SANRALPortfolio Committee

Presentation

– 07 October 2009

#401750v1

SANRALSANRAL

The South African National Roads Agency Limited

Successor to South African Roads Board

Established 19 May 1998 and registered as a public company underthe Companies Act No. 61 of 1973

100% State ownership / SOE Schedule 3A

Accountable to the Minister of Transport and Parliament

Independent Board of Directors

What Do We Do?What Do We Do?

Design, fund, maintain, operate and rehabilitate national roads

Responsible for proclaimed national roads: Toll and Non-TollNetwork

Responsible for expanding South Africa’s national road network from the original 7000 km to the current 16 170km to 20 000km by2010

Manage approximately R18.5 billion of annual spend

Manage toll road concessionaires

Levy tolls for the purposes of funding the Toll Road Network

RegulationRegulation

The South African National Roads Agency Limited and

National Roads Act, No. 7 of 1998

Public Finance Management Act, No. 1 of 1999

External Auditors: Office of the Auditor-General

Internal Auditors: Outsourced to PwC and SAB&T

Bankruptcy remote – may not be placed under judicial

management or in liquidation unless authorised by an Act

of Parliament

Exempt from Income Tax but Toll portfolio is a vendor in

terms of VAT legislation

Toll & NonToll & Non--TollToll

In terms of the SANRAL Act the SANRAL is obliged to operate its Toll roads separately from its Non-toll national roads

The issuer maintains separate Trial Balances for Toll and Non-Toll operations

There is no cross subsidisation between the Toll and Non-Toll businesses

Toll roads are deemed to be self-funding and for financial analysis are deemed to amortise over a period of 30 years

Non-toll operations are funded solely from the government grant and may not borrow any funds

Description Non Toll State Toll BOT Total

DualCarriageway

610 520 443 1 573

4-LaneUndivided

11 299 240 550

2-LaneSingle

12 429 1013 605 14 047

Total 13 050 1 832 1 288 16 170% of SANRAL Network 81% 11% 8%

NATIONAL ROAD NETWORK (km)NATIONAL ROAD NETWORK (km)

PAVEMENT DESIGN PHILOSOPYPAVEMENT DESIGN PHILOSOPY

0

20

40

60

80

100

2007 2012 2017 2022 2027Year

Roa

d C

ondi

tion

Good

Fair

Poor

Very Poor

Maintenance Actions

No Maintenance

Moisture Ingress

(Typically Designed for Traffic Expected over 20 Years)

0

20

40

60

80

100

2005 2010 2015 2020 2025

Year

Roa

d C

ondi

tion

COSTCOST OF MAINOF MAINTENANCE DELAY TENANCE DELAY –– AGENCYAGENCY

Repair Cost = X / km

Good

Fair

Poor

Very Poor

3-5 Years

Repair Cost = 6X / km

5-8 Years

Repair Cost = 18X / km

(Ratio 1:6)

(Ratio 1:18)

Please Note: Typical Costs for 11.4m Wide Road in Flat Terrain

Very Poor ConditionPoor ConditionGood Condition

COST OF MAINTENANCE DELAY COST OF MAINTENANCE DELAY --

ROAD USER (2008R)ROAD USER (2008R)

Good Poor

R 0

R 2

R 4

R 6

R 8

R 10

R 12

R 14

R 16

R 18

R 20

0 2 4 6 8 10 12 14 16

International Roughness Index (m/km)

Roa

d U

ser C

ost (

R/k

m)

Toll Class 1Toll Class 2Toll Class 3Toll Class 4

Based on HDM-4 Modeling

Northern Hemisphere

Waterproof Layer

Local Street

Farm To Market

Typical National / Interstate Road

Increased Number of Heavy Axles Repetitions over 20-30 year Design

Life

South Africa

AMS: ROAD PAVEMENT DESIGNAMS: ROAD PAVEMENT DESIGN

Vehicles Operating CostsVehicles Operating Costs

Up to 90 % of Total Transportation CostsVehicle Operating Costs (Fuel, Tires, etc)

Standard Vehicles (i.e. HDM-4 √ )

Congestion (i.e. HDM-4 √ )Accident CostsValue of Time (Congestion)

And Then !!!

