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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Skywest Air | LSE:SKYW | London | Ordinary Share | SG9999002018 | ORD SGD0.20 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 29.75 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMSKYW
RNS Number : 9398Y
Skywest Airlines Limited
28 February 2013
ASX code SXR
AIM code SKYW
28 February 2013
SKYWEST AIRLINES LTD.
("Skywest" or the "Company")
UNAUDITED RESULTS FOR THE HALF YEAR ENDED 31 DECEMBER 2012
Skywest Airlines Ltd, parent to the Australian and South East Asia regional airline and other subsidiaries ("the Group"), announces its unaudited consolidated results for the half year ended 31 December 2012.
HIGHLIGHTS
-- RECORD GROWTH IN REVENUES TO S$173M - UP 19% FROM FIRST HALF FY12 -- FLEET EXPANDED TO 30 AIRCRAFT - UP 15% FROM 30 JUNE 2012 -- EBITDAR OF S$26,209,857 -- CARBON TAX IMPACT WAS S$2.0M
-- AFTER NON-RECURRING COSTS AND CARBON TAX NET LOSS AFTER TAX OF S$2,166,814 - 1.03 SINGAPORE CENTS PER SHARE
-- ENTERED INTO TWO SUBSTANTIAL NEW CHARTER CONTRACTS -- IMPROVED OUTLOOK FOR SECOND HALF -- ESTABLISHED PLATFORM FOR BUSINESS GROWTH
The results for the Group's half financial year ended 31 December 2012, based on the unaudited Financial Statements reported pursuant to International Financial Reporting Standards "IFRS" and reported in Singapore Dollars "SGD" or "S$" are as follows (for the convenience of international shareholders, additional columns are included to denote an equivalent value in Pounds Sterling "GBP" and Australian Dollars "AUD"):
Consolidated GBP AUD 6 months ended Equivalent (I) Equivalent(II) 31 December 2012 ----------------------- ------------ ---------------- ---------------- In SGD In GBP In AUD ----------------------- ------------ ---------------- ---------------- Revenue from ordinary activities 172,698,766 87,782,783 135,223,134 ----------------------- ------------ ---------------- ---------------- EBITDAR 26,209,857 13,322,470 20,522,318 ----------------------- ------------ ---------------- ---------------- (Earnings Before Interest, Tax, Depreciation and Aircraft Rentals) ----------------------- ------------ ---------------- ---------------- Net loss before income tax (3,269,077) (1,661,672) (2,559,687) ----------------------- ------------ ---------------- ---------------- Net loss after income tax (2,166,814) (1,101,392) (1,696,615) ----------------------- ------------ ---------------- ---------------- Loss attributable to shareholders (2,166,814) (1,101,392) (1,696,615) ----------------------- ------------ ---------------- ---------------- Basic earnings per share (1.03) (0.52) (0.81) ----------------------- ------------ ---------------- ----------------
Notes:
I. In this announcement, the applicable exchange rate between SGD and GBP was taken to be the average exchange rate of 1: 0.5083 which was used in the presentation of the accounts.
II. In this announcement, the applicable exchange rate between SGD and AUD was taken to be the average exchange rate of 1: 0.7830 which was used in the presentation of the accounts.
The Directors (including any who may have delegated detailed supervision of this announcement) have taken all reasonable care to ensure that the facts stated and all the opinions expressed in this announcement are fair and accurate and that no material facts have been omitted from this announcement, the omission of which would make any statement in this announcement misleading, and the Directors jointly and severally accept full responsibility accordingly. Where any information has been extracted or reproduced from published or otherwise publicly available sources, the sole responsibility of the Directors has been to ensure through reasonable enquiries that such information is correctly extracted from such sources or, as the case may be, reflected or reproduced in this announcement.
Enquiries:
Skywest Airlines Ltd
Jeff Chatfield, Executive Chairman +65 9735 4151
Nominated Adviser
James Joyce, W H Ireland Limited +44 (0) 207 220 1666
Company Stockbroker
W H Ireland Limited +44 (0) 207 220 1670
Financial Public Relations
Bishopsgate Communications +44 (0) 207 562 3350
Nick Rome
skywest@bishopsgatecommunications.com
Media Enquiries in Australia
Brian O'Dwyer, Group Chief Financial Officer +65 6252 2077
Websites
www.skywest.com.au
www.advent.com.sg
www.skywest.com.sg
Chairman's Statement regarding the Unaudited Financial Results
Dear Fellow Shareholders,
On behalf of your Board of Directors, I present our unaudited consolidated financial results for Skywest Airlines Ltd. and its subsidiaries for the half year ended 31 December 2012 (the "Current Period").
FIRST HALF FISCAL YEAR 2013 RESULTS
Group revenue for the Current Period increased by 19% to a record S$173m (H1 2012: S$145m).
