Transnet Annual Results Presentation 31 March 2011FINANCIAL HIGHLIGHTS 2011 R billion % change Revenue 38,0 6,6 EBITDA 15,8 9,4 Cash generated from operations after changes in working

1TRANSNET ANNUAL RESULTS PAGE

Transnet Annual Results Presentation 31 March 2011

CONTENTS

Financial review

Execution of the Quantum Leap strategy


Five years looking ahead

Strategic focus areas

Conclusion


FINANCIAL REVIEW

FINANCIAL HIGHLIGHTS

2011R billion

%change

Revenue 38,0 6,6

EBITDA 15,8 9,4

Cash generated from operations after changes in working capital 18,3 13,5

Capital investment* 21,5 16,6


Key Ratios 2011 2010

EBITDA margin 41,5% 40,5%

Gearing 41,1% 39,8%

Cash interest cover 3,9 times 4,1 times

Return on average total assets (excluding CWIP) 6,6% 7,7%

* Excludes capitalised borrowing costs, including capitalised finance leases.

ABRIDGED INCOME STATEMENT

2011R million

2010R million %

Revenue 37 952 35 610 6,6

Net operating expenses excluding depreciation and amortisation (22 189) (21 201) 4,7

EBITDA 15 763 14 409 9,4

Depreciation and amortisation (7 184) (6 089) 18,0

Profit before items listed below 8 579 8 320 3,1


Profit before items listed below 8 579 8 320 3,1

Impairment of assets, fair value adjustments and other items (9) (971) (99,1)

Net finance costs (2 878) (2 436) 18,1

Profit before taxation 5 692 4 913 15,9

Taxation (1 508) (1 763) (14,5)

Profit from continuing operations 4 184 3 150 32,8

• The sustained financial performance has created a platform for the execution of the capital investment programme.

REVENUE

Revenue (R million) Commodity revenue

37 952

9,0%

20112010

35 610

2009

33 592

2008

30 091

2007

26 8996,6%

21,7

2011

13,4

2,7

5,6

2010

19,7

11,9

2,2

5,6

10,2%

Export coal GFB

Export iron oreRail sector (R billion)

4-Year CAGR

6TRANSNET ANNUAL RESULTS PAGE 6TRANSNET ANNUAL RESULTS PAGE

Revenue contribution by Operating division

TPL

3,0%TPT

16,7%TRE*

2,2%

TNPA19,3% TFR

58,8%

20112010

3,3

0,6

5,9

12,0

2011

4,0

0,9

9,8

7,1

2010

22,4%

Ports sector (R billion)

• Revenue increased by 6,6% despite the negative impact of the industrial action.

* Includes Specialist Units

Containers Total bulk

Automotive

OPERATING EXPENSES

22 189

8,1%

21 20120 39217 28116 232

4,7% TFR14 463

TPL432TPT

4 163

TRE

4-Year CAGR

Operating expenses (R million) Operating expenses contribution byOperating division* (R million)


20112010200920082007

TNPA2 195

TRE8 175

• Operating expenses increased by 4,7% despite an increase in input costs, such as electricity costs of 25%.

• Cost saving initiatives resulted in a R2,1 billion reduction in planned costs.

• The marginal increase in operating expenses is indicative of ongoing cost saving initiatives and efficiency improvements.

* Excludes Specialist Units.

EBITDA

EBITDA (R million) EBITDA contribution by Operating divisions*

(R million)

15 76310,0%

20112010

14 409

2009

13 200

2008

12 810

2007

10 6679,4%

TPL697TPT

2 188

TRE1 151 TFR

8 144

4-Year CAGR


EBITDA margin (%)

2011

41,5

2010

40,5

2009

39,3

2008

42,6

2007

39,7

TNPA5 866

8 144

• Improvement in EBITDA margin is as a result of revenue growth and cost reduction initiatives implemented during the year.

• Strong profitability over the last 5 years.

* Excludes Specialist Units and intercompany eliminations.

