INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014 presentations/Transnet Inte… ·...

1

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014 29 October 2014

Presented by Mr Brian Molefe, Group Chief Executive

Investor and Media

Agenda

Macro economic context

Executive summary

Actual performance to date in perspective

Financial results

Capital investment

Volumes and operations

Socio-economic and sustainability

Conclusion

2 TRANSNET INTERIM RESULTS 2014

3

Macro-economic context is significantly worse than 12

months ago

12 months ago Today

▪ Global GDP growth 3,6 3,8

▪ BRICs GDP growth

– China 7,3 7,1

– Brazil 2,5 1,4

– India 5,1 6,4

– Russia 3,0 0,5

▪ Iron ore 132,67 82,38 $/ton

▪ Thermal coal price 80,65 67,86 $/ton1

1. Richards Bay 6 000kcal

▪ Crude oil (Brent) 107,66 85,83 $/bbl

▪ GDP growth 2,9

1,4 %

%

%

%

%

%

▪ Rand/$ 9,90 10,95

▪ Inflation (CPI) 5,5 5,9 %

▪ Current account deficit 5,9 6,2 % of GDP

South African indicators

Global indicators

TRANSNET INTERIM RESULTS 2014


Executive summary 30 September 2014

Cash generated from operations after

working capital changes increased by

57,4% to R17,7 billion.

Strong volume growth in automotive

and containers on rail of 14,3%.

B-BBEE spend of R24,9 billion or

105,6% of total measured procurement

spend for the period per DTI codes.

Revenue increased by 6,4% to

R30,3 billion. Capital investment increased by

66,8% to R18,7 billion.

EBITDA increased by 6,0% to

R12,8 billion.

Gearing at 46,8% and cash interest

cover at 4,4 times.

DIFR at 0,68 reflects a 4 year stable

safety record.

5

Performance to date in perspective

Year-on-year

Volume growth (weighted) +2,8% (2,4%)

Revenue +6,4% (7,1%)

EBITDA* +6,0% (7,4%)

Depreciation +19,0% (7,9%)

Finance cost +15,9% (8,2%)

Net profit after tax (24,9%) (15,5%)

Capital investments +66,8% +59,5%

Cash interest cover +29% (9,4%)

Gearing +2,1% +1,0%

(Budget comparison excludes R6,1bn loco accruals).


Financial highlights

2014

R billion

2013

R billion

%

variance

Revenue 30,3 28,5 6,4

EBITDA 12,8 12,0 6,0

Cash generated from operations after working capital

changes 17,7 11,3 57,4

Capital investment* 18,7 11,2 66,8

Key ratios 2014 2013

EBITDA margin (%) 42,1 42,3

Gearing (%) 46,8 45,9

Cash interest cover (times) 4,4 3,4

Return on average total assets (excluding CWIP) (%) 6,5 6,5

* Excludes capitalised borrowing costs and intangible assets, including capitalised finance leases and decommissioning restoration liabilities. # Excludes Regulator claw backs.

#

TRANSNET INTERIM RESULTS 2014 6

7

2014 2013 %

R million R million variance

Revenue 30 282 28 461 6,4

Net operating expenses excluding depreciation, derecognition and amortisation (17 522) (16 426) 6,7

EBITDA 12 760 12 035 6,0

Depreciation, derecognition and amortisation (5 757) (4 838) 19,0

Profit from operations before items listed below 7 003 7 197 (2,7)

Impairment of assets, fair value adjustments and other items (719) (288) 149,7

Net finance costs (3 227) (2 748) 17,4

Profit before taxation 3 057 4 161 (26,5)

Taxation (913) (1 308) (30,2)

Profit for the period 2 144 2 853 (24,9)


Abridged income statement

Revenue (R million) Rail volumes (mt)

30 28228 461

+6,4%

2014 2013

Revenue contribution by Operating Division* (%)

TPL

5 TPT

13

TNPA 15

TE

15

TFR 52

* Excludes specialist units and intercompany eliminations.

