TRANSNET PRESENTATION TO PORTFOLIO COMMITTEE OF PUBLIC ENTERPRISES BRIEFING BY STATE OWNED ENTERPRIS

1
TRANSNET PRESENTATION TO PORTFOLIO COMMITTEE OF
PUBLIC ENTERPRISESBRIEFING BY STATE OWNED
ENTERPRISES ON BUDGETS AND STRATEGIC PLANS
2009/10
Mr Chris Wells Acting Group Chief Executive 17
June 2009
2
CONTENT OF THE PRESENTATION

• Introduction
• Overview Achievements
• Changes in Economic Environment
• Transnet Strategy
• Regulatory Environment
• 2009/10 Corporate Plan
• Risks and Mitigating Plans
• Conclusion - Strategic Priorities 2009/10

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INTRODUCTION
Shareholder Mandate

• Transnets key role is to assist in lowering the
  cost of doing business in South
• Africa and enabling economic growth through
  providing appropriate ports, rail
• and pipeline infrastructure and operations in
  a cost effective and efficient
• manner and within acceptable benchmark
  standards
• Transnet is self-funded and does not receive
  subsidies from the State.

Vision and Mission

• Transnet is a focused freight transport company,
  delivering integrated, efficient, safe, reliable
  and cost-effective services to promote economic
  growth in South Africa
• This is to be achieved through increasing our
  market share, improving productivity and
  profitability and by providing appropriate
  capacity to our customers ahead of demand

Values

• We would like our customers
• to prefer us because we are reliable,
  trustworthy, responsive and safe
• and because
• our employees are committed, safety conscious,
  accountable, ethical,
• disciplined and results orientated

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TRANSNET STRUCTURE

• Luxrail
• arivia.kom

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KEY STATISTICS

• Rail Infrastructure
• 30 000 km of track
• 22 300 route km
• Network Electrification
• 50kV AC (861km),
• 25 kV AC (2309km)
• 3kV DC (4935km)
• Axle loading
• Main lines at 22t / axle
• Coal and ore lines 30t / axle (coal line operates
  at 26 ton)
• Current Volumes
• GFB 78mt
• Coal 62mt
• Iron Ore 37mt

• Port Infrastructure
• 9 Commercial Ports
• 19 container berths
• 3 automotive terminals
• 26 dry bulk berths
• 39 break bulk berths
• 13 liquid bulk berths
• Current Volumes (TNPA)
• Containers 3.8 m TEUs
• Dry bulk 122 mtpa
• Auto 527 000 units
• Liquid 49 mtpa
• Break Bulk 7.5 mtpa

• Pipeline Infrastructure
• Crude line 580 km
• Design Cap 6,8 bill. l/a
• Current Cap 5,8 bill.l/a
• Refined line725 km
• Design cap 3,5 bill. l/a
• Current cap 4,3 bill. l/a
• Avtur 94 km
• Design cap 1,2 bill. l/a
• Current cap 1,1 bill. l/a

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CONTENT OF THE PRESENTATION

• Introduction
• Overview Achievements
• Changes in Economic Environment
• Transnet Strategy
• Regulatory Environment
• 2009/10 Corporate Plan
• Risks and Mitigating Plans
• Conclusion - Strategic Priorities 2009/10

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7

TRANSNET HAS EFFECTED A SUCCESSFUL FINANCIAL
TURNAROUND OVER THE PAST FIVE YEARS
R billion
7

• Continuous increase in revenue showing results
  of
• initiatives to grow the business, with revenue
  
• increasing from R25.3bn in 2004/05 to R30.1bn
  in
• 2007/08 (19.0 increase) 2008/09 in process
  of
• being finalised

Budget
08/09
07/08
06/07
05/06
04/05

• Improvements through
• Operational efficiency improvements, effective
  cost cutting initiatives mainly due to
  reengineering projects
• Sale of discontinuing non-core businesses
• Improvement from R7.3bn in 2004/05 to R12.8bn in
  2007/08 (75.3 improvement)

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Budget
07/08
06/07
05/06
04/05
08/09

• Balance sheet restructuring and cost effective
  debt structures yielding positive results with
  consistent below target gearing from 61 in
  2004/05 to 30 in 2007/08 (50.8 improvement)
• This enables Transnet to fund capital investments
  more cost effectively and without government
  guarantees

