MTC Annual Report 31 March 2009 PDF

222
Mayibuye
Transport
Corporation
ANNUAL REPORT
31 MARCH 2009

Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2009

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TABLE OF CONTENTS

FOREWORD BY MEMBER OF THE EXECUTIVE COUNCIL 6
MESSAGE FROM THE CHAIRPERSON 7
1 GENERAL INFORMATION 9
1.1 SUBMISSION OF ANNUAL REPORT TO THE EXECUTIVE
AUTHORITY BY THE CHIEF EXECUTIVE OFFICER OF MAYIBUYE
TRANSPORT CORPORATION
9
1.2 INTRODUCTION BY THE CHIEF EXECUTIVE OFFICER 9
1.2.1 GOING FORWARD 10
1.2.2 PROGRAMME HIGHLIGHTS 10
1.2.2.1 Finance Highlights 10
1.2.2.2 Operations Highlights 11
1.2.2.3 Human Resources Highlights 11
1.2.2.4 Engineering Highlights 11
1.2.2.5 Communication and Marketing Highlights 12
1.2.2.6 Strategy and Policy Development 12
1.2.3 DOCUMENTATION PRODUCED 12
1.3 INFORMATION ABOUT THE ENTITY 13
1.3.1 AREAS OF OPERATION 13
1.3.1.1 Zwelitsha Depot 13
1.3.1.2 Reeston Depot 13
1.3.1.3 Queenstown Depot 13
1.3.1.4 Alice Depot 13
1.3.2 BOARD OF DIRECTORS 13
1.3.3 MANAGEMENT 14
1.3.3.1 Secretary 14
1.3.4 REGISTERED HEAD OFFICE AND POSTAL ADDRESS 14
1.3.5 BANKERS 14
1.3.6 AUDITORS 14
1.4 VISION AND MISSION STATEMENT 14
1.5 LEGISLATIVE MANDATE 15


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2 PERFORMANCE OF THE MTC DIVISIONS 17
2.1 AIM OF ENTITY 17
2.2 SUMMARY OF DIVISIONS WITHIN MTC 17
2.3 OVERVIEW OF SERVICE DELIVERY ENVIRONMENT FOR 2008/2009 18
2.3.1 REVENUE COLLECTION 18
2.3.2 EXPENDITURE 18
2.3.2.1 Capital Expenditure 18
2.4 OVERVIEW OF ORGANISATIONAL ENVIRONMENT 20
2.5 STRATEGIC OVERVIEW AND KEY POLICY DEVELOPMENTS FOR
2008/2009
20
2.6 PERFORMANCE OF DIVISIONS WITHIN MTC 21
2.6.1 OFFICE OF THE CEO 21
2.6.2 HUMAN RESOURCES DIVISION 23
2.6.2.1 Staff Establishment 23
2.6.2.2 Industrial Relations 23
2.6.2.3 Appointments & Promotions 24
2.6.2.4 Separations 24
2.6.2.5 Performance 24
2.6.3 FINANCE DIVISION 26
2.6.3.1 Financial Statistics for the five years to March 2009 28
2.6.3.2 FINANCIAL HIGHLIGHTS 29
2.6.3.2.1 Route Revenue 29
2.6.3.2.2 Government Grant-in-Aid 29
2.6.3.3 SERVICE DELIVERY OBJECTIVES, INDICATORS & ACHIEVEMENTS 29
2.6.4 ENGINEERING DIVISION 30
2.6.4.1 PURPOSE OF ENGINEERING DIVISION 30
2.6.4.2 STRATEGIC OBJECTIVES OF ENGINEERING DIVISION 30
2.6.4.3 SECTIONS WITHIN ENGINEERING 30
2.6.4.4.1 Specific Challenges & Response 32
2.6.5 OPERATIONS DIVISION 33
2.6.5.1 PURPOSE OF OPERATIONS DIVISION 33
2.6.5.2 STRATEGIC OBJECTIVES OF OPERATIONS DIVISION 33


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2.6.5.3 SECTIONS WITHIN OPERATIONS DIVISION 33
2.6.5.4.1 Specific Challenges & Response 34
2.6.5.4.2 AREAS OF OPERATION 35
2.6.5.4.2.1 Zwelitsha Depot 35
2.6.5.4.2.2 Reeston Depot 35
2.6.5.4.2.3 Queenstown Depot 35
2.6.5.4.2.4 Alice Depot 35
2.6.5.4.2.5 Summarised Statistics 35
2.6.5.4.3 Vehicle State 36
2.6.5.4.4 Accidents 36
2.6.6 MARKETING AND COMMUNICATIONS UNIT 36
3. AUDIT COMMITTEE COMMENTS ON THE 2008/2009 ANNUAL
REPORT FOR THE MAYIBUYE TRANSPORT CORPORATION
39
3.1 APPOINTMENT OF AUDIT COMMITTEE MEMBERS / MEETINGS
AND ATTENDANCE
39
3.2 AUDIT COMMITTEE RESPONSIBILITY 39
3.3 THE EFFECTIVENESS OF INTERNAL CONTROL 39
3.4 THE QUALITY OF IN YEAR MANAGEMENT AND MONTHLY /
QUARTERLY REPORTS SUBMITTED IN TERMS OF THE PFMA
40
3.5 EVALUATION OF FINANCIAL STATEMENTS 40
3.6 APPRECIATION 40
4 ANNUAL FINANCIAL STATEMENTS 42
4.1 REPORT OF THE CHIEF EXECUTIVE OFFICER 42
4.1.1 GENERAL REVIEW 42
4.1.1.1 Overview of Financial Results 42
4.1.1.2 Operating Grant-in-Aid 43
4.1.1.3 Operating Expenses 43
4.1.2 SIGNIFICANT EVENTS AND PROJECTS 43
4.1.3 INVENTORIES 44
4.1.4 CORPORATE GOVERNANCE ARRANGEMENTS 44
4.1.4.1 BOARD MEMBERS 44
4.1.4.2 COMMITTEES 44
4.1.4.3 STATEMENT OF RESPONSIBILITY BY THE BOARD OF DIRECTORS 45


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4.1.5 RISK MANAGEMENT BY THE CORPORATION 45
4.2 APPROVAL 45
4.3 AUDITOR GENERALS REPORT 46
4.4 ANNUAL FINANCIAL STATEMENTS AS AT 31 MARCH 2009 52
4.4.1 BALANCE SHEET 53
4.4.2 INCOME STATEMENT 54
4.4.3 STATEMENT OF CHANGES IN EQUITY 55
4.4.4 CASH FLOW STATEMENT 56
4.4.5 ACCOUNTING POLICY NOTES 57
4.4.6 NOTES TO THE ANNUAL FINANCIAL STATEMENTS 65
4.4.7 DETAILED INCOME STATEMENT 81
5 HUMAN RESOURCES MANAGEMENT 85
5.1 ORGANISATIONAL STRUCTURE 85
5.2 VISION & MISSION OF HUMAN RESOURCES DIVISION 85
5.2.1 VISION 85
5.2.2 MISSION 85
5.3 KEY HUMAN RESOURCES ISSUES 85
5.3.1 OBJECTIVE 1: DEVELOP AND MAINTAIN SOUND HUMAN
RESOURCES PRACTICES
85
5.3.1.1 Develop sound human resources practices in MTC 85
5.4 COMBINED ANNUAL AND SICK LEAVE UTILISATION FOR THE
PERIOD 1 APRIL 2008 TO 31 MARCH 2009
86
5.4.1 DISABILITY LEAVE 87
5.5 LABOUR RELATIONS DISCIPLINARY HEARINGS FINALISED 87


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FOREWORD BY MEMBER OF THE
EXECUTIVE COUNCIL
The Eastern Cape Department of Roads and Transport
would like to express its sincere gratitude to the employees
and Board of Directors of Mayibuye Transport Corporation
(MTC) for the continuous improvement in the performance
of the institution.
It is gratifying to note the steady continuation of the growth
of the corporation, which includes the appointment of three
female members of the board of directors, namely Ms.
Church, Ms. Loyilane and Ms. Shweni-Booysen. This
clearly demonstrates the Departments commitment to
address the gender imbalances at Board level.
We have observed the improvement in the corporations
efficiencies through the introduction of new systems, including the Fleet Management System. As a
result, the Corporation received a clean audit report during the financial year under review. The
Department has, through its grant-in-aid program, enabled the Corporation to upgrade its bus fleet
and depot infrastructure, which resulted in the transportation of approximately 2 million passengers.
The Department of Roads & Transport will continue to support the Corporation in order to enhance
its internal capacity and to deliver on its mandate of rendering a safe, affordable, accessible and
reliable public transport service to the communities that it serves.

HON. GHISMA BARRY
MEC FOR TRANSPORT, SAFETY AND LIAISON

Hon Ghisma Barry
MEC for Transport
Hon Gloria Barry
MEC for Transport, Safety & Liaison


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MESSAGE FROM THE CHAIRPERSON
The past year has been another challenging year for Mayibuye Transport
Corporation with the second half presenting even more challenges as the
Corporation faced unprecedented financial constraints. This resulted in the
Corporation diverting capital funds in order to finance operating activities and in
turn shelving some capital projects that were planned for the year. This includes
among others, the planned acquisition of two midi-buses.
The Corporation was not immune to the effects of economic meltdown and
sustained increase in crude oil prices. This finds expression in higher variable expenses more
particularly on fuel usage. In trying to be innovative, the installation of modern fleet management
technology was identified as one of the critical projects to assist in controlling operating costs. At the
time of compiling the report, the roll out of the system was nearing completion stage.
That said, it is worth noting that with the strengthening of controls especially on revenue generation
side, positive spin-offs are there for everyone to see as budgeted revenue was exceeded by 17.67%.
More importantly, I am elated to report that the Corporation achieved unqualified audit for the year
under review which, undoubtedly, was a product of the hard work of the management team under the
stewardship of the CEO. This evolved with the gradual reduction on the number of qualifications
down to zero during the year under review. This milestone will not in any way distract MTC Board in
continually seeking to improve the performance of the Corporation. Instead, it is viewed as a stepping
stone to position MTC as one of the best Corporations in the province by ensuring that good
corporate governance practices are an integral part of the running of the institution. In order to
facilitate enabling conditions for such an environment, the Board-approved strategic plan for 2009/10,
talks to the urgent need of employing a compliance officer and at the time of compiling the report,
processes were already underway to fill the position.
It is the Boards view that whilst MTC Board and management are doing their best in executing the
mandate of the Corporation, this has to be met by political will on the part of our government to
support the Corporation. Whilst acknowledging capital allocation over the past three years, the
support in the form of huge capital injection to meet recapitalisation needs of the fleet and MTC
infrastructure is now more crucial than ever before. During the latter few months we have seen
impounding of buses by traffic authorities resulting in forced downscaling of operations and thereby
leaving communities stranded for extended period of time. The Board will be engaging the relevant
department/s to solicit such funds which we believe will save this struggling Corporation.
On behalf of the Board of Directors, I wish to thank the Portfolio Committee on Roads and Transport,
Department of Roads and Transport, management and staff of MTC, Commuters, Service Providers
and partners for their unwavering support.

___________________________________________________________
P.L.C. MASETI
CHAIRPERSON OF THE BOARD OF DIRECTORS
MAYIBUYE TRANSPORT CORPORATION


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PART 1

GENERAL
INFORMATION

MTC BOARD OF DIRECTORS


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1 GENERAL INFORMATION
1.1 SUBMISSION OF ANNUAL REPORT TO THE EXECUTIVE AUTHORITY BY THE
CHIEF EXECUTIVE OFFICER OF MAYIBUYE TRANSPORT CORPORATION
In accordance with the provisions of Section 40(1)(d) of the Public Finance Management Act, 1999
(Act 1 of 1999) as amended, the Annual Report for the fiscal year ended 31 March 2009 is hereby
submitted to the Member of the Executive Council Responsible for Roads & Transport in the
Province of the Eastern Cape.
________________________________________
L.R. MBINDA
CHIEF EXECUTIVE OFFICER
MAYIBUYE TRANSPORT CORPORATION
1.2 INTRODUCTION BY THE CHIEF EXECUTIVE OFFICER
MTC is committed to operating an effective organisation; hence policy implementation and further
systems development received priority during the year under review. Financial management systems
have improved significantly. We will continue to steer our audit turnaround plan towards clean audit
reports.
The management will continue driving a process of enhancing financial management and promoting
viability through revenue generation. The management will strengthen relations with the Board to
support it in exercising its oversight responsibility.
This oversight report reflects on the strategic and operational plan for 2008/09 financial year and
responding, but not limited, to issues raised by the:
Department of Roads & Transport;
Portfolio Committee on Roads & Transport;
Provincial Growth and Development Plan Review;
Auditor General;
Input from commuters who are beneficiaries of our services.
The performance report, synopsized in this introduction, will share progress achieved during the year
under review.


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1.2.1 GOING FORWARD
The Corporation will continue maximising inter-governmental co-operation that will result in close
working relations with the Department of Roads and Transport. This will help in developing and
enhancing the Corporations capacity to serve its customers during 2009/10. We will also be
monitoring the findings of the Legislature on the Corporation and actively work towards their
implementation and resolution.
At a strategic level we will develop a very strong business case and lobby the relevant stakeholders
for capital funding as our depot infrastructure, fleet and workshop equipment is deteriorating. This is
making it difficult for us to continue running an efficient and cost effective organisation. MTC will
also continue to invest in its human resources and capacitate the Corporation with the appropriate
calibre of staff.
I take this opportunity to thank our commuters, MTC staff and MTC Board of Directors for their
contribution in making the Corporation realise its goals and objectives.
1.2.2 PROGRAMME HIGHLIGHTS
1.2.2.1 Finance Highlights
Development and implementation of a fraud prevention plan and risk management strategy
and establishment of the risk committee.
Improving audit outcomes and financial management through:
Functional internal audit unit and audit committee.
Developing accounting and internal processes that resulted in elimination of long
outstanding audit queries.
Implementation of a fixed asset register that is SA GAAP compliant.
Establishment of a supply chain management as per the requirements of PFMA.
Policy and procedure development and implementation.
2009/10 will be focused towards the following:
Upgrading the accounting operating system.
Converting fixed assets module to be integrated to the accounting operating system.
Development of a financial manual that will serve as a guide for all the activities within
the division.
Implementing and operating own payroll system.