Substantial investments and an expansion of the workforce was undertaken to build a foundation for future growth in the ARAN network. However, due to non recurring costs, expansion costs and changes in market conditions, earnings before interest, taxation, depreciation, amortisation and aircraft rentals (EBITDAR) was S$26.2m (H1 2012: S$31.4m). Current period consolidated net loss after tax was S$2.2m (2012: S$4.5m profit) and loss per share of 1.03 Singapore cents (1H 2012: 2.23 Singapore cents). Performance was affected by challenging conditions putting downward pressure on loads and yields. During this period the Company also increased its capacity in the RPT network in the lead up to new charter contracts.
The Company was impacted by several non-recurring costs, as well as the carbon tax implemented on 1 July 2012 (S$2.0m pre-tax) and also a non-cash charge related to aircraft maintenance reserve adjustments (S$1.0m pre-tax). Excluding these items would result in a profitable Current Period. Internally, non-recurring expenses associated with the activities to establish a foundation for continued growth which include preparations for the introduction of a second A320 aircraft into the fleet, consolidation of administrative offices into a new more economic off-airport location, the transfer of flight operations from the existing passenger terminal to new facilities at Perth Airport's new terminal and advisory costs related to the proposed transaction with Virgin Australia also had an impact.
FIRST HALF FISCAL YEAR 2013 REVIEW
In the Fly-in and Fly-out ("FIFO") charter business, capacity (as measured by ASKs) was 18% lower than the comparable period while revenue was 6% lower than the comparable period reflecting higher unit revenue. However, this was temporary. Current trading as at the date of this announcement shows FIFO activity has recovered to record levels.
During the six month period aircraft were utilized on the RPT network while awaiting deployment in FIFO service for new contracts with BHP Billiton Iron Ore and Rio Tinto which were announced in October and December, respectively. Accordingly, RPT capacity (as measured by ASKs) was 34% more than the comparable period. This shift of asset to RPT was a one-off event. This significant capacity increase in addition to competitive pressures which have also affected other airlines resulted in 3% lower revenue due to lower loads, fares and yields.
In the Australian Regional Airline Network ("ARAN") operated for Virgin Australia, the Company took delivery of four additional new ATR-72 aircraft to bring the total number of ATR-72 aircraft to ten, all operating on the East Coast of Australia. In December, the Company's ARAN revenue was higher than RPT revenue and nearly half of all Skywest flight sectors operated in the month were for ARAN. Operationally, the ARAN continued to outperform its competitors for both on-time arrivals and departures. The Company ended the Current Period with 30 aircraft in its fleet. The Company entered one of its owned F100 aircraft into revenue service during the Current Period. Skywest also has an additional owned F100 asset that could be brought into service in due course.
It should be noted that the past twelve months have been a period of great change for Skywest. The Company faced challenges including a reduction in its monopoly routes caused by deregulation changes and as a consequence of security regulation lost some RPT revenue due to increased security requirements at some regional airports (up to S$45 per passenger). Skywest experienced changes to its mix of charter FIFO business. Nevertheless, the Company is now enjoying growth with the addition of new FIFO contracts including the BHP and Rio Tinto contracts. Furthermore charters to Onslow are growing rapidly and the ARAN growth, as noted above, has been significant and is continuing to increase: the 11(th) ATR-72 is due for delivery on the date of this announcement.
CURRENT TRADING AND OUTLOOK
In January 2013, the Company performed a record 400 charter services as new contracts phased-in. In RPT, load factors were 4.6 percentage points higher compared to January 2012. In ARAN, block hours reached 1,906 in January 2013 which are more than double the 833 block hours in January 2012. Overall, current trading is trending to the positive: January 2013's financial performance was materially better than January 2012. Skywest expects to add two additional ATR-72 aircraft to bring the total ATR fleet to twelve by 30 June 2013 and to add one A320 in March to bring the combined Skywest and ARAN fleet to 33 by 30 June 2013. The Company is also considering the acquisition of two other A320 aircraft.
The Company is conducting an on-going review of the business, organization, methods and practices. This has led to considerable cost savings in recent months that will contribute to what is expected to be an improved second half. I appreciate the considerable pressure placed on staff and performance as we all work through the hiatus period leading up to the potential acquisition of Skywest by Virgin Australia.
RISKS
Risks faced by the Group's business remain the normal commercial risks and typical airline industry related risks along with client concentration risks. The Group is exposed to changes in exchange rates and fuel costs. These two factors still represent a significant risk to the business. Australian domestic fuel prices, when combined with a lowering in the value of the Australian dollar, cause increased overall costs to the Airline's operations. The Group does attempt to mitigate changes in the dollar and fuel costs by way of hedging, however, rapid and massive changes can quickly impact the finances of the Group with significant consequences. The Company is undergoing a period of rapid growth, and therefore faces business execution risks associated with that growth.