-11
61
50 Max
Budget
46
39
39
30
08/09
07/08
06/07
05/06
04/05
6
8
SIGNIFICANT IMPROVEMENT IN OPERATIONAL
EFFICIENCIES

Key Performance Indicators
Rail
Weighted Loco Availability (GFB, Coal and Ore - )
Net Ton Kilometre per Loco (GFB 000)
Net Ton Kilometre per Wagon (GFB 000)
Improvement in asset utilization releasing the
pressure on rolling stock requirements.
15
7
3
88
82
08/09
04/05
08/09
04/05
04/05
08/09
Ports
Moves per Crane Hour (No. of moves)
Containers per Berth (No.)
Sweating the Port assets to create additional
capacity and alleviate pressure on investment
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189,989
150,261
04/05
08/09
08/09
04/05
CTCT
DCT
PE
Pipe-lines
Capacity Utilisation ()
Production Interruptions (Internal External -
Hours)
Operational improvements and introduction of Drag
Reducing Agents allow TPL to exceed design
capacities for Refined products
-22
965
755
04/05
08/09
06/07
08/09
Avtur
Crude
Refined
Net ton kilometer excluding the weight of the
wagon
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CONTENT OF THE PRESENTATION

• Introduction
• Overview Achievements
• Changes in Economic Environment
• Transnet Strategy
• Regulatory Environment
• 2009/10 Corporate Plan
• Risks and Mitigating Plans
• Conclusion - Strategic Priorities 2009/10

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KEY MESSAGES CHANGES IN ECONOMIC ENVIRONMENT

GDP () 2008/09
The financial crisis sparked the worst worldwide
recession since the Great Depression.

• Expectations of a quick resolution to the credit
  crisis have not been realised
• The IMF has revised its global GDP 2009 forecast
  to 0.5, from 2.2 in November 2008

08/09 CP 4
5.0
0.2
-1.8
-6.4
The global recession cause both commodity prices
and inflation to ease further on the back of weak
demand

• Commodity prices have fallen sharply since
  September 2008.
• Oil has fallen more than 60 from its peak and is
  forecast to increase to an average of 60
  -70/barrel in 2009.
• Iron Ore price had declined by almost 70 before
  recovering slightly.
• Thermal coal price has fallen by more than 50
  since July 2008

Baltic Dry Bulk Index 000/Tonne
11.5
11.5
11.6
11.4
Week 9
Week 8
Week 11
Week 10
International trade is projected to decelerate
sharply, with global trade volumes falling by
2.8 in 2009.

• The Baltic Dry Index has fallen over 90 in the
  past 6 months
• Drewry forecasts container growth of only 2.8 in
  2009
• Container volumes through US ports have been
  negative for 17 consecutive months
• Lower ocean freight rates benefit SA

GFB Volumes (mt)
-9
-20
Q3
Q2
Q4
Transnets short term focus will shift towards
sustaining the business

• Transnet is well equipped to weather the storm
• The growth strategy will continue to provide the
  strategic framework
• The timing of the implementation of the growth
  strategy will be delayed as a result of revisions
  to volume forecasts
• The short term focus is on protecting volumes and
  preserving cash

Containers (000TEUs)
4
-14
Q4
Q3
Q2
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CONTENT OF THE PRESENTATION

• Introduction
• Overview Achievements
• Changes in Economic Environment
• Transnet Strategy
• Regulatory Environment
• 2009/10 Corporate Plan
• Risks and Mitigating Plans
• Conclusion - Strategic Priorities 2009/10

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GROWTH STRATEGY THE NEXT HORIZON OF THE
TRANSFORMATION PROCESS
6.5
Transformation horizon
Three turnaround horizons
Grow

• Integration
• Accelerated rollout of operational improvements
• Integrated business model
• End-to-end corridor view
• Integrated customer view
• Achieve world class performance

Optimise
Stabilise

• Interactions
• Leveraging benefits of an intermodal business
• Effective commercial management of the network
  business
• Operational and functional teams jointly optimise
  their interaction areas

