PART A: GENERAL INFORMATION 1 DEPARTMENTAL … · DVOR Doppler VHF Omni-Directional Range DPSA...

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TABLE OF CONTENTS

PART A: GENERAL INFORMATION ...........................................................................................................................1

1 DEPARTMENTAL GENERAL INFORMATION .......................................................................................................2

2 LIST OF ABBREVIATIONS/ACRONYMS ...............................................................................................................3

4 FOREWORD BY THE MEC ..................................................................................................................................6

5 REPORT OF THE ACCOUNTING OFFICER ............................................................................................................8

6 STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY FOR THE ANNUAL REPORT ................. 15

7 STRATEGIC OVERVIEW ................................................................................................................................... 16

7.1 VISION ...................................................................................................................................................... 16

7.2 MISSION ................................................................................................................................................... 16

7.3 VALUES ..................................................................................................................................................... 16

8 LEGISLATIVE AND OTHER MANDATES ............................................................................................................ 16

9 ORGANISATIONAL STRUCTURE....................................................................................................................... 17

10 ENTITIES REPORTING TO THE MEC .............................................................................................................. 18

PART B: PERFORMANCE INFORMATION ................................................................................................................ 19

1 STATEMENT OF RESPONSIBILITY FOR PERFORMANCE INFORMATION............................................................ 20

2 AUDITOR GENERAL’S REPORT: PERFORMANCE INFORMATION ...................................................................... 21

3 OVERVIEW OF DEPARTMENTAL PERFORMANCE ............................................................................................ 21

3.1 SERVICE DELIVERY ENVIRONMENT ................................................................................................................... 21

3.2 SERVICE DELIVERY IMPROVEMENT PLAN ........................................................................................................... 22

3.2.1 Main services and standards .................................................................................................................. 22

3.2.2 Batho Pele arrangements with beneficiaries .......................................................................................... 22

3.2.3 Service Information Tool ......................................................................................................................... 22

3.2.4 Complaint Mechanism ............................................................................................................................ 22

3.3 ORGANISATIONAL ENVIRONMENT ................................................................................................................... 22

3.4 KEY POLICY DEVELOPMENTS AND LEGISLATIVE CHANGES ....................................................................................... 23

4 STRATEGIC OUTCOME ORIENTED GOALS ........................................................................................................ 24

4.1 SUMMARY OF PROGRAMMES ................................................................................................................ 25

5 PERFORMANCE INFORMATION BY PROGRAMMES......................................................................................... 26

5.1 PROGRAMME 1: ADMINISTRATION ................................................................................................................. 26

5.1.1 Strategic Objectives Planned Targets and Actual Achievements ............................................................ 26

5.1.2 Performance Indicators - Planned Targets and Actual Achievements per subprogramme .................... 27

5.1.2.1 Office of the MEC ...................................................................................................................... 27

5.1.2.2 Management of the Department .............................................................................................. 27

5.1.2.3 Corporate Support .................................................................................................................... 28

5.1.2.4 Departmental Strategy ............................................................................................................. 29

5.1.3 Strategy to overcome areas of under performance ................................................................................ 30

5.1.4 Changes to planned targets .................................................................................................................... 30

5.1.5 Linking performance with budgets ......................................................................................................... 30

5.2 PROGRAMME 2: TRANSPORT OPERATIONS ....................................................................................................... 31



5.2.2.1 Programme Support ................................................................................................................. 32

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5.2.2.2 Public Transport Services .......................................................................................................... 32

5.2.2.3 Transport Safety and Compliance ............................................................................................. 34

5.2.2.4 Transport Systems .................................................................................................................... 34

5.2.2.5 Infrastructure Operations ......................................................................................................... 35

5.2.2.6 Infrastructure Planning ............................................................................................................. 35

5.2.2.7 Scholar Transport ...................................................................................................................... 35




5.3 PROGRAMME 3: TRANSPORT REGULATION ....................................................................................................... 37




5.3.2.2 Transport Administration and Licensing.................................................................................... 38

5.3.2.3 Operator License and Permits ................................................................................................... 38

5.3.2.4 Law Enforcement ...................................................................................................................... 38




5.4 PROGRAMME 4: COMMUNITY BASED PROGRAMMES .......................................................................................... 41




5.4.2.2 Community Development ......................................................................................................... 42

5.4.2.3 Innovation and Empowerment ................................................................................................. 43

5.4.2.4 EPWP Coordination and Monitoring ......................................................................................... 44




5.5 TRADING ENTITY – ACTUAL PERFORMANCE AGAINST PREDETERMINED OBJECTIVES .................................................... 45

5.5.1 Government Fleet Management Services ............................................................................................... 45

6 SUMMARY OF FINANCIAL INFORMATION ...................................................................................................... 46

6.1 DEPARTMENTAL RECEIPTS ............................................................................................................................. 46

6.1.1 Reasons for under collection ................................................................................................................... 46

6.1.2 Measures taken during the year to keep on track .................................................................................. 46

6.2 PROGRAMME EXPENDITURE .......................................................................................................................... 46

6.2.1 Reasons for under underperformance .................................................................................................... 46

6.2.2 Measures taken during the year to keep on track .................................................................................. 46

6.2.3 Future (Corrective) measures to rectify underperformance ................................................................... 46

6.3 TRANSFER PAYMENTS EXCLUDING PUBLIC ENTITIES .............................................................................................. 47

6.4 PUBLIC ENTITIES .......................................................................................................................................... 47

6.5 CONDITIONAL GRANTS AND EARMARKED FUNDS TRANSFERRED ............................................................................. 47

6.6 CONDITIONAL GRANTS AND EARMARKED FUNDS RECEIVED ................................................................................... 47

6.7 DONOR FUNDS ........................................................................................................................................... 48

6.8 CAPITAL INVESTMENT, MAINTENANCE AND ASSET MANAGEMENT PLAN .................................................................... 48

PART C: GOVERNANCE .......................................................................................................................................... 49

1 INTRODUCTION .............................................................................................................................................. 50

2 RISK MANAGEMENT ....................................................................................................................................... 50

3 FRAUD AND CORRPUTION .............................................................................................................................. 50

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4 MINIMISING CONFLICT OF INTEREST .............................................................................................................. 51

5 CODE OF CONDUCT ........................................................................................................................................ 51

6 HEALTH SAFETY AND ENVIRONMENTAL ISSUES ............................................................................................. 52

7 INTERNAL CONTROL UNIT .............................................................................................................................. 52

8 AUDIT COMMITTEE REPORT ........................................................................................................................... 53

8.1 REPORT ON THE DEPARTMENT OF TRANSPORT ...................................................................................... 53

8.1.1 OVERVIEW .............................................................................................................................................. 53

8.1.2 CHARTER ................................................................................................................................................. 53

8.1.3 PURPOSE ................................................................................................................................................. 53

8.1.4 MEMBERSHIP .......................................................................................................................................... 53

8.1.5 EXTERNAL AUDIT .................................................................................................................................... 53

8.1.6 INTERNAL AUDIT ..................................................................................................................................... 53

8.1.7 INTERNAL CONTROL EFFECTIVENESS ...................................................................................................... 54

8.1.8 CORPORATE GOVERNANCE .................................................................................................................... 54

8.1.9 RISK MANAGEMENT ............................................................................................................................... 54

8.1.10 ANNUAL FINANCIAL STATEMENTS ...................................................................................................... 54

8.1.11 TRADING ENTITY ................................................................................................................................. 55

8.1.12 CONCLUSION ....................................................................................................................................... 55

8.1.13 APPRECIATION .................................................................................................................................... 55

8.2 REPORT ON THE EASTERN CAPE GOVERNMENT FLEET MANAGEMENT SERVICES TRADING ENTITY ......... 56

8.2.1 OVERVIEW .............................................................................................................................................. 56

8.2.2 CHARTER ................................................................................................................................................. 56

8.2.3 PURPOSE ................................................................................................................................................. 56

8.2.4 MEMBERSHIP .......................................................................................................................................... 56

8.2.5 EXTERNAL AUDIT .................................................................................................................................... 56

8.2.6 INTERNAL AUDIT ..................................................................................................................................... 56

8.2.7 INTERNAL CONTROL EFFECTIVENESS ...................................................................................................... 56

8.2.8 FINANCIAL REPORTING ........................................................................................................................... 57

8.2.9 CORPORATE GOVERNANCE .................................................................................................................... 57

8.2.10 RISK MANAGEMENT ............................................................................................................................ 57

8.2.11 CONCLUSION ....................................................................................................................................... 58

8.2.12 APPRECIATION .................................................................................................................................... 58

PART D: HUMAN RESOURCE MANAGEMENT......................................................................................................... 59

1 LEGISLATURE THAT GOVERN HUMAN RESOURCE MANAGEMENT .................................................................. 60

2 INTRODUCTION .............................................................................................................................................. 60

3 HUMAN RESOURCE OVERSIGHT STATISTICS ................................................................................................... 62

3.1 PERSONNEL RELATED EXPENDITURE ................................................................................................................. 62

3.2 EMPLOYMENT AND VACANCIES ...................................................................................................................... 64

3.3 FILLING OF SMS POSTS ................................................................................................................................ 65

3.4 JOB EVALUATION ........................................................................................................................................ 67

3.5 EMPLOYMENT CHANGES ............................................................................................................................... 68

3.6 EMPLOYMENT AND EQUITY ........................................................................................................................... 71

3.7 PERFORMANCE REWARDS ............................................................................................................................. 74

3.8 FOREIGN WORKERS ..................................................................................................................................... 77

3.9 LEAVE UTILISATION ...................................................................................................................................... 77

3.10 HIV/AIDS & HEALTH PROMOTION PROGRAMMES ............................................................................................ 79

3.11 LABOUR RELATIONS ..................................................................................................................................... 79

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PART E: FINANCIAL INFORMATION ....................................................................................................................... 80

1 REPORT OF THE AUDITOR-GENERAL ............................................................................................................... 81

2 ANNUAL FINANCIAL STATEMENTS.................................................................................................................. 85

PART F: FINANCIAL INFORMATION – TRADING ENTITY ....................................................................................... 149

1 REPORT OF THE AUDITOR-GENERAL ............................................................................................................. 150

2 ACCOUNTING OFFICER’S RESPONSIBILITIES AND APPROVAL ........................................................................ 155

3 ACCOUNTING OFFICER’S REPORT ................................................................................................................. 156

Annual Report for the 2013/14 financial year Province of the Eastern Cape Vote 10: Department of Transport

PART A: GENERAL INFORMATION Submission of the Annual Report

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Submission of the Annual Report

Ms Weziwe Tikana

MEC for Transport, Safety and Liaison

SUBMISSION OF THE ANNUAL REPORT OF VOTE 10 – 2013/14

The Annual Report OF Vote 10: Eastern Cape Department of Transport for the period 1 April 2013 to 31 March 2014 is

hereby submitted to the Member of the Executive Council. This submission is done in accordance with Chapter 5 Part

2(40)(d)(i) of the Public Finance Management Act of 1999, chapter 18 and 19 of the Treasury Regulations. The report also

includes information required by the Public Service Regulations, 2001 on human resources information

Yours in Quality Transport Systems for a better life for all,

__________________

Ms. T. Kgare

Head of Department

Eastern Cape Department of Transport

31 August 2014

GENERAL INFORMATIONPART A


PART A: GENERAL INFORMATION

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1 DEPARTMENTAL GENERAL INFORMATION

5601

POSTAL ADDRESS : Department of Transport

Private Bag x0023 BHISHO 5605

SWITCHBOARD : 043 604 7400

PHYSICAL ADDRESS : Stellenbosch Park

Flemming Street Schornville KING WILLIAM’S TOWN

POSTAL & CONTACT DETAILS PHYSICAL ADDRESS

HEAD OFFICE

Postal Address

Office of the Head of Department

Private Bag x0023

BHISHO

5605

Contact Details

Tel.: (043)604-7472

Fax: 086 646-6602

E-mail:[email protected]

Street Address

Stellenbosch Park

Flemming Street

Schornville

KING WILLIAM’S TOWN

5601

Superintendent General:

Ms T.D. Kgare

CHIEF FINANCIAL OFFICER

Postal Address

Private Bag X0023

BHISHO

5605

Contact Details

Tel.: (043)604-7416

Fax: 086 687-8528

Email (PA): [email protected]

Email: [email protected]

Street Address

Stellenbosch Park

Flemming Street

Schornville

KING WILLIAM’S TOWN

5601

Chief Financial Officer:

Mr. D.S. Skweyiya

mailto:[email protected]





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2 LIST OF ABBREVIATIONS/ACRONYMS

Abbreviation Description

ABC Algoa Bus Company

AB350 Africa’s Best 350 Ltd

ABET Adult Basic Education Training

AG Auditor-General

ASGISA Accelerated and Shared Growth Initiative of South Africa

AIDS Acquired Immuno Deficiency Syndrome

APP Annual Performance Plan

ATNS Air Traffic Navigation System

BAS Basic Accounting System

CAA Civil Aviation Authority

CBT Community Based Transportation

CFO Chief Financial Officer

CSIR Council For Scientific and Industrial Research

DOE Department of Education

DORA Division of Revenue Act

DDG Deputy Director General

DLTC Driver’s License Testing Centre

DME Distance Measuring Equipment

DVOR Doppler VHF Omni-Directional Range

DPSA Department of Public Service and Administration

ECDC Eastern Cape Development Corporation

EC DoT Eastern Cape Department of Transport

ECPG Eastern Cape Provincial Government

ECPT Eastern Cape Provincial Treasury

EPWP Expanded Public Works Programme

EXCO Executive Council

ERF Economic Reporting Format

FET Further Education and Training

FMPPI Framework for Managing Programme Performance Information

FTE Full Time Equivalent

FIFO First In First Out

GEMS Government Employees Medical Scheme

GFMS Government Fleet Management Service

GIS Geographical Information System

HCT HIV Counselling and Testing

HIV Human Immuno Virus

HOD Head of Department

HR Human Resource

HRD Human Resource Development

HROPT Human Resource Operations Project Team

IRPTN Integrated Rapid Public Transport Network

IOD Injury on Duty

ICT Information and Communication Technology

ITP Integrated Transport Plan

ITPCC Integrated Planning Co-ordinating Committee

JIPSA Joint Initiative on Priority Skills Acquisition

KSD King Sabata Dalindyebo

LDV Light Delivery Vehicle



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LOC Local Organising Committee

MCS Modified Cash Standard

MEC Member of the Executive Council

MIS Management Information System

MPSS Minimum Physical Security Standards

MTS Mayibuye Transport Services

MTEF Medium Term Expenditure Framework

NaTIS National Traffic Information System

NDoT National Department of Transport

NEHAWU National Education, Health and Allied Workers' Union

NMBMM Nelson Mandela Bay Metropolitan Municipality

NREP National Rolling Enforcement Plan

OHS Occupational Health and Safety

OL Operating License

OP Operational Plan

OTP Office of the Premier

PCC Provincial Coordinating Committee

PDP Personal Development Plan

PET Participatory Educational Technique

PFMA Public Finance Management Act

PMDS Performance Management and Development System

PILIR Policy and Procedure on Incapacity, Leave ,Ill-health and Retirement

PLTF Provincial Land Transportation Framework

PSA Public Service Act

PSETA Public Sector Education and Training Authority

PSR Public Service Regulations

PT Provincial Treasury

PTOG Public Transport Operations Grant

PVA Public Viewing Area

RA Registering Authorities

RSR Rail Safety Regulator

RTMC Road Traffic Management Corporation

SACAA South African Civil Aviation Act

SANTACO South African National Taxi Council

SCM Supply Chain Management

SCOA Standard Chart of Accounts

SDM Service Delivery Model

SCMU Supply Chain Management Unit

SETA Skills Education Training Authority

SG Superintendent-General

SIU Special Investigating Unit

SLA Service Level Agreement

SMME Small Medium Micro Enterprise

SMS Senior Management Service

SP Strategic Plan

TB Tuberculosis

TETA Transport Education and Training Authority

TRAFMAN Traffic Management System

TRE Transnet Rail Engineering



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TT Task Team

TTC Transport Technical Committee

VTS Vehicle Testing Station



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4 FOREWORD BY THE MEC

MEC WEZIWE TIKANA

TRANSPORT, SAFETY AND LIAISON

The 2013/14 financial year was characterized the re-engineering of the new Eastern Cape Department of Transport

and its entities in an effort to deliver on our mandate.

It was the conclusion of the 4th term of government, which involved the finalization of plans to usher in the 5th

administration in a seamless manner through building on the laid foundation that was mainly anchored around the

following strategic performance areas:

• Good governance and transportation excellence,

• Mobility and accessibility through public transport,

• Integrated traffic management,

• Economic empowerment and poverty alleviation opportunities in the transportation sector.

Working together with our stakeholders, we were able to make significant inroads in the following areas:

• Provision of scholar transport service;

• Management of provincial fleet;

• Provision of affordable, safe and reliable public transport system;

• Development of a Public Transport Master Plan to address public transport as a system with integration

between taxi, bus and rail services; and

• Provision services for safe environment through regulation of traffic on public infrastructure.

In an effort to reposition the Department, we embarked on a three-phase Strategy Review process focusing on the

following areas:

• Phase 1 – Development of a strategy aligned to the Department’s mandate. The new strategy was adopted by

the Department in April 2013.

• Phase 2 – Development of a Service Delivery Model aligned to the revised strategy. The exercise was

completed and adopted in February 2014.

• Phase 3 – The Department is currently developing an organizational structure that will ensure proper and

adequate resourcing towards achieving the strategy outcomes.



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In the period under review, the department continued to sustain the unqualified audit report from the previous years.

Efforts are in place to continue achieving the unqualified audit report going forward and ultimately have a clean audit.

Closer working relationship with the registering authorities coupled with monitoring of collection led the Department

has made us to be the highest contributor in revenue collection in the Province. We made significant improvements in

our Human Resource Management (HRM). As a result we have been able to improve our Monitoring Performance

Assessment Tool results compared to the previous year.

Indelible progress has been made in dealing with the backlogs of Operator License applications by Public Transport

Operators. The Provincial Regulatory Entity, has considered 6 047 applications in the last financial year and to date we

can report on 1134 applications that have been adjudicated.

Through our Community Based Transport Programme we managed to sustain employment opportunities from the

previous years, despite several challenges. As a result the department received R 4.09 million Expanded Public Works

Programme incentive grant in order to continue to create more job opportunities in the previously disadvantaged

areas.

We have stabilised the leadership and governance of our newly-established Provincial Government Fleet Trading

Entity and we are proceeding with adequately capacitating the entity to function effectively in servicing all

departments.

In the previous financial year we committed to a 40% BEE maintenance spend but we are not just satisfied that we

met that target by achieving a 42% spend, because we believe we still can do much more in accelerating

transformation in this industry using our procurement practices by developing a Supplier Transformation and

Development Programme.

In conclusion, we appreciate the efforts and contribution of everyone both within and outside the department.

Indeed, working together we can do more and help to move South Africa forward.

_______________________

MEC Weziwe Tikana

DEPARTMENT OF TRANSPORT



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5 REPORT OF THE ACCOUNTING OFFICER

During the month of the preparation of the Annual Report, Ms. Weziwe Tikana was appointed on the 23rd

May 2014

as new Member of the Executive Council responsible for the Department and she replaces Ms. Thandiswa Marawu

who is now the MEC for Roads and Public Works.

1. Overview of the operations of the department

During the 2013/14 financial year, the Department continued with its mandate of delivering quality transport

systems for a better life for all in the Eastern Cape. The priorities of the Department, consistent with prior years,

are in line with the objectives of the Provincial Growth and Development Plan, Accelerated Shared Growth

Initiative for South Africa and the EPWP.

Some of the significant events and projects that occurred during the year under review include following:

a) Development of a Provincial Integrated Public Transport Master Plan – to address public transport as a

system with integration between taxi, bus and rail services. The development was done in consultation with

various stakeholders across the province. The Master Plan was approved by Cabinet in October 2013.

b) Review of Transport Strategy – the Department continued with the process of conducting a concerted

organizational strategy review accompanied by the Service Delivery Model. Both the Revised Strategy and its

Service Delivery Model were approved by management during the year under review. The development of

the organizational and establishment structure that is inline with the revised strategy is currently underway.

c) Provision of Public Transport – The department has been facilitating the provision of affordable, reliable and

safe public transport through Mayibuye Transport Services and contracted services of AB350 servicing the

Eastern Part of the province and Algoa Bus in the Nelson Mandela Bay Metro and surrounding areas.

14,491,258 passengers were transported by these operators during the year under review.

d) Scholar Transport Programme – By the end of the financial year 56,210 scholars actually benefitted from the

programme, which is 1,739 scholars more than the previous financial year. The demand for scholar transport

far exceeds the available funding.

e) Infrastructure Development – The construction of the new runway and facilities at Mthatha Airport was

completed during the year under review. This was done in partnership with the Department of Defense and

National Treasury. The demand for scholar transport far exceeds the available funding. The construction of

the new terminal building is currently underway.

f) Transport safety – The Department established road safety councils inline with the Decade of Action 2011-

2020 in an effort to increase level of road safety awareness in order to reduce road carnage in the Province.

The Department also conducted road safety awareness programmes throughout the province reaching 424

schools and 131,474 road users were reached through road safety interventions.

g) Intensified Law Enforcement – The department engaged in operations such as Operational Kwanele and Joint

Operations with SAPS to increase visibility in an effort to reduce the fatalities on the province’s roads. The

implementation Resolution 14 of 2009 resulted in increased visibility of Traffic Officers. 9,679 selective law

enforcement operations in comparison to 4,061 in the previous year and 164 roadblocks were conducted.

h) Improved Revenue Collection – Closer monitoring of payments by registering authorities and following up on

defaulting municipalities led to the Department collecting R 443 million (102%) in revenue. The major source

of revenue are motor vehicle license fees collected on an agency basis by the municipalities.

Challenges during the year under review include:

a) The three (3) week national strike in the bus industry affected Algoa Bus Company’s operations leading to

fewer passengers transported during that period. Another challenge is the inconsistency in funding



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arrangements where ABC is funded through the Public Transport Operations Grant (PTOG) while AB350 and

MTC are funding from the limited Provincial revenue.

b) An area of concern is inadequate funding allocated to the Scholar Transport Program given the demand for

the scholar transport service. The number of learners that qualify for scholar transport in the year under

review is in excess of 94 900 as supplied by the Department of Education. The demand for scholar transport

far exceeds the available funding.

2. Overview of the financial results of the department

2.1 Departmental receipts

The Department had a target of R433 million for the collection of own revenue (2012/13: R415,265 million).

The main source is the collection of revenue from motor vehicle licence fees. The actual collection of own

revenue is R 433,485 (2012/13:R387,542 million).The over-collection of own revenue amounts to R2,844

million ( 2012/13: R27,723 million under-collection. ) The arrears for Kouga Municipality are still not paid over

as reported in 2012/13, but the Municipality paid over the current years collection. The Department is

awaiting a final decision in 2014/15. The 102% improvement in revenue collection is a result of improved

monitoring approach on the registering authorities (RA’s). Increased visits to RA’s continue in 2014/15.

Further details appear in paragraph 2.3 at the revenue table below.

2.2 Tariffs

The following are the main sources of revenue and have not changed over the years:

a) Motor vehicle licence fees

b) Vehicle number plates

c) Fees accruing from issued road transportation permits

d) Traffic fines

e) Airport landing fees

f) Proceeds from auction sale of obsolete vehicles and equipment

The tariffs determined are described below. All revenue collected by the department is subsequently paid

over to Provincial Treasury.

Motor Vehicle Licence Fees

Motor vehicle licence fees are the major source of own revenue collected by the Department. Revenue

collected is not retained. Vehicle license fees are determined according to mass and category of each vehicle

as specified in the National Road Traffic Act, (Act 93 of 1996). The Member of the Executive Council approved

the annual increase of 8.5 % which was effective from May 2013.

Vehicle Licence Number Plates

Ordinary licence number plates are sold by registered private businesses. The Department currently collects

royalties of R7.50 per plate, as from July 2010 – there was no increase for this category.

Specific number plates or numerical alpha were sold at R957 per set during the year under review while the

personalised number plates were sold at R3,309 per plate. The last increase was made in 2011-12 and there

was no increase of tariff this financial year.



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Road Traffic Fines

Revenue collected from traffic fines is paid over to Treasury into the Provincial Revenue Fund.

Free Services

There were no free services rendered during the year under review.

2.3 Revenue table

Departmental receipts 2013/14 2012/13

Estimate Actual

Amount

Collected

(Over)/Under

Collection

Estimate Actual

Amount

Collected

(Over)/Under

Collection

R’000 R’000 R’000 R’000 R’000 R’000

Tax Receipts

Motor vehicle licences 407,171 410,679 (3,508) 394,582 368,784 25,798

Sale of goods and services

other than capital assets

17,176 18,214 (1,038) 9,277 10,675 (1,398)

Fines, penalties and forfeits 6,386 5,615 771 8,136 7,110 1,026

Interest, dividends and rent on

land

1,766 1,185 581 2,438 507 1,931

Sale of capital assets - - - 832 - 832

Financial transactions in assets

and liabilities

986 163,922 (162,936) - 466 (466)

Total 433,485 599,615 (166,130) 415,265 387,542 27,723

From the total collected revenue amounting to R599,615 million, the target of own revenue was R433,485 million resulting in R166,130 million difference. This difference includes R155,900 million received from ECPG Fleet trading (GFMS) entity being surplus funds surrendered; R7,386 million is a refund of prior year expenditure and R2,844 million surplus collected on own revenue.

2.4 Programme Expenditure

The adjusted appropriation of the department per programme is disclosed in the Appropriation Statement and is as follows:

Programme name 2013/14 2012/13

Final

Appropriation

Actual

Expenditure

(Over)/Under

Expenditure

Final

Appropriation

Actual

Expenditure

(Over)/Under

Expenditure

R’000 R’000 R’000 R’000 R’000 R’000

Administration 288,374 272,531 15,843 268,404 267,945 459

Transport Operations 950,324 945,144 (5,180) 877,519 843,880 33,639

Transport Regulations 289,728 266,236 23,492 305,964 305,876 88

Community based 41,017 33,241 7,776 34,796 34,770 26

Total 1,569,443 1,517,152 52,291 1,486,683 1,452,471 34,212

The vote and the programmes did not overspend the allocated budget. The following are the reasons for under-spending.



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Administration:

The variance is due to delay in filing of critical vacant funded and replacements posts.

Transport Operations:

The variance is due to the fact that part of accruals for AB350 were paid in the last BAS run of 2012/13 financial year.

Funds were provided for those in 2013/14 financial year hence the under spending.

Transport Regulations:

Variance is due to the implementation of resolution 14 which has reduced the overtime usually worked by traffic

officers. In goods and services the variance is due to delay in tender for push to talk units for traffic officers and

savings in utilisation of vehicles.

Community Based Programmes:

The variance is due to delay in training the beneficiaries of EPWP projects. Also the delay in implementation of

monitoring software contributed to the under spending.

2.5 Virements/roll overs

Programme Adjusted Appropriation Virements Final Appropriation

R’000 R’000 R’000

Administration 295,371 (7,000) 288,374

Transport Operations 940,414 9,910 950,324

Transport Regulations 292,368 (2,910) 289,728

Community based 41,017 - 41,017

Total 1,569,443 - 1,569,443

Virements were made during the year to avoid overspending of the Transport Operations by utilising section 43 of the

PFMA. A virement of R7 million was made from Administration to Transport Operations to augment scholar transport

funding. A R2,91 million virement was also made from Transport Regulations to fund Mthatha airport.

A roll over has been subsequently made for the push to talk units in Transport Regulation.

3. Reasons for unauthorized, fruitless and wasteful expenditure and the amounts involved as well as steps taken

to address and prevent a recurrence

Fruitless and wasteful expenditure

The department incurred Fruitless and wasteful expenditure amounting to R296 000 (2012/13: R452 000) resulting

from payment of interest to Telkom, Trading entity and a service provider.

The R250 000 from Trading entity is part of the disputed amount .The department established a departmental

Condonation Committee during the year to hear representation made by responsible persons.



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Unauthorised expenditure

A donation of R3 million was provided to the Port Elizabeth Apple Express running a rail service. This was treated as

irregular expenditure in 2012/13 as the agreement was not entered into with approval from the Eastern Cape

Legislature. However during the current year further guidance was received from Provincial Treasury indicating that

the item should be classified as unauthorised expenditure. Legislature has been approached as well.

The Department entered in a contract with Port St Johns municipality to assist in the payment lifeguards protecting

the swimmers at its beaches. This was part of the maritime program that the department was pursuing. The

department was unable to pay following exhaustion of funds at the time when provincial Treasury was calling for

surrenders. The surrender was a savings from the capital and it was suggested that it rather use the surrender amount

to honour payment. This unauthorised expenditure was previously treated as irregular expenditure as the definition

was incorrectly applied not to include amounts to be surrendered mid-year to provincial treasury arising from the

shifting of funds from capital to current expenditure.

The department has made further investigations on these cases. The department has consulted Provincial Treasury

where applicable and received co-operation from these authorities. The unauthorised expenditure would

subsequently be referred by provincial treasury to Legislature in 2014/15 financial year.

4. Future plans of the department

The department is set to pursue the completion of the last phase of the Strategy Review process which is the

Development of an Organisational Structure in 2014/15.

5. Public Private Partnerships

None

6. Discontinued activities

Following discontinuation of the Kei Rail Service in 2012/13, the rolling stock (train coaches and wagons) were

returned to Transnet Engineering (TRE) during 2013/14. The TRE made an offer to the Eastern Cape Department of

Transport (EC DoT) to return the rolling stock and trade off debts due by EC DoT. The total value of the rolling stock

was R46 million less debt amounting to R48 million owed by EC DoT. The EC Dot engaged the services of an

independent valuator of the rolling stock and was happy with the results which were not far from TRE’s valuation.

Negotiations were entered into by TRE and EC DoT during the year resulting in the exclusion of interest which was

included in R48 million debt of the EC DoT debt. TRE further made an offer of R17 million which was deposited in EC

DoT on 30 May 2014. Both TRE and Department accepted the settlement offer by returning the assets to TRE and

whilst settling the debts of EC DoT. The settlement offer necessitated the removal of accruals and contingent liability

related to the rolling stock. The R17million received in May 2014 is disclosed in the accrued revenue.

7. New or proposed activities

None

8. Supply chain management

GIAMA meetings were attended by the Departmental asset officials at Department of Public Works. Immovable

assets are no longer accounted by the departments but reports are made to Department of Public Works who in



Page 13

turn accounts for such assets. On the completion of work in progress, the amount is transferred to the

Department of Public works. The renovation at the Mthatha airport is still work in progress.

Stationary, printing and consumables are removed from Inventory note and are now treated separately as

Consumables. This follows amendments to SCOA implemented in 2013/14. Disclosure note 5: inventory to the

annual financial statements has the details. The FIFO basis is used to calculate inventories at year end.

9. Gifts and donation received in kind from non -related parties

The gifts and donation received in kind from non- related parties are disclosed in the Annexure 1D of the Annual

Financial Statements.

10. Exemptions and deviations received from the National Treasury

The department is exempt from disclosing accrued tax revenue other than those receivable from collecting agencies

and any related payables or receivables such as interest or penalties relating to the collection of the tax receipts The

exemption is effective from 2013/14 and 2012/13 therefore still reflects the full accrued tax revenue.

11. Events after the reporting date

The Department increased the authorised ordinary shares of Mayibuye Transport Corporation to 250 million

which was recorded by MTC on 5 May 2014. This transaction will assist the department in providing future capital

contributions.

12. Other

HROPT cases

A project HROPT was managed by Office of the Premier and tasked to determine amounts owed in respect of undue

promotions and notch advancements. The report on the verification of files submitted by service provider was

accepted by the department. Currently the department is consulting employees affected by the verification process.

This process has not been finalised.

Industrial strike

The Department was affected by national industrial strike in 2010/11 that followed a no work no pay principle. A

deduction was made based on hours which was later disqualified and a new one emerged based on the day deduction

i.e. leave without pay. Before the deductions were made based on the latter formula, the workers challenged the

formula particularly as it meant more additional deductions. No deductions were made during the year under review.

There is uncertainty on the recovery of the amount. Some form of certainty will arise in 2014/15.

13. Acknowledgement/s or Appreciation

The department appreciates the leadership of the Executive Authority, portfolio committee on Transport,

provincial Treasury and Office of the Premier in performing their over-sight functions. Further acknowledgement

goes to Mr. HRL. Salie the former DDG for Administration who retired during the year.



Page 14

14. Conclusion

The department is committed to face the new 5 year strategic term with confidence and pride to improve the

lives of the Eastern Cape through the service delivery of transport mandate. It is set to improve in the areas

demonstrated by challenges.

15. Approval and sign off

The attached annual financial statements set out on pages 85 to 133 as well as predetermined objectives set out on

pages 26 to 45 have been approved by the Accounting Officer.

___________

T. Kgare

Superintendent-General and Head of Department

Date: 30 May 2014



Page 15

6 STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY FOR THE ANNUAL REPORT

To the best of my knowledge and belief, I confirm the following:

All information and amounts disclosed throughout the annual report are consistent.

The annual report is complete, accurate and is free from any omissions.

The annual report has been prepared in accordance with the guidelines on the annual report as issued by

National Treasury.

The Annual Financial Statements (Part E) have been prepared in accordance with the modified cash standard

and the relevant frameworks and guidelines issued by the National Treasury.

The Accounting Officer is responsible for the preparation of the annual financial statements and for the judgements

made in this information.

The Accounting Officer is responsible for establishing, and implementing a system of internal control that has been

designed to provide reasonable assurance as to the integrity and reliability of the performance information, the

human resources information and the annual financial statements.

The external auditors are engaged to express an independent opinion on the annual financial statements.

