SATS Ltd.

Good morning everyone, welcome to the SATS fourth quarter and full year results briefing for financial year 2026. I'm David Wei, Group Head of Strategic Communications. Before we begin, I turn your attention to the forward-looking statement now on screen. A quick safety reminder. Wherever you are joining us from, do be aware of your surroundings at all times. Please make your safety a priority before joining this call, a recording of which will be available on our website. With me today are Kerry Mock, SET's President and CEO, and Timothy Tang, our Chief Financial Officer. I will hand over to Kerry to take you through the business update. Kerry, please.

Thank you. Thank you, David. And very good morning, everybody. Thank you for joining our call this morning. Let me just jump straight into the results. I think you have read the headline. Very good set of results for this full year. This is actually our record profit in our history. So, $6.35 billion, up 9%. Cargo continues to be very strong. This is the 10th consecutive quarter that we have beaten ITER's number. Both APEC and EMEA are going well and that's offsetting some of the softness we see in Americas, albeit Americas is now stabilizing and not deteriorating further. We still have very strong contract wins and renewals. This includes EVA Air in the US. EVA is a very important customer of ours in the Americas, and we are happy to renew them. And in Spain is Air Cargo Europa, which is also another big customer of ours in Spain. When you go to fourth quarter metrics below, 9.8% growth on the fourth quarter. This traditionally is our softest quarter, but again, good momentum shown across both business segments. And EBITDA has grown 3.9% now to about 276 million. Partly also reflected in the headwinds of the Middle East. As you recall, the Middle East conflict started in March itself. PAMI grew very well by 31% now to 50.7% and we're pleased with their performance. And of course, given the growth in our profit, we are proposing a final dividend of 5 cents per share. That's up from the 3.5 cents the prior year. And on the right-hand side, you can see all metrics showing good growth across cargo, flight, sandal, meals, both aviation and non-aviation showing good momentum as well. Next slide. Just some updates, the usual updates, key wins I mentioned earlier. Besides renewing, we've also added Washington-Dallas International Airport into the network. And Europa is both Madrid and Barcelona, and those are very key hubs for us in European gateways. On the M&A side, we actually completed an acquisition of Avia partner that's in Brussels Airport. It's given us additional 33,000 square meters of cargo terminal space. But I think importantly, this acquisition gives us a full freighter ramp handling and airside transport. This gives us the ability to then control end-to-end for our cargo business base out of Brussels. On the food side, we've launched a culinary world chef's culinary training program. We are the first caterer to do that. It's really part of our structured career pathway for our chefs. I think this is an important step because chef is actually a key capability of ours and we want to make sure that we are able to attract the best chef to join us. On the award side, we have been, we're very pleased that with, I think this is for Maybe the seventh time that we've won the Pax Leadership of Airline Caterer and really just recognition of our authentic Asian cuisine that we provide. On the technology and AI side, this is an important aspect of our business. We have completed a 15-week trial of an automated DIMM dimensional motion, actually capturing the DIMM information for our cargo business. With this, it gives us ability to move much faster and capture information real time, enabling our cargo to move much faster within our warehouse. Again, we'll share more as we develop more such programs going forward. People side, name top employer. This is important. We are a very, very people-oriented organization. It's important that we're recognized for the people policies that we put in place to attract the best talents out there. We've also won a gold award for operational excellence by Cathay and that's something that is given to our team in EMEA. Next. Just some high level numbers. You can see the usual numbers. Very pleased that we've covered almost 10 million tons in cargo. And from including AJV side, good growth momentum also to now about 13.2. Again, this quarter is typically the weakest quarter, so numbers have dropped down to 3.21, but compared against last year, there's also a good growth momentum shown. Flight handles increased primarily due to a contract that we have started in Brazil. This is with Azul Air, and Azul is actually the largest low-cost carrier in Brazil, and we're pleased to be performing that service for them in their hub in Sao Paulo. Aviation meals, you can see good growth momentum as well. In fact, over the last few quarters, it's been down up to about 40 million. So that's overall is a good number in terms of growth and really down to travel peak and increase in China domestic. One of these driven by our acquisition also of Nanjing Weizhou that's doing very well in China itself. Meals, non-evation, this quarter again, solid momentum, just maintaining those levels that we've been performing those last few quarters. And on the headcount side, again, it's driven by the Brazil setup and the new operations that we have acquired out of Belgium. But we are maintaining numbers fairly solidly as well. This chart just shows the consecutive quarters, albeit it's narrowed a little bit. We hope to be able