Investor Presentation

Transcription

1 Investor Presentation DB Access Asia Conference, Singapore May 2013

2 Forward Looking Statements This presentation may contain forward-looking statements regarding, among other things, the Company's outlook, business and strategy which are current as of the date they are made. These forward-looking statements are based largely on the current assumptions, expectations and projections of the directors and management of SATS about our business, and the industry and markets in which we operate. These statements are not guarantees of SATS future performance and are subject to a number of risks and uncertainties, some of which are beyond the Company's control and are difficult to predict. Future developments and actual results could differ materially from those expressed in the forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the forwardlooking information will prove to be accurate. SATS does not undertake to update these forward-looking statements to reflect events or circumstances which arise after publication. 2

3 Agenda SATS Overview Investment Highlights Strategic Directions & Outlook Appendix 3

4 SATS Overview 4

5 Our Business Food Solutions Airline Catering Gateway Services Passenger Services and Lounge Management Institutional Catering Ramp and Baggage Handling Food Distribution and Logistics Airfreight Handling and Logistics Airline Linen Laundry Aviation Security Cruise Handling and Terminal Management 5

6 SATS at a Glance Revenue 1 PATMI 1 Total Assets 2 Cash and Cash Equivalents 2 S$1.82bn S$184.8mn S$2.01bn S$404.2mn Debt-to-Equity 2 ROE 1 Market Capitalisation 3 Headcount x 12.7% S$3.5bn ~14,400 (1) For the twelve months ending 31 March 2013 (2) As at 31 March 2013 (3) As at 14 May

7 4Q12/13 Highlights Revenue Higher revenue due to steady growth momentum in gateway (+7.7%) and food (+1.4%) businesses. $449.0m +3.6% Operating Profit Despite a 2.6% increase in operating expenditure, operating profit rose 12% to $54.1m. $54.1m +12.0% Share of results of Associates/JVs, net of tax $18.5m +76.2% Higher share of results of associates/jvs attributed to higher profit contributions from associates in all regions. PATMI PATMI declined 7.8% to $46.2m due to a $16.8m provision for $46.2m -7.8% impairment of Daniels deferred consideration. Excluding this impairment and gain arising from early retirement of sale and leaseback arrangement in 4Q12, underlying net profit grew 32.4% to $63m. 7

8 Our Road Map Expanding Beyond Aviation and Singapore By Business By Industry By Geography FY1999 Corp 1.5% Gateway Services 50.9% Aviation 100.0% Singapore 100.0% Food Solutions 47.6% FY2013 Corp 0.3% Gateway Services 35.7% Non- Aviation 18.5% Corp 0.3% Aviation 81.2% Japan 18.4% Others 5.2% Singapore 76.4% Food Solutions 64.0% 8

9 Investment Highlights 9

10 Investment Highlights 1. Unique Business Model 2. Strong Market Position 3. Positive Prospects 4. Sound Operating Fundamentals 5. Resilient Cash Flows 10

11 1. Unique Business Model Twin engines of growth in gateway services and food solutions Largest aviation services network in Asia 10 Countries 36 Airports Jilin Flights (1) 410,246 Passengers (1) 65.1m Jeddah Riyadh Male India Beijing Hong Kong Macau Ho Chi Minh City Tianjin Singapore Shenyang Taipei Manila Tokyo (Narita & Haneda) Medan Batam Balikpapan Manado Jakarta Surabaya Ujung Pandang Yogyakarta Denpasar Timika Indonesia Meals (1) 70.3m Airfreight (1) 4m tons Amritsar Mumbai Goa Mangalore Delhi Hyderabad Chennai Bangalore Kolkata Trivandrum Rockhampton Hervey Bay Brisbane Gateway Services Food Solutions Gateway Services and Food Solutions (1) Based on FY12/13 aviation statistics for Singapore and overseas operations 11