In my opinion, the annual report fairly reflects the operations, the performance information, the human resources

information and the financial affairs of the department for the financial year ended 31 March 2014.

Yours faithfully

___________

T. Kgare

Superintendent-General and Head of Department

Date: 30 May 2014



Page 16

7 STRATEGIC OVERVIEW

7.1 Vision

‘Quality Transport Systems for a better life for all’

7.2 Mission

‘Provide, facilitate develop, regulate, and enhance a safe, affordable and reliable multi- modal transport systems which

is integrated with land uses to ensure optimal mobility of people and goods in support of socio- economic growth and

development in the Province of the Eastern Cape.’

7.3 Values

The focus of the Department is continuous improvement and promoting a work culture that supports the vision of the

Department – “Quality service delivery for a better life for all”. A disciplined and service delivery oriented culture of

the department is shown through active and successful implementation of provincial government fleet in-sourcing

and scholar transport services. In providing both services there is evidence of planned engagement with affected

customers and stakeholders.

Since 2006 the Department has developed and adopted a service excellence program, which entrenches a culture of

service delivery measurement as a basis for understanding the extent of as-is service delivery, identifying areas for

continuous improvement and actively engaging customers and stakeholders during the implementation of the service

delivery excellence program. To this end and in conjunction with the Office of the Premier a departmental Batho Pele

audit is being implemented. Batho Pele audits are conducted in municipalities that provide transport services to the

general public on behalf of the Department of Transport, specifically in vehicle testing centres and driving license

testing centres. Provision of services following the eight (8) Batho Pele principles is under measurement and it

includes interviewing applicant/customers coming to these centres to access government services. Information

collected during the audit will be used to improve future delivery of identified services.

8 LEGISLATIVE AND OTHER MANDATES

The Department derives its existence and operations from the following legislative mandate and Regulations

emanating from the above legislation:

Constitution of the Republic of South Africa Act, 1996 (No. 108 of 1996)

White Paper on National Transport Policy (1996)

National Road Traffic Act (Act No. 93 of 1996)

Urban Transport Act (No 78 of 1977)

Eastern Cape Roads Act (No. 3 of 2003)

Passenger Transportation (Interim Provisions) Act (No 11 of 1999)

Road Transportation Act (No. 74 of 1977)

Criminal Procedure Act (No.51 of 1977)

Public Finance Management Act (No 1 of 1999 and 29 of 1999)

Public Service Act (No.103 of 1994)

Skills Development Act (No. 97 of 1998)

Skills Development Levy Act (No. 9 of 1999)

Preferential Procurement Policy Framework Act (No. 5 of 2000)

Employment Equity Act (No. 55 of 1998)

National Environmental Management Act (No. 107 of 1998)

Environmental Conservation Act (No. 73 of 1989)

Civil Aviation Act (No. 13 of 2009)

National Water Act (No. 36 of 1998)



Page 17

Occupational Health and Safety Act (including the Construction Regulations)(No. 85 of 1993)

Mine Health and Safety Act (No. 29 of 1996)

Mineral and Petroleum Resources Development Act (No. 28 of 2002)

National Land Transport Strategic Framework

Public Transport Strategy and Action Plan (2007)

National Land Transport Act (2009)

9 ORGANISATIONAL STRUCTURE

MEC: Transport , Safety and Liaison

Ms. Weziwe Tikana

Accounting Officer

Ms. Tshepo Kgare

DDG: Administration and Community Based Transportation

Vacant

Administration

Mr. D. Skweyiya

Community Based Programmes

Mr. M. Ngwendu

DDG: Transport Operations and Regulation

Vacant

Transport Operations

Mr. J. Mtila

Transport Regulation

Ms. R. Metune



Page 18

10 ENTITIES REPORTING TO THE MEC

The Department has two entities under its control and they are as follows:

Mayibuye Transport Corporation

Mandate Ciskeian Corporations Act (Act 18 of 1981)

Outputs Provide an affordable bus passenger service to the predominantly rural communities in the erstwhile

Ciskei and Border areas of the Province of the Eastern Cape.

Establishment Mayibuye Transport Corporation (MTC) is listed in Schedule 3D of the Public Finance Management Act,

No.1 of 1999. This corporation was established in terms of the Ciskeian Corporations Act (Act 18 of

1981). The main purpose of the Corporation is to provide an affordable bus passenger service to the

predominantly rural communities in the erstwhile Ciskei and Border areas of the Province of the Eastern

Cape. The Board of Directors is composed of (10) members, whose appointments are approved by the

MEC for Roads and Transport. The Chief Executive Officer who was appointed on the 1st September

2006, while the Chief Financial Officer was appointed during the financial year under review.

Nature of operations The Corporation exists as a parastatal bus operation, which provides passenger services in the Amathole

District and parts of the Chris Hani District.

Financial

Relationships

Mayibuye is funded by means of a grant-in-aid, which is reflected under transfer payments in the income

statement of the Department. The Corporation submits its budget, business plan, management reports,

financial statements and audited financial statements in compliance with the relevant provisions of the

Public Finance Management Act.

Government Fleet Management Trading Entity

Mandate Treasury Regulation 19

Outputs Provision and management of vehicle fleet

Provide fleet management support to end-users

Establishment Cabinet Resolution. See establishment letter from Treasury.

Nature of operations Procurement of vehicles

Administration of fleet

Repair and Maintenance of vehicles

Disposal of obsolete fleet

Verification of fleet

Development and monitor implementation of fleet management strategies

Report on the activities of the entity to the Accounting Officer

Management of contract with subsidised vehicles service providers

Financial

Relationships

Initial capital investment of R361m was injected to establish the Trading Entity. This includes the buy-back

of vehicles from Fleet Africa and the increase fleet to address the shortfall. The Trading Entity will sustain

itself through rate card system and by exploring possible investment opportunities.

PERFORMANCE INFORMATIONPART B


PART B: PERFORMANCE INFORMATION

Page 20

1 STATEMENT OF RESPONSIBILITY FOR PERFORMANCE INFORMATION

Statement of Responsibility for Performance Information for the year ended 31 March 2014

The Accounting Officer is responsible for the preparation of the department’s performance information and for the

judgements made in this information.

The Accounting Officer is responsible for establishing, and implementing a system of internal control designed to

provide reasonable assurance as to the integrity and reliability of performance information.

In my opinion, the performance information fairly reflects the performance information of the department for the

financial year ended 31 March 2014.

__________________________

Ms. T. Kgare

Accounting Officer

Date: 30 May 2014



Page 21

2 AUDITOR GENERAL’S REPORT: PERFORMANCE INFORMATION

The AGSA currently performs the necessary audit procedures on the performance information to provide reasonable

assurance in the form of an audit conclusion. The audit conclusion on the performance against predetermined

objectives is included in the report to management, with material findings being reported under the Predetermined

Objectives heading in the Report on other legal and regulatory requirements section of the auditor’s report.

Refer to page 81 of the Report of the Auditor General, published as Part E: Financial Information.

3 OVERVIEW OF DEPARTMENTAL PERFORMANCE

3.1 Service Delivery Environment

In attempt to align Transport issues to National and Provincial priorities, the Department has finalized the first two

phases of the organizational strategy review which included the following:

Review of the current strategic plan

Development of a concise strategic plan which complies with the relevant legislation and outlines key

deliverables for the remaining period of the Medium Term Strategic Framework

Development of a Service Delivery Model

The department is currently in the process of the developing an appropriate organizational structure which will be

finalized in December 2014.

In strengthening education, and building a skills and human resource base, Eastern Cape Department of Transport has

awarded 60 bursaries to deserving youth of the province in the 2013/14 financial year. The bursaries were awarded

for the following fields of qualification which aims at addressing the challenge of scarce skills in the Province and in

the transport sector to be exact:

Transport Management

Civil Engineering

Mechatronics

Mechanical Engineering

Aeronautical Engineering

Marine Engineering

Information Technology

84 interns were recruited during the period under review. The Department took a decision to align the intake of

interns annually with the financial year to improve resource planning and allocation and improve capacitation and

mentoring of interns. The Department continues to demonstrate its commitment to effectively transform the public

sector by assisting in enhancing learner proficiency in mathematics, science and English.



Page 22

3.2 Service Delivery Improvement Plan

3.2.1 Main services and standards Main Services Beneficiaries Current/actual

standard of service

Desired Standard

of Services

Actual Achievement

against Standards

1 Planning, regulation and facilitation

of the provision of public transport

services to enhance mobility of all

communities.

Public Transport Operators

Commuters

Private Vehicle Operators

A single entity AB350

operating service on

55 contracted routes

in place.

A single entity

AB350 operating

service on 55

contracted routes

in place.

AB350 operating

service on 55

contracted routes.

Development of the

Provincial Integrated

Public Transport

Master Plan.

2 To ensure adequate road safety

engineering, traffic law enforcement

and road safety promotion.

Road users, schools and

communities

Road Accident Fund

540 schools involved

in Road Safety

Education.

1,000 schools

involved in Road

Safety Education.

424 schools involved

in Road Safety

Education where

117,510 learners

were trained in Road

Safety Education

programmes.

3 The provision of opportunities for

social and economic development

of the population.

Previously disadvantaged

communities.

SMME’s

Empowerment of

communities with

technical and general

life skills.

Establishment of

SMME’s.

Communities trained.

3.2.2 Batho Pele arrangements with beneficiaries Current/actual arrangements Desired arrangements Actual Achievements

1 Transport Technical Committee TTC Meetings coordinated

quarterly.

TTC’s meeting coordinated for the year under

review with all key transport stakeholders.

2 Transport Forums District Forums coordinated

monthly.

District Transport Forums have been revived in all

districts. Integration of inputs from municipal IDP’s

and infrastructure sector to the Departmental

Strategy and annual plans.

3.2.3 Service Information Tool Type of Information Tool Desired Information tool Actual Achievements

1 Service Excellence Departmental Service

Excellence tool.

Departmental Service Excellence tool was adopted

and implemented by the Department.

3.2.4 Complaint Mechanism Mechanism Desired complaints

mechanism

Actual Achievements

1 Call Centre A complaints handling centre. A complaints handling system was established

through the allocation of a call centre with a toll

free number (0800 644 644).

3.3 Organisational Environment

During the period under review, the Department undertook a strategy review process in an effort to address service

delivery challenges it experienced in the previous financial years. To date an appropriate strategy aligned to the

Department mandate and government priorities has been developed and adopted by management in April 2013. This



Page 23

was followed by a service delivery model which seeks to define how services should be rendered in realisation of the

strategy. The model was finalised and adopted by management in February 2014.The department is now in the

process of developing organisational structure which is aligned to the strategy and service delivery model and this is

expected to be completed by the of December 2014..

3.4 Key policy developments and legislative changes

There were no major changes in legislation and policies that could affect the department’s operations during the year

under review. The Department implemented Resolution 14 of 2009 to improve selective Law Enforcement and

enhance visibility through a shift system. The department also reviewed final but outdated policies for proper

implementation of provisions of legislation.



Page 24

4 STRATEGIC OUTCOME ORIENTED GOALS

The Department has a responsibility of contributing towards implementation of the Provincial Strategic Framework

Priority No 2 that is “Building social and economic infrastructure” with the goal of implementing an Integrated Public

Transport Network (IPTN) throughout the province. To that end, the Department participated in the process of

integrating the existing bus services with the Rapid Public transport network systems in the two metros (BCM and

NMBM) of the provinces. Progress has been registered in NMBM however there were few challenges during

implementation .Some of the key activities towards the attainment of this goal were:

• Supporting the process of integrating Algoa Bus Service (National subsidized service) into the NMBM Rapid

Public Transport Network.

• Expanded Public Transport Services in the Eastern part of the Province by increasing the number of AB350

buses servicing from 55 to 166

• Increased the number of Mayibuye Transport Corporation busses from 48 to 66

• Implemented Resolution 19 of 2009 to improve selective Law Enforcement and enhance visibility through a

shift system. The Department also conducted Road Safety Audits and Education Programmes in an effort to

reduce the climbing rate of fatalities in the Province.

• Improved the capacity of Mthatha airport to accommodate larger aircrafts and encourage airlines to operate

in the area. A new runway has been constructed which can accommodate a Boeing 747 and other larger

aircrafts.

• Implementation of the Scholar Transport Programme

• Created over 800 decent work opportunities through implementation of Transport programmes such as Stray

Animal Management through the Road Ranger Programme, maintenance of Transport facilities and

infrastructure.

The overall goal is to provide, develop, regulate and / or enhance a safe and affordable multi-modal transport system

which is integrated with land use to ensure optimal mobility of people and goods in the Province of the Eastern Cape

in pursuance of the strategic focus areas contained in the Provincial Growth and Development Plan.

STRATEGIC GOAL 1: Promote Good Governance and Transportation Excellence.

Goal Statement Provide enabling business processes for the core functions of the Department of Roads and Transport in relation to management, corporate and financial services.

Justification In support of Public Transport, Traffic Management and Community Based Transportation. Links Compliance with legislative requirements.

STRATEGIC GOAL 2: Maximise mobility and accessibility through Public Transport.

Goal Statement Plan, regulate and facilitate the provision of public transport services and infrastructure, through own provincial resources and through co-operation with national and local authorities, as well as the private sector in order to enhance the mobility of all communities particularly those currently without or with limited access.

Justification The poor state of Public Transport in the Province is still one of the major challenges faced by many communities on a daily basis whether it is to go to schools or clinics, to their work places or the market to sell their produce or whether it is to enjoy the beautiful scenery in the Province where we live. Whilst it remains a drop in the ocean of needs, the Department highlights a few of its focus areas.

Links NLTTA



Page 25

STRATEGIC GOAL 3: Integrated traffic management.

Goal Statement Through integrated traffic management the Department enables and ensures that all road users consciously use the roads in the province in a lawful and safe manner.

Justification Integration of traffic administration, traffic law enforcement, traffic safety, traffic engineering and support services is essential to assist road users to lawfully and safely use the roads in the province

Links This goal links to the national priority of good governance and links to the eight provincial pillars.

STRATEGIC GOAL 4: Create Economic Empowerment opportunities in the transportation sector and alleviate poverty.

Goal Statement Ensure delivery of accessible services through integrated, socially just, developmental and empowering processes in order to improve the quality of life of communities within the province by way of community development programmes.

Justification To institutionalise and guarantee a more balanced transportation system throughout the Eastern Cape Province, and at the same time to create new work and business opportunities for the disadvantaged communities.

Links Expanded Public Works Programme, PGDP, ASGISA and JIPSA.

4.1 SUMMARY OF PROGRAMMES

The following table presents the Programme structure for the Department of Transport:

Programme Sub-Programmes Strategic Goals

1. Administration 1.1 Office of the MEC Promote Good Governance and Transportation Excellence. 1.2 Management of the Department

1.3 Corporate Support 1.4 Departmental Strategy

2. Transport Operations 2.1 Programme Support Operations Maximise mobility and accessibility through Public Transport. 2.2 Public Transport Services

2.3 Transport Safety and Compliance 2.4 Transport Systems 2.5 Infrastructure Operations 2.6 Infrastructure Planning 2.7 Scholar Transport

3. Transport Regulation 3.1 Programme Support Regulation Integrated traffic management. 3.2 Traffic Administration & Licensing 3.3 Operator License and Permits 3.4 Law Enforcement

4.Community Transportation Programmes

4.1 Programme Support Create Economic Empowerment opportunities in the transportation sector and alleviate poverty.

4.2 Community Development 4.3 Innovation and Empowerment 4.4 EPWP Co-ordination and monitoring



Page 26

5 PERFORMANCE INFORMATION BY PROGRAMMES

5.1 Programme 1: Administration

The Administration programme provides the Department with the overall management and administrative, strategic,

financial and corporate support services in order to ensure that it delivers on its mandate in an integrated, efficient,

effective, and sustainable manner.

The programme is divided into four (4) sub-programmes as follows:

1. Office of the Member of the Executive Council renders advisory, parliamentary, secretarial, and

administrative and office support services.

2. Management of the Department implements overall management and support of the department.

3. Corporate Support manages personnel, procurement, finance, administration and related support

services.

4. Departmental Strategy provides strategic support in terms of strategic management and integrated

planning.

5.1.1 Strategic Objectives Planned Targets and Actual Achievements Strategic Objectives Actual

Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievement

2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014

Comment of deviations

SO

1 Policy and strategic plan review

and tabled annually 1 1 0 1 Tabling of policy speeches

were deferred to June 2014

by the Presidency due to the

2014 General Elections.

SO

2 Number of management

meetings held to review, monitor

and evaluate the implementation

of resolutions

12 12 10 2 Meetings could not be

conducted due to the

following:

Jun ’13 – Meeting postponed

Dec ’13 – State Funeral

logistical arrangements

S03

a Improve internal controls leading

to a clean audit report 60% 75% 75% -

SO

3b

Number of sustained unqualified

audit opinions - 1 1 -

SO

3

c

Number of clean audit reports - - - -

SO

4 Annual Report presented

detailing performance and

financial affairs Department

1 1 1 -

SO

5 Number of vehicles leased

and/or managed for all user

departments.

- 4,326 3,104 1,222 Additional vehicles by the

user departments could only

be leased after the

finalisation of an objective

needs analysis.



Page 27

5.1.2 Performance Indicators - Planned Targets and Actual Achievements per subprogramme 5.1.2.1 Office of the MEC Performance Indicator Actual

Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


P1 Policy Speech presented to

Legislature in March.

1 1 0 1 Tabling of policy speeches

were deferred to June 2014

by the Presidency due to the

2014 General Elections.

P2 Number of MEC stakeholder

engagements.

18 12 19 7 The variance was due to

invitations received from

stakeholders in addition to

planned engagements.

P3 Number of sessions to review the

Department’s performance

against policy issues included in

the policy Speech.

4 2 2 -

5.1.2.2 Management of the Department Performance Indicator Actual

Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievement

2013/2014

Deviation from

planned target

to Actual

Achievement

for 2013/2014


P4 Number of stakeholder

engagement sessions to give

feedback on the implementation

of policy priorities.

4 4 4 -

P5 Number of top management

meetings to assess

implementation of the

programme.

11 12 10 2 Meetings could not be

conducted due to the

following:

Jun ’13 – Meeting postponed

Dec ’13 – State Funeral

logistical arrangements

P6 Number of reports on special

programmes to ensure

compliance with policies and

legislature on youth, children,

people with disability, women

and elderly rights.

- 4 3 1 During the 1st Quarter of the

financial year, business unit

day-to-day operations were

interrupted due to the

restructuring with the unit as a

result no report was prepared.

P7 Number of risk assessments and

awareness sessions conducted

to promote organization wide risk

management

10 24 17 7 The 7 security awareness

sessions could not be

conducted as planned due to

utilisation of staff in

investigations. Articles were

instead published on the

Departmental newsletter to

compensate for the sessions.



Page 28

Performance Indicator Actual

Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievement

2013/2014

Deviation from

planned target

to Actual

Achievement

for 2013/2014


P8 Approved internal audit plan

setting out the projects for the

year.

0 1 0 1 A draft internal audit plan was

developed but not approved

as at 31 March 2014.

5.1.2.3 Corporate Support Performance Indicator Actual

Achieveme

nt

2012/2013

Planned

Target

2013/2014

Actual

Achievement

2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


P9 Number of days to fill a vacant

funded post after advertisement.

240 120 145 15 Days exceeded due to delays

in recruitment processes.

P10

Reduction in the turnaround time in

days on resolving labour relations

cases.

180 90 100 10 Target not met due to

involvement of legal

practitioners whose diaries

are full in most cases.

P11

Number of skills development

interventions to address scarce and

critical skills.

- 4 4 -

P12

Number of organisational

development interventions to

address the departmental strategy.

- 3 1 2 1st Draft Organisation and

Staff Establishment Structure

developed and report

produced. Draft undergoing

consultation with

Department’s Programmes

and Districts.

P13

Number of wellness sessions

implemented.

- 20 20 -

P14

Number of Corporate Governance of ICT deliverables in the DPSA Corporate Governance of ICT Policy Framework.

- 3 2 1 The appointment of Enterprise

Architect is awaiting the

completion of the

Departmental Strategic

Review process.

P15

Number of Governance of ICT

Deliverables of the DPSA

Corporate Governance of ICT

Policy Framework.

- 10 5 5 No suitable candidate for the

ICT Manager could be found

through the normal

recruitment process as a

result headhunting process

needed to be followed.

Contribution to the Risk,

Security and Continuity plans

and policies have been made

however these were not

approved during the period

under review.



Page 29


Achieveme

nt

2012/2013

Planned

Target

2013/2014

Actual

Achievement

2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


P16

Actual % spent on budget allocated

amounting to R1, 5 billion in order

to address service delivery at the

end of the financial year.

97,7% 99%

(1,569,443)

96.7%

(1,517,153)

2.3% Variance is due to the

following reasons:

Delay in filling of critical

vacant funded and

replacement posts.

Implementation of Resolution

14 which has reduced the

overtime worked by traffic

officers.

Delay in tender for push to

talk units for traffic officers,

and

Delay in implementation of

monitoring system for EPWP

Projects.

P17

Actual % of Revenue collected on

budgeted amount of R449 million

which will contribute towards

service delivery.

93,3% 100%

(449,855)

102% 2% Improved revenue collection

processes.

P18

Number of quality compliance

reports on SCM processes and

prescripts leading unqualified audit

report and service delivery.

- 4 4 -

5.1.2.4 Departmental Strategy Performance Indicator Actual

Achieveme

nt

2012/2013

Planned

Target

2013/2014

Actual

Achievement

2013/2014

Deviation from

planned target

to Actual

Achievement

for 2013/2014


P19

Number of performance reports

submitted to Provincial Treasury

and the Provincial Legislature.

4 4 4 -

P20

Number of assessments conducted

to identify key risks with regard to

the quality of performance

information and weaknesses in

performance systems.

4 4 4 -

P21

Number of compliance reports to

departmental, provincial and

national policies.

4 4 4 -



Page 30

5.1.3 Strategy to overcome areas of under performance The Department’s Strategy Review process is nearing completion. The implementation should address key underlying

challenges leading to underperformance.

5.1.4 Changes to planned targets There were no changed to the planned targets for the year under review.

5.1.5 Linking performance with budgets Sub-Programme 2013/2014 2012/2013

Final Appropriation

Actual Expenditure

(Over)/Under Expenditure

Final Appropriation

Actual Expenditure


R’000 R’000 R’000 R’000 R’000 R’000

1 Office of the MEC 7,926 6,908 1,018 5,457 5,379 78

2 Management of the Department 24,303 23,577 726 17,374 17,028 346

3 Corporate Support 249,801 238,095 11,706 209,790 209,789 1

4 Departmental Strategy 6,344 3,951 2,393 4,389 4,355 34

5 Government Fleet Management Services

- - - 31,394 313,94 0

TOTAL 288,374 272,531 15,843 268,404 267,945 459



Page 31

5.2 Programme 2: Transport Operations

The main objective of this programme is to plan, regulate and facilitate the provision of public transport services and

infrastructure, through own provincial resources and through co-operation with local authorities, as well as the

private sector in order to enhance the mobility of all communities. Transport Systems provides the management of

Freight and Rail Transport and provides infrastructure other than roads in collaboration with the municipalities and

relevant stakeholders.

The programme is divided into seven (7) sub-programmes as follows:

1. Programme Support Operations facilitates the governance of the programme and the attainment of the

programme objectives.

2. Public Transport Services provides management of integrated land transport to provide mobility to the

commuters.

3. Transport Safety and Compliance co-ordinates and facilitates transport compliance in all modes of transport

with related legislation and policies through pro-active and re-active tactics and strategies.

4. Transport Systems provides the management of Rail Transport in collaboration with the municipalities and

relevant stakeholders. Also to develop new and upgrade transport infrastructure

5. Infrastructure Operations improves the management of provincial airports.

6. Infrastructure Planning provides planning for all modes of transport including the movement of goods and

passengers to integrate transport and spatial planning. Safety Engineering provides the development of

safety precautionary facilities at identified hazardous locations and conduction of appropriate road signs and

marking on all provincial roads.

7. Scholar Transport arranges and co-ordinates transport for scholars as identified by the Department of

Education within the budget for this purpose


Achieveme

nt

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


SO

6 Number of meetings to monitor the

implementation of programme

objectives.

4 4 4 -

SO

7 Number of kilometres operated

under Public Transport contracts.

17,191,531.

1

16,022,593.7 1,168,937.3 ABC was hampered by a 3-

week national bus industry

strike during April and May,

resulting in lower kilometres

(776,025.9km). AB350 also

recorded standing kms when

they could not operate due to

rain and road conditions

(294,576.5km).

SO

8(a)

Increase the number of reliable,

safe and compliant public transport

vehicles in the Province.

0 8,000 8,030 30

SO

8(b

) Number of road users reached

through transport safety

interventions.

248,078 131,474 117,333 Less users than planned was

reached due to unavailability

of resources

SO

9 Implementation of Integrated

Provincial Maritime Plan.

0 1 1 -



Page 32

Strategic Objectives Actual

Achieveme

nt

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


SO

10

Mthatha and Bhisho remain

compliant with South African Civil

Aviation Regulations.

2 2 2 -

SO

11

Number of Transport Plans to

promote the performance of

Integrated Transport Planning.

0 4 3 1

SO

12

Number of learners expected to

benefit from the scholar transport

scheme.

54,471 55,000 57,166 2,166 Number of learners to be

transported depends on the

list provided by Department of

Education and budget

allocated by Provincial

Treasury to the Department of

Transport.

5.2.2 Performance Indicators - Planned Targets and Actual Achievements per subprogramme 5.2.2.1 Programme Support Performance Indicator Actual

Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


P22

Number of strategic sessions held

to develop and monitor

programme objectives.

2 2 2 -

P23

Number of programme

performance reports submitted.

4 4 4 -

5.2.2.2 Public Transport Services Performance Indicator Actual

Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


P24

Number of kilometres operated by

operators receiving financial

assistance i.e. Algoa Bus

Company (ABC), Africa’s Best

350 (AB350) and Mayibuye

(MTC).

- 17,191,531.

1

16,022,593.7 1,168,937.3 ABC was hampered by a 3-

week national bus industry

strike during April and May,

resulting in lower kilometres

(776,025.9km). AB350 also

recorded standing kms when

they could not operate due to

rain and road conditions

(294,576.5km).

P25

Number of bicycles distributed. 0 500 0 500 Specifications were not

approved by Bid

Specifications Committee.

Applied to participate in nDOT

bicycle procurement. It was

approved by nDOT could not

complete process before

31/03/2014.



Page 33


Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


Standardised Sector Indicators – Indicators for the Public Transport Operation Grants (Algoa Bus Only)

P26

Number of vehicles subsidised. 406 394 12 Fewer buses operated due to

NMB IPTS Pilot Project.

P27

Number of routes subsidised. 2,053 2,150 94 New routes were introduced

and operating days influence

this as well e.g. some routes

only operated on Fridays.

P28

Number of vehicle kilometres

subsidised.

919,543 818,457.8 101,085.5 Average brought down by

strike in April and May 2013.

P29

Kilometres operated per vehicles. 2,264 2,070 194 Average brought down by

strike in April and May 2013.

P30

Passengers per vehicle. 3,426 3,299 127 3.7% deviation. The target is

based on previous years’

trends and cannot be

absolute.

P31

Passengers per trip operated. 38 40 2 The target is based on

previous years’ trends and

cannot be absolute.

P32

Staff per vehicle. 1.77 1.69 0.08 Deviation due to natural

attrition where retirees are not

replaced. Fewer buses

operated.

P33

Number of subsidised

passengers.

14,484,265 14,491,258 6,993 The target is based on

previous years’ trends and

cannot be absolute.

P34

Number of unsubsidised

passengers.

0 440,902 440,902 PTOG allocation forced

unsubsidised services in

March 2014.

P35

Number of trips subsidised. 30,875 29,737 1,138 Average brought down by

strike in April and May.



Page 34

5.2.2.3 Transport Safety and Compliance Performance Indicator Actual

Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


P36

Number of Road shows

conducted to sensitise operators

around compliance issues in Taxi

Recapitalisation.

56 94 17 77 A few workshops were

conducted during the year

than anticipated due to

requests from the taxi industry

to suspend the roadshows

until further notice.

P37

Number of capacity building

programmes to be conducted.

3 6 4 2 The funds for conducting for

the other two programmes

were transferred to other

items following a

reprioritisation exercise.

P38

Number of vehicles stopped and

inspected for compliance in

accordance with Laws governing

Public Transport.

28,575 30,000 26,582 3,418 The Transport Inspectorate

unit could not reach its targets

due to lack of resources

(vehicles for inspectors and

human resources).

Standardised Sector Indicators

P39

Number of road safety awareness

interventions conducted.

- 3 3 -

P40

Number of schools involved in

road safety education

programmes.

1,142 1,000 424 576 Target not realised due to

underestimation of kilometres

to reach the 1,000 planned

schools.

5.2.2.4 Transport Systems Performance Indicator Actual

Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


P41

Update of the Provincial Rail Plan. - 1 - 1 The update of the Rail Plan

was not conducted due to the

outcomes of the evaluation of

Kei Rail project.

P42

Number of Maritime Awareness

campaigns conducted.

32 6 6 -

P43

Number Provincial maritime

cluster initiatives supported.

6 4 4 -



Page 35

5.2.2.5 Infrastructure Operations Performance Indicator Actual

Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


P44

Number of assessments conducted in Bhisho Airport to ensure compliance with CAA requirements in terms of:

Airfield maintenance

Airport Security

Air traffic navigation services

Fire and rescue services.

- 48 44 4 Assessments carried out were

regarded as sufficient to

ensure that the Airport

remains compliant with CAA

requirements.

P45

Number of assessments conducted in Umthatha Airport to ensure compliance with CAA requirements in terms of:

Airfield maintenance

Airport Security

Air traffic navigation services

Fire and rescue services.

- 48 43 5 Assessments carried out were

regarded as sufficient to

ensure that the Airport

remains compliant with CAA

requirements.

5.2.2.6 Infrastructure Planning Performance Indicator Actual

Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


P46

Number of provincial transport

plans developed and monitored to

promote integrated transport

planning in the Province.

0 4 3 1 The Inception Report of the

Non-motorised Transport

Implementation Plan was

presented to the ITPCC in

March 2014.

P47

Number of Traffic Engineering

Projects to promote a safe road

environment.

- 4 4 -

5.2.2.7 Scholar Transport Performance Indicator Actual

Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


P48

Number of learners benefiting

from the scholar transport

scheme.

54,471 55,000 56,210 1,210 The target was estimated

before figures from DOE were

finalised. 55,537 scholar were

transported from January to

August 2013. From

September 2013 56,210 were

transported, after a school in

Duncan Village burnt down

and the scholars had to be

transported to other schools.



Page 36

5.2.3 Strategy to overcome areas of under performance The programme conducts quarterly performance review sessions to monitor performance against the set targets.

5.2.4 Changes to planned targets Changes to planned targets: Public Transport Services Indicator

No.

Performance Indicator Annual

Target

2013/14

Amendments

Operational Plan Targets 2013/14

1st 2nd 3rd 4th

P24 Number of kilometres operated by operators receiving financial assistance i.e. Algoa Bus Company (ABC), Africa’s Best 350 (AB350) and Mayibuye (MTC).

17,191,531.1 4,261,642.4 4,410,682.9 4,259,494.9 4,259,710.9

P26 Number of vehicles subsidised (ave/mth) 406 406 406 406 406

P27 Number of routes subsidised (ave/mth) 2,053 2,053 2,053 2,053 2,053

P28 Number of vehicle kilometres subsidised (ave/mth) 919,543 919,543 919,543 919,543 919,543

P29 Kilometres operated per vehicle (ave/mth) 2,264 2,264 2,264 2,264 2,264

P30 Passengers per vehicle (ave/mth) 3,426 3,426 3,426 3,426 3,426

P31 Passengers per trip operated (ave/mth) 38 38 38 38 38

P32 Staff per vehicle (ave/mth) 1.77 1.77 1.77 1.77 1.77

P33 Number of subsidised passengers (per annum) 14,484,265 3,757,056 3,811,259 3,407,405 3,508,545

P34 Number of unsubsidised passengers (per annum) 0 0 0 0 0

P35 Number of trips subsidised (ave/mth) 30,875 30,875 30,875 30,875 30,875

5.2.5 Linking performance with budgets

Sub-Programme

2013/2014 2012/2013

Final Appropriation

Actual Expenditure


Final Appropriation

Actual Expenditure


R’000 R’000 R’000 R’000 R’000 R’000

1 Programme Support Operations 7,151 7,054 97 5,257 5,256 1

2 Public Transport Services 420,326 414,975 5,351 341,896 341,699 197

3 Transport Compliance 52,431 53,092 (661) 24,331 24,331 -

4 Transport Systems 6,297 5,902 395 60,287 60,129 158

5 Infrastructure Operations 61,878 61,876 2 70,058 36,796 33,262

6 Infrastructure Planning 10,205 10,209 (4) 9,620 9,599 21

7 Scholar Transport 392,096 392,036 - 366,070 366,070 -

TOTAL 950,324 945,144 5,180 877,519 843,880 33,639



Page 37

5.3 Programme 3: Transport Regulation

The objective of the programme is to ensure the provision of a safe transport environment through the regulation of traffic on public infrastructure, law enforcement, implementation of road safety education and awareness programmes and the registration and licensing of vehicles and drivers. The programme is divided into four (4) sub-programmes as follows:

1. Programme Support Regulation facilitates the governance of the programme and the attainment of the programme objectives. The project management office provides support to the entire program in terms of project governance and the operational reporting of all functionalities regarding the strategic objectives of the department as indicated within the Annual Performance Plan.

