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Condensed Annual Financial Statements for the year ended 28 February 2018 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 2018
and dividend declaration
Performance highlights
- Basic and diluted earnings per share from total operations 124.8 cents up by 8.5% (2017: 115.0 cents)
- Revenue from continuing operations R645.6 million up by 11.0% (2017: R581.7 million)
- Headline earnings per share 141.8 cents up by 204.3% (2017: 46.6 cents)
- Net asset value per share 2 564 cents up by 4.7% (2017: 2 448 cents)
Condensed consolidated statement of comprehensive income
2018 2017
R000 R000
Continuing operations
Revenue
- transport services 635 993 573 282
- other income 9 605 8 427
645 598 581 709
Costs and expenses
- operating and administration costs (393 795) (364 830)
- employment costs (191 518) (178 994)
- depreciation of property, plant and equipment (38 633) (33 455)
(623 946) (577 279)
Profit from operating activities 21 652 4 430
Profit/(loss) on disposal of property, plant and equipment 765 (4 566)
Impairments (8 517) (6 999)
Revaluation of investment properties 5 035 2 555
Dividend income - 856
Profits from associates and joint ventures 4 471 5 425
Profit before finance income and finance cost 23 406 1 701
Finance income 12 329 12 944
Finance expense (12 019) (12 892)
Profit before tax from continuing operations 23 716 1 753
Taxation 393 (3 986)
Profit/(loss) for the year from continuing operations 24 109 (2 233)
Discontinued operations
Profit after tax from discontinued operations - 24 542
Profit for the year 24 109 22 309
Other comprehensive income:
Items not to be reclassified to profit or loss in subsequent periods:
Revaluation of owner occupied properties (continuing) 1 397 3 825
Income tax effect (continuing) (168) (663)
Other comprehensive income to be reclassified to profit or loss in subsequent periods:
Exchange differences on translation of foreign operations (2 569) (2 121)
Exchange differences on translation of foreign operations from continuing operations (2 569) (2 121)
Other comprehensive (loss)/income for the year, net of tax (1 340) 1 041
Total comprehensive income for the year, net of tax 22 769 23 350
Profit for the year from continuing activities attributable to:
Equity holders of the parent 24 206 (2 228)
Non-controlling interest (97) (5)
24 109 (2 233)
Profit for the year from continuing and discontinued operations attributable to:
Equity holders of the parent 24 206 22 314
Non-controlling interest (97) (5)
24 109 22 309
Total comprehensive income, net of tax attributable to:
Equity holders of the parent 22 866 23 355
Non-controlling interest from continuing operations (97) (5)
22 769 23 350
Basic and diluted earnings per ordinary share (cents) attributable to
equity holders of the parent (continuing operations only) 124.8 (11.5)
Basic and diluted earnings per ordinary share (cents) attributable to
equity holders of the parent (continuing and discontinued operations) 124.8 115.0
Adjustments net of tax (cents):
Loss on disposal of property, plant and equipment 5.9 16.9
Impairment of assets 33.3 26.0
Revaluation of investment properties (22.2) (13.1)
Profit on sale of subsidiary - (98.2)
Headline earnings per share (cents) attributable to equity holders of the parent 141.8 46.6
Ordinary shares in issue (closing and weighted average) (‘000) 19 406 19 406
Dividends per share (cents)
- interim declared during the year 6.0 8.0
- final declared after year-end 29.5 4.0
* Weighted average and closing excludes shares held in treasury.
