GMA ANNUAL REPORT 2011 by IWW Lateral Applications

gautRAIN management agency

ANNUAL REPORT

2011

VISION Provide an accessible, safe, reliable and affordable passenger transport system that will follow integrated, state-of-the-art technologies, change the culture of public transport usage and enable people to move freely within the Gauteng Province.

MISSION Gautrain Management Agency’s mission is to manage, co-ordinate and oversee the Gautrain Rapid Rail Link Project through the implementation of the Concession Agreement between the Gauteng Provincial Government and the Bombela Concession Company (Pty) Ltd.

CORE VALUES • Openness, honesty and transparency We are open, honest and transparent in our dealings with all stakeholders. • Professionalism We act in a professional manner in providing safe, reliable, affordable quality service to all. • Fairness and integrity We treat all the stakeholders fairly and maintain the highest levels of integrity at all times. • Excellence We strive for excellence and quality in everything we do. • Accountability and Responsibility We are accountable and responsible for delivering friendly and professional service.

CONTENTS 1. GMA’S LEGISLATIVE MANDATE 2. FOREWORD BY MEC ISMAIL VADI

4 6

3. CHAIRPERSON’S STATEMENT

4. MEMBERS OF THE BOARD

5. CEO’S REPORT

6. GMA AND PROJECT STRUCTURE

7. BACKGROUND OF CURRENT BUSINESS

A. GENERAL Policies and Legislative Mandate Management of the CA GMA Partnering Goals Ethics, Fraud and Corruption Communication and Marketing Human Resources Management

30 30 32 34 36 39 45

B. DEVELOPMENT Risk Management Contractual/Development/Project Programme Socio-Economic Development Integration Management of the Gautrain with Government’s Transport Systems Land Acquisition and Management Utilities Management Civil Design Review Civil Construction Assurance Electrical and Mechanical Systems Safety, Health, Environment and Quality Assurance Occupational Health and Safety RAMS Assurance Independent Certifier

46 46 48 54 60 64 66 72 76 78 82 87 88 92

C. OPERATIONS AND MAINTENANCE Risk Management Socio-Economic Development Integration Management of the Gautrain with Government’s Transport Systems Fares and Fare Evasion Management Safety, Health, Environment and Quality Management RAMS Assurance Train and Dedicated Feeder and Distribution Service Operations Station Operations Asset Management and Assurance Performance Management Passenger Information and Communication Security Variations Planning for Future Capacity and Extensions

94 96 100 102 104 106 110 112 118 124 126 127 132 134 136

8. CORPORATE GOVERNANCE Introduction Board Composition Board Charter Board Meetings Delegation of Authority Board Committees Board Remuneration Induction and Continuing Education Board Evaluation Company Secretarial Function Code of Conduct and Ethics Fraud and Corruption Prevention Policy Internal Control Internal Audit Legal Compliance 9. ANNUAL FINANCIAL STATEMENTS Administrative Information Statement of Responsibility by the Members of the Board Report of the Audit and Risk Committee Report of the Board Report of the Auditor-General Statement of Financial Position Statement of Financial Performance Statement of Changes in Net Assets Cash Flow Statement Summary of Accounting Policies Notes to the Financial Statements 10. PERFORMANCE AGAINST OBJECTIVES

138 140 140 141 141 141 142 145 145 146 146 146 147 147 147 147 148 151 152 153 155 156 158 159 160 161 162 175 194

Annual Performance Report

196

A. GENERAL Management of the CA GMA Partnering Goals Ethics, Fraud and Corruption Communication and Marketing Human Resources Management

206 206 214 216 218 228

B. DEVELOPMENT Risk Management Contractual/Development/Project Programme Socio-Economic Development Integration Management of the Gautrain with Governmentâ&#x20AC;&#x2122;s Transport Systems Land Acquisition and Management Utilities Management Civil Design Review Civil Construction Assurance Electrical and Mechanical Systems Safety, Health, Environment and Quality Assurance RAMS Assurance Independent Certifier

232 233 240 260 264 268 270 282 286 274 286 318 320

C. OPERATIONS AND MAINTENANCE Risk Management Socio-Economic Development Integration Management of the Gautrain with Governmentâ&#x20AC;&#x2122;s Transport System Fares and Fare Evasion Management Safety, Health, Environment and Quality Management RAMS Assurance Train and Dedicated Feeder and Distribution Operations Station Operations Asset Management and Assurance Performance Management Passenger Information and Communication Security Variations Planning for Future Capacity and Extensions

322 323 324 330 332 334 336 338 350 352 356 358 360 362 364

Submission of the Gautrain Management Agency (GMA) Annual Report to the Executive Authority The Accounting Authority of the GMA hereby presents the GMA Annual Report for the year ended 31 March 2011 to the Executive Authority. Signed on 24 August 2011 on behalf of the GMA Board.

Ms A Nair Chairperson: GMA Board

Annual Report 2011

Annual Report 2011 GAUTrain management agency

GMA‘s Legislative Mandate Gautrain Management Agency (GMA) has been established in terms of the GMA Act and listed under Schedule 3 (c) of the Public Financial Management Act (PFMA) as a Provincial Public Entity. The main objective of the GMA is to manage, coordinate and oversee the Gautrain Rapid Rail Link Project. In order to manage, coordinate and oversee the Gautrain Project, the GMA must discharge the following functions: • Assist Province in implementing the Project and achieving the Project’s objectives. • Act on behalf of Province in managing the relationship between Province and the Concessionaire in terms of the Concession Agreement and ensure that the interests of Province are protected. • Enhance the integration of the Project with other transport services and Public Transport Plans. • Promote and maximise the socio-economic development and BBBEE objectives of Province in relation to the Project. • Liaise with and promote co-operation between government structures in all three spheres of Government in relation to the Project. • Manage assets relating to the Project and promote their preservation and maintenance. • Manage the finances of the Gautrain Project and the financial securities provided by the Concessionaire. • Monitor the policy and legislative environment of the Gautrain Project. The Gauteng MEC for Roads and Transport is the Executive Authority of the GMA and the GMA Board is the Accounting Authority as contemplated in the PFMA. The GMA Board is appointed by the MEC for Roads and Transport. Gautrain Rapid Rail Link is a state-of-the-art rapid link network in Gauteng. The rail connection comprises of two links, namely a link between Pretoria (Tshwane) and Johannesburg and a link between OR Tambo International Airport and Sandton. Apart from the three anchor stations on these two links, seven other stations are linked by approximately 80 kilometres of rail along the route.

Annual Report 2011

Annual Report 2011 GAUTrain management agency

FOREWORD BY THE MEC

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Annual Report 2011 GAUTrain management agency

The Gauteng Provincial Government has a vision for the sustainable socio-economic, political, cultural, sporting and environmental development of the province. An important part of that vision is the freedom of movement for citizens through an integrated, world-class public transport system. Gautrain represents a critical step in the realisation of that vision. The Gautrain Management Agency is committed to good corporate governance and prudent financial management that is so essential for the achievement of Gautrainâ&#x20AC;&#x2122;s strategic objectives. One of the strategic objectives of Gautrain, inter alia, is the improvement of accessibility and mobility in the Johannesburg-Tshwane corridor. By providing a safe, convenient, predictable and affordable public transport system in this corridor, Gautrain is changing the perception of public transport in South Africa. This will hopefully persuade car users to swap congested roads for the speed and comfort of Gautrain. Another strategic objective met by Gautrain is the contribution to accelerated economic growth with an emphasis on job creation, local skills development and investment in black economic empowerment. With Gautrainâ&#x20AC;&#x2122;s partnership with the private sector, it has delivered on these objectives through the commitment of the Bombela Concession Companyâ&#x20AC;&#x2122;s Socio-Economic Development obligations. Through Gautrain, the Gauteng Provincial Government has also strengthened existing development nodes in Gauteng, promoted urban restructuring and re-development and facilitated the revitalisation of the Johannesburg and Tshwane central business districts.

Annual Report 2011

Looking back on the last year, the Gautrain Management Agency has proven the power of successful partnerships. I wish to express my heartfelt appreciation to the National Department of Transport for its collaboration towards bringing Gautrain to completion. Similarly, my gratitude goes to the metropolitan councils of Ekurhuleni, Johannesburg and Tshwane, and to the Airports Company of South Africa, the Passenger Rail Agency of South Africa and the South African National Roads Agency, for their consistent support.

Ismail Vadi MEC for Roads and Transport August 2011

Annual Report 2011 GAUTrain management agency

CHAIRPERSON’S STATEMENT

Annual Report 2011

Annual Report 2011 GAUTrain management agency

Core objectives of the Gautrain Management Agency (GMA) are to manage, co-ordinate and oversee the Gautrain Project through the implementation of the Concession Agreement between the Gauteng Provincial Government and the Bombela Concession Company (Pty) Ltd. The GMA is furthermore responsible for ensuring that the objectives of the Project are met. These objectives are achieved through being committed to sound corporate governance and responsible financial management. Having received a clean audit for the 2010/2011 financial year proves such sound corporate governance and responsible financial management – the second time since is first publication for the 2009/2010 financial year. Included in this year’s annual report are descriptions of core business, performance of such core business and the financial statements. Adding to the GMA’s sound corporate governance is the GMA Board’s activities and achievements during the year under review. These activities include the adoption of a formal process for the recruitment of Board Committee Members and the appointment of experts to Board Committees to assist the Committees in discharging their responsibilities. Other activities are the external training of Board Members relating to their duties, responsibilities, powers and potential liabilities and the independent evaluation of the Board and Board Committees. Since the commencement of operations of the airport link in June 2010, approximately three million passengers have used the Gautrain on this link. This stands proof of the Gautrain actively meeting Government’s objective in terms of the National Land Transport Transition Act of 2000, which requires the active promotion of public transport. Gautrain is more than just a train. Based in the economic heartland of South Africa, it is one of several strategically integrated Gauteng Provincial Government projects. It is aimed not only at meeting future transport demands and improving the image of public transport, but also at Socio-Economic Development and employment creation. Having met all these aims to some degree does not come without support and leadership, to which much gratitude is owed. Gratitude goes to the National Department of Transport, the three metropolitan councils of Ekurhuleni, Johannesburg and Tshwane and our partners in the Project. These partners are the Airports Company of South Africa, the Passenger Rail Agency of South Africa and the South African National Roads Agency.

Annual Report 2011

To our Gauteng MEC for Roads and Transport, Ismail Vadi – thank you for your constant leadership and assistance during the year. Similarly to the previous MEC for the Gauteng Department of Roads, Transport and Public Works, Bheki Nkosi who contributed to Gautrain’s guidance up to November 2010. Appreciation also goes to other members of the Gautrain Political Committee; MEC Mandla Nkomfe and MEC Qedani Mahlangu for your on-going guidance and support. Your loyalty and enthusiasm in working towards making Gautrain a success is recognised. Looking forward into the coming financial year, the GMA Board will maintain the highest standards in financial and non-financial reporting. Another action on which it will focus includes the provision of a quality assurance system that assures stakeholders that the Bombela Concession Company meets its contractual obligations. Ensuring that Gautrain functions as an integrated public transport system, the GMA Board will work with provincial and national agencies to further integrate Gautrain with other modes of public transport in accordance with the Cabinet endorsed Gautrain Integration Report. Lastly but very exiting, is that the GMA Board will examine options related to Gautrain extensions in close collaboration with provincial long term strategic planning initiatives. At Gautrain’s core is a lifestyle change to freedom of mobility, relationship building on a business level and pride in what our nation is capable of doing. With the operation of the whole Gautrain system in full swing, the GMA embraces this lifestyle change and calls on the public to do the same.

Ms A Nair Chairperson: GMA Board August 2011

Annual Report 2011 GAUTrain management agency

MEMBERS OF THE BOARD

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Annual Report 2011 GAUTrain management agency

1. Ms Amanda Nair (Chairperson) Ms Amanda Nair completed a Bachelor of Arts degree in 1984, majoring in Psychology and Industrial Sociology at the University of Natal, and during 1985 – 1986 a Masters in Town and Regional Planning also at the University of Natal with Progressive Planning Theory being her masters dissertation. She also completed a Management Development Programme coordinated by the University of Durban-Westville during 1993. She was one of 15 officials who attended a Leadership Development Programme after a fairly rigorous selection process in 1996 with a final result of 80%. She was nominated to attend the Executive Leadership Programme run by KwaZulu Natal Local Government Association in association with USAID (CEO II Programme) where she achieved the status of top candidate on the Programme and received an accolade for the outstanding student. Ms Nair has been a functionary in government for more than 20 years since April 1987 and spent ten years prior to relocating to Johannesburg at the Durban Municipality (Ethekwini) working at a senior management level in the development management sector. Among the major projects that she was involved in were the Point Waterfront, Wilson’s Wharf, upgrade of Musgrave Centre, and a number of major residential developments. Ms Nair held the position of Executive Director: Development Planning, Transportation and Environment in the City of Johannesburg. While at the City of Johannesburg, her skills as a strategic project manager were honed on projects such as Cosmo City, Gautrain, Gauteng Provincial Government Precinct, Alex Renewal Project, 2010 and Huddle Park. As a result of what are well developed strategic project management skills and an enviable basket of skills, Ms Nair was recruited by the 2010 FIFA World Cup™ South Africa Local Organising Committee as 2010 Project Manager. She headed up the Host City programme for the 2010 FIFA World Cup™ South Africa Local Organising Committee. She had as a core mandate the responsibility for ensuring that the country’s nine host cities were in a full state of readiness to host the Championship as well as the five cities that hosted the Confederations Cup in 2009. Ms Nair balances her current position as the Chief Executive Officer of Blue IQ Investment Holdings (Pty) Ltd with her position as Chairperson of the Gautrain Management Agency Board and is sole Director of her own consulting and property investment company.

Annual Report 2011

2. Mr Sipho Khumalo (Deputy Chairperson) Mr Sipho G. Khumalo is the Chief Executive Officer of the Cross-Border Road Transport Agency, a public entity that is responsible for regulating cross border road transport matters and for promoting economic integration of South Africa with the rest of the African continent. Previously, Mr Khumalo ran his own management consulting firm, Nosanda Management Solutions (Pty) Ltd, which specialised in organisational development and strategic management. Prior to this, he was the Chief Executive Officer of the Road Freight Association and Deputy Director-General in the National Department of Transport. As the DDG responsible for Transport Regulation, Transport Infrastructure, Road Traffic Management and Safety, Mr Khumalo handled a myriad of strategic projects and critical assignments on behalf of the Department of Transport. These included the setting up of the Road Traffic Management Corporation, the Railway Safety Regulator and the establishment of the Infrastructure Division within the Department of Transport. Mr Khumalo holds a Masters degree in Public and Development Management where he specialised in public sector strategic management and macro-economic analysis. He also holds a Bachelor of Arts Honours degree. Both degrees were obtained from the University of the Witwatersrand. Professionally, Mr Khumalo has held several senior positions in which he led multi-disciplinary technical teams in the area of transport planning, engineering, economic analysis and transport policy development. He previously worked for the CSIR (Transportek), in the positions of Project Manager: Transport Operations and Logistics (Transportation Research Programme) and as Programme Manager: Traffic Management. 3. Mr Abel Mawela Mr Abel Mawelaâ&#x20AC;&#x2122;s qualifications include a B.Com, B.Com. Hons, and MBA. He also holds a Public Private Partnership (PPP) Skills and Competency Certificate and another of PPP Project Officer both from an internationally acclaimed institute of PPP in Canada. He is a member of the SA Institute of Directors and the Institute of Municipal Finance Officers. Mr Mawela started his own business at the age of nine as a hawker at sports events and he is the founder and Managing Director of Molodi Consulting. He occupied various senior finance management positions in both the private and public sector. He also has extensive board participation experience, particularly in Audit Committee as a Chairperson. His areas of experience include being an active member of Black Management Forum as far back as the late 1980s. Mr Mawela occupied various cost accounting and management accounting positions in the private sector. He has extensive local government experience and occupied various senior positions culminating as the first CFO of Ekurhuleni Metro. In the Electricity distribution industry, he analysed and reviewed various asset valuation models aimed at formulating the Regional Electricity Distribution Models and completed Electricity Ringfencing projects at a number of municipalities. Mr Mawela chaired the Audit Committee and the Finance Committee of a water board. He actively participated in various road safety strategy formulation and implementation of campaigns that led to the start of the reduction of road crash fatalities in 2008/9. He was also active in the first launch of the Administrative Adjudication of Road Traffic Offence (AARTO). Mr Mawela consults to various municipalities and public sector institutions on improved audit outcomes. In other instances he participates in Audit Committees.

Annual Report 2011 GAUTrain management agency

4. Mr Donovan Nadison Donovan Nadison is a member of New Africa Consulting (NAC), a management consultancy specialising in the public sector. He leads, advises and manages dedicated teams of professionals in mostly large scale public sector turnaround assignments. He also advises in the area of public sector financial planning and modelling. Through the management of these turnaround and financial projects he has developed core competencies within the fields of governance and management, turnaround strategy, financial modelling and planning, revenue management, change management and human resources development. He was previously employed by Deloitte & Touche Consulting for several years where he worked as a public sector consultant. He was later appointed the first CEO of the South African Weather Service. Mr Nadison is a board member and director at the Gautrain Management Agency. He is also active in higher education matters and is currently the Deputy Chairperson of Walter Sisulu University in the Eastern Cape. In addition, he is Chairperson of the University Councilâ&#x20AC;&#x2122;s ICT and Finance Committees. Donovan has also been recently appointed to the Free State Provincial Government Audit and Risk Committees of the Provincial Treasury and the Office of the Premier where he serves as a member of these oversight committees. Mr Nadison is a trustee of New Africa Youth Trust, established to promote and develop youth entrepreneurs and build governance in the youth NGO sector. Mr Nadison studied at Wits University, qualifying as a social worker. He then went on to complete his Masters Degree in Industrial Social Work at Wits. He later studied in the USA as a Non-Degree PHD Fulbright Scholar at Indiana University. He is currently a business entrepreneur.

Annual Report 2011

5. Mr Mogopodi Mokoena Mr Mogopodi Mokoena began his career within the labour movement in 1989 when he was appointed Assistant National Accountant for the Congress of South African Trade Unions. In 1991 he joined the National Education Coordinating Committee where he held the post of National Accountant and later moved to the auditing firm, Douglas and Velcich (CA) SA. In 1994 he joined the Johannesburg City Council as an Internal Auditor. He was later seconded to the Gauteng Department of Housing and Local Government where he served on the Strategic Management Team. A year later he was appointed as the Housing and Local Government Departmentâ&#x20AC;&#x2122;s Director of Strategic Management from April 1995 to June 1996. He was appointed as the Strategic Executive for Finance at The Greater Johannesburg Northern Metropolitan Council in July 1996. In April 1998 he moved to Province as head of the Gauteng Department of Housing and Land Affairs. In October 2000 he was appointed to the post of Director General for the Gauteng Provincial Government â&#x20AC;&#x201C; a post he held until the end of his second term in September 2008. In March 2009 he joined African Access Holdings (Pty) Ltd as its Group Managing Director. Mr Mokoena joined the Board of Blue IQ Investment Holdings (Pty) Ltd in January 2009. 6. Mr David Sekgobela Mr David Sekgobela holds a B. Juris degree from the North West University, a certificate, advanced certificate and a diploma in Road Transport from Rand Afrikaans University. Mr Sekgobela is a legal advisor and transport consultant specialising in passenger transport and related services. He gained extensive experience having worked at the National Transport Policy Forum and African Engineering International as a legal advisor. He later joined Autonet, a division of Transnet Ltd, as a business development manager. Mr Sekgobela served on the National Council of the Chartered Institute of Transport in Southern Africa (CITSA), and also served as a committee member for the Pretoria and Johannesburg Sections of CITSA. He also served as the interim chairperson at the Association for Black Transport Professionals from 2001 to 2003. Mr Sekgobela is a founder member of the South African Commuters Organisation (SACO). He is currently advising SACO on transport policy and legislation related issues. Mr Sekgobela also served on the Steering Committee of the National Transport Policy Review Process and on the Land Passenger and Land Infrastructure Working Groups of the National Transport Policy Review Process. Mr Sekgobela served on the Steering Committee of the Moving South Africa Project where he was also involved in the Rural and Long Distance Working Group. Mr Sekgobela also served on the Board of Directors of the National Cross-Border Agency and the National Railway Safety Regulator. Mr Sekgobela is currently serving on the Board of the National Transport Appeal Tribunal.

Annual Report 2011 GAUTrain management agency

7. Dr Malindi Neluheni Dr Malindi Neluheni is an internationally trained professional, with post-graduate qualifications in built environment infrastructure and transport operations. She holds a Masters degree from Cornell University, Ithaca, New York (USA), as well as a Ph.D (Dissertation on Airports Terminals) from the University of WisconsinMilwaukee (USA). Dr Neluheni’s experience in public and private entities was accumulated in South Africa and the United States. Her professional competencies include transport logistics, aviation and airports operations, intermodal hubs space functions, rail establishment and operations, as well as land-use related traffic generation analyses. In South Africa, Dr Neluheni worked for the Council for Scientific and Industrial Research (CSIR) in the roads and transport division (Transportek) as well as for a consulting engineering firm. On completion of her studies, before returning to South Africa, she gained substantial experience with the City of Milwaukee, Department of Public Works working on public infrastructure projects as well as on various assignments at the county airport. Dr Neluheni also worked as a Research Associate for the Center for Urban Transportation Studies at the University of Wisconsin-Milwaukee. She was later employed by an engineering firm in Milwaukee, Wisconsin, as a Transportation Engineer, where she significantly participated in the establishment of light rail for the City of Milwaukee, in addition to other road construction and traffic engineering projects. She was previously Chief Executive Officer of a public entity of government reporting to the Minister of Public Works; regulates building and construction professionals. 8. Dr Sadha Moodley Dr Sadha Moodley holds a B.Sc. Hons in Physics and Instrumentation Engineering from Brandeis University, USA, an M.S., in Physics, Technology and Education from Columbia University, New York Department of Scientific Foundations and a Doctorate – Research Fellow, Physics Department, Centre for Polymer Studies, from Boston University, USA. Dr Moodley is currently researching the development of computer-based mathematics and science education interventions for Boston University, Physics Department, USA and is the CEO and founder at the Institute for Scientific Research and Educational Development (ISRED), South Africa. Dr Moodley established the institute to help transform apartheid education in Maths, Science and Technology by building partnerships with stakeholders in education. He presently oversees education excellence programmes dedicated to improving the quality of maths, science and technology, learning and teaching in disadvantaged communities in Southern Africa. Dr Moodley’s research and project work includes the following: • Massachusetts Institute of Technology (M.I.T) Fluid Dynamics Laboratory, developing hardware and software for High Speed Electrical Impedance Tomography and Acoustic Imaging Camera. • Boston Information and Technology. Developed hardware for aids used by the visually impaired and blind. Wrote Assembler Code for microprocessor-based (Z80) Electrocardiograph Machine. • Harvard University. High Energy Physics Laboratory. Instrumentation/Simulation software for detector electronics in subatomic particle accelerator at FermiLab Chicago. • Harvard-Smithsonian Centre for Astrophysics. Worked on the Hardware and Software for ROSAT (Roentgen Satellite) launched on a Delta Rocket by NASA for soft X-ray imaging studies. Developed processing software for raw data received at Ground Station at Goddard Spaceflight Centre. • Boston University and Simmons College, USA Physics lab coordinator and instructor. • Columbia University, New York. Department of Scientific Foundations Spencer Research Fellow. • Boston University, Physics Department, Centre for Polymer Studies Research Fellow. Developed computer based simulations using molecular modelling tools developed for research in Molecular Dynamics.

Annual Report 2011

9. Mr Jack van der Merwe (Chief Executive Officer) Jack van der Merwe, sixty two years old, is a professional Engineer. He obtained the degrees B.Sc.(Eng.) Civil and B.Sc.(Eng.) (Hons.) Civil from the University of Pretoria. He is also a graduate of the Harvard Business School’s SED programme. Mr van der Merwe has been a member of the Civil Service for the past thirty-eight years. His career started as an Engineer-in-Training with the Roads Branch of the Transvaal Provincial Administration in 1972 – eventually specialising in contract project management and heading the IT Directorate. After the 1994 general elections he was appointed as the team leader of the Strategic Management Team (SMT) tasked with developing, structuring and establishing the new Department of Public Transport and Roads in Gauteng. During April 1995 he was appointed to the rank of Deputy Director-General as Head of the Department of Public Transport and Roads. After a Cabinet re-shuffle in June 1996 the Department was expanded to include Public Works. In January 1999 he was promoted to the rank of Superintendent General as head of the Gauteng Department of Transport and Public Works. Apart from heading the Department he was also the project leader for the Gautrain Rapid Rail Link, one of the ten Blue IQ long-term economic development projects of Province. He represented his Department on various national forums and professional bodies – such as the Ministerial Conference of Ministers of Transport (MINCOM) and the Committee of Transport Officials (COTO). He was the Chairperson of the Gauteng Urban Transport Board. In addition, he was a member of the Civil Engineer Advisory Council (CEAC) and a board member of the South African Rail Commuter Corporation (SARCC). He was until recently a board member of the former South African Roads Board. In 2003, he was elected UITP vice-president for Africa (a world-wide association of urban and regional passenger transport operators, authorities and suppliers) and during 2004 he was elected to serve as a member on the UITP policy board. In 1998, the Transportation Engineering Division of the South African Institution of Civil Engineering awarded him the Chairman’s Award for Meritorious Service to the Transportation Profession. He is a Fellow of the South African Academy of Engineers. He is currently the CEO of the Gautrain Management Agency tasked with overseeing the building and operation of the Gautrain Rapid Rail Link. Jack has been the project leader of the Gautrain Rapid Rail Project since its inception in 2000. Under his leadership the project has developed into the largest Public-Private-Partnership (PPP) type contract in the history of South Africa. It is currently the largest Greenfields PPP rail project in the world. Jack has delivered countless papers on the development and execution of PPP contracts is South Africa and abroad. He has been asked by the World Bank to present the method, advantages and implementation of PPPs in Russia and the Philippines. He receives on average two oversees delegations per month who are seeking advice on the implementation of PPP type contracts.

Annual Report 2011 GAUTrain management agency

CHIEF EXECUTIVE OFFICER’S REPORT

The 2010/11 financial year has been an exciting year for the Gautrain Management Agency. Various milestones were achieved but the highlight of the year was the opening of the OR Tambo International Airport to Sandton link of the Gautrain system on 8 June 2010, three days before the 2010 FIFA World Cup™ kick-off. It made us proud to be part of the South African effort in hosting one of the most successful World Cup events in the history of the beautiful game! During January 2010 the fifth proposal from the Concessionaire, Bombela Concession Company, to achieve Operational Completion Date (OCD 1) in time for the 2010 FIFA World Cup™ was accepted by Province. This proposal basically consisted of a reduced scope for OCD 1 where some of the facilities, mainly a portion of the parking at Sandton station, would not be completed in time. This proposal very specifically stated that there would be no additional cost to Province in implementing this proposal.

Annual Report 2011

The achievement of opening the East â&#x20AC;&#x201C; West link in time for the World Cup was made possible by long hours of hard work, over a very long period, by all concerned. My thanks to the Gautrain Political Committee, the GMA Board, all the companies in the Bombela Concession Company family, the staff of the Provincial Support Team, the staff of the GMA, the Independent Certifier and the Independent Socio-Economic Monitor. The public embraced the Gautrain from day one and the ridership on this section of the system has matched the ridership predictions that were made by the Province during the planning stage of the Project a few years ago. If this trends continuous when the whole system is in operation, which is expected sometime in 2011, Gautrain will play a meaningful role in providing a viable alternative public transport solution to the current road congestion in the corridors between Tshwane, Ekurhuleni and Johannesburg.

Annual Report 2011 GAUTrain management agency

The objectives of the Agency are to manage, co-ordinate and oversee the Project and without derogating from the generality of the foregoing, to: (a) Assist the Province in implementing the Project and achieving the Project objectives; (b) Act on behalf of the Province in managing the relationship between the Province and the Concessionaire in terms of concession agreements and ensure the interests of Province are protected; (c) Manage assets relating to the Project and promote their preservation and maintenance; (d) Manage the finances of the Project and the financial securities provided by the Concessionaire; (e) Liaise with and promote co-operation between government structures in all three spheres of Government in relation to the Project; (f) Liaise with persons having an interest in the project; (g) promote and maximise the Socio-Economic Development and BBBEE objectives of the Province in relation to the Project; (h) Monitor the policy and legislative environment of the Project and (i) Enhance the integration of the project with other transport services and Public Transport Plans. The integration of the Gautrain Rapid Rail Link with other transport systems and major developments in the Gauteng Province has continued to be a priority focus area of the GMA. Transport operational integration deals mainly with the Gautrain’s interaction with other modes of transport, as well as with the way that its stations operate both as transport interchange facilities and as hubs of activity within the overall urban environment. Successful operational integration will bring more origins and destinations within reach of the Gautrain via the use of existing public transport modes. This will effectively “stretch” Gautrain’s target market, enabling residents in the currently lower income areas to access the areas of higher paid employment the Gautrain mainly serves. An update of the Gautrain Integrated Implementation Plan was done under the guidance of the Gautrain Public Transport Integration Committee (GPTIC), completed and endorsed by the GPTIC meeting on 15 October 2010. Subsequently the Plan was presented to the National Cabinet for notification. Another issue of importance is the integration of the Gautrain with land use in the Province. Local development frameworks are continuously evolving to accommodate greater densities of development around Gautrain stations, as Local Authorities and developers realise the potential of Gautrain as a transportation system and the value of transformation of the urban framework to create more efficient cities. This has lead to various applications for developments around stations being submitted to Local Authorities, which will result in major densification of land use at stations. This is specifically relevant to Hatfield, Sandton and Rosebank stations.

Annual Report 2011

The integrated planning of stations, to ensure appropriate land use development in the vicinity of the station precincts, has largely been completed, through regular interaction with the relevant role-players. The linking of major commercial and residential nodes within the area of influence of the respective stations has also been addressed through the process of finalisation of the Dedicated Feeder and Distribution Bus Service routes for the complete system. During the past financial year the filling of some key posts in the organisational structure of the GMA was achieved and the remaining post should be filled during the following financial year. All policies and procedures have now been developed and approved by the Board. The GMA staff is supported by the Provincial Support Team (PST) in managing the Concession Agreement with the Concessionaire. These are dedicated men and women who have worked tirelessly to ensure that the Concessionaire delivers the system within time, scope and budget. I would like to express my appreciation for their commitment, dedication and hard work. At the heart of the GMAâ&#x20AC;&#x2122;s responsibility is managing a very large and complicated PPP contract with the Concessionaire, where during the course of the year close to R3,5 billion was expended. It is indeed heartening to note that the Auditor-General has again given the GMA a clean audit for the second year of operation. This is just reward for the GMAâ&#x20AC;&#x2122;s commitment to sound corporate governance and responsible financial management. I would like to thank my CFO and her staff for their commitment and dedication throughout the past year that has made this possible. I would like to thank the two MECâ&#x20AC;&#x2122;s responsible for Transport for their support and guidance during this financial year and express my gratitude to the GMA Board for their commitment, dedication and hard work in steering the GMA during this year of operation. Finally a word of appreciation and thanks to the Chairperson of the Board for her leadership, guidance and support.

Mr E (Jack) van der Merwe CEO: Gautrain Management Agency

Annual Report 2011 GAUTrain management agency

GAUTRAIN MANAGEMENT AGENCY (GMA) AND PROVINCIAL SUPPORT TEAM (PST) STRUCTURES GAUTRAIN MANAGEMENT AGENCY (GMA) AND PROVINCIAL SUPPORT TEAM (PST) STRUCTURES

GAUTRAIN POLITICAL COMMITTEE

GMA BOARD INDEPENDENT ADJUDICATORS * IC * ISEM * IECP * DRB

PROVINCIAL SUPPORT TEAM

CEO & PROVINCIAL REPRESENTATIVE

• PROJECT COORDINATION • CONCESSION DEVELOPMENT (TECHNICAL TEAM INCL. LAND PROCUREMENT) • OTHER SUPPORT FUNCTIONS

OFFICE MANAGER

INTERNAL AUDIT

COMPANY SECRETARY

TECHNICAL • OPERATIONS, MAINTENANCE AND MANAGEMENT • SYSTEM PERFORMANCE • E&M ENGINEERING • ASSET AND MAINTENANCE • CIVIL ENGINEERING • COMMERCIAL / CLAIMS AND CONTRACT MANAGEMENT • SHEQ • PUBLIC TRANSPORT AND INTEGRATION

FINANCE • FINANCIAL MANAGEMENT • FINANCIAL CERTIFICATION ASSET AND SUPPLY CHAIN MANAGEMENT

GOVERNANCE, HR & IT

CORPORATE COMPLIANCE & LEGAL SERVICES

• HR AND TRANSFORMATION • IT AND ADMIN • SED

COMMUNICATION & MARKETING

Annual Report 2011

Annual Report 2011 GAUTrain management agency

BACKGROUND OF CURRENT BUSINESS 28

Annual Report 2011

Annual Report 2011 GAUTrain management agency

A| GENERAL

Policies and Legislative Mandates National Policy and Legislative Mandates • • • • • • • • •

White Paper on National Transport Policy. Urban Transport Act, Act 78 of 1977. Public Finance Management Act, Act 1 of 1999. Environmental Conservation Act, Act 73 of 1989. National Land Transport Act, Act 5 of 2009. National Land Transport Transition Act, Act 22 of 2000 (NLTTA). National Land Transport Strategic Framework (NLTSF). National Treasury Regulations. DoRA Act.

Provincial Policy and Legislative Mandates • • • • • • • • • • • • • • •

Gauteng White Paper on Transport Policy. Gauteng Transport Legislative Framework. Gauteng Transport Framework Revision Act, Act 8 of 2002. Gauteng Public Passenger Road Transport Act, Act 7 of 2001. Gauteng Transport Infrastructure Act, Act 8 of 2001. Gauteng Legislation on Development Planning. Urban Transport Act, Act 78 of 1977. Gautrain Management Agency Act (GMA Amendment Act 6 of 2008). The Local Government Municipal Systems Act, Act 32 of 2000. Provincial Growth and Development Strategy (PGDS). Gauteng Spatial Development Perspective. DoRA Act. New Consumer Credit Act. OH&S Act. GRAP: Generally Recognised Accounting Practice.

Annual Report 2011

Annual Report 2011 GAUTrain management agency

Management of the Concession Agreement Scope of the Contractual Matters Report The contractual matters report deals with the conduct of the Parties in respect to their respective contractual rights and obligations as provided for in terms of the Concession Agreement. A contractual matter that is to be dealt with by the Contractual matters team arises when: • One Party (i.e. the Concessionaire and/or Province) acts in accordance with its rights to request, or demands a specific performance of an obligation by the other Party in terms of the Concession Agreement; or • The Parties develop competing contentions in regard to an issue that has arisen in the course of either or both Parties implementing the provisions of the Concession Agreement; or • An event arises that has been provided for in terms of the Concession Agreement (Schedule 9: Project Events); or • A Variation to the Concession Agreement is requested by either Party; or • A Dispute arises between the Parties (Schedule 10: Avoidance and Resolution of Disputes); or • One Party Notifies the other Party of a demand, notice or other communication given in connection with or required by the Concession Agreement; or • When Termination Points are incurred by the Concessionaire in terms of the Concession Agreement. This report is for the 2010/11 Gauteng Government financial year – the period from 1 April 2010 to 31 March 2011. The period covered by this contractual matters report falls within the period where the Development Period overlaps with the Operating Period (this overlapping period occurs from 8 June 2010 to when the Operating Commencement Date for Phase 2 will occur).

Structure Contractual matters are dealt with across the full structure of Province’s Support Team i.e. contractual matters arise from time to time in all of the functional areas reported on separately under this report. The Contractual team has been structured in such a way that it has representation (usually part-time) in every functional area in Province’s Support Team. The Contractual team and the Risk management team work very closely together and responsibilities for contractual matters are shared between them.

Annual Report 2011

Significant Activities Performed to-date The Contractual matters team has been responsible for the following contractual matters during the period under review: • Discussions with the Concessionaire in regard to the manner in which an amended Operating Commencement Date for Phase 2 may be achieved; • Drafting of correspondence amounting to, on average, nearly 20 letters per month since the Effective Date • Working with Province’s legal team and senior counsel in a number of arbitration proceedings: o ROD (Award handed down on 19 January 2011) o GTIA o Land Discrepancies o Sandton Cavern o Progress Exception Reports • Overall coordination of the Water Ingress in the tunnels Dispute that was referred to the Dispute Resolution Board by the Concessionaire; • Contractual advice and setting up systems to deal with operations and maintenance matters during the Operating Period; • Negotiating a number of Variations that required high-level intervention in order to reach agreement/ resolution with the Concessionaire; • Coordination of and liaison with Province’s legal team as required from time to time; • Contractual and commercial management and assistance across all of Province’s Support Team functional areas. In particular, in regard to the Variations team, the Development Programme team, the Utilities team and the Land team; • Management of over 30 contractual issues (including Disputes) that are/were in contention between the Parties – a few of which have been successfully resolved; • Management of a number of contractual administrative functions such as: o Notices o Events likely to cause a delay o Project Events o Disputes o Collateral Agreements o Key Contracts • Management and coordination of Province’s review of and response to the Concessionaire’s “Delay and Disruption Dispute” and • Contractual and commercial input to Province’s Representative’s Executive Committee.

Annual Report 2011 GAUTrain management agency

GMA Partnering Goals Partnering is based on a simple philosophy: co-operation is a more effective strategy for developing projects than competition and conflict. But it has nothing to do with “cosy” relationships. It is not “soft and fluffy” and is not a contract. It is a hard business strategy to achieve better business results for the whole team through improved working relationships. It’s driver is joint success. It helps to remove waste from the system, improve and simplify processes, increase predictability, develop longer term thinking, manage risk more effectively and improve safety. (JCP Consultancy Limited). The Concession Agreement encourages Province and the Concessionaire to execute the Project in a spirit of partnering. To this end, the parties have signed a partnering charter which commits the Parties to commit to work together in a true spirit of co-operation, honesty, transparency and trust to successfully implement the project. It requires, amongst others, the Parties to identify project-related problems at an early stage and to resolve these problems quickly in the best interest of the Project. It also confirms the Parties’s common goal to complete Phase 1 of the Project by the 2010 FIFA World Cup™ (objective achieved) and Phase 2 by March 2011 (objective not achieved). The partnering initiative did not evolve in the manner intended by the signatories of the partnering charter. The parties have abolished all formal partnering interventions (such as workshops and task teams) that were introduced in the first year of the Project as it was felt that these interventions were not achieving the ongoing results sought by the parties who committed to the programme. Failure to resolve contractual issues have been a likely contributor to the demise of the formal partnering spirit at management level and this cascaded down and had an effect on the co-operation achieved at lower levels of management. The Parties nevertheless continued to co-operate in the best interest of the Project (and nevertheless achieved some results sought through the initial partnering initiative) by agreeing to keep Project and contractual issues apart during the day-to-day management of the Project. The main vehicle for this was the Project Exco meetings that were held on a weekly basis which were aimed at, and indeed achieved, the resolution of various Project related issues. The Project Exco continues to be a cornerstone of the management of the Project. Partnering activities were ultimately contained to individual working relationships which rendered the benefits expected from partnering in varying degrees of success throughout the greater project team.

Annual Report 2011

Who is Partnering The Partnering Initiative involves all employees across the key entities on the Project. The Partnering Steering Group (PSG), made up of representatives from the core project entities supports the Partnering Initiative. Beyond the core entities of the Project, this initiative involves various stakeholders:

Stakeholder Acronyms PST B CC B E&M B CJV B TKC B O&M IC ISEM SARSR SANRAL EMM COT CoJ ACSA PRASA GDRT LTA SAPS

Provincial Support Team Bombela Concession Company Bombela Electrical and Mechanical Bombela Civils Joint Venture Bombela Turnkey Contractor Bombela Operations and Maintenance Independent Certifier Independent Socio-Economic Monitor South African Rail Safety Regulator South African National Roads Agency Limited Ekurhuleni Metropolitan Municipality City of Tshwane City of Johannesburg Airports Company of South Africa Passenger Rail Agency of South Africa Gauteng Department of Roads and Transport Lenders Technical Advisors South African Police Services

Annual Report 2011 GAUTrain management agency

Ethics, Fraud and Corruption A Code of Conduct and Ethics commits the GMA and its staff to the highest standard of ethical conduct. The Code is founded on the principles of integrity, good faith, impartiality, openness and accountability. Furthermore, a Fraud and Corruption Prevention Policy is adopted to protect the GMA, employees, revenue, expenditure and assets as well as public funds from any attempt to gain financially or to benefit in an unlawful, dishonest or unethical manner.

Annual Report 2011

Annual Report 2011 GAUTrain management agency

Overview of Current Business

Annual Report 2011

Communication and Marketing The nature of the Gautrain Project generates significant stakeholder interest. There are supporters and opponents. People are interested in the Project for various reasons: political, personal, financial, technical, environmental, as users and numerous other reasons. Because of this interest, the communication and marketing plan implemented, outlines communication activities that are structured in such a way so as to optimise the provision of clear, unbiased and technically correct messages. A holistic approach towards communication is contentiously established. It includes stakeholder communication and the development of a database for these communication initiatives, branding, marketing and the implementation of a focused media campaign. The communication and marketing strategy focuses on Gautrain in general and its various attributes and characteristics. It also profiles Gautrain as a total integrated public transport service that is safe and secure, predictable, reliable and comfortable â&#x20AC;&#x201C; for people on the move. Gautrain is further positioned as a key infrastructure project that contributes to alleviating traffic congestion and assists with public transport transformation. To achieve the above, its core focus is on sustainable brand management that focuses on freedom for people on the move, instilling pride in Gautrain and building healthy, sustainable relationships.

Annual Report 2011 GAUTrain management agency

Structure of the Communication and Marketing Department To reach the monitoring and operational objectives described overleaf, the Communication and Marketing function is structured into nine functions: • Research, issue management and crises communication • Stakeholder management • Media management inclusive of social media and writing • Web management • Social media • Marketing communications inclusive of branding, events, exhibitions, publications, presentations and advertising • Internal communication • Project reporting – monthly, quarterly and annually • Event management

Annual Report 2011

Stakeholders with whom Communication and Marketing Interact Internal stakeholders • Gautrain Political Committee • Office of the Premier • Gauteng Department of Public Transport Roads

Project partners • • • • • • • • •

Gautrain Management Agency (GMA) Provincial Support Team (PST) Independent Certifier (IC) Independent SED Monitor (ISEM) Bombela Concession Company (BCC) Bombela TKC Bombela CJV Bombela E&M Bombela Operating Company (BOC)

Government stakeholders • • • • • • • • • • • • • •

National Treasury National Department of Transport City of Johannesburg Metropolitan Council Ekurhuleni Metropolitan Council City of Tshwane Metropolitan Council Airports Company of South Africa Utility owners Johannesburg Development Agency Passenger Rail Association of South Africa South African National Roads Agency Limited South African Railway Safety Regulator Gauteng Legislature Johannesburg Roads Agency Relevant parastatals

Interested and affected parties • For variant environmental investigation purposes

Mass media • • • • • • • •

International National Provincial Community Trade and technical Consumer On-line Social

Annual Report 2011 GAUTrain management agency

Construction Highlights in which Communication was involved The Gauteng Provincial Government finalised negotiations and signed the Concession Agreement with Bombela Concessionaire for the construction, operations and maintenance of the Gautrain Project on 28 September 2006. Construction also commenced on that day with the Premier of Gauteng turning the first sod. Various other dignitaries and media attended this memorable event. The moment that many South Africans were waiting for finally arrived on 5 June 2010 when Gautrain celebrated its commencement of operations event. This historic moment not only marked a new dawn in public transport, but also the inaugural ride on Africa’s first rapid rail transport system. The cutting of ribbons at Sandton, Marlboro, Rhodesfield and OR Tambo International Airport stations symbolised a new legacy in public transport and the delivery of a modern, world-class integrated public transport system for the people of Gauteng. The evening’s procedures also included the launch of a commemorative issue of ten stamps to celebrate the 150th anniversary of the first passenger train to be hauled in South Africa. The stamps are were released in June 2011 by the South African Post Office. Depicting the history of rail in South Africa, one of the stamps features an artists’ illustration of the Gautrain.

Communication Awards Received The Gautrain communication team received a number of accolades for their work during 2010. These were: • The National Press Club Media Liaison Officer for the Year (2010) to Dr Barbara Jensen • Public Relations Institute of Southern Africa for Public Relations of Strategic Management – Gold for media relations – Silver for social media – Silver for public relations in the public sector – Bronze for launch of a new service • International Association of Business Communicators’ African Quill (Regional Awards) – Media relations – Social media • International Association of Business Communicators’ International Merit Award (International Award) – Social media – Media relations • Paris Festival CinéRail Train and Metro on Film Special mention of the Jury for the quality of films presented. The Jury was especially impressed with the quality of films that came out of Africa and how they captured the spirit of Africa and its people. The audio-visuals were: the Story of Gautrain, Phambili Guatrain Phambili, Gautrain History Audio-Visual and Elements Audio-Visual.

Annual Report 2011

Annual Report 2011 GAUTrain management agency

Annual Report 2011

Human Resources Management The mission of the GMA Human Resources and Transformation unit is “to ensure a dynamic and successful Agency delivering exceptional performance and services through well qualified and optimally developed, engaged and motivated personnel”. The emphasis during the 2010/11 financial year was on the development of in-house capacity and competency to fully assume the roles and responsibilities of the GMA in terms of the GMA Act. A major focus was placed on the recruitment and appointment of competent staff, the transfer of knowledge from the professional teams of service providers to the appointed staff and the development and/or establishment of all required business systems, policies, procedures and practices to ensure a successful GMA in taking up its leadership role in the Broader Public Transport industry in Gauteng and South Africa. In order to attain the Human Resources Mission, the following short term strategic objectives have been developed supported by a comprehensive strategic action plan with target dates for completion: • To develop and establish human resources management and administration systems, HR Policies, to render services to the GMA. • To develop and establish GMA practices that will facilitate and navigate the GMA to become and remain a dynamic and successful Agency. • To develop and establish the required GMA practices that will facilitate and navigate exceptional performance and service by the GMA’s personnel. • To develop and establish comprehensive employment education, training and development programmes ensuring availability to the GMA of well qualified and optimally developed people. • To develop and establish GMA practices that will facilitate and navigate engaged and motivated personnel. In 2009 the GMA approved the GMA Organisational Structure comprising of 45 posts and during the financial year 2010/11 14 posts with two senior executive management positions were filled in order to capacitate the Agency. The GMA Organisational Structure was reviewed with the input from Senior Executive Management and critical positions for the operational period were created in the post establishment hence increasing the capacity of the Agency. The newly created posts in the post establishment were approved by the GMA Board and will be filled in the 2011/12 financial year. Policies of the GMA have been developed and implemented, these policies are reviewed regularly in order to constantly strengthen the success of the GMA.

Annual Report 2011 GAUTrain management agency

B| DEVELOPMENT 1

Risk Management The GMA is obliged, in terms of the PFMA and corporate governance best practice, to establish and maintain a risk management system. Risk management has therefore also been included as one of the GMA’s Key Programmes. The risk management function is currently performed by Province Support Team and it is expected that this work will be performed by officials of the GMA once Phase 2 operations commence. The work involves the identification and assessment of risks, the upkeep of a risk register, risk reporting and liaison with the Concessionaire and follow-ups with respect to the mitigation of Province’s own risks. Province’s Risk Manager reports to the Concession Development Manager and also has a close working relationship with the CEO of the GMA who is the contact person with the Chairperson of the Audit and Risk Committee (ARC) of the GMA Board. Province Support Team’s management structure is the vehicle used to support the risk management processes relating to the development of the Project. Risks are identified, assessed and managed through the various meetings of the Concession Development Manager. Risks for which mitigation actions require top management action are elevated for appropriate action at Province Executive Committee and/or the Project Executive Committee, which are held on a weekly basis. Province co-operates with Bombela with respect to the management of Project risks and meets on a quarterly basis to coordinate the management thereof. Risks are continuously identified, evaluated, mitigated, monitored, reviewed by both Province’s Representative Support Team (PST) and the Concessionaire and reported on a “bottom-up” basis through each organisation. As each risk is identified it is allocated to a person in the respective organisation who is responsible for the day-to-day management thereof – and it is recorded in a risk register which contains the descriptions, assessments and mitigating actions of all risks identified. The Parties have agreed to focus on the effective management of Project Risks and to keep contractual matters associated with risks aside, for discussion at other meetings. In the event that there may be a disagreement on the ownership of a particular risk, such disagreement is simply marked with an asterisk (*), whilst the most appropriate entity, or the entity first identified as the risk owner, is identified as the risk owner in the interim. Province contributes to the overall Project Risk Register through its own Project risk register which is updated and submitted to the Concessionaire on a monthly basis. Province Project risk register is then combined with the respective risk registers of the Bombela family of companies, all of which are then included in the Executive Project Risk Management Report compiled by the Concessionaire on a monthly basis. The Executive Project Risk Management Report lists, amongst others, an extract of the Project’s top risks so as to provide a management overview of the most important risks on the Project. The Risk Manager prepares a monthly Province Project Risk Report, based on the Executive Project Risk Management Report, which is included as a section in Province’s Monthly Progress Reports.

Annual Report 2011

All project risks, managed during the Development Phase of the Project, are assessed in terms of probability and impact using the guideline provided in the table below: Risk Assessment Guide Risk Assessment Guide Probability

Impact on Quality

Impact on Schedule

Impact on Total Project Cost

Occurs rarely

Insignificant (No effect on System Performance)

Insignificant < 2 weeks

Insignificant <0.1%

Improbable/ low

Low (Limited effect on System Performance)

Low 2 weeks to 1 month

Low 0.1% to 0.5%

Medium

Medium (System will not function optimally)

Medium 1 to 3 months

Medium 0.5% to 1%

Real chance

High (Performance of System severely impacted upon)

High 3 to 6 months

High 1% to 2%

Almost certain

Very High (System cannot function)

Very high > 6 months

Very high > 2%

SCORE

A risk score is determined by multiplying the probability with the greater score of either of the impacts. For example, a risk with a very high probability (score 5) and a high impact (score 4) on either quality, schedule or cost, will score 5 x 4 = 20. It is important to note that perceptions of risk between Province and the Concessionaire will often differ, because risk assessment is not an exact science. It was therefore agreed that risks will be assessed by the risk owners, whilst the other parties will comment on these assessments at risk meetings with a view to facilitate convergence of the views on risk as far as this is possible. The final assessment is however the decision of the risk owner.

The Risk Manager also supports the CEO of the GMA with the identification and management of risks internal to the GMA, under the guidance of the GMA ARC. The ARC has, during the reporting period, commissioned a number of internal audits which were performed by the GMA’s Internal Auditor’s, Grant Thornton. Province’s Risk Manager provides support to the CEO with the implementation of actions arising from these internal audits, on an interim arrangement until the GMA is fully staffed and in a position to take over the complete risk management function of the GMA.

Annual Report 2011 GAUTrain management agency

Contractual/Development/ Project Programme The Project and Administration Management Division deals with a wide range of activities, including, amongst others: • Monitoring Development Progress as measured against the contractual Development Programme and any delays experienced. • Assessment of Milestone achievement for interim payment purposes. • Document Control and Management. • Review of Management Plans. • General Project Administration and Project Management duties.

Annual Report 2011

Process of Monitoring Progress against the Development Programme The Development Programme and Project Management Team (referred to as the ‘Programme Team’) is responsible for the assessing, reviewing and commenting on the Gautrain’s overall contractual project programme, known as the Development Programme and Project Management Plan (or DP&PMP). This contractual programme is very complex and contains around 25 000 activities, linked by means of various logic sequences. Extracts of this programme were initially printed on 443 A3 pages and formed part of the Concession Agreement.

Development programme progress reports The Concessionaire is required to submit development programme progress reports on a monthly basis to report the Project’s progress against the DP&PMP. These submissions come in the form of various programme extracts (including three month look-ahead programmes, Critical Path programmes, Milestone programmes, etc), management programmes (higher level summary programmes), as well as progress tracking tools such as S-curves and key event indicators. Further to these hardcopy submissions, Province also receives the programme’s monthly data file (including all 30 000+ activities), which allows Province to view the programme contained in the monthly development programme progress reports in detail using dedicated management software. Province takes time to review these monthly submissions in detail. The programmes are assessed to ensure that the Concessionaire is reporting in line with the Agreement, as well as making sure that they are making use of good programming practice. Comments from these reviews are then issued to the Concessionaire using the Reviewable Item procedures. Province has thus far issued 53 technical reviews on the Concessionaire’s development programme progress reports including ten reviews issued during the 2010/11 financial year. The Concessionaire has responded to some of these, and Province also assess these responses, aimed at closing out the review comments.

Assessment of actual progress reported by the Concessionaire The Programme Team – in conjunction with Province’s site personnel in the civil construction assurance and also the electrical and mechanical installation assurance teams – conducts audits on the Programmes submitted to Province on a quarterly basis. These audits involve cross checking the actual start and finish dates of high level activities by the Concessionaire reported in their summary level programmes compared with Province’s photographic and other records from site. There have been several activities identified by Province where the dates reported by the Concessionaire have not been consistent with the actual dates from Province’s records, and these concerns have been communicated with the Concessionaire, with the request that they clarify and correct the dates. Province has not yet received a response to a single one of these letters. However, some progress in improving the monthly programme reporting has been made through Province interaction with the Concessionaire, as the Concessionaire’s reports now contain proper Critical Path programmes, S-curves, Key Event Indicators and other management reports, which were initially not included by the Concessionaire.

Annual Report 2011 GAUTrain management agency

Programme progress reports monthly meetings Province’s Programme Team attends monthly development programme progress report meetings coordinated by the Turnkey Contractor of the Concessionaire, with the purpose of updating Province on the Development Programme and the Project’s programme status. This meeting also creates a forum in which programme related queries can be addressed. These meetings are held on a monthly basis, usually the week following the Programme progress report submission to Province, and the week prior to the official Monthly Project Progress meetings. Representatives from Province (the Programme Team) attend these meetings, as well as representatives from the Bombela Turnkey Contractor, Civil Contractor, Electrical & Mechanical Contractor, the Operator and the Independent Certifier. The Independent Certifier (who had ceased attending the monthly programme meetings from the latter stages of the 2009/10 financial year on the grounds that the meeting is not productive as the programme being discussed was largely commercially driven, and not practical or useful), recommenced attending from March 2011, in preparation for the Operating Commencement Date for Phase 2. Province Programme Team has attended all 11 programme progress report meetings held during the 2010/11 financial year.

Review of other programmes The Programme Team is responsible for assessing, analysing and reviewing other programmes (including the programmes included in the Variations, contractual submissions, acceleration proposals, etc) that might be submitted or discussed by the Concessionaire and Province. These also include the programme submissions for Milestone payment purposes. These programmes are assessed to determine their quality (programme best practices) as well as their impact and integration into the DP&PMP, and Works.

Programme related correspondence Province’s Programme Team is responsible for responding to programme related correspondence between Province and the Concessionaire from a technical perspective. Province has written less than 10 Development Programme related letters during 2010/11 and more than 70 over the duration of the Project. Most of these were contractual in nature. Since commencing the assessment of actual progress reported by the Concessionaire during the 2008/09 financial year, Province has issued eight separate letters, or eight separate assessments of the summary programme, to the Concessionaire listing its concerns. Province has not yet received a response to these from the Concessionaire.

Advice management on Project target dates It appears to Province that the development programme progress reports submitted by the Concessionaire are often manipulated for commercial purposes. For this purpose, Province’s Programme Team is also responsible for providing management information, as well as advice on certain Project target dates, based on current progress, previous progress achieved as well as remaining forecasted progress.

Claims and disputes The Programme Team also has to assess, analyse and review other information related to claims by the Concessionaire and Disputes between the Parties, where these impact on the development programme. The most significant of this work is assessing the technical and programme merits of the Concessionaire’s “Delay and Disruption Submission” that was submitted to Province in the middle of 2009. A number of “dossiers” were submitted by the Concessionaire to Province informally to attempt explaining the merits of the Delay and Disruption Submission, but as these had been submitted on a “without prejudice” basis, Province has not yet responded to these formally. The Concessionaire has indicated informally that it would resubmit a claim for delay and disruption at a later stage.

Annual Report 2011

Assessment of Milestone Achievement Government contributes financially towards the development of the Gautrain System. This would normally be due largely at the end of the Development Period, but in order to assist the Concessionaire with cash flow, it was negotiated in the Concession Agreement that Province would make a number of interim payments based on specific Milestones that are achieved as fully described in Schedule 12 of the Concession Agreement. At the beginning of each month, representatives from the Turnkey Contractor, Civil Contractor, Electrical and Mechanical Contractor, the Operator and its Maintainor, attend a meeting arranged by the Independent Certifier with Province. At this meeting, the contractors provide information on the Milestones it aims to submit for certification by the 25th of the month. The Milestones, their achievement criteria, and how these would be measured are discussed in preparation for the certification process. Also, the dates and arrangements for the site inspection meetings are discussed. The Concessionaire monthly submits information to be considered for Milestone achievement, shortly before the 25th of the month. This includes the information from the actual site inspection meetings. Provinceâ&#x20AC;&#x2122;s Milestone Team assesses the information submitted by the Concessionaire, together with its own records on the achievement of these Milestones from a technical perspective, which information is provided to the Independent Certifier and copied to the Concessionaire. The Independent Certifier uses this information from Province and the Concessionaire, together with other assessments for its certification on whether or not a Milestone has been achieved. Once certified, the amounts related to these Milestones are then invoiced by the Concessionaire, and then becomes part of the financial process (reported elsewhere). The Concession Agreement allows for 15 Key Milestones and 1 042 General Milestones covering Phase 1 and Phase 2 of the Gautrain Project. For each Variation, a number of additional payment milestones are added. Up to the end of the 2010/11 financial year, in total 12 Key Milestones and 970 General Milestones have been certified. During this financial year, three Key Milestones were achieved and 237 General Milestones were certified.