DESPATCH OF DOCUMENT TO SHAREHOLDERS FOR 13 MARCH 2013 SCHEME MEETING
The Board of Directors (the "Directors") of Skywest refers to the joint announcement made by the Company and Virgin Australia Holdings Limited ("Virgin Australia") on 6 December 2012 in relation to the receipt of formal approval from the Securities Industry Council of Singapore for the terms of Virgin Australia's proposal to acquire 100% of the issued ordinary shares in the capital of the Company, to be undertaken through Virgin Australia's wholly owned subsidiary, VAH Newco No. 2 Pty Ltd (the "Offeror"), by way of a scheme of arrangement under Section 210 of the Companies Act (Chapter 50 of Singapore) and in accordance with the Singapore Code on Take-overs and Mergers (the "Scheme").
The Directors announced on 26 February 2013 that the Company dispatched to the shareholders of the Company (the "Shareholders") a scheme document dated 26 February 2013 (the "Scheme Document") containing, inter alia, full details of the Scheme (including the Virgin Australia's letter to the Shareholders, the advice of the independent financial adviser to the Directors and the recommendation of the Directors in respect of the Scheme). The Scheme Document contains the notice of a meeting of the Shareholders (the "Scheme Meeting") which is convened by the High Court of Singapore for the purpose of seeking Shareholders' approval for the Scheme on 13 March 2013. A copy of the Scheme Document and meeting notice is available on the Company's website at www.skywest.com.sg/shareholders .
Jeff Chatfield,
Executive Chairman
Interim Consolidated Statement of Comprehensive Income
for the six months ended 31 December 2012
Note 31 Dec 2012 31 Dec 2011 S$ S$ Revenue 4 172,698,766 145,000,516 Other income 5 2,757,547 233,911 Aircraft operating costs (excluding fuel costs) (19,914,272) (17,011,945) Fuel costs (37,380,754) (33,016,023) Aircraft lease rental and hire charges (16,034,339) (14,039,593) Employee benefits (60,677,253) (41,106,053) Sales and marketing cost (1,986,505) (1,970,976) Engineering and maintenance costs (17,833,980) (9,457,198) Office and general expenses (6,689,234) (5,348,270) Depreciation and amortisation (10,676,097) (10,558,468) Other expenses (4,764,458) (5,887,349) Finance costs (2,768,498) (414,760) __________ __________ (Loss)/ profit before tax (3,269,077) 6,423,792 Income tax 1,102,263 (1,942,599) __________ __________ (Loss)/ profit for the financial period (2,166,814) 4,481,193 Other comprehensive income Gain on cash flow hedges 458,519 189,189 Foreign currency translation (987,698) 491,011 __________ __________ Other comprehensive income for the financial period, net of tax (529,179) 680,200 __________ __________ Total comprehensive income for the financial period (2,695,993) 5,161,393 __________ __________ __________ __________ (Loss)/ profit attributable to owners of the parent (2,166,814) 4,481,193 __________ __________ __________ __________ Total comprehensive income attributable to owners of the parent (2,695,993) 5,161,393 __________ __________ __________ __________ Earnings per share - Basic (in cents) (1.03) 2.23 - Diluted (in cents) (1.03) 2.23 __________ __________ __________ __________
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying condensed notes to the interim condensed consolidated financial statements.
Interim Consolidated Statement of Financial Position as at 31 December 2012
