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CARGO CARRIERS LIMITED - Summarised audited annual financial statements for the year ended 29 February 2016 and dividend declaration

Release Date: 31/05/2016 17:46
Code(s): CRG     PDF:  
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Summarised audited annual financial statements for the year ended 29 February 2016 and dividend declaration

Cargo Carriers Limited                             
Registration number: 1959/003254/06                
Incorporated in the Republic of South Africa       
JSE share code: CRG                                
ISIN code: ZAE000001764                            
(“Cargo Carriers” or “ the company” or “the group”)
Summarised audited annual financial statements for the year ended 29 February 2016 and dividend declaration


Performance highlights

- Basic and diluted earnings per share from continuing operations (cents)
  up 28.4%
- Headline earnings per share (cents)
  down 33.9%  
- Revenue from continuing operations (R000)
  down 5.5%
- Net asset value per share (cents)
  up 3.2%
- Cash on hand (%) 
  up 34.2%                        

                                                                                                                        
Condensed consolidated statement of comprehensive income                                                                       
                                                                                                            2015    
                                                                                         2016               R000    
                                                                                         R000       Re-presented                                                                                                                                          
Continuing operations                                                                                               
Revenue                                                                               592 098            626 725    
Operating and administration costs                                                   (340 305)          (381 930)   
Employment costs                                                                     (179 994)          (173 658)   
Depreciation of property, plant and equipment                                         (31 026)           (31 505)   
Profit from operating activities                                                       40 773             39 632    
Profit/(loss) on disposal of property, plant and equipment                              1 810               (863)   
Impairment of assets                                                                   (3 438)               (82)   
Revaluation of investment properties                                                    1 485              1 265    
Profits from associates and joint ventures                                              3 742              2 920    
Profit before finance income and finance cost                                          44 372             42 873    
Finance income                                                                          7 578              6 370    
Finance cost                                                                           (7 504)           (11 328)   
Profit before tax                                                                      44 446             37 915    
Taxation                                                                              (10 052)           (11 510)   
Profit for the year from continuing operations                                         34 394             26 405    
Discontinued operation                                                                                            
(Loss)/profit after tax for the year from discontinued operation                      (26 618)             3 521    
Profit for the year                                                                     7 776             29 926    
Other comprehensive income:                                                                                         
Items not to be reclassified to profit or loss in subsequent periods:                                               
Revaluation of owner occupied properties                                                2 512              6 052    
Income tax effect                                                                        (362)              (783)   
Other comprehensive income to be reclassified to profit or loss 
in subsequent periods:                                      
Exchange differences on translation of foreign operations                                                           
- continuing operations                                                                 4 160                478    
- discontinued operation                                                               (8 969)            (2 093)   
Other comprehensive (loss)/income for the year, net of tax                             (2 659)             3 654    
Total comprehensive income for the year, net of tax                                     5 117             33 580    
Profit for the year from continuing operations attributable to:                                                     
Equity holders of the parent                                                           33 991             26 474    
Non-controlling interest                                                                  402                (69)   
                                                                                       34 394             26 405    
Profit for the year from continuing and discontinued operations 
attributable to:                                            
Equity holders of the parent                                                           19 352             28 411    
Non-controlling interest                                                              (11 576)             1 515    
                                                                                        7 776             29 926    
Total comprehensive income, net of tax attributable to:                                                             
Equity holders of the parent                                                           20 729             33 649    
Non-controlling interest                                                              (15 612)               (69)   
Total comprehensive income for the year, net of tax                                     5 117             33 580    


Financial information                                                                                                     
                                                                                         2016               2015    
                                                                                         R000               R000                                                                                                                              
Dividend per share (cents)                                                                                          
- interim dividend declared during the year                                               6.0                6.0    
- final dividend declared after year-end                                                 20.0               20.0    
Total dividends                                                                          26.0               26.0    
                                                                                                                    
Basic and diluted earnings per ordinary share (cents) attributable to           
equity holders of the parent (continuing operations only)                               175.2              136.5    
Basic and diluted earnings per ordinary share (cents) attributable to           
equity holders of the parent (continuing and discontinued operations)                    99.8              146.4    
Adjustments net of tax (cents):                                                                                                
(Profit)/loss on disposal of property, plant and equipment                              (10.5)               1.9    
Impairment of assets                                                                     19.5               12.7    
Revaluation of investment properties                                                     (6.2)              (5.9)   
Basic and diluted headline earnings per share (cents)                                   102.6              155.1    
                                                                                                                    
