Morning everyone, welcome to the SATS Results Briefing for the First Quarter of our 2026 Financial Year. I'm David Boey, Group Head of Strategic Communications. Before we begin, I turn your attention to the forward-looking statement now on the screen. I would also like to share a safety reminder. Whether you are joining us from the office, from home, outdoors, or on the road, please be aware of your surroundings at all times. If you have loved ones to need your attention, or something to watch on the stove, please make this a priority before joining this call, a recording of which will be available on our website. Without further ado, let me introduce Kerry Mok, SATS President and CEO, and Timothy Tang, CFO. I will hand over to Kerry to take you through the business update. Kerry, please.
Thank you, David. Very good morning, everyone, and thank you for joining our call this morning. I'll just jump straight into the executive summary. I think you can see here we had a very good, solid first quarter. I think despite the initial, what I call, volatility from the tariff situation, I think the group managed to get our act together and really still drive the profitable growth. It's easy to say that it is showing about 9% growth on our year-on-year net profits, so it's a good set of results. From our perspective, revenue continues to do well. We're growing almost 10% in terms of top line, so it's showing good momentum in terms of new wins and getting more market share from our customers.
Of course, at the same time, the food business continues to trend very well in terms of the passenger traffic that we see out of Asia itself. EBITDA margin is sustained at 18.2%. Part of it, which Tim can go a little deeper later, part of it is obviously the initial volatility we had that gave us a little bit of challenge, but I think as we figure things out, we are able to get it back to 18.2% margin. We will continue to look at how we can improve EBITDA margin. I'm confident that as we continue to scale, this improvement will continue to move towards the 20% target and set for ourselves. You can see from operational stats, cargo tonnage, very good growth, double-digit 10%. I'll show you a slide later. We are growing much faster than what ISR numbers are showing.
This is a seven-quarter of above ISR market growth, and I think it, again, boils down to the network that we have and the ability to win new customers, as well as existing customers that are not in stations that we operate in. We continue to do very well in that element. Flights handle a modest 2.6%, but importantly, it's aviation meals at 5.6% growth. That part, as you all know, has always been our stable business and one with the best margins for us in terms of food. Let me go to the next slide. This is just some of the wins that we have.
I am pleased to say, you know, customers like Emirates and Cathay continue to grow with us, and we have been very, very fortunate that we are able to grow in some of the key hubs like Frankfurt, Dallas, even for Cathay, a new hub in Portland in there. There's actually quite a lot of fashion products in Portland itself. You heard yesterday, I think at the start of the week, we've also won Riyadh Air. That obviously is more second-quarter announcement. I do want to highlight that that is a strategic win for us because that really puts our Saudi Arabian business on a very, very firm footing going forward. Because they're a new airline, we have the ability to shape a lot of new processes and all that together with Riyadh Air.
We're actually very excited by that win, and we think that's going to be one where we can really shape the growth of our cargo business together with Riyadh Air. We continue to do well in a lot of the exhibitions. I think, you know, you read we've won the Global Air Cargo Handler of the Year in Air Cargo Europe. It's a very prestigious, once every two-year event, and I think it's the first time we've won that award. Again, recognition from the industry that our strategy of growing with the network and our excellence in operations around the world is being recognized by the industry. Closer to home in Singapore, we've just launched a new DUP handling center that will offer us greater flexibility and also offer additional throughput, right, through our Singapore cargo hub.
This is going to be good for both the shippers, the cargo agents, as well as for us, just increasing our capacity to really support the growth of cargo over the next 10 years as we wait for Q5 to come on. We do need to make sure that we continue to be very efficient here in Singapore to drive the throughput through our cargo warehouses. On the food front, pleased to say we've won an International Gourmet Food Challenge representing SATS and at the same time Singapore. I think we're the only Singapore team there. Pleased to say that our chef did really well, and they were able to take a top prize with competing 10 global teams in Indonesia itself. Now, in between in terms of technology, this is something that is very important. Everybody all talks about AI and all that.