Annual Report 2011 GAUTrain management agency

Document Management and Control Document management and document control is an important activity for any large concession contract: An army marches on its stomach and the logistics to feed it. A large concession contract marches on its documents. The Gautrain Provinceâ&#x20AC;&#x2122;s Support Team currently manages close to three million documents, most of which were generated since September 2006, when the construction activities commenced in all earnest. The main purpose of the Document Control Team is to ensure that a proper record of all documents related to the Gautrain Project is kept for Government. In addition, documents are made accessible in both hard copy and electronic copy format, so as to assist the GMA and Provinceâ&#x20AC;&#x2122;s Support Team to retrieve documents immediately when needed. In addition, a number of reports have been created. These report on a real time basis the exact position and status of incoming and outgoing documents. This is done by means of workflows to enable a management systems approach on all documents. These workflows help the technical management team to deal, manage, follow up and track the technical reviews and responses to correspondence. A formal transmittal process is used, so as to ensure that all documents that are issued can be assessed by means of an auditable trail. Care is also taken to ensure that there is a management process of the designs and correspondence.

Annual Report 2011

Annual Report 2011 GAUTrain management agency

Socio-Economic Development Socio-Economic Development (SED) is one of the cornerstones of the Gautrain Rapid Rail Link (Gautrain) Project focusing on local skills development, capacity building and job creation. The SED objectives with regards to skills development and capacity building include not only the important aspect of Broad-based Black Economic Empowerment, but also address aspects such as the development of Small, Medium & Micro Enterprises (SMMEs), the sustainable development of underprivileged communities and the maximisation of local content. Broad-based Black economic empowerment focuses on equity participation by black persons and black women in the entities created for the Gautrain Project, procurement of services and materials from Black Entities (BEs), sub-contracting of service delivery to BEs and the establishment of new BEs. The job creation strategy focuses on a commitment to progress towards employment equity. This strategy forms part of the SED proposal of the Concessionaire, which includes commitment to the employment of Historically Disadvantaged Individuals (HDIs), women, people with disabilities, the participation of HDIs and women in management positions and a human resource development strategy, which includes a women learnership and mentorship programme.

Annual Report 2011

Annual Report 2011 GAUTrain management agency

Contractual Relationship Gautrain is procured as Public Private Partnership (PPP) project between the Gauteng Provincial Government (Province) and Bombela Concession Company (Pty) Ltd (Concessionaire). As this partnership is governed by a Concession Agreement (CA), the Concessionaire committed to measurable SED obligations to ensure that the Project does not merely pay lip service to its developmental responsibility. The CA makes provision for the appointment of an Independent Socio-Economic Monitor (ISEM). The ISEM is appointed jointly by Province and the Concessionaire. The ISEM undertakes the following tasks: • monitoring of the SED programmes of the Concessionaire; • reviewing the processes, procedures and systems of the Concessionaire; • verification of the SED achievements of the Concessionaire; • reporting monthly its findings with regards to its monitoring and reviewing tasks and the outcome of the verification of the SED achievements claimed by the Concessionaire in Monthly SED Reports and • if required, undertaking advisory tasks. The contractual relationship between the three Parties is illustrated in the diagram below:

The Bombela “family” consists of the following five Business Units: • Bombela Concession Company acting as the Concessionaire; • Turnkey Contractor, responsible for the management of the execution of the Works; • Bombela Civils Joint Venture; the Civil Contractor, responsible for the Civil Works; • E&M Contractor, responsible for the E&M Works and • Bombela Operating Company; the Operator, responsible for the operation and maintenance of the System.

Annual Report 2011

Reporting and Independent Monitoring The Concessionaire adheres to a comprehensive and stringent monitoring regime. A pro-active monitoring approach was adopted with monthly reporting and independent monthly verification. A penalty and reward mechanism was introduced based on a quarterly performance evaluation. Central to the ISEM core responsibilities is the performance of an independent verification to validate the performance and compliance of the Concessionaire with its contracted SED obligations during the design, construction and commissioning of the Project. A structured process was introduced that enabled Province, the Concessionaire and the ISEM to agree on the interpretation of the SED requirements and definitions in the CA. The process also enables the partners to determine the required supporting information substantiating the SED achievements of the Concessionaire todate. The Concessionaire must submit Monthly SED Reports to both Province and the ISEM within 45 calendar days after the end of each Contract Month. The Monthly SED Report provides detail on the achievements of the Concessionaire and its sub-contractors with regards to its SED obligations, positive developments, areas of concern, challenges and interventions introduced. The ISEM verifies the SED achievements claimed by the Concessionaire and submits Monthly ISEM Reports on its findings to Province and the Concessionaire about five weeks after receipt of the Monthly SED Reports.

Annual Report 2011 GAUTrain management agency

Achievements to-date The ISEM has completed at the end of March 2011 its verification of the SED achievements claimed by the Concessionaire for each month from Month 0 to Month 54 (March 2011). This will enable Province and the Concessionaire to consider the findings of the ISEM and to determine the performance of the Concessionaire with regards to its SED achievements within the first eighteen calendar quarters. The verified SED performance of the Concessionaire as contained in the Monthly ISEM Reports up to the end of March 2011 is summarised in the graph below.

SHARES HELD BY BEES/ BLACK PERSONS SHARES HELD BY BLACK WOMEN PROCUREMENT FROM BEES/BLACK PERSONS SUB-CONTRACTING TO BEE PROCUREMENT & SUB-CONTRACTING TO NEW BEE PROCUREMENT & SUB-CONTRACTING TO SMMES EMPLOYMENT OF LOCAL PEOPLE PROCUREMENT OF RSA MATERIALS PROCUREMENT OF RSA PLANT & EQUIPMENT HDI STAFF SECONDED BY SPG EXPENDITURE BY SPG ON PLANT & EQUIPMENT 0% PROCUREMENT FROM, OR SUB-CONTRACTING TO SPG HDIS IN MANAGEMENT POSITIONS WOMEN IN MANAGEMENT POSITIONS HDIS IN OCCUPATIONAL LEVEL C HDIS EMPLOYED WOMEN EMPLOYED PEOPLE WITH DISABILITIES EMPLOYED EXPENDITURE ON HUMAN RESOURCE DEVELOPMENT WOMEN TRAINED & MENTORED WOMEN LEARNERS EMPLOYED & MENTORED 0%

Annual Report 2011

119% 100% 326% 644% 295%

2032% 549% 613%

168% 326% 2054% 644%

683%

177% 109% 234%

2750%

630% 504%

398% 100%

500%

1000%

1500%

2000%

2500%

3000%

It is evident from the Monthly ISEM Reports that the Concessionaire is exceeding all of its SED obligations and significant performance is shown in the categories of procurement and sub-contracting, local employment, employment of Historically Disadvantaged Individuals (HDIs), women, people with disabilities, and the participation of HDIs and women in management positions. The commitment of the Concessionaire is not only limited to the total quantum, but also to monthly quantum. It is evident from the graph below that since the commencement of the Project, BEs – and similarly New BEs and SMMEs – have benefited from the Project. The SED performance of the Concessionaire up to the end of March 2011, can be summarised as follows: • An amount of more than R4 930 million was spent on procurement from, and sub-contracting to BEs, compared to an obligation of R2 460 million. More than 380 BEs have benefited from the Project to-date. • An amount of more than R2 480 million was spent on procurement from, and sub-contracting to New BEs, compared to an obligation of R1 260 million. More than 150 New BEs have benefited from the Project todate. • An amount of more than R1 340 million was spent on procurement from, and sub-contracting to SMMEs, compared to an obligation of R300 million. More than 300 SMMEs have benefited from the Project to-date. • South African materials, plant and equipment were produced, to a total value of more than R3 400 million, compared to an obligation of R1 870 million. • More than 31 600 local direct jobs were created or sustained, and an estimated total of 110 600 direct, indirect and induced jobs up the end of March 2011. • Bombela and its sub-contractors created, amongst others, 27 090 jobs for Historically Disadvantaged Individuals (HDIs), 2 970 jobs for women, and 210 jobs for people with disabilities. • Unskilled staff and semi-skilled staff attended to-date more than 16 160 courses to improve their skills levels. • Top management, senior management, middle management and junior management of Bombela attended to-date more than 3 400 training courses. A vast number of claims by the Concessionaire have been verified by the ISEM. The analyses of the monthly SED performance i.e. obligations, claimed achievements and verified achievements, entail the capturing of an enormous amount of data, which includes, amongst others, more than 2 500 data items.

Annual Report 2011 GAUTrain management agency

Integration Management of the Gautrain with Governmentâ&#x20AC;&#x2122;s Transport Systems

Transport integration is aimed at promoting the harmonisation and integration of the Gautrain Rapid Rail Link with the economic development activities in Province in general and specifically into the surrounding transport system, such as the road network, the commuter rail system, the respective bus rapid transit systems, other bus services and minibus-taxi operations.

Annual Report 2011

Background Integration of the Gautrain with systems and development initiatives in Gauteng has continued to be a high priority of Province, as is clearly expressed in the objectives stated at the inception of the Gautrain Project in 2000. Integration of Gautrain into the transport system of the Gauteng Province and its economic development activities, was also set as a key requirement for the approval of the Project by Government. Effective integration achieves a balance between social policy objectives – having the right transport solutions in the right places for the people who most need to use it; and financial efficiency objectives – arising when each transport mode is used in those situations where it can perform most effectively. In applying this to the Gautrain project, the following spheres of integration are broadly being addressed: • Spatial and Land Use Planning – Aimed to accelerate the ongoing process of change towards densification in terms of both spatial structure and detailed land use planning. The viability both of Gautrain and other public transport systems will benefit from higher densities along key transport corridors and at and around the stations. • Strategic Transport Integration – Aimed at giving input to investment decisions on associated transport infrastructure investments and policy initiatives and is designed to provide a framework within which the Gautrain’s benefits will be optimised, as being a public transport “link” within the bigger transport system in the Gauteng Province. • Transport Operational Integration – Aimed at investment and/or processes that will ensure maximum return of the investment in the Gautrain in respect of station developments, coordination of public transport networks, information and communication and exchange of technologies between different parts of the rail system. Successful operational integration brings more origins and destinations within reach of the Gautrain via the use of existing public transport modes, as well as private vehicles. This will effectively ‘stretch’ Gautrain’s target market area, enabling residents in currently lower income residential areas to access the areas of higher paid employment that Gautrain mainly serves. By giving attention to the interfaces between various transport services and modes, the convenience and safety of passengers transferring at stations and public transport interchanges are greatly enhanced. Through effective operational integration the Gautrain can also act as a catalyst for the transformation of public transport in Gauteng in general, whereby the quality of existing services, vehicles and facilities will be stimulated to improve over time, in response to higher expectations from travellers, linked to improved levels and quality of service experienced on the Gautrain System and its station nodes. The following focus areas for operational integration are: • Network integration. • Physical integration and interfaces. • Integration of transport nodes with city precincts. • Integrated ticketing and fares. • Integrated information and communication. • Technical integration.

Annual Report 2011 GAUTrain management agency

Key Achievements Key achievements on the integration management of the Gautrain with the transport systems in Gauteng include: • Successful work continuing with local authorities and other government agencies on integration matters; • OCD 1 operations commencement of the Gautrain Dedicated Feeder and Distribution Services (DFDS) in an integrated manner; • Opening of the Gautrain/PRASA integrated rail interchange at Rhodesfield; • Operationalising the Public Transport Interchange Level at the Sandton station, which includes the Gautrain DFDS, metered taxis, car hire, private company and hotel shuttles (minibus-taxis will be relocated from a temporary rank to the interchange in the foreseeable future); • Designs of the DFDS for OCD 2, taking cognizance of the evolving municipal public transport networks around the respective Gautrain stations; • Initiation of a process to have station operational plans developed with the respective municipalities for all the Gautrain station (except at ORTIA), dealing with interfaces with all modes of transport and the management thereof; • Successful major update of the Gautrain Integration Implementation Plan and • Continued activities of the Gautrain Public Transport Integration Committee (GPTIC).

Annual Report 2011

Annual Report 2011 GAUTrain management agency

Land Acquisition and Management The land acquisition process for Gautrain took place within the ambit of the Gauteng Transport Infrastructure Act (Act 8 of 2001) (“the GTIA”). The Gauteng MEC for Roads and Transport acts as the administrating officer under the Act, and where possible, the MEC has delegated the day to day administration of the process to the Directorate: Design (“the Department”) within Province. Since 2004, members of the Department, with the assistance of members of the Provincial Support Team (PST), have planned the land acquisition process and phases for the Gautrain Project. This working relationship between the Department and consultants was established to assist the Department with the necessary knowledgeable human resources (both legal and technical) to execute the huge administrative, management and facilitation processes. In the planning stages of the Project, it was estimated that around 1 000 properties (ultimately 1281) had to be expropriated and/or proclaimed over a two year period (this includes land and rights in land). This represented an approximate 10 fold increase in the normal annual workload of the Department. In order to assist the Department, a team of nine people were initially made available by PST specifically to assist in the management and administrative processes. This included two people to assist in Project management, three people to assist with administrative and legal processes, and a further four clerks. This number excludes the technical people utilised throughout the process from teams already forming part of other divisions within PST. During 2007, the PST team was further expanded to include a further two senior people. Over the last financial year the team has stabilised on seven members. In implementing the requirements of the GTIA for the expropriation and/or proclamation of the Rail Reserve, several people, groups or organisations played a vital role and interactions with them have been / are being managed continually. These include land owners, the Department, PST team, Gauteng Department for Agriculture and Rural Development (GDRARD), the Concessionaire, valuers, surveyors, legal teams, accountants and quantity surveyors.

Annual Report 2011

The land acquisition team faced many challenges of which the timeframe available, was probably the most significant so as not to impact on construction. Other challenges included, but are not limited to: • The compilation and publication of design documents. • Expropriation of not only land, but also rights in land where tunnel and viaducts servitudes were required. • Valuations for all the affected properties – two valuations were required per affected property and in some instances three. • Understanding of the CA – regarding land matters both Province and the Concessionaire had to come to an understanding on how land availability or non-availability is treated under the CA and what remedies were available. There remain differences of opinion between the parties on this matter. • Variations – the CA allows for variations to the baseline design and each of these variations directly impacted on land required and the time to make land available. • Court cases – in several instances land owners took Province to court on the legality of the expropriation process. • No vacation – in several instances owners refused to leave their premises even after compensation was paid. • Early vacation – in contrast with the above, in several instances owners vacated properties early without notifying Province. This resulted in illegal occupation of the properties (normally overnight) and Province had to resort to the courts and in certain instances the police to remove people from properties. • The northern variants – the Concessionaire’s delay in procuring the environmental authorisations for the Concessionaire variant proposals resulted in an effective five month delay to the expropriation process in specifically the Centurion area. Expropriation could not proceed as uncertainty remained whether land or air rights had to be expropriated. • Design development – Designs have been (and are still being) finalised resulting in land requirements not foreseen at the stage when the CA was signed. • Land discrepancies – due to the design development, additional land requirements to what was agreed in the CA was requested. In the absence of any concessionaire’s variation to request this land Province, in an effort to assist the Concessionaire, continued with the expropriation of land required where possible, in an effort to not delay the Project. Considering the challenges and obstacles faced, it has always remained the focus of Province’s land team to do whatever is (was) necessary to procure that land was available as quickly as possible to the Concessionaire. Since August 2008, when all the land was handed over, the land procurement team started focussing their efforts on finalising the administrative processes associated with the management and protection of the rail reserve. The major activities include the following: • Continuation of stakeholder interactions; • Finalisation and publication of the design process in terms of the GTIA; • Consideration and implementation of variation rail reserve requirements; • Dealing with land discrepancies i.e. additional rail reserve requirements; • Transfer of properties and registration of servitudes; • Auditing of property files; • Attending to proclamation of the rail reserve; • Finalisation of expropriated property claims and settlements; • Dealing with court matters; • Assessing development applications affecting the rail reserve and • Input to Project disputes.

Annual Report 2011 GAUTrain management agency

Utilities Management A total number of 839 Known Utilities were identified prior to the signing of the CA. The graph on the following page represents the status of relocation and protection up to the end of March 2011 in the four categories of ‘Not started’, ‘In progress’, ‘Completed’ and ‘Not affected’. The latter category refers to those Known Utilities not affected for reasons such as alignment design refinements. Currently, 221 Known Utilities have been classified as Unaffected, and substantiation of the reasons for this classification is awaited from the Concessionaire. 565 (±69%) of the total number of 839 Known Utilities that were identified prior to signature of the CA have already been relocated or protected, and work on 35 (6%) has yet to commence. The initial planned completion for the relocation or protection of Known Utilities as contained in the CA was November 2007 (14 months after the signing of the agreement). This objective was not achieved and raises concerns regarding Project progress in general.

Annual Report 2011

Utility Milestone Payment Progress: (Province to Concessionaire).

1000

TOTAL/CATEGORY DP7 DP6 DP5 DP4 DP3

900 800

NUMBER OF KNOWN UTILITIES

700 600 500 400 300 200 100 0 NOT STARTED

IN PROGRESS

COMPLETED

NOT AFFECTED

TOTAL PER DP

STATUS CATEGORY

Payment Progress (Province to Concessionaire) Cumulative actual cost paid to the Concessionaire up to the end of March 2011 amounts to R319,07 million (56,8%) of the total budget of R562 million in Schedule 1, Part 7, including the Early Works Contract (EWC) budget of R111,15 million. As mentioned above, the initial Utility Relocation Plan indicated a 14-month duration according to the Milestone Payment Schedule, which was not achieved. The elapsed time for Utility Relocation since commencement of the Concession Contract is currently 54 Contract Months. Note that the budget figures are CPIX adjusted from the February 2002 budget reflected in Schedule 1, Part 7.

Annual Report 2011 GAUTrain management agency

600,000,000

Annual Report 2011 EWC EWC EWC EWC NOV NOV 06 06 DEC DEC 06 06 JAN JAN 07 07 FEB FEB 07 07 MAR MAR 07 07 APR APR 07 07 MAY MAY 07 07 JUN JUN 07 07 JUL JUL 07 07 AUG AUG 07 07 SEP SEP 07 07 OCT OCT 07 07 NOV NOV 07 07 DEC DEC 07 07 JAN JAN 08 08 FEB FEB 08 08 MAR MAR 08 08 APR APR 08 08 MAY MAY 08 08 JUN JUN 08 08 JUL JUL 08 08 AUG AUG 08 08 SEP SEP 08 08 OCT OCT 08 08 NOV NOV 08 08 DEC DEC 08 08 JAN JAN 09 09 FEB FEB 09 09 MAR MAR 09 09 APR APR 09 09 MAY MAY 09 09 JUN JUN 09 09 JUL JUL 09 09 AUG AUG 09 09 SEP SEP 09 09 OCT OCT 09 09 NOV NOV 09 09 DEC DEC 09 09 JAN JAN 10 10 FEB FEB 10 10 MAR MAR 10 10 APR APR 10 10 MAY MAY 10 10 JUN JUN 10 10 JUL JUL 10 10 AUG AUG 10 10 SEP SEP 10 10 OCT OCT 10 10 NOV NOV 10 10 DEC DEC 10 10 JAN JAN 11 11 FEB FEB 11 11 MAR MAR 11 11 APR APR 11 11

RAND VALUE

Utilities Management

CUM MILESTONE CUM APPLIED CUM RECEIVED CUM ACTUAL COST

500,000,000

400,000,000

300,000,000

200,000,000

100,000,000

CONTRACT MONTHS

The graph above indicates the extent to which Bombela has claimed and received payments against agreed Milestones including claim and payment information during the EWC period, up to March 2011.

Payment Progress (Concessionaire to Third Parties) The table below contains Concessionaire expenditure on Known Utilities relative to Schedule 1, Part 7, expressed in February 2002 terms. Amounts include the 15% mark-up and design fees but exclude VAT. The bottom line shows that 31,8% of the budget for Known Utilities remains available for spending. R383,22 million had been spent as at the end of March 2011.

Payment Progress Utility Owner

Schedule 1 Part 7

Payment to-date Feb 2002

Remaining Budget

Variance (%)

City Power

R 21 245 431

R 16 117 254

R 5 128 177

24.1%

Egoli Gas

R 1 342 579

R 1 162 859

R 179 720

13.4%

Ekurhuleni Electrical

R 24 685 328

R 15 748 982

R 8 936 346

36.2%

Ekurhuleni Water & Sewer

R 21 313 807

R 12 986 351

R 8 327 456

39.1%

R 3 345 050

R 3 676 165

-R 331 115

-9.9%

R 54 052 059

R 54 584 853

-R 532 794

-1.0%

Ekurhuleni Stormwater Eskom

R 7 865 767

R 8 267 028

-R 401 260

-5.1%

Jhb Water

Graniti Factory

R 72 301 461

R 57 736 427

R 14 565 034

20.1%

Jhb Roads Agency

R 16 798 521

R 8 099 132

R 8 699 389

51.8%

R 4 418 025

R 575 918

R 3 842 107

87.0%

Kelvin Grey Line MTN Petronet Randwater

R 602 589

R 633 535

-R 30 946

-5.1%

R 3 581 026

R 5 613 368

-R 2 032 342

-56.8%

R 67 084 825

R 21 851 572

R 45 233 253

67.4%

Sasol

R 30 382 256

R 21 951 497

R 8 430 759

27.7%

Telkom

R 62 588 352

R 45 406 560

R 17 181 792

27.5%

Tosas

R 504 917

R 1 390 273

-R 885 355

-175.3%

R 7 398 613

R 1 871 690

R 5 526 924

74.7%

Tshwane Electrical

R 54 056 708

R 22 924 958

R 31 131 750

57.6%

Tshwane Water & Sewer

R 95 895 359

R 71 887 787

R 24 007 572

25.0%

Tshwane Stormwater

R 12 545 671

R 10 733 725

R 1 811 946

14.4%

R 562 008 345

R 383 219 935

R 178 788 410

31.8%

Transtel

Annual Report 2011 GAUTrain management agency

Physical Progress of Unknown Utilities Although the Concessionaire has reported a total of 366 Unknown Utilities at the end of March 2011, Province was officially notified of a total number of 353 Unknown Utilities to-date, of which only one has officially been approved by Province as being an Unknown Utility in terms of the Concession Agreement. Province believes that the official number of Unknown Utilities (as determined in terms of the Concession Agreement) is less than one third of the 353 officially reported by the Concessionaire. The Parties will only be in a position to confirm the correct number of Unknown Utilities once the Concessionaire has submitted all documentation in terms of Clause 13.4 of the Concession Agreement. Of this number of 366 reported Unknown Utilities, 248 (89,5%) have been relocated or protected and 89 of the total number are unaffected for reasons yet to be established. The cumulative cost paid to-date in lieu of the relocation of Unknown Utilities is R102,97 million as reported by the Concessionaire of which Province paid R1,06 million.

Physical Progress of Unknown Utilities

400

TOTAL/CATEGORY DP7 DP6 DP5 DP4 DP3

360 320

NUMBER OF UNKNOWN UTILITIES

280 240 200 160 120 80 40 0 NOT STARTED

IN PROGRESS

COMPLETED

STATUS CATEGORY

Annual Report 2011

NOT AFFECTED

TOTAL PER DP

Annual Report 2011 GAUTrain management agency

Civil Design Review The Requirement for Design Review As previously reported, the principal obligation of the Concessionaire [clause 13 of the Concession Agreement (CA)] is to design, supply and construct and/or procure the design, supply and construction of the System. In the development of the design, clause 14 of the CA requires that the Concessionaire shall carry out the Works in compliance with Province’s requirements, the Concessionaire’s Proposals and in accordance with the terms of the CA. In order to carry out its obligation the Concessionaire is then required to submit all design information for review by Province’s Representative. All designs for review are submitted as required in terms of clause 61 of the CA and in conformance with the provisions of clause 61. Province Support Team acts on behalf of Province’s Representative during this process and reviews and comments on each and every submitted item for conformance with Province’s requirements, the Concessionaire’s Proposals and whether it is in accordance with the terms of the CA. When a design is reviewed it is marked as either: • “A Action”– meaning there are no significant comments and that the Concessionaire shall proceed without deviation from the designs as submitted; • “B Action”– meaning that there are comments which shall be addressed by the Concessionaire before proceeding and • “C Action”– meaning that there are comments which must be fully addressed by the Concessionaire and that the design shall be changed and resubmitted for review by Province to ensure that the design is compliant with Province’s requirements, the Concessionaire’s Proposals and in accordance with the terms of the CA before proceeding with construction. Once a design is finalised, “Issued for Construction” (IFC) drawings are then issued. The complete design process as implemented by the Concessionaire incorporates the following stages, each of which follows on from the previous and each of which iterations has to be checked for compliance with the CA and Specifications and against Province’s review comments that were issued for the previous stage: • Preliminary Design (PD) stage; • Review In Principle (RIP) stage; • Construction Design (CDE) stage and • Issued For Construction (IFC) stage. The greatest bulk of all design submissions for the Gautrain are for Civil Designs and in the four-and-a-half-year period from the signing of the Concession Agreement to the end of this financial year, some 6 926 (5 765 last year) primary civil design submissions including civil comment responses (comprising in total in excess of an estimated 75 000 drawings) have been submitted by the Concessionaire for review by the Province. Within the first six months of the project the Concessionaire realised that their design, and hence their construction, progress was lagging and needed to be expedited. Following a special request from the Concessionaire, it was reluctantly agreed to allow the Concessionaire to proceed at his own risk, and for a limited period only, with “Fast Track” IFC (FTIFC) drawings ahead of the close out of design review comments. This relaxation was conditional upon the designs and drawings being later finalised in accordance with the provisions of the CA. Despite the original time limit, “Fast Track” IFC (FTIFC) drawings continued to be issued by the Concessionaire till the end of March 2011. From the signing of the CA until the end of this financial year 3 784 IFC packages were submitted by the Concessionaire, 1 053 of which were “Fast Track” IFC packages. Please note that the total figure quoted in the 2010 report erroneously double counted the FTIFCs.

Annual Report 2011

Timelines and Achievements The Concessionaire’s original programme indicated that the bulk of the civil designs for the project would be completed by September 2008 (80 design submissions were however received during that month) and would from that date onwards reduce steadily to about 10 per month from February 2009 and be completed by July 2009. (See 7th Quarterly DoRA Report). In the 9th DoRA report it was reported that not only had the tempo of submissions not reduced from September 2008, it had in fact increased to (at times) over 100 submissions per month. During the financial year under review, numbers of design reviews still continued to be submitted for review including February 2011 – 24 months after the anticipated date by which the Concessionaire originally anticipated that they would have reduced to below 10 per month, and 19 months after they were planned to be complete. The bulk of the designs submitted for review during the year were the Phase 2 stations, including the balance of designs for Sandton station and the associated station landscaping proposals. In the 18th DoRA report (period December 2010 to February 2011) it was reported that for the quarter under review: • 40 Design submissions had been received, including nine that were received in February. • 71 Comment responses had been received. The slow progress made by the Concessionaire in responding to reviews is a concern given that there were still some 270 open reviews, including those for OCD 2. • 52 “Issued for Construction” drawings were received. At the present rate of response by BCJV, the remaining design review issues may only be fully closed out by March 2012, unless BCJV significantly ramp up their rates of response or some other initiative materialises. The two graphs on the next pages show the summarised main activities and workload of the PST Civil Design Review team over the past four financial years. The two graphs will be discussed in detail in Part 2 of this report.

Objectives • As stated in the last annual report, the only requirement in the Concession Agreement was that Province had a minimum period of 15 days (i.e. at least 15 days) to review Reviewable Design Information and that the Concessionaire should provide a Review Plan within five days of the commencement of each Contract Month for the following three Contract Months. The Review Plan was required to indicate dates for specific reviews and the Review Periods allowed for each. Other than that, there are no specific objectives that are applicable to the civil design review team. • The previous decision to keep the average days to complete a review as low as possible, and within the range of 20 to 30 days as explained in the last annual report, was not changed for the year under review. • It was realised that as the design process drew to a close, the previously reported target of 300 documents to be issued by the civil design review team per month from May 2008 onwards was unsustainable and would have to be discarded at an appropriate time. • In the sixteenth Quarterly DoRA report (period June to August 2010) it was stated: “…it is considered unlikely that PST’s self-imposed target of 300 documents to be issued per month will be achieved again.” • Other than those specific objectives mentioned above, objectives such as; assuring that the designs were compliant with the Concession Agreement, assuring that any deviations from the Specifications were identified and responded to appropriately and assuring that the designs submitted were carried in accordance with Good Industry Practice, are virtually impossible to quantify.

Annual Report 2011 GAUTrain management agency

APR 07 MAY 07 JUN 07 JUL 07 AUG 07 SEP 07 OCT 07 NOV 07 DEC 07 JAN 08 FEB 08 MAR 08 APR 08 MAY 08 JUN 08 JUL 08 AUG 08 SEP 08 OCT 08 NOV 08 DEC 08 JAN 09 FEB 09 MAR 09 APR 09 MAY 09 JUN 09 JUL 09 AUG 09 SEP 09 OCT 09 NOV 09 DEC 09 JAN 10 FEB 10 MAR 10 APR 10 MAY 10 JUN 10 JUL 10 AUG 10 SEP 10 OCT 10 NOV 10 DEC 10 JAN 11 FEB 11 MAR 11

Monthly Submissions by CJV

PRIMARY REVIEWS

COMMENT RESPONSE

ISSUED FOR CONSTRUCTION

600

500

400

300

200

100

Annual Report 2011

Monthly Reviews Issued by PST

PRIMARY REVIEWS

COMMENT RESPONSE

ISSUED FOR CONSTRUCTION

500

450

400

350

300

250

200

150

100

Annual Report 2011 GAUTrain management agency

Civil Construction Assurance The Central Government and the Gauteng Provincial Government provides the majority of the funding for the Development Phase of the Gautrain Project and therefore requires assurances that the work complies with the specifications as laid down in the Concession Agreement. To fulfil the assurance function, a Construction Assurance Management Team provides Province’s Representative with the necessary monitoring, auditing and assurance feedback for acceptance and certification of the completed civil portion of the Works. The Project is being constructed in two phases. Phase 1 provides a passenger service between Sandton station and the OR Tambo International Airport (ORTIA). The Operation Commencement Date (OCD 1) for Phase 1 was achieved on 8 June 2010, in time for the opening of the 2010 FIFA World Cup™. Phase 2 will provide a service between all the origins and destinations of the System, i.e. between Park station in Johannesburg, Hatfield in Pretoria and the ORTIA terminal. The Anticipated Completion Date (ACD 2) for the entire System was 27 March 2011. This was not accomplished and the projected date has now been advanced to the end of June 2011.

The Construction Assurance Management Team (CAM) The primary function of the Civil Construction Assurance Team is to protect Province’s interest by monitoring the construction process and assuring Province that the civil work is in accordance with the Concession Agreement and the applicable Concession Specifications of the Gautrain Rapid Rail Link (GRRL) Project.

Annual Report 2011

CAM Structure A Construction Assurance Manager, assisted by four Section Managers, heads the Construction Assurance Management Team (CAM). The Section Managers (SMs) are assisted by resident engineers, engineers, technologists and inspectors to ensure compliance and completion of the civil construction works of the Project. The technical staff monitors the construction activities of the Concessionaire on site and keep daily dairies of all events. These diaries are consolidated into weekly reports, which in turn are used to compile the monthly section reports to the Construction Assurance Manager who submits a monthly progress report of all sections to Province.

Key Achievements for Phase 1 (ACD 1) For the first time in South Africa viaducts were constructed from precast segments and a precast yard was constructed at the depot site in Midrand to provide elements for the viaducts, bridges and tunnels. Fifteen thousand segments and 27 kilometres of M-beams were cast. On Section 1, Sandton station posed unique challenges as the excavation in rock was 48 metres deep and the platforms are nine storeys below ground level. Two shafts were sunk and connected by an 85 metre underground chamber to accommodate the platforms. The first five kilometres of the tunnel, between Marlboro Portal and Sandton station, formed part of Phase 1. When Phase 2 was completed, another 10 kilometres of tunnel was added, making it the longest train tunnel in the country. The final finishing of the Phase 1 structures was undertaken since July 2010 and only a few minor snags and non-compliances are still outstanding.

Key Achievements for Phase 2 (ACD 2) On 9 September 2009, the final breakthrough in the tunnel between Sandton and Park station took place completing the tunnelling activity. A Tunnel Boring Machine (TBM) bored the ± 3-kilometre portion of the tunnel between emergency shaft E2 and Rosebank station. It was the first time that such a machine was used in South Africa for the construction of a railway tunnel. The TBM finished its work in February 2009 and was dismantled and removed from the tunnel. As ACD 2 was not achieved by 27 March 2011, finishing work to the tunnels, emergency shafts and the underground stations, Johannesburg Park station, Rosebank station and Sandton station is still in progress. Trial running of trains has commenced and the final testing and commissioning will start on 3 May 2011. At Section 4, the alignment passes over a dolomite area of ± 10 kilometres, which is prone to sink holes. To protect the rail line, this length of track was built on viaducts and U-structures (a bridge at ground level). The foundations to the viaducts had to be grouted and more than 160 000 cubic metres of cement grout was injected up to eighty metres into the ground to ensure stable founding conditions. Where the alignment crosses over John Vorster Drive and Jean Avenue, the balanced cantilever construction method was used. It was the first time that this method was used in South Africa. The five kilometre U-structures were also a first for South Africa. This “bridge” is built on the ground and tied together in 180-metre lengths with post tensioned cables. This will enable the track to span sink-holes of up to 20 metres in diameter. Civil construction work at Section 4 is substantially complete along the rail alignment as well as at the stations and the Pretoria satellite bus depot. Trial running of trains began between Midrand station and Pretoria station, and will commence over the final section to Hatfield station during April 2011.

Annual Report 2011 GAUTrain management agency

Electrical and Mechanical Systems This Province Support Team (PST) Electrical and Mechanical (E&M) section is responsible for all the Electrical and Mechanical (E&M) and Mechanical and Electrical Systems (M&E). The team carries out the design reviews of all the E&M and M&E systems. In addition the same team is responsible for the Installation Assurance plus Testing and Commissioning Assurance of all the E&M and M&E systems.

E&M and M&E Systems Overview The objective of the E&M and M&E design reviews is to ensure that the design of the subsystems complies with Concession Agreement and with Province’s Requirements, Schedule 1 Part 1 and also with the Concessionaire proposal Schedule 1 Part 2, Volume 8 for E&M systems and Schedule 1 Part 2 Volume 9.13 in the case of M&E systems. The objective of the installation assurance is to ensure that the systems as installed, tested and commissioned comply with the Concession Agreement and with the designs as submitted and reviewed by Province. The following are the E&M sub-systems that the team is responsible for: • Depot equipment (All specialised train maintenance equipment and vehicles). • Rolling stock (The Train sets). • Signalling (The complete train signalling system for the Project). • Telecommunications (Operating radio, fibre-optic backbones, telephone systems, emergency telephones, CCTV system, passenger information displays, public address systems). • Traction power (the high voltage system for powering the trains). • Catenary system. (The overhead contact wire and feeder system). • Automatic Fare Collection (The whole fare collection, ticket issuing and passenger access control system). • SCADA. (Supervisory control and data acquisition. This monitors and reports on all aspects of the status of the various elements of the Gautrain System including status and control of station and tunnel systems, traction power, all other power supplies, OCDS, security systems, etc). • Trackwork (The rail track and all its aspects). • System-wide Earthing and Bonding of all sub-systems. • System Integration of all the sub-systems. The following are the M&E sub-systems that the team is responsible for: • Safety and Security systems (Fire alarm and suppression systems, intrusion alarms, etc.) • Power supply, lighting and small power (All the usual electrical services in the various buildings, stations, tunnels, and emergency shafts. Includes also all diesel generators, uninterruptible supplies, and medium voltage systems). • Mechanical systems (Escalators and lifts in stations, ventilation and air-conditioning systems). • Tunnel ventilation (Specialised system for correct air movement in tunnels).

Annual Report 2011

E&M and M&E System Design Reviews The E&M reviews generally cover highly complex technical issues. Some of the large review packages range in size from hundreds of pages to much larger packages as in the case of signalling comprising of thousands of pages of technical content. Province E&M team is responsible for the design review of all of the above E&M and M&E systems to ensure that the designs comply with the Concession Agreement and with electrical and mechanical standards and specifications. Each of the above systems had to pass through three levels of Design Review, those being System Design Review (SDR), Preliminary Design Review (PDR) and Final Design Review (FDR). The Design Review phases are followed by manufacturing, installation and testing and commissioning. The Design Review Work of the E&M/M&E Team includes: • Review of Concessionaire’s design submissions and comment responses. • Review of as-built drawings. • Review of reports of actual performance (Preventive maintenance, reliability, availability, etc). As per 31 March 2011 a total of 1 757 submissions have been reviewed by the E&M and M&E Team (lead and/ or support), of which 212 submissions still have open review comments. Further information: • • • •

Number of EM reviews received since Project began: Number of EM reviews issued since Project began: Number of EM reviews currently under review: Number of EM reviews currently overdue:

840 807 33 25

• Number of currently open reviews with C-action for E&MJV: split into – OCD 1: – OCD 2:

• Number of currently open reviews with B-action for E&MJV: split into – OCD 1: – OCD 2:

• Number of CV reviews received since Project began: • Number of CV reviews issued since Project began: • Number of CV reviews currently under review: • Number of CV reviews currently overdue: •

63 1

65 4 956 950 6 6

Number of currently open reviews with C-action for CJV: split into – OCD 1: – OCD 2:

• Number of currently open reviews with B-action for CJV: split into – OCD 1: – OCD 2:

12 3

14 7

Annual Report 2011 GAUTrain management agency

Open E&M Systems Reviews

OPEN E&M SYSTEMS REVIEWS (OCD 1) OPEN E&M SYSTEMS REVIEWS (OCD 2)

30 25 20 15 10 5 0 AFC

TELECOM SYSTEMS GENERAL

CCTV

FOCS

RADIO

TEL

SCADA SIGNALLING PS&D TRACKWORK VEHICLES

DEP EQ

Open Project Wide and CJV Related Issues

OPEN PROJECT WIDE AND CJV-RELATED ISSUES (OCD 1) OPEN PROJECT WIDE AND CJV-RELATED ISSUES (OCD 2)

0 EARTHING

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S&S, incl. NoBo...

RAMS

EMC

M&E SERVICES HVAC UG

CSD, MISCELLANEOUS NOISE SEM,... & VIBR

SYSTEM INTEGR

SARCC

Annual Report 2011 GAUTrain management agency

Safety, Health, Environment and Quality Assurance (SHEQ) Assurance Purpose of the SHEQ Function • To provide assurance that the Concessionaire is performing its role (in the areas of Occupational Health and Safety, Quality and Environmental management) in accordance with the Concession Agreement. • When the Concessionaire’s performance is found to be unsatisfactory, to take appropriate action to leverage the necessary improvement from the Concessionaire.

Corporate Role of the SHEQ Function • To manage the development of a Quality System for Province which describes clearly, for all of Province’s functions, how it performs its role and, in particular, identifies the controls to be implemented. • To arrange audits of the implementation of Province’s Quality System to determine if the procedures and practices developed are being followed. • To manage, with Province’s management, that, when deviations from the Quality System practices are identified, appropriate action is taken. • To ensure that Province’s interests are protected by managing its SHEQ risks.

Structure The underlying philosophy in assembling a suitable team to execute Province’s assurance role was to identify highly qualified and experienced experts, usually on a contractual, part-time basis. This was considered to be the most effective approach in a market where resources of the required level of expertise are in extremely short supply. In performing its assurance role, the SHEQ team maintains an ongoing relationship with its counterparts in the Concessionaire’s structure. This involves raising issues initially with the Turnkey Contractor (TKC) and, should further discussions to resolve issues be required, with the Contractors (the Civils Joint Venture) (CJV) and the Electrical and Mechanical (E&M) Contractor) the Bombela Concession Company’s and the Operator’s representatives, as required. When it is necessary to have work executed by external or independent bodies, the SHEQ team has commissioned specialists to undertake this work.

Annual Report 2011

Annual Report 2011 GAUTrain management agency

Overview of the SHEQ Function Province’s SHEQ function was established at the beginning of 2007 with the appointment of its SHEQ Manager. A primary objective at that stage was to assemble a competent team of individuals capable of executing a broad range of responsibilities efficiently. The core team was appointed by the end of 2007 and a Health and Safety specialist was appointed at a later stage, when ongoing work required a dedicated resource. An early initiative was to draft and agree with Province’s management the need for a Quality System and, in particular, an Assurance Strategy. The establishment and roll-out of this strategy played a key role in providing clarity of purpose and alignment within Province’s team. The need to understand and implement an assurance role, rather than performing a checking/inspection function – which is a role of the Concessionaire – was important to all Province’s personnel in understanding how they would operate. Subsequently, a mechanism for developing a Quality System for Province was proposed and agreed with Province’s management. Custodians were identified to develop the necessary procedures and a Quality Steering Committee (QSC), chaired by the Project Coordinator, with an initial role to provide a forum for discussing and approving ‘finalised’ procedures, was established. The QSC held 32 meetings over a period of about two years, the Quality System being considered finalised in September 2009. The Quality System Handbooks containing the final versions of procedures were distributed at the end of March 2011. In the early stages of 2007, the environmental structuring on the Project was necessarily complex. It was clear to the SHEQ Manager that some rationalisations could be effected, particularly in the auditing function, where a great deal of overlap was apparent. The environmental structuring diagram subsequently drafted enabled an overview of the relationship between all involved parties. Furthermore, Province was instrumental in the restructuring of Project meetings which resulted in considerable rationalisation. In particular, Province motivated to establish a Project-wide environmental meeting where Project-wide issues would be discussed and coordinated; subsequently, a separate IECP meeting was found to be unnecessary. The resultant programme of monthly environmental management meetings remains today, where the Project Environmental Coordination meeting is a forum for discussing Project environmental management matters and the Environmental Management Committee (EMC) acting as a forum for discussions of status with all involved Authorities. In performing Province’s SHEQ assurance function, Province is critically dependent on procuring information from the Concessionaire. Broadly, Province reviews all the Concessionaire’s Management Plans and comments on their acceptability. With few exceptions, the Concessionaire did not provide acceptable Plans in time, and some important Plans are still outstanding, despite the Contractors’ activities being almost complete. In checking the implementation of the Concessionaire’s Plans, monthly Project meetings provide valuable information and Province has played a major role in guiding the Concessionaire towards more effective agendas and reporting. One of the more important initiatives managed by Province Quality team has been the development of a list of Key Assurance Documentation (KAD). This list identifies documents which Province considers need to be reviewed by Province and found to be acceptable, in order to have confidence that the Concessionaire is performing competently. A close working relationship is maintained with other functions within Province’s team; in particular, with ‘Design’ and ‘Construction’. This ongoing liaison often focuses on ‘non-conformances’, with the Quality Consultant working closely with both Province’s and the Concessionaire’s staff to ascertain that defects are addressed appropriately. When the Quality management of the Concessionaire’s Contractors is not acceptable, it is formally communicated to the Concessionaire with a request for action. The Concessionaire’s agreement to hold Quality Management meetings every two weeks, with a focus on defects management, has been a positive development. As the Project moves into the testing and commissioning phase, Province’s Quality function has played a proactive role in assisting Province’s System Commissioning Assurance Manager to establish his team and to

Annual Report 2011

develop a suitable procedure covering Province’s commissioning assurance activities for the remainder of the Development Period. Ongoing monitoring of the Concessionaire’s System Acceptance process has required formal communication of Province’s concerns to the Concessionaire’s management. Province has been successful in leveraging the Concessionaire to adopt an improved process of System Acceptance although Province’s concern with the Concessionaire fulfilling requirements in time, remains. In the area of Occupational Health and Safety (OH&S), initial concerns, when reviewing the Concessionaire’s Management Plans, related to the lack of any occupational health component. This was, however, rapidly included as a necessary statutory requirement by the Concessionaire. Because of this fundamental omission, a special audit of the Concessionaire’s activities was organised to determine if basic OH&S practice was being exercised on site. The audit results were generally favourable although some areas for improvement were identified. In the course of 2008, it was considered necessary for Province to appoint a part-time H&S specialist to perform an ongoing assurance role and to ensure that Province had itself fulfilled all applicable requirements of the OH&S Act. Although Province’s site staff fall under the ambit of the relevant Concessionaire Contractor’s H&S management, it was considered prudent to develop an OH&S file for Province and a procedure for casavacing staff from site in the event of an incident. These initiatives were completed and implemented in 2009. Subsequently, as construction activities have intensified, increased attention has been given to assuring that the Concessionaire takes all necessary precautions to prevent incidents. Province’s concerns with the high incident rate in August 2009, several near-misses on site and information from its construction assurance personnel (which were communicated to the Concessionaire) resulted in the Concessionaire performing a thorough audit and compiling a 10-point plan to mitigate the risk of incidents. Province’s OH&S assurance function continues to remind the Concessionaire of its concerns during this phase of the work when activities are more intensive and risks are high. The SHEQ function has also performed two surveys of Province’s Functional Managers’ perceptions in respect of the Concessionaire’s performance. Although an improvement in the Concessionaire’s performance was noted in the second survey, these surveys were important in informing Province’s management where effort needed to be focused to effect improvement in the Concessionaire’s performance.

Annual Report 2011 GAUTrain management agency

Annual Report 2011

Occupational Health and Safety (OH&S) OH&S Statistics The following graph gives an overview of the Project OH&S statistics.

LTI’s and LTIFR since start of Project to OCD 2 LOST TIME INJURY FATALITY LTIFR (12 MONTH ROLLING) INTERIM TARGET LTIFR > 5 DAYS LOST 25

OCT 06 NOV 06 DEC 06 JAN 07 FEB 07 MAR 07 APR 07 MAY 07 JUN 07 JUL 07 AUG 07 SEP 07 OCT 07 NOV 07 DEC 07 JAN 08 FEB 08 MAR 08 APR 08 MAY 08 JUN 08 JUL 08 AUG 08 SEP 08 OCT 08 NOV 08 DEC 08 JAN 09 FEB 09 MAR 09 APR 09 MAY 09 JUN 09 JUL 09 AUG 09 SEP 09 OCT 09 NOV 09 DEC 09 JAN 10 FEB 10 MAR 10 APR 10 MAY 10 JUN 10 JUL 10 AUG 10 SEP 10 OCT 10 NOV 10 DEC 10 JAN 11 FEB 11 MAR 11 APR 11 MAY 11 JUN 11

Of note are the continually improving LTIFR (which surpassed the target set of five) and the containment of LTI’s even throughout periods when construction activities were peaking. The following table summarises important OH&S information for the Project since inception:

Project Hours Injuries

75 271 441 1238

Lost Time Injuries (LTIs)

331

LTIFR (per million hours)

4,46

Fatalities

Annual Report 2011 GAUTrain management agency

RAMS Assurance Overview The RAMS implementation process is one that is designed to ensure that the completed railway system will be Reliable; Available when required; readily and efficiently Maintained and most importantly – Safe for passengers to use. The process is specifically aimed at: • Providing a railway system that complies with the levels of safety and availability, required by the Concession Agreement. • Supporting the necessary applications for Safety Permits from the (National) Railway Safety Regulator (RSR). • Obtaining the IC’s Certificates for Operating Commencement Date 2. The Concessionaire prepared a Consolidated System Safety & RAMS Programme (implementation plan) with a critical path to obtain a Safety Permit for the commencing of revenue services Phase 1 of the Project. Critical Hazard Log items were either closed out or mitigated to acceptable levels and a Safety Permit was issued by the Railway Safety Regulator approximately a week before the Operating Commencement Date (OCD 1) 8 June 2010. The Safety Permit was subject to certain conditions. The resolving of the last condition was finalised six months after OCD 1. The Concessionaire took a similar approach as described above for the Phase 2 of the Project and is targeting to meet all conditions by the middle of 2011. The compliance to the OCD 2 hazard log remains a concern and is addressed with the Concessionaire. It is noted that OCD 2 successful RAMS implementation is critical in obtaining a Safety Permit and Independent Certifier’s certificate.

Annual Report 2011

The RAMS Process EN50126 is a European Standard which relates to the application of the RAMS discipline in the Railways Industry. Clause 4 of EN50126 shows how the quality of railway service is highly dependent on the proper application of RAMS principles. The figure below shows the inter-relation between the Railway RAMS elements:

The RAMS Process

RAILWAY RAMS

SAFETY

RELIABILITY & MAINTAINABILITY

AVAILABILITY

OPERATION & MAINTENANCE

Annual Report 2011 GAUTrain management agency

It is important to recognise the interdependency of these different elements. Throughout the life of the railway they are inextricably linked together – the nature of each element has some kind of impact on each of the others throughout the life of the railway. The relative complexity of this whole process may be gauged from the following illustrative outline diagram reproduced from the Concessionaire’s E&M RAMS Report (Rev 02). Description of abbreviations in diagram: TRD – Technical Requirement Description FMECA – Failure Mode Effects Criticality Analysis HIF – Hazard Identification Form PHA – Preliminary Hazard Analysis OSHA – Operation and Support Hazard Analysis RMAP – Reliability Modelling, Allocation and Prediction PMAL – Preventative Maintenance Action List CMAL – Corrective Maintenance Action List SVM – Safety Verification Matrix BLESS – Bombardier Life cycle cost Excel Spread Sheet CAR – Capital Assessment Replacement SSWG – System Safety Working Group ALARP – As Low As Reasonably Practicable

Annual Report 2011

The RAMS Programme Plan

Annual Report 2011 GAUTrain management agency

Independent Certifier The Independent Certifier (IC) was jointly appointed by Province, the Concessionaire and the Lenders following the issue of a Request for Prequalification (RFQ) and subsequently a Request for Proposal (RFP) document. The submissions received from the three IC bidders that prequalified were evaluated thereafter. The IC Agreement could only be signed after the signing of the Concession Agreement (CA) in September 2006 and Arup SA (Pty) Ltd commenced with the execution of the IC duties virtually immediately after the signing of the CA as any payments to the Concessionaire had to be certified by the IC. The Services to be executed by the IC only relates to the Development Period (and not the Operational Period) and these can be summarised as follows: • The IC must (in terms of the CA) issue Interim Payment Certificates and the Final Payment Certificate which trigger the payments to the Concessionaire. • The IC must also undertake monitoring and inspection duties concerning the design, materials and workmanship to satisfy itself that the Works have been designed and built in accordance with the requirements of the Concessionaire’s Proposal, the Concession Specification and Good Industry Practice. • The IC must also issue the Certificates for Operating Commencement Date as well as the list of Retention Items and Snag List Works. The IC must also issue the Certificate of Final Completion for the Gautrain Rapid Rail System as a whole. The IC needs to issue a Monthly Report to its appointers in which it sets out the milestone payments it certified as well as its findings and concerns regarding the quality and progress of the execution of the Works and this Report is then discussed at a Monthly Meeting held jointly by the IC with its three appointers. At these monthly IC Management Meetings the performance of the IC in the execution of its Services is discussed and there has to-date not been any significant concerns raised by any of the three appointers in this regard. The IC has access to world-class technical experts in all the fields related to the Gautrain System and the IC has used them when required. In all its actions to-date the IC has demonstrated its independence and its focus on playing its part to achieve a successful completion of the Gautrain Project. Together with the other appointers, Province from time to time considers and agrees on Variations in the IC contract and monitors the performance of the IC.

Annual Report 2011

Annual Report 2011 GAUTrain management agency

C| OPERATIONS AND MAINTENANCE

Annual Report 2011

Annual Report 2011 GAUTrain management agency

Risk Management The GMA is obliged, in terms of the PFMA and corporate governance best practice, to establish and maintain a risk management system. Risk Management has therefore also been included as one of the GMA’s Key Programmes. The risk management function has, since the Effective Date of 26 September 2006, in the absence of a GMA staff complement, largely been performed by Province Support Team (PST). The GMA has however over the past year been staffed, operations for Phase 1 has commenced and the commissioning of the complete System is imminent. The GMA is therefore in the process of assuming the entire risk management function for the Project. The risk management function is being performed, and reported on, from three perspectives namely: Development Phase perspective, Finance and Corporate Governance Perspective and an Operations Period Perspective. The risk management function involves the identification and assessment of risks, the upkeep of a risk register, risk reporting and liaison with the Concessionaire and follow-ups with respect to the mitigation of the GMAs own risks. Risks are identified, assessed and managed through the various meetings of the GMA management. Risks for which mitigation actions require top management action are elevated for appropriate action at Province Executive Committee and/or the Project Executive Committee, which are held on a weekly basis. The GMA co-operates with the Concessionaire with respect to the management of Project risks and meets on a quarterly basis to coordinate the management thereof. Risks are continuously identified, evaluated, mitigated, monitored, reviewed by both the GMA and the Concessionaire and reported on a “bottom-up” basis through each organisation. As each risk is identified it is allocated to a person in the respective organisation who is responsible for the day-to-day management thereof – and it is recorded in a risk register which contains the descriptions, assessments and mitigating actions of all risks identified. The GMA contributes to the overall Project Risk Register through its own project risk register which is updated and submitted to the Concessionaire on a monthly basis. Province Project risk register is then combined with the respective risk registers of the Concessionaire and its subcontractors, all of which are then included in the Executive Project Risk Management Report compiled by the Concessionaire on a monthly basis. The Executive Project Risk Management Report lists, amongst others, an extract of the Project’s top risks (including Operations Phase Risks) so as to provide a management overview of the most important risks on the Project. The Risk Manager prepares a monthly Province Project risk report, based on the Executive Project Risk Management Report, which is included as a section in Province’s Monthly Progress Reports. Further to the above risk register, the GMA’s internal risk register has been developed which will, over time, replace the Project Risk Register and also include all risks associated the Operations Phase of the Project.

Annual Report 2011

Annual Report 2011 GAUTrain management agency

All Operations related risks, managed during the Operations Phase of the Project (in line with the assessment criteria for the GMA internal risks) will be assessed in terms of probability and impact using the guideline provided in the table below: Risk Assessment and Quantification Matrix Possible Impacts of Risks

SCORE

Probability

Financial/ Economical Impact

Service Delivery

Environmental (including safety and health)

Promotion of public transport and integration

Occurs rarely

Risk event will result in no financial and or economical impact.

No impact on service delivery.

No impact on the environment or people.

No negative effect on public transport and integration.

No social or political impact

Improbable /low

Risk event will result in a financial and or economical impact of less than R20 million.

Interruption of service for a period between thirty minutes and four hours.

Insignificant negative effect on public transport and integration

Minimal social impact with no loss of job opportunities or minimal political impact. Minimal negative media coverage.

Medium

Risk event will result in a financial and or economical impact of between R20 million and R100 million.

Interruption of service for a period between four hours and five days.

Some negative effect on public transport and integration.

Some social impact including some temporary loss of job opportunities or causes some political embarrassment at a national scale. Significant negative media coverage.

Real chance

Risk event will result in a financial and or economical impact of between R100 million and R500 million.

Interruption of service for a period between five and thirty days.

Significant environmental damage or major injuries to people.

Significant negative effect on public transport and integration.

Significant social impact including temporary loss of job opportunities or causes political embarrassment at an international scale. Significant negative media coverage.

Almost certain

Risk event will result in a financial and or economical impact of more than R500 million.

Interruption of service for a period longer than thirty days.

Major environmental damage, or loss of life.

Major negative effect on public transport and integration.

Major social impact including permanent loss of job opportunities or causes political â&#x20AC;&#x153;heads to rollâ&#x20AC;?.

Insignificant environmental damage or injuries to people.

Some environmental damage, or injuries to people.

Social/ Political Impact

Annual Report 2011

The top Operations Phase risks are those risks that have been assessed at a score of 20 or greater. These risks are highlighted to assist the executive management of the Project with the prioritisation of their effort towards mitigating these risks. It also assists stakeholders to understand the key risks that could impact on the successful operation of the Project. The top Operations Phase risks identified by Province (Prov) and the Concessionaire (Con) as at the end of March 2011 are synthesised in the table below (in no particular order). The broad mitigation actions indicated are all underpinned by more detailed actions and allocation of responsibilities in the Risk Register. The Risk Register is an internal document used for the day-to-day management of risks.

Risk Registration No. 1

Description Strike of Operatorâ&#x20AC;&#x2122;s Staff

Owner 3

3 Con.

Comments - Appoint an experienced HR Manager - Negotiate company agreements with unions - IR training to managers

Comment: The Operator is finding its feet in the local labour market: Strikes are occuring due to relations difficulties

Security incidents during Operating Period

5 Con.

- Prepare in coordination with police - Adapt the security installations and organisation

Comment: Security incidents during the Operating Period due to security equipment and systems provisions not being adequate or Operatorâ&#x20AC;&#x2122;s Security Plan not adapted.

Vandalism of infrastructure (Overhead lines, cables, sub-stations)

3 Con.

Intrusion detection Surveillance through infra red camera

Comment: Vandalism will result in the disruption of services and additional replacement costs

O&M Subcontractor performance may not be sufficient to meet contractual obligations

5 Con.

- Increased monitoring and performance - Measurement against targets - Partnering initiatives

Comment: Inadequate training and lack of management experience and expertise combined with an unbalanced focus on commercial matters may cause the sub contractors performance to suffer. 5

Ridership more than demand forecast.

2 Prov.

Update of Stated Preference Studies

Comment: The cost of petrol and the higher than expected economic growth rate of RSA may cause patronage numbers to be much higher than expected in the early years of commissioning.

Annual Report 2011 GAUTrain management agency

Socio-Economic Development Socio-Economic Development (SED) is one of the cornerstones of the Gautrain Project focusing on local skills development, capacity building and job creation. The SED objectives with regards to skills development and capacity building include not only the important aspect of Broad-based Black Economic Empowerment, but also address aspects such as the development of Small, Medium and Micro Enterprises (SMMEs), the sustainable development of underprivileged communities and the maximisation of local content. Broad-based Black economic empowerment focuses on equity participation by black persons and black women in the entities created for the Gautrain Project, procurement of services and materials from Black Entities (BEs), sub-contracting of service delivery to BEs and the establishment of new BEs. The job creation strategy focuses on a commitment to progress towards employment equity. This strategy forms part of the SED proposal of the Concessionaire, which includes commitment to the employment of Historically Disadvantaged Individuals (HDIs), women, people with disabilities, the participation of HDIs and women in management positions and a human resource development strategy, which includes a women learnership and mentorship programme. During the operations phase, the focus will shift to the SED related obligations of the Bombela Concession Company (the Concessionaire) and the Bombela Operating Company (the Operator), responsible for the operation and maintenance of the System. The GMA is assisted in monitoring the achievement of SED obligations by the Concessionaire and Operator by an Independent Socio-Economic Monitor (ISEM). The ISEM is appointed jointly by Province and the Concessionaire. The ISEM undertakes the following tasks: • Monitoring of the SED programmes of the Concessionaire; • Reviewing the processes, procedures and systems of the Concessionaire; • Verification of the SED achievements of the Concessionaire; • Reporting monthly its findings with regards to its monitoring and reviewing tasks and the outcome of the verification of the SED achievements claimed by the Concessionaire in Monthly SED Reports and • If required, undertaking advisory tasks. The Concessionaire must submit Monthly SED Reports to both Province and the ISEM within 45 calendar days after the end of each Contract Month. The Monthly SED Report provides detail on the achievements of the Concessionaire and its sub-contractors with regards to its SED obligations, positive developments, areas of concern, challenges and interventions introduced. The ISEM verifies the SED achievements claimed by the Concessionaire and submits Monthly ISEM Reports on its findings to Province and the Concessionaire about five weeks after receipt of the Monthly SED Reports.

