Mtc Annual Report 2007-2008

222

Mayibuye Transport Corporation

ANNUAL REPORT

FOR THE YEAR ENDED

31 MARCH 2008


Annual Report for the Year Ended 31 March 2008

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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 Government’s 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 Corporation’s 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 MTC’s 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 Corporation’s 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 GENERAL INFORMATION

1.1 SUBMISSION OF ANNUAL REPORT TO THE EXECUTIVE AUTHORITY BY THE

CHIEF EXECUTIVE OFFICER OF MAYIBUYE TRANSPORT CORPORATION

In accordance with the provisions of Section 40(1)(d) of the Public Finance Management Act, 1999

(Act 1 of 1999) as amended, the Annual Report for the fiscal year ended 31 March 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 Programme Highlights

1.2.1.1 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:

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

1.2.1.2 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

driver’s competition

1.2.1.3 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



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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

1.2.1.4 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

1.2.1.5 Strategy and Policy Development

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 William’s Town.

Contact Details

Zwelitsha Depot P.O. Box 19596

Mount Coke Road Tecoma, East London

Zwelitsha 5608 5214

Tel: 040 – 654 1351 Fax: 040 – 655 1907

1.3.1.2 Reeston Depot

The Reeston depot is situated on the corner of Drummond and Mdantsane Access Roads between

Mdantsane and East London. It covers the Potsdam and Newlands areas of Buffalo City.



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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 BOARD OF DIRECTORS

Mr. P.L.C. Maseti Chairperson

Mr. S.J. Nyengane Deputy Chairperson

Mr. P.P. Balfour Member

Mr. D. Lefutso Member

Mr. T. Matiwane Member

Mr. J. Davies Member (resigned)

Mr. M. Tuswa Member

Mr. A.J. De Vries Member

Mr. T.A. Thomas Member

1.3.3 MANAGEMENT

Mr. L.R. Mbinda CEO

Mr. L.C. Mtise HOD: Operations

Mr. Z.D. Leni HOD: Engineering

Mr. L. Coetzer Chief Financial Officer

Vacant HOD: HR

1.3.3.1 Secretary

Mrs. C. Cronjé

1.3.4 REGISTERED HEAD OFFICE AND POSTAL ADDRESS

Reeston Depot P.O. Box 19596

Cnr of Drummond and Mdantsane Access Roads Tecoma, East London

Wilsonia 5214

East London

5247

1.3.5 BANKERS

Standard Bank of South Africa Limited

King William’s Town

1.3.6 AUDITORS

Auditor-General

Audit Committee:



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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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2 PERFORMANCE OF THE MTC DIVISIONS

The strategic focus of the Mayibuye Transport Corporation can be summarised as follows:

Strengthen collaboration and accountability between the Board and Management in building

strong and good governance.

Develop MTC into a strong brand.

Implement sound human resources practice in MTC.

Ensure sound financial and administrative practice at MTC.

Develop an organization with strong ITC capabilities.

Strive to maintain world class standards.

Promote safe, reliable public transport services.

Reduce the rate of accidents in its area of operation.

Comply with all laws governing public entities.

2.1 AIM OF ENTITY

To ensure effective and efficient governance and administration structures, systems and culture

capable of responding to Provincial Roads and Transport priorities.

2.2 SUMMARY OF DIVISIONS WITHIN MTC

The Corporation’s activities are organised in the following divisions:

Division Sub-Division

1. Human Resource Management 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 OVERVIEW OF SERVICE DELIVERY ENVIRONMENT FOR 2007/08

2.3.1 REVENUE COLLECTION

Route and Private Hire Revenue

Year Budget Actual Variance

2006 11,500,000 11,577,000 77,000

2007 12,500,000 12,149,128 (350,872)

2008 14,131,397 15,055,438 924,041

2.3.2 EXPENDITURE

Item 2008

Actual

2007

Actual

2006

Actual

Profit / (Loss) from operations 2,580,204 (1,313,625) (2,841,987)

Personnel 23,173,514 20,846,028 18,879,239

Audit fees (including internal audit fees for current year) 930,032 312,983 641,938

Other operating expenses 16,429,831 14,175,959 19,315,043

Depreciation 2,942,959 1,809,580 1,549,098

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 Budget Expenditure Variance

New Buses 2,200,000 - 2,200,000

Second hand buses 1,785,240 - 1,785,240

Refurbishment 1,100,000 1,282,167 (182,167)

Operating Equipment 163,840 150,291 13,549

Workshop Equipment 300,000 331,481 (31,481)

Office Equipment 200,000 294,009 (94,009)

IT Infrastructure 100,000 45,269 54,731

Depot Upgrading 1,150,920 1,095,514 55,406

Total 7,000,000 3,198,731 3,801,269

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 Budget Expenditure Variance

New Buses 3,532,000 3,266,997 265,003

Refurbishment 148,000 165,000 (17,000)

Operating Equipment 70,000 68,807 1,193

Office Equipment 100,000 117,682 (17,682)

Depot Upgrading 400,000 666,803 (266,803)

Total 4,250,000.00 4,285,289 (35,289)

Depreciation Rates for Assets Percentage

Ancillary Vehicles 25%

Buses – Body

Buses – Chassis, engine, etc

12.5%

8.33%

Office Equipment 20%



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Depreciation Rates for Assets Percentage

Office Furniture 10%

Operating Equipment 20%

Workshop Equipment 25%

Buildings 2%

2.4 OVERVIEW OF ORGANISATIONAL ENVIRONMENT

Mayibuye Transport Corporation (MTC) is a government parastatal that was established in 1990. It

strives to provide an effective and efficient public transport service to its customers. It has depots in

Alice, Reeston, Queenstown and Zwelitsha. Its peak fleet presently comprises of 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. MTC’s

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 PERFORMANCE OF DIVISIONS WITHIN MTC

2.6.1 OFFICE OF THE CEO

The office of the CEO provides strategic leadership and direction for the organization and gives

support to the Board of Directors.