DEPRECIATION AND AMORTISATION, NET FINANCECOSTS, TAXATION AND PROFIT FOR THE YEAR

Depreciation and amortisation (R million)

7 1846 089

4 7793 798

2 952

18,0%

Net finance costs (R million)

2 8782 436

1 9661 9312 287 18,1%

• In line with expectations, the increase in depreciation and amortisation is attributable to the capital investment programme and revaluations of port facilities and pipeline networks.

• Increase in net finance costs due to increasedlong-term borrowings to fund the capital investment programme.

2007 20092008 20112010


1 5081 7631 492

2 6151 742

14,5%

4 1843 150

5 2266 4785 736

32,8%

Taxation (R million)

Profit for the year (R million)

2007 20092008 20112010

programme.

• At 26,8% (2010: 36,8%) the effective taxation rate is marginally below the corporate taxation rate of 28%.

• Strong year on year improvement is mainly due to the volume increases and cost reduction initiatives.

2007 20092008 20112010

2007 20092008 20112010

ABRIDGED STATEMENT OF FINANCIAL POSITION

2011R million

2010R million

ASSETS

Non-current assets 146 243 120 845

Property, plant and equipment 137 836 113 579

Investment properties 7 368 6 604

Other non-current assets 1 039 662

Current assets 20 827 18 040


Current assets 20 827 18 040

Total assets 167 070 138 885

EQUITY AND LIABILITIES

Capital and reserves 73 666 63 347

Non-current liabilities 72 660 60 179

Current liabilities 20 744 15 359

Total equity and liabilities 167 070 138 885

• Transnet’s strong financial position enables the execution of the borrowing programme without Government guarantees.

PROPERTY, PLANT AND EQUIPMENT ANDLONG-TERM BORROWINGS

Property, plant and equipment (R million)

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

• Included in additions are capital investments of R21,5 billion and capitalised borrowing costs of R1,8 billion.

• Revaluations are in respect of:• Pipeline network assets R310 million;• Port facilities R8,2 billion; and• Land and buildings R264 million.

• Decline in return on average total assets due to higher depreciation charge as a result of thecapital investment programme as well as the revaluation of assets.

8 784

Additions

23 264

2010

113 579

2011

137 836

Other

(476)

Impairment

(291)

Depreciation

(7 024)

Revals

6,67,79,011,611,1


Long-term borrowings (R million)

Gearing (%)

revaluation of assets.

• Long-term borrowings increased due to funding raised for the capital investment programme which is creating capacity ahead of demand.

• Gearing, which is lower than the Board limit,reflects adequate capacity to fund futurecapital investments.

2008

30,9

2007

40,8

20112010

39,8

2009

37,7 41,1

50 452

20112010

42 736

2009

29 758

2008

16 890

2007

17 53518,1%

20112010200920082007

ABRIDGED CASH FLOW STATEMENT AND FUNDING

• Generated strong, predictable and sustainable cashfrom operations.

• Transnet has adequate liquidity and funding facilities to meet all its operational and capital investment funding requirements over the medium-term.

• Successfully implemented the funding strategy.

• Required funds raised in a cost effective manner evidenced by the reduction in WACD to below 10%.

2011R million %

Cash from operating activities 13 159 8,8

• Cash generated from operations• Security of supply petroleum levy• Changes in working capital• Other operating activities

16 1591 315792

(5 107)

13,5>100,0(57,2)27,8

Cash utilised in investing activities

(23 018) 12,8


by the reduction in WACD to below 10%.

3,9

20112010

4,1

2009

3,7

Cash interest cover (times)

• Cash interest cover of 3,9 times remains significantly above the minimum Board target of 3,0 times and is not expected to fall below the target in the medium-term.

Cash from financing activities 12 791 23,5

Sources of funding 2011 R billion

• GMTN• DMTN• Commercial paper• Bank loans and asset backed finance• DFIs/ECA

5,17,72,01,91,7

Total 18,4


EXECUTION OF THE QUANTUM LEAP STRATEGY

VOLUME GROWTH, PRODUCTIVITY AND EFFICIENCY

Volumes (mt) • GFB volumes reflect a 2,2% growth from the prior year, despite a loss of volumes due to the May 2010 industrial action,cable theft and rolling stock related faults.

• However, strategic commodities within GFB performed well.

