1. Meeting the freight logistics challenge Presentation to the Portfolio Committee on Transport Maria Ramos Group Chief Executive Transnet Limited 2 August 2007

2. Structure Context Freight system challenges What the NFLS says
What Moving South Africa says
Transnet’s view
The freight demand model
Demand forecasts
The container value chain
How is Transnet responding to the challenges?
Turnaround Strategy
How has Transnet performed to date?
Progress on the turnaround strategy
Financial performance
Where will we focus going forward?
Integrated objectives
Infrastructure
Long term
5 Year Plan

3. Efficient and effective freight logistics is critical to economic growth
Global economic liberalisation and advances in transport and ICT have given rise in recent years to high levels of global sourcing in many production systems
Imports by high-income countries from developing countries have risen from below 15 percent in the 1970s to nearly 40 percent today, and their share is expected to rise to more than 65 percent by 2030 (World Bank, 2006)
Supply chains have emerged as key competitive weapons as goods become increasingly commoditised
This requires our international supply chains to be globally competitive in terms of cost, speed, reliability, flexibility and reach
Transnet is focused on delivering a world class integrated bulk freight logistics system that will provide local firms with a competitive advantage

4. The South African freight system is far bigger than Transnet
Source: NFLS, 2005
This view of the system players ignores the very important role played by shipping lines

5. Structure Context Freight system challenges What the NFLS says
What Moving South Africa says
Transnet’s view
The freight demand model
Demand forecasts
The container value chain
How is Transnet responding to the challenges?
Turnaround Strategy
How has Transnet performed to date?
Progress on the turnaround strategy
Financial performance
Where will we focus going forward?
Integrated objectives
Infrastructure
Long term
5 Year Plan

6. What the NFLS says: The problem statement
The freight system in South Africa is fraught with:
Inefficiencies at system and firm level
Structural infrastructure shortfalls and mismatches
A lack of integrated planning
The skills base is deficient
Information gaps and asymmetries abound
The institutional structure of the freight system is inappropriate and
The regulatory frameworks are incapable of resolving the problems in the industry

7. What the NFLS say: The system challenge
Impact
Ageing infrastructure
Restricted capacity, Unreliable services, High investment requirements
Low efficiency
High cost, Unreliable services, Low service levels
Low collaboration
Duplication, Under-utilisation, High costs
Lack of integrated planning
Spatial and timing mismatches, Wasted effort and resources
Inappropriate regulatory framework and institutional structure
No ability to change system, Monopoly pricing for “competitive” services, No or low competition

8. Structure Context Freight system challenges What the NFLS says
What Moving South Africa says
Transnet’s view
The freight demand model
Demand forecasts
The container value chain
How is Transnet responding to the challenges?
Turnaround Strategy
How has Transnet performed to date?
Progress on the turnaround strategy
Financial performance
Where will we focus going forward?
Integrated objectives
Infrastructure
Long term
5 Year Plan

9. What MSA says: Key strategic challenges
Export competitiveness
Lack of alignment for value added exports
Barriers to cross border SADC traffic
System sustainability
High systems cost of domestic freight (externality costs)
Sustainability of the freight industry
High systems costs together with significant resource constraints, create a dynamic of a gradually deteriorating and eventually, financially unsustainable system

10. South Africa has been unable to overcome this challenge
What MSA says: Lack of alignment makes it difficult to address the challenge
The system lacks proper alignment
There has historically been no institution or grouping of institutions with the function of integrating across the individual components of the system
Each component of the system has been managing to its own narrow objectives
Components of the system have therefore maximised against an unintegrated set of constraints and towards an unintegrated set of objectives
South Africa has been unable to overcome this challenge
An integrated Transnet can go a long way towards overcoming this challenge

11. Structure Context Freight system challenges What the NFLS says
What Moving South Africa says
Transnet’s view
The freight demand model
Demand forecasts
The container value chain
How is Transnet responding to the challenges?
Turnaround Strategy
How has Transnet performed to date?
Progress on the turnaround strategy
Financial performance
Where will we focus going forward?
Integrated objectives
Infrastructure
Long term
5 Year Plan

12. Transnet’s view of the freight system challenges
The challenges identified by the NFLS and MSA are valid
Transnet’s turnaround strategy is aimed at addressing these challenges
Transnet has identified additional challenges through the freight demand model and analysis of the container market

