Dec disruptions burn S$4.4m hole in SMRT’s pockets

The two train service disruptions in December last year cost SMRT a whopping S$4.4 million in the last financial year, SMRT chairman Koh Yong Guan revealed for the first time yesterday in his speech at the transport operator’s annual general meeting.

The money went towards the legal and professional fees incurred after the disruptions, including rail-related studies and consultancy, an SMRT spokesperson said.

After a turbulent few months following the disruptions – during which a six-week public inquiry threw up damning assessment of SMRT’s maintenance regime and research houses expressed concern over its financials – Mr Koh sought to reassure shareholders present at the AGM that SMRT will seek to maintain its policy of paying at least 60 per cent of its profits after tax as dividends.

According to SMRT’s annual report, its profits after tax fell to S$119.9m, down from S$161.1m in the preceding financial year.

SMRT reduced its dividend per share to 7.45 cents, compared to 8.5 cents previously. Mr Koh said the reduction was “prudent” given SMRT’s cash availability, reduced profit and pressure on margins. He added: “The Board is mindful of the need to provide shareholders with a reasonable return.”

While expenses such as the S$900 million asset renewal plan it previously announced would have an impact on operating costs, Mr Koh said many of the recommendations made by the Committee of Inquiry can be incorporated with no significant additional cost. SMRT is also working with the Land Transport Authority on cost-sharing for projects like the re-signalling and re-sleepering projects.

Mr Koh also stressed that SMRT is “first and foremost an engineering and operations company” and its most important core business is to run a “safe and reliable MRT system in Singapore”. “We do not see running an efficient and reliable MRT system and running SMRT profitably as a public company as contradictory,” he said.

Mr Koh added that SMRT has already taken steps to augment its engineering and technical team, and SMRT will appoint more members with technical backgrounds and relevant expertise to its Trains Board to review and enhance the operator’s maintenance regime.

The operator’s allocation of resources and budget is consistent with its emphasis, said Mr Koh. He pointed out that 90 per cent of its 7,000 staff are working in the areas providing the train and bus services, and 90 per cent of its annual recurrent expenditure goes to these areas.

Mr Koh also highlighted the challenges of being a multi-modal public transport operator. While SMRT’s taxi business ha “turned around” last year, “the current regulatory regime and operating environment will not allow us to run a sustainable, profitable bus business”, Mr Koh said, citing structural issues where cost, particularly fuel cost, has “far outstripped fare adjustments”.

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