Measurable Objectives Performance Measure Performance Indicators and

Targets

Deviations /

Comments

1. To inculcate strong and

good governance at MTC.

Develop Board Plan. Board Plan developed. Target achieved

Develop Board Charter. Board Charter developed and

implemented.

Target achieved

Board Induction Plan. New Board Members

inducted.

Target achieved

Board Appraisal Tool. Board Appraisal Tool

developed and adopted.

Due to limited

finance resources

we have not

developed the

Appraisal Tool for

Board Members.

Conflict of interest

registers.

Conflict of interest registers

maintained.

Target achieved

Board Development

Plan.

Board Development Plan

implemented.

Target achieved

Delegation of Authority

and Performance

Agreement.

Delegations of Authority and

Performance Agreement

implemented.

Target achieved

2. Strategic leadership and

direction.

Review MTC strategy

and align to Treasury

Guidelines.

Strategic Plan reviewed and

developed according to

Treasury Guidelines.

Target achieved



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Measurable Objectives Performance Measure Performance Indicators and

Targets

Deviations /

Comments

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.

Risks to MTC identified and

mitigated.

Risk Management Strategy

and Fraud Prevention Plan

developed.

Risk Management

is a standing item

in Board and

Management

Meetings.

Risk Management

Strategy and Fraud

Prevention Plan

approved by the

Board of

Directors.

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.

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.

Develop a customer

service charter poster for

employees.

Develop and implement a

customer service

excellence course for all

front-line employees.

Customer service charter

posters printed and

disseminated at all MTC

depots.

Customer service excellence

course held at all depots

(40%).

Target not

achieved due to

budgetary

constraints.

Currently pursuing

options of in-house

training.

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 service

delivery at MTC.

Develop Service Delivery

Improvement Plan.

Draft 50%

2.6.2 HUMAN RESOURCES DIVISION

2.6.2.1 Staff Establishment

The personnel to operating bus ratio are 3:1, in line with the 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 Dismissed Resigned Absconded Disabled Deceased

13 6 4 1 0 2

2.6.2.5 Performance

The Human Resources Division has been able to demonstrate results against its measurable objectives

as indicated below:

Measurable

Objective

Performance

Measure

Target Output

2007/08

Actual Output

2007/08

Deviation from Target

& Reasons for Non-

Achievement

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.

None

Develop a

learnership program

Recruit 3 Auto

Electricians and 3

Body Builders for

learnership.

Appointment of

3 Auto

Electricians and

Body Builders for

learnership has

been finalised

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

36 employees and

8 managers were

trained in various

skills.

None



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Measurable

Objective

Performance

Measure

Target Output

2007/08

Actual Output

2007/08


& Reasons for Non-

Achievement

courses,

conferences and

seminars.

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

10 Shop stewards

and 12

supervisors and

line managers

were trained by

Global Business

Solution

None

Manage HIV/

AIDS.

Develop Employee

Wellness Programs

to support employees

Conduct EAP at all

depots

Employee

Wellness

programs held at

all MTC depots

None

Processes and

protocols run by

peer educators to

get management

support and

approval

EAP have been

approved by

management.

None

Job

Consolidation

and Evaluation.

Consolidate

Engineering jobs in

order to be in line

with the strategic

objective of

Engineering

Division

Draft new Job

Descriptions,

consult with stake

holders including

managers and

labour, evaluate

new job

descriptions (25%).

Job Consolidation

and evaluation

concluded (25%)

None

Performance

Management

System.

Effective

Performance

Management System

to be in place for all

managers.

All managers to

have signed

performance

agreements

All managers

have signed

performance

agreements.

Consolidate

retirement

funds for a

smooth

administration.

Provident/Pension

fund amalgamation

to MTC Retirement

Fund.

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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Measurable

Objective

Performance

Measure

Target Output

2007/08

Actual Output

2007/08


& Reasons for Non-

Achievement

leave provision.

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 Board’s

approval.

To capacitate

MTC with the

relevant human

resources.

MTC Organogram

populated 100%.

Critical

management

vacancies to be

filled.

Three middle

management

positions filled by

female candidates

CFO appointed

Organogram

populated 96%

10% other positions are

not funded.

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.

Currently 171

employees with a

ratio of 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 2008 2007

Zwelitsha 6,265,809 5,054,337

Reeston 2,926,797 2,685,617

Queenstown 4,468,357 3,373,029

Alice 1,394,475 1,036,145

TOTAL 15,055,438 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

Depot

2008 2007

Route

Revenue

Private Hire

Revenue

Route

Revenue

Private Hire

Revenue

Zwelitsha 5,683,388 582,421 4,692,317 362,020

Reeston 2,521,770 405,027 2,310,226 375,391

Queenstown 4,181,377 286,980 3,204,779 168,250

Alice 1,212,076 182,399 911,395 124,750

TOTAL 13,598,611 1,456,827 11,118,717 1,030,411

Average Route Revenue Per Depot

Depot 2008 2007

Zwelitsha 5.53 4.90

Reeston 5.15 5.14

Queenstown 7.32 5.82

Alice 5.55 4.61



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Combined Revenue

0

2

4

6

8

10

12

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

Ra

nd

s p

er

Km

Zwelitsha

Reeston

Queenstown

Alice

Route Revenue

0

2

4

6

8

10

12

1900/01/01 1900/01/03 1900/01/05 1900/01/07 1900/01/09 1900/01/11

Months

Ran

ds p

er

Km

REV

KM

Zwelitsha

Reeston

Queenstown

Alice

Average

Private Hire Revenue

0

20

40

60

80

100

120

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

Ra

nd

s p

er

Km

Zwelitsha

Reeston

Queenstown

Alice

Average

Bus allocation per depot for the financial year was as follows:-



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DEPOT 2008 2007

Zwelitsha 18 16

Reeston 9 10

Queenstown 12 11

Alice 7 7

TOTAL OPERATING BUSES 46 44

Average route revenue per bus was as follows:-

DEPOT 2008 2007

Zwelitsha 315,744 294,301

Reeston 280,197 231,023

Queenstown 348,448 291,344

Alice 173,154 130,199

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 Corporation’s operating activities. Allocation

