Important notice to foreign shareholders and prospective investors Foreign shareholders and prospective investors in Comair limited (“Comair”) should note that the airline industry in South Africa is subject to extensive government and regulatory oversight relating to, amongst other things, restrictions on foreign ownership. Sections 16(4)(c) and 19(a) of the Air Services Licensing Act, No. 115 of 1990, (“Act”) requires that a minimum of 75% of the voting rights in a licensee must be held by residents of South Africa (“Foreign Ownership Restriction”). In order to ensure that Comair (as a licensed air services operator in South Africa), remains compliant with the foreign ownership restriction, Comair has adopted a variable voting share structure in terms of which the voting rights attached to each ordinary share held by foreign shareholders will be decreased proportionately if (i) the number of ordinary shares held by foreign shareholders on the record date of any shareholders’ meeting exceed 24.99% or (ii) the total number of votes cast by or on behalf of foreign shareholders at such a meeting exceed 24.99% such that the voting rights of foreign shareholders do not, in aggregate, exceed 24.99%. Foreign shareholders and prospective investors are referred to the Comair’s Memorandum of Incorporation and website (www.comair.co.za) for further details. If foreign shareholders or prospective investors are in any doubt as to what action to take they should seek advice from their broker, attorney or other professional adviser. Our Passion Everyday Table of Content About this Report 002 078 Internal Control and Risk Management Performance Highlights/Group Value Added Statement 003 084 Report of the Directors Our Group 004 091 Certificate of Company Secretary Chairman and CEO’s Report 010 092 Independent Auditor’s Report Our Purpose, Strategic Intent and Stakeholders 016 096 Statements of Financial Position Our Operations and Customers 021 098 Statements of Profit or Loss Interaction with Government, Regulatory and Industry Bodies 030 099 Statements of Comprehensive Income Interaction with Investors, Suppliers and Media 034 100 Statements of Changes in Equity Company Employees and Broad-Based Black Economic Empowerment 035 101 Statements of Cash Flows Investing in the Community 046 102 Accounting Policies Environmental Report 048 108 Notes to the Financial Statements Corporate Governance Report 058 146 Notice of Annual General Meeting Audit Committee Report 070 155 Directors Standing for Election or Re-election Remuneration Report 073 159 Share Price Performance Social and Ethics Report 077 160 Shareholder Analysis 001 002 Comair Limited: Integrated Annual Report 2018 ABOUT THIS REPORT Scope, Boundary and Reporting engagement processes that drive the by its independent external auditors, Cycle Group’s integrated reporting process, when Grant Thornton Johannesburg Partnership deciding which issues are the most important (“Grant Thornton”), in accordance with This Integrated Annual Report (“this Report”) to address. While this Report attempts to International Standards of Auditing. Their of the Comair Group (“the Group”) presents highlight the significant issues raised and report is included on pages 92 to 95. the economic, social, governance and the outcomes of these various engagement environmental performance of the Group’s Grant Thornton has provided limited processes, as well as the risks identified airline and non-airline businesses in respect assurance over selected key performance during our risk assessment process, the of its operations in South Africa only, as indicators and specific disclosures as set content of this Report predominantly focuses well as the financial results of the Group on the information deemed relevant to the out in this Report. Based on their work for the financial year 1 July 2017 to Group’s shareholders and potential investors. performed, nothing has come to our 30 June 2018. While the performance attention that causes us to believe that of the Group’s associates is discussed in The information included in this Report aims the selected key performance indicators this Report, the Report focuses more on the to provide shareholders and investors with or specific disclosures in the 2018 performance of the Group’s subsidiaries, a good understanding of the significant Integrated Annual Report for the year ended since their contribution to its performance is economic, social, governance and 30 June 2018 have not been fairly stated. more significant. This Report does not extend environmental risks and opportunities the to or cover the performance of the Group’s Group faces in the short and medium term, as For a better understanding of the scope suppliers in its supply chain, nor its outsourced well as with the Group’s response, in order to of Grant Thornton’s assurance process, operations such as, but not limited to, its fleet ensure its ability to create and sustain value for reference should be made to Grant maintenance or its leased facilities. These