MTC Annual Report 2007-2008

222
Mayibuye Transport Corporation
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2008
Mayibuye Transport Corporation Annual Report for the Year Ended 31 March 2008
FOREWORD BY MEMBER OF THE EXECUTIVE COUNCIL

Mayibuye Transport Corporation continues to show signs of recovery and is gradually transforming into a viable public transport service provider. This can be attributed to good leadership and professionalism by the Board and management with limited resources at their disposal. Under their capable leadership, the Corporation adopted a host of new policies, including a Risk Management Strategy and a Fraud Prevention Policy. The internal audit function has been outsourced to one of the top auditing firms in the country in an attempt to enhance good administration and governance. 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 and reliable public transport service to the communities that it serves. The Department has, through its grant-in-aid program to Mayibuye enabled the Corporation to upgrade its bus fleet and depot infrastructure. There is, however, still major capital programs that would have to be instituted if we want the Corporation to compete with the private sector in future. Provincial Treasury will be made aware hereof. I wish, however, to express my sincere gratitude to the Board and staff of Mayibuye Transport Corporation for the service that they rendered to the approximately 1.8 million passengers that they transported during the past year. This annual report attempts to record and report to the public the extent to which the Corporation has been able to execute its mandate during the 2007/08 financial year.
HON. GLORIA BARRY MEC FOR ROADS & TRANSPORT
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MESSAGE FROM THE CHAIRPERSON

Laying strong foundations for Governance The Board of Directors of MTC, appointed in March 2007, is constituted of members who have distinguished themselves in a variety of disciplines at a governance and fiduciary level. In implementing its mandate, the Board developed a Board Planning Framework. The development of this Framework saw more structured interventions with clear monitoring and evaluation yardsticks to measure progress. Significant milestones were recorded and are reflected on the Performance Report which is Part 2 of this Report. This Framework maps the way forward for the Board and introduces sustained improvements throughout the Corporation. Contributing to the Provincial Growth and Development Plan 2007/08 was another year in which MTC made its contribution to the Provincial Growth and Development Plan through the provision of public transport services thereby enabling access to health care, basic services, education and employment. We will continue to operate in social routes such that those who live in rural Eastern Cape do not find themselves disadvantaged from accessing these and other services that can help them to improve their lives. Partnerships and putting our customers first Commuters were engaged on the level of service expected and kept abreast of changes that impact on them through functional Corporation-Commuter forums. We put our customers first and will keep to our brand promise of Until We Transport Them All. We pride ourselves on the partnerships built, encouraged by Governments declaration that all organs of state should renew their pledges to the citizenry through building partnerships that will improve their lives. In this tone, MTC started with harnessing relationships within the Corporation, promoting a sense of identity throughout the Corporation. This was extended to external partners and stakeholders. The Corporation is grateful for the support rendered by the Department of Roads and Transport through its strategic and capital investments. Improving financial viability and sustainability During the year under review, the MTC Board worked closely with the Corporations management on the areas of financial management and viability. These include introducing alternative revenue generation streams, improving route revenue and private hire. This coupled with putting in place sound financial management systems and controls, will contribute to MTCs growth and development. We are proud to announce that the Corporation, for the first time, made a profit of R2, 580, 204 million. These measures will go a long way towards improving the Corporations financial standing. Going forward We will build on these foundations in 2008/09 and fulfil statutory obligations in an accountable and responsible manner. We further commit to implementing the recommendations of the Portfolio Committee on Roads and Transport which has oversight responsibility over the Corporation.
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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
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PART 1 GENERAL INFORMATION
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1
1.1
GENERAL INFORMATION
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 2008 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
The appointment of a new Board of Directors for MTC has indeed breathed new life into the Corporation. MTC benefitted from the strategic vision and direction provided by the Board under the leadership of Mr Maseti. Our strategic and operational plans for 2007/08 were responding to, but not limited to issues raised in the following sources:
The Portfolio Committee on Roads and Transport in their oversight reports Provincial Growth and Development Plan Review The Department of Roads and Transport in their Policy Speech Feedback from commuters who are the beneficiaries of our services
In responding to these, we have no doubt that we have achieved on the strategic objectives set out in the Strategic Plan and Operational Plan. The Performance Report, synopsized in this introduction will share progress achieved during this exciting year.
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1.2.1 1.2.1.1
Programme Highlights Finance highlights Development of a fraud prevention plan and risk management strategy Improving audit outcomes and financial management through Appointment of a Chief Financial Officer Functional 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 SAGAAP compliant Establishment of a supply chain management as per the requirements of PFMA Improvement in losses reported in previously Policy and procedure development and implementation
2008/09 will be focused towards the following: 1.2.1.2 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 Highlights of Operations Increase in private hire and route revenue from R12, 149, 127 to R15, 055, 439 The opening up of new and viable routes e.g. Queenstown Appointment of a female Superintendent in an effort to meet equity imperatives Our bus drivers continued to put us on the maps through winning the provincial leg of the bus drivers competition Human Resources An acting HOD for Human Resources was appointed with plans to fund the vacancy in 2008/09 Three female managers and a Human Resources Officer were appointed
1.2.1.3
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A number of policies were developed and implemented e.g. Employment Equity, Skills Development etc Human Resource Development plans were fully implemented Staff morale was boosted through implementation of regular staff-management engagement and various functions Engineering highlights Refurbishment of six buses which assisted in improving the passenger experience Capital provision for the financial year allowed for R300, 000 for workshop equipment which will go a long way towards improving the servicing of buses thereof Two new buses were procured but could not be delivered by the Supplier due to shortage of supply against demand Strategy and Policy Development
1.2.1.4
1.2.1.5
MTC reviewed its first Treasury aligned Strategic, Performance and Operational Plans. This process was inclusive and enjoyed the participation of all sectors of MTC. A process was initiated to educate staff and raise awareness about the strategic plan. The following strategic documents and policies were approved for 2007/08: 1.2.2 DOCUMENTATION PRODUCED Five-year Strategic Plan and Annual Performance Plan Risk Management Strategy Fraud Prevention Plan Business Plan for Restructuring Skills Development Plan Policy Occupational Health and Safety Policy Sexual Harassment Policy Induction Policy Exit Interview Policy Overtime Policy Finance Policies Board Charter
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Conflict of Interest Delegation of Authority Performance Agreement for Senior Managers Board Plan 2007/2008 1.2.3 Going forward
MTC will be focusing on the development of measures aimed at improving the commuter experience and enhancing relations with various stakeholders and partners. We value the contribution of these in taking forward our mandate and putting MTC on the Map. We will also be looking at identifying areas where MTC can make a contribution through our Social Responsibility Programme. This is driven by a need to plough back to our communities on whom we owe our existence. At a strategic level, we will be reviewing our strategic plan and moving towards implementation of the areas that have proved to be a challenge in 2007/08. I take the opportunity to thank the Department of Roads and Transport, Board of Directors, management and staff for their efforts. Let us leave no stone unturned to transport them all.
1.3
INFORMATION ABOUT THE ENTITY
Mayibuye Transport Corporation was formed as a parastatal in October 1990 by the former Ciskei Government with the main objective of providing 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. Due to the socio-economic conditions prevailing in these rural communities as a direct result of apartheid, resulting in longer than normal distances between residential areas and places of employment and social institutions, the subsidisation of bus passenger fares became a necessity which in turn puts pressure on the ever-increasing real costs of the service. 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 Williams Town. Contact Details Zwelitsha Depot Mount Coke Road Zwelitsha 5608 Tel: 040 654 1351 1.3.1.2 Reeston Depot P.O. Box 19596 Tecoma, East London 5214 Fax: 040 655 1907
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.
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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 Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. 1.3.3 BOARD OF DIRECTORS P.L.C. Maseti S.J. Nyengane P.P. Balfour D. Lefutso T. Matiwane J. Davies M. Tuswa A.J. De Vries T.A. Thomas MANAGEMENT CEO HOD: Operations HOD: Engineering Chief Financial Officer HOD: HR Chairperson Deputy Chairperson Member Member Member Member (resigned) Member Member Member
Mr. L.R. Mbinda Mr. L.C. Mtise Mr. Z.D. Leni Mr. L. Coetzer Vacant 1.3.3.1 Secretary
Mrs. C. Cronj 1.3.4 REGISTERED HEAD OFFICE AND POSTAL ADDRESS P.O. Box 19596 Tecoma, East London 5214
Reeston Depot Cnr of Drummond and Mdantsane Access Roads Wilsonia East London 5247 1.3.5 BANKERS
Standard Bank of South Africa Limited King Williams Town 1.3.6 AUDITORS
Auditor-General Audit Committee:
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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 (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).
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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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PERFORMANCE OF THE MTC DIVISIONS

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.
The strategic focus of the Mayibuye Transport Corporation can be summarised as follows:
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 Corporations activities are organised in the following divisions:

Division 1. Human Resource Management Sub-Division 1.1 Personnel Administration 1.2 Industrial Relations 1.3 Training and Development 1.4 Employee Assistance Programme (EAP) 1.5 Organisational Development 2. Finance 2.1 Debtors Control 2.2 Creditors Control 2.3 Accounts 2.4 Salaries 2.5 Revenue Collection 2.6 Supply Chain
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3. Operations
3.1 Traffic 3.2 Statistics 3.3 Despatch 3.4 Inspection 3.5 Private Hire
4. Engineering
4.1 Stores 4.2 Tyres 4.3 Maintenance (Vehicles and Infrastructure) 4.4 Purchasing
2.3
2.3.1
OVERVIEW OF SERVICE DELIVERY ENVIRONMENT FOR 2007/08