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1.2.2.2 Operations Highlights
Increase in private hire and route revenue from R15,055,438 to R19,426,462.
Won Driver of the Year Competition at a Provincial Level under Female Bus Driver
Category.
Continued to show commitment on transformation in terms of Employment Equity Act by
employing 2 female candidates in critical positions, i.e. Despatcher and Supervisor.
Initiated Trainee Female Bus Driver Project to attract more female bus drivers.
1.2.2.3 Human Resources Highlights
The vacant position of HOD Human Resources was filled.
The Industrial Relations Policy, Leave Policy and Subsistence and Travelling Policy were
approved by the Board of Directors.
Four lady bus drivers were recruited in order to address male dominance in the Operations
division.
Grades were flattened in Engineering division due to consolidation of certain tasks and this
resulted in streamlined Job Profiles.
An Internship program involving trainee lady bus driver has been rolled out.
1.2.2.4 Engineering Highlights
Three buses were refurbished during the year under review. This includes one unit that was
refurbished in-house as a pilot project.
Capital provision for the financial year allowed for R100,000 to accommodate replacement
of redundant workshop equipment.
Limitations in capital provision called for some innovation, hence the procuring of two
used buses that were delivered in May 09. Although this is a drop in the ocean, through
these additional units revenue generation was enhanced.
In reality, we needed an aggressive recapitalisation program that would deliver 43 new
buses replacing the old ones in order to improve our service.
We are proud to report that the state of our reception area and boardroom in Reeston depot
are indicators that the long term objective of elevating this depot into head office status
will one day become a reality.
The Corporation purchased a mini bus as staff transport during the year under review.
The power back-up system could not be procured due to financial constraints. This results
in operations being affected whenever power outages occur.
Our efforts in the area of skills development yielded positive results as two semi-skilled
mechanics acquired artisan status during the year under review.


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1.2.2.5 Communication and Marketing Highlights
The position of Communications and Marketing Officer was filled during the last quarter of the
2008/09 financial year. Since the filling of this vacancy, there were a number of achievements in
fulfilment of the obligations of the strategy. Even though certain objectives were realized, the
resourcing of this unit will see tangible results being achieved in respect of targets set for 2009/10.
Developed MTC into a strong brand;
Created a positive perception of MTC and upheld the image of the Corporation;
Inculcated a culture of customer service and stakeholder participation.
1.2.2.6 Strategy and Policy Development
MTC reviewed its 2007/08 Treasury aligned Strategic, Performance and Operational Plans. This
process was inclusive and enjoyed the participation of all relevant stakeholders. A process was
initiated to educate staff and raise awareness about the strategic plan. The following strategic
documents and policies were approved for 2008/09:
1.2.3 DOCUMENTATION PRODUCED
Five-year Strategic Plan and Annual Performance Plan
Risk Management Strategy
Fraud Prevention Plan
Skills Development Plan Policy
Industrial Relations Policy
Occupational Health and Safety Policy
Sexual Harassment Policy
Induction Policy
Exit Interview Policy
Overtime Policy
Subsistence and Travel Policy
Leave Policy
Board Charter
Code of Conduct
Delegation of Authority
Performance Agreement for Senior Managers


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Board Plan 2008/2009
1.3 INFORMATION ABOUT THE ENTITY
Mayibuye Transport Corporation is registered as a Corporation in terms of the Ciskei Act 16 of 1981
by Government Decree number 89 of 1990. MTC is a Schedule 3D company in terms of the Public
Finance Management Act (PFMA). MTC is currently considered a public entity and its shareholder
is the Department of Roads & Transport in the Eastern Cape.
At present MTC receives a subsidy in the form of a grant-in-aid to cover the operating expenses of
the Corporation.
The main objective of Mayibuye Transport Corporation is to provide an affordable bus transport
service to the predominantly rural communities of the former Republic of Ciskei where public
transport was either inadequate or not existing at all.
1.3.1 AREAS OF OPERATION
MTC currently provides passenger transport services through its four bus depots:
1.3.1.1 Zwelitsha Depot
This depot is situated opposite Zone 8, along Route 347. It covers the area of King Williams Town.
Contact Details
Zwelitsha Depot P.O. Box 19596
Mount Coke Road Tecoma, East London
Zwelitsha 5608 5214
Tel: 040 654 1351 Fax: 040 655 1907
1.3.1.2 Reeston Depot
The Reeston depot is situated on the corner of Drummond and Mdantsane Access Roads between
Mdantsane and East London. It covers the Potsdam and Newlands areas of Buffalo City.
1.3.1.3 Queenstown Depot
This depot is situated at Queendustria, Ezibeleni and services the Whittlesea and Ntabethemba areas
of the Chris Hani District Municipality.
1.3.1.4 Alice Depot
This depot is situated in Alice and covers the Nkonkobe Municipal area.
1.3.2 BOARD OF DIRECTORS
Mr. P.L.C. Maseti Chairperson
Mr. S.J. Nyengane Deputy Chairperson
Mr. P.P. Balfour Member
Mr. D. Lefutso Member
Mr. T. Matiwane Member


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Mr. M. Tuswa Member
Mr. A.J. De Vries Member
Mr. T.A. Thomas Member
Ms. A.M. Church Member
Ms. N.E.P. Loyilane Member
Ms. N. Shweni-Booysen Member
1.3.3 MANAGEMENT
Mr. L.R. Mbinda CEO
Mr. L.C. Mtise HOD: Human Resources
Mr. Z.D. Leni HOD: Engineering
Mr. L. Coetzer Chief Financial Officer
Vacant HOD: Operations
1.3.3.1 Secretary
Mrs. C. Cronj
1.3.4 REGISTERED HEAD OFFICE AND POSTAL ADDRESS
Reeston Depot P.O. Box 19596
Cnr of Drummond and Mdantsane Access Roads Tecoma, East London
Wilsonia 5214
East London
5247
1.3.5 BANKERS
Standard Bank of South Africa Limited
King Williams Town
1.3.6 AUDITORS
Auditor-General
Audit Committee:
Mr. M. Mantyi
Mrs. R. Luzuka
Mr. J. Mdeni
Internal Audit Unit (PricewaterhouseCoopers)
1.4 VISION AND MISSION STATEMENT
The VISION of Mayibuye Transport Corporation is as follows:
Mayibuye Transport Corporation strives to be a leading public transport service provider in its areas
of operation. Guided by the ethos of customer service excellence, Mayibuye Transport Corporation


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(MTC) will provide passenger transport services which are community-driven. It will continuously
strive to be a safe, reliable and technically efficient organization.
The MISSION of Mayibuye Transport Corporation is as follows:
In pursuance of its vision, Mayibuye Transport Corporation (MTC) strives to:
Maintain the highest possible standards in the provision of an effective and efficient
transport service to the Eastern Cape communities on selected routes.
Provide an enabling environment conducive to the provision of an affordable, convenient
and safe mode of public transport.
Keep abreast of trends and developments in the sector to meet changing customer and
stakeholder needs.
The creation of strategies that lend support to the Provincial Growth and Development Plan,
Batho Pele and BEE initiatives.
1.5 LEGISLATIVE MANDATE
The Corporation derives its existence from the following legislative mandate:
Basic Conditions of Employment Act (Act No of 1997).
Corporations Transitional Provisions Act (Act 12 of 1995) (Eastern Cape)
Employment Equity Act, 1998 (Act No 55 of 1998).
Fraud and Corruption Act (Act 12 of 2004).
Labour Relations Act (Act No 65 of 1995).
National Land Transport Transition Act, 2000 (No 22 of 2000) (NLTTA).
National Road Traffic Act, 1996 (Act No. 93 of 1996).
National Transport Policy 1996.
Occupational Health and Safety Act (Act No 85 of 1993).
Passenger Transportation (Interim Provisions) Act, 1999 (No 11 of 1999).
Preferential Procurement Policy Framework Act, 2000 (Act No 5 of 2000).
Promotion of Access to Information Act (Act No 2 of 2000).
Public Finance Management Act, 1999 (No 1 of 1999) (PFMA).
Road Transportation Act, 1977 (Act No. 74 of 1977).
Skills Development Act, 1998 (Act No 97 of 1998).
Skills Development Levy Act, 1999 (Act No 9 of 1999).
Including regulations emanating from the above legislation.


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PART 2

PERFORMANCE OF MTC
DIVISIONS


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2 PERFORMANCE OF THE MTC DIVISIONS
The strategic focus of the Mayibuye Transport Corporation can be summarised as follows:
Strengthen collaboration and accountability between the Board and Management in building
strong and good governance.
Develop MTC into a strong brand.
Implement sound human resources practice in MTC.
Ensure sound financial and administrative practice at MTC.
Develop an organization with strong ITC capabilities.
Strive to maintain world class standards.
Promote safe, reliable public transport services.
Reduce the rate of accidents in its area of operation.
Comply with all laws governing public entities.
2.1 AIM OF ENTITY
To ensure effective and efficient governance and administration structures, systems and culture
capable of responding to Provincial Roads and Transport priorities.
2.2 SUMMARY OF DIVISIONS WITHIN MTC
The Corporations activities are organised in the following divisions:
Division Sub-Division
1.1 Personnel Administration
1.2 Industrial Relations
1.3 Training and Development
1.4 Employee Assistance Programme (EAP)
1. Human Resource Management
1.5 Organisational Development
2.1 Debtors Control
2.2 Creditors Control
2.3 Accounts
2.4 Salaries
2.5 Information Technology
2. Finance
2.6 Supply Chain
3. Operations
3.1 Revenue Collection


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Division Sub-Division
3.2 Statistics
3.3 Despatch
3.4 Inspection
3.5 Private Hire
3.6 Traffic
4.1 Stores
4.2 Tyres
4.3 Maintenance (Vehicles and Infrastructure)
4. Engineering
4.4 Purchasing
2.3 OVERVIEW OF SERVICE DELIVERY ENVIRONMENT FOR 2008/09
2.3.1 REVENUE COLLECTION
Route and Private Hire Revenue
Year Budget Actual Variance
2007 12,550,000 12,149,128 (350,872)
2008 14,131,397 15,055,438 924,041
2009 16,509,000 19,426,462 2,826,862
2.3.2 EXPENDITURE
Item 2009
Actual
2008
Actual
2007
Actual
Profit / (Loss) from operations 1,765,461 2,580,204 (1,313,625)
Personnel 26,147,182 23,173,514 20,846,028
Audit fees (including internal audit fees for current year) 898,280 930,032 312,983
Other operating expenses 21,538,376 16,429,831 14,175,959
Depreciation 7,602,035 2,942,959 1,809,580
2.3.2.1 Capital Expenditure
The Corporation has received a capital grant from the Department of Roads & Transport which has
been spent as follows:


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2008/09
Item Budget Expenditure Variance
New Buses &
Refurbishment
2,612,000 4,904,223 (2,292,223)
New Vehicles - 274,547 (274,547)
Operating Equipment 70,000 108,008 (38,008)
Workshop Equipment 1,130,000 87,559 1,042,441
Office Equipment - 242,428 (242,428)
Office Furniture 50,000 244,915 (194,915)
Depot Upgrading 588,000 271,167 316,833
IT Infrastructure 50,000 - 50,000
Zwelitsha Title Deed 500,000 - 500,000
Total 5,000,000 6,132,847 (1,132,847)
2007/08
Item Budget Expenditure Variance
New Buses 2,200,000 - 2,200,000
Second hand buses 1,785,240 - 1,785,240
Refurbishment 1,100,000 1,282,167 (182,167)
Operating Equipment 163,840 150,291 13,549
Workshop Equipment 300,000 331,481 (31,481)
Office Equipment 200,000 294,009 (94,009)
IT Infrastructure 100,000 45,269 54,731
Depot Upgrading 1,150,920 1,095,514 55,406
Total 7,000,000 3,198,731 3,801,269

Depreciation Rates for Assets Percentage
Ancillary Vehicles 25%


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Depreciation Rates for Assets Percentage
Buses Body 12.5%
Buses Chassis, engine, etc 8.33%
Office Equipment 20%
Office Furniture 10%
Operating Equipment 20%
Workshop Equipment 25%
Buildings 2%
2.4 OVERVIEW OF ORGANISATIONAL ENVIRONMENT
Mayibuye Transport Corporation (MTC) is a government parastatal that was established in 1990. It
strives to provide an effective and efficient public transport service to its customers. It has depots in
Alice, Reeston, Queenstown and Zwelitsha. Its peak fleet presently comprises of 48 buses servicing
major routes in the former Ciskei and Border areas. Its client base stems from the broad spectrum of
the Eastern Cape population. It has created a niche for itself in the public servants market. MTCs
name has been synonymous with affordability and reliability.
The Corporation had a total staff complement of 171 as at 31 March 2009, which reflects a staff to
bus ratio of 3:1 in line with the industry average, a number of vacancies in critical positions cannot be
filled as a result of financial constraints.
The following critical positions have been identified in the 2008/09 financial year:
Compliance Manager
HOD Operations
HR Officer
Protection Services Officer
Occupational Nurse.
2.5 STRATEGIC OVERVIEW AND KEY POLICY DEVELOPMENTS FOR 2008/09
In June 2008 the MEC for Provincial Safety Liaison, Roads & Transport appointed three female
directors to address the gender imbalances and strengthen the oversight role played by the Board of
MTC.
MTC Board is mandated by the Department of Roads & Transport to restructure the Corporation. As
a result of this mandate the Board is currently developing a business case that will be submitted to the
Department in June 2009 financial year.


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The Audit Committee continues working with the Internal Audit unit (PricewaterhouseCoopers). The
Board of Directors are getting feedback in Board meetings from the Chairperson of the Audit
Committee.
An MTC five year Strategic Plan and Annual Performance Plan for 2008/09 financial year was
developed and approved by the Board of Directors. A Fraud Prevention Plan and Risk Management
Strategy are also in place.
Due to financial constraints, the Corporation could not fill all the vacant positions during the year
under review. 96% of our organogram is populated and critical positions filled in the next financial
year.
2.6 PERFORMANCE OF DIVISIONS WITHIN MTC
2.6.1 OFFICE OF THE CEO
The office of the CEO provides strategic leadership and direction for the
organization and gives support to the Board of Directors.

Measurable Objectives Performance Measure Performance Indicators and
Targets
Deviations /
Comments
Review Board Plan. Board Plan reviewed and
implemented.
Target achieved.
Review Board Charter. Board Charter reviewed and
implemented.
Target achieved.
Board Induction Plan for
new Board members.
New Board Members
inducted.
Target achieved.
Board Appraisal Tool. Board Appraisal Tool
developed and adopted.
Due to limited
finance resources
we have not
developed the
Appraisal Tool for
Board Members.
Code of Conduct for
MTC.
Code of Conduct developed. Target achieved.
Board Development
Plan.
Board Development Plan
implemented.
Target achieved.
To promote strong and
good governance at MTC.
Delegation of Authority
and Performance
Agreement for MTC
management monitored
Delegations of Authority and
Performance Agreement for
the CEO and HODs
implemented.
Target achieved.
L.R. Mbinda
CEO


Page 22 of 88
Targets
Deviations /
Comments
and evaluated.
Strategic leadership and
direction.
Review, adopt and
implement MTC strategy
for 2008/09 and align to
Treasury Guidelines.
Strategic Plan reviewed,
adopted and implemented
according to Treasury
Guidelines.
Target achieved.
Maximise inter-
governmental co-operation.
Sustain and strengthen
partnerships in the
D.O.R.T., Public
Entities, the Legislature
and other departments.
Existing partnerships
sustained and strengthened.
New partnerships developed.
MTC management
participate in
structures like
BRT, BCM
Integrated
Transport Plan,
SABOA, SABEA,
etc.
Target achieved.
Develop a Compliance
Plan for all legislative
mandates.
Develop a Compliance
Plan for all relevant
legislative mandates.
Compliance Plan for
legislative mandates
developed and implemented.
An annexure for
compliance is
included in our
Risk Management
Strategy and
implemented.
Target achieved.
Formulate Policies and
Procedural Framework.
Develop and implement
policies and procedure
manuals.
Policies and Procedure
manuals developed and
implemented.
Target achieved.
Implement Health & Safety
Programmes.
Implement Health and
Safety Programme as per
the legislative prescripts.
Health & Safety Programme
implemented in line with
legislation: 75%.
Health & Safety
implemented.
Partially achieved:
75%.
e.g. Health &
Safety Reps in
place and meetings
are taking place.
To manage Corporation
risks for sustainability.
Risk Management Plan
in place.
Fraud Prevention Plan in
place.
Risk Action Plan
implemented.
Fraud Prevention Plan
implemented.
Risk Management
Strategy and Fraud
Prevention Plan
approved by the
Board of Directors
and implemented.
Target achieved.


