| Mon 20 Feb 2012, 14:46 | | CAT/CATP - Caxton & CTP Printers - Results for the six months ended 31 December |
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CAT CATP
CAT
CAT/CATP - Caxton & CTP Printers - Results for the six months ended 31 December
2011
Caxton & CTP Printers
Incorporated in the Republic of South Africa
Registration number 1947/026616/06
Share code: CAT ISIN: ZAE000043345
Preference share code: CATP ISIN: ZAE000043352
RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2011
CONSOLIDATED INCOME STATEMENTS
Unaudited Unaudited Audited
6 months to 6 months to for the year
31 December 31 December to 30 June
R`000 2011 2010 % change 2011
Turnover 2 585 874 2 374 166 8,9 4 340 422
Other operating 37 299 36 291 81 390
income
2 623 173 2 410 457 4 421 812
Changes in 3 435 (6 334) 14 091
inventories of
finished goods and
work in progress
Raw materials and 985 129 885 876 1 530 826
consumables used
Staff costs 500 260 443 385 897 599
Other operating 735 244 691 537 1 244 464
expenses
Total operating 2 224 068 2 014 464 10,4 3 686 980
expenses
PROFIT FROM 399 105 395 993 0,8 734 832
OPERATING ACTIVITIES
Depreciation 112 112 89 391 188 724
PROFIT FROM 286 993 306 602 (6,4) 546 108
OPERATING ACTIVITIES
AFTER DEPRECIATION
Impairment of plant - - 23 462
NET PROFIT FROM 286 993 306 602 (6,4) 522 646
OPERATING ACTIVITIES
Net finance income 50 575 72 606 (30,3) 131 109
- dividends 14 436 17 721 27 437
- interest 36 063 55 042 105 836
- net profit/(loss) 76 (157) 7
on realisation of
investments
- loss on currency - - (2 171)
hedges
Income from 16 045 22 330 (28,1) 17 957
associates
PROFIT BEFORE 353 613 401 538 (11,9) 671 712
TAXATION
Income tax expense 113 787 124 309 203 669
PROFIT FOR THE 239 826 277 229 (13,5) 468 043
PERIOD
Other comprehensive 24 078 (7 986) (31 972)
income:
Fair value 24 078 (7 986) (31 972)
adjustment - listed
investments and
preference shares
TOTAL COMPREHENSIVE 263 904 269 243 436 071
INCOME FOR THE
PERIOD
PROFIT ATTRIBUTABLE
TO:
Non-controlling 3 822 4 496 5 042
interests
Owners of the 236 004 272 733 463 001
company
239 826 277 229 468 043
TOTAL COMPREHENSIVE
INCOME ATTRIBUTABLE
TO:
Non-controlling 3 822 4 496 5 042
interests
Owners of the 260 082 264 747 431 029
company
263 904 269 243 436 071
Earnings per share 56,6 58,8 (3,8) 101,3
(cents)
Headline earnings 56,4 63,7 (11,4) 101,6
per share (cents)
Preference dividend 357 357 357
paid per share
(cents)
Ordinary dividend 40 40 40
paid per share
(cents)
Shares in issue 461 648 254 495 639 628 495 639 628
Treasury shares (44 534 342) (32 044 352) (38 387 235)
Earnings per share 417 113 912 463 595 276 457 252 393
based on
Reconciliation of
headline earnings:
Earnings 236 004 272 733 463 001
attributable to
owners of company
Adjusted for non- (564) 22 629 22 721
trading items
- net (profit)/loss (76) 157 157
on realisation of
investments
Net impairment in - - 9 209
value of property
and plant
Pearson Education SA - 23 475 -
Goodwill written off - - 14 253
Net (profit)/loss on (693) (1 363) 2 365
disposal of assets
Tax effect on above 205 360 (3 263)
adjustments
Headline earnings 235 440 295 362 485 722
Abridged % % %
segmental
analysis
Revenue:
Publishing, 2 393 139 92 2 193 370 93 4 132 146 95
printing and
distribution
Other 609 343 24 574 375 24 924 122 21
Inter-group sales (416 608) (16) (393 579) (17) (715 846) (16)
2 585 874 100 2 374 166 100 4 340 422 100
Operating income:
Publishing, 244 504 85 257 211 84 392 620 75
printing and
distribution
Other 42 489 15 49 391 16 130 026 25
286 993 100 306 602 100 522 646 100
