GATEGROUP HOLDING AG 
By gategroup delivers good results in 2013 on the back of a strong HY2
- Total revenue up 0.3% to CHF 3,002 million (CHF 3,078 million at constant exchange rates, up 2.9%)
- EBITDA margin 5.6% (5.7% in previous year) for the full year 2013; 6.9% in HY2 (5.7%, restated, in previous year)
- Currency effects within the year had an adverse impact on revenue (-2.5)% and EBITDA (-4.1)% for the full year, (-4.4)% and (-6.1)% respectively for HY2 (restated)
- Cash generated from operations up 63.6% from CHF 63.5 million in 2012 to CHF 103.9 million in 2013
- Restructuring efforts in Europe deliver CHF 25 million savings in 2013, in line with expectations
- Profit for the period of CHF 21.0 million, a substantial improvement over loss of CHF 56.3 million in 2012 (restated)
- Nomination of Ilona De March as new member of gategroup Holding AG's Board of Directors
- Board of Directors will propose to the AGM to pay a dividend of CHF 0.30 per registered dividend paying share
ZURICH, March 13, 2014 ̶ gategroup has posted good results for the 2013 financial year. All businesses of the Group contributed to the result, but the main factors in the positive overall outcome were the return to profitability of the Airline Solutions business in Europe and the improvement in cash flow position across the Group.
Total revenue increased in the 2013 financial year by 0.3% and reached CHF 3,002.2 million compared to CHF 2,992.5 million in 2012. This was driven primarily by the underlying volume growth (3.2%) and the slightly positive effect from M&A, offset by net contract losses (-0.4%) and slightly negative rate/mix effect (-0.6%) as well as the adverse currency impact (-2.5%) which mainly occurred in HY2.
EBITDA reached CHF 168.1 million compared to CHF 171.1 million in 2012, resulting in an EBITDA margin of 5.6% (5.7% in 2012) for the full year, in line with expectations and on the back of strong EBITDA margin performance in HY2 (6.9%).
Operating profit increased from CHF 15.4 million in 2012 to CHF 98.6 million in 2013, mainly due to significantly lower net impairment costs and restructuring expenses than in 2012 and also because of lower depreciation and amortization charges. Profit for the period was CHF 21.0 million, an overall improvement of CHF 77.3 million against the loss in 2012 of CHF 56.3 million.
Cash generated from operations was up from CHF 63.5 million in 2012 to CHF 103.9 million in 2013. This was primarily driven across the Group by further improvements in the management of the net working capital.
Equity attributable to shareholders of the Company reached CHF 285.2 million, an increase of CHF 44.2 million compared to 2012. This was primarily due to the increase in profit attributable to shareholders for the year to CHF 18.4 million and the positive net effect of actuarial gains on our pension positions (IAS 19) of CHF 48.4 million, net of taxes.
"We are pleased to report that we delivered in line with our stated financial objectives," said Andrew Gibson, Chief Executive Officer of gategroup. "We made important progress in 2013 to strengthen the overall business, including sustainable improvements in the Airline Solutions segment. Thanks to the work of all employees, we concluded the financial year in a stronger position than we did in 2012. We fully expect the industry challenges to continue into 2014, but also see many opportunities. I am confident we have the talent and capability to best serve our customers' evolving needs."
Segments
The Airline Solutions segment reported total revenue of CHF 2,593.2 million compared to CHF 2,590.0 million in the previous year. At constant exchange rates the Airline Solutions segment achieved a turnover of CHF 2,666.8 million, 3.0% above prior year. Segment EBITDA reached CHF 157.9 million (155.4 million in 2012) or 6.1% of segment revenue (6.0% in 2012).
The Product and Supply Chain Solutions segment increased total revenue from CHF 580.9 million in 2012 to CHF 599.6 million in 2013. At constant exchange rates the Product and Supply Chain Solutions segment achieved a turnover of CHF 602.5 million, or 3.7% above prior year. It reported an EBITDA of CHF 39.1 million or 6.5% of revenues in 2013 against CHF 40.6 million (7.0% of revenues) in 2012.
Operational achievements
gategroup renewed important contracts with several of its key customers in 2013. A highlight included the two five-year agreements covering both Iberia and its newly formed short and medium-haul subsidiary, Iberia Express. The total value of the agreements is approximately CHF 425 million in revenue over the life of the contracts. These will take effect when the existing contract expires in 2015. Another highlight was the extension of the partnership with Swiss International Air Lines until 2019, with a total revenue value of approximately CHF 400 million. Finally, gategroup has been awarded a five year extension of business with long-time customer easyJet, one of Europe's leading airlines. gategroup will provide a complete end-to-end retail program plus crew catering across easyJet's entire network. The total value of this business is anticipated to be in excess of CHF 800 million in revenue.
Gate Gourmet, gategroup's flagship brand, expanded its presence in New Zealand to a full-service catering and provisioning operation, including last-mile delivery to aircraft. Gate Gourmet upgraded from its previous asset-light operation in New Zealand by taking on the assets and business activities of catering provider Pacific Flight Catering. This gives airlines operating at Auckland Airport increased access to Gate Gourmet's customized catering offering and internationally recognized quality of service.