2013

105,8

5,8 11,3

9,1 6,3

31,4

41,9

+4,4%

2014

110,5

5,5 10,9

10,3 7,2

32,9

43,7

Agriculture and bulk (-5%)

Steel and cement (-4%)

Mineral mining and chrome (+13%)

Containers and automotive (+14%)

Iron ore and manganese (+5%)

Coal (+4%)

Port containers (‘000 TEUs)


Revenue and volumes

2 2902 379

2014

-3,8%

2013

9

The operating cost increase was managed closely by the implementation of numerous cost-reduction and containment initiatives

implemented throughout the Company, which resulted in a R1,3 billion saving in planned costs. Expenses increased by 6,7% to

R17,5 billion mainly due to:

• Increase in energy costs due to the higher electricity tariffs as well as fuel price increases impacted by foreign exchange

volatility.

• Marginal increase in personnel costs to R9,0 billion (2013: R8,9 billion).

21

10

Operating expenses (R million) Operating expenses contribution by

cost element (%)

21

5

20

54

Other operating expenses

Material and maintenance costs

Energy costs

Personnel costs


Operating expenses

17 52216 426

+6,7%

2014 2013

10

* Excludes specialist units and intercompany adjustments.

EBITDA (R million)

EBITDA margin (%)

EBITDA contribution by Operating Division* (%)

TPL

9

TPT

10

TNPA 26

TFR 55


EBITDA

12 76012 035

+6,0%

2014 2013

-0,2%

2014

42,1

2013

42,3


Depreciation, derecognition and amortisation of assets for the period

increased by 19,0%, mainly as a result of capital investments as well as

the depreciation of revalued port facilities and pipelines. This trend is

expected to continue in line with the execution of the capital investment

programme.

Impairment of assets, amounting to R653 million relates primarily to the

impairment of trade and other receivables, as well as an impairment of

property, plant and equipment.

.

Net finance costs increased by 17,4%, in line with expectations, due to

increased borrowings to fund the capital investment programme.

Depreciation, derecognition and amortisation (R million)

Impairment of assets (R million)

Net finance costs (R million)

Profit for the period (R million)

5 7574 838

+19,0%

2014 2013

653

196

+233,2%

2014 2013

2 1442 853

-24,9%

2014 2013

The decrease in profit for the period was 24,9% as a result of higher

depreciation, impairment charges and finance costs for the period.

Depreciation, derecognition and amortisation, impairment, net

finance costs and profit for the period

3 2272 748

+17,4%

2014 2013

September 2014 March 2014

R million R million

ASSETS

Property, plant and equipment 222 382 207 322

Investment properties 8 721 8 572

Other non-current assets 10 858 9 168

Non-current assets 241 961 225 062

Current assets 17 760 15 011

Total assets 259 721 240 073

EQUITY AND LIABILITIES

Capital and reserves 100 207 97 113

Non-current liabilities 129 239 117 723

Current liabilities 30 275 25 237

Total equity and liabilities 259 721 240 073


Abridged statement of financial position

PPE increased by 7,3% to R222,4 billion.

Capital investment for the period increased by

R18,7 billion, with R9,0 billion being invested in the

expansion of infrastructure and equipment, while

R9,7 billion was invested in maintaining existing capacity.

Return on average total assets at 6,5% as at

30 September 2014 due to the significant increase in the

asset base.

Property, plant and equipment (R million)

Return on average total assets (excluding CWIP) (%)*

Sept 2014

6,5

March 2014

6,5

* Excludes Regulator claw backs.


Property, plant and equipment (PPE)

880

1 49418 671

+7,3%

Sept 2014

222 382

Other

(322)

Borrowing

costs

Depreciation

(5 663)

Revaluation Additions March 2014

207 322

Transnet raised R16,6 billion for the period and repaid

borrowings amounting to R9,6 billion. The 10,1%

increase is in line with the funding plan.

The gearing ratio increased to 46,8%. The ratio remains

below the Group’s target range of 50,0%, reflecting

significant capacity available to pursue the counter cyclical

investment strategy.

