A | L |
U
N
N
A
•
2
0
2 | |
1 | / |
R | E | |
P | ||
O
R
T
•
2
2
0
2
G R O W I N G
S U S TA I N A B LY
CORPORATE PROFILE
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's one-stop maintenance facility in Singapore offers world- class MRO services to a client base of more than 80 international carriers and aerospace equipment manufacturers. Complementing its full spectrum of MRO services is its portfolio of 23 subsidiaries and joint ventures in 8 countries, forged with strategic partners and leading original equipment manufacturers (OEMs). The Company holds certifications from 27 national airworthiness authorities worldwide.
MISSION STATEMENT
SIA Engineering Company
(SIAEC) is engaged in providing
aviation engineering services
of the highest quality, at
competitive prices for customers and a profit to the Company.
FY2021/22
AT A GLANCE
SIAEC launched Lean Academy to upskill workforce and boost competitiveness
SIAEC signed Maintenance
Agreement with Hawaiian Airlines
SIAEC established
- S$1,000,000,000 Euro Medium Term Note Programme
SIAEC signed
Component
Agreement with
Thai VietJet
SIAEC extended
collaboration
with Iacobucci HF
Aerospace with
Spares Distribution
Agreement
CONTENTS | |||
Risk | 73 | ||
Management | |||
15 | Key | 78 | |
Executives | Sustainability | ||
18 | The Year | Statistical | 80 |
in Review | Highlights | ||
20 | Business | 81 | |
Review | Financials | ||
25 | Transformation | Shareholding | 205 |
and Innovation | Statistics | ||
28 | Expanding Engine | Share Price | 207 |
Services Capabilities | and Turnover | ||
30 | Corporate | Notice of Annual | 208 |
Governance | General Meeting | ||
Additional Information | 216 | ||
Re-election | |||
on Directors Seeking |
Proxy | |
SIAEC formed | Form |
component | |
maintenance, repair and | |
overhaul joint venture | |
with SR Technics in | |
Malaysia |
SIAEC signed | SIA Engineering |
CFM LEAP Engine | |
(Philippines) | |
Test Agreement with | |
Corporation signed | |
Safran Aircraft Engines | |
agreement with North | |
SIAEC signed Line | |
American Aerospace | |
Maintenance and | |
Industries to provide | |
In-Field Service | |
aircraft recycling | |
Agreement with | |
solutions | |
Rolls-Royce | |
SIAEC sets up | |
new Component | |
Services Division to | |
grow component | |
maintenance, repair | |
and overhaul | |
business |
1
SIAEC conducted
successful trial using sustainable aviation fuel for engine tests
SIAEC opened
Aircraft Engine Services
Facility to provide
engine maintenance services for CFM LEAP -1A and -1B engines
REVENUE
$566.1
MILLION
NET
PROFIT
$67.6
MILLION
S I A E N G I N E E R I N G C O M P A N Y
CHAIRMAN'S STATEMENT
CHAIRMAN'S STATEMENT
A N N U A L R E P O R T 2 0 2 1 / 2 2
DEAR
SHAREHOLDERS,
At the start of FY2021/22, recovery of the global aviation industry from the COVID-19 pandemic seemed slow. In the last six months, however, green shoots of recovery began to sprout more quickly as vaccination programmes gained traction and traveller confidence returned. As more and more countries transitioned to endemic handling of COVID-19, travel restrictions were lifted with the opening of borders and resumption of international travel.
Singapore was amongst the first few countries in the region to transition to an endemic phase. Our city state established the Vaccinated Travel Lane (VTL) with many countries, permitting quarantine-free travel for fully vaccinated travellers to resume in September 2021. This was subsequently replaced by the Vaccinated Travel Framework, which fully re-opened Singapore's borders to the world on 1 April 2022.
