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BITRA: Transnet's Audited Financial Results For The Financial Year End 31 March 2021.
Transnet SOC Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 1990/000900/30)
Issuer Bond Code: BITRA
(“Transnet”, the “Company” or the “Issuer”)
TRANSNET’S AUDITED FINANCIAL RESULTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2021
In terms of section 6.17 of the JSE Debt Listings Requirements, Noteholders are advised that the
audited Annual Financial Statements for Transnet for the year ended 31 March 2021, are available on
the Issuer’s website:
https://www.transnet.net/InvestorRelations/Pages/Annual-Results-2021.aspx
Transnet Performance Reflective of Economic Circumstances
Transnet, as one of the providers of essential services for South Africa, continued to deliver on its
mandate despite nationwide lockdowns since 26 March 2020. However, COVID-19 had a material
adverse impact on the operational performance, financial results and workforce of the Company.
Noteholders are referred to a SENS issued on 12 March 2021 where Transnet advised that its nine
months operational and financial performance as well as the outlook for the 12 months ending
31 March 2021 was negatively impacted by the COVID-19 pandemic.
In the 2021 financial year, Transnet incurred a financial net loss of R8,4 billion, mainly as a result of
the Covid-19 impact on our operations and other expenses that are not normal to our business
operations, either due to their nature or quantum including:
• Unusual environmental management expenses of R1,2 billion
• Provision for unusual third party claims of R3,6 billion
• Impairments of R1,6 billion
Without the impact of the above expenses, Transnet’s net financial loss would have been R3,8 billion
instead of R8,4 billion.
Salient Features and Performance Highlights
• Revenue decreased by 10,5% to R67,3 billion
• EBITDA decreased by 42,8% to R19,5 billion
• Net Loss for the year of R8,4 billion
• Cash generated from operations decreased to R24,4 billion
• Gearing of 48,7% and cash interest cover at 2,0 times
• Capital investment of R15,9 billion
• Debt Service of R29 billion in capital repayments and interest paid
Throughout the COVID-19 crisis, Transnet continued to meet its financial commitments without
requiring any debt service relief from its lenders. Transnet remains cash generative and has not
required government support during the 2021 financial year.
In response to the long-term socio economic shifts and structural changes in the economy, Transnet
has adopted a segment strategy. This represents a fundamental change for Transnet, away from a
divisional, modal service offering to strategic participation and structured collaboration in integrated
commodity supply chains. The new strategy will include partnership models to deliver on the Transnet
shareholder mandate and build resilience in a post-COVID-19 world. Our operational and investment
focus in the coming years will be on the following segments, which account for 80% of our revenue:
• Iron Ore
• Manganese
• Coal
• Chrome
• Magnetite
• Automotive
• Containers
• Agriculture
• Fuel & Gas
Noteholders are advised that the Board has every reason to believe that the Company has adequate
resources and facilities in place to continue in operation for the foreseeable future. The Board is
satisfied that Transnet is a going concern and has continued to adopt the going concern principle in
preparing the Annual Financial Statements.
PFMA Regulatory Environment
The Company’s focus to increase efforts in complying with the Public Finance Management Act (PFMA)
yielded notable achievements, including a condonation relating to the supplier development
contracts. Numerous consequence management cases were finalised and closed by 31 March 2021
and various engagements with National Treasury yielding positive results have taken place.
The current remedial plan has factored in the findings and recommendations made in the past three
financial years’ audit reports
Notwithstanding progress made in the implementation of the remedial plan, Transnet unfortunately
received another audit qualification. This was because of irregular expenditure. It is worth noting that
such expenditure was recorded correctly in the accounting records and in terms of International
Financial Reporting Standards, however some of the expenditure does constitute noncompliance with
PFMA.
National Treasury, however, has issued certain rulings on IE which Transnet has submitted to AGSA to
consider whether it warrants a review of the audit outcome. A SENS will be issued once this matter is
finalised.
The audit qualification has resulted in a breach of loan covenants with an outstanding balance of R19,1
billion as at 30 September 2021. Accordingly, Transnet will engage with affected lenders to request
waivers of their right to accelerating debt repayment consistent with the prior years. Management is
confident that it will receive the required support from affected lenders, as in all the prior years.
Transnet will continue engaging National Treasury and the Department of Public Enterprises to find a
solution for unresolved differences as far as PFMA matters are concerned and in particular matters
arising from the period of state capture.
Material Irregularity
The AGSA implemented the material irregularity process in line with the Public Audit Act. Transnet
was issued with a material irregularity as a result of a non-compliances with Preferential Procurement
Policy Framework Act (PPPFA) for the financial year ended 31 March 2021. Management has
commissioned a forensic investigation to determine whether there is any potential or actual loss
incurred and will implement consequence management where applicable. For further detail on the
material irregularity, refer to note 43 of the annual financial statements.
Restatement of Prior Year Financial Statements
The prior year results required restatements mainly due to a lower materiality and misapplication of
IFRS in previous years. These misstatements were identified and corrected to maintain the
comparability and accuracy of the annual financial statements, resulting in a decrease in net profit of
R1 billion for the 31 March 2020 financial year. For further details, refer to note 39 of the annual
financial statements.
Johannesburg
29 October 2021
JSE Debt Sponsor
Absa Corporate and Investment Bank (a division of Absa Bank Limited)
Date: 29-10-2021 05:42:00
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