111 732 - - 111 732 0.03Dr PJ Welgemoed 118 788 - - 118 788 0 03 118 788 - - 118 788 0.03Mr DH Borer* 88 000 - - 88 000 0 02 188 000 - - 188 000 0.04Total 2 055 050 50 000 000 9 462 52 064 512 11.09 2 155 050 50 000 000 9 462 52 164 512 11.85

* Alternate Director

Note: The difference in the percentage shareholding is as a result of the increase in the Group’s issued share capital, other than in respect of Directors who disposed of their share capital during the period under review.

Special resolutions

Since its last annual report, the Group passed four (4) special

resolutions at its Annual General Meeting, held on 5 November 2014,

namely:

• A special resolution for approval of Non-executive Directors’

remuneration for 2013/14;

• A special resolution for the approval of Non-executive Directors’

remuneration for 2014/15;

• A special resolution giving the Group a general authority to

re-purchase its shares; and

• A special resolution as contemplated in Section 45(3)(a)(ii)

of the Companies Act, i.e. a general authority to provide

financial assistance to related and interrelated companies

or corporations.

Other than the aforementioned, no other special resolutions

were passed.

As required in terms of Section 8.63(i) of the JSE Listings Requirements,

no special resolutions were passed by the Group’s subsidiaries

relating to borrowing powers, the object clause contained in

the MOI or other material matters that affect the Group and the

subsidiaries for the period under review.

Board of Directors, Company Secretary and Board meeting attendance

The names, ages, qualifications, nationality, business addresses,

attendance at Board meetings and occupations of the Directors

and the Group Company Secretary who served during the period

under review, are set out below. Four Board meetings were held



Name, age, qualification, gender and race Nationality Business address

Meeting attendance Occupation

Mr P van Hoven Age: 71 (M) (W)

South African 1 Marignane Drive, Bonaero Park, Kempton Park, 1619

4/4 Independent Non-executive Chairman

Mr MD Moritz Age: 70 (M) (W)(BCom, LLB)


4/4 Non-executive Joint Deputy Chairman

Mr RC SacksAge: 65 (M) (W)(HDip Law, HDip Tax)

South African 550 Monica Circle, Suite 201, Corona, CA 92880, USA

1/4 Independent Non-executive Director

Dr PJ Welgemoed Age: 72 (M) (W)(BCom (Hons), MCom, DCom)



Mr JM KahnAge: 76 (M) (W)(BA Law, MBA (UP), DCom (hc), SOE)

South African Retired Chairman of SABMiller plc, 4 East Road, Morningside 2057


Mr MN LouwAge: 60 (M) (W) (BMil)


3/4 Director: Operations

Mr ER Venter Age: 45 (M) (W)(BCom, CA(SA))


4/4 CEO

Mr KI MampeuleAge: 50 (M) (B)(BA, MSc, MBA)

South African C/o Lefa Group Holdings Proprietary Limited, Mulberry Hill Office Park, Broad Acres Ave, Dainfern, 2191


Mr RS NtuliAge: 45 (M) (B)(LLB (Edinburgh University))

South African Thelo Group Proprietary Limited, Ground Floor, Block 9, St. Andrews Inanda Greens Business Park, 54 Wierda Road West, Wierda Valley, 2196

4/4 Non-executive Joint Deputy Chairman

Ms WD StanderAge: 49 (F) (B)(BA (Hons) MBA)

South African 272 Kent Avenue, Randburg, 2194 2/4 Independent Non-executive Director

Mr GJ HallidayAge: 51 (M) (W)(BA Hons Economics, Geography MBA (Lancaster University))

British British Airways plc, Waterside (HAA2)), Harmondsworth, Middlesex UB7 OGB, UK


Mr HR Brody Age: 51 (M) (W)(BAcc (Hons))

South African 79 Boeing Road, East Bedfordview, Gauteng, 2007


Ms KE King Age: 37 (F) (W)(BCom (Hons) Accounting (CTA Equivalent), CA(SA))


4/4 Financial Director

Mr DH Borer Age: 53 (M) (W)(BCom, LLB)


4/4 Alternate Director to MN Louw and RC Sacks, and Group Company Secretary

Key: M = Male F = Female W = White B = Black, Coloured or Indian

Directors appointments and resignations

a) No Directors were appointed, nor did any resign during the period under review.

b) After the year end the following Directors were appointed and one resigned:

1. Mr Li Neng was appointed as a Non-executive Director on 1 August 2015;

2. Mr Luo Cheng was appointed as a Non-executive Director on 1 August 2015;

3. Mr Naran Maharajh was appointed as an independent Non-executive Director on 1 August 2015;

4. Ms Phuti Mahanyele was appointed as an independent Non-executive Director on 1 August 2015;

5. Mr Hurbert Rene Brody resigned as an independent Non-executive Director on 20 October 2015.


Share incentive scheme

Executive Directors participate in a share incentive scheme with no allocations made or options exercised during the financial year in question.

No share options were issued to employees through the share incentive scheme during the year, and 4 985 798 options remain

available for issue at year end. There were share options exercised by employees during the previous reporting period, with the transfers

effected during this reporting period.

Directors’ remuneration

Directors’ remuneration 2015

Name

For Services as Directors

R’000

Related Committee

WorkR’000

Package1 R’000

Performance-related2

R’000PensionR’000

Group Life and Disability

R’000MedicalR’000

Share-based

Payments as per IFRS

R’000

Total 2015R’000

Executives

Mr ER Venter - - 2 727 2 809 385 75 42 - 6 038

Mr MN Louw - - 1 990 1 602 264 51 38 - 3 945

Mr DH Borer - - 1 538 1 233 195 38 42 - 3 046

Ms Kirsten King - - 1 347 1 202 117 22 21 - 2 709

Sub-total - - 7 602 6 846 961 186 143 - 15 738

Non-executives

Mr MD Moritz 375 63 - - - - - - 438

Mr RS Ntuli 375 - - - - - - - 375

Dr PJ Welgemoed 161 111 - - - - - - 272

Mr JM Kahn 161 35 - - - - - - 196

Mr KI Mampeule 161 77 - - - - - - 238

Mr P van Hoven 1 284 56 - - - - - - 1 340

Mr HR Brody 161 42 - - - - - - 203

Sub-total 2 678 384 - - - - - - 3 062

Share-based payment

- - - - - 10 834 10 834

Total 2 678 384 7 602 6 846 961 186 143 10 834 29 634

Notes:

(1) ‘Package’ includes the following regular payments made in respect of the financial year while actively employed: cash salary, S&T allowances and vehicle allowance

(2) ‘Performance-related’ refers to the incentive rewards in respect of the financial year ended 30 June 2015

(3) Remuneration receivable by the Directors will not vary as a result of any proposed issue for cash or repurchase of shares


Directors’ remuneration 2014

Name

For Services as Directors

R’000

Related Committee

WorkR’000

Package1 R’000

Performance-related2

R’000PensionR’000

Group Life and Disability

R’000MedicalR’000

Share-based

Payments as per IFRS

R’000

Total 2014R’000

Executives

Mr ER Venter - - 2 525 3 500 342 67 38 - 6 472

Mr MN Louw - - 1 858 1 872 235 46 35 - 4 046

Mr RY Sri Chandana - - 988 - 90 17 20 - 1 115

Mr DH Borer - - 1 430 1 423 174 34 38 - 3 099

Ms KE King - - 50 158 7 3 3 - 221

Sub-total - - 6 851 6 953 848 167 134 - 14 953

Non-executives

Mr MD Moritz 350 59 - - - - - - 409

Mr RS Ntuli 350 - - - - - - - 350

Dr PJ Welgemoed 150 65 - - - - - - 215

Mr JM Kahn 150 20 - - - - - - 170

Mr KI Mampeule 150 72 - - - - - - 222

Mr P van Hoven 1 200 39 - - - - - - 1 239

Ms WD Stander - - - - - - - - -

Mr HR Brody 75 - - - - - - - 75

Sub-total 2 425 255 - - - - - - 2 680

Share-based payment

- - - - - - - 17 416 17 416

Total 2 425 255 6 851 6 953 848 164 134 17 416 35 049

Notes:

(1) ‘Package’ includes the following regular payments made in respect of the financial year while actively employed: cash salary, S&T allowances and vehicle allowance

(2) ‘Performance-related’ refers to the incentive rewards in respect of the financial year ended 30 June 2014

(3) Remuneration receivable by the Directors will not vary as a result of any proposed issue for cash or repurchase of shares

Further details regarding the Company’s remuneration policies are set out in the Remuneration report, which can be found on pages 65 to

67 of this Integrated Annual Report.


Statement of responsibility by the Board of Directors

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 78 to 124 have been prepared in accordance with International Financial Reports Standards

(IFRS) and the requirements of the Companies Act, 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, Grant Thornton Johannesburg Partnership, 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 78 to 124 were approved by the Board of Directors on 20 October 2015 and signed

on its behalf.

ER Venter P van Hoven

CEO Chairman

20 October 2015 20 October 2015


Certificate of Company Secretary

In terms of Section 88(2)(e) of the Companies Act (No. 71 of 2008), as amended (Companies Act), I certify that the Company has

lodged all returns and notices as required by the Act and that all such returns are true, correct and up to date.

Mr DH Borer

Company Secretary

20 October 2015


Independent Auditor’s report

We have audited the consolidated and separate financial statements

of Comair Limited set out on pages 78 to 124, which comprise

the statements of financial position as at 30 June 2015, and the

statements of comprehensive income, statements of changes

in equity and statements of cash flows for the year then ended,

and the notes, comprising a summary of significant accounting

policies and other explanatory information.

Directors’ responsibility for the financial statements

The company’s directors are responsible for the preparation and

fair presentation of these consolidated and separate financial

statements in accordance with International Financial Reporting

Standards and the requirements of the Companies Act of South

Africa and for such internal control as the directors determine is

necessary to enable the preparation of consolidated and separate

financial statements that are free from material misstatements,

whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these consolidated

and separate financial statements based on our audit. We

conducted our audit in accordance with International Standards

on Auditing. Those standards require that we comply with ethical

requirements and plan and perform the audit to obtain reasonable

assurance about whether the consolidated and separate financial

statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence

about the amounts and disclosures in the financial statements.

The procedures selected depend on the auditor’s judgement,

including the assessment of the risks of material misstatement

of the financial statements, whether due to fraud or error. In

making those risk assessments, the auditor considers internal

control relevant to the entity’s preparation and fair presentation of

the financial statements in order to design audit procedures that

are appropriate in the circumstances, but not for the purpose of

expressing an opinion on the effectiveness of the entity’s internal

control. An audit also includes evaluating the appropriateness of

accounting policies used and the reasonableness of accounting

estimates made by management, as well as evaluating the overall

presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient

and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated and separate financial statements

present fairly, in all material respects, the consolidated and separate

financial position of Comair Limited as at 30 June 2015, and its

consolidated and separate financial performance and consolidated

and separate cash flows for the year then ended in accordance with

International Financial Reporting Standards, and the requirements

of the Companies Act of South Africa.

Other reports required by the Companies Act

As part of our audit of the consolidated and separate financial

statements for the year ended 30 June 2015, we have read the

Directors’ Report, Audit Committee’s Report and Company

Secretary’s Certificate for the purpose of identifying whether there

are material inconsistencies between these reports and the audited

consolidated and separate financial statements. These reports are

the responsibility of the respective preparers. Based on reading

these reports we have not identified material inconsistencies

between these reports and the audited consolidated and separate

financial statements. However, we have not audited these reports

and accordingly do not express an opinion on these reports.

Grant Thornton Johannesburg Partnership

Registered Auditors

T Schoeman

Partner

Registered Auditor

Chartered Accountant (SA)

20 October 2015

@Grant Thornton

Wanderers Office Park

52 Corlett Drive

Illovo, 2196


Statements of Financial Positionas at 30 June 2015

Group Company

Notes

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Assets

Non-current assetsProperty, plant and equipment 3 2 760 584 2 545 033 2 709 206 2 493 813Intangible assets 4 27 490 31 106 27 490 31 106Loan to Share Incentive Trust 5 - - 3 054 3 814Investments in and loans to subsidiaries 6 - - 20 172 21 862Investments in associates 7 28 411 6 612 - -Goodwill 8 6 615 3 668 - -Deferred taxation 14 4 965 - - -

2 828 065 2 586 419 2 759 922 2 550 595

Current assetsInventories 9 10 482 7 608 10 437 7 608Trade and other receivables 10 303 056 523 226 302 238 508 056Investments in and loans to subsidiaries 6 - - 33 203 31 353Investments in and loans to associates 7 7 852 7 852 7 852 7 852Taxation 36 650 30 540 37 678 28 999Cash and cash equivalents 849 278 867 703 832 027 858 118

1 207 318 1 436 929 1 223 435 1 441 986Total assets 4 035 383 4 023 348 3 983 357 3 992 581

Equity and liabilitiesEquityEquity attributable to equity holders of parentShare capital 12 4 643 5 094 4 693 5 144Non-distributable reserves (40 387) 27 424 (40 387) 27 424Accumulated profits 1 201 045 1 035 452 1 161 563 1 025 027

1 165 301 1 067 970 1 125 869 1 057 595Non-controlling interest 889 - - -

1 166 190 1 067 970 1 125 869 1 057 595

LiabilitiesNon-current liabilitiesInterest-bearing liabilities 13 982 052 1 183 072 982 052 1 183 072Deferred taxation 14 217 316 167 689 217 316 169 226Share-based payments - 21 666 - 21 666

1 199 368 1 372 427 1 199 368 1 373 964Current liabilitiesTrade and other payables 15 785 080 1 076 171 773 433 1 054 242Unutilised ticket liability 233 015 270 391 233 015 270 391Provisions 16 109 263 99 719 109 205 99 719Interest-bearing liabilities 13 469 580 136 670 469 580 136 670Share-based payments 32 500 - 32 500 -

Financial liabilities 17 40 387 - 40 387 -

1 669 825 1 582 951 1 658 120 1 561 022

Total liabilities 2 869 193 2 955 378 2 857 488 2 934 986

Total equity and liabilities 4 035 383 4 023 348 3 983 357 3 992 581

Net asset value per share (cents) 251.5 245.3


Statements of Profit or Lossfor the year ended 30 June 2015

Group Company

Notes

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Revenue 19 5 890 746 5 903 219 5 868 226 5 893 870Operating expenses (5 157 578) (5 198 457) (5 152 312) (5 187 380)Operating profit before depreciation, amortisation, impairment and profit on sale of assets 733 168 704 762 715 914 706 490Depreciation and amortisation (405 812) (290 747) (405 754) (290 140)(Impairment) reversal of impairment (1 530) 2 235 (6 269) -Profit on sale of assets 1 231 524 1 231 524

Profit from operations 20 327 057 416 774 305 122 416 874Interest income 40 428 32 149 39 841 31 515Interest expense 21 (72 930) (77 340) (72 915) (77 317)Income from equity accounted investments 7 6 799 2 327 - -Profit before taxation 301 354 373 910 272 048 371 072Taxation 22 (82 578) (109 059) (83 092) (108 864)

Profit for the year 218 776 264 851 188 956 262 208Profit attributable to:Owners of the parent 217 887 264 851 188 956 262 208Non-controlling interest 889 - - -

218 776 264 851 188 956 262 208

Earnings per share (cents) 23 47.8 58.4Diluted earnings per share (cents) 23 47.8 56.1

Statements of Profit or Loss and Other Comprehensive Incomefor the year ended 30 June 2015

Profit for the year 218 776 264 851 188 956 262 208

Other comprehensive income:

Items that may be reclassified to profit or loss:

Effects of cash flow hedges recognised in other comprehensive income (40 387) - (40 387) -Other comprehensive income for the year net of taxation (40 387) - (40 387) -Total comprehensive income for the year 178 389 264 851 148 569 262 208Total comprehensive income for the year attributable to:Owners of the parent 177 500 264 851 148 569 262 208Non-controlling interest 889 - - -

178 389 264 851 148 569 262 208


Share capital

Share premium

Hedging reserve

Share-based payment reserve

Total reserves

Accumulated profit

Total attributable

to equity holders of the Group/Company

Non-controlling

interest Total equity

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

GroupBalance at 01 July 2013 5 578 123 631 - 23 996 153 205 867 995 1 021 200 - 1 021 200 Total comprehensive income for the year - - - - - 264 851 264 851 - 264 851 Repurchase of ordinary shares (489) (123 631) - - (124 120) (27 093) (151 213) - (151 213)BEE share-based payments - - - 3 428 3 428 - 3 428 - 3 428 Shares sold by Share Trust 5 - - - 5 (6) (1) - (1)Dividend paid - - - - - (70 295) (70 295) - (70 295)Movement for the year (484) (123 631) - 3 428 (120 687) 167 457 46 770 - 46 770 Balance at 30 June 2014 5 094 - - 27 424 32 518 1 035 452 1 067 970 - 1 067 970

Total comprehensive income for the year - - (40 387) - (40 387) 218 776 178 389 - 178 389

Repurchase of shares (451) - - - (451) - (451) - (451)

Transfer BEE reserves and accumulated profit - - - (28 281) (28 281) 28 281 - - -

BEE share-based payment - - - 857 857 - 857 - 857

Dividend paid - - - - - (81 464) (81 464) - (81 464)

Business combinations - - - - - - - 889 889

Movement for the year (451) - (40 387) (27 424) (68 262) 165 593 97 331 889 99 220

Balance at 30 June 2015 4 643 - (40 387) - (35 744) 1 201 045 1 165 301 889 1 166 190

17 15:19

CompanyBalance at 01 July 2013 5 633 123 742 - 23 996 153 371 860 732 1 014 103 - 1 014 103 Total comprehensive income for the year - - - - - 262 208 262 208 - 262 208 Repurchase of ordinary shares (489) (123 742) - - (124 231) (26 982) (151 213) - (151 213)BEE share-based payments - - - 3 428 3 428 3 428 3 428 Dividend paid - - - - - (70 931) (70 931) - (70 931)Movement for the year (489) (123 742) - 3 428 (120 803) 164 295 43 492 - 43 492 Balance at 30 June 2014 5 144 - - 27 424 32 568 1 025 027 1 057 595 - 1 057 595

Total comprehensive income for the year - - (40 387) - (40 387) 188 956 148 569 148 569

Repurchase of ‘A’ shares (451) - - (451) - (451) (451)

BEE share-based payments - - - 857 857 - 857 857

Transfer BEE reserves and accumulated profit - - - (28 281) (28 281) 28 281 - -

Dividend paid - - - - - (80 701) (80 701) (80 701)

Movement for the year (451) - (40 387) (27 424) (68 262) 136 536 68 274 - 68 274

Balance at 30 June 2015 4 693 - (40 387) - (35 694) 1 161 563 1 125 869 - 1 125 869

17 15:19

Statements of Changes in Equityas at 30 June 2015


Statements of Cash Flowsas at 30 June 2015

Group Company

Notes

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Cash generated from operating activitiesCash receipts from customers 6 147 759 6 281 836 6 108 741 6 217 549 Cash paid to suppliers (5 467 684) (5 193 498) (5 440 444) (5 133 275)Cash generated from operations 24 680 075 1 088 338 668 297 1 084 274 Interest paid (72 930) (77 340) (72 915) (77 317)Interest received 40 428 32 149 39 841 31 515 Taxation paid 25 (46 785) (76 664) (43 680) (74 757)Net cash from operating activities 600 788 966 483 591 543 963 715

Cash utilised in investing activities

Additions to property, plant and equipment 3 (274 981) (611 366) (274 765) (611 152)Proceeds on disposal of property, plant and equipment 1 269 524 1 269 524 Additions to intangible assets 4 (6 753) - (6 753) - Decrease in loan to share incentive trust - - 760 1 523 (Decrease) increase in subsidiary loans - - (160) 3 499 Net cash from investing activities (280 465) (610 842) (279 649) (605 606)

Cash utilised in financing activities

Repurchase of share capital (451) (151 214) (451) (151 214)Raising of interest-bearing liabilities - 174 675 - 174 675 Repayment of interest-bearing liabilities (256 833) (219 149) (256 833) (219 149)Dividends paid (81 464) (70 295) (80 701) (70 931)Net cash from financing activities (338 748) (265 983) (337 985) (266 619)

Total cash movement for the year (18 425) 89 658 (26 091) 91 490 Cash and cash equivalents at the beginning of the year 867 703 778 045 858 118 766 628 Cash and cash equivalents at end of the year 849 278 867 703 832 027 858 118


Accounting Policies

1. Principal accounting policies

The Financial Statements are presented in South African Rands

as this is the currency of the economic environment in which the

Group operates.

