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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
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