Profit attributable to: Equity Holders of the Company Non-controlling interests

Transcription

1 UNAUDITED RESULTS FOR THIRD QUARTER AND 9 MONTHS ENDED 31 DECEMBER (a) An income statement (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year. CONSOLIDATED PROFIT AND LOSS ACCOUNT for the third quarter and nine months ended 31 December 2010 (in $ million) 3rd Quarter 9 Months REVENUE , ,148.3 EXPENDITURE Staff costs* (156.6) (147.1) (452.9) (402.0) Cost of raw materials (124.1) (121.9) (330.7) (307.5) Licensing fees (15.7) (14.8) (45.3) (42.5) Depreciation and amortisation charges (23.7) (22.8) (68.5) (68.1) Company accommodation and utilities (25.7) (22.4) (72.5) (65.6) Other costs (42.9) (47.3) (120.0) (118.5) (388.7) (376.3) (1,089.9) (1,004.2) OPERATING PROFIT Interest on borrowings (0.6) (0.3) (2.2) (4.7) Interest income Amortisation of deferred income Dividend from long term investment, gross Gain on disposal of property, plant and equipment Share of profits of associated companies Share of loss of joint venture company (0.1) - (0.1) - PROFIT BEFORE TAXATION Taxation (15.9) (13.8) (39.1) (34.7) PROFIT AFTER TAXATION Profit attributable to: Equity Holders of the Company Non-controlling interests Underlying Operating Profit of the Group Underlying Net Profit of the Group Notes: 1. Underlying operating profit is operating profit excluding exceptional items such as M&A costs and jobs credit received. 2. Underlying net profit is defined as profit attributable to equity holders of the Company excluding exceptional items such as M&A costs and jobs credit received. *Jobs credit deducted from staff costs Foreign exchange loss, net (0.4) (0.1) (1.7) (0.7) Write-back/(provision) for doubtful debts/ 1.0 (0.7) 1.1 (0.5) bad debts Page 1 of 15

2 Underlying Net Profit Reconciliation Table 3Q Q M M Profit attributable to equity holders of the Company Add: M&A costs Less: Jobs credit - (3.2) - (15.6) Underlying Net Profit CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the third quarter and nine months ended 31 December 2010 (in $ million) 3Q Q M M Profit after taxation Other comprehensive income: Net fair value changes on available-for sale assets Foreign currency translation (12.6) (3.2) (31.6)* (1.2) (12.6) (3.2) (31.6) (0.9) Total comprehensive income Total comprehensive income attributable to: Equity Holders of the Company Non-controlling interests * This relates to the foreign exchange differences arising from the translation of assets and liabilities of the Group's foreign operations. The net translation loss incurred during the period is mainly contributed by the subsidiaries in United Kingdom and the associated companies in Hong Kong and Indonesia, arising from the appreciation of SGD against GBP, IDR, HKD. Page 2 of 15

3 1(b)(i) A balance sheet (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year. STATEMENTS OF FINANCIAL POSITION as at 31 December 2010 (in $ million) THE COMPANY Share capital Reserves reserve 1, , Share-based compensation reserve Statutory reserve Foreign currency translation reserve (91.3) (59.6) - - Equity attributable to equity holders 1, , , ,216.0 of the company Non-controlling interests Total equity 1, , , ,216.0 Deferred taxation Finance leases Term loans Other long-term liability Deferred income , , , ,267.6 Represented by:- Property, plant and equipment Freehold land and buildings Leasehold land and buildings Progress payments Others Investment properties Other non-current assets Deferred tax assets Subsidiary companies Associated companies Loan to a subsidiary Loan to an associated company Long-term investment * Joint venture company Intangible assets Current assets Trade debtors Other debtors Prepayments Related companies Associated companies Loan to an associated company Loan to a subsidiary Inventories Fixed deposits Cash and bank balances Less: Current liabilities Term loans Bank overdraft secured Trade creditors Other creditors Finance lease current Related companies Provision for taxation Net current assets (86.0) , , , ,267.6 * Includes the purchase consideration of $122 million for 50.7% stake in TFK Corporation (TFK) which was acquired on 20 December TFK will be consolidated with effect from 1 January Page 3 of 15