Total borrowings (R million)

Gearing (%)


Total borrowings

99 59590 444

10,1%

Sept 2014 March 2014

+0,9%

Sept 2014

46,8

March 2014

45,9

Cash interest cover (times)

3,4

2013

4,4

2014

3,0

Sources of funding

2014 2013

R billion R billion

DFI’s/BTMU/Bilateral loans 9,0 1,7

Domestic bonds and Commercial

paper

3,7

6,7

Call loans 3,9 1,0

Total 16,6 9,4

Credit rating: Long-term foreign currency

A3

Negative outlook

BBB-

Stable outlook

2014

2013

%

R million R million change

Cash and cash equivalents at the beginning

of the period 3 633 2 598 39,8

Cash flows from operating activities 14 111 7 769 81,6

• Cash generated from operations 13 613 12 530 8,6

• Changes in working capital 4 099

(1 277) (421,0)

• Other operating activities (3 601) (3 484) 3,4

Cash flows utilised in investing activities (19 734) (10 778) 83,1

Cash flows from financing activities

(including repayments) 7 014 6 029 16,3

Net increase in cash and cash equivalents 1 391 3 020 (53,9)

Total cash and cash equivalents at the end

of the period 5 024 5 618 (10,6)


Abridged cash flow statement and funding

Capital investment spend

Capital investment by commodity

12,8

2012

9,5 10,2

2010 2011

+16,2%

2013

11,2

+66,8%

2014

18,7

Capital investment by operating segment

Transnet achieved 88,5% of the R31,2 billion budget for 2013

Replacement: R9,7 billion

Expansion: R9,0 billion

Expansion vs replacement

Other

Piped products

10% Port

containers 4%

Export

iron ore 6%

Bulk 2%

Export coal

6%

GFB 65%

16

6%

8%

10%

76% Engineering and other

Pipelines

Ports

Rail

52% 48%


7%

R billion

Major capital deliveries during the period

Quantity

Asset type September

2014

Cumulative

Locomotives

60 class 43 diesel locomotives 8 8

95 20E locomotives 16 25

Wagons

GFB 1 282 4 563

Export coal – -

Asset type Quantity

Rail refurbishment: Infrastructure

Turnouts 67

Universals 256

Screening 247,3 km

Sleepers 185 710

Asset type Stage of completion

Pipeline infrastructure

Coastal terminal 75%

Inland terminal 89%

NMPP Trunkline is 100% complete and fully operational with

product.

17

Asset type September

2014

Quantity

Port infrastructure

RTG’s NCT 4

Straddle carriers 5

Ship-to-shore cranes for NCT 2

Trailers 25


Locomotive acquisition programme – estimated delivery schedule

18

General freight business Export coal

Year 95 electric locomotives

1 064

locomotives 60 diesel locomotives Wagons for MDS

100 electric

locomotives

2015 86 – 19 2 704 17

2016 _ 148 41 3 803 83

2017 – 492 – 3 203 –

2018 – 424 – 4 065 –

2019 – – – 5 575 –

2020 – – – 2 314 –

2021 1 294


Volumes (mt)

Productivity and efficiency

Route density (Richards Bay corridor)

Tonkm/Routekm

On-time arrivals (minutes)

• Export coal volumes

increased by 5% due to:

improved wagon cycle

times; and

overall improved

operational efficiencies.

• This was achieved despite

1mt lost due to cable theft.

• The latest estimate

suggests that at year end

export coal volumes will

exceed prior year by 9%.

• On-time departures are

performing exceptionally

well when compared to the

prior year, due mainly to

improvement initiatives

focusing on the countdown

and re-planning processes.

• However, en-route

disruptions due to power

outages, cable-theft and

equipment failures

continue to affect on-time

arrivals.

