MTC Annual Report_2011-2012_Crop Marks

Annual Report 2011/2012

we’Re shAping

youR tomoRRow,

todAy

Mayibuye TransporT CorporaTion

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AFS Annual Financial Statements

AG Auditor-General

AO Accounting Officer

APP Annual Performance Plan

ASGISA Accelerated and Shared Growth Initiative for SA

BEE Black Economic Empowerment

CCA Ciskei Corporations Act of 1990

CEO Chief Executive Officer

CFO Chief Financial Officer

COS Certificate of Fitness

CSI Corporate Social Investment

CSO Chief Strategy Officer

DoRA Division of Revenue Act

DOT Department of Transport

ECPA Eastern Cape Provincial Administration

EWP Employee Wellness Policy

EXCO Executive Council

FMS Fleet Management System

GRAP Generally Recognised Accounting Practices

GSDE Guide to Service Delivery Excellence

HDI Historically Disadvantaged Individuals

HoD Head of Department

HRD Human Resource Development

HRM Human Resource Management

IA Internal Audit

IBAC Interim Bid Advisory Committee

IFMS Integrated Financial Management Systems

IT Information Technology

IYM In-Year-Monitoring

MEC Member of the Executive Council

MTC Mayibuye Transport Corporation

MTEF Medium Term Expenditure Framework

MTSF Medium Term Strategic Framework

NTR National Treasury Regulations

OD Organisational Development

OHSA Occupational Health and Safety Act

PFMA Public Finance Management Act

PGDP Provincial Growth and Development Plan

PMDS Performance Management Development System

SABEA South African Bus Employer’s Association

SABOA South African Bus Operator’s System

SARPBAC South African Road Passenger Bargaining Council

SCM Supply Chain Management

SCOPA Standing Committee on Public Accounts

SLA Service Level Agreement

SM Senior Management

SMME Small Medium Micro Enterprise

LIST OFACCRONYMS

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AFS Annual Financial Statements

AG Auditor-General

AO Accounting Officer

APP Annual Performance Plan

ASGISA Accelerated and Shared Growth Initiative for SA

BEE Black Economic Empowerment

CCA Ciskei Corporations Act of 1990

CEO Chief Executive Officer

CFO Chief Financial Officer

COS Certificate of Fitness

CSI Corporate Social Investment

CSO Chief Strategy Officer

DoRA Division of Revenue Act

DOT Department of Transport

ECPA Eastern Cape Provincial Administration

EWP Employee Wellness Policy

EXCO Executive Council

FMS Fleet Management System

GRAP Generally Recognised Accounting Practices

GSDE Guide to Service Delivery Excellence

HDI Historically Disadvantaged Individuals

HoD Head of Department

HRD Human Resource Development

HRM Human Resource Management

IA Internal Audit

IBAC Interim Bid Advisory Committee

IFMS Integrated Financial Management Systems

IT Information Technology

IYM In-Year-Monitoring

MEC Member of the Executive Council

MTC Mayibuye Transport Corporation

MTEF Medium Term Expenditure Framework

MTSF Medium Term Strategic Framework

NTR National Treasury Regulations

OD Organisational Development

OHSA Occupational Health and Safety Act

PFMA Public Finance Management Act

PGDP Provincial Growth and Development Plan

PMDS Performance Management Development System

SABEA South African Bus Employer’s Association

SABOA South African Bus Operator’s System

SARPBAC South African Road Passenger Bargaining Council

SCM Supply Chain Management

SCOPA Standing Committee on Public Accounts

SLA Service Level Agreement

SM Senior Management

SMME Small Medium Micro Enterprise

07 VISION AND MISSION

11 MESSAGE FROM THE CHAIRPERSON

15 OVERVIEW BY THE CEO

23 PROGRAMME PERFORMANCE

28 AUDIT COMMITTEE REPORT

31 FINANCE REPORT

37 REPORT OF THE AUDITOR GENERAL

43 ANNUAL FINANCIAL STATEMENTS

66 HR MANAGEMENT REPORT

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annuaL repOrT2011/2012

From left to rightFront Row: Percival Lusapo Camagu Maseti (Chairperson); Jonga Sydney Nyengane (Deputy-Chairperson);

Portia Loyilane (Board Member); Luthando Richmond Mbinda (CEO of MTC (Ex-Officio Board Member) Back Row: Ruth Luzuka (Board member); Angela Margaret Church (Board member);

André Joubert De Vries (Department of Transport Representative); Pumelele Pazima Balfour (Board Member); Zandile Pakati (Organised Labour Representative)

In terms of the requirements of section 55(1) of the Public Finance Management Act, Act 1 of 1999, the Accounting Authority herewith presents the Annual Report of the Mayibuye Transport Corporation (MTC), for the period 1 April 2011 to 31 March 2012, to the Executive Authority, Department of Transport of the Eastern Cape. We declare that the Annual Report fairly presents the state of affairs of MTC, it’s business, financial results, performance against predetermined objectives and financial position as at the end of the financial period under review.

pResentAtion of the

mAyibuye tRAnspoRt coRpoRAtion

board of directors

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dedication

to our clients in

everything we imagine

parT 1VISION MISSION VALUES

dedicAtion to ouR

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VISIOn andM I S S I O N

Success by design!

vision of mtcmtc’s vision is to be a leading quality public transport ser-vice provider.

mission of mtcthe mission of mtc, together with strategic partners, will enable poor communities to access resources and continu-ously improve their quality of life.mtc endeavours to maintain the highest possible stan-dards in the provision of an effective and efficient trans-port service to communities in the province on selected routes by:

we’Re tRAined

in mAny diffeRent

modeRn technologies

providing an enabling environment conducive to the provision of an affordable, convenient and safe mode of public transport

Keeping abreast of trends and devel-opments in the sector to meet chang-ing customer and stakeholder needs; and

creating of strategies that lend sup-port to socio-economic growth in the eastern cape in all mtc’s areas of operation.

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mtc’s legislative and Regulatory framework

government has approved a “protocol on corporate governance in the public sector”, which is to be read in conjunction with the King Report. the protocol is applicable to all public entities listed in schedule 2, 3b and d of the pfmA. it is intend-ed to provide guidance on how to achieve the socio-politico-economic objectives of government; good governance in the public sector; freedom to manage and effective accountability of both financial and non-financial matters.mtc regards good corporate gov-ernance as integral to good perfor-mance. it is critical for mtc to fulfil its mandate in a manner that is consistent with best practices and with regard to accountability, trans-parency, fairness and responsibility. for this reason, mtc subscribes to the principles of good governance on an on-going basis as laid down by the King Report and the protocol on good governance in the public sector. mtc undertakes to maintain effective governance and the highest standard of ethics business opera-tions.mtc executes its mandate in accor-dance with its constitutive docu-ments and any applicable legislation as reflected in the corporate plan. its board exercises its fiduciary duties in pursuance of strategic objectives as set out in the corporate plan. further, the board ensures that tar-gets are met, monitored and report-ed on a regular basis.

policy themes that inform transport

national land transport policy “subsidised marginalised public transport users, especially those with poor access to socio-economic activities.”

national land transport strategic framework“integration of land transport func-tions with land use and economic planning and development. to ensure that transport demand is managed and investments are used effectively.”the framework provides for rural transport and as such mtc is com-mitted to ensuring adequate access of transport to the rural areas within its regions of operations.

final draft national scholar transport policy, 2009the policy provides a single frame-work and an enabling environ-ment for government and other stakeholders to address scholar transport challenges. it also outlines the implementation framework for scholar transport which will assist government and relevant stakehold-ers to effectively render an improved scholar transport service throughout the country.

moving south Africa: A transport strategy for 2020 (1999)“by 2020, transport in south Africa will meet the needs of freight and passenger customers for accessible,

affordable, safe, frequent, high qual-ity, reliable, efficient and seamless transport operations and infrastruc-ture. it will do so in a constantly upgrading, innovative, flexible and economically and environmentally sustainable manner. in doing so, transport will support and enable government strategies, particularly those for growth, development, redistribution, employment creation and social integration, both in south Africa and in the southern Africa region.”

the moving south Africa project (msA) provides a transport strat-egy for the country over the next 20 years. it informs of the strategic action that extends the short to medium-term policy formulation documented in the transport white paper into a long-term strategic formulation embodying the sets of trade-offs and choices necessary to realise the vision as set out in the white paper which is “provide safe, reliable, effective, efficient and fully integrated transport operations and infrastructure which will best meet the needs of freight and passenger customers at improving levels of service and cost in a fashion which supports government strategies for economic and social development whilst being environmentally and economically sustainable.”

provincial growth and development plan (pgdp), 2005the aims of the pgdp are to:• develop a framework for the

future direction of policy and strategy development;

core valuesmtc is guided by and committed to the following values: Integrity: work ethically, honestly and transparently.Consultation: create an enabling environment for community and stakeholder participation.Innovative: strive towards radical and revolutionary changes in thinking, services, processes or organisation.Accountability: Act honorably and take ownership of our actions and the outcomes thereof.

these values are the cornerstone of mtc’s organisational culture and its way of doing the business of public transport.

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• outline strategic interventions, goals and targets to direct devel-opment and planning initiatives; and

• ensure a common vision and co-ordinated action by government and partners in implementation.

the pgdp provides strategic direc-tion based on key provincial priori-ties that address the social needs of the people and the realisation of the economic growth potential of the province.

Rural transport strategy for south Africa 2007the rural transport strategy is seen as a stimulant to social develop-ment and economic growth of rural areas, which would in turn grow the economic resource of district municipalities. the strategy calls for the Rural transport service; this includes services provided by users themselves (e.g. head loading, private vehicular transport) and by operators of all modes of motorised and non-motorised transport, and the promotion of non-motorised and intermediate modes of transport.

the medium term strategic framework, A framework to guide government’s programme in the electorate mandate period (2009-2014)the mtsf is a statement of intent identifying the development chal-lenges facing south Africa and outlin-ing the medium-term strategy for improvements in the conditions of life of south Africans and for our enhanced contribution to the cause of building a better world.Road infrastructure strategic framework for south Africa (RisfsA), 2005 by the national department of transport. “good roads play a significant role

in economic development. classic economic theory suggests that pro-ductive infrastructure, including road and transport assets, is one of sev-eral key preconditions for national economic growth. the theory holds that, by investing in assets like bridges, roads ports, or even tele-phone lines, a nation can structure development by reducing transport and communications costs, thereby facilitating further trade and creation of wealth. indeed, transport is gener-ally seen as an engine of growth and a guarantor of national integration, both internally and with the external global economy”

white paper on national transport (1996) the policy document provides a basis for transport to play a more strategic role in social development and economic growth. it outlines six broad goals which seek to achieve the vision for transport in south Africa: “provide safe, reliable, effective, effi-cient, and fully integrated transport operations and infrastructure which will best meet the needs of freight and passenger customers at proving levels of service and cost in a fashion which supports government strate-gies for economic and social devel-opment whilst being environmentally and economically sustainable.”

constitutional mandatethe bill of Rights in the constitution of the Republic of south Africa (Act no 108 of 1995) is the cornerstone of democracy and enshrines the rights of all people in our country and affirms the democratic values of human dignity, equality and free-dom.the mayibuye transport corporation, through its provision of public trans-

portation, in addition to advancing the values of human dignity, equality and freedom, ensures the realisation of economic and social advancement of the citizens of the eastern cape whilst contributing to the overall eco-nomic growth of the province.

legislative mandates

the corporation derives its existence and operations from the following legislative mandates:• constitution of the Republic of

south Africa Act, 1996 (no. 108 of 1996)

• ciskei corporations Act (1990).• white paper on national

transport policy (1996)• national Road traffic Act (Act no.

