Expenses and depreciation impair functions of Ubour Logistics Services

AMMAN — Ubour Logistics Services is functioning at a loss as operational expenses and depreciation outstrip the company's earnings.

According to mid-year and annual financial statements, revealed in disclosures to the Jordan Securities Commission, Ubour's financial performance was in the red at the end of June 2015, June 2014 and the end of last year and 2013.

As a result, accumulated losses reached JD1.3 million at the end of June 2015, with the independent auditor indicating that the company was under weak liquidity as its current liabilities exceeded current assets by JD374,135 as of June 30, 2015.

As a Jordan-based company engaged in the field of land transportation, the company offers several types of logistics and truck transportation services for general cargo, foodstuff, commodity, cars and vehicles and containers. It employed 23 workers at the end of last year.

The auditor, Int'l Professional Bureau Consulting & Auditing, said in a report to the shareholders that it was not given  confirmations for the receivable amounts owed to the company from commercial debtors and for payables due to business creditors.

Moreover, the auditor did not receive confirmations for related party transactions involving not only payable amounts, but also receivables that have been carried forward from previous years and for which a JD82,723 provision has been taken.

Int'l Professional Bureau Consulting & Auditing added that it was unable to assess the fair value of an investment in Al Ahlia Enterprises covering 85,276 shares estimated at JD91,755 because trading in Al Ahlia shares was suspended in 2010.

"Ubour did not appraise its vehicles and we could not verify the fair value of trucks and trailers," the auditor wrote in the report, noting as well that the company did not acquire the title of vehicles which were purchased through a finance lease contract that expired on December 28, 2013.

This issue was raised during a general assembly meeting in May when a  shareholder inquired about the developments of a lawsuit filed by Ubour against Al Faouri Trading Company.

Ubour's legal counsellor told the general assembly that a lawsuit was filed against 14 former members of the company's board of directors accusing them of abuse of office, manipulating and squandering the funds of public shareholding companies and shareholders, dereliction of duties and reckless management.

He said the lawsuit was still under review and covered the following four issues:

— Buying trucks at manipulated and unreal prices and transferring money to the agent without being in hold of the trucks

— Investing and managing the surplus liquidity in a way that led to considerable loss

— Losses that ensued from the loan obtained from the Comprehensive Leasing Company

— An agreement for supplying truck spare parts and cancelling it afterwards without retrieving  the value of the agreement and the cheques that were written in favour of suppliers. 

Responding to a request for clarification about the exemption from customs granted to the company and the number of trucks entirely owned by Ubour, Vice Chairman Nidal Azar replied that the exemption had expired  and that a request was submitted to the Jordan Investment Commission for its renewal.

Azar said that out of 30 trucks owned by Ubour, only 18 were running as the remaining 12 were inoperative needing costly gearboxes.

"Why not sell the trucks and shift to another business?," asked another shareholder, Majd Jalal Abbasi.

The vice chairman answered that it was very difficult to sell the trucks in the local market because spare parts were not available, noting also that the trucks were subject to the investment promotion law.

Abbasi countered that the trucks can be sold abroad and expressed readiness to help in such a sale.

The company described competition as very tough mentioning in the 2014 annual report that it competes with specialised firms and that about 16,000 trucks, most privately owned, operated in the Kingdom.

"Most of those trucks run on the Amman-Aqaba-Amman route  to transport all kinds of Jordan's imports and that causes stiff competition in determining transport charges," the report said.

It noted that a slight improvement in transport charges occurred at the end of 2013 due to economic and political reasons surrounding the Kingdom.

Even so, the company indicated that the decision of the Transport Regulatory Commission and the Ministry of Transport limiting, to a maximum of nine, the number of monthly journeys per truck to and from Aqaba and applying  the queuing system in Aqaba Port affected its transport earnings.

The report showed that Ubour relied 100 per cent on Al Hamaydeh Transport Company to operate its trucks.

"The company contracted a domestic operator to run the trucks in exchange for JD1,320 monthly per truck," it said. "Under an agreement with the same party, a JD60,000 was to be spent on maintaining the trucks and keeping them in operation."

But, the report added, the maintenance could not be achieved as hoped for because spare parts were not available locally and had to bought from the Isuzu agent in Saudi Arabia.

Nevertheless, Ubour's management aims to enhance the performance of the company with new trucks in order to double income and try to lower losses as much as possible.

"The management looks to higher profitability through renewing current operations contract and securing new transport deals," it continued. 

Financially, Ubour's balance sheet as of June 30, 2015, showed net property and equipment at JD1.8 million out of JD2 million in total assets.

Notes accompanying the balance sheet also showed that the company was sued for JD92,400 and that shares within the company's portfolio of financial assets were under lien.

At the end of 2014, Abbasi, Azar, Mohammed Marwan Al Haddad, and Waheed Khalil Fazaa' were the main Ubour shareholders.