2. Transport Administration and Licensing monitors and controls all aspects related to the collection of motor vehicle license and registration fees and renders services regarding the administration of applications in terms of the National Road Traffic Act, 1996, (Act 93 of 1996). Also, implementation of laws and regulation relating to vehicle registration and licensing, vehicle fitness testing and driver fitness testing. Expenditure related to motor vehicle registration and licensing including the costs related to eNaTIS. monitoring collection of revenue from motor vehicle license fees; miscellaneous fees pertaining to vehicle and driver fitness testing, assistance and advice to motorists and municipal agents through a help desk and maintenance of a toll free telephone service; this also includes the monitoring activities of all vehicle testing stations, vehicle registering authorities and driving license testing centres.

3. Operator License and Permits manages the approval and control of registering of transport operations and issuing of all licenses and permits required in terms of legislation.

4. Law Enforcement maintains law and order on the roads and provides quality traffic policing (law enforcement) services and maximizes the traffic control and law enforcement.


Achieveme

nt

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


SO

13

Facilitate governance of the

programme.

- 1 1 -

SO

14

Number of registering authorities

and testing centres conform to the

prescripts of the NRTA Act.

250 123 127 The target was unrealistic set

by the programme.

SO

15

Number of compliant Public

Transport vehicles.

664 4,560 4,089 471 Not all licenses have been

converter due to some

operators not meeting the

requirements

SO

16

Number of Selective Law

Enforcement operations.

- 3,296 9,679 6,383 The implementation of

Resolution 14 increased the

visibility of Traffic Officer by

compelling officers to work 16

hours and additional 8 hours

on a standby principle.



Page 38


Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


P49

Number of strategic sessions. 6 4 4 -

P50

Number of Programme

performance reports to HOD.

4 4 4 -

5.3.2.2 Transport Administration and Licensing Performance Indicator Actual

Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


P51

Number of compliance

inspections conducted.

174 122 123 1 More appointments were

made during the course of the

year.

5.3.2.3 Operator License and Permits Performance Indicator Actual

Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


P52

Number of permits to be

converted to operator licences.

94 100 111 11 Backlogs were dealt with

resulting in over performance.

P53

Number of provincial regulatory

entity sittings.

17 24 63 39 Increased PRE sittings to deal

with backlogs.

P54

Number of abnormal loads

permits issued.

1,576 1,800 3,113 1,313 Over performance due to

Wind Turbine Project that

started in the 2nd Quarter.

5.3.2.4 Law Enforcement Performance Indicator Actual

Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


P55

Number of speed operation

conducted.

598 1,807 1,209 Over performance was as a

result of the implementation of

Resolution 14 which

increased the visibility of

Traffic Officer by ensuring a

16 hour fixed shift per day and

additional 8 hours on a

standby principle.



Page 39


Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


P56

Number of K78 Roadblocks held. 525 225 164 61 Unplanned incidents such as

the state funeral in the 3rd

Quarter impacted on planned

operations causing under

performance.

P57

Number of hour’s weighbridges

operated.

2,700 829.1 1,870.9 Only one weighbridge was

operational during the period

under review due to

unforeseen breakdown of

aged equipment.

P58

Number of road side vehicle

check point operations.

24,000 206,027 182,027 Over performance was as a

result of increased visibility

and in the incorporation of the

inclusion of the NREP

statistics into the operational

report

5.3.3 Strategy to overcome areas of under performance P56 – More emphasis will be placed on monitoring of K78 Road blocks in ensuring that the actual plans as per APP is

executed.

P57 - The life span of Mthatha Weighbridge has now come to an end. The Department is in the process of and an

overall upgrade/ replacing the equipment.

5.3.4 Changes to planned targets Actual performance, (over and under) in the 6 districts is used as a resource base for a comparative analysis, which is

used to redevelop realistic targets.



Page 40


Sub-Programme

2013/2014 2012/2013

Final Appropriation

Actual Expenditure


Final Appropriation

Actual Expenditure


R’000 R’000 R’000 R’000 R’000 R’000

1 Programme Support Regulation 4,505 3,076 1,429 4,219 4,219 -

2 Transport Admin and Licensing 13,250 9,152 4,098 8,782 8,699 83

3 Operator Licensing and Permits 8,307 7,862 445 6,585 6,580 5

4 Law Enforcement 236,666 246,146 17,520 258,509 258,509 -

5 Transport Safety - - - 27,869 27,869 -

TOTAL 289,728 266,236 23,492 305,964 305,876 88



Page 41

5.4 Programme 4: Community Based Programmes

The objective of the programme is to ensure delivery of accessible services through integrated, socially just,

developmental and empowering processes in order to improve the quality of life of communities within the province

by way of community development programmes.

The programme is divided into four (4) sub-programmes as follows:

1. Programme Support-facilitates the governance of the programme and the attainment of the programme

objectives.

2. Community Development - To ensure community supported transportation service delivery through

identification and creation of job opportunities in all programmes of the department.

3. Innovation and Empowerment - Seeks to develop new Ideas in transportation sector so as to maximize

opportunities for job creation and stakeholder empowerment.

4. Sector Co-ordination and Monitoring - To create a supportive and enabling environment for the creation

of a community supportive transportation service delivery. This will be achieved through reporting, co-

ordination and monitoring of the departments contribution towards poverty alleviation and job creation.


Achieveme

nt

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


SO

17

Number of Annual Plans developed

for the programme in line with the

Department’s 5 year plan.

1 1 -

SO

18

Number of work opportunities

created through Community Based

Transportation Projects.

900 930 30 Because the Programme

received an Incentive Grant

which enabled the

Programme to go beyond the

targeted number.

SO

19

Number of training and

empowerment programmes

developed and implemented.

14 15 1 Improved planning during the

course of the year led into an

effective way of delivering

trainings.

SO

20

Number of departmental projects

aligned to EPWP principles and

guidelines.

6 6 -



Page 42


Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


P59

The Number of strategic sessions

conducted.

3 4 3 1 Due to the Departmental

Strategy Review Session CBT

could not conduct the fourth

strategic plan as the funds

were directed to conduct

Brown paper mapping

exercises in districts.

P60

Number of Programme specific

performance reports submitted to

the Head of Department.

8 4 4 -

P61

Number of stakeholder

engagement.

12 19 1 18 The planned item was

identified at CBT Strategic t

planning session conducted

on the 20 June 2013; as

irrelevant with regards to that.

The session took a resolution

that a memo be moved to

register such irrelevance.

5.4.2.2 Community Development Performance Indicator Actual

Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


P62


created and sustained through the

Road ranger project.

- 688 688 -

P63


created through the pilot Car Was

Project in conjunction with the

Government Fleet Management

Trading Entity.

- 59 59 -

P64


created through the maintenance

of transport facilities.

- 82 82 -



Page 43

5.4.2.3 Innovation and Empowerment Performance Indicator Actual

Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


P65

Number of training and

empowerment sessions and

number of people trained.

6 14 15 1 Improved planning during the

course of the year led into an

effective way of delivering

trainings.



Page 44

5.4.2.4 EPWP Coordination and Monitoring Performance Indicator Actual

Achievement

2012/2013

Planned

Target

2013/2014

Actual

Achievemen

t 2013/2014

Deviation from

planned target to

Actual

Achievement for

2013/2014


P66

Number of departmental projects

aligned to EPWP principles and

guidelines.

4 6 6 -

P67

Number of impact assessments

conducted.

- 1 - 1

Standardized Sector Indicators ( EPWP Incentive Grant)

P68

Number of Jobs created. 178 829 930 101 The additional 21 jobs were

created through the Grid Gate

Maintenance Projects and the

stipend was paid through the

EPWP Incentive Grant. This

also includes EPWP Monitors.

P69

Number of full time equivalent

(FTE’s).

74 688 688 -

P70

Number of youth employed (18-

35).

31 150 151 1

P71

Number of women employed. 45 130 130 -

P72

Number of people living with

disabilities.

0 2 2 -

5.4.3 Strategy to overcome areas of under performance Implementation of Strategy Review Resolutions to address the challenge of capacity and lack of adequate resources

for monitoring EPWP projects.

5.4.4 Changes to planned targets No changes were approved to the planned targets by the Accounting Officer.


Sub-Programme

2013/2014 2012/2013

Final Appropriation

Actual Expenditure


Final Appropriation

Actual Expenditure


R’000 R’000 R’000 R’000 R’000 R’000

1 Programme Support Community Based 1,408 1,309 99 1,325 1,325 -

2 Community Development 25,532 21,502 4,030 2,360 2,345 15

3 Innovation and Empowerment 8,514 5,669 2,845 27,460 27,450 10

4 EPWP Coordination and Monitoring 5,563 4,761 802 3,651 3,650 1

TOTAL 41,017 33,241 7,776 34,796 34,770 26



Page 45

5.5 Trading Entity – Actual Performance against Predetermined Objectives

Government Fleet Management facilitates fleet management services to all departments and coordinate

departmental fleet services for the various Programmes.

5.5.1 Government Fleet Management Services Performance Indicator Actual

Achieveme

nt

2012/2013

Planned

Target

2013/2014

Actual

Achievement

2013/2014

Deviation from

planned target

to Actual

Achievement

for 2013/2014


P73

Number of vehicles added to the fleet.

694 131 563 A Cabinet resolution not to

procure additional vehicles until a

need analysis is done and

approved.

P74

Number of obsolete vehicles replaced.

641 213 428 Delay in issuing of RT57 and a

late requirement to appoint

vehicle selection committee; and

the sitting of the committee

closure – December 90 day lead

time.

P75

Number of Fleet Managers forums sittings to monitor performance of current system.

12 10 2 Quorum could not be met; most

Fleet Managers were on leave.

P76

Average Number of days for debt recovery form user departments.

30 34 4 Back billing that has not been

paid last year end

P77

Percentage of vehicles serviced on scheduled service intervals.

90% of

4,326

92.31% 2.31% The variance clearly indicates

that the unit has been proactive

in arranging the services on time

thus exceed that annual target.



Page 46

6 SUMMARY OF FINANCIAL INFORMATION

6.1 Departmental receipts

Departmental receipts 2013/14 2012/13

Estimate Actual

Amount

Collected

(Over)/Under

Collection

Estimate Actual

Amount

Collected

(Over)/Under

Collection

R’000 R’000 R’000 R’000 R’000 R’000

Tax Receipts

Motor vehicle licences 407,171 410,679 (3,508) 394,582 368,784 25,798

Sale of goods and services other than capital assets 17,176 18,214 (1,038) 9,277 10,675 (1,398)

Fines, penalties and forfeits 6,386 5,615 771 8,136 7,110 1,026

Interest, dividends and rent on land 1,766 1,185 581 2,438 507 1,931

Sale of capital assets - - - 832 - 832

Financial transactions in assets and liabilities 986 163,922 (162,936) - 466 (466)

Total 433,485 599,615 (166,130) 415,265 387,542 27,723

6.1.1 Reasons for under collection The under collection was due to non-payment of revenue collected by Kouga Municipality.

6.1.2 Measures taken during the year to keep on track Letters were sent to the municipality regarding the matter and meetings were conducted and this matter has since

been referred to the Department’s Legal Department.

6.2 Programme Expenditure

Programme name 2013/14 2012/13

Final

Appropriation

Actual

Expenditure

(Over)/Under

Expenditure

Final

Appropriation

Actual

Expenditure

(Over)/Under

Expenditure

R’000 R’000 R’000 R’000 R’000 R’000

Administration 288,374 272,531 15,843 268,404 267,945 459

Transport Operations 950,324 945,144 (5,180) 877,519 843,880 33,639

Transport Regulations 289,728 266,236 23,492 305,964 305,876 88

Community based 41,017 33,241 7,776 34,796 34,770 26

Total 1,569,443 1,517,152 52,291 1,486,683 1,452,471 34,212

6.2.1 Reasons for under underperformance The underspending is due to the non-payment of service provider contracted to upgrade the Mthatha Airport

Terminal Building that was liquidated. The project could therefore not be completed as anticipated.

6.2.2 Measures taken during the year to keep on track The Department invited tenders from service providers in order to complete the upgrading of Mthatha Airport.

6.2.3 Future (Corrective) measures to rectify underperformance Same as above.



Page 47

6.3 Transfer payments excluding public entities

The table below reflects the transfer payments made for the period 1 April 2013 to 31 March 2014:

Name of transferee Purpose for which the funds were used

Compliance with s 38 (1)

(j) of the PFMA

Amount transferred

(R’000)

Amount transferred

(R’000)

Amount spent by the entity

Reasons for the funds

unspent by the entity

1 Provincial DA:Taxi Council (SANTACO)

Profesionalisation of the Taxi Industry

No 1,235 1,235 1,235

2 Africa Best 350 Ltd Provision of public transport services

Yes 121,695 117,205 117,205

3 Algoa Bus Company Pty.Ltd Yes 183,960 183,956 183,956

4 Bus Operators Yes 819 819 819

5 Households Payments of employee benefits and claims

Yes 11,005 10,163 10,163

6.4 Public Entities

Name of Public Entity Services rendered by the public entity

Amount transferred to the public entity

Amount spent by the public entity

Achievements of the public entity

1 Mayibuye Transport Corporation

Provision of public transport services

102,088 102,088

6.5 Conditional Grants and Earmarked funds transferred

No transfers were made.

6.6 Conditional Grants and Earmarked funds received

Department who transferred the

grant

National Department of Transport

Purpose of the grant Financial assistance towards an efficient, safe, reliable and affordable Public Transport system. Creation of employment opportunities and poverty alleviation of poverty.

Expected outputs of the grant Transportation of passengers and creation of job opportunities.

Actual outputs achieved 818,457.8 of vehicle kilometres subsidised. 930 jobs were created.

Amount per amended DORA 187,805

Amount received (R’000) 187,805

Reasons if amount as per DORA

not received

N/A

Amount spent by the department

(R’000)

187,220

Reasons for the funds unspent by

the entity

Due to the delay in transfer payment of Incentive Grant by National as it was only transferred towards the end of August 2013.

Monitoring mechanism by the

receiving department

The Department has a board representative on Algoa Bus Company.



Page 48

6.7 Donor Funds

Name of donor TETA

Full amount of the funding 266 (available balance)

Period of the commitment Current Financial Year

Purpose of the funding Training of staff

Expected outputs Increased level of training

Actual outputs achieved Increased level of training

Amount received in current period

(R’000)

Nil

Amount spent by the department

(R’000)

229

Reasons for the funds unspent Training was done on the previous balances and the amount received will be utilised in the 2013/14 financial year

Monitoring mechanism by the

receiving donor

Entered into SLA with various service providers for training purposes.

6.8 Capital investment, maintenance and asset management plan

Infrastructure projects

2013/2014 2012/2013

Final Appropriation

R’000

Actual Expenditure

R’000


R’000

Final Appropriation

R’000

Actual Expenditure

R’000


R’000

Existing infrastructure assets

- Upgrades and additions

37,059 15,861

Total 37,059 15,861

GOVERNANCEPART C


Page 50

1 INTRODUCTION

2 RISK MANAGEMENT

Nature of risk management As part of the Department’s commitment to good corporate governance it has developed the following policies;

• Risk management policy • Fraud prevention policy • Whistle blowing policy • Gifts ,donations & sponsorship policy

Awareness sessions on risk management policies were conducted throughout the Department including districts. Furthermore in order for the Department to emphasize its stance towards effective management of risks it has developed and implemented a risk management strategy which includes a fraud prevention plan in line with the PFMA Treasury Regulations. The strategy is being spearheaded by the Accounting Officer of the Department and she has accordingly put in place a Risk Management Committee to drive it. The Committee meets on quarterly basis to monitor top risks of the Department and the implementation of the strategy. Risk Management strategies to identify and manage risks Annual enterprise wide risk assessment is being conducted on annual basis. Furthermore, identification and management of risks is a continuous process that is being done during Management meetings, Risk Management Committee meetings, through inspections conducted by internal control unit and internal audit reports. Risks mitigating strategies are being monitored by Risk Management unit through one on one discussions with risk owners. A continuous feedback on the management of the top 20 risks of the Department is being presented during Risk Management and Audit Committee meetings. Progress made in addressing risks identified High risks of the Department which relate particularly to Performance Management, Scholar Transport, Fleet Management have been reduced to an acceptable level as compared to the previous financial year. The Department’s Audit and Risk Management Committee have closely monitored these risks throughout the year. Furthermore, the Department would continue managing these risks to ensure that they remain stable.

3 FRAUD AND CORRPUTION

The Department Fraud Prevention Plan: The Department has an approved Fraud Prevention Plan and Policy. The plan includes principles contained in the Public Service Anti-Corruption Strategy endorsed by Cabinet in January 2002. It takes into account the risk of Fraud and Corruption as identified in the departmental wide risk assessment and addresses strategic fraud and corruption risks that should be addressed and which could jeopardize the successful implementation of each component of the plan. Progress made in implementing the Fraud Prevention Plan: The Fraud prevention plan and policy are reviewed annually. Awareness sessions on Whistle Blowing, Fraud Prevention Policy and Plan are being conducted throughout the Department including its districts on annual basis. As part of the awareness programme, anti-corruption pamphlets are being distributed to employees and a message of zero tolerance stance against corruption features in the Departmental newsletter on quarterly basis. Vetting of Senior Management and officials at critical areas such as SCM, HRM, Finance and Risk Management is in progress. The Department has established a database where all reported and investigated cases are recorded. All reported cases of Fraud and Corruption are being investigated and reported to the Accounting Officer. The department has partnered with the Special Investigating Unit through the Presidential proclamation in dealing with complex investigations.


Page 51

Mechanisms in place to report Fraud and Corruption and how these operate: A Presidential Hotline is being utilized wherein, the public/officials report incidents and then they are referred to the Department. A National Anti-Corruption Hotline is also being utilized wherein the public/ officials report incidents of fraud and corruption anonymously, the report is then sent the Office of the Premier then referred to the relevant Department. There are also cases which are referred to as “Walk ins” wherein Departmental officials report incidents of fraud and corruption directly to the Risk Management Unit of the Department. How these cases are reported and what action is taken Cases are reported by whistleblowers through the Presidential Hotline, National Anti-Corruption Hotline and walk ins. Cases reported are assessed and evaluated to determine substance to the allegations. Reports that warrant investigation are then investigated, the investigation report is forwarded to the Accounting Officer. Upon approval of the Investigation report it is then forwarded to the Labour Relations Component for the institution of the disciplinary hearing. Investigations that are criminal in nature are referred to the South African Police Services for further handling and prosecution.

4 MINIMISING CONFLICT OF INTEREST

Awareness workshops are held at Districts and HO on management of conflict of interests. Disclosure of interest is done by SMS members in terms of SMS Handbook Additional disclosure of gifts/sponsorship/donations as per the Departmental policy for all staff. Disclosure of interests in procurement and recruitment processes. Implementation of EXCO resolution on prohibition of trading by Provincial public servants with the

Departments and their entities. The awarding of bids is done after PERSAL verification clearing the bidders as non-staff members of Provincial

Departments.

5 CODE OF CONDUCT

OUR COMMITMENT TO THE PUBLIC SERVICE CODE OF CONDUCT

Our Relationship with the legislature and executive

As employees of the Department of Transport we diligently affirm our commitment to:

• Be faithful to the Republic and honour the constitution

• Put the public interest first

• Loyally execute the policies of the Government

• Strive to be faithful to statutory requirements and instructions

• Co-operate with public institutions in promoting public interest

Our Relationship with the public

As employees of the Department of Transport we diligently affirm our commitments to:

• Promote the unity and well-being of the South African Nation

• Be unbiased and impartial

• Be polite, helpful and reasonably accessible and maintain high service standards

• Have regard for the circumstances and concerns of the public

• The development and upliftment of all South Africans

• Not unfairly discriminate against any member of the public

• Not abuse our positions as Public Servants

• Respect and protect every person’s dignity and rights

• Recognise the public’s right to information except where protected by law


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Our Relationship with Our Colleagues


• Co-operate fully with other colleagues to advance the public interest

• Execute all reasonable instructions by the person’s officially assigned to give such

• Refrain from favouring friends and family and not abuse our authority nor be unduly influenced

• Use the appropriate channels to air any grievances or make direct representations

• Committed to development, motivation and utilisation of our staff and promote sound labour relations

• Deal fairly, professionally and equitably with colleagues

• Refrain from party political activities in the workplace

Performance of our Duties


• Strive to achieve objectives of our Department cost effectively and in the public interest

• Be creative in thought in the execution of our duties

• Be punctual in the execution of our duties

• Professionally and committed in our duties

• Not engage in any action or transaction in conflict with the execution of our duties

• Recuse ourselves form any official action or decision making and self-development throughout our careers

• Be honest and accountable when dealing with public funds

• Promote sound, efficient, effective, transparent and accountable administration

• Report, fraud, corruption, nepotism and maladministration

• Give honest and impartial advice

• Honour confidentiality

Our Personal Conduct and Private Interest

• Dress and behave in a manner that enhances the public service during official duties

• Act responsibly in the use of alcohol or intoxicating substances

• Not use our position to obtain gifts or benefits for ourselves or accept such that can be construed as bribes

• Not disclose official information for personal gain or the gain of others

• Not without prior approval undertake remunerative work outside official duties or use official equipment for

such work.

6 HEALTH SAFETY AND ENVIRONMENTAL ISSUES

This is extensively dealt with under the Employee Wellness Programme in Part D: Human Resource Management.

7 INTERNAL CONTROL UNIT

Work performed by Internal Control unit during the year The Department has developed a policy on irregular, fruitless & wasteful expenditure as an endeavor to exercise reasonable care to prevent and detect irregularities. The unit has conducted awareness sessions on the policy throughout the Department including its districts. Inspections on payment vouchers of the Department are being conducted in order to ensure compliance with relevant laws & regulations. The Department maintains monthly updated registers of Irregular, fruitless and unauthorised expenditure.


Page 53

8 AUDIT COMMITTEE REPORT

8.1 REPORT ON THE DEPARTMENT OF TRANSPORT

8.1.1 OVERVIEW We are pleased to present our report for the financial year ended 31 March 2014 to the Eastern Cape Department of

Transport.

8.1.2 CHARTER The Audit Committee is guided by a detailed charter that is reviewed and approved by the Head of Department. The

Committee has regulated its affairs in compliance with this charter and has endeavoured to discharge all its

responsibilities as contained therein.

8.1.3 PURPOSE The Committee has complied with its purpose and responsibilities that arise from the Public Finance Management Act

of 1999; Section 38 (1) and Treasury Regulations 3.1.

8.1.4 MEMBERSHIP The Committee consists of the members listed hereunder and are required to meet at least four times per annum as

per the approved Charter. During the financial year under review meetings were held as follows:

Name of members Attendance

Number of meetings period April 2013 to March 2014 6

M. du Toit BSocSc 6

J. Emslie (Chairperson) BCom CA(SA) 6

L. Mangquku BCom CA(SA) 6

8.1.5 EXTERNAL AUDIT During the year under review, the Auditor-General (AGSA) was invited to attend all meetings of the Audit Committee

and we note our appreciation to the AGSA for attending such meetings and for the positive interactions and

engagements between the parties.

We have reviewed the AGSA Strategic Audit Plan for the 2013/2014 financial year and have recommended approval of

their plan and budget to the Head of Department.

8.1.6 INTERNAL AUDIT The Committee considered and approved the internal audit charter during the year under review. The committee

approved the unit’s operational plan for the year and the rolling plan for subsequent years. This plan was subjected to

modification during the year taking into account capacity considerations within the unit.

The internal audit activity is responsible for reviewing and providing assurance on the adequacy of internal controls,

risk management and governance processes. Internal Audit Services are responsible for reporting the findings of the

internal audit work against the agreed audit plan to the Committee on a quarterly basis.

The Head of Internal Audit had direct access to the Committee, primarily through its Chairperson.

The unit experienced resource and skills capacity constraints during the year, including the head of the unit being

under suspension for an extended period. Management took reasonable steps to manage these challenges however

these constraints did lead to reduced effectiveness of the unit. Consequently we believe that Internal Audit has only

partially contributed to the improvement of internal controls within the department as has not had the effectiveness

intended from such a unit.


Page 54

8.1.7 INTERNAL CONTROL EFFECTIVENESS The committee per its charter is required to review the effectiveness of the internal control systems. Given the lack of

reliance that could be placed on internal audit the committee sought to address this deficiency through enhanced

interrogation of reports presented by the management of the department at the committee meetings. These

included:

Interim and annual financial statements, In Year Monitoring, Detailed Trial Balances and reports, Risk Management

Reports, Performance Report, Audit Intervention Plans and reports of the Auditor General. We further held

interaction with the Auditor General directly to establish risks identified in their own audit planning to use in our

evaluations.

Despite limited assurance provided by the department’s Internal Audit unit during the year under review, by applying

alternative means described above the Committee is satisfied that a system of internal control is in place and that

these controls have functioned during the period under review.

The Internal Audit unit would be expected to recommend on improving effectiveness of controls and efficiencies in

operations, and accordingly the Committee considers the system of internal controls to be partially adequate and

partially effective to:

• reduce risks to an acceptable level;

• meet the department’s objectives;

• ensure assets are adequately safeguarded; and

• ensure that transactions undertaken are recorded in the accounting records.

Accordingly, our assessment on the system of internal controls for the period under review is that they are partially

adequate and partially effective.

8.1.8 CORPORATE GOVERNANCE We are of the opinion that the department continues to strive towards complying with sound principles of corporate

governance. Recommendations to improve and strengthen governance processes are made through the Audit

Committee processes as considered appropriate.

8.1.9 RISK MANAGEMENT The Department has implemented a risk management strategy which includes a fraud prevention plan. A formal risk

assessment commenced during the year ending 31 March 2014 but was not complete at year end. The Committee

monitored the significant risks faced by the department through reviewing its risk reporting. We are satisfied that risks

were managed to an adequate level, however there is still room for improvement to the risk management process

and recommendations have been made to management through the Audit Committee processes for such

improvements.

8.1.10 ANNUAL FINANCIAL STATEMENTS We have:

• Reviewed and discussed the annual financial statements of the Department to be included in the annual

report with the Accounting Officer;

• Reviewed the department’s compliance with legal and regulatory provisions and that the financial

statements have been prepared in accordance with the Preparation Guide and Specimen Financial

Statements issued by National Treasury.

• During the review process of the financial statements the committee:

o Made enquiries into abnormal and significant transactions;

o Obtained reasonable explanations for variances between the financial statements and budgeted

amounts;


Page 55

o Reviewed any new or proposed legislation that may have an impact on policies, the financial

statements and disclosure therein;

o Enquired from management about the completeness of the contingent liabilities including claims

against the department;

o Made enquiries into the adequacy, reliability and completeness of supporting information as

supporting these financial statements

8.1.11 TRADING ENTITY The fleet management trading entity is administered by the department as per the PFMA. The audit committee has

reported on this entity in its separate report to the entity.

8.1.12 CONCLUSION We concur with and accept the opinion of the AGSA on the financial statements of the Department for the year ended

31 March 2014.

8.1.13 APPRECIATION The Committee expresses its sincere appreciation to the Honourable MEC, Accounting Officer, Management, Internal

Audit, Provincial Treasury and the AGSA for their co-operation in enabling the Committee to execute and fulfil its

responsibilities.

Mr JJ Emslie CA(SA)

Chairperson of the Audit Committee

Date: 18 August 2014


Page 56

8.2 REPORT ON THE EASTERN CAPE GOVERNMENT FLEET MANAGEMENT SERVICES TRADING ENTITY

8.2.1 OVERVIEW We are pleased to present our report for the financial year ended 31 March 2014 to the Eastern Cape Government

Fleet Management Services Trading Entity (the entity).

8.2.2 CHARTER The Audit Committee is guided by a detailed charter that is reviewed and approved by the Committee and Accounting

officer respectively.

The Committee has regulated its affairs in compliance with this charter and has endeavoured to discharge all its

responsibilities as contained therein.

8.2.3 PURPOSE The Committee has complied with its purpose and responsibilities that arise from the Public Finance Management Act

of 1999; Section 38 (1) and Treasury Regulations 3.1 and 19.

8.2.4 MEMBERSHIP The Committee consists of the members listed hereunder and are required to meet at least four times per annum as

per the approved Charter. During the financial year under review meetings were held as follows:

Name of members Attendance

Number of meetings period April 2013 to March 2014 6

M. du Toit BSocSc 6

J. Emslie (Chairperson) BCom CA(SA) 6

L. Mangquku BCom CA(SA) 6

8.2.5 EXTERNAL AUDIT During the year under review, the Auditor-General (AGSA) was invited to attend the meetings of the Audit Committee

and we note our appreciation to the AGSA for attending such meetings and for the positive interactions and

engagements between the parties.

We have reviewed the AGSA Strategic Audit Plan for the 2013/2014 financial year and have recommended approval of

their plan and budget to the Head of Department.

8.2.6 INTERNAL AUDIT During the previous financial year the committee recommended that the Trading Entity considers the lack of capacity

within its own internal audit unit and consider capacitating or outsourcing this function for the entity. During the year

under review the entity appointed an external firm for this function, however this only came into effect toward the

end of the financial year. Accordingly for the majority of the year under review the entity did not have an operational

internal audit unit and has similarly been detailed as such in the findings of the Auditor General.

8.2.7 INTERNAL CONTROL EFFECTIVENESS The committee per its charter is required to review the effectiveness of the internal control systems. Given the lack of

reliance that could be placed on internal audit the committee sought to address this deficiency through alternative

means. This included enhanced interrogation of reports presented by the management of the entity at the committee

meetings. These included:


Page 57

Interim and annual financial statements, Risk Management Reports, Audit Intervention Plan in response to audit

findings of the prior year and reports of the Auditor General. We further held interaction with the Auditor General

directly to establish risks identified in their own audit planning to use in our evaluations.

Based on our interaction with management on the presented reports and risk assessment, we conclude that the

design, implementation and effectiveness of the internal financial controls are not yet effective. The committee

recommended that the entity seek assistance in this regard and this has contributed to the appointment of specialists

to assist in policy and procedure development and implementation; preparation of the accounting records and the

annual financial statements. This appointment however did not achieve the desired results owing to limited

personnel within the entity to impart such skills to.

The entity has since enhanced its internal capacity and, together with policy and procedural recommendations and

the internal audit function, should continue to improve financial and internal controls to an acceptable level.

8.2.8 FINANCIAL REPORTING Annual Financial Statements

During the review process of the financial statements the committee:

• Reviewed the department’s compliance with accounting, legal and regulatory provisions;

• Reviewed the findings of the internal auditors and compilers of the financial information;

• Considered accounting treatments, significant or unusual transactions and accounting judgments and

considered the appropriateness of accounting policies and any changes made;

• Reviewed any new or proposed legislation that may have an impact on policies, the financial statements

and disclosure therein;

• Enquired from management about the completeness of the contingent liabilities and commitments;

• Made enquiries into the adequacy, reliability and completeness of supporting information as supporting

these financial statements

• During the audit process the committee met with management and external to ascertain progress on the

audit process;

• Made appropriate recommendations to the management regarding the corrective actions to be taken as

a consequence of audit findings;

Following an agreed process we recommended that the financial statements for the year ended 31 March 2014 be

submitted by management to the auditors for audit and thereafter become publicly disclosed.

Monthly reporting

For the year under review, the monthly reporting was not assessed by the committee to be in line with the

requirements of the Division of Revenue Act (DORA) and Treasury Regulations where applicable.

8.2.9 CORPORATE GOVERNANCE We are of the opinion that the entity continues to strive towards complying with sound principles of corporate

governance. Recommendations to improve and strengthen governance processes are made through the Audit

Committee processes as considered appropriate.

8.2.10 RISK MANAGEMENT The Department implemented a risk management strategy which includes a fraud prevention plan. A formal risk

assessment was undertaken for the entity for the year ending 31 March 2014. We were not satisfied that risks were

identified and managed to an acceptable level and recommendations have been made to management through the

Audit Committee processes for improvements. Management has acted upon these recommendations, including

revisiting the risk assessment process.


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8.2.11 CONCLUSION We concur with and accept the opinion of the AGSA on the financial statements of the entity for the year ended 31

March 2014.

8.2.12 APPRECIATION The Committee expresses its sincere appreciation to the Honourable MEC, Accounting Officer, Management, Internal

Audit and the AGSA for their co-operation in enabling the Committee to execute and fulfil its responsibilities.

Mr JJ Emslie CA(SA)

Chairperson of the Audit Committee

Date: 18 August 2014

HUMAN RESOURCE MANAGEMENTPART D


PART D: HUMAN RESOURCE MANAGEMENT

Page 60

1 Legislature that govern human resource management

The information provided in this part is prescribed by the Public Service Regulations (Chapter 1, Part III J.3 and J.4).

2 Introduction

The information provided in this Part of the Annual Report is for the Eastern Cape Department of Transport inclusive

of its Government Fleet Management Trading Entity.

• Overview of HR matters at the department

The HRM division operates in a highly regulated environment that seeks to ensure compliance with acts and

regulations. HRM division provides enabling business processes to the core function and our priorities

includes HR Provisioning, Condition of Services, Personnel Information Management and Employment

Relation within the department.

• Set HR priorities for the year under review and the impact of these priorities

To ensure compliance to acts and regulations, the division as a priority needs to build systems and ensure

internal controls are effective and implemented efficiently. The focus was to improved recruitment and

retention, enhanced document management, promote gender and disability representativeness, enhance

employer – employee relations and promote internal capacity building. All of these prioritise mentioned

above are very important in building and capacitating of employees within the department and their impact

has resulted in improved audit outcomes of the divisions and reduced risks associated with

maladministration and corruption.

• Workforce planning framework and key strategies to attract and recruit a skilled and capable

workforce

The department has an approved Recruitment and Selection policy to ensure that the department recruit

skilled and competent employees. The Retention policy is in a development phase and it will ensure that

strategies to ensure employees with valued or needed skills or experience in a scarce/ critical fields are

retained. This will also assist the department in reducing cost in recruitment and training of new employees.

The Human Resource Plan has been developed and it plans to ensure that the department has proper jobs

needed and when the recruitment will be done, what skills are needed, manage and develop employee

performance and manage information through a clear plan that is communicated to employees and owned

by all.

