ATNS PresentationTo the Portfolio Committee on Annual Report and Budget Review

By: Patrick Dlamini, CEO

Who are We?

Established in 1993 (ATNS Act 45 of 1993)

Services and infrastructure provided in compliance with the International

Civil Aviation Organisation (ICAO) standards and recommended practices

and SA Civil Aviation Regulations and Technical Standards.

Statutory service provision: National en-route service and terminal,

approach and aerodrome services at nine Airports Company of South

Africa (ACSA) airports.

ATNS provides an aeronautical satellite communication network which services 28 African and Middle Eastern States.

• Very Small Aperture Terminal (VSATII)

• North East Africa Satellite (NAFISAT)

Vision & Mission

VisionTo be the preferred supplier of air traffic management solutions and associated services to the African Continent and selected international markets. 

Mission

To provide safe, expeditious and efficient air traffic management solutions and associated services.

Business Concept

Our strategy will be to focus on the air traffic management needs and expectations of the ATM Community, primarily in South Africa, as well as the rest of the Africa and Indian Ocean Region (AFI) and ultimately in selected global markets

We will develop a thorough understanding of the global ATM community with emphasis on product and service offerings, technology developments and clients in order to effectively respond to the needs and expectations of our selected markets with innovative and relevant air traffic management solutions and associated services

We will source, develop, market, distribute and support a complete range of air traffic management solutions and associated services that meet the needs and expectations of access, equity, safety, efficiency predictability, environmental sustainability and affordability, thereby supporting our clients and the ATM community at large

Business Concept (cont…..)

It is an imperative that we stabilise and enhance our air traffic management solutions and associated service provision in South Africa in order to create a platform from which we can leverage strategic partnerships, our global influence as well as harmonised technologies and methods to become the leading air traffic management provider in the AFI region, to secure our future growth, revenue, profit and relevance as a provider of choice

Over the long term, we intend to expand further into selected markets around the globe, whilst at the same time expanding our range of services in air traffic management that are appropriate for market needs and expectations

Our business model will be supported through attracting, developing, retaining and appropriately rewarding a diverse and motivated team that has the right skills, experience, commitment and drive to implement this strategy, creating win-win solutions

Business Concept (cont….)

The effective implementation of this strategy will ensure a well equipped resource base, enhance financial sustainability and support the global air traffic management systems

Strategic Imperatives

To deliver continuous improvement of our safety performance

To become a transformative organization which invests in its people

To provide efficient air traffic management solutions and associated

services which meets the needs and expectations of the air traffic

management community

To maintain long-term financial sustainability

To play a leading role in the development of air traffic management solutions

and associated services in Africa and selected international markets

To deploy and use leading technologies to the benefit of the air traffic

management community

VSAT Networks

Together with our partner International Air Transport Association

(IATA) , we are the Network Service Providers for the two regional

satellite communication networks

• The SADC VSAT 2 network connects 15 States in Southern Africa including Rwanda and Burundi

• The NAFISAT network connect 13 States in North East Africa and the Middle East

ATNS will operate and manage the projects until 2014 (SADC

VSAT 2) and 2015 (NAFISAT)

Play a leading rolein the development of Air Traffic

management solutions

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Brazzaville

Kinshasa

Bangui

N'Djamena

Khartoum

Addis Ababa

Mogadishu

Victoria(Seychelles)

DjiboutiMumbai

Asmara

Cairo

Tripoli

Entebbe

NairobiBujumbura

Kigali

Dar es Salaam

Johannesburg

Antananarivo

Plaisance(Mauritius)

Niamey

Tunis

GaboroneWindhoek

Luanda

Lusaka Lilongwe

HarareBeira

Maputo

Manzini

Maseru

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Sana'a

Jeddah

MID Region

ATNS VSAT NETWORK NAFISAT and SADC/2 - AFTN Connectivity

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AccraAbijan

Dakar

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MCPC Circuits

NAFISAT Circuits

9.6 SADC/2 Circuits

Shared circuits between NAFISAT and SADC/2

9.6 Future Planned Circuits

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Revision 3.0 16-07-2010

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MUSCAT

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During 2009/10 ATNS trained 1732 delegates (999 ATNS, 213 from across the

African Continent as well as 520 from airline industry on IATA Courses)

We are in partnership with both the Governments of Southern and Northern

Sudan to develop the aviation sector. We have trained 59 Sudanese on various

aviation courses

Namibia is in the process of implementing Radar equipment across Namibia. In

preparation for the completion of this project. ATNS is training ATCs to qualify as

radar controllers. We are also training Namibian technicians to qualify as

engineering technicians

Play a leading role in the development of air traffic management solutions (cont…)

Current billing project

ATNS provide billing services for the Namibian Directorate of Civil Aviation.

