| Fri 18 Feb 2005, 9:24 | | Interim Results For The Six Months Ended 31 Decem |
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Caxton - Interim Results For The Six Months Ended 31 December 2004 And
Cautionary Announcement
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
Preference share code: CATP ISIN: ZAE000043352
(`Caxton` or `the Company`)
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2004 AND CAUTIONARY
ANNOUNCEMENT
Turnover up 12,8%
Diluted headline EPS up 26,4%
Cash resources R890 million
Net profit from operations up 30,2%
CONSOLIDATED INCOME STATEMENTS
Unaudited Unaudited Audited
6 Months to 6 Months to For the year to
31 December 31 December 30 June
2004 2003 2004
R000 R000 R000
Turnover 1 722 747 1 527 075 2 910 860
Operating profit 358 502 278 623 498 491
Depreciation (42 339) (35 776) (75 620)
Net profit from operations 316 163 242 847 422 871
Finance income 48 065 54 377 82 823
- Interest received (net) 28 130 48 473 73 553
- Dividends received 19 935 5 904 9 270
Income before
amortisation and
impairment 364 228 297 224 505 694
Amortisation and
impairment (3 100) (370) (8 558)
Income before taxation 361 128 296 854 497 136
Taxation (120 731) (103 742) (165 753)
Income after taxation 240 397 193 112 331 383
Associated companies 3 922 3 414 7 490
Attributable to outside
shareholders (3 458) (2 594) (4 930)
Preference dividend (6) (119) (6)
Earnings attributable to
shareholders 240 855 193 813 333 937
Dividends per share
(cents) 35,0 30,0 30,0
Earnings per share (cents) 53,2 42,3 73,2
Diluted earnings per
share (cents) 52,6 41,6 72,2
Headline earnings per
share (cents) 53,2 42,3 74,7
Diluted headline earnings
per share (cents) 52,6 41,6 73,7
Shares in issue 460 570 068 460 570 068 460 570 068
Less: Own shares acquired
by subsidiary (1 139 960) (1 125 402) (1 139 960)
Treasury shares (7 119 825) (942 686) (3 316 285)
Earnings per share based
on 452 310 283 458 501 980 456 113 823
Add: Treasury shares 5 690 700 7 754 828 6 131 000
Diluted earnings per
share based on 458 000 983 466 256 808 462 244 823
Net asset value per share
(cents) 542 490 513
Cash resources and
equivalents 889 879 818 657 963 458
Capital expenditure 116 369 147 761 235 777
Capital commitments 250 000 80 000 70 000
CONSOLIDATED BALANCE SHEETS
Unaudited Unaudited Audited
31 December 31 December 30 June
2004 2003 2004
R000 R000 R000
Assets
Property, plant, equipment and
intangible assets 1 108 247 1 009 759 1 038 638
Investments and loans 168 794 57 888 116 459
1 277 041 1 067 647 1 155 097
Current assets 1 989 753 1 855 855 1 963 526
Inventories, receivables and cash 1 678 457 1 650 821 1 758 492
Preference shares
- Listed 216 296 110 034 110 034
- Unlisted 95 000 95 000 95 000
Total assets 3 266 794 2 923 502 3 118 623
Equity and liabilities
Shareholders` equity 2 444 660 2 237 824 2 332 099
Preference share capital 100 100 100
Outside shareholders` interest 8 694 6 918 7 434
2 453 454 2 244 842 2 339 633
Non-current liabilities
Deferred taxation 109 620 109 356 115 109
Current liabilities 703 720 569 304 663 881
Total equity and liabilities 3 266 794 2 923 502 3 118 623
CONSOLIDATED CASH FLOW STATEMENTS
Unaudited Unaudited Audited
6 Months to 6 Months to For the year to
31 December 31 December 30 June
2004 2003 2004
R000 R000 R000
Cash flow from operating
activities 96 999 11 992 315 654
Cash generated by operations 415 419 298 373 528 678
(Increase)/decrease in
working capital (66 000) (53 807) 29 314
Cash generated by operating
activities 349 419 244 566 557 992
Less: Taxation (139 212) (147 836) (184 172)
Interest received 28 130 48 473 73 553
Dividends received 19 935 5 904 9 270
Net cash inflow from
operating activities 258 272 151 107 456 643
Distribution of share
premium - (138 990) (137 909)
Dividends paid (158 563) (125) (125)
Dividends paid minorities (2 710) - (2 955)
Cash outflow from investing
activities (138 241) (158 436) (297 147)
Property plant and equipment
- Additions to maintain and
expand operations (116 369) (147 761) (235 777)
- Proceeds from disposals 2 940 5 642 5 658
(113 429) (142 119) (230 119)
Investments and loans (24 812) (16 317) (67 028)