Page 23 of 88
Targets
Deviations /
Comments
Capacitate MTC with the
relevant human resources.

To appoint high calibre
candidate to fill the
management vacancy of
HOD of Human
Resources as well as the
other funded junior
positions.
MTC organogram populated.

Target achieved.
HOD of Human
Resources
appointed.
Inculcate a customer
service ethic in all divisions
of MTC.
Develop a customer
service charter poster for
employees.
Develop and implement a
customer service
excellence course for all
front-line employees.
Customer service charter
posters printed and
disseminated at all MTC
depots.
Customer service excellence
course held at all depots
(40%).
Target not
achieved due to
budgetary
constraints.
Currently pursuing
options of in-house
training.
Ensure timely, accurate and
reliable financial reporting.
Provide timely, accurate
and reliable financial
reporting to the Board,
Department and AG.
Timely submissions to the
Board. D.O.R.T. and AG.
Target achieved.
Improve service delivery at
MTC.
Service delivery
improved.
Develop Service Delivery
Improvement Plan.
Draft 50%
2.6.2 HUMAN RESOURCES DIVISION
2.6.2.1 Staff Establishment
The personnel to operating bus ratio are 3:1, in line with the industry norm.
This means that the Corporation has a staff complement of 171 while
operating a fleet of 62 buses. (48 peak buses plus 14 non-operational buses)
It should be noted that during the year under review the Corporation has
managed to be in line with the ideal industry norm of 3:1 with some critical
positions still vacant.
2.6.2.2 Industrial Relations
The Corporation has a collective agreement with the South African Transport and Allied Workers
Union (SATAWU). MTC is also affiliated to the South African Bus Employers Association
(SABEA) who is also a member of the South African Road Passenger Bargaining Council
(SARPBAC).
The total membership of the Union stood at One Hundred and twenty (120) employees.
C. Mtise
HOD: HR


Page 24 of 88
2.6.2.3 Appointments & Promotions
The position of the HOD: Human Resources was filled.
2.6.2.4 Separations
22 staff members left the employ of the Corporation during the year under review:
Retired Dismissed Resigned Absconded Disabled Deceased
5 9 3 3 1 1
2.6.2.5 Performance
The Human Resources Division has been able to demonstrate results against its measurable objectives
as indicated below:
Measurable
Objective
Performance
Measure
Target Output
2008/09
Actual Output
2008/09
Deviation from Target
& Reasons for Non-
Achievement
Train lady bus
drivers to acquire
driver's licences and
PrDPs.
Train 10 lady
drivers to acquire
Learner's licences.
Eight ladies
acquired
Learner's
licences.
20%
Develop an
accelerated artisan
program guided by
MERSETA.
Identify two semi-
skilled mechanics to
be trained as
artisans.
Two semi-skilled
mechanics
achieved artisan
qualifications.
None.
Conduct a
skills audit.
Compile a
skills
development
plan.
Address
organisational
skills
deficiencies.

Implement
internship programs.
Enrol three
unemployed
graduates to an
internship program.
Two interns are
getting exposure
in the HR
division and
another one in the
Marketing and
Communication
Unit.
None.
Promote sound
labour relations
within MTC.
Produce an Industrial
Relations Policy.
Circulate to relevant
stake holders for
comment and input.
Finalise policy for
Boards approval.
Circulate to all
employees of the
Corporation.
Conduct workshops
to educate
employees.
Policy approved
by the Board.
Booklets printed
and given to all
employees.
Workshops
conducted in all
depots.
None.
Facilitate
overall
physical and
psychological
Develop Employee
Wellness Programs
to support
employees.
Conduct EAP at all
depots.

Employee
Wellness
programs held at
all MTC depots.
None.


Page 25 of 88
Measurable
Objective
Performance
Measure
Target Output
2008/09
Actual Output
2008/09
Deviation from Target
& Reasons for Non-
Achievement
All MTC staff to be
able to access good
medical treatment
through their
membership of the
Medical Aid.
MTC employees
are getting good
medical
treatment.
None.
Job
Consolidation
and Evaluation.
Consolidate
Engineering jobs in
order to be in line
with the strategic
objective of
Engineering
Division.

Draft new Job
Descriptions,
consult with stake
holders including
managers and
labour, evaluate
new job
descriptions (50%).
Job Consolidation
concluded,
evaluation is in
progress. (50%)
None.
Adherence and
compliance to
labour
legislation.
Employees to have
employment
contracts and signed
job descriptions in
their files.
New recruits have
signed employment
contracts.
New recruits have
signed
employment
contracts.
Job descriptions
are being revised.
None.
To capacitate
MTC with the
relevant human
resources.
Fill budgeted
positions with
candidates who will
add value to MTC.
Fill the vacant
position of HOD
HR.

Position of the
HOD Human
Resources has
been filled.
None.
Policy
management.
Policy review and
development of
policies based on
need and
compliance.
Review the
following policies:
Training and
Development, Exit,
Induction,
Recruitment.
Draft policies
circulated to
stakeholders for
comment and
input.
None.
Promote sound
labour
relations.
Revise recognition
agreements entered
with Trade Unions.
A signed
recognition
agreement to be in
place.
A revised
recognition
agreement has
been signed by
the CEO and the
Union.
None.


Page 26 of 88
2.6.3 FINANCE DIVISION
The financial performance of the corporation is outlined in the income statement in
the audited annual financial statements.
Revenue
Total revenue (Combined Revenue) generated from bus fares for the financial
period under review amounted to R19,426,462. Revenue generation by depot was
as follows:-
Revenue generation by segment
Depot 2009 2008
Zwelitsha 9,151,805 6,265,809
Reeston 3,602,957 2,926,797
Queenstown 5,091,431 4,468,357
Alice 1,580,269 1,394,475
TOTAL 19,426,462 15,055,438
The combined revenue has been achieved by an average number of 48 operating buses (2008: 46)
with a total number of 2,566,682 kilometers travelled. Private hire kilometers amounted to 134,196
(2008: 79,841 Km) while route kilometers stood at 2,432,486 (2008: 2,306,722) for the financial year.
The increase in revenue in 2009 as compared to 2008 is due to the following:
Increased bus fares.
Improved efficiency levels.
Control measures were strengthened.
Combined revenue has been generated by each depot as follows:-
Revenue generation by service
2009 2008
Depot
Route
Revenue
Private Hire
Revenue
Route
Revenue
Private Hire
Revenue
Zwelitsha 7,964,007 1,187,798 5,683,388 582,421
Reeston 3,024,065 578,892 2,521,770 405,027
Queenstown 4,876,983 214,448 4,181,377 286,980


Page 27 of 88
2009 2008
Depot
Route
Revenue
Private Hire
Revenue
Route
Revenue
Private Hire
Revenue
Alice 1,405,969 174,300 1,212,076 182,399
TOTAL 17,271,024 2,155,438 13,598,611 1,456,827
Revenue and expenditure trends as at 31 March 2009
Pevenue ExpendIture
-
2,000,000
+,000,000
6,000,000
8,000,000
10,000,000
Apr Nay June July Aug Sept Oct Nov Dec Jan Febr Narch
honth
A
m
o
u
n
t
Revenue Expenditure

Operating expenditure trend for the period ended 31 March 2009
2,000,000
4,000,000
6,000,000
Apr |ay June Jul Aug Sept Dct Nov 0ec Jan Febr |ar
Curr Year PrIor Year

1,500,000
J,000,000
4,500,000
6,000,000
7,500,000
9,000,000
10,500,000
Apr |ay June Jul Aug Sept Dct Nov 0ec Jan Febr |ar
Current year
PrIor Year

The above graph shows that as at 31 March 2009 the corporation ended with a less favourable
balance compared to R 4,601,432 reported in the same period in 2008 financial year.


Page 28 of 88
Bus allocation per depot for the financial year was as follows:-
DEPOT 2009 2008
Zwelitsha 20 18
Reeston 10 9
Queenstown 12 12
Alice 6 7
TOTAL OPERATING BUSES 48 46
Average route revenue per bus was as follows:-
DEPOT 2009 2008
Zwelitsha 398,200 315,744
Reeston 302,407 280,197
Queenstown 406,415 348,448
Alice 234,328 173,154
Operating Grant-in-Aid
The Corporation receives a grant-in-aid from The Provincial Department of Roads & Transport. The
grant is to subsidize bus fares and partly fund the Corporations operating activities. Allocation for
the financial year under review was as follows:-
2009 2008
Grant-in-Aid 31,895,000 33,565,000
2.6.3.1 Financial Statistics for the five years to March 2009:
DETAILS 2009 2008 2007 2006 2005
Revenue 19,426,462 15,055,438 12,149,128 11,577,460 11,502,232
Grant-in-Aid
31,895,000 33,565,000 27,747,177 25,001,992 20,500,000
Capital Grant-in-Aid
5,000,000 7,000,000 4,250,000 15,000,000 -
Passengers 2,053,531 1,751,785 1,574,045 1,556,132 1,853,553
Route Kilometres
2,432,486 2,306,722 2,155,049 2,121,467 2,043,688
Buses at Year end
62 58 56 52 60
Number of
Employees
171 171 170 183 207
Revenue Cents per
Kilometre (Cpk)
799 653 564 546 563


Page 29 of 88
DETAILS 2009 2008 2007 2006 2005
Staff Ratio 3:1 3:1 3:1 3.6:1 3.7:1
2.6.3.2 FINANCIAL HIGHLIGHTS
2.6.3.2.1 Route Revenue
Revenue from Operations increased from R15,055,438 to R19,426,462.
2.6.3.2.2 Government Grant-in-Aid
An amount of Thirty One Million, Eight Hundred and Ninety Five Thousand Rand (R31,895,000) for
operational purposes and a further capital Grant-in-Aid of Five Million Rand (R5,000,000) was
received for the year under review.
2.6.3.3 SERVICE DELIVERY OBJECTIVES, INDICATORS & ACHIEVEMENTS
The Finance Division has been able to demonstrate results against its measurable objectives as
indicated below:
Measurable
Objective
Performance
Measure
Target Output
2008/09
Actual Output
2008/09
Deviation from
Target &
Reasons for
Non-
Achievement
Financial
Management.
Manage the Internal
Control environment
through policies and
procedures.
Internal Control
environment
managed.
Policies and
Procedures in place.
Internal control
environment
managed by
establishment of
risk committee
and assistance of
internal audit.
Continues
process of
internal control
management.
Reduce the number of
audit queries.
Monitor, evaluate
and review clean
audit plan.

Clean audit plan
monitored,
evaluated and
reviewed.
Revised clean audit
plan implemented.
Improved audit
report. Only
completeness of
revenue
qualification.
Revenue
reasonability
study and trend
analysis not
performed.
Monitor and evaluate
financial information
systems for uploading
and recalling of
information.
Implement financial
information system
for uploading and
recalling of
information.
Effective financial
information systems
implemented and
monitored.

The Pastel
accounting is an
effective financial
information
system.
None.
Ensure timely,
accurate and reliable
financial reporting.
Provide timely,
accurate and reliable
financial reporting to
the Board,
Timely submissions
to the Board and
AG.
All financial
reports were
submitted
accurately,
reliably and
None.


Page 30 of 88
Measurable
Objective
Performance
Measure
Target Output
2008/09
Actual Output
2008/09
Deviation from
Target &
Reasons for
Non-
Achievement
Department and AG. printed timeously.
2.6.4 ENGINEERING DIVISION
2.6.4.1 PURPOSE OF ENGINEERING DIVISION
The purpose of Engineering Division is to provide Operations Division with
safe and reliable buses so that they can operate according to their schedule.
This continues to be a daunting task given the pace at which the fleet
recapitalisation program is moving in relation to the deteriorating rate of the
fleet.
2.6.4.2 STRATEGIC OBJECTIVES OF ENGINEERING DIVISION
To provide safe, reliable buses to Operations Division so as to ensure the mandate of the corporation
is carried out.
2.6.4.3 SECTIONS WITHIN ENGINEERING
Tyre Section
Stores Section
Maintenance Section
The Engineering Division has been able to demonstrate results against its measurable objectives as
indicated below:
Measurable
Objective
Performance
Measure
Target Output
2008/09
Actual Output
2008/09
Deviation from
Target
Reason for Non-
Achievement
Deliver a safe and
reliable transport
service.
Reduced
breakdowns.
To maintain an
average of 41
breakdowns per
month.
Achieved an
average of 43
breakdowns per
month.
The majority of the
fleet has exceeded the
useful life of 800 000
Km.
Tyre failure-related
breakdowns making
up an average of 50%
of all breakdowns due
to poorly maintained
Z. Leni
HOD Engineering


Page 31 of 88
Measurable
Objective
Performance
Measure
Target Output
2008/09
Actual Output
2008/09
Deviation from
Target
Reason for Non-
Achievement
roads.
Achieved 95%
Keep abreast of
technological
developments.
Capacitated
personnel to
maintain new
generation vehicles
in the fleet.
Advanced training
(with at least ten
beneficiaries)
undertaken within
the financial year.
Five employees
were trained
instead of ten.
The advanced training
could not be carried
out on premises as
planned and costs
allowed for five.
Achieved 50%
Recapitalisation of
the fleet.
1. Improved
image and
service.

1. Newer vehicles
to make up
25% of the
fleet.
2. To acquire at
least one
disability
friendly bus.
1. Achieved
22.5%
2. Achieved 0%
1. The acquisition
of two midi-buses
was abandoned
due to financial
constraints.
2. Insufficient
capital.
Achieved 66%
Increase Revenue. Improve Route &
Private Hire
revenue collection.
Increase total
operational
revenue to R16,5
million.
R19,426,462 None.
Reduce operating
costs.
Reduce operating
costs.
Fuel consumption
not to exceed 45
L/100km.
42.25 L/100km None.
Maintain current
market share.
Satisfy peak bus
requirement.
Provide Operations
Division with 50
peak buses daily.
48 Age and reliability of
the fleet had a major
impact.
Achieved 96%
Forward planning. Minimise
disruptions caused
by major unit
failures.
Ensure that a spare
engine, gearbox
and differential are
available at each
depot.