• Individual programme focus
• Getting the basics right
• Stabilising operations

Four-point turnaround strategy
Four-point growth strategy
2010
2005
2007/2008
Corporate governance and risk
Balance sheet restructuring
Growth through
Reengi-neering integration, productivity and
efficiency
Capital optimisa-tion and financial manage-ment
Safety, risk and effective governance
Human capital execution
Redirect and re-engineer
Human capital development
Positioning the Company for growth in the future
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TRANSNETS GROWTH STRATEGY
Client orientated planning and execution through
integrated commercial management
Growth through
Governance and performance management
Re-engineering, integration, productivity and
efficiency
Capital optimisation and financial management
Safety, risk and effective governance
Human capital execution

• Financial strength and sustainability
• Enterprise wide performance management linked to
  benchmarked operating KPIs
• Risk and safety management
• Transnet culture charter

• Focusing on 5 key corridors, providing end-to-end
  logistics services to customers
• Focus on key commodities
• Productivity and efficiency improvements

Investment plans

• Replacement and expansion of existing
  infrastructure to support growth
• Integrated investments of R80bn across rail,
  ports and pipelines
• Maintenance of core asset base
• Disposal of non-core properties (e.g.
  hostels/houses)

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GOVERNANCE MEDIA REPORTS

• Article attempted to conflate two different
  issues both apparently the subject of leaks from
  employees with their own agendas
• Succession
• Totally incorrect and without foundation
• Capital Projects Report has neither served at
  Board or provoked discussion at prior Board
  meetings therefore has of course no bearing on
  succession discussion
• Acting CEO, Chris Wells informed Board in January
  2009 that he was not available to be appointed as
  CEO. This also is in Public Domain.
• Board united on process.
• Capital Project Internal Audit Report
• Alleged evidence of financial mismanagement
• Transnet Internal Audit outsourced to Ernst
  young
• Strong control environment in line with best
  international practice
• Audit report in question was the result of a
  normal audit and evidence of proactive and very
  thorough governance processes
• Senior Ernst Young partner responsible issued
  press release saying that issues are not
  material and are part of normal process.
• Normal forensics in place to find source of leaks
  as this was a breach of Transnets ethics and
  employment contract and sought to bring harm to
  Transnet
• Other
• Transnet has an independent tip-offs line for any
  anonymous reports of alleged corruption or
  malpractice.

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STRATEGY IMPLEMENTATION THROUGH CORRIDOR APPROACH
Benefits of corridor approach
NOC
Procurement

• Transnet as a network business needs to operate
  in an integrated manner throughout the logistics
  corridor
• Provide a common transformation and long-term
  planning backbone
• Maximise growth opportunities across all
  operating divisions (rail, port, pipeline)
• Capture operational and functional synergies
  across operating divisions through integrated
  solutions
• Improve efficiency and effectiveness of logistics
  supply chain
• Providing an end-to-end logistics service to
  customers
• Provide optimal capital base for network
  infrastructure evolution
• Focus on key commodities and aligning capital
  investment to high-growth potential corridors

