comair cover - 23772 - sharedata · comair limited comair cover - 23772 9/28/01 12:21 pm page 1....

Annual Report 2001

w w w . b a . c o . z a

Comair Limited

Comair cover - 23772 9/28/01 12:21 PM

Visit us online at www.ba.co.za

Administration

Comair operating as British AirwaysPO Box 7015, Bonaero Park, 1622 South Africa

Sales/administration Telephone (011) 921-0111

Reservations (011) 921-0222

Groups (011) 921-0333

Passenger Services Johannesburg International

Airport (011) 975-9128

Telefax (011) 973-1659/973-3913. Telex 7-46738

Air CARGO (011) 390-2841

Cape TownTerminal 4 and 5

Cape Town International Airport

Private Bag X13, Cape Town

Cape Town International Airport, 7525

Telephone (021) 936-9000. Telefax (021) 934-4729

Port ElizabethPort Elizabeth Airport

PO Box 3222, Humewood, 6013



HarareShop F1 Travel Plaza

Landela House, 29 Mazoe Street, Harare

PO Box 66293, Kopje, Harare

Telephone/Telefax (092634) 73-7200 (092634) 73-9878

DurbanDurban International Airport

PO Durban International Airport, Durban, 4029


WindhoekSanlam Centre, 10th Floor

154 Independence Avenue

PO Box 20800, Windhoek


Victoria Falls1 Flamelily Court Fox Road, Victoria Falls, Zimbabwe

Telephone (09263) 13 5825/2053. Telefax (09263) 13 5825

British Airways Executive ClubTelephone (011) 880-6719. Toll free 0800-11-3833

Telefax (011) 442-6989

G R A P H I C O R2 3 7 7 2

Financial Highlights 2

Executive Management 3

Joint Chairman and Managing Director’s Report 4

Five-year Review 8

Group Value Added Statement 9

Corporate Governance 10

Report of the Independent Auditors 12

Statement of Responsibility by the Board of Directors 13

Statement of Company Secretary 13

Report of the Directors 14

Income Statements 16

Balance Sheets 17

Statement of Changes in Equity 18

Cash Flow Statements 19

Accounting Policies 20

Notes to the Annual Financial Statements 21

Notice of Annual General Meeting 28

Share Price Performance 32

Analysis of Shareholding 32

Administration Inside back cover

Proxy Form Loose

Contents

Comair cover - 23772 9/28/01 12:21 PM

Adding new destinations for your convenience

We can fly you to key destinations around southern Africa, and with British

Airways you can cover the globe.

Lusaka

Johannesburg

Durban

Port ElizabethCape Town

Windhoek

Victoria Falls

Constant innovation

Customers on our British Airways services can now enjoy 40% more legroom, valet parking

at Johannesburg International and quality onboard food made from only the freshest ingredients.

Now anyone can fly

kulula.com is our latest innovation, a no-frills airline that heralds a new era of

affordable travel for all.

Best airline in South Africa - again

For the second consecutive year British Airways has been voted the best domestic and

international airline. Why? Because our passion for customer service drives every employee, every

day, every flight.

Harare

Comair Limited

Comair foldout 23772 9/28/01 12:13 PM Page 2

Your comfort and safety comes first

We are introducing a fleet of state-of-the-art 737-400 aircraft for optimum passenger comfort and safety.

Proud to carry our nation’s heroes

British Airways is proud to be the official carrier of the Springbok rugby team, both locally

and internationally. We are also the official carrier of all major provincial rugby teams.

Training the nation’s finest

Our cadet pilot training programme provides sponsored comprehensive flight

training to candidates from previously disadvantaged backgrounds. These

candidates will be trained in our new 737 flight simulator.

Special services for Executive Club Executive Club, our frequent flyer programme, offers members the

opportunity to earn free flights by flying on British Airways and partner airlines, as

well as by utilising the services of our credit card, car rental and hotels partners. Gold

and silver members can access our global network of Terraces lounges. Our special

services team will take extra care of our members at the airport.

Building enduring relationships

We understand that air travel is an intrinsic part of modern business. Together,

we will structure the package that maximises your corporate travel budget.

Comair foldout 23772 9/28/01 12:13 PM Page 1

Financial Highlights

2

389 777

97

513 498

98

608 997

99

977 036

00

1 160 000

01

Revenue(R’000)

24 418

97

67 286

98

81 932

99

119 913

00

92 962

01

Attributable earnings(R’000)

6,1

97

16,9

98

19,5

99

28,6

00

22,1

01

Earnings per share(cents)

1,1

97

3,3

98

5,0

99

7,0

00

8,0

01

Dividends per share(cents)

June 2001 June 2000 % change

Revenue (R’000) 1 160 000 977 036 19

Operating profit (R’000) 99 326 153 777 (35)

Attributable earnings (R’000) 92 962 119 913 (22)

Earnings per share (cents) 22,1 28,6 (22)

Headline earnings per share (cents) 22,1 28,6 (22)

Dividend per share (cents) 8,0 7,0 14

Executive Management Team

3

From left to right – Back row: Peter Marx, Bert van der Linden, Gidon Novick, Derek Borer, Erik Venter, Glenn Orsmond, Nic Vlok.

Middle row: Piet van Hoven (Managing Director), Eve Liebetrau, Martin Moritz (Deputy Chairman), Stuart Cochrane, Charlie Newell,

Dave Novick (Chairman).

Executive directorsDave Novick CA(SA) (Chairman), Martin Moritz BCom, LLB (Deputy Chairman), Piet van Hoven (Managing Director), Peter Marx

(Flight Operations Director), Glenn Orsmond BCom, CA(SA) (Financial Director), Bert van der Linden (Sales and Marketing

Director), Nic Vlok BSc (Elec) Eng, MBL (Technical and IT Director)

Non-executive directorsDavid Hyde MSc (Eng), CEng, FRAes, DIC, ACGI, Meyer Kahn BA Law MBA DCom(hc) SOE, Dawn Mokhobo BA Social Science,

Rodney Sacks HDip Law, HDip Tax, Dr Peter Welgemoed BCom (Hons), MCom, DCom, Dick Wyatt BSc

Earnings reviewComair performed credibly to achieve

R93 million attributable earnings in a

year of unprecedented challenges and

tough trading conditions. This translates

to 22,1 cents headline earnings per share

representing a 22% decrease on the

28,6 cents reported last year. The year

was characterised by cost pressures

caused by high fuel prices and the

significantly weaker Rand while revenue

suffered from general market

overcapacity, poor yields in the first half

and a stagnant domestic air traffic market

resulting in an average 60% load factor

for the year.

The 19% turnover growth achieved for

the year on higher yields and passenger

growth is encouraging. In particular, yield

growth achieved in the second half has

restored the historically low Comair

break-even load factors and has

contributed towards offsetting the impact

of the R90 million fuel price increases

incurred during the year. Excluding the

exceptional profit earned on the sale of

an aircraft, the operating profit increased

from R25,1 million in the first half to

R48,7 million in the second half.

For the year under review, the Company

changed its depreciation policy to

comply with generally accepted

accounting practice for depreciation. In

terms of the new policy, the Company

depreciates its aircraft assets on a

systematic basis to the estimated residual

value after each asset’s planned useful

life. This change had a R6,4 million

positive impact on the current year

earnings, R9,6 million for the previous

year and a prior year positive retained

income adjustment of R30,4 million.

This policy remains conservative with the

aircraft fleet at year end having a market

value significantly above the disclosed

net book value.

