| Tue 9 Sep 2003, 17:09 | | PRELIMINARY REVIEWED RESULTS |
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CAXTON AND CTP PUBLISHERS AND PRINTERS LIMITED - PRELIMINARY REVIEWED RESULTS
FOR THE YEAR ENDED 30 JUNE 2003
CAXTON AND CTP PUBLISHERS AND PRINTERS LIMITED
(Formerly CTP Holdings Limited)
And subsidiary companies
(Incorporated in the Republic of South Africa)
(Registration number 1947/026616/06)
Share code: CAT
ISIN: ZAE000043345
("the company")
CONSOLIDATED INCOME STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003
* Diluted headline earnings up 36%
* Distribution of 30 cents per ordinary share
* Net cash resources R978 million
Reviewed Audited
30/6/2003 30/6/2002
R"000
Revenue 2 793 033 2 357 807
Turnover 2 610 694 2 224 872
Other Operating income 60 426 55 661
Total operating income 2 671 120 2 280 533
Changes in inventories of finished goods and
work in progress (8 745) (2 195)
Raw materials and consumables used 1 071 978 899 422
Staff Costs 504 378 484 034
Other Operating expenses 669 173 545 497
Total operating expenses 2 236 784 1 926 758
PROFIT FROM OPERATING ACTIVITIES 434 336 353 775
Depreciation (102 332) (91 425)
NET PROFIT FROM OPERATING ACTIVITIES 332 004 262 350
Amortisation and impairment of goodwill (15 638) (21 375)
Net finance income 122 493 90 885
Associated companies 9 671 8 216
Profit before exceptional items 448 530 340 076
Exceptional items (752) 22 067
PROFIT BEFORE TAXATION 447 778 362 143
Taxation (153 686) (127 529)
PROFIT FROM ORDINARY ACTIVITIES 294 092 234 614
Attributable to Minority Interest (38 435) (53 010)
Preference Dividend (6) (85)
NET PROFIT FOR THE YEAR ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS 255 651 181 519
-
Earnings per ordinary share (cents) 61 49
Diluted earnings per share (cents) 60 47
Headline earnings (cents) 66 49
Diluted headline earnings 64 47
Dividend per share (cents) - 20
Proposed distribution (cents) 30 -
Preference Dividends per share
(Proposed) (cents) 12 170
CONSOLIDATED CASH FLOW STATEMENTS
for the year ended 30 June 2003
Reviewed Audited
30/6/2003 30/6/2002
R"000
CASH FLOW FROM OPERATING ACTIVITIES 265 285 254 359
Cash generated by operations 461 030 348 439
Increase in working capital (130 089) (53 571)
Cash generated by operating activities 330 941 294 868
Less: Taxation paid (93 022) (35 144)
Interest received net 122 493 90 885
Dividends received 2 5
Net cash inflow from operating activities 360 414 350 614
Dividends paid (95 129) (96 255)
CASH FLOW FROM INVESTMENT ACTIVITIES (217 451) (17 592)
Property, Plant and Equipment - additions to
expand and maintain operations (206 935) (169 869)
- proceeds from disposals 16 729 28 655
(190 206) (141 214)
Investments (27 245) 123 622
CASH FLOW FROM FINANCING ACTIVITIES (21 099) (12 175)
(Decrease) in long-term liabilities - (11 272)
(Decrease) Increase in amount owing to/by
subsidiaries (732) 175
Share options exercised (366) (1 078)
Share buy back and cancellation (15 601) -
Costs relating to share buy back and cancellation (2 345) -
Own shares acquired by subsidiary (2 055) -
Net cash increase in cash equivalents 26 735 224 592
Cash and cash equivalents at beginning of year 951 104 726 512
Cash and cash equivalents at end of year 977 839 951 104
CONSOLIDATED BALANCE SHEETS
for the year ended 30 June 2003
Reviewed Audited
30/6/2003 30/6/2002
R"000
Assets
Non-current assets
Property, plant and equipment 903 544 814 343
Investment in associated companies 41 899 27 118
Investments - unlisted 42 45
Long term debtors - 15 419
Current assets 1 936 845 1 751 997
Total assets 2 882 330 2 608 922
Equity and liabilities
Equity
Ordinary shareholders" equity 2 195 594 1 636 702
Preference shareholders 100 100
Minority interest 5 459 396 549
Non-current liabilities
Deferred taxation 89 202 94 304
Current liabilities 591 975 481 267
Total equity and liabilities 2 882 330 2 608 922
Number of shares in issue including options 473 495 510 386 597 640
Weighted Number of shares in issue 416 293 505 371 152 490
Weighted Number of shares in issue including
options 429 218 955 386 597 640
Net asset value per share inclusive of
options (cents) 512 423
Directors" value of unlisted investments
