Sia Engineering Co. Ltd. · SGX:S59
Sia Engineering — 1H FY20/21 Earnings Presentation
32 slides from Sia Engineering's earnings presentation, Nov 4, 2020
Slide 1: 1H FY20/21 Review
1H FY20/21 Review 4 November 2020 1
Slide 2: Operational Review
\ y . ( | Operational Review % SIA ENGINEERING company
Slide 3: Core Business
Core Business Line Maintenance • 29 airports in 7 countries (expanding to 40 airports in 9 countries) Base Maintenance • 6 hangars in Singapore • 3 hangars in Philippines Fleet Management • 82 aircraft from 7 airlines 3
Slide 4: Core Business: Line Maintenance
Core Business Line Maintenance Flights handled at Changi Airport 77,797 14% 2.1% 11,272 1H FY19/20 1H FY20/21 • Number of flights handled in 2Q was 39,478 16% of the same period last year - only 38,319 three percentage points higher than 1Q 13% 16% • Overseas Line Maintenance stations were 4,952 6,3
Slide 5: Core Business: Base Maintenance
Core Business Base Maintenance Singapore Base • Lower number of hangar checks tracked low flight activities and grounding of aircraft worldwide • Some hangar checks were brought forward to fill Maintenance Checks at Singapore Base up our hangar capacity in 1Q, although such 1H FY19/20 1H FY20/21 opp
Slide 6: Core Business: Fleet Management
Core Business Fleet Management Customers A32 A320 0 44 aircraft A330 8 aircraft (Tailored Support Package) 737 23 aircraft 747 7 aircraft • Workload and revenue were impacted by low flying hours FMP Fleet: 82 aircraft • Customers with domestic flights will be better positioned to continue with recov
Slide 7: Customer Contracts
Customer Contracts Line Maintenance Base Maintenance Renewed: New: 7
Slide 8: Response to COVID-19
Response to COVID-19 • Continually update staff on safe-management measures and WFH arrangements as post-circuit-breaker phases are implemented • Safe Management Officers in place to ensure compliance with authorities’ latest advisories Precautionary measures maintained for staff on company premise
Slide 9: Response to COVID-19
Response to COVID-19 • Increased cabin disinfection and fogging for airlines to protect passengers, crew and staff • Solutions for passenger-to-cargo space conversion to increase cargo capacity of passenger aircraft • Supporting hangar checks and engine changes for aircraft deleasing • 3D printing o
Slide 10: Reshaping our JV Portfolio
Reshaping our JV Portfolio Heavy Maintenance Singapore Services (HMSS) • HMSS became a wholly owned subsidiary after SIAEC acquired the remaining 35% stake in HMSS from Airbus Services Asia Pacific SIA Engineering Philippines Corporation (SIAEP) • SIAEP became a wholly owned subsidiary after SIAEC a
Slide 11: Strategic Partnerships - JV Portfolio
Strategic Partnerships - JV Portfolio 23 JVs Across 7 Countries Total Revenue in 1H FY20/21: S$2.0B Airframe and Line Maintenance Engine and Component SIA Engineering PT JAS Aero- Singapore Aero Engine Component Aerospace (USA) SIA Engineering Japan Eagle Services Asia Engineering Services Services
Slide 12: Transformation Phase 2
Transformation Phase 2 • As we manage the current challenges, we remain focused on the future in the post COVID-19 world 1 Boost competitiveness & emerge stronger 2 Create value for stakeholders Strengthen ecosystem & improve culture 12
Slide 13: Transformation Phase 2
Transformation Phase 2 Delivering value to Operations Customers Workforce Suppliers/Partners through Enhanced operating system New products and services via the 4 key thrusts LEAN Digitalisation Technology Organisation Design and enabled by In-house Staff Staff Ownership & teams of Empowerment Enabl
Slide 14: Financial Review
} | _A ( Financial Review % SIA ENGINEERING company
Slide 15: 1H20/21 Financial Highlights
1H20/21 Financial Highlights • The Group recorded a net loss of $19.0 million for 1H20/21 as compared to a net profit of $87.6M for 1H19/20. • Group operating loss was $27.2 million for 1H20/21 as compared to an operating profit of $37.3M for 1H19/20. • Share of profits of associated and joint ventu
Slide 16: Summary of Group Results 1H20/21
Summary of Group Results 1H20/21 Group 1H20/21 1H19/20 Variance $M $M % Revenue 223.0 512.7 - 56.5 Expenditure 250.2 475.4 - 47.4 Operating (loss)/profit (27.2) 37.3 n.m. Share of profits of JV & Assoc 28.4 53.4 - 46.8 Other non-operating items and taxation (20.2) (3.1) n.m. Group (loss)/profit afte
Slide 17: Analysis of Group Profit – 1H20/21
Analysis of Group Profit – 1H20/21 S$M 100.0 87.6 -104.7 20.0 -106.6* +95.6 -35.0 -19.0* 0.0 1H19/20 -28.4 +20.9 -20.0 Parent company 1H20/21 operations -1.9 -40.0 -5.4 -47.7 Impairment of assets Non- Taxation Subsidiaries Exchange operating -60.0 operations differences items & NCI -80.0 -100.0 Shar