The Financial Statements are prepared in accordance with

International Financial Reporting Standards as well as the SAICA

Financial Reporting Guides as issued by the Accounting Practices

Committee in terms of the Listings Requirements of the JSE

Limited and the Companies Act (Act No. 71 of 2008). The Annual

Financial Statements have been prepared on the historical cost

basis, except for the measurement of certain financial instruments

at fair value, and incorporate the principal accounting policies and

measurement bases listed below.

Except for the adoption of the new and revised accounting standards

the principal accounting policies of the Group are consistent with

those applied in the audited consolidated Financial Statements

for the year ended 30 June 2014.

1.1 Adoption of standards and interpretations effective in 2015

The following new standards were adopted during the financial

year under review, however none had significant financial impacts

for the Group:

• IFRS 2 Share Based Payments;

• IIFRS 3 Business Combinations;

• IFRS 8 Operating Segments;

• IFRS 10 Consolidated Financial Statements;

• IFRS 12 Disclosure of Interest in Other Entities;

• IFRS 13 Fair Value Measurement;

• IAS 16 Property, Plant and Equipment;

• IAS 19 Employee Benefits;

• IAS 24 Related Party Disclosures;

• IAS 34 Interim Financial Reporting;

• IAS 38 Intangible Assets;

• IAS 40 Investment Properties; and

• Interpretations: IFRIC Interpretation 21 Levies.

A full list of standards that will become effective in the next financial

year are disclosed in note 34.

1.2 Consolidation

Basis of consolidation

The Group Financial Statements consolidate those of the parent

company and all of its subsidiaries as of 30 June 2015. The parent

controls a subsidiary if it is exposed, or has rights, to variable

returns from its involvement with the subsidiary and has the ability

to affect those returns through its power over the subsidiary. All

subsidiaries have a reporting date of 30 June.

All transactions and balances between Group companies are

eliminated on consolidation, including unrealised gains and losses

on transactions between Group companies. Where unrealised

losses on intra-Group asset sales are reversed on consolidation,

the underlying asset is also tested for impairment from a Group

perspective. Amounts reported in the Financial Statements of

subsidiaries have been adjusted where necessary to ensure

consistency with the accounting policies adopted by the Group.

Profit or loss and other comprehensive income of subsidiaries

acquired or disposed of during the year are recognised from

the effective date of acquisition, or up to the effective date of

disposal, as applicable.

Non-controlling interests, presented as part of equity, represent a

subsidiaries’ profit or loss and net assets that are not held by the

Group. The Group attributes total comprehensive income or loss

of subsidiaries between the owners of the parent and the non-

controlling interests based on their respective ownership interests.

Business combinations

The Group applies the acquisition method in accounting for

business combinations. The consideration transferred by the

Group to obtain control of a subsidiary is calculated as the

sum of the acquisition-date fair values of assets transferred,

liabilities incurred and the equity interests issued by the Group,

which includes the fair value of any asset or liability arising from

a contingent consideration arrangement. Acquisition costs are

expensed as incurred.

The Group recognises identifiable assets acquired and liabilities

assumed in a business combination regardless of whether they


have been previously recognised in the acquiree’s Financial

Statements prior to the acquisition.

Assets acquired and liabilities assumed are generally measured

at their acquisition-date fair values.

Goodwill is stated after separate recognition of identifiable intangible

assets. It is calculated as the excess of the sum of:

• Fair value of consideration transferred;

• The recognised amount of any non-controlling interest in the

acquiree; and

• Acquisition-date fair value of any existing equity interest in the

acquiree, over the acquisition-date fair values of identifiable

net assets.

If the fair values of identifiable net assets exceed the sum calculated

above, the excess amount (i.e. gain on a bargain purchase) is

recognised in profit or loss immediately.

Investment in associates

Associates are those entities over which the Group is able to exert

significant influence but which are not subsidiaries.

Investments in associates are accounted for using the equity

method. Any goodwill or fair value adjustment attributable to the

Group’s share in the associate is not recognised separately and

is included in the amount recognised as investment.

The carrying amount of the investment in associates is increased

or decreased to recognise the Group’s share of the profit or loss

and other comprehensive income of the associate, adjusted

where necessary to ensure consistency with the accounting

policies of the Group.

Unrealised gains and losses on transactions between the Group

and its associates are eliminated to the extent of the Group’s

interest in those entities. Where unrealised losses are eliminated,

the underlying asset is also tested for impairment.

The Group’s share of movements in the associate’s other comprehensive

income is recognised in other comprehensive income. The Group’s

share of the aggregate loss in any associate is limited to its net

investment in the associate, unless the Group has incurred an

obligation or made payments on the associate’s behalf. The Group’s

share of inter-company gains is eliminated on consolidation, whilst

the Group’s share of inter-company losses is only eliminated if the

transaction does not provide evidence of impairment of the asset

transferred. Investments in associates are disclosed as the initial

investment plus the aggregate of loans made to the associate plus

the Group’s aggregate share of post-acquisition equity. Investments

in associates are accounted for at cost less any impairment losses

in the Company’s stand-alone Financial Statements.

Subsidiaries

Subsidiaries are companies and entities of which the Company

has the ability to control the financial and operating activities so as

to obtain benefit from their activities. Investments in subsidiaries

are carried at cost less any impairment losses in the Company’s

stand-alone Financial Statements.

The cost of an investment in a subsidiary is the aggregate of:

• The fair value, at the date of exchange, of assets given,

liabilities incurred or assumed, and equity instruments issued

by the Company; and

• Plus any costs already attributable to the purchase of the

subsidiary.

An adjustment to the cost of a business combination contingent

on future events is included in the profit or loss of the combination

if the adjustment is probable and can be measured reliably.

The cost includes an estimate of contingent consideration payable

at fair value at acquisition date.

The Group Share Incentive Trust is included in the consolidated

Financial Statements as a subsidiary.

1.3 Property, plant and equipment

Freehold property, aircraft and related equipment, vehicles, furniture,

computers and flight simulator equipment are depreciated systematically

on the straight-line basis, which is estimated to depreciate the assets

to their anticipated residual values through a component approach

over their planned useful lives. Land is not depreciated.

Property, plant and equipment are stated at cost less accumulated

depreciation and impairment.

Cost includes expenditure that is directly attributable to the acquisition

of the asset. Subsequent costs are included in the asset’s carrying

value or recognised as a separate asset as appropriate, only when

it is probable that future economic benefits associated with the


specific asset will flow to the Group and costs can be measured

reliably. The carrying values are assessed at each reporting date

and only written down if there are impairments in value. The useful

life, depreciation method and residual values are assessed at the

end of each reporting period and revised if necessary.

Depreciation rates for property plant and equipment

Property and buildings 2%

Furniture and equipment 7%

Motor vehicles 20%

Computer equipment 20% to 50%

Second-hand flight simulator equipment 20%

New simulator equipment 7%

Leasehold improvements Life of the lease agreement

1.4 Aircraft

Aircraft are initially recognised at spot rate at date of purchase. The

carrying values of aircraft are assessed annually for impairment.

Aircraft modifications are capitalised only to the extent that they

materially improve the value of the aircraft from which further

future economic benefits are expected to flow. Maintenance and

repairs which neither materially or appreciably prolong their useful

lives are charged against income. C and D Checks are capitalised

and expensed over their useful lives. The gain or loss on disposal

of an asset is determined as the difference between the sales

proceeds and the carrying amount of the asset and recognised

in the Statements of Comprehensive Income. The aircraft residual

values are between 0 and 10%.

Depreciation rates for aircraft

Aircraft and related equipment 4% to 20%

C Checks 18 months

D Checks 72 months

1.5 Intangible assets

An intangible asset is recognised when:

• it is probable that the expected future economic benefits

that are attributable to the asset will flow to the entity; and

• the cost of the asset can be measured reliably.

Intangible assets are initially recognised at cost.

An intangible asset arising from development (or from the

development phase of an internal project) is recognised when:

• it is technically feasible to complete the asset so that it will

be available for use or sale;

• there is an intention to complete and use or sell it;

• there is an ability to use or sell it;

• it will generate probable future economic benefits;

• there are available technical, financial and other resources

to complete the development and to use or sell the asset;

and

• the expenditure attributable to the asset during its development

can be measured reliably.

Intangible assets are carried at cost, being fair value at the date

of revaluation less any subsequent accumulated amortisation and

any subsequent accumulated impairment losses.

An intangible asset is regarded as having an indefinite useful life

when, based on all relevant factors, there is no foreseeable limit to

the period over which the asset is expected to generate net cash

inflows. Amortisation is not provided for these intangible assets,

but they are tested for impairment annually and whenever there

is an indication that the asset may be impaired.

For all other intangible assets amortisation is provided on a

straight-line basis over their useful life.

The amortisation period and the amortisation method for intangible

assets are reviewed every period-end.

Reassessing the useful life of an intangible asset with a finite useful

life after it was classified as indefinite is an indicator that the asset

may be impaired. As a result the asset is tested for impairment

and the remaining carrying amount is amortised over its useful life.

Internally generated brands, mastheads, publishing titles, customer

lists and items similar in substance are not recognised as

intangible assets.

Amortisation is provided to write down the intangible assets, on

a straight line basis, to their residual values as follows:

• Internally generated intangible assets: research and development

expenditure.

Costs associated with developing and maintaining computer software

programs are recognised as expenses when incurred. Costs that

are directly associated with the development of identifiable and

unique software products controlled by the Group and that will

probably generate economic benefits exceeding costs beyond

one year, are recognised as intangible assets. Costs include the

software development employee costs and an appropriate portion

of relevant overheads. Amortisation is charged on a straight-line

basis over their estimated useful lives of two to five years. Software

is carried at cost less accumulated amortisation and impairment.


1.6 Pre-delivery payments

Aircraft pre-delivery payments and security deposits are capitalised

to property, plant and equipment once all conditions precedent

cruical to the legal agreements are met and construction of the

aircraft has begun. Prior to being capitalised to property, plant and

equipment, aircraft pre-delivery payments and security deposits

are accounted for as deposits in other receivables. Aircraft pre-

delivery payments and security deposits are not depreciated.

Upon delivery of the relevant aircraft, the pre-delivery payments are

transferred to the cost of the aircraft at spot rate on delivery date.

1.7 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction

or production of a qualifying asset are capitalised during the period

of time that is necessary to complete and prepare the asset for

its intended use or sale. Other borrowing costs are expensed

in the period in which they are incurred and reported in finance

costs (see note 21).

1.8 Goodwill

Goodwill represents the excess of the cost of an acquisition of a

business over the fair value of the Group’s share of the net identifiable

assets of the acquired subsidiary at the date of acquisition. Goodwill

is tested at reporting date for impairment and carried at cost less

accumulated impairment losses. Impairment losses on goodwill

are not reversed. Gains and losses on the disposal of an entity

include the carrying amount of goodwill relating to the entity sold.

1.9 Leases

Finance leases and instalment sale agreements – lessee

Leases, whereby the lessor provides finance to the Group and

where the Group assumes substantially all the benefits and risks

of ownership, are classified as finance leases.

The amount capitalised at inception of the lease is the lower of

the fair value of the leased asset and the present value of the

minimum lease payments. The discount rate used in calculating

the present value of the minimum lease payments is the interest

rate implicit in the lease or the Group’s incremental borrowing

rate if rate implicit in the lease is not practicable to determine. The

capital element of future obligations under leases is included as a

liability in the Statement of Financial Position. Each lease payment

is allocated between the liability and finance charges so as to

achieve a constant rate on the finance balance outstanding. The

interest element of the instalments is charged against income

over the lease period.

Operating leases – lessee

Leases of assets to the Group under which all risks and rewards

of ownership are effectively retained by the lessor, are classified

as operating leases. Payments made under operating leases are

charged against income on a straight-line basis over the period of

the lease. A straight-line asset/liability is raised for the difference

between the leased payment and the lease expense.

1.10 Financial instruments

Initial recognition

The Group classifies financial instruments, or their component

parts, on initial recognition as a financial asset, a financial liability

or an equity instrument in accordance with the substance of the

contractual arrangement.

Financial assets and financial liabilities are recognised on the

Group’s Statement of Financial Position when the Group becomes

party to the contractual provisions of the instrument.

Derecognition

Financial assets (or a portion thereof) are derecognised when the

Group realises the rights to the benefits specified in the contract,

the rights expire, or the Group surrenders or otherwise loses

control of the contractual rights that comprise the financial asset. In

derecognition, the difference between the carrying amount of the

financial asset and proceeds receivable and any prior adjustment

to reflect fair value that had been reported in other comprehensive

income are included in profit or loss. Financial liabilities (or a portion

thereof) are derecognised when the obligation specified in the

contract is discharged, cancelled or expires. On derecognition,

the difference between the carrying amount of the financial liability,

including related unamortised costs and the amount paid for it,

are included in profit or loss.

Fair value determination

If the market for a financial asset is not active (and for unlisted

securities), the Group establishes fair value by using valuation

techniques. These include the use of recent arm’s length transactions,

reference to other instruments that are substantially the same,

discounted cash flow analysis, and option pricing models making

maximum use of market inputs and relying as little as possible on

entity-specific inputs.

Loans to (from) Group companies

These include loans to subsidiaries, associates and share incentive

trust (accounted for as a subsidiary) and are recognised initially

at fair value plus direct transaction costs. Subsequently, these


loans are measured at amortised cost using the effective interest

rate method, less any impairment loss recognised to reflect

irrecoverable amounts.

On loans receivable an impairment loss is recognised in profit

or loss when there is objective evidence that it is impaired. The

impairment is measured as the difference between the instrument’s

carrying amount and the present value of estimated future cash

flows discounted at the effective interest rate computed at initial

recognition. Impairment losses are reversed in subsequent

periods when an increase in the instrument’s recoverable

amount can be related objectively to an event occurring after

the impairment was recognised, subject to the restriction that

the carrying amount of the instrument at the date the impairment

is reversed shall not exceed what the amortised cost would

have been had the impairment not been recognised. Loans to

(from) Group companies are classified as loans and receivables

(financial liabilities at amortised cost).

Trade and other receivables

Trade receivables are measured at initial recognition at fair

value plus transaction costs, and are subsequently measured at

amortised cost using the effective interest rate method. Appropriate

allowances for estimated irrecoverable amounts are recognised

in profit or loss when there is objective evidence that the asset is

impaired. The allowance recognised is measured as the difference

between the asset’s carrying amount and the present value of

estimated future cash flows discounted at the effective interest

rate computed at initial recognition.

The carrying amount of the asset is reduced through the use of

an allowance account, and the amount of the loss is recognised

in the Statement of Comprehensive Income within operating

expenses. When a trade receivable is uncollectable, it is

written off against the allowance account for trade receivables.

Subsequent recoveries of amounts previously written off are

credited against operating expenses in the Statement of

Comprehensive Income.

Trade and other receivables are classified as loans and receivables.

Trade and other payables

Trade payables are initially measured at fair value less transaction

costs, and are subsequently measured at amortised cost, using

the effective interest rate method.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand

deposits, and other short-term, highly liquid investments that are

readily convertible to a known amount of cash, and are subject to an

insignificant risk of changes in value. These are initially recognised

at fair value including transaction costs and subsequently measured

at amortised cost using the effective interest rate method. These

instruments are classified as loans and receivables.

Interest-bearing liabilities

Interest-bearing liabilities are initially measured at fair value less

transaction cost, and are subsequently measured at amortised

cost, which includes all interest-bearing liabilities, using the effective

interest rate method. Any difference between the proceeds (net of

transaction costs) and the settlement or redemption of borrowings

is recognised over the term of the borrowings in accordance with

the Group’s accounting policy for borrowing costs.

Other financial liabilities are measured initially at fair value less

transaction cost and subsequently at amortised cost using the

effective interest rate method.

Derivatives

Derivative financial instruments, which are not designated as hedging

instruments, consisting of foreign exchange contracts and interest

rate swaps, are initially measured at fair value on the contract date,

and are re-measured to fair value at subsequent reporting dates.

Derivatives embedded in other financial instruments or other non-

financial host contracts are treated as separate derivatives when

their risks and characteristics are not closely related to those of

the host contract and the host contract is not carried at fair value

with unrealised gains or losses reported in profit or loss.

Changes in the fair value of derivative financial instruments are

recognised in profit or loss as they arise.

Derivatives are classified as financial assets at fair value through

profit or loss.

Hedge accounting

The Group designates certain derivatives as either:

• hedges of the fair value of recognised assets or liabilities or

a firm commitment (fair value hedge);


• hedges of a particular risk associated with a recognised asset

or liability or a highly probable forecast transaction (cash flow

hedge);

• hedges of a net investment in a foreign operation (net

investment hedge).