• Employee performance management framework

PMDS CONTRACTING 2013/14 SUBMISSION

The department of transport has been capacitating and guiding the employees through formulation of the PMDS

implementation circulated to all programs at the beginning of the financial year. All this done to improve

management of performance in the workplace and making sure that supervisors and employees take

responsibility for their own performance and achievement of the strategic goals of the department.

The department has not done well in complying with contracting cycle this financial year and this is tabled clearly

in the template attached. SMS are at the 57% and the other categories below are at 75%



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First quarter reviews are very low and there none for the SMS and that needs attention as back dating

assessments is not a true reflection of performance management .Reminders having been sent to program

managers to correct this picture.

o Departmental programs have started with 2013/14 evaluation assessments

o Two districts have finalized their assessments and submitted to Head office for approval

o Reminder memos to Programs have been written to those that have not started assessments.

o The PMDS implementation plan is included for your perusal



Page 62

3 Human Resource Oversight Statistics

The information provided in this section is for the Eastern Cape Department of Transport inclusive of its Government

Fleet Management Trading Entity.

3.1 Personnel related expenditure

Table 3.1.1 Personnel expenditure by programme for period 1 April 2013 and 31 March 2014

Programme Total Voted

Expenditure

(R'000)

Personnel

Expenditure

(R'000)

Training

Expenditure

(R'000)

Professional

and Special

Services

(R'000)

Personnel

Expenditure

as a % of

Total

Expenditure

Average

Personnel

Cost per

Employee

(R'000)

Administration 272,531 185,576 0 0 71.3 120

Transport Operation 945,144 76,423 0 0 8.3 49

Transport Regulation 266,236 194,505 0 0 75.3 125

Comm Based Prog 33,241 4,048 0 0 11.1 3

TOTAL 1,517,152 460,552 0 0 31 296

Table 3.1.2 Personnel costs by salary band for period 1 April 2013 and 31 March 2014

Salary Bands Compensation

of Employees

Cost including

Transfers

(R'000)

Percentage of

Total Personnel

Cost for

Department

Average

Compensation

Cost per

Employee (R)

Total Personnel

Cost for

Department

including

Goods and

Services (R'000)

Lower skilled (Levels 1-2) 5,162 1 109,830 495,550

Skilled (Levels 3-5) 37,691 7.6 168,263 495,550

Highly skilled production (Levels 6-8) 283,979 57.3 276,783 495,550

Highly skilled supervision (Levels 9-12) 112,772 22.8 498,991 495,550

Senior management (Levels 13-16) 30,127 6.1 886,088 495,550

Contract (Levels 1-2) 1,831 0.4 96,368 495,550

Contract (Levels 3-5) 355 0.1 177,500 495,550

Contract (Levels 6-8) 1,422 0.3 284,400 495,550

Contract (Levels 9-12) 1,687 0.3 421,750 495,550

Contract (Levels 13-16) 3,861 0.8 1,930,500 495,550

Abnormal Appointment 6,268 1.3 61,451 495,550

TOTAL 485155 97.9 286904 495550



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Table 3.1.3 Salaries, Overtime, Home Owners Allowance and Medical Aid by salary band

Salary bands Salarie

s

(R'000)

Salaries

as % of

Personn

el Cost

Overtim

e

(R'000)

Overtime

as % of

Personn

el Cost

HOA

(R'000

)

HOA as

% of

Personn

el Cost

Medic

al Ass.

(R'000)

Medical

Ass. as

% of

Personn

el Cost

Total

Personn

el Cost

per

Salary

Band

(R'000)

Lower skilled (Levels 1-2) 3366 65.1 13 0.3 484 9.4 575 11.1 5171

Skilled (Levels 3-5) 25023 66.2 920 2.4 2412 6.4 2954 7.8 37822

Highly skilled production (Levels

6-8)

184839 64.7 21086 7.4 10592 3.7 17879 6.3 285613

Highly skilled supervision (Levels

9-12)

84478 71 1832 1.5 1582 1.3 3369 2.8 118982

Senior management (Levels 13-16) 24930 77 0 0 232 0.7 377 1.2 32386

Contract (Levels 1-2) 1827 99.8 2 0.1 0 0 0 0 1831

Contract (Levels 3-5) 300 84.5 0 0 11 3.1 9 2.5 355

Contract (Levels 6-8) 1296 91.1 43 3 0 0 12 0.8 1422

Contract (Levels 9-12) 1482 84.5 0 0 0 0 0 0 1754

Contract (Levels 13-16) 3521 89.9 0 0 0 0 14 0.4 3915

Abnormal Appointment 5826 92.5 0 0 0 0 0 0 6297

TOTAL 336888 68 23896 4.8 15313 3.1 25189 5.1 495548



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3.2 Employment and Vacancies

Table 3.2.1 Employment and vacancies by programme as on 31 March 2014

Programme Number of Posts Number of Posts

Filled

Vacancy Rate Number of

Posts Filled

Additional to

the

Establishment

Administration 653 596 8.7 25

Transport Operation 257 240 6.6 1

Transport Regulation 725 696 4 1

Community Based Programme 10 10 0 0

TOTAL 1,645 1,542 6.3 27

Table 3.2.2 Employment and vacancies by salary band as on 31 March 2014

Salary Band Number of

Posts

Number of

Posts Filled

Vacancy Rate Number of

Posts Filled

Additional to

the

Establishment

Lower skilled (Levels 1-2), Permanent 73 65 11 2

Skilled (Levels 3-5), Permanent 230 215 6.5 0

Highly skilled production (Levels 6-8), Permanent 1,087 1,029 5.3 3

Highly skilled supervision (Levels 9-12), Permanent 214 195 8.9 15

Senior management (Levels 13-16), Permanent 32 29 9.4 3

Contract (Levels 1-2), Permanent 0 0 0 0





TOTAL 1,645 1,542 6.3 27

Table 3.2.3 Employment and vacancies by critical occupations on 31 March 2014

Critical Occupations Numbe

r of

Posts

Numbe

r of

Posts

Filled

Vacanc

y Rate

Number of

Posts Filled

Additional to

the

Establishmen

t

Administrative related, Permanent 110 98 10.9 19

Air traffic controllers, Permanent 5 5 0 0

Aircraft pilots & related associate professionals, Permanent 0 0 0 0

All artisans in the building metal machinery etc., Permanent 7 7 0 0

Architects town and traffic planners, Permanent 0 0 0 0

Bus and heavy vehicle drivers, Permanent 2 2 0 0

Cleaners in offices workshops hospitals etc., Permanent 99 88 11.1 2

Client inform clerks(switchb recept inform clerks), Permanent 3 3 0 0

Engineering sciences related, Permanent 1 0 100 0

Engineers and related professionals, Permanent 6 6 0 0

Finance and economics related, Permanent 17 16 5.9 0



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Financial and related professionals, Permanent 16 15 6.3 0

Financial clerks and credit controllers, Permanent 139 122 12.2 0

Fire fighting and related workers, Permanent 16 16 0 0

Head of department/chief executive officer, Permanent 3 3 0 0

Human resources & organisat developm & relate prof,

Permanent

14 13 7.1 0

Human resources clerks, Permanent 105 100 4.8 0

Human resources related, Permanent 26 26 0 0

Language practitioners interpreters & other commun,

Permanent

0 0 0 0

Legal related, Permanent 0 0 0 0

Library mail and related clerks, Permanent 82 76 7.3 0

Light vehicle drivers, Permanent 21 18 14.3 0

Logistical support personnel, Permanent 4 3 25 0

Material-recording and transport clerks, Permanent 145 138 4.8 1

Mathematicians and related professionals, Permanent 1 1 0 0

Messengers porters and deliverers, Permanent 2 2 0 0

Motor vehicle drivers, Permanent 1 1 0 0

Other administrat & related clerks and organisers, Permanent 111 99 10.8 1

Other administrative policy and related officers, Permanent 4 4 0 0

Other information technology personnel., Permanent 13 13 0 0

Other occupations, Permanent 5 5 0 0

Regulatory inspectors, Permanent 613 593 3.3 0

Risk management and security services, Permanent 3 3 0 0

Road workers, Permanent 0 0 0 0

Secretaries & other keyboard operating clerks, Permanent 38 36 5.3 0

Senior managers, Permanent 32 29 9.4 4

Social work and related professionals, Permanent 1 1 0 0

Trade labourers, Permanent 0 0 0 0

TOTAL 1645 1542 6.3 27

3.3 Filling of SMS Posts

Table 3.3.1 SMS post information as on 31 March 2014

SMS Level Total

number of

funded SMS

posts

Total

number of

funded SMS

Posts Filled

% of SMS

posts filled

Total

number of

SMS posts

vacant

% of SMS

posts

vacant

Director-General/Head of Department 1 1 100.0 0 0.0

Salary Level 16 0 0 0.0 0 0.0

Salary Level 15 1 0 0.0 1 100.0

Salary Level 14 5 5 100.0 0 0.0

Salary Level 13 27 24 88.9 3 11.1

TOTAL 34 30 88.2 4 11.8

Table 3.3.2 SMS post information as on 30 September 2013

SMS Level Total

number of

funded SMS

posts

Total

number of

funded SMS

Posts Filled

% of SMS

posts filled

Total

number of

SMS posts

vacant

% of SMS

posts

vacant



Page 66


Salary Level 16 0 0 0.0 0 0.0

Salary Level 15 1 1 100.0 0 0.0

Salary Level 14 5 5 100.0 0 0.0

Salary Level 13 27 24 88.9 3 11.1

TOTAL 34 31 91.2 3 8.8

Table 3.3.3 - Advertising and filling of SMS posts for the period 1 April 2013 and 31 March 2014

SMS Level Total

number of

funded SMS

posts

Total

number of

funded SMS

Posts Filled

% of SMS

posts filled

Total

number of

SMS posts

vacant

% of SMS

posts

vacant


Salary Level 16 0 0 0.0 0 0.0

Salary Level 15 0 0 0.0 0 0.0

Salary Level 14 0 0 0.0 0 0.0

Salary Level 13 0 0 0.0 0 0.0

TOTAL 0 0 0.0 0 100.0

Table 3.3.4 – Reasons for not having complied with the filling of funded vacant SMS – Advertised within 6 months and filled within 12 months after becoming vacant for the period 1 April 2013 and 31 March 2014

Reasons for vacancies not advertised within six months

Reasons for vacancies not filled within six months

Table 3.3.5 –Disciplinary steps taken for not complying with the prescribe timeframes for filling SMS within 12 months for the period 1 April 2013 and 31 March 2014

Reasons for vacancies not advertised within six months

Reasons for vacancies not filled within six months



Page 67

3.4 Job Evaluation

Table 3.4.1 Job Evaluation by Salary band for the period 1 April 2013 and 31 March 2014

Salary Band Numb

er of

Posts

Number

of Jobs

Evaluat

ed

% of

Posts

Evaluat

ed

Number

of Posts

Upgrad

ed

% of

Upgrad

ed

Posts

Evaluat

ed

Number of

Posts

Downgrad

ed

% of

Downgrad

ed Posts

Evaluated

Lower skilled (Levels 1-2) 73 0 0 0 0 0 0

Contract (Levels 1-2) 19 0 0 0 0 0 0

Contract (Levels 3-5) 232 0 0 0 0 0 0

Contract (Levels 6-8) 4 0 0 0 0 0 0

Contract (Levels 9-12) 0 0 0 0 0 0 0

Contract (Band A) 0 0 0 0 0 0 0

Contract (Band C) 1 0 0 0 0 0 0

Contract (Band D) 1 0 0 0 0 0 0

Skilled (Levels 3-5) 0 0 0 0 0 0 0

Highly skilled production (Levels

6-8)

1081 0 0 0 0 0 0

Highly skilled supervision

(Levels 9-12)

210 0 0 0 0 0 0

Senior Management Service

Band A

20 0 0 0 0 0 0


Band B

4 0 0 0 0 0 0


Band C

0 0 0 0 0 0 0

TOTAL 1645 0 0 0 0 0 0

Table 3.4.2 Profile of employees whose positions were upgraded due to their posts being upgraded for the

period 1 April 2013 and 31 March 2014

Beneficiaries African Asian Coloured White Total

Female 0 0 0 0 0

Male 0 0 0 0 0

Total 0 0 0 0 0

Employees with a Disability 0 0 0 0 0

Table 3.4.3 Employees whose salary level exceed the grade determined by Job Evaluation for the period 1

April 2013 and 31 March 2014

Occupation Number of

Employees

Job

Evaluation

Level

Remuneration

Level

Reason

for

Deviation

No of Employees in Dept

xxx 0 xxx xxx xxx

xxx 0 xxx xxx xxx

Total 0

Percentage of Total Employment 0 0



Page 68

Table 3.4.4 Profile of employees whose salary level exceeded the grade determined by job evaluation

Employees whose salary level exceed the grade determined by Job Evaluation for the period 1 April 2013

and 31 March 2014

Beneficiaries African Asian Coloured White Total

Female 0 0 0 0 0

Male 0 0 0 0 0

Total 0 0 0 0 0

Employees with a Disability 0 0 0 0 0

3.5 Employment Changes

Table 3.5.1 Annual turnover rates by salary band

Salary Band Employment

at Beginning

of Period

(April 2013)

Appointments Terminations Turnover

Rate

Lower skilled (Levels 1-2) 65 7 20 30.8

Skilled (Levels 3-5) 217 31 19 8.8

Highly skilled production (Levels 6-8) 1033 25 42 4.1

Highly skilled supervision (Levels 9-12) 197 0 13 6.6

Senior Management Service Band A 29 1 2 6.9

Senior Management Service Band B 1 0 1 100

Contract (Levels 1-2) 0 0 0 0




Contract (Band A) 0 0 0 0

Contract (Band C) 0 0 0 0

Contract (Band D) 0 0 0 0

TOTAL 1542 64 97 6.3

Table 3.5.2 Annual turnover rates by critical occupation

Occupation Employme

nt at

Beginning

of Period

(April

2013)

Appointmen

ts

Terminatio

ns

Turnov

er Rate

Administrative related 98 3 3 3.1

Air traffic controllers 5 0 0 0

Aircraft pilots & related associate professionals 0 0 0 0

All artisans in the building metal machinery etc. 7 0 0 0

Architects town and traffic planners 0 0 0 0

Building and other property caretakers 0 0 0 0

Bus and heavy vehicle drivers 2 0 0 0

Cleaners in offices workshops hospitals etc. 88 33 32 36.4

Client inform clerks(switchb recept inform

clerks)

3 0 0 0

Engineering sciences related 0 0 0 0



Page 69

Engineers and related professionals 6 0 0 0

Finance and economics related 16 0 0 0

Financial and related professionals 15 0 0 0

Financial clerks and credit controllers 122 7 6 4.9

Fire fighting and related workers 16 0 0 0

Head of department/chief executive officer 3 0 0 0

Human resources & organisat developm &

relate prof

13 1 1 7.7

Human resources clerks 100 2 3 3

Human resources related 26 0 1 3.8

Language practitioners interpreters & other

commun

0 0 0 0

Legal related 0 0 0 0

Library mail and related clerks 76 3 1 1.3

Light vehicle drivers 18 0 1 5.6

Logistical support personnel 3 0 3 100

Material-recording and transport clerks 138 7 5 3.6

Mathematicians and related professionals 1 0 0 0

Messengers porters and deliverers 2 0 1 50

Motor vehicle drivers 1 0 1 100

Other administrat & related clerks and

organisers

99 4 15 15.2

Other administrative policy and related officers 4 0 0 0

Other information technology personnel. 13 1 0 0

Other occupations 5 0 0 0

Regulatory inspectors 593 0 11 1.9

Risk management and security services 3 0 1 33.3

Road workers 0 0 0 0

Safety health and quality inspectors 0 0 0 0

Secretaries & other keyboard operating clerks 36 2 0 0

Senior managers 29 1 2 6.9

Social work and related professionals 1 0 1 100

Trade labourers 0 0 0 0

TOTAL 1542 64 88 5.7



Page 70

Table 3.5.3 Reasons why staff left the department

Termination Type Number Percentage of

Total

Resignations

Percentage of

Total

Employment

Death, Permanent 10 10.1 0.6

Resignation, Permanent 11 11.1 0.7

Expiry of contract, Permanent 21 21.2 1.3

Transfers, Permanent 1 1 0.1

Discharged due to ill health, Permanent 8 8.1 0.5

Dismissal-misconduct, Permanent 2 2 0.1

Retirement, Permanent 44 44.4 2.6

TOTAL 97 98 5.8

Resignations as % of Employment

5.7

Table 3.5.4 Promotions by critical occupation

Occupation Employme

nt at

Beginning

of Period

(April 2013)

Promotion

s to

another

Salary

Level

Salary

Level

Promotions

as a % of

Employme

nt

Progression

s to another

Notch within

Salary Level

Notch

progression

s as a % of

Employmen

t

Administrative related 98 10 10.2 55 56.1

Air traffic controllers 5 0 0 1 20

Aircraft pilots & related associate professionals 0 0 0 0 0

All artisans in the building metal machinery etc. 7 0 0 3 42.9

Architects town and traffic planners 0 0 0 1 0

Building and other property caretakers 0 0 0 0 0

Bus and heavy vehicle drivers 2 0 0 4 200

Cleaners in offices workshops hospitals etc. 88 0 0 55 62.5

Client inform clerks(switchb recept inform clerks) 3 0 0 2 66.7

Engineering sciences related 0 0 0 1 0

Engineers and related professionals 6 0 0 2 33.3

Finance and economics related 16 4 25 12 75

Financial and related professionals 15 1 6.7 3 20

Financial clerks and credit controllers 122 11 9 61 50

Fire fighting and related workers 16 0 0 9 56.3

Head of department/chief executive officer 3 0 0 2 66.7

Human resources & organisat developm & relate

prof

13 0 0 9 69.2

Human resources clerks 100 6 6 56 56

Human resources related 26 0 0 12 46.2

Language practitioners interpreters & other

commun

0 0 0 1 0

Legal related 0 0 0 0 0



Page 71

Library mail and related clerks 76 26 34.2 22 28.9

Light vehicle drivers 18 0 0 5 27.8

Logistical support personnel 3 0 0 11 366.7

Material-recording and transport clerks 138 12 8.7 47 34.1

Mathematician and other related 1 0 0 0 0

Messengers porters and deliverers 2 0 0 2 100

Motor vehicle drivers 1 0 0 4 400

Other administrat & related clerks and organisers 99 24 24.2 86 86.9

Other administrative policy and related officers 4 0 0 15 375

Other information technology personnel. 13 1 7.7 6 46.2

Other occupations 5 0 0 1 20

Regulatory inspectors 593 0 0 483 81.5

Risk management and security services 3 1 33.3 2 66.7

Road workers 0 0 0 1 0

Safety health and quality inspectors 0 0 0 0 0

Secretaries & other keyboard operating clerks 36 0 0 22 61.1

Senior managers 29 0 0 22 75.9

Social work and related professionals 1 0 0 0 0

Trade labourers 0 0 0 2 0

TOTAL 1542 96 6.2 1020 66.1

Table 3.4.5 Promotions by salary band

Salary Band Employmen

t at

Beginning

of Period

(April 2013)

Promotion

s to

another

Salary

Level

Salary

Level

Promotions

as a % of

Employmen

t

Progression

s to another

Notch within

Salary Level

Notch

progression

s as a % of

Employment

Lower skilled (Levels 1-2), Permanent 65 0 0 23 35.4

Skilled (Levels 3-5), Permanent 217 37 17.1 123 56.7

Highly skilled production (Levels 6-8),

Permanent

1033 50 4.8 737 71.3

Highly skilled supervision (Levels 9-12),

Permanent

197 17 8.6 99 50.3

Senior management (Levels 13-16), Permanent 30 0 0 36 120

Contract (Levels 1-2), Permanent 0 0 0 0 0





TOTAL 1542 104 6.7 1020 66.1

3.6 Employment and Equity

Table 3.6.1 Total number of employees (including employees with disabilities) in each of the following occupational

categories as at 31 March 2013



Page 72

Occupational Categories Male,

Afric

an

Male,

Colour

ed

Male

,

Indi

an

Male

,

Total

Blac

ks

Mal

e,

Whi

te

Fema

le,

Afric

an

Femal

e,

Colour

ed

Fema

le,

India

n

Fema

le,

Total

Black

s

Fema

le,

White

Tot

al

Legislators, senior officials and

managers, Permanent

0 0 0 0 0 0 0 0 0 0 0

Professionals, Permanent 31 2 0 33 3 54 0 0 54 1 91

Senior Officials 19 1 0

Technicians and associate professionals,

Permanent

97 8 0 106 4 79 3 0 82 2 193

Clerks, Permanent 152 9 1 165 8 323 15 0 338 18 526

Service and sales workers, Permanent 337 79 1 417 14 149 19 1 169 2 602

Craft and related trades workers,

Permanent

8 0 0 8 0 0 0 0 0 0 8

Labourers and related proffessionals 38 1

Plant and machine operators and

assemblers, Permanent

23 0 0 22 0 2 0 0 2 0 25

Elementary occupations, Permanent 0 0 0 44 0 69 1 0 70 0 70

TOTAL 705 100 2 795 29 676 38 1 715 23 157

4

Male,

Afric

an

Male,

Colour

ed

Male

,

Indi

an

Male

,

Tota

l

Blac

ks

Mal

e,

Whi

te

Fema

le,

Afric

an

Femal

e,

Colour

ed

Fema

le,

India

n

Fema

le,

Total

Black

s

Fema

le,

Whit

e

Tot

al

Employees with disabilities 2 0 0 2 0 7 0 0 7 0 9

Table 3.5.2 Total number of employees (including employees with disabilities) in each of the following occupational

bands on 31 March 2013

Occupational Bands Mal

e,

Afri

can

Male

,

Colo

ured

Ma

le,

Ind

ian

Mal

e,

Tot

al

Bla

cks

Ma

le,

W

hit

e

Fe

mal

e,

Afri

can

Fem

ale,

Colo

ured

Fe

mal

e,

Indi

an

Fe

mal

e,

Tot

al

Bla

cks

Fe

mal

e,

Whi

te

To

tal

Senior Management, Permanent 19 2 0 21 6 6 0 1 7 0 34

Professionally qualified and experienced specialists and

mid-management, Permanent

93 6 0 123 4 94 3 0 97 2 20

2

Skilled technical and academically qualified workers,

junior management, supervisors, foremen, Permanent

484 87 2 546 22 406 31 1 438 20 10

53

Semi-skilled and discretionary decision making,

Permanent

98 5 0 103 0 117 3 0 120 1 22

4

Unskilled and defined decision making, Permanent 1 0 0 11 0 35 1 0 36 0 37

Contract (Top Management), Permanent 11 0 0 0 0 1 0 0 1 0 12

Contract (Senior Management), Permanent 0 0 0 1 0 0 0 0 0 0 0

Contract (Professionally qualified), Permanent 0 0 0 3 0 1 0 0 1 0 1

Contract (Skilled technical), Permanent 0 0 0 1 0 4 0 0 4 0 4



Page 73

Contract (Semi-skilled), Permanent 0 0 0 1 0 1 0 0 1 0 1

Contract (Unskilled), Permanent 0 0 0 5 0 14 0 0 14 0 14

TOTAL 706 100 2 815 32 679 38 2 719 23 15

82

Table 3.5.3 Recruitment


e,

Afri

can

Male

,

Colo

ured

Ma

le,

Ind

ian

Mal

e,

Tot

al

Bla

cks

Ma

le,

W

hit

e

Fe

mal

e,

Afri

can

Fem

ale,

Colo

ured

Fe

mal

e,

Indi

an

Fe

mal

e,

Tot

al

Bla

cks

Fe

mal

e,

Whi

te

To

tal



junior management, supervisors, foremen, Permanent

3 0 0 3 0 5 0 0 5 0 8


Permanent

1 1 0 2 0 11 0 0 11 0 13



TOTAL 6 1 0 7 0 26 0 0 26 0 33

Table 3.5.4 Promotions

Occupational Bands Male,

African

Male,

Coloured

Male,

Indian

Male,

Total

Blacks

Male,

White

Female,

African

Female,

Coloured

Female,

Indian

Female,

Total

Blacks

Female,

White

Total


Professionally qualified and experienced specialists and mid-management, Permanent 58 2 0 60 3 50 1 0 51 2 116

Skilled technical and academically qualified workers, junior management, supervisors, foremen, Permanent 350 74 1 425 15 294 22 1 317 9 766

Semi-skilled and discretionary decision making, Permanent 65 2 0 67 0 54 1 0 55 1 123


Contract (Skilled technical), Permanent 1 0 0 1 0 1 0 0 1 0 2

TOTAL 492 80 1 573 27 426 25 3 454 12 1066

Male,

African

Male,

Coloured

Male,

Indian

Male,

Total

Blacks

Male,

White

Female,

African

Female,

Coloured

Female,

Indian

Female,

Total

Blacks

Female,

White

Total

Employees with disabilities 1 0 0 1 0 4 0 0 4 0 5



Page 74

Table 3.5.5 Terminations


e,

Afr

ica

n

Mal

e,

Col

oure

d

Ma

le,

In

dia

n

Ma

le,

Tot

al

Bla

ck

s

M

al

e,

W

hit

e

Fe

mal

e,

Afri

can

Fem

ale,

Col

oure

d

Fe

mal

e,

Indi

an

Fe

mal

e,

Tot

al

Bla

cks

Fe

mal

e,

Whi

te

T

ot

al


Professionally qualified and experienced specialists

and mid-management, Permanent

9 0 0 9 0 3 0 0 3 0 12


junior management, supervisors, foremen,

Permanent

21 2 0 23 0 21 0 0 21 0 44


Permanent

7 1 0 8 1 10 0 0 10 0 19


Contract (Top Management), Permanent 1 0 0 1 0 0 0 0 0 0 1



TOTAL 44 3 1 48 1 49 0 0 49 1 99

3.7 Performance Rewards

Table 3.7.1 Performance Rewards by race, gender and disability

Demographics Number of

Beneficiaries

Total

Employment

Percentage of

Total

Employment

Cost (R'000) Average Cost

per

Beneficiary

(R)

African, Female 60 672 8.9 866 14,425

African, Male 58 711 8.2 875 15,094

Asian, Female 0 2 0 0 0

Asian, Male 0 2 0 0 0

Coloured, Female 4 38 10.5 65 16,176

Coloured, Male 4 100 4 30 7,502

Total Blacks, Female 64 712 9 930 14,535

Total Blacks, Male 62 813 7.6 905 14,604

White, Female 3 23 13 28 9,398

White, Male 5 32 15.6 61 12,193

Employees with a disability 3 9 33.3 68 22,794

TOTAL 137 1589 8.6 1,993 14,549



Page 75

Table 3.7.2 Performance Rewards by salary band for personnel below Senior Management Service,

Salary Band Number of

Beneficiaries

Total

Employment

Percentage of

Total

Employment


per Beneficiary

(R)

Lower skilled (Levels 1-2) 6 47 12.8 27 4,500

Skilled (Levels 3-5) 9 224 4 72 8,000

Highly skilled production (Levels 6-8) 95 1026 9.3 1,069 11,253

Highly skilled supervision (Levels 9-12) 22 226 9.7 651 29,591

Contract (Levels 1-2) 0 19 0 0 0




Abnormal Appointment 0 102 0 0 0

TOTAL 132 1655 8 1819 13780

Table 3.7.3 Performance Rewards by critical occupation

Critical Occupations Number of

Beneficiaries

Total

Employment

Percentage

of Total

Employment


per

Beneficiary

(R)

Administrative related 17 150 11.3 499 29,353

Air traffic controllers 0 6 0 0 0

Aircraft pilots & related associate professionals 0 1 0 0 0

All artisans in the building metal machinery etc. 0 8 0 0 0

Architects town and traffic planners 1 2 50 56 56,000

Bus and heavy vehicle drivers 0 7 0 0 0

Cleaners in offices workshops hospitals etc. 8 103 7.8 39 4,875

Client inform clerks(switchb recept inform clerks) 0 3 0 0 0

Engineering sciences related 0 1 0 0 0

Engineers and related professionals 0 3 0 0 0

Finance and economics related 1 19 5.3 28 28,000

Financial and related professionals 0 10 0 0 0

Financial clerks and credit controllers 13 114 11.4 170 13,077

Fire fighting and related workers 1 16 6.3 16 16,000

Head of department/chief executive officer 0 2 0 0 0

Human resources & organisat developm & relate prof 2 20 10 49 24,500

Human resources clerks 7 97 7.2 98 14,000

Human resources related 2 19 10.5 78 39,000

Language practitioners interpreters & other commun 0 1 0 0 0

Legal related 0 3 0 0 0

Library mail and related clerks 3 56 5.4 31 10,333

Light vehicle drivers 1 13 7.7 6 6,000

Logistical support personnel 0 11 0 0 0

Material-recording and transport clerks 6 88 6.8 54 9,000

Messengers porters and deliverers 0 4 0 0 0

Motor vehicle drivers 0 4 0 0 0

Other administrat & related clerks and organisers 7 129 5.4 81 11,571

Other administrative policy and related officers 4 32 12.5 99 24,750

Other information technology personnel. 1 12 8.3 15 15,000



Page 76

Other occupations 0 2 0 0 0

Regulatory inspectors 54 577 9.4 525 9,722

Risk management and security services 0 3 0 0 0

Road workers 0 3 0 0 0

Secretaries & other keyboard operating clerks 7 42 16.7 67 9,571

Senior managers 2 25 8 83 41,500

Social work and related professionals 0 1 0 0 0

Trade labourers 0 2 0 0 0

TOTAL 137 1589 8.6 1994 14555

Table 3.7.4 Performance related rewards (cash bonus), by salary band for Senior Management Service

SMS Band Number of

Beneficiaries

Total

Employment

Percentage

of Total

Employment

Cost

(R'000)

Average

Cost per

Beneficiary

(R)

% of SMS

Wage Bill

Personnel

Cost SMS

(R'000)

Band A 3 27 11.1 87 29,000 0.4 24,225

Band B 2 8 25 88 44,000 1 9,121

Band D 0 1 0 0 0 0 0

TOTAL 5 36 13.9 175 35000 0.5 33346



Page 77

3.8 Foreign Workers

There are currently no foreign workers employed by the Department.

3.9 Leave utilisation

Table 3.8.1 Sick leave

Salary Band Total

Days

% Days

with

Medical

Certificatio

n

Number

of

Employee

s using

Sick

Leave

% of Total

Employee

s using

Sick

Leave

Average

Days per

Employe

e

Estimate

d Cost

(R'000)

Total

number

of

Employee

s using

Sick

Leave

Total

number of

days with

medical

certificatio

n

Lower skilled (Levels 1-2) 308 74 40 2.8 8 85 1452 228

Skilled (Levels 3-5) 2184 79.5 211 14.5 10 859 1452 1737

Highly skilled production (Levels 6-

8)

9646 80.6 961 66.2 10 6,334 1452 7771

Highly skilled supervision (Levels

9-12)

1785 83.5 196 13.5 9 2,574 1452 1490

Senior management (Levels 13-16) 228 86.8 28 1.9 8 717 1452 198

Contract (Levels 1-2) 27 59.3 10 0.7 3 7 1452 16

Contract (Levels 3-5) 4 75 1 0.1 4 2 1452 3

Contract (Levels 6-8) 8 0 2 0.1 4 4 1452 0

Contract (Levels 9-12) 12 100 2 0.1 6 27 1452 12

Contract (Levels 13-16) 5 100 1 0.1 5 23 1452 5

TOTAL 1420

7

80.7 1452 100 10 10632 1452 11460

Table 3.8.2 Disability leave (temporary and permanent)

Salary Band Tota

l

Day

s

% Days

with

Medical

Certificatio

n

Number

of

Employee

s using

Disability

Leave

% of Total

Employee

s using

Disability

Leave

Average

Days per

Employe

e

Estimate

d Cost

(R'000)

Total

number of

days with

medical

certificatio

n

Total

number

of

Employee

s using

Disability

Leave

Skilled (Levels 3-5) 260 100 3 15 87 84 260 20

Highly skilled production (Levels 6-

8)

617 100 14 70 44 453 617 20

Highly skilled supervision (Levels 9-

12)

71 100 2 10 36 143 71 20

Contract (Levels 9-12) 23 100 1 5 23 53 23 20

TOTAL 971 100 20 100 49 733 971 20



Page 78

Table 3.8.3 Annual Leave

Salary Band Total Days Taken Average days per

Employee

Number of

Employees who

took leave

Lower skilled (Levels 1-2) 805 17 47

Skilled (Levels 3-5) 5449 22 245

Highly skilled production (Levels 6-8) 25222 23 1105

Highly skilled supervision (Levels 9-12) 6018 26 235

Senior management (Levels 13-16) 731 22 34

Contract (Levels 1-2) 126 7 18





TOTAL 38542 23 1696

Table 3.8.4 Capped leave

Salary Band Total days

of capped

leave

taken

Average

number of

days taken

per

employee

Average

capped

leave per

employee

as at 31

December

2013

Number of

Employees

who took

Capped

leave

Total

number of

capped

leave

available

at 31

December

2013

Number of

Employees

as at 31

December

2013

Skilled (Levels 3-5) 128 21 95 6 8983 95

Highly skilled production (Levels 6-8) 307 13 143 23 56698 397

Highly skilled supervision (Levels 9-12) 41 5 162 8 26058 161

TOTAL 476 13 140 37 91739 653

Table 3.8.5 Leave payouts

Reason Total

Amount

(R'000)

Number of

Employees

Average

Payment

per

Employee

(R)

Leave payout for 2013/14 due to non-utilisation of leave for the previous cycle 27 1 27000

Capped leave payouts on termination of service for 2013/14 9,320 69 135072

Current leave payout on termination of service for 2013/14 157 8 19625

TOTAL 9504 78 121846



Page 79

3.10 HIV/AIDS & Health Promotion Programmes

Table 3.9.1 - Steps taken to reduce the risk of occupational exposure

Units/categories of employees identified to be at high risk of contracting HIV & related diseases (if any)

Key steps taken to reduce the risk

Traffic Officers Reduced vulnerability to HIV/AIDS infections(Condom distribution)

Launch of HCT campaign

Conduct HIV/AIDS behaviour change communication sessions

Distribution of protective clothing & first aid kid

Table 3.9.2 - Details of Health Promotion and HIV/AIDS Programmes [tick the applicable boxes and provide required

information]

Question Yes No Details, if yes

1. Has the department designated a member of the SMS to implement the provisions contained in Part VI E of Chapter 1 of the Public Service Regulations, 2001? If so, provide her/his name and position.

