| Tue 24 Aug 2004, 16:07 | | RESULTS FOR THE YEAR ENDED 30 JUNE 2004 |
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CAXTON AND CTP - REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2004
CAXTON AND CTP PUBLISHERS AND PRINTERS LIMITED
and subsidiary companies
(Incorporated in the Republic of South Africa)
(Registration number 1947/026616/06)
Share code: CAT ISIN: ZAE000043345
- Turnover up 8,1%
- Diluted headline EPS up 15,6%
- Cash resources R963,5 million
- Net profit from operations up 31,3%
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2004
CONSOLIDATED INCOME STATEMENT
for the year ended 30 June 2004
Reviewed Restated
R`000 30/6/2004 30/6/2003
Revenue 3 056 424 2 875 902
Turnover 2 910 860 2 693 563
Other operating income 54 770 63 220
2 965 630 2 756 783
Changes in inventories of finished goods and work
in progress (19 431) (8 745)
Raw materials and consumables used 1 005 980 993 675
Staff costs 554 510 504 378
Other operating expenses 930 411 833 891
Total operating expenses 2 471 470 2 323 199
Income from operating activities 494 160 433 584
Depreciation, amortisation and impairment of
goodwill (79 847) (117 970)
Net income from operating activities 414 313 315 614
Finance income 82 823 122 493
- dividends 9 270 2
- interest 73 553 122 491
Income before taxation 497 136 438 107
Taxation (165 753) (150 002)
Income after taxation 331 383 288 105
Associated companies 7 490 5 988
Attributable to minority interest (4 930) (38 436)
Fixed component of preference dividend (6) (6)
Net income for the year attributable to ordinary
shareholders 333 937 255 651
Earnings per ordinary share (cents) 73 61
Diluted earnings per ordinary share (cents) 72 60
Headline earnings per share (cents) 75 66
Diluted headline earnings per share (cents) 74 64
Preference dividends per share (cents) 250 12
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2004
Reviewed Restated
R`000 30/6/2004 30/6/2003
Balance at beginning of the year 2 195 493 1 636 702
Revaluation of plant reversed - (15 097)
- deferred tax thereon - 4 529
Share trust consolidation - 5 375
Restated balance at beginning of the year 2 195 493 1 631 509
Attributable earnings to ordinary shareholders for
the year 333 937 255 651
Ordinary dividend paid - (74 221)
Distribution of share premium (137 909) -
Preference dividend (119) -
Reversal of deferred tax (25 421) -
Share trust consolidation 1 889 5 092
Foreign currency translation reserve adjustment (994) (954)
Minority share of non-distributable reserves - 9
Share options exercised by employees and acquired
by group - (367)
Shares issued for the acquisition of the minorities
of
Caxton Publishers and Printers Limited - 398 775
Own shares acquired (34 777) (20 001)
Balance at end of the year 2 332 099 2 195 493
CONSOLIDATED BALANCE SHEET
for the year ended 30 June 2004
Reviewed Restated
R`000 30/6/2004 30/6/2003
ASSETS
Non-current assets
Property, plant, equipment and intangible assets 1 038 638 888 447
Associated companies 43 130 41 898
Other investments 73 329 43
- Listed 42 987 -
- Unlisted 30 342 43
Current assets
Inventories, receivables and cash 1 762 539 1 849 950
Preference shares 205 034 95 000
- Listed 110 034 -
- Unlisted 95 000 95 000
Total assets 3 122 670 2 875 338
EQUITY AND LIABILITIES
Equity
Ordinary shareholders` equity 2 332 099 2 195 493
Preference shareholders 100 100
Minority interest 7 434 5 459
Non-current liabilities
Deferred taxation 115 109 84 673
Current liabilities 667 928 589 613
Total equity and liabilities 3 122 670 2 875 338
Number of shares in issue 460 570 068 416 293 505
Less: Own shares acquired (4 456 245) -
Earnings per share based on 456 113 823 416 293 505
Add: Share option outstanding 6 131 000 12 925 450
Diluted earnings per share based on 462 244 823 429 218 955
Net asset value per share (cents) 513 478
Directors` valuation of investments and
associated companies 116 459 41 941
Capital expenditure for the year 235 716 206 935
Capital expenditure committed 70 000 68 000
Cash and cash equivalents 963 458 977 839
Earnings per share (cents) 73 61
Diluted earnings per share (cents) 72 60
Headline earnings:
Earnings attributable to ordinary shareholders 333 937 255 651
Add adjustments: 6 641 17 292
Goodwill impairment 2 165 7 819
Goodwill amortisation 2 165 7 819
Net impairment in value of property, plant and
equipment 2 311 902
Loss on realisation of investments - 752
340 578 272 943
Headline earnings
Headline earnings per share (cents) 75 66
Diluted headline earnings per share (cents) 74 64
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 June 2004
Reviewed Restated
R`000 30/6/2004 30/6/2003
Cash flow from operating activities 315 849 251 883
Cash generated by operations 528 873 461 033
Changes in working capital 29 314 (143 492)
Cash generated by operating activities 558 187 317 541
Less: Taxation paid (184 172) (93 021)
Net interest received 73 553 122 491
Dividends received 9 270 2
Net cash inflow from operating activities 456 838 347 013
Distribution of share premium (137 909) -
Dividends paid (3 080) (95 130)
Cash, flow from investment activities (297 342) (209 872)
Property, plant and equipment
- additions to maintain and expand operations (235 777) (206 935)
