Logistics SOE Transnet losses trickle to a drip as economy opens up after lifting of Covid-19 restrictions
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LOGISTICS SOE Transnet narrowed its losses in the six months to September, aided by a further easing of lockdown restrictions, though there are still telling effects from the July looting and unrest, a devastating cyber-attack later in that month and disruptions associated with fuel theft from its pipelines for which it had to pay over the barrel.
The group posted a net loss of R104 million, narrowing down from a net loss of R3 billion in the same period a year earlier, while revenue increased by 11.3 percent from R32bn to R35.6bn.
“With the financial performance for the six months to September 2021 as well as expected continued recovery for the six months thereafter, we expect the business and financial performance for the 12 months to March 31, 2022, to be better than the 12 months ended March 31, 2021,” Transnet said.
The group reported in its October full-year results to March 2021 that more than R104bn in irregular expenditure had come to light as it examined supposedly clean audits conducted during the state-capture years by private sector audit firms.
It said progress was being made with lenders whose loan agreements had birthed irregular expenditure reporting contributing to the Moody’s downgrade.
Transnet has this far raised long-term funding of R6.1bn against its 2022 Corporate Plan funding requirement of R10.8bn for the 2021/22 financial year.
Earnings before interest, tax depreciation and amortisation in the reporting period were up 34.5 percent from R9.8bn to R13.2bn, with cash generated from operations after working capital changes of R18.5bn. It expects gearing improvements of 46.9 percent and cash interest cover of at least 2.5 times.
Major capital projects on the deck include the issuing of requests for information to market on bulk containers to be on point with an international terminal operator to partner at Transnet’s Durban Container Terminal Pier 2, and an international terminal operator to partner at Ngqura container terminal to drive the container transhipment strategy.
In October, chief executive Portia Derby was at pains to emphasise the stringent 104 steps procedure now part of its procurement systems to avoid cost overruns from previous contracts, including that of the 1 064 locomotives with a value of R42.9bn which were found to be irregular, and that a review of tenders to the value of R62.4bn had identified R28bn as irregular.
Chief financial officer Nonkululeko Dlamini pointed out then that the utility battled legacy contracts and procedures dating back to state capture years, which had culminated in R59bn of contracts being condoned by the National Treasury, while R183.5bn in spending had been tested for irregular expenditure.
In the current reporting period, Transnet has made provision for R5.7bn in capital investment to sustain and expand operations. It reported debt service costs of R15.4bn in capital repayments and interest paid.
On the execution of its immediate projects, Transnet said market responses had been extremely positive, and the transactions were in the process of being packaged for further partner procurement processes.
BUSINESS REPORT ONLINE