Regional Express Holdings Limited
Annual General Meeting
2009
Date of meeting
25 November 2009
Time of meeting
11 am
Place of meeting
Level 3 Board Room
81 83 Baxter Road
Mascot
NSW 2020
Regional Express Holdings Limited
(ABN 18 099 547 270)
Notice of Annual General Meeting and Explanatory Notes
Contents of this booklet
Section
Page
Chairman's letter
2
Notice of Annual General Meeting for Regional Express Holdings Limited
3
Explanatory notes to the Notice of Meeting
4
Proxies
8
Glossary
9
Corporate directory
10
Documents accompanying this booklet
Proxy Form for the Meeting
1.
Reply paid envelope
2.
Important dates
Deadline for return of Proxy Forms: 11 am on 23 November 2009
Voting entitlement date: 7.00 pm on 23 November 2009
Date and time of Meeting: 11 am on 25 November 2009
Meeting procedure
The Meeting will be conducted by the Chairperson, subject to the discretion of the Chairperson to adjourn or
reconvene the meeting. Each resolution will be voted on separately.
Other parts of the notice of meeting
The Chairman's letter and the Explanatory Notes form part of the Notice of Meeting.
1
How to vote
Eligibility to vote
For the purposes of the Meeting, a Member will be entitled to vote at the Meeting if they are recorded on the
Company's register of members at 7.00 pm on 23 November 2009 (
the Voting Entitlement Date).
Voting in person
If you are proposing to attend the Meeting and vote, there is no need for you to take any further action at this
time.
Voting by corporate representative
Body corporate Members should complete a "Corporate Letter of Representation" to enable a person to
attend the Meeting on their behalf. A form of this certificate may be obtained from the Registrar by calling
1300 735 980 (within Australia) or +61 2 8280 7136 (outside Australia).
Voting by proxy
If you are not attending the Meeting and you wish to vote you must complete and lodge the enclosed Proxy
Form.
A reply paid envelope is enclosed for the Proxy Form. Proxies may also be submitted by fax.
More information about how to vote and lodge proxies is contained in the Explanatory Notes and the Proxy
Form.
Defined terms
A number of defined terms are used in this Notice of Meeting. These terms are explained in the Glossary.
Further assistance
General queries about the Meeting and voting arrangements should be directed to:
Irwin Tan or Benjamin Ng
Company Secretaries
CompanySecretary@rex.com.au
Tel: +61 2 9023 3555
2
25 October 2009
Dear Member
Annual General Meeting 2009
Please find enclosed information relating to the Regional Express Holdings Limited Annual General Meeting to
be held at 11 am on 25 November 2009.
The AGM will provide an overview of the Company's activities for the period ended 30 June 2009, as well as an
update on recent developments. In addition, Members will be given the opportunity to consider and vote on a
number of matters, as follows:
Consideration of financial statements
The Company will be reporting to you on its financial performance for the financial year ended 30 June 2009.
Remuneration report
Members will be asked to vote on the remuneration report section of the Directors' Report in the Annual
Report.
Consistent with the
Corporations Act 2001 (Cth), Members should note that the vote is not binding.
Re-election of Directors
Members will be asked to vote on the re-election of two Directors to the Company's board of Directors.
The proposed resolutions are set out in full in the enclosed Notice of Meeting and an explanation of each
resolution is set out in the enclosed Explanatory Notes.
If you are unable to attend the Meeting, the Directors encourage you to cast your vote by completing, signing
and returning the enclosed Proxy Form.
I urge all Members to read this booklet carefully before voting on the proposed resolutions. If you are undecided
what to do, you should consult your accountant, stockbroker or other professional adviser.
I look forward to seeing you at the meeting.
Lim Kim Hai
Executive Chairman
3
Notice of Annual General Meeting for Regional Express Holdings (ABN 18 099 547 270)
Regional Express Holdings Limited (
Company) gives notice that the Annual General Meeting of the Company will be
held at Level 3 Board Room, 81 83 Baxter Road, Mascot, NSW 2020 on 25 November 2009 at 11 am.
The Explanatory Notes accompanying and forming part of this Notice of Meeting describe in more detail the matters
to be considered.
The following will be transacted at the meeting.
Ordinary business
Item 1 - Annual Report
To receive and consider the financial report of the Company and its controlled entities for the financial year
ended 30 June 2009, and the related Directors' Report, Directors' Declaration and Auditor's Report.
Resolution 1 - Adoption of remuneration report
To consider, and if thought fit, pass the following as a non-binding ordinary resolution:
"That the remuneration report, as set out in the Directors' Report for the Company and its controlled entities for
the financial year ended 30 June 2009, be adopted."
Resolution 2 Re-election of Lim Kim Hai as a Director
To consider, and if thought fit, pass the following as an ordinary resolution:
"That Lim Kim Hai, being a Director of the Company, who retires in accordance with ASX Listing Rule 14.4 and
article 19.5 of the Company's constitution, and being eligible, offers himself for re-election, is re-elected as a
Director of the Company."
Resolution 3 Re-election of Lee Thian Soo as a Director
To consider, and if thought fit, pass the following as an ordinary resolution:
"That Lee Thian Soo, being a Director of the Company, who retires in accordance with ASX Listing Rule 14.4 and
article 19.5 of the Company's constitution, and being eligible, offers himself for re-election, is re-elected as a
Director of the Company."
Resolution 4 Renewal of proportional takeover bid provisions - Special Resolution
To consider, and if thought fit, pass the following as a special resolution:
"That the proportional takeover bid provisions in clause 13 of the Company's Constitution, details of which are
set out in the Explanatory Notes accompanying this Notice of Meeting, be renewed for a period of three years
from the date of approval of such renewal by Members of the Company."
BY ORDER OF THE BOARD
Dated: 25 October 2009
Irwin Tan
Company Secretary
4
Explanatory Notes to the Notice of Meeting
Annual Report
The Annual Report for consideration at the Company Meeting will consist of the financial statements of the
Company for the financial year ending on 30 June 2009, the notes to those financial statements, the Directors'
declaration about the statements and notes, the Directors' report and the auditor's report.
Neither the
Corporations Act 2001 (Cth) nor the Company's constitution requires a vote of the Members on the
statements or the reports. However, Members will be given the opportunity to raise questions or comments
on the statements and reports at the Company Meeting. In addition, a reasonable opportunity will be given to
Members as a whole at the Company Meeting to ask the Company's auditor questions relevant to the conduct
of the audit and the preparation and content of the auditor's report.
Adoption of the remuneration report
The
Corporations Act 2001 (Cth) requires that a resolution must be put to Members that the remuneration report of
the Company be adopted. The remuneration report of the Company, which forms part of the Directors' report, is
set out on pages 16 to 18 of the Annual Report. The remuneration report sets out the Company's remuneration
policy and reports the remuneration arrangements in place for executive Directors and non-executive Directors.
Under the
Corporations Act 2001 (Cth), the resolution of the Members that the remuneration report of the Company
be adopted, or any failure to pass that resolution, is advisory only and does not bind the Company or its
Directors.
The Board of Directors recommends that Members vote in favour of the adoption of the remuneration report.
Re-election of Directors
In accordance with ASX Listing Rule 14.4 and article 19.5 of the Company's constitution, any Director appointed
throughout the year to fill a casual vacancy (under 19.4 of the Company's constitution) must retire at the next
AGM following their appointment and will be eligible for re-election at that next AGM.
The following Directors, appointed to the Board in accordance with article 19.4 of the Company's constitution,
retire as required by Article 19.5 of the Company's constitution and ASX listing rule 14.4 and, being eligible, offer
themselves for re-election as Directors of the Company:
Lim Kim Hai
Mr. Lim started his career as a Defence Engineer specializing in underwater warfare. After 10 years he left to
start his own business. Currently he has a portfolio of investment and business interests in diverse sectors and
countries. He is also the Chairman of a biomedical company in Singapore, Lynk Biotechnologies Pte Ltd as well
as Chairman of WooWorld Pte Ltd, a supplier of mobile games and content to telecommunication companies in
Japan and South East Asia.
Mr. Lim obtained his Masters in Electronics Engineering from the prestigious `Grande Ecoles' engineering colleges
in France where he was sent on a French Government scholarship. He later returned to France to complete a
Masters of Public Administration at the elite Ecole Nationale d'Administration in Paris on a Singapore Government
scholarship. Mr Lim has also a Masters of Business Administration from the National University of Singapore.
Mr Lim was one of the founding shareholders and directors of Rex. He was appointed on 27 June 2003 and
re-appointed 16 November 2006.
5
Lee Thian Soo
Mr. Lee has extensive international business experience and currently is the Chairman and owner of several
businesses with subsidiaries in South East Asia. These include an aviation components and service company,
specialising in military aircraft, as well as a medical equipment supply company, involved in the distribution
and marketing of medical equipment and drugs. He is also on the board of a biomedical company and a
mobile/internet gaming company.
Mr Lee was one of the founding shareholders and directors of Rex. He was appointed on 27 June 2003 and
re-appointed 16 November 2006
The Board of Directors recommends that Members vote in favour of the re-election of Lim Kim Hai and Lee Thian
Soo as Directors.
Renewal of proportional takeover bid provisions
The Company's Constitution contains provisions which enable the Company to refuse to register transfers of
shares acquired under a proportional takeover bid unless a resolution is passed by shareholders approving the
offer. Offers under a proportional takeover bid involve offers for only a proportion of a Member's shareholding
as compared to offers made for their full shareholding which are not affected by this clause. The provision
regulating proportional takeover bids must be renewed in a general meeting every three years to remain
effective.
The Corporations Act 2001 (Cth) requires the following matters to be advised to Members in relation to a
proposed resolution to adopt proportional takeover bid provisions.
(a)
Effect of the proportional takeover bid provisions
The effect of the proportional takeover provisions in the Constitution is that if a proportional takeover bid
is received, your Directors are required to convene a general meeting to vote on a resolution to approve
the proportional takeover bid. The bidder and persons associated with the bidder will not be entitled to
vote on the resolution. If the resolution is carried, the bid proceeds in the normal way. If the resolution is
rejected, all takeover offers are withdrawn and all contracts arising from acceptances are rescinded.
If no resolution has either been passed or rejected by the end of the 14th day before the expiry of the offer
period, a resolution to approve the proportional takeover bid is deemed to have been passed.
The proportional takeover bid provisions in the Constitution will, if Resolution 4 in the Notice of Meeting is
passed, remain in effect for three years.
(b)
Reasons for proposing the resolution to adopt the new Constitution containing the proportional takeover bid
provisions
The reasons for proposing the resolution to adopt the new Constitution containing the proportional takeover
bid provisions and the factual matters and principles underlying those reasons are as follows:
(i) your Directors consider that the proportional takeover bid provisions should be included so that
shareholders have the opportunity to vote on proportional takeover bids for the Company;
(ii) without the proposed provisions, a bidder may acquire effective control of the Company through a
partial offer without shareholders having the opportunity to dispose of all their shares to the bidder.
With the proposed provisions, if shareholders consider that effective control of the Company is
likely to pass under a proportional takeover bid, they will be in a position to decide whether the bid
should be permitted to proceed;
6
(c)
Present acquisition proposals
As at the date on which this Notice was prepared, none of the Directors are aware of a proposal by a
person to acquire, or to increase the extent of, a substantial interest in the Company.
(d)
Advantages and disadvantages of proportional takeover bid provisions
The potential advantages and the potential disadvantages of the proportional takeover bid provisions for
the Directors and the Members respectively of the Company are as follows:
· In the opinion of your Directors there are no specific disadvantages for the Directors or the Members
resulting from the inclusion of the proportional takeover bid provisions in the New Constitution.
· The advantages for the Directors is that it is easier for them to discharge their fiduciary and statutory
duties to the Company and the shareholders by convening a meeting to advise and guide the
shareholders in the event of a proportional takeover bid occurring.
· The advantage for the shareholders is that they have a right to decide on the acceptance or otherwise
of partial offers which may result in a change in control of the Company.
· The advantage for both Directors and Members is that the proportional takeover bid provisions increase
the probability that control of the Company would only be acquired by a third party as a result of a full
takeover offer or as a result of a proportional takeover bid being made to all shareholders on terms
which are sufficiently attractive to gain the support of shareholders in general meeting.
The text of the proportional takeover bid provisions from the Company's Constitution is set out below.
The Directors unanimously recommend that you vote in favour of this Resolution.
"13. Proportional takeover bids
Definitions
13.1 In this clause 13:
Approving resolution has the same meaning as in section 648D of the Act;
Approving resolution deadline has the same meaning as in section 648D of the Act;
Associate has the same meaning as in section 9 of the Act for the purposes of Chapter 6 of the Act;
Proportional takeover bid has the same meaning as in section 9 of the Act.
Prohibition on registration of transfer unless takeover scheme approved
13.2 Where an offer has been made under a proportional takeover bid in respect of Shares included in a class
of Shares, registration of a transfer to effect a contract resulting from the acceptance of an offer made
under the proportional takeover bid is prohibited unless and until a resolution to approve the proportional
takeover bid is passed in accordance with this Constitution.
Approving resolution
13.3 An approving resolution is to be voted on at a meeting, convened and conducted by the Company, of the
persons entitled to vote on that resolution under the Act.
7
Entitlement to vote on approving resolution
13.4 A person (other than the bidder or an associate of the bidder) who, as at the end of the day on which the
first offer under the proportional takeover bid was made, held Shares included in that class is entitled to
vote on an approving resolution and, for the purposes of so voting, is entitled to 1 vote for each of those
Shares.
Bidder and associates not entitled to vote
13.5 The bidder or an associate of the bidder is not entitled to vote on an approving resolution.
Approving resolution passed
13.6 An approving resolution is taken to have been passed if the proportion which the number of votes in
favour of the resolution bears to the total number of votes on the Resolution is greater than 50%, and
otherwise is taken to have been rejected.
General meeting provisions to apply
13.7 The provisions of this Constitution which apply to a general meeting of the Company apply, with any
modifications as the circumstances require, to a meeting convened under this clause and apply as if that
meeting were a general meeting of the Company.
Meeting to be held before approving resolution deadline
13.8 Where takeover offers have been made under a proportional takeover bid, then the Directors of the
Company must ensure that a Resolution to approve the proportional takeover bid is voted on in accordance
with this clause before the approving resolution deadline in relation to the proportional takeover bid.
Notice as to whether approving resolution is passed
13.9 Where a resolution to approve a proportional takeover bid is voted on in accordance with this clause,
before the approving resolution deadline in relation to the proportional takeover bid, the Company must,
on or before the approving resolution deadline:
(a) give to the bidder; and
(b) serve on the Home Branch,
a written notice stating that a resolution to approve the proportional takeover bid has been voted on and
that the resolution has been passed, or has been rejected, as the case may be.