100

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101

Integration Management of the Gautrain with Government’s Transport Systems During the operations phase the key objective is achieving Transport Operational Integration, that is investment and/or processes that will ensure maximum return on the investment in the Gautrain in respect of station developments, coordination of public transport networks, information and communication and exchange of technologies between different parts of the rail system. By giving attention to the interfaces between various transport services and modes, the convenience and safety of passengers transferring at stations and public transport interchanges are greatly enhanced. Through effective operational integration the Gautrain can also act as a catalyst for the transformation of public transport in Gauteng in general, whereby the quality of existing services, vehicles and facilities will be stimulated to improve over time, in response to higher expectations from travellers, linked to improved levels and quality of service experienced on the Gautrain system and its station nodes. The following focus areas for operational integration are: • Network integration. • Physical integration and interfaces. • Integration of transport nodes with city precincts. • Integrated ticketing and fares. • Integrated information and communication. • Technical Integration. An update of the Gautrain Integration Implementation Plan was done under the guidance of the Gautrain Public Transport Integration Committee (GPTIC), completed and endorsed by this Committee at its meeting of 15 October 2010. Subsequently, the Plan was presented to the National Cabinet for notification. The mandate of the GPTIC is to facilitate the development and implementation of a Gautrain Integration Implementation Plan and to promote integration of the Gautrain Rapid Rail Link into the transport system of Gauteng. The Mandate was given by the Minister to the Gauteng MEC for Public Transport Road and Works. The Committee consist of representation by: • Department of Transport; • Gauteng Department of Public Transport Road and Works; • Gautrain Management Agency and its support team; • City of Johannesburg Metropolitan Municipality; • City of Tshwane Metropolitan Municipality; • Ekurhuleni Metropolitan Municipality and • Passenger Rail Commuter Agency (PRASA).

102

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The proposed areas of integration to be considered to be part of the GPTIC’s activities, which has to be covered by the scope of the work of the Committee are: • Integrated planning with respect to the development of various statutory integrated transport plans (i.e. NLTSF, PLTF, IDPs and ITPs); • Land use integration around stations (i.e. assimilation into Local Spatial Development Frameworks, Local Precinct Plans, etc.); • Operational integration matters; • Network integration with surrounding public transport networks; • Physical interfaces with other public transport systems; • Integrated ticketing; • Integrated information and communication and • Technical integration and transformation of public transport technologies. It was agreed that the above-mentioned aspects will be further discussed and finalised as part of the activities of a number of working groups to be established under the GPTIC. Working groups were established to deal with: • Gautrain Integration Implementation Plan Report. • Ticketing and Fare Collection. • Network designs. • Station and Public Transport Interchanges. • Public Transport Interchanges. • Information and Communication. Other matters that were deliberated at the GPTIC meetings during the past year include the transport system of the 2010 FIFA World Cup™, the Rail Steering Committee, the development of a comprehensive rail policy, integrated fare management systems, communication and integrated public transport information.

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103

Fares and Fare Evasion Management Two key elements of the Gautrain system are the fares and the management of evasion thereof.

Gautrain Fares At the feasibility study stage of the Project, the Gautrain fares were intended to be set at a level where they would be higher than existing public transport services (minibus-taxi, Metrorail and bus services) and lower than the perceived cost of private car travel (which is generally much lower than the actual cost of travelling by private car). This intention was put into effect and the Concession Agreement is thus prescriptive on fares and the manner in which they are set and amended by the Concessionaire. The following fare levels were effective for the first year of operation of the Gautrain Services:

General Passenger (commuter) Services Single Train

Sandton rhodesfield

r16.50 r18.50 marlboro

r21.00 Sandton

Single Train & Single Bus at one end

Sandton rhodesfield

r22.50 r14.50 marlboro

r27.00 Sandton

Single Train & Single Bus at both ends

Sandton rhodesfield

r28.50 r30.50 marlboro

r33.00 Sandton

Single Bus only

All stations / All routes

r20.00

The fares for the Airport Services, where passenger affordability levels are less constrained, and where the passengers would experience higher service levels due to wider seats, high probability of getting a seat, and special accommodation of luggage, were set at a higher rate. The following fare levels were applicable to the Airport Service during this year:

Airport Services Single Train Or Tambo international Airport

r100.00 marlboro

r100.00 Sandton via Sandton

r100.00 rhodesfield via Sandton

The Fares were set so as to promote the use of more than one service. For example if only a bus service is utilised, a bus trip would cost R20 for a passenger journey. When rail and bus trips are integrated, the price of a bus trip decreased to R6 per passenger trip. Similarly, when the parking was used together with a train, the rate was R9.50 per day, compared to R58.50 (R97.50 for Sandton) if only the parking system was used without connected to a train service.

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Fare Evasion One of the key success factors identified for the Gautrain System is high actual and perceived levels of security and low levels of criminality. During the initial operating in the 2010/11 financial year, from 8 June 2010 to 31 March 2011, the Concessionaire had to commence with implementation of many operational systems, including the control of Fare Evasion. Province insisted on very strict requirements for the control of fare evasion, mostly due to its research indicating a direct relationship between the level of Fare Evasion and the level of criminal incidents in a public transport system. It was found firstly, that criminals intending on robbing someone were not inclined to pay public transport fares and secondly that a general feeling of lawlessness and lack of law enforcement often go hand in hand with high fare evasion rates. The Concessionaire and Operator introduced very strict and visible controls from the opening of the Gautrain system. These efforts were successful, in that the perception of Gautrain as a secure public transport system contributed to its success during the first 10 months of operations. However, comprehensive Fare Evasion management depends also on a fully functional Automatic Fare Collection (AFC) system so that correct identification and consequential remedial action related to passengers falling under the category of Fare Evasion can take place. Teething problems with the AFC system related mainly to commissioning the full system while running the OCD 1 operations. This meant that passengers entering the Gautrain system during AFC down time would also be calculated under the category of fare evasion, even though they clearly had no intent of defrauding the system. In addition, parts of the fare evasion management plan relating to station, train and bus surveys were not used and reliance was placed on checking the validity of passengersâ&#x20AC;&#x2122; tickets for valid travel verification using mobile scanning devises. This methodology indicated very low levels of fare evasion for the OCD 1 operating period which is encouraging and significant work by both the GMA and the Concessionaire has taken place in agreeing a comprehensive Fare Evasion Management Plan for OCD 2.

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Safety, Health, Environment and Quality Management (SHEQ) OH&S Performance It is unrealistic to expect that a project of the size and complexity of Gautrain could be managed to be ‘incidentfree’. Notwithstanding this, a policy of Zero Tolerance towards safety deviations was applied throughout the Project by committed and pro-active safety teams. Despite some negative incidents, safety teams remained committed and focused and continued to manage and drive safety objectively. This was borne out by certain safety achievements by individual sections and contractors which saw those responsible being acknowledged. Particular initiatives included Industrial theatre training sessions, intensive auditing and the establishment and communication of ‘Cardinal Rules’.

Interventions to improve performance • The Province acted in an assurance role in reviewing the Concessionaire’s OH&S management plans and monitored the Concessionaire’s implementation of its plans. • Monthly OH&S meetings provided a forum for discussing Project OH&S performance and agreeing improvements. • The Concessionaire implemented an active Hazard Identification and Risk Assessment Programme. • The Civil Contractor took extraordinary measures to improve awareness of good safety practice and developed and rolled-out to its workforce its 10 ‘Cardinal Rules’. • In particular, the active participation of the Concessionaire’s management with safety-directed interventions, contributed positively to the decreasing of safety-related incidents. • Although the Province’s staff fell under the ambit of the Concessionaire’s OH&S systems, the Province implemented the issuing of casualty evacuation cards to its workforce to ensure that critical medical information was available for evacuees. • The Province incorporated an OH&S specialist into its team who was present as observer during many of the Concessionaire’s audits and inspections. This approach facilitated communications and contributed to the good working relationship with the Concessionaire’s OH&S staff. Both the GMA and the Concessionaire apply SHEQ as an assurance system.

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Assurance Purpose of the SHEQ Function The GMA applies SHEQ to provide assurance that the Concessionaire is performing its role (in the areas of Occupational Health and Safety, Quality and Environmental management) in accordance with the Concession Agreement. When the Concessionaire’s performance is found to be unsatisfactory, appropriate action is taken to leverage the necessary improvement from the Concessionaire. A further purpose is to provide assurance to all the GMA’s stakeholders that all the ‘objects’ and ‘functions’ of the GMA are being managed by developing a suitable Quality System in conjunction with the GMA’s management.

Corporate Role of the SHEQ Function Within the ambit of the GMA’s own operations the SHEQ function is used to manage the development of a Quality System for the GMA which describes clearly, for all of the GMA’s functions, how it performs its role and, in particular, identifies the controls to be implemented. The GMA will arrange audits of the implementation of the GMA’s Quality System to determine if the procedures and practices developed are being followed and ensure, with the agreement of the GMA’s management, that, when deviations from the Quality System practices are identified, appropriate action is taken. By so doing the GMA’s interests are protected by managing its SHEQ risks.

SHEQ Structure within the GMA The underlying philosophy in assembling a suitable team to execute the GMA’s assurance role was to identify highly qualified and experienced experts, usually on a contractual, part-time basis. This was considered to be the most effective and efficient approach in a market where resources of the required level of expertise are in extremely short supply until the GMA is able to establish its own SHEQ capacity. In the year under review, SHEQ was included as a key component of the organisation structure of the Agency. In performing its assurance role, the GMA maintains an ongoing relationship with its counterparts in the Concessionaire’s structure.

Approach to SHEQ Assurance An early initiative was to draft and agree with the GMA’s management the need for a Quality System and, in particular, an Assurance Strategy. The establishment and roll-out of this strategy is playing a key role in providing clarity of purpose and alignment within the GMA’s team. Subsequently, a mechanism for developing a Quality System for the GMA was proposed and agreed with the GMA’s management. Custodians have been appointed to develop the necessary procedures, and a Quality Steering Committee (QSC), with an initial role to provide a forum for discussing and approving ‘finalised’ procedures, has been established.

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In performing the GMA’s SHEQ assurance function, the GMA is critically dependent on procuring information from the Concessionaire. Broadly, the GMA reviews all the Concessionaire’s Management Plans and comments on their acceptability. At this stage further submissions of the Operator’s Project Quality Management Plan and its Procurement Plan are awaited for review. In checking the implementation of the Concessionaire’s Plans, monthly Project meetings provide valuable information and Province is playing a major role in guiding the Concessionaire towards more effective agendas and reporting. Currently, there is considerable emphasis on establishing monthly Project meetings for the Operating Period for each of the SHEQ disciplines. The timely establishment of these meetings before OCD 2 is considered a vital component in ensuring that Project-wide issues are communicated and coordinated efficiently. Since the Concessionaire has stated that it intends achieving ISO certification for its SHEQ systems, the Concessionaire’s systems are reviewed with this objective in mind. The GMA actively encourages the Concessionaire to expedite the planning and implementation of its systems, especially since operations are underway. While a monthly Project Quality meeting has been established, the GMA continues to urge the Concessionaire to convene regular OH&S and Environmental meetings. Once established, these meeting will be an effective forum for planning and implementation initiatives across the Project.

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Monitoring is based on the objective of the development and compliance with key safety, health and quality documentation, strategies and systems and the performance indicators are taken from the Concessionaire’s Reports on compliance and deviations management received quarterly and annually. Certain objects of the GMA Act have direct relevance to environmental management objectives of the Project, including to ‘act on behalf of Province in managing the relationship between Province and Concessionaires in terms of concession agreements and ensure that the interests of Province are protected; to liaise with and promote cooperation between government structures in all three spheres of Government in relation to the Project; liaise with persons having an interest in the Project, (and to) monitor the policy and legislative environment of the Project.’

Occupational Health and Safety (OH&S) The Operator’s OH&S Management Plan (which addressed both OHSA requirements as well as the requirements of the Railway Safety Regulator for the operating period) was reviewed by the GMA and was found to be acceptable. The GMA continues to exhort the Concessionaire to expedite its completion of OH&S Management Plans for the Maintainor Contractor and the Feeder and Distribution Contractor. The principle of any GMA site staff falling under the ambit of the relevant Concessionaire OH&S management system ensures that there are systems and procedures in place to cover most eventualities. A casualty evacuation procedure for the GMA’s site staff will need to be developed and implemented to ensure that each staff member on site is able to be identified and evacuated in the event of their becoming involved in a life-threatening incident.

Environmental The Operations and Maintenance Environmental Management Plan was approved by Gauteng Department of Agriculture and Rural Development (GDARD) on 31 May 2010 thus paving the way for the operational commencement date for Phase 1 (OCD 1) on 8 June 2010. The approval requires compliance with the conditions of the O&M EMP and requires certain specific measures to protect the environment. There are a number of key environmental authorisations which still need to be applied for and obtained by the Concessionaire such as the water use rights for activities relating to the operational period and for the “as built” changes relating to the surface alignment. As far as quality related issues are concerned, the Operator’s audit reports are being monitored for satisfactory and timely closure. The Concessionaire, the Maintainor Contractor and the Feeder and Distribution Contractor must still complete their Quality Management Plans. It is necessary for the GMA to develop a list of important Concessionaire documentation which, if reviewed by the GMA and found to be acceptable, would assure the GMA that the Concessionaire has developed and implemented suitable systems to control the quality of its work. This documentation is called the Key Assurance Documentation (KAD) and the compilation of a list of KAD has been initiated.

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RAMS Assurance The RAMS implementation process is one that is designed to ensure that the railway system will be Reliable; Available when required; readily and efficiently Maintained and most importantly â&#x20AC;&#x201C; Safe for passengers to use. The diagram on the following page shows the inter-relation between the Railway RAMS elements and how safety and availability are based on reliability and maintainability of the operations and maintenance systems.

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RAMS Assurance

RAILWAY RAMS

SAFETY

RELIABILITY & MAINTAINABILITY

AVAILABILITY

OPERATION & MAINTENANCE

It is important to recognise the interdependency of these different elements. Throughout the life of the railway they are inextricably linked together – the nature of each element has some kind of impact on each of the others throughout the life of the railway. In the case of Gautrain the RAMS process is specifically aimed at: • Providing a railway system that complies with the levels of safety and availability, required by the Concession agreement; • Supporting the necessary applications for Safety Permits from the (National) Railway Safety Regulator (RSR) and • Obtaining the Independent Certifier’s (IC’s) Certificates for Operating Commencement Dates. Now that the railway is operating between ORTIA and Sandton the primary RAMS objectives are now to: • Monitor RAMS performance of this part of the system which is operational and • Review and reconsider the Hazard Log (HL) mitigations put in place for OCD 1.

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Train and Dedicated Feeder and Distribution Service Operations The Phase 1 Gautrain revenue earning services commenced on 8 June 2010 between the OR Tambo International Airport and Sandton stations over a distance of approximately 20km. Two train services were introduced, namely an Airport Service between OR Tambo and Sandton, and a General Passenger Service between Sandton, Marlboro and Rhodesfield. Complimentary feeder and distribution bus services were also introduced at Sandton and Rhodesfield stations. The train and bus services performance in terms of punctuality and availability (compliance to the timetable) stabilised fairly quickly with a compliance level of above 98%. The main passenger demand for the General Passenger Service is between Rhodesfield and Sandton. Passenger demand from and to Marlboro is still lower but this is expected to increase once the North South service comes into operation. Passenger’s service complaints highlighted two major issues that will require some intervention, namely inadequate operational hours (the train services do not start early enough and terminate too early to access early and late flights to and from OR Tambo International Airport) and that the Airport service is not accessible at Marlboro station. The performance of sub-systems such as escalators and lifts was initially sub-optimal partially due to inadequate time for tests and trial running before OCD 1. The Concessionaire took appropriate action and the performance has generally improved over time.

Passenger Flows The opening of the Gautrain was just in time for the 2010 FIFA World Cup™. The response from passengers to utilise the system extensively was excellent and provided a sound base to grow patronage. The table below shows the monthly and aggregated passenger numbers on both train services and on the Dedicated Feeder and Distribution Service (DFDS). Train/Bus Pax Patronage

Month

Bus Feeders and Distribution Service

East West Train Service Monthly Total Train (1 + 2)

General Passengers GP (1)

Airport Passengers AP (2)

Weekday Average

Monthly Total Bus

Weekday Average

% of Weekday Train Passengers

Jun ‘10

283 552

159 853

123 699

9 751

10 060

592

6.07%

Jul ‘10

320 236

188 813

131 423

8 299

20 666

899

10.83%

Aug ‘10

263 274

142 917

120 357

7 548

18 480

840

11.13%

Sept ‘10

230 015

111 278

118 737

7 488

16 544

788

10.52%

Oct ‘10

233 996

120 229

113 767

7 624

19 164

913

11.97%

Nov ‘10

228 646

118 803

109 843

7 814

22 549

1 025

13.12%

Dec ‘10

259 663

150 833

108 830

8 775

17 903

853

9.72%

Jan ‘11

205 572

118 895

86 677

6 803

20 864

1 043

15.33%

Feb ‘11

189 806

93 144

96 662

7 206

26 098

1 305

18.11%

Mar ‘11

235 010

119 190

115 820

7 749

31 068

1 553

20.05%

2 449 770

1 323 955

1 125 815

Total

203 396

The average weekday passenger demand serves as a good indicator of sustained demand over the period of reporting.

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Train Services When compared with the initial forecasts made by Province, the General Passenger (GP) service demand on the Train system is on the expected level, with the Airport Passenger (AP) service demand slightly above the expectation passenger trip numbers. The graph below shows how the demand for both services changes over the period of reporting but maintains a stable profile.

Total EW Train Pax

TOTAL PAX TOTAL GP TOTAL AP

350,000 300,000 250,000

PAX

200,000 150,000 100,000 50,000 0 JUN

JUL

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

2010/11

The Concessionaire had to increase service frequencies temporarily due to a higher passenger demand than was planned for on weekends and public holidays. This high demand phenomenon, which mainly came from onceoff users or joy riders wanting to experience the train, was colloquially known as the ‘Disney Effect’. Given the once off impact of high passenger demand due to the 2010 FIFA World Cup™ and the ‘Disney Effect’ it was initially difficult to establish sustainable passenger demand levels. However, a better understanding of the impact of external factors on demand meant that the period October to November 2010 as well as the March 2011 monthly passenger demand can be regarded as the sustainable passenger demand level for OCD 1.

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The table and graph below show the average weekday Airport passengers in comparison with the General passengers and it can be seen how the ratio fluctuates around the 50% of total average weekly passengers. Average Weekday Passenger Trips Weekday Average – Airport/General Passengers Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

4 680

4 127

3 985

4 172

4 007

3 960

3 757

2 985

3 767

4 046

5 071

4 172

3 563

3 316

3 617

3 853

5 018

3 818

3 439

3 703

9 751

8 299

7 548

7 488

7 624

7 814

8 775

6 803

7 206

7 749

Total

Weekday Average – Airport / General Passenger

AP GP

6000

PASSENGERS

5000

4000

3000

2000

1000

0 JUN*

JUL

* Service commencement

AUG*

SEP*

OCT

NOV

DEC*

JAN*

FEB

MAR

2010/11

A number of overcrowding incidents were reported of which all are attributed to the ‘Disney Effect’ and not an indication of medium term demand pattern changes. There are however demand trends on the Airport service suggesting that the capacity of the service will require monitoring over the short to medium term. The extension of the Airport station platform may be accelerated to deal with capacity issues on the Airport service.

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Dedicated Feeder and Distribution Bus Service The Gautrain Dedicated Feeder and Distribution Service (DFDS) commenced revenue services with modern, low-floor buses simultaneously with the train service on 8 June 2010, with the purpose to feed and distribute passengers into and out of the system in support of the train service. The bus services implemented at the Phase 1 stations in June, namely Sandton and Rhodesfield stations were for the total Gautrain system including Phase 2 whilst only the Phase 1 train service was implemented. The DFDS is only operational on weekdays (no services on weekends and public holidays). It was however agreed to operate certain routes at Sandton station during the 2010 FIFA World Cupâ&#x201E;˘ period during weekends until the end of August 2010 in support of the Gauteng public transport offering for the tournament. The initial utilisation of the bus service at service commencement in June 2010 was below expectations, but rider-ship improved gradually from just over 600 passengers per day to around 1 500 passengers per day in March 2011 (see monthly bus feeder and distribution passengers graph on page 116). Presently, 20% of all rail-users are using the DFDS on at least one end of their Gautrain journey and this is in line with the ridership forecast (see bus pax as a % of Train Pax graph on page 117). If only general passengers (commuters) and not passengers using the Airport Service are considered, the proportion of rail-users using the DFDS is in excess of 30%. The GMA is confident that the bus ridership will improve further once the full train system is in operation and as the demand for the train service ramps up over the next three to five years.

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Monthly Bus Feeder and Distribution Passengers 4000 3500

PASSENGER TRIPS

3000 2500 2000 1500 1000 500 0 JUN*

JUL

AUG

SEP

OCT

2010/11 * Service commencement

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NOV

DEC

JAN

FEB

MAR

Bus Pax as a % of Train Pax (Weekdays) 30%

% TRAIN WKDA

25%

20%

15%

10%

0% JUN

JUL

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

2010/11

According to data collected by means of the AFC system, more than 15% of the passengers carried on the DFDS are non-rail users who presumably find the bus service quality an attractive alternative to, for example, commuting by car into the Sandton central business district from the northern suburbs of Johannesburg. Present trends in passenger demand for the bus system is that it is more sensitive to seasonal factors, such as the school holidays (i.e. the December holiday period) when compared with the Train Service. There are many established frequent users with regular travel patterns which are regarded as positive for the system.

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Station Operations The Gautrain Rapid Rail Link system includes the following 10 stations: Johannesburg Park station The Johannesburg Park station is the southern terminal station of the north-south line between Johannesburg and the City of Tshwane. The station is located in Braamfontein in the Johannesburg CBD and forms part of the Johannesburg Park station intermodal facility that houses a wide range of public transport services, including commuter rail, long distance passenger rail, bus, minibus-taxi and tour bus coach services. Rosebank station The Rosebank station is located underground below Oxford Road on the north-south line adjacent to the Rosebank business and residential node. The station is intended to serve business travellers, employees, shoppers and residents. Sandton station Sandton station is the primary transfer station between the north-south line and the east-west train services. It is located in the Sandton CBD and is intended to serve the local business and employee market, as well as the domestic and international travellers to the OR Tambo International Airport. Marlboro station This station is located at the Marlboro interchange on the N3 national road adjacent to the Alexandra Township and Alexandra Urban Renewal project. This area has become the eastern gateway to Johannesburg and provides a further opportunity for passengers to transfer between the east-west and north-south services. East of the station the railway lines split to Tshwane in the north and Ekurhuleni and OR Tambo International Airport in the east respectively.

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Midrand station The Midrand station can be described as a greenfields station because it is located within an undeveloped area that will house the future proposed Zonkâ&#x20AC;&#x2122;iziswe shopping, business and residential node. It is located at the intersection of the Midrand development spine along Grand Central Boulevard and the K101 provincial road that links Pretoria, Centurion, Midrand and Johannesburg and will serve the expanding residential townships between Tembisa and Midrand. Centurion station The station is located on the edge of the Centurion CBD with its offices, business and retail developments and adjacent to the growing residential area characterised by flats and cluster developments. Pretoria main station The Gautrain station is located right next to the historical Pretoria main station building with its Herbert Baker design. The planning initiatives of the Passenger Rail Agency of South Africa (PRASA), the City of Tshwane Metropolitan Municipality and national government provide a framework for the development of the greater Pretoria station precinct, including Salvokop and Freedom Park, located to the south-west of the station. Pretoria station is an important tourism node and accommodates a number of long distance public transport services, including commuter rail, long distance passenger rail, tourist rail such as the world famous Blue Train, tour coach services and long distance minibus-taxi services.

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Hatfield station The station, located in the Hatfield business node, is close to the N1 and N4 freeways that provide excellent accessibility and serves, inter alia, the large number of diplomatic missions in the South African administrative capital and the University of Pretoria. It is the northern terminal station of the north south service and provides a dedicated link to the Hartebeesspruit PRASA station that lie adjacent to the Hatfield Gautrain station. Rhodesfield station This station serves the Ekurhuleni area and is located in the Aero City development area in Kempton Park and is the eastern terminal of the east-west commuter service (although the airport service continues eastward to the OR Tambo International Airport). The station is located at the intersection of the Gautrain line and the PRASA line between the City of Tshwane and Germiston / Johannesburg where PRASA has recently opened its services at the new PRASA commuter rail station. OR Tambo International Airport station The airport station is located directly adjacent the international airport terminal and is fully integrated with the airport buildings and airport passenger services. Management of the Gautrain Rapid Rail Link operations is the responsibility of the Bombela Operations Company, a sub-contractor to the Concessionaire. There are three key areas of operations, namely: â&#x20AC;˘ Traffic management that is responsible for all procedures, time tables, rosters and staff to run trains and to liaise with the bus sub-contractor; â&#x20AC;˘ OCC Management (Operation Control Centre) that is responsible for train management and dispatching of all information or alarms regarding events and incidents and who has decision-making authority pertaining to the safe operation of all systems and â&#x20AC;˘ Customer service management that manages customer service officers (CSOs), customer service attendants (CSAs), the public relations officer, clerks and very importantly, the cleaning sub-contractor. Stations provide the interface between passengers and the railway system, as well as the place where the railway system interacts with the surrounding land uses that are served by the station. Station operations include a complex series of sub-systems that allow the passengers to enter the system and to ensure the collection of fares. An essential component of stations is the provision of information to passengers to ensure a safe, convenient and efficient journey. Some of the elements of station operations are discussed below, but it is important to take note that station operations have been automated as far as possible and that station operations are integrated with other elements of the Gautrain system and managed from the Operations Control Centre in the depot in Midrand where it forms part of the station and Tunnel Management System (STMS). Station operations have been designed to accommodate the projected passenger demand stipulated in the Concession Agreement, but also have to be prepared for unplanned events and emergency situations. An important element of the design of stations is that stations must be fully equipped to serve passengers with disabilities, the elderly and mothers with babies.

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Passenger Capacity of Stations Stations were designed for the passenger volumes required by Provinceâ&#x20AC;&#x2122;s minimum requirements and specifications and in each sub-component this was expressed as a capacity requirement of a specific year (Year 15 being the final year of the Concession Agreement). Station Component Capacity Requirements Element Parking (park & ride and kiss & ride)

Operating Commencement Capacity Requirement

Planning Design Capacity and Requirement

Contract Year 5

Contract Year 15

Station buildings and structures

Contract Year 20

Station operating area

Contract Year 15

Platforms

Contract Year 15

Underground station cavities

Contract Year 30

Vehicle access

Contract Year 5

Contract Year 15

* Station rail operating area includes the station building and concourse area, ticketing and access control system for rail passengers and platforms. The table demonstrates that the planning and design of station operations had to take the expected passenger demand at the end of the concession period (or beyond) into consideration. The capacity that has to be available at operating commencement is the same as the planning and design horizon year, except that for parking and road access where provision only has to be made for the expected demand in Contract Year 5.

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Fare Collection At stations passengers were given two options to purchase Gautrain Gold cards and to pay fares, namely at the ticket office or at ticket vending machines (TVMs) on the concourse. Some provision was made for the selling of off-site Gold cards, especially for passengers that wish to make use of the Gautrain dedicated feeder and distribution buses because no transactions are allowed on buses to ensure a cash-free system in the interest of passenger safety. A specific challenge was the very large number of tickets that had to be issued at the commencement of OCD 1. In a mature system, regular passengers may only purchase a new travel card (contactless smart card) on a three-year interval. In a new system, however, all prospective passengers have to obtain a travel card within a very short span of time. This challenge was exacerbated by the high numbers of first-time users that made use of the Gautrain service out of curiosity, especially on holidays and weekends.

Transactions The Gautrain offers three types of services to its passengers, namely:

The train service The train service is a closed system and passengers can only enter the paid area of stations to access trains at the platform if they are in possession of a valid Gautrain Gold card, a contactless smart card. Passengers enter the paid area via the fare gates on the station concourse.

The dedicated feeder and distribution bus service (DFDS) Passengers can only enter the bus if in possession of a valid Gold card and first-time users therefore have to purchase a Gold card before they are allowed onto a Gautrain bus. The Concessionaire has made selected off-site sales points available where passengers can purchase a Gold card. (Gold cards can also be purchased at Gautrain stations).

Parking A dual system has been installed at stations that can issue a paper ticket to allow first-time users or persons without a Gold card to enter the Gautrain parking areas. A valid Gold card also allows entry to the parking area. The parking charge on the paper ticket can be paid at the TVM or station office, or it can be transferred to the Gold card. The transactions that can be performed at the station office or TVM include the following: • Purchase Gold card; • Make a transfer to Gold card using cash or credit card (Visa / Mastercard) (“top-up”); • Users have the option to transfer money to the electronic purse or to purchase weekly or monthly period products; • Pay parking and • Check balance. The TVM allows multiple transactions and also makes provision to purchase multiple Gold cards. Some passengers initially avoided the use of TVMs and preferred to make use of the service at the ticket office. In the long run, the preferred option is that the majority of passengers should make use of the TVMs and the Concessionaire has adapted the TVMs to provide a more user-friendly service and to increase the processing speed. The capacity of the TVMs is a function of transaction time and of availability of off-site alternative options. The GMA monitors closely the ability of the available TVMs to accommodate the expected traffic demand and special measures will be required to accommodate the surge in the number of transactions that are expected during OCD 2.

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Asset Management and Assurance The infrastructure of the Gautrain is managed by the Bombela Operating Company (BOC) by way of an Asset Management and Maintenance Plan to identify the maintenance requirements, and ensures that the operational requirements regarding assets are met in an effective and efficient manner. The Asset Management and Maintenance Plan is divided into two main categories namely core rail system maintenance and non-core rail system maintenance. The non-core railway system elements provide the support infrastructure for the core railway system equipment. The asset register is structured in the most suitable manner to comply with operating and maintenance processes for daily asset management. The asset register as well as the Maintenance Management Information System (MMIS) software is used to control and facilitate the maintenance process for Gautrain and covers amongst others the processing and monitoring of works orders, preventive maintenance, inventory, equipment, purchasing, labour and resources. Maintenance activities are carried out on providerâ&#x20AC;&#x2122;s requirements, particularly for preventive maintenance, which is undertaken in compliance with the equipment maintenance plans, procedures, checklists, etc. as provided by the supplier of the assets. The operations function is maintained with adequate levels of equipment availability, reliability, operability/ maintainability and safety (RAMS) based on the levels provided by the suppliers, at an acceptable cost over their lifetime. The maintenance principles applied are based on preventive maintenance and corrective maintenance. Maintenance standards are based on meeting or exceeding general accepted standards, Good Industry Practices and standards, complying with SANS 3000-2 series relating to Railway safety regulations and all contractors are required to comply with SABS/SANS standards that are applicable to their maintenance activities.

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Performance Management Managing the Concessionaireâ&#x20AC;&#x2122;s performance by monitoring and enforcing contractually obligatory standards is a key function of the GMA. A performance management system was established that independently verified the performance evaluation of the Concessionaire. The CA imposes a penalty deduction regime on the Concessionaire that works through a validation process agreed between the parties at a Performance Committee meeting held every month. These processes result in a monthly deduction imposed on the Concessionaire from payments due from Province. These processes were effective both in measuring performance and in incentivising improvements month on month as indicated in the table below. Performance Indicators Month to Month Penalty Percentage Summary Measurement Group â&#x20AC;&#x201C; OCD 1

Major Penalty Performance Percentage Measurement Weight Groups

Jun 2010

Jul 2010

Aug 2010

Sep 2010

Oct 2010

Nov 2010

Dec 2010

Jan 2011

Feb 2011

Mar 2011

PP1 Feeder and Distribution Group

60%

0.00%

PP2 Feeder and Distribution Group

10%

5.00%

0.00%

4.00%

0.00%

0.25%

0.75%

0.25%

0.50%

0.00%

0.75%

0.50%

20%

5.00%

0.00%

2.50%

4.00%

3.50%

2.00%

2.50%

1.50%

1.00%

0.50%

1.00%

12.75%

4.75%

7.75%

6.50%

2.50%

2.25%

8.00%

1.00%

1.50%

PP3 Customer Feedback Group PP4 Security Group PP5 Cleanliness and Damage Repair Group Penalty Percentage

The table also shows the weighting of different system components.

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Passenger Information and Communication There are a variety of signage and information systems on the Gautrain system that are integrated to form a holistic means of communication to the Gautrain passenger, providing guidance to the system, guidance in and around the system, information on how to utilise the system and information for safe emergency evacuation. These systems are defined and categorised as follows: • External road traffic signs to provide guidance to motorists to the entrances of Gautrain stations; • Way-finding signage on the station precinct and the station buildings to provide directional guidance to passengers in and around the Gautrain stations; • Passenger information to provide information to passengers on how to use the system and • Statutory emergency signage to assist passengers to evacuate the system safely in the case of emergency. Responsibility for these information and communication elements on the Gautrain system are that of the Concessionaire except for the external road traffic signs which were provided by Province in close collaboration with the Metropolitan Councils.

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Signage Prior to OCD 1, the need was identified to provide external road traffic signs to guide motorists on the road network immediately surrounding the Gautrain stations, to the Gautrain stations. It was established by Province and agreed with the Concessionaire that these signs remain the obligation of the respective metropolitan municipal authorities and do not form part of the obligations of the Concessionaire in terms of the Concession Agreement. Road signage was provided for Sandton, Marlboro and Rhodesfield stations. No signage was provided at the OR Tambo station as this station does not provide parking, exclusively serving airport passengers. The layout of the Gautrain traffic signs included the Gautrain logo to clearly mark the route to the Gautrain service. At Rhodesfield station, due to the integrated PRASA and Gautrain station precinct, no Gautrain logo was provided on the traffic signs as passengers are directed to the combined station precinct and directed at the site to the individual services. The process of providing external traffic signs to the remaining six Gautrain stations to become operational at OCD 2 also commenced. Way-finding signage refers to all directional and statutory signage on the system within the boundaries of the Rail Reserve. Prior to OCD 1 all way-finding was reviewed by all parties and implemented accordingly. However, with the commencement of OCD 1 it became clear that there were some areas of directional signage that were lacking. Sandton station proved to have the largest deficiencies in signage, in part due to the installation having been incomplete of reviewed signage as well as the partial opening of Sandton station with the signage designed for the completed stations. A â&#x20AC;&#x153;Lessons Learnedâ&#x20AC;? workshop was held between all parties taking account of all comments, suggestions and proposals on signage. Subsequent to OCD 1, site inspections were held at each of the OCD 2 stations to identify signage deficiencies in light of the lessons learned at the OCD 1 stations. These changes and additions were agreed by all parties and included in the installation schedules for these stations.

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Passenger Information Passenger information is all information and signage to guide passengers on how the system operates, how to plan their journey and how to use the system. Following the commencement of OCD 1, certain areas were identified where information was lacking or where uncertainty existed about the operation of the system. These shortcomings were addressed by the development of additional signage such as the TVM notice, station Operating Hours poster, Maximum Trip and Transfer poster, Gautrain Rules decals and Parking Reminder poster. Some passenger information required by the Concession Agreement such as the station Layout Maps had not been implemented. station Layout Maps that provide passengers with information regarding the location of facilities in the vicinity of the station were subsequently installed at all OCD 1 stations. With the preparation of OCD 2 Passenger Information, a strategy document was developed by the Working Group taking into account the lessons learned after OCD 1, as well as from consultation with an information specialist with RATP (Régie Autonome des Transports Parisiens). A Passenger Information workshop was then held between all parties to present the proposed OCD 2 strategy document. The main aim of the strategy was to limit the amount of information displayed at stations to avoid “information overload and to focus and condense applicable relevant information as well as to provide information in pamphlets that a passenger can take and read at leisure. Particular areas that have been focused on include the following: • The provision of comprehensive locality maps to aid passengers and tourists in navigating the areas around the stations and • The development of comprehensive Feeder and Distribution information to aide passengers in using the bus system. The finalisation and implementation of all Passenger Information at stations is currently under way for completion prior to the commencement of OCD 2.

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Passenger information at stations Description

Locality, display and availability

Gautrain Disclaimer Poster

Located at all public entrances to the Gautrain system, at the unpaid concourse and platforms of each station and within the trains. Displays the Gautrain Disclaimer as well as extracts from the Control to Premises Access Act.

Gautrain Rules Poster

Located at the unpaid concourse and platforms of each station and within the trains. Displays the most important Gautrain Rules applicable to Gautrain Passengers.

How to use the Train Poster

Located at the unpaid concourse and platforms of each station. Displays information on how to use the Gautrain System.

How to use the Bus Poster

Located at the unpaid concourse and platforms of each station. Displays information on how to use the Gautrain Feeder and Distribution Bus System.

Fares Information Poster

Located at the unpaid concourse and platforms of each station. Displays Gautrain Fares.

Parking Information Poster

Located at the entrances to all car parks, unpaid concourse and platforms of each station. Displays Gautrain parking information and parking fares.

Timetable Poster

Located at the unpaid concourse and platforms of each station. Displays the detail Gautrain timetable.

Maximum Trip and Transfer Poster

Located at the unpaid concourse and platforms of each station. Displays and explains the Maximum Trip and Transfer conditions of the Gautrain System.

Locality Map

Located at the unpaid concourse and platforms of each station. Displays the map of the locality around each specific station.

Station Layout Map

Located at the unpaid concourse of each station. Displays the three dimensional layout and location of areas within each specific station.

Station Operational Hours Poster

Located externally and within the paid and unpaid concourse of each station displaying the station opening and closing times as well as the departure times of the first and last train.

Parking Reminder Poster

Located within the unpaid concourse as well as the parking areas reminding passengers to pay for their parking prior to exiting the station.

TVM Notice

Located on each TVM displaying related ticketing information.

TVM Fares Display

Located on each TVM displaying the Gautrain fares.

Z-Card (Information Brochure)

Brochure dispensers are located within the concourse and platforms. Brochure offers Gautrain System overview information.

Fares Brochure

Brochure dispensers are located within the concourse and platforms. Brochure offers Gautrain Fares information.

Timetables Brochure

Brochure dispensers are located within the concourse and platforms. Brochure offers Gautrain Timetable information.

Brochure dispensers are located within the concourse and on-board buses. Feeder and Distribution Bus Brochure Brochure offers user information on the Gautrain Feeder and Distribution Bus System. Feeder and Distribution Bus Route Posters

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Posters are located within the concourse and at the Feeder and Distribution bus areas. Poster offers information on specific bus routes and timetables.

Emergency Signage The Concessionaire has been providing all statutory emergency signage as required in terms of South African legislation.

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Security At the start-up of OCD 1 on 8 June 2010 the full complement of security personnel for the whole system were deployed on stations and trains because the view was taken and shared between the GMA and the Concessionaire that security would be a key consideration for people deciding whether or not to use the Gautrain. Initially the personnel were heavily involved in crowd management at the access to the station concourse areas, platforms and trains during weekends due to ridership being higher than forecasted. They did not only carry out their guard duties during the start-up period but also assisted the passengers with direction finding and information. These efforts proved highly successful in providing a safe and secure system and the table below provides statistics regarding incidents of contact crimes and property crimes. Security incidents on system Statistics of incidents vs. passengers 2010

2011

Jun

July

Aug

Sep

Oct

Nov

Dec

Jan

Feb

286 911

313 355

287 334

237 947

257 337

259 499

279 361

229 173

225 173

Property Crimes

Contact Crimes

Passengers transported on system

Mar

Total

269 253 2 200 925

Contact crimes being incidents of assault or bodily injury to any person whilst in the System resulting from the conduct of other persons in the System of a criminal nature, measured as a number of incidents per million passenger journeys. Property crimes being incidents of loss or of damage to personal property belonging to any person whilst in the System resulting from the conduct of other persons in the System of a criminal nature (and not arising from an incident already taken into account in relation to contact crimes), measured as a number of incidents per million passenger journeys. All reported incidents were investigated by the Concessionaire in cooperation with, where appropriate, the South African Police Service. Reported incidents of theft, other than passenger related, during the reporting period added up to 18, of which 12 was cable theft. This is expected to decrease once the system is operational and contractors have vacated the system.

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Variations For the duration of the Concession, any change to the Concession Specification by either Province or the Concessionaire is effected through a Variation process which is governed by the Concession Agreement (CA). The CA sets out the financial and non-financial aspects that need to be considered by the Parties during this process. It further urges the Parties to continuously seek to agree the individual matters forming part of a Variation before finally agreeing a Variation Memorandum. Variations can be categorised into Development Period and Operating Period Variations, and further either Variations requested by Province, or Province’s Variations, or Variations proposed by the Concessionaire, or Concessionaire’s Variations. Province’s Variations usually fall into one of the following categories: • Land related Variations (Mainly Development Period); • Changes Province requires to its original requirements (Development and Operating Periods) and • Requirements by external parties e.g. Old Mutual, AECI, PRASA, City of Johannesburg and the City of Tshwane, mainly to enhance the potential benefit the third party will derive from its interaction with the Gautrain. (Development and Operating Periods). Concessionaire’s Variations are mainly proposed by the Concessionaire to obtain Province’s consent to deviate from either Province’s requirements, or its own proposals contained in the CA. The CA provides that the Concessionaire may at any time propose a Concessionaire’s Variation, with implementation subject to Province’s consent, which consent may in certain instances be withheld. The Concessionaire’s proposal has to be in the form of a Variation Memorandum containing sufficient detail to enable Province to evaluate the proposal in full before refusing or consenting to it. The main steps in the process of producing a Variation Memorandum in the case of a Province’s Variation can be summarised as follows: • Province issues a Province’s Variation Notice (PVN) to the Concessionaire. • The Concessionaire submits an Outline Proposal to Province with an estimation of the price, the impact on the programme, and impact on the Total Revenues. On receipt Province advises the Concessionaire whether it requires the Concessionaire to develop its response in full, or alternatively, it withdraws the Variation. • If required, the Concessionaire prepares and issues a Concessionaire’s Variation Response with sufficient detail of all the matters identified in clauses 63 of the CA, to enable Province to evaluate the Concessionaire’s proposal with the view of reaching agreement to implement the Variation. • Once agreement is reached on all aspects of the Variation, it is documented in a Variation Memorandum, and Province finalises the documentary process by issuing a Variation Confirmation. Due to the time-consuming nature of reaching agreement on all the matters covered in a Variation Memorandum, Province and the Concessionaire decided to implement an interim measure to avoid delaying implementation, referred to as a Variation Implementation Agreement (VIA). The objective of the VIA is to enable timeous implementation of a Variation while the Parties finalise the Variation Memorandum. The Variation Implementation Agreement would only address the key elements and conditions of the Variation, e.g. the Variation specification, price, programme, payment and socio-economic development impacts. These would be critical elements considered by the Parties to satisfactorily address their respective risks, whilst the need to fast track its implementation is acknowledged.

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Planning for Future Capacity and Extensions A public transport system such as the Gautrain is a dynamic system that will change and evolve over time. The GMA must therefore anticipate such changes and control, to the greatest extent possible, the implementation thereof to maintain system efficiency and effectiveness. The Concession Agreement anticipates change and sets out detailed requirements for both capacity changes to the system and a process by which network extensions can be planned and implemented. Capacity is divided into a multitude of components, from stations to trains and bus services. Each part of the system is planned and the plans are a key part of the specification. Two plans in particular are noteworthy, the Train Operating Plan and the Bus Operating Plan. Each must be revised and agreed between the parties on a regular basis. In addition, capacity is monitored and changes agreed between the parties at Rail Service Capacity Committee meetings and Bus Service Capacity Committees. These Committees are required to meet at least monthly and agree capacity and timetable changes. The network extensions are a function of an increased demand that requires a geographic increase in coverage or capacity. Given that only 10 months of operations have been completed there was limited scope for planning such extensions in the period of reporting.

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CORPORATE GOVERNANCE

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Introduction The GMA is committed to sound Corporate Governance Principles and is primarily guided by generally accepted Corporate Governance Practices, in particular the Code of Corporate Practices and Conduct set out in the King Report (King III) as well as Protocol on Corporate Governance in the Public Sector. These practices seek to ensure that the GMA’s mandate is fulfilled with due consideration to responsible decision making, accountability, effective and ethical leadership, as well as fairness and transparency whilst monitoring performance and compliance with statutory requirements. In terms of the PFMA, GMA is classified under Schedule 3 (c) as a Provincial Public Entity. The Gauteng MEC for Roads and Transport is the Executive Authority of the Agency and the GMA Board is the Accounting Authority. The working relationship between the Executive Authority and the Accounting Authority is defined and set out in the Service Level Agreement. The Service Level Agreement sets out the mandate of the Accounting Authority as contemplated in the GMA Act and the PFMA and it also aligns the objectives of the Accounting Authority with the objectives of the Executive Authority. In accordance with the GMA Act, the MEC for Roads and Transport may issue a written directive to Gautrain Management Agency if the MEC is of such a view that such action is necessary to ensure that the GMA performs its functions in accordance with the GMA Act, that the strategic or economic interests of Province or Government in relation to the Project are implemented and that there is an operational integration between the three spheres of Government and provincial priorities. The Executive Council of the Gauteng Provincial Government had in 2001 established the Gautrain Political Committee as part of the governance structure of the Gautrain Rapid Rail Link Project, as a decision-making body with the duty to ensure that all technical and political imperatives are taken on board. The Gautrain Political Committee consists of the MEC for Finance, MEC for Economic Development, MEC for Roads and Transport, Chairperson of the GMA Board and the Chief Executive Officer of the GMA. After the establishment of the GMA and the appointment of the GMA Board, the Gautrain Political Committee’s role is to assist and advise the MEC for Roads and Transport in fulfilling his executive authority over the GMA in terms of the PFMA. During the period under review, three meetings were held to discuss the progress report on the Gautrain Project, progress report on the Concessionaire’s Claim and the Gautrain OCD 2 Fares which were announced by the MEC for Roads and Transport on 6 April 2011. Regular interactions between the Gautrain Political Committee and the GMA Board take place and some of the key events attended by both the Gautrain Political Committee and the GMA Board are: • 5 June 2010 – Gautrain Launch. • 7 December 2010 – Celebration on the arrival of the last train. • 6 April 2011 – Gautrain OCD 2 Fares Announcement.

Board Composition The GMA Board consists of eight Non-executive Members who are appointed by the MEC for Roads and Transport. The Chief Executive Officer is a member of the Board by virtue of his Office and he is also appointed by the MEC for Roads and Transport after consultation with the GMA Board. In line with the best practice the roles of the Chairperson of the Board and the Chief Executive Officer are separate. In line with the GMA Amendment Act, Act 6 of 2008, the GMA Board is supported by five advisors nominated by their respective organisations and appointed by the MEC for Roads and Transport. The functions of the advisors are to advise the GMA Board with reference to the interest views and policies of their respective organisations. The advisors are not Board Members and are not entitled to vote at the Board meetings. The advisors may be appointed by the Board to serve on the Board Committees. During the year under review, the following advisors were nominated by their respective departments and appointed by the MEC: • Mr William Dachs from the National Treasury appointed by the Board to serve in the GMA Finance Committee. Mr Dachs resigned from the GMA Board on 31 August 2010. • Mr Jan-David de Villiers from the National Department of Transport appointed by the Board to serve in the GMA Finance Committee. • Mr Kennedy Kaposa from the Gauteng Provincial Treasury appointed by the Board to serve in the GMA Audit and Risk Committee.

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Board Charter The Board Charter regulates how the Board and individual Members of the Board discharge their responsibilities according to the principles of good governance. The Charter aims to ensure that all Board Members understand their duties and responsibilities as well as the laws, regulations and best practices governing their conduct. It also entails the division of responsibilities at board level and between the board and management. The summary of the roles and responsibilities of the GMA Board as set out in the Board Charter are as follows: • Provide strategic direction and leadership. • Review the Agency’s goals and strategies for achieving objectives. • Ensure that the Agency is managed effectively in accordance with corporate governance best practices and highest ethical standards. • Ensure effective communication with the MEC and relevant stakeholders. • Consider and approve the Agency’s quarterly reports and annual financial statements. • Monitor and review the risk management process including the internal controls.

Board Meetings The Board Plan determines what activities the Board is expected to undertake during the year. The Board Plan is prepared annually and updated regularly to facilitate purposeful and effective meetings. The Board Plan also ensures that all key matters are scheduled for attention over the course of the year. During the period under review, four Board meetings were held as well as the two-day GMA Lekgotla and Risk Management Workshop. The MEC for Roads and Transport also attended part of the GMA Lekgotla. A meeting attendance schedule is set out below: Board Members and Board Advisors

2010 28 May

12 Aug

2011

30-31 Aug

24 Nov

18 March

Ms Amanda Nair – Chairperson

√

Mr Sipho Khumalo – Deputy Chair

√

Mr Abel Mawela

√

Mr Donovan Nadison

√

Mr Mogopodi Mokoena

√

Mr David Sekgobela

√

Dr Malindi Neluheni

√

Dr Sadha Moodley

√

Mr Jack van der Merwe – CEO

√

Mr William Dachs – Board Advisor1

√

n/a

Mr Jan-David de Villiers – Board Advisor2

√

Mr Kennedy Kaposa – Board Advisor

√

1 Board Advisor nominated by the National Treasury and resigned from the GMA Board on 31August 2010 2 Board Advisor nominated by the National Department of Transport 3 Board Advisor nominated by the Gauteng Provincial Treasury √ Present × Submitted an apology n/a Not applicable

Delegation of Authority The GMA Board has the authority to lead, control and manage the Agency including the authority to delegate its powers. The Board’s responsibilities are facilitated by the governance structure through board committees and a delegation of authority framework. Delegating authority does not reduce the responsibility of the Board to discharge its statutory and common law duties. The delegation of authority is reviewed annually to ensure that it remains aligned and relevant.

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Board Committees The GMA Board is the foundation of the GMA’s corporate governance systems and is accountable and responsible for the GMA’s performance. The Board retains effective control through a clear governance structure and has established committees to assist it. The Board Committees do not have executive powers unless the Board delegates any of its powers to the committee or the PFMA requires that the committee should exercise such powers. The Board Committees have Terms of Reference which set out the committees’ roles and responsibilities, compositions, meeting requirements and the authority. To ensure that the Terms of Reference of the committees remain appropriate and comply with the best practice, they are reviewed and approved by the Board annually. Board Committees report to the Board at each Board meeting and make recommendations in accordance with their Terms of Reference. The Board has established the following committees and also approved the Committees’ Terms of Reference: • Audit and Risk Committee. • Finance Committee. • HR and Remuneration Committee. Board Committee Members are appointed by the Board and Board Committees are chaired by Non-Executive Members of the Board. In line with the GMA Act, a Board Committee must consists of at least one Board Member and any other person as the Board may appoint. Board Advisors may also be appointed to serve on the Board Committees. During the year under review the Board has adopted a formal process for the recruitment and appointment of Board and Board Committee Members. Following from the recommendations made by the Board during the previous year’s Board Assessment, the additional Committee Members were appointed to provide technical support to the Board Committees and to ensure that Board Committee meetings were properly quorated.

6.1 Audit and Risk Committee 6.1.1 Purpose of the Committee The Audit and Risk Committee is constituted in terms of Section 76 and 77 of the PFMA, Regulation 27.1.1 of the Treasury Regulations and Section 19 (1) (b) of the GMA Act. The purpose of the committee is to review and make recommendations in respect of the following: • The effectiveness of the internal control system. • The effectiveness of internal audit. • The risk areas in the scope of the internal and external audits. • The Agency’s compliance with legal and regulatory provisions. • The activities of the internal audit function, including its annual work plan, coordination with the external auditors, the reports of significant investigations and responses of management to specific recommendations. • The adequacy, reliability and accuracy of financial information provided.

6.1.2 Composition of the Audit Committee At the beginning of April 2010, the Committee consisted of three Non-executive Members (two Board Members and one Committee Member). Following the resignation of one Committee Member in February 2011, two Committee Members were appointed and the Committee, as at 31 March 2011, comprised of four Nonexecutive Members (two Board Members and two Committee Members). The Committee is also supported by one Board advisor. The Committee is chaired by an independent Non-executive Member of the Board. The Chief Executive Officer, Chief Financial Officer, Head of the Internal Audit and the Representatives from the Office of the Auditor-General have a standing invitation to Committee meetings.

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6.1.3 Meetings In accordance with the Terms of Reference of the Audit and Risk Committee, the Committee held four meetings and one combined workshop with the GMA Finance Committee to discuss policies during the year. The Committee also had a closed session with representatives from the Office of the Auditor-General. A meeting attendance schedule is set out below: Committee Members and Board Advisor Mr Abel Mawela – Chairperson

2010

2011

19 May

4 Aug

27 Oct

9 Feb

11 Mar5

√

Mr David Sekgobela

√

Ms Cindy Ramokoto1

√

n/a

Ms Doris Dondur2

n/a

√

Mr Mzolisi Nkumanda3

n/a

√

Mr Kennedy Kaposa4

1 Resigned on 9 February 2011. 2 Committee Member appointed with effect 1 February 2011 3 Committee Member appointed with effect 1 February 2011 4 Board Advisor nominated by the Gauteng Provincial Treasury 5 Combined workshop with the GMA Finance Committee √ Present × Submitted an apology n/a Not applicable

6.2 Finance Committee 6.2.1 Purpose of the Committee The purpose of the committee is to review and make recommendations in respect of the following: • Changes in the accounting policies and practices of the Agency. • Annual financial statements and Interim Reports. • Finance Policy and Procedure Manual. • Supply Chain Management Policy and Procedure Manual. • Budget and MTEF Funding.

6.2.2 Composition of the Committee At the beginning of April 2010, the committee consisted of four Members (three Non-executive Board Members and the Chief Executive Officer). Two Board Committee Members were appointed with effect 1 June 2010. As at 31 March 2011, the committee comprised of five Members (four Board Members including the CEO and two Committee Members). The Committee is also supported by two Board Advisors.

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6.2.3 Meetings For the period under review, the committee held four meetings and one special meeting. A meeting attendance schedule is set out below: Committee Members and Board Advisors

2010 20 Apr

17 May1

19 May2

2011 20 Jul

27 Oct

26 Jan

11 Mar3

Mr Sipho Khumalo – Chairperson

√

Mr Donovan Nadison

√

Dr Sadha Moodley

√

Mr Jack van der Merwe – CEO

√

n/a

√

n/a

√

Mr William Dachs – Board Advisor6

√

n/a

Mr Jan-David de Villiers – Board Advisor7

√

Mr Bolokang Lengane

Dr Cosmas Ambe 5

1 Special meeting 2 Combined meeting with the GMA Audit and Risk Committee 3 Combined workshop with the GMA Audit and Risk Committee 4 Committee Member appointed with effect from 1 June 2010 5 Committee Member appointed with effect from 1 June 2010 6 Board Advisor from National Treasury and resigned on 31 August 2010 7 Board Advisor from National Department of Transport √ Present × Submitted an apology n/a Not applicable

6.4 HR and Remuneration Committee 6.4.1 Purpose of the Committee The Committee reviews and makes recommendations in respect of the following: • Human Resources Policies and Procedure Manual. • Human Resource Strategy. • Targets and rules for any performance-related pay scheme. • Framework for the remuneration of the Agency’s Executive Management. • General trends and practices regarding employment benefits of government agencies, including the structuring of conditions of employment and remuneration packages.

6.4.2 Composition of the Committee At the beginning of April 2010, the committee consisted of three Members (two Non-executive Board Members and the Chief Executive Officer). Two Board Committee Members were appointed with effect from 1 June 2010. As at 31 March 2011, the committee comprised of five Members (three Board Members including the CEO and two Committee Members).

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6.4.3 Meetings During the year under review, the committee held three meetings, one special meeting and one workshop. A meeting attendance schedule is set out below: Committee Members

2010 15 Feb

25 March2

√

n/a

√

n/a

√

22 Jul

8 Nov

17 Nov

Dr Malindi Neluheni – Chairperson

√

Mr Mogopodi Mokoena

√

Mr Jack van der Merwe – CEO

√

Ms Noedine Isaac-Mpulo

Mr Alvin Rapea4 Ms Sebina Hlapolosa 1 2 3 4 5

2011

Special meeting Workshop Committee Member appointed with effect 1 June 2010 and resigned on 27 August 2010 Committee Member appointed with effect 1 June 2010 Committee Member appointed with effect 1 February 2011

Board Remuneration The MEC for Roads and Transport in consultation with the MEC for Provincial Treasury determines the remuneration structure of the Non-executive Board Members and Board Committee Members. For the period under review the Non-executive Board Members and Board Committee Members were remunerated in accordance with the rates stipulated by the Department of National Treasury. Board Members’ remuneration is detailed on page 182 of the annual financial statements.

Induction and Continuing Education During the period under review, several Board Meetings were held. During meetings, additional time was invested to ensure that Board Members have a good understanding of the Agency’s operations and to familiarise them with the Agency’s business environment. Board Committee Members were also invited to one of the Board Meetings and several events in order to provide a broader view of the Gautrain Project. Several visits to the premises of the Gautrain Project were also done during the year under review. A comprehensive induction pack including the GMA Act, the Board Charter, the Terms of Reference of the Board Committees, GMA Policies and other documents relating to the Agency, key legislation and regulations had been compiled and provided to all Board Committee Members. During the period under review, Board Members attended the following courses offered by the Institute of Directors South Africa: • Finance for Directors. • Being a Director: Part One. • Being a Director: Part Two. • Being a Director: Part Three. • Accelerated Director Programme. Training programmes that address the needs of the Board Members and training on the new Companies Act, King III, and other new legislation and regulations, will continue in the following year.

