PRESENTATION TO PORTFOLIO COMMITTEE ON TRANSPORT 21 October 2010 Cape Town From Stabilisation to Quality Travel Experience PRESENTATION TO PORTFOLIO COMMITTEE ON TRANSPORT 21 October 2010 Cape Town From Stabilisation to Quality Travel Experience

2 INTRODUCTION Financial Year 2009/10: Significant in many respects for PRASA Represented conclusion of stabilisation phase (1 April 07 – 31 March 2010) - During past 3 Years former SARCC Mandated to: 1.Arrest decline and possible collapse of commuter rail services 2.Consolidate Passenger Rail Entities into a Single Public Entity – PRASA; 3.Prepare Rail for 2010 FIFA World Cup™ PRASA Has Successfully Delivered on this Mandate.

3 2009/10 – Challenging Economic Environment Financial Year 2009/10 A difficult year due to global economic downturn  Characterized by massive job losses in economy  Increased Energy Costs  Increased Labour Costs  Decline in Patronage in rail environment  Decline in Revenues in commuter rail

4 Key Highlights of 2009/10 Despite the difficult economic and operating environment, PRASA achieved the following key successes:  Successfully concluded Stabilisation Phase of Turn-Around Strategy with transfer of Autopax and Shosholoza Meyl into PRASA  Increased value of assets by 37% from R11,6 billion to R15.9billion (Rolling Stock and Infrastructure Upgrades and transfer of additional assets)  Increased income by 34% from R4.2billion to R5.6.billion  Completed improvements to 111 stations under the Station Improvement Programme

5 Key Highlights of 2009/10 Cont….. Built 3 new stations (Rhodesfield, Moses Mabhida, Century City) Upgraded 50 Stations (including Nasrec, Cape Town, Orlando, Doornfontein, Durban, Rissik, Loftus) Upgraded 505 coaches which ensured that PRASA exceeded the target of 2000 coaches for the period 1 April March 2010 Successful delivery of transport services during the 2009 Confederations Cup - which laid the foundations for the successful role played by PRASA during the 2010 FIFA World Cup

6 Key Highlights of 2009/10 Cont….. Accident rate in Metrorail reduced by 14% Injury rate in Metrorail reduced by 17% Revenue increase for Shosholoza Meyl and Autopax despite decline in patronage Spending to BBBEE at 77.2% More than 1000 learnerships for 2009/10 (Security, technical, drivers)

7 Passenger Rail & Bus Services during the 2010 FIFA World Cup™ - PRASA Objectives for World Cup: Contribute to the Success of the tournament Position Rail and Other Transport Products within PRASA Move Significant numbers to strengthen position of Rail as Mass Mover Reward Loyal Customers

8 Passenger Rail & Bus Services during the 2010 FIFA World Cup™ Cont… PREPARATIONS: Rolling Stock 100 Train sets upgraded 65 sets dedicated to service 2010 SWC schedules INFRASTRUCTURE 0ver 50 stations upgraded Platforms and platform seating and shelters Access control speed gates and specific stations Train operations and monitoring system

9 Passenger Rail & Bus Services during the 2010 FIFA World Cup™ Cont… Integrated Communication System Public address system Help points Information boards Bulk sms messaging

12 Summary of PRASA 2010 Train services & Passenger numbers Overall train performance 2010 FWC 11 June - 11 July 2010 Region Number of trains Trains delayed On time performance Commuter numbers WESTERN CAPE %1,005, GAUTENG (DEMAND DRIVEN) %302, KWA ZULU %92, EASTERN CAPE %47.00 SHOSHOLOZA MEYL %1, TOTAL %1,401,750.00

13 Challenges identified during 09/10 Audit Funding Shortfall of R1 Billion – presented in 2009/10 to Government with request to fund shortfall Shortfall was caused by the following: Depreciation: R738 Million (08/09) and R1 036 Million (09/10) Shosholoza Meyl funding shortfall of R558 Million – due diligence of Smeyl indicated a requirement of R1.4 Billion – only allocated R450 Million plus R492 Million in Fare Revenue Liabilities (pension, medical, statutory contributions) associated with transfer of Metrorail, Autopax and Smeyl remain largely unfunded

14 Challenges identified during 09/10 Audit – Cont… Increases of 33% (R100 million per annum) in electricity tariffs not funded Fare increase of 10% amounting to R134 Million not approved An allocation of R210 Million from PTIS did not materialise despite PRASA having committed funds for infrastructure upgrades in preparation for the World Cup

15 New Strategic Direction Having looked at PRASA’s Shortfall and considered its cash flow projections for the next three years: The Office of the Auditor-General confirmed that PRASA remains a ‘Going Concern’ That it is unlikely that given the un-equal spatial settlement patterns of SA Government would stop subsidizing public passenger transport In order to strengthen its financial position a new strategic direction has been approved by the Board which includes: Recapitalizing the business within the next 12 months through a programme of asset restructuring Balance Sheet Restructuring exercise already underway Finding a Strategic Equity Partner in order to unlock value of assets after valuing them properly

16 New strategic direction Other Aspects of new strategy include: Modernising conditions of service, Engendering a culture of performance and Investing in employee wellness programmes

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