TRANSNET’S HALF-YEAR CAPITAL EXPENDITURE HITS A RECORD Investment programme gathers speed TRANSNET’S seven-year capital investment programme was starting to bear fruit, the group’s chief executive Brian Molefe said yesterday, as capital expenditure for the six months to September rose 66.8 percent to a record R18.7 billion. The state-owned logistics and transport utility launched its R300 billion capital investment programme – also known as the Market Demand Strategy – in 2012, and has to date spent R77.9bn. However, the group’s profits for the period declined by 24.9 percent to R2.1bn. Molefe said this was not of concern as the group’s core business earnings before interest, taxes, depreciation and amortisation (Ebitda) increased 6 percent to R12.8bn. Transnet also, for the first time, recorded revenue growth of R30.3bn in the six-month period, a 6.4 percent increase. “The combination of depreciation, impairment of assets, fair value adjustments and other items such as net finance cost, have resulted in us recording lower profits for the period compared to [the] same period last year,” Molefe said. Depreciation was up 19 percent. Molefe said this was in line with Transnet’s increasing asset base. Finance costs for the period were up 17.4 percent. “We are not concerned about this because the Ebitda, which is the core of our business, has been positive at 6 percent and we also had high impairment of assets including taking about 20 locomotives out of operations because they were old and had to be replaced,” he said. Molefe said the capital expenditure for the six months had for the first time equalled the amount invested over a 12 month period in 2011. “Over the last four years we were spending for the first six months of each year R11bn on average. This year for the first time we spent R18.7bn in six months, an amount that we spent in the full year of 2011.” He said this showed that the Market Demand Strategy was starting to kick-in. “The first three years we were busy with proposals and other things and the money was now beginning to be spent.” He added that the bulk of the R18.7bn was spent on freight and rail, with R6.3bn spent on locomotives. About 1 282 wagons were built in the company’s manufacturing facilities throughout the country. Of this amount, R9bn was used to fund expansions and the rest was used for maintenance. “This ratio used to [be] 60:40 in favour of maintenance and now it has changed to about 50 percent going into expansions,” he said. Transnet Freight Rail (TFR), which is set to receive the lion’s share of the group’s capital investment programme under the market strategy, contributed about 52 percent to group revenue. TFR will receive about R205bn of the R300bn of the capital investment programme.
Posted on: Thu, 30 Oct 2014 15:31:39 +0000
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