An Overview of SATS Cho Wee Peng, CFO SIAS Corporate Profile & Investment Seminar 30 November 2013 - Finanznachrichten
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An Overview of SATS Cho Wee Peng, CFO SIAS Corporate Profile & Investment Seminar 30 November 2013
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 forward-
looking 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
Today’s Agenda
• SATS At A Glance
• Investment Thesis
• Summary
3
SATS At A Glance
4
Our Business
Food Solutions Gateway Services
Passenger Services
Airline Catering and Lounge
Management
Institutional Ramp and
Catering Baggage Handling
Airfreight Handling
Food Distribution and Logistics
and Logistics
Aviation Security
Airline Linen
Laundry
Cruise Handling
and Terminal
Management
5
Key Figures
Cash and Cash
Revenue1 PATMI1 Total Assets2
Equivalents2
S$1.82bn S$184.8mn S$1.96bn S$394.5mn
Market
Debt-to-Equity2 ROE1 Headcount2
Capitalisation3
0.09x 12.7% S$3.5bn ~14,700
(1) For the twelve months ending 31 March 2013 (2) As at 30 September 2013
(3) As at 28 November 2013
6
2Q13/14 Highlights
Revenue • Revenue in 2Q declined 2% year-on-year due to lower food
revenue (-5.9%), offset partially by higher gateway revenue
$452.1m -2.0% (+5.1%).
Operating Profit • Compared to revenue, operating expenditure declined at a slower
pace of 1%. Hence, operating profit fell 10.6%.
$46.6m -10.6%
Share of results of • Better performance reported by associates in India and Indonesia
saw share of results of Associates/JVs increased 13.5%.
Associates/JVs, net of tax
$11.8m +13.5%
PATMI • PATMI was 3.2% lower than a year ago.
$48.7m -3.2%
7
1H13/14 Highlights
Revenue • Revenue in 1H declined 1.4% year-on-year due to lower food
revenue (-5.7%), offset partially by higher gateway revenue
$886.6m -1.4% (+6.5%).
Operating Profit • Operating profit fell 4.5% on rising employment costs.
$87.3m -4.5%
Share of results of • Better performance reported by associates in India and Indonesia
saw share of results of Associates/JVs increased 10%.
Associates/JVs, net of tax
$24.3m +10.0%
PATMI • PATMI rose 3.6%. The Group benefitted from write-back of tax
provision of $4m for prior years which was partially offset by
$94.9m +3.6% impairment provision of $1.7m for assets held for sale.
• Excluding one-off items, underlying net profit was $96.6m.
Debt-to-equity • Debt-to-equity ratio remained healthy.
• Cash and cash equivalents as at 30 September 2013 was
0.09 times $394.5m.
• Free cash flow generated in the first six months was $60.1m.
8
Road Map - To Expand Beyond Aviation & Singapore
By Business By Industry By Geography
Corp
1.5%
Aviation Singapore
Gateway 100.0% 100.0%
Services
50.9%
FY1999
Food
Solutions
47.6%
Corp Corp Others
0.3% 0.3% 4.6%
Gateway Non-
Services Aviation Japan Singapore
Aviation
38.1% 80.9% 15.4% 80.0%
18.8%
1H FY2014
Food
Solutions
61.6%
9Investment Thesis
10Investment Thesis
5
4 Resilient
Cash Flows &
3 Sound Strong
2 Positive
Operating
Fundamentals
Balance
Sheet
1 Growth
Strong Prospects
Market
Unique Position
Business
Model
111 Unique Business Model
• Twin engines of growth in gateway services and food solutions
• Largest aviation services network in Asia
10 Countries
38 Airports
Jilin
Shenyang
Beijing (Narita & Haneda)
Flights(1) Tianjin
Tokyo
441,958 Riyadh
Hong Kong Kaohsiung
Taipei Medan Batam Manado
Jeddah Macau
Passengers(1) India
Ho Chi Minh City
Manila Balikpapan
Timika
Male Jakarta
65.1m Surabaya Makasar
Lombok
Singapore Yogyakarta Denpasar
Indonesia
Meals(1) Amritsar
80.0m Delhi Rockhampton
Kolkata Hervey Bay
Mumbai Brisbane
Airfreight(1) Hyderabad
4m tons Goa Chennai
Mangalore Bangalore Gateway Services
Trivandrum Food Solutions
Gateway Services and Food Solutions
(1) Based on FY12/13 aviation statistics for Singapore and overseas operations
112 Strong Market Position
• Singapore aviation: first-choice service provider for close to 60
scheduled airlines at Changi Airport
Gateway Services(1) Aviation Food Solutions(1)
Ground & Cargo Handling Airline Catering
DNATA 15%
DNATA 26%
SATS 74% 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.
133 Positive Growth Prospects
• Growing demand for air travel in Asia
2013 GDP forecasts: China – 7.6% and India – 3.8%(1)
YTD Passenger traffic on Asia Pacific airlines grew 7.2% against global average of 5.0%(2)
Asia-Pacific airlines remain one of the biggest contributors to global aviation industry
profit(3)
• Singapore - An established international hub
Changi Airport is Asia’s leading air hub; 2012 passenger traffic +10.0% to 51.2m
T4’s completion in 2017 will bring Changi Airport’s capacity to 82m; T5 (to be operational
in mid 2020s) will double existing capacity to 135m
Singapore’s cruise passenger throughput is expected to grow from 913,000 in 2012 to
1.5m by 2017(4)
• Beneficiary of tourism growth in Singapore
Visitor arrivals +9.1% to 14.4m in 2012;
target to reach between 14.8.m to 15.5m in 2013(4)
(1) Source: World Economic Outlook Update (Oct 2013) (2) Source: IATA Air Passenger Market Analysis (Sep 2013)
(3) Source: IATA Financial Forecast (Sep 2013) (4) Source: Singapore Tourism Board
143 Positive Growth Prospects
• Proposed acquisition of Singapore Cruise Centre
Grow SATS’ gateway business both in Singapore and Asia Pacific
Positive prospects for cruise in Singapore
Immediately accretive to earnings
Currently awaiting regulatory approval. Once these are obtained, we shall proceed to
convene an EGM to seek shareholder approval.
154 Sound Operating Fundamentals
• Strong customer focus and consistently high service standards
• Economies of scale
• Steady focus on improving productivity
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 gategroup
Menzies
Airport Service Providers Aviation Food Solutions Food Solutions
(1) Calendarised to March-year end; Source: FactSet, Company information as of latest financial year
165 Resilient Cash Flows & Strong Balance Sheet
• Strong cash generative businesses with short cash cycle
• Healthy cash reserves of S$394.5m and low debt-to-equity ratio of
0.09x(1)
Strong financial flexibility to seek strategic opportunities
Dividend Payout Ratio(2) FCF & Dividends Paid(2)
289
168.8%
208
190 188
156 167
98.4% 142
90.3% 132
S$ m
73.5% 78.6% 108 104
63.7% 71.4% 66.2%
FY08/09 FY09/10 FY10/11 FY11/12 FY12/13 FY08/09 FY09/10 FY10/11 FY11/12 FY12/13
Ordinary dividend Special divdend Free Cash Flow Dividends paid
(1) As at 30 September 2013
(2) 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
17Summary
• Food Solutions and Gateway Services are our core businesses
• Our strategy is to grow our businesses, organically and through
value creating acquisitions
• Our strong financial position provides funding capacity for
acquisitions
18END
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