Description
High income countries are generally top performers but there are big differences between countries at other income levels.
TRANSNET LIMITED
PRESENTATION BY MS MARIA RAMOS
27 MAY 2008
2
AGENDA
• Achieving business stability
– The four-point turnaround plan
– Achievements against plan
– Financial performance overview
• From stability to growth
• Growth opportunities
• Growth enablers
• Four-point growth strategy
• Context
3
0%
25%
50%
75%
100%
High
Income
OECD
High
Income
Non-OECD
Upper
Middle
Income
Lower
Middle
Income
Low
Income
Top Quintile, Highest Performance
2nd Quintile, High Performance
3rd Quintile, Average Performance
4th Quintile, Low Performance
Bottom Quintile,
Lowest Performance
Distribution of countries by income groups across LPI Quintiles (%)
High
Income
OECD
High
Income
Non-
OECD
Upper
Middle
Income
Lower
Middle
Income
Low
Income
SOUTH AFRICA FREIGHT SYSTEM PERFORMING
RELATIVELY WELL
Source: World Bank, Connecting to Compete: Trade Logistics in the Global Economy, October 2007
High income countries are generally top
performers but there are big differences
between countries at other income levels.
South Africa placed 24th out of 150
countries and is the highest ranked
middle income country in a list which
includes Malaysia (27), Chile (32), Turkey
(34) and Hungary (35).
Singapore, Netherlands and Germany are
the top 3 ranked countries respectively.
China (30) is the top performer amongst
lower middle income countries.
India (39) is the top performer amongst
low income countries.
4
THE SOUTH AFRICAN FREIGHT SYSTEM MUST
NEVERTHELESS CONFRONT MANY CHALLENGES
• Large infrastructure backlogs across all modes.
• A skills shortage.
• A lack of intermodal planning.
• As a very transport intensive economy, South Africa contributes less
than 0.5% to the world GDP but more than 2% of surface freight
ton/kilometres.
South Africa must apply transport far more efficiently than the norm.
Source: Centre for Supply Chain Management, University of Stellenbosch
5
TOTAL FREIGHT DEMAND WILL DOUBLE (OR TRIPLE) IN
THE NEXT TWENTY YEARS
Source: Centre for Supply Chain Management, University of Stellenbosch
Likely growth based on average 4.7% growth over 20 years, high growth based on
average 5.5% over the 20 years
Freight demand in the economy (million tons)
0
500
1000
1500
2000
2500
2006 2011 2016 2021 2026
m
i
l
l
i
o
n
t
o
n
s
Likely growth High growth
6
INTEGRATED AND COORDINATED ACTION IS NECCESARY
• Implementing a high performance rail corridor backbone for the country that
will alleviate corridor congestion 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.
• 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.
7
AGENDA
• Achieving business stability
– The four-point turnaround plan
– Achievements against plan
– Financial performance overview
• From stability to growth
• Growth opportunities
• Growth enablers
• Four-point growth strategy
• Context
8
THE FOUR-POINT TURNAROUND PLAN
WAS DEVELOPED TO STABILISE TRANSNET
Enabling
economic
growth
Enabling
economic
growth
Delivering
efficient and
competitive
services
Delivering
efficient and
competitive
services
Four-point
Turn-
around
Strategy
Redirecting and
Reengineering
the Business
Redirecting and
Reengineering
the Business
Strategic
Balance
Sheet
Management
Strategic
Balance
Sheet
Management
Ensure
Corporate
Governance
and Risk
Management
Ensure
Corporate
Governance
and Risk
Management
Develop
Human Capital
Develop
Human Capital
Growing a
focused freight
transport
company
Growing a
focused freight
transport
company
Strategic
intent
Strategic
intent
Transnet situation in
2004/05:
• Lack of clear strategic
direction;
• Weak financial
performance and controls;
• Unfocussed and inefficient
business structure -
significant non-core
investments;
• Low morale: Lack of
investment in Human
Capital;
• Poor risk management
and governance; and
• Lack of capital
investment.
1 2 3 4
9
Funding plan
Strategic Balance
Sheet Management
Pension funds
- TSDBF (R1.9bn) and TPF
(R1.0bn) in surplus
- Rule amendments approved
- Act amended
- Ex-gratia bonuses
Disposal of non-core
assets, including
- Viamax
- C Pref Share
- Housing loan book
- SAA
- V&A
- Transtel FSN
- Metrorail
Approximate proceeds
+R10bn
SIGNIFICANT ACHIEVEMENTS HAVE BEEN REALISED
Corporate Governance
and Risk Management
Established Governance
Structures
Re-direct and
Reengineering the
Business
Transnet Business
Intelligence
- Implementation of
systems/processes
to improve quality of
information, control and
analysis
- KPI project
Vulindlela projects to
improve productivity
levels
- Efficiency improvements
- GFB priority flows (+3mt)
- Port handling activities
(TEU’s from 158000 to
186000 at DCT)
- Availability and reliability
of all wagon and loco
fleets improved
- Progress towards
operational stability
- Procurement savings
>R500m p.a
- Safety: reduced incidents
(R200m)
Overall improvement of R2bn
since inception in 2005-06
Human Capital
Development
Skills demand planning
1 2
3
4
Revised Articles
of Association
Implementation of
Enterprise Performance
Management (“ EPM” )
framework
Focused attention on risk
- Safety risk
- Implementation of fraud
risk management plan
- Compliance risk
Shareholder Compact
Gearing
- From 83% to 39%
Effective capital approval
- Returns exceed cost of
capital
Monthly risk
identification and
reporting
Talent management and
succession planning
Change management
programme
Employment equity plan
Leadership development
programme
Reward model,
performance
management and
incentive scheme
10
SUBSTANTIAL IMPROVEMENTS IN FINANCIAL
PERFORMANCE DEMONSTRATED
Transnet Performance Highlights: Three-Year View
Improvement
vs 2004
208% R11,7 bn R3,8 bn
Capex
(excluding Aviation)
278% R37,4 bn R9,9 bn Shareholders equity
53% 39% 83% Gearing
70% 6,8% 4,0%
Cash flow return on
investment (“CFROI”
in real returns)
54% 5,4 times 3,5 times Cash interest cover
139% 40,7% 17% EBITDA (%)
78% R8 470bn R4 750bn Operating profit
2007
Actual
2004
Actual
Measures
Four-point turnaround
plan starting point
11
AGENDA
• Achieving business stability
• From stability to growth
– Shareholder mandate
– Transportation in SA
– Levers for growth
• Growth opportunities
• Four-point growth strategy
• Growth enablers
12
OVERVIEW OF SHAREHOLDER MANDATE
Key role as defined in Shareholder Compact
(Within context of agreed KPIs)
• Reduce the cost of doing business in
SA
• Embed growth through providing
appropriate ports, rail and pipeline
infrastructure
• Cost effectiveness and efficiency
within acceptable benchmark
standards
• Volume growth in the core divisions
Transnet challenges
To create
capacity,
improve
efficiencies
and
grow
volumes
Retain a
strong
financial
position
AND
13
IMPROVED TRANSNET EFFICIENCY SHOULD ALSO
REDUCE CUSTOMER LOGISTICS INDIRECT COSTS
42
20
7
19
Mining
cost
Customs/
Clearing
9
3
Land
Transport
Handling Storage Sea
Freight
1
100
Insurance Total
landed
cost
Percentage of total delivered cost
Storage and sea
freight costs strongly
influenced by
reliability, frequency
and speed of land
transport
• Indirect costs
(e.g. storage and
handling) are a
significantly
higher
component of
total customer
landed cost than
direct transport
costs
• Improved
Transnet
reliability and
speed should
reduce these
indirect costs
TYPICAL TRANSNET
PRIORITY CUSTOMER
Logistical flow
Transnet
direct
costs
14
Transformation horizons for a networked organisation
• Accelerate Human Capital strategy
implementation
• Implement integrated commercial
management
• Long-term capacity planning
• Focus Vulindlela on integrated,
cross functional corridor rollout
(using “ standardised”
improvements)
• Improve cross-divisional capital
projects and financial planning
• Implement focussed management
reporting, KPI analysis and
Enterprise Performance
Management
• Best practice CAPEX
• Funding strategy
• Develop customer services (e.g.
