State-owned freight and logistics company Transnet has committed to invest R31.2bn in the current financial year as part of its Market Demand Strategy - the company's R300.1bn investment programme over the next seven years.
This includes the acquisition of more than 1‚200 locomotives for Freight Rail. Of these 1064 locomotives are to be deployed in the General Freight Business (GFB).
Transnet's capital investment programme is supported by a comprehensive funding strategy and over the year under review the company raised R11.1bn from various funding sources‚ including commercial paper‚ domestic bonds‚ the French Development Bank and bank loans.
"We are confident that the company will be able to raise the R14.1bn funding requirement for the current year. The gearing ratio was up to 42.1% at year-end compared to 41.1% over the same period last year‚ but still comfortably within the 50% ceiling which we do not expect to breach.
"It is even more encouraging that the cash interest cover ratio improved to 4.2 times from last year's 3.9 and significantly above our target of three times‚ thanks to our operations' strong and sustainable cash generating ability. The latter rose by 27.6% to R20.6bn‚ aided by better collections and inflows due to improved working capital management and a 7.5 cents a litre security of supply levy for Pipelines‚" the transport parastatal said.
Record rail volumes
For the financial year ended March‚ Transnet reported record rail volumes in the financial year ended March 2012 and about a 21% increase in revenue to R45.9bn.
"For the first time we have broken the 200m tons volume ceiling‚ which has eluded us for years‚" Transnet CEO Brian Molefe said at a presentation on Tuesday.
"This is the biggest jump in volumes in the past five years‚" he said.
Net income fell 1.5% to R4.1bn in the year as a result of higher operating costs on higher material costs‚ increases in staff numbers and higher energy costs.
Billions spent in capital expenditure
Transnet spent R22.3bn under its capital expenditure programmes‚ which is the most the logistics monopoly has invested in a single year‚ Molefe said.
Cash generated from operations rose 24.3% to R22.7bn.
Transnet's total recognised broad-based black economic empowerment (B-BBEE) spend as per the Department of Trade and Industry Codes‚ rose to R25.8bn or 80% of total measurable procurement spend of R32.2bn.
"We view Transnet's massive operational and capital expenditure spend as our biggest contributor to empowerment. To that end‚ we insist on compliance to the Department of Public Enterprises-led Competitive Supplier Development Programme (CSDP) which focuses on skills development and job creation among others‚ as it drives localisation of manufacturing of heavy equipment and machinery‚" Molefe said.
During the year‚ Transnet acquired 43 locomotives from the United States' General Electric. The agreement included CSDP obligations of 65% of the total value of the contract - up from 25% in the previous agreement for the purchase of 100 locomotives from the same supplier.
Transnet has since shifted to include port-handling equipment in its CSDP programme. The following key port-handling equipment transactions were concluded during the year: Seven tandem lift cranes; six mobile harbour cranes; 28 straddle carriers; one pneumatic ship un-loader; one ship loader; 33 haulers and eight reach stackers. The total contract value since the inception of the CSDP amounts to R14.1bn. To date‚ R3bn or 55% of total supplier development obligations have been executed.
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