mtc annual report 31 march 2009.pdf
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Mayibuye Transport Corporation
ANNUAL REPORT
31 MARCH 2009
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
Page 2 of 88
TABLE OF CONTENTS FOREWORD BY MEMBER OF THE EXECUTIVE COUNCIL 6
MESSAGE FROM THE CHAIRPERSON 7
1 GENERAL INFORMATION 9
1.1 SUBMISSION OF ANNUAL REPORT TO THE EXECUTIVE AUTHORITY BY THE CHIEF EXECUTIVE OFFICER OF MAYIBUYE TRANSPORT CORPORATION
9
1.2 INTRODUCTION BY THE CHIEF EXECUTIVE OFFICER 9
1.2.1 GOING FORWARD 10
1.2.2 PROGRAMME HIGHLIGHTS 10
1.2.2.1 Finance Highlights 10
1.2.2.2 Operations Highlights 11
1.2.2.3 Human Resources Highlights 11
1.2.2.4 Engineering Highlights 11
1.2.2.5 Communication and Marketing Highlights 12
1.2.2.6 Strategy and Policy Development 12
1.2.3 DOCUMENTATION PRODUCED 12
1.3 INFORMATION ABOUT THE ENTITY 13
1.3.1 AREAS OF OPERATION 13
1.3.1.1 Zwelitsha Depot 13
1.3.1.2 Reeston Depot 13
1.3.1.3 Queenstown Depot 13
1.3.1.4 Alice Depot 13
1.3.2 BOARD OF DIRECTORS 13
1.3.3 MANAGEMENT 14
1.3.3.1 Secretary 14
1.3.4 REGISTERED HEAD OFFICE AND POSTAL ADDRESS 14
1.3.5 BANKERS 14
1.3.6 AUDITORS 14
1.4 VISION AND MISSION STATEMENT 14
1.5 LEGISLATIVE MANDATE 15
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2 PERFORMANCE OF THE MTC DIVISIONS 17
2.1 AIM OF ENTITY 17
2.2 SUMMARY OF DIVISIONS WITHIN MTC 17
2.3 OVERVIEW OF SERVICE DELIVERY ENVIRONMENT FOR 2008/2009 18
2.3.1 REVENUE COLLECTION 18
2.3.2 EXPENDITURE 18
2.3.2.1 Capital Expenditure 18
2.4 OVERVIEW OF ORGANISATIONAL ENVIRONMENT 20
2.5 STRATEGIC OVERVIEW AND KEY POLICY DEVELOPMENTS FOR 2008/2009
20
2.6 PERFORMANCE OF DIVISIONS WITHIN MTC 21
2.6.1 OFFICE OF THE CEO 21
2.6.2 HUMAN RESOURCES DIVISION 23
2.6.2.1 Staff Establishment 23
2.6.2.2 Industrial Relations 23
2.6.2.3 Appointments & Promotions 24
2.6.2.4 Separations 24
2.6.2.5 Performance 24
2.6.3 FINANCE DIVISION 26
2.6.3.1 Financial Statistics for the five years to March 2009 28
2.6.3.2 FINANCIAL HIGHLIGHTS 29
2.6.3.2.1 Route Revenue 29
2.6.3.2.2 Government Grant-in-Aid 29
2.6.3.3 SERVICE DELIVERY OBJECTIVES, INDICATORS & ACHIEVEMENTS 29
2.6.4 ENGINEERING DIVISION 30
2.6.4.1 PURPOSE OF ENGINEERING DIVISION 30
2.6.4.2 STRATEGIC OBJECTIVES OF ENGINEERING DIVISION 30
2.6.4.3 SECTIONS WITHIN ENGINEERING 30
2.6.4.4 SERVICE DELIVERY OBJECTIVES, INDICATORS & ACHIEVEMENTS 30
2.6.4.4.1 Specific Challenges & Response 32
2.6.5 OPERATIONS DIVISION 33
2.6.5.1 PURPOSE OF OPERATIONS DIVISION 33
2.6.5.2 STRATEGIC OBJECTIVES OF OPERATIONS DIVISION 33
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2.6.5.3 SECTIONS WITHIN OPERATIONS DIVISION 33
2.6.5.4 SERVICE DELIVERY OBJECTIVES, INDICATORS & ACHIEVEMENTS 33
2.6.5.4.1 Specific Challenges & Response 34
2.6.5.4.2 AREAS OF OPERATION 35
2.6.5.4.2.1 Zwelitsha Depot 35
2.6.5.4.2.2 Reeston Depot 35
2.6.5.4.2.3 Queenstown Depot 35
2.6.5.4.2.4 Alice Depot 35
2.6.5.4.2.5 Summarised Statistics 35
2.6.5.4.3 Vehicle State 36
2.6.5.4.4 Accidents 36
2.6.6 MARKETING AND COMMUNICATIONS UNIT 36
3. AUDIT COMMITTEE COMMENTS ON THE 2008/2009 ANNUAL REPORT FOR THE MAYIBUYE TRANSPORT CORPORATION
39
3.1 APPOINTMENT OF AUDIT COMMITTEE MEMBERS / MEETINGS AND ATTENDANCE
39
3.2 AUDIT COMMITTEE RESPONSIBILITY 39
3.3 THE EFFECTIVENESS OF INTERNAL CONTROL 39
3.4 THE QUALITY OF IN YEAR MANAGEMENT AND MONTHLY / QUARTERLY REPORTS SUBMITTED IN TERMS OF THE PFMA
40
3.5 EVALUATION OF FINANCIAL STATEMENTS 40
3.6 APPRECIATION 40
4 ANNUAL FINANCIAL STATEMENTS 42
4.1 REPORT OF THE CHIEF EXECUTIVE OFFICER 42
4.1.1 GENERAL REVIEW 42
4.1.1.1 Overview of Financial Results 42
4.1.1.2 Operating Grant-in-Aid 43
4.1.1.3 Operating Expenses 43
4.1.2 SIGNIFICANT EVENTS AND PROJECTS 43
4.1.3 INVENTORIES 44
4.1.4 CORPORATE GOVERNANCE ARRANGEMENTS 44
4.1.4.1 BOARD MEMBERS 44
4.1.4.2 COMMITTEES 44
4.1.4.3 STATEMENT OF RESPONSIBILITY BY THE BOARD OF DIRECTORS 45
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4.1.5 RISK MANAGEMENT BY THE CORPORATION 45
4.2 APPROVAL 45
4.3 AUDITOR GENERAL’S REPORT 46
4.4 ANNUAL FINANCIAL STATEMENTS AS AT 31 MARCH 2009 52
4.4.1 BALANCE SHEET 53
4.4.2 INCOME STATEMENT 54
4.4.3 STATEMENT OF CHANGES IN EQUITY 55
4.4.4 CASH FLOW STATEMENT 56
4.4.5 ACCOUNTING POLICY NOTES 57
4.4.6 NOTES TO THE ANNUAL FINANCIAL STATEMENTS 65
4.4.7 DETAILED INCOME STATEMENT 81
5 HUMAN RESOURCES MANAGEMENT 85
5.1 ORGANISATIONAL STRUCTURE 85
5.2 VISION & MISSION OF HUMAN RESOURCES DIVISION 85
5.2.1 VISION 85
5.2.2 MISSION 85
5.3 KEY HUMAN RESOURCES ISSUES 85
5.3.1 OBJECTIVE 1: DEVELOP AND MAINTAIN SOUND HUMAN RESOURCES PRACTICES
85
5.3.1.1 Develop sound human resources practices in MTC 85
5.4 COMBINED ANNUAL AND SICK LEAVE UTILISATION FOR THE PERIOD 1 APRIL 2008 TO 31 MARCH 2009
86
5.4.1 DISABILITY LEAVE 87
5.5 LABOUR RELATIONS – DISCIPLINARY HEARINGS FINALISED 87
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FOREWORD BY MEMBER OF THE EXECUTIVE COUNCIL
The Eastern Cape Department of Roads and Transport would like to express its sincere gratitude to the employees and Board of Directors of Mayibuye Transport Corporation (MTC) for the continuous improvement in the performance of the institution.
It is gratifying to note the steady continuation of the growth of the corporation, which includes the appointment of three female members of the board of directors, namely Ms. Church, Ms. Loyilane and Ms. Shweni-Booysen. This clearly demonstrates the Department’s commitment to address the gender imbalances at Board level.
We have observed the improvement in the corporation’s efficiencies through the introduction of new systems, including the Fleet Management System. As a result, the Corporation received a clean audit report during the financial year under review. The Department has, through its grant-in-aid program, enabled the Corporation to upgrade its bus fleet and depot infrastructure, which resulted in the transportation of approximately 2 million passengers.
The Department of Roads & Transport will continue to support the Corporation in order to enhance its internal capacity and to deliver on its mandate of rendering a safe, affordable, accessible and reliable public transport service to the communities that it serves.
HON. GHISMA BARRY MEC FOR TRANSPORT, SAFETY AND LIAISON
Hon Ghisma Barry MEC for Transport
Hon Gloria Barry MEC for Transport, Safety & Liaison
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MESSAGE FROM THE CHAIRPERSON The past year has been another challenging year for Mayibuye Transport Corporation with the second half presenting even more challenges as the Corporation faced unprecedented financial constraints. This resulted in the Corporation diverting capital funds in order to finance operating activities and in turn shelving some capital projects that were planned for the year. This includes among others, the planned acquisition of two midi-buses.
The Corporation was not immune to the effects of economic meltdown and sustained increase in crude oil prices. This finds expression in higher variable expenses more particularly on fuel usage. In trying to be innovative, the installation of modern fleet management technology was identified as one of the critical projects to assist in controlling operating costs. At the time of compiling the report, the roll out of the system was nearing completion stage.
That said, it is worth noting that with the strengthening of controls especially on revenue generation side, positive spin-offs are there for everyone to see as budgeted revenue was exceeded by 17.67%. More importantly, I am elated to report that the Corporation achieved unqualified audit for the year under review which, undoubtedly, was a product of the hard work of the management team under the stewardship of the CEO. This evolved with the gradual reduction on the number of qualifications down to zero during the year under review. This milestone will not in any way distract MTC Board in continually seeking to improve the performance of the Corporation. Instead, it is viewed as a stepping stone to position MTC as one of the best Corporations in the province by ensuring that good corporate governance practices are an integral part of the running of the institution. In order to facilitate enabling conditions for such an environment, the Board-approved strategic plan for 2009/10, talks to the urgent need of employing a compliance officer and at the time of compiling the report, processes were already underway to fill the position.
It is the Board’s view that whilst MTC Board and management are doing their best in executing the mandate of the Corporation, this has to be met by political will on the part of our government to support the Corporation. Whilst acknowledging capital allocation over the past three years, the support in the form of huge capital injection to meet recapitalisation needs of the fleet and MTC infrastructure is now more crucial than ever before. During the latter few months we have seen impounding of buses by traffic authorities resulting in forced downscaling of operations and thereby leaving communities stranded for extended period of time. The Board will be engaging the relevant department/s to solicit such funds which we believe will save this struggling Corporation.
On behalf of the Board of Directors, I wish to thank the Portfolio Committee on Roads and Transport, Department of Roads and Transport, management and staff of MTC, Commuters, Service Providers and partners for their unwavering support.
___________________________________________________________ P.L.C. MASETI CHAIRPERSON OF THE BOARD OF DIRECTORS MAYIBUYE TRANSPORT CORPORATION
Mayibuye Transport Corporation
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PART 1
GENERAL INFORMATION
MTC BOARD OF DIRECTORS
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1 GENERAL INFORMATION 1.1 SUBMISSION OF ANNUAL REPORT TO THE EXECUTIVE AUTHORITY BY THE
CHIEF EXECUTIVE OFFICER OF MAYIBUYE TRANSPORT CORPORATION
In accordance with the provisions of Section 40(1)(d) of the Public Finance Management Act, 1999 (Act 1 of 1999) as amended, the Annual Report for the fiscal year ended 31 March 2009 is hereby submitted to the Member of the Executive Council Responsible for Roads & Transport in the Province of the Eastern Cape.
________________________________________
L.R. MBINDA CHIEF EXECUTIVE OFFICER MAYIBUYE TRANSPORT CORPORATION
1.2 INTRODUCTION BY THE CHIEF EXECUTIVE OFFICER
MTC is committed to operating an effective organisation; hence policy implementation and further systems development received priority during the year under review. Financial management systems have improved significantly. We will continue to steer our audit turnaround plan towards clean audit reports.
The management will continue driving a process of enhancing financial management and promoting viability through revenue generation. The management will strengthen relations with the Board to support it in exercising its oversight responsibility.
This oversight report reflects on the strategic and operational plan for 2008/09 financial year and responding, but not limited, to issues raised by the:
Department of Roads & Transport;
Portfolio Committee on Roads & Transport;
Provincial Growth and Development Plan Review;
Auditor General;
Input from commuters who are beneficiaries of our services.
The performance report, synopsized in this introduction, will share progress achieved during the year under review.
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1.2.1 GOING FORWARD
The Corporation will continue maximising inter-governmental co-operation that will result in close working relations with the Department of Roads and Transport. This will help in developing and enhancing the Corporation’s capacity to serve its’ customers during 2009/10. We will also be monitoring the findings of the Legislature on the Corporation and actively work towards their implementation and resolution.
At a strategic level we will develop a very strong business case and lobby the relevant stakeholders for capital funding as our depot infrastructure, fleet and workshop equipment is deteriorating. This is making it difficult for us to continue running an efficient and cost effective organisation. MTC will also continue to invest in its’ human resources and capacitate the Corporation with the appropriate calibre of staff.
I take this opportunity to thank our commuters, MTC staff and MTC Board of Directors for their contribution in making the Corporation realise its’ goals and objectives.
1.2.2 PROGRAMME HIGHLIGHTS
1.2.2.1 Finance Highlights
Development and implementation of a fraud prevention plan and risk management strategy and establishment of the risk committee.
Improving audit outcomes and financial management through:
� Functional internal audit unit and audit committee.
� Developing accounting and internal processes that resulted in elimination of long outstanding audit queries.
� Implementation of a fixed asset register that is SA GAAP compliant.
� Establishment of a supply chain management as per the requirements of PFMA.
� Policy and procedure development and implementation.
2009/10 will be focused towards the following:
Upgrading the accounting operating system.
Converting fixed assets module to be integrated to the accounting operating system.