93 of 1996)• urban transport Act (no 78 of

1977)• national land transport

transition Act (no. 22 of 2000)• eastern cape Roads Act (no. 3

of 2003)• passenger transportation

(interim provisions) Act (no 11 of 1999)

• Road transportation Act (no. 74 of 1977)

• public finance management Act (no 1 of 1999 and 29 of 1999)

• public service Act (no.103 of 1994)

• skills development Act (no. 97 of 1998)

• skills development levy Act (no. 9 of 1999)

• preferential procurement policy framework Act (no. 5 of 2000)

• employment equity Act (no. 55 of 1998)

• occupational health and safety Act

• Regulations emanating from the above legislation

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parT 2MESSAGE FROM THE CHAIRPERSON

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“If you wish success in life, make perseverance your bosom friend, ex-perience your wise coun-selor, caution your elder brother, and hope your guardian genius” J Addison

meSSage FrOmTHE CHAIRPERSONTransport is not only an essential but also one of the single most visible ele-

ments of contemporary society.

to this end mayibuye transport corporation has continued to be vis-ible and to showcase its resilience under the very challenging condi-tions.the corporation has continued to reap the benefits of its services and it is worthy to note that the corporation performance admirably under tough economic conditions. As we endeavour to ensure that we continue in our endeavour to serve the rural communities of our province, proper financial manage-ment, compliance and good gover-nance shall remain critical success factors to the corporation.i wish to echo the sentiments expressed by the board in congratu-lating the management team of

mayibuye transport

corporation on transportating more than two million passengers during the period under review. considering the history of the corporation, it is now no longer unrealistic to talk about a soon-to-be completed metamorphosis from the corporation of the past to the corporation of today and the future.our strategic partners, namely, the provincial department of transport and the portfolio committee on transport, have been absolutely crit-ical to our operational success. the transport experience of our passen-gers and commuters has improved over the years primarily because our partners have come along with us on the journey of continuously intensifying our efforts to improve customer service.it has been very rewarding and enriching experience for me to serve as chairperson of the mayibuye transport corporation board and this particularly so through the continued interaction with our management team, so competently led by luthando mbinda, our chief

executive officer.to my colleagues on the board, a heartfelt appreciation for your commitment in executing the oversight role you play and the considered guidance provided to the management team. i wish to take this opportunity to recognise and thank you for the diligent man-ner in which you discharged your responsibilities.finally, i would like to thank the honourable mec marawu for her support. we look forward to carry on working with her for the con-tinued benefit of the people of our province that we serve.

Percy L. C. MasetiChairperson of the Board of DirectorsMayibuye Transport Corporation

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Percy L C Maseti

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parT 3OVERVIEW BY THE CHIEF EXECUTIVE OFFICER

being the chAnge

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nOT wIShIng FOr IT - WORkING FOR IT!the past year presented many challenges in keeping our deserving clients moving and our buses running. like you, we had to find ways to do more with less. And we did. despite lack of sufficient grant funding, mayibuye provided close to 2.1 million people with a ride on our buses. you will find more instances of challenges overcome in this annual report. but more importantly, you will see how mtc used these opportunities to improve mobility and the quality of life for eastern cape residentsAs the chief executive officer of the mayibuye transport corporation i am pleased and honoured to share the 2012 mtc Annual Report with you.As you are aware, 2011 was a challenging year for transportation funding. we faced obstacles that we never had before, and hopefully, never will again.in spite of these obstacles, mtc made good strides improving our transporta-tion fleet. the lease agreement with mAn saw the mtc fleet increase with a much needed additional 6 buses. these buses lend themselves to luxury and therefore greatly improving the quality of service experienced by hardwork-ing eastern cape residents.with the continued under funding and marginal sales revenue increase, it was an extremely challenging year for our bus system. throughout the extensive planning and implementation of cost reductions, mtc staff worked diligently to minimize the impact on our customers and to keep them engaged every step of the way.you can read more about mtc’s accomplishments, the improvements to our management systems and view financial data in this report.

it is ouR duty As men And women to

pRoceed As though the limits of ouR

Abilities do not exist.”

This year’s annual report centres on the following quote:

“Striving for success without hard work is like trying to harvest where you

haven’t planted.” -David Bly

Luthando R MbindaChief Executive Officer

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nOT wIShIng FOr IT - WORkING FOR IT!

hard work coupled with focused strategies is the essence of what we do here at mayibuye transport. our employees are driven to achieve specific goals which are measured so that mtc can attain its vision of being a leading quality public transport service provider. throughout this past year we have safely navigated the improving, but still difficult, economic times and successfully completed numerous fleet projects and efficient-ly delivered our many services and programs.whether it is through our tirelessly maintaining our ageing fleet to im-prove the number of vehicles avail-able; the advanced and defensive training being offered to our drivers in support of passenger safety; or our on-going strategic analysis and augmentation of the best practice management systems; we are driven to perform at the highest level so that

the residents of the eastern cape can see the return on their investment. our mission is to deliver transporta-tion solutions and we remain dedi-cated and focused in our efforts to achieve this goal. detailed below are the highlights as well as challenges identified by the core functions:

operationshighlights within the operations division for the period under review include:• installation of the Q-merit ticket-

ing system that improved rev-enue collection tremendously, we have increased our route revenue by R3m when comparing it to prior year’s performance.

• mr Qongqo, as one of our bus drivers, participated in the best of the best driver of the year competition held in Johannesburg in february 2012 and won the

second place; this has qualified him to be the representative of south Africa in the international competition that will be held in August 2012. he will be repre-senting the country, south Africa in this competition.

challenges experienced by the opera-tions division relate mainly to high bus driver turnover. mtc has lost very experienced drivers due to ill-health, retirements and ill-discipline. this saw us employing inexperienced drivers whose driving behaviour escalates the number of breakdowns and this has negative impact on the corporation such as increased mainte-nance costs, buses of the roads, poor service delivery etc.

engineering• the engineering department had

numerous challenges to deal

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OVerVIew OF The SerVIceDELIVERY ENVIRONTMENT

year Budget Actual Variance

2010 21,171,560 18,513,578 (2,657,982)

2011 18,650,942 18,633,508 (17,434)

2012 20,447,636 23,835,306 3,387,670

Route and private hire Revenue collection

which due to the fleet recapi-talisation plan which is yet to be approved. this was coupled with fleet recapitalisation and facili-ties and infrastructural backlog which remain key challenges facing the corporation. these in turn affects service reliability in mtc operations. these challeng-es has forced the corporation to implement solutions at the expense of others such as:

• conversion of Artisans’ restroom in Zwelitsha into a wellness cen-tre (h.R. objective)

• conversion of ablution facility into an office.

• conversion of tyre store in Zwelitsha into a drivers’ rest-room.

• efforts to have two automotive electricians qualify as artisans have not yielded results and the program will be pursued in the coming year through adequate preparation for a trade test.

• the aging compressor in Zwelitsha broke down resulting in downtime in excess of 1,820 hours

• Alice operations continue to be undertaken under uncertainty due to persisting community complaints in the neighbour-

hood. this arises out of the absence of storm water drain that is supposed to collect water away from the wash bay. the board is engaging municipality with the aim of securing an alter-native site out

highlights include: • Revamping of Queenstown driv-

ers’ restroom• Acquisition and installation of a

modern technology brake tester for Zwelitsha which assists a lot during the preparation of buses for roadworthy tests.

year 2012 Actual 2011 Actual 2010 Actual

profit / (loss) from operations (440,451) 164,385 (5,009,206)

personnel 41,314,771 35,165,181 31,021,556

Audit fees (including internal audit fees for current year) 2,693,371 1,763,700 1,793,083

operating expenses 34,859,052 25,861,242 24,871,027

depreciation 11,614,771 7,207,526 11,492,104

expenditure

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capital expenditurethe corporation has received a capital grant from the department of transport which has been spent as follows:

item Budget Expenditure Variance

new buses & Refurbishment 5,250,000 4 602 392 647,608

Ancillary vehicles 1,820,000 1,291,159 528,841

operating equipment 190,000 426,501 (236,501)

workshop equipment 600,000 383,715 216,285

office furniture & equipment, it infrastructure 1,110,000 830,467 279,533

depot upgrading 1,030,000 278,575 751,425

spare parts & units - 6,548,033 (6,548,033)

Total 10,000,000 14,360,842 (4,360,842)

capital expenditure

item Budget Expenditure Variance

new buses & Refurbishment 5,800,000 8,115,333 (2,315,333)

Ancillary vehicles 300,000 351,678 (51,678)

operating equipment 2,770,000 3,295,872 (525,872)

workshop equipment 400,000 13,660 386,340

office furniture & equipment, it infrastructure 150,000 533,284 (383,284)

depot upgrading 440,000 175,512 264,488

spare parts & units - 4,428,499 (4,428,499)

Total 9,860,000 16,913,834 (7,053,838)

capital expenditure

depreciation rates for assets

Ancillary vehiclesbuses – bodybuses – chassis, engine, etcoffice equipmentoffice furnitureoperating equipmentworkshop equipmentbuildingsspare parts & units

25%12.5%8.33%20%10%20%25%2%50%

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areaS OFOPERATION

Zwelitsha depot

the Zwelitsha depot covers the areas of King william’s town and Keiskammahoek. A total of 758 514 passengers were conveyed with 904 668 kilometers travelled.

Alice depot

the Alice depot covers the areas of Alice and middledrift. A total of 258 778 passengers were conveyed with 217 764 kilometers travelled.

Reeston depot

the Reeston depot covers the areas of east london. A total of 489 681passengers were conveyed with 502 173 kilometers travelled.

Queenstown depot

the Queenstown depot covers the areas of ntabethemba, whittlesea and swartwater. A total of 591 207 passengers were conveyed with 603 392 kilometres travelled.

we tRAnspoRt

the heARt of youR

communities

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depot 2012 2011 2010 Actual

Zwelitsha 9,743,285 7,196,358 (5,009,206)

Reeston 4,956,850 4,161,776 31,021,556

Queenstown 7,032,149 5,713,287 1,793,083

Alice 2,103,022 1,562,087 24,871,027

totAl 23,835,306 18,633,508 11,492,104

total revenue generated by each depot

Revenuetotal own-revenue generation for the financial period under review amounted to R23, 835,306.

the own-revenue has been achieved by an average number of 50 operating buses (2011: 51) with a total number of 2,227,997 kilometers travelled. private hire kilometers amounted to 215, 387 (2011: 137,765) while route kilometers stood at 2, 012, 610 (2011: 2,203,745) for the financial year.

the combined revenue has been generated by each depot as follows:

depot

2012 2011

Route RevenuePrivate Hire

RevenueRoute Revenue

Private Hire Revenue

Zwelitsha 7,697,496 2,045,789 6,478,479 717,880

Reeston 3,632,929 1,323,921 3,271,328 890,448

Queenstown 6,451,039 581,111 5,173,223 540,064

Alice 1,855,562 247,460 1,378,806 183,280

totAl 19,637,025 4,198,281 16,301,836 2,331,672

categorized revenue generated by each depot

depot 2012 2011

Zwelitsha 19 18

Reeston 12 12

Queenstown 13 15

Alice 6 6

TOTAL OPERATING BUSES 50 51

bus allocation per depot for the financial year

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2,098, 180 passengers

operating grant-in-Aid

the corporation receives a grant-in-aid from the provincial department of transport. the grant is to subsidize bus fares and partly fund the corporation’s operating activities. Allocation for the financial year under review was as fol-lows:-

please know that we could not have achieved these results without your support. we look forward to continuing to do our part to keep the eastern cape moving towards economic opportunity for all.sincerely,

________________________________Luthando R MbindaChief Executive Officer

detAils 2012 2011 2010 2009 2008

Revenue 23,835,306 18,629,433 18,513,578 19,426,462 15,055,438

grant-in-Aid 51,429,000 41,809,000 43,000,000 31,895,000 33,565,000

capital grant-in-Aid 10,000,000 9,860,000 8,500,000 5,000,000 7,000,000

Route passengers 2,098, 180 1,790,793 1,808,717 2,053,531 1,751,785

Route Kilometres 2,012,610 2,203,745 2,231,356 2,432,486 2,306,722

buses at year end 63 63 65 62 58

Revenue cents per Kilometre (cpk) 1184 845 830 799 653

total revenue generated by each depot

A gRAnd totAl of 2,098, 180 pAssengeRs

weRe cARRied with

2, 012, 610 Route KilometeRs tRAvelled duRing the yeAR undeR Review.

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dedicAtion to ouR

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parT 4PROGRAMME PERFORMANCE

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OVeraLLPERFORMANCE

Strategic GoalsMayibuye Transport Corporation has streamlined its performance

management objectives and increased its strategic focus by reducing the number of strategic goals to three main outcomes namely:

ensure an efficient, effective and service oriented organisation

strategic objective 1.1: provide strategic direction through effective leadership and good governance. strategic objective 1.2: develop and implement stakeholder relationship management strategy. strategic objective 1.3: implementation of organisation wide performance management system. strategic objective 1.4: design and implement an effective business performance improvement strategy. strategic obecjtive 1.5: establish and implement an organisation wide business excellence model. strategic objective 1.6: maintain reliable and sustainable financial management practices. strategic objecitve 1.7: provide a reliable and integrated ict platform. strategic objective 1.8: establish a world class and compliant procurement management system. strategic objective 1.9: implement an individual performance management and development system. strategic objective 1.10: develop and implement an integrated human Resource plan. strategic obkective 1.11: implement an effective and efficient inspectorate and safe operating environment.

