delivering customer satisfaction · south africa, botswana, lesotho, malawi, swaziland, drc, zambia...

DELIVERING CUSTOMER

SATISFACTION2014 ❯❯ INTEGRATED

ANNUAL REPORT

Cargo

Carriers 2014 ❯

❯ INTE

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2014 Integrated Report

About our report

Key company dataCargo Carriers Limited (Registration No.: 1959/003254/06) ISIN: ZAE000001764 JSE Main Board: Industrial Transportation Share code: CRG • Listing date: 1987 Shares in issue: 20 000 000

Cargo Carriers provides leading technology-enabled solutions for logistics, transport and aviation to a broad range of customers across sub-Saharan Africa. The company operates through three core reportable divisions: • Industrial • Agricultural • Supply chain services

Our 2014 integrated annual report endeavours to present an integrated overview of the financial, economic, environmental, social and governance performance of the group for the year 1 March 2013 to 28 February 2014, and follows our annual report for the previous year published in May 2013.

The information disclosed encompasses all divisions and subsidiaries of the company, across all regions of operation in South Africa, Botswana, Lesotho, Malawi, Swaziland, DRC, Zambia and Zimbabwe. These same entities are included in the company’s consolidated financial statements as set out on pages 72 to 114 of this report.

The report is intended to present a holistic overview of the value the company seeks to create for stakeholders, by communicating the group’s material issues in an open and balanced manner. We believe it projects an honest, measured account of our approach to sustainability that takes account of all resources employed by the group in our business activities and all resources and groups on which we impact. The report is also a reflection of commitment to excellence, which defines our culture – our aspiration to adhere to the highest possible standards in all endeavours, including reporting to stakeholders.

Governance structureThe group’s executive directors are: • Murray Bolton (CEO), • Garth Bolton (Executive Director) and • Shaneel Maharaj (CFO).

They can be contacted at the registered office of the company (see inside back cover).

Basis of preparationThis report is primarily targeted at current stakeholders and potential investors in the group.

Cargo Carriers has considered and applied many of the recommendations contained in the International Integrated Reporting Framework issued in December 2013. The company has also applied the majority of principles in the King III report and explained any which have not been applied. The report was further prepared based on GRI principles and guidance (GRI G3.1 Guidelines) and is compiled based on a self-declared application level C (see assurance table below).

The annual financial statements have been prepared in accordance with IFRS, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the Listings Requirements of the JSE Limited and the requirements of the Companies Act.

Matsotso Vuso Murray Bolton Shaneel Maharaj Audit committee chairperson CEO CFO

20 May 2014

AssuranceTo ensure the integrity of sustainability reporting in the group, the following assurance has been undertaken:

Business process Nature of assurance Assurance provider

Internal audit Quality review Group internal auditEmpowermentEmployment equity Employment equity submission Department of LabourB-BBEE B-BBEE audit verification NERASHEQOHSAS 18001 External safety audit DEKRAISO 9001 External quality assurance audit DEKRAISO 14001 External environmental audit DEKRA


Our people culture is one of striving for performance excellence. So every day we practise our core values.

OUR VALUES AND HOW WE LIVE THEM:

❯ INTEGRITY Act with honesty in our daily tasks without

compromising the truth

❯ LOYALTY Commitment and faithfulness to the company and

our colleagues

❯ INNOVATION The desire and ability to find new and better ways of

doing things in order to continuously improve our performance. This is accomplished through more effective products, processes, services, technologies, and ideas.

❯ COMMITMENT Dedication to the successful completion of tasks and

responsibilities to ensure the growth and success of the company

❯ MUTUAL RESPECT Proper regard for an individual’s dignity including fellow

employees, suppliers and customers

Cargo Carriers is a leading specialist provider of supply chain and logistics services and solutions. In operation for almost 60 years, we are recognised experts in providing a value-driven service solution customised to our clients’ needs. Our extensive coverage of the SADC region stretches from Cape Town in South Africa to the Democratic Republic of Congo some 3 000 kilometres away.

Our group 2 – 9Performance at a glance 2Our group at a glance 4Our business 6Seven-year review 8Business model 9

Leadership commentary 22 – 27Directorate and management 22Chairperson’s statement 24CEO’s report 26

Our performance 30 – 47Financial review 30Value added statement 30CFO’s report 31Operational performance 34Social performance 38Our people 40Environmental performance 45

Governance and risk 50 – 63Corporate governance 52Social and ethics committee report 62Remuneration report 63

Annual financial statements 66 – 114Approval of financial statements 66Declaration by the company secretary 66Independent auditors’ report 67Audit and risk committee report 68Directors’ report 70Statement of comprehensive income 72Statement of financial position 73Statement of changes in equity 74Statement of cash flows 75Accounting policies 76Notes to the financial statements 90

Shareholder information 115 – IBCNotice of annual general meeting 115Form of proxy 119Glossary and definitions 121GRI index 122Corporate information IBCShareholders’ diary IBC

Strategic context 12 – 19Our business strategy 12Stakeholder engagement 17

This integrated annual report is available online at www.cargocarriers.co.za. For feedback regarding the content, accessibility, functionality and usability of this report, please contactBoitumelo Choche Group Audit and Risk ManagerTel: 011 485 8700Email: [email protected]

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Performance at a glance

Financial highlights

Industrial Agricultural Supply chain❯ The integration of Buks Haulage Limited (BHL) ❯ Gained new contracts in powders industry❯ Gained contracts in chemicals industry❯ Contract renewals in mining industry❯ Owner/driver projects implemented in

powders industry

❯ Improved vehicle utilisation and efficiency

❯ Upgrade of trailing equipment to increase payloads

❯ Implementation of manufacturing and inventory optimisation software

❯ Growth in consulting and system implementation projects

Contribution to group revenue

83%


12%


4%

Operational highlights

+ 25.9% increase in REVENUE

+ 110.6% increase in HEADLINE

EARNINGS PER SHARE

+ 83.3% increase in TOTAL DIVIDENDS paid

+ 72.0% increase in EARNINGS PER SHARE

+ 102.0% increase in closing SHARE PRICE

Our vision

To be recognised as the preferred partner in supply chain and transport logistics solutions and rated as the leader in our selected specialised markets. To continually innovate for more effective and efficient client supply chains.


Industrial Agricultural Supply chain❯ The integration of Buks Haulage Limited (BHL) ❯ Gained new contracts in powders industry❯ Gained contracts in chemicals industry❯ Contract renewals in mining industry❯ Owner/driver projects implemented in

powders industry

❯ Improved vehicle utilisation and efficiency

❯ Upgrade of trailing equipment to increase payloads

❯ Implementation of manufacturing and inventory optimisation software

❯ Growth in consulting and system implementation projects


83%


12%


4%

RECOGNITION ACHIEVED

2013 Supplier Of The Year Performance Award – powders industry

2013 Gold Award for Theory of Constraints implementation – 25th Annual Logistics Achiever Awards

2013 Silver Award for implementation of PlanLogix system – 25th Annual Logistics Achiever Awards

2013 Branded Transporter of the Year Award – powders industry

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Our group at a glance

SNAPSHOT

The group was established in 1956 and listed on the JSE in 1987. Our value-driven, technology-enabled service solutions for logistics and transport across sub-Saharan Africa are appropriately customised for individual clients in specific sectors.

Sustainable customer engagement is the key to our decades-long success. By focusing entirely on our customers we have earned their loyalty, having partnered with some of them for more than 40 years, and are continually growing our customer base. Everything we do from operational management and strategic direction to skills training and service delivery is driven by our overriding commitment to customer satisfaction. Our achievement in this regard is evidenced in the numerous supplier awards we have received from our satisfied customers.

We have spent the past 10 years strategically transforming from bulk hauliers into full-service logistics and supply-chain management specialists. This has included upgrading our fleet, improving our B-BBEE rating to level 4, achieving and maintaining compliance with the relevant ISO systems, safety, health, environment and quality (SHEQ) standards and the development of an industry-leading owner/driver programme.

Our service delivery is underpinned by our highly skilled workforce which understands the distinction in client business models and sectoral demands, our extensive operating infrastructure and significant expertise in logistics as well as related IT.

Rustenburg

Lichtenburg

VanderbijlparkGauteng

Cape Town

Port Elizabeth

East London

Sasolburg Secunda

WitbankJohannesburg

MaseruBloemfontein

INDUSTRIAL

AGRICULTURAL

SUPPLY CHAIN


SUB-SAHARAN AFRICA

Industrial

Eastern Cape Fuel

Free State Powders

Gauteng Steel; chemicals; gas

Mpumalanga Fuel

Northern Cape Powders

North West Powders; mining

Western Cape Chemicals; fuel

Namibia Fuel

Lesotho Fuel; powders

Zambia Mining; general cargo, agriculture, chemicals

Agricultural

Eastern Cape Tomato

Zimbabwe Sugar

Swaziland Sugar

Supply Chain Services

South AfricaSupply chain software solutions

DRC Fuel

Swaziland General cargo

OUR FOOTPRINT Our cross-border solutions are instrumental

in opening the gateway to Africa, with our expertise extending to the fuel, grain, sugar

and mining industries.

Expansion into sub-Saharan Africa

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Our business

DIVISION FOCUS SECTOR WHAT WE DO THE CARGO WAY

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Chemicals • Transportation and remote inventory monitoring services for bulk liquid including hazardous chemical products

• A 35-year track record in safely carrying hazardous chemicals within South Africa and southern Africa

• Leading-edge onboard technology to monitor safety • Implementation of responsible and safe practices • Applying best of breed technology for efficiency optimisation • New generation of vehicles and trailers

Steel • Transportation services of steel products • Specialised trailers fitted with load securing protection equipment

• IT integration

Powders • Transportation services of cementitious products such as cement

• Continuous investment in new equipment • Significant capacity • Service Level Agreement achievement • Exemplary safety, health, environment and quality scores • Experience and expertise within the industry • Flexibility to cope with industry fluctuations

Fuel • Fuel distribution • Fuel bridging • Fuel storage

• National agreement in place to handle containment, clean up and rehabilitation if required

• Continuous investment in latest discharge and measuring technology

• High levels of reliability • Cash flow and supply chain improvement through ePOD and IT integration

Mining • Transportation services of platinum matte and copper concentrate

• Excellence in terms of SHEQ systems • Inventory stock management of in-process materials

Gases • Effective transportation of bulk cryogenic products within sub-Saharan Africa

• Excellence in terms of SHEQ systems • Leading-edge onboard technology • Extensive product knowledge

Agr

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ture Sugar • Infield logistics services including cane loading and

transport from zone to mill • Over 35 years’ experience in the transportation of sugarcane and related products

• New concept development to improve supply chain

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Trading • Experts in cross-border supply chain solutions in sub-Saharan Africa, integrating sourcing and transportation

• Provider to the fuel, sugar and mining industries in Zimbabwe, Zambia, Mozambique and the southern Democratic Republic of Congo

• Providing effective tracking of loads, using a flexible, cost-efficient third-party management system

• Flexible and scalable provision of services • Efficient transport solutions without the restrictions of high capital expenditure

CargoWare • Supplying the DPS RouteOptimiser On Premise system and the RouteOptimiser in Cloud solutions

• Only local web-based solutions • Revenue model attractive to smaller distribution operators which have been excluded due to vast capital outlay required to obtain this technology

CargoSolutions • Supply chain optimisation consulting services (based on the Theory of Constraints (TOC) principles)

• Supply and implementation of a TOC-based supply chain management system (Symphony software)

• Conduct of inventory optimisation studies (simulations) for supply chain customers.

• One of very few consulting businesses that focus on the theory of constraints (TOC) methodology in South Africa

• Sole provider of the Symphony system in the country • Optimisation of sales revenue and inventory planning


DIVISION FOCUS SECTOR WHAT WE DO THE CARGO WAY

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Chemicals • Transportation and remote inventory monitoring services for bulk liquid including hazardous chemical products

• A 35-year track record in safely carrying hazardous chemicals within South Africa and southern Africa

• Leading-edge onboard technology to monitor safety • Implementation of responsible and safe practices • Applying best of breed technology for efficiency optimisation • New generation of vehicles and trailers

Steel • Transportation services of steel products • Specialised trailers fitted with load securing protection equipment

• IT integration

Powders • Transportation services of cementitious products such as cement

• Continuous investment in new equipment • Significant capacity • Service Level Agreement achievement • Exemplary safety, health, environment and quality scores • Experience and expertise within the industry • Flexibility to cope with industry fluctuations

Fuel • Fuel distribution • Fuel bridging • Fuel storage

• National agreement in place to handle containment, clean up and rehabilitation if required

• Continuous investment in latest discharge and measuring technology

• High levels of reliability • Cash flow and supply chain improvement through ePOD and IT integration

Mining • Transportation services of platinum matte and copper concentrate

• Excellence in terms of SHEQ systems • Inventory stock management of in-process materials

Gases • Effective transportation of bulk cryogenic products within sub-Saharan Africa

• Excellence in terms of SHEQ systems • Leading-edge onboard technology • Extensive product knowledge

Agr

icul

ture Sugar • Infield logistics services including cane loading and

transport from zone to mill • Over 35 years’ experience in the transportation of sugarcane and related products

• New concept development to improve supply chain

Sup

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ces

Trading • Experts in cross-border supply chain solutions in sub-Saharan Africa, integrating sourcing and transportation

• Provider to the fuel, sugar and mining industries in Zimbabwe, Zambia, Mozambique and the southern Democratic Republic of Congo

• Providing effective tracking of loads, using a flexible, cost-efficient third-party management system

• Flexible and scalable provision of services • Efficient transport solutions without the restrictions of high capital expenditure

CargoWare • Supplying the DPS RouteOptimiser On Premise system and the RouteOptimiser in Cloud solutions

• Only local web-based solutions • Revenue model attractive to smaller distribution operators which have been excluded due to vast capital outlay required to obtain this technology

CargoSolutions • Supply chain optimisation consulting services (based on the Theory of Constraints (TOC) principles)

• Supply and implementation of a TOC-based supply chain management system (Symphony software)

• Conduct of inventory optimisation studies (simulations) for supply chain customers.

• One of very few consulting businesses that focus on the theory of constraints (TOC) methodology in South Africa

• Sole provider of the Symphony system in the country • Optimisation of sales revenue and inventory planning

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Seven year review

2014R000

2013R000

2012R000

2011R000

2010R000

2009R000

2008R000

Turnover 911 375 721 321 593 895 538 298 443 812 483 041 423 551

Total turnover of associates and joint venture 257 074 251 267 226 401 161 781 146 996 167 421 102 149

Group’s share of turnover from associates and joint venture 103 869 99 076 84 306 57 632 54 518 63 993 41 918

Profit from operating activities before depreciation 131 664 90 306 73 454 60 272 62 487 64 085 56 107

Profit from operating activities 57 808 42 538 39 219 28 137 33 282 35 504 32 479

Profit before finance income and finance cost 66 519 53 361 45 904 38 222 38 918 38 169 65 724

Profit before taxation 49 829 39 769 32 792 26 805 31 535 13 539 50 311

Total equity 435 048 389 759 345 303 332 319 326 023 305 761 283 919

Capital employed** 649 523 676 562 569 968 513 994 447 577 436 285 408 893

Total assets 853 021 862 970 699 100 624 739 540 876 534 987 498 719

• Non-current assets 557 799 578 003 520 125 461 360 373 527 340 905 303 370

• Current assets 283 520 234 029 174 590 160 267 164 100 194 082 100 349

• Assets held for sale 11 702 50 938 4 385 3 112 3 249 – 95 000

Net interest-bearing loans and borrowings to total equity (%) 22.9 46.5 42.1 34.3 7.6 6.5 29.3

Capital expenditure (R million) 64.1 80.6 77.6 123.4 64.9 62.8 57.6

Diluted earnings per share (cents) 234.4 136.3 64.9 86.1 128.0 88.8 206.3

Diluted headline earnings per share (cents) 229.3 108.8 60.7 48.5 118.8 55.0 69.7

Revaluation of owner-occupied properties 18.4 27.5 11.0 (11.3) 17.5 (2.2) 56.6

Revaluation of investment properties 36.0 38.7 17.0 2.4 44.4 (6.5) 172.7

Dividends per share (cents)

– interim declared during the year 15.0 10.0 9.0 12.0 9.5 9.5 9.5

– final declared after year end 40.0 20.0 8.0 5.0 20.0 9.0 9.0

Net asset value per share (cents) 2 166 1 924 1 771 1 706 1 681 1 576 1 463

Share price movement (cents)

– high 2 100 1 095 1 075 1 230 850 1 200 1 700

– low 1 060 900 900 750 640 700 1 100

Closing share price on JSE (cents) 2 050 1 015 907 1 080 780 710 1 100

** Capital employed comprises equity, outside shareholders’ interest and non-current liabilities


VALUE CREATION

Business model

Our business model results in growth across the value chain

STRATEGIC LEADERSHIPIndustry focus

EXPANSIONFinancial strength

TRANSFORMATIONHR and community

WORLD- CLASS SHEQ

Operational excellence

COMPETITIVE ADVANTAGEOpportunity

Innovation Development

Reliab

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C

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CONTINUAL IMPROVEMENTCreativity and technology

Capacity

Margin

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Agility

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Our business strategy

KPA MATERIAL ISSUE OUR POSITION MANAGEMENT RESPONSE

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Financial stability

• Cargo Carriers has a strong balance sheet and conservative gearing policy, which enables us to take advantage of acquisitions and new business opportunities as they arise. The company has traditionally always owned all its assets and has limited off-balance sheet financing.

• The ongoing plough-back of earnings has helped maintain our balance sheet strength and facilitate critical capital expenditure on fleet upgrade, renewal and expansion and IT innovation.

• Our strong financial platform enables clients to comfortably ‘recapitalise’ as they transition from owning costly logistics systems to utilising our effective insourced/outsourced solutions.

• Improve group operating profit by addressing underperforming operations and executing turnaround strategies

• Financial targets set for all operations

• Monitoring and review of financial performance

• Constant reviewing, setting and monitoring of progress against best practice benchmarks

• Share price up 102.0% off March 2013 baseline

People

• In order to maintain our high performance culture, we must attract, develop and retain creative and experienced people.

• Cargo Carriers has an enviable record of retaining our senior personnel, which is a key driver of our loyal long-term client relationships. This factor is also critical internally in helping the group to effectively manage our current high levels of growth without compromising service excellence.

• Training and development is key to our people success and we manage an active training and development programme, within a transformation context, to meet the challenge of maintaining this high service standard.

• Employee wellness is essential and for this reason, we pay close attention to driver performance and provide access to proper medical treatment for stress, fatigue and concentration.

• Alignment of people development and succession with strategic growth priorities

• Continuous training and development

• Ongoing training initiatives are encouraged

• Management training programmes

• Participation in industry’s National Bargaining Council (NBC) Wellness Fund

The Process for Determining Material IssuesIn identifying and prioritising the issues that could impact Cargo Carriers’ goal of remaining financially sustainable, we have considered both the findings of our internal risk management process and the outcome of engagements with our stakeholders.



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Financial stability

• Cargo Carriers has a strong balance sheet and conservative gearing policy, which enables us to take advantage of acquisitions and new business opportunities as they arise. The company has traditionally always owned all its assets and has limited off-balance sheet financing.

• The ongoing plough-back of earnings has helped maintain our balance sheet strength and facilitate critical capital expenditure on fleet upgrade, renewal and expansion and IT innovation.

• Our strong financial platform enables clients to comfortably ‘recapitalise’ as they transition from owning costly logistics systems to utilising our effective insourced/outsourced solutions.

• Improve group operating profit by addressing underperforming operations and executing turnaround strategies

• Financial targets set for all operations

• Monitoring and review of financial performance

• Constant reviewing, setting and monitoring of progress against best practice benchmarks

• Share price up 102.0% off March 2013 baseline

People

• In order to maintain our high performance culture, we must attract, develop and retain creative and experienced people.

• Cargo Carriers has an enviable record of retaining our senior personnel, which is a key driver of our loyal long-term client relationships. This factor is also critical internally in helping the group to effectively manage our current high levels of growth without compromising service excellence.

• Training and development is key to our people success and we manage an active training and development programme, within a transformation context, to meet the challenge of maintaining this high service standard.

• Employee wellness is essential and for this reason, we pay close attention to driver performance and provide access to proper medical treatment for stress, fatigue and concentration.


• Continuous training and development

• Ongoing training initiatives are encouraged

• Management training programmes

• Participation in industry’s National Bargaining Council (NBC) Wellness Fund

Our ability to deliver our business strategy ultimately depends on the effectiveness with which we identify and respond to those risks and opportunities that impact on the competitiveness of our business and on the interests of those stakeholders with whom we have a significant relationship.

The identification and prioritisation of these material issues is strongly informed by our commitment to delivering on our core values.

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Our business strategy continued


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Skills shortages

• We actively engage previously disadvantaged individuals. Our various training programmes, with this emphasis, include: – Management training programme for graduates in transport

management and logistics – General training to enhance the skills of existing employees – An established driver training centre

• We also believe that promoting industry skills growth is in the group’s long-term interest and so offer:– Learnership programmes including focus on disabled employees’

training skills– Apprenticeship programme to sustain and improve the skills

shortage industry-wide

• Ongoing review and introduction of new programmes for development and retention of skilled employees

• Conducive/flexible work environment


• Structured management performance systems

Transformation

• Our scorecard has improved from level 7 in 2008 to the current level 4 (with value-added supplier status). This enables our customers to claim 125% of their business spend with Cargo Carriers in the assessment of their preferential procurement scores.

• As a group we have taken a proactive approach to empowerment by:– Entrenching a recruitment policy to improve employment equity– Providing ongoing training to enhance our own, and the industry’s,

skills development– Identifying various sustainable, impactful CSR projects– Enterprise development through management and business

assistance– Continually seeking to increase procurement spend with black-

controlled businesses

• Strive for continual improvement in all pillars per the broad-based black economic empowerment scorecard

• Our B-BBEE score performance is monitored on a monthly basis

• Continuously aim to improve our level 4 B-BBEE rating

• Enterprise development owner/driver programmes

Safety and environment

• Our strategic focus on environmental and safety standards positions us as a partner of choice.

• We continually benchmark sustainability measures to monitor our impact in these areas and ability to prevent, or when they occur, to react to emergencies on the road as well as to minimise and offset our carbon footprint.

• Employee NBC Wellness Fund and group wellness programmes (focus on driver wellness and road safety)

• Maintain sustainable business practices

• Health and safety training

• Monitor and set energy and emission efficiency targets

• Environmentally responsible customer solutions

• OHSAS18001 and ISO14001

Quality and reliability

• Part of our philosophy of continual improvement applies directly to the technology used in our vehicles on the road, quality of our drivers and operational effectiveness.

• Continual fleet enhancement in terms of tyres, onboard technologies, capacity and safety measures

• Onboard technology that monitors driver speed and safety is standard fleet-wide

• Continually training and retraining our drivers and technicians to industry-leading standards

• Up-to-date work procedures

• Adhering to ISO 9001 systems



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Skills shortages

• We actively engage previously disadvantaged individuals. Our various training programmes, with this emphasis, include: – Management training programme for graduates in transport

management and logistics – General training to enhance the skills of existing employees – An established driver training centre

• We also believe that promoting industry skills growth is in the group’s long-term interest and so offer:– Learnership programmes including focus on disabled employees’

training skills– Apprenticeship programme to sustain and improve the skills

shortage industry-wide

• Ongoing review and introduction of new programmes for development and retention of skilled employees

• Conducive/flexible work environment


• Structured management performance systems

Transformation

• Our scorecard has improved from level 7 in 2008 to the current level 4 (with value-added supplier status). This enables our customers to claim 125% of their business spend with Cargo Carriers in the assessment of their preferential procurement scores.

• As a group we have taken a proactive approach to empowerment by:– Entrenching a recruitment policy to improve employment equity– Providing ongoing training to enhance our own, and the industry’s,

skills development– Identifying various sustainable, impactful CSR projects– Enterprise development through management and business

assistance– Continually seeking to increase procurement spend with black-

controlled businesses

• Strive for continual improvement in all pillars per the broad-based black economic empowerment scorecard

• Our B-BBEE score performance is monitored on a monthly basis

• Continuously aim to improve our level 4 B-BBEE rating

• Enterprise development owner/driver programmes

Safety and environment

• Our strategic focus on environmental and safety standards positions us as a partner of choice.

• We continually benchmark sustainability measures to monitor our impact in these areas and ability to prevent, or when they occur, to react to emergencies on the road as well as to minimise and offset our carbon footprint.

• Employee NBC Wellness Fund and group wellness programmes (focus on driver wellness and road safety)

• Maintain sustainable business practices

• Health and safety training

• Monitor and set energy and emission efficiency targets

• Environmentally responsible customer solutions

• OHSAS18001 and ISO14001

Quality and reliability

• Part of our philosophy of continual improvement applies directly to the technology used in our vehicles on the road, quality of our drivers and operational effectiveness.

• Continual fleet enhancement in terms of tyres, onboard technologies, capacity and safety measures

• Onboard technology that monitors driver speed and safety is standard fleet-wide

• Continually training and retraining our drivers and technicians to industry-leading standards

• Up-to-date work procedures

• Adhering to ISO 9001 systems

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Our business strategy continued

Risk assessmentOur headline risks are considered to be those risks which would affect our sustainability.

RISK DESCRIPTION MITIGATION

Labour unrest • The ongoing wage-related industrial action in areas in which we operate, could become disruptive, and impact productivity and service quality.

• Regular meetings between the workers’ representatives, the HR department, and management to ensure that early detection systems are in place to address pertinent labour issues and grievances in order to prevent labour unrest.

Technical skills shortage

• There is a limited pool of qualified candidates, especially given the context of employment equity.

• A dedicated training centre to increase training and skills development, which will bolster the industry as a whole.

• Internal programmes and measures are in place to equip our current workforce with the necessary skills required.

• Provide learnership and apprenticeship programme.

Proximity of communities to operations

• Government service delivery often sparks protest action in close proximity to certain operations, and community pressure can increase the onus on an operation to enhance social economic development in the surrounding area.

• Engagement with local communities and social development programmes focusing on local communities.

Regulations and compliance

• The regulatory and compliance environment is constantly changing.

• The uncertainty around certain legislative and regulatory changes that could affect our industry remains a potential risk.

• Risk management framework established and implemented.

• Compliance programmes and self-assessment checklists for compliance with laws and regulations pertinent to our business environment.

• Established systems to track new legislation with a direct impact on our business.

• The audit and risk department monitors and reports on non-compliance to reduce the risk of fines and penalties, and prevent the reputational damage that could result from non-compliance.

Managing talent • Talent management and skills shortages remain key risks as the company expands into new markets. Education systems can struggle to keep up with the industry’s demands.

• Focus on managing and retaining talent by means of regular performance assessments, skills development assessment and succession planning initiatives.

• Career development and advancement is an ongoing process.


Stakeholder engagement

Stakeholder engagement supports our key strategic objectives and enables us to manage these.

STAKEHOLDER WHAT MATTERS TO THEM TOOLS OF ENGAGEMENT

Shareholders • Profitability

• ROI (share price and dividends)

• Cash generation

• Governance

• Risk management

• Growth prospects

• Reputational issues

• Annual and interim results reports

• SENS

• Website

• Group results

• AGM

• Media

Providers of debt capital

• Capital management • Sustainability • Profitability • Cash generation • Governance • Risk management • Growth prospects

• Contractually required information flow • Regular ad hoc meetings

Employees • Job security

• Group sustainability

• Personal growth and development

• Remuneration and incentives

• Safety, health and wellness

• CargoNet (intranet)

• Internal communique

• SHEQ portal

• Website

• Toolbox talks

• Notice boards

• Performance management reviews

• Employment equity forum

• Skills development and training

• Policies/procedures

• Employee surveys

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Stakeholder engagement continued


Customers • Service delivery and quality

• Safety of cargo

• Value for money

• SHEQ written communication

• Customer relationship management

• Contracts and service level agreements

• Customer service index surveys

• Supplier assessment reports

• Advertising and media communication

Trade unions • Wage negotiations

• Conditions of employment

• Engagement on safety, health and wellness issues

• Regular meetings at relevant levels

• Open door policy in communication

• Workshops

• Focus groups

Major contractors,suppliers and business partners

• Sustainability

• Financial stability

• Governance

• Risk management

• Contracts and service agreements

• Meetings

• Industry body meetings

• Audits

• Events

Government, local authorities and regulatory bodies

• Regulatory compliance

• Environmental compliance

• Skills development

• Job creation

• Formal and informal meetings

• Consultations and workshops

• Conferences and seminars

• Tender submissions

• Presentations



Communities in which the group operates

• CSI investment

• Enterprise development (owner-driver scheme)

• Formal agreements

• Ongoing training and meetings

Industry • Skills shortages

• Safety

• Representation on key industry bodies:

– Road Freight Association. Garth Bolton (executive director and former joint CEO) is a director and a past chairman

– Federation of East and Southern African Road Transport Associations. Mike Scott (divisional director: cross-border) is chairman

– Cargo Carriers was a founder signatory to the Responsible Care Programme of Chemical and Allied Industries Association, which promotes the safe handling and transportation of hazardous substances

– Dangerous Goods Committee of Road Freight Association

– Chemical Handling Forum– Labour Relations Committee of Road

Freight Association (RFA)– National Bargaining Council (NBC)

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Directorate

Executive directors1. Murray Bolton (56)CEOBCom(Hons), CA(SA)

Mr MJ Bolton is a Chartered Accountant who graduated at the University of Witwatersrand. He joined Cargo Carriers in 1985 as Financial Administration Manager and within two years, was appointed as Financial Director. He later completed a Sloan Fellowship at the London Business School, was appointed Joint CEO in 1992 and CEO in 2013.

2. Garth Bolton (58)Executive directorMr GD Bolton’s natural flair for business dynamics has seen him steadily rise through the ranks at Cargo Carriers. His ability and hands-on experience have earned him promotions from Contracts Controller to Branch Manager and, finally from Divisional Manager to Joint CEO to Executive of Cargo Carriers in 2013. He also served as Chairman of the Road Freight Association for two years, and brings a wealth of experience at all levels of the industry to Cargo Carriers.

3. Shaneel Maharaj (39)CFOBCom(Hons), CA(SA), HDipTax

Mr S Maharaj is a Chartered Accountant who graduated at the University of Natal. He completed his accounting articles at Deloitte’s and has gained experience in various other financial positions prior to joining Cargo Carriers in 2006 as Group Financial Manager. He was appointed to the board as Financial Director in 2009 and later completed a Higher Diploma in Taxation from the Thomas Jefferson School of Law.

Independent non-executive directors4. Siza Mzimela (48)Chairperson BA

Mrs SP Mzimela is an economics and statistics graduate and her career developed through Standard Bank, Total, and South African Express. She is the former Group Chief Executive

Officer of South African Airways and is currently founding shareholder and Executive Director of Blue Crane Aviation services. Mrs SP Mzimela also serves on the boards and audit committees of Ansys Ltd and Africa Re (SA) amongst others and was appointed the Chairperson of the board of Cargo Carriers Limited on 1 November 2013.