For us, we are working closely as an ecosystem to ensure that our processes and our business model here in Singapore continues to adopt AI and bring new innovations into the way we do things here in Changi. It's an important development for us because we need to achieve both as an ecosystem in order to drive the efficiency of the air hub here in Singapore. We're pleased to find that agreement amongst the key stakeholders in the air hub. We think it's going to put us in a good position for Q5's operations in the future. Next slide. These are the usual numbers that I show. I think this time around we have added an additional number in there for an increased share of our associates in JVs.
That gives you a more holistic picture of our network itself, how we're growing across the cargo, flights handled, meals, and of course, the number of employees is really just our own subsidiaries. We continue to do well across all metrics. The media one column I'll have is the meal stuff for non-event drop slightly because we actually consolidated our kitchen in Shanghai, Kunshan, into Tianjin itself. That's why the numbers dropped. Other than that, actually, most of it is still showing good progress in terms of the non-event meals. I think those key steps around cargo, flights, and aviation meals, those are important steps because they are the main drivers of our profitability as well. We continue to keep a watch on our headcount.
Yeah, clearly, there are some increases because of new operations that we expanded, but something that we are watching out for and we'll continue to maintain a lookout on how we manage our workforce. Next. This is a slide that we added some additional information for everyone. Here you can see in the top left corner, seven consecutive quarters of growth above ISR. First quarter this year, you can see 10%, but last year, at the same time, we grew 19%. The compounded growth here is actually showing a very good momentum, and we are pleased to maintain that growth momentum that we set for ourselves. Again, as I can see, I think for both flights handled, it is still trending well, both for Americas as well as in Changi Airport. Maybe I just highlight the bottom left corner. This is our tonnage growth.
We have now added in a new analysis to allow you to really understand the power of the network and how we are growing on an organic basis. On a like-for-like, you can see we're growing at 5.1%. These are all current networks that we have, the customers that we are dealing with, and existing stations. Again, even just on a like-for-like, we are growing 5.1% against ISR's 2.9%. The non-like-for-like are new wins that we have brought on. These are new wins or additional stations that we have opened or added to our network, and that's driving another 5.3% growth. All in all, it adds up to 10.4% in terms of tonnage growth. Next. With that, I will hand over to Tim, who will take you through the financials. Tim.
All right. Thank you, Kerry. Let me start off by thanking you for being here. I obviously joined the team. I've been listening to a lot of feedback both from the market, our stakeholders, and obviously the analyst space that we have. I do think that we continue to have a lot of opportunity to enhance our market message to really showcase how we operate and obviously the competitive advantage we have. I think something like what Kerry noted around the like-for-like trajectory of the business representing our network is really things that we're looking at internally. I think we will endeavor to continue to enhance the way we broadcast that and bring light into what we do. Hang on to that for a little while, and as we move forward, we'll continue to update the base here.
Let me dive into the financial information, first one on slide seven here. I think overall, Kerry has noted our volume and our revenue obviously are growing very strongly. The main point here, our cross-border food and gateway positive growth. In particular, I think you can see that it really shows the resilience of the business model in the sense that we are still growing revenue. In particular, underneath the revenue number for Gateway, we actually still have tonnage growth across all the major geographies, including Americas, which is really ultimately, we do believe there is a little bit of front-loading impact into Q1. Despite that, I think the volume shifts across the region into the MEI and into Asia-Pacific have more than made up for that. We are definitely still seeing the resilience in the Americas market as well.
That's the first thing to note on the financial summary here. Overall, I think then if you just a quick, quick point also, if you really look at the revenue growth year-on-year, 10%, if you take away some of the U.S. dollar impact, in fact, it is more than 11% growth on a more sort of stable currency, if you will, not necessarily constant currency. Just to bear in mind that we are certainly impacted from a weaker U.S. dollar given the global exposure here. Nonetheless, the company is obviously performing strong. Last note, perhaps before we jump to the next one, is that overall, if you look at the MEI market, we are getting close to 20%+ growth in cargo volume, which I think we've also highlighted in the appendix there, which shows the really strong scale of the network benefiting our results overall in Q1 here. Okay.