In view of the Company’s considerable

cash holdings, a final cash dividend of

8,0 cents per share has been declared

representing a 14% increase on the

7,0 cents reported last year.

The partial utilisation of cash resources

and debt finance to fund the

R113 million net capital expenditure

incurred during the year contributed

towards the lower net investment income

earned for the period.

Aircraft f leet

The aircraft fleet currently comprises six

Boeing 727-200 aircraft and eleven

Boeing 737-200 aircraft, of which ten

aircraft are owned, six held through

operating leases and one aircraft through

a finance lease.

The fleet evaluation study referred to in

last year’s annual report has been

completed. In terms of the Company

fleet plan, the six Boeing 727-200

aircraft will be phased out in the second

half of the June 2002 financial year to be

replaced with five stage three noise

compliant Boeing 737-400 aircraft and

one Boeing 737-200 aircraft.

The fleet change is not expected to

have a material impact on earnings in the

Joint Chairman and Managing Director’s Report

4

5

medium term with fixed aircraft cost

increases for aircraft rentals and

financing costs being offset by operating

cost savings. The fleet change has been

motivated by a variety of factors:

• In terms of expected noise abatement

regulations, Stage two aircraft will have

a non-addition rule from the year 2003

to be fully phased out by end 2010.

• The Boeing 737-400 aircraft to be

acquired are expected to appreciate in

value in Rand terms to strengthen

Comair’s balance sheet in the longer

term.

• The fuel efficient Boeing 737-400

aircraft will significantly reduce the

Company’s exposure to fuel price

volatility.

• The standardised Boeing 737 fleet

achieved will improve operational

efficiencies derived from better aircraft

scheduling, a common pilot pool and

local pilot training.

• The modern aircraft will ensure Comair

is able to offer a competitive quality

product.

Subsequent to year end, Comair

contracted to acquire the five Boeing

737-400 aircraft from British Airways

Plc. It is planned to finance three aircraft

on balance sheet at a cost of USD66

million and two aircraft off balance sheet

through Rand based operating leases.

Market environment

During the year, to maintain a

competitive timetable, the Company

increased capacity by 8% largely through

the introduction of a thirteenth daily

return flight on the Johannesburg Cape

Town route. The Johannesburg Ndola

route was also introduced through a wet

lease arrangement with Zambian Air

Services.

The current poor domestic load

factors limit the opportunities for

further capacity expansions under the

British Airways brand during the next

financial year.

For the June 2001 financial year

Comair’s passenger volumes grew in line

with the total domestic market growth to

maintain Comair’s market share. With

yields restored to profitable levels, the

major concerns relate to the current flat

domestic passenger demand.

The turmoil in Zimbabwe has had a

severe impact on tourism which impacted

negatively on our Victoria Falls

operations. Our operations in Zambia

have however performed satisfactorily.

Flight operations

During the year, Comair successfully

acquired and brought into service a

Boeing 737 flight simulator acquired

from British Airways Plc at a cost of

R18 million. The resultant ability to train

pilots at home base will achieve pilot

efficiencies, direct training cost savings

and provide a source of revenue by

leasing spare simulator capacity to third

parties.

Human resources

As part of Comair’s commitment to

employment equity and the development

of skills, a cadet pilot training

programme has been introduced for high

potential candidates from disadvantaged

backgrounds. The programme provides

sponsored flying training to candidates

who will graduate as commercial pilots.

In the spirit of promoting training and

development in the industry Comair also

regularly offers practical experience and

work exposure to Travel and Tourism

students from various universities and

training institutions around the country.

Customer service

In support of Comair’s vision of being

Southern Africa’s leading airline, a major

customer service initiative was launched

for all staff in the Company. The Galaxy

programme comprised a training and

communications intervention aimed at

heightening awareness and skill in all

areas of customer service, with particular

emphasis on airline punctuality.

For the second year in a row, Comair was

rated the best domestic airline by the

Association of Southern African Travel

Agents and received the Airports

Company award for the best domestic

airline at Johannesburg and Cape Town

airports.

British Airways was also selected as the

official domestic and international carrier

of the Springbok Rugby team.

The focus on service excellence and

product innovation for all elements of

the British Airways branded product

remains our competitive advantage to

achieve further market share growth.

These service elements include on time

departures and efficient friendly check-

in and on-board services. Product

innovations include superior leg room,

quality meals, excellent frequent flyer

benefits and quality airport lounges.

kulula.com

Subsequent to the financial year end,

Comair, in line with worldwide trends,

launched a “no frills” air service under

the brand kulula.com which commenced

operations on 1 August 2001 on the

Johannesburg Cape Town route. The

initial set-up costs were not material

with the air service being operated with

a leased Boeing 727 aircraft. It is

anticipated that the “no frills” model will

grow the overall domestic market by

appealing to a substantial sector of that

market which could not previously afford

to fly. This is encapsulated by the logo

“Now anyone can fly”. A successful

marketing campaign contributed towards

the promising initial results and it is

expected to introduce further capacity

into kulula.com during the June 2002

financial year.

A key objective of the kulula.com air

service is to achieve a set cost lower

than any potential competitor.

Satisfactory margins are achievable

through a mix of low cost, high volumes

and low yields. Low cost is achieved by

stripping out many product elements

offered by a full service airline with

passengers paying for on-board services

and, most importantly, establishing an

internet-based sales and distribution

6

Joint Chairman and Managing Director’s Report (continued)

7

system. Currently, over 50% of

kulula.com bookings are being made

directly through the internet.

Prospects

Operating margins are expected to

remain under pressure for the June 2002

financial year as domestic airlines strive

to maintain load factors in a declining

market. The benefits of lower crude oil

prices have been negated by the weaker

Rand to maintain continued pressure on

costs. kulula.com is also not expected to

make a material contribution to profits in

its first year of operations. A combination

of these factors makes it difficult to

forecast earnings for the June 2002

financial year.

In the long term, however, Comair’s low

cost structure relative to its competitors

combined with its excellent product

places the airline in a unique position to

grow load factors to benefit from any

economic upturn that may materialise.

kulula.com operating in the “no frills”

market is expected to contribute

significantly to profits in the medium to

longer term.

Appreciation

We wish to express our appreciation to

our loyal customers and trade for their

continued support.

Our thanks and appreciation are due to

members of the Board, management and

employees for their contributions

towards the results achieved during a

difficult trading year. In particular, we

wish to thank the retiring board members

Simon Walker, Carl Michel and Richard

Daw for their valuable contributions. We

welcome to our Board Dick Wyatt and

David Hyde of British Airways Plc and

look forward to the expertise and

experience they will bring to the Board.

We pay tribute to the late Justice

CS Margo who served on the Comair

Board of Directors for fourteen years.

His knowledge was vast, his energy and

enthusiasm for aviation was incredible

and will be greatly missed.

Group income statementRevenue 1 160 000 977 036 608 997 513 498 389 777

Operating profit before exceptional items 73 843 151 807 98 883 87 243 35 738

Profit on sale of aircraft 25 483 1 970 – – –

Operating profit 99 326 153 777 98 883 87 243 35 738

Net investment income 8 706 12 863 34 743 9 498 2 618

Net income before taxation 108 032 166 640 133 626 96 741 38 356

Taxation (15 070) (46 735) (40 059) (34 834) (13 937)

Net income after taxation 92 962 119 905 93 567 61 907 24 419

Sun Air investment written off – – (11 627) – –

Share of associate company income – – – 5 377 –

Outside shareholders’ income – 8 (8) 2 (1)

Earnings attributable to ordinary shareholders 92 962 119 913 81 932 67 286 24 418

Note: Previous year figures have been restated in accordance with the new aircraft depreciation policy.