Mr. M. Tokota: Senior Manager: Human Resource Management

2. Does the department have a dedicated unit or have you designated specific staff members to promote health and wellbeing of your employees? If so, indicate the number of employees who are involved in this task and the annual budget that is available for this purpose.

• Wellness unit has been established with 4 staff members at Head Office • 3 Districts also have appointed Wellness Assistant Manager • Programme budget = R840 000 without salaries (2013/14)

3. Has the department introduced an Employee Assistance or Health Promotion Programme for your employees? If so, indicate the key elements/services of the programme.

This key elements are: • Individual Wellness (Physical Wellness) • Individual Wellness(Psycho – Social Issues, Economical, Spiritual, Intellectual and Financial/Economical Wellness) • Organizational Wellness • Work life Balance

4. Has the department established (a) committee(s) as contemplated in Part VI E.5 (e) of Chapter 1 of the Public Service Regulations, 2001? If so, please provide the names of the members of the committee and the stakeholder(s) that they represent.

NB The committee has been disbanded but the following officials are performing the duties of wellness • Wellness Manager- Ms Magwebu • EAP- Mrs Mntambo • Chief EAP practitioners- Mrs Nyaniso • HIV/AIDS- Mr Ntshuntshe • Wellness Assistant Managers from all districts The unit is assisted by Union Members from NEHAWU, PSA to provider a labour perspective on the programme.

5. Has the department reviewed the employment policies and practices of your department to ensure that these do not unfairly discriminate against employees on the basis of their HIV status? If so, list the employment policies/practices so reviewed.

• Employment Equity plan • Integrated wellness policy • Leave policy • Discipline Management policy

6. Has the department introduced measures to protect HIV-positive employees or those perceived to be HIV-positive from discrimination? If so, list the key elements of these measures.

Current measures are : • Human rights and access to justice advocacy. • Mainstreaming of HIV/AIDS & TB in the departmental strategic plan and HR policies.

7. Does the department encourage its employees to undergo Voluntary Counselling and Testing? If so, list the results that you have achieved.

Coordinate HIV and AIDS,TB testing

8. Has the department developed measures/indicators to monitor & evaluate the impact of your health promotion programme? If so, list these measures/indicators.

• GEMS medical screenings assists in continuous assessment of health status of employees

3.11 Labour Relations

Table 3.10.1 Collective agreements

Subject Matter Date

NONE

FINANCIAL INFORMATIONPART E


PART E: FINANCIAL INFORMATION

Page 81

1 REPORT OF THE AUDITOR-GENERAL

REPORT OF THE AUDITOR-GENERAL TO THE EASTERN CAPE PROVINCIAL LEGISLATURE ON VOTE NO. 10: DEPARTMENT

OF TRANSPORT

REPORT ON THE FINANCIAL STATEMENTS

Introduction

1. I have audited the financial statements of the Eastern Cape Department of Transport set out on pages 85 to 133Error! Bookmark not defined., which comprise the appropriation statement, the statement of financial position as at 31 March 2014, the statement of financial performance, statement of changes in net assets and cash flow statement for the year then ended, as well as the notes, comprising a summary of significant accounting policies and other explanatory information.

Accounting officer’s responsibility for the financial statements

2. The accounting officer is responsible for the preparation and fair presentation of these financial statements in accordance with the Modified Cash Standard (MCS) prescribed by the National Treasury and the requirements of the Public Finance Management Act, 1999 (Act No 1 of 1999)(PFMA) and the Division of Revenue Act 2013, (Act No 2 of 2013) (DoRA) and for such internal control as the accounting officer determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor-general’s responsibility

3. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA), the general notice issued in terms thereof and International Standards on Auditing. Those standards require that I comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

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

Opinion

6. In my opinion, the financial statements present fairly, in all material respects, the financial position of the Eastern Cape Department of Transport as at 31 March 2014 and its financial performance and cash flows for the year then ended, in accordance with the Modified Cash Standard prescribed by National Treasury and the requirements of the PFMA.

Emphasis of matter

7. I draw attention to the matter below. My opinion is not modified in respect of this matter.

Restatement of comparative figures

8. As disclosed in note 10.4 to the annual financial statements, the department reclassified expenditure previously recognised as irregular expenditure to unauthorised expenditure due to additional clarity provided by Provincial Treasury.

9. The department was provided with an exemption in the prior year relating to the recognition of accrued department



Page 82

revenue. Due to changes in the accounting standards, certain balances affected by the prior year exemption are not required to be disclosed in the current year financial statements. Details of these items are provided in note 25 to the financial statements.

Irregular expenditure

10. As disclosed in note 26 to the financial statements, irregular expenditure amounting to R26.5 million was incurred by the department during the year ended 31 March 2014. The department received goods and services for these payments.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

11. In accordance with the PAA and the general notice issued in terms thereof, I report the following findings on the reported performance information against predetermined objectives for selected programmes presented in the annual performance report, non-compliance with legislation as well as internal control. The objective of my tests was to identify reportable findings as described under each subheading but not to gather evidence to express assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters.

Predetermined objectives

12. I performed procedures to obtain evidence about the usefulness and reliability of the reported performance information for the following selected programme presented in the annual performance report of the department for the year ended 31 March 2014:

Programme 2: Transport Operations on pages x to x

13. I evaluated the reported performance information against the overall criteria of usefulness and reliability.

14. I evaluated the usefulness of the reported performance information to determine whether it was presented in accordance with the National Treasury’s annual reporting principles and whether the reported performance was consistent with the planned programme. I further performed tests to determine whether indicators and targets were well defined, verifiable, specific, measurable, time bound and relevant, as required by the National Treasury’s Framework for managing programme performance information (FMPPI).

15. I assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.

16. The material findings in respect of the selected programme are as follows:

Programme 2: Transport Operations

Usefulness of reported performance information

17. I did not raise any material findings on the usefulness of the reported performance information for Programme 2: Transport Operations.

Reliability of reported performance information

18. The FMPPI requires auditees to have appropriate systems to collect, collate, verify and store performance information to ensure valid, accurate and complete reporting of actual achievements against planned objectives, indicators and targets. Significantly important targets were not reliable when compared to the source information or evidence provided. This was due to a lack of documented system descriptions for the accurate recording of actual achievements and technical indicator descriptions for the accurate measurement, recording and monitoring of performance, monitoring of the completeness of source documentation in support of actual achievements and frequent review of the validity of reported achievements against source documentation.



Page 83

Additional matters

19. I draw attention to the following matters:

Achievement of planned targets

20. Refer to the annual performance report on pages xx to xx for information on the achievement of the planned targets for the year. This information should be considered in the context of the material findings on the reliability of the reported performance information for the selected programme reported in paragraph 17 of this report.

Sector findings

21. Reporting processes relating to key performance indicators and targets have not been established to facilitate performance measurement of the Learner Transport System and contractors.

Compliance with legislation

22. I performed procedures to obtain evidence that the department had complied with applicable legislation regarding financial matters, financial management and other related matters. My findings on material non-compliance with specific matters in key legislation, as set out in the general notice issued in terms of the PAA, are as follows:

Internal audit

23. The internal audit function did not submit reports, detailing the performance against the annual internal audit plan, to the audit committee for the first two quarters of 2013/14, as required by Treasury Regulation (TR) 3.2.7(d).

24. The internal audit function did not assess the operational procedure and monitoring mechanisms over all transfers made and received, including transfers in terms of the annual DoRA, as required by TR 3.2.8.

Expenditure management

25. Effective steps were not taken to prevent irregular expenditure, as required by section 38(1)(c)(ii) of the PFMA and TR 9.1.1.

Internal control

26. I considered internal control relevant to my audit of the financial statements, annual performance report and compliance with legislation. The matters reported below are limited to the significant internal control deficiencies that resulted in the findings on the annual performance report and the findings on non-compliance with legislation included in this report.

Leadership

27. The audit intervention plan in place was not adequate in ensuring that prior year shortfalls on performance information were adequately addressed as the relevant actions were not implemented satisfactorily and there was a lack of monitoring to ensure that the actions were fully implemented.

28. Actions taken by leadership to address prior year findings were not taken timeously, resulting in certain repeat non-compliance items in the current year.

Financial and performance management

29. The monitoring and evaluation unit does not review, scrutinise and verify the supporting evidence for each target reported in the annual performance report so as to identify errors in the reported information. In addition, junior staff members did not always understand the applicable performance information reporting requirements which resulted in the submission of inappropriate supporting documentation for audit purposes. Consequently, misstatements were identified when the reported information was compared to the source documentation.

30. The systems and controls in place at the department were not effective to prevent irregular expenditure from being incurred. This was as a result of non-compliance with procurement requirements relating to contracts issued in prior years but which are still active in the current year, as well as the incorrect upgrading of traffic officers’ posts in prior years.



Page 84

Governance

31. All material non-compliance relating to internal audit occurred during the first six months of the 2013/14 financial year. This was due to poor leadership within the unit which resulted in internal audit not fulfilling their mandated responsibilities.

OTHER REPORTS

Performance audits

32. A performance audit on the use of consultants was conducted at the then Department of Roads and Transport during the 2011/12 financial year and will be tabled during 2014. The audit focused on the economic, efficient and effective use of consultants at the provincial department.

East London

30 July 2014

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70


PART E: FINANCIAL INFORMATION Notes to the Appropriation Statement

Page 96

Notes to the Appropriation Statement

1. Detail of transfers and subsidies as per Appropriation Act (after Virement):

Detail of these transactions can be viewed in the note on Transfers and subsidies, disclosure notes and Annexure 1 (A-C) to

the Annual Financial Statements.

2. Detail of specifically and exclusively appropriated amounts voted (after Virement):

Detail of these transactions can be viewed in note 1 (Annual Appropriation) to the Annual Financial Statements.

3. Detail on payments for financial assets

Detail of these transactions per programme can be viewed in the note on Payments for financial assets to the Annual Financial

Statements.

4. Explanations of material variances from Amounts Voted (after Virement):

4.1 Per programme Final

Appropriation

Actual

Expenditure

Variance

R’000

Variance as a

% of Final

Appropriation

Administration 288,374 272,531 15,843 5.5%

Explanation of variance: The variance is due to delay in filing of critical vacant funded and replacements posts.

Transport Operation 950,324 945 145 5,179 0.5%

Explanation of variance: The variance is due to the fact that part of accruals for AB350 were paid in the last BAS run of

2012/13 financial year. Funds were provided for those in 2013/14 financial year hence the under spending.

Transport Regulation 289,728 266,236 23,492 8.1%

Explanation of variance: Variance is due to the implementation of resolution 14 which has reduced the overtime usually

worked by traffic officers. In goods and services the variance is due to delay in tender for push to talk units for traffic

officers.

Community Based Programme 41,017 33,241 7,776 10.9%

Explanation of variance: The variance is due to delay in training the beneficiaries of EPWP projects. Also the delay in

implementation of monitoring software contributed to the under spending.

4.2 Per economic classification Final

Appropriation

Actual

Expenditure

Variance Variance as a

% of Final

Appropriation

R’000 R’000 R’000 %

Current payments

Compensation of employees 488,071 460,552 27,519 5.6

Goods and services 570,553 550,759 19,774 3.5

Interest and rent on land 288 (288)

Transfers and subsidies

Departmental Agencies and

accounts

1,235 1,235 -

Public corporations and private

enterprises

408,562 404,068 4,494 1.1

Households 11,005 10,163 842 7.7

Gift and donations 100 100 -

Explanation of variance: The variance on Compensation of employees is due to delay in filling of critical vacant funded and

replacement posts. The implementation of resolution 14 which reduced the overtime normally worked by traffic officers also

affected compensation of employees.


PART E: FINANCIAL INFORMATION Notes to the Appropriation Statement

Page 97

Goods and services underspending is due to the delay in tenders for “push to talks” units for traffic officers. The delay in

training the beneficiaries of EPWP projects and delay in implementation of monitoring software contributed to the

underspending.

In public corporations, the appropriation for transfers and subsidies included some expected accruals for AB350 for the

2012/13 year, which were paid in the last BAS run of 2012/13 financial year and contributed to the underspending in transfers

and subsidies.

4.3 Per conditional grant Final

Appropriation

Actual

Expenditure

Variance Variance as a

% of Final

Appropriation

R’000 R’000 R’000 % EPWP Inter Grnt Prov 3,845 3,264 581 15.1

Public Transport Operations Grant 183,960 183,956 4 -

Explanation of variance: The variance is due to the delay in transfer payment of Incentive Grant by National as it was only

transferred towards the end of August 2013.


PART E: FINANCIAL INFORMATION Statement of Financial Performance

Page 98

Statement of Financial Performance

Note 2013/14 2012/13

R'000 R'000

REVENUE

Annual appropriation 1 1,569,443 1,486,683

Departmental revenue 2 166,130 -

Aid assistance 3 - 105

TOTAL REVENUE 1,735,573 1,486,788

EXPENDITURE

Current expenditure

Compensation of employees 4 460,552 455,677

Goods and services 5 550,759 594,930

Interest and rent on land 6 288 117

Aid assistance 3 229 1,861

Total current expenditure 1,011,828 1,052,585

Transfers and subsidies

Transfers and subsidies 8 415,566 337,001

Total transfers and subsidies 415,566 337,001

Expenditure for capital assets

Tangible assets 9 89,675 64,745

Intangible assets 9 - -

Total expenditure for capital assets 89,675 64,745

Payments for financial assets 7 312 1

TOTAL EXPENDITURE 1,517,381 1,454,332

SURPLUS FOR THE YEAR 218,192 32,456

Reconciliation of Net Surplus for the year

Voted funds 52,291 34,212

Annual appropriation 51,706 34,202

Conditional grants 585 10

Departmental revenue and NRF Receipts 16 166 130 -

Aid assistance 3 (229) (1,756)

SURPLUS FOR THE YEAR 218,192 32,456


PART E: FINANCIAL INFORMATION Statement of Financial Position

Page 99

Statement of Financial Position

Note 2013/14 2012/13

R'000 R'000

ASSETS

Current assets 72,891 16,873

Unauthorised expenditure 10 9,421 9,421

Cash and cash equivalents 11 57,472 4,994

Prepayments 12 3,281 -

Receivables 13 2,717 2,458

Non-current assets 510,373 482,373

Investments 14 510,373 482,373

TOTAL ASSETS 583,264 499,246

LIABILITIES

Current liabilities 72,158 16,045

Voted funds to be surrendered to the Revenue Fund 15 61,712 2,077

Departmental revenue and NRF Receipts to be surrendered to the

Revenue Fund 16 8 520 12,272

Payables 17 1,637 1,178

Aid assistance unutilised 3 289 518

TOTAL LIABILITIES 72,158 16,045

NET ASSETS 511,106 483,201

Note 2013/14 2012/13

R'000 R'000

Represented by:

Capitalisation reserve 510,373 482,373

Recoverable revenue 733 828

TOTAL 511,106 483,201


PART E: FINANCIAL INFORMATION Statement of Changes in Net Assets

Page 100

Statement of Changes in Net Assets

Note 2013/14 2012/13

R'000 R'000

Capitalisation Reserves

Opening balance 482,373 418,763

Transfers:

Movement in Equity 28,000 63,610

Closing balance 510,373 482,373

Recoverable revenue

Opening balance 828 320

Transfers: (95) 508

Irrecoverable amounts written off 7.1 (312) (1)

Debts recovered (included in departmental receipts) 29 112

Debts raised 188 397

Closing balance 733 828

TOTAL 511,106 483,201


PART E: FINANCIAL INFORMATION Cash Flow Statements

Page 101

Cash Flow Statements

Note 2013/14 2012/13

R'000 R’000

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts 2,169,058 1,832,774

Annual appropriated funds received 1.1 1,569,443 1,445,127

Departmental revenue received 2 599,588 387,529

Interest received 2.3 27 13

Aid assistance received 3 - 105

Net increase in working capital (3,081) (11,045)

Surrendered to Revenue Fund (596,023) (392,685)

Current payments (1,012,118) (1,052,702)

Interest paid 7 288 117

Payments for financial assets (312) (1)

Transfers and subsidies paid (415,566) (337,001)

Net cash flow available from operating activities 18 142,248 39,457

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for capital assets 9 (89,675) (64,745)

Increase in investments 14 (28,000) (63,610)

Net cash flows from investing activities (117,675) (128,355)

CASH FLOWS FROM FINANCING ACTIVITIES

Distribution/dividend received

Increase in net assets 27,905 64,118

Net cash flows from financing activities 27,905 64,118

Net increase/(decrease) in cash and cash equivalents 52,478 (24,780)

Cash and cash equivalents at beginning of period 4,994 29,774

Cash and cash equivalents at end of period 19 57,472 4,994


PART E: FINANCIAL INFORMATION Accounting Policies

Page 102

Accounting Policies

Summary of significant accounting policies

The financial statements have been prepared in accordance with the following policies, which have been applied consistently in all material aspects, unless otherwise indicated.

The historical cost convention has been used, except where otherwise indicated. Management has used assessments and estimates in preparing the annual financial statements. These are based on the best information available at the time of preparation.

Where appropriate and meaningful, additional information has been disclosed to enhance the usefulness of the financial

statements and to comply with the statutory requirements of the Public Finance Management Act (PFMA), Act 1 of 1999

(as amended by Act 29 of 1999), and the Treasury Regulations issued in terms of the PFMA and the annual Division of

Revenue Act.

1 Basis of preparation

The financial statements have been prepared in accordance with the Modified Cash Standard.

Comparative figures are consistent with prior years, except where reclassifications were made due to the update

of the Standard Chart of Accounts (SCOA) in 2013/14.

2 Going concern

The financial statements have been prepared on a going concern basis.

3 Presentation currency

Amounts have been presented in the currency of the South African Rand (R) which is also the functional currency

of the department.

4 Rounding

Unless otherwise stated financial figures have been rounded to the nearest one thousand Rand (R’000).

5 Foreign currency translation

Cash flows arising from foreign currency transactions are translated into South African Rands using the exchange

rates prevailing at the date of payment / receipt.

6 Current year comparison with budget

A comparison between the approved, final budget and actual amounts for each programme and economic

classification is included in the appropriation statement.

7 Revenue

7.1 Appropriated funds

Appropriated funds comprises of departmental allocations as well as direct charges against the revenue fund (i.e.

statutory appropriation).

Appropriated funds are recognised in the statement of financial performance on the date the appropriation

becomes effective. Adjustments made in terms of the adjustments budget process are recognised in the

statement of financial performance on the date the adjustments become effective.

The net amount of any appropriated funds due to / from the provincial revenue fund at the reporting date is

recognised as a payable / receivable in the statement of financial position.

7.2 Departmental revenue

Departmental revenue is recognised in the statement of financial performance when received and is subsequently

paid into the provincial revenue fund, unless stated otherwise.

Any amount owing to the provincial revenue fund at the reporting date is recognised as a payable in the statement

of financial position.



Page 103

7.3 Accrued departmental revenue

Accruals in respect of departmental revenue (excluding tax revenue) are recorded in the notes to the financial

statements when:

it is probable that the economic benefits or service potential associated with the transaction will flow to the department; and

The amount of revenue can be measured reliably.

The accrued revenue is measured at the fair value of the consideration receivable.

Accrued tax revenue (and related interest and / penalties) is measured at amounts receivable from collecting

agents.

8 Expenditure

8.1 Compensation of employees

8.1.1 Salaries and wages

Salaries and wages are recognised in the statement of financial performance on the date of payment.

8.1.2 Social contributions

Social contributions made by the department in respect of current employees are recognised in the statement of

financial performance on the date of payment.

Social contributions made by the department in respect of ex-employees are classified as transfers to households

in the statement of financial performance on the date of payment.

8.2 Other expenditure

Other expenditure (such as goods and services, transfers and subsidies and payments for capital assets) is

recognised in the statement of financial performance on the date of payment. The expense is classified as a

capital expense if the total consideration paid is more than the capitalisation threshold (currently R5, 000). All

other expenditure are classified as current expenditure

8.3 Accrued expenditure payable

Accrued expenditure payable is recorded in the notes to the financial statements when the goods are received or,

in the case of services, when they are rendered to the department.

Accrued expenditure payable is measured at cost.

8.4 Leases

8.4.1 Operating leases

Operating lease payments made during the reporting period are recognised as current expenditure in the

statement of financial performance on the date of payment.

The operating lease commitments are recorded in the notes to the financial statements.

8.4.2 Finance leases

Finance lease payments made during the reporting period are recognised as capital expenditure in the statement

of financial performance on the date of payment.

The finance lease commitments are recorded in the notes to the financial statements and are not apportioned

between the capital and interest portions.

Finance lease assets acquired at the end of the lease term are recorded and measured at the lower of:

cost, being the fair value of the asset; or

the sum of the minimum lease payments made, including any payments made to acquire ownership at the

end of the lease term, excluding interest.



Page 104

9 Aid Assistance

9.1 Aid assistance received

Aid assistance received in cash is recognised in the statement of financial performance when received. In-kind

aid assistance is recorded in the notes to the financial statements on the date of receipt and is measured at fair

value.

Aid assistance not spent for the intended purpose and any unutilised funds from aid assistance that are required

to be refunded to the donor are recognised as a payable in the statement of financial position.

9.2 Aid assistance paid

Aid assistance paid is recognised in the statement of financial performance on the date of payment. Aid

assistance payments made prior to the receipt of funds are recognised as a receivable in the statement of

financial position.

10 Cash and cash equivalents

Cash and cash equivalents are stated at cost in the statement of financial position.

Bank overdrafts are shown separately on the face of the statement of financial position.

For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held,

other short-term highly liquid investments and bank overdrafts.

11 Prepayments and advances

Prepayments and advances are recognised in the statement of financial position when the department receives or

disburses the cash.

Prepayments and advances are initially and subsequently measured at cost.

Prepayments are expensed when services relating to the road rangers and car wash project is received.

12 Receivables

Receivables are recognised in the statement of financial position at cost plus accrued interest, where interest is

charged, less amounts already settled or written-off.

13 Investments

Investments are recognised in the statement of financial position at cost.

14 Impairment of financial assets

Where there is an indication of impairment of a financial asset, an estimation of the reduction in the recorded

carrying value, to reflect the best estimate of the amount of the future economic benefits expected to be received

from that asset, is recorded in the notes to the financial statements. Impairments on investments are calculated as

being the difference between the investment cost and the net asset value /position of the entity invested in.

15 Payables

Recognised payables mainly comprise clearing accounts and funds received on behalf of the Road Traffic

Maintenance Corporation. These payables are recognised in the statement of financial position at cost.

16 Capital Assets

16.1 Immovable capital assets

Immovable capital assets are initially recorded in the notes to the financial statements at cost. Immovable capital

assets acquired through a non-exchange transaction is measured at fair value as at the date of acquisition.

Where the cost of immovable capital assets cannot be determined accurately, the immovable capital assets are measured at R1 unless the fair value of the asset has been reliably estimated, in which case the fair value is used.

All assets acquired prior to 1 April 2002 (or a later date as approved by the OAG) are recorded at R1.

Work-in-progress of a capital nature is recorded in the statement of financial performance as “expenditure for capital assets”. On completion, the total cost of the project is included in the asset register.

Immovable capital assets are subsequently carried at cost and are not subject to depreciation or impairment.

Subsequent expenditure that is of a capital nature is added to the cost of the asset at the end of the capital project

unless the immovable asset is recorded by another department in which case the completed project costs are



Page 105

transferred to that department.

Repairs and maintenance is expensed as current “goods and services” in the statement of financial performance.

16.2 Movable capital assets

Movable capital assets are initially recorded in the notes to the financial statements at cost. Movable capital

assets acquired through a non-exchange transaction is measured at fair value as at the date of acquisition.

Where the cost of movable capital assets cannot be determined accurately, the movable capital assets are measured at fair value and where fair value cannot be determined; the movable assets are measured at R1.


Movable capital assets are subsequently carried at cost and are not subject to depreciation or impairment.

Subsequent expenditure that is of a capital nature is recorded on the statement of financial performance as

“expenditure for capital assets” and is added to the cost of the asset at the end of the capital project unless the

movable asset is recorded by another department/entity in which case the completed project costs are transferred

to that department.

Repairs and maintenance is expensed as current “goods and services” in the statement of financial performance.

16.3 Intangible assets

Intangible assets are initially recorded in the notes to the financial statements at cost. Intangible assets acquired

through a non-exchange transaction are measured at fair value as at the date of acquisition.

Where the cost of intangible assets cannot be determined accurately, the intangible capital assets are measured at fair value and where fair value cannot be determined; the intangible assets are measured at R1.


Intangible assets are subsequently carried at cost and are not subject to depreciation or impairment.

Subsequent expenditure that is of a capital nature is expensed as “expenditure on capital assets” and is added to

the cost of the asset at the end of the capital project unless the intangible asset is recorded by another

department/entity in which case the completed project costs are transferred to that department.

17 Provisions and Contingents

17.1 Provisions

Provisions are recorded in the notes to the financial statements when there is a present legal or constructive

obligation to forfeit economic benefits as a result of events in the past and it is probable that an outflow of

resources embodying economic benefits or service potential will be required to settle the obligation and a reliable

estimate of the obligation can be made. The provision is measured as the best estimate of the funds required to

settle the present obligation at the reporting date.

17.2 Contingent liabilities

Contingent liabilities are recorded in the notes to the financial statements when there is a possible obligation that

arises from past events, and whose existence will be confirmed only by the occurrence or non-occurrence of one

or more uncertain future events not within the control of the department or when there is a present obligation that

is not recognised because it is not probable that an outflow of resources will be required to settle the obligation or

the amount of the obligation cannot be measured reliably

17.3 Contingent assets

Contingent assets are recorded in the notes to the financial statements when a possible asset arises from past

events, and whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain

future events not within the control of the department.

17.4 Commitments

Commitments are recorded at cost in the notes to the financial statements when there is a contractual

arrangement or an approval by management in a manner that raises a valid expectation that the department will

discharge its responsibilities thereby incurring future expenditure that will result in the outflow of cash.



Page 106

18 Unauthorised expenditure

Unauthorised expenditure is recognised in the statement of financial position until such time as the expenditure is

either:

approved by Parliament or the Provincial Legislature with funding and the related funds are received; or

approved by Parliament or the Provincial Legislature without funding and is written off against the appropriation in the statement of financial performance; or

Transferred to receivables for recovery.

Unauthorised expenditure is measured at the amount of the confirmed unauthorised expenditure.

19 Fruitless and wasteful expenditure

Fruitless and wasteful expenditure is recorded in the notes to the financial statements when confirmed. The

amount recorded is equal to the total value of the fruitless and or wasteful expenditure incurred.

Fruitless and wasteful expenditure is removed from the notes to the financial statements when it is resolved or transferred to receivables for recovery.

Fruitless and wasteful expenditure receivables are measured at the amount that is expected to be recoverable

and are de-recognised when settled or subsequently written-off as irrecoverable.

20 Irregular expenditure

Irregular expenditure is recorded in the notes to the financial statements when confirmed. The amount recorded

is equal to the total value of the irregularity unless it is impracticable to determine, in which case reasons therefor

are provided in the note.

Irregular expenditure is removed from the note when it is either condoned by the relevant authority or transferred

to receivables for recovery.

Irregular expenditure receivables are measured at the amount that is expected to be recoverable and are de-

recognised when settled or subsequently written-off as irrecoverable.

21 Changes in accounting estimates

Accounting estimates comprises impairments on investments as disclosed in note 14. The effect on future

periods could not be reasonable determined.

Accounting estimates are based on the best available information at the time of preparation of the financial

statements. Changes to these estimates are recognised prospectively.

23 Agent-Principal arrangements

The department acts as a principle for agency functions arising from the collection of motor vehicle fees from

registering authorities. The registering authorities are various municipalities and South African Post Offices in the

Eastern Cape.

24 Recoverable Revenue

Amounts are recognised as recoverable revenue when a payment made in previous financial year becomes

recoverable from a debtor in the current financial year. Amounts are either transferred to the Provincial Revenue

Fund when recovered or are transferred to the statement of financial performance when written-off.

25 Prior period errors

Prior period errors arise in respect of recording, recognition, measurement and presentation or disclosure of

financial statement amounts are corrected retrospectively from the earliest prior period presented. The nature and

amount of errors are disclosed in the notes to the financial statements indicating the impact on unauthorised

expenditure and voted funds to be surrendered (if applicable).

A prior period error was identified relating to unauthorised expenditure incurred in 2012/13 which were previously

disclosed as irregular expenditure. For details refer to note 10 & 14.

Mayibuye Transport Corporation restated the 2012/13 financial statements resulting in a restatement of the

impairment of investment in Mayibuye Transport Corporation to R66,687.



Page 107

26 Non-adjusting events after reporting date

Non-adjusting events after the reporting date are those events that occur between the reporting date and the date

when the financial statements are authorised for issue.

These events does not lead to the amendment of the financial statements, but details of such events are

disclosed in note 30 to the financial statements.


PART E: FINANCIAL INFORMATION Notes to the Annual Financial Statements

Page 108

Notes to the Annual Financial Statements

1 Annual Appropriation

1.1 Annual Appropriation

Included are funds appropriated in terms of the Appropriation Act (and the Adjustments Appropriation Act) for National

Departments (Voted funds) and Provincial Departments:

2013/14 2012/13

Final

Appropriation

Actual Funds

Received

Funds not

requested/

not received

Appropriation

received

R’000 R’000 R’000 R’000

Administration 288,374 288,374 - 265,759

Transport Operation 950,324 950,324 - 847,133

Transport Regulation 289,728 289,728 - 297,841

Community Based 41,017 41,017 - 34,394

Total 1,569,443 1,569,443 - 1,445,127

1.2 Conditional grants

Note

2013/14 2012/13

R’000 R’000 Total grants received 35 187 805 177,104

Provincial grants included in Total Grants received 187 220 177,094

2 Departmental revenue

Note 2013/14 2012/13

R’000 R’000

Tax revenue 410,679 368,784

Sales of goods and services other than capital assets 3.1 18 214 10 675

Fines, penalties and forfeits 3.2 5 615 7 110

Interest, dividends and rent on land 3.3 1 185 507

Transactions in financial assets and liabilities 3.5 163,922 466

Total revenue collected 599,615 387,542

Less: Own revenue included in appropriation 19 433,485 387,542

Departmental revenue collected 166,130 -

R166,130 million includes R155,900 million received from ECPG Fleet trading entity being surplus funds surrendered, R7,386 million is a refund of prior year expenditure and R2,844 million surplus collected on own revenue budget.

2.1 Sales of goods and services other than capital assets

Note 2013/14 2012/13

2 R’000 R’000

Sales of goods and services produced by the department

18,212

10,675

Sales by market establishment 735 801

Administrative fees 17,477 9,100

Other sales - 774

Sales of scrap, waste and other used current goods 2 -

Total 18,214 10,675



Page 109

2.2 Fines, penalties and forfeits

Note 2013/14 2012/13

2 R’000 R’000 Fines 5,615 7,110

Total 5,615 7,110

2.3 Interest, dividends and rent on land

Note 2013/14 2012/13

2 R’000 R’000 Interest 27 13

Rent on land 1,158 494

Total 1,185 507

2.4 Transactions in financial assets and liabilities

Note 2013/14 2012/13

2 R’000 R’000

Receivables 163,922 466

Total 163,922 466

3 Aid assistance

3.1 Aid assistance received in cash from other sources

2013/14 2012/13

R’000 R’000

Local

Opening Balance 518 2,274

Revenue - 105

Expenditure (229) (1,861)

Current (229) (1,861)

Closing Balance 289 518

3.2 Total assistance

2013/14 2012/13

R’000 R’000

Opening Balance 518 2,274

Revenue 105

Expenditure (229) (1,861)

Current (229) (1,861)

Closing Balance 289 518

3.3 Analysis of balance 2013/14 2012/13

Note R’000 R’000

Aid assistance unutilised 289 518

Other sources 3.1 289 518

Closing balance 289 518



Page 110

4 Compensation of employees

4.1 Salaries and Wages Note 2013/14 2012/13

R’000 R’000

Basic salary 297,598 296,098

Performance award 1,999 2,070

Service Based 705 1,067

Compensative/circumstantial 33,646 36,765

Periodic payments 442 307

Other non-pensionable allowances 56,388 54,702

Total 390,778 391,009

4.2 Social contributions

Note 2013/14 2012/13

R’000 R’000

Employer contributions

Pension 44,505 38,823

Medical 25,173 25,755

Bargaining council 96 90

Total 69,774 64,668

Total compensation of employees 460,552 455,677

Average number of employees 1,679 1,739

Comparative of R455,677 million reflects an increase of R4,628 million from R451,049 million being learnerships

reclassified from Goods and Services due to amendments to SCOA in implementation of 2013/14.

The total number of employees of 1,679 of the Department includes 81 interns.



