| Wed 16 Feb 2011, 15:54 | | CAT - Caxton & CTP Publishers & Printers Limited - Unaudited results for the |
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CAT CATP
CAT
CAT - Caxton & CTP Publishers & Printers Limited - Unaudited results for the
six months ended 31 December 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
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2010
Highlights
Net profit from operating activities up 21,6%
Headline earnings up 15,9%
Cash and cash equivalents R1,491 million
CONSOLIDATED INCOME STATEMENTS
Unaudited Unaudited Audited
6 months to 6 months to for the year
31 December 31 December to 30 June
R`000 2010 2009 2010
Turnover 2 374 166 2 186 070 4 087 277
Other operating income 36 291 34 541 84 760
2 410 457 2 220 611 4 172 037
Changes in inventories of (6 334) (14 471) (9 405)
finished goods and work in
progress
Raw materials and consumables 885 876 838 507 1 539 151
used
Staff costs 443 385 402 131 809 358
Other operating expenses 691 537 655 469 1 190 585
Total operating expenses 2 014 464 1 881 636 3 529 691
PROFIT FROM OPERATING 395 993 338 975 642 346
ACTIVITIES
Depreciation 89 391 85 405 171 268
PROFIT FROM OPERATING 306 602 253 570 471 078
ACTIVITIES AFTER DEPRECIATION
Impairment of plant - 1 391 12 702
NET PROFIT FROM OPERATING 306 602 252 179 458 376
ACTIVITIES
Net finance income 72 606 70 965 (3 466)
- dividends 17 721 23 356 33 801
- interest 55 042 50 654 112 445
- net (loss)/profit on (157) (3 045) 7 506
realisation of investments
- loss on currency hedges - - (157 218)
Income from associates 22 330 42 330 55 045
PROFIT BEFORE TAXATION 401 538 365 474 509 955
Taxation 124 309 108 164 148 775
PROFIT FOR THE PERIOD 277 229 257 310 361 180
Other comprehensive income: (7 986) (10 126) (23 665)
Fair value adjustment - listed (7 986) (10 126) (23 665)
investments and preference
shares
TOTAL COMPREHENSIVE INCOME FOR 269 243 247 184 337 515
THE PERIOD
PROFIT ATTRIBUTABLE TO:
Non-controlling interests 4 496 4 015 7 085
Owners of the company 272 733 253 295 354 095
277 229 257 310 361 180
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
Non-controlling interests 4 496 4 015 7 085
Owners of the company 264 747 243 169 330 430
269 243 247 184 337 515
Earnings per share (cents) 58,8 54,4 76,0
Headline earnings per share 63,7 55,0 76,1
(cents)
Preference dividend paid per 357 357 357
share (cents)
Ordinary dividend paid per 40 40 40
share (cents)
Shares in issue 495 639 628 495 639 628 495 639 628
Treasury shares (32 044 352) (29 644 397) (29 652 397)
Earnings per share based on 463 595 276 465 995 231 465 987 231
Reconciliation of headline
earnings:
Earnings attributable to 272 733 253 295 354 095
owners of company
Adjusted for non-trading items 22 629 2 953 537
Net loss/(surplus) on 157 3 045 (7 506)
realisation of investments
Net impairment in value of - 1 391 12 702
property and plant
Impairment by associate 23 475 - -
Net profit on disposal of 1 363 (926) (2 990)
assets
Tax effect on above 360 (557) (1 669)
adjustments
Headline earnings 295 362 256 247 354 632
Abridged segmental % % %
analysis
Revenue:
Publishing, printing 2 193 370 93 2 003 969 92 3 926 753 96
and distribution
Other 574 375 24 525 163 24 844 542 21
Inter-group sales (393 579) (17) (343 062) (16) (684 018) (17)
2 374 166 100 2 186 070 100 4 087 277 100
Operating Income:
Publishing, printing 257 211 84 192 538 76 369 711 81
and distribution
Other 49 391 16 59 641 24 88 665 19
306 602 100 252 179 100 458 376 100
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Unaudited Unaudited Audited