capacity management and
supply chain integration
products)
• Strategic organisational
initiatives
• Develop and implement long
term network improvement
concepts
• Achieve world-class
performance levels
• Build long term stakeholder
relationships
‘Stabilise the core’
‘Optimise and extend growth’
‘Expand competitive
advantage’
Current
position
‘Stop the bleeding’
• Financial restructuring
• New freight strategy and
disposal of non-core assets
• Restructure corporate
centre
• Create Human Capital
strategy
• Risk and governance
• Implement critical infrastructure
projects
• Launch Vulindlela to stabilise key
operational functions and capture
productivity
• Implement critical capability
building
• Complete disposals
• Shareholder Compact
TRANSFORMATION HORIZONS
15
THERE ARE SEVEN MAJOR LEVERS FOR GROWTH
• Roll out of Capex plan: Optimal
integration and allocation across divisions
• Increase in investment to create
capacity
1
• Vulindlela re-engineering initiatives • Productivity/efficiency improvement 2
• Safety
• Human Capital
• Embedding safety culture in organisation
(“ ERM” )
• Navigator and Group Human Capital
programmes
Key drivers for success Major levers
• Integrated commercial management • Customer focus and orientation 3
• Integrated commercial management • Sustainable service delivery 4
• Volume growth and optimal asset
utilisation
• Financial strength and sustainability 5
6
7
Key enablers
16
AGENDA
• Achieving business stability
• From stability to growth
• Growth opportunities
• Four-point growth strategy
• Growth enablers
17
ALL ODs HAVE HIGH GROWTH EXPECTATIONS
OVER NEXT 5 YEARS
47
30
2006/07 2011/12
+57%
88
67
+31%
108
80
+35%
GFB
Mv
Coal export
Mt
Ore export
Mt
Transnet Freight Rail
Transnet National Ports Authority
/Transnet Ports Terminals
Transnet Pipelines
3,400
6,400
+88%
555,000
2006/07
925,000
2011/12
+67%
Containers
TEUs
Auto-
mobiles
Units
13.9
9.9
2006/07 2011/12
+40% Refined
products
b.lit
18
AGENDA
• Achieving business stability
• From stability to growth
• Growth opportunities
• Growth enablers
• Four-point growth strategy
19
NEW GROWTH STRATEGY IS BASED ON FOUR PILLARS
Reengi-
neering –
integration,
productivity
and efficiency
Capital
optimisation
and financial
management
Safety, risk
and effective
governance
Human capital
execution
Growth through
• Integration in
priority corridors
• Efficient asset
utilisation
• Planned
maintenance
in all divisions
• Cost effective
procurement
• Shared services
• Integrated
capital,
operations, and
financial
customer
planning
• Strategic
asset/liability
management
• Funding
strategy
• Delivery on safety
performance
• Complying to the
highest standards
of corporate
governance
• Enterprise risk
management
(“ERM)
• Enterprise
performance
management
(“EPM”)
• Accelerate
implementation
of Human
Capital strategy
• Strengthen
values and
culture
20
AGENDA
• Achieving business stability
• From stability to growth
• Growth opportunities
• Four-point growth strategy
•Growth enablers
- Corridor optimisation
- Integrated commercial management
- Enterprise performance
management
21
Rail Infrastructure
30 000 km of track
22 300 route km
Network Electrification:
– 50kV AC (861km),
– 25 kV AC (2309km)
– 3kV DC (4935km)
Axle loading:
– Main lines at 22t / axle
– Coal and ore lines 30t / axle
(coal line operates at 26 ton)
Current Volumes –
– Containers: 400 000 TEU’s
– Dry bulk: 149 mtpa
– Auto: 192 000 units
– Liquid: 4.2 mtpa
– Break Bulk: 20.9 mtpa
Port Infrastructure
9 Commercial Ports
19 container berths
3 automotive terminals
26 dry bulk berths
39 break bulk berths
13 liquid bulk berths
Current Volumes –
• Containers: 3.82 m
TEU’s
• Dry bulk: 129 mtpa
• Auto: 540 000 units
• Liquid: 40 mtpa
• Break Bulk: 13 mtpa
Pipeline Infrastructure
Crude line: 580 km
• Design Cap = 6,8 bill. l/a
• Current Cap = 5,8 bill.l/a
Refined line:725 km
• Design cap = 3,5 bill. l/a
• Current cap = 4,3 bill. l/a
Avtur: 94 km
• Design cap = 1,2 bill. l/a
• Current cap = 1,1 bill. l/a
TRANSNET MANAGES AN EXTENSIVE
INTEGRATED NETWORK
22
TRANSNET EVOLUTION
TO A NETWORK BUSINESS
Corporate
Functions
• Gain effectiveness
• Improve efficiency
• Align management and
workforce on business
objectives
• Provide a common transformation
backbone
• Set pace and rhythm
• Monitor progress
• Provide support where needed
• Install value adding functions for
all business units
NOC
Projects
Maintenance
Yards
Procurement
Divisions
Network
• Progress towards the ‘perfect’
asset network
• Optimise profits from existing
networks
• Offer network related products
• Provide optimal capital base for
network evolution
• Capture synergies through smart
infrastructure bundling
Touwsrivier
MidIlovo
Plaston
Kelso
Eshowe
Utrecht
Hawerklip
Naboomspruit
Middelwit
Vierfontein
S
i
s
h
e
n
Saldanha
Cape Town
East London
Port Elizabeth
Mosselbaai
Bredasdorp
Protem Strand Simonstad
Stellenbosch
Franschhoek
Bitterfontein
Porterville
Atlantis
Prins Alfred
Hamlet
