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Annual Report 2014/15

South African Civil Aviation Authority

Keeping you safe in the sky

Annual Report 2014/15


2 SACAA Annual Report 2014/15

ContentsPart A: General Information ....................................................................................................................4General Information ...................................................................................................................................5List of Abbreviations and Acronyms .........................................................................................................6Foreword by the Chairperson....................................................................................................................9Overview by the Director of Civil Aviation ..............................................................................................14Statement of Responsibility and Confirmation of Accuracy of the Annual Report .................................22Strategic Overview ..................................................................................................................................23Legislative and other Mandates ..............................................................................................................23Organisational Structure..........................................................................................................................24Board composition ..................................................................................................................................26Executive Management Committee ........................................................................................................28

Part B: Performance Information .........................................................................................................30Statement of Responsibility for Performance Information ......................................................................31Auditor’s Report: Predetermined Objectives ...........................................................................................32Situational Analysis ..................................................................................................................................33Performance Information by Objective ....................................................................................................39Review of SACAA Programmes and Activities ........................................................................................44Revenue collection ..................................................................................................................................57

Part C: Governance ...............................................................................................................................58Introduction .............................................................................................................................................59Executive Authority ..................................................................................................................................61Accounting Authority ...............................................................................................................................62Risk management....................................................................................................................................69Internal Control Unit ................................................................................................................................69Internal Audit ...........................................................................................................................................70Audit and Risk Committee report ............................................................................................................74

Part D: Human Resource Management ...............................................................................................78Introduction .............................................................................................................................................79Human Resource Oversight Statistics ....................................................................................................83

Part E: Annual Financial Statements ...................................................................................................89Index ........................................................................................................................................................90Report of the Auditor-General to Parliament on South African Civil Aviation Authority ...........................91Accounting Authority’s Responsibilities and Approval ............................................................................93Audit and Risk Committee Report ...........................................................................................................94Accounting Authority’s Report.................................................................................................................98Company Secretary’s Certification........................................................................................................101Statement of Financial Position .............................................................................................................102Statement of Financial Performance .....................................................................................................103Statement of Changes in Net Assets ....................................................................................................104Cash Flow Statement .............................................................................................................................105Statement of Comparison of Budget and Actual Amounts...................................................................106Accounting Policies ...............................................................................................................................107Notes to the Financial Statements .........................................................................................................123

3SACAA Annual Report 2014/15

31 August 2015

Ms Dipuo Peters Minister of Transport Private Bag X193 PRETORIA0001

Honourable Minister Peters,

It is an honour to submit to you the Annual Report of the South African Civil Aviation Authority (SACAA) for the period 01 April 2014 to 31 March 2015. The Report outlines the performance of the SACAA during the year under review, and the strides made in fulfilling its mandate.

Kind regards,

Mr Smunda Mokoena Chairperson: SACAA Board


PART AGeneral Information


REGISTERED NAME: South African Civil Aviation Authority

PHYSICAL ADDRESS: Ikhaya Lokundiza 1 16 Treur Close Waterfall Park Bekker Street Midrand

POSTAL ADDRESS: Private Bag X 73 Halfway House 1685

TELEPHONE NUMBER: +27 11 545 1000

FAX NUMBERS: +27 11 545 1465

EMAIL ADDRESS: [email protected]

WEBSITE ADDRESS: www.caa.co.za

EXTERNAL AUDITORS: Auditor-General of South Africa

BANKERS: Standard Bank

COMPANY SECRETARY: Ms Nivashnee Naraindath (BA LLB, LLM)

RP NUMBER: RP255/2015

ISBN NUMBER: 978-0-620-66211-6

General Information


List of Abbreviations and Acronyms

ACC3 Air Cargo or Mail Carrier Operating into the European Union from a Third Country Airport

ACSA Airports Company of South Africa

AFCAC African Civil Aviation Commission

AGM Annual General Meeting

AGSA Auditor-General of South Africa

AIID Accident and Incident Investigation Division

AIP Aeronautical Information Package

AMO Aircraft Maintenance Organisation

ANS Air Navigation Services

AO Air Operator

APS Aviation Personnel Standards

ARC Audit and Risk Committee

ASIB Accident Safety Investigation Board

ASP Advisory Safety Panel

ATNS Air Traffic and Navigation Services

ATOs Aviation Training Organisations

ATSUs Air Traffic Service Units

AvMed Aviation Medicine

AvSec Aviation Security

BBBEE Broad-based Black Economic Empowerment

CAA Civil Aviation Authority

CAHRS Confidential Aviation Hazard Reporting System

CAP Corrective Action Plan

CAPSCA Cooperative Arrangement for the Prevention of the Spread of a Communicable Disease through Air Travel

CARCom Civil Aviation Regulations Committee

CAR Civil Aviation Regulation

CATS Civil Aviation Technical Standards

CDE Cabin Designated Examiners

CFARP Cross-functional Accident Reduction Plan

CFO Chief Financial Officer

CLS Client Services, Licensing and Examinations

CMS Content Management System

COSCAP Cooperative Development of Operational Safety and Continuing Airworthiness Programme

CRM Customer Relationship Management

CSSR Central Safety and Security Reporting System


DCA Director of Civil Aviation

DFEs Designated Flight Examiners

DoT Department of Transport

EBS Enterprise Business System

EM Executive Manager

ERP Enterprise Resource Planning

EU European Union

EXCO Executive Management Committee

FAA Federal Aviation Administration

FOD Flight Operations Department

FTP File Transfer Protocol

FIU Flight Inspection Unit

GA General Aviation

GASI General Aviation Safety Initiative

GDP Gross Domestic Product

GM General Manager

GNSS Global Navigation Satellite System

GRAP Generally Recognised Accounting Practice

HR Human Resources

HRC Human Resources and Remuneration Committee

IATA International Aviation Transport Association

ICAO International Civil Aviation Organisation

ICASA Independent Communications Authority of South Africa

ICVM ICAO Coordinated Validation Mission

ILF Industry Liaison Forum

IODSA Institute of Directors Southern Africa

IM Information Management

ISO International Standard Organisation

IT Information Technology

JAAP Joint Aviation Awareness Programme

LOC Local Organising Committee

LRC Legislative and Regulatory Committee

MoA Memorandum of Agreement

MoU Memorandum of Understanding

MTEF Medium-term Expenditure Framework

MTOW Maximum Take-off Weight


NATJOC National Joint Operational Centre

NASCOM National Airspace Committee

NASC National Aviation Security Committee

NASP National Aviation Security Programme

NATS National Aviation Transportation Strategy

NATJOINTS National Joint Operational and Intelligence Structure

NDP National Development Plan

NED Non-Executive Director

OHS Occupational Health and Safety

PAPI Precision Approach Path Indicator

PCOT Portfolio Committee on Transport

PFMA Public Finance Management Act, 1999

PMS Performance Management System

PPL Private Pilot’s Licence

PSC Passenger Safety Charge

RAASA Recreational Aviation Administration of South Africa

RQC Risk, Quality and Compliance

SAA South African Airways

SAAsMA Southern African Aerospace Medical Association

SACAA South African Civil Aviation Authority

SADC Southern African Development Community

SAHPA South African Hang Gliding and Paragliding Association

SARPs Standards and Recommended Practices

SCM Supply Chain Management

SMME Small, Medium and Micro Enterprises

SMS Safety Management System

SMTP Send Mail Transfer Protocol

SRO Southern Regional Office

SSEC Safety, Security and Environmental Committee

ToR Terms of Reference

TR Treasury Regulations

UAS Unmanned Aircraft Systems

USOAP Universal Safety Oversight Audit Programme

WAN Wide Area Network

YTD Year-to-Date


Seamless Leadership Transition

I am proud to present my first annual report, having taken office as Chairman of the South African Civil Aviation Authority (SACAA) Board on 1 October 2014. I am humbled and appreciative of the opportunity afforded to me by the Minister of Transport and am pleased to report that as the new Board, we have inherited an entity that remains technically and administratively sound, well positioned and respected by the civil aviation industry, both locally and internationally.

In keeping with the SACAA’s entrenched governance culture, the previous Board familiarised the new one with the strategic direction of the SACAA by providing it with a detailed handover report, thus ensuring a smooth transition in the strategic leadership. This has, in turn, provided the new Board with a solid understanding of the achievements and challenges facing SACAA.

Inspiring Industry Overview

For close to seven decades, South Africa has been a Signatory State to the Chicago Convention of 1944, which established the International Civil Aviation Organisation (ICAO). This means that South Africa is expected to exercise civil aviation safety and security oversight in line with ICAO Standards and Recommended Practices (SARPs). Civil aviation safety and security oversight is underpinned by eight critical elements, which are captured in a

graph on the next page. These elements are at the centre of ICAO and other reputable global civil aviation organisations’ auditing exercises. Auditing exercises are aimed at determining a particular country’s level of compliance with globally accepted civil aviation safety and security standards. Non-compliance can lead to the downgrading of that particular country’s civil aviation safety and security rating. Downgrading has a direct and undesirable bearing on civil aviation operations. The graph on the next page denotes the cited ICAO critical elements that Member States have to take into account when administering civil aviation safety and security oversight.

The SACAA’s exceptional work during the reporting

period ensured that South Africa’s civil aviation safety

and security sector continued to be held in high

regard by peers across the world. As a result, South

African air carriers are free to operate throughout the

globe. The country’s world-class civil aviation safety

and security oversight has ensured that a substantial

number of reputable operators from various parts of

Foreword by the Chairperson


Critical Elements (CE) of a State's Security Oversight System

Eight Critical Safety Elements

Eight Critical Security Elements

Aviation Security Legislation

Appropriate Authority

Programmes and

Regulations

Personnel Qualifications

and Training

Certification and Approval Obligations

Resolution of Security Concerns

Quality Control

Obligations

CE 1

ESTABLISH

IMPLEMENT

Resolution of Safety Concerns

Certification and Approval Obligations

Technical Personnel

Qualifications and Training

Specific Operating

Regulations

Primary Aviation

Legislation State Civil Aviation System

and Safety Oversight Functions

Technical Guidance,

Tools and the Provision of

Safety Critical Information

Surveillance Obligations

ESTABLISH

IMPLEMENT

CE 1CE 3C

E 5

CE 7

CE 8

CE 6

CE

4

CE 2

Guidance, Tools and

Info

the world continued to operate in and out of South Africa. In addition, the SACAA played a critical role in ensuring that South Africa maintained its Category 1 status as declared by the United States Federal Aviation Administration (FAA). South Africa’s admirable safety record allows air carriers from the United States and South Africa to operate freely between the two countries.

All these achievements are crucial, considering the catalytic

role that civil aviation plays in the economy. For instance,

a 2011 report released by Oxford Economics estimates

that the aviation sector contributes over R50 billion to South

Africa’s gross domestic product (GDP), making it a key role

player in the economy. In addition, the aviation sector is

said to support approximately 227,000 jobs in South Africa.

Organisational Performance

The SACAA annually tables the Strategic and Annual

Performance Plan with its Shareholder i.e. the Minister

of Transport, supported by the Department of Transport

(DoT). The SACAA Annual Performance Plan (APP) is

derived from the organisational Strategy. Performance

against the APP is tracked through quarterly reports, and

ultimately through the annual report. Most significantly,

performance, as conveyed in the quarterly and annual

reports, is duly audited by the Auditor-General of South

Africa (AGSA) to ensure the consistency, reliability and

accuracy of information reported.

The aviation sector is said to support approximately 227,000 jobs in South Africa.


It is the Board’s honour to report that the SACAA

has met all its APP objectives, culminating in a 100%

performance against the targets set for the 2014/15

financial year. Targets were even exceeded in a few

instances.

The SACAA’s stellar performance is not an isolated

achievement in the sense that its objectives are tied to

those of the Department of Transport, and ultimately

the National Development Plan Vision 2030 (NDP).

The table below illustrates the alignment between

the SACAA’s goals, DoT Outcomes and the NDP.

SACAA’s Strategic Flight Path

The appointment of a permanent Director of Civil Aviation (DCA) in December 2013, the development of a five-year organisational strategy, the redesigning of the organisational structure as well as the seamless transition between the old and new Board all form

the basis for ushering in a new era for the SACAA.

Whilst a new path is always exciting and full of all sorts of possibilities, the organisation will need to remain focused on critical deliverables. The diagram on the right denotes seven critical outputs on which the SACAA will need to focus between now and the 2019/20 financial year.

Improve communication and stakeholder engagement

Drive organisation efficiency and effectiveness

Significantly improve client service experience

Regulate avaition industry in compliance with the CA Act and

ICAO safety and security elements

Accelerate aviation industry transformation

Propose legislative review and governance arrangements

Secure financial sustainability

SACAA Strategy 2015/16 to 2019/20

1

4

2

3

7

6

5

National Development Plan DoT Outcomes Organisational Goal

1 Building safer communities

An efficient and integrated transport infrastructure network for social and economic development

• Regulate aviation industry in compliance with the CA Act and ICAO safety and security elements

• Propose legislative review and governance arrangements

2 Transition to low carbon economy

Increased contribution of transport to environmental protection

3 Transforming society and uniting the country

Increased contribution to job creation

• Accelerate aviation industry transformation

4 Reforming the public service

An efficient and integrated transport infrastructure network for social and economic development

• Secure financial sustainability

• Significantly improve client service experience

• Drive organisation effiency and effectiveness

• Improve communication and stakeholder management

12 SACAA Annual Report 2014/1512 SACAA Annual Report 2014/15

The strategic pillars denoted in the diagram on the previous page need to be reconciled with various national strategies or plans. Critical in the delivery of the strategic pillars, is the need for the Board and all SACAA employees to live the organisational values, which were revised, together with the mission and vision, during the course of the reporting period.

A Glance Beyond the Horizon

Whilst many aspects seem to be going well in terms of regulating the civil aviation industry, transformation of the industry is still an Achilles heel, two decades into democracy. Statistics indicate that historically disadvantaged individuals (HDIs) constitute less than 11% of the licensed aviation personnel. Moreover, these low figures also include cabin crew, a field that is represented by mostly HDIs. In pursuit of addressing this conundrum, the DoT has tasked the SACAA with co-ordinating and facilitating an industry-wide transformation intervention.

During the reporting period, the SACAA appointed an independent service provider to assist with conducting research that would form the basis of the required national industry-wide transformation strategy. Once the strategy has been developed, the SACAA will be responsible for leading the implementation and monitoring of the deliverables contained therein. At the end of the reporting period, the draft Aviation Transformation Strategy was finalised, with implementation earmarked to begin during the 2015/16 financial year. The strategy will be supported by a carefully coordinated delivery plan that addresses industry challenges.

In addition to regulating the civil aviation industry and accelerating transformation, the Board will also concern itself with several other key deliverables. These include:• Proposing legislative review and governance

arrangements;

• Introducing measures to ensure improved financial sustainability;

• Significantly improving clients’ service experience;

• Driving organisational efficiency and effectiveness; and

• Improving communication and stakeholder management.

Reinforcement of Strategic Relations

The SACAA continues to make inroads in terms of contributing to Africa’s aviation safety record. Whilst its contribution in this regard has historically been modest, this was given impetus through the development of the Africa Skills Assistance Plan. During the course of the review period, the SACAA continued to engage and share best practices with counterparts across the continent. Following requests, the SACAA offered technical assistance to various authorities across the continent. A full review of the type of assistance and the impact thereof is provided elsewhere in this annual report.

The SACAA was also privileged to have hosted a visit by the Portfolio Committee on Transport during February 2015. This afforded SACAA an opportunity to strengthen its visibility, and showcase its strategic path, talents, achievements and challenges.

Acknowledgements

On behalf of the entire Board and SACAA staff complement, I wish to take this opportunity to thank the Government of the Republic of South Africa through the Minister of Transport, Honourable Ms Dipuo Peters, for the confidence displayed in appointing the current SACAA Board from 01 October 2014. The mandate to serve the people of South Africa is not taken lightly, and as outlined in my comments above, we have developed a comprehensive five-year Strategic Plan that will be key to steering the SACAA towards identified critical goals. Implementation commences in the 2015/16 financial year.

The Board wishes to thank the Minister and Deputy Minister, as well as the entire Department of Transport for their unwavering support and guidance on matters relating to civil aviation.


Let me also take this opportunity and thank the previous Board for the tremendous work that they did in laying a solid foundation for the current leadership to continue steering the organisation towards an improved fulfilment of its mandate.

On behalf of the Board, I wish to express my sincere admiration and appreciation to the Director of Civil Aviation and her executive team for the stellar work, diligence and dedication in ensuring that the SACAA lives up to its new brand promise – “Keeping you safe in the sky”. A big thank you goes to each and every employee of the SACAA who have so positively embraced the new Board’s vision and mission and continued to discharge their respective duties in the best way they know how.

Significant Matters of Importance Post the Financial Year End

The SACAA had a very successful year in terms of performance and achieving our strategic objectives. Allow me to take this opportunity to acknowledge the appointment of South Africa as the Chairperson of ICAO’s Aviation Security Panel. The country will be represented by the Director of Civil Aviation. The appointment is indeed a demonstration of

trust and faith by the global aviation community in South Africa’s capabilities in aviation matters, and specifically aviation security.

This achievement, and several others, are detailed further in this report.

Conclusion

I conclude by congratulating the organisation on behalf of the Board for the accolades received during the reporting period from, among others, the Department of Transport for the “Best-performing Entity in Transport” and the Auditor-General of South Africa for a Clean Audit for two consecutive years. Whilst the year was one of significance for SACAA, I look forward to witnessing the organisation exceeding expectations in the years to come.


South African Civil Aviation Authority 31 August 2015


A Year of Delivery in Retrospect

This review period marks the first full financial year since my permanent appointment as the Director of Civil Aviation; having served as acting DCA since November 2012 until my appointment in December 2013. It was a year characterised by some challenges and a significant number of remarkable achievements. Most importantly, it was a year when the organisation’s persistent commitment to service delivery was recognised by independent external parties.

Of all the acknowledgements and honours received, the most memorable was when the SACAA scooped the Best-performing Institution Award amongst all modes of transport during the inaugural Transport Awards hosted by the Minister of Transport. We are also gratified that the SACAA received a Clean Audit Award from the AGSA for the second year running. I am proud to say that it has truly been a remarkable year of delivery as is attested by the additional highlights captured further in this report.

General Financial Overview

The SACAA realised a net operating surplus of R17.1 million for the year ending 31 March 2015 compared to a budgeted surplus of R1.7 million; and the R9.0 million realised during the 2013/14 financial year. This is 90% higher than the previous year and R15.4 million higher than budgeted. The reported surplus is largely due to increased revenue generated as well as stringent cost management measures applied during the reporting period.

The total revenue for the year, which was R462.5 million, grew by 11.5% compared to R414.9 million during the previous reporting period. The SACAA’s primary source of revenue, which is passenger safety charges, user fees and fuel levy, accounted for 97.2% (2013/14: 96.0%) of the total revenue. From that figure, passenger safety charge accounted for 72.2% (2013/14: 70.3%), the user fees for 16.1% (2013/14: 17.0%) and the fuel levy for 5.1% (2014: 4.7%).

Overview by the Director of Civil Aviation

Based on the available cash resources and projections for the year, there is reasonable expectation and assurance

that the SACAA has access to adequate resources to continue in operational existence for the

foreseeable future.


The table below reflects the total revenue split of the SACAA

Two-year Comparison of the SACAA Total Revenue Split2014/15 2014/15 2013/14 2013/14R million % R million %

Passenger safety charges 333.8 72.2 291.7 70.3

User fees 74.3 16.1 70.4 17.0

Fuel levy 23.5 5.1 19.5 4.7

Accident and incident investigation grant 18.0 3.8 16.9 4.1

Interest received 9.6 2.1 8.5 2.0

Other income 3.3 0.7 7.9 1.9

Total revenue 462.5 100 414.9 100

The table below reflects the breakdown of total expenditure

Breakdown of the SACAA’s Total Expenditure for the Year Ended 31 March 2015 2014/15 2013/14 %R million R million increase

Personnel costs 301.4 280.7 7.4

Operating expenses 104.0 98.5 5.6

Lease rentals on operating lease 17.9 16.8 6.5

Depreciation and amortisation 9.0 7.0 28.6

Finance costs 7.9 0.0

Repairs and maintenance 4.7 3.8 23.7

Debt impairment 1.0 0.3 233.3

Total expenditure 445.9 407.1 9.5

The passenger safety charge constitutes a significant portion of the SACAA’s revenue, and any decline in passenger movement has a direct and major impact on the organisation’s financial performance. Encouragingly, passenger numbers came in at 18,619,109 compared to 18,336,390 in the previous financial year.

Total expenditure for 2014/15 year amounted to R445.9 million. This is a 9.5% increase when compared to the previous year’s R407.1 million. Notwithstanding, total expenditure for 2014/15 is 1.04% below the budgeted amount of R450.6 million.

The SACAA has maintained a positive cash flow with cash and cash equivalents as at the end of the financial year amounting to R154.6 million compared to

R185.3 million in the previous year. Net cash generated from operating activities amounted to R8.6 million compared to R8.1 million in the previous reporting period. An amount of R39.3 million was spent on capital expenditure compared to R12.6 million in the previous year. The biggest contribution to the capital expenditure amount was the acquisition of the Enterprise Business System during the reporting period.

It is worth noting that the SACAA implemented cost containment measures which resulted in significant savings. These measures included deferments of certain expenditure across the entity, but most notably the freezing of appointments pending the finalisation of the organisational restructuring process.


Other cost-management measures included cutting down on the use of consultants, travel and subsistence costs, expenses relating to catering and events as well as the use of organisational debit and credit cards. Further, the SACAA implemented cost-containment measures as recommended by National Treasury.

Based on the available cash resources and projections for the year, there is reasonable expectation and assurance that the SACAA has access to adequate resources to continue in operational existence for the foreseeable future.

Overview on Global Compliance

The South African aviation industry continued to get global recognition for its world-class safety and security standards. In relations to ICAO compliance, I am thrilled to report that, as at 31 March 2015, South Africa’s ICAO Effective Implementation Rating was nearly 84%. This rating does not include the Accident and Incident Investigation function, which was not reviewed during the last audit. Moreover, the 84% rating does not include progress achieved against the corrective action plan since the last audit in 2007. Notwithstanding, and with the commitment shown by the organisation towards improving the current rating, it will not come as a surprise if ICAO’s next audit reveals that South Africa has again moved further up and above the world average. In my view, the SACAA’s vision to become one of the top civil aviation regulators in the world is within reach.

During the course of the reporting period the SACAA continued to carry out deliverables in line with its ICAO compliance corrective action plan (CAP). The SACAA’s CAP is carried out by a multidisciplinary team comprising experts from various departments. It is also worth reporting that ICAO compliance will, going forward, get a boost through the introduction of an ICAO compliance function in the newly revised organisational structure.

Aviation Accidents are on the Decline

It is gratifying to report a decline in the number of aircraft accidents. During the reporting period, aircraft accidents declined by 17% when compared to the 2013/14 financial year, whilst the number of fatal accidents declined by 41%. Most significantly, the number of fatalities from aircraft accidents declined by 37% compared to the previous financial year. Moreover, scheduled commercial passenger operations retained a 0% accident record.

Whilst these numbers are encouraging, the Board and management are very keen and determined to work hard to ensure that the general aviation sector swiftly adopts the admirable safety record witnessed in commercial operations. In addition to our own initiatives, the SACAA will continue to work with ICAO and other member states to come up with long-term solutions to stem aircraft accidents.

Over the last two review periods, the global community witnessed several aviation tragedies, with the most notable being Malaysia Airlines Flight 370 (MH370), Malaysia Airlines Flight 17 (MH17), and Germanwings Flight 9525 (4U9525). Even though their circumstances differ, all these tragedies are a course for concern for the global aviation industry. These tragedies have propelled aviation regulators, including the SACAA, to review their systems in order to ensure improved aviation safety and security. In addition to monitoring developments, the SACAA is also participating at various global platforms that are discussing these matters in details in order to develop measures that will help prevent recurrence of the tragedies. The SACAA will take guidance from ICAO and other reputable aviation organisation once these matters have been finalised and pronouncements are made.

One of the key incidents that happened after the end of the reporting period was the stowaway aboard the British Airways flight from Johannesburg to London.

Aircraft accidents declined by 17% and the number of fatal accidents declined by 41%.

17SACAA Annual Report 2014/15 17SACAA Annual Report 2014/15

The incident, even though a final report was still outstanding at the time of compiling this report, has brought to the fore the need for operators to augment their security system.

Towards an Efficient Organisation

Just like most organisations, the SACAA had its fair share of challenges. The challenges also afforded the SACAA the opportunity to reinvent the way it went about doing business. In order to capitalise on the opportunity, the SACAA embarked on a project called Siyathuthuka. The project entails the organisational structure review process which deals with structural alignment with stakeholder needs, and the introduction of a new enterprise business system that, among others, assist with the roll-out of an integrated safety and security oversight management system. These joint projects will ultimately lead to a transformed and efficient SACAA, both from a structural, functional and efficiency point of view.

An Organisational Structure Tailored to Stakeholder Needs

This reporting period was an era focused on a comprehensive organisational review and renewal in order to bring about organisational efficiency and

alignment with the SACAA’s mandate and international obligations as well as dedicated focus on industry dynamics. In essence, this was a year geared towards ensuring that the organisation is refocused on being effective and efficient in discharging its mandate. It was also a year aimed at elevating performance to bring to life the vision of being rated amongst the top civil aviation authorities in the world.

The last review of the organisational structure was done in 2007. Since then, ICAO has introduced many changes and the industry has grown, but the SACAA’s staff complement and processes remained the same, with concomitant challenges. Moreover, a few structural changes were introduced over the years without any informed needs analysis.

During the reporting period, substantial progress was made with the organisational redesign process. The SACAA employed the services of an independent party in an effort to ensure the impartiality and integrity of the process. The initial phases of the project, which were diagnosis and review, were completed with impressive contributions by internal and external stakeholders. Decent quantitative and qualitative data, necessary during the implementation phase, were received. The diagnosis and review exercises also helped to identify

Road map to improved

organisational performance

Stage 4Approved organisational design and structure

Stage 3Organisation-wide high level process mapping

Stage 5Resourcing of organisational structure

Stage 2Five-year strategy development aligned with diagnostic outcomes

Stage 6Implement strategy under the new structure - setting into a new organisation

Stage 1Internal and external stakeholder diagnostics survey

The diagram below depicts the six phases undertaken during the organisational redesign process


optimum structural alignment based on processes, regulatory requirements, and stakeholder needs.

Another outcome of these initial phases of the organisational redesign process was the identification of the skills that the SACAA requires in order to function optimally. A thorough skills audit was

necessary to help steer the organisation towards building resilient human capital capacity that embraces a high-performance culture. The intention was to determine the skills housed in the organisation and to gauge if there are any skills gaps. A review of the job grades across departments was another outcome of the process.

Summarised Benefits of the Enterprise Business SystemArea Anticipated Improvement and Impact on Industry• Approval and surveillance

of aerodromes, heliports, air traffic services, aviation training organisations, aircraft maintenance organisations, design organisations, manufacturing organisations, and air operation/operating certificate holders.

• Quicker turnaround times and better client service.

• Single source of information for all areas.

• Certification and approval processes will be better executed and monitored for follow-up actions.

• Risk-based oversight.

• Safety concerns will be better tracked.

• Single view of organisations and individuals and their interrelationships.

• Enforcement. • Integrated automated processes offer increased transparency of organisations and personnel activity and their related approvals, certifications and licences and the applicability thereof.

• An automated enforcement register allows for the improved tracking and resolution of cases.

• Inspector training. • Improved inspector training management would lead to improved capability and capacity.

• Aircraft registration, mortgages and currency fee collection.

• Type certification.

• An accurate and reliable Aircraft Register.

• Reduced deficit and improved revenue collection.

• Licensing of air traffic controllers, pilots, cabin crew, aircraft maintenance engineers, etc.

• Medical fitness data for pilots and air traffic controllers, etc.

• The implementation of these modules will ensure that client service standards are improved and operate optimally, to ensure a quick turnaround time in the issuance of licences. The system will also ensure that clients do not have to physically apply for their licence renewals at the SACAA premises.

• Electronic document management. • Documents will be stored electronically, allowing SACAA employees easy retrieval, thereby reducing response times.

• Industry access. • Web access and wo rkflow will offer the industry an electronic view of how their requests are being managed and the completion status thereof.

• Statistics. • Improved capturing of statistics – e.g. accident statistics, etc.


The new organisational structure also gave birth to additional and vital functions such as Research and Development as well as Enterprise-wide Risk Management. The last phase of the organisational redesign process is scheduled for implementation during the 2015/16 financial year. The organisational redesign process is expected to ensure the alignment of organisational processes with the SACAA’s international obligations and local oversight mandate. Moreover, once completed, there should be higher adherence to performance deliverables across the organisation, coupled with improved operational efficiency as well as enhanced customer satisfaction.

A New Enterprise-wide Business System

Organisational efficiency and the security of information will always be of paramount importance for any successful organisation. For many years, the SACAA’s systems and processes, including financial, licensing, aircraft registry, examination platforms, and many others, were contained within disparate systems and some remained paper-based. Duplication of data and efforts, and time-consuming processes slowed responses to customer service requests. The disparate and paper-based systems also led to data integrity issues. As a result, a decision was taken to implement an Enterprise Business System (EBS) to centralise all data and processes within one system. An industry-appropriate system was sourced following tender processes, and its modular implementation is scheduled to take place over a three-year period. Central modules, plus those which have data in common with other modules, will be implemented during the 2015/16 financial year. Once fully functional, the EBS is expected to have numerous benefits for various stakeholders, including those outlined in the table adjacent.

The EBS project is being run concurrently with the organisational structural review process as part of the larger Siyathuthuka project. The project is all about re-engineering the organisation for maximum efficiency and alignment with the mandate and stakeholder expectations.

Relocation of SACAA Offices

As part of long-term cost-cutting measures, it has been decided that the organisation should acquire its own offices. In this regard, the relocation plan is progressing fairly well, with the building project having been registered with National Treasury. At the end of the financial year, the process of appointing a transaction advisor was at an advanced stage.

