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Mayibuye Transport Corporation
ANNUAL REPORT
FOR THE YEAR ENDED
31 MARCH 2008
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 2 of 87
FOREWORD BY MEMBER OF
THE EXECUTIVE COUNCIL
Mayibuye Transport Corporation continues to show
signs of recovery and is gradually transforming into a
viable public transport service provider. This can be
attributed to good leadership and professionalism by
the Board and management with limited resources at
their disposal.
Under their capable leadership, the Corporation
adopted a host of new policies, including a Risk
Management Strategy and a Fraud Prevention Policy.
The internal audit function has been outsourced to one
of the top auditing firms in the country in an attempt
to enhance good administration and governance.
The Department of Roads & Transport will continue
to support the Corporation in order to enhance its
internal capacity and to deliver on its mandate of
rendering a safe, affordable and reliable public
transport service to the communities that it serves. The
Department has, through its grant-in-aid program to
Mayibuye enabled the Corporation to upgrade its bus fleet and depot infrastructure. There is,
however, still major capital programs that would have to be instituted if we want the Corporation to
compete with the private sector in future. Provincial Treasury will be made aware hereof.
I wish, however, to express my sincere gratitude to the Board and staff of Mayibuye Transport
Corporation for the service that they rendered to the approximately 1.8 million passengers that they
transported during the past year.
This annual report attempts to record and report to the public the extent to which the Corporation has
been able to execute its mandate during the 2007/08 financial year.
HON. GLORIA BARRY
MEC FOR ROADS & TRANSPORT
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 3 of 87
MESSAGE FROM THE CHAIRPERSON
Laying strong foundations for Governance
The Board of Directors of MTC, appointed in March 2007, is constituted of
members who have distinguished themselves in a variety of disciplines at a
governance and fiduciary level. In implementing its mandate, the Board
developed a Board Planning Framework. The development of this Framework
saw more structured interventions with clear monitoring and evaluation
yardsticks to measure progress. Significant milestones were recorded and are
reflected on the Performance Report which is Part 2 of this Report. This Framework maps the way
forward for the Board and introduces sustained improvements throughout the Corporation.
Contributing to the Provincial Growth and Development Plan
2007/08 was another year in which MTC made its contribution to the Provincial Growth and
Development Plan through the provision of public transport services thereby enabling access to health
care, basic services, education and employment. We will continue to operate in social routes such that
those who live in rural Eastern Cape do not find themselves disadvantaged from accessing these and
other services that can help them to improve their lives.
Partnerships and putting our customers first
Commuters were engaged on the level of service expected and kept abreast of changes that impact on
them through functional Corporation-Commuter forums. We put our customers first and will keep to
our brand promise of “Until We Transport Them All”. We pride ourselves on the partnerships built,
encouraged by Government’s declaration that all organs of state should renew their pledges to the
citizenry through building partnerships that will improve their lives. In this tone, MTC started with
harnessing relationships within the Corporation, promoting a sense of identity throughout the
Corporation. This was extended to external partners and stakeholders. The Corporation is grateful for
the support rendered by the Department of Roads and Transport through its strategic and capital
investments.
Improving financial viability and sustainability
During the year under review, the MTC Board worked closely with the Corporation’s management on
the areas of financial management and viability. These include introducing alternative revenue
generation streams, improving route revenue and private hire. This coupled with putting in place
sound financial management systems and controls, will contribute to MTC’s growth and
development. We are proud to announce that the Corporation, for the first time, made a profit of R2,
580, 204 million. These measures will go a long way towards improving the Corporation’s financial
standing.
Going forward
We will build on these foundations in 2008/09 and fulfil statutory obligations in an accountable and
responsible manner. We further commit to implementing the recommendations of the Portfolio
Committee on Roads and Transport which has oversight responsibility over the Corporation.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 4 of 87
On behalf of the Board of Directors, I wish to thank the Portfolio Committee on Roads and Transport,
Department of Roads and Transport, management and staff of MTC, Commuters, Service Providers
and partners for their unwavering support.
___________________________________________________________
P.L.C. MASETI
CHAIRPERSON OF THE BOARD OF DIRECTORS
MAYIBUYE TRANSPORT CORPORATION
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 5 of 87
PART 1
GENERAL
INFORMATION
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 6 of 87
1 GENERAL INFORMATION
1.1 SUBMISSION OF ANNUAL REPORT TO THE EXECUTIVE AUTHORITY BY THE
CHIEF EXECUTIVE OFFICER OF MAYIBUYE TRANSPORT CORPORATION
In accordance with the provisions of Section 40(1)(d) of the Public Finance Management Act, 1999
(Act 1 of 1999) as amended, the Annual Report for the fiscal year ended 31 March 2008 is hereby
submitted to the Member of the Executive Council Responsible for Roads & Transport in the
Province of the Eastern Cape.
________________________________________
L.R. MBINDA
CHIEF EXECUTIVE OFFICER
MAYIBUYE TRANSPORT CORPORATION
1.2 INTRODUCTION BY THE CHIEF EXECUTIVE OFFICER
The appointment of a new Board of Directors for MTC has indeed breathed
new life into the Corporation. MTC benefitted from the strategic vision and
direction provided by the Board under the leadership of Mr Maseti.
Our strategic and operational plans for 2007/08 were responding to, but not
limited to issues raised in the following sources:
The Portfolio Committee on Roads and Transport in their oversight reports
Provincial Growth and Development Plan Review
The Department of Roads and Transport in their Policy Speech
Feedback from commuters who are the beneficiaries of our services
In responding to these, we have no doubt that we have achieved on the strategic objectives set out in
the Strategic Plan and Operational Plan. The Performance Report, synopsized in this introduction will
share progress achieved during this exciting year.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 7 of 87
1.2.1 Programme Highlights
1.2.1.1 Finance highlights
Development of a fraud prevention plan and risk management strategy
Improving audit outcomes and financial management through
Appointment of a Chief Financial Officer
Functional audit unit and audit committee
Developing accounting and internal processes that resulted in elimination of long
outstanding audit queries
Implementation of a fixed asset register that is SAGAAP compliant
Establishment of a supply chain management as per the requirements of PFMA
Improvement in losses reported in previously
Policy and procedure development and implementation
2008/09 will be focused towards the following:
Upgrading the accounting operating system
Converting fixed assets module to be integrated to the accounting operating system
Development of a financial manual that will serve as a guide for all the activities within the
division
Implementing and operating own payroll system
1.2.1.2 Highlights of Operations
Increase in private hire and route revenue from R12, 149, 127 to R15, 055, 439
The opening up of new and viable routes e.g. Queenstown
Appointment of a female Superintendent in an effort to meet equity imperatives
Our bus drivers continued to put us on the maps through winning the provincial leg of the bus
driver’s competition
1.2.1.3 Human Resources
An acting HOD for Human Resources was appointed with plans to fund the vacancy in
2008/09
Three female managers and a Human Resources Officer were appointed
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
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A number of policies were developed and implemented e.g. Employment Equity, Skills
Development etc
Human Resource Development plans were fully implemented
Staff morale was boosted through implementation of regular staff-management engagement
and various functions
1.2.1.4 Engineering highlights
Refurbishment of six buses which assisted in improving the passenger experience
Capital provision for the financial year allowed for R300, 000 for workshop equipment which
will go a long way towards improving the servicing of buses thereof
Two new buses were procured but could not be delivered by the Supplier due to shortage of
supply against demand
1.2.1.5 Strategy and Policy Development
MTC reviewed its first Treasury aligned Strategic, Performance and Operational Plans. This process
was inclusive and enjoyed the participation of all sectors of MTC. A process was initiated to educate
staff and raise awareness about the strategic plan. The following strategic documents and policies
were approved for 2007/08:
1.2.2 DOCUMENTATION PRODUCED
Five-year Strategic Plan and Annual Performance Plan
Risk Management Strategy
Fraud Prevention Plan
Business Plan for Restructuring
Skills Development Plan Policy
Occupational Health and Safety Policy
Sexual Harassment Policy
Induction Policy
Exit Interview Policy
Overtime Policy
Finance Policies
Board Charter
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
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Conflict of Interest
Delegation of Authority
Performance Agreement for Senior Managers
Board Plan 2007/2008
1.2.3 Going forward
MTC will be focusing on the development of measures aimed at improving the commuter experience
and enhancing relations with various stakeholders and partners. We value the contribution of these in
taking forward our mandate and putting MTC on the Map. We will also be looking at identifying
areas where MTC can make a contribution through our Social Responsibility Programme. This is
driven by a need to plough back to our communities on whom we owe our existence.
At a strategic level, we will be reviewing our strategic plan and moving towards implementation of
the areas that have proved to be a challenge in 2007/08. I take the opportunity to thank the
Department of Roads and Transport, Board of Directors, management and staff for their efforts. Let
us leave no stone unturned to transport them all.
1.3 INFORMATION ABOUT THE ENTITY
Mayibuye Transport Corporation was formed as a parastatal in October 1990 by the former Ciskei
Government with the main objective of providing an affordable bus transport service to the
predominantly rural communities of the former Republic of Ciskei where public transport was either
inadequate or not existing at all.
Due to the socio-economic conditions prevailing in these rural communities as a direct result of
apartheid, resulting in longer than normal distances between residential areas and places of
employment and social institutions, the subsidisation of bus passenger fares became a necessity which
in turn puts pressure on the ever-increasing real costs of the service.
1.3.1 AREAS OF OPERATION
MTC currently provides passenger transport services through its four bus depots:
1.3.1.1 Zwelitsha Depot
This depot is situated opposite Zone 8, along Route 347. It covers the area of King William’s Town.
Contact Details
Zwelitsha Depot P.O. Box 19596
Mount Coke Road Tecoma, East London
Zwelitsha 5608 5214
Tel: 040 – 654 1351 Fax: 040 – 655 1907
1.3.1.2 Reeston Depot
The Reeston depot is situated on the corner of Drummond and Mdantsane Access Roads between
Mdantsane and East London. It covers the Potsdam and Newlands areas of Buffalo City.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
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1.3.1.3 Queenstown Depot
This depot is situated at Queendustria, Ezibeleni and services the Whittlesea and Ntabethemba areas
of the Chris Hani District Municipality.
1.3.1.4 Alice Depot
This depot is situated in Alice and covers the Nkonkobe Municipal area.
1.3.2 BOARD OF DIRECTORS
Mr. P.L.C. Maseti Chairperson
Mr. S.J. Nyengane Deputy Chairperson
Mr. P.P. Balfour Member
Mr. D. Lefutso Member
Mr. T. Matiwane Member
Mr. J. Davies Member (resigned)
Mr. M. Tuswa Member
Mr. A.J. De Vries Member
Mr. T.A. Thomas Member
1.3.3 MANAGEMENT
Mr. L.R. Mbinda CEO
Mr. L.C. Mtise HOD: Operations
Mr. Z.D. Leni HOD: Engineering
Mr. L. Coetzer Chief Financial Officer
Vacant HOD: HR
1.3.3.1 Secretary
Mrs. C. Cronjé
1.3.4 REGISTERED HEAD OFFICE AND POSTAL ADDRESS
Reeston Depot P.O. Box 19596
Cnr of Drummond and Mdantsane Access Roads Tecoma, East London
Wilsonia 5214
East London
5247
1.3.5 BANKERS
Standard Bank of South Africa Limited
King William’s Town
1.3.6 AUDITORS
Auditor-General
Audit Committee:
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
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Mr. M. Mantyi
Mrs. R. Luzuka
Mr. J. Mdeni
Internal Audit Unit (PricewaterhouseCoopers)
1.4 VISION AND MISSION STATEMENT
The VISION of Mayibuye Transport Corporation is as follows:
“Mayibuye Transport Corporation strives to be a leading public transport service provider in its areas
of operation. Guided by the ethos of customer service excellence, Mayibuye Transport Corporation
(MTC) will provide passenger transport services which are community-driven. It will continuously
strive to be a safe, reliable and technically efficient organization”.
The MISSION of Mayibuye Transport Corporation is as follows:
“In pursuance of its vision, Mayibuye Transport Corporation (MTC) strives to:
Maintain the highest possible standards in the provision of an effective and efficient transport
service to the Eastern Cape communities on selected routes.
Provide an enabling environment conducive to the provision of an affordable, convenient and
safe mode of public transport.
Keep abreast of trends and developments in the sector to meet changing customer and
stakeholder needs.
The creation of strategies that lend support to the Provincial Growth and Development Plan,
Batho Pele and BEE initiatives.
1.5 LEGISLATIVE MANDATE
The Corporation derives its existence from the following legislative mandate:
Basic Conditions of Employment Act (Act No of 1997).
Corporations Transitional Provisions Act (Act 12 of 1995) (Eastern Cape)
Employment Equity Act, 1998 (Act No 55 of 1998).
Fraud and Corruption Act (Act 12 of 2004).
Labour Relations Act (Act No 65 of 1995).
National Land Transport Transition Act, 2000 (No 22 of 2000) (NLTTA).
National Road Traffic Act, 1996 (Act No. 93 of 1996).
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
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National Transport Policy 1996.
Occupational Health and Safety Act (Act No 85 of 1993).
Passenger Transportation (Interim Provisions) Act, 1999 (No 11 of 1999).
Preferential Procurement Policy Framework Act, 2000 (Act No 5 of 2000).
Promotion of Access to Information Act (Act No 2 of 2000).
Public Finance Management Act, 1999 (No 1 of 1999) (PFMA).
Road Transportation Act, 1977 (Act No. 74 of 1977).
Skills Development Act, 1998 (Act No 97 of 1998).
Skills Development Levy Act, 1999 (Act No 9 of 1999).
Including regulations emanating from the above legislation.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
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PART 2
PERFORMANCE OF MTC
DIVISIONS
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
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2 PERFORMANCE OF THE MTC DIVISIONS
The strategic focus of the Mayibuye Transport Corporation can be summarised as follows:
Strengthen collaboration and accountability between the Board and Management in building
strong and good governance.
Develop MTC into a strong brand.
Implement sound human resources practice in MTC.
Ensure sound financial and administrative practice at MTC.
Develop an organization with strong ITC capabilities.
Strive to maintain world class standards.
Promote safe, reliable public transport services.
