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gategroup Holding AG

EANS-Adhoc: gategroup Reports Solid 2009 Performance

  ad-hoc disclosure transmitted by euro adhoc with the aim of a Europe-wide
  distribution. The issuer is solely responsible for the content of this
  announcement.
annual report
18.03.2010
- Results demonstrate resilience in face of weak airline industry and
severe global recession
ZURICH, March 18 --
Highlights for the year 2009:
  • gategroup reports respectable turnover, profitability and very strong cash flow despite challenging macro-economic and airline industry environment
  • New contract wins and increased volume among low-fare carriers mitigate effects of aviation industry downturn
  • Revenue of CHF 2,712.3 million, is down 6.7% reported; essentially flat in constant currencies (down 0.5%)
  • EBITDA of CHF 202.2 million, is down 17.4% reported; or 10.1% in constant currencies
  • EBITDA margin holds steady at 7.5% down less than one percentage point from the previous year
  • Operating profit of CHF 98.3 million, is down 20.4% reported, or 11.3% in constant currencies
  • Reported profit for the year is CHF 51.0 million, 12.8% lower than 2008's result of CHF 58.5 million
  • Cash flow from operations is up sharply to CHF 137.1 million from CHF 36.6 million, an increase of 274.6%
  • Shares are listed on SIX Swiss Exchange as of May 2009
gategroup, the leading independent global provider of onboard 
products and services, reported a profit of CHF 51.0 million for the 
full year 2009 in the face of a severe global economic downturn and 
the weakest environment in decades for airlines, its core customer 
group.
The reported profit for the period came on revenue of CHF 2,712.3 
million compared to CHF 2,907.9 million in 2008. However, when 
adjusted for foreign exchange differences, revenue was essentially 
flat. Basic earnings per share improved in 2009 to CHF 2.61 versus 
CHF 2.16 in 2008.
"In the context of the world economic downturn and crisis within the 
airline industry, we consider 2009's results to be a solid 
performance," said Chief Executive Officer Guy Dubois. "gategroup is 
structured to withstand the shocks of the cyclical airline industry 
and these results demonstrate that resilience," he said.
Substantial contract wins and retentions The relatively mild impact 
on revenue was largely influenced by new customer business that 
offset volume reductions among existing accounts. The new agreements 
include, among others:
- The 10-year renewal of British Airways' long-haul catering   and 
handling business at its London Heathrow hub - A major contract 
renewal with Delta Air Lines, now the world's   largest carrier, that
will exceed CHF 1 billion in revenue over several   years - Extension
of business with Swiss International Air Lines at its   home bases in
Switzerland - A new long-term contract with United Air Lines for 
business at   its Tokyo hub and an agreement to manage United's 
onboard retail program   within North America - A quadrupling of the 
rail catering and logistics business in Spain as   provider to 
Cremonini Rail Iberica S.a.a, whose contract with RENFE, the   
Spanish national railway company, was expanded to the railroad's 
entire   network
"In addition to winning new business, the Group's basic contract 
structure buffers it against swings in the number of passengers among
its traditional full-service airline customers because it generally 
includes a fixed overhead recovery charge, a handling charge and 
per-meal revenue," explained Chief Financial Officer Thomas Bucher. 
"In addition to this revenue buffer, the Group has a very flexible 
cost structure," he said.
Approximately 90% of gategroup's 2009 revenue was derived from 
contracts which are valid through 2010; about 80% from contracts 
valid through 2011; and 75% through 2012, which management believes 
implies stable future cash flow generation.
Further expansion into onboard retailing Also, gategroup has 
successfully expanded into the onboard retailing business, which is 
an integral part of the business model for the fast-growing low-fare 
airline segment and which traditional airlines are increasingly 
adopting as a way to generate additional revenue. gategroup is the 
industry's leading provider of onboard retailing services, currently 
managing programs for 10 airlines involving well over 500 aircraft.