Cash outflow from financing
activities (32 337) (12 738) (32 888)
Own shares acquired (32 337) (12 738) (34 777)
Share trust consolidation - - 1 889
Net decrease in cash and
cash equivalents (73 579) (159 182) (14 381)
Cash and cash equivalents
at beginning of period 963 458 977 839 977 839
Cash and cash equivalents
at end of period 889 879 818 657 963 458
STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 Months to 6 Months to For the year to
31 December 31 December 30 June
2004 2003 2004
R000 R000 R000
Balance at beginning of
period 2 332 099 2 195 594 2 195 594
Changes in accounting policy - - (10 568)
Share trust consolidation
prior period - - 5 375
Share trust consolidation
current period - - 5 092
Restated balance at
beginning of the year 2 332 099 2 195 594 2 195 493
Preference dividend paid (120) (119) (119)
Distribution of share
premium - (137 742) (137 909)
Ordinary dividend paid (158 437) - -
Retained income 240 855 193 813 333 937
Foreign currency
translation reserve 1 057 (984) (994)
Reversal of deferred tax - - (25 421)
Own shares acquired (32 337) (12 738) (32 888)
Realisation of land and
buildings revaluation
reserve (811) - -
Fair value adjustments
- investments 26 093 - -
- preference shares 36 261 - -
Balance at end of period 2 444 660 2 237 824 2 332 099
RECONCILIATION OF HEADLINE EARNINGS
Unaudited Unaudited Audited
6 Months to 6 Months to For the year to
31 December 31 December 30 June
2004 2003 2004
R000 R000 R000
Earnings 240 855 193 813 333 937
Adjusted for:
Net impairment in value of
property, plant and
equipment 3 100 (248) 2 311
Goodwill impairment - 185 2 165
Goodwill amortisation - 185 2 165
Surplus on realisation of
investments (758) (138) -
Surplus on disposal of
property, plant and
equipment (2 454) - -
Headline earnings 240 743 193 797 340 578
COMMENT
Buoyant trading conditions prevailed during the period under review, and in
particular the latter three months. This translated into the Company achieving
good results as advertising spend by the major retailers reached new heights.
Earnings
Turnover rose from R1 527 million to R1 723 million, an increase of 12,8%, well
above the inflation rate and which is indicative of the real growth that was
achieved. Net income from operating activities was 30,2% up from R242,8 million
to R316,2 million and had the effect of increasing the trading margin to 18,4%.
Interest rates continued their decline and the strong possibility exists that
further interest rate decreases could be in the pipeline. Accordingly finance
income reduced from R54,4 million to R48,1 million due to this decline. Total
cash resources have been maintained and amounted to R890 million at 31 December
2004.
Taxation, which includes Secondary Tax on Companies, amounted to R120,7
million, and income after taxation was R240,4 million. Income from associated
companies totalled R3,9 million and, after providing for earnings attributable
to outside shareholders, and the preference dividend, net income attributable
to ordinary shareholders amounted to R240,9 million.
Earnings per share amounted to 53,2 cents, diluted earnings per share to 52,6
cents, and diluted headline earnings per share also to 52,6 cents, an increase
of 25,8% and 26,4% respectively.
Divisional performance
The period being reported on was one of the most stable in recent years and
consumer spending reached hitherto unknown levels. The exchange and inflation
rates reflect the stability inherent in the economy, which is growing at a
faster rate than originally anticipated. Whilst the authorities might be
concerned with the pick up in the rate of purchasing by individuals, retailers
enjoyed the boom conditions and spent aggressively on advertising. This bodes
well for the Company as it`s major source of income remains advertising.
All divisions, without exception, improved their profitability and contribution
to the overall results.
Newspaper publishing and printing
This division continues to produce excellent results well ahead of
expectations. Market share increased further and new products and titles have
done well.