Maintenance
Functions
Yards
Projects
Sentrarand
Yard
Kaserne
Depot
Corridors
Newcastle
Port
Example
Danskraal
Durban
DCT
Beit Bridge
Messina
Louis Trichardt
Soekmekaar
Ellisras
Thabazimbi
Pietersburg
Drummondlea
Phalaborwa
Zebediela
Vaalwater
Chroomvallei
Hoedspruit
Naboomspruit
Middelwit
Nylstroom
Steelpoort
Graskop
Northam
Marble Hall
Roossenekal
Rustenburg
Plaston
Komatipoort
Cullinan
Belfast
Witbank
Mafikeng
Machadodorp
Pretoria
Rayton
Ogies
Lichtenburg
Krugersdorp
Baberton
O/fontein
Sentrarand
Welgedag
Welverdiend
Hawerklip
Coligny
Jburg
B/plaas
Breyten
Vermaas
Bethal
Lothair
Potchestroom
Ottosdal
Klerksdorp
Orkney
Hotazel
Schweizer-Reneke
Wolwehoek
Standerton
Vierfontein
Pudimoe
Makwassie
Charlestown
Newcastle
Ancona
Westleigh
Vrede
Erts
Golela
Utrecht
Kroonstad
Sishen
Warden
Hlobane
Naroegas
Warrenton
Vryheid
Manganore
Whites
Arlington
Harrismith
Virginia
Glen H
Nakop
Postmasburg
Palingpan
Glencoe
Upington
Bultfontein
Bethlehem
Theunisen
Marquard
Ladysmith
Kimberley
Kakamas
Bergville
Winburg
Douglas
Nkwalini
Empangeni
Eshowe
Bloemfontein
Kranskop
Richards Bay
Ladybrand
Moorleigh
Sannaspos
Koffiefontein
Greytown
Belmont
Maseru
Prieska
Stanger
Howick
Hilton
Network
Underberg
Copperton
Richmond
Mid Ilovo
Donnybrook
Springfontein
Durban
Matatiele
Mandonela
Kelso
Bethulie
Franklin
De Aar
Aliwal North
Kokstad
Harding
Simuma
Sakrivier
Bitterfontein
Dreunberg
Barkley East
Port Shepstone
Noupoort
Jamestown
Maclear
Kootjieskolk
Rosmead
Calvinia
Schoombee
Hutchinson
Hofmeyer
Umtata
Queenstown
Tarkastad
Qamata
Beaufort West
Seymour
Klawer
Somerset East
Amabele
Klipplaat
Cookhouse
Blaney
Porterville
Fort Beaufort
Saldanha
East London
Prins Alfred Hamlet
Touwsrivier
Kirkwood
Atlantis
Ladysmith
Calitzdorp
Oudtshoorn
Alexandria
Worcester
Uitenhage
George
Avontuur
Patensie
Port Alfred
Franschhoek
Cape Town
Port Elizabeth
Stellenbosch
Riversdale
Mosselbaai
Knysna
Protem
Strand
Simonstad
Bredasdorp
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KEY OPERATIONAL AND FINANCIAL STRATEGIC
INITIATIVES
Growth through
Growth Strategy
Reengineering integration, productivity and
efficiency
Capital optimi-sation and financial management
Safety, risk and effective governance
Human capital execution
3
1
2
4
5
Key Focus Areas

• Revenue optimisation- Deliver on committed
  volumes for export coal and iron ore
• Domestic coal
• Containers on rail

Targeted cost reduction including introducing
shared services procurement review
Improve key productivities and operational
efficiencies
Implement funding plan at cost effective rates
Optimise Capex on value creating growth and
sustainability
Financial Value Creation
Proactive cash management Gearing to remain lt47
and cash interest cover gt3 times over 5 year
plan
R80,5 billion Capex spend over five years on key
corridors
Target coal (74mt) and iron ore (60mt) volumes by
2013/14
Maintain operating cost increases below revenue
increases over the 5 year plan
Drive KPIs to benchmark levels
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CONTENT OF THE PRESENTATION

• Introduction
• Overview Achievements
• Changes in Economic Environment
• Transnet Strategy
• Regulatory Environment
• 2009/10 Corporate Plan
• Risks and Mitigating Plans
• Conclusion - Strategic Priorities 2009/10

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REGULATORY ENVIRONMENT

• The following Acts impact on the operations of
  the business
• National Port Act (2005) Transnet National
  Ports Authority responsible for ensuring safety
  efficient and effective functioning of the ports.
  Setting of tariffs.
• Ports regulatory body appointed
• Petroleum Pipelines Act (2003) to licence
  petroleum pipelines and storage facilities and to
  set tariffs
• Nersa as regulated body
• Port directives/regulations not finalised as yet
  which makes it difficult to manage and plan
  future revenues
• Pipeline regulations /directives issued but
  principles inconsistently applied between years
• Significant uncertainty on future revenues do not
  allow for alternative funding options
• No policy on funding for capital work in progress

Regulation in its current form and application is
not conducive for investment in major
infrastructure projects.
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CONTENT OF THE PRESENTATION

• Introduction
• Overview Achievements
• Changes in Economic Environment
• Transnet Strategy
• Regulatory Environment
• 2009/10 Corporate Plan
• Risks and Mitigating Plans
• Conclusion - Strategic Priorities 2009/10

