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Condensed Annual Financial Statements for the Year Ended 28 February 2017 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")
Condensed annual financial statements for the year ended 28 February 2017 and dividend declaration
Performance highlights
- Basic and diluted earnings per share from total operations up 15.2%
2017: 115.0 cents
2016: 99.8 cents
- Headline earnings per share down 54.5%
2017: 46.6 cents
2016: 102.5 cents
- Revenue from continuing operations down 1.8%
R000
2017: R581 709
2016: R592 098
- Net asset value per share up 4.1%
2017: 2 448 cents
2016: 2 351 cents
2015: 2 279 cents
- Cash on hand up 17.0%
R000
2017: R211 030
2016: R180 349
2015: R134 412
Condensed consolidated statement of comprehensive income
2017 2016
R000 R000
Continuing operations
Revenue
- transport services 573 282 585 714
- other income 8 427 6 384
581 709 592 098
Costs and expenses
- operating and administration costs (364 830) (340 305)
- employment costs (178 994) (179 994)
- depreciation of property, plant and equipment (33 455) (31 026)
(577 279) (551 325)
Profit from operating activities 4 430 40 773
(Loss)/profit on disposal of property,
plant and equipment (4 566) 1 810
Impairment of assets (6 999) (3 438)
Revaluation of investment properties 2 555 1 485
Dividend income 856 -
Profits from associates and joint ventures 5 425 3 742
Profit before finance income and finance cost 1 701 44 372
Finance income 12 944 7 578
Finance expense (12 892) (7 504)
Profit before tax from continuing operations 1 753 44 446
Taxation (3 986) (10 052)
(Loss)/profit for the year from continuing operations (2 233) 34 394
Discontinued operations
Profit/(loss) after tax from discontinued operations 24 542 (26 618)
Profit for the year 22 309 7 776
Other comprehensive income:
Items not to be reclassified to profit or loss in
subsequent periods:
Revaluation of owner occupied properties (continuing) 3 825 2 512
Income tax effect (continuing) (663) (362)
Other comprehensive income to be reclassified to profit
or loss in subsequent periods:
Exchange differences on translation of foreign operations (2 121) (4 809)
Exchange differences on translation of foreign operations
from continued operations (2 121) 4 160
Exchange differences on translation of foreign operations
from discontinued operations - (8 969)
Other comprehensive income/(loss) for the year, net of tax 1 041 (2 659)
Total comprehensive income for the year, net of tax 23 350 5 117
Profit for the year from continuing activities attributable to:
Equity holders of the parent (2 228) 33 992
Non-controlling interest (5) 402
(2 233) 34 394
Profit for the year from continuing and discontinued operations
attributable to:
Equity holders of the parent 22 314 19 352
Non-controlling interest (5) (11 576)
22 309 7 776
Total comprehensive income, net of tax attributable to:
Equity holders of the parent 23 355 20 729
Non-controlling interest from continuing operations (5) (15 612)
23 350 5 117
Basic and diluted earnings per ordinary share (cents) attributable
to equity holders of the parent (continuing operations only) (11.5) 175.2
Basic and diluted earnings per ordinary share (cents) attributable
to equity holders of the parent
(continuing and discontinued operations only) 115.0 99.8
Adjustments net of tax (cents):
Profit/ (loss) on disposal of property, plant and equipment 16.9 (10.5)
Impairment of assets 26.0 19.5
Revaluation of investment properties (13.1) (6.2)
Profit on sale of subsidiary (98.2) -
Basic and diluted headline earnings per share (cents) attributable
to equity holders of the parent 46.6 102.6
Ordinary shares in issue (weighted average and closing)* (’000) 19 406 19 406
Dividends per share (cents)
- interim declared during the year 8 8
- final declared after year-end 4 20
*Weighted average and closing excludes shares held in treasury
Condensed consolidated statement of financial position
2017 2016
R000 R000
ASSETS
Non-current assets 457 106 404 424
Property, plant and equipment 351 511 337 192
Investment properties 58 570 26 520
Investment in associates 33 350 29 997
Investment in joint ventures 13 675 10 654
Deferred taxation - 62
Current assets 315 646 283 157
Inventories 8 722 9 846
Trade and other receivables 95 894 91 468
Cash and short-term deposits 211 030 180 349
Taxation - 1 494
Disposal group and non-current assets held for sale 6 172 136 730
Total assets 778 924 824 311
EQUITY AND LIABILITIES
Share capital 194 194
Non-distributable reserves 56 641 58 067