Group borrowings                                                                                                    
Borrowing capacity of the group (R000)                                                229 057            229 814    
Borrowing capacity utilised net of cash (R000)                                              -             40 104    
Borrowing capacity utilised (%)                                                             -               17.5    
Capital commitments (R000)                                                                  -                  -    
Net asset value per share (cents)                                                       2 351              2 279    
Ordinary shares in issue (closing and weighted average) (’000)                         19 406             19 406    
                                                                                
                                                                                
Condensed consolidated segmental analysis                                                                           
                                                                                                            2015    
                                                                                         2016               R000
                                                                                         R000       Re-presented 
Revenue                                                                                                             
Fuel and Powders                                                                      219 497            224 556    
Chemicals and Steel                                                                   281 678            286 274    
Agriculture                                                                            64 478             71 841    
Supply Chain Services                                                                  26 445             44 055    
Revenue from continuing operations                                                    592 098            626 725    
Revenue from discontinued operation                                                   213 579            286 702                                                                                                                                      
                                                                                      805 677            913 427    
Profit/(loss) before finance income/cost                                                                                   
Fuel and Powders                                                                       10 061             13 574    
Chemicals and Steel                                                                    30 817             24 475    
Agriculture                                                                             7 093             (1 465)   
Supply Chain Services                                                                  (3 599)             6 288    
Profit before finance income/cost from continuing operations                           44 372             42 873    
Profit/(loss) before finance income/cost from discontinued operation                  (23 128)            18 518                                                                                                                                      
                                                                                       21 244             61 391    
Total assets                                                                                                        
Fuel and Powders                                                                      222 059            206 571    
Chemicals and Steel                                                                   311 685            312 730    
Agriculture                                                                           140 216            129 897    
Supply Chain Services                                                                  17 247             29 699    
Total assets from continuing operations                                               691 207            678 897    
Total assets from discontinued operation                                              133 105            183 401                                                                                                                                     
                                                                                      824 312            862 297    
Total liabilities                                                                                                   
Fuel and Powders                                                                       75 240             77 040    
Chemicals and Steel                                                                   105 608            116 631    
Agriculture                                                                            47 510             48 445    
Supply Chain Services                                                                   5 844             11 076    
Total liabilities from continuing operations                                          234 202            253 191    
Total liabilities from discontinued operation                                         131 995            149 396                                                                                                                                       
                                                                                      366 197            402 587    


Condensed consolidated statement of financial position                                                                
                                                                                         2016               2015    
                                                                                         R000               R000                                                                                                
ASSETS                                                                                                              
Non-current assets                                                                                                  
Property, plant and equipment                                                         337 192            448 146    
Investment properties                                                                  26 520             25 735    
Investment in associates                                                               29 997             26 778    
Investment in joint ventures                                                           10 654              7 872    
Deferred taxation                                                                          62             15 296    
                                                                                      404 424            523 827    
Current assets                                                                                                      
Trade and other receivables                                                            91 468            167 948    
Inventories                                                                             9 846             15 230    
Cash and short-term deposits                                                          180 349            134 412    
Taxation                                                                                1 494                  -    
                                                                                      283 157            317 590    
Disposal group and non-current assets held for sale                                   136 730             20 799    
Total assets                                                                          824 311            862 216    
EQUITY AND LIABILITIES                                                                                              
Equity                                                                                                              
Share capital                                                                             194                194    
Non-distributable reserves                                                             58 067             56 547    
Distributable reserves                                                                397 911            385 332    
Equity attributable to equity holders of the parent                                   456 172            442 073    
Non-controlling interest                                                                1 943             17 555    
Total equity                                                                          458 114            459 628    
Non-current liabilities                                                                                             
Deferred taxation                                                                      71 766             95 232    
Contingent consideration                                                                    -              3 010    
Provisions                                                                              2 101              3 881    
Interest-bearing loans and borrowings                                                  26 768             93 713    
                                                                                      100 635            195 836    
Current liabilities                                                                                                 
Trade, other payables and provisions                                                   90 729            118 741    
Interest-bearing loans and borrowings                                                  33 324             80 803    
Taxation                                                                                9 513              7 208    
                                                                                      133 566            206 752    
Disposal group liabilities                                                            131 995                  -    
Total equity and liabilities                                                          824 311            862 216    


