SATS Ltd
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Welcome to SATS Third Quarter FY 2021/'22 Business Update. Before we begin, SATS would like to remind you that certain comments made during this call may contain forward-looking statements. Many of these forward-looking statements can be identified by the use of words such as may, will, expect, anticipate, estimate, assume, continue, project, plan and similar words and phrases. The company's actual results and future financial condition may differ materially from those expressed in any such forward-looking statement as a result of many factors that may be outside the company's control, including, but not limited to, changes in the business environment. The company does not undertake any obligation to update its forward-looking statements.
I will now hand over the call to Carolyn Khiu of sets. Please go ahead, Carolyn.
Hi, good evening everyone. Welcome to another SATS broadcast. Just a while ago, we released our results for the third quarter and the 9 months for FY 2021/22. With me in this room who will take you through the results are Kerry Mok, President and CEO; Manfred Seah, CFO; and we have also with us today Yacoob Piperdi, CEO of Gateway Services; and Spencer Low who is our Chief Strategy and Sustainability officer.
Okay. I'll hand the call over to Kerry, who will take us through the results.
Good evening, everyone. Yes, this is my first analyst call with everyone, so let me just quickly run through the business updates. Can that go to the next slide, please.
Okay, let me just start with Q-on-Q operating stats. As you can see from the slide, a lot of positive momentum across the board. Operations obviously has improved quarter-on-quarter against previous year as well. Flight passenger volume obviously has increased mainly due to VTL's and year-end holiday. In particular, fly increased to 30,000 in Q3. Passenger handled to 3.6 million, and this all mirrors the [ IFR ] trends in terms of revenue passenger kilometer that grew almost 80% year-on-year in December. In Changi Airport alone, we had a huge growth in packs. In fact, almost more than 800,000 packs being managed in December itself, and about 12,000 commercial flights handled in December itself, and that is a huge increase compared to December 2020.
Non-travel sector continued steady growth driven by institutional catering. Meals increased to 13 million in Q3. Cargo, which obviously has been a star performer for us, continues its robust growth. It's increased to 459,000 tonnes in Q3 due to strong demand for goods and, obviously, flight capacity as well, and this mirrors the IATA industry trends where it's grown from almost 9% of pre-COVID level in December 2019.
Employee figures helped steady. Our recruitment will be ramped up in the coming quarters, and I'll explain that a little bit later.
Moving on to the next slide, which dives a little bit into the cargo slide. Cargo continues to grow in tandem with our international air cargo growth. CTK in December grew 9% from December '19 pre-COVID levels and volumes in 2021 offers grew more than 19% year-on-year. And this, again, mirrors the Changi's [ debt ] of about 24% -- 25% from December 2020. Key e-commerce events such as 11/11 and pre-Christmas, and it has helped in the cargo capacity as flights increased as well.
For us, cargo is a key business driver. It's also helped us in our cargo associates, and overall, cargo revenue growth of 17% Q3, and cargo continues to drive year-on-year growth of 26% and 4.1% quarter-on-quarter.
If I move on to the next slide. We have been scaling up our innovation capabilities while developing local ventures for non-travel business. In particular, we have been investing in digitalization of our cargo and security command center. This is a very digitally connected center that enables our -- us and our customer to share real-time decision making by having data sharing amongst different parties. This has actually helped to increase our capability in this digitalization of our business model.
In terms of non-business travel, we have obviously grew 6.8% year-on-year to SGD 133 million, and we have started new ventures as well on the food side. In particular, FoodFlix and Twyst, and in here, you can see a couple of pictures in there of what we have done. It's our first actually retail outlet in rental space.
Moving on to the next slide. We have also extended our food solutions and gateway services internationally. In particular, in India, we have started construction of first central kitchen to support the growing customer base. It is expected to be operational in 2023. We will be putting the high-end technologies such as automated rice line, including IoT as well for food monitoring, and it also includes an innovation center that will link up with innovation center here in Singapore as well as U.K. to offer SATS's product and packaging expertise for the Indian market. This central kitchen will be critical for us to drive growth for India going forward, and that will serve both aviation and non-aviation customers.