Group balance sheetAssetsFixed assets 309 989 186 600 185 733 108 989 113 743

Loan to share incentive trust 14 000 15 120 15 120 15 120 –

Unlisted investments 80 493 67 331 56 823 17 877 835

Current assets 372 881 383 834 264 574 157 870 52 254

777 363 652 885 522 250 299 856 166 832

Equity and liabilitiesShare capital and reserves 368 621 309 259 218 747 160 380 90 974

Outside shareholders’ interest – – 507 39 265

Long-term liability 181 237 135 490 133 261 6 584 –

Deferred taxation 31 168 28 284 20 158 11 159 16 836

Current liabilities 196 337 179 852 149 577 121 694 58 757

777 363 652 885 522 250 299 856 166 832

Salient featuresOperating margin 6,4% 15,5% 16,2% 17,0% 9,2%

Profit margin 8,0% 12,3% 15,4% 12,1% 6,3%

Earnings per share (cents) 22,1 28,6 19,5 16,9 6,1

Headline earnings per share (cents) 22,1 28,6 22,3 16,9 6,1

Dividends per share (cents) 8,0 7,0 5,0 3,3 1,1

Weighted ordinary shares issued (’000) 420 000 420 000 420 000 399 000 399 000

Current ratio (times) 1,90 2,13 1,77 1,30 0,89

Gearing ratio 49% 44% 61% – –

Five-year Review f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 1

2001 2000 1999 1998 1997

R’000 R’000 R’000 R’000 R’000

8

Wealth createdGroup revenue 1 160 000 977 036

Cost of materials and services 916 190 712 884

Value added 243 810 264 152

Income from investments 37 114 37 413

Total value added 280 924 100% 301 565 100%

Wealth distributedEmployeesSalaries, wages and related benefits 129 782 46% 98 942 33%

Providers of capitalInterest on loans 28 408 10% 24 550 8%

Dividends to shareholders 33 600 12% 29 400 10%

GovernmentTaxation 15 070 5% 46 735 15%

Re-invested in the Group 74 064 27% 101 938 34%

Depreciation 14 702 11 425

Retained income 59 362 90 513

280 924 100% 301 565 100%

Group Value Added Statement f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 1

9

2001 2000

R’000 % R’000 %

Comair is committed to the principles of

good corporate governance through the

establishment of appropriate reporting

and control structures within the

Company. The Company strives to

substantially comply in all material

respects with the King Report’s Code of

Corporate Practices and Conduct.

Financial statementsThe directors are responsible for the

preparation of the annual financial

statements in a manner which fairly and

accurately presents the state of affairs

and the results of the Company and

Group. The directors are responsible for

adopting sound accounting practices, for

maintaining an adequate and effective

system of internal controls and

accounting records, and for the

safeguarding of assets.

Audit committeeThe Company has an audit committee,

chaired by a non-executive director,

which meets periodically and operates in

terms of formally approved guidelines.

The audit committee also reviews the

effectiveness of the Company’s system of

internal control as reported on by an

internal audit function. The independent

auditors’ appointment is recommended

by the committee and considered

annually by the shareholders.

Chairman: Peter Welgemoed

Members: Rodney Sacks

Dick Wyatt

RemunerationcommitteeThe remuneration committee, comprising

three non-executive directors, reviews

and approves the remuneration and

terms of employment of executive

directors and executive management.

Chairman: Rodney Sacks

Members: David Hyde

Meyer Kahn

Board of DirectorsThe Board of Directors meets regularly

and monitors the performance of

executive management through review of

financial reports and provides strategic

guidance for management. The roles of

Chairman and Managing Director have

been separated. The Group Secretary

ensures that statutory and other pro-

cedures are followed and can only be

removed from his duties by means of a

directors’ resolution. The Board is consti-

tuted to ensure a fair balance between

executive and non-executive directors.

Non-executivedirectorsNon-executive directors offer

independent judgement of executive

management and, apart from their fees

and, in some cases, shareholding, there

are no extraneous factors that materially

affect their judgement. Their fees are

paid under a laid-down tariff that reflects

their committee time and levels of

responsibility.

Employment equityComair is committed to achieving the

goals of employment equity legislation

and has incorporated the principle of

employment equity into its strategic

vision and business strategy.

Code of EthicsA Code of Ethics has been implemented

as part of the corporate governance of

the Group. The code commits the Group

to the highest standards of behaviour

when dealing with all stakeholders.

Corporate Governance

10

11

Comair Limited’s new Operations Centre and Flight Training Centre was completed in May 2001.

Report of the Independent Auditors

12

To the members of ComairGroupWe have audited the annual financial statements and

Group annual financial statements of Comair Limited set

out on pages 14 to 27 for the year ended 30 June 2001.

These financial statements are the responsibility of the

Company’s directors. Our responsibility is to report on

these financial statements based on our audit.

ScopeWe conducted our audit in accordance with statements

of South African Auditing Standards. Those standards

require that we plan and perform the audit to obtain

reasonable assurance that the financial statements are

free of material misstatement. An audit includes:

• Examining, on a test basis, evidence supporting the

amounts and disclosures in the financial statements;

• Assessing the accounting principles used and

significant estimates made by management; and

• Evaluating the overall financial statement

presentation.

We believe that our audit provides a reasonable basis for

our opinion.

Audit opinionIn our opinion, the financial statements fairly present, in

all material respects, the financial position of the

Company and the Group at 30 June 2001, and the

results of their operations and cash flows for the year

then ended in accordance with generally accepted

accounting practice and in the manner required by the

Companies Act.

FFiisshheerr HHooffffmmaann PPKKFF ((JJHHBB)) IINNCC

Chartered Accountants (SA)

Registration number 1994/001166/21

Registered Accountants and Auditors

Johannesburg

27 August 2001

Statement of Responsibility by the Board of Directors

13

The directors are responsible for the preparation,

integrity and fair presentation of the financial statements

and other financial information included in this report.

The financial statements, presented on pages 14 to 27,

have been prepared in accordance with generally

accepted accounting practice, and include amounts

based on judgements and estimates made by

management.

The going-concern basis has been adopted in preparing

the financial statements. The directors have no reason

to believe that the Company or the Group will not be

going concerns in the foreseeable future based on

forecasts and available cash resources. The financial

statements support the viability of the Company and

the Group.

The financial statements have been audited by the

independent accounting firm, Fisher Hoffman PKF (JHB)

INC, which was given unrestricted access to all financial

records and related data, including minutes of all

meetings of shareholders, the Board of Directors and

committees of the Board. The directors believe that all

representations made to the independent auditors

during the audit were valid and appropriate.

The financial statements, which appear on pages 14 to

27, were approved by the Board of Directors on

27 August 2001 and signed on its behalf.

Chairman Managing director

27 August 2001 27 August 2001

Statement of Company Secretary

I, Derek Henry Borer, being the Company Secretary of

Comair Limited, certify that all returns required of a

public company, have in respect of the year under

review been lodged with the Registrar of Companies and

that all such returns are true, correct and up to date.

