Chairman & CEO’s Statement (cont’d.) 0 7 2 C A P I T A L A B E R H A D OUR ALLSTARS It has been a very tough time for our people. For two years, the majority have been on reduced salaries, about 18% of Allstars have been on furlough and of those who continue to report to work, 70% have been required to work from home for the most part of the year. However, through various engagement programmes developed by our Culture Department and Internal Communications teams, we’ve made sure they do not feel cut off even if they are working remotely. We have also sought continuously to assuage any fears they have of our business sustainability by addressing these issues regularly, openly and transparently through numerous communication channels. Recognising that some may need emotional support, in 2020 we launched an Allstar Peer Support Programme. We are also collaborating with digital health and well-being platform Naluri to provide access to therap i s t s and other psychological well-being practitioners. Additionally, in 2021 we launched the Allstar First initiative to help Allstars in need of monetary support. Given that our planes have been grounded for the most part of the last 20 months, undoubtedly among the most affected of our Allstars throughout the pandemic have been our pilots and cabin crew. While many of them have pivoted to other roles within the business during the downturn in flying, they can’t wait to get back in the air. The last quarter of 2021 saw a pleasing upturn in domestic flying; and with a global air travel revival expected throughout 2022, we look forward to bringing them all back into service as soon as possible. In appreciation of Allstars’ loyalty and commitment, as mentioned in last year’s annual report, we introduced a Long Term Incentive Scheme (LTIS) consisting of an Employee Share Option Scheme and a Share Grant Scheme. Following approval by the Board, the LTIS was tabled at an EGM on 21 June 2021 and subsequently approved by our shareholders. The equitybased incentive enables us to reward and retain Allstars who attain their individual key performance indicators which have been aligned with achieving our overarching company goals. FINANCIAL PERFORMANCE For the year 2021, the Consolidated Group recorded RM1.8 billion in revenue, marking a 44% decrease year on year (YoY). Despite a healthy load factor of 74%, revenue from our airlines dropped by 62% as the Consolidated Group was operating at only 36% of capacity compared to 2020. Meanwhile, our Digital business saw its revenue grow by a significant 76% YoY as it captured greater market share through aggressive expansion across the different lines of business. Overall, aviation contributed to 58% of our total revenue while the remaining 42% was from our Digital segment. Within the Digital segment, Teleport was the main contributor (at 71%), its revenue increasing more than 87% YoY. Meanwhile, we reported a loss in earnings before income, taxes, depreciation and amortisation (EBITDA) of RM1 billion, which was 70% less than the loss of RM3.3 billion in 2020. This was the result of strict cost control measures which helped to reduce our operating costs by 47% YoY. Similarly, our net loss after tax was RM3.7 billion, 37% less than the RM5.9 billion loss in 2020. The Group ended the year with RM1.26 billion in cash balance, based on the RM974.5 million raised from the RCUIDS; drawdown of the USD100 million term loan; and increasing cash inflow from the recovery of the airline business. Of note, the Group also managed to report our first quarter of positive net operating cash flow since the pandemic in 4Q 2021, when we saw an average inflow of RM105 million per month. In terms of cost, the Aviation segment saw its operating expenses reduce by 63% along with a 53% reduction in staff costs as a result of headcount rationalisation, salary cuts and natural attrition. Other operating expenses reduced by 80% due to the absence of the one-off expenses incurred in 2020. We expect our financial performance to improve across all key metrics in 2022 as international borders reopen in all of our core markets. PN17 On 7 January 2022, we were classified by Bursa Malaysia as falling under Practice Note 17 (PN17). We are in the process of redressing the matter as it does not reflect the reality of our cash flow position. While we were provided with an 18 month relief period from being classified as a PN17 company from 8 July 2020, and were subsequently not required to comply with the obligations in the listing requirements, we have undertaken various fundraising exercises of over RM2.5 billion to improve our liquidity position, to see us through the effects of the pandemic. We are, moreover, set to raise another RM1 billion, and have also put in place a solid foundation to not only survive but recover from the effects of the pandemic stronger than ever. Our robust and diverse company portfolios will allow us to fasttrack the regularisation of our financial position, and affirm the strong viability of our business moving forward. The outlook for our airline business in 2022 is positive with the reopening of international borders. We aim to return to pre-Covid capacity on many of our core routes by the end of 2022.
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