for the financial year under review was as follows:-

2008 2007

Grant-in-Aid 33,565,000 27,747,177

2.6.3.1 Financial Statistics for the five years to March 2008:

DETAILS 2008 2007 2006 2005 2004 2003

Revenue 15,055,438 12,149,128 11,577,460 11,502,232 10,422,675 9,754,141

Grant-in-

Aid 33,565,000 27,747,177 25,001,992 20,500,000 24,435,000 22,400,000

Capital

Grant-in-

Aid

7,000,000

4,250,000

15,000,000

-

-

-

Passengers 1,751,785 1,574,045 1,556,132 1,853,553 1,976,150 1,428,128

Route

Kilometres 2,306,722 2,155,049 2,121,467 2,043,688 2,061,683 1,577,785

Buses at

Year end 58 56 52 60 60 61

Number of

Employees 171 170 183 207 223 243

Revenue

Cents per

Kilometre

(Cpk)

631

564

546

563

459

618



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DETAILS 2008 2007 2006 2005 2004 2003

Staff Ratio 3:1 3:1 3.6:1 3.7:1 3.7:1 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

Non-

Achievement

Inculcate strong and

good governance at

MTC.

Good governance

plan developed and

implemented.

Strategic leadership

and direction at

MTC.

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 plan

reviewed and

developed and

submitted

according to

treasury

guidelines and

procedures.

None.

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

Risks

management

strategy and fraud

prevention plan

developed.

None.



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Measurable

Objective

Performance

Measure

Target Output

2007/08

Actual Output

2007/08

Deviation from

Target &

Reasons for

Non-

Achievement

management

meetings.

Manage conflict of

interest.

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.

None.

Develop board

development program

to capacitate board

members with

oversight on risk

management, fiduciary

duties and roles of

directors in line with

legislation.

A training needs

analysis conducted.

Implementation of

training as per the

needs analysis.

Training needs

implemented as

per the needs

analysis.

None.

Formulate policies and

procedural frameworks

for MTC.

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.

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.

Continues

process in order

to improve

internal control

structure at

MTC.

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.

None.

Reduce the number of

audit queries.

Audit queries

reduced and action

Clean audit plan

implemented.

All measures

implemented to

improve the audit

None.



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Measurable

Objective

Performance

Measure

Target Output

2007/08

Actual Output

2007/08

Deviation from

Target &

Reasons for

Non-

Achievement

plan developed. report.

Implement effective

financial information

system for uploading

and recalling of

information.

Effective financial

information system

developed.

Implement financial

information system.

Pastel

implemented as

financial

information

system.

None.

To purchase new buses

and upgrade the depots

with the funding

pledge from the

department.

New buses

purchased.

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.

None.

Ensure timely,

accurate and reliable

financial reports.

Timely submissions

to board, department

and AG.

All financial reports

are accurate,

reliable and printed

timeously.

All financial

reports were

submitted

accurately,

reliably 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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The Engineering 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

Reason for Non-

Achievement

Increase Revenue. Improve Route &

Private Hire

revenue collection.

Increase total

operational

revenue to R15

million.

R15,055,439 None

Reduce operating

costs.

Reduce dead

kilometres.

Dead kilometres

not to exceed 15%

of total kilometres.

14.75% None

Reduce

maintenance costs.

Reduce

maintenance cost.

Fuel consumption

not to exceed 45

l/100km.

42.50 l/100km None

Maintain current

market share.

Satisfy peak bus

requirement. Provide Operations

Division with 49

peak buses daily.

46 Age and reliability of

the fleet had a major

impact. See 1.2.1.4 on

high level overview

Forward planning. Minimise

disruptions caused

by major unit

failures.

Ensure that a spare

engine, gearbox

and differential are

available at each

depot.

No spare units

were kept at depots

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.

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.


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.


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 OPERATIONS DIVISION

2.6.5.1 PURPOSE OF OPERATIONS DIVISION

To spearhead the transportation of passengers on all MTC routes and

thereby generate revenue for the Corporation.

2.6.5.2 STRATEGIC OBJECTIVES OF OPERATIONS DIVISION

To provide a community – needs driven passenger service that is reliable,

access provided by a disciplined and caring staff.

2.6.5.3 SECTIONS WITHIN OPERATIONS DIVISION

Traffic

Statistics

Private Hire

Inspection



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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 Non-

Achievement

Develop best

practice operations

standards.

Implement

passenger

participation plan

i.e. update

commuters on fare

increase and

feedback on

customer services.

Improved passenger

participation and

customer services.

Stakeholder

engagement plan

developed and

implemented but

continuity 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.

Improve driver

performance

Implement, monitor

and evaluate

driver’s

performance plan.

Improved driver

performance and

fewer minor

accidents.

Driver’s

performance

improved by 80%.

Operating with

ageing fleet is the

greatest challenge

that our drivers

have to deal with.

Improve route

revenue in all

depots.

Develop a

complimentary

revenue generation

plan as well as

revenue collection

mechanisms and

monitor route

performance while

develop.

Meet the target set

for the current year.

Achieved R15m

which was our

target.

Limited number of

operating buses

due to breakdowns

and major defects

remains our major

concern.



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Measurable

Objective

Performance

Measure

Target Output

2007/2008

Actual Output

2006/07

Deviation from

Target

Reason for Non-

Achievement

Develop alternative

revenue generation

streams.

Promote private

higher through

advertising and

other special

services rendered

by MTC.

Increased revenue

generated from

other sources.

Private hire target

was also achieved.

Promote customer

services

Develop a customer

services charter

poster for

employees and

conduct training for

front line staff on

customer care/

services.

Conduct training at

Zwelitsha and

Reeston.

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 (ETM’s) are susceptible to frequent breakdowns due to the dusty nature

of the rural operations which comprises 80% of the MTC operations as well as bad routes.