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Render safe, affordable and reliable transportation service.

strategic objective 2.1: enhance vehicle availability. strategic objective 2.2: implement fleet maintenance and refurbishment program. strategic objective 2.3: enhance passenger safety. strategic objective 2.4: ensure adequate and conducive infrastructure for productive operations. strategic obecjtive 1.5: financial sustainability

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institutionalise bus operations best practices

strategic objective 3.1: improve driver performance. strategic objective 3.2: increase ridership. strategic objective 3.3: maximise Revenue.

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pRogRAmme 1: AdministRAtion

stRAtegic goAl: to ensuRe An efficient, effective And seRvice oRiented oRgAnisAtion.

strategic objec-tive

measur-able objective

service delivery indicators

target Actual Challenges/Reasons for non-performance

Plans to address challenges/Non-

performance

proper resource management and compliance with legislative framework.

compli-ance plan and charter in place

% compli-ance plan and char-ter devel-oped

100.00 100.00 not applicable none required

proper manage-ment systems and properly coordinated planning

board pro-gramme and Risk plan de-veloped

board pro-gramme and Risk plan devel-oped


proper resource management which will include human, financial as well as compliance with relevant legislation

Resource charter developed

% Resource charter developed

100.00 0.00not achieved due to

resource and capacity con-straint. the compliance

manager Resigned.

A compliance manager will be appointed in the 2012/2013 finan-

cial year.

to align mtc’s corporate image and identity with marketing plan

marketing plan de-veloped

marketing plan devel-oped


Financial Sus-tainability

4% Own Revenue Increased

% Own Revenue Increased

4.00 28.30

The Corporation has in-creased its own-revenue

base significantly through additional 6 buses; Fare

increase; Stronger collec-tion controls by imple-

menting Q-Merit system.

None required

100% Ef-ficiencies gained on operation-al expen-diture

% Efficien-cies gained on expen-diture of operation-al budget

100.00 100.00

The Corporation did not achieve a 100% efficiency

gain in operational ex-penditure as the Budget was overspent by R815 503; Poor budget moni-toring controls were in place; The budget was

not decentralised

The Budget for the new financial year is linked to the related AOP

and project based. Heads of depart-ments are now responsible for

budget allocations (decentralised).

To align MTC’s corporate im-age and identity with the Mar-keting Plan

Market-ing Plan Developed

Marketing Plan Devel-oped

100.00 100.00 Not applicable None required

Proper resource management of customer needs

Customer Satisfac-tion Index Calculated

Customer Satisfac-tion Index Calculated

100.00 0.00Target not achieved.

This could not be achieved due to capacity and resource constraints

This target has been incorporated

into the AOP for the 2012/2013 fi-

nancial year and a new project man-

ager assigned.

performance against 2011/2012 predetermined objectives

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performance

Proper imple-mentation of Corporate So-cial Investment Plan.

Corporate Social Invest-ment Plan Imple-mented

Corporate Social Investment Plan Imple-mented


This could not be achieved due to capacity

constraints




ager assigned.

Proper resource management of the customer needs

CSI of 80% % CSI 100.00 70.00Target not achieved.





ager assigned.

Proper resource management of the customer needs

Customer Care Centre Es-tablished

% Cus-tomer Care Centre Established



Deviation Ap-proved by the

Board

The achieve-ment of a favourable Em-ployee Satisfac-tion Index

Employee Satisfac-tion Index above 75%

% Employ-ee Satisfac-tion Index above 75 %


Proper resource management and compliance with legislative framework.

Perfor-mance Manage-ment System Devel-oped and Imple-mented

% Perfor-mance Manage-ment System Imple-mented

100.00 60.00Incentives could not be

paid due to financial constrains

Provision in the 2012/13 financial

year

Skills Audit Con-ducted

Number of Skills Audits Conducted

1.00 1.00 Not Applicable None required

HRD Strategy Developed

Approved HRD Strat-egy

1.00 1.00HRD Strategy approved in

the 4th QuarterNone required

Succes-sion Plan Developed

% Succes-sion Plan Developed

100.00 70.00A policy had to be devel-oped before a Plan could

be drafted

Plan to be devel-oped in 2012/2013

pRogRAmme 2: engineeRing

stRAtegic goAl: RendeR A sAfe, AffoRdAble And ReliAble seRvice.






performance

implement fleet management maintenance and refurbish-ment pro-gramme

provide operations with 54 buses

% of 54 buses sup-plied

100.00 93.00fleet age, scarcity of major

components, changes in cof intervals and financial

constraints

scrapping of five buses to build spare capacity on major units,

Re-submission of the recapitalisation

plan

bus allocation per depot for the financial year

27






performance

fleet mainte-nance and refurbish-ment pro-gramme 100% imple-mented

% fleet mainte-nance pro-gramme implement-ed

100.00 83.00

the government legisla-tive requirement to obtain

fitness certificates has been increased from an-

nually to bi-annually there-fore constraining hR and

financial Resources

the new legislative requirement will be incorporated

into the 2012/2013 refurbishment

programme

fleet mainte-nance and refurbish-ment pro-gramme 100% imple-mented

% Refur-bishment pro-gramme implement-ed


6 buses and 6 pool vehicles acquired

number of buses acquired


Number of pool vehicles acquired


pRogRAmme 3: opeRAtions

stRAtegic goAl: institutionAlise opeRAtions best pRActice.






performance

to ensure an increase in op-erating capacity, quality, reliabil-ity and safety

100% operating capacity, safety and reliability improved

% improve-ment in operating capacity, safety and reliability

100.00 93.00we operated with less

buses due major break-downs

Re-submitted Re-capitalisation plan to dot and provin-

cial treasury

increase in num-ber of people accessing bus services

10% increase in number of people accessing services

% increase in number of people accessing services


10% increase in own Revenue

% of 10% revenue increase achieved

100.00 100.00

the corporation has increased its own-revenue base significantly through additional 6 buses; fare in-crease; stronger collection controls by implementing

Q-merit system.

none required

performance against 2011/2012 predetermined objectives

28

dedicAtion

to ouR clients in

eveRything we imAgine

parT 5REPORT OFOF THE AUDITCOMMITTEE

29

Audit committee Responsibilitythe Audit committee report that it has complied with its responsibilities arising from section 38(1) (a) of the pfmA and treasury Regulation 3.1.13. the Audit committee also discharged its responsibilities as contained therein. the Audit charter, as adopted.

effectiveness of internal controlInternal Auditthe Audit committee notes that during the year under re-view, full amount of internal audit work was performed in the department. internal audit plans for 2011/2012 were carried out by the outsourced internal audit section.

Internal Audit Findingsduring the financial year the Audit committee met with management periodically to track their progress in resolv-ing outstanding internal control issues previously raised by the Auditor-general and internal Audit. internal Audit has reported that management has not taken adequate corrective action to address weaknesses previously re-ported with reference to significant matters pertaining to supply chain management, management accounting and asset management as identified in the 2010/11 audit.

Risk managementthe corporation has not yet fully implemented a system of risk management. the Audit committee notes with that during the year under review the corporation had ap-pointed a chief Risk officer to highlight and bring changes to the risk environment to the attention of management. the committee recommends that more focus be given to strengthening the risk management function. As much as the internal control systems of the corporation are based on an assessment of key risks within the entity. the moni-toring and management of those risks cannot therefore

be regarded as effective.

evaluation of financial statementsthe Audit committee has:• Reviewed and discussed with the Auditor-general and

the Accounting officer the audited annual financial statements to be included in the annual report;

• Reviewed the Auditor-general’s management letters and the responses thereto;

• Reviewed significant adjustments resulting from the audit.

• Reviewed the Auditor-general’s report.the Audit committee concurs and accepts the Auditor-general’s conclusion on the annual financial statements and is of the opinion that the audited annual financial statements be accepted and read together with the report of the Auditor-general.

in year management Reportingthe Audit committee has reviewed the in year manage-ment Reports and discussed these with entity officials. sufficient progress is being made in the development and quality of these reports.

Appreciationthe Audit committee wishes to express its appreciation to management and staff of the mayibuye transport, the Auditor-general and internal audit for the information they have provided for us to compile this report. J MDENICHAIRPERSON: AUDIT COMMITTEEMAYIBUYE TRANSPORT CORPORATION31 AUGUST 2012

we are pleased to present our report for the 2011/2012 financial year.

the Audit committee also reports that it has adopted formal terms of reference as its Audit committee charter regulated its affairs in compliance with this charter and has discharged all its responsibilities as contained therein. the Audit committee members attended meetings during the financial year under review, in terms of their adopted Audit charter, as indicated below:

Name Position Meetings Attended Date of Appointment

Jack mdeni Audit committee chair 5 Acting chair :17 July 2009 ; chair: 25 may 2010

Ruth luzuka Audit committee member 5 24 August 2009

thoneka Jama Audit committee member 2 25 may 2010

Audit committee members and Attendance

30

31

parT 6FINANCE REPORT

being the chAnge

we wish to

see in the woRld

32

the accounting authority is required by the public finance management Act (Act 1 of 1999), to maintain adequate accounting records and is responsible for the content and integrity of the annual financial statements and related financial information included in this report. it is the responsibility of the accounting authority to ensure that the annual financial statements fairly present the state of affairs of the entity as at the end of the financial year and the results of its operations and cash flows for the period then ended. the external auditors are engaged to express an independent opinion on the annual financial statements and were given unrestricted access to all financial records and related data.the annual financial statements have been prepared in ac-cordance with standards of generally Acceptable Account-ing practice (gAAp) including any interpretations, guidelines and directives issued by the Accounting standards board.the annual financial statements are based upon appropri-ate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates. the accounting authority acknowledges that they are ultimately responsible for the system of internal financial control established by the entity and place considerable importance on maintaining a strong control environment. to enable the accounting authority to meet these respon-sibilities, the board of directors sets standards for internal control aimed at reducing the risk of error or deficit in a cost effective manner. the standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. these controls are monitored throughout the entity and all employees are required to maintain the highest ethical standards in ensuring the entity’s business is conducted in a manner that in all reasonable circumstances is above reproach. the focus of risk management in the entity is on identifying, assessing, managing and monitoring all known forms of risk across the entity. while operating risk cannot

be fully eliminated, the entity endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. the accounting authority are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assur-ance that the financial records may be relied on for the preparation of the annual financial statements. however, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or deficit.the accounting authority have reviewed the entity’s cash flow forecast for the 12 months to 31 march 2013 and, in the light of this review and the current financial position, they are satisfied that the entity has or has access to ad-equate resources to continue in operational existence for the foreseeable future. Although the accounting authority is primarily responsible for the financial affairs of the entity, they are supported by the entity’s external auditors. the external auditors are re-sponsible for independently reviewing and reporting on the entity’s annual financial statements. the annual financial statements have been examined by the entity’s external auditors and their report is presented on page ## to # #the Annual financial statements, which have been pre-pared on the going concern basis, were approved by the Accounting Authority and were signed on its behalf by:

STaTemenT OF reSpOnSIbILITy by The accOunTIng auThOrITy FOR THE 12 MONTHS ENDED 31 MARCH 2012

___________________________Luthando R MbindaChief Executive OfficerTuesday, 31 July 2012

________________________Percy L MasetiChairpersonTuesday, 31 July 2012

33

Review of Activitiesmayibuye transport corporation (mtc) was established in accordance with the ciskei corporations Act of 1990, to render an effective and efficient public transport service primarily for workers to industries and other places of em-ployment in the adjacent south African urban areas. the corporation operates under the jurisdiction of the eastern cape department of transport as a parastatal bus passenger transport service provider. the corporation is funded through a grant-in-aid from the provincial depart-ment of transport. in synchronisation with its developmental mandate, mtc maintains the highest possible standards in the provision of an effective and efficient transport service to communi-ties in the province on selected routes by:• Providing an enabling environment conducive to the pro-vision of an affordable, convenient and safe mode of public transport. • Keeping abreast of trends and developments in the sec-tor to meet changing customer and stakeholder needs; and• Creating of strategies that lend support to socio-econom-ic growth in the eastern cape in all mtc’s areas of opera-tion.the successful achievement of these key outcomes will result in economic and social opportunities for citizens of the eastern cape.

going concernthe annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. this basis presumes that funds will be available from the department of transport (dot) to predominantly 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.Accounting Authoritythe current board is appointed in terms of the ciskei cor-porations Act of 1990. the members of the board of direc-tors of the entity during the 12 months are as follows: percival lusapo camagu maseti (board chairperson, Ap-pointed 28 february 2007)Jonga sydney nyengane (board deputy chairperson, Ap-pointed 28 february 2007)pumelele pazima balfour board member (member, Ap-pinted 28 february 2007)André Joubert de vries (member, department of trans-port Representative, Appointed 28 february 2007)

luthando Richmond mbinda, (ceo of mtc , ex-officio board member, Appointed 1 september 2006)Angela margaret church (board member, Appointed 23 June 2008)ndileka eumera portia loyilane (board member, Appoint-ed, 23 June 2008)Ruth luzuka (board member, Appointed 24 August 2009)fezeka sister loliwe (board member, Appointed 23 August 2010 )Zandile pakati (organised labour Representative, 20 April 2011)

secretarythe secretary of the entity is mrs charon cronjé.

corporate governancethe accounting authority is committed to business integ-rity, transparency and professionalism in all its activities. As part of this commitment, the accounting authority sup-ports the highest standards of corporate governance and the on-going development of best practice.the entity confirms and acknowledges its responsibility to total compliance with the code of corporate practices and conduct (“the code”) laid out in the King Report on corporate governance for south Africa. the accounting authority discusses the responsibilities of management in this respect, at board meetings and monitor the entity’s compliance with the code on a three monthly basis.

