I met Mulyana at SATS. We are friends, two best friends. We are blessed with four children, three girls and a boy.
Working in SATS for 25 years. I grew with them. Beautiful journey. I hope I can even reach 60 with SATS.
It is the people who make the company, and the people need to attune towards the journey that they had in SATS. What we can do to help and sustain ourselves will be nourishing and developing people.
I have always dreamt about becoming a teacher. SATS helped me to fulfill that dream when I became a customer service agent trainer. Becoming a trainer is not about telling people what to do. It's about inspiring a learning mindset and helping others to become better, and I find that very rewarding.
I am really very proud of Mulyana. She is one who exemplify the attitude and the attribute of a SATS staff.
It's from yourself. Whatever you do, make sure it comes from your heart, and it will be touching another person's heart. My passion now to make sure that everybody that enters SATS, make sure they feel SATS is their family.
We are one big family. Our people must be equipped with the right information through the systems that we have and able to use this information and help the passenger where they are in need.
In our mission to feed and connect communities, what it means is to have the heart when it comes to passengers' experience and finding new ways and better ways with technology, with innovation.
Innovation is very important. I experience this innovation while doing Project Mosaic.
Mosaic is the system that help us to see how the resources on the ground are to deploy our staff dynamically and the experience of this human factor will prepare ourselves as a sustainable business.
If we don't take the first step to make the initial changes, we will never grow. I think as leaders, we will have to instill this and let them know that we are here with them, that we go through this change together.
If you did not try, you will never know. Give it a go. This is the words that comes from my eldest daughter.
As a working mother, time is very precious. I want to cook good meals for my four children to enjoy, and I know SATS makes a range of tasty and nutritious food for the home. My children really love the Home Chef ready-to-eat meals and pan-fried chicken. Our experienced chefs and dietitians use many different food technologies and innovation.
SATS has given to me skill, work, innovation, how to adapt changes, and I would like my children to use it and pass it to next generation.
There is no limit to technology. There is no limit to innovation. As long as the people in SATS are willing to move on and take the step ahead to find new ways and be creative in our work, we will always be strong.
Our people has to continually evolve and continues to learn and also open up their mindset to the new changes. That will make the difference and carry us through to the next 75 years.
I hope all of you enjoyed the video and some of you would have in fact had the chance to experience our digital capability showcase next door as well as some of our breakfast offerings. Rest assured there's more exciting things lined up on the food front. I will now take this time to introduce our President and CEO, Alex Hungate, to give the opening address. Alex, please.
Thank you, Charlene, and welcome everybody. Thanks for joining us today. I know there are a lot of competing events. It just so happens that 10 A.M. this morning is like the peak of the peak of all the various earnings announcements, especially for transport companies for some reason. We're really pleased that you came to join us. We have the extra magnet of the food later for breakfast, so maybe that was the clinching factor. We like to think it's also to do with our relationship with you over the years.
Many familiar faces, and it's been great that so many of you know SATS really, really well at this point because then we can talk to you know, in a very meaningful way this morning about where we are today, where the company stands, and that's what I'm gonna cover. Kerry is going to do most of the work this morning 'cause he's gonna talk about, along with Bob, you know, where the company is going. Spencer will talk about sustainability, which is a very important theme for the future as well. I'll be doing less work than normal, but I want you to know that I'm equally excited about the prospects ahead of SATS. My decision to leave SATS is really more about my belief that CEOs shouldn't overstay their welcome.
It's been eight years for me. Nothing to do with a lack of opportunities at SATS, as you'll hear about in lots of detail this morning. Let's get started. I think any follower of SATS obviously needs to read the tea leaves around the aviation volumes, because that's one of the key drivers for our business. Let's start with that and start with the passenger side. These are the IATA forecasts. IATA is forecasting, and these were done in July, these forecasts, that by 2023, global aviation will have reached the same levels as it was pre-COVID. Asian passenger volumes will only reach that level one year later in 2024. The reason being, of course, in Asia, we have a lot of big markets like China, for example, which is a very big driver of Asian volumes.
We're taking a more kind of contained cautious approach towards opening up. The assumptions that they made for Asia was that there will be limited international flight volumes in Asia before the beginning of 2022. Back in July, that looked like a reasonable assumption. I think now there are signs of hope that we might restart a bit sooner than that with some of the Vaccinated Travel Lanes that we're seeing here in Singapore. That's a positive. Obviously, the announcements out of Australia, the announcements out of Malaysia, et cetera. We'll see whether IATA revises that. But I think it's a fair base case that we would look at something between 2023 and 2024 in the Asian context. Now, cargo has been a lot more positive throughout. We've been updating you every quarter on this.
Cargo's given us a really kind of solid baseload business that has grown very consistently over the period of the pandemic. It was obviously impacted at the start, but it turns out that air cargo is a critical part of any resilient supply chain, and therefore, there's an overdemand still for the air cargo market, which has resulted in an increase in yield for airlines. Singapore Airlines yesterday, when they announced their results, were talking about the fact that their cargo business was generating positive earnings and cash flow for them. I think all of the cargo airlines, all of the passenger airlines and all of the specialist cargo airlines basically are sold out, and their rates are very healthy. That's because the global demand is already 9% higher than it was pre-COVID.
Unlike passenger, it's already rebounded and is beyond where it was. Driven by a number of factors, e-commerce, where many people, even though they may be working from home and not moving around so much have shifted across to the habit of buying more and more online. The other thing is the medical industry, so pharmaceuticals in particular, and the vaccines obviously as the core of that with increased demand for the cold chain aspects of air cargo, which of course will outcompete for those high-value, relatively lighter, more dense products that you tend to find in the pharma medical area. That has been beneficial for SATS and all of our associates, except for one, which I think is the Oman associate, which lost just marginally a couple hundred thousand dollars in the last quarter.
Everything else is positive. In Oman's case, it's because Oman Air was grounded for a period of time during the quarter, but they've now restarted. I think we'll be able to safely say that those cargo associates will continue to contribute well to SATS as well as, of course, our cargo subsidiaries as well. Our cargo revenue jumped up 45% in the quarter year-on-year. Our volumes of both pharmaceutical and e-commerce cargo are north of 40% year-on-year as well. Those two higher value components, e-commerce because of its track and trace and the express nature of the handling, and then pharmaceutical because it's cold chain and therefore has higher handling standards, are both driving that growth in revenue. Well, here's the detail that we've been disclosing.
At the half year, we give a lot of detail. You can see here there's the quarterly evolution of each of these. It's probably worth me just talking you through these 'cause I know you're all trying to draw trend lines and work out what's gonna happen next. I'll give some context. A year ago, in the second quarter last year, you remember there was a bit of a false dawn. We had a surge in flights and a surge in passengers after the first round of vaccination but before the Delta variant. That's what you see here, in terms of flights handled and passengers. The first column and the third column, there was a spike. We're still below that in both cases of flights and passengers. You can see after the correction, there's been a more steady increase.
These numbers end obviously in September, so it's before the first Vaccinated Travel Lane to Germany. Again, you would have heard Singapore Airlines last evening announce that the Vaccinated Travel Lanes made a major difference for them in terms of their load factors. Since then, there have been announcements of more than 12 new Vaccinated Travel Lanes to add to the German one and the Brunei one. Those Vaccinated Travel Lanes are not in these numbers and should start to show through in the October, November, December quarter. Meals served, you can see, ought to be correlated. If we were a pure aviation caterer, it would be correlated directly with passengers traveling. In this case, we've actually outperformed because passengers traveling has been on a successive decline since the second quarter last year.
In our case, the meals catered have actually been on a successive rise. The difference, of course, is the non-travel related catering businesses that we've been investing in over the last several years. In fact, we accelerated the investment into those new areas during COVID as we redeployed thousands of people to support the growth in those areas. You can see that that continues to climb and in the quarter continued to climb again. We expect that non-aviation food business to grow, not just over the successive quarters, but over the successive years. I'm gonna let Kerry talk about that later 'cause he'll give you some idea of how big we think that can become. The fourth column, cargo, I mentioned earlier, has been consistently growing. 421,000 tons in the quarter is a good number.
It's not the highest number we've ever done. I think, the third quarter typically is our largest cargo quarter because it includes Singles' Day, 11/11, which was just yesterday, and of course, the pre-Christmas ramp-up as well. At the third quarter, before the COVID pandemic, we hit 489,000 tons in that quarter, which was the highest ever until that point. We're still not quite at the peak that we've seen in cargo, but we expect to continue the growth in cargo because, as I mentioned earlier, there's more demand than supply in the market.
As the passenger flights come back, the belly hold capacity from those flights can be used by the airlines to sell this high-yielding cargo product that they have. On the far right-hand side, you'll see the number of employees. Unfortunately, obviously, we had to make some difficult decisions and cut back on the staffing as the pandemic hit. We did that very rapidly, starting in the fourth quarter of the year, right after the issues in China because of our operations there. We realized it was going to go very quickly across the region. Probably amongst Singapore companies, we were the first to make those cuts. We used to have, at the peak before COVID, 17,500 employees.
You can see that's way beyond this time series. The couple of quarters before this, we actually cut the most, then down to 14,000, and now we've been steady at about 11,000 for the last couple of quarters. We should expect that to increase now as we get more and more flights coming in, and we're gearing up for that. We like to think that because some of the productivity improvements and fundamental changes that we've made during the pandemic, investing in technology and process changes, that the ramp-up of employees will be more productive than it was in the past before COVID. We'll talk a bit more about that.
The other key aspect that I want to emphasize this morning, and the reason why I'm very confident about the future at SATS, is we have enhanced our market leadership position in Asia during the COVID pandemic. We were already the market leader in cargo with about 9% market share and in catering with about 12% market share across the region. We've been taking this opportunity because we were relatively better capitalized and more confident about our liquidity than some of our competitors. We were able to win market share during the pandemic. We've done that in two areas. One is aviation catering, where we've been able to win contracts steadily. Some of our international global competitors have pulled out of the region. For example, in India, two global competitors pulled out.
We were able to win those new contracts from them. As the ramp-up comes back, we expect our steady-state market share to be at a higher level than it was pre-COVID. The other thing we've done is we've continued to invest in the cargo operations. We've been building out in Saudi Arabia, even during the pandemic, and we now have three locations in Saudi Arabia as an example of our longer term view in terms of enhancing our market share. That's not all. You shouldn't look at these as just standalone sites. You should look at them as a network of sites which are linked together through technology.
We talk about the quality corridors, which have digital linkages between them using our new COSYS+ system in the cloud, which we've rebranded Cargo Insights, which shares data between ourselves, the airlines, the freight forwarders, and the agents in each market. In fact, in nine markets, also links into last mile providers that come to the airport, collect the e-commerce packages, and then go to the last mile. You can see that SATS is now creating a network across the region to add value to the individual operational excellence it brings to each cargo terminal and then linking those into last mile. That's very real. On the cold chain side, we've got additional certifications that distinguish us from our competitors in terms of our reputation and the excellence of our handling.