Distributable reserves 418 098 397 911
Equity attributable to equity holders of the parent 474 933 456 172
Non-controlling interest 1 202 1 942
Total equity 476 135 458 114
Non-current liabilities 167 491 100 635
Deferred taxation 66 820 71 766
Employee benefit obligations 1 995 2 101
Interest-bearing loans and borrowings 98 676 26 768
Current liabilities 135 298 133 567
Trade and other payables 95 310 81 116
Employee benefit obligations 5 333 9 614
Interest-bearing loans and borrowings 34 215 33 324
Taxation 440 9 513
Disposal group liabilities - 131 995
Total equity and liabilities 778 924 824 311
Condensed consolidated statement of changes in equity
Equity
attribu-
table to
Foreign Share- equity Non-
Asset currency based Distribu- holders control-
Share revaluation translation payments table of the ling Total
capital reserve* reserve* reserve* reserve parent interest equity
Group R000 R000 R000 R000 R000 R000 R000 R000
Balance at 29 February 2016 194 59 590 (1 523) - 397 911 456 172 1 942 458 114
Total comprehensive income - (7 205) 5 493 - 25 807 24 095 (740) 23 355
- (loss) for the year from
continuing operations - - - - (2 233) (2 233) 5 (2 228)
- profit for the year from
discontinued operations - - - - 24 542 24 542 - 24 542
- other comprehensive income/
(loss) from continuing
operations - 3 162 (2 121) - - 1 041 - 1 041
Realisation of unrealised
reserves on sale of
discontinued operation - (10 367) 7 614 - 3 498 745 (745) -
Unclaimed dividends - - - - (19) (19) - (19)
Dividends paid - - - - (5 601) (5 601) - (5 601)
- issue of ordinary shares 12 247 - - - - 12 247 - 12 247
- treasury shares (12 247) - - - - (12 247) - (12 247)
Share based employment costs - - - 286 - 286 - 286
Balance at 28 February 2017 194 52 385 3 970 286 418 098 474 933 1 202 476 135
*Represents non-distributable reserves
Condensed consolidated statement of cash flows
2017 2016
R000 R000
Cash receipts from customers 566 029 828 923
Cash paid to suppliers and employees (521 944) (679 501)
Cash generated by operations 44 085 149 423
Finance income 12 944 12 523
Finance cost (12 892) (19 872)
Tax paid (16 003) (8 983)
Dividends paid (5 620) (5 432)
Dividend income received 856 -
Cash flows from operating activities 23 370 127 659
Cash (outflow) from investing activities (62 982) (15 542)
Decrease in loans from associates and joint ventures (809) (2 259)
Purchase of property, plant and equipment (101 124) (44 752)
Proceeds from sale of property, plant and equipment 12 274 29 156
Proceeds from the sale of subsidiary 25 652 -
Proceeds from sale of investment property 1 025 2 312
Cash inflow/(outflow) from financing activities 72 798 (66 173)
Interest-bearing loans and borrowings repaid (39 667) (104 317)
Interest-bearing loans and borrowings raised 112 465 38 144
Increase in cash and cash equivalents 33 186 45 944
Cash and cash equivalents at the beginning of the year 180 349 134 412
Foreign exchange movement during the year (2 505) 1 984
Less cash and cash equivalents at the end of the year
included in disposal group - (1 991)
Cash and cash equivalents at the end of the year 211 030 180 349
Segmental analysis
2017 2016
R000 R000
Revenue
Fuel and Powders 234 087 219 497
Chemicals and Steel 303 182 281 678
Agriculture 24 816 64 478
Supply Chain Services 19 624 26 445
Continuing 581 709 592 098
Discontinued - 213 579
581 709 805 677
Profit before tax
Fuel and Powders (2 655) 10 078
Chemicals and Steel 19 259 30 863
Agriculture (7 271) 7 104
Supply Chain Services (7 580) (3 599)
Continuing 1 753 44 446
Discontinued (after tax) 24 542 (26 618)
26 295 17 828
Total assets
Fuel and Powders 313 449 222 059
Chemicals and Steel 405 969 311 685
Agriculture 33 229 140 216
Supply Chain Services 26 277 17 247
Continuing 778 924 691 207
Discontinued - 133 105
778 924 824 312
Total liabilities
Fuel and Powders 121 846 75 240
Chemicals and Steel 157 811 105 608
Agriculture 12 917 47 510
Supply Chain Services 10 215 5 844
Continuing 302 789 234 202
Discontinued - 131 995
302 789 366 197
Commentary
Review
The past financial year will be remembered as one of the more economically challenging years for our customers, and as
a result, for our business. The headwinds of prior financial years continued unabated. Difficult operating conditions
in the mining, steel, sugar and cement sectors resulted in extreme pressure on our margins, as customers actively sought
rate reductions, often with lower utilisation. This situation was exacerbated by the fragmented and highly competitive
landscape, with low barriers to entry.