Slide 18: Breakdown of Group Revenue 1H20/21
Breakdown of Group Revenue 1H20/21 Group Revenue 1H20/21 1H19/20 Variance $M $M % Airframe and line maintenance Airframe overhaul and line maintenance 186.5 456.4 - 59.1 Fleet management programme 30.1 43.9 - 31.4 216.6 500.3 - 56.7 Engine and component 6.4 12.4 - 48.4 223.0 512.7 - 56.5 Revenue dec
Slide 19: Group Expenditure 1H20/21
Group Expenditure 1H20/21 Group Expenditure 1H20/21 1H19/20 Variance $M $M % Staff costs 105.5 248.9 - 57.6 Material costs 30.1 69.2 - 56.5 Subcontract costs 24.0 55.2 - 56.5 Overheads 90.6 102.1 - 11.3 250.2 475.4 - 47.4 Excluding government support, decrease in staff costs would be 27.9%. 19
Slide 20: Group Operating Profit 1H20/21
Group Operating Profit 1H20/21 Group Operating (Loss)/Profit 1H20/21 1H19/20 Variance $M $M % Airframe and Line Maintenance (25.1) 39.4 n.m. Engine and Component (2.1) (2.1) - (27.2) 37.3 n.m. Losses in the Airframe and Line Maintenance segment mainly due to reduction in revenue being outpaced by re
Slide 21: Joint Venture and Associated Companies 1H20/21
Joint Venture and Associated Companies 1H20/21 Share of Profit/(Loss) After Tax 1H20/21 1H19/20 Variance $M $M % Engine and component Engine centers 22.4 35.7 - 37.3 Component centers 15.5 19.4 - 20.1 37.9 55.1 - 31.2 Airframe and line maintenance (9.5) (1.7) n.m. 28.4 53.4 - 46.8 • Performance of a
Slide 22: Group Revenue 1H20/21
Group Revenue 1H20/21 (SIAEC, Subsidiaries, JV and Associated Companies) Company and Associated Joint venture Group Revenue subsidiaries companies * company * Total $M $M $M $M % Airframe & line maintenance 216.6 24.8 - 241.4 - 57.8 Engine and component 6.4 958.2 988.0 1,952.6 - 22.6 223.0 983.0 988
Slide 23: Group Balance Sheet
Group Balance Sheet Sep-20 Mar-20 Variance $M $M % Equity attributable to owners of the parent 1,537.9 1,628.8 - 5.6 Non-controlling interests 26.3 32.2 - 18.3 Total equity 1,564.2 1,661.0 - 5.8 Non-current liabilities 93.0 103.7 - 10.3 1,657.2 1,764.7 - 6.1 Represented by: Non-current assets 942.0
Slide 24: Financial Statistics
Financial Statistics Financial Statistics 1H20/21 1H19/20 Variance Return on shareholders' funds (%) 5.7 11.2 - 5.5 ppts Basic (loss)/earnings per share (cents) (1.69) 7.82 n.m. Sep-20 Mar-20 Variance Net asset value per share (cents) 137.1 145.4 - 5.7 % 24
Slide 25: Impact of COVID-19 and Positioning for the Future
Impact of COVID-19 and Positioning for the Future
Slide 26: Outlook
Outlook “Recovery delayed as international travel remains locked down. Global passenger traffic will not return to pre-COVID-19 levels until 2024.” – July 2020 26
Slide 27: Outlook: MRO Demand Recovery
Outlook Aggregate MRO Demand is Only Expected to Recover to Pre-COVID-19 Levels in 2024 2019-2025 Air Transport Realized Nominal MRO Demand, by MRO Activity ($B) • Recovery of the 95 94 MRO business is 90 Pre-COVID 87 contingent on the 85 83 Expected recovery to pre-COVID levels 80 recovery of the 7
Slide 28: Outlook: Slow Lifting of Border and Travel Restrictions
Outlook Slow Lifting of Border and Travel Restrictions Changi falls from 7th to 58th on the World’s Busiest Airport list • Slow recovery and lack of (‘000) Commercial Aircraft Movements in Changi Airport a domestic travel market 35 33.4 • Encouraging efforts by * Singapore and various 30 26.2 countr
Slide 29: Reshaping our JV Portfolio
Reshaping our JV Portfolio In response to changing market environment and to ensure the long-term sustainability of our investment portfolio Heavy Maintenance Singapore • Acquisition and re-integration into Base Maintenance operations for Services greater efficiency and competitiveness Line Maintena
Slide 30: Adapting to Changing Market Environment
Adapting to Changing Market Environment • As post-circuit breaker phases are implemented: Business Continuity Measures - continually update staff on safe-management measures and WFH arrangements - ensure compliance with authorities’ latest advisories • Tighten control of expenditure, operating costs
Slide 31: Positioning for the Future
Positioning for the Future 1• Planned investments of $40M to deepen and broaden scope of Transformation efforts over the next 3 years - digitalisation, automation and data analytics - strengthen culture of continuous improvement through LEAN programme and capability development 2• Look out for new o
Slide 32: Thank you
Thank you SIA ENGINEERING COMPANY
SIA Engineering Company — 1H FY20/21 Earnings Presentation on 6ix