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CARGO CARRIERS LIMITED - Summarised audited annual financial statements for the year ended 28 February 2014 and dividend announcement

Release Date: 20/05/2014 17:40
Code(s): CRG     PDF:  
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Summarised audited annual financial statements for the year ended 28 February 2014 and dividend announcement

Cargo Carriers Limited                            
Registration number: 1959/003254/06               
Incorporated in the Republic of South Africa      
(“Cargo Carriers”, “the company”)  
JSE share code: CRG                               
ISIN code: ZAE000001764                           
Summarised audited annual financial statements for the year ended 28 February 2014 and dividend announcement  

  
Consolidated statement of comprehensive income                                                                                                                                                                                             
                                                                              2014          2013        
                                                                              R000          R000                                                                                                                               
Turnover                                                                   911 375       721 321     
Other income                                                                 3 707         5 384       
Revenue                                                                    915 082       726 705     
Operating and administration costs                                        (561 502)     (441 456)   
Employment costs                                                          (221 916)     (194 943)   
Depreciation of property, plant and equipment                              (73 856)      (47 768)    
Profit from operating activities                                            57 808        42 538      
Profit on disposal of property, plant and equipment                          6 334         1 261       
Impairment of assets                                                       (10 554)       (3 078)     
Revaluation of investment properties                                         8 576         9 234       
Dividend income                                                              1 137           915         
Profits from associates and joint ventures                                   3 218         2 491       
Profit before finance income and finance cost                               66 519        53 361      
Finance income                                                               6 472         4 547       
Finance cost                                                               (23 162)      (18 139)    
Profit before tax                                                           49 829        39 769      
Taxation                                                                    (3 759)      (13 666)    
Profit for the year                                                         46 070        26 103      
Other comprehensive income:                                                                          
Items not to be reclassified to profit or loss in subsequent periods:                                
Revaluation of owner occupied properties                                     4 333         7 415       
Income tax effect                                                             (770)       (2 076)     
Income tax effect of property adjustments                                   (1 774)            -           
Change in estimated base cost for CGT purposes                               2 857             -           
Other comprehensive income to be reclassified to profit or loss in 
subsequent periods:                               
Exchange differences on translation of foreign operations                    3 601         1 244       
Other comprehensive income for the year, net of tax                          8 247         6 583       
Total comprehensive income for the year, net of tax                         54 317        32 686      
Total comprehensive income, net of tax attributable to:                                              
Equity holders of the parent                                                53 729        33 021      
Non-controlling interest                                                       588          (335)       
Total comprehensive income for the year, net of tax                         54 317        32 686      
Profit for the year attributable to:                                                                   
Equity holders of the parent                                                45 482        26 438      
Non-controlling interest                                                       588          (335)       
                                                                            46 070        26 103      


Financial information                                                                                                                                                           
                                                                              2014          2013                                                                   
Dividend per share (cents)                                                                              
-  interim dividend declared during the year                                  15.0          10.0       
-  final dividend declared after year end                                     40.0          20.0       
Total dividends                                                               55.0          30.0       
Basic and diluted earnings per share (cents)                                 234.4         136.3      
Adjustments (cents):                                                                                    
Profit on disposal of property, plant and equipment                          (23.5)         (4.7)      
Impairment of assets                                                          54.4          15.9       
Revaluation of investment properties                                         (36.0)        (38.7)     
Basic and diluted headline earnings per share (cents)                        229.3         108.8      
Group borrowings                                                                                        
Borrowing capacity of the group (R000)                                     217 524       194 880    
Borrowing capacity utilised (R000)                                          99 766       181 417    
Borrowing capacity utilised (%)                                               45.9          93.1        
Capital commitments (R000)                                                       -        21 096     
Net asset value per share (cents)                                            2 166         1 924      
Ordinary shares in issue (closing and weighted average) (000)               19 406        19 406     


Segmental analysis                                                                                                                     
                                                                              2014          2013       
                                                                              R000          R000                                                                             
Revenue                                                                                                
Industrial                                                                 761 630       587 563    
Agricultural                                                               113 529        94 480     
Aviation                                                                     3 242         9 428      
Supply chain services                                                       33 212        30 192     
Property                                                                     3 469         5 042                                                                                
                                                                           915 082       726 705    
Profit before finance income and finance cost                                                          
Industrial                                                                  57 985        61 478     
Agricultural                                                                (9 847)      (16 574)   
Aviation                                                                     3 671         4 775      
Supply chain services                                                       (2 629)      (10 658)   
Property                                                                    17 339        14 340                                                                               
                                                                            66 519        53 361     