No spare units
were kept at
depots.
Limited financial
resources did not
allow. We installed
fleet management
systems for better
control and
indications are that
premature engine
failures will be
overcome, affording
us more savings that
will facilitate better
planning going
forward.


Page 32 of 88
Measurable
Objective
Performance
Measure
Target Output
2008/09
Actual Output
2008/09
Deviation from
Target
Reason for Non-
Achievement
External
relationship.
MTC represented
in the SABOA
Technical
Committee.
Develop
relationships with
other bus
companies.
Attended 3
meetings where
the unfolding of
the BRT System,
2010 preparations
and relevant
legislation were
discussed.
Achieved 75%
Policy
development.
Fleet Policy in
place.
Fleet Policy
developed and
adequate system
for fleet records in
place.
Fleet Policy and
Procedures were
being finalised for
implementation in
2009/10.
Fleet Management
System installation
almost complete.
Achieved 50%
Financial constraints
resulted in the delay
in achieving the
objective.
2.6.4.4.1 Specific Challenges & Response
Challenge 1:
The average number of operating buses per month was 48 instead of the targeted 50 buses due to the
age of the fleet.
Response to challenge 1:
The Department of Roads & Transport has provided capital funds and further commitment to sustain
this funding in order for the Corporation to recapitalise the fleet. However, the allocation is
insignificant to match the rate of the necessary recapitalisation programme.
Challenge 2:
Our buses are still vulnerable, to some extent, to siphoning of diesel at sleeping grounds.
During the year under review, 75% of the vulnerable vehicles were fitted with modified diesel tank
caps to curb siphoning. The consumption has stabilised around 42L/100km for two years in
succession, however, there is still room for improvement.
Challenge 3:
The state of the infrastructure is not desirable especially Alice Depot where current conditions may
subject the Corporation to litigation given the prevailing safety hazards.


Page 33 of 88

Although an alternative site with the existing infrastructure was identified, negotiations to secure the
site were unsuccessful. The Corporation will continue to explore other alternatives and with the
assistance of the Department of Transport, the Corporation hopes to find a feasible solution.
2.6.5 OPERATIONS DIVISION
2.6.5.1 PURPOSE OF OPERATIONS DIVISION
To spearhead the transportation of passengers on all
MTC routes and thereby generate revenue for the
Corporation.
2.6.5.2 STRATEGIC OBJECTIVES OF
OPERATIONS DIVISION
To provide a community needs driven passenger
service that is reliable, access provided by a
disciplined and caring staff.
2.6.5.3 SECTIONS WITHIN OPERATIONS DIVISION
Traffic
Statistics
Private Hire
Inspection
The Operations Division has been able to demonstrate results against its measurable objectives as
indicated below:
Measurable
Objective
Performance Measure Target Output
2008/2009
Actual Output
2008/2009
Deviation from
Target
Reason for Non-
Achievement
Develop best
practice
operations
standards.

Implement passenger
participation plan i.e.
update commuters on
fare increase and
feedback on customer
services.
Improved passenger
participation and
customer services.

Stakeholder
engagement plan
developed and
implemented but
continuity is still a
problem.
MTC did not
have Marketing
and
Communications
Unit previously;
hence this
objective was not
N. Funani & T. Ncaphayi
Traffic & Operations Superintendents


Page 34 of 88
Measurable
Objective
Performance Measure Target Output
2008/2009
Actual Output
2008/2009
Deviation from
Target
Reason for Non-
Achievement

mastered. Now
that it has been
established more
ground work is
being done.
Improve route
performance.
Monitor route
performance and
develop mechanism to
ensure route viability
and profitability.
All MTC routes to
achieve CPPK (cent
per passenger per
kilometre) of R5,50.
Target was achieved:
Zwelitsha = R7,00
Reeston = R6,00
Queenstown = R9,00
Alice = R7,00
Average = R8,00
Target was
achieved.
Improve driver
performance.
Implement, monitor
and evaluate drivers
performance plan as
well as accident
statistics.
Improved driver
performance and
fewer accidents.
4 x bus accidents
were recorded in the
year under review
but there were no
casualties.
Operating with
ageing fleet is the
greatest challenge
that our drivers
have to deal with.
Improve route
revenue in all
depots.
Develop a
complimentary
revenue generation
plan as well as
revenue collection
mechanisms and
monitor route
performance.
Meet the R15m target
set for the current
year.
Generated R17m on
route revenue for the
year under review.
Achieved the
budget although
we operated with
limited number of
buses due to
breakdowns and
major defects.
Develop
alternative
revenue
generation
streams.
Promote private
higher through
advertising and other
special services
rendered by MTC.
Increased revenue
generated from other
sources. Meet R1,5m
target set for private
hire.
Generated R1,8m on
private hire.
Target achieved.
Promote
customer
services.
Develop a customer
services charter poster
for employees and
conduct training for
front line staff on
customer care/
services.
Conduct training at
Zwelitsha and
Reeston.
Render excellent
customer services to
all our clients.
Appointed service
provider to conduct
training on customer
care.
Budget
constraints.
2.6.5.4.1 Specific Challenges and Response
Challenge 1:
Electronic Ticket Machines (ETMs) are susceptible to frequent breakdowns due to the dusty nature
of the rural operations which comprises 80% of the MTC operations as well as bad routes.


Page 35 of 88
Strengthen first line maintenance on ETMs and purchase sufficient spare machines as well liaising
with the Department of Roads and Transport to assist on bad routes.
Challenge 2
Meeting customer needs and expectations as well as running a reliable service is a major challenge
due to limited number of peak buses.
Recapitalize MTC fleet.
2.6.5.4.2 AREAS OF OPERATION
2.6.5.4.2.1 Zwelitsha Depot
The Zwelitsha Depot covers the areas of King Williams Town and Keiskammahoek.
A total of Eight Hundred and Eighty Six Thousand and Forty One (886,041) passengers were carried
with One Million, One Hundred and Thirty Seven Thousand, Three Hundred and Eight (1,137,308)
kilometres travelled.
2.6.5.4.2.2 Reeston Depot
The Reeston Depot covers the areas of East London.
A total of Four Hundred and Fifty Five Thousand, Five Hundred and Forty Three (455,543)
passengers were carried with Five Hundred and Nine Thousand, One Hundred and Seventy Seven
(509,177) kilometres travelled.
2.6.5.4.2.3 Queenstown Depot
The Queenstown Depot covers the areas of Ntabethemba, Whittlesea and Mkapusi.
A total of Four Hundred and Eighty Four Thousand Five Hundred and Ninety Three (484,593)
passengers were carried with Five Hundred and Sixty Two Thousand, Five Hundred and Sixty Three
(562,563) kilometres travelled.
2.6.5.4.2.4 Alice Depot
The Alice Depot covers the areas of Alice and Middledrift.
A total of Two Hundred and Twenty Seven Thousand, Three Hundred and Fifty Four (227,354)
passengers were carried with Two Hundred and Twenty Three Thousand, Four Hundred and Thirty
Eight (223,438) kilometres travelled.
2.6.5.4.2.5 Summarised Statistics
A grand total of Two million and Fifty Three Thousand, Five Hundred and Thirty One (2,053,531)
passengers were carried with Two Million Four Hundred and Thirty Two Thousand, Four Hundred
and Eighty Six (2,432,486) route kilometres travelled during the year under review.


Page 36 of 88
2.6.5.4.3 Vehicle State
Depot 2008/09 2007/08 2006/07
Zwelitsha 27 24 24
Reeston 11 11 9
Queenstown 15 14 14
Alice 9 9 9
TOTAL 62 58 56
One standard bus being B38 was scrapped because it was not economically repairable. Two second
hand buses being B62 and B63 as well as two new buses were purchased for the year under review.
That has increased our fleet by 4 standard buses when compared to the previous year. The average
number of buses we operated with is Forty Eight (48) compared to 46 buses we operated with in the
previous year.
2.6.5.4.4 Accidents
Four accidents occurred during the year under review and it involved B45, B10, B46 and B56.
2.6.6 MARKETING & COMMUNICATIONS UNIT
An analysis of the environment will reflect that before the appointment
of this officer, the media liaison was carried out in a reactive rather than
proactive manner. The electronic media was utilised as a tool to
communicate positive developments regarding MTC, including its social
responsibility programmes. The priority this year will be the
development of a Marketing Plan, Communications Plan, brand
consolidation and promoting a customer service ethic within the
organisation.

Measurable
Objective
Performance
Measure
Target Output
2008/09
Actual Output
2008/09
Deviation from
Target &
Reasons for
Non-
Achievement
Promote social
responsibility.
Sponsorship of
sports clubs and
community events
concentrating on the
rural areas.
Marketing of MTC. Donated boxing
equipment to
Eastern Cape
Boxing Managers
Association and
soccer kit to
Island Ideas
Target achieved.
2. Moeyi
Morke|inq & Communico|ions O||icer


Page 37 of 88
Measurable
Objective
Performance
Measure
Target Output
2008/09
Actual Output
2008/09
Deviation from
Target &
Reasons for
Non-
Achievement
Football Club.
Improve
communication and
access to MTC
information.
Develop a website
for MTC.
Improve access to
MTC information.
Website
developed; vision
and mission of
various divisions
have been
captured in the
website.
Target partially
achieved.
70%
Communicating of
corporation news to
internal and external
stakeholders.
Produce brochures,
calendars, banners
and corporate
stationery.
Institutionalise
communication and
branding of MTC.
Brochures,
calendars,
corporate
stationery and
banners were
produced and
branding of buses
with our motto.
Target partially
achieved.
70%
Develop MTC into a
strong brand.
Develop a
Communication and
Marketing Strategy
for MTC.
Create positive
perceptions of
MTC.
A marketing plan
has been
developed and a
consultant will be
hired to develop a
marketing
strategy.
Target partially
achieved.
40%
Internal promotion of
MTC through
advertising and
communication.
Placing of
suggestion boxes,
corporate ware, e.g.
golf shirts and
jackets for front-line
staff.
Uphold the image
of the Corporation
and ensure
participation of all
stakeholders.
Suggestion boxes
in place, golf-
shirts have been
purchased for
front-line staff.
Target partially
achieved due to
limited
resources.
50%


Page 38 of 88
PART 3

AUDIT COMMITTEE


Page 39 of 88

3 AUDIT COMMITTEE COMMENTS ON THE 2008/2009
ANNUAL REPORT FOR THE MAYIBUYE TRANSPORT
CORPORATION
In terms of its obligations according to Treasury Regulation 3.1.12, the Audit Committee reports as
follows on certain events as well as actions and findings in respect of the financial year ended 31
March 2009.
3.1 APPOINTMENT OF AUDIT COMMITTEE MEMBERS / MEETINGS AND
ATTENDANCE
The Corporation established an Audit Committee in accordance with the requirements of Section
38(1) (a) of the Public Finance Management Act. All three members of the Audit Committee are
external independent members.
Except for ad hoc meetings, the committee held three meetings during the year under review and
attendance was as follows:
Name Meetings
Mr. M. Mantyi 3
Mr. J. Mdeni 2
Mrs. R. Luzuka 3
3.2 AUDIT COMMITTEE RESPONSIBILITY
The Audit Committee has performed its functions in accordance with Section 38 (1) (a) of the PFMA
and Treasury Regulation 3.1.13. The Audit Committee has adopted appropriate formal terms of
reference by way of the Audit Committee Charter and the Internal Audit Charter. It has regulated its
affairs in compliance with these charters and discharged all of its responsibilities as contained therein.
3.3 THE EFFECTIVENESS OF INTERNAL CONTROL
Executive Management suggested that the approach to the internal audit function be changed to gain
even greater value to the systems, controls, and operations of MTC. The internal audit unit performed
a number of projects to assist in adding value to the Corporations systems and controls. These
projects with implementable recommendations include:
Information technology controls review;
Asset management review;
Performance reporting review;
Procurement policy review.
In addition, a risk management strategy and fraud prevention plan was developed and implemented
during the current financial year. As part of the risk management strategy, a risk committee was
established to take responsibility of addressing the identified high-level risks.


Page 40 of 88
The deliverables from the scope of internal audit work performed were satisfactory and will further
assist the Corporation in the process of continued improvement over its internal controls.
Notwithstanding the fact that several shortcomings were pointed out, the Audit Committee is satisfied
that the Corporation is continually focussed on maintaining qualitative levels of internal control.
Adequate steps are being implemented to address the shortcomings identified during the internal and
external audit visits.
The term of the internal audit unit expired on 31 March 2009. The contract was extended until 30
June 2009 (three months) to assist with external audit matters if necessary. Appropriate tender and
recruitment procedures will be followed to appoint internal auditors.
3.4 THE QUALITY OF IN YEAR MANAGEMENT AND MONTHLY/QUARTERLY
REPORTS SUBMITTED IN TERMS OF THE PFMA
The administration of monthly- / quarterly reports submitted in terms of the PFMA was satisfactory
according to monitoring and internal audit results.
3.5 EVALUATION OF FINANCIAL STATEMENTS
The Audit Committee has:
Reviewed and discussed with the Auditor-General the audited financial statements included in
the annual report;
Reviewed the contents of the management letter (s) from the Office of the Auditor-General,
and responses by management;
Reviewed changes in accounting policies and practices;
Reviewed significant adjustments resulting from the audit.
The Audit Committee concurs and accepts the conclusion(s) of the Auditor-General on the financial
statements and is of the opinion that the financial statements can be accepted when read with the
report of the Auditor-General.
3.6 APPRECIATION
The committee expresses its sincere appreciation to the Honourable MEC, Accounting Officer, senior
management team and the Auditor General.