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SALIENT FEATURES TRANSNET CORPORATE PLAN
2009/10(as submitted to Shareholder)

• Economic recession put Transnet volumes under
  pressure (-4.7 average growth against 2008/09)
  and lower volumes specifically in
• General Freight
• Containers
• Export volumes (excluding iron ore and coal)
• Revenue growth 8.8 y-o-y
• Cost containment to keep cost increases to 8.4,
  notwithstanding sharp increases in input costs
  such as electricity, fuel and other input costs.
• Profitability (EBITDA) of the Group increases by
  9.6 y-o-y
• The 5 year capital investment program remains on
  a R80bn level and approximately R21bn to be
  invested in 2009/10
• Cash from operations will remain a healthy
  R10.6bn in 2009/10
• Gearing and cash interest cover remain within set
  limits over the 5 years

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KEY COMMODITY VOLUMES AND TARIFF INCREASES 5
YEAR PLAN
0
Commodity
Volumes
Average Tariff increases
Containers (000 TEUs)
4,059
5.9
3,710
3,666

• Average tariff increase impacted by underlying
  product mix (Containers GFB)
• Including negotiated contract tariffs (export
  coal and iron ore) to
• Increase infrastructure capacity to meet customer
  demand, and
• Service requirements of clients

Average
3,315
11/12
10/11
09/10
08/09
09/10-13/14
Export Iron Ore (mtpa)
7.4
Average
09/10-13/14
11/12
10/11
09/10
08/09
Export Coal (mtpa)
9.7
Average
08/09
11/12
10/11
09/10
09/10-13/14
GFB (mtpa)
6.3
Average
11/12
10/11
09/10
08/09
09/10-13/14
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INCOME STATEMENT CORPORATE PLAN 2009/10
8
Budget
Operating Profit Margin ()
Critical to maintain profitability to be able to
fund major component of capex plans through
internal funding sources
20,8
19,7
17,1
16,5
15,0
13/14
12/13
11/12
10/11
09/10
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EXTERNAL REVENUE CONTRIBUTION BY DIVISION 5
YEAR VIEW
s
Specialist Units
TPL
TRE
6
1
8
TPT
14
53
TFR
33.6
TNPA
Budget
22
24
OPERATING COST CONTRIBUTION 5 YEAR VIEW
r
Materials Other
30
21.6
56
Personnel
6
Electricity
Fuel
Budget

• Labour cost increase over 5 year period on
  average 6 (reduction in numbers 3)
• Electricity cost increases by 158 from 2008/09
  to 2013/14

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25
BALANCE SHEET
3
Budget
100 967
8 454
109 421
54 216
12 661
41 555
41 988
13 217
109 421
Must maintain headroom to be able to withstand
unforeseen economic circumstances
Gearing ()
50
46,8
46,4
44,6
43,1
39,3
13/14
12/13
11/12
10/11
09/10
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CASH FLOW CORPORATE PLAN 2009/10
4
Excluding the redemption of current loans
Cash Interest Cover (times)
Critical ratio for investors to ensure sufficient
cash to service and repay loans
4,4
3,6
3,6
3,3
3,5
3,1
11/12
12/13
13/14
10/11
09/10
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27
SALIENT FEATURES OF FIVE YEAR CAPITAL INVESTMENT
PLAN

• The 5 year capital investment plan approved in
  the 2008/09 Corporate Plan amounts to R80.5bn
• Latest approved 5-Year Investment Plan amounts
  to R80.5bn.
• Projects in plan have been reviewed and
  re-prioritised as well as rescheduling of cash
  flows over 5 years to
• - Remain within the financial parameters
• - Ensuring that revised customer demands are
  still met
• - Capacity is created on time to meet future
  volume demands
• Of the planned Capital Investment of R80.5bn
  spending will be as follows
• 32 in rolling stock (R25.8bn)
• 59 in Infrastructure related projects (R47.5bn)
• 9 in Acquisition of machinery equipment and
  floating craft (R7.2bn)
• The capital expenditure over the next three years
  of R57.7bn will be funded by borrowings of
  R28.4bn and cash from operations of R29.3bn.