REVENUE COLLECTION
Route and Private Hire Revenue

Year 2006 2007 2008 Budget 11,500,000 12,500,000 14,131,397 Actual 11,577,000 12,149,128 15,055,438 Variance 77,000 (350,872) 924,041
2.3.2
Item
EXPENDITURE
2008 Actual 2007 Actual (1,313,625) 20,846,028 312,983 14,175,959 1,809,580 2006 Actual (2,841,987) 18,879,239 641,938 19,315,043 1,549,098
Profit / (Loss) from operations Personnel Audit fees (including internal audit fees for current year) Other operating expenses Depreciation
2,580,204 23,173,514 930,032 16,429,831 2,942,959
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
Item New Buses Second hand buses Refurbishment Operating Equipment Workshop Equipment Office Equipment IT Infrastructure Depot Upgrading Total Budget 2,200,000 1,785,240 1,100,000 163,840 300,000 200,000 100,000 1,150,920 7,000,000 Expenditure 1,282,167 150,291 331,481 294,009 45,269 1,095,514 3,198,731 Variance 2,200,000 1,785,240 (182,167) 13,549 (31,481) (94,009) 54,731 55,406 3,801,269
The two second hand buses has been received and paid for in the next financial year. The Corporation also committed to an order of two new buses. 2007
Item New Buses Refurbishment Operating Equipment Office Equipment Depot Upgrading Total Budget 3,532,000 148,000 70,000 100,000 400,000 4,250,000.00 Expenditure 3,266,997 165,000 68,807 117,682 666,803 4,285,289 Variance 265,003 (17,000) 1,193 (17,682) (266,803) (35,289)
Depreciation Rates for Assets Ancillary Vehicles Buses Body Buses Chassis, engine, etc Office Equipment
Percentage 25% 12.5% 8.33% 20%
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Depreciation Rates for Assets Office Furniture Operating Equipment Workshop Equipment Buildings
Percentage 10% 20% 25% 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 46 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. MTCs name has been synonymous with affordability and reliability. The Corporation had a total staff complement of 171 as at 31 March 2008, which reflects a staff to bus ratio of 3:1 in line with the industry average which stands at 3:1 with a number of vacancies in critical positions that cannot be filled as a result of financial constraints. The following critical positions have been identified in the 2007/08 financial year: Occupational Nurse HR Manager Protection Services Officer Marketing and Communication Officer It should be noted that Finance Division has appointed a Chief Financial Officer on 1 October 2007 and as a result of that, financial controls and monitoring mechanisms are being put in place with the assistance of the Internal Audit unit (PricewaterhouseCoopers). The Corporation also established an information technology unit which provides the necessary support. To date, the Corporation does not have a marketing and communication unit and we are hoping to establish one in the next financial year. 2.5 STRATEGIC OVERVIEW AND KEY POLICY DEVELOPMENTS FOR 2007/08
MTC is a public entity and is accountable to the Department of Roads & Transport in the Eastern Cape Government. The Department of Roads & Transport is governed by pieces of legislation that have relevance to its sphere and operation, be it at national level or provincial level, as well as policy frameworks. MTC is obliged by virtue of its reporting to ensure alignment to these. At the beginning of the current financial year, the MEC for Provincial Safety Liaison, Roads & Transport appointed a complete new Board of Directors for a period of two years. The Audit Committee is now operational, working with the Internal Audit unit (PricewaterhouseCoopers). The
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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 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 will be filled in the next financial year. 2.6 2.6.1 PERFORMANCE OF DIVISIONS WITHIN MTC 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 Board Plan developed. Board Charter developed and implemented. New Board inducted. Members Deviations / Comments Target achieved Target achieved
1. To inculcate strong and good governance at MTC.
Develop Board Plan. Develop Board Charter.
Board Induction Plan.
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. Target achieved
Conflict registers. Board Plan.
of
interest
Conflict of interest registers maintained. Board Development implemented. Plan
Development
Target achieved
Delegation of Authority and Performance Agreement. 2. Strategic leadership and direction. Review MTC strategy and align to Treasury Guidelines.
Delegations of Authority and Performance Agreement implemented. Strategic Plan reviewed and developed according to Treasury Guidelines.
Target achieved
Target achieved
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Measurable Objectives
Performance Measure
Performance Indicators and Targets Risks to MTC identified and mitigated. Risk Management Strategy and Fraud Prevention Plan developed.
Deviations / Comments Risk Management is a standing item in Board and Management Meetings. Risk Management Strategy and Fraud Prevention Plan approved by the Board of Directors.
3. Risk Management for MTC.
Review risk assessment undertaken by auditors, prioritise them and develop a plan to mitigate them. Establish Corporation risk co-ordinators per division. Ensure that risk management is a standing item on management meetings.
4. Capacitate MTC with the relevant human resources.
To appoint high calibre candidates to fill the management vacancies of Chief Financial Officer, HOD: Engineering, HOD: Human Resources as well as the other funded junior positions. Develop a customer service charter poster for employees. Develop and implement a customer service excellence course for all front-line employees.
MTC organogram populated.
Target partially achieved, except the appointment of HOD HR due to financial constraints.
5. Inculcate a customer service ethic in all divisions of MTC.
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.
6. 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 and AG.
Target achieved
7. Improve delivery at MTC.
service
Develop Service Delivery Improvement Plan.
Draft 50%
2.6.2 2.6.2.1
HUMAN RESOURCES DIVISION Staff Establishment
The personnel to operating bus ratio are 3:1, in line with the ideal industry norm of 3:1. This means that the Corporation has a staff complement of 171 while operating a fleet of 58 buses. (46 peak buses plus 12 spares)
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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 twelve (112) employees. 2.6.2.3 Appointments & Promotions
Three female managers were employed or promoted during the year under review. 2.6.2.4 Separations
26 staff members left the employ of the Corporation during the year under review: Retired 13 2.6.2.5 Dismissed 6 Performance Resigned 4 Absconded 1 Disabled 0 Deceased 2
The Human Resources Division has been able to demonstrate results against its measurable objectives as indicated below:
Measurable Objective Performance Measure Target Output 2007/08 Actual Output 2007/08 Deviation from Target & Reasons for NonAchievement None
Conduct a skills audit and compile a skills development plan.
Conduct a skills audit and compile a skills development plan (100%)
Conduct a skills audit for all depots and compile a skills development plan
Skills audit for all depots completed. Sills development plan being developed. Appointment of 3 Auto Electricians and Body Builders for learnership has been finalised 36 employees and 8 managers were trained in various skills.
Develop a learnership program
Recruit 3 Auto Electricians and 3 Body Builders for learnership.
None
To empower 30% of MTC employees with various skills over a period of two years.
Skills development interventions were identified. MTC employees were trained in different skills by attending
None
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Measurable Objective
Performance Measure
Target Output 2007/08 courses, conferences seminars.
Actual Output 2007/08
Deviation from Target & Reasons for NonAchievement
and
Promote sound labour relations within MTC.
To empower MTC Shop Stewards and line managers in the IR discipline
10 Shop stewards and 12 supervisors and line managers to attend a capacity building workshop in Industrial Relations Conduct EAP at all depots
10 Shop stewards and 12 supervisors and line managers were trained by Global Business Solution Employee Wellness programs held at all MTC depots EAP have been approved by management.
None
Manage AIDS.
HIV/
Develop Employee Wellness Programs to support employees
None
Processes and protocols run by peer educators to get management support and approval 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 (25%). All managers to have signed performance agreements
None
Job Consolidation and evaluation concluded (25%)
None
Performance Management System.
Effective Performance Management System to be in place for all managers. Provident/Pension fund amalgamation to MTC Retirement Fund.
All managers have signed performance agreements.
Consolidate retirement funds for a smooth administration.
Contributions from 1/04/2007 must go to MTC Retirement Fund.
All three funds i.e. Sanlam Pension/Provident and Metropolitan Rainmaker Plus consolidated
None.
To conform to the annual budget.
Control accumulated leave by doing quarterly reconciliations of
Leave accrued not to exceed budget provision.
Accrued leave has been reduced by more than 80%
20%
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Performance Measure leave provision.
Target Output 2007/08
MTC to comply with legislation.
Implement Employment Equity Plan.
Increase female representation in the organization by 15%.
3 females were appointed in management positions. ACI compliant i.e. 2 Africans and 1 Indian.
None
Promotion of transparency, consistency and fairness.
All Human Resources Policies to be consolidated into the HR policy hand book
Revised Personnel Regulations, Industrial Relations and other HR policies to be consolidated into a HR manual
80% of Human Resources policies are in place. 100% IR policy is in a draft form still awaiting Boards approval. Three middle management positions filled by female candidates CFO appointed Organogram populated 96% Currently 171 employees with a ratio of 3:1. 10% other positions are not funded.
To capacitate MTC with the relevant human resources.
MTC Organogram populated 100%.
Critical management vacancies to filled.
be
Sustain current bus to staff ratio level.
Reduction of excess Keep manpower levels to existing 3:1 ratio.
Total number of employees 171 ratio 3:1.
Industry Ratio of 3:1 achieved.
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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 R15,055,438. Revenue generation by depot was as follows:-
Revenue generation by segment
Depot Zwelitsha Reeston Queenstown Alice TOTAL
2008 6,265,809 2,926,797 4,468,357 1,394,475 15,055,438
2007 5,054,337 2,685,617 3,373,029 1,036,145 12,149,128
The combined revenue has been achieved by an average number of 46 operating buses (2007: 44) with a total number of 2,386,563 kilometers traveled. Private hire kilometers amounted to 79,841 (2007: 72,344 Km) while route kilometers stood at 2,306,722 (2007: 2,153,850) for the financial year. The increase in revenue in 2008 as compared to 2007 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:-
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Revenue generation by service

2008 Route Revenue 5,683,388 2,521,770 4,181,377 1,212,076 13,598,611 Private Hire Revenue 582,421 405,027 286,980 182,399 1,456,827 Route Revenue 4,692,317 2,310,226 3,204,779 911,395 11,118,717 2007 Private Hire Revenue 362,020 375,391 168,250 124,750 1,030,411
Depot Zwelitsha Reeston Queenstown Alice TOTAL
Average Route Revenue Per Depot