Executive Committee update
gategroup appointed Jann Fisch, a Swiss citizen, as the new Group Senior Vice President and President Europe and Africa for the Airline Solutions business. In addition, gategroup's Chief Human Resources Officer Richard Wells joined the Group's Executive Management Board (EMB). Richard Wells, a British citizen, rejoined gategroup in January 2013. Both Fisch and Wells' EMB appointments have been effective as of June 17, 2013.
Annual General Meeting 2014
The Annual General Meeting of Shareholders (AGM) 2014 for gategroup Holding AG, scheduled for April 15, 2014, in Zurich, Switzerland, will include the following proposals:
- The Board of Directors proposes a dividend of CHF 0.30 per registered dividend paying share, funded by a withdrawal from the reserve from capital contributions. If approved, the dividend will be paid free of Swiss withholding tax on April 24, 2014.
- In March 2013, a majority of Swiss citizens voted in favor of a constitutional initiative requiring a set of changes to the governance of listed companies. In order to comply with the ordinance implementing the constitutional amendment, the Board of Directors proposes various changes to the Company's Articles of Incorporation at the AGM 2014. These proposed changes include, among other things, a prospective approval of the maximum compensation for the Board of Directors and the Executive Management Board. At the AGM 2014 and subsequent AGMs, we will follow standard practice and submit the Compensation Report to the shareholders for approval on a non-binding consultative basis. In addition, at the AGM 2015 shareholders will, for the first time, vote bindingly on the maximum total compensation for members of the Board of Directors (from AGM 2015 until AGM 2016) and the Executive Management Board (for the financial year 2016). As of the AGM 2014, the Chairman of the Board of Directors and the members of the Compensation Committee will be elected annually by the shareholders.
- The Board of Directors will propose the election of Ilona De March (born 1963, Swiss and German citizen) to the Board of Directors for a term of office of one year. Ilona De March has served since 2006 as President EMEA, Chief Operating Officer and Member of the Executive Committee at BCD Travel, a global corporate travel management company with its global headquarters in the Netherlands. Prior to assuming this role, she held senior roles within TQ3 Travel Solutions Management Holding GmbH as Senior Vice President of Commercial EMEA (from 2004 to 2006) and as Managing Director Sales for the German, Swiss and Austrian markets (from 2002 to 2004). From 1993 to 2002, Ms. De March held various sales and marketing-oriented positions with Carlson Wagonlit Travel. She began her professional career at Swissair and American Airlines. Ms. De March was a member of the Board of Directors of the Schweizerische Bundesbahnen (SBB) from 2009 to 2012.
Andreas Schmid, Chairman of the Board of Directors of gategroup Holding AG, commented: "We are pleased that Ilona De March accepted our nomination. With her wide-ranging expertise in the travel and transportation sector I am convinced that she will bring a highly valuable contribution to our Board." - David Siegel, member of the Board of Directors of gategroup Holding AG since 2004, has announced that he will not stand for re-election at this year's AGM. The Board of Directors appreciates Siegel's long-standing commitment to the Group and his excellent support to the Board of Directors and management over the last ten years.
- The Board of Directors proposes to re-establish the authority of the Board of Directors until April 16, 2016, to issue authorized share capital up to 2,655,413 registered shares payable in full with a nominal value of CHF 5.00 each.
Outlook 2014
Based on present knowledge and excluding major changes in general economic conditions, gategroup expects the global economy to show another year of uneven performance and associated volatility in foreign currency exchange rates. For the full year gategroup anticipates flat revenue growth and an EBITDA margin between 5.6% and 6.2%.
Midterm Outlook 2016
The Group expects to expand the existing portfolio from organic growth and new business development to the order of 10% to 15% and achieve revenues of approximately CHF 3.4 billion in 2016 on the basis of 2012 exchange rates. Additionally it is expected to achieve an EBITDA margin in the range of 7% to 8%, and cash flow generated from operations in the range of 4% to 6% of revenue with ROIC greater than 12%. As previously communicated, the incremental contribution to the mid-term plan from bolt-on acquisitions will be lower due to the re-direction of resources and cash in 2013 to restructuring within the Airline Solutions business.
Additional information, particularly with respect to the Outlook, is provided in the Investors and Analysts presentation. This is available on the gategroup website, together with the Annual Report 2013 and further Company information, at the following link: http://www.gategroup.com/investors/financial-reports-and-presentations
Overview of financial key figures for 2013 (January - December)
millions of CHF | Q4 2013 | Q4 2012 | Change | FY 2013 | FY 2012 | Change |
Revenue | 721.1 | 748.0 | (3.6%) | 3,002.2 | 2,992.5 | 0.3% |
EBITDA | 40.5 | 24.4 | 66.0% | 168.1 | 171.1 | (1.8%) |
EBITDA margin | 5.6% | 3.3% | 2.3 pp | 5.6% | 5.7% | (0.1) pp |
Operating profit | 27.9 | (56.3) | 149.6% | 98.6 | 15.4 | 540.3% |
Operating profit margin | 3.9% | (7.5)% | 11.4 pp | 3.3% | 0.5% | 2.8 pp |
Profit (loss) for the year | 10.3 | (72.4) | 114.2% | 21.0 | (56.3) | 137.3% |
Cash generated from operations | 7.9 | (8.4) | 194.0% | 103.9 | 63.5 | 63.6% |
Net financial debt | 261.0 | 258.5 | (1.0)% | |||
Cash | 296.9 | 291.3 | 1.9% |
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