Condensed consolidated statement of changes in equity                                                                                                                                   
                                                                                                      Equity   
                                                                                                    attribu-  
                                                                   Foreign                          table to      
                                                         Asset    currency                            equity       Non-            
                                                       revalu-      trans-              Distribu-    holders       con-            
                                             Share       ation      lation      Other       table     of the   trolling      Total 
                                           capital     reserve*    reserve*  reserves*    reserve     parent   interest     equity 
                                              R000        R000        R000       R000        R000       R000       R000       R000                                                                                                                                                              
Balance at 1 March 2014                        194      50 881         865         50     368 212    420 202     14 846    435 048    
 Total comprehensive income                      -       5 269      (1 615)         -      28 411     32 065      1 515     33 580    
- profit for the year                            -           -           -          -      28 411     28 411      1 515     29 926    
- other comprehensive income/(loss)              -       5 269      (1 615)         -           -      3 654          -      3 654    
Transfer between reserves                        -           -           -        (50)         50          -          -          -    
Dissolution of foreign subsidiary                -           -           -          -         (73)       (73)         -        (73)    
Purchase of negative equity from                 -           -           -          -      (1 194)    (1 194)     1 194          -    
non-controlling interest                                                                                                              
Post-tax transfer of revaluation 
of investment properties                         -       1 147           -          -      (1 147)         -          -          -    
Dividends paid                                   -           -           -          -      (8 927)    (8 927)         -     (8 927)    
Balance at 28 February 2015                    194      57 297        (750)         -     385 332    442 073     17 555    459 627    
Total comprehensive income                       -       2 150        (773)         -      19 352     20 729    (15 612)     5 117    
-  profit for the year from 
   continuing operations                         -           -           -          -      33 992     33 992        402     34 394    
-  loss for the year from 
   discontinued operations                       -           -           -          -     (14 640)   (14 640)   (11 978)   (26 618)    
-  other comprehensive income
   from continuing operations                    -       2 150       4 160          -           -      6 310          -      6 310    
-  other comprehensive loss 
   from discontinued operation                   -           -      (4 933)         -           -     (4 933)    (4 036)    (8 969)    
Rate change deferred tax                         -      (1 197)          -          -           -     (1 197)         -     (1 197)    
Post tax transfer of revaluation 
of investment properties                         -       1 341           -          -      (1 341)         -          -          -    
Dividends paid                                   -           -           -          -      (5 432)    (5 432)         -     (5 432)    
Balance at 29 February 2016                    194      59 590      (1 523)         -     397 911    456 172      1 943    458 114    
*Represents non-distributable reserves                                                                                                        


Condensed consolidated statement of cash flows                                                                                   
                                                                                             2016                2015    
                                                                                             R000                R000                                                                                                                             
Cash receipts from customers                                                              828 923             891 901    
Cash paid to suppliers and employees                                                     (679 501)           (746 777)    
Cash generated by operations                                                              149 423             145 124    
Finance income received                                                                    12 523               6 378    
Finance expense paid                                                                      (19 872)            (18 351)    
Tax paid                                                                                   (8 983)            (10 254)    
Dividend paid                                                                              (5 432)             (8 927)    
Cash inflow from operating activities                                                     127 659             113 970    
Cash outflow from investing activities                                                    (15 542)            (51 252)    
Payment of contingent consideration                                                             -              (3 251)    
Increase in loans to and from associates and joint ventures                                (2 259)             (3 974)       
Purchase of property, plant and equipment                                                 (44 752)            (53 269)    
Proceeds from sale of property, plant and equipment                                        29 156               9 242    
Proceeds from sale of investment property                                                   2 312                   -    
Cash outflow from financing activities                                                    (66 173)            (41 591)    
Interest-bearing loans and borrowings repaid                                             (104 317)            (88 346)    
Interest-bearing loans and borrowings raised                                               38 144              46 755    
Increase in cash and cash equivalents                                                      45 944              21 127    
Cash and cash equivalents at the beginning of the year                                    134 412             116 341    
Less cash and cash equivalents at the end of the year included in disposal group           (1 991)                  -        
Foreign exchange movement on cash balances                                                  1 984              (3 056)    
Cash and cash equivalents at the end of the year                                          180 349             134 412    


Commentary
Review 
Cargo Carriers faced numerous challenges in a difficult year characterised by low economic growth, a depressed
commodity cycle, an intense quest for cost savings across the business-to-business environment, and a sharp decline in the
value of the rand.

Low economic growth put pressure on volumes which resulted in increased competition, while customers put pressure on
margins.

Despite the group’s turnover from continuing operations declining by 5.5%, profit from continuing operations increased
by 30.25% to R34.4 million (2015: R26.4 million). The sale of our Zambian subsidiary was finalised shortly after the
financial year-end, and its results are reflected under discontinued operations. This operation experienced a 
R26.6 million loss largely due to foreign exchange losses incurred. 

