Recently, Workers' Party issued a National Day message which touches on the upcoming public transport fare hike. Few days later, Comfort Delgro come up with a press statement of rebuttals.I was not really paying attention to this little piece of information until I read the Chinese version on Zao Bao today. The headline is really catchy, accusing Workers' Party of "confusing" the public.
Well, I decided to pay a little bit more attention to what it says. According to Zao Bao, Comfort Delgro stated the following points:
1) It says that we should not make use of the profits of this "global company" to "mix up" with the talk of fare hike.
2) Half of the profits of Comfort Delgro are derived from overseas operations.
3) It says that if we want to see whether it is justifiable to raise bus fare or not, we should look at the financial report of SBS Transit.
4) According to the Zao Bao report, Comfort Delgro holds 75% of SBS Transit shares.
5) It says that from the quarterly financial report of SBS Transit, its profit has dropped by 3.9%.
6) It also says that the cost of fuel has increased by 40% for the past 1 year. Fuel cost takes up about 20% of their total operating costs.
7) As for staff cost, which make up of 50% of operation cost, it has increased by 3%.
Ok, these are the "facts" raise by the newspaper report. My stand is quite clear: if Comfort Delgro owns 75% of SBS Transit, any fare increase will of course benefit Comfort Delgro most! Besides, SBS Transit could be view as a subsidiary of Comfort Delgro. Thus, to see the impact of the fare increase and the validity of allowing such increase, we must of course take a wider approach, a bigger view.
For example, we cannot say GIC is badly managed just because it makes some losses in some of its investment, right? We must look at GIC as a whole entity. Similarly, when it comes to justifying whether a fare hike is necessary, we cannot just look at one small subsidiary's financial status and then claim that oh, it suffers financial burden, so we must let them increase price; even though when its mother company is enjoying a healthy annual growth in profits. Furthermore, which business in the world has the "immunity" from making losses?
Anyway, since the newspaper report mentioned about looking at SBS Transit financial report, so curiously, I did a search on both Comfort Delgro and SBS Transit financial report:
Comfort Delgro financial report at SES website:
SBS Transit Financial report at SES website:
From point 4, it says SBS Transit quarterly profit has dropped by 3.9. Taking a closer look at the financial report, this figure refers to the quarter to quarter comparison. i.e. compare to 2nd quarter 2005, 2006 2nd quater profit has dropped by 3.9%.
Well, fine. But when we look at point 6, claiming that cost of fuel has increased by 40%, I look at the quarter to quarter comparison, it has stated clearly that cost of fuel has only increased by 27.2%! So, where does the 40% come from? Even for half yearly comparison, the increase in fuel cost is only 36%. They round it up to 40%? This puzzles me alot.
And if you read further into the report analysis, you will realise that part of the increase in fuel cost is due to the increase of bus lines during that period!
Looking further at point 7, it claims that staff cost has increased by 3%. But I look at the financial report, it is actually 3.9% from the quarter to quarter comparison.What it did not mention is that turnover has increased by 5%!
But wait, aren't we suppose to be consistent in making comparison? Quarter to Quarter comparison is not a good comparison due to seasonal factors. I prefer to take a look at the half yearly comparison. To my shock, operating profits has only decreased by 0.7% instead of 3.9%!
Let me put it simply here,
>>>>>>>>>>>>Quarterly>>>>>>>Half Yearly
Turnover>>>>>> +5.1%>>>>>>>>>>> +5.0%
Staff cost>>>> +3.9%>>>>>>>>>>>> +1.9%
Fuel cost>>>>> +27.2%>>>>>>>>>>> +36%
Ops profit>>>>> -3.9%>>>>>>>>>> -0.7%
Profit less tax>>No change>>>>>> +6.3%
We must bear in mind that the increase in fuel cost is partly due to the increase of new bus services introduced.
So now we know that they have only highlight the "higher cost" figures, but did not report on the increase of Turnover and the increase of profit less tax of 6.3%! If we look at the half yearly result, the increase in both staff and fuel cost was largely offset by the 5% increase in Turnover, resulting only a slight drop of 0.7% of operating profits.
Overall, profit less tax still enjoys a healthy 6.3% for the first half of this year!
So what do you think, should PTC allow them to increase fare?
Goh Meng Seng
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37 comments:
Ah,
the fiction of accounting. The numbers mean absolutely nothing without the context.