Page 111

5 Goods and services

Note 2013/14 2012/13

R’000 R’000

Administrative fees 299 369

Advertising 1,706 1,165

Capital assets less than R5 000 5.1 3,559 622

Bursaries (employees) 3,967 2,883

Catering 3,153 2,778

Communication 14,640 15,895

Computer services 5.2 7,812 9,377

Consultants, contractors and agency/outsourced services 5.3 56,966 68,889

Entertainment 81 144

Audit cost – external 5.4 6,239 6,133

Fleet services 12,690 14,959

Consumables 5.6 12,803 10,183

Operating leases 1 095 48,671

Property payments 5.7 8,800 12,978

Rental and hiring 170 1,537

Transport provided as part of the departmental activities 390,634 366,064

Travel and subsistence 5.8 20,512 18,591

Venues and facilities 662 575

Training and development 2,907 10,999

Other operating expenditure 5.9 2,064 2 118

Total 550,759 594,930

Comparative of R594,930 million reflects a decrease of R4,628 million from R599,558 million being learnerships reclassified to

compensation of employees due to amendments to the SCOA implemented in 2013/14.

The significant decrease in prior year operating leases of R48,671 million to R1,095 million current years is due to accruals for

ECPG Fleet as disclosed in 2011/12. These accruals were paid in the 2012/13 financial year and not reclassified as capital

expenditure (finance leases) was exempted by Treasury in 2011/12.

The SCOA reimplementation of 2013/2014 classified the department as a non-inventory department and therefore the prior

year inventory is reclassified as consumables. The item “Gifts” has been removed from “Other operating expenditure” and

moved to “Consumables” during the SCOA reimplementation of 2013/14.

5.1 Capital assets less than R5 000

Note 2013/14 2012/13

6 R’000 R’000

Tangible assets

Buildings and other fixed structures 3,559 622

Machinery and equipment 3,559 622

Total 3,559 622

5.2 Computer services

Note 2013/14 2012/13

6 R’000 R’000

SITA computer services 6,742 8,765

External computer service providers 1,070 612

Total 7,812 9,377



Page 112

5.3 Consultants, contractors and agency/outsourced services

Note 2013/14 2012/13

5 R’000 R’000

Business and advisory services 6,558 2,341

Infrastructure and planning 15,513 17,912

Legal costs 7,407 3,649

Contractors 3,559 18,509

Agency and support/outsourced services 23,929 26,478

Total 56,966 68,889

Agency and support/outsourced services relates to payment of road rangers, beneficiaries of the car wash project and

community road safety councils.

5.4 Audit cost – External

Note 2013/14 2012/13

5 R’000 R’000

Regularity audits 5,892 6,133

Computer audits 347 -

Total 6,239 6,133

5.5 Consumables

Note 2013/14 2012/13

5 R’000 R’000

Consumable supplies 6,891 5,132

Uniform and clothing 5,261 3,088

Household supplies 481 416

Building material and supplies 239 904

IT consumables 369 448

Other consumables 541 276

Stationery, printing and office supplies 4,783 4,343

Total 11,674 9,475

Comparative R708 thousand in inventory decreased from R10,183 million and the difference of R9,475 million has been reclassified to

consumables from inventory due to amendments to SCOA implemented in 2013/14.

5.6 Property payments

Note 2013/14 2012/13

5 R’000 R’000

Municipal services 1,125 1,795

Property maintenance and repairs - 37

Other 7,675 11,146

Total 8,800 12,978

Other property payments include payments for security services at airports and district offices, pest control, fumigation, gardening,

cleaning and electricity.

5.7 Travel and subsistence

Note 2013/14 2012/13

5 R’000 R’000

Local 20 512 18 591

Total 20,512 18,591



Page 113

5.8 Other operating expenditure

Note 2013/14 2012/13

5 R’000 R’000

Professional bodies, membership and subscription fees - 13

Resettlement costs 1,605 1,547

Other 459 558

Total 2,064 2,118

Comparative for R 2,118 million decreased with R 4,628 million from R 6,746 million disclosed in the prior year being learner

ships reallocated to compensation of employees (note 4) due to the amendment of SCOA implemented in 2013/14.

6 Interest and rent on land

Note 2013/14 2012/13

R’000 R’000

Rent on land 288 117

Total 288 117

7 Payments for financial assets Note 2013/14 2012/13

R’000 R’000

Debts written off 7.1 312 1

Total 312 1

7.1 Debts written off Note 2013/14 2012/13

7 R’000 R’000

Nature of debts written off

Other debt written off

Staff debtors 312 1

Total 312 1

Total debt written off 312 1

8 Transfers and subsidies

2013/14 2012/13

R’000 R’000

Note

Departmental agencies and accounts Annex 1A 1,235 1,455

Public corporations and private enterprises Annex 1B 404,068 330,571

Households Annex 1C 10,163 4,975

Gifts, donations and sponsorships made Annex 1F 100 -

Total 415,566 337,001

Unspent funds transferred to the above beneficiaries 5,337 31



Page 114

9 Expenditure for capital assets

Note 2013/14 2012/13

R’000 R’000

Tangible assets 89,675 64,745

Buildings and other fixed structures 30 37,059 15,861

Machinery and equipment 29 52,616 48,884

Total 89,675 64,745

9.1 Analysis of funds utilised to acquire capital assets – 2013/14

Voted funds Aid assistance Total

R’000 R’000 R’000

Tangible assets 89,675 - 89,675

Buildings and other fixed structures 37,059 - 37 059

Machinery and equipment 52,616 - 52 616

Total 89,675 - 89,675

9.2 Analysis of funds utilised to acquire capital assets – 2012/13

Voted funds Aid assistance Total

R’000 R’000 R’000


Buildings and other fixed structures 15,861 - 15,861

Machinery and equipment 48,884 - 48,884

Total 64,745 64,745

9.3 Finance lease expenditure included in Expenditure for capital assets

Note 2013/14 2012/13

R’000 R’000


Machinery and equipment 31.1 47,472 47,472

Total 47 472 47 472



Page 115

10 Unauthorised expenditure

10.1 Reconciliation of unauthorised expenditure Note 2013/14 2012/13

R’000 R’000

Opening balance 9,421 -

Prior year error - 3,044

As restated 9,421 3,044

Unauthorised expenditure – discovered in current year (as restated) - 6,377

Unauthorised expenditure awaiting authorisation / written off 9,421 9,421

10.2 Analysis of unauthorised expenditure awaiting authorisation per economic classification

2013/14 2012/13

R’000 R’000

Current 9,421 9,421

Total 9,421 9,421

10.3 Analysis of unauthorised expenditure awaiting authorisation per type

2013/14 2012/13

R’000 R’000

Unauthorised expenditure incurred not in accordance with the

purpose of the vote or main division 9,421 9,421

Total 9,421 9,421

10.4 Prior period error

Note 2013/14

10 R’000

Nature of prior period error

Relating to 2009/10 3,044

A donation was provided to the Port Elizabeth Apple Express.

This was treated as irregular expenditure in the prior period as the

agreement was not entered into with approval from the Eastern

Cape Legislature. However during the current year further

guidance was received from Provincial Treasury indicating that the

item was should be classified as unauthorised expenditure.

3,044



This unauthorised expenditure was previously treated as irregular

expenditure as the definition was incorrectly applied not to include

amounts to be surrendered mid-year to provincial treasury arising

from the shifting of funds from capital to current expenditure.

6,377

Total 9,421



Page 116

11 Cash and cash equivalents Note 2013/14 2012/13

R’000 R’000

Consolidated Paymaster General Account 57, 474 4,994

Cash receipts (2) -

Total 57, 472 4,994

12 Prepayments and advances

Note 2013/14 2012/13

R’000 R’000

Prepayments 3,281 -

Total 3,281 -

13 Receivables

2013/14 2012/13

R’000 R’000 R’000 R’000 R’000

Note

Less

than

one

year

One

to

three

years

Older

than

three

years

Total

Total

Claims recoverable 13.1

Annex 4 1,474 - - 1,474 1,238

Recoverable expenditure 13.2 198 - - 198 6

Staff debt 13.3 351 474 219 1,044 1,214

Fruitless and wasteful expenditure 13.4 1 - - 1 -

Total 2,024 474 219 2,717 2,458

13.1 Claims recoverable Note 2013/14 2012/13

13 R’000 R’000

National departments 20 -

Provincial departments 1,454 1,238

Total Annex 4 1,474 1,238

13.2 Recoverable expenditure (disallowance accounts) Note 2013/14 2012/13

13 R’000 R’000

Sal Pension Fund

Sal Medical Aid

Disallowance: Dishonoured Cheque

Sal Tax Debt

Sal Reversal

-

7

170

2

19

2

-

-

4 -

Total 198 6

13.3 Staff debt Note 2013/14 2012/13

13 R’000 R’000

Staff debtors 1,044 1,214

Total 1 044 1,214

13.4 Fruitless and wasteful expenditure Note 2013/14 2012/13

13 R’000 R’000

Opening balance - -

Transfers from note 27 Fruitless and Wasteful Expenditure 1 -

Total 1 1



Page 117

14 Investments

Note 2013/14 2012/13

R’000 R’000

Non-Current

Shares and other equity

Mayibuye Transport Corporation

148,371

120,371

EC Government Fleet Management Services 362,002 362,002

Total 510,373 482,373

Total non-current 510,373 482,373

2013/14 2012/13

R’000 R’000

Analysis of non-current investments


Additions in cash 28,000 63,610


14.1 Impairment of investments

Note 2013/14 2012/13

R’000 R’000

Estimate of impairment of investment 82,175 70,842

Total 82,175 70,842

Mayibuye Transport Corporation financial information is recorded from audited Annual Financial Statements. The

Department capitalised a further R28 million investment in current year for Mayibuye Transport Corporation from

R120,371 million reported prior year.

14.2 Prior period error 2012/13

R’000


Relating to 2012/13 16,623

Mayibuye Transport Corporation restated the 2012/2013 financial

statements resulting in a restatement of the impairment of investment

in Mayibuye Transport Corporation to R70 842.

16,263

15 Voted funds to be surrendered to the Revenue Fund

Note 2013/14 2012/13

R’000 R’000


Prior period error (2009/10) - 3,044

2,077 16,282

Transfer from statement of financial performance 52,291 34,212

Add: Unauthorised expenditure for current year 10.1 - 6,377

Voted funds not requested/not received 1.1 - (41,556)

Paid during the year 7,344 (13,238)




Page 118

15.1 Prior period error (affecting Voted funds to be surrendered)

Note 2012/13

14 R’000



A donation was provided to the Port Elizabeth Apple Express. This

was treated as irregular expenditure in 2012/13 as the agreement

was not entered into with approval from the Eastern Cape Legislature.

However during the current year further guidance was received from

Provincial Treasury indicating that the item should be classified as

unauthorised expenditure. This led to an increase in the voted funds

to be surrendered in 2012/13 and 2013/14

3,044


This unauthorised expenditure was previously treated as irregular

expenditure as the definition was incorrectly applied not to include

amounts to be surrendered mid-year to provincial treasury arising

from the shifting of funds from capital to current expenditure.

6,377

Total 9,421

16 Departmental revenue and NRF Receipts to be surrendered to the Revenue Fund

Note 2013/14 2012/13

R’000 R’000


Transfer from Statement of Financial Performance 166,130 -

Own revenue included in appropriation 433,485 387,542

Paid during the year (603,367) (379,447)


17 Payables – current

Note 2013/14 2012/13

R’000 R’000

Amounts owing to other entities

Clearing accounts 15.1 523 22

Other payables 15.2 1,114 1,156

Total 1,637 1,178

17.1 Clearing accounts Note 2013/14 2012/13

17 R’000 R’000

Sal: Income Tax 460 -

Sal: ACB Recalls - 22

Sal: Pension Fund 63 -

Total 523 22

17.2 Other payables Note 2013/14 2012/13

17 R’000 R’000

Rec: Dom Other Payables 72 -

Enatis – (RTMC) 1,042 1,156

Total 1,114 1,156



Page 119

18 Net cash flow available from operating activities Note 2013/14 2012/13

R’000 R’000

Net surplus as per Statement of Financial Performance 218,192 32,456

Add back non cash/cash movements not deemed operating activities (75,944) 7,001

(Increase) in receivables – current (259) (1,470)

(Increase) in prepayments and advances – current (3,281) -

Increase/(decrease) in payables – current 459 (9,575)

Expenditure on capital assets 89,675 64,745

Surrenders to Revenue Fund (596,023) (392,685)

Voted funds not requested/not received - (41,556)

Own revenue included in appropriation 433,485 387,542

Net cash flow generated by operating activities 142,248 39,457

19 Reconciliation of cash and cash equivalents for cash flow purposes

Note 2013/14 2012/13

R’000 R’000

Consolidated Paymaster General account 57,474 4,994

Cash receipts (2) -

Total 57,472 4,994

20 Contingent liabilities and contingent assets

20.1 Contingent liabilities

Note 2013/14 2012/13

R’000 R’000

Liable to Nature

Housing loan guarantees Employees Annex 3A 62 -

Claims against the department Annex 3B 36,254 21,034

Other Annex 3B 110,257 123,140

Total 146,573 144,174

Included in other contingent liabilities is R55, 884 million relating to Fleet Africa. In terms of an agreement Fleet Africa

undertook to render services for the Department whilst ECPG undertook to lease certain vehicles. The parties are in

dispute in respect of the original amount claimed by Fleet Africa for R46million plus interest from date due until

discharged in full. The matter has been referred for arbitration in terms of the agreement for decision whether or not Fleet

Africa is entitled to claim the said amount or any lessor amount.

Also included in other contingent liabilities is an amount relating to Transnet Freight Rail maintenance. The department

entered into a lease agreement with Transnet Freight Rail for Mthatha - Amabele line. This intervention cost amounted to

an estimated R46,601 million which Transnet Freight Rail wish to claim from the department. The initial maintenance cost

and any further costs of maintaining the rail line is in dispute.

20.2 Contingent assets

Note 2013/14 2012/13

R’000 R’000

Nature of contingent asset

Industrial Strike 391 391

Overtime 8 48

-

Total 399 439

The R391 thousand refers to no work no pay principle at the time of the industrial strike. There is uncertainty on the recovery

of the amount. Some certainty will arise in 2014/15. A project HROPT was managed by Office of the Premier and tasked to

determine amounts owed in respect of undue promotions and notch advancements. The report on the verification of files

submitted by service provider was accepted by the department. Currently the department is consulting employees affected by

the verification process. This process has not been finalised.



Page 120

21 Commitments

Note 2013/14 2012/13

R’000 R’000

Current expenditure

Approved and contracted 34,089 180,550

Approved but not yet contracted 258,519 -

292,608 180,550

Capital expenditure

Approved and contracted 243 243

Total Commitments 292,851 180,793

Total commitments exceeding one year amount to R 20,631million.

22 Accruals

2013/14 2012/13

R’000 R’000

Listed by economic classification 30 Days 30+ Days Total Total

Goods and services 46,309 6,229 52,538 72,827

Transfers and subsidies 76 - 76 32,793

Capital assets - - - 24,355

Total 46,385 6,229 52,614 129,975

Note 2013/14 2012/13

R’000 R’000

Listed by programme level

Programme 1: Administration

Programme 2: Transport Operations

Programme 3: Transport Regulation

8,982

42,117

1,207

20,813

106,131

2,929

Programme 4: Community Based 308 102

Total 52,614 129,975

Note 2013/14 2012/13

R’000 R’000

Confirmed balances with other departments Annex 5 856 2,430

Total 856 2,430

23 Employee benefits

Note 2013/14 2012/13

R’000 R’000

Leave entitlement 25,667 25,337

Service bonus (Thirteenth cheque) 13,934 13,837

Performance awards 7,594 6,770

Capped leave commitments 87,546 95,455

Other 1,503 3,633

Total 136,244 145,032

Performance awards amounting to R7,594 million are based on 1,5% of the compensation of employees budget plus

R274 thousand relating to unpaid bonuses of 2012/13



Page 121

24 Lease commitments

24.1 Operating leases expenditure

2013/14

Buildings

and other

fixed

structures

Total

Not later than 1 year 761 761

Later than 1 year and not later than 5

years

- -

Later than five years - -

Total lease commitments 761 761

2012/13

Buildings

and other

fixed

structures

Total

Not later than 1 year 260 260

Later than 1 year and not later than 5

years

- -


Total lease commitments 260 260

The R761 thousand relates to rental of four properties. These leases are expiring in the next

financial year.



Page 122

24.2 Finance leases expenditure

2013/14

Machinery

and

equipment

Total

Not later than 1 year 48,244 48,244

Later than 1 year and not later

than 5 years

38,146

38,146


Total lease commitments 86,390 86,390

2012/13

Machinery

and

equipment

Total

Not later than 1 year 44,149 44,149

Later than 1 year and not later

than 5 years

67,534

67,534


Total lease commitments 111,683

111,683

R48, 244 million relates to leasing of 1204 cell phone lines renewed every 2 years, 78 photocopiers with a term of 3 years,

PABX system comprising (17 lines) with a term of 5 years and motor vehicles.

R38,146 million relates to same as above but for outer years.

25 Accrued departmental revenue

Note 2013/14 2012/13

R’000 R’000

Tax revenue 29,671 384,958

Sales of goods and services other than capital assets 263 755

Interest, dividends and rent on land 12,140 14,531

Transactions in financial assets and liabilities 17,000 -

Sales of capital assets 12,464 12,465

Total 71,538 412,709



Page 123

25.1 Analysis of accrued departmental revenue Note 2013/14 2012/13

R’000 R’000


Less: amounts received (443,197) (387,541)

Less: amounts reversed as irrecoverable (356,195) -

Add: amounts recognised 458,221 482,937


The department was provided with an exemption in 2012/13 relating to the recognition of accrued departmental revenue. Due

to changes in the 2013/2014 financial year modified cash standards, these balances that were exempt in the prior year are no

longer required to be disclosed. These items are therefore included in the amounts written off line for 2013/14 in the note

above.

25.2 Impairment of accrued departmental revenue Note 2013/14 2012/13

R’000 R’000

Estimate of impairment of accrued departmental revenue 42,146 351,026

Total 42,146 351,026

26 Irregular expenditure

26.1 Reconciliation of irregular expenditure

Note 2013/14 2012/13

R’000 R’000


Add: Irregular expenditure – relating to current year

26,509

32,666

Less: Current year amounts condoned (21,417) (100,936)

Irregular expenditure awaiting condonation 290,102 285,010

Analysis of awaiting condonation per age classification

Current year 21,092 21,632

Prior years 269,010 263,378

Total 290,102 285,010

Irregular expenditure amounting to R26.5 million was incurred by the department during the year ended 31 March 2014. This

is as a result of non-compliance with procurement requirements as well as the incorrect upgrading of traffic officers’ posts in

prior years. The majority of irregular expenditure incurred in 2013/2014 relates to contracts entered into in prior years, but

where the department has continued making payments in the current year due to early contract cancellation penalties. Goods

and services were received even though the correct procurement process was not followed.



Page 124

26.2 Details of irregular expenditure – current year Incident Disciplinary steps

taken/criminal

proceedings

2013/14

R’000

Finance leases: Non-compliance with PFMA and Treasury Regulation Under investigation 7,110

Upgrading of Traffic Officers: Non Compliance with PSA and regulations Under investigation 13,672

SCM Prescripts not adhered to – Various transactions

Accommodation – Non compliance

Under investigation 5,523

with National Treasury instruction

Note 1 2913/14 cost containment measure

204

Total 26,509

26.3 Details of irregular expenditure condoned Incident Condoned by

(condoning authority)

2013/14

R’000

SCM Prescripts not adhered to – Various transactions Accounting officer 5,417

Non – Compliance with PFMA and Treasury Regulation 6.3.1 Virements Provincial Treasury 16,000

Total 21,417

26.4 Details of irregular expenditures under investigation Incident

2013/14

R’000

PFMA & Prescripts not adhered to 189,920

Public Service Regulation not adhered to – upgrading of Traffic officials Levels 54,689

Public Service Regulation & Act not adhered to – overtime 14,395

PFMA and Treasury regulations not adhered to – Finance Lease 25,968

Public Service regulations not adhered to – Acting allowance Paid 2,209

Public Service regulation not adhered to – Job evaluation 2,717

Accommodation – Non-compliance with National Treasury instruction note

1 2013/14 – Cost containment measures

204

Total 290,102

The department has made further investigations on these cases. The department have consulted Provincial Treasury

and the Department of Public Service and Administration on the condonation of these amounts. The department have

received co-operation from these authorities.



Page 125

27 Fruitless and wasteful expenditure

27.1 Reconciliation of fruitless and wasteful expenditure

Note 2013/14 2012/13

R’000 R’000

Opening balance 440 9,206

Fruitless and wasteful expenditure – relating to prior year - 2

Fruitless and wasteful expenditure – relating to current year 296 452

Less: Amounts resolved

Less amounts transferred to receivables for recovery (112)

(1)

(9,220)

Fruitless and wasteful expenditure awaiting resolution 623 440

27.2 Analysis of awaiting resolution per economic classification

27.3 Analysis of Current year’s fruitless and wasteful expenditure Incident Disciplinary steps taken/criminal proceedings 2013/14

R’000

Forever resort - outstanding balance for team

building(litigation claim)

Under investigation

9

Forever resort - outstanding balance for team

building(interest)

Under investigation

29

Interest charged – Telkom Under investigation 9

Interest charged - DOT GFMS trading entity Under investigation

250

Total 297

The department has made further investigations on these cases. The department have consulted Provincial Treasury

and the Department of Public Service and Administration on the condonation of these amounts. The department have

received co-operation from these authorities.

2013/14 2012/13

R’000 R’000

Current 623 440

Total 623 440



Page 126

28 Related party transactions

2013/14

2012/13

R'000

R'000

Related party transactions

Revenue received

Sales of goods and services other than capital assets 16,862

9,271

Total

16,862

9,271

Payments made

Goods and services

25,788

51,386

Grant aid payment to Mayibuye 74,088 63,773

Capital contribution – Increase in share capital - Mayibuye 28,000 5,000

Total 127,876 120,159

2013/14

2012/13

R'000

R'000

Year end balances arising from revenue/payments

Receivables from related parties

1,593

1,879

Payables to related parties

(2,799)

(10,118)

Total

(1,206)

(8,239)

2013/14

2012/13

R'000

R'000

In kind goods and services provided/received

Rentals paid by Department of Roads and Public Works

34,901

18,961

Total

34,901

18,961

The Department occupies Stellenbosh Park and other buildings free of charge which is rented by Department of Roads and

Public Works.

The related parties of the Department are as follows:

Mayibuye Transport (as Department has a 100% Share investment in entity)

Eastern Cape Government Fleet Management Services (EC GFMS) (Under the control of the Department as it is the

majority shareholder)

For Mayibuye the department pays subsidies on an annual basis to support their activities. For details refer to Annexure 1B

to the financial statement of transfer and subsidies made.

The share investment in Mayibuye is disclosed in note 14 to the financial statements.

The Department has contributed to the capital investment in the EC GFMS which is also disclosed in note 14 to the financial

statements.



Page 127

29 Key management personnel

No. of

Individuals

2013/14 2012/13

R’000 R’000

Political office bearers

Officials:

Level 15 to 16 2 2,863 2,749

Level 14 (incl. CFO if at a lower level) 5 5,052 4,502

Family members of key management personnel 1 137 123

Total 8,052 7,374

30 Non-adjusting events after reporting date

Nature of event Mayibuye Transport Corporation amended its authorised ordinary shares to 250million on 5 May 2014. This transaction

will assist the department in providing future capital contributions.

No other events after the reporting date were identified by management that would affect the operations of the

department or the results of those operations significantly.

31 Movable Tangible Capital Assets

MOVEMENT IN MOVABLE TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH

2014

Opening

balance

Curr Year

Adjust-

ments to

prior year

balances

Additions Disposals Closing

Balance

R’000 R’000 R’000 R’000 R’000

MACHINERY AND EQUIPMENT 52 698 429 5,144 12,306 45,965

Transport assets 17,576 (69) 1,138 11,076 7,569

Computer equipment 10 258 (27) 1,867 493 11,605

Furniture and office equipment 6 674 (100) 1,312 498 7,388

Other machinery and equipment 18 190 (625) 827 239 19,403

TOTAL MOVABLE TANGIBLE

CAPITAL ASSETS

52 698 429 5,144 12,306 45,965



Page 128

31.1 Additions to movable tangible capital assets per asset register for the year ended 31 March 2014

Cash Non-Cash (Capital

work in

progress

current

costs and

finance

lease

payments)

Received

current not

paid(Paid

current

year,

received

prior year

Total

R’000 R’000 R’000 R’000 R’000

MACHINERY AND EQUIPMENT 52 616 - (47,472) - 5,144

Transport assets 38,339 - (37,201) - 1,138

Computer equipment 1,867 - - - 1,867

Furniture and office equipment 1,312 - - - 1,312

Other machinery and equipment 11,098 - (10,271) - 827

TOTAL ADDITIONS TO MOVABLE

TANGIBLE CAPITAL ASSETS

52,616 - (47,472) -

5,144

The expenditure for capital assets per note 10 amounts to R52,616 million, split as follow:R47,472 million is for payments

finance leases, GG Vehicles amounting to R37,201 million and Finance leases (other machinery) for R10,271 million.

31.2 Disposals of movable tangible capital assets per asset register for the year ended 31 March 2014

Sold for

cash

Transfer

out or

destroyed

or scrapped

Total

disposals

Cash

received

actual

R’000 R’000 R’000 R’000 R’000

MACHINERY AND EQUIPMENT - 12,306 12,306 - -

Transport assets - 11,076 11,076 - -

Computer equipment

Furniture and office equipment

Other machinery and equipment

-

-

-

493

498

239

493

498

239

-

-

- -


CAPITAL ASSETS

- 12,306 12,306 - -

The disposal include R11 million relating to the Kei Rail project. The department accepted a settlement by Transnet

Engineering of R17 million in return for the assets. The settlement offer necessitated the removal of accruals and the

contingent liability related to the assets. The R17million is included in accrued departmental revenue.

31.3 Movement for 2012/13

Opening

balance

Curr Year

Adjust-

ments to

prior year

balances


Balance

R’000 R’000 R’000 R’000 R’000

MACHINERY AND EQUIPMENT 51,453 - 1,507 262 52,698

Transport assets 17,576 - - - 17,576

Computer equipment 9,367 - 1,043 152 10,258

Furniture and office equipment 6,509 - 183 18 6,674

Other machinery and equipment 18,001 - 281 92 18,190


CAPITAL ASSETS

51,453 - 1,507 262 52,698



Page 129

31.4 Minor assets Movement in minor assets per the asset register for the year ended as at 31 March 2014

Machinery

and

equipment

Total

R’000 R’000


Curr Year Adjustments to Prior Year

balances

27 27

Additions 3,559 3,559

Disposals 769 769

TOTAL MINOR ASSETS 6,348 6,348



Page 130

Machinery

and

equipment

Total

Number of R1 minor assets 15,257 15,257

Number of minor assets at cost 3,048 3,048

TOTAL NUMBER OF MINOR

ASSETS

18,305 18,305

MOVEMENT IN MINOR ASSETS PER THE ASSET REGISTER FOR THE YEAR ENDED AS AT 31 MARCH 2013

Machinery

and

equipment

Total

R’000 R’000


Curr Year Adjustments to Prior Year balances (665) (665)

Additions 632 632

Disposals 61 61

TOTAL MINOR ASSETS

3,531

3,531

Machinery

and

equipment

Total

Number of R1 minor assets 16,725 16,725

Number of minor assets at cost 5,367 5,367

TOTAL NUMBER OF MINOR ASSETS

22,092

22,092

31.5 Movable assets written off MOVABLE ASSETS WRITTEN OFF FOR THE YEAR ENDED AS AT 31 MARCH 2014

Machinery

and

equipment

Total

R’000 R’000

Assets written off 769 769

TOTAL MOVABLE ASSETS WRITTEN OFF 769 769



Page 131

32 Immovable Tangible Capital Assets

MOVEMENT IN IMMOVABLE TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31

MARCH 2014

Opening

balance

Curr Year

Adjust-

ments to

prior year

balances


Balance

R’000 R’000 R’000 R’000 R’000

BUILDINGS AND OTHER FIXED

STRUCTURES

Non-residential buildings - - - - -

TOTAL IMMOVABLE TANGIBLE

CAPITAL ASSETS

- - - - -

32.1 Additions

Additions to immovable tangible capital assets per asset register for the year ended 31 March 2014

Cash Non-cash (Capital

Work in

Progress

current

costs and

finance

lease

payments)

Received

current, not

paid

(Paid

current

year,

received

prior year)

Total

R’000 R’000 R’000 R’000 R’000

BUILDING AND OTHER FIXED

STRUCTURES

37,059 - (37,059) - -

Non-residential buildings 37,059 - (37,059) - -

TOTAL ADDITIONS TO

IMMOVABLE TANGIBLE CAPITAL

ASSETS

37,059 (37,059) - -

R37, 059 million addition relates to upgrade of Mthatha airport and work is still in progress for completion 2014/15.

MOVEMENT IN IMMOVABLE TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31

MARCH 2013

Opening

balance

Curr Year

Adjust-

ments to

prior year

balances


Balance

R’000 R’000 R’000 R’000 R’000

BUILDINGS AND OTHER FIXED

STRUCTURES

Non-residential buildings - - - - -

TOTAL IMMOVABLE TANGIBLE

CAPITAL ASSETS

- - - - -



Page 132

33 Agent-principal arrangements

33.1 Department acting as the principal 2013/14

R’000

Municipalities 58,498

South African Post Offices 63,271

Total 121,769

The department has appointed various registration authorities in the eastern cape province to

collect motor vehicle license fees on its behalf. These registration authorities comprise

municipalities and the SA post office. The full listing of municipalities is available at the

Department’s head office.



Page 133

33.2 Department acting as the agent

33.2.1 Reconciliation of agency funds and disbursements – 2013/14

Name of principal entity Total agency

funds

received

Amount

remitted to

the principal

Variance

between

amounts

received and

amounts

remitted

Explanation of

variance

R’000 R’000 R’000

RMTC 26,650 25,608 1,042 March fees due for

payment

Total 26,650 25,608 1,042

The eNatis system used by the Department and its registration authorities is the property of the Road Traffic Maintenance

Corporation (RTMC). Administration fees are charged on each transaction which is paid over by the registration authorities to

the Department. RTMC appointed the department to collect these administration fees and pay it over to RTMC on a monthly

basis.

Funds due to RMTC for the administration fee collected in March 2014 are held in the Department’s bank account.

An

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al R

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or

the

2013

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Pro

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4

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05

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177,0

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An

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2013

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Pro

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60

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48

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00

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121,6

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05

100%

96%

- -

- -

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87,4

98

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122,5

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10,8

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- - -

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10,8

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10,0

68

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61%

4 ,472

103

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11,0

05

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63

- 4,8

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An

nu

al R

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the

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An

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5.

FINANCIAL INFORMATION - TRADING ENTITY GOVERNMENT FLEET MANAGEMENT SERVICES

PART F


PART F: FINANCIAL INFORMATION – TRADING ENTITY REPORT OF THE AUDITOR-GENERAL

Page 150

1 REPORT OF THE AUDITOR-GENERAL REPORT OF THE AUDITOR-GENERAL

REPORT OF THE AUDITOR-GENERAL TO THE EASTERN CAPE PROVINCIAL LEGISLATURE ON EASTERN CAPE GOVENMENT FLEET

MANAGEMENT SERVICES

REPORT ON THE FINANCIAL STATEMENTS

Introduction

1. I have audited the financial statements of the Eastern Cape Government Fleet Management Services Trading Entity

(ECGFMS) set out on pages 157 to 205, which comprise the appropriation statement, statement of financial position as at 31

March 2014, the statement of financial performance, statement of changes in net assets and cash flow statement for the year

then ended, as well as the notes, comprising a summary of significant accounting policies and other explanatory information.

Accounting officer’s responsibility for the financial statements

2. The accounting officer is responsible for the preparation and fair presentation of these financial statements in

accordance with the South African Statements of Generally Recognised Accounting Practice (GRAP) and the requirements of the

Public Finance Management Act of South Africa, 1999 (Act no. 1 of 1999) (PFMA), and for such internal control as the

accounting officer determines is necessary to enable the preparation of financial statements that are free from material

misstatement, whether due to fraud or error.

Auditor-general’s responsibility

3. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in

accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA), the general notice issued in terms thereof

and International Standards on Auditing. Those standards require that I comply with ethical requirements, and plan and

perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial

statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material

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

considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to

design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used

and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the

financial statements.

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

opinion.



Page 151

Basis for qualified audit opinion

Revenue rendering of services – Utilisation charges

6. The entity did not recognise revenue from the rendering of services at the fair value of the consideration receivable as

required by GRAP 9 – Revenue from Exchange Transactions as they used the incorrect kilometres travelled as well as the

incorrect rates for the different vehicles types when calculating the revenue on utilisation. As a result, revenue from utilisation

charges as disclosed in note 16 and receivables from exchange transactions as disclosed in note 9 were understated by R56,9

million.

Aggregation of immaterial uncorrected misstatements

7. The financial statements are materially misstated due to the cumulative effect of numerous individually immaterial

uncorrected misstatements in the following items making up the statement of financial position, the statement of financial

performance and the notes to the financial statements:

• Revenue from rendering of services: Fixed charge was overstated by R3,4 million

• Interest earned was overstated by R7,3 million

• Depreciation was understated by R2,9 million

• Finance leases receivables were overstated by R10,7 million (2013: understated by R1 million)

• Plant, property and equipment was overstated by R2,9 million

• Payables from exchange transactions were overstated by R4,5 million

• Accounts receivable from exchange transactions were understated by R1 million

• Accumulated surplus was understated by R6,7 million.

Qualified opinion

8. 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 the Eastern Cape Government Fleet Management

Services as at 31 March 2014 and its financial performance and cash flows for the year then ended, in accordance with GRAP

and the requirements of the PFMA.

Emphasis of matters

9. I draw attention to the matters below. My opinion is not modified in respect of these matters.

Restatement of corresponding figures

10. As disclosed in note 32 to the financial statements, the corresponding figures, which relate to the year ended 31 March

2013, were restated as a result of errors discovered during the prior and current financial years.

