Annual Report 2007 #12-04 SLF Building Western Australia 6105 Singapore 298135 Ph: 61 8 9478 9999 Ph: 65 6252 2077 Fax: 61 8 9478 9928
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Advent Air Limited Skywest Airlines Pty Ltd Advent Air Limited 510 Thomson Road Domestic Terminal, Perth Airport Annual Report 2007 #12-04 SLF Building Western Australia 6105 Singapore 298135 Ph: 61 8 9478 9999 Ph: 65 6252 2077 Fax: 61 8 9478 9928 Fax: 65 6252 5158 Bookings: 1300 66 00 88 Annual Report 2007 www.advent.com.sg www.skywest.com.au | ANNUAL REPORT 2007 Sand dunes at Wylie Bay, east of Esperance Corporate Directory Cover: Near the Cockburn Range, on El Questro Station Directors Robert Jeffries Chatfield (Executive Chairman) Seah Kian Peng (Non-executive Director) John Leonard Jost (Non-executive Director) Ron Aitkenhead (Non-executive Director) Business Address Stockbroker UK Registrars 510 Thomson Road W H Ireland Ltd Computershare Investor Services PLC #12-04 SLF Building Attn Philip Haydn-Slater PO Box 82, The Pavilions Singapore 298 135 5th Floor Bristol BS99 7NH 24 Martin Lane London EC4R 0DR United Kingdom Company Secretaries United Kingdom Siobhan Mary Cool Singapore Registrars Han Kee Fong Australian Solicitors Compact Administrative Services Pte Ltd Loh Chuen Thim Herbert Geer & Rundle 3 Anson Road Registered Office 385 Bourke Street #27-01 Springleaf Tower Melbourne VIC 3000 Singapore 079909 510 Thomson Road Australia #12-04 SLF Building Bankers Singapore 298 135 UK Solicitors Citibank N.A National Corporate Group Nominated Adviser Trowers & Hamlins 3 Temasek Avenue WH Ireland Limited Sceptre Court #17-00 Centennial Tower Corporate Broking 40 Tower Hill Singapore 039190 24 Martin Lane London EC4R 0DR London EC3N 4DX United Kingdom United Kingdom Auditors Jasmine Chua & Associates 371 Beach Road #05-01 Keypoint Singapore 199597 Contents Report from Chairman 2 Highlights 4 Group Structure 5 Directors 7 Share Price Performance 8 Dividends Global Payments Service 8 Senior Management 10 Skywest Operations 12 Western Australian Mining industry 20 2007 Financial Statements 22 1 | ANNUAL REPORT 2007 Skywest fleet at Perth airport Chairman’s Statement 2006 – 2007 Financial Year group after a successful mop-up Change of Name takeover offer with all remaining minority The takeover of the remaining shares in shareholders bought out. As at the date Skywest Ltd by the Group is considered of this announcement, the Group owns to be successful with all companies now 7 aircraft, with 12 in operation in total. 100% owned. In view of the growth of The Company estimates that the aircraft contribution in terms of profits for the operated and owned within the group group booked by Skywest Airlines and have a useful life which will amount to pursuant to the approval granted by 11 to 14 years of use. Safety is a major shareholders on the 15th of May 2006 The Company announces the completion priority and Skywest has been managing a the directors have taken steps to change of a satisfactory year in which we managed Change Management Program. the name of the Company to “Skywest to achieve continuing improvements in Airlines Ltd”. The Company results were negatively operating performance along with an impacted by certain issues including increased profit margin. Group revenues Pursuant to this process the name increased corporation tax and fuel price for the year increased to S$130 million of the Company has been changed increases. The Company has utilized the compared to S$98 million in the last year. to “Skywest Airlines Ltd” with effect majority of the carry forward historical EBITDAR increased to S$26.6 million. from 20th November 2007. tax losses from the years before Skywest Profit before tax increased to S$12.6 Effective the 20th of November 2007, was under Company control. The taxes million, net group profit attributable to the the new trading symbol for the payable have increased to $4.77 million, shareholders of the Company was S$7.1 Company will be SKYW. this is a dramatic increase as in the prior million, an increase over the S$4 million in year the taxes were $1.078m. Fuel costs Capital Management the prior year. The Company is proposing have continued to increase and remain a The Company has enjoyed a strong balance further capital management initiatives concern. The experience of the Company sheet, with net cash and ownership of 7 including share buybacks and other indicates that hedging of fuel purchases aircraft along with low borrowings. With a measures to better utilize the strength of has some mitigating influence in delaying view to capital management and increasing its currently under-leveraged balance sheet. increases as does the Fuel Levy imposed shareholder value the Company has been Consolidated earnings per share increased on ticket sales. Another area of concern buying back shares for cancellation. The to 3.61 cents per share. is that the airline employees entitlements Company repurchased and cancelled The Company intends to declare a second including various vacation and