Development of a financial manual that will serve as a guide for all the activities within the division.
Implementing and operating own payroll system.
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1.2.2.2 Operations Highlights
Increase in private hire and route revenue from R15,055,438 to R19,426,462.
Won Driver of the Year Competition at a Provincial Level under Female Bus Driver Category.
Continued to show commitment on transformation in terms of Employment Equity Act by employing 2 female candidates in critical positions, i.e. Despatcher and Supervisor.
Initiated Trainee Female Bus Driver Project to attract more female bus drivers.
1.2.2.3 Human Resources Highlights
The vacant position of HOD Human Resources was filled.
The Industrial Relations Policy, Leave Policy and Subsistence and Travelling Policy were approved by the Board of Directors.
Four lady bus drivers were recruited in order to address male dominance in the Operations division.
Grades were flattened in Engineering division due to consolidation of certain tasks and this resulted in streamlined Job Profiles.
An Internship program involving trainee lady bus driver has been rolled out.
1.2.2.4 Engineering Highlights
Three buses were refurbished during the year under review. This includes one unit that was refurbished in-house as a pilot project.
Capital provision for the financial year allowed for R100,000 to accommodate replacement of redundant workshop equipment.
Limitations in capital provision called for some innovation, hence the procuring of two used buses that were delivered in May 09. Although this is a drop in the ocean, through these additional units revenue generation was enhanced.
In reality, we needed an aggressive recapitalisation program that would deliver 43 new buses replacing the old ones in order to improve our service.
We are proud to report that the state of our reception area and boardroom in Reeston depot are indicators that the long term objective of elevating this depot into head office status will one day become a reality.
The Corporation purchased a mini bus as staff transport during the year under review.
The power back-up system could not be procured due to financial constraints. This results in operations being affected whenever power outages occur.
Our efforts in the area of skills development yielded positive results as two semi-skilled mechanics acquired artisan status during the year under review.
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1.2.2.5 Communication and Marketing Highlights
The position of Communications and Marketing Officer was filled during the last quarter of the 2008/09 financial year. Since the filling of this vacancy, there were a number of achievements in fulfilment of the obligations of the strategy. Even though certain objectives were realized, the resourcing of this unit will see tangible results being achieved in respect of targets set for 2009/10.
Developed MTC into a strong brand;
Created a positive perception of MTC and upheld the image of the Corporation;
Inculcated a culture of customer service and stakeholder participation.
1.2.2.6 Strategy and Policy Development
MTC reviewed its 2007/08 Treasury aligned Strategic, Performance and Operational Plans. This process was inclusive and enjoyed the participation of all relevant stakeholders. A process was initiated to educate staff and raise awareness about the strategic plan. The following strategic documents and policies were approved for 2008/09:
1.2.3 DOCUMENTATION PRODUCED
Five-year Strategic Plan and Annual Performance Plan
Risk Management Strategy
Fraud Prevention Plan
Skills Development Plan Policy
Industrial Relations Policy
Occupational Health and Safety Policy
Sexual Harassment Policy
Induction Policy
Exit Interview Policy
Overtime Policy
Subsistence and Travel Policy
Leave Policy
Board Charter
Code of Conduct
Delegation of Authority
Performance Agreement for Senior Managers
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Board Plan 2008/2009
1.3 INFORMATION ABOUT THE ENTITY
Mayibuye Transport Corporation is registered as a Corporation in terms of the Ciskei Act 16 of 1981 by Government Decree number 89 of 1990. MTC is a Schedule 3D company in terms of the Public Finance Management Act (PFMA). MTC is currently considered a public entity and its shareholder is the Department of Roads & Transport in the Eastern Cape.
At present MTC receives a subsidy in the form of a grant-in-aid to cover the operating expenses of the Corporation.
The main objective of Mayibuye Transport Corporation is to provide an affordable bus transport service to the predominantly rural communities of the former Republic of Ciskei where public transport was either inadequate or not existing at all.
1.3.1 AREAS OF OPERATION
MTC currently provides passenger transport services through its four bus depots:
1.3.1.1 Zwelitsha Depot
This depot is situated opposite Zone 8, along Route 347. It covers the area of King William’s Town.
Contact Details
Zwelitsha Depot P.O. Box 19596 Mount Coke Road Tecoma, East London Zwelitsha 5608 5214
Tel: 040 – 654 1351 Fax: 040 – 655 1907
1.3.1.2 Reeston Depot
The Reeston depot is situated on the corner of Drummond and Mdantsane Access Roads between Mdantsane and East London. It covers the Potsdam and Newlands areas of Buffalo City.
1.3.1.3 Queenstown Depot
This depot is situated at Queendustria, Ezibeleni and services the Whittlesea and Ntabethemba areas of the Chris Hani District Municipality.
1.3.1.4 Alice Depot
This depot is situated in Alice and covers the Nkonkobe Municipal area.
1.3.2 BOARD OF DIRECTORS
Mr. P.L.C. Maseti Chairperson Mr. S.J. Nyengane Deputy Chairperson Mr. P.P. Balfour Member Mr. D. Lefutso Member Mr. T. Matiwane Member
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Mr. M. Tuswa Member Mr. A.J. De Vries Member Mr. T.A. Thomas Member Ms. A.M. Church Member Ms. N.E.P. Loyilane Member Ms. N. Shweni-Booysen Member
1.3.3 MANAGEMENT
Mr. L.R. Mbinda CEO Mr. L.C. Mtise HOD: Human Resources Mr. Z.D. Leni HOD: Engineering Mr. L. Coetzer Chief Financial Officer Vacant HOD: Operations
1.3.3.1 Secretary
Mrs. C. Cronjé
1.3.4 REGISTERED HEAD OFFICE AND POSTAL ADDRESS
Reeston Depot P.O. Box 19596 Cnr of Drummond and Mdantsane Access Roads Tecoma, East London Wilsonia 5214 East London 5247
1.3.5 BANKERS
Standard Bank of South Africa Limited King William’s Town
1.3.6 AUDITORS
Auditor-General
Audit Committee:
Mr. M. Mantyi
Mrs. R. Luzuka
Mr. J. Mdeni
Internal Audit Unit (PricewaterhouseCoopers)
1.4 VISION AND MISSION STATEMENT
The VISION of Mayibuye Transport Corporation is as follows:
“Mayibuye Transport Corporation strives to be a leading public transport service provider in its areas of operation. Guided by the ethos of customer service excellence, Mayibuye Transport Corporation
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(MTC) will provide passenger transport services which are community-driven. It will continuously strive to be a safe, reliable and technically efficient organization”.
The MISSION of Mayibuye Transport Corporation is as follows:
“In pursuance of its vision, Mayibuye Transport Corporation (MTC) strives to:
Maintain the highest possible standards in the provision of an effective and efficient transport service to the Eastern Cape communities on selected routes.
Provide an enabling environment conducive to the provision of an affordable, convenient and safe mode of public transport.
Keep abreast of trends and developments in the sector to meet changing customer and stakeholder needs.
The creation of strategies that lend support to the Provincial Growth and Development Plan, Batho Pele and BEE initiatives.
1.5 LEGISLATIVE MANDATE
The Corporation derives its existence from the following legislative mandate:
Basic Conditions of Employment Act (Act No of 1997).
Corporations Transitional Provisions Act (Act 12 of 1995) (Eastern Cape)
Employment Equity Act, 1998 (Act No 55 of 1998).
Fraud and Corruption Act (Act 12 of 2004).
Labour Relations Act (Act No 65 of 1995).
National Land Transport Transition Act, 2000 (No 22 of 2000) (NLTTA).
National Road Traffic Act, 1996 (Act No. 93 of 1996).
National Transport Policy 1996.
Occupational Health and Safety Act (Act No 85 of 1993).
Passenger Transportation (Interim Provisions) Act, 1999 (No 11 of 1999).
Preferential Procurement Policy Framework Act, 2000 (Act No 5 of 2000).
Promotion of Access to Information Act (Act No 2 of 2000).
Public Finance Management Act, 1999 (No 1 of 1999) (PFMA).
Road Transportation Act, 1977 (Act No. 74 of 1977).
Skills Development Act, 1998 (Act No 97 of 1998).
Skills Development Levy Act, 1999 (Act No 9 of 1999).
Including regulations emanating from the above legislation.
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PART 2
PERFORMANCE OF MTC DIVISIONS
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2 PERFORMANCE OF THE MTC DIVISIONS The strategic focus of the Mayibuye Transport Corporation can be summarised as follows:
Strengthen collaboration and accountability between the Board and Management in building strong and good governance.
Develop MTC into a strong brand.
Implement sound human resources practice in MTC.
Ensure sound financial and administrative practice at MTC.
Develop an organization with strong ITC capabilities.
Strive to maintain world class standards.
Promote safe, reliable public transport services.
Reduce the rate of accidents in its area of operation.
Comply with all laws governing public entities.
2.1 AIM OF ENTITY
To ensure effective and efficient governance and administration structures, systems and culture capable of responding to Provincial Roads and Transport priorities.
2.2 SUMMARY OF DIVISIONS WITHIN MTC
The Corporation’s activities are organised in the following divisions:
Division Sub-Division
1.1 Personnel Administration
1.2 Industrial Relations
1.3 Training and Development
1.4 Employee Assistance Programme (EAP)
1. Human Resource Management
1.5 Organisational Development
2.1 Debtors Control
2.2 Creditors Control
2.3 Accounts
2.4 Salaries
2.5 Information Technology
2. Finance
2.6 Supply Chain 3. Operations 3.1 Revenue Collection
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Division Sub-Division
3.2 Statistics
3.3 Despatch
3.4 Inspection
3.5 Private Hire
3.6 Traffic
4.1 Stores
4.2 Tyres
4.3 Maintenance (Vehicles and Infrastructure)
4. Engineering
4.4 Purchasing
2.3 OVERVIEW OF SERVICE DELIVERY ENVIRONMENT FOR 2008/09
2.3.1 REVENUE COLLECTION
Route and Private Hire Revenue
Year Budget Actual Variance
2007 12,550,000 12,149,128 (350,872)
2008 14,131,397 15,055,438 924,041
2009 16,509,000 19,426,462 2,826,862
2.3.2 EXPENDITURE
Item 2009
Actual
2008
Actual
2007
Actual
Profit / (Loss) from operations 1,765,461 2,580,204 (1,313,625)
Personnel 26,147,182 23,173,514 20,846,028
Audit fees (including internal audit fees for current year) 898,280 930,032 312,983
Other operating expenses 21,538,376 16,429,831 14,175,959
Depreciation 7,602,035 2,942,959 1,809,580
2.3.2.1 Capital Expenditure
The Corporation has received a capital grant from the Department of Roads & Transport which has been spent as follows:
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2008/09
Item Budget Expenditure Variance
New Buses & Refurbishment
2,612,000 4,904,223 (2,292,223)
New Vehicles - 274,547 (274,547)
Operating Equipment 70,000 108,008 (38,008)
Workshop Equipment 1,130,000 87,559 1,042,441
Office Equipment - 242,428 (242,428)
Office Furniture 50,000 244,915 (194,915)
Depot Upgrading 588,000 271,167 316,833
IT Infrastructure 50,000 - 50,000
Zwelitsha Title Deed 500,000 - 500,000
Total 5,000,000 6,132,847 (1,132,847)
2007/08
Item Budget Expenditure Variance
New Buses 2,200,000 - 2,200,000
Second hand buses 1,785,240 - 1,785,240
Refurbishment 1,100,000 1,282,167 (182,167)
Operating Equipment 163,840 150,291 13,549
Workshop Equipment 300,000 331,481 (31,481)
Office Equipment 200,000 294,009 (94,009)
IT Infrastructure 100,000 45,269 54,731
Depot Upgrading 1,150,920 1,095,514 55,406
Total 7,000,000 3,198,731 3,801,269
Depreciation Rates for Assets Percentage
Ancillary Vehicles 25%
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Depreciation Rates for Assets Percentage
Buses – Body 12.5%
Buses – Chassis, engine, etc 8.33%
Office Equipment 20%
Office Furniture 10%
Operating Equipment 20%
Workshop Equipment 25%
Buildings 2%
2.4 OVERVIEW OF ORGANISATIONAL ENVIRONMENT
Mayibuye Transport Corporation (MTC) is a government parastatal that was established in 1990. It strives to provide an effective and efficient public transport service to its customers. It has depots in Alice, Reeston, Queenstown and Zwelitsha. Its peak fleet presently comprises of 48 buses servicing major routes in the former Ciskei and Border areas. Its client base stems from the broad spectrum of the Eastern Cape population. It has created a niche for itself in the public servants’ market. MTC’s name has been synonymous with affordability and reliability.
The Corporation had a total staff complement of 171 as at 31 March 2009, which reflects a staff to bus ratio of 3:1 in line with the industry average, a number of vacancies in critical positions cannot be filled as a result of financial constraints.
The following critical positions have been identified in the 2008/09 financial year:
Compliance Manager
HOD Operations
HR Officer
Protection Services Officer
Occupational Nurse.
2.5 STRATEGIC OVERVIEW AND KEY POLICY DEVELOPMENTS FOR 2008/09
In June 2008 the MEC for Provincial Safety Liaison, Roads & Transport appointed three female directors to address the gender imbalances and strengthen the oversight role played by the Board of MTC.
MTC Board is mandated by the Department of Roads & Transport to restructure the Corporation. As a result of this mandate the Board is currently developing a business case that will be submitted to the Department in June 2009 financial year.
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The Audit Committee continues working with the Internal Audit unit (PricewaterhouseCoopers). The Board of Directors are getting feedback in Board meetings from the Chairperson of the Audit Committee.
An MTC five year Strategic Plan and Annual Performance Plan for 2008/09 financial year was developed and approved by the Board of Directors. A Fraud Prevention Plan and Risk Management Strategy are also in place.
Due to financial constraints, the Corporation could not fill all the vacant positions during the year under review. 96% of our organogram is populated and critical positions filled in the next financial year.
2.6 PERFORMANCE OF DIVISIONS WITHIN MTC
2.6.1 OFFICE OF THE CEO
The office of the CEO provides strategic leadership and direction for the organization and gives support to the Board of Directors.
Measurable Objectives Performance Measure Performance Indicators and Targets
Deviations / Comments
Review Board Plan. Board Plan reviewed and implemented.
Target achieved.
