Financial Results Presentation For the year ended 31 March 2014 1
Executive summary 31 March 2014 Revenue increased by 12,8% to Capital investment increased by 15,6% R56,6 billion. to R31,8 billion. Cash generated from operations after EBITDA increased by 12,3% to working capital changes increase by R23,6 billion. 11,6% to R25,3 billion. Profit for the year increased by Strong volume growth in automotive and 24,9% to R5,2 billion. containers on rail of 25,2%. B-BBEE spend of R38,8 billion or 94,4% of Gearing at 45,9% and cash interest total measured procurement spend for the cover at 3,7 times. year per DTI codes. 2 TRANSNET AUDITED RESULTS 2014
Shareholder’s Compact Rail Ports Financial ratios Ship turnaround time – Durban (hours) Rail volumes (mt) Opex as a percentage of revenue (%) +4% +3% 58 210,4 207,7 201,0 54 53 182,1 51 178,6 46 59,5 58,5 58,9 58,2 56,1 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013* 2014* *Excluding Regulator claw backs. GFB GTK /loco/month (‘000) Ship turnaround time – Cape Town (hours) Return on average total assets (%) -2% -5% 44 7,7 7,7 36 35 6,8 5 239 5 121 5 167 4 973 6,6 6,5 4 786 29 24 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013# 2014# * Excluding Regulator claw backs. Export iron ore GTK /loco/month (‘000) Ship turnaround time – Richards Bay (hours) Cash interest cover (times) +8% -16% 51 983 47 530 4,1 4,2 43 110 3,9 120 3,7 3,7 115 38 310 38 866 112 70 Not applicable 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 3 TRANSNET AUDITED RESULTS 2014
Abridged income statement % 2014 2013 change R million R million Revenue 12,8 56 606 50 194 Net operating expenses excluding depreciation, derecognition and amortisation 13,1 (32 967) (29 143) EBITDA 12,3 23 639 21 051 Depreciation, derecognition and amortisation 15,7 (10 736) (9 277) Profit from operations before items listed below 9,6 12 903 11 774 Impairment of assets, fair value adjustments and other items (63,4) (217) (593) Net finance costs 8,0 (5 551) (5 140) Profit before taxation 18,1 7 135 6 041 Taxation 3,3 (1 964) (1 902) Profit for the year 24,9 5 171 4 139 4 TRANSNET AUDITED RESULTS 2014
Revenue and volumes Revenue (R million) Rail volumes (mt) +1,3% +12,3% +12,8% 210,4 207,7 Coal (-1,4%) 56 606 83,1 Containers and automotive (25,2%) 84,3 50 194 45 900 Mineral mining and chrome (14,2%) 37 952 10,7 13,4 35 610 Iron ore and manganese (-2,2%) 16,2 18,5 Steel and cement (2,4%) 62,9 64,3 Agriculture and bulk (-1,8%) 20,9 21,4 11,1 11,3 2010 2011 2012 2013 2014 2013 2014 Port c ontainers (‘000 TEUs) Revenue contribution by Operating Division* (%) +5,4% TPL 4 641 4 352 4 403 TPT 4 081 4 3 629 13 TNPA 14 TFR 50 19 2010 2011 2012 2013 2014 TE * Excludes specialist units and intercompany eliminations. 5 TRANSNET AUDITED RESULTS 2014
Operating expenses Operating expenses contribution by Operating expenses (R million) cost element (%) +11,7% +13,1% 22 32 967 29 143 27 018 51 22 189 21 201 9 18 21 Personnel costs Material and maintenance costs 2010 2011 2012 2013 2014 Energy costs Other operating expenses 10 Cost-reduction initiatives were implemented by the Company during the year in response to the uncertain economic environment, which resulted in a saving of R2,1 billion, against planned costs. Expenses increased by 13,1% to R33,0 billion mainly due to: • Increase in energy costs of 10,3%, due to the higher electricity tariffs as well as fuel price increases impacted by foreign exchange volatility. • Increase in personnel costs of 14,6% to R16,6 billion (2013: R14,5 billion), due to an average wage increase across the Company relating to the two-year wage agreement concluded with the recognised labour unions of 8,5%, as well as the filling of MDS critical vacancies. 6 TRANSNET AUDITED RESULTS 2014
EBITDA EBITDA contribution by Operating Division* (%) EBITDA (R million) +13,2% +12,3% TPL 23 639 21 051 9 18 882 TPT 15 763 14 409 9 2010 2011 2012 2013 2014 54 TFR EBITDA margin (%) TNPA 25 +1,3% -0,1% 3 41,9 41,8 41,5 41,1 TE 40,5 * Excludes specialist units and intercompany adjustments. 2010 2011 2012 2013 2014 7 TRANSNET AUDITED RESULTS 2014