Introduction of Regulations for Remotely Piloted Aircraft

One of the key events that took place soon after the end of the reporting period was the signing of new regulations that would allow the flying of remotely piloted aircraft systems (RPAS). The draft regulations were completed before the end of March 2015, following a comprehensive consultation process with various role-players and airspace users. These regulations, which are known as Part 101 of the civil aviation regulations, were approved by the Minister of Transport, Honourable Ms Dipuo Peters on 05 May 2015 and came into effect on 01 July 2015.

RPAS are aircraft that can fly without a pilot on board. These aircraft come in various shapes and sizes and can be controlled remotely by an individual on the ground, in another aircraft or through an on-board computer system. Traditionally, remotely piloted aircraft systems were primarily used in military operations. However, they can also be used for many other purposes outside of the military, such as, conservation efforts, aerial surveillance, scientific

New regulations that would allow the flying of remotely

piloted aircraft systems were approved and came into

effect on 01 July 2015… the use of RPAS can be limited only by one’s imagination.


research, journalism, and many other commercial and non-commercial activities. Basically, the use of RPAS can be limited only by one’s imagination.

While these types of aircraft have been used for some time in military operations, their useful deployment in civilian activities has only become more apparent in recent times. These types of aircraft are, therefore, a relatively new component of the civil aviation framework, and their rapid advancement has caught many regulators worldwide by some level of surprise. Hence, in recent times, authorities around the globe have been putting their heads together and have been collaborating with ICAO in an attempt to understand, define and ultimately integrate this technology into the mainstream aviation sector. Under normal circumstances ICAO would take the lead in terms of developing Standards and Recommended Practices, and regulators would then translate the prescribed Standards and Recommended Practices into legally-enforceable local civil aviation regulations. In the absence of guiding documents from ICAO, regulators such as ourselves had to swiftly derive measures to address the regulation deficiency in response to a growing demand for regulation of this sector. South Africa is thus one of a handful of countries around the world to have introduced comprehensive regulations to guide RPAS operations.

South Africa Assumes Key Role in United Nations Specialised Agency

South Africans should take pride in knowing that their country was appointed as the Chairperson of the ICAO’s Aviation Security Panel. The appointment came just months after the United States and European Union gave their thumbs-up to South Africa’s aviation regulatory system on aviation and air cargo security.

The appointment is significant in that ICAO is a specialised agency of the United Nations tasked with working with Member States and global aviation organisations to develop SARPs, which member States must effect when developing their legally-

enforceable national civil aviation regulations. In addition, ICAO regularly audits member states to help identify aviation security shortcomings, and subsequently discusses methods to assist States in resolving deficiencies by implementing globally accepted security SARPs.

Supply Chain Management and BBBEE

Four years ago the SACAA had a Level 6 broad-based black economic empowerment (BBBEE) rating. Concerted efforts by the organisation have resulted in a drastic improvement on its accreditation levels. The SACAA was accredited as a Level 2 BBBEE contributor during the review period.

In terms of BBBEE spending, the SACAA managed to achieve gradual improvement. A two-year comparison as illustrated in the graph below indicates that the Supply Chain Management department has maintained an upward trend in BBBEE spending. During the 2013/14 financial year, the SACAA managed to exceed its 60% BBBEE spending by achieving 81%. BBBEE spending for this reporting period was at 86%. Moreover,, the Supply Chain Management department is working hand-in-hand with the Finance department to ensure quicker turnaround times in terms of payment of suppliers.

100

80

60

40

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02013/14 2014/15

B-BBEE% Target%


Acknowledgments and Appreciation

Allow me to take this opportunity to extend my gratitude to the Minister and Deputy Minister of Transport for their unwavering support and decisive leadership throughout the years, especially during this reporting period. The guidance that the Ministry provides is invaluable in the interest of upholding aviation safety and security. The same goes for the entire Department of Transport.

On behalf of the entire SACAA, let me also take this opportunity to congratulate the newly appointed Director General and thank him for his support and guidance thus far. The SACAA also wishes to thank the Parliamentary Committee on Transport for providing the necessary guidance on complex matters that form part of the civil aviation industry. We give absolute assurance that we shall continue upholding the mandate of the organisation.

We also wish to acknowledge the contribution that we get from members of the public, especially the myriad of stakeholders involved in civil aviation activities. It is through your feedback, partnerships and progressive association that the SACAA continues to make the necessary strides in civil aviation.

A special word of thanks goes to the previous Board for its dedicated guidance over the last three financial years. Similary and on behalf of the SACAA management and staff, I would like to extend a warm welcome to the new Board. It is worth noting that the new Board hit the ground running and ensured continuity. We remain thankful to the new Board for its collective guidance on matters critical to the

Authority and for mapping a strategic direction for the next five years. The unity and focus we see at the top bodes well for the positioning of the Authority as one of the best in the world.

Allow me to take this opportunity to report that soon after the end of the financial year; the SACAA welcomed a fully-fledged Executive Management team that has been augmented by new members who were appointed soon after the completion of the organisational redesign process. I wish to pledge my support to the organisation’s management and staff and in addition remind all that besides all the achievements during this review period, there is still an enormous challenge that lies ahead. Regardless, I have faith that through cooperation and dedication, we shall rise to the occasion and take the performance of the SACAA another notch higher.

Last and certainly not least, I wish to thank all staff members for their dedication and drive to contribute towards the SACAA’s success. It is evident to me that as a team our efforts are a testimony to the phrase we adopted for our organisational renewal project and therefore I say, Siyathuthuka – we are progressing!

Ms Poppy KhozaDirector of Civil Aviation

South African Civil Aviation Authority 31 August 2015


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

All information and amounts disclosed in the Annual Report are consistent with the annual financial statements audited by the AGSA.

The Annual Report is complete, accurate and free from any omissions.

The Annual Report has been prepared in accordance with the Annual Report Guide for Schedule 3A and 3C Public Entities as issued by National Treasury.

The Annual Financial Statements (Part E) have been prepared in accordance with the Public Finance Management Act, 1999, (Act No. 1 of 1999), as amended (PFMA), and standards applicable to the SACAA.

The Accounting Authority is responsible for the preparation of the annual financial statements and for the judgments made in this information.

The Accounting Authority is furthermore responsible for establishing and implementing a system of internal control, which has been designed to provide reasonable assurance as to the integrity and reliability of the performance and human resources (HR) information as well as the annual financial statements.

The AGSA was engaged to express an independent opinion on the annual financial statements.

In our opinion, the annual report fairly reflects the operations, performance information, HR information and financial affairs of the SACAA for the financial year ended 31 March 2015.

Yours faithfully,

Mr Smunda Mokoena Ms Poppy KhozaChairperson: SACAA Board of Directors Director of Civil Aviation

Statement of Responsibility and Confirmation of Accuracy of the Annual Report


Strategic Overview

Core Values

Vision

The SACAA’s vision is to be rated amongst the top 30 civil aviation authorities within five years.

Mission

• To regulate aviation safety and security through oversight in line with international standards;

• To minimise the impact of the aviation industry on the environment; and

• To promote transformation, development and sustainability in partnership with industry players.

Brand Promise

Our excellence, your safety!

Values

• Good is never good enough – always give your best effort and seek to continuously improve;

• Integrity – maintain high ethical standards and approach issues professionally without bias and in a transparent manner that engenders trust amongst all stakeholders;

• Service delivery ahead of customer expectations – striving to exceed customer expectations; and

• Teaming and partnering – working with others where we are jointly accountable for the end result.

Legislative and other Mandates

The SACAA is an agency of the DoT and was established on 01 October 1998, following the enactment of the now repealed South African Civil Aviation Authority Act, 1998 (Act No. 40 of 1998). This Act was replaced by the Civil Aviation Act, 2009 (Act No. 13 of 2009), which came into effect on 31 March 2010.

As outlined in the PFMA, the SACAA is a Schedule 3A public entity. The PFMA and the Civil Aviation Act designate the SACAA Board as the organisation’s Accounting Authority, whilst the Minister of Transport is the Executive Authority.

The Civil Aviation Act provides for the establishment of a stand-alone authority mandated with controlling, promoting, regulating, supporting, developing, enforcing and continuously improving levels of safety and security throughout the civil aviation industry. The above is to be achieved by complying with the SARPs of ICAO, whilst considering the local context.


Organisational Structureas at 31 March 2015

Executive Manager: DCA

Office

General Manager: Air Safety

Infrastructure

MISS

General Manager:

Aircraft Safety

General Manager: Aviation Security

Flight Inspection Unit

Accident and Incident Investigation

Director of Civil Aviation (DCA)

Minister of Transport

General Manager: Air Safety

Operations

Corporate Communications and Marketing

Air Navigation Service

Aircraft Certification

Training and Certification

Flight Operations

ProjectsAerodromes and Facilities

Aircraft Airworthiness

Dangerous Goods and

Cargo Security

Aviation Medicine

Cape Town Office

Airports and Airlines Security

Aviation Personnel Standards

Safety Advisory Panel

Executive Manager: Accident and Incident Investigations


General Manager: Risk and

Compliance

Executive Manager: Legal

Executive Manager: Human

Resources

General Manager: Finance

RAASA

General Manager:

Information and Communication

Technology

Risk Quality and Compliance

Human Resources, Training and Development

FinanceInformation Technology

Client Services, Licensing and Examinations

Supply Chain Management

Information Management

CompanySecretary

Chief Audit Executive:

Internal Audit

CAA BOARD

MANAGEMENT STRUCTURE


Board composition

Mr SS Mokoena: Chairman Major-General NLJ Ngema

Ms L Dlepu Prof. NV Dyani Mhango


Mr M India: Shareholder representative

Adv. RR Dehal

Ms D Dondur Ms P Khoza: Director of Civil Aviation

(Executive)


Executive Management Committee as at 31 March 2015


Mr Asruf SeedatGeneral Manager: Finance

Mr Sphelo Ntaka Executive Manager:

DCA’s Office (Acting)

Mr Paul MorakaExecutive Manager: Human Resources

Ms Mmanare MamaboloExecutive Manager:

Legal

Ms Mary StephensGeneral Manager: Risk and

Compliance (Acting)


Mr Mpho LebogoGeneral Manager:

Aircraft Safety

Mr Thabo FishaGeneral Manager:

Air Safety Operations (Acting)

Mr Luvuyo GqekeGeneral Manager:

Aviation Security (Acting)

Mr Gawie BestbierGeneral Manager:

Air Safety Infrastructure

Mr Albert MorudiExecutive Manager:

Accident and Incident

Investigation (Acting)

Mr Phila KewanaChief Audit Executive

Ms Nivashnee NaraindathCompany Secretary

PART BPerformance Information


In line with applicable regulatory prescripts, the Director of Civil Aviation is responsible for the preparation of the SACAA’s performance information and for judgments made in this report. In addition, the DCA is responsible for establishing and implementing a system of internal control designed to provide reasonable assurance as to the integrity and reliability of the outlined performance information.

In my opinion, the performance information outlined in this report fairly reflects the actual achievements against planned objectives, indicators and targets as per the strategic and annual performance plan of the SACAA for the year ended 31 March 2015.

The SACAA’s performance information for the year ended 31 March 2015 has been audited by the Auditor-General of South Africa with no material audit findings and the entity’s report is presented on page 91 to 92 of this document.

The performance information of the Authority, set out from page 39 to 43 was approved by the SACAA’s Board of Directors.


31 August 2015

Statement of Responsibility for Performance Information for the Year Ended 31 March 2015


Overview of the South African Civil Aviation Authority’s Performance

The AGSA performs the necessary audit procedures on the performance information to provide reasonable assurance in the form of an audit conclusion. The audit conclusion on the performance against predetermined objectives is included in the report to management, with material findings being reported under the Predetermined Objectives heading in the Report on other legal and regulatory requirements section of the auditor’s report.

Refer to page 91 to 92 of the Auditor’s Report, published in Part E: Financial Information.

Auditor’s Report: Predetermined Objectives


Situational Analysis

This report provides a detailed operational and financial review of the SACAA’s performance during the 2014/15 financial year. This review is also aligned with the SACAA’s APP and five-year (2012–2017) Strategy. Furthermore, the report provides a detailed analysis of positive and negative factors that influenced the SACAA’s service delivery and the mitigating measures employed during the reporting period.

Service Delivery Environment

Separation of Accident Investigation Function

The separation of the Accident and Incident Investigation Division (AIID) was one of the major conundrums that the SACAA faced during the financial year. Linked to the separation of the accident investigation function is the amendment of the Civil Aviation Act, (Act No.13 of 2009) (“the Act”), which needs to be addressed in order to resolve this issue.

Whilst a few significant areas need legislative attention, the establishment of an independent accident and incident investigation function, through a legislative framework, is critical. The amendment of the Act remains high on the agenda, but is a function that is driven by the DoT. As an interim solution,

a memorandum of agreement (MoA) was signed between the SACAA and the DoT. The SACAA also submitted a draft Service Level Agreement (SLA) to the DoT for comment in order to ensure the effective implementation of the MoA.

It is hoped that the amendment of the Act will finally introduce a workable framework, instead of the AIID having to report to two entities. Currently AIID reports administratively to the SACAA and functionally to the DoT. The dual reporting is an administrative challenge that inadvertently creates a gap in terms of governance conformity, and has led to uncertainty among AIID employees. This arrangement also leaves the very essence of the independence of the accident investigation function open to challenge. The revision of the Act to address both governance and AIID administrative issues is the panacea for the current challenges.

Analysis of Aviation Industry Activities

This part of the report provides a commentary on trends in the local aviation industry. It focuses on statistics in relation to passenger numbers and commercial activities as well as figures in relation to aviation personnel licensing and aircraft registry.

Seven-year Passenger Safety Charges Performance Analysis

19,000,000

18,000,000

17,000,000

16,000,0002009/10

17,054,808

Pas

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2010/11 2011/12 2012/13 2013/14 2014/15

18,092,069

18,710,018

18,316,858 18,336,390

18,756,774


Passenger Statistics and Commercial Activities

Over 70% of the SACAA’s revenue comes from the Passenger Safety Charge (PSC), which is levied on passengers departing within or out of South Africa. In this respect, security of income with regard to the PSC is important for the organisation.

A seven-year PSC performance analysis indicates that passenger numbers during the year under review has generally improved, with the 2014/15 financial year posting the highest numbers in recent history, closely followed by 2011/12.

A year-on-year growth comparison between 2013/14 and 2014/15 highlights a 1.53% increase, which is juxtaposed with Statistics South Africa’s figures, which indicate a corresponding 1.4% average increase in the Gross Domestic Product (GDP). This is in line with international norms that have proven the assertion that the aviation growth rate is aligned with GDP. The above scenario suggests that 75% of the SACAA’s income is at risk should the economy experience a negative growth rate. This exposure is addressed in the 2015/16 APP which seeks to diversify income streams.

The total passenger numbers for the year ending 31 March 2015 amounted to 18,756,774, while the revised budget forecast this figure as 18,303,482. This is 2.48% higher than budget, and 2.29% higher than the same period last year. Overall, passenger numbers showed positive growth compared with the previous two years. The following points are also noteworthy:• Based on the health of the global economy,

Airports Company South Africa did not budget for any growth in passenger numbers for the 2014/15 financial year; however it is optimistic about the 2015/16 financial year as it anticipates a 1.5% growth;

• The Airlines Association of Southern Africa confirmed that the 2013 passenger numbers ‘went a bit off trend’ and that they hope to see growth in the second half of 2014 onwards.

They were forecasting a 2–2.5% overall growth for 2014, followed by 3% in 2015 and 4% in 2016. They also envisaged that the three new low-cost contenders, namely FastJet, Skywise and Flysafair, will increase passenger numbers but confirmed that if all three of these operations had to run into difficulties, that might defer their impact;

• In February 2015, the International Air Transport Association (IATA) released a report showing a strong 6.2% rise in global Revenue Passenger Kilometres (RPK) compared to a year ago. This compares with a 2014 average expansion of 5.9%. African RPK growth decreased by 2.1% year-on-year, and it was again the only region with negative growth and also the region with the lowest RPK, followed by North America at 3.4% growth and Europe at 4.4%. Asia/Pacific reported a 9.1% RPK growth;

• The March 2015 edition of African Pilot Magazine echoed IATA’s observation and indicated that Africa’s demand growth was the lowest of all the global regions. It was further argued that this weakness was not primarily attributable to the Ebola outbreak. It was argued that the outbreak of the Ebola pandemic had largely been restricted to Guinea, Liberia and Sierra Leone – markets that comprise a very small proportion of passenger traffic. It was suggested that the weakness rather reflects negative economic developments in some of the key markets on the continent, like Nigeria and South Africa;

• The local operator, Comair, confirmed that the domestic passenger market remained below its 2008 peak volume and they were not anticipating any near-term recovery in local consumer spending;

• Flysafair, a new low-cost airline, commenced its local scheduled flight operations in October 2014 and contributed to the passenger numbers without a notable drop being evident from existing operators. Skywise’s first scheduled domestic


flight took off on 05 March 2015, but we are yet to determine its influence on passenger numbers. Fastjet’s domestic plans were not publicised by the end of the reporting period. However, they have started operating their international flights between Dar es Salaam and Johannesburg. It is plausible that additional competition, together with lower fuel prices, could lead to lower air fares and higher passenger numbers.

Statistics of Licence Holders

At the end of the 2014/15 financial year, the number of licence holders, including cabin crew, was 30,492 compared to 28,449 in the previous year. This demonstrates that just over 2,000 licensed personnel entered the aviation industry during the reporting period. Of these numbers, 21,789 are South Africans. The total number of South African women amounted to 4,822, of which 3,351 are cabin crew members, with 1,773 being African females.

Statistics clearly point to an oversubscription of previously disadvantaged personnel in the cabin crew category, i.e. Indian, Coloured, African and White

females. This is corroborated by the total number of White males in the helicopter and aeroplane licence category, which stands at 14,607.

The graph below provides a snapshot of statistics in relation to South African licence holders in the airline transport pilot licence (ATPL) category, which is the highest level of aircraft pilot licences.

Aircraft Register

The SACAA aircraft register database indicates a 1.4% growth compared to 1.7% in March 2014, and underscores a decrease in economic activity, although still maintaining a positive growth. These growth levels are somewhat in line with the current GDP level. The combined aircraft growth was 6%, with the helicopter category growing by 5%, and aeroplanes by 6%. Of significance is the 2.5% increase of Turboprops compared with 0% growth in the previous year. The table on the next page outlining the Aircraft Register provides more detail.

South African License Holders: Airline Transport Pilot License (ATPL)

3,000

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Whitemales

77 4 31 5 47 169

2,967

Just over 2,000 licensed personnel entered the aviation industry during the reporting period.


SACAA Aircraft Register Database Comparison between 2014 and 2015

Aircraft type

March 2013

March 2014

2013/14 Annual Growth

June2014

Quarter Growth

Sept2014

Quarter Growth

Dec2014

Quarter Growth

March2015

Quarter Growth

12 Months Growth

Compared growth decrease Compared growth increase No growth increasePiston Engines

3,727 3,779 1% 3,776 0% 3,780 0% 3,795 0% 3,796 0% 0%

Turboprop 517 516 0% 529 3% 531 0% 539 2% 529 -2% 3%

Turbo Jet 485 492 1% 491 0% 496 1% 498 0% 501 1% 2%

Helicopters 1,187 1,207 2% 1,218 1% 1,226 1% 1,227 0% 1,227 0% 2%

Recreational 5,874 5,992 2% 6,016 0% 6,052 1% 6,072 0% 6,106 1% 2%

Total 11,790 11,986 1.7% 12,030 0% 12,085 0% 12,131 0% 12,159 0% 1.4%

Migration towards Non-type Certified Aircraft

Aircraft are basically divided into non-type certified aircraft (NTCA) and type certified aircraft (TCA). In simpler terms, these are categorised by the SACAA as experimental and commercial aircraft respectively. Type certified aircraft are regulated under stricter conditions and require a more intense approval process, referred to as a certificate of airworthiness. On the other hand, NTCAs are given what is referred to as an ‘authority to fly’. The maintenance of type certified aircraft is also more strictly controlled and is regulated through aircraft maintenance organisations (AMOs), whereas maintenance matters regarding non-type certified aircraft are less stringent.


Growth of TCA versus NTCAYear Month TCA NTCA Aircraft Total TCA % NTCA %2013 April 5,914 5,889 11,803 50.10% 49.89%

May 5,915 5,904 11,819 50.05% 49.95%

June 5,929 5,920 11,849 50.04% 49.96%

July 5,935 5,931 11,866 50.02% 49.98%

August 5,944 5,935 11,879 50.04% 49.96%

September 5,957 5,941 11,898 50.07% 49.93%

October 5,967 5,953 11,920 50.06% 49.94%

November 5,976 5,959 11,935 50.07% 49.93%

December 5,983 5,963 11,946 50.08% 49.92%

2014

January 5,991 5,974 11,965 50.07% 49.93%

February 5,992 5,979 11,971 50.05% 49.95%

March 5,994 5,992 11,986 50.01% 49.99%

April 6,001 6,003 12,004 50.04% 49.96%

May 6,007 6,009 12,016 49.99% 50.01%

June 6,010 6,020 12,030 49.96% 50.04%

July 6,013 6,020 12,033 49.97% 50.03%

August 6,029 6,041 12,070 49.95% 50.05%

September 6,033 6,052 12,085 49.92% 50.08%

October 6,045 6,064 12,109 49.92% 50.08%

November 6,056 6,072 12,128 49.93% 50.07%

December 6,059 6,072 12,131 49.95% 50.05%

2015

January 6,054 6,084 12,138 49.88% 50.12%

February 6,052 6,099 12,151 49.81% 50.19%

March 6,053 6,106 12,159 49.78% 50.22%

Historically, NTCA comprised a very small portion of aviation in Southern Africa. This segment has, however, grown exponentially, and has become a fully-fledged industry in its own right. A comparison between the 2013/14 and 2014/15 aircraft registry, as depicted above, reflects a growing ratio of NTCA as compared to TCA.

NTCA are said to be more fuel-efficient and economically viable than their certified counterparts. Even though the majority of NTCA are built or restored to be used for sport and recreational purposes, many of these aircraft are also being used for pilot training, scenic flights and entry-level commercial operations. NTCA can also be used to support other commercial non-passenger operations such as nature conservation, security, aerial surveys, research, as well as agricultural operations, to name just a few. The NTCA sector could serve as a training platform and eventual feeder to the larger industry. It also has potential in terms of skills development and job creation in areas such as engineering, aircraft design, repair and maintenance.


An experimental aircraft designed and constructed in an enthusiast’s garage or hangar may not meet or be required to subscribe to the same rules as a production/type certified aircraft. This poses a challenge to the SACAA and the aviation industry to come up with measures that will promote safety through adherence to applicable regulations and continued application of good airmanship principles. The uplifting of safety standards will require a pragmatic approach to the development of regulations and standards. The challenge is to balance safety requirements against the sustainability benefits associated with NTCA.

Organisational Environment

Stabilisation of Management Echelons

Over the years, a lack of stability at the organisation’s helm has had a negative impact on the optimal functioning thereof. The appointment of a permanent Director of Civil Aviation in December 2013 brought some welcome relief. Similarly, the appointment of a Human Resources Executive, and the Chief Information Officer brought about additional stability within the top management ranks. Nonetheless, other positions were deferred as the organisation commenced with the process of redesigning its structure in order to meet the ever-changing stakeholder needs. It is envisaged that the last phase of the restructuring process will be implemented during the 2015/16 financial year. This will entail the appointment of suitable candidates to relevant positions, starting with the Executive team.

Challenging Labour Relations Environment

Whilst the SACAA managed to comfortably discharge its mandate, labour relations matters proved to be a challenging aspect during the reporting period. This was primarily due to differences between labour representatives, in the form of the South African Transport and Allied Workers Union (SATAWU), and management on an outdated labour recognition agreement and the interpretation of labour legislation. Whilst a middle ground could not be reached, both parties concurred that the labour recognition agreement in question was neither appropriate nor conforming to the current labour relations environment and therefore needed some amendments. Further details about this matter are captured under the HR section.

Key Policy Developments and Legislative Changes

During the year under review there were no legislative or policy changes that might have had a major impact on the SACAA’s operations and pursuit of its mandate.


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pro

gre

ss a

gai

nst C

orre

ctiv

e A

ctio

n P

lan

(CA

P),

Sta

ndar

d R

ecom

men

ded

Pra

ctic

es (

SA

RP

S),

and

Pro

toco

l Q

uest

ions

(P

Qs)

;•

CA

P: S

AC

AA

had

rea

ched

54%

on

the

CA

P a

nd is

due

for

ICA

O

revi

ew

• P

Qs:

Res

pon

ses

on IC

AO

pro

toco

l que

stio

ns w

ere

sub

mitt

ed to

ICC

S

with

follo

win

g r

evie

ws

com

ple

ted

; PE

L, O

RG

, AIG

, AG

A a

nd A

NS

SA

RP

S: W

ith r

egar

ds

to IC

AO

SA

RP

S c

omp

lianc

e un

der

the

vario

us 1

9 IC

AO

Ann

exes

, the

se w

ere

div

ided

und

er 1

1 A

nnex

cus

tod

ians

, with

fo

ur IC

AO

Com

plia

nce

and

Coo

rdin

atio

n S

ectio

n (I

CC

S)

spec

ialis

ts

shar

ed a

mon

gst

them

. At t

his

poi

nt 4

,582

(42

.13%

) of

the

Com

plia

nce

Che

cklis

ts h

ave

bee

n au

dite

d o

r q

ualit

y as

sure

d w

ith v

ario

us r

epor

ting

d

ates

ass

igne

d. T

hese

form

par

t of

the

rep

ort t

o th

e D

epar

tmen

t of

Tran

spor

t (D

oT).

Perf

orm

ance

Info

rmat

ion

by O

bjec

tive

Del

iver

able

met

Del

iver

able

par

tially

met

Del

iver

able

not

met


Stra

tegi

c O

bjec

tive

Out

com

esPe

rfor

man

ce

Indi

cato

rsA

nnua

l Tar

get

2014

/201

5D

etai

ls

2. B

uild

ing

Safe

r Com

mun

ities

(ND

P) (

Con

tinue

d)

DoT

Out

com

e: A

n ef

ficie

nt a

nd in

tegr

ated

tran

spor

t inf

rast

ruct

ure

netw

ork

for s

ocia

l and

ec

onom

ic

2C

omp

ly w

ith

ICA

O S

afet

y an

d S

ecur

ity

Crit

ical

E

lem

ents

Saf

e U

AS

op

erat

ions

that

cr

eate

job

s

Reg

ulat

ions

su

bm

itted

to

CA

RC

om

UA

S g

uid

ance

d

ocum

ent a

nd

imp

lem

enta

tion

pla

n ci

rcul

ated

to

ind

ustr

y

SA

CA

A o

ver

achi

eved

as

the

2014

/15

Ann

ual P

erfo

rman

ce P

lan

(AP

P)

ind

icat

es th

at a

gui

dan

ce d

ocum

ent s

hall

be

circ

ulat

ed to

the

ind

ustr

y an

d th

at s

ubm

issi

on o

f U

n-m

anne

d A

eria

l Sys

tem

s or

Rem

otel

y P

ilote

d

Airc

raft

Sys

tem

s (R

PAS

) re

gul

atio

ns is

a 2

015/

16 s

trat

egy

del

iver

able

. H

owev

er th

is d

eliv

erab

le w

as m

et th

roug

h th

e su

bm

issi

on o

f th

e sa

me

to th

e M

inis

ter

of T

rans

por

t on

the

23rd o

f Fe

bru

ary

2015

. Thi

s m

ilest

one

was

pre

ced

ed b

y th

e fo

llow

ing

act

iviti

es.

• In

dus

try

Not

ice

on th

e d

evel

opm

ent o

f re

gul

atio

ns p

erta

inin

g to

R

emot

ely

Pilo

ted

Airc

raft

Sys

tem

(R

PAS

) –

17 J

uly

2014

.•

Med

ia S

tate

men

t: C

AA

cra

ckd

own

on il

leg

al d

rone

flyi

ng –

2nd

Ap

ril

2014

.•

Med

ia S

tate

men

t: C

AA

set

s th

e re

cord

str

aig

ht o

n U

nman

ned

A

ircra

ft S

yste

ms

– 3

June

201

4.•

Ind

ustr

y co

nsul

tatio

n, w

orks

hop

s, a

nd C

AR

CO

M p

roce

ss in

the

reg

ulat

ion

dev

elop

men

t pro

cess

.Fo

r th

e 20

14/1

5 fin

anci

al y

ear,

the

SA

CA

A w

as s

upp

osed

to d

evel

op

a g

uid

ance

doc

umen

t and

imp

lem

enta

tion

pla

n to

info

rm th

e d

evel

opm

ent a

nd s

ubm

issi

on o

f re

gul

atio

ns in

201

5/16

. How

ever

due

to

saf

ety

and

nat

iona

l sec

urity

con

sid

erat

ions

, thi

s d

eliv

erab

le w

as

exp

edite

d in

201

4/15

. Thi

s is

an

over

achi

evem

ent i

n te

rms

of th

e A

PP

an

nual

del

iver

able

s.

Del

iver

able

met

Del

iver

able

par

tially

met

Del

iver

able

not

met


Stra

tegi

c O

bjec

tive

Out

com

esPe

rfor

man

ce

Indi

cato

rsA

nnua

l Tar

get

2014

/201

5D

etai

ls

3. R

efor

min

g th

e Pu

blic

Ser

vice

(ND

P)D

oT O

utco

me:

An

effic

ient

and

inte

grat

ed tr

ansp

ort i

nfra

stru

ctur

e ne

twor

k fo

r soc

ial a

nd

econ

omic

dev

elop

men

t3

Imp

rove

or

gan

isat

iona

l ef

ficie

ncy

Op

timis

ed IT

sy

stem

s an

d

pro

cess

es

Sec

ure

and

ef

ficie

nt

inte

gra

ted

sy

stem

s

Dev

elop

and

Im

ple

men

t R

oad

map

for

optim

isin

g

syst

ems

and

p

roce

sses

Roa

dm

ap fo

r op

timis

ing

sys

tem

s p

roce

sses

was

ach

ieve

d th

roug

h th

e Te

chno

log

y P

lan

and

the

org

anis

atio

nal d

esig

n p

roce

ss o

ptim

isat

ion

as a

pp

rove

d b

y E

XC

O.