4 1(b) (ii) Aggregate amount of group s borrowings and debt securities (In $ million) Amount repayable in one year or less, or on demand As at As at Secured * Unsecured Secured * Unsecured Amount repayable after one year As at As at Secured * Unsecured Secured * Unsecured Details of any collateral * Secured by property, plant and equipment and other assets belonging to certain subsidiaries in the Group. Page 4 of 15

5 1(c) A cash flow statement (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year. CONSOLIDATED CASH FLOW STATEMENT for the third quarter and 9 months ended 31 December 2010 (in $ million) 3rd Quarter 9 Months Cash flows from operating activities Profit before taxation Adjustments for: Interest income (0.1) (0.1) (0.4) (0.5) Interest on borrowings Dividend from long-term investment - - (1.0) - Depreciation and amortisation expenses Gain on disposal of property, plant and equipment (0.1) (0.1) (0.2) (0.6) Effects of exchange rate changes Share of profits of associated companies (15.4) (9.3) (46.0) (28.9) Share of results of joint venture company Share-based payment expense Amortisation of deferred income (0.2) (0.3) (0.7) (0.8) Operating profit before working capital changes Increase in debtors (21.6) (21.2) (45.5) (117.4) Decrease in prepayments (Increase)/decrease in inventories (5.9) 3.9 (10.5) 11.4 (Increase)/decrease in amounts owing by related - (0.1) companies Increase in creditors Increase in amount due from associated companies (0.1) (0.2) - (0.4) Cash generated from operations Interest paid to third parties (0.5) (0.4) (2.1) (5.2) Income tax paid (12.3) (16.5) (36.0) (37.5) Net cash from operating activities Cash flows from investing activities Capital expenditure (11.5) (16.2) (49.8) (34.0) Purchase of long term investment (122.0) - (122.0) - Repayment of loan from associated companies Dividends from associated companies Proceeds from disposal of property, plant and equipment Interest received from deposits Proceeds from disposal of short-term non-equity investments Changes in fair value of financial instruments Dividend from long-term investment Capital expenditure for setting up associated companies (1.9) - (1.9) 0.1 Net cash (used in)/provided by investing activities (135.2) (10.2) (148.4) 8.9 Cash flows from financing activities Repayment of medium-term notes and term loans (4.2) (3.1) (6.4) (227.6) Drawdown of term loans Repayment of finance leases (0.1) (0.2) (0.5) (1.5) Proceeds from exercise of share options Dividends paid (55.4) (54.2) (143.5) (118.9) Bank charges on sale and lease back arrangement (0.3) (0.2) (0.7) (0.6) Net cash from/(used in) financing activities 67.5 (46.3) 1.1 (332.1) Net (decrease)/increase in cash and cash equivalents (17.3) 14.8 (30.9) (137.0) Effects of exchange rate changes 1.2 (0.8) 1.8 (0.3) Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period Page 5 of 15

6 1(d) (i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year. STATEMENTS OF CHANGES IN EQUITY for the third quarter ended 31 December 2010 (in $ million) Attributable to Equity Holders of the Company Share Capital Reserve Share-based Compensation Reserve Statutory Reserve* Foreign Currency Translation Reserve Total Noncontrolling interests Total Equity Balance at 30 September , (78.6) 1, ,507.6 Total comprehensive income for October-December (12.7) Share-based payment Share options exercised (1.0) Dividends, net - (55.4) (55.4) - (55.4) Balance at 31 December , (91.3) 1, ,497.9 Balance at 30 September , (46.2) 1, ,441.3 Total comprehensive income for October-December (3.2) Share-based payment Share options exercised and lapsed Award of performance and restricted shares (2.2) (0.5) Dividends, net - (54.2) (54.2) - (54.2) Balance at 31 December , (49.4) 1, ,448.6 * Certain countries in which some of the Group s associated companies are incorporated legally require statutory reserves to be set aside. The laws of the countries restrict the distribution and use of these statutory reserves. Page 6 of 15

