| Fri 23 Oct 2020, 15:12 | | Availability of Annual Financial Results Announcement - BITRA |
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Availability of Annual Financial Results Announcement - BITRA
TRANSNET SOC Limited
Issuer Code: BITRA
(“TRANSNET” or “the Issuer”)
Availability of Annual Financial Results Announcement
In terms of sections 6.14 and 6.15 of the JSE Debt Listings
Requirements, Noteholders are advised that the Annual Financial
Statements for Transnet for the year ended 31 March 2020, are
available on the Issuer’s website:
https://www.transnet.net/InvestorRelations/Pages/Annual-Results-
2020.aspx
Transnet announces solid results despite a challenging operational
environment
The turnaround strategy and plan remain on track despite
setbacks encountered due to COVID-19 and a challenging economic
environment. The implementation of the strategy will pick up
momentum in the new financial year with the five (5) pillars
being customer service, people, asset utilisation, safety and
cost control. This will go a long way to positioning Transnet as
an efficient freight transport service provider, whilst
contributing to government’s socio-economic developmental
agenda.
Salient features and performance highlights
• Revenue increased by 1,3% to R75,1 billion
• EBITDA increased by 0,7% to R34,0 billion
• Profit for the year at R3,9 billion
• Cash generated from operations increased to R35,9 billion
• Gearing of 47,6% and cash interest cover at 2,9 times
• Capital investment of R18,6 billion represent 3.5% increase
compared to prior year
Throughout the COVID-19 crisis Transnet was able to meet its
financial commitments without requiring any relief measures.
Transnet remains cash generative and has not required government
support other than the R3,5 billion which was guaranteed in
1999.
Noteholders are advised that the Board has every reason to
believe that the Company has adequate resources and facilities
in place to be able to continue in operation for the foreseeable
future. The Board is satisfied that Transnet is a going
concern, and has continued to adopt the going concern principle
in preparing the annual financial statements.
Operations and financial control environment
Noteholders are referred to the detail in the integrated report
on the progress made on the turnaround strategy of the Company.
A new management team took office in the first half of the new
financial year, ensuring stability at the top. However, the
impact of events of state capture and mismanagement remain in
the organisation. The neglect in effective maintenance planning
and investments in systems control contributed to the under-
performance of the operations.
The external auditors are of the view that Transnet did not have
adequate systems in place to identify and report all irregular
expenditure as required by Section 55(2)(b)(i) of the PFMA. The
absence of adequate systems and the use of manual processes
resulted in irregular expenditure that was not always identified
and reported, and this dates back to 2011.
As in the prior year, Transnet was in the 2019/20 year unable to
determine the full extent of the understatement of the irregular
expenditure stated in note 39 of the Annual Financial
Statements. This led to a qualified audit opinion. It is
important to emphasise that the financial statements are
compliant with the International Financial Reporting Standards
(IFRS) in all material respects. The qualification has mainly
been as a result of non-compliance with the PFMA in the supply
chain management processes and Transnet internal processes.
There were no restatements in the prior years’ Annual Financial
Statements, furthermore, the non-compliance with the PFMA as
disclosed in note 39 of the Annual Financial Statements does not
require any restatement of the previous years’ annual financial
statements, notwithstanding that note 39 was updated.
Discussions with National Treasury and the Auditor-General (SA)
are continuing to find a solution as to how to record
expenditure on contracts entered into in the period of state
capture.
With the expectation of a favourable response from the audit
qualification waiver requests to our lenders, Transnet is of the
view that the qualified opinion will not result in any negative
action related to the debt book.
The Company’s external auditors reported one reportable
irregularity in terms of section 45 (1) of the Auditing
Profession Act, No 26 of 2005, to the Independent Regulatory
Board for Auditors, which has since been resolved.
The Transnet Board, together with management, will continue to
enhance controls to avoid the recurrence of such instances of
non-compliance.
23 October 2020
Debt Sponsor
The Standard Bank of South Africa Limited
Date: 23-10-2020 03:12:00
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