Impressive cash flow generation on the back of resilient business 
model Reported EBITDA was CHF 202.2 million, down 17.4% or 10.1% in 
constant currencies, and EBITDA margin was 7.5%, which was at the 
high end of the Group's earlier stated expectations. The EBITDA 
margin declined by less than one percentage point (minus 0.9pp) 
compared to the previous year.
Operating profit was CHF 98.3 million compared to CHF 123.5 million 
in 2008, a decline of 20.4%, or 11.3% in constant currencies.
Profitability in 2009 was negatively impacted due to higher 
restructuring costs in line with our continuous efforts to rightsize 
our operations to market conditions and the costs incurred in 
relation to the Company's listing on the SIX Swiss Exchange. In 
addition, the startup costs for SAS Scandinavian Airlines as well as 
integration costs of the new United Airlines business at Tokyo Narita
had an impact on profitability.
Meanwhile, cash flow from operations was up sharply to CHF 137.1 
million from CHF 36.6 million the previous year, an increase of 
274.6%. "We put considerable emphasis on balance sheet management in 
2009 and that has paid off," Bucher said, adding that "we intend to 
maintain this strong focus on cash flow management within our 
operating units."
Reported gross debt was CHF 692.8 million, higher than at the end of 
the previous year following the Group's decision to tap a delayed 
draw credit facility, at LIBOR +250 bps, that would have expired in 
May 2009. The intention was to retain financial flexibility during 
uncertain economic times by having more cash on the balance sheet, 
Dubois said. Reported net debt decreased compared to the previous 
year by CHF 68.2 million to CHF 435.2 million.
In addition to a comfortable cash position, the Group's listing on 
the SIX Swiss Exchange sets the stage for potentially broader access 
to capital markets as an additional funding source should appropriate
opportunities arise, Dubois said. "We intend to be active in the 
market consolidation process and to benefit from the trend among 
airlines and other travel-related industries to outsource non-core 
activities."
Cautiously confident outlook Looking ahead, Dubois said 2010 will 
continue to be difficult, but that an upturn is likely. "We believe 
the U.S. market will turn around in the first half, but that Europe 
will lag behind by at least one or two quarters. On the revenue line,
we expect that a positive run rate from 2009 contract wins will 
offset the non-retention of the British Airways short-haul catering 
contract at London Heathrow.
In summary, we expect a recovery to take hold by the end of the year,
which we believe will translate into a stable top line for 2010, an 
improved EBITDA margin of 7.5% to 8.0% and continued strong operating
cash flow," Dubois said.
Key figures of gategroup
Income Statement information
In CHF m except per share data
Period ended                              Dec. 31, 2009  Dec. 31, 2008
Revenue                                         2,712.3        2,907.9
EBITDA                                            202.2          244.9
EBITDA margin                                       7.5%           8.4%
Operating profit                                   98.3          123.5
Operating profit margin                             3.6%           4.2%
Finance (costs) net                               (26.7)         (79.1)
Profit before tax                                  72.2           45.0
Profit for the year                                51.0           58.5
Basic earnings per share                           2.61           2.16
Fully diluted earnings per share                   2.57           2.13
Balance Sheet information
in CHF m                                  Dec. 31, 2009  Dec. 31, 2008
Current assets                                    665.6          580.6
Non-current assets                                860.9          844.5
Total assets                                    1,526.5        1,425.1
Current liabilities                               519.9          557.2
Non-current liabilities                           892.4          809.3
Total liabilities                               1,412.3        1,366.5
Total equity                                      114.2           58.6
Total liabilities and equity                    1,526.5        1,425.1
Cash and cash equivalents                         257.6          155.2
Short-term debt                                    19.5           85.9
Long-term debt                                    673.3          572.7
Cash Flow information
in CHF m                                  Dec. 31, 2009   Dec. 31, 2008
Profit before tax                                  72.2            45.0
Cash generated from operations                    182.3           100.2
Interest, net                                    (35.9)          (41.0)
Income taxes paid, net                             (9.3)          (22.6)
Net cash flow operating activities                137.1            36.6
Acquisition of subsidiaries                       (19.5)          (34.9)
Capital expenditure                               (58.6)          (79.6)
Other                                               6.2             4.9
Net cash flow investing activities                (71.9)         (109.6)
Net cash flow financing activities                 52.3            76.4
Increase in cash                                   117.5            3.4
For more detailed information, please see gategroup's Annual Report 2009,
which is available in English in the Investor Relations section of our web
site, www.gategroup.com.