As a result of this recovery trend in international air travel and the increase in flights, SIAEC saw an increase in MRO activity in the second half of the financial year. The number of flights handled by the Company's Line Maintenance unit in Singapore surged 73% to 47,885 in FY2021/22, compared to 27,727 in FY2020/21. The Group's maintenance checks at its Singapore and Clark bases also registered double-digit percentage increases, compared to the low numbers in the previous year. Fleet management work volume, which is largely driven
by flight activities, showed signs of improvement in the fourth quarter.
The increase in activity lifted SIAEC's performance. For FY2021/22, the Group posted revenue of $566.1 million,
up 27.8% year-on-year. The share of profits from associated and joint venture companies also increased to $79.1 million, mainly from a one-time writeback of tax provisions by certain associated companies, compared to a one-time tax charge a year ago. There were also improvements in business volume across several associated and
joint venture companies. Overall, the Group recorded a net profit of $67.6 million, reversing the loss of $11.2 million in FY2020/21. The improved bottom line was boosted by government wage support, and the absence of a one-off impairment provision which impacted the Group's FY2020/21 performance. Excluding the wage support, the Group would have reported a loss.
Even though the volume of flight activities is clearly recovering, it is far from pre- pandemic levels, and there remain challenges to the pace of recovery. In view of this, the Board of Directors will not be recommending a dividend for FY2021/22.
THE ROAD TO RECOVERY
While we welcome the promising pace of recovery, we know that risks still exist, and we remain ever vigilant.
New COVID-19 variants have emerged and could cause an unexpected resurgence in infections and temper travel sentiments. Also, not all countries' borders have fully opened, such as China, Hong Kong, Taiwan and Japan. The limited accessibility to these Asian markets could prolong the recovery in the regional aviation industry, which is important for us. The conflict between Ukraine and Russia has further strained an already fragile global economy. Operating costs are soaring as inflation accelerates across many markets, owing to the disruption to crude oil supplies and supply chain crunches. As a result, the propensity to travel could be dampened by the risk of stagflation in many countries that are potentially facing slower economic growth.
We are deeply grateful to the Singapore Government and its institutions for the wage support schemes in support of businesses and the aerospace industry. In the absence of wage support from the Government, which will taper off in July 2022, and with the recovery of the aviation sector still some way off from pre- COVID-19 levels of activity, our financial performance will be highly dependent on
TANG KIN FEI
Chairman
the degree of revenue recovery vis-à-vis rising costs.
Despite these challenges, we are confident of a quality recovery. Our strategies to strengthen our core competencies and to build new capabilities for new-generation aircraft in the last two years have made SIAEC stronger and more resilient. This has placed the Group on a solid footing for sustainable growth after the recovery.
BUILDING NEW CAPABILITIES AND BUSINESSES
In April 2021, we established the Engine Services Division to enhance our integration into the engine MRO value chain; strengthen our engine services eco-system; and increase our value to OEM partners and airline customers.
SIAEC secured a 10-year agreement with Safran Aircraft Engines (SAE) to provide engine test services for its CFM LEAP-1A and -1B engines in December 2021. This is in addition to an existing long-term engine maintenance services arrangement for SIAEC to provide engine Quick Turn and modification embodiment services for these engines.
In February 2022, we opened a new $9.0 million Aircraft Engine Services (AES) facility in Singapore that is custom- designed with state-of-the-art equipment and technology to perform at least
60 Quick Turns per year for the CFM LEAP engines, and additional 50% capacity
to cope with surge demands. We also offer on-site support and boroscope inspection services. While the AES facility currently serves SAE exclusively, we will seize opportunities to extend such engine services to the wider market as global air travel continues to recover and demand increases for Quick Turn maintenance and shorter engine turnaround.
We also signed a 10-year agreement in January 2022 to provide line maintenance and in-field services for Rolls-Royce Trent 7000, 1000, 900, 800, 700, 500 and XWB engines. This expanded SIAEC's existing on-wing care services to include new capabilities for the Trent 7000 and Trent XWB engines.