Depot Zwelitsha Reeston Queenstown Alice 2008 5.53 5.15 7.32 5.55 2007 4.90 5.14 5.82 4.61
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Combined Revenue
12
10
Zwelitsha 8
Rands per Km
Reeston 6
Queenstown 4 Alice 2
0 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Months
Route Revenue
12
10
REV 8
Rands per Km
KM
Zwelitsha
Reeston 4 Queenstown
Alice
Average 0 1900/01/01 1900/01/03 1900/01/05 1900/01/07 Months 1900/01/09 1900/01/11
Private Hire Revenue

120
100
Zwelitsha
80
Rands per Km
Reeston
60
Queenstown
40
Alice
20
Average
0 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Months
Bus allocation per depot for the financial year was as follows:-
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DEPOT Zwelitsha Reeston Queenstown Alice TOTAL OPERATING BUSES
2008 18 9 12 7 46
2007 16 10 11 7 44
Average route revenue per bus was as follows:DEPOT Zwelitsha Reeston Queenstown Alice 2008 315,744 280,197 348,448 173,154 2007 294,301 231,023 291,344 130,199
Operating Grant-in-Aid The Corporation receives a 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:2008 Grant-in-Aid 33,565,000 2007 27,747,177
2.6.3.1
DETAILS Revenue Grant-inAid Capital Grant-inAid Passengers
Financial Statistics for the five years to March 2008:

2008 15,055,438 33,565,000 2007 12,149,128 27,747,177 2006 11,577,460 25,001,992 2005 11,502,232 20,500,000 2004 10,422,675 24,435,000 2003 9,754,141 22,400,000
7,000,000 1,751,785 2,306,722 58 171
4,250,000 1,574,045 2,155,049 56 170
15,000,000 1,556,132 2,121,467 52 183
1,853,553 2,043,688 60 207
1,976,150 2,061,683 60 223
1,428,128 1,577,785 61 243
Route Kilometres Buses at Year end Number of Employees Revenue Cents per Kilometre (Cpk)
631
564
546
563
459
618
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DETAILS Staff Ratio
2008 3:1
2007 3:1
2006 3.6:1
2005 3.7:1
2004 3.7:1
2003 4.0:1
2.6.3.2
FINANCIAL HIGHLIGHTS
2.6.3.2.1 Route Revenue Revenue from Operations increased from R12,149,128 to R15,055,438. 2.6.3.2.2 Government Grant-in-Aid An amount of Thirty Three Million, Five Hundred and Sixty Five Thousand Rand (R33,565,000) for operational purposes and a further capital Grant-in-Aid of Seven Million Rand (R7,000,000) 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 2007/08 Actual Output 2007/08 Deviation from Target & Reasons for NonAchievement None.
Inculcate strong and good governance at MTC.
Good governance plan developed and implemented.
Board charters developed, board induction, board plan, board developed man, board performance appraisal tool, delegation of authority, conflict of interest register maintained. Strategic plan reviewed and developed according to treasury guidelines and procedures.
All the governance tools were developed and maintained.
Strategic leadership and direction at MTC.
Strategic plan reviewed and developed and submitted according to treasury guidelines and procedures. Risks management strategy and fraud prevention plan developed.
None.
To manage Corporation risks for sustainability.
Risk management for MTC.
Risks reviewed and mitigation plan implemented, risk coordination forums in place, risk management a standing item at
None.
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Performance Measure
management meetings. Manage interest. conflict of Conflicts of interest managed at MTC. Review and update conflict of interest register. Each board of director signed a conflict of interest and declare their interest in each meeting. Training needs implemented as per the needs analysis. None.
Develop board development program to capacitate board members with oversight on risk management, fiduciary duties and roles of directors in line with legislation. Formulate policies and procedural frameworks for MTC.
A training needs analysis conducted.
Implementation of training as per the needs analysis.
None.
Policies and procedure manuals developed and implemented.
Policies developed and procedure manuals done.
Continues policy development.
Continues process in order to improve internal control structure at MTC. Continues process in order to improve internal control structure at MTC. None.
Develop a compliance plan for all legislative mandates that have relevance to MTC.
Compliance plan for legislative mandates developed and implemented.
Develop and implement compliance plan.
Continues control implementation in order to comply with all legislation.
Maximise intergovernmental cooperation.
Partnerships with Department of Roads and Transport, other departments, public entities, the Legislature forged and maintained.
MTC represented at meetings of the Department of Roads and Transport, monitors findings of the Standing Committee and forges links with other public entities.
MTC do attend Department of Roads and Transport meetings, monitors findings of the Standing Committee and forges links with other public entities. All measures implemented to improve the audit
Reduce the number of audit queries.
Audit queries reduced and action
Clean audit implemented.
plan
None.
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Performance Measure
plan developed. Implement effective financial information system for uploading and recalling of information. To purchase new buses and upgrade the depots with the funding pledge from the department. Effective financial information system developed. Implement financial information system.
report. Pastel implemented financial information system. None. as
New purchased.
buses
Depots upgraded as phased development.
3 Buses purchased and phase 1 of depot upgrading implemented.
Orders placed for two second hand buses and two new buses. Continues process of upgrading MTC depots. All financial reports were submitted accurately, reliably and printed timeously.
None.
Ensure timely, accurate and reliable financial reports.
Timely submissions to board, department and AG.
All financial reports are accurate, reliable and printed timeously.
None.
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 reliable buses so that they can operate according to their schedule. This proves to be a great challenge for the reasons that have been stated in the section that deals with the overview of the service delivery environment. 2.6.4.2 STRATEGIC OBJECTIVES OF ENGINEERING DIVISION To provide safe, reliable buses to Operations Division.
2.6.4.3
SECTIONS WITHIN ENGINEERING Tyre Section Stores Section Maintenance Section
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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:
Performance Measure
Deviation from Target Reason for NonAchievement
Increase Revenue.
Improve Route & Private Hire revenue collection.
Increase total operational revenue to R15 million. Dead kilometres not to exceed 15% of total kilometres. Fuel consumption not to exceed 45 l/100km.
R15,055,439
None
Reduce costs.
operating
Reduce kilometres.
dead
14.75%
None
Reduce maintenance costs.
Reduce maintenance cost.
42.50 l/100km
None
Maintain current market share.
Satisfy peak bus requirement.
46 Provide Operations Division with 49 peak buses daily. Ensure that a spare engine, gearbox and differential are available at each depot. No spare units were kept at depots
Age and reliability of the fleet had a major impact. See 1.2.1.4 on high level overview 100% Limited financial resources did not allow. We are engaged in the process of procuring fleet management systems for possible installation on the 1st August 2008. Early indications are that premature engine failures will be overcome once this has been installed.
Forward planning.
Minimise disruptions caused by major unit failures.
2.6.4.4.1
Specific Challenges & Response
Challenge 1: The average number of operating buses per month was 46 instead of the targeted 49 buses due to the age of the fleet.
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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 subsequent amounts from 2007/08 will be insignificant to match the rate of the necessary recapitalisation programme. Challenge 2: Attacks on drivers at some sleeping grounds forces the Corporation to run empty buses from the depots after completion of shifts. Response to challenge 2: Constant mobilization of communities to remain vigilant to strangers and suspicious persons who perpetrate these robberies. Operations are actively engaging relevant stakeholders with the aim of securing sleeping grounds closer to pick-up points. Target date for implementation is end of September 2008 Challenge 3: Our buses are still vulnerable, to some extent, to siphoning of diesel at sleeping grounds. Response to challenge 3: During the year under review, 15% of the vulnerable vehicles were fitted with modified diesel tank caps to curb siphoning. This strategy along introduction of new vehicles with is yielding the desired results and the average consumption for the year is testimony to this conclusion i.e. 42.5l/100km compared to 45l/100km in 2006/07 2.6.5 2.6.5.1 OPERATIONS DIVISION 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
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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 2007/2008 Actual Output 2006/07 Deviation from Target Reason for NonAchievement 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 still our main concern. Most of the operations are in rural areas where it is difficult to maintain continuity due to the movement of people to urban centres.
Improve route performance.
Maintain average cppk of not less than R5.50 on all routes.
100% of our routes to achieve the R5.50 average.
70% of the routes achieved cppk of R5.87.
More dead kms were travelled in certain routes. MTC in partnership with communities has negotiated sleeping grounds for drivers to eliminate dead kms. Operating with ageing fleet is the greatest challenge that our drivers have to deal with. Limited number of operating buses due to breakdowns and major defects remains our major concern.
Improve driver performance
Implement, monitor and evaluate drivers performance plan.
Improved driver performance and fewer minor accidents.
Drivers performance improved by 80%.
Improve revenue depots.
in
route all
Develop a complimentary revenue generation plan as well as revenue collection mechanisms and monitor route performance while develop.
Meet the target set for the current year.
Achieved R15m which was our target.
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Performance Measure
Develop alternative revenue generation streams.
Promote private higher through advertising and other special services rendered by MTC. Develop a customer services charter poster for employees and conduct training for front line staff on customer care/ services.
Increased revenue generated from other sources.
Private hire target was also achieved.
Promote services
customer
Conduct training at Zwelitsha and Reeston. Improved and excellent customer services to all our clients.
Appointed service provider for the development and printing of customer service charter posters.
Budget constraints.
2.6.5.4.1
Specific Challenges and Response
Challenge 1: Electronic Ticket Machines (ETMs) 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. Response to challenge 1: Strengthen first line maintenance on ETMs and purchase sufficient spare machines as well liaising with the Department of Roads and Transport to assist on bad routes. Challenge 2: Attacks on drivers at some sleeping grounds forces the Corporation to run empty buses to and from the depots after completion and before the start of shifts. Response to challenge 2 Constant mobilization of communities to remain vigilant to strangers and suspicious persons who perpetrate these robberies. Challenge 3 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 3: The refurbishment programme implemented by Engineering department will partially yield positive results as some buses are off the road due to body structural defects.
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2.6.5.4.2 2.6.5.4.2.1
AREAS OF OPERATION Zwelitsha Depot
The Zwelitsha Depot covers the areas of King Williams Town and Keiskammahoek. A total of Six Hundred and Fifty Four Thousand and Thirty Seven (654, 037) passengers were carried with One Million and Twenty Seven Thousand One Hundred and Nine (1,027. 109) 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 Twenty Three Thousand, Eight Hundred and Twelve (423,812) passengers were carried with Four Hundred and Ninety Thousand, One Hundred and Twenty Eight (490,128) 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 Fifty Nine Thousands One Hundred and Seventy Three (459, 173) passengers were carried with Five Hundred and Seventy Thousands, Nine Hundred and Twenty Six (570, 926) 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 Fourteen Thousand Seven Hundred and Sixty Three (214, 763) passengers were carried with Two Hundred and Eighteen Thousand Five Hundred and Fifty Nine (218,559) kilometres travelled. 2.6.5.4.2.5 Summarised Statistics
A grand total of One million Seven Hundred and Fifty One Thousand, Seven Hundred and Eighty Five (1,751.785) passengers were carried with Two Nine Two Million Three Hundred and Six Thousand Seven Hundred and Twenty Two (2,306.722) route kilometres travelled during the year under review.
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2.6.5.4.3
Vehicle State
Depot 2007/08 24 11 14 9 58 2006/07 24 9 14 9 56 2005/06 21 10 14 7 52
Zwelitsha Reeston Queenstown Alice TOTAL
One standard bus being B38 was scrapped because it was not economically repairable. Three standard buses being bus 59, bus 60 and bus 69 were purchased. On average Forty Six (46) peak buses operated during the year under review. 2.6.5.4.4 Accidents
Two major accidents occurred during the year under review.
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PART 3 AUDIT COMMITTEE
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3 AUDIT COMMITTEE COMMENTS ON THE 2007/2008 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 2008. 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. Except for ad hoc meetings, the committee held five meetings during the year under review and attendance was as follows: Name Mr. M. Mantyi Mr. J. Mdeni Mrs. R. Luzuka 3.2 Meetings 5 2 5
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 Controls Adequacy Assessment within specific agreed upon business processes and selected departments, and made recommendations for controls best practiced to be implemented within each of the identified processes and departments. In addition to the Controls Adequacy Assessment, the following work was completed during the year under review: High-level risk assessment workshop (Business risk identification and rating project) Formulating a Risk Management Strategy and Fraud Prevention Plan 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.
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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. 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
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4
4.1 4.1.1 4.1.1.1
ANNUAL FINANCIAL STATEMENTS