Note 31 Dec 2012 30 Jun 2012 31 Dec 2011 S$ S$ S$ ASSETS Non-current assets Property, plant and equipment 7 88,517,144 82,685,163 62,613,675 Intangible assets 17,189,507 17,189,507 17,189,508 Other receivables 6,987,191 6,041,527 2,825,655 Prepayments 1,874,051 3,519,639 2,889,142 __________ __________ __________ 114,567,893 109,435,836 85,517,980 __________ __________ __________ Current assets Inventories 5,660,864 5,126,307 5,706,798 Trade and other receivables 51,703,506 41,120,979 45,936,882 Unbilled receivables 1,142,820 - - Prepayments 2,452,294 5,244,649 3,340,512 Other investments 381,889 342,346 428,945 Cash and cash equivalents 6 6,713,002 24,727,772 10,520,863 __________ __________ __________ 68,054,375 76,562,053 65,934,000 __________ __________ __________ Total assets 182,622,268 185,997,889 151,451,980 __________ __________ __________ __________ __________ __________ EQUITY AND LIABILITIES Current liabilities Provisions 13,204,378 9,837,206 8,443,929 Income tax payable 993,766 6,742,440 10,227,289 Borrowings 5,165,744 7,103,428 966,558 Trade and other payables 52,660,685 45,098,289 37,929,757 Revenue received in advance 6,882,475 10,320,843 8,561,286 Finance lease liability 1,676,556 1,702,246 258,538 Derivative financial instruments 84,923 739,952 557,265 Bank overdrafts 6 2,074,736 - - __________ __________ __________ 82,743,263 81,544,404 66,944,622 __________ __________ __________ Net current liabilities (14,688,888) (4,982,351) (1,010,622) __________ __________ __________ __________ __________ __________ Non-current liabilities Provisions 1,084,414 665,154 1,120,546 Borrowings 9,016,201 9,825,847 2,389,291 Derivative financial instruments 8 - 1,177,377 - Other payables 4,997,211 3,636,870 - Finance lease liability 1,633,568 2,573,849 905,244 Deferred tax liabilities 8,013,249 7,542,770 6,124,343 __________ __________ __________ 24,744,643 25,421,867 10,539,424 __________ __________ __________ Total liabilities 107,487,906 106,966,271 77,484,046 __________ __________ __________ __________ Net assets 75,134,362 79,031,618 73,967,934 __________ __________ __________ __________ __________ __________ Equity attributable to owners of the parent Share capital 9 50,002,608 48,382,289 44,629,894 Treasury shares - (229,870) - Reserves 3,495,802 4,328,218 5,422,974 Retained earnings 21,635,952 26,550,981 23,915,066 __________ __________ __________ Total equity 75,134,362 79,031,618 73,967,934 __________ __________ __________ __________ __________ __________ Total equity and liabilities 182,622,268 185,997,889 151,451,980 __________ __________ __________ __________ __________ __________
The above Consolidated Statement of Financial Position should be read in conjunction with the condensed notes to the interim condensed consolidated financial statements.
Interim Consolidated Statement of Changes in Equity for the six months ended 31 December 2012
Equity attributable to owners of the parent Foreign Cash flow currency Share Treasury hedge Capital Warrant translation Retained Note capital Shares reserve reserve reserve reserve earnings Total equity S$ S$ S$ S$ S$ S$ S$ S$ Balance at 1 July 2011 43,927,891 - (579,275) 827,779 556,790 3,669,281 21,895,069 70,297,535 Profit for the period - - - - - - 4,481,193 4,481,193 Other comprehensive income - - 189,189 - - 491,011 - 680,200 Total comprehensive income for the period - - 189,189 - - 491,011 4,481,193 5,161,393 Exercise of share warrants 702,003 - - - (160,787) - - 541,216 Warrant expense - - - - 428,986 - - 428,986 Dividends 12 - - - - - - (2,461,196) (2,461,196) Balance at 31 December 2011 44,629,894 - (390,086) 827,779 824,989 4,160,292 23,915,066 73,967,934 Balance at 1 July 2012 48,382,289 (229,870) (517,965) 827,779 956,035 3,062,369 26,550,981 79,031,618 Loss for the period - - - - - - (2,166,814) (2,166,814) Other comprehensive income - - 458,519 - - (987,698) - (529,179) Total comprehensive income for the period - - 458,519 - - (987,698) (2,166,814) (2,695,993) Exercise of share warrants 1,997,708 - - - (462,001) - - 1,535,707 Purchase of treasury shares - (147,519) - - - - - (147,519) Cancellation of treasury shares (377,389) 377,389 - - - - - - Warrant expense - - - - 158,764 - - 158,764 Dividends 12 - - - - - - (2,748,215) (2,748,215) Balance at 31 December 2012 50,002,608 - (59,446) 827,779 652,798 2,074,671 21,635,952 75,134,362
The above Consolidated Statement of Changes in Equity should be read in conjunction with the condensed notes to the interim condensed consolidated financial statements.