Another item that I'm pleased to announce, and we just announced that as well, we have increased our stake in AAT by another 16.4%, making it a subsidiary for us going forward. And this is, again, part of our strategic move to actually do more cross-border e-commerce logistics in a Greater Bay area for China. And obviously, Hong Kong is a very key cargo hub globally, and it's very important that we increased our presence in Hong Kong to drive that connectivity.
If I go into the next slide. Our business activities and growth strategies are really underpinned by strong corporate governance that allows us to build sustainable growth. So here, you see we have recently won for a few awards across the different categories, and this really reflects the strong credentials and our commitment to international standards that SATS aspires to [indiscernible].
With that, I will hand over to Manfred, who will give you the lowdown on all our financials. Thank you, Manfred.
Thank you, Kerry, you've done now the interesting bit. I'm going to take you through a few slides. I won't go through all just to leave a bit more time for Q&A.
SATS 3Q revenue improved 22.6% to SGD 307.8 million, backed by aviation recovery. Travel and non-travel revenue grew 40% and 6.8%, respectively.
The group recorded PATMI of SGD 5.1 million, making this the fourth consecutive quarter of positive results for SATS since the pandemic outbreak. For the fourth quarter, we have recognized total relief of SGD 38.1 million, without which, SATS' 3Q PATMI would have been a loss of SGD 33 million.
Share of earnings from associates and joint venture increased SGD 8.6 million to SGD 12.1 million. This is contributed mainly by our cargo associates in the region.
SATS 3Q EBITDA came in at positive SGD 31.7 million, and our EPS for the quarter improved by about SGD 0.7 to SGD 0.5 per share.
Moving to Slide 11. As mentioned earlier, while revenue improved 22.6%, OpEx grew -- OpEx actually outpaced that by 28.2%. Staff cost was SGD 43.4 million -- was up by SGD 43.4 million, primarily due to lower government reliefs, higher contract services in tandem with the resumption of business activities and implementation of additional safety measures at Changi Airport.
SATS recorded EBIT loss of SGD 9.5 million this quarter, reflecting a decrease of about SGD 13 million compared to 3Q last year. This was mainly contributed by bad debts or doubtful debt provision that we have taken for our cruise operations due to the [ vending ] cruise line outstanding amount.
Share of earnings from associates improved by SGD 8.6 million to SGD 12.1 million as we see recovery in the performances of all our associates, especially those in the cargo business.
For the next slide, I shall leave it to you to read it. This is actually the 9 months year-on-year comparison.
Moving on to the portfolio trend in Slide 13. This sets up SATS key financials for over 7 quarters starting from first Q FY '21. As you can see from the trend, it's all self-explanatory. Revenue, the share of associates, PATMI, all improved sequentially over the 7 quarters. I will draw your attention to the core PATMI ex-relief, excluding relief, and we started the period with a loss of about SGD 107 million. That has now narrowed down to about SGD 33 million. This is excluding relief.
And then before I leave this slide, if you look at the EBITDA, this is the sixth quarter of positive EBITDA. So cash flow-wise, we are fine. Yes.
Now for the next 2 slides on segmental revenue for the 3Q and 9Q, maybe I'll just cover the 3Q, I got -- the 9 months, I will leave it to you to read.
Just to orientate you to this slide, Food versus -- Food and Gateway grew by about 16% and 33.5%, respectively. This is a year-on-year growth. Travel, as you can see, grew by about 40% and Non-travel came in at about 6.8% growth. Singapore continued to be the basically the kind of chief contributor of our business, and Singapore actually grew by 20.7%.
Very quickly, going into the OpEx slide, Slide #16. Group OpEx grew -- increased by about 28.2%. These are led by higher staff costs primarily due to lower grant support per quarter and increased business volume and activities, and also implementation of additional safety measures. Cost of Materials, Premise and Other Costs all rose impendent with volume growth.