12 2. Strong Market Position Singapore aviation: first-choice service provider for close to 60 scheduled airlines at Changi Airport Gateway Services (1) Ground & Cargo Handling Aviation Food Solutions (1) Airline Catering DNATA 26% SATS 74% DNATA 15% SATS 85% ASIG 0% Singapore non-aviation: leading institutional caterer with the largest capacity Regional aviation: majority of subsidiaries and JVs are either No. 1 or 2 service provider in the airports where they operate (1) Source: Changi Airport Group; market share based on number of scheduled flights. 12

13 3. Positive Prospects - Singapore & the Region Located in Asia a bright spot in the world economy 2013 GDP forecasts (1) China 8.0% and India 5.7% Asia-Pacific airlines remain the biggest contributors to global aviation industry profit (2) YTD Passenger traffic (RPK) on Asia Pacific airlines grew 3.6% against global average of 3.1% (3) Well established international hub Changi Airport is Asia s leading air hub; passenger traffic up 10.0% to 51.2m in 2012 (4) Addition of the new Marina Bay Cruise Centre Singapore Transforming tourism and hospitality landscape Integrated Resorts, F1, Gardens by the Bay, River Safari, Sports Hub Visitor arrivals up 9.1% to 14.4m in 2012; target to reach 14.8.m to 15.5m in 2013 (5) (1) Source: World Economic Outlook Update April 2013 (2) Source: IATA Financial Forecast March 2013 (3) Source: IATA February 2013 Air Transport Market Analysis (4) Source: Changi Airport Group (5) Source: Singapore Tourism Board 13

14 4. Sound Operating Fundamentals Strong customer focus and consistently high service standards Economies of scale Focused on sustainable cost levels Operating Margins SATS vs global peers (1) 10.6% 9.1% 7.0% 5.3% 4.3% 3.2% 3.0% SATS BBA Compass Sodexo Autogrill John Menzies gategroup Airport Service Providers Aviation Food Solutions Food Solutions Source: FactSet, Company information as of latest financial year (1) Calendarised to March-year end 14

15 S$ m 5. Resilient Cash Flows & Strong Balance Sheet Highly cash generative businesses with short cash cycle Contract based revenues with limited downside risks Low capex spend ~ S$60-70m p.a. Healthy cash reserves of S$404.2m (36 cents per share) (1) Low debt-to-equity ratio of 0.09x (1) Undrawn S$500m MTN programme Dividend Payout Ratio (2) 168.8% 98.4% 73.5% 78.6% 63.7% 71.4% 90.3% 66.2% FY08/09 FY09/10 FY10/11 FY11/12 FY12/13 Ordinary dividend Special divdend FCF & Dividends Paid (2) 289 Excellent financial flexibility to seek strategic opportunities (1) As at 31 March 2013 (2) Includes special dividends * Includes special dividends of S$0.06 per share, S$0.15 per share and S$0.04 per share for FY11, FY12 and FY13 respectively FY08/09 FY09/10 FY10/11 FY11/12 FY12/13 Free Cash Flow Dividends paid 15

16 Strategic Directions & Outlook 16

17 Our Strategy Customer Intimacy Anticipate customers business challenges and find solutions collaboratively Increase share of their spending Growth Serve key customers at strategic locations Seek strategic partnerships and acquisitions Operational Excellence Continually improve productivity and performance Innovation Explore creative ways to delight our customers with game-changing innovations Sustain and improve product and service offerings 17

18 Execution Focused execution of strategy Formed 50:50 ground handling JV with Air India AISATS Bought 40% stake in Adel Abuljadayel Flight Catering in Saudi Arabia Commenced cruise handling and terminal management MBCCS Appointed as exclusive caterer for Singapore Sports Hub Awarded technical ramp handling licence at Changi Airport Formed a 51:49 JV with OCS Ventures to provide remote catering services Formed a 30%-owned assoc company in Saudi Arabia to offer pilgrimage catering services Formed JV to set up an integrated pig farm in Jilin Food Zone, China Disposed UK nonaviation food business Daniels Group Divested 51% equity stake in Country Foods Macau Purchased 50.7% stake in Japanese inflight caterer, TFK Corporation Won tender to operate and manage the new Marina Bay Cruise Centre S pore (MBCCS) Renewed ground handling and inflight catering contracts with SIA 18