___________________________________________
M. MANTYI
CHAIRPERSON OF THE AUDIT COMMITTEE


Page 41 of 88

PART 4

ANNUAL FINANCIAL
STATEMENTS


Page 42 of 88
4 ANNUAL FINANCIAL STATEMENTS
4.1 REPORT OF THE CHIEF EXECUTIVE OFFICER
4.1.1 GENERAL REVIEW
4.1.1.1 Overview of Financial Results
I have done a review of the attached annual financial statements. The following were noted in
carrying out the review:
Total revenue generated from bus fares and private hire for the financial period under review
amounted to R19,426,462.
Depot 2009 2008
Zwelitsha 9,151,805 6,265,809
Reeston 3,602,957 2,926,797
Queenstown 5,091,431 4,468,357
Alice 1,580,269 1,394,475
TOTAL 19,426,462 15,055,438
The combined revenue has been achieved by an average number of 48 operating buses (2008: 46)
with a total number of 2,566,682 kilometres travelled. Private hire kilometres amounted to 134,196
(2008: 79,841 km) while route kilometres stood at 2,432,486 (2008: 2,306,722) for the financial year.
Combined revenue has been generated by each depot as follows:-
2009 2008
Depot Route Revenue
Private Hire
Revenue Route Revenue
Private Hire
Revenue
Zwelitsha 7,964,007 1,187,799 5,683,388 582,421
Reeston 3,024,065 578,892 2,521,770 405,027
Queenstown 4,876,983 214,448 4,181,377 286,980
Alice 1,405,969 174,300 1,212,076 182,399
TOTAL 17,271,024 2,155,439 13,598,611 1,456,827
Bus allocation per depot for the financial year was as follows:-


Page 43 of 88
DEPOT 2009 2008
Zwelitsha 20 18
Reeston 10 9
Queenstown 12 12
Alice 6 7
TOTAL OPERATING BUSES 48 46

Average route revenue per bus was as follows:-

DEPOT 2009 2008
Zwelitsha 398,200 315,744
Reeston 302,407 280,197
Queenstown 406,415 348,448
Alice 234,328 173,154

4.1.1.2 Operating Grant-in-Aid

The Corporation receives grant-in-aid from The Provincial Department of Roads & Transport. The
grant is meant to subsidize bus fares and partly fund the Corporations operating activities. Allocation
for the financial year under review was as follows:-
2009 2008
Grant-in-Aid 32,195,000 33,565,000
4.1.1.3 Operating Expenses
The Corporation has reported a net profit for the year amounting to R 1,765,461 (2008 net profit: R
2,580,204). The net profit arose as the assets were restated to their accurate carrying values in the
current financial year. The net profit has been arrived at after taking into account cost of services
rendered of R 26,441,272 (2008: R 23,167,061), operating expenses amounting to R 21,558,376
(2008: R 16,430,431) and administration expenses amounting to R 13,335,757 (2008: R 11,353,145).
Non-cash items which have been included in operating expenses include depreciation and provision
for staff leave. Details of reportable operating expenses are found in the notes to the financial
statements.

4.1.2 SIGNIFICANT EVENTS AND PROJECTS

An amount of R 5,000,000 was received from the Department of Roads & Transport in the current
financial year.


Page 44 of 88
The following capital expenditures were made:

Ancillary vehicles;
Buses and bus refurbishment program;
Operating equipment;
Workshop equipment;
Office equipment;
Office furniture;
Depot upgrading.
4.1.3 INVENTORIES
Inventory in rand 2009 2008
Stock on hand 1,096,325 2,048,323
Total 1,096,325 2,048,323
4.1.4 CORPORATE GOVERNANCE ARRANGEMENTS
Mayibuye Transport Corporation is fully committed to the principles of openness, accountability and
integrity, as advocated in the King Code of Corporate Governance (King 2). The Board members
recognise the need to conduct the business of the Corporation with integrity and in accordance with
generally accepted corporate governance practices.
4.1.4.1 BOARD MEMBERS
The Board consists of eight non-executive members appointed in terms of a proclamation that was
gazetted on 30 April 2001 (no. 742 extraordinary). Two members represent Provincial Government
departments, whilst the balance was appointed by virtue of their relevant specialist knowledge and
skills.
During the financial year an additional three female board members were appointed.
The Chief Executive Officer is an ex-officio member of the Board, but is not entitled to vote.
4.1.4.2 COMMITTEES
The Board established the following sub-committees who assist the Board in performing its duties:
Finance and Investment;
Operations and Engineering;
Human Resources and Remuneration;
Directors Affairs.


Page 45 of 88
The Board also appointed an audit committee. The committee was effectively operating during the
current financial year. The committee consist of:
Mr. Mandisi Mantyi
Mrs. Ruth Luzuka
Mr. Jack Mdeni
4.1.4.3 STATEMENT OF RESPONSIBILITY BY THE BOARD OF DIRECTORS
The Board is responsible for the preparation, integrity and fair presentation of the financial statements
of Mayibuye Transport Corporation. The financial statements presented on pages 52 to 83 have been
prepared in accordance with South African Statements of Generally Accepted Accounting Practice
and include amounts based on judgements and estimates made by management.
The going concern basis has been adopted in preparing the financial statements. The Board members
have no reason to believe that Mayibuye Transport Corporation will not be a going concern in the
foreseeable future, based on the commitment by the Government to subsidise public transport.
The financial statements have been audited by the Office of the Auditor-General, which was given
unrestricted access to all financial records and related data, including minutes of all Board meetings.
The Board members believe that all representations made to the independent auditors during their
audit are valid and appropriate.
4.1.5 RISK MANAGEMENT BY THE CORPORATION
PricewaterhouseCoopers performed internal audit projects during the financial year. These projects
include:
Information technology controls review;
Asset management review;
Performance reporting review;
Procurement policy review.
In addition, a risk management strategy and fraud prevention plan was developed and implemented
during the current financial year. As part of the risk management strategy, a risk committee was
established to take responsibility of addressing the identified high-level risks.
4.2 APPROVAL
The Accounting Officer has approved the attached annual financial statements set out on pages
52 to 83.
______________________________
L. R. MBINDA
CHIEF EXECUTIVE OFFICER


Page 46 of 88
4.3 AUDITOR GENERALS REPORT
REPORT OF THE AUDITOR-GENERAL TO THE EASTERN CAPE PROVINCIAL
LEGISLATURE ON THE FINANCIAL STATEMENTS AND PERFORMANCE
INFORMATION OF THE MAYIBUYE TRANSPORT CORPORATION FOR THE YEAR
ENDED 31 MARCH 2009
REPORT ON THE FINANCIAL STATEMENTS
Introduction
1. I have audited the accompanying financial statements of the Mayibuye Transport Corporation
which comprise the balance sheet as at 31 March 2009, and the income statement, the statement
of changes in equity and the cash flow statements for the year then ended, and a summary of
significant accounting policies and other explanatory notes as set out on pages 52 to 83.
The accounting authoritys responsibility for the financial statements
2. The accounting authority is responsible for the preparation and fair presentation of these
financial statements in accordance with the South African Statements of Generally Accepted
Accounting Practice (SA Statements of GAAP) and in the manner required by the Public
Finance Management Act, 1999 (Act No. 1 of 1999) (PFMA), Corporations Transitional
Provisions Act, 1995 (Act No. 12 of 1995) (Eastern Cape) and for such internal control as the
accounting authority determines is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
The Auditor-Generals responsibility
3. As required by section 188 of the Constitution of the Republic of South Africa, 1996 read with
section 4 of the Public Audit Act, 2004 (Act No. 25 of 2004) (PAA), my responsibility is to
express an opinion on these financial statements based on my audit.
4. I conducted my audit in accordance with the International Standards on Auditing read with
General Notice 616 of 2008, issued in Government Gazette No. 31057 of 15 May 2008. Those
standards require that I comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material
misstatement.
5. An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors
judgement, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entitys preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An
audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
6. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis
for my audit opinion.


Page 47 of 88
Basis of accounting
7. The corporations policy is to prepare financial statements on the applicable financial reporting
framework, as set out in accounting policy note 2 to the financial statements.
Basis for opinion
8. In my opinion the financial statements present fairly, in all material respects, the financial
position of the Mayibuye Transport Corporation as at 31 March 2009 and its financial
performance and its cash flows for the year then ended, in accordance with the South African
Statements of Generally Accepted Accounting Practice (SA Statements of GAAP) and in the
manner required by the PFMA.
Emphasis of matters
9. Without qualifying my opinion, I draw attention to the following matters on which I do not
express a qualified opinion:
Highlighting critically important matters presented or disclosed in the financial statements
Restatement of corresponding figures
10. As disclosed in note 22.1 to the financial statements, the corresponding figures for 2008 have
been restated as a result of errors discovered during 2009 in the financial statements of the
Mayibuye Transport Corporation at, and for the year ended, 31 March 2008.
Property, plant and equipment
11. As disclosed in note 3 to the financial statements, the Zwelitsha Depot has been recognized as
leasehold land and buildings with a carrying value of R1.1 million. There is a lack of clarity with
regard to the following matters pertaining to the related lease:
The parties to the lease,
The period of the lease,
The terms of the lease, and
The holder of title to the property.
12. Under these circumstances it is not possible to determine whether or not these leasehold assets
and the related amortisation have been correctly recognized, measured and disclosed in the
annual financial statements. The corporations right to occupy the properties has not been laid
down in writing; however it derives economic benefits from the use thereof and carries the risks
that are incidental to ownership.
Irregular expenditure
13. The corporation has incurred irregular expenditure during the year as a result of non-adherence to
the Preferential Procurement Policy Framework Act, 2000 (Act No. 5 of 2000) and National
Treasury Practice Note No. 8 of 2007/2008, the details of which are disclosed in note 13.8 to the
financial statements. At the date of this report no procedures were instituted against the
responsible officials to recover any of these amounts.


Page 48 of 88
Other matters
I draw attention to the following matters that relate to my responsibilities in the audit of the financial
statements:
Unaudited supplementary schedule
14. The supplementary information set out on pages xx to xx do not form part of the financial
statements and is presented as additional information. I have not audited this schedule and
accordingly I do not express an opinion thereon.
Governance framework
15. The governance principles that impact the auditors opinion on the financial statements are
related to the responsibilities and practices exercised by the accounting authority and executive
management and are reflected in the key governance responsibilities addressed below:
Key governance responsibilities
16. The PFMA tasks the accounting authority with a number of responsibilities concerning financial
and risk management and internal control. Fundamental to achieving this is the implementation
of key governance responsibilities, which I have assessed as follows:
No. Matter Y N
Clear trail of supporting documentation that is easily available and provided in a timely manner
1. No significant difficulties were experienced during the audit concerning delays
or the availability of requested information.

Quality of financial statements and related management information
2. The financial statements were not subject to any material amendments resulting
from the audit.

3. The annual report was submitted for consideration prior to the tabling of the
auditors report.

Timeliness of financial statements and management information
4. The annual financial statements were submitted for auditing as per the legislated
deadlines as set out in section 55 of the PFMA

Availability of key officials during audit
5. Key officials were available throughout the audit process.
Development and compliance with risk management, effective internal control and governance
practices
6. Audit committee


Page 49 of 88
No. Matter Y N
The corporation had an audit committee in operation throughout the
financial year.

The audit committee operates in accordance with approved, written terms
of reference.

The audit committee substantially fulfilled its responsibilities for the year,
as set out in section 77 of the PFMA and Treasury Regulation 27.1.8.

7. Internal audit
The Corporation had an internal audit function in operation throughout the
financial year.

The internal audit function operates in terms of an approved internal audit
plan.

The internal audit function substantially fulfilled its responsibilities for the
year, as set out in Treasury Regulation 27.2.

8. There are no significant deficiencies in the design and implementation of
internal control in respect of financial and risk management.

9. There are no significant deficiencies in the design and implementation of
internal control in respect of compliance with applicable laws and regulations.

10. The information systems were appropriate to facilitate the preparation of the
financial statements.

11. A risk assessment was conducted on a regular basis and a risk management
strategy, which includes a fraud prevention plan, is documented and used as set
out in Treasury Regulation 27.2.

12. Delegations of responsibility are in place, as set out in section 56 of the PFMA.
Follow-up of audit findings
13. The prior year audit findings have been substantially addressed.
14. SCOPA resolutions have been substantially implemented. n/a
Issues relating to the reporting of performance information
15. The information systems were appropriate to facilitate the preparation of a
performance report that is accurate and complete.

16. Adequate control processes and procedures are designed and implemented to
ensure the accuracy and completeness of reported performance information.


Page 50 of 88

No. Matter Y N
17. The corporation has governance structures such as an internal audit function reporting to an audit
committee in place. However, the corporation failed to fully implement the recommendations
made by the internal audit function.
18. Although the finance section has adequate skills and competencies which have been effectively
utilised in obtaining an unqualified audit opinion, monitoring controls are not adequate to ensure
that the information disclosed in the financial statements is accurate and complete. As a result,
material amendments were made to the annual financial statements in order to avoid
qualifications. The continuous correction and re-submission of financial information had an
adverse impact on the scheduled audit deadlines and placed pressure on the reporting time
frames.
Investigations
19. As disclosed in note 17 to the financial statements, an investigation is being conducted to identify
whether officials were involved in defrauding the corporation of revenue generated from casual
passengers. A further amount of R4.2 million is currently under investigation, the details of
which are disclosed in note 11 to the financial statements. It is uncertain as to whether this
amount relates to data integrity issues or misappropriation.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Report on performance information
20. I was engaged to review the performance information.
The accounting authoritys responsibility for the performance information
21. The accounting authority has additional responsibilities as required by section 55(2)(a) of the
PFMA to ensure that the annual report and audited financial statements fairly present the
performance against predetermined objectives of the public entity.
The Auditor-Generals responsibility
22. I conducted my engagement in accordance with section 13 of the PAA read with General Notice
616 of 2008, issued in Government Gazette No. 31057 of 15 May 2008.
17. A strategic plan was prepared and approved for the financial year under review
for purposes of monitoring the performance in relation to the budget and
delivery by the Corporation against its mandate, predetermined objectives,
outputs, indicators and targets [Treasury Regulation 29.1/30.1].

18. There is a functioning performance management system and performance
bonuses are only paid after proper assessment and approval by those charged
with governance.


Page 51 of 88
23. In terms of the foregoing my engagement included performing procedures of an audit nature to
obtain sufficient appropriate evidence about the performance information and related systems,
processes and procedures. The procedures selected depend on the auditors judgement.
24. I believe that the evidence I have obtained is sufficient and appropriate to provide a basis for the
audit findings reported below.
Audit finding (performance information)
25. There is no formal documented policy in respect of the performance management system.
APPRECIATION

26. The assistance rendered by the staff of the Mayibuye Transport Corporation during the audit is
sincerely appreciated.

East London
31 July 2009


Page 52 of 88
4.4 ANNUAL FINANCIAL STATEMENTS AS AT 31 MARCH 2009
DIRECTORS PLC Maseti Chairperson
SJ Nyengane Deputy Chairperson
PP Balfour Director
D Lefutso Director
T Matiwane Director
M Tuswa Director
AJ de Vries Director
TA Thomas Director
AM Church Director
NEP Loyilane Director
N Shweni-Booysen Director

Mesdames AM Church, NEP Loyilane and N Shweni-Booysen were
appointed on 1 July 2008.

NATURE OF BUSINESS The entity provides subsidized public transport and is governed by
the Public Finance Management Act, Schedule 3D Provincial
Government Business Enterprises Entity.

BANKERS The Standard Bank of South Africa Limited.

AUDITORS Office of the Auditor-General.

