SMRT shelves board renewal plans for transition to new rail financing framework

PLANS for board renewal at SMRT Corporation have been shelved, as the public transport operator looks to transit to a new rail financing framework (NRFF) in the coming financial year.

In its annual report for financial year 2016, chairman Koh Yong Guan stated that continuity of the 10-member board should be maintained, so that the transition to the new framework can receive the attention it deserves.

"In the coming year, the planned transition to the new rail financing framework will need the board's closest attention. Board continuity is important at this stage so we have decided to defer the planned board renewal," said Mr Koh in the report that was made available on Friday evening.

The Nominating Committee has nominated and recommended that board members Patrick Ang Peng Koon, Yap Kim Wah, Peter Tan Boon Heng and Moliah Hashim retire. "All of them, being eligible for re-election, have offered themselves for re-election" at the forthcoming annual general meeting in July, the report noted.

Under the NRFF, SMRT is expected to emerge as an asset-light company and a pure operator. The government will own all operating assets and the associated risks for major capital asset investments. These assets will then be leased to SMRT.

Recent comments made by SMRT have sparked speculation that there has been substantial progress made in negotiations over the NRFF. CEO Desmond Kuek had said at a briefing in April that risk of fare revenue should be part of the negotiations.

Analysts have noted that SMRT had revealed more details about the NRFF in its FY16 financial report that was issued in late April. "There seems to be good progress on the negotiations in transiting to the NRFF," wrote Deutsche Bank then.

RHB said a few days later that it had raised its target price for SMRT Corp to S$2.25, citing rail reforms that are likely to take place earlier than anticipated. Transition to the NRFF will enable the rail division to earn a conservative 5 per cent operating margin, it added.

SMRT's counter was up 1.5 Singapore cents to close at S$1.525 on Friday.