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Board Evaluation Regular examination of the Board’s structure, processes and mandate is essential to building the Board effectiveness and improving its efficiency. Evaluation also improves the interaction and communication amongst Board Members and identifies training needs. The findings of the previous Board Assessment were addressed and certain recommendations have been implemented such as the appointment of technical experts to assist Board Committees in discharging their functions. An independent facilitator was appointed to assist with the assessment of Board and Board Committees during the period under review, as proposed by the Board after the previous assessment. Matters that were considered in the assessment include: • Composition of the Board / Board Committee. • Roles and responsibilities of the Board / Board Committee. • Relationship of the Board / Board Committee and Management. • Board / Board Committee meetings. • Key corporate governance role players. • General observations. The general view from the assessment is that the Board has during the period under review performed satisfactorily in delivering the GMA’s mandate. The Institute of Directors highlighted in the report that the GMA’s score on the performance review will rank in the upper quartile of similar organisations that have been assessed by the Institute of Directors. The challenges identified from assessment include amongst others succession planning at board level and senior management level, continuous training, etc. The results of the assessment will be used in the review of the Board Charter and the development of the future Board Plans. The Board’s action plan to address the findings of the assessment will be developed and monitored throughout the next financial year.

Company Secretarial Function The Company Secretary is responsible for developing and maintaining the procedures and processes required for the proper administration of Board and Board Committee proceedings. The Company Secretary ensures that the Board and Board Committees’ procedures and applicable rules and regulations are fully observed. The Company Secretary oversees the induction of new Board and Committee Members as well as ongoing training of Board and Committee Members.

Code of Conduct and Ethics The Board has adopted a Code of Conduct and Ethics which commits Gautrain Management Agency and staff to the highest standard of ethical conduct in dealing with stakeholders, including customers, sub-contractors, service providers, consultants, etc. The Code of Conduct and Ethics is founded on the principles of integrity, good faith, impartiality, openness and accountability. The GMA’s Code of Ethics and Conduct address amongst other the following matters: • Conflict of interest. • Employment Equity. • Political Support. • Environmental Responsibility. • Stakeholder relations.

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Fraud and Corruption Prevention Policy The GMA has adopted a Fraud and Corruption Prevention Policy to protect the Agency and the assets from any financial or unlawful gains, including dishonesty or other forms of unethical conduct. The Fraud and Corruption Prevention Policy provides guidance to stakeholders, management and employees as to what constitutes fraud and corrupt activities. During the period under review, the Fraud and Corruption Prevention Policy was reviewed and a paragraph on whistle blowing was added to the Policy to enable employees and other stakeholders to report fraudulent or corrupt activities within the GMA. The following registers were also developed and no non-compliance incidents were reported: • Fraud and Corruption Prevention Register. • Fruitless and Wasteful Expenditure Register. • Incidents Register.

Internal Control The Board has overall responsibility for the GMA’s system of internal control and for reviewing its effectiveness while the implementation of the internal control system is the responsibility of management. Internal control comprises the methods and procedures implemented by management to achieve the objectives of safeguarding the asset, the efficient and effective employment of resources, prevention and detection of errors and fraud, ensuring the accuracy of accounting records and timely production of reliable financial and operational information. The internal controls are contained in the GMA’s policies and procedures and structures and they provide direction, establish accountability and ensure adequate segregation of duties. The internal audit function monitors the operation of the internal control systems and reports the findings and recommendations for improvement to management and the Audit and Risk Committee.

Internal Audit The Internal Audit function provides the Board with an independent assurance on the effectiveness of the Agency’s risk management, internal controls and governance processes. The Internal Audit reports functionally to the Chairperson of the Audit and Risk Committee and administratively to the Chief Executive Officer. The role of the Internal Audit is to provide support to management and the Audit and Risk Committee in discharging their responsibilities. The Internal Audit function was outsourced to Grant Thornton, an independent audit firm for the 2010/11 financial year. The scope of the Internal Audit function includes assessing the adequacy of internal controls, fraud prevention, risk management and governance processes. The Internal Audit Charter reviewed by the Committee and approved by the Board defines the authority, role, responsibilities and scope of activities of the internal audit function.

Legal Compliance Key activities during the period under review include the appointment of the Executive Manager: Corporate Compliance and Legal Services in December 2010, the adoption of the Legal Compliance Policy and the development of the GMA Act Legal Compliance Manual. This manual ensures that the GMA complies with the relevant provisions of the GMA Act and that responsible persons or bodies are made aware of their responsibilities and the requirements of the GMA Act. During the period under review, the GMA Act Legal Compliance review was completed and no material noncompliance issues were noted.

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ANNUAL FINANCIAL STATEMENTS

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ADMINISTRATIVE INFORMATION For the year ended 31 March 2011

Domicile

Republic of South Africa

Nature of Principal Activities To manage, coordinate and oversee the Gautrain Rapid Rail Link Project

and to enhance the integration of the Gautrain with public transport

services and other transport plans, on behalf of the Gauteng Provincial

Government.

Board Members

Ms A Nair – Chairperson

Mr S Khumalo – Deputy Chairperson

Mr E van der Merwe

Mr A Mawela

Mr M Mokoena

Dr S Moodley

Mr D Nadison

Dr M Neluheni

Mr D Sekgobela

Postal Address P O Box 1266, Kelvin, 2054, South Africa Physical Address

22 Milkyway Avenue, Linbro Business Park

Marlboro, Johannesburg, South Africa

Chief Executive Officer

Mr E van der Merwe

Chief Financial Officer

Ms K Muthen CA (SA)

Secretary

Ms T Marumo

Bankers

ABSA Bank Limited

Auditors

Auditor-General of South Africa

Contact Information Telephone No.

+27 11 997 – 8900

Facsimile No.

+27 11 997 – 8901 / 2 / 3

Website:

www.gautrain.co.za

E-mail:

info@gautrain.co.za

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STATEMENT OF RESPONSIBILITY BY THE MEMBERS OF THE BOARD For the year ended 31 March 2011

The Board Members are responsible for the preparation of the annual financial statements. The annual financial statements conform with Generally Recognised Accounting Practices (GRAP) and the reporting requirements of the Public Finance Management Act of South Africa 1999 (Act No.1 of 1999) (PFMA) and fairly present the state of affairs of the Agency as at the end of the financial year, and the results of its operations and cash flows for that period. It is the responsibility of the independent auditors to report on the fair presentation of the financial statements.

INTERNAL AND ACCOUNTING CONTROLS The Board Members are ultimately responsible for the internal controls of the Agency. Management enables the Board Members to meet these responsibilities. I n order for the Board Members to discharge their responsibilities, management has developed and maintains a risk management policy and an effective and efficient system of internal control. The system of internal control is designed to provide reasonable assurance of the integrity and reliability of the financial statements of the Agency and to adequately safeguard, verify and maintain accountability for funds and assets. Management and the Audit and Risk Committee of the Board have implemented a risk management policy and regularly review the risk register and the system of internal control. These are monitored and improved as the Agency’s operating conditions change. The system of internal control includes a comprehensive budgeting and reporting system operating within strict deadlines, the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties. Systems and controls are monitored throughout the Agency by the Board Members. As part of the system of internal control, the Agency’s internal audit function was outsourced during the year under review to a firm of chartered accountants, who conducted the internal audit function and coordinated audit coverage with the Auditor-General. Based on the information and explanations provided by management and the internal auditors, the Board Members are of the opinion that the internal financial controls are adequate and that the financial records may be relied upon for preparing the financial statements in accordance with GRAP and to maintain accountability for the Agency’s assets and liabilities. Nothing has come to the attention of the Board Members to indicate that a breakdown in the functioning of these controls, resulting in material loss to the Agency, has occurred during the year and up to the date of this report.

AUDIT AND RISK COMMITTEE The Audit and Risk Committee of the Board consists of four non-executive committee members, two of whom are Board Members and two of whom are Non-Board Members. The committee meets at least two times per annum. The committee ensures effective communication between the Board, internal audit and the Auditor-General. The Auditor-General and internal audit have access to the Audit and Risk Committee. The Audit and Risk Committee operates within the framework of formal terms of reference and has discharged its responsibilities for the year, in compliance with its terms of reference.

ANNUAL FINANCIAL STATEMENTS The annual financial statements are prepared in accordance with accounting policies as set out in the Notes to the Annual Financial Statements and are supported by judgements, estimates and assumptions in compliance with GRAP. The annual financial statements have been prepared on a going concern basis, as the Board Members have a reasonable expectation that the Agency will have adequate resources to continue in operational existence and as a going concern for the foreseeable future. The annual financial statements for the year ending 31 March 2011 set out on pages 158 to 193 were approved on 26 July 2011 by the Board and signed on its behalf by the Chairperson of the Board and the Chief Executive Officer of the Agency.

Ms A Nair GMA: Board Chairperson

Mr E van der Merwe GMA: Chief Executive Officer

Date: 26 July 2011

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Annual Report 2011

REPORT OF THE AUDIT AND RISK COMMITTEE For the year ended 31 March 2011

This report is provided by the Audit and Risk Committee, in respect of the 2010/11 financial year of the Agency, in compliance with Section 51 (1) (a) of the PFMA and Treasury Regulations 27.1.8 and 27.1.10. The committee’s operation is guided by formal Terms of Reference which has been adopted as its Committee Charter, and which has been reviewed to ensure its relevance as required by Treasury Regulation 3.1.8. The committee has regulated its affairs and discharged all of its responsibilities in compliance with this charter, and the requirements of the Public Finance Management Act and Treasury Regulations. The committee is appointed by the Board and consists of the members listed hereunder and meets at least two times per annum in accordance with the Committee’s approved Terms of Reference. During the year under review a total of four committee meetings were held together with a joint workshop with the GMA Finance Committee. Name of Committee Member Mr A Mawela (Chairperson) Mr D Sekgobela Ms C Ramokoto (Resigned with effect 9 February 2011) Ms D Dondur (Appointed with effect 1 February 2011) Mr M Nkumanda (Appointed with effect 1 February 2011) Committee Meeting Attendance Name of Committee Member

Number of Meetings Attended

Mr. A Mawela

Four out of four Committee Meetings

Mr. D Sekgobela

Three out of four Committee Meetings

Ms. C Ramokoto

Three out of four Committee Meetings

Ms. D Dondur

One out of one Committee Meetings

Mr. M Nkumanda

One out of one Committee Meetings

THE QUALITY OF MANAGEMENT QUARTERLY REPORTS SUBMITTED IN TERMS OF THE PFMA The committee was satisfied with the content and quality of the quarterly reports issued and approved by the Board during the year, for submission to the relevant legislative bodies.

EXECUTION OF FUNCTIONS The committee has executed its duties and responsibilities during the financial year in accordance with its terms of reference as they relate to the Agency’s accounting, internal auditing, internal control and financial reporting practices. During the year under review, the committee amongst other matters, considered the following in respect of the Auditor-General (AG) and the external audit: - approved the AG’s audit strategy and budgeted audit fees; - reviewed the audit and evaluated the effectiveness of the audit; - obtained assurance from the auditors that their independence was not impaired; - obtained assurances from the auditors that adequate accounting records were being maintained and - confirmed that no reportable irregularities were identified and reported by the external auditors in terms of the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004)(PAA). In respect of the financial statements: - confirmed the going concern as a basis of preparation of the annual financial statements; - examined and reviewed the annual financial statements prior to submission and approval by the Board; - ensured that the annual financial statements fairly present the financial position of the Agency as at the end of the financial year and the results of operations and cash flows for the financial year and considered the basis on which the Agency was determined to be a going concern; - considered the appropriateness of accounting treatments and accounting judgements; - considered the appropriateness of the accounting and financial policies adopted and the changes thereto; - reviewed and discussed the AG’s management report and management responses contained in the report; - through the chairman, met with the chief audit officer and the AG; - reviewed any significant legal matters that could have a material impact on the financial statements and - noted that there were no material reports or complaints received concerning accounting practices, internal audit, internal financial controls, content of the annual financial statements and other related matters.

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153

REPORT OF THE AUDIT AND RISK COMMITTEE For the year ended 31 March 2011

EXECUTION OF FUNCTIONS (continued) In respect of internal control and internal audit: - reviewed and approved the annual internal audit mandate and audit plan and evaluated the independance, effectiveness and performance of the internal audit function and compliance with its mandate; - considered reports of the internal and external auditors on the Agencyâ&#x20AC;&#x2122;s system of internal control, including financial controls; - reviewed significant issues raised by the internal audit processes and the adequacy of corrective action in response to such findings; - reviewed significant differences of opinion between the internal and external auditors and management and noted that there were none; - assessed the adequacy of the performance of the internal audit function and found this to be satisfactory; - reviewed assurance that proper and adequate accounting records were maintained and that systems and procedures safeguarded the assets against unauthorised use and disposal and - based on the above, the committee formed the opinion that at the date of this report there were no material breakdowns in internal control, including internal financial controls, resulting in any material loss to the Agency. In respect of legal and regulatory requirements to the extent that they may have an impact on the financial statements: - reviewed with management matters that could have a material impact on the Agency and - monitored compliance with the GMA Act, the Public Finance Management Act, Treasury Regulations and all other applicable legislation and governance standards and reviewed reports from the internal and external auditors detailing the extent of compliance. In respect of the coordination of assurance activities: - the committee reviewed the plans and work outputs of the external and internal auditors and concluded that these were adequate to address all significant financial risks facing the Agency: - considered the expertise, resources and experience of senior members of management including management responsible for the finance function and concluded these were appropriate and - considered the appropriateness of the experience and expertise of the chief financial officer and concluded that these were appropriate.

INDEPENDENCE OF THE EXTERNAL AUDITORS The committee is satisfied that the external auditor is independent of the Agency. This conclusion was arrived at after taking into account the following factors: - the representations made by the external auditor to the committee; - - the auditors do not, except as external auditors, receive any remuneration or other benefits from the Agency; - the auditorâ&#x20AC;&#x2122;s independence was not impaired by any consultancy, advisory or other work undertaken by the auditors; - the auditorâ&#x20AC;&#x2122;s independence was not prejudiced as a result of any previous appointment as auditor and - the criteria specified for independence by the Independent Regulatory Board for Auditors and international regulatory bodies were met. The Audit and Risk Committee has reviewed the annual report and recommended it to the Board for approval.

Mr A Mawela Audit and Risk Committee Date: 26 July 2011

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Annual Report 2011

REPORT OF THE BOARD For the year ended 31 March 2011

The Members of the Board have pleasure in presenting their report for the year ended 31 March 2011.

GENERAL REVIEW

The GMA has been established in terms of the GMA Act, Act 6 of 2008, and listed under Schedule 3C of the Public Finance Management Act, 1999 (Act No.1 of 1999) (PFMA), as a Provincial Public Entity. The overall objective of the GMA is to manage, coordinate and oversee the Concession Agreement and to enhance the integration of the Gautrain Project with other public transport services and the other public modes of transport.

FINANCIAL OVERVIEW The financial overview of the GMA is comprehensively disclosed in the annual financial statements.

FINANCIAL RESULTS

The summary of the financial results of the Agency for the year ended 31 March 2011 is detailed in the table below. SUMMARY OF FINANCIAL RESULTS (R'000)

2011

2010

Total Revenue (*)

339 597

353 358

Total Expenditure

333 990

348 398

Net surplus for the year

41 319

15 433

Restricted Project Funds

3 392 034

5 899 240

Project Expenditure utilising restricted project funds

3 363 900

5 555 687

738 702

387 582

Total Assets (*) Non-Exchange Transactions only

GOING CONCERN

The Board has considered all facts and has every reason to believe that the GMA will continue to operate as a going concern in the year ahead.

APPRECIATION The Board wishes to express its appreciation to all parties who participated and assisted during the financial year under review, and especially the following: • The Gauteng Provincial Government, the former MEC Bheki Nkosi and MEC Ismail Vadi and the Department of Roads and Transport; • The Agency staff and the Board, for their dedication and commitment; • Professional Bodies who rendered services to the Board; • Independent Audit Committee Members; • The Media fraternity and • The public in general.

Annual Report 2011 GAUTrain management agency

155

REPORT OF THE AUDITOR-GENERAL For the year ended 31 March 2011

REPORT OF THE AUDITOR·GENERAL TO THE GAUTENG PROVINCIAL LEGISLATURE ON THE GAUTRAIN MANAGEMENT AGENCY REPORT ON THE FINANCIAL STATEMENTS Introduction 1. I have audited the accompanying financial statements of the Gautrain Management Agency, which comprise the statement of financial position as at 31 March 2011, and the statement of financial performance, statement of changes in net assets and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information, and the accounting authority’s report, as set out on pages 158 to 193. Accounting authority’s responsibility for the financial statements 2. The accounting authority is responsible for the preparation and fair presentation of these financial statements in accordance with the South African Standards of Generally Recognised Accounting Practice (SA Standards of GRAP) and the requirements of the Public Finance Management Act, 1999 (Act No.1 of 1999) (PFMA), and for such internal control as management determines 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. As required by section 188 of the Constitution of the Republic of South Africa, 1996, section 4 of the Public Audit Act, 2004 (Act No. 25 of 2004) (PAA), and section 38 of the Gautrain Management Act, 2006 (Act No.5 of 2006) (GMA Act) my responsibility is to express an opinion on these financial statements based on my audit. 4. I conducted my audit in accordance with International Standards on Auditing and General Notice 1111 of 2010 issued in Government Gazette 33872 of 15 December 2010. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 5. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the 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. 6. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion 7. In my opinion, the financial statements present fairly, in all material respects, the financial position of the Gautrain Management Agency as at 31 March 2011 and its financial performance and cash flows for the year then ended in accordance with SA Standards of GRAP and the requirements of the PFMA. Emphasis of matter 8. I draw attention to the matter below. My opinion is not modified in respect of this matter. Restatement of corresponding figures 9. As disclosed in note 27 to the financial statements, misstatements in the corresponding figures were identified during our interim audit which related to revenue and expenditure amounting to R5 899 240 000 and R5 572 321 000, respectively. Management restated the corresponding figures for 31 March 2010. The net effect, as a result of the incorrect classification in the last year’s financial statements, was R326 919 000. Additional matter 10. I draw attention to the matter below. My opinion is not modified in respect of this matter.

156

Annual Report 2011

REPORT OF THE AUDITOR-GENERAL For the year ended 31 March 2011

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS 11. In accordance with the PAA and in terms of General Notice 1111 of 2010, issued in Government Gazette 33872 of 15 December 2010, I include below my findings on the annual performance report as set out on pages 196 to 203 and material non-compliance with laws and regulations applicable to the GMA. Predetermined objectives 12. There were no material findings on the annual performance report. Compliance with laws and regulations 13. There were no findings concerning material non-compliance with laws and regulations applicable to the public entity. INTERNAL CONTROL 14. In accordance with the PAA and in terms of General Notice 1111 of 2010, issued in Government Gazette 33872 of 15 December 2010, I considered internal control relevant to my audit, but not for the purpose of expressing an opinion on the effectiveness of internal control. There were no significant deficiencies in internal control that resulted in a qualification of the auditorâ&#x20AC;&#x2122;s opinion on the financial statements and/or findings on predetermined objectives and/or material non-compliance with laws and regulations.

Johannesburg Date: 29 July 2011

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STATEMENT OF FINANCIAL POSITION For the year ended 31 March 2011

Notes 2011 R’000

2010 R’000 (Restated)

ASSETS

Current Assets

738 003

386 971

Cash and Cash Equivalents

734 137

384 065

Accrued Income (Exchange Transactions)

3 829

2 897

Prepayments (Exchange Transactions)

Non-Current Assets

699

611

Property, Plant and Equipment

Intangible Assets

TOTAL ASSETS

699 -

738 702

582 29

387 582

LIABILITIES Current Liabilities

1 231 120

921 319

Other Liabilities

552 244

248 006

Accrued Expenses

206 101

257 756

Obligations Arising from Restricted SIP Funds

100 088

71 004

Obligations Arising from Restricted Project Funds

357 998

327 920

Provision: Land Expropriation

14 689

16 633

TOTAL LIABILITIES

1 231 120

921 319

Accumulated Deficit

(492 418)

(533 737)

TOTAL NET ASSETS

738 702

387 582

158

Annual Report 2011

STATEMENT OF FINANCIAL PERFORMANCE For the year ended 31 March 2011

Notes 2011 R’000

2010 R’000 (Restated)

REVENUE Revenue from Non-Exchange Transactions

339 597

353 358

Government Grants

339 597

353 353

Other Income

Revenue from Exchange Transactions

35 712

10 473

Interest Income

33 300

10 473

Other Income

2 412

Total Revenue

375 309

363 831

EXPENDITURE Director’s Remuneration

1 217

355

Audit and Risk Committee Remuneration

Sub-Committee Remuneration

126

Executive Management Remuneration

2 800

2 307

Employee Related Costs

4 074

971

Amortisation

Depreciation

172

143

Other Operating Expenditure

325 500

344 561

333 990

348 398

Total Expenditure

NET SURPLUS FOR THE YEAR

41 319

15 433

Annual Report 2011 GAUTrain management agency

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STATEMENT OF CHANGES IN NET ASSETS For the year ended 31 March 2011

Notes

Balance as at 1 April 2009

Accumulated Total Surplus / (Deficit) Amount R’000 R’000

(549 170)

Net Surplus for the year

342 352

Balance as at 31 March 2010 as previously reported

(206 818)

Adjustment for prior year error

(326 919)

Restated Balance as at 31 March 2010

(533 737)

Net Surplus for the year

41 319

Balance as at 31 March 2011

160

Annual Report 2011

(492 418)

CASH FLOW STATEMENT For the year ended 31 March 2011

Notes 2011 R’000

2010 R’000 (Restated)

CASH FLOWS FROM OPERATING ACTIVITIES Receipts

3 795 496

6 091 033

Project Income

3 728 076

6 058 747

Interest Received

32 498

8 320

Operating Period Penalty Income

2 299

SIP Receipts

29 036

23 961

Heartlands and SWC Variation Income

3 556

Other Receipts

Payments

3 445 121

5 755 091

Project Expenditure

3 105 584

5 400 291

Director’s Remuneration

1 408

265

Employee and Related Costs

6 805

3 911

Audit Fees

1 293

1 442

Other Audit Services

1 075

563

Other Operating Expenditure

328 956

348 619

Net cash from operating activities

350 375

335 942

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of Property, Plant and Equipment

(303)

(62)

Net cash from investing activities

(303)

(62)

Net increase in cash and cash equivalents

350 072

335 880

Cash and cash equivalents at beginning of the year

384 065

48 185

Cash and cash equivalents at end of the year

734 137

384 065

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161

SUMMARY OF ACCOUNTING POLICIES For the year ended 31 March 2011

PRESENTATION OF THE ANNUAL FINANCIAL STATEMENTS 1.1 GENERAL INFORMATION The Gautrain Management Agency has been established in terms of the GMA Act and listed under Schedule 3C of the Public Finance Management Act as a provincial public entity. The overall objective of the GMA is to manage, coordinate and oversee the Concession Agreement and to enhance the integration of the Project with the current public transport services and the other public modes of transport. 1.2 BASIS OF PREPARATION The annual financial statements have been prepared in accordance with the prescribed standards of Generally Recognised Accounting Practice (GRAP), including any directives, interpretations and guidelines issued by the Accounting Standards Board (ASB), in accordance with the Public Finance Management Act. The annual financial statements have been prepared on an accrual basis of accounting and are in accordance with the historical cost convention. The principal accounting policies adopted in the preparation of these annual financial statements are set out below. Assets, liabilities, revenues and expenses have not been offset except where offsetting is required or permitted by a Standard of GRAP. The accounting policies have been applied consistently in all material aspects, unless otherwise indicated. The details of any changes are explained in the relevant policy notes. Additional information has been disclosed to enhance the usefulness of the annual financial statements and to comply with the relevant legislative requirements of the PFMA. The Cash Flow Statement is prepared on the direct cost method. 1.3

USE OF ESTIMATES AND JUDGEMENTS

1.4

The preparation of the annual financial statements in conformity with GRAP requires the use of certain critical accounting estimates. It also requires management to exercise judgements, estimates and assumptions in the process of applying the accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future financial periods affected. In particular, information about significant areas of estimation and uncertainty and critical judgements in applying accounting policies that have material effect on the amounts recognised in the financial statements is included in the notes to the financial statements. PRESENTATION CURRENCY

The annual financial statements are presented in South African Rand (ZAR), which is the currency in which the entity’s transactions are denominated. All financial information has been expressed in rand thousand (R’ 000). Transactions in currencies other than the Agency’s reporting currency are initially recorded at the exchange rate applicable on the date of the transactions. Gains and losses arising from the settlement of such transactions are recognised in the Statement of Financial Performance, or disclosed in the notes to the financial statements if they relate to ring-fenced Project activities. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rates of exchange ruling on the Statement of Financial Position date. Unrealised differences on monetary assets and liabilities are recognised in the Statement of Financial Performance in the period in which they occurred. Any foreign exchange variance incurred during the year relating exclusively to Schedule 12 Milestones certified for payment, are recognised in the Statement of Financial Position at year end as an asset or liability.

162

Annual Report 2011

SUMMARY OF ACCOUNTING POLICIES For the year ended 31 March 2011

1.5

REVENUE (Non-Exchange Transactions)

1.5.1 Government Grants Government grants comprise gross inflows of economic benefits, and are recognised as revenue when it is probable that future economic benefits will flow to the Agency and the fair value of those benefits can be reliably measured. Grants are recognised when there is reasonable assurance that they will be received or when there is legal obligation for the grant to be paid, and only to the extent that the Agency has complied with any of the stipulations or conditions (if any) attached to the grant. Grant funding collected as an agent of the Government, and applied to settle Project expenditure and liabilities, do not give rise to an increase in the revenue of the Agency, and is disclosed separately in the notes to the financial statements. The Agency cannot control the use of, or otherwise benefit from this grant funding in the pursuit of its objectives. The portion of grant funding received, which the Agency controls the use of, or otherwise benefits from in the pursuit of its objectives in managing the Concession Agreement and overseeing the Agency operations is recognised as revenue in the Statement of Financial Performance in the same period in which the Agency qualifies to receive the grant. 1.6 REVENUE (Exchange Transactions) Revenue is recognised on the accrual basis of accounting when it is probable that future economic benefits will flow to the entity and those benefits can be reliably measured. 1.6.1 Finance Income Finance income is recognised as it accrues, in the Statement of Financial Performance on a time proportionate basis using the effective interest rate method. Finance income comprises of interest income on funds invested on available for sale financial assets. 1.6.2 Other Income Revenue is recognised on the accrual basis when it is probable that future economic benefits will flow to the entity and these benefits can be reliably measured. 1.7 FINANCE EXPENSES All finance costs are recognised in the Statement of Financial Performance using the effective interest rate method. 1.8 CASH AND CASH EQUIVALENTS For the purposes of the cash flow statement, cash and cash equivalents comprise cash at the bank including deposits held at call with banks. 1.9 OTHER RECEIVABLES Other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less any provision for impairment. A provision for impairment of other receivables is established when there is objective evidence that the entity will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of any debtor, probability that the debtor will be bankrupt or under financial reorganisation, and default or delinquency in payments (more than 30 days overdue), are considered indicators that the receivable is impaired. The provision is the difference between the assetâ&#x20AC;&#x2122;s carrying amount and the present value of the estimated future cash flows, discounted using the effective interest rate and is recognised in the Statement of Financial Performance. Subsequent recoveries of amounts previously written off are then recognised in the Statement of Financial Performance.

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SUMMARY OF ACCOUNTING POLICIES For the year ended 31 March 2011

1.10 PROPERTY, PLANT AND EQUIPMENT

Initial Recognition:

Property, plant and equipment are resources controlled by the entity as a result of past events and are recognised in the Statement of Financial Position only when: ‑ it is probable that future economic benefits or service potential associated with the asset will flow to the Agency and ‑ the cost or fair value can be reliably measured. All items of property, plant and equipment that qualify for recognition as an asset are measured at cost, or if acquired at no cost, or at a nominal cost are measured at fair value at the date of acquisition. Measurement at Recognition: Costs for acquired assets include: ‑ the items purchase price, including import duties, non-refundable taxes, after deducting any trade discounts and rebates; ‑ any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner as intended by management and ‑ the initial estimates of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which the Agency incurs either when the item is acquired or as a consequence of having used the item during a particular period. The cost of self-constructed assets is determined using the same principles as for an acquired asset and includes the cost of materials, direct labour and other resources incurred in constructing the asset, any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management, and an initial estimate where relevant of the costs of dismantling and removing the items and restoring the site on which they are located. Measurement after Recognition: Subsequent costs, such as replacement costs, are included in the asset’s carrying amount or recognised as a separate asset, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be reliably measured. The carrying amount of parts of items that are replaced is derecognised in accordance with derecognition provisions. All other costs such as day-to-day servicing and small parts are treated as ‘repairs and maintenance’ and are charged to the Statement of Financial Performance during the financial period in which they are incurred. After recognition as an asset, the Agency applies the cost model as its accounting policy. An item of property, plant and equipment is carried at its cost less any accumulated depreciation and any accumulated impairment losses. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as a separate items of property, plant and equipment. Depreciation: Depreciation is recognised in the Statement of Financial Performance and is calculated on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. 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. Depreciation is calculated on the cost less the expected residual value of an item of property, plant and equipment, and begins when an asset is available for use. The estimated useful lives of items of property, plant and equipment in the Agency are: - Motor vehicles 5 years - Office Machinery and Equipment 6 years - Computer Equipment 3 years Depreciation methods, useful lives and residual values are re-assessed annually and adjusted if necessary at the end of each reporting period.

164

Annual Report 2011

SUMMARY OF ACCOUNTING POLICIES For the year ended 31 March 2011

1.10 PROPERTY, PLANT AND EQUIPMENT (continued)

Impairment: The Agency assesses at each reporting date whether there is indication that any item of property, plant and equipment may be impaired. If such an indication exists the Agency estimates the recoverable service amount of the asset. In assessing whether there is any indication that an asset may be impaired, the Agency considers both external and internal sources of information. Recoverable service amount is the higher of the asset’s fair value less costs to sell, and its value in use. Value in use is the present value of the asset’s remaining service potential. If either of these amounts exceeds the asset’s carrying value, the asset is not impaired, and it is not necessary to determine the other amount. If the asset’s carrying value exceeds its recoverable service amount, the asset is impaired. The carrying amount of the asset is then reduced to its recoverable service amount, and this reduction is the impairment loss which is charged as an expense to the Statement of Financial Performance. Reversal of Impairment: The Agency shall assess at each reporting date whether there is any indication that an impairment loss recognised in prior periods for an asset may no longer exist or may have decreased. If any such indication exists, the entity shall estimate the recoverable service amount of that asset. The increased carrying amount of an asset attributable to a reversal of an impairment loss shall not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised for the asset in prior periods. A reversal of an impairment loss for an asset shall be recognised immediately in the Statement of Financial Performance. After a reversal of an impairment loss is recognised, the depreciation charge for the asset shall be adjusted in future periods to allocate the asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life. Derecognition:

The carrying amount of an item of property, plant and equipment shall be derecognised on disposal or when no future economic benefits or service potential are expected from its use or disposal. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of the property, plant and equipment, and is recognised in the Statement of Financial Performance when the item is derecognised. 1.11 INTANGIBLE ASSETS Initial Recognition: Intangible assets are classified as non-monetary assets without physical substance and are only recognised when: ‑ it is probable that future economic benefits or service potential associated with the asset will flow to the Agency and ‑ the cost or fair value of the asset can be reliably measured. For those intangible assets with a definite useful life: ‑ Amortisation is recognised in the Statement of Financial Performance and is calculated on a straight line basis over the estimated useful life of each part of the intangible asset and - Amortisation is determined from the date the intangible asset is available for use in the location and condition as intended by management.

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SUMMARY OF ACCOUNTING POLICIES For the year ended 31 March 2011

1.11 INTANGIBLE ASSETS (continued)

Measurement at Recognition: Initial expenditure incurred is recognised and capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in the Statement of Financial Performance as an expense when it is incurred. All intangible assets of the Agency have been capitalised on the basis of the costs incurred in order to acquire and bring the assets into use. Measurement after Recognition: Subsequent expenditure on capitalised intangible assets is recognised and capitalised only when the costs incurred increases the future economic benefits embodied in the specific asset to which it relates. All other subsequent expenditure is recognised in the Statement of Financial Performance as an expense when it is incurred. Amortisation:

All items of intangible assets are measured at historic cost less accumulated amortisation and accumulated impairment losses. The estimated useful lives are as follows: - Computer Software 2 years - Computer Licenses Over the period of the license

Amortisation methods and useful lives are reassessed annually and adjusted if necessary at the end of each reporting period. Amortisation is recognised in the Statement of Financial Performance on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life are systematically tested for impairment at each reporting date. Other intangible assets are amortised from the date they are available for use. Impairment: Intangible assets with an indefinite useful life or an intangible asset not yet available for use are tested annually for impairment by comparing the carrying amount with the recoverable service amount of the intangible asset. Different intangible assets may be tested for impairment at different times.

If the intangible assetâ&#x20AC;&#x2122;s carrying value exceeds its recoverable service amount, the intangible asset is impaired. The carrying amount of the asset is then reduced to its recoverable service amount, and this reduction is the impairment loss which is charged as an expense to the Statement of Financial Performance. Reversal of Impairment: The Agency shall assess at each reporting date whether there is any indication that an impairment loss recognised in prior periods for an asset may no longer exist or may have decreased. If any such indication exists, the entity shall estimate the recoverable service amount of that asset. The increased carrying amount of an asset attributable to a reversal of an impairment loss shall not exceed the carrying amount that would have been determined (net of amortisation) had no impairment loss been recognised for the asset in prior periods. A reversal of an impairment loss for an asset shall be recognised immediately in the Statement of Financial Performance. After a reversal of an impairment loss is recognised, the amortisation charge for the asset shall be adjusted in future periods to allocate the assetâ&#x20AC;&#x2122;s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.

166

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SUMMARY OF ACCOUNTING POLICIES For the year ended 31 March 2011

1.11 INTANGIBLE ASSETS (continued)

Derecognition:

The carrying amount of an intangible asset shall be derecognised on disposal or when no future economic benefits are expected from its use or disposal. The gain or loss arising from the derecognition of an intangible asset is determined by comparing the proceeds from disposal with the carrying amount of the intangible asset, and is recognised in the Statement of Financial Performance when the item is derecognised. 1.12 PROVISIONS AND OTHER LIABILITIES A provision is a liability of uncertain timing or amount. Provisions are recognised as liabilities when the Agency has a present legal or constructive obligation as a result of a past event, for which 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 amount of the obligation. The amount recognised as a provision shall be the best estimate of the expenditure required to settle the present obligation at the reporting date. The best estimate is determined by management judgement, supplemented by experience of similar transactions, and in certain cases reports from independent experts.

1.13 OBLIGATIONS ARISING FROM RESTRICTED PROJECT FUNDS

Liabilities are present obligations of the Agency arising from past events, the settlement of which is expected to result in an outflow from the Agency of resources embodying economic benefits or service potential. Funding received relating to the Project Assets

Financial transactions relating directly to the Project do not impact on the Statement of Financial Performance of the Agency. Government funding received for the Project is ring-fenced, and applied solely to project expenditure incurred. This is due to the fact that the Agency cannot control the use of, or otherwise benefit from these funds in pursuit of its objectives. The financial transactions relating to the Project are disclosed in the notes to the financial statements under ‘Obligations Arising from Restricted Project Funds’. All government funding received for the Project is requested from Provincial Treasury based on management’s best estimate of Project disbursements to be incurred for the period. To the extent that funding received is in excess of Project expenditure actually incurred for the year under review, it is classified as income received in advance of obligations yet to be incurred, and recognised in the Statement of Financial Position as a liability. 1.14 CONTINGENCIES AND COMMITMENTS The Agency does not recognise a contingent liability but discloses details of any contingencies in the notes to the financial statements, unless the possibility of an outflow of resources embodying economic benefits or service potential is remote. A contingent liability 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 wholly within the control of the entity; or - a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability. Transactions are classified as commitments where the entity commits itself to future transactions or if the items will result in the acquisition of an asset.

Annual Report 2011 GAUTrain management agency

167

SUMMARY OF ACCOUNTING POLICIES For the year ended 31 March 2011

1.15 COMPARATIVE INFORMATION Where necessary comparative figures have been adjusted to conform to the changes in presentation in the current year. 1.16 IRREGULAR EXPENDITURE Irregular expenditure means expenditure, other than unauthorised expenditure, incurred in contravention of, or not in accordance with the GMA Supply Chain Management Policy, the PFMA, the State Tender Board Act or any other applicable legislation providing for procurement procedures. Such expenditure is accounted for in the Statement of Financial Performance. 1.17 FRUITLESS AND WASTEFUL EXPENDITURE Fruitless and wasteful expenditure is defined as expenditure that was made in vain and would have been avoided had reasonable care been exercised. Such expenditure is treated as a current asset in the Statement of Financial Position until such expenditure is recovered from the responsible official or written off as irrecoverable.

1.18 TAXES AND LEVIES No taxes or levies are accounted by the Agency. If required by law then, these will be collected on behalf of the Government or other party in an agency capacity, and would not be accounted for as revenue in the financial statements of the Agency.

1.19 TAXATION The Gautrain Management Agencyâ&#x20AC;&#x2122;s income received is exempt from taxation in terms of Section 10 (1)(cA) of the Income Tax Act.

1.20 FINANCIAL INSTRUMENTS Recognition Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, other liabilities (accruals) and other payables. All non-derivative financial instruments, other than financial instruments at fair value through profit and loss, are initially recognised at fair value plus any directly attributable transaction costs. All non-derivative financial instruments at fair value through profit and loss are initially recognised at fair value excluding any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are classified and measured as described in the individual notes below. (A) FINANCIAL ASSETS Classification and subsequent measurement The entity classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, available-for-sale and held to maturity. The classification depends on the purpose for which the financial assets were acquired. Management initially recognises and determines the classification of its financial assets at acquisition date. (i) Financial assets at fair value through profit or loss Financial assets at fair value through the Statement of Financial Performance (profit or loss) are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets. Financial assets at fair value through profit or loss are subsequently measured at fair value with changes in fair value being recognised directly in Statement of Financial Performance.

168

Annual Report 2011

SUMMARY OF ACCOUNTING POLICIES For the year ended 31 March 2011

1.20 FINANCIAL INSTRUMENTS (continued)

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except if they have maturities greater than twelve months after the end of the reporting period. These are classified as non-current assets. Loans and receivables are subsequently measured at amortised cost using the effective interest rate method less any impairment loss. Interest income is recognised in the Statement of Financial Performance by applying the effective interest rate. (iii) Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within twelve months of the end of the reporting period. Available for sale financial assets are subsequently measured at fair value with changes in fair value being recognised directly in net assets (equity). (iv) Held-to-maturity financial assets Held-to-maturity assets are non-derivative financial assets with fixed or determinable payments and fixed maturity that an entity has the positive intention and ability to hold to maturity other than: (a) Those that the entity upon initial recognition designates as at fair value through profit or loss; (b) Those that the entity designates as available for sale and (c) Those that meet the definition of loans and receivables. They are included in non-current assets unless the investment matures or management intends to dispose of it within twelve months of the end of the reporting period. Held-to-maturity assets are subsequently measured at amortised cost using the effective interest rate method less any impairment loss. Interest income is recognised in the Statement of Financial Performance by applying the effective interest rate. Derecognition The entity derecognises a financial asset only when: (a) The contractual rights to the cash flows from the financial asset expire, are settled or waived; (b) It transfers to another party substantially all of the risks and rewards of ownership of the financial asset; or (c) The entity, despite having retained some significant risks and rewards of ownership of the financial asset, has transferred control of the asset to another party who has the practical ability to sell the asset in its entirety, and to exercise that ability unilaterally. Any difference between the consideration received and the amounts recognised and derecognised, is recognised in the Statement of Financial Performance in the period of the transfer. The entity transfers a financial asset if, and only if, it either: (a) Transfers the contractual rights to receive the cash flows of the financial asset; or (b) Transfers control of the asset to another party. (B) FINANCIAL LIABILITIES Classification The entity classifies its financial liabilities in the following categories: at fair value through profit or loss and held at amortised cost. The classification depends on the purpose for which the financial liabilities were acquired. Management determines the classification of its financial liabilities at initial recognition (trade date). Annual Report 2011 GAUTrain management agency

169

SUMMARY OF ACCOUNTING POLICIES For the year ended 31 March 2011

1.20 FINANCIAL INSTRUMENTS (continued) (i) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through the Statement of Financial Performance (profit or loss) are financial liabilities held for trading. A financial liability is classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorised as held for trading unless they are designated as hedges. Liabilities in this category are classified as current liabilities. Financial liabilities at fair value through profit or loss are subsequently measured at fair value with changes in fair value being recognised directly in Statement of Financial Performance. (ii) Financial liabilities held at amortised cost On initial recognition financial liabilities held at amortised cost are measured at their fair value plus transaction costs that are directly attributable to the issue of the financial liability. The financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Interest expense is recognised in the Statement of Financial Performance by applying the effective interest rate. Derecognition

The entity removes a financial liability, or a part of a financial liability, from its Statement of Financial Position when, and only when, it is extinguished i.e. when the obligation specified in the contract is discharged or cancelled or expires. The entity recognises the difference between the carrying amount of the financial liability, or part of a financial liability, extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, in the Statement of Financial Performance.

1.21 IMPAIRMENT OF ASSETS (A) Non-Financial Assets The carrying amounts of non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any indication of impairment exists, then the assetâ&#x20AC;&#x2122;s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The recoverable amount of an asset is the greater of its fair value less costs to sell, and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to that asset. Impairment losses are recognised in the Statement of Financial Performance. An impairment loss recognised in prior periods for an asset is reversed if, and only if, there has been a change in the estimates used to determine the assetâ&#x20AC;&#x2122;s recoverable service amount since the last impairment loss was recognised. If this is the case, the carrying amount of the asset shall be increased to its recoverable service amount. This increase is a reversal of an impairment loss. The increased carrying amount of an asset attributable to a reversal of an impairment loss shall not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised for the asset in prior periods. (B) Financial Assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events that have had a negative

170

Annual Report 2011

SUMMARY OF ACCOUNTING POLICIES For the year ended 31 March 2011

1.21 IMPAIRMENT OF ASSETS (continued)

effect on the estimated cash flows of that asset can be reliably estimated. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. All impairment losses are recognised in the Statement of Financial Performance.

1.22 OFFSETTING FINANCIAL INSTRUMENTS

Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

1.23 FINANCIAL RISK MANAGEMENT The entities activities expose it to the following risks: - Credit risk; - Liquidity risk and - Market risk. The GMA Board has overall responsibility for the establishment and oversight of the entity’s Risk Management framework. The Board has established the Audit and Risk Committee, which is responsible for developing and monitoring the entity’s risk management policies. The Committee reports regularly to the Members of the Board on its activities. The entity’s risk management policies and systems are established to identify and analyse the risks faced by the entity, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the entity’s activities. The Agency has a fundamental objective in maintaining a disciplined and constructive control environment in which all appointed officials understand their roles and obligations in relation to the Agency’s overall risk management framework, policy, systems and processes. This policy presents information about the entity’s exposure to each of the above risks, the entity’s objectives, policies and processes for measuring and managing risk and the entity’s management of capital. Further quantitative disclosures are included in the Notes to the annual financial statements. (A) Credit Risk Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as committed transactions. For banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted. (i) Deposits The entity limits its exposure to credit risk by only investing in liquid securities and only with counterparties that have a credit rating of at least A+. Management does not expect any counterparty to fail to meet its obligations with regards to the Agency deposits. (B) Liquidity Risks Cash flow forecasting is performed on a monthly basis. This rolling forecast is monitored for liquidity requirements to ensure the entity has sufficient cash to meet the Project’s monthly financial obligations as they fall due. Surplus cash held is invested in an interest bearing current account.

Annual Report 2011 GAUTrain management agency

171

SUMMARY OF ACCOUNTING POLICIES For the year ended 31 March 2011

1.23 FINANCIAL RISK MANAGEMENT (continued) (C) Market Risks The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The entity ensures that it reviews its cash management strategies to ensure finance income is maximised. (i) Foreign Exchange Risks In terms of the Schedule 12 Milestone payments, the entity is not exposed to any foreign exchange risk, as National Treasury has accepted full responsibility for foreign exchange variances (loss) that the Gautrain Project is exposed to on the translation effect of the foreign denominated components (Euro and Pound) of payments certified. (ii) Price Risks The entity does not hold equity security and is therefore not exposed to equity security price risk. The entity is also not exposed to any commodity price risk. (iii) Interest Rate Risks As the entity has no significant interest-bearing assets, the entityâ&#x20AC;&#x2122;s income and operating cash flows are substantially independent of changes in market interest rates.

1.24 EMPLOYEE BENEFITS Short-term employee benefits The cost of short-term employee benefits (those benefits payable within twelve months after the service has been rendered) are recognised in the period in which the service is rendered and not discounted. Short-term benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

1.25 RELATED PARTIES The Agency operates in an economic environment currently dominated by entities directly or indirectly owned by the South African Government. Due to the constitutional independence of all three spheres of Government in South Africa, only parties under the Executive Authority of the MEC of Gauteng Provincial Department of Roads and Transport will be treated as related parties. However related party transactions exclude transactions with any other entity that is a related party solely because of its economic dependence on the reporting entity or the sphere of Government of which it forms part of. Key management is defined as being individuals with the authority and responsibility for planning, directing and controlling the day-to-day activities of the entity. All those officials who report directly to the Chief Executive Officer are considered to be a related party of the Agency, thus forming part of the Agencyâ&#x20AC;&#x2122;s key management personnel. Only transactions not at armâ&#x20AC;&#x2122;s length are disclosed in terms of the requirements of the Standard and materiality is considered in terms of the disclosure of these transactions.

1.26 SUBSEQUENT EVENTS Events after the reporting date, are those events both favourable and unfavourable that occur between the reporting date and the date when the Financial Statements are authorised for issue, and are treated as follows: (a) The Agency shall adjust the amounts recognised in its annual financial statements to reflect adjusting events after the reporting date for those events that provide evidence of conditions that existed at the reporting date and (b) The Agency shall not adjust the amounts recognised in its annual financial statements to reflect non-adjusting events after the reporting date for those events that are indicative of conditions that arose after the reporting date.

172

Annual Report 2011

SUMMARY OF ACCOUNTING POLICIES For the year ended 31 March 2011

1.27 BUDGET INFORMATION The annual approved budget allocated to the GMA is prepared under the cash basis of accounting, whereas the Agency’s annual financial statements have been prepared under the accrual basis of accounting. As a result of the different basis of accounting used by the Department and the Agency, an explanatory note has been included in the financial statements, in accordance with paragraph .30 of Directive 5 on Determining the GRAP Reporting Framework (issued by the ASB during November 2010).

In order to enhance the usefulness of the financial statements, additional information has been provided on whether the resources obtained, have been used in accordance with the appropriated budget. Refer to the Notes to the Financial Statements: Reconciliation Between the Budget and the Statement of Financial Performance.

1.28 NEW STANDARDS AND INTERPRETATIONS (A) Interpretations of the Standards of GRAP: Adopted and Effective in the Current Year The Agency has applied the following approved Interpretations of the Standards of GRAP in the current year. (i.e.: the financial period beginning 1 April 2010). - IGRAP 1: Applying the Probability Test on Initial Recognition of Exchange Revenue. (B) International Public Sector Accounting Standards: Adopted and Effective in the Current Year The Agency has applied the following effective IPSAS per the accrual basis of accounting in the current year. (i.e.: the financial period beginning 1 April 2010). - IPSAS 20: Related Party Disclosures. (C) Standards and Interpretations: Approved But Not Effective in the Current Year The following Standards of GRAP have been approved by the Minister of Finance but are not yet effective for the year ended 31 March 2011. The Agency has however, decided to early adopt these Standards of GRAP in accordance with paragraph 29 of Directive 5 on Determining the GRAP Reporting Framework. The Agency has chosen to early adopt the Standards of GRAP 23 and has applied it in formulating the entity’s Accounting Policy relating to Revenue (Non-Exchange Transactions). - GRAP 23: Revenue from Non Exchange Transactions. The Agency has chosen to early adopt the Standards of GRAP 24 and has applied it in formulating the entity’s Accounting Policy relating to the Budget Information. - GRAP 24: Presentation of Budget Information in Financial Statements. (D) New Standards and Interpretations: Approved But Not Effective in the Current Year and Not Yet Adopted The following new/revised standards are not yet effective for the year ended 31 March 2011, and have not been applied in preparing these annual financial statements.

Annual Report 2011 GAUTrain management agency

173

SUMMARY OF ACCOUNTING POLICIES For the year ended 31 March 2011

1.28 NEW STANDARDS AND INTERPRETATIONS (continued)

STANDARDS OF GRAP

DETAILS OF THE AMENDMENT TO THE STANDARDS AND THE ANTICIPATED IMPACT THEREOF

FINANCIAL PERIOD

GRAP 21: Impairment of Non-cashgenerating Assets

New standard of GRAP dealing with the procedures that an entity applies to determine whether a non-cash-generating asset is impaired and to ensure that impairment losses are recognised. The Standard also specifies when an entity would reverse an impairment loss and prescribes disclosures. The impact of this is currently being assessed by management.

Effective for financial years commencing on or after 1 April 2012.

GRAP 25: Employee Benefits

New standard of GRAP dealing with the requirements around accounting and disclosure of employee benefits including short term, long term and post retirement employee benefits. The impact of this is currently being assessed by management.

To be determined by the Minister. (Issued in November 2009).

GRAP 26: Impairment of Cashgenerating Assets

New standard of GRAP dealing with the procedures that an entity applies to determine whether a cash-generating asset is impaired and to ensure that impairment losses are recognised. The Standard also specifies when an entity should reverse an impairment loss and prescribes disclosures. The impact of this is currently being assessed by management.

Effective for financial years commencing on or after 1 April 2012.

GPAP 103: Heritage Assets

New standard of GRAP dealing with the accounting treatment for heritage assets and related disclosure requirements. The impact of this is currently being assessed by management.

Effective for financial years commencing on or after 1 April 2012.

GRAP 104: Financial Instruments

New standard of GRAP dealing with the recognition, subsequent measurement, presentation and disclosure of heritage assets. The impact of this is currently being assessed by management.

To be determined by the Minister. (Issued in October 2009).

GRAP 105: Transfer Of Functions Between Entities Under Common Control

New standard of GRAP the objective of which is to establish accounting principles for the acquirer and transferor in a transfer of functions between entities under common control.

To be determined by the Minister. (Issued in November 2010).

GRAP 106: Transfer Of Functions Between Entities Not Under Common Control

New standard of GRAP dealing with the establishment of accounting principles for the acquirer in a transfer of functions between entities not under common control. The impact of this is currently being assessed by management.

To be determined by the Minister. (Issued in November 2010).

GRAP 107: Mergers

New standard of GRAP dealing with the establishment of accounting principles for the combined entity and combining entities in a merger. The impact of this is currently being assessed by management.

To be determined by the Minister. (Issued in November 2010).

174

Annual Report 2011

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2011

PROPERTY, PLANT AND EQUIPMENT

Amounts Expressed in R‘000

2011

2010

Cost/ Accumulated Carrying Cost/ Accumulated Carrying SUMMARY Valuation Depreciation Value Valuation Depreciation Value

Motor Vehicles

Office Equipment Computer Equipment

TOTAL

Reconciliation – 2011

Motor Vehicles

Office Equipment Computer Equipment

Carrying Value – 2011

Reconciliation – 2010

Motor Vehicles

842

288

554

670

141

529

105

–

1 021

322

699

732

150

582

Opening Closing Balance Additions Disposals Write-off Depreciation Balance

529

172

–

147

554

–

120

–

582

304

–

172

699

Opening Closing Balance Additions Disposals Transfer Depreciation Balance

–

663

134

529

Office Equipment

–

663

143

582

Carrying Value – 2010

Annual Report 2011 GAUTrain management agency

175

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2011

INTANGIBLE ASSETS

Amounts Expressed in R ‘000

2011

2010

Cost/ Accumulated Carrying Cost/ Accumulated Carrying SUMMARY Valuation Depreciation Value Valuation Depreciation Value

Computer Software

–

TOTAL

Reconciliation – 2011

Opening Closing Balance Additions Disposals Write-off Depreciation Balance

Computer Software

–

Carrying Value – 2011

–

Reconciliation – 2010

Opening Closing Balance Additions Disposals Transfer Depreciation Balance

Computer Software

–

Carrying Value – 2010

–

2011 R’000

2010 R’000

CASH AND CASH EQUIVALENTS

Bank Balance – Current Account

634 486

313 451

Call Investment Deposits – Social Investment Programme (SIP) Funds

99 651

70 614

734 137

384 065

TOTAL

Cash and cash equivalents consists of all cash balances of the Agency’s various bank accounts held with ABSA Bank Limited. There are no restrictions on the balance of R634.5m. There are restrictions on the SIP funds (R99.6m) which are restricted funds that may only be used for identified and authorised

social investment projects.

ACCRUED INCOME (EXCHANGE TRANSACTIONS)

Accrued Interest Income

3 310

2 508

Accrued Penalty Income

–

Accrued Interest Income – SIP Funds

437

389

TOTAL

3 829

2 897

176

Annual Report 2011

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2011

Notes

2011 R’000

2010 R’000

PREPAYMENTS (EXCHANGE TRANSACTIONS)

Staff Costs – Medical Aid

–

Training and Membership Fees

–

Other Consultant Costs – Software Support

TOTAL

OTHER LIABILITIES

Foreign Exchange Liability

552 244

248 006

TOTAL

552 244

248 006

Reconciliation of Movement during the year:

Opening Balance

248 006

–

Additions

304 238

248 006

Reversed/(Utilised) during the year

–

552 244

248 006

Motor Vehicle Expenses

Closing Balance

The foreign exchange liability arises as a result of the translation effect on the foreign denominated components of the milestone

payments (Euro and Pound) with respect to the cash flow hedge in place over the life of the Project.

ACCRUED EXPENSES

Accrued Bonus

Accrued Leave Pay

Accrued Project Expenditure

Accrued Consultant Expenditure

Accrued Operational Expenditure

TOTAL

–

197

220

181 412

227 333

22 618

28 756

1 851

1 398

206 101

257 756

The Agency’s Human Resources Policy stipulates that all officials are entitled to take accumulated annual leave days within the

first six month period of the next annual leave cycle, failing which those leave days accrued to the official are forfeited.

Annual Report 2011 GAUTrain management agency

177

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2011

Notes 9.

2011 R’000

2010 R’000

OBLIGATIONS ARISING FROM RESTRICTED SIP FUNDS

Social Investment Programme Fund (SIP)

100 088

71 004

TOTAL

100 088

71 004

SIP funds are restricted funds that may only be used for identified and authorised social investment projects. The contribution to the SIP Fund will terminate in April 2011.

10. OBLIGATIONS ARISING FROM RESTRICTED PROJECT FUNDS

Income received in advance of obligations:

National Grants: Capital Projects DoRA Conditional Grants

Provincial Grants: Capital Projects

MTEF Equitable Shares

LOAN Borrowings

- 357 998

327 920

TOTAL

357 998

327 920

Reconciliation of movement during the year: Obligation at the beginning of the year

327 920

1 000

10.1

3 392 034

5 899 240

10.2

(3 363 900)

(5 555 687)

Add: Reversal of Prior Year Provision: Land Expropriation

16 633

Less: Provision: Land Expropriation

(14 689)

(16 633)

357 998

327 920

Add: Project Funds received during the year – capital

Less: Project Expenditure paid during the year – capital

178

Closing Balance

Annual Report 2011

10.3

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2011

Notes

2011 R’000

2010 R’000

10. OBLIGATIONS ARISING FROM RESTRICTED PROJECT FUNDS (continued) 10.1 CAPITAL: PROJECT FUNDS RECEIVED DURING THE YEAR

Public Sector

DoRA – Conditional Grants

438 360

2 976 720

NSF – National Skills Fund

13 299

MTEF – Equitable Shares

1 823 952

1 679 981

LOAN – Borrowings

1 112 867

1 048 615

3 388 478

5 705 316

Sub Total

Private Sector

Zonkiziziwe Old Mutual Variation Milestones

193 924

FIFA SWC Variation Milestones

Heartlands Variation Milestones

3 528

3 556

193 924

3 392 034

5 899 240

Sub Total

Total

10.2 CAPITAL: PROJECT EXPENDITURE INCURRED DURING THE YEAR

Project Expenditure

Schedule 12 Milestones

3 116 328

4 909 931

Variation Milestones

159 707

68 047

Forex Variance – Variation Milestones

(3 874)

3 074

Forex Variance – Land Variation Milestones

444

(2 630)

Variations relating to clause 25.2.2 of the CA

44 107

Construction of the K60 Access Road

12 947

Land Expropriation Costs

44 478

80 635

Land Variation Milestones

(10 237)

295 570

Unknown Utility Milestones

971

Capital Intergration Costs

6 165

Zonkizizwe Variation Milestones

193 924

Sub Total

3 363 900

5 555 687

3 363 900

5 555 687

Total

Annual Report 2011 GAUTrain management agency

179

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2011

2011 R’000

2010 R’000

10. OBLIGATIONS ARISING FROM RESTRICTED PROJECT FUNDS (continued) 10.3 Analysis of the Movement during the year: (a) National – DoRA Conditional Grants

Add: Obligation at the beginning of the year

Add: Current year receipts

438 360

2 976 720

Less: Assets under construction

(438 360)

(2 976 720)

Less: Conditions met – transferred to revenue

Conditions still to be met – transferred to liabilities

(b) National – COT Subsidy - Pretoria Precinct

Add: Obligation at the beginning of the year

1 000

Add: Current year receipts

Less: Assets under construction

(1 000)

Less: Conditions met – transferred to revenue

Conditions still to be met – transferred to liabilities

Add: Obligation at the beginning of the year

Add: Current year receipts

13 299

Less: Assets under construction

(13 299)

Less: Conditions met – transferred to revenue

Conditions still to be met – transferred to liabilities

(d)

Provincial – MTEF Equitable Shares

Add: Obligation at the beginning of the year

Add: Current year receipts

1 823 952

1 679 981

Less: Assets under construction

(1 823 952)

(1 679 981)

Less: Conditions met – transferred to revenue

Conditions still to be met – transferred to liabilities

(e)

Provincial – LOAN Borrowings

Add: Obligation at the beginning of the year

Add: Current year receipts

1 112 867

1 048 615

Less: Assets under construction

(756 813)

(704 062)

Less: Conditions met – transferred to revenue Conditions still to be met – transferred to liabilities

- 356 054

344 553

Adjusted for: Add: Reversal of Prior Year Provision: Land Expropriation

16 633

Less: Provision: Land Expropriation

(14 689)

(16 633)

357 998

327 920

Total

180

Annual Report 2011

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2011

2011 R’000

2010 R’000

10. OBLIGATIONS ARISING FROM RESTRICTED PROJECT FUNDS (continued) 10.3 Analysis of the Movement during the year: (continued) (f)

Public – Zonkiziziwe Variation – Old Mutual

Add: Obligation at the beginning of the year

186 284

Add: Current year receipts

7 640

Less: Assets under construction

(193 924)

Less: Conditions met – transferred to revenue

Conditions still to be met – transferred to liabilities

(g)

Public – Heartlands Variation Milestones

Add: Obligation at the beginning of the year

Add: Current year receipts

3 528

Less: Assets under construction

(3 528)

Less: Conditions met – transferred to revenue

Conditions still to be met – transferred to liabilities

(h)

Public – FIFA SWC Variation Milestones

Add: Obligation at the beginning of the year

Add: Current year receipts

Less: Assets under construction

(28)

Less: Conditions met – transferred to revenue

Conditions still to be met – transferred to liabilities

The project funds received from the Private Sector have been utilised towards the capital costs of the project during the

year under review.