Strengthen first line maintenance on ETM’s and purchase sufficient spare machines as well liaising

with the Department of Roads and Transport to assist on bad routes.

Challenge 2:

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.


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 AREAS OF OPERATION

2.6.5.4.2.1 Zwelitsha Depot

The Zwelitsha Depot covers the areas of King William’s Town and Keiskammahoek.

A total of 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 2006/07 2005/06

Zwelitsha 24 24 21

Reeston 11 9 10

Queenstown 14 14 14

Alice 9 9 7

TOTAL 58 56 52

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 Meetings

Mr. M. Mantyi 5

Mr. J. Mdeni 2

Mrs. R. Luzuka 5

3.2 AUDIT COMMITTEE RESPONSIBILITY

The Audit Committee has performed its functions in accordance with Section 38 (1) (a) of the PFMA

and Treasury Regulation 3.1.13. The Audit Committee has adopted appropriate formal terms of

reference by way of the Audit Committee Charter and the Internal Audit Charter. It has regulated its

affairs in compliance with these charters and discharged all of its responsibilities as contained therein.

3.3 THE EFFECTIVENESS OF INTERNAL CONTROL

Executive Management suggested that the approach to the internal audit function be changed to gain

even greater value to the systems, controls, and operations of MTC. The internal audit unit performed

a “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 ANNUAL FINANCIAL STATEMENTS

4.1 REPORT OF THE CHIEF EXECUTIVE OFFICER

4.1.1 GENERAL REVIEW

4.1.1.1 Overview of Financial Results

I have done a review of the attached annual financial statements. The following were noted in

carrying out the review:

Total revenue generated from bus fares and private hire for the financial period under review

amounted to R 15,055,438.

Depot 2008 2007

Zwelitsha 6,265,809 5,054,337

Reeston 2,926,797 2,685,617

Queenstown 4,468,357 3,373,029

Alice 1,394,475 1,036,145

TOTAL 15,055,438 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:-

Depot

2008 2007

Route Revenue

Private Hire

Revenue Route Revenue

Private Hire

Revenue

Zwelitsha 5,683,388 582,421 4,692,317 362,020

Reeston 2,521,770 405,027 2,310,226 375,391

Queenstown 4,181,377 286,980 3,204,779 168,250

Alice 1,212,076 182,399 911,395 124,750

TOTAL 13,598,611 1,456,827 11,118,717 1,030,411

Bus allocation per depot for the financial year was as follows:-

DEPOT 2008 2007

Zwelitsha 18 16

Reeston 9 10



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DEPOT 2008 2007

Queenstown 12 11

Alice 7 7

TOTAL OPERATING BUSES 46 44

Average route revenue per bus was as follows:-

DEPOT 2008 2007

Zwelitsha 315,744 294,301

Reeston 280,197 231,023

Queenstown 348,448 291,344

Alice 173,154 130,199

4.1.1.2 Operating Grant-in-Aid

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 2007

Grant-in-Aid 33,565,000 27,747,177

4.1.1.3 Operating Expenses

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

Inventory in rand 2008 2007

Stock on hand 2,048,323 1,880,472

Provision for Obsolete Stock - (362,177)

Total 2,048,323 1,518,295

4.1.4 CORPORATE GOVERNANCE ARRANGEMENTS

Mayibuye Transport Corporation is fully committed to the principles of openness, accountability and

integrity, as advocated in the King Code of Corporate Governance (King 2). The Board members

recognise the need to conduct the business of the Corporation with integrity and in accordance with

generally accepted corporate governance practices.

4.1.4.1 BOARD MEMBERS

The Board consists of eight non-executive members appointed in terms of a proclamation that was

gazetted on 30 April 2001 (no. 742 extraordinary). Two members represent Provincial Government

departments, whilst the balance was appointed by virtue of their relevant specialist knowledge and

skills.

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 Corporation’s 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 GENERAL’S 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.

4. 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.

5. An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial statements. The procedures selected depend on the auditor’s

judgement, including the assessment of the risks of material misstatement of the financial

statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the entity’s preparation and fair presentation of the

financial statements in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the

entity’s internal control.



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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 entity’s 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 of

Revenue

X

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 management’s 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. 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.

18. In terms of the foregoing my engagement included performing procedures of an audit nature to

obtain sufficient appropriate evidence about the performance information and related systems,

processes and procedures. The procedures selected depend on the auditor’s judgement.

19. I believe that the evidence I have obtained is sufficient and appropriate to provide a basis for

the audit findings reported below.

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

DIRECTORS PLC Maseti Chairperson

SJ Nyengane Deputy Chairperson

PP Balfour Director

D Lefutso Director

T Matiwane Director

AJ de Vries Director

TA Thomas Director

M Tuswa Director

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.

BANKERS The Standard Bank of South Africa Limited

AUDITORS Office of the Auditor-General

CONTENTS PAGE

Balance sheet 51

Income statement 52

Statement of changes in equity 53

Cash flow statement 54

Accounting policy notes 55 – 65

Notes to the financial statements 66 – 78

Detailed income statement 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 2007

R R

ASSETS

Non-current assets

Property, plant and equipment 3 34,303,394 31,811,607

Total non-current assets 34,303,394 31,811,607

Current assets

Inventories 4 2,048,323 1,518,295

Trade and other receivables 5 506,681 387,515

Investment - Restructuring process 6 - 235,452

Investments - Marketable securities 7 45,698 -

Cash and cash equivalents 8 9,648,150 6,629,379

Total current assets 12,248,852 8,770,641

Total assets 46,552,246 40,582,248

EQUITY AND LIABILITIES

Capital and reserves

Share capital 9 56,761,075 56,761,075

Accumulated deficit (54,684,609) (57,264,813)

2,076,466 (503,738)