Aside from engine services, another area of growth for SIAEC is the component MRO business. We established the Component Services Division to capitalise on the anticipated upturn in this market. All our existing component repair and fleet management services, including inventory technical management services, were integrated together under the Component Services Division since 1 April 2022. This new division, with its focus on broadening our capabilities and strengthening our partnership network, will boost our ability to provide an even wider range of customised and flexible solutions to cater to the needs of our airline customers and OEM partners.
One of the major milestones for the component services business, and a significant step in our strategic plan, was our acquisition of a 75% stake in SR Technics Malaysia (SRT Malaysia), to form a component MRO joint venture company. SRT Malaysia provides component repair, testing and overhaul services with a focus on the Airbus A320, A330, A340 and the Boeing 737NG aircraft in the Asia-Pacific region and beyond. We are excited as SRT Malaysia will not only complement our existing portfolio of engine and component joint ventures with leading OEMs, but also allow us to broaden
our component repair and overhaul capabilities for new-generation aircraft.
We further expanded our range of component services through a collaboration with Iacobucci HF Aerospace S.P.A (IHFA), an Italy-based cabin interior OEM, in December 2021. Under a long-term agreement, we will distribute and sell spare parts required for the aftermarket activities of IHFA's galley insert products for premium cabins of current and next generation aircraft in the Asia-Pacific region. In May 2022, we also obtained from Honeywell the licensed repair capability for the Air Data Inertial Reference Unit on Boeing 737 and 787 aircraft.
Alongside these capability-building initiatives, we also continued to focus on strengthening our core business. Under Base Maintenance, SIAEC is potentially expanding its network to include two hangar facilities in Subang, Malaysia,
which have a combined capacity of six simultaneous aircraft checks. This follows the signing of a non-binding Memorandum of Understanding with a wholly-owned subsidiary of Malaysia's sovereign wealth fund, Khazanah Nasional Berhad, for the potential lease of these hangars. Together with our acquisition of SR Technics Malaysia and the recently announced plan to acquire a stake in Pos Aviation Engineering Services to form a line maintenance joint venture, our growth in Malaysia will complement the capabilities of our Singapore hub. Expansion of our Line Maintenance International network to South Korea
is also in the pipeline with the recently announced plan to form a joint venture with Air Innovation Korea.
STRENGTHENING COMPETENCIES THROUGH TRANSFORMATION
Our Transformation Phase 2 programme, with Lean, Digitalisation and Technology, and Innovation Culture as core thrusts, continued to gather momentum during the year.
We introduced a series of impactful Lean initiatives to optimise work processes over the course of FY2021/22, which created significant additional capacity via improved turnaround times and higher task accomplishment rates across SIAEC's operations. As a result, we had greater capacity to perform more checks at Base Maintenance. We also launched our landmark Lean Academy in September 2021, reflecting SIAEC's focus on the re- skilling, upskilling and development of our workforce to enhance competitiveness. By early 2023, we hope to have 100%
of our workforce trained in Lean, and to extend Lean training to the wider aerospace MRO community in the longer term. Meanwhile, additional investments in digital technologies, applications and workflow, and digital infrastructure were also made in FY2021/22 that enabled our workforce to improve productivity, operational efficiency, and take on higher value work.
We expect more pervasive enterprise- wide application of Lean and adoption of Digitalisation and Technology, particularly as work volume ramps up with the
S I A E N G I N E E R I N G C O M P A N Y
2
3
CHAIRMAN'S STATEMENT
CORPORATE CALENDAR
A N N U A L R E P O R T 2 0 2 1 / 2 2
recovery trend. Our Transformation efforts continue to yield positive results and we foresee this to be an on-going journey for SIAEC as we strive towards sustainable business growth.
GROWING SUSTAINABLY
SIAEC remains committed to support the aviation industry towards its net zero carbon emissions goal by 2050. Our readiness is reflected in a number of important sustainability-related achievements announced in FY2021/22.