• Overall productivity and

General freight business

Productivity and efficiency

83,8

78,4

72,1 73,7

3,2%

20112010200920082007

2,2%

84,5

4-Year CAGR


• Overall productivity and service delivery deteriorated from theprior year.

General freight business


GTK /loco/month (’000)

Wagon turnaround (days)

On-time departures (avg minutes delayed)

On-time arrivals (avg minutes delayed)

2010

5 3375 239

5 121

2,3%

4,0%

Target 2011

2010 Target 2011

434

238265

63,8%

82,4%

2010 Target 2011

12,612,2

14,03,3%

10,0%

Target 201120112010

350

184165

112,1%

90,2%

VOLUME GROWTH, PRODUCTIVITY AND EFFICIENCY (continued)

Containers on rail (‘000 TEUs)

Domestic coal (mt)

• Volumes increased by 13,2% compared to the prior year.• Freight Rail’s overall “rail friendly” container market

share increased from 30,9% to 34,0%.

• Volume growth of 12,4% despite operational challenges and customer cancellations.

• One of Transnet’s key focus areas over the next five years is to meet Eskom’s domestic coal requirements.

Strategic Commodities –GFB

502,3 536,8 524,7 554,7 627,8

5,7%

13,2%

19,818,6

17,019,119,8

0,9%

12,4%

20112010200920082007

4-Year CAGR


Magnetite (mt)

Export manganese (mt)

years is to meet Eskom’s domestic coal requirements.

• Volumes increased by 3,7% despite the negative impact of the Brakspruit Bridge collapse – the main transport route for this commodity.

• Export manganese volumes increased by 23,1% compared to the prior year.

Strategic Commodities

12,4%

1,1 1,52,2

2,7 2,8

26,3%

3,7%

3,0 3,8 3,4 3,9 4,8

12,5%

20112010200920082007

23,1%

20112010200920082007

20112010200920082007


Volumes (mt) • Export coal volumes reflect marginal growth from the prior year,despite a loss of 3,1mt due to the May 2010 industrial action,derailments and a longer than planned shutdown of the line due to the industrial action.

• Overall productivity and service delivery

Export coal


63,561,9 61,8 62,2

67,0

2011

1,8%

2010200920082007

0,6%

4-Year CAGR


service delivery deteriorated from the prior year, mainly due to the impact of the industrial action as well as rail infrastructure problems and operational challenges such as crew scheduling, hook-up failures, cable theft and RBCT cancellations.

Export coal



Wagon cycle time (hours)



2010

13 50515 755

14 173

14,3%

4,7%

Target 2011

2010 Target 2011

468

248309

88,7%

51,5%

2010 Target 2011

726569

10,8%

4,3%

Target 201120112010

234149

289 57,0%

19,0%


Volumes (mt) • Export iron ore volumes increased by 3,4%,despite an unprecedented number of derailments resulting in lost volumes which also impactedoperational performance levels.

• Ship loading rates (TPT) increased with 9,7% from 6 341 tons per hour during 2010 to 6 959 tons

Export iron ore


30,0 31,936,8

44,7 46,211,4%

20112010200920082007

3,4%

4-Year CAGR


during 2010 to 6 959 tons per hour during 2011 due to the successful implementation of dual and staggered ship loading at the Iron Ore Terminal.

Export iron ore



Wagon cycle times (hours)



2010

38 86643 650

38 310

11,0%

1,5%

Target 2011

2010 Target 2011

285

160190

78,1%

50,0%

2010 Target 2011

8580

85 6,3%

–

Target 201120112010

161

94121

71,3%

33,1%


Volumes (’000 TEUs) • Maritime container volumes reflect a 12,5% growth, primarily driven by an increase in transshipments and imports due to the 2010 FIFA Soccer World Cup.

• Container handling rates (moves per gross crane hour) have improved by an average 12,8% across all terminals and resulted

Maritime Containers


4 081

12,5%

2,7%

20112010

3 629

2009

3 800

2008

3 738

2007

3 674

4-Year CAGR


all terminals and resulted in an increase in overall container port efficiencies.

• Marine services delays caused by tugs, pilots and berthing staff at all ports have decreased significantly with 42,3% (average across all ports).