31 December 31 December 30 June
R`000 2010 2009 2010
ASSETS
NON-CURRENT ASSETS
PROPERTY, PLANT AND EQUIPMENT 2 283 836 2 071 605 2 147 242
ASSOCIATED COMPANIES 405 697 135 662 402 180
OTHER INVESTMENTS AT FAIR 511 673 754 236 483 589
VALUE
- LISTED 6 208 53 221 7 870
- UNLISTED 505 465 701 015 475 719
CURRENT ASSETS
INVENTORIES 552 277 535 955 511 293
ACCOUNTS RECEIVABLE 934 449 894 309 770 497
TAXATION - - 17 207
CASH 1 405 702 1 420 306 1 757 265
BANK PREFERENCE SHARES AND 84 807 85 532 87 947
OTHER INSTRUMENTS AT FAIR
VALUE - LISTED
TOTAL ASSETS 6 178 441 5 897 605 6 177 220
EQUITY AND LIABILITIES
EQUITY 4 987 335 4 854 332 4 941 536
EQUITY ATTRIBUTABLE TO OWNERS 4 958 687 4 828 134 4 917 384
OF COMPANY
PREFERENCE SHAREHOLDERS 100 100 100
NON-CONTROLLING INTEREST 28 548 26 098 24 052
NON-CURRENT LIABILITIES
DEFERRED TAXATION 376 357 346 506 359 946
CURRENT LIABILITIES
TRADE AND OTHER PAYABLES 685 863 564 890 762 316
PROVISIONS 112 854 118 776 113 422
TAXATION 16 032 13 101 -
TOTAL EQUITY AND LIABILITIES 6 178 441 5 897 605 6 177 220
Net asset value per share 1 076 1 042 1 060
(cents)
Directors` valuation of 911 161 836 677 877 899
unlisted investments and
associated companies
Capital expenditure 230 951 94 247 269 061
Capital expenditure committed 50 000 85 000 250 000
STATEMENTS OF CHANGES IN EQUITY
Unaudited Unaudited Audited
31 December 31 December 30 June
R`000 2010 2009 2010
Balance at beginning of the 4 941 536 4 795 841 4 795 841
year
Total comprehensive profit for 269 243 247 184 337 515
the period
Treasury shares (36 231) - (120)
Dividends paid - ordinary and (187 214) (187 042) (186 584)
preference shareholders
Dividends paid - minority - (1 651) (5 116)
shareholders
Balance at end of the period 4 987 334 4 854 332 4 941 536
CONSOLIDATED CASH FLOW STATEMENTS
Unaudited Unaudited Audited
6 months to 6 months to for the year
31 December 31 December to 30 June
R`000 2010 2009 2010
CASH FLOW FROM OPERATING (67 055) 74 105 572 888
ACTIVITIES
Cash generated by operations 394 060 338 806 310 733
Changes in working capital (281 386) (105 948) 401 246
Cash generated by operating 112 674 232 858 711 979
activities
Less: Taxation paid (65 278) (44 070) (93 637)
Net interest received 55 042 50 654 112 445
Dividends received 17 721 23 356 33 801
Net cash inflow from operating 120 159 262 798 764 588
activities
Dividends paid (187 214) (188 693) (191 700)
CASH FLOW FROM INVESTING (255 361) (101 090) (263 274)
ACTIVITIES
Property, plant and equipment
- additions to expand (230 951) (94 247) (269 061)
operations
- proceeds from disposals 6 329 941 5 298
(224 622) (93 306) (263 763)
Investments
- (acquisitions of (30 739) (7 784) 489
investments)/proceeds from
disposals
CASH FLOWS FROM FINANCING (36 231) - (120)
ACTIVITIES
Own shares acquired (36 231) - (120)
Net (decrease)/increase in (358 647) (26 985) 309 494
cash and cash equivalents
Cash and cash equivalents at 1 851 196 1 541 702 1 541 702
beginning of the year
Cash and cash equivalents at 1 492 549 1 514 717 1 851 196
end of the period
Fair value adjustment of (2 040) (8 879) (5 984)
preference shares and other
investments
Fair value of cash and cash 1 490 509 1 505 838 1 845 212
equivalents at end of the
period
COMMENTARY
Basis of preparation
The accounting policies adopted in the preparation of the financial statements
for the six months under review are in accordance with the requirements of
International Financial Reporting Standards ("IFRS"), and are consistent with
the prior period and IFRS 34 on interim reporting.