Revenue collected will benefit Namibia to develop and maintain the air traffic

and navigation infrastructure.

Play a leading rolein the development of Air Traffic management solutions (cont…)

Future billing projects

• Angola and Ghana expressed interest for ATNS to provide Non IATA

billing services

• Finalising the billing agreement with Ghana

Angola ENANA is currently implementing surveillance systems across Angola. ATNS has trained 36 ATCs and 9 engineering technicians in readiness to operate the newly acquired systems

Play a leading rolein the development of Air Traffic management solutions (cont…)

Namibia

Finalising implementation of the ATM/cns systems• Eurocat X• Simulator training• Wide area multilaterations• Voice communication and control systems (VCCS)

Provide efficientAir Traffic Management solutions and

associated services

The future plans of ATNS will require dependant surveillance systems.

ATNS has already engaged the South African Civil Aviation Authority

regarding the mandatory carriage of transponders by all aircraft to support

these plans.

These plans will benefit safety through:

Improved surveillance data presented to ATNS Air Traffic Controllers

Improved ability to support light aircraft with navigation and reduction of

controlled flight into terrain (CFIT)

Enhanced use of airborne collision avoidance systems

Dependent surveillance systems are furthermore more economical to

procure

Provide efficientAir Traffic Management solutions and

associated services (cont…)

Our experience in hosting the FIFA 2010 World Cup can be shared with

other States and Air Navigation Service Providers

ATNS has rebuilt the flight procedure design capacity which had been

lost, this allows ATNS to design flight procedures to support the national

requirement and provide this service to regional and global clients as a

revenue generation initiative

Provide efficientAir Traffic Management solutions and

associated services (cont…)

Provide efficientAir Traffic Management solutions and

associated services

We interact with the users during the Operational User Consultation meeting on an annual basis

Users were engaged in the Performance Based Navigation (PBN) Roadmap and implementation Plan, which were driven by ATNS

Together with ACSA have regular planning interaction meetings to support alignment of infrastructure planning and capacity enhancement initiatives

We plan to reconvene the dormant cns/ATM Committee during Oct 2010

We are actively involved in National Safety Committee (NASCOM) and Civil Aviation Regulatory Committee (CARCOM) As part of the NASCOM activities of the National Airspace Management

Procedure (NAMP) are currently being finalised This involves extensive engagement with the air traffic management

community

Central Airspace Management Unit (CAMU) Air Traffic Flow Management tool (ATFM) successfully deployed and used during the 2010 FIFA SWC.

ANSP systems successfully deployed for a timeous opening of the King Shaka International Airport.

Discussions with Namibia DCA initiated for the surveillance coverage cooperation for the NW region.

A-SMGCS information sharing and cooperation with ACSA for enhanced airport surface guidance and control at FAJS and FACT.

Cooperation with SAAF on development of future technologies starting with Project Descent (SAAF VOR replacement programme)

Deploy and use leading technologies to the benefit of clients

ATNS has been instrumental in establishing the AFI Performance Based Navigation (PBN) roadmap, the South African PBN roadmap and the PBN Implementation Plan

The PBN implementation plan outlines the near, medium and long term activities and initiatives towards full PBN implementation

PBN will yield positive results regarding optimised routings for aircraft, reduced fuel burn and aviation environmental impact.