and associated companies (R"000) 43 347 27 163
Capital expenditure for the year 206 935 194 000
Capital expenditure committed 68 000 20 000
Cash resources (net) 977 839 951 104
Earnings per share (cents) 61 49
Diluted earnings per share (cents) 60 47
-
Reconciliation of headline earnings:
Earnings attributable to ordinary
shareholders 255 651 181 519
Add/(less) adjustments: 17 292 (839)
Goodwill written-off 7 819 21 375
Goodwill amortisation 7 819 -
Investments and loan accounts written down - 12 189
Surplus on sale less impairment in value
of fixed assets 903 (808)
(Loss)/surplus on realisation of investments 751 (54 256)
Tax Thereon - 16 519
Outside shareholders" interest - 4 142
Headline earnings 272 943 180 680
Headline earnings per share (cents) 66 49
Diluted headline earnings per
share (cents) 64 47
STATEMENTS OF CHANGES IN EQUITY
for the year ended 30 June 2003
Reviewed Audited
30/6/2003 30/6/2002
R"000
Balance at beginning of the year 1 636 702 1 512 147
Attributable earnings to ordinary shareholders
for the year 255 651 181 519
Ordinary dividend paid (74 220) (74 230)
Revaluation of land and buildings - 30 093
- deferred tax thereon - (9 028)
- minority interest therein - (4 340)
Foreign currency translation reserve adjustment (955) 344
NDR - loans at a discount - 1 275
Minority Share of NDR 9 -
Share options exercised (366) (1 078)
Shares issued for the acquisition of the
minorities of Caxton Publishers and Printers Ltd 398 774 -
Own shares acquired by subsidiary (2 055) -
Cost relating to share buy back, cancellation and
issue to minorities (2 345) -
Share buy back and cancellation (15 601) -
Balance at end of the year 2 195 594 1 636 702
COMMENT
Acquisition of the minority shareholders in Caxton Publishers and Printers Ltd
("Caxton")
During the year under review, the company proposed a scheme of arrangement in
terms of which it acquired the minority shareholders shares in Caxton, which is
now a wholly owned subsidiary, and Caxton was delisted in December 2002. In
terms of the scheme 92,287,586 ordinary shares were issued on 23 December 2002.
The company then sub-divided its ordinary shares in the ratio of 10-for-1 and
changed its name to Caxton and CTP Publishers and Printers Ltd to reflect the
change in the operations of the company from that of a holding company.
Company performance
The substantial improvement in the performance of the company as reflected in
the interim report continued for the remainder of the financial year. It is
therefore pleasing to report that excellent results for the year have been
achieved which is due in no small measure to the continuing investment in the
company"s assets, both physical and intangible. During the year an amount of
some R207 million was expended which compares with R170 million expended during
the preceding financial year. The company, some 10 years ago, embarked upon a
policy of replacing and updating its plant and presses which has resulted in all
its divisions being equipped with "state of the art" machinery which enables the
manufacturing divisions to operate at a high level of efficiency. This program
will be completed in the year ahead when additional presses and ancillary
equipment will be installed in the newspaper printing facilities and in the
packaging division, and should be the last year of major capital expenditure
where a similar amount will be spent to that during the year under review.
A large portion of the company"s success is also attributable to its newspaper
interests where it is active in the community and regional sectors, where growth
in excess of the industry average has been achieved. One of the significant
achievements of the past year has been the increasing involvement and co-
operation of the Johnnic Communications Shareholders and their executives.
Resultant material benefits have accrued to the respective companies and the
opportunity is taken to thank those concerned for facilitating the increase in
business between the two companies. This bodes well for the future.
Earnings
Turnover which excludes inter company turnover increased by 17,3% from
R2,225 million to R2,611 million.