Riversdale
Knysna
C
a
l
i
t
z
d
o
r
p
George
Ladysmith
Avontuur Patensie
Klipplaat
Oudtshoorn
Rosmead
Kirkwood
Alexandria
Port Alfred
Cookhouse
Somerset East
Noupoort
De Aar
Prieska
Upington
Kakamas
Naroegas
Worcester
Sakrivier
Calvinia
Hutchinson
Kootjieskolk
Beaufort West
Belmont
Douglas
Hotazel
Warrenton
Pudimoe Makwassie
Mafikeng
Ottosdal
Vermaas
Schweizer-Reneke
K
l
e
r
k
s
d
o
r
p
Orkney
Coligny
Bultfontein
Whites
Westleigh
Bloemfontein
Aliwal North
Sannaspos
Dreunberg
Springfontein
Koffiefontein
Hofmeyer
Schoombee
J amestown
BarkleyEast
Maclear
Tarkastad Qamata
Queenstown
Blaney
Bethulie
Seymour
Umtata
Fort
Beaufort
Amabele
Maseru
Marquard
Ladybrand
Bethlehem
Wolwehoek
Lichtenburg
Warden
Harrismith
Bergville
Kokstad
Matatiele
Harding
Port Shepstone
Durban
Kranskop
Richmond
Underberg
Stanger
Nkwalini
Richards Bay
Vryheid
Hlobane
Moorleigh
Ladysmith
Roossenekal
Steelpoort
Graskop
Machadodorp
Belfast
Lothair
Komatipoort
Baberton
Phalaborwa
Messina
L
o
u
i
s
T
r
i
c
h
a
r
d
t
Soekmekaar
Zebediela Vaalwater
Nylstroom
J ’burg
Pretoria
O/fontein
E
l
l
i
s
r
a
s
Northam
Charlestown
Vrede
Potchestroom
Empangeni
Donnybrook
Greytown
Franklin
Kimberley
Marble Hall
Standerton
Bethal
B
/
p
l
a
a
s
Simuma
Mandonela
Winburg
Theunisen
Chroomvallei Drummondlea
Virginia
GlenH
Hilton
Copperton
C
u
l
l
i
n
a
n
R
a
y
t
o
n
Uitenhage
K
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r
T
h
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i
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P
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B
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B
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e
H
o
w
i
c
k
N
a
k
o
p
Postmasburg
E
r
t
s
Manganore
Palingpan
Rustenburg
Hoedspruit
Glencoe
Newcastle
A
r
l
i
n
g
t
o
n
Witbank
Ogies
Breyten
Krugersdorp
Welverdiend
S
e
n
t
r
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a
n
d
Welgedag
K
r
o
o
n
s
t
a
d
G
o
l
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a
Ancona
• Deliver high performing
elements
• Deliver 100% at interfaces
• Provide necessary capacity
• Optimise growth opportunities
across all operating divisions (rail,
port and pipeline)
• Capture operational and functional
synergies across business units –
integrated solutions
Sentrarand
DCT
Port
Newcastle
Durban
Yard
Depot
Danskraal
Kaserne
Corridors
Springfontein
Klerksdorp
Estcourt
Bethlehem
Volksrust
Makwassie
Orkney
Welverdiend
Theunisen
Richmond
Uitenhage
Thabazimbi
Witbank
Rayton
Port Shepstone
Oudtshoorn
Postmasburg
Bethal
Roossenekal
Polokwane
Cato Ridge
Touwsrivier
Naboomspruit
Sishen
Saldanha
CapeTown
East London
Port Elizabeth
Mosselbaai
Bredasdorp
Bitterfontein
Kraaifontein
Knysna
Patensie
Klipplaat
Rosmead
New
Brighton
Port Alfred
Somerset East
Noupoort
DeAar
Prieska
Upington
Kakamas
Worcester
Hutchinson
Beaufort West
Belmont
Hotazel
Warrenton
Pudimoe
Mafikeng
Coligny
Bloemfontein
Aliwal North
Dreunberg
Koffiefontein
Stormberg
Barkly East
Blaney
Umtata
Fort
Beaufort
Maseru
Sasolburg
Lichtenburg
Harrismith
Bergville
Harding
Durban
Underberg
Stanger
Richards Bay
Vryheid
Ladysmith
Graskop
Machadodorp
Belfast
Komatipoort
Phalaborwa
Messina
Louis Trichardt
Soekmekaar
Nylstroom
Pretoria
Ellisras
Northam
Empangeni
Kimberley
Copperton
Beit Bridge
Pietermaritzburg
Nakop
Erts
Rustenburg
Hoedspruit
Glencoe
Ogies Krugersdorp
Golela
Queenstown
Kroonstad
Newcastle
Sentrarand
Bellville
Liebendal
Kalbaskraal
Boksputs
Calvinia
Vryburg
Ottosdal
Vermaas
Ermelo
Atlantis
George
Avontuur
Sannaspos
Pyramid South
MarbleHall
Pienaarsrivier
Steelpoort
Vereeniging
Danskraal
Cedara
Kokstad
Piet Retief
Delmas
Balfour
Nelspruit
Kaapmuiden
Tzaneen
Pretoria-
North
Pendoring
Macmullins
Magaliesburg
Marseilles
Gunhill
Burgersdorp
Sterkstroom
Stutterheim
Maclear
Cradock
Cookhouse
Alicedale
Dal
J osafat
J ’burg
• Current organisational structure;
• Current maintenance depot
distribution;
• Current distribution of hub and
depot nodes;
• Limited overlap and clear
boundaries and ‘gate nodes’;
• Important commodity flows and
customer flows (including
Growth); and
• Preserve technical and natural
geographic boundaries and
internodal distances.
14 CORRIDORS HAVE BEEN DEFINED
Northcor
Capecor
Southcor
Natalcor
R.Baycor
N.Westcor
Eastcor
N.Eastcor
Sishen-Saldanha
Sentracor
South East Cor
Westcor
Freestate
Namibia
Corridor definition principles
24
Corridor
Rail volume handled**
Mt handled FY07
RBayCor
Sishen-Saldanha
CapeCor
Sentra hub
NatCor
Freestate
EastCor
NorthCor
NWestCor
SouthCor
WestCor
NEastCor
SEastCor
NamibiaCor
0.7
4.1
3.7
4.2
9.0
95.5
39.6
18.8
40.1
17.2
15.1
17.1
13.2
~0
Port volume
Mt, FY07
2
10
61
10
40
83
(Richards Bay)
(Saldanha)
(Cape Town)
(Durban***)
(Port Elizabeth*)
(East London)
* Includes Mossel Bay, ** Multiple counts of volumes due to travel on multiple corridors, *** 25 Mt liquid bulk included
TRANSNET’S ACTIVITIES ARE CONCENTRATED
MAINLY IN FOUR PORTS, FIVE LAND CORRIDORS . . .