I agree that if we look at the numbers alone, they need a fare increase. But these numbers do not tell us whether there are more bus miles driven (no proper KPI comparison?!) or less efficient buses used, or simply due to higher fuel costs (and attendant higher fuel tax$)
But its the fiction that is Singapore. The numbers will mean whatever the user wants them to mean.
There are reasons why accountants are needed to crunch numbers and provide perspective. Without proper perspectives, the numbers will continue to mean - absolutely nothing.
E.o.M.
My cost did not increase so much,
don't use me to confuse the public.
Blame PTC if fare increase.
Dear EoM,
You are absolutely right.
If you read the Financial report carefully, you will realize that there is a huge potential for SBS Transit to improve its bottomline. It could make more money from advertising.
This is very true if you look around; many precious space for advertisement in NorthEast Line underutilized.
They did manage to increase advertisement revenue for the first half year though, mainly through bus advertisement I believe.
Goh Meng Seng
Ah Seng,
This is my blog:
http://domtheclown.blogspot.com/
Cheers!
DOM
From points (2) and your comments on GIC, I take it you are saying that it is ok to use the overseas profits to subsidize local operations?
i.e. It is ok to keep SBS fares low (and lose money), and use the profits from overseas to cover the loss?
Now let me ask you this in reverse:
If next year they lose money in UK, will you support them in raising Singapore bus fares to cover that loss?
Dear Gerald,
Of course not! ;)
Comfort Delgro is a SINGAPORE company/MNC, it will take care of its origin country first, isn't it not?
That is what Singapore Identity all about. Social responsibility towards your own country first is first priority. If London business make loss, increase the fare there! Why need to increase the fare in Singapore?
This is a basic principle, take care of your own people first.
Goh Meng Seng
You know, actually, you are a talented individual.It is a very sad sight to see you having only a blog to issue your statements, unlike the ruling party having the entire media to say what ever they want. Really, i pity your plight. I know it is not easy to be an opposition, and, all i can say to you is all the best. However, i do have to note that inasmuch as it is difficult as playing opposition, playing government is not easy either... Yes, nevertheless, Singapore still needs people like you sir, and the Worker's party. Thanks for your efforts, and i hope that you and your party can soar to greater heights in future.
Hi Meng Seng,
On business principles, I find that your argument that Comfort Delgro overseas profit should cover SBS Transit is flawed. It undermines the fundamental interest of the shareholders.
I also believe the financial results are audited by public accounting institutions, released to the public and hence is credible in its representations. If there are any misrepresentations, you could have clarified with them instead of making suggestive remarks to question the integrity of the represented figures.
In my opinon, Comfort Delgro made fair rebutes but perhaps harsh words (e.g. use of word "confuse").
Your questioning deviates from the objectivity of asking if raising of fares is justifiable. The scruntiny on details of financial results did nothing to improve the situation.
As a concerned Singaporean, I believe it would be better for policy critics to focus on whether the existing framework allows fare adjustments decisions to be made in public interests and also whether our transport operators should be publicly-listed institutions and should be managed all under one entity.
BR
Dear mr g,
My position on public transport is in line with my party's position; i.e. it should not be a profit making entity but an entity run by the government on a non-profit basis.
But in the present situation where we have a transport company that is public listed and which has to be "accountable" to its shareholders first rather than the public, there would be of course "conflict of interests" in terms of public service. The second best solution is that it should make as much money as possible from overseas but for local operations, keep the prices low.
I think the financial results of both ComfortDelgro and SBS Transit are all in public domain as they are public listed companies. I do not see what other possibility of different figures arising unless there are important data that are not declared publicly?
Whatever data I quoted here are factual data taken out from the very financial result they cited that we need to take a look. So I did. They may use other different interpretations of raw data they might have in hand but the truth is, what I have quoted here are all in public domain. That's the best data I could get.
I do believe the financial results are audited and reflect truthfully about the financial status of the company. I think you have mistaken that I am questioning the validity of the financial results. In fact, I am not.
But it is the manner they try to represent it. For example, why only talk about quarterly results instead of half yearly result? Why only talk about increase in staff and fuel cost but did not talk about increase in Turnover (revenue)? Why no mention about the increase in profit after tax for the half yearly result?
The fault does not lie on the credibility of the financial results but the way the data is being presented. Selective presentation of data to support their "need to increase fare" is not acceptable in the name of public interests. They must present a fuller picture.
What I did here is merely to put up all the relevant data for all to see. Comfort Delgro is making money, SBS Transit is making money. Not only making money, but got growth in profits. period.
