Transnet Online Integrated Report 2018

Market Demand Strategy (MDS) themes
  • Financial sustainability
  • Capacity creation and maintenance
  • Market segment competitiveness
  • Operational excellence
  • Human capital
  • Organisational readiness
  • Sound governance and ethics
  • Constructive stakeholder relations
  • Sustainable developmental outcomes
Sustainable Developmental Outcomes (SDOs)
  • Employment
  • Skills development
  • Industrial capability building
  • Investment leveraged
  • Regional integration
  • Transformation
  • Health and safety
  • Community development
  • Environmental stewardship
The Capitals
  • Financial Capital
  • Manufactured Capital
  • Intellectual Capital
  • Human Capital
  • Social and Relationship Capital

Our performance

Operating Divisions' review


Freight Rail

KPIs

  • Revenue (R million)
  • EBITDA (R million)
  • Operational expenditure (R million)
  • ROTA (%)
  • Capex
  • Volumes
  • black employees (%)
  • Training spend (% of personnel cost)
  • Disabling injury frequency rate (DIFR)
  • % energy efficiency improvement on the previous year (electricity)
  • Regional Integration: Cross-border revenue (R million)

Key

Improvement on prior year performance
Decline on prior year performance
Equivalent performance to prior year
Target achieved
Target partially achieved
Target not achieved

Commentary


Opportunities in the short to medium term



  • 2018

    43 709
  • 2017

    39 114,
  • 20 473
  • 17 263
  • 23 236
  • 21 851
  • 7,6
  • 5,80
  • 17 598
  • 15 746
  • 226,3 (mt)
  • 219,1 (mt)
  • 87.9
  • 87
  • 2.1
  • 1,9
  • 0,91
  • 0,78
  • 64.4
  • 65.4
  • 2113
  • 1 860

Revenue for the period under review increased by 11,7% to R43,7 billion compared to prior year results (R39,1 billion). This is mainly attributable to the 3,3% increase in volumes, complemented by an increase in the average Rand/ton (R186,75 in 2018 compared to R174,95 in 2017). The average increase in R/ton at 6,7% was mainly attributable to the prioritisation of high-yield commodity flows.


Operating expenses increased marginally by 6,3%. Costs increased to R23,2 billion compared to the prior year (2017: R21,9 billion). This was achieved despite some operating expenses such as fuel and electricity costs increasing significantly above inflation.



Acceleration of new business development and road-to-rail initiatives to improve volumes.


Cost optimisation (both capital and operational costs) initiatives will reshape the core of the business and safeguard it from economic stagnation and fluctuation.


Opportunities for private sector participation in the development of hubs and terminals; regional rail expansion projects, branchlines concessions and bimodal technologies


  • New business development in Fruit and FMCG sectors
  • Regional corridor development
  • Building competitive supply chains enabled by 4.0 technologies
Engineering

KPIs

  • Revenue (R million)
  • EBITDA (R million)
  • Operational expenditure (R million)
  • ROTA (%)
  • Capex
  • Volumes
  • Black employees (%)
  • Training spend (% of personnel cost)
  • Disabling injury frequency rate (DIFR)
  • % energy efficiency improvement on the previous year (electricity)
  • Regional Integration: Cross-border revenue (R million)

Key

Improvement on prior year performance
Decline on prior year performance
Equivalent performance to prior year
Target achieved
Target partially achieved
Target not achieved

Commentary


Opportunities in the short to medium term



  • 2018

    11 250
  • 2017

    9 380
  • (139)
  • (457)
  • 11 389
  • 9 837
  • (3.4)
  • (6.7)
  • 275
  • 945
  • -
  • -
  • 80.8
  • 80.2
  • 2.6
  • 3.6
  • 0,66
  • 0,61
  • 9.6
  • 14
  • 254
  • 227

Revenue increased by 19,9% to R11,3 billion (2017: R9,4 billion), largely as a result of increased demand of rolling stock from Freight Rail.


Operating expenses increased by 15,8% to R11,4 billion (2017: R9,8 billion). R52 million in cost savings were recorded as Engineering continued to optimise and rationalise operations during the year.



Aided by the operationalisation of the TIH model, Engineering will exploit opportunities for increased cross-border revenue.


National Ports Authority

KPIs

  • Revenue (R million)
  • EBITDA (R million)
  • Operational expenditure (R million)
  • ROTA (%)
  • Capex
  • Volumes
  • Black employees (%)
  • Training spend (% of personnel cost)
  • Disabling injury frequency rate (DIFR)
  • % energy efficiency improvement on the previous year (electricity)
  • Regional Integration: Cross-border revenue (R million)

Key

Improvement on prior year performance
Decline on prior year performance
Equivalent performance to prior year
Target achieved
Target partially achieved
Target not achieved

Commentary


Opportunities in the short to medium term



  • 2018

    11 699
  • 2017

    10 379
  • 7 196
  • 6 367
  • 4 503
  • 4 012
  • 6,0
  • 6,9
  • 1 054
  • 2 020
  • 4 778 (000’ TEUs)
  • 4 466 (000’ TEUs)
  • 88
  • 85,8
  • 5.9
  • 5,0
  • 0,33
  • 0,59
  • 1.9
  • 1.42
  • 77.9
  • -
    n/a  n/a

Revenue increased by 12,7% to R11, 7 billion (2017: R10,4 billion) due to increased volumes across all commodities.