Comments
Consumer spending has improved with retail and wholesale sales growing in
excess of the inflation rate. The high debt levels of individuals at just
under 80% continues to act as a deterrent to consumer confidence as does the
level of unemployment, which remains exceptionally high and is the subject of
intense debate between Government and Trade Unions. Interest rates have fallen
appreciably and have no doubt assisted in the improved level of sales
particularly insofar as motor vehicles are concerned. The property market has
however not yet experienced any real improvement and it appears unlikely that
much growth will take place during 2011.
Advertising expenditure over the last year is up with television experiencing
good growth of over 25%, mainly as a result of the holding of the 2010 FIFA
World Cup. Print advertising declined as a percentage of total spend but
nevertheless posted modest growth of approximately 4,5%.
Earnings
The period under review has seen the resumption of growth in both revenues and
profits. Turnover increased by 8,6% from R2 186 million to R2 374 million and
profit from operating activities after depreciation, as a percentage of
turnover, was relatively unchanged, having gone up to 12,9% from 11,6%
achieved during the previous financial year.
Notwithstanding the substantial amounts expended on new plant and other
investments, the company remains in a strong financial position. Cash and cash
equivalents of R1 490,5 million at 31 December 2010, are very similar to those
held at 31 December 2009 of R1 505,8 million.
Depreciation amounted to R89,4 million, up on the previous period`s
depreciation of R85,4 million, and there were no impairments of plant.
Net Finance Income, despite the downward revision in interest rates by the
Reserve Bank, increased slightly from R71,0 million to R72,6 million.
Associated companies in the main achieved budgeted profits. The apparent large
fall-off in the earnings of associates from R42,3 million to R22,3 million is
primarily due to the reduction in the attributable profits of the Pearson
Southern African Group. Whilst this important associate earned good operating
profits, their results were adversely affected by the write off of large
extraordinary items which have been adjusted for in headline earnings and are
reflected in the amount of R23,5 million in the reconciliation of headline
earnings.
Profit before taxation amounted to R401,5 million, up R36,1 million or 9,9% on
the corresponding figure for the comparable period of R365,4 million, which is
considered to be a reasonable result.
Taxation absorbed R124,3 million, at a higher rate of 31%, compared with the
previous period of 29,6% due to additional payment of secondary tax on
companies. Profit for the period was R277,2 million, up 7,7% on the profit for
the previous period of R257,3 million. During the six months, 2 391 955 shares
in the company were purchased at a cost of R36,2 million. This results in the
total number of Treasury Shares held at 31 December 2010 amounting to 32 044
352 shares.
Earnings per share at 58,8 cents were up by 8,2% and headline earnings per
share were 63,7 cents, a satisfactory improvement of 15,9% on the previous
period of 55 cents per share.
Capital expenditure
Expenditure was incurred on the improvements to the Newspaper printing
facility in Industria, Johannesburg and the completion and equipping of the
Newspaper factory in Cape Town. Additional sums were expended in the Cape on
the upgrade of finishing equipment for the book printing division and new
printing presses were installed and commissioned at both CTP Printers and
Kagiso BM Printing in Johannesburg.
Capital expenditure totalled R231 million during the six months ended 31
December 2010.
The number of new projects being undertaken has substantially reduced and
commitments for further capital expenditure at the end of December 2010
amounted to only R50 million.
Additional shares in MoneyWeb Holdings Limited ("MHL") at a cost of R20,9
million were acquired during the period which has resulted in the company
owning 32,9% of that company. In January 2011, further shares in MHL were
acquired which has increased the company`s holding to 41,8%.
DIVISIONAL PERFORMANCE
PUBLISHING, PRINTING AND DISTRIBUTION
Newspaper Publishing and Printing
The negative conditions prevailing worldwide in certain sections of the
newspaper industry continue to impact on the performance of both the Daily and
Sunday newspapers. Circulations have continued falling and advertising is
coming under increasing pressure. This is again most evident in the broadsheet
dailies and the broadsheet Sunday newspapers. The Caxton paid local weeklies
have performed well and being local newspapers, have not been affected by this
trend and in fact experienced good growth and a strong improvement in
profitability. The free newspaper sector of this division continues to
prosper, particularly in the retail market where further good growth was
achieved. Property and Classified advertising remains depressed but improved
on the previous period. In overall terms, market share gains have been
achieved.
