PRECISION AIR SERVICES DIRECTORS’ REPORT ON FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2014

Capacity Utilised
Total passengers carried in the network during the financial year amounted to 687,981 compared to a prior year level of 895,654 thus a drop of 23% compared to prior. The shortfall on previous year is largely due to the withdrawal of the Boeing fleet as well as the suspension of a number of routes which accounted for a significant portion of available seats per kilometer (ASK) offered in the prior year.
The Revenue Passenger per Kilometre (RPK) achieved from the market amounted to 332 million against prior year level of 493 million; thus a drop of 33% compared to prior year.
The significant deficit on previous year on the other hand is attributable to the suspension of a number of regional routes which constituted a significant portion of the network’s ASKs in the prior year.
Yields
Yield achieved on passenger revenue during the financial year was Yield per RPK of 19.49 US Cents (USc) compared to a prior year level of USc 17.56.
Profitability
Whereas the Company incurred a loss of TZS 12.41billion during the year (2013: TZS 30.43billion); the Group incurred a loss of TZS 12.06 billion (2013: TZS 30.15 billion). The significant reduction in operating loss has been primarily attributed to review of the network to eliminate inefficient routes, return of the inefficient leased jet aircrafts, operational and structural rationalization, aggressive cost control and optimization of ancillary revenues opportunities.
FUTURE DEVELOPMENTS AND PLANS
The group will continue to focus on improving profitability and liquidity by increasing revenues and maintaining our costs at reasonable levels. The group will focus on the  following;

  • using the help of a consultant to overhaul the entire network and work on HUB and SPOKE   strategy so as to maximize on the feed and de-feed in Dar es Salaam and Nairobi HUBS. This will open up opportunities to get extra passengers on board in our flights and thus make additional revenues on existing fleets.
  • review the existing skill levels of our staffs and either upgrade it through coaching and training; or recruitment of the right people in the right places.
  • tight and continuous focus on cost control across all functional areas.
  • increase our partnership portfolio and sign up more Side Partnership Arrangements (SPA's), code shares and joint ventures (JV's) thus increase our passenger revenues numbers.
  • finalize and conclude on partnership arrangements in Ground handling and maintenance so as to generate additional revenues alongside other ancillary revenue opportunities

 
The Company continues to monitor closely the competitive environment, impact of increased competition through the entry of new players in the market, jet fuel prices, and performance of Tanzania Shilling against major currencies and recognises these as amongst the main challenges the Group will face during 2015.
STOCK EXCHANGE INFORMATION
During the year, there was minimal fluctuation in the Company’s share price. At the close of the financial year the share was trading at the Dar es Salaam Stock exchange at TZS 460 per share, compared to TZS 475 per share at the end of the prior financial year.
DIVIDENDS
The Directors do not recommend payment of dividend (2013: Nil).
SUBSEQUENT EVENTS
There are no subsequent events that have occurred which are either to be disclosed or to be adjusted for in the consolidated and separate financial statements that could materially affect the consolidated and separate financial statements.
SOLVENCY AND GOING CONCERN EVALUATION
The Group’s state of affairs is set out on page 18 of the consolidated and separate financial statements. The Group incurred a net loss of TZS 12.06 billion for the year ended 31 March 2014 (31 March 2013: TZS 30.15 billion) and, as at that date, the Group’s current liabilities exceeded its current assets by TZS 99.76 billion (31 March 2013: TZS 85.71 billion). The Group was also in a net liability position of TZS 23.12 billion as at that date (31 March 2013: TZS 11.07 billion).
Furthermore, the Company incurred a net loss of TZS 12.41 billion for the year ended 31March 2014 (31 March 2013: TZS 30.43 billion) and, as at that date, the Company’s current liabilities exceeded its current assets by TZS 97.38 billion (31 March 2013: TZS 83.14 billion). The Company was also in a net liability position of TZS 22.76 billion as at that date (31 March 2013: TZS 10.35 billion).It is worthy of note that the net loss has reduced significantly over the last one year (by over 60%). More significantly, the cash and cash equivalent balances have improved over the last financial year by TZS 6.83 billion (TZS 6.86 billion for the Company).
The Company however continues to face working capital challenges to support its working capital requirements and to honour, in time, repayment of maturing loan obligations. Furthermore, the Company has some delayed remittance of statutory deductions and indirect taxes to relevant authorities.

Detailed Financial Report can be found on the following link of our website
http://dse.co.tz/content/company-announcements.