Of course, the other operating expenses included an outstanding amount from GCL, Genting Cruise Line of about SGD 10.7 million. Now, we have taken full provision of the situation. Unfortunately, with the news of the company going to liquidation, we will exert all initiatives to recover as much as we can. And at this point in time, we are exercising cash handling for all the activities that we provide services for.
And then next 2 slides, and these are more for segmentation. I'm going to leave you to read.
I want to just go to the balance sheet in Slide 19, just hit on the key points here. Total assets and total equity actually stood at about SGD 3 billion and SGD 1.7 billion respectively.
Cash-wise, we are okay. We are still at cash level of about SGD 678 million, but excluding the total borrowing of about SGD 540 million, SATS is still in a net cash position of SGD 135 million.
Return on equity for the quarter returned to positive territory of about 1.2% as the group reported profit for this period.
Okay. Last slide. Yes. Last slide is on cash flow, Slide 21. As mentioned earlier, SATS's cash position actually is still at about SGD 678 million. This is a slight -- this declined by about SGD 200 million primarily due to a repayment of SGD 150 million term loan. And free cash flow for the 9 months is at a negative of about SGD 49 million. This is primarily due to a higher pretax spent for the period.
I think that concludes my financial presentation. I'm going to hand this back to Kerry. Oh, sorry, for Q&A. Yes. Thank you. Sorry. Yes. So you are going to...
Yes, sure, so we can start.
So, yes. We move now over to Q&A.
[Operator Instructions] We have got Yew Ping from OCBC.
I have 2 questions. One, regarding the government relief. So I think last time during the briefing, it was mentioned that the government relief will be given -- spread over our financial year '22. So does that mean that next quarter, 4Q, that will be the last quarter that we will see the government relief?
Yew Ping, you want to -- you want to ask the other question first?
Okay. The other -- Okay. The other question is on the cost pressure. So given the rising inflation, can you please share how SATS are doing to mitigate cost pressures, and how easy is it to pass on the higher cost to the consumers, the customers?
Yew Ping, I'm going to take these 2 questions. These are easy ones, and I'll leave the difficult one to Kerry afterwards.
Government reliefs now, we have -- the government has been very generous and helpful, supportive to the aviation sector. Altogether, there have been 9 tranches, right? The last was 8th and 9th tranches that was announced sometime in September. Now, the -- out of the 9 tranches, right. For each tranche, there's a declining, it kind of tapers off. The intention here is really for these job support scheme to support employment, if you like. Help the company to preserve employments, particularly for the local and residents of Singapore. We have benefited from that, so this actually helps us to maintain capabilities over the entire period of the pandemic.
But having said that, the reliefs quite rightly, as volume comes back, business volume comes back, the relief would taper off. So the reason for the third quarter staff cost increase was partly because of lower relief compared to a year ago, yes, so that's the first -- the answer to your first question.
The second question, good question. Cost pressure. I think with the rising in interest rates, I think the market is calling about 75 to about 150 basis points increase over the period, and that will indeed put tremendous inflationary pressure on all businesses. So that would actually increase business costs for everybody.
So now for our -- in our situation, particularly the aviation sector, it's not so easy to actually pass cost down because the entire ecosystem has suffered over the last 24, 25 months. But surely, we will look at ways to be able to do that, and we will have to work collaboratively with all the stakeholders at Changi, number one. Number 2, engage our customers to look at justified way of passing the cost.
I think the other way of looking at cost savings or rationalization is to look at what other services we can provide them. So the -- we have been doing that over the last 15, 18 months to be able to engage our customers, to see what other services that can be shared, and henceforth, the both stakeholders can actually look at a win-win situation to reduce costs accordingly. But that's not going to be easy.
I hope I've answered your questions.
Okay. Yes.
Our next question is Mr. Louis Chua from Credit Suisse.
Got quite a few questions. Do you want me to ask them one by one or altogether?
Why don't you download all the questions at one go so we can answer them together.