Approving resolution deemed to have been passed
13.10 Where, as at the end of the day before the approving resolution deadline in relation to a proportional
takeover bid under which offers have been made, no Resolution to approve the proportional takeover bid
has been voted on in accordance with this clause, then a resolution to approve the proportional takeover
bid is, for the purposes of this clause, deemed to have been passed in accordance with this clause.
Effect of this clause
13.11 This clause ceases to have effect on the third anniversary of the later of the date of its adoption or of its
most recent renewal."
8
Proxies
Proxy votes
If you do not plan to attend the Meeting in person, you are encouraged to complete and return the Proxy Form
which accompanies the Notice of Meeting.
Any Member entitled to attend and vote at the Meeting is entitled to appoint one or two proxies to vote on their
behalf in respect of each share they hold in the Company. If two proxies are appointed, the Member may specify
the proportion or number of votes each proxy is appointed to exercise. If two proxies are appointed and no
proportion or number is specified, each proxy may exercise half of the votes. A proxy need not be a Member.
The Proxy Form contains voting instructions and other important information which you should read carefully.
To be effective, Proxy Forms (duly completed and with any necessary documentation) must be received by
11 am on 23 November 2009.
Proxy Forms may be returned by any of the following means:
By mailing it to:
Link Market Services Limited, Level 12, 680 George Street, Sydney NSW 2000 or Locked Bag A14, Sydney South,
NSW 1235 Australia using the reply paid envelope enclosed with this booklet.
By faxing it to:
(02) 9287 0309 (within Australia)
+61 2 9287 0309 (outside Australia)
By hand delivering it to:
Link Market Services Limited, Level 12, 680 George Street, Sydney NSW 2000
By lodging it online at:
http://www.linkmarketservices.com.au
Proxy Forms must be signed by a Member or the Member's attorney or, if the Member is a body corporate, by
two directors or by a director and secretary, or of it is a proprietary company that has a sole director who is
also the sole secretary (or has no secretary), by that director, or under hand of its attorney or duly authorised
officer.
If a proxy is signed by a Member's attorney, the power of attorney must have been previously noted by the
Registrar or a certified copy thereof must also be received by 11 am on 23 November 2009.
9
Glossary
AGM
Annual General Meeting
Annual Report
In the case of the Company, the financial statements of the Company
for the financial year ending on 30 June 2009, the notes to those
financial statements, the Directors' declaration about the statements
and notes, the Directors' report and the auditor's report
ASX
Australian Stock Exchange
Booklet
This booklet, comprising the Chairman's letter, the Notice of Meeting,
the Explanatory Notes and accompanying documents
Company
Regional Express Holdings Limited (ABN 18 099 547 270)
Directors
The directors of the Company or the Responsible Entity (as the case
requires) from time to time and "Director" means any one of them
Explanatory Notes
Explanatory Notes to the Notice of Meeting
Meeting
The AGM of the Company to be held at Level 3 Board Room, 81 83
Baxter Road, Mascot, NSW 2020 at 11 am on 25 November 2009.
Notice of Meeting
The notice of the Meeting (together with the Chairman's letter and
Explanatory Notes) enclosed in this Booklet
Registrar
Link Market Services Limited (ACN 083 214 537)
Member
A person who is entered in the Company's members' register from
time to time as the holder of shares in the capital of the Company
Voting Entitlement Date
7 pm on 23 November 2009, being the time and date for determining
the eligibility of Members to vote at the Meeting
10
Corporate directory
Regional Express Holdings Limited
81 83 Baxter Road, Mascot, NSW 2020
Tel: +61 2 9023 3555
Website: http://www.rex.com.au
Directors of the Company
Lim Kim Hai
Lee Thian Soo
James Davis
John Sharp
Russell Hodge
David Miller
Secretaries of the Company
Irwin Tan
Benjamin Ng
Registrar
Link Market Services Limited
Tel: 1300 735 980 or (02) 8280 7136
Website: http://www.linkmarketservices.com.au
*X99999999999*
X99999999999
I/We being a member(s) of Regional Express Holdings Limited and entitled to attend and vote hereby appoint:
Resolution 1
Adoption of remuneration report
Resolution 2
Re-election of Lim Kim Hai as a Director
Resolution 3
Re-election of Lee Thian Soo as a
Director
Resolution 4
Renewal of proportional takeover bid
provisions - Special Resolution
For
Against Abstain
*
By mail:
Regional Express Holdings Limited
C/- Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235 Australia
By fax: (02) 9287 0309
www.linkmarketservices.com.au
ONLINE
LODGE YOUR VOTE
All enquiries to:
Telephone: 1300 735 980
(02) 8280 7136
Regional eXpRess Holdings liMiTed
ABN 18 099 547 270
Proxies will only be valid and accepted by the Company if they are signed and received no later than 48 hours before the meeting.
Please read the voting instructions overleaf before marking any boxes with an
X
ShAREhOLDER VOTING FORM
or failing the person/body corporate named, or if no person/body corporate is named, the Chairman of the Meeting, as my/our proxy and
to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held at 11:00am on Wednesday, 25 November
2009, at Level 3 Board Room, 81-83 Baxter Road, Mascot NSW 2020 and at any adjournment or postponement of the meeting.
APPOINT A PROXY
OR
if you are
NOT appointing the Chairman of the
Meeting as your proxy, please write the name of the
person or body corporate (excluding the registered
shareholder) you are appointing as your proxy
the
Chairman
of the Meeting
(mark box)
STEP 1
* If you mark the Abstain box for a particular Item, you are directing your proxy not to vote on your behalf on a show of hands or on a
poll and your votes will not be counted in computing the required majority on a poll.
This form should be signed by the shareholder. If a joint holding, either shareholder may sign. If signed by the shareholder's attorney, the power
of attorney must have been previously noted by the registry or a certified copy attached to this form. If executed by a company, the form must
be executed in accordance with the company's constitution and the Corporations Act 2001 (Cth).
SIGNATURE OF ShAREhOLDERS ThIS MUST BE COMPLETED
Shareholder 1 (Individual)
Joint Shareholder 2 (Individual)
Joint Shareholder 3 (Individual)
Sole Director and Sole Company Secretary
Director/Company Secretary (Delete one)
Director
*REX PRX901*
ReX pRX901
VOTING DIRECTIONS
STEP 2
STEP 3
hOW TO COMPLETE ThIS PROXY FORM
hOW TO COMPLETE ThIS PROXY FORM
If you would like to attend and vote at the Annual General Meeting, please bring this form with you.
This will assist in registering your attendance.
Lodgement of a Proxy Form
This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below by 11:00am
on Monday, 23 November 2009, being not later than 48 hours before the commencement of the meeting. Any Proxy Form received
after that time will not be valid for the scheduled meeting.
Proxy Forms may be lodged using the reply paid envelope or:
by mail:
Regional Express Holdings Limited
C/- Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235
Australia
by fax:
+61 2 9287 0309
online:
www.linkmarketservices.com.au
ONLINE
lodging it online at Link's website (www.linkmarketservices.com.au) in accordance with the instructions given there (you
will be taken to have signed your Proxy Form if you lodge it in accordance with the instructions given on the website);
by hand:
delivering it to Link Market Services Limited, Level 12, 680 George Street, Sydney NSW 2000.
Your Name and Address
This is your name and address as it appears on the company's
share register. If this information is incorrect, please make the
correction on the form. Shareholders sponsored by a broker
should advise their broker of any changes.
Please note: you
cannot change ownership of your shares using this form.
Appointment of a Proxy
If you wish to appoint the Chairman of the Meeting as your
proxy, mark the box in Step 1. If the person you wish to appoint
as your proxy is someone other than the Chairman of the
Meeting please write the name of that person in Step 1. If you
leave this section blank, or your named proxy does not attend
the meeting, the Chairman of the Meeting will be your proxy.
A proxy need not be a shareholder of the company. A proxy
may be an individual or a body corporate.
Votes on Items of Business Proxy Appointment
You may direct your proxy how to vote by placing a mark in
one of the boxes opposite each item of business. All your shares
will be voted in accordance with such a direction unless you
indicate only a portion of voting rights are to be voted on any
item by inserting the percentage or number of shares you wish
to vote in the appropriate box or boxes. If you do not mark
any of the boxes on the items of business, your proxy may vote
as he or she chooses. If you mark more than one box on an
item your vote on that item will be invalid.
Appointment of a Second Proxy
You are entitled to appoint up to two persons as proxies to
attend the meeting and vote on a poll. If you wish to appoint
a second proxy, an additional Proxy Form may be obtained by
telephoning the company's share registry or you may copy this
form and return them both together.
To appoint a second proxy you must:
(a) on each of the first Proxy Form and the second Proxy Form
state the percentage of your voting rights or number of
shares applicable to that form. If the appointments do not
specify the percentage or number of votes that each proxy
may exercise, each proxy may exercise half your votes.
Fractions of votes will be disregarded.
(b) return both forms together.
Signing Instructions
You must sign this form as follows in the spaces provided:
Individual: where the holding is in one name, the holder must
sign.
Joint holding: where the holding is in more than one name,
either shareholder may sign.
Power of Attorney: to sign under Power of Attorney, you must
lodge the Power of Attorney with the registry. If you have not
previously lodged this document for notation, please attach a
certified photocopy of the Power of Attorney to this form when
you return it.
Companies: where the company has a Sole Director who is
also the Sole Company Secretary, this form must be signed by
that person. If the company (pursuant to section 204A of the
Corporations Act 2001) does not have a Company Secretary, a
Sole Director can also sign alone. Otherwise this form must be
signed by a Director jointly with either another Director or a
Company Secretary. Please indicate the office held by signing
in the appropriate place.
Corporate Representatives
If a representative of the corporation is to attend the
meeting the appropriate "Certificate of Appointment of
Corporate Representative" should be produced prior to
admission in accordance with the Notice of Meeting. A form
of the certificate may be obtained from the company's share
registry.
hOW TO COMPLETE ThIS PROXY FORM
hOW TO COMPLETE ThIS PROXY FORM
ANNUAL REPORT
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2009
REGIONAL EXPRESS HOLDINGS LIMITED
Annus Horribilis II
What does it profit a company if it gains the whole world and loses its soul
REGIONAL EXPRESS VALUE STATEMENT
COMPANy
Staff members are part of the Rex family. This comes with both
privileges and responsibilities.
We expect every staff member to take ownership of
issues encountered:
Ownership means that if something is wrong then it is
· everyone's job to fix it.
Matters that cannot be handled by the staff member
· ought to be pursued further with senior management.
Staff have the right to make mistakes if they act in the
· best interest of the customer and the company.
We strive to be a learning organization where we actively
seek to identify issues no matter how small in order to
continually transform ourselves to a better organization:
This entails a culture where issues are highlighted as
· learning experiences even though they may place our
colleagues in a bad light.
An excellent airline is one that is outstanding in a
· thousand small ways.
We believe that we can only count on ourselves for our
continued success:
All staff members must embrace the `can do' and `will
· do' spirit that has been the defining characteristic of
our initial success.
Hard work is the cornerstone of our work ethic.
· All staff share in the profits and so all staff are
· expected to contribute his/her fair share.
We value open communication and will strive to create an
environment that removes barriers to communication:
Staff members have a right to be heard regardless of
· their position.
Staff members are encouraged to contact directly the
· members of the Management Committee and Board if
they see the need.
We respect the dignity of each staff member and will
treat each other with respect and fairness:
The customer does not always come first and we
· will stand by our staff member if the customer is
unreasonable.
While we can be single-minded in tackling issues
· and problems, we will focus on the issue and not the
person.
We accept that staff members may have different
· talents and capabilities and will strive to fit the job to
the person rather than the other way around.
Important decisions concerning staff matters are
· always referred to the Management Committee to
ensure transparency, fairness and consistency.
We are committed to standing behind our staff members
and their families and will do all we can to help them in
their times of special need:
We believe in the value of the family and will strive to
· create a working environment that is supportive of
the family.
All staff members have the right to appeal to the
· Management Committee if special assistance or
consideration is needed.
CUSTOMER
We are committed to providing our customers with safe
and reliable air transportation with heartfelt hospitality.
As a regional carrier, we constantly strive to keep fares
low through our commitment to simplicity, efficiency and
good value.
We are committed to treating our customers as
individuals and will respond to all their comments and
complaints.
CONTRACTORS
We believe that our suppliers are partners in our
business.
In all our dealings with suppliers we will seek to be fair
and honest and will strive to work only with like-minded
suppliers.
COMMUNITy
Rex is mindful of the tremendous social and economic
impact its services have on the regional communities and
works in partnership with these communities to balance
their needs against Rex commercial imperatives.
We are also committed to giving back to the regional
communities by supporting worthwhile charitable causes
which are focused on helping the less fortunate.
We are committed to preserving the environment to the
measure of our capabilities.
CAPITAL
Rex believes that its shareholders' interest is best served
by pursuing a path of steady but sustainable growth of its
earnings.
We believe that maximizing shareholders' returns in
the long term is not incompatible with our duties and
responsibilities towards our other stakeholders outlined
above.
Ever since its birth in August 2002, Rex has never had any respite
from the continuous onslaught of the most debilitating of external
pressures following the aftermath of 9/11 we had the steep fall of
the AUD to almost half the value of the USD, the Iraq war, SARS, the
most prolonged drought that regional Australia Rex's main client
base has experienced in a century, three years of explosive rise of
fuel prices, a worldwide shortage of pilots leading to a crippling pilot
attrition rate in Rex that reached 50% in a year, the global meltdown
of the financial systems and to cap off the year, the swine flu that
saw our passenger numbers in Victoria dropping by 20%. Sadly, in
Australia this has meant the demise of at least eight regional airlines
during that period.
It is therefore most gratifying when we received news that Rex was
ranked by the prestigious Aviation Week and Space Technology as the
world's best regional airline ahead of the traditional regional giants
in America like Republic, Pinnacle and Mesa. In an almost perverse
manner, that this accolade, which comes on top of being awarded the
best regional airline by CAPA for the second year in a row, should be
made in the midst of the biggest economic turmoil in 50 years gives
us our greatest pride.
Indeed we have much to be proud of. Although we faced the
same loss of passengers as the other airlines, the 5% reduction in
full-year earnings seems almost comforting compared to the massive
reductions in profits or even losses that airlines in Australia and
elsewhere are facing. Our balance sheet is as strong if not stronger
than ever before with continuing absence of debt and a healthy cash
balance. Instead of raising capital, we continue to invest into our
future.