CONTENTS PAGE

Balance sheet 53
Income statement 54
Statement of changes in equity 55
Cash flow statement 56
Accounting policy notes 57
Notes to the financial statements 65
Detailed income statement 81

APPROVAL OF THE ANNUAL FINANCIAL STATEMENTS

The annual financial statements were approved by the board of directors on 31 July 2009 and are
signed as such by :

CHAIRPERSON OF THE BOARD CHIEF EXECUTIVE OFFICER


Page 53 of 88
4.4.1 BALANCE SHEET
NOTES 2009 2008
R R
ASSETS

Non-current assets
Property, plant and equipment 3 34,725,238 30,445,407

Total non-current assets 34,725,238 30,445,407

Current assets
Inventories 4 1,096,325 2,048,323
Trade and other receivables 5 677,728 506,681
Investments - Marketable securities 6 - 45,698
Cash and cash equivalents 7 844,439 9,648,150

Total current assets 2,618,492 12,248,852

Total assets 37,343,730 42,694,259

EQUITY AND LIABILITIES

Capital and reserves
Share capital 8 56,761,075 56,761,075
Accumulated deficit (54,451,487) (56,216,948)

2,309,588 544,127

Non-current liabilities
Deferred income 31,018,511 37,021,465

31,018,511 37,021,465

Current liabilities
Trade and other payables 9 1,810,276 2,706,401
Payroll accruals 10 2,205,355 2,422,266

4,015,631 5,128,667

Total equity and liabilities 37,343,730 42,694,259


Page 54 of 88
4.4.2 INCOME STATEMENT

NOTES 2009
2008

R

R

Revenue 11
19,426,462

15,055,438

Cost of services rendered
26,441,272

23,167,061

Gross profit / (loss)
(7,014,810)

(8,111,623)

Other income - Grant 20.2
43,197,954

37,511,372

Other operating income
104,592

439,750

Administration expenses
(13,335,757) (11,353,145)

Operating expenses
(21,558,376) (16,430,431)

Fruitless and wasteful expenditure 12
(20,897)

-

Profit / (Loss) from operations 13
1,372,706

2,055,923

Interest income 13
392,755

524,281

Profit / (loss) for the year 1,765,461 2,580,204


Page 55 of 88
4.4.3 STATEMENT OF CHANGES IN EQUITY

Share Accumulated
Capital Loss Total
R R R

Balance at 1 April 2007 56,761,075 (57,264,813) (503,738)

Prior period error - (1,532,339) (1,532,339)

Additional grant received - - -

Deferred income release to income - - -

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

Balance at 31 March 2008 56,761,075 (56,216,948) 544,127

Additional grant received - - -

Deferred income release to income - - -

Profit / (loss) for the year - 1,765,461 1,765,461

Balance at 31 March 2009 56,761,075 (54,451,487) 2,309,588

Deferred
Income
R

Balance at 1 April 2007 36,293,485

Additional grant received 7,000,000

Deferred income release to income (6,272,020)

Balance at 31 March 2008 37,021,465

Additional grant received 5,000,000

Deferred income released to income (11,002,954)

Balance at 31 March 2009 31,018,511


Page 56 of 88
4.4.4 CASH FLOW STATEMENT

NOTES 2009 2008
R R

OPERATING ACTIVITIES

Cash receipts from customers 19,985,705 14,001,129
Cash paid to suppliers and employees (22,333,946) (13,096,202)

Cash generated by operations 14 (2,348,241) 904,927

Interest received 392,755 524,281

NET CASH (USED IN)/ FROM
OPERATING ACTIVITIES (1,955,485) 1,429,208

INVESTING ACTIVITIES

Purchases of property, plant and equipment (11,894,935) (5,506,392)
Proceeds on sale of property, plant and equipment 46,709 95,955

NET CASH (USED IN)/FROM INVESTING
ACTIVITIES (11,848,226) (5,410,437)

FINANCING ACTIVITIES

Decrease / (increase) in grant allocation 5,000,000 7,000,000

NET CASH (USED IN)/FROM FINANCING
ACTIVITIES 5,000,000 7,000,000

NET INCREASE /(DECREASE) IN CASH
AND CASH EQUIVALENTS (8,803,711) 3,018,771

CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 9,648,150 6,629,379

CASH AND CASH EQUIVALENTS AT
END OF YEAR 7 844,439 9,648,150


Page 57 of 88
4.4.5 ACCOUNTING POLICY NOTES

1 PRESENTATION OF FINANCIAL STATEMENTS

These financial statements are presented in South African Rand [R] since that is the
functional currency in which the transactions are denominated.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Annual Financial Statements are prepared under the historical cost convention, other
than certain financial instruments, and incorporate the following principal accounting
policies, which have been consistently applied in all material respect. The financial
statements have been prepared in accordance with South African Statements of Generally
Accepted Accounting Practice. The principal accounting policies adopted remained
unchanged from the previous year except as listed below:

2.1 Changes in accounting policy and disclosures

In the current year, the Corporation has adopted all new GAAP standards and
interpretations that are relevant to its operations, and that became effective for periods
beginning on or after 1 April 2008. The adopted standards and interpretations have not
resulted in significant changes to the Corporation's accounting policies or financial
performance.

2.2 Irregular and fruitless and wasteful expenditure

Irregular expenditure means expenditure incurred in contravention of, or not in accordance
with a requirement of any applicable legislation, including:

The Public Finance Management Act, or

Any provincial legislation providing for procurement procedures in that provincial
government.

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

All irregular and fruitless and wasteful expenditure is recognized in profit and loss in the
period in which it is incurred and where recovered, it is subsequently accounted for as
revenue in the Income Statement.

2.3
Cash and cash equivalents

Cash and cash equivalents are measured at fair value.


Page 58 of 88
Cash in the balance sheet comprises cash at bank and on hand and short-term deposits held
by the Corporation. For the purposes of the cash flow statement, cash and cash
equivalents consist of cash and cash equivalents as defined above.

2.4 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue
is reduced for estimated customer returns, rebates and other similar allowances. Revenue
is recognized to the extent that it is probable that the economic benefits will flow to the
entity and the revenue can be reliably measured.

When the outcome of a transaction involving the rendering of services can be estimated
reliably, revenue associated with the transaction will be recognized by reference to the
stage of completion of the transaction at the balance sheet date.

Revenue from the sale of bus tickets and bus hiring is recognized when the significant
risks and rewards of ownership are transferred to the buyer.

Interest income is accrued on a time basis, by reference to the principal outstanding and at
the interest rate applicable, except for interest earned on capital funding which is disclosed
separately.

Dividend income from investments is recognized when the shareholder's rights to receive
payment have been established.

2.5 Leasing

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

2.6 Deferred income

Government grants represent monthly transfer payments from the Eastern Cape
Department of Roads and Transport in order to subsidize the Corporation's public transport
service.


Page 59 of 88
Government grants are recognized when there is reasonable assurance that the entity will
comply with the conditions related to them and that the grants will be received. Grants
related to income are recognized in the Income Statement as other income over the periods
necessary to match them with the related costs that they are intended to compensate. The
timing of such recognition in the Income Statement will depend on the fulfilment of any
conditions or obligations attached to the grant. Grants related to assets are presented as
deferred income in the Balance Sheet. The Income Statement will be affected either by
reduced deprecation charge or by deferred income being recognized as income
systematically over the useful life of the related asset.

2.7 Defined contribution plans

The cost of defined contribution plans is the contribution payable by the employer for that
accounting period. Contribution to a defined contribution plan, in respect of service in a
particular period, is recognized as an expense in that period.

2.8 Taxation

No provision has been made for taxation as the entity is a tax exempt institution in terms
of section 10 (a) of the Income Tax Act No. 58 of 1962.

2.9 Property, plant and equipment

Buildings, plant and equipment is stated at cost less accumulated depreciation and
accumulated impairment losses. Such cost includes the cost of replacing part of the plant
and equipment when that cost is incurred, if the recognition criteria are met. All other
repair and maintenance costs are recognized in profit or loss as incurred.

Land is not depreciated as it is deemed to have an indefinite life.

Items of property, plant and equipment are depreciated using the straight line basis at rates
that will reduce the book values to estimated residual values over the anticipated useful
lives of the assets concerned. The principal annual rates used for this purpose are:

Ancillary Vehicles 25%
Buses - Body 12.5%
Buses - Chassis, Engine, etc 8.33%
Office Equipment 20%
Office Furniture 10%
Operating Equipment 20%
Workshop Equipment 25%
Buildings 2%

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


Page 60 of 88
An item of plant and equipment is derecognized upon disposal or when no future
economic benefits are expected to arise from the continued use of the asset. Inferior
equipment is written off in full in the year it is acquired. Surpluses or deficits on the
disposal of assets are credited or charged to income. The surplus or deficit is the difference
between the net disposal proceeds and the carrying amount of the asset.

Subsequent expenditure relating to property, plant and equipment is capitalized if the
subsequent expenditure meets the definition of an asset.

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

The gains and losses arising from the de-recognition of property, plant and equipment
(difference between carrying amount less any revaluation surpluses and net disposal
proceeds) are included in surplus or deficit when the item is derecognized.

The residual value and the useful life of each asset are reviewed and adjusted at balance
sheet date.

The depreciation charge for each year is recognized in surplus and deficit unless it is
included in the carrying amount of another asset.

2.10
Impairment of non-financial assets

The Corporation assesses at each reporting date whether there is an indication that an asset
may be impaired. If any such indication exists, or when annual impairment testing for an
asset is required, the Corporation estimates the assets recoverable amount.

An assets recoverable amount is the higher of an assets or cash-generating units fair
value less costs to sell and its value in use and is determined for an individual asset, unless
the asset does not generate cash inflows that are largely independent of those from other
assets or group of assets. Where the carrying amount of an asset exceeds its recoverable
amount, the asset is considered impaired and is written down to its recoverable amount. In
assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset. In determining fair value less costs to sell, an
appropriate valuation model is used.

For an asset that does not generate cash inflows that are largely independent of those from
other assets the recoverable amount is determined for the cash-generating unit to which the
asset belongs. An impairment loss is recognized in the income statement whenever the
carrying amount of the cash-generating unit exceeds recoverable amount.

A previously recognized impairment loss is reversed if the recoverable amount increases
as a result of a change in the estimates used to determine the recoverable amount, but not
to an amount higher than the carrying amount that would have been determined (net of
depreciation) had no impairment loss been recognized in prior years.


Page 61 of 88
2.11 Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is calculated using
the weighted average method. Net realizable value is the estimated selling price in the
ordinary course of business, and the estimated costs necessary to make the sale.

Inventory cost includes the costs of purchase of inventories comprising the purchase price,
levies, pressing and storage. Trade discounts, rebates and other similar items are deducted
in determining the costs of purchase.

2.12 Financial Instruments

2.12.1 Investments and Financial Assets

Financial assets within the scope of IAS 39 are classified as financial assets at fair value
through profit or loss, loans and receivables, held-to-maturity investments, or available-
for-sale financial assets, as appropriate. When financial assets are recognized initially, they
are measured at fair value, plus, in the case of investments not at fair value through profit
or loss, directly attributable transaction costs.

The Corporation determines the classification of its financial assets on initial recognition
and, where allowed and appropriate, re-evaluates this designation at each financial year
end.

2.12.2
Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss includes financial assets held for trading
and financial assets designated upon initial recognition as at fair value through profit or
loss.

Financial assets are classified as held for trading if they are acquired for the purpose of
selling in the near term. Derivatives, including separated embedded derivatives are also
classified as held for trading unless they are designated as effective hedging instruments or
a financial guarantee contract. Gains or losses on investments held for trading are
recognized in profit or loss.

2.12.3
Held-to-maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturities
are classified as held-to-maturity when the Corporation has the positive intention and
ability to hold to maturity. After initial measurement held-to-maturity investments are
measured at amortized cost using the effective interest method. Gains and losses are
recognized in profit or loss when the investments are derecognized or impaired, as well as
through the amortization process.


Page 62 of 88
2.12.4 Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. After initial measurement loans and
receivables are carried at amortized cost using the effective interest method less any
allowance for impairment. Gains and losses are recognized in profit or loss when the loans
and receivables are derecognized or impaired, as well as through the amortization process.

2.12.5
Available-for-sale financial investments

Available-for-sale financial assets are those non-derivative financial assets that are
designated as available-for-sale or are not classified in any of the three preceding
categories. After initial measurement, available-for-sale financial assets are measured at
fair value with unrealized gains or losses recognized directly in equity until the investment
is derecognized or determined to be impaired at which time the cumulative gain or loss
previously recorded in equity is recognized in profit or loss.

2.12.6
Amortized cost

Held-to-maturity investments and loans and receivables are measured at amortized cost.
This is computed using the effective interest method less any allowance for impairment.
The calculation takes into account any premium or discount on acquisition and includes
transaction costs and fees that are an integral part of the effective interest rate.

2.13
Impairment of financial assets

The Corporation assesses at each balance sheet date whether a financial asset or group of
financial assets is impaired.

2.13.1
Assets carried at amortized cost

If there is objective evidence that an impairment loss on assets carried at amortized cost
has been incurred, the amount of the loss is measured as the difference between the assets
carrying amount and the present value of estimated future cash flows discounted at the
financial assets original effective interest rate. The carrying amount of the asset is reduced
through use of an allowance account. The amount of the loss shall be recognized in profit
or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease
can be related objectively to an event occurring after the impairment was recognized, the
previously recognized impairment loss is reversed, to the extent that the carrying value of
the asset does not exceed its amortized cost at the reversal date. Any subsequent reversal
of an impairment loss is recognized in profit or loss.


Page 63 of 88
In relation to trade receivables, a provision for impairment is made when there is objective
evidence that the Corporation will not be able to collect all of the amounts due under the
original terms of the invoice. The carrying amount of the receivable is reduced through use
of an allowance account. Impaired debts are derecognized when they are assessed as
uncollectible.

2.13.2
Available-for-sale financial investments

If an available-for-sale asset is impaired, an amount comprising the difference between its
cost and its current fair value, less any impairment loss previously recognized in profit or
loss, is transferred from equity to profit or loss. Reversals in respect of equity instruments
classified as available-for-sale are not recognized in profit or loss. Reversals of impairment
losses on debt instruments are reversed through profit or loss, if the increase in fair value
of the instrument can be objectively related to an event occurring after the impairment loss
was recognized in profit or loss.

2.14 Financial liabilities and equity instruments

2.14.1
Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss includes financial liabilities held for
trading and financial liabilities designated upon initial recognition as at fair value through
profit or loss.

Financial liabilities are classified as held for trading if they are acquired for the purpose of
selling in the near term. Gains or losses on liabilities held for trading are recognized in
profit or loss.

2.14.2
Derecognition of financial assets and liabilities

Financial assets

A financial asset (or, where applicable a part of a financial asset or part of a group of
similar financial assets) is derecognized when:

the rights to receive cash flows from the asset have expired;

the Corporation retains the right to receive cash flows from the asset, but has
assumed an obligation to pay them in full without material delay to a third party
under a pass through arrangement; or

the Corporation has transferred its rights to receive cash flows from the asset and
either (a) has transferred substantially all the risks and rewards of the asset, or (b)
has neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset.


Page 64 of 88
Financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or
cancelled or expires.

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

2.15
Future changes to accounting policies

At the date of authorization of these financial statements, a number of International
Financial Reporting Standards and Interpretations had been promulgated, but were
effective for periods after 31 March 2009. The Corporation will implement these as they
become effective.

Based on a review of these standards, management has determined that none of them
would have a significant impact on the Corporation as at 31 March 2009, had they been
effective.