to push more, but this is again a pleasing quarter that we are still showing good growth momentum, even though year on year it's been good growth from previous year. So this plus this year 4.7 It's even better. Light for light, it's about a small 0.3% in light for light growth. So that part there is something that we're watching out to see how we continue to make progress. But a non-light for light is 4.4%. And this really reflects a new win that we have across our network. So that momentum is something that's important. And we continue to place a lot of emphasis through our commercial team. We are present in, again, 14 out of the top 30 air cargo stations with direct access to air site, putting us in a very good momentum to work with our customers. Next slide. Now, what I want to highlight in this page is our business model, I think over the last few years has proven to be very resilient. Despite whatever challenges that's being thrown at us, whether is it tariff tension, rate C issue, or now the current Middle East conflict, I think we have been able to show growth momentum. This is important. It means that with the network that we have, with a key emphasis on working with customers, we are able to continue this growth trajectory. Importantly, also improving our margins. This is an important part of our FY29 target. And as we say, as long as we continue to grow our profitability, we will increase the dividend payout. So very pleasing to note that this year the payout is increased by 40% to now $0.07. And again, cargo tonnage continues to grow nicely. It's now 9.7. Hopefully momentum will carry us to double digit volumes this coming year. And we've also strengthened our capability. We're not stopping here. We continue to look for areas where there's white space in both network as well as capability. It's important that we continue to drive extension of adjacency We talked about specialised services in the past. This is an important aspect. No matter what the macroeconomic situation is, we do have the ability to focus on additional valid services that hopefully will drive our revenue stream even though volumes may taper off in the short term due to various reasons. This really shows our ability to absorb some of these challenges and we have enough growth opportunity and paths for us to manage both the top line as well as the bottom line. With that, I'll hand over to Tim. He will take you through the financial summary. Thank you. Yeah, thanks, Kerry.

I think and welcome everyone. Good to be here again on our earnings announcements. I think as Kerry said, maybe just to sum it up from my perspective, of course, We're pleased with the results in particular given the overall volatility in the market and obviously delivered record revenue as Kerry noted in spite of the Middle East conflict that we're experiencing here. I will try to attempt to give a bit more colour in terms of the impact of the media use conflict because I assume that there will be lots of questions on that one in any case. So as I go through, let me see if I can just add a little bit more colour to the overall numbers there. To begin with, I think as Kerry's noted also, overall organisational growth, business growth, revenue, and across both segments, we're seeing in particular strong performance on our gateway side of things, but obviously the food side continues to be very, very resilient as well. Both markets are absolutely impacted by the Middle East conflict in March in both top line, but actually more importantly, throughout the cost structure, mainly because March is a typically higher month out of the three quarters and the organization was structured to get up that way to service the March volume before the conflict started. I think if you look at the EBIT number, obviously that number is impacted primarily due to the conflict, given the waiting of the March. If you look within January and February, actually, in terms of run rate, I would say that you can sort of guide that number more towards the year-to-date growth because that is effectively the trajectory of the business. So what we can say is outside of the Middle East conflict then, the business actually was running very, very strong and very much in line with our year-to-date expectations and numbers from a year-on-year growth perspective, along with margin accretion as well. Going a little bit further down the page here on the SOA-JV, so once again it is the Middle East conflict that impacts the SOA-JVs. A lot of them do service the Middle East and we'll talk a little bit more details around how we're seeing the market later on in terms of the overall trend. coming out and as we move through the conflict. But nonetheless, it was impacted our JVs. And if you look at within the underlying trends, once again, excluding the, try to normalize out a little bit of the Middle East conflict impact then. The year-on-year growth actually in Q3 was probably more indicative of where our numbers were tracking prior to the impact. So whilst still modest growth, the underlying rate is actually stronger than that on the SOE JV standpoint. And lastly, on the PATMI, there is certainly some one-off impact here, as we've also highlighted on the page. Firstly, the PATMI number is impacted negatively by an impairment charge. We did go through some cleaning up of assets in our non-core portfolio. that negatively impacted that number. But on the flip side, we did have some upside in tax, the tax line. Obviously, timing was in 4Q. But actually, if you look at the tax, the effective tax rate for the four years of that guy, we generally have been guiding around this 27% to 