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TRANSNET 5 YEAR CAPITAL HISTORICAL SPEND AND
INVESTMENT PLAN
5
Average investment per annum 2000/01 2004/05
R billion
80.5
2006/07
5 yr plan
2009/10
2010/11
Cumulative 3 yr Actual
2011/12
2007/08
2013/14
2008/09
2012/13
Invested cumulatively the last 4 years more than
the previous 15 years
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CAPITAL INVESTMENT 5-YEAR PLAN R80.5bn
7,718
Expansion
Sustaining
Sustaining vs Expansion (3 year view)
21,912
19,442
16,336
9,071
8,121
13,331
42
7,180
9,480
58
9,439
12,841
11,321
7,718
9,156
3,892
1,762
09/10
10/11
11/12
12/13
13/14
Other R1.2bn
TPL R11.1bn
Capital spending will be closely monitored during
year to ensure that financial metrics are
maintained
14
TPT R6.3bn
1
8
TFR R43.5bn
54
20
TNPA R16.3bn
3
TRE R2.1bn
30
CAPITAL INVESTMENT PLANNED SPENDING PER CORRIDOR
Capex spread over the Country
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31
MAJOR EXISTING PROJECT TNPA DURBAN HARBOUR
ENTRANCE CHANNEL WIDENING
Overview The Durban Harbour Entrance Channel
Widening and Deepening project is essential in
enabling the Port of Durban to accommodate larger
vessels through its entrance and to improve the
safety of navigation. The widening of the
entrance to 330m will enable the super post
panamax container vessels to enter the port
without any constraining factors. Current
Status Excavation of the North revetment
continues and is progressing well. Armouring of
the new north grove and the south breakwater is
making good progress. Design of the sand bypass
system at A-berth is nearing completion while
commissioning of the temporary bypass system is
scheduled for June 2009. The project has reached
a 60 stage of completion.
Investment Criteria
Cost
Time
Quality
Local Content
Safety
Risk
30
32
MAJOR EXISTING PROJECTS FREIGHT RAIL ORE LINE
EXPANSION TO 47mtpa
Overview The aim of the ore line expansion
project is to increase the ore carrying capacity
on the Sishen to Saldanha corridor from 41mtpa to
47mtpa. The project entails the upgrading of
infrastructure and the procurement of rolling
stock to enable the increase in the conveyance of
the additional tonnages. The Ore Line is an
expansion project aimed at increasing capacity
for ore exports. A project to further increase
capacity to 60mtpa to address client demand has
been approved with the feasibility having been
completed and the early stage of execution of the
project in progress. Current Status New control
software to improve reliability of tipplers,
conveyors and reclaimers has been successfully
implemented. Passing loops are handed over to
operations after completion on a continual basis.
Various contracts for the power upgrade and
material acquisition are underway. The project is
56 complete.
Investment Criteria
Cost
Time
Quality
Local Content
Safety
Risk
31
33
MAJOR EXISTING PROJECTS FREIGHT RAIL COAL LINE
EXPANSION TO 78 mtpa
Overview The aim of this project is to increase
the coal carrying capacity of the line from the
mines in Mpumalanga to the Port of Richards Bay.
This is an expansion project and of major
economic importance as it affects exports. The
expansion of the Coal line entails the upgrade
and building of new infrastructure as well as the
acquisition of rolling stock. Current
Status Rail and power infrastructure work is
progressing well and is progressing well.
Locomotive upgrades and wagon refurbishments are
progressing according to plan.
Investment Criteria
Cost
Time
Quality
Local Content
Safety
Risk
32
34
MAJOR EXISTING PROJECTS TNPA NGQURA CONTAINER
TERMINAL
Overview Ngqura Container Terminal is a
Greenfield project with the objective of
providing a full service container terminal
together with rail links to the port. The scope
is to develop a 4 berth container terminal and
further extending the port infrastructure for a
small craft basin, tugs, buildings and other
landside infrastructure for the functioning of a
container terminal. The project will provide 700
000 TEUs/a capacity when complete. Current
Status 30 hectares of paving have been completed
behind the first 2 berths while work on the
trailer park and admin buildings is progressing
well. The terminal handled its first two vessels
in September 2008. Transformers for Eskom and
cargo handling equipment for Port Terminals were
offloaded from these vessels.
Investment Criteria
Cost
Time
Quality
Local Content
Safety
Risk
33
35
MAJOR EXISTING PROJECTS TPL NEW MULTI-PRODUCT
PIPELINE
Overview The aim of this project is to build a
550 km new trunk line from Durban to Jameson Park
(Gauteng), 24 inch in diameter, addressing the
increased demand for fuel in Gauteng and
surrounding areas. The trunk line will connect an
inland and coastal terminal with significant
storage capacity. The existing pipeline is 40
years old and needs replacing. With the front-end
engineering design phase completed, Transnet was
granted licence to construct the NMPP by NERSA.
It also entails the replacement of two northern
network pipelines that have outlived their
sustainable life. Given the energy problem facing
South Africa, the Board has granted unconditional
approval to commence construction in February
2008. This project is considered a strategic
project for the Company, and is of national
importance.  Current Status In May 2008 a R3.3
Billion contract was awarded to Spiecapag Group
5, a South African French Consortium for the
construction of the NMPP. Favorable
Environmental Approvals for the project scope has
also been received. Manufacturing for the 16
pipe commenced in April 2008 and all 105 000 tons
of steel for the main 24 pipe has arrived in
South Africa. As at end March 2009, the first 6
out of a total of 170 km of 16 pipe had been
laid in the Kendall/Waltloo area. It is expected
that the last phase of this project will be
completed at the end of 2011.
Investment Criteria
Cost
Time
Quality
Local Content
Safety
Risk
36
COMPETITIVE SUPPLIER DEVELOPMENT PROGRAMME (CSDP)
1.0
551

