Group revenue rose 3.5% to $284.8 million due mainly to higher train, rental and taxi revenue. However, operating profit declined 49.4% to $22.2 million as continued increase in operating expenses for the fare business is not being offset by fare increases, resulting in lower Train profit and higher Bus and LRT losses.
Operating expenses rose 11.0% to $272.1 million mainly due to higher staff costs and depreciation. Staff cost rose 23.4% to $112.7 million due to increased headcount for train and bus operations and wage revision, partially offset by the Wage Credit Scheme. Depreciation net amortisation rose 12.2% to $39.9 million due mainly to capitalisation of the operating assets taken over from LTA and a larger bus and taxi fleet.
Repairs and maintenance costs rose slightly by 4.4% to $26.5 million in line with more scheduled repairs and maintenance for Train operations with higher operational loading and a larger taxi fleet. Electricity and diesel costs remained flat at $42.9 million as hedged prices were lower compared to same period last year.
The Group’s total assets declined 13.4% to $1.9 billion from $2.2 billion as at 31 March 2013 mainly due to a decline in cash balance of $431.7 million after paying $392.7 million for the 17 trains purchased and operating assets taken over from LTA. The Group’s borrowings rose slightly to $619.6 million from $609.5 million while net gearing rose to 64% compared to 8% as at 31 March 2013 as a result of the lower cash balance.
Train EBIT declined 88.7% to $2.9 million despite higher revenue due to higher staff costs, depreciation and other operating expenses relating to security related expenditure2 and insurance. Bus losses increased to $7.5 million from $5.2 million in 1QFY13 due mainly to higher staff costs, depreciation of a larger fleet, and higher security related expenditure.
Rental EBIT rose 9.0% to $17.7 million with a 5.3% increase in average lettable space to 36,714 sqm following redevelopment at various stations in the network. Advertising EBIT rose 4.5% to $4.8 million with higher revenue following an increase in advertising on buses. Taxi EBIT rose 45.6% to $2.3 million due to a newer and larger hired out fleet. Engineering and Other Services EBIT rose to $0.5 million from $0.1 million due to higher contribution from consultancy projects and the absence of allowance for trade receivables.
Details of the operating metrics may be found in attachment.
OUTLOOK AND PROSPECTS
SMRT's President and Chief Executive Officer, Mr Desmond Kuek, said: "Our first quarter result reflects continued challenges in the fare business which negated the improved performances from taxis and rental. There remain various critical issues that we are working through with the authorities to derive a sustainable and equitable model for the trains and bus businesses, and we are doing our utmost to move speedily to a favourable outcome.
Even as we work through these challenges in the fare business, we will continue to strive for improvements in our overall operational performance and expand our commercial revenue stream. The successful completion of the Woodlands Xchange this year will add to our retail space and increase commercial contribution."
The next twelve months remain challenging for the Group in the absence of fare adjustments and continuing absorption of fare concessions. Operating costs are expected to increase with the annual wage increment and higher headcount, higher Trains repair and maintenance, and depreciation from additions of Trains operating assets as well as a larger bus and taxi fleet. The Group continues in discussion with the Government on a new rail financing framework with the aim of a smooth transition which will improve the overall sustainability of the Trains business. There are also developments in the Bus operational framework which could lead to a more viable business model.
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SMRT Corporation Ltd (SMRT) is Singapore’s premier multi-modal public transport operator. SMRT serves millions of passengers daily by offering a safe, reliable and comprehensive transport network that consists of an extensive MRT and light rail system which connects seamlessly with its island-wide bus and taxi operations. SMRT also markets and leases the commercial and media spaces within its transport network, and offers engineering consultancy and project management as well as operations and maintenance services, locally and internationally.