Welcome to SATS' first quarter financial year 2021/2022 business update conference call. Before we begin, SATS would like to remind you that certain comments made during this call may contain forward-looking fact statements. Many of these forward-looking statements can be identified by the use of words such as may, will, expect, anticipate, estimate, assume, continue, project, plan, and similar words and phrases. The company actual results and future financial condition may differ materially from those expressed in any such forward-looking statement as a result of many factors that may be outside the company's control, including, but not limited to, the changes in the business environment. The company does not undertake any obligation to update its forward-looking statements. I will now hand over the call to Carolyn Khiu of SATS. Please go ahead. Thank you, Tang. Look. Hi. Good evening, everyone. Welcome to SATS webcast. Very quickly, we come to the end of our first quarter of the new financial year. Together here with me are Alex Hungate, PCEO, and Manfred Seah, CFO, who will take you through the results. I will now hand over the floor to Alex to start the ball rolling. Alex, over to you. Thanks, Carolyn. Welcome, everybody. Thank you for joining us this evening. This is a first quarter update. Let's start with a slide which shows the volume changes in the first quarter. If you look across the first row, you will see the year-on-year comparison. Of course, the year-on-year comparison, compared to first quarter last year, shows that everything increases because, if you recall, the first quarter last year was really the low point in the pandemic in Asia. This marks an increase from a low point. Probably more informative is to look at the quarter-on-quarter statistics on the second row. Let's go one by one. We're starting with flights handled. You can see that there was a small increase in flights handled. Some recovery from the drop in the fourth quarter of 2021, but still only about 25% of the pre-COVID volumes in Singapore. Actually below that in Malaysia, where the Movement Control Order has been extended. A relatively flat picture in terms of flights handled. In terms of meals served, there has been an increase, not driven by aviation recovery. In fact, there has been a small decrease in the number of aviation meals served in line with the drop in passengers handled. Actually, the increase is driven from China, where we are seeing an increase from our growth in non-travel related food solutions, which we've been embarking on for the last few years. We're getting good traction there. Also from the subsidiary that we acquired called Nanjing Weizhou, which services both the domestic aviation market across about 85 airports in China and the domestic aviation volumes in China are quite healthy at this time, as well as some non-aviation revenues. Passengers handled, as I mentioned, although it looks like it jumped up materially from a year-on-year perspective, is still much below where it would be pre-pandemic. The pre-pandemic scale obviously is not on this graph, but as an example, in Singapore Changi Airport, only about 3% of the normal passenger flow through the airport at this point in time. Still quite low. In Malaysia, with the Movement Control Order, also quite low. Cargo tonnage continues its sequential increase quarter-on-quarter. Now it's running at about 80% of the pre-pandemic levels, and at the end of the quarter was above 85%, but about 80% as an average during the quarter. The last column is the only one showing decreases, but that's because it's the number of employees. As you know, we've had to reshape the cost base quite materially, especially on the aviation services market side. The number has come down again this quarter, slightly below 11,000 at this point, down about 3% quarter-on-quarter. Down 18.5% year-on-year, as you can see, but down about 38% since before the pandemic in the fourth quarter of 2019/2020, when it was about 17,600 full-time equivalent. Moving to the next slide. This is the IATA data on the global air cargo ton kilometers flown. You can see that actually this is the highest it's ever been. It's now exceeded the pre-COVID levels, driven by the same mega trends that we've talked about in the past. The growth of e-commerce, the focus on medical supplies and vaccines post-pandemic, and also the demand for fresh food across the various cities in Asia as they start to increase in terms of wealth and demand for healthy food. We expect this picture to continue. As I've said in prior discussions, probably supply constrained as much as anything at this point because of the lack of belly hold capacity in the market. All of our cargo associates were profitable in the quarter. That's something that we talked about last quarter, and it's something that we expect to continue because of the strong demand, despite the fact that passenger volumes are low, but continued strong demand for air cargo. Turning to the next slide, we need to give you an update on the non-travel related businesses. You know that we're not sitting around waiting for aviation to recover. We are driving growth in the non-travel related businesses in the meantime and continuing to get good traction. You'll recall that year-on-year, last year, we increased this category by 28%, sorry, 38%. In this quarter, we continued that progress with a further 22.6% growth year-on-year. At this point, in the first quarter, almost half of the group revenues came from non-travel related businesses, 46%. Security, new security contracts in Singapore, where we have one of the three licenses to operate a police force. The productization work we're doing with SMEs to create retail products. In this case, KEK Seafood going into retail distribution via our food distribution subsidiary called Country Foods. Taking over the supply of bakeries into some of the major supermarket chains here in Singapore. Continuing to grow in China, as I mentioned earlier, where we're starting to see quite welcome increases in number of meals served and revenues from our two subsidiaries in that market. You'll see us continue to focus on this. Most recently, you would have heard the announcement of our acquisition of the Food City facility in Bangkok, which we acquired 85% of from the seller, Bangkok Ranch. Bangkok Ranch will remain a 15% shareholder, but it will become a