• The aim of the Transnet Competitive Supplier
  Development Programme (CSDP) is to localise
  Transnet supply chain to a reasonable level and
  to promote South Africa as an off-shore source of
  goods and services for Original Equipment
  Manufacturers (OEMs).
• This will secure source of supply, provide
  industrialisation opportunities for national
  businesses and reduce lead times
• Initially, the programme is being piloted over
  three years with rolling stock and port equipment
  purchases as its focus. The following is the
  progress to date

35
37
5-YEAR FUNDING REQUIREMENT PER 2009/10 CORPORATE
PLAN
Excluding the redemption of current loans
More than 50 of the funding requirements for the
2009/10 financial year has already been raised to
date on the strength of Transnets balance sheet.
36
38
TRANSNET FUNDING SOURCES TO TAP INTO

• The following funding sources have been
  initiated. The amounts are indicative subject
  to market conditions
• Domestic bonds (TN17, TN23 and T27 Bonds)(R6 bn)
• Currently tapping R1 bn per month and plan to
  launch at least 1 new bond increase the size as
  liquidity increases
• ECA Supported Funding (R2 bn)
• 1st transaction with Finvera to be concluded by
  early April 2009.
• Development Finance Institutions (R4bn)
• JBIC loan agreement signed 26 March first
  drawdown mid April 2009 approximately R2 bn and
  balance (R2bn) in line with project payment dates
• AfDB at due diligence stage expected to conclude
  end May 2009
• Domestic Loans (R7 bn)
• Rand Bilateral loans from banks(8) and other
  financial institutions(2)
• International Bond (R5 bn)
• Close to concluding documentation update with
  year-end financials, if not implemented will
  replace with domestic bonds
• Other International Initiatives

Transnet has committed banking facilities in
excess of R4 billion that can be utilised when
required
39
CONTENT OF THE PRESENTATION

• Introduction
• Overview 2008/09 Preliminary Results
• Changes in Economic Environment
• Transnet Strategy
• Regulatory Environment
• 2009/10 Corporate Plan
• Risks and Mitigating Plans
• Strategic Priorities 2009/10
• Conclusion