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Unaudited Unaudited Audited
31 December 31 December 30 June
R`000 2011 2010 2011
ASSETS
NON-CURRENT ASSETS
PROPERTY, PLANT AND EQUIPMENT 2 266 610 2 283 836 2 287 722
ASSOCIATED COMPANIES 132 866 405 697 159 628
OTHER INVESTMENTS AT FAIR VALUE 387 904 511 673 743 974
- LISTED 6 967 6 208 6 651
- UNLISTED 380 937 505 465 737 323
TOTAL NON-CURRENT ASSETS 2 787 380 3 201 206 3 191 324
CURRENT ASSETS
INVENTORIES 501 803 552 277 633 863
ACCOUNTS RECEIVABLE 1 147 833 934 449 707 954
TAXATION - - 7 965
CASH 855 647 1 405 702 1 519 332
PREFERENCE SHARES AND OTHER 485 461 84 807 81 371
INSTRUMENTS AT FAIR VALUE
TOTAL CURRENT ASSETS 2 990 744 2 977 234 2 950 485
TOTAL ASSETS 5 778 124 6 178 441 6 141 809
EQUITY AND LIABILITIES
EQUITY 4 612 242 4 987 334 5 063 879
EQUITY ATTRIBUTABLE TO OWNERS 4 575 081 4 958 687 5 030 542
OF COMPANY
PREFERENCE SHAREHOLDERS 100 100 100
NON-CONTROLLING INTEREST 37 061 28 548 33 237
NON-CURRENT LIABILITIES
DEFERRED TAXATION 393 857 376 356 390 145
CURRENT LIABILITIES
TRADE AND OTHER PAYABLES 658 344 685 863 561 902
PROVISIONS 111 466 112 854 125 883
TAXATION 2 215 16 032 -
CURRENT LIABILITIES 772 025 814 749 687 785
TOTAL EQUITY AND LIABILITIES 5 778 124 6 178 441 6 141 809
Net asset value per share 1 106 1 076 1 107
(cents)
Directors` valuation of 513 803 911 162 896 951
unlisted investments and
associated companies
Capital expenditure 86 402 230 951 342 793
Capital expenditure committed 90 000 50 000 20 000
STATEMENTS OF CHANGES IN EQUITY
Unaudited Unaudited Audited
31 December 31 December 30 June
R`000 2011 2010 2011
Balance at beginning of the 5 063 879 4 941 536 4 941 536
period
Total comprehensive profit for 260 082 264 747 431 029
the period
Minority interest 3 822 4 496 14 865
Treasury shares (545 561) (36 231) (131 392)
Dividends paid - ordinary and (169 979) (187 214) (192 160)
preference shareholders
Balance at end of the period 4 612 243 4 987 334 5 063 879
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 2011 2010 2011
CASH FLOW FROM OPERATING (51 425) (67 055) 275 751
ACTIVITIES
Cash generated by operations 383 995 394 060 748 941
Changes in working capital (211 377) (281 386) (256 388)
Cash generated by operating 172 618 112 674 492 553
activities
Less: Taxation paid (104 563) (65 278) (158 079)
Net interest received 36 063 55 042 106 000
Dividends received 14 436 17 721 27 437
Net cash inflow from operating 118 554 120 159 467 911
activities
Dividends paid (169 979) (187 214) (192 160)
CASH FLOW FROM INVESTING (221 521) (255 361) (395 505)
ACTIVITIES
Property, plant and equipment
- additions to expand (86 402) (230 951) (342 793)
operations
- proceeds from disposals 804 6 329 27 011
Investments
- acquisitions of investments (135 923) (30 739) (79 723)
CASH FLOWS FROM FINANCING (3 436) (36 231) (131 392)
ACTIVITIES
Treasury shares acquired (3 436) (36 231) (131 392)
Net decrease in cash and cash (276 382) (358 647) (251 146)
equivalents
Subsidiary cash acquired 12 790 - 6 129
Cash and cash equivalents at 1 606 179 1 851 196 1 851 196
the beginning of the period
Cash and cash equivalents at 1 342 587 1 492 549 1 606 179
the end of the period
Fair value adjustment of (1 479) (2 040) (5 476)
preference shares and other
investments
Fair value of cash and cash 1 341 108 1 490 509 1 600 703
equivalents at the 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
The Global Media landscape remains challenging. Print media has been negatively
impacted by the migration to digital alternatives and its share of advertising
spend has declined.
