| Tue 24 Aug 2010, 16:22 | | CAT - Caxton & CTP Publishers & Printers - Reviewed results for the |
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CAT CATP
CAT
CAT - Caxton & CTP Publishers & Printers - Reviewed results for the
year ended 30 June 2010
Caxton & CTP
Publishers & Printers Limited
Incorporated in the Republic of South Africa
Registration number 1947/026616/06
Share code: CAT
ISIN code: ZAE000043345
Preference share code: CATP
ISIN code: ZAE000043352
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2010
Highlights
Net profit from operating activities up by 24%
Cash generated by operations R711,9 million
Cash and cash equivalents R1,845 million
ABRIDGED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Reviewed Audited
for the year to for the year to
R`000 30 June 2010 30 June 2009
Turnover 4 087 277 4 028 134
Other operating income 84 760 44 076
4 172 037 4 072 210
Changes in inventories of finished (9 405) (17 739)
goods and work in progress
Raw materials and consumables used 1 539 151 1 543 208
Staff costs 809 358 804 996
Other operating expenses 1 190 585 1 170 223
Total operating expenses 3 529 689 3 500 688
PROFIT FROM OPERATING ACTIVITIES 642 348 571 522
Depreciation 171 268 161 439
PROFIT FROM OPERATING ACTIVITIES 471 080 410 083
AFTER DEPRECIATION
Impairment of plant 12 702 41 772
NET PROFIT FROM OPERATING ACTIVITIES 458 378 368 311
Net finance (loss)/income (3 466) 107 117
- dividends 33 801 62 816
- interest 112 445 50 524
- net surplus/(loss) on realisation 7 506 (6 223)
of investments
- loss on currency hedges (157 218) -
Income from associates 55 045 19 799
PROFIT BEFORE TAXATION 509 957 495 227
Income tax expense 148 776 119 142
PROFIT FOR THE PERIOD FROM 361 181 376 085
CONTINUING OPERATIONS
(Profit from discontinued operations - 70 730
- Maskew Miller Longman)
PROFIT FOR THE YEAR 361 181 446 815
(Surplus on disposal of Maskew - 477 081
Miller Longman)
PROFIT FOR THE YEAR 361 181 923 896
Other comprehensive income: (23 665) 259 323
Foreign currency translation reserve - 3 414
Fair value adjustment - listed (23 665) 255 909
investments and preference shares
TOTAL COMPREHENSIVE INCOME FOR THE 337 516 1 183 219
YEAR
PROFIT ATTRIBUTABLE TO:
Non-controlling interests 7 085 8 671
Owners of the company 354 096 915 225
361 181 923 896
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
Non-controlling interests 7 085 8 671
Owners of the company 330 431 1 174 548
337 516 1 183 219
Earnings per share (cents) 76,0 196,4
Headline earnings per share (cents) 76,1 102,6
Preference dividend paid (cents) 357 476
Ordinary dividend paid per share 40 52
(cents)
Shares in issue 495 639 628 495 639 628
Treasury shares (29 652 397) (29 644 397)
Earnings per share based on 465 987 231 465 995 231
Reconciliation of headline earnings:
Earnings attributable to owners of 354 096 915 225
the company
Adjusted for non-trading items 537 (437 015)
Net surplus on realisation of (7 506) (516 248)
investments
Net impairment in value of property 12 702 41 772
and plant
Net (profit)/loss on disposal of (2 990) 6 442
assets
Tax effect on above adjustments (1 669) 31 019
Headline earnings 354 634 478 210
Abridged segmental analysis % %
Revenue:
Publishing, printing and distribution 3 926 753 96 3 921 207 97
Other 844 542 21 826 224 21
Inter-group sales (684 018) (17) (719 297) (18)