13. Freight demand model
The model was developed in August 2006 to assist with long term capacity planning
A first of its kind in South Africa
Modelling risk mitigated through stringent verification procedures which included:
Utilising multiple sets of economic forecasts
Comparing modeled flows against actual Transnet Freight Rail (previously Transnet Freight Rail) flows and outputs of SANRAL’s national freight flow model
Interviews with industry analysts, customers and supply chain experts to confirm forecasts and verify flows for the top 23 commodities comprising more than 90 percent of the total freight demand by weight
Model results were closely aligned with previous assumptions of long term demand for the ports

14. A pareto based combination was adopted
A pareto based combination was adopted. The modelling framework provided a economic structure which was then enhanced with empirical research for 90% of total GDP by weight.
Verify with:
Known flows
Rail data
National freight flow model
Actual data – based on publications and personal interviews
Macro-economic data
National I-O model
Apportionment - Supply and demand per commodity on a geographical basis
Allocation - Flows per commodity
Macro-economic forecast
Commodity forecasts
Parameters: 354 magisterial districts
95 commodity groupings
The total output was compared to the national freight flow model (SANRAL) and strong correlation on corridor and rural flows confirmed a high degree of accuracy.

15. South Africa is a transport intensive economy
Our long transport corridors is the key reason behind this abnormal demand
Transport needs to be especially efficient to overcome this challenge
Source: Supply Chain Management Centre, University of Stellenbosch

16. Structure Context Freight system challenges What the NFLS says
What Moving South Africa says
Transnet’s view
The freight demand model
Demand forecasts
The container value chain
How is Transnet responding to the challenges?
Turnaround Strategy
How has Transnet performed to date?
Progress on the turnaround strategy
Financial performance
Where will we focus going forward?
Integrated objectives
Infrastructure
Long term
5 Year Plan

17. Our structural problem with corridors will grow.
Million tons 2006, 2011, 2016, 2021, 2026
Likely and high scenario
Gauteng-Beitbridge (incl. Polokwane)
Gauteng-Nelspruit (incl. Witbank)
Gauteng-Lobatse
Gauteng-Richards Bay
Gauteng-Cape Town
Gauteng-Durban
Coastal
Gauteng-East London
Gauteng-PE
Growth in the two major corridors can only be addressed with a sustainable intermodal solution

18. Intermodal solutions provide the most efficient solution
The continued absence of an intermodal solution has led to a sudden increase in South Africa’s truck fleet in an attempt to address freight owners’ door-to-door needs
It is important to note that this increase has taken place after the release of the NFLS – the NFLS therefore did not take this into account
Failure to address the corridor challenge will result in corridor gridlock
Intermodal solutions provide the most efficient solution
Source: NAAMSA data

19. Primary flows are completely rail orientated for obvious reasons
Million tons 2006, 2011, 2016, 2021, 2026
Likely and high scenario
Magnetite
Domestic iron ore
Export iron ore
Export coal
Domestic manganese
Export manganese
Capacity expansion should follow well developed systemic patterns
Source: Centre for Supply Chain Management, University of Stellenbosch

20. Knowledge about rural traffic will facilitate branch line strategies.
Rural traffic in South Africa will pose growth challenges for the second economy
Million tons 2006, 2011, 2016, 2021, 2026
Likely and high scenario
Limpopo
Mpumalanga
North West
Kwazulu Natal
Northern Cape
Free State
Eastern Cape
Western Cape
This is primarily a road demand but rail solutions are possible where infrastructure is already installed
Knowledge about rural traffic will facilitate branch line strategies.

21. Total tonnage demand and shipped
In the likely scenario, total tonnage shipped will more than double in the next 20 years
Total tonnage demand and shipped
Likely scenario
Coordinated action is required by all stakeholders to optimise the investment required to meet this demand
Source: Centre for Supply Chain Management, University of Stellenbosch

22. .... and almost triple in the high scenario
Total tonnage demand and shipped
High scenario
Source: Centre for Supply Chain Management, University of Stellenbosch

23. The economy will grow the fastest, by weight, in basic energy related commodities, basic earthworks, building related and food commodities
Supply/Demand data: Growth in tons – 2006 to 2026
Source: Centre for Supply Chain Management, University of Stellenbosch