HACCP, for example, IATA certification, CEIV for pharmaceuticals, and then most recently, CEIV Fresh because there's been an increase in the demand for perishables as well. The first few corridors for CEIV Fresh were between Singapore and Hong Kong, and which you can imagine is a very active route as well. You should think of this as not only a picture of the leading market share provider for Asia, but also as a network that we've invested in to create value around the network. We've invested a lot in innovation, too. We acquired Monty's in the March, April of the first year of the pandemic, and a lot of people said, "Wow, that's quite bold of you to continue to do acquisitions during this period." We did it because we knew that the future is about innovation.
You can see the picture underneath that. It's actually Kerry proudly actually demonstrating some of the products from the ventures initiatives that we've launched. There was a press release this week about our ventures co-founded by EDB, so very grateful to EDB for that. But this is like corporate venturing, which has already, in our case, spun off a lot of very powerful, capabilities and new products. Next to that, at the bottom, you can see some of our Farmpride products that we've co-branded in a brand accelerator program. People like Boon Tong Kee, Bismillah, and this is Keng Eng Kee Seafood, I think, in here as well. These have gone on to Singapore Airlines to help them, you know, showcase the local favorites, which has been very popular.
It's also going into retail outlets in Singapore as well. Above that, this is a snapshot of the highly automated frozen capabilities that we've acquired in Food City in Thailand, which gives us more scope. In fact, we have won the onboard hospitality prize for both sustainable packaging, which was Monty's, and then also for innovation using sustainable packaging from Monty's for Singapore Airlines. In fact, they were those sealable sustainable boxes that you might have seen if you had breakfast here this morning. This is recognized not just in Asia, but on a global basis by these awards. Next to that, the Indian dish is signaling another announcement we made this week that we've done the groundbreaking on our new kitchen in Bengaluru.
This will be the largest central kitchen ever constructed in India by anybody. We hope to have that operational before March 2023. We've got below that's our cold chain facility in Saudi Arabia. We started in Dammam, in the Eastern Province, and then now we have both Jeddah and Riyadh. We're the only international operator to be allowed to do cargo handling in Saudi Arabia. Up until now, it's been only one local company doing that. That's a recognition of our reputation and the fact that we can link Saudi Arabia to this big network that we mentioned earlier. In security services, we did a pivot during the pandemic.
Most of our security services have come from aviation in the past, and we realized that the combination of technology and people that we've been already espousing for our aviation customers was very valuable to non-aviation as well. We've made big inroads in winning new contracts for non-aviation contracts, and we'll continue to do that. This is our new digital control tower where we bring customers in and we show them how we can help them optimize decision-making using Industry 4.0 techniques like IoT monitoring and helping make our people more productive as well, as you saw in the video from Vincent talking about the Mosaic launch that we've just done, which is a dynamic rostering system which allows our people to be rostered in real time.
The big message on this slide is that we haven't been standing still during the pandemic. We've actually made major investments in our capabilities in productivity and in service levels, which should help us as the volumes rebound. Here's the quarterly evolution of revenue and operating profit and expense. You can see the impact of the pandemic was most severe in the first quarter last year and has been recovering since then. You can also see that where there have been some increases in expenses as the jobs support scheme starts to taper off because this is net of those.
Also as we've had to engage with the authorities in terms of some quite time-consuming and delicate operations at the airport where we have to handle the operations in a very different way during the period of, you know, the zero COVID type approach to travel. The good news is that actually the authorities are now starting to relax some of those requirements in terms of handling. As the volumes come up in this current quarter with the Vaccinated Travel Lanes, there are some easier ways of operating. That should allow us to ramp up and acquire, you know, bring the manpower in at the right rate going forward. Here's the result in terms of the profit after tax and minority interests.
We've been trying to show you the core PATMI, so that's without the one-offs, impairments, and provisions. You can see where core PATMI in the middle and the PATMI diverge. During the period of the pandemic, we were making quite large provisions, and you can see that has ceased now, and there's a convergence of core PATMI and PATMI. Then you can also see the EBITDA. We are positive EBITDA. In fact, the EBITDA has continued to be positive, you can see here for five quarters. It shows the cash flow generation capability of SATS remains strong even under these very difficult circumstances. Still not quite positive without the government reliefs. You can see that gap is closing, but still not quite positive.
It's getting quite close now in terms of being EBITDA positive even after government relief. That's an important milestone because it influences our dividend policy. As we've said in the past, we feel that it's appropriate that we should be EBITDA positive after government reliefs and then also profitable after government reliefs without including government reliefs before we can begin to start paying dividends again. That's still our policy, but you can see, as I mentioned just earlier, that the EBITDA even not including government reliefs is almost in the positive territory. A bit more work to do on the PATMI side, but hopefully with the new volumes, that will not be too far off as well. We still got a very strong balance sheet.
Manfred took on additional liquidity during the crisis to make sure that we didn't have any issues. As I said, that was a really good decision because that gave us strength that our competitors don't have and allowed us to execute on some of these market share gains that I talked about earlier. We're still net cash by about SGD 150 million, so we have a lot of capacity still to for our growth strategy, which is really what it's all about. The main message I have today is that SATS is in a relatively stronger position than it was at the start of the pandemic. Our market share is higher, our capabilities are stronger, and our, relative to our competitors, we're also stronger.
We see many opportunities ahead of us. I personally am very confident in the leadership team. I'm delighted that Kerry is taking over from me. I think he'll make a really good President and CEO going forward. It's appropriate now that I let him do most of the work, I hand over to Kerry. Thank you very much.
Thank you, Alex. We'll now have our President and CEO-designate, Kerry Mok.
Good morning, everyone. I guess, unlike Alex, I don't know many of you guys, but I hope over the next few months I get to know you better and can share a bit more about what we're gonna do going forward. Let me quickly just share a bit about the overall strategy going forward for both Food as well as Gateway. Later on, I'll dive deeper into the Food Solution side, and then I'll pass on to Bob to talk a lot more about the Gateway portion. This slide encapsulate exactly what we're gonna go and focus on going forward in terms of SATS strategy. Really, on the left-hand side, what you see in Singapore, we really wanna establish market leadership.
I think, us being a Singapore company, we must be very strong in our home market, because being strong in home market gives you the ability to drive growth overseas. Therefore, we will continue to invest. You heard from what Alex said earlier, we have been investing a lot in digital capabilities. Not just in the Gateway side, but also in the Food side as well. This studio itself is one of our consumer insights that gives us a lot more know-how about how to come up with better food and types of food that consumers are looking for. For us, you know, in the past we've always worked with airlines and all that, but we're increasingly going more towards the consumer side.
This, as a food company, is important because if you understand trends and all that, you get early in the trends, you can actually help your customer succeed in food choices. That portion is something that we will continue to invest and strengthen. In Singapore, on the Food side, maybe many of you guys may not be aware of, we are the largest frozen food importer, poultry, in Singapore. You know, brands like Sadia and all that, you can actually see that in the supermarket. We are the largest in Singapore. We have a market share of about 40%-50%, in there, and that gives us scale in supply chain. As part of our strategy, we will continue to invest in that.
We also have Country Foods, which we bought 100% of it just before COVID, and that has been really good for Food because it allow us channels that we probably had struggled to get in the past. With Country Foods, we are distributing Food Services company. We are distributing to retail channels. We have trucks that deliver stuff to all our customers. From a supply chain standpoint, we already have that flow going. Now, adding on more products into the supply chain is the way to actually increase share of wallet, but at the same time improve your profitability as well. That is something that we'll continue to invest in and we have plans to actually scale up our operations here in Singapore as well.
Food innovation, as I mentioned, this is something that's important, but innovation is not just the insight side of things, it's also about the food technology. We are very, very conscious that, food technology, long shelf life extension is gonna be a critical component for Asia. When you look at the Asia market itself, you know, we talk about cold chain a lot, but the last mile cold chain is actually not very well developed still. For some of the food safety and all that, the cold chain component is actually important. We have been investing quite a bit in terms of long shelf life extension through ambient.
We think ambient food technology is gonna be very important for Asia going forward, particularly in Southeast Asia, where the cold chain may not be as mature as places like Australia and Japan. Of course, in Singapore, you know, during the pandemic, we have extended our security services. We have moved into a non-aviation security, and that has been a big help to our revenue growth as well as profitability. That will continue to drive that. We have got a license to do training as well in security services, so we intend to expand on that and grow that part of the services here in Singapore.
On the overseas side, clearly, you know, with our market leadership here, with the knowhow, domain knowhow we have here in Singapore, we are able to then take this knowhow and be more successful overseas, right? I mean, I don't know whether you have a chance to see some of the digital solutions we have in place, but those digital asset will allow us to go to markets and differentiate ourselves. How we work with our partners and all that will be very different because we're bringing real domain knowledge and assets that we can share with our joint venture partners. That's something that we believe is important for us as we develop our overseas growth.
Food, you would have heard Alex mention earlier, we have invested quite a bit of food capacity, but the one that I wanna highlight very critically is actually the one that we made in Thailand. You may ask why Thailand. Actually, we took a long time to decide whether is it Thailand or elsewhere, you know, Malaysia, Indonesia, but Thailand is actually the kitchen of the world. We picked Thailand because Thailand has a lot of licenses, agreements that it can export to European countries and all that. For food, the export ability is actually very important. We actually use Thailand as our main production factory going forward. It's gonna help us drive scale.
We've bought the company that gives us ability to scale up the facility to be a much bigger capacity than we have today. That Thai factory is gonna help us serve both aviation and non-aviation business as well, right? Now, once you have food production, what's next? You actually need channels. We have that channel here in Singapore through Country Foods. One of the key focus for us was actually expand on that channel distribution across Asia. When you have the ability to develop good food, you know, cost effective, as well as delicious food that people would like to have, but you need to have the distribution channel. We are very focused in developing that channel going forward.
This is again, something that will drive the food strategy as we look to expand across Southeast Asia. The last but not the least, the adjacent services. Again, cargo is a very important aspect. Not just the general cargo, but in particular the e-commerce side, as well as the perishable. These are the segments where we believe we have an advantage through the hub position that we have here in Singapore. I think importantly, we've been building a lot of relationship with both, and you'll hear that from Bob later. We've built relationship with the e-commerce players, with the postal guys, as well as integrators, and we think we can continue that model to actually drive that growth going forward.
Having the network connectivity plus the system will put us in a very different position compared to our competitors. Of course, end of the day, you know, we underpinned by core capabilities that we have here in Singapore. Around the culinary authenticity, and I hope you had a chance to taste some of food later on as well. The safety standard, I cannot overemphasize the safety standards that we emphasize a lot, not just on the Food side, but also on the aviation side as well. This is something that will hopefully set us apart from our competitors. Of course, we have invested a lot in supply chain. I think the last since I've been here, with SATS, we have been investing a lot in supply chain.
