| Wed 9 Sep 2009, 15:50 | | CAT/CATP - Caxton and CTP Publishers and Printers - Reviewed abridged results |
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CAT CATP
CAT
CAT/CATP - Caxton and CTP Publishers and Printers - Reviewed abridged results
for the year ended 30 June 2009
Caxton and CTP Publishers and Printers Limited
Incorporated in the Republic of South Africa
Registration number 1947/026616/06
Share code: CAT ISIN: ZAE000043345
Preference share: CATP ISIN: ZAE000043352
REVIEWED ABRIDGED RESULTS FOR THE YEAR ENDED 30 JUNE 2009
CONSOLIDATED INCOME STATEMENTS
Reviewed Restated Audited
abridged
for the year for the year for the year
to to to
30 June 30 June 30 June
R`000 2009 2008 2008
Turnover 4 028 134 4 038 352 4 342 732
Other operating income 44 076 93 844 95 801
4 072 210 4 132 196 4 438 533
Changes in inventories (17 739) (10 129) (23 106)
Raw materials and 1 543 208 1 402 648 1 508 192
consumables used
Staff costs 804 996 769 373 809 340
Other operating expenses 1 170 223 1 159 340 1 250 117
Total operating expenses 3 500 688 3 321 232 3 544 543
PROFIT FROM OPERATING 571 522 810 964 893 990
ACTIVITIES
Depreciation 161 439 164 762 167 012
PROFIT FROM OPERATING 410 083 646 202 726 978
ACTIVITIES AFTER
DEPRECIATION
Net impairment 41 772 75 128 75 128
NET PROFIT FROM 368 311 571 074 651 850
OPERATING ACTIVITIES
Finance income 107 117 194 127 201 706
- dividends 62 816 85 906 85 906
- interest 50 524 25 311 32 890
- net (loss)/surplus on (6 223) 82 910 82 910
realisation of
investments
- net (loss)/surplus on (6 223) 42 548 42 548
realisation of
investments
- dividend distribution - 40 362 40 362
on investments
Income from associates 19 799 22 798 22 798
PROFIT BEFORE TAXATION 495 227 787 999 876 354
Taxation 119 142 178 080 212 036
PROFIT FOR THE PERIOD 376 085 609 919 664 318
FROM CONTINUING
OPERATIONS
PROFIT FOR THE PERIOD 70 730 54 399 -
FROM DISCONTINUED
OPERATIONS (MASKEW
MILLER LONGMAN)
PROFIT AFTER TAXATION 446 815 664 318 664 318
Surplus on disposal of 477 081 - -
Maskew Miller Longman
Gross surplus on 522 471 - -
disposal
Taxation thereon (45 390) - -
PROFIT FOR THE PERIOD 923 896 664 318 664 318
Attributable to minority 8 671 9 330 9 330
interest
Attributable to ordinary 915 225 654 988 654 988
shareholders before
providing for
preference dividends
Earnings per share 196,4 139,1 139,1
(cents)
Earnings per share 181,2 127,6 127,6
continuing operations
(cents)
Earnings per share 15,2 11,5 11,5
discontinued operations
(cents)
Headline earnings per 102,6 135,2 135,2
share (cents)
Headline earnings per 87,4 123,7 123,7
share continuing
operations (cents)
Headline earnings per 15,2 11,5 11,5
share discontinued
operations (cents)
Preference dividend paid 178 229 229
Reconciliation of
headline earnings:
Earnings attributable to 915 225 654 988 654 988
ordinary shareholders
Adjusted for non-trading (437 014) (18 266) (18 266)
items
Net surplus on (516 247) (42 548) (42 548)
realisation of
investments
Dividend distribution on - (40 362) (40 362)
investments
Net impairment in value 41 772 75 128 75 128
of property, plant and
trade marks
Net loss/(profit) on 6 442 (1 466) (1 466)
disposal of assets
Tax effect on above 31 019 (9 018) (9 018)
adjustments
Headline earnings 478 211 636 722 636 722
Number of shares in 495 639 628 495 639 628 495 639 628
issue
Number of shares in 495 639 628 495 172 961 495 172 961
issue
Treasury shares (29 644 397) (24 183 157) (24 183 157)
Earnings per share based 465 995 231 470 989 804 470 989 804
on
Reviewed Restated Audited
abridged
for the for the for the
year to year to year to
R`000 30 June 30 June 30 June
Abridged 2009 % 2008 % 2008 %
segmental
analysis
Revenue
Publishing, 3 921 207 97 4 002 034 99 4 002 034 92
printing and
distribution
Other 826 223 21 802 026 20 1 106 406 25
Inter-group (719 296) (18) (765 708) (19) (765 708) (17)
sales
