Publicly owned freight transport group Transnet on Monday reported a R6,8-billion attributable profit for the year ending March 31 2005 after posting a R6,3-billion loss last year.
The group’s turnover rose by 6% to R46,2-billion from R43,6-billion a year ago. Operating margins increased by 28% to 12,9% during the reporting period, the highest level reached in six years.
The group said margins increased significantly in all core divisions of the group. This improvement in margins resulted in a 35% increase in profits from operations of R6-billion in the period under review.
Group operating expenses were contained — rising by a modest 2,7% to R40,3-billion, showing progress in the group’s cost-reduction programme.
The group improved cash generated from operations after working capital by R2,7-billion to R10,2-billion as a result of improved operating margins and a real growth in turnover.
Net cash generated from operating activities decreased by R2,6-billion to R484-million, mainly as a result of the R6-billion paid to settle the South African Airways (SAA) hedging positions.
The group said gearing — although it improved to 67%, from 83% in 2004 — remained significantly above the target levels of 50% to 55%. However, this investment from non-core businesses and improved operating cash flows will significantly improve the group’s gearing.
Capital and reserves increased by 71% to R16,9-billion, which is attributed largely to the significant turnaround in profitability.
In 2004, the SAA hedge book and the embedded derivatives contained in two service contracts for the transport of commodity products by rail contributed a R4,4-billion loss. The hedge book has subsequently been closed off and embedded derivatives have been expunged. — I-Net Bridge