2.16
Key management assumptions, estimates and judgements

The preparation of financial statements requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of
applying the Corporations accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed.

The key assumptions, estimates and judgements concerning the future and other key
sources of estimation uncertainty at the balance sheet date, that have a significant risk of
causing a material adjustment to the carrying amount of the assets and liabilities within the
next financial year are discussed below.

The residual values and estimated useful lives of property, plant and equipment were
assessed and found to be reasonable. Residual values of motor vehicles are determined
with reference to market related prices of vehicles in a similar condition.


Page 65 of 88
4.4.6 NOTES TO THE ANNUAL FINANCIAL STATEMENTS

3 PROPERTY, PLANT & EQUIPMENT

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Land and buildings comprise workshops, offices and bus sheds situated in the following sites:
Erf 77, 78, 79, 80, 81 of farm 35, Wilsonia, district of East London, market value R2 300 000.
Plot 4265, Queendustria Industrial Township, Queenstown, market value R1 000 000.
Zone 8 Zwelitsha - the entity has been given the right to use the property indefinitely. A process
for the acquisition of the title deed has been initiated with the Land Claims Commission. At
present, a valuation has been performed, details of which are noted under note 16. Improvements
on the property has been capitalised as leasehold land and buildings.
Erf 1097, Alice, market value R600 000.


Page 66 of 88

4 INVENTORIES 2009 2008

R R

Fuel, Oils and Greases 499,526 449,047

Units - 364,490

Spares - 646,602

Consumables 171,832 384,463

Tyres & Tubes 154,382 106,176

Ancillary Vehicle Spares 13,384 4,077

Operational Equipment Spares 12,520 62,086

Stationery and Miscellaneous items 244,681 31,382

1,096,325 2,048,323

Inventories included in cost of services rendered 19,629,575 15,194,686

5
TRADE AND OTHER RECEIVABLES

Trade receivables 761,959 395,969
Less: Provision for impairment of receivables (579,525) (359,659)
182,434 36,310
Other receivables 495,294 470,371
677,728 506,681

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

As at 31 March 2009, trade receivables at nominal value of R579,525 (2008:
R359,659) for the Corporation were impaired and fully provided for. Movements in
the provision for impairment of receivables were as follows:

Individually
impaired

R

At 1 April 2007 308 585

Charge for the year 51 074

Utilised -

At 31 March 2008 359 659

Charge for the year 219 866

Utilised -

At 31 March 2009 579 525


Page 67 of 88

As at 31 March, the ageing analysis of trade and other receivables are as follows:
2009 2008
R R

< 30 days 495,294 470,371

30 60 days - -

60 90 day - -

90 120 day - -

>120 days 182,434 36,310

Total 677,729 506,681

6 INVESTMENTS - MARKETABLE SECURITIES

Market value at 31 March 2009 - 45,698

Marketable securities represented 2308 demutualised shares received from Sanlam
and were classified as available-for-sale financial assets. These shares were awarded
at no cost to the employees (members of the Sanlam pension fund) when
demutualization was affected.

During the financial year, the share owners requested the Corporation to sell the
shares for their benefit.

7 CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash on hand, call deposits and cash balances
with banks. Cash and cash equivalents included in the cash flow statement comprise
the following balance sheet amounts:

Cash on hand and balances with banks 844,439 9,648,150

844,439 9,648,150

Cash at banks earns interest at floating rates based on daily bank deposit rates.
Short-term deposits are made for varying periods of between one day and three
months, depending on the immediate cash requirements of the Corporation, and earn
interest at the respective short-term deposit rates. The fair value of cash and short-
term deposits is R844,439 (2008: R9,648,150).


Page 68 of 88

8 SHARE CAPITAL 2009 2008
R R
Authorized:
Ordinary shares of R 1 each 60,000,000 60,000,000
Issued and fully paid
Ordinary shares of R 1 each 56,761,075 56,761,075

The authorized share capital was increased to 60,000,000 as per the notification in
the Government Gazette dated April 2005. 100% of the shares are held by the
Department of Roads and Transport and the entity has one class of ordinary shares
which carry no right to Provincial Administration. The entity has one class of
ordinary shares which carry no right to fixed income.

The Corporation applied for an increase in authorized share capital on 8 June 2009
from the executive authority in order to issue share capital equal to the capital grants
(R30,250,000) received since 2006.

9 TRADE AND OTHER PAYABLES 2009 2008
R R

Trade payables
909,789 1,828,920

Other payables
900,487 877,481

- Accrued Provident Fund 306,416 275,994

- Accrued Medical Aid 227,164 200,914

- Accrued Workmen's Compensation 181,504 135,798

- Accrued Employee Insurance 96,568 82,505

- Other payables 88,835 182,270

1,810,276 2,706,401

Terms and conditions of the above financial liabilities:

Trade and other payables are non-interest bearing and are normally settled on 30-day
terms.

Other payables represent South African Revenue Services and payover creditors.


Page 69 of 88
10 PAYROLL ACCRUALS 2009 2008
R R

At 1 April 2008 2,422,266 2,305,498
Additional accrual in the year 978,755 1,688,938
Utilization of accrual (1,195,666) (1,572,170)
At 31 March 2008
2,205,355 2,422,266

Accrual for bonuses - 13th cheque 467,018 433,849
Accrual for leave 1,738,337 1,988,417

2,205,355 2,422,266

At 31 March 2009, employees with excessive leave days were offered to sell a
portion of their excessive leave days back to the Corporation. The employees
accepted the offer and leave days to the amount of R745 891 were paid to the
employees in April 2009.

11 REVENUE

Revenue comprises of passenger fares and special hire revenue.

2009 2008

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

Passenger fares 17,271,023 13,598,611
Special hire 2,155,439 1,456,827
Total revenue 19,426,462 15,055,438

A major portion of the Corporation's revenue comprises cash sales to passengers. It
should be recognized that controls are designed to provide reasonable, but not
absolute assurance that errors and irregularities will not occur, and that procedures are
performed in accordance with management's intentions. There are inherent limitations
that should be recognized in considering the potential effectiveness of any system of
internal controls. The Corporation utilizes the sole service provider in South Africa to
record bus fare information. Management identified data integrity errors resulting
from the revenue application system failure during the financial year and is in the
process of rectifying this. There is an unreconciled difference between banking of
cash and revenue collected per the revenue application system estimated at R4.2m.
This is currently under review to determine if the unreconciled difference is as a
result of the revenue application system error or misappropriation of cash taking.
Refer to note 17 for a claim against an employee.

The controls implemented by management include the installation of electronic
ticketing machines, establishing an effective inspectorate unit and implementing a
zero-tolerance policy with regards to non-issue of bus fare tickets. These controls
caused a remarkable increase of 27% in passenger fare revenue.


Page 70 of 88
12 FRUITLESS AND WASTEFUL EXPENDITURE

2009 2008

R R

South African Revenue Services penalties 20,897 -
20,897 -

The Corporation does not regard the SARS penalty as fruitless and wasteful expenditure.
The penalty payment was not made in vain and reasonable care has been exercised to avoid
the expenditure.

13 NET PROFIT / LOSS FROM OPERATIONS

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

2009 2008

R R
INCOME

Interest income 392,755 524,281
Profit on disposal of assets - 24,310
Dividends received - 1,777

EXPENSES

Audit fees 898,280 930,032
Audit Committee (see note 13.2) 19,500 39,200
Defined contribution plan 3,727,566 2,364,824
Directors Emoluments (see note 13.3 and 13.4) 210,296 187,051
Depreciation 7,602,035 2,942,959
Fair value adjustment - Marketable securities - 45,698
Insurance 970,288 1,201,050
Loss on disposal of assets 12,058 -
Finance lease charges 226,296 197,201
Consulting fees 201,963 198,067
Staff Costs 26,147,182 23,173,514

The average number of employees for the financial year ended
was:

170

182


Page 71 of 88

13.2 Audit committee

2009 2008
Fees for attending meetings
R R

M. Mantyi 7,500 20,500
R. Luzuka 8,000 12,200
J. Mdeni 4,000 6,500

19,500 39,200

13.3 Directors Emoluments 2009
Meetings Travel Total
R R R

P.L.C. Maseti - Chairperson 42,873 1,591 44,464
J.S. Nyengane - Vice-chairperson 40,145 3,026 43,171
P.P. Balfour 13,283 380 13,663
D. Lefutso 33,956 1,526 35,482
T. Matiwane 10,729 336 11,065
A.J. De Vries - - -
T.A.Thomas 13,126 1,128 14,254
M. Tuswa - - -
A.M. Church 13,440 769 14,209
N.E.P. Loyilane 15,523 331 15,854
N. Shweni-Booysen 17,763 370 18,133

200,838 9,457 210,296

13.4 Directors Emoluments 2008
Meetings Travel Total
R R R

P.L.C. Maseti - Chairperson 44,870 201 45,071
J.S. Nyengane - Vice-chairperson 40,306 361 40,667
P.P. Balfour 18,083 - 18,083
D. Lefutso 36,366 - 36,366
T. Matiwane 18,966 - 18,966
A.J. De Vries - - -
T.A.Thomas 27,898 - 27,898
M. Tuswa - - -

186,489 562 187,051


Page 72 of 88
13.5 Senior Management 2009
CEO
L.R. Mbinda
CFO
L. Coetzer
HOD: HR
L.C. Mtise
HOD: Eng
Z. Leni
R R R R
Basic 540,900 380,604 334,684 296,144
Car 118,908 36,000 52,860 40,800
Housing allowance - - 17,556 -
Medical aid 21,120 7,692 - 8,136
Provident 87,624 - 50,160 42,300
Bonus - 35,217 25,807 28,762
UIF 1,488 1,488 1,488 1,488
Total 770,040 461,001 482,555 417,630

13.6 Senior Management 2008
CEO
L.R. Mbinda
CFO
L. Coetzer
HOD: HR
L.C. Mtise
HOD: Eng
Z. Leni
R R R R
Basic 439,200 180,000 245,532 237,396
Car 118,800 - 52,860 40,800
Acting allowance - - 36,000 -
Housing allowance - - 13,092 -
Medical aid 21,120 3,852 - 8,136
Provident 71,148 - 39,768 38,448
Bonus 50,000 5,000 20,461 19,783
UIF 1,500 750 1,500 1,500
Total 701,768 189,602 409,213 346,063

13.7 FINANCE LEASE ARRANGEMENTS
2009 2008

R R
Minimum lease payments paid under finance leases 226,296 197,201
At the balance sheet date, the entity had outstanding
commitments under finance leases, which fall due as
follows:

Within one year 226,295 121,478
In the second to fifth years inclusive 235,486 134,623
After five years - -
Finance lease payments represent rentals payable by the Corporation for certain of its office
equipment.

13.8 IRREGULAR EXPENDITURE
2009 2008

R R
Transactions not in full compliance with legislation 15,146,421 -


Page 73 of 88

14 CASH GENERATED BY OPERATIONS

FROM/(USED IN) OPERATING ACTIVITIES
2009 2008

R R

Net Profit / (Loss) for the year 1,765,461 2,580,204

Adjustments for:

Profit / Loss on sale of property, plant and equipment 12,058 (24,310)

Depreciation of property, plant and equipment
7,602,035 2,942,959

Deferred income
(11,002,954) (3,946,372)

Interest income
(392,755) (524,281)

Operating cash flow before movements in working capital
(2,016,155) 1,028,200

(Increase)/ Decrease in inventories
951,998 (530,028)

(Increase)/ Decrease in receivables
(171,047) (119,166)

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

Increase / (Decrease) in payables
(1,113,036) 571,619

(2,348,241) 904,927


Page 74 of 88

15 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Corporation's principal financial liabilities comprise of trade and other payables. The
main purpose of these financial liabilities is to recognize amounts payable by the
Corporation. The Corporation has various financial assets such as trade and other
receivables and cash and short-term deposits, which arise directly from its operations.
The Entity has no significant concentration of credit risk, with exposure spread over a large
number of counterparties and customer.
The main risks arising from the companys financial instruments are cash flow interest rate
risk, liquidity risk and credit risk. The Board of Directors reviews and agrees policies for
managing each of these risks which are summarized below.
Interest rate risk
The Corporation is not exposed to interest rate risk as it has no long-term debt obligations.
Credit risk management
The entity trades only with recognized, creditworthy third parties. Receivable balances are
monitored on an ongoing basis with the result that the entity's exposure to bad debts is not
significant. The maximum exposure is the carrying amount as disclosed in Note 5. There
are no significant concentrations of credit risk within the company.
With respect to credit risk arising from the other financial assets of the company, which
comprise of cash and short-term deposits, the entity's exposure to credit risk arises from
default of the counterparty, with a maximum exposure equal to the carrying amount of these
instruments.
Liquidity risk
The entity monitors its risk to a shortage of funds by considering the maturity of both its
financial assets and projected cash flows from operations. The entity's objective is to
maintain a balance between continuity of funding and flexibility through use of the grant-in-
aid funding.
Foreign currency risk
The Corporation is not exposed to foreign currency risk.
Capital management
The primary objective of the Corporation's capital management is to ensure that it continue
to provide a safe and reliable public transport service and to maximize internal revenue
collection.


Page 75 of 88

16 CONTINGENT LIABILITIES
During the reporting period, there were matters arising that gives rise to contingent
liabilities:
There are two pending CCMA referrals as at 31 March 2009 and there are currently no
indication as to the probability of the success of the claims. One referral has been set for 19
May 2009 where the claim will be dealt with and no date has been set for the second
referral. Should the Corporation lose the cases, the estimated cost will be R42 000.
The Corporation is in the process of obtaining a title deed for the Zwelitsha depot. A
valuation was performed which will be used for negotiation purposes. At year-end, the
Corporation received a draft settlement agreement from the Land Claims Commission. The
amount payable is uncertain.
The Board of Directors will conduct a performance assessment for the Chief Executive
Officer and there is a possibility of performance bonus payable. The amount payable is
uncertain.
The Corporation is disputing invoices to the value of R171 356 with certain suppliers. The
amount payable is dependant on the dispute resolution.
17 CONTINGENT ASSETS
At the reporting date, the Corporation has a claim against an employee of R135 953. The
success of the claim depends on the outcome of case.
18 CAPITAL COMMITMENTS
2009
R
2008
R
Commitments for the acquisition of property, plant and equipment: - 2,200,000
19 SUBSEQUENT EVENTS

The directors are not aware of any matter of circumstances arising since the end of the
financial year, which significantly affects the financial position of the entity or the results of
its operations.
20 RELATED PARTY TRANSACTIONS
20.1 Identification of related parties
Eastern Cape Department of Roads and Transport
Board of Directors - Refer to note 13.3 for details of transactions with directors.

Key management personnel - Refer to note 13.5 for detail of transactions with key
personnel.


Page 76 of 88

20.2 Related party transactions

Significant transactions occurred between the Department of roads and transport by way of
receiving grant funding.