About gategroup:
gategroup is the leading independent global provider of onboard services
to companies that serve people on the move. gategroup comprises 11 member
companies, which are deSter, eGate Solutions, Elan, Gate Aviation, Gate
Gourmet, Gate Safe, Harmony, Performa, potmstudios, Pourshins and Supplair.
The Group's world-class capabilities are focused in catering and
hospitality; provisioning and logistics; and onboard solutions.
Our customers include top airlines, railroads and hotels around the 
world that rely on our expertise and solutions tailored to their 
guests, service offerings and geographic regions.
Shares of Zurich-based gategroup are traded on the SIX Swiss Exchange
under the symbol GATE. Please visit www.gategroup.com.
IMPORTANT NOTICE This publication may contain specific 
forward-looking statements, e.g., statements including terms like 
"believe", "assume", "expect" or similar expressions. Such 
forward-looking statements are subject to known and unknown risks, 
uncertainties and other factors which may result in a substantial 
divergence between the actual results, financial situation, 
development or performance of the company and those explicitly or 
implicitly presumed in these statements. Against the background of 
these uncertainties readers should not rely on forward-looking 
statements. The company assumes no responsibility to update or revise
any of these forward-looking statements or to adapt them whether to 
reflect new information, future events, developments or circumstances
or otherwise.
INVITATION TO MEDIA gategroup CEO Guy Dubois and CFO Thomas Bucher 
invite media representatives to participate in a telephone conference
call regarding Full Year 2009 Results.
The call will be held at 9:00 CET on Thursday, March 18, 2010.
To participate, please call the dial-in number approximately 15 
minutes before the start time. Once dialed in, please follow the 
instructions given over the phone.
Direct dial-in numbers:
+41 (0) 91 610 56 00 (CH & other countries)
+44 (0) 207 107 06 11 (UK)
+1 866 291 4166 (USA - Toll-Free)
+49 (0) 69 2 22 22 05 93 (Germany)
INVITATION TO ANALYSTS AND INVESTORS gategroup CEO Guy Dubois and CFO
Thomas Bucher invite analysts and investors to participate in a 
telephone conference call regarding Full Year 2009 Results.
The presentation of Full Year Results 2009 can be accessed via 
webcast and dial-in teleconference at 14:00 CET on Thursday, 18 March
2010.
To listen to the live presentation via teleconference, call the 
dial-in number approximately 15 minutes before the start time. Once 
dialed in, please follow the instructions given over the phone.
Direct dial-in numbers:
+41 (0)91 610 56 00 (CH & all countries)
+44 (0)207 107 06 11 (UK)
+1 866 291 41 66 (USA - Toll-Free)
+49 (0)69 2 22 22 05 93 (Germany)
Please note that media will not be able to ask questions during the 
Q&A session for analysts and investors.
To link to the live webcast of the presentation, please go to the 
"Investor Pack" tab under the "Investor Relations" section of the 
gategroup website, www.gategroup.com.
ANNUAL REPORT ESSAYS Annual Report essays by the Chairman, Chief 
Executive Officer and Chief Financial Officer are reproduced here for
your convenience.
Chairman Andreas Schmid As Chairman of our Board of Directors, it 
gives me great pleasure and pride to present gategroup Holding AG's 
first Annual Report as a publicly traded company. Despite a 
challenging economic environment during 2009, the Group has performed
admirably, particularly considering results within its largest 
customer segment -- the airline industry.