7 STATEMENTS OF CHANGES IN EQUITY (Cont d) for the third quarter ended 31 December 2010 (in $ million) THE COMPANY Share Capital Reserve Share-based Compensation Reserve Total Equity Balance at 30 September ,238.3 Total comprehensive income for October-December Share-based payment Share options exercised (1.0) 6.2 Dividends, net - (55.4) - (55.4) Balance at 31 December ,204.7 Balance at 30 September ,140.4 Total comprehensive income for October-December Share-based payment Share options exercised and lapsed (2.2) 10.5 Award of performance and restricted shares (0.5) - Dividends, net - (54.2) - (54.2) Balance at 31 December ,100.4 Page 7 of 15

8 1(d)(ii) Details of any changes in the company s share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. SHARE CAPITAL AND OPTIONS ON SHARES IN THE COMPANY (i) Employee Share Option Plan As at 31 December 2010, the number of share options of the Company outstanding was 34,441,475 (31 December 2009: 57,328,425). During the period October to December 2010, 2,908,900 shares were exercised under the SATS Employee Share Option Plan, which comprises the Senior Executive Share Option Scheme for senior executives and the Employee Share Option Scheme for all other employees. The movement of share options of the Company during the period October to December 2010 is as follows: Date of Grant Balance at Lapsed Exercised Balance at Exercise price # Expiry date ,100 - (30,500) 206,600 S$ ,850 - (78,400) 440,450 S$ ,250 - (80,800) 605,450 S$ ,756,850 (15,600) (168,000) 2,573,250 S$ ,240,800 (34,400) (566,700) 5,639,700 S$ ,659,225 - (672,200) 4,987,025 S$ ,393,500 (38,600) - 13,354,900 S$ ,951,600 (5,200) (1,312,300) 6,634,100 S$ ,444,175 (93,800) (2,908,900) 34,441,475 # Following approval by the Company s shareholders of the declaration of a special dividend of $0.05 per share on 26 July 2007, the Committee administering the Plan has approved a $0.05 reduction in the exercise prices of all shares options outstanding on 30 July The exercise prices reflected here are the exercise prices after such adjustment. The Company has accounted for the modification in accordance to FRS 102. As the incremental fair value of the share options resulting from the modification is $nil, no adjustment is made to the share-based payment expenses in the current year. Page 8 of 15

9 (ii) Restricted Share Plan (RSP) and Performance Share Plan (PSP) In addition to the Employee Share Option Plan, senior management staff are entitled to two sharebased incentive plans, the RSP and PSP, which were approved by the shareholders of the Company on 19 July For grants prior to FY2010/2011 Depending on the achievement of pre-determined targets over a two-year period for the RSP and a three-year period for the PSP, the final number of restricted shares and performance shares awarded could range between 0% to 150% of the initial grant of the restricted shares and between 0% to 200% of the initial grant of the performance shares. For grants in FY 2010/2011 RSP award is subject to yearly financial achievement and has an equal vesting over a four-year period. The number of restricted shares awarded is based on individual performance. PSP is subject to specified performance conditions over a three-year period and the final number of performance shares awarded could range from 0% to 200% of the initial grant of the performance shares. As at 31 December 2010, the number of shares outstanding under the Company s Restricted Share Plan ( RSP ) and Performance Share Plan ( PSP ) were 1,961,000 and 1,085,616 respectively. The details of the shares awarded under RSP and PSP are as follows: Date of grant Balance at Number of Restricted Shares Cancelled Balance at RSP ,160 (560) 19, ,100-5, ,100 (3,700) 158, ,700-18, ,000 (12,800) 733, ,046,000 (20,000) 1,026,000 1,998,060 (37,060) 1,961,000 Date of grant Balance at Number of Performance Shares Cancelled Balance at PSP , , ,000-92, ,000-72, ,000 (10,000) 736,000 1,095,616 (10,000) 1,085,616 1(d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year. As At 31 December 2010 As at 31 March ,107,612,894 1,093,151,046 Page 9 of 15

