A very difficult and challenging year is now in the past, with lessons learned and the dust finally settled. (Image: Transnet Media Desk)
Transnet’s performance for the fiscal year ended March 31, 2021 is set against a backdrop of the combined impact of sluggish economic growth (mainly due to bottlenecks linked to COVID-19) and challenges in the operating environment ( including port operating system problems, locomotive vandalism, derailments, cable theft and pipeline spills due to theft incidents). The impact of these external and internal challenges resulted in a drop in Transnet revenues of 10.5% to 67.3 billion rand (2020: 75.2 billion rand), in line with lower volumes in the whole business.
Net operating expenses increased by 16.2% To 47.8 billion rand, mainly due to third party claims and environmental provisions.
EBITDA decreased by 42.8% To 19.5 billion rand, the EBITDA margin decreasing to 28.9%.
Net loss for the period of 8.4 billion rand (2020: 2.9 billion rand in profit).
Capital investment decreases 14.3% To R15.9 billion.
Cash generated operating after change in working capital reduced by 26.8% to R24.4 billion.
Gear of 48.7% and interest coverage in cash * To 2.0 times.
1.6% of personnel costs invested in the training of craftsmen, engineers and technicians.
B-BBEE pass from 23.39 billion rand Where 98.1% of the total measured procurement expenditure, as defined by the DTIC codes.
LTIFR performance of 0.61, which is lower than the tolerance.
Governance and compliance
The Public Financial Management Law (PFMA) imposes certain obligations on the Company in terms of prevention, identification and declaration of unnecessary and unnecessary expenses; irregular expenses; expenses not in accordance with operational policies; losses due to criminal behavior; and the collection of all revenues.
The company’s focus on increasing its efforts to comply with the PFMA has resulted in notable achievements. Condolences were submitted to the National Treasury and approval was granted regarding supplier development. Numerous consequence management cases have been finalized and closed as of March 31, 2021. PFMA points of interest are now a standing item on the agenda for monthly executive committee meetings.
Despite the progress made in the implementation of the remediation plan, the transformation process of the supply chain management, the improvement of the PFMA environment and its compliance, Transnet has unfortunately received another audit qualification. . This was due to the occurrence, accuracy and completeness of the incorrect statements identified in the irregular expenditure.
The reservation does not relate to any issue relating to IFRS, but resulted in a breach of the loan covenants. Consequently, Transnet will have to receive waivers from the lenders concerned to waive their right to accelerate the repayment of the debt in accordance with the previous year, since the qualification results from the occurrence, accuracy and completeness of expenditure. irregular. Management is confident that it will receive the required waivers from the affected lenders, as in previous years.
Manual procurement processes remain a major challenge in recording, identifying and processing irregular expenditures that are accurate and complete. Transnet gives priority to the process of automating its procurement practices.
Improving the PFMA remediation plan remains a key priority for the Company. The lessons learned and the challenges that prevented it from achieving an unqualified audit result have been clearly defined and put the organization in a much better position to quickly implement these initiatives.
A very difficult and challenging year is now in the past, with lessons learned and the dust finally settled. The group’s CEO and the Minister of Public Enterprises have announced plans to secure private sector partners and investments in Transnet ports for the next five to ten years. This is in line with the government’s broader economic reforms aimed at supporting economic growth by improving the operational capacity and efficiency of Transnet in order to strengthen its competitive advantage.
Information requests are issued to assess private sector investment appetite for Durban Port Terminal operations as well as Ngqura Port. The Minister of Public Enterprise has set a target of R100 billion for investments. Much of the investment will go to the Port of Durban which currently handles 60% of South Africa’s import and export container traffic. The proposed infrastructure upgrade will ensure that the port will continue to handle container traffic at this level with improved efficiency.
Following the changes of management at the level of the board of directors, Transnet embarked on a corporate restructuring of all functions across the Group. Restructuring will lead to a more efficient use of human capital while lowering the overall cost of fixed labor through a voluntary severance package.
The performance management system has been updated to include revised KPIs for major revenue-generating commodities, in line with efforts to increase revenue over the next five years. This desire to increase turnover while reducing fixed costs should improve Transnet’s profitability in the short term.
This article and its content are sponsored, written and provided by Transnet.