11. REVENUE FROM NON-EXCHANGE TRANSACTIONS MTEF Funds

266 046

320 019

LOAN Funds

73 551

33 334

SAICE Award

TOTAL

339 597

353 358

12. REVENUE FROM EXCHANGE TRANSACTIONS

Interest Income

33 300

10 473

Operating Period Penalty Income

2 381

Other Income – Tender Receipts

Other Income – Insurance Claim

35 712

10 473

TOTAL

Annual Report 2011 GAUTrain management agency

181

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2011

2011 R’000

2010 R’000

13. EMPLOYEE RELATED COSTS

Salaries, bonuses and allowances

3 918

863

Increase/(Decrease) in Leave Provision

148

Employee Contributions

Employer Contributions

4 074

971

TOTAL

14. DEPRECIATION AND AMORTISATION COSTS

Property, Plant and Equipment

172

143

Intangible Assets

201

171

TOTAL

15. TAXATION The GMA is exempt from Income Tax in terms of section 10(1) (cA) of the Income Tax Act.

16. CONTINGENCIES AND COMMITMENTS At year end there are no provisions for any contingencies and no commitments relating to any authorised or contracted tenders for Projects that have been issued during the year under review.

17. DIRECTOR’S REMUNERATION

Amounts Expressed in R‘000

Name of Board Members

Ms A Nair (Chairperson)

2011 Retention Fees

Board Travel Total Fees Expenses Remuneration

318

–

318

Mr S Khumalo (Deputy Chairperson)

–

Mr A Mawela

163

Mr M Mokoena

150

Dr S Moodley

147

Mr D Nadison

151

Dr M Neluheni

Mr D Sekgobela

118

TOTAL

901

277

1 217

182

Annual Report 2011

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2011

17. DIRECTOR’S REMUNERATION (continued)

Amounts Expressed in R‘000

2010

Retention Name of Board Members Fees

Board Travel Total Fees Expenses Remuneration

Ms A Nair (Chairperson)

–

Mr S Khumalo (Deputy Chairperson)

–

Mr A Mawela

–

Mr M Mokoena

–

Dr S Moodley

–

Mr D Nadison

–

Dr M Neluheni

–

Mr D Sekgobela

–

TOTAL

–

328

355

18. AUDIT AND RISK COMMITTEE REMUNERATION

Amounts Expressed in R‘000

2011

Committee Travel Total Name of Committee Members Fees Expenses Remuneration

Mr A Mawela (Chairperson)

Mr D Sekgobela

Ms C Ramokoto

Ms D Dondur

Mr M Nkumanda

TOTAL

Amounts Expressed in R‘000

2010

Committee Travel Total Name of Committee Members Fees Expenses Remuneration

Mr A Mawela (Chairperson)

Mr D Sekgobela

TOTAL

Annual Report 2011 GAUTrain management agency

183

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2011

19. EXECUTIVE MANAGEMENT REMUNERATION

Amounts Expressed in R‘000

2011

Name of Executive Management

Basic Company Medical Aid Total Salary Contribution Benefits Remuneration

Chief Executive Officer

1 878

101

1 981

Senior Executive: Technical Pro-rata 5 mths

472

–

473

345

–

346

2 695

Chief Financial Officer

Full year

Pro-rata 4 mths

TOTAL

Amounts Expressed in R‘000

101

2 800

2010

Name of Executive Management

Basic Company Medical Aid Total Salary Contribution Benefits Remuneration

Chief Executive Officer

1 945

–

362

2 307

TOTAL

1 945

–

362

2 307

Full year

2011 R’000

2010 R’000

20. RECONCILIATION OF NET CASH FLOWS FROM OPERATING ACTIVITIES TO SURPLUS Net Surplus for the year

41 319

15 433

Non-cash movements

Amortisation

Depreciation

172

143

Increase in payables

312 502

323 172

Increase in provisions relating to employee costs

220

Increase in other current assets

(3 867)

(2 906)

Net cash inflows from operating activities

350 375

335 942

184

Annual Report 2011

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2011

2011 R’000

2010 R’000

273 790

296 819

21. OTHER OPERATING EXPENDITURE Consultant Costs

- Operational Support Costs

39 556

42 439

- Technical Costs

210 463

237 691

- Legal Costs

22 772

15 571

- Financial Costs

999

Independent Monitor Costs

32 393

36 350

Independent Environmental Costs

2 632

3 392

Independent Certifier Costs

20 982

23 136

Independent Socio-Economic Monitor Costs

8 779

9 822

Dispute Resolution Board Costs

2 035

1 326

Commercial Costs

8 651

3 133

Other Consultant Costs

1 118

358

Audit Fees

1 729

1 593

Internal Audit Services

1 075

563

Travel and Accommodation

Building Rent and Office Costs

4 908

4 519

Information Technology Costs

113

Advertising Costs

115

Bank Charges

Entertainment Costs

Facility Costs

Training and Membership

146

Motor Vehicle Expenses

Sundry Expenses

153

325 500

344 561

TOTAL

Grants paid are utilised to fund capital and operational expenditure. The grants paid are based on the operating and capital budgeted amounts as approved by the Accounting Authority.

Annual Report 2011 GAUTrain management agency

185

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2011

2011 R’000

2010 R’000

22. RECONCILIATION OF THE BUDGET TO THE STATEMENT OF FINANCIAL PERFORMANCE Net Surplus per the Statement of Financial Performance

41 319

15 433

Adjusted for:

Amortisation

Depreciation

172

143

Increase in payables

312 502

323 172

Increase in provisions relating to employee costs

220

Increase in other current assets

(3 867)

(2 906)

Cash flows from operating activities

350 375

335 942

Increase in other income from sources other than government funding

(67 420)

(32 286)

282 955

303 656

Net Surplus per the Approved Budget

23. RELATED PARTY RELATIONSHIPS – NATURE (a) Non-Executive Board Members and the Audit and Risk Committee Members: The name of each Non-Executive Board Member including the name of each Audit and Risk Committee Member have been

disclosed in Note No. 17 and No. 18 above.

(b) Executive Management: The name of each Executive Manager have been disclosed in Note No. 19 above. (c) Executive Authority: MEC of the Gauteng Department of Roads and Transport

The GMA is a Provincial Public Entity reporting to the MEC of the Gauteng Provincial Department of Roads and Transport. The

Gauteng Provincial Department of Roads and Transport including their trading entities are related parties of the Agency.

24. RELATED PARTY TRANSACTIONS – AMOUNT (a) Non-Executive Board Members and the Audit and Risk Committee Members:

The total value of all transactions in respect of the Non-Executive Board Members including the Audit and Risk Committee Members are disclosed in Note No. 17 and No. 18 respectively.

(b) Executive Management: The total value of all transactions in respect of Executive Management are disclosed in Note No. 19. (c) Executive Authority: MEC of the Gauteng Department of Roads and Transport:

During the current financial year under review, the GMA did not enter into any transactions with nor facilitate any

projects on behalf of the various other Departments.

186

As a result there are no outstanding balances owed to / due by the Agency.

Annual Report 2011

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2011

2011 R’000

2010 R’000

25. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT The Agency’s financial instruments consist mainly of cash at bank and cash equivalents, other receivables and other payables. A ll financial instruments are measured and recognised at fair value. The bank deposits and bank balances, receivables and payables approximate their fair value due to the short term nature of these instruments. No financial instrument is carried at an amount in excess of its fair value. The fair values together with the carrying amounts have been determined by using available market information and is shown in the Statement of Financial Position as detailed below.

Financial assets – at carrying value

Cash and cash equivalents

734 137

384 065

Accrued income

3 829

2 897

TOTAL

737 966

386 962

Financial liabilities – at carrying value

Restricted Funds – SIP

100 088

71 004

Restricted Funds – Project

357 998

327 920

Other Liabilities

552 244

248 006

Accrued expenses

206 101

257 756

TOTAL

1 216 431

904 686

Fair value of financial instruments:

Financial assets by category – at fair value:

Cash and cash equivalents

734 137

384 065

Accrued income

3 829

2 897

TOTAL

737 966

386 971

Financial liabilities held at amortised cost:

Restricted Funds – SIP

100 088

71 004

Restricted Funds – Project

357 998

327 920

Other Liabilities

552 244

248 006

Accrued expenses

206 101

257 756

TOTAL

1 216 431

904 686

Annual Report 2011 GAUTrain management agency

187

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2011

2011 R’000

2010 R’000

25. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued) The revenue and expenses that are included the Statement of Financial Performance are detailed below per category of

financial instrument.

Income from Cash and cash equivalents

Finance Income

33 300

10 473

TOTAL

33 300

10 473

Financial Instruments Potential concentrations of credit risk consist mainly of cash and cash equivalents, trade receivables and other receivables. For banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ have been accepted. Other receivables consist of accrued interest and prepayments, upon which credit risk is limited as interest is receivable from banks with rating of ‘A’ and prepayments are minimal. At 31 March 2010, the Agency did not consider there to be any significant concentration of credit risk which had not been insured or adequately provided for. Risk Management Interest rate risk management As the entity has no significant interest-bearing assets, the entity’s income and operating cash flows are substantially independent of changes in market interest rates. Foreign exchange risk management The Agency is not exposed to any foreign exchange risk relating to the certified Schedule 12 Milestones, as National Treasury has accepted responsibility for the foreign exchange risk that the Gautrain Project will be exposed to. However the Gautrain Project has limited its exposure to any foreign exchange risk relating to the certified Variation Milestones, as these predetermined fixed hedge rates have been agreed by both the Province and the Concessionaire.

During the period under review the following foreign exchange variances were reported:

188

Foreign Exchange Gain

3 874

3 109

Foreign Exchange Losses

444

3 554

Net effect

3 430

Annual Report 2011

(445)

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2011

25. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued) Liquidity risk management The entity manages liquidity risk through the compilation and monitoring of cash flow forecasts as well as ensuring that there are adequate banking facilities. The maturity profiles of the financial instruments are summarised as follows: MATURITY PERIOD 0 - 12 Months

1 - 5 Years

> 5 Years

Financial Liabilities

Restricted Funds – SIP

100 088

Restricted Funds – Project

357 998

Other Liabilities

552 244

206 101

Accrued expenses

Market Risk sensitivity analysis The table below shows the results of a sensitivity analysis on the surplus for the period and changes in net assets for reasonable possible changes in the risk variables. Accumulated Surplus

Net Assets

- 100% decrease in foreign exchange variance

3 430

+ 100% increase foreign exchange variance

(3 430)

NET EFFECT

ASSUMPTIONS The sensitivity analysis is based on the entity’s financial performance at reporting date and may vary at the time that any actual market movement occurs. A 100% increase or decrease is used and presents management’s assessment of the reasonable possible changes in foreign exchange risk.

Annual Report 2011 GAUTrain management agency

189

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2011

2011 R’000

2010 R’000

26. FRUITLESS AND WASTEFUL EXPENDITURE Finance expense

108

TOTAL

108

No. 1

Date 22 June 2009

Detailed Description of Incident Late payment to National Treasury due to the late receipt of

DoRA funds from National Department of Transport. 2

24 April 2009

Late payment to National Treasury due to the late scheduling of

transfer payment.

TOTAL

27. PRIOR PERIOD ERROR

108

In the previous financial year the Agency reported:

STATEMENT OF FINANCIAL PERFORMANCE

REVENUE

Government Grants (Non-exchange transactions)

Other income (Exchange transactions)

6 058 669 10 478

Re-alignment Variation (Exchange transactions)

193 924

TOTAL

6 263 071

EXPENDITURE

Board and Committee Member Remuneration

355

Audit and Risk Committee Member Remuneration

Executive Management Remuneration

2 307

Amortisation Expense

Depreciation Expense

143

Finance Expense

108

Project Expenses

5 720 098

Other Operating Expenses

2 307

Staff and Salary Costs

971

Re-Alignment Variation (Exchange transactions)

193 924

TOTAL

5 920 274

Net Foreign Exchange Loss

445

190

NET SURPLUS FOR THE YEAR

Annual Report 2011

342 352

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2011

27. PRIOR PERIOD ERROR (continued) A prior period error is reported in the financial statements due to the reclassification of Project expenditure and associated grant funding from the expenditure and revenue line items in the Statement of Financial Performance, to disclosure in the Notes to the Financial Statements as expenditure that is capital in nature, and funds received that are ring-fenced for this capital project expenditure. The capital expenditure is not disclosed as work-in-progress in the Statement of Financial Position because ownership of the System assets rests with the Gauteng Department of Roads and Transport. Financial transactions relating directly to the Project do not impact on the Statement of Financial Performance of the Agency. Government funding received for the Project is ring-fenced, and applied solely towards Project expenditure incurred. This is due to the fact that the Agency cannot control the use of, or otherwise benefit from these funds in pursuit of its objectives. The financial transactions relating to the Project are disclosed in the notes to the financial statements under ‘Obligations Arising from Restricted Project Funds’.

All government funding received for the Project is requested from Provincial Treasury based on management’s best estimate of Project disbursements to be incurred for the period. To the extent that funding received is in excess of Project expenditure actually incurred for the year under review, it is classified as income received in advance of obligations yet to be incurred, and recognised in the Statement of Financial Position as a liability. The financial impact of the prior period error has resulted in R 5 899 240 000 and R 5 572 321 000 being transferred from the revenue and expenditure line items respectively, in the Statement of Financial Performance, to disclosure in the Notes to the Financial Statements treated on the basis of fund accounting principles for the year ended 31 March 2011. The net financial impact of the prior period error has resulted in R 326 919 000 being disclosed as an adjustment to the opening balance of the accumulated surplus in the Statement of Changes in Equity for the year ended 31 March 2011.

Refer to the Notes to the Financial Statements No. 10 Obligations Arising From Restricted Project Funds for the detailed movement of the Restated Accumulated Surplus Balance relating to the Prior Period Error. The correction of the error results in the restatement of comparative figures as follows overleaf:

Annual Report 2011 GAUTrain management agency

191

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2011

27. PRIOR PERIOD ERROR (continued) STATEMENT OF FINANCIAL PERFORMANCE 2010 Previously Reported Correction

2010 Restated

REVENUE Government Grants

6 058 669

5 705 316

353 353

Other Income

Interest Income

10 473

Re-alignment Variation

193 924

TOTAL

6 263 071

5 899 240

363 831

EXPENDITURE Director’s Remuneration

355

Audit and Risk Committee Remuneration

Executive Management Remuneration

2 307

Employee Related Costs

971

Amortisation Costs

Depreciation Costs

143

Finance Expense

108

Project Expense

5 720 098

Re-alignment Variation

193 924

Other Operating Expenditure

2 307

(342 254)

344 561

Net foreign exchange loss TOTAL NET SURPLUS FOR THE YEAR

445

5 920 719

5 572 321

348 398

342 352

326 919

15 433

STATEMENT OF CHANGES IN NET ASSETS Revenue

6 263 071

5 899 240

363 831

Expenditure

5 920 719

5 572 321

348 398

NET EFFECT ON ACCUMULATED DEFICIT

326 919

STATEMENT OF FINANCIAL POSITION

Previously Reported Prior Period Error Restated Amount

Obligations Arising from Restricted Project Funds

1 001

326 919

NET EFFECT

326 919

192

Annual Report 2011

327 920

NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2011

28. ADDITIONAL DISCLOSURE

COMMENCEMENT OF OPERATIONS:

The Gautrain is a rapid rail system that links three metropolitan areas in Gauteng, with an airport service between Sandton City in Johannesburg and the OR Tambo International Airport (ORTIA) in Ekurhuleni, as well as a general passenger service between Johannesburg Park station and Hatfield in the City of Tshwane. Train operations commenced for Phase 1 of the System in time for the 2010 FIFA World Cupâ&#x201E;˘ on 8 June 2010. Phase 1 is the line between Sandton and ORTIA, and comprises the airport service and the east-west general passenger service between Sandton, Marlboro and Rhodesfield. By 16 September 2010, the Gautrain had already transported its one millionth passenger. There exists a high possibility that the Gautrain will offer additional services with opening of the route between Hatfield, Pretoria, Centurion, Midrand, Sandton and Rosebank stations in the second quarter of the 2011/12 financial year. This involves a reduced general passenger service in relation to the full opening of the System from Hatfield to Park station in Johannesburg, which was initially projected to occur within this timeframe. The reduction in services is between Rosebank and Park stations where the Concessionaire is required to complete the works in the tunnel between the two stations. The opening of the full System that will link Tshwane (Hatfield) with Johannesburg (Sandton and Park) and Ekurhuleni (ORTIA) is termed OCD 2 and is an event that is of uncertain timing. There exists a probability that OCD 2 may occur in the last quarter of the 2011/12 financial year. The commencement of operations with firstly, the partial opening of the System in the second quarter of the new financial year, and the probable full commencement of operations (OCD 2) in the last quarter of the new financial year, represent non-adjusting events after the reporting date, and accordingly no adjustments have been made to the annual financial statements. In addition the partial and late opening of the System will have no effect on the Agencyâ&#x20AC;&#x2122;s ability to continue as a going concern, as the Board has every reason to believe that the entity has adequate resources in place to continue in operation for the foreseeable future. It is the objective of the Agency to request the Executive Authority: MEC for the Roads and Transport to effect transfer to the GMA, of the entire System (provincial assets and liabilities), on OCD 2 in accordance with the Public Finance Management Act, Section 42 and the Gautrain Management Agency Act, Section 31. Once the provincial assets and liabilities have been transferred by the MEC, the accounting treatment of the Concession Agreement in the financial statements of the Agency will include, amongst others:

The System assets to be accounted for shall comprise of the following items:

- Property, Plant and Equipment - Intangible Assets The Concession Liabilities to be accounted for shall comprise of the following items:

Financial Liability: Patronage Guarantee

- Contingent Liability: Performance Obligation

Except for the above mentioned matter the Agency does not have any other significant events to report requiring adjustment or disclosure in the financial statements for the year ended 31 March 2011.

Annual Report 2011 GAUTrain management agency

193

PERFORMANCE AGAINST OBJECTIVES

194

Annual Report 2011

Annual Report 2011 GAUTrain management agency

195

ANNUAL PERFORMANCE REPORT For the year ended 31 March 2011

MEASURABLE OBJECTIVES

STRATEGIC OBJECTIVE

PERFORMANCE INDICATORS

PERFORMANCE TARGETS

Liaise with persons having an interest in the Project. (Gautrain Rapid Rail Link Project).

1. GOOD GOVERNANCE AND COMPLIANCE:

1. PERFORMANCE MEASURES:

1. PLANNED PERFORMANCE – ANNUAL OUTPUTS:

a.1. Effective functioning of the GMA Board (Accounting Authority). a.2. Effective governance of the Board.

a.1. The minimum number of quorate Board and Board SubCommittee meetings are to be held ito the GMA Act and GMA Board Charter and each Board Sub-Committee’s approved Terms of Reference. a.2. An effective self assessment or independent Board evaluation.

Effective Audit and Risk Committee.

Effective functioning of Internal Audit as reported in the Annual Report of the GMA. Statement of Responsibility by the Board Members.

a.1. A minimum of Four Board and Committee Meetings as per the GMA Board Charter and each Board SubCommittee’s approved Terms of Reference documents. a.2. A self assessment or an independent Board evaluation is performed annually and any negative results or findings must be appropriately addressed. b. The ARC Report must be prepared in terms of its Charter and included in the AFS based on the results of the audit findings and conclusions reached and minuted in the quorate ARC meeting held during the year. c. No deviation from the Internal Audit Plan in respect of the internal audit work scheduled to be performed unless approved by the ARC ( based on considerations of reliance to be place by the external auditors).

STRATEGIC OBJECTIVE: TO MANAGE, CO-ORDINATE AND OVERSEE THE GAUTRAIN

- Report of the Audit and Risk Committee. d. Liaison forums to be held in order to exchange information with the list of key stakeholders (refer # 7) in accordance with the GMA Act.

Effective functioning of the Audit & Risk Committee in terms of its approved Committee Charter and Terms of Reference. The Internal Audit Charter and Three Year Internal Audit Plan approved by the ARC must to be carried out within the agreed timeline in order to ensure that the Board is satisfied that the overall system of internal controls is adequate as reported in the GMA Annual Report.

d.1. All written directives assigned by the MEC are executed. d.2. Particulars of all directives issued by the MEC is reported in the Annual Report and the revised Strategic Plan.

d.1. No non-performance on any directives issued by the MEC, where applicable. d.2. The GMA Annual Report must include the particulars of all directives issued.

Ensure the interests of the Province are protected. Liaise with persons having an interest in the Project.

2. ETHICS, FRAUD AND CORRUPTION:

2. PERFORMANCE MEASURES:

2. PLANNED PERFORMANCE - ANNUAL OUTPUTS:

Compliance with all approved GMA policies as monitored in the following registers:

a.1 - Irregular, Fruitless and Wasteful Expenditure Register a.2 - Fraud and Corruption Register. a.3 - Anti-Bribery Pact (Incidents) Register.

Occurrence of any incidents or offences are timely reported and adequately documented in the following registers.

a.1 - Irregular, Fruitless and Wasteful Expenditure Register. a.2 - Fraud and Corruption Register. a.3 - Anti-Bribery Pact (Incidents) Register.

Zero offences and incidents disclosed in the: a.1 - Irregular, Fruitless and Wasteful Expenditure Register. a.2 - Fraud and Corruption Register. a.3 - Anti-Bribery Pact (Incidents) Register. The respective GMA registers are to be completed as and when an incident, transaction or activity occurs or is reported.

Act on behalf of the Province in managing the relationship between the Province and the Concessionaire and ensure the interests of the Province are protected.

3. RISK MANAGEMENT:

3. PERFORMANCE MEASURES:

3. PLANNED PERFORMANCE – ANNUAL OUTPUTS:

b.1 No deviation by the ARC from its responsibility to review the risk registers tabled as a standing agenda item at the quarterly AR Committee Meeting. b.2 ARC reviews and discusses the risk registers and then recommends these to the Board for approval.

Effective reporting of risks and risk management under the risk section of the quarterly DoRA Progress Reports. b.1 Quarterly review of risk registers by the ARC. b.2 Quarterly approval of risk registers by the ARC.

4. HUMAN RESOURCES MANAGEMENT:

4. PERFORMANCE MEASURES:

4. PLANNED PERFORMANCE – ANNUAL OUTPUTS:

a.1. To establish and manage an effective and professional Human Resource Unit in order to ensure efficient administration in terms of the GMA HR Implementation Strategy. a.2. To effectively manage and report on the total vacant posts filled for the annual financial year. b. To effectively administer the GMA HR and Remuneration Policy Manual as approved by the Board.

a.1. Appointment of the required number of HR officials with the appropriate levels of skill, knowledge and experience in order to establish an effective GMA HR Unit in terms of the approved GMA HR Implementation Strategy. a.2. Report on the number of post to be filled by March 2011 in accordance with the HR Implementation Strategy. b. Adherence by all staff members to the HR Policy and Procedure Manual approved by the GMA Board.

a.1. Assessment on a quarterly basis of the appointment of the required personnel for the Agency in terms of e.g.: occupancy rate. a.2. No deviations from the agreed timelines as per the approved HR Strategy in terms of the total number of vacant posts to be filled. b. No deviations from any of the requirements listed in the HR Policy Manual as approved by the GMA Board. Zero tolerance to disciplinary matters resulting from policy breaches.

Risks are appropriately identified, evaluated, reported and managed.

To effectively review, update, manage and obtain approval of the risk registers by the GMA Board.

Effective risk identification and evaluation – management and reporting of risk in terms of the risk assessment guideline for all known project and GMA risks as listed in the risk registers.

To monitor the HR policy and other relevant legislative mandates of the Project and to effectively and professionally manage all HR affairs of the GMA.

196

Annual Report 2011

PERFORMANCE OUTPUTS – ACTUAL RESULTS

1. ACTUAL OUTPUTS AGAINST PLANNED PERFORMANCE

Number of Board and Committee Meetings

Quarterly Targets Q1

Actual Outputs Q4

Total

Variances Q4

Total

Reason

a.1.

Board Meetings

N/A

a.1.

Audit and Risk Committee

N/A

a.1.

Finance Committee

N/A

a.1.

Human Resource Committee

N/A

a.2.

Independent Board Evaluation

N/A

ARC Report and Board Report

N/A

External Audit Opinion

N/A

d.1.

MEC Directives

N/A

d.2.

GMA: 2011 Annual Report

N/A

2. ACTUAL OUTPUTS AGAINST PLANNED PERFORMANCE

Compliance Management

Quarterly Targets Q1

a.1

Irregular, Fruitless and Wasteful Expenditure

Q2 -

Q3 -

Actual Outputs Q4

Total -

Q1 -

Q2 -

Q3 -

Variances Q4

Total

Reason -

N/A

a.2

Fraud and Corruption Register

N/A

a.3

Anti-Bribery Pact

N/A

3. ACTUAL OUTPUTS AGAINST PLANNED PERFORMANCE

Risk Management

Quarterly Targets Q1

Actual Outputs Q4

Total

Variances Q4

Total

Reason

DoRA Report – Risk Section

N/A

b.1

ARC Meeting Agenda Item

N/A

b.2

Approval of Risk Register

N/A

4. ACTUAL OUTPUTS AGAINST PLANNED PERFORMANCE Human Resource Management

Quarterly Targets Q1

Actual Outputs Q4

Total

Variances Q4

Total

Reason

a.1.

Assessment of appointments

N/A

a.2.

No. of Vacant Posts Filled

Refer Below

HR Policy Breaches Reported

N/A

The variance is due to a change during the year in the approved GMA Organisational Structure, which has resulted in a reallocation of vacant posts available for appointment, from the current year to the next financial year.

Annual Report 2011 GAUTrain management agency

197

ANNUAL PERFORMANCE REPORT For the year ended 31 March 2011

STRATEGIC OBJECTIVE

MEASURABLE OBJECTIVES

PERFORMANCE INDICATORS

PERFORMANCE TARGETS

F. 5. FINANCIAL MANAGEMENT

5. PERFORMANCE MEASURES:

5. PLANNED PERFORMANCE – ANNUAL OUTPUTS:

STRATEGIC OBJECTIVE: TO MANAGE, CO-ORDINATE AND OVERSEE THE GAUTRAIN

To monitor the compliance with the financial policy and procedures including the relevant legislative mandates of the Gautrain Project. To manage the finances of the Project and the financial securities provided by the Concessionaire.

Effective administration and management of Government and Private Sector funding for the 2010/11 and 2011/12 financial years. The total Provincial loan amount comprises of: -Rollover of remaining balance of the R4.2bill loan from the previous year amounting to R 474m. and -Additional funding required calculated as the difference between the TA III authorisation and the additional borrowing approved by the LCC (R 978m). Effective management of the total estimated expenditure for the 2010/11 and the 2011/12 financial year.

d.1. Effective safeguarding of assets ito the GMA Finance Policy. d.2. Effective management of assets ito the GMA Finance Policy. e. Compliance with the GMA SCM Policy. f.1. Financial risk management. f.2. Financial risk – auditing.

Financial reconciliations, cash flow projections, budgets, performance payments and Quarterly Progress Reports.

b.1. National DoRA - Conditional Grants. b.2. Provincial MTEF: Equitable Shares. b.3 Provincial LOANS: Borrowings. b.4 National Skills Fund: Contribution. NSF: not at accurate measure of performance due to lack of control over receipt of funds. b.5 Private Sector SPG: Equity. SPG: not an accurate measure of performance due to lack of control over receipt of funds. c.1. Total Estimate – Construction Commissioning Costs.

c.2. Total Estimate – GMA Operational Staff and Office Support Costs. d.1. Regular fixed asset counts and timely updates in the asset register. d.2. Fixed Asset reconciliation ito the Asset Management Policy. e. No deviations from the GMA SCM Policy and compliance with government tender prescripts. f.1. Updated risk matrix and report on mitigation. f.2. Unqualified External Audit Opinion as reported and signed off in the Report of the Auditor-General included in the GMA Annual Report.

b.5 R 5 952 000 SPG: Equity. c.1. - R 3 595 000 000 - Construction and Commissioning Costs p/a. c.2. - R 402 000 000 - GMA Operational Staff and Support Costs p/a. d.1. Annually. d.2. Quarterly. e. Annually. f.1. Annually. f.2. Annually.

6. GMA PARTNERING GOALS:

6. PERFORMANCE MEASURES:

6. PLANNED PERFORMANCE – ANNUAL OUTPUTS:

Partnering behavior and co-operation by the signatories of the Partnering Charter by ensuring timely resolutions of the various Project related issues/problems involving the day-to-day management of the Project.

Adherence by each party to the commitment declared in the signed Partnering Charter… (Paraphrased)…. “Commit to work together in a true spirit of co-operation, honesty, transparency and trust to successfully implement the Project”.

a.1 Co-operation is observed and evidenced in the minutes of the quorate Project Exco meetings held between the Gauteng Provincial Government, the Concessionaire, the Lenders and the Independents in accordance with the Partnering Initiative.

a.1 Attendance by the respective parties at the minimum number of weekly Project Exco meetings required to be held during the year. Note: Proper attendance at any other negotiation meetings (ad hoc) that are required to be held over and above the weekly Project Exco meetings. b. Project EXCO meetings to be held during the year. Other ad hoc ‘Negotiations’ meetings are also held at various times, depending on the nature of the matter.

NOTE: Qualitative assessment of progress in terms of partnering as encouraged in the CA by sharing knowledge and experience of the Gautrain Project. Timely submission and clearance of various other Project related matters arising from the minutes of the meetings and reported upon in the respective monthly reporting by the following parties: - Gauteng Provincial Government; - the Concessionaire; - the Lenders and - the Independent Certifiers and Monitors.

Adherence to agreed partnering initiatives: Project Exco meetings, including other partnering interventions. Negotiation meetings are also held hence ensuring that co-operation is maintained at all times. This common goal and commitment requires the parties to ensure (amongst others):

b.1 Identification of Project related problems at an early stage. b.2 Accurate communication and comprehensive reporting of those identified Project matters. b.3 Timely resolution of those Project related matters in the best interest of the Project.

b.1 Weekly. Identification: As evidenced in the meeting’s minutes. b.2 Weekly. Communication: As evidenced in the meeting’s minutes. b.3 Weekly. Resolution: As evidenced in the meeting’s minutes.

c. Timely submission of the respective monthly reports by: c.1 - The Bombela Progress Reports.

c.2 - The Provinces Progress Reports. c.3 - The Independent Certifiers Reports. c.4 - The Independent Socio-Economic Monitor Reports. c.5 - The Independent Environmental Control Person Reports.

198

Annual Report including Annual Financial Statement, and the monthly and quarterly Progress Reports. b.1. R 438 360 000 DoRA – Conditional Grants. b.2. R 2 090 000 000 MTEF: Equitable Shares. b.3 R 1 456 000 000 LOANS: Borrowings. b.4 R 4 972 000 NSF: Contribution.

Act on behalf of the Province in managing the relationship btw the GMA the Concessionaire.

Compliance with the financial terms and conditions per the PFMA,Treasury Regulations and the GMA Act.

Annual Report 2011

Timely submission of the relevant reports as follows: c.1 Monthly c.2 Monthly c.3 Monthly (IC – refer to 11 below) c.4 Monthly (ISEM – refer to 10 below) c.5 Monthly (IECP – Refer to 8 below)

PERFORMANCE OUTPUTS - ACTUAL RESULTS 5. ACTUAL OUTPUTS AGAINST PLANNED PERFORMANCE

Financial Management

Quarterly Targets Q1

DoRA Report – Finance Section

b.1.

Actual Outputs Q4

Total

Variances Q4

Total

Reason

N/A

DoRA – Conditional Grants

438

N/A

b.2.

MTEF: Equitable Shares

522

750

818

2 090

547

1 077

466

2 090

N/A

b.3

MTEF: Borrowings

256

1 200

1 456

256

968

1 224

232

Refer Below

b.4

NSF Contribution

c.1.

Construction Costs

c.2.

GMA Office Support Costs

d.1.

Fixed Asset – Counts

d.2.

Fixed Asset – Reconciliations

SCM Policy Deviations

f.1.

Risk Management Reporting

f.2.

External Audit Opinion

b.3

MTEF: Borrowings

For the 2010/11 FY, there was an increase in actual funding utilised in comparison with budgeted funds, due to the Concessionaire completing additional works and invoicing amounts more than what was initially projected. To provide for the extra funds required to settle additional expenditure, the LCC granted an extra R1bn of funding, which was subsequently appropriated in the budget. At year end, approximately R232m of this loan funding remained unutilised and was rolled over to the new financial year.

c.1.

Construction Costs

This is as a result of the delay in construction and certification of milestones. Also refer to point #11 below.

c.2.

GMA Office Support Costs

This is as a result of delayed appointment of the full staff complement. Refer to point #4 above.

1 256

1 114

865

725

3 960

874

966

593

889

3 322

638

Refer Below

N/A

101

114

417

344

Refer Below

N/A

6. ACTUAL OUTPUTS AGAINST PLANNED PERFORMANCE

Partnering Goal Management

Quarterly Targets Q1

a.1

Project Exco Meetings

b.1

Project Exco – Identification

Refer to a.1 above

b.2

Project Exco – Communication

b.3

Actual Outputs Q4

Total 8

Variances Q4

Total 8

Total

Reason 4

Refer Below

Refer to a.1 above

N/A

Refer to a.1 above

N/A

Project Exco – Resolution

Refer to a.1 above

N/A

c.1

Bombela Progress Report

N/A

c.2

Province Progress Report

N/A

c.3

IC Reports

N/A

c.4

ISEM Reports

N/A

c.5

IECP Reports

N/A

Project Exco Meetings

Four additional meetings were held during the year. These were negotiation meetings required as a result of reaching agreement on reaching OCD 1 in time for the 2010 FIFA Word Cup™ held during the second quarter of the financial year.

Annual Report 2011 GAUTrain management agency

199

ANNUAL PERFORMANCE REPORT For the year ended 31 March 2011

STRATEGIC OBJECTIVE: TO MANAGE, CO-ORDINATE AND OVERSEE THE GAUTRAIN

STRATEGIC OBJECTIVE

To enhance the integration of the Project with other public transport services/plans. To liaise & promote co-operation between structures in all three spheres of Government.

MEASURABLE OBJECTIVES

200

PERFORMANCE TARGETS

7. PERFORMANCE MEASURES:

7. PLANNED PERFORMANCE – ANNUAL OUTPUTS:

Integration of the Gautrain into the Public Transport System (including other transport related) development initiatives in Gauteng.

Established Gautrain Public Transport Integration Committee.

NOTE: This objective is only applicable for those integration initiatives that fall within the mandate of the GMA. (i.e.: initiatives that the GMA has the authority and capacity to enforce)

Meetings between by the GPTIC with consistent representation by NDOT, GDRT, GMA, COJ, COT EMM, PRASA.

Development of the Implementation Plan by the GPTIC.

NOTE: Review of effectiveness of Public Transport Integration with the Project in terms of the detailed findings and management action plans contained in the GPTI IA Report.

The Committee has been established during July 2009. Regular reporting of progress to date is documented in the Quarterly – Four DoRA Reports and Annually – One Annual Report. Six meetings per annum. Development of the GPTIP and submission for approval to Cabinet during the current year.

8. ENVIRONMENTAL MANAGEMENT:

8. PERFORMANCE MEASURES:

8. PLANNED PERFORMANCE - ANNUAL OUTPUTS:

Attainment of the overall environmental objectives as listed in the Concession Agreement relating to the ROD issued by GDACE and EMP.

To ensure the interest of the Province are protected. To monitor the policy and legislative mandates of the Project.

To manage assets relating to the Project and promote their preservation and maintenance.

PERFORMANCE INDICATORS

7. INTEGRATION MANAGEMENT:

b. c. d.

EMC meetings are held with consistent representatives from the relevant government authorities – GDACE, DWAF, relevant local authorities, Province, IC, SEC, BCC and IECP.

Twelve monthly meetings. (usually in the last week of the month)

Project Environmental Management Co-ordination and the b. Three quarterly meetings. GDARD meetings held. Reports by the Environmental Management Committee. c. Quarterly – four DoRA Reports and Annual Report. Reports by the Independent Environmental Control Person. d. Quarterly – four DoRA Reports and Annual Report.

9. LAND ACQUISITION AND MANAGEMENT:

9. PERFORMANCE MEASURES:

9. PLANNED PERFORMANCE – ANNUAL OUTPUTS:

Receipt of signed acceptance of offer letters from property owners whose properties are listed as outstanding properties – still to be transferred.

Reports on the protection and management of the Gautrain Rail Reserve.

To ensure land proclamation and expropriation in order to obtain full transfer of the properties from the property owners to the DRT. b. To obtain and ensure the maintenance and protection of the rights to the Gautrain Rail Reserve.

Annual Report 2011

Total number of properties transferred during the year = 60% the total outstanding properties expected to be transferred at the beginning of the year. Quarterly – Four DoRA Reports and Annually – One Annual Report.

PERFORMANCE OUTPUTS â&#x20AC;&#x201C; ACTUAL RESULTS 7. ACTUAL OUTPUTS AGAINST PLANNED PERFORMANCE

Integration Management

Quarterly Targets Q1

Variances

Actual Outputs

Total

Reason

DoRA Report

N/A

GPTIC Meetings

Refer Below

Approval of GPTIC Imp Plan

N/A

8. ACTUAL OUTPUTS AGAINST PLANNED PERFORMANCE

Environmental Management

Quarterly Targets Q1

Variances

Actual Outputs

Total

Reason

EMC Meetings

N/A

EM Co-ordination Meetings

N/A

c. + d.

DoRA Report

N/A

Total

9. ACTUAL OUTPUTS AGAINST PLANNED PERFORMANCE Land Management

Quarterly Targets Q1

Variances

Actual Outputs

Total

Reason

Total Properties Transferred

N/A

DoRA Report: Land Section

N/A

Annual Report 2011 GAUTrain management agency

201

ANNUAL PERFORMANCE REPORT For the year ended 31 March 2011

STRATEGIC OBJECTIVE

MEASURABLE OBJECTIVES

10. PLANNED PERFORMANCE – ANNUAL OUTPUTS:

STRATEGIC OBJECTIVE: TO MANAGE, CO-ORDINATE AND OVERSEE THE GAUTRAIN

Performance and compliance by the Concessionaire ito the 21 SED elements in 7 Clusters identified in the CA. Employment targets set for the Gautrain Project.

SED Requirements (Local Content):

c.1 c.2 d. e.

- RSA Plant and Material

Socio-Investment Program (SIP).

c.1 c.2 d. e.

f. f.1 f.2 f.3 f.4 f.5 g.

Broad Based Black Economic Empowerment:

- Number of local people to be employed SED Requirements (Job Creation).

- BE’s (Procurement from and Sub-Contracting to BE’s) - New BE’s (Procurement from and Sub-Contracting to) - SMME’s (Procurement from and Sub-Contracting with) - Number of jobs for Women (SED) - Number of jobs for people with disabilities (SED) SED Requirements:

g.1 - Human Resource Development g.2 - Number of women participating in training & mentorship g.3 - Number women learners employed and mentored

Achievement of the employment targets set specifically for HDIs . Achievement of the SED obligations ito the CA requirements: - RSA Plant and Material. - Number of local people to be employed. (Local Content) Number of jobs created. Application of SIP funds ito the budget for local employment. Ensuring that the specific SED requirements are met ito the: - BEs. - New BEs. - SMMEs. - Number of jobs for Women (SED). - Number of jobs for people with disabilities (SED).

f.1 f.2 f.3 f.4 f.5 g. Ensuring that the HR requirements are met in terms of the: g.1 - Human Resource Development Expenditure. g.2 - Women participating in training and mentorship programmes g.3 - Women learners employed and mentored.

Independent Socio-Economic Monitor - (ISEM) Progress Quarterly Reports. b. 820 direct jobs for HDI’s. c.

Ensuring that the following SED requirements are met: c.1 - R 173 000 000 for RSA Plant and Material c.2 - 1 080 number of local people to be employed d. 5 800 total jobs created or sustained. e. R 70 000 000 f. SED obligations: f.1 f.2 f.3 f.4 f.5

- R 205 000 000 for BE’s - R 188 000 000 for New BE’s - R 11 000 000 for SMME’s - 140 direct jobs for women (SED) - 19 direct jobs for people with disabilities (SED)

HR requirements are met in terms of the: g.1 - R 40 000 000 Human Resources Development g.2 - 51 Women participating in training and mentoring

h. GMA Human Resource Requirements: h.1 - Number of training courses HR staff trained (within the HR Unit). h.2 - Number of management level staff trained (within the GMA).

11. DEVELOPMENT PROGRAMME MANAGEMENT:

11. PERFORMANCE MEASURES:

11. PLANNED PERFORMANCE – ANNUAL OUTPUTS:

h.2 - Management level staff trained from the different units of the GMA

Independent monitoring and inspection of progress with OCD I and OCD II since commencement of construction in terms of the Concession Agreement.

To assist the Province in implementing and achieving the Projects objectives.

202

Performance, verification and compliance reports – Independent Socio-Economic Monitor Reports.

g.3 - 120 Women learners employed and mentored h. GMA Human Resource Requirements: h.1 - 1 training course within the HR Unit. h.2 - 12 management level staff trained within the GMA.

h. GMA Human Resource Requirements h.1 HR Unit iro Training and Skills Development

To ensure the interest of the Province are protected and to assist the Province implementing and achieving Gautrain objectives.

PERFORMANCE TARGETS

10. PERFORMANCE MEASURES:

To promote and maximize the Socio-Economic Development and BBBEE objectives of the Province in relation to the Project.

PERFORMANCE INDICATORS

10.SOCIO-ECONOMIC DEVELOPMENT:

Reporting on the progress in terms of the attainment and certification of Schedule 12 Milestones. Achievement of certified Schedule 12 Milestones and Variation Milestones for payment to the Concessionaire.

Twelve (12) monthly Independent Certifier (ARUP) Reports indicating the monthly Milestones certified for payment. b. Total number of Schedule 12 Milestones planned to the achieved and certified amounts to 230 Milestones for the 2010/11 financial year.

12. MANAGEMENT OF THE CONCESSION AGREEMENT:

12. PERFORMANCE MEASURES:

12. PLANNED PERFORMANCE – ANNUAL OUTPUTS:

Compliance with all of the Gautrain Management Agency’s strategic objectives as listed in the GMA Act Section 2 of Chapter 4 including the terms and conditions listed in the signed Concession Agreement relating to each individual objective. (Objectives 1 to 11).

Annual Report 2011

Conducting of the Performance Monitoring Committee meetings after OCD I in terms of the Concession Agreement.

Ten monthly Performance Monitoring Committee meetings from July 2010. Also refer to # 3 and # 6 above.

PERFORMANCE OUTPUTS – ACTUAL RESULTS 10. ACTUAL OUTPUTS AGAINST PLANNED PERFORMANCE Socio-Economic Development

Management Quarterly Targets

Actual Outputs

Variances

Total

Reasons

ISEM Progress Reports

N/A

Direct Jobs for HDIs

320

200

140

160

820

1622

1366

1208

4196

3 376

Refer Below

140

c.1

RSA Plant and Materials

118 000

44 000

6 000

5 000

173 000

259 000

141 957

133 176

534 133

361 133

Refer Below

6 000

c.2

Local Content (People)

390

240

210

1 080

1 884

1 547

1 404

4 835

3 755

Refer Below

240

Jobs created/ sustained

2 100

1 300

1 100

5 800

6 595

5 415

4 915

16 925

11 125

Refer Below

1 300

SIP Funds

N/A

f.1

BEs

123 000

47 000

18 000

17 000

205 000

323 000

283 000

178 000

784 000

579 000

Refer Below

18 000

f.2

New BEs

129 000

36 000

12 000

11 000

188 000

201 000

185 000

95 000

481 000

293 000

Refer Below

12 000

f.3

SMME's

3 000

4 000

2 000

11 000

55 000

83 000

39 000

177 000

166 000

Refer Below

2 000

f.4

No. of Women Part (Direct Jobs)

140

181

200

189

570

430

Refer Below

f.5

No. of People (Disabilities)

Refer Below

g.1

HR Development Costs

-11

Refer Below

g.2

No. of Women Participating

134

182

131

N/A

g.3

No. of Women Learner

120

347

256

220

823

703

N/A

h.1

No. of Training Courses

-1

Refer Below

h.2

No. of Mgnt Staff Trained

-8

Refer Below

The ISEM completed its verification up to the end of December 2010. The verified SED performance for the period October to December 2010 are reported in the 4th quarter results. The Concessionaire has made significant efforts to ensure the SED obligations are met and have on average significantly exceeded their obligations. The current quarters over-achievement can be ascribed to the change in construction programme. The Concessionaire must submit SED Reports within 45 days after the end of each month. The ISEM verifies the achievements claimed and submits reports about five weeks after the monthly SED Reports.

h2.

The variance resulted from the delay in the appointment of managers. Relates to point # 4a.2 above.

N/A

11. ACTUAL OUTPUTS AGAINST PLANNED PERFORMANCE Construction Management

Quarterly Targets Q1

IC (Arup) Report

No. Of Milestones

Actual Outputs

Total

Variances

Total

Reasons

N/A

230

152

Refer Below

The planned targets includes a total of 13 Milestones (Mth 54) carried forward into the current FY. The variance is dependent on the total number of actual Sch 12 Milestones as certified by the IC for payment. The Concessionaire reported an overall six month delay, notwithstanding the reported mitigation and acceleration measures implemented during the current quarter. 12. ACTUAL OUTPUTS AGAINST PLANNED PERFORMANCE CA Management

Quarterly Targets Q1

PMC Meetings

Q2 0

Q3 3

Actual Outputs

Q4 3

Total 4

Q2 0

Q3 3

Variances Q4

Total 4

Annual Report 2011 GAUTrain management agency

Total

Reasons -

203

N/A

Large rail transport projects typically take very long from conceptualisation to opening. This is true internationally, as well as locally. The Gautrain Provincial Project Team did some investigations to research comparative durations for the development of major projects, in order to benchmark the Gautrain Project to these international projects. It was found typically that the actual construction of large construction projects of the nature of the Gautrain are planned for construction over a 60 month period (as compared to Gautrain’s contractual 54-month period). Similar to the Gautrain, most of these projects – due to their complexities – often overrun this planned period due to unforeseen project events. With regard to the planning, approval and procurement processes, it was more difficult to find comparative information. Indications are that approval and procurement in countries such as China and Spain are typically much shorter than in countries where there are stronger legal requirements for environmental approvals and financial and funding approval, such as the UK. In the latter, it is often necessary to promulgate project-specific legislation in order for Parliament to approve the Project formally (as was historically done in South Africa as well). This is needed before land expropriation may continue. The Gauteng Transport Infrastructure Act assisted the Gauteng Government in winning some time in this regard on the Gautrain Project. Certain international projects, such as the Euro Tunnel between Europe and the UK, to be many decades from announcing the concept to opening. For this project, the total period from the first line on a drawing to development was 19 years, of which 10 were taken just to get the go-ahead for the Project. However, it is not possible to determine a reliable average or benchmark based on information readily available. Gautrain’s investigations, albeit not scientifically conducted, indicate that the average duration from the time that a government department or body decides to embark on a project, until it has obtained the approvals, funding, and has done the procurement and actual construction, up to opening is approximately 14 years. Taking cognizance that the Gautrain had to break ground as the first of its kind in South Africa, and had many obstacles to overcome, it is clear that the Gautrain achievement has been very fortunate and impressive.

204

Annual Report 2011

Annual Report 2011 GAUTrain management agency

205

A| GENERAL

Management of the Concession Agreement Monitoring Objective The contractual matters team’s specific monitoring objective is to ensure that the provisions of the Concession Agreement are satisfactorily performed by each Party. Province’s Representative directed that the contractual matters team adopt a “zero tolerance” stance and that all significant non-conformances or proposed indulgences be drawn to his attention as and when these may occur during the Development Period. This applies to Province’s Support Team in the case of the latter and to the Concessionaire in the case of the former. It should be stressed that a “zero tolerance” stance does not imply absolute inflexibility; it merely serves to identify each and every non-conformance in order that it be resolved either by applying sound judgement and good industry practice, or by escalating the matter for resolution in terms of the Dispute Resolution Procedure in the Agreement. In either event, Province’s Representative is informed (usually with a recommendation) and he will decide on the course of action to be adopted.

206

Annual Report 2011

Performance Indicators There are a number of key performance indicators which the contractual matters team uses to ensure that it is appropriately and adequately monitoring the performance by the Parties of the Concession Agreement. These are: • Attendance and/or review of minutes of each of the functional area meetings held between the Parties. • Weekly review with all of Province’s Support Team managers (Concession Development Manager’s meeting). • Review all incoming correspondence of a contractual nature. • Review of Province’s Quality System. • Monthly Contractual Matters meeting with Province’s Construction Assurance team. • Monthly Variations progress meeting to track progress of all Variations to the Project. • Weekly meetings with Province’s legal team. • Attendance of Province’s Representative’s weekly Exco meeting. • Attendance of the weekly Project Exco meeting held between the Parties. • To wrap up the above; regular review of the contractual matters register (including Disputes register) with the Province’s Risk Manager.

Time Frames The time frame for performing each of the above key performance indicators is indicated above. It should be stressed that the above time frames are indicative only and that the intensity of review is dependent on and responsive to changing priorities and developments on the Project.

A Annual Report 2011 GAUTrain management agency

207

Overview of the 2010/11 Year Activities Contractual issues that have significantly occupied the PST’s management time during the year under review: • A number of issues that arose leading up to the achievement of the Operating Commencement Date for Phase 1 in time for the 2010 FIFA World Cup™; • Discussions aimed at resolving a number of Operating Period insurances that had not been placed; • A number of issues that arose in regard to the Performance Monitoring System; • Resolving the payment of the incentive regime for achievement of OCD 1 in time for the 2010 FIFA World Cup™; • Resolving issues in regard to the schedule of Retention Items and Snag List Works for Phase 1 of the System; • RoD arbitration proceedings; • Expert’s conference on the Water Ingress in the tunnels; • Change from CPIX to CPI; • Discussions aimed at clarifying the basis of the Concessionaire’s Delay and Disruption Claim; • A number of Operating Period issues (some of which have subsequently become disputes) e.g. o Advertising rights on bus shelters; o Performance Monitoring System issues: n Definitions of ‘Availability’ and ‘Punctuality’; n Passenger Satisfaction Surveys; n Station and Track condition surveys; o Multi Fare zone system for the buses; o Capacity of the system to issue and top-up tickets; o Bus routes, number of buses, etc.; o Fare Evasion and o Management Information System. • Significant amount of work in regard to the Disputes (reported below); • Discussions with the Concessionaire on measures to mitigate delays to OCD 2; • Level and policy in respect of Fares; • Water Ingress into tunnels; • Concerns over the deteriorating standard of quality of the civil works; • The Concessionaire’s management of and reporting on the Development Programme and Project Management Plan; • Increasing number of applications for encroachments on/over/under the Railway Line in terms of the Act; nearly all of which require individual attention and involve new processes in terms of servitude registrations, way-leaves from third parties and from the Concessionaire, etc and • Review of Insurances for the Project.

208

Annual Report 2011

Contractual issues As at 31 March 2011, Province has registered 15 matters which are in contention between the Parties. Of these issues, nine are the subject of a Dispute – and of these nine; four have been referred to arbitration and one has been referred to the Dispute resolution Board. The Disputes: • RoD (Province) – arbitration award on 19 January 2011; • GTIA (Province) – referred to arbitration; • Sandton Cavern (Province) – referred to arbitration; • Land Discrepancies (Province) – referred to arbitration; • Delay and Disruption (Concessionaire) – with CEOs; • Bus Satellite Land (Concessionaire) – being amicably resolved (CEOs); • Progress Exception Reports (Province) – with CEOs; • Non-compliances with Specification (Province) – with CEOs and • Water Ingress in tunnels – referred to the Dispute Resolution Board.

Project events • T he Concessionaire submitted its ‘Delay and Disruption Submission’ in three tranches between July and August 2009. This is purported to contain a number of Project Events. The Concessionaire has Notified Province that this is a Dispute between the Parties. • T he Variations that are being implemented by the Concessionaire (defined as a Project Event) to date are as follows: o Province’s Variations Implemented – refer to Annexure C2.1 o Concessionaire’s Variations Implemented – refer to Annexure C2.1. •

The Concessionaire informed Province that tests conducted on the Site in the vicinity of viaduct 13 (EastWest airport link, north of Modderfontein Road, on the Heartlands Property), indicate the presence of possible Unknown Pre-Existing Contamination (‘UPEC’). Province still needs to be convinced that this is UPEC and has in a number of letters advised the Concessionaire accordingly. The cost associated with UPEC is a Project Event.

• T he Concessionaire has formally notified in the Province letter dated 8 July 2009 (received by Province on 10 July 2009) of a Project Event that occurred during July 2009 (national strikes that adversely affect the Concessionaire are Project Events). The Concessionaire has not yet provided the information, required in terms of Schedule 9 that is needed to assess the impact of this event. • T he Concessionaire has reported an event where Physical Damage occurred on 16 July 2009 (see letter BOMGPG-LET-03556, dated 18 August 2009) due to a pipe burst in the vicinity of the Burnett Street bridge. • T he Concessionaire has notified Province that there were two occurrences of a delay in the relocation of Utilities, namely one for a Sasol gas pipeline and the other for services on the West Street bridge (CoJ). The former has not yet been motivated in terms of clause 13.3.1 and the latter cannot be a delay in the relocation of Utilities, because it is not a delay by a Utility Owner as defined in clause 13.3.1. • T he Concessionaire has notified Province of a ‘third party breach’ by ACSA at the OR Tambo International Airport (ORTIA) station. The Concessionaire has not to date substantiated its contention in this regard. The Concessionaire subsequently informed Province (informally) that this dispute between ACSA and the Concessionaire had been resolved. • T he Concessionaire has made a number of vague allegations of delays caused by the discovery of Unknown Utilities (SW92) at Technopark (2 April 2009). • T he Concessionaire has made an allegation on 1 October 2009 that an event of Unknown Pre-existing Contamination occurred on the temporary site of the Mushroom Farm Park dam. • The Concessionaire has made an allegation in its monthly report that the City of Tshwane Municipality had “retracted” its approval of the temporary steel bridge structure for the City of Tshwane Water service (W19) in the military area near viaduct 6. Province is not sure how this can be categorised as a Project Event in terms of the Agreement and the Concessionaire has not yet clarified this. Province is not aware of any other Project Events or potential Project Events that have not been listed above or in Annexure C2 attached hereto. Annual Report 2011 GAUTrain management agency

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Unknown Utilities Although the Concessionaire has reported a total number of 366 at the end of April 2011 Province was officially notified of 353 Unknown Utilities, of which 248 (89%) have been relocated or protected. Although all of these Unknown Utilities have been brought to Province’s attention the Concessionaire has yet to make further formal submissions in terms of further requirements of Clause 13.4 of the Concession Agreement. Province believes that less than one third of the reported Unknown Utilities may qualify as such. The value of the Unknown Utilities relocated to date amounts to R102,97 million as reported by the Concessionaire, however Province has only approved one (ACSA) and paid R740 905.93 excluding the 15% mark-up and VAT. None of the notified Unknown Utilities have to date been accepted as constituting a Project Event – although the Concessionaire has in correspondence suggested a number as being ‘Project Events due to delays in its relocation/protection’. Many of these Utilities have not yet been proven to be Unknown Utilities nor have these matters been followed up by the Concessionaire in terms of Schedule 9. There have been 78 formal Notifications of Unknown Utilities to-date.

Events likely to cause a delay Province has received 148 Notices of ‘events likely to cause a delay’ to-date.

Notices issued to the concessionaire Province has issued 22 Notices to the Concessionaire during the year under review. Besides the normal notices in respect of Province’s Variation Notices, most of the remainder of the notices refer to serious objections by Province to the Concessionaire’s performance of its obligations under the Agreement.

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Correspondence During the year, 913 letters were received from the Concessionaire, most of which were contractual and/or commercial in nature. Province issued 483 letters during the same period, the majority of which were responses to letters received from the Concessionaire.

Reports The Concessionaire submits regular monthly reports to Province in accordance with its obligations under the Concession Agreement: • Executive Project Risk Management Report; • Monthly Project Progress Report; • Monthly Programme Progress; • Socio-Economic Development Performance Report; • Communications Report; • Utilities Report; • Concessionaire’s Monthly Operations Summary Report; • Monthly Security Report; • Monthly Assets Report; • Monthly Draft Fare Evasion Report; • Monthly Customer Comments Report; • Monthly Maintenance Inspection Report; • Monthly Revenue and Patronage Report; • Monthly Usage of the Dedicated Feeder and Distribution Services by non-rail users report; • Monthly Origin and Destination Matrix and • Monthly Performance Measures and Performance Monitoring System Report. The contents of each of the regular reports are reported upon separately, by each of the responsible managers within the PST. Since July 2010 the Concessionaire has commenced submitting reports dealing with the operations and maintenance matters as required for the Operating Period. There are still a number of deficiencies and shortcomings in these reports, which are discussed at a number of different meetings and committees dealing with operational matters.