Review Board Charter. Board Charter reviewed and implemented.
Target achieved.
Board Induction Plan for new Board members.
New Board Members inducted.
Target achieved.
Board Appraisal Tool. Board Appraisal Tool developed and adopted.
Due to limited finance resources we have not developed the Appraisal Tool for Board Members.
Code of Conduct for MTC.
Code of Conduct developed. Target achieved.
Board Development Plan.
Board Development Plan implemented.
Target achieved.
To promote strong and good governance at MTC.
Delegation of Authority and Performance Agreement for MTC management monitored
Delegations of Authority and Performance Agreement for the CEO and HOD’s implemented.
Target achieved.
L.R. Mbinda CEO
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
Page 22 of 88
Measurable Objectives Performance Measure Performance Indicators and Targets
Deviations / Comments
and evaluated.
Strategic leadership and direction.
Review, adopt and implement MTC strategy for 2008/09 and align to Treasury Guidelines.
Strategic Plan reviewed, adopted and implemented according to Treasury Guidelines.
Target achieved.
Maximise inter-governmental co-operation.
Sustain and strengthen partnerships in the D.O.R.T., Public Entities, the Legislature and other departments.
Existing partnerships sustained and strengthened.
New partnerships developed.
MTC management participate in structures like BRT, BCM Integrated Transport Plan, SABOA, SABEA, etc.
Target achieved.
Develop a Compliance Plan for all legislative mandates.
Develop a Compliance Plan for all relevant legislative mandates.
Compliance Plan for legislative mandates developed and implemented.
An annexure for compliance is included in our Risk Management Strategy and implemented.
Target achieved.
Formulate Policies and Procedural Framework.
Develop and implement policies and procedure manuals.
Policies and Procedure manuals developed and implemented.
Target achieved.
Implement Health & Safety Programmes.
Implement Health and Safety Programme as per the legislative prescripts.
Health & Safety Programme implemented in line with legislation: 75%.
Health & Safety implemented.
Partially achieved: 75%.
e.g. Health & Safety Reps in place and meetings are taking place.
To manage Corporation risks for sustainability.
Risk Management Plan in place.
Fraud Prevention Plan in place.
Risk Action Plan implemented.
Fraud Prevention Plan implemented.
Risk Management Strategy and Fraud Prevention Plan approved by the Board of Directors and implemented.
Target achieved.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
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Measurable Objectives Performance Measure Performance Indicators and Targets
Deviations / Comments
Capacitate MTC with the relevant human resources.
To appoint high calibre candidate to fill the management vacancy of HOD of Human Resources as well as the other funded junior positions.
MTC organogram populated.
Target achieved.
HOD of Human Resources appointed.
Inculcate a customer service ethic in all divisions of MTC.
Develop a customer service charter poster for employees.
Develop and implement a customer service excellence course for all front-line employees.
Customer service charter posters printed and disseminated at all MTC depots.
Customer service excellence course held at all depots (40%).
Target not achieved due to budgetary constraints.
Currently pursuing options of in-house training.
Ensure timely, accurate and reliable financial reporting.
Provide timely, accurate and reliable financial reporting to the Board, Department and AG.
Timely submissions to the Board. D.O.R.T. and AG.
Target achieved.
Improve service delivery at MTC.
Service delivery improved.
Develop Service Delivery Improvement Plan.
Draft 50%
2.6.2 HUMAN RESOURCES DIVISION
2.6.2.1 Staff Establishment
The personnel to operating bus ratio are 3:1, in line with the industry norm. This means that the Corporation has a staff complement of 171 while operating a fleet of 62 buses. (48 peak buses plus 14 non-operational buses)
It should be noted that during the year under review the Corporation has managed to be in line with the ideal industry norm of 3:1 with some critical positions still vacant.
2.6.2.2 Industrial Relations
The Corporation has a collective agreement with the South African Transport and Allied Workers Union (SATAWU). MTC is also affiliated to the South African Bus Employers Association (SABEA) who is also a member of the South African Road Passenger Bargaining Council (SARPBAC).
The total membership of the Union stood at One Hundred and twenty (120) employees.
C. Mtise HOD: HR
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
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2.6.2.3 Appointments & Promotions
The position of the HOD: Human Resources was filled.
2.6.2.4 Separations
22 staff members left the employ of the Corporation during the year under review:
Retired Dismissed Resigned Absconded Disabled Deceased
5 9 3 3 1 1
2.6.2.5 Performance
The Human Resources Division has been able to demonstrate results against its measurable objectives as indicated below:
Measurable Objective
Performance Measure
Target Output 2008/09
Actual Output 2008/09
Deviation from Target & Reasons for Non-
Achievement
Train lady bus drivers to acquire driver's licences and PrDPs.
Train 10 lady drivers to acquire Learner's licences.
Eight ladies acquired Learner's licences.
20%
Develop an accelerated artisan program guided by MERSETA.
Identify two semi-skilled mechanics to be trained as artisans.
Two semi-skilled mechanics achieved artisan qualifications.
None.
Conduct a skills audit.
Compile a skills development plan.
Address organisational skills deficiencies.
Implement internship programs.
Enrol three unemployed graduates to an internship program.
Two interns are getting exposure in the HR division and another one in the Marketing and Communication Unit.
None.
Promote sound labour relations within MTC.
Produce an Industrial Relations Policy. Circulate to relevant stake holders for comment and input.
Finalise policy for Boards approval. Circulate to all employees of the Corporation. Conduct workshops to educate employees.
Policy approved by the Board. Booklets printed and given to all employees. Workshops conducted in all depots.
None.
Facilitate overall physical and psychological
Develop Employee Wellness Programs to support employees.
Conduct EAP at all depots.
Employee Wellness programs held at all MTC depots.
None.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
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Measurable Objective
Performance Measure
Target Output 2008/09
Actual Output 2008/09
Deviation from Target & Reasons for Non-
Achievement
All MTC staff to be able to access good medical treatment through their membership of the Medical Aid.
MTC employees are getting good medical treatment.
None.
Job Consolidation and Evaluation.
Consolidate Engineering jobs in order to be in line with the strategic objective of Engineering Division.
Draft new Job Descriptions, consult with stake holders including managers and labour, evaluate new job descriptions (50%).
Job Consolidation concluded, evaluation is in progress. (50%)
None.
Adherence and compliance to labour legislation.
Employees to have employment contracts and signed job descriptions in their files.
New recruits have signed employment contracts.
New recruits have signed employment contracts.
Job descriptions are being revised.
None.
To capacitate MTC with the relevant human resources.
Fill budgeted positions with candidates who will add value to MTC.
Fill the vacant position of HOD HR.
Position of the HOD Human Resources has been filled.
None.
Policy management.
Policy review and development of policies based on need and compliance.
Review the following policies: Training and Development, Exit, Induction, Recruitment.
Draft policies circulated to stakeholders for comment and input.
None.
Promote sound labour relations.
Revise recognition agreements entered with Trade Unions.
A signed recognition agreement to be in place.
A revised recognition agreement has been signed by the CEO and the Union.
None.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
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2.6.3 FINANCE DIVISION
The financial performance of the corporation is outlined in the income statement in the audited annual financial statements.
Revenue
Total revenue (Combined Revenue) generated from bus fares for the financial period under review amounted to R19,426,462. Revenue generation by depot was as follows:-
Revenue generation by segment
Depot 2009 2008
Zwelitsha 9,151,805 6,265,809
Reeston 3,602,957 2,926,797
Queenstown 5,091,431 4,468,357
Alice 1,580,269 1,394,475
TOTAL 19,426,462 15,055,438
The combined revenue has been achieved by an average number of 48 operating buses (2008: 46) with a total number of 2,566,682 kilometers travelled. Private hire kilometers amounted to 134,196 (2008: 79,841 Km) while route kilometers stood at 2,432,486 (2008: 2,306,722) for the financial year.
The increase in revenue in 2009 as compared to 2008 is due to the following:
Increased bus fares.
Improved efficiency levels.
Control measures were strengthened.
Combined revenue has been generated by each depot as follows:-
Revenue generation by service
2009 2008
Depot Route
Revenue Private Hire
Revenue Route
Revenue Private Hire
Revenue
Zwelitsha 7,964,007 1,187,798 5,683,388 582,421
Reeston 3,024,065 578,892 2,521,770 405,027
Queenstown 4,876,983 214,448 4,181,377 286,980
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
Page 27 of 88
2009 2008
Depot Route
Revenue Private Hire
Revenue Route
Revenue Private Hire
Revenue
Alice 1,405,969 174,300 1,212,076 182,399
TOTAL 17,271,024 2,155,438 13,598,611 1,456,827
Revenue and expenditure trends as at 31 March 2009
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The above graph shows that as at 31 March 2009 the corporation ended with a less favourable balance compared to R 4,601,432 reported in the same period in 2008 financial year.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
Page 28 of 88
Bus allocation per depot for the financial year was as follows:-
DEPOT 2009 2008
Zwelitsha 20 18
Reeston 10 9
Queenstown 12 12
Alice 6 7
TOTAL OPERATING BUSES 48 46
Average route revenue per bus was as follows:-
DEPOT 2009 2008
Zwelitsha 398,200 315,744
Reeston 302,407 280,197
Queenstown 406,415 348,448
Alice 234,328 173,154
Operating Grant-in-Aid
The Corporation receives a grant-in-aid from The Provincial Department of Roads & Transport. The grant is to subsidize bus fares and partly fund the Corporation’s operating activities. Allocation for the financial year under review was as follows:-
2009 2008
Grant-in-Aid 31,895,000 33,565,000
2.6.3.1 Financial Statistics for the five years to March 2009:
DETAILS 2009 2008 2007 2006 2005
Revenue 19,426,462 15,055,438 12,149,128 11,577,460 11,502,232
Grant-in-Aid 31,895,000 33,565,000 27,747,177 25,001,992 20,500,000
Capital Grant-in-Aid 5,000,000 7,000,000 4,250,000 15,000,000 -
Passengers 2,053,531 1,751,785 1,574,045 1,556,132 1,853,553
Route Kilometres 2,432,486 2,306,722 2,155,049 2,121,467 2,043,688
Buses at Year end 62 58 56 52 60
Number of Employees 171 171 170 183 207
Revenue Cents per Kilometre (Cpk) 799 653 564 546 563
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
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DETAILS 2009 2008 2007 2006 2005
Staff Ratio 3:1 3:1 3:1 3.6:1 3.7:1
2.6.3.2 FINANCIAL HIGHLIGHTS
2.6.3.2.1 Route Revenue
Revenue from Operations increased from R15,055,438 to R19,426,462.
2.6.3.2.2 Government Grant-in-Aid
An amount of Thirty One Million, Eight Hundred and Ninety Five Thousand Rand (R31,895,000) for operational purposes and a further capital Grant-in-Aid of Five Million Rand (R5,000,000) was received for the year under review.
2.6.3.3 SERVICE DELIVERY OBJECTIVES, INDICATORS & ACHIEVEMENTS
The Finance Division has been able to demonstrate results against its measurable objectives as indicated below:
Measurable Objective
Performance Measure
Target Output 2008/09
Actual Output 2008/09
Deviation from Target &
Reasons for Non-
Achievement
Financial Management.
Manage the Internal Control environment through policies and procedures.
Internal Control environment managed.
Policies and Procedures in place.
Internal control environment managed by establishment of risk committee and assistance of internal audit.
Continues process of internal control management.
Reduce the number of audit queries.
Monitor, evaluate and review clean audit plan.
Clean audit plan monitored, evaluated and reviewed.
Revised clean audit plan implemented.
Improved audit report. Only completeness of revenue qualification.
Revenue reasonability study and trend analysis not performed.
Monitor and evaluate financial information systems for uploading and recalling of information.
Implement financial information system for uploading and recalling of information.
Effective financial information systems implemented and monitored.
The Pastel accounting is an effective financial information system.
None.
Ensure timely, accurate and reliable financial reporting.
Provide timely, accurate and reliable financial reporting to the Board,
Timely submissions to the Board and AG.
All financial reports were submitted accurately, reliably and
None.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
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Measurable Objective
Performance Measure
Target Output 2008/09
Actual Output 2008/09
Deviation from Target &
Reasons for Non-
Achievement
Department and AG. printed timeously.
2.6.4 ENGINEERING DIVISION
2.6.4.1 PURPOSE OF ENGINEERING DIVISION
The purpose of Engineering Division is to provide Operations Division with safe and reliable buses so that they can operate according to their schedule. This continues to be a daunting task given the pace at which the fleet recapitalisation program is moving in relation to the deteriorating rate of the fleet.
2.6.4.2 STRATEGIC OBJECTIVES OF ENGINEERING DIVISION
To provide safe, reliable buses to Operations Division so as to ensure the mandate of the corporation is carried out.
2.6.4.3 SECTIONS WITHIN ENGINEERING
Tyre Section
Stores Section
Maintenance Section
2.6.4.4 SERVICE DELIVERY OBJECTIVES, INDICATORS & ACHIEVEMENTS
The Engineering Division has been able to demonstrate results against its measurable objectives as indicated below:
Measurable Objective
Performance Measure
Target Output 2008/09
Actual Output 2008/09
Deviation from Target
Reason for Non-Achievement
Deliver a safe and reliable transport service.
Reduced breakdowns.
To maintain an average of 41 breakdowns per month.
Achieved an average of 43 breakdowns per month.
The majority of the fleet has exceeded the useful life of 800 000 Km.
Tyre failure-related breakdowns making up an average of 50% of all breakdowns due to poorly maintained
Z. Leni HOD Engineering
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
Page 31 of 88
Measurable Objective
Performance Measure
Target Output 2008/09
Actual Output 2008/09
Deviation from Target
Reason for Non-Achievement
roads.
Achieved 95%
Keep abreast of technological developments.
Capacitated personnel to maintain new generation vehicles in the fleet.
Advanced training (with at least ten beneficiaries) undertaken within the financial year.
Five employees were trained instead of ten.
The advanced training could not be carried out on premises as planned and costs allowed for five.
Achieved 50%
Recapitalisation of the fleet.
1. Improved image and service.
1. Newer vehicles to make up 25% of the fleet.
2. To acquire at least one disability friendly bus.
1. Achieved 22.5%
2. Achieved 0%
1. The acquisition of two midi-buses was abandoned due to financial constraints.
2. Insufficient capital.
Achieved 66%
Increase Revenue. Improve Route & Private Hire revenue collection.