25
Sishen-
Saldanha
CapeCor
SentraCor
NatCor
RBay Cor
All others
. . . AND SIX COMMODITIES. THE STRATEGY THUS
FOCUSES ON THESE BUSINESS AREAS
• 95% of the rail flows
in the critical
commodities on 5
corridors
• GFB 75% of total
Transnet Freight Rail
revenue
4
53
10
16
13
41
21
12
5
32
33
27
24
16
31
Manganese 5
1
Coal domestic
Containers
13
41
Automotive
and
industrial
2
Other GFB
1 Coal
export line
97
1
Iron ore
export line
1
2
3
4
5
6
Percent of corridor revenue
26
THERE IS AN OPPORTUNITY TO INCREASE RAIL
SHARE OF PORT VOLUME THROUGH INTEGRATION
Port
Current volume
(Mt, FY07)
Current volume on rail
(Mt)
Rail share
(%)
2
83 Richards Bay
61 Durban
40 Saldanha*
10 Port Elizabeth**
10 Cape Town
East London 1
3
4
83
10
33
100
31
15
38
93
40
* Includes 6Mt of trans-shipped volume
** Includes Mossel Bay (1.8Mt)
The Natcor
offers the
biggest
opportunity
for share
capture
PRELIMINARY
27
• Majority of demand is rail friendly
• Natcor, CapeCor, Ore Line, Coal Line and Port Elizabeth to Hotazel
line will require capacity improvements (balance of the network has
capacity for at least 10 years)
• Complementary ports system to provide a range of facilities to meet
local and hinterland
• Rail linkages between adjacent ports and Gauteng
• Container terminal R3.8bn
• MPT refurbishment
R0.3bn
• Other R0.5bn
Port
Elizabeth
East London
Maputo
Sishen
Road/rail volume
Richards
Bay
Durban
Saldanha
Cape Town
• Ore Line R3.6bn
• Ngqura construction R0.7bn and
container terminal R5.1bn
• General Freight R1.0bn
• Manganese R0.5bn
• Automotive R0.2bn
• Other R0.9bn
• Container terminals R7.2bn
• Island View and Agriport R0.7bn
• Maydon Wharf R1.6bn
• Automotive R0.3bn
• General Freight R0.9bn
• Bulk liquids (NMPP) R13.5bn
creating R 12bn
• Other R4.6bn
• Coal Expansion R6.6bn
• Dry bulk terminal R1.6bn
• Multi-purpose terminal R0.6bn
• Other R0.8bn
R0.2bn - General Freight
• Other national/countrywide
investments
• General Freight R25.6bn
• Rail Engineering R2.3bn
• Other R2.2bn
2006 2021
16.4 46.1
80.6 119.4
43.3 109.3
12.0 29.4
35.9 63
NATIONAL INFRASTRUCTURE PLAN IS
ALIGNED WITH THE STRATEGY*
* Excluding funding costs
30.1 92
28
CAPEX PLAN IS ALIGNED WITH GROWTH
OPPORTUNITIES
26.2
4.8
16.2
3.7
84.0
40.3
6.6
26.0
12.0
Fund-
ing
Ports Pipe-
lines
Supp-
orting
Svcs
Coal Total
3.2
Bulk
3.0
2.7
Ore GFB Other TFR
2.0
Break-
bulk
0.4
Auto
3.2
Other Cont-
ainers
R80.3m
11
mtpa
18
mtpa
64.2
mtpa
3.77
mTEU
7.2
mtpa
180k
Units
3m
m
3
3.6b
litre pa
5yr Capex, Rb
Incremental capacity
AND CAPEX IS ALIGNED TO GROWTH
OPPORTUNITIES
29
IN CONCLUSION…
30
PROMOTING A WINNING CULTURE AT TRANSNET
• We have done well – key aspects of the turnaround strategy have been
achieved
• The next phase of growth is about volumes and about delivering on our
commitments to customers
• More than ever, it depends on how our people perform – this requires
promoting a winning culture at Transnet
• We need to focus on driving a winning culture in Transnet, and we have a plan
to involve all our employees in this process
Growth can only be achieved through people
Performance can only be driven by individual behaviors
Collectively our individual behaviors drive team performance and
defines the organisational culture
31
LEADERSHIP CHALLENGE IN MOVING FROM
TURNAROUND TO GROWTH
GROWTH
TURNAROUND
32
Recognise, capture,
affirm, reward
behaviours
Involve staff in
defining desired
culture and optimise
buy-in
Regularly assess
and make
transparent how
we are doing
Lead by example,
train, coach,
codify, give
feedback, inspire
Embed it in
systems and
processes, induct
into it, measure it,
teach it
Affirm it where it exists
1
1
Name it and sign up
2
2
Track it
3
3
Replicate it
4
4
Institutionalise it
5
5
OUR APPROACH TO DRIVING CULTURE CHANGE
Our approach has been unique, a truly inclusive process that
allows all employees to shape our culture
33
We would fulfil our brand promise and our
customers prefer us because we are:
•Reliable
•Responsive
•Trustworthy
•Safe
•Preferred
…TRANSNET PEOPLE
WOULD…
IF TRANSNET WERE
WINNING…
People brand and
culture charter
We deliver on our mission
and brand prom ise because
we demonstrate these behaviours
and attributes:
We…
• The departure point is the wheel that also underpins the new Transnet brand
• The culture charter will populate the right hand side of the wheel
• It will comprise an agreed set of behaviours and attributes that are needed to deliver on the
vision/mission and brand promise of Transnet
We would be adding
value to our
shareholders and
society because we:
“deliver a freight transport
systemthat promotes national competitiveness
and economic growth by increasing our
market share, pricing competitively and providing
efficient,, safe and reliable services”
CULTURE CHARTER FRAMEWORK
34
INPUTS HAVE EXCEEDED ALL EXPECTATIONS
PROGRESS TO DATE KEY ACHI EVEMENTS
Input gathering
• Mobilised the organisation through shop stewards,
human resources practioners and culture champions
to collect inputs from staff to shape ballot
GCE Site Visits
• GCE conducted site visits to 6 key sites to engage
and mobilise employees on the culture charter
process prior to voting week in Saldanha, Bloem, RB,
Dbn, CT, Sentrarand
Voting Week
Supported by
• GCE Broadcast to 90 broadcast sites
• Communication blitz teams
• 160 Primary voting stations
of critical stakeholders
Engaged with close
to 7000 employees
Over 43 000 Ballots
Collected
Collected over
17000 inputs
35
THE BALLOT FROM WHICH STAFF SHAPED THE TRANSNET CULTURE
Adaptable and flexible
Business focused
Community and social responsibility
Compliant to policies and procedures
Customers first/ Service excellence
Effective management
A safety mindset
Equal opportunities/fairness/ consistency
Going the extra mile
Good communication
Good working environment and conditions
Happy staff
Having the right tools/ equipment & uniforms
Honesty, integrity & transparency
Dedication & commitment
Enough people to get the job done
Dignity & respect
Consultation with staff/ Inclusive & participative
Delivering on our promises
Knowing what is expected of me
On time
Operational efficiencies
Pay for performance
Preparing and planning
Seeking solutions/ Acing to solve problems
Innovation & creativity
Staff support & care
Teamwork/ aligned people
Training & development
Understand the needs of our clients
Protecting and respecting our assets
Skilled & proficient
Responsible & Accountable
Positive attitudes
Recognition & acknowledgement
Transfer of skills internally
Winning and united culture & vision
36
KEY OBSERVATIONS FROM PROCESS THUS FAR
Employees are ready and hungry for opportunities to be heard
and participate in change
There is a positive spirit and energy surrounding the new “one-
company, one vision” winning Transnet brand
Employee responses indicate business focus and a good
understanding of business needs.
High level of participation in the culture charter bodes well for
the credibility and efficacy of the process
37
Effective governance and mitigation of key risks
THIS STRATEGY WILL ADVANCE TRANSNET’S
TRANSFORMATION INTO A WORLD-CLASS
TRANSPORTATION, INFRASTRUCTURE AND
LOGISTICS COMPANY
1
Optimal capital investment without compromising reliability of
infrastructure and capacity.
2
Planning and coordination along the corridor value chain, across
geographies, functions and divisions.
Informed, empowered and fit-for-the job workforce. 3
THANK YOU
doc_593733689.pdf
High income countries are generally top performers but there are big differences between countries at other income levels.