AMS Software AMS Software -- Data Management Data Management

RoughnessRut DepthMacro TextureCrackingRavellingVideo

Surface Friction

Structural Strength

Centralised Database

Traffic

Bridge

DGPS

Unit Costs

Economic Analysis& Optimisation

Road Deterioration &Maintenance Effects

Road User Effects

Centralised Database

Dynamic Segmentation

Uniform Sections

Asset Preservation Asset Preservation -- ModellingModelling

Condition Surveys

ØPlease Note: 81% of Network Older than Original 20 Year Design Life

Pavement Age Trend

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

YEAR

Nat

iona

l Roa

d N

etw

ork

Leng

th

(Car

riage

way

km

)

> 25 years 21 - 25 years 16 - 20 years 11 - 15 years 6 - 10 years 0 - 5 years

Average Daily Traffic Trend

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Year

Nat

iona

l Roa

d N

etw

ork

Leng

th

(Car

riage

way

km

)

0-5 000 5 000-10 000 10 000-20 000 20 000-50 000 > 50 000

Construction Price Adjustment Indices Trend

100.00

150.00

200.00

250.00

300.00

350.00

400.00

450.00

500.00

550.00

Jul-0

0

Nov

-00

Mar

-01

Jul-0

1

Nov

-01

Mar

-02

Jul-0

2

Nov

-02

Mar

-03

Jul-0

3

Nov

-03

Mar

-04

Jul-0

4

Nov

-04

Mar

-05

Jul-0

5

Nov

-05

Mar

-06

Jul-0

6

Nov

-06

Mar

-07

Jul-0

7

Nov

-07

Mar

-08

Jul-0

8

Nov

-08

Mar

-09

Jul-0

9

YEAR

Inde

x Va

lue

(Bas

e 10

0 =

2000

)

Civil Engineering Plant Index Fuel Index Civil Engineering Materials Index Labour Index (Average) CPI

Indices Comparison Trend

100

110

120

130

140

150

160

170

180

190

200

210

220Ja

n-01

Apr-0

1

Jul-0

1

Oct

-01

Jan-

02

Apr-0

2

Jul-0

2

Oct

-02

Jan-

03

Apr-0

3

Jul-0

3

Oct

-03

Jan-

04

Apr-0

4

Jul-0

4

Oct

-04

Jan-

05

Apr-0

5

Jul-0

5

Oct

-05

Jan-

06

Apr-0

6

Jul-0

6

Oct

-06

Jan-

07

Apr-0

7

Jul-0

7

Oct

-07

Jan-

08

Apr-0

8

Jul-0

8

Oct

-08

Jan-

09

Apr-0

9

Jul-0

9

YEAR

Inde

x Va

lue

(Bas

e 10

0 =

2000

)

CPI Index PPI Index CPA Index Source: www.statssa.gov.za

Bitumen Price Trend2009 Rands

R 3,525

R 3,225

R 5,682

R 500

R 1,500

R 2,500

R 3,500

R 4,500

R 5,500

R 6,500Ja

n-00

May

-00

Sep-

00

Jan-

01

May

-01

Sep-

01

Jan-

02

May

-02

Sep-

02

Jan-

03

May

-03

Sep-

03

Jan-

04

May

-04

Sep-

04

Jan-

05

May

-05

Sep-

05

Jan-

06

May

-06

Sep-

06

Jan-

07

May

-07

Sep-

07

Jan-

08

May

-08

Sep-

08

Jan-

09

May

-09

Year

Pric

e @

Dur

ban

(Ran

d/To

n)

Source: www.sabita.co.za

Material Cost Increases over Period 2003 to 2009

-50.00

0.00

50.00

100.00

150.00

200.00

Material Type

Perc

enta

ge C

hang

e

% Total Change 65.26 186.40 148.48 72.65 99.15 94.58 110.53 50.59 38.21Avg % Change per Year 10.88 31.07 24.75 12.11 16.53 15.76 18.42 8.43 6.37% Change in Last Year -35.39 28.97 33.19 -40.98 -16.47 24.98 36.75 5.96 9.78

Surface Material Asphalt

Base Material - G1 Stone

Concrete Steel Bitumen Cement Lime CPA CPI

Budget Kilometre Trend (2009 Rands)

R 0

R 200,000

R 400,000

R 600,000

R 800,000

R 1,000,000

R 1,200,000

R 1,400,000

R 1,600,000

R 1,800,000

R 2,000,000

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Year

Bud

get p

er K

ilom

etre

(Ran

ds)

Basic Budget Requirement Trend(Excludes Addressing Backlog and Expansions)

R 0

R 1,000

R 2,000

R 3,000

R 4,000

R 5,000

R 6,000

R 7,000

R 8,000

R 9,000

R 10,000

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Year

Ran

ds (M

illio

n)

Theoretical Budget (2008R) Theoretical Budget (2009R) Actual Budget

2009/102010/11

2011/122012/13

Funding Allocation

MTEF Basic

MTEF Basic + Backlog

MTEF Basic + Backlog + ExpansionContribution

R 9,248,616

R 13,513,304 R 14,086,297

R 14,086,297

R 9,248,616 R 10,513,304 R 11,086,297

R 11,086,297

R 7,349,616 R 7,904,304 R 8,477,297

R 8,477,297

R 5,842,442R 7,034,849

R 8,210,418 R 8,867,251

R 0

R 2,000,000

R 4,000,000

R 6,000,000

R 8,000,000

R 10,000,000

R 12,000,000

R 14,000,000

R 16,000,000

Ran

ds ('