The International Air Transport Association estimates its member 
airlines will post losses of about $9.4 billion for 2009, following 
negative results of $17 billion the previous year. The Group, 
meanwhile, has held its own with a 2009 reported profit for the year 
of CHF 51.0 million, coming from reported revenue of CHF 2,712.3 
million.
These results are testament to the resilient business model of the 
Group, management's close attention to cost control and our 
innovative responses to customer needs.
gategroup Holding AG listed its shares on the SIX Swiss Exchange on 
May 12, 2009. At the time, markets worldwide were in the doldrums. 
The Dow was under 8,500; the FTSE 100 below 4,500; and the SMI under 
5,400. I have been asked many times why the Company chose to go 
public during such a period. Simply stated, the enterprise was ready.
Following a financial and organizational restructuring in the middle 
of the decade as part of a private equity firm's portfolio, the 
Group's ownership base expanded in 2007 to about 100 investors, 
primarily financial institutions, with shares trading in a limited 
fashion over the counter.
Recognizing the structural changes within its customer base, 
management launched a growth-through-acquisitions strategy in 2007. 
By building upon the traditional airline catering business and 
growing through selective acquisitions, gategroup's 11 brands now 
address a full range of onboard needs in the aviation and rail 
industries. With a successful reorganization completed and a flexible
business model achieved, the time was right to begin positioning for 
the future.
By going public, we increased the liquidity of our shares and 
expanded our ownership base, which now numbers about 500 registered 
shareholders, as investors increasingly recognize the value of 
gategroup. The Group instituted a new governance structure, ensuring 
transparency to all of our constituents, and we have attracted 
coverage among a number of financial analysts.
We firmly believe airline industry consolidation will continue and 
lead to growth opportunities. Through its listing, the Group has set 
the stage for potentially broader access to capital markets as an 
additional funding source, which also may be used for merger and 
acquisition activities.
In the meantime, the Group continues to focus on cash flow to 
deleverage the balance sheet and provide internally generated funds 
for growth and investment, including any potential M&A activity.
There will continue to be challenges in 2010, although we expect to 
see a recovery taking hold by the end of the year. The Group has 
already demonstrated its capability to weather economic storms, and 
my fellow Board members and I are confident that the Group is 
uniquely well equipped to capitalize on an upturn.
On behalf of the Board of Directors, I thank our management team for 
their excellent work in the past year navigating through a very 
difficult environment. Our thanks also go to the employees around the
world for their efforts and contribution to the Group's performance. 
And, of course, we are grateful for our shareholders' ongoing 
interest and support.
Chief Executive Officer Guy Dubois 2009 will long be remembered as 
the year that the world's economies entered the most difficult period
in decades. Airlines, our major customer group, were particularly 
hard hit as businesses slashed travel to cut costs and worried 
consumers canceled vacation plans.
The Group, of course, has not been immune to these global forces. 
2009 reported revenue of CHF 2,712.3 million was down by 0.5% on a 
constant currency basis compared to 2008. The reason for the mild 
revenue impact was due to new business wins that offset volume 
reductions among existing accounts. Our reported EBITDA margin was 
7.5%. On a reported basis, we delivered to the high end of our 
expectations on the EBITDA margin, while generating substantial 
operating cash flow of CHF 137.1 million. In the context of the world
economic downturn and crisis within the airline industry, we consider
this a solid performance.
Our resiliency is a direct result of our corporate strategy to create
a "one-stop shop" for clients seeking end-to-end solutions for their 
customer service needs. This year has seen a further integration and 
alignment of our 11 brands to work more coherently, and especially to
leverage our ability to cross-sell to clients and solve problems 
holistically. As a result, customers increasingly regard gategroup as
a strategic partner rather than simply a supplier.