• Th

e Te

chno

log

y P

lan

app

rove

d b

y E

XC

O in

Jun

e 20

14 h

ighl

ight

ed

the

nece

ssar

y ha

rdw

are

and

oth

er IT

infr

astr

uctu

re u

pg

rad

es

need

ed fo

r th

e op

timum

imp

lem

enta

tion

of th

e E

nter

pris

e B

usin

ess

Sys

tem

(E

BS

). T

he a

pp

rove

d T

echn

olog

y P

lan

has

bee

n fu

lly

imp

lem

ente

d.

• Fr

om a

pro

cess

op

timis

atio

n p

ersp

ectiv

e, 1

56 o

rgan

isat

iona

l op

timis

atio

n p

roce

sses

wer

e m

app

ed, a

nd in

form

ed th

e ap

pro

ved

or

gan

isat

iona

l str

uctu

re.

Sin

ce th

e ap

poi

ntm

ent o

f th

e C

IO in

Mar

ch 2

015,

a r

evis

ed r

oad

map

w

as ta

ble

d fo

r fu

ture

EB

S im

ple

men

tatio

n th

at c

onso

lidat

es th

e fo

llow

ing

into

sin

gle

meg

a p

roje

ct.

• C

hang

e m

anag

emen

t•

EB

S r

ollo

ut•

IT h

ard

war

e re

fres

h•

Ass

ocia

ted

pro

cess

rev

iew

Imp

rove

d

per

form

ance

Rev

ised

str

uctu

reR

ealig

n or

gan

isat

iona

l st

ruct

ure

to im

pro

ve

effic

ienc

y

With

the

final

org

anis

atio

nal s

truc

ture

ap

pro

ved

by

the

SA

CA

A

Boa

rd o

n th

e 27

th o

f M

arch

201

5, th

e S

AC

AA

has

sin

ce b

egun

the

imp

lem

enta

tion

pro

cess

. The

org

anis

atio

n re

des

ign

revi

ew p

roce

ss

incl

uded

the

follo

win

g s

tag

es.

• In

dep

end

ent d

iag

nost

ic p

roce

ss c

ond

ucte

d w

ith e

mp

loye

es a

nd

ind

ustr

y st

akeh

old

ers.

• S

trat

egy

dev

elop

men

t bas

ed o

n th

e ab

ove

dia

gno

stic

inp

uts.

• P

roce

ss o

ptim

isat

ion

with

a v

iew

of

add

ress

ing

dia

gno

stic

ou

tcom

es.

• E

mp

loye

e sk

ills

anal

ysis

.•

Dev

elop

men

t of

an o

rgan

isat

iona

l str

uctu

re b

ased

on

stra

teg

y.•

The

new

str

uctu

re is

lean

er a

t the

top

com

par

ed to

the

pre

viou

s on

e.

Imp

rove

d

qua

lity

of

dec

isio

n-

mak

ing

Res

earc

h an

d

dev

elop

men

t fu

nctio

n in

stitu

ted

Res

earc

h an

d

dev

elop

men

t fu

nctio

n in

stitu

ted

The

Res

earc

h an

d D

evel

opm

ent f

unct

ion

is p

art o

f th

e ne

w

org

anis

atio

nal s

truc

ture

ap

pro

ved

on

the

27th o

f M

arch

201

5.

Del

iver

able

met

Del

iver

able

par

tially

met

Del

iver

able

not

met


Stra

tegi

c O

bjec

tive

Out

com

esPe

rfor

man

ce

Indi

cato

rsA

nnua

l Tar

get

2014

/201

5D

etai

ls

3. R

efor

min

g th

e Pu

blic

Ser

vice

(ND

P) (C

ontin

ued

)D

oT O

utco

me:

An

effic

ient

and

inte

grat

ed tr

ansp

ort i

nfra

stru

ctur

e ne

twor

k fo

r soc

ial a

nd

econ

omic

dev

elop

men

t3

Imp

rove

or

gan

isat

iona

l ef

ficie

ncy

FIU

com

mer

cial

vi

abili

ty r

isk

miti

gat

ed

Ap

pro

ved

FI

U s

trat

egy

imp

lem

ente

d

Dev

elop

and

im

ple

men

t FIU

st

rate

gy

The

FIU

str

ateg

y w

as a

pp

rove

d b

y th

e S

AC

AA

Boa

rd in

Mar

ch 2

015.

Th

e st

rate

gy

is b

eing

imp

lem

ente

d a

nd th

e te

am is

focu

sing

on

bus

ines

s d

evel

opm

ent.

Imp

rove

d

emp

loye

e sk

ills

Ski

lled

wor

kfor

ce

abov

e in

dus

try

aver

age

Det

erm

ine

SA

CA

A s

trat

egic

sk

ills

gap

and

ad

dre

ss th

e d

isp

arity

A s

trat

egic

ski

lls g

ap a

naly

sis

was

con

duc

ted

as

par

t of

the

org

anis

atio

nal d

esig

n p

roje

ct a

nd s

ubse

que

ntly

the

“CA

A S

kills

Gap

A

naly

sis

and

Rec

omm

end

ed S

kills

Pla

n” w

as a

pp

rove

d b

y E

XC

O o

n th

e 30

th o

f M

arch

201

5 fo

r im

med

iate

imp

lem

enta

tion.

Op

timis

ed

offic

e sp

ace

with

long

-te

rm fi

nanc

ial

ben

efits

Rel

ocat

ion

to

SA

CA

A-o

wne

d

bui

ldin

g

Dev

elop

and

im

ple

men

t S

AC

AA

bui

ldin

g

pro

ject

pla

n

The

Bui

ldin

g P

roje

ct w

as a

pp

rove

d b

y E

XC

O a

nd is

rev

ised

as

soon

as

new

del

iver

able

s su

rfac

e. T

he P

roje

ct w

as s

ucce

ssfu

lly r

egis

tere

d

with

the

Nat

iona

l Tre

asur

y. T

he p

roce

ss o

f ob

tain

ing

the

serv

ices

of

a Tr

ansa

ctio

n A

dvi

sor

is u

nder

way

and

furt

her

dev

elop

men

t the

reof

are

m

onito

red

by

the

Boa

rd.

4Im

pro

ve

stak

ehol

der

re

latio

ns

Imp

rove

d

Afr

ican

saf

ety

over

sig

ht

Pro

vid

e as

sist

ance

to

SA

DC

and

A

FCA

C

Imp

lem

ent

a m

inim

um

80%

of

annu

al

del

iver

able

s

Eig

hty

thre

e p

erce

nt (

83%

) of

the

Sta

keho

lder

Str

ateg

y d

eliv

erab

les

wer

e ac

hiev

ed, e

nsur

ing

that

the

annu

al ta

rget

is m

et a

nd e

xcee

ded

.

4. T

rans

form

ing

Soci

ety

and

Uni

ting

the

Cou

ntry

D

oT O

utco

me:

Incr

ease

d co

ntrib

utio

n to

job

crea

tion

5In

fluen

ce

Ind

ustr

y Tr

ansf

orm

atio

n

BB

BE

E

Sco

reca

rd

imp

lem

enta

tion

pla

n w

ith

targ

ets

BB

BE

E F

ive-

Year

P

lan

imp

lem

ente

d

Imp

lem

ent

BB

BE

E p

lan

and

ac

hiev

e Le

vel 4

The

annu

al ta

rget

req

uire

s a

BB

BE

E L

evel

3. T

he S

AC

AA

is c

ertif

ied

as

a B

BB

EE

Lev

el 2

con

trib

utor

, thu

s ex

ceed

ing

the

targ

et.

Imp

rove

d H

DI

emp

loym

ent

stat

istic

s on

co

re a

viat

ion

area

s

Str

ateg

y th

at

add

ress

es:

• A

viat

ion

awar

enes

s•

BB

BE

E A

ct•

Cad

ets

• B

ursa

ries

• C

hang

e in

in

dus

try

dem

ogra

phi

cs

Coo

rdin

ate

the

dev

elop

men

t of

a n

atio

nwid

e in

dus

try

tran

sfor

mat

ion

stra

teg

y

The

Nat

iona

l Avi

atio

n Tr

ansf

orm

atio

n S

trat

egy

was

ap

pro

ved

by

the

SA

CA

A B

oard

on

the

27th o

f M

arch

201

5.

Del

iver

able

met

Del

iver

able

par

tially

met

Del

iver

able

not

met


The SACAA met, and in some cases exceeded, all of its performance targets set for the 2014/15 financial year.

Strategy to overcome areas of under performance

Even though there is scope for improvement, at year-end, the SACAA had met, and in some cases exceeded, all of its performance targets set for the 2014/15 financial year.

Changes to planned targets

In terms of paragraph 2.1 of the National Treasury Framework for Strategic Plans and Annual Performance Plans, entities are required to ensure that the Annual Performance Plan is linked to the Strategic Plan, the budget and the MTEF. Moreover and in terms of paragraph 30.1.3(g) of the Treasury Regulations, the Strategic Plan must form the basis for the annual reports of accounting authorities in terms of section 55 of the Act (PFMA):

In this case, the SACAA’s Strategic Plan and Annual Performance Plan are aligned, except for the for the following themes that are no longer present in the Annual Performance Plan;• Promote aviation awareness

• Reduce aircraft accidents.

The reduction in accident was removed from the Annual Performance Plan as the strategy was concluded in the previous year, with deliverables reported in the departmental reports. Aviation awareness was removed as the outcome of the Annual General Meeting indicated that some deliverables were not strategic enough. However, the quarterly report to the Department of Transport included section on aviation awareness. Overall, the Strategic Plan and the APP are therefore aligned.


Aviation Safety

Aircraft incident and accident statistics can be used as a barometer to gauge the safety levels of an operator or a particular country’s skies. The SACAA is proud to report that South Africa’s aviation accident record, especially among scheduled commercial passenger operators, remained admirable during the reporting period. It is worth noting that the country managed to retain its impeccable 0% accident record in the scheduled passenger airline operations category.

Regrettably, all the recorded fatal accidents and fatalities during the reporting period happened in the general aviation sector. This sector reported 120 aircraft accidents, 16 of which were fatal accidents that claimed the lives of 26 individuals. Notwithstanding, a comparison of the past three years’ statistics shows a substantial decrease in the number of aircraft accidents and subsequent fatalities reported, and aircraft accidents came down by 17% in 2014/15 compared to 2013/14.

Three-year Comparison of Reported Aircraft Accidents (2012/13 to 2014/15 Financial Year)

1332012/13 Financial

Year


Year


Year

The number of fatal accidents was reduced by 41% when compared to the 2013/14 reporting period.

Three-year Comparison of Reported Fatal Aircraft Accidents (2012/13 to 2014/15 Financial Year)

202012/13 Financial

Year

162014/15 Financial

Year

272013/14 Financial

Year

Moreover, the number of fatalities as a result of aircraft accidents dropped by 37% when compared to the 2013/14 financial year.

Three-year Comparison of Fatalities from Reported Aircraft Accidents (2012/13 to 2014/15 Financial Year)

312012/13 Financial

Year

262014/15 Financial

Year

412013/14 Financial

Year

A close study of reports released during the 2014/15 financial year indicated that human error, aircraft operations as well as mechanical systems failures

Review of SACAA Programmes and Activities


It is worth noting that the country managed to retain its impeccable 0% accident record in the scheduled passenger airline operations category.

are the main causes of aircraft accidents and serious incidents. Further scrutiny indicated that poor pilot technique or airmanship is responsible for 42% of accidents and serious incidents. The second most common cause was the disregard for safety standards, including regulatory operating procedures. Loss of control is pegged at 10% and includes directional, lateral as well as longitudinal control when taking off and landing. The 9% error in judgement is of concern and includes landing, distance, separation, height, obstacle clearance and related factors. Controlled Flight into Terrain is responsible for an 8% portion. Other factors were responsible for 5%, whilst failure to comply with instructions or orders was at 3% and disregard of standards and recommended procedures at 12%. All the above factors indicate an inability by pilots

to make the correct decisions when faced with challenges during flight. The 11% failure to maintain flying speed is also a concerning causal factor. All these pointers will be taken into account when the SACAA reviews its Cross-functional Accident Reduction Plan (CFARP) during the 2015/16 financial year.

Once instituted, the envisaged R&D Department will make it easier to identify measures that need to be taken to curb the number of accidents, serious incidents, and hazards. Management also intends to put measures in place to enable the speedy review and implementation of recommendations associated with occurrence reports, so as to allow the SACAA and industry to learn from previous occurrences. This should be coupled with quicker finalisation of accident investigations.

Accident and Incident Causal Factors

Identified accidents and incident causals from released AIDD reports indicate an inability by pilots to make the correct decisions when faced with challenges during flight.

Poor techniques/airmanship

CFIT

Error in judgement

Loss of control

Non compliance

Failure to maintain the flying speed

Standards disregard

Other

42%

8%9%

10%

3%

11%

12%

5%


Surveillance and Oversight Auditing Activities

In order to ensure adequate oversight over civil aviation matters, the SACAA uses a Master Surveillance Plan to keep track of surveillance and auditing tasks that need to be undertaken by its various technical departments. These surveillance and auditing tasks help to ensure that users are adequately licensed and certified to legally undertake their respective operations.

A review of the Master Surveillance Plan indicates that the SACAA performed 11.3% below target. This is mainly attributed to underperformance by the Aircraft Safety Division. The table below provides a statistical analysis of overall performance against the Master Surveillance Plan.

Overall SACAA Performance against the 2014/15 Master Surveillance Plan

Audit AreaPlanned Audits

Actual AuditsPerformance in

Percentage

Quarter 1 Quarter 2 Quarter 3 Quarter 4Annual Total Variance

% of Variance

Aircraft Safety 7,625 1,653 1,720 1,449 1,579 6,401 (1,224) (16)

Air Safety Operations 1,110 272 282 281 276 1,111 1 0

Aviation Security 1,081 279 301 265 298 1,143 62 6

Air Safety Infrastructure 254 63 92 71 51 277 23 9

Total 10,070 2,267 2,395 2,066 2,204 8932 (1,138) (11.3)

Air Safety Operations Division

In addition to advising the DoT’s Air Service Licensing Council on licensing matters pertaining to civil aviation operations, the Air Safety Operations Division is tasked with ensuring safety oversight and regulatory compliance by a myriad of civil aviation stakeholders, including air operators, aviation training organisations, designated flight examiners, designated aviation medical examiners and aircraft maintenance engineers. The division is also responsible for administering civil aviation examinations, testing standards, flight inspections as well as the application of civil aviation medical standards.

A detailed review of the SACAA’s Master Surveillance Plan shows that the Air Safety Operations Division met a significant portion of its planned audits. As outlined in the table on the next page, it processed 663 Air Operator Certificate applications. The division surpassed its target of 440 Aviation Training Organisation applications by eight, bringing the total for the year to 448. A further scrutiny of the numbers indicates a negative variance of one per cent in terms of Air Operator Certificate holder activities. The variance is as the result of a number of factors, such as suspension of operations, operators not paying the required renewal fees, surrender of the certificate, and operators ceasing operations.


Air Safety Operations Division Performance against the 2014/15 Master Surveillance Plan



Percentage


% of Variance

Air Operator Certificate holders 670 150 184 152 177 663 (7) (1)Aviation Training Organisations 440 122 98 129 99 448 8 2Total 1,110 272 282 281 276 1,111 1 0

Air Safety Infrastructure Division

Among others, the SACAA is responsible for ensuring that South African airspace, airports, helistops and heliports are safe. In addition, it is tasked with ensuring that airports and surrounding structures that may affect the safety of air navigation, comply with all safety standards as outlined in the Civil Aviation Regulations. The SACAA is also responsible for the approval of flight procedures and the licensing of Air Traffic Controllers as well as the provision of aeronautical safety information to industry in accordance with ICAO requirements. All these responsibilities are discharged by the Air Safety Infrastructure (ASI) Division.

The division is primarily responsible for steering safety at the ten international airports, 121 domestic airports ranging from Category 1 to Category 7 as well as 110 helistops. It furthermore ensures that civil aviation navigational aids comply with safety guidelines.

Air Safety Infrastructure Division Performance against the 2014/15 Master Surveillance Plan



Percentage


% of Variance

Air Traffic Services 54 14 15 14 12 55 1 2Aerodrome Licence Inspections 131 25 49 34 25 133 2 2Aerodrome Surveillance 19 10 6 6 10 32 13 68Communication, Navigation and Surveillance 50 14 22 17 4 57 7 14Total 254 63 92 71 51 277 23 9

The table above illustrates that the Division exceeded its target for surveillance inspections by 9% during the 2014/15 financial year. This was primarily due to a need for follow-up inspections of a handful of airports that initially had findings during their licensing inspections. The division also took advantage of additional opportunities as a result of the need to perform surveillance oversight on remote navigational aid installations.


Aviation Security Division

One of the primary mandates of the SACAA is to ensure that there is sufficient security in the civil aviation industry. In a nutshell, the SACAA, through the Aviation Security Division, has to guide the industry in ensuring the protection and safeguarding of passengers, crew, ground personnel, the general public as well as aircraft and airports serving civil aviation, against any acts of unlawful interference with operations, whether on the ground or in flight. This mandate is carried out by, among others, ensuring oversight over assigned aviation security personnel, aviation security training organisations, air operators and airports as well as operators involved in the transportation of cargo and dangerous goods.

A review of the Master Surveillance Plan indicates that the division met its set annual target, and in fact exceeding it by 6%.

Aviation Security Division Performance against the 2014/15 Master Surveillance Plan



Percentage


% of Variance

Airports and Airlines 209 50 54 53 64 221 12 6

Regulated Agents and Known Consignors 355 108 93 90 85 376 21 6

Dangerous Goods 396 95 127 93 107 422 26 7

Training Organisations 121 26 27 29 42 124 3 2

Total 1,081 279 301 265 298 1,143 62 6

Aircraft Safety Division

The upkeep of the South African Civil Aircraft Register, ensuring that civil aircraft are maintained in accordance with regulated prescripts and oversight of AMOs, are the responsibilities of the Aircraft Safety Division. This division also takes care of the approval of aircraft modifications and Supplementary Type Certificates as well as ascertaining that maintenance engineers adhere to the applicable regulations. In brief, the Aircraft Safety Division is responsible for ensuring that all aircraft that fly in the South African civil airspace are airworthy.

A review of the Master Surveillance Plan shows that the division conducted a significant number of its planned audits. As outlined in the table on the next page, it processed 471 AMO Licence renewal applications, 28 Aviation Training Organisation (ATO) maintenance renewals and 3,626 Certificate of Airworthiness renewal applications. A total of 939 Aircraft Maintenance Engineer Licence applications were also processed, and the division conducted 385 AMO surveillance audits and 28 ATO surveillances. A total of 924 Aircraft Ramp inspections were conducted during the reporting period.


Aircraft Safety Division Performance against the 2014/15 Master Surveillance Plan



Percentage


% of Variance

AMO Licence Renewal 496 102 124 101 144 471 (25) (5)

ATO Maintenance Renewal 20 5 10 10 3 28 8 40

Certificate of Airworthiness Renewal 4,320 966 938 820 902 3,626 (694) (16)

Aircraft Maintenance Engineer Licence 724 249 297 247 146 939 215 30

AMO Surveillance 489 100 79 82 124 385 (104) (21)

ATO Surveillance 28 10 3 5 10 28 0 0

Aircraft Ramp Inspection 1,548 221 269 184 250 924 (624) (40)

Total 7,625 1,653 1,720 1,449 1,579 6,401 (1,224) (16)

The table above indicates a 16% underperformance against the Master Surveillance Plan. The variance is attributable to a number of factors, discussed below: • AMO renewal applications were off target by 25, resulting in a 5% variance. The processing, and

subsequent renewal of these licences, is based on the actual number of applications received. However, when planning, the division is guided by the number received in the previous year. The 25 AMO renewals not conducted were due to the fact that licence holders did not submit applications by the end of 2014/15. In addition, eight applications could not be processed;

• In terms of AMO surveillance, 21% of the planned activities could not be achieved;

• Aircraft ramp inspections indicate a 40% underperformance against the Master Surveillance Plan. The variance was the result of the reallocation of resources from aircraft ramp inspections to certification activities during the third quarter of the reporting period. The division had planned to reallocate resources to aircraft ramp inspections during the fourth quarter, however, this was still not possible due to continued competing demands from other operations. The division is reviewing its operations to ensure an even allocation of resources for all operational areas.


Key Highlights and Stakeholder Relations Initiatives

Thumbs up for South Africa’s Aviation Security Systems

In July 2014, South Africa received confirmation from the European Union that cargo shipments originating from South Africa would be exempted from the European cargo security regulations, commonly known as Air Cargo or Mail Carrier operating into the Union from a Third Country Airport (ACC3). This is attributed to cargo security measures implemented in South Africa being confirmed as robust, reliable and equivalent to the European Union standards. In February 2015 South Africa’s Explosive Detection Canine Screening Programme was also audited and subsequently recognised by the United States Transportation Security Administration as being equivalent to their expectations. The implication of this recognition is that cargo consignments screened in South Africa, whether by canines or other means, are now recognised as secure by the time they reach the United States.

The Aviation Security Division facilitated an assessment by the Australian Office of Transport Security on both Qantas and South African Airways facilities at OR Tambo International Airport. No findings were noted during the assessment, which was held in March 2015.

In June 2014 the United States Transportation Security Administration’s audit team carried out its scheduled assessment of South African Airways and Delta Airlines at OR Tambo International Airport, as well as a repair station at Lanseria Airport. The results were a resounding success, with no findings recorded. This attest to the robust regulatory framework established by the SACAA, and its ability to oversee the civil aviation industry in a manner that is on par with global standards.

Ground-breaking RPAS Regulations

RPAS constitute a relatively new, but rapidly growing, component of the civil aviation framework. The SACAA

has always been cognisant of the urgent need and demand for RPAS usage for commercial and other activities. Moreover, the SACAA acknowledged that civil aviation legislation did not provide for the certification, registration and/or operation of RPAS in the South African civil aviation airspace. As a result, the development of mechanisms to manage RPAS operations was an element that preoccupied the Aircraft Safety Division during this reporting period.

The SACAA was supposed to develop a guidance document and implementation plan to inform the development and submission of regulations in 2015/16. However, due to safety and national security considerations, this deliverable was expedited in 2014/15. Subsequently, in August 2014, the SACAA hosted an industry workshop aimed at sourcing industry input on the development of the RPAS regulations. Following this consultation and other processes, the RPAS regulations were developed and approved by the Civil Aviation Regulation Committee (CARCom). By the end of the review period, the draft Regulations were submitted to the Minister of Transport for approval.

South Africa appointed ICAO-CAPSCA Deputy Leader

South Africa is the ICAO-Collaborative Arrangement for the Prevention and Management of Public Health Events in Civil Aviation (CAPSCA) Deputy Team Leader and Technical Advisor, and assists ICAO in providing State Assistance Training on the continent to ensure that the ICAO Annexes are implemented in a harmonised manner.

Africa’s first Aerospace Medicine Conference

In June 2014, the SACAA, through its Aviation Medicine Department, successfully hosted the first African Aerospace Medicine Conference in collaboration with the DoT and ICAO. The conference was attended by nearly 200 delegates from across the world, including the local aviation medical industry and representatives from 14 African states, mainly from the Southern African Development Community (SADC) region.


The aim of the conference was to encourage collaboration in aerospace medicine development and regulation. It further sought to create awareness among counterparts regarding ICAO and other international aerospace medicine organisations’ medical standards and practices. Moreover, it was intended as a platform to facilitate and encourage harmonisation regarding the implementation of medical standards. Topics for discussion were centred on the sharing of information pertaining to the implementation of aviation medicine regulations, the identification of challenges and the promotion of aviation safety and security from a medical perspective. ICAO also used the platform to provide feedback from the World Health Organization regarding the international methods of aircraft disinfection. This information is valuable to managing suspected cases of communicable diseases, such as Ebola.

Managing Communicable Disease

It is estimated that more than three billion passengers are carried on ultra-long range flights annually, and passengers and flights are able to circumnavigate the globe in less than 24 hours. This means that passengers can carry a communicable disease to the opposite end of the world in less than 24 hours. In 2003, the rapid spread of Severe Acute Respiratory

Syndrome caught many states by surprise, and a primary casualty was the aviation sector, resulting in a major reduction in air travel, with financial implications for the industry and the affected countries. The response to the Severe Acute Respiratory Syndrome outbreak was characterised by panic and a lack of co-ordination between aviation and health stakeholders locally and internationally. Following the Severe Acute Respiratory Syndrome outbreak, various measures were put into place to ensure better global preparedness and collaboration during the outbreak of a communicable disease.

As a measure to prepare the country for the recent Ebola outbreak, the SACAA engaged industry role-players through various channels including workshops. In addition, the SACAA conducted audits. The workshops and audits focused on communicable diseases, particularly Ebola, and how to mitigate the impact thereof. These measures helped to ensure a co-ordinated effort by all aviation industry stakeholders as well as other major role players such as health departments, customs, etc. Delegates at the workshops included representatives from airlines, airport operators, entities responsible for dealing with epidemics as well as national and provincial Health Departments. The workshops ensured the harmonised implementation of measures necessary to mitigate the risk of a communicable disease on-board aircraft, among passengers and crew as well as at airports.

Aviation Medicine Partnerships with Universities

On 16 April 2014, the Transport Minister, Honourable Ms Dipuo Peters, unveiled a multi-entity aviation medicine training and research partnership programme between the SACAA, the Institute for Aviation Medicine and four academic institutions. This initiative is aimed at ensuring collaboration on efforts to understand and deal with aviation medical complexities. It will ultimately help to ensure that aircrews maintain a high level of physical and mental fitness, lessening the effects of altitude stress triggers that often lead to medical conditions such as hypoxia, dehydration, fatigue, decompression syndrome, acceleration and spatial disorientation.


Risk Profiling of Training Schools

The Air Safety Operation Division’s Flight Operations Department recently introduced a system of risk-profiling of training schools. The department monitors the Master Surveillance Plan in order to pinpoint training schools that have recurring or significant numbers of findings during SACAA audits.

Night Vision Goggle Gets the Green Light for Civilian Operations

In what is a first in the South African context, night vision goggle operations were approved for the Red Cross. The SACAA is also evaluating applications from two other operators, i.e. the National Aviation Cooperation and South African National Parks. For the latter, it is expected to help with anti-rhino poaching initiatives. In the past, the night vision goggle operations were restricted to military operations only. This development will enhance safety, as pilots’ night vision operations will be enhanced. This achievement was overseen by the Air Safety Operations Division.

Private Pilot’s Licence Syllabi Get Bench-marked Against the Best

During the financial year, the Air Safety Operations Division benchmarked the current Private Pilot’s Licence (PPL) syllabi against various syllabi, including that of the European Aviation Safety Agency. The exercise confirmed that the SACAA syllabi are on par with those of other leading aviation countries, and covered all aspects that were raised as safety points of concern in the CFARP. In addition, a PPL induction video was developed in partnership with the General Aviation Safety Initiative. The aim of the video is to help promote and develop a culture of safety among aviators.

Progress in the Development of Regulations

The SACAA utilises civil aviation standards, policies and regulations in order to effectively discharge its civil aviation safety and security oversight mandate. These are not drafted in isolation, but with the

assistance and agreement of relevant civil aviation role-players. Regulations are not static and continue to be refreshed as and when the need arises. By the end of the financial year, 38 standards and regulations had been ratified by the CARCom for review and approval by the Minister of Transport and the Director of Civil Aviation, respectively. Some of the resolutions adopted by the CARCom include proposals for the amendment of Parts 34, 36, 139 and associated technical standards relating to AEP as well as Part 139 relating to heliports and helistops and protocols for HIV/AIDS and diabetes.

Part 101, which relates to the administration of remotely piloted aircraft, was the most significant draft regulation developed during the reporting period.

Raising the Bar on Environmental Protection

ICAO’s Annex 16: Standards and Recommended Practices, outlines aspects which signatory countries should regulate to reduce the aviation sector’s footprint on the environment. Volume 1 covers aircraft noise, whilst Volume 2 addresses engine emissions. Annex 16 further delineates elements of aircraft design, manufacturing and certification that need to be addressed to reduce the impact of aviation on the environment.


South Africa, through the SACAA, has converted ICAO SARPs contained in Annex 16 into Civil Aviation Regulations (CARs) Parts 34, 36 and 139. Recent analysis revealed that, from an operational perspective, current CARs fall short in terms of addressing all the necessary environmental protection requirements. It is for this reason that during the reporting period, the SACAA embarked on a process aimed at amending Parts 34, 36 and 139 of the CARs. The intention was to ensure that the CARs provide comprehensive requirements on key issues such as air quality, noise monitoring, and incident management (for example, cases of intentional fuel venting, as well as the establishment and continuation of aerodrome environmental committees.

During the reporting period, the SACAA’s AEP Department received a boost with the appointment of an Environmental Specialist who is primarily tasked with drafting the requisite regulations. The SACAA is happy to report that the AEP CARs and Technical Standards (CATS) were approved by CARCom and submitted to the Department of Transport for review and approval. It is envisaged that the amended regulations will assist with, among others, comprehensive environmental management at aerodromes as well as focussed environmental management when incidents or accidents occur.

Law Enforcement Overview

Tony Kern, in his book Redefining Airmanship (1996), describes airmanship as “the consistent use of good judgment and well-developed skills to accomplish flight objectives. This consistency is founded on the cornerstone of uncompromising flight discipline and is developed through systematic skill acquisition and proficiency. A high state of situational

awareness completes the airmanship picture and is obtained through knowledge of one’s self, aircraft, environment, team and risk”.

Statistics indicate that in aviation there is absolutely no room for error. Errors whether deliberate or not, simply lead to the loss of lives. During the reporting period, the SACAA worked with various stakeholders to ensure that South African skies remain safe. To achieve this objective, it applies a three-pronged approach. One of the approaches entails auditing and certifying aviators and aviation operations. The second approach entails encouraging and reminding aviators about the importance of unquestionable airmanship. The third approach focuses on applying punitive measures against lawbreakers.