Whilst difficult economic conditions were forecasted to be prevalent throughout
the year, consumer spending was at a relatively high level and both retail and
wholesale sales grew above inflation. This could not have been possible without
consumers taking on additional debt and a worrying feature of this is the
burgeoning of the granting of unsecured loans by the banking sector and the
recent statistics pointing to an increase in the number of individuals who are
unable to pay their debts.
Unemployment remains stubbornly high without the creation of sufficient
additional jobs targeted by Government.
World financial markets remain in turmoil and currencies are extremely volatile
and there appears to be no imminent solution.
Earnings
Turnover grew ahead of inflation by 8,9% to R2.586 billion. Commendably, in a
difficult environment, profit from operations increased marginally from R395,9
million to R399,1 million. Depreciation increased substantially by R22,7
million from R89,4 million to R112,1 million, mainly as a result of a review of
the remaining life of the company`s plant and equipment which revealed that an
acceleration to write off the balance of the equipment on hand over its useful
life was required.
The company continues to be in a very strong financial position. Accounts
receivable at the end of December 2011 were unusually high and this accounted
for cash and cash equivalents being lower at 31 December 2011 in the amount of
R1.341,1 billion. However, at the date of this report, cash and cash
equivalents had already increased to R1.608 billion which is expected to
increase further. Net finance income has decreased quite considerably from
R72,6 million to R50,6 million as a direct result of the lower level of
interest rates prevailing throughout the period.
Income from associates also reflects a fall in income from R22,3 million to
R16,0 million, predominantly attributable to the change in classification of
the company`s 15% shareholding in Pearson Southern Africa from an associate to
that of an investment. Income received from this investment is now in the form
of dividends which are dependent on declaration by the Pearson Group and are
therefore not comparable with the previous accounting treatment.
Taxation absorbed R113,8 million which equates to a rate of 32,2% which is
higher than the rate in the previous period of 31,0%.
Profit for the period amounted to R239,8 million which compares with R277,2
million earned in the six months ended 31 December 2010.
Shares in issue, adjusted for shares repurchased during the period, amounted to
457 113 912 shares. During the period, the company acquired the entire issued
share capital of Caxton Share Investments (Pty) Limited which resulted in the
elimination, for the calculation of earnings, of 40 million ordinary shares in
the company which will now be held as treasury shares. Earnings per share are
therefore based on 417 113 912 ordinary shares in issue.
Earnings per share amounted to 56,6 cents compared with 58,8 cents in the
comparative six-month period.
Headline earnings were 56,4 cents per share compared to 63,7 cents per share.
It must however be noted that in the comparative period headline earnings were
adjusted by an impairment of R23,5 million relating to the Pearson Southern
Africa Group, which was, during that period, an associate and which is now an
investment, and therefore for comparison purposes should be adjusted. Based on
such an adjustment headline earnings for the six months ended 31 December 2010
would have amounted to 58,6 cents per share.
Capital expenditure
Additional printing and upgraded post-press equipment is due to be installed in
the Johannesburg newspaper factory and should be commissioned towards the close
of the financial year.
No other major capital expenditure will, in all likelihood, be incurred during
the current financial year.
DIVISIONAL PERFORMANCE
PUBLISHING, PRINTING AND DISTRIBUTION
Newspaper Publishing and Printing
Advertising expenditure on newspapers continues to fall, as does the
circulation of paid-for newspapers, particularly the daily and Sunday
broadsheet newspapers. It is against this background that it is pleasing to
report that the company`s regional and free newspapers have again improved
their market share and continue to grow. Against the trend, local and free
newspapers, by the very nature of their coverage, have grown both in the number
of publications and circulations. Retailers realise the importance of these
publications and are increasingly reliant on these papers, coupled with their
reliable distribution network, to deliver their advertising.
The Property and Classified sectors have underperformed and it is noticeable
that an ever increasing number of readers is making more use of mobile and
digital technology to fulfil their needs. The launch of the "Look Local" web-
based sites is on schedule and the roll out is nearing completion with good
interaction from the public. These sites are being developed to complement the
printed products and to allow on-line users to interact with local communities
giving our many readers, who number over five million, the ability to focus
exclusively on their catchment area.
The Citizen, the company`s regional daily, did well in a depressed market and
bucked the trend of paid-for dailies by maintaining circulation and advertising
revenues.
During the period the Johannesburg newspaper factory performed exceptionally
well and experienced increased volumes which were handled efficiently. As
referred to earlier, additional capacity is being installed to provide ongoing
support to existing customers and to provide for growth opportunities. The Cape
Town newspaper factory, which started up during the latter part of the previous
financial year, is now operating efficiently and is starting to contribute to
profits.
