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Thursday, January 26, 2012

Apple Commuters Finance Assignment

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c o n t e n t s








v Group Profile


Cheap University Papers on Apple Commuters Finance Assignment




v Goals and Objectives


v Group Locations 4


v Group Structure 5


v Company History 6





v Chairman’s Statement 8


v Corporate Governance 10


v Auditor’s Report 15


v Annual Financial Statements 16


v Operating Costs 4


v Financial Highlights 5


v Ratio Analysis 6


v Efficiency 7


v Risk Analysis 8


OBJECTIVES


Our medium term business objectives are to secure as much of the Taxi market from which we can expand the South African operation into other related segments.





GOALS


Apple commuters will aspire to achieve the following key targets over the next three years


· Increase our installed base and secure our market position


· Improve our service offering and implement systems and controls to measure our performance


· Improve on our profitability


· Implement a Key Account Management structure


· Improve staff training on all levels in line with BEE and labour law requirements.





GROUP LOCATIONS


Below is a map of the areas represented by Apple commuters. The red indicates currently supported areas whereas the black indicates potential expansion points.


� Head offices


u Regional offices


u Potential expansion areas











COMPANY HISTORY


Executive Chairwoman of Apple Commuters Kathy A always dreamed of working on computers. In the early 170’s � she enrolled for a computer course at LamDin in Johannesburg with a view to making that dream a reality. Kathy then lived in the sprawling township of Alexandra and transportation to and from Johannesburg CBD was having an adverse impact on her studies. Little did she realise that this frustration would change her career path and her life forever. “I was shocked at the quality of public transportation in Johannesburg. I spent four hours a day commuting to and from the city. It was ridiculous � something had to be done about it!”


From humble beginnings Apple Commuters has evolved into one of South Africa’s most well known and well-respected group of transport companies. It boasts the largest taxi fleets in the country with branches in all major centers.


The company was started about 7 years ago with a vision of meeting the needs of commuters expediently. “Safety, reliability and punctuality were our main focus”, says Kathy as she reminisces about those simple days. “We’ve come a long way from our first vehicle � a Chevrolet 800 that was bought for cash”


Alex B had been making similar inroads into the field of transportation around the same time. He had worked his way up to head the Northern Suburbs Taxi Association � a key position with good insight into the industry.


By 176 � the newly formed partnership were already operating with two taxis doing about 5 trips a day combined.


December 178


The company doubles its fleet to 4 vehicles whilst streamlining operating costs.


March 180


The company follows closely with the rapid expansion of the greater Johannesburg and covers new routes in the North East region.





COMPANY HISTORY (continued…)


February 181


Apple Commuters acquires a small operation in Durban headed by Avi E. A further 1 taxis are added to the already expanding fleet. Routes between Durban and Johannesburg are explored � a first for light commercial vehicles.


September 185


Branches in Port Elizabeth and Bloemfontein were launched and the fleet was now in excess of 50 vehicles. Simon D and Craig F � owners of a successful auto repairs business decided to tap into the transport industry and bought into Apple Commuters.


August 10


Establishment of National Taxi Repair Centres (Apple Eishh Fix-It Services) with a view to driving down operating costs and maximising on profits.


May 1


New Head Office and Truck Centre built in Ormonde.


November 15


Apple Commuters is the largest privately owned taxi company in South Africa.


March 18


For R15m Apple Commuters purchases FBI Transport and acquires the skills of Paul C.


January 000


Apple Commuters receives gold-partner status with major manufacturers Toyota, Nissan and Ford securing a combined fleet of 51 taxis.


CHAIRMAN’S REPORT


“We continue to transform Apple Commuters into a broad-based transport business, offering the widest range of service and coverage with the best skills level in transportation.”


Message to our shareholders


Apple Commuters proven strategy of focusing on the commuting of passengers continues to strengthen the company’s already significant standing as a transport leader, and it is pleasing to report that for the rd consecutive year, an excellent set of results notwithstanding tough local market conditions has been achieved.


It is our view that great companies distinguish themselves over long periods.


Apple Commuters operating income increased by . % to 66,500.00 (64,450.00).


Trading Environment


The trading environment remained difficult as the economy did not perform to expected GDP results.