24. But when depicted as a % growth more beneficiated growth is expected
Supply/Demand data: % Growth in tons – 2006 to 2026
Source: Centre for Supply Chain Management, University of Stellenbosch

25. Salient points South Africa is a transport intensive economy
Freight demand will more than double in the next 20 years
The sudden increase in the truck fleet will lead to increasing congestion throughout the freight system
Future freight demand can best be met through the development of intermodal corridor solutions

26. Structure Context Freight system challenges What the NFLS says
What Moving South Africa says
Transnet’s view
The freight demand model
Demand forecasts
The container value chain
How is Transnet responding to the challenges?
Turnaround Strategy
How has Transnet performed to date?
Progress on the turnaround strategy
Financial performance
Where will we focus going forward?
Integrated objectives
Infrastructure
Long term
5 Year Plan

27. The container freight system
The container is the core of a highly automated system for transporting freight internationally
Almost all beneficiated goods are transported in containers
Maximising opportunities arising from the globalisation of production and supporting an export led growth strategy requires a world class container freight system
Maritime connectivity and ocean freight rates are the main drivers behind the competitiveness of South Africa’s container supply chains

28. Distribution of costs across value chain
Ocean freight is the biggest determinant of our container supply chain competitiveness

29. Source: Port of Singapore Authority, 2006
Comparison of supply chain costs
At around 3,5 Million TEU, South Africa accounts for only 0.75% of the world container market and our market is dominated by two lines
Source: Port of Singapore Authority, 2006

30. Structure Context Freight system challenges What the NFLS says
What Moving South Africa says
Transnet’s view
The freight demand model
Demand forecasts
The container value chain
How is Transnet responding to the challenges?
Turnaround Strategy
How has Transnet performed to date?
Progress on the turnaround strategy
Financial performance
Where will we focus going forward?
Integrated objectives
Infrastructure
Long term
5 Year Plan

31. Transnet vision and mission
Transnet is a focused freight transport company delivering:
Integrated, efficient, safe, reliable and cost effective services which help promote economic growth in South Africa
INCREASED
Market share
IMPROVED
Productivity and profitability
PROVIDING
Capacity for customers ahead of demand 31

32. TRANSNET’S CUSTOMERS PREFER US BECAUSE:
Transnet values
TRANSNET’S CUSTOMERS PREFER US BECAUSE:
We are:
Reliable
Trustworthy
Responsive
Safe service provider
OUR EMPLOYEES ARE:
Thinking
Disciplined
Results orientated
Ethical
Committed
Safety conscious
Accountable 32

33. Four-point turnaround plan
Enabling economic
growth
Four-point
Turnaround
Strategy
Redirecting and
Re-engineering
the Business
Strategic Balance
Sheet Management
Ensure Corporate
Governance &
Risk Management
Develop
Human Capital
Delivering efficient &
competitive services
Revitalising HR by
transforming culture
and behaviour of staff
Be a preferred and
sustainable employer
Focusing on:
- Talent management
- Leadership
- Transformation
- Performance and
reward management
Highest standards of corporate governance
Improvement in risk management, especially safety in all operations
Dispose all non-core activities and focus on core business units
Appropriate rate of return on invested capital (>WACC)
Post retirement funding
Optimise cash flow and cash management
Strategic asset/liability management
Improving
efficiencies and
effectiveness of core
divisions
Realising port-rail
synergies
Customer focus
Infrastructure and
maintenance
Focused freight
transport company
Strategic
intent 33

34. Structure to support strategy
TRANSNET COMPANY
Operational divisions (continued businesses)
Discontinued Businesses
Discontinued businesses
SA Express
Transtel Telecoms
Viamax
Autopax
freightdynamics
Housing Loan Book
Shosholoza Meyl
Arivia.kom
Transnet
Freight
Rail
RAIL
Engineering
PORTS
PIPELINE
National
Ports
Authority
Transnet
Port
Terminals
Transnet Pipelines
Supporting businesses: Property, Capital Projects 34

35. Structure Context Freight system challenges What the NFLS says
What Moving South Africa says
Transnet’s view
The freight demand model
Demand forecasts
The container value chain
How is Transnet responding to the challenges?
Turnaround Strategy
How has Transnet performed to date?
Progress on the turnaround strategy
Financial performance
Where will we focus going forward?
Integrated objectives
Infrastructure
Long term
5 Year Plan