• Since December 2010,DCT Pier 1 and Pier 2 have sustained an average GCH of 29,5 and 24,5 respectively.

Maritime Containers


GCH – DCT Pier 1 GCH – DCT Pier 2

Shipping delays (avg hours if ship is delayed)

2010

262621

–

23,8%

Target 2011

2010 Target 2011

1,5

34,8%2,3

42,3%

2,6

Target 201120112010

402827

42,9%

48,1%

TEUs/STAT Hour - Durban

2010 Target 2011

2326

2211,5%

4,5%


Volumes (mℓ) • Petroleum volumes increased by 1,5% from the prior year, despitethe constrained Durban-Johannesburg Pipeline (DJP).

• Capacity utilisation increased through continued use of drag-reducing agents (DRAs) and a 26,9% decrease in production interruptions

Petroleum (TPL)


18 0251,4%

20112010

17 751

2009

17 216

2008

16 893

2007

17 032 1,5%

4-Year CAGR


production interruptions due to internal causes,which is significantly below benchmarks.

• Security of supply to the inland market was achieved due to the successful implementation of the rail bridging plan.

Petroleum (TPL)


Capacity utilisation - DJP

Capacity utilisation - Crude

Internal production interruptions(total annual hours)

2010

102%

100%101%

2,0%

1,0%

Target 2011

2010 Target 2011

85%83%83% 2,4%

2,4%

Target 201120112010

285280390

1,8%

26,9%

SUMMARY OF CAPITAL INVESTMENT

5-year Capital investment (R billion)

2007 2008 2009

11,7

2011

15,818,419,4

2010

21,5

58,3%Rail and other

13,5%

Ports

28,2%

Pipeline

Capital investment by operating segment


• Planned investment of R22,8 billion for the 2011 year as part of the 5-year capital investment plan.

• Actual investment represents 94% of planned spend.

• Did not compromise capacity creation or customer commitments.

• Capacity created in Rail (iron ore, manganese and containers on rail) and Ports (bulk, automotive and container sectors).

2007 2008 2009 20112010Ports

• Total investment of R86,8 billion during the past 5 years, funded without Government guarantee on the strength of Transnet’s financial position.

CAPITAL INVESTMENT BY ASSET TYPE

Asset Type Quantity

Acquisitions

Locomotives

19E Dual voltage locomotives for the Coal Line 58

Class 15E locomotives for the Ore Line 34

Class 43 GE Diesel Locomotives 2

Wagons

New wagons for Manganese export 354

Refurbishments

Asset Type Quantity

Port Infrastructure

Tugs for Durban 2

Tugs for Richards Bay 1

Trailing Suction Hopper Dredger 1

Bulk liquid berth at Richards Bay 1

Cargo handling equipment and facilities

Rubber tyred gantry cranes for CTCT 28

Agriport Bulk Terminal 80 000 tons of storage capacity 1


Refurbishments

Locomotives

Conversion from Class 6E to 18E 41

Conversion of wagons 48t to 60t capacity 410

Wagons

Wagon Liftings 12 900

Infrastructure: Replacements

Rail 555km

Railway sleepers 292km

Screening of track 528km

Agriport Bulk Terminal 80 000 tons of storage capacity 1

PE Manganese Refurbishment: Increase in capacity from 2,8mt to 4,8mt

1

Rubber tyred gantry cranes for Durban Pier 1 4

Durban Point Car Terminal 80 000 units of automotive capacity (parking bays)

3 300

MEGA PROJECTS SUMMARY AND CAPACITY CREATION

Project Total ETC

Actual spending

2011

Spending since

inception Capacity created

R million R million R million

Iron Ore Line expansion to 60,7mt 16 073 3 263 9 793 24mt to date

New Multi-Product Pipeline 23 407 5 612 11 588 3 X16” lines operational in the Northern network

Reengineering of Durban Container Terminal 1 802 268 1 319 300 000 TEUs

Ngqura Port Construction 3 492 123 3 083 Fully functional 5 berth deepwater port


Ngqura Container Terminal 7 900 461 4 842 700 000 TEUs

Durban Harbour entrance channel widening and deepening 3 360 54 2 826 9 200 TEU vessel sizecan be accommodated