The Group documents at the inception of the transaction the

relationship between hedging instruments and hedged items, as

well as its risk management objectives and strategy for undertaking

various hedging transactions. The Group also documents its

assessment, both at hedge inception and on an ongoing basis,

of whether the derivatives that are used in hedging transactions

are highly effective in offsetting changes in fair values or cash

flows of hedged items.

The full fair value of a hedging derivative is classified as a non-current

asset or liability when the remaining hedged item is more than

12 months, and as a current asset or liability when the remaining

maturity of the hedged item is less than 12 months.

Cash flow hedgeThe effective portion of changes in the fair value of derivatives that

are designated and qualify as cash flow hedges is recognised to

other comprehensive income and accumulated in equity. The gain

or loss relating to the ineffective portion is recognised immediately

in the Statement of Profit or Loss within profit or loss.

The amount of gains/losses in other comprehensive income is

reclassified to profit or loss in the period when the hedged item

affects profit or loss.

However, when the forecast transaction that is hedged results in the

recognition of a non-financial asset (for example, inventory or fixed

assets) the gains and losses previously deferred in the Statement of

Comprehensive Income are transferred from other comprehensive

income and included in the initial measurement of the cost of the asset.

The deferred amounts are ultimately recognised in cost of goods sold

in the case of inventory or in depreciation in the case of fixed assets.

If a legally enforceable right exists to set off recognised amounts

of financial assets and liabilities and there is an intention to settle

net, the relevant financial assets and liabilities are offset.

Where the impact of discounting is not considered to be material,

financial instruments carried at amortised costs are not discounted

due to the fact that their carrying values approximate amortised cost.

1.11 Inventories

Inventory is stated at the lower of cost and net realisable values.

Cost is determined on the first-in-first-out basis. Net realisable value

is the estimated selling price in the ordinary course of business

less the estimated cost of completion and the estimated cost

necessary to make the sale. The cost of inventories comprises

all cost of purchase, cost of conversion and other costs incurred

in bringing the inventories to their present location and condition.

1.12 Share capital

An equity instrument is any contract that evidences a residual

interest in the assets of an entity after deducting all of its liabilities.

Ordinary shares are classified as equity. If the Group re-acquires

its own equity instruments, the consideration paid, including any

directly attributable incremental costs (net of income taxes) on those

instruments is deducted from equity. No gain or loss is recognised

in profit or loss on the purchase, sale, issue or cancellation of the

Group’s own equity instruments. Consideration paid or received

shall be recognised directly in equity.

1.13 Share-based payment transactionsCash settled

Options are granted to certain employees in the Group. The fair

value of the amount payable to the employee is recognised as an

expense with a corresponding increase in liabilities. The fair value

is initially measured at grant date using the Black-Scholes Model

and expensed over the period during which the employee becomes

unconditionally entitled to payment. Management assesses the

number of options that will ultimately vest based on non-market

vesting conditions at each reporting period until vesting, but the

assessment of the fair value of the option against the market

performance of the share price, is done at each reporting period

end up to and including settlement date.

Share options that expire or are forfeited are reversed against

the liability raised with an adjustment to profit or loss. The fair

value of the instruments granted is measured against market

performance of the share price. The liability is measured at each

reporting date and at settlement date, with all movements in fair

value being recognised in profit or loss.

Where options are issued that provide the holder the choice of

settlement (equity or cash) these are accounted for as a compound

financial instrument. First the fair value of the debt component

is determined and then the difference between the value of the


compound instrument and the fair value of the debt component

is recognised as the equity component.

Equity settled

Convertible ‘A’ class shares and options were issued in terms of a

Black Economic Empowerment Deal. The fair value of the equity

instrument is measured at grant date using the Black-Scholes

Model and recognised as an expense with corresponding increase

in equity over the vesting period of the share-based payment.

Management reassesses the number of options expected to

ultimately vest based on non-market vesting conditions. The impact

of the revision to the original estimates, if any, is recognised in

the Statement of Comprehensive Income, with a corresponding

adjustment to equity. Proceeds received net of any directly

attributable transaction costs are credited to share capital and

share premium when the options are exercised. Subsequent to

vesting, management no longer makes any adjustments to the

cost of the share-based payments recognised. Options that expire

or are forfeited, are removed from equity with a corresponding

adjustment to the Statement of Comprehensive Income.

1.14 Provisions

The amount of a provision is the present value of the expenditure

expected to be required to settle the obligation. Where some or all

of the expenditure required to settle a provision is expected to be

reimbursed by another party, the reimbursement shall be recognised

when, and only when, it is virtually certain that reimbursement will

be received if the entity settles the obligation. The reimbursement

shall be treated as a separate asset. The amount recognised for

the reimbursement shall not exceed the amount of the provision.

Provisions are not recognised for future operating losses.

If an entity has a contract that is onerous, the present obligation

under the contract shall be recognised and measured as a

provision. The rate applied to present value the expenditure is

the pre-tax market related rate adjusted for the risks associated

with the obligation.

Provisions were raised and management determined an estimate

based on the information available. Additional disclosure of these

estimates of provisions is included in the provisions note.

1.15 Revenue recognition

Revenue comprises all airline-related and non-airline revenue

earned. Revenue arising from the provision of transportation

services to passengers is recognised on an accrual basis in the

period in which the services are rendered and the passenger

has flown. Unflown ticket revenue is recognised as a liability until

such time as the passenger has flown. Revenue is measured at

the fair value of consideration received and is exclusive of VAT,

discounts received and returns.

Revenue from sale of goods is recognised when risks and rewards

transfer and excludes value added tax.

Non-airline revenue relates to services relating to the hiring of

simulator equipment, commission from airport lounges and the

sale of holiday packages.

International Loyalty Programme revenue is income received from

BA Executive Club members using the Group’s services, and is

recognised on the accrual basis in profit or loss.

Interest is recognised on the accrual basis, in profit or loss, using

the effective interest rate method. Dividends are recognised

in profit or loss when the Group’s right to receive payment has

been established.

1.16 Tax

Current tax and deferred taxes are recognised as income or an

expense and included in profit or loss for the period, except to

the extent that the tax arises from:

• A transaction or event which is recognised, in the same or

a different period, directly in other comprehensive income;

or

• A business combination.

Current tax and deferred taxes are charged or credited directly

to other comprehensive income if the tax relates to items that are

credited or charged in the same or a different period, to other

comprehensive income.

Current tax is calculated at rates (tax laws) enacted or substantively

enacted at reporting period end in accordance with the South

African Income Tax Act (Act No. 58 of 1962).

Deferred taxation

Deferred tax is the tax expected to be payable or recoverable on

differences between the carrying amount of assets and liabilities in

the Financial Statements and the corresponding tax basis used in

the computation of taxable profit, and is accounted for using the

comprehensive liability method. Deferred tax liabilities are recognised

for all taxable temporary differences and deferred tax assets are


recognised to the extent that it is probable that taxable profits will

be available against which deductible temporary differences can

be utilised. Such assets and liabilities are not recognised if the

temporary differences arise from goodwill (or negative goodwill) or

from the initial recognition (other than in a business combination)

of other assets and liabilities in a transaction affecting neither the

tax profit or losses, nor the accounting profit or losses.

Deferred tax liabilities are recognised for taxable temporary differences

arising on investments in subsidiaries and associates, except

where the Group is able to control the reversal of the temporary

differences and it is probable that the temporary difference will not

reverse in the foreseeable future. The carrying amount of deferred

tax assets is reviewed at each reporting date and reduced to the

extent that it is no longer probable that sufficient taxable profit

will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates

expected to apply to the period when the asset is realised or the

liability is settled, based on the tax rates (and tax laws) enacted

or substantively enacted by the reporting date.

1.17 Accounting estimates and judgements

Sources of estimation and uncertainty

In preparing the Financial Statements, management is required

to make estimates and assumptions that affect the amounts

represented in the Financial Statements and related disclosures.

Use of available information and the application of judgement is

inherent in the formation of estimates. Actual results in the future

could differ from these estimates which may be material to the

Financial Statements. Significant judgements include:

Fair value estimationThe fair value of financial instruments that are not traded in

an active market (for example, over the counter derivatives) is

determined by using valuation techniques. The Group uses a

variety of methods and makes assumptions that are based on

market conditions existing at the end of each reporting period.

Quoted market prices or dealer quotes for similar instruments are

used for long-term debt. Other techniques, such as estimated

discounted cash flows, are used to determine fair value for the

remaining financial instruments. The fair value of interest rate

swaps is calculated as the present value of the estimated future

cash flows. The fair value of forward foreign exchange contracts

is determined using quoted forward exchange rates at the end

of the reporting period.

The carrying value less impairment provision of trade receivables

and payables is assumed to approximate their fair values. The fair

value of financial liabilities for disclosure purposes is estimated

by discounting the future contractual cash flows at the current

market interest rate that is available to the Group for similar

financial instruments.

ImpairmentFuture cash flows expected to be generated by the asset are

projected, taking into account market conditions and the expected

useful lives of the assets. The present value of these cash flows,

determined using an appropriate discount rate, is compared to

the current asset value and, if lower, the assets are impaired to

the present value.

Asset lives and residual valuesProperty, plant and equipment are depreciated over their useful

lives taking into account residual values, where appropriate. The

actual lives of the assets and residual values are assessed at

each reporting date and may vary depending on a number of

factors. In re-assessing asset lives, factors such as technological

innovation, product lifecycles and maintenance programmes are

taken into account. Residual value assessments consider issues

such as future market conditions, the remaining life of the asset

and projected disposal values.

Loans and other receivablesThe Group assesses its trade and other receivables for impairment

at the end of each reporting period. In determining whether an

impairment loss should be recorded in profit or loss, the Group

makes judgements as to whether there is observable data indicating

a measurable decrease in the estimated future cash flows from

a financial asset.

1.18 Contingencies

After initial recognition, contingent liabilities recognised in business

combinations that are recognised separately are subsequently

measured at the higher of:

• The amount that would be recognised as a provision; and

• The amount initially recognised less cumulative amortisation.

Contingent assets and liabilities that do not form part of a business

combination are not recognised, but are disclosed in the notes

to the financial statements.


1.19 Impairment of assets

The Group assesses at each end of the reporting period whether

there is any indication that an asset may be impaired. If any such

indication exists, the Group estimates the recoverable amount

of the asset.

Irrespective of whether there is any indication of impairment, the

Group also:

• tests intangible assets with an indefinite useful life or intangible

assets not yet available for use for impairment annually by

comparing its carrying amount with its recoverable amount.

This impairment test is performed during the annual period

and at the same time every period.

• tests goodwill acquired in a business combination for

impairment annually.

If there is any indication that an asset may be impaired, the

recoverable amount is estimated for the individual asset. If it is

not possible to estimate the recoverable amount of the individual

asset, the recoverable amount of the cash-generating unit to which

the asset belongs is determined.

The recoverable amount of an asset or a cash-generating unit is

the higher of its fair value less costs to sell and its value in use. If

the recoverable amount of an asset is less than its carrying amount,

the carrying amount of the asset is reduced to its recoverable

amount. That reduction is an impairment loss.

An impairment loss of assets carried at cost less any accumulated

depreciation or amortisation is recognised immediately in profit

or loss. Any impairment loss of a revalued asset is treated as a

revaluation decrease.

Goodwill acquired in a business combination is, from the acquisition

date, allocated to each of the cash-generating units, or groups

of cash-generating units, that are expected to benefit from the

synergies of the combination, irrespective of whether other

assets or liabilities of the acquiree are assigned to those units

or groups of units.

An impairment loss is recognised for cash-generating units if the

recoverable amount of the unit is less than the carrying amount of

the unit. The impairment loss is allocated to reduce the carrying

amount of the assets of the unit in the following order:

• first, to reduce the carrying amount of any goodwill allocated

to the cash-generating unit; and

• then, to the other assets of the unit, pro rata on the basis of

the carrying amount of each asset in the unit.

The Group assesses at each reporting date whether there is any

indication that an impairment loss recognised in prior periods

for assets other than goodwill may no longer exist or may have

decreased. If any such indication exists, the recoverable amounts

of those assets are estimated.

The increased carrying amount of an asset other than goodwill

attributable to a reversal of an impairment loss does not exceed

the carrying amount that would have been determined had no

impairment loss been recognised for the asset in prior periods.

A reversal of an impairment loss of assets carried at cost less

accumulated depreciation or amortisation other than goodwill

is recognised immediately in profit or loss. Any reversal of an

impairment loss of a revalued asset is treated as a revaluation

increase.

1.20 Employee benefits

Short-term employee benefits

The cost of short-term employee benefits, (those payable within

12 months after the service is rendered, such as paid vacation

leave and sick leave, bonuses, and non-monetary benefits such

as medical care), are recognised in the period in which the service

is rendered and are not discounted.

The expected cost of compensated absences is recognised as

an expense as the employees render services that increase their

entitlement or, in the case of non-accumulating absences, when

the absence occurs.

The expected cost of profit sharing and bonus payments is

recognised as an expense when there is a legal or constructive

obligation to make such payments as a result of past performance.

Retirement and medical funds

Current contributions to the Group’s defined contribution retirement

fund are based on current salary and are recognised when they

fall due. The Group has no further payment obligations once the

payments have been made.


1.21 Foreign currency

Foreign currency transactions are recorded at the exchange rate

ruling on the transaction dates. Monetary assets and liabilities

denominated in foreign currencies are translated at rates of exchange

ruling at the reporting date. Profits or losses arising on translation

of foreign currency transactions are included in profit or loss.

Non-monetary assets and liabilities are translated at the prevailing

rate at the date of acquisition. Exchange differences on non-

monetary assets classified as available for sale financial instruments

are recognised as part of the fair value movement in other

comprehensive income. All foreign exchange movements are

recognised in profit or loss, unless they relate to non-monetary

assets classified as available for sale financial instruments where

that movement is then recognised in equity, or they form part of

the borrowing costs capitalised to qualifying assets.

1.22 Critical judgements in applying the entity’s accounting policies

Judgements made by management are continually evaluated and

are based on historical experience and the expectation of future

events that are believed to be reasonable under the circumstances.

Borrowing costs

Pre-delivery payment assets are regarded as qualifying assets for

the purpose of the capitalisation of borrowing costs. Exchange

differences arising from foreign currency borrowings, to the

extent that they are regarded as an adjustment to interest costs,

are capitalised as part of borrowing costs as these expenses

are considered part of the cost of borrowing in foreign currency.

Taxation

Judgement is required in determining the provision for income taxes

due to the complexity of legislation. There are many transactions

and calculations for which the ultimate taxation determination

is uncertain during the ordinary course of business. The Group

recognises liabilities for anticipated taxation audit issues based on

estimates of whether additional taxes will be due. Where the final

taxation outcome of these matters is different from the amounts

that were initially recorded, such differences will impact the income

taxation and deferred taxation provisions in the period in which

such determination is made.

Recovery of deferred tax assets

The Group recognises the net future taxation benefit related to

deferred income taxation assets to the extent that it is probable that

the deductible temporary differences will reverse in the foreseeable

future. Assessing the recoverability of deferred income taxation

assets requires the Group to make significant estimates related

to expectations of future taxable income. Estimates of future

taxable income are based on forecast cash flows from operations

and the application of existing taxation laws in each jurisdiction.

To the extent that future cash flows and taxable income differ

significantly from estimates, the ability of the Group to realise the

net deferred taxation assets recorded at the end of the reporting

period could be impacted.

Management has applied a probability analysis to determine future

taxable income against which calculated tax losses will be utilised.

Segmental information

Operating segments are reported in a manner consistent with the

internal reporting provided to the chief operating decision-maker

(Financial Director). The chief operating decision-maker, who is

responsible for allocating resources and assessing performance of

the segments, has been identified as the Chief Executive Officer.

Segments are presented in terms of IFRS

At year end, the Group was organised into two main operating

segments:

• Airline; and

• Non-airline, which comprises the travel business, property

investments,simulator business, Slow Lounges and Slow in

the City.


Notes to the Financial Statements

2. Segmental information

Airline Non-airline Total

R’000 R’000 R’000

30 June 2015Revenue 5 645 467 245 279 5 890 746

Operating profit before depreciation, impairment and profit on sale of assets 645 608 87 560 733 168

Profit on sale of assets 1 231 - 1 231

Reversal of impairment (1 530) - (1 530)

Depreciation (397 352) (8,460) (405 812)

Profit from operations 247 957 79 100 327 057

Segmental assets and liabilities

Segmental assets 3 860 891 158 546 4 019 437

Segmental interest-bearing liabilities (1 451 632) - (1 451 632)

Other segmental liabilities (1 291 932) (108 156) (1 400 088)

Segmental net asset value 1 117 327 50 390 1 167 717

Segmental capital additions (excluding borrowing costs capitalised) during the year 558 145 11 082 569 227

30 June 2014Revenue 5 819 632 83 587 5 903 219

Operating profit before depreciation, impairment and profit on sale of assets 654 252 50 510 704 762

Profit on sale of assets 524 - 524

Impairment 2 235 - 2 235

Depreciation (280 475) (10 272) (290 747)

Profit from operations 376 536 40 238 416 774

Segmental assets and liabilities

Segmental assets 3 858 702 164 646 4 023 348

Segmental interest-bearing liabilities (1 284 833) (34 909) (1 319 742)

Other segmental liabilities (1 540 481) (95 155) (1 635 636)

Segmental net asset value 1 033 388 34 582 1 067 970

Segmental capital additions (excluding borrowing costs capitalised) during the year 510 381 668 511 049

Comair predominately operates within South Africa and as a result no Geographic Segmental Report is presented.

Revenue earned from flights, other than in South Africa, is not considered to be significant and is generated from assets in control of the South African operation.

Inter-segmental revenue is not material and has therefore not been presented.

Refer to note 29 Reclassification of comparatives and segmental reclassification.