000)

Year

MTEF Funding Requirements vs Allocation Comparison

2 0 0 9 /2 0 1 0 2 0 1 0 /2 0 1 1 2 0 1 1 /2 0 1 2

T R E A S U R Y A L L O C A T IO N 5 ,8 4 2 ,4 4 2 7 ,0 3 4 ,8 4 9 8 ,2 1 0 ,4 1 8

O T H E R IN C O M E 3 5 4 ,9 6 4 1 4 3 ,8 4 4 1 7 9 ,6 3 8 S u n d ry In c o m e 3 9 ,8 7 4 7 9 9 8 4 7 L a n d s a le s a n d R e n ta l In c o m e 5 4 ,4 4 4 5 7 ,7 1 0 6 1 ,1 7 3 In te re s t R e c e iv e d - N e t 1 2 ,8 8 4 1 3 ,6 5 7 1 4 ,4 7 6 T h ird P a rty P ro je c t C o n tr ib u tio n s 2 4 7 ,7 6 2 7 1 ,6 7 8 1 0 3 ,1 4 2

T O T A L IN C O M E (A ) 6 ,1 9 7 ,4 0 6 7 ,1 7 8 ,6 9 3 8 ,3 9 0 ,0 5 6

O P E R A T IN G E X P E N D IT U R E (B ) 2 ,1 2 3 ,7 2 4 2 ,5 4 3 ,4 7 5 2 ,8 2 8 ,5 3 0 S a la r ie s 1 0 8 ,2 2 6 1 1 2 ,6 3 1 1 1 7 ,8 4 9 A d m in is tra tive S u p p o rt 1 3 7 ,6 7 4 1 4 1 ,8 2 9 1 4 4 ,9 7 8 T e c h n ic a l S u p p o rt 1 4 6 ,0 2 7 1 6 8 ,3 5 6 1 8 2 ,4 2 3 P ro p e rty M a n a g e m e n t 5 2 ,3 6 7 5 5 ,0 1 7 5 6 ,0 1 7 C o m m u n ity D e ve lo p m e n t 5 8 ,2 6 7 7 ,3 7 6 -

M R A d H o c M a in te n a n c e 6 6 ,9 1 9 6 0 ,4 6 5 1 2 9 ,5 6 6 M O R o u tin e O p e ra tio n s 5 5 5 ,0 0 5 5 1 2 ,7 9 3 4 9 4 ,0 2 8 M P P e rio d ic M a in te n a n c e 8 2 3 ,9 8 3 1 ,1 8 4 ,1 1 9 1 ,4 3 7 ,0 8 0 M S S p e c ia l M a in te n a n c e 1 7 5 ,2 5 6 3 0 0 ,8 9 0 2 6 6 ,5 9 0

C A P IT A L E X P E N D IT U R E (C ) 4 ,3 9 6 ,3 5 1 4 ,6 3 3 ,7 0 1 5 ,5 6 3 ,6 6 9 S u n d ry C a p ita l E x p e n d itu re 4 1 ,3 5 8 1 4 ,6 6 0 1 ,6 4 5

D S S tre n g th e n in g 2 ,4 0 9 ,7 8 5 3 ,3 0 2 ,6 1 9 4 ,1 8 9 ,1 8 8 D I Im p ro v e m e n ts 1 ,2 4 8 ,2 9 2 8 6 0 ,8 0 3 1 ,0 1 7 ,9 7 4

D N N e w F a c ilit ie s 6 4 6 ,9 1 6 4 0 5 ,6 2 0 3 0 4 ,8 6 1 L a n d A c q u is it io n 5 0 ,0 0 0 5 0 ,0 0 0 5 0 ,0 0 0

T O T A L E X P E N D IT U R E [B + C ] 6 ,5 2 0 ,0 7 6 7 ,1 7 7 ,1 7 6 8 ,3 9 2 ,1 9 9

S U R P L U S / (D E F IC IT ) [A - B - C ] (3 2 2 ,6 6 9 ) 1 ,5 1 7 (2 ,1 4 3 )

B a la n c e B ro u g h t F o rw a rd 3 2 3 ,8 5 2 1 ,1 8 3 2 ,7 0 0

B a la n c e C a rr ie d F o rw a rd 1 ,1 8 3 2 ,7 0 0 5 5 7

N O N T O L L B U D G E T 2 0 0 9 /2 0 1 0 B U D G E T (R '0 0 0 )

D E S C R IP T IO NB U D G E TB U D G E T B U D G E T

2009/2010 2010/2011 2011/2012

TOTAL INCOME (A) 1,489,770 3,048,740 5,493,970

OPERATING EXPENDITURE (B) 648,621 816,224 660,940 Other 10,217 8,001 8,001

MR Ad Hoc Maintenance 8,823 5,000 5,000 MO Routine Operations 512,249 573,863 538,337 MP Periodic Maintenance 79,939 74,453 105,701 MS Special Maintenance 37,392 154,907 3,901