In fact, our supply chain system just went on live, you know, a couple of weeks ago, and we now have the basis to actually take that forward to our overseas unit as well. Thailand will be next, where we'll start to launch our new supply chain system into Thailand. What's our priorities going forward? I, you know, you heard me talk about, you know, aviation side, hub handling is very important. Again, Singapore is a key hub. We are, you know, I've always said this, to my colleagues as well, you know, best airport in the world. We work with the best airlines in the world.
You know, we have to be the best in the world, and we've got to set ourselves the standard to actually bring those standards to markets that we choose to compete in and differentiate ourselves. This is something that we will continue to focus on and take this forward. Aviation catering is an important part of our business. I’ll say this although it’s been in the doldrums for the last couple of years. We believe when it comes back, you know, it’s important. That channel for us is important to showcase product. Earlier, Alex mentioned about how we have now brought branded products onto the aviation sector. You think about it, for the last, what, 40 years, we have always had the same casserole and all that. I mean, you guys travel as well.
In future, we're gonna bring more branded products to interact with the consumer, and I think that will be something that is a differentiating factor for us as a airline caterer. Because the days where, you know, you just serve a normal meal and all that, I think the consumers, as we know, are getting more and more. Well, they demand a lot more. And now you have social media and all that. They want to have the latest food and trends. And we wanna build partners, bring some of these brands on board as well. And that's why, you know, we launched the announcement a couple of days ago around our ventures. The ventures component is gonna work with a lot of branded companies, and we're gonna help them utilize our know-how to actually develop the business going forward.
Those are things that not only affects the aviation side but also gives us the ability to penetrate to other segments. Whether we are serving food in the institutional catering or even in some of the retail channels, bringing branded product is gonna be something that's important for us. Of course, all these are supported by, like I said, supply chain as well as our tiered production. Maybe I'll give a little bit of update on tiered production later on in my Food segment. For cargo itself, I just wanna highlight that, like I said, cold chain, e-commerce, and security are things that we will continue to invest in and take that forward. Key enabler for us, very simple. The people and the culture is very important.
I think over this pandemic, we have spent a lot of investment in our people, and a lot of our people are now multi-trained so that when the volume comes back, we have a much better way to deploy our folks. We are looking at technology. I think technology is something that will differentiate us. I wanna highlight one point, which is partnership. As we expand overseas, whether that's India, that's China, that's Vietnam, we believe working with our local partners there is gonna help differentiate us. I think importantly, we can bring synergies into the local partnership, and that's gonna help us have the market access on ground. This is a bit of a breakdown on our numbers, right?
As you can see, in the first half, our travel versus non-travel is almost, you know, on par. Non-travel went up to about 47%. And if on the Food side, you can see a lot of non-travel revenue, right? Over 70% is actually non-travel. Large part of it is frankly, our Country Foods business that has been driving a lot of revenue growth for us. We've been able to, despite the pandemic, as you would have heard, you know, food, you know, getting food supplies and that was a big challenge. Because of our dominant position, we were able to increase our supply sources and therefore maintain that flow coming to Singapore. So that, I think, helped us to get some of the market share from competitors. You know, aviation side, you know, used to be the largest, now it's about 30%.
We will see that grow as long as passenger traffic comes back. Once that grows, you'll start to see the shift as well in terms of our margins as well. On the Gateway side, you know, one of the highlights for us, frankly, has been security and the crew side as well. Of course, cargo, without a doubt, has been the star for us. I think for many, you know, airlines and all that, cargo has been a shining light for them. We have seen that in SIA results yesterday as well. Now, going forward, what are we gonna do? Like I said, we are gonna focus a lot on channel development. We want to reach out to more channels, right, across Asia.
I'll talk a little bit later on about what we have done with Monty's and how the collaboration between Asia and Europe is starting to bear fruit as well. Of course, you will see cold chain is something that we will continue to invest in our joint ventures going forward. We'll bring the know-how, the certification into the places that we operate in. You'll see for food, Country Foods is gonna be at the tip of the spear for us, because it's gonna represent our consumer-facing brand going forward. A house of brands approach is what we're gonna focus on, and we'll be working with partners to drive more distribution products through Country Foods. I'll talk a little bit about how are we gonna, you know, drive that kind of growth.
If you look at the slide here, we have spent about, you know, SGD 700+ million over the last five years, both in terms of CapEx and investments, which is M&A and all that. You can see Singapore continues to take a large part of that, primarily, actually, in the Singapore hub itself, it is very asset heavy. The investments we put in is all to drive productivity gains. A lot of systems, investments and all that is actually to help us get there. That's why we're spending quite a fair bit in Singapore. You can see in terms of where we are focusing our investments is outside of Singapore. ASEAN is leading, about SGD 138 million. Of course, China is the next one, right?
India will be, you know, India. I think we are very bullish about India because our partner, the Tata Group, has just bought Air India. We believe that's gonna give us a lot of leverage as well as opportunity to be even bigger than what we are today in India. We have targeted SGD 1 billion over the next three years. You see quite a bit of that, we hope, you know, be more for M&A investments that will help expand our operations overseas. Just in terms of, I guess it's the first time we're sharing this. This is a target we set for ourselves, right? By FY 2022, we want to be about SGD 3 billion in terms of revenue.
We have set ourselves, you know, we say that by 2025, we think aviation is gonna come back to where we were in the past. The non-travel component will continue to drive that growth. There's questions around, "Oh, if aviation comes back, do we still wanna, you know, invest in non-travel?" The answer is absolutely yes, because in five years' time, our portfolio of our business must be one that is well-represented and one that gives us the diversity, the resiliency in terms of numbers. We have learned from the pandemic that we need to utilize our market leading position in aviation to try and drive growth elsewhere. We, as a team, have decided that we are gonna continue to focus on the non-travel side.
In terms of investments, there's a split between Food and Gateway of about 60/40. That's something that, you know, we have in our plans. Of course, when Target comes on board, you know, that the ratio may change. By and large, we have set aside some investment to drive our growth. SGD 3 billion is a target that we set for ourselves. You know, can we do better? That's something that I think as a leadership team will continue to evolve and move that along. By then you'll see that both for Food and Gateway will be something where it's a bit more spread out as well. In terms of travel, non-travel, you can see the shift from 14% to about 35% for non-travel.
Of course, not forgetting that by then aviation will come back, and therefore aviation will be at its full steam. I hope that gives you a bit of idea of general strategy of where we are going, where we're gonna focus on. Let me jump straight into the Food Solution side, right? I mean, obviously, I've spent the last three years working very, very much with my team and, you know, with the management team to drive this. If I may, you know, when you look at the food side, you know, individually in the past, we are very focused on one segment. But actually, when you tie all that together, we actually play across the food value chain.
From the time we bring proteins coming in, we do the processing value add, to the time we convert them to meals, all these are value-adding steps that actually allows us to take a clip on the profits, right? In the food business, it's about scale. If you do not have scale, then you're gonna struggle. Frankly, you know, we have seen many SMEs struggle to get the scale, struggle to invest in the right technology to drive the scale. Why is it that the CPs of the world is able to, you know, generate, you know, product at a certain price point? It's because they have a scale. They have a lot of channels out there. And of course, we're not gonna, you know, compete directly with these guys, but we're gonna bring our own flair into this, right?
Ours is about the right food technology, the right culinary skills that we have, and of course, food safety, very, very important. The food technology we're gonna put in place is gonna differentiate us from the market, and that's something that we believe is an advantage that most manufacturers do not have. We're not a food manufacturer. We are actually more of a food solutions company, and therefore utilizing our know-how across the value chain to differentiate ourselves. I will give you an example. In terms of raw materials, if you just do it in natura, which is a commodity play, but if we're able to do some value adds in terms of putting the spice and putting the flavorings, the value goes up.
We are gonna focus a lot more on such value-adding in the food value chain to take a clip more of the value that's generated. That allows us to then go into channels that we probably have not done in the past. It allows us to be responsive to the market. Places like this and Monty's allows us to understand consumer insight much better. I'll give you a bit of a case study later when I move on to the next few slides. Channel expansion. In Singapore today, if you go to some of the Cheers outlet, you'll start to see Country Foods European pastry. The bakery segment is something that throughout the pandemic we have focused on trying to build that category.
We believe the bakery category, again, leveraging on what we have done in the aviation side, we have expanded that into the retail channel, and we will continue to do that as well. This is the network that we have. You know, three key components in there, right? The strategic sourcing supply. We believe this is actually an advantage for SATS. The three-tier processing, as I mentioned, three-tier meaning the tier one being Thailand, high volume, lesser SKU. Central kitchen being more of a large batch but able to customize the food product. The third tier really is just assembly. That's how we're gonna drive scale through this model going forward.
This is something that we are already starting to work on here also in Singapore, because by redoing the whole supply chain, we can drive scale and get better efficiency going forward. In distribution channel, Southeast Asia, China, India, and Singapore is what we looked at. Now, you can see all the production capacity that we have put in place or going to put in place is quite a lot, right? You heard India is gonna be the largest central kitchen in India with modern technology as well. We believe that's gonna set us ourself apart from the other players that's out there in the market. The Singapore Global Innovation Centre, SATS Global Innovation Centre is made out of Singapore and U.K., and that's something that I'll explain next slide how it works.
I'm pleased to announce as well, because of the setup that we have with Monty's in U.K. as well as in Asia, and you know, we have been investing quite a fair bit together with Temasek on alternative protein. In fact, next week is the Agri-Food Week. We're gonna host event here for alternative protein. We have worked with Monty's, and we have developed a product. Well, relationship we've built in Singapore, we've brought the alternative protein into U.K. Monty's worked very hard to create a new product using the same raw material, and I'm pleased to say that in April next year, we will be supplying to Marks & Spencer across all of U.K. alternative protein product that was developed by Monty's.
You just imagine, because we're able to utilize the insight, and the U.K. retail market is not easy, but we found that actually alternative protein, there's a wide space in there, and handheld healthy snacks for alternative protein is something that is not as well developed. Asia is actually leading in terms of a lot of alternative protein product in Singapore. We're able to take the product, work with our team, both teams in Singapore and U.K., develop the design of it, the taste profile, and Marks & Spencer has agreed to take on those product. We are in the midst of looking for the production right now. In April next year we're gonna launch that across U.K. You just think about it. If I can do it in U.K., I can do it in Australia, I can do it many places.
We want to use food innovation as a means to drive more products going forward. You can see, you know, house of brand is gonna be something that's important for us because branding, you know, is gonna set us apart from just being a commodity play. By utilizing all our production facility, we're gonna try and target the various channels through the consumer side, right? Food is food, and if I can utilize the same food to supply into multiple channel, that's how you're gonna get scale. Innovation is gonna be key, and I just wanna say a few things. Future food is important for us. We will focus on future foods, which is new technology and alternate protein. We think that's gonna be critical. Digitalization, we are spending quite a bit of time and effort on digitalization.