Auditorsthe office of the Auditor general will continue in office for the next financial period.

corporate governance statementthe board is the designated Accounting Authority of mtc and governs the entity in accordance with the provisions of the ciskei corporations Act of 1990, the public finance management Act, 1 of 1999 (pfmA) and good corporate governance principles. the board also strives to comply with the principles and standards of integrity and account-ability as contained in the recommendations of the King iii report on corporate governance. the board is composed of nine non-executive members with the chief executive officer serving in an ex officio capacity with no voting powers. the board meets at least quarterly and monitors the performance of the executive management by ensuring that all material matters are

for the 12 months ended 31 march 2012

Report of the Accounting Authority

34

subject to board approval and that the mandate of mtc is carried out in an efficient and effective manner. the execu-tive management attend board meetings by invitation. the roles of the chairperson and chief executive officer do not vest in the same person and the chairperson is a non-executive member of the board. the chairperson provides leadership and guidance to the board and encourage prop-er deliberation of all matters requiring the board’s atten-tion, and obtain optimum input from the their members. All committees of the board are chaired by non-executive members of the board with the exception of the Audit committee which is chaired by an independent person.

executive managementthe members of the executive management are appointed by the board of directors. executive management are involved in the operational activities of the organisation and are responsible for ensuring that decisions, strategies and objectives of the reporting entity, the department of transport (dot), and the board are implemented. execu-tive management retains full financial and operational control over the organisation under the leadership of the chief executive officer.

human Resources & Remuneration committeethis committee was established by the board with two non-executive directors namely mr J s nyengane as chair-person and ms A m church as member serving on this committee together with relevant members of executive management. the committee operates under terms of reference approved by the board. this committee attends to matters concerning the human Resource policies and practices of mtc, performance management and remu-neration. the committee deliberates on these issues and makes appropriate recommendations to the board for approval.

finance and investment committeethis committee was established by the board with three non-executive directors namely ms R luzuka as chairper-son and ms f e s loyilane and mr A de vries as members. the committee operates under terms of reference ap-proved by the board. in addition to providing an important deliberative forum for the board and executive manage-ment, it advises the board on all material and significant finance and ict matters presented by the executive man-agement, either as directed by the board or on the execu-tive management’s initiative.

Audit committee in compliance with section 27 of the national treasury Regulations, the board has established an Audit commit-tee comprising of an independent chairperson namely mr J mdeni, with ms R luzuka as member. the Audit commit-tee operates under a charter which has been approved by the board. the primary responsibility of the Audit commit-tee is to report and make recommendations to the board on the effectiveness of corporate governance internal controls and risk management within mtc, oversee the internal Audit function and to comment on and evaluate the annual financial statements of the corporation. the chairperson of the Audit committee attends board meetings by invitation.

operations and engineering commit-teethis committee, established by the board, comprises two non-executive directors namely mr pp balfour, as chairper-son and ms nep loyilane as member, as well as relevant members of the executive management. this committee was established to strengthen the operations manage-ment and engineering support capacity of mtc by focus-ing on initiatives to promote customer service and fleet management excellence in the pursuit of providing access to economic opportunity for citizens of the eastern cape. the key focus areas of the committee for the year under review were the development of the recapitalisation plan, fleet management strategies, identifying and implementing operations best practice and maximising the utilization and returns from mtc fleet.

director’s Affairs committeethis committee was established by the board with three non-executive directors namely mr Js nyengane as chairperson, mr pp balfour and ms R luzuka as members serving together with the chief executive officer and chief financial officer of the entity. this committee is respon-sible for critical management items which require review and input prior to being submitted to the board of direc-tors for approval. meetings held and attended for the period under review A meeting and attendance register for board members and members of the Audit committee is kept and maintained by the board secretary with a summary of the meetings held and attendance by the said members and the particu-lar meeting attended set out as follows:

35

36

J MDENICHAIRPERSON: AUDIT COMMITTEE

Audit committeeduring the period under review three audit committee meetings were held. mr J mdeni and ms R luzuka at-tended all three meetings.

Risk managementin accordance with the requirements of the public finance management Act, 1999 (Act no. 1 of 1999), as amended, a risk assessment was facilitated by the inter-nal Auditors.

effective risk management is integral to the organisa-tion’s objective of consistently adding value to the business. management is continuously developing and enhancing its risk and control procedures to improve the mechanisms for identifying and monitoring risks. the board has initiated the development of a Risk manage-ment framework and fraud prevention plan.

the fraud prevention and risk management policies ad-opted by mtc are aimed at obtaining sufficient cover to protect its asset base, earning capacity and legal obliga-tions against possible losses.

Risks of a possible catastrophic nature (e.g. bus ac-cidents) are identified and insured. these risks are reviewed on an annual basis to ensure that cover is adequate. claims of a general nature are adequately covered.

internal control systemsin order to meet its responsibility of providing reliable financial information, mtc maintains financial and op-erational systems of internal control. these controls are

designed to provide reasonable assurance that transac-tions are concluded in accordance with management’s authority, that the assets are adequately protected against material loss of unauthorised acquisition, use or disposition, and the transactions are properly authorised and recorded. the system includes a documented organisational struc-ture and division of responsibility, established policies and procedures which are communicated throughout the organisation, and the careful selection, training and development of staff.

pwc has been appointed as the internal Auditors. the auditors adopt a risk based audit approach in order to ensure that the process adds value to the organisation. internal auditors monitor the operation of the internal control system and report findings and recommenda-tions to the Audit committee and executive manage-ment. corrective actions are taken to address control deficiencies and other opportunities for improving the systems, as they are identified. the board, operating through its Audit committee, provides oversight of the financial reporting process and internal control system.

there are inherent limitations in the effectiveness of any system of internal control, including the possibility of human error and the circumvention or overriding of con-trols. Accordingly, even an effective internal control sys-tem can provide only reasonable assurance with respect to financial statement preparation and the safeguarding of assets.

cOrpOraTe gOVernance STaTemenTFOR THE 12 MONTHS ENDED 31 MARCH 2012

37

RepoRt of the AuditoR-geneRAl to the eAsteRn cApe pRovinciAl legislAtuRe on mAyibuye tRAnspoRt coRpoRAtion RepoRt on the finAnciAl stAtements

introduction 1. i have audited the financial statements of the mayibuye transport corporation set out on pages 43 to 65,

which comprise the statement of financial position as at 31 march 2012 statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

Accounting authority’s responsibility for the financial statements2. the accounting authority is responsible for the preparation and fair presentation of these financial statements in ac-

cordance with south African statements of generally Accepted Accounting practice (sA statements of gAAp) and the requirements of the public finance management Act of south Africa, 1999 (Act no. 1 of 1999) (pfmA), and for such internal control as the accounting authority determines is necessary to enable the preparation of financial state-ments that are free from material misstatement, whether due to fraud or error.

Auditor-general’s responsibility 3. my responsibility is to express an opinion on these financial statements based on my audit. i conducted my audit

in accordance with the public Audit Act of south Africa, 2004 (Act no. 25 of 2004) (pAA), the general notice issued in terms thereof and international standards on Auditing. those standards require that i comply with ethical require-ments and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. the procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. in making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evalu-ating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

5. i believe that the audit evidence i have obtained is sufficient and appropriate to provide a basis for my qualified audit opinion.

basis for qualified opinion

Revenue

6. Revenue of R23.8 million is disclosed in the statement of comprehensive income and note13 to the financial state-ments. included in this revenue is passenger fares of R19.6 million which is disclosed in note 13 to the financial statements. this passenger revenue is comprised of revenue from prepaid tickets sold to casual passengers of R1.6 million and revenue received from casual passengers on bus routes of R18 million (2011: R16.3 million). sufficient appropriate audit evidence could not be obtained to verify the completeness and accuracy of passenger fares from prepaid tickets sold to casual passengers of R1.6 million and the completeness of passenger fares for cash received from casual passengers on bus routes of R18 million (2011: R16.3 million). no alternative audit procedures could be performed. consequently, i am unable to verify the completeness of the cash and cash equivalents of R105 000 (2011:R1.8 million) as disclosed in the statement of financial position and note 6 to the financial statements.

38

7. in addition, i was denied access to the service organization who shares responsibilities with the entity over the rev-enue management system and i was unable to obtain sufficient appropriate audit evidence to confirm if the general information technology controls present in the system were adequately designed and implemented to support the integrity of the revenue data. the revenue management system did not permit the application of alternative proce-dures to verify the completeness and accuracy of the revenue mentioned above.

8. An impairment loss of R1 million is disclosed in the statement of comprehensive income and note 3 to the financial statements. Revenue earned by a bus less the costs to maintain the bus was used as an indicator of impairment. As a result of the above findings, i am unable to verify the accuracy, completeness and occurrence of this impairment loss.

9. consequently, i am unable to obtain sufficient appropriate audit evidence relating to the valuation of buses of R38.8 million included in property, plant and equipment of R62.2 million as disclosed in the statement of financial position and note 3 to the financial statements.

Cost of services rendered

10.cost of services rendered of R29 million is disclosed in the statement of comprehensive income in the financial state-ments. significant variances were noted between the expected values of inventory issued according to the inventory management system and the amounts recorded in the accounting records. this was due to inadequate controls over the allocation and the recording of inventory issued and the entity performing only one inventory count during the financial year which was not adequate in detecting and preventing these errors. the system records and related controls did not permit the application of alternative audit procedures. i am unable to obtain sufficient appropriate audit evidence to satisfy myself as to the occurrence, accuracy and completeness of cost of services rendered.

11.spares and units of R9.5 million are included in property, plant and equipment of R62.2 million which is disclosed in the statement of financial position and note 3 to the financial statements. it is the practice of the entity to carry spares and units as inventory until the date when the financial statements are submitted for the purposes of my audit and from which time it is reclassified as property, plant and equipment. certain categories of inventories may have been misclassified as spares and units due to unexplained variances identified in the recording of inventory issued. sufficient appropriate alternative audit procedures could not be performed. As a result, i am unable to con-clude on the classification and valuation of inventory of R867 000 as disclosed in the statement of financial position and note 4 to the financial statements and spares and units included in property, plant and equipment of R62.2 mil-lion which is disclosed in the statement of financial position and note 3 to the financial statements.

12.consequently, i am unable to obtain sufficient appropriate audit evidence relating to the accuracy, completeness and occurrence of the depreciation charge of R7 million relating to spares and units in operating expenses of R34.9 million as disclosed in the statement of comprehensive income, the valuation and classification of spares and units of R38.8 million included in property, plant and equipment of R62.2 million as disclosed in the statement of financial position and note 3 to the financial statements, accuracy, completeness and occurrence of other income – grant of R63 million as disclosed in the statement of comprehensive income, the accuracy of deferred income of R43.7 million as disclosed in the statement of financial position and note 9 to the financial statements and the accuracy, completeness and occurrence related deferred income released to income of R11.6 million as disclosed in note 9 to the financial statements.

Qualified opinion13. in my opinion, except for the possible 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 the mayibuye transport cor-poration as at 31 march 2012 and its financial performance and cash flows for the year then ended, in accordance with sA statements of gAAp and the requirements of the pfmA.

emphasis of matters14. i draw attention to the matters below. my opinion is not modified in respect of these matters.