4 028 134 100 4 038 352 100 4 342 732 100
Operating income
Publishing, 303 687 82 471 375 83 471 373 72
printing and
distribution
Other 64 624 18 99 699 17 180 477 28
368 311 100 571 074 100 651 850 100
CONSOLIDATED BALANCE SHEETS
Reviewed Restated Audited
abridged
30 June 30 June to 30 June
R`000 2009 2008 2008
ASSETS
NON-CURRENT ASSETS
PROPERTY, PLANT AND 2 064 458 1 950 298 1 955 742
EQUIPMENT
ASSOCIATED COMPANIES 108 556 98 193 98 193
OTHER INVESTMENTS AT FAIR 755 821 461 493 461 493
VALUE
- LISTED 54 812 50 590 50 590
- UNLISTED 701 009 410 903 410 903
CURRENT ASSETS
INVENTORIES 543 509 637 232 694 512
ACCOUNTS RECEIVABLE 684 777 720 425 770 579
ACCOUNTS RECEIVABLE - OTHER 24 289 - -
TAXATION 19 234 1 215 1 215
FAIR VALUE OF CASH AND CASH 1 532 449 936 614 1 035 011
EQUIVALENTS
CASH AND CASH EQUIVALENTS 1 437 765 124 076 222 473
BANK PREFERENCE SHARES AND 94 684 812 538 812 538
OTHER INSTRUMENTS AT FAIR
VALUE
- LISTED 94 684 302 538 302 538
- UNLISTED - 510 000 510 000
TOTAL ASSETS 5 733 093 4 805 470 5 016 745
EQUITY AND LIABILITIES
EQUITY 4 795 839 3 841 043 3 930 666
ORDINARY SHAREHOLDERS` 4 769 390 3 821 417 3 911 040
EQUITY
PREFERENCE SHAREHOLDERS 100 100 100
MINORITY INTEREST 26 349 19 526 19 526
NON-CURRENT LIABILITIES
DEFERRED TAXATION 326 080 250 939 246 931
CURRENT LIABILITIES
ACCOUNTS PAYABLE 492 877 555 419 641 280
PROVISIONS 118 297 100 617 122 557
TAXATION - 57 452 75 311
TOTAL EQUITY AND LIABILITIES 5 733 093 4 805 470 5 016 745
Net asset value per share 1 029 816 835
(cents)
Directors` valuation of 809 565 509 096 509 096
unlisted investments and
associated companies
Capital expenditure 347 833 405 342 407 737
Capital expenditure 40 000 201 000 201 000
committed
CONSOLIDATED CASH FLOW STATEMENTS
Reviewed Restated Audited
for the for the for the
year to year to year to
30 June 30 June 30 June
R`000 2009 2008 2008
CASH FLOW FROM OPERATING 369 958 461 107 445 926
ACTIVITIES
Cash generated by operations 685 648 793 520 883 358
Changes in working capital 20 361 (129 409) (125 664)
Cash generated by operating 706 009 664 111 757 694
activities
Less: Taxation paid (199 543) (143 164) (184 507)
Net interest received 50 524 25 311 32 890
Dividends received 62 816 85 906 85 906
Net cash inflow from 619 806 632 164 691 983
operating activities
Dividends paid (249 848) (171 057) (246 057)
CASH FLOW FROM INVESTMENT 274 159 (231 699) (233 875)
ACTIVITIES
Property, plant and equipment
- additions to expand (347 833) (405 342) (407 737)
operations
- proceeds from disposals 24 012 12 161 12 380
(323 821) (393 181) (395 357)
Investments
- proceeds on disposal of 608 136 - -
discontinued operations
- (acquisitions of (10 156) 161 482 161 482
investments)/proceeds from
disposals
CASH FLOWS FROM FINANCING (66 526) (133 808) (133 808)
ACTIVITIES
Shares issued - 3 507 3 507
Own shares acquired (66 526) (137 315) (137 315)
Net increase in cash and cash 577 591 95 600 78 243
equivalents - continuing
operations
- continuing operations (30 545) 95 600 78 243
- proceeds on disposal of 608 136 - -
discontinued operations
Cash and cash equivalents at 1 062 508 868 511 984 265
the beginning of the year
Cash at the beginning of the (98 397) - -
year - discontinued
operations
Cash and cash equivalents at 1 541 702 964 111 1 062 508
the end of the period
Fair value adjustment of (9 253) (27 497) (27 497)
preference shares and other
investments
Fair value of cash and cash 1 532 449 936 614 1 035 011
equivalents at the end of the
period
Note:
Cash 1 437 765 124 076 222 473
Preference shares and other 94 684 812 538 812 538
investments at fair value
Fair value of cash and cash 1 532 449 936 614 1 035 011
equivalents at the end of the
period
STATEMENTS OF CHANGES IN EQUITY
Reviewed Restated Audited
abridged
30 June 30 June to 30 June
R`000 2009 2008 2008
Balance at beginning of the 3 930 666 3 696 373 3 782 582
year