Irregular expenditure

11. As disclosed in note 38 of the financial statements, the entity incurred irregular expenditure relating to the year ended

31 March 2014. The entity received goods and services for these payments.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

12. In accordance with the PAA and the general notice issued in terms thereof, I report the following findings on the

reported performance information against predetermined objectives for selected programmes presented in the annual

performance report, non-compliance with legislation as well as internal control. The objective of my tests was to identify

reportable findings as described under each subheading but not to gather evidence to express assurance on these matters.

Accordingly, I do not express an opinion or conclusion on these matters.



Page 152

Predetermined objectives

13. I performed procedures to obtain evidence about the usefulness and reliability of the reported performance

information for the following selected programme presented in the annual performance report of the Department of Transport

on behalf of the trading entity for the year ended 31 March 2014:

• Sub-programme 4: Government Fleet Management Trading Entity

14. I evaluated the reported performance information against the overall criteria of usefulness and reliability.

15. I evaluated the usefulness of the reported performance information to determine whether it was presented in

accordance with the National Treasury’s annual reporting principles and whether the reported performance was consistent with

the planned programme. I further performed tests to determine whether indicators and targets were well defined, verifiable,

specific, measurable, time bound and relevant, as required by the National Treasury’s Framework for managing programme

performance information (FMPPI).

16. I assessed the reliability of the reported performance information to determine whether it was valid, accurate and

complete.

17. I did not raise any material findings on the usefulness and reliability of the reported performance information for the

selected programme.

Additional matters

18. Although I raised no material findings on the usefulness and reliability of the reported performance information for the

selected programme, I draw attention to the following matters:

Adjustment of material misstatements

19. I identified material misstatements in the annual performance report submitted for auditing on the reported

performance information for Sub-programme 4: Government Fleet Management Trading Entity. As management subsequently

corrected the misstatements, I did not raise any material findings on the usefulness and reliability of the reported performance

information.

Achievement of planned targets

20. Refer to the annual performance report on pages xx to xx for information on the achievement of planned targets for

the year.

Compliance with legislation

21. I performed procedures to obtain evidence that the trading entity had complied with applicable legislation regarding

financial matters, financial management and other related matters. My findings on material non-compliance with specific

matters in key legislation, as set out in the general notice issued in terms of the PAA, are as follows:

Annual financial statements, performance and annual reports

22. The financial statements submitted for auditing were not prepared in accordance with the prescribed financial

reporting framework as required by section 40(1)(a) of the PFMA. Material misstatements of current assets, non-current assets

and disclosure items identified by the auditors in the submitted financial statements were subsequently corrected, but the

uncorrected material misstatements resulted in the financial statements receiving a qualified audit opinion.



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Internal audit

23. The accounting officer did not ensure that the internal audit function was established for the full financial year, as

required by section 38(1)(a)(i) of the PFMA and Treasury Regulations (TR) 3.2.2, 3.2.3 and 3.2.4.

24. The internal audit function did not submit reports, detailing the performance against the annual internal audit plan, to

the audit committee every quarter, as required by TR 3.2.7(d).

25. The internal audit function did not evaluate the effectiveness and efficiency of controls or give recommendations for

their enhancement and improvement, as required by TR 3.2.11.

26. The internal audit function did not evaluate the reliability and integrity of financial and operational information, as

required by TR 3.2.11(b).

27. The internal audit function did not evaluate the compliance with laws and regulations, as required by TR 3.2.11(e).

Expenditure management

28. Effective steps were not taken to prevent irregular and fruitless and wasteful expenditure, as required by section

38(1)(c)(ii) of the PFMA and TR 9.1.1.

Revenue management

29. Appropriate processes were not developed and implemented to provide for the collection, recording and reconciliation

of information about revenue, as required by TR 7.2.1.

Human resource management

30. Employees were appointed without following a proper process to verify the claims made in their applications in

contravention of Public Service Regulation (PSR) 1/VII/D.8.

31. Funded vacant posts were not filled within 12 months as required by PSR 1/VII/C.1A.2.

Internal control

32. I considered internal control relevant to my audit of the financial statements, annual performance report and

compliance with legislation. The matters reported below are limited to the significant internal control deficiencies that resulted

in the basis for qualified opinion, the findings on the annual performance report and the findings on non-compliance with

legislation included in this report.

Leadership

33. The accounting officer did not adequately review the financial statements prior to their submission for audit. As a

result, significant audit findings were raised in the current year due to insufficient oversight or follow-up action by management

and leadership which resulted in material adjustments to the financial statements and the modification of the audit opinion. In

addition, leadership did not adequately fulfil their oversight role of compliance with applicable laws and regulations. The entity

did not have systems or controls in place to prevent the irregular expenditure from being incurred.

34. Leadership did not ensure that there was an adequate information technology system in place for financial accounting

and reporting. Numerous internal control weaknesses were identified in the assets system which affected the revenue billed by

the entity, the most significant of which is that the system did not allow for the monitoring of assets to ensure the appropriate

classification in terms of the applicable financial reporting framework.



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Financial and performance management

35. The entity did not have a proper system of record management that provided for the maintenance of information that

supports the reported balances contained in the financial statements. Internal controls were not implemented, in all instances,

over the processing and reconciliation of transactions as manual reconciliations were often required which were subject to

error. The final audit outcome was achieved due to numerous amendments to the financial statements and re-auditing of

balances.

36. The entity did not have a formal documented process in place relating to the collection, monitoring and reporting of

performance information. Consequently, the annual performance report contained material findings which were subsequently

corrected by management.

37. Numerous instances of non-compliance with laws and regulations were identified which were due to a lack of

processes in place at the entity to ensure compliance with relevant legislation. Such non-compliance could have been

prevented had compliance been properly reviewed and monitored.

Governance

38. The risk assessment process performed by the entity was not adequate as it was not comprehensive in all

departmental responsibility areas. This contributed to significant findings on financial reporting and compliance with laws and

regulations.

39. The audit committee’s review of the financial statements did not identify material errors, which were subsequently

identified by the external auditors and communicated to management.

40. An internal audit service provider was appointed during the last quarter of the year and was therefore no operational

for the full year under review. This resulted in the internal audit function not being effective as it did not fulfil its responsibilities

as required by legislation.

OTHER REPORTS

Investigations

41. At the time of this report, the entity was investigating fraud relating to fuel cards that were cloned. Independent

forensic investigators were appointed and the investigations were still ongoing.

East London

30 July 2014


PART F: FINANCIAL INFORMATION – TRADING ENTITY ACCOUNTING OFFICER’S REPORT

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ACCOUNTING OFFICER’S REPORT

2 Accounting Officer’s Responsibilities and Approval

The accounting officer is required by the Public Finance Management Act, 1 of 1999, to maintain adequate accounting

records and is responsible for the content and integrity of the annual financial statements and related financial information

included in this report. It is the responsibility of the accounting officer to ensure that the annual financial statements fairly

present the state of affairs of the trading entity as at the end of the financial year and the results of its operations and cash

flows for the period then ended. The external auditors are engaged to express an independent opinion on the annual financial

statements and was given unrestricted access to all financial records and related data.

The financial statements have been prepared in accordance with Standards of Generally Recognised Accounting

Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board.

The annual financial statements are based upon appropriate accounting policies consistently applied and supported by

reasonable and prudent judgment and estimates.

The accounting officer acknowledges that she is ultimately responsible for the system of internal financial control established by

the trading entity and place considerable importance on maintaining a strong control environment. To enable the accounting

officer to meet these responsibilities, the accounting officer sets standards for internal control aimed at reducing the risk of

error or deficit in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly

defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk.

These controls are monitored throughout the trading entity and all employees are required to maintain the highest ethical

standards in ensuring the trading entity’s business is conducted in a manner that in all reasonable circumstances is above

reproach. The focus of risk management in the trading entity is on identifying, assessing, managing and monitoring all known

forms of risk across the trading entity. While operating risk cannot be fully eliminated, the trading entity endeavours to

minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed

within predetermined procedures and constraints.

The accounting officer is of the opinion, based on the information and explanations given by management, that the system of

internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual

financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance

against material misstatement or deficit.

The financial statements set out on pages 157 to 205, which have been prepared on the going concern basis, were approved by

the accounting officer on 31 May 2014 :

Accounting Officer

T Kgare


PART F: FINANCIAL INFORMATION – TRADING ENTITY ACCOUNTING OFFICER’S REPORT

Page 156

3 Accounting Officer’s Report

The accounting officer submits her report for the year ended 31 March 2014. 1. Review of activities Main business and operations The entity is engaged to provide and manage the fleet services in the provincial departments of the Eastern Cape Government in terms of the PFMA and Treasury Regulations 19. 2. Accounting Officer The accounting officer of the entity during the year and to the date of this report is as follows: Name: Nationality: Tsepo Kgare South African 3. Principal activities The entity is responsible to supply the Eastern Cape Government Departments with affordable and reliable vehicles. The entity rents the vehicles for the duration of the useful lives of the vehicles to the various Provincial Departments. 4. Establishment of the entity The Entity is established by Treasury Regulation No.19 of the Public Finance Management Act, 1 of 1999 (as amended by Act 29 of 1999.) The Executive Committee of the Province of the Eastern Cape resolved at its 26th Executive Council meeting held on 30 June 2010 (minute no.26, item 2.2.2) that the Department of Transport (DoT) establish a Trading Entity in line with Treasury Regulation No.19.


PART F: FINANCIAL INFORMATION – TRADING ENTITY STATEMENT OF FINANCIAL POSITION

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STATEMENT OF FINANCIAL POSITION

33. Annual Financial StatemetsStatement of Financial Position as at 31 March 2014

Figures in Rand Note(s) 2014 2013

Assets

Current Assets

Inventories 8 42,728,910 104,595,169

Investments 4 349,551,862 149,283,163

Finance lease receivables 6 69,969,817 154,391,260

Receivables from exchange transactions 9 50,704,862 98,067,291

Cash and cash equivalents 10 122,516,221 109,148,559

635,471,672 615,485,442

Non-Current Assets

Property, plant and equipment 3 99,093,797 52,011,189

Finance lease receivables 6 106,908,208 52,402,797

206,002,005 104,413,986

Non-current assets held for sale 11 5,951,914 2,304,720

Total Assets 847,425,591 722,204,148

Liabilities

Current Liabilities

Payables from exchange transactions 14 60,503,402 45,772,608

Provisions 13 33,279,840 58,445,167

93,783,242 104,217,775

Total Liabilities 93,783,242 104,217,775

Net Assets 753,642,349 617,986,373

Net Assets

Reserves

Capital Contribution 12 362,001,648 362,001,648

Accumulated surplus 391,640,701 255,984,724

Total Net Assets 753,642,349 617,986,372


PART F: FINANCIAL INFORMATION – TRADING ENTITY STATEMENT OF FINANCIAL PERFORMANCE

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STATEMENT OF FINANCIAL PERFORMANCE

Statement of Financial Performance

Figures in Rand Note(s) March 2014 March 2013

Revenue

Rendering of services 16 434,431,268 384,261,339

Interest earned 21 118,267,844 112,472,897

Other income 17 45,922 39,996

Interest received - investment 9,282,680 -

Total revenue 562,027,714 496,774,232

Expenditure

Personnel costs 19 (16,862,328) (9,270,925)

Depreciation and amortisation 23 (12,723,419) (6,655,056)

Impairment expense 24 (21,532,249) (6,595,510)

Finance costs 26 - (59,392)

Fleet Running costs 20 (270,175,028) (203,333,508)

Office Building Maintenance (1,767,752) (419,276)

Movement in provision for maintenance of vehicles 27 31,530,219 (24,467,334)

Administration costs 18 (20,879,082) (15,686,819)

Total expenditure (312,409,639) (266,487,820)

Operating surplus 249,618,075 230,286,412

Fair value adjustments 22 1,000,141 1,378,144

Profit/(loss) on disposal non-current assets held for sale 25 3,749,842 -

4,749,983 1,378,144

Surplus for the year 254,368,058 231,664,556

Attributable to:

Owners of the controlling entity 254,368,058 231,664,556


PART F: FINANCIAL INFORMATION – TRADING ENTITY STATEMENT OF CHANGES IN NET ASSETS

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STATEMENT OF CHANGES IN NET ASSETS

Statement of Changes in Net Assets

Figures in Rand

Capital

Contribution

Accumulated surplus

Total net assets

Balance at 01 April 2012 362,001,648 24,320,168 386,321,816 Changes in net assets Surplus for the year - 231,664,556 231,664,556

Total changes - 231,664,556 231,664,556

Balance at 01 April 2013 362,001,648 255,984,724 617,986,372 Changes in net assets Prior year error - 36,287,919 36,287,919

Net income (losses) recognised directly in net assets - 36,287,919 36,287,919 Surplus for the year - 254,368,058 254,368,058

Total recognised income and expenses for the year - 290,655,977 290,655,977 Surrender of surplus - Treasury - (155,000,000) (155,000,000)

Total changes - 135,655,977 135,655,977

Balance at 31 March 2014 362,001,648 391,640,701 753,642,349

Note(s) 12


PART F: FINANCIAL INFORMATION – TRADING ENTITY CASH FLOW STATEMENT

Page 160

CASH FLOW STATEMENT

Cash Flow Statement

Figures in Rand Note(s) March 2014 March 2013

Cash flows from operating activities

Receipts

Cash recieved from rendering services 468,800,680 364,862,293

Interest income 9,282,680 -

Interest income 21 118,267,845 112,320,602

596,351,205 477,182,895

Payments

Suppliers (227,820,359) (336,911,323)

Finance costs - (59,392)

(227,820,359) (336,970,715)

Net cash flows from operating activities 28 368,530,846 140,212,180

Cash flows from investing activities

Purchase of Property, Plant and Equipment 3 (894,626) (164,373,493)

Purchase of other intangible assets - (507,302)

Decrease/(Increase) in Investments (199,268,558) (147,905,019)

Purchase of donated assets - (3,412,351)

Other changes, movements in property, plant and equipment - 160,219,542

Net cash flows from investing activities (200,163,184) (155,978,623)

Cash flows from financing activities

Surrender of surplus (155,000,000) -

Net increase/(decrease) in cash and cash equivalents 13,367,662 (15,766,443)

Cash and cash equivalents at the beginning of the year 109,148,559 124,915,002

Cash and cash equivalents at the end of the year 10 122,516,221 109,148,559


PART F: FINANCIAL INFORMATION – TRADING ENTITY ACCOUNTING POLICIES

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ACCOUNTING POLICIES

1. Accounting Policies The accounting policies applicable in the preparation of these annual financial statements are detailed below and are consistent with the previous period, unless specified otherwise

1.1 Basis of preperation The annual financial statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board.

These annual financial statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention unless specified otherwise.

In the absence of a GRAP statement, principles from IFRS have been used i.e. Insurance Accounting.

1.2 Presentation currency

The annual financial statements are presented in South African rands, which is the functional currency of the Entity.

1.3 Going concern These financial statements are prepared on a going concern basis. 1.4 Comparative information The comparative figures relate to the financial results of operations for the year ended 31 March 2013. Where applicable, the comparative figures have been restated as a result of corrections to prior year audit findings and reconsideration's by management.

1.5 Significant judgments and sources of estimation uncertainty In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of judgment is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the annual financial statements. Significant judgments include:

1.5.1 Provisions

Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions are included in note 13 Provisions.

1.5.2 Trade and other receivables

The entity assesses its trade and other receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in surplus or deficit, management makes judgments as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from the receivables financial asset

1.5.3 Availableforsale financial assets

The entity follows the guidance of IAS 39 to determine when an availableforsale financial asset is impaired. This determination requires significant judgment. In making this judgment, the entity evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its cost; and the financial health of and nearterm business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flow.



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1.5.4 Impairment testing

The recoverable amounts of cashgenerating units and individual assets have been determined based on the higher of valueinuse calculations and fair values less costs to sell. These calculations require the use of estimates and assumptions. It is reasonably possible that the assumption may change which may then impact our estimations and may then require a material adjustment to the carrying value of goodwill and tangible assets.

1.5.5 Depreciation and amortisation

Depreciation and amortisation recognised on Property, Plant and Equipment and Intangible assets is determined based on the useful lives on the underlying items. The useful lives are based on management’s estimation of the asset condition, its current use and expected future use of the asset.

1.5.6 Accrued revenue

Revenue from exchange transactions is derived from kilometres that are travelled throughout the financial year. At year end an estimation is made by management of kilometres travelled between the last billing date and the last day of the financial year and an accrual is raised in this effect.

1.5.7 Assets held for sale

Assets held for sale are valued based on management’s estimation as guided by the motor industry booklet and guidelines.

1.5.8 Gross investment in lease – residual value

Residual values used in the calculation of the gross investment in lease are based on management’s estimation, vehicle condition and expected use of the leased vehicles. These residuals are calculated using a rate determined with reference to the potential decline in the value of fleet vehicles

over the lease period as per trade value data.

1.6 Property plant and equipment Property, Plant and Equipment are tangible noncurrent assets that are held for use in the production or supply of goods or services, rental to others, or for administrative purposes, and are expected to be used during more than one period

Initial recognition.

The cost of an item of property, plant and equipment is recognised as an asset when:

- it is probable that future economic benefits or service potential associated with the item will flow to the entity; and

-the cost of the item can be measured reliably

The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and rebates are deducted in arriving at the cost.

Where an asset is acquired at no cost, or for a nominal cost, its cost is its fair value as at date of acquisition

Where an item of property, plant and equipment is acquired in exchange for a nonmonetary asset or monetary assets, or a combination of monetary and nonmonetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired item's fair value was not determinable, it's deemed cost is the carrying amount of the asset(s) given up.

When significant components 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.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of



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property, plant and equipment, the carrying amount of the replaced part is derecognised.

The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also included in the cost of property, plant and equipment, where the entity is obligated to incur such expenditure, and where the obligation arises as a result of acquiring the asset or using it for purposes other than the production of inventories

Recognition of costs in the carrying amount of an item of property, plant and equipment ceases when the item is in the location and condition necessary for it to be capable of operating in the manner intended by management.

Major spare parts and stand by equipment which are expected to be used for more than one period are included in property, plant and equipment. In addition, spare parts and stand by equipment which can only be used in connection with an item of property, plant and equipment are accounted for as property, plant and equipment.

Major inspection costs which are a condition of continuing use of an item of property, plant and equipment and which meet the recognition criteria above are included as a replacement in the cost of the item of property, plant and equipment. Any remaining inspection costs from the previous inspection are derecognised.

Subsequent measurement

Property, Plant and Equipment are depreciated on the over their expected useful lives.

Any increase in an asset’s carrying amount, as a result of a revaluation, is credited directly to a revaluation surplus. The increase is recognised in surplus or deficit to the extent that it reverses a revaluation decrease of the same asset previously recognised in surplus or deficit.

1.6 Property plant and equipment (continued)

The useful lives of items of property, plant and equipment have been assessed as follows:

Item Average useful life

Furniture 7 years Airconditioners 4 years Motor vehicles 3-7 years Computer equipment 3 years The useful life and depreciation method of each asset are reviewed at the end of each reporting date. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate

Reviewing the useful life of an asset on an annual basis does not require the entity to amend the previous estimate unless expectations differ from the previous estimate.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.

The depreciation charge for each period is recognised in surplus or deficit unless it is included in the carrying amount of another asset.

De recognition

Items of property, plant and equipment are derecognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the asset.

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

Operating lease vehicles



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Vehicles that exceed the maximum Kilometres per the rate card but are still being used by the User Departments are transfered at deemed cost to take into account the decline in economic benefits and service potential associated witht that vehicle from its original purchase date to the date of transfer due to use by the User Departments

These vehicles are subsequently measured at the deemed cost less accumulated depreciation and impairment over the maximum useful life of the vehicles (7 years).

1.7 Intangible assets

An asset is identified as an intangible asset when it: Is an identifiable asset without physical substance.

An intangible asset is recognised when: it is probable that the expected future economic benefits or service potential that are attributable to the asset

will flow to the entity; and the cost or fair value of the asset can be measured reliably.

Subsequent Measurement

Intangible assets are initially recognised at cost.

An intangible asset acquired through a non-exchange transaction, the cost shall be its fair value as at the date of acquisition.

Expenditure on research (or on the research phase of an internal project) is recognised as an expense when it is incurred.

An intangible asset arising from development (or from the development phase of an internal project) is recognised when: it is technically feasible to complete the asset so that it will be available for use or sale. there is an intention to complete and use or sell it. there is an ability to use or sell it. it will generate probable future economic benefits or service potential. there are available technical, financial and other resources to complete the development and to use or sell the

asset. the expenditure attributable to the asset during its development can be measured reliably. Intangible

assets are carried at cost less any accumulated amortisation and any impairment losses.

An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows or service potential. Amortisation is not provided for these intangible assets, but they are tested for impairment annually and whenever there is an indication that the asset may be impaired. For all other intangible assets amortisation is provided on a straight line basis over their useful life.

The amortisation period and the amortisation method for intangible assets are reviewed at each reporting date.

Reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is an indicator that the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying amount is amortised over its useful life.

Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not recognised as intangible assets.

Amortisation is provided to write down the intangible assets, on a straight line basis,

Computer software 5 years



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1.8 Non-current assets held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

Vehicles that have completed their lease period and have been returned by the departments are classified as held for sale, unless kept for a specific use by the entity.

Non-current assets held for sale (or disposal group) are measured at the lower of its carrying amount and fair value less costs to sell.

A non-current asset is not depreciated (or amortised) while it is classified as held for sale, or while it is part of a disposal group classified as held for sale.

1.9 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or a residual interest of another entity.

The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectibility.

A concessionary loan is a loan granted to or received by an entity on terms that are not market related.

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

Derecognition is the removal of a previously recognised financial asset or financial liability from an entity’s statement of financial position.

A derivative is a financial instrument or other contract with all three of the following characteristics: Its value changes in response to the change in a specified interest rate, financial instrument price,

commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract (sometimes called the ‘underlying’).

It requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors.

It is settled at a future date.



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1.9 Financial instruments (continued)

The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or group of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, an entity shall estimate cash flows considering all contractual terms of the financial instrument (for example, prepayment, call and similar options) but shall not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate (see the Standard of GRAP on Revenue from Exchange Transactions), transaction costs, and all other premiums or discounts. There is a presumption that the cash flows and the expected life of a group of similar financial instruments can be estimated reliably. However, in those rare cases when it is not possible to reliably estimate the cash flows or the expected life of a financial instrument (or group of financial instruments), the entity shall use the contractual cash flows over the full contractual term of the financial instrument (or group of financial instruments).

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s length transaction.

A financial asset is: cash; a residual interest of another entity; or a contractual right to:

- receive cash or another financial asset from another entity; or - exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity.

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

A financial liability is any liability that is a contractual obligation to: deliver cash or another financial asset to another entity; or exchange financial assets or financial liabilities under conditions that are potentially unfavourable to

the entity.

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Liquidity risk is the risk encountered by an entity in the event of difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

Loan commitment is a firm commitment to provide credit under pre-specified terms and conditions.

Loans payable are financial liabilities, other than short-term payables on normal credit terms.

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market.

A financial asset is past due when a counterparty has failed to make a payment when contractually due.



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1.9 Financial instruments (continued) A residual interest is any contract that manifests an interest in the assets of an entity after deducting all of its liabilities. A residual interest includes contributions from owners, which may be shown as:

equity instruments or similar forms of unitised capital; a formal designation of a transfer of resources (or a class of such transfers) by the parties to the

transaction as forming part of an entity’s net assets, either before the contribution occurs or at the time of the contribution; or

a formal agreement, in relation to the contribution, establishing or increasing an existing financial interest in the net assets of an entity. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or financial liability. An incremental cost is one that would not have been incurred if the entity had not acquired, issued or disposed of the financial instrument. Financial instruments at amortised cost are non-derivative financial assets or non-derivative financial liabilities that have fixed or determinable payments, excluding those instruments that:

the entity designates at fair value at initial recognition; or are held for trading.

Financial instruments at cost are investments in residual interests that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured. Financial instruments at fair value comprise financial assets or financial liabilities that are:

derivatives; combined instruments that are designated at fair value; instruments held for trading. A financial instrument is held for trading if:

- it is acquired or incurred principally for the purpose of selling or repurchasing it in the nearterm; or - on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short term profit-taking; - non-derivative financial assets or financial liabilities with fixed or determinable payments that are designated at fair value at initial recognition; and - financial instruments that do not meet the definition of financial instruments at amortised cost or financial instruments at cost. 1.10 Leases A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership. Finance leases - lessor The entity recognises finance lease receivables as assets on the statement of financial position. Such assets are presented as a receivable at an amount equal to the net investment in the lease. Finance revenue is recognised based on a pattern reflecting a constant periodic rate of return on the entity’s net investment in the finance lease.



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1.10 Leases (continued)

Finance leases - lessee

Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Minimum lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of on the remaining balance of the liability. Any contingent rents are expensed in the period in which they are incurred. Operating leases - lessor Operating lease revenue is recognised as revenue on a straight-line basis over the lease term. Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as the lease revenue. The aggregate cost of incentives is recognised as a reduction of rental revenue over the lease term on a straight-line basis. The aggregate benefit of incentives is recognised as a reduction of rental expense over the lease term on a straight-line basis. Income for leases is disclosed under revenue in statement of financial performance. Operating leases - lessee Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability. 1.11 Inventories Initial Measurement

Inventories initially measured at cost except where inventories are acquired through a non-exchange transaction, then their costs are their fair value as at the date of acquisition.

Subsequent Measurement

Subsequently inventories are measured at the lower of cost and net realisable value. Vehicles that are being made ready for leasing to departments are classified as inventory. This category of inventory is not subsequently measured at lower of cost or net realisable value, this is because the economic benefits will be fully realised once they are leased. Net realisable value is the estimated selling price in the ordinary course of operations less the estimated costs of completion and the estimated costs necessary to make the sale, exchange or distribution.

The cost of inventories is the cost of purchase plus plus any costs necessary to bring the item to its prresent location and condition. Each inventory item is measured at its actual costs Current replacement cost is the cost the entity incurs to acquire the asset on the reporting date.



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1.11 Inventories (continued)

Derecognition

When inventories are sold, the carrying amounts of those inventories are recognised as an expense in the period in which the related revenue is recognised. If there is no related revenue, the expenses are recognised when the goods are distributed, or related services are rendered. The amount of any write-down of inventories to net realisable value or current replacement cost and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value or current replacement cost, are recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

1.12 Impairment of cash-generating assets

Cash-generating assets are those assets held by the entity with the primary objective of generating a commercial return. When an asset is deployed in a manner consistent with that adopted by a profit-orientated entity, it generates a commercial return.

Impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the asset’s future economic benefits or service potential through depreciation (amortisation).

Carrying amount is the amount at which an asset is recognised in the statement of financial position after deducting any accumulated depreciation and accumulated impairment losses thereon.

A cash-generating unit is the smallest identifiable group of assets held with the primary objective of generating a commercial return that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets.

Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.

Depreciation (Amortisation) is the systematic allocation of the depreciable amount of an asset over its useful life.

Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.

Recoverable amount of an asset or a cash-generating unit is the higher its fair value less costs to sell and its value in use.

Useful life is either: (a) the period of time over which an asset is expected to be used by the entity; or (b) the number of production or similar units expected to be obtained from the asset by the entity.

1.13 Capital Contribution

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

Consideration received for the establishment of the entity shall be recognised directly in equity as capital contributions.

1.14 Employee benefits

Employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees.



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1.14 Employee benefits (continued) A qualifying insurance policy is an insurance policy issued by an insurer that is not a related party (as defined in the Standard of GRAP on Related Party Disclosures) of the reporting entity, if the proceeds of the policy can be used only to pay or fund employee benefits under a defined benefit plan and are not available to the reporting entity’s own creditors (even in liquidation) and cannot be paid to the reporting entity, unless either:

the proceeds represent surplus assets that are not needed for the policy to meet all the related employee benefit obligations; or

the proceeds are returned to the reporting entity to reimburse it for employee benefits already paid. Termination benefits are employee benefits payable as a result of either:

an entity’s decision to terminate an employee’s employment before the normal retirement date; or an employee’s decision to accept voluntary redundancy in exchange for those benefits.

Other long-term employee benefits are employee benefits (other than post-employment benefits and termination benefits) that are not due to be settled within twelve months after the end of the period in which the employees render the related service. Vested employee benefits are employee benefits that are not conditional on future employment. Composite social security programs are established by legislation and operate as multi-employer plans to provide post-employment benefits as well as to provide benefits that are not consideration in exchange for service rendered by employees. A constructive obligation is an obligation that derives from an entity’s actions where by an established pattern of past practice, published policies or a sufficiently specific current statement, the entity has indicated to other parties that it will accept certain responsibilities and as a result, the entity has created a valid expectation on the part of those other parties that it will discharge those responsibilities.



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1.14 Employee benefits (continued)

Short-term employee benefits

Short-term employee benefits are employee benefits (other than termination benefits) that are due to be settled within twelve months after the end of the period in which the employees render the related service. Short-term employee benefits include items such as:

wages, salaries and social security contributions; short-term compensated absences (such as paid annual leave and paid sick leave) where the

compensation for the absences is due to be settled within twelve months after the end of the reporting period in which the employees render the related employee service;

bonus, incentive and performance related payments payable within twelve months after the end of the reporting period in which the employees render the related service; and

non-monetary benefits (for example, medical care, and free or subsidised goods or services such as housing, cars and cellphones) for current employees. When an employee has rendered service to the entity during a reporting period, the entity recognise the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service:

as a liability (accrued expense), after deducting any amount already paid. If the amount already paid exceeds the undiscounted amount of the benefits, the entity recognise that excess as an asset (prepaid expense) to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund; and

as an expense, unless another Standard requires or permits the inclusion of the benefits in the cost of an asset. The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs. The entity measure the expected cost of accumulating compensated absences as the additional amount that the entity expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The entity recognise the expected cost of bonus, incentive and performance related payments when the entity has a present legal or constructive obligation to make such payments as a result of past events and a reliable estimate of the obligation can be made. A present obligation exists when the entity has no realistic alternative but to make the payments. Post-employment benefits Post-employment benefits are employee benefits (other than termination benefits) which are payable after the completion of employment. Post-employment benefit plans are formal or informal arrangements under which an entity provides post- employment benefits for one or more employees. Multi-employer plans are defined contribution plans (other than state plans and composite social security program) or defined benefit plans (other than state plans) that pool the assets contributed by various entities that are not under common control and use those assets to provide benefits to employees of more than one entity, on the basis that contribution and benefit levels are determined without regard to the identity of the entity that employs the employees concerned. Multi-employer plans and/or State plans and/or Composite social security programmes The entity classifies a multi-employer plan and/or state plans and/or composite social security programmes as a defined contribution plan or a defined benefit plan under the terms of the plan (including any constructive obligation that goes beyond the formal terms).



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1.15 Provisions and contingencies

Provisions are recognised when: the entity has a present obligation as a result of a past event; it is probable that an outflow of resources embodying economic benefits or service potential will be required to

settle the obligation; and a reliable estimate can be made of the obligation.

The amount of a provision is the best estimate of the expenditure expected to be required to settle the present obligation at the reporting date.

Where the effect of time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation.

The discount rate is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement is treated as a separate asset. The amount recognised for the reimbursement does not exceed the amount of the provision.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversed if it is no longer probable that an outflow of resources embodying economic benefits or service potential will be required, to settle the obligation.

Where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognised as an interest expense.

A provision is used only for expenditures for which the provision was originally recognised. Provisions

are not recognised for future operating deficits.

If an entity has a contract that is onerous, the present obligation (net of recoveries) under the contract is recognised and measured as a provision.

A constructive obligation to restructure arises only when an entity: has a detailed formal plan for the restructuring, identifying at least:

- the activity/operating unit or part of a activity/operating unit concerned; - the principal locations affected; - the location, function, and approximate number of employees who will be compensated for services

being terminated; - the expenditures that will be undertaken; and - when the plan will be implemented; and

has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it.

A restructuring provision includes only the direct expenditures arising from the restructuring, which are those that are both: necessarily entailed by the restructuring; and not associated with the ongoing activities of the entity



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1.15 Provisions and contingencies (continued)

No obligation arises as a consequence of the sale or transfer of an operation until the entity is committed to the sale or transfer, that is, there is a binding arrangement.

After their initial recognition contingent liabilities recognised in entity combinations that are recognised separately are subsequently measured at the higher of:

the amount that would be recognised as a provision; and the amount initially recognised less cumulative amortisation.

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 30.

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

Loan commitment is a firm commitment to provide credit under pre-specified terms and conditions.

The Entity recognises provision for financial guarantees and loan commitments when it is probable that an outflow of resources embodying economic benefits and service potential will be required to settle the obligation and a reliable estimate of the obligation can be made.

Determining whether an outflow of resources is probable in relation to financial guarantees requires judgment. Indications that an outflow of resources may be probable are:

financial difficulty of the debtor; defaults or delinquencies in interest and capital repayments by the debtor; breaches of the terms of the debt instrument that result in it being payable earlier than the agreed term and

the ability of the debtor to settle its obligation on the amended terms; and a decline in prevailing economic circumstances (e.g. high interest rates, inflation and

unemployment) that impact on the ability of entities to repay their obligations.

Where a fee is received by the Entityssuing a financial guarantee and/or where a fee is charged on loan commitments, it is considered in determining the best estimate of the amount required to settle the obligation at reporting date. Where a fee is charged and the Entity ers that an outflow of economic resources is probable, an cognises the obligation at the higher of:

the amount determined using in the Standard of GRAP on Provisions, Contingent Liabilities and Contingent Assets; and

the amount of the fee initially recognised less, where appropriate, cumulative amortisation recognised in accordance with the Standard of GRAP on Revenue from Exchange Transactions.