subsidiary of SATS. We will use that large-scale frozen food capability, nicely integrated into the food ecosystem in Thailand to increase our productivity and to improve our supply of frozen food across our supply chain. The next slide focuses on sustainability. It is a topic that we are taking very seriously. Our management team have bonus targets based upon achieving sustainability targets, and you'll have seen our commitments in our sustainability report, which we published just this month. Three categories of activity. The first is developing smart infrastructure, which has a direct impact on our carbon footprint. You should be aware that we're actually one of the leaders installing solar paneling. We intend to install another 6,000 megawatt hours of capacity, which will pretty much double our capacity and make us one of the bigger producers. This not only reduces our carbon footprint, it also reduces our costs because our offtake rates are below the rates that we can get on the open market, makes use of the roof space that we have on our facilities, both at the cargo terminals and also in the kitchens. We've already begun to electrify our ground service equipment fleet, and almost a third of it now is electrified. We intend to continue that drive over the next nine years to achieve 100% electrification by 2030. Our carbon footprint's come down quite a bit this year from the baseline. Some of that is volume related, though, so I won't crow too much about it. Some of it, as you can tell, is from changes in infrastructure and introducing solar and more efficient equipment in both our kitchens and our freight terminals. On the food packaging waste, we're doing waste tracking now for the first time using AI. We're also investing in food to energy or food waste to energy conversion, which again will help us to reduce our cost base, our energy usage. We're very proud of the work we've been doing with the benefit of the capability we acquired when we bought Monty's in March 2020. Monty's Bakehouse is the world leader in sustainable packaging for aviation food. We've made use of that to introduce some sustainable food packaging this year, particularly on short-haul flights for some of our biggest customers. The customer reaction to that has been very positive. Measurably so because in the customer surveys, they've started to see a significant increase in the customer satisfaction with those meals served in this new packaging. The last one, which has always been important to SATS but continues to be a source of investment for us, is investing in our people. We've been reskilling and upskilling our people so we can continue to harness technology to increase productivity, which is important because labor costs, we believe, will continue to increase in the major cities in Asia. Importantly, to enhance the services we provide to our customers. For example, by creating the software as a service linkage between our different cargo terminal operations across Asia to provide better track and trace for the forwarders and the shippers. With that, I'll hand over to Manfred, and he'll take you through the financial results for the quarter. Thank you, Manfred. Thank you, Alex. Good evening, everyone, I shall take you now through the 1Q financial, starting with executive summary. SATS 1Q revenue improved by 31.6% to SGD 275.6 million, backed by stronger business volume for both our travel and non-travel business. Recorded a PATMI of SGD 6.4 million, making this the second consecutive quarter of positive results for SATS since the pandemic outbreak. For the quarter, we recognized a total relief net of tax of SGD 42 million, without which our 1Q PATMI would have been a loss of SGD 35.6 million. Share of losses from associates and JVs has reduced to SGD 1.2 million, an improvement of about SGD 30.2 million versus 1Q last year. SATS 1Q EBITDA remained positive at SGD 32.9 million, our EPS improved by SGD 0.045 to SGD 0.006 per share. On this summary P&L, revenue grew 31.6% with overall increase in aviation volume. Travel-related revenue grew 41.9% year-on-year, while non-travel related revenue grew 22.6%, as Alex has mentioned earlier. Just to be clear, travel-related revenue comprises all revenue related plus cruise revenue, while non-travel related revenue consists of non-travel, non-aviation food, and non-aviation security services. Compared to revenue, OPEX increased at a slower pace of 10.9% to SGD 272 million. This is after taking into account government relief of SGD 45.4 million, which is SGD 28.7 million lower compared to 1Q FY 2021. I have a separate slide for OPEX, which I shall come back later to. As a result, SATS EBIT improved by SGD 39.5 million to SGD 3.5 million compared to 1Q last year. As I mentioned, shared losses of associates and joint venture improved by SGD 30.2 million, as we see better performance of our associates and JVs, especially our cargo units. In the next slide, we look at the quarterly trending over the past five quarters. All financial metrics registered significant improvements and favorable variances. 1Q FY 2021 was the worst-hit quarter, with SGD 209.4 million revenue and PATMI loss of SGD 43.7 million. Since then, we see sequential quarterly improvement in our financial results in line with the recovery of aviation volume, albeit modest, growth in our non-travel business activities, as well as group-wide cost measures taken by management early and proactively to resize our cost base and improve our operational capabilities. On slide six, segmental revenue for 1Q. Revenue-wise, both business divisions, food and gateway, grew by 8.4% and 77.4% respectively. Cargo continued to register sequential Q on Q growth while security revenue expanded through COVID-related projects and also diversification into non-aviation security services. By sector, travel revenue improved 41.9% and accounted for 53% of the group revenue, while non-travel grew 22.6% to SGD 127.6 million and made up 46% of SATS revenue. The next slide, as noted earlier, Group OPEX for 1Q increased 10.9% led by higher staff costs due to higher contract services resulting from the implementation of additional safety measures at Changi Airport, increased business volumes, and lower grant support. The cost of raw materials, license fees, and other costs rose in line with higher revenue. Premise costs and depreciation and amortization were lower, generally