38
40
GROUPS KEY RISKS (as at May 2009)
Strategic residual risks heat map
1
Revenue/Volume Growth Non compliance with Safety
and Standard Operating Procedures (SOPs) Economic
Regulation (Ports Regulator and National Energy
Regulator of South Africa) Funding/Liquidity
Risk Delivery of capital projects on time and
within budgets and affordability thereof Asset
Performance and Maintenance Regime Human
Resources Capability to deliver on growth
strategy Environmental Risks Input costs
including Energy (electricity), Fuel, Steel,
Pricing Supply Commodity Concentration Risks
(Third Party Supplier Risks)
1
2
3
9
2
6
10
3
4
7
5
8
Likelihood Rating
4
5
6
7
Consequence Rating
Priority I risk Transnet Group CE and Board
level Priority II risk - Operating Divisions
CEOs Level Priority III risk - General Managers
level Priority IV risk Managers level Priority
V risk Employees level
8
9
10
Mitigating plans are in place to manage the key
risks
39
41
IMPLEMENTED A DYNAMIC MANAGEMENT FRAMEWORK WITHIN
EPM OPERATING MODEL
Dynamic Management Framework to actively assess
performance and plan/reallocate resources to
achieve goals
Weekly Activity Reporting
Focus on weekly trends volume trends, year end
estimates and impact analysis on Group Revenue
80
90
Monthly assessment of performance, success of
cost cutting and capex initiatives and updated
year end estimates
Monthly Performance Assessment
95
100
Quarterly Performance Assessment
Quarterly workshop (Ext. Exco) on year-to-date
results, year-end estimates and effectiveness of
initiatives
105
Corporate Plan
40
42
2009/10EXECUTIVE SUMMARYWEEKLY ACTIVITY
REPORTING
8
Extract of Week 11 Report
Previous year
Budget
-9,5
Current Estimate
9
-17
4,1
1.1
-3,6
66,644
1,37
0.83
1,41
1,35
61,102
1,24
1.0
-1,0
0.69
7.39
3.72
6,1
3.68
5,8
5,1
271
5.95
5.89
268
2.50
251
Export Coal (mt)
GFB (mt)
Containers (TPT)
Export Iron Ore (mt)
GFB (mt)
Containers (000 TEUs)
Export Iron Ore (mt)
Export Coal (mt)
-49
-34
-3
872
166,613
358,376
369,753
109,400
447
Current Year
Prior Year
Liquid Bulk (TNPA)
Break Bulk (TPT)
Other Bulk (TPT)
Analysis of Volume and Revenue Variance - Year
end Estimate (2009/10)
Revenue contribution to Group
Size
Iron Ore (TPT)
Iron Ore (TNPA)
Petroleum
Baltic Dry Bulk Index /Tonne
Spot Price /Tonne Coal
Spot Price /Tonne Iron Ore
Iron Ore (TFR)

• The Transnet weighted volume variance estimate
  for 2009/10 is negative 1.4 (estimated 2.5
  negative for June 2009).
• Group revenue (all commodities) is estimated to
  be 4.7 below budget for the 2009/10 year, mainly
  due to limitation on petroleum tariff increases,
  container volumes and negative price mix, export
  coal volumes and other bulk commodities.
• The Group revenue variance for 2009/10 would only
  be 2.0 below budget if the impact of TPLs
  tariff increases are excluded.

GFB
Liquid Bulk
Volume Variance
Coal (TFR)
Coal (TNPA)
Containers
Other Bulk
Automotives
Negative 4.7 revenue variance, including TPL
tariffs
TRANSNET STATUS
Gas
Negative 2 revenue variance, excluding TPL
tariffs
-8
-6
-42
-4
-2
-10
6
4
2
0
Revenue Variance
41
43
CONTENT OF THE PRESENTATION

• Introduction
• Overview 2008/09 Preliminary Results
• Changes in Economic Environment
• Transnet Strategy
• Regulatory Environment
• 2009/10 Corporate Plan
• Risks and Mitigating Plans
• Conclusion - Strategic Priorities 2009/10

42
44
CONCLUSION - 2009/10 STRATEGIC PRIORITIES

• Increasing export iron ore volumes by 11.6 above
  the budget to contractual levels (47.9mt compared
  to budget of 43mt)
• Increasing current throughput in domestic coal to
  at least achieve the budgeted volumes of 21.5mt
• Containers on rail to increase by 10 above the
  current budget of 544 460 TEUs to 600 000 TEUs
• To maintain at least the current trends in
  magnetite and cement volumes which are on average
  70 and 20 in excess of budgets respectively.

Volume and revenue opportunities
43
45
END OF PRESENTATION
THANK YOU