Our supply chain will have digital control tower as well as we manage our production across the region. Sustainability is gonna be very critical. We have a chance to actually reset some of our assets here in Singapore to be more sustainable. That's something that we will continue to invest in to make sure that when it comes to food waste and all that, we will be in a market leading position. Last but not the least, corporate venturing. We believe this is gonna help us differentiate ourselves. When we do venturing, it's not just SATS alone, but it's about creating an ecosystem, working in startups, working with other companies to come together to drive new business concepts. This is something that I personally believe is gonna help differentiate against SATS and find new opportunity for us.
With that, I took up a bit more of your time, Bob.
Yeah.
I'll pass it on to you.
Thank you, Kerry. We now have Bob, our Chief Operating Officer of Gateway Services. Bob, please.
Okay. Good morning, ladies and gentlemen. It's a pleasure to be here. I think we've got quite a lot to exhaust, so I'll try to make it short and sharp for the Gateway Services side. Essentially, this is a snapshot of our imperatives that the Gateway Services will be focusing on. Very simple. Strategy number one, we need to continue to build our capability, the foundation. We need to strengthen our core competencies, and we need to develop new, unique selling points to be able to cater to new customer base. How we do it is by leveraging on technology, obviously, digitization, and also our people, which is most important in our industry. How are we going to accomplish this goal? Three goals that we want to accomplish. Number one, market leadership, as what Kerry has mentioned, is so important.
Singapore Airlines is our base carrier. We need to prepare for the rebound. Therefore, this is our key priority. We are focusing on that because this is most important for us. Secondly, we need to modernize our operation. One of the ways of modernizing is none other than, as you can see, is digitization. Despite the pandemic, as you can see the show and tell outside there, we've done lots of projects, from manpower deployment to cargo insights and so on and so forth. All of them is for our future to be able to provide more visibility, better decision-making, and ultimately, we also want to ensure that we can drive productivity through our use of digitization.
Finally, when we have all these new capabilities and unique selling points, the idea is to be able to replicate them to all our JVs overseas and wherever we are present. The next strategy, obviously, is to focus, to nurture, and to propel the growth and investments that we've made overseas. That is another growth strategy that we have. I'm pleased to let you know that there have been several developments, especially in the cargo space. We are building the new terminal facilities in Riyadh as well as in Jeddah that will be completed in 2022 and 2024. Over and above that, we are also going to expand our CTO presence in Malaysia beyond just KL, but also in Penang and also in Kota Kinabalu.
Because these are international airports, one at the north part of West Malaysia and the other one in East Malaysia. These are some of the key developments. Finally, the third strategy is none other than can we expand our repertoire to include other businesses? That's where the cargo verticals come in. E-commerce, everybody talks about e-commerce. It's just booming, and we have a piece to play in that. Similarly, for medical products, perishables, it is also booming, the transport of vaccines and so on and so forth. We are also part of that whole value chain, logistics. Finally, we spoke a little bit about the opportunity that's available at the security space. Let me just give a bit more detail on how we plan to grow in these new cargo verticals.
First and foremost, I think traditionally, our core customer has always been the airlines. Actually, throughout the air cargo value space, similar for food, I think we are following quite similar to food. Are we able to expand our value chain, our customer base, by serving and providing value-added services to the players in the air cargo value chain? For instance, the e-commerce platform players, as you know, they are rather big at the current moment. How about the brand owners? Also, the integrators, they are now doing booming business nowadays, carrying a lot of e-commerce products. And finally, the freight forwarders. How are we planning to do it? This is the capability that I have. Number one, where we are positioned. We are in the Singapore hub.
Over and above that, we are also in a network where all the centers are growth centers for e-commerce, growth centers for pharmaceutical. We are in the right location. Secondly, we are also unique. Unique because we are at the air side. Being at the air side means one advantage. We will be the first to be able to intercept any shipment that comes in. When we can intercept that shipment, we will be able to provide what we call quick transfers, be able to do value-adding services at the airport itself. The benefit to the customers is none other than, number one, we are able to reduce cycle time. Number two, we'll be able to reduce duplication of work and therefore costs. Number three, we'll be able to provide track and trace, which currently many are unable to provide in the middle mile.
That is the key advantages and therefore critical for the success of the e-commerce market. Ladies and gentlemen, what has happened is this is not just talk. We have been able to do some work. We are working with Cainiao, which as you know is the key logistics arm for Taobao, Lazada, and Tmall. We are doing some sortation work and scanning work for them here in Singapore. We're also beginning to do some work for Shopee, another big e-commerce platform player. I'm also pleased to say that we've developed a collaborative relationship with ZTO Express, and we are now handling their flights here in Singapore, carrying most likely e-commerce product and express products.
At the end of the day, what we are going to do is we're gonna replicate this all over the place because Singapore cannot be operating in isolation, and we would need to have that network synergy. That's where I'm coming from. We need to then harness this network strategy across where we are present. How we do it is very simple. We replicate what we have in Singapore overseas. We develop what we call quality corridors wherever we are present, not only in our network, but we are working with the hub carriers like Singapore Airlines and talk to their partners overseas to be able to develop these quality corridors. This will be categorized by, number one, high quality infrastructure. That's what Alex have mentioned.
We're gonna build facilities with the right certification and be able to provide track and trace capabilities. That's at the end of the day this network strategy has got one goal. It is to promote, to aggregate, and to drive volumes through our CTOs. Finally, for security, we've already mentioned that it's been the most resilient together with cargo, and this has opened our eyes to the opportunity that security offers in the non-aviation, aviation space. I'll let the video do the talking. Thank you very much. Handling complex airport operations require real-time information for quick decision-making. We have data coming from operations located in different parts of Singapore and also overseas. Our system has to be interoperable with our customer system to enable centralized monitoring and localized response.
We have built integrated command centers in several of our operations to provide us with centralized monitoring capability. We've leveraged on smart technologies such as the digital twin, artificial intelligence with machine learning capability, Internet of Things, and smart glasses in our operations.
At the nerve center of SATS security operations, technology is used to automate processes, enabling our officers to effectively manage command and control operations. Information streams from all the connected systems are processed in real time to generate centralized situation awareness that enables critical decision-making. The system in SATS Central Command Center, Cargo and Security Command Center, or CSCC, is connected to various systems in different locations. These include the vehicle management system. It uses automated number plate recognition solutions to allow pre-registered cars access. The under-vehicle surveillance system detects and alerts threats in seconds while ensuring smooth traffic flow.
Thank you, Bob. I'd now like to invite our strategy and sustainability officer, Spencer, to give his presentation. Spencer, please.
Good morning, ladies and gentlemen. Before providing you with details on how SATS is endeavoring to be, to become a more sustainable business, I'd like to share with you, if I may, how SATS has refreshed our purpose, vision, mission, and values, which you see summarized on this slide here. Sustainability is fundamental to our purpose to feed and connect communities, and also to our vision to be the market leader by delighting customers with innovative Food Solutions and seamless connections. SATS monitors and provides disclosure on a wide range of ESG-related topics as part of the GRI framework. However, in support of our purpose, vision, and mission, our sustainability framework calls out three overarching themes, which represent areas which are where SATS can make a distinctive and material impact and are closely aligned with our strategic priorities. They are, firstly, developing smart infrastructure.
Second, reducing food and packaging waste. Third, nurture skills for the future. These three themes support four United Nations Sustainable Development Goals, which are relevant to SATS business, and we have set and are reporting on quantified goals for 2030 or earlier. Now, the first two themes relate directly to our responsibility to prepare for a low carbon future. Our Scope 1 and 2 emissions, according to the GHG Protocol, have gone down by 45% in the most recent fiscal year. We are cognizant of the fact that this is due to the drop in volume during the COVID pandemic. To stay focused on our commitment to decarbonize by 50% by 2030, when volumes are expected to have recovered, we are focused on carbon intensity as a management KPI.
We are also in the midst of engaging external advisors to assess and manage our Scope 3 emissions, especially along our food business supply chain. On the third theme, nurture skills for the future, we aim to develop and share our culinary, nutritional service, and technological expertise to enable our people in the communities we serve to develop to their fullest potential. SATS is present in over 55 locations across 14 countries. However, as a Singapore-based company, our carbon footprint is still primarily in Singapore, accounting for almost 80% of our use of energy and our emissions. While the bulk of our efforts are therefore on our environmental footprint in Singapore, we are coordinating our initiatives and best practices across the network through our sustainability council.
SATS is committed to reducing our Singapore origin carbon emissions by 50% by 2030 as measured against a baseline of 2018 of 90,000 tons of carbon dioxide equivalent. Scope 1 and 2 represent approximately half of this baseline. By electrifying 100% of our ground support equipment by 2030, we expect to reduce 11,000 tons of CO₂ equivalent in direct Scope 1 emissions. By intensifying a deployment of solar panels across the rooftop surface facilities, we will reduce over 5,000 tons of CO₂ equivalent in Scope 2 emissions. Another 11,000 tons will be reduced through smart infrastructure, for example, high-efficiency cooking equipment as well as the deployment of advanced building management systems. At this current point in time, our carbon reduction roadmap has a gap of 17,000 tons of CO₂ equivalent.
The SATS management team and the sustainability council are working on identifying the pathways to address this gap. Now, some of the pathways will have a degree of dependency on an ecosystem approach, such as with the aviation partners at Changi Airport, and in terms of the planned reductions in the emission factor in the national grid. Now, SATS has made important progress with our environmental initiatives that you see on this slide here. These are described in detail in our latest sustainability report. Now, of our highlight would be the expansion of our renewable energy infrastructure, which will actually see the 10,000 MWh of solar energy being generated annually.
This represents over 50,000 sq m of solar panels, which is actually the equivalent of more than seven soccer fields across the rooftops of our facilities at Changi Airport. This power is able to supply almost 60% of our building electricity needs across our air freight terminals one to four. SATS was also the first in Singapore to install hybrid solar thermal panels. This prototype on the rooftop of our in-flight catering center number one is able to not only convert solar energy into electricity, but also pre-heat water for use in our production kitchens. To operationalize our drive to reduce our carbon footprint, SATS has adopted carbon intensity as a key metric that is tied to management compensation. The three areas of focus are the carbon intensity for meals produced, for flight turnarounds, and for cargo tonnage handled.
In each of these areas, key projects are being implemented this fiscal year to reduce carbon intensity. In addition to electrification and solarization, these projects extend to waste-to-energy applications, as well as the optimization of the cooling infrastructure at our Coolport. In addition to our environmental responsibilities, SATS aims to promote and advance sustainable and inclusive economic growth, full and productive employment, and decent work for all. This relates to the United Nations SDG 8. To this end, our ambition is to increase by 50% the average value added per employee across our subsidiaries globally, even as SATS expands our business outside of Singapore. The baseline for this goal is the SGD 27,000 achieved in 2020. SATS also strives to touch lives by sharing our expertise in culinary, nutritional service, and technology areas with the communities in which we operate.