resulted from cost measures taken by management. Slide 14 shows the SATS share of revenue and share of losses of associates and joint venture for the period. COVID has adversely affected all SATS associates and joint ventures in the region. However, we are seeing gradual improvement to the share of associates and JV results, especially the cargo units. On slide 15, I have two points to make here. One is SATS share of revenue improved by 26.8% to SGD 353.7 million. PATMI-wise, Singapore is profitable at SGD 16.1 million, while the rest of the region are still in loss position. Having said that, their losses have reduced considerably against last year. Slide 16 shows our financial position as at 30th June 2021. Total equity and total assets stood at SGD 1.7 billion and SGD 2.9 billion respectively. SATS total cash amounted to SGD 753 million. If we back out the SGD 531 million of borrowings, we are still in a net cash position of SGD 222 million. In April this year, we actually repaid SGD 150 million term loan, which resulted in our D/E ratio dropped from 0.44x to 0.34x. This is excluding the IFRS 16 lease liabilities. ROE for the quarter turned positive for the period. The next slide, I shall leave you to read on your own. This is actually the group balance sheet. Lastly, SATS cash flow statement on slide 18. Overall, SATS cash position declined by SGD 127 million to SGD 753 million for the period ended 30th June 2021. This is after the repayment of the SGD 150 million term loan. Higher CapEx is mainly due to the construction of cargo terminals and a central kitchen in China. Free cash flow for 1Q FY 2022 remained positive at SGD 7.9 million, which is a significant improvement compared to 1Q FY 2021. That, I shall hand you back to Alex to take us through the outlook. Thank you very much, Manfred. We wanted to provide an outlook statement even though it's just a 1Q update, because obviously there's a lot of uncertainty related to travel restrictions. We feel that while mass vaccination programs are still being rolled out in all of the world's major economies, the emergence of the new variants of the virus continue to create uncertainty about when those travel restrictions will be lifted. SATS is adapting to the changes in this environment by reshaping our cost base and building new capabilities to support future growth. For example, the acquisition in Thailand that I mentioned, that gives us a much higher volume frozen food production out of the Thai ecosystem. Also, the Monty's Bakehouse acquisition, which has given us the innovative capability to work on sustainable packaging and other product design capabilities. I mentioned also earlier this cloud-based cargo handling system, which is proprietary to SATS, and it does give us an advantage as we believe we're the only cargo terminal operator that is linking together cargo terminal operations digitally, certainly across this region. That will allow us to improve service standards for the shippers and the forwarders, and also to allow us to provide temperature information for some of the medical-related cargos like vaccines. Finally, a very important topic for us is we must continue to invest in our people, upskilling and reskilling, so that we can continue to reshape and redesign the jobs to make them more productive and to provide rewarding careers for our people, as well as to help them to harness technology as they adopt it to improve productivity and service levels. I hope that's a useful sense of what the outlook is and how SATS is preparing for that future. Now, we would love to hear your questions, so hand back to the operator to take your questions. Thank you. Thank you. We begin the question and answer section. Audio participant with question to pose, please press zero followed by one on your telephone keypad. You will be placed in the queue. To cancel the queue, please press zero followed by two. Once again, zero followed by one on your telephone keypad now. Your first question from UOB, Komal Dalal. Please go ahead. Yeah. Hi. This is Ajith. Hi, Alex and Manfred. Several questions from me. Perhaps I'll start off with some accounting-related question. For 1Q, was there a tax credit that was recognized? If so, perhaps you could share that with us. Secondly is pertaining to the repayment of the term loans of SGD 150 million or so. Can we expect additional debt repayment? These are my two accounting-related questions. A follow-up question, this is on the travel-related revenue. You mentioned earlier, this is for Alex and I guess for Manfred as well. For the non-travel related revenue, you mentioned security-related revenue. Am I correct to assume that this is not related to airport-related revenue, meaning that COVID checks at the airport? Perhaps you could clarify that. Next question is relating to Food City acquisition. When is that expected to be completed? A follow-up question on that, would SATS be planning to distribute non-frozen foods or some of its own product line via Food City? I've actually got one more final question. Actually, this is about Impossible. What's your plan for that in terms of bringing it outside Singapore and so forth? Yeah. These are my questions. Thanks. Thanks very much, Ajith. As usual, you got some good questions, a whole bunch of them. I'll let Manfred take the first two, please. Manfred, the tax credit and the term loan repayments. Hi, Ajith. Hi, Manfred. For the tax credit, indeed, we actually recognized some of the tax credit. This is pertaining to the losses that we have experienced. For the term loan, we are actually quite comfortable with our cash position at this point. As you can see that the COVID situation still remain very uncertain. As a result of that, we will continue to monitor our liquidity. Until such time where we are more comfortable, perhaps we can consider that. At this point, no action is required. Yeah. Thanks, Manfred. I'll take the last two questions. Non-travel related security is indeed not at all related to airlines or airport work. It's work that depends upon the capabilities our people have in terms of technology and technology-enhanced security, which we've done quite a bit of in the airport. Both government and non-government customers are hiring SATS security. In the past, we've only really pitched to airlines and airport-related assignments. Obviously with the volumes there having dried up, we are