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
FR TPMATMBITBJJ
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