leave approximately 6.8 million shares during and final dividend for FY2007 representing provisions continue to increase faster than the year. The Company will seek at the a final payment of 1.8 cents per share, the the employees appear able to utilize them, AGM shareholder approval to continue this payment of this final dividend is subject a parameter which is becoming a concern process. to shareholder approval at the AGM. to Directors and one which shall receive Avation PLC Spin Off The payment timing will be announced appropriate attention in the current period. pursuant to the AGM notice. Skywest has in place Enterprise Bargaining The Company paid as a dividend all of the ordinary shares in Avation PLC to its Results for this financial year improved Agreements with its Engineers and Pilots shareholders in a 1: 10 distribution. Avation across several measures including yield, which have lead in recent years to a stable PLC was listed on Plus Markets in London revenue and profit increases, passenger workforce. The Company and subsidiaries during the financial year. number increases and revenue seat is undergoing an on-going recruitment passenger kilometers. The Group now program for more pilots, engineers and Existing shareholders were rewarded with a includes 100% of the Skywest Airlines flight attendants. quoted share as a further dividend. 2 As at the date of this report the shares Core Market Outlook This strategy has increased the scheduled in Avation PLC were quoted at 71 pence charter revenue from a low base in 2003 The Company’s airline revenues are per share. The result of the creation of to approximately $45 million in FY07. The expected to continue to grow on the Avation PLC included that Skywest has an Company seeks to service its clients with Skywest traditional routes including accommodating leasing company related to a reliable, on time and safe air services. Albany, Esperance, Geraldton, Carnarvon, it which seeks to service Skywest ongoing The Company has been successful in and Exmouth. Skywest continues to seek needs. This arrangement may be useful as providing services to Argyle Diamonds, opportunities for growth and in particular and when Skywest Airlines expands. It is BHP Billiton, Rio Tinto, Fortescue Metals is focusing on securing additional charter the directors’ opinion that airlines prefer Group, Macmahon, Portman Iron Ore, business as result of opportunities to lease some or all of their fleet for two Barminco and Newmont. To facilitate this presenting from the robust mining and main reasons: leasing provides operational strategy the Company has leased more resource industry in Western Australia. leverage so as to give an airline flexible F100 jets and made certain improvements The Company believes that activity within access to more aircraft and also that there in scheduling and operations so as to the mining and resource sectors remain is a lowering of the ownership risk to improve its on time performance. Bidding the key driver for increased passenger shareholders. This ownership risk relates for more scheduled charters, on time numbers. Skywest is in the process of to the concept that the valuations of performance and the safety management announcing new routes and additional airlines are correlated strongly to the resale systems will remain key areas of frequencies including routes such as values of the planes themselves. Airlines management attention in the coming year. Kalgoorlie – Melbourne. Skywest recently are a cyclical industry and spinning off Skywest is pleased that it recently achieved was entered into the Western Australian the ownership risk associated with some a 3 year roll-over of its Air Operators Tourism Hall of Fame after winning a of the aircraft fleet lowers the overall risk Certificate, prior to this year 2 years was major Tourism Award in 3 consecutive to the shareholders of the airline in any the typical extension granted by the years. Tourism remains a key interest to future downturn in airline or aircraft market Aviation Regulator CASA. the Company and we seek to expand conditions. our tourism related services. Skywest The Company shortly will have Skywest’s Exclusive Sole has joined the VirginBlue Velocity loyalty available a set of accounts audited Operating Rights program so as to seek to improve its under IFRS. Interested persons can view these on the Company website Skywest is the operator of services on appeal to travelers and tourists. The group or may request a hard copy by the coastal network of Western Australia has increasing focus on ancillary revenue contacting the Company. Copies of the under an exclusive right granted by the sources such as that which result from annual report will be available on the Government of Western Australia for partnerships with Avis, Wotif and Mondial company website at www.advent.com. a term of 3 years commencing January Insurance. Other recent initiatives include 2006, with an option for a further 2- a carbon offset program in the form of sg, and at the offices of the Company.