pitching to customers which are not related to aviation. It seems that the combination of the technology-enhanced services that we've developed for aviation, plus the fact that all of our security people are trained in customer service skills, seems to be a differentiator. We'll continue. We have a pipeline that will allow us to continue to grow that business. Your last question was about the Food City acquisition. When do we expect to close it? There are a few bits of paperwork that we need from the authorities in Thailand before we can formally close, so we can't put a definitive date on that. We're not expecting it to be a very long time, perhaps a couple of months. Will we distribute via Food City? It's really intended to be more of a production facility for us to create highly productive, cost-efficient frozen meals. We would then export them outside of Thailand, mainly. We might have an option to distribute in Thailand, but that's not the main focus for that acquisition. One of the benefits of that acquisition is that there are export licenses already in place, so we can quickly do that once we close the acquisition. My final question is on Impossible Foods. Yeah. Alternative protein. Well, you said specifically Impossible Foods, but maybe I'll make the answer more general and talk about alternative protein. Country Foods distributes Impossible, plus a bunch of other well-known alternative protein providers, like Growthwell, et cetera, Fable. This is a category where, because we are strong in distribution of conventional proteins, we intend to leverage that distribution for the growth of alternative proteins. You should expect to see us distribute a number of the market-leading players, whether they originate from Asia or from the U.S. or Europe, through our Asian distribution. Using the culinary skills of our chefs to create menus and uses for those alternative proteins that actually are appealing to the consumers here in Asia. That's worked very well so far, where we've managed to use that to win market share in ready-to-eat meals for commissary kitchen, central kitchen, for the food service customers that we have, as well as to enhance the sell-through into retail. It seems to be a good combination and one which makes us an attractive partner for some of these alternative protein providers. Okay. Thanks, Ajith. Thanks. Thank you, Ajith. Next question from Wong Yew Kiang from CLSA. Please go ahead. Hi. Hi, Alex. Fine, thank you. Can you hear me? Yes. Hi, Yew Kiang. Carry on with the question. Yes. Firstly is on grants. Can you remind us how much more grants we can expect for the remaining of this financial year? Given that government is also talking about some more support due to the situation in Singapore, are SATS going to be eligible for this round of additional grants coming up? That's related on grants. The second question is on food solutions. The SGD 147 million this quarter, how much is it not related to travel? You've been talking about expanding the food solution segment. I just want to know, ex travel, how has this segment been performing? The last question is on non-travel related. You talk about the security business, but out of that SGD 127.6 million, how much does it contribute? That's it from me. Thanks. Okay. Thank you, Kiang. I'll ask Manfred to pick up the point on the grants remaining, and then the question about whether we qualify going forward. Hi, Yew Kiang. On the grants, I think we've guided in the past that quarter-on-quarter, the government support, the grant value for SATS is on a decline. We also actually mentioned that we will recognize all the Jobs Support Scheme and all the other grants all the way to end of this FY. You will still see grants for the next three quarters, albeit on a declining basis. Yeah. Yeah. We don't know, of course, yet how or whether the government will extend the JSS. They are talking about it, but we don't know the details of the scheme. Obviously, we very much hope that aviation will be taken into account as it has been in the past, given the very low volumes of passengers traveling through Changi Airport. For the current financial year, how much government grants can you get for the current financial year? Hi, Yew Kiang, Manfred again. Last financial year, we took in a grant of a total of SGD 247 million. This financial year, you will expect it substantially reduced, even more than half of that. Yeah. I can't give you the exact amount, because we don't guide as yet for the next three quarters. Okay, thanks. On the food solutions and travel security hub. Yeah. 48% of the revenue in the quarter was from non-travel related, as I mentioned earlier. 46% of the total revenue of the group was non-travel related. You're asking for further information on the breakdown of the food and how much of that is non-travel. Is that right, Yew Kiang? No, I'm asking for the non-travel, the 46% that you mentioned. How much of it is the security business that you talk about? Okay. Yew Kiang, maybe I can try that. Of the non-travel security actually represent up to about, I think 7%, if I'm not wrong, of the total. If you assume that non-travel is half of that, then it will actually expand to about 15% as well. Yeah. Sorry, 7% of total revenue of the SGD 275, is it? Just to double check here. This is non-travel security. Yew Kiang, I beg your pardon. Sorry. I got the number mixed up. Non-travel security is actually about 1% of total. If you like, then that translates to about 2% of the non-travel. Yeah. Okay. Can you comment on the food solutions? How much of that is not related to travel? That is the stuff that you are working on the QSR side and distribution in Singapore. Okay. Of the non-travel, the food side will contribute almost about 75%, 76%. Okay. Non-travel predominantly, three quarter of that is actually food related. Okay. Thanks. Thank you, Yew Kiang. Next question is from Rachael Tan, UBS. Please go ahead. Hi. Good evening. Thanks for hosting the operating update. I have a couple of questions. First one being, in previous quarters we note that there was almost linear quarter-on-quarter improvement in net profit to the tune of SGD 20 million-SGD 30 million per quarter. Could you explain why this net profit has kind of stagnated at about SGD 36 million ex grant losses? Even though cargo is up and your non-travel is actually contributing so much to your total group