During this review period, some aviators did not comply with the applicable civil aviation regulations, leaving the SACAA with no choice but to administer appropriate punitive measures. The Aviation Regulation Enforcement Department administered 101 cases during the reporting period, compared to 38 during the 2013/14 financial year and 52 in 2012/13. The table on the next page provides details on penalties administered during the review period.

As per the table on the next page, 47 culprits received administrative fines, of which 17 were against Private Pilot’s Licence holders. Thirty-nine warning letters were issued against lawbreakers, whilst one Airline Transport Pilot’s Licence was downgraded to that of Commercial Pilot’s Licence. One Private Pilot’s Licence holder was convicted and sentenced to two years’ imprisonment with the alternative of a R5,000 fine for having forged a Commercial Pilot’s Licence. The SACAA will continue to intensify collaboration with various stakeholders, including law enforcement

During this review period, some aviators did not comply with the applicable civil aviation regulations, leaving the SACAA with no choice

but to administer appropriate punitive measures.


entities, to root out any unlawful activities in aviation. It will also continue to advocate for harsher punitive measures against culprits. This is critical, as facts illustrate that a significant number of aircraft accidents are caused by man, and not machine. Moreover, the SACAA strongly believes that one life lost from an aviation activity is just one too many.

Enforcement Activities During the 2014/15 Financial Year

Administrative fines WarningsSuspensions and disqualifications

National Pilot’s Licence holders

3 Aircraft Maintenance Organisations

4 Commercial Pilot’s Licence holders

3

Airline Transport Pilot’s Licence holder

1 Airline Transport Pilot’s Licence holders

3 Airline Transport Pilot’s Licence was downgraded to CPL

1

Commercial Pilot’s Licence holders

2 Public companies 3 Aircraft Maintenance Organisation

1

Private Pilot’s Licence holders

17 Aviation Training Organisations

3 Aviation Training Organisation

1

Hot Air Balloon Licence holder

1 Aircraft Maintenance Engineer Licence holder

1 Private Pilot’s Licence holders

2

Aircraft Maintenance Engineers

4 Commercial Pilot’s Licence holders

8 Aviation Security Regulated Agent

1

Aircraft Maintenance Organisations


7 Authorised Person 1

Student Pilot’s Licence holder

1 Student Pilot’s Licence holder

1

Aviation Security Regulated Agent

1 National Pilot’s Licence holder

1 Disqualifications

Aviation Security Training Organisations

4 Aviation Security Regulated Agents


3

Air Operating Certificate owners

5 Air Operating Certificate owner

1 Student Pilot’s Licence holders

2

Aircraft owners 2 Aircraft owners 2

Aviation Training Organisation

1 Members of the public 2

Cabin Crew Licence holder 1 Cabin Crew Licence holder 1

Total 47 Total 39 Total 15

Co-operation with Peers Across the Continent

The SACAA continues to make inroads in terms of contributing to Africa’s aviation safety record. Whilst SACAA’s contribution has historically been modest, this has recently been given impetus through the development of the Africa Skills Assistance Plan. In terms of this Plan, assistance is provided to users on a cost-recovery basis; meaning that all incidental costs, except salaries, will be paid for by the beneficiary.


The table below outlines the various countries that requested aviation safety and security technical assistance from SACAA during the year under review.

Country Nature of Technical Assistance Impact on CountryMozambique Assisted with Air Traffic Services proficiency

following ICAO audit findings against Mozambique. Follow-up assistance is being scheduled.

ATCs received on the job training to enable them to be signed out according to international standards.

Requested assistance for 2015/16 to close ICAO audit findings in relation to airport certification. South Africa is to assist with on-the-job-training, regulations and technical guidance material as well as airport inspections.

International airports will be certified in accordance with ICAO standards.

Flight operations assistance Assisted with Mozambique’s Air Operating Certificate (AOC) process.

Zambia AOC maintenance approval Assisted Zambia to close their findings from their recent ICAO Co-ordinated Validation Mission audit.

AOC flight operations Assisted in closing findings from the recent ICAO Co-ordinated Validation Mission audit.

Sierra Leone Assistance with the closing of ICAO findings, ATC processes, AOC processes, etc.

Assistance to Sierra Leone regarding its ICAO compliance is scheduled for the 2015/16 financial year.

Malawi Setting up of aviation medicine and related training.

Established stronger aviation medical teams.

Botswana Assisted in setting up medical services for the industry of Botswana.

Established stronger aviation medical teams.

Lesotho Technical assistance provided in the flight operations area.

Assistance given in the flight operations area.

Swaziland Assistance in the flight operations area Assisted flight operations counterparts with gaps in their system.

Namibia A SACAA inspector was shadowed at the OR Tambo operations. Assistance also provided with the transfer of AOCs to SA.

Assisted with AOC processes.

In talks to assist in the review of medical cases by the SA Aviation Medical Panel.

Assisted with medical appeal cases.

Aviation Security training. Inspector capacity building.


Report on Flight Inspections

Safe, efficient and effective air navigation is highly reliant on the precision of the navigational aids in use. Flight calibration is thus an essential part of safe air navigation. Locally, this function is carried out by the SACAA’s Flight Inspection Unit (FIU).

This unit has been successfully carrying out flight inspections of ground radio navigational aids in South Africa and for many other countries for over half a century. During the reporting period, the FIU continued to ensure that navigational aids in South Africa are safe, by focusing on two key functions, i.e.:• Carrying out precision certification for the

commissioning of newly installed air navigation systems; and

• Periodically checking the technical and operational parameters of existing surveillance and navigational aid instruments.

During the reporting period, the FIU had planned 251.5 flying hours, but carried out an additional 69 flying hours, bringing the total flying hours for the year to 320.1. The increase in hours was as the result of various requests from its expanding clientele. The approved FIU strategy will help grow the clientele, especially among African countries.

Safe, efficient and effective air navigation is highly reliant on the

precision of the navigational aids in use. The SACAA’s Flight Inspection Unit has been successfully carrying

out flight inspections of ground radio navigational aids in South

Africa and for many other countries for over half a century.


Revenue collection

Sources of revenue

2014/15 2013/14Budget Actual Variance Budget Actual VarianceR’million R’million R’million R’million R’million R’million

Passenger safety charge 326.4 333.8 7.4 294.0 291.7 (2.3)

User fees 79.5 74.3 (5.2) 72.9 70.4 (2.5)

Fuel levy 20.0 23.5 3.5 19.3 19.5 0.2

Accident and incidence investigation grant 17.9 17.9 0 16.9 16.9 0

Interest received 5.2 9.7 0.7 8.1 8.5 0.4

Other income 3.1 3.3 0.2 5.1 7.9 2.8

Total 452.1 462.5 10.4 416.3 414.9 (1.4)

Total revenue for the year of R462.5 million (2014: R414.9 million) increased by 11.4% when compared to the previous year. This is also 2.3% better than the budgeted amount of R452.1 million. The revenue for passenger safety charge increased by 14.4% when compared to the prior year mainly as a result in tariff increases as well as higher than budget passenger numbers. The passenger numbers increased by 1.54% when compared to the previous financial year. Passenger safety charge accounts for 72.2% of total revenue, user fees for 16.1% and fuel levy for 5.1%.

Capital investment

Capital projects

2014/15 2013/14Budget Actual Variance Budget Actual VarianceR’million R’million R’million R’million R’million R’million

Furniture and fixtures 3.4 1.1 (2.3) 1.8 1.8 0

Motor vehicles 0.5 0.6 0.1 0.7 0.7 0

Computer equipment 9.0 4.5 (4.5) 1.8 5.9 4.1

Generator 0 0.3 0.3 0 0 0

Canteen equipment 0 0 0 0 0 0

Calibration equipment 0 0 0 0 3.3 3.3

Computer software 50.9 33.1 (17.8) 30.6 0.9 (29.7)

Aircraft 19.0 0 (19.0) 0 0 0

Land and buildings 0 0 0 30.0 0 (30.0)

Total 82.8 39.6 (43.2) 64.9 12.6 (52.3)

Capital expenditure of R39.6 million was incurred for the year compared to the budget of R82.8 million. This is an underspent of R43.2 million. The underspent is a result of the delay in implementing the EBS system due to the delays in the tender process. The aircraft replacement was also delayed due to the finalisation of the Flight Inspection Unit Strategy.

Revenue collection


PART CGovernance


Sound corporate governance practices remain the cornerstone of the SACAA Board of Directors’ journey towards operational excellence. The Board supports the principles of corporate governance as recommended by the King Commission in the King Code of Governance Principles and King Report on Governance (King III) and appreciates that such governance practices can always be improved over time. In addition, the Board has ensured proper alignment of governance practices with its fiduciary duties as stipulated in the PFMA. The SACAA is a Schedule 3A public entity in terms of the PFMA.

According to the PFMA, the SACAA Board is the Accounting Authority, whilst the Minister of Transport is the Executive Authority in line with the Civil Aviation Act, 2009 (Act No. 13 of 2009).

The SACAA Board of Directors underwent a reconstitution during the year under review. The old Board was retired by the Minister of Transport on 30 September 2014 and the new Board appointed with retroactive effect from 01 October 2014. To maintain continuity on the Board, two members were retained from the old Board. Despite the change in leadership, there has been a smooth transition from the old to the new Board. In keeping with the strong governance trends at the SACAA, the old Board acclimatised the new one by providing it

with a detailed handover report. Whilst the Board remains the focal point of corporate governance, it has concerned itself in the past year with:• Improving shareholder value; and

• Ensuring excellence in performance.

The Board has practiced a stakeholder-inclusive model of corporate governance, whereby the interests of all stakeholders are taken into account in developing and implementing the SACAA Strategy and APP.

In keeping with the King III principles, the following governance events, which took place during the year under review, are worth noting:• The Board successfully held its Annual General

Meeting on 12 September 2014, and all resolutions tabled were approved by the shareholder;

• The new Board was successfully inducted in November 2014;

• The Board induction was followed by a two-day Strategic Planning Session between the Board and EXCO and culminated in the birth of a new vision, mission and a five-year strategy for the SACAA;

• The Board reviewed its Board Charter, Code of Conduct, and Communication Protocol in January 2015;

• A skills matrix was developed for each Board member with the aim of ensuring that they are properly empowered to exercise their fiduciary duties;

• The Corporate Governance Plan was reviewed and submitted to the Minister of Transport, as the Executive Authority and shareholder;

• The Board successfully concluded its Performance Agreement with the Minister of Transport in March 2015; and

• The Executive Authority approved the SACAA’s Strategic Plan and APP for the 2015/16 financial year.

Introduction

Governance and leadership are the yin and the yang of successful

organisations. If you have leadership without governance

you risk tyranny, fraud and personal fiefdoms. If you have governance without leadership

you risk atrophy, bureaucracy and indifference.– Mark Goyder

(Director of Tomorrow’s Company)


Due to the fact that the previous Board was outgoing, a comprehensive performance evaluation was conducted in November 2013, and no evaluation was performed during the financial year under review.

Engagement with Portfolio Committees

Throughout the reporting period, the SACAA has had valuable and fruitful engagements with the Portfolio Committee on Transport (PCOT). Soon after the reporting period, the SACAA was also afforded an opportunity to present the SACAA Strategy for 2015/16–2019/20 and Annual Performance Plan for the 2015/16 financial year to the Portfolio Committee of Transport. In addition, the Board and the Executive Management Committee hosted a delegation from the PCOT at the SACAA offices in February 2015.

The Board has practiced a stakeholder-inclusive model of corporate governance, whereby the interests of all stakeholders

are taken into account in developing and implementing the

SACAA Strategy and APP.


In keeping with sound governance practices, engagement between the Executive and Accounting Authority is ongoing. The Chairperson and the DCA had the opportunity to present the SACAA Strategic Plan as well as the organisation’s Annual Performance Plan to the Executive Authority during February 2015. Both documents were eventually approved by the Executive Authority during March 2015. As agreed in the Board Performance agreement, all four quarterly reports were submitted timeously to the Executive Authority. The reports were reviewed and approved by the Accounting Authority prior to submission to the Executive Authority. At year-end, the SACAA had met 100% of its targets which reveals an improvement on the previous year and a firm commitment to operational excellence in performance.

Executive Authority

At year-end, the SACAA had met 100% of its targets which reveals an improvement on the previous year and a firm commitment to operational excellence in performance.


Accounting Authority

The Accounting Authority continuously receives constructive written feedback from the Executive Authority on its reported performance. The Board has embraced the feedback from the Minister and has remained committed to delivering on its obligations as stated in the APP.

Roles and responsibilities of the Board

The Board retains full and effective control over the governance of the SACAA, and a clear division of responsibility exists at Board and executive level. The Board has delegated some of its powers to the DCA and EXCO through a delegation of authority framework, which has been approved by the Board. The framework, however, does not absolve the Board of its responsibilities and accountability. The role of the Board is, among others, to:• Provide effective leadership;

• Develop the SACAA Strategy and APP;

• Oversee all of the SACAA’s income, expenditure and assets;

• Determine, oversee and revise corporate governance structures;

• Determine, oversee and revise the HR policies and strategies;

• Ensure that the organisation is managed effectively in pursuing its mission, by providing oversight over its strategies, policies, decisions, and the execution thereof;

• Appreciate that the SACAA’s Strategy, risk, performance and sustainability are inseparable;

• Review and approve the financial objectives, plans and actions, including cost allocations and expenditures;

• Ensure that the organisation has an effective and independent Audit and Risk Committee (ARC);

• Ensure that there is an effective risk-based internal audit function, as well as effective governance of risk management and information technology infrastructure; and

• Ensure that the SACAA complies with all the applicable laws, and also considers adherence to non-binding rules, codes, policies and standards.

The above-mentioned are not exhaustive, but provide

a high-level summary of the roles and responsibilities

of the Board as stipulated in the Civil Aviation Act

and Board Charter.

Board Charter

The Board has adopted a formal charter which

clearly articulates its duties and responsibilities and

which is reviewed and approved annually. The Board

Charter is closely aligned with King III. The Board

confirms that, during the period under review, it has

satisfactorily discharged its duties and obligations

as contained in the Board Charter.

Board composition

All non-executive directors (NEDs) are appointed by the Minister of Transport. In terms of the Civil Aviation Act, the Board must comprise seven NEDs and one executive director, the DCA. At the beginning of the financial year, the Board consisted of the DCA as the sole executive director and six NEDs, as one NED position had not been filled by the Minister at the time. All the directors were duly appointed by the Minister

of Transport in accordance with the Civil Aviation Act.


As previously mentioned, the Board underwent a

transition during the financial year, and the following

are the current Board members: • Mr SS Mokoena – Chairman

• Major-General NLJ Ngema

• Ms L Dlepu

• Prof. NV Dyani Mhango

• Mr M India – shareholder representative

• Adv. RR Dehal – re-appointed

• Ms D Dondur – re-appointed

• Ms P Khoza – DCA.

All NEDs are appointed for a term of three years, with the exception of Mr India, whose term is reflected as until further notice. In line with international best practice, the SACAA has an independent non-executive Chairman, Mr SS Mokoena, who is free from any conflict of interest. The Board is satisfied that the size, diversity, skills, qualifications, knowledge, and expertise of the members are adequate to ensure an effective and well-balanced Board. This also contributes to an appropriate balance of power and authority and robust intra-Board deliberations.


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Committee

No. of meetings held

No. of members

Name of members(1/04/2014–30/09/2014)

No. of meetings attended

Name of members(1/10/2014–31/03/2015)

No. of meetings attended

Audit and Risk Committee

6 4 (until 30/09/14), then 3

Ms D Dondur (Chairperson)

3 Ms D Dondur (Chairperson)**

3

Adv. RR Dehal 3 Mr M India 3

Ms P Matlala* 1 Prof. N Dyani Mhango

3

Mr Z Fihlani* # 1

Human Resources and Remuneration Committee

6 4(until 30/09/14), then 3

Ms D Dondur(Interim Chairperson)

2 Ms L Dlepu(Chairperson)

4

Ms P Matlala* 1 Ms D Dondur** 2

Mr V Ndwamato* 2 Major-General L Ngema

4

Mr C Marais* # 1

Safety, Security and Environment Committee

5 3 (until 30/09/14), then 4

Mr Z Nomvete*(Chairperson)

Major-General L Ngema(Chairperson)

Adv. RR Dehal 2 Adv. RR Dehal** 3

Ms P Matlala* 2 Ms L Dlepu 2

Mr SS Mokoena 3

Legislative and Regulatory Committee

3 3 (until 30/09/14), then 3

Adv. RR Dehal(Chairperson)

2 Adv. RR Dehal**(Chairperson)

1

Mr V Ndwamato* 2 Mr M India 1

Ms P Matlala* 2 Prof. N Dyani Mhango

1

* Retired 30 September 2014 ** Reappointed 1 October 2014 # Specialist committee member appointed by the Board

Board committees

The Board committees form an integral part of the SACAA governance model. They allow for more in-depth deliberation on crucial and complex matters and enable the Board to make more informed decisions on such matters based on the recommendation of its committees.

The Board has four committees, namely the Audit and Risk Committee, the Human Resources and Remuneration Committee, the Safety, Security and Environmental Committee, and the Legislative and Regulatory Committee. The roles and responsibilities of each committee are discussed further on in this report.

All committees operate within the framework of Board-approved Terms of Reference (ToR) and these are reviewed annually by the committees and the Board. In addition, each committee has an approved Annual Work Plan linked to its respective ToR, the Civil Aviation Act, the PFMA and the Board Performance Agreement. This ensures a robust system of governance. The Board is responsible for appointing and removing the Chairperson and members of each of the committees, with the exception of the ARC. The members of the ARC are appointed by the Board and subject to concurrence from the Executive Authority.

The table below indicates the committees’ composition as well as meeting attendance during the period under review.



The ARC is a statutory committee of the Board. The members were nominated by the Board and their appointment ratified at the Annual General Meeting of 12 September 2014. After the retirement of the previous Board, the new ARC was constituted in November 2014 and the Minister of Transport notified of the membership. The minister approved the members in February 2015.

The ARC operates in accordance with an approved ToR and is responsible for the review of financial performance, external audit strategy and reports, the internal audit function, risk management, budgets, PFMA compliance, fraud and corruption, information technology governance and the monitoring of CAPEX projects. An independent member, Mr Zola Fihlani, was appointed to the ARC effective 01 July 2013, and continued to serve on the committee until 30 September 2014. His appointment was meant to enhance the financial expertise of the ARC.

Human Resources and Remuneration Committee

The HRC has a key role to play in advising the Board on HR and remuneration matters. Like all other Board committees, it reports to the Board in line with King III requirements. The HRC is tasked with overall accountability for performance monitoring against the HR Strategy, overseeing disciplinary and employment equity matters, remuneration issues, HR policies and social responsibility. The HRC’s duties and

responsibilities are detailed in its Board-approved ToR. Mr Charl Marais was appointed as a specialist member to the committee in September 2013, to complement the remuneration expertise of the HRC. He was retired on 30 September 2014. The DCA and Executive Manager: HR are invited members to committee deliberations.

Safety, Security and Environmental Committee

This SSEC was constituted to ensure that the Board is aware of aviation safety and security matters as well as environmental issues. It conducts safety and security oversight and mobilises the required resources for safety and security matters, including audits. The SSEC continuously reviews key strategies which have an impact on the aviation industry.

Legislative and Regulatory Committee

The SACAA, as a regulator, is faced with multiple legislative and regulatory matters. The LRC was constituted to advise the Board on legislative, regulatory and compliance matters affecting the Board and the SACAA as a whole.

Board remuneration

Board remuneration is determined by the Minister of Transport. Board members are paid a monthly fee. In addition, they are remunerated for meeting attendance and preparation. Members are also reimbursed for any travel expenses incurred. The Board remuneration is disclosed in the Annual Financial Statements and is summarised hereunder:

Name

Annual remunerationR

Other allowanceR

Other reimbursementsR

TotalR

Ms P Riba* 115,973 N/A - 115,973

Ms D Dondur** 230,711 N/A 3,223 233,944

Adv. RR Dehal** # 221,554 N/A 150,390 371,944

Mr Z Nomvete* 90,095 N/A - 90,095

Mr V Ndwamato* - N/A - -

Mr MP Matlala* 105,900 N/A - 105,900

Mr SS Mokoena*** 145,491 N/A 2,345 147,836

Ms L Dlepu*** 117,175 N/A 2,687 119,862

Mr M India*** 115,028 N/A 3,058 118,086

Major-General NLJ Ngema*** 123,557 N/A 10,785 134,342

Prof. NV Dyani Mhango*** 119,464 N/A 3,391 122,855

* Retired 30 September 2014 ** Reappointed 01 October 2014 *** Appointed 01 October 2014# Amount includes reimbursement of actual cost incurred by member for travel bookings.


Risk management

Enterprise-wide risk management, through the

continuous assessment of current risks and

identification of new risks, is a fundamental

component in ensuring that the SACAA fulfils its

mandate. All risks, whether they are strategic or

operational in nature, are documented in risk registers

and continually addressed through mitigating action

and treatment.

Risk management is a standing agenda item on

the ARC agenda, and the Strategic Risk Register

is reviewed on a quarterly basis. At the beginning

of the year, five strategic risks, with an inherent risk

level of 106, were identified in the following areas:

• Compliance;

• Stakeholder engagement;

• Funding;

• Skills and capacity; and

• Systems and business efficiency.

By the end of the year, all risk levels had diminished as a result of the mitigation and treatment plans, resulting in a residual risk level of 30.

During the fourth quarter, the organisations’ strategic risk profile was reviewed and 12 strategic risks were identified with mitigation measures implementable from the beginning of April 2015.

As part of the newly redesigned organisational structure, the SACAA will have function that will concentrate on independently managing risk mitigation plans. As an interim measure, the organisation will be drafting and making use of a comprehensive plan to mitigate identified risks.

Enterprise-wide risk management, through the continuous assessment of current risks and identification of new risks, is a fundamental

component in ensuring that the SACAA fulfils its mandate.

Internal Control Unit

The SACAA does not have an Internal Control Unit as the functions and activities are covered by Internal Audit Department and the Board’s Audit and Risk Committee.


Internal Audit

Key activities and objectives of Internal Audit

The Internal Audit Department is responsible for maintaining an adequate system of internal control within the SACAA. In line with the PFMA, Treasury Regulations and King III, the department provides the ARC and SACAA management with assurance that the internal controls are adequate and effective.

The Internal Audit Department reports functionally to the Board’s Audit and Risk Committee and administratively to the Director of Civil Aviation (“DCA”).

The Internal Audit Department ensures that there is constant and regular monitoring of performance in the organisation. The Department performs its duties according to the approved Internal Audit Charter (IAC), Annual Audit Plan, and Three-Year Coverage Plan.

Internal Audit plays a key and independent role within the organisation in assessing the adequacy and effectiveness of risk management, internal controls and governance processes. One of its functions is to ensure that there is improved internal controls within the organisation as well as compliance with applicable legislation.

In line with the PFMA, Treasury Regulations and the King III requirements, the department provides the Audit and Risk Committee and SACAA management with assurance that the internal controls are appropriate and effective. Internal Audit reports are presented quarterly to the Audit and Risk Committee to enable the Committee to discharge its oversight responsibility. The Department’s performance is reviewed on a quarterly basis against the Annual Audit Plan.

Summary of audit work done

The Internal Audit Department prepares a risk-based Three-Year Coverage Plan as well as Annual Audit Plan for approval by the Audit and Risk Committee. Progress reports against the Plans are presented

quarterly to the Audit and Risk Committee by the Chief Audit Executive.

The Internal Audit Coverage Plan ensures that the internal audit function focuses on high and significant risk areas of the organisation. The Plan is balanced since it covers both strategic and operational risks, as well as issues of compliance.

Internal Audit Department has managed to execute and complete all the audits on the approved Internal Audit Coverage Plan for the year under review and all significant and major findings were reported to the Audit and Risk Committee on an on-going basis.

The Internal Audit Department developed a findings tracking register, which is used to continuously monitor and follow up on the progress made by management in addressing the agreed management action and implementation plans. In addition, the Internal Audit Department conducted numerous ad hoc requests by management as part of its consulting activities according to the standards of the Institute of Internal Auditors (IIA).


The Committee derives its mandate from the Public Finance Management Act, 1999 (Act No. 1 of 1999) (“PFMA”) and the Treasury Regulations and specific reference is made to section 51 of the PFMA. In terms of the above legislation the Board is required to appoint the Audit and Risk Committee and the appointment of the members is ratified by the Executive Authority at the Annual General Meeting.

The Board and the Shareholder have appointed the Audit and Risk Committee (“ARC”) to carry out the functions mentioned in the legal prescripts above. The ARC has adopted an appropriate formal Terms of Reference (ToR’s) and which is reviewed annually and approved by the Board. This Committee is independent and carries out the functions without any influence and interventions from the Board and management of SACAA.


The Committee provides independent and objective oversight over, among others, financial and sustainability reporting, financial management, risk management, internal audit function, external audit, procurement processes, information technology governance and integrated reporting within the South African Civil Aviation Authority. ARC meets at least four times a year to consider the quarterly financial management report, internal audit quarterly report, risk management report, performance management, External audit strategy and any other statutory requirements.

Compliance with laws and regulations

In terms of King III, the Board is required to ensure that the SACAA complies with applicable laws and considers adherence to non-binding rules, codes and standards. This has remained an ethical imperative for the Board and the SACAA. Quarterly reporting on compliance with the PFMA as well as international codes and standards has been ongoing. The SACAA has compiled a compliance manual which sets out its compliance parameters.

Fraud and corruption

The SACAA Fraud Prevention Plan deals primarily with matters pertaining to fraud prevention, detection and investigation. The fraud prevention and detection initiatives are supported by the existence of the tip-offs anonymous hotline and continuous fraud awareness campaigns within the organisation. The current financial year has seen focused attention on encouraging stakeholders to report incidents of criminality and maladministration. The SACAA remained on track in terms of implementation of the Fraud Prevention Plan.

The SACAA understands that fraud and corruption within the industry has a potential to undermine aviation safety and security; hence the initiatives undertaken in the current financial year to augment efforts around industry fraud awareness campaigns.

The reporting of alleged fraud and corruption activities, both within the Authority and the industry,

is facilitated through the Tip-Offs Anonymous Hotline, which is accessible to internal and external stakeholders, and it is available 24 hours daily. Other reporting mechanism like a walk-in and e-mail facilities are available to stakeholders who do not wish to make use of the Hotline.

All reported incidents are subjected to an initial assessment aimed at determining whether they warrant a forensic investigation or other remedial actions. Forensic investigations are mostly conducted internally and in certain instances they are outsourced to external service providers. Where investigations reveal evidence of misconduct, corrective actions as provided for in terms of prevailing policies are considered.

Minimising conflict of interest

Conflict of interest is managed through mandatory annual declarations of interest by all employees. This is over and above the requirement that employees are to disclose matters of conflict of interest as and when they arise.

The declarations are verified by Internal Audit for validity, accuracy and completeness, and where discrepancies exist, such discrepancies are subjected to a full forensic investigation. The Internal Audit Department has the mandate to conduct lifestyle audits at any given moment where they deem it appropriate on all divisions, including SCM. In addition, all employees within the supply chain are vetted annually to manage issues of conflict.

All Board members are required to declare any conflict of interest on an ongoing basis. The Board Charter details the importance of declaring any conflict of interest and contains prescripts for dealing with such conflicts.

Code of conduct

The SACAA has a Code of Conduct and Code of Ethics in place which define the ethos in terms of values and behavioural principles expected of its directors, employees and contractors. These


codes ensure that the SACAA maintains high ethical standards at all times. The values encapsulated in the Code of Conduct are continuously instilled through ongoing communication and training.

Health, safety and environmental issues

The SACAA is a medium risk organisation with a positive health and safety culture. The organisation places a high premium on the well-being of its employees. In this regard, the organisation has an effective Health and Safety management system in place to ensure the continued health, safety, welfare and development of its staff. The Health and Safety management system duly meets recognised standards and is backed by effective policies, procedures. The Health and Safety (H&S) unit successfully discharged its duties, in line with its annual performance plan. In this regard, the unit was successful in undertaking continuous organisation-wide occupational health and safety hazard identification and risk assessments. The H&S unit also successfully reviewed the organisation’s occupational health and safety policy. The H&S unit offered continuous training and capacity building for the occupational health and safety representatives. Moreover, the SACAA was issued with a Letter of Good Standing from the Department of Labour’s Compensation Commissioner.

On the other hand, the H&S unit has noted the need to intensify awareness across the organisation in relation to occupational health and safety. The number of on-duty incidents was slightly higher during the reporting period compared to the 2013/14 financial year. As the table illustrates, there were six cases reported during the review period compared to two in the year prior. All reported incidents were minor and met the reporting requirements of the Compensation for Occupational Injuries and Diseases Act 130 of 1993. All such incidents were duly processed and submitted to the Department of Labour’s Compensation Commissioner.

Two-year Comparison of Reported Injuries on Duty

Category of InjuryPeriod Period 2013/14 2014/15

Fatal 0 0

Minor Injury 2 5

Major injury 0 0

Dangerous occurrence 0 0

Ill health 0 1

Total reports 2 6

Company Secretary

The Company Secretary has a pivotal role to play in advising the Board on its roles and responsibilities, amongst other duties. The roles and responsibilities of the Company Secretary are defined in the Board Charter, read together with King III. The directors have full access to the services and advice of the Company Secretary and all information and records necessary for the discharge of their duties. In addition, the Board of Directors has access to the services of independent professionals and advisors, where necessary. The Company Secretary maintains an arm’s length relationship with the Board and its members, and is empowered with the necessary authority and support to carry out her duties, which include:• Maintaining all statutory records;

• Annually reviewing all Board and committee charters;

• Assisting the Chairperson with the annual Board evaluation;

• Advising the Board on business ethics and good governance;

• Ensuring that the Board’s policies and instructions are communicated to the appropriate persons in the SACAA;

• Ensuring that the Board receives adequate information so as to make informed decisions; and

• Ensuring Board induction, training and development.


Social responsibility

Community and social responsibility (CSR) is an important contributor to nation building and BBBEE compliance. For several years, the SACAA has been involved in various community development initiatives, and the 2014/15 financial year was no different.