2009
R
2008
R
Grant received 32,195,000 33,565,000
Deferred income 11,002,954 3,946,372
43,197,954 37,511,372
21 GOING CONCERN
During the reporting period, in order to continue as a going concern, the Corporation
utilized capital grant funding of R3.8m for operational purposes.
We draw attention to the fact that at 31 March 2009, the Corporation had an accumulated
deficit of R54,451,487 (2008: R56,216,948).
The financial statements have been prepared on the basis of accounting policies applicable
to a going concern. This basis presumes that funds will be available to finance future
operations and that the realization of assets and settlement of liabilities, contingent
obligations and commitments will occur in the ordinary course of business.
The ability of the Corporation to continue as a going concern is dependent on a number of
factors. The most significant of these is that the directors continue to procure funding for the
ongoing operations of the Corporation by recapitalization of the bus fleet in order to
increase revenues, as well as negotiations and pro-active budgeting and communication
thereof to the Department of Roads and Transport, in an effort to obtain additional funding
in the form of unconditional grants.
The Department of Roads & Transport has approved a grant-in-aid of R43,000,000 for the
2009/10 financial year.
22 PRIOR PERIOD ERRORS
22.1 Restatement of property, plant and equipment
In previous years the Corporation failed to fully apply the provisions of IAS 16 Property,
Plant and Equipment. Management did not revise the useful lives, depreciation rates and
residual values annually as is required by IAS 16. In some instances inadequate residual
values were assigned to items of Property, Plant and Equipment. As a result, the
depreciation expense was incorrectly allocated to income as it did not reflect the pattern in
which the Corporation consumed the economic benefits inherent in the cost of the asset. In
the current year management revised the useful lives, depreciation rates and residual values
of Property, Plant and Equipment. Due to inherent limitations relating to the nature of


Page 77 of 88
operations, management performed estimations in arriving at the restated amounts for spares
and units. The basis used in calculating the estimations was to utilize a useful life of two
years and derecognizing spares and units older than two years, recalculating the
accumulated depreciation and depreciation charges for assets brought into use in arriving at
the carrying amount. The financial statements have been restated to correct this error. The
effect of the restatement on the opening accumulated deficit is summarized below:

2009 2008

R R
Operating equipment accumulated depreciation - 2,298,905
Ancillary vehicles accumulated depreciation - 603,209
Buses accumulated depreciation - 2,862,992
Buses cost - 1,164,974
Spare parts and units - (3 072 093)
- 3,857,987
22.2 Restatement of deferred income
The Corporation has chosen to recognize capital grant income systematically over the useful
lives of assets. The basis of accounting for deferred income was not applied correctly in
previous years as the amounts of income recognized did not match annual depreciation
charges. The financial statements have been restated to correct this error. The effect of the
restatement on the opening accumulated deficit is summarized below:
2009 2008
R R
Deferred income - (2 325 648)
- (2,325,648)


Page 78 of 88
23 STANDARD / INTERPRETATIONS ISSUED NOT YET EFFECTIVE AS AT 31
DECEMBER 2008
Standard Details of amendment Annual periods
beginning on or
after
IFRS 1, First-time
Adoption of
International Financial
Reporting Standards
Measurement of the cost of investments
in subsidiaries, jointly controlled
entities and associates when adopting
IFRS for the first time.
01-Jul-09
IFRS 2, Share Based
Payments
Amendments to vesting conditions and
cancellations.
01-Jan-09
IFRS 3, Business
Combinations
Amendments to accounting for business
combinations.
01-Jul-09
IFRS 5 Non-current
Assets Held for Sale and
Discontinued Operations
Plan to sell the controlling interest in a
subsidiary.
01-Jul-09
IFRS 7 Financial
Instruments: Disclosure
Presentation of finance costs. 01-Jan-09
IFRS 8, Operating
Segments
New standard on segment reporting
(replaces IAS14).
01-Jan-09
IAS 1, Presentation of
Financial Statements
Amendments to structure of Financial
Statements Current/non-current
classification of derivatives.
01-Jan-09
IAS 8 Accounting
Policies, Changes in
Accounting Estimates
and Errors
Status of implementation guidance. 01-Jan-09
IAS 10 Events after the
Reporting Period
Dividends declared after the end of the
reporting period.
01-Jan-09
Recoverable amount.

IAS 16 Property, Plant
and Equipment
Sale of assets held for rental.
01-Jan-09
IAS 18 Revenue Costs of originating a loan. 01-Jan-09
Curtailments and negative past service
cost.
Plan administration costs.
Replacement of term fall due.

IAS 19 Employee
Benefits
Guidance on contingent liabilities.
01-Jan-09
Government loans with a below-market
rate of interest.

IAS 20 Accounting for
Government Grants and
Disclosure of
Government Assistance
Consistency of terminology with other
IFRSs.
01-Jan-09
IAS 23 Borrowing Costs Amendment requiring capitalization
only model.
01-Jan-09


Page 79 of 88
beginning on or
after
Components of borrowing costs.
Amendment dealing with measurement
of the cost of investments when
adopting IFRS for the first time.

IAS 27 Consolidated and
Separate Financial
Statements
Measurement of subsidiary held for sale
in separate financial statements.
01-Jan-09
IAS 27 Consolidated and
Separate Financial
Statements
Consequential amendments from
changes to Business Combinations.
01-Jul-09
Required disclosures when investments
in associates are accounted for at fair
value through profit or loss.

IAS 28 Investments in
Associates
Impairment of investment in associate.
01-Jan-09
IAS 28 Investments in
Associates
01-Jul-09
Description of measurement basis in
financial statements.

IAS 29 Financial
Reporting in
Hyperinflationary
Economies
Consistency of terminology with other
IFRSs.
01-Jan-09
IAS 31 Interests in Joint
Ventures
Required disclosures when interests in
jointly controlled entities are accounted
for at fair value through profit or loss.
01-Jan-09
IAS 31 Interests in Joint
Ventures
01-Jul-09
IAS 32 Financial
Instruments:
Presentation
Certain financial instruments will be
classified as equity whereas, prior to
these amendments, they would have
been classified as financial liabilities.
01-Jan-09
IAS 34 Interim Financial
Reporting
Earnings per share disclosures in
interim financial reports.
01-Jan-09
IAS 36 Impairment of
Assets
Disclosure of estimates used to
determine recoverable amount.
01-Jan-09
Advertising and promotional activities.

IAS 38 Intangible Assets
Unit of production method of
amortization.
01-Jan-09
Reclassification of derivatives into or
out of the classification of at fair value
through profit or loss.

IAS 39 Financial
Instruments:
Recognition and
Measurement Designating and documenting hedges at
the segment level.
01-Jan-09


Page 80 of 88
beginning on or
after
Applicable effective interest rate on
cessation of fair value hedge
accounting.
Clarifies two hedge accounting issues:
Inflation in a financial hedged item.

IAS 39 Financial
Instruments:
Recognition and
Measurement
A one-sided risk in a hedged item.
01-Jul-09
Property under construction or
development for future use as
investment property.
Consistency of terminology with IAS 8.

IAS 40 Investment
Property
Investment property held under lease.
01-Jan-09
Discount rate for fair value calculations.
Additional biological transformation.
Examples of agricultural produce and
products.

IAS 41 Agriculture
Point-of-sale costs.
01-Jan-09

Interpretations
Annual periods
beginning on or
after

IFRIC 11 IFRS 2: Group and Treasury Share Transactions 01-Mar-07

IFRIC 12 Service Concession Arrangements 01-Jan-08

IFRIC 13 Customer Loyalty Programmes 01-Jul-08

IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their interaction 01-Jan-08

IFRIC 15 Agreements for the Construction of Real Estate 01-Jan-09

IFRIC 16 Hedges of a Net Investment in a Foreign Operation 01-Oct-08

IFRIC 17 Distribution of Non-cash Assets to Owners 01-Jul-09


Page 81 of 88
4.4.7 DETAILED INCOME STATEMENT

2009 2008
R R

INCOME 19,923,807 16,019,467

Casual passengers 17,271,024 13,598,611
Private Hire 2,155,439 1,456,826
Other income 497,346 964,030
Discount Received 49,113 44,625
Interest 392,755 524,281
Profit on sale of assets - 24,310
Miscellaneous 55,478 370,814

EXPENDITURE 53,754,265 48,007,676

Operations Department 22,359,503 17,186,112
Accident costs 150,424 333,181
Fuel 12,803,988 8,896,979
Fines 5,450 600
General Expenses - 2,315
Licenses and Permits 758,359 619,252
Lubricants and Grease 618,539 343,333
Maintenance - Operating Equipment 176,737 169,938
Private Hire Expenses 49,582 150,579
Salaries and Wages 5,744,105 4,890,205
Sleep-out Allowance 61,101 53,486
Ticket/Waybill Usage 153,929 66,508
Travelling and Subsistence 66,606 2,100
Tyre Usage 1,770,434 1,614,461
Uniforms 252 43,175

Traffic Department 5,497,139 5,127,699
Ancillary Vehicle Costs 270,768 259,368
Driver of the Year Award 2,100 1,350
Uniforms 140 300


Page 82 of 88
2009 2008
R R

Maintenance Department 12,540,969 14,340,720
Ancillary Vehicle 192,052 179,121
Building Maintenance 404,650 716,756
Bus Repairs 1,640,623 542,424
Consumables Used 394,821 317,179
Loose Tools 44,622 77,594
Maintenance - Workshop Equipment 87,379 98,866
Spares Used (0) 1,815,448
Staff Uniforms 95,144 57,139
Units Used - 1,520,759

Administrative Department 13,356,654 11,353,145
Auditor's Remuneration 898,280 930,032
Audit Committee 19,500 39,200
Bad debts 221,366 51,074
Bank Charges 168,705 151,551
Cleaning, teas and entertainment 114,090 75,549
Collection Fees 283,203 239,110
Computer Expenses 92,089 99,407
Consultation Fees 201,963 198,067
Directors' Fees 210,296 187,051
Donations and sponsorships 30,808 -
Electricity and Water 499,327 397,547
General Expenses 71,015 32,586
Insurance 970,288 1,201,050
Interest and Penalties 20,897 -
Lease Charges 226,296 197,201
Legal Expenses 86,315 205,674
Levies 230,239 165,511
Long Service Awards 23,722 34,900
Loss on sale of assets 12,058 -
Maintenance - Office Equipment 34,039 21,143
Printing and Stationary 600,163 392,211
Recruitment costs 31,500 -
Security Expenses 1,167,533 950,832
Subscriptions 39,454 38,289
Telephone Expenses 776,488 601,378


Page 83 of 88
2009 2008
R R

Training 323,292 420,304

Loss for the year before Depreciation (33,830,458) (31,988,209)
Depreciation (7,602,035) (2,942,959)

Loss for the year before Government Grant (41,432,493) (34,931,168)
Government Grant 43,197,954 37,511,372

Profit / (Loss) for the year 1,765,461 2,580,204


Page 84 of 88
PART 5

HUMAN RESOURCES
MANAGEMENT


Page 85 of 88
5 HUMAN RESOURCES MANAGEMENT
5.1 ORGANISATIONAL STRUCTURE
The structure that was approved by the Board of Directors in 2004 is still in place. The Corporations
structure consists of four (4) Divisions, namely Human Resources, Finance, Operations and
Engineering.
5.2 VISION & MISSION OF HUMAN RESOURCES DIVISION
5.2.1 VISION
Guided by the ethos of service & commitment to the maintenance of best bus company standards, the
division strives to render an effective and equitable service to all MTC employees. To lend support to
the Human Resources and Business Development Strategy by recruiting outstanding candidates that
will add value to the organization thereby leading to the realization of the Corporation's vision.
5.2.2 MISSION
To achieve the aforementioned vision, we embrace the following core values:
Superior Performance - driven by the quest for continuous improvement and excellence in
rendering HR services (Industrial Relations, Training & Development Personnel &
Organizational Development), as well as compliance with all relevant pieces of legislation.
Being Proactive - work towards exceeding our customers expectations by proactively
assessing and addressing their current and future needs.
Ethical Business Practices - we will continually uphold strong business ethics and values, and
ensure the transfer of these to our internal employees.
We will further see to the development of sound human resources policies and procedures,
serve as a custodian of these policies by ensuring compliance and adherence to them.
5.3 KEY HUMAN RESOURCES ISSUES
The Human Resources Division aimed to achieve the following objectives:
5.3.1 OBJECTIVE 1: DEVELOP AND MAINTAIN SOUND HUMAN RESOURCES
PRACTICES
5.3.1.1 Develop sound human resource practices in MTC


Page 86 of 88

Measurable
Objective
Performance
Measure
Target Outputs
2008/09
Actual Output
2008/09

Deviation from
Target
Reason for Non-
Achievement
To conform to the
annual budget.
Control
accumulated leave
by complying with
the new leave
policy.
Leave accrued not
to exceed policy
provision.
Accrued leave has
been reduced by to
acceptable levels.

None.
Human Resource
capacity; skill
retention strategy.
Replace retirees
with young,
educated and
skilful prospects.
Attract two young
female graduates
to the Corporation.
Three young
graduates have been
placed on internship
program.
None.
Boost employee
morale and
enhance passenger
interest to MTC.
Reward best
performers.
Develop a policy
for the employee
of the month and
community client
of the month.
Reward best
performers.
Develop a policy
for the employee
of the month and
community client.
A policy and
selection criteria for
the employee of the
month has been
developed.
Partially achieved.
Benchmark staff
levels and
comparatives to
best practice
models.
Conduct job
evaluation and
compare with
other passenger
transport
companies.
All jobs to be
evaluated starting
with management.
Jobs could not be
evaluated due to
financial constraints.
100%
5.4 COMBINED ANNUAL AND SICK LEAVE UTILISATION FOR THE PERIOD 1
APRIL 2008 TO 31 MARCH 2009
Level Total Days % Days With
Medical
Certificate
No. Of
Employees Using
Sick Leave
%Using Sick
Leave
Human Resources & Admin 987 15% 61 13%
Engineering 2888 43% 214 47%
Operations 2851.50 42% 178 40%


Page 87 of 88
5.4.1 DISABILITY LEAVE
Total Days Taken %With Medical
Certificate
No. Of Employees
On Disability
Average Days
Per Employee
Human Resources: 0 0 0
Engineering: 0 0 0
Operations: 1 1 45
5.5 LABOUR RELATIONS DISCIPLINARY HEARINGS FINALISED
Sanction Imposed Nature of Misconduct Number of employees % of total
Fined 10% of excess,
Final Written Warning
Negligence 2 7.7%
Written Warning Negligent driving 3 15.4%
Written Warning Negligence 3 7.7%
Dismissed Under the influence of liquor 1 7.7%
Dismissed Theft 9 46.1%
Dismissed Dishonesty 1 7.7%
Final Written Warning Poor Performance 1 7.7%

Chief Executive Officer
P.O. Box 19596
TECOMA
5214

Tel. (043)745-2582 Fax (043)745-2586
mbinda@mtcec.co.za

PR 87/2009
ISBN: 978-0-621-38551-9

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