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Meetings The following Project meetings were held between the Parties during the year mainly on a monthly basis (unless otherwise noted): • Progress; • Design; • Land; • Utilities; • Construction; • M&E Integration; • Risk Management; • Development Programme; • Communications; • Quality; • Health and Safety; • Milestones Planning and Preparation; • Environmental; • GDARD; • Project Environmental Coordination; • EMC; • Variations; • Independent Certifier; • Independent Socio-Economic Monitor; • Dispute Resolution Board; • RAMS; • System Acceptance Panel Meeting and • Trial Run Panel Meeting. The Project meetings referred to above do not include the regular liaison meetings the Parties hold with a number of third parties – and with affected communities. It also does not include all the ad hoc meetings between the Parties aimed at clarifying specific issues. This list of meetings also does not include the meetings dealing with operational matters as required for the Operating Period, such as the Performance Committee, the Rail Service Capacity Committee and the Bus Service Planning Committee. The meetings are reported on separately by the managers responsible for each of the above functions.

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Areas of concern during the year A number of areas of concern in regard to the overall management of the Concession Agreement exist: • The non-achievement by the Concessionaire of the Operating Commencement Date for Phase 2 of the System (OCD 2) by 27 March 2011 – and continuing delay hereof until the second half of the calendar year at least. • The lack of any credible reliance that can be placed on the Concessionaire’s monthly update reports against the Development Programme and Project Management Plan – particularly in respect of OCD 2 where the date has recently been forecast as December 2011, despite verbal indications that the date may be as early as 27 June 2011. • A number of disputes/issues raised by the Concessionaire in regard to the Concession Specification for the Operating Period – based on the Concessionaire’s understanding, apparently, of the guidelines contained in the RoD award.

Highlights On a positive note, the following continue to be some of the highlights of the overall management of the Concession Agreement during the past year: • Successful achievement of OCD 1 in time for the 2010 FIFA World Cup™. • The weekly Project Exco meetings held between the Parties aimed at agreeing practical measures to unblock constraints and bottlenecks that exist on the Project.

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GMA Partnering Goals Quantitative Report on the Risk Management Monitoring Objective Due to the nature of the partnering effort, and the demise of the formal partnering initiative, there are no specific and quantitative measures to report for this year. The outcome of “informal” partnering initiatives however comprised: • Weekly Project Exco Meetings which proved to be instrumental in the resolution of many Project problems. • The conclusion of an agreement that enabled the achievement of Phase 1 of the Project by 8 June 2010, in time for the 2010 FIFA World Cup™ and the subsequent achievement of this objective. • An increasing number of instances where the Parties agreed to resolve problems (sharing costs in the interim) whilst contractual disagreements are dealt with through the Dispute Resolution Process. • Informal reports of varying degrees of good co-operation between some project teams in the greater Project organisation.

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Qualitative Report on the Value Added in Terms of the Monitoring Objective The Concession Agreement encourages Province and the Concessionaire to execute the Project in a spirit of partnering. To this end, the parties have signed a partnering charter which commits the Parties to commit to work together in a true spirit of co-operation, honesty, transparency and trust to successfully implement the project. It requires, amongst others, the Parties to identify project-related problems at an early stage and to resolve these problems quickly in the best interest of the Project. It also confirms the Partiesâ&#x20AC;&#x2122; common goal to complete Phase 1 of the Project by the 2010 FIFA World Cupâ&#x201E;˘ and Phase 2 by March 2011. The Partnering Initiative did not evolve in the manner intended by the signatories of the Partnering Charter. The Parties have abolished all formal partnering interventions (such as workshops and task teams) that were introduced in the first year of the Project because it was felt that these interventions were not achieving the ongoing results sought by the Parties who committed to the Programme. Failure to resolve contractual issues have been a likely contributor to demise of the formal partnering spirit at management level and this cascaded down and had an effect on the cooperation achieved at lower levels of management. The Parties nevertheless continued to co-operate in the best interest of the Project (and nevertheless achieved some results sought through the initial partnering initiative) by agreeing to keep Project and contractual issues apart during the dayto-day management of the Project. The main vehicle for this was the Project Exco meetings that were held on a weekly basis which were aimed at, and indeed achieved, the resolution of various Project related issues. The Project Exco continues to be a cornerstone of the management of the Project. Partnering activities were ultimately contained to individual working relationships which produced the benefits expected from partnering in varying degrees of success throughout the greater project team.

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Ethics, Fraud and Corruption Introduction The GMA is committed to a policy of fair dealing and integrity in the conduct of its business.

Code of Conduct and Ethics The Board has adopted a Code of Conduct and Ethics which commits GMA and staff to the highest standard of ethical conduct in dealing with stakeholders including customers, sub-contractors, service providers, consultants, etc. The Code of Conduct and Ethics is founded on the principles of integrity, good faith, impartiality, openness and accountability. The GMA’s Code of Ethics and Conduct address the following matters: • • • • •

Conflict of interest. Employment equity. Political support. Environmental responsibility. Stakeholder relations.

In the new financial year, the Code of Conduct and Ethics will form an integral part of the induction Programme and all new Board Members and staff members will be required to sign the code so as to acknowledge that they agree to subscribe to the code. Non-compliance with the code will treated in accordance with the disciplinary procedures of the GMA.

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Fraud and Corruption The GMA recognises the importance of protecting the agency, its employees, its revenue, expenditure and assets, and the public funds which it has been entrusted, from any attempt by any person to gain financially or benefit in an unlawful, dishonest or unethical manner. The GMA Board has adopted a Fraud and Corruption Prevention Policy. The objectives of the policy are to: •

• • •

Ensure that the GMA Board and management are aware of their responsibilities for identifying exposures to fraudulent and/or corrupt activities and for establishing control and procedures for detecting and preventing such fraudulent and/or corrupt activities when they occur. Provide guidance to employees as to which action should be adopted when they suspect any fraudulent and/or corrupt activities. Provide a clear statement to employees forbidding any fraudulent and/or corrupt activities including fraud for the GMA. Provide assurances that any and all suspected fraudulent and/or corrupt activities shall be fully investigated and acted upon.

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Communication and Marketing The Communication and Marketing Department’s mission for the period under review was to position Gautrain as a total integrated public transport service that is safe and secure, predictable, reliable and comfortable – for people on the move. Performance measurement of the Department was done accordingly.

Operational Objectives To achieve the above monitoring objective, the following communication and marketing objectives were focus: • To increase awareness and acceptance about Gautrain’s contribution to the economic, social and political stability of the South African macro environment amongst relevant stakeholder groups. • To promote Gautrain’s ridership. • To increase awareness about Gautrain’s commitment to world-class delivery amongst relevant stakeholder groups.

Public Perception Research results below shows perceptions about Gautrain as per February 2011: • Knowledge and experience about Gautrain. • Gautrain’s vision and leadership.

Knowledge and experience about Gautrain General Public

n = 525

Only Know About

345

66%

Used Gautrain

165

31%

Don’t Know Anything

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Percentages between 80.7% and 64.4% were received for Gautrain’s vision and leadership. Highest were: – Ability to compete on an international level. – Inspiration and vision for Gautrain. – Strengths of Gautrain’s leadership.

• Positive feelings about Gautrain The likeliness of respondents to use Gautrain received a very high percentage of 80.4%.

COMPLETELY DISAGREE 0,10 SOMEWHAT DISAGREE 20, 30, 40 INDIFFERENT 50, 60 SOMEWHAT AGREE 70, 80 COMPLETELY AGREE 90, 100

100

0 ABILITY TO COMPETE ON AN INTERNATIONAL LEVEL

INSPIRATION AND VISION FOR GAUTRAIN

STRENGTH OF GAUTRAIN'S LEADERSHIP

MANAGEMENT ABILITY TO LEAD GAUTRAIN INTO THE FUTURE

OPENNESS AND HONESTY

VISIBILITY OF PROJECT LEADERS

ACCESSIBILITY OF MANAGEMENT

The likeliness of respondents to use Gautrain

CONFIDENCE RATING OF 79.2

RESPECT

RATING OF 80.5

LIKELY TO SUPPORT GAUTRAIN RATING OF 80.4

TRUST

RATING OF 77.7

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• •

Positive brand perception overall. Gautrain’s overall brand perception includes that it: – Is recognisable and distinctive. – Represents technological progressiveness. – Is respectable. – Evokes positive feelings. – Has a relevant slogan.

•

Development and improvement of public transport.

Gautrain is seen as improving and transforming public transport.

Positive brand perception overall

RECOGNISABLE & DISTINCTIVE RATING OF 87.2 ON “BRAND PERCEPTION”

REPRESENTS TECHNOLOGICAL PROGRESSIVENESS

RESPECTABLE THE GAUTRAIN BRAND IS RATED HIGHLY OVERALL

RATING OF 83.1 ON “BRAND PERCEPTION”

RATING OF 80.3 ON “BRAND PERCEPTION”

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RELEVANT SLOGAN RATING OF 82.4 ON “BRAND PERCEPTION”

EVOKES POSITIVE FEELINGS

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RATING OF 82.0 ON “BRAND PERCEPTION”

Development and Improvement of Public Transport

THE GAUTRAIN IS IMPROVING AND TRANSFORMING PUBLIC TRANSPORT RATING OF 77.5 ON “CORE BUSINESS FOCUS”

IMPROVEMENT OF ACCESSIBILITY & MOBILITY IN THE JOHANNESBURG & PRETORIA CORRIDOR RATING OF 79.6 ON “CORE BUSINESS FOCUS”

HOW?

STRENGTHENING EXISTING DEVELOPMENT NODES IN GAUTENG RATING OF 78.3 ON “CORE BUSINESS FOCUS”

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Website Review From 1 April 2010 to 31 March 2011, review of websites shows: • Corporate website: 871 599. • Kids’ Station: 16 280. • MyTrain Youth website: 11 290.

Review on Social Media Activities From 1 April 2010 to 31 March 2011, review of social media shows: •

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Overall annual social media analysis. – In terms of credibility, Gautrain is mostly respected. – In terms of reputation, Gautrain scores stayed stable at around 360 mentions per week. Just after the announcement of Gautrain fares, mentions soured to almost 2 000 in that week.

• Facebook post views: 1 562 103. • Twitter: Based on www.klout.com Gautrain creates content that drives discussion. Based on this a Klout Score of 56 was given. The Klout Score is the measurement of overall online influence. The score ranges from 1 – 100 with higher scores representing a wider and stronger sphere of influence. • FourSquare. In March 2011,Gautrain joined FourSquare - A geolocation social community which integrates into Twitter and Facebook. A “Brand” Page for Gautrain has been created (http://www.foursquare.com/thegautrain). All our stations have been claimed providing us full ownership and extra features on which to communicate with Four Square users and our commuters. Conversation in March around Gautrain amounted to: 2 612 mentions online and 3 669 055 individuals were exposed to Gautrain due to this conversation.

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Gautrain earned an advert value equivalent of R845 127 in March due to the conversation. - The Influence Matrix showed stated â&#x20AC;&#x153;You may not be a celebrity, but in your area of expertise your opinion is second to none. Your content is likely focused around a specific topic or industry with a focused, highlyengaged audience.â&#x20AC;?

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Events From 1 April 2010 to 31 March 2011, 109 events were held: • Gautrain supported the Twitter Blanket Drive in which Twitter followers collected blankets for the needy. Blanket collection points were established around the country on 29 May. Gautrain attended the Sandton collection event. • In celebration of Gautrain’s commenced operations, dignitaries and guests attended a gala event on 5 June at Gallagher Estate. This included an inaugural Gautrain ride and the cutting of ribbons at Sandton, Marlboro, Rhodesfield and OR Tambo International Airport stations. • On 25 August a function was held at the Gautrain Radisson Blue Hotel in Sandton. This function was held to celebrate the commencement of operations with staff. • Charity organisations Reach for a Dream and Helpende Hand brought children to Gautrain to make their wish come true – their first ride on Gautrain on 8 October. At the same time we held a party for the children with ice cream, face painters, a jumping castle and other goodies. • Around 30 journalists and three social media users were taken on a site visit to see the construction progress in Centurion, Hatfield and Pretoria on 21 October. Positive media coverage was received after the event. • Gautrain buses were made available for free by Bombela on Car Free Day on 20 October. Highlights of the day were communicated on Facebook and Twitter. • Members of the Public Relations Institute of Southern Africa were hosted by the PST communication team on 27 October. After going for a ride on the train, they listened to presentations on the communication and marketing of Gautrain. • An intimate lunch with selected Twitter followers and bloggers with an interest in spatial development were invited for a tweetup with @TheGautrain at the Gautrain Raddison Blue Hotel on 22 November. • The last rail car was delivered to Gautrain’s depot in Midrand on 7 December 2010 and was welcomed by a host of guest’s to celebrate its arrival. • Eighteen site visits were hosted by Gautrain.

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Review of Media Relations The relationship that Gautrain’s Communication and Marketing Department has with the media, both broadcast and print, is professional and recommendable. This collaboration with varied media results in immeasurable public education and buy-in about and for Gautrain. Frequency: 5 614 media reports • Communication value in rands: R374 820 059.94. • Media value: Most reports were positive (42%) and followed with balanced reports (30%). The least was very negative reports (3%).

Review of media relations VERY POSITIVE 3%

POSITIVE 12%

BALANCED

13%

NEGATIVE VERY NEGATIVE

30%

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42%

Brand Management Apart from normal project brand management that is ongoing, a strategic focus on brand management has taken place since January 2011. The communication mandate, mission statement and all objectives reflected strategic brand management.

Gautrainâ&#x20AC;&#x2122;s strategic focus

1. BRAND & REPUTATION MANAGEMENT & GOVERANCE

2. FREEDOM FOR PEOPLE ON THE MOVE

4. INSTILLING PRIDE IN GAUTRAIN

3. STRONG, SUSTAINABLE RELATIONSHIPS

Visual Documentation of the Project Development Still photos and video footage are taken on a monthly basis of all sites and other developments and events. It is archived and uploaded to the image gallery with relevant captions. The image gallery holds 20 567 images. The Gautrain history video is nearing completion.

Historic Documentation of the Gautrain Project The Gautrain history book is nearing completion and is to be published in latter part of 2011.

Gautrain Integrated Public Transport Map The development for an online map showing integration of other public transport options available was completed. This tool routes people from one point to the next with the use of different public transport options such a Rea Vaya, Metrorail and Metro buses.

Advertisements Advertisements were published and placed in the media about the project in general, availability of posts and event specific announcements. Thirty-eight advertisements (both station and print advertisements) were placed during the period under review.

Performance Indicator Monthly and quarterly project reports were produced and submitted to the Department of Transport and Roads.

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Human Resources Management Performance Indicator: Human Resource Management

Problem Statement 1. HR-Policy

Strategic Actions

The recruitment and selection criteria and process should be refined in cooperation with newly appointed senior managers 3. Performance Management The GMAâ&#x20AC;&#x2122;s performance management system should be finalised and implemented

4. Organisational development The organisational structure should be adjusted as required 5. Transformation and equity The GMA should develop a customised Employment Equity and Transformation Programme.

6. Skills Development Systems Maintenance

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Status Report/ Targets Date

Develop and establish Human Resource policies for the GMA.

HR-Policy document adopted by the HR-Committee and Board.

HR Policies have been developed and approved by the Board and an ongoing review is taking place.

Develop and establish a GMA customised recruitment strategy and program to fill all approved vacant posts with competent, well qualified staff.

GMA customised recruitment strategy and programme for 2011 and 2012 approved and implemented.

14 posts filled by April 2011.

Develop and establish a GMA customised Personnel Performance Management System ensuring all employees are aware how they contribute towards achieving individual and organisational performance targets, how personnel performance is monitored and evaluated and exceptional performance rewarded.

GMA customised Personnel Performance Management System approved and implemented.

Performance Management System and Performance tool developed, to be approved by the CEO and implemented beginning of April 2011.

Develop capacity to adjust the organisational and post establishment of the GMA to ensure continuous structural support of the GMAâ&#x20AC;&#x2122;s business strategy.

The HR Division must acquire competency to adjust the post establishment organisational structure as and when required.

Organisational structure reviewed to cater for Unit deliverables in March 2011.

Develop and establish a GMA customised Employment Equity and Transformation Programme that will set Employment Equity targets and contains a clear strategy for the employment of disabled persons and that facilitates access of all people of South Africa irrespective of race, gender and creed, to the Agency, based on their suitability for employment.

GMA customised Employment Equity and Transformation Program developed, approved and implemented.

Employment Equity and Transformation Policy and Plan draft has been developed.

Develop a system to track skills and development training programmes in the organisation.

Implemented training programmes as per GMA requirements.

Develop and implement priority skills programmes to respond to Government scarce skills.

Implement programmes on GMA future scarce skills.

The GMA is a new organisation and requires HR policies that will guide the GMA in its HR services 2. Recruitment, Selection and Placement

Deliverables

Recruitment Strategy has been developed and used as a working document to finalise the recruitment process as required by the GMAâ&#x20AC;&#x2122;s Senior Managers.

To be finalised end May 2011 to enable lodging of a report with the Minister of Labour in June 2011.

Skills Development Policy developed July 2011. Learnerships and Internship Programmes developed June 2011.

Progress on Recruitment The GMA intends filling all approved posts over a three year period as illustrated below: • 18 posts to be filled by 1 December 2010 – March 2011. • 11 posts filled during the period July – December 2011. • 3 posts filled (January – March 2012). Filling of additional 14 posts by March 2012 and the pending 13 posts in the GMA Organogram of 58 staff complement will be informed by the Operational Phase deliverables, and determined by the Heads of the GMA Units. The current total number of employees in the GMA Organisational Structure is 31. Planned Performance and Actual Output Financial Year 2010/11 Quarter

Quarterly Targets

Actual Output

Variance

Quarter 1

None

Quarter 2

2 posts filled

Quarter 3

14 posts filled

9 posts filled

Quarter 4

11 posts filled

3 posts filled

27 Posts

14 Posts

13 Posts

Total

The variance has resulted from a review of the GMA Organisational Structure during the Financial Year 2010/11. Existing posts were amended and new posts were created to cater for the GMA operational requirements and the need to capacitate the Units with suitable expertise in order to facilitate achievement of the GMA’s strategic objectives.

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Mitigations The Recruitment Plan with set time frames has been developed to capacitate the Agency. Mitigations Recruitment Activity

230

Responsibility

Development of job descriptions

Unit Head

Obtain CEO and CFO approval for advertising

HR Unit

Time frame February 2011 March 2011

Placing of Adverts in Print Media

HR Unit/Finance Unit (SCM)

21 April 2011

Receiving and Capturing of Applications

HR Unit

20 May 2011

Initial Screening

HR Unit

23 - 24 May 2011

Shortlisting

Unit Head and HR Unit as the Observer

25 - 27 May 2011

Interviews

Panel members as appointed by the CEO

30 - 31 May 2011

Reference Checking

Unit Head and HR Unit as the Observer

2 and 3 June 2011

Referral Competence Based Assessment

Panel members as appointed by the CEO

Recommendations and Approval

Unit head in conjunction with HR Unit

6 June 2011

Communicate Offer of Appointment

HR Unit

10 June 2011

1 - 3 June 2011

Acceptance of an Offer

HR Unit/Candidate

21 June 2011

Anticipated Notice Period

HR Unit/Candidate

1 - 31 July 2011

Date of Appointment

CEO/HR Unit

Communication to Unsuccessful Candidate

HR Unit

Annual Report 2011

1 August 2011 August 2011

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B| DEVELOPMENT

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Risk Management Quantitative Report on the Risk Management Monitoring Objective During the reporting period the activities comprised: • Eleven (monthly with December 2010 and January 2011 combined) updates of Province’s Project Risk Register. • Twelve monthly Province risk reports as inputs to Province Progress Report for the Project). • Four quarterly risk management coordination meetings (held on 19 May 2010, 18 August 2010, 17 November 2010 and 16 February 2011) with the Concessionaire’s risk management representatives. • Various risk mitigation activities based on courses of action identified, and decided upon, at the Concession Development, Province Support Team and Operations Management meetings, as reflected in the minutes of these meetings, as well as regular follow-ups by the Risk Manager, per telephone and email with regards to progress with mitigation actions. The overall Project risk picture, as reported in the Executive Project Risk Management Report, evolved as follows over the period 1 April 2010 to 31 March 2011: • The total number of risks reduced from 582 to 406 largely as a result of the progress towards completion of the Civil and E&M works. • The total current score of risks reduced from 3 920 to 2 770 as a result of mitigation actions and also due to the reduction of the number of open risks noted above. • The total remaining score of all risks, which gives an indication of the extent of risk on the Project remaining after all available mitigation actions have been implemented reduced from 2 025 to 1 266.

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Qualitative Report on the Value Added in Terms of the Monitoring Objective Scope This report provides an overview of the status of the overall risk management of the Project for the year ending March 2011 compared to the situation as at the end of the previous year (end March 2010). Risk Management is the joint responsibility of Province and the Concessionaire. The report briefly summarises the risk management activities on the Project, and then provides an update of the most significant project risks, as well as the broad mitigation thereof. The scope of risks identified is largely limited to Project development and operations related risks. As a result, it should be noted that internal risks of the GMA, could be under represented in the register. The Reliability, Accessibility, Maintainability and Safety (RAMS) system also comprises a subsystem of hazard and risk identification which is not covered by this report.

Summary of risk management activities Risks are continuously identified, evaluated, mitigated, monitored, reviewed by both Province’s Representative Support Team (“PST”) and the Concessionaire and reported on a “bottom-up” basis through each organisation. As each risk is identified it is allocated to a person in the respective organisation who is responsible for the dayto-day management thereof – and it is recorded in a risk register which contains the descriptions, assessments and mitigating actions of all risks identified. The Parties have agreed to focus on the effective management of Project Risks and to keep contractual matters associated with risks aside, for discussion at other meetings. In the event that there may be a disagreement on the ownership of a particular risk, such disagreement is simply marked with an asterisk (*), whilst the most appropriate entity, or the entity first identified as the risk owner, is identified as the risk owner in the interim. It remains however a concern that the Parties do not seem to be successful at resolving contractual disagreements. Some progress has however been made towards resolution of these matters through the dispute resolution process. The Executive Risk Management Report of March 2011 prepared by Bombela includes all Project risks on the Project identified by the Concessionaire and Province.

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Assessment of project risk All project risks identified are assessed in terms of probability and impact using the guideline provided in the table below: Assessment of Project Risk Risk Assessment Guide SCORE

Probability

Impact on Quality

Impact on Schedule

Impact on Total Project Cost

Occurs rarely

Insignificant (No effect on System Performance)

Insignificant < 2 weeks

Insignificant <0.1%

Improbable/low

Low (Limited effect on System Performance)

Low 2 weeks to 1 month

Low 0.1% - 0.5%

Medium

Medium (System will not function optimally)

Medium 1 - 3 months

Medium 0.5% to 1%

Real chance

High (Performance of System severely impacted upon)

High 3 - 6 months

High 1% to 2%

Almost certain

Very High (System cannot function)

Very high > 6 months

Very High >2%

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Overview of the most Significant Project Risks at the Year Ending March 2011 The analysis of the risk statistics up to the end of March 2011 reveal that the number of “open” risks has declined from 582 at the end of the previous year (March 2010 report) to 406 at the end of March 2011. The decrease is as a result of the completion of civil and E&M work with the effect that the total number of open risks will now decline at a steep pace. The number of Civil and E&M related risks is expected to be fully closed out (or reduce to an insignificant number) by the Operating Commencement Date for Phase 2. O&M risks are expected to increase in view of the imminent Operating Commencement Date for Phase 2 and expected new risks associated with the initial stages of any “greenfields” project such as the Gautrain. It is nevertheless expected that the total number of Project risks will show a significant reduction in the year ahead. The top project risks are those risks that have been assessed at a score of 20 or greater. These risks are highlighted to assist the executive management of the Project with the prioritisation of their effort towards mitigating these risks. It also assists stakeholders to understand the key risks that could impact on the success of the Project. Major changes in the list of the most significant project risks compared to the end of the previous year (March 2010): • The following risks have been added to the list of top Project risks: o Strike of Operator’s staff. o Poor quality of building and equipment handed over to the Operator. o Flash flooding due to excessive rainfall and incomplete drainage works. o Delay in the finalisation of the Schedule of Retention Items and Snag List Works. • The following risks have remained on the top risk list through out the reporting year: o Potential Unknown Utilities discovered during road works upgrades. o Potential CJV programme delay due to E&M early energisation. o OCD 2 delay due to System integration. o E&M staffing plan man-hours exceeded. o Security incidents during Operating Period. o Increase in energy costs. o Vandalism of infrastructure (Overhead lines, cables, sub-stations). o O&M Subcontractor performance may not be sufficient to meet contractual obligations. o Concessionaire’s Special Purpose Vehicle (SPV) does not work optimally. o Ridership more than demand forecast. o Water ingress into tunnels is not compliant with the requirements of the CA. • The following risks have been dropped (scoring 16 or lower) from the list of the most significant Project risks since the end of the previous reporting year: o OCD 1 Delay. o Testing and Commissioning Delay to OCD 1 and OCD 2. o Proposal for Auto Paralleling Supply (APS) not accepted. o Insufficient signals. o Increase in energy costs. o Railway incidents due to Automatic Train Protection (ATP) limitations. o Project will not satisfy a Cost-to-complete test. The top project risks identified by Province and the Concessionaire as at the end of March 2011 are synthesised in the table on the next page (in no particular order). The broad mitigation actions indicated are all underpinned by more detailed actions and allocation of responsibilities in the Risk Register. The Risk Register is an internal document used for the day to day management of risks.

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Risk Register No.

Description

Probability Quality

Potential Unknown Utilities discovered during road works upgrade (score 20)

Owner Broad Mitigation actions (Assessor)

Impact on: Schedule

Cost

Prov(*)

Close liaison with Utility owners. Follow CA process once discovered.

Comment: Not all exiting Utilities are indicated on drawings of the Utility owners - and may be discovered during the implementation of road widenings. 2

Potential CJV programme delay due to E&M early energisation (score 20)

Con.

Improved coordination between Civil and E&M contractor.

Comment: A lack of coordination and delays by the civil contractor have placed the Concessionaire in a position where the snagging of the Civil works now has to happen under constrained circumstances causing extra costs and possible delays. Comment: Additional grouting as a result of ground conditions leads to additional cost. 3

Radio System will need to be revisited

n/a

Con.

Audit of system and evaluation of findings.

n/a

Con.

Not provided by E&M.

Comment: The risk is caused by changes in design by the suppliers/installers. 4

OCD 2 delay due to System integration (Score 25)

n/a

Comment: This risk is caused as a result of delays in the contracted handover dates between BCJV and E&M. 5

E&M staffing plan man-hours exceeded (Score 25)

n/a

Con.

Not provided.

Comment: There is a risk that the staffing plan man hours will be exceeded as a result of the compression of the schedule, quality issues and late access. 6

Poor quality of building and equipment handed over to O&M (Score 20)

Flash Flooding

Con.

-Rigorous snagging process and close out before handover. -Attendance of O&M of all handover inspections. Comment: The Operator is at risk accepting substandard work due to design and construction deficiencies (with the commensurate long term cost implications) from the Civil Contractor as a result of pressures to commence trial running. Con.

Details awaited from the Operator.

Comment: Details awaited from the Operator. 8

Strike of Operatorâ&#x20AC;&#x2122;s Staff

Con.

-Appoint an experienced HR manager -Negotiate company agreements with unions -IR training to managers Comment: The Operator is finding its feet in the local labour market. Strikes are occurring due relations difficulties. 9

Security incidents during Operating Period (Score 20)

Con.

- Prepare coordination with police. -Adapt the security installations and organisation to the situation. Comment: Security incidents during the Operating Period due to security equipment and systems provisions not being adequate or Operatorâ&#x20AC;&#x2122;s Security Plan not adapted.

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Risk Register No.

Description

Probability

Owner (Assessor)

Impact on: Quality

Schedule

Broad Mitigation actions

Cost

Comment: Vandalism will result in the disruption of services and additional replacement costs. 10

O&M Subcontractor performance may not be sufficient to meet contractual obligations (Score 20)

Con

- Increased monitoring and performance measurement against targets. -Partnering initiatives.

Comment: Inadequate training and lack of management experience and expertise combined with an unbalanced focus on commercial matters may cause the sub contractors performance to suffer. 11

Concessionaire’s SPV structure does 5 3 2 5 Prov -Robust contract management not work optimally – leading to initiatives by PST. internal disputes, etc. -Focus on quality systems. - Disputes between the Concessionaire’s SPV entities may inevitably spill over to Province. (Score 25) Comment: Every Concession Structure has its risks. In this particular case most of the project risk has been devolved down to the design and construction entities which is right at the bottom of the concession structure. These entities demand an input in decision-making of the Concessionaire, commensurate with the risk they are taking. This consequence is slow decision-making by the Concessionaire and a tendency towards short term decision-making since design and construction entities only have an involvement in the Development Phase of the project. The fact that payments to the Concessionaire are front end loaded implies that parties with a short term interest may be put in a position where they could extract more money from the project than what is due at the stage of their involvement of the Project. This risk is being mitigated by reinforcing the role of Bombela and the Turnkey Contractor (TKC) through the correspondence and actions of Province, as well as an emphasis on integration, interfaces between the concession entities and in particular, project quality systems and management. 12 Ridership more than demand 5 4 1 2 Prov Update of Stated Preference Studies. forecast. (Score 20) Comment: The cost of petrol and the higher than expected economic growth rate of RSA may cause patronage numbers to be much higher than expected in the early years of commissioning. 13

Water ingress into tunnels not compliant (25)

Con

-Remedial work. -Further specialist studies.

Comment: The Concessionaire does not seem to be able to meet the specification for water ingress into the tunnels. This matter may delay OCD 1 and OCD 2 if not mitigated in time. 14

Delay in the finalisation of the list for Retention Items and Snag List Works

Con

Letters to the Concessionaire and the IC on contractual interpretation. Representations to the IC on what should be included in the list.

Comment: The number of snags and Retention Items to deal with coupled with conflicting priorities associated with the pressure to commence operations underlies this risk. * Allocation of risk owner not yet agreed between the Parties * Prov = Province * Con = Concessionaire

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Contractual/Development /Project Programme Summary of Progress Based on the elapsed time between 28 September 2006 when commercial close was reached, and the end of March 2011, 100% of the contractual Development Period time available for Phase 2 (i.e. 54 months) had elapsed. The Project would enter a period of delay after the Anticipated Completion Date of 27 March 2011 as no extension of time had been agreed between Province and the Concessionaire at the time.

Summary of Progress OCD 2 - 100%

0%:

100%:

* Figure 1: Lapsed time for phase 2 (to OCD 2) – March 2011 The Operating Commencement Date for Phase 1 (for the section between Sandton and ORTIA) occurred on 8 June 2010, shortly before the 2010 FIFA World Cup™. In the third week of March 2011, the Concessionaire reported in its monthly development programme progress report that, based on the actual progress made up to the end of February 2011, the forecasted date for the Operating Commencement Date for Phase 2 (OCD 2) was 21 October 2011. Based on the actual progress made on the Project at the end of March 2011 (i.e. in the programme progress report submitted by Bombela during the third week of April 2011), the Concessionaire reported that OCD 2 would occur on 5 October 2011. However, the Concessionaire submitted an “amended DP&PMP” on 18 March 2011 for Province’s consent. This programme indicated that OCD 2 would occur on 27 June 2011, almost four months earlier. This was based on actual progress up to January 2011, and used a slightly revised logic, which the Concessionaire reported that it was actually implementing. This implies that the contractual reporting and the reporting according to the amended DP&PMP and the other information on the forecasted dates for OCD 2 differ significantly.

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Province’s Forecast on Completion Province has assessed the programme progress reports submitted by the Concessionaire and has interpreted the logic and imposed dates, as well as the current working environment; to develop a more accurate forecast date for the completion of Phase 2. This need has arisen from Province’s rejecting of previous development programme progress reports by the Concessionaire, on the basis of erroneous Critical Path reporting, and the Concessionaire’s failure to rectify or explain these.

Phase 1 During this financial year, the Commencement of Operations for Phase 1 (OCD 1) was achieved on 8 June 2010, in time for the start of the 2010 FIFA World Cup™. The Concessionaire before that reported the following forecast dates for OCD 1: Province’s Forecast on Completion: Phase 1 Date of Forecast

Concessionaire’s Projected OCD 1 Date

March 2009

30 August 2010

August 2009

22 September 2010

March 2010

29 June 2010

Phase 2 During this financial year, the works for Phase 2 have been under pressure, with civil construction progress being delayed in a number of critical areas. Despite further delays being experienced by the Civil Contractor, the Electrical & Mechanical Contractor, as well as the Operator, implemented some mitigation measures that have resulted in approximately 12 weeks recovery to the forecast Operation Commencement Date of Phase 2 (OCD 2). The Phase 2 works remained in delay at the end of the 2010/2011 financial year, the delay mainly being caused by the Civil Contractor’s late completion of works, which in many cases delayed the E&M Contractor from commencing some of its works. Province’s Forecast on Completion: Phase 1 Date of Forecast

Concessionaire’s Projected OCD 1 Date

August 2009

24 November 2011

March 2010

10 January 2012

April 2011 (based on March progress)

5 October 2011

Province has repeatedly informed the Concessionaire that it disagreed with the forecasted dates as they were clearly not reliable. Furthermore, it is obvious that these reported dates are of contractual/commercial nature, and do not reflect the actual methods or sequences planned for the remaining works. It appears possible that despite all the delays currently being experienced, and the late forecasted dates of Bombela, that a target date of end of June 2011 for OCD 2 would be possible. However, this would include the planned optimised area integration testing and the optimised trial running by the Operator. Furthermore, the Concessionaire has indicated that they are actually targeting the end of June 2011 for OCD 2. The end of June 2011 for the practical completion of the bulk of the Development Phase of the Gautrain, therefore, appears feasible.

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Bombela’s Actual Progress Indicators Programme progress reports Project progress is being tracked using progress S-curves, which track key quantities in the Works. Each of the main contractors (Turnkey Contractor, Civil Contractor, Electrical and Mechanical Contractor and the Operator) has its own progress S-curve. It is thus possible to track the individual progress of each Contractor as well as the overall progress of all the Contractors combined. The Overall Progress S-curves clearly shows that the Project is behind the planned progress figures. Although it appears that this can mainly be contributed to the E&M works, the details indicates that the Civil works are in fact a major contributing factor to the continued lateness. This delay has been compounded as the E&M works comprise mainly “linear” works; meaning that if works are not able to commence at a starting location, works will possibly not be able to commence in other locations, as those works rely on access from the start location.

Progress percentages reported by the Concessionaire up to 25 March 2011 Planned Annual Progress % for 2010/11 Overall Progress

Planned Total Progress % by March 2011

100 %

Civil Progress

E&M Progress

10%

O&M Progress*

25%

* Operator’s figures do not include trial running phase.

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Actual Annual Progress % for 2010/11

Actual Total Progress % By March 2011

10.7 %

99.7 %

100 %

1.95%

99.95 %

100 %

22.3%

99.3 %

100 %

26%

100 %*

Overall project progress The Concessionaire’s S-Curve for the Gautrain Rapid Rail Link, including Civil, Electrical and Mechanical and the Operating and Maintenance works (refer to Figure 3), shows 99.7% actual progress against a planned progress of 100% for Month 54. This implies 99.7% of the work planned for completion at this stage has actually been completed.

Civil contractor’s progress The progress figures for the Civil Works indicate that the Civil Contractor has been successful in achieving 99.95% overall actual progress against the DP&PMP planned progress of 100.0% for Month 54, as the Civil Contractor had planned to complete all its works during September 2010. The Civil Contractor is now carrying out mainly finishing works and dealing with the large number of snags on the System.

Electrical and mechanical contractor’s progress The progress figures for the Electrical and Mechanical Works indicate that the E&M Contractor has been successful in achieving 99.3% overall actual progress against the DP&PMP planned progress of 100% for Month 54. The E&M Contractor is now focusing mainly on finishing installation works on the Hatfield tranch, as well as between Rosebank and Park stations. Testing and commissioning of components and systems are taking place on all other areas of the Phase 2 System, mainly between Rosebank station and Pretoria station.

Operator’s Progress The previous progress figures for the Operator indicated that 100% of actual progress had been achieved against the DP&PMP planned progress of 100% for Month 54. This does not include the trial running that is required before Operations can take place on the System. Only procurement, subcontracting, documentation, staff recruitments and training are included in the S-curve calculations.

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Figure 2: Overall progress S-curve for entire project â&#x20AC;&#x201C; March 2011

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Figure 3: S-curve showing progress made with civil works â&#x20AC;&#x201C; March 2011

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Figure 4: S-curve showing progress made with Electrical and Mechanical works â&#x20AC;&#x201C; March 2011

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Figure 5: S-curve showing progress made with Operatorâ&#x20AC;&#x2122;s works â&#x20AC;&#x201C; March 2011

Critical Path The Concessionaire monthly submits a Critical Path – as part of its development programme progress report. This Critical Path represents those remaining activities of the Project with the effect that if any one of them is delayed by one day, this would result in the completion of Phase 2 being delayed. A summary of the Critical Path submitted by the Concessionaire for the end of March 2011 is shown below: Critical Path for Phase 2: (Concessionaire’s programme extract) 1. Finalise Installation of signalling from Pretoria station to Hatfield station. 2. Testing of signalling. 3. Area Integration Testing – Hatfield tranch. 4. OCD 2 – Area integration testing complete. 5. OCD 2 – Systems demonstration testing. 6. OCD 2. Province’s comments: The Critical Path reported by the Concessionaire runs through the installation and testing of the E&M systems on the Hatfield tranch. However, from reviewing the “amended Programme” that the Concessionaire submitted on 18 March 2011 for “Province’s consent” it is clear that this reported Critical Path is not a true or accurate representation of the Project’s actual Critical Path. A more realistic Critical Path would run through the commissioning of the E&M system between Park station and Rosebank. The monthly programme progress report programme has not taken cognisance of the revised working methods and commissioning phases. Thus, it is not an accurate representation of the works on site or forecast for OCD 2. Assessing the works as well as the detailed commissioning programme within the “revised DP&PMP” of 18 March 2011, it appears quite possible that the date of 1 July 2011 for OCD 2 is achievable, with some concessions from Province. However, the concerns around the water ingress levels into the tunnel for the Park to Rosebank tunnel (which do not meet the Concession Specification) remain a high risk to OCD 2 achievement. The fact that the Parties are in dispute – with the Dispute Resolution Process planned to be finalised only in June 2011 – would increase the delay risk due to the water ingress as these could result in requiring time consuming remedial work to solve the water ingress issue after receiving the decision from the Dispute Resolution Board.

Conclusion on Actual Status Although much work has been achieved, the work on the Project remains delayed as compared to the planning in the DP&PMP, but there is difference in opinion of the extent of this delay. The actual progress of the Works remains a matter of concern. Despite the concerns raised by the current delays affecting the entire Project, much progress has been made and some delays have been successfully mitigated. This is evident from the recent S-curves submitted by the Concessionaire, albeit with no further recovery on the forecasted completion of the Project. The Concessionaire indicated in recent discussions that they are in fact targeting end of June 2011 for Phase 2 completion. Province remains confident that the Concessionaire will be able to recover from the current reported setbacks and with some mitigation actions complete the Project not much later than the Anticipated Completion Date of Phase 2 (i.e. 27 March 2011), and that with some effort from the Concessionaire, the project can be completed within three to four months of this date.

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Assessment of Interim Payment Milestone Achievement This report covers all interim payment Milestones certified and paid on the Gautrain Project during the Government 2010/11 Financial Year, i.e. from 1 April 2010 to 31 March 2011. It should be noted that the Independent Certifier has nine Business Days to certify Milestones, implying that the certification of Milestones usually takes place early in the month following the achievement of the Milestones. This implies that a number of Milestones (three General Milestones, one Operator’s Milestone, one 2010 FIFA World Cup™ Variation Milestones) and one Key Milestone from March 2011, that were certified as having been achieved during 2010/11 have not been included in this report as they were formally certified after the end of the 2010/11 Financial Year, and would only be paid during the next financial year (i.e. 2011/12).

Gautrain Milestone Certification BEFORE 2010/11 DURING 2010/11

REMAINING

15%

78%

This figure shows the 152 Milestones certified during this financial year. It also shows that at the end of the planned Development Period up to the Anticipated Completion Date of Phase 2, there are still about 7,5% of the Milestones that have not yet been achieved and paid. The certification of Milestones during the 2010/11 financial year included Variation Milestones, also those contained in the 2010 FIFA World Cup™ Variation (Variation PVN010). The latter Variation allowed for a decreased scope of works for Phase 1 (i.e. a number of exclusions to be included in Phase 2), so as to allow the Concessionaire to achieve the revised Operating Commencement Date for Phase 1 before the 2010 FIFA World Cup™. Certain changes to the achievement criteria of Milestones were made, and certain Milestones were split in order to result in an improved cash flow situation for the Concessionaire. Until the end of Month 53 (i.e. achieved by 25 February 2011 and certified early in March 2011 for payment during March 2011), the Independent Certifier (IC) had certified the achievement of 964 of the 1 042 total interim payment Milestones (i.e. 92.5% of the Schedule 12 Milestones in number but not in financial terms). This implies that during the 2010/11 financial year, 163 General Milestones (or 16% of all the Milestones for the 54-month Development Period) were certified. For detailed financial information, refer to the Financial Chapter. Regarding Milestones, the IC has certified a cumulative amount of R20 411 million in non-indexed cumulative actual Rand values, which is about 97% of the capped amount available for the Development Period up to Month 53. The total amount certified to date in Total Rand values amounts to R25 413 million (excluding Variations). Including Variations and interest payments, the IC has certified R26 846 million for the period up to the end of the 2010/11 financial year. This means that for the financial year, a total of R3 315 million in Milestones achieved has been certified by the Independent Certifier, as compared to the R4 055 million for the previous financial year.

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A number of activities have been delayed, as is evident from the certification of Milestones. The delayed activities are managed, and discussions are ongoing with Bombela to minimise the impact of any delay. Province is also discussing with the Concessionaire ways in which it would recover from the delays experienced. The Milestones that have been delayed and advanced indicate that 97 General Milestones have not yet been achieved by the end of the 2010/11 financial year although achievement was expected in Schedule 12 before the end of March 2011 (in other words, these have been delayed). This figure includes 11 “split milestones” and two Key Milestones not achieved to-date, but scheduled for payment. Considering only the General Milestones, the 86 General Milestones that have been delayed is less than the delayed General Milestones at the end of the previous financial year. No General Milestones have been advanced, which – in turn – is much less than the previous financial year. This indicates that the Concessionaire continues to be in delay. The following work streams are affected by delayed General Milestones (the reasons for the delays are various, including land, third party issues, design development, manufacturing and procurement): • Integrated Design and Project Management. • Civil Design and Project Management. • Utilities. • Earthworks, Drainage and Roads in Area 1, Area 2, Area 4 and Area 5. • Cut-and-covers, Bridges and Viaducts in Area 4. • Bored Tunnels. • Tunnel M&Es. • Stations in Area 1, Area 3, Area 4 and Area 5. • Civil Finishings. • Rolling Stock. • Signalling. • Trackwork. • System Integration and Project Management. • AFC. • Depot Equipment. • Radio. • Telecommunications. • PRASA relocation work. • Operator.

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The following Key Milestones have been certified to-date: KM01: Turnkey Contract implemented. KM02: Bombela internal System design review completed. KM03: Review in principle (“RIP”) alignment drawings and track schematics submitted to Province. KM04: Review of the entire integrated Design of the railway system completed. KM05: Civil works for the main traction power sub-station ready for equipment installation. KM06: Flash Butt Welding Facility operational at the depot. KM07: Depot Stabling Area ready for trackwork installation and System, Preliminary and Detailed Electrical and Mechanical Design – excluding production drawings completed. KM08: 1km of track laid and main traction power sub-station ready for power in-feed connection. KM09: 1st car (Rolling Stock) Assembled in South Africa. KM10: Operation control room ready for commencement of installation of system-wide equipment. KM11: Subsystems test completed for the Test Track. KM12: Systems ready for train running from Marlboro to ORTIA (OR Tambo International Airport) – revised wording from 2010 FIFA World Cup™ Variation (PVN010). KM13: Operating Commencement Date for Phase 1 (OCD 1), achieved by means of certification by the Independent Certifier. Key Milestone KM13A – i.e. the achievement of reduced items as listed in the FIFA 2010 World Cup™ Variation (PVN 010), implying all the items that were initially included in Phase 1 but that were excluded for the earlier commencement of operations before the FIFA 2010 World Cup™, was scheduled for achievement during Month 51 (i.e. December 2010). This Key Milestone was achieved during Month 54, but was certified and paid after the end of the financial year. Key Milestone KM14 was scheduled for achievement during Month 52 (i.e. for January 2011). This Key Milestone is for “Systems ready for train running from Rosebank to Park station”. This Key Milestone was also not achieved by the Concessionaire during this financial year. Key Milestone KM15 is the last Key Milestone, and will be achieved with the certification of OCD 2. Province actively participates in the assessment of Milestone achievement and attends site inspections with the Independent Certifier and Bombela.

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Certification of Achievement of Milestones by the IC â&#x20AC;&#x201C; from the IC Month 42 Report Financial progress A graph showing the actual spending compared to the actual spending from the Independent Certifierâ&#x20AC;&#x2122;s Report is given below. The first graph shows that the actual amounts certified by the Independent Certifier up to the end of this financial year (i.e. until end of Month 53) are slightly below the anticipated amount.

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Milestones Certified for Year Amounts Certified for the 2010/2011 are as follows: • Month 42 • Month 43 • Month 44 • Month 45 • Month 46 • Month 47 • Month 48 • Month 49 • Month 50 • Month 51 • Month 52 • Month 53

R221 624 055 R217 919 097 R443 800 837 R445 664 738 R278 964 910 R209 770 390 R224 850 621 R97 320 546 R259 211 806 R201 853 178 R195 991 079 R449 904 812 R3 246 876 069

Conclusions The process of certification of Milestones by the Independent Certifier generally works well, although some problems have to be dealt with on a monthly basis. In total, 92.5% of the Milestones covering the Development Period have been certified by the end of the 2010/2011 financial year. Thus far, 13 of the 15 Key Milestones have been certified. A number of Variations have been concluded, dealing mainly with land matters, and in total 112 Variation Milestones have been certified. Although Milestone achievement is not an accurate indication of progress of the Development Programme, indications are that the Concessionaire is running somewhat late, as 97% of the cash flow capped amount for Month 53 (not-indexed) has been certified. The implication is that because of the delays, the payments were later than planned in the Concession Agreement, but the payments have generally been higher than the number of Milestones achieved, indicating that the Concessionaire should remain in a relatively positive cash flow situation. This is slightly better than the previous financial year.

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Document Control During the financial year Bombela made 4 523 document submissions to Province, 1 940 fewer than in the previous year. Of these, 913 documents received from Bombela comprised letters from the Concessionaire, which were mostly contractual or commercial in nature. Province issued 2 141 document transmittals during this year, which is 1 428 fewer than in the previous year. Of these, 483 were letters issued to the Concessionaire, most of which were in response to letters received from the Concessionaire. The management of Province’s document control system works well. Province recently undertook an internal audit on the document control system, which was largely considered as “adequate”. Management is addressing those few areas where it was found that additional attention was required. Currently, Province manage approximately three million documents in hard copy, electronic copy and on CDs and DVDs. Back ups of the documents are made on a frequent basis, with secure off-site back ups being taken twice a week. The following graph shows the decrease in the number of letters issued by Province in accordance with the number of Province’s transmittals to the Concessionaire (“GPO Transmittals”) and transmittals to other parties (“GPR Transmittals”), which shows a small increase in the number of document flows since January 2011.

PST Transmittals

TOTAL TRANSMITTALS/MONTHS GPO TRANSMITTALS/MONTH (TO BOMBELA) GPR TRANSMITTALS/MONTH (TO IC, DRB, ECP) 400

350

300

250

200

150

100

0 APR 10

MAY 10

JUN 10

JUL 10

AUG 10

SEP 10

This figure shows the number of transmittals by Province

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OCT 10

NOV 10

DEC 10

JAN 11

FEB 11

MAR 11

The following graphs depict the main activity of document flows between Province and the Concessionaire. Documents flowing to others (third party bodies) are not included. The figure below shows the number of transmittals by the Turnkey Contractor (“GPG Submissions”, which are the bulk) and the number of submissions by the Concessionaire (“BOM Submissions”). The BOM Submissions are largely contractual in nature.

Bombela Submissions (Accumulative)

BOM SUBMISSIONS GPG SUBMISSIONS SUM GPG & BOM

25000

20000

15000

10000

5000

0 APR 10

MAY 10

JUN 10

JUL 10

AUG 10

SEP 10

OCT 10

NOV 10

DEC 10

JAN 11

FEB 11

MAR 11

This figure shows the number of transmittals by the Turnkey Contractor (GPG Submissions) and the Concessionaire.

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Bombela Submissions/Month

JV SUB./MONTH BOM/MONTH GPG/MONTH TOTAL/MONTH 600

500

400

300

200

100

0 APR 10

MAY 10

JUN 10

JUL 10

AUG 10

SEP 10

OCT 10

NOV 10

DEC 10

JAN 11

FEB 11

MAR 11

(BOM Submissions) to Province for the 2010/2011 financial year. This graph shows the submissions per month by the Turnkey Contractor (GPG Submissions) and the Concessionaire (BOM Submissions) to Province for the 2010/2011 financial year. The trend shown in the following graph indicates that the trend in the number of submissions by Bombela is no longer increasing as in the past, but there is still a significant number of submissions being made each month.

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Bombela Submissions (Accumulative)

2500 2250 2000 1750 1500 1250 1000 750 500

JAN 08 FEB 08 MAR 08 APR 08 MAY 08 JUN 08 JUL 08 AUG 08 SEP 08 OCT 08 NOV 08 DEC 08 JAN09 FEB 09 MAR 09 APR 09 MAY 09 JUN 09 JUL 09 AUG 09 SEP 09 OCT 09 NOV 09 DEC 09 JAN 10 FEB 10 MAR 10 APR 10 MAY 10 JUN 10 JULY 10 AUG 10 SEP 10 OCT 10 NOV 10 DEC 10 JAN 11 FEB 11 MAR 11

250

This figure shows the trend in the number of submissions since January 2008 up to the end of the previous finanicial year. Currently, the biggest challenge for Provinceâ&#x20AC;&#x2122;s Document Control Team is to obtain the construction and installation records from the Concessionaire, as well as the as-built drawings, and to make these available to the Gautrain Management Agency in a user-friendly format. The PST Team has commenced with the planning of a Knowledge Transfer and Training Programme, in order to ensure that it can transfer knowledge to the Gautrain Management Agency on how to manage, develop and maintain a state-of-the-art document management system.

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Socio-Economic Development Performance against Obligations: 2010/11 The monthly SED achievements claimed by the Concessionaire within 45 calendar days after the end of each month are verified by the ISEM and reported on within about five weeks after receiving the monthly SED report of the Concessionaire. The SED achievements for the period April 2010 to March 2011 are based on the verification of the ISEM. Various meetings were held in the period April 2010 to March 2011 which include amongst other, 12 monthly Concessionaire’s progress meetings, 12 meetings with the ISEM, 12 ISEM progress meetings and 42 ad-hoc meetings with the Concessionaire, its business units and the ISEM. The Gautrain Rapid Rail Link project continued to make a significant impact on socio-economic development. The SED performance in the 12-month period from April 2010 to March 2011 can be summarised as follows: • Black persons are holding 25% shares in the Concession Company, the Turnkey Contractor and the Operating Company. Furthermore, black persons are holding 10% of the shares in the Civil Contractor and the Electrical and Mechanical Contractor. • More than R940 million has been spent on procurement from and sub-contracting to BEs, compared to an obligation of more than R200 million. • More than R550 million has been spent on procurement from, and sub-contracting to New BEs compared to an obligation of more than R180 million. • More than R230 million has been spent on procurement from, and sub-contracting to SMMEs compared to an obligation of more than R10 million. The SED performance to-date with regards to the procurement and sub-contracting from BEs is shown in the following graph. Although it is evident from the graph below that the activities of the Concessionaire are ramping down in the 2010/11 financial year, the Concessionaire is still significantly exceeding its obligations.

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Procurement from and sub-contracting to BEs

ACTUAL ACHIEVEMENTS BOC OBLIGATIONS E&M OBLIGATIONS BCJV OBLIGATIONS

140,000

PREVIOUS REPORTING YEARS

2010/11

120,000

100,000

AMOUNT (Rʼ000)

80,000

60,000

40,000

20,000

JAN - MAR 11

OCT - DEC 10

JUL - SEP 10

APR - JUN 10

JAN - MAR 10

OCT - DEC 09

JUL - SEP 09

APR - JUN 09

JAN - MAR 09

OCT - DEC 08

JUL - SEP 08

APR - JUN 08

JAN - MAR 08

OCT - DEC 07

JUL - SEP 07

APR - JUN 07

JAN - MAR 07

SEP - DEC 06

CONTRACT QUARTERS

Gautrain’s SED strategy ensures the Concessionaire’s commitment to optimally utilise local resources and develop local skills. The performance of the Concessionaire in this regard is summarised in the graphs below. It is evident that with regards to the utilisation of local resources that the Concessionaire has significantly exceeded its obligations. In summary, the Concessionaire has up to the end of March 2011: • Procured South African materials, plant and equipment to the value of more than R580 million, compared to an obligation of more than R170 million. • Bombela and its sub-contractors have created 5 950 jobs for local people, compared to an obligation of 1 080. • 5 230 Jobs created for Historically Disadvantaged Individuals (HDIs), compared to an obligation of more than 820. • 760 Jobs created for women, compared to an obligation of 150. • 30 Jobs created for people with disabilities, compared to an obligation of 20.

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Procurement of South African Materials, Plant and Equipment

ACTUAL ACHIEVEMENTS BOC OBLIGATIONS E&M OBLIGATIONS BCJV OBLIGATIONS

140,000

PREVIOUS REPORTING YEARS

2010/11

120,000

100,000

AMOUNT (Rʼ000)

80,000

60,000

40,000

JAN - MAR 11

OCT - DEC 10

JUL - SEP 10

APR - JUN 10

JAN - MAR 10

OCT - DEC 09

JUL - SEP 09

APR - JUN 09

JAN - MAR 09

OCT - DEC 08

JUL - SEP 08

APR - JUN 08

JAN - MAR 08

OCT - DEC 07

JUL - SEP 07

APR - JUN 07

JAN - MAR 07

SEP - DEC 06

20,000

CONTRACT QUARTERS Bombela has significantly exceeded its obligations with regards to training. Bombela has achieved the following performance during this financial year: • An amount of more than R30 million on Human Resource Development was verified which is equal to the obligation of about R30 million. • A total of 206 person-months of women participating in the Women Training and Mentorship Programme of Bombela were verified, compared to an obligation of about 88 person-months. • A total of 954 person-months of Women Learners Employed and Mentored, were verified compared to an obligation of about 240 person-months.

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Local Employment

ACTUAL ACHIEVEMENTS BOC OBLIGATIONS E&M OBLIGATIONS BCJV OBLIGATIONS

140,000

PREVIOUS REPORTING YEARS

2010/11

120,000

100,000

PERSON MONTHS

80,000

60,000

40,000

JAN - MAR 11

OCT - DEC 10

JUL - SEP 10

APR - JUN 10

JAN - MAR 10

OCT - DEC 09

JUL - SEP 09

APR - JUN 09

JAN - MAR 09

OCT - DEC 08

JUL - SEP 08

APR - JUN 08

JAN - MAR 08

OCT - DEC 07

JUL - SEP 07

APR - JUN 07

JAN - MAR 07

SEP - DEC 06

20,000

CONTRACT QUARTERS The significant efforts to complete the second phase of the project by the end of June 2011 can be seen in the continued performance during the reporting year. Compared to the previous reporting period, the current figures are lower but can be ascribed to the fact that the peak of the development phase was reached in the previous reporting periods. The emphasis of the socio-economic development strategy of the Gautrain Rapid Rail Link project is to move away from idle promises and to ensure that the socio-economic objectives or “dreams” become a reality. According to the information submitted by Bombela and verified by the ISEM, the Gautrain Rapid Rail Link project has already made a significant impact on socio-economic development in Gauteng and for that matter, in South Africa.

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Integration Management of the Gautrain with Government’s Transport Systems Monitoring Objective – Integration of the Gautrain into the transport system and other development initiatives in Gauteng. Performance Indicator – Reports of the GPTIC (Quarterly) and on Gautrain Integration Implementation Plan (Annually).

How the Transport Integration Objective were Pursued Quantitative – performance against monitoring objectives and performance indicators, i.e. meetings, reports, etc. The Gautrain Public Transport Integration Committee (GPTIC) has had six meetings during the past year on the following dates: • 16 April 2010; • 18 June 2010; • 6 August 2010; • 15 October 2010; • 3 December 2010 and • 25 February 2011. An update of the Gautrain Integration Implementation Plan was done under the guidance of the GPTIC, completed and endorsed by this Committee at its meeting of 15 October 2010. Subsequently, the Plan was presented to the National Cabinet for notification.

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Transport Integration Achievements Qualitative – narrative on how value was added in terms of the monitoring objectives and performance indicators.

Gautrain Public Transport Integration Committee (GPTIC) The mandate of the GPTIC is to facilitate the development and implementation of a Gautrain Integration Implementation Plan and to promote integration of the Gautrain Rapid Rail Link into the transport system of Gauteng. The Mandate was given by the Minister to the Gauteng MEC for Public Transport Road and Works. The Committee consists of representation by: • Department of Transport; • Gauteng Department of Public Transport Road and Works; • Gautrain Management Agency and its support team; • City of Johannesburg Metropolitan Municipality; • City of Tshwane Metropolitan Municipality; • Ekurhuleni Metropolitan Municipality and • South African Rail Commuter Corporation. The proposed areas of integration to be considered to be part of the GPTIC’s activities, which have to be covered by the scope of the work of the Committee are: • Integrated planning with respect to the development of various statutory integrated transport plans (i.e. NLTSF, PLTF, IDPs and ITPs); • Land use integration around stations (i.e. assimilation into Local Spatial Development Frameworks, Local Precinct Plans, etc.) and • Operational integration matters: o Network integration with surrounding public transport networks; o Physical interfaces with other public transport systems; o Integrated ticketing; o Integrated Information and communication and o Technical integration and transformation of public transport technologies. It was agreed that the above-mentioned aspects will be further discussed and finalised as part of the activities of a number of working groups to be established under the GPTIC. Working groups were established to deal with: • Gautrain Integration Implementation Plan Report; • Ticketing and Fare Collection; • Network designs; • Station and Public Transport Interchanges; • Public Transport Interchanges and • Information and Communication. Other matters that were deliberated at the GPTIC meetings during the past year included the transport system of the 2010 FIFA World Cup™, the Rail Steering Committee, the development of a comprehensive rail policy, integrated fare management systems, communication and integrated public transport information.