Coal Line expansion to 81mt 9 806 1 384 1 801 In progress to meet 81mt

Cape Town Container expansion 4 375 741 2 697 200 000 TEUs

LOCOMOTIVE AND WAGON ACQUISITION PROGRAMME

Spending(R million)

Coal 110 Cl 19E

Ore 44 Cl 15E

Ore 32 Cl 15E

GFB 100Cl 43

2011 Actual 925 1 058 268 334

Since inception 2 116 2058 268 771

2012 857 307 85 510

2013 292 - 715 692

2014 - - 98 569

Acquisition of 110 Class 19E dual voltage locomotives for the Coal Line:• 58 locomotives have been delivered :

• 48 locomotives accepted into operations • 10 locomotives are at various stages of testing and commissioning.

• The remaining 52 locomotives are planned to be delivered at four per month over the next 13 months.

Acquisition of 100 Class 43 Diesel locomotives: Locomotives for GFB for replacement of ageing fleet.• 2 locomotives were delivered in January 2011 for testing


Delivery scheduleLocomotives*

(units)Wagons(units)

2012 86 1509

2013 110 672

2014 64 736

2015 40 915

2016 40 461

• 2 locomotives were delivered in January 2011 for testing • 8 locomotive sets were shipped from the United States in April 2011 for assembly in South Africa.

• 90 locomotives will be built at Rail Engineering’s Koedoespoort plant.

Acquisition of 44 Class 15E locomotives for theIron Ore Line: Acquisition to facilitate the ramp up in Iron Ore volumesto 60,7mt:• 34 locomotives have been delivered, • 10 locomotives will be delivered during 2012. Transnet entered into a contract to acquire 32 more Class 15E locomotives with delivery expected as follows:• 25 locomotives in 2013• 7 locomotives in 2014

* Currently being revised.

HUMAN CAPITAL

SkillsDevelopmentand Capacity Building

Capacity Building Initiatives

• 1 412 apprentices and 427 engineers in the Company

• Granting of 52 engineering bursaries for 2011

• 356 engineering technicians in the internship programme.

• The availability of appropriate skills across the Company remains a significant challenge.

• Training is 3% of personnel cost

2010 2011


Employment Equity as at31 March 2011

• Representation of black (African, Colouredand Indian) employees improved to 76% oftotal workforce.

• Since 2001 Transnet has managed to morethan double its female employee base from8,4% to 20%.

• People with disabilities comprise 0,8% of Transnet’s workforce.

2010 2011

White 25% 24%

Black 75% 76%

2010 2011

Female 19% 20%

Male 81% 80%

STRATEGIC ENABLERS

BBBEE

• Transnet’s BBBEE spend has grown significantly over the past three years from R6,9bn in 2008 to R19,4bn in 2011. This is higher than the DTI target of 50% and the internal target of 65%.

CSDP

• Procurement of 100 General Electric (GE) locomotives: Total localisation value as a percentage of the total contract value is 52%. This includes skills development in TFR and TRE as well as localised assembly and investment in plant.

• Procurement of 32 new 15E locomotives: The total localisation value is 40% which includes local assembly by Union Carriage Works. Due to this 15E build programme, 734 jobs are being preserved.

75%

2010 2011

65%

2009

59%

2008

41%

2007

37%

BBBEE spend % against total measured procurement spend


CSDP assembly by Union Carriage Works. Due to this 15E build programme, 734 jobs are being preserved.

• Procurement of Electro-Motive Diesel (EMD) locomotive spare parts and components:Total localisation value of 34%.

• The GE locomotive parts (Long-Term Parts Agreement): Total localisation value is 12% which includes skills development and purchasing of local parts and services

Branch lines

• The Branch lines were grouped by cluster and comprehensive feasibility studies were conducted on the grain handling branch lines.

• A non-binding call for expressions of interest in October 2010 resulted in 47 companies responding to the likely opportunities, and competitive bidding documents were prepared for release in theyear ahead.

• Key focus going forward is to drive CSDP initiatives to stimulate local employment opportunities

SAFETY

Disabling Injury Frequency Rate

(DIFR)

• The Company’s 12-month rolling disabling injury frequency rate (weighted) deteriorated by 11,4% to 0,98 compared to 0,88 in the prior year –mainly due to an increase in disabling injuries at TFR and TRE.