revenue. That's my first question. My second question would be, how much would you say out of your current cargo volumes, is the tonnage comprises of PPE and medical vaccine related equipment? My third question is, for the JVs that are doing mixed ground and cargo handling, have they returned to profitability as well? Hi, Rachael. Thanks very much for your questions. There are some handling requirements that we're currently having to do, both for cargo and packs, which have increased the cost burden and reduced our productivity in the quarter because of the COVID restrictions. Although we're still handling the passengers, the complication is there and it's actually more manpower intensive temporarily because of that. That's been one of the issues. There are similar issues on the cargo side. In fact, as you know, there have been a couple of outbreaks that do involve the airport, and those have created some disruption by taking people out into quarantine. That's also increased our overtime expenses in the quarter. I think that gives you some flavor that this is not business as usual type operations in this interim phase as things pick up. Yeah. Rachael, Manfred here. Could you elaborate on what some of these are? What is this increased cost burden, and has it normalized already given that the Changi cluster's been closed? Some of it's normalized. The cluster itself doesn't exist any longer, so that was well managed by the airport community. That part is normalized. The special handling requirements to avoid or to minimize the chances of any infections coming from passengers transiting from higher risk countries, those are still in place. Therefore means that our passenger operations are not particularly productive. That won't last forever, but it's still ongoing at this point in time. Then, similarly on the cargo side, the management of the certain aircraft types for cargo is not that productive either. That's not helping in terms of the profitability track record that you were pointing to earlier. I think Manfred wanted to make a comment also on this topic. Hi, Rachael. I think quarter-on-quarter, because of the heightened alert, we saw a drop in the institutional catering side. That has impacted quite a bit on our first Q results. Yeah. Other than that, otherwise, you see that the trending is in the right direction. We are improving gradually, but unfortunately, last few weeks, we were affected by the heightened alert. Okay. All right. Okay. Thank you, Rachael. Wait. I believe I have a couple more questions. Maybe the one on your JVAs that are mixed ground and cargo handling. Have they returned to profitability? Okay. Thanks. Yes, Rachael, I was about to answer your second and third question. The second question was how much of the cargo tonnage is related to PPE. At this point, not that much. There is still a significant amount of vaccine trans shipments going on, but not so much PPE as there was maybe one year ago when there were large discrepancies and shortages across the world. Your last question is the- JVA ...the JVAs and associates. Yes. Any of the associates which have cargo handling are now making money, including those that have ground handling components, where they have a mix of ground handling and cargo. It shows that there is demand for cargo, and it does drive the apron activities as well as the pure cargo handling. Okay, thanks. If you don't mind, I have a final question. Yeah. Sure. On the line. Go ahead. You've mentioned in the past that your non-travel, the food side, the net margins on an optimal basis can be about 10% to low teens percent. You said that 75%-76% of your non-travel revenue was actually food-related. Can we assume that there was a 10% net profit on that part of the revenue? Is this something we can assume? [Break] Hello? Hi, Rachael. Manfred here. A chunk of the non-travel food is actually more on the sourcing and distribution side. To expect a double-digit margin is not realistic. That, over time, the scale of which will make up for the lower margin. The answer is no, it won't be 10% net of the entire 75%. It would be a blended, and we hope to drive it to a high single digits kind of a margin. Okay. Thank you very much. I have no more questions. Thank you, Rachael. Next question from Neel Sinha from CLSA. Please go ahead. Hi, Alex, Manfred. Thanks for the call. I've got three questions, all non-aviation related. What is your sense of the non-aviation food solutions growth trajectory that you would expect over the next four to six quarters, I suppose? Because the aviation side is a wild card, until the market comes back to a semblance of normalcy. Specifically, on non-aviation food, would you have any update on the China commercial kitchens like Kunshan? What was the other one? Tianjin, I think. Where are these parked? I've not attended your briefings for a few quarters, so apologies for that question. Are they parked under the Beijing Kitchen subsidiary? My second question is, again, apologies if this has been answered in a previous quarterly call. CapEx outlook for the year, should we think about this at the same run rate as this quarter? What are you spending on and where? Is it mostly maintenance? I suppose it's not capacity increase. The third would be, if I exclude financing activity, can I assume that the cash flow pre-financing at the current level of operating activity should remain stable for the rest of the year? Hi, Neel. I hope you're well. Hi. Let me answer these questions. We don't guide on growth trajectory, but we have in the past said that we would seek to drive the top line for the non-aviation food, to become a significant proportion of the overall group's food revenues over the next several years. You can tell that over the last 15 months we've been doing that. This is now quite a substantial part of the revenue of the group. We will try to make sure that we keep that kind of level of momentum going. Without giving you any guidance, you can tell it's a very important target for management to keep growing that. In fact, my view is we don't have any other choice. We can't, as I said earlier, wait around for the aviation food revenues to recover. We have to continue to drive it. You'll remember about three years ago, we invested in the Kunshan kitchen, and that kitchen has contributed quite well to our non-aviation meals growth. I mentioned earlier that, although the aviation