PRASAGROUP FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31 MARCH 2013

2

Key Highlights Conclusion of the procurement process in relation to the

Rolling Stock Fleet Renewal Program and announcement of the successful bidder (ALSTOM-led GIBELA consortium).

Commenced with the implementation of the 5-year Signalling Upgrade Program in Gauteng, KwaZulu-Natal and the Western Cape

A total of 579 coaches delivered as part of the Accelerated Rolling Stock Program.

As part of the Balance Sheet restructuring process, investment property was revalued according to IAS 40 (from R924m to R2.5bn.

Capital expenditure improved by 82% from R3.5bn last year to R6.3bn.

3

Key Highlights

Established the SIP7 Project Office as part of the Government’s infrastructure program under the Strategic Integrated Projects.

Metrorail fare revenue increased by 22% from last year, generating R1.8bn for the year and was 2% below budget for the year

Unlocking the value of assets through Balance Sheet Restructuring initiatives (New Real Estate Strategy Approved).

Reduced operational losses through various cost containment/management interventions

Despite a demand for a double-digit wage increase, PRASA settled at 8%

4

Key Highlights

Awarding of over 500 bursaries as part of skills development contribution and Learnerships

Increase in the value of assets (excluding investment property) grew by 25% from R19.4 billion to R24 billion

Improvement on the company’s solvency with debt or solvency ratio at 0.17 despite operational challenges and unfunded mandate within Rail.

Fare revenue excluding Government subsidy and other revenue growth by 16.3% (Metrorail fare revenue)

Total Revenue (excluding government subsidy) and grew by 16.3% to R549 million compared to the previous year.

5

Key Highlights

Group posted a current year shortfall of R157m, which is a loss increase of R128m on the prior year loss of R29m, mainly due to increased operational costs.

Passenger number for MLPS declined further due to the rationalization of its services. MLPS posted R795m loss excluding subsidy.

CRES’ ability to lease property has been affected by the current economic environment, characterised by poor property rental demand and generally lower rentals has severely affected the income generation capacity of the property portfolio division, with income being 46% below budget.

6

Key Highlights

Autopax failed to secure the required bus operating licences which would have allowed it to generate sufficient revenue.

Despite the increase in Capital subsidy this has not been accompanied by growth in Operational Subsidy thus placing strain on cash flows to manage the capital enhancements. Operational subsidy increased by 5.6%.

Rates & taxes including energy increased by 18% on the prior year.

7

ANALYSIS OF TOTAL ASSETS

8

FIXED ASSET BASE

Property, Plant and Equipment; Investment Properties & Intangible Assets

R'm FY 2013 FY 2012

Carrying value at beginning of year 20 485 17 804

Additions 6 329 3 476

Fair valuation 1 265 774

Depreciation/derecognitions/impairment ( 1 618) ( 1 569)

Carrying value at end of year 26 461 20 485

% Movement 29.2%

Assets grew by 29.2% further strengthening the Group Balance Sheet.

Spending on capital project for the year increased by 82% on last year.

9

ANALYSIS OF TOTAL LIABILITIES

10

ANALYSIS OF TOTAL LIABILITIES

11

KEY FINANCIAL POSITION RATIOS

12

ABRIDGED GROUP INCOME STATEMENT

13

QUALITY OF EARNINGS

14

GROUP SUBSIDY AND FARE REVENUE

R'm FY 2010 FY 2011%

Movement FY 2012%

Movement FY 2013%

Movement

Capital Subsidy 4 297 5 610 30.6% 6 135 9.4% 6 701 9.2%

Operational Subsidy 3 186 3 155 -1.0% 3 339 5.8% 3 527 5.6%

Fare Revenue 2 159 2 117 -1.9% 2 342 10.6% 2 756 17.7%

Increase in Capital Subsidy is in line with strategy on modernisation of public transport.

However, the operational subsidy is below the levels required to sustain the envisaged growth strategy.

Eventhough fare revenue increased by 18%in f2013 it is still not sufficient to sustain the current business operating activities as well as to manage additional capital enhancements of R6.3bn

-

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

FY 2010 FY 2011 FY 2012 FY 2013

R'm

Capital Subsidy

Operational Subsidy

Fare Revenue

15

% COST DISTRIBUTION

16

OPERATIONAL EFFICIENCY RATIOS

17

FRUITLESS & WASTEFUL EXPENDITURE

Nature R'm

Interest and penalties on late payment of creditors 8 347

18

IRREGULAR EXPENDITURE : FY 2013

Nature of Irregular Expenditure R'000

CCMA award to employees fired/suspended 948

Relocation costs contrary to policy requirements 56

Employee appointed with no qualifications 54

Employee suspended for longer periods 1 184

Procurement of services : Hired vehicles without following due process in the the Western Cape 3 884

Three quotes not obtained and no motivation for deviation 1 310

Functionality not applied from 7 December - PPPFA 169

Appointment of security in the Western Cape on an emergency and not approved for emergency security 9 630

Entity 17 234

Autopax : Non compliance with SCM policies - month to month contracts 15 114

Autopax : Elapsed contracts continued month to month 1 307

Group 33 655

19

SUMMARY OF KEY CHALLENGESTRANSPORT AND RAIL POLICY

Policy certainty is vital

Rail as backbone of transport

Conflict between rail and transport policy

Devolution of rail functions

Long distance rail

Access to the rail network

High speed rail (Future)

20

SUMMARY OF KEY CHALLENGESFUNDING FOR NEW ROLLING STOCK

Request for Review of Affordability Level (R40bn to R51bn)

Hedging – National Treasury

Turbulent Situation in Terms of Exchange Rate

(Rand – Dollar)

(Rand – Euro)

(Commodity Risks – Steel, Copper etc)

Mitigate Against the Risk

21

SUMMARY OF KEY CHALLENGESFUNDING FOR RAIL

Lack of funding is destroying long-distance Rail (Metrorail)

Mainline Pax Services (MLPS – otherwise known as Shosholoza Meyl, is costing PRASA R870m a year

Reduced Funding for Metrorail is equally destructive, affecting key operations

Increase in energy costs as well as negative rates and taxes impact on cash position of PRASA, suppliers and small business

Conditions on Capex Retrogressive

22

SUMMARY OF KEY CHALLENGESUNLOCKING THE VALUE OF PRASA ASSESTS

Section 54 (a) Application to the Shareholder

Support for PRASA Real Estate Strategy

Disposal of certain assets (eg Residential Property)

Private Sector Investment in New Developments

Conditions on Capex Retrogressive

23

SUMMARY OF KEY CHALLENGESTHE ROLE OF PRASA IN THE SADC REGION

Opportunities for Integration in the SADC region

Legal Framework not prohibitive, however, no mandate

Opportunities to run train and bus between South Africa, Mozambique, Zimbabwe, Malawi, Lesotho and Zambia

Infrastructure Investment in SADC region

24

THANK YOU