1. PRESENTATION TO PUBLIC ENTERPRISES PORTFOLIO COMMITTEE 8 MARCH 2000 TRANSNETLIMITED

2. TRANSNET PENSION FUND

3. TRANSNET DEBT RESTRUCTURING PLAN TRANSNET NET BORROWINGS 1994 1995 1996 1997 1998 1999 Total in R’bn 22,619 21,467 22,624 22,651 23,846 27,185 Pension Fund and Medical Aid as % of total 54% 56% 52% 50% 43% 43% of our net borrowings is the Pension Fund T11 Bond and Medical Aid Provision. Our focus is on solving these two structural problems

4.  HISTORY  PROCESS - AGREEMENTS  WAY FORWARD TRANSNET PENSION FUND RESTRUCTURING

5. PENSION FUND HISTORY

6. 1990 VALUATION Assets Liabilities Shortfall R5 billion R22 billion (R17 billion) LIABILITIES - R22 BILLION Statutory 2% = Social Liabilities 6,5% = R11,835 billion R10,394 billion (R22,229 billion) T11 BOND WAS R10,394 BILLION

7. 31 MARCH 1990 SOCIAL LIABILITY 6,5% R10,394 BILLION Increases already granted = Future Increases - Existing Pensioners = Future Increases - Members = TOTAL R2,137 billion* R4,635 billion* R3,621 billion R10,394 billion

8. T11 BOND  R10,394 billion  20 years to Year 2010  16,5% fixed coupon

10. FUNDING LEVEL LIABILITIES Transnet Active Members Transnet Pensioners SATS Pensioners TOTAL Liabilities ASSETS Equities Fixed interest and cash T11 Property Loans to unlisted companies Foreign Equity investments Accrued Investment Income Net current assets TOTAL Assets DEFICIT MARCH 1990 (R’bn) 22,0 MARCH 1998 (R’bn) 13,9 7,4 14,4 35,7 5,0 R17 billion 19,0 3,3 7,3 2,3 0,1 0,4 0,1 32,9 R3 billion

11. CHANGES IMPLEMENTED SINCE 1997

12. REDUCTION TO THE PENSION FUND DEFICIT R17 BILLION - 1990 TO R3 BILLION - 1998 DECISIONSPOSITIVE EFFECTNEGATIVE EFFECTEXECUTIVE’S ACTIONS ON THE PENSIONON THE COMPANYTO REVERSE (CORRECT) FUNDSOME OF THE DECISIONS 1.1990 - Creation of the T11The Pension Fund hadTransnet had a liability Bond - R8,4 billion foran asset of R8,4 billion.in its balance sheet of 20 yearsFunding level dramaticR8bn for 20 years. Debt/ increaseEquity Ratio goes to 72% 2.1990 - Coupon Rate ofThe Pension Fund receivesTransnet has a fixed 16,5% was fixed on theinterest from the company commitment of R1,4bn T11 Bondof R1,4 bn per annum.Interest payment/year. Accumulated to current Accumulated interest payment = R8 billionto current is R8bn out of its income statement 3.1993 - Additional contributionsR500 m/year additionalTransnet paid out of its cashAdditional contributions by the company of 9%contributions received fromflows R500m to the Pensionreduced by 4,5% in the company Fund. Accumulated additional1997 to R250m/year Accumulated to currentcontribution to current= R3,0 billion 4.1994 - V&A Waterfront propertyThe V&A Waterfront AssetValuable asset could haveCompany bought back sold by the Company to theis valued at ±R2bn in thebeen in the Transnet26% controlling stake Pension Fund for R249 millionPension Fund Assetbalance sheeteffective 31 March 1999 5.1995 - 3 valuable TransnetThe Pension Fund tied theTransnet committed to leaseNegotiating to buy back buildings sold to TPF forcompany to 20-25 yearpayments for full occupancythe buildings R120 millionlease payments withfor 20-25 years and unfair conditionsmaintenance } Investment Strategy being } discussed with the } Government Actuary

13. PHASE 1 SOLUTION

14. EFFECT OF THE CHANGE IN THE PENSION INCREASE POLICY Investment earnings Pension Increases Valued at AFTER THE CHANGE 12,0% 5,0% 7,0% BEFORE THE CHANGE 12,0% 7,5% 4,5%

15. ASSETS OF THE FUND - 31/03/99 Shares, Investment Policy & Foreign Equity Fixed-interest Stock Transnet T011 Stock (nominal value) Property Loans to Unlisted Companies Deposits and Promissory Notes Cash at Bank Accrued Investment Income Debtors Creditors TOTAL Market Value (R’m) 16792,2 1258,7 7327,0 2743,0 157,2 1699,1 224,5 362,8 294,7 30859,2 (244,8) 30 614,4 Actuarial Value R’m 16624,2 1258,7 9070,8 2743,0 157,2 1699,1 224,5 362,8 294,7 32435,0 (244,8) 32190,2

16. FUNDING LEVEL - 31/03/1999 A.PENSION FUND LIABILITIES SATS Pensioners Transnet Pensioners Transnet Active Total Liabilities B.PENSION FUND ASSETS Equities Fixed Interest and Cash TII Property Loans to unlisted companies Foreign equity investments Accrued investment income Net current assets Total Assets SURPLUS/(DEFICIT) Actuarial Valuation 31/3/98 R’bn 14,4} 7,4} 13,9 35,7 17,2 3,3 9,1 2,3 0,1 0,4 0,1 32,9 (R3,0 billion) Actuarial Valuation 31/03/99 R’bn 11,9 6,9 13,3 32,1 16,2 1,3 9,1 2,7 0,2 0,4 2,0 32,2 R88 million

17. TRANSNET PENSION FUND

19. PHASE 1  CONCLUDED  PENSION FUND FULLY FUNDED

20. GOVERNMENT AND PARLIAMENTARY SUPPORT IS CRITICAL TO THE SUCCESS OF THIS NEXT PHASE OF THE SOLUTION

21. THANK YOU TRANSNETLIMITED