The economic tide will turn. It is not a question of if but of when.
God willing and with the continued loyalty of our outstanding staff,
to whom I express my gratitude, Rex will be there when that happens
even if we are to be the last one standing.
Lim Kim Hai
Executive Chairman
26 August 2009
FOREWORD
La
st M
a
n St
a
n
d
i
n
g
This annual report covers both Regional Express Holdings Limited as
an individual entity and the consolidated entity comprising Regional
Express Holdings Limited and its subsidiaries.
The Group's functional and presentation currency is AUD ($).
DIRECTORS
Lim Kim Hai
The Hon. John Sharp
James Davis
Russell Hodge
David Miller
Lee Thian Soo
COMPANY SECRETARIES
Irwin Tan
Benjamin Ng
REGISTERED OFFICE
81 83 Baxter Road
Mascot, NSW 2020
(Ph): 02 9023 3555
(Fax): 02 9023 3599
SHARE REGISTRY
Link Market Services Limited
Level 12, 680 George Street
Sydney, NSW 2000
SOLICITORS
Baker & McKenzie
Level 27, AMP Centre
50 Bridge Street
Sydney, NSW 2000
BANkERS
Westpac Banking Corporation
AUDITORS
Deloitte Touche Tohmatsu
CORPORATE INFORMATION
PART I
Directors' Report
4 - 19
Auditor's Independence Declaration
20
PART II
Financial Report
22 - 71
Income Statement
24
Balance Sheet
25
Cash Flow Statement
26
Statement of Changes in Equity
27 - 28
Notes to the Financial Statements
29 - 71
Directors' Declaration
71
PART III
Regulatory Reports
72 - 80
Independent Auditor's Report
74 - 75
Corporate Governance Statement
76 - 79
ASX Additional Information
80
CONTENTS
6
REGIONAL EXPRESS HOLDINGS LIMITED
In compliance with the provisions of the Corporations Act 2001, the directors of Regional Express Holdings Limited (`Rex') submit herewith the
annual report for Rex and its consolidated entities (the `Group') for the financial year ended 30 June 2009.
The names and particulars of the directors of Rex during or since the end of the financial year are:
01.
BOARD OF
DIRECTORS
Mr. Lim started his career as a Defence Engineer specializing in underwater warfare.
After 10 years he left to start his own business. Currently he has a portfolio of
investment and business interests in diverse sectors and countries. He is also the
Chairman of a biomedical company in Singapore, Lynk Biotechnologies Pte Ltd as
well as Chairman of WooWorld Pte Ltd, a supplier of mobile games and content to
telecommunication companies in Japan and South East Asia.
Mr. Lim obtained his Masters in Electronics Engineering from the prestigious `Grande
Ecoles' engineering colleges in France where he was sent on a French Government
scholarship. He later returned to France to complete a Masters of Public Administration
at the elite Ecole Nationale d'Administration in Paris on a Singapore Government
scholarship. Mr Lim has also a Masters of Business Administration from the National
University of Singapore.
Mr Lim was one of the founding shareholders and directors of Rex.
The Honourable John Sharp, originally from a farming and business background, is
an aviator having been a licensed pilot of both fixed wing and rotary wing aircraft.
Mr. Sharp was a member of the House of Representatives of the Commonwealth
Parliament for 14 years (1984 1998). Mr. Sharp retired from the House of Representatives
in 1998 and established his own high level aviation and transport consulting company,
Thenford Consulting. Mr. Sharp is a former Chairman of the Aviation Safety Foundation
of Australia, a director of Australian Aerospace, a wholly-owned subsidiary of European
Aeronautics Defence and Space (EADS) representing Airbus (the aircraft manufacturer
of ATR, CASA, Eurocopter and Astrium satellites) and a director of Skytraders, an air
freight and aerial work operation providing services for Australia's Antarctic Division.
He is Chairman of Parsons Brinkerhoff Advisory Board. This is an engineering and
design company operating throughout Australia. He is also Chairman of Power and
Data Corporation Pty Limited and Chairman of Pel-Air Aviation Pty Limited. Mr. Sharp
is a Trustee and Board Member of John McKeown House, Honorary Federal Treasurer,
National Party of Australia and recently retired Chairman of Winifred West Schools
Foundation. He is a member of the University of Wollongong Vice Chancellor's Advisory
Board. Recently he was appointed a director of the Flight Safety Foundation following his
receipt of the Foundations Presidential Citation for Aviation Safety; the first Australian to
receive this award. Mr. Sharp's extensive experience of aviation, regional air services and
as the former Federal Minister for Transport and Regional Development in the Federal
Government, adds significantly to the expertise and standing of the Board.
LIM KIM HAI
Executive Chairman
Appointed 27 June 2003 and
re-appointed 16 November 2006
THE HON. JOHN SHARP
Deputy Chairman and Independent Director
Appointed 14 April 2005
Mr. Davis is a qualified Aeronautical Engineer and worked for four years with the
Civil Aviation Safety Authority before obtaining his Air Transport Pilot Licence. Since
then he has flown professionally with airlines in Australia and overseas for 26 years
accumulating some 12,500 flying hours. Upon joining Hazelton Airlines in 1999, he
was appointed Flight Operations and Standards Manager and Deputy Chief Pilot for
the airline. In 2001, Mr. Davis was promoted to Chief Pilot of Hazelton, and held that
position when Hazelton was merged into and began trading as part of Rex in 2002.
Mr. Davis became Executive General Manager Operations in 2003, and subsequently
Managing Director Operations. Mr. Davis became Chief of Staff of the Chairman's Office
in 2007 and was appointed Managing Director in May 2008. Mr. Davis is Chairman of
the Australian Airline Pilot Academy Pty Ltd. and a Director of Rex Group companies
Pel-Air Aviation Pty Ltd and Air Link Pty Ltd. He also sits on the Board of the Regional
Aviation Association of Australia.
JAMES DAVIS
Managing Director
Appointed 27 May 2008
7
DIRECTORS' REPORT
RUSSELL HODGE
Independent Director
Appointed 31 March 2008
DAVID MILLER
Executive Director, Rex
Chief Executive Officer, Air Link Pty Ltd
Appointed 26 February 2007
Mr. Hodge practiced as a solicitor from 1973 to 1997 and specialised in aviation
and commercial law. He retired as senior partner of Owen Hodge & Son Solicitors
in 1992. Mr. Hodge, a former CEO of Pel-Air, was an executive director of Pel-Air
from November 1994 to March 2008. He currently is a non-executive director of
Pel-Air. He was previously a director of the Regional Aviation Association of Australia
(RAAA). He has over 30 years experience in aviation regulation, compliance, aircraft
financing and the commercial operations of aircraft and airlines.
Mr. Miller commenced flying commercially in 1985 and bought a 50% share of
Air Link which was at that time a one-aircraft charter business. Between 1985 and
1991 Mr. Miller purchased all the shares of Air Link Pty Ltd and commenced regular
passenger transport services throughout Western N.S.W. Air Link had commercial ties
with Hazelton Airlines right through until the Ansett collapse in 2001. Mr. Miller has
served as a director of the Regional Aviation Association of Australia since 1992 along
with industry leaders Max Hazelton and Don Kendell and held the position of chairman
for four years and vice-chairman for numerous terms of this important industry body.
Air Link continues to operate under Mr. Miller's management.
Mr. Lee has extensive international business experience and currently is the Chairman
and owner of several businesses with subsidiaries in South East Asia. These include an
aviation components and service company, specialising in military aircraft, as well as
a medical equipment supply company, involved in the distribution and marketing of
medical equipment and drugs. He is also on the board of a biomedical company and a
mobile/internet gaming company.
Mr Lee was one of the founding shareholders and directors of Rex.
LEE THIAN SOO
Non-Executive Director
Appointed 27 June 2003 and
re-appointed 16 November 2006
8
REGIONAL EXPRESS HOLDINGS LIMITED
The names and particulars of the senior management executives of Rex during or since the end of the financial year are:
02.
SENIOR MANAGEMENT
EXECUTIVES
IRWIN TAN
General Manager, Corporate Services
Irwin's background was originally in genetic research after graduating with first class honours in
biotechnology from the University of New South Wales in Sydney. Irwin left the field of genetic
research when he joined Morrison Express Logistics in 1999 and then Singapore Airlines in 2001.
He was later transferred to Singapore Airlines Cargo as an executive where he took on various
appointments in product development, advertising, sales and airline alliances before taking on
the role of Regional Marketing Manager in South West Pacific in 2003. Irwin joined Rex in July
2005 and was appointed the Company Secretary on 7 September 2005. Irwin is also a member
of the Rex Management Committee.
WARRICK LODGE
General Manager, Network Strategy and Sales
Warrick manages a team responsible for scheduling, pricing, revenue management, sales and
commercial analysis. His duties include the monitoring of network performance and analysis of
both existing and new market opportunities. Warrick has more than 17 years of regional airline
experience in the specialised areas of scheduling, pricing and revenue management and held
the position of Manager Network Planning with Kendell Airlines, having joined that company
in 1992. Warrick has been with Rex since its inception in 2002 and is also a member of the Rex
Management Committee.
CHRIS HINE
General Manager, Flight Operations and Chief Pilot
Chris has over 19 years of aviation experience including 14 years as a First Officer and Captain of
Metroliner and SAAB 340 aircraft. He is a well-accomplished training and checking pilot and has
been Chief Pilot of Rex since the Company's inception in August 2002. Prior to Rex he worked in
the same fields in Kendell Airlines from 1995. He currently oversees all facets of the Company's
flight operations and all operational matters affecting the safety of flight operations. Chris
also has experience as a lecturer in Cockpit Systems Management for the Bachelor of Applied
Science (Civil Aviation) degree at the University of South Australia. Chris is a member of the Rex
Management Committee and a Director of the Australian Airline Pilot Academy Pty Ltd.
JAMES DAVIS
Managing Director
Jim is a member of the Rex Management Committee. A description of his qualifications, skills and
experience is included on page 6.
9
DIRECTORS' REPORT
MAyOORAN THANABALASINGHAM
General Manager, Information Technology and Communications
Mayooran completed his Associate Diploma of Electrical Engineering / Computer Engineering in
2001. He commenced with Rex in April 2004 and leads a team of IT professionals responsible
for ensuring day-to-day operations of the airline. With over eight years experience and an
extensive background in information technology, Mayooran has managed a range of IT projects
and initiatives for Rex including the Internet Booking Engine, the Amend Booking Engine and
Web check-in. Mayooran is a member of the Rex Management Committee.
GARRy FILMER
General Manager, Engineering
Garry is a Licensed Aircraft Maintenance Engineer with 30 years experience and has been
involved in Regional Airline and Maintenance Repair Organization management over the last
15 years, holding positions such as Engineering Manager and General Manager Engineering.
Garry joined Rex in 2007 as Engineering Advisor in the Chairman's Office and as a member
of the Engineering Management Committee, is involved in the coordination of projects such
as the management of Ground Support Equipment, review of Engineering resources and the
recruitment of staff. Garry became General Manager, Engineering in June 2008 and is a member
of the Rex Management Committee.
DALE HALL
Maintenance Control Manager
Dale has 27 years of aviation engineering experience. He began his career as an apprentice
in the Royal Australian Air Force where he served for nine years. He then spent the next
17 years in the industry working in turbine engine and component overhaul facilities, on
and offshore gas and petroleum helicopter industries and maintaining aero-medical charter
aircraft. Dale joined Kendell Airlines in 1999 as a Licensed Aircraft Maintenance Engineer and
held the position of a Technical Support Engineer with both Kendell and Rex. In late 2006 Dale
was appointed as a Maintenance Controller for Rex and took up the position of Maintenance
Control Manager in 2007. He is a member of the Rex Management Committee.
10
REGIONAL EXPRESS HOLDINGS LIMITED
04. DIRECTORS' SHAREHOLDINGS
05. DIRECTORS' MEETINGS
06. REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT
07. SHARES UNDER OPTION OR ISSUED ON EXERCISE OF OPTIONS
08. FORMER PARTNERS OF THE AUDIT FIRM
03. DIRECTORSHIPS OF OTHER LISTED COMPANIES
During the year under review, no directors appointed as at 30 June 2009 served as a director with any other company listed on the ASX.
Information about the remuneration of directors and senior management is set out in the remuneration report of this directors' report, on
pages 16 to 18.
No options were granted or exercised in Fy 2009.
No directors or officers in Rex or the Group have been a partner or director of Deloitte Touche Tohmatsu, the Group's auditor.
The following table sets out each director's relevant interest in shares and options of Rex as at the date of this report. No debentures or rights
exist.
Directors
Fully paid ordinary shares
direct interest
Fully paid ordinary shares
indirect interest
Share options
Lim Kim Hai
18,480,630
5,755,513
-
The Hon. John Sharp
150,000
250,000
-
James Davis
192,431
-
-
Russell Hodge
16,000
1,108,000
-
David Miller
90,460
-
-
Lee Thian Soo
7,722,181
3,727,181
-
The following table sets out the number of directors' meetings (including meetings of committees of directors) held during the financial year
and the number of meetings attended by each director (while they were a director or committee member). During the financial year, five Board
meetings, two Remuneration and Nomination Committee meetings, two Audit and Corporate Governance Committee meetings and four Safety
and Risk Management Committee meetings were held. Note: the Managing Director chairs the Rex Safety Management Group which meets
monthly and the Chairman of the Safety and Risk Management Committee attends those meetings.
Directors
Board
Remuneration
and Nomination
Committee
Audit & Corporate
Governance
Committee
Safety & Risk
Management
Committee
No. of meetings held:
5
2
2
4
Attendance:
Lim Kim Hai
5 (Chair)
-
-
-
The Hon. John Sharp
5
2 (Chair)
2
-
James Davis
5
2
-
1
Russell Hodge
5
-
-
4 (Chair)
David Miller
5
-
-
3
Lee Thian Soo
4
-
2 (Chair)
-
11
DIRECTORS' REPORT
10. PRINCIPAL ACTIVITIES
11. ORGANISATION & GROUP STRUCTURES
Mr Irwin Tan holds the position of Company Secretary of Rex. A description of his qualifications, skills and experience is included on page 8.
Mr Benjamin Ng, having completed his Bachelor of Science followed by an MBA in the UK, started his career with the German multi-national
chemical company, Henkel in Malaysia. In his eight years with Henkel/Cognis, he held various positions ranging from sales, marketing, business
analysis and cost controlling. In 2001, he was posted to headquarters in Germany for just over a year where he was cost controller for the Asia
Pacific Region. Upon his return to Malaysia, he headed up the controlling department of Cognis for three years. Benjamin joined Rex in April 2006
and was appointed Company Secretary on 10 October 2007.