D H Borer

Company Secretary

27 August 2001

Report of the Directors

14

The directors have pleasure in presenting their report

which forms part of the audited financial statements of

the Company and of the Group for the year ended

30 June 2001.

Nature of the businessComair Limited, trading as British Airways, provides

scheduled air services in Southern Africa between

Johannesburg and Cape Town, Durban, Port Elizabeth,

Harare, Victoria Falls, Lusaka and Windhoek, as well

as between Cape Town and Durban. Aircraft lease

services are provided on the Johannesburg Ndola route.

The airline currently operates a fleet of seventeen jet

aircraft.

Financial resultsFull details of the financial results for the year ended

30 June 2001 are set out on pages 14 to 27.

DividendsThe directors of Comair have resolved to declare a

dividend of 8,0 cents per share to all shareholders.

The last day to trade (“CUM” the dividend) in order to

participate in the dividend will be Friday, 14 September

2001. The share of Comair will commence trading “EX”

the dividend from the commencement of business on

Monday, 17 September 2001 and the Record Date will

be Friday, 21 September 2001. Dividend cheques will

be posted and electronic dividend payments made to

shareholders on 25 September 2001.

Share capitalThere have been no changes in the authorised share

capital, issued share capital, or the share premium

account during the year under review.

SubsidiariesDetails of the Company’s sole subsidiary, Commuter

Handling Services (Pty) Limited, are recorded in the

notes to the annual financial statements. The interest in

the subsidiary contributed a profit of R2 417 (2000:

R1 341 507 loss) towards the Group after tax earnings.

Events subsequent to year endSubsequent to year end, Comair launched a “no frills”

air service which successfully commenced operations on

the Johannesburg Cape Town route on 1 August 2001

utilising a leased Boeing 727-200 aircraft. Set-up costs

were not material. The air service is not expected to

have a material impact on earnings in the June 2002

financial year.

The Company has committed to acquiring five Stage 3

noise-compliant Boeing 737-400 aircraft from British

Airways Plc. The aircraft will be phased in during the

second half of the June 2002 financial year to replace

the Boeing 727 fleet. It is planned to acquire two aircraft

through Rand-based operating leases and to finance

three aircraft on balance sheet at a cost of US$66 million.

The fleet change is not expected to have a material

impact on earnings.

15

Company Secretary D H Borer

1 Marignane Drive

Bonaero Park

1619

Directorate shareholdingThe beneficial direct and indirect interests of directors

holding in excess of 1% of the issued shares of Comair

Limited as at financial year-end are as follows:

2001 2000

Number of ordinary

shares 156 562 893 165 723 313

Percentage

shareholding (%) 37,3 39,5

Directors Appointed ResignedD Novick – Chairman 30 June 1970

M D Moritz – Deputy Chairman 15 February 1979

P van Hoven – Managing Director 10 November 1973

R C Sacks 3 July 1981

B J van der Linden (Neth.) 3 July 1981

The Hon. Justice C S Margo 3 November 1987 Deceased

Dr P J Welgemoed 1 November 1994

N Vlok 11 September 1995

P R Marx (Br.) 6 December 1999

G W Orsmond 6 December 1999

S E J Walker (Br.) 16 February 2000 5 March 2001

C H Michel (Br.) 16 March 2000 5 March 2001

D N M Mokhobo 18 April 2000

J M Kahn 1 May 2000

R W Daw (Br.) 5 March 2001 5 August 2001

R M Wyatt (Br.) 5 March 2001

D Hyde (Br.) 27 August 2001

Revenue 1 160 000 977 036 1 158 460 975 315

Operating profit before

exceptional item 73 843 151 807 73 782 151 777

Profit on disposal of aircraft 25 483 1 970 25 483 1 933

Operating profit 1 99 326 153 777 99 265 153 710

Net investment income 2 8 706 12 863 8 762 12 928

Net income before taxation 108 032 166 640 108 027 166 638

Taxation 3 (15 070) (46 735) (15 070) (46 735)

Net income after taxation 92 962 119 905 92 957 119 903

Outside shareholders’ interest – 8 – –

Earnings attributable to ordinary

shareholders 92 962 119 913 92 957 119 903

Headline earnings per share (cents) 4 22,1 28,6

Earnings per share (cents) 4 22,1 28,6

Income Statements f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 1

Group Company

2001 2000 2001 2000

Notes R’000 R’000 R’000 R’000

16

Balance Sheets a t 3 0 J u n e 2 0 0 1

17

AssetsNon-current assets 404 482 269 051 403 699 267 675

Fixed assets 7 309 989 186 600 307 961 183 979

Loan to share incentive trust 8 14 000 15 120 14 000 15 120

Investments 9 80 493 67 331 81 738 68 576

Current assets 372 881 383 834 372 635 382 981

Inventory 10 8 391 7 393 8 391 7 329

Accounts receivable 87 907 60 587 87 905 60 720

Taxation 9 355 – 9 355 –

Cash and cash equivalents 267 228 315 854 266 984 314 932

777 363 652 885 776 334 650 656

Equity and l iabil it iesCapital and reserves 368 621 309 259 368 605 309 248

Share capital 11 4 200 4 200 4 200 4 200

Share premium 8 456 8 456 8 456 8 456

Retained income 355 965 296 603 355 949 296 592

Non-current liabilities 212 405 163 774 212 405 163 774

Long-term liability 12 181 237 135 490 181 237 135 490

Deferred taxation 31 168 28 284 31 168 28 284

Current liabilities 196 337 179 852 195 324 177 634

Accounts payable 152 671 129 370 151 657 127 154

Aircraft maintenance provision 10 066 15 892 10 067 15 892

Dividends 33 600 29 400 33 600 29 400

Taxation – 5 190 – 5 188

777 363 652 885 776 334 650 656

Group Company

2001 2000 2001 2000

Notes R’000 R’000 R’000 R’000

GroupBalance at 1 July 1999 4 200 8 456 175 657 188 313

Net profit for the year – – 119 913 119 913

Prior year adjustment – – 30 433 30 433

Dividend paid – – (29 400) (29 400)

Balance at 30 June 2000 4 200 8 456 296 603 309 259


Dividend paid – – (33 600) (33 600)

Balance at 30 June 2001 4 200 8 456 355 965 368 621

CompanyBalance at 1 July 1999 4 200 8 456 175 656 188 312


Prior year adjustment – – 30 433 30 433

Dividend paid – – (29 400) (29 400)

Balance at 30 June 2000 4 200 8 456 296 592 309 248


Dividend paid – – (33 600) (33 600)

Balance at 30 June 2001 4 200 8 456 355 949 368 605

Statement of Changes in Equity f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 1

Share Share Retained

capital premium income Total

R’000 R’000 R’000 R’000

18

Cash Flow Statements f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 1

19

Cash from operating activities 17 117 113 813 17 626 112 776

Cash receipts from customers 1 121 294 973 009 1 119 889 967 957

Cash paid to suppliers (1 051 574) (806 544) (1 049 719) (802 598)

Cash generated by operations 13 69 720 166 465 70 170 165 359

Net investment income received 14 2 160 2 355 2 217 2 421

Taxation paid 15 (25 363) (34 007) (25 361) (34 004)

Cash available from operating activities 46 517 134 813 47 026 133 776

Dividends paid 16 (29 400) (21 000) (29 400) (21 000)

Cash utilised in investing activities (112 610) (10 321) (112 441) (9 948)

Additions to fixed assets (152 146) (49 384) (151 977) (48 679)

Proceeds on disposal of assets 17 39 536 39 063 39 536 39 000

Investment in unlisted companies – – – (269)

Cash generated by financing activities 46 867 2 230 46 867 2 230

Decrease in loan to share incentive trust 1 120 – 1 120 –

Increase in long-term borrowings 45 747 2 230 45 747 2 230

Net (decrease)/increase in cash

and cash equivalents (48 626) 105 722 (47 948) 105 058

Cash and cash equivalents at the

beginning of the year 315 854 210 132 314 932 209 874

Cash and cash equivalents at the

end of the year 267 228 315 854 266 984 314 932

Group Company

2001 2000 2001 2000

Notes R’000 R’000 R’000 R’000

Group Company

2001 2000 2001 2000

Notes R’000 R’000 R’000 R’000

Accounting Policies

20

The financial statements are prepared on the historical

cost basis and incorporate the following principal

accounting policies in compliance with generally

accepted accounting practice in South Africa.

