Integrated Annual Report 2011 22112_Comair_297x210.pdf 1 2011/09/05 4:01 PM C M Y CM MY CY CMY K iv Comair Integrated Annual Report 2011 22112_Comair_297x210.pdf 1 2011/09/05 4:01 PM Contents 2 Report Profile 3 Comair Limited (“Group”) Core Values 4 Group Objectives 5 Chairman and CEOs’ Report 9 Corporate Governance 23 Sustainable Development Report 52 Group Value Added Statement C M 53 Statement of Responsibility by the Board of Directors Y 54 Statement of Company Secretary CM MY 55 Audit Committee Report CY 58 Remuneration Committee Report CMY K 61 Independent Auditor’s Report to the Shareholders of Comair Limited 62 Report of the Directors 68 Statements of Financial Position 69 Statements of Comprehensive Income 70 Statements of Changes in Equity 71 Statements of Cash Flow 72 Segmental Report 73 Accounting Policies 83 Notes to the Annual Financial Statements 110 Notice of the Annual General Meeting 121 Share Price Performance 122 Shareholder Analysis Form of Proxy for Annual General Meeting ibc Administration Comair Integrated Annual Report 2011 1 There is more to life than increasing its speed Report Profile Scope, Boundary and Reporting Cycle External Audit and Assurance This Integrated Annual Report of Comair presents the economic, The Company’s annual financial statements and the Group’s social and environmental performance of the Company in respect annual financial statements were audited by the Group’s of its operations in South Africa only, as well as presenting the independent external auditors, PKF (JHB) Inc., in accordance financial results, of the Comair Group for the financial year ended with International Standards of Auditing. The report of the external 30 June 2011. The Integrated Annual Report will be sent to auditors is included on page 61. shareholders, who are recorded as such in Comair’s Securities Register on 23 September 2011. Governance of the Business Reporting Principles Comair’s governance structures are focused on maintaining and building a sustainable business and being a responsible corporate The contents included in this Integrated Annual Report are citizen. The key elements of these governance structures include: deemed to be useful and relevant to Comair’s stakeholders. • Providing a safe, secure, reliable and quality airline service The Integrated Annual Report was prepared in accordance (refer to the Sustainable Development Report for more with International Financial Reporting Standards, the Listings information); Requirements of the JSE as well as the Companies Act (Act No. • Maintaining principles of good corporate governance, 71 of 2008) as amended. The Company’s reporting on sustainable integrity and ethics (see the Corporate Governance Report development is guided by the Sustainability Reporting Guidelines for more information); of the Global Reporting Initiative. • Maintaining effective risk management and internal controls (see the Risk Management section of the Corporate The Company has applied the majority of the principles contained Governance Report for more information); in the King Report on Governance for South Africa 2009 (the • Engaging with stakeholders and responding to their Report) King III. Those requirements of King III which the reasonable expectations (see the Sustainable Development Company has not applied are explained, where applicable, in this Report for more information); Integrated Annual Report. The Company’s reporting on sustainable • Managing the business in a sustainable manner (see the development was done in accordance with the Global Reporting Sustainable Development Report for more information); and Initiative (GRI G3.1). • Offering employees competitive remuneration packages, based on the principles of fairness and affordability (see the Significant Events During the Reporting Period Sustainable Development Report and the Remuneration Report for more information). No significant events occurred during the reporting period compared to previous financial years. 2 Comair Integrated Annual Report 2011 Comair Limited (“Group”) Core Values The Group and its employees support the following core values. Performance Driven Our Customers We seek to always: In our dealings with our customers, we aim to: • Set objectives and give regular performance feedback; • Ensure that each employee knows what is expected of him/ • Reflect the image of the Group; her and what our standards are; • Deliver a safe and quality service; • Give recognition to those to whom it is due; and • Regard everyone who is dependent on our outputs as a • Continuously strive to improve our operating efficiencies. customer; • Meet the expectations of our customers; • Measure customer satisfaction levels; • Respect our customer’s 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; and • Maintain ethical standards. Comair Integrated Annual Report 2011 3 Time makes friendships rich and excuses poor Group Objectives Creating Shareholder Value Provide Growth and Development Opportunities for Employees • We will continue to optimise operating efficiencies and grow the profitability of the business. • We strive to maintain a corporate culture that provides a • We will always look to make investments that will provide good working environment, training and skills development incremental growth based on sound investment principles. that assists us to attract and retain a talented work force. • We will strive to be an employer of choice, recognising that Commitment to Quality market competition for competent resources is increasing. • We will strive to be trusted by all our stakeholders. Operating Effectiveness • We will always ensure that we provide a safe, secure and reliable service. • We will continue to develop core competencies across our • We will strive to always improve customer satisfaction levels. operating environment. • We will continue to look for cost saving initiatives and look to Managing Risk create synergies over our existing and future operations. • We wish to position ourselves as the airline of choice. • 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. 4 Comair Integrated Annual Report 2011 Chairman and CEOs’ Report Strategic Priorities Flexibility in capacity remains essential in the uncertain economic During the period under review, we focused on the following environment. During the period under review we entered into a strategic priorities: Joint Operation with Solenta Aviation, a quality operator of smaller gauge (50–70 seater) aircraft. We initiated our joint business with • Driving volume growth and the expense of yield and daily flights from Johannesburg to Nelspruit. Subsequent to year managing costs without ever compromising on providing a end we started further routes from Lanseria airport to Gaborone, safe, secure and reliable airline service. Botswana and Maputo, Mozambique. Early indications are that • Attempting to ensure that we constantly meet the needs of this new partnership will allow us to successfully grow into smaller, our customers. lucrative routes both in South Africa and southern Africa. • Investing in new technology. • Continually monitoring and evaluating changes to the Post year end, we terminated our overnight services to Dar es economic environment. Salaam, after realising that we need to offer more convenient day flights on this route to attract business travellers. We are currently We have made good progress against most of these priorities researching this need. during the period under review. We also hope to be a good corporate citizen in our dealings with all our stakeholders. Customer Satisfaction Customer Service Performance Against Objectives We continuously measure customer satisfaction levels in respect of both our brands to identify areas of improvement and to ensure Financial Performance the delivery of a quality service to our customers. The Numbers Due to aircraft shortages in the beginning of 2011, we did not The past year has been an extremely tough year for our business achieve our target of 85% within 15 minutes of scheduled and the global aviation industry in general. Despite strong growth departure time, but we have since rectified this situation and of 19% in turnover, earnings declined by 14% and earnings per from May 2011 are now consistently achieving this target. The share by 28%. External factors certainly played their part – a 20% anticipated reliability benefit of our new fleet only materialised increase in our fuel bill, crippling increases in airport charges and towards the end of the financial year. BA and kulula were voted a stagnant local economy. Notwithstanding the impact of these, the number one and two business airlines in the annual Sunday our performance over the period was below our own budgets and Times Survey. The introduction of our SLOW airport lounges at expectations. Last year we set ourselves a medium term objective all major airports has been very well accepted by our business of a 10% profit