Annual Report 2020/21 01 Sia Engineering Company
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POWERING ANNUAL REPORT 2020/21 01 SIA ENGINEERING COMPANY CONTENTS 02 26 218 Chairman’s Statement Innovation and Technology Shareholding Statistics 05 30 220 MISSION STATEMENT Corporate Calendar Sustainability Share Price and Turnover 06 32 221 SIA Engineering Company Limited (SIAEC) is engaged in Board of Directors Risk Management Notice of Annual General Meeting providing aviation engineering services of the highest quality, 14 38 230 at competitive prices for customers and a profit to the Company. Key Executives Corporate Governance Additional Information on 18 88 Directors Seeking Re-election Year in Review Statistical Highlights Proxy Form 20 89 Business Segments Financials CORPORATE PROFILE FY2020/21 AT A GLANCE Listed on the mainboard of the Singapore Exchange in 2000, SIAEC is one of the world’s leading maintenance, repair and overhaul (MRO) organisations. SIAEC wins Airline Economics SIAEC sets up new Engine Potential acquisition of SIAEC’s one-stop maintenance facility in Singapore offers magazine’s Asia-Pacific MRO Services Division to tap growth in SR Technics Malaysia world-class MRO services to a client base of more than 80 of the Year Award 2021 the engine services market international carriers and aerospace equipment manufacturers. Complementing its full spectrum of MRO services is its portfolio of 23 subsidiaries and joint ventures in 7 countries, forged with strategic partners and leading original equipment manufacturers SIAEC launches Transformation SIA Engineering Philippines Heavy Maintenance Singapore Phase 2 programme to enhance (OEMs). The Company holds certifications from 27 national Corporation becomes wholly- Services becomes wholly-owned competitiveness and resilience owned subsidiary of SIAEC subsidiary of SIAEC airworthiness authorities worldwide. post-COVID-19 Revenue Net Profit $443.0 ($11.2) million million 02 03 ANNUAL REPORT 2020/21 SIA ENGINEERING COMPANY CHAIRMAN’S STATEMENT DEAR SHAREHOLDERS, Like many others in the aviation industry, no-pay leave, furlough and release Despite the mitigating measures, the also led to provisions being made by opening their economies. These initiatives ideas are constantly generated from the we were dealt a severe blow as the of contract staff. Non-critical capital precipitous decline in flights directly the Group, including a $35.0 million have given rise to growing confidence ground will enable sustainment of process COVID-19 pandemic brought passenger expenditure was deferred to conserve impacted all our business segments at impairment provision on the assets of our in international air travel, and a more improvement initiatives. With the right air travel to a near-complete standstill at cash and maintain liquidity. We adjusted both our Singapore base and overseas Base Maintenance unit. Overall, the Group meaningful increase in flight frequencies structure and processes in place, we are the start of FY2020/21. our resources to match changing stations. In FY2020/21, the number of recorded a net loss of $11.2 million – our and subsequent demand for MRO services. confident that significant productivity business volume. At the same time, we flights we handled at Changi Airport was first since listing. improvements will be accomplished in the The Group’s businesses in Singapore worked closely with our customers, our only 18.5% of the previous year’s level, Against this uncertain outlook, it is years ahead. continued to operate as essential service joint ventures and industry partners, and directly impacting our Line Maintenance We are grateful to the government for imperative that we press on with SIAEC’s providers. We responded swiftly and relevant communities in tackling the business. The low flight activities and the wage support schemes, especially Transformation journey to strengthen STRENGTHENING CAPABILITIES activated business continuity plans, challenges and preserving Singapore’s widespread grounding of aircraft by the Jobs Support Scheme (JSS), which our resilience and agility, and position The pandemic has brought about which effectively minimised disruptions strong aerospace hub status. airlines further led to the extension of significantly cushioned the decline in ourselves to be first off the blocks when structural changes to the aviation industry, to our operations and service delivery maintenance intervals. Our Singapore and our financial performance. With the the upturn comes around. Following with significant impact on the MRO to our customers. From the onset of the In response to changes in the market, Philippines Base Maintenance facilities progressive step-down in support from significant improvements in productivity business as well as opportunities amidst pandemic, SIAEC