Profit from operating activities amounted to R434,3 million well up on the
corresponding profit in the previous financial year of R353,8 million. After
taking into account depreciation, which has risen to an all time high of
R102,3 million, Net Profit from operating activities amounted to R332,0 million,
which compares extremely favorably with that of the previous year of
R262,3 million - an improvement of 26,6%.
The net profit from operating activities as a margin on turnover has improved
from 11,8% to 12,7% which is indicative on the improved level of efficiency,
which is being achieved, coupled with an unrelenting control over expenditure.
The amortisation and impairment of goodwill arose in the main from the purchase
of the additional shares in Caxton. In view of the increase in cash resources,
notwithstanding the high level of investments during the year, and the level of
interest rates that prevailed where the prime overdraft rate reached a peak of
17%, net finance income increased to R122,4 million. Our investment in our
associates showed a slight improvement and the company"s share of their income
rose to R9,7 million from R8,2 million which is mainly attributable to our
investment in Ince (Pty) Ltd, where 26% of the equity is held and a new
investment of 40% in the equity of Merpak Envelopes (Pty) Ltd. Taxation amounted
to R153,7 million and after providing for the minority"s share of profits of
R38,4 million, the major portion of which relates to the minority"s share of
profits in Caxton for the six months to 31 December 2002 and which has now
fallen away as Caxton is wholly-owned, earnings attributable to ordinary
shareholders amounted to R255,7 million. Diluted earnings per share were
therefore 60 cents per share, an improvement of 27,7% on the 47 cents per share
last year. Diluted headline earnings per share, after taking into account the
number of shares over which options still exist, increased from 47 cents per
share to 64 cents per share - an impressive increase of 36,2%.
Divisional Performance
A remarkable feature of this years" results is that all divisions within the
company managed to improve both revenues and profits in varying degrees. What
must also be borne in mind is the volatility that existed during the year on
currency markets. This impacted directly on raw materials used by the company,
namely paper and ink. During the former part of the financial year paper prices
increased markedly, particularly newsprint and which price has not decreased in
spite of the substantial improvement in the Rand. A number of other grades of
paper also increased but have since fallen. This has had a major bearing on the
pricing of printing to our numerous customers and their patience is appreciated
during a turbulent period. It is notable to report that contrary to the position
of a number of companies who appear to have fallen prey to exchange losses, the
company did not incur any substantial losses. The improvement in advertising
spend assisted the company in achieving its success but mention needs to be made
of the present state of the economy and the parlous state that the majority of
consumers find themselves in. It is submitted that, supported by incorrect
figures being reported on inflation by the Government"s statistical service, the
authorities allowed interest rates to rise to an unrealistically high level
where they were maintained for far too long a period. Whilst at the time of
writing, there has been a decrease of 2.5% in prime rate, the present prime rate
of 14.5% remains too high and is negatively affecting the spending power of the
population, who are still recovering from the effects of the high interest rate
regime. This is evidenced in the lower rate of growth, which has prevailed this
year and is being forecasted and the present difficult trading conditions being
experienced in a number of sectors of the economy.
* Newspapers - Excellent results were achieved on increased revenues
resulting in part from the introduction of new products and market share
has grown.
* Magazines - Continued improvements have been made but this division is
still not operating at an acceptable return, even though their results were
better than the previous year. One magazine was closed and the license on
another was not renewed. A number of new investments and titles are
currently in the planning process.
* Academic Publishing - Excellent profits were earned from the company"s
investment of 50% in Maskew Miller Longman in a year in which substantial
investments had to be made in both Publishing and Marketing as the new
curriculum is due to be introduced in 2004.
* Book Printing - Record profits were earned, resulting from higher revenues
as more money has been made available from the different Provinces for
spending on textbooks, and increased efficiencies, which came about from
the installation of new equipment.
* Web Printing - Stable profits were achieved in a market affected by
exchange rate volatility and an extremely competitive environment where
margins were constantly under pressure.
* Packaging - An area where there has been considerable investment in new
plant and a degree of restructuring. Vast improvements were made in
revenues and profits and further consolidation in both premises and plant
will take place during the first half of the next financial year.
* Stationery - Marginal improvements in trading occurred in a market which
remains fiercely competitive.