Okay. Okay. I think this -- if I look at the operating statistics, big [indiscernible] in flights, handled passengers, handled on a quarter-on-quarter basis, talking about multiple full increase. But if I look at it in terms of your revenues, your Gateway revenues or Travel revenues and the increase is much more modest, looking at adding [indiscernible] based on my rough gauge issues like maybe around 10% plus/minus increase on a quarter-on-quarter basis. So just wanted to figure what's causing the disparity? That's the first question.
The second question, I think Kerry talked about it briefly in opening remarks, but if we were to look at the number of employees, the head count, I think there's been a slight uptick from a quarter-on-quarter basis as well. So in consideration of the expected opening up of the Singapore aviation market, how should we be thinking about the headcount for the rest of this calendar year? And because of the tight labor market, what sort of relative increase in terms of the salaries will you have to give to bring these people back? That's the second question.
The third question, and just to refine the government reliefs point a bit further, I think there's some mention of additional support being given during the Singapore budget. If you can share further color on that one?
And lastly, sorry for hogging the airtime. But just to confirm, the Genting so-called provision, that's SGD 10.7 million, that's the entire summary? That's all.
Okay. I think I can take most of these questions, and then if my colleagues Yacoob actually, we are privileged to have Yacoob here joining us, and Carolyn can add in, right.
So operating statistics actually showed quite a high volume growth, but flights and but travel revenue didn't grow in tandem. Actually, Louis, Gateway actually grew by -- on a Q-on-Q basis, right? Gateway grew -- let me just get my statistics correct -- about 68% like year-on-year. So -- and that -- so Gateway grew 34%. So -- and then Food, actually 16%.
That's kind of expected because while there are flights that's being loaded on, these rights are not full, right? So from a passenger patch load standpoint and the Food is a function, the meals that we serve is a function of the number of passenger that's on onboard, but the flights has increased tremendously. And I think the Gateway revenue has followed suit.
Now the second question that you have on headcount, tight labor market, maybe I can get Kerry to chip in later. Let me deal with the relief question, your fourth question first.
Actually, quite frankly, the budget didn't give us much relief in terms of job support, yes, so those conditional support and we try to quantify it, and it doesn't amount to very, very much that it would not be material. But having said that, Louis, I think the -- I think the government has kind of expressed way back that once the business volume comes back, they will taper this off. So -- and then they will be looking at very targeted kind of support. As of now, SATS, we have not been informed of such specific ones, so I would not expect too much at this point in time.
Now, in so far as the GCL provision, that's taken in full, yes. So -- and SATS grow has taken the GCL provision in full, but of course, there are other debts that are still good, so there's no need to take further provision.
So maybe Kerry can chip in on the headcount side?
Yes. So Louis, just on the headcount side, clearly, we're all going after the same pool of attrition in the past. We have also suffered attrition, but attrition is not as high as against the other general industry. We have been being managed very well.
But in terms of -- what I wanted to say was it's going to start up, right? You can hear the announcement from Ministry of Transport and everything, VTL is going to increase. You'll see that other countries are also going to open up as well, particularly in Southeast Asia and, of course, in Europe and the U.S., they are going to open up as well, so we are going to gear up for that group. And again, Changi being the hub, we're going to step up our increase in head count over the next few quarters in support of the anticipated growth.
But what this means, likely we will have to scale ahead because we have to bring people back for training. It may not be in tandem with the revenue growth that you see the numbers coming through. So I just want to be upfront that there will be an additional -- we expect to have that mismatch over the next few months because we are scaling up for that growth.
In terms of whether the inflation wages is going to hit us, it's not just the hiring of the -- of the folks. If you read the papers as well, everyone is expecting an increase in salary growth as well. So we will have to be in line with the market to ensure that our existing staff, talent is also maintained, so we expect that kind of cost pressure across the board.