We are donating our human capital to encourage the building of capabilities, to embed citizenship in our business operations, to empower healthier communities, and to enable collaborations. Now, in addition to these two commitments, engaging employees, growing internal talent, and promoting diversity at SATS are also important aspects of being a sustainable business. Finally, on the governance front, SATS is very honored to have been recognized by the Singapore Governance and Transparency Index and the SIAS in this past year for our corporate governance. The SGTI is a collaboration between the Singapore Institute of Directors, the National University of Singapore Business School, and CPA Australia, and is the leading index for assessing the corporate governance performance of listed Singapore companies. SIAS is the Securities Investors Association (Singapore), which represents retail investors and is the largest organized investor group in Asia.
In conclusion, SATS continues to accelerate our ESG progress, to carry out our purpose to feed and connect communities. We realize the importance of sustainability to our stakeholders, including our shareholders. With that, I'd like to introduce SATS Chief Financial Officer, Mr. Manfred Seah, to take us through our group financial review. Thank you.
Thank you, Spencer. Good morning, all of you. It's good to see you. Some of you I've not met for almost two years in person. I always like CMD, Capital Markets Day, because I've got all my colleagues here to answer all the difficult questions for me afterwards. Nonetheless, SATS revenue improved by about 27% to about SGD 294 million for the second quarter. This compares against last year now mainly due to non-travel cargo, as mentioned by Alex earlier, as well as security services. Our PATMI came in slightly higher at about SGD 6.8 million.
This is the third consecutive quarter that we are having positive results. We recognize a total relief of about SGD 39 million post-tax for the quarter, and without which, our loss would have been about SGD 30 million. Our share of results actually came in SGD 15 million better than same time last year to register a profit of about SGD 2.1 million compared to losses of the last two quarters. EBITDA remained positive at about SGD 32.8 million, and EPS improved SGD 3.6 cents to about SGD 0.6 cents per share. Okay. As mentioned, our revenue expanded by about SGD 63 million, and this contributed mainly by travel.
Travel came in about SGD 36 million-SGD 37 million more, grew about 31%, and then non-travel grew also about 30%, 27% to be exact, to about SGD 29 million. OpEx-wise, our OpEx increase was mainly due to staff costs, number one, and raw material costs because of the expanded volume business. The staff cost increase was largely due to a lower grant that we have received and also contract services that we have to engage for the implementation of higher safety measures in Changi. As I mentioned earlier, our share of results came in about SGD 15 million better to about SGD 2.1 million positive and PATMI of about SGD 6.8 million.
PATMI, if you look at the core PATMI last year, if you recall, we actually have a one-off impairment of about SGD 31 million. Nonetheless, you know, our PATMI actually, core PATMI actually increased about SGD 9 million, SGD 8.4 million to be exact. Okay? First half results, our first half results, revenue expanded by about 29%. Gateway, both Gateway and Food actually grew. Our travel revenue grew about 36% and non-travel about 25%. Likewise, similar to second quarter, the staff costs featured as the largest increase in OPEX. That is about SGD 57 million more.
This is due to 84% of that is actually due to a lower relief that we received for the first six months. Share results actually reversed a loss of about SGD 44 million in the first half of last year. There's a swing factor of about SGD 45 million. Our PATMI, if you look at the core PATMI, came in about SGD 13.2 million. This is about SGD 60 million better off than FY 2021, first half of FY 2021. Okay. I thought I'd show you the time series of six quarters. If you look at the revenue, you know, revenue stepped up kind of improved gradually. It's not a hockey stick.
We know that the aviation is still quite badly affected. We were able to reverse the loss of the share of results from associates. What's interesting here, which we actually track very closely, is actually on the right-hand side in the middle, the middle time series here called core PATMI ex relief. Without relief, at the start of the pandemic, the first quarter of FY 2021, we actually lost about SGD 106 million, and that gradually, quarter by quarter, actually improved. We registered a loss of about SGD 30.1 million this year without relief. EBITDA wise, as Alex has mentioned, this is the fifth quarter that we are recording positive EBITDA. Just maybe a note.
I think the results were due to three key factors. One is obviously the gradual recovery of aviation. Kerry and team, together with Bob, looked at you know what else can we do in the non-travel side. The expansion of the non-travel business has actually yielded results. The third one is actually management has always constantly been intensely involved in looking at ways of resizing the operation, rationalizing group-wide, basically, not just Singapore, all our JVs and also associates overseas as well, to look at cost measures to implement. Yeah. On a segmental side, I won't spend too much time here. You look at the revenue-wise by business, Food and Gateway grew. Food grew 16.8%.
Gateway actually grew about 48.4%. This is actually a year-on-year for second quarter growth. Gateway grew faster simply because of the cargo fee, the cargo component and the security component. Whereas Food is more on the non-travel food side. Today the distribution is about 55% food and 45% food. This is actually quite similar to pre-COVID kind of percentage. Now, we have also added the segmentation by industry. Instead of looking at aviation, non-aviation, we look at travel, non-travel. Travel here actually comprises the aviation business plus the cruise business. Non-travel is everything else. You look at the travel, the second quarter is about SGD 155 million.
I just wanted to maybe remind you that, you know, this portion two years, exactly two years ago, this was about SGD 420 million. There was a very severe drop because of the pandemic. To be exact, about 77% drop, right? What we have been doing is really to look at, you know, how to pivot out, how to very quickly gear up the non-travel side. Today, the non-travel contributes about 47%. Now, if you recall the earlier slide that Kerry has presented, what we are looking at, you know, is actually to create a certain tension to continue to grow the non-travel, right?
To keep it as close to the travel as possible, and then I think we'll do very well when travel resumes back to its original level. We are looking at, you know, maybe 35%-40% non-travel going forward. Then if when travel comes back, that basically will expand the revenue. Our concentration then will not be so much on the aviation side. Yeah. I won't go through this slide. It's more or less the same profile as the second quarter data. Okay. Just a quick word on the group expenditure. You see that in the second quarter, our expenditure grew about 27%, SGD 62 million. I think some of you will be concerned, you know, this thing is expanding very fast.
Actually, this is attributed to three key ones, right? Staff costs, raw material and license fees are correlated to business volume. Certain parts of staff costs are as well, but maybe the next slide will. Sorry. Yeah. Of the staff cost increase, here of about SGD 39 million, about SGD 24 million of this was due to the lesser relief in this year compared to last year. If you look at it, what does it mean for the first six months? I think the first six months we are talking about a difference of almost SGD 66 million total relief short of last year, right? For the first six months.
For the first quarter is about SGD 40 million. Yeah. Raw materials is, as I said, actually correlated to business volume. Now the other operating expenses increase was due to fuel costs and some professional fees. A quick slide on associates and JV. We mentioned earlier that for the second quarter, there was a favorable variance compared to same period last year of about SGD 15 million. For the first six months, it'll be about SGD 45 million favorable variance. Indeed, all our associates and JVs are generally improving in results, and we are confident that this momentum will continue. This is largely also due to the cargo units are doing much better than others, as Alex has mentioned earlier.
What we'd like to see is actually when travel restrictions are lifted, more people are traveling, then the food side will come back. The food was the worst affected of the three segments between food, cargo, and ground. Actually, cargo did best, yeah. Food will be languishing until the recovery comes back. Okay. This slide basically shows the consolidated revenue relative to the SATS share of revenue. Both sets of revenue actually grew about 27%. For consolidated, it's about SGD 294 million. Then the SATS share of revenue, if you take into consideration all our share of the revenue of Associates and JVs, it will increase to about SGD 378 million.
You can see that year-on-year growth, all these are showing positive results with the exception of ASEAN ex Singapore. That is more because of the GTR effect, yeah, in Malaysia, the MCO. On the right-hand side is the share of PATMI, and some of you may be wondering why is Singapore showing a decline? The reason here, as I mentioned earlier, was because of the relief, lower relief received this quarter compared to last year. Okay. So here at the bottom right-hand side, you see that Singapore continue to be profitable. I think there's an improvement in the India. This is largely because of the cargo units doing better. Yeah.
Nonetheless, you look at the results performance, you see that, you know, we are seeing improvement across the region. Okay. Now, on the balance sheet, I won't go into this very much because Alex has already touched on this. Cash position is positive. If you back out the total loans and borrowing, we have about SGD 540 million of that, and our net cash position is still about SGD 150 million. Yeah. Gearing is about 0.47. This is a gross gearing. Total assets dropped about SGD 140 million. This is because of that, and that is in tandem with the total reduction of debt as well.
This was because we repaid a term loan of SGD 150 million. Okay? I won't go through this balance sheet. I'll leave you to read this. Cash flow. Our net cash actually declined by about SGD 194 million. This is due to basically a repayment of the term loan of SGD 150 million. We had some capital investment for the period of about SGD 30 million. You'll see that actually we have a negative operating outflow. Some of you may be concerned why is this negative? This is because of some delayed collection of ARS, which came in a little bit late.
As a result of that, we actually registered a free cash flow of about -SGD 40 million, but this is simply because of timing. With that, I'm gonna hand you back to Kerry, who will take us through the outlook. We're privileged today because we have two PCOs in the room today.
Thank you, Manfred.
Thank you.
Thank you. Let me jump straight into the outlook statement. Look, with the designated travel lanes coming back, definitely is good news for us. I think two things. One is from a passenger load standpoint, we can see some increase and of course, there's pent-up demand from a lot of Singapore folks here all wanting to travel. That VTL will be useful for us, although it's not gonna be the one that gives us the best benefit because of the capacity limit on each of the VTL lanes. The best news will be when the VTL restriction is removed, then I think you can see a lot more.
Having said that, with more passenger flights coming, I think Alex alluded to it as well, the belly space for cargo will be increased, and with that, our yield for cargo should be better. We believe that will help us going forward. We continue to invest a lot in the whole innovation that you saw from the video earlier. We believe that's gonna help us be more efficient. It's gonna give us better relationship with our customers as well, create a more sticky relationship, which is obviously very important. The investments we made in both Saudi, right, in especially Riyadh and Jeddah, is gonna help us expand going forward. That's gonna be very important for us. We continue to invest a lot more on the food side of this.
The whole food accelerator, the innovation will continue to drive hopefully new products as we expand our channels. That the branded component, as I mentioned, for us is very critical because it actually differentiates our product and it gives us a lot more well, a lot more customer satisfaction, which is important, which means you know our customers will be more willing to buy our services. Of course, new segments you know the investments we are making in China as well as India is gonna help bring new revenue growth. Of course, that's gonna take time for the capacity come on board. We're not stopping. In India, we're not just relying on our own capacity. We are already working with outsource partners to help drive some of our products going forward.