Deploy and use leading technologiesto the benefit of clients (cont…)

The roadmap will focus on the following key areas:

The implementation of Governance Legislation in the form of King III

IT becoming a better enabler for ATNS to do business and drive process efficiencies

The ERP strategy that should be adopted by ATNS in the medium to long term

The operational governance model for IT within the organization as a whole which includes operations technology

The roadmap will be finalized during October 2010

Deploy and use leading technologies to the benefit of clients

Maintain long-term financial sustainability

Financial Results 2009/10

31 March 2010

Rm

31 March 2009

Rm

Variance

%

Permission

31 March 2010

Rm

Variance

%

Revenue 737 656 12.4 974 -24.3

Operating Expenditure

551 483 14.1 756 -27.1

Profit before Interest and Tax

79 92 -14.1 93 -15.1

Profit before Tax 66 84 -21.4 60 10.0

Net Profit After Tax 47 61 -23.0 43 9.3

Total Assets 1,264 1,172 7.8 1,380 -8.4

Total Liabilities 469 424 10.6 561 -16.4

Net Working Capital 9 3 200.0 58 -84.5

Financial Results 2009/10

31 March 2010 31 March 2009

Tariff Change 11.26% 2.5%

Return on Capital Employed4.84% 9.86%

Capital Expenditure R147.0m R147.7m

Gearing Ratio 41% 43%

DescriptionActual YTD

RmBudget YTD Rm

Variance %

Forecast 10/11 Rm

Full Year Budget

Rm Variance %

Tariff Revenue 456.8 420.3 8.7% 913.7 909.5 0%

Other Revenue 26.6 21.8 21.9% 53.9 45.2 19%

Non Regulated Revenue 21.0 23.2 -9.7% 41.9 46.4 -10%

Total Revenue 504.4 465.3 8.4% 1009.5 1001.2 1%

Salaries and Related Costs 249.8 269.9 7.4% 499.5 530.5 -6%

Travelling Expenses 8.1 16.7 51.5% 16.2 30.2 -46%

Telecommunication Expenses 13.0 15.4 15.2% 26.0 29.6 -12%

Administration Fees 8.1 13.5 40.1% 23.7 28.9 -18%

Electronic Maintenance 24.9 28.6 12.8% 49.9 54.3 -8%

Professional Fees 7.7 10.2 24.0% 20.5 20.1 2%

(Profit)/Loss on Forex 2.1 1.4 -48.3% 2.2 2.2 0%

Other Operational Expenditure 24.7 31.2 20.8% 60.1 59.3 1%

Overhead Expenditure 62.4 61.8 -0.9% 124.7 132.5 -5.9%

Total Expenditure 400.8 448.6 10.7% 822.9 887.8 -7.3%

Net Funding 9.4 9.6 1.2% 22.8 26.9 -15%

Profit Before Tax 94.1 7.1 1224.6% 163.8 86.5 89%

Tax 26.4 2.0 -1224.6% 45.9 24.2 89%

Net Profit After Tax 67.8 5.1 1224.6% 118.0 62.3 89%

Financial results for the six months period ending 30 September 2010

Preferential Procurement Figuresfor the six months period ending

30th September 2010

Description Discretionary Spend Actual BEE Spend BEE Spend per BEE BEE %Opex 86,070,450 73,963,634 45,005,810 52%Capex 11,726,531 15,770,593 2,471,180 21%Total 97,796,981 89,734,227 47,476,990 49%

The set annual preferential procurement spent target for Operating and Capital Expenditure is 58% and 35% respectively.

Looking forward

2010/11 2011/12 2012/13 2013/14 2014/15

Tariff increase (%) 35.4 7.4 5.5 5.4 5.4

EBITDA (Rm) 246 317 404 486 573

NPAT (Rm) 62 98 142 189 258

Target ROCE (%) 11.6 11.8 12.2 12.2 12.0

ROCE excl WIP (%) 8.3 11.3 14.2 16.1 18.7

CAPEX (Rm) 195 259 341 321 217

Gearing Ratio (%) 45 46 45 34 23

Current Ratio 1.15:1 1.15:1 1.11:1 1.11:1 1.37:1

Challenges

Regulatory Regime Focus on ROCE v Key Indicators Pre–Funding (Not earning a return on Capital WIP)

Continued pressure on OPEX via staff cost (retention of core and

critical skills) Transformation and succession Supply management and cost efficiency Capacity to leverage on African opportunities

Thank You

Ngiyabonga