19 Key Contracts Secured in FY12/13 Singapore Ground handling and inflight catering for Singapore Airlines. Ground and cargo handling for Air India Express, FedEx, Lufthansa Cargo/AeroLogic, Sichuan Airlines, United Airways. Inflight catering services for Air Mauritius. Catering services for Singapore Sports Hub and the Home Team Academy.. 19

20 Key Contracts Secured in FY12/13 Overseas TFK: inflight catering services for Air Asia Japan, Air France, Finnair, Garuda, Scoot and Swiss International Air Lines. SATS HK: ground handling services for Air India, Ethiopian Airlines, Malaysia Airlines, Singapore Airlines, Spring Airlines and Turkish Airlines. 20

21 Corporate Updates Key Management Appointments Appointed Mr Alexander Charles Hungate as Executive Director effective 16 July 2013 and subsequently as President & CEO effective 1 January Appointed Mr Cho Wee Peng as CFO effective 1 July Appointed Mr Wong Hong as the Executive Vice President for Gateway Services. 21

22 Accolades SATS clinched Best Air Cargo Terminal in Asia title at the 27 th Asian Freight & Supply Chain Awards (AFSCA) for the 15 th time. SATS won joint Silver Award for Best Managed Boards at Singapore Corporate Awards SATS was ranked 27th out of 100 top brands in Singapore by Brand Finance, up 8 notches from last year. SATS won a distinction award at the inaugural Human Capital Breakthrough Award for being one of Singapore s boldest and most innovative companies in the field of people management. AISATS Bangalore Cargo won the Air Cargo Terminal Operator of the Year in India for second consecutive year at the Indian Supply Chain and Logistics Summit and Excellence Awards

23 Outlook The continued growth of passenger traffic at Singapore Changi Airport and the robust intra-asia traffic will provide opportunities for the Group s gateway and food businesses. Air freight demand, however, is anticipated to remain weak. The continuing manpower policies in Singapore and their impact on operating costs remain major challenges for SATS. The Group continues to seek new growth areas by expanding its offerings and regional footprint. 23

24 In Summary Gateway Services and Food Solutions are our core businesses. We will leverage our core strengths to access opportunities in Asia Pacific and the Middle East. We continue to adopt a focused and disciplined approach to drive both organic and inorganic growth. Our strong financial position provides funding capacity for acquisitions. We continue to return surplus cash to shareholders by way of dividends. Our objectives are well aligned to create value for shareholders. 24

25 Appendix - Highlights of 4Q & FY12/13 Results Released on 15 May

26 Impairment of Daniels Deferred Consideration Took a $16.8m one-off provision for impairment of Daniels deferred consideration receivable. This receivable is contingent on Daniels FY12 and FY13 EBITDA which have not met the agreed annual target of m. Recap of Daniels Divestment: Aggregate sales consideration comprised of: - 150m consideration received - Deferred consideration of up to 13m in the event that Daniels met its EBITDA target over two-year period Sale consideration estimated at 159m after accounting for fair value of deferred consideration. Deferred consideration earn-out formula: 3 x (FY EBITDA m). - No earn-out, no clawback if EBITDA target was not achieved Recorded loss on disposal of S$5.5m in 3Q12. 26

27 Underlying Net Profit from Continuing Ops $M 4Q12/13 4Q11/12 FY12/13 FY11/12 Profit Attributable to Owners of the Company Adjustment for Discontinued Operations Loss/(Profit) from Daniels One-offs: Write-back of TFK's Retirement Benefit Plan Obligations (5.5) Loss/(Gain) on Early Retirement of Sale & Lease Back Arrangement - (2.5) Loss on Disposal of Country Foods Macau Impairment of Daniels Deferred Consideration Underlying Net Profit from Continuing Operations