Condensed consolidated statement of financial position
2018 2017
R000 R000
ASSETS
Non-current assets 430 191 457 106
Property, plant and equipment 312 612 351 511
Investment properties 63 605 58 570
Investment in associates 34 656 33 350
Investment in joint ventures 14 208 13 675
Deferred taxation 5 110 -
Current assets 332 281 315 646
Inventories 8 867 8 722
Trade and other receivables 109 683 95 894
Cash and short-term deposits 213 731 211 030
Non-current assets held for sale 589 6 172
Total assets 763 061 778 924
EQUITY AND LIABILITIES
Share capital 194 194
Non-distributable reserves 55 824 56 641
Distributable reserves 440 316 418 098
Equity attributable to equity holders of the parent 496 334 474 933
Non-controlling interest 1 105 1 202
Total equity 497 439 476 135
Non-current liabilities 145 209 167 491
Deferred taxation 65 411 66 820
Employee benefit obligations 2 501 1 995
Interest-bearing loans and borrowings 76 941 98 676
Share-based liability 356 -
Current liabilities 120 413 135 298
Trade and other payables 91 015 95 310
Employee benefit obligations 5 539 5 333
Interest-bearing loans and borrowings 21 754 34 215
Taxation 2 105 440
Total equity and liabilities 763 061 778 924
Condensed consolidated statement of changes in equity
Equity
attribu-
table to
Foreign Share- equity
Asset currency based Distribu- holders Non-
Share revaluation translation payments table of the controlling 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)/profit 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 operations - (10 367) 7 614 - 3 498 745 (745) -
Unclaimed dividends - - - - (19) (19) - (19)
Dividends paid (note 6) - - - - (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
GROUP
Balance at 28 February 2017 194 52 385 3 970 286 418 098 474 933 1 202 476 135
Total comprehensive income - 1 229 (2 569) - 24 206 22 866 (97) 22 769
- profit/(loss) for the year
from continuing operations - - - - 24 206 24 206 (97) 24 109
- other comprehensive income/
(loss) from continuing
operations - 1 229 (2 569) - - (1 340) - (1 340)
Dividends paid - - - - (1 988) (1 988) - (1 988)
Share-based employment costs - - - 523 - 523 - 523
Balance at 28 February 2018 194 53 614 1 401 809 440 316 496 334 1 105 497 439
* Asset revaluation reserve, foreign currency translation reserve and share-based payments reserve represent
non-distributable reserves
Condensed consolidated statement of cash flows
2018 2017
R000 R000
Cash receipts from customers 631 809 566 029
Cash paid to suppliers and employees (586 343) (521 944)
Cash generated by operations 45 466 44 085
Finance income 12 329 12 944
Finance cost (12 019) (12 892)
Tax paid (4 234) (16 003)
Dividend paid (1 988) (5 620)
Dividend income received - 856
Cash inflow from operating activities 39 554 23 370
Cash outflow from investing activities (1 515) (62 982)
Decrease/(increase) in loans to associates and joint ventures 2 156 (809)
Purchase of property, plant and equipment (14 966) (101 124)
Proceeds from sale of property, plant and equipment 11 295 12 274
Proceeds from the sale of subsidiary - 25 652
Proceeds from sale of investment property - 1 025
Cash (outflow)/inflow from financing activities (34 196) 72 798
Interest-bearing loans and borrowings repaid (37 220) (39 667)
Interest-bearing loans and borrowings raised 3 024 112 465
Increase in cash and cash equivalents 3 843 33 186
Cash and cash equivalents at the beginning of the year 211 030 180 349
Foreign exchange movement during the year (1 142) (2 505)
Cash and cash equivalents at the end of the year 213 731 211 030
Segmental analysis
2018 2017
R000 R000
Revenue
Fuel and Powders 221 417 234 087
Chemicals and Steel 336 446 303 182
Agriculture 46 372 24 816
Supply Chain Services 41 363 19 624
Continuing and total revenue 645 598 581 709
(Loss)/profit before tax
Fuel and Powders (6 068) (2 655)
Chemicals and Steel 34 190 19 259
Agriculture 804 (7 271)
Supply Chain Services (5 210) (7 580)
Continuing 23 716 1 753
Discontinued - 24 542
23 716 26 295
Total assets
Fuel and Powders 261 704 313 449
Chemicals and Steel 397 661 405 969
Agriculture 54 808 33 229
Supply Chain Services 48 888 26 277
Continuing and total assets 763 061 778 924
Total liabilities
Fuel and Powders 91 101 121 846
Chemicals and Steel 138 427 157 811
Agriculture 19 079 12 917
Supply Chain Services 17 015 10 215
265 622 302 789
Commentary
Review
Cargo Carriers posted a good set of results under tough market conditions. Widespread socio-political tensions and
regulatory uncertainty during the year led to subdued economic growth, with the South African economy growing by a
marginal 1.3% in the 2017 calendar year. These factors, together with sector-specific conditions, placed pressure on
our customers, who in turn sought further cost reductions. However, the group is pleased to report that our sustained
drive to improve operational efficiencies helped us achieve better than expected results in some of our key vertical
segments.
Financial performance
The group produced a solid set of results, with revenue increasing by 11.0% to R645.6 million (2017: R581.8 million)
and earnings before interest and taxation (EBIT) increasing from R1.7 million to R23.4 million.
Basic and diluted earnings per share (EPS) increased to 124.8 cents (2017: 115.0 cents), boosted by increased
profitability in some of the vertical segments. This positive turnaround is an overall reflection of the turnaround
plans implemented at the end of the previous reporting period.
Careful capital management remained a priority. The group maintained its strong liquidity position, with the liquidity
ratio improving from 2.33 to 2.76, and solvency improved from 2.57 to 2.87 times. In addition, total debt has reduced
by R37.2 million.
Prospects
The group is well positioned, both financially and operationally, for growth. Problematic contracts have received
significant attention and we have divested from areas that were not sustainable. Through a relentless focus on
efficiencies and ongoing engagement with our customers, underperforming contracts have been addressed. These
interventions have created a profitable base for the business to build on.