3. Property, plant and equipment

Group

2015 2014

Cost

Accumulated depreciation

and impairmentCarrying

value Cost



value

R’000 R’000 R’000 R’000 R’000 R’000

Properties and buildings 98 593 (8 263) 90 330 92 811 (7 473) 85 338

Leasehold improvements 66 860 (43 703) 23 157 63 266 (33 961) 29 305

Aircraft and flight simulator equipment 3 103 013 (1 053 564) 2 049 449 3 319 371 (1 135 952) 2 183 419

Pre-delivery payments 566 388 - 566 388 230 331 - 230 331

Vehicles, furniture and equipment and computer equipment 105 323 (74 063) 31 260 84 308 (67 668) 16 640

Total 3 940 177 (1 179 593) 2 760 584 3 790 087 (1 245 054) 2 545 033

Company

2015 2014

Cost



value Cost



value

R’000 R’000 R’000 R’000 R’000 R’000

Properties and buildings 47 568 (8 263) 39 305 41 786 (7 473) 34 313

Leasehold improvements 66 703 (43 546) 23 157 63 266 (33 961) 29 305

Aircraft and flight simulator equipment 3 103 013 (1 053 564) 2 049 449 3 319 371 (1 135 952) 2 183 419

Pre-delivery payments 566 388 - 566 388 230 331 - 230 331

Vehicles, furniture and equipment and computer equipment 104 508 (73 601) 30 907 84 096 (67 651) 16 445

Total 3 888 180 (1 178 974) 2 709 206 3 738 850 (1 245 037) 2 493 813

Reconciliation of property, plant and equipment – Group – 2015

Opening balance Additions

Paymentsmade Disposals

Interest capitalised

Foreign exchange

movements Depreciation Total

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Properties and buildings 85 338 5 782 - - - - (790) 90 330

Leasehold improvements 29 305 3 437 - - - - (9 585) 23 157

Aircraft and flight simulator equipment 2 183 419 244 991 - - - - (378 961) 2 049 449

Pre-delivery payments 230 331 - 288 161 - 10 647 37 249 - 566 388

Vehicles, furniture and equipment and computer equipment 16 640 20 772 - (44) - - (6 108) 31 260

2 545 033 274 981 288 161 (44) 10 647 37 249 (395 444) 2 760 584


Reconciliation of property, plant and equipment – Group – 2014



Foreign exchange


R’000 R’000 R’000 R’000 R’000 R’000

Properties and buildings 85 992 95 - - (749) 85 338

Leasehold improvements 29 854 10 336 - - (10 885) 29 305

Aircraft and flight simulator equipment 2 154 929 290 359 - - (261 869) 2 183 419

Pre-delivery payments 24 568 205 483 1 490 (1 210) - 230 331

Vehicles, furniture and equipment and computer equipment 18 739 4 776 - - (6 875) 16 640

2 314 082 511 049 1 490 (1 210) (280 378) 2 545 033

Reconciliation of property, plant and equipment – Company – 2015


Paymentsmade Disposals


Foreign exchange


R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Properties and buildings 34 313 5 782 - - - - (790) 39 305

Leasehold improvements 29 305 3 437 - - - - (9 585) 23 157

Aircraft and flight simulator equipment 2 183 419 244 991 - - - - (378 961) 2 049 449

Pre-delivery payments 230 331 - 288 161 - 10 647 37 249 - 566 388

Vehicles, furniture and equipment and computer equipment 16 445 20 556 - (44) - - (6 050) 30 907

2 493 813 274 766 288 161 (44) 10 647 37 249 (395 386) 2 709 206

Reconciliation of property, plant and equipment – Company – 2014



Foreign exchange


R’000 R’000 R’000 R’000 R’000 R’000

Properties and buildings 34 967 95 - - (749) 34 313

Leasehold improvements 29 854 10 336 - - (10 885) 29 305

Aircraft and flight simulator equipment 2 154 929 290 359 - - (261 869) 2 183 419

Pre-delivery payments 24 568 205 483 1 490 (1 210) - 230 331

Vehicles, furniture and equipment and computer equipment 18 149 4 564 - - (6 268) 16 445

2 262 467 510 837 1 490 (1 210) (279 771) 2 493 813

3. Property, plant and equipment (continued)


Property and buildings owned consist of Erf 1092 and 1096 Bonaero Park extension 2, Erf 931, Bonaero Park extension 1, Erf 700,

Rhodesfield Township, and Erven 674, 684, 685, 687, 688, 689, 690, 695 and Erf 1040, Rhodesfield Township. Valuations of the

properties are performed every three years, and based on this the estimated Directors’ value of these properties is approximately

R129 million (2014: R129 million).

The net book value of property, plant and equipment held under instalment sale and finance lease agreements is disclosed in note 13.

Pre-delivery payments are payments made to the Boeing Company for the remaining four (4) of eight (8) new Boeing 737-800 aircraft

which arrived in South Africa from July 2012. The finance for the aircraft was partly through a rights issue during the 2010 financial

year and a further loan through Investec Limited which is disclosed in note 13. Future capital commitments relating to the Boeing

737-800s are disclosed in note 26. Borrowing costs capitalised to the pre-delivery payments are incurred at a rate of 3.7% on a US

Dollar-based facility concluded in 2012.

4. Intangible assets

Group and Company

2015 2014

Cost/ValuationAccumulated amortisation Carrying value Cost/Valuation

Accumulated amortisation Carrying value

R’000 R’000 R’000 R’000 R’000 R’000

Computer software 58 596 (31 106) 27 490 51 844 (20 738) 31 106

Reconciliation of intangible assets – Group and Company – 2015

Opening balance Additions Amortisation Total

R’000 R’000 R’000 R’000

Computer software 31 106 6 753 (10 369) 27 490

Reconciliation of intangible assets – Group and Company – 2014

Opening balance Additions Amortisation Total

R’000 R’000 R’000 R’000

Computer software 41 475 - (10 369) 31 106

Other information

The Intangible asset relates to the implementation of SABRE Airline Solutions which was fully operational in the 2012 financial and

Openjaw Travel Portal development costs.


5. Loan to Share Incentive Trust

Group Company

Notes

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Loan to Share Incentive Trust - - 3 054 3 814

This loan relates to the Comair Share Incentive Trust’s acquisition of 21 million ordinary shares at 72 cents per share in June 1998.

The term of the loan is unspecified and it bears no interest.

At year end the Trust held 4 983 598 shares representing 1.1% of shares in issue (prior year: 4 992 531 shares representing 1.1%)

at a closing price of 430c (2014: 448c).

6. Investments in and loans to subsidiaries

Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Non-current portion

Aconcagua 32 Investments Proprietary LimitedInvestment at cost - - 16 732 16 732

Loan receivable - - 837 2 527

1 ordinary share of R1 at cost (100% shareholding)

The company is the owner of Erf 700, Rhodesfield Township. This is the only asset in its books, valued at R22 million. There are no material liabilities in this company. The share in the company was acquired during May 2008. The loan is interest free and not repayable in the next 12 months.

Holiday Tours Proprietary LimitedInvestment at cost - - 2 593 2 593

1 million shares of 1 cent each at cost (100% shareholding)

The Company acquired 65% of the issued share capital in the 2011 financial year. In December 2011, the remaining 35% shareholding was acquired at a cost of R35 000. The company is a tour operating company offering holiday packages.


Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Churchill Finance Services 23 LimitedInvestment at cost - - 10 10

2 shares of US$1 at cost (100% shareholding)

Comair Limited acquired 100% of the shares in Churchill Finance Services 23 Limited during February 2011 for R10 000.

The company is currently being liquidated.

Imperial Air Cargo Proprietary LimitedInvestment at cost - - - -

100 ordinary shares of R 1 at cost (100% shareholding )

The company is currently dormant

Total non-current portion - - 20 172 21 862

Alooca Technologies Proprietary LimitedLoan receivable - - 26 589 27 517

100 ordinary shares of R1 at cost (100% shareholding)

The company acquired Erven 674, 684, 685, 687, 688, 689, 690, 695 and 1040 in Rhodesfield Township with funding from Comair Limited. The properties at cost are valued at R30.8 million (2014: R30.8 million).

The loan is unsecured, has no fixed repayment terms and is interest free.

Kulula Air Proprietary LimitedLoan receivable - - 4 739 3 823

Impairment of loan - - (4 739) -


This company operates a Business Lounge situated opposite the Gautrain Station in Sandton. The Lounge commenced operations in August 2011.


Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Comair Catering Proprietary Limited - - 13 13

Loan receivable


This dormant company has a bank account which has been funded by Comair Limited.

The loan is unsecured, has no fixed repayment terms and is interest free.

Holiday Tours Propreitary LimitedLoan receivable - - 6 601 -

The loan is unsecured, has no fixed repayment term and is interest free.

Total current portion - - 33 203 31 353

Total investment in subsidiaries - - 53 375 53 215

Maximum amount exposed to credit risk - - 38 779 33 880

7. Investments in associatesUnrealised gains and losses on transactions between the Group and its associates are eliminated to the extent of the Group’s interests in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment.

The following table lists all of the associates in the Group:

Name of company% ownership

interest % ownership

interest Carrying amount

Carrying amount

2015 2014 2015 2014

R’000 R’000

Commuter Handling Services Proprietary Limited held by Comair Limited 40.00% 40.00% 14 114 10 104

Imperial Air Cargo Proprietary Limited held by Comair Limited - % 30.00% - -

OR Tambo Hospitality Proprietary Limited held by Aconcagua 32 Investments Proprietary Limited 49.00% 25.00% 22 149 4 360

Comair Mozambique Limitada held by Comair Limited 49.00% 49.00% - -

36 263 14 464

Long-term portion 28 411 6 612

Short-term portion 7 852 7 852

36 263 14 464

6. Investments in and loans to subsidiaries (continued)


Reconciliation to carrying amounts – 2015

Loans to/(from) associate

Group share of retained income/

(accumulated loss) Loan impairmentTotal

carrying value

R’000 R’000 R’000 R’000

Commuter Handling Services Proprietary Limited 7 852 6 262 - 14 114

OR Tambo Hospitality Proprietary Limited 15 000 7 149 - 22 149

Reconciliation to carrying amounts – 2014

Loans to/(from) associate

Group share of retained income/

(accumulated loss) Loan impairmentTotal

carrying value

R’000 R’000 R’000 R’000

Commuter Handling Services Proprietary Limited 7 852 2 252 - 10 104

Imperial Air Cargo Proprietary Limited 15 559 (12 977) (2 582) -

OR Tambo Hospitality Proprietary Limited - 4 360 - 4 360

The summarised financial information in respect of the Group’s associates is set out below.

Summarised financial information of material associates

2015

Summarised Statement of Financial Position

Non-current assets

Net current assets Total assets

Capital and reserves Liabilities

Total equity and liabilities

R’000 R’000 R’000 R’000 R’000 R’000

Commuter Handling Services Proprietary Limited 8 071 47 596 55 667 11 934 43 733 55 667

OR Tambo Hospitality Proprietary Limited 51 341 21 398 72 739 42 336 30 403 72 739

Summarised Statement of Comprehensive Income Revenue

Profit (loss) from continuing operations

Totalcomprehensive

income

R’000 R’000 R’000

Commuter Handling Services Proprietary Limited 239 339 10 026 10 026

OR Tambo Hospitality Proprietary Limited 13 655 5 588 5 588

252 994 15 614 15 614


2014

Summarised statement of financial position

Non-current assets

Net current assets Total assets

Capital and reserves Liabilities Total liabilities

R’000 R’000 R’000 R’000 R’000 R’000

Commuter Handling Services Proprietary Limited 9 241 8 642 17 883 (1 908) 19 791 17 883

Imperial Air Cargo Proprietary Limited 3 722 26 278 30 000 (43 257) 73 257 30 000

OR Tambo Hospitality Proprietary Limited 112 437 8 205 120 642 17 439 103 203 120 642

Summarised statement of comprehensive income Revenue

Profit (loss) from continuing

operations

Totalcomprehensive

income

R’000 R’000 R’000

Commuter Handling Services Proprietary Limited 203 236 3 703 3 703

Imperial Air Cargo Proprietary Limited 167 826 7 450 7 450

OR Tambo Hospitality Proprietary Limited 22 251 12 324 12 324

During the course of the year the Company acquired the remaining 70% shareholding of Imperial Air Cargo Proprietary Limited from

Imperial Holdings Limited resulting in Imperial Air Cargo becoming a wholly owned subsidiary.

The maximum credit exposure for the Company and Group amount to R22 852 000 (2014: R23 411 000). The balance of the loans

receivable is considered to be recoverable and not past due.

8. Goodwill

2015 2014

GroupCost

R’000

Accumulated impairment

R’000

Carrying value

R’000

Cost

R’000

Accumulated impairment

R’000

Carrying value

R’000

Gross amount and carrying value 6 615 - 6 615 3 668 - 3 668

Reconciliation of goodwill

Opening balance

R’000

Additions through business

combinations

R’000

Total

R’000

Reconciliation of goodwill – Group – 2015 3 668 2 947 6 615

Reconciliation of goodwill – Group – 2014 3 668 - 3 668

7. Investments in associates (continued)


The net book value of goodwill has been allocated to the following cash generating units (CGU’s):

Group

2015 2014

Holiday Tours Proprietary Limited 3 668 3 668

Highly Nutritious Food Company Proprietary Limited 2 947 -

6 615 3 668

Goodwill arising in business combinations is allocated, at acquisition, to the CGUs acquired and those expected to benefit from that

business combination. The Group tests goodwill for impairment at least annually by estimating the recoverable amount of any CGU to

which goodwill has been allocated. The recoverable amount of all significant amounts of goodwill are estimated by using the higher of

the value in use method and the fair value less cost to sell. During the current year, all recoverable amounts were based on value in use.

A discounted cash flow valuation model is applied using five-year forecasts based on detailed budgets and management estimates.

The process ensures that all significant risks and sensitivities are appropriately considered and factored into these forecasts. Key

assumptions are based on industry-specific performance levels as well as economic indicators approved by the executive and their

impact on turnover and operating margins. These assumptions are generally consistent with external sources of information and with

past experience of the impact thereof on the Group’s cash flow. Cash flows for the second and third years are forecast by applying

individual estimated sustainable levels of growth for the specific businesses, taking into account the drivers of the economic sectors

in which they operate and their expected impact on turnover and margins, their business strategies and the risks they face. For the

fourth and fifth years and terminal value, cash flows are determined by using estimated sustainable growth levels for CGUs ranging from

5% to 10% and 5% to 7% per annum, respectively. Beyond the short-term, they are derived from the use of a common forecasting

process followed across the Group. Discount rates applied to cash flow projections are based on a South African-specific weighted

average cost of capital (WACC), which takes into account appropriate risk-free rates adjusted for market risk, company-specific risk,

effective rates of taxation, cost of debt and the relevant weighting between debt and equity. The WACC applied to all CGUs is 8.07%

(2014: 8.06%). Consideration was given as to whether the factors pertaining to any of the CGUs warranted the use of an adjusted rate,

but it was not considered necessary. No impairment losses were required to be recognised during the current year.

9. Inventory

Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Catering equipment and consumables 10 482 7 608 10 437 7 608


10. Trade and other receivables

Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Trade receivables 165 768 351 750 164 937 336 580

Impairment allowance (4 876) (1 096) (4 876) (1 096)

160 892 350 654 160 061 335 484

Deposits 142 164 140 716 142 177 140 716

Other receivables - 31 856 - 31 856

303 056 523 226 302 238 508 056

The standard credit period is 30 days from statement. The average age of the receivables is 31 days. Only customers with whom the

Group has a long-standing relationship have access to credit. New customers are rare as the Group prefers to sell air tickets for cash

rather than on credit.

Included in the Group’s trade receivables balance are debtors with a carrying value of R2.0 million (2014: R4 million) which are past

due at the reporting date for which the Group has not provided an impairment as the amounts are still considered recoverable.

Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Trade and other receivables past due but not impaired

120 days - 1 234 2 403 1 234 2 403

120 days + 785 1 640 785 1 640

Trade and other receivables impaired

120 days - - - - -

120 days + 4 876 1 096 4 876 1 096

Reconciliation of provision for impairment of trade and other receivables

Opening balance 1 096 3 030 1 096 3 030

Provision for impairment 3 780 3 780 -

Reversal during the period - (1 934) - (1 934)

4 876 1 096 4 876 1 096

11. Cash Encumbered

The Group has pledged cash totalling £500 000 to the St Helena Government for the operation of its new route to St Helena which will

commence in March 2016. The Company has pledged cash balances in favour of the Air Traffic and Navigation Services of R7.5 million

and to the SA Insurance Company of R250 000 (2014: R20 million in respect of aircraft lease obligations).


12. Share capital

Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Authorised

1 000 000 000 Ordinary shares of 1 cent each 10 000 10 000 10 000 10 000

75 000 000 ‘A’ class shares of 1 cent each 750 750 750 750

1 000 000 Preference shares of 1 cent each 10 10 10 10

10 760 10 760 10 760 10 760

Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Issued

440 263 099 (2014: 489 176 471) ordinary shares of 1 cent each 4 403 4 892 4 403 4 403

Repurchase of 10% of share capital (48 913 372 ordinary shares of 1 cent each) - (489) - (489)Conversion of 29 067 766 ‘A’ Class shares into ordinary shares 290 - 290 -

74 117 647 ‘A’ Class shares of 1 cent each 741 741 741 741Conversion of 29 067 766 ‘A’ Class shares into ordinary shares (290) - (290) -

Repurchase of 45 049 881 ‘A’ Class shares (451) - (451) -Adjustment in respect of consolidation of Share Trust 4 983 598 (2014: 4 992 531) (50) (50) - -

4 643 5 094 4 693 5 144

At a general meeting of the Group held on 14 September 2006, shareholders approved by way of various special resolutions the creation,

specific issue and re-purchase of the ‘A’ shares, as well as the dividend and voting policy relating to those shares. The ‘A’ shares

will be converted to equity if the hurdle rate is achieved. The hurdle rate is set out as per the circular issued on the 23 August 2006.

Refer to note 20 below. The ‘A’ shares shall vote as a single class at all meetings of shareholders of the Group, save for resolutions

of the Group relating to the rights and privileges of the ‘A’ shares such that the holders of the ‘A’ shares shall not be entitled to vote

or approve any resolution that would otherwise have been passed or not by the required majority of votes, collectively, of the holders

of the ordinary shares and the ‘A’ shares (other than resolutions relating to the rights and privileges of the ‘A’ shares.) The ‘A’ shares

will not be listed on the JSE and will not be taken into account for the purposes of categorisation transactions under the JSE Listings

Requirements. The ‘A’ shares will not be listed on any security exchange but are convertible into ordinary shares on a ‘one-for-one’ basis

and are not entitled to dividends and voting rights. The Group wound up its BEE transaction during the year resulting in the conversion

of 29 067 766 ‘A’ class shares into ordinary shares and the repurchase of the remaining 45 049 881 shares at a cost of 1 cent each.


13. Interest-bearing liabilities

Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Rand Merchant BankAircraft instalment sale agreements

Aircraft instalment sale agreement 243 972 276 232 243 972 276 232

Less: Finance raising fees (10 771) (12 224) (10 771) (12 224)

Instalment sale agreement payable in 40 quarterly instalments with the final payment due on 12 October 2022. Interest is charged at a variable rate – currently 7.4% (prior year: 7.1%). The current instalment is R12 million.

One aircraft mortgage serves as collateral covering security with a net book value of R323 million (prior year: R333 million).



Instalment sale agreement payable in 40 quarterly instalments with the final payment due on 12 October 2022. Interest is charged at a variable rate – currently 7.4% (prior year: 7.1%). The current instalment is R12 million.