Non-current liabilities

Restructuring process fund 6 - 235,452

Deferred income 39,347,113 36,293,485

39,347,113 36,528,937

Current liabilities

Trade and other payables 10 2,706,401 2,251,551

Payroll accruals 11 2,422,266 2,305,498

5,128,667 4,557,049

Total equity and liabilities 46,552,246 40,582,248



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4.4.2 INCOME STATEMENT

NOTES 2008 2007

R R

Revenue 12 15,055,438 12,149,128

Cost of services rendered 23,167,061 20,613,318

Gross profit / (loss) (8,111,623) (8,464,190)

Other income - Grant 20.2 37,511,372 29,476,383

Other operating income 439,750 73,806

Administration expenses (11,353,145) (8,749,528)

Operating expenses (16,429,831) (14,175,959)

Fruitless and wasteful expenditure 13 (600) (29,886)

Profit / (Loss) from operations 14 2,055,923 (1,869,375)

Interest income 14 524,281 555,749

Profit / (loss) for the year 2,580,204 (1,313,625)



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4.4.3 STATEMENT OF CHANGES IN EQUITY

Share Future Accumulated

Capital Capital Loss Total

R R R R

Balance at 1 April 2006 50,000,000 6,761,075 (51,945,641) 4,815,434

Prior period error adjustments - Note 24 - - (4,005,547) (4,005,547)

Restated balance at 1 April 2006 50,000,000 6,761,075 (55,951,188) 809,887

Transfers to share capital 6,761,075 (6,761,075) - -

Additional grant received - - - -

Deferred income release to income - - - -

Profit / (loss) for the year - - (1,313,625) (1,313,625)

Balance at 31 March 2007 56,761,075 - (57,264,813) (503,738)

Additional grant received - - - -

Deferred income release to income - - - -

Profit / (loss) for the year - - 2,580,204 2,580,204

Balance at 31 March 2008 56,761,075 - (54,684,609) 2,076,466

Deferred

Income

R

Balance at 1 April 2006 14,000,000

Prior period error adjustments - Note 24 20,517,868

Restated balance at 1 April 2006 34,517,868

Additional grant received 4,252,000

Deferred income release to income (2,476,383)

Balance at 31 March 2007 36,293,485

Additional grant received 7,000,000

Deferred income release to income (3,946,372)

Balance at 31 March 2008 39,347,113



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4.4.4 CASH FLOW STATEMENT

NOTES 2008 2007

R R

OPERATING ACTIVITIES

Cash receipts from customers 14,001,129 43,254,053

Cash paid to suppliers and employees (13,096,202) (46,044,736)

Cash generated by operations 15 904,927 (2,790,683)

Interest received 524,281 555,749

NET CASH (USED IN)/ FROM

OPERATING ACTIVITIES 1,429,208 (2,234,934)

INVESTING ACTIVITIES

Purchases of property, plant and equipment (5,506,392) (10,393,253)

Proceeds on sale of property, plant and equipment 95,955 -

Restructuring process grant release - 1,998

NET CASH (USED IN)/FROM INVESTING

ACTIVITIES (5,410,437) (10,391,255)

FINANCING ACTIVITIES

Decrease / (increase) in grant allocation 7,000,000 4,250,000

NET CASH (USED IN)/FROM FINANCING

ACTIVITIES 7,000,000 4,250,000

NET INCREASE /(DECREASE) IN CASH

AND CASH EQUIVALENTS 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 8 9,648,150 6,629,379



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4.4.5 ACCOUNTING POLICY NOTES

1 PRESENTATION OF FINANCIAL STATEMENTS

These financial statements are presented in South African Rand [R] since that is the

functional currency in which the transactions are denominated.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Annual Financial Statements are prepared under the historical cost convention, other

than certain financial instruments, and incorporate the following principal accounting

policies, which have been consistently applied in all material respect. The financial

statements have been prepared in accordance with South African Statements of

Generally Accepted Accounting Practice. The principal accounting policies adopted

remained unchanged from the previous year except as listed below:

2.1 Changes in accounting policy and disclosures

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 25%

Buses - Body 12.5%

Buses - Chassis, Engine, etc 8.33%

Office Equipment 20%

Office Furniture 10%

Operating Equipment 20%

Workshop Equipment 25%

Buildings 2%

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 asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair

value less costs to sell and its value in use and is determined for an individual asset,

unless the asset does not generate cash inflows that are largely independent of those

from other assets or group of assets. Where the carrying amount of an asset exceeds its

recoverable amount, the asset is considered impaired and is written down to its

recoverable amount. In assessing value in use, the estimated future cash flows are

discounted to their present value using a pre-tax discount rate that reflects current market

assessments of the time value of money and the risks specific to the asset. In determining

fair value less costs to sell, an appropriate valuation model is used.

For an asset that does not generate cash inflows that are largely independent of those

from other assets the recoverable amount is determined for the cash-generating unit to

which the asset belongs. An impairment loss is 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 available-

for-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

asset’s carrying amount and the present value of estimated future cash flows discounted

at the financial asset’s original effective interest rate. The carrying amount of the asset is

reduced through use of an allowance account. The amount of the loss shall be 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 non-

owner 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 company’s accounting policies. The areas involving a higher degree of

judgement or complexity, or areas where assumptions and estimates are significant to the

financial statements, are disclosed.

The key assumptions, estimates and judgements concerning the future and other key

sources of estimation uncertainty at the balance sheet date, that have a significant risk of

causing a material adjustment to the carrying amount of the assets and liabilities within

the next financial year are discussed below.

The residual values and estimated useful lives of property, plant and equipment were

assessed and found to be reasonable. Residual values of motor vehicles are determined

with reference to market related prices of vehicles in a similar condition.



