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Transnet SOC Ltd Interim Results
Reviewed Condensed
Consolidated Interim Results
fOR the sIx mOnths ended 30 September,2012
Income statement Statement of financial position Overview
PERFORMANCE 6 months 6 months 12 months 30 September 30 September 31 March Despite the continued economic uncertainty during the period, the Company
ended ended ended 2012 2011 2012 has sustained its financial and operating performance, which has resulted in
SUMMARY 30 September 30 September 31 March
As at
(in Rand million) Reviewed Reviewed Audited EBITDA growth driven primarily by higher rail volumes a key component of the
2012 2011 2012 Market Demand Strategy (MDS). During the period the Company concentrated on
for the period ended ASSETS
(in Rand million) Reviewed Reviewed Audited executing the capital expenditure programme by employing additional skills and
through building capacity.
Continuing operations Non-current assets 175 187 155 613 165 380
Revenue 24 909 22 438 45 900 Property, plant and equipment 165 326 145 276 155 953
Group operating performance continuing operations
Net operating expenses excluding Revenue for the period increased by 11,0% to R24,9 billion (2011: R22,4 billion),
Investment properties 7 938 7 503 7 732 mainly as a result of a 7,5% growth in volumes railed, with coal, iron ore and
depreciation and amortisation (14 818) (13 014) (27 018)
Revenue Profit from operations before Intangible assets 507 413 586 manganese volumes increasing by 9,2% as well as strong growth in the
automotive and container sectors of the business. Port container and petroleum
depreciation, amortisation and items Investments in associates and joint volumes have remained flat compared to the prior period due to subdued
increased by listed below (EBITDA) 10 091 9 424 18 882 ventures 85 75 72 economic growth. Future price increases will be guided by a combination of
11,0% to Depreciation and amortisation
Profit from operations before the items
(4 923) (3 933) (8 355)
Derivative financial assets 653 1 809 467
volume increases, operational efficiency gains and capital investments, thus
allowing the Company to earn a fair return on invested capital.
listed below: 5 168 5 491 10 527 Long-term loans and advances 4 17 2 Operating costs increased by 13,9% to R14,8 billion (2011: R13,0 billion) mainly
R24,9 billion Impairment of assets (159) (335) (342)
Other investments and long-term
due to an increase in input costs such as material costs of 47,9%, an increase in
personnel costs of 13,8% as well as increased energy costs of 25,5%. Material
Post-retirement benefit obligation income 40 77 31 financial assets 674 520 568
costs increased in response to the higher levels of maintenance incurred to
Fair value adjustments 113 (83) (202) support volume growth. Personnel costs increased to R9,7 billion due to an 8,4%
Current assets 19 596 14 678 12 625
Income/(loss) from associates and joint average wage increase during the period as well as an increase in headcount in
ventures 14 (4) (6) Inventories 3 090 2 699 2 591 response to rolling out the MDS. Energy costs increased mainly due to the higher
Profit from operations before net electricity tariffs as well as fuel price increases experienced during the period.
Trade and other receivables 6 359 5 909 5 615
Finance costs 5 176 5 146 10 008 Consequently, earnings before interest, taxation, depreciation and amortisation
Current taxation asset 209 (EBITDA) increased by 7,1% to R10,1 billion (2011: R9,4 billion), while the EBITDA
Finance costs (2 672) (2 166) (4 255)
Derivative financial assets 61 214 35 margin declined to 40,5% (2011: 42,0%).
Finance income 201 276 488
EBITDA Profit before taxation
Taxation
2 705
(938)
3 256
(917)
6 241
(2 122)
Other short-term investments 1 709 1 746 2 755
Depreciation and amortisation of assets for the period increased by 25,2% to
R4,9 billion (2011: R3,9 billion), as a result of the significant ramp up in capital
Cash and cash equivalents 8 166 3 863 1 189 investments over the last five years, as well as depreciation of revalued port
increase of Profit for the period from continuing facilities and pipelines. This trend is expected to continue in line with the
operations 1 767 2 339 4 119 Assets classified as held-for-sale 211 247 231 execution of the capital investment programme.
7,1% to Discontinued operations
Profit from operations after depreciation and amortisation decreased by 5,9%
Total assets 194 783 170 291 178 005
Loss from discontinued operations (21) to R5,2 billion (2011: R5,5 billion).
R10,1 billion Profit for the period 1 767 2 318 4 119 EQUITY AND LIABILITIES
Impairment of assets, amounting to R159 million (2011: R335 million) reflects a
Capital and reserves 81 051 76 745 79 421 decrease compared to the prior period due mainly to improved collection from
the Passenger Rail Agency of South Africa (PRASA).