REPORT OF THE CHIEF EXECUTIVE OFFICER GENERAL REVIEW 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 R 15,055,438. Depot Zwelitsha Reeston Queenstown Alice TOTAL 2008 6,265,809 2,926,797 4,468,357 1,394,475 15,055,438 2007 5,054,337 2,685,617 3,373,029 1,036,145 12,149,128
The combined revenue has been achieved by an average number of 46 operating buses (2007: 44) with a total number of 2,386,563 kilometres travelled. Private hire kilometres amounted to 79,841 (2007: 72,344 km) while route kilometres stood at 2,306,722 (2007: 2,153,850) for the financial year. Combined revenue has been generated by each depot as follows:2008 Private Hire Depot Zwelitsha Reeston Queenstown Alice TOTAL Route Revenue 5,683,388 2,521,770 4,181,377 1,212,076 13,598,611 Revenue 582,421 405,027 286,980 182,399 1,456,827 Route Revenue 4,692,317 2,310,226 3,204,779 911,395 11,118,717 2007 Private Hire Revenue 362,020 375,391 168,250 124,750 1,030,411
Bus allocation per depot for the financial year was as follows:DEPOT Zwelitsha Reeston 2008 18 9 2007 16 10
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DEPOT Queenstown Alice TOTAL OPERATING BUSES Average route revenue per bus was as follows:DEPOT Zwelitsha Reeston Queenstown Alice 4.1.1.2 Operating Grant-in-Aid
2008 12 7 46
2007 11 7 44
2008 315,744 280,197 348,448 173,154
2007 294,301 231,023 291,344 130,199
The Corporation receives grant-in-aid from The Provincial Department of Roads and 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:2008 Grant-in-Aid 4.1.1.3 Operating Expenses 33,565,000 2007 27,747,177
The Corporation has reported a net profit for the year amounting to R 2,580,204 (2007 net loss: R 1,313,625). 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 23,167,061 (2007: R 20,613,318), operating expenses amounting to R 16,429,831 (2007: R 14,175,959) and administration expenses amounting to R 11,353,145 (2007: R 8,749,528). 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 7,000,000 was received from the Department of Roads & Transport in the current financial year. The following capital expenditures were made: Bus refurbishment program; Operating equipment; Workshop equipment; Office equipment;
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IT infrastructure; Depot upgrading. 4.1.3 INVENTORIES 2008 2,048,323 2,048,323 CORPORATE GOVERNANCE ARRANGEMENTS 2007 1,880,472 (362,177) 1,518,295
Inventory in rand Stock on hand Provision for Obsolete Stock Total 4.1.4
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. 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. 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 50 to 81 have been
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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 CONDUCTED BY PRICEWATERHOUSECOOPERS INTERNAL AUDIT
PricewaterhouseCoopers performed an updated risk assessment whereby the Corporations high-level risks were identified and addressed. A risk management strategy and fraud prevention plan was developed and implemented during the current financial year. An internal audit report addressing the controls adequacy was completed. The above internal audit plan was approved by the audit committee and the Board for the financial year ending 31 March 2008. Action plans were put in place by MTC Management by ranking key risks facing the Corporation in terms of their importance. 4.2 APPROVAL
The Accounting Officer has approved the attached annual financial statements set out on pages 50 to 81.
______________________________ L. R. MBINDA CHIEF EXECUTIVE OFFICER
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4.3
AUDITOR GENERALS REPORT
REPORT OF THE AUDITOR-GENERAL TO THE EASTERN CAPE PROVINCIAL LEGISLATURE ON THE FINANCIAL STATEMENTS AND PERFORMANCE INFORMATION OF MAYIBUYE TRANSPORT CORPORATION FOR THE YEAR ENDED 31 MARCH 2008 REPORT ON THE FINANCIAL STATEMENTS Introduction 1. I have audited the accompanying financial statements of Mayibuye Transport Corporation which comprise the balance sheet as at 31 March 2008, income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages [xx] to [xx].
Responsibility of the accounting authority for the financial statements 2. The accounting authority is responsible for the preparation and fair presentation of these financial statements in accordance with South African Statements of Generally Accepted Accounting Practice and in the manner required by the Public Finance Management Act, 1999 (Act No. 1 of 1999) (PFMA). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error selecting and applying appropriate accounting policies making accounting estimates that are reasonable in the circumstances.
Responsibility of the Auditor-General 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) and section 10(2) of the Ciskeian Corporations Act, 1981 (Act No. 16 of 1981) as amended by the Corporations Transitional Provisions Act, 1995 (Act No. 12 of 1995), my responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with the International Standards on Auditing and 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 on whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors 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 entitys 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 entitys internal control.
4.
5.
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6.
An audit also includes evaluating the: appropriateness of accounting policies used reasonableness of accounting estimates made by management overall presentation of the financial statements.
7.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
Basis of Accounting 8. The public entitys policy is to prepare financial statements on the basis of accounting determined by the National Treasury, as set out in the accounting policy note 1 to the financial statements.
Basis for qualified opinion 9. Completeness of Revenue In common with similar organisations, it is not feasible for the Corporation to institute accounting controls over cash collections from casual passengers prior to initial entry of the collections in the accounting records. Accordingly, it was impracticable for us to extend our examination beyond the receipts actually recorded. Under these circumstances it was not possible to confirm the completeness of casual passenger revenue amounting to R13 598 611 (2007: R11 118 716) recognised in the annual financial statements. Qualified opinion 10. In my opinion, except for the effects of the matters described in the Basis for qualified opinion paragraphs, the financial statements present fairly, in all material respects, the financial position of Mayibuye Transport Corporation as at 31 March 2008 and its financial performance and cash flows for the year then ended, in accordance with the South African Statements of Generally Accepted Accounting Practice and in the manner required by the PFMA and the Ciskeian Corporations Act, 1981 (Act No. 16 of 1981) as amended by the Corporations Transitional Provisions Act, 1995 (Act No. 12 of 1995).
Emphasis of matter I draw attention to the following matter: Highlighting critically important matters presented or disclosed in the financial statements 11. Capital improvements to the Zwelitsha Depot has been recognised as leasehold land and buildings with a carrying value of R 1 100 000 in note 3 to the annual financial statements. A process for acquisition of the title deed has been initialised with the Land Claims Commission. Although the entities right to occupy the land has not been reduced to writing, it derives benefits from its use and carries the risks that are incidental to ownership.
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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: Internal conrols 13. Section 51(1)(a)(i) of the PFMA states that the accounting authority must ensure that the public entity has and maintains effective, efficient and transparent systems of financial and risk management and internal control. The table below depicts the root causes that gave rise to the inefficiencies in the system of internal control, which lead to the qualified opinion. The root causes are categorised according to the five components of an effective system of internal control. In some instances deficiencies exist in more than one internal control component.
Reporting item
Control environment
Risk assessment
Control activities
Information and communicatio n
Monitori ng
Completeness Revenue
of
Control environment: Establishes the foundation for the internal control system by providing fundamental discipline and structure for financial reporting. Risk assessment: Involves the identification and analysis by management of relevant financial reporting risks to achieving predetermined financial reporting objectives. Control activities: Policies, procedures and practices that ensure managements financial reporting objectives are achieved and financial reporting risk mitigation strategies are carried out. Information and communication: Supports all other control components by communicating control responsibilities for financial reporting to employees and by providing financial reporting information in a form and time frame that allows people to carry out their financial reporting duties. Monitoring: Covers external oversight of internal controls over financial reporting by management or other parties outside the process; or the application of independent methodologies, like customized procedures or standard checklists, by employees within a process.
Matters of governance 14. Section 55(1) of the PFMA requires that the financial statements be prepared in accordance with generally recognised accounting practice. Fundamental to achieving this is the implementation of certain key governance responsibilities, which I have assessed as follows:
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Matter of governance
Yes
No
Audit committee The Corporation has an audit committee. The audit committee operates in accordance with 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 3.1.10/27.1.8.
Internal audit The Corporation has an internal audit function. The internal audit function operates in terms of an internal audit plan. The internal audit function substantially fulfilled its responsibilities for the year, as set out in Treasury Regulations 3.2/27.2.
Other matters of governance The financial statements submitted for audit were not subject to any material amendments resulting from the audit. No significant difficulties were experienced during the audit concerning delays/unavailability of expected information and/or unavailability of senior management. Prior year external audit recommendations have been substantially implemented. SCOPA resolutions have been substantially implemented. OTHER REPORTING RESPONSIBILITIES REPORT ON PERFORMANCE INFORMATION 15. I have reviewed the performance information as set out on pages xx to xx.
Responsibility of the accounting authority for the performance information 16. 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.
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Responsibility of the Auditor-General 17. 18. 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. 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 auditors judgement. I believe that the evidence I have obtained is sufficient and appropriate to provide a basis for the audit findings reported below.
19.
Audit findings Performance management policy not documented 20. There is no formal documented policy in respect of the performance management system.
No alignment of predetermined objectives with individual staff performance valuations 21. The performance management system is not structured in a manner so as to ensure the performance of the entity in all its facets, is measured and reported on from its strategic objectives down to the assessment of individual staff performance evaluations in terms of job descriptions. APPRECIATION The assistance rendered by the staff of Mayibuye Transport Corporation during the audit is sincerely appreciated.
East London 31 July 2008
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4.4
ANNUAL FINANCIAL STATEMENTS PLC Maseti SJ Nyengane PP Balfour D Lefutso T Matiwane AJ de Vries TA Thomas M Tuswa Chairperson Deputy Chairperson Director Director Director Director Director Director
DIRECTORS
NATURE OF BUSINESS
The entity provides subsidised public transport and is governed by the Public Finance Management Act, Schedule 3D Provincial Government Business Enterprises Entity. The Standard Bank of South Africa Limited Office of the Auditor-General
BANKERS AUDITORS
CONTENTS Balance sheet Income statement Statement of changes in equity Cash flow statement Accounting policy notes Notes to the financial statements Detailed income statement
PAGE 51 52 53 54 55 65 66 78 79 81
APPROVAL OF THE ANNUAL FINANCIAL STATEMENTS The annual financial statements were approved by the board of directors on 30 May 2008 and are signed as such by :
CHAIRPERSON OF THE BOARD
CHIEF EXECUTIVE OFFICER
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4.4.1
BALANCE SHEET NOTES 2008 R 2007 R
ASSETS Non-current assets Property, plant and equipment Total non-current assets Current assets Inventories Trade and other receivables Investment - Restructuring process Investments - Marketable securities Cash and cash equivalents Total current assets Total assets EQUITY AND LIABILITIES Capital and reserves Share capital Accumulated deficit
34,303,394 34,303,394
31,811,607 31,811,607
4 5 6 7 8
2,048,323 506,681 45,698 9,648,150 12,248,852 46,552,246
1,518,295 387,515 235,452 6,629,379 8,770,641 40,582,248
56,761,075 (54,684,609) 2,076,466
56,761,075 (57,264,813) (503,738)
Non-current liabilities Restructuring process fund Deferred income
39,347,113 39,347,113
235,452 36,293,485 36,528,937
Current liabilities Trade and other payables Payroll accruals
10 11
2,706,401 2,422,266 5,128,667
2,251,551 2,305,498 4,557,049 40,582,248
Total equity and liabilities
46,552,246
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4.4.2
INCOME STATEMENT NOTES 2008 R 2007 R 12,149,128 20,613,318 (8,464,190) 29,476,383 73,806 (8,749,528) (14,175,959) (29,886) (1,869,375) 555,749
Revenue Cost of services rendered Gross profit / (loss) Other income - Grant Other operating income Administration expenses Operating expenses Fruitless and wasteful expenditure Profit / (Loss) from operations Interest income
12
15,055,438 23,167,061 (8,111,623)
20.2
37,511,372 439,750 (11,353,145) (16,429,831)
13 14 14
(600) 2,055,923 524,281
Profit / (loss) for the year
2,580,204
(1,313,625)
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4.4.3
STATEMENT OF CHANGES IN EQUITY Share Capital R Future Accumulated Capital Loss R R 6,761,075 6,761,075 (6,761,075) (51,945,641)
Total R 4,815,434
Balance at 1 April 2006 Prior period error adjustments - Note 24 Restated balance at 1 April 2006 Transfers to share capital Additional grant received Deferred income release to income Profit / (loss) for the year Balance at 31 March 2007 Additional grant received Deferred income release to income Profit / (loss) for the year Balance at 31 March 2008
50,000,000 50,000,000 6,761,075 56,761,075 56,761,075
(4,005,547) (4,005,547) (55,951,188) 809,887 -
(1,313,625) (1,313,625) (57,264,813) 2,580,204 (54,684,609) (503,738) 2,580,204 2,076,466 Deferred Income R
Balance at 1 April 2006 Prior period error adjustments - Note 24 Restated balance at 1 April 2006 Additional grant received Deferred income release to income Balance at 31 March 2007 Additional grant received Deferred income release to income Balance at 31 March 2008
14,000,000 20,517,868 34,517,868 4,252,000 (2,476,383) 36,293,485 7,000,000 (3,946,372) 39,347,113
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4.4.4
CASH FLOW STATEMENT NOTES 2008 R 2007 R
OPERATING ACTIVITIES Cash receipts from customers Cash paid to suppliers and employees 14,001,129 (13,096,202) 43,254,053 (46,044,736)
Cash generated by operations Interest received
15
904,927 524,281
(2,790,683) 555,749
NET CASH (USED IN)/ FROM OPERATING ACTIVITIES
1,429,208
(2,234,934)
INVESTING ACTIVITIES Purchases of property, plant and equipment Proceeds on sale of property, plant and equipment Restructuring process grant release NET CASH (USED IN)/FROM INVESTING ACTIVITIES (5,506,392) 95,955 (10,393,253) 1,998
(5,410,437)