meal volume had dropped quarter-on-quarter, you can still see on that first slide that I showed, that there's been an increase in total meals served, and that's driven by China. That China revenue, SATS China, which is a subsidiary, is not going to come through any of the associates. It's 100% owned by SATS. Hopefully that answers your first question. Second question, CapEx. Thank you. We have given guidance for CapEx. We've said that it will be around SGD 60 million per year. That's down from where we were before the pandemic when we were between SGD 80 million-SGD 100 million, in terms of annual CapEx. We've cut back on everything except the essential CapEx. The essential CapEx is that which we think can help us continue to transform the business through digital initiatives, for example. The last question, you seem to be asking for guidance on cash flow through the year. We haven't given that guidance either. I think you're going to have to structure your own models around that and make your own estimates. Right. Thanks, Alex. On the cash flow question, if I can rephrase that. If I stripped out the financing activities component, I suppose what I'm trying to drive at is what we saw this quarter, it's a positive number. Is that at risk? Are you seeing raw materials input component inflation, et cetera? I see what you mean. Yeah. I suppose that's what I was driving at. Yeah What's the pressure points at the current level of operating activity? Got it. Okay. Well, in fact, from a cash flow generating perspective, SATS remains a strong cash flow generating company. We only dipped into a negative EBITDA in 1 quarter, which was the first quarter of last year. Since then, we've been positive EBITDA. We were SGD 70 million over in EBITDA last year. This year, in the first quarter, we are already generating more than SGD 30 million. I think though, what you have to bear in mind is that those numbers are boosted by the government relief. without government relief, we couldn't have claimed that positive cash flow. It's not so much about the current situation, it's more about what will happen on the relief side. We will continue to drive the revenue for non-aviation, but we've got to anticipate, hopefully, that if aviation remains poor in terms of volumes, then we will get some government relief to offset the cost base. If aviation volumes pick up, of course, then we won't need those kind of reliefs. It will be a self-solving equation. That's the judgment call, I think, you'll have to make if you want to look at that more broadly as a question. Okay. All right. Thanks, Alex. Thanks, Manfred. Thanks, Neel. Thank you, Neel. Next question is Chu Peng from OCBC. Please go ahead. Hey. Hi. Hello. My first question is on the government relief. Can I clarify that, for the government relief this quarter, was it SGD 42 million or SGD 45.5 million? My second question is on the non-aviation revenue. I think just now Alex mentioned that it's likely to make up a significant portion of the total revenue. I'm just wondering if you could share whether it's likely to be over half or still below. My last question is on Japan. Can you provide some updates on Japan's business? Do you see any improvement or demand from Japan's Olympic this year? Thanks. Okay, thanks. That is great. Manfred, you just confirm the first quarter release number, please. Yeah. The difference is actually the tax. SGD 42 million is after tax. Yeah. SGD 45.5 million is a gross number. Okay, thanks. Thank you. The non-aviation revenue is already 46%, so it wouldn't take much to go over half. Of course, that's based on a very low travel-related, so aviation in particular, very low, and cruise is also low at this point in time. I can see it going over half. It may go over half very soon if aviation doesn't pick up. Actually, I was talking more about a medium-term target where we think that actually, we could easily reach a 50/50 balance between aviation and travel and non-travel related food revenue. In fact, we have reached as high as this 46% now, and we'll see what happens in the next quarter because we intend to continue the growth of the non-aviation in the short term at these kinds of rates. Japan TFK is benefiting from a small increase from the Olympics. Most of the people traveling are the teams, nonetheless, that has helped. There is some domestic travel in Japan as well as a relatively large market. Quarter-on-quarter, there was an increase in the meal serve for aviation. In addition, they are also trying to penetrate some of the convenience stores in the Japanese market. They've made some progress there, probably not as fast as the progress we're making in China, there has been also an increase in the non-aviation meals for TFK as well. Okay, thanks. Thank you. Thank you, Chu Peng. Next question is Lim Siew Khee from CGS-CIMB Research. Please go ahead. Hi. Evening. Can we just go one by one in terms of the questioning? Can I just check how much is cargo contribution to revenue? Is it similar to previous quarters? Yes. Hi, Siew Khee. Yeah, cargo forms about 15% of the group's revenue. 15. Thank you. For Gateway, I think I have to actually go back to your answers on the previous question. I had wanted to ask, in Gateway, how much is COVID-related? Do we still have COVID-related revenue in Gateway? Yes, we do. In fact, of our non-travel related revenue, about 15%, coincidentally same number, about 15% is related to COVID in some way, of the non-travel related. And then I take- As you remember, non-travel related- So this will probably- It's about 7% of the total. Okay. This will probably taper off by end of the year? How long will this contract last? Well, it will taper off at the same time as the aviation revenue comes back, right? Okay That will be overtaken, hopefully, by the aviation revenue once that goes away. I think there will be a similar timing. Okay. You mentioned that you had the police force contract. That is the security contract that we're talking about, which is non-COVID and non-travel, right? Yeah. What I said was that SATS has one of three licensed police forces in Singapore. As a matter of fact, the police force is one of the clients, but that's not what I had mentioned earlier. I did mention that we have some government contracts. Oh, okay. The government contract, I take it that it's also over a few years. Is it significant, the government contract? I