The unexpected and severe currency crises during the course of last year played havoc with rising fuel costs and the importation of spares. A change in supply chain partnerships was inevitable in maintaining margins.


A new strategy in outsourcing repairs has lowered expenses considerably. However, the three increases in prime interest rates up to 17 percent (prime) has over-shadowed many of these cost-cutting efforts.


Acquisition


During the financial year under review, considerable work was carried out on acquisition search and investigation, particularly in Namibia and Botswana. Certain prospects reached an advanced stage of negotiation but were ultimately turned down due to lack of interest and commitment from the other party.





CHAIRMAN’S REPORT (continued…)


Management and Employees


The quality of our management teams and employees has contributed to the success of the group and continues to differentiate us from our competitors. We have a strong, dynamic and entrepreneurial management team with a proven track record.


Outlook


The past year has seen Apple Commuters make further progress in strengthening the company. Looking forward, Apple Commuters increasing focus on international market will remain our core strategy to ensure the maintenance of long-term growth and increased shareholder value.


Appreciation


Apple Commuters ongoing success would not have been possible without a dedicated team of employees who thrill at pushing the limits and who have the courage to dare to imagine what the next opportunities might be. Our people are our business and we extend to our team the gratitude of our shareholders and the Board of Directors for their tremendous commitment and plain hard work throughout the year.


Finally, we extend our appreciation to our loyal customers. Thank you for your confidence in Apple Commuters services. It’s our aim to provide you with even greater satisfaction and value in the year to come.


CORPORATE GOVERNANCE (continued…)


Corporate Governance


For the year ended 1 March 00


The directors of Apple Commuters recognize the need to conduct the business of the enterprise with integrity and in accordance with generally accepted corporate practices. Accordingly, they endorse and have complied broadly with the principles contained in the King Report on Corporate Governance (14) during the period under review. Maintaining compliance at Apple Commuters within the code of corporate practice forms part of the mandate of the company’s audit committee.


Directorate


Apple Commuters has a unitary board structure comprising mainly non-executive directors. The board meets regularly and monitors executive management. The position of the chairperson is a non-executive appointment and is separate from that of the managing director. The chairperson and chief executive provide leadership and guidance. The directors bring together a wealth of experience from their own fields of business and ensure that debate on matters of strategy, policy progress and performance is robust, informed and constructive. The directors have access to the advice and services of the company secretary, who is responsible to the board for ensuring that board procedures are followed. All directors are entitled to seek independent professional advice about the affairs of the company at the company’s expense.


Determination of executive remuneration


The remuneration committee comprises tow non-executive directors. The committee determines the chief executive’s salary and bonus and establishes guidelines relating to cash compensation and benefit arrangements for all employees.


CORPORATE GOVERNANCE (continued…)


Audit Committee


The audit committee comprises to non-executive directors and the chief executive. The chief financial officer and internal and external auditors have unrestricted access to the audit committee and attend the meetings. Meetings are planned to be held three times per year. The audit committee is charged with the responsibility of monitoring the company’s financial controls, accounting policies and financial reporting. It provides a forum through which the independent external and internal auditors report to the board of directors.


Risk assessment


The risks facing Apple Commuters are closely monitored annually. This involves a risk assessment exercise conducted with the assistance of the internal auditors. The risks are assessed at every business level and controls mitigating these risks are identified. This exercise also assists the internal auditors in ensuring that major risks are correctly and appropriately addressed.


Internal Control


The company maintains systems of internal control over financial reporting and safeguarding of assets against unauthorized use, acquisition and disposal.


The systems of internal control incorporate suitable segregation of conflicting duties wherever possible, and the delegation of authority to suitably appointed and trained personnel. The internal audit function has been co-sourced to a specialist internal audit division of Hoffman Fisher PFK Inc.


There are inherent limitations in the effectiveness of any internal control systems, including the possibility of human error and the circumvention of overriding of controls. Accordingly, even an effective internal control system can provide only a limited amount of assurance with respect to financial statement preparation and the safeguarding of assets. Furthermore, the effectiveness of an internal control system can change with circumstances. Corrective action is taken as and when control deficiencies or opportunities for improvement in the systems are identified. Nothing has come to the attention of the board (through the audit committee) to indicate that any material breach of those controls has occurred during the year under review.


