Transnet¢â‚¬â„¢s National Ports Authority (National Ports Authority), Transnet Port Terminals (Port Terminals)

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  • Transnet Limited Annual Report 20103

    Western Cape

    Northern Cape

    Eastern Cape

    Free State

    North West

    Mpumalanga

    Limpopo

    Sishen

    Maputo

    Beitbridge

    Gauteng

    East London

    Port Elizabeth

    Ngqura

    Durban

    Richards Bay

    Saldanha

    Cape Town

    2

    6

    4

    5

    1

    KwaZulu-Natal

    Rail

    Ports and Terminals Pipelines

    2

    6

    5

    3

    4

    1

    Corridor Primary commodities transported

    Sishen to Saldanha Export iron ore

    Capecor General freight

    Southcor Automotives, manganese and general freight

    Natcor 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

    3 3 3

    Transnet’s reach

  • 1

    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:

    GRI 2.1

    Specialist Units

    Transnet Capital Projects Transnet Property Transnet Foundation

    Transnet supports the 2010 FIFA World CupTM

    PipelinesRail Ports

    freight rail rail engineering national ports authority

    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 stakeholders.

    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.

    GRI

  • 3 33

    Contents

    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

    GRI 3.12

  • Volume and revenue growth

    doing business in South Africa.

    Capital and financial efficiency

    the Company.

    Operational efficiency (across Operating divisions)secs

    by sustainable cost reductions and containment.

    Infrastructure investments

    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.

    Developmental objectives

    leveraging the economic benefits from associated activities, such as

    Safety, health and environment

    environmental impacts.

    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