TRANSNET LIMITED
PRESENTATION BY MS MARIA RAMOS
27 MAY 2008
2
AGENDA
• Achieving business stability
– The four-point turnaround plan
– Achievements against plan
– Financial performance overview
• From stability to growth
• Growth opportunities
• Growth enablers
• Four-point growth strategy
• Context
3
0%
25%
50%
75%
100%
High
Income
OECD
High
Income
Non-OECD
Upper
Middle
Income
Lower
Middle
Income
Low
Income
Top Quintile, Highest Performance
2nd Quintile, High Performance
3rd Quintile, Average Performance
4th Quintile, Low Performance
Bottom Quintile,
Lowest Performance
Distribution of countries by income groups across LPI Quintiles (%)
High
Income
OECD
High
Income
Non-
OECD
Upper
Middle
Income
Lower
Middle
Income
Low
Income
SOUTH AFRICA FREIGHT SYSTEM PERFORMING
RELATIVELY WELL
Source: World Bank, Connecting to Compete: Trade Logistics in the Global Economy, October 2007
High income countries are generally top
performers but there are big differences
between countries at other income levels.
South Africa placed 24th out of 150
countries and is the highest ranked
middle income country in a list which
includes Malaysia (27), Chile (32), Turkey
(34) and Hungary (35).
Singapore, Netherlands and Germany are
the top 3 ranked countries respectively.
China (30) is the top performer amongst
lower middle income countries.
India (39) is the top performer amongst
low income countries.
4
THE SOUTH AFRICAN FREIGHT SYSTEM MUST
NEVERTHELESS CONFRONT MANY CHALLENGES
• Large infrastructure backlogs across all modes.
• A skills shortage.
• A lack of intermodal planning.
• As a very transport intensive economy, South Africa contributes less
than 0.5% to the world GDP but more than 2% of surface freight
ton/kilometres.
South Africa must apply transport far more efficiently than the norm.
Source: Centre for Supply Chain Management, University of Stellenbosch
5
TOTAL FREIGHT DEMAND WILL DOUBLE (OR TRIPLE) IN
THE NEXT TWENTY YEARS
Source: Centre for Supply Chain Management, University of Stellenbosch
Likely growth based on average 4.7% growth over 20 years, high growth based on
average 5.5% over the 20 years
Freight demand in the economy (million tons)
0
500
1000
1500
2000
2500
2006 2011 2016 2021 2026
m
i
l
l
i
o
n
t
o
n
s
Likely growth High growth
6
INTEGRATED AND COORDINATED ACTION IS NECCESARY
• Implementing a high performance rail corridor backbone for the country that
will alleviate corridor congestion 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.
• 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.
7
AGENDA
• Achieving business stability
– The four-point turnaround plan
– Achievements against plan
– Financial performance overview
• From stability to growth
• Growth opportunities
• Growth enablers
• Four-point growth strategy
• Context
8
THE FOUR-POINT TURNAROUND PLAN
WAS DEVELOPED TO STABILISE TRANSNET
Enabling
economic
growth
Enabling
economic
growth
Delivering
efficient and
competitive
services
Delivering
efficient and
competitive
services
Four-point
Turn-
around
Strategy
Redirecting and
Reengineering
the Business
Redirecting and
Reengineering
the Business
Strategic
Balance
Sheet
Management
Strategic
Balance
Sheet
Management
Ensure
Corporate
Governance
and Risk
Management
Ensure
Corporate
Governance
and Risk
Management
Develop
Human Capital
Develop
Human Capital
Growing a
focused freight
transport
company
Growing a
focused freight
transport
company
Strategic
intent
Strategic
intent
Transnet situation in
2004/05:
• Lack of clear strategic
direction;
• Weak financial
performance and controls;
• Unfocussed and inefficient
business structure -
significant non-core
investments;
• Low morale: Lack of
investment in Human
Capital;
• Poor risk management
and governance; and
• Lack of capital
investment.
1 2 3 4
9
Funding plan
Strategic Balance
Sheet Management
Pension funds
- TSDBF (R1.9bn) and TPF
(R1.0bn) in surplus
- Rule amendments approved
- Act amended
- Ex-gratia bonuses
Disposal of non-core
assets, including
- Viamax
- C Pref Share
- Housing loan book
- SAA
- V&A
- Transtel FSN
- Metrorail
Approximate proceeds
+R10bn
SIGNIFICANT ACHIEVEMENTS HAVE BEEN REALISED
Corporate Governance
and Risk Management
Established Governance
Structures
Re-direct and
Reengineering the
Business
Transnet Business
Intelligence
- Implementation of
systems/processes
to improve quality of
information, control and
analysis
- KPI project
Vulindlela projects to
improve productivity
levels
- Efficiency improvements
- GFB priority flows (+3mt)
- Port handling activities
(TEU’s from 158000 to
186000 at DCT)
- Availability and reliability
of all wagon and loco
fleets improved
- Progress towards
operational stability
- Procurement savings
>R500m p.a
- Safety: reduced incidents
(R200m)
Overall improvement of R2bn
since inception in 2005-06
Human Capital
Development
Skills demand planning
1 2
3
4
Revised Articles
of Association
Implementation of
Enterprise Performance
Management (“ EPM” )
framework
Focused attention on risk
- Safety risk
- Implementation of fraud
risk management plan
- Compliance risk
Shareholder Compact
Gearing
- From 83% to 39%
Effective capital approval
- Returns exceed cost of
capital
Monthly risk
identification and
reporting
Talent management and
succession planning
Change management
programme
Employment equity plan
Leadership development
programme
Reward model,
performance
management and
incentive scheme
10
SUBSTANTIAL IMPROVEMENTS IN FINANCIAL
PERFORMANCE DEMONSTRATED
Transnet Performance Highlights: Three-Year View
Improvement
vs 2004
208% R11,7 bn R3,8 bn
Capex
(excluding Aviation)
278% R37,4 bn R9,9 bn Shareholders equity
53% 39% 83% Gearing
70% 6,8% 4,0%
Cash flow return on
investment (“CFROI”
in real returns)
54% 5,4 times 3,5 times Cash interest cover
139% 40,7% 17% EBITDA (%)
78% R8 470bn R4 750bn Operating profit
2007
Actual
2004
Actual
Measures
Four-point turnaround
plan starting point
11
AGENDA
• Achieving business stability
• From stability to growth
– Shareholder mandate
– Transportation in SA
– Levers for growth
• Growth opportunities
• Four-point growth strategy
• Growth enablers
12
OVERVIEW OF SHAREHOLDER MANDATE
Key role as defined in Shareholder Compact
(Within context of agreed KPIs)
• Reduce the cost of doing business in
SA
• Embed growth through providing
appropriate ports, rail and pipeline
infrastructure
• Cost effectiveness and efficiency
within acceptable benchmark
standards
• Volume growth in the core divisions
Transnet challenges
To create
capacity,
improve
efficiencies
and
grow
volumes
Retain a
strong
financial
position
AND
13
IMPROVED TRANSNET EFFICIENCY SHOULD ALSO
REDUCE CUSTOMER LOGISTICS INDIRECT COSTS
42
20
7
19
Mining
cost
Customs/
Clearing
9
3
Land
Transport
Handling Storage Sea
Freight
1
100
Insurance Total
landed
cost
Percentage of total delivered cost
Storage and sea
freight costs strongly
influenced by
reliability, frequency
and speed of land
transport
• Indirect costs
(e.g. storage and
handling) are a
significantly
higher
component of
total customer
landed cost than
direct transport
costs
• Improved
Transnet
reliability and
speed should
reduce these
indirect costs
TYPICAL TRANSNET
PRIORITY CUSTOMER
Logistical flow
Transnet
direct
costs
14
Transformation horizons for a networked organisation
• Accelerate Human Capital strategy
implementation
• Implement integrated commercial
management
• Long-term capacity planning
• Focus Vulindlela on integrated,
cross functional corridor rollout
(using “ standardised”
improvements)
• Improve cross-divisional capital
projects and financial planning
• Implement focussed management
reporting, KPI analysis and
Enterprise Performance
Management
• Best practice CAPEX
• Funding strategy
• Develop customer services (e.g.