27.5%. We were tracking at 27.5% in FY25. and I think that's the best place to start. So we did have some benefit overall for the full year that then offset it partially or some most of the impairment charge then if you will before Q. But looking at the full year number I think it's a better guide on the effective tax rates. I'll take on to the next slide a little bit more colour then into the segments. I think Ultimately, I think Kerry has highlighted the IATA comparatives and we obviously continue to deliver 10 consecutive quarters of beating the IATA number. It is worth noting, before I jump into revenue, if you look at that metric, a lot of that adjustment factor for contractual change will now move towards the dotted line, I think, as we move forward, because obviously that impact annualises. So the gap, while it is closing against the item number, we do know that it will track now to a more favourable comparison because that underlying business volume obviously continues to be there. I think if you look at the revenue across both segments, Suffice to say, very, very similar line, excluding the impact of the Middle East GenFed runway was very close to year-to-date run rate. On the diving a little bit further into the maybe perhaps the ground number. So we do have the ground number growing significantly higher than prior year in this quarter. That is due to a business that we acquired and started Azul in Brazil. And that directly impacts the ground revenue number. Excluding that, the ground revenue number is low single-digit travelling. Once again, very similar to year-to-date numbers, but obviously on a full operating base now. This is the new base for the ground operations. Lastly, I think if you look across food, then once again, that is also impacted by the Middle East conflict. But ultimately, I think the aviation number continues to be very, very steady while the non-aviation is being improved or contributed by some of the overseas facilities that we continue to ramp up. Next slide, please. I think I've covered most of the top left hand side, so maybe just a few more notes operating cash flow. We did benefit from some working capital timing. We noted that in Q3 and we did get the other side of that in Q4. I think I'll talk more about the cash flow in the next slide looking at a full year, which is better indicative of the But just a few more notes on this slide. Number one, we obviously continue to be very diligent in how we pay down our debt. Overall borrowings, you know, roughly 160 million of reduction in borrowings. We do see that as a fundamental portion of our capital allocation strategy. But, you know, continue to make very, very good progress and we will continue to see that opportunity and evaluate those as we move forward. Our framework of looking at capex and turning dividends to the shareholders as well. Lease liabilities grew on the other side. That's generally, you know, whilst from a metric standpoint, it may be a negative on some metrics. I think we see these generally as positive because they are as a result of us securing and getting into new facilities in most cases. I think, lastly, then, if you look at that net current liabilities line, obviously, we'll continue to manage that number, significant improvement versus last year, just from a balance sheet management standpoint, primarily due to a lot of successful refinancing of facilities moving to a better timeline from a maturity standpoint. I think the last thing I would like to highlight on the right hand side is obviously the margins component are all looking at going the wrong direction, more for Q4. And once again, I want to just make sure I reflect that that is a direct result of the Middle East conflict. As I've noted already, if you look within the underlying performance in January, February before the conflict, we did see margin accretion across the business. Next slide, please. Okay, so lastly on the cash flow, I think taking all that into consideration the full year cash flow, you know, obviously reflects the operation performance and it's been a strong operating performance reflecting in an overall cash flow performance and Working capital wise, if you look at our sort of net DSO and DPO days, we've increased that by two days. So there is definitely some positive working capital that's been achieved by the team in terms of the overall working capital management. But ultimately, I think the results speak for itself. Translating to free cash flow then ultimately it's really just a capex story. We've guided in the past that we really walk within the 46% of revenue range from a capex standpoint. We've ended the year you'll see on here roughly at around 5.4% and so translating that to free cash flow obviously slightly lower but with 123 million more capex from a cash flow perspective. We've invested and continue to do that in a very targeted way. We do believe we have areas that we do want to continue to invest in both for growth and obviously also for our enhanced competitiveness in particular in Singapore hub as we continue to invest in our home market and the test bed for a lot of innovation. So that's really contributing towards that uplift. But beyond that, I think if you look at within the capex number, it is on projects that I think the market is aware of, which is the finalization of our Thailand facilities on the food side. In particular, also our finalization of the cruise terminal in Singapore as well, along with other facilities around the world that's contributing to the high number. I think that is all for me. What I'll do is now I'll pass it back over to Kerry to sum it all up for us.