Increase total operational revenue to R16,5 million.
R19,426,462 None.
Reduce operating costs.
Reduce operating costs.
Fuel consumption not to exceed 45 L/100km.
42.25 L/100km None.
Maintain current market share.
Satisfy peak bus requirement. Provide Operations
Division with 50 peak buses daily.
48 Age and reliability of the fleet had a major impact.
Achieved 96%
Forward planning. Minimise disruptions caused by major unit failures.
Ensure that a spare engine, gearbox and differential are available at each depot.
No spare units were kept at depots.
Limited financial resources did not allow. We installed fleet management systems for better control and indications are that premature engine failures will be overcome, affording us more savings that will facilitate better planning going forward.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
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Measurable Objective
Performance Measure
Target Output 2008/09
Actual Output 2008/09
Deviation from Target
Reason for Non-Achievement
External relationship.
MTC represented in the SABOA Technical Committee.
Develop relationships with other bus companies.
Attended 3 meetings where the unfolding of the BRT System, 2010 preparations and relevant legislation were discussed.
Achieved 75%
Policy development.
Fleet Policy in place.
Fleet Policy developed and adequate system for fleet records in place.
Fleet Policy and Procedures were being finalised for implementation in 2009/10.
Fleet Management System installation almost complete.
Achieved 50%
Financial constraints resulted in the delay in achieving the objective.
2.6.4.4.1 Specific Challenges & Response
Challenge 1:
The average number of operating buses per month was 48 instead of the targeted 50 buses due to the age of the fleet.
Response to challenge 1:
The Department of Roads & Transport has provided capital funds and further commitment to sustain this funding in order for the Corporation to recapitalise the fleet. However, the allocation is insignificant to match the rate of the necessary recapitalisation programme.
Challenge 2:
Our buses are still vulnerable, to some extent, to siphoning of diesel at sleeping grounds.
Response to challenge 2:
During the year under review, 75% of the vulnerable vehicles were fitted with modified diesel tank caps to curb siphoning. The consumption has stabilised around 42L/100km for two years in succession, however, there is still room for improvement.
Challenge 3:
The state of the infrastructure is not desirable especially Alice Depot where current conditions may subject the Corporation to litigation given the prevailing safety hazards.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
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Response to challenge 3:
Although an alternative site with the existing infrastructure was identified, negotiations to secure the site were unsuccessful. The Corporation will continue to explore other alternatives and with the assistance of the Department of Transport, the Corporation hopes to find a feasible solution.
2.6.5 OPERATIONS DIVISION
2.6.5.1 PURPOSE OF OPERATIONS DIVISION
To spearhead the transportation of passengers on all MTC routes and thereby generate revenue for the Corporation.
2.6.5.2 STRATEGIC OBJECTIVES OF OPERATIONS DIVISION
To provide a community – needs driven passenger service that is reliable, access provided by a disciplined and caring staff.
2.6.5.3 SECTIONS WITHIN OPERATIONS DIVISION
Traffic
Statistics
Private Hire
Inspection
2.6.5.4 SERVICE DELIVERY OBJECTIVES, INDICATORS & ACHIEVEMENTS
The Operations Division has been able to demonstrate results against its measurable objectives as indicated below:
Measurable Objective
Performance Measure Target Output 2008/2009
Actual Output 2008/2009
Deviation from Target
Reason for Non-Achievement
Develop best practice operations standards.
Implement passenger participation plan i.e. update commuters on fare increase and feedback on customer services.
Improved passenger participation and customer services.
Stakeholder engagement plan developed and implemented but continuity is still a problem.
MTC did not have Marketing and Communications Unit previously; hence this objective was not
N. Funani & T. Ncaphayi Traffic & Operations Superintendents
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
Page 34 of 88
Measurable Objective
Performance Measure Target Output 2008/2009
Actual Output 2008/2009
Deviation from Target
Reason for Non-Achievement
mastered. Now that it has been established more ground work is being done.
Improve route performance.
Monitor route performance and develop mechanism to ensure route viability and profitability.
All MTC routes to achieve CPPK (cent per passenger per kilometre) of R5,50.
Target was achieved:
Zwelitsha = R7,00 Reeston = R6,00 Queenstown = R9,00 Alice = R7,00 Average = R8,00
Target was achieved.
Improve driver performance.
Implement, monitor and evaluate driver’s performance plan as well as accident statistics.
Improved driver performance and fewer accidents.
4 x bus accidents were recorded in the year under review but there were no casualties.
Operating with ageing fleet is the greatest challenge that our drivers have to deal with.
Improve route revenue in all depots.
Develop a complimentary revenue generation plan as well as revenue collection mechanisms and monitor route performance.
Meet the R15m target set for the current year.
Generated R17m on route revenue for the year under review.
Achieved the budget although we operated with limited number of buses due to breakdowns and major defects.
Develop alternative revenue generation streams.
Promote private higher through advertising and other special services rendered by MTC.
Increased revenue generated from other sources. Meet R1,5m target set for private hire.
Generated R1,8m on private hire.
Target achieved.
Promote customer services.
Develop a customer services charter poster for employees and conduct training for front line staff on customer care/ services.
Conduct training at Zwelitsha and Reeston.
Render excellent customer services to all our clients.
Appointed service provider to conduct training on customer care.
Budget constraints.
2.6.5.4.1 Specific Challenges and Response
Challenge 1:
Electronic Ticket Machines (ETM’s) are susceptible to frequent breakdowns due to the dusty nature of the rural operations which comprises 80% of the MTC operations as well as bad routes.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
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Response to challenge 1:
Strengthen first line maintenance on ETM’s and purchase sufficient spare machines as well liaising with the Department of Roads and Transport to assist on bad routes.
Challenge 2
Meeting customer needs and expectations as well as running a reliable service is a major challenge due to limited number of peak buses.
Response to challenge 2:
Recapitalize MTC fleet.
2.6.5.4.2 AREAS OF OPERATION
2.6.5.4.2.1 Zwelitsha Depot
The Zwelitsha Depot covers the areas of King William’s Town and Keiskammahoek.
A total of Eight Hundred and Eighty Six Thousand and Forty One (886,041) passengers were carried with One Million, One Hundred and Thirty Seven Thousand, Three Hundred and Eight (1,137,308) kilometres travelled.
2.6.5.4.2.2 Reeston Depot
The Reeston Depot covers the areas of East London.
A total of Four Hundred and Fifty Five Thousand, Five Hundred and Forty Three (455,543) passengers were carried with Five Hundred and Nine Thousand, One Hundred and Seventy Seven (509,177) kilometres travelled.
2.6.5.4.2.3 Queenstown Depot
The Queenstown Depot covers the areas of Ntabethemba, Whittlesea and Mkapusi.
A total of Four Hundred and Eighty Four Thousand Five Hundred and Ninety Three (484,593) passengers were carried with Five Hundred and Sixty Two Thousand, Five Hundred and Sixty Three (562,563) kilometres travelled.
2.6.5.4.2.4 Alice Depot
The Alice Depot covers the areas of Alice and Middledrift.
A total of Two Hundred and Twenty Seven Thousand, Three Hundred and Fifty Four (227,354) passengers were carried with Two Hundred and Twenty Three Thousand, Four Hundred and Thirty Eight (223,438) kilometres travelled.
2.6.5.4.2.5 Summarised Statistics
A grand total of Two million and Fifty Three Thousand, Five Hundred and Thirty One (2,053,531) passengers were carried with Two Million Four Hundred and Thirty Two Thousand, Four Hundred and Eighty Six (2,432,486) route kilometres travelled during the year under review.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
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2.6.5.4.3 Vehicle State
Depot 2008/09 2007/08 2006/07
Zwelitsha 27 24 24
Reeston 11 11 9
Queenstown 15 14 14
Alice 9 9 9
TOTAL 62 58 56
One standard bus being B38 was scrapped because it was not economically repairable. Two second hand buses being B62 and B63 as well as two new buses were purchased for the year under review. That has increased our fleet by 4 standard buses when compared to the previous year. The average number of buses we operated with is Forty Eight (48) compared to 46 buses we operated with in the previous year.
2.6.5.4.4 Accidents
Four accidents occurred during the year under review and it involved B45, B10, B46 and B56.
2.6.6 MARKETING & COMMUNICATIONS UNIT
An analysis of the environment will reflect that before the appointment of this officer, the media liaison was carried out in a reactive rather than proactive manner. The electronic media was utilised as a tool to communicate positive developments regarding MTC, including its social responsibility programmes. The priority this year will be the development of a Marketing Plan, Communications Plan, brand consolidation and promoting a customer service ethic within the organisation.
Measurable Objective
Performance Measure
Target Output 2008/09
Actual Output 2008/09
Deviation from Target &
Reasons for Non-
Achievement
Promote social responsibility.
Sponsorship of sports clubs and community events concentrating on the rural areas.
Marketing of MTC. Donated boxing equipment to Eastern Cape Boxing Managers Association and soccer kit to Island Ideas
Target achieved.
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Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
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Measurable Objective
Performance Measure
Target Output 2008/09
Actual Output 2008/09
Deviation from Target &
Reasons for Non-
Achievement
Football Club.
Improve communication and access to MTC information.
Develop a website for MTC.
Improve access to MTC information.
Website developed; vision and mission of various divisions have been captured in the website.
Target partially achieved.
70%
Communicating of corporation news to internal and external stakeholders.
Produce brochures, calendars, banners and corporate stationery.
Institutionalise communication and branding of MTC.
Brochures, calendars, corporate stationery and banners were produced and branding of buses with our motto.
Target partially achieved.
70%
Develop MTC into a strong brand.
Develop a Communication and Marketing Strategy for MTC.
Create positive perceptions of MTC.
A marketing plan has been developed and a consultant will be hired to develop a marketing strategy.
Target partially achieved.
40%
Internal promotion of MTC through advertising and communication.
Placing of suggestion boxes, corporate ware, e.g. golf shirts and jackets for front-line staff.
Uphold the image of the Corporation and ensure participation of all stakeholders.
Suggestion boxes in place, golf-shirts have been purchased for front-line staff.
Target partially achieved due to limited resources.
50%
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
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PART 3
AUDIT COMMITTEE
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
Page 39 of 88
3 AUDIT COMMITTEE COMMENTS ON THE 2008/2009 ANNUAL REPORT FOR THE MAYIBUYE TRANSPORT CORPORATION In terms of its obligations according to Treasury Regulation 3.1.12, the Audit Committee reports as follows on certain events as well as actions and findings in respect of the financial year ended 31 March 2009.
3.1 APPOINTMENT OF AUDIT COMMITTEE MEMBERS / MEETINGS AND ATTENDANCE
The Corporation established an Audit Committee in accordance with the requirements of Section 38(1) (a) of the Public Finance Management Act. All three members of the Audit Committee are external independent members.
Except for ad hoc meetings, the committee held three meetings during the year under review and attendance was as follows:
Name Meetings
Mr. M. Mantyi 3
Mr. J. Mdeni 2
Mrs. R. Luzuka 3
3.2 AUDIT COMMITTEE RESPONSIBILITY
The Audit Committee has performed its functions in accordance with Section 38 (1) (a) of the PFMA and Treasury Regulation 3.1.13. The Audit Committee has adopted appropriate formal terms of reference by way of the Audit Committee Charter and the Internal Audit Charter. It has regulated its affairs in compliance with these charters and discharged all of its responsibilities as contained therein.
3.3 THE EFFECTIVENESS OF INTERNAL CONTROL
Executive Management suggested that the approach to the internal audit function be changed to gain even greater value to the systems, controls, and operations of MTC. The internal audit unit performed a number of projects to assist in adding value to the Corporation’s systems and controls. These projects with implementable recommendations include:
Information technology controls review;
Asset management review;
Performance reporting review;
Procurement policy review.
In addition, a risk management strategy and fraud prevention plan was developed and implemented during the current financial year. As part of the risk management strategy, a risk committee was established to take responsibility of addressing the identified high-level risks.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009
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The deliverables from the scope of internal audit work performed were satisfactory and will further assist the Corporation in the process of continued improvement over its internal controls.
Notwithstanding the fact that several shortcomings were pointed out, the Audit Committee is satisfied that the Corporation is continually focussed on maintaining qualitative levels of internal control. Adequate steps are being implemented to address the shortcomings identified during the internal and external audit visits.
The term of the internal audit unit expired on 31 March 2009. The contract was extended until 30 June 2009 (three months) to assist with external audit matters if necessary. Appropriate tender and recruitment procedures will be followed to appoint internal auditors.
3.4 THE QUALITY OF IN YEAR MANAGEMENT AND MONTHLY/QUARTERLY REPORTS SUBMITTED IN TERMS OF THE PFMA
The administration of monthly- / quarterly reports submitted in terms of the PFMA was satisfactory according to monitoring and internal audit results.
3.5 EVALUATION OF FINANCIAL STATEMENTS
The Audit Committee has:
Reviewed and discussed with the Auditor-General the audited financial statements included in the annual report;
Reviewed the contents of the management letter (s) from the Office of the Auditor-General, and responses by management;
Reviewed changes in accounting policies and practices;
Reviewed significant adjustments resulting from the audit.
The Audit Committee concurs and accepts the conclusion(s) of the Auditor-General on the financial statements and is of the opinion that the financial statements can be accepted when read with the report of the Auditor-General.
3.6 APPRECIATION
The committee expresses its sincere appreciation to the Honourable MEC, Accounting Officer, senior management team and the Auditor General.
___________________________________________ M. MANTYI CHAIRPERSON OF THE AUDIT COMMITTEE
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PART 4
ANNUAL FINANCIAL
STATEMENTS
Mayibuye Transport Corporation
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4 ANNUAL FINANCIAL STATEMENTS 4.1 REPORT OF THE CHIEF EXECUTIVE OFFICER
4.1.1 GENERAL REVIEW
4.1.1.1 Overview of Financial Results
I have done a review of the attached annual financial statements. The following were noted in carrying out the review:
Total revenue generated from bus fares and private hire for the financial period under review amounted to R19,426,462.
Depot 2009 2008
Zwelitsha 9,151,805 6,265,809
Reeston 3,602,957 2,926,797
Queenstown 5,091,431 4,468,357
Alice 1,580,269 1,394,475
TOTAL 19,426,462 15,055,438
The combined revenue has been achieved by an average number of 48 operating buses (2008: 46) with a total number of 2,566,682 kilometres travelled. Private hire kilometres amounted to 134,196 (2008: 79,841 km) while route kilometres stood at 2,432,486 (2008: 2,306,722) for the financial year.