its shareholders and investors in the long term. Thornton’s Assurance Statement, which can limitations are not considered material enough In addition, the Group attempts to explain its be obtained from the Group Company to impair the completeness of this Report. efforts to reduce its impact on the environment Secretary, or accessed via the Group’s and the societies in which it operates. website www.comair.co.za. The Report will be sent to shareholders, who are recorded as such in the Group’s This Report was prepared in accordance with Board Approval Securities Register on 21 September 2018, International Financial Reporting Standards; and is available on the Group’s website the Financial Reporting Guides issued by the The Board is ultimately responsible for the at www. comair.co.za. Printed copies Accounting Practices Committee; the Listings authenticity of this Report. Together with the are available on request from the Group Requirements of the JSE; the requirements of appropriate Management and Committee Company Secretary. This is the Group’s the Companies Act (No. 71 of 2008) as support, the Board reviewed and analysed eighth Integrated Annual Report. The previous amended; and the requirements of the King the information disclosed, and is satisfied Integrated Annual Report, which covered the IV Report on Corporate Governance 2016 with the content of this Report. This Report period 1 July 2016 to 30 June 2017, was (“King IV”). It is also guided by the International was approved by the Audit Committee published on 30 September 2017 and is Integrated Reporting Council’s Integrated and duly authorised by the Board on also available on the Group’s website. Reporting Framework. The Group’s reporting 17 September 2018. on sustainable development is guided by Reporting Principles the Sustainability Reporting Guidelines of the Contact Us The content of this Report is driven by those Global Reporting Initiative (“GRI G4”). We welcome opinions, suggestions and issues that have the greatest potential to affect questions from all our stakeholders. Please the Group’s ability to operate. We consider a External Audit and Assurance direct these to the Group Company Secretary, broad range of external and internal factors, The Group’s Annual Financial Statements Derek Borer. Our contact details are included including the outcome of various stakeholder on pages 96 to 145 were audited on the inside back cover of this Report. 001 002 003 Our Passion Everyday PERFORMANCE HIGHLIGHTS/ GrOUP VALUE ADDED STATEMENT Strategic/Group objective Indicator Actual 2015/16 Actual 2016/17 Actual 2017/18 Creating Shareholder value Net profit (after tax) 192 702 000 296 970 000 325 611 000 Total turnover/Group revenue 5 959 573 000 6 063 737 000 6 536 540 000 Operating expenses 5 129 781 000 4 999 789 000 5 412 752 000 Dividends paid to shareholders 69 764 000 83 776 000 88 528 000 Interest on loans 170 496 000 250 377 000 248 938 000 Current taxation 5 250 000 4 269 000 8 902 000 Commitment to quality On time performance BA: 85% BA:85% BA: 85% kulula: 85% kulula: 85% kulula: 84% Investment in assets (property, plant and equipment) 2 012 053 000 965 821 000 907 872 000 Managing risk Number of significant safety incidents 1 0 11 Number of consecutive unqualified audits by IOSA 6 6 7 Leading as a responsible Carbon inventory – all scopes footprint per employee (tonnes 316.84 331.51 314.32 corporate citizen of CO2 emissions) % of carbon emissions relating to scope 1 82% 82% 83% % of carbon emissions relating to scope 2 1% 1% 1% % of carbon emissions relating to scope 3 17% 16% 16% No. of legislative/regulatory breaches 0 0 0 Total staff cost 897 467 000 1 001 889 000 1 132 838 000 Number of South African employees 2 085 2 105 2 206 Overall Employment Equity (“EE”) representation 1 375 1 479 1 516 % Staff members belonging to a union 42% 42% 47% Provide growth and % Spend of training or training investment (% of salary spend) 3.1% 4.4% 4.75% development opportunities Employee turnover rate 8.0% 10.19% 4.8% for staff % Female representation 64.5% 63.8% 63.6% Operational effectiveness Quantity of fuel consumed per passenger/fuel burn per 32.14 30.93 29.19 passenger (kg per passenger) Number of passengers carried 5 428 678 5 545 214 5 801 191 Aircraft and flight simulator spend 1 945 164 000 1 083 201 000 712 919 000 Number of owned aircraft 19 19 18 Number of leased aircraft 6 7 8 Electricity consumed (kWh) 5 996 310 5 283 795 5 028 480 1 On 23 November 2017 a Foodirections loader slipped off the catering truck while loading meals. It was raining and safety procedures had not been adhered to. Refresher training was provided to all staff. 002 003 004 Comair Limited: Integrated Annual Report 2018 OUR GrOUP Who We Are and What We Do Comair Limited (“The Group”) is a South African aviation and travel company, offering scheduled and non-scheduled airline services within South Africa, and to Sub-Saharan Africa and the Indian Ocean Islands, as its main business.
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