28 FY12/13 Highlights Revenue Higher revenue driven by organic growth in gateway (+7.6%) and food (+8.1%) businesses. $1,819.0m +7.9% Operating Profit Operating profit increased due mainly to better performance of food business, including TFK. $192.3m +13.8% Share of results of Associates/JVs, net of tax $52.7m +27.9% Higher profit contributions from associates/jvs in North and Southeast Asia saw higher share of results of associates/jvs. PATMI Due to provision for impairment of Daniels deferred $184.8m +8.1% consideration, PATMI grew at a lower rate of 8.1% to $184.8m. Excluding Daniels loss in FY11/12 and one-off items, underlying net profit improved 13.8% to $202m. Debt-to-equity Debt-to-equity ratio remained healthy. Cash balance was $404.2m as at 31 March times ppt Free cash flow generated during the year was $208.1m. 28

29 4Q and FY12/13 Financials $M 4Q12/13 4Q11/12 % Change FY12/13 FY11/12 % Change Operating Revenue , , Operating Expenditure (394.9) (385.0) 2.6 (1,626.7) (1,516.4) 7.3 Operating Profit EBITDA Share of Results of Associates/JVs, Net of Tax Other Non-Operating Income/Expenses (17.0) 3.3 n.m. (20.5) 11.6 n.m. PBT from Continuing Operations (10.5) Profit from Continuing Operations, Net of Tax & Non-Controlling Interests Loss from Discontinued Operations, Net of Tax (7.8) (10.1) n.m. PATMI (7.8) Underlying Net Profit from Continuing Operations n.m. not meaningful 29

30 Q-o-Q Highlights $M 4Q12/13 3Q12/13 2Q12/13 1Q12/13 4Q11/12 Revenue % Change in Revenue -4.6% 2.0% 5.4% 1.1% -2.0% Expenditure (394.9) (423.8) (409.4) (398.6) (385.0) Operating Profit % Change in Operating Profit 15.6% -10.2% 32.6% -18.6% 10.3% EBITDA Share of Results of Associates/JVs, Net of Tax PBT from Continuing Operations Profit from Continuing Operations, Net of Tax & Non- Controlling Interests Loss from Discontinued Operations, Net of Tax PATMI % Change in PATMI -1.7% -6.6% 21.8% -17.6% 31.2% Underlying Net Profit from Continuing Operations % Change in Underlying Net Profit 34.0% -7.3% 22.8% -13.2% 8.9% 30

31 Financial Indicators % 4Q12/13 4Q11/12 Change (ppt) FY12/13 FY11/12 Change (ppt) Operating Margin EBITDA Margin PBT Margin (1.9) (0.9) PATMI Margin (1.3) Underlying Net Margin Cents 4Q12/13 4Q11/12 % Change FY12/13 FY11/12 % Change EPS Based on Net Profit Attributable to Shareholders (6.7) EPS Based on Net Profit from Continuing Operations Attributable to Shareholders (6.7) Mar Mar-12 NAV Per Share ($) Debt Equity Ratio Margins are calculated based on profits from continuing operations. 31

32 Group Segmental Revenue $M 4Q12/13 4Q11/12 % Change FY12/13 FY11/12 % Change By Business: Gateway Services Food Solutions , , Corporate (6.7) (1.8) Total , , By Industry: Aviation , , Non-Aviation Corporate (6.7) (1.8) Total , , By Geographical Location: Singapore , , Japan (4.2) Others (19.8) Total , ,

33 Group Expenditure 4Q12/13 Including TFK Excluding TFK $M 4Q12/13 4Q11/12 % Change 4Q12/13 4Q11/12 % Change Staff Costs Cost of Raw Materials Licensing Fees Depreciation & Amortisation (10.3) (6.9) Company Premise & Utilities (0.9) Other Costs Total Expenditure Revenue Excluding TFK s expenses, group expenditure increased 3.9% y-o-y against revenue growth of 5.4% 33