upheld the necessary we introduced service offerings to recorded fewer maintenance checks. the JSS, financial discipline and prudence and performance last year, we rolled out safe management measures to ensure the support our customers in the safe Work volume for our Fleet Management continues to be one of our top priorities. the second phase of our Transformation safety and well-being of our people who management of their operations business and Engine and Component efforts in January 2021. In Phase 2, we In view of the losses incurred, and will invest $40 million over three years in to sustain the business through the technological areas such as digitalisation continuing uncertainties, the Board of and automation, as well as the adoption Directors will not be recommending a of Lean methodologies to create value dividend for FY2020/21. This will also for our customers, workforce and the To emerge stronger in a post-pandemic landscape, we continue to allow us to preserve financial flexibility to aviation community. Initiatives that pursue any business opportunities that leverage technology and digital tools will invest for future growth and reshape our portfolio of joint ventures and may arise. enable real-time sharing of information subsidiaries. We have been diligently reviewing and rationalising our investments, and data-driven decisions to achieve and tapping into new opportunities in the changing environment to build new ACCELERATING TRANSFORMATION higher efficiencies in operations, and also support the development of technology- “ capabilities for existing and new generation aircraft and components. ” Amidst much uncertainty, a full recovery enabled products and services. Our staff in air travel to pre-pandemic levels is are receiving training in digital skillsets likely to take about three years, based and customised training to lead the on forecasts by the International Air implementation of Lean methodologies were at our work premises. We enabled during the pandemic. These included joint venture companies also fell sharply Transport Association. The emergence of for a value-driven approach to process staff who could work from home to do so the provision of cabin disinfection as a result of low flight hours. From record new, and more transmissible, COVID-19 improvements. in compliance with the latest advisories services on operating aircraft, as well lows in April and May 2020, the number of strains and resurgence of infections have from relevant authorities, with robust IT as preservation maintenance on our flights handled has been recovering, albeit led governments to implement renewed We have already seen productivity systems and support in place. We also customers’ parked aircraft to ensure at a slow pace. lockdowns and impose tighter travel improvements with significant reduction set up a one-stop COVID-19 support that they remain airworthy upon restrictions. in turnaround time during pilot projects portal for staff to access consolidated resumption of flights. The debilitating At the close of FY2020/21, revenue of for checks performed on the Boeing 787 information on relevant regulatory impact of the prolonged pandemic the Group fell 55.4% to $443.0 million. Nevertheless, we are encouraged by aircraft. Lean projects will be launched updates, industry news, health and had also forced airlines to rationalise Group expenditure declined by 49.5% the gathering pace of vaccination across enterprise-wide and will extend beyond mental wellness tips and helplines. their existing fleets. This resulted in an to $468.0 million, due to grants from the globe, ongoing bilateral discussions specific functions to encompass end-to- uptick in demand for de-lease checks government support schemes and cost- between countries for the establishment end processes such as planning, supply To safeguard the long-term sustainability and related engine changes, as well as saving measures. of air travel bubbles and green lanes, chain and documentation. alongside the growing adoption of of our business, we implemented a slew demand for temporary passenger-to- Tang Kin Fei of tight cost management measures to cargo modification to increase the cargo As the considerable reduction in the IATA Travel Pass to integrate In addition to the continual upskilling of Chairman mitigate the adverse financial impact capacity of passenger aircraft. As more expenditure could not keep pace with the COVID-19 test results and vaccinations the workforce to broaden their expertise of the global health crisis and, equally aircraft gradually return to the skies, we sharp decline in revenue, we recorded an with passengers’ boarding credentials. and enhance agility, strengthening the important, to protect jobs. Apart from are also providing a full suite of Return operating loss of $25.0 million. Share of