(10,391,255)
FINANCING ACTIVITIES Decrease / (increase) in grant allocation NET CASH (USED IN)/FROM FINANCING ACTIVITIES NET INCREASE /(DECREASE) IN CASH AND CASH EQUIVALENTS 7,000,000 4,250,000
7,000,000
4,250,000
3,018,771
(8,376,189)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
6,629,379
15,005,568
CASH AND CASH EQUIVALENTS AT END OF YEAR
9,648,150
6,629,379
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4.4.5 1
ACCOUNTING POLICY NOTES 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.
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 The company has adopted the following new and amended IFRS and IFRIC interpretations during the year. Adoption of these revised standards and interpretations did not have any effect on the financial performance or position of the company. They did however give rise to additional disclosures, including in some cases, revisions to accounting policies. IFRS 7 Financial Instruments: Disclosure IAS 1 Presentation of Financial Statements - Capital Disclosures IFRIC 8 (AC441), Scope of IFRS2 (effective 1 May 2006) IFRIC 9 (AC442), Re-assessment of Embedded Derivatives (effective 1 June 2006) IFRIC 10 (AC443), Interim Financial Reporting and Impairment (effective 1 November 2006) IFRIC 11, IFRS 2 - Company and Treasury Share Transactions The principal effects of these changes are as follows: IFRS 7 Financial Instruments: Disclosures This standard requires disclosures that enable users of the financial statements to evaluate the significance of the company's financial instruments and the nature and extent of risks arising from those financial instruments. The new disclosures are included throughout the financial statements. While there has been no effect on the financial position or results, comparative information has been revised where needed. IAS 1 Presentation of Financial Statements This amendment requires the company to make new disclosures to enable users of the
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financial statements to evaluate the company's objectives, policies and processes for managing capital. IFRIC 8 Scope of IFRS 2 This interpretation requires IFRS 2 to be applied to any arrangements in which the entity cannot identify specifically some or all of the goods received, in particular where equity instruments are issued for consideration which appears to be less than fair value. As equity instruments are only issued to employees in accordance with the employee share scheme, the interpretation had no impact on the financial position or performance of the company. This statement has had no effect on the current year financial statements. IFRIC 9 Reassessment of Embedded Derivatives IFRIC 9 states that the date to assess the existence of an embedded derivative is the date that an entity first becomes a party to the contract, with reassessment only if there is a change to the contract that significantly modifies the cash flows. As the company has no embedded derivative requiring separation from the host contract, the interpretation had no impact on the financial position or performance of the company. This statement has had no effect on the current year financial statements. IFRIC 10 Interim Financial Reporting and Impairment The company adopted IFRIC Interpretation 10 as of 1 January 2007, which requires that an entity must not reverse an impairment loss recognised in a previous interim period in respect of goodwill or an investment in either an equity instrument or a financial asset carried at cost. As the company had no impairment losses previously reversed, the interpretation had no impact on the financial position or performance of the company. This statement has had no effect on the current year financial statements. IFRIC 11 IFRS 2 - Company and Treasury Share Transactions The company adopted IFRIC 11 which requires arrangements whereby an employee is granted rights to an entity's equity instruments to be accounted for as an equity-settled scheme, even if the entity buys the instruments from another party, or the shareholders provide the equity instruments needed. No such arrangement exists and hence this interpretation has had no impact on the company. 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.
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All irregular and fruitless and wasteful expenditure is recognised 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. 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 recognised 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 recognised 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 recognised 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 recognised when the shareholder's rights to receive payment have been established. 2.5 Leasing Operating lease payments are recognised as an expense in profit or loss on a straight line basis over the lease term. 2.6 Deferred income Government grants represent monthly transfer payments from the Eastern Cape Department of Roads and Transport in order to subsidise the Corporation's public transport service.
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Government grants are recognised 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 recognised 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 recognised 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 recognised 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 recognised 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 Buses - Body Buses - Chassis, Engine, etc Office Equipment Office Furniture Operating Equipment Workshop Equipment Buildings 25% 12.5% 8.33% 20% 10% 20% 25% 2%
An item of plant and equipment is derecognised 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.
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Subsequent expenditure relating to property, plant and equipment is capitalised 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 company 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 company estimates the assets recoverable amount. An assets recoverable amount is the higher of an assets or cash-generating units 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 recognised in the income statement whenever the carrying amount of the cash-generating unit exceeds recoverable amount. A previously recognised 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 recognised in prior years. 2.11 Inventories Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average method. Net realisable 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
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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 availablefor-sale financial assets, as appropriate. When financial assets are recognised 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 company 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 recognised 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 company has the positive intention and ability to hold to maturity. After initial measurement held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the investments are derecognised or impaired, as well as through the amortisation process. 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 amortised cost using the effective interest method less any allowance for impairment. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process.
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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 unrealised gains or losses recognised directly in equity until the investment is derecognised or determined to be impaired at which time the cumulative gain or loss previously recorded in equity is recognised in profit or loss. 2.12.6 Amortised cost Held-to-maturity investments and loans and receivables are measured at amortised 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 company assesses at each balance sheet date whether a financial asset or group of financial assets is impaired. 2.13.1 Assets carried at amortised cost If there is objective evidence that an impairment loss on assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the financial assets 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 recognised 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 recognised, the previously recognised impairment loss is reversed, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. Any subsequent reversal of an impairment loss is recognised in profit or loss. In relation to trade receivables, a provision for impairment is made when there is objective evidence that the company 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 derecognised when they are assessed as uncollectible.
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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 recognised 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 recognised 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 recognised 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 recognised 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 derecognised 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. Financial liabilities A financial liability is derecognised 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
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carrying amounts is recognised in profit or loss. 2.15 Future changes to accounting policies IAS 1 Presentation of Financial Statements - revised A revised IAS 1 Presentation of financial statement was issued in March 2007, and becomes effective for financial years beginning on or after 1 January 2009. Changes to the presentation of financial statements include renaming of the following: Statement of financial position to replace the name balance sheet, Statement of comprehensive income to replace the name income statement and; Statement of cash flows to replace the name cash flow statement. Other changes: Statement of changes in equity to include only transactions with owners, Statement of comprehensive income to contain non-owner changes in equity, Reclassifications to be separately disclosed, Three statements of financial position required if retrospective changes in accounting policy or retrospective restatement / reclassification. Further to the abovementioned revisions, an additional revision was issued in September 2007 and becomes effective for financial years beginning on or after 1 January 2009. The Standard separates owner and non-owner changes in equity. The statement of changes in equity will include only details of transactions with owners, with all nonowner changes in equity presented as a single line. In addition, the standard introduces the statement of comprehensive income: it presents all items of income and expense recognised in profit or loss, together with all other items of recognised income and expense, either in one single statement, or in two linked statements. The company is still evaluating whether it will have one or two statements. IAS 23 Borrowing Costs A revised IAS 23 Borrowing Costs was issued in March 2007, and becomes effective for financial years beginning on or after 1 January 2009. The standard has been revised to require capitalisation of borrowing costs when such costs relate to a qualifying asset. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. In accordance with the transitional requirements in the Standard, the company will adopt this as a prospective change. Accordingly, borrowing costs will be capitalised on qualifying assets with a commencement date after 1 January 2009. No changes will be made for borrowing costs incurred to this date that have been expensed.
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IFRIC 12 Service Concession Arrangements IFRIC Interpretation 12 was issued in November 2006 and becomes effective for annual periods beginning on or after 1 January 2008. This Interpretation applies to service concession operators and explains how to account for the obligations undertaken and rights received in service concession arrangements. No member of the company is an operator and hence this Interpretation will have no impact on the company. IFRS 8 Operating Segments IFRS 8 was issued in November 2006 and becomes effective for financial years beginning on or after 1 January 2009. This standard requires disclosure of information about the company's operating segments and replaced the requirement to determine primary (business) and secondary (geographical) reporting segments of the company. The company expects that this standard will have no impact on the company's financial statements. IFRIC 13 Customer Loyalty Programmes IFRIC Interpretation 13 was issued in June 2007 and becomes effective for annual periods beginning on or after 1 July 2008. This Interpretation requires customer loyalty award credits to be accounted for as a separate component of the sales transaction in which they are granted and therefore part of the fair value of the consideration received is allocated to the award credits and deferred over the period that the award credits are fulfilled. The company expects that this interpretation will have no impact on the company's financial statements as no such schemes currently exist. IFRIC 14 IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction IFRIC Interpretation 14 was issued in July 2007 and becomes effective for annual periods beginning on or after 1 January 2008. This Interpretation provides guidance on how to assess the limit on the amount of surplus in a defined benefit scheme that can be recognised as an asset under IAS 19 Employee Benefits. The company expects that this Interpretation will have no impact on the financial position or performance of the company as the company does not have any defined benefit schemes. IFRS 2 Share-based Payments Vesting Conditions and Cancellations This amendment to IFRS 2 Share-based payments was published in January 2008 and becomes effective for financial years beginning on or after 1 January 2009. The Standard restricts the definition of vesting condition to a condition that includes an explicit or implicit requirement to provide services. Any other conditions are non-vesting conditions, which have to be taken into account to determine the fair value of the equity instruments granted. In the case that the award does not vest as the result of a failure to meet a non-vesting condition that is within the control of either the entity or the counterparty, this must be accounted for as a cancellation. The company expects that this standard will have no impact on the financial position or performance of the company as the company has not entered into any share-based payment schemes.
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IFRS 3R Business Combinations and IAS 27R Consolidated and Separate Financial Statements The revised standards were issued in January 2008 and become effective for financial years beginning on or after 1 July 2009. IFRS 3R introduces a number of changes in the accounting for business combinations that will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported results. IAS 27R requires that a change in the ownership interest of a subsidiary is accounted for as an equity transaction. Therefore, such a change will have no impact on goodwill, nor will it give raise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. The changes introduced by IFRS 3R and IAS 27R must be applied prospectively and will affect future acquisitions and transactions with minority interests. These amendments will not impact the financial statements of the company. Amendments to IAS 32 and IAS 1 Puttable Financial Instruments Amendments to IAS 32 and IAS 1 were issued in February 2008 and become effective for annual periods beginning on or after 1 January 2009. The amendment to IAS 32 requires certain puttable financial instruments and obligations arising on liquidation to be classified as equity if certain criteria are met. The amendment to IAS 1 requires disclosure of certain information relating to puttable instruments classified as equity. The company does not expect these amendments to impact the financial statements of the company. 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 companys 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 1
NOTES TO THE ANNUAL FINANCIAL STATEMENTS PROPERTY, PLANT & EQUIPMENT