Further gains in efficiencies in the Newspaper printing facility took place
and aided by additional products being printed, improved profitability was
experienced. The new facility in the Cape is presently in the process of being
commissioned and will be operative during March 2011. The Independent Group of
newspapers has recently announced that they are closing their printing
facilities in the Western Cape and from 1 April 2011 will be printing all
their newspapers in this new factory.
"The Citizen", the Company`s daily paid newspaper, continues to improve
circulation and despite competition, which is further increasing with the
launch of a new daily national newspaper, maintained advertising revenues and
experienced growth in most categories.
The investment made in MHL is facilitating the Newspaper division`s greater
exposure to the digital environment. Steady progress is being made with the
development of internet based sites, which are being called "Look-Local". The
investment in MHL will speed up the entry of the company`s community and free
newspapers into new digital products.
Magazine Publishing and Distribution
Regardless of the minimal growth in magazine advertising spend, the Caxton
magazines have done well and have shown growth in both revenues and
profitability. Most of the various titles gained further ground in
circulations against their competitors. Retail shelf space continues to be a
major impediment that faces magazine publishers and the lack of sufficient
specialised retail outlets is an additional hindrance that impacts on
circulation. Notwithstanding the difficult conditions which this publishing
sector has to deal with, a number of new titles were launched with mixed
success. Concomitantly several titles closed and further closures are
anticipated.
The distribution arm, RNA performed well over the period and good cost control
produced improved results. Efficiencies have been maintained despite an
increase in the number of products and the large number of new outlets that
have been opened and which have to be serviced.
Customer care and consistent focus have led to new well known magazine
publishers availing themselves of the services offered by RNA, which will
commence from 1 April 2011.
Commercial Printing
Web, Gravure and Book Printing
Additional presses were brought into operation during the period and have
added to the improvement in efficiency which is evident in the results of this
important area of the company`s activities. Whilst profitability has slightly
improved, it is not commensurate with the large investment that has been made
in the modern and technically advanced equipment.
In both commercial and book printing the pressure on margins has continued
unabated and particularly in book printing, the present profit margins are not
sustainable. The recession resulted in substantially lower volumes of printing
and even though economic activity is up, this has not fed through to this area
of operations. The problem has been exacerbated by the reduced level of
expenditure by government and the various provinces. The introduction of
another new school curriculum requiring the publishing of new text books and
the government`s entry into what could be described as "State Publishing" in
the form of workbooks that are now being published by Central Government and
supplied to learners, is adding to the difficulties facing publishers and
printers alike.
OTHER
Packaging
Whilst this division reduced its contribution to the company`s profits,
certain of its divisions performed well and improved profitability. Resulting
from the strength of the Rand over the period, a number of packaging products
were imported by manufacturers at cheaper prices and finished goods, which are
already packaged, were also imported. This division has recently substantially
improved its equipment which has resulted in an improvement in efficiencies
which augurs well for the future.
Avarto, the optical disk replication facility that was recently purchased, has
performed in line with budget and should achieve enhanced profitability when a
number of recently concluded contracts come into operation towards the end of
the financial year.
Stationery
There has been no change in the competitive environment in which this division
trades. The retailers` pressure on margins has continued and lower profits
were earned.
Directors
Mr Trevor Gatefield, who has been a director of the company for many years,
and who is resident overseas, has decided to retire from the board of
directors. The opportunity is taken of wishing him well in his retirement and
thanking him for his tireless efforts spent in assisting the growth of the
company.
Prospects
The company has met the objectives set at the end of the previous financial
year and achieved growth in earnings ahead of inflation. Subject to no
unforeseen negative economic circumstances, similar results should be achieved
for the financial year.
P M Jenkins* (Chairman)
T D Moolman (Chief Executive Officer)
G M Utian (Managing Director)
A C G Molusi*
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: 16/02/2011 15:54:01 Produced by the JSE SENS Department.
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