Revenue

Revenue comprises all airline-related revenue earned

and is recognised when the transportation service is

provided.

Foreign currencies

Foreign currency transactions are recorded at the

exchange rate ruling on the transaction dates. Assets and

liabilities designated in foreign currencies are translated

at rates of exchange ruling at the balance sheet date, or

the forward rates where applicable. Exchange differences

arising are taken to income.

Deferred taxation

Deferred taxation is provided using the balance sheet

liability method. Full provision is made for all temporary

differences between the taxation base of an asset or

liability and its balance sheet carrying amount. Deferred

taxation assets are raised in respect of assessed losses

where it is probable that future taxable profits will be

available in the foreseeable future.

Fixed assets

Freehold land and buildings are stated at cost and are

not depreciated.

Aircraft and related equipment, vehicles, furniture,

computers and other equipment are depreciated on a

systematic basis, which is estimated to amortise the

assets to their anticipated residual values over their

planned useful lives. Expenditure relating to aircraft and

related equipment is capitalised to the extent that it

improves the condition of the asset beyond its original

assessed standard of performance.

Inventory

Inventory is stated at the lower of cost and estimated net

realisable value. Cost is determined on the first-in first-

out basis.

Aircraft maintenance

Aircraft maintenance is charged to the income statement

based on a contracted comprehensive maintenance rate

per hour flown as charged by the maintenance provider.

Known costs for maintenance contract exclusions are

provided for in an aircraft maintenance provision based

on time expired to incurring the cost.

Retirement funds

Current contributions to the Group’s defined

contribution retirement funds are based on current

service and current salary and are recognised in the

results for the year.

Medical funds

Medical aid contributions are recognised as an expense

in the period during which the employees render

services to the Group. Post-retirement medical aid

contributions are charged against income in the year

they become payable.

Notes to the Annual Financial Statements f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 1

21

1. Operating profitOperating profit is stated after incorporating

the following items:

Audit fees 202 186 180 165

Depreciation – aircraft assets 11 289 8 943 11 289 8 747

Depreciation – other fixed assets 3 413 2 482 2 649 1 833

Directors’ emoluments 6 064 4 280 6 064 4 280

– for services as directors 181 183 181 183

– for managerial and other services 4 787 3 715 4 787 3 715

– retirement and medical benefits 1 096 382 1 096 382

Rentals under operating leases 32 218 28 112 32 218 27 513

– property rentals 2 170 786 2 170 311

– aircraft rentals 29 853 27 066 29 853 27 066

– equipment and vehicle rentals 195 260 195 136

Profit on disposal of fixed assets 25 483 1 970 25 483 1 933

2. Net investment incomeInterest expense (28 408) (24 550) (28 261) (24 340)

Interest income 7 158 17 041 7 067 16 897

Preference dividend income 29 956 20 372 29 956 20 371

8 706 12 863 8 762 12 928

Group Company

2001 2000 2001 2000

R’000 R’000 R’000 R’000

22

Notes to the Annual Financial Statements ( c o n t i n u e d )

3. TaxationSouth African normal tax

Current 8 065 35 946 8 065 35 946

– prior year underprovision – 260 – 260

8 065 36 206 8 065 36 206

Deferred 4 252 7 863 4 252 7 863

– as previously stated – 3 752 – 3 752

– previous year adjustment – 4 111 – 4 111

Secondary tax on companies 2 753 2 666 2 753 2 666

15 070 46 735 15 070 46 735

Reconciliation of rate of taxation % % % %

South African normal tax rate 30,0 30,0 30,0 30,0

Adjusted for: (18,6) (3,6) (18,6) (3,6)

Disallowable expenditure 0,1 0,1 0,1 0,1

Permanent differences (18,7) (3,7) (18,7) (3,7)

Secondary tax on companies 2,5 1,6 2,5 1,6

Effective rate 13,9 28,0 13,9 28,0

4. Headline earningsEarnings attributable to ordinary shareholders 92 962 119 913 92 957 119 903

Weighted ordinary shares in issue 420 000 420 000

Earnings per share (cents) 22,1 28,6

Headline earnings per share (cents) 22,1 28,6

5. Dividend paidOrdinary:

– Final dividend of 8,0 cents per share (2000 : 7,0 cents) 33 600 29 400 33 600 29 400

Group Company

2001 2000 2001 2000

R’000 R’000 R’000 R’000

23

6. Retained incomeBalance at the beginning of the year as previously reported 296 603 175 657 296 592 175 656

Prior year adjustment (note 18) – 30 433 – 30 433

Balance at the beginning of the year as restated 296 603 206 090 296 592 206 089

7. Fixed assetsProperty and buildings

Cost 6 736 6 506 6 574 6 428

Accumulated depreciation (761) (714) (661) (636)

Book value 5 975 5 792 5 913 5 792

Aircraft and related equipment

Cost 329 510 204 093 327 642 202 277

Accumulated depreciation (38 431) (31 199) (37 497) (30 483)

Book value 291 079 172 894 290 145 171 794

Vehicles and equipment

Cost 27 466 19 250 22 390 14 434

Accumulated depreciation (14 531) (11 336) (10 487) (8 041)

Book value 12 935 7 914 11 903 6 393

Total fixed assets 309 989 186 600 307 961 183 979

Fixed assets – reconciliation of carrying value

Property and buildings

Carrying value at the beginning of the year 5 792 6 206 5 792 6 206

Additions 230 20 146 20

Disposals – (415) – (415)

Depreciation (47) (19) (25) (19)

Carrying value at the end of the year 5 975 5 792 5 913 5 792

Group Company

2001 2000 2001 2000

R’000 R’000 R’000 R’000

24


7. Fixed assets (continued)

Aircraft and related equipmentCarrying value at the beginning of the year 172 894 172 906 171 794 171 900

Additions 143 484 45 940 143 431 45 650

Disposals (13 791) (37 009) (13 791) (37 009)

Depreciation (11 508) (8 943) (11 289) (8 747)


Vehicles and equipmentCarrying value at the beginning of the year 7 914 6 621 6 393 4 841

Additions 8 431 3 365 8 400 2 947

Disposals (263) (97) (263) –

Depreciation (3 147) (1 975) (2 627) (1 395)


Total fixed assets 309 989 186 600 307 961 183 979

8. Loan to Comair Share Incentive Trust

This loan relates to the Comair Share Incentive Trust acquisition

of 21 million ordinary shares at 72 cents per share on 30 June 1998.