We are looking at opportunities now to actually accelerate that while we are building our kitchen. We're not standing still, waiting for the business to come, while we build our capacity. Hopefully that will continue to help us drive our non-travel related growth numbers going forward. It's something I think Manfred alluded as well. As a team, we are very, very focused to wanting to drive that part of the revenue because over the next few years, while aviation comes back, we need the non-travel revenue to be a strong growth for us going forward. Maybe with that, it's more for Q&A.
Thank you, Kerry. I'd now like to invite our management team to join Kerry on stage for the Q&As. Okay, thank you. We will now take questions on the floor. Please state your name and your brokerage or company for the record. Thank you.
Thank you.
Thanks, management team. I'm Terence from Phillip Securities Research. I was hoping you could give us a little bit more insights on your SGD 3 billion revenue target for 2025. Just two questions. How much of this do you see will come from M&A? The second question is, does the management team have any margin target for 2025 as well? Grateful for any insights. Thank you.
Why don't you take the first one?
Yeah. Now, I think if you can just bring back the slide. In terms of the revenue side, you can see we are assuming that the travel side will come back to about SGD 1 billion, then the growth of the non-travel will be another about SGD 300 million-SGD 400 million. The rest of it will be the M&A side. Yeah.
Yeah. The second one, we're not giving margin guidance.
Yeah.
We haven't been doing that, and we won't start to do that. You can see that on the airline catering side, which has traditionally had margins in the mid-teens, it's way below that currently. A lot of that's volume-based because the kitchens have high operating leverage. You would expect that the margin there should start to recover as the operating leverage returns.
Kerry's food strategy, as you heard, is very much focused on scale and operating leverage. For the non-travel food, we have said in the past that if you look at industry comparables, the industry operates around a high single-digit margin. It also operates at a high asset turn level, higher asset turns than aviation catering. What we would focus on as investors, and you're investors too, what we focus on as we invest our capital, is that the return on invested capital can be as good as the aviation catering, as long as we keep the asset turns high.
Because of the large scale focus of the food strategy, we do expect higher asset turns in the new non-travel related food business, despite the fact that the margins will tend to be a bit lower, as I mentioned.
Yeah. I think just to add on, in the non-travel side, the scaling is very important for us. Therefore, market access, and in driving that through the production scale that we've built is gonna help us get the kind of profits going forward. That's what we are hoping to push going forward. That also have a knock-on effect on our travel business, because there are things that we can take from some of these production capacity, and we can feed that into our location without, you know, spending additional CapEx to actually do on-site production.
Yeah.
Like, maybe I can just add, for avoidance of doubt, this is purely a target, right? SGD 3 billion. This is not a kind of a. There's no exact science to this. The assumption here is aviation comes back to what it was before, and if it does, it's about SGD 1.8 billion. Then we step up, you know, roughly 30%-40% of that, and the remaining is M&A—
Mm.
— that we are targeting. Yeah.
Any other questions from the floor?
Hi. Morning. Thank you for having us today and serving us yummy food. I'm Siew Khee from CGS-CIMB. I just have, like, three questions to begin with. What is your ROE target by 2025? That's the first one. Also maybe just touch on your SGD 1 billion investment. Maybe just give us some color on the geography, or is it gonna be just building new kitchens like, or taking over new kitchens? Just more color on the investment. That's the second one. The second one, 2B, would be the returns for that you expect from this investment.
For recovery, now that we're having more details, do you actually have a sense of when do you think food travel will be in terms of percentage of where it will be versus pre-COVID in the next 12 months? I know that you actually have some, like g radual recovery, but what is a sensible recovery for travel food in the next 12 months?
All right. Maybe I'll take a couple of these questions and then maybe Alex and Kerry can add to it. In terms of ROE, I think ROE before pre-pandemic days, you know, we were ranging between 13%-15%, thereabout. There's no reason to believe that we can't achieve that. Although, you know, the revenue expansion that we are targeting, you know, the quality of a margin of some of these segments that may be lower, but what we hope to do is actually to ensure that the asset turn is there.
Mm.
That the ROE, the return side is not compromised. Yeah. I think we are given the initiatives that both food and cargo has put out. We believe that we are able to have that kind of productivity and operating leverage to generate that kind of a return. Now, in respect to the SGD 1 billion investment, if you just track our maintenance CapEx, it's generally about SGD 60 million-SGD 70 million on a yearly basis. If you do 3x of that, it will be, you know, SGD 200 million to anything between SGD 200 million and SGD 240 million, and then the balance would be on the M&A. Again, on the M&A side, I would say that there's no exact science there.
There's a pipeline of deals that we are looking at. We have always guided the market to say that, "Look, you know, we are pivoting into the segments that we believe will actually build our regional competitiveness and market share." One is on the food, the other one is actually on the cargo side. So, there's no specific proportion, but, as Kerry has guided, we are looking at maybe a 40%-60%, roughly. Yeah.
I don't know whether Kerry and Alex.
No. I—
Yeah.
I think, well, just to add on, I think the quality of the earnings. I think we are very conscious of the fact that ROE is a measure that we put in our mind. The asset turn in our new business is gonna be critical. As you drive more scale in those segments that we choose, the asset turn has to be much better than what we do in the aviation side. You look in the past, our aviation business used to be obviously good margins in a sense, but then our CapEx into managing those businesses actually pretty high.
Mm-hmm.
When you compare against the asset turn, it's actually not as good as what it can be. That's the nature of the business that we do. Which is why it's very important as we move forward, we have to balance that in terms of the margin versus the asset turn, and therefore maintain the ROE that we're gonna try and achieve.
Yeah.
I think the third question is about.
The VTL.
Yeah, the VTL question. So I can't really hear properly. Could you just repeat that one more time?
Okay. Look, we are obviously crystal ball gazing in terms of VTL. We firstly welcome the VTLs coming back because I think, as I mentioned, it's good that it gives us. It will help in our cargo business as well. On the food side, primarily because of the capacity limit, we've got to be careful because there's a limit to the number, and that limit actually prevents us from doing more, right? Just for example, recently, I think when we did launch the whole Germany thing, it was only 3,000 per day, although the flights are there, but there's a limited number that's coming in.
We are very hopeful that with the Australia side of things opening up, we are quite hopeful because Australian side is more for the Australian citizens going back, and that is traditionally a very key route for us in the past. We're hoping that will give us some benefit over the next few months as well. Going forward, we are cautiously optimistic. Now, I think the news around in Europe where we are removed from the white list, we got to watch that, right? Because if they're gonna put quarantine orders on Singaporeans going over or people from Singapore going over, that is gonna put a damper to the travel.
If Singapore continues to recover and there's no, you know, major changes to the numbers, then I think we can hopefully see the re-releasing of more VTLs, which we believe will come, and we're ready for the growth, right? Because we set our team in place, and when it comes back, we're ready to take on the growth. So fingers crossed, I in terms of how we're gonna move forward. Yeah. Next, question.
Yeah. I think one, just one aspect that Kerry didn't cover is Malaysia. Malaysia is very important for us. We have a subsidiary GTR there, where the base carrier is AirAsia, and we operate across more than a dozen airports. Before COVID, the volumes in Malaysia were becoming almost as large as those in Singapore.
Mm.
I think the relaxation of measures in Malaysia is also very important for us financially. Then the other one to look at is Japan, where we have TFK SATS over in Japan. Of course, as the Japan measures start to relax, that will also benefit the margins as well.
I maybe just touch on Japan a little bit. Pre-COVID, we actually invested in additional capacity in Haneda. We believe Haneda's growth will have a beneficial impact to our business in Japan. We have SIA access, and the second facility we have is just right beside our current facility. Frankly, pre-COVID, with all the airlines, international airlines moving from Narita into Haneda, it was actually gonna give us a lot of that scale. We needed the capacity in order to get those business on-site. When Japan recovers, and we believe Japan will recover, we are well-placed to actually take on a lot more volumes out of Haneda Airport.
Yeah. If I may add, the one wildcard geography would be China, both for the domestic business as well as the very large international flights.
Mm.
We are watching this very carefully, as there's a lot of news about the Chinese government position on this, but for now, our expectations are still muted.
Maybe just since you brought China, I'll touch a little bit on China, how I think we have pivoted a little bit in China. You recall that we made an investment in a aviation frozen meal company called Nanjing Weizhou. That company has been benefiting quite a fair bit from the growth of the domestic air. Of course, now with the recent surge in China, we are a little bit cautious. When it comes back, we are well-placed to take on that growth because that's primarily focused on China domestic. In fact, during the pandemic, that unit has been the one that's been most resilient.
We were able to turn in profits for our food side, and that's the only one that we were, you know, benefiting from the aviation growth, but within the China domestic market. When it comes back, in fact, during this time we have also expanded those the Tier 2, Tier 3 airports as well. We started to establish some of this location during this pandemic because of the fact that we have this frozen meal factory that we can supply around China without increasing CapEx within those airports.
Thank you, Kerry . We have a follow-up question from Siew Khee from CIMB, followed by Louis from Credit Suisse. Siew Khee, please.
Thank you. Just to touch on the asset turn, what are the key measures that you'll be looking at? 'Cause you said that, you know, you'll be looking at asset turn for non aviation business, but what are the indicators that we should be looking at or you will be giving to us?
You're talking about, sorry, asset turns, right? Yeah. Yeah. Basically, it's very simple. The CapEx we put in and the returns that we get from the CapEx that we put in for that segment of the business is what we look at. We're looking more for, you know, if I put in, say, SGD 100 million, we're looking for more returns generated, right? Although the margins may be lesser, but we're looking at the absolute component, right, that it generates from the CapEx investment. It's really about investment on return on investment for that CapEx, ROIC.
Uh, may-
Um-
If I may, a major driver of that would be large batch production.
Yeah.
'Cause the larger the batches, the better the turn. That would be one internal metric that we'll be looking at.
I think to begin with, and just to add to what my two colleagues saying, you know, the businesses that we're going in has got to be of a certain scale, critical scale for the operating leverage to come into play. You know, it is important that, you know, all the investments that we do going forward, it has to be scrutinized to look at how it fits into our general strategy. You know, Kerry mentioned about the hubbing, right? That's important. If we go into a particular market, are those segments big enough? You know, otherwise it would not be worthwhile. Yeah.
Thank you. We now have Louis from Credit Suisse.
Hi. Morning. It feels good to be back in this environment again. I have three pretty long-winded questions, if I may. The first is more in relation to staff costs. If I look at the numbers comparing a year-on-year basis, it seems that the staff costs has been relatively comparable, even though the headcount has actually come down quite significantly from about 13,000 to 14,000 to about 11,000. As you move towards your next calendar year and also back towards 2019 levels, in terms of us thinking about the headcount that you require, that you're budgeting for next year and for a full recovery, what would that headcount level be? Since I think Alex, in the past, has always talked about doing more with less people given productivity investments.