The Group's principal activity during the financial year was air transportation of passengers and freight.
Regional Express
Holdings Limited
Rex Freight & Charter
Pty Limited
Air Link
Pty Limited
Rex Investment
Holdings Pty Limited
Pel-Air Aviation
Pty Limited
Regional Express
Pty Limited
Australian Airline Pilot
Academy Pty Limited
ACN 099 547 270
ACN 065 221 356
ACN 000 872 613
ACN 101 317 677
ACN 002 858 013
ACN 101 325 642
ACN 128 392 469
100%
100%
100%
Executive
Chairman
Lim Kim Hai
Managing
Director
Jim Davis
Flight
Operations
Chris Hine
General Manager
Maintenance
Control
Dale Hall
Manger
Engineering
Garry Filmer
General Manager
National
Airports
Irwin Tan
(Acting)
Network
Strategy & Sales
Warrick Lodge
General Manager
IT &
Communications
Mayooran Thanabalasingham
General Manager
Corporate
Services
Irwin Tan
General Manger
Chairman's
Office
General Staff
·
Productivity Committee
·
Board/Company Secretariat
·
Human Factors Group
·
HR
·
Legal
·
Finance
·
Call Centre
·
Administration
·
Corporate
·
Communications
09. COMPANY SECRETARIES
Monthly Passenger Chart
TotalPassengers
FY 2003 Passengers
FY 2004 Passengers
FY 2005 Passengers
FY 2006 Passengers
FY 2007 Passengers
FY 2008 Passengers
FY 2009 Passengers
`000
Jul
0
10
20
30
40
50
60
80
90
100
110
120
130
140
70
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
12
REGIONAL EXPRESS HOLDINGS LIMITED
12. REVIEW OF OPERATIONS
The first half of Fy 2009 was shaped by record fuel prices, easing pilot attrition and harsh commercial operating conditions that were driven by the
global financial crisis.
On the back of 50% pilot attrition during the previous Fy 2008, a significant turnaround was seen in Fy 2009 with average pilot attrition rates falling
to 13% due to a contraction of the global aviation industry. In 2H Fy 2009 the pilot attrition fell to below 6% and when combined with the recruitment
of 28 Rex pilot cadets from the Rex subsidiary Australian Airline Pilot Academy (AAPA), it enabled the Rex pilot establishment to reach full strength
during 2H Fy 2009.
Throughout the prior Fy 2008 the record high pilot attrition steered frequency reductions and some service suspensions. These reductions were
largely kept in place in Fy 2009 due to the harsh economic conditions that impacted passenger demand for regional travel. The prior years capacity
reductions greatly assisted with the management of network capacity with total Available Seat Kilometres (ASK's) falling by 9% in Fy 2009 to counter
the reduced demand.
In line with its primary philosophy, the Group continued to build relationships with the regional communities throughout the network and successfully
renewed and formed new partnerships with local council airport operators to jointly invest in improvements to the air services to those communities.
In the year under review, a new partnership agreement was forged with the Dubbo City Council. Partnership agreements were renewed with the
regional councils that own and operate the following regional airports: Albury, Broken Hill, Bathurst, Ballina, Burnie, Ceduna, Coober Pedy, Grafton,
Griffith, Lismore, Moruya, Narrandera, Parkes, Port Lincoln, Taree and Wagga Wagga. There were no partnership agreements with the regional councils
that own and operate the following regional airports: Kangaroo Island, King Island, Mount Gambier, Merimbula, Mildura, Orange and Whyalla.
ROUTE NETWORk DEVELOPMENTS
Overall Fy 2009 saw a drop in passenger numbers and an associated and necessary reduction in network capacity.
During 1H Fy 2009, Rex exited the Sydney to Mildura route due to the commencement of Virgin Blue on the Melbourne to Mildura route and subsequent
over supply of capacity in the total market place. In partnership with the Griffith City Council, Rex redeployed the Sydney to Mildura resources to the
Sydney to Griffith route and this led to the doubling of peak time business frequency between Sydney and Griffith.
In December 2008, Air Link terminated the piston engine RPT operations to Bourke, Cobar, Coonamble, Lightning Ridge, Mudgee and Walgett, with the
piston engine aircraft being retired from providing regular air services. In addition, the 19 seat Air Link Beech 1900D services were transitioned to the
34 seat Rex Saab 340 services on the Sydney to Bathurst and Dubbo routes, with the Beech 1900D aircraft focusing on charter work in 2H Fy 2009.
There were no changes to the competitive market position of the airline over the course of the year.
The tables below set out the evolution of monthly passenger carriage and monthly passenger revenue over the last four financial years.
Monthly Passenger Revenue
PassengerRevenue
*
*
Revenue only includes passenger, fuel levy & contra revenue. Other revenue such as head tax, unearned revenue, freight, charter, excess baggage,
memberships etc. are not included.
FY 2003 Revenue
FY 2004 Revenue
FY 2005 Revenue
FY 2006 Revenue
FY 2007 Revenue
FY 2008 Revenue
FY 2009 Revenue
$M
Jul
0
1
2
3
4
5
8
7
6
10
11
12
13
14
15
16
17
9
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
13
DIRECTORS' REPORT
FLEET CHANGES
Over the past financial year the following changes to the Rex fleet occurred:
Added 6 SAAB 340B Plus aircraft
Sold 3 SAAB 340A aircraft offshore
Transferred 2 SAAB 340B Plus aircraft to Pel-Air for Osbourne Mine Fly-in/Fly-out contract in Townsville
IMPROVING PRODUCTIVITY
The Group's
Productivity Committee continued its efforts throughout the year with the launching of its fifth consecutive productivity drive. The
committee ended the year with a total realised savings of $4.1M.
The Group's Cost per Available Seat Kilometre (ASK) increased 10.5% from 19.0 cents in Fy 2008 to 21.0 cents in Fy 2009. This increase is largely due
to the 10.2% reduction of ASKs as well as normal 3% CPI adjustments of salaries and other costs.
The realised productivity savings enabled the Group to maintain strong earnings in spite of a drastic drop in passenger numbers and the continued
rise in fuel prices. It also enabled the Group to keep air fares at a competitive and affordable level, particularly in the context of the record fuel prices
that were encountered during Fy 2009. As a result, the Group's average fare in Fy 2009 remained 6% below that of Fy 2003 (inclusive of fuel levy,
exclusive of airport taxes and GST) which was Rex's first year of operations.
OPERATIONAL AND SERVICE STANDARDS
Over the year, Rex achieved the second lowest cancellation rates of all Australian airlines as measured by the Bureau of Infrastructure, Transport and
Regional Economics. This was a direct result of the improving situation for the pilot numbers in Fy 2009 and by Q3 of Fy 2009 Rex has managed to
bring down its cancellations rates to 0.2% - the lowest of all Australian airlines and a level consistent with its past trends prior to the acute pilot
shortages of Fy 2008 which saw the annual cancellation rate skyrocket to 0.9%.
For the second year running, the Centre for Asia Pacific Aviation (CAPA) has named Rex as "Regional Airline of
the year" for 2008. This award recognises Aviation Excellence as demonstrated by Rex's notable achievements
in the aviation industry.
COMMUNITY INVOLVEMENT
The year 2009 started off on a tragic note as Australia's worst bushfire disaster hit the state of Victoria.
Rex set aside a Bushfire Assistance fund of $200,000 in the form of air fares and other means, where charity groups and other organizations involved
in relief efforts are able apply for air fare assistance.
In addition, collection on board all flights was organised, as well as collection boxes being set up across the network offices for employees to
contribute. A dollar for dollar match was made by Rex against the monies collected, resulting in a total contribution of $145,000.
In addition to this major involvement, Rex has contributed almost $350,000 to sponsoring and participating in a myriad of community and charitable
projects across the network.
CA
PA
A
vi
at
ion
Awards for
Ex
c
elle
nce
CA
PA
A
vi
at
ion
Awards for
Ex
c
elle
nce
14
REGIONAL EXPRESS HOLDINGS LIMITED
13. CHANGES IN STATE OF AFFAIRS
In April the Australian Airline Pilot Academy (AAPA) moved from Mangalore in Victoria to Wagga Wagga in NSW. This was accomplished in partnership
with the Wagga Wagga City Council and the NSW Department of State Development. At the end of Fy 2009, 65 cadets had been enrolled, with 35
graduating and 19 still undergoing flying training.
A new hangar was acquired at Wagga Wagga and modified for the Academy's operations. Land was also acquired adjacent to the airport and in June
Development Approval was given for the new AAPA training complex to be constructed.
With the severe downturn in freight volumes Pel-Air's overnight freight business was adversely affected and the decision was made to retire the 10
aircraft in the Metro III freighter fleet and the company's sole Embraer 120 aircraft. Freight operations continued at a reduced level and the period
finished with three dedicated SAAB 340A freighters in service. The year also saw the end of the country's longest running continuous freight service
with the Westwind jet Darwin to Melbourne service ending after 30 years.
Pel-Air's resources were deployed into other areas and a significant mining contract was awarded in Queensland with the company providing a
Fly-in/Fly-out service for Barrick Gold using two SAAB aircraft based in Townsville.
In another significant development Pel-Air was selected as the preferred tenderer for the Ambulance Victoria contract based in Melbourne and due
to commence in 2011.
Pel-Air also established a base in Cairns for medivac operations in partnership with NRMA Careflight extending its Australia-wide medivac capability.
As part of the regular and ongoing review of the Rex network, Air Link's regular passenger transport services ceased in December 2008. Routes
affected are those linking Dubbo to Bourke, Cobar, Coonamble, Lightning Ridge and Walgett as well as the Mudgee to Sydney run. Since then, Air Link
has continued to operate and develop its charter service in addition to growing its third party aircraft maintenance business.
Rex signalled its intention to resume RPT services in Queensland with the announcement of flights commencing between Townsville and Mackay on
1 October 2009. This was made easier by the base already established in Townsville for the Osborne mine contract for Barrick Gold.
Pel-Air Aviation was awarded the Jacinth-Ambrosia Project Fly-in/Fly-out charter contract on behalf of Iluka Resources, using Metro 23 aircraft based
in Adelaide. The Contract commenced on 5 August 2009.
It was announced in July that Rex is ranked the world's top-performing regional carrier in a global survey of airlines by respected industry magazine
Aviation Week & Space Technology. Rex beat American regional giants like Republic, Mesa and Pinnacle for this award.
AAPA has also commenced development work on its new $12m Academy cum campus on a 2.4 hectare land along Don Kendell drive at
Wagga Wagga.
Rex will receive, over the course of the new Fy, the last eight of the 25 SAAB 340B Plus ordered as part of its upgrading programme. It also intends to
dispose of four of the older SAAB models. Together with its full complement of pilot numbers, the additional aircraft at the end of the new Fy would
allow Rex to take advantage of any improvement in economic conditions should it occur in the later half of the new Fy.
Expansion is more likely to be in Pel-Air with opportunities in the mining, medivac and defence sectors being explored over the next 12 months.
Furthermore it is a strong contender in several tenders that have been called or about to be called:
Provision of Fixed Wing Patient Transport Services for the Ambulance Victoria (Pel-Air awarded the preferred tenderer status);
Provision of Fixed Wing Patient Transport Services for the Ambulance Service of NSW;
Provision of Fixed Wing Aero-Medical Services for Queensland Health;
Provision of Interstate Aero Medical Evacuation Services Panel for the Department of Health and Families (Northern Territory Government);
Air Transport Standing Offer for Australian Defence Force and the Commonwealth;
JP 66 Phase 1 Air Defence Target Systems;
Provision of Interim Flight Screening and Basic Flying Training Services for the Australia Defence Force;
Queensland Transport Subsidised Regional Air Services;
Several mining Fly-in/Fly-out tenders.
AAPA will commission its new pilot training facility in Q3 of the Fy. It is also anticipated that RTO and CRICOS certification will be attained and these
three factors will enable it to consider training opportunities with overseas airlines. Accreditation with the Chinese civil aviation authorities is currently
being pursued and expected to be obtained in Q3 of the Fy which would then open the door to training of Chinese pilot cadets.
14. SUBSEQUENT EVENTS
15. FUTURE DEVELOPMENTS
15
DIRECTORS' REPORT
16. ENVIRONMENTAL REGULATIONS
Aviation is an industry whose environmental impact is limited to several key areas, but the impact on those areas is significant. The primary area of
concern for Rex relates to the impact of climate change and energy efficiency.
Rex has been an active participant in programs aimed at maximising energy efficiency and reducing greenhouse gas emissions in accordance with the
Energy Efficient Opportunities Act 2006 (EEO) and the National Greenhouse Energy Reporting Act 2007 (NGER).
Rex registered for the EEO program on 11 November 2007 and has since embarked on various initiatives to reduce energy consumption, and in turn
reducing emissions. Rex also registered for the NGER program on 12 January 2009 and was accepted on 25 February 2009.
The first public report on the initiatives undertaken by Rex in response to the Energy efficient opportunities program is available on the Rex website
at www.rex.com.au.
The first reporting to the NGER is in October 2009 and second year reporting to the EEO program is in December 2009.
In respect of the financial year ended 30 June 2008, as detailed in the directors' report for that financial year, a final fully franked dividend of 6.6 cents
per share was paid to the holders of fully paid ordinary shares on 28 November 2008.
In respect of the financial year ended 30 June 2009, the directors have recommended the prudent approach of postponing the payment of dividends
as the outlook remains uncertain. The Board recommends a reassessment of the situation at its meeting of February 2010 and the payment of an
interim dividend if the financial health of the company permits it.
During the financial year, the company paid a premium in respect of a contract insuring the directors of the company (as named above), the company
secretary (as named above), and all executive officers of the company and of any related body corporate against a liability incurred as such a director,
secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the
liability and the amount of the premium.
The company has not otherwise, during or since the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an
officer or auditor of the company or of any related body corporate against a liability incurred as such an officer or auditor.
17. DIVIDENDS
18. INDEMNIFICATION OF OFFICERS AND AUDITORS
16
REGIONAL EXPRESS HOLDINGS LIMITED
19. REMUNERATION REPORT
REMUNERATION AND NOMINATION COMMITTEE
Rex's board of directors has established a Remuneration and Nomination Committee for the purpose of determining and reviewing compensation
arrangements for the directors and the senior management executives of the Group. This committee has a process for performance evaluation of the
board, its committees and key executives of Rex. The committee's role is to assess the appropriateness of the nature and amount of remuneration of
directors and senior management executives on a periodic basis.