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Gautrain Integration Implementation Plan The GPTIC oversaw and facilitated the development the Gautrain Integration Implementation Plan, which informs integrated transport planning and the development of the transport system in Gauteng by all three spheres of Government, as well as agencies of Government. The integration of Gautrain into Gauteng Province’s transport system and economic development activities was a key requirement for the approval of the Project by Government. In order to ensure that all facets of integration receive attention by the authorities and by the Gautrain Management Agency, two reports were prepared in 2005/06 by the Gauteng Provincial Government and by the National Department of Transport respectively, namely: • Gautrain: A Catalyst for Public Transport and Transport Transformation, A Study on Areas for Strategic and Operational Integration, Gauteng Department of Public Transport, Roads and Works, 21 November 2005. • Integration of the Gautrain into Broader Public Transport Network, National Department of Transport, 9 January 2006. Since the adoption of the above two documents by the relevant authorities, the implementation of the Gautrain proceeded, including a number of actions aimed at the implementation of the recommendations in these two reports. Almost five years had passed and it was considered appropriate to take stock of the efforts that have been taken so far in order to the determine progress made, and to reconsider the way forward. The objectives of the Integration Implementation Plan are: • To describe recent transport institutional, planning and implementation developments in the Gauteng Province with a particular emphasis on the developments that occurred since the preparation of the Gautrain integration reports in 2005/06. • To consider the progress made in the areas of: o Transport integration at the broader strategic level. o Strategic spatial development integration. o Operational integration. • To develop a new action plan and budget for the implementation of further actions to achieve the objective of the effective integration of Gautrain with the broader Gauteng transport system. The Plan covers an update of the status quo, considering the changes in the policy and legislative environment, as well as the planning and public transport systems implementation. It also gives an overview of the successes to date with respect to the integration of the Gautrain into the broader Gauteng transport system. The Plan is concluded with an action plan and key recommendations. The plan of actions covers initiatives and further actions to be taken in the areas of: • Strategic Integration; • Spatial Integration and • Operational Integration.

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Land Acquisition and Management Province had already finalised handover of all affected land parcels to the Concessionaire in the 2008/09 financial year. Subsequent financial years up to now were used to finalise as far as possible all outstanding administrative, compensation and registration matters. Of specific importance was the proclamation of the rail reserve to enable the opening of the system both in the section between Sandton and the OR Tambo International Airport before the 2010 FIFA World Cupâ&#x201E;˘ and currently the sections between Park station and Sandton station and between Sandton station and Hatfield station. From a monitoring objective, by the end of the previous financial year, all expropriations for the system (as scheduled under the CA) were finalised and the land handed over to the Concessionaire. In addition to this are also numerous other pieces of land which the Concessionaire required due to his design development. However, the financial year started with the discovery that in addition to proclamations already done, that several areas of the Rail Reserve require to enable the opening of the system between Sandton station and OR Tambo International Airport in time for the 2010 FIFA World CupTM had not yet been proclaimed. Through the finalisation of several legal processes, the team managed to complete the outstanding proclamations by January 2011 to enable the operation of the full system once completed.

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Regarding the management and protection of the rail reserve, actions are ongoing to make sure that all land transfers, servitude registrations and other legal processes are being closed out. These include: • The auditing of the files of all 1 281 properties affected. This includes the implementation of follow-up actions where it is identified that processes might not have been completed i.e. final notices might be outstanding, additional notices are required where ownership details have changed, final payments are outstanding etc. This process remains ongoing. • The finalisation and publication of outstanding design reports and proclamations, a process that is now complete. • Endorsement of title deeds – this process remains ongoing in collaboration with the state attorney’s offices in both Johannesburg and Tshwane. • Endorsement of Province’s Asset Register – this process remains ongoing. • Compilation and finalisation of outstanding payments – this process remains ongoing. • Registration of servitudes – process remains ongoing. • Subdivision of partially affected properties – this process still needs to begin on fully expropriated land that is only partially affected to allow Province to dispose of this additional land. As part of the Gautrain process, limited subdivisions will take place and the remainder will ultimately form part of a process within Province once land is sold. Apart from the above, the land team is also actively involved in several of the disputes between Province and the Concessionaire. This includes a dispute whereby Province seeks a ruling on the role and responsibility of the Concessionaire in assisting Province specifically in the protection of the rail reserve by commenting on the impact that future planned development applications will have on the rail reserve. The Concessionaire currently denies his obligation in this regard. There is also a dispute with the Concessionaire on the responsibility for the cost of acquiring additional land for the system, above what was indicated in the Concession Agreement. Over the last financial year, also with input from the land acquisition, arbitrators ruled on the responsibility for environmental authorisations for several instances along the route. It is noted that Province was successful in the majority of their claims. It is foreseen that the Gautrain Management Agency, in consultation with the Department will now become responsible for the further management of the Rail Reserve. This will involve primarily the evaluation and feedback to township developments that will or could affect the Rail Reserve or the Gautrain System. This is a process similar to what is already followed within Province as far as roads are concerned.

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Utilities Management Advanced Milestone Payment Payment for the relocation and protection of Utilities to the Concessionaire is made according to milestone payments based on a predetermined monthly percentage claim. Draw down of payments up to the end of February 2007 resulted in an â&#x20AC;&#x2DC;over paymentâ&#x20AC;&#x2122; of R174 million relative to the initially anticipated progress of the work. Province and the Concessionaire have reached a mutual agreement to suspend further payments pending proof by the Concessionaire that the payment, already advanced has been depleted. This occurred in June 2009.

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Annual Report 2011

Increase in Unaffected Known Utilities and Unknown Utilities The increase in Known Utilities unaffected by the Works is cause for concern. Province has requested the Concessionaire to submit substantiating evidence for the reasons behind this trend. It has been established that a number of reported identified Unknown Utilities is as a result of incorrect utility identification where Unknown Utilities were labelled with a Known Utility code. These discrepancies are being addressed and will result in a reduction in the reported identified Unknown Utilities.

Quality of Documentation An aspect which has become increasingly difficult to manage is the quality of design review documentation submitted for review by the Concessionaire to Province. This and other matters of concern have been taken up with the Concessionaire and evidence of improved quality is awaited.

Final Utilities Review Currently the Concessionaire is working to hand over the Relocated/Protected Utilities to the Utility owners but because of non compliance to the requirements of the Concession Agreement or their own development/quality plans they are encountering problems. Work was done either without Utility Owner or Province approval and in addition, no Quality Assurance/Certification documentation were generated/updated. Therefore, to achieve successful handover to Utility Owners as well as review by PST at this very late stage is a time consuming and expensive problem for the Concessionaire. The Concessionaire plans to complete all outstanding issues by year-end. This, with due consideration of the amount of work involved, will prove to be big challenge. In the event of “reasonable” progress being achieved, the opinion is that the final Utilities Review will only be concluded during the next financial year.

Correspondence and Reviews To effect the final review for the Relocation/Protection of all Utilities every individual Utility design and “As Built” drawings with the relevant Quality documentation and Bills of Quantity must be reviewed.

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Civil Design Review

Objectives • As stated in the last annual report, the only requirement in the Concession Agreement was that Province had a minimum period of 15 days (i.e. at least 15 days) to review Reviewable Design Information and that the Concessionaire should provide a Review Plan within five days of the commencement of each Contract Month for the following three Contract Months. The Review Plan was required to indicate dates for specific reviews and the Review Periods allowed for each. Other than that, there are no specific objectives that are applicable to the civil design review team. • The previous decision to keep the average days to complete a review as low as possible and within the range of 20 to 30 days as explained in the last annual report has not changed for the year under review. • I t was realised that as the design process drew to a close, the previously reported target of 300 documents to be issued by the civil design review team per month from May 2008 onwards was unsustainable and would have to be discarded at an appropriate time. • In the 16th Quarterly DoRA report (period June to August 2010) it was stated: “... it is considered unlikely that PST’s self-imposed target of 300 documents to be issued per month will be achieved again.” • Other than those specific objectives mentioned above, objectives such as; assuring that the designs were compliant with the Concession Agreement (CA), assuring that any deviations from the Specifications were identified and responded to appropriately and assuring that the designs submitted were carried in accordance with Good Industry Practice, are virtually impossible to quantify.

Achievements • During the 2007/8 financial year, the average days to complete a review varied between 19 and 27 days with a mean of 23 days. • During the 2008/9 financial year, the average days to complete a review varied between 22 and 29 days with a mean of 26 days. • During the 2009/10 financial year, the average days to complete a review varied between 22 and 32 days with a mean of 26 days. Up to and including December the mean was 24,6 days. The recent strong focus on closing out OCD 1 reviews, comment responses and IFC drawings resulted in the average days figure jumping to 32,2 days in January 2010, but this then reduced steadily to financial year end when it was 30,3 days.

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• During the 2010/2011 financial year, the average days to complete a review varied between 10 and 29 days with a mean of 24,6 days. • Despite the down-sizing of the Civil Design Review team and budget constraints, the team still continues an essential role in the management of the Civil Design Review process. The statistics for the team’s output for the past year to end March 2011 as contained in one of the two graphs included to Part 1 of this Annual Report show that they were still dealing with a number of primary design reviews, specifically of the Phase 2 stations, including the satellite bus depot in Pretoria and various landscaping submissions, all of which should have been completed some time ago. It is once again enlightening to view the tempo of the various submissions by the Concessionaire depicted in the other graph, which although abating from the highs experienced during the previous reporting year has nevertheless remained significant for most part of the year under review. It still serves to put into context the effect of the Concessionaire’s delayed design production. The two graphs included were selected from the Monthly and Quarterly reports as deemed appropriate for the purposes of this annual report but were expanded in time to span the last four financial years. They depict the following: Monthly Submissions by CJV The number of design review submissions each month are represented by the vertical yellow bars on top of which are stacked the number of IFC packages submitted (represented by the blue bars) and then topped by the green bars representing the number of comment responses received that month. T his graph once again clearly paints the “de facto” situation compared with the Concessionaire’s originally predicted design submissions for review completion by the end of the 2008 financial year. Reviews/Assessments by PST During the financial year under review, the original target of 300 documents issued per month was only reached or exceeded on two of the 12 months (16,7%). As stated in the objectives, this is to be expected at this stage of the design process. I t can also readily be seen from the above graphs that the Civil Design Review team, despite recent budget pressures, still handled a significant workload during the year under.

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• The quantitative achievements of the Civil Design Review team since the signing of the CA on 28 September 2006 and during the past financial year include: Aspect

4½ years since Signing of CA

Year ending 31 March 2011

Primary design reviews (complete packages)

3 657

454

Assessment of Concessionaire’s Comment Responses

3 269

707

Assessment of IFC packages

3 784*

395

Assessment of FTIFC packages (included in above total of IFC packages)

1 053

Requests for information to civil contractor (CR Process)

745

* The previously reported figure of 4 358 for the 3½ year period since signing of CA should have read 3 389. • During the assessment of the IFC and FTIFC drawings the previously identified two issues remained abundantly clear: o The Concessionaire was hopelessly behind in responding to many of the PST Design Reviews which resulted in the submission of further packages without closing out previous reviews for the same design element and o The Concessionaire was issuing IFC drawings without incorporating Province’s Design Review comments. T he Civil Design Review team is CR (Comment Review Response) process to ensure that the Concessionaire did in fact incorporate all of Province comments in their final designs continued to be implemented. As can be seen from the above tabulation, the total number of CR requests for information has now reached a total of 745, of which 78 were issued during the past year. • Most Monday mornings had scheduled Concession Development Management meetings and these continued to the end of 2010. Starting from 10 January 2011, Operating Period Meetings (OPM) were scheduled at fortnightly intervals and these were then interspersed with fortnightly Development Period Meetings (DPM) starting from 17 January 2011. 41 of these 45 scheduled meetings were attended during the year. • During the reporting period, some eight out of eight scheduled Monthly Project Progress meetings were attended. • Monthly Engineering Manager’s reports were issued each month. Every third month they are adapted to serve as the Quarterly DoRA Report.

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• High Level Design meetings were originally scheduled every fortnight but during the year under review they were further reduced to one a month and then one every second month, on average. A total of 10 high level design meetings took place and all were attended.

Other Issues • The number of design errors and omissions still being uncovered by the design team led to the issue of numerous “B Action” reviews and are once again considered to be the outcome of the Concessionaire’s drive to reduce the design effort to the minimum on all but the most significant structures. Even then, there have been and continue to be many issues identified by the design review team requiring rectification. The further comments made in respect of this issue in the last annual report are still valid, but will not be repeated here. o The “Design comment close-out workshops” for OCD 1 civil design issues were completed, but at the end of the financial year the situation was as follows: Design Review Situation PST still reviewing

Bombela to respond

OCD 1 Open Reviews

No. which are Cat 4 reviews

o No similar initiative has as yet been undertaken for OCD 2 civil design issues. The situation at the end of the financial year was however as follows: Design Review Situation PST still reviewing OCD 2 Open Reviews No which are Cat 4 reviews

Bombela to respond to reviews

to “CR’s”

228

Total 308

Note: Only five OCD 2 comment responses received during March. hilst it is difficult to predict when the Concessionaire’s OCD 2 civil designs submissions will be completed and W all comments closed out, it is now considered to be unlikely before the end of 2011, at the earliest, possibly as late as March 2012 unless other interventions materialise.

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Civil Construction Assurance Monitoring objective: Civil construction work satisfactorily meets with requirements of the CA. The objective of the Construction Assurance management Team is: â&#x20AC;˘ To ensure that the Concessionaire meets the requirements of the Concession Agreement, the Concession Specifications and generally accepted engineering construction principles. â&#x20AC;˘ To establish a reliable record of civil construction events that can be used for commercial, contractual and litigation purposes.

Performance indicator: Construction assurance management reports. The Section Managers compile monthly reports from daily dairies reflecting the status of the work on their sections. The following is an overview of the activities on the various Sections during the past year.

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Section 1 Park station All major works for Johannesburg Park station are complete. The platform level is ready for train trial running which is scheduled to commence soon. The passenger concourse is also largely complete with a few electrical installations such as Automatic Fare Collection gates (AFCs) and Ticket Vending Machines (TVMs) still to be completed. The south entrance pavilion, connecting the Gautrain with the Johannesburg PRASA station, is running behind on programme, but should meet the set deadline for full train operations by end of June 2011. Backfilling of the cut and cover section of the station excavation commenced on 14 January 2011 and is still ongoing. The parkade structure and the ventilation building are complete with minor snag repairs still being carried out. The track slab in the tunnel between Park station and emergency shaft E2 was completed on 28 February 2011.

Emergency shafts E1 to E7 During the past year, the shaft and head house structures on all the shafts were completed. At present finishing on lift installations and landscaping is still underway. Some testing and commissioning of electrical equipment is in progress, but it will be completed and finished before the end of June 2011.

Tunnels between Park station and Rosebank station All the tunnel works from Park station to the Marlboro portal are complete. There are serious water ingress problems between E2 and Park station. These have has been referred to the Dispute Resolution Board (DRB) for a decision. The outcome is expected in June 2011. However, the excess water in the tunnel is at present being managed by additional drainage pipes that have recently been installed. The impact of the water ingress on the future efficient operation and maintenance of the tunnel, is at present a serious concern for all parties involved in the Project.

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Rosebank station The station works are complete. Oxford Road was reinstated to its original position above the underground station. The two passenger entrances from Oxford Road and the ventilation structures are still under construction but they will be finished before the station opens to traffic in June 2011. Trial running of trains between Rosebank station and Sandton station, commenced on 7 March 2011. Construction of the parkade structure that commenced during the previous reporting year is complete and minor snags have been rectified. The leaks on the top slab have been waterproofed and overlaid with asphalt.

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Annual Report 2011

Sandton Station to Marlboro Portal Sandton station opened to the public on the 8 of June 2010 for use between Sandton and ORTIA. Only platform PC was opened to the public. Platform PA was 90% complete and PB 50% complete. The main areas to be utilised by the public were completed to a reasonable standard, and the balance of the civil work and finishing was undertaken until March 2011 and is in the de-snagging phase now. Only one third of the parking bays on B3, B2 and B1 levels were available for public use when the station officially opened. The balance of the parking opened in February and March 2011. Construction of the taxi rank was completed with finishing and snagging occurring between January â&#x20AC;&#x201C; April 2011. No official handover of the Taxi rank has taken place and this facility remains vacant. Water ingress issues persist in the station complex, but the contractor seems confident that all these issues will be resolved by the end of June 2011. De-snagging is continuing in all areas of the station whilst there are still areas with incomplete work. The tunnels between Sandton and Marlboro portal have been completed and handed over to the operator, but closing out of the final snag list along with outstanding work (blocked drains, water ingress, etc.) have yet to be completed and checked by PST. The tunnel brows at Mushroom Farm Park presented water ingress problems on the PB side. Using various gutter and cavi-drain installation techniques, the water inflow seems to have been controlled so as not to drip directly onto the tracks. Marlboro portal cut and cover structure remains 99% complete with final snagging of the technical rooms and generator building still ongoing.

Quality In the three to four months run up to the opening of the Sandton station (8 June 2010), quality control with regard to the civil works deteriorated. and as a consequence numerous Quality Concern Notices (QCNs) and Quality Advisory Notices (QANs) were issued by PST, documenting these non-conformances. Generally good workmanship standards and the quality of completed works have deteriorated to a point where the construction assurance team is hard pressed to provide the levels of assurance given previously. There is evidence of disregard towards the concessionaireâ&#x20AC;&#x2122;s quality management system, with the general quality of works falling below the specifications in many areas.

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Section 2 The whole of Section 2, between ORTIA and Marlboro portal, was finished in time for the 2010 FIFA World Cup™ in June 2010. However, there remained a large quantity of finishing work to be done, as well as fixing of snags. This continued during the latter part of 2010 up to the end of March 2011. At present, there are still 82 quality related snags that must be fixed.

Quality During the reporting period members of the Section Technical staff executed daily quality spot checks and the following issues were raised: • Reinforced Earth Walls 1 to 8 (REW 1 to REW 8) do not conform to the construction specifications as specified in the Concession Agreement. • There are permanent alignment non-conformances to the parapets of viaducts 1a, 14, and 15 as well as parapet walls to Marlboro station platform no. 1 and some of the bridge decks on the section. • Exposed conduits on the underside of the suspended ceiling of the ground floor areas of Rhodesfield station require rectification. • The brick work and plastering to the APS 5 yard construction at Rhodesfield station is unacceptable and requires major attention. QAN 44 is not closed as yet. • Water damage occurred at Rhodesfield station during the rainy season and needs attention. • The Gautrain palisade fence between culvert 2b and 2c is not constructed on the boundary of the rail reserve therefore causing a safety hazard to the public. • There are three Quality Advisory Notices (QANs), excluding QAN 44, that have not been closed. Indications are that the Concessionaire will not correct these issues and they might end up as Retention Items.

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Section 3 Earthworks, linear works, train depot and structures All linear works and facilities were completed on time to meet the target date for the 2010 FIFA World Cupâ&#x201E;˘. The Test Track and train depot were the major facilities that had to be completed well in advance of the Operational Commencement Date for Phase 1 (OCD 1) to be able to complete the required testing of rolling stock. These facilities were officially handed over to Operations and Maintenance (O&M) on 19 April 2010. All earthworks were completed by March 2010 and during the past year; minor works adjacent to the rail formation were completed such as:

Concrete lined drains, trimming of slopes, placing topsoil, hydro seeding and placing of grass sods The viaducts, bridges and culverts were all complete at the beginning of the reporting period except for finishing and snags.

Bus depot Construction of the Midrand bus depot started in June 2009 and was finished in May 2010.

Midrand station Progress on construction of the station increased from 79.5% in April 2010 to 100% in March 2011. Only 4% of the remaining snags still need to be closed out as at end of March 2011.

Fencing, maintenance roads and environmental The fencing and maintenance roads were completed by August 2010. The seeding and sodding of the embankment slopes as well as the rehabilitation of disturbed areas were completed at the end of August 2010.

Utilities A total of 127 Utilities were relocated on Section 3 of which 88 were completed, handed over and accepted by Utility owners. For the remainder of the Utilities, Utility owners demand proper as-built drawings, bills of quantities and quality documentation before considering acceptance.

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Section 4 Earthworks and retaining structures in the Samrand-Centurion-Pretoria Central section are substantially completed along the track formation, but trimming of embankment and cutting slopes, storm water drainage channels, service roads, landscaping, grassing and fencing are well behind programme. These works will continue well beyond start of operations (OCD 2). Earthworks, retaining structures and lateral support along the section between Pretoria station and Hatfield station are substantially complete.

Viaducts Construction is complete on the 6-span balanced cantilever viaducts at John Vorster Interchange and Jean Avenue Interchange, the precast segmental viaduct through Centurion, the 6-span viaduct at Eeufees Road intersection, as well as the viaduct /flyover structures over the existing railway lines south of Pretoria station and Nelson Mandela Boulevard. All of these structures total 5 606 metres.

U-shapes The U-shape structures are essentially continuous bridge decks constructed directly on the pre-stabilised ground in dolomite formations where the soils are very deep and prone to sinkhole development. The 335 metre-long U-shape structure south of John Vorster Interchange and the 4 999 metre-long U-shape structure through the Military Area have been completed.

Bridges (overpasses and underpasses) Section 4 has 11 overpass bridges (including 2 cut and cover tunnels totalling 365 metres) and five underpass bridges. All of these structures have been completed, as well as the doubling of the Jean Avenue Bridge over the N1 Freeway at Centurion.

Stations Civil finishing work on Centurion, Pretoria and Hatfield stations and at the Pretoria satellite bus depot are substantially completed, as are the parking areas at Centurion and Pretoria stations and the multi-level parkade at Hatfield station. Electrical and mechanical installations at all of the stations and the depot are substantially completed.

Utility diversions and road upgrades Utility diversions are substantially completed in Centurion and Pretoria Central and are well advanced between Pretoria and Hatfield stations. Road upgrades are nearing completion in Centurion and Pretoria, and are expected to be completed by OCD 2.

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Health and Safety Health and Safety personnel and audit systems are in place. Safety concerns raised by Province Support Team (PST) are addressed promptly. No major incidents or disabling injuries have occurred.

Environmental Environmental inspection personnel and audit systems are in place, although staff turnover is a problem. Although there were two early instances of unauthorised stockpiling of excavated material near watercourses (subsequently removed and the areas reinstated), no major incidents have occurred. Concerns raised by the PST or the local authority are addressed reasonably promptly.

Quality Demobilisation of the Concessionaireâ&#x20AC;&#x2122;s civil construction supervisors and quality assurance staff towards the end of the Development Period, has left insufficient personnel to ensure that the quality of work produced is compliant with specification. This has resulted in a steadily increasing number of Quality Advisory Notices issued by the PST and the work having to be re-done to the required standard. Notwithstanding the above concerns, the quality of execution of most of the permanent works to date has been of variant quality. The construction standards and quality of the two balanced cantilever bridges are of very high quality; the segmental viaducts are of good quality; the U-shapes are in general of poor workmanship and the storm water drainage structures have a large percentage of non conforming and poor quality work that is being or has to be rectified.

Conclusion Province is Construction Assurance Management Team has successfully managed to execute the defined mandate as required from Province representative and have developed the assurance function to effectively support the Project. In the last three months before commissioning of the total system at the end of June 2011, the Construction Assurance Management Team will ensure that all outstanding work is recorded, the snag lists are complete and non conformances are brought to the attention of the Independent Certifier.

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Electrical and Mechanical Systems E&M and M&E Status and Installation Assurance The objective of installation assurance is to assure that the E&M systems as installed comply with the Concession Agreement, Province Requirements and the Concessionaire Proposal as well as the local standards and specifications as well as the international standards of best practice with regard to the particular sub-system. Where problems are detected or foreseen, these are raised quickly with the Concessionaire to initiate corrective action. Many potential problems were detected by Province E&M team and these resulted in corrective resolution ahead of operational commencement. The status of the overall E&M sub-system is reflected in the individual E&M and M&E sub-systems report.

Electrical and Mechanical Assurance Reports The team compiles monthly and quarterly reports on the status of the Project. There has been substantial progress during the year in the design and installation of the various sub-systems as described below. OCD 1 was achieved on 8 June 2011 in time for the 2010 FIFA World Cupâ&#x201E;˘. All of the E&M sub-systems for OCD 1 were installed, tested and commissioned and fully operational with some sangs which needed to be resolved whilst the system is running. The system continues to run satisfactorily to this day. After OCD 1 attention was focused on the installation, testing and commissioning for the OCD 2 systems. The following reflects the status report on the various sub-systems.

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Signalling system The signalling system is a specialised electronic and computer based system that regulates the safe and efficient movement of trains on the Gautrain system by means of the “distance to go” principle. Movement authorities containing speed and distance are communicated to the train by means of track mounted balises. The on-board ATP (Automatic Train Protection) monitors the speed and distance travelled. If the driver of the train does not adhere to the movement authority, the ATP system will intervene by means of a warning and/or braking of the train. The equipment works in an integrated manner with the telecommunications equipment. Province E&M team participated in various signalling tests including the achievement by the Gautrain of a target speed of 160km/h regulated by the ATP, the loading of the timetable into the system and the testing (SPVT) thereof with up to 13 trains in the system. During the latter part of 2010, a problem was detected regarding the Signalling System equipment. The Concessionaire discovered that the track circuit equipment as provided by the local supplier ERB does not meet the required standards as set out for the Gautrain. The Concessionaire has decided to replace all such equipment, for the whole of the Gautrain system, with equipment produced by Bombardier Transportation in Britain that meets the specified requirements. The new equipment is a digital type, whereas the originally installed equipment is analogue based. It is anticipated that the change-out process will take 12 months to complete. In addition, some modifications are required to the power supply surge protection in the track circuit equipment. These modifications will be done by RCS on site. Assessment of the Gautrain construction and installation programme indicated that the Pretoria – Hatfield and the Rosebank – Park station part on the Gautrain system will not be available by February 2011. In order to facilitate the start of Trial Run, the E&M contractor divided OCD 2 into two parts, the OCD 2A for Rosebank – Pretoria and the OCD 2B which includes the two outer ends of the Gautrain system in the North (Pretoria – Hatfield) and South (Rosebank-Park). The Signalling and the Telecommunications system was configured to allow Trial running for OCD 2A and later to include OCD 2B. OCD 2A Trial running started on 8 March 2011 and is progressing well. The OCD 2B is planned to be included in the trial running by 17 May 2011. The ATP system experienced in several locations a time-out which needed resolution. Ten balises whose positions had been identified as problematic by the contractor have been replaced. OCD 2 signalling installations were complete to Pretoria and testing continued during March. In the Southern section the signalling installation works are complete to Rosebank station and are continued towards Park station and in the north towards Hatfield station. Trial run for OCD 2A is continuing.

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Trackwork OCD 1 Trackwork was completed in time for the achievement of OCD 1 on 8 June 2010 with snags. After this attention was focused on the resolution of snags and OCD 2. In the latter part of 2010, it was discovered that a number of Thermit welds were defective. This resulted in broken rail incidents on the OCD 1 line. As a precaution all the suspect welds which numbered around 200 were clamped. On investigation it was found that a faulty batch of Thermit welds material used on the welds was responsible. The suspect welds were then systematically replaced and the clamps removed. The kink in the Marlboro-Sandton tunnel, which resulted in a poor ride quality, has been rectified by means of specially designed Sonneville blocks. The ride quality improved as a result. A programme to grind all the rails on OCD 1 and OCD 2 was commenced in order to improve the ride quality of the Gautrain. In line with the OCD 2A and OCD 2B, Trackwork for the Rosebank to Pretoria (OCD 2A) was completed by December 2010 and the balance later. Trial running between Rosebank and Pretoria commenced in the second week of March. Grinding of rails has been sporadic and irregular due to mechanical problems with the grinder as well as track occupation problems. Approximately 85km of track has nevertheless been completed (approximately 58% of the total). The destressing of the Pretoria-Hatfield lines was completed during the March 2011. Derailment containment rails on the curves on Viaduct 7 have been installed. The final pour of concrete for track installation at Park station was completed on 4 March 2011. Although Trackwork construction is now complete many snags require attention by the Trackwork teams. These snags, which number over 2 000, mostly involve the replacement of damaged sleeper fastenings. It is clear that the tracklaying contractor will require a few months to complete the work involved. Trains have been running between the depot and Pretoria on a regular basis. The Kelvin power station siding issues remain unresolved. Derailment containment measures and ballast mat issues require commercial agreement and closure. An assessment of the effect of grinding on the ride quality of the tracks is being done on an ongoing basis, and is thus far positive.

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Telecommunications equipment A dependable telecommunications system is essential for the successful operation of a rail transportation system. Passengers rely upon the telecommunication system for information such as communication of information on normal and abnormal events, emergency situations etc. Furthermore, centralised control would be impossible without telecommunications as it provides the control centre employees with eyes and ears throughout the system and serves as the data communication backbone for all control systems. The Gautrain telecommunications system consists of the following subsystems: • Fibre Optic Communication System (FOCS). • Private Branch Exchange (PBX) Telephone System. • Radio System. • Public Address (PA) System. • Passenger Information (PI) and Clock System. • Closed Circuit Television (CCTV) System. The FOCS system, which is the backbone of the communications system was configured as per the Signalling configuration to allow OCD 2A and OCD 2B segmentation of the system. This enabled trains to run and trial run operations to commence between Rosebank and Pretoria (OCD 2A) and later to be configured for the full system, which includes the sections Rosebank-Park and Pretoria-Hatfield (OCD 2B). FOCS installation for OCD 2A is complete up to Pretoria station in the Northern section and to Rosebank station in the South. Installation towards Park and Hatfield stations has been continuing and should be complete in early April. There are no system issues. Radio Communications System The OCD 1 tunnel radio system has exhibited poor quality and reliability issues. The contractor has carried numerous design changes with the aim of improving the situation. This has led to marginal improvements and the reliability and quality issues still not fully resolved. It remains Province’s contention however that this portion of the system does not substantially conform to specification with consequent implications for reliability and maintainability. The Rail Safety Regulator has raised concerns about the OCD 1 radio as it is a critical part of the Safety Case. The Concessionaire is busy working on a resolution of the problem. An audit is planned to be done by TKC which inform if the radio is fit for purpose and compliant with operational requirements. A revised system design for OCD 2 has been implemented. This design makes use of fibre fed repeaters for the OCD 2 tunnels and appears to be satisfactory. A number of issues remain for the above-ground sections of the system with inadequate coverage evident in a number of areas. A 25 metre antenna mast is being erected at Midrand station to improve coverage from this base station. Testing of the above-ground sections for OCD 2 is ongoing. CCTV CCTV for OCD 1 is complete and is functioning satisfactorily. Installation work for OCD 2 is continuing and is estimated to be at about 90 percent completion. A minor problem has become apparent in that presumed electrical interference with some exterior cameras makes controlling them difficult or temporarily not possible. This is particularly so during lightning storms. The matter is still being addressed by the CCTV supplier.

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SCADA The SCADA system is part of the overall telecommunication system of the railway and is used for the monitoring and control of amongst others, the Closed Circuit Television (CCTV), the Passenger Information System (PIS), the Public Address System (PAS), the Overhead Contact and Distribution System (OCDS), the station and Tunnel Management System (STMS) and other Building Management Systems (BMS). The SCADA System will allow centralised computer monitoring and selected control of sub-systems including: • Wayside Communication Equipment: o Fibre Optic Communication System (FOCS); o Automatic Fare Collection (AFC); o Public Address System (PAS); o Passenger Information System (PIS); o Closed Circuit Television (CCTV); o Private Branch Exchange (PBX) and o Emergency Telephones (ETELS). • Power Supply and Distribution System (PS&D): o Main Power Station (MPS); o Autotransformer Paralleling Sub-stations (APS); o Power Sectionalisation Disconnect Switches and o Uninterruptible Power Supply (UPS). • Fire Alarm Panels: o Fire Alarm Activation. • Security and Access Management System (SAMS): o Door Forced Indications. • Building Management System (BMS): o Fire Alarm Activation; o Escalators and o Lifts. • Tunnel Mechanical and Electrical Management System (TMEMS): o Tunnel 11 kV Power Supply and Distribution; o Tunnel Fire Hydrant Network; o Tunnel Ventilation / Smoke Control; o Tunnel Lighting and o Tunnel Storm Water Drainage and Pumping System. The SCADA system for OCD 2 has been through all the various tests such as PICO, SAT and SITS. During the SPVT period various snags have been reported. Most of the alarms are caused by the equipment being monitored by the SCADA. There are some small integration issues with the SAMS and STMS, but these are being sorted out and should be resolved by OCD 2. There are a few display issues that have been identified by the operator. The SCADA is ready (service worthy) for OCD 2. SCADA Equipment at the MPS SCADA Equipment at the MPS TYPICAL RTU CABINET.

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Depot equipment Depot equipment is the specialised equipment, both stationary and mobile, that is used to carry out efficient maintenance of the Rolling Stock, Trackwork, and Lineside Equipment. It comprises a ballast tamper, a rail grinder, in-floor and lineside vehicle jacks, bogie turntable, inspection- and drop pits, lifting cranes, an underfloor wheel lathe, sand distribution facility, maintenance and recovery locomotive, a catenary inspection vehicle, a track geometry measurement vehicles, a vehicle wash system and necessary minor equipment. The installation, commissioning, and operator training of major and minor equipment is complete, except for the catenary maintenance vehicle mentioned below. In respect of train maintenance, this includes the workshop buildings and staging tracks, overhead cranes and lifting jacks, under-floor wheel lathe and ancillary equipment, store rooms and spares stock, specialised testing equipment for bogies, brakes, HVAC and outside, the train washing plant and sanding facility, and shunting locomotives. In respect of infrastructure maintenance, this subsumes the ballast temping machine, flat- and hopper wagons, tie crane and rail grinder. Some of this equipment is still being used for construction and will be refurbished for maintenance when construction is complete. Light inspection and recovery vehicles have also been delivered and commissioned. The only outstanding equipment is the catenary maintenance vehicle, which should already have been in service. However, its bogies were damaged during off-loading at the port in South Africa. They are being repaired in Germany and the catenary maintenance vehicle should be in service by mid-2011.

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Rolling Stock The Rolling Stock is Bombardierâ&#x20AC;&#x2122;s Electrostar, which has been designed to operate at a speed of 160km/h. It has been adapted where necessary to meet Gautrainâ&#x20AC;&#x2122;s specific requirements. Ninety six such cars, representing the entire requirements for the Operating Period, have already been manufactured. The first 15 were built completely in the United Kingdom and imported to South Africa, while the remaining 81 were assembled in South Africa at the UCW Partnership in Nigel. The 24 trains, comprising four cars each, have all been delivered, commissioned, and tested. The five OCD 1 airport trains, on which two cars of each are allocated to airport passengers, have been in revenue service for almost a year. They have proven reliable and comfortable.

Automatic fare collection equipment The Automatic Fare Collection (AFC) System is designed to manage fare media sales, fare collection and control the ingress and egress of paying passengers of the Gautrain Rapid Rail Link. The Automatic Fare Collection System will provide integrated vending and collection of fares for buses, parking and train facilities associated with the Gautrain. The Gautrain is using a Contactless Smart Card (CSC) as a ticket for single journey tickets and period passes such as weekly and monthly ticket. For first time parking users, a magnetic ticket will be used. This magnetic ticket can be upgraded to a more functional CSC at the Ticket Office Machine (TOM) or Automatic Ticket Vending Machine (TVM). The Concessionaire and Province held regular workshops and meetings to finalise the AFC business rules. All the Ticket Vending Machines (TVM), fare gates and ticket office machines (TOM) have been delivered to stations, installed, tested and commissioned accordingly. The TVM design incorporates a choice of four languages for passengers interacting with the machine, viz. English, Afrikaans, isiZulu and Sesotho. Testing and Commissioning of these components was done in three phases, viz. PICO (Post Installation Checkout), SAT (Site Acceptance Tests) and SIT (Site Integration Tests). There is a concern within Province with regard to the capacity of the AFC system to cope with initial ticket demand at the beginning of OCD 2 services. This is receiving high level attention through interaction between Province and the Concessionaire.

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Traction power and overhead catenary system The Gautrain traction power is derived from two separate 88 kV Eskom feeds which power four 40 MVA 2 x 25 kV AC single phase transformers. Power is distributed along the alignment through a double feeder Overhead Contact Distribution System (OCDS) with five Auto Paralleling Stations (APS) balancing the load. Marlboro and Rhodesfield APSs were successfully energised in time for OCD 1. The installations however did not meet the standard normally associated with new traction power sub-stations. A high voltage cable fire at Marlboro APS in June 2010 also damaged the control cables and resulted in a complete traction power loss. Remedial work was undertaken at Marlboro APS during November 2010 to mitigate some of the installation deficiencies. All APS sites were handed over to E&M by end September 2010 with some snagging work still outstanding. The impact on the Project completion date of the late hand overs is not clear. Severe deficiencies in design integration, site supervision and coordination between E&M and CJV was evident in the APS civil works with incorrect cable routing, incorrect hold down bolts and earth tails in incorrect positions. The commissioning of Samrand APS was delayed by more than three months by the unavailability of the auxiliary power supply and was eventually energised in mid December 2010. Pretoria APS was successfully energised end January 2011. Trial running for OCD 2a commenced on 8 March 2011 with only Hatfield APS remaining to be commissioned. Energisation of the Hatfield station is planned for early April 2011. The traction power system is now feeding power into the OCDS system between Pretoria and Rosebank and to the airport. A number of technical issues still need to be resolved on the traction power system with some issues open since June 2009. Regular meetings are being held between E&M, TKC and ABB and slow progress is being made on closing out the issues. The issues have now also been included in the list of ‘Province High Level Concerns’. Little progress has been made on the closing out of PST’s formal review comments. The Final Design Review still has a C-action on the design. A pole transformer providing auxiliary power to Samrand Signalling REB from the OCDS failed and tripped the MPS in early March 2011. It was found that a fault occurred inside the transformer. The incorrect operation of the protection system is being investigated. The integrity of the auxiliary power supplies at the APSs is a point of concern. Assurance has been sought from the Concessionaire on the reliability of the APS’s auxiliary power supplies. Recent auxiliary power outages have resulted in the loss of the traction power and the supply and the design has been questioned with respect to its suitability, SCADA alarms, maintenance procedures and protection settings. The installations at existing and future APSs may prove to be non-compliant with the contractual requirement that it must be possible to perform all preventative and corrective maintenance without impacting the train service. This issue is currently under discussion by PST, TKC and E&M and a final E&M report on the issue is still awaited.

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Overhead Contact Distribution System The Overhead Contact Distribution System (OCDS) provides traction power to the Rolling Stock along the alignment. The installation is a typical 2 x 25 kV auto transformer system. The support structures are cantilever structures in the open section and a contact bar arrangement in the tunnels. The complete OCDS system for OCD 1 was successfully energised in April 2010. A break was left in the OCDS around Dale Road to separate the OCD 1 into two sections. This gap was closed in October 2010 and the OCDS was successfully energised from Sandton up to Samrand in early November 2010. Sandton-Rosebank and Samrand-Centurion was energised in December 2010. A bending termination structure at Pretoria station prevented energisation of the whole line. The defective structure was supported by stay wires and the whole line was energised from Rosebank to Pretoria in January 2011. Late formation hand overs severely impacted on the installation of the OCDS system. Formal formation hand overs were all late with Sandton station to Park station achieved in mid November 2010, up to Pretoria station in September 2010 and the Hatfield tranch only in mid December 2010 (more than seven months late). The Hatfield section was part delayed by civil works between Cilliers Road and the PRASA Walker Street station. The effect of late formation hand overs on the project completion date is difficult to quantify. The installation along the Hatfield tranch and between Rosebank and Park stations were completed by the end of March 2011. The break in the contact bar just south of Rosebank station will be closed in early April 2011 and the rest of the tunnel energised. The Hatfield station is also scheduled for energisation in early April 2011. Insulated cladding was installed around the structural beams on Sandton platform A in April 2010 to mitigate the electrical clearance issues to the contact bar. A constant electrical discharge was however occurring with the arc also marking the insulation. The contact bar in the area was removed in July 2010. A rigid OCDS transition arrangement was implemented in early December 2010 with the standard electrical clearances as required by the Concession Specification not being achieved. A presentation on the issue was attended by PST in late Feb 2011 and it was clear that the solution offered by the Concessionaire has significant long term maintenance and operational implications. PST has strongly objected to the solution and insisted that the Concessionaire meet the standard. A follow-up meeting on the issue was attended by PST in late March 2011. The Concessionaire is now considering covering more of the beam with the insulating material to achieve the required clearances. The final proposal and report on the issue is expected in April 2011. An incident occurred in early August 2010 in which an employee of the OCDS installation sub-contractor (Tractional) suffered an electric shock while working on the OCDS system around Dale Road. The injured person came into contact with a live feeder wire due to a failure in the isolation procedures. A prohibition directive was raised by the Railway Safety Regulator prohibiting any OCDS work to take place but was later amended to only include energised areas (i.e. OCD 1). A board of enquiry was established and a preliminary report was issued late August 2010. The injured person made a good recovery in hospital and was discharged from hospital in September 2010.

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Safety and security systems Safety and Security Systems are designed to detect hazardous situations and notify the Operations Control Centre accordingly in order to protect human life and equipment and provide security to personnel and facilities. These include: • SAMS (Security and Access Management System), controlling access in the stations and depot; • STMS (Stations and Tunnels Management System) controlling the extraction of smoke in the tunnel when an incident occurs and cooling of the tunnels and • FDP (Fire Detection and Protection) systems which ensure detection of fire, alarming in case of emergency to enable evacuation and fire protection availability through hose reels, extinguishers, sprinklers and gas suppression (only in certain equipment rooms). These systems have been installed, commissioned and tested (PICOs, SATs and SITs) in all the OCD 2 stations including all the Emergency Shafts, APS 2, 3 & 4. However most of these systems, STMS and SAMS in particular were not consistent during the SIT stage, but they were accepted by Bombela Operating Company for trial run. We are now at the trial run stage and most of the Trial Run Exercises performed by Bombela Operating Company on STMS and SAMS. The second Emergency Vehicle has now arrived and is parked at Park station; however its cover has not arrived in the country yet. The braking system which has always been of major concern has been improved and was tested fine on a 4% incline at E5.

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Mechanical systems The mechanical systems of the Gautrain Project consist of escalators, lifts, pumps, station HVAC systems and tunnel ventilation systems. Mechanical equipment (escalators, lifts and HVAC) installation work at all stations apart from Hatfield and Park stations is complete. Installation work is still continuing at the emergency shafts but now with limited access due to the commencement of Trial Running. The mechanical, HVAC and ventilation designs for all stations and tunnels are complete. There is a concern on the tunnel ventilation installation between Sandton and Rosebank stations where the design air velocities have not been achieved during the initial test. This is receiving attention from the Concessionaire for speedy resolution. The issues on the ventilation system and outstanding works in the emergency shafts must be resolved and completed before passenger service can commence. The ventilation system and emergency shafts are critical to the safe operation of the system. All above ground stations have HVAC systems installed for the station concourses apart from Marlboro and Rhodesfield stations where only natural ventilation has been used. Natural ventilation in PSTâ&#x20AC;&#x2122;s view will not meet the contractual temperature requirements and compliance to the specification will be assessed when the system is fully operational. A potential non-compliance also exists on the winter design criteria. The Concessionaire has proposed to install spot heaters for the concourses but PST are still awaiting assurance that the specification can be met with this solution.

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Power supply, lighting and small power Power Supply At the train depot, bus depot, stations, sub-stations and tunnels, the Power Supply consists of the Eskom or Local Supply Authority 11 kV main incoming feed, 11 kV to 400 volt main transformer systems, the associated LV switchboards, miniature sub-stations and the associated back-up power systems (Diesel generator and UPS ), three phase and single phase power distribution systems, earthing and lightning protection systems. The 11 kV RMUs, Distribution Transformers, MV & LV Switchboards, Miniature sub-stations, Diesel generators, UPSs, MV & LV Cables, Earthing and Lightning Protection Systems, have been subjected to PICOs, FATs, SATs and SITs prior to energisation of the systems. The power supply systems have been energised and is operational at the train depot, Rhodesfield station, ORTIA station, Marlboro station, Marlboro portal, Sandspruit sub-station, Mushroom Farm Park sub-station, Sandton station, Midrand bus depot, Midrand station, Rosebank station, Park station, emergency shafts E1 to E7, Centurion station, Pretoria station, Hatfield station and Pretoria satellite bus depot. Lighting and Small Power Installation At the train depot, bus depotâ&#x20AC;&#x2122;s, stations, sub-stations, emergency shafts, and tunnels, the lighting and small power installations consists of LV switchboards, cable containment, wireways, outlet boxes, wiring, switches, luminaires, socket outlets and earthing. The circuit wiring makes provision for a dual system to allow for normal and emergency lighting and socket outlets. The installation has been subjected to PICOs, FATs, SATs and SITs prior to energisation of the system. The lighting and socket outlet installation has been energised and is operational at the train depot, Rhodesfield station, ORTIA station, Marlboro station, Marlboro portal, Sandspruit sub-station, Mushroom Farm Park sub-station, Sandton station, tunnel from Marlboro portal up to Park station, Rosebank station, Park station, emergency shafts E1 to E7, Midrand bus depot, Midrand station, Centurion station, Pretoria station, Hatfield station and Pretoria satellite bus depot.

SARCC relocation The Gautrain runs in the South African Rail Commuter Corporation (now called PRASA) Rail Reserve in the Pretoria to Hatfield section. There is a need to relocate the track, signals and related infrastructure of PRASA in order to make way for the Gautrain. There is also a need to immunise PRASA signalling infrastructure to minimise interference from the AC traction. The relocation of the PRASA assets and immunisations is well advanced. There are excessive stray currents which were measured as emanating from the PRASA direct current line. This can have a negative impact on the Gautrain infrastructure and needs to be resolved. This issue is receiving attention for resolution by PRASA.

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Safety, Health, Environment and Quality Assurance Executive Summary Occupational health and safety The Concessionaireâ&#x20AC;&#x2122;s planning of OH&S systems has proved to be of an acceptable standard. Although the improving safety statistics since the beginning of the Project gave cause for optimism, the high incident rate of 53 LTIs for the period under review emphasises the need for constant vigilance. With site activities drawing to a close and manpower levels rapidly reducing, the Concessionaire will need to continue taking the necessary action to mitigate risk on site. In particular, observations on site and the results of several site audits have given cause for concern where a lack of competent safety management controls was plainly evident. A review of current OH&S practice, relating to Provinceâ&#x20AC;&#x2122;s staff, has been conducted and several improvement initiatives have been implemented.

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Environmental Province’s Environmental Team’s input has continued to be required across a wide range of Project-related issues including: • The assurance of compliance by the Concessionaire with the Concession Agreement, the Project RoD and DF EMP conditions. • The drafting of formal correspondence to the Concessionaire and other parties. • The review of Applications for authorisation prepared by the Concessionaire, including the O&M Standards EMP and the O&M EMP. • The review and comment on performance and monitoring reports produced by the Concessionaire, the IECP and the SEC. • Site investigations. • The formalisation and management of Province’s environmental library. • Input into the ‘snag lists’ being prepared by the CJV for OCD 1 and OCD 2, the latter submitted to the Independent Certifier and to the Concessionaire to ensure these are addressed and remediated by the Concessionaire. • Design review. • Specific input and advice to other Province functions on environmentally-related legal and technical issues. • Providing input to Province Support Team regarding environmental disputes. The Concessionaire’s compliance record has continued to be of concern, mainly with regard to water management issues and in particular with water pumped from the tunnel section of the alignment. As a result, the Directive issued by the Department of Water Affairs (DWA) to the Concessionaire in December 2008 has not yet been lifted. Furthermore, there were long delays by the Concessionaire in the preparation of a draft Application to the DWA for an amended WUL which would cover the permanent discharge of elevated volumes of water from the tunnels and other water uses that will be required for the operational period; as well as the necessary Applications relating to changes to the surface alignment. Towards the end of the reporting period draft reports in this regard were available for Province’s comment and Province has recorded its concerns regarding process-related issues and the content. These outstanding authorisations remain a key concern for Province, as does the detrimental impact of the dewatering of the tunnels on the groundwater table. Environmental non-compliance was also highlighted in the independent external environmental audit which is conducted annually as a requirement of the Project RoD. However, the findings of the follow-up audit (necessary because of the gravity of the findings of the initial audit) were more positive since the Concessionaire had closed most of the non-compliances identified. The unacceptably high number of designs, reviewed by Province, which were non-compliant with technical or statutory requirements, demonstrates that the environmental design review function performed by the Concessionaire remains inadequate. Province has confirmed that the Concessionaire’s environmental team is not reviewing designs effectively which leads to non-compliances in the field with consequent ongoing remedial measures to manage these issues. Province has corresponded with the Concessionaire in this regard. The Concessionaire remains under-resourced in the environmental arena and further staff losses have occurred due to the phased completion of construction, whilst a number of environmental snags still need to be closed-out. Many of the shortcomings in the Concessionaire’s performance could have been avoided if the Concessionaire had been adequately resourced. Province is following an assurance-based approach in the close-out of snags related to OCD 1 and OCD 2. Where Province has observed environmental non-compliances during its site inspections, it has informed the Concessionaire, so that such issues can be included in its snagging process, thereby facilitating rapid close-out.

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Quality The development of acceptable Quality Management Plans (QMPs) by the Concessionaire has presented challenges for some parties. In particular, a suitable QMP was only drafted by the E&M Contractor in June 2010. Subsequently, in order for Province to determine that essential controls were in place, a multidisciplinary team from Province performed an audit in October 2010 of the E&M’s activities. The resulting audit report identified several findings which were duly closed-out by the E&M Contractor in March 2011. A focus by the Concessionaire and Province on the close-out of site-related non-conformances has resulted in improved performance. Although the management of non-conformances remains an ongoing issue, structures have been established to improve communications between involved parties, with obvious benefits to product quality. Province’s team is performing an important role in monitoring the Concessionaire’s system acceptance process and is, in particular, assuring that all its concerns are being addressed appropriately by the Concessionaire. Current concerns relate to the limited time available for acceptance of the Works packages and the nonacceptance of many packages submitted to the Systems Acceptance Panel (SAP). Province has completed the development of its Quality System Handbook which was distributed to all users in March 2011. Work with the Concessionaire to establish a list of important documentary evidence (Key Assurance Documentation: KAD) that the Concessionaire’s systems have been developed and implemented, has been completed. The next stage involved recording the status of each listed document by gathering feedback from Province’s Functional Management. An analysis of the information has been conducted which shows that a substantial proportion of the KAD is still outstanding or is of unacceptable quality. This is of major concern to Province since it means that there is insufficient documentation available to provide the required assurance that the Concessionaire is executing its responsibilities in an acceptable manner. A special meeting of the Quality Steering Committee has been conducted to plan the way forward, and plans have been compiled to expedite delivery from the Concessionaire of the top priority documents identified.

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Basis for the Performance Against Objectives Report (Taken from the GMA Strategy) Safety, health and quality assurance • Monitoring Objective: ‘Development and compliance with key safety, health and quality documentation, strategies and systems’ • Performance Indicator: ‘Reports on compliance and deviations management’ • Time-frame: ‘Quarterly, annually’

Environmental Management • Monitoring Objective: ‘Attainment of environmental objects in the GMA Act and Concession Agreement in terms of RoDs and DF EMP’ • Performance Indicator: ‘Reports by the Environmental Management Committee. Reports by Independent Environmental Monitor’ • Time-frame: ‘Quarterly, annually’ Certain objects of the GMA Act have direct relevance to environmental management objectives of the Project, including to: ‘act on behalf of Province in managing the relationship between Province and Concessionaires in terms of concession agreements and ensure that the interests of Province are protected; to liaise with and promote co-operation between government structures in all three spheres of Government in relation to the Project; liaise with persons having an interest in the Project, (and to) monitor the policy and legislative environment of the Project’ This report explains how the performance against objectives has been achieved by Province’s SHEQ team over the past financial year by monitoring the Concessionaire’s performance in Occupational Health and Safety, Quality and Environmental Management.

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Occupational Health And Safety (OH&S) The Concessionaire’s systems development Prior to this reporting period, the TKC and the Contractors had submitted OH&S Management Plans to Province for review. Although there were previous re-submissions in some cases, important issues have now been addressed and are now considered acceptable.

The Concessionaire’s systems implementation Compliance Monitoring • OH&S Statistics The 12-month Lost Time Injury Frequency Rate, for the period of this annual report, appears below:

LOST TIME INJURY FATALITY LTIFR (12 MONTH ROLLING) INTERIM TARGET LTIFR > 5 DAYS LOST 9 8 7 6 5

4.53

4.42

4.11

4.14

3.65

3.26

3.48

3.25

3.40

3.15

3.38

3.12

3 2

1.64

1.54

1.28

1.20

1.16

1 0

0.94

1.04

1.13

1.23

1.12

1.18

1.04

40 269 40 299 40 330 40 360 40 391 40 422 40 452 40 483 40 513 40 544 40 575 40 603

There has been a noticeable improvement in the 12-month rolling LTI FR figures which has seen a lowering from those reported in the early part of the year reducing from 4.53 in April 2010 to 3.12 in March 2011. This is attributable to a number of factors which include the diminishing workforce levels and tighter control measures, reflecting a constant downward trend.

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The Concessionaire’s management has played a proactive role in preventing more serious incidents. Identified initiatives included increased training and toolbox talks which aimed at improving safety awareness and safety practice, followed up by regular intensified audits and monitoring of the approved CJV 10-point plan designed to mitigate risks on site. A fatality occurred in the Project’s footprint when an unrelated worker was struck by a train while speaking on his cellphone. The Project realised one fatality which occurred on 17 August 2010 when a worker cleaning tiles at Park station fell through an opening in the concourse level to the platform level. After this fatality, an H&S stand-down was implemented and a systematic investigation was undertaken to determine areas of risk during construction. It is notable that, resulting from this exercise, many risk-mitigating actions have been taken which has contributed towards the steadily reducing LTIs – zero LTIs being achieved for March 2011. The statistics for the remainder of this reporting period have continued to show progressive improvement, as indicated by a decreasing 12-month rolling LTIFR. However, 53 LTIs were reported during the reporting period. • Review of reports Valuable OH&S information is gathered by reviewing the Concessionaire’s monthly Progress Reports and Statistical Reports. Province reviews Flash Reports and Incident Reports on an ongoing daily basis and follows through with the Concessionaire any concerns it may have relating to each incident. More importantly, Province seeks to receive assurance that the Concessionaire is implementing appropriate corrective and preventive action. Province reviews all TKC Audit Reports and takes up any issues it may have with the TKC. An ongoing good working relationship has been maintained with the TKC and Province is afforded the opportunity to accompany the TKC in an observer role on its audits. In this respect, Province observer provides valuable input where appropriate, as well as gaining first-hand evidence of important issues. Reports are also presented for discussion at the monthly Project OH&S meetings and provide an ongoing source of information. These monthly meetings provide a forum where open dialogue and the exchange of ideas and shared experiences is encouraged. Particular concerns Province’s observations of site practice have given cause for concern in a number of cases where the Concessionaire’s staff were often ignorant of, or chose to ignore, good safety management practice. This was in contrast with the initiatives undertaken by the Concessionaire at management level where Province has been assured of the Concessionaire’s commitment towards safety and of the many preventive measures it has taken. Province has continued to encourage the Concessionaire to focus its efforts on site practice which often falls short of acceptable OH&S standards. However, because the substantial gap between the Concessionaire’s management initiatives and individual behaviour on site persists, Province continues to require convincing assurance that the necessary awareness of safety is being translated into practice by construction workers and is being policed. Follow-up audits by the TKC have continued throughout the reporting period with a focus on critical issues/ concerns observed during previous audits. In many cases Province’s OH&S specialist attends these audits as an observer as well as attending de-briefing sessions where concerns are both noted and addressed. Although it was anticipated that there would be issues/concerns leading up to OCD 1, no significant safety issues were encountered.

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Summary Although the improving safety statistics since the beginning of the Project give cause for optimism, the need for constant vigilance and pro-active safety programmes continues. With approaching deadlines for OCD 2, site activities are intensifying and the Concessionaire needs to adopt appropriate and positive action to mitigate risks on site.

Development and implementation of Province’s OH&S practice to ensure compliance with the OHSA Overview The principle of Province’s site staff falling under the ambit of the relevant Concessionaire Contractor’s OH&S management system ensures that there are systems and procedures in place to cover most eventualities. Several areas have been identified where improvements have been implemented. Casualty Evacuation A casualty evacuation procedure for Province’s site staff has been implemented to ensure that each staff member on site is able to be identified and evacuated in the event of their becoming involved in a life-threatening incident. Informative identification cards have been produced, to be worn and carried by staff at all times. This exercise, together with training for on-site staff, has been completed. Thus far, the need to implement the casevacing procedure has not arisen. OHSA Requirements Several planning initiatives at Linbro Park offices were identified by Province’s management to ensure compliance with OHSA requirements. The identification and appointment of OH&S Representatives, Fire Marshals and First Aids was a first step. Subsequently, as these appointees came to the end of their contracts and departments relocated within the building, further appointees and their training have become necessary. The Province ‘Safety File’ is currently under review to reflect the above changes and should be completed by the end of April 2011.

Conclusions • Currently, all OH&S Management Plans for the Development Period from the TKC and Contractors have been reviewed by Province and found to be acceptable. • The 12-month rolling Lost Time Injury Frequency Rate decreased from 4.53 in April 2010 to 3.12 in March 2011 and represents sustained improvement over that previously reported. The Concessionaire’s management is making every effort to increase safety awareness during the period leading up to OCD 2 when site activity is intensifying against a back-drop of diminishing workforce levels. • Province continues to exhort the Concessionaire to translate its safety planning into actions that will realise improvements in site behaviour. • The roll-out of Province’s casevacing procedure has been completed and cards have been issued to all personnel.

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Environmental The Concessionaire’s systems development The Concessionaire’s Environmental Management Plan (EMP) Revision 5 and Environmental Management System have been in place throughout the Development Period and have not been revised.