External revenue increased by 7,6% to R10,1 billion (2017: R8,4 billion).


Net operating expenses increased by 12,2% to R4,5 billion (2017: R4,0 billion), mainly due to increases in personnel costs, energy costs and legal fees.



The Port of Ngqura will embark on the Multi-Purpose Terminal: Planning phase.


South African port system: The new business development team has eight planned section 56 concession projects for the year ahead.


Various efficiency-improvement projects include the installation of early-warning sensors at Cape Town Container Terminal, and deploying two berth four-crane operations to increase port efficiencies at Ngqura Container Terminal.

Port Terminals

KPIs

  • Revenue (R million)
  • EBITDA (R million)
  • Operational expenditure (R million)
  • ROTA (%)
  • Capex
  • Volumes
  • Black employees (%)
  • Training spend (% of personnel cost)
  • Disabling injury frequency rate (DIFR)
  • % energy efficiency improvement on the previous year (electricity)
  • Regional Integration: Cross-border revenue (R million)

Key

Improvement on prior year performance
Decline on prior year performance
Equivalent performance to prior year
Target achieved
Target partially achieved
Target not achieved

Commentary


Opportunities in the short to medium term



  • 2018

    12 393
  • 2017

    11 150
  • 4 172
  • 3 794
  • 8 221
  • 7 356
  • 15,3
  • 13,6
  • 1 365
  • 1 208
  • 4 664 (000’ TEUs)
  • 4 396 (000’ TEUs)
  • 87
  • 85
  • 1.50
  • 1,50
  • 0,67
  • 0,71
  • 1.7
  • 2
  • 5.9
  • 8,2

Revenue increased by 11,1% to R12,4 billion (2017: R11,2 billion) due to good volume performance across all sectors.


Despite tightly managing costs, net operating expenses increased by 11,8% to R8,2 billion (2017: R7,4 billion). Key drivers of net operating expenses include above-inflation energy cost increases and volume growth across all sectors.



Explore opportunities to expand Port Terminals’ service offerings across the transport value chain. ‘Back of port’ opportunities are being explored to offer warehousing and value-add services in the container, mineral bulk and automotive segments.


Port Terminals will continue to support Transnet’s international strategy by applying strengths and capabilities to regional opportunities in Africa.


Port Terminals continues to grow volumes as the South African economy recovers and commodity prices improve.


The TVCC strategy continues to facilitate improvements in operational efficiencies and logistics integration between port and rail.

Pipelines

KPIs

  • Revenue (R million)
  • EBITDA (R million)
  • Operational expenditure (R million)
  • ROTA (%)
  • Capex
  • Volumes
  • Black employees (%)
  • Training spend (% of personnel cost)
  • Disabling injury frequency rate (DIFR)
  • % energy efficiency improvement on the previous year (electricity)
  • Regional Integration: Cross-border revenue (R million)

Key

Improvement on prior year performance
Decline on prior year performance
Equivalent performance to prior year
Target achieved
Target partially achieved
Target not achieved

Commentary


Opportunities in the short to medium term



  • 2018

    4 488
  • 2017

    4 355
  • 3 192
  • 3 377
  • 1 296
  • 978
  • 6.9
  • 10.7
  • 1 544
  • 1 706
  • 16 345 (Mℓ)
  • 16 978 (Mℓ)
  • 89
  • 88
  • 3,5
  • 3,3
  • 0,09
  • 0,37
  • n/a
  • (1,0%)
    n/a  n/a
  • 89.1
  • -
    n/a  n/a

Revenue (including clawback and levy) increased by 3,1% to R4,5 billion (2017: R4,4 billion).


The revenue increase was mainly due to a 1,43% increase in petroleum allowable revenue granted by Nersa in its 2018 Tariff Determeination, a favourable distribution pattern from the coast, and the unwinding of clawback raised in the prior financial year.


Net operating expenses increased by 32,5% to R1,3 billion (2017: R978 million), mainly attributable to a write-off of inventory of R296,6 million. The increase in net operating expenses, excluding the inventory write-off, is 3,3%.



Pipelines will look to achieve the petroleum volume target of 17,516 billion litres.


Measures will be implemented to mitigate the impact of a lower allowable revenue granted by Nersa for the 2019 financial year.


Opportunities exist to increase volumes at Tarlton, including influencing the Botswana supply mix and route alternatives.


Maximise volumes for Transnet through the Transnet Value Chain Coordinator (TVCC) and continue to explore diversification opportunities in the LNG market.