39

Irregular expenditure

15. irregular expenditure of R4.2 million is disclosed in note 14.8 to the financial statements. R3 million was incurred as a result of the entity not obtaining valid tax clearance certificates of suppliers and R1.2 million was incurred as a result of the entity not complying with the bid evaluation requirements of the preferential procurement policy framework Act 5 of 2000 and the preferential procurement Regulations, 2011.

Restatement of corresponding figures 16.As disclosed in note 22.1 to the financial statements, the corresponding figures for accumulated depreciation for

the year ending 31 march 2011 has been restated by R7.5 million as a result of errors identified in the prior year audit.

share capital17. in terms of the ciskeian corporations Act (Act 61 of 1981) and the corporations transitional provisions Act (Act 12

of 1995) (eastern cape), the corporation should issue a R1 share for each R1 of capital grant received. As disclosed in note 7 to the financial statements, the corporation does not have adequate authorised share capital to issue. the accounting authority applied for an increase in the authorised share capital in June 2009 to the executive authority. A follow-up application was made on 21 february 2011 to further increase the authorised share capital to 120 000 000 shares to accommodate current and future capital grants. the increase in authorised share capital was ap-proved on 29 march 2011 by the mec of the department of transport. however, until this approval is gazetted, by the mec for provincial planning and finance it may not be utilized to fulfill the requirements of the above mentioned Acts.

significant uncertainties 18.As disclosed in note 3 and 17 to the financial statements, the Zwelitsha depot, which is situated on communal land,

has been recognised as leasehold land and buildings with a carrying value of R1.1 million. the corporation’s right to occupy the properties has not been not reduced to writing; however it derives economic benefits from the use thereof and carries the risks that are incidental to ownership. A process for the acquisition of the title deed has been initiated with the land claims commission, the outcome of which is uncertain at the date of this report. the pos-sible cost element of the acquisition of the land as well as any adjustments to the carrying value of leasehold land and buildings is dependent on this future event and cannot be reasonably measured.

material losses/ impairments 19.As disclosed in note 3 to the financial statements, material losses to the amount of R1 million were incurred on

buses as a result of the impairment of fixed assets. the impairment is attributed to the poor conditions of the infrastructure in routes where the buses are utilised. this was line with the accounting standards to ensure that the carrying amount of the assets does not exceed the net recoverable amount

Additional matter20. i draw attention to the matter below. my opinion is not modified in respect of this matter.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS 21. in accordance with the pAA and the general notice issued in terms thereof, i report the following findings relevant

to performance against predetermined objectives, compliance with laws and regulations and internal control, but not for the purpose of expressing an opinion.

predetermined objectives 22. i performed procedures to obtain evidence about the usefulness and reliability of the information in the perfor-

mance against annual targets report as set out on pages 24 to 27 of the annual report.

23.the reported performance against predetermined objectives was evaluated against the overall criteria of usefulness

40

and reliability. the usefulness of information in the annual performance report relates to whether it is presented in accordance with the national treasury annual reporting principles and whether the reported performance is con-sistent with the planned objectives. the usefulness of information further relates to whether indicators and targets are measurable (i.e. well defined, verifiable, specific, measurable and time bound) and relevant as required by the national treasury framework for managing programme performance information.

the reliability of the information in respect of the selected programmes is assessed to determine whether it ad-equately reflects the facts (i.e. whether it is valid, accurate and complete).

24.the material findings are as follows concerning the usefulness and reliability of the information.

Usefulness of information

25.the national treasury guide for the preparation of the annual report requires that explanations for major variances between the planned and reported (actual) targets should be provided in all instances and should also be supported by adequate and reliable corroborating evidence. Adequate and reliable corroborating evidence could not be provid-ed for 50% of major variances as disclosed in the performance against annual targets report. the institution’s records did not permit the application of alternative audit procedures. consequently, i did not obtain sufficient appropriate audit evidence to satisfy myself as to the validity, accuracy and completeness of the reasons for major variances.

26.the national treasury framework for managing programme performance information (fmppi) requires that perfor-mance targets be specific in clearly identifying the nature and required level of performance. A total of 50% of the targets relevant to operations programmes were not specific in clearly identifying the nature and the required level of performance. management was aware of the requirements of the fmppi but did not receive the necessary training to enable application of the principles.

Reliability of information

27.the national treasury framework for managing programme performance information (fmppi) requires that process-es and systems which produce the indicator should be verifiable. A total of 67% of the actual reported performance relevant to the selected programmes differed materially when compared to the source information and evidence provided. this was due to a lack of monitoring, and review for the recording of actual achievements.

28.the national treasury framework for managing programme performance information (fmppi) requires that the indicator be accurate enough for its intended use and respond to changes in the level of performance. A total of 67% of the actual reported indicator relevant to operations and engineering programmes were not accurate when compared to source information. this was due to a lack of monitoring and review for the recording of actual achieve-ments.

Additional matters29. i draw attention to the following matter below. these matters do not have an impact on the predetermined objec-

tives audit findings reported above.

Achievement of planned targets30.of the total number of planned targets, only 8 were achieved during the year under review. this represents 52% of

total planned targets that were not achieved during the year under review.

this was as a result of the institution not considering relevant systems and evidential requirements during the an-nual strategic planning process.

strategic planning and performance management31.the accounting authority did not establish procedures for quarterly reporting to the executive authority in order to

facilitate effective performance monitoring, evaluation and corrective action as required by tR 29.3.1.

the accounting authority did not submit to the accounting officer of a department designated by the executive authority responsible for that public entity, and to the national treasury, at least one month, or another period agreed with the national treasury, before the start of the financial year, a corporate plan in the prescribed format as

41

required by section 52(b) of the pfmA read with tR 29.2.

compliance with laws and regulations 32. i performed procedures to obtain evidence that the entity has complied with applicable laws and regulations

regarding financial matters, financial management and other related matters. my findings on material non-compli-ance with specific matters in key applicable laws and regulations as set out in the general notice issued in terms of the pAA are as follows:

Annual financial statements, performance and annual report

33.the financial statements submitted for auditing were not prepared in all material respects in accordance with the requirements of section 55(1)(c)(i) of the pfmA. material misstatements of property plant and equipment, inven-tory, trade and other payables, deferred income, depreciation and disclosure of the correction of opening balance were, identified by the auditors in the submitted financial statements were subsequently corrected, the uncor-rected material misstatements resulted in the financial statements receiving a qualified audit opinion.

Asset management

34.proper control systems to safeguard and maintain assets were not implemented, as required by sections 50(1)(a) and 51(1)(c) of the public finance management Act.

Expenditure management35.the accounting authority did not take effective steps to prevent irregular expenditure as required by section 51(1)

(b)(ii) of the public finance management Act.

Revenue management36.the accounting authority did not take effective and appropriate steps to collect all money due, as required by sec-

tion 51(1)(b)(i) of the public finance management Act and treasury Regulations 31.1.2(a) and 31.1.2(e).

Internal control

37. i considered internal control relevant to my audit of the financial statements, performance against annual targets report and compliance with laws and regulations. the matters reported below under the fundamentals of internal control are limited to the significant deficiencies that resulted in the basis for qualified opinion, the findings on the performance against annual targets report and the findings on compliance with laws and regulations included in this report.

Leadership

38.the accounting authority did not ensure that qualifying matters for prior years were addressed.

39.the fixed asset register was not properly managed in prior years. this led to the qualification of assets in the 2010/11 and 2010/09 financial years. the asset register was inspected during the audit and it was noted that the matters reported previously had not been addressed.

40. incidences of missing revenue data were reported in the prior years. this matter has not yet been resolved as revenue data is still not complete for certain depots of the entity.

Financial and performance management

41.management did not ensure the timeous completion of standard monthly reconciliations or where these recon-ciliations were completed staff did not have the prerequisite skills to complete these reconciliations resulting in a number of adjustments processed during the audit.

42.the fixed asset register was not maintained adequately during the financial year. A consultant had to be appointed during the audit process to assist with critical aspects of the fixed asset register. without this intervention, the opinion on fixed assets would have been modified and this would have resulted in a regression in the audit opin-ion.

43. inventory was not adequately maintained during the financial year. the internal control environment over the

42

management of inventory has significant weaknesses.

44.generally, staff did not have the prerequisite understanding or skills to interpret the national treasury framework for managing programme performance information. this is clearly evidenced by the findings reported under predeter-mined objectives.

Governance

45.the entity assessed its risks on a regular basis and the impact of risks on the general control environment. however, the process of implementation was not effective over financial and performance reporting and monitoring of compliance. these deficiencies rendered the control environment ineffective.

46.the entity developed a plan to address internal and external audit findings however, adherence to the plan was not monitored on a timely basis by the appropriate level of management. in a number of instances the entity has assured the audit committee that their recommendations had been implemented. Reported audit findings have however re-vealed that management did not implement these recommendations adequately.

47. internal audit provided sufficient evidence to management that there were significant deficiencies in key controls re-quired to achieve clean administration with corrective actions to be taken, but management did not adequately imple-ment their recommendations over the drivers of internal controls. in addition, i provided 36 audit recommendations which were accepted by management in the prior year and were implemented or alternative actions were taken which resolved the prior year audit findings. in addition, six recommendations were still in the process of being implemented and 28 have not been addressed or very limited progress has been made.

otheR RepoRts

Investigations

48.the entity has a claim against a former employee. the employee was a cashier at the Queenstown depot and was in-volved in rolling of cash. the employee absconded the court case and the trial has been postponed until the accused is arrested.

east london31 July 2012

43


Notes 2012 2011

R R

ASSETS

Non-current assets

property, plant and equipment 3 62 156 461 52 374 839

Total non-current assets 62 156 460 52 374 839

Current assets

inventories 4 866 723 1 471 515

trade and other receivables 5 99 200 415 007

cash and cash equivalents 6 105 900 1 770 890

Total current assets 1 071 823 3 657 412

Total assets 63 228 283 56 032 251

EQUITY AND LIABILITIES

Capital and reserves

share capital 7 56 761 075 56 761 075

Accumulated deficit (60 662 587) (60 222 136)

(3 901 512) (3 461 061)

Non-current liabilities

finance lease liability 8 7 711 716 4 592 557

deferred income 9 43 656 139 45 270 951

51 367 856 49 863 508

Current liabilities

current portion of finance liability 8 6 345 754 2 909 286

trade and other payables 10 5 882 816 3 381 809

payroll accruals 11 3 533 367 3 057 709

provision 12 - 281 000

15 761 938 9 629 804

Total equity and liabilities 63 228 283 56 032 251

Report of financial position

44


Report of financial performance

Notes 2012 2011

R R

Revenue 13 23 835 306 18 633 508

cost of services rendered (28 961 368) (23 007 455)

Gross loss (5 126 063) (4 373 949)

other income - grant 20.2 63 043 770 49 770 644

other operating income 107 853 211 915

Administration expenses (23 730 440) (19 648 387)

operating expenses (34 859 052) (25 861 242)

profit / (loss) from operations (563 933) 98 981

interest income 14.1 123 481 65 404

Profit/(Loss) for the year (440 451) 164 385

45

for the year ended 31 march 2012

statement of changes in equity

Notes Share Capital Accumulated Loss Total

R R R

Balance at 1 April 2010 56 761 075 (60 647 480) (3 886 405)

prior period error 22.1 - 260 959 260 959

Additional grant received - - -

deferred income release to income - - -

profit / (loss) for the year - 164 385 164 385

Balance at 31 March 2011 56 761 075 (60 222 136) (3 461 061)

prior period error 22.1 - 7 522 850 7 522 850

Additional grant received - - -

deferred income release to income - (7 522 850) (7 522 850)

profit / (loss) for the year - (440 451) (440 451)

Balance at 31 March 2012 56 761 075 (60 662 587) (3 901 512)

46


cashflow statement

Notes 2012 2011

opeRAting Activities

cash receipts from customers 75 264 306 60 039 445

cash paid to suppliers and employees (69 953 251) (57 721 790)

cash generated by operations 15 5 311 055 2 317 655

interest received 123 481 65 404

NET CASH (USED IN)/ FROM OPERATING ACTIVITIES 5 434 537 2 383 057

INVESTING ACTIVITIES

purchases of property, plant and equipment (13 167 110) (12 143 009)

purchases of finance lease assets - -

NET CASH (USED IN)/FROM INVESTING ACTIVITIES (13 167 110) (12 143 009)

FINANCING ACTIVITIES

(decrease) / increase in grant allocation 9 10 000 000 9 860 000

finance lease liability raised - -

finance lease liability repaid (3 932 417) (809 729)

NET CASH (USED IN)/FROM FINANCING ACTIVITIES 6 067 583 9 050 271

NET INCREASE /(DECREASE) IN CASH AND CASH EQUIVALENTS (1 664 990) (709 680)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1 770 890 2 480 569

CASH AND CASH EQUIVALENTS AT END OF YEAR 6 105 900 1 770 890

47

accOunTIng pOLIcIeSFOR THE 12 MONTHS END-ED 31 MARCH 2012

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 finan-cial instruments, and incorporate the following principal accounting policies, which have been consistently applied in all material respect. the financial statements have been prepared in accordance with south African statements of generally Accepted Accounting practice. the principal accounting policies adopted remained unchanged from the previous year except as listed below:

2.1 Changes in accounting policy and disclosures

in the current year, the corporation has adopted all new gAAp standards and interpretations that are rel-evant to its operations, and that became effective for periods beginning on or after 1 April 2011. the adopted standards and interpretations have not resulted in significant changes to the corporation's accounting poli-cies or financial performance.