Reduce the rate of accidents in its area of operation.
Comply with all laws governing public entities.
2.1 AIM OF ENTITY
To ensure effective and efficient governance and administration structures, systems and culture
capable of responding to Provincial Roads and Transport priorities.
2.2 SUMMARY OF DIVISIONS WITHIN MTC
The Corporation’s activities are organised in the following divisions:
Division Sub-Division
1. Human Resource Management 1.1 Personnel Administration
1.2 Industrial Relations
1.3 Training and Development
1.4 Employee Assistance Programme (EAP)
1.5 Organisational Development
2. Finance 2.1 Debtors Control
2.2 Creditors Control
2.3 Accounts
2.4 Salaries
2.5 Revenue Collection
2.6 Supply Chain
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
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3. Operations 3.1 Traffic
3.2 Statistics
3.3 Despatch
3.4 Inspection
3.5 Private Hire
4. Engineering 4.1 Stores
4.2 Tyres
4.3 Maintenance (Vehicles and Infrastructure)
4.4 Purchasing
2.3 OVERVIEW OF SERVICE DELIVERY ENVIRONMENT FOR 2007/08
2.3.1 REVENUE COLLECTION
Route and Private Hire Revenue
Year Budget Actual Variance
2006 11,500,000 11,577,000 77,000
2007 12,500,000 12,149,128 (350,872)
2008 14,131,397 15,055,438 924,041
2.3.2 EXPENDITURE
Item 2008
Actual
2007
Actual
2006
Actual
Profit / (Loss) from operations 2,580,204 (1,313,625) (2,841,987)
Personnel 23,173,514 20,846,028 18,879,239
Audit fees (including internal audit fees for current year) 930,032 312,983 641,938
Other operating expenses 16,429,831 14,175,959 19,315,043
Depreciation 2,942,959 1,809,580 1,549,098
2.3.2.1 Capital Expenditure
The Corporation has received a capital grant from the Department of Roads & Transport which has
been spent as follows:
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 16 of 87
2008
Item Budget Expenditure Variance
New Buses 2,200,000 - 2,200,000
Second hand buses 1,785,240 - 1,785,240
Refurbishment 1,100,000 1,282,167 (182,167)
Operating Equipment 163,840 150,291 13,549
Workshop Equipment 300,000 331,481 (31,481)
Office Equipment 200,000 294,009 (94,009)
IT Infrastructure 100,000 45,269 54,731
Depot Upgrading 1,150,920 1,095,514 55,406
Total 7,000,000 3,198,731 3,801,269
The two second hand buses has been received and paid for in the next financial year. The Corporation
also committed to an order of two new buses.
2007
Item Budget Expenditure Variance
New Buses 3,532,000 3,266,997 265,003
Refurbishment 148,000 165,000 (17,000)
Operating Equipment 70,000 68,807 1,193
Office Equipment 100,000 117,682 (17,682)
Depot Upgrading 400,000 666,803 (266,803)
Total 4,250,000.00 4,285,289 (35,289)
Depreciation Rates for Assets Percentage
Ancillary Vehicles 25%
Buses – Body
Buses – Chassis, engine, etc
12.5%
8.33%
Office Equipment 20%
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 17 of 87
Depreciation Rates for Assets Percentage
Office Furniture 10%
Operating Equipment 20%
Workshop Equipment 25%
Buildings 2%
2.4 OVERVIEW OF ORGANISATIONAL ENVIRONMENT
Mayibuye Transport Corporation (MTC) is a government parastatal that was established in 1990. It
strives to provide an effective and efficient public transport service to its customers. It has depots in
Alice, Reeston, Queenstown and Zwelitsha. Its peak fleet presently comprises of 46 buses servicing
major routes in the former Ciskei and Border areas. Its client base stems from the broad spectrum of
the Eastern Cape population. It has created a niche for itself in the public servants’ market. MTC’s
name has been synonymous with affordability and reliability.
The Corporation had a total staff complement of 171 as at 31 March 2008, which reflects a staff to
bus ratio of 3:1 in line with the industry average which stands at 3:1 with a number of vacancies in
critical positions that cannot be filled as a result of financial constraints.
The following critical positions have been identified in the 2007/08 financial year:
Occupational Nurse
HR Manager
Protection Services Officer
Marketing and Communication Officer
It should be noted that Finance Division has appointed a Chief Financial Officer on 1 October 2007
and as a result of that, financial controls and monitoring mechanisms are being put in place with the
assistance of the Internal Audit unit (PricewaterhouseCoopers). The Corporation also established an
information technology unit which provides the necessary support. To date, the Corporation does not
have a marketing and communication unit and we are hoping to establish one in the next financial
year.
2.5 STRATEGIC OVERVIEW AND KEY POLICY DEVELOPMENTS FOR 2007/08
MTC is a public entity and is accountable to the Department of Roads & Transport in the Eastern
Cape Government. The Department of Roads & Transport is governed by pieces of legislation that
have relevance to its sphere and operation, be it at national level or provincial level, as well as policy
frameworks. MTC is obliged by virtue of its reporting to ensure alignment to these.
At the beginning of the current financial year, the MEC for Provincial Safety Liaison, Roads &
Transport appointed a complete new Board of Directors for a period of two years. The Audit
Committee is now operational, working with the Internal Audit unit (PricewaterhouseCoopers). The
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 18 of 87
Board of Directors are getting feedback in board meetings from the Chairperson of the Audit
Committee.
An MTC five year Strategic Plan and Annual Performance Plan was developed and approved by the
Board of Directors. A Fraud Prevention Plan and Risk Management Strategy are also in place.
Due to financial constraints, the Corporation could not fill all the vacant positions during the year
under review. 96% of our organogram is populated and critical positions will be filled in the next
financial year.
2.6 PERFORMANCE OF DIVISIONS WITHIN MTC
2.6.1 OFFICE OF THE CEO
The office of the CEO provides strategic leadership and direction for the organization and gives
support to the Board of Directors.
Measurable Objectives Performance Measure Performance Indicators and
Targets
Deviations /
Comments
1. To inculcate strong and
good governance at MTC.
Develop Board Plan. Board Plan developed. Target achieved
Develop Board Charter. Board Charter developed and
implemented.
Target achieved
Board Induction Plan. New Board Members
inducted.
Target achieved
Board Appraisal Tool. Board Appraisal Tool
developed and adopted.
Due to limited
finance resources
we have not
developed the
Appraisal Tool for
Board Members.
Conflict of interest
registers.
Conflict of interest registers
maintained.
Target achieved
Board Development
Plan.
Board Development Plan
implemented.
Target achieved
Delegation of Authority
and Performance
Agreement.
Delegations of Authority and
Performance Agreement
implemented.
Target achieved
2. Strategic leadership and
direction.
Review MTC strategy
and align to Treasury
Guidelines.
Strategic Plan reviewed and
developed according to
Treasury Guidelines.
Target achieved
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
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Measurable Objectives Performance Measure Performance Indicators and
Targets
Deviations /
Comments
3. Risk Management for
MTC.
Review risk assessment
undertaken by auditors,
prioritise them and
develop a plan to
mitigate them.
Establish Corporation
risk co-ordinators per
division.
Ensure that risk
management is a
standing item on
management meetings.
Risks to MTC identified and
mitigated.
Risk Management Strategy
and Fraud Prevention Plan
developed.
Risk Management
is a standing item
in Board and
Management
Meetings.
Risk Management
Strategy and Fraud
Prevention Plan
approved by the
Board of
Directors.
4. Capacitate MTC with the
relevant human resources.
To appoint high calibre
candidates to fill the
management vacancies
of Chief Financial
Officer, HOD:
Engineering, HOD:
Human Resources as
well as the other funded
junior positions.
MTC organogram populated.
Target partially
achieved, except
the appointment of
HOD HR due to
financial
constraints.
5. Inculcate a customer
service ethic in all divisions
of MTC.
Develop a customer
service charter poster for
employees.
Develop and implement a
customer service
excellence course for all
front-line employees.
Customer service charter
posters printed and
disseminated at all MTC
depots.
Customer service excellence
course held at all depots
(40%).
Target not
achieved due to
budgetary
constraints.
Currently pursuing
options of in-house
training.
6. Ensure timely, accurate
and reliable financial
reporting.
Provide timely, accurate
and reliable financial
reporting to the Board,
Department and AG.
Timely submissions to the
Board and AG.
Target achieved
7. Improve service
delivery at MTC.
Develop Service Delivery
Improvement Plan.
Draft 50%
2.6.2 HUMAN RESOURCES DIVISION
2.6.2.1 Staff Establishment
The personnel to operating bus ratio are 3:1, in line with the ideal industry norm of 3:1. This means
that the Corporation has a staff complement of 171 while operating a fleet of 58 buses. (46 peak buses
plus 12 spares)
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
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It should be noted that during the year under review the Corporation has managed to be in line with
the ideal industry norm of 3:1 with some critical positions still vacant.
2.6.2.2 Industrial Relations
The Corporation has a collective agreement with the South African Transport and Allied Workers
Union (SATAWU). MTC is also affiliated to the South African Bus Employers Association
(SABEA) who is also a member of the South African Road Passenger Bargaining Council
(SARPBAC).
The total membership of the Union stood at One Hundred and twelve (112) employees.
2.6.2.3 Appointments & Promotions
Three female managers were employed or promoted during the year under review.
2.6.2.4 Separations
26 staff members left the employ of the Corporation during the year under review:
Retired Dismissed Resigned Absconded Disabled Deceased
13 6 4 1 0 2
2.6.2.5 Performance
The Human Resources Division has been able to demonstrate results against its measurable objectives
as indicated below:
Measurable
Objective
Performance
Measure
Target Output
2007/08
Actual Output
2007/08
Deviation from Target
& Reasons for Non-
Achievement
Conduct a
skills audit and
compile a skills
development
plan.
Conduct a skills
audit and compile a
skills development
plan (100%)
Conduct a skills
audit for all depots
and compile a skills
development plan
Skills audit for all
depots completed.
Sills development
plan being
developed.
None
Develop a
learnership program
Recruit 3 Auto
Electricians and 3
Body Builders for
learnership.
Appointment of
3 Auto
Electricians and
Body Builders for
learnership has
been finalised
None
To empower 30% of
MTC employees
with various skills
over a period of two
years.
Skills development
interventions were
identified. MTC
employees were
trained in different
skills by attending
36 employees and
8 managers were
trained in various
skills.
None
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 21 of 87
Measurable
Objective
Performance
Measure
Target Output
2007/08
Actual Output
2007/08
Deviation from Target
& Reasons for Non-
Achievement
courses,
conferences and
seminars.
Promote sound
labour relations
within MTC.
To empower MTC
Shop Stewards and
line managers in the
IR discipline
10 Shop stewards
and 12 supervisors
and line managers
to attend a capacity
building workshop
in Industrial
Relations
10 Shop stewards
and 12
supervisors and
line managers
were trained by
Global Business
Solution
None
Manage HIV/
AIDS.
Develop Employee
Wellness Programs
to support employees
Conduct EAP at all
depots
Employee
Wellness
programs held at
all MTC depots
None
Processes and
protocols run by
peer educators to
get management
support and
approval
EAP have been
approved by
management.
None
Job
Consolidation
and Evaluation.
Consolidate
Engineering jobs in
order to be in line
with the strategic
objective of
Engineering
Division
Draft new Job
Descriptions,
consult with stake
holders including
managers and
labour, evaluate
new job
descriptions (25%).
Job Consolidation
and evaluation
concluded (25%)
None
Performance
Management
System.
Effective
Performance
Management System
to be in place for all
managers.
All managers to
have signed
performance
agreements
All managers
have signed
performance
agreements.
Consolidate
retirement
funds for a
smooth
administration.
Provident/Pension
fund amalgamation
to MTC Retirement
Fund.
Contributions from
1/04/2007 must go
to MTC Retirement
Fund.
All three funds
i.e. Sanlam
Pension/Provident
and Metropolitan
Rainmaker Plus
consolidated
None.
To conform to
the annual
budget.
Control accumulated
leave by doing
quarterly
reconciliations of
Leave accrued not
to exceed budget
provision.
Accrued leave has
been reduced by
more than 80%
20%
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 22 of 87
Measurable
Objective
Performance
Measure
Target Output
2007/08
Actual Output
2007/08
Deviation from Target
& Reasons for Non-
Achievement
leave provision.
MTC to
comply with
legislation.
Implement
Employment Equity
Plan.
Increase female
representation in the
organization by
15%.
3 females were
appointed in
management
positions. ACI
compliant i.e. 2
Africans and 1
Indian.
None
Promotion of
transparency,
consistency
and fairness.
All Human
Resources Policies to
be consolidated into
the HR policy hand
book
Revised Personnel
Regulations,
Industrial Relations
and other HR
policies to be
consolidated into a
HR manual
80% of Human
Resources
policies are in
place. 100% IR
policy is in a draft
form still
awaiting Board’s
approval.
To capacitate
MTC with the
relevant human
resources.
MTC Organogram
populated 100%.
Critical
management
vacancies to be
filled.
Three middle
management
positions filled by
female candidates
CFO appointed
Organogram
populated 96%
10% other positions are
not funded.
Sustain current
bus to staff
ratio level.
Reduction of excess
Keep manpower
levels to existing 3:1
ratio.
Total number of
employees 171 ratio
3:1.
Currently 171
employees with a
ratio of 3:1.
Industry Ratio of 3:1
achieved.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 23 of 87
2.6.3 FINANCE DIVISION
The financial performance of the corporation is outlined in the income statement in
the audited annual financial statements.
Revenue
Total revenue (Combined Revenue) generated from bus fares for the financial period
under review amounted to R15,055,438. Revenue generation by depot was as
follows:-
Revenue generation by segment
Depot 2008 2007
Zwelitsha 6,265,809 5,054,337
Reeston 2,926,797 2,685,617
Queenstown 4,468,357 3,373,029
Alice 1,394,475 1,036,145
TOTAL 15,055,438 12,149,128
The combined revenue has been achieved by an average number of 46 operating buses (2007: 44)
with a total number of 2,386,563 kilometers traveled. Private hire kilometers amounted to 79,841
(2007: 72,344 Km) while route kilometers stood at 2,306,722 (2007: 2,153,850) for the financial year.
