Saturday, August 06, 2011

SBS and SMRT more profitable than SIA

Extracts from the Annual Report of SBS and SMRT on their Revenue and Profit After Tax. Percentage of their Profit After Tax against Revenue for the last 5 years are as follow

SMRT year 2006-14.5%, 2007-18.2%, 2008-18.7%, 2009-18.5%, 2010-18.2%

SBS year 2006-8.9%, 2007-7.5%, 2008-5.6%, 2009-7.8%, 2010-7.5%

SMRT is enjoying an extremely good profit, not expected for a public service type of business.

Although SBS is having much lower profit, it is still a very healthy company. Many companies are operating at sub 5% profit. Considering this is a public service, it is also very profitable.

In contrast, looking at SIA Annual Report, Total revenue for the Group was $12,707.3 Million with a Profit After Tax of $279.8 Million, that works out to 2.2%. SMRT is 8.3 times more profitable than SIA, while SBS is 3.3 times more profitable than SIA.

Both submitted a proposal to increase fare by 2.8%, which is the cap. According to the report, it was worked out with the formula recommended by the Government appointed - Fare Review Mechanism Committee.

From the Profit %, Profit trend and as reported, last fare increase was October last year. There is really no reason for PTC to approve the increase. The formula for calculating fare increase if flawed and should be reviewed. It has not taken the profit level of the company into consideration which is an important factor where public service is concern.

The formula takes the Consumer Price Index into consideration is flawed. This index is affected by Property Prices and Prices of Car, both are increasing at a very steep rate. Are we convinced that cost of public transport increase in tandem with highly speculative property prices? Has the cost of public transport dropped when the property prices fell drastically in late 2008 during the financial crisis?

The justification for increase due to increase of manpower and train/bus to provide more trips is also flawed, they have not been providing the level of service resulting in packed trains and many have to wait for the next train because they could not get onto the train. The customers were left with no other option because this is how the government has organised the public transport system. At that level of profit, they should be adding the services at their own cost. If there is true competition, they would have done it without price increase to gain ridership.

The justification of new buses to replace the old is also flawed. I am sure they are not scrapping the bus early. The cost is amortised over many years, operating cost will be lowered if they do not replace. If they do, it will only maintain at the same level, because it is a replacement cost.

1 comment:

  1. Katerina Williams11:03 AM GMT+8

    Tinnitus is a not a disease itself, but rather a symptom of other problems in the ear, brain, heart, or blood vessels. So if you can eliminate the underlying cause of the problem, the tinnitus may go away by itself.check this gold method: tinyurl-CoM/q5n4n9k

    ReplyDelete