Transnet has boosted its revenue, turned a R5-billion profit, and received an unqualified audit of its latest financial statements, the parastatal announced in its latest Sens (Stock Exchange News Services) released on Thursday.
The parastatal said in the SENS statement that the Auditor-General had expressed an unqualified audit opinion on the annual financial statements for the year ended March 31, and that the parastatal had “exhibited aspects of resilience and intrinsic improvement” as it focused on returning to pre-pandemic performance levels.
The unqualified audit was “a significant development from the history of qualified audit opinions received in the past four financial years related to the completeness of irregular expenditure”, the logistics entity added.
“Transnet is encouraged by the signs of improvements achieved thus far and especially the timeous release of this set of financial statements. It is recognised that significant efforts are required to improve the performance of our freight rail, engineering and port operations.”
According to its latest financial statements, Transnet increased revenue by 1.8% to R68.5bn compared to the previous financial year; Ebitda (earnings before interest, taxation, depreciation and amortisation) improved by 20.5% to R23.4bn; profit was R5bn, up from a loss of R8.7bn; while cash generated from operations after working capital changes increased by 18.1% to R29.1bn. Gearing and cash interest cover were within debt covenant requirements.
“The significant increase in profits is mainly attributable to the improvement in the Ebitda, a decrease in asset impairments, and an increase in fair value adjustments related mainly to investment property,” Transnet said.
Group revenue for the year was higher than in 2021, mainly due to higher port and pipeline volumes, in line with improved economic conditions. This was despite fire disruptions at the ports, partially offset by lower rail volumes that were impacted by locomotive availability challenges, cable theft, vandalism and adverse weather conditions.
Net operating expenses decreased due to cash preservation initiatives implemented during the year, a reduction in impairments and provisions requirements, as well as a third-party settlement, resulting in operating cost savings. The savings were partially offset by the provision for voluntary severance packages and the increase in energy costs in line with increased activity and prices during the financial year.
On the outlook for the year, Transnet said it was focusing on improving its rail services in 2022/23, despite a difficult start due to the KwaZulu-Natal floods, theft and vandalism of infrastructure.
Transnet Freight Rail recently embarked on a pilot project in partnership with the National Defence Force to explore the deployment of additional security resources to secure affected infrastructure. The operating division was also partnering with customers regarding security deployment to clamp down on theft and minimise operational disruption on key corridors.
“The group remains committed to resolving operational constraints related to infrastructure, locomotives and security,” Transnet said.
Key maintenance and infrastructure supplier contracts have also been concluded which will increase the efficiency of maintenance programmes.
“A significant amount of work has been undertaken internally to improve procurement timeframes for key contracts which have been a significant cause for delay in the past. The finalisation of major bulk materials and on-track machine contracts has led to faster and more efficient resolution of historical and new maintenance issues as they arise,” Transnet said.
It added that its locomotive procurement strategy was “well underway” and would be introduced to the market soon.
“Simultaneously, the company is continuing to engage original equipment manufacturers on the provision of critical spares. Transnet Engineering will continue to find innovative engineering solutions to the current shortage, with upgraded locomotives being redeployed to different corridors to close the performance gap,” Transnet said.