capacity management and
supply chain integration
products)
• Strategic organisational
initiatives
• Develop and implement long
term network improvement
concepts
• Achieve world-class
performance levels
• Build long term stakeholder
relationships
‘Stabilise the core’
‘Optimise and extend growth’
‘Expand competitive
advantage’
Current
position
‘Stop the bleeding’
• Financial restructuring
• New freight strategy and
disposal of non-core assets
• Restructure corporate
centre
• Create Human Capital
strategy
• Risk and governance
• Implement critical infrastructure
projects
• Launch Vulindlela to stabilise key
operational functions and capture
productivity
• Implement critical capability
building
• Complete disposals
• Shareholder Compact
TRANSFORMATION HORIZONS
15
THERE ARE SEVEN MAJOR LEVERS FOR GROWTH
• Roll out of Capex plan: Optimal
integration and allocation across divisions
• Increase in investment to create
capacity
1
• Vulindlela re-engineering initiatives • Productivity/efficiency improvement 2
• Safety
• Human Capital
• Embedding safety culture in organisation
(“ ERM” )
• Navigator and Group Human Capital
programmes
Key drivers for success Major levers
• Integrated commercial management • Customer focus and orientation 3
• Integrated commercial management • Sustainable service delivery 4
• Volume growth and optimal asset
utilisation
• Financial strength and sustainability 5
6
7
Key enablers
16
AGENDA
• Achieving business stability
• From stability to growth
• Growth opportunities
• Four-point growth strategy
• Growth enablers
17
ALL ODs HAVE HIGH GROWTH EXPECTATIONS
OVER NEXT 5 YEARS
47
30
2006/07 2011/12
+57%
88
67
+31%
108
80
+35%
GFB
Mv
Coal export
Mt
Ore export
Mt
Transnet Freight Rail
Transnet National Ports Authority
/Transnet Ports Terminals
Transnet Pipelines
3,400
6,400
+88%
555,000
2006/07
925,000
2011/12
+67%
Containers
TEUs
Auto-
mobiles
Units
13.9
9.9
2006/07 2011/12
+40% Refined
products
b.lit
18
AGENDA
• Achieving business stability
• From stability to growth
• Growth opportunities
• Growth enablers
• Four-point growth strategy
19
NEW GROWTH STRATEGY IS BASED ON FOUR PILLARS
Reengi-
neering –
integration,
productivity
and efficiency
Capital
optimisation
and financial
management
Safety, risk
and effective
governance
Human capital
execution
Growth through
• Integration in
priority corridors
• Efficient asset
utilisation
• Planned
maintenance
in all divisions
• Cost effective
procurement
• Shared services
• Integrated
capital,
operations, and
financial
customer
planning
• Strategic
asset/liability
management
• Funding
strategy
• Delivery on safety
performance
• Complying to the
highest standards
of corporate
governance
• Enterprise risk
management
(“ERM)
• Enterprise
performance
management
(“EPM”)
• Accelerate
implementation
of Human
Capital strategy
• Strengthen
values and
culture
20
AGENDA
• Achieving business stability
• From stability to growth
• Growth opportunities
• Four-point growth strategy
•Growth enablers
- Corridor optimisation
- Integrated commercial management
- Enterprise performance
management
21
Rail Infrastructure
30 000 km of track
22 300 route km
Network Electrification:
– 50kV AC (861km),
– 25 kV AC (2309km)
– 3kV DC (4935km)
Axle loading:
– Main lines at 22t / axle
– Coal and ore lines 30t / axle
(coal line operates at 26 ton)
Current Volumes –
– Containers: 400 000 TEU’s
– Dry bulk: 149 mtpa
– Auto: 192 000 units
– Liquid: 4.2 mtpa
– Break Bulk: 20.9 mtpa
Port Infrastructure
9 Commercial Ports
19 container berths
3 automotive terminals
26 dry bulk berths
39 break bulk berths
13 liquid bulk berths
Current Volumes –
• Containers: 3.82 m
TEU’s
• Dry bulk: 129 mtpa
• Auto: 540 000 units
• Liquid: 40 mtpa
• Break Bulk: 13 mtpa
Pipeline Infrastructure
Crude line: 580 km
• Design Cap = 6,8 bill. l/a
• Current Cap = 5,8 bill.l/a
Refined line:725 km
• Design cap = 3,5 bill. l/a
• Current cap = 4,3 bill. l/a
Avtur: 94 km
• Design cap = 1,2 bill. l/a
• Current cap = 1,1 bill. l/a
TRANSNET MANAGES AN EXTENSIVE
INTEGRATED NETWORK
22
TRANSNET EVOLUTION
TO A NETWORK BUSINESS
Corporate
Functions
• Gain effectiveness
• Improve efficiency
• Align management and
workforce on business
objectives
• Provide a common transformation
backbone
• Set pace and rhythm
• Monitor progress
• Provide support where needed
• Install value adding functions for
all business units
NOC
Projects
Maintenance
Yards
Procurement
Divisions
Network
• Progress towards the ‘perfect’
asset network
• Optimise profits from existing
networks
• Offer network related products
• Provide optimal capital base for
network evolution
• Capture synergies through smart
infrastructure bundling
Touwsrivier
MidIlovo
Plaston
Kelso
Eshowe
Utrecht
Hawerklip
Naboomspruit
Middelwit
Vierfontein