CORPORATE GOVERNANCE (continued…)


Staff participation and development


The company subscribes to the principle of equality. As Apple Commuters (Pty) Limited has only 1 permanent employees, a formal employee forum has not been formed. However, weekly meetings are held and all employees participate.


An Employment Equity programme forms part of the group’s training and business programme.


Code of Ethics


The Code of Ethics commits the company to the highest standards of integrity, behaviour and ethics dealing with all its stakeholders, including its directors, managers, employees, customers, suppliers, competitors, investors and society at large. Directors and staff are expected to observe their ethical obligations in such a way as to carry on business only through fair commercial competitive practices.


Environment, health and safety


Apple Commuters values the occupational health and safety of its employees. We take every reasonable precaution to ensure a safe working environment for all its employees. Apple Commuters conducts its business with due consideration for environment issues and has appointed a committee to address the environmental impact of its business activities, as well as all health and safety aspects of the business.


The King Report on Corporate Governance for South Africa 00


The board is reviewing this report and the requisite improvements to the company’s corporate governance procedures and policies will be implemented in the next financial year.


CORPORATE GOVERNANCE (continued…)


Statement of Responsibility by the Board of Directors


The directors are responsible for the preparation, integrity and fair presentation of the financial statement and other financial information included in this report.


The financial statements, presented on pages 16 to have been prepared in accordance with Generally Accepted Accounting Practice, and included amounts based on judgments and estimates made by management.


The going-concern basis has been adopted in preparing the financial statement. The directors have no reason to believe that the Company will not be going concerns in the foreseeable future based on forecasts and available cash resources. The financial statements support the viability of the Company.


The financial statements have been audited by the independent accounting firm, Hoffman Fisher PFK (JHB) INC, which was given unrestricted access to all financial records and related data, including minutes of all meetings of shareholders, the Board of Directors and committees of the Board. The directors believe that all representations made to the independent auditors during the audit were valid and appropriate.


The financial statements, which appear on pages 16 to were approved by the Board of Directors on 17 July 00 and signed on its behalf


Chairman Managing Director


CORPORATE GOVERNANCE (continued…)


Statement of Company Secretary


I, Patrick Sibanda, being the Company Secretary of Apple Commuters (Pty) Limited, certify that all returns required of a public company, have in respect of the year under review been lodged with the Registrar of Companies and that all such returns are true, correct and up to date.


P Sibanda


Company Secretary








AUDITORS’ REPORT


Report of the Independent Auditors


To the members of Apple Commuters (Pty) Limited


We have audited the annual financial statements of Apple Commuters (Pty) Limited as set out on pages x to xx for the year ended 1 March 00. These financial statements are the responsibility of the Company’s directors. Our responsibility is to report on these financial statements based on our audit.


Scope


We conducted our audit in accordance with statements of South African Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. An audit includes


· Examine, on a test basis, evidence supporting the amounts and disclosures in the financial statements;


· Assessing the accounting principles used and significant estimates made by management; and


· Evaluating the overall financial statement presentation.


We believe that our audit provides a reasonable basis for our opinion.


Audit Opinion


In our opinion, the financial statements fairly present, in all material respects, the financial position of the Company and the Group at 1 March 00, and the results of their operations and cash flows for the year then ended in accordance with generally accepted accounting practice and in the manner required by the Companies Act.


Hoffmann Fisher PFK (JHB) INC


Chartered Accountants (SA)


Registration number 14/0066/1


FINANCIAL STATEMENTS


Annual Financial Statements


For the year ended 8 February 00


Ø Income Statement


Ø Balance Sheet


Ø Cash Flow Statement


Ø Ratios


Ø Notes to the Financial Statements





FINANCIAL STATEMENTS


Income Statement of Apple Commuters (Pty) Ltd for year ended 8 February 00.





R 000 R 000 R 000


000 001 00


Turnover 6,.0 64,450.0 66,500.0





Trading Income ,8.0 ,88.0 4,07.0








Interest Received 61.0 6.0 66.0





Interest Paid -1,48.0 -1,511.0 -1,640.0





Income Before Tax 1,545.0 ,45.0 ,.0





Tax -,46.5 -,70.5 -,.





