Johannesburg - State-owned freight transport and
logistics company Transnet on Friday reiterated its commitment to press
ahead with its R80bn capital investment programme over the next
five years despite the ongoing economic recession which has forced peers to
ice ambitious expansion plans.
The company, which spent a record R19.4bn in the year ended in
March 31 2009, also expressed confidence that it would successfully spend
and finance the planned R21bn in the current financial year,
making this another record year.
Transnet, which released its Annual Report 2009 this week, provided more
details about the R19.4bn it spent in the year ended in March 31
2009.
This amount, excluding the capitalisation of borrowing costs of R764m, was 23% higher than the previous year.
It brings to R53.5bn the total amount invested by Transnet in
the last four years and this is cumulatively more than the total capital
expenditure of the core business divisions in the previous 15 years.
The company said that over the next three years, its capital investments
would amount to R57.7bn, of which R35.4bn was
anticipated to be financed through borrowings from the debt capital markets - mainly from the domestic markets while the rest will be funded by cash
generated from operations.
In line with its growth strategy, there was a discernable shift in
spending patterns towards creating capacity ahead of demand.
The bulk of the year's spend - 56% or R11bn - was on expanding
operations, while the balance (44% or an R8.5bn) was spent on
replacement of existing infrastructure.
Rail was by far the biggest beneficiary with some R9.2bn or
47% of the total followed by the ports, which invested R7.3bn and
pipelines R2.8bn.
The latter mainly went to the purchase of pipes, pumps and valves for
the New Multi-Product Pipeline (NMPP) between Durban and Gauteng to replace
the existing pipeline.
Commenting on the performance, outgoing chairperson of the Board, Fred
Phaswana said: "The records we have set since we launched our investment
programme are a source of great pride, not only for Transnet; but for South
Africa as a whole. Few companies have the capacity to manage a programme as
large as we have. This is further testimony to the soundness of our decision
to establish a specialist division to roll out this ambitious programme."
At the launch of the capital investment programme, Transnet also
launched Transnet Capital Projects.
Transnet then tied up with a joint venture of global engineering and
project management specialists Hatch Mott MacDonald (and its local partners
Goba) to effectively and efficiently roll out the demanding programme.
Acting group chief Executive Chris Wells, said the company had reviewed
the entire programme and taken the necessary steps to respond to the
deteriorating economic environment.
On balance, the major and strategically significant projects, most of
which were under way, were proceeding as planned.
Highlights
"This confirms our commitment to invest in our infrastructure to create,
in a cost-effective manner, appropriate capacity for our clients ahead of
demand. Given the current drop in demand as a result of global economic
conditions, we will implement a delayed phasing-in of certain investments.
"However, we will remain focused on priority projects where capacity is
needed to prepare for the upturn when demand improves," said Wells.
Highlights this year included the commissioning in October of Nqgura
Container Terminal, the green-fields port being built near Port Elizabeth,
and the delivery of some new locomotives.
Wells confirmed that Ngqura, which would initially have two berths and
capacity to handle 800 000 TEUs each year, would be commissioned according
to plans.
Until recently, Transnet funded the capital investment programme through
its own cash resources which were made up of its own cash flows and the
approximately R10bn the company raised through the disposal of
non-core assets.
Now that the disposal programme is complete, the company is implementing
its robust and comprehensive funding strategy.
Wells said the key focus of the strategy was to grant Transnet access to
a diverse range of funders on cost-effective terms at the right time.
To date, the company has set up a R30bn Domestic Medium-Term
Note Programme (DMTN) through which it has issued a number of bonds in the
local debt capital markets.
Transnet has also signed a string of bilateral agreements with local and
international financial institutions and, for the first time in its history
this year, it concluded funding transactions with foreign export credit
agencies.
"We are genuinely heartened by the confidence that investors have shown
in Transnet and our portfolio of investments by continuing to support our
programme despite the turmoil in the global credit markets. We see this as
an endorsement of our corporate strategy, business and operating model, risk
mitigation plans, management and the attractiveness of our projects," said
Wells.
- I-Net Bridge