5. Matsotso Vuso (40)BCom(Hons), CA(SA)Mrs MJ Vuso is a Chartered Accountant who graduated from the University of Cape Town. She is the Managing Director of Nyamezela Group Companies, which offers multidisciplinary services ranging from engineering, business advisory, metering to energy optimisation solutions. She has extensive experience in assurance, project finance and financial restructuring gained from her association with companies including Industrial Development Corporation, Transnet Group Audit Services, KPMG and Coopers & Lybrand (now PWC). Mrs Vuso also serves on the board of Prothech Khuthele Ltd.

6. Alistair Franklin (55)BA LLB, MA

Mr AE Franklin graduated with a BA LLB degree from the University of Natal and obtained a MA degree from Oxford University. He was admitted to the Johannesburg Bar as an Advocate in August 1985 and took Silk on 17 November 2000. Areas of practice include commercial and pension fund litigation. He has periodically acted as a Judge in the High Court in Johannesburg.

Non-executive director7. Beverley Fraser (53)BA

Mrs BB Fraser graduated with a BA degree from the University of Cape Town and gained significant experience in the travel and tourism industry. She is currently directly involved in the ownership and management of retail franchise stores as well as a franchise motor vehicle retailing business.

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Executive management

1. Dawid Janse van RensburgDivisional Director: IT & Supply ChainBEng, MCom Business Management, MEngDawid holds a B.Eng (Electrical) degree from the University of Pretoria, a Masters degree in Nuclear Engineering from Pennsylvania State University, USA and an M.Com in Business Management from Rand Afrikaans University. Dawid is a consultant with the International Goldratt Group, and is certified as an Application Expert with TOCICO (Theory of Constraints International Certification Organisation). Dawid heads up the operations of the Solutions division.

2. Andre Jansen van VuurenDivisional Director: MarketingRAU Transport DiplomaAndre joined Cargo Carriers at the beginning of 2009. He holds a RAU Road Transport Diploma from the University of Johannesburg. With 20 years’ experience in logistics, from an operational and marketing perspective, Andre brings a wealth of experience at all levels of the industry. Andre is responsible for customer service, internal and external marketing, as well as sales.

3. Mercia MaletswaGroup SHEQ ManagerBTech, Masters of Management (SHE)Mercia joined Cargo Carriers in 2009. She holds a B.Tech in Environmental Health from Tshwane University of Technology and a Masters of Management in Safety, Health and Environment (University of Southern Queensland). With more than ten years’ experience in the SHEQ arena, Mercia brings a wealth of experience to the company and is responsible for all aspects of SHEQ.

4. Mike ScottDivisional Director: Cross-BorderMike has been with Cargo Carriers since July 1989. His extensive knowledge of the SADC region, together with his fluency in a number of African languages, has been pivotal to the company’s successful expansion into Southern Africa. Mike is the Chairman of both the RFA Cross-Border Committee and FESARTA (Federation of Eastern and Southern African Road Transport Associations).

5. Pauline LegodiDivisional Director: HRLLB BAPauline joined Cargo Carriers in June 2010 as HR Manager and was appointed as director in July 2011. She holds an LLB degree from University of South Africa (UNISA), as well as a BA (Social Work) degree from University of Fort Hare. In 2011, she was appointed to the Executive Committee (EXCO) of the Road Freight Employers Association (RFEA). Pauline brings a wealth of experience at all levels of Human Resource Management and is responsible for aligning HR Strategy to Corporate Strategy.

6. Boitumelo ChocheGroup Audit & Risk ManagerCIA, CCSABoitumelo holds a CIA, CCSA, ND Internal Audit (VUT) and a Diploma in Forensic Auditing and Criminal Justice (RAU), and MDP (UNISA SBL). He joined Cargo Carriers in 2010 and brings with him a wealth of experience in internal Audit and Risk management, having worked for major conglomerates in various capacities.

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Chairperson’s statement

SG Chilvers, Chairman

Given the challenging local and global economy and increasingly competitive environment, Cargo Carriers delivered a pleasing performance reaping the benefits of our strategy of client-centred value creation. Our full-service approach to client relationships and commitment to delivering efficient, cost-effective supply chain management, without compromising safety, is bearing fruit. The renewal of key contracts, the successful award of new contracts and the broadening of our geographic involvement through acquisition in Zambia are testament to our success.

Trading conditions over the past year remained challenging with a weak Rand, continued fuel price increases and the introduction of e-tolls in Gauteng. We remain one of the highest taxed industries and may be challenged in future to accommodate tolling systems in other provinces.

We have been persistent in the pursuit of what we call the “Cargo way”. It is a culture of providing ever-improving value to each of our customers, and this is what has driven our impressive levels of organic and acquisitive growth

S Mzimela, Chairperson

Cargo Carriers was

established in 1956 by

Desmond Bolton. (His two

sons, Garth and Murray

Bolton, are now actively

involved in the company)

Been involved in the

sugar industry since 1966

GROUP MILESTONES

When Cargo Carriers listed

on the JSE, the company

was one of the largest

privately owned transport

operations in southern

Africa

Our strategic focus shifted

in 2002. Our vision was to

become more than a

reliable and efficient

hauler, and we reinvented

ourselves as a specialist

logistics and supply chain

service provider

1956 1966 1987 2002


Increased investment in road infrastructure has been a positive development with better maintained roads translating into reduced maintenance for our vehicles and ensuring we can adhere to our promise of timely delivery. The increased infrastructure investment has also seen an increase in freight requirements.

The environment we work in is becoming more and more challenging and SHEQ demands in the transport industry are increasing. We strive to uphold and improve upon our high SHEQ standards, intensify our driver training and vehicle maintenance, and take all necessary precautions to avoid possible accidents on the road.

Operational efficiency from a time and cost perspective remains a priority. Passing on input costs to customers is not always possible so we need to find innovative and efficient ways to deliver our services while always maintaining customer satisfaction as our final objective. In order to drive the economy South African companies need to improve the efficiency of their supply chain and we are well positioned to help industry in achieving this.

GDP growth in South Africa has remained around 3%. However driven by GDP growth of 6% to 8% in a number of African countries we see growing opportunities across the continent. Tacit signs of an upswing in the US and EU markets also carry positive signs for our markets.

The movement of goods remains crucial to globalisation, and requires excellent standards in quality and quantity. Customers appreciate speed, quality, reliability and efficiency – all elements we are well-equipped to deliver.

Changes to the boardDuring the year, I was honoured to take over the reins of chairperson following Stan Chilvers’ retirement. He has been part of the Cargo Carriers ‘family’ for 49 years and has served as a director since 1985 and as chairman of the board since 2001. On behalf of the board, I would like to thank him for the leadership and guidance that he has provided to the company over the years and wish him well in his retirement.

Won the Logistics

Achiever Platinum Award

for a B-BBEE programme

in the sugar industry

Won the Gold Logistics

Achiever Award for supply

chain innovation in the

clothing industry

Mercedes-Benz’s extra heavy

duty vehicles biggest

customer in 2010

GROWTH IN SHARE PRICE

+102%

2005 2010 2014

In addition, Garth Bolton stepped down as joint CEO. Murray Bolton will continue to fulfil the role and responsibilities of CEO. Having risen through the ranks at the company and served as joint CEO since 1992, Garth has been instrumental in the success and turnaround of the group initiated in 2002. He will remain as an executive director of the board.

Looking aheadWe expect the tough trading environment to continue marked by possible labour disputes and the negative impact of inflation. Fuel price increases and reduced consumer spending are expected to further constrain our customers’ margins.

In addition we will maintain a close eye on the rapidly changing legislative and regulatory environment to ensure we adapt and comply timeously.

Our focus remains on ensuring excellence in service and customer satisfaction which in turn fosters sustainable growth.

ThanksI would like to thank my fellow board members for their input during the year. I commend the dedication of the then joint CEOs, Murray and Garth Bolton, and the group’s diligent executive management who have helped steer our growth so admirably.

Thank you to our stakeholders for your ongoing support of Cargo Carriers.

Siza MzimelaChairperson

20 May 2014

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CEO’s report


creation for our customers our primary focus – is well entrenched in the group. I believe that our excellent relationships with our clients are the foundation of our strength in these tough times. This is evident not only in our ability to attract new clients, but to provide a service of such a standard that they expand and extend their contracts.

The year under review was successful in this regard. The growth of our steel business since 2012 is a good example, as is the award in 2013 of an additional contract to transport pitch and tar for a steel manufacturer. In addition two leading cement manufacturers have both expanded their business with Cargo Carriers. Various contracts within the fuel, chemicals and gas markets have also been secured.

Our strategy has been executed within a framework of the “Cargo Way”, which has driven innovation by installing world-class logistics software to manage cost-effective planning and scheduling of loads. Onboard technology monitors driver performance and enables tracking and tracing of cargo throughout the delivery process. Improvement in our B-BBEE rating, which is crucial to broadening our customer base, and the achievement and maintenance of stringent SHEQ standards, have further supported our strategy.

Our excellent relationships with our clients are the foundation of our strength. This is evident in our ability to attract new clients and assist existing clients expand and extend their contracts

The year at a glanceThe year past was marked by the group’s resilience in the face of a difficult macroeconomic environment. Revenue and operating profit increased by 25.7% and 35.6% respectively, as a result of organic growth and the contribution of new acquisition, Buks Haulage Limited (BHL). In addition, the disposal of surplus property and an aircraft in the first half of the year considerably strengthened our balance sheet.

Our strategyTwelve years ago, we began a complete overhaul of our business operations to transform the company into client and industry-centred specialists in logistics and supply chain management. The success of this strategy is borne out by our steady growth. The central tenet of our long-term strategy for growth – to make value

M Bolton, CEO


AcquisitionOur investment in BHL, a transport operation in Zambia, has brought significant growth and has given the company the opportunity to take advantage of increased transport demand in the mining, industrial, agricultural, and chemicals sectors in the region. More importantly for the logistics group, it has allowed them to offer a comprehensive and integrated service to clients who are increasingly describing their marketplace as the whole of the SADC region, or beyond.

Operational performanceThe volatile operating conditions in South Africa are reflected in the reported results. The inclusion in the industrial segment of the Zambian acquisition, BHL, resulted in significant revenue growth whilst its operating profits were restrained by a decrease in commodity demand and once off impairments.

The combined effects of a weakening Rand, low economic growth, increasing cost pressure, and industrial action have resulted in lower margins. This comes about through lower and volatile transport requirements and price cutting in the market.

The agricultural sector’s improved performance shows the combined effects of the acceptable returns from the Zimbabwean operations and the rationalisation of previously loss-making contracts.

The earnings growth from joint ventures, in certain of which the company plays a lead management role, is encouraging. The supply chain services segment achieved revenue growth and a significant decrease in the loss of the prior year. This prior-year loss arose mainly through the write-off of debt.

TransformationIn a few short years we have improved our B-BBEE rating from a level 7 to a level 4 with value-adding supplier status. I am particularly proud that this year marks a decade of our owner driver scheme in which we provide training and support to allow drivers to become stakeholders in the industry. The result is genuine empowerment, backed by Cargo Carriers’ financial and management expertise, and stringent health and safety standards.

Future outlookThe global economic volatility and uncertainty remain a concern as these impact on global economic growth and in turn growth in South Africa. Labour volatility may also impact the business and we will continue to ensure solid stakeholder engagement and focus on skills development in this regard.

We will continue to focus our efforts on profitable growth through acquisitions and capitalising on new business opportunities. Our current strength and balance sheet position us to take advantage of opportunities as they arise.

AppreciationOur achievements and success is made possible by our people. Thank you all for your hard work and loyalty.

I also thank the members of the board for their support, guidance and innovative suggestions. Thank you to our business partners, suppliers and advisers.

Finally I thank the people without whom we do not exist – our customers and shareholders.

Murray BoltonCEO

20 May 2014

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FlexibilitySupply Chain Solutions

SHEQ

Reliability

Technology

Cross-Border

Transformation

Experience

FlexibilityFinancial Stability

Cross-Border

TransformationO

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Our performance

Value added statementfor the year ended 28 February 2014

2014 2013

Rm % Rm %

Value added comprises: Turnover 911 247 721 239 Revaluation of assets 9 2 9 3 Cost of goods and services bought (551) (149) (428) (142)

369 100 302 100

Shared as follows: Employment costs 222 60 195 65 Government direct and deferred taxes 4 1 14 5 Interest paid to financial institutions 23 6 18 6 Dividends paid to shareholders 7 2 4 1 Depreciation of property, plant and equipment 74 20 48 16 Profits retained 39 11 23 7

369 100 302 100

Financial reviewfor the year ended 28 February 2014

2014 2013 % change

Turnover (R million) 911.4 721.0 26.4 Profit from operating activities before depreciation (R million) 131.7 90.3 45.8 Profit from operating activities (R million) 57.8 42.5 35.9 Net finance costs (R million) (16.7) (13.6) 22.8 Profit for the year (R million) 46.1 26.1 76.5Diluted earnings per share (cents) 234.4 136.3 72.0Diluted headline earnings per share (cents) 229.3 108.8 110.6Dividends per share (cents) – interim declared during the year 15.0 10.0 50.0 – final declared after year end 40.0 20.0 100.0

Net asset value per share (cents) 2 166 1 924 12.6Closing share price on JSE (cents) 2 050 1 015 102.0 Total assets (R million) 853.0 863.0 (1.2)Capital employed* (R million) 649.5 676.6 (4.0)Interest-bearing loans and borrowings (R million) 216.1 266.2 (18.8)Borrowing capacity of the group utilised (%) 45.9 93.1 (50.7)Capital expenditure (R million) – actual spent 64.1 80.6 (20.4)Capital expenditure (R million) – committed – 21.1 (100.0)

* Comprises equity, outside shareholders’ interest and non-current liabilities


CFO’s report


Revenue grew to a record level of R915.1 million. This milestone was achieved primarily as a result of acquisitive growth

HIGHLIGHTS

• Diluted earnings per share up 72.0%

• Diluted headline earnings per share up 110.6%

• Share price up 102.0% and reaches record high of R20.50 per share at year end

• Total dividends per share up 83.3%

• Borrowing capacity utilised down by 50.7%

• Cash and short-term deposits up 37.2%

S Maharaj, CFO

Strategic overview Cargo Carriers is committed to being recognised as the transport and logistics provider of choice. The group’s objective is to ensure sustainable growth and customer satisfaction that will enhance investor confidence and deliver acceptable levels of returns. Underscoring this objective is Cargo Carriers’ pursuit of revenue and profit enhancing opportunities that translate into increased operating profits and distribution to all stakeholders.

Financial performanceStatement of comprehensive income analysisThe group has delivered pleasing results for the year ended February 2014, which was achieved against a backdrop of a challenging trading and operating environment.

Revenue grew by 25.9% to a record level of R915.1 million (2013: R726.7 million). This milestone was achieved primarily as a result of acquisitive growth within the industrial segment, which benefited from the full year consolidation of newly acquired subsidiary Buks Haulage Limited (BHL) (2013: six months).

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Profit from operating activities increased 35.9% to R57.8 million (2013: R42.5 million). Costs and expenses rose by 25.3% and are attributable mainly to the full cost of acquisitions in the 2013 financial year coupled with the impact of the translation and exchange rate movements recognised in the foreign businesses. Although not apparent, cost increases remain a management priority with continued focus on efficiencies at all operating divisions.

The group realised a net loss of R4.2 million (2013: loss of R1.8 million) on the disposal and impairment of assets. These assets represented surplus property, plant and equipment which were no longer required within the operations or have been subjected to abnormal deterioration during the year.

Revaluation of investment properties declined 7.1% to R8.6 million (2013: R9.2 million) primarily due to the disposal of the Alrode property in the current year, which contributed to the revaluation gain in the prior year. The group’s property portfolio remains highly lucrative with the combined fair value gain contributing R12.9 million (2013: R16.6 million) to the increase in non-current assets.

Dividend income increased 24.3% to R1.1 million (2013: R0.9 million) and represents increased distribution of earnings from an associate company.

HIGHLIGHTS

• Cash generated from operations increased 112.2%

• Net debt to equity ratio 22.9%

Associate earnings from the group’s investments increased 29.2% to R3.2 million (2013: R2.5 million). See note 9 and 10 to the financial statements for a detailed breakdown of the earnings per investment.

Net finance costs increased by 22.8% to R16.7 million (2013: R13.6 million). Finance income grew by 42.3% to R6.5 million (2013: R4.5 million) and reflects the benefit of the increased investment of R35 million in the Stanlib Extra Income Fund, which was invested from the proceeds on disposal of the Alrode property. Finance costs increased by 27.7% to R23.2 million (2013: R18.1 million) primarily due to the full year consolidation of BHL.

Profit for the year grew by 76.5% to R46.0 million (2013: R26.1 million) and benefited from lower tax of R3.8 million (2013: R13.7 million). The change in estimate of calculating the deferred tax on investment properties in line with the “time apportionment basis” resulted in the deferred tax provision being reduced by R6 million through profit or loss, which reduced the effective tax rate of the group to 7.5%.

Statement of financial position and cash flow analysisThe group has built a robust balance sheet which augurs well for successfully pursuing its growth objectives and related opportunities.

The group incurred capital expenditure of R64.1 million (2013: R80.6 million) during the year which reflects on the continued strategy of appropriate investment into fixed assets. Debt funding relating to R49.1 million of capital expenditure was raised, as the group took advantage of the low-interest environment during the year. Depreciation charges amount to R73.8 million (2013: R47.8 million) and reflect the impact of the full year consolidation of BHL together with a much more aggressive policy than Cargo Carriers.

CFO’s report continued


Non-current assets held-for-sale declined 77.0% to R11.7 million (2013: R50.9 million) primarily as a result of the disposal of the Alrode property, which was classified as held-for-sale in the prior year. The group intends disposing of assets held-for-sale within the new financial year, barring any unforeseen circumstances within the market.

The group repaid R99.2 million (2013: R74.6 million) in capital of its outstanding debt, which reduces the debt to equity ratio to an attractive and very conservative 22.9% (2013: 46.5%). This ratio augurs very well for the future prospects of raising debt capital for expansion and acquisitions.

Cash generated from operations increased 112.2% to R105.4 million (2013: R49.7 million), primarily due to the full year contribution from BHL including a reduction in investment of working capital by 20.2% to R30.5 million (2013: R38.2 million).

Trade and other receivables have increased in line with revenue growth across the divisions, with impairments approximating only 9.9% (2013: 18.5%) of gross debtors. Debtor’s days improved to 42.6 days (2013: 47.8 days) reflecting normalisation off a high base in 2013. Contingent consideration, which represents the profit warranty liability in respect of the acquisition of BHL, increased by 6.8% to R5.7 million (2013: R5.3 million). This movement reflects a payment of R1.4 million made during the year including a translation loss of R1.3 million and a R0.5 million notional interest charge at year end.

Trade and other payables increased marginally by 0.9% to R82.7 million (2013: R81.9 million) and is well managed.

Cash and short-term deposits increased 37.2% to R116.3 million (2013: R84.8 million), contributing to the reduction in the group’s net borrowing capacity utilised to 45.9% (2013: 93.1%). The sale of non-core and unutilised property, plant and equipment generated R70.6 million in cash.

Challenges aheadContinued market volatility, labour disputes and strikes, inflationary pressures and a subdued trading environment are expected for the coming year.

Inflationary measures such as interest rate increases would negatively impact the group’s margins in light of the debt funding utilised. Fuel price increases coupled with the decrease in the purchasing power of consumers would further contribute to the growing pressure on margins by our customers.

Notwithstanding these challenges, Cargo Carriers remains well positioned and focused on customer excellence and service delivery to ensure sustainable growth.

The regulatory and legislative environment remains challenging in light of the rapid pace of change, which creates significant obligation on the group to ensure compliance. Cargo Carriers will strive to ensure that the highest level of compliance is achieved in all of the jurisdictions in which we operate, engage with local management and the relevant statutory bodies.

ProspectsAcquisition of profitable enterprises which complement the group’s current service offering and strategy remains a key driver in achieving growth. The current gearing and financial position of the group ideally places us with sufficient capacity to fund both organic and acquisitive growth.

Ongoing cost control combined with effective working capital management will also ensure that acceptable returns are generated on funds employed. Further focus and effort is to be concentrated on those operations which are not performing optimally in respect of the group’s current expectations.

Management will continue to focus its energy on identifying opportunities which will deliver acceptable stakeholder value going forward.

Shaneel MaharajCFO

20 May 2014

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Operational performance

PowdersThe powders business showed impressive turnover growth from new business secured and increased volumes from existing customers. The operating profit growth was more muted because of higher than anticipated set-up and operating costs. Customer satisfaction through on-time delivery and exceptional SHEQ performance, secured our position as market leader.

Once again the powders business garnered a “2013 Branded Transporter of the Year” award from a major customer, confirming our position as a preferred partner in this specialised field.

OutlookAdapting to the expected structural changes within the cement and powders industry will be challenging. New entrants will require that service optimisation takes place through planning and co-ordination of services while controlling operating costs.

Cargo Carriers has a strategic advantage in infrastructure and geographic spread, and this will enable synergies to arise for the benefit of customers.

Our focus will be on organic growth without compromising existing client service. Growth opportunities exist in the Eastern and Western Cape.

INDUSTRIALCustomer satisfaction through on-time delivery and exceptional SHEQ performance, secured our position as market leader

The powders business’s exceptional growth in the past two years, is an enabler for the growth to continue into 2015.

The construction market and infrastructure expenditure are huge opportunities but also remain key risks. The primary risk mitigation is our unique service offering – it is more than just a product shift from A to B, it is providing comprehensive on-time tracking, a technology-enabled delivery process, and highly trained staff.

SteelCargo Carriers’ steel business maintained its pleasing contribution to overall results despite a three-month shutdown at a major customer through a plant malfunction. The knock-on effects within the steel supply chain continued even after production resumed, but the fleet flexibility enabled customer demands to be met.

OutlookThis is another sector that will benefit from infrastructure-development spend and Cargo Carriers has the specialised equipment and knowledge base in our people to capitalise on this.

Innovation and optimisation will be key elements in ensuring customer satisfaction and Cargo Carriers is confident that, through collaboration with our customers, this business will continue successfully.


ChemicalsThe performance of the chemicals business was constrained at both the revenue and operating profit levels. This resulted from labour unrest in the mining sector and lower than expected volumes from existing customers. Price competition in this SHEQ-intensive sector has placed pressure on margins.

OutlookIn-house infrastructure in terms of state-of-the-art facilities, chemical wash-bays and know-how in the chemical logistics sector will enable Cargo Carriers to take advantage of the growth when the sector conditions normalise.

GasWhile revenue of the gas business was maintained, the operating profit decreased through shift in customer expectations, but simultaneously contract renewals were achieved.

OutlookThis business requires very high levels of SHEQ, product knowledge and operational excellence. Cargo Carriers has proved its mettle over the last number of years and is well positioned to benefit from volume growth opportunities.

MiningThe group’s mining sector operations are mainly in Zambia and the industrial relations turmoil in South Africa had only a minor effect. The volatility in world commodity markets and changes in regulations in Zambia affected the volumes available for transport.

OutlookThe uncertainty in the demand for commodities in China will continue to affect the mining business. Certain policy changes in Zambia will increase product demand but deteriorating infrastructure is driving increases in operating costs.

FuelPerformance in the fuel business remained flat year-on-year. We continued to focus on bedding down and improving systems and procedures, which will enhance our services offering and facilitate strategic partnerships with regional branded distributors. The primary service requirements in the fuel market include extremely high levels of SHEQ compliance and on-time fuel delivery. Cargo Carriers’ growing capability in this regard positions the group to grow our presence in this market.

Our e-POD technology, which was introduced to the fuel distribution sector, has potential for use in other industries experiencing cash flow challenges emanating from slow and inaccurate proof-of-delivery processes. We are also currently introducing new equipment to maximise productivity and product security and prevent contaminations and spillages.

Our physically challenging Lesotho operations performed well during the year.

OutlookIn the new financial year we expect favourable organic growth in volumes from existing customers. We look forward to implementing new technology for existing clients which will provide greater efficiencies, more product security, and reduce shrinkage, again differentiating us from our competitors.

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Operational performance continued

SugarOur operation in the sugar industry experienced mixed fortunes during the year. The Zimbabwe-based Heavy Hauliers contract performed to expectations. However, operations in Swaziland continued to fall short of requirements despite a significant improvement in output compared to previous periods.

The underperforming Malelane branch in the Mpumalanga region was disposed as a going concern.

OutlookThe introduction of new and more reliable equipment and an improved technical and workshop infrastructure is expected to improve vehicle utilisation, which in turn will boost performance and customer satisfaction. The sugar industry will remain a challenging market due to its seasonality, weather influences and extreme price sensitivity.

AGRICULTURE Improved vehicle utilisation will boost performance in the coming year

The disposal of the Malelane branch is expected to benefit the operating results of this segment.

TomatoOur operation in the tomato division did not gain traction during the year. The disposal of the harvesting operations benefited the operating results.

OutlookWe are in ongoing negotiations with the customer to find a tangible solution for the business going forward.


Trading During the year the Trading business was awarded a new contract to transport both packed and bulk lubricants to Mozambique. However, export of fuels from South Africa to Zimbabwe and Zambia has substantially decreased given that fuel is far cheaper sourced from other countries such as Mozambique. In addition, the landed costs for the fuels from these regions is lower as transport charges are lower reflecting the shorter distances. There are still small quantities of petrol being exported from South Africa to southern DRC.

Other active contracts include the export of specialised piping used in the mining industry from the South African-based manufacturer to mines in Zambia. In addition we are transporting increasing numbers of both import and export containers from Durban to national destinations.

OutlookThe coal mining in the Moatize area of Mozambique, driven mainly by the increasing demand for coal in the Far East, potentially offers opportunities for road transport of products allied to this development which are sourced from South Africa. In addition, the increase of agricultural products for export from Zambia via certain South African ports is creating further road transport possibilities.

CargoSolutionsDuring the year CargoSolutions secured new consulting and system implementation projects in the printing and building materials industries, respectively.

SUPPLY CHAIN SERVICES PlanLogiX system provides an attractive option for smaller operations

OutlookWe have secured and started work on two new large consulting and system implementation projects for the year ahead, in the footwear and aerospace industries, respectively. CargoSolutions aims to secure another two similar projects during the new financial year.

Many, if not all manufacturing industries remain under pressure in the current economic climate. Consequently revenue is strained, and high working capital is a threat to adequate cash flow. Thus there is a growing need for the CargoSolutions’ supply chain optimisation interventions which are aimed at improving revenue based on higher product availability and reliability (due-date performance), while simultaneously reducing inventories for an improved working capital position.

CargoWareThe tough economic environment affected the group’s performance quite significantly as most businesses curtailed capital investment in software solutions. As measurement of success and financial returns derived from software solutions are often difficult to quantify it is seen as a ‘luxury’ spend and not a necessity.

The company extended its reach into Africa, deploying the FleetLogiX system within a transport company in Ethiopia and in addition, is currently rolling out the OnKey Maintenance management system.

OutlookThe PlanLogiX system provides an attractive option for smaller operations as customers are charged “per vehicle per month” and provided with easy exit clauses and no capital outlay. The solution creates annuity income for the company.

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ACHIEVEMENTS

❯Top 3 empowered transport companies

❯Sustainable owner/driver implementation

❯New owner-driver schemes set up in powders industry

TransformationTransformation in South Africa is not only seen as a moral imperative, but also a strategic one so as to ensure that Cargo Carriers remains relevant in the communities in which we operate. True empowerment takes place through the enablers of skills acquisition and job opportunities. Where the economy does not grow at a sufficient rate, empowerment stagnates.

Our extensive B-BBEE programme entrenches the group as one of the top three empowered logistics companies in South Africa. We progressed from level 7 to level 4 between 2008 and 2011, and since then have firmly retained our footing and continue to progress towards improving empowerment.

To this end we monitor our scorecard monthly, with proactive initiatives implemented to improve each pillar. Performance against B-BBEE targets is monitored through the monthly management reporting process and quarterly reporting to the B-BBEE steering committee.

2014 in reviewOwnershipAs a listed company our shares are traded in the public domain and there is a significant number of black individuals who own our shares directly. In addition there is a continual commitment to enhancing black shareholding in the company.

Our extensive B-BBEE programme entrenches the group as one of the top three empowered logistics companies in South Africa

Social performance

Management controlDuring the year, Cargo Carriers appointed Siza Mzimela as chairperson of the board. The composition of the board consist of four non-executive directors and three executive directors. Three of the board members are black.

Employment equity Cargo Carriers subscribes to the principle of employment equity and proactively implements policies that are in accordance with B-BBEE guidelines and requirements. In addition to internal training and development programmes, we are active in development programmes aimed at alleviating the industry-wide skills shortage.


Existing drivers within the group who meet the programme’s selection criteria are invited to enter into a three- or five-year service partnership. The criteria include demonstrating an understanding of contractual issues, operating parameters, accounting matters, budgeting principles, business management and communication. In addition, the driver is required to employ a co-worker to assist him to complete the required loads. The owner/driver must also be able to raise finance for his vehicle, with the backing of Cargo Carriers. Once in business the owner/driver must render a transportation service to the satisfaction of Cargo Carriers and its clients while complying with safety standards for driving and maintenance of vehicles.

In addition to assisting successful candidates in acquiring their own vehicles and equipment, the group further provides maintenance and financial administration support.

Other enterprise development initiatives included ensuring that qualifying enterprises receive payment over a shorter period. In addition we offer financial assistance to qualifying joint venture partners. The company achieved the maximum score for enterprise development.

The employment equity committee, which meets quarterly, monitors the group’s implementation of the employment equity plan and reviews and discusses strategies to ensure employment equity at Cargo Carriers now and in the future. The committee comprises unionised and non-unionised employees, as well as senior and middle management representatives.

The company employs 524 people (2013: 622) and the group employs 1 068 (2013: 1 027).

Skills development (Please see page 41 for further detail of our progress in terms of skills development.)

Preferential procurementWe are deeply committed to sustainable, responsible preferential procurement that actively supports black-owned local suppliers and in turn spurs employment creation.

Enterprise development Our owner/driver schemes have been in operation for over a decade and are considered to be some of the most successful in the industry. We subscribe to a careful selection process which is followed up with a rigorous monthly operational and financial mentoring process. As a result our productivity increases and real wealth creation objectives are achieved, making it a sustainable solution for all parties involved.

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ACHIEVEMENTS 2014

Employees❯Zero incidents of discrimination❯Management development programme for

branch managers ❯Bursaries awarded❯Provided 15 learnerships to disabled

employees ❯11 apprentices trained to qualify as diesel

mechanics❯Ongoing training interventions

Health and safety ❯Active in National Bargaining Council

Wellness Fund ❯Maintained OHSAS 18001 accreditation❯Maintained ISO 9001 accreditation❯Corporate wellness programme – Biggest

Loser❯Staff participation Discovery ‘702 Walk the

Talk’❯Preferred status (> 90%) SQAS audit at

Sasolburg branch❯Achieved 92% in “surprise” audit by

customer ❯Hygiene surveys conducted

Our service levels, innovation and expertise are our strengths as a business. Each of these hinge on the skills, experience and attitude of our employees and the company continuously works to improve these attributes.

Cargo Carriers is committed to achieving equity in the workplace by ensuring equal opportunities and fair treatment, eliminating unfair discrimination and implementing measures to redress past imbalances experienced by designated groups. Discrimination on any level is not tolerated. There were no reported incidents of discrimination during the year.