Statement of comprehensive income Issued capital 12 661 12 661 12 661
Post-retirement benefit obligations are actuarially assessed on a quarterly basis
6 months 6 months 12 months Reserves 68 390 64 084 66 760 in accordance with IAS 19: Employee Benefits, and adjusted accordingly.
ended ended ended Consequently a net return on pension assets of R40 million (2011: R77 million)
30 September 30 September 31 March Non-current liabilities 96 470 73 719 79 846 was recognised during the period.
for the period ended 2012 2011 2012
Employee benefits 3 454 3 268 3 322 The fair value adjustment results mainly from the investment property fair value
(in Rand million) Reviewed Reviewed Audited
gain of R167 million, recognised in terms of IAS 40: Investment Property. This
Profit for the period 1 767 2 318 4 119 Long-term borrowings 66 370 49 475 52 566
gain was slightly offset by losses in mark to market of derivative financial
A significant Other comprehensive income (171) 1 079 2 338 Derivative financial liabilities 81 77 82 instruments for the period. More specifically, these losses arose from the mark
to market of foreign exchange hedges that Transnet executed to eliminate
Exchange differences on translation Long-term provisions 1 811 1 236 1 626
improvement in of foreign operations 1
Deferred taxation liabilities 18 952 16 657 18 050
foreign currency risk and those hedges which have not been hedge accounted in
terms of IAS 39: Financial Instruments: Recognition and Measurement.
Gains on revaluations 877 1 170 2 899
volumes railed (Loss)/gain on cash flow hedges (653) 135 (61) Other non-current liabilities 5 802 3 006 4 200
Accordingly, net profit from operations before net finance costs increased by
0,6% to R5,2 billion (2011: R5,1 billion).
Actuarial loss on post-retirement benefit Current liabilities 17 262 Finance costs increased by 23,4% to R2,7 billion (2011: R2,2 billion) in line with
increase in coal, obligations (395) (226) (501)
19 827 18 738
expectations, due to increased borrowings to fund the capital investment
iron ore and Taxation relating to components of other Trade payables and accruals* 10 730 8 892 11 151 programme. Capitalised borrowing costs amounted to R490 million (2011:
comprehensive income 34 (318) (702) R811 million) a decrease of 39,6% mainly due to the lower costs capitalised to the
Short-term borrowings 4 823 9 772 5 566
Manganese volumes Other comprehensive income for the
New Multi-Product Pipeline (NMPP) assets compared to the prior period.
period, net of taxation (137) 761 1 636 Current taxation liability 79 9
The taxation charge for the period amounted to R938 million (2011:
of 9,2% Total comprehensive income for Derivative financial liabilities 41 71 62 R917 million), comprising a current taxation charge of Rnil (2011: Rnil) and a
deferred taxation charge of R938 million (2011: R917 million). The increase in the
the period 1 630 3 079 5 755
Short-term provisions 1 076 831 934 deferred taxation charge arose mainly due to an increase in wear and tear
allowances claimed and maintenance expenditure. The effective taxation rate
Other current liabilities* 513 236 1 025
for the Group at 34,7% (2011: 28,2%) is higher than corporate taxation rate,
Statement of cash flows Liabilities directly associated with assets primarily due to depreciation on assets not qualifying for taxation allowances.
6 months 6 months 12 months classified as held-for-sale 16 Profit for the period from continuing operations amounted to R1,8 billion (2011:
ended ended ended R2,3 billion), a decrease of 24,5%.
30 September 30 September 31 March Total equity and liabilities 194 783 170 291 178 005
for the period ended 2012 2011 2012 Commentary on Operating division performance
(in Rand million) Reviewed Reviewed Audited * Short-term deferred income relating to regulated clawbacks has been reallocated from trade payables and
Transnet Freight Rail (Freight Rail)
Capital Cash flows from operating activities 7 117 6 241 17 910
accruals to other current liabilities in September 2011: R236 million.
Revenue for the period increased by 19,5% to R15,8 billion compared to
Cash generated from operations 10 926 9 984 20 616
expenditure Security of supply petroleum levy 658 328 1 315 Headline earnings summarised reconciliation
R13,2 billion in the prior period. The increase in revenue is attributable to an
increase in freight moved by Freight Rail to 103,3mt (2011: 96,1mt) representing
a 7,5% increase compared to the prior period.
up 34,5% to
Changes in working capital (1 817) (2 040) 781 6 months 6 months 12 months
Cash generated from operations after ended ended ended In an attempt to grow volume and to improve customer satisfaction, the division
changes in working capital 9 767 8 272 22 712 30 September 30 September 31 March changed its operating model to customer facing business units while continuing
to roll out the scheduled railway philosophy.