REMUNERATION POLICY
Remuneration levels are set to enable Rex and its subsidiaries to attract and retain appropriately qualified and experienced directors and senior
management executives, who will create sustainable value for shareholders and other stakeholders. They also fairly and responsibly reward
directors and senior management, having regard to the performance of the Group, the performance of the individual and the external compensation
environment.
REMUNERATION STRUCTURE
In accordance with best practice corporate governance, a distinction has been drawn between the remuneration structure of Rex's non-executive
directors and that of its senior management executives. This enables Rex to maintain the independence of non-executive directors and reward senior
management executives for their performance of duties and their dedication.
Rex has set in place a remuneration model for all its staff which calls for staff accepting a lower fixed annual salary increase in exchange for a profit
share and a share plan.
PROFIT SHARE INCENTIVE PLAN
Rex has established a profit share incentive scheme which has run for three financial years, and will continue to run for another three financial
years. Under this scheme, eligible employees will be awarded a share of Rex's profit before tax (PBT) (excluding contributions from subsidiaries
and associates) for the financial year immediately preceding the award. The profit share is allocated on an equal share basis. Permanent part time
employees will receive an amount proportional to their employment hours. The Group has paid out $1.6M (inclusive of superannuation) under this
scheme in Fy 2009 and has accrued $1.6M (inclusive of superannuation) as profit share bonus for distribution to all eligible staff in Fy 2010 for services
rendered in Fy 2009.
SHARE GIFT PLAN
Rex has established the share plan for its executive directors and eligible employees. The share gift plan which has run from Fy 2007 to Fy 2009 was
offered to all the EBA groups and adopted by all the groups except the flight attendants. The board has also decided that this plan will be offered to all
non-EBA employees who are not the subject of an adverse recommendation by the Remuneration and Nomination Committee. This plan is not based
on any performance measures as it was established to show its recognition of employees' contribution to Rex by providing an opportunity to share in
its future growth and profitability and to align the interests of the employees more closely with the interests of the shareholders.
Eligible employees who accept an offer of shares under the share plan will be entitled to receive the equivalent of 2% of their base salary in shares
each financial year for three financial years, starting from Fy 2007. Such shares will be issued to eligible employees on the relevant award dates. The
flight attendants have voted on an additional 0.45% increase of fixed salary in lieu of the 2% share plan. The first distribution of this plan took place
on 4 December 2006.
DIRECTOR AND SENIOR MANAGEMENT DETAILS
The following persons acted as directors of the company during or since the end of the financial year:
Lim Kim Hai (Chairman)
The Hon. John Sharp (Deputy Chairman)
James Davis
Russell Hodge
David Miller
Lee Thian Soo
The term `senior management' is used in this remuneration report to refer to the following persons. Except as noted, the named persons held their
current position of the whole of the financial year and since the end of the financial year:
James Davis (Managing Director)
Warrick Lodge (General Manager, Network Strategy & Sales)
Chris Hine (General Manager, Flight Operations and Chief Pilot)
Irwin Tan (General Manager, Corporate Services / Company Secretary)
Mayooran Thanabalasingham (General Manager, Information Technology and Communications)
Garry Filmer (General Manager, Engineering)
Dale Hall (Maintenance Control Manager)
17
DIRECTORS' REPORT
Short-term benefits
Post
employment
benefits
Long-
term
benefits
Share-based
payment
Directors/Executives
FY
Cash salary
& fees
$
Cash
profit
sharing
& other
bonuses
$
Non-
monetary
$
Pension &
super-
annuation
$
Annual
leave &
long
service
leave
$
Options
& rights
$
Share
gift
$
Total
$
%
Consisting
of options
%
EXECUTIVE DIRECTORS
LIM KIM HAI****
2009
42,308
-
-
-
-
-
-
42,308
-
Executive Chairman
2008
100,000
-
-
-
-
-
-
100,000
-
JAMES DAVIS
2009
185,000
-
-
13,951
-
-
3,200
202,151
-
Managing Director
2008
149,703
33,672
-
13,157
-
-
47,500
244,032
-
DAVID MILLER
2009
149,385
2,294
-
13,290
-
-
2,500
163,469
-
Executive Director,
CEO of Air Link Pty Ltd
2008
201,155
12,888
-
13,614
-
-
45,833
273,490
-
GEOFFREy BREUST*
2009
-
-
-
-
-
-
-
-
-
Managing Director
2008
62,695
4,061
-
8,879
-
-
384
76,019
-
NON-EXECUTIVE DIRECTORS
THE HON. JOHN SHARP
2009
90,000
-
-
8,100
-
-
-
98,100
-
Deputy Chairman
2008
90,000
-
-
8,100
-
-
-
98,100
-
RUSSELL HODGE
2009
25,000
-
-
2,250
-
-
-
27,250
-
Executor Director,
CEO of Pel-Air Pty Ltd
2008
25,000
-
-
2,250
-
-
-
27,250
-
LEE THIAN SOO
2009
25,000
-
-
-
-
-
-
25,000
-
Non-Executive Director
2008
25,000
-
-
-
-
-
-
25,000
-
ROBERT WINNEL**
2009
-
-
-
-
-
-
-
-
-
Independent Director
2008
20,961
-
-
1,887
-
-
-
22,848
-
STEPHEN JERMyN***
2009
-
-
-
-
-
-
-
-
-
Independent Director
2008
24,038
-
-
2,164
-
-
-
26,202
-
SENIOR MANAGEMENT EXECUTIVES
CHRIS HINE
2009
160,000
-
-
13,518
-
-
3,000
176,518
-
GM Flight Operations & Chief Pilot
2008
141,827
37,177
-
12,898
-
-
47,747
239,649
-
WARRICK LODGE
2009
129,808
-
-
12,150
5,192
-
2,700
149,850
-
GM Network Strategy & Sales
2008
114,810
32,609
-
11,711
6,994
-
52,914
219,238
-
IRWIN TAN
2009
130,000
-
-
11,700
-
-
2,500
144,200
-
GM Corporate Services
2008
116,956
29,109
-
11,379
-
-
50,706
208,153
-
DALE HALL
2009
113,491
22,782
-
12,264
-
-
2,216
150,752
-
Manager-Maintenance Control
2008
113,522
4,284
-
10,603
-
-
33,286
161,695
-
GARRy FILMER
2009
110,000
-
-
9,900
-
-
2,200
122,100
-
GM Engineering
2008
100,559
1,119
-
9,151
-
-
7,621
118,450
-
MAyOORAN THANABALASINGHAM
2009
125,000
-
-
11,249
-
-
2,500
138,749
-
GM ITC
2008
96,372
22,633
-
9,919
-
-
41,700
170,624
-
BRETT DAVIDSON
(i)
2009
-
-
-
-
-
-
-
-
-
Manager - Maintenance Control
2008
131,233
4,284
-
7,118
-
-
33,486
176,111
-
TOTAL
2009 1,280,992
25,076
-
108,372
5,192
-
20,816 1,440,448
-
2008 1,513,921 181,836
-
122,830
6,994
- 361,180 2,186,661
-
VALUE OF OPTIONS ISSUED TO DIRECTORS AND EXECUTIVES
No options lapsed, were granted or were exercised during the Fy 2009.
REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT
The directors and the five highest remunerated executives received the following amounts as compensation for their services as directors and
executives of the Company and/or the Group during the year:
* Geoff Breust ceased employment with Rex on 5 December 2007.
** Robert Winnel ceased being a Director of Rex on 22 April 2008.
*** Stephen Jermyn ceased being a Director of Rex on 6 June 2008.
**** Lim Kim Hai undertook to forfeit his Director's fee in November 2008 in response to the global economic crisis.
(i) Brett Davidson ceased employment on 22 February 2008.
18
REGIONAL EXPRESS HOLDINGS LIMITED
19. REMUNERATION REPORT
(CONTINUED)
RELATIONSHIP BETWEEN THE REMUNERATION POLICY AND COMPANY PERFORMANCE
The only proportion of remuneration that was dependent on the satisfaction of a performance condition was the Company's profit share bonus. Of the
directors, only Jim Davis and David Miller were entitled to the Company's profit share bonus. Both Jim Davis and David Miller volunteered to forego
their profit share bonus which would have been paid in Fy 2008. The senior management executives were also entitled to the profit share bonus but
chose to forego this bonus.
Senior management executives also received a share gift as set out in Note 28 of the financial statement.
RELATIONSHIP BETWEEN THE REMUNERATION POLICY AND COMPANY PERFORMANCE
The tables below set out summary information about the Group's earnings and movements in shareholder wealth for the five years to June 2009:
30 June 2009
$'000
30 June 2008
$'000
30 June 2007
$'000
30 June 2006
$'000
30 June 2005
$'000
Revenue
250.963
260,513
225,193
174,259
144,658
Net profit before tax
30,789
32,478
33,072
21,984
9,171
Net profit after tax
22,982
24,343
23,627
15,724
6,527
30 June 2009
30 June 2008
30 June 2007
30 June 2006
30 June 2005
Share price at start of year*
1.05
$2.74
$1.00
N/A
N/A
Share price at end of year*
0.80
$1.06
$2.75
$0.995
N/A
Interim dividend
-
-
-
-
Final dividend
1,2
6.6cps
6.6cps
5.0cps
-
Basic earnings per share
20.4
20.3cps
20.5cps
15.4cps
11.1cps
Diluted earnings per share
20.4
20.3cps
20.4cps
15.4cps
11.1cps
kEY TERMS OF EMPLOYMENT CONTRACTS
Employment contracts between the senior management executives and the Group do not have a specified duration. A notice of four weeks must be
given for senior management executives to terminate their contract. There are no extraordinary termination payments set out in the contracts of the
senior management executives of the Group.
No proceedings have been brought on behalf of the Group, nor has any application been made in respect of the Group under s.237 of the
Corporations Act 2001.
*
The Company commenced trading on the Australian Stock Exchange on 9 November 2005.
1
Franked to 9.43cps at 30% corporate income tax rate for 2008 and 2007; unfranked for 2006.
2
Declared after the balance date and not reflected in the financial statements.
20. PROCEEDINGS ON BEHALF OF THE COMPANY
19
DIRECTORS' REPORT
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in Note 30 to the financial
statements.
The directors are satisfied that the provision of non-audit services, during the year, by the auditor (or by another person or firm on the auditor's behalf)
is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in Note 30 to the financial statements do not compromise the external auditor's
independence, based on advice received from the Audit Committee, for the following reasons:
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor, and
none of the services undermine the general principles relating to auditor independence as set out in Code of Conduct APES 110 Code of Ethics
for Professional Accountants issued by the Accounting Professional & Ethical Standards Board, including reviewing or auditing the auditor's own
work, acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic
risks and rewards.
The company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order amounts
in the directors' report and the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.
Signed in accordance with a resolution of directors made pursuant to s.298(2) of the Corporations Act 2001.
On behalf of the Directors
James Davis
Managing Director
Sydney, 26 August 2009
21. ROUNDING OFF OF AMOUNTS
22. NON-AUDIT SERVICES
20
REGIONAL EXPRESS HOLDINGS LIMITED
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
26 August 2009
The Board of Directors
Regional Express Holdings Limited
81 83 Baxter Road
MASCOT NSW 2000
Dear Board Members
Regional Express Holdings Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of Regional Express Holdings Limited.
As lead audit partner for the audit of the financial statements of Regional Express Holdings
Limited for the financial year ended 30 June 2009, I declare that to the best of my knowledge and
belief, there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Catherine Hill
Partner
Chartered Accountant
Liability limited by a scheme approved under Professional Standards Legislation.
23. AUDITOR'S INDEPENDENCE DECLARATION
21
DIRECTORS' REPORT
This page has been intentionally left blank.
24
REGIONAL EXPRESS HOLDINGS LIMITED
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2009
Consolidated
Company
Note
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Continuing operations
Passenger revenue
204,259
211,306
200,018
202,412
Freight revenue
925
937
914
904
Charter revenue
36,311
40,444
298
975
Other passenger services and amenities
2,085
2,157
2,079
2,148
Finance income
3
525
1,221
419
1,047
Other income
3,4
6,858
4,448
5,404
3,226
Total revenue and other income
250,963
260,513
209,132
210,712
Flight and port operation costs (excluding fuel)
(48,964)
(49,567)
(44,495)
(45,236)
Fuel costs
(38,924)
(45,901)
(32,270)
(36,674)
Salaries and employee-related costs
3
(78,102)
(73,899)
(63,702)
(61,007)
Selling and marketing costs
(6,416)
(6,775)
(6,398)
(6,694)
Engineering and maintenance costs
(31,532)
(35,656)
(23,305)
(24,403)
Office and general administration costs
(6,488)
(6,531)
(4,605)
(4,759)
Finance costs
3
(190)
(330)
-
-
Depreciation and amortisation
3
(9,139)
(8,144)
(6,619)
(5,624)
Other expenses
3
(419)
(1,219)
(193)
(1,301)
Total costs and expenses
(220,174)
(228,022)
(181,587)
(185,698)
Share of profits/(losses) of associates and jointly
controlled entities accounted for using the equity
method
-
(13)
-
-
Profit before income tax
30,789
32,478
27,545
25,014
Income tax expense
5
(7,807)
(8,135)
(7,139)
(6,251)
Profit after tax from continuing operations
22,982
24,343
20,406
18,763
Profit attributable to:
Members of the parent
22,982
24,343
20,406
18,763
22,982
24,343
20,406
18,763
Earnings per share (cents per share)
Basic (cents per share)
19
20.4
20.3
-
-
Diluted (cents per share)
19
20.4
20.3
-
-
Dividends per share (cents per share)
20
-
6.6
-
-
Notes to the financial statements are included on pages 29 to 71.
