R16,3 billion, significantly higher increased by 17,6% to a 7,9% - PowerPoint PPT Presentation

 Revenue increased by 13,8% to  EBITDA increased by 17,7% to  Cash generated from operations R37,1 billion, underlined by: R16,3 billion, significantly higher increased by 17,6% to  a 7,9% increase in general freight than SA’s GDP growth of 0,5%*. R17,2 billion, reflecting our strong volumes; cash generating capability.  a 6,5% increase in export coal railed volumes; and  a 11,4% increase in railed automotive and container  Profit for the period increased to  Borrowings of R9,9 billion raised volumes. R3,4 billion (2016: R1,0 billion), and R9,5 billion repaid during the more than 230% higher than the period, reflecting the strength of prior period. Transnet’s financial position.  Operating expenses increased by 10,9% to R20,8 billion, mainly due to:  the increase in variable costs in line with higher volumes, with  Gearing at 44,0% and cash interest resultant increases in personnel, cover** (CIC) at 3,0 times, are fuel and electricity costs. significantly within loan covenant  Savings of R2,2 billion were achieved requirements. against planned costs. * The above GDP is calculated on the latest BER estimates for comparative periods (Apr-Sept 2017 vs Apr-Sep 2016). ** Excluding working capital changes.

 Capital investment of R8,9 billion.  Disabling Injury Frequency Rate  B-BBEE spend: R15,8 billion (87,8% of  Brings expenditure during the (DIFR): 0,72. total measured procurement spend  On track to record the seventh MDS period to R153 billion. (TMPS) per the DTI codes).  541 locomotives accepted  Black-owned enterprises spend of consecutive year that the into operations since the Company outperformed the R6,4 billion (40,5% of TMPS).  Black women-owned enterprises inception of the locomotive target of 0,75 and the global acquisition contracts in 2014. benchmark of 1. spend of R2,5 billion (15,8% of  We regret to report the passing TMPS).  Transnet was rated a Level 2 B- on of Mr Edgar Masilela, construction manager from BBEE contributor in 2016.  2,8% of personnel costs invested in Transnet Group Capital during training. Focus on: the period.  Artisans.  R104,3 million committed to sustainable  The Company continues to  Engineers. community development programmes proactively strive ‘towards zero  Engineering technicians. across South Africa. harm’ .  132 033 patients treated on board the Phelophepa trains.  334 734 individuals benefitting from community outreach services.

VOLUMES 7,9 General freight (GFB) (mt) 82,6 88,0 90,6 84,0 88,1 43,1 46,5 6,5 Export coal (mt) 69,2 68,1 76,3 72,1 73,8 35,5 37,8 1,7 Export iron ore (mt) 55,9 54,3 59,7 58,1 57,2 28,8 29,3 5,8 Total rail 207,7 210,4 226,6 214,2 219,1 107,4 113,6 6,1 Containers (TPT) ('000 TEUs) 4 237 4 503 4 571 4 366 4 396 2 234 2 370 Petroleum (M ℓ ) 15 882 16 583 17 186 17 426 16 978 8 575 8 324 (2,9) FINANCIALS Revenue (including claw back) 50 194 56 606 61 152 62 167 65 478 32 604 37 096 13,8 EBITDA (including claw back) 21 051 23 639 25 588 26 250 27 557 13 865 16 318 17,7 Capital investment 27 471 31 766 33 565 29 561 21 438 9 422 8 948 (5,0) Total assets 203 896 240 073 328 439 356 393 351 635 351 727 362 363 3,0 Total borrowings 73 088 90 444 110 377 134 517 124 780 127 685 126 229 (1,1) RATIOS/STATISTICS EBITDA margin (%) 41,9 41,8 41,8 42,2 42,1 42,5 44,0 Gearing (%) 44,6 45,9 40,0 43,1 44,4 43,8 44,0 Cash interest cover (times)* 3,7 3,5 3,2 3,0 2,8 2,6 3,0 FFO/Debt (S&P) (%) 21,6 20,7 17,2 13,6 13,0 13,3 16,2 FFO/cash interest coverage (S&P) (times) 3,5 3,4 3,0 2,8 2,1 2,1 2,6 Return on total average assets 7,7 6,6 6,4 3,7 4,6 3,8 5,9 Net debt/EBITDA 3,3 3,5 3,7 4,1 4,2 4,0 3,7 Group operational efficiency (%) 3,3 13,8 16,6 15,9 14,9 13,7 3,6 Real GDP growth (%) 2,2 1,5 1,4 0,6 0,7 0,7 0,5 * Excluding working capital changes.

