1. Annual Report Presentation 2004/2005
Portfolio Committee Presentation October 2005

2. Transnet team Ms Maria Ramos – group chief executive
Mr Christopher Wells – group chief financial officer
Mr Pradeep Maharaj – group executive: strategy & transformation
Ms Swazi Tshabalala – group treasurer

3. Contents of presentation
Strategy overview
Financial results 2004/2005
Divisional reports (including SAA)
Post-balance sheet events
Pension Fund liability
SAA unbundling
Non-core investments
Prospects
Conclusion and questions

5. Strategy overview To be a focused freight transport company Strategy
Service providers: – Transwerk – Protekon
Transport Portfolio
Pipeline
Network
Operations
Rail
Infrastructure
Port
Investment
Portfolio
Aviation
Other
Holding company
Strategy
Structure
To be a focused freight transport company

6. Strategy overview continued
Implementation of the Transnet Strategy: 4-Point Turnaround Plan
(1) Redirect the business 1
(4) Human capital
4-Point Turnaround Plan
(2) Balance sheet restructuring
(Incorporated into plan 2005) 4 2 3
(3) Corporate governance and risk management

7. Strategy overview continued
Progress from last year against 4-point turnaround plan
1. Redirecting the business
Investment plan of R40 billion approved: Focus on project management
Restructuring of corporate office will be completed by September 2005
Re-engineering core business processes underway: Efficiency, cost reduction, service delivery, market share increase
Top management team now in place

8. Strategy overview continued
Progress from last year against 4-point turnaround plan
2. Restructuring the balance sheet
Exit of all non-core assets: PFMA approval obtained subsequent to year-end and process underway
Closure of SAA hedge book and removal of embedded derivatives have been completed
Unwinding of MTN share transaction structure in progress: Suspensive conditions
SAA recapitalisation agreed at R2,4 billion
Unfunded liability of Second Defined Benefit Fund fully provided
Funding solution required

9. Strategy overview continued
Progress from last year against 4-point turnaround plan
Corporate governance and risk management
Board committees now functioning:
Governance
Remuneration
Audit
Executive committee fully functional with sub-committees:
Risk – Capital Investment
ALCO – Operations
Risk committees established at business units
Enterprise Wide Risk Management Framework in progress
Fraud Prevention Plan and Ethics Program established
Financial management and control strengthened
Internal Audit outsourced

10. Strategy overview continued
Progress from last year against 4-point turnaround plan
Human capital strategy:
Executive to be appointed
Organisational design and development
Talent management
Employment Equity
Training and Development
Performance management and reward

11. PLATFORM FOR THE FUTURE ESTABLISHED
Salient Features: 2005
Results 2005
2005
R million
% change
Turnover
46 259
+ 6,0
Operating profit (after impairments)
5 818
+ >100
Operating margin % (after impairments)
12,6
Capital and reserves
16 959
+ 71,0
Cash flows from operating activities before cash effects of derivative transactions
7 536
+ 52,2
Gearing % 67
- 19,3
PLATFORM FOR THE FUTURE ESTABLISHED

13. Financial results 2005 Consolidated income statement
for the year ended 31 March 2005
% change
2005
R million
2004
Turnover
6,0
46 259
43 637
Net operating expenses excluding impairments
2,7
(40 288)
(39 229)
Profit from operations before net finance costs and impairments
35,5
5 971
4 408
Impairment of assets
(153)
(4 221)
Profit from operations before net finance costs
5 818
187
Net finance costs
17,1
(2 588)
(2 211)
Profit/(loss) before items below
3 230
(2 024)
Other income and fair value adjustments
4 926
(4 187)
Taxation
(1 629)
(204)
Income from associates and minority interest
283 83
Profit/(loss) for the year attributable to shareholder
6 810
(6 332)
Ratios:
Operating margin % – before impairment
27,7
12,9
10,1
Operating margin % – after impairment
>100
12,6
0,4 1) 2) 3)

14. Transnet operating profit margin (after impairment)
HIGHEST MARGIN IN LAST SIX YEARS

15. Spoornet’s transformation is key to Transnet’s success
Re-engineering Spoornet’s business processes is key
Africa’s leading railway company with 20,000km of rail
Spoornet lost R21m in FY2005 (excluding the embedded derivative)
Operational problems are being addressed
Target is to reduce cost and grow volumes
Key operational challenge is to address investment backlog
Impact of a turnaround on Transnet’s financials would be very positive
Largest of Transnet’s divisions
Only core business that is underperforming
R9bn of assets and 20% target return