Outside Shareholders interest - - -





Earnings After Tax ,081.5 ,704.5 ,.1





Extraordinary Item - - -





Distributable Income ,081.5 ,704.5 ,.1





Dividends -5,000.0 -5,000.0 -5,000.0





Retained Income 17,081.5 17,704.5 18,.1





FINANCIAL STATEMENTS


Balance Sheet of Apple Commuters (Pty) Ltd as at 8 February 00.





R 000 R 000 R 000


Assets 000 001 00


Fixed Assets 6,86.0 5,5.5 ,55.6


Property & Equipment ,567.5 ,567.5 ,10.6


Transport Fleet 4,4.5 ,55.0 1,450.0





Investments & Loans 1,650.0 1,650.0 1,650.0





Current Assets 5,858. 7,40.1 8,181.5


Debtors 5,60.7 5,81.8 6,557.


Bank 168. 1,58. 1,64.





Total Assets 4,70. 4,574.6 ,84.1





Liabilities


Capital and Reserves


Share capital ,500.0 ,500.0 ,500.0


Retained Income 17,081.5 17,704.5 18,.1


Shareholders interest 0,581.5 1,04.5 1,8.1


Outside Shareholders interest 0.7 0.8 1.0





Non Current Liabilities


Loan 1,5.6 11,57.0 10,00.0





Current Liabilities 1,56.1 1,41. 1,50.0


Creditors 1,56.1 1,41. 1,50.0





Total Liabilities 4,70. 4,574.6 ,84.1





FINANCIAL STATEMENTS


Cash Flow Statement





Notes








CASH FLOWS FROM OPERATING ACTIVITIES





Cash generated by/(utilised from) operations 1 14 64


Cash (utilised)/generated by an (increase)/decrease in working capital (14)


Cash generated by/(utilised from) operating activities 14 81


Taxation paid (10 000)


Dividends Paid (5 000)


Net cash generated from/(utilised in) operating activities (17)








CASH FLOWS FROM INVESTING ACTIVITIES





Purchase of tangible fixed assets 0


Proceeds on disposal of tangible fixed assets 4 44


Interest received 66





Net cash (utilised)/generated from investing activities 4 40








CASH FLOWS FROM FINANCING ACTIVITIES





Interest paid (1 640)


(Decrease)/increase in Loan (1 7)





Net cash from/(utilised in) financing activities ( 567)





Net increase/(decrease) in cash and cash equivalents 744


Cash and cash equivalents at beginning of year 5 81


Cash and cash equivalents at end of year 6 557





check 0








F FINANCIAL STATEMENTSNOTES





1. Cash generated/(utilised) from operating activities





Profit/(Loss) before taxation





Adjusted for


Depreciation 1 4


Finance costs 1 574


Loss/(profit) on disposal of assets (1 867)





14 64





1. Cash (utilised)/generated by an (increase)/decrease in working capital





(Increase)/decrease in inventory 0


(Increase)/decrease in Accounts receivable (5)


Increase/(decrease) in Accounts payable (108)





(14)











FINANCIAL STATEMENTS


Ratios


Ratio Analysis





Liquidity





Current Ratio 4.7 5. 5.4





Profitability





% net profit 5.4% 5.% 5.0%





% Return on Net Assets 66.68% 68.46% 7.%





% Return on Total Assets 64.4% 65.67% 6.8%





% Return on Equity 107.8% 107.07% 106.87%





% Return on Capital Employed 66.68% 68.46% 7.%





Leverage





% debt ratio 40.1% 8.67% 4.60%





% debt to equity 66.% 6.05% 5.0%





Efficiency





Assume COS 50% of sales 1164.50 5.00 50.00





debtors days 6





creditors days 15 16 17











FINANCIAL STATEMENTS


Notes to the financial statements


Revenue 00 001


Rand (000s) Rand (000s)


Cash Fares 1,451 4,11


Pre-Paid Fares ,184 18,87


Service & Repairs 1,865 11,458


66,500 64,450


Operating Expenditure 00 001


Rand (000s) Rand (000s)


Payroll 5,01 5,81


Fuels & Oils 1,01 18,057


Administration 1,11 1,100


Depreciation 775 85


Operating lease charges 4,0 ,4


Other expenses 750 75


1,5 0,617


Net Financing Costs 00 001


Rand (000s) Rand (000s)