Combined revenue has been generated by each depot as follows:-
2009 2008
Depot Route Revenue
Private Hire
Revenue Route Revenue
Private Hire
Revenue
Zwelitsha 7,964,007 1,187,799 5,683,388 582,421
Reeston 3,024,065 578,892 2,521,770 405,027
Queenstown 4,876,983 214,448 4,181,377 286,980
Alice 1,405,969 174,300 1,212,076 182,399
TOTAL 17,271,024 2,155,439 13,598,611 1,456,827
Bus allocation per depot for the financial year was as follows:-
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DEPOT 2009 2008
Zwelitsha 20 18
Reeston 10 9
Queenstown 12 12
Alice 6 7
TOTAL OPERATING BUSES 48 46
Average route revenue per bus was as follows:-
DEPOT 2009 2008
Zwelitsha 398,200 315,744
Reeston 302,407 280,197
Queenstown 406,415 348,448
Alice 234,328 173,154
4.1.1.2 Operating Grant-in-Aid The Corporation receives grant-in-aid from The Provincial Department of Roads & Transport. The grant is meant to subsidize bus fares and partly fund the Corporations’ operating activities. Allocation for the financial year under review was as follows:-
2009 2008
Grant-in-Aid 32,195,000 33,565,000
4.1.1.3 Operating Expenses
The Corporation has reported a net profit for the year amounting to R 1,765,461 (2008 net profit: R 2,580,204). The net profit arose as the assets were restated to their accurate carrying values in the current financial year. The net profit has been arrived at after taking into account cost of services rendered of R 26,441,272 (2008: R 23,167,061), operating expenses amounting to R 21,558,376 (2008: R 16,430,431) and administration expenses amounting to R 13,335,757 (2008: R 11,353,145). Non-cash items which have been included in operating expenses include depreciation and provision for staff leave. Details of reportable operating expenses are found in the notes to the financial statements. 4.1.2 SIGNIFICANT EVENTS AND PROJECTS An amount of R 5,000,000 was received from the Department of Roads & Transport in the current financial year.
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The following capital expenditures were made:
Ancillary vehicles;
Buses and bus refurbishment program;
Operating equipment;
Workshop equipment;
Office equipment;
Office furniture;
Depot upgrading.
4.1.3 INVENTORIES
Inventory in rand 2009 2008
Stock on hand 1,096,325 2,048,323
Total 1,096,325 2,048,323
4.1.4 CORPORATE GOVERNANCE ARRANGEMENTS
Mayibuye Transport Corporation is fully committed to the principles of openness, accountability and integrity, as advocated in the King Code of Corporate Governance (King 2). The Board members recognise the need to conduct the business of the Corporation with integrity and in accordance with generally accepted corporate governance practices.
4.1.4.1 BOARD MEMBERS
The Board consists of eight non-executive members appointed in terms of a proclamation that was gazetted on 30 April 2001 (no. 742 extraordinary). Two members represent Provincial Government departments, whilst the balance was appointed by virtue of their relevant specialist knowledge and skills.
During the financial year an additional three female board members were appointed.
The Chief Executive Officer is an ex-officio member of the Board, but is not entitled to vote.
4.1.4.2 COMMITTEES
The Board established the following sub-committees who assist the Board in performing its duties:
Finance and Investment;
Operations and Engineering;
Human Resources and Remuneration;
Directors’ Affairs.
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The Board also appointed an audit committee. The committee was effectively operating during the current financial year. The committee consist of:
Mr. Mandisi Mantyi Mrs. Ruth Luzuka Mr. Jack Mdeni
4.1.4.3 STATEMENT OF RESPONSIBILITY BY THE BOARD OF DIRECTORS
The Board is responsible for the preparation, integrity and fair presentation of the financial statements of Mayibuye Transport Corporation. The financial statements presented on pages 52 to 83 have been prepared in accordance with South African Statements of Generally Accepted Accounting Practice and include amounts based on judgements and estimates made by management.
The going concern basis has been adopted in preparing the financial statements. The Board members have no reason to believe that Mayibuye Transport Corporation will not be a going concern in the foreseeable future, based on the commitment by the Government to subsidise public transport.
The financial statements have been audited by the Office of the Auditor-General, which was given unrestricted access to all financial records and related data, including minutes of all Board meetings. The Board members believe that all representations made to the independent auditors during their audit are valid and appropriate.
4.1.5 RISK MANAGEMENT BY THE CORPORATION
PricewaterhouseCoopers performed internal audit projects during the financial year. These projects include:
Information technology controls review;
Asset management review;
Performance reporting review;
Procurement policy review.
In addition, a risk management strategy and fraud prevention plan was developed and implemented during the current financial year. As part of the risk management strategy, a risk committee was established to take responsibility of addressing the identified high-level risks.
4.2 APPROVAL
The Accounting Officer has approved the attached annual financial statements set out on pages
52 to 83.
______________________________
L. R. MBINDA CHIEF EXECUTIVE OFFICER
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4.3 AUDITOR GENERAL’S REPORT
REPORT OF THE AUDITOR-GENERAL TO THE EASTERN CAPE PROVINCIAL LEGISLATURE ON THE FINANCIAL STATEMENTS AND PERFORMANCE INFORMATION OF THE MAYIBUYE TRANSPORT CORPORATION FOR THE YEAR ENDED 31 MARCH 2009
REPORT ON THE FINANCIAL STATEMENTS
Introduction
1. I have audited the accompanying financial statements of the Mayibuye Transport Corporation which comprise the balance sheet as at 31 March 2009, and the income statement, the statement of changes in equity and the cash flow statements for the year then ended, and a summary of significant accounting policies and other explanatory notes as set out on pages 52 to 83.
The accounting authority’s responsibility for the financial statements
2. The accounting authority is responsible for the preparation and fair presentation of these financial statements in accordance with the South African Statements of Generally Accepted Accounting Practice (SA Statements of GAAP) and in the manner required by the Public Finance Management Act, 1999 (Act No. 1 of 1999) (PFMA), Corporations Transitional Provisions Act, 1995 (Act No. 12 of 1995) (Eastern Cape) and for such internal control as the accounting authority determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
The Auditor-General’s responsibility
3. As required by section 188 of the Constitution of the Republic of South Africa, 1996 read with section 4 of the Public Audit Act, 2004 (Act No. 25 of 2004) (PAA), my responsibility is to express an opinion on these financial statements based on my audit.
4. I conducted my audit in accordance with the International Standards on Auditing read with General Notice 616 of 2008, issued in Government Gazette No. 31057 of 15 May 2008. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
5. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
6. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
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Basis of accounting
7. The corporation’s policy is to prepare financial statements on the applicable financial reporting framework, as set out in accounting policy note 2 to the financial statements.
Basis for opinion
8. In my opinion the financial statements present fairly, in all material respects, the financial position of the Mayibuye Transport Corporation as at 31 March 2009 and its financial performance and its cash flows for the year then ended, in accordance with the South African Statements of Generally Accepted Accounting Practice (SA Statements of GAAP) and in the manner required by the PFMA.
Emphasis of matters
9. Without qualifying my opinion, I draw attention to the following matters on which I do not express a qualified opinion:
Highlighting critically important matters presented or disclosed in the financial statements
Restatement of corresponding figures
10. As disclosed in note 22.1 to the financial statements, the corresponding figures for 2008 have been restated as a result of errors discovered during 2009 in the financial statements of the Mayibuye Transport Corporation at, and for the year ended, 31 March 2008.
Property, plant and equipment
11. As disclosed in note 3 to the financial statements, the Zwelitsha Depot has been recognized as leasehold land and buildings with a carrying value of R1.1 million. There is a lack of clarity with regard to the following matters pertaining to the related lease:
• The parties to the lease,
• The period of the lease,
• The terms of the lease, and
• The holder of title to the property.
12. Under these circumstances it is not possible to determine whether or not these leasehold assets and the related amortisation have been correctly recognized, measured and disclosed in the annual financial statements. The corporation’s right to occupy the properties has not been laid down in writing; however it derives economic benefits from the use thereof and carries the risks that are incidental to ownership.
Irregular expenditure
13. The corporation has incurred irregular expenditure during the year as a result of non-adherence to the Preferential Procurement Policy Framework Act, 2000 (Act No. 5 of 2000) and National Treasury Practice Note No. 8 of 2007/2008, the details of which are disclosed in note 13.8 to the financial statements. At the date of this report no procedures were instituted against the responsible officials to recover any of these amounts.
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Other matters
I draw attention to the following matters that relate to my responsibilities in the audit of the financial statements:
Unaudited supplementary schedule
14. The supplementary information set out on pages xx to xx do not form part of the financial statements and is presented as additional information. I have not audited this schedule and accordingly I do not express an opinion thereon.
Governance framework
15. The governance principles that impact the auditor’s opinion on the financial statements are related to the responsibilities and practices exercised by the accounting authority and executive management and are reflected in the key governance responsibilities addressed below:
Key governance responsibilities
16. The PFMA tasks the accounting authority with a number of responsibilities concerning financial and risk management and internal control. Fundamental to achieving this is the implementation of key governance responsibilities, which I have assessed as follows:
No. Matter Y N
Clear trail of supporting documentation that is easily available and provided in a timely manner
1. No significant difficulties were experienced during the audit concerning delays or the availability of requested information.
�
Quality of financial statements and related management information
2. The financial statements were not subject to any material amendments resulting from the audit.
�
3. The annual report was submitted for consideration prior to the tabling of the auditor’s report.
�
Timeliness of financial statements and management information
4. The annual financial statements were submitted for auditing as per the legislated deadlines as set out in section 55 of the PFMA
�
Availability of key officials during audit
5. Key officials were available throughout the audit process. �
Development and compliance with risk management, effective internal control and governance practices
6. Audit committee
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No. Matter Y N
• The corporation had an audit committee in operation throughout the financial year.
�
• The audit committee operates in accordance with approved, written terms of reference.
�
• The audit committee substantially fulfilled its responsibilities for the year, as set out in section 77 of the PFMA and Treasury Regulation 27.1.8.
�
7. Internal audit
• The Corporation had an internal audit function in operation throughout the financial year.
�
• The internal audit function operates in terms of an approved internal audit plan.
�
• The internal audit function substantially fulfilled its responsibilities for the year, as set out in Treasury Regulation 27.2.
�
8. There are no significant deficiencies in the design and implementation of internal control in respect of financial and risk management.
�
9. There are no significant deficiencies in the design and implementation of internal control in respect of compliance with applicable laws and regulations.
�
10. The information systems were appropriate to facilitate the preparation of the financial statements.
�
11. A risk assessment was conducted on a regular basis and a risk management strategy, which includes a fraud prevention plan, is documented and used as set out in Treasury Regulation 27.2.
�
12. Delegations of responsibility are in place, as set out in section 56 of the PFMA. �
Follow-up of audit findings
13. The prior year audit findings have been substantially addressed. �
14. SCOPA resolutions have been substantially implemented. n/a
Issues relating to the reporting of performance information
15. The information systems were appropriate to facilitate the preparation of a performance report that is accurate and complete.
�
16. Adequate control processes and procedures are designed and implemented to ensure the accuracy and completeness of reported performance information.
�
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No. Matter Y N
17. The corporation has governance structures such as an internal audit function reporting to an audit committee in place. However, the corporation failed to fully implement the recommendations made by the internal audit function.
18. Although the finance section has adequate skills and competencies which have been effectively utilised in obtaining an unqualified audit opinion, monitoring controls are not adequate to ensure that the information disclosed in the financial statements is accurate and complete. As a result, material amendments were made to the annual financial statements in order to avoid qualifications. The continuous correction and re-submission of financial information had an adverse impact on the scheduled audit deadlines and placed pressure on the reporting time frames.
Investigations
19. As disclosed in note 17 to the financial statements, an investigation is being conducted to identify whether officials were involved in defrauding the corporation of revenue generated from casual passengers. A further amount of R4.2 million is currently under investigation, the details of which are disclosed in note 11 to the financial statements. It is uncertain as to whether this amount relates to data integrity issues or misappropriation.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Report on performance information
20. I was engaged to review the performance information.
The accounting authority’s responsibility for the performance information
21. The accounting authority has additional responsibilities as required by section 55(2)(a) of the PFMA to ensure that the annual report and audited financial statements fairly present the performance against predetermined objectives of the public entity.
The Auditor-General’s responsibility
22. I conducted my engagement in accordance with section 13 of the PAA read with General Notice 616 of 2008, issued in Government Gazette No. 31057 of 15 May 2008.
17. A strategic plan was prepared and approved for the financial year under review for purposes of monitoring the performance in relation to the budget and delivery by the Corporation against its mandate, predetermined objectives, outputs, indicators and targets [Treasury Regulation 29.1/30.1].
�
18. There is a functioning performance management system and performance bonuses are only paid after proper assessment and approval by those charged with governance.
�
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23. In terms of the foregoing my engagement included performing procedures of an audit nature to obtain sufficient appropriate evidence about the performance information and related systems, processes and procedures. The procedures selected depend on the auditor’s judgement.
24. I believe that the evidence I have obtained is sufficient and appropriate to provide a basis for the audit findings reported below.
Audit finding (performance information)
25. There is no formal documented policy in respect of the performance management system.
APPRECIATION
26. The assistance rendered by the staff of the Mayibuye Transport Corporation during the audit is
sincerely appreciated.
East London
31 July 2009
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4.4 ANNUAL FINANCIAL STATEMENTS AS AT 31 MARCH 2009
DIRECTORS PLC Maseti Chairperson SJ Nyengane Deputy Chairperson PP Balfour Director D Lefutso Director T Matiwane Director M Tuswa Director AJ de Vries Director TA Thomas Director AM Church Director NEP Loyilane Director N Shweni-Booysen Director
Mesdames AM Church, NEP Loyilane and N Shweni-Booysen were appointed on 1 July 2008.
NATURE OF BUSINESS The entity provides subsidized public transport and is governed by
the Public Finance Management Act, Schedule 3D Provincial Government Business Enterprises Entity.
BANKERS The Standard Bank of South Africa Limited. AUDITORS Office of the Auditor-General.