36. Strategy implementation: achievements to date
Capital investment to address infrastructure challenges
On target with 2007 (R11,7 bn) roll out of five-year investment plan
Replacement of assets (R8,2 billion)
Expansion investments (R3,5 billion)
Major projects commenced and spending next five years per Corporate Plan
New Multi Product Pipeline (NMPP) from Durban to Johannesburg (R9,3 billion)
Widening and deepening of the entrance channel at the Port of Durban
(R2,6 billion)
Ngqura Container terminal (capacity from 2010 onwards) (R6,1 billion)
Coal line capacity expansion to 86 mtpa (R3,3 billion)
Ore line expansion to 47 mtpa (R3,8 billion)
Acquisition of 404 new locomotives (R4,9 billion)
Project management: Establishment of Capital Projects
Focus on: Co-ordination, implementation, skills, planning and delivery 36

37. Strategy implementation: achievements to date
Disposal of non-core assets to refocus the business
R20 million and R3 million, respectively
Metropolitan Life (including Kagiso Trust Investments) and Fifth Quadrant respectively
Transnet Pension Fund Administrators (100% - administration and investment services)
R1.8 billion
London & Regional Consortium
V&A Waterfront Holdings (Pty) Ltd (26%)
R30 million
VAE SA (Pty) Ltd
VAE Perway (Pty) Ltd (35%)
R70 million
Equity Aviation Services (Pty) Ltd
(and employee share scheme)
Equity Aviation Services (Pty) Ltd (49%)
R250 million (funded by issue of equity of 15% in Neotel (Pty) Ltd via Transpoint Properties (Pty) Ltd)
Neotel (Pty) Ltd (formerly the Second Network Operator)
Transtel Telecom FSN
Metro assets
R2 billion (no cash flow – transaction effected by share buy-back)
Department of Public Enterprises
South African Airways (Pty) Ltd (100%)
Price
Buyer
Businesses disposed 37

38. Disposal of non-core assets – Subsequent events
Strategy implementation: achievements to date
Disposal of non-core assets – Subsequent events
R5,8 billion
– Subject to certain conditions
Newshelf 664 (Pty) Ltd
“C” Preference share
Approximate R1,0 billion
Subject to Competition
Commission approval
Bidvest Ltd
Viamax Pty Ltd (100%)
Fair value of R1,4 billion
– Subject to Competition
FirstRand Bank Ltd
Transnet Housing
Loan Book
Price
Buyer
Businesses 38

39. Strategy implementation: achievements to date
Human capital development
Achievements:
Focus on:
Change management programmes in place
Organisational culture
Career planning and remuneration
Recruitment and retention
SPO’s defined for all managers and performance assessed
Performance management
Skills mapping completed
Leadership development plans
Prioritising skills and succession planning
Skills demand planning
Capacity building and skills development
Talent management
Additional capacity building
175 additional engineering bursaries
173 students at institutions of technology (to be increased to 300)
1 261 additional apprentices in different trades
20 Thuthuka bursaries through SA Institute of Chartered Accountants 39

40. Strategy implementation: achievements to date
Re-engineering the business: Vulindlela projects
Second year of implementation
Improve productivity levels and operational efficiencies
Orientate businesses towards customers
Address safety
Culture of planned maintenance
Increase in market share – volume growth (especially GFB in Transnet Freight Rail)
Savings of more than R2 billion have been achieved since inception
Success/achievements in 2007
Improved GFB freight flows (3 mt)
Capacity created on Iron Ore and Coal Line that exceeds current demand
from clients
Increase in monthly port handling capacity at DCT (TEU’s vs )
Procurement savings of R500 million p.a. and reduction in safety incidents
(R200 million) 40

41. Strategy implementation: achievements to date
Efficiency improvement: Transnet Business Intelligence projects (TBI)
Implementation of TBI projects
Effective use of technology, world class systems and processes
Financial management and reporting
Improving processes and systems that enable information management
Identified KPI’s across businesses to measure key value drivers
Benchmarking against international companies to ensure world
class performance
Implemented Key Performance Indicator project to measure:
Key volume drivers
KPI performance weekly/monthly
Performance vs benchmarks – all areas of business 41