It is worth reporting that, as part of its CSR Programme, the SACAA adopted Moiletsoane Primary School, situated in a village by the same name in the North West province, in 2011. The relationship with the school started off when SACAA staff and management painted the classrooms, provided furniture for the staff room and established a vegetable garden as part of its Mandela Day activities. Blankets were also donated to the 150 orphans at the school. Subsequent projects involved the children from Moiletsoane Primary and the neighbouring Mmamogwai Secondary School in the SACAA’s annual Take a Girl Child to Work and Tracker Man in the Making initiatives.

A needs analysis, conducted during the 2013/14 financial year, indicated that the school needed a computer laboratory. The SACAA once again rose to the occasion and provided the community and school with a fully functional computer lab, which was unveiled on 22 July 2014.

The SACAA continues to partake in the Men in the Making and the Take a Girl Child to Work initiatives. During the reporting period, 60 young leaners were given exposure to the work environment as part of the two initiatives.

Further, as part of its Mandela Day activities, SACAA employees donated non-perishable food items and blankets to a family in Tembisa, Gauteng. In December 2014, the SACAA donated food parcels to the value of R70,000 to the community of Perdekop in Mpumalanga. It also reserved R200,000 as sponsorship for a family in need of shelter and educational assistance. The funds were earmarked for the construction of a three bedroom house in

Carolina, Mpumalanga. Considerable progress was made during the reporting period, with completion and handover earmarked for the second quarter of the 2015/16 financial year.

Most importantly, the SACAA continued to champion the Joint Aviation Awareness Programme (JAAP). JAAP is a State-initiated project that brings together key aviation role players in the pursuit of transformation of the aviation industry by ensuring that previously disadvantaged youth have access to and partake in initiatives aimed at aviation career and opportunity awareness. In this regard, the SACAA visited 452 schools, mostly based in rural areas across the country. In the process, over 26,600 learners were introduced to various careers and opportunities in the aviation sector.

Carolina home before.

Carolina home after.


Audit and Risk Committee reportAudit and Risk Committee Responsibility

The Audit and Risk Committee reports that it has complied with its responsibilities arising from section 50 (1) and 51 (1) of the Public Finance Management Act and Treasury Regulation 27. The Audit and Risk Committee also reports that it has adopted appropriate formal terms of reference as its Audit Committee Charter, and has regulated its affairs in compliance with this charter and has discharged all its responsibilities as contained therein.

The Audit and Risk Committee comprises of three (3) Non Executive Directors all of whom are members of the Board and a specialist member appointed by the Board up until 30 September 2014. The Director of Civil Aviation, the Chief Financial Officer, the Chief Audit Executive, the Auditor General and the Acting

General Manager Risk and Compliance all have a standing invitation to the Audit and Risk Committee meetings. The appointment of the Audit and Risk Committee members is confirmed annually at the Annual General meeting by the Executive Authority.

In the year under review, the Committee convened 6 meetings.

Work of the committee in 2014/ 2015

At our meetings held during the financial year, we focused on financial reporting, internal control, internal audit and external audit. We received presentations from management. The presentations covered key accounting judgements and estimates, internal control and risk management. We also reviewed the committee’s own terms of reference.

Attendance of Audit and Risk Committee meetings by Audit Committee members

Name of member Qualifications Appointed Retired

Number of meetings attended

Ms D Dondur (Chairperson)

B Acc, B Compt (Hons), MBA, CA (SA), International Executive Development Programme (University of Nevada) Cert Executive Development, Cert Human Resources, Fellow at the Institute of Directors, IODSA membership, Member of the Institute of Internal Auditors

1 July 2013 - 6 out of 6

Adv. RR Dehal LLB, LLM, IODSA membership 1 April 2011 30 September 2014 3 out of 3

Ms P Matlala BA (Hons), IODSA membership 1 April 2011 30 September 2014 1 out of 3

Mr Z Fihlani (Specialist member)

B.Com, B.Com (Hons), M.Com, CA (SA), IODSA membership

1 July 2013 30 September 2014 1 out of 3

Prof. NV Dyani Mhango

LLB, LLM, LLD, Associate Professor of Law, IODSA membership

1 October 2014

- 3 out of 3

Mr M India Dip Security Risk Management, Dip Aviation Security Management, Cert Project Management, Programme in Economic and Public Finance, Cert Disaster Management and Communication, IODSA membership

1 October 2014

- 3 out of 3


The effectiveness of internal control

The PFMA section 51(1)(a)(i) states that the Accounting Authority must ensure that SACAA has maintained an effective, efficient and transparent system of financial, risk management and internal control.

The system of internal control and the concomitant control environment within SACAA has been effective as the various reports of Internal Audit, Auditor General and the management representation revealed no major weaknesses in the system of internal control. The system of internal control applied by SACAA over financial and risk management is effective, efficient and transparent.

Governance of Risk

The PFMA section 51(1)(a)(i) state that the Accounting Authority must ensure that SACAA has maintained an effective, efficient and transparent system of financial, risk management and internal control.

The Audit and Risk Committee has the responsibility to ensure that a risk management process is in place at SACAA and as such can report that, at meetings held during the year it was infomed that risks are being managed and that over and above the strategic risk assessment carried out during the financial year, all operational risks are managed on a continuous basis.

Additional information regarding the risk events and their effect on this annual report are detailed elsewhere in the annual report.

Financial reporting

In addressing our key objective, which is to assist the Committee through the Board in ensuring the integrity of its financial statements, we reviewed financial statements with both management and the external auditor, concentrating on:• compliance with financial reporting standards

and governance reporting requirements;

• areas requiring significant judgements to be made in applying accounting policies;

• the appropriatemess of accounting policies;

• the procedures and controls around estimates that are key in applying accounting policies;

• whether the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides information necessary for stakeholders to assess the Company’s business model, strategy and performance.

Our committee is focused on ensuring integrity of SACAA’s financial reporting and improving the financial controls framework and assessed the fair presentation of the financial statements.

Internal audit

The Audit and Risk Committee is responsible for ensuring that SACAA’s Internal Audit activity is independent and has the necessary resources, standing and authority within SACAA to enable it to discharge its duties. Furthermore, the Committee oversees cooperation between the internal and external auditors, and serves as a link between the Board of Directors and these functions.

The Audit and Risk Committee considered and approved the internal audit charter and the internal audit three (3) year rolling plan during the year under review.

In line with the PFMA, Internal Audit provides the Audit and Risk Committee and management with assurance that the internal controls are appropriate and effective. This is achieved by means of the risk management processes, as well as the identification of corrective actions and suggested enhancements to the controls and processes. From the various reports of the Internal Audit, the Audit Report on the financial statements, and the management report of the Auditor General South Africa, it was noted that no material matters were reported which indicate deficiencies in the system of internal control or any deviations there from. Accordingly, we can report that


the system of internal control over financial reporting for the period under review was efficient and effective.

The following internal audit work was completed during the year under review:• Compliance and Statutory Audits;

• Review of Performance Information;

• Information Technology Audits; and

• Ad hoc management requests.

Whistle blowing

The Audit and Risk Committee wishes to report that, for the financial year under review, the committee had received and dealt with any concern or complaints, whether from within or outside of SACAA, relating to the accounting practices, the content or auditing of SACAA’s financial statements, the internal financial controls of SACAA and other matters.

The Audit and Risk Committee has reviewed the whistle blowing and fraud and corruption reports for the financial year ended 31 March 2015 and recommended this to the Accounting Authority for approval.

The quality of management and quarterly reports submitted in terms of the PFMA

The Committee further reports that, during the year under review, they were presented with regular quarterly management reports to enable them to:• Monitor the integrity, accuracy and reliability of

the financial position of SACAA;

• Review the management accounts of SACAA to provide the Accounting Authority with an authoritative and credible view of the financial position of SACAA;

• Review the disclosure in the financial reports of SACAA and the context in which statements on the financial health of SACAA are made; and

• Review all material information presented together with the management accounts.

The quality of budgets submitted in terms of the PFMA

The Committee further reports that, during the year under review, they were regularly presented with budgets, and update, where applicable, to enable them to:• Review and ensure that the annual budgets

of SACAA are balanced, credible and realistic against the approved business plans; and

• Monitor and periodically review the implementation of the approved budget of SACAA by the Accounting Authority.

Evaluation of financial statements

The Audit and Risk Committee, at its meeting held on 17 July 2015, resolved to recommend the approval of the annual financial statements to the Accounting Authority.

The Audit and Risk Committee wished to indicate that it has performed a review on the annual financial statements focusing on:• Significant financial reporting judgements and

estimates contained in the annual financial statements;

• Clarity and completeness of disclosure and whether disclosures made have been set properly in context;

• Quality and acceptability of, and any changes in accounting policies and practices;

• Compliance with accounting standards and legal requirements;

• Significant adjustments and/or unadjusted differences resulting from the audit;

• Reflection of unusual circumstances or events and management’s explanation for the accounting treatment adopted;


• Reasons for major year on year fluctuations;

• Asset valuations and revaluations;

• Calculation and levels of general and specific provisions;

• Write offs and reserve transfers; and

• The basis for the going concern assumption.

Auditor’s report

We have reviewed SACAA’s implementation plan for the audit issues raised in the prior year and we are satisfied that the matters have been adequately resolved. The Audit and Risk Committee concurs with and accepts the conclusions and the audit

opinion of the Auditor-General on the annual financial statements and is of the view that the audited financial statements be accepted and read together with the report of the Auditor-General.


PART DHuman Resource Management


Overview of HR Matters

Human capital plays a critical role in any organisation. It is at the centre of an organisation’s ability or inability to achieve predetermined goals. The HR Division discharged its role without any significant hindrances; safe for labour relations matters, as detailed further on in this section.

Nonetheless, the division continued to implement key elements contained in the organisation’s HR Strategy, which seeks to, among others:• improve employee relations;

• enhance reward management;

• review manpower planning and resources;

• improve the recruitment and on-boarding process; and

• improve the HR Division’s resources and capacity.

HR Priorities for the Year Under Review

The HR Division met all its performance targets as set out in the APP. In line with the APP, the HR Division sought to improve organisational efficiency by developing and implementing a comprehensive HR Strategy. One of the key throughputs, led by the DCS’s Office, was the development of a new organisational structure to improve efficiency. The new structure was approved in March 2015, and implementation thereof has since begun. The organisational redesign review process included the following stages:• Independent diagnostic process conducted with

employees and industry stakeholders;

• Strategy development based on the above diagnostic inputs;

• Process optimisation with a view to addressing diagnostic outcomes;

• Employee skills analysis; and

• Development of an organisational structure based on strategy.

A Research and Development function forms part of the new organisational structure. Moreover, the organisational redesign process has helped determine the SACAA’s strategic skills gap and how to address the disparity.

A review of Labour Relations

For several months, management sought, without any success to conclude a fair labour recognition agreement with SATAWU; the only union recognised by the SACAA then. Part of the contention was the definition of the bargaining unit. Instead of continuing with negotiations, SATAWU opted to embark on an industrial action that culminated in the handing over of a memorandum to management in June 2014. In addition to the recognition agreement, the union also raised several other issues in their memorandum. Management duly considered all issues, however, SATAWU was still not satisfied with management’s responses and subsequently opted to abandon the negotiation table.

After several unsuccessful attempts to settle the matter, management gave the union 90 days’ notice regarding its intention to terminate the recognition agreement. In addition, the union was simultaneously given the option of application for an extension of the recognition agreement while negotiating a new one. The union did not apply for an extension and parties deadlocked on the new recognition agreement. The union referred the matter to the Commission for Conciliation, Mediation and Arbitration for arbitration in relation to the termination of the recognition agreement, however, the case was dismissed.

Labour relations were, since then, somewhat dampened. One of the challenges caused by the impasse is that, in the absence of a recognised union, a key matter such as the salary increment percentages will have to be applied by management unilaterally. The envisaged salary percentage increment will be applied across the board and in line with National Treasury instructions.

Introduction


By the end of the review period, a new union, the National Union of Metalworkers of South Africa, was recognised for certain organisational rights in line with the Labour Relations Act, 1995 (Act No 66 of 1995). Management is and has always been eager to have a healthy working relationship with labour, and as such welcomes any development that ensures that employees have representation in the workplace.

At the end of the reporting period, efforts to engage with SATAWU were still continuing but finality on the recognition agreement was still not reached.

Review of HR Policies and Procedures

During the review period, management identified the need to conceptualise and update existing HR Policies and Procedures to ensure that the organisation has an updated set of employment governance documents, which are based on best practice HR principles, systems and processes as well as applicable legislation.

During the reporting period, the Human Resources Division facilitated the review of twenty (20) organisational policies, which were subsequently approved by the Board. In order for the policy review and formulation to be inclusive, all internal stakeholders were consulted.

Review of Reward Management

The total management of remuneration and rewards was another project that the SACAA Management carried out during the reporting period. In this regard, it continued with the Salary Discrepancy Project, which is a three-year project. The second phase of the project will be implemented upon finalisation of the organisational review and grading phase. The project is in line with the approved Remuneration Policy, and Remuneration Strategy.

This reporting period marks the last year of the three-year bargaining unit wage deal. During the 2011/12 financial year, the Board approved a three-year salary increase for staff members falling within the

bargaining unit. The increases were respectively 10% for the 2012/13 financial year, 10.5% for 2013/14, and 11% for 2014/15. The last percentage increase of 11 % was implemented to eligible employees falling under the bargaining unit and professionals’ category. Management salary increases were performance-based and applied according to the Remuneration Policy.

Tied to total rewards and remuneration management is the organisation’s Performance Management System. In this case, individual, departmental and divisional performances are tracked and channelled towards contributing to the success of the organisation. Divisional scorecards are linked to the APP. Likewise, all employees’ performance contracts are linked back to the divisional and organisational plans.

Keeping Tabs on Employee Wellbeing

The SACAA fully recognises the importance of employee wellness for the achievement of its strategic business objectives and the fulfilment of its mandate. It is for this reason that it continued to invest in a comprehensive Employee Wellness Programme that offers, among others, psychosocial, financial and legal advisory services to SACAA employees and their families.

In an effort to enhance the Employee Wellness Programme and ensure optimal impact on SACAA’s performance, Management initiated a process that seeks to augment the current programme. Ultimately, the envisaged Employee Wellness Programme should:• Be aligned with the strategic objectives of

the SACAA and, more specifically, with the organisation’s HR management priorities;

• Be integrated with other relevant employee services such as the respective medical aids’ service offerings and disease management programmes;

• Strive to enhance the current programme structure and service offerings to ensure alignment with business needs whilst pursuing best practice and offering the optimum standards; and


• Ensure that the programme is based on the SACAA’s people risk profile.

The HR Division also ensured that there is improved communication between employees and the provident fund manager. In this case, the fund manager conducted presentation to inform employees about, among others, the growth of the provident fund. Likewise, medical aid service providers were invited to present changes in medical aid plans. In addition, medical aid scheme services providers have agreed to conduct monthly consultation sessions. These sessions have minimised the number of queries regarding medical aid services.

Contributing to Transformation and Aviation Skills Development

The transformation of the aviation industry remains high on the agenda. More so when statistics indicate that less than 10% of South African aviation license holders (excluding cabin crew) are HDIs. It is noted that most of the Black candidates generally are from other African countries, and this is possible through sponsorships from their respective governments. A preliminary diagnosis of the current situation reveals that the following may be some of the hindering factors:• Lack of aviation industry awareness among youth;

• High aviation training costs that result in barriers to entry;

• Most of the aviation training is in the hands of private individuals and thus driven by profit;

• Lack of coordination of transformation initiatives;

• Potential students being unaware of available funding; and

• Lack of opportunities to build flying hours – a critical element for aspiring pilots.

Notwithstanding the prevailing scenario, the SACAA made significant inroads in terms of transformation and the development of skills required in the aviation sector. It is worth noting that the APP calls for the development of a National Aviation Transformation Strategy. The strategy will be the first of its kind, through which relevant industry players within the Government and private sector will together drive transformation. The strategy is also expected to entail a delivery plan that addresses industry challenges. Implementation is expected to commence during the 2015/16 financial year, or soon after it has been tabled before and adopted by all stakeholders.


Bursary initiative

The SACAA has over the years managed to spark the youths’ interest in aviation. However, it observed that once their interest in aviation is kindled, the chances of fulfilling their dreams are quickly thwarted by the lack of financial support. It is for this reason that SACAA went a step further to put some funds aside to support those that are worthy and truly in need of assistance.

Between 01 April 2014 and 31 March 2015, the SACAA provided training funding to 27 young South Africans. The recipients are mainly students from rural

areas and economically depressed households. All the recipients went through a thorough screening and selection process, and only the most deserving and competent were selected for their respective programmes. The total spent on training these youths amounted to R1,911,695 in the financial year under review. Below are highlights of the SACAA’s training initiatives.

• Eight female students were enrolled in the Cadet Pilot Training Programme. Four of the eight students will complete the final phase of the Commercial Pilot’s Licence training programme by December 2015, with the remaining four expected to follow suit in July 2016.

• Fourteen students were registered to participate in the Aircraft Mechanics Apprenticeship Programme between February 2014 to March 2015. Eleven have successfully completed their first year of training and are all currently participating in the on-the-job training phase of the programme at SA Express. The remaining three students commenced their training in February 2015 and are expected to complete their first year of theory training in October 2015.

• The SACAA also increased the number of bursaries allocated for students studying Aeronautical Engineering at WITS University from three to five. Four of the five students managed to pass all their subject examinations in 2014 and the fifth student has been given another opportunity by the university to redo one of the subjects in which he was found to be not yet competent in. All five students have, however, moved on to the next phase of their study programme. It is the intention of the SACAA that once they have qualified, the graduates will be afforded employment opportunities within the organisation and other sister organisations.


Human Resource Oversight Statistics

This section of the report provides statistics in relation to various human resources activities and functions.

Personnel Costs by Programme

The personnel costs in the table below are inclusive of fixed and variable pay for permanent, fixed-term and part-time contracted employees. The amounts relate to payments made via the payroll and are excluding accruals and provisions as disclosed in the Annual Financial Statements. The costs for Board and Aeromedical Committee members, as well as Temporary employees are excluded from these totals.

Personnel Costs by Programme

Programme

Personnel expenditure (R)

Personnel expenditure as a % of total expenditure (%)

Number of employees

Average personnel cost per employee (R)

Accident and Incident Investigations 15,478,602 5.5 22 703,573

Air Safety Infrastructure 26,580,392 9.4 42 632,866

Air Safety Operations 51,467,233 18.2 76 677,200

Aircraft Safety 56,077,987 19.8 89 630,090

Aviation Security 23,025,666 8.1 40 575,642

Finance 23,188,961 8.2 44 527,022

Human Resources 7,928,340 2.8 27 293,642

Company Secretary 2,882,371 1.0 3 960,790

Legal 12,167,929 4.3 13 935,995

Office of the DCA 17,635,465 6.2 26 678,287

Internal Audit 5,180,144 1.8 6 863,357

Flight Inspection Unit 7,037,955 2.5 9 781,995

Risk and Compliance 27,500,241 9.7 68 404,415

Cape Town office 6,375,452 2.3 10 637,545

Total 282,526,738 100 475 594,793

Personnel Costs by Salary Band

The SACAA is currently using the Paterson Grading System, which reflects the levels below. As part of the outcomes of the Organisation Structure Review, all positions within the SACAA will be subjected to re-grading, to ensure consistency and standardisation of job levels and worth.


Personnel Costs by Salary Band

Level


% of personnel expenditure to total personnel cost (%)

Number of employees

Average personnel cost per employee (R)

Top management 3,358,113 1.2 1 3,358,113

Senior management 14,183,906 5.0 9 1,575,990

Professional qualified 96,466,294 34.1 109 885,012

Skilled 148,029,742 52.4 271 546,235

Semi-skilled 19,643,689 7.0 59 332,944

Unskilled 844,994 0.3 26 32,500

Total 282,526,738 100 475 594,793

* These amounts include a performance bonus.

Performance Rewards

Payment of the 2013/14 performance rewards was effected in September 2014 after the Board and AGSA’s approval of the organisation’s overall performance results.

Performance Rewards

ProgrammePerformance reward


% of performance rewards to total personnel cost (%)

Top management 1 585,109 2.5

Senior management 7 1,739,966 7.5

Professional qualified 100 8,775,197 37.6

Skilled 259 11,124,573 47.7

Semi-skilled 57 1,071,702 4.6

Unskilled 2 25,193 0.1

Total 426 23,321,740 100

Training Costs

In a quest to expand the knowledge of its employees, the SACAA ensured training for a significant number of its employees during this reporting period. Throughout the financial year, employees at various employment levels attended a myriad of training programmes relevant to their job requirements or skills development needs. Examples of training undertaken include leadership and soft skills development programmes as well as mandatory technical training. Notably, 40 managers have attended project management training; whilst 76 staff members participated in protocol and etiquette training.


In May 2014 the SACAA submitted its Annual Training Report and Workplace Skills Plan to the Transport Education and Training Authority (TETA) in compliance with the requirements of the Skills Development Act, 1998 (Act No. 97 of 1998). All funds received from TETA relating to the skills development levy paid to the South African Revenue Service were reallocated to the training budget for continued funding of the SACAA Bursary Programme. The SACAA also partnered with TETA through its Discretionary Grant Programmes in funding employees and students from previously disadvantaged communities to study in various aviation fields.

Training Costs

Programme


Training expenditure(R)

Training expenditure as a % of personnel cost. (%)

Number of employees trained

Average training cost per employee

DCA Office 17,635,465 220,870 1.3 19 11,625

Company Secretary and The Board 2,882,371 51,789 1.8 2 25,895

Legal 12,167,929 161,651 1.3 5 32,330

Finance 23,188,961 606,831 2.6 25 24,273

Human Resources 7,928,340 3,182,586 40.1 9 353,621

Air Safety and Infrastructure 26,580,392 725,003 2.7 18 40,278

Air Safety Operations 51,467,233 980,501 1.9 53 18,500

Aircraft Safety 56,077,987 1,659,710 3.0 63 26,345

Accident Incident Investigation 15,478,602 741,339 4.8 8 92,667

Aviation Security 23,025,666 764,166 3.3 34 22,475

Risk and Compliance 27,500,241 567,445 2.1 25 22,698

Flight Inspection 7,037,955 272,805 3.9 4 68,201

Internal Audit 5,180,144 188,517 3.6 6 31,420

Cape Town 6,375,452 78,502 1.2 1 78,502

Total 282,526,738 10,201,715 3.6 272 37,506

Employment and Vacancies

Vacancies are advertised internally and externally through newspapers, recruitment and head-hunting agencies. In pursuit of supporting the National Youth Development Project, the SACAA also undertakes internships and learnership programmes.


Employment Vacancies

Programme

2013/2014 number of employees

2014/2015 approved posts

2014/2015 number of employees

2014/2015 vacancies

% of vacancies

Accident and Incident Investigations 24 27 22 5 18.5

Air Safety Infrastructure 43 52 42 10 19.2

Air Safety Operations 77 85 76 9 10.6

Aircraft Safety 95 99 89 10 10.1

Aviation Security 40 46 40 6 13.0

Finance 46 54 44 10 18.5

Human Resources 8 15 27 -12 -80.0

Company Secretary 3 4 3 1 25.0

Legal 14 11 13 -2 -18.2

Office of the DCA 26 19 26 -7 -36.8

Flight Inspection Unit 8 9 9 0 0.0

Chief Audit 5 6 6 0 0.0

Cape Town office 11 10 10 0 0.0

Risk and Compliance 63 69 68 1 1.4

Total 463 506 475 31 6.1

Employment Changes

The organisation’s manpower capacity will be determined by the outcomes of the Organisation Structure Review. Additionally, retention strategies have been put in place to mitigate talent flow out of SACAA.

Employment Changes

Salary band

Employment at beginning of the period Appointments Terminations

Employment at end of the period

Top management 1 0 0 1

Senior management 8 1 0 9

Professional qualified and middle management 113 14 18 109

Skilled 272 8 9 271

Semi-skilled 62 3 6 59

Unskilled 7 19 0 26

Total 463 45 33 475


Reasons for Staff Leaving

Mitigation plans are in place to ensure that there is adequate talent retention in the organisation. The recently approved Retention and Employee Wellness policies will leverage employee attrition rates below the numbers reflected below. The number and percentage reflected below are calculated against the actual number of employees employed by the SACAA during the reporting period.

Reason for Staff Leaving

Reason Number% of total number of staff leaving

Death 1 0.2

Resignation 21 4.5

Dismissal 3 0.6

Retirement 3 0.6

Ill health 2 0.4

Expiry of contract 2 0.4

Other (retrenchment) 1 0.2

Total 33 7.1

Labour Relations: Misconduct and Disciplinary Action

The table below provides details around misconduct and actions taken.

Reason for Staff LeavingLabour Relations: Misconduct and Disciplinary Action NumberVerbal warning 1

Written warning 0

Final written warning 2

Dismissal 1

Equity Target and Employment Equity Status

The appointment of a permanent Director of Civil Aviation has contributed significantly to the organisation’s equity targets. Nonetheless, a closer look at the tables on the next page suggests that the SACAA fell short of reaching its equity targets. Senior management, professionals, skilled technical, and semi-skilled are the four occupational categories which still require attention. Causal factors behind the inability to reach the set targets were mainly a handful of resignations as well as the freezing of posts due to the Organisational Structure Review process.

New Employment Equity Targets will be set once the process of developing detailed divisional structures has been completed. The three tables to follow provide details around the SACAA employment equity initiatives.


Equity target and employment equity status - Males

Levels

RaceAfrican Coloured Indian White

Current Target Current Target Current Target Current TargetTop Management 0 0 0 0 0 0 0 0

Senior Management 4 3 0 1 1 1 1 2

Professional qualified 43 41 4 3 6 6 19 23

Skilled 98 105 7 9 12 13 33 40

Semi-skilled 10 9 0 1 0 0 0 0

Unskilled 9 0 0 0 0 0 0 0

Total 164 158 11 14 19 20 53 65

Equity target and employment equity status - Females

Levels

RaceAfrican Coloured Indian White

Current Target Current Target Current Target Current TargetTop Management 1 0 0 0 0 0 0 0

Senior Management 1 4 0 0 1 0 1 0

Professional qualified 29 28 2 10 1 7 5 7

Skilled 85 84 9 9 6 6 21 18

Semi-skilled 42 44 2 2 3 3 2 3

Unskilled 17 2 0 0 0 0 0 0

Total 175 162 13 21 11 16 29 28

Equity target and employment equity status – Disabled

Levels

DisabledMale Female

Current Target Current TargetTop Management 0 0 0 0

Senior Management 0 0 0 0

Professional qualified 1 0 0 0

Skilled 0 1 1 2

Semi-skilled 0 0 1 0

Unskilled 0 0 0 2

Total 1 1 2 4


PART EAnnual Financial Statements


Index


Financial Statements for the year ended 31 March 2015

Report of the Auditor-General to Parliament on South African Civil Aviation Authority ........................... 91Accounting Authority’s Responsibilities and Approval ............................................................................ 93Audit and Risk Committee Report ........................................................................................................... 94Accounting Authority’s Report................................................................................................................. 98Company Secretary’s Certification........................................................................................................ 101Statement of Financial Position ............................................................................................................. 102Statement of Financial Performance ..................................................................................................... 103Statement of Changes in Net Assets .................................................................................................... 104Cash Flow Statement ............................................................................................................................. 105Statement of Comparison of Budget and Actual Amounts................................................................... 106Accounting Policies ............................................................................................................................... 107Notes to the Financial Statements ......................................................................................................... 123


Report of the Auditor-General to Parliament on South African Civil Aviation Authority

Report on the Financial Statements

Introduction

1. I have audited the Financial Statements of the South African Civil Aviation Authority set out on pages 94 to 147, which comprise the Statement of Financial Position as at 31 March 2015, the Statement of Financial Performance, Statement of Changes in Net Assets, Cash Flow Statement, and the Statement of Comparison of Budget Information with actual information for the year then ended, as well as the notes, comprising a summary of significant accounting policies and other explanatory information.

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 the accounting authority determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor-General’s responsibility

3. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with International Standards on Auditing. Those standards require that I comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

6. In my opinion, the Financial Statements present fairly, in all material respects, the financial position of the South African Civil Aviation Authority as at 31 March 2015 and its financial performance and cash flows for the year then ended, in accordance with the SA standards of GRAP and the requirements of the PFMA.

Report on other legal and regulatory requirements

7. In accordance with the Public Audit Act, 2004 (Act No. 25 of 2004) and the general notice issued in terms thereof, I have a responsibility to report findings on the reported performance information against predetermined objectives for selected


objectives presented in the annual performance report, non-compliance with legislation and internal control. The objective of my tests was to identify reportable findings as described under each subheading but not to gather evidence to express assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters.

Predetermined objectives

8. I performed procedures to obtain evidence about the usefulness and reliability of the reported performance information for the following selected objectives presented in the annual performance report of the entity for the year ended 31 March 2015:

• Objective 1: Enable environmental protection on page 39 to 42

• Objective 2: Comply with ICAO Safety and Security Critical Elements on pages 39 to 42

• Objective 3: Improve organisational efficiency on pages 39 to 42

• Objective 5: Drive industry transformation on page 39 to 42

9. I evaluated the reported performance information against the overall criteria of usefulness and reliability.

10. I evaluated the usefulness of the reported performance information to determine whether it was presented in accordance with the National Treasury’s annual reporting principles and whether the reported performance was consistent with the planned objectives. I further performed tests to determine whether indicators and targets were well defined, verifiable, specific, measurable, time bound and relevant, as required by the National Treasury’s Framework for managing programme performance information (FMPPI).

11. I assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.

12. I did not identify any material findings on the usefulness and reliability of the reported performance information for the selected objectives.

Compliance with legislation

13. I performed procedures to obtain evidence that the entity had complied with applicable legislation regarding financial matters, financial management and other related matters. I did not identify any instances of material non-compliance with specific matters in key legislation, as set out in the general notice issued in terms of the PAA.

Internal control

14. I considered internal control relevant to my audit of the financial statements, annual performance report and compliance with legislation. I did not identify any significant deficiencies in internal control.