The increase in revenue in 2008 as compared to 2007 is due to the following:
Increased bus fares.
Improved efficiency levels.
Control measures were strengthened.
Combined revenue has been generated by each depot as follows:-
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 24 of 87
Revenue generation by service
Depot
2008 2007
Route
Revenue
Private Hire
Revenue
Route
Revenue
Private Hire
Revenue
Zwelitsha 5,683,388 582,421 4,692,317 362,020
Reeston 2,521,770 405,027 2,310,226 375,391
Queenstown 4,181,377 286,980 3,204,779 168,250
Alice 1,212,076 182,399 911,395 124,750
TOTAL 13,598,611 1,456,827 11,118,717 1,030,411
Average Route Revenue Per Depot
Depot 2008 2007
Zwelitsha 5.53 4.90
Reeston 5.15 5.14
Queenstown 7.32 5.82
Alice 5.55 4.61
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 25 of 87
Combined Revenue
0
2
4
6
8
10
12
Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08
Months
Ra
nd
s p
er
Km
Zwelitsha
Reeston
Queenstown
Alice
Route Revenue
0
2
4
6
8
10
12
1900/01/01 1900/01/03 1900/01/05 1900/01/07 1900/01/09 1900/01/11
Months
Ran
ds p
er
Km
REV
KM
Zwelitsha
Reeston
Queenstown
Alice
Average
Private Hire Revenue
0
20
40
60
80
100
120
Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08
Months
Ra
nd
s p
er
Km
Zwelitsha
Reeston
Queenstown
Alice
Average
Bus allocation per depot for the financial year was as follows:-
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 26 of 87
DEPOT 2008 2007
Zwelitsha 18 16
Reeston 9 10
Queenstown 12 11
Alice 7 7
TOTAL OPERATING BUSES 46 44
Average route revenue per bus was as follows:-
DEPOT 2008 2007
Zwelitsha 315,744 294,301
Reeston 280,197 231,023
Queenstown 348,448 291,344
Alice 173,154 130,199
Operating Grant-in-Aid
The Corporation receives a grant-in-aid from The Provincial Department of Roads & Transport. The
grant is meant to subsidize bus fares and partly fund the Corporation’s operating activities. Allocation
for the financial year under review was as follows:-
2008 2007
Grant-in-Aid 33,565,000 27,747,177
2.6.3.1 Financial Statistics for the five years to March 2008:
DETAILS 2008 2007 2006 2005 2004 2003
Revenue 15,055,438 12,149,128 11,577,460 11,502,232 10,422,675 9,754,141
Grant-in-
Aid 33,565,000 27,747,177 25,001,992 20,500,000 24,435,000 22,400,000
Capital
Grant-in-
Aid
7,000,000
4,250,000
15,000,000
-
-
-
Passengers 1,751,785 1,574,045 1,556,132 1,853,553 1,976,150 1,428,128
Route
Kilometres 2,306,722 2,155,049 2,121,467 2,043,688 2,061,683 1,577,785
Buses at
Year end 58 56 52 60 60 61
Number of
Employees 171 170 183 207 223 243
Revenue
Cents per
Kilometre
(Cpk)
631
564
546
563
459
618
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 27 of 87
DETAILS 2008 2007 2006 2005 2004 2003
Staff Ratio 3:1 3:1 3.6:1 3.7:1 3.7:1 4.0:1
2.6.3.2 FINANCIAL HIGHLIGHTS
2.6.3.2.1 Route Revenue
Revenue from Operations increased from R12,149,128 to R15,055,438.
2.6.3.2.2 Government Grant-in-Aid
An amount of Thirty Three Million, Five Hundred and Sixty Five Thousand Rand (R33,565,000) for
operational purposes and a further capital Grant-in-Aid of Seven Million Rand (R7,000,000) was
received for the year under review.
2.6.3.3 SERVICE DELIVERY OBJECTIVES, INDICATORS & ACHIEVEMENTS
The Finance Division has been able to demonstrate results against its measurable objectives as
indicated below:
Measurable
Objective
Performance
Measure
Target Output
2007/08
Actual Output
2007/08
Deviation from
Target &
Reasons for
Non-
Achievement
Inculcate strong and
good governance at
MTC.
Good governance
plan developed and
implemented.
Strategic leadership
and direction at
MTC.
Board charters
developed, board
induction, board
plan, board
developed man,
board performance
appraisal tool,
delegation of
authority, conflict
of interest register
maintained.
Strategic plan
reviewed and
developed
according to
treasury guidelines
and procedures.
All the
governance tools
were developed
and maintained.
Strategic plan
reviewed and
developed and
submitted
according to
treasury
guidelines and
procedures.
None.
None.
To manage
Corporation risks for
sustainability.
Risk management
for MTC.
Risks reviewed and
mitigation plan
implemented, risk
coordination forums
in place, risk
management a
standing item at
Risks
management
strategy and fraud
prevention plan
developed.
None.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 28 of 87
Measurable
Objective
Performance
Measure
Target Output
2007/08
Actual Output
2007/08
Deviation from
Target &
Reasons for
Non-
Achievement
management
meetings.
Manage conflict of
interest.
Conflicts of interest
managed at MTC.
Review and update
conflict of interest
register.
Each board of
director signed a
conflict of
interest and
declare their
interest in each
meeting.
None.
Develop board
development program
to capacitate board
members with
oversight on risk
management, fiduciary
duties and roles of
directors in line with
legislation.
A training needs
analysis conducted.
Implementation of
training as per the
needs analysis.
Training needs
implemented as
per the needs
analysis.
None.
Formulate policies and
procedural frameworks
for MTC.
Policies and
procedure manuals
developed and
implemented.
Policies developed
and procedure
manuals done.
Continues policy
development.
Continues
process in order
to improve
internal control
structure at
MTC.
Develop a compliance
plan for all legislative
mandates that have
relevance to MTC.
Compliance plan for
legislative mandates
developed and
implemented.
Develop and
implement
compliance plan.
Continues control
implementation in
order to comply
with all
legislation.
Continues
process in order
to improve
internal control
structure at
MTC.
Maximise
intergovernmental
cooperation.
Partnerships with
Department of Roads
and Transport, other
departments, public
entities, the
Legislature forged
and maintained.
MTC represented at
meetings of the
Department of
Roads and
Transport, monitors
findings of the
Standing
Committee and
forges links with
other public entities.
MTC do attend
Department of
Roads and
Transport
meetings,
monitors findings
of the Standing
Committee and
forges links with
other public
entities.
None.
Reduce the number of
audit queries.
Audit queries
reduced and action
Clean audit plan
implemented.
All measures
implemented to
improve the audit
None.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 29 of 87
Measurable
Objective
Performance
Measure
Target Output
2007/08
Actual Output
2007/08
Deviation from
Target &
Reasons for
Non-
Achievement
plan developed. report.
Implement effective
financial information
system for uploading
and recalling of
information.
Effective financial
information system
developed.
Implement financial
information system.
Pastel
implemented as
financial
information
system.
None.
To purchase new buses
and upgrade the depots
with the funding
pledge from the
department.
New buses
purchased.
Depots upgraded as
phased development.
3 Buses purchased
and phase 1 of
depot upgrading
implemented.
Orders placed for
two second hand
buses and two
new buses.
Continues process
of upgrading
MTC depots.
None.
Ensure timely,
accurate and reliable
financial reports.
Timely submissions
to board, department
and AG.
All financial reports
are accurate,
reliable and printed
timeously.
All financial
reports were
submitted
accurately,
reliably and
printed timeously.
None.
2.6.4 ENGINEERING DIVISION
2.6.4.1 PURPOSE OF ENGINEERING DIVISION
The purpose of Engineering Division is to provide Operations Division with
safe reliable buses so that they can operate according to their schedule. This
proves to be a great challenge for the reasons that have been stated in the
section that deals with the overview of the service delivery environment.
2.6.4.2 STRATEGIC OBJECTIVES OF ENGINEERING DIVISION
To provide safe, reliable buses to Operations Division.
2.6.4.3 SECTIONS WITHIN ENGINEERING
Tyre Section
Stores Section
Maintenance Section
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 30 of 87
2.6.4.4 SERVICE DELIVERY OBJECTIVES, INDICATORS & ACHIEVEMENTS
The Engineering Division has been able to demonstrate results against its measurable objectives as
indicated below:
Measurable
Objective
Performance
Measure
Target Output
2007/08
Actual Output
2007/08
Deviation from
Target
Reason for Non-
Achievement
Increase Revenue. Improve Route &
Private Hire
revenue collection.
Increase total
operational
revenue to R15
million.
R15,055,439 None
Reduce operating
costs.
Reduce dead
kilometres.
Dead kilometres
not to exceed 15%
of total kilometres.
14.75% None
Reduce
maintenance costs.
Reduce
maintenance cost.
Fuel consumption
not to exceed 45
l/100km.
42.50 l/100km None
Maintain current
market share.
Satisfy peak bus
requirement. Provide Operations
Division with 49
peak buses daily.
46 Age and reliability of
the fleet had a major
impact. See 1.2.1.4 on
high level overview
Forward planning. Minimise
disruptions caused
by major unit
failures.
Ensure that a spare
engine, gearbox
and differential are
available at each
depot.
No spare units
were kept at depots
100% Limited
financial resources
did not allow. We are
engaged in the
process of procuring
fleet management
systems for possible
installation on the 1st
August 2008. Early
indications are that
premature engine
failures will be
overcome once this
has been installed.
2.6.4.4.1 Specific Challenges & Response
Challenge 1:
The average number of operating buses per month was 46 instead of the targeted 49 buses due to the
age of the fleet.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 31 of 87
Response to challenge 1:
The Department of Roads & Transport has provided capital funds and further commitment to sustain
this funding in order for the Corporation to recapitalise the fleet. However, the subsequent amounts
from 2007/08 will be insignificant to match the rate of the necessary recapitalisation programme.
Challenge 2:
Attacks on drivers at some sleeping grounds forces the Corporation to run empty buses from the
depots after completion of shifts.
Response to challenge 2:
Constant mobilization of communities to remain vigilant to strangers and suspicious persons who
perpetrate these robberies. Operations are actively engaging relevant stakeholders with the aim of
securing sleeping grounds closer to pick-up points. Target date for implementation is end of
September 2008
Challenge 3:
Our buses are still vulnerable, to some extent, to siphoning of diesel at sleeping grounds.
Response to challenge 3:
During the year under review, 15% of the vulnerable vehicles were fitted with modified diesel tank
caps to curb siphoning. This strategy along introduction of new vehicles with is yielding the desired
results and the average consumption for the year is testimony to this conclusion i.e. 42.5l/100km
compared to 45l/100km in 2006/07
2.6.5 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
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 32 of 87
2.6.5.4 SERVICE DELIVERY OBJECTIVES, INDICATORS & ACHIEVEMENTS
The Operations Division has been able to demonstrate results against its measurable objectives as
indicated below:
Measurable
Objective
Performance
Measure
Target Output
2007/2008
Actual Output
2006/07
Deviation from
Target
Reason for Non-
Achievement
Develop best
practice operations
standards.
Implement
passenger
participation plan
i.e. update
commuters on fare
increase and
feedback on
customer services.
Improved passenger
participation and
customer services.
Stakeholder
engagement plan
developed and
implemented but
continuity still our
main concern.
Most of the
operations are in
rural areas where
it is difficult to
maintain
continuity due to
the movement of
people to urban
centres.
Improve route
performance.
Maintain average
cppk of not less
than R5.50 on all
routes.
100% of our routes
to achieve the
R5.50 average.
70% of the routes
achieved cppk of
R5.87.
More dead kms
were travelled in
certain routes.
MTC in
partnership with
communities has
negotiated
sleeping grounds
for drivers to
eliminate dead
kms.
Improve driver
performance
Implement, monitor
and evaluate
driver’s
performance plan.
Improved driver
performance and
fewer minor
accidents.
Driver’s
performance
improved by 80%.
Operating with
ageing fleet is the
greatest challenge
that our drivers
have to deal with.
Improve route
revenue in all
depots.
Develop a
complimentary
revenue generation
plan as well as
revenue collection
mechanisms and
monitor route
performance while
develop.
Meet the target set
for the current year.
Achieved R15m
which was our
target.
Limited number of
operating buses
due to breakdowns
and major defects
remains our major
concern.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 33 of 87
Measurable
Objective
Performance
Measure
Target Output
2007/2008
Actual Output
2006/07
Deviation from
Target
Reason for Non-
Achievement
Develop alternative
revenue generation
streams.
Promote private
higher through
advertising and
other special
services rendered
by MTC.
Increased revenue
generated from
other sources.
Private hire target
was also achieved.
Promote customer
services
Develop a customer
services charter
poster for
employees and
conduct training for
front line staff on
customer care/
services.
Conduct training at
Zwelitsha and
Reeston.
Improved and
excellent customer
services to all our
clients.
Appointed service
provider for the
development and
printing of
customer service
charter posters.
Budget
constraints.
2.6.5.4.1 Specific Challenges and Response
Challenge 1:
Electronic Ticket Machines (ETM’s) are susceptible to frequent breakdowns due to the dusty nature
of the rural operations which comprises 80% of the MTC operations as well as bad routes.
Response to challenge 1:
Strengthen first line maintenance on ETM’s and purchase sufficient spare machines as well liaising
with the Department of Roads and Transport to assist on bad routes.
Challenge 2:
Attacks on drivers at some sleeping grounds forces the Corporation to run empty buses to and from
the depots after completion and before the start of shifts.
Response to challenge 2
Constant mobilization of communities to remain vigilant to strangers and suspicious persons who
perpetrate these robberies.
Challenge 3
Meeting customer needs and expectations as well as running a reliable service is a major challenge
due to limited number of peak buses.
Response to challenge 3:
The refurbishment programme implemented by Engineering department will partially yield positive
results as some buses are off the road due to body structural defects.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 34 of 87
2.6.5.4.2 AREAS OF OPERATION
2.6.5.4.2.1 Zwelitsha Depot
The Zwelitsha Depot covers the areas of King William’s Town and Keiskammahoek.