In February 2022, SIAEC's engine test facility successfully performed engine tests using blended sustainable aviation fuel that produced 32% lower carbon emissions compared to conventional fossil jet fuel. In the same month, SIA Engineering (Philippines) Corporation (SIAEP), our wholly-owned subsidiary, signed an agreement to provide sustainable, end-to-end aircraft recycling solutions to North American Aerospace Industries (NAAI), an aircraft part-out specialist. These capabilities broaden SIAEC's array of green MRO services.
Efforts, meanwhile, were also made to reduce our carbon footprint through the electrification of our fleet of vehicles in the operational environment. We successfully completed trials of electric tractors in FY2021/22 and plan to increase their adoption in FY2022/23. Moreover, two of our hangars in Singapore have been certified Green Mark (Platinum, Super Low Energy Buildings) and PUB Water Efficient Buildings.
In April 2022, the Board Sustainability Committee was established to provide oversight and guide SIAEC's sustainability strategy. To lead our efforts in enhancing sustainability, we concurrently appointed our Executive Vice President Operations as our Chief Sustainability Officer to drive and accelerate SIAEC's Environmental, Social and Governance initiatives.
PRIORITIES AHEAD
Going forward, we will keep a lookout for opportunities to invest in new capabilities and services for new-generation aircraft to broaden the Company's range of service offerings to airline customers
and OEM partners. We will also seize opportunities for growth by leveraging existing strong capabilities and deepening long-standing relationships with OEM partners to strengthen our joint ventures portfolio.
At the same time, we will remain agile, vigilant and prudent in managing the increase in costs, whilst balancing the need to invest in capabilities and capacity expansion to lay the foundation for recovery and growth.
During the downturn of the past two years, protecting jobs and retaining talents were our key concerns. With recovery gathering pace, our focus on employee retention is serving us well as we were able to swiftly ramp up operations to support our airline customers. To ensure that SIAEC has adequate manpower for further flight recovery, we are ramping up recruitment.
Under our Transformation Phase 2 programme, we will continue to build on the momentum achieved in FY2021/22 by further investing in digitalisation, automation, optimisation and decision support capabilities. We will also continue to scale up our Lean initiatives across the Company to raise productivity.
APPRECIATION
I would like to take this opportunity to extend a warm welcome to Mr Lim Kong Puay, who joined the Board of SIAEC as a Non-Executive and Independent Director in August 2021. His extensive experience will serve us well in charting strategic directions and enhancing operational excellence for the Company. I would like to thank my fellow Board members for their continued guidance in steering the Group through another challenging year, and for continuing their voluntary reduction in Directors' fees.
On behalf of the Board of Directors, I would also like to express our deepest appreciation to Mr Manohar Khiatani and Mr Chew Teck Soon, who retired as Independent and Non-Executive Directors of SIAEC after serving on the Board for nine years each. Both Mr Chew's and Mr Khiatani's extensive
4
experience and invaluable contributions have enabled the Group to navigate
a steady course, especially during the turbulence caused by the COVID-19 pandemic. I wish them a happy retirement.
The SIAEC team has again demonstrated tenacity and perseverance in overcoming challenges during these unprecedented times. I wish to express my heartfelt gratitude to our staff, unions and Management for their immeasurable sacrifices, teamwork and commitment to the Company to ensure business continuity and success of the Group. Truly, the Group would not be where it is today without our people, who are indeed our greatest asset. We are humbled and pleased to be ranked among Singapore's Top 200 Employers in 2022, as published by The Straits Times and global data firm Statista in April 2022.
Our collective efforts have been recognised again with the recent award of the 2022 Asia-Pacific MRO of the Year, our second in two consecutive years, by leading aviation publication Airline Economics. We are delighted, yet challenged, by these accolades to emerge stronger and achieve sustainable growth for the future.
Lastly, I wish to convey our profound and heartfelt gratitude to all stakeholders and friends, including our shareholders, customers, business partners and government agencies, who have journeyed with us through another difficult year. Thank you for your continued support and trust in us.