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4.4.6 NOTES TO THE ANNUAL FINANCIAL STATEMENTS

1 PROPERTY, PLANT & EQUIPMENT

Land &

Building

Leasehold

Land &

Buildings

Ancillary

Vehicles Buses

Office

Equipment

Office

Furniture

Operating

Equipment

Workshop

Equipment Total

R R R R R R R R R

Carrying value at 1 April 2007

2,514,901

1,100,000

2,264,095

21,740,411

232,654

47,551

3,730,810

181,185

31,811,607

At Cost 2,514,901 1,100,000 2,196,103 33,508,487 869,336 177,769 1,897,881 766,544 43,031,021

Accumulated Depreciation - - 67,992 (11,768,076) (636,682) (130,218) 1,832,929 (585,359) (11,219,414)

Additions 137,370 - - 4,494,986 162,996 235,111 144,448 331,481 5,506,392

Disposals - Cost - - (138,857) (1,534,435) - - - - (1,673,292)

Disposals - Accumulated Depreciation - - 138,857 1,462,790 - - - - 1,601,647

Depreciation for the year - - (224,581) (2,258,853) (105,536) (24,985) (242,381) (86,623) (2,942,959)

34,303,394

Carrying value at 31 March 2008 2,652,271 1,100,000 2,039,514 23,904,899 290,114 257,677 3,632,877 426,043 34,303,394

At Cost 2,652,271 1,100,000 2,057,246 36,469,038 1,032,332 412,880 2,042,329 1,098,025 46,153,491

Accumulated Depreciation - - (17,732) (12,564,139) (742,218) (155,203) 1,590,548 (671,982) (11,850,096)

Land &

Building

Leasehold

Land &

Buildings

Ancillary

Vehicles Buses

Office

Equipment

Office

Furniture

Operating

Equipment

Workshop

Equipment Total

R R R R R R R R R

Carrying value at 1 April 2006 1,816,588 767,606 246,366 3,131,025 203,556 36,669 934,523 86,943 7,223,276

At Cost 2,514,901 1,100,000 955,915 24,966,175 764,206 159,254 1,556,904 620,413 32,637,768

Accumulated Depreciation (698,313) (332,394) (709,549) (21,835,150) (560,650) (122,585) (622,381) (533,470) (25,414,492)

Prior period error adjustments 698,313 332,394 888,211 11,403,990 - - 2,681,750 - 16,004,658

Additions - - 1,240,188 8,542,312 105,130 18,515 340,977 146,131 10,393,253

Disposals - Cost - - - - - - - - -

Disposals - Accumulated Depreciation - - - - - - - - -

Depreciation for the year - - (110,670) (1,336,916) (76,032) (7,633) (226,440) (51,889) (1,809,580)

31,811,607

Carrying value at 31 March 2007 2,514,901 1,100,000 2,264,095 21,740,411 232,654 47,551 3,730,810 181,185 31,811,607

At Cost 2,514,901 1,100,000 2,196,103 33,508,487 869,336 177,769 1,897,881 766,544 43,031,021

Accumulated Depreciation - - 67,992 (11,768,076) (636,682) (130,218) 1,832,929 (585,359) (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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2 INVENTORIES

2008 2007

R R

Fuel, Oils and Greases 449,047 499,373

Units 364,490 263,303

Spares 646,602 730,599

Consumables 384,463 129,503

Tyres & Tubes 106,176 111,292

Ancillary Vehicle Spares 4,077 5,939

Operational Equipment Spares 62,086 87,655

Stationery and Miscellaneous items 31,382 52,808

2,048,323 1,880,472

Provision for Obsolete Stock - (362,177)

2,048,323 1,518,295

Inventories included in cost of services rendered 15,194,686 14,008,827

3 TRADE AND OTHER RECEIVABLES

Trade receivables 395,969 369,478

Less: Provision for impairment of receivables (359,659) (308,585)

36,310 60,893

Other receivables 470,371 326,622

506,681 387,515

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 308 585

Charge for the year -

Utilised -

At 31 March 2007 308 585

Charge for the year 51 074

Utilised -

At 31 March 2008 359 659

As at 31 March, the ageing analysis of trade receivables is as follows:



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2008 2007

R R

Neither past due nor impaired

Past due and not impaired

< 30 days 470 371 326 622

30 – 60 days - -

60 – 90 day - -

90 – 120 day - -

>120 days 36 310 60 893

Total 506 681 387 515

4 INVESTMENT - RESTRUCTURING PROCESS

Investment - Restructuring process - 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 6,629,379

9,648,150 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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7 SHARE CAPITAL 2008 2007

R R

Authorised:

Ordinary shares of R 1 each 60,000,000 60,000,000

Issued and fully paid

Ordinary shares of R 1 each 56,761,075 56,761,075

The 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 2008 2007

R R

Trade payables 1,828,920 1,417,413

Other payables 877,481 834,138

2,706,401 2,251,551

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 2008 2007

R R

At 1 April 2007 2,305,498 2,413,207

Additional accrual in the year 1,688,938 1,631,171

Utilisation of accrual (1,572,170) (1,738,880)

At 31 March 2008 2,422,266 2,305,498

Accrual for bonuses 433,849 1,083,435

Accrual for leave 1,988,417 1,222,063

2,422,266 2,305,498

10 REVENUE

Revenue comprises of passenger fares and special hire revenue.



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2008 2007

R R

An analysis of the Entity's revenue is as follows:

Passenger fares 13,598,611 11,118,717

Special hire 1,456,827 1,030,411

Total revenue 15,055,438 12,149,128

11 FRUITLESS AND WASTEFUL EXPENDITURE

Minor roadworthy infringement fines 600 3,720

South African Revenue Services penalties - 19,746

South African Revenue Services interest - 6,420

600 29,886

12 NET PROFIT / LOSS FROM OPERATIONS

12.1 Net Profit / Loss from operations has been arrived at after charging (crediting):

INCOME

Interest income 524,281 555,749

Profit on disposal of assets 24,310 -

Dividends received 1,777 1,500

EXPENSES

Audit fees 930,032 312,983

Audit Committee (see note 14.2 and note 14.3) 39,200 19,500

Defined contribution plan 2,364,824 2,249,167

Directors Emoluments (see note 14.4 and 14.5) 187,051 83,653

Depreciation 2,942,959 1,809,580

Fair value adjustment - Marketable securities 45,698 -

Insurance 1,201,050 1,107,040

Operating lease charges 197,201 141,158

Consulting fees 198,067 518,256

Staff Costs 23,173,514 20,846,028

The average number of employees for the financial year

ended was:

182 186



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12.2 Audit committee 2008

Meetings Travel Total

R R R

M. Mantyi 20,500 - 20,500

R. Luzuka 12,200 - 12,200

J. Mdeni 6,500 - 6,500

39,200 - 39,200

12.3 Audit committee 2007

Meetings Travel Total

R R R

M. Mantyi 15,500 - 15,500

R. Luzuka 2,000 - 2,000

J. Mdeni 2,000 - 2,000

19,500 - 19,500

12.4 Directors Emoluments 2008

Meetings Travel Allowances Total

R R R R

P.L.C. Maseti 44,870 201 - 45,071

S.J. Nyengane 40,306 361 - 40,667

P.P. Balfour 18,083 - - 18,083

D. Lefutso 36,366 - - 36,366

T. Matiwane 18,966 - - 18,966

A.J. De Vries - - - -

T.A. Thomas 27,898 - - 27,898

M. Tuswa - - - -

186,489 562 - 187,051

12.5 Directors Emoluments 2007

Meetings Travel Allowances Total

R R R R

A.R. Wadsworth 34,500 6,950 4,800 46,250

D.N. Webb 12,500 1,183 1,500 15,183

K.N. Harvey 11,500 1,200 - 12,700

X. Pakati 7,000 2,520 - 9,520

65,500 11,853 6,300 83,653



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12.6 Senior Management 2008

CEO CFO HOD:

Operations

HOD:

Engineering

L.R. Mbinda L. Coetzer L.C. Mtise Z. Leni

R R R R

Basic 439,200 180,000 245,532 237,396

Car 118,800 - 52,860 40,800

Acting allowance - - 36,000 -

Housing allowance - - 13,092 -

Medical aid 21,120 3,852 - 8,136

Provident 71,148 - 39,768 38,448

Bonus 50,000 5,000 20,461 19,783

UIF 1,500 750 1,500 1,500

Total 701,768 189,602 409,213 346,063

12.7 Senior Management 2007

CEO HOD:

Operations

L.R. Mbinda L.C. Mtise

R R

Basic 260,896 225,264

Car 52,860 52,860

Acting allowance 132,938 24,000

Housing allowance - 9,094

Medical aid 11,964 -

Pension 42,264 41,940

UIF 1,404 1,404

Total 502,326 354,562

12.8 OPERATING LEASE ARRANGEMENTS 2008 2007

R R

Minimum lease payments paid under operating leases 197,201 141,157

At the balance sheet date, the entity had outstanding

commitments under operating leases, which fall due as

follows:

Within one year 121,478 103,420

In the second to fifth years inclusive 134,623 262,241

After five years - -

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 2007

R R

Net Profit / (Loss) for the year 2,580,204 (1,313,625)

Adjustments for:

Prior period error adjustment - Refer to note 24.3 507,665

Profit on sale of property, plant and equipment 24,310) -

Depreciation of property, plant and equipment 2,942,959 1,809,580

Deferred income (3,946,372) (2,476,383)

Interest income (524,281) (555,749)

Operating cash flow before movements in working capital 1,028,200 (2,028,512)

(Increase)/ Decrease in inventories (530,028) (147,074)

(Increase)/ Decrease in receivables (119,166) 73,318

(Increase)/ Decrease in investments (45,698) -

Increase / (Decrease) in payables 571,619 (688,415)

904,927 (2,790,683)



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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 company’s financial instruments are cash flow interest rate

risk, liquidity risk and credit risk. The Board of Directors reviews and agrees policies for

managing each of these risks which are 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-in-

aid funding.

Foreign currency risk

The Corporation is not exposed to foreign currency risk.

Capital management

The primary objective of the Corporation's capital management is to ensure that it continue to

provide a safe and reliable public transport service and to 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 2008 2007

R R

Commitments for the acquisition of property, plant and equipment: 2,200,000 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 RELATED PARTY TRANSACTIONS

18.1 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 2007

R R

Grant received 33,565,000 27,000,000

Deferred income 3,946,372 2,476,383

37,511,372 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 COMPARATIVE INFORMATION

21.1 Deferred income is disclosed under capital and reserves in the balance sheet and not under

non-current liabilities as in the prior year.

21.2 Defined contribution plan payments are disclosed in note 14.1 and were not disclosed in the

prior year.

21.3 Dividends received are disclosed in note 14.1 and was not disclosed in the prior year.



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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.

21.5 Cost of services rendered were not disclosed in the prior year but is disclosed in the current

year income statement.

21.6 The deferred income and interest received disclosed in the cash flow statement for the prior

year has been included in note 15.

22 PRIOR PERIOD ERRORS

22.1 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 2007

R R

Increase / (Decrease) in opening accumulated deficit - 20,517,868

Increase / (Decrease) in other income 2,101,918 1,729,206

Increase / (Decrease) in Deferred income 2,101,918 22,247,074

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 2007

R R

Increase / (Decrease) in accumulated deficit - (16,004,658)

Increase / (Decrease) in depreciation (160,904) (492,561)

Increase / (Decrease) in NBV of Property, Plant and Equipment 160,904 16,497,219



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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 2007

R R

Increase / (Decrease) in the goods received note accrual - 507,663

Increase / (Decrease) in opening accumulated deficit - (507,663)

- -



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4.4.7 DETAILED INCOME STATEMENT