Interim Consolidated Statement of Cash Flows for the six months ended 31 December 2012
Note 31 Dec 2012 31 Dec 2011 S$ S$ Cash flows from operating activities (Loss)/ profit before tax (3,269,077) 6,423,792 Adjustments for: Gain on disposal of other investments - (2,507) Fair value loss on other investments 10,058 34,833 Reversal of fair value on embedded derivative of convertible loan - warrants and conversion option (1,156,788) - Depreciation expense 10,676,097 10,558,468 Warrant expense 158,764 428,986 Notional interest expense on deposits received for aircraft operating lease commitments 1,509,254 - Interest expense 881,309 414,760 Notional interest income on deposits placed for aircraft operating lease commitments (1,377,853) - Interest income (222,406) (227,583) Dividend income - (83) Amortisation of interest expense on convertible loan liability 377,935 - (Writeback)/allowance for doubtful debt (632,486) 620,530 (Writeback)/allowance for inventory obsolescence (119,341) 462,667 Provision/(writeback) for aircraft handback 55,859 (20,559) Provision for employee benefits 3,936,863 1,703,935 Provision for structural maintenance - 36,752 _________ _________ Operating profit before working capital changes 10,828,188 20,433,991 Increase in inventories (415,216) (1,020,539) Increase in trade, other receivables and prepayments (9,109,836) (9,065,015) Decrease in trade, other payables and provisions 6,655,932 3,620,841 _________ _________ Cash generated from operations 7,959,068 13,969,278 Interest expense paid (881,309) (414,760) Interest income received 222,406 227,583 Income tax paid (3,946,268) (794,895) _________ _________ Net cash generated from operating activities 3,353,897 12,987,206 _________ _________ Cash flows from investing activities Acquisition and sales of other investments (49,601) 5,062 Dividend income received - 83 Acquisition of property, plant and equipment (18,122,336) (9,878,702) _________ _________ Net cash used in investing activities (18,171,937) (9,873,557) _________ _________ Cash flows from financing activities Repayment of borrowings (3,713,301) (687,113) Purchase of treasury shares (147,519) - Dividends paid on ordinary shares (2,748,215) (2,461,196) Proceeds from exercise of warrants 1,535,707 541,216 _________ _________ Net cash used in financing activities (5,073,328) (2,607,093) _________ _________ Net increase in cash and cash equivalents (19,891,368) 506,556 Net foreign exchange difference (198,138) 47,978 Cash and cash equivalents at beginning of financial period 24,727,772 9,966,329 _________ _________ Cash and cash equivalents at end of financial period 6 4,638,266 10,520,863 _________ _________ _________ _________
The above Consolidated Statement of Cash Flows should be read in conjunction with the condensed notes to the interim condensed consolidated financial statements.
Notes to the Interim Condensed Consolidated Financial Statements for the six months ended 31 December 2012
1. Corporate information
Skywest Airlines Ltd. (the "Company") is a limited liability company which is incorporated and domiciled in Singapore and is dual-listed on the London Stock Exchange's Alternative Investment Market (AIM), and the Australian Securities Exchange (ASX).
The interim condensed consolidated financial statements as at and for the six-month period ended 31 December 2012 comprises the financial statements of the Company and its subsidiaries (together known as the "Group").
The principal activities of the Company are those of investment holding. The principal activities of the subsidiaries are those of airline operator, trading of quoted and unquoted securities and provision of management, aircraft leasing/finance and parts procurement services to holding company and related companies.
The interim condensed consolidated financial statements of the Group for the six months ended 31 December 2012 were authorised for issue in accordance with a resolution of the Directors on 28 February 2013.
2. Basis of preparation and accounting policies
The interim condensed consolidated financial statements for the six months ended 31 December 2012, which is expressed in Singapore dollars, has been prepared in accordance with International Financial Reporting Standards IAS 34: Interim Financial Reporting.
The interim condensed consolidated financial statements does not include all notes of the type normally included within the annual report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full annual financial statements.
It is recommended that the interim condensed consolidated financial statements be read in conjunction with the annual financial statements for the year ended 30 June 2012 and considered together with any public announcements made by Skywest Airlines Ltd during the six months ended 31 December 2012 in accordance with the continuous disclosure obligations of the ASX listing rules.
Changes in accounting policies
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 30 June 2012.
The adoption of new standards and interpretation as of 1 July 2012 did not have material impact on the financial position or performance of the Group
The Group has not elected to early adopt any other new Standards or amendments that are issued but not yet effective.
Change in accounting estimate
During the current financial period, the Group revised the estimated useful lives and residual values of certain of its aircraft and engine from 5 to 24 years to 11 to 24 years to more accurately reflect their condition and estimated utilisation. The revision in accounting estimate has been applied prospectively from 1 July 2012. The effect of the revision on the depreciation charge recognised in the consolidated statement of comprehensive income in the current period is a reduction of $936,636.
3. Segment reporting
An operating segment is a component of an entity that engages in business activities from which it may earn revenues or incur expenses (including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about the resources to be allocated to the segment and assess its performance and for which discrete financial information is available. Management will also consider other factors in determining operating segments such as the existence of a line manager and the level of segment information presented to the board of directors.
Operating segments have been based on the information provided to the chief operating decision makers- being the executive management team. The accounting policies applied for internal reporting are consistent with the policies applied in the preparation of the financial statements.
The Group has identified that it has one operating segment with operations predominantly in Australia as an airline operator.
4. Revenue For the six-months ended 31 December 2012 2011 S$ S$ Passenger revenue 54,260,567 56,665,613 Charter revenue 64,700,441 68,969,852 Freight revenue 1,590,760 1,560,732 Revenue from services 46,826,460 15,828,146 Others 5,320,538 1,976,173 __________ __________ 172,698,766 145,000,516 __________ __________ __________ __________
Revenue from services relates to revenue earned from the strategic alliance with Virgin Australia Airlines Pty Ltd.