Land & Building R Leasehold Land & Buildings R 1,100,000 1,100,000 Ancillary Vehicles R 2,264,095 2,196,103 67,992 Office Equipment R 21,740,411 33,508,487 (11,768,076) R 232,654 869,336 (636,682) Office Furniture R 47,551 177,769 (130,218) Operating Equipment R 3,730,810 1,897,881 1,832,929 Workshop Equipment R 181,185 766,544 (585,359)
Buses
Total R 31,811,607 43,031,021 (11,219,414)
Carrying value at 1 April 2007 At Cost Accumulated Depreciation
2,514,901 2,514,901 -
Additions Disposals - Cost Disposals - Accumulated Depreciation Depreciation for the year
137,370 -
(138,857) 138,857 (224,581)
4,494,986 (1,534,435) 1,462,790 (2,258,853)
162,996 (105,536)
235,111 (24,985)
144,448 (242,381)
331,481 (86,623)
5,506,392 (1,673,292) 1,601,647 (2,942,959) 34,303,394
Carrying value at 31 March 2008 At Cost Accumulated Depreciation
2,652,271 2,652,271 -
1,100,000 1,100,000 -
2,039,514 2,057,246 (17,732)
23,904,899 36,469,038 (12,564,139)
290,114 1,032,332 (742,218)
257,677 412,880 (155,203)
3,632,877 2,042,329 1,590,548
426,043 1,098,025 (671,982)
34,303,394 46,153,491 (11,850,096)
Land & Building R Carrying value at 1 April 2006 At Cost Accumulated Depreciation 1,816,588 2,514,901 (698,313)
Leasehold Land & Buildings R 767,606 1,100,000 (332,394)
Ancillary Vehicles R 246,366 955,915 (709,549)
Buses R 3,131,025 24,966,175 (21,835,150)
Office Equipment R 203,556 764,206 (560,650)
Office Furniture R 36,669 159,254 (122,585)
Operating Equipment R 934,523 1,556,904 (622,381)
Workshop Equipment R 86,943 620,413 (533,470)
Total R 7,223,276 32,637,768 (25,414,492)
Prior period error adjustments Additions Disposals - Cost Disposals - Accumulated Depreciation Depreciation for the year
698,313 -
332,394 -
888,211 1,240,188 (110,670)
11,403,990 8,542,312 (1,336,916)
105,130 (76,032)
18,515 (7,633)
2,681,750 340,977 (226,440)
146,131 (51,889)
16,004,658 10,393,253 (1,809,580) 31,811,607
Carrying value at 31 March 2007 At Cost Accumulated Depreciation
2,514,901 2,514,901 -
1,100,000 1,100,000 -
2,264,095 2,196,103 67,992
21,740,411 33,508,487 (11,768,076)
232,654 869,336 (636,682)
47,551 177,769 (130,218)
3,730,810 1,897,881 1,832,929
181,185 766,544 (585,359)
31,811,607 43,031,021 (11,219,414)
Land and buildings comprises workshops, offices and bus sheds situated in the following sites:
Erf RST00081 of farm 35, Wilsonia, district of East London, market value R2 300 000. Plot 4625, 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 17. Improvements on the property has been capitalised as leasehold land and buildings. Erf 1097, Alice, market value R600 000.
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INVENTORIES 2008 R Fuel, Oils and Greases Units Spares Consumables Tyres & Tubes Ancillary Vehicle Spares Operational Equipment Spares Stationery and Miscellaneous items 449,047 364,490 646,602 384,463 106,176 4,077 62,086 31,382 2,048,323 Provision for Obsolete Stock 2,048,323 Inventories included in cost of services rendered 15,194,686 2007 R 499,373 263,303 730,599 129,503 111,292 5,939 87,655 52,808 1,880,472 (362,177) 1,518,295 14,008,827
TRADE AND OTHER RECEIVABLES Trade receivables Less: Provision for impairment of receivables 395,969 (359,659) 36,310 Other receivables 470,371 506,681 Trade receivables are non-interest bearing and are generally on 30-60 days terms. As at 31 March 2008, trade receivables at nominal value of R359,659 (2007: R308,585) 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 2006 Charge for the year Utilised At 31 March 2007 Charge for the year Utilised At 31 March 2008 As at 31 March, the ageing analysis of trade receivables is as follows: 308 585 308 585 51 074 359 659 369,478 (308,585) 60,893 326,622 387,515
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2008 R Neither past due nor impaired Past due and not impaired < 30 days 30 60 days 60 90 day 90 120 day >120 days Total 4 INVESTMENT - RESTRUCTURING PROCESS Investment - Restructuring process -
2007 R
470 371 36 310 506 681
326 622 60 893 387 515
235,452
The fund represents monies received from the Eastern Cape Department of Roads and Transport to facilitate the negotiated contract process. The process has been cancelled and the fund was subsequently transferred to income. The fund was held as an interest-bearing fixed deposit. 5 INVESTMENTS - MARKETABLE SECURITIES Market value at 31 March 2008 45,698 -
(As per FTSE/JSE Quarterly review 31 March 2008 shares traded at R19.80 per share). Marketable securities represent 2308 demutualised shares received from Sanlam and are classified as available-for-sale financial assets. 6 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 9,648,150 9,648,150 6,629,379 6,629,379
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 R9,648,150 (2007: R6,629,379).
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SHARE CAPITAL Authorised: Ordinary shares of R 1 each Issued and fully paid Ordinary shares of R 1 each
2008 R 60,000,000 56,761,075
2007 R 60,000,000 56,761,075
The authorised share capital was increased to R60,000,000 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. 8 TRADE AND OTHER PAYABLES Trade payables Other payables 2008 R 1,828,920 877,481 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. 9 PAYROLL ACCRUALS At 1 April 2007 Additional accrual in the year Utilisation of accrual At 31 March 2008 Accrual for bonuses Accrual for leave 2008 R 2,305,498 1,688,938 (1,572,170) 2,422,266 433,849 1,988,417 2,422,266 10 REVENUE Revenue comprises of passenger fares and special hire revenue. 2007 R 2,413,207 1,631,171 (1,738,880) 2,305,498 1,083,435 1,222,063 2,305,498 2007 R 1,417,413 834,138 2,251,551
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2008 R An analysis of the Entity's revenue is as follows: Passenger fares Special hire Total revenue 11 FRUITLESS AND WASTEFUL EXPENDITURE Minor roadworthy infringement fines South African Revenue Services penalties South African Revenue Services interest 600 600 12 12.1 NET PROFIT / LOSS FROM OPERATIONS Net Profit / Loss from operations has been arrived at after charging (crediting): INCOME Interest income Profit on disposal of assets Dividends received EXPENSES Audit fees Audit Committee (see note 14.2 and note 14.3) Defined contribution plan Directors Emoluments (see note 14.4 and 14.5) Depreciation Fair value adjustment - Marketable securities Insurance Operating lease charges Consulting fees Staff Costs The average number of employees for the financial year ended was: 930,032 39,200 2,364,824 187,051 2,942,959 45,698 1,201,050 197,201 198,067 23,173,514 182 524,281 24,310 1,777 13,598,611 1,456,827 15,055,438
2007 R
11,118,717 1,030,411 12,149,128
3,720 19,746 6,420 29,886
555,749 1,500
312,983 19,500 2,249,167 83,653 1,809,580 1,107,040 141,158 518,256 20,846,028 186
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12.2
Audit committee Meetings R M. Mantyi R. Luzuka J. Mdeni 20,500 12,200 6,500 39,200 Travel R -
2008 Total R 20,500 12,200 6,500 39,200 2007 Meetings R Travel R Total R 15,500 2,000 2,000 19,500 2008 Meetings R Travel R 201 361 562 Allowances R Total R 45,071 40,667 18,083 36,366 18,966 27,898 187,051 2007 Meetings R Travel R 6,950 1,183 1,200 2,520 11,853 Allowances R 4,800 1,500 6,300 Total R 46,250 15,183 12,700 9,520 83,653
12.3
Audit committee
M. Mantyi R. Luzuka J. Mdeni
15,500 2,000 2,000 19,500
12.4
Directors Emoluments
P.L.C. Maseti S.J. Nyengane P.P. Balfour D. Lefutso T. Matiwane A.J. De Vries T.A. Thomas M. Tuswa
44,870 40,306 18,083 36,366 18,966 27,898 186,489
12.5
Directors Emoluments
A.R. Wadsworth D.N. Webb K.N. Harvey X. Pakati
34,500 12,500 11,500 7,000 65,500
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12.6
Senior Management CEO L.R. Mbinda R Basic Car Acting allowance Housing allowance Medical aid Provident Bonus UIF Total 439,200 118,800 21,120 71,148 50,000 1,500 701,768 CFO L. Coetzer R 180,000 3,852 5,000 750 189,602 HOD: Operations L.C. Mtise R 245,532 52,860 36,000 13,092 39,768 20,461 1,500 409,213
2008 HOD: Engineering Z. Leni R 237,396 40,800 8,136 38,448 19,783 1,500 346,063 2007 HOD: Operations L.C. Mtise R 225,264 52,860 24,000 9,094 41,940 1,404 354,562 2007 R 141,157
12.7
Senior Management CEO L.R. Mbinda R Basic Car Acting allowance Housing allowance Medical aid Pension UIF Total 260,896 52,860 132,938 11,964 42,264 1,404 502,326 2008 R 197,201
12.8
OPERATING LEASE ARRANGEMENTS Minimum lease payments paid under operating leases At the balance sheet date, the entity had outstanding commitments under operating leases, which fall due as follows: Within one year In the second to fifth years inclusive After five years
121,478 134,623 -
103,420 262,241 -
Operating lease payments represent rentals payable by the Corporation for certain of its office equipment. Rentals are fixed for an average of three years.
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13
CASH GENERATED BY OPERATIONS FROM/(USED IN) OPERATING ACTIVITIES 2008 R Net Profit / (Loss) for the year Adjustments for: Prior period error adjustment - Refer to note 24.3 Profit on sale of property, plant and equipment Depreciation of property, plant and equipment Deferred income Interest income Operating cash flow before movements in working capital (Increase)/ Decrease in inventories (Increase)/ Decrease in receivables (Increase)/ Decrease in investments Increase / (Decrease) in payables 24,310) 2,942,959 (3,946,372) (524,281) 1,028,200 (530,028) (119,166) (45,698) 571,619 904,927 507,665 1,809,580 (2,476,383) (555,749) (2,028,512) (147,074) 73,318 (688,415) (2,790,683) 2,580,204 2007 R (1,313,625)
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14
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 recognise 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 companys 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 summarised 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 recognised, 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 3. 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-inaid 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 maximise internal revenue collection.
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15
CONTINGENT LIABILITIES During the reporting period, there were matters arising that gives rise to contingent liabilities: There was a labour dispute as at 31 March 2008 and there is currently no indication as to the probability of the success of the claim. The hearing has been set for 29 May 2008 where this claim will be dealt with. 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. The amount payable is uncertain.
16
CAPITAL COMMITMENTS Commitments for the acquisition of property, plant and equipment:
2008 R 2,200,000
2007 R 3,500,000
17
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.
18 18.1
RELATED PARTY TRANSACTIONS Identification of related parties Eastern Cape Department of Roads and Transport Board of Directors - Refer to note 14.4 for details of transactions with directors. Key management personnel - Refer to note 14.6 for detail of transactions with key personnel.
18.2
Related party transactions Significant transactions occurred between the Department of roads and transport by way of receiving grant funding which is disclosed in note 12 above. 2008 R Grant received Deferred income 33,565,000 3,946,372 37,511,372 2007 R 27,000,000 2,476,383 29,476,383
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19
GOING CONCERN We draw attention to the fact that at 31 March 2008, the Corporation had an accumulated deficit of R54,684,609 (2007: R57,264,813). 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 realisation 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 recapitalisation 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.
20
DEFINED BENEFIT PLAN CONVERSION During the year under review, the Corporation converted its defined benefit plan to a defined contribution plan. The defined benefit plan required the Corporation to settle any liability that may arise in the fund. Upon conversion the Corporation's open liability ceased. The assets and liabilities of the defined benefit plan were transferred to the defined contribution plan in terms of section 14 of the Financial Services Board Act. The transfer can only occur upon approval from the Financial Services Board. The defined contribution plan only requires the Corporation to settle the agreed contributions. The defined contribution plan settles the benefits and the members bear the investment risk. The Corporation is not required to settle any liability if one should arose.
21 21.1
COMPARATIVE INFORMATION Deferred income is disclosed under capital and reserves in the balance sheet and not under non-current liabilities as in the prior year. Defined contribution plan payments are disclosed in note 14.1 and were not disclosed in the prior year. Dividends received are disclosed in note 14.1 and was not disclosed in the prior year.
21.2
21.3
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21.4
Transactions with audit committee members are disclosed in note 14.2 and 14.3 and were not disclosed in the prior year. Cost of services rendered were not disclosed in the prior year but is disclosed in the current year income statement. The deferred income and interest received disclosed in the cash flow statement for the prior year has been included in note 15. PRIOR PERIOD ERRORS Restatement of deferred income The Corporation has chosen to recognise 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 recognised did not match annual depreciation charges. The financial statements have been restated to correct this error. The effect of the restatement on the financial statements is summarised below: 2008 R Increase / (Decrease) in opening accumulated deficit Increase / (Decrease) in other income Increase / (Decrease) in Deferred income 2,101,918 2,101,918 2007 R 20,517,868 1,729,206 22,247,074
21.5
21.6
22 22.1
22.2
Restatement of Property, Plant and Equipment In previous years the Corporation failed to 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. The financial statements have been restated to correct this error. The effect of the restatement on the financial statements is summarised below: 2008 R Increase / (Decrease) in accumulated deficit Increase / (Decrease) in depreciation Increase / (Decrease) in NBV of Property, Plant and Equipment (160,904) 160,904 2007 R (492,561) 16,497,219
- (16,004,658)
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22.3
Restatement of comparative period goods received note accrual The prior period good received note accrual was overstated due to duplicate processing of goods received. The financial statements have been restated to correct this error. The effect of the restatement on the financial statements is summarised below: 2008 R Increase / (Decrease) in the goods received note accrual Increase / (Decrease) in opening accumulated deficit 2007 R 507,663 (507,663) -
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4.4.7
DETAILED INCOME STATEMENT 2008 R 2007 R 12,778,683 11,118,717 1,030,411 629,555 29,254 555,749 44,552 41,759,111 14,407,152 37,688 7,435,146 3,720 471,742 153,405 292,027 35,222 4,629,193 55,350 9,139 10,961 1,267,124 6,435 4,869,033 179,566 9,500 4,633,300 46,667 -
INCOME Casual passengers Private Hire Other income Discount Received Interest Profit on sale of assets Miscellaneous EXPENDITURE Operations Department Accident costs Diesel Fines General Expenses Licenses and Permits Lubricants and Grease Maintenance - Operating Equipment Private Hire Expenses Salaries and Wages Sleep-out Allowance Ticket/Waybill Usage Travelling and Subsistence Tyre Usage Uniforms Traffic Department Ancillary Vehicle Costs Driver of the Year Award Salaries and Wages Travelling and Subsistence Uniforms
16,019,467 13,598,611 1,456,826 964,030 44,625 524,281 24,310 370,814 48,007,676 17,186,112 333,181 8,896,979 600 2,315 619,252 343,333 169,938 150,579 4,890,205 53,486 66,508 2,100 1,614,461 43,175 5,127,699 259,368 1,350 4,812,843 53,838 300
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2008 R Maintenance Department Ancillary Vehicle Building Maintenance Bus Repairs Consumables Used Loose Tools Maintenance - Workshop Equipment Salaries and Wages Spares Used Staff Uniforms Travelling and Subsistence Units Used Administrative Department Auditor's Remuneration Audit Committee Bad debts Bank Charges Cleaning and Teas Collection Fees Computer Expenses Consultation Fees Directors' Fees Electricity and Water General Expenses Insurance Interest and Penalties Lease Charges Legal Expenses Levies Long Service Awards Maintenance - Office Equipment Printing and Stationary Salaries and Wages Security Expenses Subscriptions Telephone Expenses Training Travelling and Subsistence 14,340,720 179,121 716,756 542,424 317,179 77,594 98,866 8,983,566 1,815,448 57,139 31,868 1,520,759 11,353,145 930,032 39,200 51,074 151,551 75,549 239,110 99,407 198,067 187,051 397,547 32,586 1,201,050 197,201 205,674 165,511 34,900 21,143 392,211 4,486,900 950,832 38,289 601,378 420,304 236,578
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2007 R 13,733,398 201,214 283,833 2,007,592 91,395 52,597 100,495 7,939,645 1,804,278 61,436 2,763 1,188,150 8,749,528 312,983 19,500 152,817 60,508 216,486 94,757 518,256 83,654 539,018 23,923 1,107,040 26,166 141,158 20,898 227,882 47,700 30,288 140,285 3,643,890 705,499 28,467 406,160 70,681 131,512
2008 R Loss for the year before Depreciation Depreciation Loss for the year before Government Grant Government Grant Profit / (Loss) for the year (31,988,209) (2,942,959) (34,931,168) 37,511,372 2,580,204
2007 R (28,980,428) (1,809,580) (30,790,008) 29,476,383 (1,313,625)
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PART 5 HUMAN RESOURCE MANAGEMENT
Management: L. Nkunjana, Z. Leni, L.R. Mbinda, C. Mtise, Mrs C. Cronje, Mrs Z. Pakati, Ms May
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5
5.1
HUMAN RESOURCE MANAGEMENT