Capital Gains Tax and the Accounting Policy on Depreciation and Revaluation of
Fixed Assets
Extensive work has been undertaken over the past few months with a view to
meeting the requirements of the Tax Authorities where assets have to be valued
at 1 October 2001 by no later than 30 September 2003 where it is stipulated that
such valuations need to accompany the company"s first tax return which is
submitted after that date. Needless to say the exercise has been an arduous one
considering the vast number of titles and the numerous items of plant and
equipment owned by the company. During this process it has become patently
evident that the present policy of the company of depreciating its presses over
a ten-year period has been too aggressive. One of the major tenets that the
company subscribes to is that its equipment must at all times be maintained at
the highest possible standard and continual investments are made in the
maintenance, modernisation, upgrading and refurbishment of all machinery.
Whilst some two years ago a decision was made not to change the company"s policy
regarding the rate of depreciation utilised for presses, this extensive
investigation has revealed that the policy does requires amendment. Therefore,
with effect from the financial year ending 30 June 2004 the company"s major
items of equipment will be depreciated over the remaining life of each asset
after having taken into account the residual value of such asset, if any, at the
end of the life of such asset. All other assets e.g. Buildings, computers,
fixtures, etc. will not be affected by this decision where the present rates of
depreciation being utilised will continue to be applied. Furthermore, up until
this date it has been the company"s policy to revalue its land and buildings and
plant and machinery with the next valuation having been due in the 2004
financial year. After careful consideration the decision has been taken to amend
the company"s policy and its plant and machinery will not be revalued in future.
Prospects
In spite of the fall in inflation and the lowering of interest rates, the
present pattern of trading is confusing as no clear trend has yet emerged.
Theoretically, with overseas markets having stabilised and consumer spend in
those countries on the increase, South Africa should follow suit. It is
anticipated that there will be a good run up to the Festive season and that
consumer spending will improve as the decrease in interest rates and inflation
find their way into consumer"s pockets in the form of additional disposable
income. The fall in interest rates will, however, impact negatively on the
company"s cash resources, where reduced interest earnings are being forecast.
Notwithstanding this potentially negative feature on the company"s results, the
company is budgeting for continued growth, albeit at a lower level than what was
achieved this year.
Review by the independent auditors
The company"s auditors, Ernst & Young, have reviewed these results. Their
unqualified review report is available for inspection at the registered office
of the company.
Basis of preparation
The accounting policies used in the preparation of the financial statements are
in accordance with South African Statements of Generally Accepted Accounting
Practice and are consistent with those applied in the prior year, except the
adoption of AC133 Financial Instruments: Recognition and Measurement, during the
year which had no material impact on the results.
Change in comparatives
Comparatives have been restated to more adequately reflect the operations of the
company. This restatement has changed the turnover and other operating expenses.
Dividends : Ordinary Shares
Over the last several years the company effected capitalisation issues which
resulted in the transfer of distributable reserves to share premium. The
distribution out of the share premium account attracts secondary tax on
companies ("STC") until the amount of the share premium account resulting from
such capitalisation issues has been distributed. The board has resolved to
distribute to ordinary shareholders the distributable reserves in the share
premium account in lieu of a dividend. The distribution will amount to 30 cents
per ordinary shareholder (2002 - 20 cents dividend per share). In terms of the
company"s Articles of Association, the distribution is subject to the passing of
an ordinary resolution by the company"s shareholders. It is accordingly proposed
that an appropriate resolution will be put to shareholders at the Annual General
Meeting of the company which will take place during October 2003. The payment to
shareholders will take place approximately three weeks thereafter, and a further
announcement will be made at the conclusion of the Annual General meeting of the
Company. The attention of shareholders is drawn to the fact that this
distribution constitutes a dividend for purposes of the Income Tax Act.
Consequently, the company will be paying STC on the distribution. Corporate
recipients of the distribution will therefore be entitled to claim the STC
benefit that attaches to such receipt.
By order of the Board
Dr F van Zyl Slabbert G M Utian T D Moolman
(Chairman) (Managing Director) (Chief Executive Officer)
09 September 2003
SPONSOR:
SASFIN
Corporate Finance
Division of Sasfin Bank Limited
Date: 09/09/2003 04:12:25 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