5. Other income For the six-months ended 31 December 2012 2011 S$ S$ Dividend income - 83 Gain on sales of other investments - 2,507 Reversal of fair value on embedded derivative of convertible loan - warrants and conversion option (1) 1,156,788 - Notional interest income from deposits placed for aircraft operating lease commitments 1,377,853 - Interest income from third parties 221,790 220,474 Interest income from related parties 616 7,109 Other miscellaneous income 500 3,738 __________ __________ 2,757,547 233,911 __________ __________ __________ __________
(1) The reversal of the fair value of $1,156,788 (A$906,023) on embedded derivative of convertible loan - warrants and conversion option which was recorded in the prior year, has arose in the current period as the holder of the convertible loan has provided in writing the intention not to convert the warrants and exercise the conversion option.
6. Cash and cash equivalents For the six-months ended 31 December 2012 2011 S$ S$ Bank balances 6,713,002 10,520,863 Less: Bank overdraft (1) (2,074,736) - __________ __________ Cash and cash equivalents in consolidated cash flow statement 4,638,266 10,520,863 __________ __________ __________ __________
(1) A debt service ratio covenant in respect of the overdraft facility has been breached but no remedy has been sought from the bank or further action pursued to the date of this report. All other covenants in respect of the overdraft facility were complied with as at 31 December 2012.
7. Property, plant and equipment Aircraft & related Furnitures Plant and Leasehold Rotables equipment and fittings equipment improvement Motor vehicle Total S$ S$ S$ S$ S$ S$ S$ Cost: Balance at 1 July 2011 37,296,488 71,450,816 16,422 9,865,825 3,286,161 71,912 121,987,624 Additions 7,043,359 2,063,359 1,920 430,403 339,661 - 9,878,702 Translation adjustments 498,870 645,581 - 100,133 37,752 - 1,282,336 Balance at 31 December 2011 44,838,717 74,159,756 18,342 10,396,361 3,663,574 71,912 133,148,662 Accumulated depreciation: Balance at 1 July 2011 13,832,233 37,442,660 2,003 6,899,196 973,973 55,132 59,205,197 Charge for the period 5,308,063 4,391,260 2,790 584,537 264,627 7,191 10,558,468 Translation adjustments 244,251 436,027 - 76,282 14,762 - 771,322 Balance at 31 December 2011 19,384,547 42,269,947 4,793 7,560,015 1,253,362 62,323 70,534,987 Net carrying amount: Balance at 31 December 2011 25,454,170 31,889,809 13,549 2,836,346 2,410,212 9,589 62,613,675 Balance at 30 June 2011 23,464,255 34,008,156 14,419 2,966,629 2,312,188 16,780 62,782,427 Aircraft & related Furnitures Plant and Leasehold Motor Rotables equipment and fittings equipment improvement vehicle Total S$ S$ S$ S$ S$ S$ S$ Cost: Balance at 31 December 2011 44,838,717 74,159,756 18,342 10,396,361 3,663,574 71,912 133,148,662 Additions 3,645,352 13,884,014 2,380 573,991 101,797 - 18,207,534 Arising on acquisition of subsidiary - 14,144,879 - - - - 14,144,879 Disposal - - - (11,570) - - (11,570) Derecognition of fully depreciated assets (1,889,930) (20,105,010) - (4,719,702) (238,622) - (26,953,264) Translation adjustments (1,052,164) (1,484,767) - (209,770) (83,258) - (2,829,959) Balance at 30 June 2012 45,541,975 80,598,872 20,722 6,029,310 3,443,491 71,912 135,706,282 Accumulated depreciation: Balance at 30 December 2011 19,384,547 42,269,947 4,793 7,560,015 1,253,362 62,323 70,534,987 Charge for the period 6,042,110 4,104,462 3,190 546,889 282,321 7,192 10,986,164 Disposal - - - (11,570) - - (11,570) Derecognition of fully depreciated assets (1,889,930) (20,105,010) - (4,719,702) (238,622) - (26,953,264) Translation adjustments (483,479) (872,488) - (149,626) (29,605) - (1,535,198) Balance at 30 June 2012 23,053,248 25,396,911 7,983 3,226,006 1,267,456 69,515 53,021,119 Net carrying amount: Balance at 30 June 2012 22,488,727 55,201,961 12,739 2,803,304 2,176,035 2,397 82,685,163 Balance at 31 December 2011 25,454,170 31,889,809 13,549 2,836,346 2,410,212 9,589 62,613,675 Aircraft & related Furnitures Plant and Leasehold Rotables equipment and fittings equipment improvement Motor vehicle Total S$ S$ S$ S$ S$ S$ S$ Cost: Balance at 1 July 2012 45,541,975 80,598,872 20,722 6,029,310 3,443,491 71,912 135,706,282 Additions 6,265,593 10,552,446 - 876,243 428,054 - 18,122,336 Derecognition of fully depreciated assets (6,748,111) (2,079,907) - (1,036,631) - - (9,864,649) Translation adjustments (795,370) (1,553,680) - (106,721) (71,425) - (2,527,196) Balance at 31 December 2012 44,264,087 87,517,731 20,722 5,762,201 3,800,120 71,912 141,436,773 Accumulated depreciation: Balance at 1 July 2012 23,053,248 25,396,911 7,983 3,226,006 1,267,456 69,515 53,021,119 Charge for the period 5,644,912 4,220,820 3,454 523,532 280,982 2,397 10,676,097 Derecognition of fully depreciated assets (6,748,111) (2,079,909) - (1,036,631) - - (9,864,651) Translation adjustments (398,345) (437,657) - (53,177) (23,757) - (912,936) Balance at 31 December 2012 21,551,704 27,100,165 11,437 2,659,730 1,524,681 71,912 52,919,629 Net carrying amount: Balance at 30 June 2012 22,488,727 55,201,961 12,739 2,803,304 2,176,035 2,397 82,685,163 Balance at 31 December 2012 22,712,383 60,417,566 9,285 3,102,471 2,275,439 - 88,517,144 8. Derivative financial instruments
