2017 - cargo carriers · for the year ended 28 february 2017 and dividend declaration building...

CONDENSED ANNUAL FINANCIAL STATEMENTS for the year ended 28 February 2017 and dividend declaration

Building today for TOMORROW

2017

Performance highlights

Cargo Carriers LimitedRegistration number: 1959/003254/06Incorporated in the Republic of South AfricaJSE share code: CRGISIN code: ZAE000001764(“Cargo Carriers” or “the company” or “the group”)

Registered office11A Grace Road, Mountainview,Observatory, Johannesburg, 2198

Share transfer secretariesComputershare Investor Services (Pty) LimitedRosebank Towers15 Biermann Avenue, Rosebank, 2196 (PO Box 61051, Marshalltown, 2107)

By order of the board6 June 2017

Board of directorsSP 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 secretaryArbor Capital Company Secretarial (Pty) Limited

SponsorArbor Capital Sponsors (Pty) Limited

Corporate information

Industrial Agriculture Supply chain services

WE ARE EXPERTS AND SPECIALISTS IN THE FOLLOWING FIELDS

Chemicals

Steel

Mining

Sugar

Gas

Powder

Supply Chain Solutions

Fuel

Ó

Basic and diluted earnings per share from total operations (cents)

15.2%99.8

115.02017

2016

Ó

Headline earnings per share (cents)

54.5%102.5

46.62017

2016Ó

Revenue from continuing operations (R000)

1.8%592 098

581 7092017

2016

Ó

Net asset value per share (cents)

4.1%

2 351

2 448

2 279

2017

2016

2015

Cash on hand (R000)

Ó 17.0%

180 349

211 030

134 412

2017

2016

2015

1 CargoCarriers condensed annual financial statements for the year ended 28 February 2017 and dividend declaration

Financials

Condensed consolidated statement of comprehensive income

2017R000

2016R000

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


Financials continued

Condensed consolidated statement of comprehensive income continued

2017R000

2016R000

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.


2017R000

2016R000

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 financial position


GROUP

Share capital

R000

Asset revaluation

reserve* R000

Foreign currency

translation reserve*

R000

Share- based

payments reserve*

R000

Distribu-table

reserveR000

Equity attribu-table to

equity holders

of the parent

R000

Non- control-

ling interest

R000

Total equity

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 changes in equity


2017R000

2016R000

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

Condensed consolidated statement of cash flows


2017R000

2016R000

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


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





Continuing 778 924 691 207


778 924 824 312

Total liabilities





Continuing 302 789 234 202


302 789 366 197


Segmental analysis


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 performanceThe 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.

Commentary

ProspectsWe 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 boardIt 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 shares1 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 instrumentsThe 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

2017R000

2016R000

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)

Commentary continued


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

Related party transactionsTransactions with subsidiary companies comprise management fees and other transport-related services:

Transactions with related parties

Related party – company Relationship2017R000

2016R000

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 reportThe 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 periodExcept for changes to the board previously mentioned, there were no significant events after the reporting date.

Dividend declarationNotice 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.

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2017 - cargo carriers · for the year ended 28 february 2017 and dividend declaration building...

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