Basic and diluted earnings per share as well as headline earnings per share decreased over the prior year from 
146.4 cents to 99.8 cents per share and from 155.1 cents to 102.6 cents per share respectively, largely as a result of the
impact of the foreign exchange loss from our Zambian subsidiary. The basic and diluted earnings per share has improved by
28.4% from 136.5 cents to 175.2 cents on a continuing operations basis.

Prospects 
A focus on business retention and organic growth in the South African market, is expected to largely offset some of
the contracts that came to an end across our African operations. 

Although the sale of our Zambian operation will reduce revenue by more than R200 million, the profitability of the
group will improve as a result. In addition, the disposal will significantly de-risk the balance sheet due to the dollar
based financial exposure within that business.

We continue to explore opportunities for acquisitive growth, either geographic or sectoral expansion, to complement
our existing portfolio. The group’s low debt level, operational expertise, and brand strength places it in a favourable
position to grow in the coming year.

Business conditions may remain difficult for some time. The strategy of innovation and close partnership with
customers proved highly effective in the 2016 financial year, and will continue to complement our strategic intent in the 
2017 year.

Basis of preparation 
The condensed consolidated financial statements for the year ended 29 February 2016 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). 

These condensed consolidated 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 
29 February 2016 which is expected to be available to shareholders on 31 May 2016 and posted by 14 June 2016. The annual 
financial statements were compiled under the supervision of the chief financial officer, Mr J Kriel CA(SA).

The accounting policies are consistent in all material respects with that of the prior financial period, except for
the following amendments related to disclosure in terms of IFRS 8 Operating Segments. The segments are re-presented in a
manner in which the chief operating decision maker (CODM) manages the business, considering the impact of several
business changes during the financial year. The industrial segment, which constitutes the largest segment has been further
split into the Fuel and Powders, and Chemicals and Steel segments. Furthermore, the recent exit from the aviation industry
as well as the property segment not constituting more than 10% of the revenue, profit or assets of the combined operating
segments, are no longer separately disclosed.

Additional disclosure has also been added as required by IFRS 5 Assets Held for Sale and Discontinued Operations.
Measurement, presentation and disclosure requirements have been implemented. 

Major disclosure items include:

Impairment of assets                                                      
                                                         2016           2015    
                                                         R000           R000                                                                             
Impairment of non-current assets                        3 438          2 469   
                                                        3 438          2 469   

Certain contracts in the agriculture segment were not renewed. The affected assets were assessed for impairment. The
assessment was made in relation to the physical condition of the assets including the realisable value based on market
research. The recoverable amount was calculated based on fair value less cost to sell.

Related parties
The following table provides the total amount of transactions, which have been entered into with related parties for
the year ended 29 February 2016.

                                          Sales to         Cost recovery from    Purchases from     Amounts owed to/(by)                  
                                       related parties      related parties      related parties      related parties                                                 
                                        2016      2015      2016       2015      2016       2015      2016       2015    
                                        R000      R000      R000       R000      R000       R000      R000       R000                                                                                                                               
Related party - group                                                                                                    
Hallmark Motor Group                   1 643        18         -      1 474         -      8 199       129        207    
Bolton Footwear                          715       371         -          -         -          -        46          -    
Bulk Haulage Namibia                       -         -         -          -         -          -         -     (8 636)   

Hallmark Motor Group and Bolton Footwear are subsidiaries of the group’s ultimate holding company, Cargo Carriers
Holdings (Pty) Limited. Bulk Haulage Namibia (Pty) Limited is a related party to a director of Buks Haulage Limited Zambia.
The debts are non-interest-bearing and payment terms are generally on 30 days.

Discontinued operations
Cargo Carriers Limited received an offer to sell its 55% holding in its foreign subsidiary Buks Haulage Limited (BHL),
which was accepted. The suspensive sale conditions have been met shortly after year-end. The subsidiary is disclosed as
a discontinued operation in the group financial statements as it is a major line of business.

Summary statement of comprehensive income                                                               
                                                                     2016                       2015    
                                                                     R000                       R000                                                                                                            
Revenue                                                           213 579                    286 703    
Cost and administrative expenses                                 (235 721)                  (269 444)   
(Loss)/profit from operating activities                           (22 142)                    17 259    
Impairment                                                         (1 804)                    (2 387)   
Profit/(loss) on disposal of property, plant and equipment            817                       (345)   
Net finance costs                                                  (7 423)                    (7 015)   
(Loss)/profit before tax from a discontinued operation            (30 552)                     7 512    
Taxation                                                            3 934                     (3 991)   
Loss/(profit) for the year from discontinued operation            (26 618)                     3 521    