42. Strategy implementation: achievements to date
Transnet Second Defined Benefit Fund (TSDBF)
Active management and leadership from Transnet
Currently in surplus of R1,9 billion as opposed to being in deficit in 2006 of R1,6 billion (aided by the sale of MTN shares-M Cell and V&A Waterfront)
Rule amendments submitted to the Minister for approval
Generally to enable bonus amounts to be paid to pensioners to exceed 2% pension increase (subject to affordability)
Transnet to pay ex-gratia bonuses of R125 million to pensioners
All to receive an additional 1%
Previously disadvantaged widows and members with >15 years service who receive low pensions and/or also over 65 years old receive additional amounts 42

43. Strategy implementation: achievements to date
Transnet Pension Fund Act Amendment Bill
Bill passed by Parliament enables non-Transnet employees of businesses transferred to other Government agencies to remain members – awaiting Presidential approval
Rule amendments approved by Minister of Public Enterprises with the concurrence of the Minister of Finance
Fund will become multi-employer with new employer guaranteeing obligations of its employees
Fund now in substantial surplus (R1,1 billion) 43

44. Put in place a special committee to manage Regulation
Strategy implementation: achievements to date
Economic Regulation
National Ports Act
Act in force from November 2006
Places responsibility on Transnet National Ports Authority to ensure safe, efficient and effective functioning of ports system
Independent Regulator oversees Transnet National Ports Authority’s functions, approves tariffs, hears complaints and appeals from port users
Transnet is investing in systems and capabilities to perform additional functions prescribed by legislation
Interacting with shareholder on certain aspects of Act
Pipelines
NERSA (energy regulator), declined Transnet Pipelines’s application for 5,6% increase
Methodology for pipeline tariffs not yet approved by NERSA
Transnet engaging with relevant authorities; important that tariff methodology enables Transnet to earn a fair return on invested capital (> WACC)
Put in place a special committee to manage Regulation 44

45. Strategy implementation: achievements to date
Risk Management
Operational Risk
Established a Risk Committee of the Board and appointed a Chief Risk Officer that serves on EXCO
Appointed GE Human Resources and HR Sub-Committee dealing with human capital in sustaining the turnaround
Improved safety measures and roll out safety awareness and training programmes
Reviewed safety procedures and strengthened capacity in problematic areas
Improved controls and campaign against fraud 45

46. Strategy implementation: achievements to date
Risk Management
Financial Risk
Financial Risk Framework in place covering all risks (interest, currency, market)
Asset and Liability Committee ensures that financial risks are effectively managed
Stringent financial objectives are set to ensure that targeted financial ratios are achieved/maintained
Improved internal financial and system controls 46

47. Performance vs Corporate Plan/Compact 2007
Transnet performance highlights:
three-year view
Achieved 99% of budget (Target: >90%)
208%
R11,7 bn
R11,8 bn
R3,8 bn
Capex (excl. Aviation) –
278%
R37,4 bn
R9,9 bn
Shareholders equity
Improvement against compact 19%
53%
39%
48%
83%
Gearing
Exceeds compact by 17%
70%
6,8%
5,8%
4,0%
Cash flow return on investment (CFROI – real return)
Exceeds compact by 2%
54%
5,4 times
5,3 times
3,5 times
Cash interest cover
Exceeds compact by 16%
139%
40,7%
35%
17%
EBITDA
Exceeds compact by 21%
78%
R8 470 m
R7 022 m
R4 750 m
Operating profit
Performance vs Corporate Plan/Compact 2007
Improvement vs 2004
2007 Actual
2007 Compact
2004 Actual
Measures 47

48. Structure Context Freight system challenges What the NFLS says
What Moving South Africa says
Transnet’s view
The freight demand model
Demand forecasts
The container value chain
How is Transnet responding to the challenges?
Turnaround Strategy
How has Transnet performed to date?
Progress on the turnaround strategy
Financial performance
Where will we focus going forward?
Integrated objectives
Infrastructure
Long term
5 Year Plan

49. Financial results 2007 Consolidated income statement 39,6% 40,7%
EBITDA margin (%)
4 930
7 404
Profit for year
102
1 082
Profit for the year from discontinued operations
4 828
6 322
Profit for the year from continuing operations 33 2
Income from associates
(2 042)
(1 902)
Taxation
(2 406)
(2 437)
Net finance costs
9 243
10 659
Profit from operations before net finance costs
1 105
2 189
Profit on sale of interest in businesses, impairment of assets,
dividends received and fair value adjustments
(2 163)
(3 018)
Depreciation and amortisation
10 301
11 488
EBITDA
(15 733)
(16 726)
Net operating expenses
26 034
28 214
Revenue
2006
R million
2007
for the year ended 31 March 49