The good news is from a hiring standpoint, we do have workers that have worked with us in the past before, and these are foreign labels that we have previously -- they have previously worked with us. We have reached out to them and a lot of them indicated that they are willing to come back to support the growth, and one of the key thing that will give us access to the pool of resources actually when the border opens up between Singapore and Malaysia. But we've also worked very closely with MOM and all that to get access to non-traditional sources. Even places like Myanmar and all that, some of the workers that we are going to bring in to help us manage our headcount growth that's required, yes.
So yes, so the cost will go up, but we are managing it based on skilled resources that we have. But at the same time, also marrying it up with additional -- because we have done some cross training over the last few years, so we are able to mitigate the increase. Not so much in terms of just a straight line increase, but based on some of the cross-training, we can mitigate some of the head count increase.
[Operator Instructions] We have a question from Ryan Davis, Citigroup.
I'm Ryan from Citigroup. I'm just wondering what's the valuation that you're seeing for [indiscernible]?
Sorry, Ryan, we can't hear you. Can you repeat?
I'm Ryan from Citi. Can you hear me?
Yes, you're a bit muffled, Ryan, unfortunately. Can you speak closer to the...?
Yes. I'm wondering what is the valuation that you're seeing for [ AAG ]?
Valuation for AAG?
Yes.
Actually, the -- we have disclosed that, right? Yes. It is disclosed, right? So it was actually in the announcement that we have sent out, yes.
Ryan? Ryan?
Yes. I've seen the news.
So actually, I was just checking to see whether we indeed have announced it. Yes, we did. For the incremental 16%, it's equivalent of about SGD 58.5 million, so you can actually work out of 100%, what is that, yes? So in Hong Kong dollars, I believe, is about HKD 240 million.
Did you get that, Ryan?
Yes. All right.
We have Neel Sinha from CLSA Singapore.
I had a couple of quick questions. The first is to do with -- this is something that I'm seeing across the board with a few other companies as well, utilities expenses. What are your views on it? And how should we think about it? Will it remain at the level that we've seen through 3Q, given where oil prices...
Sorry. Neel, what expenses are you talking about? Fuel, sorry?
Utilities.
Utilities. Okay. All right. And what's the second question, Ryan?
Yes. So for utilities, I'm wondering what your thinking is over this coming year in terms of where we should also think about modeling?
The second question is actually -- it would be great to get a little bit of an update on JAS CAS and the Malaysia joint venture.
Neel, Manfred here. Very simply put through, we -- SATS, we are not a big consumer of fuel, right? And we look at fuel, although the rate of prices have gone up quite significantly, it only represents less than 1% of our revenues. So that's for the fuel.
For utility, yes, it's a little bit more, but it's no more than 3%. So if we put it all together, it's not a significant portion of our operating costs. But year-on-year, quarter-on-quarter, yes, it has increased quite significantly, actually.
Manfred, how should I think about 2022? I mean, either financial year or calendar year, should I just assume it will be sort of similar proportion? I mean, you don't break it out specifically.
We don't, but because it's so insignificant. But if you look at our OpEx slide, right, it is actually embedded in the other operating expenses, and I've already explained the increase of the other operating expenses was primarily due to a bad debt that we have taken, right? And there's professional fees in there, there's fuel costs in there, but the fuel cost is not based on one. So I already give you indication it's less than 1%, 2%, right?
So in 2022, it is not going to deviate too far from that because a big part of the energy cost is that the utility cost is actually fixed cost.
Okay.
And now, just to give some color on the Malaysia, Indonesia, I think, PT JAS business, the core business is actually cargo-related. The business has improved significantly, continued to be robust, so -- And basically, JAS, you see JAS and CAS as one cash operating unit, a cash-generating unit, so a big part of JAS is actually -- a big part of CAS is actually JAS, right?
Now Malaysia, our joint venture with AirAsia is -- the volume, one of the observation that Louis has done earlier, flight has increased quite significantly. It was also main -- because of the movement control order being lifted, Malaysian borders being open, so the AirAsia has put on a lot of flights as a result of that. And then [ DTS ] business is actually totally related and connected to AirAsia volume.
