Commentary

Group operating performance – continuing operations

The effect of the global economic crisis, which began in the third quarter of the prior calendar year, continues to adversely impact the volume of commodities and containers handled in the six-months ended 30 September 2009. General freight tons have decreased to 35,6 mt (2008: 43,2 mt) and container volumes declined by 12,9%, reflecting the adverse impact of the economic downturn during this period. Iron ore export tons increased by 32,7% to 21,1 mt (2008: 15,9 mt) in line with contractual commitments and export coal volumes increased marginally by 1,0% to 30,2 mt, but are still well below planned volumes. The reasons for the disappointing export volumes of coal include continued operational problems at TFR, supply issues at the coal mines and commissioning difficulties at the Richards Bay Coal Terminal. Despite the overall decrease in volumes, revenues for this period increased by 2,9% to R17,3 billion (2008: R16,8 billion).

The onset of the economic crisis required the Company to proactively manage the business in response to the changing environment to ensure that its financial metrics and cash flows were maintained during this period of financial instability. One of the elements that received significant focus was operating costs. Consequently, a series of cost-cutting initiatives were implemented throughout the Company. These have realised substantial benefits and resulted in an operating cost increase of only 3,8% to R10,7 billion (2008: R10,3 billion).

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