2.2 Irregular and fruitless and wasteful expenditure

irregular expenditure means expenditure incurred in contravention of, or not in accordance with a require-ment of any applicable legislation, including:

• The Public Finance Management Act, or • Any provincial legislation providing for procurement procedures in that provincial govern-ment.

fruitless and wasteful expenditure means expenditure that was made in vain and would have been avoided had reasonable care been exercised.

All irregular and fruitless and wasteful expenditure is 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 cor-poration. 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

48

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 as-sociated 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.

2.5 Leasing

leases are classified as finance leases whenever the term of the lease transfer substantially all the risks and rewards to the lessee. All other leases are classified as operating leases. Assets held under finance leases are initially recognised as assets of the corporation at their fair value at the inception of the lease or if lower at the present value of the minimum lease payments. the corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. the lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of of interest on the remaining balance of the liability.

2.6 Deferred income

government grants represent monthly transfer payments from the eastern cape department of transport in order to subsidise the corporation's public transport service.

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 statement of comprehensive income 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 statement of comprehensive income 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 statement of financial position. the state-ment of comprehensive income 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 pe-riod. contribution to a defined contribution plan, in respect of service in a particular period, are 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 10.1 (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 prin-

49

cipal annual rates used for this purpose are:

Ancillary vehicles 25% buses - body 12.5% buses - chassis, engine, etc 8.33% office equipment 20% office furniture 10% operating equipment 20% workshop equipment 25% buildings 2% spare parts & units 50%

spare parts and units are capitalised at cost. it is not practical to determine the carrying amount or cost of the parts and units that were replaced or added. the carrying amount or cost of replacement is estimated at what the cost of the replaced part or unit was initially.

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.

subsequent expenditure relating to property, plant and equipment is capitalised if the subsequent expendi-ture meets the definition of an asset.

when parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment and shall be depreciated according to their different useful life.

the gains and losses arising from the de-recognition of property, plant and equipment (difference between carrying amount less any revaluation surpluses and net disposal proceeds) are included in surplus or deficit when the item is derecognized. the residual value and the useful life of each asset are reviewed and adjusted at balance sheet date. the depreciation charge for each year is recognized in surplus and deficit unless it is included in the carrying amount of another asset.

2.10 Impairment of non-financial assets

"the corporation assesses at each reporting date whether there is an indication that an asset may be im-paired. if any such indication exists, or when annual impairment testing for an asset is required, the corpo-ration 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

50

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 valua-tion 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 impair-ment 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 rec-ognised 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, press-ing and storage. trade discounts, rebates and other similar items are deducted in determining the costs of purchase.

2.12 Financial Instruments 2.12.1 investments and financial Assets

financial assets within the scope of iAs 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets, as appro-priate. 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 corporation determines the classification of its financial assets on initial recognition and, where allowed and appropri-ate, 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 as-sets 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 corporation 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 im-paired, 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

51

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 amorti-sation process.

2.12.5 Available-for-sale financial investments

Available-for-sale financial assets are those non-derivative financial assets that are designated as available-for-sale or are not classified in any of the three preceding categories. After initial measurement, available-for-sale financial assets are measured at fair value with 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 corporation 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 impair-ment 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 corporation will not be able to collect all of the amounts due under the original terms of the invoice. the carrying amount of the receivable is reduced through use of an allowance account. impaired debts are derecognised when they are assessed as uncollectible.

2.13.2 Available-for-sale financial investments

if an available-for-sale asset is impaired, an amount comprising the difference between its cost and its cur-rent 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 impair-ment 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 finan-

52

cial 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 obli ga-

tion 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 trans-ferred 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 ex-pires.

when an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

2.15 Future changes to accounting policies At the date of authorisation of these financial statements, a number of international financial Reporting standards and interpretations had been promulgated, but were effective for periods after 31 march 2012. the corporation will implement these as they become effective. based on a review of these standards, management have determined that none of them would have a signifi-cant impact on the corporation as at 31 march 2012, had they been effective.

2.16 Provisions provisions are recognised where the corporation has a present legal or constructive obligation as a result of a past event, a reliable estimate of the obligation can be made and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation.

2.17 key management assumptions, estimates and judgements the preparation of financial statements requires the use of certain critical accounting estimates. it also requires management to exercise its judgement in the process of applying the corporation’s accounting policies. the areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed. the key assumptions, estimates and judgements concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the car-rying 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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notes on the Annual financial statementfor the 12 months ended 31 march 2012

54

pRopeRty, plAnt And eQuipment

land and buildings comprises workshops, offices and bus sheds situated in the following sites: • erf 77, 78, 79, 80, 81 of farm 35, wilsonia, district of east london, market value R2 600 000.

• plot 4265, Queendustria industrial township, Queenstown, market value R1 400 000.

• 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 and the land has been surveyed, details of which are noted under note 17. improvements on the property are capitalised.

• erf 1097, Alice, market value R620 000. • the historical opening depreciation charge assumes that the land is worth 50% of the historical carrying value.

included in the property, plant and equipment net book value are assets recorded at R1. these are old assets but still in use. the corporation estimates that value of the assets at R126 720. during the 2011 financial year, the corporation entered into a lease agreement with mAn financial services for the supply of five buses. the lease is repayable within 36 months at monthly instalments of R242 440.53. the interest implicit is 9%. At the end of the lease term the corporation has an option to acquire the buses outright, extend the agreement or to return the buses to mAn financial services. the depreciation charge is included in the fixed asset note. during the 2012 financial year, the corporation entered into a lease agreement with mAn financial services for the supply of six buses. the lease is repayable within 36 months at monthly instalments of R267 435.75. the interest implicit is 9%. At the end of the lease term the corporation has an option to acquire the buses outright, extend the agreement or to return the buses to mAn financial services. the depreciation charge is included in the fixed asset note.A loss of R919 537 was incurred on the buses as a result of impairment attributed to the poor conditions of the roads that the buses drive on. this was in line with the accounting standards to ensure that the carrying amount of the assets do not exceed the net recoverable amount. 4 INVENTORIES 2012 2011

R Rfuel, oils and greases 252 186 860 831 consumables 155 803 170 686 tyres & tubes 286 879 156 751 Ancillary vehicle spares 12 066 14 781 operational equipment spares 118 259 - stationery, tickets and waybills 41 530 268 466

866 723 1 471 515

inventories included in cost of services rendered 18 899 872 13 959 999

5 TRADE AND OTHER RECEIVABLES

trade receivables 242 155 225 209 less: provision for impairment of receivables (241 860) (225 209)

296 - other receivables 98 904 415 007

99 200 415 007

trade receivables are non-interest bearing and are generally on 30-60 days’ terms.

individually impaired

RAt 1 April 2010 184 256 charge for the year 40 953 utilised - At 31 march 2011 225 209 charge for the year 16 651 utilised - At 31 March 2012 241 860

2012 2011R R

< 30 days - 78 715 30 – 60 days - - 60 – 90 day - - 90 – 120 day - - >120 days 99 200 336 292 total 99 200 415 007

As at 31 march, the ageing analysis of trade and other receivables are as follows:

As at 31 March 2012, trade receivables at nominal value of R241 860 (2011: R225 209) for the corporation were impaired and fullyprovided for. movements in the provision for impairment of receivables were as follows:

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8 FINANCE LEASE LIABILITY 2012 2011R R

13 547 429 7 116 999

within one year 6 118 515 2 909 286

in the second to fifth years inclusive 7 428 914 4 207 714

After five years - -

510 042 384 843

within one year 227 239 108 905

in the second to fifth years inclusive 282 803 275 938

After five years - -

total finance lease liability 7 938 955 4 592 557

9 DEFERRED INCOME 2012 2011R R

At 1 April 2011 45 270 951 35 849 745

Additional grant received 10 000 000 9 860 000

deferred income released to income (11 614 770) (438 794)

43 656 181 45 270 951

during the 2012 financial year, the corporation entered into a lease agreement with mAn financial services for the supply of six buses. thelease is repayable within 36 months at monthly instalments of R267 435.75. the interest implicit is 9%. At the end of the lease term thecorporation has an option to acquire the buses outright, extend the agreement or to return the buses to mAn financial services. An interestportion of R355 228 is included in the lease liability payable within one year.

At the balance sheet date, the entity had outstanding commitments under officeequipment finance leases, which fall due as follows:

finance lease payments represent rentals payable by the corporation for certain of its office equipment.

At the balance sheet date, the entity had outstanding commitments under busfinance leases, which fall due as follows:

during the 2011 financial year, the corporation entered into a lease agreement with mAn financial services for the supply of five buses. thelease is repayable within 36 months at monthly instalments of R242 440.53. the interest implicit is 9%. At the end of the lease term thecorporation has an option to acquire the buses outright, extend the agreement or to return the buses to mAn financial services. An interestportion of R521 821 is included in the lease liability payable within one year.

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10 TRADE AND OTHER PAYABLES 2012 2011R R

trade payables 3 508 136 1 382 436

other payables 2 374 679 1 999 372 - Accrued provident fund 492 447 452 792 - Accrued pAye 319 851 324 020 - Accrued medical Aid 361 384 311 869 - Accrued workmen's compensation 570 636 243 602 - Accrued employee insurance 132 275 191 246 - private hire deposits 76 710 4 000 - Additional payables 421 377 471 844

5 882 816 3 381 809

trade and other payables are non-interest bearing and are normally settled on 30-day terms.terms and conditions of the above financial liabilities:

Additional payables not described include accrued water and electricity, garnishees, unemployment insurance fund, levies, union fees andhousing bonds.

11 PAYROLL ACCRUALS 2012 2011R R

At 1 April 2011 3 057 709 2 751 763

Additional accrual in the year 2 557 494 2 396 515

utilisation of accrual (2 081 836) (2 090 569) At 31 march 2012 3 533 367 3 057 709

Accrual for bonuses - 13th cheque 726 313 587 970

Accrual for leave 2 807 054 2 469 739 3 533 367 3 057 709

12 PROVISIONS 2012 2011R R

employee cost - 281 000

13 REVENUE

Revenue comprises of passenger fares and special hire revenue.2012 2011

R RAn analysis of the entity's revenue is as follows:passenger fares 19 637 025 16 297 760special hire 4 198 281 2 335 747

Total revenue 23 835 306 18 633 508

A major portion of the corporation's revenue comprises cash sales to passengers. it should be recognised that controls are designed to provide reasonable, butnot absolute assurance that errors and irregularities will not occur, and that procedures are performed in accordance with management's intentions. there areinherent limitations that should be recognised in considering the potential effectiveness of any system of internal controls. the corporation utilises the soleservice provider in south Africa to record bus fare information. there are no unreconciled differences between banking of cash and revenue collected per therevenue application system.

the controls implemented by management include the installation of electronic ticketing machines, establishing an effective inspectorate unit and implementing a zero-tolerance policy with regards to non-issue of bus fare tickets. in addition, the corporation has upgraded to a new revenue recording system, which iseffective 1 April 2011. the system will strive to address revenue accuracy and completeness recordings.

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10 TRADE AND OTHER PAYABLES 2012 2011R R

trade payables 3 508 136 1 382 436

other payables 2 374 679 1 999 372 - Accrued provident fund 492 447 452 792 - Accrued pAye 319 851 324 020 - Accrued medical Aid 361 384 311 869 - Accrued workmen's compensation 570 636 243 602 - Accrued employee insurance 132 275 191 246 - private hire deposits 76 710 4 000 - Additional payables 421 377 471 844

5 882 816 3 381 809

trade and other payables are non-interest bearing and are normally settled on 30-day terms.terms and conditions of the above financial liabilities:

Additional payables not described include accrued water and electricity, garnishees, unemployment insurance fund, levies, union fees andhousing bonds.