The table below outlines the employment equity progress in the group’s recruitment over the past three years:

2014 2013 2012

% % %

Black female 14 9 7Black male 79 82 88White female 2 3 1White male 5 6 4

We strive to attract and retain employees of the highest calibre to uphold the group’s performance and sustainability, and in parallel prioritise optimal working conditions and opportunities for development.

We strive to attract and retain employees of the highest calibre to uphold the group’s performance and sustainability

Our people


As we operate in a sector in which skilled employees such as artisans remain scarce, we have in place a programme to identify and train apprentices to enhance the skills pool.

The majority of employees are employed on a permanent basis and only in exceptional circumstances is temporary employment considered. (Medical aid and retirement fund benefits are not applicable to temporary salaried employees.) Managers are able to work flexible working hours within reason, and without compromising operational requirements.

Wage employees in South Africa are regulated by the three-year wage agreement signed between employer parties and the unions at the National Bargaining Council for Road Freight and Logistics Industry, which was implemented in March 2013. Employees within companies outside of South Africa are regulated by their respective employment and union agreements. There is no

differentiation with regards to benefits for the employees covered by the bargaining council’s collective agreements.

For salaried employees the group subscribes to “Deloitte’s Reward Survey”, which provides a guideline to market-related remuneration.

Performance management is a central tenet of optimal HR practice and monitoring of performance on an ongoing basis is vital. Employees excluding those falling within the ambit of the bargaining council received performance and career development reviews.

Labour relations The group supports every employee’s right to belong to a union and demonstrates this through an open and transparent relationship with all relevant unions and their representatives. Regular meetings are held between management, employees and the union representatives to address areas of concern.

SATAWU has majority representation within the company and has therefore been granted recognition rights in terms of the Labour Relations Act. 75% of our employees are covered by collective policies.

The group’s grievance and disciplinary policy is communicated to employees as part of their induction. It is also available through the intranet, CargoNet, and on request.

Skills development Cargo Carriers is committed to internal advancement of staff, particularly those from previously disadvantaged groups. This is reflected in our ongoing skills development programmes.

Our investment in training and development for the year equated to 3% of the skills development leviable amount.

For the most part training and development plans are guided by gaps identified during employee performance appraisals as well as by identified career paths. During the year a range of accredited and non-accredited courses were conducted across the group. Ongoing training such as defensive driving and in-cab

STRATEGIC FOCUS

❯Attract, develop and retain talented employees

❯Reduce employee turnover

❯Advance employment equity targets

❯Entrench a high performance culture

❯ Implement effective incentive schemes

❯Minimise road accidents and injuries

❯Legal and systems compliance

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Our people continued

assessments is conducted on an annual basis. Drivers underwent training in first aid, conveying dangerous goods by road, operating a combination vehicle and customer service.

Cargo Carriers has a fully equipped and accredited driver training centre in Sasolburg which enables our drivers to grow their skills for the benefit of the business and the wider industry. The training initiatives were well received and further roll out is planned.

During the year we introduced a successful management development programme for our branch managers. This programme was well received and enhanced the decision-making ability and management skills of the delegates.

In respect of the management trainees who have completed their studies in transport management, exposure across the business is offered for 18 months after which they can be appointed into appropriate positions should there be vacancies.

Apprenticeship programmeEleven diesel mechanics received apprenticeships. We offer apprenticeships for diesel mechanics with the intention of employing them at Cargo Carriers on completion of their training. In this vein two mechanics completed their studies and were appointed within the group.

LearnershipsDuring the year, 15 disabled learners benefited from learnerships at the group. These learners are unemployed individuals who are given an opportunity to acquire life-skills, that will enable them to become employable.

A junior internal auditor completed a two year internal audit learnership and was subsequently appointed in the Group.

Bursary schemeBursaries were awarded to students studying towards a transport management diploma. On completion of their studies they will be eligible for appointment as management trainees at the group, at which time they will follow the process outlined under the management programmes above.

Health and safetyKey performance indicators

CriteriaActual

2014Actual

2013

Number of fatalities 0 1

Lost-time incidents 11 9

Fatalities per 1 million kms 0 0.027

Injuries per 1 million kms 0.09 0.14

Accidents per 1 million kms 3.12 1.94

LTIFR per 200 000hrs* 0.72 0.80

LTSR per 200 000hrs* 14 9.3

*BHL claims were not included in 2013 report


We fully comply with the South African Occupational Health and Safety Act 85 of 1993, OHSAS 18001, ISO 9001 and the stringent requirements as set by our clients. During the year we maintained certification in both standards and successfully completed several audits by customers including a legal compliance audit.

In meeting the specified requirements of ISO 9001 and OHSAS 18001, consideration is given to the following:

• Group health and safety policy • Identification and acquisition of controls, processes, inspection techniques, human resources and skills needed to achieve quality

• Updating of quality control techniques

• Clarification of standards of acceptability for processes, products and services, including those that contain a subjective element

• SHEQ systems implemented by management in relation to the quality plan

A change management procedure was introduced during the year to ensure training is conducted when a new contract, product or equipment is introduced, in order to mitigate risk. Procedures were introduced to ensure all aspects of risk are addressed and that relevant employees attend training courses.

In terms of OHSAS 18001, the group has identified key safety and health focus areas and our response thereto as set out below:

KEY FOCUS AREA OUR RESPONSE

Reduction in road accidents and injuries

• Annual medical examinations to ensure fitness to work

• Employee safety induction programme

• Intensive training and testing for drivers on an annual basis

• Route risk assessments that form part of a driver’s journey plan

• Driver briefing and debriefing

Legal and systems compliance • SHEQ committees at branch level

• Internal audits

• Periodic external legal compliance audit

• Occupational hygiene surveys

• External audits by customersO

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All accidents and injuries are thoroughly investigated to identify causes and to ensure preventive measures are put in place. Risk assessments are re-evaluated on an ongoing basis and communicated to employees. Work instructions are implemented to minimise risk exposure. Monthly awareness talks are held at branches to promote safety.

During the year the following safety training took place: • First-aid training to drivers and branch appointees (external training)

• Fire fighting training to drivers including selected branch personnel (external training)

• SHE representative training to appointed representatives for branches (external)

• Vehicle roll-over training (external) • Hazchem training (internal) • Route risk assessment training (internal) • SHEQ induction training (internal)

Employee wellnessAs an active participant in the industry National Bargaining Council Wellness Fund, Cargo Carriers, in collaboration with Trucking Wellness, holds “employee wellness days” at various branches. These include the provision of health screening tests e.g. cholesterol, blood pressure, blood sugar, body mass index (BMI), HIV and eye screening. The aim is to detect any illnesses as early as possible so as to proactively advise employees on their wellbeing and encourage healthy habits and behaviour.

Annually we participate in the “Discovery Healthy Company Index” survey, which assesses the health status of our employees. Put simply, the survey establishes how healthy our workplace is, and what we can do to ensure the wellbeing of all employees. Motivated by the report from the previous year, we introduced wellness initiatives during the year in respect of blood pressure, blood sugar, weight and cholesterol.

HIV/Aids Formal risk assessments have been conducted at some branches to assess the potential impact of HIV/Aids on the group. We have in place an HIV/Aids policy to which all employees have access. The policy entrenches the following principles in the group’s approach:

• Respect for the rights of all employees • Non-discrimination against employees and applicants who are HIV positive

• Confidentiality of information regarding an employee’s HIV status

• Every effort to reduce and manage the impact of HIV/Aids on the workplace and on the lives of our employees and their dependants.

Voluntary testing programmes are conducted in conjunction with Trucking Wellness and Discovery Health at employee wellness days (as above). During the year posters were further distributed to branches covering different aspects of HIV/Aids, aimed at educating employees about the condition.

Our people continued


Environmental performance

ACHIEVEMENTS 2014

❯Maintained ISO 14001 accreditation

❯Zero non-compliance issues on the legal compliance audit conducted

STRATEGIC FOCUS

❯Reduction of emissions

❯Control of hazardous waste

❯Conservation of water and energy

❯Ongoing training of environmental awareness

We are conscious of the way in which we use environmental resources in our day-to-day operational activities. We consequently recognise our responsibility to manage and, where possible, reduce our environmental impact and carbon emissions through appropriate fuel and energy efficiency, pollution reduction and water conservation measures.

Relevant statutes with which we ensure compliance include the Hazardous Substances Act, National Environmental Management Act, Disaster Management Act and National Water Act. No fines in respect of environmental contraventions were levied on the group during the year. The group’s SHEQ policy outlines the procedure for identifying, eliminating and managing environmental issues that may arise. During the year we underwent independent evaluation of our systems related to ISO 14001 certification and a separate legal compliance audit. In addition internal bi-annual SHEQ audits were conducted.

Environmental training was conducted for our employees in the categories of basic environmental awareness and emergency response training.

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Environmental performance continued

Environmental key performance indicators2014 2013

Environmental incidents per 1 million kms 0.030 0.000 Total CO2e emissions (tonnes CO2e) 46 331.43 42 096.23Emissions per R million turnover (tonnes CO2e/R million) 63.18 55.25Emissions per thousand kilometres (tonnes CO2e/1 000 kms) 1.39 1.30Emissions per vehicle (tonnes CO2e/vehicle) 116.13 106.59

The acquisition of BHL is primarily responsible for the increased emmissions. We will endeavour to ensure that emissions are constantly monitored in line with our strategic intentions.

Total measured emissions

Electricity

Revenue earning fleet

Non-revenue earning fleet

Stationary fuels

94

3

1

2


In terms of ISO 14001, the group has identified key environmental focus areas and our response thereto as below:

KEY FOCUS AREA OUR RESPONSE

Climate change

Carbon footprint • Greenhouse gases inventory • Measuring our carbon footprint using greenhouse gas emission protocol (Emissions table: see page 46)

Energy management • Reducing emissions through driver training programmes to ensure optimal driving • Vehicles’ fuel usage monitoring and investigation on any abnormalities • Gas boiler heating for head office • Monitoring monthly electricity usage

Water consumption • Monitoring monthly water usage • Re-use of wash bay water at certain branches

Waste management

• Recycling by approved contractors of paper, electronic waste and used oil from workshops • Use of contractors registered with REDISA for used tyres • Annual testing of effluent water from wash bays to ensure conformity with municipal by-laws

Hazardous substance storage

• Adequate secondary containment • Suitable type and quantity of fire-fighting equipment within reasonable distance • Integrity test for underground tanks by respective oil companies • Municipal fire permits where applicable • Contracts with major spill-response companies and a trained emergency control centre to enable around-the-clock effective response to road accidents resulting in spillage

Environmental incidents

• Driver training on emergency response • Vehicle tracking for real time positioning and control enabling prompt response and reaction to incidents

• Contracts with major spill-response companies and a trained emergency control centre to enable around-the-clock effective response to road accidents resulting in spillage for spill response and rehabilitation if required

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SustainabilityO

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Group governance structure

THE BOARD

Responsibility

• The performance and affairs of the group, with full control over all underlying companies.

• Sound judgement and leadership with integrity based on the King III RAFT principles (see ethical leadership on page 52).

• Safeguarding Cargo Carriers’ sustainability.

• The board has four subcommittees, each with a formal charter and principles that were observed during the year, that assist in discharging its responsibilities. These group committees, listed below, play an important role in enhancing good corporate governance and monitoring and reporting on internal control environments in order to give assurance to the positive performance of the company:

Cargo Carriers Limited board of directors

• Mrs SP Mzimela# (48) – Chairperson • Mr AE Franklin# (55) • Mrs MJ Vuso# (40) • Mrs BB Fraser^ (53) • Mr MJ Bolton (56) – CEO Mr GD Bolton (58) – Executive

• Mr S Maharaj (39) – CFO

Audit and risk committee

Remuneration committee

Nominations committee

Social and ethics committee

• Mrs MJ Vuso – Chairperson • Mr AE Franklin

• Mrs SP Mzimela – Chairperson • Mr AE Franklin • Mrs MJ Vuso • Mrs BB Fraser

• Mrs SP Mzimela – Chairperson • Mr AE Franklin • Mrs MJ Vuso • Mrs BB Fraser

• Mrs MJ Vuso – Chairperson • Mrs BB Fraser

# Independent non-executive director^ Non-executive director

Independence Self-evaluation

Number of independent non-executive directors: 3/7

During the year an independent chairperson was appointed to the board in line with the recommendations of King III.

The board performed an assessment of the independence of each non-executive director and concluded that each independent non-executive director is independent in line with recommendations set out in King III.

During the year a review of the directors’ performance was conducted by the company secretary and each director undertook a self-evaluation exercise. As a whole, the board was satisfied that it operates effectively according to the approved board charter, which sets out its duties and responsibilities.


COMMITTEES

Members and meetings attendance

No. of independent non-executive directors Responsibilities

Audit and risk committee (for the full report see page 68)

Matsotso Vuso (chairperson)Siza MzimelaAlistair Franklin

By invitationMurray BoltonGarth BoltonShaneel MaharajBoitumelo Choche

3/3 • Appointment and assessment of independence of the external auditor

• Financial statements and accounting practices

• Internal financial control • Risk management • Evaluation of CFO • Integrated reporting and combined assurance model

• The audit and risk committee considers comprehensive reports from:

– the internal audit department – the external auditors

Remuneration committee

(for the full report see page 63)

Stan Chilvers (resigned 31 October 2013)Matsotso VusoSiza Mzimela (chairperson)Alistair Franklin

By invitation Murray BoltonGarth Bolton

3/3 • Assessing executive and non-executive directors’ remuneration

• Determining short and long-term incentives for group executives

• Determining remuneration strategy for group as a whole


Matsotso Vuso (chairperson)Siza Mzimela Alistair Franklin

By invitation Murray BoltonGarth Bolton

3/3 • Considering and investigating suitable candidates for board appointment

• Assessing balance of composition and skill on board

• Implementing induction training for new appointments who are inexperienced directors

Social and ethics committee

(for the full report see page 62)

Matsotso Vuso (chairperson)Beverley Fraser

By invitationPauline LegodiBoitumelo Choche

1/2 Monitoring and reporting on: • Social and economic development • Good citizenship • Environmental issues • Health and public safety • Consumer relations • Labour and employment • Wellbeing of employees

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Governance and risk

Ethical leadershipMeasuring ethics is a difficult science, as ethical conduct is an intangible with tangible consequences. Ethical management is informed by the group’s values as set out in the code of ethics (‘the code’). The code is incorporated into the group’s policies and procedures manual to which all employees are required to comply. The code was reviewed during the period and aligned with the new provisions of the Companies Act 71 of 2008.

To ensure a greater degree of certainty in this regard, the social and ethics committee has been tasked by the board to oversee this area, assisted by the internal audit function which conducts an annual ethical audit through qualitative employee questionnaires. No incidences of violation of the code were found during the year.

The company has formalised detailed statements on ethics, health, safety and environmental issues which are incorporated into the accreditation in terms of ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2007 standards. These have been in place for the full year, which accreditation is audited on a regular basis by international accreditation agencies.

We expect our directors to lead by example in conducting group business with the utmost integrity. The King III principles of responsibility, accountability, fairness and transparency are not however, restricted to our board, and every employee is expected to behave in accordance with these. The code therefore applies to all directors and employees in the group. It is accordingly communicated to all employees at least once a year by email and on notice boards.

The board, assisted by the social and ethics committee, ensures that the code is considered in strategic and operational decisions. Cargo Carriers’ disciplinary codes and procedures further accord with the code and give effect to its tenets. The code is reviewed annually. Where breaches of the code have occurred, disciplinary action is taken. The group’s anonymous fraud hotline is managed by Deloitte. Information about the ethics hotline is communicated to employees and displayed in the branches.

Corporate governanceStatement of compliance Cargo Carriers’ board is committed to responsibility, accountability, fairness and transparency in accordance with the King III report and applicable laws, reflecting integrity in all business dealings. The board aims to integrate this responsible corporate citizenship into the group’s business strategy, audits and assessments and to embed sound corporate governance practices into daily operations and processes for sustainability.

In line with the King III report’s ‘apply or explain’ approach, the directors will continue to state the extent to which the company applies good corporate governance principles to create and sustain value for stakeholders over the short, medium and long term, and to explain any non-application.

The board acknowledges that applying good corporate governance principles is a dynamic responsibility in line with developments in South Africa and internationally.

Cargo Carriers’ board and its committees are guided by individual charters, which are reviewed and updated annually in accordance with emerging guidelines and legislation. There is transparency and full disclosure from board committees to the board in the form of verbal reports by committee chairpersons on recent committee activities at board meetings, and the minutes of committee meetings are available to the board at any time.

The board is satisfied that all committees have complied with their respective responsibilities during the year.

Tax committeeThe tax committee is a subcommittee of the audit and risk committee and is chaired by the CEO. This committee comprises the executive directors and management and the company’s auditors attend by invitation. This committee was established to ensure that the company complies with all relevant fiscal legislation and that the affairs of the group are handled in a tax-effective manner.


The management committee meets on a monthly basis and is chaired by the CEO. The committee discusses matters of significance to the group, reviews results and ensures that matters requiring the attention of the board are brought to its attention timeously. The committee deals with all the management issues of the group and ensures that policies are adhered to. It recommends to the board all strategies and policies and is responsible for their subsequent implementation. There is a detailed delegation of authority in place which manages the activities of the committee members.

Management committee

•

Management committee

• MJ Bolton (56) – CEO and chairman

• GD Bolton (58) – Executive • S Maharaj (39) – CFO • MA Scott (74) – Trading division

• P Legodi (45) – Human resources

• A Jansen van Vuuren (44) – Marketing

• D Janse van Rensburg (54) – IT and supply chain

Meeting attendance Attendance at board and committee meetings is set out below:

NON-EXECUTIVE DIRECTORS BOARD

AUDIT AND RISK REMUNERATION NOMINATIONS#

SOCIAL AND

ETHICS

SG Chilvers – resigned 31 October 2013 4 1 (by invitation) 2 2 –

SP Mzimela – appointed chairperson 1 November 2013 4 4 2 2 –

AE Franklin 3 3 2 2 –

MJ Vuso 4 4 2 2 1

BB Fraser 4 1 (by invitation) 2 2 1

EXECUTIVE DIRECTORS BOARD

AUDIT AND RISK REMUNERATION NOMINATIONS#

SOCIAL AND

ETHICS

MJ Bolton 4 4 (by invitation) 2 (by invitation) 2 (by invitation) –

GD Bolton 4 4 (by invitation) 2 (by invitation) 2 (by invitation) –

S Maharaj 4 4 (by invitation) – – –

# The nominations committee meetings were held telephonically and via email during the year. No formal minutes were prepared as the decision was referred to the board for approval.

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Governance and risk continued

The board The board ensures effective control over the group by continuously monitoring the implementation of strategies, policies and goals which are prepared by executive management based on the group’s core competencies, existing skills, overarching values and ultimate goal of value creation. Cargo Carriers’ unitary board comprises seven directors, three of whom are executives, one of whom is non-executive, and three of whom are independent non-executives.

With effect 31 October 2013 Stan Chilvers resigned as chairman and Siza Mzimela, an independent non-executive director, was appointed in his stead. In addition, effective the same date Garth Bolton stepped down as joint CEO, but continues to serve as an executive director.

The board meets quarterly with additional meetings as and when necessary. Attendance is set out on page 53.

The responsibilities of the chairperson and CEO, and those of other non-executive and executive directors, are clearly separated to ensure a balance of power and prevent any one director from exercising unfettered discretion. The chairperson provides leadership and guidance to the board and encourages proper deliberation on all matters requiring the board’s attention while obtaining input from other directors. She plays an active role in setting the agenda for board meetings and presides over the group’s shareholder meetings.

The CEO is responsible for day-to-day operations and the controlled implementation of strategic and operational decisions. In this regard he is assisted by the former joint CEO and current executive director Garth Bolton and the CFO.

The independent non-executive directors are high merit individuals who objectively contribute a wide range of industry skills, knowledge and experience to the board’s decision-making process. (See page 22.) These directors are not involved in the daily operations of the company.

Board processesRotation of directors In terms of King III and the group’s memorandum of incorporation, one-third of the board’s non-executive directors must retire from office at each annual general meeting on a rotation basis. Retiring directors may make themselves available for re-election, provided that they remain eligible as required by the memorandum of incorporation and in compliance with the JSE Listings Requirements.

Accordingly, Siza Mzimela and Alistair Franklin will offer themselves for re-election at the upcoming annual general meeting.

Succession planning While there is no formal succession planning in place, the board is confident that the necessary candidates are available. During the year the chairperson retired and the role was filled immediately by an existing independent non-executive director.

Share dealings and conflicts of interestAll directors and senior executives with access to financial and any other price-sensitive information are prohibited from dealing in Cargo Carriers’ shares during ‘closed periods’, as defined by the JSE, or while the company is trading under cautionary. The company secretary informs all directors by email when the company enters a ‘closed period’.

At all other times directors are required to disclose any proposed share dealings in the company’s securities to the chairperson for approval. The group’s sponsor ensures that share dealings are published on SENS.

No instances of non-compliance were reported during the year.

Support functions Independent advice All independent non-executive directors have unrestricted access to management at any time as well as to the group’s external auditors. Further, all directors are entitled to seek independent professional advice on any matters pertaining to the group as they deem necessary and at the group’s expense.


supported by group control and the audit and risk function. This flexible approach has ensured the commitment and buy-in of the group’s senior management and so entrenched risk management as a basic operational practice. It further ensures that there is clear accountability for risk management, which is a key performance area of line managers throughout the group. The requisite risk and control capability of responsible management is assured through board challenge and appropriate management selection and skills development.

The process of risk management is designed to identify internal and external threats to the business and to assist management in prioritising their response to those risks. Continuous monitoring of risk and control processes, across headline risk areas (group) and other business-specific risk areas (divisional), provides the basis for regular and exception reporting to business management, the audit and risk committee and the board. Output from the risk management process is used to plan internal audit activities. Risk control frameworkRisk tolerance levels are set by senior management as a determination of the levels of risk deemed acceptable, tolerable or unacceptable to the group, which includes determining the appropriate response to and responsibility for events that go beyond the determined risk appetite. This decision making takes account of:

• Stakeholder expectations • Financial strength • Attitude of the board and senior management to risk taking

• Business plan and strategy • Costs of risk control, financing (of losses) and risk management administration

Operating within risk tolerance levels provides management greater assurance that the group overall will remain within its risk appetite, which in turn provides a higher degree of comfort that the group will be well positioned to achieve its strategic objectives. The audit and risk committee is responsible for overseeing the group’s risk management programme and reporting to the board, which retains ultimate responsibility for the control and mitigation of risk. The day-to-day responsibility for risk management resides with management.

Company secretary Arcay Client Support (Pty) Limited is the appointed company secretary and the board is satisfied that the directors of Arcay Client Support are appropriately qualified, competent and experienced to fulfil this function. In accordance with the requirements of the Companies Act and JSE Listings Requirements, as read with King III, they are not directors of the company and therefore have an arm’s-length relationship with the board. As required in terms of the JSE Listings Requirements, the board has satisfied itself by way of an informal review.

It is the responsibility of the company secretary to monitor changes and developments in corporate governance and, together with the executive directors, to keep the board updated in this regard. The board reviews any changes and appropriate measures are implemented to comply in such a way to support sustainable performance. The company secretary ensures the company complies with all current and applicable regulations and legislation. In doing so they liaise closely with the company’s sponsor.

The company secretary is appointed and removed by the board. All directors have access to the advice and services of the company secretary and to company records, information, documents and property in order to participate meaningfully in board meetings. The certificate required to be signed in terms of section 88 of the Companies Act appears on page 66 of the annual financial statements.

Risk managementHow we manage risk and leverage opportunityWe recognise that the management of business risk is vital to our continued growth and success. The Group Audit and Risk Manager is responsible for risk at group level and assists the board in this regard.

The board’s policy on risk management extends to all significant business risks that could undermine the achievement of the group’s business objectives. These include financial risk, operational risk including safety, health, fraud and corruption risk, and compliance risk.

Our overall system of risk management is designed to enable our divisions to adapt their risk-management processes to their specific circumstances, while guided by standardised policies and guidelines on risk, and

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Internal audit and controls The group has an internal audit department that reports directly to the audit and risk committee, with responsibility for reviewing and providing assurance on the adequacy and effectiveness of the internal control environment across all of Cargo Carriers’ operations.

Internal audit follows a risk-based audit approach and its function is governed by a charter, which outlines its authority, independence, role in enterprise risk management, audit scope and audit planning, reporting and assessment. The function’s mandate and annual audit coverage plans have been approved by the audit and risk committee, to which the teams have unhindered access. The internal audit function also has unhindered access to the group chairperson.

The head of internal audit is responsible for reporting and following up on findings with management and the audit and risk committee on a regular basis. The function co-ordinates internal audit teams at each of the group’s divisions, all of which comprise appropriate, qualified and experienced employees supplemented if necessary by external practitioners on specified terms.

A summary of audit results and risk management information was presented quarterly to the audit and risk committee and group senior management during the year. Internal audit projects were completed across a variety of financial, operational, strategic and compliance-related business processes in all divisions and functions. In addition, the internal audit department responded to a number of management requests to investigate alleged breaches of our business principles.

A self assessment exercise of the internal audit function was undertaken during the year and the results were presented to the audit and risk committee.

External audit The independent external auditors – Ernst & Young Inc. – as recommended by the audit and risk committee and appointed by the group’s shareholders, are responsible for reporting on whether the annual financial statements are fairly presented in compliance with IFRS and the Companies Act. The preparation of the annual financial statements remains the responsibility of the directors.

The board, assisted by the audit and risk committee, regularly meets with the external auditors and formally evaluates their independence annually.

IT governance The board acknowledges its overall responsibility for IT governance and business continuity. The IT director fulfils the role of CIO, and is a member of EXCO.

An IT governance framework is currently being evaluated for implementation during the coming year. An IT governance charter will follow. However, an internal IT controls’ framework and all associated policies are already in place. The framework and individual policies are reviewed by the company auditors on an annual basis. In terms of this a business continuity and disaster plan is in place, fed by a risk analysis of business process as dependent on IT systems which was conducted during the year.

The new systems rolled-out during the year included: • New HR/Payroll system

A new system has been selected and is currently being implemented. The system will ensure the integrity of the wage process through deploying biometric fingerprint readers at all operations to further ease the task of capturing accurate wage-related data.

• New accident management systemA new system has been developed and deployed to centrally capture all relevant information pertaining to incidents and accidents. This will ensure that the risks associated with insurance and third party claims are properly managed.

• Financial accounting system upgrade The financial system was upgraded to ensure compliance and avoid risks of ageing software.

• Fixed assets software upgradeA project was started to adopt the fixed assets module of the upgraded financial accounting system, rather than the third party product which was not fully integrated.

• Fuel management system upgrade This was undertaken to ensure accuracy of calculations and proper system administration functionality.



Legal compliance The board is responsible for ensuring compliance with laws and regulations. New legislation that impacts the group is discussed at board meetings.

Application of King III and Companies ActChapter 2 of the company’s King III compliance checklist is set out below. The full King III compliance checklist can be found on our website.

CHAPTER 2: BOARDS AND DIRECTORS RESPONSIBILITY

2.1 The board should act as the focal point for and custodian of corporate governance.

The board is the focal point and custodian of corporate governance at Cargo Carriers. In accordance with the board charter the board is committed to the highest standards of corporate governance.

(See board charter on our website.)

The board

2.2 The board should appreciate that strategy, risk, performance and sustainability are inseparable.

The board, in accordance with the board charter, and all committee terms of reference reviewed in line with King III, is responsible for aligning the strategic objectives, vision and mission with performance and sustainability considerations.

The group’s formalised risk management process takes into account the full range of risks including strategic and operational risk, as well as performance and sustainability.

The board evaluates the risk report quarterly

2.3 The board should provide effective leadership based on an ethical foundation.

The board provides effective leadership and is committed to the highest levels of corporate governance as a key driver of sustainability.

Monitored by the social and ethics committee

2.4 The board should ensure that the company is and is seen to be a responsible corporate citizen.

See 2.3 above. Monitored by the social and ethics committee

2.5 The board should ensure that the company’s ethics are managed effectively.

The social and ethics committee is tasked with ensuring that the company’s ethics are managed effectively. In addition to ensuring adherence to the code of ethics, the social and ethics committee aligns itself with the goals of the United Nations Global Compact Principles, the OECD Guidelines on Corruption and the Employment Equity Act.

The social and ethics committee meets to assess compliance and progress with goals

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2.6 The board should ensure that the company has an effective and independent audit committee.

The audit and risk committee is chaired by an independent non-executive director. It further consists of one independent non-executive director. The board is currently in the process of interviewing suitable candidates for two independent non-executive director vacancies and is expecting to finalise such appointments before the next interim report. The board is satisfied with their levels of independence in accordance with directors’ mandatory quarterly disclosures. The board is satisfied that the audit and risk committee is effective. The audit committee met 4 times during the financial year.

The board

2.7 The board should be responsible for the governance of risk.

The board’s audit and risk committee has conducted an evaluation of governance risk and is satisfied with the effective management of risk.

Risk management plan was developed

2.8 The board should be responsible for information technology (IT) governance.

The board ensures that IT governance is an integral part of corporate governance.

IT director

2.9 The board should ensure that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards.

The board ensures that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards within South Africa. The applicable laws were prioritised and actions will be rolled out in FY2015.

Group audit and risk manager

2.10 The board should ensure that there is an effective risk-based internal audit.

The group has an internal audit department that reports directly to the audit and risk committee, with responsibility for reviewing and providing assurance on the adequacy and effectiveness of the internal control environment across all of Cargo Carriers’ operations.

Group audit and risk manager

2.11 The board should appreciate that stakeholders’ perceptions affect the company’s reputation.

The board of Cargo Carriers recognises the importance of developing and nurturing positive and stable relationships with key stakeholders as a key driver of business success. The value we place on our stakeholders is articulated in our mission statement.

Board manages direct relationships with key stakeholders




2.12 The board should ensure the integrity of the company’s integrated report.

The social and ethics committee is responsible for oversight of the integrated report process, while the audit and risk committee recommends the integrated report to the board once approved by it.


2.13 The board should report on the effectiveness of the company’s system of internal controls.

The board continually ensures the soundness of the company’s system of internal controls through independent review by internal and external audit.


2.14 The board and its directors should act in the best interests of the company.

The board acknowledges its role as a trustee on behalf of the shareholders. In addition to the code of ethics, the members of the board are governed by a formal policy in respect of dealing in Cargo Carriers shares as well as disclosure related to third-party transactions.

Policy on insider trading is in place where senior managers are forbidden to trade in Cargo Carriers shares in closed periods

2.15 The board should consider business rescue proceedings or other turnaround mechanisms as soon as the company is financially distressed as defined in the Act.

The board monitors the company’s solvency and liquidity. Business rescue has not been required.

The group’s ability to continue as a going concern is assessed annually by the audit and risk committee

2.16 The board should elect a chairman of the board who is an independent non-executive director. The CEO of the company should not also fulfil the role of chairman of the board.

The chairperson, Siza Mzimela, is an independent non-executive chairperson and the roles of CEO and chairperson are clearly defined.

