Transnet Limited Annual Report 20103
Ports and Terminals
Corridor Primary commodities transported
Sishen to Saldanha Export iron ore
Capecor General freight
Southcor Automotives, manganese and general freight
General freight such as steel, domestic
coal, containers, liquid bulk, refined,
synthetics, crude, avtur and gas
R. Baycor Export coal, magnetite and chrome
Maputo Corridor General freight
Transnet Limited (Transnet or the Company) is a focused freight transport Company,
delivering integrated, efficient, safe, reliable and cost-effective services to
promote economic growth in South Africa.
Transnet’s key role is to assist in lowering the cost of doing business in South Africa.
This is to be achieved by increasing the Company’s market share of freight on rail,
improving productivity and profitability and by providing appropriate capacity to
customers, ahead of demand.
In order to achieve the above mission and vision statements, the Company is
structured as follows:
Transnet Capital Projects
Transnet supports the 2010 FIFA World CupTM
freight rail rail engineering national ports
port terminals pipelines
Transnet Limited Annual Report 20102
Transnet Limited Annual Report 20102
About this report
This annual report (the report) covers Transnet’s governance,
financial, social responsibility, environmental, broader economic
and overall sustainability performance for the year ended
31 March 2010. It provides an account of the Company’s progress
to date and offers a forward-looking perspective in terms of
future plans and value generating strategies.
The report includes comparative information on Transnet’s performance in prior years, with
information disclosed in past annual reports being restated where appropriate.
The report not only reflects performance information for the 2010 financial year, but also
contains future targets based on the Company’s strategy, commercial prospects, policies and
procedures, as well as social development priorities. It must be noted that there are possible
variations between previously stated objectives and present targets given that a range of
variables could impact future business activities and may alter targets. Where possible,
reasons for variations are provided.
The consolidated performance information in the report covers all Transnet’s Operating
divisions and Specialist Units. In addition, detailed operational reports are presented for
Transnet Freight Rail (Freight Rail), Transnet Rail Engineering (Rail Engineering), Transnet
National Ports Authority (National Ports Authority), Transnet Port Terminals (Port Terminals)
and Transnet Pipelines (Pipelines). Disclosures on sustainability issues are integrated
throughout the report, with the sustainability section on pages 96 to 133 serving as a central
point from where to access consolidated sustainability information, material to Transnet
Accountability owners for key functional areas within Transnet ensure data accuracy through
rigorous high level reviews at all stages of data collection and processing.
Transnet’s reporting continues to be influenced by the Global Reporting Initiative’s (GRI) G3
Sustainability Reporting Guidelines* in determining relevant content and performance metrics.
It further complies with the integrated reporting requirements of the King III Report on
Governance for South Africa – 2009 (King III Report) and aims to provide a broad range of
stakeholders with a transparent, balanced and holistic view of the Company’s performance.
To address the requirements of the Company’s diverse stakeholders, the report follows the
format applied in previous years by providing three ‘sustainability access points’:
1. A Sustainability Report which provides an overview of the Company’s performance as well
as challenges in terms of the seven sustainability principles of the Transnet Value
Measurement Framework (TVMF).
2. Operational Reports which present Operating division-specific information pertaining to
operational performance and essential sustainability information.
3. The GRI content index included in the Contents alongside which indicates the page numbers
for relevant economic, social and environmental disclosures.
‘Sustainability principle buttons’ have again been used in the Sustainability Report to facilitate
quick access to information on the Company’s integrated performance management. To further
enhance readability, a list of abbreviations and acronyms is provided in the General information
section. Corporate contact details are provided on the inside back cover.
*More detail on the GRI Guidelines is available on www.globalreporting.org
GRI 2.2, 3.1 – 3.7, 3.13, 4.12
O S Overview
E S Executive statements
C G Corporate governance
S R Sustainability report
O R Operational review
F S Annual financial statements
The numbers in the text refer to the sections
in the GRI index
The following icons are used in the annual
report to depict the various sections.
Page GRI Index
Overview O S 01 – 31
Transnet’s reach ifc 2.1, 2.5, 2.7
About this report 02 2.2, 3.1 – 3.7, 3.13, 4.12
Achievement against our Shareholder’s expectations 04
2010 Performance highlights 05 2.8
Review of strategy execution 06 1.1, 1.2
Our strategic focus areas going forward – Quantum Leap Strategy 07 1.1
Board of Directors 28
Group Executive Committee 30
Executive statements E S 34 – 77
Chairman’s review 34 1.1, EC8
Group Chief Executive’s review 40 1.1, EC8
Group Chief Financial Officer’s review 64 1.1
Consolidated value added statement 75 EC1
Concolidated five-year review 76
Corporate governance C G 80 – 92 4.1 – 4.3, 4.5, 4.6, 4.8, 4.10
Sustainability report S R 96 – 133
Integrated sustainability management and reporting 96 4.11, 4.12
Engaging our stakeholders for mutual benefit 99 4.14 – 4.17
Assuring sound accountability and governance 102 2.10, LA7
Managing our environment responsibly 107 EN3, EN8, EC2
Achieving returns greater than the cost of capital 113
Developing and maintaining world-class infrastructure 117
Creating a workplace where our people can excel 119 2.8, LA1, LA4, LA7, LA8, LA13
Caring for the communities in which we operate 126 SO1
Operational review O R 136 – 219
Capital Investment Report 136 2.8
Transnet Freight Rail 146 2.8, LA7, LA8, EN3, EN8
Transnet Rail Engineering 162 2.8, LA7, LA8, EN3, EN8
Transnet National Ports Authority 176 2.8, LA7, LA8, EN3, EN8
Transnet Port Terminals 192 2.8, LA7, LA8, EN3, EN8
Transnet Pipelines 208 2.8, LA7, LA8, EN3, EN8
Annual financial statements F S 222 – 346
Group Audit Committee report 222
Approval of the annual financial statements 226
Independent auditors’ report 227
Annual financial statements 229
General information 347 – 349
Abbreviations and acronyms 347
Glossary of terms 349
Corporate information ibc 2.4
Volume and revenue growth
doing business in South Africa.
Capital and financial efficiency
Operational efficiency (across Operating divisions)secs
by sustainable cost reductions and containment.
Make appropriate investments in ports, rail and pipelines to enable growth,
ensuring that the returns on investments are greater than Transnet’s weighted
average cost of capital.
Create appropriate capacity ahead of demand.
leveraging the economic benefits from associated activities, such as
Safety, health and environment
Transnet Limited Annual Report 20104
4 Transnet Limited Annual Report 2010
Achievement against our Shareholder’s expectations
The Transnet mandate and strategic objectives of the Company over the medium-term are
set out in the Shareholder Compact between Transnet and the Department of Public
Enterprises (Shareholder Representative).
To ensure alignment of Shareholder expectations and the strategic intent of the Company, key performance indicators (KPIs) have
been identified for the Company and for each Operating division. These KPIs have helped ensure focus on the priority value drivers
in the key areas of the business. The Board and Group Executive Committee monitors the performance against the KPIs to ensure
that the strategic objectives of the Company are achieved.
Despite the challenging economic environment, Transnet has exceeded most of its targets as set out in the 2010 Shareholder
Compact while continuing to establish a strong platf