Consolidated statement of changes in equity                                                                                                                Foreign                 
                                                                                            Asset        currency                 
                                                                          Share       revaluation     translation         Other                          
                                                                        capital           reserve*        reserve*     reserves*                                                                                                                                                                                                                   
Balance at 1 March 2012                                                     194            47 578           4 952            50   
Total comprehensive income                                                    -             5 339           1 244             -   
- Profit for the year                                                         -                 -               -             -   
- Other comprehensive income                                                  -             5 339           1 244             -   
Transfer between reserves on disposal of assets                               -              (380)              -             -   
Non-controlling interest arising on a business combination                    -                 -               -             -   
Post-tax transfer of revaluation of investment properties                     -             7 512               -             -   
Dividends paid                                                                -                 -               -             -   
Balance at 28 February 2013                                                 194            60 049           6 196            50   
Total comprehensive income                                                    -             4 646           3 601             -   
- Profit for the year                                                         -                 -               -             -   
- Other comprehensive income                                                  -             4 646           3 601             -   
Disposal of assets and transfer between reserves                              -           (20 878)         (6 291)            -   
Exchange differences realised on dissolution of foreign subsidiary            -                 -          (2 641)            -   
Post-tax transfer of revaluation of investment properties                     -             7 064               -             -   
Dividends paid                                                                -                 -               -             -   
Balance at 28 February 2014                                                 194            50 881             865            50   
* Represents non-distributable reserves                                                                                                                                                         


Consolidated statement of changes in equity (continued)                                                                                                                                                        
                                                                                                 Equity    
                                                                                           attributable       
                                                                                              to equity            Non-                
                                                                          Distributable      holders of     controlling        Total        
                                                                               reserves      the parent        interest       equity        
Balance at 1 March 2012                                                         290 780         343 554           1 749      345 303     
Total comprehensive income                                                       26 438          33 021            (335)      32 686     
- Profit for the year                                                            26 438          26 438            (335)      26 103     
- Other comprehensive income                                                          -           6 583               -        6 583     
Transfer between reserves on disposal of assets                                     565             185            (185)           -     
Non-controlling interest arising on a business combination                            -               -          15 264       15 264     
Post-tax transfer of revaluation of investment properties                        (7 512)              -               -            -     
Dividends paid                                                                   (3 494)         (3 494)              -       (3 494)     
Balance at 28 February 2013                                                     306 777         373 266          16 493      389 759     
Total comprehensive income                                                       45 482          53 729             588       54 317     
- Profit for the year                                                            45 482          45 482             588       46 070     
- Other comprehensive income                                                          -           8 247               -        8 247     
Disposal of assets and transfer between reserves                                 27 169               -               -            -     
Exchange differences realised on dissolution of foreign subsidiary                2 641               -               -            -     
Post-tax transfer of revaluation of investment properties                        (7 064)              -               -            -     
Dividends paid                                                                   (6 793)         (6 793)         (2 235)      (9 028)     
Balance at 28 February 2014                                                     368 212         420 202          14 846      435 048     
* Represents non-distributable reserves                                                                                                                                                          
  
   
Consolidated statement of financial position                                    
                                                                                
                                                                2014          2013       
                                                                R000          R000                                                                                      
Assets                                                                          
Non-current assets                                                              
Property, plant and equipment                                487 092       505 718    
Investment properties                                         24 470        25 161     
Deferred taxation                                             18 481        22 529     
Investment in associates                                      22 953        19 869     
Investment in joint ventures                                   4 803         4 726               
                                                             557 799       578 003    
Current assets                                                                  
Trade and other receivables                                  150 190       133 951    
Inventories                                                   16 989        12 547     
Taxation                                                           -         2 751      
Cash and short-term deposits                                 116 341        84 780     
                                                             283 520       234 029    
Non-current assets held for sale                              11 702        50 938     
Total assets                                                 853 021       862 970    
Equity and liabilities                                                           
Equity                                                                           
Share capital                                                    194           194        
Non-distributable reserves                                    51 796        66 295     
Distributable reserves                                       368 212       306 777    
Equity attributable to equity holders of the parent          420 202       373 266    
Non-controlling interest                                      14 846        16 493     
Total equity                                                 435 048       389 759    
Non-current liabilities                                                          
Deferred taxation                                             98 954       109 607    
Contingent consideration                                       5 721         5 359      
Provisions                                                     2 781             -          
Interest-bearing loans and borrowings                        107 019       171 837    
                                                             214 475       286 803     
Current liabilities                                                              
Trade and other payables                                      92 309        92 048     
Interest-bearing loans and borrowings                        109 088        94 360     
Taxation                                                       2 101             -          
                                                             203 498       186 408     
Total equity and liabilities                                 853 021       862 970    