The non-current derivative financial instruments relate to the fair value changes of embedded derivatives relating to the warrants and conversion option of the convertible loan. The fair values of these embedded derivatives are calculated using the binomial option pricing method based on certain assumption of volatility that is not supported by observable market data. The binomial option pricing method takes into account changes in the stock price, which is determined by parameters such as risk free rate, time step and the volatility of the stock price.
As at 31 December 2012, the fair value of these embedded derivatives calculated using the binomial option pricing method amounts to $3,508,458 (A$2,763,000). However this amount has not been recorded as at 31 December 2012 as management has received in writing from the holder the intention not to convert the warrants and exercise the conversion option. Consequently, the fair value of $1,177,377 (A$906,023) recorded as at 30 June 2012 was similarly reversed in the current period.
9. Share capital 31 Dec 2012 30 Jun 2012 31 Dec 2011 No. of shares S$ No. of shares S$ No. of shares S$ Issued and fully paid: At 1 Jul 2012/ 1 Jan 2012/ 1 Jul 2011 210,640,000 48,382,289 202,640,000 44,629,894 200,040,000 43,927,891 Issue of shares under warrant scheme 3,300,000 1,997,708 - - 2,600,000 702,003 Issue of shares - - 8,000,000 3,752,395 - - Cancellation of treasury shares (900,000) (377,389) - - - - ___________ ___________ ___________ ___________ ___________ ___________ At 31 Dec 2012 / 30 Jun 2012/ 31 Dec 2011 213,040,000 50,002,608 210,640,000 48,382,289 202,640,000 44,629,894 ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ 10. Other reserves
(a) Capital reserve
This represents the gain or loss arising from purchase, sale, issue or cancellation of treasury shares. No dividend may be paid, and no other distribution (whether in cash or otherwise) of the Company's assets (including any distribution of assets to members on a winding up) may be made in respect of this reserve.
(b) Warrant reserve
The Company has a warrant scheme under which options to subscribe for the Company's ordinary shares have been granted to the Directors and Executives of the Group for the purpose of providing incentives and rewards to eligible participants who have contributed significantly to the growth and performance of the Group.
Warrant reserve is made up of the cumulative fair values of the warrants at grant date which are recognised over the vesting period.
Movement of share warrants during the financial period
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, share warrants during the financial period:
No. WAEP S$0.49 Outstanding at 1 July 2012 7,800,000 (24.99 pence) S$0.51 * Granted 2,000,000 (25.78 pence) S$0.49 - Exercised (3,300,000) (24.99 pence) __________ ___________ S$0.51 Outstanding at 31 Dec 2012 6,500,000 (25.78 pence) __________ ___________ __________ ___________ S$0.51 Exercisable at 31 Dec 2012 6,500,000 (25.78 pence) __________ ___________ __________ ___________
- The weighted average fair value of the warrants granted during the half year period was S$0.08.
- The weighted average share price at the date of exercise of the warrant exercised during the financial period was S$0.51 (25.78 pence).
- The exercise price for warrant outstanding at the end of the year was S$0.51 (25.78 pence).
Fair value of warrants granted
The fair value of the warrants granted is estimated at the grant date using a binomial option pricing model, taking into account the terms and conditions upon which the instruments were granted.
The following table lists the inputs into the binomial option pricing model for the six-months ended 31 December 2012:
Dividend yield 0% Expected volatility 40% Risk-free interest rate 0.35% per annum Expected life of warrant 1.09 years Weighted average share price 25.78 pence _______________ _______________
(c) Foreign currency translation reserve
The foreign currency translation reserve represents exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group's presentation currency.
