PRESENTATION OF SARCC ANNUAL REPORT AND FINANCIAL RESULTS FOR 200607 TO PORTFOLIO COMMITTEE ON TRANS

1
PRESENTATION OF SARCC ANNUAL REPORT AND FINANCIAL
RESULTSFOR 2006/07 TO PORTFOLIO COMMITTEE ON
TRANSPORT24 October 2007
2
Scope of Presentation

• Background
• Business Performance
• Group Annual Financial Statements
• Current Challenges
• Current Initiatives
• Conclusion
• Accelerating the Momentum for Change

3
Background

• Successful transfer of Metrorail to SARCC in May
  2006
• Cabinet approval of Rail Plan in December 2006
• Unqualified Audit Report for two years in
  succession
• Increased Capital funding for Rolling Stock and
  Infrastructure
• Preparations for 2010 FIFA World Cup
• Approval of new Public Transport Strategy in
  February 2007

4
Some Basic Facts about SARCC

• SARCC delivers commuter rail services in
• major metropolitan centres
• Wits (JHB Ekurhuleni)
• Tshwane
• Port Elizabeth
• East London
• Cape Town
• Durban

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Some Basic Facts about SARCC Cont

• Owns 2 200 kilometres of rail network
• Owns rail assets with book value of R7.1bn
• More than 470 stations other properties
• Owns a fleet of 4 600 coaches
• Undertakes almost 2.2 million passenger trips
  every weekday
• Employs over 10 000 people

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Some Basic Facts about SARCC Cont

• Mandate of SARCC
• Primary Object to ensure that, at the request
  of the National Department of Transport or any
  sphere of Government, rail commuter services are
  provided in the public interest, and to promote
  rail as the primary mode of mass commuter
  transportation
• Secondary Object to generate income from the
  exploitation of assets, transferred to the SARCC
  by the Minister of Transport under section 25 of
  the Legal Succession act to the SATS ACT (Act 9
  of 1989)

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Performance Against Objectives

• Generate Income from the Exploitation of Assets
  Transferred by the Minister under section 25 of
  Legal Succession Act 9 of 1989
• Actively contribute to Commuter Rail
  Restructuring
• Spearhead Rail Development and Implementation
• Enforce compliance to the required Level of
  Service
• Reduction/Elimination of aspects contributing to
  poor reliability, safety and financial losses
• Rationalisation of services and optimisation of
  Government Funding
• Seamless transfer of Metrorail into the SARCC
• Roll out and extend new rail service networks
  where required within external constraints
• Performance in terms Capacity Building

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Business Performance Report Key Highlights

• Increased Passenger trips
• Improved punctuality levels
• Increased fare revenue
• Introduction of new services
• Soweto Business Express
• Additional service in Malmesbury
• Increased investment in Rolling Stock
• New 2 year operating permit issued by Railway
  Safety Regulator (RSR)
• Completed interface agreement with Transnet
  Freight Rail (former Spoornet) i.t.o. Mutual use
  of assets and related services

9
Business Performance Report Key Highlights Cont

• Improved training development
• Increased momentum for Roll out of railway police
• Building of contact points at key stations
• 2010 preparations
• Streamlining procurement policies and adoption of
  New Supply Chain Management Policy
• Introduced ISO 9001 Quality Management System
  (all regions certified)

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Business Performance Report Major Challenges
shortcomings

• Post Merger Integration and continuous
  performance improvements
• Significant decline in number of trains scheduled
  and ran
• Poor availability lack of reliability of
  rolling stock remains the single biggest
  challenge (contributes 38 to poor performance of
  train service)
• Number of train cancellations delays
  unacceptably high
• Accessibility to rail services and facilities for
  people with special needs remains a major
  challenge
• Shortage of technical skills
• Railway fatalities largely due to suicides and
  people crossing railway lines in front of trains
• Huge operational risks (overcrowding, stampede
  etc)

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Performance against Objectives

• Seamless Transfer of Metrorail into
• SARCC
• SARCC now both custodian of Commuter Rail Assets
  Operator of Metrorail services
• Establishment of a single Head Office
• Establishment of a Single Executive Team
• Integration of SARCC regional Metrorail offices
• Review of various policies governing the
  Corporation and Operations