10 1(d)(iv) A statement showing all sales, transfer, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on. Not applicable 2 Whether the figures have been audited, or reviewed and in accordance with which standard. The figures have not been audited or reviewed in accordance with Singapore Standards on Auditing, or Singapore Standards on Review Engagements. 3 Where the figures have been audited or reviewed, the auditor s report (including any qualifications or emphasis of matter). Not applicable. 4 Whether the same accounting policies and methods of computation as in the issuer s most recently audited annual financial statements have been applied. The Group has applied the same accounting policies and methods of computation in the preparation of the financial statements for the current reporting period compared with the audited financial statements as at 31 March The adoption of the new and revised Financial Reporting Standards (FRS) and Interpretations of FRS (INT FRS) that are mandatory for financial years beginning on or after 1 April 2010 has no significant impact on the Group. A subsidiary TFK Corporation which was acquired on 20 December 2010 has been recorded as a long-term investment and will be consolidated with effect from 1 January If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change. Not applicable. 6 Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends. Earnings per share based on net profit attributable to shareholders (cents): 3rd Quarter 9 Months (i) Basic * (ii) Diluted ** * Based on weighted average number of fully paid shares in issue. ** Based on weighted average number of fully paid shares in issue after adjusting for the effect of dilutive options of the company. Page 10 of 15

11 7 Net asset value (for the issuer and group) per ordinary share based on issued share capital of the issuer at the end of the (a) current financial period reported on and (b) immediately preceding financial year. Net asset value per ordinary share (cents) As at As at THE COMPANY As at As at A review of the performance of the group, to the extent necessary for a reasonable understanding of the group s business. It must include a discussion of the following:- (a) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and (b) any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on. GROUP FINANCIAL PERFORMANCE Third Quarter Group net profit attributable to equity holders of $51.2 million in the third quarter ended 31 December 2010 decreased by $2.2 million or 4.1% over the corresponding period in FY In the absence of jobs credit of $3.2 million received in the preceding year and the $3.3 million M&A expenses relating to the acquisition of TFK Corporation, the underlying profit would have increased 8.6% to $54.5 million. Group revenue rose $6.6 million or 1.5% to $440.9 million. for Gateway Services was higher by 9.1% whereas Food Solutions showed a 1.6% decline mainly due to lower UK sales arising from the continued weakness of the pound and the alignment of accounting period for Daniels from 16 weeks to 13 weeks in 3Q FY Group expenditure increased $12.4 million or 3.3%, mainly due to increase in staff costs. The resulting operating profit of $52.2 million was $5.8 million or 10% lower than the same quarter last year. Excluding the jobs credit and M&A expense, the underlying operating profit would be $55.5m representing an increase of 1.3%. The continued recovery in the aviation industry has also resulted in higher contribution from associates. In 3QFY , share of profits from associated companies was $15.4 million, representing an increase of 65.6% year-on-year. The business segmental revenue and its composition are summarised below: 3QFY Mix 3QFY Mix Growth $M % $M % % Gateway Services Food Solutions Corporate* Total * from rental of premises and provision of management services. Page 11 of 15

12 9 Months Group net profit attributable to equity holders for the nine months ended 31 December 2010 was $140.7 million, $6 million or 4.5% higher than the same period in FY Excluding the effect of jobs credit of $15.6 million in the nine months of FY and the M&A cost, the underlying net profit would have risen 20.9% to $144 million. Group revenue rose $75.9 million or 6.6% to $1,224.2 million. This was at the back of increased flights handled as well as higher cargo and meal volumes.. for Gateway Services was higher by 9.5% whereas Food Solutions contributed a 5.4% growth. Group expenditure increased $85.7 million or 8.5%, with higher raw materials and staff costs being the key contributors. Consequently, the Group operating profit for April to December period was $134.3 million, a decline of $9.8 million or 6.8% compared to the same period last year. Excluding the benefits of jobs credit recorded in the nine months of FY and the M&A expenses, underlying operating profit would have grown 7.1% year-on-year to $137.6 million. The business segmental revenue and its composition are summarised below: 9MFY Mix 9MFY Mix Growth $M % $M % % Gateway Services Food Solutions Corporate* (10.3) Total 1, , * from rental of premises and provision of management services. Contribution from overseas associates improved by $17.1 million or 59.2% to $46 million due mainly to higher volumes in the overseas ground handling joint ventures. Balance Sheet Review Total equity and total assets of the Group remained at $1.5 billion and $2.0 billion respectively as at 31 December Net asset value per share fell marginally from $1.36 as at 31 March 2010 to $1.34. The total number of shares issued was 1,107.6 million as at 31 December 2010 while the Group s cash balance was $166.7 million. Cash Flow Review Cash inflow from operating activities for the nine months for FY has decreased mainly due to an increase in working capital arising from growth in revenue. Cash used in investing activities has increased over the prior year because of the acquisition of TFK Corporation in December 2010 and higher capital expenditure due to the setting up of Coolport@Changi and technical ramp service offering at Changi Airport as well as the new Grimsby plant in UK. The higher net cash inflow from financing activities was due to the drawdown of short-term revolving loan of $122 million to finance TFK acquisition. The Group s cash and cash equivalents increased $28.3 million to $166.7 million. Page 12 of 15