16. Spoornet recent performance
Profit before tax (Rm)
Turnover (Rm)
Financial
Turnover increased by 5.6% to R14.2bn
Profit before tax of R3.5bn driven by fair value gain on embedded derivative
R16bn to be spent upgrading infrastructure over next 5 years
24% 3%
Operational
Freight volumes increased by 2.8% to 181mt:
Iron ore line 28m tons, growing to 41m tons in five years
Coal line railed 67m tons, growing to 86m tons
General Freight 86m tons (including containers), growing to 88m tons
(5%) %
Margin

17. National Ports Authority recent performance
The NPA is a landlord port authority that owns, manages and controls all seven commercial ports along South Africa’s coastline
Financial
Turnover improved by 9.8% to R5.0bn
Profit before tax increased by 26.1% to R2.7bn
Margins improved from 47% to 54%
Capital expenditure R1.1bn
Profit before tax (Rm)
Turnover (Rm)
Operational
NPA’s financial performance has exceeded expectations
The major spend on projects related to the construction of the Port of Ngqura, expansion of container and car terminal capacity at the Port of Durban in 2005.
NPA is focused on delivering its capital expansion programme – R1.7bn for FY 2006
54%
47%
42% %
Margin

18. South African Port Operations recent performance
SAPO operates 14 cargo terminals at South Africa’s six largest seaports
Financial
Turnover increased by 15.5% to R3.4bn
Profit before tax of R1.9bn
Operating profit was positively impacted by the reversal of the embedded derivative
Profit before tax (Rm)
Turnover (Rm)
56%
Operational
SAPO’s 14 cargo terminals handled:
Containers (m) +12% 2.8
Break bulk (m tons) -3% 12
Bulk (m tons) +1% 44
Vehicles (000 units) +27% 332
R591m invested in infrastructure
12% 4% %
Margin

19. Petronet recent performance
Operates a liquid petroleum and gas pipeline network
Financial
Turnover increased by 10.9% to R1.0bn
Profit before tax increased by 39.3% to R333m
Return on assets of 15% in line with international benchmarks
Profit before tax (Rm)
Turnover (Rm)
33%
Operational
Termination of the Sasol supply agreement in December 2003 resulted in volatility in demand for Petronet’s services and need for strict capacity management
Introduced new systems and processes to manage this demand
Coming regulation will have significant impact on Petronet
Planning R3bn 16” New Multi-Product Pipeline (NMPP)
26%
17% %
Margin -

20. SAA key financials: 2005 vs. 2004 Results 2004 Rm 2005 % change
Total airline income
16 339
17 442
6.8
EBITDAR
2 475
2 991
20.8
EBITDAR margin %
15.1
17.1
Capital and reserves
(2 697)
2 228
Cash generated from operations
741
1 911
>100.0
Derivative liability
(5 957) -
(100.0)

21. SAA recent performance
Financial
Turnover increased by 6.8% to R17.4bn
Operating costs increased by only 1.9%
Gross profit increased from R134m to R935m despite 40% increase in oil price
Net profit increased from a loss of R8.6bn to a profit of R966m
Total airline income (Rm)
Gross Profit (Rm) 5%
Operational
Number of passengers increased by 5.2% to 6.8m
Passenger load factors increased from 67% to 70%
Revenue per revenue passenger kilometer of 0.56 2% 1% %
Margin -

22. Financial performance 2005 vs 2004: SAA
Turnover
Operating profit
(Rm)
>100%

23. Fair value adjustment 2005 R million 2004 R million
Embedded derivative
3 959
(1 213)
SAA hedge book
211
(4 485)
MTN structure
932
1 835
Other
(452)
(666)
Transnet total
4 650
(4 529)
(Negative) charge to income statement

24. Financial results 2005 Consolidated balance sheet at 31 March 2005
R million
2004
ASSETS
Non-current assets
55 282
57 156
Current assets
17 351
15 544
Total assets
72 633
72 700
EQUITY AND LIABILITIES
Capital and reserves
16 959
9 917
Non-current liabilities
30 710
32 217
– Derivative liability
559
6 797
– Other
30 151
25 420
Current liabilities
24 964
30 566
668
7 396
24 296
23 170
Total equity and liabilities
Gearing (%) 67 83
Return on average total assets managed (%)
8.3
0.3 1) 2) 3)