CONTENTS PAGE Balance sheet 53 Income statement 54 Statement of changes in equity 55 Cash flow statement 56 Accounting policy notes 57 Notes to the financial statements 65 Detailed income statement 81
APPROVAL OF THE ANNUAL FINANCIAL STATEMENTS The annual financial statements were approved by the board of directors on 31 July 2009 and are signed as such by :
CHAIRPERSON OF THE BOARD CHIEF EXECUTIVE OFFICER
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4.4.1 BALANCE SHEET
NOTES 2009 2008 R R
ASSETS
Non-current assets Property, plant and equipment 3 34,725,238 30,445,407 Total non-current assets 34,725,238 30,445,407 Current assets Inventories 4 1,096,325 2,048,323 Trade and other receivables 5 677,728 506,681 Investments - Marketable securities 6 - 45,698 Cash and cash equivalents 7 844,439 9,648,150
Total current assets 2,618,492 12,248,852
Total assets 37,343,730 42,694,259
EQUITY AND LIABILITIES
Capital and reserves Share capital 8 56,761,075 56,761,075 Accumulated deficit (54,451,487) (56,216,948)
2,309,588 544,127
Non-current liabilities Deferred income 31,018,511 37,021,465
31,018,511 37,021,465
Current liabilities Trade and other payables 9 1,810,276 2,706,401 Payroll accruals 10 2,205,355 2,422,266
4,015,631 5,128,667
Total equity and liabilities 37,343,730 42,694,259
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4.4.2 INCOME STATEMENT
NOTES 2009 2008 R R Revenue 11 19,426,462 15,055,438 Cost of services rendered 26,441,272 23,167,061 Gross profit / (loss) (7,014,810) (8,111,623) Other income - Grant 20.2 43,197,954 37,511,372 Other operating income 104,592 439,750 Administration expenses (13,335,757) (11,353,145) Operating expenses (21,558,376) (16,430,431) Fruitless and wasteful expenditure 12 (20,897) - Profit / (Loss) from operations 13 1,372,706 2,055,923 Interest income 13 392,755 524,281
Profit / (loss) for the year 1,765,461 2,580,204
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4.4.3 STATEMENT OF CHANGES IN EQUITY
Share Accumulated Capital Loss Total R R R
Balance at 1 April 2007 56,761,075 (57,264,813) (503,738)
Prior period error - (1,532,339) (1,532,339)
Additional grant received - - -
Deferred income release to income - - -
Profit / (loss) for the year - 2,580,204 2,580,204 Balance at 31 March 2008 56,761,075 (56,216,948) 544,127
Additional grant received - - -
Deferred income release to income - - -
Profit / (loss) for the year - 1,765,461 1,765,461
Balance at 31 March 2009 56,761,075 (54,451,487) 2,309,588
Deferred Income R
Balance at 1 April 2007 36,293,485
Additional grant received 7,000,000 Deferred income release to income (6,272,020)
Balance at 31 March 2008 37,021,465
Additional grant received 5,000,000
Deferred income released to income (11,002,954)
Balance at 31 March 2009 31,018,511
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4.4.4 CASH FLOW STATEMENT
NOTES 2009 2008 R R
OPERATING ACTIVITIES
Cash receipts from customers 19,985,705 14,001,129 Cash paid to suppliers and employees (22,333,946) (13,096,202)
Cash generated by operations 14 (2,348,241) 904,927
Interest received 392,755 524,281
NET CASH (USED IN)/ FROM OPERATING ACTIVITIES (1,955,485) 1,429,208 INVESTING ACTIVITIES Purchases of property, plant and equipment (11,894,935) (5,506,392) Proceeds on sale of property, plant and equipment 46,709 95,955 NET CASH (USED IN)/FROM INVESTING ACTIVITIES (11,848,226) (5,410,437) FINANCING ACTIVITIES Decrease / (increase) in grant allocation 5,000,000 7,000,000 NET CASH (USED IN)/FROM FINANCING ACTIVITIES 5,000,000 7,000,000 NET INCREASE /(DECREASE) IN CASH AND CASH EQUIVALENTS (8,803,711) 3,018,771
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 9,648,150 6,629,379 CASH AND CASH EQUIVALENTS AT END OF YEAR 7 844,439 9,648,150
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4.4.5 ACCOUNTING POLICY NOTES 1 PRESENTATION OF FINANCIAL STATEMENTS These financial statements are presented in South African Rand [R] since that is the
functional currency in which the transactions are denominated. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Annual Financial Statements are prepared under the historical cost convention, other
than certain financial instruments, and incorporate the following principal accounting policies, which have been consistently applied in all material respect. The financial statements have been prepared in accordance with South African Statements of Generally Accepted Accounting Practice. The principal accounting policies adopted remained unchanged from the previous year except as listed below:
2.1 Changes in accounting policy and disclosures In the current year, the Corporation has adopted all new GAAP standards and
interpretations that are relevant to its operations, and that became effective for periods beginning on or after 1 April 2008. The adopted standards and interpretations have not resulted in significant changes to the Corporation's accounting policies or financial performance.
2.2 Irregular and fruitless and wasteful expenditure Irregular expenditure means expenditure incurred in contravention of, or not in accordance
with a requirement of any applicable legislation, including:
The Public Finance Management Act, or Any provincial legislation providing for procurement procedures in that provincial
government. Fruitless and wasteful expenditure means expenditure that was made in vain and would
have been avoided had reasonable care been exercised.
All irregular and fruitless and wasteful expenditure is recognized in profit and loss in the
period in which it is incurred and where recovered, it is subsequently accounted for as revenue in the Income Statement.
2.3 Cash and cash equivalents Cash and cash equivalents are measured at fair value.
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Cash in the balance sheet comprises cash at bank and on hand and short-term deposits held by the Corporation. For the purposes of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above.
2.4 Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Revenue
is reduced for estimated customer returns, rebates and other similar allowances. Revenue is recognized to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured.
When the outcome of a transaction involving the rendering of services can be estimated
reliably, revenue associated with the transaction will be recognized by reference to the stage of completion of the transaction at the balance sheet date.
Revenue from the sale of bus tickets and bus hiring is recognized when the significant
risks and rewards of ownership are transferred to the buyer. Interest income is accrued on a time basis, by reference to the principal outstanding and at
the interest rate applicable, except for interest earned on capital funding which is disclosed separately.
Dividend income from investments is recognized when the shareholder's rights to receive
payment have been established. 2.5 Leasing Leases are classified as finance leases whenever the term of the lease transfer substantially
all the risks and rewards to the lessee. All other leases are classified as operating leases. Assets held under finance leases are initially recognized as assets of the Corporation at their fair value at the inception of the lease or if lower at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. The lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability.
2.6 Deferred income Government grants represent monthly transfer payments from the Eastern Cape
Department of Roads and Transport in order to subsidize the Corporation's public transport service.
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Government grants are recognized when there is reasonable assurance that the entity will comply with the conditions related to them and that the grants will be received. Grants related to income are recognized in the Income Statement as other income over the periods necessary to match them with the related costs that they are intended to compensate. The timing of such recognition in the Income Statement will depend on the fulfilment of any conditions or obligations attached to the grant. Grants related to assets are presented as deferred income in the Balance Sheet. The Income Statement will be affected either by reduced deprecation charge or by deferred income being recognized as income systematically over the useful life of the related asset.
2.7 Defined contribution plans The cost of defined contribution plans is the contribution payable by the employer for that
accounting period. Contribution to a defined contribution plan, in respect of service in a particular period, is recognized as an expense in that period.
2.8 Taxation No provision has been made for taxation as the entity is a tax exempt institution in terms
of section 10 (a) of the Income Tax Act No. 58 of 1962. 2.9 Property, plant and equipment Buildings, plant and equipment is stated at cost less accumulated depreciation and
accumulated impairment losses. Such cost includes the cost of replacing part of the plant and equipment when that cost is incurred, if the recognition criteria are met. All other repair and maintenance costs are recognized in profit or loss as incurred.
Land is not depreciated as it is deemed to have an indefinite life. Items of property, plant and equipment are depreciated using the straight line basis at rates
that will reduce the book values to estimated residual values over the anticipated useful lives of the assets concerned. The principal annual rates used for this purpose are:
Ancillary Vehicles 25% Buses - Body 12.5% Buses - Chassis, Engine, etc 8.33% Office Equipment 20% Office Furniture 10% Operating Equipment 20% Workshop Equipment 25% Buildings 2% Spare parts and units are capitalized at cost. It is not practical to determine the carrying
amount or cost of the parts and units that were replaced or added. The carrying amount or cost of replacement is estimated at what the cost of the replaced part or unit was initially.
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An item of plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Inferior equipment is written off in full in the year it is acquired. Surpluses or deficits on the disposal of assets are credited or charged to income. The surplus or deficit is the difference between the net disposal proceeds and the carrying amount of the asset.
Subsequent expenditure relating to property, plant and equipment is capitalized if the
subsequent expenditure meets the definition of an asset. When parts of an item of property, plant and equipment have different useful lives, they
are accounted for as separate items (major components) of property, plant and equipment and shall be depreciated according to their different useful life.
The gains and losses arising from the de-recognition of property, plant and equipment
(difference between carrying amount less any revaluation surpluses and net disposal proceeds) are included in surplus or deficit when the item is derecognized.
The residual value and the useful life of each asset are reviewed and adjusted at balance
sheet date. The depreciation charge for each year is recognized in surplus and deficit unless it is
included in the carrying amount of another asset. 2.10 Impairment of non-financial assets The Corporation assesses at each reporting date whether there is an indication that an asset
may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Corporation estimates the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair
value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used.
For an asset that does not generate cash inflows that are largely independent of those from
other assets the recoverable amount is determined for the cash-generating unit to which the asset belongs. An impairment loss is recognized in the income statement whenever the carrying amount of the cash-generating unit exceeds recoverable amount.
A previously recognized impairment loss is reversed if the recoverable amount increases
as a result of a change in the estimates used to determine the recoverable amount, but not to an amount higher than the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognized in prior years.
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2.11 Inventories Inventories are stated at the lower of cost and net realizable value. Cost is calculated using
the weighted average method. Net realizable value is the estimated selling price in the ordinary course of business, and the estimated costs necessary to make the sale.
Inventory cost includes the costs of purchase of inventories comprising the purchase price,
levies, pressing and storage. Trade discounts, rebates and other similar items are deducted in determining the costs of purchase.
2.12 Financial Instruments 2.12.1 Investments and Financial Assets Financial assets within the scope of IAS 39 are classified as financial assets at fair value
through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets, as appropriate. When financial assets are recognized initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.
The Corporation determines the classification of its financial assets on initial recognition
and, where allowed and appropriate, re-evaluates this designation at each financial year end.
2.12.2 Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss includes financial assets held for trading
and financial assets designated upon initial recognition as at fair value through profit or loss.
Financial assets are classified as held for trading if they are acquired for the purpose of
selling in the near term. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments or a financial guarantee contract. Gains or losses on investments held for trading are recognized in profit or loss.
2.12.3 Held-to-maturity investments Non-derivative financial assets with fixed or determinable payments and fixed maturities
are classified as held-to-maturity when the Corporation has the positive intention and ability to hold to maturity. After initial measurement held-to-maturity investments are measured at amortized cost using the effective interest method. Gains and losses are recognized in profit or loss when the investments are derecognized or impaired, as well as through the amortization process.
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2.12.4 Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. After initial measurement loans and receivables are carried at amortized cost using the effective interest method less any allowance for impairment. Gains and losses are recognized in profit or loss when the loans and receivables are derecognized or impaired, as well as through the amortization process.
2.12.5 Available-for-sale financial investments Available-for-sale financial assets are those non-derivative financial assets that are
designated as available-for-sale or are not classified in any of the three preceding categories. After initial measurement, available-for-sale financial assets are measured at fair value with unrealized gains or losses recognized directly in equity until the investment is derecognized or determined to be impaired at which time the cumulative gain or loss previously recorded in equity is recognized in profit or loss.
2.12.6 Amortized cost Held-to-maturity investments and loans and receivables are measured at amortized cost.
This is computed using the effective interest method less any allowance for impairment. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of the effective interest rate.
2.13 Impairment of financial assets The Corporation assesses at each balance sheet date whether a financial asset or group of
financial assets is impaired. 2.13.1 Assets carried at amortized cost If there is objective evidence that an impairment loss on assets carried at amortized cost
has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through use of an allowance account. The amount of the loss shall be recognized in profit or loss.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease
can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed, to the extent that the carrying value of the asset does not exceed its amortized cost at the reversal date. Any subsequent reversal of an impairment loss is recognized in profit or loss.
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In relation to trade receivables, a provision for impairment is made when there is objective evidence that the Corporation will not be able to collect all of the amounts due under the original terms of the invoice. The carrying amount of the receivable is reduced through use of an allowance account. Impaired debts are derecognized when they are assessed as uncollectible.
2.13.2 Available-for-sale financial investments If an available-for-sale asset is impaired, an amount comprising the difference between its
cost and its current fair value, less any impairment loss previously recognized in profit or loss, is transferred from equity to profit or loss. Reversals in respect of equity instruments classified as available-for-sale are not recognized in profit or loss. Reversals of impairment losses on debt instruments are reversed through profit or loss, if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment loss was recognized in profit or loss.
2.14 Financial liabilities and equity instruments 2.14.1 Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss includes financial liabilities held for
trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are acquired for the purpose of
selling in the near term. Gains or losses on liabilities held for trading are recognized in profit or loss.
2.14.2 Derecognition of financial assets and liabilities Financial assets A financial asset (or, where applicable a part of a financial asset or part of a group of
similar financial assets) is derecognized when: the rights to receive cash flows from the asset have expired; the Corporation retains the right to receive cash flows from the asset, but has
assumed an obligation to pay them in full without material delay to a third party under a ‘pass through’ arrangement; or
the Corporation has transferred its rights to receive cash flows from the asset and
either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
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Financial liabilities A financial liability is derecognized when the obligation under the liability is discharged or
cancelled or expires. When an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in profit or loss.
2.15 Future changes to accounting policies
At the date of authorization of these financial statements, a number of International Financial Reporting Standards and Interpretations had been promulgated, but were effective for periods after 31 March 2009. The Corporation will implement these as they become effective.
Based on a review of these standards, management has determined that none of them would have a significant impact on the Corporation as at 31 March 2009, had they been effective.