Auditor-General

Pretoria31 July 2015


Accounting Authority’s Responsibilities and Approval

The Public Finance Management Act 1999 (Act No. 1 of 1999) requires that the Accounting Authority (Board) maintains adequate accounting records and takes responsibility for the content and integrity of the Financial Statements and related financial information included in this report. It is the responsibility of the Board to ensure that the Financial Statements fairly present the state of affairs of the South African Civil Aviation Authority (SACAA) as at the end of the financial year, and the results of its operations and cash flows for the period then ended. The external auditors are engaged to express an independent opinion on the Financial Statements and were given unrestricted access to all financial records and related data.

The Financial Statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP), including any interpretations, guidelines and directives issued by the Accounting Standards Board.

The Financial Statements are based on appropriate accounting policies, consistently applied and supported by reasonable and prudent judgments and estimates.

The Board acknowledges that they are ultimately responsible for the system of internal financial control established by the SACAA, and places considerable importance on maintaining a strong control environment. To enable the Board to meet these responsibilities, it sets standards for internal control aimed at reducing the risk of error or deficit in a cost-effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the SACAA, and all employees are required to maintain the highest ethical standards in ensuring that the SACAA’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the SACAA is on identifying, assessing, managing and monitoring all known forms of risk across the entity. While operational risk cannot be fully eliminated, the SACAA endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The Board is of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the Financial Statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or deficit.

The Board has reviewed the SACAA’s cash flow forecast for the year ending 31 March 2016 and, in the light of this review and the current financial position, they are satisfied that the SACAA has or has access to adequate resources to continue in operational existence for the foreseeable future.

Although the Board is primarily responsible for the financial affairs of the SACAA, they are supported by the external auditors.

The external auditors are responsible for independently reviewing and reporting on the SACAA’s Financial Statements. The Financial Statements were examined by the external auditors and their report is presented on pages 91 to 92.

The Financial Statements set out on pages 98 to 147, which have been prepared on the going-concern basis, were approved by the Board on 29 July 2015 and were signed on its behalf by:


Ms D DondurChairperson: Audit and Risk Committee


We are pleased to present our report for the financial year ended 31 March 2015.

Audit and Risk Committee Responsibility

The Audit and Risk Committee reports that it has complied with its responsibilities arising from Section 50 (1) and 51 (1) of the PFMA and Treasury Regulation 27. The Audit and Risk Committee also reports that it has adopted appropriate formal terms of reference as its Audit Committee Charter, and has regulated its affairs in compliance with this charter and has discharged all its responsibilities as contained therein.

The Audit and Risk Committee comprises three non-executive directors, all of whom are members of the Board and a specialist member appointed by the Board up until 30 September 2014. The Director of Civil Aviation, the Chief Financial Officer, the Chief Audit Executive, the Auditor-General and the Acting General Manager Risk and Compliance all have a standing invitation to the Audit and Risk Committee meetings. The appointment of the Audit and Risk Committee members is confirmed annually at the Annual General Meeting of the Executive Authority.

On an annual basis, the Audit and Risk Committee assesses the effectiveness of the Internal Audit activity against the criteria outlined below:• Achievement of the annual Internal Audit Plan;

• Compliance with the Institute of Internal Auditors’ professional standards, inclusive of quality assurance assessments on the level of compliance achieved;

• Achievement of reporting protocols through management to the Audit and Risk Committee;

• Timeliness of reporting of findings and activities;

• Responsiveness to the changing business and operational environment;

• Management’s acceptance of the internal audit findings;

• Quality and relevance of the annual assessment reports;

• Level of co-operation and interaction with other assurance providers within the agreed combined assurance approach;

• Maintenance of adequate staffing and resource levels to achieve the annual Internal Audit Plan outcomes and meet the requirements of the Internal Audit Charter; and

• Meeting the budget allocated to the internal audit function.

The Audit and Risk Committee meets at least four times per year to consider the Annual and Interim Financial Statements, accounting policies, safeguarding of assets, audit plans and the findings of the external and internal auditors.

In the year under review, the committee convened six meetings.

Attendance of Audit and Risk Committee meetings by Audit Committee Members

Name of member Appointed Retired/ ReappointedNumber of meetings attended

Ms D Dondur (Chairperson) 1 July 2013 6 out of 6

Adv. RR Dehal 1 April 2011 30 September 2014 3 out of 3

Ms P Matlala 1 April 2011 30 September 2014 1 out of 3

Mr Z Fihlani (Specialist member) 1 July 2013 30 September 2014 1 out of 3

Prof. NV Dyani Mhango 1 October 2014 3 out of 3

Mr M India 1 October 2014 3 out of 3

Audit and Risk Committee Report


Work of the Committee in 2014/15

At our meetings held during the financial year, we focused on financial reporting, internal control, internal audit and external audit. We received presentations from management. The presentations covered key accounting judgments and estimates, internal control and risk management. We also reviewed the committee’s own Terms of Reference.

The Effectiveness of Internal Control

Section 51(1)(a)(i) of the PFMA state that the Accounting Authority must ensure that the SACAA maintains an effective, efficient and transparent system of financial, risk management and internal control.

The system of internal control and the concomitant control environment within the SACAA has been effective, as per the various reports of Internal Audit, the Auditor-General and management, which revealed no major weaknesses in the system of internal control. The system of internal control applied by the SACAA over financial and risk management is effective, efficient and transparent.

Governance of Risk

Section 51(1)(a)(i) of the PFMA state that the Accounting Authority must ensure that the SACAA maintains an effective, efficient and transparent system of financial, risk management and internal control.

The Audit and Risk Committee has the responsibility to ensure that a risk management process is in place at the SACAA, and as such can report that, at meetings held during the year it was infomed that risks are being managed and that over and above the strategic risk assessment carried out during the financial year, all operational risks are managed on a continuous basis.

Additional information regarding the risk events and their impact on this Annual Report are detailed elsewhere in the report.

Financial Reporting

In addressing our key objective, which is to assist the entity through the Board, in ensuring the integrity of its Financial Statements, we reviewed the Financial Statements with both management and the external auditor, concentrating on:• Compliance with financial reporting standards and governance reporting requirements;

• Areas requiring significant judgments to be made in applying accounting policies;

• The appropriateness of accounting policies;

• The procedures and controls around estimates that are key to applying accounting policies; and

• Whether the Annual Report and accounts, taken as a whole, is fair, balanced and understandable and provides information necessary for stakeholders to assess the entity’s business model, strategy and performance.

Our committee focuses on ensuring the integrity of the SACAA’s financial reporting and improving the financial controls framework and assessed the fair presentation of the Financial Statements.

Internal audit

The Audit and Risk Committee is responsible for ensuring that the internal audit funcion is independent and has the necessary resources, standing and authority within the SACAA to enable it to discharge its duties. Furthermore, the committee oversees co-operation between the internal and external auditors, and serves as a link between the Board of Directors and these functions.


The Audit and Risk Committee considered and approved the Internal Audit Charter and the Internal Audit Three-year Rolling Plan during the year under review.

In line with the PFMA and King III, internal audit provides the Audit and Risk Committee and management with assurance that the internal controls are appropriate and effective. This is achieved by means of the risk management processes, as well as the identification of corrective actions and suggested enhancements to the controls and processes. From the various internal audit reports, the Audit Report on the Financial Statements, and the Management Report of the AGSA, it was noted that no material matters were reported which indicated deficiencies in the system of internal control or any deviations therefrom. Accordingly, we can report that the system of internal control over financial reporting for the period under review was efficient and effective.

The following internal audit work was completed during the year:• Compliance and Statutory Audits;

• Review of Performance Information;

• Information Technology Audits; and

• Ad hoc management requests.

Whistle-Blowing

The Audit and Risk Committee wishes to report that, for the financial year under review, it received and dealt with any concern or complaints, whether from within or outside of SACAA, relating to the accounting practices, content or auditing of SACAA’s Financial Statements, the internal financial controls and other matters.

The Audit and Risk Committee has reviewed the whistle-blowing and fraud and corruption reports for the financial year ended 31 March 2015, and recommended these to the Accounting Authority for approval.

The Quality of Management and Quarterly Reports Submitted in Terms of the PFMA

The committee further reports that, during the year under review, they were presented with regular quarterly management reports to enable them to:• Monitor the integrity, accuracy and reliability of the financial position of the SACAA;

• Review the management accounts of the SACAA to provide the Accounting Authority with an authoritative and credible view of the entity’s financial position;

• Review the disclosures made in the financial reports of the SACAA and the context in which statements on the financial health of the entity are made; and

• Review all material information presented together with the management accounts.

The quality of budgets submitted in terms of the PFMA

The committee further reports that, during the year under review, they were regularly presented with budgets, and updates, where applicable, to enable them to:• Review and ensure that the annual budgets are balanced, credible and realistic against the approved

business plans; and

• Monitor and periodically review the implementation of the approved budget by the Accounting Authority.


Evaluation of financial statements

The Audit and Risk Committee, at its meeting held on 17 July 2015, resolved to recommend the approval of the Annual Financial Statements to the Accounting Authority.

The Audit and Risk Committee wishes to indicate that it has performed a review on the Annual Financial Statements focusing on:• Significant financial reporting judgments and estimates contained in the Annual Financial Statements;

• Clarity and completeness of disclosure and whether disclosures made have been set properly in context;

• Quality and acceptability of, and any changes in accounting policies and practices;

• Compliance with accounting standards and legal requirements;

• Significant adjustments and/or unadjusted differences resulting from the audit;

• Reflection of unusual circumstances or events and management’s explanation for the accounting treatment adopted;

• Reasons for major year-on-year fluctuations;

• Asset valuations and revaluations;

• Calculation and levels of general and specific provisions;

• Write-offs and reserve transfers; and

• The basis for the going-concern assumption.

Auditor’s report

We have reviewed SACAA’s implementation plan for the audit issues raised in the prior year, and we are satisfied that the matters have been adequately resolved. The Audit and Risk Committee concurs with, and accepts the conclusions and the audit opinion of the AGSA on the Annual Financial Statements and is of the view that the audited Financial Statements be accepted and read together with the Report of the AGSA.

Ms D DondurChairperson: Audit and Risk Committee

Date: 29 July 2015


The Board submits its report for the year ended 31 March 2015.

1. Introduction

The Board presents its seventeenth Annual Report in terms of the Civil Aviation Act, 2009 (Act No. 13 of 2009), (previously governed by the South African Civil Aviation Authority (Act No. 40 of 1998)) and the Public Finance Management Act , 1999 (Act No. 1 of 1999) (PFMA), which forms part of the audited Financial Statements for the year ended 31 March 2015.

The Board confirms that the SACAA complies with the provisions of the PFMA.

2. Principal Activities

Main business and operations

The SACAA is a statutory body which has the primary focus to control and regulate civil aviation in the Republic of South Africa and to oversee the functioning and development of the civil aviation industry.

It was established as a juristic body in terms of the now repealed South African Civil Aviation Authority Act, 1998 (Act No. 40 of 1998), and is presently regulated in terms of the Civil Aviation Act, 2009. This, read in conjunction with the South African Civil Aviation Authority Levies Act, 1998 (Act No. 41 of 1998), enables the SACAA to charge a passenger safety charge on scheduled operations, a fuel levy on non-scheduled operations and general aviation, and charges for services rendered to the aviation industry, allowing it to generate revenue to fund its operations.

During the year, there were no major changes in the activities of the business.

The operating results and state of affairs of the SACAA are fully set out in the Financial Statements

and do not, in the opinion of the Board, require any further comment.

The SACAA recorded a net surplus of R17,087,780 for the year ended 31 March 2015 (2014: surplus R9,048,067).

3. Going Concern

The Financial Statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

4. Events after the Reporting Date

In the previous financial year, a contingent liability of R26,595,495 relating to a legal claim was disclosed. The SACAA appealed the judgment which was decided in favour of it by the Supreme Court of Appeal. The plaintiff subsequently lodged an application for leave to appeal the judgment at the Constitutional Court.

Except for the above, the directors are not aware of any subsequent events or circumstances arising since the end of the financial year that would require adjustments to or disclosure in the Financial Statements. Furthermore, management is not aware of any circumstances which exist that would impede the SACAA’s ability to continue as a going concern.

5. Accounting Policies

The Financial Statements are prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP), including any interpretations of such statements issued by the Accounting Standards Board.

Accounting Authority’s Report


6. Accounting Authority

The directors of the SACAA during the year and to the date of this report were as follows:

Name of member Appointed Resigned/retired/re-appointedMs P Riba Appointed 01 April 2011 Retired 30 September 2014

Mr Z Nomvete Appointed 01 April 2011 Retired 30 September 2014

Adv. RR Dehal Appointed 01 April 2011 Re-appointed 01 October 2014

Mr V Ndwamato Appointed 01 April 2011 Retired 30 September 2014

Ms P Matlala Appointed 01 December 2012 Retired 30 September 2014

Ms D Dondur Appointed 01 July 2013 Re-appointed 01 October 2014

Mr SS Mokoena Appointed 01 October 2014

Mr MG India * Appointed 01 October 2014

Mr L Dlepu Appointed 01 October 2014

Major-Gen NLJ Ngema Appointed 01 October 2014

Prof. NV Dyani Mhango Appointed 01 October 2014

Ms GNB Khoza Appointed 01 November 2013

* Mr MG India is appointed as a representative of the Minister of Transport.

7. Secretary

The company secretary is Ms N Naraindath, she was appointed on 15 July 2013. The business and postal address is: Business address Ikhaya LokundizaBuilding 16, Treur CloseWaterfall Park, Bekker StreetMidrand

Postal address Private Bag X73Halfway House1685

8. Interests of Board Members

The Board members have, at each Board meeting, confirmed that they had no material personal interests in any transactions of any significance with the SACAA. Board members are required to sign a declaration of interest at every meeting attended. In addition, they are required annually to declare

any interests in contracts. Accordingly, no conflict of interest with regard to directors’ interests in contracts was reported. There was no change in directors’ interests in contracts in the period between the financial year end and the date of signature of this report.

9. Corporate Governance

General

The Board is committed to business integrity, transparency and professionalism in all its activities. As part of this commitment, the Board supports the highest standards of corporate governance and the ongoing development of best practice.

The SACAA confirms and acknowledges its responsibility to compliance with the Code of Corporate Practices and Conduct (the Code), laid out in King III. The Board discusses the responsibilities of management in this respect at Board meetings and monitors the SACAA’s compliance with the relevant legislative prescripts.


The salient features of the SACAA’s adoption of the Code are as per below:

Board of Directors

The Board:• Retains full governance control over the SACAA,

its plans and Strategy;

• Acknowledges its responsibilities as to strategy, compliance with internal policies, external laws and regulations, effective risk management and performance measurement, transparency and effective communication, both internally and externally by SACAA; and

• Is of a unitary structure comprising:

- Six non-executive directors, all of whom are independent directors as defined in the Code;

- One non-executive director appointed as a representative of the executive authority; and

- One executive director.

Chairperson and Director of Civil Aviation

The Chairperson of the Board is a non-executive and independent director (as defined by the Code).

The roles of Chairperson and Director of Civil Aviation are distinct, with responsibilities divided between them, so that no individual has unfettered powers.

Remuneration

The Director of Civil Aviation is appointed by the Minister of Transport, who is the Executive Authority of the SACAA. In terms of the Civil Aviation Act, the Executive Authority determines the remuneration of the Director of Civil Aviation. The Board determines the Remuneration Policy and Strategy of the SACAA.

Board meetings

In terms of the Board Charter, the Board meets at least four times per annum, and during the year under review met on nine occasions. It has also successfully held Board induction, strategic planning and risk sessions.

Non-executive directors have access to all the SACAA management members.

10. Auditors

In terms of the Public Audit Act, 2004 (Act No. 24 of 2004), specifically Section 4 (3) provides that the Auditor-General may audit and report on the accounts and Financial Statements.

The Executive Authority confirmed the appointment of the Auditor-General as the external auditors of SACAA at the Annual General Meeting of 2014.

11. Number of Employees

The number of employees as at 31 March 2015 was 475 (2014: 463).

12. Materiality Framework

In terms of Treasury Regulation 28 (3) of the PFMA, the Board must develop and agree on a framework of acceptable levels of materiality and significance with the relevant Executive Authority.

The SACAA has developed a materiality framework whereby all material and significant information is disclosed to the Audit and Risk Committee, the Board and the Executive Authority on a quarterly basis.


Company Secretary’s Certification

In my capacity as Company Secretary, I hereby confirm that the SACAA has lodged all returns as required by the Public Finance Management Act, 1999 (Act No. 1 of 1999), as amended, for the year ended 31 March 2015.

Ms N NaraindathCompany Secretary

Midrand


2015 2014Note(s) R R

AssetsCurrent assetsCash and cash equivalents 3 154,575,050 185,339,543Trade and other receivables 4 43,601,313 36,484,980

198,176,363 221,824,523Non-current assetsProperty, plant and equipment 5 43,414,145 44,339,598Intangible assets 6 36,639,001 4,823,239

80,053,146 49,162,837

Total assets 278,229,509 270,987,360

LiabilitiesCurrent liabilitiesTrade and other payables 7 83,867,413 41,417,393Operating lease liability 8 1,763,780 4,662,347Provisions 10 37,770,067 86,585,217

123,401,260 132,664,957

Total liabilities 123,401,260 132,664,957

Net assets 154,828,249 138,322,403

ReservesNon-distributable reserves 11 54,862,833 55,444,767Accumulated surplus 99,965,416 82,877,636

Total net assets 154,828,249 138,322,403

Statement of Financial Positionas at 31 March 2015


Statement of Financial Performancefor the year ended 31 March 2015

2015 2014Note(s) R R

RevenueRevenue 13 449,561,191 398,479,316Interest received 14 9,647,217 8,487,557Other income 15 3,332,214 7,906,317

Total revenue 13 462,540,622 414,873,190

ExpenditurePersonnel cost 16 (301,436,900) (280,725,550)Operating expenses 17 (104,018,964) (98,520,902)Lease rentals on operating lease (17,925,131) (16,750,899)Depreciation and amortisation (8,967,295) (6,994,747)Finance costs 18 (7,861,004) (28,359)Repairs and maintenance (4,726,935) (3,806,432)Debt impairment 19 (983,836) (285,229)

Total expenditure (445,920,065) (407,112,118)

Operating surplus 16,620,557 7,761,072Loss on scrapping of assets (394,943) (208,841)Reversal of impairment loss 862,166 1,495,836

467,223 1,286,995

Surplus for the year 17,087,780 9,048,067


Statement of Changes in Net Assetsas at 31 March 2015

Non-distributable

reservesAccumulated

surplus Total net assetsR R R

Balance at 01 April 2013 54,635,362 73,829,569 128,464,931Changes in net assetsSurplus for the year - 9,048,067 9,048,067Fixed asset adjustments (refer to note 5) 809,405 - 809,405

Total changes 809,405 9,048,067 9,857,472

Balance at 01 April 2014 55,444,767 82,877,636 138,322,403Changes in net assetsSurplus for the year - 17,087,780 17,087,780Fixed asset adjustments (refer to note 5) (581,934) - (581,934)

Total changes (581,934) 17,087,780 16,505,846

Balance at 31 March 2015 54,862,833 99,965,416 154,828,249Disclosure note 11

Represented by:Capital funding by government 43,275,516 7,931,000 51,206,516Government subsidies received - 49,404,915 49,404,915Accumulated funds - 42,629,501 42,629,501Fixed asset adjustments (refer to note 5) 1,587,317 - 1,587,317Asset replacement reserve 10,000,000 - 10,000,000

Total net assets 54,862,833 99,965,416 154,828,249


Cash Flow Statementas at 31 March 2015

2015 2014Note(s) R R

Cash flows from operating activities

ReceiptsReceipts from customers and Department of Transport 445,195,138 408,600,931Interest received 14 9,647,217 8,487,557

454,842,355 417,088,488

PaymentsPayments made to suppliers and employees (438,355,463) (408,949,599)Finance costs 18 (7,861,004) (28,359)

(446,216,467) (408,977,958)Net cash inflows from operating activities 22 8,625,888 8,110,530

Cash flows from investing activities

Purchase of property, plant and equipment 5 (6,453,011) (11,624,198)Proceeds from sale of property, plant and equipment 5 150,000 -Purchase of intangible assets 6 (33,087,370) (973,999)

Net cash flows from investing activities (39,390,381) (12,598,197)

Net decrease in cash and cash equivalents (30,764,493) (4,487,667)Cash and cash equivalents at the beginning of the year 185,339,543 189,827,210

Cash and cash equivalents at the end of the year 3 154,575,050 185,339,543


Statement of Comparison of Budget and Actual Amountsas at 31 March 2015

Budget on accrual basisApproved

budget Adjustments Final budget

Actual amounts on comparable

basis

Difference between final budget and

actualR R R R R Note

Statement of Financial PerformanceRevenueRevenue from exchange transactionsInterest received 6,256,501 (1,094,470) 5,162,031 9,647,217 4,485,186 33Other income 5,420,455 (2,350,263) 3,070,192 3,332,214 262,022

Total revenue from exchange transactions 11,676,956 (3,444,733) 8,232,223 12,979,431 4,747,208

Revenue from non-exchange transactionsTransfer revenuePassenger safety charge 341,060,627 (14,638,579) 326,422,048 333,818,522 7,396,474 33User fees 77,270,820 2,249,141 79,519,961 74,332,529 (5,187,432) 33Fuel levy 20,803,563 (752,853) 20,050,710 23,494,140 3,443,430 33Accident and incident investigation 17,916,000 - 17,916,000 17,916,000 -

Total revenue from non-exchange transactions 457,051,010 (13,142,291) 443,908,719 449,561,191 5,652,472

Total revenue 468,727,966 (16,587,024) 452,140,942 462,540,622 10,399,680

ExpenditurePersonnel (322,361,569) 17,361,686 (304,999,883) (301,436,900) 3,562,983 33Operating expenses (113,266,203) 2,326,212 (110,939,991) (104,018,964) 6,921,027 33Lease rentals on operating lease (17,563,319) (2,159,359) (19,722,678) (17,925,131) 1,797,547Depreciation and amortisation (10,705,821) 2,005,811 (8,700,010) (8,967,295) (267,285)Finance costs - 24,053 24,053 (7,861,004) (7,885,057) 33Repairs and maintenance (4,785,652) (294,277) (5,079,929) (4,726,935) 352,994Bad debts written off - (1,152,757) (1,152,757) (983,836) 168,921

Total expenditure (468,682,564) 18,111,369 (450,571,195) (445,920,065) 4,651,130

Operating surplus 45,402 1,524,345 1,569,747 16,620,557 15,050,810Loss on scrapping of assets - 80,766 80,766 (394,943) (475,709)Reversal of impairment loss - - - 862,166 862,166 33

- 80,766 80,766 467,223 386,457

Surplus 45,402 1,605,111 1,650,513 17,087,780 15,437,267

Actual amount on comparable basis as presented in the budget and actual comparative statement 45,402 1,605,111 1,650,513 17,087,780 15,437,267


1. Presentation of Financial Statements

The Financial Statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP), issued by the Accounting Standards Board in accordance with Section 91(1) of the PFMA.

These Financial Statements have been prepared on an accrual basis of accounting and are in accordance with historical cost conventions as the basis of measurement, unless specified otherwise. They are presented in South African Rand.

A summary of the significant accounting policies, which have been consistently applied in the preparation of these Financial Statements, is disclosed below.

These accounting policies are consistent with the previous period.

1.1 Significant judgments and accounting estimates

In preparing the Financial Statements, management is required to make estimates and assumptions that affect the amounts represented in the Financial Statements and related disclosures. Use of available information and the application of judgment is inherent in the formation of estimates. Actual results in the future could differ from these estimates, which may be material to the Financial Statements. Significant judgments include:

Loans and receivables

The SACAA assesses its loans and receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in surplus or deficit, it makes judgments as to whether there are observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.

Management has applied judgment in estimating the extent of any impairment deemed necessary on the gross carrying value of loans and receivables and has impaired all doubtful accounts in arrears for a period longer than normal expected trading terms. The impairment loss is recognised in surplus and deficit when there is objective evidence that it is impaired.

Fair value estimation

The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the SACAA is the current bid price.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. The SACAA uses a variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the SACAA for similar financial instruments. Impairment testing

The recoverable amounts of cash-generating units and individual assets have been determined based on the higher of value-in-use calculations and fair values, less cost to sell. These calculations require the use of estimates and assumptions. It is reasonably

Accounting Policies


possible that the assumption may change, which may then have an impact on the estimations and may then require a material adjustment to the carrying value of goodwill and tangible assets.

The SACAA reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. Assets are grouped at the lowest level at which identifiable cash flows are largely independent of cash flows of other assets and liabilities. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each group of assets. Expected future cash flows used to determine the value-in-use of tangible assets are inherently uncertain and could materially change over time.

Useful lives of property, plant and equipment

The SACAA’s management determines the estimated useful lives and related depreciation charges for property, plant and equipment. This estimate is based on the industry norm. Management will increase the depreciation charge where useful lives are less than previously estimated.

In estimating the useful lives of the assets, management assesses the present status of the assets and the expected future benefits associated with the continued use of the assets.

Provisions

Provisions were raised and management determined an estimate based on the information available, as well as past experience. Additional disclosure of these estimates of provisions is included in the Notes to the Annual Financial Statements under Provisions.

1.2 Property, plant and equipment

Property, plant and equipment are tangible non-current assets that are held for use in the production or supply of goods or services, rental to others, or for administrative purposes, and are expected to be used during more than one period.

The cost of an item of property, plant and equipment is recognised as an asset when:• It is probable that future economic benefits or service

potential associated with the item will flow to the SACAA; and

• The cost of the item can be measured reliably.

Property, plant and equipment is initially measured at cost.

The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and rebates are deducted in arriving at the cost.

Where an asset is acquired through a non-exchange transaction, its cost is its fair value as at date of acquisition.

Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or monetary assets, or a combination of monetary and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired item’s fair value was not determinable, it’s deemed cost is the carrying amount of the asset(s) given up.

When significant components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Cost includes costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.

The initial estimate of the cost of dismantling and removing the item and restoring the site on which it is located is also included in the cost of property, plant


and equipment, where the SACAA is obligated to incur such expenditure, and where the obligation arises as a result of acquiring the asset or using it for purposes other than the production of inventories.

Recognition of cost in the carrying amount of an item of property, plant and equipment ceases when the item is in the location and condition necessary for it to be capable of operating in the manner intended by management.

Major spare parts and stand-by equipment, which are expected to be used for more than one period, are included in property, plant and equipment. In addition, spare parts and stand-by equipment, which can only be used in connection with an item of property, plant and equipment, are accounted for as property, plant and equipment.

Major inspection costs which are a condition of continuing use of an item of property, plant and equipment and which meet the recognition criteria above, are included as a replacement in the cost of the item of property, plant and equipment. Any remaining inspection costs from the previous inspection are derecognised.

Items of property, plant and equipment are depreciated on the straight-line basis over their expected useful lives to their estimated residual value.

Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses.

The useful lives of items of property, plant and equipment have been assessed as follows:

2015 2014Aircraft Refer below Refer below

Calibration equipment 15 years 15 years

Furniture, fixtures and canteen equipment 6–8 years 6–8 years

Computer equipment 5 years 5 years

Generator and motor vehicles 6–15 years 5–15 years

Leasehold improvements

Period of lease

Period of lease

Included under the aircraft are the following components with the following respective remaining useful lives:

2015 2014Airframe 10 years 11 years

Left engine 2,118 hours 2,449 hours

Right engine 2,172 hours 2,503 hours

Avionics 6.5 years 7.5 years

Undercarriage 18,784 cycles 18,961 cycles

Interior 1 year 2 years

Reviewing the useful life of an asset on an annual basis does not require the SACAA to amend the previous estimate, unless expectations differ from the previous estimate.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.

The depreciation charge for each period is recognised in surplus or deficit, unless it is included in the carrying amount of another asset.

Items of property, plant and equipment are derecognised when the asset is disposed of, or when there are no further economic benefits or service potential expected from the use of the asset. The gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

1.3 Intangible assets

An asset is identified as an intangible asset if it either:• Is separable, i.e. is capable of being separated

or divided from the SACAA and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, identifiable assets or liability, regardless of whether the SACAA intends to do so; or


• Arises from binding arrangements (including rights from contracts), regardless of whether those rights are transferable or separable from the SACAA or from other rights and obligations.

A binding arrangement describes an arrangement that confers similar rights and obligations on the parties to it as if it were in the form of a contract.

An intangible asset is recognised when:• It is probable that the expected future economic

benefits or service potential that is attributable to the asset will flow to the SACAA; and

• The cost or fair value of the asset can be measured reliably.

Where an intangible asset is acquired through a non-exchange transaction, its initial cost at the date of acquisition is measured at its fair value as at that date.

Expenditure on research (or on the research phase of an internal project) is recognised as an expense when it is incurred.

An intangible asset arising from development (or from the development phase of an internal project) is recognised when:• It is technically feasible to complete the asset so

that it will be available for use or sale;

• There is an intention to complete and use or sell it;

• There is an ability to use or sell it;

• It will generate probable future economic benefits or service potential;

• There are available technical, financial and other resources to complete the development and to use or sell the asset; and

• The expenditure attributable to the asset during its development can be measured reliably.

An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows or service potential. Amortisation is not provided for these

intangible assets, but they are tested for impairment annually and whenever there is an indication that the asset may be impaired. For all other intangible assets, amortisation is provided on a straight-line basis over their useful lives.

The amortisation period and the amortisation method for intangible assets are reviewed at each reporting date.

Reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is an indicator that the asset may be impaired. As a result, the asset is tested for impairment and the remaining carrying amount is amortised over its useful life.

Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not recognised as intangible assets.

Internally generated goodwill is not recognised as an intangible asset. Amortisation is provided to write down the intangible assets, on a straight-line basis, to their residual values as follows:

Item Useful lifeComputer software 3 years

1.4 Financial instruments

Classification

The SACAA has the following types of financial assets (classes and category) as reflected on the face of the Statement of Financial Position or in the notes thereto:

Class CategoryTrade and other receivables

Financial asset measured at amortised cost

Cash and cash equivalents

Financial asset measured at amortised cost

The SACAA has the following types of financial liabilities (classes and category) as reflected on the


face of the Statement of Financial Position or in the notes thereto:

Class CategoryTrade and other payables

Financial liability measured at amortised cost

Operating lease liability

Financial liability measured at amortised cost

Initial recognition

The SACAA recognises a financial asset or a financial liability in its Statement of Financial Position when it becomes a party to the contractual provisions of the instrument.