34 Group Expenditure FY12/13 Including TFK Excluding TFK $M FY12/13 FY11/12 % Change FY12/13 FY11/12 % Change Staff Costs Cost of Raw Materials Licensing Fees Depreciation & Amortisation (4.6) (0.5) Company Premise & Utilities Other Costs Total Expenditure 1, , , , Revenue 1, , , ,

35 Associates/JVs Performance by Business Based on SATS Shareholding* $M 4Q12/13 4Q11/12 % Change FY12/13 FY11/12 % Change Turnover (6.4) Gateway Services (8.6) Food Solutions EBITDA Gateway Services Food Solutions EBITDA Margin (%) ppt ppt Gateway Services ppt ppt Food Solutions ppt ppt PAT Gateway Services Food Solutions 1.5 (0.7) n.m n.m. Dividends Received * Excludes TFK s Associates n.m. not meaningful 35

36 Associates/JVs Performance by Region Based on SATS Shareholding* $M 4Q12/13 4Q11/12 % Change FY12/13 FY11/12 % Change Turnover (6.4) West Asia (21.1) North Asia (2.1) SEA & Australasia EBITDA West Asia (24.5) North Asia SEA & Australasia EBITDA Margin (%) ppt ppt West Asia ppt (0.8) ppt North Asia (0.2) ppt ppt SEA & Australasia ppt ppt PAT West Asia n.m (7.5) North Asia SEA & Australasia Dividends Received * Excludes TK s Associates n.m. not meaningful 36

37 Proforma Segmental Revenue (Include Proportionate Revenue from Assocs/JVs*) FY12/13 By Business By Industry By Geography Food Solutions 58.0% Corp 0.3% Gateway Services 41.7% Corp 0.3% Non- Aviation 15.8% Aviation 83.9% Assoc/JVs 14.8% Japan 15.7% Others 4.4% Singapore 65.1% FY11/12 Food Solutions 56.9% Corp 0.3% Gateway Services 42.8% Non- Aviation 15.9% Corp 0.3% Aviation 83.8% Assoc/JVs 16.7% Japan 14.9% Others 4.2% Singapore 64.2% * Excludes TFK s Associates 37

38 Group Balance Sheet $M As at 31 Mar 13 As at 31 Mar 12 Total Equity 1, ,616.2 Long-term Loans Other Long-Term Liabilities Current Liabilities Total Equity & Liabilities 2, ,122.5 Fixed Assets & Investment Property Associated Companies & JVs Intangible Assets Other Non-Current Assets & Long-Term Investment Current Assets Cash & Short-Term Deposits Debtors & Other Current Assets Total Assets 2, ,122.5 Decline in equity and cash & short-term deposits mainly attributed to dividend payments of $288.6m 38

39 Group Cash Flow Statement $M FY12/13 FY11/12 Difference Net Cash from Operating Activities Net Cash generated from/(used in) Investing Activities (16.6) (241.1) Net Cash used in Financing Activities (286.4) (215.9) (70.5) Net (decrease)/increase in Cash & Cash Equivalents (57.1) (233.7) Cash & Cash Equivalents at the end of the period (65.9) Free Cash Flow* Higher free cash flow attributed to higher cash flow from operating activities and lower capex incurred * Free Cash Flow refers to net cash from operating activities less cash purchases of capital expenditure. 39

40 Operating Statistics for Singapore Aviation Business 4Q12/13 4Q11/12 % Change FY12/13 FY11/12 % Change Passengers Handled ('M) Flights Handled ('000) Unit Services ('000) Cargo ('000 tonnes) , , (2.8) Gross Meals Produced ('M) Unit Meals Produced ('M) All operating metrics grew y-o-y in 4Q FY12/13 The above aviation operating data cover Singapore operations only. With the exception of unit and gross meals produced, all data include LCC operations. Unit services in 9M11/12 has been restated due to the change in the weightage factor for certain aircraft type. As a result, the restated figure is higher than what was previously announced for 9M11/12. 40

41 END 41