14 NET PROFIT / LOSS FROM OPERATIONS

14.1 net profit / loss from operations has been arrived at after charging (crediting): 2012 2011R R

INCOMEinterest income 123 481 65 404

EXPENSESAudit fees 2 693 371 1 763 700

Audit committee (see note 14.2 and 14.3) 40 002 19 379

defined contribution plan 4 062 128 4 566 290

directors emoluments (see note 14.4 and 14.5) 442 399 280 229

depreciation 11 614 771 7 207 526

insurance 1 441 560 1 226 244

interest 1 013 295 591 168

interest - discounting 318 679 204 045

loss on disposal of assets - impairment resulting from scrapping 234 153 730 609

finance lease charges 101 194 214 429

consulting fees 340 665 595 151

staff costs 41 314 771 35 165 181

the number of permanent employees for the financial year ended was: 196 191

14.2 Audit committee 2012Meetings Travel Total

R R R

J. mdeni - chairperson 13 639 4 274 17 913 t. Jama 5 377 70 5 447 R. luzuka 16 262 380 16 642

35 278 4 724 40 002

14.3 Audit committee 2011Meetings Travel Total

R R R

m. mantyi 7 500 4 197 11 697 R. luzuka 2 475 82 2 557 J. mdeni 4 950 175 5 125

14 925 4 454 19 379

fees for attending meetings

fees for attending meetings

14.4 Directors Emoluments 2012Meetings Travel Total

R R R

p.l.c. maseti - chairperson 86 634 2 079 88 713 s.J. nyengane - vice-chairperson 84 745 4 228 88 973 p.p. balfour 12 516 467 12 983 m. tuswa - - - A.J. de vries - - - t.A.thomas 7 425 689 8 114 f.s. loliwe 16 762 2 278 19 040 A.m. church 46 785 1 772 48 557 n.e.p. loyilane 36 965 3 366 40 331 n. shweni-booysen 42 653 2 226 44 879 Z. pakati 24 270 1 101 25 371 J. mdeni 8 131 2 763 10 894 R. luzuka 51 718 2 826 54 544

418 604 23 795 442 399

58

15

FROM/(USED IN) OPERATING ACTIVITIES 2012 2011R R

net profit / (loss) for the year (440 450) 164 385 Adjustments for:profit / loss on sale of property, plant and equipment 234 153 730 609 impairment loss 994 742 - prior period error - 261 001 depreciation of property, plant and equipment 11 614 771 7 207 526 deferred income (11 614 770) (7 961 644) interest on finance leases 904 668 566 114 interest income (123 481) (65 404)

operating cash flow before movements in working capital 1 569 633 902 587

(increase)/ decrease in inventories 604 792 (337 659)

(increase)/ decrease in receivables 315 767 76 822

increase / (decrease) in payables 2 820 864 1 675 906

5 311 055 2 317 656

CASH GENERATED BY OPERATIONS

14.5 Directors Emoluments 2011Meetings Travel Total

R R R

p.l.c. maseti - chairperson 20 733 1 469 22 202

s.J. nyengane - vice-chairperson 43 483 3 550 47 033

p.p. balfour 22 275 1 000 23 275

m. tuswa - - -

A.J. de vries - - -

t.A.thomas 34 650 4 858 39 508

f.s. loliwe 9 900 1 475 11 375

A.m. church 22 275 1 961 24 236

n.e.p. loyilane 19 800 1 298 21 098

n. shweni-booysen 42 075 3 673 45 748

R. luzuka 42 075 3 678 45 753

257 266 22 963 280 229

14.6 Senior Management 2012CEO OSM CFO HOD: HR HOD: Operations HOD: Engineering

l.R. mbinda n. van wyk l. coetzer l.c. mtise n. funani Z. leni

R R R R R Rbasic 915 584 1 000 800 655 303 571 982 539 880 533 428

car 120 000 - 36 000 64 548 45 288 49 812

housing allowance - - - 17 563 - -

medical aid 46 562 - 20 815 - 9 496 20 945

provident 148 325 - - 100 415 94 618 93 479

bonus 146 102 - 51 178 47 568 45 420 44 307

uif 1 497 1 497 1 497 1 497 1 497 1 497 Total 1 378 070 1 002 297 764 793 803 573 736 199 743 468

14.7 Senior Management 2011CEO OSM CFO HOD: HR HOD: Operations HOD: Engineering

l.R. mbinda n. van wyk l. coetzer l.c. mtise n. funani Z. leniR R R R R R

basic 838 116 165 900 623 712 518 352 470 755 483 168 car 120 000 - 36 000 64 548 45 288 49 812 housing allowance - - - 17 563 - - medical aid 29 971 - 20 387 - 9 299 20 513 provident 135 775 - - 90 910 82 617 84 796 bonus 104 854 - 51 976 43 196 39 230 40 264 uif 1 497 250 1 497 1 497 1 497 1 497 Total 1 230 213 166 150 733 572 736 066 648 686 680 050

14.8 IRREGULAR EXPENDITURE 2012 2011R R

transactions not in full compliance with legislation 4 178 971 -

the irregular expenditure relates to the corporation not obtaining tax clearance certificates from suppliers.

59

16 FINANCIAL RISk MANAGEMENT OBJECTIVES AND POLICIES

Interest rate risk

the corporation is exposed to interest rate risk as it has bus lease agreements in place.

Credit risk management

Liquidity risk

Foreign currency risk

the corporation is not exposed to foreign currency risk.

Capital management

17 CONTINGENT LIABILITIES

the main risks arising from the corporation's financial instruments are cash flow interest rate risk, liquidity riskand credit risk. the board of directors reviews and agrees policies for managing each of these risks which aresummarised below.

the corporation monitors its risk to a shortage of funds by considering the maturity of both its financial assetsand projected cash flows from operations. the corporation's objective is to maintain a balance betweencontinuity of funding and flexibility through use of of the grant-in-aid funding.

the corporation trades only with recognised, creditworthy third parties. Receivable balances are monitored onan ongoing basis with the result that the corporation's exposure to bad debts is not significant. the maximumexposure is the carrying amount as disclosed in note 5. there are no significant concentrations of credit riskwithin the corporation.

with respect to credit risk arising from the other financial assets of the corporation, which comprise of cash andshort-term deposits, the corporation's exposure to credit risk arises from default of the counterparty, with amaximum exposure equal to the carrying amount of these instruments.

the corporation's principal financial liabilities comprise of trade and other payables. the main purpose of thesefinancial liabilities is to recognise amounts payable by the corporation. the corporation has various financialassets such as trade and other receivables and cash and short-term deposits, which arise directly from itsoperations.

the corporation has no significant concentration of credit risk, with exposure spread over a large number ofcounterparties and customers.

during the reporting period, there were matters arising that gives rise to contingent liabilities:

the primary objective of the corporation's capital management is to ensure that it continue to provide a safe andreliable public transport service and to maximise internal revenue collection.

the corporation is in the process of obtaining a title deed for the Zwelitsha depot. A historic land valuation wasperformed which was used for negotiation purposes to draft and sign a settlement agreement. in addition, theland was surveyed to assess the exact boundaries. At year-end, the corporation is awaiting correspondance from the land claims commission to purchase the land. the possible cost element of the ouright acquisition (titledeed) of the land is uncertain.

60

18 CAPITAL COMMITMENTS 2012 2011R R

commitments for the acquisition of property, plant and equipment: - -

19 SUBSEQUENT EVENTS

20 RELATED PARTY TRANSACTIONS

20.1 Identification of related parties

20.2 Related party transactions

2012 2011R R

grant received 51 429 000 41 809 000 deferred income 11 614 770 7 961 644

63 043 770 49 770 644

21 GOING CONCERN

we draw attention to the fact that at 31 march 2012, the corporation had an accumulated deficit of R60 662 587(2011: R60 222 136).

Key management personnel - Refer to note 14.6 for detail of transactions with key personnel. management isresponsible for the day-to-day operations of the corporation.

during the reporting period, in order to continue as a going concern, the corporation utilised capital grantfunding of R2 238 812 for operational purposes.

director nep loyilane - she is also a director of fabkomp which transacted with the corporation for an amount ofR24 509. the nature of the transactions were similar to normal market transactions for bus repairs.

significant transactions occurred between the department of transport by way of receiving grant funding.

the directors are not aware of any matter of circumstances arising since the end of the financial year, whichsignificantly affects the operations of the corporation. the department of transport has approved the increasein authorised share capital. when the increase is gazzetted, it will affect the corporation's financial position.

there is one pending ccmA referral as at 31 march 2012 and there are currently no indication as to theprobability of the success of the claim. there has also not been a date confirmed when the claim will be dealtwith. should the corporation lose the case, the cost will be R100 000.

board of directors - Refer to note 14.4 for details of transactions with directors. the board is appointed by theexecutive Authority and fulfil a governance and oversight role.

eastern cape department of transport. the department is the sole shareholder of the corporation and thecorporation acts as the service delivery arm of the the department. the department provides the grant-in-aidand the corporation report on its activities.

61

22 PRIOR PERIOD ERRORS

22.1 Restatement of prior year known errors

2012 2011

R R

trade and other payables - 16 578 operating equipment accumulated depreciation ( 177 391) - Ancillary vehicles accumulated depreciation 203 467 - buses accumulated depreciation 7 496 774 - lease liability - 262 187 inventory - (14 654)

trade and other receivables - (3 151)

7 522 850 260 959

the corporation present valued its own-revenue stream to be R66 403 256 over the next three financial years.

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 assetsand settlement of liabilities, contingent obligations and commitments will occur in the ordinary course ofbusiness.

the ability of the corporation to continue as a going concern is dependent on a number of factors. the mostsignificant 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 transport, in an effort to obtain additional funding in the formof unconditional grants.

the financial statements have been restated to correct these unadjusted known errors from the 2011 financialyear. the effect of the restatement on the opening accumulated deficit is summarised below:

trade and other payables included a prior period error for understating the fair value of payables.

operating equipment, ancillary vehicles and buses accumulated depreciation included prior period errors forrestating (was overstated) the opening accumulated depreciation.

lease liability included a prior period error for overstatement of finance cost.

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 assetsand settlement of liabilities, contingent obligations and commitments will occur in the ordinary course ofbusiness.

inventory included a prior period error for overstatement of inventory.

the corresponding deferred income liability was adjusted with the accumulated depreciation adjustment of R7 522 850.

trade and other receivables included a prior period error for a under statement of a clerk shortage.

the department of transport has approved a grant-in-aid of R63 773 000 for the 2012/13 financial year and R80000 000 in the 2013/14 financial year.

62

23

below is a list of the current standards and interpretations that have been issued, but may not be effective.

Standard Details of amendment

Annual periodsbeginning on orafter

ifRs 1, first-time Adoptionof international financialReporting standards

01-Jan-10

01-Jul-10

01-Jan-11

01-Jan-11

01-Jan-11

01-Jul-11

01-Jul-11

01-Jan-13

ifRs 2, share basedpayments

01-Jan-10

ifRs 3, businesscombinations

01-Jan-11

01-Jan-11

01-Jan-11

Amendment permits the use of carrying amount underprevious gAAp as deemed cost for operations subject to rateregulation.

Amendments add an exception to the retrospective application of ifRss to require that first-time adopters apply therequirements in ifRs 9 financial instruments and iAs 20Accounting for government grants and disclosure ofgovernment Assistance prospectively to government loansexisting at the date of transition to ifRss.

standard amended to remove the fixed date of 1 January 2004relating to the retrospective application of the derecognitionrequirements of iAs39, and relief for the first-time adoptersfrom calculating day 1 gains on transactions that occurredbefore the date of adoption.

Amendments to transition requirements for contingentconsideration from a business combination that occurredbefore the effective date of the revised ifRs.

Additional guidance provided on un-replaced and voluntarilyreplace share-based payment awards.

Amendments relating to oil and gas assets and determiningwhether an arrangement contains a lease.

Amendment permits the use of revaluation carried out afterthe date of transitionas a basis for deemed cost.

clarification on the measurement of non-controlling interests.

Amendments relieves first-time adopters of ifRs's fromproviding the additional disclosures introduced throughAmendments to ifRs 7 in march 2009.

Amendment clarifies that changes in accounting policies in theyear of adoption fall outside of the scope of iAs8.