The instalment sale agreement was payable in 41 quarterly instalments with the final payment due on 12 July 2022. RMB has entered into a selldown agreement with Nedbank for this loan. Interest is charged at a variable rate – currently 7.4% (prior year: 7.1%). The current instalment is R12 million.


Simulator loan

Instalment sale agreement - 34 909 - 34 909

Instalment sale agreement payable in 30 quarterly instalments with the final payment due on 8 June 2018. Interest was charged at a variable rate of 10%. The loan was early settled on the 8 December 2014.


Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Private Export Funding CorporationAircraft instalment sale agreement 344 307 331 452 344 307 331 452


A US$ based aircraft instalment sale agreement payable in 40 quarterly instalments with the final payment due on 15 November 2022. Interest is charged at a fixed rate of 2.35% The current instalment is US$1 million.

Investec LimitedMortgage finance agreement 15 729 19 425 15 729 19 425

This mortgage finance agreement is payable in 28 quarterly instalments with the final payment due on 30 September 2019. Erf 700 Rhodesfield Township has been pledged as collateral for this mortgage finance agreement. A mortgage bond of R25 9 million has been registered against this property. Interest is charged at a variable rate – currently 9.9% (prior year 9.5%). The current instalment is R1 3 million.

Working capital loan 39 651 120 463 39 651 120 463

This loan forms part of a facility granted by the bank. Cross collaterisation of properties serves as security for this loan. There are no repayment terms and interest is charged quarterly at a variable rate – currently 9.6% (prior year 9.3%.) Capital of R80 million was repaid during the current year.

Boeing 737-800 382 068 54 213 382 068 54 213

A facility for pre-delivery payments required for four new 737-800 aircraft on order. Cross-collateralisation of other Investec loans stand as security for this loan. The facility is repayable on delivery of the relevant aircraft. The facility is in US$ and earns a variable interest rate quarterly – currently 4.0% (prior year 4.0%.) The aircraft will be delivered between August 2015 and November 2016.

Sub-total 1 451 632 1 319 742 1 451 632 1 319 742

Less: current portion (469 580) (136 670) (469 580) (136 670)

Non-current portion 982 052 1 183 072 982 052 1 183 072

Total value of interest-bearing liabilities 1 451 632 1 319 742 1 451 632 1 319 742

Finance charges 234 915 279 114 234 915 279 114

Total interest-bearing liability commitments 1 686 547 1 598 856 1 686 547 1 598 856


Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Total commitments for year one 524 545 201 527 524 545 201 527

Total commitments for years two to five 798 680 867 027 798 680 867 027

Total commitments after year five 363 322 530 302 363 322 530 302

Total commitments for the year 1 686 547 1 598 856 1 686 547 1 598 856

Capital commitments for year one 469 580 136 670 469 580 136 670

Capital commitments for years two to five 696 763 689 623 696 763 689 623Capital commitments after year five 285 289 493 449 285 289 493 449

Allocation of present valued amounts 1 451 632 1 319 742 1 451 632 1 319 742

14. Deferred taxation

Net deferred tax liability

Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Deferred tax liability (217 316) (167 689) (217 316) (169 226)

Deferred tax asset 4 965 - - -

Net deferred tax liability (212 351) (167 689) (217 316) (169 226)

On temporary differences arising from:

Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Plant and equipment (319 948) (269 507) (314 983) (269 507)

Staff obligations and accruals 69 663 63 390 64 429 63 390

Unflown ticket liability 39 104 48 060 39 104 48 060

Prepayments (6 135) (9 632) (5 866) (11 169)

Calculated tax loss 4 965 - - -

(212 351) (167 689) (217 316) (169 226)

13. Interest-bearing liabilities (continued)


Reconciliation of deferred tax asset/(liability)

Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

At beginning of year (167 689) (135 696) (169 226) (136 678)

Accelerated capital allowances (50 441) (51 878) (45 476) (51 878)

Staff obligations and accruals 6 273 3 361 1 039 3 361

Unflown ticket liability (8 956) 14 745 (8 956) 14 745

Prepayments 3 497 1 779 5 303 1 224Increase in tax loss available for set-off against future taxable income 4 965 - - -

(212 351) (167 689) (217 316) (169 226)

Recognition of deferred tax asset

There are no unrecognised deferred taxation assets or losses.

15. Trade and other payables

Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Trade payables 751 577 1 039 856 739 934 1 017 927

- - - -

Share options granted to employees (32 500) (21 666) (32 500) (21 666)Share options recognised as short-term portion (2014: long-term portion) 32 500 21 666 32 500 21 666

Other payables 33 503 36 315 33 499 36 315

785 080 1 076 171 773 433 1 054 242

Trade creditor terms vary, depending on the agreements. An average of 30 days from statement is fair. Average days outstanding is

37 days.

Cash settled, share-based payments – share options are granted to certain employees in the Group. The fair value of the amount

payable to the employee is recognised as an expense with a corresponding increase in liabilities.

16. ProvisionsReconciliation of provisions – Group – 2015

Openingbalance Raised Utilised Total

R’000 R’000 R’000 R’000

Leave pay provision 48 128 15 322 (12 709) 50 741

Bonus provision 51 591 85 738 (78 807) 58 522

99 719 101 060 (91 516) 109 263


Reconciliation of provisions – Group – 2014


R’000 R’000 R’000 R’000


Bonus provision 72 218 68 258 (88 885) 51 591

116 212 83 563 (100 056) 99 719

Reconciliation of provisions – Company – 2015


R’000 R’000 R’000 R’000


Bonus provision 51 591 85 630 (78 759) 58 462

99 719 100 924 (91 438) 109 205

Reconciliation of provisions – Company – 2014


R’000 R’000 R’000 R’000


Bonus provision 72 218 68 258 (88 885) 51 591

116 212 83 563 (100 056) 99 719

In terms of Comair’s policy, employees are entitled to accumulate vested leave benefits not taken within a leave cycle. Leave days

have been capped, depending on the level of employment of the employees.

The bonus scheme consists of performance bonuses which are dependent on the achievement of financial and non-financial targets.

Bonuses are payable annually in December for all staff other than Executives. Executive bonuses are paid in July.

17. Financial liabilities

Fair value hierarchy of derivative used for hedging

For financial liabilities recognised at fair value, disclosure is required of a fair value hierarchy which reflects the significance of the inputs

used to make the measurement.

Level 2 applies inputs other than quoted prices that are observed for the liabilities either directly (as prices) or indirectly (derived from

prices).

Group Company

Level 22015 2014 2015 2014

R’000 R’000 R’000 R’000

Financial derivative – Oil hedges 40 387 - 40 387 -

The open hedge contracts have been revalued at year end using the confirmed mark to market from Investec Bank Limited.

16. Provisions (continued)


18. Risk management

The Group finances its operations through a combination of accumulated profits, current borrowings and non-current borrowings.

The Group also enters into Forward Exchange Contracts to manage the currency risks of its operations. The main risks arising in the

normal course of business from the Group’s financial instruments are currency, interest rate, price and liquidity risk. This note presents

information on the Group’s exposure to these risks. The Board of Directors is responsible for risk management activities in the Group.

The carrying values equate to the fair values of each financial instrument.

The carrying value of short-term financial instruments approximates fair value due to their short-term nature, and all interest-bearing

financial liabilities carried at amortised cost bear interest at market-related rates. Hence the carrying values of these financial instruments

equate to their fair values.

Identification of financial instruments

2015At fair value

through profit (loss)

Loans and receivables

Financial liabilities at

amortised costNon-financial instruments Total

R’000 R’000 R’000 R’000 R’000

AssetsNon-current assets

Property, plant and equipment - - - 2 760 584 2 760 584

Intangible assets - - - 27 490 27 490

Investments in and loans to associates - - - 28 411 28 411

Goodwill - - - 6 615 6 615

Deferred taxation - - - 4 965 4 965

Current assets

Inventories - - - 10 482 10 482

Trade and other receivables - 160 892 - 142 164 303 056

Investments in and loans to associates - 7 852 - - 7 852

Taxation - - - 36 650 36 650

Cash and cash equivalents - 849 278 - - 849 278

Total assets - 1 018 022 - 3 017 361 4 035 383


2015At fair value

through profit (loss)

Loans and receivables



R’000 R’000 R’000 R’000 R’000

Equity and liabilitiesCapital and reserves

Share capital - - - 4 643 4 643

Non-distributable reserves - - - (40 387) (40 387)

Accumulated profit - - - 1 201 045 1 201 045

Non-controlling interest - - - 889 889

Liabilities

Interest-bearing liabilities - - 982 052 - 982 052


Current liabilities

Trade and other payables - - 785 080 - 785 080

Unutilised ticket liability - - - 233 015 233 015

Provisions - - - 109 263 109 263


Share-based payment - - - 32 500 32 500

Financial liabilities 40 387 - - - 40 387

Total equity and liabilities 40 387 - 2 236 712 1 758 284 4 035 383

2014

At fair value through profit

(loss)Loans and receivables



R’000 R’000 R’000 R’000 R’000

AssetsNon-current assets

Property, plant and equipment - - - 2 545 033 2 545 033

Intangible assets - - - 31 106 31 106

Investments in associates - - - 6 612 6 612

Goodwill - - - 3 668 3 668

Current assets

Inventories - - - 7 608 7 608

Trade and other receivables - 350 654 - 172 572 523 226

Investments in and loans to associates - 7 852 - - 7 852

Current tax receivable - - - 30 540 30 540

Cash and cash equivalents - 867 703 - - 867 703

Total assets - 1 226 209 - 2 797 139 4 023 348

18. Risk management (continued)


2014

At fair value through profit

(loss)Loans and receivables



R’000 R’000 R’000 R’000 R’000

Equity and liabilitiesCapital and reserves

Share capital - - - 5 094 5 094

Non-distributable reserves - - - 27 424 27 424

Accumulated profit - - - 1 035 452 1 035 452

Non-current liabilities

Interest-bearing liabilities - - 1 183 072 - 1 183 072


Share-based payments - - - 21 666 21 666

Current liabilities

Trade and other payables - - 1 076 171 - 1 076 171

Unutilised ticket liability - - - 270 391 270 391

Provisions - - - 99 719 99 719


Total liabilities - - 2 395 913 1 627 435 4 023 348

Financial assets are substantially the same for the Group and the Company, however loans to subsidiaries amount to R53.3 million (2014: R37.3 million) and are classified as loans and receivables.

Financial liabilities are substantially the same for the Group and the Company.

Interest rate risk

The Group is exposed to interest rate risk as it borrows and places funds. This risk is managed by managing the Group’s exposure on long-term loans and placing surplus funds in investments that yield a market-linked return.

Management reviews the interest rate risk on an ongoing basis. Where new loans are entered into, management compares interest rates offered by various institutions and where considered more favourable, may enter into loans in foreign currency. The interest rate risk is viewed in conjunction with the foreign exchange risk.

The Group, as part of its financing activities, enters into foreign denominated interest-bearing loans. The foreign exchange rate exposure is monitored by management in conjunction with the interest rate exposure which would have been incurred had a Rand-denominated loan been taken out. Refer to sensitivity analysis below.

Credit risk

Credit risk relates to the potential of non-recovery of bank and call deposits and loans and trade receivables. At the reporting date, the Group did not consider there to be any significant concentration of credit risk which has not been adequately provided for.

Liquidity risk

The liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate cash resources and unutilised borrowing facilities are maintained. The maturity profile of financial liabilities is as follows:


Carrying amount

Contractual cash flows

Within one year

Two to five years

More than five years No fixed terms

R’000 R’000 R’000 R’000 R’000 R’000

2015Secured non-current borrowings 982 052 1 162 002 - 798 680 363 322 -

Secured short-term borrowings 469 580 524 545 524 545 - - -

Trade and other payables 783 080 783 080 783 080 - - -

Total financial liabilities – Group and Company 2 235 165 2 469 627 1 307 625 798 680 363 322 -

Total financial assets – Group 875 201 - 160 892 - - 7 852

2014Secured non-current borrowings 1 183 072 1 397 329 - 867 027 530 302 -

Secured short-term borrowings 136 670 201 527 201 527 - - -

Trade and other payables 1 076 171 1 076 171 1 076 171 - - -

Total financial liabilities – Group and Company 2 395 913 2 675 027 1 277 698 867 027 530 302 -

Total financial assets – Group 1 232 821 1 232 821 1 218 357 - - 14 464

Foreign currency risk

The Group undertakes certain transactions denominated in foreign currency, which therefore have exposure to exchange rate variations.

The Group may enter into forward exchange contracts to manage exchange rate exposure. Where appropriate, open positions are

maintained. The Group does not speculate in derivative instruments and all foreign exchange contracts are supported by underlying

transactions.

Exchange rates used for conversion of foreign items were: 2015 2014

US$ (spot at 30 June) 12.128 10.417

GBP 19.081 17.793

Approximately 50% of operating costs are incurred and approximately 31% of revenue is based in foreign currency. The following

uncovered foreign currency amounts are included in the Financial Statements at year end: net short-term liabilities of US$5 889 064

(2014: US$6 744 987) and GBP439 334 (2014: GBP1 480 062) and net short-term receivables of GBP3 639 494 (2014: GBP3 393 836).

The Group, as part of its financing activities, enters into foreign denominated interest-bearing loans. The foreign exchange rate exposure

is monitored by management in conjunction with the interest rate exposure which would have been incurred had a Rand-denominated

loan been taken out.

Sensitivity analysisThe sensitivity analysis below calculates the impact of movements in the foreign exchange rates in which the Group transacts as well

as in interest rates on the Group’s profits. The analysis is based on closing balances at year end.

Interest and related foreign currency amounts incurred on account of aircraft and other qualifying assets under construction are

capitalised and added to the asset concerned and therefore do not affect profit or loss.

The movements are recognised in other property, plant and equipment until such time as the other qualifying asset is complete and

the aircraft has been delivered and recognised, in which case these amounts are no longer recognised and are expensed in profit or

loss when incurred.



The effect of the movement in the interest rate was only calculated for the estimated period that the loan will be outstanding.

Group

Foreign exchange risk profit (loss) should the Rand exchange rate change by 5%

Interest rate risk profit (loss) should the interest rate change by 2%

Carrying value

R’000

Amount exposed to

risk

R’000

Rand appreciation

R’000

Rand depreciation

R’000

Amount exposed to

risk

R’000

Rate increase

R’000

Rate decrease

R’000

2015Financial asset

Trade and other receivables 160 892 8 171 (409) 409 - - -

Cash and cash equivalents 849 278 251 299 (12 565) 12 565 849 278 16 986 (16 986)

Impact of financial assets on:

- profit before tax - - (12 974) 12 974 - 16 986 (16 986)

- profit after tax - - (9 341) 9 341 - 12 230 (12 230)

Financial liabilities

Interest bearing liabilities 1 451 632 333 347 16 667 (16 667) 1 451 632 (29 033) 29 033

Trade and other payables 783 553 79 806 3 990 (3 990) - - -

Impact of financial liabilities on:

- profit before tax - - 20 657 (20 657) - (29 033) 29 033

- profit after tax - - 14 873 (14 873) - (20 904) 20 904

Overall impact on profit after taxation - - (5 532) 5 532 - (8 674) 8 674

Group

Foreign exchange risk profit (loss) should the Rand exchange rate change by 5%

Interest rate risk profit (loss) should the interest rate change by 2%

Carrying value

R’000

Amount exposed to

risk

R’000

Rand appreciation

R’000

Rand depreciation

R’000

Amount exposed to

risk

R’000

Rate increase

R’000

Rate increase

R’000

2014Financial assets

Cash and cash equivalents 867 703 285 754 (14 288) 14 288 867 703 17 354 (17 354)

Trade and other receivables 350 654 70 148 (3 507) 3 507 - - -


- profit before tax - - (17 795) 17 795 - 17 354 (17 354)

- profit after tax - - (12 812) 12 812 - 12 495 (12 495)

Financial liabilities

Interest-bearing liabilities 1 319 742 331 452 - - 1 319 742 (26 395) 26 395

Trade and other payables 1 076 171 323 062 16 153 (16 153) - - -


- profit before tax - - 16 153 (16 153) - (26 395) 26 395

- profit after tax - - 11 630 (11 630) - (19 004) 19 004

Overall impact on profit after taxation - - (1 182) 1 182 - (6 509) 6 509


Capital risk management

The Group’s objective when managing capital is to safeguard the entity’s ability to continue as a going concern.

The Group sets the amount of capital in proportion to risk. The Group manages the capital structure and makes adjustments to it in the

light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital

structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or

sell assets to reduce debt.

The Group monitors capital on the basis of the debt-to-adjusted-capital ratio. This ratio is calculated as net debt divided by adjusted capital.

Net debt is calculated as total interest-bearing debt (as shown in the Statement of Financial Position) less cash and cash equivalents.

Adjusted capital comprises all components of equity (i.e. ordinary shares, share premium, accumulated profits and other reserves).

The debt-to-adjusted capital ratios at 30 June 2015 and 2014 were as follows:

Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Total liabilities, excluding deferred taxation 2 651 877 2 787 689 2 640 172 2 765 760

Less: Cash and cash equivalents 849 278 867 703 832 027 858 118

Net debt 1 802 599 1 919 986 1 808 145 1 907 642

Adjusted equity 1 166 190 1 067 970 1 125 869 1 057 595

Adjusted capital ratio 1.54:1 1.80:1 1.61:1 1.80:1

19. Revenue

Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Flight revenue 5 651 656 5 722 816 5 648 893 5 722 816

Rendering of services 157 616 136 768 156 595 126 715

Commissions received 55 702 34 191 36 966 34 895

Other 25 772 9 444 25 772 9 444

5 890 746 5 903 219 5 868 226 5 893 870

20. Profit from operations

Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Operating expenses are stated after incorporating the following items:

Auditors remuneration 1 118 779 1 042 670



Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Managerial, technical, administrative and secretarial services 43 622 55 583 43 622 55 583

Directors' remuneration (included in total staff costs)

- for services as Directors and related committee work 3 062 2 680 3 062 2 680

- for managerial and other services 14 448 13 804 14 448 13 804

- retirement and medical benefits 1 290 1 149 1 290 1 149

- share-based payments 10 834 17 416 10 834 17 416

29 634 35 049 29 634 35 049

Only Directors are considered key management. A comprehensive breakdown per Director is included in the Report of Directors on pages 73 to 74.

