| Tue 30 Aug 2005, 17:32 | | Caxton - Reviewed Results For The Year Ended 30 Ju |
|
Caxton - Reviewed Results For The Year Ended 30 June 2005
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`)
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2005
Turnover up 10,1%
Earnings per share up 32,0%
Cash resources R1 079,0 million
Net profit from operations up 33,0%
CONSOLIDATED INCOME STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
Reviewed Audited
R`000 30/6/2005 30/6/2004
Turnover 3 204 833 2 910 860
Other operating income 77 522 56 199
3 282 355 2 967 059
Changes in inventories (6 280) (9 083)
Raw materials and consumables used 1 006 858 995 632
Staff costs 616 523 554 510
Other operating expenses 1 018 353 927 509
Total operating expenses 2 635 454 2 468 568
Income from operating activities 646 901 498 491
Depreciation, amortisation and impairment (95 755) (84 178)
Net income from operating activities 551 146 414 313
Finance income 75 961 82 823
- dividends 18 025 9 270
- interest 57 936 73 553
Income before taxation 627 107 497 136
Taxation (195 281) (165 753)
Income after taxation 431 826 331 383
Income from associates 7 575 7 490
Attributable to minority interest (6 198) (4 930)
Fixed component of preference dividend (6) (6)
Net income attributable
to ordinary shareholders 433 197 333 937
Earnings per share (cents) 96 73
Diluted earnings per share (cents) 95 72
Headline earnings per share (cents) 94 75
Diluted headline earnings per share (cents) 93 74
Preference dividends per share (cents) 338 264
Reconciliation of headline earnings:
Earnings attributable to ordinary shareholders 433 197 333 937
Adjusted for non-trading items (9 155) 6 641
(Goodwill impairment) - 2 165
(Goodwill amortisation) - 2 165
Negative goodwill written off (2 882) -
Net impairment in value of
property, plant & equipment 4 926 2 311
Profit on sale of fixed assets (4 627) -
Surplus on disposal of investments (6 572) -
Headline earnings 424 042 340 578
Number of shares in issue 453 450 243 460 570 068
Less: Own shares acquired (3 957 196) (4 456 245)
Earnings per share based on 449 493 047 456 113 823
Add: Share options outstanding 5 176 700 6 131 000
Diluted earnings per share based on 454 669 747 462 244 823
CONSOLIDATED BALANCE SHEETS
FOR THE YEAR ENDED 30 JUNE 2005
Reviewed Audited
R`000 30/6/2005 30/6/2004
Assets
Non-current assets
Property, plant and equipment 1 209 903 1 031 560
Intangible assets 5 348 7 076
Associated companies 55 419 43 130
Other investments 165 539 73 329
- listed at fair value 109 725 42 987
- unlisted 55 814 30 342
Current assets
Inventories, receivables and cash 1 675 804 1 758 494
Preference shares at fair value 300 706 205 034
- listed 205 706 110 034
- unlisted 95 000 95 000
Total assets 3 412 719 3 118 623
Equity and liabilities
Equity
Ordinary shareholders` equity 2 614 475 2 332 099
Preference share 100 100
Minority interest 9 708 7 434
Non-current liabilities
Deferred taxation 136 780 115 109
Current liabilities 651 656 663 881
Total equity and liabilities 3 412 719 3 118 623
Net asset value per share (cents) 584 513
Directors` valuation of unlisted
investments and associated companies 111 233 73 472
Capital expenditure for the year 279 504 235 777
Capital expenditure committed 297 000 70 000
Cash and cash equivalents 1 079 293 963 458
CONSOLIDATED CASH FLOW STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2005
Reviewed Audited
R`000 30/6/2005 30/6/2004
Cash flow from operating activities 455 111 315 654
Cash generated by operations 633 358 528 678
Changes in working capital 108 839 29 314
Cash generated by operating activities 742 196 557 992
Less: Taxation paid (200 914) (184 172)
Net interest received 57 936 73 553
Dividends received 18 025 9 270
Net cash inflow from operating activities 617 244 456 643
(Distribution of share premium) - (137 909)
Dividends paid (162 133) (3 080)
Cash flow from investment activities (313 130) (297 147)
Property, plant & equipment
- additions to maintain and expand operations (279 504) (235 777)
- proceeds from disposals 11 764 5 658
(267 740) (230 119)
Investments (45 390) (67 028)
Cash flows from financing activities (51 816) (32 888)
Share trust consolidation 232 1 889
Own shares acquired (52 048) (34 777)
Net increase/(decrease) in
cash and cash equivalents 90 165 (14 381)
Cash and cash equivalents
at the beginning of the year 963 458 977 839
Cash and cash equivalents
at the end of the year 1 053 623 963 458
Note:
Cash 778 587 758 424
Preference shares at fair value 300 706 205 034
Fair value of cash and cash equivalents 1 079 293 963 458
Fair value adjustment of preference shares (25 670) -
Cash and cash equivalents 1 053 623 963 458
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2005
Reviewed Audited
R`000 30/6/2005 30/6/2004
Balance at beginning of the year 2 332 099 2 195 493
Attributable earnings to ordinary shareholders 433 197 333 937
(Distribution of share premium) - (138 028)
(Reversal of deferred tax) - (25 421)
Share trust consolidation 232 1 889
Own shares acquired (32 440) (34 777)
Treasury shares (19 608) -
Fair value adjustments - listed investments 33 530 -
Fair value adjustments - preference shares 25 670 -
(Foreign currency translation reserve) - (994)
Dividends paid (158 205) -
Balance at end of the year 2 614 475 2 332 099
COMMENT
Basis of Preparation
The accounting policies used in the preparation of the financial statements for
the year under review are in accordance with South African Statements of
Generally Accepted Practice and are consistent with those applied in the prior
year.