The two roles operate under distinct mandates as approved by the board

2.17 The board should appoint the chief executive officer and establish a framework for the delegation of authority.

The board has appointed Murray Bolton as CEO and a delegation of authority framework is reviewed regularly.

The board

2.18 The board should comprise a balance of power, with a majority of non-executive directors. The majority of non-executive directors should be independent.

The board comprises a majority of non-executive directors; three independent non-executives, one non-executive and three executive directors. The composition of the board ensures the balance of power with no single member having the majority influence.

The board

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2.19 Directors should be appointed through a formal process.

A formal and transparent appointment process is in place. One-third of directors retire on a rotational basis.


2.20 The induction of and ongoing training and development of directors should be conducted through formal processes.

Directors are kept up to date through regular briefings and continuing professional development programmes.

Board committees

2.21 The board should be assisted by a competent, suitably qualified and experienced company secretary.

Arcay Client Support (Pty) Limited is an independent company secretarial practice providing services to numerous JSE-listed companies and was appointed in compliance with the Companies Act 71 of 2008, the JSE Listings Requirements and the recommendations of King III.

Suitability of company secretary is assessed annually by the board

2.22 The evaluation of the board, its committees and the individual directors should be performed every year.

The chairperson of the company performs an internal board assessment annually.

The board committees

2.23 The board should delegate certain functions to well-structured committees but without abdicating its own responsibilities.

The board delegates certain functions without abdicating its own responsibilities to the following committees:

• Audit and risk committee • Remuneration committee • Nominations committee • Social and ethics committee

Members are elected by the board and the committees act in accordance with the approved terms of reference of each committee



2.24 A governance framework should be agreed between the group and its subsidiary boards.

A governance framework between the group and its subsidiary companies is agreed and is in effect.


2.25 Companies should remunerate directors and executives fairly and responsibly.

The remuneration philosophy reflects Cargo Carriers’ commitment to best practice. The group’s remunerations committee determines the remuneration policy on executive and senior remuneration in line with the group’s remuneration philosophy and strategy. The total remuneration packages of the executive directors and senior management are subject to annual review and benchmarked against external market data, taking into account the size of the company, its market sector and business complexity. A detailed remuneration report is contained in the integrated report on page 63.

Remuneration philosophy in line with previous years and is recommended by the remuneration committee to the board for approval

2.26 Companies should disclose the remuneration of each individual director and certain senior executives.

The remuneration of directors and prescribed officers is disclosed in the integrated report on page 91.

Annual disclosure

2.27 Shareholders should approve the company’s remuneration policy.

Shareholders consider and endorse, by way of a non-binding advisory vote, the company’s remuneration policy at the annual general meeting.

Policy tabled at annual general meeting

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Social and ethics committee report

The social and ethics committee’s responsibilities encompass monitoring and regulating the impact of the group on its stakeholders. Although management is tasked with overseeing the day-to-day operational sustainability of their respective areas of business, and reporting thereon to the social and ethics committee, the board remains ultimately responsible for group sustainability.

The committee is chaired by Matsotso Vuso and further comprises Beverley Fraser, Pauline Legodi and Boitumelo Choche. Details of meeting attendance are on page 53.

The purpose of the committee is to regularly monitor the group's activities, with regard to any relevant legislation, other legal requirements or prevailing codes of best practice, in respect of the following:

• Social and economic development, including the group’s standing in terms of the:

– 10 principles set out in the United Nations Global Compact Principles

– OECD recommendations regarding corruption – Employment Equity Act – Broad-Based Black Economic Empowerment Act

• Good corporate citizenship, including the group’s: – promotion of equality, prevention of unfair discrimination, and reduction of corruption

– contribution to development of the communities in which our activities are predominantly conducted or within which our products or services are predominantly marketed

– record of sponsorship, donations and charitable giving

• Environment, health and public safety, including the impact of the group’s activities and its services

• Consumer relationships, including the group’s advertising, public relations and compliance with consumer protection laws

• Labour and employment, including the group’s: – standing in terms of the International Labour Organisation Protocol on decent work and working conditions

– employment relationships, and our contribution towards the educational development of our employees

• A King III requirement with respect to ethical leadership and ethical behaviour.

The committee is satisfied that overall principles laid down by the King Code of Governance for South Africa (King III) and the Companies Act 2008 have been adhered to, the committee’s terms of reference was approved by the board of directors of the company.

Matsotso VusoChairperson

20 May 2014


Remuneration report

The remuneration committee assists the board in ensuring that group remuneration and recruitment is aligned with overall business strategy, with the aim of enabling Cargo Carriers to attract and retain personnel who will create long-term value for all stakeholders.

The committee comprises three independent non-executive directors and is chaired by independent non-executive director Siza Mzimela.

In accordance with the committee’s charter, it is also responsible for the oversight of all aspects of remuneration and determining the group’s strategy in this regard. The charter was revised during the year.

Remuneration policy Cargo Carriers strives to remunerate its employees at market related salaries and the remuneration committee and is guided by one or more appropriate annual salary surveys produced by industry specialists. Positions/jobs are evaluated using a mechanism designed and provided by an external expert, with this job grading exercise being undertaken every two to three years. The remuneration committee, in consultation with management, design all incentive schemes, (long and short term), to:

• Promote growth in quality sustainable earnings • Align shareholder and management objectives • Enhance the ability to recruit and retain key employees and management.

Senior management salaries Guaranteed remuneration, on a cost to company basis, is aligned to the 50th percentile in terms of the market information available from time to time.

The structure and basis for performance based incentives will be recommended by the remuneration committee and approved by the board from time to time to be aligned with company strategy and current shareholder and management objectives.

All increases, after being recommended by the CEO, have to be approved by the remuneration committee. Once an average overall increase is agreed to by the remuneration committee, the executive committee determines individual application of increases, with variances being due to higher or lower performance ratings based on regular formal reviews.

Non-executive directors’ fees are set out below:

ChairpersonR

Other directors/members of other

committeesR

Board meetingRetainer per month (maximum) 18 333 7 500 – 8 333Attendance fee per meeting 12 000 9 000 – 10 800

Audit committeeRetainer per month (maximum) Nil NilAttendance fee per meeting 6 000 5 400 – 6 000

Remuneration and nominations committeesRetainer per month (maximum) Nil NilAttendance fee per meeting 6 000 Nil

Social and ethics committeeRetainer per month (maximum) Nil NilAttendance fee per meeting Nil Nil

Prescribed officersThe remuneration of prescribed officers (excluding Cargo Carriers’ executive directors) for the year ended 28 February 2014 is set out in note 4 to the annual financial statements.

DirectorsThe remuneration packages for executive directors and the attendance fee structure for non-executive directors is set out in detail in note 4 to the annual financial statements.

Siza MzimelaChairperson

20 May 2014

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Visibility

Upgrading and expanding our fleet

Achievement and maintenance of stringent SHEQ standards

Improving our B-BBEE rating

Delivering custom-tailored logistics and outstanding service levels

Innovative programmes

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DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

DECLARATION BY THE COMPANY SECRETARY

TO THE SHAREHOLDERS OF CARGO CARRIERS LIMITEDThe directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa.

The directors’ responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

The directors are satisfied that such internal controls systems have been maintained during the year.

The directors have made an assessment of the group’s and company’s ability to continue as a going concern and there is no reason to believe that the group and company will not be going concerns in the year ahead.

In terms of section 268G(d) of the Companies Act in South Africa, I certify that the company has lodged with the Registrar of Companies all such returns required by the Companies Act and that such returns are true, correct and up to date.

Arcay Client Support (Pty) LimitedCompany secretary

20 May 2014

The independent external auditors are responsible for reporting on whether the consolidated and separate financial statements are fairly presented in accordance with the applicable financial reporting framework.

The consolidated and separate financial statements of the group were approved by the board of directors and are signed on its behalf by:

SP Mzimela MJ BoltonChairperson Chief executive officer

20 May 2014


INDEPENDENT AUDITORS’ REPORT

TO THE SHAREHOLDERS OF CARGO CARRIERS LIMITEDWe have audited the consolidated and separate financial statements of Cargo Carriers Limited set out on pages 72 to 114, which comprise the statements of financial position as at 28 February 2014, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

DIRECTORS’ RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTSThe company’s directors are responsible for the preparation and fair presentation of these consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

AUDITORS’ RESPONSIBILITYOur responsibility is to express an opinion on these consolidated and separate financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated and separate financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINIONIn our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of Cargo Carriers Limited as at 28 February 2014, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards, and the requirements of the Companies Act of South Africa.

OTHER REPORTS REQUIRED BY THE COMPANIES ACTAs part of our audit of the consolidated and separate financial statements for the year ended 28 February 2014, we have read the directors’ report, the audit and risk committee’s report and the report of the company secretary for the purpose of identifying whether there are material inconsistencies between these reports and the audited consolidated and separate financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports we have not identified material inconsistencies between these reports and the audited consolidated and separate financial statements. However, we have not audited these reports and accordingly do not express an opinion on these reports.

Ernst & Young Inc.Director – Sarel Jacobus Johannes StrydomRegistered AuditorChartered Accountant (SA)

20 May 2014

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STATUTORY DUTIESIn execution of its statutory duties during the past financial year, the audit and risk committee:

• Nominated for appointment as auditor, Ernst & Young Inc. who, in our opinion are independent of the company

• Determined the fees to be paid to Ernst & Young Inc. as disclosed in note 1

• Determined Ernst & Young Inc. terms of engagement • Believes that the appointment of Ernst & Young Inc. complies with the relevant provisions of the Companies Act and King III

• Developed and implemented a policy setting out the categories of non-audit services for the external auditors

• Received no complaints relating to the accounting practices and internal audit of the company, the content or auditing of its financial statements, the internal financial controls of the company, and other any related matters

• Made submissions to the board on matters concerning the company’s accounting policies, financial control, records and reporting and we concur that the adoption of the going-concern premise in the preparation of the financial statements is appropriate.

DELEGATED DUTIESOversight of risk managementThe committee has:

• Received assurance that the process and procedures followed by the group audit and risk manager are adequate to ensure that financial risks are identified and monitored

• Satisfied itself that the following areas have been appropriately addressed:– Financial reporting risks– Internal financial controls– Fraud risks as it relates to financial reporting– Reviewed tax and technology risks, in particular how

they are managed.

The audit and risk committee is pleased to present its report for the financial year ended 28 February 2014. The committee’s duties and objectives are mandated by the board, with the specific inclusion of its responsibilities in terms of the Companies Act, 71 of 2008 and the JSE Listings Requirements, which includes assisting the board through advising and making submissions on financial reporting, oversight of the risk management process and internal financial controls, external and internal audit functions and statutory and regulatory compliance of the company. This allows the committee to discharge its statutory and other board delegated duties as outlined in this report, in compliance with the committee’s terms of reference.

TERMS OF REFERENCEThe committee has adopted formal terms of reference that have been approved by the board of directors, and has executed its duties during the past financial year in accordance with these terms of reference.

COMPOSITIONThe committee comprises three independent non-executive directors, Mrs MJ Vuso CA(SA) (chairperson), Advocate AE Franklin and Mrs SP Mzimela. Mrs SP Mzimela was appointed as chairperson of the board on 31 October 2013 and a recruitment process to fulfil two further appointments to the committee so as to enable Mrs Mzimela to step down as a member of the committee in accordance with the principles of King III and good corporate governance, is currently underway. This process is expected to be completed prior to the publication of the interim results for the period ending 31 August 2014.

Details of the audit and risk committee members are set out in the directors’ report. The CEO, CFO, the group audit and risk manager and representatives from the external auditors attend the committee meetings by invitation. The internal and external auditors have unrestricted access to the audit and risk committee.

MEETINGSThe committee held four meetings during the period. Details of the member’s attendance at meetings are set out on page 53 of this report. Closed sessions with key parties including group audit and risk, external audit, and management are held from time to time to ensure confidential discussions take place.

AUDIT AND RISK COMMITTEE REPORT


ASSESSMENT OF THE EFFECTIVENESS OF INTERNAL CONTROLSThe committee performed the following review during the period:

• The effectiveness of the company’s system of internal financial controls including receiving assurance from management, internal audit and external audit

• Significant issues raised by the internal and external audit process

• Policies and procedures for preventing and detecting fraud.

Nothing came to our attention to indicate that internal controls are not working effectively.

REGULATORY COMPLIANCEThe audit and risk committee has complied with all applicable legal and regulatory responsibilities.

EXTERNAL AUDITBased on processes followed and assurances received, nothing has come to our attention with regard to the external auditor’s independence. Details of the external auditor’s fees are set out in note 1. Based on our satisfaction with the results of the activities outlined above, we have recommended to the board that Ernst & Young Inc. should be reappointed for 2014.

The committee reviews the use of external auditors for non-audit services. It is the policy that non-audit services must not impinge upon the independence of the auditors in any way. During the current year, the non-audit services provided by the external auditors comprise:

• Attendance at the tax committee meetings to ensure compliance with an ever changing tax regime.

INTERNAL AUDITThe committee is mandated to ensure that the internal audit function is independent, properly resourced and effective within the group. The in-house group audit and risk function operates within a scope of an internal audit charter and an annual plan as approved by the committee. The committee assessed the performance of the group audit and risk manager and encourages co-operation between external and internal audit. The group audit and risk manager reports functionally to the audit and risk committee and had unrestricted access to the audit committee chairman.

EVALUATION OF EFFECTIVENESS OF THE FINANCE FUNCTIONWe believe that Mr Shaneel Maharaj CA(SA) HDipTax, the CFO of the group, possesses the appropriate expertise and experience to meet his responsibilities in that position as required by the JSE. We are further satisfied with the experience of the group financial manager and general manager finance. In making these assessments, we have obtained feedback from both external and internal audit. Based on the processes and assurances obtained, we believe that the accounting practices are effective.

INTEGRATED REPORTThis committee, together with the social and ethics committee, performs an oversight role with regard to the integrated annual report, the reporting process and the information disclosed in the report to ensure its reasonable accuracy and consistency. The information is reviewed and ultimately interrogated by the board to ensure the board is satisfied with the integrity of the report.

GOING CONCERNBased on the results of the committee’s quarterly assessment of the solvency and liquidity of the group and the year-end going-concern review, the committee is comfortable with its recommendation to the board regarding the annual financial statements and that the group will be a going concern for the upcoming financial year.

On behalf of the audit and risk committee

Matsotso VusoAudit and risk committee chairperson

20 May 2014

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results of their operations and cash flows for the year then ended.

The directors are satisfied that the group has adequate resources to continue in operational existence for the foreseeable future and accordingly continue to adopt the going-concern basis in preparing the financial statements.

Share capitalThe authorised and issued share capital of the company remained unchanged compared to 2013. At the year end, the shares of the company were held by the following categories of shareholders:

2014 %

2013 %

Non-public• Holding company 64.3 64.3• Share Incentive Trust 3.0 3.0• Directors 0.7 0.7

68.0 68.0Public – 727 shareholders (2013: 740) 32.0 32.0

100.0 100.0

The following shareholders were the registered holders of 5% or more of the issued share capital of the company, at year end:

The directors present their report for the year ended 28 February 2014.

NATURE OF BUSINESSThe group provides logistics, transport, aviation charter, and related IT solutions to a broad range of customers within sub-Saharan Africa. The provision of these services is enabled by a highly skilled workforce, a large infrastructure of operating branches, and significant logistics management and IT expertise.

FINANCIAL REPORTINGThe directors are required by the Companies Act No 71 of 2008, as amended (the Act), to produce financial statements, which fairly present the state of affairs of the group and company as at the end of the financial year and the profit or loss for that financial year, in conformity with International Financial Reporting Standards (IFRS) and the Act.

The financial statements as set out in this report have been prepared by management in accordance with IFRS and the Act and are based on appropriate accounting policies supported by reasonable and prudent judgements and estimates.

The directors are of the opinion that the financial statements fairly present the financial position of the group and company as at 28 February 2014 and the

Number of shares

2014 % 2013 %

Cargo Carriers Holdings (Pty) Limited 12 865 837 64.3 12 865 837 64.3BB Invest Co (Pty) Limited 2 861 032 14.3 2 861 032 14.3Mr Allan Hurwitz 1 270 000 6.4 1 217 600 6.1

DIRECTORS’ REPORT

Holding companyCargo Carriers Holdings Proprietary Limited is the company’s ultimate holding company.

Share Incentive TrustThe Share Incentive Trust held 593 710 (2013: 593 710) unallocated shares at year end. At 28 February 2014 the trust had not entered into any agreements to sell shares to participants in terms of the trust deed and there were no outstanding or issued share options. In terms of the

rules of the scheme not more than one million shares may be issued to participants. To conform to the requirements issued by the JSE Limited, the group consolidates the trust.

Results of operationsThe results of the operations are dealt with in the consolidated financial statements, segmental analysis and commentary.


DividendsA gross final cash dividend (number 46) of 40 cents per share (2013: 20 cents) has been declared for the year ended 28 February 2014. The dividend has been declared out of income reserves.

The dividend will be subject to a dividend withholding tax rate of 15% or 6 cents per ordinary share. As no STC credits are available for utilisation, shareholders, unless exempt or qualifying for a reduced withholding tax rate, will receive a net dividend of 34 cents per share.

Cargo Carriers tax reference number is 9900156713 and the number of ordinary shares in issue at the declaration date is 20 000 000.

The salient dates for the dividend will be as follows:

Last date to trade ‘cum’ dividend Friday, 6 June 2014

Shares commence trading ‘ex’ the dividend Monday, 9 June 2014

Record date (date shareholders recorded in share register) Friday, 13 June 2014

Payment date Tuesday, 17 June 2014

Shareholders may not dematerialise or rematerialise their share certificates between Monday, 9 June 2014 and Friday, 13 June 2014, both dates inclusive.

The directors confirm that the company will satisfy the solvency and liquidity test immediately after completing the distribution.

Net borrowingsThe net borrowings of the group and company are detailed in notes 17 and 18 to the financial statements. The holding company has set the borrowing capacity of the company at 50% of equity plus non-controlling interest. The group is currently operating at 45.9% of the borrowing capacity set.

Special resolutionsNo special resolutions were passed during the period.

DirectorateIn terms of the company’s memorandum of incorporation (MOI), SP Mzimela and AE Franklin retire from office at the forthcoming annual general meeting but they are eligible and offer themselves for re-election. Neither director has a service contract with the company.

DIRECTORS’ INTERESTS IN SHARESAt the year end 2014 and 2013, the directors had the following direct and indirect interests in the issued share capital of the company:

Directly Indirectly

Beneficial 148 929 9 649 377GD Bolton 87 388 3 216 459MJ Bolton 50 372 3 216 459BB Fraser – 3 216 459SG Chilvers 11 169 –Non-beneficial – 14 053 256SG Chilvers – 13 459 546BB Fraser – 593 710

Directors’ remunerationThe remuneration paid to directors during the year ended 28 February 2014 is disclosed in note 4 to the annual financial statements.

Company secretaryArcay Client Support (Pty) Limited is the company secretary and is independent of the group. The business and postal addresses of the secretary are 54 Maxwell Drive, Woodmead, Johannesburg, 2193 and PO Box 62397, Marshalltown, 2107, respectively.

Events subsequent to the statement of financial position dateThere are no material events that occurred subsequent to the statement of financial position date, which impacted the current reporting period.

SUBSIDIARY COMPANIESDetails of joint ventures and subsidiary companies are given in notes 10 and 11 to the financial statements.

RETIREMENT BENEFITSThe group has a defined contribution provident fund which is governed by the Pension Funds Act of 1956. All eligible employees of the group are members of this fund, other than those who are required by legislation to be members of another fund.

At year end full provision had been made for all retirement benefits in the group. The group has no liability for any other post-retirement benefits.

MEDICAL BENEFITSThe group contributes to the medical aid membership cost of current employees, but these benefits cease on retirement.

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for the year ended 28 February 2014


GROUP COMPANY

Note 2014

R000 2013

R000 2014

R000 2013

R000

Revenue – transport services 904 701 708 836 530 997 491 345 – information technology and consulting services 3 432 3 058 2 803 2 424 – aviation services 3 242 9 427 135 184 – other income 1 3 707 5 384 6 271 6 897

915 082 726 705 540 206 500 850

Costs and expenses – operating and administration costs 561 502 441 456 323 038 303 092 – employment costs 1 221 916 194 943 159 500 148 864 – depreciation of property, plant and equipment 7.1 73 856 47 768 27 623 27 613

857 274 684 167 510 161 479 569

Profit from operating activities 1 57 808 42 538 30 045 21 281 Profit/(loss) on disposal of property, plant and equipment 6 334 1 261 (3 541) 1 307 Impairment of assets 3 (10 554) (3 078) (3 602) (4 620)Revaluation of investment properties 7.2 8 576 9 234 8 524 724 Dividend income 1 137 915 3 902 9 081 Profits from associates and joint ventures 3 218 2 491 – –

Profit before finance income and finance cost 66 519 53 361 35 328 27 773 Finance income 6 472 4 547 6 404 4 464 Finance cost 2 (23 162) (18 139) (11 905) (14 322)

Profit before tax 49 829 39 769 29 827 17 915 Taxation 5 (3 759) (13 666) (1 340) (4 018)

Profit for the year 46 070 26 103 28 487 13 897

Other comprehensive income: Items not to be reclassified to profit or loss in subsequent periods:Revaluation of owner-occupied properties 7.1 4 333 7 415 4 131 6 591 Income tax effect 16 (770) (2 076) (770) (1 845)Income tax effect of property adjustments (1 774) – – – Change in estimated base cost for CGT purposes 5 2 857 – 2 857 – Other comprehensive income to be reclassified to profit or loss in subsequent periods:Exchange differences on translation of foreign operations 3 601 1 244 – –

Other comprehensive income for the year, net of tax 8 247 6 583 6 218 4 746

Total comprehensive income for the year, net of tax 54 317 32 686 34 705 18 643

Total comprehensive income, net of tax attributable to: Equity holders of the parent 53 729 33 021 Non-controlling interest 588 (335)

54 317 32 686

Profit for the year attributable to: Equity holders of the parent 45 482 26 438 Non-controlling interest 588 (335)

46 070 26 103

Basic and diluted earnings per ordinary share (cents) attributable to equity holders of the parent 6 234.4 136.3

Dividends per share (cents)– Interim declared during the year 15.0 10.0– Final declared after year end 40.0 20.0

STATEMENT OF COMPREHENSIVE INCOME


GROUP COMPANY

Note 2014

R000 2013

R000 2014

R000 2013

R000

ASSETS • Non-current assets 557 799 578 003 373 579 434 376

Property, plant and equipment 7.1 487 092 505 718 328 503 334 357 Investment properties 7.2 24 470 25 161 10 880 16 903 Loans to related parties 8 – – – 2 518 Investment in associates 9 22 953 19 869 – – Investment in joint ventures 10 4 803 4 726 1 1 Investments in subsidiaries 11 – – 23 895 25 175 Amounts owing by subsidiary companies 11 – – – 38 617 Deferred taxation 16 18 481 22 529 10 300 16 805

• Current assets 283 520 234 029 240 345 152 092 Inventories 12 16 989 12 547 5 427 4 999 Loans to related parties 8 – – 2 285 – Amounts owing by subsidiary companies 11 – – 31 303 – Trade and other receivables 13 150 190 133 951 110 478 96 132 Cash and short-term deposits 14 116 341 84 780 90 686 50 952 Taxation 25.2 – 2 751 166 9 Non-current assets held for sale 7.3 11 702 50 938 6 622 2 328

Total assets 853 021 862 970 620 546 588 796

EQUITY AND LIABILITIES Share capital 15 194 194 200 200 Non-distributable reserves 51 796 66 295 40 420 27 268 Distributable reserves 368 212 306 777 301 716 179 661 Equity attributable to equity holders of the parent 420 202 373 266 342 336 207 129 Non-controlling interest 14 846 16 493 – –

• Total equity 435 048 389 759 342 336 207 129 • Non-current liabilities 214 475 286 803 134 223 275 735

Deferred taxation 16 98 954 109 607 64 874 72 126 Contingent consideration 25.5 5 721 5 359 5 721 5 359 Provisions 20 2 781 – 2 477 – Interest-bearing loans and borrowings 17 107 019 171 837 61 151 85 162 Amounts owing to subsidiary companies 11 – – – 113 088

• Current liabilities 203 498 186 408 143 987 105 932 Trade and other payables 19 82 736 81 969 61 870 54 833 Provisions 20 9 573 10 079 3 192 4 990 Interest-bearing loans and borrowings 17 109 088 94 360 44 701 46 109 Amounts owing to subsidiary companies 11 – – 34 224 – Taxation 25.2 2 101 – – –

Total equity and liabilities 853 021 862 970 620 546 588 796

at 28 February 2014STATEMENT OF FINANCIAL POSITION

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GROUP

Share capital

R000

Asset revaluation

reserve*R000

Foreign currency

translation reserve*

R000

Other reserves*

R000

Distri-butable reserve

R000

Equity attributable

to equityholders ofthe parent

R000

Non-controlling

interest R000

TotalequityR000

Balance at 1 March 2012 194 47 578 4 952 50 290 780 343 554 1 749 345 303 Total comprehensive income – 5 339 1 244 – 26 438 33 021 (335) 32 686 – profit for the year – – – – 26 438 26 438 (335) 26 103 – other comprehensive income – 5 339 1 244 – – 6 583 – 6 583 Transfer between reserves on disposal of assets – (380) – – 565 185 (185) – Non-controlling interest arising on a business combination (note 25.5) – – – – – – 15 264 15 264 Post-tax transfer of revaluation of investment properties – 7 512 – – (7 512) – – – Dividends paid (note 6) – – – – (3 494) (3 494) – (3 494)

Balance at 28 February 2013 194 60 049 6 196 50 306 777 373 266 16 493 389 759 Total comprehensive income – 4 646 3 601 – 45 482 53 729 588 54 317– profit for the year – – – – 45 482 45 482 588 46 070– other comprehensive income – 4 646 3 601 – – 8 247 – 8 247 Disposal of assets and transfer between reserves – (20 878) (6 291) – 27 169 – – – Exchange differences realised on dissolution of foreign subsidiary – – (2 641) – 2 641 – – – Post-tax transfer of revaluation of investment properties – 7 064 – – (7 064) – – – Dividends paid (note 6) – – – – (6 793) (6 793) (2 235) (9 028)

Balance at 28 February 2014 194 50 881 865 50 368 212 420 202 14 846 435 048* Represents non-distributable reserves

COMPANY

Share capital

R000

Asset revaluation

reserve*R000

Foreign currency

translation reserve*

R000

Other reserves*

R000

Distri-butable reserve

R000

Equity attributable

to equityholders ofthe parent

R000

Non-controlling

interest R000

TotalequityR000

Balance at 1 March 2012 200 21 884 – 50 169 952 192 086 – 192 086 Total comprehensive income – 4 746 – – 13 897 18 643 – 18 643 – profit for the year – – – – 13 897 13 897 – 13 897 – other comprehensive income – 4 746 – – – 4 746 – 4 746 Post-tax transfer of revaluation of investment properties – 588 – – (588) – – – Dividends paid (note 6) – – – – (3 600) (3 600) – (3 600)

Balance at 28 February 2013 200 27 218 – 50 179 661 207 129 – 207 129 Total comprehensive income – 6 218 – – 28 487 34 705 – 34 705– profit for the year – – – – 28 487 28 487 – 28 487– other comprehensive income – 6 218 – – – 6 218 – 6 218 Merger of dormant property companies (see note 11) – – – – 107 502 107 502 – 107 502 Post-tax transfer of revaluation of investment properties – 6 934 – – (6 934) – – – Dividends paid (note 6) – – – – (7 000) (7 000) – (7 000)

Balance at 28 February 2014 200 40 370 – 50 301 716 342 336 – 342 336* Represents non-distributable reserves

Nature and purpose of reserves presented on the statements of changes in equity: Asset revaluation reserve This reserve is used to record increases in the revaluation of land and buildings and decreases to the extent that such decrease relates to an increase on the same asset previously recognised in other comprehensive income. Revaluations relating to investment properties are further transferred to this reserve from distributable reserves. This reserve is not available for distribution as dividends.

Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

Other reserves Other reserves comprise the capital redemption reserve fund, which was created when preference shares in the group were redeemed.

STATEMENT OF CHANGES IN EQUITY

75



GROUP COMPANY

Note 2014

R000 2013

R000 2014

R000 2013

R000

Cash receipts from customers 897 634 702 993 527 211 501 970 Cash paid to suppliers and employees (792 244) (653 330) (474 628) (437 530)

Cash generated by operations 25.1 105 390 49 663 52 583 64 440 Finance income 6 472 4 547 6 404 4 464 Finance cost 2 (23 162) (18 139) (11 905) (14 322)Tax (paid)/received 25.2 (4 085) (882) (157) 880 Dividend paid 25.3 (9 028) (3 494) (7 000) (3 600)Dividend income 1 137 915 3 902 9 081

Cash inflow from operating activities 76 724 32 610 43 827 60 943

Cash inflow/(outflow) from investing activities 5 047 (68 713) (7 136) (25 518)Payment of contingent consideration 25.5 (1 437) – (1 437) – Decrease/(increase) in loans to associates and joint ventures 57 (1 400) 234 (1 305)Acquisition of subsidiary, net of cash acquired 25.5 – (10 172) – (12 566)Decrease in amounts owing by subsidiary companies 11 – – 7 314 3 829 Investment maintaining operations: Purchase of property, plant and equipment 25.4 (64 133) (80 618) (27 475) (19 923)Proceeds from sale of property, plant and equipment 70 560 23 477 14 228 4 447

Cash (outflow)/inflow from financing activities (50 091) 62 791 3 219 (33 506)Interest-bearing loans and borrowings repaid (99 242) (74 645) (48 111) (56 611)Interest-bearing loans and borrowings raised 49 151 137 436 22 692 22 875 Increase in amounts owing to subsidiary companies 11 – – 28 638 230

Increase in cash and cash equivalents 31 680 26 688 39 910 1 919 Cash and cash equivalents at the beginning of the year 84 780 58 152 50 952 49 096 Foreign exchange movement during the year (119) (60) (176) (63)

Cash and cash equivalents at the end of the year 116 341 84 780 90 686 50 952

STATEMENT OF CASH FLOWS

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1. CORPORATE INFORMATIONThe consolidated financial statements of Cargo Carriers Limited and its subsidiaries (the group) for the year ended 28 February 2014 were authorised for issue in accordance with a resolution of the directors on 20 May 2014. Cargo Carriers Limited is a widely held company incorporated and domiciled in the Republic of South Africa whose shares are traded publicly on the JSE Limited.

The principal activities of the group are described on pages 6, 34 to 37.

2. BASIS OF PREPARATIONThe consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and the

STANDARD/AMENDMENT KEY REQUIREMENTS EFFECTIVE DATE

IFRS 7 Financial Instruments: Disclosures – offsetting financial assets and financial liabilities – amendments to IFRS 7

The group adopted the amendments to IFRS 7 in the current period.

Key requirementsThe amendment requires additional disclosure regarding information about rights of set-off and related arrangements (e.g., collateral agreements).

ImpactThis amendment had no impact on the group as the group does not offset financial assets and liabilities.

1 January 2013

IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements

The group adopted IFRS 10 and the amendments to IAS 27 in the current period.