Also from a dollar staff cost perspective, you know, given that you may need to pay your people a bit more, how should we think about the so-called staff cost-to-income ratio when it comes back to a full recovery? That's the first one. Second, in terms of the revenue targets, I think in the past you gave some breakdowns for Food Solutions business and the Gateway. Food in the past used to be 70%-80% travel related. Within Gateway, I think it was two-thirds ground handling, one-third cargo. FY 2025, some sense of what that mix would be like. Thirdly, if I think back at 2019's Capital Markets Day, I think there was a similar SGD 1 billion investment over the next three-year target, and obviously COVID derailed everything.
If I were to think about, let's say in, you know, FY 2020, I think, the investments was relatively modest. I think just about close to SGD 100 million or so of new investments excluding maintenance CapEx. If an investor were to ask me, you know, this time why is it different in terms of this SGD 1 billion in three years target, how should we respond to that?
Thank you, Louis.
Okay, the first one is on the staff costs. I think you, Louis, if you look at staff costs ex reliefs, it gives a more accurate picture of the ramp-up trends that you should expect going forward. In particular, you can see that staff costs in this first and second quarter, although they've increased, they've increased at a lower rate than the revenue. This is the trend that we expect to continue on an underlying basis. In the second quarter and first quarter, we had extra safety measures at Changi Airport. I think Bob mentioned this earlier, and so did Manfred. That meant that we couldn't be as productive as we should be under normal operating conditions.
Those operating conditions are now being relaxed so that we can start to handle more volumes with more closer to a steady state, sustainable level of manpower. That's why the trend line should look more attractive going forward than it did in the last two quarters. Maybe Kerry, you should—
Yeah.
— talk about the FY 2025 picture.
Yeah, maybe I just wanna tackle sort of staff cost component. Look, in Singapore, we're gonna face inflationary pressure. I think that is. I think almost every company is faced with that, inflationary pressure. We have been very conscious of the fact that that's gonna come and hit us, and hence the investment into technology to mitigate that. I think also more importantly, we have been looking at cross-training skill set as a means to justify the productivity gains. Something as a measure that you know, Bob's side as well, the food side, we're very, very conscious of. I think the base salary numbers, I think, will continue to have pressures to grow. I think there's a shortage of manpower, particularly in the blue-collar side that we are faced with.
We have to manage that portion very carefully. Now back to forecasting to 2025. If we've got our strategy correct in terms of, you know, what we're gonna do on the food side, where we're gonna rely a lot more on offshore production and then have a bit more productivity here in Singapore, plus what we're also gonna do in the cargo side, where we're gonna digitalize the process. From a cost perspective, we would like to try and at least maintain the pre-COVID number despite having all these, you know, cost pressures that's coming on board. That's what we're gonna look to try and do. Because, you know, we know we're gonna increase the cost.
You look in Singapore with progressive wages and all that, you know, even cleaners and all that, the numbers are gonna go up. You can't stop that. There will be the increase, but we've got to utilize technology and job redesign as a means to manage our cost for us. I think technology is gonna be very critical for us. If we can maintain what we have done in the past with all these challenges, I think we would have been in a very good position.
I'll just like to add in the sense that, frankly speaking, as a result of COVID, we had reshaped and resized our organization quite a bit. I think you've seen that, staff count numbers have come down. It is also important, as I mentioned earlier, that we need to build capacity for the rebound.
Mm-hmm.
Maybe in the short term, there might be obviously a need for us to bring in the resources. We have to. That's key. Short term, maybe there might be an increased spike, but the important thing is that we can now calibrate the numbers that's coming in, and we have to calibrate it aligned with the business that we think we project that will come in, and also with all the productivity initiatives that we have put in. I think we might be in a stronger position. We need to invest.
Maybe I'll just add on, right? I know as capacity continues to grow and we bring more and more people, you're never gonna get the same level of productivity when in the past pre-COVID, we have basically optimized our business, right? Because of the volume of scale, we're able to optimize. As it comes back, like what Bob says, there's a little bit of that inefficiency, but we're gonna manage that through technology. Once the volume comes back and we have another chance to then, you know, re-optimize again, and that's something that for Singapore as a hub here, is very important for us to do that. I think also importantly, as we take the same learnings overseas, we also wanna bring that kind of learnings into our overseas network.
As you see, our investments overseas is gonna grow. Our ability to take their learnings and bring that overseas is gonna make a difference. The earnings profile will be very different in five years' time. That that's something that we hope to achieve. Sorry, a long-winded answer. I hope you get
Actually, Louis, there was a quantitative disclosure in the presentations this morning that you might have missed on this point, which wasn't in Manfred's presentation or Kerry or Bob's. It's actually in Spencer's. There was a value add per employee target of an improvement of 50% by 2025 in the —
2025?
Yep.
2030.
2030. Sorry. 2030 in the sustainability slides. That gives you a sense. That puts some numbers against what Kerry was just saying that we do expect wages to increase, but we also have a target ourselves to improve value add per employee during the same period.
Yeah.
Thank you.
Louis, did we answer all your questions?
Oh, we didn't talk about.
Sorry, can you expand the SGD 1 billion target? That's the question.
What's changed? Because 2020 we talk about billion and then now we are talking the same SGD 1 billion. We actually held back. Look, I think when we went- y ou know, I think we presented at the time, you know, things were all looking rosy and we had quite a lot of plans to invest to things. Like, one is obviously some of the growth that we are looking to expect. In fact, the SGD 1 billion. For Thailand, let me just take Thailand for example. We were actually about to invest in a greenfield in Thailand. Because we were able to find this current asset, we did not have to do a greenfield, and a greenfield would have cost us a lot more. In fact, we were quite fortunate because we found that location, the investment made was, what? SGD 25 million, I believe, for on a Thai asset.
If we had to do a greenfield, it would've been SGD 100 million. We actually, because of that, we actually were able to save on the CapEx. Of course, now with COVID, the numbers are not as good, and therefore, we're able to then retain some of those capital expenditure for other investment for other things. At a time that SGD 1 billion included things like this. Going forward, a large part of it, I would say, is gonna come from M&A side. I think, you know, we have been doing things organically over the last few years, but M&A is gonna help drive the growth much faster. We frankly have got a list that we are looking at.
Of course, with M&A, you never know how things go. We have a list of targets for both food as well as for Gateway side. We hope to progress with some of those going forward.
Yeah.
A lot will be on M&A in SGD 1 billion.
Louis, just to add some color to it. In 2019, the Capital Markets Day, I believe at that time, you know, Turkey was on the radar. Quite frankly, you know, we don't just dream up the SGD 1 billion. I mean, there is a pipeline of transactions that we are working on at this point in time. Now, COVID has certainly delayed some of that and for good reasons as well. Valuation is one. Number two is we couldn't actually get onto the ground to do due diligence over the last couple of years. Even, you know, Kerry shared about the Food City transaction took longer than necessary, right? So some of these—
COVID.
Impediment was forced upon us, right? Now, over the last couple of years, we made a very conscious decision also to look at discretionary spends, right? Particularly on the CapEx side. What is not essential, what is not urgent, let's defer. But what is strategic in terms of fixing processes, systems, those we actually carried on. Your investors will be asking, though, is the SGD 1 billion kind of a realistic target? I would say at this point, yes. You know, I've already back out, if we back out the maintenance CapEx, right? I think you're talking about maybe, you know, SGD 700 million-SGD 800 million of that. Certainly there are transactions that we are looking at, yeah, for that.
Thank you, Manfred.
I think it's a reassertion, Louis.
Mm.
I mean, you know, it's not like a lot's changed actually. It's just that we've been delayed in terms of getting started.
Yeah.
The transaction in Thailand is probably better value than we would have gotten pre-COVID.
Yeah. Yeah.
Which is an attractive part of it.
Absolutely.
I think the management team now, you know, led by Kerry going forward, is gonna be saying, "Yeah, we still think that the opportunities are there, and we still think that we can make good use of the SGD 1 billion and get good returns from that." Maybe a slightly more emphasis on cargo would be fair to say, right?
Yes.
Going forward.
Yeah.
That's just one, maybe one slight nuance.
Yeah.
Yeah.
Yeah. Yeah. Sorry, just before I leave, Louis, did we answer your question about the split? There was a question on the split of Food/ Gateway thing.
If you feel you can share, like, within Food, how much is travel versus non-aviation, non-travel, and then within your that is basically the substrate down to the—
Maybe I give you a philosophical response to that. Today, we can't. It's all crystal ball gazing. There's no science to it. You know, if you look at Food itself, right? Food before pandemic was almost, you know, aviation food is about 70-odd%, right?
75%, yeah, about.
75%, to be exact, right? Now, it has gone the other way around. Non-travel has gone—
70%
— to about 70%+. Right. What we hope to do, the desired outcome that we hope to achieve is, as I mentioned earlier, maybe it wasn't clear, have a creative tension that the non-aviation food side keep on increasing, and then when aviation comes back, I think it's probably gonna be maybe 60/40 aviation and non-aviation. I think we will do pretty well if we're able to achieve that kind of proportion.
Mm.
Now, from a gateway standpoint, it's more travel, right? With the exception of the security side. The security expansion is more in Singapore. We don't go into security business outside Singapore. I mean, cargo is gonna be something that I think-
Yeah.
What Alex is saying, cargo is something we're gonna focus on a lot in terms of a network perspective. As I say, the strategy really is to utilize our digital know-how to benefit from this cargo network expansion. That's something that is gonna be key for us.
Okay. Thank you, everyone. We have just under 10 minutes to go for Q&As. We'll take two questions from Swati Chopra from Bank of America. Swati, please.
Hi, management team. Thank you for the opportunity. This is Swati from Bank of America. I had two questions. When do you realistically expect the per quarter profitability to go back to SGD 55 million-SGD 60 million? What is the contribution expected from Singapore in three years time? Thank you.
I can't really hear. I can't hear properly, sorry. I can pick up your second question. What is the proportion of Singapore in three years time? The first question, the fourth quarter to—
When do you expect to be back to SGD 60 million per quarter profitability?
Per quarter against. Back to the, you know, back to where we were, basically.
Three years.
Maybe I ask Louis that question. Swati, as much as I'd like to, I don't think I'm able to guide on the first one. I can tell you that, you know, we are cautiously confident it, over time, quarter by quarter, albeit very gradual. You know, we would love to see a kind of hockey stick, but it is a very long L. You can see that management is working very hard to k eep stepping that up. Relief is a big feature today, right?
Yeah.