Onto the next slide, onto slide eight. The main thing to note as we dive deeper into all the lines of the business in the region is that you can see that reflected in the strong revenue numbers as the team continues to take advantage of serving the customers around the world. I think Kerry's dived into a few of these already, so I won't repeat them in the sense that a lot of these are driven by volume. We are seeing the positive growth in cargo and flight service. Overall, if you look at the food growth, there's no doubt that we do see a slower growth. That's really reflective of the, in particular, Singapore based. Overall, Singapore flights managed between 5% - 6% growth versus last year. That really drives the food results in terms of how it compares to the cargo business.
Overall, we are certainly growing above the market and continue to be very, very strong across all the segments that we operate in around the world. Next slide. Let me highlight a few key metrics across the board. Firstly, we've already noted the revenue and in particular also revenue, including 100% AJVs. As Kerry noted, it is almost a truer reflective of our overall scale. As you can see there, we are over SGD 2.1 billion in total revenue if you include all our partners' revenue contribution to the business as well. Underneath that, obviously, the SOH-AV number, as I mentioned, does show a decline, but on a like-for-like basis versus last year, we did have a one-off adjustment in Q1 2024, FY 2025, if you will. We excluded that one-off gain that was in last year. In fact, we're growing at plus 7% on SOH-AV.
Within that number, we also continue to have divestments that have benefited with the way we look at our recycling of capital. We have divestments in our Macao business, for example. There's also within that mix. Despite all of that, the positive growth is obviously reflective of the continued strength of our network and working with our JV partners as well. Let me move then down a little bit of the page on the left-hand side there. The next one that jumps out, I think, that requires a little bit of clarification, of course, is the operating cash flow and that impact versus last year. As we've noted in last evening's media release, we have a ward impact significantly with some customer payment delays, which was settled on July 1st. We do have a one-off timing difference here that we don't expect to necessarily repeat.
Outside of that impact, if you will, the overall operating cash flow will be flat versus last year, and same likewise with free cash flow. This is in spite of the higher CapEx number versus Q1 last year by close to SGD 9 million as well. Further down the page, a little bit of a quick note on our overall debt profile and our borrowings. We have already in Q1 repaid close to SGD 100 million, or, in Q1 we've repaid SGD 100 million of our overall borrowing. In fact, year-to- date, we are already at SGD 125 million in overall paring down our debt. The organization and the management team are obviously really focused on one of our focuses on paring down our debt as well as CapEx and returning, obviously, returning to shareholder returns, enhancing our shareholder returns, if you will.
There is a need to address our continue to address our net current assets. That primary number, that number of wallets, has improved. The majority of that net current liability, if you will, then, at the end of Q1, is really related to a term loan that's due to mature in March 2026. Ultimately, we've already started some work on reshaping what that will look like post-March, and we have a very, very good avenue towards extending that sort of tenure, if you will. Of course, I think as many of you may know, we launched our Singapore dollar SGD 300 million note in August. Very, very well received on the market. It really does show and is reflective of SATS' reputation and the status in the market and our ability to go to market with such an attractive rate and a very strongly subscribed note.
Seven times oversubscribed in that particular note. A couple of notes then, finally, on the right-hand side, I think all the metrics and ratios continue to progress exactly as the management team has targeted, including our goals to continue to maintain and enhance our ratings remedies across the leverage ratios. Within the details of the EBITDA margin, whilst the organization has sustained it in spite of a lot of volatility in Q1 in circling cost structure, I think you'll note that, as Kerry Mok noted, our employee base was actually quite flat in Q1 over Q4. This is in spite of a significant volume growth still across the particular cargo. You can see how that relationship has, at least in terms of balancing and reflective of the management actions. Actually, within that volatility, we can continue to do more.
We will obviously, that's going to be something that we have our profile on as we move into Q2 and the rest of the year. Lastly, as you can see at the bottom left-hand corner of the right-hand side, we are continuing to enhance our return on equity and ROIC there in the overall financial metrics. Positive improvement is something that we are continuing to, we believe we'll have a good path towards our 2029 targets of 15% in that metric there, on our ROE, that is. Okay. Next slide, please. A couple of notes, final notes, and no major new news out here. I think we've seen now, if you look at the overall shape of the P&L, it's just reflective of what I've noted.