A total of Six Hundred and Fifty Four Thousand and Thirty Seven (654, 037) passengers were carried
with One Million and Twenty Seven Thousand One Hundred and Nine (1,027. 109) kilometres
travelled.
2.6.5.4.2.2 Reeston Depot
The Reeston Depot covers the areas of East London.
A total of Four Hundred and Twenty Three Thousand, Eight Hundred and Twelve (423,812)
passengers were carried with Four Hundred and Ninety Thousand, One Hundred and Twenty Eight
(490,128) kilometres travelled.
2.6.5.4.2.3 Queenstown Depot
The Queenstown Depot covers the areas of Ntabethemba, Whittlesea and Mkapusi.
A total of Four Hundred and Fifty Nine Thousands One Hundred and Seventy Three (459, 173)
passengers were carried with Five Hundred and Seventy Thousands, Nine Hundred and Twenty Six
(570, 926) kilometres travelled.
2.6.5.4.2.4 Alice Depot
The Alice Depot covers the areas of Alice and Middledrift.
A total of Two Hundred and Fourteen Thousand Seven Hundred and Sixty Three (214, 763)
passengers were carried with Two Hundred and Eighteen Thousand Five Hundred and Fifty Nine
(218,559) kilometres travelled.
2.6.5.4.2.5 Summarised Statistics
A grand total of One million Seven Hundred and Fifty One Thousand, Seven Hundred and Eighty
Five (1,751.785) passengers were carried with Two Nine Two Million Three Hundred and Six
Thousand Seven Hundred and Twenty Two (2,306.722) route kilometres travelled during the year
under review.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 35 of 87
2.6.5.4.3 Vehicle State
Depot 2007/08 2006/07 2005/06
Zwelitsha 24 24 21
Reeston 11 9 10
Queenstown 14 14 14
Alice 9 9 7
TOTAL 58 56 52
One standard bus being B38 was scrapped because it was not economically repairable. Three standard
buses being bus 59, bus 60 and bus 69 were purchased. On average Forty Six (46) peak buses
operated during the year under review.
2.6.5.4.4 Accidents
Two major accidents occurred during the year under review.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 36 of 87
PART 3
AUDIT COMMITTEE
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 37 of 87
3 AUDIT COMMITTEE COMMENTS ON THE 2007/2008
ANNUAL REPORT FOR THE MAYIBUYE TRANSPORT
CORPORATION
In terms of its obligations according to Treasury Regulation 3.1.12, the Audit Committee reports as
follows on certain events as well as actions and findings in respect of the financial year ended 31
March 2008.
3.1 APPOINTMENT OF AUDIT COMMITTEE MEMBERS / MEETINGS AND
ATTENDANCE
The Corporation established an Audit Committee in accordance with the requirements of Section
38(1) (a) of the Public Finance Management Act. All three members of the Audit Committee are
external.
Except for ad hoc meetings, the committee held five meetings during the year under review and
attendance was as follows:
Name Meetings
Mr. M. Mantyi 5
Mr. J. Mdeni 2
Mrs. R. Luzuka 5
3.2 AUDIT COMMITTEE RESPONSIBILITY
The Audit Committee has performed its functions in accordance with Section 38 (1) (a) of the PFMA
and Treasury Regulation 3.1.13. The Audit Committee has adopted appropriate formal terms of
reference by way of the Audit Committee Charter and the Internal Audit Charter. It has regulated its
affairs in compliance with these charters and discharged all of its responsibilities as contained therein.
3.3 THE EFFECTIVENESS OF INTERNAL CONTROL
Executive Management suggested that the approach to the internal audit function be changed to gain
even greater value to the systems, controls, and operations of MTC. The internal audit unit performed
a “Controls Adequacy Assessment” within specific agreed upon business processes and selected
departments, and made recommendations for controls best practiced to be implemented within each
of the identified processes and departments.
In addition to the “Controls Adequacy Assessment”, the following work was completed during the
year under review:
High-level risk assessment workshop (Business risk identification and rating project)
Formulating a Risk Management Strategy and Fraud Prevention Plan
The deliverables from the scope of internal audit work performed were satisfactory and will further
assist the Corporation in the process of continued improvement over its internal controls.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 38 of 87
Notwithstanding the fact that several shortcomings were pointed out, the Audit Committee is satisfied
that the Corporation is continually focussed on maintaining qualitative levels of internal control.
Adequate steps are being implemented to address the shortcomings identified during the internal and
external audit visits.
3.4 THE QUALITY OF IN YEAR MANAGEMENT AND MONTHLY/QUARTERLY
REPORTS SUBMITTED IN TERMS OF THE PFMA
The administration of monthly- / quarterly reports submitted in terms of the PFMA was satisfactory
according to monitoring and internal audit results.
3.5 EVALUATION OF FINANCIAL STATEMENTS
The Audit Committee has:
Reviewed and discussed with the Auditor-General the audited financial statements included in
the annual report;
Reviewed the contents of the management letter (s) from the Office of the Auditor-General,
and responses by management;
Reviewed changes in accounting policies and practices;
Reviewed significant adjustments resulting from the audit.
The Audit Committee concurs and accepts the conclusion(s) of the Auditor-General on the financial
statements and is of the opinion that the financial statements can be accepted when read with the
report of the Auditor-General.
3.6 APPRECIATION
The committee expresses its sincere appreciation to the Honourable MEC, Accounting Officer, senior management team and the Auditor General.
___________________________________________
M. MANTYI
CHAIRPERSON OF THE AUDIT COMMITTEE
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 39 of 87
PART 4
ANNUAL FINANCIAL
STATEMENTS
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 40 of 87
4 ANNUAL FINANCIAL STATEMENTS
4.1 REPORT OF THE CHIEF EXECUTIVE OFFICER
4.1.1 GENERAL REVIEW
4.1.1.1 Overview of Financial Results
I have done a review of the attached annual financial statements. The following were noted in
carrying out the review:
Total revenue generated from bus fares and private hire for the financial period under review
amounted to R 15,055,438.
Depot 2008 2007
Zwelitsha 6,265,809 5,054,337
Reeston 2,926,797 2,685,617
Queenstown 4,468,357 3,373,029
Alice 1,394,475 1,036,145
TOTAL 15,055,438 12,149,128
The combined revenue has been achieved by an average number of 46 operating buses (2007: 44)
with a total number of 2,386,563 kilometres travelled. Private hire kilometres amounted to 79,841
(2007: 72,344 km) while route kilometres stood at 2,306,722 (2007: 2,153,850) for the financial year.
Combined revenue has been generated by each depot as follows:-
Depot
2008 2007
Route Revenue
Private Hire
Revenue Route Revenue
Private Hire
Revenue
Zwelitsha 5,683,388 582,421 4,692,317 362,020
Reeston 2,521,770 405,027 2,310,226 375,391
Queenstown 4,181,377 286,980 3,204,779 168,250
Alice 1,212,076 182,399 911,395 124,750
TOTAL 13,598,611 1,456,827 11,118,717 1,030,411
Bus allocation per depot for the financial year was as follows:-
DEPOT 2008 2007
Zwelitsha 18 16
Reeston 9 10
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 41 of 87
DEPOT 2008 2007
Queenstown 12 11
Alice 7 7
TOTAL OPERATING BUSES 46 44
Average route revenue per bus was as follows:-
DEPOT 2008 2007
Zwelitsha 315,744 294,301
Reeston 280,197 231,023
Queenstown 348,448 291,344
Alice 173,154 130,199
4.1.1.2 Operating Grant-in-Aid
The Corporation receives grant-in-aid from The Provincial Department of Roads and Transport. The
grant is meant to subsidize bus fares and partly fund the Corporations’ operating activities. Allocation
for the financial year under review was as follows:-
2008 2007
Grant-in-Aid 33,565,000 27,747,177
4.1.1.3 Operating Expenses
The Corporation has reported a net profit for the year amounting to R 2,580,204 (2007 net loss: R
1,313,625). The net profit arose as the assets were restated to their accurate carrying values in the
current financial year. The net profit has been arrived at after taking into account cost of services
rendered of R 23,167,061 (2007: R 20,613,318), operating expenses amounting to R 16,429,831
(2007: R 14,175,959) and administration expenses amounting to R 11,353,145 (2007: R 8,749,528).
Non-cash items which have been included in operating expenses include depreciation and provision
for staff leave. Details of reportable operating expenses are found in the notes to the financial
statements.
4.1.2 SIGNIFICANT EVENTS AND PROJECTS
An amount of R 7,000,000 was received from the Department of Roads & Transport in the current
financial year.
The following capital expenditures were made:
Bus refurbishment program;
Operating equipment;
Workshop equipment;
Office equipment;
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IT infrastructure;
Depot upgrading.
4.1.3 INVENTORIES
Inventory in rand 2008 2007
Stock on hand 2,048,323 1,880,472
Provision for Obsolete Stock - (362,177)
Total 2,048,323 1,518,295
4.1.4 CORPORATE GOVERNANCE ARRANGEMENTS
Mayibuye Transport Corporation is fully committed to the principles of openness, accountability and
integrity, as advocated in the King Code of Corporate Governance (King 2). The Board members
recognise the need to conduct the business of the Corporation with integrity and in accordance with
generally accepted corporate governance practices.
4.1.4.1 BOARD MEMBERS
The Board consists of eight non-executive members appointed in terms of a proclamation that was
gazetted on 30 April 2001 (no. 742 extraordinary). Two members represent Provincial Government
departments, whilst the balance was appointed by virtue of their relevant specialist knowledge and
skills.
The Chief Executive Officer is an ex-officio member of the Board, but is not entitled to vote.
4.1.4.2 COMMITTEES
The Board established the following sub-committees who assist the Board in performing its duties:
Finance and Investment;
Operations and Engineering;
Human Resources and Remuneration;
Directors’ Affairs.
The Board also appointed an audit committee. The committee was effectively operating during the
current financial year. The committee consist of:
Mr. Mandisi Mantyi
Mrs. Ruth Luzuka
Mr. Jack Mdeni
4.1.4.3 STATEMENT OF RESPONSIBILITY BY THE BOARD OF DIRECTORS
The Board is responsible for the preparation, integrity and fair presentation of the financial statements
of Mayibuye Transport Corporation. The financial statements presented on pages 50 to 81 have been
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Annual Report for the Year Ended 31 March 2008
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prepared in accordance with South African Statements of Generally Accepted Accounting Practice
and include amounts based on judgements and estimates made by management.
The going concern basis has been adopted in preparing the financial statements. The Board members
have no reason to believe that Mayibuye Transport Corporation will not be a going concern in the
foreseeable future, based on the commitment by the Government to subsidise public transport.
The financial statements have been audited by the Office of the Auditor-General, which was given
unrestricted access to all financial records and related data, including minutes of all Board meetings.
The Board members believe that all representations made to the independent auditors during their
audit are valid and appropriate.
4.1.5 RISK MANAGEMENT – CONDUCTED BY PRICEWATERHOUSECOOPERS
INTERNAL AUDIT
PricewaterhouseCoopers performed an updated risk assessment whereby the Corporation’s high-level
risks were identified and addressed. A risk management strategy and fraud prevention plan was
developed and implemented during the current financial year. An internal audit report addressing the
controls adequacy was completed.
The above internal audit plan was approved by the audit committee and the Board for the financial
year ending 31 March 2008. Action plans were put in place by MTC Management by ranking key
risks facing the Corporation in terms of their importance.
4.2 APPROVAL
The Accounting Officer has approved the attached annual financial statements set out on pages
50 to 81.
______________________________
L. R. MBINDA
CHIEF EXECUTIVE OFFICER
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4.3 AUDITOR GENERAL’S REPORT
REPORT OF THE AUDITOR-GENERAL TO THE EASTERN CAPE PROVINCIAL
LEGISLATURE ON THE FINANCIAL STATEMENTS AND PERFORMANCE
INFORMATION OF MAYIBUYE TRANSPORT CORPORATION FOR THE YEAR ENDED
31 MARCH 2008
REPORT ON THE FINANCIAL STATEMENTS
Introduction
1. I have audited the accompanying financial statements of Mayibuye Transport Corporation
which comprise the balance sheet as at 31 March 2008, income statement, statement of
changes in equity and cash flow statement for the year then ended, and a summary of
significant accounting policies and other explanatory notes, as set out on pages [xx] to [xx].
Responsibility of the accounting authority for the financial statements
2. The accounting authority is responsible for the preparation and fair presentation of these
financial statements in accordance with South African Statements of Generally Accepted
Accounting Practice and in the manner required by the Public Finance Management Act, 1999
(Act No. 1 of 1999) (PFMA). This responsibility includes:
designing, implementing and maintaining internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error
selecting and applying appropriate accounting policies
making accounting estimates that are reasonable in the circumstances.
Responsibility of the Auditor-General
3. As required by section 188 of the Constitution of the Republic of South Africa, 1996 read with
section 4 of the Public Audit Act, 2004 (Act No. 25 of 2004) (PAA) and section 10(2) of the
Ciskeian Corporations Act, 1981 (Act No. 16 of 1981) as amended by the Corporations
Transitional Provisions Act, 1995 (Act No. 12 of 1995), my responsibility is to express an
opinion on these financial statements based on my audit.
4. I conducted my audit in accordance with the International Standards on Auditing and General
Notice 616 of 2008, issued in Government Gazette No. 31057 of 15 May 2008. Those
standards require that I comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance on whether the financial statements are free from material
misstatement.
5. An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control.
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6. An audit also includes evaluating the:
appropriateness of accounting policies used
reasonableness of accounting estimates made by management
overall presentation of the financial statements.
7. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis
for my audit opinion.
Basis of Accounting
8. The public entity’s policy is to prepare financial statements on the basis of accounting
determined by the National Treasury, as set out in the accounting policy note 1 to the financial
statements.
Basis for qualified opinion
9. Completeness of Revenue
In common with similar organisations, it is not feasible for the Corporation to institute
accounting controls over cash collections from casual passengers prior to initial entry of the
collections in the accounting records. Accordingly, it was impracticable for us to extend our
examination beyond the receipts actually recorded.
Under these circumstances it was not possible to confirm the completeness of casual passenger
revenue amounting to R13 598 611 (2007: R11 118 716) recognised in the annual financial
statements.