R12,8 billion Finance costs (2 630) (2 158) (4 233) for the period ended
(in Rand million)
2012
Reviewed
2011
Reviewed
2012
Audited Coal business unit volumes increased by 7,8% to 41,6mt (2011: 38,6mt). Growth
Finance income 200 276 407 in volumes is attributable to improved operational efficiencies after the
Profit for the period attributable to
Taxation refunded/(paid) 289 317 (95) deployment of new locomotives and scheduled infrastructure maintenance.
the equity holder 1 767 2 318 4 119
Settlement of post-retirement benefit The iron ore and manganese business unit moved 31,7mt, an 11,2% increase
obligations (160) (131) (270) Loss/(profit) on the disposal of property, compared to the prior period (2011: 28,5mt). Iron ore and manganese achieved
plant and equipment 15 (44) (39) new record-breaking weekly performances during the current period signifying
Derivatives settled and raised (349) (335) (611)
growth, attributable to the capital expenditure and improved operational
Cash flows utilised in investing activities (12 280) (10 402) (24 661) Total remeasurements (165) (177) (268) efficiencies.
Investments to maintain operations (7 592) (4 502) (10 367) Reversal of impairment of The containers and automotive business unit posted an increase of 19,0% to
Investments to expand operations (4 535) (5 714) (13 194) discontinued operations (2) 5,0mt (2011: 4,2mt), evidencing market share growth. This business unit was
Cash generated Changes in investments, loans, advances Investment property fair value
used to pilot the scheduled railway operating model concept, and therefore
and other investing activities (153) (186) (1 100) experienced significant improvement in volumes railed.
from operations Cash flows from/(utilised in) financing
adjustments (167) (201) (353)
Mineral mining and chrome volumes increased marginally by 5,1% to 8,2mt
activities 12 140 (2 852) (2 936) Impairment of property, plant and compared to the prior period (2011: 7,8mt). The marginal growth in volumes is
after changes in Borrowings raised 14 719 1 901 11 110 equipment 2 26 150 mainly attributable to the decline in global demand mainly affecting chrome.
working capital Borrowings repaid (2 579) (4 753) (14 046) Impairment reversal of assets held-
for-sale (66)
Steel and cement business unit volumes slightly increased to 11,0mt compared to
prior period (2011: 10,9mt), reflecting a 0,9% increase due to the slowdown in
Net increase/(decrease) in cash and cash economic growth and reduced demand from customers.
equivalents 6 977 (7 013) (9 687)
increased by Impairment of associates 1 Agriculture and bulk business unit volumes decreased by 4,9% to 5,8mt compared
Cash and cash equivalents at the
18,1% to beginning of the period 1 189 10 876 10 876 Total taxation effects of adjustments 27 33 53
to the prior period (2011: 6,1mt). The decline in volumes is mainly attributable to
the migration of some customers in the energy (fuel) sector to the 24 inch multi-
Total cash and cash equivalents at the product pipeline and a slow start to the grain season.
end of the period 8 166 3 863 1 189 Headline earnings 1 644 2 130 3 865
R9,8 billion Net operating expenses increased by 19,8% for the period to R10,0 billion
compared to R8,3 billion in the prior period. This was as a result of an increase in
personnel costs of 37,4% which is attributable mainly to an increase in
Statement of changes in equity headcount, in line with the MDS and an 8,4% average wage increase during the
Foreign period, an average increase in electricity tariffs of 24,0% and an increase in fuel
cost of 32,0% mainly due to increased volumes railed as well as an increase in
currency Actuarial Cash flow
fuel prices.
for the period ended Issued Revaluation translation gains hedging Other Retained
(in Rand million) capital reserve reserve and losses reserve reserve earnings Total This resulted in an EBITDA of R5,8 billion (2011: R4,9 billion) an increase of 18,9%
from the prior period.
Opening balances as at 1 April 2011 12 661 28 547 19 2 348 (32) 249 29 874 73 666
Other comprehensive income for the period (net of taxation) 837 (162) 86 2 318 3 079 Transnet Rail Engineering (Rail Engineering)
8 456 direct Transfer to retained earnings (net of taxation) (18) 18 Rail Engineerings internal revenue increased by 25,6% to R5,7 billion compared
to R4,5 billion in the prior period. The increase was due to Freight Rails increased
and indirect Balances as at 30 September 2011 12 661 29 366 19 2 186 54 249 32 210 76 745 demand for maintenance as well as the upgrade of locomotives and wagons to
support volume growth under the MDS. Rail Engineerings external revenue
Other comprehensive income for the period (net of taxation) 1 205 1 (201) (130) 1 801 2 676
increased by 7,1% to R561 million (2011: R524 million) mainly due to locomotive
jobs created Transfer to retained earnings (13) 13 and wagon sales into the African market.