50. Five-year EBITDA Margin Growth
Financial results 2007
Five-year EBITDA Margin Growth
86% growth 41 40 29 22 17 50

51. Core operating division performance
Operating divisions
EBITDA (R million)
Revenue (R million) 4% %▲
14 574
2007
2 910
2006
3 737
28%
14 055
Transnet Freight Rail
4% increase in revenue.
Total volumes 176,6 mt (2006:178 mt)
- GFB , (2006: 79,7)
- Iron ore 30, (2006: 29,6)
- Coal , (2006: 68,7)
Volumes negatively impacted by
- Customer’s production constraints,
- Capacity constraints
- Derailments
3% decrease in operating cost compared to prior year – improvements from the
re-engineering programme
Capital expenditure R7,4 billion
Transnet Freight Rail contribution to Group EBITDA 33% 51

52. Core operating divisions performance
Transnet Rail Engineering contribution to Group EBITDA 9%*
* Mainly internal and eliminated on consolidation
Operating divisions
1 088
47%
738
7 317
90%
3 845
Transnet Rail Engineering
EBITDA (R million)
Revenue (R million) 4% %▲
14 574
2007
2 910
2006
3 737
28%
14 055
Transnet Freight Rail
Revenue increase mainly due to integration of Transnet Freight Rail maintenance operation.
Locomotive reliability and availability exceeded targets
Annual number of wagon maintenance lifting increased from to
Record production of new iron ore and coal wagons
Capital expenditure R623 million 52

53. Core operating divisions performance
Increase in revenue mainly due to volume increases
- Containers 14%
- Vehicles 25%
Capital expenditure R1 026 million
Berth occupancy 66% (2006: 58,9%)
Transnet National Ports Authority contribution to Group EBITDA 40%
4 627 9%
4 242
6 107
12%
5 438
Transnet National Ports Authority
1 088
47%
738
7 317
90%
3 845
Transnet Rail Engineering
EBITDA (R million)
Revenue (R million) 4% %▲
14 574
2007
2 910
2006
3 737
28%
14 055
Transnet Freight Rail
Operating divisions 53

54. Core operating divisions performance
Transnet Port Terminals contribution to Group EBITDA 14%
Operating divisions
1 561
31%
1 193
4 098
14%
3 585
Transnet Port Terminals
4 627 9%
4 242
6 107
12%
5 438
Transnet National Ports Authority
1 088
47%
738
7 317
90%
3 845
Transnet Rail Engineering
EBITDA (R million)
Revenue (R million) 4% %▲
14 574
2007
2 910
2006
3 737
28%
14 055
Transnet Freight Rail
Revenue increase 14% vs 2006
- Containers (13% in TEU’s)
- Automotive (18% in Units)
- Bulk (2% in tons)
Capital expenditure R1 740 million 54

55. Core operating divisions performance
15% increase in revenue vs 2006
- Petroleum volumes (8,1%)
- Gas (14,6%)
- Tariff increase 2,5%
Capital expenditure R310 million
Board approval to commence with the Multi Product Pipeline subject to certain governance issues being resolved
Transnet Pipelines contribution to Group EBITDA 8%
Operating divisions
931 8%
860
1 218
15%
1 060
Transnet Pipelines
1 561
31%
1 193
4 098
14%
3 585
Transnet Port Terminals
4 627 9%
4 242
6 107
12%
5 438
Transnet National Ports Authority
1 088
47%
738
7 317
90%
3 845
Transnet Rail Engineering
EBITDA (R million)
Revenue (R million) 4% %▲
14 574
2007
2 910
2006
3 737
28%
14 055
Transnet Freight Rail 55

56. Financial results 2007 Consolidated balance sheet
R million
2006
R million
for the year ended 31 March
ASSETS
Non-current assets
57 843
50 144
PPE and other
57 720
48 125
Long term loans and advances
123
2 019
CURRENT ASSETS
19 411
28 202
Inventory, receivable assets and cash
9 841
7 588
Derivative financial assets
5 658
3 874
Assets classified as held-for-sale
3 912
16 740
Return on average total assets (%)
TOTAL ASSETS
77 254
78 346 56