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Sept 2017 vs prior period Weighted group volume performance Prior period +6,3% Revenue excluding claw back 6,1 5,8 +12,5% Revenue including claw back +13,8% EBITDA excluding claw back +14,7% (2,9) Ports Pipelines Rail EBITDA including claw back +17,7% Depreciation (19,8%) Transnet's performance was exceptional in the context of a depleted economy, with EBITDA growth of 17,7%, in spite of GDP growth tracking below expectations: Finance cost +5,7% Capital investment (5,0%) 2012/13 1 st year of MDS 2,8% Sept 2017 Cash interest cover (times)*^ +0,4 latest BER estimate 0,5% 2017/18 Budget Gearing* +0,2% 1,0% * Absolute variance. ^ Excluding working capital changes.

+13,8% Claw back +5,8% 37 096 32 604 General freight +7,9%* 113,6 107,4 Export coal +6,5%* 36 475 46,5 43,1 32 422 Export iron ore +1,7%* 37,8 35,5 621 182 28,8 29,3 2016 2017 2016 2017 Exceptional in the context of a sluggish economy . +6,1% TPL 5 TPT 2 370 2 234 15 2016 2017 53 TFR TNPA 16 ℓ -2,9% 8 575 8 324 11 TE 59% of Transnet’s revenue is guaranteed as a result of regulated entities and take or 2016 2017 pay contracts. * Variance % prior year.

Personnel costs +10,9% 19 95,4 90,4 Electricity costs 84,4 20 778 18 739 73,0 Fuel costs 69,6 67,6 17,0 14,3 14,9 4 24,7 21,0 20,8 20,7 Material and maintenance 23,7 17,5 11,3 10,5 9,1 Other operating expenses 6 60 11 2016 2017 Net operating expenses increased by 10,9% , mainly due to: Cost-reduction initiatives implemented throughout the Company resulted in a • the increase in variable costs in line with higher volumes, with resultant R2,2 billion saving against planned costs. These initiatives included: • increases in personnel, fuel and electricity costs. Reduction in professional and consulting fees; and • Limit on discretionary costs as it relates to travel, accommodation, printing, These three cost categories represent 77% of net operating expenses. stationery and telecommunications.

+17,7% TPL** Claw back 16 318 10 13 865 TPT 13 12 15 697 13 683 57 56 TFR 621 182 20 23 TNPA** 2016 2017 -1 -1 TE * +1,5% 44,0 42,5 EBITDA at 17,7% , well in excess of SA’s GDP growth of 0,5%. Regulated entities (33%) and take or pay contracts (40%) represent 73% of Group EBITDA. 2016 2017 * Absolute variance. ** Regulated entities.

-19,8% 8 015 6 428 Depreciation, derecognition and amortisation of assets decreased by 19,8%, mainly due to the annual useful life adjustments to rolling stock and the re-phasing of capital investments to align with lower market demand. 2016 2017 -35,4% 914 Impairment of assets relates primarily to impairments of trade and other receivables, as 590 well as index valuation impairments on port operating assets. 2016 2017 +5,7% 4 707 4 452 Finance costs increased by 5,7%, in line with expectations, due to the increased cost of borrowings. 2016 2017

+3,5% PPE by 3,5% to R322,8 billion. 6 337 Due to: • capital investment of R8,9 billion. 1 835 322 773 ̶ Expansion: R2,1 billion; and 8 948 (39) ̶ Sustaining: R6,8 billion. (6 235) • R153 billion invested in the past five years. • R229,2 billion (including a R20 billion ‘ war chest’ for revenue diversification 311 927 planned up to 2023/24). 541 electric and diesel locomotives accepted into operations, in terms of the March Additions Reval. Deprec. Borrowing Impairment Sept 2017 contracts for 1 319 new locomotives signed in 2014. 2017 costs and other * +2,1% 5,9 3,8 Return on total average assets of 5,9% represents an absolute increase of 2,1% compared to the prior period, mainly due to a 69,1% increase in operating profits. 2016 2017 * Absolute variance. ** Excluding capital work in progress and Regulator claw backs.

+1,2% 126 229 124 780 Raised R9,9 billion without government guarantees and repaid borrowings of R9,5 billion . March 2017 Sept 2017 * -0,4% The gearing ratio by 0,4% . 44,4 44,0 • Below the target range of 50,0%; and • Well below the triggers in loan covenants. Gearing ratio not expected to exceed the target ratio over the medium-term. March 2017 Sept 2017 Reflects available capacity to continue investment strategy, aligned to validated demand. 3,0 2,6 Transnet’s strong cash -generating capability resulted in CIC of 3,0 times which is significantly higher than the triggers in loan covenants. 2016 2017 * Absolute variance. **Excluding working capital changes.