Long Term Borrowings 1,505 1,4


Bank and Short Term Borrowing 105 74


Capitalised finance lease 7 7


Interest Received -66 -


1,640 1,511


Taxation 00 001


Rand (000s) Rand (000s)


RSA Normal Taxation - Current Year 8,61 8,744


RSA Normal Taxation - Prior Year 1,0 87


Deferred Taxation - Current Year - -


Deferred Taxation - Prior Year - -


10,000 ,71


Property & Equipment 00 001


Rand (000s) Rand (000s)


Freehold Land & Buildings 1,78 1,58


Plant, Machinery and other 75 86


,10 ,568


FINANCIAL STATEMENTS


Notes to the financial statements


Transport Fleet 00 001


Rand (000s) Rand (000s)


Net Book Value a beginning of year 1,450 0,07


Additions ,74 ,800


(Disposals) -46 -58


Depreciation -775 -85


,55 1,450


Retained Income 00 001


Rand (000s) Rand (000s)


Balance at beginning of year 75,8 58,00


Net profit for this year , ,08


Dividends Paid -5,000 -5,000


4,15 75,8





Share Capital 00 001


Rand (000s) Rand (000s)


Opening Balance ,500 ,500


Issue of new shares - -


repurchase of shares - -


,500 ,500





Long Term Borrowings 00 001


Rand (000s) Rand (000s)


Bond - Repayment Due 00 ,48 ,8


Bond - Repayment Due 004 ,8 ,4


Bond - Repayment Due 005 ,4 5,45


10,00 11,57


Off Balance Sheet Financing 00 001


Rand (000s) Rand (000s)


Value of leased fleet 40,57 40,0


4,0 ,4





OPERATING COSTS


SUMMARY OF


OPERATING EXPENSES FOR PERIOD 00


FINANCIAL HIGHLIGHTS


RECORDED GROWTH OVER THE LAST


THREE FINANCIAL YEARS.








RATIO ANALYSIS


Ratio Analysis


Profitability


Ratio 000 001 00


Net Profit Percentage 5.4% 5.% 5.1%


Gross Profit Percentage _ _ _


Mark Up Percentage _ _ _





Ratio 000 001 00


Return on Total Assets 64.% 65.7% 6.%


Return on Net Assets 5.4% 5.% 5.1%


Return on Capital Employed 107.% 107.1% 106.%


Return on Equity 66.7% 68.5% 7.%


Liquidity


Ratio 000 001 00


Current Ratio 4.7 5. 5.4


Acid Test 4.7 5. 5.4


Leverage


Ratio 000 001 00


Debt Ratio 40.1% 8.7% 4.6%


Debt to equity 66.% 6.1% 5.%


Interest .0 .4 1.


EFFICIENCY


Efficiency


Ratio 000 001 00


Asset Turnover 1.8 1.7 .0


Creditor Days 15 16 17


Debtor Days 6








RISK ANALYSIS


.8 Risk analysis


Using the Ernst and Young risk model as a basis we have compiled a risk profile of the South African organisation as well as comments. The profile is graded as Green = low risk, Yellow = medium risk, Red = high risk.


Area ITEM COMMENT


People & culture Human resource Low staff turnover over the last two years


Legal Liability Liability in accident situation


Contracts All contracts reviewed by lawyers


Legislative Need to review our legislative requirements


Market Interest rate Unstable in South Africa.


Liquidity & credit Collectibility Low bad debts historically, cash business


Cash management Cash business


Reporting Tax Reviewed with auditors


Accounting Reviewed with auditors


Capital structure Debt Good debt history


Stakeholders Supplier Cash purchases


Customer Wide customer base


Government Reviewed with auditors


Governance Reputation Good overall reputation


Strategic planning In the process of reviewing this


Ethics Sound ethics


Corporate monitoring Needs to be reviewed since group changes


Market structure Economics Fair economic practice within the country


Market dynamics Market restricted in project size


Competitor Stable company in an unstable competitor market


Systems Hardware Requirements met


Software Need to review licensing


Information management Operations Need to implement procedures


Planning & develop Need to implement procedures


Process Marketing & selling Need to review documentation


Products and delivery Need to review documentation


Support processes Need to implement procedures


Physical assets Asset base All assets covered by sufficient insurance





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