Consolidated statement of cash flows                                                                                                                                     
                                                                2014          2013        
                                                                R000          R000                                                                                                           
Cash receipts from customers                                 897 634       702 993     
Cash paid to suppliers and employees                        (792 244)     (653 330)   
Cash generated by operations                                 105 390        49 663      
Finance income                                                 6 472         4 547       
Finance cost                                                 (23 162)      (18 139)    
Dividends paid                                                (9 028)       (3 494)     
Dividend income                                                1 137           915         
Tax paid                                                      (4 085)         (882)       
Cash inflow from operating activities                         76 724        32 610      
Cash (outflow)/inflow from financing activities              (50 091)       62 791      
Cash inflow/(outflow) from investing activities                5 047       (68 713)    
Payment of contingent consideration                           (1 437)            -           
Decrease/(increase) in loan to associates and 
joint ventures                                                    57        (1 400)     
Purchase of subsidiary net of cash acquired                        -       (10 172)    
Purchase of property, plant and equipment                    (64 133)      (80 618)    
Proceeds from sale of property, 
plant and equipment                                           70 560        23 477                                                                                                        
Increase in cash and cash equivalents                         31 680        26 688      
Cash and cash equivalents at the beginning 
of the year                                                   84 780        58 152      
Foreign exchange movement during the year                       (119)          (60)        
Cash and cash equivalents at the end of the year             116 341        84 780      


Review
The group has delivered a significant increase in earnings and headline earnings per share, growing by 72.0% and
110.6% respectively. The growth in earnings reflects the positive impact of newly acquired subsidiary, Buks Haulage Limited
(“BHL”), being consolidated for the full year coupled with the lower tax rate of the group. The growth in earnings
permits the group to increase the total dividend payments for the year by 83.3%, with a final dividend of 40.0 cents per share
being declared.

Revenue increased 25.9% to a high of R915.1 million, which materialised primarily as a result of acquisitive growth.
Profit from operating activities increased 35.9%, benefiting substantially from the disposal of the underperforming
Malelane branch and the exit from the tomato harvesting business within the agricultural segment. The industrial segment was
positively influenced by the full year consolidation of BHL and the supply chain services segment had lower debtor
provisions. The disposal of the Alrode property and other non-core and unutilised assets held for sale, and a 29.2% increase
in equity earnings from joint ventures and associates further contributed to the 24.7% increase in profit before
finance income and finance cost.

Net finance costs increased by 22.8% to R16.7 million and was largely impacted by the increased borrowings of BHL.
Finance income improved by 42.3%, primarily due to the investment of the proceeds realised on the disposal of the Alrode
property.

The reduction in the effective group tax rate to 7.5% is due to the adjustment to the most favourable base cost for
CGT purposes of investment properties, which was treated as a change in estimate in the current year. The effect of this
adjustment resulted in the deferred tax provision being reduced by R6 million through profit and loss, consequently
reducing the effective tax rate by 12.1%. Barring the effect of this tax adjustment, would have translated in earnings and
headline earnings per share increasing by 49.3% and 82.2% respectively.

Prospects
The group has built a robust balance sheet which augurs well for successfully pursuing its growth objectives. Organic
and acquisitive growth will remain a key focus in the current year. The agricultural segment should benefit from the
disposal of the Malelane branch and management will continue to focus its efforts within this vertical. The industrial
segment should benefit from fewer labour disruptions and increased national infrastructure spending anticipated in the
current year. Management remains committed and focused to improve the performance and operating results of the business.

Basis of preparation
The consolidated financial statements for the year ended 28 February 2014 have been prepared in accordance with the
recognition and measurement criteria of International Financial Reporting Standards (“IFRS”), IAS 34: Interim Financial
Reporting, the Listings Requirements of the Johannesburg Stock Exchange and the requirements of the Companies Act, 
2008 (No. 71 of 2008). The summarised financial statements do not include all the information and disclosures required in 
the annual financial statements, and should be read in conjunction with the group’s annual financial statements as at 
28 February 2014. The annual financial statements are expected to be available to shareholders towards the end of May 2014. 
The annual financial statements were compiled under the supervision of the Chief Financial Officer, Mr S Maharaj (CA)(SA)/HDiptax.