INCOME STATEMENT
25
FINANCIAL REPORT
AS AT 30 JUNE 2009
Consolidated
Company
Note
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Current assets
Cash and cash equivalents
25
15,469
15,140
15,163
11,198
Trade and other receivables
6
8,308
16,459
9,659
13,166
Available for sale investments carried at fair value
shares
10
-
-
-
Inventories
7
7,488
6,719
5,162
4,433
Total current assets
31,275
38,318
29,984
28,797
Non-current assets
Other financial assets
8
11
11
-
-
Other receivables
6
2,742
-
34,877
41,581
Investment in subsidiaries
23
-
-
117
117
Deferred tax assets
5
3,017
3,285
2,257
2,676
Property, plant and equipment
9
Aircraft
80,509
75,433
44,355
38,034
Other property, plant and equipment
45,860
39,973
38,861
33,179
Goodwill and intangible assets
10
7,327
7,363
126
168
Total non-current assets
139,466
126,065
120,593
115,755
Total assets
170,741
164,383
150,577
144,552
Current liabilities
Trade and other payables
11
14,883
16,286
12,720
13,017
Unearned revenue
15
16,202
17,801
16,283
17,632
Borrowings
12
1,657
1,818
-
-
Income tax payable
5
2,288
3,803
2,288
3,803
Provisions
14
7,534
7,014
5,547
5,357
Other financial liabilities
13
-
672
-
672
Other liabilities
15
43
288
43
288
Total current liabilities
42,607
47,682
36,881
40,769
Non-current liabilities
Borrowings
12
-
1,657
-
-
Provisions
14
453
375
105
166
Deferred tax liabilities
5
2,272
2,016
1,654
1,417
Total non-current liabilities
2,725
4,048
1,759
1,583
Total liabilities
45,332
51,730
38,640
42,352
Net assets
125,409
112,653
111,937
102,200
Equity
Issued capital
16
75,037
78,608
75,037
78,608
Reserved shares
17
(3,241)
(3,427)
-
-
Retained earnings
18
51,371
35,807
35,932
23,201
Share-based payments reserve
17
652
545
652
545
Other reserves
17
1,590
1,120
316
(154)
Total equity
125,409
112,653
111,937
102,200
Notes to the financial statements are included on pages 29 to 71.
BALANCE SHEET
26
REGIONAL EXPRESS HOLDINGS LIMITED
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2009
Consolidated
Company
Note
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Cash flows from operating activities
Receipts from customers
269,314
282,311
239,544
227,945
Payments to suppliers and employees
(230,275)
(243,541)
(196,042)
(198,499)
Interest paid
(190)
(330)
-
-
Income taxes paid
(9,000)
(12,590)
(9,000)
(11,039)
Net cash provided by/(used in) operating activities
25 (B)
29,849
25,850
34,502
18,407
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
10,756
4,331
6,551
4,329
Interest received
525
1,221
419
1,047
Purchase of aircraft
(19,325)
(5,698)
(14,396)
(3,051)
Purchase of other property, plant and equipment
(9,132)
(11,148)
(8,566)
(9,887)
Purchase of investments
(5,742)
-
-
-
Purchase of intangibles
-
(127)
-
(118)
Proceeds from sale of investments
6,693
-
-
-
Advances to related parties
-
-
(3,299)
-
Net cash provided by/(used in) investing activities
(16,225)
(11,421)
(19,291)
(7,680)
Cash flows from financing activities
Payments for share buy-back to equity holders
(3,571)
(4,332)
(3,571)
(4,332)
Repayment of borrowings
(1,818)
(2,450)
-
-
Payment for purchase of reserved shares
(488)
(2,974)
-
-
Dividends paid
(7,418)
(7,986)
(7,675)
(7,986)
Net cash provided by/(used in) financing activities
(13,295)
(17,742)
(11,246)
(12,318)
Net increase in cash and cash equivalents
329
(3,313)
3,965
(1,591)
Effect of exchange rate on the balance of cash held
in foreign currencies
-
(164)
-
(164)
Cash and cash equivalents
at the beginning of the financial year
15,140
18,617
11,198
12,953
Cash and cash equivalents
at the end of the financial year
25 (A)
15,469
15,140
15,163
11,198
Notes to the financial statements are included on pages 29 to 71.
CASHFLOW STATEMENT
27
FINANCIAL REPORT
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2009
Attributable to equity holders of the company
Issued
capital
Reserved
shares
Retained
earnings
Share-
based
payments
reserve
Other
reserves
Equity-
settled
employee
benefits
reserve
Total
equity
$'000
$'000
$'000
$'000
$'000
$'000
$'000
CONSOLIDATED
At 1 July 2008
78,608
(3,427)
35,807
545
1,120
-
112,653
Dividends paid
-
-
(7,418)
-
-
-
(7,418)
Profit for the year
-
-
22,982
-
-
-
22,982
Share buy-back
(3,571)
-
-
-
-
-
(3,571)
Share purchased as reserve shares
-
(488)
-
-
-
-
(488)
Gains/(losses) on cash flow hedges
-
-
-
-
672
-
672
Deferred tax effect on cash flow hedges
-
-
-
-
(202)
-
(202)
Share gift exercised/issued
-
674
-
(557)
-
-
117
Share gift plan expense
-
-
-
664
-
-
664
At 30 June 2009
75,037
(3,241)
51,371
652
1,590
-
125,409
COMPANY
At 1 July 2008
78,608
-
23,201
545
(154)
-
102,200
Dividends paid
-
-
(7,675)
-
-
-
(7,675)
Profit for the year
-
-
20,406
-
-
-
20,406
Share buy-back
(3,571)
-
-
-
-
-
(3,571)
Gains/(losses) on cash flow hedges
-
-
-
-
672
-
672
Deferred tax effect on cash flow hedges
-
-
-
-
(202)
-
(202)
Share gift exercised
-
-
-
(557)
-
-
(557)
Share gift plan expense
-
-
-
664
-
-
664
At 30 June 2009
75,037
-
35,932
652
316
-
111,937
Notes to the financial statements are included on pages 29 to 71.
28
REGIONAL EXPRESS HOLDINGS LIMITED
STATEMENT OF CHANGES IN EQUITY
(CONTINUED)
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2009
Attributable to equity holders of the company
Issued
capital
Reserved
shares
Retained
earnings
Share-
based
payments
reserve
Other
reserves
Equity-
settled
employee
benefits
reserve
Total
equity
$'000
$'000
$'000
$'000
$'000
$'000
$'000
CONSOLIDATED
At 1 July 2007
82,446
(963)
19,450
471
946
118
102,468
Dividends paid
-
-
(7,986)
-
-
-
(7,986)
Profit for the year
-
-
24,343
-
-
-
24,343
Share buy-back
(4,332)
-
-
-
-
-
(4,332)
Share purchased as reserve shares
-
(3,948)
-
-
-
-
(3,948)
Issue of shares
494
-
-
-
-
-
494
Gains/(losses) on cash flow hedges
-
-
-
-
(146)
-
(146)
Deferred tax effect on cash flow hedges
-
-
-
-
202
-
202
Share gift exercised/issued
-
394
-
(476)
-
-
(82)
Share gift provision
-
-
-
550
-
-
550
Recognition of share-based payments
-
283
-
-
-
-
283
Share options exercised
-
807
-
-
-
-
807
Transfer from equity settled employee
benefits reserve
-
-
-
-
118
(118)
-
At 30 June 2008
78,608
(3,427)
35,807
545
1,120
-
112,653
COMPANY
At 1 July 2007
82,446
-
12,424
471
(328)
118
95,131
Dividends paid
-
-
(7,986)
-
-
-
(7,986)
Profit for the year
-
-
18,763
-
-
-
18,763
Share buy back
(4,332)
-
-
-
-
-
(4,332)
Issue of shares
494
-
-
-
-
-
494
Gains/(losses) on cash flow hedges
-
-
-
-
(146)
-
(146)
Deferred tax effect on cash flow hedges
-
-
-
-
202
-
202
Share gift exercised/issued
-
-
-
(476)
-
-
(476)
Share gift provision
-
-
-
550
-
-
550
Transfer from equity settled employee
benefits reserve
-
-
-
-
118
(118)
-
At 30 June 2008
78,608
-
23,201
545
(154)
-
102,200
Notes to the financial statements are included on pages 29 to 71.
29
FINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2009
Note
Content
1
General information
2
Significant accounting policies
3
Revenues and expenses
4
Profit for the year
5
Income tax
6
Trade and other receivables
7
Inventories
8
Other financial assets
9
Property, plant and equipment
10
Goodwill and other intangible assets
11
Trade and other payables
12
Borrowings
13
Other financial liabilities
14
Provisions
15
Other liabilities
16
Issued capital
17
Reserves and other reserves
18
Retained earnings
19
Earnings per share
20
Dividends
21
Commitments for expenditure
22
Contingent liabilities and contingent assets
23
Subsidiaries
24
Acquisition of businesses
25
Notes to the cash flow statement
26
Financial instruments
27
Share-based payments
28
Key management personnel compensation
29
Related party transactions
30
Remuneration of auditors
31
Subsequent events
32
Segment Information
30
REGIONAL EXPRESS HOLDINGS LIMITED
01. GENERAL INFORMATION
02. SIGNIFICANT ACCOUNTING POLICIES
Regional Express Holdings Limited (the Company) is listed on the Australian Stock Exchange (Trading under symbol `REX'), incorporated and operating
in Australia. The Company's registered office and its principal place of business is at 81 83 Baxter Road, Mascot, NSW 2020, Australia.
STATEMENT OF COMPLIANCE
The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001, Accounting Standards
and Interpretations, and complies with other requirements of the law. The financial report includes the separate financial statements of the Company
and the consolidated financial statements of the Group.
Accounting Standards include Australian equivalents to International Financial Reporting Standards (`A-IFRS'). Compliance with A-IFRS ensures that the
financial statements and notes of the Company and the Group comply with International Financial Reporting Standards (`IFRS').
The financial statements were authorised for issue by the directors on 26 August 2009.
BASIS OF PREPARATION
The financial report has been prepared on the basis of historical cost, except for the revaluation of certain financial instruments. Cost is based on the
fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.
The Company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order, amounts
in the financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.
CRITICAL ACCOUNTING JUDGEMENTS & SOURCES OF UNCERTAINTY
CRITICAL JUDGEMENTS IN APPLYING THE ENTITY'S ACCOUNTING POLICIES
The following are the critical judgements (apart from those involving estimations, which are dealt with below), that management has made in the
process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the financial statements:
Employee entitlements
Management judgement is applied in determining the following key assumptions used in the calculation of long service leave at balance sheet
date:
future increases in wages and salaries;
future on-cost rates; and
experience of employee departures and period of service.
key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been
allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a
suitable discount rate in order to calculate present value.
The carrying amount of goodwill at the balance sheet date was $7,190 thousand (2008: $7,190 thousand) with no impairment loss recognised
during the current financial year.
Fair value of derivatives and other financial instruments
As described in Note 26, management uses their judgement in selecting an appropriate valuation technique for financial instruments not quoted
in an active market. Valuation techniques commonly used by market practitioners are applied. For derivative financial instruments, assumptions
are made based on quoted market rates adjusted for specific features of the instrument.
ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS
In the current year, the Company and the Group have adopted all of the new and revised Standards and Interpretations issued by the Australian
Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period. The adoption of these
new and revised Standards and Interpretations has resulted in changes to the Company's and the Group's accounting policies in the following areas
that have affected the amounts reported for the current or prior years:
Interpretation 13: Customer loyalty programmes
There was no material impact on the results report for 2009 and 2008, nor on the amounts reported for earnings per share.
STANDARDS AND INTERPRETATIONS ISSUED NOT YET EFFECTIVE
At the date of authorisation of the financial report, a number of standards and Interpretations were in issue but not yet effective.
31
FINANCIAL REPORT
Initial application of the following Standards will not affect any of the amounts recognised in the financial report, but will change the disclosures
presently made in relation to the Group and the Company's financial report:
Standard
Effective for annual reporting
periods beginning on or after
Expected to be initially applied
in the financial year ending
AASB 101 `Presentation of Financial Statements' (revised September 2007),
AASB 2007-8 `Amendments to Australian Accounting Standards arising from
AASB 101', AASB 2007-10 `Further Amendments to Australian Accounting
Standards arising from AASB 101'
1 January 2009
30 June 2010
AASB 8 `Operating Segments', AASB 2007-3 `Amendments to Australian
Accounting Standards arising from AASB 8'
1 January 2009
30 June 2010
AASB 2009-2 `Amendments to Australian Accounting Standards Improving
Disclosures about Financial Instruments'
1 January 2009
30 June 2010
Initial application of the following Standards is not expected to have any material impact on the financial report of the Group and the Company:
Standard/Interpretation
Effective for annual reporting
periods beginning on or after
Expected to be initially applied
in the financial year ending
AASB 123 `Borrowing Costs' (revised), AASB 2007-6 `Amendments to
Australian Accounting Standards arising from AASB 123'
1 January 2009
30 June 2010
AASB 3 `Business Combinations' (2008), AASB 127 `Consolidated and
Separate Financial Statements' (revised) and AASB 2008-3 `Amendments to
Australian Accounting Standards arising from AASB 3 and AASB 127'
Business combinations
occurring after the beginning
of annual reporting periods
beginning 1 July 2009
30 June 2010
AASB 2008-1 `Amendments to Australian Accounting Standard - Share-
based Payments: Vesting Conditions and Cancellations'
1 January 2009
30 June 2010
AASB 2008-2 `Amendments to Australian Accounting Standards - Puttable
Financial Instruments and Obligations arising on Liquidation'
1 January 2009
30 June 2010
AASB 2008-5 `Amendments to Australian Accounting Standards arising
from the Annual Improvements Project'
1 January 2009
30 June 2010
AASB 2008-6 `Further Amendments to Australian Accounting Standards
arising from the Annual Improvements Project'
1 July 2009
30 June 2010
AASB 2008-7 `Amendments to Australian Accounting Standards Cost of an
Investment in a Subsidiary, Jointly Controlled Entity or Associate'
1 January 2009
30 June 2010
AASB 2008-8 `Amendments to Australian Accounting Standards Eligible
Hedged Items'
1 July 2009
30 June 2010
AASB 2009-4 `Amendments to Australian Accounting Standards arising
from the Annual Improvements Process'
1 July 2009
30 June 2010
AASB 2009-5 `Further Amendments to Australian Accounting Standards
arising from the Annual Improvements Process'
1 January 2010
1
30 June 2011
AASB 2009-6 `Amendments to Australian Accounting Standards'
1 January 2009
2
30 June 2010
AASB 2009-7 `Amendments to Australian Accounting Standards'
1 July 2009
30 June 2010
AASB 1 `First-time Adoption of Australian Accounting Standards'
1 July 2009
30 June 2010
AASB Interpretation 17 `Distributions of Non-cash Assets to Owners', AASB
2008-13 `Amendments to Australian Accounting Standards arising from
AASB Interpretation 17 Distributions of Non-cash Assets to Owners'
1 July 2009
30 June 2010
AASB Interpretation 18 `Transfers of Assets from Customers'
1 July 2009
30 June 2010
1
Applicable to financial years beginning on or after 1 January 2010, except for the amendments made to the guidance
to AASB 118 `Revenue' that have no explicit application date and are taken to be immediately effective.
2
Applicable to financial years beginning on or after 1 January 2009 that end on or after 30 June 2009.