Key requirementsIFRS 10 establishes a single control model that applies to all entities including special purpose entities.

This does not change the consolidation procedures but whether an entity is consolidated by revising the definition of control.

IFRS 10 also provides a number of clarifications on applying this new definition of control.

The changes introduced by IFRS 10 will require management to exercise significant judgement to determine which entities are controlled, and therefore, are required to be consolidated by a parent.

IFRS 10 requires retrospective application if the assessment of control is different between IFRS 10 and IAS 27.

ImpactThe adoption of IFRS 10 has not resulted in a change in the consolidated group.

1 January 2013

requirements of the South African Companies Act No 71 of 2008. The consolidated financial statements are prepared in accordance with the going-concern principle under the historical cost basis, except as otherwise noted below, and are presented in the functional currency, the South African Rand, and all values are rounded to the nearest thousand (R000) except where otherwise indicated.

3. CHANGES IN ACCOUNTING POLICIESThe accounting policies adopted are consistent with those of the previous year, except the group has adopted the following standards and interpretations mandatory for financial years beginning on or after 1 March 2013.

ACCOUNTING POLICIES



IFRS 11 Joint Arrangements, IAS 28 Investments in Associates and Joint Ventures

The group adopted IFRS 11 and the amendments to IAS 28 in the current period.

Key requirementsIFRS 11 replaces IAS 31 and SIC-13.

Joint control under IFRS 11 is defined as the contractually agreed sharing of control of an arrangement. ‘Control’ in ‘joint control’ refers to the definition of ‘control’ in IFRS 10.

Under IFRS 11 a joint arrangement (previously a ‘joint venture’ under IAS 31) is accounted for as either a:• joint operation – by showing the investor’s interest/relative

interest in the assets, liabilities, revenues and expenses of the joint arrangement; or

• joint venture – by applying the equity accounting method. Proportionate consolidation is no longer permitted.

Under IFRS 11 the structure of the joint arrangement is not the only factor considered when classifying the joint arrangement as either a joint operation or joint venture.

IAS 28 has been amended to include the application of the equity method to investments in joint ventures.

IFRS 11 requires retrospective application with some relief.

ImpactThe application of IFRS 11 has not had a significant impact on the group as they did not have any joint operations or accounted for joint ventures in the proportionate consolidation method in the past.

1 January 2013

IFRS 12 Disclosure of Interests in Other Entities

The group adopted IFRS 12 in the current period.

Key requirementsIFRS 12 applies to an entity that has an interest in subsidiaries, joint arrangements, associates and/or structured entities. IFRS 12 requirements disclosure to help the users of financial statements understand:• The effects of interests in other entities on the group’s financial

position, financial performance and cash flows.• The nature of, and the risks associated with, the entity’s interest

in other entities.

IFRS 12 requires extensive qualitative and quantitative disclosures including summarised financial information for material associates and joint ventures as well as subsidiaries with material non-controlling interest.

Disclosure is also required regarding the nature of the risks associated with an entity’s interests in unconsolidated structured entities, and changes to those risks.

IFRS 12 requires retrospective application with some relief.

ImpactThe adoption of IFRS 12 has resulted in additional disclosure being required. The additional disclosure required has been included in the individual notes presented.

1 January 2013

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ACCOUNTING POLICIES continued


IFRS 13 Fair Value Measurement

The group adopted IFRS 13 in the current period.

Key requirements• IFRS 13 describes how to measure fair value where fair value is

required or permitted to be used as a measurement basis under IFRS (with certain standards being excluded from the scope of IFRS 13).

• Under IFRS 13 fair value is presumed to be an ‘exit price’.

New disclosures related to fair value measurements are also introduced.

ImpactThe adoption of IFRS 13 did not have any significant impact on the financial performance or the financial position of the group as the measurement bases applied in the past were not materially different from those under IFRS 13.

1 January 2013

IAS 1 Presentation of Items of Other ComprehensiveIncome – Amendments

The group adopted the amendments of IAS 1 in the current period.

Key requirementsThe amendments to IAS 1 introduce a grouping requirement for items presented in OCI. Items that will be reclassified to profit or loss in the future will be presented separately from items that will never be reclassified. The amendments do not change the nature of the items that are recognised in OCI, nor do they impact the determination of whether items in OCI are reclassified through profit or loss in future periods.

The IAS 1 amendment requires retrospective application in terms of IAS 8 – changes in accounting policy.

ImpactThe relatively minor change in presentation of OCI has been effected in the statement of comprehensive income.

1 July 2012

IAS 19 Employee Benefits (Revised)

The group adopted the revised IAS 19 in the current period.

Key requirementsIAS19R has several amendments that relate to defined benefit plans and related plan assets and liabilities. The recognition of termination benefits is required to be at the earlier of when the offer of termination cannot be withdrawn, or when the related restructuring costs are recognised. The distinction between short-term and other long-term employee benefits is based on the expected timing of settlement rather than the employee’s entitlement to the benefits.

IAS 19R requires retrospective application in accordance with IAS 8 – changes in accounting policy.

ImpactThe impact of the adoption of IAS 19R has been limited as the group does not have a defined benefit plans or termination benefits.

1 January 2013


4. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATESIn preparing the financial statements, management is required to make estimates and assumptions that affect reported income, expenses, assets, liabilities and disclosure of contingent assets and liabilities. Use of available information and the application of judgement are inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the financial statements.

Significant judgements applied in preparing the financial statements relate to the:

• Estimate of useful life and residual values of tangible assets (refer to accounting policy note 9.2 and financial statements note 7)

• Allowance for doubtful debts (refer to accounting policy note 18.4 and financial statements note 13)

• Impairment of assets (refer to accounting policy note 20 and financial statements note 7)

• Determining fair value of investment property • Revaluation of land and buildings • Determining the amount of deferred tax asset that can be recognised in respect of unused tax losses

• Assumptions utilised in purchase price allocation pertaining to business combinations

• Assessment of the long-term portion of employee benefits (refer to accounting policy note 15 and financial statements note 20)

• Materiality of subsidiaries, joint ventures and associates to the group as a whole as required by IFRS 12: Disclosure of Interests in Other Entities. Any contribution of total assets, total liabilities, revenue and profit before tax of the relevant subsidiary, joint venture or associate below 10% of the group as a whole is regarded as immaterial (refer to financial statements note 11.2).

5. CONSOLIDATIONBasis of consolidationThe consolidated financial statements comprise the financial statements of the group and its subsidiaries as at 28 February 2014.

Subsidiaries are defined as those companies in which the group, either directly or indirectly, has control.

Control is achieved when the group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Specifically, the group controls an investee if and only if the group has:

• Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)

• Exposure, or rights, to variable returns from its involvement with the investee

• The ability to use its power over the investee to affect its returns.

When the group has less than a majority of the voting or similar rights of an investee, the group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

• The contractual arrangement with the other vote holders of the investee

• Rights arising from other contractual arrangements • The group’s voting rights and potential voting rights.

The group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the group obtains control over the subsidiary and ceases when the group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the group gains control until the date the group ceases to control the subsidiary.

All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions are eliminated in full.

Non-controlling interests represent the portion of profit or loss and net assets not held by the group and are presented separately in the statement of comprehensive income and within equity in the consolidated statement of financial position, separately from parent shareholders’ equity. Total comprehensive income in a subsidiary is attributed to the non-controlling interest even if it results in a deficit balance.

The company carries its investments in subsidiaries at cost, less accumulated impairment losses in the company accounts. A change in the ownership interest of a subsidiary, without a loss in control, is accounted for as an equity transaction.

Business combinations and goodwillGoodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a

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business combination is, from the acquisition date, allocated to each of the group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill forms part of the cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operations disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Legal mergerThe group has elected to apply the following accounting policy to the individual financial statements whereby a legal merger of a parent and subsidiary is considered in substance to be the redemption of shares in the subsidiary, in exchange for the underlying assets of the subsidiary.

The application of the equity method results in: • The values recognised in the consolidated financial statements become the cost of these assets for the parent. The acquired assets and assumed liabilities are recognised at the carrying amounts in the consolidated financial statements as of the date of the legal merger.

• The difference between the amounts assigned to the assets and liabilities in the parent’s separate financial statements after the legal merger; and the carrying amount of the investment in the merged subsidiary before the legal merger is recognised directly in equity.

6. INVESTMENT IN ASSOCIATESAn associate is an entity in which the group has significant influence and which is neither a subsidiary nor a joint venture.

Investments in associates are equity accounted in the consolidated financial statements for the period in which the group exercises significant influence. Significant influence is typically assumed in instances where the group has an equity stake sufficiently material to enable it to participate in the financial and operating policies of the investee company concerned without controlling or joint controlling those policies.

Equity accounted income represents the group’s proportionate share of profits of these companies and the share of taxation thereon, net of the group’s share of material unrealised inter-group profits and non-controlling interests. Losses incurred by associates

(including impairment losses where necessary) are brought to account in the consolidated financial statements until the investment, including any long-term interest that, in substance, form part of the investors net investment in the associate, in such associates is written down to a nominal value.

The group’s interest in an associate is carried in the statement of financial position at cost plus an amount that reflects its share of the net post-acquisition reserves. Goodwill relating to the associate is included in the carrying amount of the investment and is not amortised or separately tested for impairment. Where there has been a change recognised directly in equity of the associate, the group recognises its share of any changes and discloses this, when applicable, in the statements of changes in equity. Unrealised gains or losses resulting from transactions between the group and the associates are eliminated to the extent of the interest in the associate.

After application of the equity method the group determines whether it is necessary to recognise any impairment loss with respect to the group’s net investment in the associate. The group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case the group calculates the amount of the impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in profit or loss.

The reporting dates of the associates, with the exception of TAB Charters (Pty) Limited (June year end), are identical and the associates’ accounting policies conform to those used by the group for like transactions and events in similar circumstances. Adjustments are made to the reporting period to bring it in line with the group if considered necessary.

The investment in associates is carried at cost less any impairment in the company accounts.

7. INVESTMENT IN JOINT VENTURESThe group has interests in two jointly controlled entities, whereby the venturers have a contractual arrangement that establishes joint control over the economic activities of the entity. The agreement requires unanimous agreement for financial and operating decisions among the venturers. The group recognises its interest in the joint venture using the equity method.

Under the equity method, the investment in the joint venture is carried on the statement of financial position at cost plus post-acquisition changes in the group’s



share of net assets of the joint venture. Goodwill relating to the joint venture is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment.

The group’s share of the results of operations of the joint venture is reflected in profit or loss. When there has been a change recognised directly in the equity of the joint venture, the group recognises its share of any changes and discloses this, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the group and the joint venture are eliminated to the extent of the interest in the joint venture.

The group’s share of profits or losses in a joint venture is shown in profit or loss. This is the profit attributable to equity holders of the joint venture and, therefore, is profit after tax and non-controlling interests in the subsidiaries of the joint venture. The financial statements of the joint venture are prepared for the same reporting period as the group. When necessary, adjustments are made to bring the accounting policies in line with those of the group.

Upon loss of joint control, the group measures and recognises its remaining investment at its fair value. Any difference between the carrying amount of the former joint controlled entity upon loss of joint control and the fair value of the remaining investment and proceeds from disposal are recognised in profit or loss. When the remaining investment constitutes significant influence, it is accounted for as investment in an associate.

8. TAXATION8.1 Current taxCurrent tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the statement of financial position date. Current tax relating to items recognised directly in equity is recognised in equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

8.2 Deferred taxDeferred income tax is provided using the liability method on temporary differences at the statement of financial position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences except:

• Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilised except:

• Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each statement of financial position date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the statement of financial position date.

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Deferred tax assets and liabilities are measured at the tax rates that are expected to apply, based on the expected manner of recovery, in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

When there is a change in the expected manner of recovery that results in a change in the tax rate that is applicable the deferred tax asset/liability is subsequently adjusted. This adjustment is treated as a change in accounting estimate in the period that it occurs and the resulting gain or loss is taken to profit/loss unless the adjustment to the underlying assets is taken to other comprehensive income in which case the tax effect follows the accounting treatment.

For capital gains tax (CGT) on “pre-valuation date” assets, SARS allows the group to select the most advantageous of the three “base cost” calculation methods allowed in the Income Tax Act. Management uses their judgement in selecting the calculation method that the deferred tax calculations are based on. The actual base cost used at final recovery of the asset might materially differ from those selected by management for the purposes of the deferred tax calculation in the current period. When there is a change in the base cost calculation method used the adjustment is treated as a change in accounting estimate in the period that it occurs and the resulting gain or loss is taken to profit/loss unless the adjustment to the underlying assets is taken to other comprehensive income in which case the tax effect follows the accounting treatment.

Deferred tax items are recognised in correlation to the underlying transaction either in profit or loss, directly in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

The group does not intend to settle current tax liabilities and assets on a net basis, nor to realise tax liabilities and assets simultaneously, as this is not how the group manages its tax affairs. With each entity in the group regarded as not having the right to set off current tax liabilities and assets and requirements of IAS 12.74(a) are not met for each entity and accordingly IAS 12.74(b)(i) requires the deferred tax amounts in each entity not to be set off.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would be recognised subsequently if new

information about facts and circumstances changed. The adjustment would either be treated as a reduction to goodwill (as long as it does not exceed goodwill), if it incurred during the measurement period, or in profit or loss.

8.3 Value added taxRevenues, expenses and assets are recognised net of the amount of value added tax except:

• Where the value added tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the value added tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable

• Receivables and payables that are stated with the amount of value added tax included.

The net amount of value added tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

8.4 Dividend withholding tax (DWT)The dividend withholding tax that replaced STC on 1 April 2013 is a tax on distributions to shareholders levied at 15%. It is a tax payable by the shareholders and not the company and no amount is therefore required to be provided.

9. NON-FINANCIAL ASSETS9.1 Investment propertiesInvestment properties are initially recorded at cost, including transaction costs, and are subsequently stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the period in which they arise. The after tax gains are transferred from distributable to non-distributable reserves unless they offset prior year losses.

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no further economic benefit is expected from its use. Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the period incurred.

Transfers are made to investment property when, and only when, there is a change in use, evidenced by the end of the owner occupation, commencement of a long-term operating lease to another party or completion of construction or development.

For a transfer from investment property to owner-occupied, the deemed cost of property for subsequent accounting is its fair value at the date of change in use.



If the property occupied by the group as an owner occupied property becomes an investment property, any difference between the fair value of the property at the date of reclassification and its previous carrying amount is accounted for in accordance with the policy stated under property, plant and equipment.

The fair values of investment properties are determined by an independent valuer, on an open-market basis. No assets held under operating leases have been classified as investment property.

9.2 Property, plant and equipmentLand and buildings are measured at fair value less accumulated depreciation on buildings and impairment charged subsequent to the date of the revaluation.

Any revaluation surplus is credited to the asset revaluation reserve within the statement of changes in equity, through other comprehensive income, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss, in which case the increase is recognised in profit or loss. A revaluation deficit is recognised in profit or loss, except that a deficit directly offsetting a previous surplus on the same asset is directly offset against the surplus in the asset revaluation reserve. Valuations are performed frequently enough to ensure that the fair value of a revalued asset does not differ materially from its carrying amount.

Plant and equipment is stated at cost, excluding the costs of day-to-day servicing, less accumulated depreciation and accumulated impairment in value. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred. Refurbishment costs incurred on vehicles and trailers are expensed in full.

Buildings erected on leased land are considered to be owner-occupied and are depreciated over the term of the lease. Owner-occupied buildings are depreciated over their estimated useful lives to reduce the value to its residual value. Land is not depreciated.

Property, plant and equipment are depreciated on a straight-line basis at rates considered appropriate to depreciate the assets to their residual values, over their expected useful lives. Where significant components of an item have different useful lives to the item itself,

these parts are depreciated separately if the component’s cost is significant in relation to the cost of the remainder of the asset.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:Buildings – (owner-occupied) 1.5% – 10% p.a.Leasehold land and buildings 2% p.a.Leasehold improvements 10% p.a.Vehicles and leased vehicles 7% – 25% p.a.Plant furniture and equipment 10% – 33% p.a.Aircraft engine (hours) 6 000 hours

The carrying values of property, plant and equipment are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount is estimated as the higher of fair value less costs of disposal and value in use. An impairment loss is recognised in profit or loss whenever the carrying amount exceeds the recoverable amount and the assets are written down to their recoverable amount. Subsequent valuations may result in the impairment being reversed through profit or loss.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net proceeds on disposal and the carrying amount of property, plant and equipment is included in profit or loss. Any balance in the revaluation reserve relating to disposed property is transferred to distributable reserves.

The assets residual values, useful lives and methods of depreciation are reviewed and adjusted prospectively as a change in accounting estimate at each financial year end if necessary.

10. INVENTORIESInventory is valued at the lower of cost, determined on the weighted average basis, and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and costs necessary to make the sale.

11. FOREIGN CURRENCY TRANSLATIONThe group’s consolidated financial statements are presented in South African Rand, which is also the parent company’s functional currency. Each entity in the group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. The group has elected to recycle the gain or loss that arises from consolidation, which is the method the group uses to complete its consolidation, through profit and loss.

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Transactions and balancesTransactions in foreign currencies are initially recorded by the group entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange at the reporting date. All differences arising on settlement or translation of monetary items are taken to profit or loss.

Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other comprehensive income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss, respectively).

Group companiesOn consolidation the assets and liabilities of foreign operations are translated into South African Rand at the rate of exchange prevailing at the reporting date and their profits or losses are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss.

12. BORROWING COSTSBorrowings costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

13. LEASESThe determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date, whether fulfilment of the arrangement is dependent on the use of specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.

Group as lesseeWhere the group assumes the significant risks and rewards of ownership of leased assets, these leases are classified as finance leases.

Items of property, plant and equipment held under finance leases are capitalised at amounts equal at the commencement of the lease to the fair value of the leased assets or if lower, at the present value of the minimum lease payments using the interest rate implicit in the lease, and a corresponding liability is raised. Such assets are depreciated and impaired in terms of the accounting policy on property, plant and equipment stated above, or if shorter, over the term of the lease if there is no reasonable certainty that the group will obtain ownership by the end of the lease term.

Lease payments are apportioned between finance charges and reduction of lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in profit or loss.

All other leases are treated as operating leases and the relevant rentals are charged to profit or loss on a straight-line basis over the lease term.

Group as lessorLeases where the group does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. Contingent rentals are recognised as revenue in the period in which they are earned.

14. REVENUE RECOGNITIONRevenue is recognised to the extent that it is probable that the economic benefits will flow to the group and the revenue can be reliably measured, regardless of when payment is made. Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, and other sales taxes or duty. The following specific recognition criteria must also be met before revenue is recognised:

Rendering of servicesRevenue from the transportation of goods is recognised on delivery of the goods. Revenue from the rendering of information technology services is recognised by reference to the stage of completion. Stage of completion is measured by reference to labour hours incurred to date as a percentage of total estimated labour hours for each contract. Where the contract outcome cannot be measured reliably, revenue is



recognised only to the extent of the expenses incurred that are recoverable. Revenue from the transportation of passengers via air is recognised on completion of scheduled flights.

Finance incomeRevenue is recognised as interest accrues using the effective interest method (that is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset).

DividendsRevenue is recognised when the group’s right to receive the payment is established.

Rental incomeRental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease terms. Rental income is included in revenue due to its operating nature.

15. EMPLOYEE BENEFIT OBLIGATIONSDefined contribution planThe group operates a defined contribution plan. The contribution payable to a defined contribution plan is in proportion to the services rendered to the group by the employees and is recorded as an expense in profit or loss. Unpaid contributions are recorded as a liability.

The group’s legal or constructive obligation is limited to the agreed contributions into the separately administrated fund.

Other long-term employee benefitsEmployees are entitled to transfer unused annual leave days to be taken in subsequent periods or to be paid out at termination of their employment.

The group provides for present value of the expected obligation and the related expense is included in profit or loss in the year that the service which entitles the employee to the benefit is rendered. Interest on the unwinding of the obligation is included in finance cost in profit or loss. Payments will be made out of operating capital as they fall due.

Short-term employee benefitsShort-term employee benefits are employee benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service. The group recognises a liability for the undiscounted amount of short-term employee benefits expected to be paid and the expense is include in personnel expenses in profit or loss in the period

that the services that entitles the employee to the benefit is rendered.

16. PROVISIONSProvisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in profit or loss net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

17. TREASURY SHARESOwn equity instruments which are re-acquired (treasury shares) are deducted from equity. No gain or loss is recognised in the statement of comprehensive income on the purchase, sale, issue or cancellation of the group’s own equity instruments.

18. FINANCIAL INSTRUMENTS18.1 Initial recognitionThe group classifies financial instruments, or their component parts, on initial recognition as financial assets, financial liabilities or equity instruments in accordance with the substance of the contractual arrangement. When a financial asset or financial liability is recognised initially, an entity shall measure it at its fair value plus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.

All regular way purchases and sales of financial assets are recognised on the trade date, which is the date that the group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

Financial instruments recognised on the statement of financial position include loans receivable, cash and cash equivalents, trade and other receivables, trade and other payables, and interest-bearing loans and borrowings. Disclosure of financial instruments to which the company is party, is provided in the notes to the annual financial statements.

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18.2 Subsequent measurementFinancial assets are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets, as appropriate. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or financial liabilities at amortised cost. The classification depends on the purpose for which the instruments were acquired. Management determines the classification at initial recognition. Depending on classification financial assets are subsequently measured as follows:

Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are subsequently measured at amortised cost using the effective interest rate (EIR), less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in profit or loss. The losses arising from impairment are recognised in profit or loss.

Held-to-maturity investmentsHeld-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturities and are classified as held-to-maturity when the group has the positive intention and ability to hold it to maturity. After initial measurement held-to-maturity investments are measured at amortised cost using the effective interest method, less impairment.

Financial assets at fair value through profit or lossFinancial assets at fair value through profit or loss includes financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss and derivatives. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. These financial assets subsequently measured at fair value with changes in fair value recognised in the statement of comprehensive income.

Available-for-sale investmentsFinancial assets are classified as available-for-sale if they do not fall into any of the preceding three categories. They are subsequently measured at fair value with unrealised gains or losses recognised in other comprehensive income in the available-for-sale reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in profit or loss, or determined to be impaired, at which time the cumulative loss is recognised in profit or loss and removed from the available-for-sale reserve.

After initial recognition, financial liabilities are measured as follows:

• financial liabilities at fair value through profit or loss are measured at fair value; and

• other financial liabilities are measured at amortised cost using the effective interest method.

18.3 DerecognitionFinancial assets (or, where applicable, parts of financial assets or parts of a group of similar financial assets) are derecognised when:

• the rights to receive cash flows from the asset have expired; or

• the group has transferred its rights to receive cash flows from the assets and either, has transferred substantially all the risks and rewards of the assets, or has neither transferred nor retained substantially all risks and rewards of the assets, but has transferred control of the assets.

When the group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all the risk and rewards of the asset nor transferred control of the asset, a new asset is recognised to the extent of the group’s continuing involvement in the asset.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the group could be required to repay.

When continuing involvement takes the form of a written and/or purchased option (including a cash-settled option or similar provision) on the transferred asset, the extent of the group’s continuing involvement is the amount of the transferred asset that the group may repurchase, except that in the case of a written put option (including a cash-settled option or similar provision) on an asset measured at fair value, the extent of the group’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.



Offsetting of financial instrumentsFinancial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

18.4 Impairment of financial assetsThe group assesses at each statement of financial position date whether there is objective evidence that a financial asset or group of financial assets is impaired. Objective evidence of impairment of loans and receivables exists if at least one of the following events has occurred (objective evidence of impairment):

• The borrower is experiencing significant financial difficulty

• The borrower’s actions, such as default on interest or principal payments, lead to a breach of contact

• The group, for reasons relating to the borrower’s financial difficulty, grants to the borrower a concession that the group would not otherwise have granted, or

• It becomes probable that the borrower will enter bankruptcy or other financial reorganisation.

If the group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss on loans and receivables or held-to-maturity investments carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account. The amount of the loss is recognised in profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income in profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment

loss is reversed. The reversal does not result in a carrying amount of the financial asset that exceeds what the amortised cost would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.

If an available-for-sale asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current value, less any impairment loss previously recognised in profit or loss, is transferred from other comprehensive income to profit or loss. Reversals in respect of equity instruments classified as available for sale are not recognised in profit or loss; they are recognised in other comprehensive income. In the case of equity investments, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. In the case of debt instruments, impairment is assessed on the same criteria as financial assets carried at amortised cost.

18.5 Investments (other than investments in subsidiaries, associates and joint ventures)Investments, other than investments in subsidiaries, associates and joint ventures, are classified as available-for-sale.

Unlisted investments are subsequently measured at fair value, unless this cannot be reliably established, in which case they are carried at cost, subject to an impairment review at each statement of financial position date.

18.6 Cash and short-term depositsCash and short-term deposits comprise cash on hand, deposits held at call with banks, other short-term, highly liquid investments and bank overdrafts.

For cash flow purposes, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

18.7 Trade and other payablesTrade and other payables are recognised initially at fair value, generally being their issue proceeds net of transaction costs incurred, and are subsequently measured at amortised cost. Interest is recognised over the period of the borrowing, using the effective interest rate method.

18.8 Trade and other receivablesTrade and other receivables are classified as loans and receivables. They are initially measured at fair value and are subsequently carried at amortised cost using the effective interest rate method.

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18.9 Interest-bearing loans and borrowingsAfter initial recognition, interest-bearing loans and borrowing are subsequently measured at amortised cost using the effective interest rate method.

18.10 Fair value measurementThe group measures financial instruments, such as, derivatives, and non-financial assets such as investment properties, at fair value at each balance sheet date. Also, fair values of financial instruments measured at amortised cost are disclosed in note 24.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability, or • In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities

• Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

• Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For the purpose of fair value disclosures, the group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

19. SEGMENT RECOGNITIONThe group provides transport and logistics solutions to a wide range of customers in southern Africa.

The results have been segmented to reflect the different markets in which the customers operate, which are the industrial, agricultural, consumer, supply chain services, aviation and property sectors.

20. IMPAIRMENTS OF NON-FINANCIAL ASSETSThe group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s value in use or its fair value less costs of disposal.

Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, an appropriate valuation model is used.

Impairment losses are recognised in profit or loss except for property previously revalued where the revaluation was taken directly to equity. In this case the impairment is also recognised in equity up to the amount of any previous revaluation.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the group makes an estimate of recoverable amount.

A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such



reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase.

21. PRESCRIBED OFFICERSAccording to the regulations to the Companies Act, a prescribed officer is anyone who:

• exercises general executive control over and management of the whole, or a significant portion, of the business and activities of the company; or

• regularly participates to a material degree in the exercise of general executive control over and management of the whole, or a significant portion, of the business and activities of the company.

The three executive directors of the group are considered to be the prescribed officers.

22. NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONSNon-current assets and disposal groups classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for

sale if their carrying amounts will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

In the consolidated statement of comprehensive income of the reporting period, and of the comparable period of the previous year, income and expenses from discontinued operations are reported separate from income and expenses from continuing activities, down to the level of profit after taxes, even when the group retains a non-controlling interest in the subsidiary after the sale. The resulting profit or loss (after taxes) is reported separately in the statement of comprehensive income.

Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised.

23. IFRS AND IFRIC INTERPRETATIONS ISSUED NOT YET EFFECTIVEThe group has not applied the following IFRS and IFRIC interpretations that have been issued but are not yet effective:

IFRS 9 Financial Instruments Date not set – Expected effective date 1 January 2018

IFRS 10, IFRS 12 and IAS 27 Investment Entities (amendments) 1 January 2014

IAS 19 Defined Benefit Plans: Employee Contributions – Amendments 1 July 2014

IAS 32 Offsetting Financial Assets and Financial Liabilities – Amendments to IAS 32

1 January 2014

IAS 36 Recoverable Amount Disclosures for Non-Financial Assets – Amendments

1 January 2014

IAS 39 Novation of Derivatives and Continuation of Hedge Accounting – Amendments

1 January 2014

IFRIC 21 Levies 1 January 2014

Annual improvement project – issued in December 2103 1 July 2014

Effective for annual periods beginning on or after the date specified. Early adoption of these standards is permitted.

The group does not intend early adoption of any of the above new/revised standards and/or interpretations. The effect of adoption is not certain at this stage, but is not expected to be material.

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NOTES TO THE FINANCIAL STATEMENTS

GROUP COMPANY

2014 R000

2013 R000

2014 R000

2013 R000

1. PROFIT FROM OPERATING ACTIVITIES Profit is stated after crediting: Foreign exchange translation gain 3 389 4 710 1 362 3 051 Other income 3 707 5 384 6 271 6 897 – rental income from investment property 3 469 5 042 3 269 3 028 – vehicle hire from subsidiary companies – – 2 764 3 527 – carrier income 238 342 238 342 Profit is stated after charging: Depreciation of property, plant and equipment 73 856 47 768 27 623 27 613 Inventories written down 1 516 418 165 200 Auditors’ remuneration 2 524 2 634 1 419 1 228 – audit fees 2 338 2 120 1 233 908 – prior year 186 461 186 267 – other services – 53 – 53 Cost of sales 762 216 609 215 487 157 440 931 Foreign exchange translation loss 7 861 5 497 1 182 429 Operating expenses on investment property 181 185 104 105 Gain on loan written off – – – (2 333)Operating lease expenses 7 360 8 355 3 643 4 449 – buildings 6 919 6 928 3 349 4 159 – equipment 441 1 427 294 290 Employment costs# 221 916 194 943 159 500 148 864 – salaries, wages and bonuses 203 287 177 153 141 698 132 608 – contributions to medical aid and retirement fund 18 629 17 790 17 802 16 256

2. FINANCE COST Secured loans 21 162 13 351 9 961 11 667 Bank and short-term borrowings 2 000 4 788 1 944 2 655

23 162 18 139 11 905 14 322

3. IMPAIRMENT OF ASSETS Impairment of non-current assets (note 7) (10 716) – (2 321) – Impairment of investment and other assets (note 11.1) 162 (393) (1 281) (4 620)Impairment of goodwill – (2 685) – –

(10 554) (3 078) (3 602) (4 620)

Certain unutilised assets were subjected to abnormal deterioration during the year, which resulted in impairment. The assessment was done in relation to the physical condition of the vehicles including the realisable value based on market research.

The company impaired its investment in a foreign subsidiary, Jaybee Holdings Incorporated, in the current year as a result of its dormant status (see note 11.1). The prior year impairment in the company related to a long-outstanding loan due from its subsidiary company Ezethu Logistics (Pty) Limited. The group’s 25% investment in associate company Murtons Cane Contractors (Pty) Limited was fully impaired in the prior year and was subsequently disposed of for R0.16 million during the current year.

The goodwill raised on acquisition of the controlling interest in Ezethu Logistics (Pty) Limited had been assessed for impairment, utilising the discounted cash flow method, on the date at which a 30% shareholding in this company was allocated to new shareholders. The exercise performed in the prior year indicated that the goodwill raised on acquisition was fully impaired.