13 9 Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results. Not applicable. 10 A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months. OUTLOOK The fourth quarter (January to March) has traditionally been the low season quarter for the aviation sector. As the sector is already in recovery mode, we expect to post moderate year-on-year growth for the last quarter. Inflationary pressure on food materials is expected to worsen. Hence, managing food costs remains a key focus of management. Over in the UK, food inflation and the increase in value added tax to 20% from January 2011 would potentially affect retailers. As such, Daniels management will continue to monitor the situation closely and broaden its food sources. The acquisition of TFK Corporation was completed in late-december. While the Group will begin consolidating its financials from 1 January 2011, this is not expected to have any material impact on the Group s earnings for the current financial year. 11 Dividends (a) Current Financial Period Reported On Any dividend declared for the current financial period reported on? No (b) Corresponding Period of the Immediately Preceding Financial Year Any dividend declared for the corresponding period of the immediately preceding financial year? No (c) Date Payable Not applicable. (d) Books Closure Date Not applicable. 12 If no dividend has been declared/recommended, a statement to that effect. No dividend has been declared/recommended for the quarter ended 31 December Page 13 of 15

14 13 Interested Person Transactions 13.1 The interested person transactions entered into during the third quarter ended 31 December 2010 are as follows: Third Quarter FY Aggregate value of all interested person transactions entered into during the financial year below (excluding transactions of value less than S$100,000 and transactions conducted under the shareholders mandate pursuant to Rule 920 of the SGX-ST Listing Manual) Aggregate value of all interested person transactions entered into during the financial year below under the shareholders mandate pursuant to Rule 920 of the SGX-ST Listing Manual (excluding transactions of value less than S$100,000) $ 000 $ 000 Name of Interested Person Singapore Telecommunications Limited Sembcorp Gas Pte Ltd NCS Pte Ltd Singapore Airlines Limited ST Electronics (Info-Comm Systems) Pte Ltd Total - 2,450 Note: All the transactions set out in the above table were based on records from the Group's Register of Interested Persons Transactions for the financial period under review, and include transactions whose durations exceed the financial period under review and/or multiple transactions with the same interested person. The transactions were based on actual or estimated values of the transactions for the entire duration of the relevant transactions in the case of fixed term contracts or annual/periodic values of the transactions in the case of open-ended contracts, taking into account agreed rates. BY ORDER OF THE BOARD Leow Chiap Seng Company Secretary 1 February 2011 Singapore Singapore Company Registration No: G Page 14 of 15

15 CONFIRMATION BY THE BOARD We, Edmund Cheng Wai Wing and Keith Tay Ah Kee, being two directors of SATS Ltd. (the Company ), do hereby confirm on behalf of the directors of the Company that, to the best of their knowledge, nothing has come to the attention of the board of directors of the Company which may render the third quarter and nine months ended 31 December 2010 financial results to be false or misleading in any material respect. On behalf of the board of directors EDMUND CHENG WAI WING Chairman KEITH TAY AH KEE Director Singapore, 1 February 2011 Page 15 of 15