2.16 Key management assumptions, estimates and judgements The preparation of financial statements requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Corporation’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed.
The key assumptions, estimates and judgements concerning the future and other key
sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amount of the assets and liabilities within the next financial year are discussed below.
The residual values and estimated useful lives of property, plant and equipment were
assessed and found to be reasonable. Residual values of motor vehicles are determined with reference to market related prices of vehicles in a similar condition.
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4.4.6 NOTES TO THE ANNUAL FINANCIAL STATEMENTS 3 PROPERTY, PLANT & EQUIPMENT �
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Land and buildings comprise workshops, offices and bus sheds situated in the following sites:
Erf 77, 78, 79, 80, 81 of farm 35, Wilsonia, district of East London, market value R2 300 000.
Plot 4265, Queendustria Industrial Township, Queenstown, market value R1 000 000.
Zone 8 Zwelitsha - the entity has been given the right to use the property indefinitely. A process for the acquisition of the title deed has been initiated with the Land Claims Commission. At present, a valuation has been performed, details of which are noted under note 16. Improvements on the property has been capitalised as leasehold land and buildings.
Erf 1097, Alice, market value R600 000.
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4 INVENTORIES 2009 2008
R R
Fuel, Oils and Greases 499,526 449,047
Units - 364,490
Spares - 646,602
Consumables 171,832 384,463
Tyres & Tubes 154,382 106,176
Ancillary Vehicle Spares 13,384 4,077
Operational Equipment Spares 12,520 62,086
Stationery and Miscellaneous items 244,681 31,382
1,096,325 2,048,323
Inventories included in cost of services rendered 19,629,575 15,194,686
5 TRADE AND OTHER RECEIVABLES Trade receivables 761,959 395,969 Less: Provision for impairment of receivables (579,525) (359,659) 182,434 36,310 Other receivables 495,294 470,371 677,728 506,681
Trade receivables are non-interest bearing and are generally on 30-60 days’ terms. As at 31 March 2009, trade receivables at nominal value of R579,525 (2008:
R359,659) for the Corporation were impaired and fully provided for. Movements in the provision for impairment of receivables were as follows:
Individually impaired
R At 1 April 2007 308 585 Charge for the year 51 074 Utilised - At 31 March 2008 359 659 Charge for the year 219 866 Utilised - At 31 March 2009 579 525
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As at 31 March, the ageing analysis of trade and other receivables are as follows: 2009 2008 R R < 30 days 495,294 470,371 30 – 60 days - - 60 – 90 day - - 90 – 120 day - - >120 days 182,434 36,310 Total 677,729 506,681
6 INVESTMENTS - MARKETABLE SECURITIES Market value at 31 March 2009 - 45,698 Marketable securities represented 2308 demutualised shares received from Sanlam
and were classified as available-for-sale financial assets. These shares were awarded at no cost to the employees (members of the Sanlam pension fund) when demutualization was affected.
During the financial year, the share owners requested the Corporation to sell the
shares for their benefit. 7 CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, call deposits and cash balances with banks. Cash and cash equivalents included in the cash flow statement comprise the following balance sheet amounts:
Cash on hand and balances with banks 844,439 9,648,150
844,439 9,648,150
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Corporation, and earn interest at the respective short-term deposit rates. The fair value of cash and short-term deposits is R844,439 (2008: R9,648,150).
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8 SHARE CAPITAL 2009 2008
R R
Authorized:
Ordinary shares of R 1 each 60,000,000 60,000,000
Issued and fully paid
Ordinary shares of R 1 each 56,761,075 56,761,075
The authorized share capital was increased to 60,000,000 as per the notification in
the Government Gazette dated April 2005. 100% of the shares are held by the Department of Roads and Transport and the entity has one class of ordinary shares which carry no right to Provincial Administration. The entity has one class of ordinary shares which carry no right to fixed income.
The Corporation applied for an increase in authorized share capital on 8 June 2009
from the executive authority in order to issue share capital equal to the capital grants (R30,250,000) received since 2006.
9 TRADE AND OTHER PAYABLES 2009 2008 R R Trade payables 909,789 1,828,920 Other payables 900,487 877,481 - Accrued Provident Fund 306,416 275,994 - Accrued Medical Aid 227,164 200,914 - Accrued Workmen's Compensation 181,504 135,798 - Accrued Employee Insurance 96,568 82,505 - Other payables 88,835 182,270 1,810,276 2,706,401
Terms and conditions of the above financial liabilities:
Trade and other payables are non-interest bearing and are normally settled on 30-day terms.
Other payables represent South African Revenue Services and payover creditors.
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10 PAYROLL ACCRUALS 2009 2008 R R At 1 April 2008 2,422,266 2,305,498
Additional accrual in the year 978,755 1,688,938
Utilization of accrual (1,195,666) (1,572,170)
At 31 March 2008 2,205,355 2,422,266 Accrual for bonuses - 13th cheque 467,018 433,849
Accrual for leave 1,738,337 1,988,417
2,205,355 2,422,266 At 31 March 2009, employees with excessive leave days were offered to sell a
portion of their excessive leave days back to the Corporation. The employees accepted the offer and leave days to the amount of R745 891 were paid to the employees in April 2009.
11 REVENUE Revenue comprises of passenger fares and special hire revenue. 2009 2008 R R An analysis of the Entity's revenue is as follows: Passenger fares 17,271,023 13,598,611 Special hire 2,155,439 1,456,827
Total revenue 19,426,462 15,055,438 A major portion of the Corporation's revenue comprises cash sales to passengers. It
should be recognized that controls are designed to provide reasonable, but not absolute assurance that errors and irregularities will not occur, and that procedures are performed in accordance with management's intentions. There are inherent limitations that should be recognized in considering the potential effectiveness of any system of internal controls. The Corporation utilizes the sole service provider in South Africa to record bus fare information. Management identified data integrity errors resulting from the revenue application system failure during the financial year and is in the process of rectifying this. There is an unreconciled difference between banking of cash and revenue collected per the revenue application system estimated at R4.2m. This is currently under review to determine if the unreconciled difference is as a result of the revenue application system error or misappropriation of cash taking. Refer to note 17 for a claim against an employee.
The controls implemented by management include the installation of electronic
ticketing machines, establishing an effective inspectorate unit and implementing a zero-tolerance policy with regards to non-issue of bus fare tickets. These controls caused a remarkable increase of 27% in passenger fare revenue.
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12 FRUITLESS AND WASTEFUL EXPENDITURE 2009 2008 R R South African Revenue Services penalties 20,897 -
20,897 - The Corporation does not regard the SARS penalty as fruitless and wasteful expenditure.
The penalty payment was not made in vain and reasonable care has been exercised to avoid the expenditure.
13 NET PROFIT / LOSS FROM OPERATIONS 13.1 Net Profit / Loss from operations has been arrived at after charging (crediting): 2009 2008 R R INCOME Interest income 392,755 524,281 Profit on disposal of assets - 24,310 Dividends received - 1,777 EXPENSES Audit fees 898,280 930,032 Audit Committee (see note 13.2) 19,500 39,200 Defined contribution plan 3,727,566 2,364,824 Directors Emoluments (see note 13.3 and 13.4) 210,296 187,051 Depreciation 7,602,035 2,942,959 Fair value adjustment - Marketable securities - 45,698 Insurance 970,288 1,201,050 Loss on disposal of assets 12,058 - Finance lease charges 226,296 197,201 Consulting fees 201,963 198,067 Staff Costs 26,147,182 23,173,514 The average number of employees for the financial year ended
was:
170
182
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13.2 Audit committee 2009 2008 Fees for attending meetings R R M. Mantyi 7,500 20,500 R. Luzuka 8,000 12,200 J. Mdeni 4,000 6,500 19,500 39,200
13.3 Directors Emoluments 2009 Meetings Travel Total R R R P.L.C. Maseti - Chairperson 42,873 1,591 44,464 J.S. Nyengane - Vice-chairperson 40,145 3,026 43,171 P.P. Balfour 13,283 380 13,663 D. Lefutso 33,956 1,526 35,482 T. Matiwane 10,729 336 11,065 A.J. De Vries - - - T.A.Thomas 13,126 1,128 14,254 M. Tuswa - - - A.M. Church 13,440 769 14,209 N.E.P. Loyilane 15,523 331 15,854 N. Shweni-Booysen 17,763 370 18,133 200,838 9,457 210,296
13.4 Directors Emoluments 2008 Meetings Travel Total R R R P.L.C. Maseti - Chairperson 44,870 201 45,071 J.S. Nyengane - Vice-chairperson 40,306 361 40,667 P.P. Balfour 18,083 - 18,083 D. Lefutso 36,366 - 36,366 T. Matiwane 18,966 - 18,966 A.J. De Vries - - - T.A.Thomas 27,898 - 27,898 M. Tuswa - - - 186,489 562 187,051
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13.5 Senior Management 2009 CEO
L.R. Mbinda CFO
L. Coetzer HOD: HR L.C. Mtise
HOD: Eng Z. Leni
R R R R Basic 540,900 380,604 334,684 296,144 Car 118,908 36,000 52,860 40,800 Housing allowance - - 17,556 - Medical aid 21,120 7,692 - 8,136 Provident 87,624 - 50,160 42,300 Bonus - 35,217 25,807 28,762 UIF 1,488 1,488 1,488 1,488 Total 770,040 461,001 482,555 417,630
13.6 Senior Management 2008 CEO
L.R. Mbinda CFO
L. Coetzer HOD: HR L.C. Mtise
HOD: Eng Z. Leni
R R R R Basic 439,200 180,000 245,532 237,396 Car 118,800 - 52,860 40,800 Acting allowance - - 36,000 - Housing allowance - - 13,092 - Medical aid 21,120 3,852 - 8,136 Provident 71,148 - 39,768 38,448 Bonus 50,000 5,000 20,461 19,783 UIF 1,500 750 1,500 1,500 Total 701,768 189,602 409,213 346,063
13.7 FINANCE LEASE ARRANGEMENTS 2009 2008 R R
Minimum lease payments paid under finance leases 226,296 197,201
At the balance sheet date, the entity had outstanding commitments under finance leases, which fall due as follows:
Within one year 226,295 121,478
In the second to fifth years inclusive 235,486 134,623
After five years - -
Finance lease payments represent rentals payable by the Corporation for certain of its office equipment.
13.8 IRREGULAR EXPENDITURE 2009 2008 R R
Transactions not in full compliance with legislation 15,146,421 -
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14 CASH GENERATED BY OPERATIONS
FROM/(USED IN) OPERATING ACTIVITIES 2009 2008 R R Net Profit / (Loss) for the year 1,765,461 2,580,204
Adjustments for:
Profit / Loss on sale of property, plant and equipment 12,058 (24,310) Depreciation of property, plant and equipment 7,602,035 2,942,959 Deferred income (11,002,954) (3,946,372)
Interest income (392,755) (524,281)
Operating cash flow before movements in working capital (2,016,155) 1,028,200
(Increase)/ Decrease in inventories 951,998 (530,028) (Increase)/ Decrease in receivables (171,047) (119,166) (Increase)/ Decrease in investments - (45,698) Increase / (Decrease) in payables (1,113,036) 571,619 (2,348,241) 904,927
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15 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Corporation's principal financial liabilities comprise of trade and other payables. The main purpose of these financial liabilities is to recognize amounts payable by the Corporation. The Corporation has various financial assets such as trade and other receivables and cash and short-term deposits, which arise directly from its operations.
The Entity has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customer.
The main risks arising from the company’s financial instruments are cash flow interest rate risk, liquidity risk and credit risk. The Board of Directors reviews and agrees policies for managing each of these risks which are summarized below.
Interest rate risk
The Corporation is not exposed to interest rate risk as it has no long-term debt obligations.
Credit risk management
The entity trades only with recognized, creditworthy third parties. Receivable balances are monitored on an ongoing basis with the result that the entity's exposure to bad debts is not significant. The maximum exposure is the carrying amount as disclosed in Note 5. There are no significant concentrations of credit risk within the company.
With respect to credit risk arising from the other financial assets of the company, which comprise of cash and short-term deposits, the entity's exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.
Liquidity risk
The entity monitors its risk to a shortage of funds by considering the maturity of both its financial assets and projected cash flows from operations. The entity's objective is to maintain a balance between continuity of funding and flexibility through use of the grant-in-aid funding.
Foreign currency risk
The Corporation is not exposed to foreign currency risk.
Capital management
The primary objective of the Corporation's capital management is to ensure that it continue to provide a safe and reliable public transport service and to maximize internal revenue collection.
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16 CONTINGENT LIABILITIES
During the reporting period, there were matters arising that gives rise to contingent liabilities:
There are two pending CCMA referrals as at 31 March 2009 and there are currently no indication as to the probability of the success of the claims. One referral has been set for 19 May 2009 where the claim will be dealt with and no date has been set for the second referral. Should the Corporation lose the cases, the estimated cost will be R42 000.
The Corporation is in the process of obtaining a title deed for the Zwelitsha depot. A valuation was performed which will be used for negotiation purposes. At year-end, the Corporation received a draft settlement agreement from the Land Claims Commission. The amount payable is uncertain.
The Board of Directors will conduct a performance assessment for the Chief Executive Officer and there is a possibility of performance bonus payable. The amount payable is uncertain.
The Corporation is disputing invoices to the value of R171 356 with certain suppliers. The amount payable is dependant on the dispute resolution.
17 CONTINGENT ASSETS
At the reporting date, the Corporation has a claim against an employee of R135 953. The success of the claim depends on the outcome of case.
18 CAPITAL COMMITMENTS 2009 R
2008 R
Commitments for the acquisition of property, plant and equipment: - 2,200,000
19 SUBSEQUENT EVENTS
The directors are not aware of any matter of circumstances arising since the end of the financial year, which significantly affects the financial position of the entity or the results of its operations.
20 RELATED PARTY TRANSACTIONS
20.1 Identification of related parties
Eastern Cape Department of Roads and Transport
Board of Directors - Refer to note 13.3 for details of transactions with directors.
Key management personnel - Refer to note 13.5 for detail of transactions with key personnel.
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20.2 Related party transactions
Significant transactions occurred between the Department of roads and transport by way of receiving grant funding.
2009
R
2008
R
Grant received 32,195,000 33,565,000
Deferred income 11,002,954 3,946,372
43,197,954 37,511,372
21 GOING CONCERN
During the reporting period, in order to continue as a going concern, the Corporation utilized capital grant funding of R3.8m for operational purposes.