The term of the loan is unspecified and bears no interest. 14 000 15 120 14 000 15 120

9. Investments (unlisted)Subsidiary – Commuter Handling Services (Pty) Limited

69 shares at cost (67% shareholding) 1 1

Loan 2 586 2 586

Provision against investment (1 342) (1 342)

The loan is interest free and there are no fixed repayment terms. 1 245 1 245

Amber (Pty) Limited preference shares

5 549 shares at R10 000 per share at cost 55 490 55 490 55 490 55 490

Add dividend accrued 25 003 11 841 25 003 11 841

80 493 67 331 80 493 67 331

Total valuation of unlisted investments 80 493 67 331 81 738 68 576

Group Company

2001 2000 2001 2000

R’000 R’000 R’000 R’000

25

10. InventoryAircraft spares 5 523 5 201 5 523 5 201

Catering equipment and consumables 2 868 2 192 2 868 2 128

8 391 7 393 8 391 7 329

11. Share capitalAuthorised

1 000 000 000 ordinary shares of 1 cent each 10 000 10 000 10 000 10 000

1 000 000 000 “N” ordinary shares of 0,01 cent each 100 100 100 100

1 000 000 preference shares of 1 cent each 10 10 10 10

10 110 10 110 10 110 10 110

Issued

420 000 000 ordinary shares of 1 cent each 4 200 4 200 4 200 4 200

4 200 4 200 4 200 4 200

12. Long-term liabil it iesAfrican Merchant Bank loan (AMB)

Aircraft financing and working capital loan from AMB of which

the capital is repayable in full on 31 May 2004. The interest is

payable every six months at 19% per annum. Two aircraft

mortgages serve as collateral covering security as per note 7. 135 490 135 490 135 490 135 490

Laroc Aviation Limited

Aircraft finance lease agreement which is payable in equal

quarterly payments of R4 665 959. The last payment is due

on 31 August 2004. Interest is calculated at 13% per annum. 45 747 – 45 747 –

181 237 135 490 181 237 135 490

Group Company

2001 2000 2001 2000

R’000 R’000 R’000 R’000

13. Cash generated by operationsOperating profit 99 326 153 777 99 265 153 710

Depreciation and other non-cash items 14 702 11 425 13 938 10 580

Outside shareholders’ loan movement – (499) – –

Decrease in aircraft maintenance provision (5 826) (256) (5 825) (256)

Provision against subsidiary investment – – – 1 342

Profit on disposal of fixed assets (25 483) (1 970) (25 483) (1 933)

Cash from operations before working capital changes 82 719 162 477 81 895 163 443

Decrease/(increase) in working capital (12 999) 3 988 (11 725) 1 916

– Inventory (998) (3 741) (1 061) (3 677)

– Accounts receivable (28 702) (9 798) (27 187) (13 164)

– Accounts payable 16 701 17 527 16 523 18 757

69 720 166 465 70 170 165 359

14. Net investment income receivedInterest paid (21 792) (24 550) (21 645) (24 340)

Interest received 7 157 17 041 7 067 16 897

Preference dividend received 16 795 9 864 16 795 9 864

2 160 2 355 2 217 2 421

15. Taxation paidUnpaid at the beginning of year (5 190) (586) (5 188) (581)

Current year charge (10 818) (38 611) (10 818) (38 611)

Unpaid/(prepaid) at end of year (9 355) 5 190 (9 355) 5 188

(25 363) (34 007) (25 361) (34 004)

16. Dividends paidUnpaid at the beginning of year (29 400) (21 000) (29 400) (21 000)

Charged in income statement (33 600) (29 400) (33 600) (29 400)

Unpaid at end of year 33 600 29 400 33 600 29 400

(29 400) (21 000) (29 400) (21 000)


Group Company

2001 2000 2001 2000

R’000 R’000 R’000 R’000

26

27

17. Proceeds on disposal of assetsNet book value of assets disposed 14 053 37 093 14 053 37 067

Profit realised on disposal 25 483 1 970 25 483 1 933

Proceeds 39 536 39 063 39 536 39 000

18. Prior year adjustmentThe depreciation policy was revised during the year in order to comply with AC 123. Fixed assets are depreciated at rates

deemed suitable to reduce the depreciable amount of the assets over their planned useful lives to their residual values.

The change in accounting policy had a positive effect on the earnings for the current year of R9,1 million (R6,4 million

after tax) and for the previous financial year the positive earnings impact was R13,7 million (R9,6 million after tax). The

effect on prior year adjusted retained earnings was an increase of R43,5 million (R30,4 million after tax).

19. Retirement benefitsPost-retirement benefitsThe Group contributed to several retirement funds, all of which are governed by the Pension Funds Act 1956. The funds

cover the majority of its employees substantially, all of which is covered by defined contribution schemes. Contributions

paid by Group companies are charged against income as incurred.

An actuarial valuation was performed on the Comair Pension Fund in March 2001 for the year ended June 2000. The fund

was reported to be actuarially sound.

Post-retirement medical aid benefitsThe Group companies subsidise the post-retirement medical aid contributions of certain pensioners. These subsidies

which are not significant are charged to income in the year they become payable.

20. Capital commitmentsSubsequent to the financial year-end Comair has contracted to acquire five Boeing 737-400 aircraft from British Airways

Plc. It is planned to finance three aircraft on balance sheet at a cost of US$66 million. Two aircraft will be acquired

through Rand-based operating leases.

21. Lease commitmentsThe Group lease commitments for next year are R16,7 million (R30 million).

22. Cash encumberedThe Company has pledged cash investments totalling R11 million in respect of aircraft and property rental obligations.

23. Borrowing powersThere are no restrictions on the Group’s borrowing power.

Group Company

2001 2000 2001 2000

R’000 R’000 R’000 R’000

Notice of Annual General Meeting

28

Notice is hereby given that the Annual General Meeting

of Members of Comair Limited will be held at the

Comair Board Room, Comair Head Office, 1 Marignane

Drive, Corner Atlas Road, Bonaero Park, Kempton Park,

1619, on Friday, 26 October 2001, at 12:00 for the

following purposes:

1. To consider the Annual Financial Statements for

the year ended 30 June 2001.

Ordinary resolutions2.1 To appoint directors in place of Messrs D Novick,

B J van der Linden and Dr P J Welgemoed, who

retire by rotation at the Annual General Meeting

but, being eligible, offer themselves for

re-election.

2.2 Mr R M Wyatt was appointed as Director of the

Company on 5 March 2001, and Mr D Hyde was

appointed as a Director of the Company on

6 August 2001, and in terms of the Articles of

Association of the Company retire at the meeting,

but being eligible, offer themselves for re-election.

3. To authorise the directors to determine the

remuneration of the auditors and to appoint them

for the ensuing year.

4. To place the unissued shares of any class in the

capital of the Company under the control of the

directors, who shall be authorised to allot such

shares at such prices, on such terms and condi-

tions and at such times as they deem fit, subject to

the provisions of the Companies Act, No. 61 of

1973, as amended, and the rules and requirements

of the Johannesburg Securities Exchange (JSE);

5. To grant the directors the specific authority, in

terms of the requirements of the JSE, to issue the

unissued shares of any class in the capital of the

Company for cash as and when suitable

circumstances arise, subject to the following

limitations:

(a) that this authority shall not extend beyond the

date of the next Annual General Meeting or

beyond 15 (fifteen) months from the date of

this Annual General Meeting, whichever is the

earlier;

(b) that a paid press announcement giving full

details, including the impact on net asset value

and earnings per share, will be published at the

time of any issue representing, on a

cumulative basis within one year, 5% or more

of the number of shares of that class in issue

prior to the issues;

(c) that issues for cash in aggregate in any one year

will not exceed 10% of the number of shares of

any class in the Company’s issued share capital,

provided further that such issues shall not in

aggregate in any three-year period exceed 15%

of the Company’s issued share capital; and

(d) that in determining the price at which an issue

of shares will be made in terms of this

authority, the maximum discount permitted

will be 10% of the average closing price of the

shares in question, as determined over

30 (thirty) days prior to either the date of the

paid press announcement or, where no

announcement is required and none has been

made, the date of issue of the shares.