1.16 Revenue from exchange transactions

Revenue is the gross inflow of economic benefits or service potential during the reporting period when those inflows result in an increase in net assets, other than increases relating to contributions from owners.

Exchange transactions are transactions in which one entity receives assets or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of cash, goods, services, or use of assets) to another entity in exchange.

An exchange transaction is one in which the entity receives assets or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of goods, services or use of assets) to the other party in exchange.

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.

Rendering of services



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1.16 Revenue from exchange transactions (continued) When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the reporting date. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied:

the amount of revenue can be measured reliably; it is probable that the economic benefits or service potential associated with the transaction will flow to the

entity; the stage of completion of the transaction at the reporting date can be measured reliably; and the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

As a service organisation, the entity recognises revenue when the criteria is met When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable (where applicable). Interest Revenue arising from the use by others of entity assets yielding interest, royalties and dividends is recognised when:

It is probable that the economic benefits or service potential associated with the transaction will flow to the entity, and

The amount of the revenue can be measured reliably. Interest is recognised, in surplus or deficit, using the effective interest rate method. 1.17 Revenue from non-exchange transactions Revenue comprises gross inflows of economic benefits or service potential received and receivable by an Enth represents an increase in net assets, other than increases relating to contributions from owners. Conditions on transferred assets are stipulations that specify that the future economic benefits or service potential embodied in the asset is required to be consumed by the recipient as specified or future economic benefits or service potential must be returned to the transferor. Control of an asset arise when the Entity can use or otherwise benefit from the asset in pursuit of its objectives and can exclude or otherwise regulate the access of others to that benefit. Exchange transactions are transactions in which one entity receives assets or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of cash, goods, services, or use of assets) to another entity in exchange. Expenses paid through the tax system are amounts that are available to beneficiaries regardless of whether or not they pay taxes. Fines are economic benefits or service potential received or receivable by entities, as determined by a court or other law enforcement body, as a consequence of the breach of laws or regulations. Non-exchange transactions are transactions that are not exchange transactions. In a non-exchange transaction, an Entity either receives value from another Entity without directly giving approximately equal value in exchange, or gives value to another Entity without directly receiving approximately equal value in exchange. Restrictions on transferred assets are stipulations that limit or direct the purposes for which a transferred asset may be used, but do not specify that future economic benefits or service potential is required to be returned to the transferor if not deployed as specified.



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1.17 Revenue from non-exchange transactions (continued) Stipulations on transferred assets are terms in laws or regulation, or a binding arrangement, imposed upon the use of a transferred asset by entities external to the reporting Entity Tax expenditures are preferential provisions of the tax law that provide certain taxpayers with concessions that are not available to others. The taxable event is the event that the government, legislature or other authority has determined will be subject to taxation. Taxes are economic benefits or service potential compulsorily paid or payable to entities, in accordance with laws and or regulations, established to provide revenue to government. Taxes do not include fines or other penalties imposed for breaches of the law. Transfers are inflows of future economic benefits or service potential from non-exchange transactions, other than taxes. Gifts and donations, including goods in-kind Gifts and donations, including goods in kind, are recognised as assets and revenue when it is probable that the future economic benefits or service potential will flow to the entity and the fair value of the assets can be measured reliably. Services in-kind Services in-kind are not recognised. 1.18 Borrowing costs

The entity does not have any borrowings and such does not account for borrowing costs 1.19 Unauthorised expenditure Unauthorised expenditure means:

overspending and expenditure not in accordance with the purpose of a vote or, in the case of a main division, not in

accordance with the purpose of the main division. All expenditure relating to unauthorised expenditure is recognised as an expense in the statement of financial performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance. 1.20 Fruitless and wasteful expenditure Fruitless and wasteful expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised. All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the statement of financial performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance.



Page 176

1.21 Irregular expenditure

Irregular expenditure as defined in section 1 of the PFMA is expenditure other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation, including - (a) this Act; or (b) the State Tender Board Act, 1968 (Act No. 86 of 1968), or any regulations made in terms of the Act; or (c) any provincial legislation providing for procurement procedures in that provincial government.

National Treasury practice note no. 4 of 2008/2009 which was issued in terms of sections 76(1) to 76(4) of the PFMA requires the following (effective from 1 April 2008):

Irregular expenditure that was incurred and identified during the current financial and which was condoned before year end and/or before finalisation of the financial statements must also be recorded appropriately in the irregular expenditure register. In such an instance, no further action is also required with the exception of updating the note to the financial statements.

Irregular expenditure that was incurred and identified during the current financial year and for which condonement is being awaited at year end must be recorded in the irregular expenditure register. No further action is required with the exception of updating the note to the financial statements.

Where irregular expenditure was incurred in the previous financial year and is only condoned in the following financial year, the register and the disclosure note to the financial statements must be updated with the amount condoned.

Irregular expenditure that was incurred and identified during the current financial year and which was not condoned by the National Treasury or the relevant authority must be recorded appropriately in the irregular expenditure register. If liability for the irregular expenditure can be attributed to a person, a debt account must be created if such a person is liable in law. Immediate steps must thereafter be taken to recover the amount from the person concerned. If recovery is not possible, the accounting officer or accounting authority may write off the amount as debt impairment and disclose such in the relevant note to the financial statements. The irregular expenditure register must also be updated accordingly. If the irregular expenditure has not been condoned and no person is liable in law, the expenditure related thereto must remain against the relevant programme/expenditure item, be disclosed as such in the note to the financial statements and updated accordingly in the irregular expenditure register.

.

1.22 Investments

Where the carrying amount of an investment is greater than the estimated recoverable amount, it is written down immediately to its recoverable amount and an impairment loss is charged to the statement of financial performance. Increases in the carrying amount, other than contributions to the investment are recognised as a fair value adjustments.

1.23 Budget information

Trading Entities are typically subject to budgetary limits in the form of appropriations or budget authorisation's (or equivalent), which is given effect through authorising legislation, appropriation or similar.

General purpose financial reporting by Trading Entities shall provide information on whether resources were obtained and used in accordance with the legally adopted budget.

The approved budget is prepared on a accrual basis and presented by economic classification linked to performance outcome objectives.

The approved budget covers the fiscal period from 01/04/2013 to 31/03/2014.



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1.23 Budget information (continued)

The budget for the economic entity includes all the entities approved budgets under its control.

The financial statements and the budget are on the same basis of accounting therefore a comparison with the budgeted amounts for the reporting period have been included in the Statement of comparison of budget and actual amounts.

1.24 Related parties

The entity operates in an economic sector currently dominated by entities directly or indirectly owned by the South African Government. As a consequence of the constitutional independence of the three spheres of government in South Africa, only entities within the provincial sphere of government are considered to be related parties.

Management are those persons responsible for planning, directing and controlling the activities of the entity, including those charged with the governance of the entity in accordance with legislation, in instances where they are required to perform such functions.

Close members of the family of a person are considered to be those family members who may be expected to influence, or be influenced by, that management in their dealings with the entity.

Only transactions with related parties not at arm’s length or not in the ordinary course of business are disclosed.

1.25 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially and subsequently recorded at fair value.

1.26 Correction of prior period errors

Correction of errors is applied retrospectively in the period in which the error has occurred in accordance with GRAP 3 requirements, except to the extent that it is impracticable to determine the period-specific effects or the cumulative effect of the error. In such cases the Trading Entity shall restate the opening balances of assets, liabilities and net assets for the earliest period for which retrospective restatement is practicable.t

1.27 Commitments

A commitment is the entity’s intention to commit to an outflow of its resources embodying economic benefits commitments are disclosed in note 29.

Commitments are split between operating and capital commitments, and where the period is longer than a year, this is reflected in the disclosure note. Only expenditure relating to commitments not already recognised will be disclosed and the contracts should be non-cancelable, or highly unlikely to be cancelled.


PART F: FINANCIAL INFORMATION – TRADING ENTITY NOTES TO THE FINANCIAL STATEMENTS

Page 178

NOTES TO THE FINANCIAL STATEMENTS

Notes to the Financial Statements

Figures in Rand March 2014 March 2013

2. New standards and interpretations 2.1 Standards and interpretations approved but not yet effective In the current year, the municipality has not adopted the following standards and interpretations that are approved but not yet effective for the current financial year

Standard/ Interpretation: Effective date: Years beginning on or after

Expected impact:

GRAP 18: Segment Reporting 01 April 2013 No impact GRAP 25: Employee benefits 01 April 2013 No impact

The aggregate impact of the above is not considered to be material : 3. Property, plant and equipment

Cost / Valuation

31 Mar 2014

Accumulated depreciation

and accumulated impairment

Carrying value

Cost / Valuation

31 Mar 2013

Accumulated depreciation

and accumulated impairment

Carrying value

Furniture and fixtures 1,034,111 (183,375) 850,736 564,733 (60,881) 503,852 Motor vehicles 1,244,161 (441,556) 802,605 1,244,161 (186,757) 1,057,404 Office equipment 146,341 (19,763) 126,578 8,191 (1,148) 7,043

Computer equipment 622,758 (221,023) 401,735 342,796 (64,484) 278,312

Leased Motor Vehicles - Operating lease

103,571,079 (6,658,936) 96,912,143 58,758,784 (8,594,206) 50,164,578

Total 106,618,450 (7,524,653) 99,093,797 60,918,665 (8,907,476) 52,011,189

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Page 181

4. Investments

Designated at fair value

Stanlib Classic Investments 349,551,862 149,283,163

Current assets Designated at fair value 349,551,862 149,283,163

5. Financial assets by category

The accounting policies for financial instruments have been applied to the line items below:

2014

Loans and receivables Fair value through

surplus or deficit -

designated

Total

Trade and other receivables from exchange transactions 50,704,862 - 50,704,862 Finance Lease receivables 176,878,025 - 176,878,025 Cash and cash equivalents 122,516,221 - 122,516,221 Investments - 349,551,862 349,551,862

350,099,108 349,551,862 699,650,970

2013

Loans and receivables Fair value through

surplus or deficit -

designated

Total

Trade and other receivables 99,034,329 - 99,034,329 Finance lease receivables 206,794,056 - 206,794,056 Cash and cash equivalents 109,148,559 - 109,148,559 Investments - 149,283,163 149,283,163

414,976,944 149,283,163 564,260,107



Page 182

6. Finance lease receivables

Gross investment in the lease due - within one year 141,352,544 270,334,188 - in second to fifth year inclusive 174,526,864 122,062,121

315,879,408 392,396,309 less: Unearned finance revenue (139,001,383) (185,602,253)

176,878,025 206,794,056

Present value of minimum lease payments due - within one year 69,969,817 154,391,260 - in second to fifth year inclusive 106,908,208 52,402,796

176,878,025 206,794,056

Non-current assets 106,908,208 52,402,797 Current assets 69,969,817 154,391,260

176,878,025 206,794,057

The entity entered into material finance leasing arrangement with Provincial departments. The agreement between the entity and the user departments requires the entity to maintain the vehicles during the lease period and to replace these as directed by the rate card and the service level agreement when they reach predetermined kilometres or the period.



Page 183

7. Employee benefit obligations

Defined benefit plan

It is the policy of the entity to provide retirement benefits to all its employees in in respect of pension funds. All employees of the entity are memebers of the Government Employees Pension Fund (GEPF) , to which the Entity contributes, the fund is administered and underwritten by an external party through National Treasury , and the entity bears no further obligation.

The entity is under no obligation to cover any unfunded benefits.

8. Inventories

Motor vehicles 42,728,910 104,595,169

Reconciliation of Inventories - 31 March 2014: Opening balance 104,595,168 2,540,472 Transfer of opening balance to lease receivables (67,381,352) (2,540,472) Additions 5,515,094 99,284,734 Transfer of returned vehicles from Finance Lease Receivable - 5,310,435

42,728,910 104,595,169

The inventory balance for the financial quarter ended relates to 187 motor vehicles acquired by the Entity not yet distributed to the Provincial Departments which were still stationed at the Entity's premises as at 31 March 2014.

These Vehicles are waiting to be converted and registered so as to be in a condition that can be used by the user departments for service delivery.

The prior year balance has been restated due to the fact that the vehicles were incorrectly written down to Net Realisable value, this was incorrect as there is no impairment of the economic benefits associated with the vehicle as the delay will not change the fact that those vehicles will earn lease rentals over the lease terms.



Page 184

9. Receivables from exchange transactions

Trade debtors - Provincial Departments 34,334,378 97,873,417 Prepaid expenses - Third Party claims - 41,579 Dika Transport CC 11,141,250 - Accrued Revenue 4,763,482 - Accrued Interest 465,752 152,295

50,704,862 98,067,291

Trade and other receivables pledged as security

These balances are not secured by any collateral.

Credit quality of trade and other receivables

The above receivables relate to Provincial Departments which do not have external credit ratings:

Trade receivables

Counterparties without external credit rating Trade Receivables 34,334,378 97,873,417 Prepayments Dika Transport

- 11,141,250

41,579 -

Accrued revenue 4,763,482 - Accrued Interest 465,752 152,295

50,704,862 98,067,291

All counter parties are considered to be at the minimum credit grade.

Trade and other receivables impaired

Trade and other receivables comprise Provincial Departments and are considered to be fully recoverable. As a result these receivables have not been impaired or encumbered in any way.

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above.

Trade debtors - Provincial departments comprises the following:

Provincial Treasury 77,402 61,839 Office of the Premier - 111,901 Safety and Security 25,195 48,140 Human Settlements 2,498,751 1,413,905 Local Government 1,050,200 970,435 Sports, Arts and Culture 1,466,322 1,836,774 Department of Economic Affairs and Tourism 1,085,951 616,858 Rural Development and Agrarian Reform 4,774,643 7,524,409 Provincial Department of Public Works 1,395,205 3,165,703 Provincial Department of Education 3,087,372 2,688,957 Provincial Department of Transport 2,798,954 3,111,807 Provincial Department of Social Development 456,415 12,834,060 Provincial Department of Health 15,617,968 27,087,985 Emergency and Rescue Services - 36,400,644

34,334,378 97,873,417



Page 185

9. Receivables from exchange transactions (continued)Prepaid expenses - Third Party claims comprises the following: Sports, Arts and Culture - 30,479 Emergency and Rescue Services - 9,500 Provincial Department of Social Development - 1,600

- 41,579

The amounts above relating to Trade Debtors - Provincial Departments include interest on outstanding debt.

10. Cash and cash equivalents

Cash and cash equivalents consist of:

Bank balances 122,516,221 109,148,559

Credit quality of cash and bank

Bank balances are invested only with top tier banks with high quality investment ratings:

Credit rating

AAA 122,516,221 109,148,559

Cash and cash equivalents pledged as security

No cash and cash equivalents have been pledged as security or are encumbered in any way.

Restrictions on cash and cash equivalents There are no restrictions on bank balances 122,516,221 109,148,559



Page 186

11. Non-current assets held for sale The non-current assets held for sale of R 5 951 914 to vehicles which have reached the end of the leasing period in terms of the lease agreement between the User Departments and the Trading Entity and have been returned to the entity from the User Departments for disposal. In terms of the service level agreement between the Trading Entity and User Departments, vehicles earmarked for replacement (those which have reached the end of their useful lives) are handed in at the Trading Entity for disposal. Management has no option but to dispose of these assets, as this is required in terms of the Service level Agreement with the User Departments, These vehicles are withdrawn from use and immediately available for sale. The amount at which Non-Current assets held for sale has been measured at the lower of the carrying amount or fair value less costs to sell, at the reporting date. Fair value less costs to sell has been determined with reference to trade values as only one disposal has taken place to date. Opening Balance 2,304,720 -

Transfer from Finance Lease Receivables - carrying amount at the reporting date before classification as held for sale

12,305,539 5,717,071

Write-down of Carrying Amount to Fair Value less costs to sell (1,675,686) (3,412,351) Disposal (6,982,659) -

Carrying amount re-measured immediately before classification as held for sale

5,951,914 2,304,720

12. Capital Contribution The initial capital establishment of the entity was recorded as capital contribution equal to amounts transferred from the Department of Transport. Opening Balance 362,001,648 - Capital contribution during the year - 362,001,648

362,001,648 362,001,648



Page 187

13. Provisions

Reconciliation of provisions - 2014

Provision 2

Opening Balance

-

Additions

6,364,892

Reversal of prior year provision

-

Total

6,364,892 Provision for claims 13,452,522 20,592,677 (13,452,522) 20,592,677 Provision for maintenance of vehicles 44,992,645 6,322,271 (44,992,645) 6,322,271

58,445,167 33,279,840 (58,445,167) 33,279,840

Reconciliation of provisions - 2013

Opening Balance

Additions Utilised during the

year

Total

Provision for claims - 13,452,522 - 13,452,522 Provision for maintenance of vehicles 33,977,832 44,992,645 (33,977,832) 44,992,645

33,977,832 58,445,167 (33,977,832) 58,445,167

The provision for the maintenance of motor vehicles relates to the estimated costs associated with the maintenance of vehicles based on usage of vehicles during the time which has elapsed from the previous service interval to financial year end.

The provision for Insurance claims relates to claims incurred prior to year end that have not yet been settled and have be actuarially valued. The Fleet Africa Provision relates to cliams incurred prior to year end that have not yet been settled, for which there is uncertainty relating to the timing of the amount.

14. Payables from exchange transactions

Trade payables 43,335,365 44,875,321 Leave pay accrual 501,647 647,509 Accrued bonus 486,386 249,778 Payments received in advance 13,661,504 - Auction Proceeds Payable to User Departments 2,518,500 -

60,503,402 45,772,608

Trade Payables comprise of the following: First Auto (Pty) Ltd 33,779,650 25,852,118 Fleet Africa - 6,364,892 Mercedes Benz South Africa - - Nissan - 131,100 Toyota South Africa - 8,865,558 General Motors - 250,584 EMRS - Debtor with credit balance 2,479,130 - OTP 9,654 - Department of Transport - salaries 1,593,109 - Eastern Cape Provincial Treasury - salaries 116,726 - Other Payables 5,357,096 3,411,072

43,335,365 44,875,324



Page 188

14. Payables from exchange transactions (continued)

The bonus accrual relates to the portion of the annual service bonus payable which would have accrued to employees as at 31 March 2014.

The leave pay accrual relates to the liability which would arise were the employee to exit the employment of the Trading Entity and the related charge will need to be paid out at reporting date, due to past event of the rendering services as an employee of the Entity and based on the monthly salary of each employee.

The payable relating to auctioned vehicles relates to those vehicles that did not belong to the entity which were part of the auction , the entity has an obligation to pay over these funds to the User Departments.

Payments received in advance 2014 2013

EMS 7,523,780 - Health 6,036,272 - Safety and Liaison 101,452 -

13,661,504 -

15. Financial liabilities by category

The accounting policies for financial instruments have been applied to the line items below:

2014

Financial liabilities at cost Total Trade and other payables 43,335,365 43,335,365

Auction Proceeds Payable to User Departments 2,518,500 2,518,500 Accrued bonus 486,386 486,386 Accrued leave pay 501,647 501,647 Payments received in advance 13,661,504 13,661,504

60,503,402 60,503,402

2013

Financial liabilities at cost Total Trade and other payables 44,875,321 44,875,321

Accrued Bonus 249,778 249,778 Accrued Leave pay 647,509 647,509

45,772,608 45,772,608



Page 189

16. Revenue

Rendering of services 434,431,268 384,261,339 Interest earned 118,267,844 112,472,897 Other income 45,922 39,996 Interest received - investment 9,282,680 -

562,027,714 496,774,232

The amount included in revenue arising from exchanges of goods or services are as follows: Rendering of services 434,431,268 384,261,339 Interest earned 118,267,844 112,472,897 Other income 45,922 39,996 Interest received - investment 9,282,680 -

562,027,714 496,774,232

Revenue from the Rendering of Services comprises the following: Full Maintenance Lease - fixed charge 128,467,038 79,716,788 Full Maintenance Lease - utilisation charge 305,964,229 305,664,884

434,431,267 385,381,672

17. Other income

Rebates and recoveries 45,922 8,713 Donations - 31,283

45,922 39,996

Refer to note 39 below for the related disclosure for cash and in-kind donations received.



Page 190

18. Administration costs

Audit fees 3,011,115 1,295,880 Advertising 136,027 483,538 Audit committee fees 222,874 - Bank charges 1,304,850 407,087 Cleaning 134,691 116,053 Commission paid 225,946 - Data lines 7,007,320 2,737,147 Consulting and professional fees 3,271,886 514,154 Consumables Donated items

54,279 -

- 29,783

Catering 223,446 173,933 Hire - venues and facilities 49,071 56,100 Postage and courier 1,069 3,968 Printing and stationery 198,461 141,443 Security 2,931,857 3,468,717 Subscriptions and membership fees 18,758 - Telephone and fax 241,567 98,743 Staff training and development 23,630 47,789 Travel, accomodation and subsistence 159,828 855,839 Refuse 15,413 2,955 Electricity and Water 386,462 215,920 Accomodation 897,727 - Rental of office equipment 289,690 254,165 Transfer costs - Fleet Africa (Pty) Ltd - 4,394,784 Entertainment 7,646 5,996 Name Tags 1,225 1,993 Resettlement Costs 23,430 140,405 Marketing - Signage - 58,241 Tools 21,205 121,992 Third party claims - Accidents FML 19,609 18,098 Fire extinguishers - 42,096

20,879,082 15,686,819

19. Employee costs

Basic 12,245,845 5,884,925 Bonus 893,359 454,073 Medical aid - company contributions 449,816 211,735 Bargaining Council levies 2,977 1,313 Leave pay accrual charge (145,861) 647,509 PAYE 95,404 - Travel, accommodation, subsistence and other allowances 344,731 274,190 Overtime payments 21,853 - Long-service awards Acting allowances

21,120 -

- 76,761

Car allowance 36,812 93,900 Housing benefits and allowances 245,695 116,624 Pension contributions 1,179,879 621,387 Non-pensionable cash allowance 1,249,741 555,891 Resettlement allowance 220,957 332,617

16,862,328 9,270,925



Page 191

20. Fleet Running costs

Fleet Running costs comprises the following: 'Motor Vehicle - Petrol & Oil 177,306,665 129,098,612 'Motor Vehicle - Repairs & Maintenance 84,363,702 42,666,118 'Motor Vehicle- Other vehicle expenses 8,481,626 31,568,778

270,151,993 203,333,508

21. Interest earned

Interest earned comprises the following: Interest earned on current account - ABSA - 1,043,100 Interest earned on current account - Standard Bank 3,962,655 1,939,071 Interest earned on investment account - 2,154,807 Interest portion of Finance Lease Receivables 111,854,784 101,695,829 Interest on outstanding debtors 2,450,406 5,487,795

118,267,845 112,320,602

22. Fair value adjustments

Investments Stanlib Classic Investment 1,000,141 1,378,144

23. Depreciation and amortisation

Property, plant and equipment 12,723,419 6,655,056

Refer to note 2 for a reconciliation of depreciation relating to Property, Plant and Equipment.

Refer to note 3 for a reconciliation of amortisation relating to Intangible Assets.

24. Impairment of assets

Impairments Property, plant and equipment When an asset is classified as held for sale an assessment is done as to whether the Carrying amount of the asset has been impaired with reference to the trade in values relating to that make of vehicle.

Impairment is also accounted for relating to the decline in economic benefits for PPE items that are transfered from the lease recievable given that these vehicle would have been utilised by the user departments

21,532,249 6,595,510



Page 192

25. Profit/(loss) on disposal of Non-current assets held for sale

Proceeds received

10,822,381

- Carrying amount of vehicles sold (6,982,539) -

Profit/(loss) 3,839,842 -

During the year the entity disposed of vehicles by means of a public auction , the the total proceeds amounted to R 13 340 881 , of which R2 518 500 related to vehicles which were owned by User Departments and is reflected as a payable by the entity as the entity has a an obligation to pay over these funds to the owners of those vehicles. As a result the proceeds that are due to the enity amounted to R 10 822 381 . The entities vehicles sold had a carrying amount of R 6 982 539 resulting in a profit attributable to the entity of R

3 839 842

-

26. Finance costs Trade and other payables - 59,392

The finance charges relate to the late payment of invoices made to First Auto (Pty) Ltd. Refer to note 37 below for the related Fruitless and Wasteful expenditure disclosure. 27. Movement in provision Movement in maitenance provision (31,530,219) 24,467,334

28. Cash generated from operations Surplus 254,368,058 231,664,556 Adjustments for:

Depreciation and amortisation 12,723,419 6,655,056 Profit(loss)Loss on sale of non-current assets and disposal groups (3,749,842) - Fair value adjustments (1,000,141) (1,378,144) Impairment deficit 21,532,249 6,595,510 Movements in provisions (25,165,327) 16,255,209 Changes in working capital: Inventories 61,866,259 (102,440,602) Receivables from exchange transactions 47,362,429 (53,096,909) Finance Lease receivables (14,137,052) 41,757,693 Payables from exchange transactions 14,730,794 (5,800,189)

368,530,846 140,212,180



Page 193

29. Commitments

Authorised capital expenditure

Capital expenditure - Motor vehicles

Contracted not yet commenced 50,583,776 - Contracted not yet completed 9,981,126 - Not yet contracted for 198,128,017 146,860,651

258,692,919 146,860,651

Goods and services Contracted for but not completed 8,644,988 1,298,394 Not yet contracted for - -

8,644,988 1,298,394

30. Contingent Liabilities

i) The Department of Transport has an ongoing dispute with Fleet Africa Eastern Cape (Pty) Ltd amounting to R50,308,111 (2012: R 13,330,599) related to penalties for the Trading Entity's failure to meet the agreed order of 2,888 units of vehicles per paragraph 8.1.2.1 of the transfer extension agreement dated 18 February 2012. Management is currently disputing this and are of the opinion that the success chances of Fleet Africa Eastern Cape (Pty) Ltd succeeding are remote.



Page 194

31. Related parties

`

Relationships Controlling entity Eastern Cape Department of Transport Members of key management Mr K Gazi (Head of Entity) Ms. N.P. Mayeza (Director: Strategy, Finance and Sustainability) Mr. F Narkedien (Senior Manager) Mr P Yeko (Senior Manager : Finance)

Services provided by Department of Transport The Trading Entity enjoys the benefit of free services being delivered by the Department of Transport in respect of its Human Resources and Supply Chain Management functions. The costs relating to these functions cannot be reliably measured and is therefore not disclosed.

Related party balances

Amounts included in Trade and other Receivables

Eastern Cape Department of Transport 2,798,954 10,118,776

Amounts included in Trade and other Payables Eastern Cape Department of Transport 1,593,109 1,878,813

Related party transactions

Salaries paid to employees by related parties on behalf of the trading entity as part of the Human Resources function: Eastern Cape Department of Transport 16,862,328 9,270,925

Revenue received from related parties in terms of the finance lease agreements for the use of vehicles: Eastern Cape Department of Transport 25,788,476 51,386,096

Compensation of key management - 2014 Basic Salary

members of F. Narkedien

491,188

N.P. Mayeza

539,914

K Gazi

524,273

Total

1,555,375 Service Bonus 40,932 44,993 - 85,925 Non-pensionable cash allowance 167,280 92,878 156,533 416,691 Medical aid 16,560 - - 16,560 Housing allowance 38,832 23,332 - 62,164 Pension 65,743 70,188 68,155 204,086

820,535 771,305 748,961 2,340,801

Compensation of key members of management - 2013 Total Compensation F. Narkedien - 766,246 Total Compensation - N.P. Mayeza - 589,285

- 1,355,531



Page 195

32. Prior period errors

The correction of the error(s) results in adjustments as follows:

Accumulated surplus Column heading

Column heading

Balance as previously reported 1 April 2012 - 586,769 Adjustment related to leases - 2012 - 23,733,399

Restated Balance 1 April 2012 - 24,320,168

Accounts receivable Balance as previously reported - 142,121,546 Adjustment for utlisation - (42,933,822)

- 99,187,724

Statement of financial position Net investment in lease receivable - - As previously reported - 274,642,813 Re-classified as operating leases/Property, plant and equipment - (67,848,756)

- -

The net investment in lease receivable for 2012/2013 Financial year has been restated to take into account the inception date of Fleet Africa vehicles and the correct winding down of interest and capital through the lease period, refer below for further details.

- -

- 206,794,057

Intangible assets As previously reported - 455,740 adjustment due to not meeting defintion of asset - (455,740)

- -

Interest earned As previously reported - 192,685,539 Adjustment due to interest portion on PPE reclassified - (80,212,642)

- 112,472,897

Financial Position Provision for claims - - As previously reported - - Adjustment due to recognise provision for claims incurred - 13,452,522

- - Provision for insurance claims in the prior year not recognised - -

- 13,452,522

Statement of financial position Property, plant and equipment - - As previously reported - 1,846,611 Re-classified from Finance lease receivable - cost - 56,507,690



Page 196

32. Prior period errors (continued)

Accumulated Depreciation - (6,343,112)

Property, plant and equipment has been restated to reflect those vehicles which have exceeded their KM per the rate card for the prior financial period ended 31 March 2013. These vehicles have been transferred from the lease receivable to Property, plant and equipment and are leased on a month to month basis in terms of an operating lease to ensure continued service delivery.

- -

- 52,011,189

Statement of financial performance Rendering of services - - As previously reported - 396,848,322

Re-classifion and utilisation adjustment - (11,466,650) Revenue from rental and utilisation has been restated to take into account the impact of the reclassification of items from finance lease to PPE and the correction of KM and accrual

- -

- 385,381,672

Statement of Financial Position Inventory - - As previously reported - 95,552,679 Reversal of write down to NRV - 9,042,490 Inventory was incorrectly written down to NRV in the prior year - -

- 104,595,169



Page 197

33. Comparative figures

The prior year reporting period is shorter than a year, therefore comparative amounts are not comparable to the current balances.

Certain comparative figures have been reclassified.

The effects of the reclassification are as follows:

Statement of Financial Performance Employee costs were reclassified to reflect a breakdown of salaries and wages - - in terms of the requirements of GRAP 25: Employee Benefits Salaries and Wages - (461,258) Basic Salary - 312,189 Non-Pensionable Cash allowance - 98,690 Motor car allowance - 50,379

- -

34. Risk management

Financial risk management

The entity’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk) and liquidity risk.

The entity’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the entity’s financial performance. Risk management is carried out by a central finance department.

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, entity treasury maintains flexibility in funding by maintaining availability under committed credit lines.

The entity’s risk to liquidity is a result of the funds available to cover future commitments. The entity manages liquidity risk through an on-going review of future commitments and credit facilities.

Cash flow forecasts are prepared and adequate utilised borrowing facilities are monitored.

The table below analyses the maturity analysis of the entity’s financial liabilities and assets. Balances due within 12 months equal their carrying balances at the date of the statement of financial position.

Trade and other payables

Less than 1 year 60,503,402 45,772,610

Trade and other receivables, Finance Lease receivables, Cash an cash equivalents and Inventories Less than 1 year 66,880,255 616,631,075 Between 2 and 5 years 66,904,618 52,402,797

133,784,873 669,033,872



Page 198

34. Risk management (continued)

Interest rate risk

As the entity has no significant interest-bearing assets, the entity’s expenditure and operating cash flows are substantially independent of changes in market interest rates.

The entiry’s interest rate risk arises from bearing short-term deposits, issued at variable rates expose the entity to cash flow interest rate risk. Deposits and investments issued at fixed rates expose the entity to fair value interest rate risk.

Based on simulations performed, the impact of a 1% shift would be a maximum increase/decrease of R 3,495,518 (2013: R 1,479,050)

Foreign exchange risk

The municipality does not hedge foreign exchange fluctuations.

The entity is not exposed to foreign exchange risk as it conducts its transactions in South African Rands.

Price risk

The entity is not exposed to significant price risk

35. Going concern

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.

36. Events after the reporting date

No significant events came to the attention of management, since the balance sheet date, that might impact on the annual financial statements as at 31 March 2014.

37. Fruitless and wasteful expenditure

Opening balance - 17,056 Fuel Fraud 420,272 - Interest penalties - 59,392 catering 2,550 - Interest penalties - KSD Municipality 4,035 - Fruitless and wasteful expenditure condoned (6,585) (76,448)

420,272 -



Page 199

37. Fruitless and wasteful expenditure (continued) The amounts relating to the Interest penalties (Opening Balance) , KSD and catering have been condoned.

Fuel fraud relates to the following cases and is still under investigation

KWT CAS 308/02/2014 Fuel card for GGV532EC was cloned, case is still under investigation. A petrol attendant was arrested at Total KWT. Queenstown CAS 109/04/2013

Case closed. Defendant (petrol attendant) was found guilty of 48 counts valued at R44 463.59 for counterfeit cards. Which he made a plea bargain. He was fined R6000 per count or imprisonment. Queenstown CAS 155/11/2013

Bulk card DOT16 was involved in this fraudulent case. Investigation is ongoing. An independent Forensic investigators appointed. 38. Irregular expenditure Reconciliation of irregular expenditure - - Opening balance 9,876,614 - Add: Irregular Expenditure - current year 555,016 9,876,614 Amounts condoned or written off by Provincial Treasury - - - Transfer to receivables for recovery - not condoned - - - Irregular expenditure awaiting condonement - -

10,431,630 9,876,614

Details of irregular expenditure – current year

Non-compliance with SCM policy Procurement of services not in line with procurement process

555,016



Page 200

Irregular expenditure was the result of deviations from the procurement process, all services contracted for were received by the enity and were to the entities satisfaction. Actions taken on prior year irregular expenditure

The irregular was as a result of misinterpretation of the PPPFA definition of local suppliers, in that bids were extended only to Eastern Cape Suppliers. The PPPFA became effective on the 07th December 2011 and this change in regulations was overlooked in the bid process. The department has subsequently changed the process to ensure that all approvals are reviewed by legal before the accounting officer approves. 39. In-kind donations and assistance Donations comprises the following: Cash donation from M&H Bodies - 1,500 In kind donation from M&H Bodies - 29,783

- 31,283

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