32
REGIONAL EXPRESS HOLDINGS LIMITED
02. SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
The following significant accounting policies have been adopted in the preparation and presentation of the financial report:
(A) BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the financial statements of the Company and entities (including special purpose entities)
controlled by the Company (its subsidiaries) (referred to as `the Group' in these financial statements). Control is achieved where the Company
has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date
of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used
by other members of the Group.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. In the separate financial statements of
the Company, intra-group transactions (`common control transactions') are generally accounted for by reference to the existing (consolidated)
book value of the items. Where the transaction value of common control transactions differ from their consolidated book value, the difference
is recognised as a contribution by or distribution to equity participants by the transacting entities.
Minority interests in the net assets (excluding goodwill) of consolidated subsidiaries are identified separately from the Group's equity therein.
Minority interests consist of the amount of those interests at the date of the original business combination and the minority's share of changes
in equity since the date of the combination.
Losses applicable to the minority in excess of the minority's interest in the subsidiary's equity are allocated against the interests of the Group
except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses.
Acquisitions of subsidiaries and businesses are accounted for using the purchase method. The cost of the business combination is measured
as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by
the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree's identifiable
assets, liabilities and contingent liabilities that meet the conditions for recognition under AASB 3 `Business Combinations' are recognised at
their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with
AASB 5 `Non-current Assets Held for Sale and Discontinued Operations', which are recognised and measured at fair value less costs to sell.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination
over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment,
the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities exceeds the cost of the
business combination, the excess is recognised immediately in profit or loss.
The interest of minority shareholders in the acquiree is initially measured at the minority's proportion of the net fair value of the assets,
liabilities and contingent liabilities recognised.
(B) INVESTMENTS IN ASSOCIATES
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture.
Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control
over those policies.
The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting,
except when the investment is classified as held for sale, in which case it is accounted for in accordance with AASB 5 `Non-current Assets
Held for Sale and Discontinued Operations'. Under the equity method, investments in associates are carried in the consolidated balance sheet
at cost as adjusted for post-acquisition changes in the Group's share of the net assets of the associate, less any impairment in the value of
individual investments.
Losses of an associate in excess of the Group's interest in that associate (which includes any long-term interests that, in substance, form part
of the Group's net investment in the associate) are recognised only to the extent that the Group has incurred legal or constructive obligations
or made payments on behalf of the associate.
Any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities
of the associate recognised at the date of the acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the
investment and is assessed for impairment as part of that investment. Any excess of the Group's share of the net fair value of the identifiable
assets, liabilities and contingent liabilities over the cost of the acquisition, after reassessment, is recognised immediately in profit or loss.
Where a Group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group's interest in the
relevant associate.
33
FINANCIAL REPORT
(C) BORROWING COSTS
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take
a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted
from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
(D) CASH AND CASH EQUIVALENTS
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value.
Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
(E) FOREIGN CURRENCY
The individual financial statements of each Group entity are presented in its functional currency being the currency of the primary economic
environment in which the entity operates. For the purpose of the consolidated financial statements, the results and financial position of each
entity are expressed in Australian dollars, which is the functional currency of the Group and the presentation currency for the consolidated
financial statements.
In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency are
recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated
in foreign currencies are retranslated at the rates prevailing at the balance sheet date. Non-monetary items carried at fair value that are
denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary
items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which they arise except for exchange differences on transactions entered
into in order to hedge certain foreign currency risks (refer Note 26).
(F) DERIVATIVE FINANCIAL INSTRUMENTS
The Group is only authorised by the Board to enter into forward contracts for the purchase of US dollars (USD) and is only authorised
to purchase amounts not exceeding the annual USD requirements of the Group. The Group does not engage in any derivative financial
instruments speculatively.
The Group enters into forward contracts where it agrees to buy specified amounts of USD in the future at a predetermined exchange rate.
The objective is to match the contract with anticipated future cash flows from sales and purchases in USD, to protect the consolidated entity
against the possibility of loss from future exchange rate fluctuations. The forward exchange contracts are usually no longer than 12 months.
Further details of these USD contracts are disclosed in Note 26 to the financial statements.
The USD contracts are initially recognised at fair value at the date the contract is entered into and are subsequently remeasured to their fair
value at each reporting date. The resulting gain or loss is recognised in profit or loss immediately unless the foreign currency contracts are
designated and effective as a hedging instrument, in which event, the timing of the recognition in profit or loss depends on the nature of
the hedge relationship. The Group designates these USD contracts as hedges of highly probable forecast transactions or hedges of foreign
currency risk of firm commitments.
The fair value of USD contracts are classified as a non-current asset or a non-current liability if the remaining maturity of the hedge relationship
is more than 12 months and as a current asset or a current liability if the remaining maturity of the hedge relationship is less than 12
months.
USD contracts not designated into an effective hedge relationship are classified as a current asset or a current liability.
34
REGIONAL EXPRESS HOLDINGS LIMITED
HEDGE ACCOUNTING
Hedges of foreign exchange risk on highly probable forecast transactions or firm commitments are accounted for as cash flow hedges.
At the inception of the hedge relationship the entity documents the relationship between the USD contract and hedged item, along with
its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and
on an ongoing basis, the Group documents whether the USD contract that is used in a hedging relationship is highly effective in offsetting
changes in fair values.
Note 26 contains details of the fair values of the USD contracts used for hedging purposes. Movements in the hedging reserve in equity are
also detailed in Note 17.
Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or
exercised, or no longer qualifies for hedge accounting. The adjustment to the carrying amount of the hedged item arising from the hedged
risk is amortised to profit or loss from that date.
CASH FLOW HEDGE
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are deferred in equity. The
gain or loss relating to the ineffective portion is recognised immediately in profit or loss as part of other expenses or other income.
Amounts deferred in equity are recycled in profit or loss in the periods when the hedged item is recognised in profit or loss. However, when
the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses
previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset or liability.
Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated,
or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss deferred in equity at that time remains in equity and is
recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur,
the cumulative gain or loss that was deferred in equity is recognised immediately in profit or loss.
(G) EMPLOYEE BENEFITS
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave
when it is probable that settlement will be required and they are capable of being measured reliably.
Liabilities recognised in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values using
the remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of employee benefits which are not expected to be settled within 12 months are measured as the present
value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to reporting date.
DEFINED CONTRIBUTION PLANS
Contributions to defined contribution superannuation plans are expensed when incurred.
(H) FINANCIAL ASSETS
Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract whose terms
require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of
transaction costs except for those financial assets classified as at fair value through profit or loss which are initially measured at fair value.
Subsequent to initial recognition, investments in subsidiaries are measured at cost in the Company's financial statements. Subsequent to
initial recognition, investments in associates are accounted for under the equity method in the consolidated financial statements and the cost
method in the Company's financial statements.
Other financial assets are classified into the following specified categories: financial assets `at fair value through profit or loss', `held-to-
maturity investments', `available-for-sale' financial assets, and `loans and receivables'. The classification depends on the nature and purpose
of the financial assets and is determined at the time of initial recognition.
EFFECTIVE INTEREST METHOD
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset, or, where appropriate, a shorter period.
Income is recognised on an effective interest rate basis for debt instruments other than those financial assets `at fair value through profit or
loss'.
02. SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
35
FINANCIAL REPORT
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Financial assets are classified as financial assets at fair value through profit or loss where the financial asset:
(i) has been acquired principally for the purpose of selling in the near future;
(ii) is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-
term profit-taking; or
(iii) is a derivative that is not designated and effective as a hedging instrument.
Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net
gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset.
Fair value is determined in the manner described in Note 26.
AVAILABLE-FOR-SALE FINANCIAL ASSETS
Certain shares and redeemable notes held by the Group are classified as being available-for-sale and are stated at fair value. Fair value is
determined in the manner described in Note 26. Gains and losses arising from changes in fair value are recognised directly in the investments
revaluation reserve with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange
gains and losses on monetary assets which are recognised directly in profit or loss. Where the investment is disposed of or is determined
to be impaired, the cumulative gain or loss previously recognised in the investments revaluation reserve is included in profit or loss for the
period.
Dividends on available-for-sale equity instruments are recognised in profit and loss when the Group's right to receive payments is
established.
The fair value of available-for-sale monetary assets denominated in a foreign currency is determined in that foreign currency and translated
at the spot rate at reporting date. The change in fair value attributable to translation differences that result from a change in amortised cost
of the asset is recognised in profit or loss, and other changes are recognised in equity.
LOANS AND RECEIVABLES
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified
as `loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method less impairment.
Interest is recognised by applying the effective interest rate.
IMPAIRMENT OF FINANCIAL ASSETS
Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each balance sheet date.
Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred after the initial recognition
of the financial asset the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost,
the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows,
discounted at the original effective interest rate.
The carrying amount of financial assets including uncollectible trade receivables is reduced by the impairment loss through the use of an
allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the
carrying amount of the allowance account are recognised in profit or loss.
With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is
reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed
what the amortised cost would have been had the impairment not been recognised.
In respect of available-for-sale equity instruments, any subsequent increase in fair value after an impairment loss is recognised directly in
equity.
36
REGIONAL EXPRESS HOLDINGS LIMITED
(I) FINANCIAL INSTRUMENTS ISSUED BY THE COMPANY
DEBT AND EQUITY INSTRUMENTS
Debt and equity instruments are classified as either liabilities or as equity in accordance with the substance of the contractual arrangement.
Equity Instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
FINANCIAL LIABILITIES
Financial liabilities are classified as either financial liabilities `at fair value through profit or loss' or other financial liabilities.
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
Financial liabilities at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. The
net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability. Fair value is determined in the manner
described in note 26.
OTHER FINANCIAL LIABILITIES
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised
on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the
financial liability, or, where appropriate, a shorter period.
(J) GOODWILL
Goodwill acquired in a business combination is initially measured at its cost, being the excess of the cost of the business combination over
the acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised at the date of acquisition.
Goodwill is subsequently measured at its cost less any impairment losses.
For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units (CGUs), or groups of CGUs, expected
to benefit from the synergies of the business combination. CGUs (or groups of CGUs) to which goodwill has been allocated are tested for
impairment annually, or more frequently if events or changes in circumstances indicate that goodwill might be impaired.
If the recoverable amount of the CGU (or group of CGUs) is less than the carrying amount of the CGU (or groups of CGUs), the impairment
loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU (or groups of CGUs) and then to the other assets of
the CGU (or groups of CGUs) pro-rata on the basis of the carrying amount of each asset in the CGU (or groups of CGUs). An impairment loss
recognised for goodwill is recognised immediately in profit or loss and is not reversed in a subsequent period.
On disposal of an operation within a CGU, the attributable amount of goodwill is included in the determination of the profit or loss on disposal
of the operation.
(k) GOVERNMENT GRANTS
Government grants are assistance by the government in the form of transfers of resources to the Group in return for past or future compliance
with certain conditions relating to the operating activities of the entity. Government grants include government assistance where there are
no conditions specifically relating to the operating activities of the Group other than the requirement to operate in certain regions or industry
sectors.
Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them
and the grants will be received.
Government grants whose primary condition is that the Group should purchase, construct or otherwise acquire long-term assets are recognised
as deferred income in the balance sheet and recognised as income on a systematic and rational basis over the useful lives of the related
assets.
Other government grants are recognised as income over the periods necessary to match them with the related costs which they are intended
to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred or for
the purpose of giving immediate financial support to the Group with no future related costs are recognised as income of the period in which
it becomes receivable.
(L) IMPAIRMENT OF OTHER TANGIBLE AND INTANGIBLE ASSETS
At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from
other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and
consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are
allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually and whenever
there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and
the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
02. SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
37
FINANCIAL REPORT
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the
asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately, unless the
relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate
of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment
loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment
loss is treated as a revaluation increase.
(M) INCOME TAX
CURRENT TAX
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the
period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current
and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).
DEFERRED TAX
Deferred tax is accounted for using the balance sheet liability method. Temporary differences are differences between the tax base of an
asset or liability and its carrying amount in the balance sheet. The tax base of an asset or liability is the amount attributed to that asset or
liability for tax purposes.
In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that
it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax
offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise
from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor
accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from the initial
recognition of goodwill.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries, branches and associates,
except where the Group is able to control the reversal of the temporary differences and it is probable that the temporary differences will not
reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with these investments and
interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits
of the temporary differences and they are expected to reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving
rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting date.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group
expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company/Group
intends to settle its current tax assets and liabilities on a net basis.
CURRENT AND DEFERRED TAX FOR THE PERIOD
Current and deferred tax is recognised as an expense or income in the income statement, except when it relates to items credited or debited
directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a
business combination, in which case it is taken into account in the determination of goodwill or excess.
TAX CONSOLIDATION
The Company and all its wholly-owned Australian resident entities are part of a tax-consolidated group under Australian taxation law. Regional
Express Holdings Limited is the head entity in the tax-consolidated group. Tax expense/income, deferred tax liabilities and deferred tax assets
arising from temporary differences of the members of the tax-consolidated group are recognised in the separate financial statements of
the members of the tax-consolidated group using the `separate taxpayer within group' approach by reference to the carrying amounts in
the separate financial statements of each entity and the tax values applying under tax consolidation. Current tax liabilities and assets and
deferred tax assets arising from unused tax losses and relevant tax credits of the members of the tax-consolidated group are recognised by
the Company (as head entity in the tax-consolidated group).
Due to the existence of a tax funding arrangement between the entities in the tax-consolidated group, amounts are recognised as payable
to or receivable by the Company and each member of the group in relation to the tax contribution amounts paid or payable between the
Company entity and the other members of the tax-consolidated group in accordance with the arrangement. Further information about the
tax funding arrangement is detailed in Note 5 to the financial statements. Where the tax contribution amount recognised by each member of
the tax-consolidated group for a particular period is different to the aggregate of the current tax liability or asset and any deferred tax asset
arising from unused tax losses and tax credits in respect of that period, the difference is recognised as a contribution from (or distribution to)
equity participants.
38
REGIONAL EXPRESS HOLDINGS LIMITED
(N) INTANGIBLE ASSETS
INTANGIBLE ASSETS ACQUIRED SEPARATELY
Intangible assets acquired separately are recorded at cost less accumulated amortisation and impairment. Amortisation is charged on a
straight-line basis over their estimated useful lives. The estimated useful life and amortisation method is reviewed at the end of each annual
reporting period, with any changes in these accounting estimates being accounted for on a prospective basis.