4 087 277 100 4 028 134 100
Operating income:
Publishing, printing and distribution 369 711 81 303 687 82
Other 88 667 19 64 624 18
458 378 100 368 311 100
ABRIDGED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Reviewed Audited
R`000 30 June 2010 30 June 2009
ASSETS
NON-CURRENT ASSETS
PROPERTY, PLANT AND EQUIPMENT 2 147 242 2 064 458
ASSOCIATED COMPANIES 402 180 108 555
OTHER INVESTMENTS AT FAIR VALUE 483 589 755 821
- LISTED 7 870 54 812
- UNLISTED 475 719 701 009
CURRENT ASSETS
INVENTORIES 511 293 543 509
ACCOUNTS RECEIVABLE 770 497 709 066
TAXATION 17 207 19 234
CASH 1 757 265 1 437 765
BANK PREFERENCE SHARES AND OTHER 87 947 94 684
INSTRUMENTS AT FAIR VALUE - LISTED
TOTAL ASSETS 6 177 220 5 733 092
EQUITY AND LIABILITIES
EQUITY 4 941 538 4 795 841
EQUITY ATTRIBUTABLE TO OWNERS OF THE 4 917 386 4 773 658
COMPANY
PREFERENCE SHAREHOLDERS 100 100
NON-CONTROLLING INTEREST 24 052 22 083
NON-CURRENT LIABILITIES
DEFERRED TAXATION 359 947 326 080
CURRENT LIABILITIES
TRADE AND OTHER PAYABLES 762 313 492 877
PROVISIONS 113 422 118 294
TOTAL EQUITY AND LIABILITIES 6 177 220 5 733 092
Net asset value per share (cents) 1 060 1 029
Directors` valuation of unlisted 877 899 809 564
investments and associated companies
Capital expenditure 269 061 347 835
Capital expenditure committed 250 000 40 000
ABRIDGED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Reviewed Audited
R`000 30 June 2010 30 June 2009
Balance at beginning of the year 4 795 841 3 930 666
Total comprehensive income for the 337 516 1 183 219
period
Non-controlling interest acquired - (1 670)
Treasury shares acquired (120) (66 526)
Dividends paid - ordinary and (186 583) (245 581)
preference shareholders
Dividends paid - minority shareholders (5 116) (4 267)
Balance at end of the year 4 941 538 4 795 841
ABRIDGED CONSOLIDATED STATEMENTS OF CASH FLOWS
Reviewed Audited
for the year to for the year to
R`000 30 June 2010 30 June 2009
CASH FLOW FROM OPERATING ACTIVITIES 572 887 369 952
Cash generated by operations 310 735 685 645
Changes in working capital 401 246 20 358
Cash generated by operating activities 711 981 706 003
Less: Taxation paid (93 641) (199 543)
Net interest received 112 445 50 524
Dividends received 33 801 62 816
Net cash generated from operating 764 586 619 800
activities
Dividends paid (191 699) (249 848)
CASH FLOW FROM INVESTING ACTIVITIES (263 275) 274 165
Property, plant and equipment
- additions to expand operations (269 061) (347 835)
- proceeds from disposals 5 298 24 022
(263 763) (323 813)
Investments
- net proceeds from disposals 488 597 978
CASH FLOWS FROM FINANCING ACTIVITIES (120) (66 526)
Own shares acquired (120) (66 526)
Net increase/(decrease) in cash and 309 492 577 591
cash equivalents
Continuing operations 309 492 (30 545)
Proceeds on disposal of discontinued - 608 136
operations
Cash and cash equivalents at the 1 541 702 964 111
beginning of the year
Continuing operations 309 492 1 062 508
Discontinued operations - (98 397)
Cash and cash equivalents at the end 1 851 194 1 541 702
of the year
Fair value adjustment of preference (5 982) (9 253)
shares and other investments
Fair value of cash and cash 1 845 212 1 532 449
equivalents at the end of the year
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")
and are consistent with the prior year and IFRS 34 on interim
reporting.