TANG KIN FEI
Chairman
2022 | ||
21 FEB | ||
Announcement of | 2021 | |
FY2021/22 third-quarter | ||
5 MAY | business updates | 29 JAN |
Announcement of FY2021/22 full-year financial results
6 MAY
Analyst briefing on FY2021/22 full-year financial results
Announcement of FY2020/21 third-quarter business updates
4 MAY
Announcement of FY2020/21 full-year financial results
5 MAY
Analyst briefing on FY2020/21 full-year financial results
22 JUN
Website publication of
Notice of Annual General
Meeting and FY2021/22
Annual Report
21 JUL
40th Annual
General Meeting
25 JUL
Announcement of FY2022/23 first-quarter business updates
1 JUL
Website publication of Notice of Annual General Meeting and FY2020/21 Annual Report
23 JUL
39th Annual General Meeting
23 JUL
Announcement of FY2021/22 first- quarter business updates
5 NOV
Announcement of first-half
FY2021/22 financial results
1 NOV | 8 NOV |
Announcement of first-half | Analyst briefing on first-half |
FY2022/23 financial results | FY2021/22 financial results |
2 NOV | |
Analyst briefing on | first-half |
FY2022/23 financial results
5
S I A E N G I N E E R I N G C O M P A N Y
BOARD OF DIRECTORS
BOARD OF DIRECTORS
TANG KIN FEI
Chairman, Board of Directors
Chairman, Compensation & HR Committee
Chairman, Executive Committee
Non-Executive and Independent Director
2 0 2 1 / 2 2 | |||||||||
CHRISTINA ONG | CHUA BIN HWEE | LIM KONG PUAY | |||||||
T | |||||||||
R | Chairman, Nominating Committee | Chairman, Audit Committee | Chairman, Board Safety & Risk Committee | ||||||
O | |||||||||
Chairman, Board Sustainability Committee | Non-Executive and Independent Director | Non-Executive and Independent Director | |||||||
E P | |||||||||
Non-Executive and Independent Director | |||||||||
R | |||||||||
A N N U A L |
GOH CHOON PHONG | NG CHIN HWEE | DR RAJ THAMPURAN | WEE SIEW KIM | ||||||||||||||
Non-Executive and | Non-Independent Director and | Chairman, Technology Advisory | Non-Executive and Independent | ||||||||||||||
Non-Independent Director | Chief Executive Officer | Committee | Director | ||||||||||||||
Non-Executive and Independent | |||||||||||||||||
Director | |||||||||||||||||
MAK SWEE WAH | CHIN YAU SENG | MANOHAR KHIATANI | CHEW TECK SOON |
Non-Executive and | Non-Executive and | Chairman, Board Safety & Risk | Chairman, Audit Committee |
Non-Independent Director | Non-Independent Director | Committee | Non-Executive and Independent |
Non-Executive and Independent | Director | ||
Director | Until 30 April 2022 | ||
Until 31 March 2022 |
TANG KIN FEI, 71
Chairman, Board of Directors
Chairman, Compensation & HR Committee
Chairman, Executive Committee
Member, Nominating Committee
Non-Executive and Independent Director
Mr Tang Kin Fei was appointed Director and Deputy Chairman on 8 May 2017 and subsequently, as Chairman on 19 July 2018. He was the Group President and Chief Executive Officer of Sembcorp Industries Ltd from 1 May 2005 until his retirement on 31 March 2017. He then remained as an Advisor and a non-executive Director on the Board of Sembcorp Industries until 31 May 2017.
Mr Tang, who was previously with the Sembcorp Group for
30 years, has been credited with driving its transformation into an international energy, water, marine and urban development group. Prior to his appointment as Group President and Chief Executive Officer, Mr Tang headed Sembcorp's utilities business on Jurong Island in Singapore, which grew into a global energy and water player with a sizeable portfolio of assets and capabilities. Before joining Sembcorp, Mr Tang was the Managing Director of Wescon Asia and a project engineer in Esso Singapore.