Magazine Publishing and Distribution
Further good progress has been made in both revenue and profitability growth by
the Caxton Magazine Division. Market share gains have been achieved in the
share of advertising spend and circulations have, in the main, increased or
held steady.
As time goes by it is becoming increasingly evident that printed magazines are
not going to be anywhere as badly affected by digital products as printed
newspapers have and, whilst there will be an ongoing migration towards digital,
the life cycle of printed magazines is unlikely to be curtailed. However, the
ongoing need for digital innovation and products is gathering at a pace and
steps are being taken to support existing publications with a variety of
applications. The mushrooming of digital tablet devices and mobile phones has
been quite remarkable and this event has already affected book publishing from
a printing perspective.
RNA, the company`s distribution arm, has performed admirably for its ever
increasing number of customers where both large and small publishers are
appreciating the need for excellence in distribution and have chosen RNA as
their preferred supplier of distribution services. An extension to their
capabilities to distribute DVD`s and CD`s for the music industry has been
completed and traded to full capacity during the period.
The importance of efficient and workable systems in this intricate area of the
company`s operations cannot be exaggerated and continuous updating is taking
place to cater for the ever changing needs of a variety of demanding customers.
Displaying of magazines in retail outlets is becoming increasingly difficult
with the expansion of new titles where limited space is available and retailers
have taken no steps to increase the space provided to cope with the growth in
titles. Additionally, with an increasing number of retail outlets being opened,
costs are being negatively impacted upon by the extra trips having to be made
and the time taken for deliveries. Furthermore the higher cost of fuel has had
a dramatic effect on costs which the publishing industry has to bear.
COMMERCIAL PRINTING
Web and Gravure Printing
Whilst volumes increased in line with revenue the relentless pressure on
margins continued unabated which resulted in profits remaining static.
The volatility of the Rand is also making pricing decisions exceedingly
difficult as this division is heavily reliant upon the importation of paper,
ink and consumables which are the major components of their cost structure.
Capacities are not fully utilised even during peak periods and, whilst this
demonstrates the efficiencies that have been achieved by the amounts expended
on plant over the last couple of years, the anticipated increase in volume has
not occurred.
Book Printing
Book printing has also had a difficult period particularly in the area of
education book printing. As previously reported, a new curriculum is in the
process of introduction with 2011 being the first of three years over which the
new syllabus will be introduced. The various provinces were exceptionally slow
in advising publishers of the success or otherwise of their submission copies.
This, in turn, put pressure on their promotions, and inevitably orders from the
provinces were not placed timeously thereby causing late deliveries. In fact
certain provinces only placed minimal orders and, as has been reported in the
press, Limpopo has still not placed their orders.
The second year of implementation is now upon the publishers and it is hoped
that steps taken to improve the time lines will result in greater efficiencies.
It appears that the Government will be relying increasingly on workbooks to
replace textbooks which, in a country heavily dependent on improving skills
through education, is a dangerous route to be taking. Further confirmation of
this phenomenon is gleaned through observing that the total spend on textbooks
has decreased alarmingly over the past couple of years.
OTHER
Packaging
The overall contribution to the company`s profits fell slightly but a number of
operations within the packaging division improved their profitability. Imports
of finished goods have decreased the size of the market as has the importation
of packaging materials. Pressure on margin here too remains problematical
despite volume growth.
Initial results from CTP Digital Services, the replication plant, have been
encouraging.
Stationery
The manufacturing operations of Premier Stationery have been closed and
production has moved to Ladysmith where it is anticipated that benefits in
efficiencies and a saving in transport costs will be achieved. This heavily
overtraded market works on very slim margins and adequate returns are difficult
to achieve. Results in certain areas of this division`s operations were below
budget and profits were down on the corresponding period last year.
Prospects
Economic conditions world-wide can only be described as fragile and media
globally is experiencing changing conditions and new challenges. Print media,
in particular, is having to deal with the migration to digital products and
technologies, and lower advertising revenues. Judging by the performance of our
peers, the company has performed creditably, albeit at a slightly lower level
of profitability. This situation is likely to continue for the remainder of 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*
N A Nemukula*
T Slabbert*
*Non-executive directors
Registered office:
28 Wright Street, Industria West, Johannesburg, 2093
20 February 2012
Sponsor
Arcay Moela
Date: 20/02/2012 14:46:53 Produced by the JSE SENS Department.
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