CAPITAL EXPENDITURE (C) 12,056,728 6,328,630 2,080,811

DS Strengthening 371,755 258,308 161,007 DI Improvements 8,996,782 4,643,154 1,156,311 DN New Facilities 2,688,191 1,427,168 763,493

TOTAL EXPENDITURE [b+c] (D) 12,705,349 7,144,853 2,741,751

Nett Income Before Finance Charges[a-d] (E) (11,215,579) (4,096,113) 2,752,219

Finance Charges (F) 1,521,800 2,903,500 3,631,800

Cash Surplus (Deficit) [A-D-F] (12,737,379) (6,999,613) (879,581)

BUDGETBUDGET BUDGET

TOLL BUDGET 2009/2010BUDGET (R'000)

Capital Investment ProgrammeCapital Investment Programme

N2 Tsitsikamma Toll RoadN17 East Toll Road Extension Gauteng Freeway Improvement Project (GFIP)N1 South and R30 Bloemfontein – KroonstadN1 Polokwane BypassMariannhill ExtensionDube Trade Port

State Toll Network Development

Current & Proposed ConcessionsCurrent & Proposed Concessions

Current ConcessionsN4 East, Maputo Development Corridor –420kmN3 Cedara, Heidelberg – 512kmN4 West, Platinum Highway – 484km

Proposed ConcessionsN1/N2 Winelands Toll HighwayN2 Wild Coast Toll HighwayR300 Ring Road

THE GAUTENG FREEWAY IMPROVEMENT THE GAUTENG FREEWAY IMPROVEMENT PROJECT (GFIP) 561KMPROJECT (GFIP) 561KM

Project Extent:Project Extent:PLANNED LANE ADDITIONS:

185

km (2010)

FUTURE UPGRADES:

(223 KM)

PLANNED NEW ROUTES:158 km

FINAL SCHEME:

561 KM

GFIP Phase 1 GFIP Phase 1 –– 185 km 185 km

Freeway ITS networkFreeway ITS network

SANRAL ITS Network – Implemented (210 km)

JRA ITS

Expansion

Road ImprovementsRoad Improvements

• In general, freeways will be upgraded to 4 lanes per direction

• Some sections, up to 6 lanes per direction

• Interchanges are improved:7 Systems Interchanges (additional lanes, directional

ramps)21Access Interchanges (Additional bridges, single points,

ramp Additions, lane additions)

• Auxiliary lanes at on- and off-ramps

• Cross road improvements

• Median lighting is provided

Open Road Tolling ORT Open Road Tolling ORT

All the toll transactions will take place electronicallyNo physical toll plazas

TagTagAlso known as:Also known as:

TransponderTransponderor On Board or On Board Unit (OBU)Unit (OBU)

RatingRating

Moody’s

National Scale Issuer Ratings:Long-Term: Aa2.zaShort-Term: P-1.za

Global Scale Issuer Ratings:Long-Term: A3Short-Term: P2

Background to Government GuaranteeBackground to Government Guarantee

• Secure Finance for Capital Programme

• Next Phase

- GFIP – next phase

- N2 Wild Coast

- N1/N2 Winelands

- N11

- N3 Marianhill

- R33

• Reduce cost of borrowing

Form of Government GuaranteeForm of Government Guarantee

•

Unlimited in time•

Quantum guaranteed-

R6 Billion: SZ Bonds

-

R31.9 Billion: HWAY Bonds•

Annual Borrowing limits-

2009/10: R12.33bn

-

2010/11: R12.31bn-

2011/12: R4.05bn

-

2012/13: R3.22bn•

R10 Billion DMTN Programme-

NRA Bonds: non-guaranteed

R31,91billion DMTN Programme R31,91billion DMTN Programme –– HWAY BONDSHWAY BONDS

• Annual limits of issuance. SANRAL may issue later under the guarantee but not earlier

• The HWAY DMTN programme carries a Aa2.za rating from Moody’s

• The DMTN is listed on BESA (now JSE)

• Auctioned monthly on 1st Wednesday of each month

• First auction 5 August 2009

• Programme Memorandum circulated to all investors

Contact DetailsContact Details

SANRALDitsela Place1204 Park StreetHatfield, Pretoria 0083

PO Box 415Pretoria 0001

Telephone: +27 12 426 6000Fax: +27 12 362 2101

FRAUD HOTLINE:

0800 204 558

Website: www.nra.co.za

SANRAL: Touching Peoples LivesSANRAL: Touching Peoples Lives

“Where a road passes,

development follows right on

its heels”

THANK YOU!THANK YOU!THANK YOU!