As more than 35% of the Company’s issued shares

are in the hands of the public as defined by the

JSE, the approval of a 75% majority of votes cast

by shareholders present or represented by proxy

at this meeting is required for this resolution to

become effective.

6. That the Trust Deed constituting the Comair

Share Incentive Trust (“the Trust”) signed by the

first trustees thereof on 18 June 1998 at

Johannesburg, as amended by a resolution of the

Company passed in general meeting on

29

21 October 1998 at Bonaero Park and by a

resolution of the Board of Trustees of the Trust

passed at a meeting of the Board of Trustees held

at Bonaero Park on the 28th day of September

1998 (“the Trust Deed”) be amended in the

manner contemplated in paragraph 2 hereof,

subject in all respects to the suspensive conditions

contemplated in paragraph 1 hereof.

1. The coming into effect of the amendments to the

trust deed contemplated in paragraph 2 hereof

(“the amendments”) are subject in all respects to

the fulfilment of the following suspensive

conditions, namely that –

1.1 the JSE Securities Exchange South Africa

approves, insofar as may be necessary, the

amendments; and

1.2 the Board of Trustees of the Comair Share

Incentive Trust approve the amendments.

2. Subject to the resolutions in this paragraph

2 becoming unconditional in accordance with

paragraph 1 hereof, the Trust Deed shall be

amended with effect from 26 October 2001,

as follows:

2.1 Clause 16.2.7 of the Trust Deed shall be

amended to read:

16.2.7 may, in the case of an option granted

to a beneficiary who has been in the

employ of the Company for not less

than 1 (one) year as at the option

date in question, be exercised

as follows:

16.2.7.1 33,1/3% (thirty three and

one third per cent) thereof

on or after the 1st (first)

anniversary calculated as

from the option date;



on or after the 2nd (second)


from the option date;



on or after the 3rd (third)


from the option date,

it being recorded that –

(a) no beneficiary shall be entitled to exercise an

option in respect of any number of shares

which comprise less than 33,1/3% (thirty

three and one third per cent) of the percentage

in question (as contemplated in clauses

16.2.7.1 – 16.2.7.3 [both inclusive]);

(b) if a beneficiary fails to exercise an option in

respect of any tranche of shares as at any date

stipulated in this clause 16.2, he/she will be

entitled to do so on any succeeding option

date, whether such option falls on 1 January or

1 July, on a cumulative basis;

(c) if the relevant provisions of clause 17 are

applicable, then notwithstanding the

provisions of this clause 16.2, the secretary or

the trustees shall, subject to the provisions of

clause 18, forthwith, against payment of the

stamp duty, if any, payable thereon, release

such shares to the beneficiary concerned or

his/her executor or the legal representative of

the beneficiary, as the case may be;”.

2.2 Clause 16.2.8 of the trust deed shall be

amended to read:

16.2.8 may, in the case of an offer granted to

a beneficiary who has been in the

Notice of Annual General Meeting

30

employ of the Company for not less

than 1 (one) year as at the offer date in

question, be accepted in full within

90 (ninety) days of such offer date, in

respect of the entire tranche of scheme

shares, against payment of the share

debt in respect thereof in full, together

with the stamp duty, if any, payable

thereon, provided that the secretary or

the trustees shall only release such

shares together with any capitalisation

shares and dividends linked thereto in

the following tranches:

(a) as to 33,1/3% (thirty three and

one third per cent) thereof on or

after the 1st (first) anniversary of

the offer date;

(b) as to 33,1/3% (thirty three and


after the 2nd (second)

anniversary of the offer date;

(c) as to 33,1/3% (thirty three and


after the 3rd (third) anniversary

of the offer date;

provided that if the relevant provisions

of clause 17 are applicable, then,

notwithstanding the provisions of this

clause 16.2.8, the secretary or trustees

shall, subject to the provisions of

clause 18, forthwith release such

shares from retention in terms of this

clause 16.2.8 to the beneficiary

concerned or his/her executor, as the

case may be”.

2.3 An additional clause 16.7 shall be inserted

into the Trust Deed, and shall read as follows:

16.7

16.7.1 All and any options granted and offers

made to employees at any time prior

to 26 October 2001 and validly

existing and of full force and effect as

at 26 October 2001 shall, (“the

existing options and offers” or “the

existing options” and “the existing

offers”), notwithstanding the date on

which such offers or options were so

granted or made, be governed in all

respects by the provisions of clause

16.2.7 or 16.2.8 hereof, as the case

may be.

16.7.2 Accordingly, notwithstanding the dates

on which –

16.7.2.1 the existing options were, at

the time of their issue,

capable of being exercised; or

16.7.2.2 the shares subject to the

existing offers were, at the

time of their issue, capable of

being released, as the case

may be, the employees to

whom the existing options

have been granted or existing

offers have been made shall

be entitled to exercise such

options or procure the release

of the shares subject to such

offers within the time period

contemplated in clause

16.2.7 or 16.2.8, as the case

may be.

16.7.3 Any employee to whom an existing

option has been granted or an existing

offer has been made shall be entitled,

on any option date or offer date, as the

31

case may be, which occurs on or after

26 October 2001, to exercise such

portion of the existing options or

procure the release of such portion of

the shares comprising existing offers as

is contemplated in terms of the

provisions of clause 16.2.7 or 16.2.8

hereof, as the case may be, having

regard to the date on which the

existing option was granted or the

existing offer made. Thereafter, in the

case of existing options, such

employee shall be entitled to exercise

such options on any succeeding option

date, whether such option date falls on

1 January or 1 July, on a cumulative

basis, in accordance with the

provisions of clause 16.2.7(b)”.

7. Derek Henry Borer be and is hereby authorised

on behalf of the Company to sign all documents

and all and any acts whatsoever as may be

necessary in order to give effect to the special and

ordinary resolutions.

Special resolutionsTo consider and, if deemed fit, pass the following special

resolution with or without modification in the manner

required by the Companies Act, No. 61 of 1973 (as

amended):

8. Special resolution number 1Resolved that the Company hereby approves, as a

general approval as contemplated in Section 85(2)

and Section 85(3) of the Companies Act, 61 of

1973 (as amended) (“the Companies Act”), the

acquisition by the Company from time to time of

issued shares of the Company, upon such terms

and conditions and in such amounts as the

directors of the Company may from time to time

decide, but subject always to the provisions of the

Companies Act and the Listings Requirements

from time to time of the JSE, which approval shall

endure until the forthcoming annual general

meeting of the Company (whereupon this

approval shall lapse unless it is renewed at the

aforementioned annual general meeting, provided

that it shall not extend beyond 15 (fifteen)

months after the date of registration of this

Special Resolution No. 1).

The reason for and effect of the passing of this

Special Resolution is so as to enable the Company

to acquire its own issued shares from time to time

upon the terms and conditions and in the amounts

as the directors may from time to time decide,

subject to certain statutory provisions.

Other business9. To transact such other business as may be

transacted at an annual general meeting.