Qualified opinion
10. In my opinion, except for the effects of the matters described in the Basis for qualified opinion
paragraphs, the financial statements present fairly, in all material respects, the financial
position of Mayibuye Transport Corporation as at 31 March 2008 and its financial
performance and cash flows for the year then ended, in accordance with the South African
Statements of Generally Accepted Accounting Practice and in the manner required by the
PFMA and the Ciskeian Corporations Act, 1981 (Act No. 16 of 1981) as amended by the
Corporations Transitional Provisions Act, 1995 (Act No. 12 of 1995).
Emphasis of matter
I draw attention to the following matter:
Highlighting critically important matters presented or disclosed in the financial statements
11. Capital improvements to the Zwelitsha Depot has been recognised as leasehold land and
buildings with a carrying value of R 1 100 000 in note 3 to the annual financial statements. A
process for acquisition of the title deed has been initialised with the Land Claims Commission.
Although the entities right to occupy the land has not been reduced to writing, it derives
benefits from its use and carries the risks that are incidental to ownership.
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OTHER MATTERS
I draw attention to the following matters that relate to my responsibilities in the audit of the financial
statements:
Internal conrols
13. Section 51(1)(a)(i) of the PFMA states that the accounting authority must ensure that the
public entity has and maintains effective, efficient and transparent systems of financial and
risk management and internal control. The table below depicts the root causes that gave rise to
the inefficiencies in the system of internal control, which lead to the qualified opinion. The
root causes are categorised according to the five components of an effective system of internal
control. In some instances deficiencies exist in more than one internal control component.
Reporting item Control
environment
Risk
assessment
Control
activities
Information
and
communicatio
n
Monitori
ng
Completeness of
Revenue
X
Control environment: Establishes the foundation for the internal control system by providing
fundamental discipline and structure for financial reporting.
Risk assessment: Involves the identification and analysis by management of relevant financial
reporting risks to achieving predetermined financial reporting objectives.
Control activities: Policies, procedures and practices that ensure management’s financial
reporting objectives are achieved and financial reporting risk mitigation strategies are carried
out.
Information and communication: Supports all other control components by communicating
control responsibilities for financial reporting to employees and by providing financial
reporting information in a form and time frame that allows people to carry out their financial
reporting duties.
Monitoring: Covers external oversight of internal controls over financial reporting by
management or other parties outside the process; or the application of independent
methodologies, like customized procedures or standard checklists, by employees within a
process.
Matters of governance
14. Section 55(1) of the PFMA requires that the financial statements be prepared in accordance
with generally recognised accounting practice. Fundamental to achieving this is the
implementation of certain key governance responsibilities, which I have assessed as follows:
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Matter of governance Yes No
Audit committee
The Corporation has an audit committee. √
The audit committee operates in accordance with written terms of
reference.
√
The audit committee substantially fulfilled its responsibilities for the
year, as set out in section 77 of the PFMA and Treasury Regulation
3.1.10/27.1.8.
√
Internal audit
The Corporation has an internal audit function. √
The internal audit function operates in terms of an internal audit plan. √
The internal audit function substantially fulfilled its responsibilities for
the year, as set out in Treasury Regulations 3.2/27.2.
√
Other matters of governance
The financial statements submitted for audit were not subject to any material
amendments resulting from the audit.
√
No significant difficulties were experienced during the audit concerning
delays/unavailability of expected information and/or unavailability of senior
management.
√
Prior year external audit recommendations have been substantially
implemented.
√
SCOPA resolutions have been substantially implemented. √
OTHER REPORTING RESPONSIBILITIES
REPORT ON PERFORMANCE INFORMATION
15. I have reviewed the performance information as set out on pages xx to xx.
Responsibility of the accounting authority for the performance information
16. The accounting authority has additional responsibilities as required by section 55(2)(a) of the
PFMA to ensure that the annual report and audited financial statements fairly present the
performance against predetermined objectives of the public entity.
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Responsibility of the Auditor-General
17. I conducted my engagement in accordance with section 13 of the PAA read with General
Notice 616 of 2008, issued in Government Gazette No. 31057 of 15 May 2008.
18. In terms of the foregoing my engagement included performing procedures of an audit nature to
obtain sufficient appropriate evidence about the performance information and related systems,
processes and procedures. The procedures selected depend on the auditor’s judgement.
19. I believe that the evidence I have obtained is sufficient and appropriate to provide a basis for
the audit findings reported below.
Audit findings
Performance management policy not documented
20. There is no formal documented policy in respect of the performance management system.
No alignment of predetermined objectives with individual staff performance valuations
21. The performance management system is not structured in a manner so as to ensure the
performance of the entity in all its facets, is measured and reported on from its strategic
objectives down to the assessment of individual staff performance evaluations in terms of job
descriptions.
APPRECIATION
The assistance rendered by the staff of Mayibuye Transport Corporation during the audit is sincerely
appreciated.
East London
31 July 2008
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4.4 ANNUAL FINANCIAL STATEMENTS
DIRECTORS PLC Maseti Chairperson
SJ Nyengane Deputy Chairperson
PP Balfour Director
D Lefutso Director
T Matiwane Director
AJ de Vries Director
TA Thomas Director
M Tuswa Director
NATURE OF BUSINESS The entity provides subsidised public transport and is governed
by the Public Finance Management Act, Schedule 3D Provincial
Government Business Enterprises Entity.
BANKERS The Standard Bank of South Africa Limited
AUDITORS Office of the Auditor-General
CONTENTS PAGE
Balance sheet 51
Income statement 52
Statement of changes in equity 53
Cash flow statement 54
Accounting policy notes 55 – 65
Notes to the financial statements 66 – 78
Detailed income statement 79 – 81
APPROVAL OF THE ANNUAL FINANCIAL STATEMENTS
The annual financial statements were approved by the board of directors on 30 May 2008 and are
signed as such by :
CHAIRPERSON OF THE BOARD CHIEF EXECUTIVE OFFICER
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4.4.1 BALANCE SHEET
NOTES 2008 2007
R R
ASSETS
Non-current assets
Property, plant and equipment 3 34,303,394 31,811,607
Total non-current assets 34,303,394 31,811,607
Current assets
Inventories 4 2,048,323 1,518,295
Trade and other receivables 5 506,681 387,515
Investment - Restructuring process 6 - 235,452
Investments - Marketable securities 7 45,698 -
Cash and cash equivalents 8 9,648,150 6,629,379
Total current assets 12,248,852 8,770,641
Total assets 46,552,246 40,582,248
EQUITY AND LIABILITIES
Capital and reserves
Share capital 9 56,761,075 56,761,075
Accumulated deficit (54,684,609) (57,264,813)
2,076,466 (503,738)
Non-current liabilities
Restructuring process fund 6 - 235,452
Deferred income 39,347,113 36,293,485
39,347,113 36,528,937
Current liabilities
Trade and other payables 10 2,706,401 2,251,551
Payroll accruals 11 2,422,266 2,305,498
5,128,667 4,557,049
Total equity and liabilities 46,552,246 40,582,248
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4.4.2 INCOME STATEMENT
NOTES 2008 2007
R R
Revenue 12 15,055,438 12,149,128
Cost of services rendered 23,167,061 20,613,318
Gross profit / (loss) (8,111,623) (8,464,190)
Other income - Grant 20.2 37,511,372 29,476,383
Other operating income 439,750 73,806
Administration expenses (11,353,145) (8,749,528)
Operating expenses (16,429,831) (14,175,959)
Fruitless and wasteful expenditure 13 (600) (29,886)
Profit / (Loss) from operations 14 2,055,923 (1,869,375)
Interest income 14 524,281 555,749
Profit / (loss) for the year 2,580,204 (1,313,625)
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4.4.3 STATEMENT OF CHANGES IN EQUITY
Share Future Accumulated
Capital Capital Loss Total
R R R R
Balance at 1 April 2006 50,000,000 6,761,075 (51,945,641) 4,815,434
Prior period error adjustments - Note 24 - - (4,005,547) (4,005,547)
Restated balance at 1 April 2006 50,000,000 6,761,075 (55,951,188) 809,887
Transfers to share capital 6,761,075 (6,761,075) - -
Additional grant received - - - -
Deferred income release to income - - - -
Profit / (loss) for the year - - (1,313,625) (1,313,625)
Balance at 31 March 2007 56,761,075 - (57,264,813) (503,738)
Additional grant received - - - -
Deferred income release to income - - - -
Profit / (loss) for the year - - 2,580,204 2,580,204
Balance at 31 March 2008 56,761,075 - (54,684,609) 2,076,466
Deferred
Income
R
Balance at 1 April 2006 14,000,000
Prior period error adjustments - Note 24 20,517,868
Restated balance at 1 April 2006 34,517,868
Additional grant received 4,252,000
Deferred income release to income (2,476,383)
Balance at 31 March 2007 36,293,485
Additional grant received 7,000,000
Deferred income release to income (3,946,372)
Balance at 31 March 2008 39,347,113
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4.4.4 CASH FLOW STATEMENT
NOTES 2008 2007
R R
OPERATING ACTIVITIES
Cash receipts from customers 14,001,129 43,254,053
Cash paid to suppliers and employees (13,096,202) (46,044,736)
Cash generated by operations 15 904,927 (2,790,683)
Interest received 524,281 555,749
NET CASH (USED IN)/ FROM
OPERATING ACTIVITIES 1,429,208 (2,234,934)
INVESTING ACTIVITIES
Purchases of property, plant and equipment (5,506,392) (10,393,253)
Proceeds on sale of property, plant and equipment 95,955 -
Restructuring process grant release - 1,998
NET CASH (USED IN)/FROM INVESTING
ACTIVITIES (5,410,437) (10,391,255)
FINANCING ACTIVITIES
Decrease / (increase) in grant allocation 7,000,000 4,250,000
NET CASH (USED IN)/FROM FINANCING
ACTIVITIES 7,000,000 4,250,000
NET INCREASE /(DECREASE) IN CASH
AND CASH EQUIVALENTS 3,018,771 (8,376,189)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 6,629,379 15,005,568
CASH AND CASH EQUIVALENTS AT
END OF YEAR 8 9,648,150 6,629,379
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4.4.5 ACCOUNTING POLICY NOTES
1 PRESENTATION OF FINANCIAL STATEMENTS
These financial statements are presented in South African Rand [R] since that is the
functional currency in which the transactions are denominated.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Annual Financial Statements are prepared under the historical cost convention, other
than certain financial instruments, and incorporate the following principal accounting
policies, which have been consistently applied in all material respect. The financial
statements have been prepared in accordance with South African Statements of
Generally Accepted Accounting Practice. The principal accounting policies adopted
remained unchanged from the previous year except as listed below:
2.1 Changes in accounting policy and disclosures
The company has adopted the following new and amended IFRS and IFRIC
interpretations during the year. Adoption of these revised standards and interpretations
did not have any effect on the financial performance or position of the company. They
did however give rise to additional disclosures, including in some cases, revisions to
accounting policies.
IFRS 7 Financial Instruments: Disclosure
IAS 1 Presentation of Financial Statements - Capital Disclosures
IFRIC 8 (AC441), Scope of IFRS2 (effective 1 May 2006)
IFRIC 9 (AC442), Re-assessment of Embedded Derivatives (effective 1 June
2006)
IFRIC 10 (AC443), Interim Financial Reporting and Impairment (effective 1
November 2006)
IFRIC 11, IFRS 2 - Company and Treasury Share Transactions
The principal effects of these changes are as follows:
IFRS 7 Financial Instruments: Disclosures
This standard requires disclosures that enable users of the financial statements to
evaluate the significance of the company's financial instruments and the nature and
extent of risks arising from those financial instruments. The new disclosures are included
throughout the financial statements. While there has been no effect on the financial
position or results, comparative information has been revised where needed.
IAS 1 Presentation of Financial Statements
This amendment requires the company to make new disclosures to enable users of the
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financial statements to evaluate the company's objectives, policies and processes for
managing capital.
IFRIC 8 Scope of IFRS 2
This interpretation requires IFRS 2 to be applied to any arrangements in which the entity
cannot identify specifically some or all of the goods received, in particular where equity
instruments are issued for consideration which appears to be less than fair value. As
equity instruments are only issued to employees in accordance with the employee share
scheme, the interpretation had no impact on the financial position or performance of the
company. This statement has had no effect on the current year financial statements.
IFRIC 9 Reassessment of Embedded Derivatives
IFRIC 9 states that the date to assess the existence of an embedded derivative is the date
that an entity first becomes a party to the contract, with reassessment only if there is a
change to the contract that significantly modifies the cash flows. As the company has no
embedded derivative requiring separation from the host contract, the interpretation had
no impact on the financial position or performance of the company. This statement has
had no effect on the current year financial statements.
IFRIC 10 Interim Financial Reporting and Impairment
The company adopted IFRIC Interpretation 10 as of 1 January 2007, which requires that
an entity must not reverse an impairment loss recognised in a previous interim period in
respect of goodwill or an investment in either an equity instrument or a financial asset
carried at cost. As the company had no impairment losses previously reversed, the
interpretation had no impact on the financial position or performance of the company.
This statement has had no effect on the current year financial statements.
IFRIC 11 IFRS 2 - Company and Treasury Share Transactions
The company adopted IFRIC 11 which requires arrangements whereby an employee is
granted rights to an entity's equity instruments to be accounted for as an equity-settled
scheme, even if the entity buys the instruments from another party, or the shareholders
provide the equity instruments needed. No such arrangement exists and hence this
interpretation has had no impact on the company.
2.2 Irregular and fruitless and wasteful expenditure
Irregular expenditure means expenditure incurred in contravention of, or not in
accordance with a requirement of any applicable legislation, including:
The Public Finance Management Act, or
Any provincial legislation providing for procurement procedures in that provincial
government.
Fruitless and wasteful expenditure means expenditure that was made in vain and would
have been avoided had reasonable care been exercised.
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All irregular and fruitless and wasteful expenditure is recognised in profit and loss in the
period in which it is incurred and where recovered, it is subsequently accounted for as
revenue in the Income Statement.
2.3 Cash and cash equivalents
Cash and cash equivalents are measured at fair value.
Cash in the balance sheet comprises cash at bank and on hand and short-term deposits
held by the Corporation. For the purposes of the cash flow statement, cash and cash
equivalents consist of cash and cash equivalents as defined above.