We started the year strongly with the 10-year renewal of British 
Airways' long-haul business at its key London Heathrow hub. We also 
completed major contract renewals with Delta Air Lines and Northwest 
Airlines -- now the world's largest airline -- as part of their post-
merger integration of supply contracts. This is a significant deal 
that will encompass in excess of CHF 1 billion in revenue over 
several years.
Service to SAS Scandinavian Airlines began at its three Nordic hubs, 
and we extended our business with Swiss International Air Lines for 
three additional years at its home bases in Switzerland. LAN Airlines
extended and expanded business with gategroup brands in its key Latin
American markets. We increased our presence in the important European
rail market through the Group's increased business in Spain with 
Cremonini, which provides catering for the national railway.
There were other "wins," and it's clear we have forward momentum. I 
am pleased to say that nearly 90% of the past year's revenue is 
already secured under contract for 2010 and the figure for 2011 is at
about 80%.
Innovation continued to blossom in 2009 and gategroup today is more 
than ever the leader in serving people on the move. As airlines seek 
to save fuel costs by lowering weight and to respond to environmental
concerns about carbon output, we have brought new products to market.
The deSter brand developed its unique Lean-on-Me Tray(TM) concept to 
save trolley space, and our Harmony brand is offering amenity bags 
made from recycled plastic, to name a few examples.
One of the fastest growing segments of catering and hospitality in 
the airline industry is onboard retailing and gategroup has clearly 
become the industry's leading provider. We have developed a robust 
offering that ranges from a turn-key model, such as with easyJet, to 
managing a customer's retail program as under a new agreement with 
United Airlines for its domestic network. eGate Solutions' 
acquisition of Abanco's software and wireless point-of-sale 
technology significantly enhances our retail solution, which airlines
are increasingly adopting as a way to generate additional revenue.
The Abanco acquisition is just one example of our continued 
commitment to invest in our future. Others include the acquisition of
United Airlines' flight kitchen at Narita in the important Tokyo hub,
new Gate Gourmet units in Newark and Copenhagen, and the addition of 
new highloaders into the network. We have invested CHF 58.6 million 
in fixed assets in 2009.
We continued to refine our "asset-light" model by aligning the 
management of our Pourshins and Supplair brands into one leadership 
team to take advantage of customer, supply chain and market 
synergies. Working together the two brands offer unique and flexible 
off-airport food and beverage solutions that can free up space in 
existing flight kitchens and allow the Group to operate in markets 
where it has no physical presence.
We believe that consolidation within the industry will continue and 
that merger and acquisition opportunities, particularly in the 
Asia-Pacific and Middle East Regions, will develop as airlines there 
follow the pattern set elsewhere and outsource non-core activities 
such as catering and provisioning. Under the right conditions, the 
Group fully intends to participate in this consolidation. We have 
cash available, and since our listing on the Swiss stock exchange, we
can tap capital markets for merger and acquisition funds should an 
attractive opportunity arise.
Internally, we have new leaders for deSter, Pourshins/Supplair, 
Performa, for the Asia-Pacific Region and the human resources 
function. These moves have further strengthened our management team 
across regions and brands. Additionally, our efforts to identify and 
enhance our people talent through leadership development programs are
in full swing. In the technology area, the continued rollout of SAP 
and strengthening of IT systems and processes are resulting in more 
standardization and cost efficiencies.
I thank our tireless management team and our hard-working employees 
around the world for what they have achieved against a backdrop of 
enormous challenges. We anticipate that 2010 will be difficult. An 
upturn, however, is inevitable, and we expect it in late 2010 with a 
full impact in the following year.
Through the efforts of our employees and the continued support of our
Board of Directors and shareholders, we at gategroup are well 
positioned to take advantage of a recovery.
Chief Financial Officer Thomas Bucher The global economic climate in 
general was challenging in 2009 and the recessionary environment for 
airlines -- gategroup's primary end-user industry -- was particularly
difficult. Yet even in the face of these adverse circumstances, the 
Group generated respectable turnover and profitability and very 
strong cash flow.