Amendments relating to group cash-settled share-basedpayment transactions - clarity of the definition of the term"group" and where in a group share-based payments must beaccounted for.

standard amended to provide guidance for entities emergingfrom severe hyperinflation and resuming presentation of ifRscompliant financial statements, or presenting ifRs compliantfinancial statements for the first time.

STANDARDS / INTERPRETATIONS ISSUED NOT YET EFFECTIVE AS AT 13 MARCH 2012

63

Standard Details of amendment Annual periodsbeginning on or

ifRs 5 non-current Assetsheld for sale anddiscontinued operations 01-Jan-10

ifRs 7 financialinstruments: disclosure

01-Jan-11

01-Jul-11

01-Jan-13

ifRs 8, operating segments

01-Jan-10

ifRs 9, financialinstruments

01-Jan-15

ifRs 10, consolidatedfinancial statements

01-Jan-13

ifRs 11, Joint Arrangements

01-Jan-13

ifRs 12, disclosure ofinterests in other entities

01-Jan-13

ifRs 13, fair valuemeasurement 01-Jan-13

Amendments require entities to disclose gross amountssubject to rights of set-off, amounts set-off in accordance withthe accounting standards followed, and the related net creditexposure. this information will help investors understand theextent to which an entity has set-off in its balance sheet andthe effects of rights of set-off on the entity's rights andobligations.

new standard that replaces the consolidation requirements insic-12 consolidation special purpose entities and iAs 27consolidated and seperate financial statements. standardbuilds on existing prnciples by identifying the concept ofcontrol as the determining factor in whether an entity shouldbe included within the consolidated financial statements of theparent company and provides additional guidance to assist inthe determination of control where this is difficult to assess.

new standars that deals with the accounting of jointarrangements and focusses on the rights and obligations ofthe arrangement, rather than its legal form. standard requiresa single method for accounting for interests in jointlycontrolled entities.

new and comprehensive standard on disclosure requiremntsfor all forms of interests in other entities, including joitarrangements, associates, special purpose vehicles and otheroff balance sheet vehicles.

new guidance on fair value measurement and disclosurerequirements.

new standard that forms the first part of a three-part projectto replace iAs 39 financial instruments: Recognition andmeasurement.

disclosures of non-current assets (or disposal groups)classified as held for sale or discontinued operations.

Amendment clarifies the intended interaction betweenqualitative and quantitative disclosures of the nature andextent of risks arising from financial instruments and removedsome disclosure items which were seen to be superfluous ormisleading.

Amendments require additional disclosure on transfertransactions of financial assets, including the possible effectsof any residual risks that the transferring entity retains. theamendments also require additional disclosures if adisproportionate amount of transfer transactions areundertaken around the end of a reporting period.

disclosure of information about segment assets.

64


iAs 1, presentation offinancial statements 01-Jan-10

01-Jan-11

01-Jul-12

iAs 7, statement of cashflows

01-Jan-10

iAs 12 income taxes

01-Jan-12

iAs 17 leases

01-Jan-10

iAs 19 employee benefits

01-Jan-13

iAs 21 the effects ofchanges in foreignexchange Rates

01-Jul-10

iAs 24 Related partydisclosures 01-Jan-11

01-Jan-11

iAs 27 consolidated andseperate financialstatements 01-Jul-10

01-Jan-13

iAs 28 investments inAssociates

01-Jul-10

01-Jan-13

iAs 31 interests in Jointventures

01-Jul-10

clarification of statement of changes in equity.

classification of expenditures on unrecognised assets.

simplification of the disclosure requirements for government-related entities.clarification of the definition of a related party.

consequential amendments from changes to iAs27consolidated abd seperate financial statements (clarificationon the transition rules in respect of the disposal or partialdisposal of an interest in a foreign operation).

Rebuttable presumption introduced that an investmentproperty will be recovered in its entirety through sale.

current/non-current classification of convertible instruments.

classification of leases of land and buildings.

new requirements to group together items with oci that maybe reclassified to the profit or loss section of the incomestatement in order to facilitate the assessment of their impacton the overall performance of the entity.

consequential amendments resulting from the issue of ifRs10, 11 and 12.

transition requirements for amendments arising as a result ofiAs27 consolidated and seperated financial statements.

consequential amendments from changes to iAs27consolidated and seperated financial statements(clarification on the transition rules in respect of the disposalor partial disposal of an interest in a foreign operation).

consequential amendments resulting from the issue of ifRs10, 11 and 12.

consequential amendments from changes to iAs27consolidated and seperated financial statements(clarification on the transition rules in respect of the disposalor partial disposal of an interest in a foreign operation).

Amaendments for the accounting to current and futureobligations resulting from the provision of defined benefitplans.

65


iAs 32 financialinstruments: presentation

01-feb-10

01-Jan-13

iAs 34 interim financialReporting 01-Jan-11

iAs 36 impairment of Assets

01-Jan-10

iAs 38 intangible Assets 01-Jul-09

01-Jul-09

iAs 39 financialinstruments: Recognitionand measurement 01-Jan-10

01-Jan-10

01-Jan-10

ifRic 13 customer loyalty programmes 01-Jan-11

ifRic 19 extinguishing financial liabilities with equity instruments 01-Apr-10

ifRic 20 stripping costs in the production phase of a surface mine 01-Jan-13

Amendments require entities to disclose gross amountssubject to rights of set-off, aounts set-off in accordance withthe accounting standards followed, and the related net creditexposure. this information will help investors understand theextent to which an entity has set-off in its balance sheet andthe effects of rights of set-off on the entity's rights andobligations.

measuring the fair value of an intangible asset acquired in abusiness combination.

scope exemption for business combination contracts.

cash flow hedge accounting.

- clarification on the intended meaning of the term "fair value" in respect of award credits.

Accounting for rights issues (including rights, options orwarrants) that are denominated in a currency other than thefunctional currency of the issuer.

Additional consequential amendments arising from revised

clarification of disclosure requirements around significantevents and transactions including financial instruments.

unit of accounting for goodwill impairment test.

treating loan prepayment penalties as closely relatedembedded derivatives.

66

parT 7HUMANRESOURCEMANAGEMENTREPORT

pushing foR

totAl

peRfoRmAnce

67

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 Resourc-es and business development strategy by recruiting outstanding candidates that will add value to the organiza-tion thereby leading to the realization of the corporation's vision.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 address-ing 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.

expenditure

Personnel costs by programme, 2011/2012

Total Expenditure

Compensation of Employees

ExpenditureTraining

Expenditure

Personnel cost as a percentage of

total expenditureNumber of Employees

Average personnel cost per employee

(R'000) (R'000) (R'000) (R'000) (R'000) (R'000)

Administration 35 017 511 10 371 579 111 546 29.94% 68 154 164

Engineering 18 614 213 14 461 065 111 546 78.29% 59 246 993

Operations 33 919 136 16 482 126 111 546 48.92% 81 204 860

TOTAL AS PER AFS 87 550 860 41 314 770 334 638 47.57% 208 200 238

Programme

Personnel costs by salary bands, 2011/2012Compensation of

Employees Expenditure

% of Total Personnel Cost

Number of Employees

Average personnel cost per employee

(R'000) (R'000) (R'000) (R'000)

Bargaining Unit (T2-T10) 28 615 690 69.26% 180 158 976

Assistant Managers (T11) 3 459 258 8.37% 12 288 272

Deputy Managers (T12-T14) 3 081 558 7.46% 8 385 195

Managers (T15-T17) 729 864 1.77% 3 243 288

Senior management (T18-T22) 5 428 400 13.14% 5 1 085 680

TOTAL AS PER AFS 41 314 770 208 198 629

Salary bands

Salaries, Overtime and Medical Assistance by programme, 2011/2012

Amount ('000)As a % of total expenditure Amount ('000)

As a % of total expenditure Amount ('000)

As a % of total expenditure

Administration 7 516 469 21.46% 38 152 0.11% 377 979 1.08%

Engineering 8 433 329 45.31% 1 006 707 5.41% 862 599 4.63%

Operations 10 331 895 30.46% 811 488 2.39% 1 005 673 2.96%

TOTAL AS PER AFS 26 281 693 30.02% 1 856 347 2.12% 2 246 251 2.57%

Salaries Overtime Medical Assistance

Programme

68

salaries, overtime and medical Assistance by programme, 2011/2012

employment and vacancies

employment and vacancies by programme, 31 march 2012

employment and vacancies by salary bands, 31 march 2012

employment and vacancies by critical occupation, 31 march 2012

69

Job evaluation

Job evaluation by occupation, 2011/2012

staff movement

the table below provides an indication of staff movements for the full time employees for the period 1 April 2011 to 31 march 2012.

staff movements for the period 1 April 2011 to 31 march 2012

70

the table below gives an indication of staff terminations per levels for the period 1 April 2011 to 31 march 2012.

staff terminations per levels for the period 1 April 2011 to 31 march 2012

the table below provides an indication of staff terminations per type for the period 1 April 2011 to 31 march 2012. staff terminations per type for the period 1 April 2011 to 31 march 2012

staff death analysis for the period 1 April 2011 to 31 march 2012

71

the table below provides an analysis of the reasons for terminations as per the exit interview forms for the period 1 April 2011 to 31 march 2012.

Resignations per Reason for the period 1 April 2011 to 31 march 2012

labour Relations

the table below provides an indication of the disciplinary cases per occupational level for the period 1 April 2011 to 31 march 2012.

disciplinary cases per occupational level for the period 1 April 2011 to 31 march 2012

the table below provides an indication of grievances lodges during the period 1 April 2011 to 31 march 2012.

grievances lodged for the period 1 April 2011 to 31 march 2012

the table below provides an indication of the types of misconduct and outcome of disciplinary charges for the period 1 April 2011 to 31 march 2012.

type of misconduct and outcome of disciplinary charges for the period 1 April 2011 to 31 march 2012

Nature of Misconduct CounsellingVerbal

WarningWritten

Warninig

Final Written Warning Dismissal Not Guilty

Case Withdrawn Total % of Total

Unfair Dismissal 0 4 1 10 15 3 33 100.00%

Unfair labour practice 0 0.00%

TOTAL 0 4 1 10 15 3 0 33 100.00%

% of TOTAL 0.00% 12.12% 3.03% 30.30% 45.45% 9.09% 0.00% 100.00% 3.03%

72

employment equity

the table below provides an indication of the race and gender ratio per occupational level as at 31 march 2012

employment equity statistics as per occupational level per Race and gender as at 31 march 2012

leave utilisation

the table below provides an indication of the use of sick leave for the period 1 April 2011 to 31 march 2012

sick leave for the period 1 April 2011 to 31 march 2012

the table below provides an indication of the use of temporary and permanent disability leave for the period 1 April 2011 to 31 march 2012

disability leave for the period 1 April 2011 to 31 march 2012

the table below provides an indication of the use of Annual leave for the period 1 April 2011 to 31 march 2012Annual leave for the period 1 April 2011 to 31 march 2012

73

the table below summarises payments made to employees as a result of leave that was not taken for the period 1 April 2011 to 31 march 2012leave pay-outs for the period 1 April 2011 to 31 march 2012

Recruitment

the table below indicates the number of external appointments that were finalised during the period 1 April 2011 and 31 march 2012 per race, gender and occupational levels

external Appointments as per occupational levels per Race and gender for the period 1 April 2011 and 31 march 2012

the table below indicates the number of internal appointments that were finalised during the period 1 April 2011 and 31 march 2012 per race, gender and occupational levels

internal Appointments as per occupational levels per Race and gender for the period 1 April 2011 and 31 march 2012

74

training and development

the table below indicates the number of training interventions that were finalised during the period 1 April 2011 and 31 march 2012 per race, gender and occupational levels

training interventions per occupational levels, Race and gender for the period 1 April 2011 and 31 march 2012

occupational health and safety

the table below provides an indication of the number of injuries on duty (iods) for the period 1 April 2011 to 31 march 2012

iods for the period 1 April 2011 to 31 march 2012

hiv, Aids and health promotion programmessteps taken to reduce the risk of occupational exposure

75

details of health promotion and hiv and Aids programmes

consultantsthe table below provides an indication of the number of consultants utilised for the period 1 April 2011 to 31 march 2012

Report on consultant appointments for the period 1 April 2011 to 31 march 2012

76

77

dedicAtion

to ouR clients in

eveRything we imAgine

mayibuye Transport

Corporate Headquarters

Corner of Drummond and Mdantsane Access Road, Reeston | East LondonP.O. Box19596 | Tecoma | 5214Tel: 043 745 2582

PR238/2012 | ISBN: 978-0-621-41219-2

MTC Annual Report_2011-2012_Crop Marks

Documents

business of public transport

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