Employee fatalities (Numbers)

• Sadly there were 12 employee fatalities during the year under review, compared with 8 fatalities during the prior year. Transnet conveys its deepest condolences to the families and friends of the employees who lost their lives on duty.

2011Target

0,85

2010

11,4%0,980,88

128

1311

26

20112009

50,0%

201020082007


of the employees who lost their lives on duty.

Public fatalities (Numbers)

• Public fatalities decreased by 12,7% to 151 for the year compared to 173 in the prior year. Public fatalities remains a focus area.

Cost of losses(R million)

• Cost of losses increased to R1 billion for the year compared to R501m in the prior year mainly due to the derailments.

• Continued commitment to strive for zero fatalities

20112009 201020082007

473 432589

501

2008 201020092007

104,6%

1 025

2011

151173197151

2009

12,7%

201120102008

• Two Operating divisions of Transnet are regulated by economic regulators:

− Transnet Pipelines (TPL) is regulated by the National Energy Regulator of South Africa (NERSA);

− Transnet National Ports Authority (TNPA) is regulated by the Ports Regulator of South Africa.

REGULATORY

69,00

51,3059,99

19,13

11,91

Approved by Regulator

Applied forTPL tariff increase % TNPA tariff increase %


• Closer alignment with NERSA resulting in greater certainty in terms of future tariff applications.

• Difference with the Ports Regulator on tariff determination for National Ports Authority due to the lack of an approved tariff methodology.

Other developments

• King III compliance – Assessment completed – fully compliant.

• Ports Act and ICM Act amendments – mitigation plan in place. Long-term sustainable solution is being addressed at policy level.

• DoT has established an interim Rail Regulator.

2011

11,86

2012

4,49

2011

4,42

2012


FIVE YEARS LOOKING AHEAD

STRATEGY OVERVIEW

The Quantum Leap strategy will stimulate economic growth in South Africa

Improvement in rail, port and pipeline infrastructure as a result of extensive capital investments

Accelerate implementation of the human capital strategy and skills development in line with NGP commitments


Resulting in volume growth, increased productivity and efficiency, infrastructure capacity, financial

sustainability, safety and improved customer service

Reduce the cost of doing business in SAIncrease in exports and growing local economies

Volume throughputand financial sustainability

Improvement in operational efficiencies

Strategic supply chain management

and BBBEE

VOLUME PROJECTIONS

Key commodity 2012 2013 2014 2015 2016 Comments

GFB(mt)

• Growth in Eskom coal from 7,1mt in 2011 to 14,5mt in 2016 have been planned but is dependent on the timing of the Eskom’s capacity increase.

Exportcoal (mt)

• Capacity beyond 81,0mt will becreated through alternative funding

110,7104,499,791,184,4

81,081,077,073,070,0

4-Year CAGR

7,0%

3,7%


coal (mt)created through alternative funding models (PSPs).

Exportiron ore(mt)

• Allocation of capacity to emerging miners.

• Capacity beyond 60,7mt will becreated through alternative funding models (PSPs).

Maritimecontainers(’000 TEUs)

• Current capacity expansionprogrammes are in progress at Durban.

• Ngqura and Cape Town container terminals will increase total container capacity to 6,1 million TEUs by 2016.

60,760,760,759,951,6

5 3645 0694 7904 5274 319

4,1%

5,6%

3,7%

Containers on rail (‘000 TEUs)

Domestic coal (mt)

• Transnet’s key focus is to move container“rail friendly” traffic from road to rail.

• Opportunity to increase market share in this sector.

• Included in domestic coal volumes is the ramp up to 14,5mt volume throughput in respect of Eskom’s anticipated requirements.

VOLUME PROJECTIONS (continued)Strategic Commodities –GFB

24,827,6 30,5 30,8 32,5

7,0%

786 884 990 1 078

10,0%

1 149

20162015201420132012

4-Year CAGR


Magnetite (mt)

Manganese (mt)

Eskom’s anticipated requirements.