Attributable earnings 923 896 664 318 664 318
Foreign currency 3 415 - 3 414
translation reserve
Shares issued - 3 507 3 507
Minority interest acquired (1 670) - -
NDR realised on disposal of - (652) (652)
land and buildings
Treasury shares (66 526) (137 315) (137 315)
Fair value adjustment - 245 902 (112 711) (112 711)
unlisted and listed
investments
Fair value adjustment - 10 004 (26 420) (26 420)
preference shares and
instruments
Dividends paid - ordinary (245 581) (239 550) (239 550)
and preference shareholders
Dividends paid - minority (4 267) (6 507) (6 507)
shareholders
Balance at end of the year 4 795 839 3 841 043 3 930 666
COMMENTARY
Basis of Preparation
The accounting policies adopted in the preparation of the financial statements
for the year under review are in accordance with the requirements of
International Financial Reporting Standards (IFRS), which are consistent with
the prior year and IAS 34 on interim reporting for the financial year end. The
previous year`s results were restated to account for the change in shareholding
in Maskew Miller Longman Holdings (Pty) Limited (MML).
Comments
The negative trend which was evident at the time of reporting on the results for
the six months ended 31 December 2008 intensified during the remainder of the
year, especially during the last three months of the year. Advertising spend
throughout the world is down and South Africa is no exception. No area of media
activity has been fortunate enough to be spared. There has also been a drop in
consumer confidence which is evident in the fall in retail and wholesale sales
and more significantly in the drop off in the sales of properties and vehicles.
In recent months there has been a welcome recovery in the value of the Rand
which will assist in keeping import costs in line with inflation.
All major capital projects have been completed and successfully commissioned and
are providing the increases in capacity and efficiency that were anticipated at
the planning stages of these projects. As previously reported there are
presently no plans for further major capital investments.
Earnings
The year under review was difficult and the results are lower than the previous
year. The company however, remains in a very strong cash position with total
cash and cash equivalents, including the anticipated proceeds of the sale of a
portion of the shares in MML of R1 532,4 million.
It was announced on 23 October 2008 that the company and Pearson PLC our
erstwhile partners in MML for over 25 years, had agreed to form the Pearson
Southern Africa Education Group in order to consolidate Pearson and MML`s
Southern African education businesses. This resulted in the company selling 70%
of its 50% shareholding in MML to Pearson for GBP45 496 000 and retaining a 15%
shareholding in the enlarged company which has been expanded to include the
activities of Heinemann Publishers in South Africa, Heinemann Education,
Botswana Publishers and Edexcel South Africa.
In terms of the agreements that were reached the company will provide printing
services to the enlarged organisation.
All conditions precedent have been met and Pearson is currently in the process
of implementing the merger.
This transaction resulted in a capital profit to the company of R522,5 million
on which Capital Gains Tax of R45,4 million is payable.
Accordingly and where appropriate, it has been necessary to restate the previous
year`s financial figures to give effect to the transaction. The company`s
turnover has reduced as a consequence of the sale as the previous financial
results included the consolidation of the 50% then held in MML. The company`s
share of the after tax profits of MML for the year are separately reflected in
the income statement. The effect on earnings and headline earnings per share is
15,2 cents in the current year and 11,5 cents in the prior year.
