Nicola Mawson
Beleaguered logistics company Transnet’s loss for the year widened from R5.1 billion last year to R7.3 billion in the year to March after it lost a legal case lodged by Sasol and Total. It has set itself a profit target of R1bn for next year.
The external auditors have raised concerns that Transnet may not be able to continue as a “going concern in the foreseeable future”.
However, Transnet – which is currently implementing a recovery plan – believes that any risks will be “satisfactorily addressed” as it restructures.
It adds that government guarantees to the value of R47bn provides it with the expectation that the group “will continue to have access to adequate resources and facilities to be able to continue its operations as well as fund the capital investment programme for the foreseeable future, as a going concern”.
On Friday, the BRICS’ New Development Bank granted Transnet a R5bn loan.
This would help support the modernisation and improvement of South Africa’s freight rail sector.
The loss comes despite an increase in revenue of 11.6% to R76.7bn, which it said was in line with weighted average tariff increases throughout the business, higher volumes from the rail and container businesses, partially offset by lower pipeline volumes.
Transnet explained in its annual financial statements that the higher loss was due to a court ruling in June that ordered Transnet to pay Total and Sasol just more than R9bn after the two petroleum companies successfully argued that Transnet over charged them to transport crude oil. Transnet will be appealing the judgement on “various grounds”.
Total and Sasol claimed it breached a 1991 contract, as it is alleged that Transnet overcharged them when transporting crude oil through its pipeline system by not correctly using an agreed formula. A provision to the value of R9.3 billion was made in the financial statements, which considered the claim, interest and legal fees as estimated.
In its results statement, Transnet said that “rail volumes were impacted by various operational challenges, including collisions and community unrest on the coal line and equipment challenges on the ore line, derailments, Eskom power outages affecting all lines, as well as customer challenges on the coal and general freight business lines.”
The state-owned company also stated that petroleum volumes decreased, mostly because of a refinery shutdown in the first quarter of the year.
BUSINESS REPORT