The accounting policies are consistent in all material respects with that of the prior financial period, except for
the following amendments to IFRS: IFRS 7 Disclosures - Offsetting Financial Assets and Financial Liabilities, IFRS 10
Consolidated Financial Statements, IAS 27 Separate Financial Statements, IFRS 11 Joint Arrangements, IAS 28 Investments in
Associates and Joint Ventures, IFRS 12 Disclosure of Interests in Other Entities, IFRS 13 Fair Value Measurement, IAS 1
Presentation of Items of Other Comprehensive Income and IAS 19 Employee Benefits (Revised).

Fair values of financial instruments
The fair value measurement of level 2 financial instruments have been determined in accordance with appropriate
valuation techniques, including recent market transaction and other valuation models. Significant inputs include market yield
curves and exchange rates. There is no difference between the fair value and carrying value of financial assets and
liabilities not presented below due to either the short-term nature of these items, or the fact that they are priced at
variable interest rates.

The following table provides the fair value measurement hierarchy of the group’s assets and liabilities:


                                                                      Group                  
                                             Fair value         2014         2013   
                                            measurement         R000         R000                                                                                   
• Non-current assets                                                           
Property, plant and equipment                   Level 2      487 092      505 718   
Investment properties                           Level 2       24 470       25 161   
Non-current assets held for sale                Level 2       11 702       50 938   
• Non-current liabilities                                                      
Contingent consideration                        Level 3        5 721        5 359   
Interest-bearing loans and borrowings           Level 2      109 088       94 360   


There have been no transfers between Level 2 and Level 3 during the period. The movement in the contingent liability
is mainly a result of fair value adjustments and the payment reflected in the cash-flow.

Independent auditor’s report
The annual financial statements have been audited by Ernst & Young Inc. and their unqualified audit opinion is available 
on request from the company secretary or at Cargo Carriers Limited’s registered office. This summarised report is extracted 
from the audited information, but is not itself audited. The directors take full responsibility for the preparation of this 
report and are satisfied that the financial information has been correctly extracted from the underlying annual financial statements. 

Dividend declaration
Notice is hereby given that a gross final cash dividend (Number 46) of 40.0 cents per share (2013: 20.0 cents) has been
declared for the year ended 28 February 2014. The dividend has been declared out of income reserves. The dividend will
be subject to a dividend withholding tax rate of 15% or 6.0 cents per ordinary share. As no STC credits are available for
utilisation, shareholders, unless exempt or qualifying for a reduced withholding tax rate, will receive a net dividend
of 34.0 cents per share.

Cargo Carriers tax reference number is 9900156713 and the number of ordinary shares in issue at the declaration date
is 20 000 000.

The salient dates for the dividend will be as follows:
                                                                                    
Last date to trade ‘cum’ dividend                                     Friday, 6 June 2014   
Shares commence trading ‘ex’ the dividend                             Monday, 9 June 2014   
Record date (date shareholders recorded in share register)           Friday, 13 June 2014   
Payment date                                                        Tuesday, 17 June 2014   
                                                                                        

Share certificates may not be dematerialised or rematerialised between Monday, 9 June 2014 and Friday, 13 June 2014
both dates inclusive.

Changes to the board
With effect from 31 October 2013, Mr Stan Chilvers resigned as Chairman and Independent non-executive director Mrs
Sizakele Mzimela was appointed as Chairperson. Mrs Mzimela has been a member of the board since 2008 and her knowledge of
the company and leadership skills position her well to take over the reins from Mr Chilvers. The board welcomes Mrs Mzimela 
to her new role. In addition, effective the same date Mr Garth Bolton stepped down as joint CEO, but continues to serve as 
an executive director.
                                                                                                                                                                                                                                                                                                                                                                                                                                                     
By order of the board                                                                                                    
Arcay Client Support (Pty) Limited 
                                                                                      
Company secretary                                                                                                        
20 May 2014
                                                                                                              
Board of directors                                                                                                       
SP Mzimela* (Chairperson), AE Franklin*, BB Fraser#, MJ Vuso*, GD Bolton (Executive), MJ Bolton (CEO), S Maharaj (CFO)   
# non-executive director                                                                                            
* independent non-executive director 
                                                                               
Registered office                                                                                                        
11A Grace Road, Mountainview, Observatory, Johannesburg, 2198 
                                                           
Sponsor                                                                                                                  
Arcay Moela Sponsors (Pty) Limited                                                                                       
                                                                                                                         
Transfer secretaries                                                                                                     
Computershare Investor Services (Pty) Limited                                                                            
70 Marshall Street, Johannesburg, 2001                                                                                   
(PO Box 61051, Marshalltown, 2107)                                                                                       
                                                                                                                         
www.cargocarriers.co.za                                                   



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