On-time departure (minutes)

74,2

+9%

2015 LE 2014

68,2

2013

69,2

2012

67,7

2011

62,2

943

206209234

-79%

Sept

2014

2014 2013 2012 2011

186134

332375

468

2014 2013 2012 2011

+39%

Sept

2014


19

Ra

il –

exp

ort

co

al

36,5

+5%

Sept 2014 Sept 2013

34,6

38,0

+2%

Sept 2014 Sept 2013

37,4


Ra

il –

exp

ort

iro

n o

re



• Export iron ore volumes

increased by 3% despite:

tippler failures; and

the derailment affecting

the Khumani mine.


suggests that at year end,

iron ore volumes will

exceed the prior year by

5%.

• On-time departures

deteriorated compared to

the prior year, but reflects

continued improvement

since 2011, due to process

adherence improvements.

• On-time arrivals are

performing exceptionally

well versus the prior year,

due to a focus to minimise

en-route delays.


57,1

+5%

2015 LE 2014

54,3

2013

55,9

2012

52,3

2011

46,2

38

9

7367

161

+322%

Sept

2014

2014 2013 2012 2011

109129140133

285

-16%

Sept

2014

2014 2013 2012 2011

20

Volumes (mt)

Sept 2013

27,0 27,9

+3%

Sept 2014



21



• General freight volumes

increased by 4% compared to

the prior period, mainly due to:

improved operational

efficiencies;

the optimisation of the value

chain with port terminals

and customers; and

growth of market share

arising from the road-to-rail

modal shift.

• Mineral, mining and chrome

volumes were hampered by an

extended period of strike.

• The latest estimate suggests

that at year end, GFB volumes

will exceed prior year by 5%.

• On-time departures and

arrivals are performing well

due mainly to process

adherence improvements,

including a focus on the

countdown and re-planning

processes.


92,5

+5%

2015 LE 2014

87,9

2013

82,6

2012

81,0

2011

73,7

Volumes (mt)

Ra

il –

Ge

ne

ral fr

eig

ht

bu

sin

es

s (

GF

B)

46,1

+4%

Sept 2014 Sept 2013

44,2



93

213

280284

350

-56%

Sept

2014

2014 2013 2012 2011

199

340356357

434

Sept

2014

-41%

2014 2013 2012 2011

22

Po

rts

Container Volumes (‘000 TEUs)


• Maritime container volumes

decreased by 4% compared

to the prior period, due to a

decline in:

Transshipment

containers;

Vehicle and transport

equipment imports; and

Strong machinery,

electronics, base metal

and chemical product

export volumes.

• The latest estimate suggests

that at year end, maritime

container volumes will be 2%

below the prior year.

• Ship turnaround times are

performing well at most ports,

with the exception of Port

Elizabeth, mainly due to aging

cranes with limited capability,

East London and Richards

Bay.

4 5324 6414 4034 3524 081

-2%

2015 LE 2014 2013 2012 2011

-4%

Sept 2014

2 290

Sept 2013

2 379

Ship turnaround time (hours)

73

474644

71

44

2629

58

77

424445

88

47

2827

51

+5%

-11% -4% +2%

+24%

+7%

+8% -7%

-12%

Iron ore

(Saldanha)

Manganese

(Port

Elizabeth)

Coal

(RBCT)

Ngqura Richards

Bay

East

London

Port

Elizabeth

Cape Town Durban

Sept 2014

March 2014



23

Pip

eli

nes

Volumes (bℓ)


Operating cost per Mℓ.km (Nominal R/Mℓ.km)

• Petroleum product

volumes increased by 2%

compared to the prior

period, mainly due to:

Increased avtur

volumes transported

from the coast; and

Improved crude

volumes.


suggests that at year end,

petroleum volumes will

exceed the prior year by

1%.

• The NMPP capacity

utilisation averaging 112

mega litres per week

reflects favourably.

• DJP and NMPP capacity

utilisation, Ordered vs

Delivered volumes, and

Planned vs Actual delivery

times reflect favourably.