57. Cash generated from operations (R million) Cash interest cover (times)
Financial Results 2007
Abridged consolidated cash flow statement
(5 379)
(4 637)
Other
11 244
13 488
Cash generated from operations
5 865
8 851
Cash flow from operating activities
2006
R million
2007
for the year ended 31 March
Cash generated from operations before working capital changes increased by 20% to R13,5 billion
Net cash generated from operating activities increased by 51% to R8,9 billion
Cash generated from operations (R million)
Cash interest cover (times)
4,3
3,5
4,8
4,5
5,4
7 178
7 040
10 089
11 244
13 488 57

58. Structure Context Freight system challenges What the NFLS says
What Moving South Africa says
Transnet’s view
The freight demand model
Demand forecasts
The container value chain
How is Transnet responding to the challenges?
Turnaround Strategy
How has Transnet performed to date?
Progress on the turnaround strategy
Financial performance
Where will we focus going forward?
Integrated objectives
Infrastructure
Long term
5 Year Plan

59. Integrated and coordinated action between the port, rail and pipeline systems is necessary to meet the challenges by:
Implementing a high performance rail corridor backbone for the country that will start to recapture corridor market share from road and provide the capacity to meet the long term demand for freight in the economy.
Operating the ports in a complementary manner to make the port system more efficient, increase maritime connectivity and reduce ocean freight rates
Integrating physical, financial and information flows along the port-rail-pipeline supply chain to ease the administrative burden of trade and create greater visibility and responsiveness within industry supply chains.
Formulating and implementing integrated service strategies for key customer segments to realise the synergies of the port, rail and pipeline systems.
Enhancing the connectivity of the South African freight system with the regional freight system

60. Integrated port and rail masterplan
Integration is well advanced in Transnet as can be seen from the following examples
Integrated port and rail masterplan
Integrated freight infrastructure solution for the Port of Ngqura
Integrated solution for Toyota
Focus on corridor performance management
In all these cases, a fragmented approach would yield a sub-optimal solution

61. Structure Context Freight system challenges What the NFLS says
What Moving South Africa says
Transnet’s view
The freight demand model
Demand forecasts
The container value chain
How is Transnet responding to the challenges?
Turnaround Strategy
How has Transnet performed to date?
Progress on the turnaround strategy
Financial performance
Where will we focus going forward?
Integrated objectives
Infrastructure
Long term
5 Year Plan

62. Ports and rail master plans
Informed by the freight demand model and stakeholders
Corridor approach adopted in the development of the plans
Ensures integrated port and rail planning and investment
Ports are clustered into three regional groupings ensuring that the associated coastal regions are assured of both bulk and general cargo facilities
Infrastructure strategy premised on creating capacity ahead of demand
Corridor solutions are expensive and risky. This risk can be managed through coordinated and complementary action between the port, rail and pipeline systems

63. Future core rail infrastructure
Ore line upgrade to 93 million tons in 3 stages
Extension of Loops and electrification upgrade CT - Kimberly
Upgrade signalling, power supply and electrification Kimberly - Gauteng
Bellville Intermodal Hub Upgrade
Loop extensions and power supply upgrade
Loop extensions and electrification Bloemfontein - Springfontein
Upgrade axle load, Glencoe - Gauteng
New industrial line:
Durban – Richards Bay, Richards Bay - Ermelo
Coal Line capacity upgrade to 92 Million tons
Gauteng Freight Ring
Sentrarand rail hub development
Future core rail infrastructure

64. An integrated approach to container capacity
Transnet’s capacity strategy for containers is premised on a complementary system of ports
This creates flexibility within the system and optimizes investment
Creating capacity ahead of demand is critical to ensure the reliability of the system

65. Container terminal expansion (2011)
Container capacity plan: Western Ports
Container terminal expansion (2011)
For 12% growth scenario further capacity to be provided by additional 2 berths in Cape Town or container expansions in Saldanha (2019)
12%
Shortfall in stacking capacity due to expansion project (EIA) approval delays, to be supplemented by inland stacking capacity
10%
TEU VOLUMES & CAPACITY 8%
EXISTING CT CONTAINER TERMINAL CAPACITY
YEARS