The SACAA recognises financial assets using trade date accounting.

Initial measurement of financial assets and financial liabilities

The SACAA measures a financial asset and financial liability initially at its fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.

The SACAA measures a financial asset and financial liability initially at its fair value.

Subsequent measurement of financial assets and financial liabilities

The SACAA measures all financial assets and financial liabilities after initial recognition using the following categories:• Financial instruments at fair value;

• Financial instruments at amortised cost; and

• Financial instruments at cost.

All financial assets measured at cost or at amortised cost, are subject to an impairment review.

Fair value measurement considerations

The best evidence of fair value is quoted prices in an active market. If the market for a financial

instrument is not active, the SACAA establishes fair value by using a valuation technique. The objective of using a valuation technique is to establish what the transaction price would have been on the measurement date in an arm’s length exchange motivated by normal operating considerations. Valuation techniques include using recent arm’s length market transactions between knowledgeable, willing parties, if available, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analyses and option pricing models. If there is a valuation technique commonly used by market participants to price the instrument, and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, the SACAA uses that technique. The chosen valuation technique makes maximum use of market inputs and relies as little as possible on entity-specific inputs. It incorporates all factors that market participants would consider in setting a price and is consistent with accepted economic methodologies for pricing financial instruments. Periodically, the SACAA calibrates the valuation technique and tests it for validity using prices from any observable current market transactions in the same instrument (i.e. without modification or repackaging) or based on any available observable market data.

The fair value of a financial liability with a demand feature (e.g. a demand deposit) is not less than the amount payable on demand, discounted from the first date that the amount could be required to be paid.

Reclassification

The SACAA does not reclassify a financial instrument while it is issued or held unless it is:• A combined instrument that is required to be

measured at fair value; or

• An investment in a residual interest that meets the requirements for reclassification.

Where the SACAA cannot reliably measure the fair value of an embedded derivative that has been separated from a host contract that is a financial


instrument at a subsequent reporting date, it measures the combined instrument at fair value. This requires a reclassification of the instrument from amortised cost or cost to fair value.

If fair value can no longer be measured reliably for an investment in a residual interest measured at fair value, the SACAA reclassifies the investment from fair value to cost. The carrying amount, on the date that the fair value is no longer available, becomes the cost.

If a reliable measure becomes available for an investment in a residual interest for which a measure was previously not available, and the instrument would have been required to be measured at fair value, the SACAA reclassifies the instrument from cost to fair value.

Gains and losses

A gain or loss arising from a change in the fair value of a financial asset or financial liability measured at fair value is recognised in surplus or deficit.

For financial assets and financial liabilities measured at cost or amortised cost, a gain or loss is recognised in surplus or deficit when the financial asset or financial liability is derecognised or impaired, or through the amortisation process. Impairment and uncollectibility of financial assets

The SACAA assesses, at the end of each reporting period, whether there is any objective evidence that a financial asset or group of financial assets is impaired.

Financial assets measured at amortised costIf there is objective evidence that an impairment loss on financial assets measured at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. The carrying amount

of the asset is reduced directly. The amount of the loss is recognised in surplus or deficit.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed directly. The reversal does not result in a carrying amount of the financial asset that exceeds what the amortised cost would have been, had the impairment not been recognised at the date on which the impairment is reversed. The amount of the reversal is recognised in surplus or deficit.

Financial assets measured at costIf there is objective evidence that an impairment loss has been incurred on an investment in a residual interest that is not measured at fair value because its fair value cannot be measured reliably, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows, discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed.

Derecognition

Financial assetsSACAA derecognises financial assets using trade date accounting.

The SACAA derecognises a financial asset only when:• The contractual rights to the cash flows from the

financial asset expire, are settled or waived;

• It transfers to another party substantially all of the risks and rewards of ownership of the financial asset; or

• It, despite having retained some significant risks and rewards of ownership of the financial asset, has transferred control of the asset to another party and the other party has the practical ability to sell the asset in its entirety to an unrelated third party, and is able to exercise that ability


unilaterally and without needing to impose additional restrictions on the transfer. In this case, it:

- Derecognises the asset; and

- Recognises separately any rights and obligations created or retained in the transfer.

The carrying amounts of the transferred asset are allocated between the rights or obligations retained and those transferred on the basis of their relative fair values at the transfer date. Newly created rights and obligations are measured at their fair values at that date. Any difference between the consideration received and the amounts recognised and derecognised is recognised in surplus or deficit in the period of the transfer. If the SACAA transfers a financial asset in a transfer that qualifies for derecognition in its entirety and retains the right to service the financial asset for a fee, it recognises either a servicing asset or a servicing liability for that servicing contract. If the fee to be received is not expected to compensate the SACAA adequately for performing the servicing, a servicing liability for the servicing obligation is recognised at its fair value. If the fee to be received is expected to be more than adequate compensation for the servicing, a servicing asset is recognised for the servicing right at an amount determined on the basis of an allocation of the carrying amount of the larger financial asset.

If, as a result of a transfer, a financial asset is derecognised in its entirety but the transfer results in the SACAA obtaining a new financial asset or assuming a new financial liability, or a servicing liability, the SACAA recognises the new financial asset, financial liability or servicing liability at fair value.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received is recognised in surplus or deficit.

If the transferred asset is part of a larger financial asset and the part transferred qualifies for derecognition in its entirety, the previous carrying amount of the larger financial asset is allocated between the part that continues to be recognised and the part that is derecognised, based on the relative fair values of those parts, on the date of the transfer. For this purpose, a retained servicing asset is treated as a part that continues to be recognised. The difference between the carrying amount allocated to the part derecognised and the sum of the consideration received for the part derecognised is recognised in surplus or deficit.

If a transfer does not result in derecognition because the SACAA has retained substantially all the risks and rewards of ownership of the transferred asset, the SACAA continues to recognise the transferred asset in its entirety and recognise a financial liability for the consideration received. In subsequent periods, the SACAA recognises any revenue on the transferred asset and any expense incurred on the financial liability. Neither the asset and the associated liability, nor the revenue and the associated expenses, are offset.

Financial liabilitiesThe SACAA removes a financial liability (or a part of a financial liability) from its Statement of Financial Position when it is extinguished – i.e. when the obligation specified in the contract is discharged, cancelled, expires or is waived.

An exchange between an existing borrower and lender of debt instruments with substantially different terms is accounted for as having extinguished the original financial liability and a new financial liability is recognised. Similarly, a substantial modification of the terms of an existing financial liability or a part of it is accounted for as having extinguished the original financial liability and having recognised a new financial liability.

The difference between the carrying amount of a 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, is recognised in surplus or deficit. Any liabilities that are waived, forgiven or assumed by another entity by way of a non-exchange transaction are accounted for in accordance with the Standard of GRAP on Revenue from Non-exchange Transactions (Taxes and Transfers).

Presentation

Interest relating to a financial instrument or a component that is a financial liability is recognised as a revenue or expense in surplus or deficit.

Dividends or similar distributions relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit.

Losses and gains relating to a financial instrument or a component that is a financial liability is recognised as a revenue or expense in surplus or deficit.

A financial asset and financial liability are only offset and the net amount presented in the Statement of Financial Position when the SACAA currently has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

In accounting for a transfer of a financial asset that does not qualify for derecognition, the SACAA does not offset the transferred asset and the associated liability.

1.5 Leases

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

When a lease includes both land and buildings elements, the SACAA assesses the classification of each element separately.

Finance leases – lessee

Finance leases are recognised as assets and liabilities in the Statement of Financial Position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in the Statement of Financial Position as a finance lease obligation.

The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease.

Minimum lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of return on the remaining balance of the liability.

Any contingent rents are expensed in the period in which they are incurred.

Operating leases – lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments is recognised as an operating lease asset or liability.

1.6 Impairment of non-cash-generating assets

Cash-generating assets are those assets held by entity with the primary objective of generating a commercial return. When an asset is deployed in a manner consistent with that adopted by a profit-orientated entity, it generates a commercial return.

Non-cash-generating assets are assets other than cash-generating assets. Impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the asset’s future economic benefits or service potential through depreciation (amortisation).


The carrying amount is the amount at which an asset is recognised in the Statement of Financial Position after deducting any accumulated depreciation and accumulated impairment losses thereon.

A cash-generating unit is the smallest identifiable group of assets held with the primary objective of generating a commercial return that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets.

Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.

Depreciation (amortisation) is the systematic allocation of the depreciable amount of an asset over its useful life.

Fair value less cost to sell is the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.

Recoverable service amount is the higher of a non-cash-generating asset’s fair value less cost to sell and its value-in-use.

Useful life is either:(a) The period of time over which an asset is expected

to be used by entity; or(b) The number of production or similar units

expected to be obtained from the asset by entity.

Identification

When the carrying amount of a non-cash-generating asset exceeds its recoverable service amount, it is impaired.

The SACAA assesses, at each reporting date, whether there is any indication that a non-cash-generating asset may be impaired. If any such indication exists, the SACAA estimates the recoverable service amount of the asset.

Irrespective of whether there is any indication of impairment, the SACAA also tests a non-cash-generating intangible asset with an indefinite useful life or a non-cash-generating intangible asset not yet available for use for impairment, annually by comparing its carrying amount with its recoverable service amount. This impairment test is performed at the same time every year. If an intangible asset was initially recognised during the current reporting period, that intangible asset was tested for impairment before the end of the current reporting period. Value-in-use

Value-in-use of non-cash-generating assets is the present value of the non-cash-generating assets remaining service potential.

The present value of the remaining service potential of a non-cash-generating asset is determined using the following approach:

Depreciated replacement cost approachThe present value of the remaining service potential of a non-cash-generating asset is determined as the depreciated replacement cost of the asset. The replacement cost of an asset is the cost to replace the asset’s gross service potential. This cost is depreciated to reflect the asset in its used condition. An asset may be replaced either through reproduction (replication) of the existing asset, or through replacement of its gross service potential. The depreciated replacement cost is measured as the reproduction or replacement cost of the asset, whichever is lower, less accumulated depreciation calculated on the basis of such cost, to reflect the already consumed or expired service potential of the asset.

The replacement cost and reproduction cost of an asset is determined on an ‘optimised’ basis. The rationale is that the SACAA would not replace or reproduce the asset with a like asset if the asset to be replaced or reproduced is an overdesigned or overcapacitated asset. Overdesigned assets contain features which are unnecessary for the goods


or services the asset provides. Overcapacitated assets are assets that have a greater capacity than is necessary to meet the demand for goods or services the asset provides. The determination of the replacement cost or reproduction cost of an asset on an optimised basis thus reflects the service potential required of the asset.

Recognition and measurementIf the recoverable service amount of a non-cash-generating asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable service amount. This reduction is an impairment loss.

An impairment loss is recognised immediately in surplus or deficit.

Any impairment loss of a revalued non-cash-generating asset is treated as a revaluation decrease.

When the amount estimated for an impairment loss is greater than the carrying amount of the non-cash-generating asset to which it relates, the SACAA recognises a liability only to the extent that is required by the Standards of GRAP.

After the recognition of an impairment loss, the depreciation (amortisation) charge for the non-cash-generating asset is adjusted in future periods to allocate the non-cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life. Reversal of an impairment lossThe SACAA assesses, at each reporting date, whether there is any indication that an impairment loss recognised in prior periods for a non-cash-generating asset may no longer exist or may have decreased. If any such indication exists, the SACAA estimates the recoverable service amount of that asset.

An impairment loss recognised in prior periods for a non-cash-generating asset is reversed if there has been a change in the estimates used to determine the asset’s recoverable service amount since the

last impairment loss was recognised. The carrying amount of the asset is increased to its recoverable service amount. The increase is a reversal of an impairment loss. The increased carrying amount of an asset attributable to a reversal of an impairment loss does 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.

A reversal of an impairment loss for a non-cash-generating asset is recognised immediately in surplus or deficit.

After a reversal of an impairment loss is recognised, the depreciation (amortisation) charge for the non-cash-generating asset is adjusted in future periods to allocate the non-cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.

1.7 Employee benefits

Employee benefits are all forms of consideration given by the SACAA in exchange for services rendered by employees.

Termination benefits are employee benefits payable as a result of either:• The SACAA’s decision to terminate an

employee’s employment before the normal retirement date; or

• An employee’s decision to accept voluntary redundancy in exchange for those benefits.

Other long-term employee benefits are employee benefits (other than post-employment benefits and termination benefits) that are not due to be settled within twelve months after the end of the period in which the employees render the related service.

Vested employee benefits are employee benefits that are not conditional on future employment.

A constructive obligation is an obligation that derives from the SACAA’s actions whereby; through an established pattern of past practice, published


policies or a sufficiently specific current statement, the SACAA has indicated to other parties that it will accept certain responsibilities and as a result, it has created a valid expectation on the part of those other parties that it will discharge those responsibilities. Short-term employee benefits

Short-term employee benefits are employee benefits (other than termination benefits) that are due to be settled within twelve months after the end of the period in which employees render the related service.

Short-term employee benefits include items such as:• Wages, salaries and social security contributions;

• Short-term compensated absences (such as paid annual leave and paid sick leave) where the compensation for the absences is due to be settled within twelve months after the end of the reporting period in which the employees render the related employee service;

• Bonus, incentive and performance-related payments payable within twelve months after the end of the reporting period in which the employees render the related service; and

• Non-monetary benefits (for example, medical care, and free or subsidised goods or services such as housing, cars and cellphones) for current employees.

When an employee has rendered services to the SACAA during a reporting period, the SACAA recognises the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service:• As a liability (accrued expense), after deducting

any amount already paid. If the amount already paid exceeds the undiscounted amount of the benefits, the SACAA recognises that excess as an asset (prepaid expense) to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund; and

• As an expense, unless another standard requires or permits the inclusion of the benefits in the cost of an asset.

The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs. The SACAA measures the expected cost of accumulating compensated absences as the additional amount that the SACAA expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The SACAA recognises the expected cost of bonus, incentive and performance-related payments when it has a present legal or constructive obligation to make such payments as a result of past events and a reliable estimate of the obligation can be made. A present obligation exists when the SACAA has no realistic alternative but to make the payments.

Post-employment benefits: defined contribution plans

Defined contribution plans are post-employment benefit plans under which the SACAA pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.

When an employee has rendered services to the SACAA during a reporting period, it recognises the contribution payable to a defined contribution plan in exchange for that service:• As a liability (accrued expense), after deducting

any contribution already paid. If the contribution already paid exceeds the contribution due for service before the reporting date, the SACAA recognises that excess as an asset (prepaid expense) to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund; and

• As an expense, unless another standard requires or permits the inclusion of the contribution in the cost of an asset.


Where contributions to a defined contribution plan do not fall due wholly within twelve months after the end of the reporting period in which the employees render the related service, they are discounted. The rate used to discount reflects the time value of money. The currency and term of the financial instrument selected to reflect the time value of money is consistent with the currency and estimated term of the obligation. Termination benefits

The SACAA recognises termination benefits as a liability and an expense when it is demonstrably committed to either:• Terminate the employment of an employee or

group of employees before the normal retirement date; or

• Provide termination benefits as a result of an offer made in order to encourage voluntary redundancy.

The SACAA is demonstrably committed to a termination when it has a detailed formal plan for the termination and is without realistic possibility of withdrawal. The detailed plan includes:• The location, function, and approximate number of

employees whose services are to be terminated;

• The termination benefits for each job classification or function; and

• The time at which the plan will be implemented.

Implementation begins as soon as possible and the period of time to complete implementation is such that material changes to the plan are not likely.

Where termination benefits fall due more than 12 months after the reporting date, they are discounted using an appropriate discount rate. The rate used to discount the benefit reflects the time value of money. The currency and term of the financial instrument selected to reflect the time value of money is consistent with the currency and estimated term of the benefit.

In the case of an offer made to encourage voluntary redundancy, the measurement of termination benefits shall be based on the number of employees expected to accept the offer.

1.8 Provisions and contingencies

Provisions are recognised when:• The SACAA has a present obligation as a result

of a past event;

• It is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation; and

• A reliable estimate can be made of the obligation.

The amount of a provision is the best estimate of the expenditure expected to be required to settle the present obligation at the reporting date.

Where the effect of time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

The discount rate is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognised when, and only when, it is virtually certain that it will be received if the entity settles the obligation. The reimbursement is treated as a separate asset. The amount recognised for the reimbursement does not exceed the amount of the provision.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversed if it is no longer probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation.

Where discounting is used, the carrying amount of a provision increases in each period to reflect the


passage of time. This increase is recognised as an interest expense.

A provision is used only for expenditures for which the provision was originally recognised. Provisions are not recognised for future operating deficits.

If the SACAA has a contract that is onerous, the present obligation (net of recoveries) under the contract is recognised and measured as a provision.

After their initial recognition, contingent liabilities recognised in entity combinations that are recognised separately are subsequently measured at the higher of:• The amount that would be recognised as a

provision; and

• The amount initially recognised less cumulative amortisation.

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 24.

1.9 Revenue recognition from exchange transactions

Revenue is the gross inflow of economic benefits or service potential during the reporting period when those inflows result in an increase in net assets, other than increases relating to contributions from owners.

An exchange transaction is one in which the SACAA receives assets or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of goods, services or use of assets) to the other party in exchange.

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.

Measurement

Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and volume rebates.

Interest

Revenue arising from the use by others of the SACAA’s assets yielding interest is recognised when:• It is probable that the economic benefits or

service potential associated with the transaction will flow to the SACAA; and

• The amount of the revenue can be measured reliably.

Interest is recognised in surplus or deficit using the effective interest rate method.

1.10 Revenue recognition from non-exchange transactions

Revenue is the gross inflow of economic benefits or service potential during the reporting period when those inflows result in an increase in net assets, other than increases relating to contributions from owners.

Non-exchange transactions are defined as transactions where the SACAA receives value from another entity without directly giving approximately equal value in exchange.

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. Measurement

The invoice value of sales and services rendered, excluding value-added tax in respect of trading operations, is recognised at the date on which services are provided.

The safety charge is based on the number of passengers on scheduled services departing from all airports in the country. This data is obtained from all the airports in South Africa and the various airline companies.

Fuel levies are based on fuel supplied by fuel companies to general aviation operators and charter operators. This is based on the litres audited by the external auditors appointed by the SACAA.


Accident and incident investigation fees are based on the number of accidents and incidents that are investigated, and the revenue generated varies according to the nature and extent of the investigation.

User fees are generated from examinations, licence renewals, certifications, airworthiness and calibrations. The revenue is recognised when the service is rendered.

Government grants are not recognised until there is reasonable assurance that the organisation will comply with the conditions attached to them and the grants will be received.

A Government grant which primary condition is that the organisation should purchase, construct or otherwise acquire non-current assets is recognised as deferred income in the Statement of Financial Position and transferred to surplus or deficit on a systematic and rational basis over the useful lives of the related assets.

Other government grants are recognised as income over the periods necessary to match them with the cost for which they are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the organisation with no future related costs are recognised in surplus or deficit in the period in which the grant becomes receivable.

The SACAA immediately recognises government grants.

1.11 Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset when it is probable that they will result in future economic benefits or service potential to the SACAA, and the costs can be measured reliably. The SACAA applies this consistently to all borrowing costs that are directly attributable to the acquisition, construction, or production of all its

qualifying assets. The amount of borrowing costs eligible for capitalisation is determined as follows:• Actual borrowing costs on funds specifically

borrowed for the purpose of obtaining a qualifying asset less any investment income on the temporary investment of those borrowings; and

• Weighted average of the borrowing costs applicable to SACAA on funds generally borrowed for the purpose of obtaining a qualifying asset. The borrowing costs capitalised do not exceed the total borrowing costs incurred.

The capitalisation of borrowing costs commences when all the following conditions have been met:• Expenditures for the asset have been incurred;

• Borrowing costs have been incurred; and

• Activities that are necessary to prepare the asset for its intended use or sale are undertaken.

Capitalisation is suspended during extended periods in which active development is suspended.

Extended periods is periods that exceeds six months.

Capitalisation ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete. When the SACAA completes the construction of a qualifying asset in parts and each part is capable of being used while construction continues on other parts, it ceases capitalising borrowing costs when it completes substantially all the activities necessary to prepare that part for its intended use or sale.

All other borrowing costs are recognised as an expense in the period in which they are incurred.

1.12 Translation of foreign currencies

Foreign currency transactions

A foreign currency transaction is recorded, on initial recognition in Rand, by applying to the foreign currency amount the spot exchange rate between


the functional currency and the foreign currency at the date of the transaction.

At each reporting date:• Foreign currency monetary items are translated

using the closing rate;

• Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction; and

• Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items, or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous Financial Statements, are recognised in surplus or deficit in the period in which they arise.

When a gain or loss on a non-monetary item is recognised directly in net assets, any exchange component of that gain or loss is recognised directly in net assets. When a gain or loss on a non-monetary item is recognised in surplus or deficit, any exchange component of that gain or loss is recognised in surplus or deficit.

Cash flows arising from transactions in a foreign currency are recorded in Rand by applying to the foreign currency amount the exchange rate between the Rand and the foreign currency at the date of the cash flow.

1.13 Comparative figures

Where necessary, comparative figures have been reclassified to conform to changes in presentation in the current year.

1.14 Fruitless and wasteful expenditure

Fruitless expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised.

All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the Statement of Financial Performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the Statement of Financial Performance.

1.15 Irregular expenditure

Irregular expenditure, as defined in Section 1 of the PFMA, is expenditure other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation, including: • The PFMA;• The State Tender Board Act, 1968 (Act No. 86 of

1968), or any regulations made in terms thereof; or

• Any provincial legislation providing for procurement procedures in that provincial government.

National Treasury Practice Note No. 4 of 2008/09, which was issued in terms of Sections 76(1) to 76(4) of the PFMA, requires the following (effective from 1 April 2008):

Irregular expenditure that was incurred and identified during the current financial year and which was condoned before year end and/or before finalisation of the Financial Statements must also be recorded appropriately in the irregular expenditure register. In such an instance, no further action is required, with the exception of updating the Note to the Financial Statements.

Irregular expenditure that was incurred and identified during the current financial year and for which condonement is being awaited at year end must be recorded in the irregular expenditure register. No further action is required, with the exception of updating the Note to the Financial Statements.

Where irregular expenditure was incurred in the previous financial year and is only condoned in the following financial year, the register and disclosure


Note to the Financial Statements must be updated with the amount condoned.

Irregular expenditure that was incurred and identified during the current financial year and which was not condoned by National Treasury or the Accounting Authority must be recorded appropriately in the irregular expenditure register. If liability for the irregular expenditure can be attributed to a person, a debt account must be created if such a person is liable by law. Immediate steps must thereafter be taken to recover the amount from the person concerned. If recovery is not possible, the Accounting Officer or Accounting Authority may write off the amount as debt impairment and disclose such in the relevant Note to the Financial Statements. The irregular expenditure register must also be updated accordingly. If the irregular expenditure has not been condoned and no person is liable by law, the expenditure related thereto must remain against the relevant programme/expenditure item and must be disclosed as such in the Note to the Financial Statements and updated accordingly in the irregular expenditure register.

1.16 Conditional grants and receipts

Revenue received from conditional grants, donations and funding are recognised as revenue to the extent that the SACAA has complied with any of the criteria, conditions or obligations embodied in the agreement. To the extent that the criteria, conditions or obligations have not been met, a liability is recognised.

1.17 Budget information

The financial reporting by an entity shall provide

information on whether resources were obtained

and used in accordance with the budget approved

by the Board.

The approved budget is prepared on an accrual basis

and presented by economic classification linked to

performance outcome objectives.

The approved budget covers the fiscal period from

1 April 2014 to 31 March 2015.

The Financial Statements and the budget are

compiled on the same basis of accounting, therefore

a comparison with the budgeted amounts for the

reporting period has been included in the Statement

of Comparison of Budget and Actual Amounts.

1.18 Related parties

Related parties are defined as persons or entities

with the ability to control or jointly control the other

party, or exercise significant influence over the other

party, or vice versa, or an entity that is subject to

common control, or joint control.

The National Department of Transport was identified

as being able to exercise significant influence over

the SACAA. As a result, all other entities under the

same influence are regarded as related parties.


2. New Standards and Interpretations

2.1 Standards and interpretations issued, but not yet effective

The SACAA has not applied the following standards and interpretations, which have been published and are mandatory for its accounting periods beginning on or after 01 April 2015:

Standard/interpretation:

Effective date: Years beginning on or after Expected impact:

GRAP 18: Segment reporting 01 April 2015 No impact on the SACAA

GRAP 105: Transfers of functions between Entities under common control

01 April 2015 No impact on the SACAA

GRAP 106: Transfers of functions between entities not under common control


GRAP 107: Mergers 01 April 2015 No impact on the SACAA

GRAP 20: Related parties 01 April 2016 No material impact on the SACAA

IGRAP 11: Consolidation – special purpose entities


IGRAP 12: Jointly controlled entities – non-monetary contributions by ventures


GRAP 6 (as revised 2010): Consolidated and separate Financial Statements


GRAP 7 (as revised 2010): Investments in associates


GRAP 8 (as revised 2010): Interests in joint ventures


GRAP32: Service concession arrangements: grantor


GRAP108: Statutory receivables 01 April 2016 No material impact on the SACAA

IGRAP17: Service concession arrangements where a grantor controls a significant residual interest in an asset


DIRECTIVE 11: Changes in measurement bases following the initial adoption of Standards of GRAP


Notes to the Financial Statements


3. Cash and Cash Equivalents

Cash and cash equivalents consist of:

2015 2014R R

Cash on hand 3,000 3,000Bank balances 4,019,433 8,066,134Short-term deposits 150,552,617 177,270,409

154,575,050 185,339,543

Cash and cash equivalents held have not been encumbered.

Credit quality of cash at bank and short-term deposits, excluding cash on hand

The credit quality of cash at bank and short-term deposits is the credit rating of financial institutions. Cash and cash equivalents attract interest at variable rates linked to prime.

The credit quality of cash at bank and short-term deposits, excluding cash on hand that are neither past due nor impaired, can be assessed/monitored by reference to historical information about counterparty default rates. Furthermore, the credit quality of cash at bank and short-term deposits is ensured by only contracting with highly reputable financial institutions registered in terms of the Banks Act of South Africa, 1990 (Act No. 94 of 1990) and endorsed by National Treasury.

4. Trade and other Receivables

2015 2014R R

Trade receivables 48,357,528 40,964,475Provision for impairment of trade and other receivables (8,679,817) (25,758,840)Unallocated receipts (491,039) (497,141)Other debtors* 2,448,923 20,215,213Prepayments 792,661 371,739Deposits 1,015,505 1,015,505Staff advances 157,552 174,029

43,601,313 36,484,980

*Included in other debtors in the previous financial year is an amount of R17.9 million relating to 1Time Airlines which is currently in final liquidation. This debt was fully provided for in the previous financial year. The full amount has been written off in the current financial year as the recoverability of the amount is unlikely, based on the report of the liquidators.


Trade receivables ageing

As at the end of the year, the trade receivables ageing was as follows:

2015 2014R R

Current 33,698,563 28,467,5100 to 30 days 2,163,330 3,009,13231 to 60 days 2,709,799 460,91461 to 90 days 1,129,560 370,405Over 90 days 8,656,276 8,656,514

48,357,528 40,964,475

Credit quality of trade and other receivables

The credit quality of trade and other receivables that are neither past due nor impaired can be assessed by reference to historical information about counterparty default rates as well as payment history.

None of the financial assets that are fully performing have been renegotiated in the last year.

Fair value of trade and other receivables

2015 2014R R

Trade and other receivables 43,601,313 36,484,980

The Board of Directors considers the carrying amount of other financial assets to approximate fair value.

Trade and other receivables past due but not impaired

Trade and other receivables which are past due are not considered to be impaired. At 31 March 2015, R8,288,973 (2014: R6,471,846) was past due but not impaired.

The ageing of amounts past due but not impaired is as follows:

2015 2014R R

One month past due 2,163,330 3,009,132Two months past due 2,709,799 460,914Three months past due 1,129,560 370,405Older than three months past due 2,286,284 2,631,395

8,288,973 6,471,846


Trade and other receivables impaired

As of 31 March 2015, trade and other receivables of R8,679,817 (2014: R25,758,840) were impaired and provided for.

The ageing of these trade and other receivables is as follows:

2015 2014R R

Over three months 8,679,817 25,758,8408,679,817 25,758,840

Reconciliation of provision for impairment of trade and other receivables

2015 2014R R

Opening balance 25,758,840 25,883,797Provision for impairment 828,835 -Unused amounts reversed - (124,957)Provision utilised (17,907,858) -

8,679,817 25,758,840

The creation and release of provision for impaired receivables have been included in surplus for the year.

The decrease in the provision for impairment of trade and other receivables in the current financial year is mainly as a result of the write-off of 1Time Airlines.

The maximum exposure to credit risk at the reporting date is the fair value of each class of trade and other receivable balances mentioned above. The SACAA does not hold any collateral as security.