Rentals under operating leases

Property

- Contractual amounts 27 018 20 171 29 758 22 647

Equipment and vehicles


Aircraft leases


235 604 218 675 237 918 221 091

Employment costs 772 792 693 728 769 236 690 629

Contributions to defined contribution funds 59 258 44 275 59 258 44 275

Total staff costs 832 050 738 003 828 494 734 904

Number of employees 2 088 2 026 - -

Impairments

Loan to associate 1 530 (2 235) - -

Trading loan in subsidiary 6 269 -

(Loss)/profit on exchange differences (36 680) 34 350 (36 680) 34 350

Equity-settled share-based payment (BEE transaction) This amount relates to the BEE transaction concluded in 2007 and is being equity accounted for (in terms of IFRS 2) using the Black-Scholes Option Valuation Model. The principal assumptions in applying the value of the options were as follows: 857 3 428 857 3 428

a. Volatility of 50%;

b. Eight years to date of exercise;

c. Dividend yield of 5%;

d. Risk-free rate of 9.15%; and

e. Strike price of R3.03.


Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Cash-settled, share-based paymentsThis amount relates to the long-term incentive scheme concluded in 2013 and is being cash accounted for (in terms of IFRS 2) using the Black-Scholes Option Valuation Model. The principal assumptions in applying the value of the options were as follows: 15 084 17 416 15 084 17 416

a. Total vesting period is 36 months;

b. Only holders in the employment of the Group after the vesting period will be entitled to receive a cash payout. For the purposes of the calculation it was estimated that all employees will remain in the employment of the Group;

c. Strike price is R1.50;

d. Risk-free rate is 5.22%; and

e. Dividend yield was 2%.

Closed hedging positions for the period expensed through profit and loss 61 546 - 61 546 -

21. Interest expense

Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Total interest paid 83 577 78 830 83 562 78 807Bank interest 72 930 77 340 72 915 77 317Interest capitalised to pre-delivery payments 10 647 1 490 10 647 1 490

Less: amount capitalised as borrowing costs (See note 3) (10 647) (1 490) (10 647) (1 490)

Net interest 72 930 77 340 72 915 77 317

22. Taxation

Major components of the tax expense

Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

CurrentLocal income tax – current period 40 675 77 066 35 001 76 316

DeferredDeferred tax – current 25 957 31 993 32 595 32 548Deferred tax – prior year adjustment 15 946 - 15 946 -

82 578 109 059 83 092 108 864

20. Profit from operations (continued)


Reconciliation of the tax expense

Reconciliation between applicable tax rate and average effective tax rate.

Group Company

2015 2014 2015 2014

Applicable tax rate 28.00 % 28.00 % 28.00 % 28.00 %

Exempt income - % (0.10) % - % (0.10) % Assessed losses utilised - % (0.10) % - % (0.10) % Disallowable expenditure (0.60) % 1.40 % (0.60) % 1.40 %

27.40 % 29.20 % 27.40 % 29.20 %

23. Earnings per share

Group

2015 2014

R’000 R’000

Reconciliation of profit or loss for the year to basic earningsEarnings attributable to ordinary shareholders 218 777 264 851Less: IAS 16 (profit) on disposal of property, plant and equipment (1 231) (524)Less: IAS 36 (reversal of impairment) impairment to loans to associates - (2 235)Add: taxation effect of profit on disposal 345 147Add: IAS 36 impairment of loan to subsidiaries 1 530 -

Headline earnings attributable to ordinary shareholders 219 421 262 239

Ordinary shares in issue ('000) 469 331 440 263Adjustment in respect of share buy-back (6 692) 18 586Adjustment in respect of consolidation of Share Trust (4 984) (4 993)Weighted ordinary shares in issue ('000) 457 655 453 856Adjusted for dilutive effect of share options in issue - 483Adjusted for dilutive effect of BEE transaction - 17 512

457 655 471 851Earnings per share (cents) 47,8 58,4Headline earnings per share (cents) 47,9 57,8Diluted earnings per share (cents) 47,8 56,1Diluted headline earnings per share (cents) 47,9 55,6Dividends per share paid (cents) 18.0 15.0


24. Cash generated from operations

Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Profit before taxation 301 354 373 910 272 048 371 072

Adjustments for:Depreciation and amortisation 405 812 290 747 405 754 290 140Profit on sale of assets (1 231) (524) (1 231) (524)Income from equity accounted investments (6 799) (2 327) - -Interest received - investment (40 428) (32 149) (39 841) (31 515)Interest expense 72 930 77 340 72 915 77 317Impairment loss (reversal) 1 530 (2 235) 6 269 -Cash-settled share-based payments 10 834 17 416 10 834 17 416Equity-settled BEE transaction 857 3 428 857 3 428

Changes in working capital:Inventories (2 874) (522) (2 829) (522)Trade and other receivables 257 013 4 995 240 515 (5 161)Trade and other payables (318 923) 358 259 (296 994) 362 623

680 075 1 088 338 668 297 1 084 274

25. Taxation paid

Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Balance at beginning of the year 30 540 30 942 28 999 30 558

Current tax for the year recognised in profit or loss (40 675) (77 066) (35 001) (76 316)Balance at end of the year (36 650) (30 540) (37 678) (28 999)

(46 785) (76 664) (43 680) (74 757)

26. Commitments and contingencies

Group and Company capital commitments and contingencies

Comair made pre-delivery payments of R288 million prior to year-end towards the delivery of four Boeing 737-800 aircraft due for delivery in

late 2015 and early 2016. The Group had a remaining commitment to Boeing for R1.9 billion at year end (prior year: R1.5 billion), the funding

of which will be finalised closer to the time of delivery of the aircraft. Pre-delivery payment finance has been arranged through Investec Bank.

Comair has also made deposits of R102 million towards the purchase of eight Boeing 737-8 MAX aircraft due for delivery from 2019

to 2021. Pre-delivery payments on these aircraft will commence in 2017. At year end, the Group had a remaining commitment to

Boeing of R5.4 billion (2014: R4.6 billion), payable from 2017 to 2021, the funding of which will be finalised closer to the time of delivery.


Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

Financial year 2015 - 315 652 - 315 652Financial year 2016 1 143 368 982 063 1 143 368 982 063Financial year 2017 392 117 336 797 392 117 336 797

1 535 485 1 634 512 1 535 485 1 634 512

Operating lease commitments

Group Company

2015 2014 2015 2014

R’000 R’000 R’000 R’000

AircraftCommitments for year one 180 756 188 567 180 756 188 567Commitments for years two to five 539 957 555 464 539 957 555 464Commitments after year five 50 210 116 847 50 210 116 847

770 923 860 878 770 923 860 878

Leasing arrangements – Aircraft

Generally medium-term (five-year) leasing agreements on aircraft

The Group acquired three previously Rand denominated leased aircraft for R107 million. The Group has six US$ denominated leases averaging

US$204 000 per month, each which have no escalation clauses. These leases are included in the operating lease commitments outlined above.

Contingent liabilities

The Company has signed subordination agreements with Imperial Air Cargo Proprietary Limited and Kulula Air Proprietary Limited (per

note 6), which would represent a contingent liability in the amount of R29 million (2014: R10.3 million).

27. Borrowing powers

There are no restrictive funding arrangements in place.

28. Share incentive trust

Staff Share Incentive Scheme (Excluding BEE Equity-settled, share-based payment)

In terms of the Staff Share Incentive Scheme, shares are offered on an option or outright sale basis. Options vest over a period of one

to five years. All options must be taken up by way of purchase by no later than ten years after the date of grant The exercise price of

the option is not less than the market value of the ordinary shares on the date preceding the day of grant and the option is exercisable

provided the participant has remained in the Group’s employ until the option vests. In the case of retirement/death/retrenchment, all

options immediately vest. Options must be converted into shares.

In the event of retirement/death/retrenchment of a participant, options may be taken up and converted into cash within 12 months of such

an event. The Directors of the Group have the discretion to extend this by a further 12 months. In the case of the resignation of a participant,

options which have vested may be exercised within 30 days after date of resignation. Options which have not vested will be forfeited.


The Staff Share Incentive Scheme is allowed to hold a total of 7.5% (36.7 million shares) of issued share capital in Comair Limited.

Currently the scheme holds 1.1% (prior year: 1.1%) of issued share capital. The maximum number of options to be held by any

participant in the scheme shall not exceed 1% (4.2 million shares) of the ordinary shares then in issue. The share option liability as per

IFRS 2 at year end was R nil (prior year: R nil) based on the closing share price of R4.48 (prior year: R2.65).

The following table illustrates the number and weighted average exercise prices of share options held by eligible participants, including Directors:

2015 Number of

share options

2015 Weighted average

exercise price

2014 Number of

share options

2014 Weighted average

exercise price

Balance at the beginning of period 741 334 1.55 741 334 1.55

Balance at the end of the period 741 334 1.55 741 334 1.55

Share options extended and accepted during the year were done at the ruling market price on the date preceding the extension date.

The options outstanding at 30 June 2015 become unconditional between the following dates:

Subscriptionprice

R

2015Number of

share options

2014 Number of

share options

1 September 2004 and 1 September 2007 0.80 33 334 33 334

5 December 2005 and 5 December 2010 1.70 133 000 133 000

5 June 2006 and 5 June 2011 1.57 575 000 575 000

741 334 741 334

Should the participant resign from the Group before options fully vest, the unvested portion will be forfeited.

29. Reclassification of comparatives and segmental reclassification

Comair offers travel and holiday package services using advanced technology, both locally and internationally, to consumers directly and

via the retail travel trade. This business forms part of the non-airline segment of the Group and is disclosed as such in the Segmental

Report. In terms of IAS 18 – Revenue, Comair acts as an agent for the collection of revenue on certain travel packages and these

amounts, net of inventory costs, should be accounted for as commission received. In the financial year ended 30 June 2014 gross

amounts were included in revenue, and the associated inventory costs were included in operating expenses which gives rise to the

restatement. The restatement has no impact on the profit of the Group. The effect is a reduction in both revenue and operating expenses

amounting to R379 million in the Statement of Comprehensive Income for the year ended 30 June 2014.

2014 Re-presented Effect on profit

or loss

R’000 R’000 R’000

Revenue 6 282 219 5 903 219 379 000

Operating costs (5 577 457) (5 198 457) (379 000)

The Group is organised into two main business segments: Airline and Non-Airline. Previously “Non-airline” comprised the travel business,

property investments, simulator business and Slow in the City. Lounges were initially established at main ACSA airports to improve

customer experience and were therefore included in the Airline segment. However, the lounge business has since evolved into a self-

sustainable business, generating third party Lounge Revenue and can now be considered independent of the Airline segment and will

be reported as “Non-airline” for segmental reporting purposes.

28. Share incentive trust (continued)


2014 Re-presented Reclassified segments Difference

R’000 R’000 R’000

Segmental revenue

Airline 5 819 632 5 730 306 89 326

Non-airline 83 587 172 913 (89 326)

5 903 219 5 903 219 -

Segmental result

Airline 681 552 654 252 27 300

Non-airline 23 210 50 510 (27 300)

704 762 704 762 -

Depreciation

Airline (285 734) (280 475) (5 259)

Non-airline (5 013) (10 272) 5 259

(290 747) (290 747) -

30. Related partiesSubsidiaries Inspect note 6 for investments in subsidiaries Associates Inspect note 7 for investments in associates Share Incentive Trust Inspect note 5 for the details Directors Inspect Directors renumeration on pages 73 to 74 of the Report of Directors

Group Company

Loan accounts – Owing (to) by related parties2015 2014 2015 2014

R’000 R’000 R’000 R’000

Related party balances

Alooca Technologies Proprietary Limited - 26 589 27 517 Aconcagua 32 Investments Proprietary Limited - 837 2 527 Kulula Air Proprietary Limited - 4 739 3 823 Commuter Handling Services Proprietary Limited 7 852 7 852 7 852 7 852 Imperial Air Cargo Proprietary Limited - 15 559 - 15 559 Comair Share Incentive Trust - 3 054 3 814 Holiday Tours Proprietary Limited 6 601 -

Amounts included in trade receivable (trade payable) regarding related parties

4 739 3 802 Kulula Air Proprietary Limited

Related party transactions

Rent paid to related partiesAconcagua 32 Investments Proprietary Limited - 1 662 1 510 Alooca Proprietary Limited - 1 078 966

Service RecoveryKulula Air Proprietary Limited 2 405 2 400


31. Retirement benefits

Post-retirement benefits

The Group contributes to the Old Mutual Superfund which is governed by the Pension Funds Act (Act No. 24 of 1956). The fund covers the majority of its employees and is a defined contribution scheme. Contributions paid by the Group companies are charged against income as incurred.

32. Subsequent events

The Directors are not aware of any matter or circumstances arising since the end of the period under review that would significantly affect or have a material impact on the financial position of the Group or Company.

33. Business combinations

Highly Nutritious Food Company Proprietary Limited and Imperial Air Cargo Proprietary Limited On 1 May 2015, the Group acquired the remaining 70% of the share capital in Imperial Air Cargo Proprietary Limited and 56% of the share capital in the Highly Nutritious Food Company Proprietary Limited. These acquistions were acquired for an aggregate consideration of R210, comprising cash and subscription shares payable.

Imperial Air Cargo Proprietary Limited contributed nil revenue and net profit to the Group and it has been dormant since aquisition.

The Highly Nutritious Food Company Proprietary Limited contributed a net loss after tax of R4 125 and R869 000 in revenue since acquisition.

These amounts have been calculated using the Group’s accounting policies.

Group

2015

R’000

Purchase consideration

The assets and liabilities arising from the acquisitions are as follows:Property, plant and equipment 118

Trade receivables 357

Inventory 50

Cash and cash equivalents 87

Trade and other payables (38)

Shareholder loans (4 410)

(3 836)

Non-controlling interest 889

Goodwill 2 947

Purchase consideration -

Purchase consideration -

- Settled in cash -

- Settled in amount payable -

Cash outflow on acquisition -

The goodwill arises from the expected synergies from the acquisition.


34. New accounting pronouncements

Standard Details of amendmentsAnnual periods

beginning of after

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

Annual Improvements 2012–2014 Cycle: Amends IFRS 5 to clarify that when an entity reclassifies an asset (or disposal group) directly from being held for sale to being held for distribution (or vice-versa), the accounting guidance in paragraphs 27–29 of IFRS 5 does not apply. The amendments also state that when an entity determines that the asset (or disposal group) is no longer available for immediate distribution or that the distribution is no longer highly probable, it should cease held-for-distribution accounting and apply the guidance in paragraphs 27–29.

1 July 2016

IFRS 7 Financial Instruments: Disclosures

Annual Improvements 2012–2014 Cycle: The amendments provide additional guidance to help entities identify the circumstances under which a servicing contract is considered to be 'continuing involvement' for the purposes of applying the disclosure requirements in paragraphs 42E–42H of IFRS 7. Such circumstances commonly arise when, for example, the servicing fee is dependent on the amount or turning of the cash flows collected from the transferred financial asset or when a fixed fee is not paid in full due to non-performance of that asset.

1 July 2016

Annual Improvements 2012–2014 Cycle: These amendments clarify that the additional disclosure required by the recent amendments to IFRS 7 Disclosure-Offsetting Financial Assets and Financial Liabilities is not specifically required for all interim periods. However, the additional disclosure is required to be given in condensed interim financial statements that are prepared in accordance with lAS 34 Interim Financial Reporting when its inclusion would be necessary in order to meet the general principles of lAS 34.

1 July 2016

IFRS 9 Financial Instruments

IFRS 9 Financial Instruments (2014) replaces IAS 39 Financial Instruments: Recognition and Measurement.

1 January 2018

IFRS 10Consolidated Financial Statements

Amendments to address an acknowledged inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and those in IAS 28 (2011) Investments in Associates in dealing with the sale or contribution of a subsidiary.

1 January 2016

Amendments confirming that the IFRS 10.4(a) consolidation exemption is also available to parent entities which are subsidiaries of investment entities where the investment entity measures its investments at fair value in terms of IFRS 10.31.

1 January 2016

Amendments modifying IFRS 10.32 to state that the consolidation requirement only applies to subsidiaries who are not themselves investment entities and whose main purpose is to provide services which relate to the investment entity’s investment activities.

1 January 2016

Amendments providing relief to non-investment entity investors in associates or joint ventures that are investment entities by allowing the non-investment entity investor to retain, when applying the equity method, the fair value measurement applied by the investment entity associates or joint ventures to their interests in subsidiaries.

1 January 2016

IFRS 11 Joint Arrangements

Amendments to provide guidance on the accounting for the acquisition of an interest in a joint operation in which the activity of the joint operation constitutes a business.

1 January 2016

IFRS 15Revenue from Contracts with Customers

New guidance on recognition of revenue that requires recognition of revenue in a manner that depicts the transfer of goods or services to customers at an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services.

1 January 2018

IAS 1 Presentation of Financial Statements

Amendments clarifying IAS 1’s specified line items on the statement(s) of profit and loss and other comprehensive income and the statement of financial position can be disaggregated.

1 January 2016

Additional requirements of how entities should present subtotals in the statement(s) of profit or loss and other comprehensive income and the statement of financial position.

1 January 2016

Clarification that entities have flexibility as to the order in which they present their notes to the financial statements, but also emphasising the need to consider fundamental principles of comparability and understandability in determining the order.

1 January 2016


Standard Details of amendmentsAnnual periods

beginning of after

IAS 16Property, Plant and Equipment

Amendments to prohibit the use of a revenue-based depreciation method for property, plant and equipment, as well as guidance in the application of the diminishing balance method for property, plant and equipment.

1 January 2016

Amendments specifying that because the operation of bearer plants is similar in nature to manufacturing, they should be accounted for under IAS 16 rather than IAS 41. The produce growing on the bearer plants will continue to be within the scope of IAS 41.

1 January 2016

IAS 19EmployeeBenefits

Annual Improvements 2012–2014 Cycle: lAS 19.83 requires that the currency and term of the corporate or government bonds used to determine the discount rate for post-employment benefit obligations must be consistent with the currency and estimated term of the obligations. The amendments clarify that the assessment of the depth of the corporate bond market shall be made at the currency-level rather than the country-level.

1 July 2016

IAS 27 Consolidated and Separate Financial Statements

Amendments to introducing a third option which allows entities to account for investments in subsidiaries, joint ventures and associates under the equity method in their separate financial statements.

1 January 2016

IAS 28Investments in Associates

Amendments to address an acknowledged inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and those in IAS 28 (2011) Investments in Associates in dealing with the sale or contribution of a subsidiary. In addition IAS 28 (2011) has been amended to clarify that when determining whether assets that are sold or contributed constitute a business, an entity shall consider whether the sale or contribution of those assets is part of multiple arrangements that should be accounted for as a single transaction.

1 January 2016

IAS 34 Interim Financial Reporting

The amendment to IAS 36 clarifies the required disclosures of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal.

1 January 2014

IAS 38 Intangible Assets

Amendments present a rebuttable presumption that a revenue-based amortisation method for intangible assets is inappropriate except in two limited circumstances, as well as provide guidance in the application of the diminishing balance method for intangible assets.