66. Container capacity plan: Eastern Ports
Existing DCT Capacity
Pier One (2008)
Capacity shortfall possibly supplemented by Ngqura (2010 – 2013)
Bayhead & RHB 600 series developed in parallel ( 2013)
Additional capacity required for 12% growth scenario at 2017 is currently under review
12%
10% 8%
TEU VOLUMES & CAPACITY
YEARS

67. Container capacity plan: Central Ports
Surplus capacity to handle overflow volumes from Durban from
For 12% growth additional capacity required at 2016
12%
New Ngqura 4 berth container terminal 2008
10% 8%
TEU VOLUMES & CAPACITY
EXISTING PE TERMINAL CAPACITY
YEARS

68. Structure Context Freight system challenges What the NFLS says
What Moving South Africa says
Transnet’s view
The freight demand model
Demand forecasts
The container value chain
How is Transnet responding to the challenges?
Turnaround Strategy
How has Transnet performed to date?
Progress on the turnaround strategy
Financial performance
Where will we focus going forward?
Integrated objectives
Infrastructure
Long term
5 Year Plan

69. Capex spending five-year plan: R78 billion*
13%
Capex spending five-year plan: R78 billion*
RAIL
Transnet Freight RailR34,8 bn
Coal Line – R4,9 bn
Ore Line – R3,8 bn
General Freight – R15,3 bn
Maintenance Capitalisation – R10,8 bn
PIPELINE
Transnet Pipelines R10 bn
Multi-product pipeline – R9,3 bn
Gas line upgrading – R0,2 bn
13%
PORTS
Transnet Port Terminals R9,5 bn
Durban – R0,9 bn
Richards Bay – R0,7 bn
Ngqura – R1,5 bn
Cape Town – R0,4 bn
Saldanha – R2,9 bn
12%
45%
24%
PORTS
Transnet
National Ports Authority R18,5 bn
Richards Bay – R0,8 bn
Ngqura – R4,7 bn
Cape Town – R3,8 bn
Durban – R7,6 bn
Floating craft – R0,7 bn 5%
RAIL
Transnet Rail Engineering R4,1 bn
Equipment - R2 bn
Upgrade of facilities – R1,1 bn
* Continuing businesses

70. Capex five-year plan: R78 billion*
12,8
Capex five-year plan: R78 billion*
Annual spending over five years
Cumulative
R78 bn
R21.5 bn
R16.9 bn
R17.5 bn
R12.7 bn
R9.4 bn
Five-year plan
2012
2008
2009
2011
2010
Rail
Ports
Pipeline and other
* Continuing businesses 70

71. 5 Year Infrastructure Investment Plan

72. Funding requirements: Next 5 years
R million
2007
R million
40% – 45%
39%
Gearing
* Funding requirements over 3 years approximately R25 billion
(15 207)*
(3 764)
Funding requirements
(10 085)
(1 860)
Loan redemptions
(5 122)
(1 904)
Cash shortfall
(78 014)
(11 674)
Gross capital expenditure
69 805
8 851
Cash flows from operating activities
ECA umbrella facility
DMTN program – R30 billion facility rated by Moody’s
Raise cost effective borrowings at the appropriate tenors 72

73. Funding requirements: Next 5 years
2008/09
R million
2009/10
R million
2010/11
R million
2007/08
R million
20011/12 R million
Cash flows from operating activities
7 653*
15 529
12 579
15 363
18 681
Gross capital expenditure
(16 935)
(21 481)
(17 480)
(12 714)
(9 404)
Proceeds from disposals and other investments
2 516
301
140 66 64
Loan redemptions
(5 054)**
(2 287)
(220)
(2 327)
(197)
Funding requirements
(11 820)
(7 938)
(4 981)
388
9 144
* Including sale of “C” Preference shares
** Redemption of T004 bond 73

74. Challenges next 3 years Grow the business Volumes/activities
Efficiencies and reliability improvements
Customer satisfaction
Providing safe services
Roll out of investment plan
Replace assets and capacity creation
Roll out of Transnet Business Intelligence project (TBI)
Risk Management and Corporate Governance
Safety of people and freight
Complying with environmental requirements
Strengthening internal controls
WE ARE DEDICATED TO FULFILLING OUR VISION AND MISSION:
To deliver on our commitment to our customers and co-operation with all stakeholders
To play a leading role in the transport and logistic sector to support economic growth in South Africa and fulfil the role required by the Shareholder 74

75. Thank you