GROUP COMPANY

2014 R000

2013 R000

2014 R000

2013 R000

4. DIRECTORS’ EMOLUMENTS AND KEY MANAGEMENT Non-executive directors: • SG Chilvers (resigned 31 October 2013) – fees 201 280 201 280• BB Fraser – fees 126 126 126 126• AE Franklin – fees 149 149 149 149 • SP Mzimela

(appointed chairperson 1 November 2013) – fees 205 149 205 149• MJ Vuso – fees 167 167 167 167 Executive directors: • GD Bolton# 1 217 1 678 1 217 1 678

– salary 896 1 250 896 1 250 – bonus 112 104 112 104 – post-retirement, medical and other benefits 209 324 209 324

• MJ Bolton 2 024 1 894 2 024 1 894 – salary 1 559 1 451 1 559 1 451 – bonus 130 121 130 121 – post-retirement, medical and other benefits 335 322 335 322

• S Maharaj 1 329 1 494 1 329 1 494 – salary 966 894 966 894 – bonus 80 325 80 325 – post-retirement, medical and other benefits 283 275 283 275

Total directors emoluments 5 418 5 937 5 418 5 937

Other key management 4 984 5 259 4 984 5 114 – salary 3 528 3 610 3 528 3 465 – bonus 294 273 294 273 – post-retirement, medical and other benefits 1 162 1 376 1 162 1 376 # Mr GD Bolton has recently assumed additional responsibilities outside of Cargo Carriers and has accordingly decided to step

down as joint CEO of the company from 1 November 2013. He will, however, remain as an executive director of the board, while Mr MJ Bolton will continue to fulfil the role and responsibilities of chief executive officer.

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NOTES TO THE FINANCIAL STATEMENTS continuedfor the year ended 28 February 2014


GROUP COMPANY

2014 R000

2013 R000

2014 R000

2013 R000

5. TAXATION South African normal taxation: Current – current year 649 – – –– dividend withholding tax 32 14 – – – capital gains tax 2 790 – – –– prior year – 106 – 106 Deferred – attributable to income not yet taxable, expenses not

yet deductible and movement in assessed losses in the current year (3 692) 10 037 1 582 3 729

– prior year (243) (12) (242) 183 Foreign taxation: Current – current year 8 201 2 844 – – Deferred – attributable to income not yet taxable and expenses not yet

deductible in the current year (3 256) 682 – – – prior year (722) (5) – –

Total charge against profit for the year 3 759 13 666 1 340 4 018

Reconciliation of tax rate: % % % % Standard tax rate 28.0 28.0 28.0 28.0 Non-taxable income (10.5) (24.6) (3.5) (21.5)Prior year adjustments (1.9) 0.3 (0.8) 1.6 Foreign tax rate differential 4.5 1.2 – – Profits from associates and joint ventures (1.8) (1.8) – – Disallowable expenses 7.9 13.2 2.4 7.4 Impairment of assets 0.7 2.3 1.2 7.3 Amortisation of fair value adjustment to assets acquired in business combination – 18.1 – – Capital gains tax rate differential on fair value adjustments to investment property (2.8) (2.3) (2.6) (0.4)Deferred tax credit on sale of Alrode property (4.5) – – – Change in estimated base cost for CGT purposes# (12.1) – (20.2) –

Effective tax rate 7.5 34.4 4.5 22.4

# SARS allows three options for the calculation of the base cost for CGT purposes on “Pre-valuation date” assets namely; “Time apportionment basis”, “Valuation date market value” and “20% of the proceeds”. In the current year the most advantageous option for the calculation of base cost for “Pre-valuation date” investment and owner-occupied property was assessed as the “Time apportionment basis”. The effect of the adjustment in the current period resulted in the deferred tax provision being reduced by R6 million through profit or loss and R2.8 million in other comprehensive income. There is no significant effect expected in the future periods.


GROUP COMPANY

2014 R000

2013 R000

2014 R000

2013 R000

6. DIVIDENDS, BASIC/DILUTED EARNINGS AND HEADLINE EARNINGS PER ORDINARY SHARE Dividends: No. 44 of 20.0 cents declared 10 May 2013 and paid 18 June 2013 3 881 1 553 4 000 1 600 No. 45 of 15.0 cents declared 25 October 2013 and paid 9 December 2013 2 912 1 941 3 000 2 000

Total ordinary dividends 6 793 3 494 7 000 3 600

Dividends per share (cents) – interim declared during the year 15.0 10.0 – final declared after year end 40.0 20.0

The basic and diluted earnings per ordinary share are based on the net profit for the year of R45.5 million (2013: profit of R26.4 million) divided by 19.4 million (2013: 19.4 million) ordinary shares in issue during the year (cents) 234.4 136.3 Adjustments (cents): Profit on disposal of property, plant and equipment (23.5) (4.7)Impairment of assets 54.4 15.9 Revaluation of investment properties (36.0) (38.7)

Basic and diluted headline earnings per share (cents) 229.3 108.8

Basic and diluted earnings per share (cents) 234.4 136.3

Reconciliation between profit for the year and headline earnings Profit attributable to equity holders of the parent 45 482 26 438 Adjustments: Profit on disposal of property, plant and equipment (6 334) (1 261)– income tax effect 1 774 353 Impairment of assets 10 554 3 078 Revaluation of investment properties (8 576) (9 234)– income tax effect 1 599 1 722

Headline earnings for the year 44 499 21 096 O

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Land and

buildings R000

Leasehold improve-

ments and prefabri-

cated buildings

R000 Vehicles

R000

Leased vehicles

R000

Plant,furniture

and equipment

R000 Total R000

7. NON-FINANCIAL ASSETS 7.1 Property, plant and equipment

Group2014 Beginning of year – cost/fair value 73 906 9 141 404 130 246 405 64 876 798 458 – accumulated depreciation (4 465) (8 010) (198 816) (38 521) (42 928) (292 740)

Net book value 69 441 1 131 205 314 207 884 21 948 505 718

Current year’s movements – revaluation of owner-occupied

properties 4 333 – – – – 4 333 – impairment of non-current assets – – (6 214) (4 502) – (10 716)– additions 1 990 243 22 390 36 426 3 084 64 133 – foreign exchange differences 540 – 12 543 – 121 13 204 – transfers and reclassification of assets

at net book value including assets held for sale 9 267 – 22 859 (19 423) 186 12 889

– non-current assets held for sale – – (11 702) – – (11 702)– disposals at net book value – (351) – (7 854) (8 706) (16 911)– depreciation (400) (135) (53 508) (16 554) (3 259) (73 856)

Balance at end of year 85 171 888 191 682 195 977 13 374 487 092

Made up as follows: – cost/fair value 90 035 8 282 411 177 239 753 45 553 794 800– accumulated depreciation (4 864) (7 394) (219 495) (43 776) (32 179) (307 708)

Net book value 85 171 888 191 682 195 977 13 374 487 092

Company2014 Beginning of year – cost/fair value 64 407 3 810 196 470 231 587 35 188 531 462 – accumulated depreciation (3 426) (2 596) (121 813) (38 242) (31 028) (197 105)

Net book value 60 981 1 214 74 657 193 345 4 160 334 357


properties 4 131 – – – – 4 131 – impairment of non-current assets – – (688) (1 633) – (2 321)– transfers and reclassification of assets

at net book value 14 547 – 19 409 (19 422) 13 14 547 – additions 614 – 915 23 719 2 227 27 475 – non-current assets held for sale – – (6 622) – – (6 622)– disposals at net book value – (351) (7 167) (7 854) (69) (15 441)– depreciation (277) (13) (11 187) (14 460) (1 686) (27 623)

Balance at end of year 79 996 850 69 317 173 695 4 645 328 503

Made up as follows: – cost/fair value 83 699 2 708 168 873 216 952 27 651 499 883– accumulated depreciation (3 703) (1 858) (99 556) (43 257) (23 006) (171 380)

Net book value 79 996 850 69 317 173 695 4 645 328 503


Land and

buildings R000

Leasehold improve-

ments and prefabri-

cated buildings

R000 Vehicles

R000

Leased vehicles

R000

Plant,furniture

and equipment

R000 Total R000

7. NON-FINANCIAL ASSETS continued7.1 Property, plant and equipment

(continued) Group2013 Beginning of year – cost/fair value 62 253 8 046 256 549 255 590 80 748 663 186 – accumulated depreciation (3 820) (7 967) (153 317) (30 684) (44 633) (240 421)

Net book value 58 433 79 103 232 224 906 36 115 422 765


properties 7 415 – – – – 7 415 – assets acquired through business

combinations 2 116 – 72 156 4 069 584 78 925 – additions 4 436 1 096 58 205 15 365 1 516 80 618 – foreign exchange differences – – 7 – 25 32 – transfers and reclassification of assets

at net book value – – 20 066 (20 066) – – – prior year non-current assets held

for sale – – 2 335 2 050 – 4 385 – non-current assets held for sale – – (18 438) – – (18 438)– disposals at net book value (2 017) – (5 978) (2 050) (12 171) (22 216)– depreciation (942) (44) (26 271) (16 390) (4 121) (47 768)

Balance at end of year 69 441 1 131 205 314 207 884 21 948 505 718

Made up as follows: – cost/fair value 73 906 9 141 404 130 246 405 64 876 798 458 – accumulated depreciation (4 465) (8 010) (198 816) (38 521) (42 928) (292 740)

Net book value 69 441 1 131 205 314 207 884 21 948 505 718

Company2013 Beginning of year – cost/fair value 56 499 3 768 189 048 238 537 35 825 523 677 – accumulated depreciation (2 551) (2 585) (117 272) (30 556) (31 036) (184 000)

Net book value 53 948 1 183 71 776 207 981 4 789 339 677


properties 6 591 – – – – 6 591 – transfers and reclassification of assets

at net book value – – 15 566 (15 566) – – – additions 1 317 42 2 110 15 365 1 089 19 923 – prior year non-current assets held

for sale – – 1 247 – – 1 247 – non-current assets held for sale – – (2 328) – – (2 328)– disposals at net book value – – (3 079) – (61) (3 140)– depreciation (875) (11) (10 635) (14 435) (1 657) (27 613)

Balance at end of year 60 981 1 214 74 657 193 345 4 160 334 357

Made up as follows: – cost/fair value 64 407 3 810 196 470 231 587 35 188 531 462 – accumulated depreciation (3 426) (2 596) (121 813) (38 242) (31 028) (197 105)

Net book value 60 981 1 214 74 657 193 345 4 160 334 357

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GROUP COMPANY

2014 R000

2013 R000

2014 R000

2013 R000

7. NON-FINANCIAL ASSETS continued7.2 Investment properties

Opening balance at 1 March 2013 25 161 48 427 16 903 16 179 Non-current assets held for sale – (32 500) – – Transfers and reclassification of assets at net book value (9 267) – (14 547) – Fair value adjustment 8 576 9 234 8 524 724

Closing balance at 28 February 2014 24 470 25 161 10 880 16 903

Rental income 3 469 5 042 3 269 3 028 Operating expenses (181) (185) (104) (105)

Profit from investment properties 3 288 4 857 3 165 2 923

Cost of owner occupied and investment properties 35 530 35 530 34 412 34 412

Investment properties together with land and buildings were revalued by an independent valuator as at 28 February 2014 on an open-market basis based on discounted cash flows, as supported by current market evidence. The independent valuer has reviewed and updated the valuations on an annual basis for the determination of the fair value of the investment properties. The current use does not differ significantly from the highest and best use.

GROUP COMPANY

2014 R000

2013 R000

2014 R000

2013 R000

7.3 Non-current assets classified as held for sale Property plant and equipment 11 702 18 438 6 622 2 328 Investment property – 32 500 – –

11 702 50 938 6 622 2 328

The group intends to dispose of non-current assets classified as held for sale within the next 12 months. Property, plant and equipment no longer required in the operations have been classified as held for sale and a firm commitment exists to dispose of these assets.

GROUP COMPANY

2014 R000

2013 R000

2014 R000

2013 R000

8. LOANS TO RELATED PARTIES 8.1 Loan to share trust – – 13 189 8.2 Loan to joint ventures – long term – – – 2 329 8.3 Loan to joint ventures – short term – – 2 272 –

– – 2 285 2 518

The group consolidates the share incentive trust, which results in an elimination of the non-interest-bearing loan on consolidation. Dividends earned by the trust are used to repay the loan.

The loans to joint ventures, Uzuko Carriers (Pty) Limited and Sitanani Carriers (Pty) Limited, are interest free and have no fixed terms of repayment. The loan is payable on demand. Due to the short term nature of this instrument carrying amount approximates fair value.


9. INVESTMENTS IN ASSOCIATESThe group has a 49.9% interest in Lugubhu Carriers (Pty) Limited and a 40.0% interest in Buhle Betfu Holdings (Pty) Limited at year end. The nature of these associate companies’ business is contract sugar cane harvesting and transportation in Swaziland and South Africa. The group has a further 26% investment in TAB Charters (Pty) Limited and the nature of its business in South Africa is aircraft charter for the transportation of passengers. The 25% investment in Murton’s Cane Contractors (Pty) Limited, which is based in Swaziland, was fully impaired in the prior year.

The investment in Lugubhu Carriers (Pty) Limited is held by Cargo Carriers (Swaziland) (Pty) Limited (an indirect wholly owned subsidiary of Cargo Carriers Limited) and is accounted for at cost in that company. The investment in Buhle Betfu Holdings (Pty) Limited is held by Siyazama Sisonke (Pty) Limited (a wholly owned subsidiary of Cargo Carriers Limited) and is accounted for at cost in that company. The investment in TAB Charters is held by Executive Air (Pty) Limited (a 79% owned subsidiary of Cargo Carriers Limited) and is accounted for at cost in that company.

2014 R000

2013 R000

Murton’s Cane Contractors (Pty) Limited Investment at cost – 160 Post-acquisition profits – 576 Impairment of investment – (393)Current year share of losses – (343)

Carrying value at year end – –

Lugubhu Carriers (Pty) Limited Investment at cost 1 618 1 618 Post-acquisition losses (1 550) (1 550)Loan to associate (151) (151)Impairment of investment 83 83

Carrying value at year end – –

Buhle Betfu Holdings (Pty) Limited Investment at cost 3 405 3 405 Post-acquisition profits 12 426 11 078 Current year share of profits 2 030 1 348

Carrying value at year end 17 861 15 831

TAB Charters (Pty) Limited Investment at cost 1 560 1 560 Sale of investment (763) (763)Post-acquisition profits 3 241 2 688 Current year share of profits 1 054 553

Carrying value at year end 5 092 4 038

Total carrying value of investment in associates 22 953 19 869

Total share of profits from associates 3 084 1 558

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LUGUBHU CARRIERS (PTY)

LIMITED

MURTON’S CANE CONTRACTORS (PTY) LIMITED

2014 R000

2013 R000

2014 R000

2013 R000

9. INVESTMENTS IN ASSOCIATES continuedStatement of financial positionTotal assets 4 635 4 218 – 3 605

4 635 4 218 – 3 605

Equity (3 825) (3 739) – 2 482 Total liabilities 8 460 7 957 – 1 123

4 635 4 218 – 3 605

Income statement Revenue 1 477 2 563 – –

Loss before tax (170) (356) – (1 962)Taxation 18 66 – 589

Loss after tax (152) (290) – (1 373)

Share of associates loss (49.9%/25%) – – – (343)

BUHLE BETFU HOLDINGS (PTY)

LIMITEDTAB CHARTERS (PTY) LIMITED

2014 R000

2013 R000

2014 R000

2013 R000

Statement of financial positionTotal assets 87 841 104 348 25 040 27 637

87 841 104 348 25 040 27 637

Equity 37 112 35 037 19 752 16 476 Total liabilities 50 729 69 311 5 288 11 161

87 841 104 348 25 040 27 637

Income statement Revenue 156 015 138 284 37 771 53 646

Profit before tax 6 124 5 529 5 631 2 953 Taxation (1 049) (2 159) (1 577) (827)

Profit after tax 5 075 3 370 4 054 2 126

Share of associates profit (40%/26%) 2 030 1 348 1 054 553

Dividend income from associate 1 137 915 – – Transactions with group 11 807 – 3 107 9 244

The carrying value of the above investments does not exceed the directors’ valuation of the investments.

The group does not equity account losses from associates when the carrying value of the investment in associate is impaired to nil. The loans to associates are non-interest-bearing and have no fixed terms of repayment.

The group has no legal or constructive obligation to make payments on behalf of the associates, unless sureties or guarantees have been offered.

The transactions with Cargo Carriers relate to management fees, vehicle hire charges and other operating costs.


10. INVESTMENT IN JOINT VENTURES The investment in joint ventures represents the shareholding of 50% (2013: 50.83%) in Sitanani Carriers (Pty) Limited and 50% (2013: 50%) in Uzuko Carriers (Pty) Limited. These partnerships represent Cargo Carriers’ relationship with fuel distributorship marketers in Mpumalanga and the Eastern Cape. The group has equal voting rights together with its joint venture partners and unanimous consent is required for decision-making purposes. These joint ventures are equity accounted in the group.

GROUP COMPANY

2014 R000

2013 R000

2014 R000

2013 R000

Sitanani Carriers (Pty) Limited Investment at cost – – – –Post-acquisition profits 378 – – –Loan to joint venture 1 343 1 400 – – Current year share of profits (268) 378 – –

Carrying value at year end 1 453 1 778 – –

Uzuko Carriers (Pty) Limited Investment at cost – – – –Post-acquisition profits 2 018 1 463 – – Loan to joint venture 930 930 – – Current year share of profits 402 555 – –

Carrying value at year end 3 350 2 948 – –

Total carrying value of investment in joint ventures 4 803 4 726 – –

Total share of profits from joint ventures 134 933 – –

SITANANI CARRIERS (PTY) LIMITED

UZUKO CARRIERS (PTY) LIMITED

2014 R000

2013 R000

2014 R000

2013 R000

Statement of financial position Total assets 24 223 15 893 25 741 27 689

24 223 15 893 25 741 27 689

Equity (209) 735 4 839 4 036 Total liabilities 24 432 15 158 20 902 23 653

24 223 15 893 25 741 27 689

Income statement Revenue 21 912 18 624 39 899 38 150

(Loss)/profit before tax (709) 1 045 1 136 1 558 Taxation 174 (301) (332) (448)

(Loss)/profit after tax (535) 744 804 1 110

Share of joint ventures (loss)/profit (50%/50%) (268) 378 402 555

Dividend income from associate – – – – Transactions with group 1 850 870 3 781 2 315

The carrying value of the investment does not exceed the directors’ valuation of the investment.

The transactions with Cargo Carriers relate to management fees and other operating costs.

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Issued share

capital

Cost of shares R000

2014R000

2013R000

2014R000

2013R000

11. SUBSIDIARY COMPANIES11.1 Investments in subsidiaries

Transport Cargo Carriers (Botswana)2 2 – – – (94) (135)Cargo Carriers (Swaziland)22 4 – 26 179 25 980 – – Heavy Hauliers (Pvt) Limited# 2 – 1 442 1 442 – – J & G Transport (Lesotho)## 200 1 335 – – (29 972) (29 940)J & G Transport (South Africa) 100 – – – – – Jaybee Holdings Incorporated### 10 000 1 281 – – – –Ezethu Logistics (Pty) Limited 100 1 000 – – – – Cargo Carriers Namibia 1 – – – (780) (850)Buks Haulage Limited 922 18 043 2 065 3 090 – – Information technology Two Inc Consulting 100 2 068 – – – – Property Cargo Carriers Alrode Properties 1 600 107 – 6 488 – – Cargo Carriers Workshop Property 2 – – – – (78 785)Carrick (Swaziland)22 2 – – – – – Aviation Executive Air (Pty) Limited (South Africa) 154 – 1 617 1 617 – – Summer Sun Trading (Pty) Limited (South Africa) 1 000 – – – – – Dormant/Holding Cargo Carriers (Lesotho)## 2 – – – – – Cargo Carriers Management Services 3 501 4 – – (4) (4)Cargo Carriers Swaziland Holdings22 10 – – – – – Cargo Carriers Harvesting22 10 – – – – –Cargo Carriers Mozambique~ 1 – – – – –GFLT Developments 1 000 1 – – (1) (1)Heavy Hauliers Limited 10 – – – – – Heavy Hauliers Limited 2 – – – – – Siyazama Sisonke Empowerment 200 3 405 – – (3 373) (3 373)Cost of shares 27 244 31 303 38 617 (34 224) (113 088)Less: Impairment of Two Inc Consulting (2 068)Carrying value 28 February 2013 25 176 Less: Impairment of Jaybee Holdings Incorporated (1 281)Carrying value 28 February 2014 23 895

Country of incorporation Currency of issued share capital 2 Botswana Pula 22 Swaziland Emalangeni # Zimbabwe US Dollars ## Lesotho Maloti ### British Virgin Islands US Dollars

Namibia Namibian Dollars Zambia Zambian Kwacha Malawi Malawian Kwacha

~ Mozambique Mozambique Meticals Held indirectly

The subsidiaries listed above are all wholly owned, with the exception of GFLT Developments (Pty) Limited (85%), Executive Air (Pty) Limited (79%), Ezethu Logistics (Pty) Limited (70%) and Buks Haulage Limited (55%). The group exercises effective control over all subsidiaries based on its majority shareholding and shareholders’ agreements which are in place. Executive Air owns 70% of the issued share capital in Summer Sun Trading (Pty) Limited which results in the group having an effective control of 55.3% in this company. Unless otherwise stated, all subsidiaries are private companies and the issued share capital is stated in South African Rand.

Amounts owing Amounts owing by subsidiary to subsidiary companies companies


11. SUBSIDIARY COMPANIES continued11.1 Investments in subsidiaries continued

The group has commenced with the dissolution and deregistration of Jaybee Holdings Incorporated and accordingly the carrying value of the investment of R1.28 million was fully impaired during the year in the company. This decision was taken in view of the company’s dormant status (see note 3).

Workshop Property (Pty) Limited and Alrode Property (Pty) Limited were merged during the current year with Cargo Carriers Limited (CCL). The rationale for this merger was due to the dormant status of these companies as a result of the sale of the properties and the fact that they are wholly owned subsidiaries of CCL with both being under common control. The result of this merger resulted ultimately in the intercompany loans between the property companies and CCL being eliminated and the distributable reserves of the dormant companies being transferred directly to distributable reserves of CCL in accordance with business combinations under common control. The deregistration of these companies is expected to be concluded within the next financial year.

The loans to subsidiary companies are non-interest-bearing and have no stipulated repayment terms. The loan is payable on demand. Due to the short term nature of this instrument carrying amount approximates fair value. In the prior year the loans were classified as long term as the company committed not to claim repayment within 12 months.

The attributable aggregate income after taxation of the subsidiaries for the year ended 28 February 2014 is: Profit: R29.3 million (2013: R37.4 million) Loss: R9.9 million (2013: R13.9 million)

The application of IFRS 12 Disclosure of Interests in Other Entities requires any material contribution of total assets, total liabilities, revenue and profit before tax of the relevant subsidiary, joint venture or associate to be disclosed. The group has applied significant judgement and considers contributions below 10% from the relevant subsidiary, joint venture or associate of the group as a whole as being immaterial.

11.2 Investment in a material subsidiary The group’s 55% investment in Buks Haulage Limited (BHL) represents a material subsidiary in terms of IFRS 12 Disclosure of Interests in Other Entities. BHL’s net contribution of total assets, total liabilities, revenue and profit before tax is disclosed below.

BUKS HAULAGE LIMITED

2014 R000

2013 R000

Total assets 164 986 172 373 Total liabilities 129 660 142 114 Revenue 235 420 91 812 Profit/(loss) before tax 3 870 (582)

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GROUP COMPANY

2014 R000

2013 R000

2014 R000

2013 R000

12. INVENTORIES Fuels, oils and lubricants 4 323 4 152 2 249 2 402 Tyres 1 158 945 683 542 Maintenance spares 12 712 7 990 2 823 2 463 Provision for obsolescence (1 204) (540) (328) (408)

Total inventories at the lower of cost and net realisable value 16 989 12 547 5 427 4 999

13. TRADE AND OTHER RECEIVABLES Trade receivables net of impairments 121 374 107 633 91 378 84 654 Sundry receivables 28 816 26 318 19 100 11 478

150 190 133 951 110 478 96 132

Trade receivables are non-interest-bearing and are generally on 30 day terms. Included in trade receivables are related parties as disclosed in note 23.

As at 28 February 2014, trade receivables of an initial value of R13.2 million (2013: R26.4 million) were impaired and fully provided for. See below for the movements in the provision for impairment of receivables.

Individually impaired Group R000

Individually impaired Company

R000

Balance at 1 March 2012 10 441 5 648 Increase in provision during year 16 416 29 669 Provision utilised (397) (331)

Balance at 28 February 2013 26 460 34 986 Increase in provision during year 2 739 3 918 Provision utilised (15 927) (14 534)

Balance at 28 February 2014 13 272 24 370

As at 28 February 2014, the age analysis of trade receivables is as follows:

Total R000

Neither past due nor

impaired 0 to 30 days 31 to 60 days 61 to 90 days >90 days

Group2014 121 374 92 424 14 661 3 821 3 890 6 578 2013 107 633 86 449 14 542 2 857 1 157 2 628 Company2014 91 378 62 914 12 344 2 710 5 411 7 999 2013 84 654 68 623 9 528 1 346 1 920 3 237

Past due but not impaired


GROUP COMPANY

2014 R000

2013 R000

2014 R000

2013 R000

14. CASH AND SHORT-TERM DEPOSITS Cash at bank 34 676 39 371 9 129 5 659 Short-term investments on call 81 229 45 000 81 229 45 000 Cash on hand 436 409 328 293

116 341 84 780 90 686 50 952

Cash at bank earns interest based on daily bank deposit rates. Short-term investments on call are invested in the Stanlib Extra Income Fund and is interest-bearing at market-related rates.

15. SHARE CAPITAL Authorised – 25 000 000 ordinary shares of 1 cent each 250 250 250 250

Issued – 20 000 000 ordinary shares of 1 cent each 200 200 200 200 Treasury – 593 710 ordinary shares of 1 cent each (6) (6) – –

194 194 200 200

The unissued shares have been placed under the control of the directors. This authority expires at the next annual general meeting.

16. DEFERRED TAXATION The liability for deferred taxation is made up as follows: Non-financial assets 97 936 109 056 64 441 71 617 Prepayments 506 551 430 509 Provisions (8 040) (12 406) (2 914) (8 744)Estimated tax losses (9 929) (10 123) (7 383) (8 061)

80 473 87 078 54 574 55 321

Deferred tax asset (18 481) (22 529) (10 300) (16 805)Deferred tax liability 98 954 109 607 64 874 72 126

Net deferred tax liability 80 473 87 078 54 574 55 321

Reconciled as follows: Opening balance at 1 March 2013 87 078 59 552 55 321 49 564 Current year deferred tax expense recognised in profit and loss (6 948) 10 719 1 582 3 729 Current year deferred tax expense recognised in other comprehensive income (313) 2 076 (2 087) 1 845 Income tax effect of revaluation of owner-occupied properties (770) (2 076) (770) (1 845)Income tax effect of property adjustments (1 774) – – – Change in estimated base cost for CGT purposes 2 857 – 2 857 – Foreign currency translation reserve 1 621 163 – – Prior period adjustments (965) (17) (242) 183 Deferred tax acquired in business combination – 13 516 – – Fair value adjustment to assets in business combinations – 1 069 – –

Closing balance at 28 February 2014 80 473 87 078 54 574 55 321

The asset for deferred taxation has been raised on the assumption that future taxable profits will be available against which the associated unused tax losses and deductible temporary differences can be utilised. The group has a total of R29.1 million unrecognised tax losses as at 28 February 2014.

The group does not intend to settle current tax liabilities and assets on a net basis, nor to realise tax liabilities and assets simultaneously, as this is not how the group manages its tax affairs. With each entity in the group regarded as not having the right to set off current tax liabilities and assets and requirements of IAS 12.74(a) are not met for each entity and accordingly IAS 12.74(b)(i) requires the deferred tax amounts in each entity not to be set off.

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GROUP COMPANY

2014 R000

2013 R000

2014 R000

2013 R000

17. INTEREST-BEARING LOANS AND BORROWINGS 17.1 Loan bears interest between prime and prime less 2.25%,

with monthly repayment terms over a five-year period ending December 2014, and is secured by vehicles with a book value of R0.5 million (2013: R10.1 million). 146 6 005 146 1 122

17.2 Loan bears interest between prime and prime less 1%, with monthly repayment terms over a five-year period ending June 2017, and is secured by vehicles with a book value of R0.2 million (2013: R0.2 million). 207 259 207 259

17.3 Loan bears interest between prime and prime less 1.0%, with monthly repayment terms over a five-year period ending July 2018, and is secured by vehicles with a book value of R7.2 million (2013: R5.39 million). 5 315 4 715 – –

17.4 Loan bears interest at prime, with monthly repayment terms over a five-year period ending August 2015, and is secured by vehicles with a book value of R12.4 million (2013: R13.4 million). 5 719 9 315 – –

17.5 Loan bears interest between prime and prime less 1.0%, with monthly repayment terms over a five-year period ending September 2016, and is secured by vehicles with a book value of R16.7 million (2013: R18.1 million). 11 104 15 398 11 104 15 398

17.6 Loan was fully settled during the current financial year due to the sale of an aircraft and the related proceeds being used to settle remaining loans of the business (2013: R7.7 million). – 3 473 – –

17.7 Loan bears interest at a fixed rate of 6.95%, with monthly repayment terms over a two to three-year period ending September 2015, and is secured by vehicles with a book value of R94.0 million (2013: R94.4 million). 89 557 112 540 – –

17.8 Loan bears interest between prime and prime less 2.25%, with monthly repayment terms over a five-year period ending January 2019, and is secured by vehicles with a book value of R168.3 million (2013: R164.1 million). 104 059 114 492 94 395 114 492

216 107 266 197 105 852 131 271 Current portion included under current liabilities (109 088) (94 360) (44 701) (46 109)

Non-current liabilities 107 019 171 837 61 151 85 162


18. GROUP BORROWINGS AND CAPITAL MANAGEMENTThe primary objective of the group’s capital management, which comprises equity attributable to the equity holders of the parent, is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. The method to raise additional capital will be decided and approved by the board.

The borrowing powers of the company and its subsidiaries are as determined by the company’s holding company. These have been fixed at not more than 50% of total equity. No changes were made to the objectives, policies or processes for managing capital during the reporting period.

GROUP COMPANY

2014 R000

2013 R000

2014 R000

2013 R000

Total equity 435 048 389 759

Borrowing capacity of the group at 50% of total equity 217 524 194 880

The extent to which the group’s borrowing capacity has been utilised at year end was as follows: Interest-bearing loans and borrowings – non-current 107 019 171 837 Interest-bearing loans and borrowings – current 109 088 94 360

216 107 266 197 Cash and short-term deposits (116 341) (84 780)

Net interest-bearing loans and borrowings 99 766 181 417

Borrowing capacity of the group utilised at year end 45.9% 93.1%

19. TRADE AND OTHER PAYABLES Trade payables 59 361 54 504 42 113 41 038 VAT payable 5 126 4 018 2 872 2 523 Other payables 18 249 23 447 16 885 11 272

82 736 81 969 61 870 54 833

Trade payables are non-interest-bearing and are generally on 30 day terms.