S
i
s
h
e
n
Saldanha
Cape Town
East London
Port Elizabeth
Mosselbaai
Bredasdorp
Protem Strand Simonstad
Stellenbosch
Franschhoek
Bitterfontein
Porterville
Atlantis
Prins Alfred
Hamlet
Riversdale
Knysna
C
a
l
i
t
z
d
o
r
p
George
Ladysmith
Avontuur Patensie
Klipplaat
Oudtshoorn
Rosmead
Kirkwood
Alexandria
Port Alfred
Cookhouse
Somerset East
Noupoort
De Aar
Prieska
Upington
Kakamas
Naroegas
Worcester
Sakrivier
Calvinia
Hutchinson
Kootjieskolk
Beaufort West
Belmont
Douglas
Hotazel
Warrenton
Pudimoe Makwassie
Mafikeng
Ottosdal
Vermaas
Schweizer-Reneke
K
l
e
r
k
s
d
o
r
p
Orkney
Coligny
Bultfontein
Whites
Westleigh
Bloemfontein
Aliwal North
Sannaspos
Dreunberg
Springfontein
Koffiefontein
Hofmeyer
Schoombee
J amestown
BarkleyEast
Maclear
Tarkastad Qamata
Queenstown
Blaney
Bethulie
Seymour
Umtata
Fort
Beaufort
Amabele
Maseru
Marquard
Ladybrand
Bethlehem
Wolwehoek
Lichtenburg
Warden
Harrismith
Bergville
Kokstad
Matatiele
Harding
Port Shepstone
Durban
Kranskop
Richmond
Underberg
Stanger
Nkwalini
Richards Bay
Vryheid
Hlobane
Moorleigh
Ladysmith
Roossenekal
Steelpoort
Graskop
Machadodorp
Belfast
Lothair
Komatipoort
Baberton
Phalaborwa
Messina
L
o
u
i
s
T
r
i
c
h
a
r
d
t
Soekmekaar
Zebediela Vaalwater
Nylstroom
J ’burg
Pretoria
O/fontein
E
l
l
i
s
r
a
s
Northam
Charlestown
Vrede
Potchestroom
Empangeni
Donnybrook
Greytown
Franklin
Kimberley
Marble Hall
Standerton
Bethal
B
/
p
l
a
a
s
Simuma
Mandonela
Winburg
Theunisen
Chroomvallei Drummondlea
Virginia
GlenH
Hilton
Copperton
C
u
l
l
i
n
a
n
R
a
y
t
o
n
Uitenhage
K
l
a
w
e
r
T
h
a
b
a
z
i
m
b
i
P
i
e
t
e
r
s
b
u
r
g
B
e
i
t
B
r
i
d
g
e
H
o
w
i
c
k
N
a
k
o
p
Postmasburg
E
r
t
s
Manganore
Palingpan
Rustenburg
Hoedspruit
Glencoe
Newcastle
A
r
l
i
n
g
t
o
n
Witbank
Ogies
Breyten
Krugersdorp
Welverdiend
S
e
n
t
r
a
r
a
n
d
Welgedag
K
r
o
o
n
s
t
a
d
G
o
l
e
l
a
Ancona
• Deliver high performing
elements
• Deliver 100% at interfaces
• Provide necessary capacity
• Optimise growth opportunities
across all operating divisions (rail,
port and pipeline)
• Capture operational and functional
synergies across business units –
integrated solutions
Sentrarand
DCT
Port
Newcastle
Durban
Yard
Depot
Danskraal
Kaserne
Corridors
Springfontein
Klerksdorp
Estcourt
Bethlehem
Volksrust
Makwassie
Orkney
Welverdiend
Theunisen
Richmond
Uitenhage
Thabazimbi
Witbank
Rayton
Port Shepstone
Oudtshoorn
Postmasburg
Bethal
Roossenekal
Polokwane
Cato Ridge
Touwsrivier
Naboomspruit
Sishen
Saldanha
CapeTown
East London
Port Elizabeth
Mosselbaai
Bredasdorp
Bitterfontein
Kraaifontein
Knysna
Patensie
Klipplaat
Rosmead
New
Brighton
Port Alfred
Somerset East
Noupoort
DeAar
Prieska
Upington
Kakamas
Worcester
Hutchinson
Beaufort West
Belmont
Hotazel
Warrenton
Pudimoe
Mafikeng
Coligny
Bloemfontein
Aliwal North
Dreunberg
Koffiefontein
Stormberg
Barkly East
Blaney
Umtata
Fort
Beaufort
Maseru
Sasolburg
Lichtenburg
Harrismith
Bergville
Harding
Durban
Underberg
Stanger
Richards Bay
Vryheid
Ladysmith
Graskop
Machadodorp
Belfast
Komatipoort
Phalaborwa
Messina
Louis Trichardt
Soekmekaar
Nylstroom
Pretoria
Ellisras
Northam
Empangeni
Kimberley
Copperton
Beit Bridge
Pietermaritzburg
Nakop
Erts
Rustenburg
Hoedspruit
Glencoe
Ogies Krugersdorp
Golela
Queenstown
Kroonstad
Newcastle
Sentrarand
Bellville
Liebendal
Kalbaskraal
Boksputs
Calvinia
Vryburg
Ottosdal
Vermaas
Ermelo
Atlantis
George
Avontuur
Sannaspos
Pyramid South
MarbleHall
Pienaarsrivier
Steelpoort
Vereeniging
Danskraal
Cedara
Kokstad
Piet Retief
Delmas
Balfour
Nelspruit
Kaapmuiden
Tzaneen
Pretoria-
North
Pendoring
Macmullins
Magaliesburg
Marseilles
Gunhill
Burgersdorp
Sterkstroom
Stutterheim
Maclear
Cradock
Cookhouse
Alicedale
Dal
J osafat
J ’burg
• Current organisational structure;
• Current maintenance depot
distribution;
• Current distribution of hub and
depot nodes;
• Limited overlap and clear
boundaries and ‘gate nodes’;
• Important commodity flows and
customer flows (including
Growth); and
• Preserve technical and natural
geographic boundaries and
internodal distances.
14 CORRIDORS HAVE BEEN DEFINED
Northcor
Capecor
Southcor
Natalcor
R.Baycor
N.Westcor
Eastcor
N.Eastcor
Sishen-Saldanha
Sentracor
South East Cor
Westcor
Freestate
Namibia
Corridor definition principles
24
Corridor
Rail volume handled**
Mt handled FY07
RBayCor
Sishen-Saldanha
CapeCor
Sentra hub
NatCor
Freestate
EastCor
NorthCor
NWestCor
SouthCor
WestCor
NEastCor
SEastCor
NamibiaCor
0.7
4.1
3.7
4.2
9.0
95.5
39.6
18.8
40.1
17.2
15.1
17.1
13.2
~0
Port volume
Mt, FY07
2
10
61
10
40
83
(Richards Bay)
(Saldanha)
(Cape Town)
(Durban***)
(Port Elizabeth*)
(East London)
* Includes Mossel Bay, ** Multiple counts of volumes due to travel on multiple corridors, *** 25 Mt liquid bulk included
TRANSNET’S ACTIVITIES ARE CONCENTRATED
MAINLY IN FOUR PORTS, FIVE LAND CORRIDORS . . .