Balances as at 31 March 2012 12 661 30 558 20 1 985 (76) 249 34 024 79 421 Net operating expenses increased by 24,3% to R5,5 billion (2011: R4,4 billion)
mainly due to a 7,5% increase in personnel costs and a 40,8% increase in
Other comprehensive income for the period (net of taxation) 622 (289) (470) 1 767 1 630
material costs as a result of increased activity levels.
Balances as at 30 September 2012 12 661 31 180 20 1 696 (546) 249 35 791 81 051
This resulted in a 18,8% increase in EBITDA to R713 million (2011: R600 million).
Segment information
Transnet Transnet Transnet National Transnet Transnet Total reportable
Freight Rail Rail Engineering Ports Authority Port Terminals Pipelines segments Other* Total Transnet
6 months 6 months 12 months 6 months 6 months 12 months 6 months 6 months 12 months 6 months 6 months 12 months 6 months 6 months 12 months 6 months 6 months 12 months 6 months 6 months 12 months 6 months 6 months 12 months
ended ended ended ended ended ended ended ended ended ended ended ended ended ended ended ended ended ended ended ended ended ended ended ended
30 sept 30 Sept 31 March 30 sept 30 Sept 31 March 30 sept 30 Sept 31 March 30 sept 30 Sept 31 March 30 sept 30 Sept 31 March 30 sept 30 Sept 31 March 30 sept 30 Sept 31 March 30 sept 30 Sept 31 March
For the period ended 2012 2011 2012 2012 2011 2012 2012 2011 2012 2012 2011 2012 2012 2011 2012 2012 2011 2012 2012 2011 2012 2012 2011 2012
(in Rand million) Reviewed Reviewed Audited Reviewed Reviewed Audited Reviewed Reviewed Audited Reviewed Reviewed Audited Reviewed Reviewed Audited Reviewed Reviewed Audited Reviewed Reviewed Audited Reviewed Reviewed Audited
External revenue 15 271 13 056 27 371 561 524 1 477 3 740 4 043 7 423 3 759 3 544 7 053 1 325 1 052 2 093 24 656 22 219 45 417 253 219 483 24 909 22 438 45 900
Internal revenue 499 143 287 5 652 4 500 9 789 466 417 834 1 1 2 2 1 3 6 620 5 062 10 915 (6 620) (5 062) (10 915)
Total revenue 15 770 13 199 27 658 6 213 5 024 11 266 4 206 4 460 8 257 3 760 3 545 7 055 1 327 1 053 2 096 31 276 27 281 56 332 (6 367) (4 843) (10 432) 24 909 22 438 45 900
Earnings before interest, taxation,
depreciation and amortisation
(EBITDA) 5 801 4 877 10 541 713 600 1 042 2 914 3 363 5 753 1 080 1 247 2 211 1 003 792 1 502 11 511 10 879 21 049 (1 420) (1 455) (2 167) 10 091 9 424 18 882
Total assets** 71 750 59 997 65 851 8 873 7 507 8 400 65 210 62 245 64 313 15 730 13 024 13 504 25 937 22 201 24 760 187 500 164 974 176 828 7 072 5 070 946 194 572 170 044 177 774
Total liabilities** 42 693 34 217 38 712 5 430 4 478 5 179 38 442 33 237 33 598 7 819 6 754 7 084 15 403 12 699 14 674 109 787 91 385 99 247 3 945 2 145 663 113 732 93 530 98 584
Capital expenditure*** 8 176 6 122 14 792 438 214 722 780 694 1 749 516 361 1 472 1 256 2 440 4 507 11 166 9 831 23 242 1 677 (283) (983) 12 843 9 548 22 259
Cash generated from operations
after changes in working capital 4 226 4 386 13 056 206 376 1 298 4 736 3 440 7 440 951 1 230 2 506 1 234 # 707# 2 917# 11 353 10 139 27 217 (1 586) (1 867) (4 505) 9 767 8 272 22 712
* Other includes other segments, inter-unit eliminations and consolidation adjustments. *** Capital expenditure excludes the effects of borrowing costs, includes capitalised leases and decommissioning liabilities.
** Excludes assets and liabilities held-for-sale. # Includes an amount of R658 million (September 2011: R328 million, March 2012: R1 315 million) relating to the levy on the NMPP.
Date: 22/11/2012 12:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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