20. PROVISIONS Leave pay – at 1 March 2013 5 393 5 073 4 990 4 670 – increase in provision during year 5 422 4 573 4 705 4 338 – amounts utilised during year (4 343) (4 253) (4 026) (4 018)– classified as non-current (2 781) – (2 477) –

– at 28 February 2014 3 691 5 393 3 192 4 990

Statutory severance and retirement allowance – at 1 March 2013 4 686 4 129 – increase in provision during year 2 032 781 – amounts utilised during year (836) (224)

– at 28 February 2014 5 882 4 686

Total provisions non-current 2 781 – 2 477 –

Total provisions current 9 573 10 079 3 192 4 990

Provisions listed above are dependent on the movement of staff. The expected timing of the outflow of cash resources is not determinable. Provision for severance pay represents severance allowance entitled to employees in certain foreign jurisdictions in accordance with basic conditions of service regulated by law in those areas.

Leave pay provision classified as non-current was calculated using the following assumptions: average leave days per employee expected to be taken after 12 months and discounted by the risk free rate as per the applicable RSA government bond.

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GROUP COMPANY

2014 R000

2013 R000

2014 R000

2013 R000

21. COMMITMENTS21.1 Capital expenditure commitments

Approved by directors: – contracted for – – – – – not contracted for – 21 096 – 21 056

– 21 096 – 21 056

Budgeted capital expenditure for 2015 46 320 39 301 8 729 30 929

Capital commitments will be funded from existing cash resources and funds generated by operations as well as available finance facilities.

21.2 Interest-bearing loans and borrowings commitments – within one year 109 088 94 360 44 701 46 109– after one year, but not more than five years 107 019 171 837 61 151 85 162– more than five years – – – –

216 107 266 197 105 852 131 271

Within 1 year 1 to 5 years Total

Group 2014Total of future minimum lease payments 122 488 115 037 237 525 Less unearned finance charges (13 400) (8 018) (21 418)

Present value of future minimum lease payments 109 088 107 019 216 107

Company 2014 Total of future minimum lease payments 51 630 66 773 118 403 Less unearned finance charges (6 929) (5 622) (12 551)


Group 2013 Total of future minimum lease payments 109 507 185 366 294 873 Less unearned finance charges (15 147) (13 529) (28 676)


Company 2013 Total of future minimum lease payments 54 900 93 486 148 386 Less unearned finance charges (8 791) (8 324) (17 115)


The group has instalment sale agreements and finance leases for various items of property, plant and equipment. The terms of repayment are disclosed in note 17.


GROUP COMPANY

2014 R000

2013 R000

2014 R000

2013 R000

21. COMMITMENTS continued21.3 Operating lease commitments

– within one year 6 619 9 775 3 353 4 399 – after one year, but not more than five years 24 352 30 992 10 559 15 425– more than five years – – – –

30 971 40 767 13 912 19 824

Operating lease payments are debited monthly in advance and are subject to annual escalation linked either to consumer price index (CPI) or in terms of the contractual agreement. Significant operating leases relate primarily to the rental of property.

22. CONTINGENCY The company did not guarantee any bank facilities of subsidiary companies during the current year (2013: Rnil).

The company has provided the following guarantees and sureties at 28 February 2014: – guarantees of R5.4 million (2013: R5.6 million) – instalment sale facilities granted to joint ventures of R13.9 million (2013: R12.8 million) – instalment sale, finance lease and loan facilities granted to subsidiary companies of R101.6 million (2013: R122.4 million) – instalment sale facilities granted to owner drivers of Rnil million (2013: R0.6 million)

23. RELATED-PARTY TRANSACTIONS Terms and conditions of transactions with related parties Related-party transactions exist between the group, fellow subsidiaries, associates and joint ventures. All purchasing and selling transactions with related parties are concluded at arm’s length. Outstanding balances at year end are unsecured, interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables, except as referred to in note 22.

Details of the major shareholders of the company are disclosed in the directors’ report and all directors of the company have confirmed that they have no major interest in any contract of significance to the group which could result in a conflict of interest.

No share options have been granted to any of the members of the board of directors.

Dividend payments to shareholders and the holding company are disclosed in the directors report.

The following table provides the total amount of transactions, which have been entered into with related parties, other than those noted above, for the year ended 28 February 2014.

SALES TO RELATED PARTIES

PURCHASES FROM RELATED PARTIES

AMOUNTS OWED TO RELATED

PARTIES

Related party – Group 2014 R000

2013 R000

2014 R000

2013 R000

2014 R000

2013 R000

Hallmark Motor Group 428 – 2 849 19 544 425 301 Bolton Footwear 63 29 – – – –

Hallmark Motor Group and Bolton Footwear are subsidiaries of the group’s ultimate holding company, Cargo Carriers Holdings (Pty) Limited. The debts are non-interest-bearing and payment terms are generally on 30 day terms.

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23. RELATED PARTY TRANSACTIONS continuedTerms and conditions of transactions with related parties continued

TRANSACTIONS WITH RELATED

PARTIES

AMOUNTS OWED BY RELATED

PARTIES

AMOUNTS OWED TO RELATED

PARTIES

Related party – Company 2014 R000

2013 R000

2014 R000

2013 R000

2014 R000

2013 R000

Cargo Carriers (Botswana) (Pty) Limited 50 47 – – – – Cargo Carriers (Swaziland) (Pty) Limited 9 066 7 509 – – 7 738 1 781 Heavy Hauliers (Pvt) Limited 2 908 4 711 3 144 8 327 – – J & G Transport (Lesotho) (Pty) Limited 465 1 210 33 1 096 294 38 J & G Transport (South Africa) (Pty) Limited – – – – 1 365 1 020 Jaybee Holdings Incorporated – 581 – – – – Ezethu Logistics (Pty) Limited 12 360 4 378 2 486 77 2 187 10 Buhle Betfu Carriers (Pty) Limited 11 807 – 125 – – – Summer Sun Trading (Pty) Limited 110 170 4 8 – – Uzuko Carriers (Pty) Limited 14 792 12 470 5 907 2 670 198 205 Sitanani Carriers (Pty) Limited 8 912 2 108 2 660 828 – – Buks Haulage Limited 4 046 1 743 499 1 519 13 14 Cargo Carriers Namibia (Pty) Limited 9 671 6 814 854 860 – –

74 187 41 741 15 712 15 385 11 795 3 068

Transaction with subsidiary companies comprise management fees and other transport related services. The above related party disclosure does not include loans to subsidiary companies which are reflected in note 11. Net impairments totalling R1.9 million was recognised during the current year.

Refer to note 11 for the company’s equity interest in subsidiary companies.

Refer to note 9 and 10 for the company’s equity interest in associates and joint venture companies, respectively.

Payments made to directors and key management of the company is disclosed in note 4.

At year end inter-group loans payable to Cargo Carriers Limited by Cargo Carriers Swaziland (Pty) Limited and Ezethu Logistics (Pty) Limited have been subordinated, until such time that the assets of these subsidiary companies fairly valued exceed their liabilities.

24. FINANCIAL INSTRUMENTS 24.1 Introduction

The group’s principal financial instruments comprise bank loans and overdraft, finance leases and hire purchase contracts, loans to associates and joint ventures, cash and short-term deposits, loans and unlisted investments, amounts owing by subsidiary companies and amounts owing to subsidiary companies. The main purpose of these financial instruments is to raise finance for the group’s operations. The group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.

The group does not normally enter into derivative transactions. It is, and has been throughout the year under review, the group’s policy that no trading in financial instruments shall be undertaken.

Listed below are the carrying values of all financial instruments within the group.

GROUP COMPANY

2014 2013 2014 2013

Financial instrument classifications:– loans and receivables 237 715 192 413 182 064 135 606 – financial liabilities at amortised cost 304 564 348 165 173 443 299 192

The main risks arising from the group’s financial instruments are credit risk, foreign currency risk, treasury and interest rate risk and liquidity risk. The board reviews and agrees policies for managing each of these risks and they are summarised on the following page.


24. FINANCIAL INSTRUMENTS continued24.2 Credit risk

The most significant exposure to credit risk is in trade debtors that amounts to 80.8% (2013: 80.4%) of total accounts receivable at year end, for which no collateral is held. The trade debtors comprise a large number of customers. The majority have been contractually tied for some years and have proven credit risk ratings. The group policy is to perform credit checks on all customers. Ratings are done on a regular basis via a debt rating agency. Trade debtors are presented net of impairments. At year end the group considered it had sufficient allowances to cover any significant risk exposure among debtors. The group only deposits cash surpluses with major banks of high quality credit standing. Accordingly the group has no significant concentration of credit risk (refer to note 13).

The carrying amounts of financial assets included in the statement of financial position represent the group’s maximum exposure to credit risk in relation to these assets.

24.3 Foreign currency risk The group policy is to avoid unnecessary exposure to foreign exchange rate fluctuations when entering into any foreign currency transaction. Forward exchange contracts will be used to mitigate the exposure to currency movements if required. No forward exchange contracts were concluded during the current period. The year-end balances and rates are as follows:

Balance at 28 February

2014 in foreign currency

Balance at 28 February

2013 in foreign currency

Exchange rate

28 February 2014

Exchange rate

28 February 2013

GroupUS Dollar bank and short-term deposits ($) 2 603 066 1 139 676 R10.71/US$1 R8.846/US$1 Trade and other receivables 325 566 191 050 R10.71/US$1 R8.846/US$1 Trade and other payables (497 177) (381 822) R10.71/US$1 R8.846/US$1 Long-term loans (8 318 769) (12 259 239) R10.71/US$1 R8.846/US$1

Total foreign currency exposure (5 887 314) (11 310 335)

CompanyUS Dollar bank and short-term deposits ($) 687 607 582 472 R10.71/US$1 R8.846/US$1 Trade and other receivables 282 755 1 611 861 R10.71/US$1 R8.846/US$1 Trade and other payables (171 610) (190 772) R10.71/US$1 R8.846/US$1 Long-term loans – – R10.71/US$1 R8.846/US$1

Total foreign currency exposure 798 752 2 003 561

Increase/(decrease) in basis points

Effect on profit

before tax R000

Effect on equity

R000

Sensitivity analysis – Group2014 50 basis points (2 944) (2 119)

(50) basis points 2 944 2 119

2013 50 basis points (570) (410) (50) basis points 570 410

Sensitivity analysis – Company 2014 50 basis points 399 288

(50) basis points (399) (288)

2013 50 basis points 1 002 721 (50) basis points (1 002) (721)

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24. FINANCIAL INSTRUMENTS continued24.4 Treasury and interest rate risk

Management regularly evaluates the company’s exposure to interest rate fluctuations and determines future gearing based on economic forecasts. As part of the process of managing the group’s interest rate risk, interest rate characteristics of new borrowings and the refinancing of existing borrowings are positioned according to expected movements in interest rates. Refer to note 17 of the financial statements for the potential exposure to interest rate fluctuations.

Increase/(decrease) in basis points

Effect on profit

before tax R000

Sensitivity analysis – Group2014 50 basis points (1 184)

(50) basis points 1 184

2013 50 basis points (915) (50) basis points 915

Sensitivity analysis – Company 2014 50 basis points (378)

(50) basis points 378

2013 50 basis points (450) (50) basis points 450

24.5 Liquidity risk The group monitors its risk of a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity of both its financial investments and financial assets (e.g. accounts receivables, other financial assets) and projected cash flows from operations. The cash flows from debtors and creditors are reasonably well matched in that payments are made to creditors on the same terms and conditions given to customers. It is anticipated that the year-end position will be settled within a 45 to 60 day time frame.

The table below summarises the maturity profile of the group’s financial liabilities at 28 February 2014 based on contractual undiscounted payments.

On demand

R000

Less than 1 year R000

1 to 5 years R000

Total R000

2014Group Interest-bearing loans and borrowings 122 488 – 115 037 237 525 Trade and other payables – 59 361 – 59 361 Other payables excluding VAT 18 249 – – 18 249

Company Interest-bearing loans and borrowings 51 630 – 66 773 118 403 Trade and other payables – 42 113 – 42 113 Other payables excluding VAT 16 885 – – 16 885

2013 Group Interest-bearing loans and borrowings 109 507 – 185 366 294 873 Trade and other payables – 54 504 – 54 504 Other payables excluding VAT 23 446 – – 23 446

Company Interest-bearing loans and borrowings 54 900 – 93 486 148 386 Amounts owing to subsidiary companies 113 088 – – 113 088 Trade and other payables – 41 038 – 41 038 Other payables excluding VAT 11 272 – – 11 272


24. FINANCIAL INSTRUMENTS continued24.6 Fair value of financial instruments

The carrying amounts of financial instruments approximate their fair values due to the short-term maturities of these assets and liabilities. The interest rates on long-term loans are market related, therefore, the fair values approximate the carrying values.

24.7 Fair value measurement The following table provides the fair value measurement hierarchy of the group’s assets and liabilities.

GROUP COMPANY

Fair value measurement

2014 R000

2013 R000

2014 R000

2013 R000

• Non-current assets Property, plant and equipment Level 2 487 092 505 718 328 503 334 357Investment properties Level 2 24 470 25 161 10 880 16 903 Loans to related parties Level 3 – – – 2 518 Amounts owing by subsidiary companies Level 3 – – – 38 617 Non-current assets held for sale Level 2 11 702 50 938 6 622 2 328

• Non-current liabilities Amounts owing by subsidiary companies Level 3 – – – 113 088 Contingent consideration Level 3 5 721 5 359 5 721 5 359 Interest-bearing loans and borrowings Level 2 107 019 171 837 61 151 85 162

There have been no transfers between level 2 and level 3 during the period. The movement in the contingent liability is mainly a result of fair value adjustments and the payment reflected in the cash flow.

The fair value of the above financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values: Fair values of the group’s interest-bearing borrowings and loans were determined by using an amortised cost model using the applicable interest rate. The interest rate was assessed as being at fair value as it is comparable to other interest rates in the market.

Investment properties together with land and buildings were revalued by an independent valuer as at 28 February 2014 on an open market basis based on discounted cash flows, as supported by current market evidence. The independent valuer has reviewed and updated the valuations on an annual basis for the determination of the fair value of the investment properties. The current use does not differ significantly from the highest and best use.

Non-current assets held for sale fair value were established by using the fair value that a willing seller will sell to a willing buyer in the current market as at 28 February 2014.

Fair value of the contingent consideration was determined by discounting the consideration to its present value by using the discount rate that reflects the risk inherent to the transaction.

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GROUP COMPANY

2014 R000

2013 R000

2014 R000

2013 R000

25. NOTES TO THE STATEMENT OF CASH FLOWS25.1 Reconciliation of profit from operating activities to cash

generated by operationsProfit from operating activities 57 808 42 538 30 045 21 281 Depreciation of property, plant and equipment 73 856 47 768 27 623 27 613 Notional interest on contingent consideration 458 – 458 – Foreign exchange movement on contingent consideration (1 341) – (1 341) – Gain on loan written off – – – (2 333)Increase in provisions 2 275 877 679 320 Unrealised foreign exchange differences 2 801 (3 348) 2 856 (2 342)

Operating profit before working capital changes 135 857 87 835 60 320 44 539 Working capital changes (30 467) (38 172) (7 737) 19 901 Increase in inventories (4 442) (8 873) (428) (1 112)(Increase)/decrease in trade and other receivables (16 239) (40 549) (14 346) 12 158 Increase in trade and other payables 767 9 946 7 037 8 855 Foreign exchange differences (10 553) 1 304 – – Cash generated from operations 105 390 49 663 52 583 64 440

25.2 Tax (paid)/received Tax prepaid at the beginning of the year 2 751 2 675 9 995 Tax liability set off against withholding tax debtor 2 735 2 158 – – Current tax charge (11 672) (2 964) – (106)Tax payable/(receivable) at the end of the year 2 101 (2 751) (166) (9)

(4 085) (882) (157) 880

25.3 Dividend paid Amounts unpaid at beginning of year – – – – Amounts charged per statement of equity (9 028) (3 494) (7 000) (3 600)Amounts unpaid at end of year – – – –

(9 028) (3 494) (7 000) (3 600)

25.4 Replacement of non-financial assets Land and buildings 1 990 4 436 614 1 317 Leasehold improvements and prefabricated buildings 243 1 096 – 42 Vehicles 22 390 58 205 915 2 110 Leased vehicles 36 426 15 365 23 719 15 365 Plant, furniture and equipment 3 084 1 516 2 227 1 089

64 133 80 618 27 475 19 923


25. NOTES TO THE STATEMENT OF CASH FLOWS continued25.5 Subsidiary acquired

The group acquired 55% of the issued share capital of Buks Haulage Limited, an unlisted transport company based in Zambia and specialising in the transport of various commodities including, inter alia, copper concentrates, lime and sulphuric acid. This transaction afforded the group further opportunities in expanding its footprint into sub-Saharan Africa and achieving its goal of growth by means of acquisition and risk diversification through business in neighbouring countries. The effective date of the acquisition was 1 September 2012. The fair values of the identifiable assets and liabilities as at the date of acquisition were:

2014 R000

2013 R000

Cash and short-term deposits – 2 394 Inventories – 2 470 Trade and other receivables – 19 734 Property, plant and equipment – 79 522 Deferred taxation – (13 516)Trade and other payables – (24 166)Interest-bearing loans and borrowings – (32 518)

Total identifiable net assets at fair value – 33 920 Non-controlling interest (45% of net assets fair value) – (15 264)Contingent consideration (undiscounted) – (5 969)

Purchase consideration payable – 12 687 Foreign currency movement – (121)

Purchase consideration transferred – 12 566 Net cash acquired with the subsidiary – (2 394)

Net purchase consideration in obtaining control of subsidiary – 10 172

Present value of contingent consideration 5 721 5 359 Revenue consolidated in group – 91 170 Profit/(loss) before tax consolidated in group – (582)

The group did not acquire any subsidiaries in the current year. The contingent consideration relates to a profit warranty as part of the purchase consideration to the current minority shareholders of BHL. A payment of R1.4 million was made in relation to the contingent consideration raised in the prior year. The outstanding contingent consideration was further increased by R1.3 million relating to foreign exchange translation and R0.5 million relating to notional interest.

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INDUSTRIAL AGRICULTURAL SUPPLY CHAIN

SERVICES AVIATION PROPERTY TOTAL

2014R000

2013R000

2014R000

2013R000

2014R000

2013R000

2014R000

2013R000

2014R000

2013R000

2014R000

2013R000

26. SEGMENT REPORTRevenue and other income 761 630 587 563 113 529 94 480 33 212 30 192 3 242 9 428 3 469 5 042 915 082 726 705 Profit before finance income and finance cost 57 985 61 478 (9 847) (16 574) (2 629) (10 658) 3 671 4 775 17 339 14 340 66 519 53 361 Depreciation of property, plant and equipment 65 812 39 393 6 257 4 834 417 409 970 2 190 400 942 73 856 47 768 Profits from associates and joint ventures 134 933 2 030 1 005 – – 1 054 553 – – 3 218 2 491 Investment in associates and joint ventures 4 803 4 726 17 861 15 831 – – 5 092 4 037 – – 27 756 24 594 Impairment of assets (9 920) (2 685) (634) (393) – – – – – – (10 554) (3 078)Non-current assets 370 826 365 282 45 499 46 842 1 214 793 12 139 20 689 109 640 121 867 539 318 555 473 Non-current assets held for sale 7 714 17 707 3 988 731 – – – – – 32 500 11 702 50 938 Capital expenditure 58 567 73 274 3 925 5 672 1 027 355 – – 614 1 317 64 133 80 618

Excludes deferred taxation

WITHIN SOUTH AFRICA

EXTERNAL TO SOUTH AFRICA TOTAL

2014R000

2013R000

2014R000

2013R000

2014R000

2013R000

Geographical segmentsRevenue 579 461 544 568 335 621 182 137 915 082 726 705 Non-current assets 391 865 444 612 147 453 110 861 539 318 555 473

The group operates nationally in South Africa and the Southern African Development Community (SADC) regions. For management purposes the group is split into two main operating divisions comprising the wheels division and the enterprises division, which reports to the CEO and executive director. The wheels division comprises the industrial (powders/steel/chemicals/gas/fuel/mining), agricultural (sugar/tomato) and aviation segment (passenger aircraft transportation) and is headed up by divisional directors. The enterprises division comprises supply chain services (solutions/trading) and the property (investment and owner occupied) segment which are also headed up by divisional directors.

The group’s risks and rate of return are affected predominantly by differences in the products and services provided. Each segment represents a strategic business unit that offers different products and serves different markets. Transfer prices between business segments are set on an arm’s-length basis in a manner similar to transactions with independent third parties. Segment revenue, segment expense and segment results include transfers between business segments. Those transfers are eliminated on consolidation. The basis of this segment report is to reflect those areas of business that are subject to differing risks. This may relate to risk factors such as the weather, consumption patterns, exchange rate volatility and the like.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on the operating profit or loss and is measured consistently with operating profit or loss in the consolidated financial statements. There are no material inter-segment revenues. Revenue from two major customers amounted to R210.7 million (2013: R171.8 million), arising from sales within the industrial segment. Operational sites beyond the borders of South Africa comprise Zambia, Swaziland, Lesotho, Namibia and Zimbabwe.

27. EVENTS AFTER THE REPORTING PERIODThere are no material events that occurred subsequent to the statement of financial position date, which impacted the current reporting period.


Notice is hereby given that the fifty-fourth annual general meeting of shareholders of Cargo Carriers Limited will be held at the registered office of the company, which is situated at 11A Grace Road, Mountainview, Observatory, Johannesburg at 09:30 on Thursday, 3 July 2014 to consider, and if deemed fit, to pass, with or without modifications, the resolutions set out below.

RECORD DATEThe record date for determining which shareholders are entitled to notice of the meeting is Friday, 23 May 2014 and the record date for the purposes of determining which shareholders of the company are entitled to participate in and vote at the annual general meeting is Friday, 27 June 2014. Accordingly, the last day to trade in order to be eligible to vote at the annual general meeting will be Friday, 20 June 2014.

ATTENDANCE AND VOTINGRegistered holders of certificated shares or of dematerialised shares with own name registration may attend the annual general meeting in person. Alternatively you may appoint a proxy to represent you at the annual general meeting of shareholders by completing the attached form of proxy in accordance with the instructions it contains. This proxy form must be delivered to the company’s registered address, set out in paragraph 1 above, to be received before 09:30 on Tuesday, 1 July 2014. Holders of dematerialised shares held through a CSDP or broker and who do not have “own name” registration, but who wish to attend the annual general meeting of shareholders, must obtain the necessary letter of representation from their Central Securities Depository Participant (CSDP) or broker. Holders of dematerialised shares not registered in their name and who do not wish to attend the annual general meeting of shareholders, but would like their vote to be recorded at the meeting, should contact their CSDP or broker and furnish their voting instructions. Holders of dematerialised shares not registered in their name must not complete the form of proxy.

In terms of section 62(3)(e) of the Companies Act, 71 of 2008 (the Companies Act):(i) a shareholder who is entitled to attend and vote at

the meeting is entitled to appoint one or more proxies to attend, participate in and vote at the meeting in his/her stead, by completing the proxy form in accordance with the instructions set out therein;

(ii) a proxy need not be a shareholder of the company;(iii) meeting participants (including shareholders and

proxies) are required to provide reasonably satisfactory identification before being entitled to

attend or participate in a shareholders’ meeting: in this regard, all meeting participants will be required to provide identification satisfactory to the chairman of the meeting. Forms of identification include valid identity documents, driving licences and passports.

ELECTRONIC PARTICIPATION IN THE ANNUAL GENERAL MEETINGPlease note that the company intends to make provision for shareholders of the company, or their proxies, to participate in the annual general meeting by way of electronic communication. Should you wish to participate in the annual general meeting by way of electronic communication, you will need to contact the company at +2711 485 8700 by Friday, 27 June 2014, so that the company can provide for a teleconference dial-in facility. Please ensure that if you are participating in the meeting via teleconference that the voting proxies be sent through to the transfer secretaries, namely Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) by no later than 09:30 on Tuesday, 1 July 2014. No changes to voting instructions after this time and date can be accepted unless the chairman of the meeting is satisfied as to the identification of the electronic participant.

1. Ordinary resolution number 1 – Annual financial statements“RESOLVED THAT the annual financial statements of the company and its subsidiaries for the year ended 28 February 2014, together with the social and ethics and audit committees’ reports, directors’ report and auditors’ reports thereon, be received, considered and adopted.”

Explanatory note:The annual financial statements are required to be approved in terms of the Companies Act, 2008 (No 71 of 2008) (the Act). The minimum percentage of voting rights that is required for ordinary resolution 1 to be adopted is 50% (fifty percent) of the voting rights plus 1 (one) vote to be cast on this resolution.

2. Ordinary resolution number 2 – Director retirement and re-election – SP Mzimela“RESOLVED THAT SP Mzimela, which director retires in terms of the company’s memorandum of incorporation and, being eligible, offers herself for re-election as a director of the company be and is hereby approved.”

SP Mzimela’s curriculum vita is set out on page 22 of the directors’ report.

NOTICE OF ANNUAL GENERAL MEETING OF THE SHAREHOLDERS OF THE COMPANY

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NOTICE OF ANNUAL GENERAL MEETING OF THE SHAREHOLDERS OF THE COMPANY continued

3. Ordinary resolution number 3 – Director retirement and re-election – AE Franklin“RESOLVED THAT AE Franklin, which director retires in terms of the company’s memorandum of incorporation and, being eligible, offers himself for re-election as a director of the company be and is hereby approved.”

AE Franklin’s curriculum vita is set out on page 22 of the directors’ report.

Explanatory note for ordinary resolution numbers 2 and 3:Directors are required to retire by way of rotation in terms of Article 53 of the company’s memorandum of incorporation. The minimum percentage of voting rights that is required for ordinary resolutions 2 and 3 to be adopted is 50% (fifty percent) of the voting rights plus 1 (one) vote to be cast on these resolutions.

4. Ordinary resolution number 4 – Approval of remuneration policy“RESOLVED THAT the remuneration policy, a summary of which has been tabled below, be and is hereby approved.”

Remuneration policy summary:The group strives to remunerate its employees at market-related salaries and the remuneration committee (Remcom) will be guided by one or more appropriate annual salary surveys produced by industry specialists. Positions/jobs are evaluated using a mechanism designed and provided by an external expert, with this job grading exercise being undertaken every two to three years.

Remcom, in consultation with management, designs all incentive schemes, (long and short term), to:

• Promote growth in quality sustainable earnings • Align shareholder and management objectives • Enhance the ability to recruit and retain key employees and management.

Senior management salaries guaranteed remuneration, on a cost-to-company basis, is aligned to the 50th percentile in terms of the market information available from time to time.

The structure and basis for performance based incentives will be recommended by Remcom and approved by the board from time to time to be aligned with company strategy and current shareholder and management objectives.

All increases, after being recommended by the CEO, have to be approved by Remcom.

Once an average overall increase is agreed to by Remcom, the executive committee determines individual application of increases, with variances being due to higher or lower performance ratings based on regular formal reviews.

Explanatory note:Chapter 2 of King III dealing with boards and directors requires companies to table every year their remuneration policy to shareholders for a non-binding advisory vote at the annual general meeting. This vote enables shareholders to express their views on the remuneration policy adopted and on their implementation.

This ordinary resolution is of an advisory nature only and failure to pass this resolution will therefore not have any legal consequences relating to existing arrangements. However the board will take the outcome of the vote into consideration when considering the company’s remuneration policy.

The minimum percentage of voting rights that is required for this ordinary resolution to be adopted is 50% (fifty percent) of the voting rights plus 1 (one) vote to be cast on each resolution.

5. Ordinary resolution number 5 – Appointment and remuneration of auditors“RESOLVED THAT the appointment of Ernst & Young Inc. as the auditors of the company, with Mr Sarel Strydom as designated registered auditor, be and is hereby approved.”

Explanatory note:Ernst & Young Inc. has indicated their willingness to be appointed as the company’s auditors until the next annual general meeting. The audit committee has satisfied itself as to the independence of Ernst & Young Inc. The audit committee has the power in terms of the Act to approve the remuneration of the external auditors. The remuneration and non-audit fees paid to the auditors during the year ended 28 February 2014 are contained in note 1 of the annual financial statements.

The minimum percentage of voting rights that is required for ordinary resolution number 5 to be adopted is 50% (fifty percent) of the voting rights plus 1 (one) vote to be cast.

6. Ordinary resolution number 6 – Appointment of audit committee member – AE Franklin“RESOLVED THAT AE Franklin be and is hereby reapproved as a member of the audit committee.”


AE Franklin’s curriculum vitae is set out on page 22 of the directors’ report.

7. Ordinary resolution number 7 – Appointment of audit committee member – SP Mzimela“RESOLVED THAT SP Mzimela be and is hereby reapproved as a member of the audit committee, it being noted that SP Mzimela is the independent non-executive chairman of Cargo Carriers Limited.”

SP Mzimela’s curriculum vitae is set out on page 22 of the directors’ report.

8. Ordinary resolution number 8 – Appointment of audit committee member – MJ Vuso (Chairman)“RESOLVED THAT MJ Vuso be and is hereby reapproved as a member of the audit committee.”

MJ Vuso’s curriculum vitae is set out on page 22 of the directors’ report.

Explanatory note for ordinary resolutions number 6 to 8:In terms of section 61 (8)(c)(ii) of the Act, shareholders are required to approve the appointment of the audit committee members.

The minimum percentage of voting rights that is required for ordinary resolutions 6 to 8 to be adopted is 50% (fifty percent) of the voting rights plus 1 (one) vote to be cast on these resolutions.

9. Ordinary resolution number 9 – General authority to allot and issue shares for cash“RESOLVED THAT subject to the approval of 75% of the members present in person or by proxy, and entitled to vote at the meeting either by way of a poll or by a show of hands, excluding the controlling shareholders of the company, the directors of the company be and hereby are authorised, by way of general authority, to allot and issue all or any of the authorised but unissued shares in the capital of the company as they in their discretion deem fit, subject to the following limitations:

• The shares which are the subject of the issue for cash must be of a class already in issue, or where this is not the case, must be limited to such equity securities or rights that are convertible into a class already in issue;

• This authority shall not endure beyond the next annual general meeting of the company nor shall it endure beyond 15 months from the date of this meeting;

• There will be no restrictions in regard to the persons to whom the shares may be issued, provided that such shares are to be issued to public shareholders (as defined by the JSE Limited (JSE) in its listing requirements) and not to related parties;

• Upon any issue of shares which, together with prior issues during any financial year, will constitute 5% or more of the number of shares of the class in issue, the company shall by way of an announcement on Securities Exchange News Service (SENS), give full details thereof, including the effect on the net asset value of the company and earnings per share;

• The aggregate issue of a class of shares already in issue in any financial year will not exceed 3 000 000 ordinary shares, being 15% of the number of that class of shares in issue at the date of posting of this notice of annual general meeting (including securities which are compulsorily convertible into shares of that class); and

• The maximum discount at which shares may be issued is 10% of the weighted average traded price of the company’s shares over the 30 business days prior to the date that the price of the issue is determined or agreed by the directors of the applicant.”

Explanatory note:In terms of the company’s memorandum of incorporation, read with the JSE Listings Requirements, the shareholders may authorise the directors to allot and issue the authorised but unissued shares, as the directors in their discretion think fit. This ordinary resolution requires a 75% (seventy-five percent) vote in accordance with the JSE Listings Requirements.