25
Sishen-
Saldanha
CapeCor
SentraCor
NatCor
RBay Cor
All others
. . . AND SIX COMMODITIES. THE STRATEGY THUS
FOCUSES ON THESE BUSINESS AREAS
• 95% of the rail flows
in the critical
commodities on 5
corridors
• GFB 75% of total
Transnet Freight Rail
revenue
4
53
10
16
13
41
21
12
5
32
33
27
24
16
31
Manganese 5
1
Coal domestic
Containers
13
41
Automotive
and
industrial
2
Other GFB
1 Coal
export line
97
1
Iron ore
export line
1
2
3
4
5
6
Percent of corridor revenue
26
THERE IS AN OPPORTUNITY TO INCREASE RAIL
SHARE OF PORT VOLUME THROUGH INTEGRATION
Port
Current volume
(Mt, FY07)
Current volume on rail
(Mt)
Rail share
(%)
2
83 Richards Bay
61 Durban
40 Saldanha*
10 Port Elizabeth**
10 Cape Town
East London 1
3
4
83
10
33
100
31
15
38
93
40
* Includes 6Mt of trans-shipped volume
** Includes Mossel Bay (1.8Mt)
The Natcor
offers the
biggest
opportunity
for share
capture
PRELIMINARY
27
• Majority of demand is rail friendly
• Natcor, CapeCor, Ore Line, Coal Line and Port Elizabeth to Hotazel
line will require capacity improvements (balance of the network has
capacity for at least 10 years)
• Complementary ports system to provide a range of facilities to meet
local and hinterland
• Rail linkages between adjacent ports and Gauteng
• Container terminal R3.8bn
• MPT refurbishment
R0.3bn
• Other R0.5bn
Port
Elizabeth
East London
Maputo
Sishen
Road/rail volume
Richards
Bay
Durban
Saldanha
Cape Town
• Ore Line R3.6bn
• Ngqura construction R0.7bn and
container terminal R5.1bn
• General Freight R1.0bn
• Manganese R0.5bn
• Automotive R0.2bn
• Other R0.9bn
• Container terminals R7.2bn
• Island View and Agriport R0.7bn
• Maydon Wharf R1.6bn
• Automotive R0.3bn
• General Freight R0.9bn
• Bulk liquids (NMPP) R13.5bn
creating R 12bn
• Other R4.6bn
• Coal Expansion R6.6bn
• Dry bulk terminal R1.6bn
• Multi-purpose terminal R0.6bn
• Other R0.8bn
R0.2bn - General Freight
• Other national/countrywide
investments
• General Freight R25.6bn
• Rail Engineering R2.3bn
• Other R2.2bn
2006 2021
16.4 46.1
80.6 119.4
43.3 109.3
12.0 29.4
35.9 63
NATIONAL INFRASTRUCTURE PLAN IS
ALIGNED WITH THE STRATEGY*
* Excluding funding costs
30.1 92
28
CAPEX PLAN IS ALIGNED WITH GROWTH
OPPORTUNITIES
26.2
4.8
16.2
3.7
84.0
40.3
6.6
26.0
12.0
Fund-
ing
Ports Pipe-
lines
Supp-
orting
Svcs
Coal Total
3.2
Bulk
3.0
2.7
Ore GFB Other TFR
2.0
Break-
bulk
0.4
Auto
3.2
Other Cont-
ainers
R80.3m
11
mtpa
18
mtpa
64.2
mtpa
3.77
mTEU
7.2
mtpa
180k
Units
3m
m
3
3.6b
litre pa
5yr Capex, Rb
Incremental capacity
AND CAPEX IS ALIGNED TO GROWTH
OPPORTUNITIES
29
IN CONCLUSION…
30
PROMOTING A WINNING CULTURE AT TRANSNET
• We have done well – key aspects of the turnaround strategy have been
achieved
• The next phase of growth is about volumes and about delivering on our
commitments to customers
• More than ever, it depends on how our people perform – this requires
promoting a winning culture at Transnet
• We need to focus on driving a winning culture in Transnet, and we have a plan
to involve all our employees in this process
Growth can only be achieved through people
Performance can only be driven by individual behaviors
Collectively our individual behaviors drive team performance and
defines the organisational culture
31
LEADERSHIP CHALLENGE IN MOVING FROM
TURNAROUND TO GROWTH
GROWTH
TURNAROUND
32
Recognise, capture,
affirm, reward
behaviours
Involve staff in
defining desired
culture and optimise
buy-in
Regularly assess
and make
transparent how
we are doing
Lead by example,
train, coach,
codify, give
feedback, inspire
Embed it in
systems and
processes, induct
into it, measure it,
teach it
Affirm it where it exists
1
1
Name it and sign up
2
2
Track it
3
3
Replicate it
4
4
Institutionalise it
5
5
OUR APPROACH TO DRIVING CULTURE CHANGE
Our approach has been unique, a truly inclusive process that
allows all employees to shape our culture
33
We would fulfil our brand promise and our
customers prefer us because we are:
•Reliable
•Responsive
•Trustworthy
•Safe
•Preferred
…TRANSNET PEOPLE
WOULD…
IF TRANSNET WERE
WINNING…
People brand and
culture charter
We deliver on our mission
and brand prom ise because
we demonstrate these behaviours
and attributes:
We…
• The departure point is the wheel that also underpins the new Transnet brand
• The culture charter will populate the right hand side of the wheel
• It will comprise an agreed set of behaviours and attributes that are needed to deliver on the
vision/mission and brand promise of Transnet
We would be adding
value to our
shareholders and
society because we:
“deliver a freight transport
systemthat promotes national competitiveness
and economic growth by increasing our
market share, pricing competitively and providing
efficient,, safe and reliable services”
CULTURE CHARTER FRAMEWORK
34
INPUTS HAVE EXCEEDED ALL EXPECTATIONS
PROGRESS TO DATE KEY ACHI EVEMENTS
Input gathering
• Mobilised the organisation through shop stewards,
human resources practioners and culture champions
to collect inputs from staff to shape ballot
GCE Site Visits
• GCE conducted site visits to 6 key sites to engage
and mobilise employees on the culture charter
process prior to voting week in Saldanha, Bloem, RB,
Dbn, CT, Sentrarand
Voting Week
Supported by
• GCE Broadcast to 90 broadcast sites
• Communication blitz teams
• 160 Primary voting stations
of critical stakeholders
Engaged with close
to 7000 employees
Over 43 000 Ballots
Collected
Collected over
17000 inputs
35
THE BALLOT FROM WHICH STAFF SHAPED THE TRANSNET CULTURE
Adaptable and flexible
Business focused
Community and social responsibility
Compliant to policies and procedures
Customers first/ Service excellence
Effective management
A safety mindset
Equal opportunities/fairness/ consistency
Going the extra mile
Good communication
Good working environment and conditions
Happy staff
Having the right tools/ equipment & uniforms
Honesty, integrity & transparency
Dedication & commitment
Enough people to get the job done
Dignity & respect
Consultation with staff/ Inclusive & participative
Delivering on our promises
Knowing what is expected of me
On time
Operational efficiencies
Pay for performance
Preparing and planning
Seeking solutions/ Acing to solve problems
Innovation & creativity
Staff support & care
Teamwork/ aligned people
Training & development
Understand the needs of our clients
Protecting and respecting our assets
Skilled & proficient
Responsible & Accountable
Positive attitudes
Recognition & acknowledgement
Transfer of skills internally
Winning and united culture & vision
36
KEY OBSERVATIONS FROM PROCESS THUS FAR
Employees are ready and hungry for opportunities to be heard
and participate in change
There is a positive spirit and energy surrounding the new “one-
company, one vision” winning Transnet brand
Employee responses indicate business focus and a good
understanding of business needs.
High level of participation in the culture charter bodes well for
the credibility and efficacy of the process
37
Effective governance and mitigation of key risks
THIS STRATEGY WILL ADVANCE TRANSNET’S
TRANSFORMATION INTO A WORLD-CLASS
TRANSPORTATION, INFRASTRUCTURE AND
LOGISTICS COMPANY
1
Optimal capital investment without compromising reliability of
infrastructure and capacity.
2
Planning and coordination along the corridor value chain, across
geographies, functions and divisions.
Informed, empowered and fit-for-the job workforce. 3
THANK YOU
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