4. Trade and other Receivables (continued)


5. Property, Plant and Equipment

2015R

2014R

Cost

Accumulated depreciation

and accumulated impairment

Carrying value Cost

Accumulated depreciation


Carrying value

Furniture and fixtures 14,847,524 (9,260,336) 5,587,187 14,443,859 (8,416,994) 6,026,865Motor vehicles 2,730,226 (976,520) 1,753,706 2,527,183 (1,023,175) 1,504,008Computer equipment 19,566,900 (8,863,279) 10,703,621 16,986,254 (7,415,955) 9,570,299Generator 1,035,138 (167,187) 867,951 733,994 (118,254) 615,740Aircraft 21,383,221 (10,531,293) 10,851,929 21,383,221 (10,180,293) 11,202,928Calibration equipment 26,570,603 (12,994,803) 13,575,800 26,570,603 (11,223,429) 15,347,174Canteen equipment 127,086 (53,135) 73,951 107,643 (35,059) 72,584Total 86,260,698 (42,846,553) 43,414,145 82,752,757 (38,413,159) 44,339,598

Reconciliation of property, plant and equipment – 2015

Opening balance Additions Disposals Depreciation

Impairment reversal Total

Furniture and fixtures 6,026,865 1,035,712 (92,008) (1,383,382) - 5,587,187Motor vehicles 1,504,008 647,635 - (397,937) - 1,753,706Computer equipment 9,570,299 4,449,077 (452,935) (2,862,820) - 10,703,621Generator 615,740 301,144 - (48,933) - 867,951Aircraft 11,202,928 - - (1,213,165) 862,166 10,851,929Calibration equipment 15,347,174 - - (1,771,374) - 13,575,800Canteen equipment 72,584 19,443 - (18,076) - 73,951Total 44,339,598 6,453,011 (544,943) (7,695,687) 862,166 43,414,145


Reconciliation of property, plant and equipment – 2014

Opening balance Additions Disposals Adjustments Depreciation

Impairment reversal Total

Furniture and fixtures 4,989,282 1,798,939 (30,760) 579,661 (1,310,257) - 6,026,865Motor vehicles 1,163,142 660,558 - - (319,692) - 1,504,008Computer equipment 4,904,508 5,886,433 (130,796) 476,278 (1,566,124) - 9,570,299Leasehold improvements 74,450 - - - (74,450) - -Generator 664,668 5 - - (48,933) - 615,740Aircraft 10,784,656 - - - (1,077,564) 1,495,836 11,202,928Calibration equipment 13,436,510 3,278,263 - - (1,367,599) - 15,347,174Canteen equipment 86,747 - - 3,239 (17,402) - 72,584Total 36,103,963 11,624,198 (161,566) 1,059,178 (5,782,021) 1,495,836 44,339,598

Included in the movement in aircraft is a reversal of impairment loss of R862,166 (2014: R1,495,836), which arises from the difference between the carrying value of the aircraft compared to the recoverable amount. The recoverable amount is the fair value less cost to sell based on a valuation performed in Dollar. The impairment reversal is as a result of the deterioration of ZAR/USD exchange rate from R10.6 at the beginning of the year to R12.08 as at 31 March 2015.

Included in the fixed asset adjustments are additional fixed asset items capitalised as a result of physical verifications. A fixed asset adjustment was raised for these items and depreciation charges are annually reversed against this reserve.

6. Intangible Assets

2015R

2014R

Cost

Accumulated amortisation


Carrying value Cost

Accumulated amortisation


Carrying value

Computer software 42,865,057 (6,226,056) 36,639,001 9,777,686 (4,954,447) 4,823,239

5. Property, Plant and Equipment (continued)


Reconciliation of intangible assets – 2015

Opening balance Additions

Work in progress* Amortisation Total

Computer software 4,823,239 128,618 32,958,752 (1,271,608) 36,639,001

*Work in progress relates to a payment made for the software licence of the new Enterprise Business System. This software has not been taken into use and will be implemented over the next three years.

Included in purchase of intangible assets on the Cash Flow Statement is an amount of R33,087,370 which is made up of additions of R128,618 and work in progress of R32,958,752.

Reconciliation of intangible assets – 2014

Opening balance Additions Disposals Amortisation Total

Computer software 5,109,254 973,995 (47,285) (1,212,725) 4,823,239

7. Trade and other Payables

2015 2014R R

Trade payables 10,228,936 2,042,523Sundry accruals 23,124,742 17,936,602Income received in advance 31,143,566 274,143Salaries control account 117,807 3,322,04913th Cheque accrual 682,809 753,500Leave pay accrual 18,569,553 17,088,576

83,867,413 41,417,393

The Minister of Finance approved the inclusion in revenue of passenger safety charges that was previously over-collected, in the current and next two financial years. The portion relating to the next two financial years was included in income in received in advance and was reclassified from provisions (refer to note 10).

The SACAA does not have any long-term liabilities, as it currently has sufficient cash reserves to fund its capital and operating expenditure.

8. Operating Lease Liability

2015 2014R R

Operating lease liability 1,763,780 4,662,347

The operating lease liability relates to the smoothing of the rental lease payment for property rental over the lease period.


9. Unspent Conditional Grants and Receipts

Unspent conditional grants and receipts comprises:

2015 2014R R

Unspent conditional grants and receiptsNational Department of Transport - -

Movement during the yearBalance at the beginning of the year - 4,256,629Income recognition during the year - (4,256,629)

- -

The grant was received from the National Department of Transport to be utilised towards the investigation on the underwater survey and salvage of the aircraft that crashed into the sea near Plettenberg Bay. The investigation was concluded following the recommendations of the Advisory Safety Panel meeting held on 14 May 2013.

10. Provisions

Reconciliation of provisions – 2015


Utilised/ transferred

during the year Total

Performance bonus provision 25,451,807 35,640,000 (23,321,740) 37,770,067Passenger safety charge provision 61,133,410 - (61,133,410) -

86,585,217 35,640,000 (84,455,150) 37,770,067

Reconciliation of provisions – 2014


Utilised/ transferred

during the year Total

Performance bonus provision 23,699,243 24,000,000 (22,247,436) 25,451,807Passenger safety charge provision 61,133,410 - - 61,133,410

84,832,653 24,000,000 (22,247,436) 86,585,217

Uncertainties and assumptions

Provisions are recognised when the SACAA has a present obligation, whether legal or constructive, because of a past event for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where some, or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognised only when the reimbursement is virtually certain. The amount to be reimbursed is recognised as a


separate asset. Where the company has a joint and several liability with one or more other parties, no provision is recognised to the extent that those other parties are expected to settle part or all of the obligation.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the obligation at the Statement of Financial Position date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability.

Performance bonus provision

The performance bonus provision is calculated based on the performance of the SACAA as well as individual performance ratings for the financial year ended 31 March 2015.

Passenger safety charge provision

Provisions for an over-collection of passenger safety charge was previously included under this heading. The Minister of Finance and the Minister of Transport approved the utilisation of these funds. As a result, the balance was reclassified as income received in advance (refer to note 7).

11. Non-distributable Reserves

2015 2014R R

Assets transferred from the National Department of Transport at inception 43,275,526 43,275,526Asset replacement reserve 10,000,000 10,000,000Fixed asset adjustments 1,587,307 2,169,241

54,862,833 55,444,767

12. Employee Benefit Obligations

Defined contribution plan

It is the policy of the SACAA to provide retirement benefits to all its employees. The defined contribution provident fund, which is subject to the Pensions Fund Act, 1956 (Act No. 24 of 1956) exists for this purpose.

The SACAA is under no obligation to cover any unfunded benefits.

2015 2014R R

The amount recognised as an expense for defined contribution plans is 34,105,426 31,373,334


13. Total Revenue

2015 2014R R

Passenger safety charge 333,818,522 291,688,968User fees 74,332,529 70,349,908Fuel levy 23,494,140 19,539,690Accident and incident investigation grant 17,916,000 16,900,750Revenue 449,561,191 398,479,316Interest received 9,647,217 8,487,557Other income 3,332,214 7,906,317

Total revenue 462,540,622 414,873,190

The amount included in revenue arising from exchanges of goods or services are as follows:Interest received 9,647,217 8,487,557Other income 3,332,214 7,906,317

12,979,431 16,393,874

The amount included in revenue arising from non-exchange transactions are as follows:Passenger safety charge 333,818,522 291,688,968User fees 74,332,529 70,349,908Fuel levy 23,494,140 19,539,690Accident and incident investigation grant 17,916,000 16,900,750

449,561,191 398,479,316

14. Interest Received

2015 2014R R

Financial institutions 9,405,496 8,145,755Trade and other receivables 241,721 341,802

9,647,217 8,487,557


15. Other Income

2015 2014R R

Sundry income 1,245,136 6,084,035Sponsorship income 1,848,000 1,669,750Insurance claim received 239,078 152,532

3,332,214 7,906,317

16. Personnel Cost

2015 2014R R

Basic salary 198,368,245 187,129,619Pension fund contributions 34,105,426 31,373,334Bonus 35,640,000 24,000,000Medical aid contributions 12,184,599 11,541,591Temporary staff 3,368,189 6,206,039Leave pay provision charge 3,120,842 5,959,908Other employee benefit costs 6,499,978 5,461,066Stand-by allowance 2,860,606 2,516,830Acting allowances 2,359,719 2,304,241Travel and other allowances 1,300,008 1,835,614Compensation for occupational injuries and diseases fund 763,161 1,546,171Unemployment Insurance Fund 866,127 851,137

301,436,900 280,725,550


17. Operating Expenses

2015 2014R R

Aircraft operation expenses 3,444,236 2,792,666Auditors' remuneration 1,906,399 1,615,979Bank charges 769,251 700,083Bursaries 2,766,162 1,477,898Cleaning 1,294,952 1,126,242Conferences, seminars and venue hire 1,798,480 1,846,240Consulting and professional fees* 11,548,760 6,170,378Consumables 804,288 352,487Electricity 4,810,712 4,503,598Fuel and oil 230,071 268,888Insurance 990,457 1,234,743IT expenses 3,246,008 1,958,949Legal fees 4,984,853 3,306,763Magazines, books and periodicals 2,088,643 2,239,288Motor vehicle expenses 141,824 2,400Placement fees 1,492,729 951,391Postage and courier 827,676 672,619Printing and stationery 2,298,199 2,199,740Public relations 3,206,234 2,538,413Recreation Aviation Administration of South Africa 4,573,969 4,520,392Refuse 404,452 204,864Regulation development 145,423 174,491Safety and promotion 1,392,280 513,564Security 2,795,114 2,153,410Skills development levy 2,457,756 2,291,275Software expenses 4,138,642 1,832,751Sponsorships 2,922,658 3,152,478Staff events 848,807 2,570,324Staff welfare 233,443 274,811Telephone and fax 5,966,621 6,148,731Training 7,435,553 10,452,312Travel – national 13,376,012 17,742,886Travel – international 8,020,183 8,852,030Uniforms 155,814 161,659Other expenses 502,303 1,516,159

104,018,964 98,520,902

*Included in consulting and professional fees is an amount for co-sourced services for internal audit of R1,006,320 (2014: R1,233,364).


18. Finance Costs

2015 2014R R

Foreign exchange loss - 28,359Interest paid to National Treasury – Revenue Fund 7,861,004 -

7,861,004 28,359

The Minister of Finance approved the inclusion in revenue of passenger safety charges that was previously over-collected, in the current and next two financial years. He also pronounced that all interest earned on the over-collected passenger safety charge be paid into the National Treasury Revenue Fund.

19. Debt Impairment

2015 2014R R

Debt impairment 983,836 285,229

20. Taxation

No provision for taxation has been made for 2015 tax year, as the SACAA is exempted in terms of Section 10 (1) (CA) (1) of the Income Tax Act, 1962 (Act No. 58 of 1962).

21. Auditors’ Remuneration

2015 2014R R

Fees 1,906,399 1,615,979


22. Cash Generated from Operations

2015 2014R R

Surplus 17,087,780 9,048,067Adjustments for:Depreciation and amortisation 8,967,295 6,994,746Loss on sale and scrapping of assets 394,943 208,841Release of depreciation on assets in non-distributable reserves (581,934) (249,773)Impairment loss reversal (862,166) (1,495,836)Debt impairment 983,836 285,229Movements in operating lease liability (2,898,567) (2,481,625)Movements in provisions (48,815,150) 1,752,564Changes in working capital:Trade and other receivables (7,116,333) 2,553,424Consumer debtors (983,836) (285,229)Trade and other payables 42,450,020 (3,963,249)Unspent conditional grants and receipts - (4,256,629)

8,625,888 8,110,530

23. Commitments

Authorised capital expenditure

2015 2014R R

Contracted for and authorised by the BoardProperty, plant and equipment - 3,088,350Intangible assets 61,132,363 94,091,130

61,132,363 97,179,480

The capital expenditure commitment relates to the installation and implementation of an Enterprise Business System and will be financed by retained surpluses, existing cash resources and funds internally generated.

The capital expenditure budget for the year ending 31 March 2016 is R44,500,00.

Operating leases – as lessee (expense)

2015 2014R R

Minimum lease payments due- Within one year 9,809,864 15,664,817- In second to fifth year inclusive 8,776,190 17,697,985

18,586,054 33,362,802

Operating lease payments represent rentals payable by the SACAA for certain of its office properties and equipment. Leases are negotiated for an average term of three years. No contingent rent is payable.


24. Contingencies

2015 2014R R

Pending obligation – regulatory matters 5,778,000 45,514,609Pending obligation – employee-related matters - 100,000

5,778,000 45,614,609

These contingent liabilities relate to estimated settlement costs with regard to legal cases for or against the SACAA. Whatever the prospects are, the SACAA is obliged to disclose this.

Included in contingencies in the previous financial year is an amount of R26,595,495 relating to a claim made by a UK citizen who was severely injured when an accident occurred during a tandem paragliding adventure, which rendered her a paraplegic. The trial court ordered that the South African Hang Gliding and Paragliding Association (SAHPA) and the SACAA are jointly and severally liable for damages. SAHPA and the SACAA appealed the decision of the trial court, which was upheld with cost in favour of SAHPA and the SACAA, thus no contingent liability is recognised in the current financial year. The plaintiff has lodged an application for leave to appeal the judgment granted by the Supreme Court of Appeal as disclosed under subsequent events in note 30.

25. Related Parties

Related party balances

2015 2014R R

Loan accounts – Owing/(to) by related partiesDepartment of Transport (250) 62,634South African Airways 343,693 528,499Air Traffic and Navigation Services 456,204 844,179Airports Company of South Africa (licences) (95,283) (168,873)SA Express (passenger safety charge and general aviation) 55,177 131,548Mango Airlines 88,097 44,722

847,638 1,442,709

No expense has been recognised in the current period for impairment of trade receivables in respect of amounts owed by related parties. The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. The National Department of Transport either controls or exercises significant influence over all entities listed as related parties.


Related party transactions

2015 2014R R

Transaction value received/(paid) to related partiesDepartment of Transport (accidents and incidents) 19,217,450 18,154,750Department of Transport (secondments) - 158,061Air Traffic and Navigation Services 6,301,431 8,595,025Airports Company of South Africa (licences) 1,619,147 1,620,104Airports Company of South Africa (parking) (1,427,680) (1,114,056)South African Airways (safety fees and general aviation) 89,055,388 94,958,825SA Express (safety fees and general aviation) 21,859,189 22,981,765Mango Airlines (safety fees) 39,288,851 35,506,706Recreation Aviation Administration of South Africa (4,573,969) (4,897,091)

171,339,807 175,964,089

These transactions are carried out on commercial terms and conditions.

26. Comparative Figures

Certain comparative figures have been reclassified.

The reclassification was done in order to more accurately disclose income and expenditure in the correct categories. Material reclassification effects are shown below:

2015 2014R R

Statement of Financial PerformancePersonnel cost - (1,376,230)Operating expenses - 1,504,709Lease rentals on operating lease - (16,750,899)

25. Related Parties (continued)


27. Members’ Emoluments

Executive Management

2015 Salary Medical aidProvident

fund

Lumpsum/ leave pay/

bonus Total

Ms GNB Khoza DCA 2,336,026 88,695 348,283 585,110 3,358,114

Mr AAA Seedat GM: Finance 1,302,286 105,177 238,181 310,193 1,955,837

Mr T Fisha (Acting from 1 June 2014 – 31 March 2015)

GM: Air Safety Operations

875,309 47,139 133,442 177,376 1,233,266

Mr GH Bestbier GM: Air Safety Infrastructure 1,349,649 72,411 238,633 308,428 1,969,121

Mr P Moraka (Appointed 1 April 2014)

EM: Human Resources

1,119,059 70,941 210,000 228,894 1,628,894

Mr S Ntaka (Acting from 1 December 2012)

EM: DCA's Office

1,855,028 - - - 1,855,028

Mr P Kewana Chief Audit Executive 1,197,965 62,868 213,368 297,221 1,771,422

Ms M Mamabolo EM: Legal 1,137,695 62,868 136,287 251,779 1,588,629

Ms N Naraindath Company Secretary 1,143,263 82,818 139,019 197,073 1,562,173

Ms M Stephens (Acting from 1 August 2013)

GM: Risk and Compliance

975,214 41,346 151,919 173,984 1,342,463

Mr M Lebogo GM: Aircraft Safety 1,378,975 56,313 255,009 146,377 1,836,674

Mr A Morudi (Acting from 1 April 2013)

GM: Acident and Incident Investigation 873,742 72,585 140,620 163,293 1,250,240

Ms S Ngidi (Acting from 1 June 2014 – 30 September 2014)

GM: Aviation Security

320,052 11,184 48,612 262,558 642,406

Mr W Mathonsi (Acting from 1 April 2014 – 31 May 2014)


137,797 12,566 22,325 - 172,688

Mr L Gqeke (Acting from 1 October 2014 – 31 March 2015)


417,936 - 61,124 - 479,060

16,419,996 786,911 2,336,822 3,102,286 22,646,015



fund

Lumpsum/ leave pay/

bonus Total

Ms GNB Khoza * DCA 1,651,085 81,216 200,885 299,304 2,232,490

Mr AAA Seedat GM: Finance 1,072,143 96,324 196,838 250,050 1,615,355

Mr A Richman (Resigned 30 October 2013)

GM: Air Safety Operations

726,261 46,340 126,629 381,591 1,280,821

Mr GH Bestbier GM: Air Safety Infrastructure 1,236,905 64,803 209,983 272,565 1,784,256

Mr P Moraka (Acting from 1 April 2013 – 31 March 2014)

EM: Human Resources

855,711 62,289 162,000 - 1,080,000

Mr S Ntaka (Acting from 1 December 2012)

EM: DCA's Office

1,697,150 - - - 1,697,150

Mr MG India ** Chief Aviation Security 668,648 - 108,617 3,489,638 4,266,903

Ms L Stols (Resigned effective 31 July 2013)


442,890 15,824 66,144 185,815 710,673

Mr P Kewana Chief Audit Executive 1,059,808 57,564 187,649 242,312 1,547,333

Ms Mamabolo EM: Legal 1,075,098 57,564 108,210 79,332 1,320,204

Ms M Sonjani (Acting from 1 April 2013 – 14 July 2013)

Company Secretary

284,765 8,168 45,553 - 338,486

Ms N Naraindath (Appointed 15 July 2013)

Company Secretary

753,944 51,112 84,375 - 889,431

Ms M Stephens (Acting from 1 August 2013)


631,902 25,516 95,718 156,660 909,796

Mr S Devkaran (Acting from 1 April 2013 – 30 September 2013)

GM: Aircraft Safety

436,193 39,104 69,353 137,815 682,465

Mr M Lebogo (Appointed 1 October 2013)

GM: Aircraft Safety

520,435 26,388 106,100 - 652,923

27. Members’ Emoluments (continued)



fund

Lumpsum/ leave pay/

bonus Total

Mr A Morudi (Acting from 1 April 2013)

GM: Accident and Incident Investigation

801,114 66,459 128,692 136,693 1,132,958

Ms S Ngidi (Acting in April 2013, and from 1 September 2013 – 30 November 2013)


337,299 10,260 45,687 162,870 556,116

Mr W Mathonsi (Acting from 1 May 2013 – 31 July 2013 and March 2014)


268,307 18,508 40,424 - 327,239

Mr L Gqeke (Acting in August 2013 and from 1 December 2013 – 31 January 2014)


250,559 - 36,000 - 286,559

14,770,217 727,439 2,018,857 5,794,645 23,311,158

* Ms GNB Khoza was appointed as acting DCA with effect from 1 November 2012 and subsequently appointed as permanent DCA on 1 December 2013.

** Mr India was seconded to the Department of Transport in March 2007 with the creation of the National Aviation Security Programme (NASP). Mr India had to champion the implementation of the NASP on behalf of the Minister of Transport and the Republic of South Africa as a whole. His secondment period ended on 30 November 2012. A settlement agreement was reached with Mr India and approved by the Board and his services were subsequently terminated.

Non-executive Director’s fees

2015Board

Members’ feesReimbursive expenses* Total

Ms P Riba (Retired 30 September 2014) 115,973 - 115,973Mr Z Nomvete (Retired 30 September 2014) 90,095 - 90,095Ms MP Matlala (Retired 30 September 2014) 105,900 - 105,900Adv. RR Dehal (Re-appointed 1 October 2014) 221,554 150,390 371,944Ms D Dondur (Re-appointed 1 October 2014) 230,711 3,233 233,944Mr SS Mokoena (Appointed 1 October 2014) 145,491 2,345 147,836Ms L Dlepu (Appointed 1 October 2014) 117,175 2,687 119,862Major-Gen. NLJ Ngema (Appointed 1 October 2014) 123,557 10,785 134,342Mr MG India (Appointed 1 October 2014) 115,028 3,058 118,086Prof. NV Dyani-Mhango (Appointed 1 October 2014) 110,464 3,391 113,855

1,375,948 175,889 1,551,837


2014Board

Members’ feesReimbursive expenses* Total

Ms P Riba 281,531 - 281,531Mr Z Nomvete 187,221 - 187,221Ms MP Matlala 293,745 - 293,745Adv. RR Dehal 270,921 458,408 729,329Ms D Dondur (Appointed 1 July 2013) 185,288 - 185,288Mr V Ndwamato - - -Ms K Selane (Retired 30 April 2013) - - -Mr P Ndlovu (Resigned 31 January 2014) 281,838 - 281,838

1,500,544 458,408 1,958,952

Fees

No director’s fees were paid to Mr V Ndwamato and Ms K Selane, as they are in the full-time service of the State.

*Reimbursive expenses are disclosed in terms of Section 28 (1) (4) of the PFMA as reimbursive costs paid to Board members. The costs include flights, car hire and accommodation for all meetings of the Board and its committees.

28. Risk Management

Capital risk management

The SACAA’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for its owner and benefits for its stakeholders, and to maintain an optimal capital structure to reduce the cost of capital.

The capital structure of the SACAA consists of cash and cash equivalents disclosed in note 3, and equity as disclosed in the Statement of Financial Position.

As the SACAA is not exposed to debt, there is no meaningful debt to equity ratios, such as gearing ratio, to be disclosed.

There are no externally imposed capital requirements.

There have been no changes to what the SACAA manages as capital. The strategy for capital maintenance or externally imposed capital requirements remained the same as in the previous year.

Financial risk management

The SACAA’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. the SACAA does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

Management meets on a regular basis to analyse interest rate exposures and evaluate treasury management strategies against revised economic forecasts. Compliance with policies and exposure limits is reviewed by management on a continuous basis. Management believes that, to the best of its knowledge, there are no significant undisclosed financial risks.

27. Members’ Emoluments (continued)


Liquidity risk

Liquidity risk refers to the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Management is satisfied that the SACAA will be able to settle its financial liabilities (payables and provisions) in the normal course of business.

The SACAA’s liquidity risk is a result of the funds available to cover future commitments. It manages liquidity risk through an ongoing review of future commitments and credit facilities.

Cash flow forecasts are prepared and monitored on a monthly basis.

The liquidity ratio below illustrates:

2015 2014R R

Current assets 198,176,363 221,824,523Current liabilities 123,401,260 132,664,957

Current ratio 1.61:1 1.67:1

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The SACAA is exposed to interest rate risk as it invests funds in the money market at floating interest rates. As at 31 March 2015, no derivative financial instruments were used to manage the SACAA’s exposure to interest rate risk.

The SACAA has adopted a policy of investing the majority of surplus cash in call account investments as a means to safeguard and mitigate interest rate risk. The risk is further managed through the fact that the surplus funds are invested with reputable financial institutions.

Credit risk

The SACAA is exposed to credit risk, which is the risk of financial loss to the SACAA if a counterparty to a financial instrument fails to meet its contractual obligations.

Credit risk consists mainly of cash deposits, cash equivalents, derivative financial instruments and trade and other receivables. The SACAA only deposits cash with major banks with high quality credit standing, and limits exposure to any one counterparty.

Trade receivables comprise a widespread customer base. Management evaluates credit risk relating to customers on an ongoing basis. If customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, Risk Control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Executive Committee. The utilisation of credit limits is regularly monitored.


Certain credit limits were exceeded during the reporting period, and where management considered these debtors to be impaired, a provision for doubtful debts was raised.

Financial assets exposed to credit risk at year end were as follows:

2015 2014Financial instrument R R

Trade receivables less unallocated receipts 47,866,489 40,467,334Other debtors 2,448,923 20,215,213Staff advances 157,552 174,029Cash and cash equivalents 154,575,050 185,339,543

205,048,014 246,196,119

DefaultDefault occurs when: a) credit limits are exceeded; and/or b) payments are not received within the approved period. In such cases the necessary collection measures were taken with due regard to the financial risk connected to a specific debtor account. Collection measures included handing accounts over to the Legal Department for follow-up.

As at 31 March 2015, the SACAA did not consider that any significant concentration of credit risk existed in the receivable book which had not been adequately provided for.

The table below provides an analysis of credit risk exposure inherent in the loans and receivables book at the year-end reporting dates, reconciled to the carrying value of net trade receivables as reported in note 4.

2015Direct

chargesIndirect charges Total

Current balances 286,832 33,411,731 33,698,563Overdue balances 12,071,187 2,587,778 14,658,965

Total 12,358,019 35,999,509 48,357,528Impairment provision (6,035,460) (2,644,357) (8,679,817)

2014Direct

chargesIndirect charges Total

Current balances 264,474 28,203,036 28,467,510Overdue balances 11,855,664 641,301 12,496,965

Total 12,120,138 28,844,337 40,964,475Impairment provision (5,341,787) (20,417,053) (25,758,840)

DefinitionsDirect charges include regulatory fees and calibration fees.Indirect charges include passenger safety fees and fuel levies.

28. Risk Management (continued)


LiquidationAs soon as it becomes known that a debtor has been placed into provisional liquidation/sequestration or has been placed into final liquidation/sequestration, the credit facility is automatically revoked. Interest is charged from the date of last payment to the date of final liquidation/sequestration and the debt is provided in full as irrecoverable.

Foreign exchange risk

The SACAA incurs currency risk as a result of expenses in foreign currencies, hence exposure to exchange rate fluctuations arises. The currency in which the SACAA primarily deals is the US Dollar. No forward cover is taken out for these transactions. Management considers the foreign currency risk to be insignificant.

29. Going Concern

The Financial Statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

30. Events after the Reporting Date

In the previous financial year, a contingent liability of R26,595,495 relating to a legal claim was disclosed. The SACAA appealed the judgment, which was decided in favour of the SACAA by the Supreme Court of Appeal. The plaintiff subsequently lodged an application for leave to appeal the judgment in the Constitutional Court.

Except for the above matter, management is not aware of any significant events that occurred after the reporting date that would require adjustments to or disclosure in the Financial Statements. Furthermore, management is not aware of any circumstances which exist that would impede the SACAA’s ability to continue as a going concern.

31. Fruitless and Wasteful Expenditure

2015 2014R R

Training costs paid for non-employees - 231,549

During the year under review no fruitless and wasteful expenditure was recorded. The fruitless and wasteful expenditure incurred in the previous financial year was investigated by Internal Audit, and disciplinary steps were taken against the respective employees. The legal process of recovering the amounts has commenced.


32. Irregular Expenditure

2015 2014R R

Opening balance 2,041,136 1,887,134Add: Irregular expenditures – current year - 154,002Less: Amounts reversed, not irregular expenditure (154,002) -Irregular expenditure to be condoned 1,887,134 2,041,136Details of irregular expenditure – current yearGoods and services procured without competitive bidding (154,002) 154,002

(154,002) 154,002

Irregular expenditure was reviewed and investigated by management. The irregular expenditure of R1,887,134 related to an audit finding raised during the 2011/12 financial year. Disciplinary action was initiated against the respective employees, who subsequently resigned and no further action was taken by management. The irregular expenditure did not result in any loss or damages to the SACAA and that the SACAA did obtain value for such transaction hence no further action was taken. This will be submitted to the Board for condonation.

33. Budget Variances

Material differences between budget and actual amounts

All material differences above R3 million, as well as the reversal of impairment loss on aircraft have been disclosed.

Interest received

Interest received during the year is higher than budgeted due to lower capital expenditure resulting in higher cash balances.

Passenger safety charge

An increase in passenger numbers resulted in passenger safety charge income exceeding budget by R7,396,474. Passenger numbers for the year are 1.01% higher than budgeted and 1.53% higher than the same period last year.

User fees

User fees is R5,187,432 lower than budgeted. The initial budget expected a 6% fee increase to be implemented from 1 April 2014, but these increases were only approved with effect from 1 November 2014.

Fuel levy

Independent audits undertaken by the SACAA focusing on completeness and accuracy of fuel levy returns led to a recovery of additional fuel levies income exceeding the budget by R3,443,430.

Personnel cost

A saving of R3,562,983 on personnel cost relates to a process of organisational re-design undertaken by the SACAA during the financial year. As a result, some budgeted vacancies were not filled. This process will be completed during the 2015/16 financial year.


Finance cost

Finance cost was R7,885,057 higher than budgeted. This can be attributed to interest received from over-collected passenger safety charge being paid to the National Treasury Revenue Fund, as instructed by the Minister of Finance.

Operating expenses

With the implementation of National Treasury’s cost containment and other cost saving activities, various savings, most notably on seminars, conferences, staff events and other travel expenditure, were made during the financial year. Non-critical training was delayed awaiting the implementation of the organisational re-design and the associated skills audit. This contributed to a saving of R6,921,027 against budget.

Reversal of impairment loss

The reversal of impairment loss arises from the difference between the carrying value of aircraft compared to the recoverable amount. The recoverable amount is the fair value less cost to sell, based on a valuation performed in US Dollar. The impairment reversal is a result of the deterioration of the ZAR/USD exchange rate. This was not budgeted for.

Changes between the approved and the final budget

The changes between the approved and final budget are a consequence of adjustments and reallocations within the approved budget parameters. These adjustments and reallocations were necessary to align the budget with business needs.


Notes

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Physical Address: Ikhaya Lokundiza 1 16 Treur Close Waterfall Park Bekker Street Midrand Johannesburg

Postal Address: Private Bag X 73 Halfway House 1685

Telephone Number: +27 11 545 1000

Fax Number: +27 11 545 1465

Email Address: [email protected]

Website Address: www.caa.co.za

RP Number: RP255/2015

ISBN Number: 978-0-620-66211-6