Depreciation, derecognition and amortisation, net finance costs, taxation and profit for the year Depreciation, derecognition and amortisation (R million) +15,7% Depreciation, derecognition and amortisation of assets for the year increased by 15,7%, mainly as a result of capital investments as 10 736 9 277 well as the depreciation of revalued port facilities and pipelines. This 8 355 7 184 6 089 trend is expected to continue in line with the execution of the capital investment programme. 2010 2011 2012 2013 2014 Net finance costs (R million) +8,0% 5 551 5 140 Net finance costs increased by 8,0%, in line with expectations, due 3 767 2 878 2 436 to increased borrowings to fund the capital investment programme. 2010 2011 2012 2013 2014 Taxation (R million) +3,3% 2 122 1 902 1 964 1 763 1 508 The taxation charge for the year amounted to R2,0 billion. 2010 2011 2012 2013 2014 Profit for the year (R million) +24,9% 5 171 The resulting increase in profit for the year was 24,9%. 4 184 4 139 4 119 3 150 2010 2011 2012 2013 2014 8 TRANSNET AUDITED RESULTS 2014
Abridged statement of financial position 2014 2013 R million R million ASSETS Property, plant and equipment 207 322 176 921 Investment properties 8 572 7 938 Other non-current assets 9 168 5 123 Non-current assets 225 062 189 982 Current assets 15 011 13 914 Total assets 240 073 203 896 EQUITY AND LIABILITIES Capital and reserves 97 113 84 954 Non-current liabilities 117 723 98 543 Current liabilities 25 237 20 399 Total equity and liabilities 240 073 203 896 9 TRANSNET AUDITED RESULTS 2014
Property, plant and equipment (PPE) Property, plant and equipment (R million) +17,2% 8 276 (10 565) 31 766 1 288 (364) 207 322 PPE increased to R207,3 billion. Capital investment 176 921 for the year increased by 15,6%, with R13,3 billion being invested in the expansion of infrastructure and equipment, while R18,5 billion was invested in maintaining existing capacity. March 2013 Additions Revaluation Depreciation Borrowing Other March 2014 costs Return on average total assets (excluding CWIP) (%)* -1,2% 7,7 7,7 6,8 6,6 6,5 Return on average total assets decreased to 6,5% at 31 March 2014. This is as a result of the significant increase in the asset base. 2010 2011 2012 2013* 2014* * Excludes Regulator claw backs. 10 TRANSNET AUDITED RESULTS 2014
Total borrowings Total borrowings (R million) +23,7% 90 444 73 088 60 030 58 132 Transnet raised R22,4 billion for the year and repaid 47 434 borrowings amounting to R8,0 billion. The 23,7% increase is in line with the funding plan. 2010 2011 2012 2013 2014 Gearing (%) +1,3% 45,9 44,6 41,9 41,1 38,8 The gearing ratio increased to 45,9%. The ratio remains below the Group’s target of 50,0%, reflecting significant capacity available to pursue the counter cyclical investment strategy. 2010 2011 2012 2013 2014 11 TRANSNET AUDITED RESULTS 2014
Abridged cash flow statement and funding 2014 2013 % Cash interest cover (times) R million R million change 4,2 Cash and cash equivalents at the beginning of 3,7 3,7 2 598 1 189 118,5 the year 3,0 Cash flows from operating activities 18 709 16 776 11,5 24 043 22 599 6,4 • Cash generated from operations 2012 2013 2014 – 1 315 • Security of supply petroleum levy (100,0) 1 228 (1 273) • Changes in working capital (196,5) 2014 2013 • Other operating activities (6 562) (5 865) 11,9 Sources of funding R billion R billion Cash flows utilised in investing activities (32 067) (27 241) 17,7 GMTN/DFIs/ECAs 9,9 10,8 Cash flows from financing activities 14 393 11 874 21,2 Domestic bonds and Commercial paper 8,5 3,2 Net increase in cash and cash equivalents 1 035 1 409 (26,5) 0,6 Call loans 4,0 Total cash and cash equivalents at the end of Total 22,4 14,6 3 633 2 598 39,8 the year Credit rating: Long-term foreign currency BBB- A3 Stable outlook Negative outlook 12 TRANSNET AUDITED RESULTS 2014
Capital investment analysis – spend for last five years R121,5 billion Capital investment by commodity R billion Other +14,6% 7% Piped products +15,6% 10% Port 31,8 containers 4% 27,5 Export iron ore 6% 22,3 21,5 18,4 Bulk 2% 6% 65% GFB Export coal 2010 2011 2012 2013 2014 Capital investment by operating segment Expansion vs replacement 4% Replacement: R18,5 billion 10% Expansion: R13,3 billion Rail 9% 42% Ports 58% Pipelines 77% Engineering and other Transnet achieved 88,5% of the R31,2 billion budget for 2013 13 TRANSNET AUDITED RESULTS 2014
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