2.4 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
Revenue is reduced for estimated customer returns, rebates and other similar allowances.
Revenue is recognised to the extent that it is probable that the economic benefits will
flow to the entity and the revenue can be reliably measured.
When the outcome of a transaction involving the rendering of services can be estimated
reliably, revenue associated with the transaction will be recognised by reference to the
stage of completion of the transaction at the balance sheet date.
Revenue from the sale of bus tickets and bus hiring is recognised when the significant
risks and rewards of ownership are transferred to the buyer.
Interest income is accrued on a time basis, by reference to the principal outstanding and
at the interest rate applicable, except for interest earned on capital funding which is
disclosed separately.
Dividend income from investments is recognised when the shareholder's rights to
receive payment have been established.
2.5 Leasing
Operating lease payments are recognised as an expense in profit or loss on a straight line
basis over the lease term.
2.6 Deferred income
Government grants represent monthly transfer payments from the Eastern Cape
Department of Roads and Transport in order to subsidise the Corporation's public
transport service.
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Government grants are recognised when there is reasonable assurance that the entity will
comply with the conditions related to them and that the grants will be received. Grants
related to income are recognised in the Income Statement as other income over the
periods necessary to match them with the related costs that they are intended to
compensate. The timing of such recognition in the Income Statement will depend on the
fulfilment of any conditions or obligations attached to the grant. Grants related to assets
are presented as deferred income in the Balance Sheet. The Income Statement will be
affected either by reduced deprecation charge or by deferred income being recognised as
income systematically over the useful life of the related asset.
2.7 Defined contribution plans
The cost of defined contribution plans is the contribution payable by the employer for
that accounting period. Contribution to a defined contribution plan, in respect of service
in a particular period, is recognised as an expense in that period.
2.8 Taxation
No provision has been made for taxation as the entity is a tax exempt institution in terms
of section 10 (a) of the Income Tax Act No. 58 of 1962.
2.9 Property, plant and equipment
Buildings, plant and equipment is stated at cost less accumulated depreciation and
accumulated impairment losses. Such cost includes the cost of replacing part of the
plant and equipment when that cost is incurred, if the recognition criteria are met. All
other repair and maintenance costs are recognised in profit or loss as incurred.
Land is not depreciated as it is deemed to have an indefinite life.
Items of property, plant and equipment are depreciated using the straight line basis at
rates that will reduce the book values to estimated residual values over the anticipated
useful lives of the assets concerned. The principal annual rates used for this purpose are:
Ancillary Vehicles 25%
Buses - Body 12.5%
Buses - Chassis, Engine, etc 8.33%
Office Equipment 20%
Office Furniture 10%
Operating Equipment 20%
Workshop Equipment 25%
Buildings 2%
An item of plant and equipment is derecognised upon disposal or when no future
economic benefits are expected to arise from the continued use of the asset. Inferior
equipment is written off in full in the year it is acquired. Surpluses or deficits on the
disposal of assets are credited or charged to income. The surplus or deficit is the
difference between the net disposal proceeds and the carrying amount of the asset.
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Subsequent expenditure relating to property, plant and equipment is capitalised if the
subsequent expenditure meets the definition of an asset.
When parts of an item of property, plant and equipment have different useful lives, they
are accounted for as separate items (major components) of property, plant and equipment
and shall be depreciated according to their different useful life.
The gains and losses arising from the de-recognition of property, plant and equipment
(difference between carrying amount less any revaluation surpluses and net disposal
proceeds) are included in surplus or deficit when the item is derecognized.
The residual value and the useful life of each asset are reviewed and adjusted at balance
sheet date.
The depreciation charge for each year is recognized in surplus and deficit unless it is
included in the carrying amount of another asset.
2.10 Impairment of non-financial assets
The company assesses at each reporting date whether there is an indication that an asset
may be impaired. If any such indication exists, or when annual impairment testing for an
asset is required, the company estimates the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair
value less costs to sell and its value in use and is determined for an individual asset,
unless the asset does not generate cash inflows that are largely independent of those
from other assets or group of assets. Where the carrying amount of an asset exceeds its
recoverable amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. In determining
fair value less costs to sell, an appropriate valuation model is used.
For an asset that does not generate cash inflows that are largely independent of those
from other assets the recoverable amount is determined for the cash-generating unit to
which the asset belongs. An impairment loss is recognised in the income statement
whenever the carrying amount of the cash-generating unit exceeds recoverable amount.
A previously recognised impairment loss is reversed if the recoverable amount increases
as a result of a change in the estimates used to determine the recoverable amount, but not
to an amount higher than the carrying amount that would have been determined (net of
depreciation) had no impairment loss been recognised in prior years.
2.11 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is calculated
using the weighted average method. Net realisable value is the estimated selling price in
the ordinary course of business, and the estimated costs necessary to make the sale.
Inventory cost includes the costs of purchase of inventories comprising the purchase
price, levies, pressing and storage. Trade discounts, rebates and other similar items are
Mayibuye Transport Corporation
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deducted in determining the costs of purchase.
2.12 Financial Instruments
2.12.1 Investments and Financial Assets
Financial assets within the scope of IAS 39 are classified as financial assets at fair value
through profit or loss, loans and receivables, held-to-maturity investments, or available-
for-sale financial assets, as appropriate. When financial assets are recognised initially,
they are measured at fair value, plus, in the case of investments not at fair value through
profit or loss, directly attributable transaction costs.
The company determines the classification of its financial assets on initial recognition
and, where allowed and appropriate, re-evaluates this designation at each financial year
end.
2.12.2 Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss includes financial assets held for
trading and financial assets designated upon initial recognition as at fair value through
profit or loss.
Financial assets are classified as held for trading if they are acquired for the purpose of
selling in the near term. Derivatives, including separated embedded derivatives are also
classified as held for trading unless they are designated as effective hedging instruments
or a financial guarantee contract. Gains or losses on investments held for trading are
recognised in profit or loss.
2.12.3 Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturities
are classified as held-to-maturity when the company has the positive intention and
ability to hold to maturity. After initial measurement held-to-maturity investments are
measured at amortised cost using the effective interest method. Gains and losses are
recognised in profit or loss when the investments are derecognised or impaired, as well
as through the amortisation process.
2.12.4 Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. After initial measurement loans and
receivables are carried at amortised cost using the effective interest method less any
allowance for impairment. Gains and losses are recognised in profit or loss when the
loans and receivables are derecognised or impaired, as well as through the amortisation
process.
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2.12.5 Available-for-sale financial investments
Available-for-sale financial assets are those non-derivative financial assets that are
designated as available-for-sale or are not classified in any of the three preceding
categories. After initial measurement, available-for-sale financial assets are measured at
fair value with unrealised gains or losses recognised directly in equity until the
investment is derecognised or determined to be impaired at which time the cumulative
gain or loss previously recorded in equity is recognised in profit or loss.
2.12.6 Amortised cost
Held-to-maturity investments and loans and receivables are measured at amortised cost.
This is computed using the effective interest method less any allowance for impairment.
The calculation takes into account any premium or discount on acquisition and includes
transaction costs and fees that are an integral part of the effective interest rate.
2.13 Impairment of financial assets
The company assesses at each balance sheet date whether a financial asset or group of
financial assets is impaired.
2.13.1 Assets carried at amortised cost
If there is objective evidence that an impairment loss on assets carried at amortised cost
has been incurred, the amount of the loss is measured as the difference between the
asset’s carrying amount and the present value of estimated future cash flows discounted
at the financial asset’s original effective interest rate. The carrying amount of the asset is
reduced through use of an allowance account. The amount of the loss shall be recognised
in profit or loss.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease
can be related objectively to an event occurring after the impairment was recognised, the
previously recognised impairment loss is reversed, to the extent that the carrying value
of the asset does not exceed its amortised cost at the reversal date. Any subsequent
reversal of an impairment loss is recognised in profit or loss.
In relation to trade receivables, a provision for impairment is made when there is
objective evidence that the company will not be able to collect all of the amounts due
under the original terms of the invoice. The carrying amount of the receivable is reduced
through use of an allowance account. Impaired debts are derecognised when they are
assessed as uncollectible.
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2.13.2 Available-for-sale financial investments
If an available-for-sale asset is impaired, an amount comprising the difference between
its cost and its current fair value, less any impairment loss previously recognised in
profit or loss, is transferred from equity to profit or loss. Reversals in respect of equity
instruments classified as available-for-sale are not recognised in profit or loss. Reversals
of impairment losses on debt instruments are reversed through profit or loss, if the
increase in fair value of the instrument can be objectively related to an event occurring
after the impairment loss was recognised in profit or loss.
2.14 Financial liabilities and equity instruments
2.14.1 Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss includes financial liabilities held
for trading and financial liabilities designated upon initial recognition as at fair value
through profit or loss.
Financial liabilities are classified as held for trading if they are acquired for the purpose
of selling in the near term. Gains or losses on liabilities held for trading are recognised in
profit or loss.
2.14.2 Derecognition of financial assets and liabilities
Financial assets
A financial asset (or, where applicable a part of a financial asset or part of a group of
similar financial assets) is derecognised when:
the rights to receive cash flows from the asset have expired;
the corporation retains the right to receive cash flows from the asset, but has
assumed an obligation to pay them in full without material delay to a third party
under a ‘pass through’ arrangement; or
the corporation has transferred its rights to receive cash flows from the asset and
either (a) has transferred substantially all the risks and rewards of the asset, or (b)
has neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset.
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged
or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as a derecognition of the original
liability and the recognition of a new liability, and the difference in the respective
Mayibuye Transport Corporation
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carrying amounts is recognised in profit or loss.
2.15 Future changes to accounting policies
IAS 1 Presentation of Financial Statements - revised
A revised IAS 1 Presentation of financial statement was issued in March 2007, and
becomes effective for financial years beginning on or after 1 January 2009.
Changes to the presentation of financial statements include renaming of the following:
Statement of financial position to replace the name balance sheet,
Statement of comprehensive income to replace the name income statement and;
Statement of cash flows to replace the name cash flow statement.
Other changes:
Statement of changes in equity to include only transactions with owners,
Statement of comprehensive income to contain non-owner changes in equity,
Reclassifications to be separately disclosed,
Three statements of financial position required if retrospective changes in
accounting policy or retrospective restatement / reclassification.
Further to the abovementioned revisions, an additional revision was issued in September
2007 and becomes effective for financial years beginning on or after 1 January 2009.
The Standard separates owner and non-owner changes in equity. The statement of
changes in equity will include only details of transactions with owners, with all non-
owner changes in equity presented as a single line. In addition, the standard introduces
the statement of comprehensive income: it presents all items of income and expense
recognised in profit or loss, together with all other items of recognised income and
expense, either in one single statement, or in two linked statements. The company is still
evaluating whether it will have one or two statements.
IAS 23 Borrowing Costs
A revised IAS 23 Borrowing Costs was issued in March 2007, and becomes effective for
financial years beginning on or after 1 January 2009. The standard has been revised to
require capitalisation of borrowing costs when such costs relate to a qualifying asset. A
qualifying asset is an asset that necessarily takes a substantial period of time to get ready
for its intended use or sale. In accordance with the transitional requirements in the
Standard, the company will adopt this as a prospective change. Accordingly, borrowing
costs will be capitalised on qualifying assets with a commencement date after 1 January
2009. No changes will be made for borrowing costs incurred to this date that have been
expensed.
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IFRIC 12 Service Concession Arrangements
IFRIC Interpretation 12 was issued in November 2006 and becomes effective for annual
periods beginning on or after 1 January 2008. This Interpretation applies to service
concession operators and explains how to account for the obligations undertaken and
rights received in service concession arrangements. No member of the company is an
operator and hence this Interpretation will have no impact on the company.
IFRS 8 Operating Segments
IFRS 8 was issued in November 2006 and becomes effective for financial years
beginning on or after 1 January 2009. This standard requires disclosure of information
about the company's operating segments and replaced the requirement to determine
primary (business) and secondary (geographical) reporting segments of the company.
The company expects that this standard will have no impact on the company's financial
statements.
IFRIC 13 Customer Loyalty Programmes
IFRIC Interpretation 13 was issued in June 2007 and becomes effective for annual
periods beginning on or after 1 July 2008. This Interpretation requires customer loyalty
award credits to be accounted for as a separate component of the sales transaction in
which they are granted and therefore part of the fair value of the consideration received
is allocated to the award credits and deferred over the period that the award credits are
fulfilled. The company expects that this interpretation will have no impact on the
company's financial statements as no such schemes currently exist.
IFRIC 14 IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction
IFRIC Interpretation 14 was issued in July 2007 and becomes effective for annual
periods beginning on or after 1 January 2008. This Interpretation provides guidance on
how to assess the limit on the amount of surplus in a defined benefit scheme that can be
recognised as an asset under IAS 19 Employee Benefits. The company expects that this
Interpretation will have no impact on the financial position or performance of the
company as the company does not have any defined benefit schemes.
IFRS 2 Share-based Payments – Vesting Conditions and Cancellations
This amendment to IFRS 2 Share-based payments was published in January 2008 and
becomes effective for financial years beginning on or after 1 January 2009. The Standard
restricts the definition of “vesting condition” to a condition that includes an explicit or
implicit requirement to provide services. Any other conditions are non-vesting
conditions, which have to be taken into account to determine the fair value of the equity
instruments granted. In the case that the award does not vest as the result of a failure to
meet a non-vesting condition that is within the control of either the entity or the
counterparty, this must be accounted for as a cancellation. The company expects that this
standard will have no impact on the financial position or performance of the company as
the company has not entered into any share-based payment schemes.
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IFRS 3R Business Combinations and IAS 27R Consolidated and Separate Financial
Statements
The revised standards were issued in January 2008 and become effective for financial
years beginning on or after 1 July 2009. IFRS 3R introduces a number of changes in the
accounting for business combinations that will impact the amount of goodwill
recognised, the reported results in the period that an acquisition occurs, and future
reported results. IAS 27R requires that a change in the ownership interest of a subsidiary
is accounted for as an equity transaction. Therefore, such a change will have no impact
on goodwill, nor will it give raise to a gain or loss. Furthermore, the amended standard
changes the accounting for losses incurred by the subsidiary as well as the loss of control
of a subsidiary. The changes introduced by IFRS 3R and IAS 27R must be applied
prospectively and will affect future acquisitions and transactions with minority interests.