guess it's something new. Yeah Government contract that involved, yeah. Yeah. That's one of the customers that we've done very well with over the last year or so. Hopefully, we'll continue to grow our market share of both government and non-government contracts. Okay. These contracts, how long do they last? A year or two? If there is, some of them are quite long-term, and others are more short-term. Okay. Also for associates. The Food Solutions associate had done quite well as well in terms of the improvement in narrowing in losses. Can you just give us some color on that? Yeah, most of that is the result of the reshaping of the cost base. In some countries, it's taken us a bit longer because of different labor laws involved, et cetera. You can tell that the aviation catering volumes are not returning fast, and therefore, it's important that we took steps to reshape the cost base to get them in line with the new passenger volumes. However, there's also some positive impact from each of them beginning to sell more into the non-aviation, non-travel related markets. Working with the teams in Singapore and China who have obviously made quite a bit of inroads into these markets to understand how to do the productization and the working with positioning for these new segments. You can start to see some of that getting traction, as well as the cost reduction measures. Oh, on the non-aviation one, which are the countries that do have that impact? The biggest ones are Japan, of course, which we talked about earlier, China, and India. Okay. I have just two more questions. One is Food City was in a loss position. How do you plan to actually turn it around, and when would it be, do you reckon? Yeah. We're going to be using that facility in an entirely different way than the current owners. We'll be using it to slot into our supply chain and driving very cost-efficient export of frozen food out of Thailand. The current owners use it primarily to process duck products and freeze those duck products, also for export, so they have export licenses in place. Ours will be ready-to-eat meals, basically, both for aviation and non-aviation, which is quite a different way of using the facility. We haven't made any guidance externally about what we expect the financial characteristics of that facility to be. Obviously, we're expecting to be able to create value from that. We're very happy with the acquisition cost that we managed to get that asset. We think it's a very good entry cost for us. Okay. You will use the facility to export, or first you have to do some of the reconfigurations first, and then you will export and use it to create ready-to-eat meals and export. Is that right? That's correct, yeah. Export the ingredients for you to do ready-to-eat meal elsewhere. Yes. In some cases, they could be assembled elsewhere. In some cases, they'll be intact, ready-to-eat meals that we could use for aviation and also non-aviation demand. Okay, great. My last question is, how much is tax credit? Hi, Siew Khee. Manfred here. The tax credit amounted to somewhere below between SGD 3 million-SGD 4 million, thereabout. Okay. Also, sorry, I think maybe Ajith asked the question on the repayment of the term loan. Yeah. Just wanted to hear your point of view of, is that you reckon you would actually continue to do that? Or this is just opportunistic that it's due and then you just? Okay. Why? No, because I think it's quite impressive that you still managed to actually pay it. Yeah. Siew Khee, maybe we backtrack a little bit. We took the loans very early for two reasons, right? One is actually for contingency. Yeah. The other one is. Yeah ensure that we have sufficient liquidity for deals, right? It really depends on how this situation recovers and, quite frankly, speaking today, there's a lot of uncertainty. While we still have very comfortable cash position, we also want to monitor the situation before we take any action. It also depends on the pace of the transactions that we close going forward. Yeah. In fact, that takes us probably to the next question, Siew Khee. Unless you have other questions, I'll take a question from online because Jeffrey from The Edge is asking. Okay, I'm done. Thanks, Siew Khee. Thanks for the questions. He's asking, "SATS has a healthy pile of cash," I quote. "Will the company continue to embark on acquisitions or conserve cash to service existing debts?" Manfred, he just indicated, of course, having assembled the cash at the start of the pandemic to deal with any uncertainty, to make sure we had strong liquidity. We were able to pay down the SGD 150 million quite confidently. We're balancing the continued slow recovery of aviation. Although we are EBITDA positive, even then, we have uncertainty over government reliefs, et cetera, and also the pace at which we can grow the non-aviation to balance. We are looking at a pipeline of acquisition opportunities. To talk directly to Jeffrey's question, we are continuing to look for acquisitions. The acquisitions that we will target are either cargo terminal operations in larger cargo hubs, air cargo hubs around the region and/or central kitchens, so like the Food City acquisition that we just made in Thailand. We do think that this is a good time to look for assets which are undervalued, and I think the Food City acquisition is just that kind of a situation. It might also be a good time to look for undervalued cargo handling assets as well. As we've all seen, cargo turned out to be a highly resilient part of the aviation value chain. Nonetheless, it could be that there are airlines that are restructuring their holdings, which might mean that some of these assets become available. Those are the two categories of acquisitions that we're looking for. If we don't find those acquisitions at the right value, of course, then we would be able to pay down more of the debt. If we generate cash, or if we continue to generate cash at the kind of levels that we are now or better, even as the government reliefs taper off, then of course that will make us more ambitious on the acquisition side as well. That's Jeffrey's question. We have another question from Louis Chua, I think. Look, we are now back to audio questions. Okay. Next question is Louis Chua. Please go ahead. Hello. Good evening, Alex and Manfred. Thanks for your patience. I'll just ask questions one by one too, if I may. I noticed there's a