2008 2007

R R

INCOME 16,019,467 12,778,683

Casual passengers 13,598,611 11,118,717

Private Hire 1,456,826 1,030,411

Other income 964,030 629,555

Discount Received 44,625 29,254

Interest 524,281 555,749

Profit on sale of assets 24,310 -

Miscellaneous 370,814 44,552

EXPENDITURE 48,007,676 41,759,111

Operations Department 17,186,112 14,407,152

Accident costs 333,181 37,688

Diesel 8,896,979 7,435,146

Fines 600 3,720

General Expenses 2,315 -

Licenses and Permits 619,252 471,742

Lubricants and Grease 343,333 153,405

Maintenance - Operating Equipment 169,938 292,027

Private Hire Expenses 150,579 35,222

Salaries and Wages 4,890,205 4,629,193

Sleep-out Allowance 53,486 55,350

Ticket/Waybill Usage 66,508 9,139

Travelling and Subsistence 2,100 10,961

Tyre Usage 1,614,461 1,267,124

Uniforms 43,175 6,435

Traffic Department 5,127,699 4,869,033

Ancillary Vehicle Costs 259,368 179,566

Driver of the Year Award 1,350 9,500



Uniforms 300 -



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2008 2007

R R

Maintenance Department 14,340,720 13,733,398

Ancillary Vehicle 179,121 201,214

Building Maintenance 716,756 283,833

Bus Repairs 542,424 2,007,592

Consumables Used 317,179 91,395

Loose Tools 77,594 52,597

Maintenance - Workshop Equipment 98,866 100,495


Spares Used 1,815,448 1,804,278

Staff Uniforms 57,139 61,436


Units Used 1,520,759 1,188,150

Administrative Department 11,353,145 8,749,528

Auditor's Remuneration 930,032 312,983

Audit Committee 39,200 19,500

Bad debts 51,074 -

Bank Charges 151,551 152,817

Cleaning and Teas 75,549 60,508

Collection Fees 239,110 216,486

Computer Expenses 99,407 94,757

Consultation Fees 198,067 518,256

Directors' Fees 187,051 83,654

Electricity and Water 397,547 539,018

General Expenses 32,586 23,923

Insurance 1,201,050 1,107,040

Interest and Penalties - 26,166

Lease Charges 197,201 141,158

Legal Expenses 205,674 20,898

Levies 165,511 227,882

Long Service Awards 34,900 47,700

Maintenance - Office Equipment 21,143 30,288

Printing and Stationary 392,211 140,285


Security Expenses 950,832 705,499

Subscriptions 38,289 28,467

Telephone Expenses 601,378 406,160

Training 420,304 70,681




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2008

2007

R R

Loss for the year before Depreciation (31,988,209) (28,980,428)

Depreciation (2,942,959) (1,809,580)

Loss for the year before Government Grant (34,931,168) (30,790,008)

Government Grant 37,511,372 29,476,383

Profit / (Loss) for the year 2,580,204 (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 HUMAN RESOURCE MANAGEMENT

5.1 ORGANISATIONAL STRUCTURE

The structure that was approved by the Board of Directors in 2004 is still in place. The Corporation’s

structure consists of four (4) Divisions, namely Human Resources, Finance, Operations and

Engineering.

5.2 VISION & MISSION OF HUMAN RESOURCES DIVISION

5.2.1 VISION

Guided by the ethos of service & commitment to the maintenance of best bus company standards, the

division strives to render an effective and equitable service to all MTC employees. To lend support to

the Human Resources and Business Development Strategy by recruiting outstanding candidates that

will add value to the organization thereby leading to the realization of the Corporation's vision.

5.2.2 MISSION

To achieve the aforementioned vision, we embrace the following core values:

Superior Performance - driven by the quest for continuous improvement and excellence in

rendering HR services (Industrial Relations, Training & Development Personnel &

Organizational Development), as well as compliance with all relevant pieces of legislation.

Being Proactive - work towards exceeding our customers’ expectations by proactively

assessing and addressing their current and future needs.

Ethical Business Practices - we will continually uphold strong business ethics and values, and

ensure the transfer of these to our internal employees.

We will further see to the development of sound human resources policies and procedures,

serve as a custodian of these policies by ensuring compliance and adherence to them.

5.3 KEY HUMAN RESOURCES ISSUES

The Human Resources Division aimed to achieve the following objectives:

5.3.1 OBJECTIVE 1: DEVELOP AND MAINTAIN SOUND HUMAN RESOURCES

PRACTICES

5.3.1.1 Develop sound human resource practices in MTC



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Measurable

Objective

Performance

Measure

Target Outputs

2006/07

Actual Output

2006/07

Deviation from

Target

Reason for Non-

Achievement

To conform to the

annual budget.

Control

accumulated leave

by doing quarterly

reconciliations of

leave provision.

Leave accrued not

to exceed budget

provision.

Accrued leave has

been reduced by

more than 80%

20%

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 Board’s

approval.

Sufficient

consultation must be

done regarding the

IR policy.

To capacitate

MTC with the

relevant human

resources.

MTC Organogram

populated 100%.

Critical

management

vacancies to be

filled.

Three middle

management

positions filled by

female candidates

CFO appointed

Organogram

populated 96%

10% other positions

are not funded.

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

No. Of

Employees Using

Sick Leave

%Using Sick

Leave

Human Resources & Admin 734 88% 153 20.8%

Engineering 1840 81% 697 37.8%

Operations 2679 79% 343 12.8%



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5.4.1 DISABILITY LEAVE

Total Days Taken %With Medical

Certificate

No. Of Employees

On Disability

Average Days

Per Employee

Human Resources:

0

0 0 0

Engineering:

0

0 0 0

Operations:

0

0 0 0

5.5 LABOUR RELATIONS – DISCIPLINARY HEARINGS FINALISED

Sanction Imposed Nature of Misconduct Number of employees % of total

Fined 10% of excess,

Final Written Warning

Negligence 1 7.7%

Written Warning Negligent driving 2 15.4%

Written Warning Negligence 1 7.7%

Dismissed Under the influence of liquor 1 7.7%

Dismissed Theft 6 46.1%

Dismissed Dishonesty 1 7.7%

Final Written Warning Poor Performance 1 7.7%



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Continuous Improvement Workshop held at Areena

Riverside Resort, Kwelera



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Chief Executive Officer


P.O. Box 19596

TECOMA

5214

Tel. (043)745-2582 Fax (043)745-2586

[email protected]

PR 105/2008

ISBN: 978-0-621-37872-6

mailto:[email protected]

Mtc Annual Report 2007-2008

Documents

Transcript of Mtc Annual Report 2007-2008