ORGANISATIONAL STRUCTURE
The structure that was approved by the Board of Directors in 2004 is still in place. The Corporations structure consists of four (4) Divisions, namely Human Resources, Finance, Operations and Engineering. 5.2 5.2.1 VISION & MISSION OF HUMAN RESOURCES DIVISION 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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Performance Measure
Target Outputs 2006/07
To conform to the annual budget.
Control accumulated leave by doing quarterly reconciliations of leave provision. Implement Employment Equity Plan.
Leave accrued not to exceed budget provision.
Accrued leave has been reduced by more than 80%
20%
MTC to comply with legislation
Increase female representation in the organization by 15%.
3 females were appointed in management positions. ACI compliant i.e. 2 Africans and 1 Indian. 80% of Human Resources policies are in place. 100% IR policy is in a draft form still awaiting Boards approval. Three middle management positions filled by female candidates CFO appointed Organogram populated 96%
None
Promotion of transparency, consistency and fairness
All Human Resources Policies to be consolidated into the HR policy hand book
Revised Personnel Regulations, Industrial Relations and other HR policies to be consolidated into a HR manual Critical management vacancies to filled.
Sufficient consultation must be done regarding the IR policy.
To capacitate MTC with the relevant human resources.
MTC Organogram populated 100%.
10% other positions are not funded.
be
5.4
COMBINED ANNUAL AND SICK LEAVE UTILISATION FOR THE PERIOD 1 APRIL 2007 TO 31 MARCH 2008
Level Total Days % Days With Medical Certificate 88% 81% 79% No. Of Employees Using Sick Leave 153 697 343 %Using Sick Leave
Human Resources & Admin Engineering Operations
734 1840 2679
20.8% 37.8% 12.8%
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5.4.1
DISABILITY LEAVE
%With Medical Certificate 0 No. Of Employees On Disability 0 Average Days Per Employee 0
Total Days Taken
Human Resources: 0 Engineering: 0 Operations: 0
5.5
LABOUR RELATIONS DISCIPLINARY HEARINGS FINALISED