• Growth in exports through Maputo and Richards Bay. Market opportunity may exceed 10mt.

• Grow manganese through Durban and Port Elizabeth through capital investment, improved service design and increase in the customer base by allocation of capacity to emerging miners.

Strategic Commodities

3,7 4,1 4,4 4,64,6

5,6%

7,0 7,7 8,1 8,4 8,5

5,0%

20162015201420132012

20162015201420132012

20162015201420132012

PRODUCTIVITY AND EFFICIENCY

Sector 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

Rail

General Freight: GTK/loco/month (’000)

3,2%

6 1335 9755 8095 5955 400

General Freight: Wagon turnaround (days)

6,2%

8,58,59,010,011,0

– 2,4%

4-Year CAGR


Ports

Pipelines

• Focus on productivity and operational efficiencies to improve customer service

TPT: Moves/GCH-DCT Pier1

3030303030

TNPA: TEU’s per ship turnaround time hour (Durban)

4443414040

2,4%

Production interruptions (hours per annum)

210255290300250

4,3%

Meantime between failures (days)

1,0%

1 0501 0401 0301 0201 010

Performance maintained

5-YEAR CAPITAL INVESTMENT PLAN

Transnet (R110,6 billion) Major capacity creation projects in the R110,6 billion capital investment plan.

Project

Next 5years

R million

Iron Ore Line expansion to 60,7mt 3 232

Iron Ore Line:32 Class 15E locomotives 898

New Multi-Product Pipeline 11 150

Durban Container Terminal Reengineering 247

Ngqura Container Terminal 1 550

2015

24,622,4

2011 2012 2013

21,5

25,9

2014

18,7

2016

19,0


5%

7%19%

Pipeline networksR13,2bn

12%Mach & EquipR5,9bn

Port facilitiesR20,9bn

19%

Land & BuildingsR8,1bn Perway R20,6bn

Wagons R18,9bn

17%

Locomotives R23,0bn

21%

Ngqura Container Terminal 1 550

DHEW sand bypass system 545

Coal Line expansion to 81mt (Above 63mt, Quantum Leap and 81mt)

5 063

Coal Line: 110 Dual Voltage Locomotives 1 149

Cape Town Container expansion 2 392

Acquisition of 100 Class 43GE diesel locomotives

1 771

Acquisition of former Durban Airport site 1 500

Reconstruction of sheet pile quay walls at Maydon Wharf

1 487

Durban Container Terminal berth deepening 3 300

Pier 1 Phase 2 expansion into Salisbury Island 1 884

CAPITAL INVESTMENT PLAN:POTENTIAL PSP OPPORTUNITIES

A number of infrastructure development opportunities have been identified beyond the 5 years as part of Transnet's Infrastructure Plan.

Project Capacity

• Waterburg coal opportunity for domestic and export market Between 80mt and 135mt

• Increasing the existing export coal channel. Further investment will be rolled out in conjunction with industry.

Beyond 81mt

• Iron Ore expansion to support the increase in demand for export iron ore. Beyond 60,7mt


• Iron Ore expansion to support the increase in demand for export iron ore. Beyond 60,7mt

• The Manganese export terminal through Ngqura/Saldanha is linked to the Iron Ore expansion project above. The preliminary estimated cost is dependant on the preferred export route.

Increase from 4,2mtto 12mt

• Ngqura Container Terminal equipping of the remaining two berths. Increase of 1,2m TEUs/a

• Former Durban Airport site development into a dig out port to provide berthing facilities of 16 container, 5 automotive and 4 bulk liquid berths. The initial cost includes basic port infrastructure and 4 container berths.

2,4mTEUs/a

• Inland terminals (City Deep, Kaserne and Pretoria). Mainly replacement

KEY FINANCIAL RATIOS

GEARING (%) CASH INTEREST COVER (times)

41,146,4

42,837,7

46,846,8

201620152014201320122011

Board limit

50% max

3,9

2011 20162015

4,8

3,9

2014

3,4

2013

3,3

2012

3,2 Board limit

3,0 min


• Transnet gearing and cash interest cover will remain within target ranges ensuring the ability of the Company to access the debt capital markets to fund the capital investment programme.