1 January 2016

IAS 41Agriculture

The amendments change the accounting for bearer plants.1 January 2016

34. New accounting pronouncements (continued)


Notice of Annual General Meeting (AGM)

A member of the Company entitled to attend and vote at the below-mentioned AGM is entitled to appoint a proxy or proxies to attend,

speak and vote in his/ her stead. A proxy need not be a member of the Company. Meeting attendees will be required to provide

reasonably satisfactory identification before being allowed to participate in or vote at the AGM. Forms of identification that will be

accepted include original and valid South African identity documents, driver’s licences and passports.

This document is important and requires your immediate attention.

Comair Limited

Registration number 1967/006783/06

Incorporated in the Republic of South Africa

ISIN Code: ZAE000029823 Share Code: COM

(“Comair” or “the Company” or “the Group”)

Notice is hereby given in terms of section 62(1) of the Companies Act (Act No. 71 of 2008), as amended (“the Companies Act”) that the

Annual General Meeting (the “AGM”) of shareholders of the Company will be held at Comair’s Operations Building, Corner Whirlwind

and Fortress Roads, Rhodesfield, 1619, on 3 December 2015 at 13h00 to consider, and if deemed fit, to pass the ordinary and special

resolutions set out below, with or without modification/s.

This notice has been sent to shareholders of the Company who were recorded as such in the Company’s security register on 23 October

2015, being the notice record date set by the Board of the Company in terms of the Companies Act determining which shareholders

are entitled to receive notice of the AGM.

Electronic Participation

Shareholders or their proxies are able to attend, but not participate and vote at the AGM by way of a teleconference call. Should you

wish to make use of this facility, please contact Derek Borer at e-mail: [email protected], by no later than 12h00 on Tuesday,

1 December 2015. Shareholders will:

• be required to provide reasonably satisfactory identification; and

• be billed separately by their own telephone service providers for their telephone call to participate in the meeting.

The notice of meeting includes the attached proxy form.

Ordinary Resolutions

1. Consideration of Annual Financial Statements

Ordinary Resolution Number 1

RESOLVED THAT the Audited Annual Financial Statements, together with the report of the Board of Directors of the Company (the

“Board”), the auditors’ report and the report by the Audit Committee of the Company and the Group for the year ended 30 June 2015,

be and are hereby received and adopted.


Reason for and Effect of Ordinary Resolution Number 1The reason for and the effect of Ordinary Resolution Number 1 is to adopt the complete Audited Annual Financial Statements of the

Company, including the Report of the Board, the Auditors’ Report and the Report by the Audit Committee of the Company and the

Group for the year ended 30 June 2015.

2. Re-appointment of External Auditors


RESOLVED THAT the re-appointment of Grant Thornton Johannesburg Partnership (“GT”), as nominated by the Company’s Audit

Committee as independent external auditors of the Company, be and is hereby approved until the conclusion of the next AGM.

Reason for and Effect of Ordinary Resolution Number 2The reason for and the effect of Ordinary Resolution Number 2 is to re-appoint Grant Thornton Johannesburg partnership Thornton

Johannesburg (“GT”), as the auditors of the Company to hold office until the conclusion of the next AGM. The Company’s Audit

Committee has recommended, and the Board has endorsed, the above re-appointment.

3. Re-election of Directors

Directors Retiring by Rotation

Ordinary Resolution Number 3.1

RESOLVED THAT Mr Pieter van Hoven, an independent Non-executive Director, who retires in terms of the Company’s Memorandum

of Incorporation (“MOI”) and who, being eligible, offers himself for re-election, be hereby re-elected as a Director of the Company.


RESOLVED THAT Mr Martin Darryl Moritz, a Non-executive Director, who retires in terms of the Company’s MOI and who, being

eligible, offers himself for re-election, be hereby re-elected as a Director of the Company.

Ordinary Resolutions Number 3.3

RESOLVED THAT Dr Peter J Welgemoed, an independent Non-executive Director, who retires in terms of the Company’s MOI and

who, being eligible, offers himself for re-election, be hereby re-elected as a Director of the Company.

Ordinary Resolutions Number 3.4

RESOLVED THAT Mr Erik Rudolf Venter, an Executive Director and CEO, who retires in terms of the Company’s MOI and who, being

eligible, offers himself for re-election, be hereby re-elected as a Director of the Company.


RESOLVED THAT Mr Jacob Meyer Kahn, an independent Non-executive Director, who retires in terms of the Company’s MOI and

who, being eligible, offers himself for re-election, be hereby re-elected as a Director of the Company.

Reason for and Effect of Ordinary Resolutions Numbers 3.1 to 3.5The reason for and the effect of Ordinary Resolutions Numbers 3.1 to 3.5 is to re-elect, by way of separate resolutions, Mr Pieter van Hoven,

Mr Martin Darryl Moritz, Dr Peter J Welgemoed, Mr Erik Rudolf Venter and Mr Jacob Meyer Kahn as Directors of the Company.

In terms of Article 41 of the Company’s MOI, one third of the Company’s Directors are required to retire at every AGM. These Directors

may offer themselves for re-election. In terms of Article 40 of the Company’s MOI, a person appointed to fill a vacancy or appointed as

an additional Director shall retire at the AGM but may offer himself/herself for re-election. The Board recommends to the shareholders

the re-election of the Directors mentioned above. A brief CV of each of these Directors appears on pages 133 to 135 of the Integrated

Annual Report of which this notice forms part.


4. Election of Members of Audit Committee


RESOLVED THAT, subject to the re-election of Dr PJ Welgemoed as a Director of the Company pursuant to ordinary resolution

No. 3.3, Dr PJ Welgemoed, who is an independent Non-executive Director of the Company, be hereby elected as a member of the

Company’s Audit Committee for the financial year ending 30 June 2016.


RESOLVED THAT Mr KI Mampeule, who is an independent Non-executive Director of the Company, be hereby elected as a member

of the Company’s Audit Committee for the financial year ending 30 June 2016.


RESOLVED THAT Ms WD Stander, who is an independent Non-executive Director of the Company, be hereby elected as a member



RESOLVED THAT Mr GJ Halliday, who is an independent Non-executive Director of the Company, be hereby elected as a member


Reason for and Effect of Ordinary Resolutions Numbers 4.1 to 4.4The reason for and the effect of Ordinary Resolutions Numbers 4.1 to 4.4 is to elect, by way of separate resolutions, Dr PJ Welgemoed,

Mr KI Mampeule, Ms WD Stander and Mr GJ Halliday as members of the Audit Committee of the Company.

A brief CV of each of the Directors mentioned above is included on pages 133 to 135 of the Integrated Annual Report of which this

notice forms part. As is evident from the CVs of these Directors, each of the proposed members of the Audit Committee has the

required qualifications and/or experience to fulfil his/her duties.

5. Non-binding Endorsement of Company Remuneration Policy

The Company’s Remuneration Policy, as described in the Remuneration report on pages 65 to 67 of the Integrated Annual Report

of which this notice forms part, is hereby endorsed by way of a non-binding advisory vote, as recommended in the King Code of

Governance for South Africa 2009, commonly referred to as King III.

Reason for and Effect of Non-binding Endorsement The reason for and the effect of the above non-binding endorsement is to endorse the Company’s Remuneration Policy on the basis

of a non-binding advisory vote.

Special Resolutions

6. Approval of Non-executive Directors’ Remuneration 2014/2015

Special Resolution Number 1

RESOLVED THAT the joint remuneration of the Non-executive Directors for their services as Directors of the Company in the amount

of R3 057 525.00 for the financial year ended 30 June 2015 be and is hereby approved.

Reason for and Effect of Special Resolution Number 1The reason for and the effect of Special Resolution Number 1 is to approve the remuneration payable by the Company to its Non-executive


Directors for their services as Directors of the Company for the period ended 30 June 2015. The fees payable to Non-executive Directors

are based on a fixed annual retainer. The Chairperson and members of every sub-committee, however, are paid an additional fee for each

sub-committee meeting chaired and/or attended up until the end of the 2015 financial year. No fees are payable to Mr Sacks, Mr Halliday

and Ms Stander. Mr van Hoven, in addition to being the Chairperson of the Board and Nominations Sub-committee, is also the Chairman

of Comair Pension Fund and as such is paid a fee for each Pension Fund Trustee meeting attended, which fees were approved by the

Company’s shareholders at the AGM on 5 November 2014. The fees payable to each Director and further details on the basis of calculation

of the remuneration are respectively included in the annual financial statements on page 115, and in the Remunerations report on pages

65 to 67 of the Integrated Annual Report of which this notice forms part.

7. Approval of Non-executive Directors’ Remuneration – 2015/2016


RESOLVED THAT the following fees be approved as the basis for calculating the remuneration of the Non-executive Directors for their

services as Directors of the Company for the financial year ending 30 June 2016:

30 June 2015 30 June 2016

Chairman of the Board R1 284 000.00 R1 348 200.00

Vice-chairman (2) R374 500.00 R393 225.00

Non-executive Directors (4) R160 500.00 R168 525.00

Chairperson of each Sub-committee per Sub-committee meeting held R13 910.00 R14 606.00

Members of each Sub-committee, per Sub-committee meeting held R6 955.00 R7 303.00

Chairperson of Pension Fund Board R13 910.00 R14 606.00

Reasons for and Effect of Special Resolution Number 2 The reason for and the effect of Special Resolution Number 2 is to approve the basis for calculating the remuneration payable by the

Company to its Non-executive Directors for their services as Directors of the Company for the period ending 30 June 2016. The fees

payable to Non-executive Directors are based on a fixed annual retainer. The Chairperson and members of each sub-committee,

however, will be paid an additional fee for each sub-committee meeting held, subject to attendance at the sub-committee meeting.

No fees are payable to Mr Sacks, Mr Halliday and Ms Stander. Mr van Hoven, in addition to being Chairperson of the Board and

the Nominations Sub-committee, is also the Chairman of the Comair Pension Fund and as such is paid a fee for each Pension Fund

Trustee meeting attended. Further details on the basis of calculation of the remuneration are included in the Remuneration report on

pages 65 to 67 of the Integrated Annual Report of which this notice forms part.

8. General Authority to Repurchase Shares


RESOLVED THAT the Board of Directors of the Company is hereby authorised, by way of a renewable general authority, to approve

the purchase of its own ordinary shares by the Company, or to approve the purchase of ordinary shares in the Company by any

subsidiary of the Company, provided that:

8.1.1 the Company or the relevant subsidiary is authorised thereto by its MOI;

8.1.2 the general repurchase by the Company and/or any subsidiary of the Company of ordinary shares in the aggregate in

any one financial year shall not exceed 15% (fifteen percent) of the Company’s issued ordinary share capital as at the

beginning of the financial year, provided that the acquisition of shares as treasury shares by a subsidiary of the Company

shall not be effected to the extent that in aggregate more than 10% (ten percent) of the number of issued shares in the

Company are held by or for the benefit of all the subsidiaries of the Company taken together;


8.1.3 at any point in time, the Company may only appoint one agent to effect any repurchases on the Company’s behalf;

8.1.4 the repurchase of securities being effected through the order book operated by the JSE and the counter party (reported

trades are prohibited);

8.1.5 this general authority shall only be valid until the date of the next AGM or for 15 (fifteen) months from the date of passing

of this Special Resolution Number 3, whichever is the shorter;

8.1.6 in determining the price at which the Company’s ordinary shares are acquired by the Company or any subsidiary in

terms of this general authority, the maximum premium at which such ordinary shares may be acquired will be 10%

(ten per cent) of the weighted average of the market price at which such ordinary shares are traded on the JSE, as

determined over the 5 (five) trading days immediately preceding the date of the repurchase of such ordinary shares

by the Company. The JSE should be consulted for a ruling if the Company’s securities have not traded in such 5 (five)

business day period;

8.1.7 the Company or any subsidiary may not repurchase securities during a prohibited period as defined in the JSE Listings

Requirements unless they have in place a repurchase programme where the dates and quantities of securities to be

traded during the relevant period are fixed (not subject to any variation) and full details of the programme have been

disclosed to the JSE in writing prior to the commencement of the prohibited period; and

8.1.8 when the Company or any subsidiary has cumulatively repurchased 3% (three percent) of the initial number of the relevant

class of securities, and for each 3% (three percent) in aggregate of the initial number of that class acquired thereafter,

an announcement will be made.

8.2 In terms of the general authority given under this special resolution, any repurchase of ordinary shares shall be subject to –

8.2.1 any applicable exchange control regulations and approval at that point in time;

8.2.2 the Companies Act;

8.2.3 the JSE Listings Requirements and any other applicable stock exchange rules, as may be amended from time to time;

8.2.4 the sanction of any other relevant authority whose approval is required in law; and

8.2.5 a resolution by the Board and/or the relevant subsidiary of the Company confirming that the Board of the Company

and/or of such relevant subsidiary has authorised the repurchase, that the Company and/or the relevant subsidiary has

satisfied the solvency and liquidity tests contemplated in the Companies Act, and that since the test was done there

have been no material changes to the financial position of the Group.

The Board is of the opinion that this authority should be in place should it become appropriate to undertake a share repurchase in the

future. After having considered the effect of any repurchases of ordinary shares pursuant to this general authority, the Board, in terms

of the Companies Act and the JSE Listings Requirements, confirms and undertakes that it will not implement the proposed authority

to repurchase the shares unless it is of the opinion that:

• the Company and the Group will be in a position to repay its debt in the ordinary course of business for a period of 12 (twelve)

months after the date of the general repurchase;

• the assets of the Company and the Group, fairly valued in accordance with International Financial Reporting Standards, will be in

excess of the liabilities of the Company and the Group for a period 12 (twelve) months after the date of the general repurchase;

• the share capital and reserves of the Company and the Group will be adequate for a period of 12 (twelve) months after the date

of the general repurchase; and

• the working capital of the Company and the Group will be adequate for ordinary business purposes for a period of 12 (twelve)

months after the date of the general repurchase.

Reason for and Effect of Special Resolution Number 3The reason for and the effect of Special Resolution Number 3 is to authorise the Company or any of its subsidiaries, by way of a

general authority, to repurchase its issued shares on such terms, conditions and such amounts determined from time to time by the

Board subject to the limitations set out above. Please refer to the additional disclosure of information contained in this notice, which

disclosure is required in terms of the JSE Listings Requirements.


Other disclosure in terms of the JSE Listings Requirements Section 11.26

Further to Special Resolution Number 3, the JSE Listings Requirements require the following disclosure, some of which is elsewhere

in the Integrated Annual Report of which this notice forms part:

Major shareholders of the Company – page 136

Share capital of the Company – page 103

Directors’ responsibility statement

The Directors, whose names are given on page 72 of this Integrated Annual Report, collectively and individually accept full responsibility

for the accuracy of the information pertaining to this resolution and certify that, to the best of their knowledge and belief, there are no

facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such

facts have been made and that this resolution contains all information required by law and the JSE Listings Requirements.

No material change

Other than the facts and developments reported on in the Integrated Annual Report, there have been no material changes in the financial

or trading position of the Company and its subsidiaries since the date of signature of the Audit Report and the date of this notice.

Statement of Board’s intention

The Board has no specific intention to effect the provisions of Special Resolution Number 3 but will, however, continually review this

position having regard to prevailing circumstances and market conditions, in considering whether to effect the provisions of Special

Resolution Number 3.

9. General Authority to Provide Financial Assistance to related and inter-related Companies or Corporations


RESOLVED THAT the Board is hereby authorised in terms of section 45(3)(a)(ii) of the Companies Act, as a general approval (which

approval will be in place for a period of 2 (two) years from the date of adoption of this Special Resolution Number 4), to authorise the

Company to provide any direct or indirect financial assistance (“financial assistance” will herein have the meaning attributed to such

term in section 45(1) of the Companies Act), that the Board may deem fit to any related or inter-related company or corporation of the

Company (“related and inter-related” will herein have the meaning attributed to these terms in section 2 of the Companies Act), on the

terms and conditions and for the amounts that the Board may determine.

The main purpose for this authority is to Grant Thornton Johannesburg partnership the Board the authority to provide intergroup loans

and other financial assistance for the purpose of funding the activities of the Group. The Board undertakes that:

9.1 it will not adopt a resolution to authorise such financial assistance unless the Directors are satisfied that

9.1.1 immediately after providing the financial assistance, the Company would satisfy the solvency and liquidity test as

contemplated in the Companies Act; and

9.1.2 the terms under which the financial assistance is proposed to be given are fair and reasonable to the Company; and

9.2 written notice of such resolution by the Board shall be given to all shareholders of the Company and any trade union representing

the employees

9.2.1 within 10 (ten) days after the Board adopted the resolution, if the total financial assistance contemplated in that resolution,

together with any previous such resolutions during the financial year, exceeds 0.1% (zero comma one percent) of the

Company’s net worth at the time of the resolution; and

9.2.2 within 30 (thirty) days of the end of the financial year, in any other case.


Reason for and Effect of Special Resolution Number 4The reason for and the effect of Special Resolution Number 4 is to provide a general authority to the Board to grant direct or indirect

financial assistance to any company or corporation forming part of the Company’s Group of Companies, including in the form of loans

or the guaranteeing of their debts. The Board provided such inter-group financial assistance to subsidiaries as disclosed in the annual

financial statements in note 6 on pages 96 to 98 of the Integrated Annual Report of which this notice forms part.

Ordinary Resolution

10. Authorisation for Company Secretary or any Director to sign necessary documents to give effect to resolutions


RESOLVED THAT the Company Secretary or any Director be and is hereby authorised on behalf of the Company to sign all documents

as may be necessary in order to give effect to the Special and Ordinary Resolutions set out above.

Other Business

11. To transact any other business that may be transacted at annual general meetings.

Approvals Required for Resolutions

Ordinary Resolutions Numbers 1 to 5 contained in this Notice of AGM require the approval by more than 50% (fifty percent) of the

votes exercised on the resolutions by shareholders present or represented by proxy at the AGM, and further subject to the provisions

of the Companies Act, the MOI of the Company and the JSE Listings Requirements.

Special Resolutions Numbers 1 to 4 contained in this Notice of AGM require the approval by at least 75% (seventy five percent) of the

votes exercised on the resolutions by shareholders present or represented by proxy at the AGM and further subject to the provisions

of the Companies Act, the MOI of the Company and the JSE Listings Requirements.

Record Date

The record date on which shareholders of the Company must be registered as such in the Company’s securities register, which

date was set by the Board of the Company in determining which shareholders are entitled to attend and vote at the AGM is Friday,

27 November 2015. Accordingly the last day to trade in order to be eligible to attend and vote at the meeting is Friday, 20 November 2015.

Proxy and Voting Procedures

A shareholder entitled to attend and vote at the AGM is entitled to appoint a proxy or proxies to attend, speak and vote in his/her

stead. A proxy need not be a shareholder of the Company. For the convenience of registered shareholders of the Company, a form

of proxy is enclosed herewith.