Nature of Misconduct Negligence Number of employees 1 % of total 7.7%
Sanction Imposed Fined 10% of excess, Final Written Warning Written Warning Written Warning Dismissed Dismissed Dismissed Final Written Warning
Negligent driving Negligence Under the influence of liquor Theft Dishonesty Poor Performance
2 1 1 6 1 1
15.4% 7.7% 7.7% 46.1% 7.7% 7.7%
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Continuous Improvement Workshop held at Areena Riverside Resort, Kwelera
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Page 86 of 87
Chief Executive Officer Mayibuye Transport Corporation P.O. Box 19596 TECOMA 5214 Tel. (043)745-2582 Fax (043)745-2586 mbinda@mtcec.co.za PR 105/2008 ISBN: 978-0-621-37872-6

MTC Annual Report 2007-2008

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222

Mayibuye Transport Corporation

ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2008

FOREWORD BY MEMBER OF THE EXECUTIVE COUNCIL

HON. GLORIA BARRY MEC FOR ROADS & TRANSPORT

MESSAGE FROM THE CHAIRPERSON

PART 1 GENERAL INFORMATION

INFORMATION ABOUT THE ENTITY

Auditor-General Audit Committee:

VISION AND MISSION STATEMENT

PART 2 PERFORMANCE OF MTC DIVISIONS

PERFORMANCE OF THE MTC DIVISIONS

The Corporations activities are organised in the following divisions:

OVERVIEW OF SERVICE DELIVERY ENVIRONMENT FOR 2007/08

Route and Private Hire Revenue

2,580,204 23,173,514 930,032 16,429,831 2,942,959

Percentage 25% 12.5% 8.33% 20%

Percentage 10% 20% 25% 2%

OVERVIEW OF ORGANISATIONAL ENVIRONMENT

1. To inculcate strong and good governance at MTC.

Develop Board Plan. Develop Board Charter.

Board Induction Plan.

Board Appraisal Tool.

Board Appraisal Tool developed and adopted.

Conflict registers. Board Plan.

Conflict of interest registers maintained. Board Development implemented. Plan

3. Risk Management for MTC.

4. Capacitate MTC with the relevant human resources.

MTC organogram populated.

5. Inculcate a customer service ethic in all divisions of MTC.

6. Ensure timely, accurate and reliable financial reporting.

Timely submissions to the Board and AG.

7. Improve delivery at MTC.

Develop Service Delivery Improvement Plan.

HUMAN RESOURCES DIVISION Staff Establishment

Conduct a skills audit and compile a skills development plan.

Conduct a skills audit and compile a skills development plan (100%)

Develop a learnership program

Recruit 3 Auto Electricians and 3 Body Builders for learnership.

Target Output 2007/08 courses, conferences seminars.

Actual Output 2007/08

Deviation from Target & Reasons for NonAchievement

Promote sound labour relations within MTC.

To empower MTC Shop Stewards and line managers in the IR discipline

Develop Employee Wellness Programs to support employees

Job Consolidation and evaluation concluded (25%)

Performance Management System.

All managers have signed performance agreements.

Consolidate retirement funds for a smooth administration.

Contributions from 1/04/2007 must go to MTC Retirement Fund.

To conform to the annual budget.

Control accumulated leave by doing quarterly reconciliations of

Leave accrued not to exceed budget provision.

Accrued leave has been reduced by more than 80%

Performance Measure leave provision.

Target Output 2007/08

Actual Output 2007/08

Deviation from Target & Reasons for NonAchievement

MTC to comply with legislation.

Implement Employment Equity Plan.

Increase female representation in the organization by 15%.

Promotion of transparency, consistency and fairness.