The Concessionaire’s systems implementation Compliance monitoring Province’s team of environmental specialists headed by the SHEQ Manager has continued to support Province’s interests on the Gautrain Project. The Environmental team has been of particular value in monitoring and reporting on the Concessionaire’s compliance. The team has also assisted to develop, formalise and manage Province’s environmental library, which is also accessible to all parties within the Province Support Team. • Compliance overview Over the last year, Province noted serious concerns related to the Concessionaire’s lack of compliance with environmental requirements, as stipulated in the Draft Final Environmental Management Plan Revision 5 (DF EMP), the amended Water Use Licence of 12 September 2008 (WUL) and the various Records of Decision (RoDs) on the Project. Such concerns included the following key issues: • Unlawful discharges to storm water (the DWA’s directive disallowed discharges to storm water) even after the Concessionaire entered into an agreement with the City of Johannesburg for the discharge to sewer. • A high degree of non-compliance of designs with the EMP, the WUL and RoD conditions. • Issues raised by Province’s environmental staff during site investigations not receiving appropriate attention. • A high number of unresolved Category 2 incidents relating to the dumping of illegal waste and affecting the Project externally. In spite of the above key issues, other major issues of non-compliance with the DF EMP included: • Repeat transgressions on sewage leakages, concrete spillages, excessive levels of dust, and hazardous (acid) and hydrocarbon (fuel, oils and grease) spillages for the entire year. • The discharge of pollutants to the storm water system in the Muckleneuk, Marlboro portal and Centurion areas. • Issues regarding silt being spilled on public roads and unauthorised disposals into municipal storm water systems and watercourses, in contravention of the amended Water Use Licence. • Discharges of partially-treated, untreated or cement-laden effluent to storm water at various locations, in contravention of the DWA directive. • Dumping of spoil and solidified concrete within the 1:100 year flood lines of a watercourse and waste at various locations of the Project. • Siltation, erosion, discharge of concrete washout and disturbance of the riverine habitat (including the removal of indigenous vegetation) at most viaducts and river crossings (highlighted by specialist studies commissioned by the IECP team). • The disturbance of wetland run-off at the Samrand Viaduct. The above major issues have been exacerbated by the high number of resignations of the Concessionaire’s Environmental Team, notably the CJV’s Director responsible for environmental matters, the newly appointed Environmental Manager for the southern section, Environmental Engineers, and Site Environmental Control Officers, as well as E&M environmental site officers. These resignations have not always been part of a phased demobilisation programme and the result is inadequate capacity to manage the Concessionaire’s environmental responsibilities. Province also attended the External Audit of the CJV Water Crossings in August 2010, which was reported by the IECP during September 2010. However, during follow-up site investigations in March 2011, most of the recommendations by the IECP had not been implemented by the Concessionaire.

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Province has observed some improvement in rehabilitation in certain areas but much work remains to be done. The Concessionaire’s management did take certain steps to improve the compliance situation during the reporting period. For example, the Concessionaire closed-out by March 2011 the majority (98%) of findings from the independent external environmental audit in September 2010 and the follow-up audit in November 2010. • Review of reports Valuable environmental information is gathered by reviewing the Concessionaire’s monthly Progress Report, the TKC’s audit reports and reports presented at the monthly environmental meetings. Monthly environmental meetings reports The Project Environmental Coordination (PEC) meeting provides a forum for discussing Project environmental issues and has played an important role in aligning the effort of involved parties. The timing of this monthly meeting has been arranged to facilitate the development and review of the TKC’s Monthly Environmental Progress Report (MEPR) and the IECP’s Monthly Environmental Management Performance Report. The PEC meeting is held in the week prior to the monthly Environmental Management Committee (EMC) meeting, where relevant regulatory authorities are represented. The IECP chairs the meeting and has requested that regulatory authorities improve their attendance and representation at the meeting and provide feedback on issues raised for their attention. Site visits with the EMC are also arranged by the IECP quarterly so that members of the EMC meeting can acquaint themselves with environmental compliance and progress during the construction phase of the Project. Province’s and the Concessionaire’s joint raising of external issues that could delay OCD 2 have expedited close-out of these issues. The GDARD Liaison meetings serve to track the progress of amendment Applications and responses to Compliance Notices in process with GDARD, as well as to inform GDARD of amendment Applications still to be submitted. Furthermore, compliance issues now form part of this meeting’s scope. The Concessionaire’s monthly environmental progress report The purpose of the Monthly Environmental Progress Report (MEPR) is to reflect the Contractors’ (i.e. Civil Joint Venture and Electrical and Mechanical Contractor) compliance with environmental standards as set out in the DF EMP for the Gautrain Project, in the form of a high level summary. The results are displayed in terms of the key environmental performance indicators as specified within the DF EMP, which include incidents, complaints, DF EMP implementation, compliance against targets, non-conformances, monitoring results, public consultations, training and awareness information sessions, and design reviews. The progress report also includes findings of audits and/or reviews and investigations conducted by the TKC. The reduced reporting of incidents may be due to reduced work by CJV, the hand-over to E&M resulting in a lack of environmental incident reporting, and/or the continued demobilisation of the Concessionaire’s environmental personnel. Although action to close-out non-conformances is usually specified by the Concessionaire, there is generally a lack of evidence that corrective and preventive action has been implemented. The IECP and Province have engaged with the Concessionaire on how to improve reporting on the close-out of non-conformances with a view to improving understanding of the information being reported and facilitating more rapid close-out of non-conformances both by the regulatory authorities and the Concessionaire. The tracking of non-conformances has now improved and Province and the IECP now receive increased assurance of the status of non-conformances.

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Environmental concern notifications Although the Concessionaire tracks non-conformances in its monthly MEPR, the Environmental Concern Notifications (ECN) issued by Province’s Construction Assurance staff, provide a useful mechanism for Province’s staff to alert the Concessionaire of environmental site non-conformances. ECNs have been forwarded to the Concessionaire for follow-up, and to the IECP for information. Annual environmental report Province notes that the Environmental Status Report by the Concessionaire has not been submitted to the GDARD during the past year as required in terms of the conditions of the Project RoD. Although the Project RoD specifies that the Annual Environmental Report must report on the status of groundwater resources, the Concessionaire has failed to do so in previous Annual Environmental Reports. This situation is not acceptable to Province since it exposes the Project to unnecessary environmental risk. • Environmental investigations When necessary, environmental investigations are performed to follow-up on issues that are reported by Province’s Construction Assurance personnel, such as ECNs, or issues identified through attendance at formal meetings. An intense programme of site visits was performed by Province to cover the complete alignment. These Province site inspections involved Environmental and Construction Assurance personnel and enabled the confirmation of the status of site-related issues. If necessary, the Concessionaire is informed of the findings of these site inspections in the interests of promoting appropriate risk management and expeditious reporting and close-out of incidents on the Gautrain Project.

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• Environmental list of issues and concerns Province is following an assurance-based approach in the close-out of environmental issues and concerns related to OCD 1 and OCD 2. After the successful commissioning of OCD 1 on 8 June 2010, Province engaged with the Concessionaire to ensure that the environmental issues and concerns it had identified prior to commissioning had been included in the Concessionaire’s snag list and had been closed-out. For the OCD 2 snagging process, Province’s Environmental Team completed preliminary site inspections of selected sites from Park station to Sandton station, and from the Midrand depot to Hatfield station between January and March 2011 and informed the CJV of its more serious findings at the subsequent PEC meetings. The identified issues and concerns for both OCD 1 and OCD 2 have been formally forwarded to the Independent Certifier, copied to the Concessionaire and the IECP, through the formal System Commissioning procedures. Province has identified the following significant environmental issues and concerns for OCD 2: • Excessive water ingress into the tunnels, especially between Shafts E1 and E2. • Sinkhole formations at and about Centurion station. • The management of storm water generally and specifically: o Ponding in the water management corridor in the dolomitic areas which could lead to sinkhole formation. o Draining from all piers in the dolomitic area and linkages to the nearest formal storm water drainage line/river/channel are inadequate/not complete resulting in erosion with the risk of ponding of water and the formation of sinkholes. o Constructed channels of insufficient length, according to the design. o Chutes not serving their purpose (i.e. storm water draining adjacent to the chutes causing erosion which may lead to destabilisation of bridges.) o Channels not constructed between the rail alignment and the Rail Reserve boundary, resulting in erosion of the boundary palisade fence and of neighbouring properties. o Existing drains cannot contain storm water sufficiently which has resulted in overflowing of the existing drains into the Rail Reserve. • Significant erosion in the water management corridor. • Siltation of most storm water culverts resulting in silting up of drainage courses and rivers downstream of Gautrain construction activities. • Unauthorised temporary and permanent deviation of water courses. • Abandonment and lack of rehabilitation/restoration to original state of old/used construction sites. • Alien invasive vegetation and weed (including kikuyu grass) species infeStation of construction sites which has spread into river courses and properties bordering the Rail Reserve in contravention of Section 19 of the Conservation of Agricultural Resources Act. • Lack of rehabilitation/restoration of areas affected by the Gautrain construction outside the Rail Reserve.

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• External independent environmental audit A condition of the Project RoD is that an independent external auditor undertakes annual environmental compliance audits on the Gautrain Project. The final audit report concluded that: • “Detailed documentation with environmental management methodologies have been developed for the Construction Phase, but are only partially implemented. • Effective clearance of previous audit non-conformances remains a concern.” The main areas for improvement and attention to the Concessionaire’s EMS relate to: • Environmental non-conformance, incident reporting, corrective and preventive action. • Lack of identification of root cause and verification of corrective action. • Environmental emergency preparedness. • Environmental competency and awareness training systems. It was concluded that effective corrective action on non-conformances recorded during the 2010 Environmental Compliance Audit should be taken to prevent recurrence. The follow-up audit by Shangoni Management Services took place during the first week of November 2010 and was presented to the EMC meeting on 26 November 2010. The main findings of the follow-up audit were that 70.4% of all non-conformances have been closed-out or partially closed-out.

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Particular concerns • Environmental review of designs Province has confirmed that the Concessionaire’s environmental team is not reviewing designs effectively from an environmental perspective and has corresponded with the Concessionaire in this regard. The subsequent requests from the Concessionaire to Province to discuss environmental comments are a further indication of the lack of understanding and application of basic environmental management principles in the design process. After repeated exhortations to the Concessionaire to perform an effective design review function, Province is not convinced that any improvement occurred during the reporting period. During the financial year, Province’s Environmental Team reviewed closed-out comments or provided further comments on 186 Design Reports and Comment Responses out of a total of 1000 documents submitted to Province. Of these documents reviewed, 93 (50%) did not comply with environmental (including landscaping) requirements. The Concessionaire’s designs contain multiple contraventions with environmental legislation and there is little or no evidence that the Concessionaire takes the necessary corrective action to address Province’s comments. A substantial portion of these contraventions is being challenged by Province through the appropriate communication channels. This situation is not acceptable to Province and it is receiving on-going attention to leverage an acceptable response from the Concessionaire towards improving environmental legislative compliance. • Water ingress into tunnels During the year various interventions were executed with regard to water-related matters, particularly concerning the elevated water discharges from the tunnels. Province is concerned that the Concessionaire is not providing sufficient monitoring information (e.g. monthly borehole water and piezometer level monitoring results) and is thus not assuring Province that it is operating in compliance with the conditions of the WUL. Province has requested further information from the Concessionaire in correspondence. Province has commented on Concessionaire-commissioned expert reports and has completed its own work on tunnel water ingress. The Concessionaire has undertaken further studies on dependent ecosystems, potential changes in groundwater quality and the long-term impact of the construction and operation of the tunnel on the groundwater regime of the affected area. The monitoring information received from the Concessionaire during March 2011 is being verified by Province. Province attended a meeting between the Bombela CJV and the DWA on 14 December 2010 to discuss the CJV’s request to pump additional water from the tunnels and to discharge the water to storm water rather than to sewer as it had been required to do. Various letters setting out Province’s position have been sent to the Concessionaire. The DWA issued a letter to the Concessionaire on 25 January 2011 allowing the discharge of specified quantities of water from the tunnel amounting to 7.32 Mℓ/day into storm water systems but subject to conditions and pending the application for an amendment of the WUL. Province notes that a public participation process is required by the DWA which needs to be completed prior to 25 April 2011 and that the Concessionaire had not, by the end of the reporting period, commenced such a process.

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Environmental legal matters During the course of the year Province’s Environmental Team consistently required the Concessionaire to demonstrate, or to provide Province with the assurance that it was complying with environmental legal requirements and the conditions of the RoDs, the WUL and EMPs for the Project. The Concessionaire’s progress in obtaining the environmental ‘Necessary Consents’ was also closely monitored. The matter of the responsibility for obtaining environmental authorisations and compliance with the conditions of the authorisations was considered by the Arbitration Board during the reporting period (commencing in May 2010) and an Arbitration Award was issued on 20 January 2011. This was necessitated by the Concessionaire’s persistent denial of responsibility regarding the obtaining of RoDs after the Effective Date. During the reporting period the team provided substantial input to Province’s legal team in preparation for, and during, the Arbitration hearing. There are a number of key environmental authorisations which still need to be applied for and obtained by the Concessionaire such as the water use rights for activities relating to the operational period and for the ‘as built’ changes relating to the surface alignment. Furthermore, the Concessionaire must comply with legal requirements and follow correct legal processes. Province’s Environmental Team will continue to advise Province on these issues, as part of its assurance role. In addition, numerous letters (in excess of 40 sets of correspondence) to the Concessionaire and third parties were contributed to or drafted by Province’s Environmental Team during the period.

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Environmental authorisations The Application for and processing of environmental authorisations was monitored throughout the year. The GDARD Applications Schedule was updated prior to and after the liaison meetings with the GDARD. For more than 18 months the Concessionaire has indicated that there are several Applications in the process of being prepared for environmental authorisation relating to the surface alignment, including Section 24G Rectification Applications. It is noteworthy that the BCJV has undertaken to provide Province and the GDARD with a list of the activities that it intends including in the Applications, but has not yet done so, despite ongoing requests by Province. The only Application currently under consideration by GDARD is the Concessionaire’s ‘Section 24G Rectification Application for the K103/Snake Valley Road’. Revised integrated water use licence and water ingress into tunnels The Concessionaire was again requested formally by Province to provide the assurance that it has reviewed the conditions of the WUL and that it is in compliance with the conditions of the revised WUL. The Concessionaire has not responded to this request. During the course of the financial year Province declared a dispute with the Concessionaire concerning noncompliance with the Concession Specification on tunnel water ingress. The dispute has been referred to the Dispute Resolution Board for hearing (commencing on 31 May 2011) and pleadings are being exchanged between the parties. Litigious matters • The RoD Arbitration Award handed down on 20 January 2011 The award confirms the Concessionaire’s responsibility to obtain and comply with Necessary Consents, including RoDs, related to the System, after Province has provided the land. Each party was ordered to pay its own costs and to pay half of the costs of the Tribunal, AFSA, the venue and the stenographic services. • WeCare high court review application This matter is unlikely to proceed to court since WeCare has failed to file a replying affidavit in response to Province’s answering affidavit. It is presumed that WeCare has been reluctant to formally withdraw the Application as it may be wary of an adverse costs order. The State Attorney is managing this matter and no further developments are expected.

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Conclusions • Continued environmental non-compliance in several areas together with late reporting of incidents has stabilised during the year and decreased towards the end of the year as construction nears completion. The focus should now be on effective and appropriate rehabilitation and the closing-out of snags. • Of concern is the conclusion of the external environmental audit that environmental responsibilities are not effectively defined and communicated to relevant personnel, especially in the light of the fact that a further three months of activity remain on the Project (i.e. up to OCD 2). This impacts the ability of the Concessionaire to effectively close-out and prevent environmental non-conformances. • An increased focus on high standards of rehabilitation is required from the Concessionaire along the sections of the alignment to be commissioned by 28 June 2011. There are many snags to be addressed, with a limited number of staff members available to the Concessionaire to attend to these. • An unacceptably high proportion of designs (50%) reviewed by Province are not compliant with environmental requirements. The responsibility for compliance to environmental legislation remains with the Concessionaire. • The annual independent external environmental audit was undertaken in August 2010 and the follow-up audit in November 2010. The final audit report concluded that: o Detailed documentation with environmental management methodologies have been developed for the Construction Phase, but are only partially implemented. o Effective clearance of previous audit non-conformances remains a concern. • The main findings of the follow-up audit were that 70.4% of all non-conformances have been closed-out or partially closed-out, which is of concern to Province because such performance is indicative of the Concessionaire’s under-resourcing. • The Directive by the DWA, which was issued on 11 December 2008, has not yet been closed-out. • The Concessionaire’s delay in closing-out certain incidents is of concern to Province, as is the Concessionaire’s reluctance to address the environmental review of engineering designs to ensure legal compliance and environmental best practice. The Concessionaire has failed to assure Province that it has a process in place to perform environmental reviews of relevant design sets before submission to Province. The need for such environmental reviews is a fundamental component of design review and the failure to conduct such reviews puts the Concessionaire at risk of not fulfilling environmental regulatory requirements. • It is essential for the Concessionaire to expedite the Application for all outstanding environmental authorisations required for the Project, particularly the water use rights for activities relating to the operational period and for the changes relating to the surface alignment. Furthermore, the Concessionaire must ensure compliance with legal requirements and that legally correct processes are used for such Applications.

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Quality The Concessionaire’s systems development Although there has been some progress by the Concessionaire in developing acceptable Management Plans, in general, the quality of key Quality Management Plans submitted for review is poor. Revised versions of the TKC’s System Acceptance Plan and the CJV’s Completion Plan were reviewed by Province early in 2011, although some improvement over previous versions was noted, both plans were considered unacceptable by Province. Summarising, Province is reasonably comfortable with the status of most of the CJV’s plans. The development of a suitable Quality Management Plan (QMP) by E&M has been satisfactorily completed. Province has undertaken an audit of the E&M Contractor’s quality systems and raised a number of findings which were satisfactorily closed-out by the end of March 2011.

The Concessionaire’s systems implementation Compliance monitoring • Review of reports Valuable and quality management information is gathered by reviewing the Concessionaire’s monthly Progress Reports, the TKC’s audit reports, Quality Advice Notices (QANs are raised by Province’s Construction Assurance personnel) and reports are presented at the monthly Project Quality meeting. Province has played a proactive role in leveraging improvement in this meeting’s Agenda where an overview of audits performed during the month is presented by the Concessionaire together with highlighting important findings for discussion. The content of the TKC audit reports, though initially rather superficial, has improved during the latter part of 2010 with this improvement being sustained in 2011. The satisfactory closure of the TKC’s findings is being monitored by Province. However, it is apparent that the Contractors are slow in closing these findings – an issue which is also of concern to the TKC.

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Annual Report 2011

Particular concerns • Construction assurance Province’s concerns, related to the Concessionaire’s management and assurance of the quality of the Works, are well-documented. Further serious issues, often directly related to the quality of the Works, continue to be raised by Province’s Construction Assurance staff and many of the concerns, already formally communicated to the Concessionaire, remain. A positive development has been the establishment of a series of bi-weekly meetings with the Concessionaire, focused on site quality issues. These meetings facilitate the communication process enabling the Concessionaire to demonstrate the status of deviations it has identified and Province to highlight its concerns. The emphasis on ‘deviations management’ and, in particular, the satisfactory close-out of deviations, have narrowed the widening gap between NCRs raised and NCRs closed-out, a trend which has been an ongoing concern of Province. As the Works is prepared for handover from the CJV to E&M, Province is playing an important role in identifying items for inclusion in the Concessionaire’s snag lists and Retention Items. As the Project proceeds into the testing and commissioning phase, the involvement of site-based staff performing assurance activities has been clarified to enable an integrated approach within the context of Province’s System Commissioning Assurance function. • System Commissioning Assurance Province has established a multidisciplinary team to draft a procedure to reflect Province’s role and responsibilities in the testing and commissioning process for the Gautrain system. Initial work involved reviewing information relating to the Concessionaire’s testing and commissioning process and ensuring that all involved Province staff are aware of their role. The scope of this assurance process covers the testing and commissioning of subsystems and of the system as a whole, as well as important activities preceding certification milestones. Considerable preparatory work was done by Province’s team to structure appropriately for the commissioning phase of the Project and by January 2010, the following achievements were noted: • The finalisation of Province’s team. • The finalisation of Province’s System Commissioning Assurance procedure. • The roll-out of how Province executes its assurance role at a presentation on 24 January 2010 to Province’s senior management. • Discussions with the Concessionaire relating to the better functioning of the System Acceptance Panel. A key element in System Acceptance is the functioning of the System Acceptance Panel (SAP). Although the Concessionaire had modified its process of system acceptance to accommodate weekly detailed meetings with a monthly Systems Acceptance Panel meeting planned to give an overview of status, the process was far from transparent to Province. Recent representations by Province have focused on seeking assurances from the Concessionaire (through formal and informal correspondence, attending official meetings, attending suitable site inspections and interacting pro actively with all concerned parties) that Province’s issues and concerns have been addressed.

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Corporate initiatives Development and implementation of Province’s quality system (QS) The development of Province’s Quality System (QS) was completed in September 2009 and comprises 30 procedures and 16 attachments. Because the completion of Province’s QS is a significant milestone in the overall process of assuring the Concessionaire’s work, the QS Handbook was referred to Province’s EXCO to decide the format and distribution to external parties. Subsequent activities in the reporting period have focused on; checking the content of each QS document and revising where necessary; arranging that document custodians sign-off their documents; compiling a revised hard copy QS Handbook and completing their distribution.

Identification of and Status of Key Assurance Documentation (KAD) Province has worked with the TKC to develop a list of important Concessionaire documentation which, if reviewed by Province and found to be acceptable, would assure Province that the Concessionaire has developed and implemented suitable systems to control the quality of its work. This documentation is called the Key Assurance Documentation (KAD) and the list was finalised by March 2010. An assessment of the status of the KAD for each Discipline has informed Province’s management of: • The nature of each Discipline’s KAD. • The quality of the KAD submitted for review. • The status of each KAD. An evaluation of the information gathered has enabled Province’s management to identify appropriate action where KAD of appropriate quality is lacking. At this stage of the Gautrain Project, it is noted that a substantial proportion of KAD has either not yet been submitted for review or is of unacceptable quality. This situation is of major concern to Province since it means that there is insufficient documentation available to provide the required assurance that the Concessionaire is executing its responsibilities in an acceptable manner. In order to focus effort appropriately, it was decided that top priority KAD would first be identified and a schedule compiled to indicate the ‘Status’ and ‘Action Plan’ for each top priority item. The process of monitoring the completion of KAD to a satisfactory standard and keeping the list of KAD updated as further KADs are identified is being managed on an ongoing basis.

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Conclusions • Construction assurance concerns, in particular relating to the Works quality, have been an ongoing issue. Bi-weekly meetings, established in 2009 to facilitate the communication of site quality issues, have been a positive development. Also, the Concessionaire’s focus on the management of non-conformances has narrowed the gap between NCRs raised and NCRs closed-out. • Province’s Quality Management function has played a proactive role in supporting Province’s System Commissioning Assurance function. Activities have focused on ensuring that Province’s issues and concerns are receiving appropriate attention from the Concessionaire and will be closed-out expeditiously. • Province is particularly concerned with the lack of transparency of the Concessionaire’s System Acceptance Process. • Province’s reviews of the TKC’s System Acceptance Plan and of the CJV’s Completion Plan have found both to be unacceptable. Of significance is the misrepresentation of Province’s assurance role in these plans. • The development of Province’s Quality System is complete and copies have been distributed. • A list of Key Assurance Documentation has been established and the status of each document has been identified.

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RAMS Assurance Monitoring Objective As noted earlier in this section of the report the RAMS process is specifically aimed at: • Providing a railway system that complies with the levels of safety and availability, required by the Concession agreement; • Supporting the necessary applications for Safety Permits from the (National) Railway Safety Regulator (RSR) and • Obtaining the IC’s certificates for Operating Commencement Date 2. Province endeavours to monitor the Concessionaire’s implementation of its RAMS activities with a view to being able to provide the assurance that these activities are being carried out timeously, and effectively.

Performance Indicators Province has found it difficult to properly assess the Concessionaire’s performance of its RAMS activities partially due to a complex project structure. However, the process of review and interaction has provided a better understanding of the processes being employed by the Concessionaire, and has provided added value and integration of the whole RAMS process. Furthermore Province’s interrogation of the Hazard Log process has helped to ensure that it has moved from being a generic document to one that is specific to Gautrain. The Concessionaire has also produced and updated its E&M RAM activity reports, and Province’s comments have generally been well received and acted upon.

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Independent Certifier (IC) Performance against Objectives and Timeframe Quantitive Monitoring objective • A per the GMA Strategic Plan, the monitoring objective for the Independent Certifier is Independent monitoring and inspection of progress with OCD 1 and OCD 2. • The IC has been faithful to its monitoring objective and has reported on its findings in its monthly reports to its Appointers. • Province on an annual basis assesses the services of the IC in terms of their quality system, and provides feedback on the highlights and concerns. Performance indicator • As per the GMA Strategic Plan, the Performance Indicator is the monthly IC Reports. • In the present financial year, 12 IC reports have been compiled and issued by the IC and these have been considered to be factually correct and expressing the IC’s independent opinion on the matters concerned. • These reports contain the certification of Milestones. The IC also certifies the Concessionaire’s invoices in accordance to the certified Milestones. • The IC has to certify OCD 1 and OCD 2. In addition the IC must certify the schedule of Retention Items and Snag List Works within 10 days of the certification of OCD 1.

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Timeframe • The timeframe for the IC Reports is monthly. • The IC Reports have been issued monthly on time as per the dates agreed beforehand with the IC’s Appointers. • Over and above these reports, a number of informal meetings are held each month, and the IC also participates in Quality and Milestone Achievement inspections. • Full operations on the Sandton – Marlboro – Rhodesfield – ORTIA line commenced on 8 June 2010. The IC certified the 2010 FIFA World Cup™ Operating Commencement Date for Phase 1 on 8 June 2010 in accordance with the SWC/OCD 1 agreement between the Concessionaire and Province. • The IC also certified the schedule of Retention Items and Snag List Works within 10 days of the issue of OCD 1 in terms of the Independent Certifier Agreement.

Qualitative The IC has played its role as defined in the Concession Agreement to issue monthly Payment Certificates in which the Milestone payments to be paid were listed. The Milestone payments claimed by the Concessionaire but which were not certified by the IC for payment were also listed in each monthly report complete with reasons for its non-certification. With hindsight it is clear that Province and the Concessionaire would have had difficulties to amicably come to an agreement on the certification of Milestones to be paid on their own. The IC monthly reports also contained information on concerns previously raised by the IC and not properly addressed as well as new concerns that the IC wished to bring to the attention of the Concessionaire, Province as well as the Lenders. These concerns were actively followed up by the IC with the responsible party in an effort to get it addressed and rectified. In many cases the concerns raised by the IC reinforced Province’s concerns and was therefore experienced by Province as being of great assistance. The IC has also played its role in executing Completion Services as defined in the Concession Agreement and the Independent Certifier Agreement by Certifying SWC/OCD 1 as well as the schedule of Retention Items and Snag List Works. The contractual completion date for Phase 2 is 27 March 2011 but it is clear that it will not be reached. The Concessionaire is aiming for completion on 27 June 2011 but no agreement has been reached on this. The IC is busy with the necessary preparations for the certification of OCD 2. In summary it can be stated that the IC successfully contributed during the past financial year to the goal of achieving the successful completion of the Gautrain Project.

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C| OPERATIONS AND MAINTENANCE

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Risk Management During the reporting period, the activities comprised: • Eleven (monthly with December 2010 and January 2011 combined) updates of Province’s Project Risk Register. • Twelve monthly Province risk reports (as inputs to Province Progress Report for the Project). • Four quarterly risk management coordination meetings (held on 19 May 2010, 18 August 2010, 17 November 2010 and 16 February 2011) with the Concessionaire’s risk management representatives. • Various risk mitigation activities based on courses of action identified, and decided upon, at the Concession Development, Province Support Team and Operations Management meetings, as reflected in the minutes of these meetings, as well as regular follow-ups by the Risk Manager, per telephone and email with respect to progress with mitigation actions. • Two quarterly risk updates of the GMA Risk Register.

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Socio-Economic Development During the year under review the GMA monitored and reported on SED obligations and the achievement thereof. The monthly SED achievements claimed by BCC and BOC within 45 calendar days after the end of each month are verified by the ISEM and reported on within about five weeks after receiving the monthly SED report of the Concessionaire. The SED achievements for the period April 2010 to March 2011 are based on the verification of the ISEM. Various meetings were held in the period April 2010 to March 2011, which include, amongst other, 12 monthly Concessionaire’s progress meetings, 12 meetings with the ISEM, 12 ISEM progress meetings, and 42 ad-hoc meetings with the Concessionaire, its business units and the ISEM. The Gautrain Rapid Rail Link project continued to make a significant impact on Socio-Economic Development. The SED performance of BCC and BOC in the 12-month period from April 2010 to March 2011 can be summarised as follows: • Black persons are holding 25% shares in the Concession Company and the Operating Company. • An amount of more than R260 million was spent on procurement from and sub-contracting to BEs, compared to an obligation of R140 million. • An amount of more than R210 million was spent on procurement from and sub-contracting to New BEs, compared to an obligation of R170 million. • An amount of more than R14 million was spent on procurement from and sub-contracting to SMMEs, compared to an obligation of R6 million.

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The Parties are currently finalising the extension of the ISEM Agreement for a three month period in view of a possible delay of the Operations Commencement Date of Phase 2 (OCD 2). Furthermore, the Parties are negotiating the re-appointment of the ISEM for the first five years of the operating phase. The verified SED performance of the Concessionaire (BCC) and the Operator as contained in the Monthly ISEM Reports up to the end of February 2011 for the 2010/11 financial year is summarised in the graph below.

Verified Compliance for Operational Phase 2010/11 Financial Year

119% 100% 326% 644% 295%

2032% 549% 613%

168% 326% 2054% 644%

683%

177% 109% 234%

2750%

630% 504%

398% 100%

500%

1000%

1500%

2000%

2500%

3000%

It is evident from the Monthly ISEM Reports that the Concessionaire and the Operator exceeded most of their SED Obligations and significant performance is shown in the categories of procurement and sub-contracting, local employment, employment of Historically Disadvantaged Individuals (HDIs), women, people with disabilities, and the participation of HDIs and women in management positions. In the Operating Period neither BCC nor BOC has any obligations with regards to Expenditure by SPG on Plant and Equipment and Procurement from, or Sub-contracting to SPG. The Concessionaire and the Operator are intending to achieve compliance on the elements â&#x20AC;&#x201C; HDI staff seconded to SPG and Expenditure on Human Resource Development for the financial year. The SED performance to-date with regards to the procurement and sub-contracting from BEs is shown in the following graph. Although it is evident from the graph on the next page that the activities of BCC and BOC are ramping down in the 2010/11 financial year, they are still significantly exceeding their obligations.

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Procurement from, and Sub-Contracting to BEs: 2010/11 Financial Year

ACTUAL VERIFIED OPERATIONAL PHASE BOC OBLIGATIONS BOC OBLIGATIONS

60,000

DEVELPOMENT PERIOD

50,000

AMOUNT (Rʼ000)

OPERATING PERIOD 40,000

30,000

20,000

10,000

0 APR 10

MAY 10

JUN 10

JUL 10

AUG 10

SEP 10

OCT 10

NOV 10

DEC 10

JAN 11

FEB 11

MAR 11

CONTRACT MONTHS

Gautrain’s SED strategy ensures the Concessionaire’s commitment to optimally utilise local resources and develop local skills. The performance of BCC and BOC in this regard is summarised in the graphs overleaf. It is evident that with regards to the utilisation of local resources that BCC and BOC have significantly exceeded its obligations. The performance of BCC and BOC up to the end of February 2011 is summarised as follows: • South African materials, plant and equipment were produced, to a total value of more than R2 810 million, compared to an obligation of R1 700 million. • More than 580 local direct jobs were created or sustained by BCC and BOC, and an estimated total of 2 060 direct, indirect and induced jobs up the end of February 2011. • BCC and BOC created, amongst other, 474 jobs for Historically Disadvantaged Individuals (HDIs), 146 jobs for women, and six jobs for people with disabilities.

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Procurement of South African Materials, Plant and Equipment: 2010/11 Financial Year

ACTUAL VERIFIED OPERATIONAL PHASE BOC OBLIGATIONS BCC OBLIGATIONS

60 000

DEVELOPMENT PERIOD

50 000

AMOUNT (R始000)

OPERATING PERIOD 40 000

30 000

20 000

10 000

0 APR 10

MAY 10

JUN 10

JUL 10

AUG 10

SEP 10

OCT 10

NOV 10

DEC 10

JAN 11

FEB 11

MAR 11

NOV 10

DEC 10

JAN 11

FEB 11

MAR 11

CONTRACT MONTHS

Local Employment: 2010/11 Financial Year

ACTUAL VERIFIED OPERATIONAL PHASE BOC OBLIGATIONS BCC OBLIGATIONS DEVELOPMENT PERIOD

1 500

OPERATING PERIOD

PERSON MONTHS

1 200

900

600

300

0 APR 10

MAY 10

JUN 10

JUL 10

AUG 10

SEP 10

OCT 10

CONTRACT MONTHS

BCC and BOC have significantly exceeded its obligations with regards to training as an amount of about R20 million was verified on Human Resource Development, which exceeds the obligation of about R18 million.

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Integration Management of the Gautrain with Government’s Transport Systems The GMA maintained activity in liaison with all parties on integration issues. Key achievements on the integration management of the Gautrain with the transports system in Gauteng include: • Successful work continuing with local authorities and other government agencies on integration matters; • Opening of the Gautrain Dedicated Feeder and Distribution Services (DFDS) in an integrated manner with the opening of OCD Operations; • Opening of the Gautrain/PRASA integrated rail interchange at Rhodesfield; • Operationalising the Public Transport Interchange Level at the Gautrain Sandton station, which includes the Gautrain DFDS, metered taxis, car hire, private company and hotel shuttles (minibus-taxis will be relocated from a temporary rank to the interchange in the foreseeable future); • Completion of designs of the DFDS for OCD 2, taking cognisance of the evolving municipal public transport networks around the respective Gautrain stations; • Initiation of a process to have station operational plans developed with the respective municipalities for all the Gautrain stations (except at ORTIA), dealing with interfaces with all modes of transport and the management thereof; • Successful update of the Gautrain Integration Implementation Plan and • Continued activities of the Gautrain Public Transport Integration Committee (GPTIC). The GPTIC oversaw and facilitated the development the Gautrain Integration Implementation Plan, which informs integrated transport planning and the development of the transport system in Gauteng by all three spheres of Government, as well as agencies of Government.

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Fares and Fare Evasion Management During the year under review considerable work was done to allow the Gautrain to commence in June 2011 with weekly and monthly tickets that offer a saving for frequent passengers. In June 2011 the first annual increase in the fare levels, as provided for in the Concession Agreement, will be implemented. The index used tracks the Consumer Price Index. In most cases the increase in fare cost due to indexation was offset by the discounts offered for frequent use. Fares for OCD 2 were also set and communicated to the public.

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Safety, Health, Environment and Quality Management (SHEQ) Over the last year, the GMA noted concerns related to the Concessionaire’s compliance with environmental requirements, as stipulated in the Draft Final Environmental Management Plan Revision 5 (DF EMP), the amended Water Use Licence of 12 September 2008 (WUL) and the various Records of Decision (RoDs) on the Project. Such concerns included the following key issues: • Discharges to storm water (the Department of Water Affairs’ directive disallowed discharges to storm water) even after the Concessionaire entered into an agreement with the City of Johannesburg for the discharge to sewer. • Compliance of designs with environmental legislation. • Issues raised by Province’s environmental staff during site investigations receiving appropriate attention. • A number of unresolved incidents relating to waste disposal. The Concessionaire’s progress in addressing these issues will need to be monitored closely by the GMA to ensure that the Concessionaire fulfils its Concession Agreement obligations. The identified issues and concerns for both OCD 1 and OCD 2 have been formally forwarded to the Independent Certifier, copied to the Concessionaire and the IECP, through the formal System Commissioning procedures. Any outstanding issues and concerns not addressed adequately by the Concessionaire within the 12 month Retention Period will become Retention Items. The GMA will therefore monitor that suitable action is being implemented by the Concessionaire. Valuable environmental information is gathered by reviewing the Concessionaire’s monthly Progress Reports, the TKC’s audit reports, and reports presented at the monthly environmental meetings. The Project Environmental Coordination (PEC) meeting provides a forum for discussing Project environmental issues and has played an important role in aligning the effort of involved parties. The GDARD Liaison meetings serve to track the progress of amendment Applications and responses to Compliance Notices in process with GDARD, as well as to inform GDARD of amendment Applications still to be submitted. Furthermore, compliance issues now form part of this meeting’s scope. These meetings are expected to continue into the Operating Period. The purpose of the O&M Monthly Environmental Report (MER) is to reflect the Operator’s compliance with environmental standards as set out in the O&M EMP for the Gautrain Project, in the form of a high level summary. The results are displayed in terms of the key environmental performance indicators as specified within the O&M EMP, which include reporting on environmental parameters (i.e. water, waste, energy consumption, water consumption, fuel consumption, noise, ground borne vibration and heritage), public participation, training, incident reporting, O&M EMP review items, and EMS implementation. The progress report also includes findings of site inspections and audits conducted by the Operator. With particular regard to findings relating to operational issues, the final audit report concluded that some documentation has been developed for the Operational Phase, although method statements, specialist studies and a formal ISO14001:2004 Environmental Management System (EMS) are still to be developed. The lack of the aforementioned documentation results in limited implementation of environmental management on-site and is considered an audit limitation.

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Particular concerns relate to the Environmental Review of Designs, which are received ongoing attention from the GMA and Water Ingress into tunnels where, during the year, various interventions were executed with regard to water-related matters, particularly concerning the elevated water discharges from the tunnels. The GMA has commented on Concessionaire-commissioned expert reports and has completed its own work on tunnel water ingress. The Concessionaire has undertaken further studies on dependent ecosystems, potential changes in groundwater quality and the long-term impact of the construction and operation of the tunnel on the groundwater regime of the affected area. The monitoring information received from the Concessionaire during March 2011 is being verified by the GMA. During the reporting period the main authorisation issued by the GDARD in favour of the Gautrain Project was the approval of the O&M EMP on 31 May 2010. During the course of the financial year Province declared a dispute with the Concessionaire concerning noncompliance with the Concession Specification on tunnel water ingress. The dispute has been referred to the Dispute Resolution Board for hearing (commencing on 31 May 2011) and pleadings are being exchanged between the parties. In terms of environmental related disputes an arbitration award was handed down on 20 January 2011 with regard to responsibility for so-called Necessary Consents. The award confirms the Concessionaireâ&#x20AC;&#x2122;s responsibility to obtain and comply with Necessary Consents, including RoDs, related to the System, after Province has provided the land.

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RAMS Assurance The Concessionaire liaises with the RSR on a continuous basis to ensure compliance. The routine monthly liaison meetings are attended by Province as observers. The Concessionaire has obtained a Safety Permit from the RSR, with certain proviso, to operate the ORTIAâ&#x20AC;&#x201C; Sandton link which was brought into service on 8 June 2010. The long time being taken to close out OCD 1 issues continue to be a matter of concern as well as the Concessionaire not providing sufficient evidence that will give Province the assurance that the RAMS implementation process is fully under control and on track. This work will be ongoing. The mitigations put in place for the Hazard Log items relating to OCD 1 are being reviewed to see whether they are still appropriate and/or need rectification.

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Train and Dedicated Feeder and Distribution Operations In the year under review progress was made on the extended operational hours and Airport service change at Marlboro respectively as follows: • A Variation Order was submitted to the Concessionaire to investigate the possibility to extend the operating hours. In the Concessionaire’s response it was indicated that this issue will only be investigated after OCD 2. • A service change is planned to be implemented before or on OCD 2 to allow passengers to access the Airport service at Marlboro station. The expectation is that this change will enhance the Airport service in terms of attractiveness due to shorter journey times and the accessibility from the N3 highway. • Performance measurement of critical elements of the Gautrain system started immediately after commencement of revenue services via the Concessionaire’s Performance Management System (PMS). Some of the performance targets were relaxed or suspended in the first three months as was agreed with the Concessionaire for a reduced scope of services in order to achieve OCD 1 for the 2010 FIFA World Cup™. • After the three month period, the OCD 1 bedding-in targets were applied to provide for a ramp-up phase in performance levels.

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System Performance The table below illustrates the performance regime applicable to the measurement of the Gautrain System from Operations Commencement Date 1 (OCD 1). From a performance monitoring perspective, the Gautrain is still in the â&#x20AC;&#x153;bedding-inâ&#x20AC;? period for Phase 1 which means that performance is measured at lower targets than those that will be applicable to the full System operation six months after OCD 2.

Applicable Performance Management Regime

Source: Schedule 1 Part 2 Volume 11.2.5.4 of the Concession Agreement

The anticipated commencement date (ACD) for implementation of the Phase 2 service by 27 March 2011 was not achieved so the targets applicable to the Phase 1 bedding-in period remain. Graphs of the critical performance elements are provided in this section with brief comments where performance targets were not met.

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Train Operational Service Train Service availability and punctuality graphs are shown below. Train availability performed well above its target of 95% except for December 2010 where the Operator was forced to restrict the train service to a â&#x20AC;&#x153;one train, one trackâ&#x20AC;? operation due to a track circuit quality problem. This restriction was lifted early in January 2011 after agreement with the Rail Safety Regulator on mitigating operational measures. A programme of replacing these track circuits was agreed and implemented. Based on the latest performance achievement it is clear that the OCD 1 train service performance stabilised above the set targets for reliability and availability.

Train Service Availability

110%

NORM

105% 100% 95% 90% 85% 80% 75% JUN

JUL

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

2010/11

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Train Service Punctuality

110%

NORM

105% 100% 95% 90% 85% 80% 75% JUN

JUL

AUG

SEP

OCT

NOV

2010/11

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DEC

JAN

FEB

MAR

Dedicated Feeder and Distribution Bus Service The DFDS availability and punctuality are shown in the following graphs.

Bus Service Availability

110%

NORM

105% 100% 95% 90% 85% 80% 75% 70% 65% JUN

JUL

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

2010/11

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Bus Service Punctuality

110%

NORM

105% 100% 95% 90% 85% 80% 75% 70% 65% JUN

JUL

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

2010/11

The DFDS availability and punctuality performance was below its targets in June mainly due to traffic congestion at Sandton station during the 2010 FIFA World Cupâ&#x201E;˘period. The poor availability performance in September 2010 was caused by industrial action by bus drivers. The bus operator implemented a contingency plan to limit the impact on passengers, service frequencies however could not be maintained. Based on the latest DFDS performance the indication is that the OCD 1 DFDS is sustaining its high level of reliability and availability performance.

Customer Feedback Customer feedback is measured by customer comments (initial response within seven days) and Call Centre availability (% of calls reaching an operator). The initial below performance achievements in the first three months were attributed to an excessive number of enquiries and the fact that the call centre was not fully geared with applicable software and information. Thereafter, performance stabilised above required norms levels.

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Customer Comments

105%

NORM

95%

85%

75%

65%

55% JUN

JUL

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

NOV

DEC

JAN

FEB

MAR

2010/11

Call Centre Availability

105%

NORM

95%

85%

75%

65%

55% JUN

JUL

AUG

SEP

OCT

2010/11

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Cleanliness and Damage Repair Cleanliness and Condition are measured for stations and train sets. Train set cleanliness and condition maintained a high level of compliance over the total period. station cleanliness was under required standards at the start-up of the service due especially to Sandton station that was still under construction at the time.

Station Cleaning

110%

NORM

100%

90%

80%

70%

60%

50% JUN

JUL

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

NOV

DEC

JAN

FEB

MAR

2010/11

Train Set Cleaning % NORM

105%

95%

85%

75%

65%

55% JUN

JUL

AUG

SEP

OCT

2010/11

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Station Condition

110%

NORM

100%

90%

80%

70%

60%

50% JUN

JUL

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

NOV

DEC

JAN

FEB

MAR

2010/11

Train Set Condition

% NORM

105%

95%

85%

75%

65%

55% JUN

JUL

AUG

SEP

OCT

2010/11 The availability of critical sub-systems is indicated in the graphs overleaf. Most these systems experienced problems in achieving acceptable performance levels from start-up given the short time they were tested. Lift availability performance levels fluctuated whilst ticket vending machines performance consistently failed to achieve its performance target as the AFC system was under constant development.

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Lift Availability

110%

NORM

100%

90%

80%

70%

60%

50% JUN

JUL

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

NOV

DEC

JAN

FEB

MAR

2010/11

Escalator Availability

% NORM

105%

95%

85%

75%

65%

55% JUN

JUL

AUG

SEP

OCT

2010/11

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Availability TVM

110%

NORM

100%

90%

80%

70%

60%

50% JUN

JUL

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

2010/11

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Station Operations A team of GMA and Provincial Support Team staff worked closely with the Concessionaire in developing station Operations Plans for OCD 2 and monitored performance on the OCD 1 stations. Regular meetings between the parties took place and the planning work was well coordinated and communicated to third parties such as the Metropolitan Councils.

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Asset Management and Assurance

The GMA carried out Asset Management Assurance and concluded that, except for the radio and communication system where issues with quality and reliability in the OCD 1 tunnel area were noted, the other sub-systems appear to be within acceptable norms. For the sub-systems not relating to the core railway system the most challenging from a maintenance perspective are the electricity in station and the escalators and the lifts, which together comprise about 50% of all system service work orders.

Work Orders for March 2011 1% 1% AUTOMATIC FARE COLLECTION 5%

COMMUNICATION SYSTEMS 12%

TRAINS

RADIO SIGNAL TRACKWORK

11%

POWER SUPPLY AND DISTRIBUTED WORKSHOP

15%

58%

From an Asset Management and Maintenance perspective, work was carried out by the GMA on the monthly Infrastructure Condition assessment method for the Penalty Regime as well as the undertaking of ultrasonic testing of the rails. The objective is that all maintenance and reporting matters have to be resolved prior to the commencement of operations for OCD 2.

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The Operator has since the achievement of the Operating Commencement Date for Phase 1 (8 June 2010) continued to implement its Asset Management and Maintenance Plan. Maintenance sub-contracts are awarded for periods of five years. One of the matters that continue to impact on the accurate assessing of the maintenance effort, is the ongoing de-snagging of the Phase 1 system by The Concessionaire while Phase 1 maintenance activities are also being conducted at the same time. There have been visible improvements in the monthly reporting by the Concessionaire but further improvements are essential. The following are the total number of system service requests logged on the MMIS on a weekly basis since the start of operations (OCD 1).

System Service Requests from 8 June 2010 180 160 140

NUMBER OF SERVICE REQUESTS

120 100 80 60 40

354

WEEK 1 WEEK 2 WEEK 3 WEEK 4 WEEK 5 WEEK 6 WEEK 7 WEEK 8 WEEK 9 WEEK 10 WEEK 11 WEEK 12 WEEK 13 WEEK 14 WEEK 15 WEEK 16 WEEK 17 WEEK 18 WEEK 19 WEEK 20 WEEK 21 WEEK 22 WEEK 23 WEEK 24 WEEK 25 WEEK 26 WEEK 27 WEEK 28 WEEK 29 WEEK 30 WEEK 31 WEEK 32 WEEK 33 WEEK 34 WEEK 35 WEEK 36 WEEK 37 WEEK 38 WEEK 39 WEEK 40 WEEK 41 WEEK 42 WEEK 43

Annual Report 2011

The following are the total number of service requests per sub-system logged on the MMIS.

Sub-system Service Requests from 8 June 2010

140

AFC 4 PER MAV, AUG (AFC) COMM TRAIN UNITS SIGNAL TRACK PS5D RADIO

120

100

The graph indicates the number of maintenance service requests for the electrical and mechanical sub-systems. It is evident that with regard to maintenance the most challenging to date is the Automatic Fare Collection (AFC) system.

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Performance Management In the year under review all committee meetings were held, performance was analysed and remedial work undertaken by the Concessionaire. Considerable work was also undertaken in developing and testing the performance regime applicable after OCD 2. A key difference between OCD 1 and OCD 2 is that, post OCD 2 Province is obliged to pay a Patronage Guarantee based on actual against required revenue. The CA contemplates that the Patronage Guarantee only be paid in full if all performance standards are met or exceeded.

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Passenger Information and Communication The Concessionaire is responsible for all marketing communication on the system as well as the coordination of all signage on the system. The GMA and Concessionaire have worked closely in coordinating and implementing a successful marketing and communication strategy. The Concessionaire has revised the z-card (information brochure) with updated system information to be implemented for OCD 2. The Concessionaire has made substantial progress with ACSA on the implementation of additional way finding signage within the ORTIA terminal. A proposal on additional signage was made by the Concessionaire to ACSA. This was accepted by ACSA and will be implemented. In addition, two Passenger Information Displays indicating train departure times will be mounted within the ACSA terminal.

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Security The GMA monitored security reports and worked with the Concessionaire to develop station precinct operation plans as well as established benchmarks for security performance going into OCD 2. Work commenced on developing an enhanced security initiatives for OCD 2 to ensure that the very high security benchmark continues beyond OCD 1.

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Variations During the year in review Province issued six Province’s Variation Notices (PVNs) impacting on operations, withdrew none and concluded a Variation Memorandum with the Concessionaire for one PVN as described in more detail below.

PVNs issued • PVN 011-01: Amendments to DFDS OCD 1– for the amended Dedicated Feeder and Distribution Services (DFDS) for the period OCD 1 to OCD 2, issued in terms of PVN 010 – OCD 1 in time for 2010 FIFA World Cup™. • PVN 011-02: Rhodesfield station: Amendments to Phase 1 DFDS – Route RF – for amendments to the route and frequency of the DFDS serving Rhodesfield station. • PVN 011-03: Temporary withdrawal of certain DFDS from Timetable until OCD 2 – for the temporarily withdrawal of certain scheduled DFDS. • PVN 012: Weekend DFDS Soccer World Cup (SWC) – for the provision of additional weekend DFDS from Sandton during the period of the SWC. • PVN 013: Airport Service between ORTIA and Marlboro stations – for the amendment of the Airport Service to include the provision of Services between ORTIA station and Marlboro station. • PVN 014: Extension of Train Operating Hours – for the extension of the operating hours of the Airport Service and the General Passenger Service.

Variation Memorandum concluded • PVN 010: OCD 1 in Time for 2010 FIFA World Cup™ – to enable the Concessionaire to procure OCD 1 in time for the 2010 FIFA World Cup™. • Variations implemented by means of high level agreements between the Parties. • PVN 011-01: Amendments to DFDS OCD 1. • PVN 011-02: Rhodesfield station: Amendments to Phase 1 DFDS – Route RF. • PVN 011-03: Temporary Withdrawal of Certain DFDS from Timetable until OCD 2. • PVN 012: Weekend DFDS SWC. • Variations not yet agreed. • PVN 013: Airport service between ORTIA and Marlboro stations – Price for Implementation not yet agreed with the Concessionaire. • PVN 014: Extension of Train Operating Hours – Province is awaiting the Concessionaire’s Variation Response.

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Progress in concluding agreements for PVNs impacting on Operations 7

VM’s CONCLUDED INTERIM AGREEMENTS NOT YET AGREED

APR 10

MAY 10

JUN 10

JUL 10

AUG 10

SEP 10

OCT 10

NOV 10

DEC 10

JAN 11

FEB 11

MAR 11

Concessionaire’s Variations During the year under review the Concessionaire submitted no proposals for Concessionaire’s Variations (CV) for changes to the Concession Specification affecting operations. The most important objective for Province in agreeing an operational Variation, is to ensure that Province gets value for money spent, while its other interests e.g. Total Revenue, Risk Profile, SED requirements etc. are adequately addressed and or protected. The Variation process followed in terms of the Agreement is supportive of this objective.

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Planning for Future Capacity and Extensions All contractual service capacity committees met as required and were effective in monitoring capacity and agreeing changes to the operating plans to accommodate capacity changes. Network extension planning was carried out for an extension to the ORTIA station platform to allow partial access to eight-car train sets.

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KEY TO ABBREVIATIONS AARTO ACD ACSA AFC ALARP APS ARC ASB ATP BBEEE BCJV BCC BEs BEE BE&M BLESS BOC BMS BO&M BTKC CA CAM CAR CCTV CDE CEO CJV CMAL CoJ COTO COT CPIX CSIR CEAC CR CSC CV DDG DFDS DoRA DP DPM DPPMP DRB DRB DWA ECN ECP E&M EMC EMM EMP EWC ETELS FDP FDR FMECA FTIFC FIFA FOCS GMA GDARD GDRT GPG GPO GPR

Administrative Adjudication of Road Traffic Offences Anticipated Completion Date Airports Company of South Africa Automatic Fare Collection As Low as Reasonably Practicable Auto Paralleling Supply Audit and Risk Committee Accounting Standards Board Automatic Train Protection Broad-Based Black Economic Empowerment Bombela Civil Joints Venture Bombela Concession Company Black Entities Black Economic Empowerment Bombela Electrical and Mechanical Bombardier Life cycle cost Excel Spread Sheet Bombela Operating Company Building Management System Bombela Operations and Management Bombela Turnkey Contractor Concession Agreement Construction Assurance Manager Capital Assessment Replacement Closed Circuit Television Construction Design Chief Executive Officer Civils Joint Venture Corrective Maintenance Action List City of Johannesburg Committee of Transport Officials City of Tshwane Consumer Price Index Council for Scientific and Industrial Research Civil Engineer Advisory Council Comment Review Contact Smart Card Contingent Valuation Deputy Director General Dedicated Feeder and Distribution Services Division of Revenue Act Development Planning Development Period Meeting Development Programme and Project Management Plan Dispute Resolution Board Deutsche Reichsbahn-Gesellschaft Department of Water Affairs Environmental Concern Notification Engineering Capacitation Programme Electrical and Mechanical Environmental Management Committee Ekurhuleni Metropolitan Municipality Environmental Management Plan Early Works Contract Emergency Telephones Fire Detection and Protection Final Design Review Failure Mode Effects Criticality Analysis Fast Track Issued For Construction Fédération Internationale de Football Association (International Federation of Association Football) Fibre Optic Communication System Gautrain Management Agency Gauteng Department of Agriculture and Rural Development Gauteng Department of Roads and Transport Gauteng Provincial Government General Post Office Ground Penetrating Radar

GPTIC GRAP GRRL GTIA HDI HIF HL HR H&S HVAC IC IDP IECP IECP IFC IPSAS IFC ISRED ISEM ISO ITP JV KAD KM LTA LTI LTIFR LV MEC M&E M&E MEPR MER MINCOM MIT MPS MTEF NAC NASA NGO NLTSF OCD OCDS OH&S O&M OPM ORTIA OSHA PA PB PC PAS PBX PD PDR PEC PFMA PI PICO PHA PHD PIS PLTF PMAL PMP PPP PRASA

Gautrain Public Transport Integration Committee Generally Recognised Accounting Practice Gautrain Rapid Rail Link Gauteng Transport Infrastructure Act Historically Disadvantaged Individuals Hazard Identification Form Hazard Log Human Resource Health and Safety Heating Ventilation Air Conditioning Independent Certifier Integrated Development Plan Integrated Energy and Climate Programme Independent Environmental Control Person Issued for Construction International Public Sector Accounting Standards International Finance Corporation Institute for Scientific Research and Educational Development Independent Socio-Economic Monitor International Standards Organisation Integrated Transport Plan Joint Venture Key Assurance Documentation Key Milestone Lenders Technical Advisors Lost Time Injury Lost Time Injury Frequency Rate Level of Velocity Member of the Executive Council Mechanical and Electrical Systems Monitoring and Evaluation Monthly Environmental Progress Report Monthly Environmental Report Ministerial Conference of Ministers of Transport Massachusetts Institute of Technology Main Power Station Medium Term Expenditure Framework New Africa Consulting National Aeronautical Space Administration Non-Governmental Organisation National Land Transport Strategic Framework Operating Commencement Date Overhead Contacts and Distribution System Occupational Health and Safety Operations and Maintenance Operating Period Meeting OR Tambo International Airport Operation and Support Hazard Analysis Line to Pretoria Line to Pretoria Line to OR Tambo International Airport Public Address System Private Branch Exchange Preliminary Design Preliminary Design Review Project Environmental Co-Ordination Public Finance Management Act Passenger Information Post Installation Checkout Preliminary Hazard Analysis Doctor of Philosophy Passenger Information System Provinsional Land Transport Framework Preventative Maintenance Action List Project Management Professional Public Private Partnership Passenger Rail Agency of South Africa

PS&D PSG PST PVN QAN QMP QCN QS QSC RAMS REB REW RFP RFQ RIP RMAP RoD RSR RTU SACO SAICE SAMA SANRAL SANTACO SAP SAPA SARCC SARSR SAT SATACO SCADA SDR SED SHEQ SIT SMs SMMEs SMT SPG SPV SPVT SRS SSWG STMS SVM SWC TBM TKC TMEMS TOM TVM UPEC UCW UITP UPS USA USAID WUL ZAR

Power Supply and Distribution System Partnering Steering Group Provincial Support Team Project Variation Notices Quality AdvisoryNotice Quality Management Plans Quality Concern Notices Quality System Quality Steering Committee Realiability, Accessibility, Maintainability and Safety Relocatable Equipment Building Reinforced Earth Walls Request for Proposal Request for Pre-Qualification Review in Principle Realiability Modelling, Allocation and Prediction Record of Decisions Railway Safety Regulator Remote Terminal Unit South African Commuters Organisation South African Institute of Civil Engineering Security and Access Management South African National Roads Agency Limited South African National Taxi Council Systems Acceptance Panel South African Police Services South African Rail Commuter Corporation South African Rail Safety Regulator Site Acceptance Tests South African Taxi Council Supervisory Control and Data Acquisition System Design Review Socio-Economic Development Safety, Health and Quality Assurance Site Integration Tests Section Managers Small, Medium and Micro Enterprises Strategic Management Team Strategic Partnership Group Special Purpose Vehicle System Performance Verification Testing Railway Safety Regulator System Safety Working Group System and Tunnel Management System Safety Verification Matrix Soccer World Cup Tunnel Boring Machine Turn Key Contractor Tunnel Mechanical and Electrical Management System Ticket Office Machine Ticket Vending Machine Unknown Pre-Existing Contamination University of the Western Cape A world wide association of urban and regional passenger transport operators, authorities and suppliers Uninterruptable Power Supply United States of America United States Agency for International Development Water User License South African Rand

22 MILKY WAY AVENUE, LINBRO BUSINESS PARK, MARLBORO, JOHANNESBURG PO BOX 1266, KELVIN, 2054, JOHANNESBURG, SOUTH AFRICA. TELEPHONE: +27 (0) 11 997 8550 TO 997 8899 FAX: +27 (0) 11 997 8901/2/3 E-MAIL: info@gautrain.co.za • www.gautrain.co.za