12
Performance against Objectives Cont

• Active Contribution To Restructuring
• Accelerated Rolling Stock programme
• Well resourced for first time
• Aim is to build capacity in industry,
• Creation of certainty through 3 - 5 year
  contracts with Rolling Stock Suppliers
• Emphasis on better Pricing, Quality Timeous
  delivery
• Penalties introduced for the first time in these
  contracts

13
Performance against Objectives Cont

• Spearhead Rail Plan Development and
• Implementation
• Implementation of Rail Plan through focusing
  investment on priority corridors
• Regional Rail Plans finalised
• Formal technical groups, rail liaison committee
  and working group meetings established to advance
  rail plans

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Crime Index

• Crime index represents numbers of crimes per 100
  000 passenger trips
• Crime dropped steadily from 02/03 to 05/06
• It increased in 06/07 due to the protracted
  national security strike in first quarter of the
  year
• Crime is back on a downward trend

15
Crime Index Cont..
16
Elimination of Aspects Contributing to Poor
Reliability

• Rolling Stock contributes 38 Signalling 11
  to poor train performance (Delays, Cancellations,
  Overcrowding, etc)
• The huge backlog of coaches to be repaired is
  causing major reliability and availability
  problems.
• The GO/Upgrade allocations were increased from
  189 early in 2006 to 388 in the second half of
  2006
• 310 coaches completed at a cost of R715 million
• R299 million was invested in infrastructure

17
Rationalization of Services and Optimization of
Govt. Funding

• Subsidy Per Passenger will need to be carefully
  managed
• A Steady Increase in Fare Income from R1 042bn
  to R1 060bn
• No fare Increase for the past 4 years
• Passenger Journeys increased from 511 908 904 to
  527 283 088 (3 increase)
• Have reduced fare evasion

18
Fare Revenue
19
Subsidy
20
Passenger Kilometer
21
Compliance to the Required Level of Service
22
Train Statistics Cont
23
Train Statistics Cont
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Contribution to Socio-Economic Development

• SARCC continues to spend significant amounts on
• BEE. Below are some examples of BEE spend
• within SARCC group
• Wits
• Total spend is R336.9m
• Total BEE spend is R111.4m
• Percent of BEE spend is 33.
• Cape Town
• Total spend is R375m
• Total  BEE Spend is R116m
• Percent of BEE spend is 52

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Contribution to Socio-Economic Development Cont

• Total number of people staff trained was 2 309
• 1 776 males
• 533 - females
• External recruits trained was 25
• 17 male
• 8 female
• In total SARCC invested a total R22.8 million
  which equates to 1.6 of payroll

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MTEF Allocations
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Capital Allocations

• 91 of the Capital allocation was spent in 06/07
  financial year
• Additional R1,3 billion has been allocated to the
  SARCC over 3 years for the 2010 World Cup
  Preparations
• About R40 million had already been spent on 2010
  projects (with the bulk of spending going to the
  construction of contact points)

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Current Initiatives

• Improved punctuality levels and reducing
  overcrowding
• Improving on train reliability and availability
• Accelerated Rolling Stock Programme
• Increasing maintenance levels quality
• Revisiting working hours so that trains not taken
  out of service for maintenance during peak
  periods (considering night weekend working
  hours)
• Acquisition of new generation modern fleet
• Consolidating signaling projects into one
  national programme
• 2010 preparations bringing projects to
  construction phase by Jan 2008 finalising
  appointment of contractors
• Shosholoza Meyl the transfer of Shosholoza will
  present major challenges to the SARCC
• Enhancing Safety in Passenger Rail Operations
• Intensifying roll out of the Railway police
• Legacy Projects Cape Town station
  revitalization,Cape Town International Airport
  Rail Link, Bridge City development, Moloto Rail
  corridor others

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Conclusion

• Solid foundation for Turn Around laid during
  06/07 Financial Year
• Great expectations have been created
• Commuters gaining confidence in rail
• Investment in passenger rail has increased
  significantly - the focus is now on the quality
  of investments and ensuring that it is directed
  in areas that would support change
• With 2010 preparations new PT strategy, there
  are great expectations the passenger rail
  sector must live up to the Challenge.