Shareholders are requested to lodge their forms of proxy with, or to post same to the Company’s Transfer Secretaries, Computershare

Investor Services Proprietary Limited, PO Box 61051, Marshalltown, 2107, to be received not later than 48 hours (excluding Saturdays,

Sundays and public holidays) before the time appointed for the holding of the AGM, being Thursday, 3 December 2015 at 13h00.

Nevertheless, forms of proxies may be lodged at any time prior to the commencement of voting on the resolutions at the AGM.

Any shareholder who completes and lodges a form of proxy will nevertheless be entitled to attend and vote in person at the AGM.

Any forms of proxy not received by this time must be handed to the Chairperson of the meeting immediately prior to the meeting.


On a show of hands, every shareholder of the Company present in person or represented by proxy shall have one vote only. On a poll,

every shareholder of the Company shall have one vote for every share held in the Company by such shareholder.

The attached form of proxy is only to be completed by those shareholders who are:

• holding ordinary shares of the Company 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 and wish

to attend the AGM, 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/mandate entered into between them and

the CSDP or broker.

Equity securities held by a share trust or scheme will not have their votes at annual general meetings taken into account for the purposes

resolutions proposed in terms of the JSE Listings Requirements.

Note that holders of unlisted securities and treasury shares are not entitled to vote at the AGM.

Proof of Identification Required

The Companies Act requires that any person who wishes to attend or participate in a shareholders’ meeting, must present reasonably

satisfactory identification at the meeting. Any shareholder or proxy who intends to attend or participate at the AGM must be able to

present reasonably satisfactory identification at the meeting for such shareholder or proxy to attend and participate at the meeting. A

green bar-coded identification document issued by the South African Department of Home Affairs, a driver’s licence or a valid passport

will be accepted as sufficient identification.

By order of the Board

Derek H. Borer

Company Secretary

Bonaero Park

20 October 2015


Directors Standing for Election or Re-Election1. P van Hoven (Board)

(Age: 71)

Pieter joined Comair in 1965 and after serving the company in a variety of designations, was appointed Managing Director in 1980.

He was responsible for initiating and introducing the British Airways franchise agreement, transforming Comair into the local British

Airways brand in the latter part of 1996 and it was under Pieter’s management that Comair’s low cost airline kulula.com took to the

skies in August of 2001.

After 41 years with the company, Pieter retired in 2006 but has continued to serve on the Comair Board as an independent Non-

executive Director. He has also been a Director of Comair General Aviation Holdings since 1970 and continues to serve the company

in the capacity of a Non-executive Director,

Pieter was a member of the South African Tourism Board throughout the period 1983 to 1997 during which time he served on several

committees and was appointed Chairman of the Board in 1989 and continued to serve in this position until 1996.

Pieter was also elected as Chairman of the Airlines Association of South Africa (AASA) for four years during the 1980s, and was

active on many other industry committees for the Department of Transport. To date he continues to serve on the Aviation Accident

Investigation Panel for the Civil Aviation Authority.

As of 13 February, 2012, Pieter was appointed independent Non-executive Chairman to the Comair Limited Board of Directors, which

position he holds to date.

2. MD Moritz (Board)

(Age: 70)

BCom, LLB

Martin matriculated at King Edward VII School, Johannesburg in 1961 and graduated from the University of the Witwatersrand in 1968 with

BCom and LLB degrees. After graduating he was appointed as Legal Adviser to Rand Mines Limited. In October 1969, he commenced

employment at Comair Holdings Limited as Assistant to the Managing Director. He was appointed Assistant General Manager of the

Comair Group shortly thereafter and subsequently Group General Manager in 1973. In 1976 he acquired a shareholding in the Company

as part of the management buy-out and was, in 1978, appointed Deputy Chairman of the Group, a position which he still holds today. He

is a Fellow of the Royal Aeronautical Society and a Director of the Commercial Aviation Association of Southern Africa, which honoured

him with a Lifetime Service Award in 2011. Martin currently holds the position of Non-executive Joint Deputy Chairperson of Comair.

3. Dr PJ Welgemoed (Board and Audit Committee)

(Age: 72)

BCom (Hons), MCom, DCom

In 1971 Peter obtained a Doctorate in Transport Economics at the Rand Afrikaans University. In 1974, he was appointed Professor

and Chairman of the Department of Transportation Economics and Director of the Research Centre for Physical Distribution and

Transportation Studies at Rand Afrikaans University. Thereafter he served on various Boards of Directors of companies involved in

transportation and banking. In September 1989 he was appointed Deputy Minister of Mineral and Energy Affairs and Public Enterprises.

In 1990 he was appointed as a Member of Cabinet, with the portfolio of Minister of Transport, and in 1992 as Minister of Transport and

of Post and Telecommunication. In 1998 he was appointed as the Executive Chairman of the Board of Market Power (SA) in South

America. He controlled the daily operations of the Group in Chile, Argentina and Uruguay from the Head Office in Santiago. At present

is he is involved in private business through directorships and consultancy.


4. ER Venter (Board)

(Age: 45)

Erik joined Comair in 1996 as Financial Manager, and has held various positions within the company including Commercial Manager;

Commercial Director and Financial Director. In July of 2006 Erik was appointed as Joint CEO of Comair and served in this position until

December 2011 when he assumed the sole responsibility for the company as Chief Executive Officer. He remains in this position to date.

Whilst attending the University of Cape Town, Erik attained a BCom and Post Graduate Diploma in Accounting and further completed

his articles with KPMG, qualifying as a Chartered Accountant (South Africa).

Erik previously served a term as Chairman of the Airlines Association of South Africa and was re-elected to serve a further term at their

AGM held on 1 November, 2014. Erik is also currently a Director on the Board of Imperial Air Cargo.

As a married man with two daughters, Erik has a busy lifestyle but finds time for his hobbies which include painting, building custom

made cars and re-modelling furniture.

5. JM Kahn (Board)

(Age: 76)

BA (Law), MBA (UP), DComm (hc), SOE

Meyer joined the South African Breweries Group in 1966 and occupied executive positions in a number of the Group’s former retail

interests before being appointed to the Board of South African Breweries Limited (SAB) in 1981. He was appointed Group Managing

Director of SAB in 1983 and Executive Chairman in 1990. In 1997, he was seconded full-time to the South African Police Service as its

Chief Executive, serving for two and a half years. In 1999 he was appointed Chairman of the Company on its London listing. Amongst

other awards, he holds an Honorary Doctorate in Commerce from the University of Pretoria and was awarded the South African Police

Star for Outstanding Service (SOE) in 2000. He retired as Chairman of SAB Miller in July 2012.

6. KI Mampeule (Audit Committee)

(Age: 50)

BA, MSc, MBA

Khutso is the Executive Chairman of Lefa Group Holdings, an investment holding and consulting company he established in 2003. He

is a Director of JSE-Listed Niveus Investments Limited (where he is the Chairman of the Audit and Risk Committee) as well as Truworths

International Limited. He is the immediate past Chairman of Withmore Investments Proprietary Limited, an empowerment consortium

he represented on the KWV Holdings Limited Board. He is also a Director of a few other privately held companies. Until May 2007,

Khutso was the Group CEO of the South African Post Office, where he made extensive headlines for taking firm positions against poor

governance and corrupt practices at the institution. Prior to starting Lefa Group Holdings, Khutso was the CEO of Old Mutual Employee

Benefits. Before joining Old Mutual, he spent seven years in various senior executive positions at Transnet where he was responsible

for rail operations, including rail/port integration, and the turnaround of the iron-ore export business within Spoornet (OREX). His last

position at Transnet was as the CEO of its subsidiary, South African Express Airways. Khutso is a trustee of the World Wide Fund

for Nature (WWF, SA), a member of the Institute of Directors SA, the Young President Organisation, and Toastmaster International.


7. WD Stander (Audit Committee)

(Age: 48)

BA (Hons), MBA

Over the last 25 years Wrenelle has served across the private, public and NGO sectors.

Wrenelle joined Sasol in May 2008 and prior to her current role as Senior Vice President: Public Affairs, she served as Managing Director

of Sasol Gas for almost four years. She currently serves as a Director on a number of subsidiary Boards.

Before joining Sasol, Wrenelle served in various capacities within the public sector including the position of Deputy Chief Executive

Officer of the South African Civil Aviation Authority, and the Managing Director of the Air Traffic and Navigation Services Company.

Wrenelle holds a BA (Hons) degree from the University of Cape Town, as well as an MBA from Oxford Brookes University in the United

Kingdom.

8. GJ Halliday (Audit Committee)

(Age: 51)

BA (Hons), Economics, (Geog.), MBA (Lancaster University)

Gavin joined British Airways Plc (“BA”) in 1986, working in customer service, operational research and marketing, before joining sales

as part of the airline’s Global Sales team, he was involved in the airline’s launch of e-ticket in 1995. He has since managed sales teams

in Miami, UK, and Latin America, and Asia and Pacific region in 2006, where he was responsible for all sales activity, before joining

Europe. He is Area General Manager for Europe and Africa.


Share price performance

2015 2014

c c

Market price (cents per share) 430 448Closing (30 June) 617 500High 320 250Low

Closing price/earnings ratio 9.0 7.7

Number of shares in issueAt year end (millions) 469 440Weighted average (millions) 457 453

Volume of shares traded (millions) 89 116

Volume of shares traded to number in issue at year end 19.0% 26.4%.


Shareholder analysis

Shareholder Spread

BandsNo. of

shareholdings % No. of shares %

1–1 000 shares 2 102 53.84 693 770 0.15

1 001–10 000 shares 1 178 30.18 4 388 493 0.93

10 001–100 000 shares 417 10.68 14 861 414 3.17

100 001–1 000 000 shares 164 4.20 51 173 270 10.90

1 000 001 Shares and over 43 1.10 398 213 918 84.85

Total 3 904 100.00 469 330 865 100.00

Distribution of Shareholders

Type of shareholderNo. of

shareholdings % No. of shares %

Banks and Brokers 21 0.54 16 877 325 3.60

Medical Schemes 4 0.10 1 144 484 0.24

Close Corporations 33 0.85 490 002 0.10

Endowment Funds 20 0.51 4 104 275 0.88

Individuals 3 343 85.63 20 021 564 4.27

Insurance Companies 18 0.46 4 376 472 0.93

Investment Companies 7 0.18 1 289 971 0.28

Mutual Funds 62 1.59 101 953 756 21.72

Nominees and Trusts 184 4.71 10 633 695 2.27

Other Corporations 19 0.49 106 981 0.02

Retirement Funds 119 3.05 30 984 852 6.60

Private Proprietary Companies 71 1.82 218 385 067 46.53

Share Trust 1 0.03 4 985 798 1.06

Public Companies 2 0.04 53 976 623 11.50

3 904 100.00 469 330 865 100.00


Beneficial Shareholders Holding of 3% or More

The following shareholders hold more than 3% of the issued share capital of the Company

Type of shareholderNo. of shares

% Shareholding

BB Investment Company Proprietary Limited 126 320 151 26.91

Allan Gray* 60 533 949 12.90

Britair Holdings Limited 53 966 623 11.50

Innercreek Investments Proprietary Limited 50 000 000 10.65

HNA Group 26 067 766 6.19

Total 316 888 489 68.15

* Allan Gray

Allan Gray Balanced Fund 22 009 211 (4.69%)

Allan Gray Equity Fund 21 974 221 (4.68%)

Allan Gray Domestic Equity Portfolio 5 449 900 (1.16%)

Allan Gray Optimal Fund 3 210 978 (0.68%)

Allen Gray Global Absolute Portfolio 2 672 172 (0.57%)

Allan Gray Global Balanced Portfolio 2 488 891 (0.53%)

Allan Gray Domestic Optimal Portfolio 1 102 848 (0.23%)

Allan Gray Domestic Absolute Portfolio 824 936 (0.18%)

Allan Gray Life Hedged Domestic Equity Portfolio 421 462 (0.09%)

Allan Gray Domestic Balanced Portfolio 345 830 (0.07%)

Allan Gray SA Equity Fund 33 500 (0.01%)

60 533 949 12.90%

Fund Managers Holding 3% or More

The following Fund managers hold 3% or more of the issued share capital of the Company:

No. of shares

% Shareholding

Allan Gray Asset Management 93 877 647 20.0

Total 93 877 647 20.0


Public/Non-public Shareholder Spread (Including Resident and Non-resident Shareholding)

Type of shareholder and number of shareholders

Number of shareholders in South Africa

Number of shareholders other than in South Africa Total shareholders

No. of shares % No. of shares % No. of shares %

Non Public Shareholders

Directors and Associates (7) 52 064 512 11.09 52 064 512 11.09

Strategic Holdings (more than 10%)

BB Investment Co. Proprietary Limited (1) 126 320 151 26.91 126 320 151 26.91

Britair Holdings Limited (1) 53 966 623 11.50 53 966 623 11.50

Share Trusts

Comair Share Incentive Trust (1) 4 985 798 1.06 4 985 798 1.06

Public shareholders

Resident (3 825) 172 934 573 36.86 172 934 573 36.86

Non-resident (69) 59 059 208 12.58 59 059 208 12.58

356 305 034 75.92 113 025 831 24.08 469 330 865 100.00


Administration

Registered Office

1 Marignane Drive

Bonaero Park

Kempton Park

1619

Principal Place of Business

1 Marignane Drive

Bonaero Park

Kempton Park

1619

Transfer Secretaries

Computershare Investor Services Proprietary Limited

Ground floor

70 Marshall Street

Johannesburg

2001

(PO Box 61051, Marshalltown, 2107)

K-12

591 [

www.

kash

an.co

.za]

Integrated Annual Report 2015

Incorporated in the Republic of South AfricaRegistration number: 1967/006783/06.

Share code: COM. ISIN code: ZAE000029823.(“Comair” or “the Company” or “the Group”)

Form of Proxy for Annual General Meeting

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

The form of proxy is only to be completed by those shareholders who are:

• holding ordinary shares of the Company in certificated form; or• 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 and wish 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/mandate entered into between them and the CSDP or broker.

Shareholders are requested to lodge their forms of proxy or to post same to the Company’s Transfer Secretaries 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, being Thursday, 3 December 2015 at 13h00. Nevertheless, forms of proxy may be lodged at any time prior to the commencement of voting on the resolutions at the Annual General Meeting. Any shareholder who completes and lodges a form of proxy will nevertheless 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, if deemed fit, passing, with or without modifications, the resolutions to be proposed thereat and at each adjournment or postponement thereof, and to vote for/or against the resolutions and/or abstain from voting in respect of the shares in the issued share capital of the Company registered in my/our name/s (see note 2) as follows:

Number of votesFor Against Abstain

Ordinary Resolutions 1 to 41 Consideration of the Annual Financial Statements2 Re-appointment of external auditors.3 To re-elect the following Directors:

Directors retiring by rotation:3.1 P van Hoven 3.2 MD Moritz 3.3 Dr PJ Welgemoed 3.4 ER Venter3.5 JM Kahn4 To elect the following Directors to the Audit Committee4.1 Dr PJ Welgemoed4.2 KI Mampeule4.3 WD Stander4.4 GJ Halliday5. Non-binding endorsement

Non-binding endorsement of Company’s Remuneration PolicySpecial Resolutions 1 to 46. Approval of Non-executive Directors’ Remuneration 2014/15 7. Approval of Non-executive Directors’ Remuneration 2015/168 General authority to repurchase shares9. General authority to provide financial assistance to related and inter-related companies and corporationsOrdinary Resolution No. 510. Authorisation for Company Secretary or any other Director to sign necessary documents to give effect to

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 direction is given, the proxy holder will be entitled to vote or abstain from voting as the proxy holder deems fit.)

Signed at on this day of 2015

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, speak and vote in place of that shareholder at the Annual General Meeting.

Please read the notes on the reverse side hereof

Notes to the Form of Proxy

1. A certificated shareholder or “own-name” dematerialised shareholder may insert the names of two alternative proxies of the shareholder’s choice in the space provided, with or without deleting “the Chairman of the Annual General Meeting”. The person whose name appears first on the form of proxy and whose name has not been deleted will be entitled and authorised 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 an “X” in the appropriate box provided. Failure to comply herewith will be deemed to authorise the proxy to vote or to abstain from voting at the Annual General Meeting as he/she deems fit in respect of all the shareholder’s votes exercisable thereat. Where the proxy is the Chairman, such failure shall be deemed to authorise the Chairman to vote in favour of the resolutions to be considered at the Annual General Meeting in respect of all the shareholder’s votes exercisable thereat.

3. 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. Forms of proxy should be lodged with or posted to the Company’s Transfer Secretaries to be received not later than 48 hours before the Annual General Meeting, being Thursday, 3 December 2015 at 13h00. Nevertheless, forms of proxy may be lodged at any time prior to the commencement of voting on the resolutions at the Annual General Meeting. Any forms of proxy not received by this time must be handed to the Chairperson of the meeting immediately prior to the meeting.

4. The Chairman of the Annual General Meeting may accept or reject any form of proxy which is completed and/or received other than in accordance with these notes and instructions, provided that the Chairman is satisfied as to the manner in which the shareholder wishes to vote.

5. Documentary evidence establishing the authority of a person signing this form of proxy in a representative or other legal capacity such as a power of attorney or other written authority 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.

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

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

unless that person’s power of attorney or authority is deposited with the Transfer Secretaries of the Company as set out in note 3 not less than 48 hours before the holding of the Annual General Meeting.

7. An instrument of proxy shall be valid for any adjournment or postponement of the Annual General Meeting, unless the contrary is stated therein, but shall not be used at the resumption of an adjourned Annual General Meeting if it could not have been used at the Annual General Meeting from which it was adjourned for any reason other than that it was not lodged timeously for the meeting from which the adjournment took place.

8. A vote cast or act done in accordance with the terms of a form of proxy shall be deemed to be valid notwithstanding:

(a) the previous death, insanity or any other legal disability of the person appointing the proxy; 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-mentioned matters shall have been received by the Company care of its Transfer Secretaries as set out in note 3 or by the Chairman of the Annual General Meeting if not held at the principal place of business of the Company, before the commencement or resumption (if adjourned) of the Annual General Meeting at which the vote was cast or the act was done or before the poll on which the vote was cast.

9. A minor must be assisted by his/her parent or guardian unless the relevant documents establishing her/her legal capacity are produced or have been registered by the Company’s transfer secretaries.

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

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

Registered office Transfer Secretaries Principal Place of Business1 Marignane Drive Computershare Investor Services Proprietary Limited 1 Marignane DriveBonaero Park Ground Floor Bonaero ParkKempton Park 70 Marshall Street Kempton Park1619 Johannesburg 1619 2001 (PO Box 61051, Marshalltown, 2107)

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