Goh Meng Seng
aiya, what the heck! do anyone here know the meaning of PUBLIC TRANSPORT?
fellow singaporean, public transport should be operated by govt and not by private sector.
want to operate by private sector also can la but for private sector to operator, cost should not be passed on the the commuters. I say so many time in GMS blog liao. there should be 2 type of petrol taxes.
1) For those who can afford to drive, go to ESSO, SHELL etc etc to top your tank - petrol tax increase has nothing to do with the poor. Anyway, I drive ma, so I am not complaining.
2)For public trasnport, reduced petrol tax and maintain the fares and make the poor happy.
Those who drive like me, don't complain - you want to enjoy luxury, you pay for it and help the poor. Agreed?
A WP Supporter
Can use overseas profits to cover up losses here but not vice versa. So what Mr Goh is telling the whole world is "I can cheat on my wife, my wife can't cheat on me!!!" Double standards. Mr Goh I pity your wife, pls share your wife with other men!!! dont monopolise her thank u!!!
Peachy_rose seems very generous, like to share her/his spouse with other people.
I very pity her/his unfortunately spouse.
peachy_rose is actually saying that she supports the fare increase. Just say it.But also think of those poor folks where every cent counts.
Dear MS,
At 9:23 PM, Goh Meng Seng said...
Dear Gerald,
Of course not! ;)
Comfort Delgro is a SINGAPORE company/MNC, it will take care of its origin country first, isn't it not?
That is what Singapore Identity all about. Social responsibility towards your own country first is first priority. If London business make loss, increase the fare there! Why need to increase the fare in Singapore?
Thanks for your reply (and for not deleting the post ala some other singapore organisations ;-)
That raises 3 new questions:
(1) If you agree the London and Singapore identity are separate, why bring up the overseas operations of Comfort (or GIC) in your post in the first place?
(2) How does your reply "London business make loss, increase the fare there! Why need to increase the fare in Singapore" jive with your reply "we cannot just look at one small subsidiary's financial status and then claim that oh, it suffers financial burden"
(3) If (if ah, but be careful ah, these blogs get archived and who knows what can come back to haunt you 5 years later) we swop the words Singapore and London around, to read "If Singapore business make loss, increase the fare there! Why need to increase the fare in London", would you still agree?
I wouldn't mind paying a few cents extra for them to shut off that blasted TVmobile.
I believe the issue isn't whether Comfort should subsidise the local transport arm through its foreign profits, but rather if Comfort is justified in asking for fare increases when its overall profits is still very good. This necessarily has to take into consideration that profits from overseas investments is only possible because of its PAST PROFITS arising from the duopoly of the transport sector in Singapore.
In other words, although 50% of its profits arise from overseas, the overseas profit was possible only because its excess profits in the past allowed it to invest overseas.
Bearing in mind the duopolistic nature of the transport sector, whereby commuters are price-takers with no viable alternative when fares increase, there is also a social and equitable responsibilty to society to keep fare affordable.
I guess you have never heard of the word Pruedence.
You understate profits and don't state profits until they are received and overstate losses and realize losses before they are even made.
It's a common practice by most firms.
So stop whining about the figures, they are perfectly normal.
You know the most funny thing about this blog ?
It's not the authorities or goverment who are rebutting you but normal people.
Workers party is a great party and it's sad that they have a looser like you in them making stupid comments which brings down the party's image.
I think Singapore's privatised public transport is uniquely Singapore indeed. It's a private company yet somehow it does not face any competition from other private bus companies who may want to operate those lucrative bus routes.
When TIBS(now SMRT) goes to northeast, SBS moves away. When NEL is completed, private bus can no longer operate there. So we have a private transport company that do not have any real competition that takes the role of a public transport.
I'm fine with privatising public transport, but shouldn't other private companies get the chance to compete with them?
Actually, I think this blog is great! At least, ordinary folks can rebutt his views. Try doing it to PAP!!!!
I think most of us would prefer that public transport be one of those few remaining public services that is not privatised.
Privatisation has not brought any real benefits to its commuters?? Air con bus stations, MobileTV, EZlink etc look good but we all can do without.
Privatisation should be about providing choice, not forcing everyone to have the same thing whether you want to afford it or not. The basic provision is expected in any social compact in any government.
And please don't tell me I can ride a bicycle or buy a car ... complementary not supplementary good.
Singaporeans are used to lame excuses for everything. Costs of goods for any business will not stay constant to guarantee the same net profit ratio every year. It's all business risks. Singapore transport companies are just kiasu entrepreneurs.
Quote
Mastermind said...