In the year ahead, we will look to capitalise on our investments in warehousing while evaluating opportunities
for organic and inorganic growth. There continues to be a strong focus on improving our B-BBEE scorecard in light
of the revised sector charter codes, ensuring that we have a meaningful impact on South Africa.
Changes to the board
Three new independent non-executive directors were appointed to the board during the year under review. One of the
longer-serving independent non-executive directors, Matsotso Vuso, retired at the 2017 AGM in order to pursue both
existing and new business interests.
As announced in the prior financial year, Murray Bolton who had served as joint chief executive officer (CEO) since
2002 and as CEO since 2013, informed the board that he intended stepping down as CEO prior to the end of the financial
year. Following a robust selection process, it was announced on the Stock Exchange News Service (SENS) that Lekau
(Solly) Letsoalo had been appointed as CEO with effect from 8 January 2018. During the leadership transition period,
Murray Bolton continued to serve in an executive capacity, but subsequent to year-end, his role changed from that of
executive director to non-executive director.
Basis of preparation
The condensed consolidated financial statements for the year ended 28 February 2018 have been prepared in
accordance with recognition and measurement criteria of International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board (IASB), IAS 34 Interim Financial Reporting, the
requirements of the South African Companies Act, 71 of 2008, the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee, Financial Reporting Pronouncements as issued by the Financial Reporting
Standards Council and the JSE Listings Requirements. 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 2018
which are expected to be posted to shareholders on or about 13 June 2018. 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
There were no issues or disposal of shares during the year.
Fair values of financial instruments
The fair value measurement of level 3 financial instruments has 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.
Group
Fair 2018 2017
value R000 R000
level
Non-financial assets measured at
fair value
Owner occupied properties Level 3 59 150 58 300
Investment properties Level 3 63 605 58 570
Non-current assets held for sale Level 3 589 6 172
There have been no transfers between
level 2 and level 3 during the period.
Significant transactions
Impairments (8 517) (6 999)
Revaluation of investment properties 5 035 2 555
Profits from associates and joint venture 4 471 5 425
Profit/(loss) on disposal of property,
plant and equipment 765 (4 566)
Related party transactions
Transactions with subsidiary companies comprise management fees and other transport-related services:
Transactions with
related parties
2018 2017
Related party - company Relationship R000 R000
Cargo Carriers (Swaziland) (Pty) Limited Subsidiary 4 958 1 276
Ezethu Logistics (Pty) Limited Subsidiary 55 868 41 921
Cargo Carriers Namibia (Pty) Limited Subsidiary 14 570 12 875
Uzuko Carriers (Pty) Limited Joint venture 8 587 8 318
Heavy Hauliers Zambia (Pty) Limited Subsidiary 3 234 -
Sitanani Carriers (Pty) Limited Joint venture 3 727 3 363
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
Subsequent to year-end, the group has declared a dividend of 29.5 cents per share, resulting in a payable of
R6.2 million.
Dividend declaration
Notice is hereby given that a gross final cash dividend (number 54) of 29.5 cents per share (2017: 4.0 cents) has been
declared for the year ended 28 February 2018. The dividend has been declared out of income reserves. The dividend will
be subject to a dividend withholding tax rate of 20% or 5.9 cents per ordinary share. Shareholders, unless exempt or
qualifying for a reduced withholding tax rate, will receive a net dividend of 23.6 cents per share. Cargo Carriers'
tax reference number is 9900156713 and there were 21 053 632 ordinary shares in issue at the declaration date.
The salient dates for the dividend will be as follows:
Last day to trade cum dividend Tuesday, 12 June 2018
Shares commence trading ex the dividend Wednesday, 13 June 2018
Record date (date shareholders recorded in the share register) Friday, 15 June 2018
Payment date Monday, 18 June 2018
Share certificates may not be dematerialised or rematerialised between Wednesday, 13 June 2018 and Friday, 15 June 2018,
both dates inclusive.
The directors confirm that the company will satisfy the solvency and liquidity test immediately after completing
the distribution.
For and on behalf of the board
Lekau Letsoalo Junaid Kriel
Chief executive officer Chief financial officer
29 May 2018
Directorate and statutory information
Board of directors
SP Mzimela* (Chairperson), AE Franklin*, BB Fraser#, V Raseroka*, A Gcabashe*, F Nomvalo*, N Medupe*, MJ Bolton#,
GD Bolton (Executive), LS Letsoalo (CEO), J Kriel (CFO)
(#non-executive director *independent non-executive director)
Registered office
11A Grace Road, Mountainview,
Observatory, Johannesburg 2198
Company secretary
Arbor Capital Company Secretarial (Pty) Limited
Share transfer secretaries
Computershare Investor Services (Pty) Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank,
Johannesburg, 2196, South Africa
(PO Box 61051, Marshalltown, 2107)
JSE sponsor
Arbor Capital Sponsors (Pty) Limited
Website
www.cargocarriers.co.za
Date: 29/05/2018 05:41:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
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