Summary statement of financial position                                          
                                                                     2016                       2015    
                                                                     R000                       R000                                                                                                            
Non-current assets                                                 75 022                    102 320    
Current assets                                                     58 083                     81 081    
Total assets                                                      133 105                    183 401    
Non-current liabilities                                            92 951                    102 433    
Current liabilities                                                39 044                     46 963    
Total liabilities                                                 131 995                    149 396    

Summary statement of cash flows                                                            
                                                                     2016                       2015    
                                                                     R000                       R000                                                                                                           
Cash outflow from operations                                      (41 674)                   (24 214)   
Cash inflow from investing activities                              30 838                     24 472    
Cash (outflow)/inflow from financing activities                    (3 589)                     6 983    
Net (decrease)/increase in cash and cash equivalents              (14 426)                     7 242    
Cash and cash equivalents at the beginning of the year             16 417                      9 175    
Cash and cash equivalents at the end of the year                    1 991                     16 417    

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:                                                            
                                                                                                 
                                                              Fair value           2016         2015    
                                                             measurement           R000         R000                                                                                                         
Non-current assets                                                                                      
Property, plant and equipment                                    Level 3        337 192      448 146    
Investment properties                                            Level 3         26 520       25 735    
Non-current assets held for sale                                 Level 3        136 730       20 779    
Non-current liabilities                                                                                 
Contingent consideration                                         Level 3              -        3 010    
Interest-bearing loans and borrowings                            Level 2         26 768       93 713    
                                                                                                           
There have been no transfers between Level 2 and Level 3 during the period. The movement in the contingent 
liability has resulted from the conclusion of the agreement of the sale of BHL. 
             
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. The group’s integrated annual report will be available 
by 14 June 2016.

Dividend declaration
Notice is hereby given that a gross final cash dividend (Number 50) of 20.0 cents per share (2015: 20.0 cents) has
been declared for the year ended 29 February 2016. The dividend has been declared out of income reserves. The 
dividend will be subject to a dividend withholding tax rate of 15% or 3.0 cents per ordinary share. 

Cargo Carriers tax reference number is 9900156713 and the number of ordinary shares which will be eligible for the
dividend at the declaration date is 21 052 632.

The salient dates for the dividend will be as follows:

Last date to trade “cum” dividend                                                Friday, 17 June 2016    
Shares commence trading “ex” dividend                                            Monday, 20 June 2016    
Record date (date shareholders recorded in share register)                       Friday, 24 June 2016    
Payment date                                                                     Monday, 27 June 2016    

Share certificates may not be dematerialised or rematerialised between Monday, 20 June 2016 and Friday, 24 June 2016
both dates inclusive.

Changes to the board
Mr S Maharaj resigned as CFO with effect from 30 November 2015 and Mr J Kriel was appointed as CFO with effect from 
18 January 2016.

Events after the reporting period
The company entered into an agreement prior to year-end for the sale of its majority shareholding in BHL to BeefCo
Limited, a related party to the minority shareholder of this subsidiary. The suspensive conditions of the sale were only
fulfilled subsequent to year-end and the results of BHL are accordingly included as a discontinued operation section and
disclosed as a disposal group held for sale within the annual financial statements.

The company entered into an agreement providing for the implementation of an employee share participation transaction
through the creation and funding of a special purpose vehicle, EmployeeCo (Pty) Limited through which eligible employees
of the group will collectively acquire an indirect 5% shareholding in Cargo Carriers. The special and ordinary
resolutions required to approve the employee share participation transaction were approved by shareholders at a 
general meeting held on 5 May 2016.
 
 
Corporate information  

Registered office                                  
11A Grace Road, Mountainview,                      
Observatory, Johannesburg, 2198                    
                                                   
Share transfer secretaries                         
Computershare Investor Services Proprietary Limited
70 Marshall Street                                 
Johannesburg, 2001                                 
(PO Box 61051, Marshalltown, 2107)                 
                                                                                                                                                                                                  
By order of the board                                                                                                                
31 May 2016                                                                                                                          
                                                                                                                                     
Board of directors                                                                                                                   
SP Mzimela* (Chairperson), AE Franklin*, BB Fraser#, MJ Vuso*, V Raseroka*, GD Bolton (Executive), MJ Bolton (CEO), J Kriel (CFO)    
# non-executive director                                                                                                             
* independent non-executive director                                                                                                 
                                                                                                                                     
Company Secretary                                                                                                                    
Arbor Capital Company Secretarial Proprietary Limited                                                                                
                                                                                                                                     
Sponsor                                                                                                                              
Arbor Capital Sponsors Proprietary Limited                                                                                           
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
www.cargocarriers.co.za
Date: 31/05/2016 05:46:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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