2016

11,3

2015

10,6

2014

9,4

2013

8,6

2012

6,5

2011

6,6

41,5 39,644,2 45,6 47,9 49,3

2016201520142012 20132011

ROTA (%) EBITDA MARGIN (%)

TRANSNET DOMESTIC BOND CURVE VERSUS GOVERNMENT CURVE

8.358.53 8.53

8.78

9.15

9.419.60 9.62 9.59

8.00

8.50

9.00

9.50

10.00

10.50

11.00

Government

Transnet

T018*

TN17

TN20TN23 TN27TN25

R203

R208 R186 R186R209


6.90 7.05

8.04

8.35

7.35

6.50

7.00

7.50

8.00

15-Jan-14

21-Dec-14

15-Sep-17

31-M

ar-21

21-Dec-26

21-Dec-26

31-M

ar-36

T018* (Guarantee)

R206 R201

R203

• Transnet’s primary source of funding remains the R30 billion DMTN programme. We have been able to successfully tap the local bond market with regular bond auctions at spreads that vary between 106 and 111 basis points above the Government curve (excluding T018, which is guaranteed).

FUNDING PLAN

Funding Plan Strategy

• Maintain liquidity through pre-funding

• Diversify investor base and sources of funding both internationally and locally

• Minimize market risk (interest rate and foreign exchange)

• Explore PSP opportunities

• Managing and protecting Transnet’s financial position

• Maintain Transnet’s credit grade rating

Key features of Funding Plan

• Cash from operations over the next 5 years: R96,4 billion

Funding requirements (R billion)

6,5


• Cash from operations over the next 5 years: R96,4 billion

• Transnet to borrow R25,6 billion over the next 5 yearsfor the capital programme and redemption ofexisting loans

Sources of Funding

• Commercial paper

• Bonds

• DFIs, ECAs, domestic and foreign loans

2012 2013 2014 2015 2016

(12,9)*

(7,2) (8,3)

(3,7)

*The funding requirement for 2012 of R20,8 billion is reduced to R12,9 billion due to the cash on hand at 31 March 2011 and the pre-funding buffer.


STRATEGIC FOCUS AREAS

FOCUS AREAS


• Implement rail turnaround plan to ensure improvement in productivity.

• Build on existing port efficiency improvements.

Humancapital

• Continue to increase training of engineers, technicians and artisans.

• Through the capital investment programme stimulate both direct and indirectjob creation.

• NGP commitments.

Volumegrowth

• Focus on growth in rail volumes and in particular growth in GFB volumes to meet market demand.

• Ensure emerging miners access capacity on the rail network.

Strategic enablers

• Maintain commitment to BBBEE and CSDP by ensuring suppliers invest directly in Transnet’s supply chain which benefits both the Company and the country.

• Rural development.


• Ensure security of fuel supply.• Rural development.

Capital investment

• Provide responsive infrastructure that creates appropriate capacity ahead of demand

• Rollout the R110,6 billion capital programme.

• Engage with private sector participants to fund commodity specific capital expansion.

SHEQ

• Commitment to zero fatalities across operations.

• Drive safety culture programme across the Company.

• Ensure strict compliance to environmental legislation.

Financial sustainability

• Continue to implement the cost effective funding plan

• Gearing remains below 50% and cash interest cover remains greater than 3,0 times.

• Maintain strong growth in respect of cash from operations.

Regulatory

• Engage collaboratively with Government to meet policy and regulatory challenges.

• Proactive engagement with RailSafety Regulator.

• Address TPL and TNPA corporatisation at a policy level.


CONCLUSION

CONCLUSION

Financial sustainability maintained.

Productivity and efficiency in port and pipeline operationsprogressing successfully.


Continued capital investment to create additional capacity.

Significant focus on productivity and safety improvements in rail.


Transnet SOC Ltd

47th floor, Carlton Centre

150 Commissioner Street

Johannesburg, 2001

Telephone: +27 11 308 2719

www.transnet.net

Documents

Transnet Annual Results Presentation 31 March 2011FINANCIAL HIGHLIGHTS 2011 R billion % change Revenue 38,0 6,6 EBITDA 15,8 9,4 Cash generated from operations after changes in working