Furthermore, when normalized for foreign exchange variations and 
one-time charges related to restructuring and the costs related to 
the listing process at the Six Swiss Exchange, the results paint a 
picture that underscores the Group's resilience.
Taken at face value, the reported performance for the Group, at both 
the top and bottom lines, shows a decline for 2009 when compared to 
the previous year. Context, however, is the key to understanding 
these results.
Reported revenue for the year totaled CHF 2,712.3 million for 2009, a
decrease of 6.7% but essentially flat (down only 0.5%) when compared 
to 2008 at constant currencies. The impact on revenue due to volume 
reductions among existing customers was mitigated by new contract 
wins, including our growing business in the low-cost carrier segment.
Furthermore, the Group in principle is less exposed to swings in the 
number of airline passengers because our basic contract structure 
generally includes a fixed overhead recovery charge, a handling 
charge and per-meal revenue. In addition to this revenue buffer, we 
have a very flexible cost structure that generally lessens the impact
on profitability in a down market.
EBITDA was CHF 202.2 million, a decline of 10.1% at constant 
currencies compared to 2008. The results of 2008 were positively 
impacted overall by the release of substantial legal provisions no 
longer needed. Our profitability in 2009 was negatively affected by 
the costs incurred in relation to the listing on the SIX Swiss 
Exchange as well as the startup costs for SAS Scandinavian Airlines 
in Scandinavia and integration costs of the new United Airlines 
business at Tokyo Narita. Likewise, the full run rate profitability 
of new business won was not yet fully achieved, and the overall lower
volume led to sub-optimal capacity utilization in some of our 
production units.
Operating profit of CHF 98.3 million was down compared to CHF 123.5 
million in 2008, a decline of 20.4%, or 11.3% in constant currencies,
and was impacted by higher restructuring costs in our continuous 
efforts to rightsize operations to market conditions. Reported profit
for the period was CHF 51.0 million, a decline of CHF 7.5 million, 
which was positively impacted by a net foreign exchange gain of CHF 
24.3 million.
Cash flow from operating activities, meanwhile, was up in 2009 to CHF
137.1 million versus CHF 36.6 million in the previous year. We put 
considerable emphasis on balance sheet management in 2009 and that 
has paid off. We have been able to manage our net working capital 
position more effectively through better controls and tighter 
processes, for example over receivables, payables and inventories, 
and that has helped improve cash flow significantly compared to the 
previous year. Going forward, we intend to maintain this strong focus
on cash flow management within our operating units.
Reported gross debt of CHF 692.8 million is higher than at the end of
the previous year at LIBOR +250 bps because we decided to tap the 
delayed draw facility that would have expired in May 2009. Our 
intention was to retain the financial flexibility of the Group in 
uncertain economic circumstances by having more cash on the balance 
sheet. In addition to a comfortable cash position, our listing on the
stock exchange has created a platform for future financial 
flexibility through potentially wider and deeper access to capital 
markets. Reported net debt was CHF 435.2 million, a decrease of CHF 
68.2 million compared to 2008.
In summary, we are pleased with our solid business performance in 
economically challenging times. The results validate the Group's 
claim to a resilient business model and our focused approach to cash 
management has shown results and generated value for shareholders. We
believe the Group is in a good position to benefit as the global 
economy and our end-user industries recover.
SOURCE  gategroup
end of announcement                               euro adhoc

Further inquiry note:

Media, John Bronson, Corporate Communications, +41-43-812-2048,
jbronson@gategourmet.com; Investors/analysts, Dagmara Wawrzonowska, Investor
Relations, +41-43-812-5496, dwawrzonowska@gategourmet.com, both of gategroup

Branche: Consumer Goods
ISIN: CH0100185955
WKN: 010018595
Börsen: SIX Swiss Exchange / Hauptsegment

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