Sky Bus bounced back from its worst fiscal year ever, as it recovered from a half a million Br loss in 2014/15.
Nevertheless, the picture that emerged from its 8th general assembly held at Federal Transport Authority on March 5, 2017, was one full of rage and revolt against the Board of Directors and the management of the company.
Sky Bus reported a net profit of 2.3 million Br in the recently ended fiscal year, enabling the company to earn three times its earning during the previous year.
This, however, was three times lower than the company’s target.
“The target was overambitious,” says Yosef G. Hiwot, board chairman of Sky. “We planned beyond our capacity.”
Behind these blossoming figures, however, lies some disappointment for shareholders. The Firm has not paid dividends to shareholders for more than two years, which has created discontent among shareholders.
“I would never believe that the company would make a profit and pay us dividend afterwards,” said Tesfamariam Andargie, a shareholder and founding member of the company.
Despite such drawbacks, the company’s management is optimistic about raising profits and shareholder returns in the coming years. Around 80pc of shareholders investment will be paid as a dividend for the 2015/16 fiscal year.
“It is a matter of management problems, I am sure it will be fixed in the coming years,” Yosef said.
Last year, shareholders’ dividend income declined by half a million to 3.2 million Br. In a bid to applaud shareholders, the general assembly, in its latest annual meeting, passed a decision for the shareholders to withdraw 80pc of their dividend and reinvest the remaining 20pc.
The total amount of income earned from investment activities reached 1.29 million Br, almost half of the company’s profit last year. This made shareholders believe the transport business is not viable.
“I prefer we focus on investment activities rather than hoping for operational income,” said another shareholder.
Sky’s profit performance is very low compared to its nearest competitor, Selam Bus Transport Share Company, whose profit was 33 million Br last year. Both are known for providing special bus services along the main routes of the country.
Yosef, the founder and chairman of Sky, attributes the slow profit growth to external factors.
“The problem of foreign currency is one of the huge problems we faced. We could not access letters of credit for more than a year to buy new buses and spare parts,” he told Fortune.
A year ago, nine of 21 buses owned by sky were out of service due to unavailability of spare parts. Its number of operational buses is very small relative to its competitors.
Selam Bus owned 59 buses up until the last fiscal year.
A single bus costs the company four million Birr, according to Yosef.
However, the audit report goes against Yosef’s argument.
“Adequate records showing the movement of stock have not been provided to us for our review and verification,” Sky’s audit report, by Ermias Nigussie & Co. Chartered Certified Accountants & Auditors, reads.
The auditors were not provided with the records showing the status and condition of used spare parts and replaced vehicle part.
“There was no trained personnel in the area to trace movements of spare parts,” Yosef argues.
In addition, the auditor was unable to prove records showing consumption of fuels.
We are unable to satisfy ourselves as to the correctness of the fuel cost, reads the audit report. Last year, Sky spent 9.7 million Br on fuel consumption, which is 13.3pc lower than the preceding fiscal year.
“As we use credit cards to buy fuels, we are not exposed to fuel embezzlement,” says Yosef.
Shareholders like Reta Liqu disagree with the Auditor’s report.
“I don’t have any trust in the auditor’s report,” Reta said. “It would be better if the company was inspected by an independent committee. If not it would be better to dissolute it.”
Another shareholder, Tesfamariam Andargie seeks the intervention of an independent body including the government as it is done in other sectors. However, the general assembly re-elected the Auditor for the next three years.
During the general assembly, the shareholders also decided to reduce the number of Board members to seven from the existing nine.
In the midst of the rage it is facing from shareholders, Sky has planned to start transport services to Khartoum soon.
Founded in 2008, with a paid capital of 60m Br and 3,400 shareholders, Sky currently travels to eight major cities and targets to add Khartoum on its routes list soon. Last year, it has transported 207,310 individuals, which is three times lower than of Selam Bus.
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