11. Related party transactions
In addition to related party information disclosed elsewhere in the interim condensed consolidated financial statements, the following significant transactions with related parties took place at terms agreed between the parties as follows:
For the six-months Sales to/income Purchases ended 31 from related from related Related parties December parties parties S$ S$ Avation PLC 2011 3,738 218,473 Avation.net Inc 2011 - 250,774 2010 - 677,096 Airframe Leasing (S) Pte Ltd 2011 - 6,321,965 For the six-months Sales to/income Purchases ended 31 from related from related Related parties December parties parties S$ S$ Avation PLC 2012 202,649 - 2011 3,738 218,473 Avation.net Inc 2012 6,011 768,386 2011 - 250,774 Avation Eastern Fleet Pte Ltd 2012 - 90,000 2011 - - Airframe Leasing (S) Pte Ltd 2012 - 9,959,981 2011 - 6,321,965 Airframe Leasing (S) II Pte Ltd 2012 - 2,759,129 2011 - - Capital Lease Aviation PLC 2012 22,238 - 2011 5,497 - Capital Lease Australia Portfolio One Pty Ltd 2012 - - 2011 - 2,865,635 Epsom Assets Ltd 2012 616 - 2011 1,612 - F100 Pty Ltd 2012 12,096 4,349,274 2011 - 4,354,799 Luflet SRO 2012 - 125,235 2011 - - MSN 429 Limited 2012 - 1,440,824 2011 - 1,432,085 PPT Consulting Pte Ltd 2012 - - 2011 - 349,905 Takeoff Services Pte Ltd 2012 - 384,944 2011 - 98,312 __________ __________ __________ __________ Amount owed Amount owed by related to related Related parties As at parties parties S$ S$ 31 Dec Avation PLC 2012 380,756 - 30 Jun 2012 146,664 214,810 31 Dec 2011 1,551,493 40,664 31 Dec Avation.net Inc 2012 301,196 497,873 30 Jun 2012 151,121 103,417 31 Dec 2011 52,336 90,133 Avation Airframe Holding Pte Ltd 31 Dec 2012 - - 30 Jun 2012 - - 31 Dec 2011 256 - Avation Eastern Fleet Pte Ltd 31 Dec 2012 530,866 - 30 Jun 2012 434,565 - 31 Dec 2011 251 - Airframe Leasing (S) Pte Ltd 31 Dec 2012 4,092,063 - 30 Jun 2012 2,649,137 - 31 Dec 2011 251 - Airframe Leasing (S) II Pte Ltd 31 Dec 2012 1,095,258 - 30 Jun 2012 1,483,041 545,572 31 Dec 2011 - - Capital Lease Aviation PLC 31 Dec 2012 965 179,347 30 Jun 2012 745,755 5,351,650 31 Dec 2011 42,518 - Capital Lease Australia Portfolio One Pty Ltd 31 Dec 2012 - - 30 Jun 2012 - - 31 Dec 2011 961,387 477,928 Epsom Assets Ltd 31 Dec 2012 122,228 - 30 Jun 2012 322,638 - 31 Dec 2011 324,356 - F100 Pty Ltd 31 Dec 2012 7,262,081 2,533,921 30 Jun 2012 - 964,289 31 Dec 2011 6,973,541 1,243,977 Luflet SRO 31 Dec 2012 - - 30 Jun 2012 - 12,924 31 Dec 2011 - - Amount owed Amount owed by related to related Related parties As at parties parties S$ S$ MSN 429 Limited 31 Dec 2012 831,810 231,832 30 Jun 2012 932,547 248,085 10 31 Dec 2011 913,370 247,360 PPT Consulting Pte Ltd 31 Dec 2012 - - 30 Jun 2012 - - 10 31 Dec 2011 - 210,888 Takeoff Services Pte Ltd 31 Dec 2012 40,133 - 30 Jun 2012 40,426 - 31 Dec 2012 40,553 18,334 __________ __________ __________ __________
All related parties are entities with certain common directors who have an interest in these entities.
12. Dividends For the six-months ended 31 December 2012 2011 S$ S$ Declared and paid during the six months on ordinary shares: Dividends on ordinary shares * Final exempt (one-tier) dividend for 2012: $0.0129 (2011: $0.0123) per share 2,748,215 2,461,196 __________ __________ __________ __________ 13. Contingencies
There are no contingencies as at 31 December 2012 and as disclosed in the most recent annual report.
14. Subsequent events
Subsequent to the statement of financial position date, the following event occurred:
Pursuant to an order of the High Court of Singapore on 22 February 2013, a scheme meeting of the shareholders of the Company will be convened on 13 March 2013 for the shareholders of the Company to vote on the proposed scheme of arrangement for Virgin Australia Holdings Limited to acquire a 100% equity interest in the Company.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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