I think Singapore's privatised public transport is uniquely Singapore indeed. It's a private company yet somehow it does not face any competition from other private bus companies who may want to operate those lucrative bus routes.
When TIBS(now SMRT) goes to northeast, SBS moves away. When NEL is completed, private bus can no longer operate there. So we have a private transport company that do not have any real competition that takes the role of a public transport.
I'm fine with privatising public transport, but shouldn't other private companies get the chance to compete with them?
Now this I agree with! What other alternatives do poor guys in Punggol have when there's only SMRT-Train or SMRT-Bus or SMRT-LRT?
Answer: SMRT-Taxi. Or walk (a bit far yah). :-p
To peachy_rose
You are using a totally irrelevant analogy. Very typical for MIW-types to mix up their analogies. Not surprised.
We are talking about profitability of a govt-linked company (set up from day 1 using public monies - i.e. surplus of tax collections over payments for public services) which provides "public" not "private transport".
Your spouse is private to you and vice-versa. You never share your spouse ... So do realise how silly you look with that poorly thought out analogy.
cheers.
l_f
================
At 5:31 PM, peachy_rose said...
Can use overseas profits to cover up losses here but not vice versa. So what Mr Goh is telling the whole world is "I can cheat on my wife, my wife can't cheat on me!!!" Double standards. Mr Goh I pity your wife, pls share your wife with other men!!! dont monopolise her thank u!!!
To anon 7:49 am.
1) Please include a nickname to responses to your posts are easier to address. Even a simple abc as nickname is better than 7.49am Anon.
2) GMS is not disputing the financial statements. He is disputing the interpretation or "spin" that Comfort Delgro is putting on the figures. If you have to critise people, at least criticise correctly.
3) I hope you are not an accountant. You simplified explanation puts professional accountants to shame. Anyway, as per my point 2), no-one is disputing the profits/loss figure. It's just that Comfort Delgro wants to put a positive spin and use quarter comparisons that are favourable to its case of raising public transport prices. GMS is simply highlighting that point. If you need to rebut, please be more specific rather than sweeping generalisations about GMS not knowing how financial statements work. You don't seem to be a CPA yourself.
l_f
================
At 7:49 AM, Anonymous said...
I guess you have never heard of the word Pruedence.
You understate profits and don't state profits until they are received and overstate losses and realize losses before they are even made.
It's a common practice by most firms.
So stop whining about the figures, they are perfectly normal.
Don't use anonymouse.
Using abc is better then using anon.
LOL ? Your nick is anonymous too.
Scratch your own backside first lol ?
- Fellow Anonymous lover lol
GMS,
Thx for spending so much time and sharing yr insights with us w/o getting any reward in return. I can feel yr passion in debating for the truth and serving the pple, esp. the underprivileged. Guess u muz hv a very supportive wife and family.
All the best!!
Ah Seng, thanks for the check and balance! Not many people can interpret financial-statement easily. Now that I know this big corporation is trying to squeeze me and my hard earn money.
At least these party here is able to take rebutts better than those who that cant stand even a question from a teenager...
hey, the WP website is down?
Could you please get it up again? I wanted to view the manifesto but i couldn't. Yeah thank you!
Dear zeslene,
The WP website is not down. I have checked and it is ok. Please let me know if you still have access problems and maybe, let me know where or which ISP you are using to access WP website. Thanks.
Goh Meng Seng
BUT
http://perrytong.blogspot.com/
IS
Personal weblog of Yaw Shin Leong??
Dear blog,
Nope. perrytong.blogspot.com is the personal weblog of Perry Tong.
Goh Meng Seng
I mean u put it wrongly, u should put personal weblog of Perry Tong. can u goto the website chk it because u put wrongly.
Dear Blog,
Which links are you referring to? On this blog or WP's website?
I have tried the links and they are correct.
Goh Meng Seng
http://www.wp.sg/links/local.htm
Perry Tong Blog
http://Perrytong.blogspot.com
Personal weblog of Yaw Shin Leong
I mean
"Personal weblog of Yaw shin Leong"
should be
"Personal weblog of Perry Tong",
correct? It is just a very very not important mistake.
Can't find just ignore it.
Dear blog,
Ok, Thanks. Corrected.
Goh Meng Seng
increase fare in London because the business there made loss. Ha ha ha ha ha, are you sure you are a businessman ? When no one buys your product and you made a loss, you increase your price so that you can make profit ? Ha ha ha ha ha !
that's GMS logic. talk cock only, better stick to repair PC, hey fat ass, can you repair my laptop at $3 too?
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