Depreciation remained relatively constant at R161,4 million. A further R41,8
million has been written off as impairment, in line with our policy of annually
reviewing the value and useful life of plant and equipment compared with R75,1
million in the previous year.
Turnover was virtually unchanged at R4,028 million. Profit from operating
activities, after depreciation, as a percentage of turnover declined to 10,2%
from 14,1%.
Net finance income fell from R194,1 million to R107,1 million due to the absence
of surpluses on realisation of investments which in the previous year had
amounted to R82,9 million whereas in the current year a loss of R6,2 million was
incurred.
Income from associates, operating in the identical field to that of the company,
were also impacted on by the fall-off in media spend, and profits from this
source slightly decreased from R22,8 million to R19,8 million.
Profit before taxation amounted to R495,2 million in the current year compared
to R787,9 million in the previous year.
After providing for taxation at an effective rate of 24% amounting to R119,1
million and capital gains tax on the capital profit arising from the MML
transaction of R45,4 million, profit after taxation amounted to R923,9 million.
The share of after tax profits of MML, which was disposed of, amounted to R70,7
million.
Minority shareholders absorbed R8,7 million and earnings attributable to
ordinary shareholders were R915,2 million which includes the capital profit
after taxation on the sale of the shares in MML of R477,1 million. The company`s
operating earnings after taxation declined from R664,3 million to R446,8
million.
During the year 5 523 740 shares in the company were repurchased at a cost of
R66,5 million. These shares together with the shares already held as treasury
shares now total 29 644 397.
Earnings per share including the MML capital profit net of tax amounted to 196,4
cents and excluding this capital profit, 95,9 cents.
Headline earnings per share were 102,6 cents compared to 135,2 cents in the
previous year - a decline of 24,1%. Headline earnings per share excluding
discontinued operations amounted to 87,4 cents compared to 123,7 cents in the
previous year - a decline of 29,4%.
Capital expenditure
The completion of the two major projects and other expenditure on the purchase
of capital items resulted in capital expenditure totaling R347,8 million.
All divisions are equipped with the most up to date and efficient equipment,
more than able to cater for increased customer requirements should they arise,
even during peak demand periods without incurring any additional capital costs,
which would lead to a substantial increase in turnover.
Cash flow
Cash and cash equivalents at the year end amounted to R1 532,4 million
notwithstanding the large investment in new assets and the purchase of shares in
the company. This compares with cash and cash equivalents at the end of the
previous year of R936,6 million.
Cash from operations generated R685,6 million and cash from working capital
generated R20,4 million.
DIVISIONAL PERFORMANCE
PUBLISHING, PRINTING AND DISTRIBUTION
Newspaper Publishing and Printing
It has not been an easy year for all media owners regardless of what sphere of
the media landscape they operate in. Worldwide, newspaper companies have
regretted giving away content free on the internet and are finding it almost
impossible to now start charging for content.
The global trend of decreasing advertising revenues which has been in evidence
in our country for some time, with the brunt having been felt by the paid daily
and weekly newspapers has also impacted on revenues. Additionally for a variety
of reasons, circulations keep falling and publications are faced with lower
circulation revenue and are printing less copies for sale with lower
paginations. Simultaneously advertising revenues have substantially decreased in
areas such as property, motoring, employment and classified.
In the light of these recessionary conditions the newspapers of the company,
which are predominantly free community and paid regional newspapers, have held
up relatively well.
It is gratifying to report, that through the strength of our products and more
importantly a competent and loyal staff, profitability in all areas of newspaper
publishing has been maintained albeit at a slightly lower level.
The newspaper factory in Industria has benefited from the installation of the
new plant which is one of the finest of its kind in the world. It has however
had to contend with a serious reduction in volume particularly in respect of
products printed for other publishers and profitability was reduced.
Progress in the creation of new digital platforms to support a number of
publications through web based applications and mobile telephony has taken
place.
The Citizen, which was a beam of light in a sea of darkness in a highly
competitive environment, improved profitability despite circulations having
decreased.
Magazine Publishing and Distribution
The year under review has been a testing time for all magazine publishers.
Driven by unemployment, and the high cost of living, consumer purchasing is down
which is evident in the fall in the circulations of magazines.