INTERNALLY-GENERATED INTANGIBLE ASSETS RESEARCH AND DEVELOPMENT EXPENDITURE
Expenditure on research activities is recognised as an expense in the period in which it is incurred. Where no internally-generated intangible
asset can be recognised, development expenditure is recognised as an expense in the period as incurred.
An intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the
following have been demonstrated:
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset;
and
the ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the
intangible asset first meets the recognition criteria listed above.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and
accumulated impairment losses, on the same basis as intangible assets acquired separately.
A summary of the policies applied to the Group's intangible assets is as follows:
Computer software
Development costs
Useful lives
Finite
Finite
Amortisation method used
5 years straight line
2.5 years straight line
Internally generated / acquired
Acquired
Internally generated
Impairment test / recoverable
amount testing
Annually and where an indicator of
impairment exists
Amortisation method reviewed at each
financial year-end; reviewed annually for
indicator of impairment
(O) INVENTORIES
Inventories are valued at the lower of cost and net realisable value. Costs, including an appropriate portion of fixed and variable overhead
expenses, are assigned to inventory on hand by the method most appropriate to each particular class of inventory, with the majority being
valued on a first in first out basis. Net realisable value represents the estimated selling price less all estimated costs of completion and costs
necessary to make the sale.
(P) LEASED ASSETS
Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards incidental to ownership of
the leased asset to the lessee. All other leases are classified as operating leases.
GROUP AS LESSOR
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. However, contingent rentals
arising under operating leases are recognised as income in a manner consistent with the basis on which they are determined.
02. SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
39
FINANCIAL REPORT
GROUP AS LESSEE
Assets held under finance leases are initially recognised at their fair value or, if lower, at amounts equal to the present value of the minimum
lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as
a finance lease obligation.
Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on
the remaining balance of the liability. Finance charges are charged directly against income, unless they are directly attributable to qualifying
assets, in which case they are capitalised in accordance with the Group's general policy on borrowing costs. Refer to Note 2(C). Contingent
rentals are recognised as expenses in the periods in which they are incurred.
Finance leased assets are amortised on a straight-line basis over the estimated useful life of the asset.
Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis
is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under
operating leases are recognised as an expense in the period in which they are incurred.
LEASE INCENTIVES
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate
benefits of incentives are recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more
representative of the time pattern in which economic benefits from the leased asset are consumed.
(Q) PROPERTY, PLANT AND EQUIPMENT
Land and buildings, plant and equipment, leasehold improvements and equipment under finance lease are stated at cost less accumulated
depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement
of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present
value as at the date of acquisition.
Depreciation is provided on property, plant and equipment, including freehold buildings but excluding land. Depreciation is calculated on
a straight-line basis so as to write off the net cost of each asset over its expected useful life to its estimated residual value. Leasehold
improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight-line method.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period, with the effect
of any changes recognised on a prospective basis.
The rates applied are as follows:
Aircraft
15,000 to 60,000 hours
Building
20 years
Computer Equipment
4 years
Engines
10 years
Furniture & Fittings
8 years
Leasehold Improvements
over the unexpired lease period
Motor Vehicles
7 years
Plant & Equipment
8 years
Rotable Assets
5 to 20 years
(R) PROVISIONS
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the
Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date,
taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cashflows estimated to
settle the present obligation, its carrying amount is the present value of those cashflows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable
is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured
reliably.
40
REGIONAL EXPRESS HOLDINGS LIMITED
02. SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
(S) REVENUE
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for rebates and other similar
allowances.
RENDERING OF SERVICES
Revenue from providing air passenger and freight services is recognised when the relevant flights are made.
DIVIDEND AND INTEREST INCOME
Dividend from investments is recognised when the shareholder's right to receive payment has been established.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is
the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying
amount.
(T) SHARE-BASED PAYMENTS
Equity-settled share-based payments with employees and others providing similar services are measured at the fair value of the equity
instrument at the grant date. Further details on how the fair value of equity-settled share-based transactions has been determined can be
found in note 27.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting
period, based on the Group's estimate of shares that will eventually vest.
Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods and services received, except
where the fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted,
measured at the date the entity obtains the goods or the counterparty renders the service.
For cash-settled share-based payments, a liability equal to the portion of the goods or services received is recognised at the current fair value
determined at each reporting date.
(U) GOODS AND SERVICES TAX
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
i. where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of
an asset or as part of an item of expense; or
ii. for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.
Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising from investing and financing
activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.
41
FINANCIAL REPORT
03. REVENUES AND EXPENSES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2009
Consolidated
Company
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Finance income
Interest
525
1,221
419
1,047
525
1,221
419
1,047
Other income
Net gain on disposal of property, plant & equipment
3,429
520
2,169
520
Grant Department of Transport and Regional Services
244
192
244
192
Other income
3,185
3,736
2,991
2,514
6,858
4,448
5,404
3,226
Salaries & employee related costs
Wages and salaries (excluding bonus profit share scheme)
(69,178)
(64,287)
(56,147)
(52,984)
Bonus profit share scheme
(2,004)
(1,951)
(1,626)
(1,715)
Workers' compensation costs
(1,465)
(1,241)
(1,391)
(1,228)
Superannuation costs
(4,674)
(4,943)
(3,874)
(3,603)
Expense of employee options
-
(856)
-
(856)
Expense of share-based payments
(781)
(621)
(664)
(621)
(78,102)
(73,899)
(63,702)
(61,007)
Finance costs
Interest expense
(190)
(330)
-
-
(190)
(330)
-
-
Depreciation & amortisation
Depreciation and amortisation
(9,017)
(7,994)
(6,503)
(5,474)
Amortisation of development costs and software
(122)
(150)
(116)
(150)
(9,139)
(8,144)
(6,619)
(5,624)
Lease payments included in income statement
Included in flight and port operation costs
Minimum lease payments operating lease
(7,604)
(7,700)
(7,604)
(7,429)
(7,604)
(7,700)
(7,604)
(7,429)
Office and general administrative costs
Bad debts provided
(1)
(209)
-
(209)
Negative goodwill on acquisition of subsidiary
-
(13)
-
-
Other expenses
Loss on disposal of property, plant & equipment
-
(340)
-
-
Provision for non-recoverability of Hazelton loan
-
(67)
-
(67)
Net foreign currency loss
(419)
(812)
(193)
(1,234)
(419)
(1,219)
(193)
(1,301)
Notes to the financial statements are included on pages 29 to 71.
42
REGIONAL EXPRESS HOLDINGS LIMITED
04. PROFIT FOR THE YEAR
(A) GAINS AND LOSSES
Profit/(loss) for the year has been arrived at after crediting/(charging) the following gains and losses:
Consolidated
Company
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Net gain/(loss) on disposal of property, plant and equipment
3,429
180
2,169
520
Net foreign exchange gain/(loss)
(419)
(812)
(193)
(1,234)
(B) OTHER EXPENSES
Profit/(loss) for the year includes the following expenses:
Consolidated
Company
2009
$'000
2008
$'000
2009
$'000
2008
$'000
Depreciation
Aircraft
6,119
5,626
3,758
3,234
Other property, plant and equipment
2,898
2,368
2,745
2,241
Amortisation
Development costs and software
122
150
116
150
Operating lease rental expenses
Minimum lease payments
7,604
7,700
7,604
7,429
Employee related expenses
Employee options
-
856
-
856
Share-based payments
781
621
664
621
43
FINANCIAL REPORT
05. INCOME TAX
INCOME TAX RECOGNISED IN PROFIT OR LOSS
CONSOLIDATED
2009
$'000
2008
$'000
Tax expense/(income) comprises:
Current tax expense/(income)
Deferred tax expense/(income) relating to the origination and reversal of temporary differences
7,491
8,402
(Over)/under-provision of income tax in previous year
316
541
Total tax expense/(income)
-
(808)
Total tax expense/(income)
7,807
8,135
Attributable to:
Continuing operations
7,807
8,135
7,807
8,135
The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the
income tax expense in the financial statements as follows:
Profit/(loss) from continuing operations
30,789
32,478
Profit/(loss) from operations
30,789
32,478
Income tax expense calculated at 30%
9,237
9,743
Non deductible expenses/(income)
-
279
Effect of revenue that is exempt from taxation
-
(10)
Equity share of associates' (profits)/losses
-
4
Previously unrecognised and unused tax losses and tax offsets now recognised as deferred tax assets
(888)
(919)
Other
(38)
(154)
Investment allowance
(504)
-
(Over)/under-provision of income tax in previous year
-
(808)
7,807
8,135
The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under
Australian tax law. There has been no change in the corporate tax rate when compared with the previous reporting period.
44
REGIONAL EXPRESS HOLDINGS LIMITED
05. INCOME TAX
(CONTINUED)
INCOME TAX RECOGNISED DIRECTLY IN EQUITY
The following current and deferred tax amounts were charged directly in equity during the period:
CONSOLIDATED
2009
$'000
2008
$'000
Deferred tax
Other
202
(202)
202
(202)
Current tax payables
Income tax attributable:
Parent entity
2,722
2,179
Entities in the tax consolidated group
(434)
1,624
2,288
3,803
Deferred tax balances
Deferred tax assets comprise:
Temporary differences
3,017
3,285
Deferred tax liabilities comprise:
Temporary differences
2,272
2,016
Net deferred tax assets
745
1,269
45
FINANCIAL REPORT
Taxable and deductible temporary differences arise from the following:
CONSOLIDATED
30 June 2009
Opening
balance
$'000
Charged to
income
$'000
Charged to
equity
$'000
Acquisitions
/disposals
$'000
Exchange
differences
$'000
Changes in
tax rate
$'000
Closing
balance
$'000
Gross deferred tax liabilities
Inventories
(2,016)
(230)
-
-
-
-
(2,246)
Other items
-
(26)
-
-
-
-
(26)
(2,016)
(256)
-
-
-
-
(2,272)
Gross deferred tax assets
Employee-related provisions
2,398
211
-
-
-
-
2,609
Deferred government grant
86
(73)
-
-
-
-
13
Provision for doubtful debts
10
1
-
-
-
-
11
Listing costs deductible over five years
348
(174)
-
-
-
-
174
Other items
443
(31)
(202)
-
-
-
210
3,285
(66)
(202)
-
-
-
3,017
-
-
-
-
-
-
-
Net deferred tax assets/liabilities
1,269
(322)
(202)
-
-
-
745
CONSOLIDATED
30 June 2009
Gross deferred tax liabilities
Inventories
(2,580)
564
-
-
-
-
(2,016)
(2,580)
564
-
-
-
-
(2,016)
Gross deferred tax assets
Employee-related provisions
2,844
(446)
-
-
-
-
2,398
Deferred government grant
144
(58)
-
-
-
-
86
Provision for doubtful debts
118
(108)
-
-
-
-
10
Listing costs deductible over five years
522
(174)
-
-
-
-
348
Other items
560
(319)
202
-
-
-
443
4,188
(1,105)
202
-
-
-
3,285
-
-
-
-
-
-
-
Net deferred tax assets/liabilities
1,608
(541)
202
-
-
-
1,269
Deferred tax assets of $2,851 thousand (2008: $3,751 thousand) from tax losses have not been brought to account as assets.
46
REGIONAL EXPRESS HOLDINGS LIMITED
INCOME TAX RECOGNISED IN PROFIT OR LOSS
COMPANY
2009
$'000
2008
$'000
Tax expense/(income) comprises:
Current tax expense/(income)
6,685
6,189
Deferred tax expense/(income) relating to the origination and reversal of temporary differences
454
460
(Over)/under-provision of income tax in previous year
-
(398)
Total tax expense/(income)
7,139
6,251
Attributable to:
Continuing operations
7,139
6,251
7,139
6,251
The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the
income tax expense in the financial statements as follows:
Profit/(loss) from continuing operations
27,545
25,014
Profit/(loss) from operations
27,545
25,014
Income tax expense calculated at 30%
8,264
7,504
Non deductible expenses/(income)
(77)
125
Equity share of associates' (profits) / losses
-
4
Previously unrecognised and unused tax losses and tax offsets now recognised as deferred tax assets
(888)
(697)
Other
-
(287)
Investment allowance
(160)
-
(Over)/under-provision of income tax in previous year
-
(398)
7,139
6,251
The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under
Australian tax law. There has been no change in the corporate tax rate when compared with the previous reporting period.
05. INCOME TAX
(CONTINUED)
47
FINANCIAL REPORT
INCOME TAX RECOGNISED DIRECTLY IN EQUITY
The following current and deferred tax amounts were charged directly in equity during the period:
COMPANY
2009
$'000
2008
$'000
Deferred tax
Other
202
(202)
202
(202)
Current tax payables
Income tax attributable:
Parent entity
2,722
2,179
Entities in the tax consolidated group
(434)
1,624
2,288
3,803
Deferred tax balances
Deferred tax assets comprise:
Temporary differences
2,257
2,676
Deferred tax liabilities comprise:
Temporary differences
1,654
1,417
Net deferred tax assets/liabilities
603
1,259
48
REGIONAL EXPRESS HOLDINGS LIMITED
Taxable and deductible temporary differences arise from the following:
COMPANY
30 June 2009
Opening
balance
$'000
Charged to
income
$'000
Charged to
equity
$'000
Acquisitions
/disposals
$'000
Exchange
differences
$'000
Changes in
tax rate
$'000
Closing
balance
$'000
Gross deferred tax liabilities
Inventories
(1,330)
(219)
-
-
-
-
(1,549)
Other items
(87)
(18)
-
-
-
-
(105)
(1,417)
(237)
-
-
-
-
(1,654)
Gross deferred tax assets
Employee-related provisions
1,838
71
-
-
-
-
1,909
Deferred government grant
86
(73)
-
-
-
-
13
Provision for doubtful debts
10
-
-
-
-
-
10
Listing costs deductible over five years
348
(174)
-
-
-
-
174
Other items
394
(41)
(202)
-
-
-
151
2,676
(217)
(202)
-
-
-
2,257
-
-
-
-
-
-
-
1,259
(455)
(202)
-
-
-
603
COMPANY
30 June 2009
Gross deferred tax liabilities
Inventories
(1,265)
(65)
-
-
-
-
(1,330)
Other items
(11)
(76)
-
-
-
-
(87)
(1,276)
(141)
-
-
-
-
(1,417)
Gross deferred tax assets
Employee-related provisions
1,648
190
-
-
-
-
1,838
Deferred government grant
144
(58)
-
-
-
-
86
Provision for doubtful debts
4
6
-
-
-
-
10
Listing costs deductible over five years
522
(174)
-
-
-
-
348
Other items
475
(283)
202
-
-
-
394
2,793
(319)
202
-
-
-
2,676
| 
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