Group revenue rose 5.3% to $296.3 million in 2QFY14 on broad based revenue growth particularly in the non-fare business. Operating profit however declined 50.7% to $20 million as operating expenses increased by 15.8% to $285.8 million due mainly to higher staff, repair and maintenance (R&M) and depreciation costs.
The Board has declared an interim dividend of 1.00 cent per ordinary share similar to the final dividend for FY2013 to reward shareholders for their continued support.
Staff costs rose 27.0% to $118.5 million following the wage revision exercise in 4QFY13 and increased headcount for Trains and Buses. R&M rose 14.2% to $29.8 million mainly due to the increase in scheduled R&M because of higher operational loading for trains. Depreciation rose 10.7% to $45.3 million with the capitalization of operating assets taken over from LTA in the last quarter, and a newer taxi fleet. Electricity and diesel costs rose 6.6% to $43.7 million on higher energy consumption with a larger fleet and higher average electricity tariffs. Finance costs were also higher as a result of interest cost from the $450 million bond issuance in October 2012.
Total assets declined 11.9% to $2.0 billion from $2.2 billion as at 31 March 2013 due to a decline of $373.0 million in cash balance following payment of the 17 trains and operating assets taken over from LTA.
Net gearing stands at 58% compared to 8% as at 31 March 2013 with borrowings of $625.8 million, of which $621.3 million are non-current liabilities. The Group has $400 million remaining from its $1 billion medium term note (MTN) programme; and Standard & Poor had recently reaffirmed its 'AAA' credit rating on SMRT.
The Group ended the quarter with a cash balance of $173.3 million, higher by $58.7 million compared to the start of the quarter. It generated $115.2 million of cashflow from operations, offset against $50.4 million outflow in investing activities, and $6.0 million in financing cash outflow due to dividend payment.
The fare business remains challenging despite healthy ridership growth as fares have not been adjusted to reflect higher operating costs. Train and Bus revenue rose 3.9% and 2.9% with a healthy 3.7% and 4.0% increase in ridership, respectively. However, Train EBIT declined to $1.0 million and Bus losses widened to $7.0 million from $6.6 million.
Non-fare business maintained growth with a 10.9% increase in profit, driver by higher taxi, rental and advertising profit. Taxi EBIT rose 55.1% with higher rental from a newer fleet. Rental EBIT rose 8.3% with a 5.1% increase in average lettable space from the redevelopment of Woodlands Xchange and higher rental renewal rates. Advertising EBIT increased 15.0% with increased advertising sales. Engineering and other services EBIT declined despite higher contribution from consultancy projects due to cost increase in external fleet maintenance projects.
OUTLOOK AND PROSPECTS
SMRT's President and Chief Executive Officer, Mr. Desmond Kuek, said: "We continue to make good progress in improving service frequency and reliability in our Train and Bus operations.
The financials for the fare business remain challenging. We continue to discuss with the authorities on details for a timely transition to a viable and sustainable model for the Train and Bus businesses.
We are also growing our non-fare business locally and overseas. The Woodlands Xchange will officially open in November and will contribute to rental profits this year. We recently entered a consortium to participate in opportunities in the Jakarta monorail project, which will position us for growth in international markets."
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SMRT Corporation Ltd (SMRT) is the leading multi-modal public transport operator in Singapore. 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.