Okay. Quick follow-up, okay. The Malaysia business side, I think, is probably easier to compare in terms of how they're opening up. For CAS, like, how should I think about when the cargo business has had a big bump up? Obviously, despite all the restrictions during the COVID environment for people just having to rely on more logistics, should I think about the cargo business continuing to grow at like a 10%, 15% kind of flip? Or how are you all viewing it? Then of course, there's a bit of a catering as well there, right?
Okay. Maybe I will give my perspective, and then I will ask my colleagues here whether they like to add on, right?
So cargo has indeed been consistently been the bright spot for our business, and cargo, in some ways, volume-wise has come back to pre-COVID volume, right? So the -- consistently, not just in Singapore but also in the region, and one of the reasons why our share of associates have gone up this quarter is also because of the cargo business throughout the region have basically reported better results, right?
Now, I think the cargo business pre-COVID may not be a good gauge anymore because the cargo -- because of the entire pandemic, the e-commerce side of things, we believe the cargo business continue to be promising, which actually is part and parcel of our strategy to go into the region, to continue to consolidate and also deepen, right, and expand and deepen our network. So that is where we are today.
So I don't know whether Yacoob or Kerry.
Just to add on, on the cargo side, I think even at the Capital Markets Day, we have stated that cargo is a key focus strategy for us. In particular, the whole e-commerce, supporting the e-commerce goal as well as temperature controlled cargo is something that we are very committed to continue to grow that. So we believe the cargo will be -- will continue to be a bright spot for us going forward.
All right.
We have a follow-up question from Louis Chua from Credit Suisse.
Sorry, it's me again. Just 2 very quick follow-up questions.
Firstly, any target head count for -- by the end of the year?
And secondly, I think Manfred just I am -- I was asking more from a quarter-on-quarter perspective. In terms of your flights doubling quarter-on-quarter, number of passengers up 4x, but if we look at the Travel revenues and Gateway revenues on a quarter-on-quarter basis, I think the increase was really more in the 10% range.
Okay. Louis, you're very sharp. You can ask quarter-on-quarter results. Okay. So there was an adjustment that we actually did pertaining to some rebates, and so, if you like, without that adjustment, obviously, our revenue would have been -- reported revenue would have been higher. That adjustment amounted to less than SGD 10 million, so that basically explains the Q-on-Q adjustment. Is that okay?
Yes, yes. Manfred...
Louis, just to add. That revenue adjustment has got no impact to the bottom line. It is more of regulatory type of fees that we have adjusted [indiscernible].
Okay, sure. And the head count?
No. For the headcount, we don't have a specific targeted headcount. What we are trying to do is to look at core areas where we need to increase some resiliency in terms of head counts. You all know, one of the things that we are managing through as well is the Omicron challenge as well, so there are specific areas that we're going to bump up the headcount just to be more resilient, and then we don't really have a targeted headcount to shoot for. But it's really in conjunction with what we see is -- volume growth that will come, and that's something that we work closely with the Changi Airport ecosystem to understand how that growth is coming back, and then specifically, which area we're going to increase to support that growth. So that's how we are looking at it.
And of course, the situation remains fluid as to when, when those numbers are going to come.
Louis, just to add to what Kerry has said. Operationally, we are in a business of safety, security, though, quite frankly, we cannot risk incidents or -- or delays and things like that. So safe to assume that there will be some uptick where we really need to prepare ahead of the volume search or volume recovery, which we expect that come about later part of the year. And it's not easy also because as we recruit, there are also levers, right? So -- so therefore, we are stepping up all initiatives and to -- to bring back, right, people that have left us some time back because of pandemic, during the rightsizing or during the border lockdown, but we are hoping to actually bring back some of these capability in preparation for the recovery of the aviation.
I don't know whether Yacoob. Yes.
Okay. Kerry and Manfred.