The launch of new titles appears to be slowing and there have been a number of
closures. Too many magazines are all competing for the same share of the
advertising spend in a market where retail shelf space is a major problem.
In these circumstances results below budget were recorded.
RNA - the magazine distribution arm continues to provide efficient and effective
service to all of its customers nation wide with the emphasis on excellent
service and merchandising.
Additional products, requiring the same distribution model utilised by RNA were
launched with excellent results.
Commercial Printing
Web and Gravure Printing
The Johannesburg Web Offset factory successfully commissioned its large format
press and post press equipment. This has been an extremely productive
installation, resulting in a far higher level of efficiency. Facilities in Cape
Town were updated and a new warehouse has been built.
This concluded the capital programmes that have been running for several years.
Modern and well equipped factories are situated in Johannesburg, Cape Town and
Durban which allows nation wide servicing of the customer base with maximum
efficiencies, variety and savings.
Even before the economic downturn, there existed an excess in capacity. With a
number of new press installations by the company and its competitors, the
overhang of capacity has been accentuated.
Whilst in most instances, volumes have been maintained, this has been achieved
at lower margins.
Large national retailers appear to be maintaining a reasonable spending pattern
on advertising, but smaller retailers have cut back their spend quite
significantly. Future volume growth and profitability will be entirely
dependent on how quickly the economy recovers.
Book Printing
This section of the company`s business had a relatively better year and was able
to improve profitability despite adverse market conditions.
The production and site facilities were upgraded and place this highly efficient
and modern facility in an excellent position to cope with increased demands as
and when required.
OTHER
Packaging
The emphasis in the packaging division over the past few years has been on the
improvement of efficiencies which also involved the installation of new plant. A
new Gravure press has been installed with an uplift in throughput and efficiency
and the other divisions have also benefited from the upgrading of machinery.
As this division predominantly services fast moving consumer goods clients, it
has suffered from a reduction in volumes.
For years the packaging division has underperformed, but this division is now
better placed to improve its contribution to the company`s profits.
Stationery
Budgets were not met in this highly competitive market particularly insofar as
the procurement of provincial tenders are concerned. This has led to a review of
the joint venture in Ladysmith and a decision to terminate this venture was
recently made. Discussions are currently underway to secure new partners.
Review by Independent Auditors
The company`s auditors, PKF (JHB) Inc. have reviewed these results. Their
unqualified review is available for inspection at the registered office of the
company.
Dividends
The Board has declared a dividend of 40 cents (2008: 52 cents) per share payable
to ordinary shareholders and a preference dividend of 357 cents (2008: 464
cents) per preference share to preference shareholders. To comply with the
procedures of STRATE the following dates are applicable.
Date dividend declared: Wednesday, 9 September 2009
Last date to trade cum dividend: Friday, 20 November 2009
Date to commence trading ex dividend: Monday, 23 November 2009
Record Date: Friday, 27 November 2009
Date of payment: Monday, 30 November 2009
Share certificates may not be dematerialised, or rematerialised between Monday,
23 November 2009 and Friday, 27 November 2009, both days inclusive.
Prospects
Past predictions for future prospects have unfortunately been shown to be
accurate and at this moment in time it is exceedingly difficult to contemplate
the current trading environment changing for at least the next twelve months and
unemployment improving in the short term.
All large capital projects are completed which places the company in a good
position for the future. The company fortunately has large cash resources to
assist it through this difficult period and all major divisions continue to
trade profitably and are cash positive. It also has extremely loyal and long
standing competent employees and an excellent array of products and services.
The company is dependant on advertising and consumer spending and until the
trend evident at this moment in time reverses itself, an improvement in
profitability could decline further before improving.
By order of the Board
Dr F van Zyl Slabbert (Chairman)
T D Moolman (Chief Executive Officer)
G M Utian (Managing Director)
Johannesburg
9 September 2009
Dr F van Zyl Slabbert* (Chairman)
T D Moolman (Chief Executive Officer)
G M Utian (Managing Director)
A C G?Molusi*
F T Gatefield*
P G Greyling
T J W Holden
P M Jenkins*
P Vallet*
A N Nemukula*
(*Non-executive directors)
Registered office:
28 Wright Street, Industria West Johannesburg, 2093
Sponsor
Arcay Moela
Date: 09/09/2009 15:50:07 Produced by the JSE SENS Department.
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