Comments
Trading conditions continued to be difficult but it appears that the
underlying trend is improving which was evident during the last quarter
of the financial year. The pressure on advertising revenue however
continues unabated and was exacerbated during the run up to the
Football World Cup, as additional investments were made by marketers in
television advertising which received major exposure over this period,
to the detriment of the print industry as a whole. Whilst Wholesale and
Retail Sales figures confirm the improving trend, unemployment is
growing and remains the number one problem with which the country has
to deal.
The strength of the Rand was not anticipated and currency hedges taken
out during the year were marked to market at year end, which resulted
in a loss of R157,2 million being incurred. Notwithstanding this loss
the company traded reasonably, given the circumstances, and operating
profits grew. The financial position remains extremely strong and cash
and cash equivalents were R1,845 million at the year end having
increased from R1,532 million at the close of the previous year with
cash from operations generating R711,9 million.
Earnings
As mentioned above total profits are down on the previous year due to
the loss incurred on the currency exposure.
Turnover was marginally up from R4,028 million to R4,087 million, and
profit from operating activities after depreciation, as a percentage of
turnover, increased to 11,5% from 10,2%. Depreciation amounting to
R171,3 million was R10 million higher than the previous year. An amount
of R12,7 million was written off plant as an impairment in line with
our policy of annually reviewing the book value and estimated useful
life of all items of equipment. This compares with R41,8 million
written off last year.
Net profit from operating activities increased by 24% to R458,4 million
from R368,3 million.
Net finance income declined from R107,1 million to a loss of R3,5
million. Included in net finance income is the aforementioned loss on
currency hedges of R157,2 million. Interest earned has increased mainly
as a result of the proceeds received from the sale of shares in Maskew
Miller Longman Holdings (Proprietary) Limited ("MML"). Interest rates
have however been in a downward phase for some time and lower returns
were earned on cash invested during the year.
Income from Associated Companies has increased substantially from R19,8
million to R55,0 million. This large increase is due to the inclusion,
for the first time, of the company`s share of the profits earned on the
15% shareholding in Pearson Southern Africa which traded up to
expectation during the year. The majority of the investments in other
associates performed satisfactorily.
Profit after providing for taxation at a higher rate of 29% compared to
24% last year, due to additional sums provided for Secondary Tax on
Companies, amounted to R361,2 million. However, the comparable figure
last year of R376,1 million must be adjusted upwards by R70,7 million,
being the after tax profit from discontinued operations relating to
MML, for the year to 30 June 2009, bringing total profit after taxation
for the year ended 30 June 2009 to R446,8 million, which, is therefore
down by 19,2%.
The prior year`s figures include the surplus on the disposal of the
shares in MML after taxation which had amounted to R477,1 million and
total profit for that year was R923,9 million.
Treasury Shares remain substantially unchanged at 29 652 397 shares.
Earnings per share were 76,0 cents compared with 196,4 cents and
headline earnings per share amounted to 76,4 cents - a decline of 25%
on the previous year.
Capital expenditure
New presses and finishing equipment were installed during the year for
the Commercial Printing and Packaging Divisions. Further expenditure
will occur in the Newspaper factories where a decision to extend and
improve its plants, both in Johannesburg and Cape Town has been taken,
and at CTP Cape Printers where finishing equipment is being upgraded.
Capital expenditure during the year amounted to R269,1 million and
commitments to complete the various projects which have been embarked
upon amount to R250 million.
DIVISIONAL PERFORMANCE
PUBLISHING, PRINTING AND DISTRIBUTION
Newspaper Publishing and Printing
Worldwide, certain sections of the newspaper industry are facing
difficult times. In South Africa this trend is being seen mainly in the
Daily and Sunday newspapers. We have seen falling circulations in the
broadsheet dailies and the broadsheet Sunday newspapers but fortunately
the paid local weeklies in the Caxton stable have been unaffected and
are showing remarkable growth. With regard to the free newspaper
market, the company has maintained its strong position.
