MANAGING DIRECTORS REPORT
The Corporation once again had a difficult year with a funding
shortfall of R84,8 million. This was however successfully addressed
by Management through internal savings, and in addition, Metrorail
was called upon to save a further R75 million in the second half
of the year. This was achieved through a reduction in specific
early morning, late night and weekend services, which however
resulted in negative public reaction as was expected.
Future funding curtailments will inevitably lead to further reductions
in services and even the closing down of certain lines. This will
be viewed negatively by the commuting public, many of which are
dependent on rail as their only affordable means of public transport.
RESTRUCTURING
The internal restructuring process to prepare the Corporation
to optimally manage the new business agreement with Metrorail
was completed in May 1998. There are now four divisions, namely
Business Development and Contracts Management, Assets Development
and Management, Management Services and Financial Services, each
headed by an Executive Manager.
With Government's intention to devolve public transport powers
to lower spheres of government, an Institutional Reform study
into commuter rail has been initiated. This study, which will
be pursued further in the new financial year, includes a thorough
look at the SARCC's functions, asset ownership and management.
CONCESSIONING
1998/99 saw both the Corporation and Metrorail increase the momentum
to finalise the new business agreement. The concession-based contract
was ready for implementation on 1 April 1999 but the formal signing
thereof will be done once some outstanding issues have been finalised.
Pilot Project
A lot of preparatory work has been done in conjunction with other
role players, including labour unions, and a good climate has
been developed around the Project. In the beginning of 1999, a
short-list of three possible Pilot Project locations was completed
and a feasibility study into these areas has begun.
In order to make informed decisions and to start off concessioning
on a sound and credible footing, consultants have been appointed
to do a thorough analysis of all options and to assist in finalising
plans for the Project.
INTERSITE PROPERTY MANAGEMENT SERVICES
The property development and management arm of the Corporation
continued to perform exemplary. Its contribution to revenue increased
by 14,0% to R123.2 million (1997/98: 36,5 percent to R108.0 million).
This contribution, since Intersite's inception in 1992, of about
R320 million, has been helping to ease the funding shortfall and
thus the required Government subsidies over the years.
Intersite continues to seek other opportunities to increase its
returns year on year. Its National Roads Agency Portfolio has
taken off and is expected to add to the income received from the
commuter rail portfolio. The company's commitment to empowerment
is evident in the ongoing involvement of small and medium sized
companies in all its projects.
EMPLOYMENT EQUITY
The Corporation established an Employment Equity Forum in February
1999 in accordance with the Employment Equity Act of 1998. Management
fully supports the Forum and the Equity Plan will be ready according
to the statutory requirement in 2000. Members of the Forum will
undergo training to familiarise themselves with their roles and
responsibilities.
Affirmative Action The new structure has resulted in new positions
and opportunities in middle to senior management. These positions
were filled with people who were previously disadvantaged. The
Corporation now better reflects both the demographic distribution
and the profile of the commuters it serves. The development and
growth of staff was heightened by the appointment of a person
to focus on Training and Development, thus creating the environment
for ongoing upward mobility for staff.
THE FUTURE
The new business agreement with Metrorail will become operational
in the new financial year. Both the SARCC and Metrorail are ready
to enter the new era ofconcessioning of commuter rail in South
Africa.
Funding remains the biggest challenge facing the Corporation.
Management is committed to finding innovative ways of accessing
additional funds, specifically for the renewal and refurbishment
of its rolling stock fleet where a large recapitalisation backlog
has been built up over many years due to inadequate funding.
Although the Institutional Reform study will have a direct impact
on the Corporation's future role, management actively supports
the study as well as any further developments that will assist
in improving the provision of commuter rail services to the travelling
public.
THANKS 1998/99 was a year of consolidation, with regards to internal
restructuring and preparing for the new business agreement and
I thank my management team and staff for tackling their tasks
with determination and enthusiasm. The continuing support of the
Board of Control and of our Chairman is always appreciated, and
together we will forge our way through the following year.
Wynand Burger
Managing Director
