Full Year 2006/07 Singapore Airlines Earnings Presentation - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

STEPHEN FORSHAW, VP PUBLIC AFFAIRS, SINGAPORE AIRLINES: Ladies and gentlemen good afternoon. My name's Stephen Forshaw, the vice president of public affairs for Singapore Airlines. And welcome to the presentation of the Singapore Airlines Group's results for the full financial year 2006/07.

Today's proceedings are being webcast as usual so when we get to the question and answer session if I could just ask you to identify your name and organization and also wait for the microphone for the benefit of those who are watching on the web.

Can I also ask you to turn your mobile phones off or to silent and please don't be making or taking phone calls during the proceedings this afternoon.

The format for the briefing this afternoon is that the chief executive officer, Mr. Chew Choon Seng will make some opening remarks about the Group's results. Mr. Chan Hon Chew, the senior vice president of finance for the organization will follow that up with some more detail and then Mr. Chew will come back to give you some comments on the overview and outlook for the future. And then we'll move to a question and answer session.

So without further ado I'd now like to introduce Mr. Chew to you.

CHEW CHOON SENG, CEO, SINGAPORE AIRLINES: Good evening friends and colleagues and thank you for giving up part of your Friday evening to join us here for a presentation of our financial results for the 12 months ended March 2007.

Firstly Group revenue for the 12 months came up to SGD14.5 billion. As you can see it is the highest ever that we have achieved. This represented a growth of 8.6% and that was ahead of the compound annual growth rate over the five -- plus five years of about 8.4. The 8.4% CAGR for the five year period of costs takes into account the higher growth in FY2005 after the year of SARS that was FY2004.

On the expenditure side inevitably it was also one of the highest in the -- or rather it was the highest as well in the same series, up 8.7%. And the five year CAGR 7.7%. So thanks to high jet fuel prices Group expenditure grew faster than the five year average.

Operating profit for the Group, for the year, came in at SGD1,314 million; a year-on-year improvement of 8.3%. And behind on a five year average but then again the five year average is boosted by the early years being depressed.

If we take a look at how we came to the Group operating profit, this was the figure recorded last year SGD1,213 million. There was an improvement in operating revenue as a result of higher loads as well as improved yields, that added SGD1.15 billion. However in fuel expenditure we gave back SGD677 million. This was as a result of higher fuel prices and to a very small extent because of higher volume that was consumed.

Expenditure ex-fuel also went up but by a lesser amount of only SGD375 million. So you put all those things together plus SGD1,153 million less SGD677 million, less SGD375 million. We added on SGD101 million at the Group operating level in terms of profit.

Move on to an analysis of the big item, fuel expenditure. As you can see it's a record high for 12 months, nearly SGD5 billion, SGD4.9 billion to be exact and that was year-on-year an increase of 16%. But that was less than the five year average of 27%, so fuel prices really have shot up in the last three years.

Ex-fuel, we have done reasonably a good job despite a bigger operating base. As you can see from this depiction our ex-fuel expenses have been around the SGD8 billion mark; up only 4.8%. Much less than the rate at which revenue grew. Five year average of course only 1%.

Move on. In terms of our contribution by the Group's principal operating units. The parent airline company turned in a strong performance and in fact underpin the Group's operating numbers. The parent airline SIA's share of Group profits, operating profits went from 53% to 78%, up 24.5 points. Debt for SIA Cargo conversely took a tumble; from a contribution the previous year of 14.3% it went into a situation where it actually entered minus territory for the full 12 months and dragged profits down by 2.5% in terms of its stake of the pie.

SATS Group's contribution down 3.5 points form 15.2% to 11.7% and the engineering company's contribution came down relatively from 11.1% to 3.3%. But it should not detract from both sets and EC's contribution, the main takeaway from this is really that the underlying strong or benign revenue environment that the passenger airline was fortunate enough to be operating in really underpins its operating performance.

In terms of Group net profit, after taking in non-operating surpluses, exceptional items and a tax write back would give this picture. In 2006, bottom line profit attributable to equity holders was SGD1,241 million. This year as you have seen, operating profit went up SGD101 million, so we add SGD101 million to that. Non-op surpluses mainly from surplus on disposal of aircraft and others like spares and so …