- proceeds from disposals 5 821 16 729
(229 956) (190 206)
Investments (67 386) (19 666)
Cash flow from financing activities (32 888) (15 276)
Share options acquired - (367)
Share trust consolidation 1 889 5 092
Own shares acquired (34 777) (20 001)
Net cash (decrease)/increase in cash and cash
equivalents (14 381) 26 735
Cash and cash equivalents at the beginning of the
year 977 839 951 104
Cash and cash equivalents at the end of the year 963 458 977 839
Note:
Cash and cash equivalents at the end of the year 963 458 977 839
Cash 758 424 882 839
Preference shares 205 034 95 000
COMMENT
It is once again pleasing to report that good results have been achieved for the
year under review. The major capital expenditure programme, which commenced some
years ago, has now been completed and an amount of approximately R236 million
was expended during the year. Investments will now diminish and an expenditure
of only around R100 million is anticipated next year as further projects are
undertaken where there is a requirement to keep up with changes in technology
and to replace plant where appropriate.
The major contributor to the results has once again been the company`s newspaper
interests where growth ahead of industry average was achieved by the community
and regional newspapers.
Two major factors impacted on the year`s results. The first was the fall in the
Reserve Bank`s repo rate which had the effect of reducing Finance Income by
nearly R40 million. The second was the reassessment of the useful life of plant
and machinery which necessitated a change in depreciation rates. The resultant
charge to the Income Statement of almost R80 million is a more accurate measure
of the extent of the depreciation of the company`s assets for the year just
ended.
Consumer spending increased appreciably, mainly as a result of the substantial
decrease in the cost of financing debt, and continues to maintain the same
momentum. This has had a concomitant benefit in the level of spending on
advertising by the major retailers and packaged goods manufacturers. Figures
just released by Ad Ex, which is a ser vice measuring advertising investment,
show that overall advertising expenditure in newspapers and magazines is up by
18% for the year ended June 2004, with newspapers having fared slightly better
than magazines. Advertising spending in the area of community and regional
newspapers increased by a remarkable 68%.
Whilst these factors contributed to the good results of the company, trading
conditions remained difficult in a number of areas in which the company
operates. These were primarily the Web printing, Packaging and Stationery
divisions, which were negatively impacted by the strengthening of the Rand and
the intense pressure on margins.
Cash generated by operations reached a record level of R529 million. In an
endeavour to improve the return on the company`s cash resources a decision was
taken to invest further in preference shares. During the year R110 million was
invested bringing the investment in preference shares at year end to R205
million.
EARNINGS:
Turnover increased by 8% from R2 694 million to R2 911 million. Net income from
operating activities at R414,3 million was up by 31% and equates to a trading
margin of 14,2%.
Finance Income reduced from R122,5 million to R82,8 million, directly as a
consequence of the decrease in interest rates.
Taxation, which includes Secondary Tax on Companies, absorbed R165,7 million
leaving Income after tax at R331,4 million.
Associated companies, which mainly represent the company`s investment in Ince
(Pty) Ltd and Merpak Envelopes (Pty) Ltd, performed in line with expectations,
increasing their contribution to earnings to R7,5 million.
Minority interests amounted to R4,9 million and after providing for
thepreference dividend, income attributable to ordinary shareholders amounted to
R333,9 million.
Earnings per share amounted to 73 cents compared with 61 cents in 2003, an
increase of 20% and headline earnings were 75 cents per share, a 14% improvement
on those earned in the previous year. Diluted earnings per share amounted to 72
cents per share, an increase of 20% and diluted headline earnings were 74 cents
per share, an improvement of 16%.
DIVISIONAL PERFORMANCE:
As indicated previously, whilst spending on advertising was well up, overall
trading conditions were tough and pressure on margins has been relentless.
Dealing with an unstable currency is never easy and when the vast majority of
the company`s raw materials are sourced from overseas suppliers, or where local
suppliers apply import parity to the pricing of their products, it then becomes
problematical. All countries and industries require a degree of stability in
their currency but the prevailing contradictory statements regarding what the
level of the currency should be creates a situation where it is difficult to
plan for ward.
Newspaper Publishing and Printing:
Excellent results were again achieved. A number of new titles and products were
added and an investment in the Rising Sun group of newspapers in Natal was made.
Market share has grown appreciably and further growth is being budgeted for.