DJP + NMPP Capacity utilisation (Mℓ/Week)

16,7 +1%

2015 LE 2014

16,6

2013

15,9

2012

16,7

2011

18,0

105998978 +6%

Sept

2014

2014 2013 2012

8,4

+2%

Sept 2014 Sept 2013

8,3

112

51

152

84

Sept 2014 2014

Capacity

Usage

Ordered vs Delivered volumes

(% of deliverables within 5% of order) Planned vs Actual Delivery time

(% of deliverables within 2 hours of plan)

100,0 +1%

Sept 2014 2014

99,0

2013

100,0 84,0

Sept 2014

+4%

2014

81,0

2013

77,0



24

Disabling injury

frequency rate

(DIFR)

Employee

fatalities

(Numbers)

Safety, the fourth consecutive year the Company has recorded a

DIFR ratio below 0,75

Sept 2014

0,68

March 2014

0,69

March 2013

0,74

March 2012

0,65

March 2011

0,82

3

6

4

5

8

2014 2013 2012 2011 2010

The Company recorded a reduction in

the disabling injury frequency rate

compared to the 0,75 annual target,

which is exceptional by international

standards. This is the fourth consecutive

year that the Company recorded a DIFR

ratio below 0,75, due to continued focus

and investment in safety.

The organisation remains committed to

zero employee fatalities. Despite

considerable efforts to improve safety, the

Company regrets to report three employee

fatalities in the current period, compared to

six in the prior period.


Key performance Indicator

Unit of measure Annual

Target

2014

Sept Actual

Training spend % of personnel costs

Rand value

≥ 4,4

2,4

R274,9 million

Engineering trainees Number of learners ≥ 220 192

Technician trainees Number of learners ≥ 363 358

Artisan trainees Number of learners ≥ 605 107

Sector specific trainees Number of learners ≥ 2 178 2 606

Protection officers Number of learners 968 463

Direct jobs created (Transnet employees) Number of jobs ≥ 4 426 2 525*

A representative workforce.

Skills development, capacity

building and job creation.

Actual % Target %

Designated categories Sept 2014 2014

Black 82,3 80,0

Females at Group Exco 40,0 50,0

Females at extended Exco 41,3 50,0

Females below extended Exco 25,5 35,0

PWD’s 1,9 2,0

• Transnet achieved and exceeded its targets for

black employees.

• Female representation is growing steadily

despite significant challenges in an operations

heavy environment at semi and unskilled levels.

• Transnet invested 2,4% of the labour cost bill on skills development initiatives to grow and develop capacity

requirements to support MDS (focusing on operational and technical training).

• Transnet achieved its targets for 2014 in all critical skills that were the focus for the period, except for sector specific

trainees with 79% of the target achieved.

• Training of 463 protection officers also took place showing positive progress in the School of Security.

• The Schools of Excellence in Transnet continued to be a great flagship of the Transnet Academy’s delivery platforms to

contribute to local and regional skills development.


Human resources

* Includes fixed term project and trainee contract employees.


B-BBEE spend of 105,6% per DTI codes and local supplier industry

supported through Supplier development initiatives

Broad-based black

economic

empowerment and

local supplier

industry

development.

8580

106

88

+20%

2014 2013

Actual Target

85

26

10

1917

73

+3%

+16%

+2%

+4%

2014 2013

Black owned

Black woman owned

Emerging enterprises

Qualifying small enterprises

32,3

+75%

Total contract value

18,5

2014 2013

Committed SD obligation

+53%

12,2

8,0 4,8

Actual SD obligation delivered

+67%

8,0

**TMPS – Total Measurable Procurement Spend.

% B-BBEE spend of TMPS** B-BBEE categories spend % of TMPS**

Supplier development programme (R billion)

Conclusion


• The economic recovery together with the Company’s plan will ensure continued successful implementation of the MDS.

• Capital investment remains on track to create capacity ahead of demand in line with Transnet’s counter cyclical investment strategy.

• Operational efficiency continues to show improvements.

• The current financial year is a watershed year for MDS implementation and as can be seen from current performance the organisation is well placed to achieve its strategic objectives.

Thank you

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014 presentations/Transnet Inte… ·...

Documents

Transcript of INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014 presentations/Transnet Inte… ·...