25. Financial results 2005 Abridged consolidated cash flow statement
for the year ended 31 March 2005
2005
R million
2004
Cash flows from operating activities before cash effects of derivative transactions
7 536
4 952
Cash generated from operations after working capital changes
10 192
7 497
Interest paid, investment income and other
(2 656)
(2 545)
Cash effects of derivative transactions
(7 052)
(1 839)
Cash flows from operating activities
484
3 113
Cash flows from investing activities
(4 938)
(5 468)
Cash flows from financing activities
2 437
5 696
Net (decrease)/increase in cash and cash equivalents
(2 017)
3 341
Cash and cash equivalents at the beginning of the year
4 324
983
Cash and cash equivalents at the end of the year
2 307
10,2
7,5
36%
R bn
Cash from operations

26. CAPEX
Planned spending over next five years (Core businesses): R40,8 bn
Durban Port Investment
Cape Town Container Terminal
Expansion
Port of Ngqura
Multipurpose product pipeline DJP
12,5%
10,3%
39,5%
37,7%
Iron-ore line Capacity Expansion
Coal line Capacity Expansion
Wagon fleet Renewal and Modernisation
Upgrade of E Locomotives
Emphasis on:
Project management
Returns > cost of capital
Funding: More than 50% funded from operating cash flows
Gearing to reduce over five years to between 50% – 55% (target)

27. Transnet funding requirement
Funding strategy:
Minimise financial risks
Reduce weighted average cost of capital
Extend the duration of the debt portfolio
Match asset and liability cash flows and maturities and
Begin to re-establish a prudently diversified debt portfolio

28. Post-balance sheet events
SAA recapitalisation
Continued support to SAA
Amendment to terms of Compulsorily Convertible Subordinated
Loan of R4 billion
SAA capitalised at R2,4 billion
R1,6 billion has been repaid to Transnet
Renewal of credit facility of R1,5 billion and guarantee
MTN structure
Agreement to early unwind structure
Subject to suspensive conditions
Major cash inflow if implemented
Umthunzi Telecoms Consortium
PFMA non-compliances (page 64)

29. Pension fund Second Defined Benefit Fund
Actuarial net liability at 31 March 2005: R4,8 billion (fully provided)
Funding solution required
Closed Fund
Enhancement of benefits: Substantial increase in liability
Project underway – finding a sustainable solution

30. SAA: Unbundling Transfer of SAA to Government
Transfer requires separate parliamentary Bill, SAA Bill
Joint team involved in project (valuation, HR, pensions, loans, joint assets, etc)
Road shows to owners of capital
Target date of transfer: 31 March 2006

31. Divestment/Transfer of non-core investments
Purpose:
To enable strategic focus
To focus scarce resources (human and capital) on core businesses
Reduce borrowings
Investments identified as non-core: To be divested/transferred
Freightdynamics – V & A Waterfront Holdings (26%)
Autopax – Equity Aviation (49%)
Metrorail – VAE Perway (35%)
Shosholoza Meyl – Viamax
Transnet Pension Fund – Transnet Housing
Administrators
Reintegration to support the core
Protekon, HSA, Esselen Park, Transtel and Transwerk
Divestment/Transfer of non-core businesses has been approved by shareholder post year end

32. New Transnet Based on 31 March 2005 New Transnet: Financial
Transnet Group
Aviation and other business
New* Transnet
Turnover (Rm)
46 259
18 559
27 700
EBIT (Rm)
5 818
1 182
4 636
Operating Margins (%) – after impairment
12,6
6,4
16,7
* After disposal of non-core for which approval has been received
New Transnet:
Reduced borrowings
Increase in return on assets
Focused business
Less volatility/risk

33. PLEASING RESULTS – BUT MAJOR CHALLENGES GOING FORWARD
Prospects
PLEASING RESULTS – BUT MAJOR CHALLENGES GOING FORWARD
Turnaround a five year process
Re-engineering of core business processes: Improve efficiencies,
cost levels, service delivery and market growth
Implementation of the investment plan over the next five
years – effective project management
Sustainable funding solution for Second Defined Benefit Fund
Divestment from non-core businesses
Sustainable value creation

34. WE MOVE INTO THE FUTURE WITH CONFIDENCE
Conclusion
While the progress of last year is pleasing, the road ahead is a challenging one
The turnaround of Transnet can only be successful if we can improve on these results in a sustained way over the long term
What we have achieved is a platform on which to build the future of the company
WE MOVE INTO THE FUTURE WITH CONFIDENCE

35. Thank you
Any questions??