The group’s resilience, given the current operating environment, is testament to the diversity of our portfolio as
well as our trusted reputation in the market. The group’s results reflect the market conditions, but were buoyed by the
profit arising from the completion of the sale of our Zambian subsidiary during the year.
Financial performance
The group’s financial performance was heavily impacted by the aforementioned tough operating environment. Total
revenue from continuing operations was largely in line with that of last year, decreasing slightly by 1.8% to
R581.7 million from R592.1 million in the prior year. Losses for the year from continuing operations were R2.2 million,
down from a profit of R34.4 million in the prior year.
Basic and diluted EPS increased from 99.8 cents in 2016 to 115.0 cents in 2017, due mainly to the positive effect of
the realisation of the sale of our Zambian subsidiary, whose results negatively impacted EPS in the prior year. Basic and
diluted earnings per share from continuing operations decreased to (11.5) cents from 175.2 cents in the prior year.
Cargo Carriers maintained a strong balance sheet, combined with careful cost management resulted in a net cash position
of R211.0 million, up from R180.3 million in the prior year. The solvency ratio of 2.57 times is an improvement on the
2.25 in the prior year.
Prospects
We anticipate subdued volume growth in the year ahead given the growth outlook in the regional economy. Our focus this
year will be on efficiencies, maintaining a strong balance sheet, and striving for a low-cost base. We firmly believe
that through managing these factors we will create a stable platform from which to grow as opportunities arise.
Changes to the board
It was announced on 27 January 2017 that Mr Murray Bolton, the group CEO, has notified the board of his intention to
step down as CEO within the next 12-month period. The board has commenced with the process of identifying a successor to
Murray and a further announcement in this regard will be made in due course.
Three new independent non-executive directors were appointed to the board subsequent to year-end. Ms Amanda Gcabashe
and Mr Freeman Nomvalo joined the board with effect from 30 March 2017 and Ms Ndumi Medupe joined the board with effect
from 5 May 2017.
Ms Matsotso Vuso will be retiring from the board at the forthcoming annual general meeting and has advised the board
that as a result of the time commitments required by both her current and new business ventures she will not be making
herself available for re-election as a director. The board thanks Matsotso for her valuable contribution over the past
eight years and wishes her every success in growing her companies.
Basis of preparation
The condensed consolidated financial statements for the year ended 28 February 2017 have been prepared in accordance
with recognition and measurement criteria of International Financial Reporting Standards (IFRS), IAS 34 Interim Financial
Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee Financial
Pronouncements as issued by Financial Reporting Standards Council, the Listings Requirements of the
Johannesburg Stock Exchange (JSE) 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 28 February 2017 which is
expected to be posted to shareholders on or about 19 June 2017. 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 those of the prior financial year.