Okay. I think we can take off-line questions. There is a question for Yacoob from [indiscernible]. With Genting Cruise now down, will we be seeing ship volumes drop by half going forward? Are there plans that there's a new ship taking its place? Yacoob, over to you?
Yes. Thank you. I think the demand for cruise remains strong, and both Royal Caribbean and Star Cruises are still sailing, and that will likely to continue. There is no announcement to indicate that there would be the change. So long as demand continues at the current level, we don't see any major change because if there is a drop in sailing schedule by one, it's very likely that others will also fill up the gap, yes.
[Operator Instructions] We have got Yew Ping with a follow-up question from OCBC.
Maybe just a follow-up question on the cost side.
So have you started your price adjustments in view of the inflation, or you are waiting for your competitors, what they are doing?
Let me take that question. Look, we obviously have contracts in place with our existing customers and all that, and that's the cycle for some of these contracts. But on the food side, we do have meal presentation and -- that we actually present, and that actually, based on what is being selected, there's an opportunity to reflect the existing prices that we see, right, in our food costs going forward. So that's one way that we are working with the customer. Then of course, it's within the customer's right to choose the kind of specs that they want because it's really driven by the specs of the food that we're presenting.
On the rest of it, the other parts of the business, like I said, is based on contracts. So as part of contract renewal and all that, all those will be in discussion with our customers to discuss some of these inflationary pressures that everyone is facing. So that's how we are taking it. Of course, I think Manfred alluded earlier, the aviation obviously is in a bit of challenge, so how we commercially negotiate and all that is going to be on a case by case basis with different customers.
Okay. But how about the raw material side for your food business? Have you seen an update in the raw material price, or still -- you are [indiscernible] so they can't really increase the price?
Sorry, [indiscernible]? I couldn't [indiscernible]
Your raw materials price, there's actually an increase but these are in tandem with volume increase, right?
Yes.
Okay.
So, to me, if we do in terms of the meal side, it's dependent on the specs, which is raw materials. So sometimes we use substitute raw materials instead of using a type of protein meal which substitute a different protein that price is adjusted for, so there are various ways that we can actually mitigate some of the price increase by looking at substitute proteins and all that.
So this is something we work closely with our customers to have them mitigate the price increase, at the same time, mitigate our cost increase as well. [indiscernible].
We have got a question from Terence from Phillip Securities Research.
Hello, can you hear me?
Yes.
Yes. I know this question is a little bit premature, but given that we are on this recovery track, I'm just wondering, at what point will management feel confident or what metrics might you see management to start to consider distributing dividends again? Yes, that's all.
Okay. Manfred?
Terence, thanks for the question. It is a very popular question. Usually, towards the end of the session, people will ask. Terence, we have guided the market now. We know we will resume the repayment of the dividend as soon as a company goes back into profitability and also cash flow positive without government release, right? So as you can understand, we can't be taking reliefs and then use it to pay shareholders, that would not be right optically.
So now, as you can see from the quarterly trend chart that I showed you, this is a sixth quarter that we are EBITDA positive, and then fourth quarter of consecutive profitability, but that is still with relief. But without relief, the losses are narrowing to a little -- a bit above SGD 20 million for the third quarter, so we are actually not quite out of the woods. So we will continue to work towards getting back to the profitability and then resuming the repayment of dividends thereafter.
Sure. Can I have a follow-up question? Is the gearing ratio a consideration for you?
The gearing ratio is, of course, a consideration because it basically shows us how we are able to repay our debt if there was no profit. So -- so but if there's profit, then there is a certain threshold that we aim at. So today, it's standing at about less than 50%, and our threshold, we could go all the way up to about 1%, but we generally -- my Board would not allow that. So conservatively, we'll be looking at a range of maybe 0.5% to about 0.75%, but it has to be a good reason before we will load up the debt.
Yes.
We have come to the end of the Q&A session. I will now hand the session back to Carolyn. Please go ahead.
Okay. We come to the end of our questions today. So if you have more questions, you can continue to e-mail us, and we will get back to you. Have a good evening, everyone. Bye.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.