Magazines
Continuing improvements have been achieved despite aggressive market
conditions, where new titles abound without a meaningful increase in the
country`s overall circulation growth. A new title is to be launched in March
2005 under licence to IPC in the United Kingdom.
Academic publishing
The investment in products and the marketing thereof yielded good results for
Maskew Miller Longman and it is most pleasing to be able to report that this
well established educational publishing organisation has managed to maintain
its market share of the new curriculum for South African schools, which is in
the process of implementation. Further successes have also been achieved by
Longmans, which operates in Southern Africa, and branches in Kenya and
Mozambique have been successfully opened. Pearson Education, which is the
provider of higher education, professional and trade products, now contributes
meaningfully to this Company. Results, which are at budgeted levels, have been
impacted by the investment in the new curriculum, but are nevertheless
satisfactory.
Book printing
Irrespective of the loss of export turnover occasioned by the continued
strength of the Rand, excellent earnings growth has been achieved on volume
growth and efficiencies in production.
Web printing
Satisfactory results were achieved in the most competitive area of the
Company`s operations where margin pressures remain. Here too, volumes increased
significantly and were the major reason for the improved performance. It has
become evident that despite vast sums having been invested in new plant over
the past few years, this division will require further capital expenditure,
which is referred to later in this commentary.
Packaging
A number of steps to reduce the operational cost base and improve efficiencies
have been taken. The consolidation of operations has assisted this process and
a loss making division has been closed. Market conditions remain difficult, but
initial results are encouraging and indicate that further earnings growth can
be anticipated.
Stationery
Volume increases have to a degree offset lower margins and selling prices, and
a modest improvement in profitability occurred.
Capital expenditure
At the time of the release of the results for the year ended 30 June 2004,
shareholders were advised that future investments in equipment were expected to
reduce and expenditures of approximately R100 million per annum were at that
time anticipated. This took place before the substantial increase in consumer
spending, referred to earlier, occurred. The volume of advertising spend
particularly over the October to December period, has been unprecedented, and
created a need to reassess the capabilities of the Company`s commercial
printing facilities.
With a view to ensuring that our customers` requirements are fully catered for
now and in the future, a decision to invest in a new Gravure printing facility
in Johannesburg has been taken. This, together with an expansion already
underway in Durban, and which will be commissioned in May 2005, will result in
the Company substantially increasing its Gravure printing capacity. The new
facility will be operational by the end of the year.
The cost of this new investment will be funded from existing cash resources.
Total capital expenditure for the year to 30 June 2005 will accordingly
increase substantially.
Increase in authorised share capital
In view of the fact that the industries in which the Company trades or invests
in are undergoing a period of deregulation, consolidation and change, and
whilst the Company has access to adequate financial resources, the directors
deemed it prudent to put forward to shareholders a resolution to double the
authorised share capital of the Company. This resolution was approved at a
General Meeting of the Shareholders held on 10 January 2005.
Cautionary announcement
Shareholders are advised that on 25 January 2005, the board of the Company
resolved to pursue the implementation of a share incentive scheme by the
Company, which may, inter alia, require a specific issue of approximately 10%
of the Company`s share capital for cash and will be subject to the necessary
shareholders` approval. Shareholders are accordingly advised to exercise
caution when dealing in the shares of the Company until a detailed announcement
is made in this regard.
Basis of preparation
The accounting policies used in the preparation of the financial statements for
the period under review are in accordance with South African Statements of
Generally Accepted Accounting Practice and are consistent with those applied in
the prior year.
Comparatives have been restated to more accurately reflect turnover and the
cost of sales in the magazine distribution business, which has had no effect on
the net income.
Prospects
The South African retail industry appears set, at this point in time, to
continue to prosper. With inflation well under control consumers can look
forward to further reductions in interest rates. Whilst conditions could easily
change due to the vagaries of overseas markets, the next six months should see
a continuation of growth in consumer consumption. It is therefore predicted
that a similar pattern in the results can be anticipated for the remainder of
the financial year.
By order of the board
Dr F van Zyl Slabbert G M Utian T D Moolman
(Chairman) (Managing Director) (Chief Executive Officer)
17 February 2005
Sponsor
Sasfin Corporate Finance
A Division of Sasfin Bank Limited
Date: 18/02/2005 07:30:21 AM
Produced by the JSE SENS Department