Magazine Publishing:
The South African magazine market is going through an interesting and
challenging phase. There has been intense activity when it comes to the
launching of new titles. The advertising market for magazines is showing signs
of contraction which appears to be a world wide phenomenon. Against this
background Caxton Magazines performed well, improving circulations, share of
advertising market and most importantly their profitability. Major success has
been achieved with the launching of People as a weekly magazine and with
Vrouekeur which is also a weekly.
An overseas magazine is to be launched early next year.
Academic Publishing:
The new schools curriculum is now well under way and exceptional focus has been
placed on maintaining market share. It is pleasing to note that these efforts
have paid off. Whilst substantial marketing costs have had to be incurred, the
profits of Maskew Miller Longman have been more than satisfactory, with all
their divisions having participated. They maintain their position as the leading
educational publisher in this country and have also done well in a number of
countries in Southern Africa. New investments are presently being undertaken in
Kenya and Mozambique.
Book Printing:
Further improvements in plant, technology and efficiencies have assisted CTP
Books to maintain their profits. Whilst the export side of their business has
all but dried up, due to the strength of the Rand, which makes their products
uncompetitive in overseas markets, additional volumes have been locally sourced
which have made up the shortfall.
Web Printing:
This division has done well to maintain volumes during a period where margins
have been under pressure. Surplus printing capacity in the country and minimal
volume growth has resulted in a highly competitive environment. The accent has
been and will continue to be placed on improving efficiencies and a number of
technological advances are in the planning stage and will be implemented during
the forthcoming year. The overall results of this division were nevertheless
satisfactory.
Packaging:
The reorganisation of the packaging divisions is now complete and the year saw
the conclusion of the capital expenditure programme during which a number of new
installations were finalised. The gravure printing facilities are now housed in
a modern and well-equipped factory in Elandsfontein. Turnovers and profits have
however been negatively affected by both imported packaging and finished goods
which come into the country at lower prices than locally manufactured
equivalents, due to the strength of the South African currency.
Stationery:
Results were impacted negatively by a competitive market where raw material
prices reduced materially during the year thus affecting margins. Volumes
continue to show no growth.
PROSPECTS:
There can be no doubt that the substantial reduction in interest rates, where a
further half percent decrease has just occurred, has led to an increase in
consumer spending. This bodes well for the forthcoming year, but has to be
tempered by the probability of the rate of inflation picking up and interest
rates increasing next year. The future of our currency is also unknown and as
indicated earlier has a major impact on the performance of the company.
Advertising spend is currently buoyant and taking all factors into account,
further satisfactory growth should be achieved albeit at not quite the level of
improvement achieved this year. The continuing involvement of the Johnnic
Communications shareholders and executives will also play a pivotal role in
looking for ward.
DIRECTORS RESIGNATION:
Mr Ron Woulidge resigned as a director of the company on 12 February 2004. We
take this opportunity of thanking him for his ser vices as a director over many
years.
WITHDRAWAL OF CAUTIONARY
Shareholders are referred to the trading statement and cautionary announcement
published on SENS on 28 July 2004.
As the results for the year ended 30 June 2004 have now been published,
shareholders are advised that caution is no longer required when dealing in
their shares.
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 on interim financial reporting and are consistent with those applied in
the prior year except for the changes noted below.
AC133 Financial Instruments: Recognition and Measurement, has been adopted and
has no material impact on the results.
Comparatives have been restated to more accurately reflect turnover and cost of
sales in the magazine distribution business which has had no effect on the net
income.
The accounting policy for the revaluation of plant and machinery was ceased.
The effect of this change was to increase the prior year opening retained income
by R10,6 million, decrease fixed assets by R15,1 million and increase deferred
taxation liability by R4,5 million. The effect on the prior year income
statement was immaterial and therefore no adjustment was effected.
In addition, the share trusts were consolidated for the first time. The effect
of this change was to increase the prior year opening retained income by R5,3
million. The effect on the prior year equity statement was R5,0 million.
REVIEW BY THE INDEPENDENT AUDITORS
The company`s auditors, Ernst and Young, have reviewed these results. Their
unqualified review is available for inspection at the registered offices of the
company.
DIVIDENDS: ORDINARY SHARES
The board has declared a dividend of 35 cents (2003 - 30 cents distribution) per
share to ordinary shareholders.
To comply with the procedures of STRATE the following dates are applicable:
Date dividend declared Tuesday, 24 August 2004
Last date to trade `cum` dividend Friday, 1 October 2004
Date to commence trading `ex` dividend Monday, 4 October 2004
Record date Friday, 8 October 2004
Date of payment Monday, 11 October 2004
Share certificates may not be dematerialised or rematerialised between Monday, 4
October 2004 and Friday, 8 October 2004, both days inclusive.
By order of the Board
Dr F van Zyl Slabbert G M Utian T D Moolman
(Chairman) (Managing Director) (Chief Executive Officer)
24 August 2004
Date: 24/08/2004 04:00:19 PM
Produced by the JSE SENS Department
