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Transnet keeps a lid on debt levels

Nov 07 2016 18:39
Lameez Omarjee

Johannesburg – State-Owned Enterprise (SOE) Transnet is keeping a lid on its debt levels, while embarking on an infrastructure investment programme.

According to the group’s interim results announcement at the head office on Monday, Transnet has repaid R17.2bn of debt during the six months ending in September 2016.

Its gearing ratio is at 43.8%, “comfortably below” the group’s target range of 50%.

“Through cash flow from operations we were able to pay the R17.2bn,”explained CEO Siyabonga Gama.

The group borrowed R11bn for this and the net debt paid was R6bn. This reduced debt from R134bn by 5.1% to R127bn.

The 5.1% decrease is in line with a funding plan for the capital investment programme.

Transnet has committed banking facilities of R16.85bn available and committed funding worth R4.3bn, guaranteed by US Exim. It also has secured R12.9bn from the China Development Bank for its 1064 locomotive programme.

READ: "I won't lose sleep over Futuregrowth" - Transnet CEO

So far, Transnet has spent R9.4bn on its infrastructure and investment programme, “despite a weak economy”.  

“These investment activities are very important for us to remain in business. In sustaining capital we need to invest in prolonging the life of some plant and equipment,” he said.

The group has also invested in new equipment, positioning them well to earn more revenue, he explained.

However, capital investment was down 41% compared to the same period in 2015.

Diversification strategy

Transnet has further diversified its operations across Africa.

“External revenue sources are bearing fruit,” the report stated. Transnet Engineering recorded a 13.7% increase in external revenue to R688m, up from R605m in 2015, this includes sales to the rest of Africa.

“There is very little growth in South Africa itself. If we are going to keep pumping as a company, then the African continent, India and the Middle East is important.”

He explained that the organic growth in South Africa is limited.

“We are looking to those opportunities to grow our market share. Some countries grow faster than South Africa.”

Gama added that Tanzania, Angola, the Democratic Republic of Congo and Ethiopia are “interesting countries”. 

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transnet  |  siyabonga gama  |  investment  |  capital  |  debt
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