What we can say on this slide here, a couple of notes is that, number one, on the OpEx, if you look at the shape of the year-on-year change, we obviously grew our revenue the same as OpEx for Q1 on a year-on-year basis. We've at least maintained that relationship. The aim obviously here is always to grow our revenue faster than our cost. That's core to our belief in the way we run the organization. We were certainly scheduled with some volatility, in particular around the labor still. Despite our flexibility in the America's labor trajectory, there is still always going to be lag as there was such a stop-start action across the tariff impact in the America's market.
Despite all of that, we were able to maintain that growth below the, or at the same rate as the revenue, which already speaks to the resilience of the operating model and the flexibility of our management team. Lastly, maybe on this one here, below the EBIT line from a tax standpoint, effective tax-wise, we continue to maintain our rates and improve it slightly extra over Q1 last year. We're hovering around the 25% mark now from an effective tax standpoint. We do believe that we continue to have some efficiencies there. Likely the end of this year, anywhere between 25%- 27% at this stage, depending on how the market shapes out, which will still be an improvement versus last year. Next slide, please. Quickly on the quarter-to-quarter trend, no major point to note there now. Hopefully, that's really just for your consumption.
It does show our continued growth trajectory. It is worth reminding everyone on the call here that we do have a natural fall Q lower seasonality. As you look at your full year, as we look at our full year forecast numbers, it's always worth taking that in mind as we look out for the remaining of the year trading. Beyond that, I think I've noted the SOH-AV, which is the one that has a negative delta versus last year. I want to ask you one to the last slide here, on slide 12. I think I've already noted the major impact lastly on the cash flow here. The other one that's just worth noting is really that maybe let me address the anomaly that is on the lease payment line, the second from the top there.
Ultimately, that was really more a reclassification that we had, in particular the impact Q1 2025, FY 2025. If you added that back in and that reclassification, actually, the year-on-year increase of close to only SGD 4 million on that lease payment, that reclassification does not impact the overall free cash flow and operating cash flow from a free cash flow for FY 2025. That number is still accurate. Overall, you can see that if you sort of address that anomaly out, our free cash flow is progressing and excluding that one-off timing difference of which we've obviously received the cash as of 1st of July. That's impacted our first quarter cash flow. I think lastly, we do continue to look at how we enhance our cash conversion. We've added the cash conversion on the bottom right-hand side of the page there.
We know we are very focused on turning our overall results into cash generation, which funds our returns across all the major capital deployments. We are at the proactive step looking at enhancing our capital return strategy as we speak. We do hope that we can update the market as we move forward with a more structured approach in how we return our capital to our shareholders, as well as our ability to be able to pay down the debt and then address our CapEx. On that note, I will pass it over to Q&A. Thank you, everyone. Our look. Oh, sorry, yes. I think you guys can read this, but I think from an outlook perspective, we are still very confident of our progress in there, especially in the cargo side as well.
We think based on wins that we have that will continue to drive our volume growth above market rate. That's something we've actually watched very closely, and we continue to put a lot of emphasis in trying to gain more market share and additional customers through our network itself. That's something that I think will continue. With the wins that we see, you see in this space as we start to roll out the business across those stations, we'll start to see those volumes coming through as well. We continue to build momentum also here in Singapore. It is very important that we continue to drive operational efficiency here. That's one thing that we are working very closely with the authorities here as well as the ecosystem partner. As long as we continue to drive the profitability, I think our cash flow will continue to come in.
We'll continue to pay down our debt and ensure that we can invest in all the capital that's required to drive our operational efficiencies going forward. We are really looking to invest a lot more in our IT side, and this IT component is going to be crucial for us driving efficiency and get us the next level of operational efficiency in the future. That's something we will continue to look at and use some of the AI tools out there that can help us to drive our productivity in operations across the world. With that, I think we are open for Q&A. Thank you.
Thank you, Kerry and Tim.