change in terminology for your segments. I mean, travel versus non-travel versus aviation/non-aviation in the past. I don't think it's a very material change in numbers, but I just wanted to get the understanding of the thinking around it. Louis, you want to ask all your questions first before we answer them? Okay. It works as well. This one is related to what I think Rachael has also asked. I understand on the cost side, there were some increases. If I just look at it purely on the revenue side, since the first quarter last year sequentially all the way until the first quarter this year, if I look at your aviation-related revenues, that has been increasing steadily since 1Q FY 2021, notwithstanding that passenger volumes, flight volumes have been quite muted, but cargo has been increasing. This has presumably driven the aviation revenues. This quarter, we saw that the aviation revenues has actually come off quarter-on-quarter. Just wanted to understand the drivers there, whether or not there is any change in your product mix or ASPs or anything along those lines. The other question is in terms of the non-travel revenues. If I just backtrack a bit, if I look at the fourth quarter of FY 2021, I think back then there was a SGD 20-odd million increase in revenues Q on Q, which, if I recall correctly, is because of the MHA contract as well as increase in the security services contracts that you have won. I understand from the question earlier today that if I look at the non-aviation-related security, I think that was just about 1% of group revenues. Again, if I look at this SGD 127 million of non-travel revenues, the SGD 20-plus million increase that came about last quarter, what was it really driven by? Given that it's not really from your security services, I think that's on a historical basis. Going forward, I think, Alex, you mentioned that you are looking at the pipeline. Basically, you have the pipeline to grow the business in terms of these tech-enabled security services. At this point in time, are there any new contracts that you have already won that you expect to contribute to revenues in the next couple of quarters, or are these still in the tender stage and haven't been awarded yet? Final question. Sorry. Manfred, I know you can't really guide on the JSS, but if I look at the Q on Q decline in JSS, I think that's about SGD 10 million or so decline. How much of that is really due to the way that you accrue for your JSS, and how much of it is due to the declines in the headcount that has happened over the last one, two quarters? Thank you. Louis, thanks for the questions. Manfred will cover the first one, which is the definition of travel/non-travel, and the thinking behind that. Yeah. Louis, thanks for the question. On the travel/non-travel, we actually redefined from aviation to non-aviation simply because to give a better reflection of our business and the way that we are pursuing, if you like, the new food sector. We want to be sharper in terms of being able to define that. With the non-travel, we'll exclude all the aviation catering business. In fact, all the aviation side, we regard that as travel. Plus the cruise business is also a travel. Everything else is non-travel except for corporate revenue, if you like. Corporate revenue is very, very small, it's negligible. With that as a redefine, we are then able to segmentize our non-aviation catering business better, if you like. Yeah. Thanks, Manfred. Your second question was about the travel-related revenue and why it hasn't gone up more considering that cargo is climbing. It's quite simply because the passenger volumes and the number of meals served to those passengers has declined. Both of those declined. We have a decline quarter-on-quarter in aviation meals, and then we have also a decline in number of passengers. The decline in aviation meals is disguised on that slide where I show the quarter-on-quarter volume evolution. That actually goes up, but that's all driven by non-travel related food revenue. That gets really to your third question, because you note that the non-travel related security is actually quite small, and therefore you're saying, how is it that non-travel revenues have gone up? That's driven by the food business. There has been good growth, in particular in China, from Kunshan kitchen selling into non-travel related customers. There's also been growth from some of the aviation associates who, as I mentioned earlier in this call, have been pivoting to sell to non-aviation customers. People like TFK, BAIK, Nanjing Weizhou, TajSATS, they've all managed to increase their non-travel related food sales during the quarter. Which is in line with our longer-term strategy. We're very pleased to see those developments. You asked about the pipeline also, your fourth question, the pipeline for the next couple of quarters for security. We are engaged in some RFPs currently. The results are not yet known. It's really the latter case, which is that they're in the pipeline. There's nothing to tell you at this point in time. Okay. Thanks very much, Louis Chua. Thank you. Hi, Louis. Pertaining to your last question on the JSS. It's on the decline. Sorry, can you just clarify your question so that I can answer it better, please? Yeah. I think you have been seeing sequential declines in your headcount. To what extent is that SGD 10 million Q on Q decline in the JSS you recorded attributable to your accounting recognition versus the decline in actual headcount? Thank you. Thank you for clarifying that. It is more due to not so much the headcount, because we try to continue to preserve the jobs of the locals as much as possible. It is more of the percentage that's being granted to us. Aviation, if you like, at the onset of the pandemic, we have a 75% support, then it goes on a decline. When it got to the final round, the last six months is actually quite a low number. As a result of that, it declines according to that percentage. Yeah. Okay. With that, this is Carolyn. Thank you. Okay. This is Carolyn. Sorry, Louis Chua. With that, I think we come to the end of today's session. Thank you everyone for tuning in. If you have more questions, please send it to us. We'll reply you by email. I've also taken note of some questions that have come in, and we will get back to you. Thank you everyone. Till our next quarterly session, and stay safe. Bye. Thank you. Bye-bye.