10. Special resolution number 1 – Non-executive directors’ remuneration“RESOLVED THAT the remuneration of the non-executive directors be and is hereby approved with effect from 1 March 2014 as set out below:

Chair-person

R

Other directors/members

of other committees

R

Board meetingRetainer per month 18 333 8 333Attendance fee per meeting 12 000 10 800

Audit committeeRetainer per month – –Attendance fee per meeting 6 000 6 000

Remuneration committeeRetainer per month – –Attendance fee per meeting – –

Social and ethics committeeRetainer per month – –Attendance fee per meeting 2 500 2 500

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Explanatory note:In terms of section 69(9) of the Act, shareholders are required to approve the remuneration of directors.

The minimum percentage of voting rights that is required for this special resolution to be adopted is 75% (seventy-five percent) of the voting rights to be cast on this resolution.

11. Special resolution number 2 – General authority to enter into funding agreements, provide loans or other financial assistance“RESOLVED THAT in terms of section 45 of the Act, as amended, the company be and is hereby granted a general approval authorising the company and/or any one or more of its wholly owned subsidiaries to enter into direct or indirect funding agreements or to provide loans or financial assistance between any one or more of the subsidiaries from time to time, subject to the provisions of the JSE Listings Requirements, for funding agreements and as the directors in their discretion deem fit.

Explanatory note:The purpose of this resolution is to enable the company to enter into funding arrangements with its subsidiaries and to allow inter-group loans between subsidiaries.

The minimum percentage of voting rights that is required for this special resolution to be adopted is 75% (seventy-five percent) of the voting rights to be cast on each resolution.

VOTING AND PROXIESCertificated shareholders and dematerialised shareholders with “own name” registrationIf you are unable to attend the annual general meeting of Cargo Carriers Limited’s shareholders to be held at 09:30 on Thursday, 3 July 2014, at 11A Grace Road, Mountainview, Observatory, Johannesburg and wish to be represented thereat, you should complete and return the attached form of proxy in accordance with the instructions contained therein and lodge it with, or post it to, the transfer secretaries, namely Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) so as to be received by them by no later than 09:30 on Tuesday, 1 July 2014.

Dematerialised shareholders, other than those with “own name” registrationIf you hold dematerialised shares in Cargo Carriers through a CSDP or broker and do not have an “own name” registration, you must timeously advise your CSDP or broker of your intention to attend and vote at the annual general meeting or be represented by proxy thereat in order for your CSDP or broker to provide you with the necessary authorisation to do so, or should you not wish to attend the annual general meeting in person, you must timeously provide your CSDP or broker with your voting instruction in order for the CSDP or broker to vote in accordance with your instruction at the annual general meeting.

Each shareholder, whether present in person or represented by proxy, is entitled to attend and vote at the annual general meeting. On a show of hands every shareholder who is present in person or by proxy shall have one vote, and, on a poll, every shareholder present in person or by proxy shall have one vote for each share held by him/her.

A form of proxy which sets out the relevant instructions for use is attached for those members who wish to be represented at the annual general meeting of members. Duly completed forms of proxy must be lodged with the transfer secretaries of the company to be received by not later than 09:30 on Tuesday, 1 July 2014.

By order of the board

Arcay Client Support (Pty) LimitedCompany secretary

ObservatoryJohannesburg

20 May 2014

NOTICE OF ANNUAL GENERAL MEETING OF THE SHAREHOLDERS OF THE COMPANY continued


CARGO CARRIERS LIMITED(Registration number 1959/003254/06)

Share code: CRGISIN: ZAE000001764

(“Cargo Carriers” or “the Company”)

FORM OF PROXY (for use by certificated and own name dematerialised shareholders only)

For use by certificated and “own name” registered dematerialised shareholders of the company (shareholders) at the annual general meeting of Cargo Carriers to be held at 09:30 on Thursday, 3 July 2014 at 11A Grace Road, Mountainview, Observatory, Johannesburg (the annual general meeting).

I/we (please print)

of (address)

being the holder/s of ordinary shares of R0.01 each in Cargo Carriers, appoint (see note 1)

1. or failing him,

2. or failing him,

3. the chairperson of the annual general meeting,

as my/our proxy to act for me/us and on my/our behalf at the annual general meeting which will be held for the purpose of considering, and if deemed fit, passing, with or without modification, the resolutions to be proposed thereat and at any adjournment thereof; and to vote for and/or against the resolutions and/or abstain from voting in respect of the ordinary shares registered in my/our name/s, in accordance with the following instructions (see note 2):

Number of votes

For Against Abstain

Ordinary resolution number 1 – Annual financial statements

Ordinary resolution number 2 – Director retirement and re-election – SP Mzimela

Ordinary resolution number 3 – Director retirement and re-election – AE Franklin

Ordinary resolution number 4 – Approval of remuneration policy

Ordinary resolution number 5 – Appointment and remuneration of auditors

Ordinary resolution number 6 – Appointment of audit committee member – AE Franklin

Ordinary resolution number 7 – Appointment of audit committee member – SP Mzimela

Ordinary resolution number 8 – Appointment of audit committee member – MJ Vuso (Chairman)

Ordinary resolution number 9 – Approval of general authority to allot and issue shares for cash

Special resolution number 1 – Approval of non-executive remuneration

Special resolution number 2 – Approval of financial assistance

Signed at on 2014

Signature Assisted by me (where applicable)

Name Capacity Signature

FORM OF PROXY

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NOTES TO PROXY

1. CERTIFICATED SHAREHOLDERS AND DEMATERIALISED SHAREHOLDERS WITH “OWN NAME” REGISTRATION

If you are a certificated shareholder or have dematerialised your shares with “own name” registration and you are unable to attend the annual general meeting of Cargo Carriers shareholders to be held at 09:30 on Thursday, 3 July 2014 at the registered office of the company at 11A Grace Road, Mountainview, Observatory, Johannesburg and wish to be represented thereat, you must complete and return this form of proxy in accordance with the instructions contained herein and lodge it with, or post it to, the transfer secretaries, namely Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107), so as to be received by them no later than 09:30 on Tuesday, 1 July 2014.

2. DEMATERIALISED SHAREHOLDERS OTHER THAN THOSE WITH “OWN NAME” REGISTRATION

If you hold dematerialised shares in Cargo Carrier through a CSDP or broker other than with an “own name” registration, you must timeously advise your CSDP or broker of your intention to attend and vote at the annual general meeting or be represented by proxy thereat, in order for your CSDP or broker to provide you with the necessary authorisation to do so, or should you not wish to attend the annual general meeting in person, you must timeously provide your CSDP or broker with your voting instruction in order for the CSDP or broker to vote in accordance with your instruction at the annual general meeting.

NOTES1. This form is for use by certificated shareholders and dematerialised shareholders

with “own-name” registration whose shares are registered in their own names on the record date and who wish to appoint another person to represent them at the meeting. If duly authorised, companies and other corporate bodies who are shareholders having shares registered in their own names may appoint a proxy using this form, or may appoint a representative in accordance with the last paragraph below.

Other shareholders should not use this form. All beneficial holders who have dematerialised their shares through a Central Securities Depository Participant (CSDP) or broker, and do not have their shares registered in their own name, must provide the CSDP or broker with their voting instructions. Alternatively, if they wish to attend the meeting in person, they should request the CSDP or broker to provide them with a letter of representation in terms of the custody agreement entered into between the beneficial owner and the CSDP or broker.

2. This proxy form will not be effective at the meeting unless received at the registered office of the company at 11A Grace Road, Mountainview, Observatory, Johannesburg, Republic of South Africa, not later than 09:30 on Tuesday, 1 July 2014.

3. This proxy shall apply to all the ordinary shares registered in the name of shareholders at the record date unless a lesser number of shares are inserted.

4. A shareholder may appoint one person as his proxy by inserting the name of such proxy in the space provided. Any such proxy need not be a shareholder of the company. If the name of the proxy is not inserted, the chairman of the meeting will be appointed as proxy. If more than one name is inserted, then the person whose name appears first on the form of proxy and who is present at the meeting will be entitled to act as proxy to the exclusion of any persons whose names follow. The proxy appointed in this proxy form may delegate the authority given to him in this proxy by delivering to the company, in the manner required by these instructions, a further proxy form which has been completed in a manner consistent with the authority given to the proxy of this proxy form.

5. Unless revoked, the appointment of proxy in terms of this proxy form remains valid until the end of the meeting even if the meeting or a part thereof is postponed or adjourned.

6. If 6.1 a shareholder does not indicate on this instrument that the proxy is to vote

in favour of or against or to abstain from voting on any resolution; or 6.2 the shareholder gives contrary instructions in relation to any matter; or 6.3 any additional resolution/s which are properly put before the meeting; or 6.4 any resolution listed in the proxy form is modified or amended,

the proxy shall be entitled to vote or abstain from voting, as he thinks fit, in relation to that resolution or matter. If, however, the shareholder has provided further written instructions which accompany this form and which indicate how the proxy should vote or abstain from voting in any of the circumstances referred to in 6.1 to 6.4, then the proxy shall comply with those instructions.

7. If this proxy is signed by a person (signatory) on behalf of the shareholder, whether in terms of a power of attorney or otherwise, then this proxy form will not be effective unless:

7.1 it is accompanied by a certified copy of the authority given by the shareholder to the signatory; or

7.2 the company has already received a certified copy of that authority.

8. The chairman of the meeting may, at his discretion, accept or reject any proxy form or other written appointment of a proxy which is received by the chairman prior to the time when the meeting deals with a resolution or matter to which the appointment of the proxy relates, even if that appointment of a proxy has not been completed and/or received in accordance with these instructions. However, the chairman shall not accept any such appointment of a proxy unless the chairman is satisfied that it reflects the intention of the shareholder appointing the proxy.

9. Any alterations made in this form of proxy must be initialled by the authorised signatory/ies.

10. This proxy form is revoked if the shareholder who granted the proxy: 10.1 delivers a copy of the revocation instrument to the company and to the

proxy or proxies concerned, so that it is received by the company by not later than 09:30 on Tuesday, 1 July 2014; or

10.2 appoints a later, inconsistent appointment of proxy for the meeting; or 10.3 attends the meeting in person.

11. If duly authorised, companies and other corporate bodies who are shareholders of the company having shares registered in their own name may, instead of completing this proxy form, appoint a representative to represent them and exercise all of their rights at the meeting by giving written notice of the appointment of that representative. This notice will not be effective at the meeting unless it is accompanied by a duly certified copy of the resolution/s or other authorities in terms of which that representative is appointed and is received at the company’s registered office at 11A Grace Road, Mountainview, Observatory, Johannesburg, Republic of South Africa, not later than 09:30 on Tuesday, 1 July 2014

Summary of rights established by section 58 of the Companies Act, 71 of 2008 (Companies Act), as required in terms of subsection 58(8)(b)(i)1. A shareholder may at any time appoint any individual, including a non-

shareholder of the company, as a proxy to participate in, speak and vote at a shareholders’ meeting on his or her behalf (section 58(1)(a)), or to give or withhold consent on behalf of the shareholder to a decision in terms of section 60 (shareholders acting other than at a meeting) (section 58(1)(b)).

2. A proxy appointment must be in writing, dated and signed by the shareholder, and remains valid for one year after the date on which it was signed or any longer or shorter period expressly set out in the appointment, unless it is revoked in terms of paragraph 6.3 or expires earlier in terms of paragraph 10.4 below (section 58(2)).

3. A shareholder may appoint two or more persons concurrently as proxies and may appoint more than one proxy to exercise voting rights attached to different securities held by the shareholder (section 58(3)(a)).

4. A proxy may delegate his or her authority to act on behalf of the shareholder to another person, subject to any restriction set out in the instrument appointing the proxy (proxy instrument) (section 58(3)(b)).

5. A copy of the proxy instrument must be delivered to the company, or to any other person acting on behalf of the company, before the proxy exercises any rights of the shareholder at a shareholders’ meeting (section 58(3)(c)) and in terms of the memorandum of incorporation (MOI) of the company at least 48 hours before the meeting commences.

6. Irrespective of the form of instrument used to appoint a proxy: 6.1 the appointment is suspended at any time and to the extent that the

shareholder chooses to act directly and in person in the exercise of any rights as a shareholder (section 58)4)(a));

6.2 the appointment is revocable unless the proxy appointment expressly states otherwise (section 58(4)(b)); and

6.3 if the appointment is revocable, a shareholder may revoke the proxy appointment by cancelling it in writing or by making a later, inconsistent appointment of a proxy, and delivering a copy of the revocation instrument to the proxy and to the company (section 58(4)(c)).

7. The revocation of a proxy appointment constitutes a complete and final cancellation of the proxy’s authority to act on behalf of the shareholder as of the later of the date stated in the revocation instrument, if any, or the date on which the revocation instrument was delivered as contemplated in paragraph 6.3 above (section 58(5)).

8. If the proxy instrument has been delivered to a company, as long as that appointment remains in effect, any notice required by the Companies Act or the company’s MOI to be delivered by the company to the shareholder must be delivered by the company to the shareholder (section 58(6)(a)), or the proxy or proxies, if the shareholder has directed the company to do so in writing and paid any reasonable fee charged by the company for doing so (section 58(6)(b)).

9. A proxy is entitled to exercise, or abstain from exercising, any voting right of the shareholder without direction, except to the extent that the MOI or proxy instrument provides otherwise (section 58(7)).

10. If a company issues an invitation to shareholders to appoint one or more persons named by the company as a proxy, or supplies a form of proxy instrument:

10.1 the invitation must be sent to every shareholder entitled to notice of the meeting at which the proxy is intended to be exercised (section 58(8)(a));

10.2 the invitation or form of proxy instrument supplied by the company must: 10.2.1 bear a reasonably prominent summary of the rights established in

section 58 of the Companies Act (section 58(8)(b)(i)); 10.2.2 contain adequate blank space, immediately preceding the name(s)

of any person(s) named in it, to enable a shareholder to write the name, and if desired, an alternative name of a proxy chosen by the shareholder (section 58(8)(b)(ii)); and

10.2.3 provide adequate space for the shareholder to indicate whether the appointed proxy is to vote in favour of or against any resolution(s) to be put at the meeting, or is to abstain from voting (section 58(8)(b)(iii));

10.3 the company must not require that the proxy appointment be made irrevocable (section 58(8)(c)); and

10.4 the proxy appointment remains valid only until the end of the meeting.


GLOSSARY AND DEFINITIONS

“the board” the board of directors of Cargo Carriers Limited, as set out on page 22.

“Buks” Buks Haulage Limited, a Zambia-based logistics company in which Cargo Carriers acquired a 55% stake at 1 September 2012.

“CEO” chief executive officer Cargo Carriers, Murray Bolton.

“CFO” chief financial officer Cargo Carriers, Shaneel Maharaj.

“the company” or Cargo Carriers Limited, listed on the JSE Limited in the Industrial Transportation sector.“Cargo Carriers”

“CSR” corporate social responsibility.

“GRI” Global Reporting Initiative, a best practice benchmark in reporting.

“the group” Cargo Carriers and its subsidiaries and associates.

“IFC” inside front cover.

“IT” information technology.

“IBC” inside back cover

“JSE” JSE Limited incorporating the Johannesburg Securities Exchange, the main bourse in South Africa.

“King III report” King Report on Corporate Governance for South Africa 2009.

“LTSR” lost-time severity rate.

“LTIFR” lost-time injury frequency rate.

“the previous year” the year ended 28 February 2013.

“SENS” Stock Exchange News Service, the regulatory information dissemination platform for the JSE.

“SHEQ” safety, health, environment and quality.

“the year” or the year ended 28 February 2014.“the year under review”

FINANCIAL DEFINITIONS

“EBITDA” Earnings before interest, taxation, depreciation and amortisation.

“FY” Financial year, for Cargo Carriers ending 28 February.

“IFRS” International Financial Reporting Standards.

“HEPS” headline earnings per share.

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Application Level CG3.1 CONTENT INDEX

Profile disclosure Disclosure

Level of

reportingLocation of disclosure

STANDARD DISCLOSURES PART I: Profile disclosures1. Strategy and analysis1.1 Statement from the most senior decision maker of the organisation. Fully Pages 24 to 27,

31 to 33,

1.2 Description of key impacts, risks, and opportunities. Partially Page 16,54 to 56

2. Organisational profile2.1 Name of the organisation. Fully IFC

2.2 Primary brands, products, and/or services. Fully Pages 4 to 7

2.3 Operational structure of the organisation, including main divisions, operating companies, subsidiaries and joint ventures.

Fully Page 6,99 to 101

2.4 Location of organisation’s headquarters. Fully IBC

2.5 Number of countries where the organisation operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report.

Fully Pages 4 and 5

2.6 Nature of ownership and legal form. Fully Page 70

2.7 Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries).

Fully Pages 4 to 7

2.8 Scale of the reporting organisation. Fully IFC

2.9 Significant changes during the reporting period regarding size, structure or ownership. Fully Page 70

2.10 Awards received in the reporting period. Fully Page 3

3. Report parameters3.1 Reporting period (e.g., fiscal/calendar year) for information provided. Fully IFC

3.2 Date of most recent previous report (if any). Fully IFC

3.3 Reporting cycle (annual, biennial, etc) Fully Annual

3.4 Contact point for questions regarding the report or its contents. Fully Page 1

3.5 Process for defining report content. Fully IFC

3.6 Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). See GRI boundary protocol for further guidance.

Fully IFC

3.7 State any specific limitations on the scope or boundary of the report (see completeness principle for explanation of scope).

Partially IFC

3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations and other entities that can significantly affect comparability from period to period and/or between organisations.

Partially Pages 99 to 101

3.9 Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the indicators and other information in the report. Explain any decisions not to apply, or to substantially diverge from, the GRI indicator protocols.


3.10 Explanation of the effect of any restatements of information provided in earlier reports, and the reasons for such restatement (e.g.,mergers/acquisitions, change of base years/periods, nature of business, measurement methods).

Fully None

3.11 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report.

Not None

3.12 Table identifying the location of the standard disclosures in the report. Fully Pages 76 to 89

3.13 Policy and current practice with regard to seeking external assurance for the report. Fully IFC



Level of


4. Governance, commitments and engagement4.1 Governance structure of the organisation, including committees under the highest

governance body responsible for specific tasks, such as setting strategy or organisational oversight.

Fully Pages 50 and 51

4.2 Indicate whether the chair of the highest governance body is also an executive officer. Fully Page 22

4.3 For organisations that have a unitary board structure, state the number and gender of members of the highest governance body that are independent and/or non-executive members.

Fully Page 22

4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.

Fully Pages 17 to 19

4.5 Linkage between compensation for members of the highest governance body, senior managers and executives (including departure arrangements), and the organisation’s performance (including social and environmental performance).

Partially Page 63

4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided.


4.7 Process for determining the composition, qualifications, and expertise of the members of the highest governance body and its committees, including any consideration of gender and other indicators of diversity.


4.8 Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental and social performance and the status of their implementation.


4.9 Procedures of the highest governance body for overseeing the organisation’s identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct and principles.

Fully Page 16, 38 to 47

4.10 Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental and social performance.


4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organisation.

Not

4.12 Externally developed economic, environmental and social charters, principles, or other initiatives to which the organisation subscribes or endorses.

Partially IFC

4.13 Memberships in associations (such as industry associations) and/or national/international advocacy organisations in which the organisation:

• has positions in governance bodies; • participates in projects or committees; • provides substantive funding beyond routine membership dues; or • views membership as strategic.

Partially Page 19

4.14 List of stakeholder groups engaged by the organisation. Fully Pages 17 to 19

4.15 Basis for identification and selection of stakeholders with whom to engage. Fully Pages 17 to 19

4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group.


4.17 Key topics and concerns that have been raised through stakeholder engagement, and how the organisation has responded to those key topics and concerns, including through its reporting.


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G3.1 CONTENT INDEX continued

STANDARD DISCLOSURES PART II: Disclosures on management approach (DMAs)


Level of


DMA EC Disclosure on management approach ECAspects Economic performance Partially Page 30

Market presence Partially Pages 5 and 6

Indirect economic impacts Partially Page 30

DMA EN Disclosure on management approach ENAspects Materials Not

Energy Partially Pages 45 to 47

Water Partially Pages 45 to 47

Biodiversity Not

Emissions, effluents and waste Partially Pages 45 to 47

Products and services Partially Pages 6 and 7

Compliance Partially Pages 45 to 47

Transport Partially Pages 45 to 47

Overall Partially Pages 45 to 47

DMA LA Disclosure on management approach LAAspects Employment Fully Pages 40 to 44

Labour/management relations Fully Pages 40 to 44

Occupational health and safety Fully Pages 40 to 44

Training and education Fully Pages 40 to 44

Diversity and equal opportunity Fully Pages 40 to 44

Equal remuneration for women and men Not

DMA HR Disclosure on management approach HRAspects Investment and procurement practices Fully Page 39

Non-discrimination Partially Page 62

Freedom of association and collective bargaining Fully Page 41

Child labour Not

Prevention of forced and compulsory labor Not

Security practices Not

Indigenous rights Not

Assessment Not

Remediation Not

DMA SO Disclosure on management approach SOAspects Local communities Not

Corruption Partially Page 62

Public policy Not

Anti-competitive behaviour Not

Compliance Partially Page 62

DMA PR Disclosure on management approach PRAspects Customer health and safety Not

Product and service labelling Not

Marketing communications Not

Customer privacy Not

Compliance Not


STANDARD DISCLOSURES PART III: Performance indicators


Level of


ECONOMIC

Economic performanceEC1 Direct economic value generated and distributed, including revenues, operating costs,

employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.

Fully Page 30

EC2 Financial implications and other risks and opportunities for the organisation’s activities due to climate change.

Partially Page 16 and 47

EC3 Coverage of the organisation’s defined benefit plan obligations. Not

EC4 Significant financial assistance received from government. Not

Market presenceEC5 Range of ratios of standard entry-level wage by gender compared to local minimum

wage at significant locations of operation.Not

EC6 Policy, practices and proportion of spending on locally based suppliers at significant locations of operation.

Partially Page 39

EC7 Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation.

Partially Pages 40 and 41

Indirect economic impactsEC8 Development and impact of infrastructure investments and services provided primarily

for public benefit through commercial, in-kind, or pro bono engagement. Fully Page 13,

38 and 39

EC9 Understanding and describing significant indirect economic impacts, including the extent of impacts.

Partially Pages 38 and 39

ENVIRONMENTAL

MaterialsEN1 Materials used by weight or volume. Partially Pages 45 to 47

EN2 Percentage of materials used that are recycled input materials. Partially Pages 45 to 47

EnergyEN3 Direct energy consumption by primary energy source. Partially Pages 45 to 47

EN4 Indirect energy consumption by primary source. Partially Pages 45 to 47

EN5 Energy saved due to conservation and efficiency improvements. Partially Pages 45 to 47

EN6 Initiatives to provide energy-efficient or renewable energy-based products and services, and reductions in energy requirements as a result of these initiatives.


EN7 Initiatives to reduce indirect energy consumption and reductions achieved. Partially Pages 45 to 47

WaterEN8 Total water withdrawal by source. Partially Pages 45 to 47

EN9 Water sources significantly affected by withdrawal of water. Partially Pages 45 to 47

EN10 Percentage and total volume of water recycled and reused. Partially Pages 45 to 47

BiodiversityEN11 Location and size of land owned, leased, managed in, or adjacent to, protected areas

and areas of high biodiversity value outside protected areas.Not

EN12 Description of significant impacts of activities, products and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas.

Not

EN13 Habitats protected or restored. Not

EN14 Strategies, current actions and future plans for managing impacts on biodiversity. Not

EN15 Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk.

Not

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Level of


Emissions, effluents and wasteEN16 Total direct and indirect greenhouse gas emissions by weight. Fully Pages 45 to 47

EN17 Other relevant indirect greenhouse gas emissions by weight. Fully Pages 45 to 47

EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved. Partially Pages 45 to 47

EN19 Emissions of ozone-depleting substances by weight. Not

EN20 NOx, SOx, and other significant air emissions by type and weight. Not

EN21 Total water discharge by quality and destination. Not

EN22 Total weight of waste by type and disposal method. Not

EN23 Total number and volume of significant spills. Not

EN24 Weight of transported, imported, exported or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally.

Not

EN25 Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organisation’s discharges of water and runoff.

Not

Products and servicesEN26 Initiatives to mitigate environmental impacts of products and services, and extent of

impact mitigation.Not

EN27 Percentage of products sold and their packaging materials that are reclaimed by category.

Not

ComplianceEN28 Monetary value of significant fines and total number of non-monetary sanctions for

non-compliance with environmental laws and regulations. Fully Page 62

TransportEN29 Significant environmental impacts of transporting products and other goods and

materials used for the organisation’s operations, and transporting members of the workforce.

Not

OverallEN30 Total environmental protection expenditures and investments by type. Not

SOCIAL: LABOUR PRACTICES AND DECENT WORK

EmploymentLA1 Total workforce by employment type, employment contract and region, broken down

by gender.Partially Pages 40 to 44

LA2 Total number and rate of new employee hired and employee turnover by age group, gender and region.


LA3 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations.


LA15 Return to work and retention rates after parental leave, by gender. Not

Labour/management relationsLA4 Percentage of employees covered by collective bargaining agreements. Fully Pages 40 to 44

LA5 Minimum notice period(s) regarding significant operational changes, including whether it is specified in collective agreements.

Not

Occupational health and safetyLA6 Percentage of total workforce represented in formal joint management-worker health

and safety committees that help monitor and advise on occupational health and safety programmes.


LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region and by gender.

Partially Page 42

LA8 Education, training, counselling, prevention, and risk-control programmes in place to assist workforce members, their families, or community members regarding serious diseases.


LA9 Health and safety topics covered in formal agreements with trade unions. Partially Page 40



Level of


Training and educationLA10 Average hours of training per year per employee by gender, and by employee category. Partially Pages 40 to 44

LA11 Programmes for skills management and life-long learning that support the continued employability of employees and assist them in managing career endings.


LA12 Percentage of employees receiving regular performance and career development reviews, by gender.


Diversity and equal opportunityLA13 Composition of governance bodies and breakdown of employees per employee

category according to gender, age group, minority group membership, and other indicators of diversity.


Equal remuneration for women and menLA14 Ratio of basic salary and remuneration of women to men by employee category, by

significant locations of operation. Not

SOCIAL: HUMAN RIGHTS

Investment and procurement practicesHR1 Percentage and total number of significant investment agreements and contracts that

include clauses incorporating human rights concerns, or that have undergone human rights screening.

Not

HR2 Percentage of significant suppliers, contractors and other business partners that have undergone human rights screening, and actions taken.

Not

HR3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained.


Non-discriminationHR4 Total number of incidents of discrimination and corrective actions taken. Not

Freedom of association and collective bargainingHR5 Operations and significant suppliers identified in which the right to exercise freedom of

association and collective bargaining may be violated or at significant risk, and actions taken to support these rights.


Child labourHR6 Operations and significant suppliers identified as having significant risk for incidents of

child labour, and measures taken to contribute to the effective abolition of child labour.Not

Prevention of forced and compulsory laborHR7 Operations and significant suppliers identified as having significant risk for incidents of

forced or compulsory labour, and measures to contribute to the elimination of all forms of forced or compulsory labour.

Not

Security practicesHR8 Percentage of security personnel trained in the organisation’s policies or procedures

concerning aspects of human rights that are relevant to operations. Not

Indigenous rightsHR9 Total number of incidents of violations involving rights of indigenous people and actions

taken.Not

AssessmentHR10 Percentage and total number of operations that have been subject to human rights

reviews and/or impact assessments.Not

RemediationHR11 Number of grievances related to human rights filed, addressed and resolved through

formal grievance mechanisms.Not

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Level of


SOCIAL: SOCIETY

Local communitiesSO1 Percentage of operations with implemented local community engagement, impact

assessments, and development programmes.Partially Pages 38 and 39

SO9 Operations with significant potential or actual negative impacts on local communities. Not

SO10 Prevention and mitigation measures implemented in operations with significant potential or actual negative impacts on local communities.

Not

CorruptionSO2 Percentage and total number of business units analysed for risks related to corruption. Partially Page 16

SO3 Percentage of employees trained in organisation’s anti-corruption policies and procedures.

Not

SO4 Actions taken in response to incidents of corruption. Partially Page 62

Public policySO5 Public policy positions and participation in public policy development and lobbying. Not

SO6 Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country.

Not

Anti-competitive behaviorSO7 Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly

practices and their outcomes. Partially Page 62

ComplianceSO8 Monetary value of significant fines and total number of non-monetary sanctions for

non-compliance with laws and regulations. Partially Page 62

SOCIAL: PRODUCT RESPONSIBILITY

Customer health and safetyPR1 Life cycle stages in which health and safety impacts of products and services are

assessed for improvement, and percentage of significant products and services categories subject to such procedures.

Not

PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes.

Partially Page 62

Product and service labellingPR3 Type of product and service information required by procedures, and percentage of

significant products and services subject to such information requirements. Not

PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling, by type of outcomes.

Not

PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction.

Not

Marketing communicationsPR6 Programmes for adherence to laws, standards and voluntary codes related to marketing

communications, including advertising, promotion and sponsorship. Not

PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion and sponsorship by type of outcomes.

Not

Customer privacyPR8 Total number of substantiated complaints regarding breaches of customer privacy and

losses of customer data. Not

CompliancePR9 Monetary value of significant fines for non-compliance with laws and regulations

concerning the provision and use of products and services. Partially Page 62


SHAREHOLDERS’ DIARY

Annual general meeting 3 July 2014

Interim report for the half-year to 31 August 2014 and dividend announcement October 2014

Final dividend payable 17 June 2014

Interim dividend payable December 2014

(Registration no: 1959/003254/06)ISIN: ZAE000001764JSE Main Board: Industrial Transportation Share code: CRGListing date: 1987

REGISTERED OFFICE11A Grace Road, MountainviewObservatory, Johannesburg, 2198(Private Bag X555, Houghton 2041)

COMPANY SECRETARYArcay Client Support (Pty) Limited54 Maxwell Drive, WoodmeadJohannesburg, 2193(PO Box 62397, Marshalltown, 2107)

BANKERSStandard Corporate and Merchant Bank Limited3 Simmonds StreetJohannesburg, 2000

LAWYERSWerksmans Attorneys155 Fifth Street SandownJohannesburg, 2000

TRANSFER SECRETARIES AND CENTRAL SHARE DEPOSITORY PARTICIPANTComputershare Investor Services Proprietary Limited70 Marshall StreetJohannesburg, 2001(PO Box 61051, Marshalltown, 2107)

AUDITORSErnst & Young Inc.102 Rivonia RoadSandton, 2196

SPONSORArcay Moela Sponsors Proprietary LimitedRegistration number 2006/033725/07

PREPARER OF ANNUAL FINANCIAL STATEMENTSThe annual financial statements were prepared under the supervision of the CFO, Mr S Maharaj (CA)SA/HDipTax

WEBSITEwww.cargocarriers.co.za

CORPORATE INFORMATION

BASTION GRAPHICS

Cargo

Carriers 2014 ❯

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www.cargocarriers.co.za

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