These amendments will not impact the financial statements of the company.
Amendments to IAS 32 and IAS 1 Puttable Financial Instruments
Amendments to IAS 32 and IAS 1 were issued in February 2008 and become effective
for annual periods beginning on or after 1 January 2009. The amendment to IAS 32
requires certain puttable financial instruments and obligations arising on liquidation to
be classified as equity if certain criteria are met. The amendment to IAS 1 requires
disclosure of certain information relating to puttable instruments classified as equity.
The company does not expect these amendments to impact the financial statements of
the company.
2.16 Key management assumptions, estimates and judgements
The preparation of financial statements requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of
applying the company’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed.
The key assumptions, estimates and judgements concerning the future and other key
sources of estimation uncertainty at the balance sheet date, that have a significant risk of
causing a material adjustment to the carrying amount of the assets and liabilities within
the next financial year are discussed below.
The residual values and estimated useful lives of property, plant and equipment were
assessed and found to be reasonable. Residual values of motor vehicles are determined
with reference to market related prices of vehicles in a similar condition.
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4.4.6 NOTES TO THE ANNUAL FINANCIAL STATEMENTS
1 PROPERTY, PLANT & EQUIPMENT
Land &
Building
Leasehold
Land &
Buildings
Ancillary
Vehicles Buses
Office
Equipment
Office
Furniture
Operating
Equipment
Workshop
Equipment Total
R R R R R R R R R
Carrying value at 1 April 2007
2,514,901
1,100,000
2,264,095
21,740,411
232,654
47,551
3,730,810
181,185
31,811,607
At Cost 2,514,901 1,100,000 2,196,103 33,508,487 869,336 177,769 1,897,881 766,544 43,031,021
Accumulated Depreciation - - 67,992 (11,768,076) (636,682) (130,218) 1,832,929 (585,359) (11,219,414)
Additions 137,370 - - 4,494,986 162,996 235,111 144,448 331,481 5,506,392
Disposals - Cost - - (138,857) (1,534,435) - - - - (1,673,292)
Disposals - Accumulated Depreciation - - 138,857 1,462,790 - - - - 1,601,647
Depreciation for the year - - (224,581) (2,258,853) (105,536) (24,985) (242,381) (86,623) (2,942,959)
34,303,394
Carrying value at 31 March 2008 2,652,271 1,100,000 2,039,514 23,904,899 290,114 257,677 3,632,877 426,043 34,303,394
At Cost 2,652,271 1,100,000 2,057,246 36,469,038 1,032,332 412,880 2,042,329 1,098,025 46,153,491
Accumulated Depreciation - - (17,732) (12,564,139) (742,218) (155,203) 1,590,548 (671,982) (11,850,096)
Land &
Building
Leasehold
Land &
Buildings
Ancillary
Vehicles Buses
Office
Equipment
Office
Furniture
Operating
Equipment
Workshop
Equipment Total
R R R R R R R R R
Carrying value at 1 April 2006 1,816,588 767,606 246,366 3,131,025 203,556 36,669 934,523 86,943 7,223,276
At Cost 2,514,901 1,100,000 955,915 24,966,175 764,206 159,254 1,556,904 620,413 32,637,768
Accumulated Depreciation (698,313) (332,394) (709,549) (21,835,150) (560,650) (122,585) (622,381) (533,470) (25,414,492)
Prior period error adjustments 698,313 332,394 888,211 11,403,990 - - 2,681,750 - 16,004,658
Additions - - 1,240,188 8,542,312 105,130 18,515 340,977 146,131 10,393,253
Disposals - Cost - - - - - - - - -
Disposals - Accumulated Depreciation - - - - - - - - -
Depreciation for the year - - (110,670) (1,336,916) (76,032) (7,633) (226,440) (51,889) (1,809,580)
31,811,607
Carrying value at 31 March 2007 2,514,901 1,100,000 2,264,095 21,740,411 232,654 47,551 3,730,810 181,185 31,811,607
At Cost 2,514,901 1,100,000 2,196,103 33,508,487 869,336 177,769 1,897,881 766,544 43,031,021
Accumulated Depreciation - - 67,992 (11,768,076) (636,682) (130,218) 1,832,929 (585,359) (11,219,414)
Land and buildings comprises workshops, offices and bus sheds situated in the following sites:
Erf RST00081 of farm 35, Wilsonia, district of East London, market value R2 300 000.
Plot 4625, Queendustria Industrial Township, Queenstown, market value R1 000 000.
Zone 8 Zwelitsha - the entity has been given the right to use the property indefinitely. A process for the acquisition of the title deed has been initiated with
the Land Claims Commission. At present, a valuation has been performed, details of which are noted under note 17. Improvements on the property has been
capitalised as leasehold land and buildings.
Erf 1097, Alice, market value R600 000.
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2 INVENTORIES
2008 2007
R R
Fuel, Oils and Greases 449,047 499,373
Units 364,490 263,303
Spares 646,602 730,599
Consumables 384,463 129,503
Tyres & Tubes 106,176 111,292
Ancillary Vehicle Spares 4,077 5,939
Operational Equipment Spares 62,086 87,655
Stationery and Miscellaneous items 31,382 52,808
2,048,323 1,880,472
Provision for Obsolete Stock - (362,177)
2,048,323 1,518,295
Inventories included in cost of services rendered 15,194,686 14,008,827
3 TRADE AND OTHER RECEIVABLES
Trade receivables 395,969 369,478
Less: Provision for impairment of receivables (359,659) (308,585)
36,310 60,893
Other receivables 470,371 326,622
506,681 387,515
Trade receivables are non-interest bearing and are generally on 30-60 days’ terms.
As at 31 March 2008, trade receivables at nominal value of R359,659 (2007: R308,585)
for the Corporation were impaired and fully provided for. Movements in the provision for
impairment of receivables were as follows:
Individually
impaired
R
At 1 April 2006 308 585
Charge for the year -
Utilised -
At 31 March 2007 308 585
Charge for the year 51 074
Utilised -
At 31 March 2008 359 659
As at 31 March, the ageing analysis of trade receivables is as follows:
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2008 2007
R R
Neither past due nor impaired
Past due and not impaired
< 30 days 470 371 326 622
30 – 60 days - -
60 – 90 day - -
90 – 120 day - -
>120 days 36 310 60 893
Total 506 681 387 515
4 INVESTMENT - RESTRUCTURING PROCESS
Investment - Restructuring process - 235,452
The fund represents monies received from the Eastern Cape Department of Roads and
Transport to facilitate the negotiated contract process. The process has been cancelled and
the fund was subsequently transferred to income. The fund was held as an interest-bearing
fixed deposit.
5 INVESTMENTS - MARKETABLE SECURITIES
Market value at 31 March 2008 45,698 -
(As per FTSE/JSE Quarterly review 31 March 2008 shares traded at R19.80 per share).
Marketable securities represent 2308 demutualised shares received from Sanlam and are
classified as available-for-sale financial assets.
6 CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, call deposits and cash balances with
banks. Cash and cash equivalents included in the cash flow statement comprise the
following balance sheet amounts:
Cash on hand and balances with banks 9,648,150 6,629,379
9,648,150 6,629,379
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term
deposits are made for varying periods of between one day and three months, depending on
the immediate cash requirements of the Corporation, and earn interest at the respective
short-term deposit rates. The fair value of cash and short-term deposits is R9,648,150
(2007: R6,629,379).
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7 SHARE CAPITAL 2008 2007
R R
Authorised:
Ordinary shares of R 1 each 60,000,000 60,000,000
Issued and fully paid
Ordinary shares of R 1 each 56,761,075 56,761,075
The authorised share capital was increased to R60,000,000 as per the notification in the
Government Gazette dated April 2005. 100% of the shares are held by the Department of
Roads and Transport and the entity has one class of ordinary shares which carry no right to
Provincial Administration. The entity has one class of ordinary shares which carry no right
to fixed income.
8 TRADE AND OTHER PAYABLES 2008 2007
R R
Trade payables 1,828,920 1,417,413
Other payables 877,481 834,138
2,706,401 2,251,551
Terms and conditions of the above financial liabilities:
Trade and other payables are non-interest bearing and are normally settled on 30-day
terms.
9 PAYROLL ACCRUALS 2008 2007
R R
At 1 April 2007 2,305,498 2,413,207
Additional accrual in the year 1,688,938 1,631,171
Utilisation of accrual (1,572,170) (1,738,880)
At 31 March 2008 2,422,266 2,305,498
Accrual for bonuses 433,849 1,083,435
Accrual for leave 1,988,417 1,222,063
2,422,266 2,305,498
10 REVENUE
Revenue comprises of passenger fares and special hire revenue.
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Annual Report for the Year Ended 31 March 2008
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2008 2007
R R
An analysis of the Entity's revenue is as follows:
Passenger fares 13,598,611 11,118,717
Special hire 1,456,827 1,030,411
Total revenue 15,055,438 12,149,128
11 FRUITLESS AND WASTEFUL EXPENDITURE
Minor roadworthy infringement fines 600 3,720
South African Revenue Services penalties - 19,746
South African Revenue Services interest - 6,420
600 29,886
12 NET PROFIT / LOSS FROM OPERATIONS
12.1 Net Profit / Loss from operations has been arrived at after charging (crediting):
INCOME
Interest income 524,281 555,749
Profit on disposal of assets 24,310 -
Dividends received 1,777 1,500
EXPENSES
Audit fees 930,032 312,983
Audit Committee (see note 14.2 and note 14.3) 39,200 19,500
Defined contribution plan 2,364,824 2,249,167
Directors Emoluments (see note 14.4 and 14.5) 187,051 83,653
Depreciation 2,942,959 1,809,580
Fair value adjustment - Marketable securities 45,698 -
Insurance 1,201,050 1,107,040
Operating lease charges 197,201 141,158
Consulting fees 198,067 518,256
Staff Costs 23,173,514 20,846,028
The average number of employees for the financial year
ended was:
182 186
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12.2 Audit committee 2008
Meetings Travel Total
R R R
M. Mantyi 20,500 - 20,500
R. Luzuka 12,200 - 12,200
J. Mdeni 6,500 - 6,500
39,200 - 39,200
12.3 Audit committee 2007
Meetings Travel Total
R R R
M. Mantyi 15,500 - 15,500
R. Luzuka 2,000 - 2,000
J. Mdeni 2,000 - 2,000
19,500 - 19,500
12.4 Directors Emoluments 2008
Meetings Travel Allowances Total
R R R R
P.L.C. Maseti 44,870 201 - 45,071
S.J. Nyengane 40,306 361 - 40,667
P.P. Balfour 18,083 - - 18,083
D. Lefutso 36,366 - - 36,366
T. Matiwane 18,966 - - 18,966
A.J. De Vries - - - -
T.A. Thomas 27,898 - - 27,898
M. Tuswa - - - -
186,489 562 - 187,051
12.5 Directors Emoluments 2007
Meetings Travel Allowances Total
R R R R
A.R. Wadsworth 34,500 6,950 4,800 46,250
D.N. Webb 12,500 1,183 1,500 15,183
K.N. Harvey 11,500 1,200 - 12,700
X. Pakati 7,000 2,520 - 9,520
65,500 11,853 6,300 83,653
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12.6 Senior Management 2008
CEO CFO HOD:
Operations
HOD:
Engineering
L.R. Mbinda L. Coetzer L.C. Mtise Z. Leni
R R R R
Basic 439,200 180,000 245,532 237,396
Car 118,800 - 52,860 40,800
Acting allowance - - 36,000 -
Housing allowance - - 13,092 -
Medical aid 21,120 3,852 - 8,136
Provident 71,148 - 39,768 38,448
Bonus 50,000 5,000 20,461 19,783
UIF 1,500 750 1,500 1,500
Total 701,768 189,602 409,213 346,063
12.7 Senior Management 2007
CEO HOD:
Operations
L.R. Mbinda L.C. Mtise
R R
Basic 260,896 225,264
Car 52,860 52,860
Acting allowance 132,938 24,000
Housing allowance - 9,094
Medical aid 11,964 -
Pension 42,264 41,940
UIF 1,404 1,404
Total 502,326 354,562
12.8 OPERATING LEASE ARRANGEMENTS 2008 2007
R R
Minimum lease payments paid under operating leases 197,201 141,157
At the balance sheet date, the entity had outstanding
commitments under operating leases, which fall due as
follows:
Within one year 121,478 103,420
In the second to fifth years inclusive 134,623 262,241
After five years - -
Operating lease payments represent rentals payable by the Corporation for certain of its
office equipment. Rentals are fixed for an average of three years.
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13 CASH GENERATED BY OPERATIONS
FROM/(USED IN) OPERATING ACTIVITIES 2008 2007
R R
Net Profit / (Loss) for the year 2,580,204 (1,313,625)
Adjustments for:
Prior period error adjustment - Refer to note 24.3 507,665
Profit on sale of property, plant and equipment 24,310) -
Depreciation of property, plant and equipment 2,942,959 1,809,580
Deferred income (3,946,372) (2,476,383)
Interest income (524,281) (555,749)
Operating cash flow before movements in working capital 1,028,200 (2,028,512)
(Increase)/ Decrease in inventories (530,028) (147,074)
(Increase)/ Decrease in receivables (119,166) 73,318
(Increase)/ Decrease in investments (45,698) -
Increase / (Decrease) in payables 571,619 (688,415)
904,927 (2,790,683)
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14 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Corporation's principal financial liabilities comprise of trade and other payables. The
main purpose of these financial liabilities is to recognise amounts payable by the Corporation.
The Corporation has various financial assets such as trade and other receivables and cash and
short-term deposits, which arise directly from its operations.
The Entity has no significant concentration of credit risk, with exposure spread over a large
number of counterparties and customer.
The main risks arising from the company’s financial instruments are cash flow interest rate
risk, liquidity risk and credit risk. The Board of Directors reviews and agrees policies for
managing each of these risks which are summarised below.
Interest rate risk
The Corporation is not exposed to interest rate risk as it has no long-term debt obligations.
