Presentation 2019
Contents 1 Performance highlights 2 Operating context 4 Value through the capitals 6 Presentation 18 Audited results 21 Media statement IBC Corporate information For more information SCAN TO DOWNLOAD INTEGRATED REPORT AND ANNUAL FINANCIAL STATEMENTS
Transnet Presentation 2019 1 Performance highlights Revenue increased by 1,6 % to R74,1 billion for the year, supported by a 9,1 % increase in 3,8 % petroleum volumes. Operating expenses EBITDA were contained to R40,3 billion , increased by 3,8 % which represents a R6,8 billion to R33,8 billion , saving against planned costs. with the EBITDA margin increasing from 44,6 % to 45,6 % . 24,7 % Profit for the year Gearing of 44,5 % and cash interest cover increased by 24,7% at 2,9 times are both comfortably within loan to R6,0 billion. covenant requirements. Cash generated from operations increased by 0,7 % to R35,2 billion . Capital investment of R17,9 billion brought expenditure over the past seven years to R183,5 billion . B-BBEE spend amounted to R29,93 billion or 92,62 % of total measured procurement spend per DTI codes. 2,5 % of labour costs was spent on training , focusing on artisans, engineers and engineering technicians. The Company recorded a DIFR ratio of 0,71 – the eighth consecutive year that a ratio below 0,75 has been achieved with the global benchmark being 1,0.
2 Operating context Transnet Satellite offices Corporate Centre Operating Johannesburg context MPUMALANGA > ±30 400 km of track Five Operating GAUTENG Divisions spread Tanzania > 20 953 route km throughout > Core network: Namibia South Africa 12 801 route km Four satellite Swaziland offices in Lesotho, Lesotho Tanzania, Namibia and Swaziland Three joint operating centres Pretoria: Koedoespoort Germiston in Mozambique, Freight Rail Botswana and KWAZULU- Zimbabwe NATAL Bloemfontein FREE Durban STATE Engineering Specialist Units EASTERN CAPE Transnet Group Capital Uitenhage WESTERN National Ports Authority Transnet Property CAPE Salt River Port Terminals Pipelines KWAZULU- NATAL Richards Bay Services provided Durban EASTERN Outbound services CAPE East London South African businesses moving products to Ngqura Saldanha WESTERN CAPE international markets Port Elizabeth Cape Town Mossel Bay Inbound services Bringing products to South African markets Commodities transported Mining exports, general freight and petroleum products KWAZULU- NATAL Richards Bay General freight Durban Containerised cargo, local manganese, minerals, local coal, local iron ore, chrome and EASTERN CAPE ferrochrome, agricultural products, iron and East London Ngqura steel, fertilisers, cement, fast-moving Saldanha WESTERN CAPE Port Elizabeth consumer goods, bulk liquids, wood and wood Cape Town products, industrial chemicals, intermediate products and automotive products Petroleum products Crude oil, refined petroleum products, aviation GAUTENG turbine fuel and methane-rich gas products Johannesburg KWAZULU- NATAL Durban
Transnet Presentation 2019 3 Operating Divisions’ overview Fixed-term contract Employees Total Permanent SCAN TO DOWNLOAD OPERATING DIVIONS REPORT Rail corridor throughout South Africa Employees Revenue R43,6 28 868 29 % 2,66 % TFR TFR 26 312 billion People with 71 % disabilities 2 556 Koedoespoort, Germiston, Bloemfontein, Durban, Uitenhage, Salt River Employees Revenue R10,5 10 866 24 % 1,90 % TE 10 370 billion People with 76 % disabilities 496 Richards Bay, Durban, East London, Ngqura, Port Elizabeth, Mossel Bay, Saldanha, Cape Town Employees Revenue R12,5 4 199 35 % 2,12 % TNPA People with billion 4 182 disabilities 65 % 17 Richards Bay, Durban, East London, Ngqura, Port Elizabeth, Cape Town, Saldanha Employees Revenue R13,1 9 357 29 % 1,22 % TPT 7 392 billion People with disabilities 71 % 1 965 Durban – Johannesburg Employees Revenue R5,3 706 34 % 1,98 % TPL People with billion 672 disabilities 66 % 34