Issue and disposal of shares
1 052 632 ordinary shares totalling R12 246 594 were issued to Ikamvalethu Shares (Pty) Limited (Ikamvalethu)
(previously known as EmployeeCo (Pty) Limited) in accordance with the approval given by shareholders for the implementation
of an employee share participation transaction through which eligible employees of the group were able to collectively
acquire an indirect 5% shareholding in the company. The acquisition of the shares by Ikamvalethu was funded by the company
subscribing for 100 non-convertible, cumulative, redeemable, participating preference shares and 1 000 "B" ordinary shares
in Ikamvalethu for an aggregate amount of R12 246 594.
The company disposed of a 30% shareholding in a wholly owned subsidiary to WomenCo (Pty) Limited, a company
incorporated for the benefit of black women employees. The transaction fell below the categorisation provisions of the
JSE Listings Requirements and shareholder approval for the disposal was accordingly not required.
Fair values of financial instruments
The fair value measurement of level 3 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, exchange rates and the cost to a market participant buyer to acquire the asset. 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 measurement
2017 2016
R000 R000
Non-financial assets measured at fair value
Property, plant and equipment Level 3 58 300 85 688
Investment properties Level 3 58 570 26 520
Non-current assets held for sale Level 3 6 172 136 730
There have been no transfers between level 2
and level 3 during the period.
Significant transactions
(Loss)/profit on disposal of property, plant
and equipment (4 566) 1 810
Impairment of assets (6 999) (3 438)
Related party transactions
Transactions with subsidiary companies comprise management fees and other transport-related services:
Transactions with related parties
Related party - company Relationship 2017 2016
R000 R000
Cargo Carriers (Swaziland) (Pty) Limited Subsidiary 1 276 4 940
Ezethu Logistics (Pty) Limited Subsidiary 41 921 1 625
Cargo Carriers Namibia (Pty) Limited Subsidiary 12 875 50
Uzuko Carriers (Pty) Limited Joint venture 8 318 7 994
Sitanani Carriers (Pty) Limited Joint venture 3 363 3 884
Independent auditor’s report
The annual financial statements have been audited by Ernst & Young Inc. and their unqualified audit opinion is
available for inspection 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
provisional report and are satisfied that the financial information has been correctly extracted from the underlying
annual financial statements.
Events after the reporting period
Except for changes to the board previously mentioned, there were no significant events after the reporting date.
Dividend declaration
Notice is hereby given that a gross final cash dividend (number 52) of 4.0 cents per share (2016: 20.0 cents) has been
declared for the year ended 28 February 2017. The dividend has been declared out of income reserves. The dividend will
be subject to a dividend withholding tax rate of 20% or 0.8 cents per ordinary share. Shareholders, unless exempt or
qualifying for a reduced withholding tax rate, will receive a net dividend of 3.2 cents per share.
Cargo Carriers’ tax reference number is 9900156713 and the number of ordinary shares in issue at the date of this
declaration is 21 052 632.
The salient dates for the dividend will be as follows:
Last day to trade "cum" dividend Tuesday, 27 June 2017
Shares commence trading "ex" dividend Wednesday, 28 June 2017
Record date Friday, 30 June 2017
Payment date Monday, 3 July 2017
Share certificates may not be dematerialised or rematerialised between Wednesday, 28 June 2017 and
Friday, 30 June 2017, both dates inclusive.
For and on behalf of the board
Murray Bolton Junaid Kriel
Chief executive officer Chief financial officer
6 June 2017
Corporate information
Registered office
11A Grace Road, Mountainview,
Observatory, Johannesburg, 2198
Share transfer secretaries
Computershare Investor Services (Pty) Limited
Rosebank Towers
15 Biermann Avenue, Rosebank, 2196
(PO Box 61051, Marshalltown, 2107)
By order of the board
6 June 2017
Board of directors
SP Mzimela* (Chairperson), AE Franklin*, BB Fraser#, M J Vuso*, V Raseroka*, A Gcabashe*, F Nomvalo*,
N Medupe*, GD Bolton (Executive), MJ Bolton (CEO), J Kriel (CFO)
# non-executive director
* independent non-executive director
Company secretary
Arbor Capital Company Secretarial (Pty) Limited
Sponsor
Arbor Capital Sponsors (Pty) Limited
www.cargocarriers.co.za
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