Efficiencies in newspaper printing have improved and will improve even
further when the new plants presently under installation are
commissioned, which is anticipated to occur in the first quarter of
2011.
"Get It", the free community monthly glossy magazine has attracted new
advertisers and is performing in line with budgets.
"The Citizen", our daily and paid for newspaper is making good strides
in increasing circulation due to the cover price having been reduced.
Advertising revenues are only marginally down.
A number of new initiatives and investments have been made by the
regional publishing division and new publishing partnerships have been
entered into.
In line with our view that it is necessary to support and complement
our various publications with digital platforms it has been decided to
form a partnership with Moneyweb Holdings Limited ("Moneyweb") who have
the necessary experience and competence to deliver these services.
Concomitantly the company has, after the year end, invested some R20
million in acquiring slightly over 30% of the equity of Moneyweb by
subscribing for new shares in that company.
Magazine Publishing and Distribution
Caxton magazines have shown remarkable resilience. The latest ABC
figures recently published show that our magazines have continued to
gain ground on their major competitors. The overall magazine market is
very tight and is expected to remain so for some time to come.
The distribution arm, RNA, faced with ever increasing pressures on
costs and having to contend with a number of new store openings which
put further pressure on costs, has maintained market share and
continues to provide an excellent service to its many customers.
A number of additional products have been added to its range and
recently a distribution arm to service the music and home entertainment
industry was started. This resulted, in part, from a decision taken to
enter the DVD and CD replication business by acquiring the optical disk
replication operation of Bertelsmann in South Africa conducted through
a company trading as Arvato. This acquisition takes effect from 1 July
2010.
Commercial Printing
Web, Gravure and Book Printing
The investment in new equipment over the past five years is paying
dividends and highlights the importance of having technologically
advanced equipment. Having the capacity in all centres of the country
to service customers, especially during peak periods, has been
advantageous. The strength of the Rand has meant that raw material
costs have reduced and this benefit has been passed onto customers,
resulting in lower revenues.
Combining the book printing and web printing operations in the Cape has
provided them with versatile and additional capacity to service their
customers. The benefits of additional book production, arising out of
the agreement with the Pearson Southern Africa Group, has also added to
revenues and profits and further investment is now taking place in
additional finishing equipment to efficiently handle increased volumes.
Whilst revenue has decreased, expenses have been extremely well
controlled and results achieved were in line with budget.
OTHER
Packaging
An area of the company`s operations which have become more important in
the overall performance of the company. Here too, the investment in new
equipment is making a remarkable difference to the operations where
equipment has been upgraded. The market remains highly competitive and
has not grown.
Profits have improved over the prior year and it is anticipated that
this division`s profitability will continue to improve.
Stationery
The pressure on margins in this highly competitive area continued
throughout the year. Volumes were maintained but increased competition
resulted in lower margins.
Review by Independent Auditors
The company 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 (2009: 40 cents) per
share payable to ordinary shareholders and a preference dividend of 357
cents (2009: 357 cents) to preference shareholders. To comply with the
procedures of STRATE the following dates are applicable:
Date dividend declared: Tuesday, 24 August 2010
Last date to trade cum dividend: Friday, 19 November 2010
Date to commence trading ex Monday, 22 November 2010
dividend:
Record date: Friday, 26 November 2010
Date of payments: Monday, 29 November 2010
Share certificates may not be dematerialised, or rematerialised between
Monday, 22 November and Friday, 26 November 2010, both dates inclusive.
Prospects
The company continues to be dependent on advertising and discretionary
consumer spending. Provided that the upward trend, which is currently
evident is maintained, a return to growth more or less in line with
inflation is predicted.
P M Jenkins* (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 Vallet*
A N?Nemukula*
(*Non-executive directors)
Registered office:
28 Wright Street, Industria West, Johannesburg, 2093
Sponsor
Arcay Moela Sponsors
Date: 24/08/2010 16:22:20 Produced by the JSE SENS Department.
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