4 Value through the capitals Value through the capitals MEASURE 2018 2019 Financial capital Revenue R billion 72,9 74,1 Operating expenses R billion 40,4 40,3 Cash and cash equivalents ROTA % 5,9 5,8 Total capital borrowings EBITDA margin % 44,6 45,6 Finance income Profjt R billion 4,9 6,1 Gearing % 43,4 44,5 Cash interest cover times 3,0 2,9 Manufactured capital Capital expenditure Property, plant and equipment R billion 21,8 17,9 (including accruals) Rail track Infrastructure maintenance spend R billion 16,4 14,7 Pipeline infrastructure Depreciation and amortisation R billion 13,7 14,3 Information and communications technology (ICT) Net impairment of assets R billion 1,4 2,7 infrastructure Number of permanent employees Number 51 324 50 798 Human and intellectual capitals Personnel cost R billion 25,7 26,8 Skilled, healthy and motivated workforce Training spend R million 741 740,8 Standard operating procedures Training spend (as % of labour cost) % 2,9 2,5 Policies, frameworks, management systems and processes Engineering trainees Number 100 60 Effjcient and reliable leadership team delivering Investment in R&D R million 147 275 on our mandate Technology transfer/intellectual property % 0,93 0,74 National pool of skilled artisans and engineers (% of TMPS) Research and development DIFR Rate 0,73 0,71 Social capital Total CSI spend R million 219 151 B-BBEE spend R billion 25,8 29,9 Transactional, collaborative and constructive relationships with stakeholders Committed supplier development R billion 63,4 4,96 Engaged workforce Patients treated on Phelophepa train Number 157 418 91 588 Social licence to operate Energy-effjciency improvement % 0,9 0,5 Carbon emissions mtCO 2 e 4,0 3,78 Natural capital Used oil reclaimed 202 140,9 K Natural resources we use to enable us to operate (water, air, energy, etc.) Alien invasive species eradicated Ha 1 307 1 158 Land on which to run operations Number of pipeline spillages Number 0 2 Biodiversity and ecosystem health Asbestos waste removed Tonnes 929,8 49,2
Transnet Presentation 2019 5 Strategies to preserve or create value Introducing stringent Managing working capital to meet target levels Maintaining a strong capital base to maintain cost-containment initiatives to reduce costs investor, creditor and market confjdence to across operations support future growth of the business Ensuring adequate reinvestment in the business and maintaining a Maintaining a capital-to-debt structure Maintaining a cash interest cover of at least stand-alone investment grade credit rating (gearing) below maximum parameters (< 50%) 2,5 times Ensuring integrated management of projects Strictly adhering to the capital maintenance Advancing Transnet’s inland terminal strategy through the Integrated Capital Projects programme and cultivating a culture of and addressing infrastructure and rolling stock Programme maintenance and preservation of existing maintenance requirements assets Structuring and maintaining the information Applying Transnet’s Value Chain Coordinator technology network for more reliable (TVCC) in operations to streamline activity Optimising Transnet’s property portfolio connectivity Implementing and embedding the Integrated Contributing towards the development Providing apprenticeship opportunities Management System (IMS) across all of young professionals through young through the young engineers and technicians in operations professionals in training programmes training programmes Developing and implementing an integrated Developing intellectual property through Embedding a zero-harm safety culture across training plan for key procurement staff research and development operations As part of Transnet’s strategic plans to create Transnet has developed a three-year plan Transnet’s Phelophepa Healthcare programme enterprise development programmes that (Stakeholder Engagement Plan 2021) that is a CSI fmagship project across eight of South expand opportunities to communities where sets out precise actions required to rebuild Africa’s nine provinces that is in its 25th year the Company operates, there are currently relations particularly with our Shareholder, of operation, and provides experiential learning fjve enterprise development hubs for small Government, investors, funders, customers, opportunities to an estimated 2 500 healthcare businesses and entrepreneurs with the fjfth regulators, communities as well as employees students per annum mega-hub offjcially launched in March 2019 in Empangeni, north of KwaZulu-Natal Transnet’s approach to natural capital Through the modal shift of cargo from road to Our integrated asbestos and hydrocarbon management encompasses energy effjciency, rail we aim to lower carbon emissions in the clean-up programmes enable us to manage climate change mitigation and adaptation, transport sector, especially for the hauling of the impact of historical environmental water stewardship, biodiversity management large volumes of high-density freight over contamination and enhancement, and land use management long distances
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