A member entitled to attend, to speak and vote is

entitled to appoint a proxy or proxies to attend,

speak and on a point to vote in his/her stead and

the person so appointed need not be a member. A

form of proxy is enclosed for this purpose and

should be forwarded to reach the principal place

of business of the Company (1 Marignane Drive,

Corner Atlas Road, Bonaero Park, Kempton Park,

1619 [PO Box 8050, Bonaero Park, 1622]) not

less than 48 hours before the time fixed for the

holding of the meeting.

By order of the Board

Derek Borer

Company Secretary

27 August 2001

Market price (cents per share)

Closing (30 June) 165 260

High 275 310

Low 117 180

Closing price/earnings ratio 7,5 9,1

Number of shares in issue

At year-end (millions) 420 420

Weighted average (millions) 420 420

Volume of shares traded (millions) 70,9 68,6

Volume of shares traded to number in issue (%) 16,9 16,3

Value of shares traded (millions) 130,7 139,4

Share Price Performance

2001 2000

R’000 R’000

Number of Number

shareholders % shares

32

Analysis of shareholding

Portfolio size1 – 1 000 1 692 70,6 489 993

1 001 – 5 000 467 19,5 1 370 053

5 001 – 10 000 116 4,8 902 581

10 001 – 50 000 78 3,3 1 310 035

50 001 – 100 000 9 0,4 649 990

100 001 and over 33 1,4 415 277 348

2 395 100,0 420 000 000

ShareholdersIndividuals 2 263 94,5 4 628 590

Companies 25 1,0 79 054 180

Staff share incentive trust 1 0,0 20 595 416

Institutions, nominees and trusts 106 4,4 315 721 814

2 395 100 420 000 000

Proxy Form

PROXY FORM FOR ANNUAL GENERAL MEETINGCOMAIR LIMITED(Reg. No. 1967/006783/06)

Incorporated in the Republic of South Africa(“Comair” or the Company)

For use at the Annual General Meeting of shareholders to be held at Bonaero Park on 26 October 2001 at 12:00 (“theAnnual General Meeting”).I/We being a shareholder of the Company hereby appoint (see note 1)

(Please print)

1. or failing him/her

2. or failing him/her

3. The Chairman of the Annual General Meetingas my/our proxy to vote for me/us at the annual general meeting which will be held in Bonaero Park on 26 October 2001at 12:00, at the Comair Head Office, 1 Marignane Drive, Corner Atlas Road, Bonaero Park, Kempton Park, 1619, for thepurpose of considering, and, if deemed fit, passing, with or without modifications, the resolutions to be proposed thereatand at each adjournment or postponement thereof, and to vote for/or against the resolutions and/or abstain from votingin respect of the shares in the issued share capital of the Company registered in my/our name/s (see note 2) as follows

RESOLUTIONS For Against Abstain

1. Resolutions to appoint Directors

D NOVICK

B J VAN DER LINDEN

P J WELGEMOED

R W WYATT

D HYDE

2. Resolution to appoint and determine the auditors’ remuneration.

3. Resolution to grant authority to the directors to issue the unissued shares of the Company.

4. Resolution authorising the issue of shares for cash other than by way of rights issue

5. Resolution to amend the provisions of the Comair Share Incentive Trust

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

7. Special Resolution No.1. Acquisition by the Company of its issued shares

And generally to act as my/our proxy at the said Annual General Meeting.

(Tick whichever is applicable. If no direction is given, the proxy holder will be entitled to vote or abstain from voting as theproxy holder deems fit.)

Signed at on 2001

Signature

assisted by me (where applicable)

Number of shares held

Ordinary

A member entitled to attend, speak and vote is entitled to appoint a proxy/ies to attend, speak and, on a poll, vote inhis/her stead, and such proxy need not also be a member of the Company.

Notes

1. A shareholder may insert the name of a proxy or names of two alternative proxies of the shareholder’s choice in the

space/s provided, with or without deleting “the Chairman of the Annual General Meeting”, but any such deletion must

be initialled by the shareholder. The person whose name appears first on the proxy form or whose name has not been

deleted, will be entitled to act as proxy to the exclusion of those whose names follow.

2. A shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes

exercisable by that shareholder in the appropriate space/s provided. Failure to comply with the above will be deemed

to authorise the proxy to vote or abstain from voting at the Annual General Meeting as he/she deems fit in respect of

all shareholders’ votes exercisable thereat. A shareholder or his/her proxy is not obliged to use all the votes

exercisable by the shareholder or by his/her proxy or cast them in the same way, but if the total of the votes cast and

in respect of which abstention is recorded, may not exceed the total of the votes exercisable by the shareholder or by

his/her proxy.

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

4. Documentary evidence establishing the authority of a person signing this proxy form in a representative capacity must

be attached to this form unless previously recorded by the transfer secretaries of the Company or waived by the

Chairman of the Annual General Meeting.

5. The completion and lodging of this form will not preclude the relevant shareholders from attending the Annual

General Meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof,

should such shareholder wish to do so.

6. The Chairman of the Annual General Meeting may accept or reject any proxy form which is completed and/or

received other than in accordance with these notes and instructions, provided that he/she is satisfied as to the manner

in which the shareholder wishes to vote.

7. Proxy forms must be lodged with or posted to the Company’s registered office (2nd Floor, FHS House, 15 Girton

Road, Parktown, 2193 [Postnet suite 200, Private Bag X30500, Houghton, 2041]) to be received not later than 48

hours (excluding Saturdays, Sundays and public holidays) before the time appointed for the holding of the Annual

General Meeting.

Visit us online at www.ba.co.za

Administration

Comair operating as British AirwaysPO Box 7015, Bonaero Park, 1622 South Africa

Sales/administration Telephone (011) 921-0111


Groups (011) 921-0333

Passenger Services Johannesburg International

Airport (011) 975-9128

Telefax (011) 973-1659/973-3913. Telex 7-46738

Air CARGO (011) 390-2841

Cape TownTerminal 4 and 5

Cape Town International Airport

Private Bag X13, Cape Town

Cape Town International Airport, 7525


Port ElizabethPort Elizabeth Airport

PO Box 3222, Humewood, 6013



HarareShop F1 Travel Plaza

Landela House, 29 Mazoe Street, Harare

PO Box 66293, Kopje, Harare

Telephone/Telefax (092634) 73-7200 (092634) 73-9878

DurbanDurban International Airport

PO Durban International Airport, Durban, 4029


WindhoekSanlam Centre, 10th Floor

154 Independence Avenue

PO Box 20800, Windhoek


Victoria Falls1 Flamelily Court Fox Road, Victoria Falls, Zimbabwe

Telephone (09263) 13 5825/2053. Telefax (09263) 13 5825

British Airways Executive ClubTelephone (011) 880-6719. Toll free 0800-11-3833

Telefax (011) 442-6989

G R A P H I C O R2 3 7 7 2

Financial Highlights 2

Executive Management 3

Joint Chairman and Managing Director’s Report 4

Five-year Review 8

Group Value Added Statement 9

Corporate Governance 10

Report of the Independent Auditors 12

Statement of Responsibility by the Board of Directors 13

Statement of Company Secretary 13

Report of the Directors 14

Income Statements 16

Balance Sheets 17

Statement of Changes in Equity 18

Cash Flow Statements 19

Accounting Policies 20

Notes to the Annual Financial Statements 21

Notice of Annual General Meeting 28

Share Price Performance 32

Analysis of Shareholding 32

Administration Inside back cover

Proxy Form Loose

Contents

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Annual Report 2001

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Comair Limited

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