Credit risk management
The entity trades only with recognised, creditworthy third parties. Receivable balances are
monitored on an ongoing basis with the result that the entity's exposure to bad debts is not
significant. The maximum exposure is the carrying amount as disclosed in Note 3. There are
no significant concentrations of credit risk within the company.
With respect to credit risk arising from the other financial assets of the company, which
comprise of cash and short-term deposits, the entity's exposure to credit risk arises from
default of the counterparty, with a maximum exposure equal to the carrying amount of these
instruments.
Liquidity risk
The entity monitors its risk to a shortage of funds by considering the maturity of both its
financial assets and projected cash flows from operations. The entity's objective is to
maintain a balance between continuity of funding and flexibility through use of the grant-in-
aid funding.
Foreign currency risk
The Corporation is not exposed to foreign currency risk.
Capital management
The primary objective of the Corporation's capital management is to ensure that it continue to
provide a safe and reliable public transport service and to maximise internal revenue
collection.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 74 of 87
15 CONTINGENT LIABILITIES
During the reporting period, there were matters arising that gives rise to contingent liabilities:
There was a labour dispute as at 31 March 2008 and there is currently no indication as to the
probability of the success of the claim. The hearing has been set for 29 May 2008 where this
claim will be dealt with.
The Corporation is in the process of obtaining a title deed for the Zwelitsha depot. A
valuation was performed which will be used for negotiation purposes. The amount payable is
uncertain.
16 CAPITAL COMMITMENTS 2008 2007
R R
Commitments for the acquisition of property, plant and equipment: 2,200,000 3,500,000
17 SUBSEQUENT EVENTS
The directors are not aware of any matter of circumstances arising since the end of the
financial year, which significantly affects the financial position of the entity or the results of
its operations.
18 RELATED PARTY TRANSACTIONS
18.1 Identification of related parties
Eastern Cape Department of Roads and Transport
Board of Directors - Refer to note 14.4 for details of transactions with directors.
Key management personnel - Refer to note 14.6 for detail of transactions with key personnel.
18.2 Related party transactions
Significant transactions occurred between the Department of roads and transport by way of
receiving grant funding which is disclosed in note 12 above.
2008 2007
R R
Grant received 33,565,000 27,000,000
Deferred income 3,946,372 2,476,383
37,511,372 29,476,383
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 75 of 87
19 GOING CONCERN
We draw attention to the fact that at 31 March 2008, the Corporation had an accumulated
deficit of R54,684,609 (2007: R57,264,813).
The financial statements have been prepared on the basis of accounting policies applicable to
a going concern. This basis presumes that funds will be available to finance future operations
and that the realisation of assets and settlement of liabilities, contingent obligations and
commitments will occur in the ordinary course of business.
The ability of the Corporation to continue as a going concern is dependent on a number of
factors. The most significant of these is that the directors continue to procure funding for the
ongoing operations of the Corporation by recapitalisation of the bus fleet in order to increase
revenues, as well as negotiations and pro-active budgeting and communication thereof to the
Department of Roads and Transport, in an effort to obtain additional funding in the form of
unconditional grants.
20 DEFINED BENEFIT PLAN CONVERSION
During the year under review, the Corporation converted its defined benefit plan to a defined
contribution plan.
The defined benefit plan required the Corporation to settle any liability that may arise in the
fund. Upon conversion the Corporation's open liability ceased. The assets and liabilities of
the defined benefit plan were transferred to the defined contribution plan in terms of section
14 of the Financial Services Board Act. The transfer can only occur upon approval from the
Financial Services Board.
The defined contribution plan only requires the Corporation to settle the agreed contributions.
The defined contribution plan settles the benefits and the members bear the investment risk.
The Corporation is not required to settle any liability if one should arose.
21 COMPARATIVE INFORMATION
21.1 Deferred income is disclosed under capital and reserves in the balance sheet and not under
non-current liabilities as in the prior year.
21.2 Defined contribution plan payments are disclosed in note 14.1 and were not disclosed in the
prior year.
21.3 Dividends received are disclosed in note 14.1 and was not disclosed in the prior year.
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 76 of 87
21.4 Transactions with audit committee members are disclosed in note 14.2 and 14.3 and were not
disclosed in the prior year.
21.5 Cost of services rendered were not disclosed in the prior year but is disclosed in the current
year income statement.
21.6 The deferred income and interest received disclosed in the cash flow statement for the prior
year has been included in note 15.
22 PRIOR PERIOD ERRORS
22.1 Restatement of deferred income
The Corporation has chosen to recognise capital grant income systematically over the useful
lives of assets. The basis of accounting for deferred income was not applied correctly in
previous years as the amounts of income recognised did not match annual depreciation
charges. The financial statements have been restated to correct this error. The effect of the
restatement on the financial statements is summarised below:
2008 2007
R R
Increase / (Decrease) in opening accumulated deficit - 20,517,868
Increase / (Decrease) in other income 2,101,918 1,729,206
Increase / (Decrease) in Deferred income 2,101,918 22,247,074
22.2 Restatement of Property, Plant and Equipment
In previous years the Corporation failed to apply the provisions of IAS 16 Property, Plant and
Equipment. Management did not revise the useful lives, depreciation rates and residual values
annually as is required by IAS 16. In some instances inadequate residual values were assigned
to items of Property, Plant and Equipment. As a result, the depreciation expense was
incorrectly allocated to income as it did not reflect the pattern in which the Corporation
consumed the economic benefits inherent in the cost of the asset. In the current year
management revised the useful lives, depreciation rates and residual values of Property, Plant
and Equipment. The financial statements have been restated to correct this error. The effect of
the restatement on the financial statements is summarised below:
2008 2007
R R
Increase / (Decrease) in accumulated deficit - (16,004,658)
Increase / (Decrease) in depreciation (160,904) (492,561)
Increase / (Decrease) in NBV of Property, Plant and Equipment 160,904 16,497,219
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 77 of 87
22.3
Restatement of comparative period goods received note accrual
The prior period good received note accrual was overstated due to duplicate processing of
goods received. The financial statements have been restated to correct this error. The effect of
the restatement on the financial statements is summarised below:
2008 2007
R R
Increase / (Decrease) in the goods received note accrual - 507,663
Increase / (Decrease) in opening accumulated deficit - (507,663)
- -
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 78 of 87
4.4.7 DETAILED INCOME STATEMENT
2008 2007
R R
INCOME 16,019,467 12,778,683
Casual passengers 13,598,611 11,118,717
Private Hire 1,456,826 1,030,411
Other income 964,030 629,555
Discount Received 44,625 29,254
Interest 524,281 555,749
Profit on sale of assets 24,310 -
Miscellaneous 370,814 44,552
EXPENDITURE 48,007,676 41,759,111
Operations Department 17,186,112 14,407,152
Accident costs 333,181 37,688
Diesel 8,896,979 7,435,146
Fines 600 3,720
General Expenses 2,315 -
Licenses and Permits 619,252 471,742
Lubricants and Grease 343,333 153,405
Maintenance - Operating Equipment 169,938 292,027
Private Hire Expenses 150,579 35,222
Salaries and Wages 4,890,205 4,629,193
Sleep-out Allowance 53,486 55,350
Ticket/Waybill Usage 66,508 9,139
Travelling and Subsistence 2,100 10,961
Tyre Usage 1,614,461 1,267,124
Uniforms 43,175 6,435
Traffic Department 5,127,699 4,869,033
Ancillary Vehicle Costs 259,368 179,566
Driver of the Year Award 1,350 9,500
Salaries and Wages 4,812,843 4,633,300
Travelling and Subsistence 53,838 46,667
Uniforms 300 -
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
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2008 2007
R R
Maintenance Department 14,340,720 13,733,398
Ancillary Vehicle 179,121 201,214
Building Maintenance 716,756 283,833
Bus Repairs 542,424 2,007,592
Consumables Used 317,179 91,395
Loose Tools 77,594 52,597
Maintenance - Workshop Equipment 98,866 100,495
Salaries and Wages 8,983,566 7,939,645
Spares Used 1,815,448 1,804,278
Staff Uniforms 57,139 61,436
Travelling and Subsistence 31,868 2,763
Units Used 1,520,759 1,188,150
Administrative Department 11,353,145 8,749,528
Auditor's Remuneration 930,032 312,983
Audit Committee 39,200 19,500
Bad debts 51,074 -
Bank Charges 151,551 152,817
Cleaning and Teas 75,549 60,508
Collection Fees 239,110 216,486
Computer Expenses 99,407 94,757
Consultation Fees 198,067 518,256
Directors' Fees 187,051 83,654
Electricity and Water 397,547 539,018
General Expenses 32,586 23,923
Insurance 1,201,050 1,107,040
Interest and Penalties - 26,166
Lease Charges 197,201 141,158
Legal Expenses 205,674 20,898
Levies 165,511 227,882
Long Service Awards 34,900 47,700
Maintenance - Office Equipment 21,143 30,288
Printing and Stationary 392,211 140,285
Salaries and Wages 4,486,900 3,643,890
Security Expenses 950,832 705,499
Subscriptions 38,289 28,467
Telephone Expenses 601,378 406,160
Training 420,304 70,681
Travelling and Subsistence 236,578 131,512
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 80 of 87
2008
2007
R R
Loss for the year before Depreciation (31,988,209) (28,980,428)
Depreciation (2,942,959) (1,809,580)
Loss for the year before Government Grant (34,931,168) (30,790,008)
Government Grant 37,511,372 29,476,383
Profit / (Loss) for the year 2,580,204 (1,313,625)
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 81 of 87
PART 5
HUMAN RESOURCE
MANAGEMENT
Management: L. Nkunjana, Z. Leni, L.R. Mbinda, C. Mtise,
Mrs C. Cronje, Mrs Z. Pakati, Ms May
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 82 of 87
5 HUMAN RESOURCE MANAGEMENT
5.1 ORGANISATIONAL STRUCTURE
The structure that was approved by the Board of Directors in 2004 is still in place. The Corporation’s
structure consists of four (4) Divisions, namely Human Resources, Finance, Operations and
Engineering.
5.2 VISION & MISSION OF HUMAN RESOURCES DIVISION
5.2.1 VISION
Guided by the ethos of service & commitment to the maintenance of best bus company standards, the
division strives to render an effective and equitable service to all MTC employees. To lend support to
the Human Resources and Business Development Strategy by recruiting outstanding candidates that
will add value to the organization thereby leading to the realization of the Corporation's vision.
5.2.2 MISSION
To achieve the aforementioned vision, we embrace the following core values:
Superior Performance - driven by the quest for continuous improvement and excellence in
rendering HR services (Industrial Relations, Training & Development Personnel &
Organizational Development), as well as compliance with all relevant pieces of legislation.
Being Proactive - work towards exceeding our customers’ expectations by proactively
assessing and addressing their current and future needs.
Ethical Business Practices - we will continually uphold strong business ethics and values, and
ensure the transfer of these to our internal employees.
We will further see to the development of sound human resources policies and procedures,
serve as a custodian of these policies by ensuring compliance and adherence to them.
5.3 KEY HUMAN RESOURCES ISSUES
The Human Resources Division aimed to achieve the following objectives:
5.3.1 OBJECTIVE 1: DEVELOP AND MAINTAIN SOUND HUMAN RESOURCES
PRACTICES
5.3.1.1 Develop sound human resource practices in MTC
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 83 of 87
Measurable
Objective
Performance
Measure
Target Outputs
2006/07
Actual Output
2006/07
Deviation from
Target
Reason for Non-
Achievement
To conform to the
annual budget.
Control
accumulated leave
by doing quarterly
reconciliations of
leave provision.
Leave accrued not
to exceed budget
provision.
Accrued leave has
been reduced by
more than 80%
20%
MTC to comply
with legislation
Implement
Employment
Equity Plan.
Increase female
representation in
the organization
by 15%.
3 females were
appointed in
management
positions. ACI
compliant i.e. 2
Africans and 1
Indian.
None
Promotion of
transparency,
consistency and
fairness
All Human
Resources Policies
to be consolidated
into the HR policy
hand book
Revised Personnel
Regulations,
Industrial
Relations and
other HR policies
to be consolidated
into a HR manual
80% of Human
Resources policies
are in place. 100%
IR policy is in a
draft form still
awaiting Board’s
approval.
Sufficient
consultation must be
done regarding the
IR policy.
To capacitate
MTC with the
relevant human
resources.
MTC Organogram
populated 100%.
Critical
management
vacancies to be
filled.
Three middle
management
positions filled by
female candidates
CFO appointed
Organogram
populated 96%
10% other positions
are not funded.
5.4 COMBINED ANNUAL AND SICK LEAVE UTILISATION FOR THE PERIOD 1
APRIL 2007 TO 31 MARCH 2008
Level Total Days % Days With
Medical
Certificate
No. Of
Employees Using
Sick Leave
%Using Sick
Leave
Human Resources & Admin 734 88% 153 20.8%
Engineering 1840 81% 697 37.8%
Operations 2679 79% 343 12.8%
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
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5.4.1 DISABILITY LEAVE
Total Days Taken %With Medical
Certificate
No. Of Employees
On Disability
Average Days
Per Employee
Human Resources:
0
0 0 0
Engineering:
0
0 0 0
Operations:
0
0 0 0
5.5 LABOUR RELATIONS – DISCIPLINARY HEARINGS FINALISED
Sanction Imposed Nature of Misconduct Number of employees % of total
Fined 10% of excess,
Final Written Warning
Negligence 1 7.7%
Written Warning Negligent driving 2 15.4%
Written Warning Negligence 1 7.7%
Dismissed Under the influence of liquor 1 7.7%
Dismissed Theft 6 46.1%
Dismissed Dishonesty 1 7.7%
Final Written Warning Poor Performance 1 7.7%
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 85 of 87
Continuous Improvement Workshop held at Areena
Riverside Resort, Kwelera
Mayibuye Transport Corporation
Annual Report for the Year Ended 31 March 2008
Page 86 of 87
Chief Executive Officer
Mayibuye Transport Corporation
P.O. Box 19596
TECOMA
5214
Tel. (043)745-2582 Fax (043)745-2586
PR 105/2008
ISBN: 978-0-621-37872-6