We draw attention to the fact that at 31 March 2009, the Corporation had an accumulated deficit of R54,451,487 (2008: R56,216,948).
The financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realization of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.
The ability of the Corporation to continue as a going concern is dependent on a number of factors. The most significant of these is that the directors continue to procure funding for the ongoing operations of the Corporation by recapitalization of the bus fleet in order to increase revenues, as well as negotiations and pro-active budgeting and communication thereof to the Department of Roads and Transport, in an effort to obtain additional funding in the form of unconditional grants.
The Department of Roads & Transport has approved a grant-in-aid of R43,000,000 for the 2009/10 financial year.
22 PRIOR PERIOD ERRORS
22.1 Restatement of property, plant and equipment
In previous years the Corporation failed to fully apply the provisions of IAS 16 Property, Plant and Equipment. Management did not revise the useful lives, depreciation rates and residual values annually as is required by IAS 16. In some instances inadequate residual values were assigned to items of Property, Plant and Equipment. As a result, the depreciation expense was incorrectly allocated to income as it did not reflect the pattern in which the Corporation consumed the economic benefits inherent in the cost of the asset. In the current year management revised the useful lives, depreciation rates and residual values of Property, Plant and Equipment. Due to inherent limitations relating to the nature of
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operations, management performed estimations in arriving at the restated amounts for spares and units. The basis used in calculating the estimations was to utilize a useful life of two years and derecognizing spares and units older than two years, recalculating the accumulated depreciation and depreciation charges for assets brought into use in arriving at the carrying amount. The financial statements have been restated to correct this error. The effect of the restatement on the opening accumulated deficit is summarized below:
2009 2008 R R
Operating equipment accumulated depreciation - 2,298,905
Ancillary vehicles accumulated depreciation - 603,209
Buses accumulated depreciation - 2,862,992
Buses cost - 1,164,974
Spare parts and units - (3 072 093)
- 3,857,987
22.2 Restatement of deferred income
The Corporation has chosen to recognize capital grant income systematically over the useful lives of assets. The basis of accounting for deferred income was not applied correctly in previous years as the amounts of income recognized did not match annual depreciation charges. The financial statements have been restated to correct this error. The effect of the restatement on the opening accumulated deficit is summarized below:
2009 2008
R R
Deferred income - (2 325 648)
- (2,325,648)
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23 STANDARD / INTERPRETATIONS ISSUED NOT YET EFFECTIVE AS AT 31 DECEMBER 2008
Standard Details of amendment Annual periods beginning on or after
IFRS 1, First-time Adoption of International Financial Reporting Standards
Measurement of the cost of investments in subsidiaries, jointly controlled entities and associates when adopting IFRS for the first time.
01-Jul-09
IFRS 2, Share Based Payments
Amendments to vesting conditions and cancellations.
01-Jan-09
IFRS 3, Business Combinations
Amendments to accounting for business combinations.
01-Jul-09
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
Plan to sell the controlling interest in a subsidiary.
01-Jul-09
IFRS 7 Financial Instruments: Disclosure
Presentation of finance costs. 01-Jan-09
IFRS 8, Operating Segments
New standard on segment reporting (replaces IAS14).
01-Jan-09
IAS 1, Presentation of Financial Statements
Amendments to structure of Financial Statements Current/non-current classification of derivatives.
01-Jan-09
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
Status of implementation guidance. 01-Jan-09
IAS 10 Events after the Reporting Period
Dividends declared after the end of the reporting period.
01-Jan-09
Recoverable amount.
IAS 16 Property, Plant and Equipment Sale of assets held for rental.
01-Jan-09
IAS 18 Revenue Costs of originating a loan. 01-Jan-09 Curtailments and negative past service
cost. Plan administration costs. Replacement of term ‘fall due’.
IAS 19 Employee Benefits
Guidance on contingent liabilities.
01-Jan-09
Government loans with a below-market rate of interest.
IAS 20 Accounting for Government Grants and Disclosure of Government Assistance
Consistency of terminology with other IFRSs.
01-Jan-09
IAS 23 Borrowing Costs Amendment requiring capitalization only model.
01-Jan-09
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Standard Details of amendment Annual periods beginning on or after
Components of borrowing costs. Amendment dealing with measurement
of the cost of investments when adopting IFRS for the first time.
IAS 27 Consolidated and Separate Financial Statements
Measurement of subsidiary held for sale in separate financial statements.
01-Jan-09
IAS 27 Consolidated and Separate Financial Statements
Consequential amendments from changes to Business Combinations.
01-Jul-09
Required disclosures when investments in associates are accounted for at fair value through profit or loss.
IAS 28 Investments in Associates
Impairment of investment in associate.
01-Jan-09
IAS 28 Investments in Associates
Consequential amendments from changes to Business Combinations.
01-Jul-09
Description of measurement basis in financial statements.
IAS 29 Financial Reporting in Hyperinflationary Economies
Consistency of terminology with other IFRSs.
01-Jan-09
IAS 31 Interests in Joint Ventures
Required disclosures when interests in jointly controlled entities are accounted for at fair value through profit or loss.
01-Jan-09
IAS 31 Interests in Joint Ventures
Consequential amendments from changes to Business Combinations.
01-Jul-09
IAS 32 Financial Instruments: Presentation
Certain financial instruments will be classified as equity whereas, prior to these amendments, they would have been classified as financial liabilities.
01-Jan-09
IAS 34 Interim Financial Reporting
Earnings per share disclosures in interim financial reports.
01-Jan-09
IAS 36 Impairment of Assets
Disclosure of estimates used to determine recoverable amount.
01-Jan-09
Advertising and promotional activities.
IAS 38 Intangible Assets Unit of production method of amortization.
01-Jan-09
Reclassification of derivatives into or out of the classification of at fair value through profit or loss.
IAS 39 Financial Instruments: Recognition and Measurement Designating and documenting hedges at
the segment level.
01-Jan-09
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Standard Details of amendment Annual periods beginning on or after
Applicable effective interest rate on cessation of fair value hedge accounting.
Clarifies two hedge accounting issues:
Inflation in a financial hedged item.
IAS 39 Financial Instruments: Recognition and Measurement A one-sided risk in a hedged item.
01-Jul-09
Property under construction or development for future use as investment property.
Consistency of terminology with IAS 8.
IAS 40 Investment Property
Investment property held under lease.
01-Jan-09
Discount rate for fair value calculations. Additional biological transformation. Examples of agricultural produce and
products.
IAS 41 Agriculture
Point-of-sale costs.
01-Jan-09
Interpretations
Annual periods beginning on or
after
IFRIC 11 IFRS 2: Group and Treasury Share Transactions 01-Mar-07 IFRIC 12 Service Concession Arrangements 01-Jan-08 IFRIC 13 Customer Loyalty Programmes 01-Jul-08 IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their interaction 01-Jan-08 IFRIC 15 Agreements for the Construction of Real Estate 01-Jan-09 IFRIC 16 Hedges of a Net Investment in a Foreign Operation 01-Oct-08 IFRIC 17 Distribution of Non-cash Assets to Owners 01-Jul-09
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4.4.7 DETAILED INCOME STATEMENT
2009 2008
R R INCOME 19,923,807 16,019,467
Casual passengers 17,271,024 13,598,611 Private Hire 2,155,439 1,456,826 Other income 497,346 964,030 Discount Received 49,113 44,625 Interest 392,755 524,281 Profit on sale of assets - 24,310 Miscellaneous 55,478 370,814 EXPENDITURE 53,754,265 48,007,676 Operations Department 22,359,503 17,186,112 Accident costs 150,424 333,181 Fuel 12,803,988 8,896,979 Fines 5,450 600 General Expenses - 2,315 Licenses and Permits 758,359 619,252 Lubricants and Grease 618,539 343,333 Maintenance - Operating Equipment 176,737 169,938 Private Hire Expenses 49,582 150,579 Salaries and Wages 5,744,105 4,890,205 Sleep-out Allowance 61,101 53,486 Ticket/Waybill Usage 153,929 66,508 Travelling and Subsistence 66,606 2,100 Tyre Usage 1,770,434 1,614,461 Uniforms 252 43,175
Traffic Department 5,497,139 5,127,699 Ancillary Vehicle Costs 270,768 259,368 Driver of the Year Award 2,100 1,350 Salaries and Wages 5,156,585 4,812,843 Travelling and Subsistence 67,546 53,838 Uniforms 140 300
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2009 2008 R R Maintenance Department 12,540,969 14,340,720 Ancillary Vehicle 192,052 179,121 Building Maintenance 404,650 716,756 Bus Repairs 1,640,623 542,424 Consumables Used 394,821 317,179 Loose Tools 44,622 77,594 Maintenance - Workshop Equipment 87,379 98,866 Salaries and Wages 9,576,821 8,983,566 Spares Used (0) 1,815,448 Staff Uniforms 95,144 57,139 Travelling and Subsistence 104,857 31,868 Units Used - 1,520,759
Administrative Department 13,356,654 11,353,145 Auditor's Remuneration 898,280 930,032 Audit Committee 19,500 39,200 Bad debts 221,366 51,074 Bank Charges 168,705 151,551 Cleaning, teas and entertainment 114,090 75,549 Collection Fees 283,203 239,110 Computer Expenses 92,089 99,407 Consultation Fees 201,963 198,067 Directors' Fees 210,296 187,051 Donations and sponsorships 30,808 - Electricity and Water 499,327 397,547 General Expenses 71,015 32,586 Insurance 970,288 1,201,050 Interest and Penalties 20,897 - Lease Charges 226,296 197,201 Legal Expenses 86,315 205,674 Levies 230,239 165,511 Long Service Awards 23,722 34,900 Loss on sale of assets 12,058 - Maintenance - Office Equipment 34,039 21,143 Printing and Stationary 600,163 392,211 Recruitment costs 31,500 - Salaries and Wages 5,669,672 4,486,900 Security Expenses 1,167,533 950,832 Subscriptions 39,454 38,289 Telephone Expenses 776,488 601,378
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2009 2008 R R Training 323,292 420,304 Travelling and Subsistence 334,053 236,578 Loss for the year before Depreciation (33,830,458) (31,988,209) Depreciation (7,602,035) (2,942,959)
Loss for the year before Government Grant (41,432,493) (34,931,168) Government Grant 43,197,954 37,511,372 Profit / (Loss) for the year 1,765,461 2,580,204
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PART 5
HUMAN RESOURCES MANAGEMENT
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5 HUMAN RESOURCES MANAGEMENT 5.1 ORGANISATIONAL STRUCTURE
The structure that was approved by the Board of Directors in 2004 is still in place. The Corporation’s structure consists of four (4) Divisions, namely Human Resources, Finance, Operations and Engineering.
5.2 VISION & MISSION OF HUMAN RESOURCES DIVISION
5.2.1 VISION
Guided by the ethos of service & commitment to the maintenance of best bus company standards, the division strives to render an effective and equitable service to all MTC employees. To lend support to the Human Resources and Business Development Strategy by recruiting outstanding candidates that will add value to the organization thereby leading to the realization of the Corporation's vision.
5.2.2 MISSION
To achieve the aforementioned vision, we embrace the following core values:
Superior Performance - driven by the quest for continuous improvement and excellence in rendering HR services (Industrial Relations, Training & Development Personnel & Organizational Development), as well as compliance with all relevant pieces of legislation.
Being Proactive - work towards exceeding our customers’ expectations by proactively assessing and addressing their current and future needs.
Ethical Business Practices - we will continually uphold strong business ethics and values, and ensure the transfer of these to our internal employees.
We will further see to the development of sound human resources policies and procedures, serve as a custodian of these policies by ensuring compliance and adherence to them.
5.3 KEY HUMAN RESOURCES ISSUES
The Human Resources Division aimed to achieve the following objectives:
5.3.1 OBJECTIVE 1: DEVELOP AND MAINTAIN SOUND HUMAN RESOURCES PRACTICES
5.3.1.1 Develop sound human resource practices in MTC
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Measurable Objective
Performance Measure
Target Outputs 2008/09
Actual Output 2008/09
Deviation from Target
Reason for Non-Achievement
To conform to the annual budget.
Control accumulated leave by complying with the new leave policy.
Leave accrued not to exceed policy provision.
Accrued leave has been reduced by to acceptable levels.
None.
Human Resource capacity; skill retention strategy.
Replace retirees with young, educated and skilful prospects.
Attract two young female graduates to the Corporation.
Three young graduates have been placed on internship program.
None.
Boost employee morale and enhance passenger interest to MTC.
Reward best performers. Develop a policy for the employee of the month and community client of the month.
Reward best performers. Develop a policy for the employee of the month and community client.
A policy and selection criteria for the employee of the month has been developed.
Partially achieved.
Benchmark staff levels and comparatives to best practice models.
Conduct job evaluation and compare with other passenger transport companies.
All jobs to be evaluated starting with management.
Jobs could not be evaluated due to financial constraints.
100%
5.4 COMBINED ANNUAL AND SICK LEAVE UTILISATION FOR THE PERIOD 1 APRIL 2008 TO 31 MARCH 2009
Level Total Days % Days With Medical
Certificate
No. Of Employees Using
Sick Leave
%Using Sick Leave
Human Resources & Admin 987 15% 61 13%
Engineering 2888 43% 214 47%
Operations 2851.50 42% 178 40%
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5.4.1 DISABILITY LEAVE
Total Days Taken %With Medical Certificate
No. Of Employees On Disability
Average Days Per Employee
Human Resources: 0 0 0
Engineering: 0 0 0
Operations: 1 1 45
5.5 LABOUR RELATIONS – DISCIPLINARY HEARINGS FINALISED
Sanction Imposed Nature of Misconduct Number of employees % of total
Fined 10% of excess, Final Written Warning
Negligence 2 7.7%
Written Warning Negligent driving 3 15.4%
Written Warning Negligence 3 7.7%
Dismissed Under the influence of liquor 1 7.7%
Dismissed Theft 9 46.1%
Dismissed Dishonesty 1 7.7%
Final Written Warning Poor Performance 1 7.7%
Chief Executive Officer Mayibuye Transport Corporation
P.O. Box 19596 TECOMA
5214
Tel. (043)745-2582 Fax (043)745-2586 [email protected]
PR 87/2009
ISBN: 978-0-621-38551-9