Relief, this first half totals up to SGD 86 million, but if you look at last year, we actually got SGD 150 million, right? Same period, right? Ex-relief is something that we want to get into the break-even point. I would love to be able to say SGD 55 million next quarter, but I can't, right? Your first question on SG contribution in three years time, we have always targeted to reduce the concentration of Singapore. Revenue-wise, right, if we are able to achieve a 50/50, we are far from that. Today, Singapore is still contributing, you know, from a consolidated revenue standpoint, about 80%-85%. On a SATS share of revenue standpoint, it's about 67%. Not ideal. We want SATS share of revenue to be at least 50/50.
Thank you. Next up, we have one question from Edward from Covenant Capital. Edward, please. Followed by Neel Sinha from CLSA.
Thank you very much. I think this is by far the biggest illustration expounding of your Food Solution strategy. It's very, very exciting. I think as investor, our mind will start to pivot away of how do we value your company from a gateway throughput, travel-related to a Food Solution, consumer branding company. That itself has got two different levels of valuation multiples. I think it will help when information is available. I'm sure the information is available. You give a little bit more granularity. I think one of the things that has come up over and over again is how much CapEx, what kind of CapEx, what kind of asset turns are you talking about? That's the recurring theme, right?
It's a low margin business, but if you can have asset turn huge and quick, it will give us a sense of this Food Solution business. As it is right now, not enough granularity, but I'm pretty excited of the direction you're taking.
Yeah. I think that's good feedback, Edward. I think the team over time will give more granularity around the targets that Manfred and Kerry have talked about.
Absolutely. I think as you start to see the scaling, we will have to give you more granularity on how, you know, the return on investment is gonna shape up.
Yeah.
Thank you. I will remember that question.
Okay. We have two quick questions from Neel Sinha from CLSA. Neel, please.
Morning, gentlemen. Thank you for the presentation. My two questions are on the associates. This new central kitchen in Bangalore, Bengaluru, how does this sit with your existing tie-ups with TajSATS? And, will it eventually operate on its own, and you'll get rid of the other partnerships and just operate out of this? Also, I'd like to get a sense of PT Jas and PT CAS. How did they do? Those numbers looked a little small given that e-commerce, you know, headline growth in Indonesia has been fantastic this year.
First, I'll take the central kitchen. Look, when we look at the strategy for India, two things, right? One is we realized that there's a big demand for high quality central kitchen in India. In fact, throughout with TajSATS, we were supplying stuff to Starbucks and all that, which is all the QSRs. Starbucks were looking for a solution that's pan-India-wide. At the time we couldn't do it because ours were all in-flight kitchen. An in-flight kitchen is never meant to be large scale in terms of what QSR guys are looking. When we formulated a strategy together with TajSATS, the idea was firstly to tackle the QSR market in a much broader way.
Second, more important is we also realized that our in-flight kitchens were all nearing to its limits of capacity. You know, as I said and all that is, you know, capacity is very difficult to manage. Together with the TajSATS team, we agreed that the central kitchen approach is the best way to help us scale our business in India going forward. Now, today, yes, we are at 100% on our own to develop that. The idea is actually we are meant to also supply some of these food into the kitchen itself, because like I said, the kitchen will. Once the growth comes back, the kitchen will not have the capacity to fulfill those volumes. The central kitchen will be an enabler to fulfill those numbers going forward.
We are very much working very closely with the TajSATS team, although we are on our own at the moment. They are a critical partner of ours, and we wanna continue to do that. This is in line with the same strategy we are employing both in Singapore as well as in China, right, also in Japan as well. We're also employing the same strategy where a lot of the big batch cooking wanna take it offsite, and we will then feed into the aviation business. Yeah.
Maybe I-
Alex, you want to—
Maybe I'll pick up the Indonesia question, Neel. PT Jas, which is the ground handling and cargo subsidiary of PT CAS, is actually performing very well. It's the one that SATS manages. We have our secondees in there managing it, and it is riding a wave of e-commerce growth in Indonesia. We, as a team, are very bullish about the future of Indonesia, and cargo in Indonesia in particular. PT CAS, which is the parent company, has some other loss-making companies in it, which is diluting the returns at that level. We're a holder of 49.9% at the PT Jas level, but also 41.65% at the PT CAS level. Our PT CAS investment is being diluted. The returns from PT Jas are being diluted by these loss-making operations.
We think there's scope to improve and to restructure at the PT CAS level. More of that, see-through of the cash flows out of the cargo opportunity flow through both of our levels of investment, and that's something we'll be focused on in the next six to 12 months.
Yeah.
Thank you, Neil. Thank you, Alex. We will wrap the Q&A session with some questions from Jason Sum from DBS. I know some of you may have some burning questions that you'd like to pose to the management team. Rest assured, you can still post them via email, and we'll be in touch with you after this event.
Yeah. Hi, this is Jason from DBS. Thank you for the presentation and for the Q&A session. First question is, if I recall correctly, SATS had about 9% market share of the cargo handling market in Asia prior to the pandemic. Could you share what's the market share that SATS holds today? And maybe elaborate a bit more if you have a target market share in mind for the future. The second question is, there's also great clarity today on your ESG goals. But I wanted to get more color if there could be any potential adverse impact on your operating margins in the near term. And also, how much CapEx have you earmarked for your ESG initiatives? Thank you.
Mm-hmm. Great, Jason. Really good questions. On the cargo market share, our objective is not to hoover up share, for the sake of it, but to look for, to get strong positions in the leading hubs.
Yeah.
The leading hubs in Asia. That's because our strategy is a network strategy that where we generate network effects from connectivity. The smaller cargo operations-
Mm.
Might be more like spokes, but they won't be hubs in that network effect that we're seeking. You should expect us to invest, continue to invest, to grow our presence in the big hubs. You know, if you look at our most recent acquisitions in cargo, they've been in places like Mumbai, for example. Right? Kuala Lumpur.
Mm.
Most recently, we've managed to get into Riyadh and Jeddah, which obviously will form that position in the GCC as well. You should expect us to look for high-share opportunities in large cargo hubs rather than hoovering up everywhere.
Mm-hmm.
Bob, wouldn't you say that's?
Yeah, definitely. I think, for instance, in India, as we mentioned, it's very clear, the total volumes, majority of them only goes through certain metro cities. If you are able to capture these very few cities, maybe, Delhi and Chennai, you will more or less cover about close to 70%-75% of the total volumes. I just want to follow up on your question about the data. We are also pretty excited with this development, clearly, because we used to have a relationship with a state enterprise, but now we think that, with data coming in, we're probably going to get a bit more excited in terms of running the business, right? In a businesslike manner. There'll be growth opportunities.
Tata is a good partner, and we are quite excited and hope that maybe through our collaboration with them we might be able to latch on and grow and develop where we want to be.
I think the India market is going to be key for us. Our partner, Tata there, you know, Bob says we have a good relationship with them. As they start to take on Air India operations, you know, you have Vistara, you have Air India and AirAsia as well. You've got three big airlines in there that we can work with very well. How the future model and all that, they've been working together and Tata is up for discussion.
We believe there's a lot of value we can bring from what we know here in Singapore into that relationship there. That's what we wanna try and leverage on. I think the point around the cargo hub is a very important one, because our capabilities in hub operation, right? Not many of our competitors, right, have got that access and capability. We have invested a lot in them. That's how we wanna leverage on the scale and the know-how, right, to benefit. Some of the smaller airports and all that, frankly, you know, without the volume against our scale, without the volume, you know, having those presence in there may not make a big impact to how we are running the network.
Yeah. Thanks.
Jason, I think Spencer's gonna pick up your question about ESG and the trade-offs.
Yeah. Thank you for that question. I think that there were two parts to it. Firstly, around margin expectations. I think this is something we're managing very carefully. I'd actually like to point out that we see this as a bit of an opportunity, because as we improve and raise our game in terms of sustainable technology and capabilities that you've seen described today, we actually see this as a way to actually better support our customers, such as the airlines.
In terms of improving their performance as well. In this collaborative approach, we actually think that margin expectations should be stable. In terms of increased costs, et cetera, this is something that we have to manage against willingness to pay on the part of consumers as well as our customers. We do believe that there's upside here. The second question was around whether we've earmarked any CapEx for ESG initiatives. The quick answer is not directly. I have to say that our commitments to our ESG goals are actually very much in line with our strategic priorities as well.
In a lot of the CapEx that we're considering in terms of upgrading our facilities in Singapore and elsewhere, these take into consideration the ESG considerations in terms of high energy efficiency, lower waste. We do actually see cost benefits and productivity improvements coming out of being a more sustainable business. All these are part of our overall CapEx plans. One particular aspect that you might have had in mind is the electrification of our ground support equipment. Right now, we are in close discussions with our stakeholders. We have, of course, very detailed replacement plans as in terms of a business as usual cycles.
We are identifying when electric variants become available and actually are feasible to deploy in Singapore and make business sense. This is actually an ecosystem play, and we're in touch in regular contact with the stakeholders to make sure that the business plan works. This would also be built into our regular CapEx cycle for equipment replacements.
Can I just touch a little bit on this whole sustainability thing? I mean, we have been working with our airline customers and all that, and I'll say this, right, in a sustainability supply chain, the cost element can be increased in certain parts, but there'll be certain elements, there'll be savings in there, which you know. Unfortunately, the pools of the savings may not accrue to the same guy who have to take on that cost. What we are trying to do deliberately is to work it from an ecosystem standpoint, work with different partners. At the end of the day, from an end-to-end chain, there must be some value.
Now, whether the value is, you know, better carbon footprint, or you know, from an ESG standpoint, the airlines, for example, needs to be more sustainable. How do we work through with these providers and find a win-win situation? Our recent stuff when we did with the sustainable packaging on board the airline, there are savings in there. Because in the past, in terms of waste, food waste, we used to have trucks coming in to take waste away from us, but we're able to put an eco digester in there that reduces the waste by a very small bit. I think just on the cost of picking up waste alone, we're able to make savings. But in return, I may have to pay a bit more for the packaging.
Now, the packaging is paid a lot more because there's no scale in this substrate at the moment. As volume comes in, the scale comes back, then of course, you know, you can actually balance that cost. As a market leader, we are very conscious that we must invest in this. We must learn how to bring some of these technology into our business, because if not, then, you know, our customers will not have the same solution that they've come to expect. We are making the investment to learn a lot more about sustainability, the technology. It is still out there. I mean, Monty's has done a fantastic job in creating a know-how on the various kind of substrate that is actually sustainable.
We're gonna use that knowledge to work with all our customers, to drive solution. That's, you know, bringing a bit more know-how into the market, into our customer, so together we can make the right choice for the right packaging. I believe this whole sustainable packaging thing is gonna be very critical going forward. Whether that is retail side, or aviation side, it's gonna be critical. We want to be in the forefront knowing that and helping our customers shape the solution.
Thank you everyone for your time. We would like to wrap the session for today, and I'm sure everyone's curious about lunch, so I invite you to join us next door. You have the option of taking away or grabbing and go and checking out our showcase next door, but there'll be no dining in this side of the building for now. Just take note of that, please. Thank you.