Mr Tang is currently the Chairman of Metis Energy Limited and a member of its Nominating Committee and Remuneration Committee. He is also the Chairman of Singapore LNG Corporation Pte Ltd, a Director of Summit Power International Ltd, a Board Member of Singapore Cooperation Enterprise, the Council Chairman of Ngee Ann Polytechnic and Vice Chairman of the Kwong Wai Shiu Hospital, a charitable hospital which provides care for needy patients.
Academic and Professional Qualifications:
- Bachelor of Mechanical Engineering (1st Class Honours), University of Singapore
- Advanced Management Programme, INSEAD, France
Current Directorships In Other Listed Companies
Company | Title | |
1. | Metis Energy Limited | Chairman |
Other Principal Commitments | ||
Organisation/Company | Title | |
1. | Singapore LNG Corporation Pte Ltd | Chairman |
2. | Summit Power International Ltd | Director |
3. | Singapore Cooperation Enterprise | Director |
4. | Ngee Ann Polytechnic | Council Chairman |
5. | Kwong Wai Shiu Hospital | Vice Chairman |
6. | Athena Energy Holdings Pte Ltd | Director |
7. | Vietrof RE Pte. Ltd. | Director |
Directorships/Appointments in the past 5 years
Organisation/Company | Title | |
1. | Shenzhen Chiwan Sembawang Engineering | Chairman |
Company Limited | ||
2. | Penglai Jutal Offshore Engineering Heavy | Vice Chairman |
Industry Co. Ltd | ||
3. | Defence Science & Technology Agency | Board Member |
Board | ||
4. | Nanyang Technological University | Chairman, College |
Advisory Board | ||
5. | Climate Change Network, National Climate | Member |
Change Secretariat | ||
6. | Singapore Chinese Chamber of Commerce | Council Member |
and Industry | ||
7. | National Research Foundation | Board Member |
CHRISTINA ONG, 70
Chairman, Nominating Committee
Chairman, Board Sustainability Committee
Member, Audit Committee
Non-Executive and Independent Director
Mrs Ong was appointed Director on 1 January 2014. She is Chairman and Senior Partner of Allen & Gledhill LLP, where she has headed the Financial Services Department for many years. Her areas of practice include banking, securities offerings, securities regulations, investment funds, capital markets and corporate finance. She has been involved in a broad range of debt and equity issues. She provides corporate and corporate regulatory and compliance advice, particularly to listed companies.
Mrs Ong is currently a Director of Oversea-Chinese Banking Corporation Ltd, Singapore Telecommunications Ltd, Hongkong Land Holdings Limited and Epimetheus Ltd. She is also a Director of Allen & Gledhill Regulatory & Compliance Pte Ltd, Eastern Development Pte Ltd and Eastern Development Holdings Pte Ltd (companies associated with Allen & Gledhill LLP). Mrs Ong is a member of the Corporate Governance Advisory Committee, which is a standing committee established by the Monetary Authority of Singapore, a member of the Supervisory Committee of the ABF Singapore Bond Index Fund, and a member of Civil Aviation Authority of Singapore. She is also a Trustee of the Stephen A. Schwarzman Scholars Trust.
Academic and Professional Qualifications:
- Bachelor of Laws, LLB (Honours) (Second Upper), University of Singapore
- Member, Law Society of Singapore
- Member, International Bar Association
Current Directorships In Other Listed Companies
Company | Title | |
1. | Oversea-Chinese Banking Corporation Ltd | Director |
2. | Singapore Telecommunications Ltd | Director |
3. | Hongkong Land Holdings Limited | Director |
S I A E N G I N E E R I N G C O M P A N Y
6
7
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
SIA Engineering Company Ltd. published this content on 22 June 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 June 2022 07:54:07 UTC.