The company`s current accounting policies are in line with the requirements of
the following International Financial Reporting Standards, IAS 36 (AC 128);
impairment of assets, IAS 16 (AC123); property, plant and equipment, IAS 38 (AC
129); intangible assets, IAS 32 (AC 125)/IAS 39 (AC 133); financial instruments
IFRS 2 (AC 139); share based payments, and IFRS 3 (AC 140);
business combinations.
Comment
It is most gratifying to once again report that good results have been produced
for the year ended 30 June 2005. Shareholder`s attention is drawn to the fact
that earnings attributable to ordinary shareholders have more than doubled over
the last three years from some R182 million to R433 million. The last year`s
performance has been assisted by the buoyant conditions that prevailed in the
economy generally, and in retail trading in particular. South Africa appears to
have entered into a far more stable and enduring economic pattern which bodes
well for the future of the country. It is a pattern which is characterised by a
firmer currency, a lower interest rate environment and disciplined fiscal
management. This has resulted in a more confident consumer who has seen his or
her most valuable asset, their home, appreciating considerably in value and
this has lead to a new found confidence and a willingness to spend. As a
consequence, retailers have experienced what can probably be described as the
best trading conditions in their history, which in turn has positively impacted
on the advertising market. In addition, more money is flowing into the economy
from the vast increase in the income of a number of the previously
disadvantaged population as they take their rightful place in society.
Against this background, and with advertising spend reaching new heights, the
turnover of the company grew by 10% from R2,911 million to R3,205 million which
is approximately 6% above the level of inflation.
Earnings
Net income from operating activities increased from R414,3 million to R551,1
million which equates to a 33% rise. The trading margin amounted to 17.2%,
considerably up from last year`s 14.2% and which reflects the efficiencies
achieved during the year.
Interest rates have for a number of years been in decline and this year was no
exception. As a result, finance income reduced from R82,8 million to R76,0
million. Notwithstanding capital expenditure of R280 million to create new
capacity, cash and cash equivalents amounted to R1,079 million at 30 June 2005,
R116 million larger than at 30 June 2004.
Income before taxation amounted to R627,1 million compared with R497,1 million
earned in the corresponding period last year. Taxation, including Secondary Tax
on Companies, reflects the lower level of company tax, (where the rate has been
reduced from 30% to 29%,) and the benefit derived from the investment in
preference shares, and amounted to R195,3 million, an effective rate of 31.1%;
slightly lower than the rate in the previous year of 33.3%. Income from the
company`s associates was relatively unchanged at R7.6 million and after
providing for the minority shareholders` share of income and the fixed
component of the preference dividend, net income for the year attributable to
ordinary shareholders was R433,2 million, an improvement of 29.7% on the R333,9
million earned during the previous financial year.
Earnings per share were 96 cents, up 32%, and diluted earnings amounted to 95
cents. Headline earnings increased to 94 cents - a substantial improvement of
26%, which improvement remained at a similar level for diluted headline
earnings, which were 93 cents per share.
Cash Flow
The generation of cash from operating activities grew in no small measure to
R742 million. A feature of this year`s activities is the exemplary reduction of
R109 million in working capital.
Capital expenditure on property, plant and equipment, as previously mentioned,
amounted to R280 million and investments of R45 million were made. In addition
an amount of R52 million was expended on the buying back of a number of the
company`s ordinary shares.
Divisional Performance
The major generator of the improvement in the Company`s performance was the
Newspaper division, whilst the remainder of the company`s operations were
negatively impacted on by margin pressure in varying degrees. Only towards the
end of the financial year did raw material input costs start to rise. The lower
costs that prevailed during the year, meant that in a number of instances,
selling prices of products had to be reduced. The improved predictability of
the exchange rate also helped to reduce the levels of working capital,
particularly where raw material stocks were concerned.
Newspapers
An excellent result was obtained by the community and regional newspapers,
where further market share gains were achieved and where advertising income was
at an all time high. Expenditure on increasing the availability of papers to
cater for the growth in consumer demand and the number of new readers, partly
due to the residential boom was well spent. A number of successful new titles
were launched, particularly those into the old `townships` which are being
developed under the banner of `Caxton Urban Newspapers`. New products were
published and an exciting opportunity to launch a monthly magazine, which will
service individual communities, has been identified and the roll out of this
magazine, which has been named `Get It`, has begun.
It would be inappropriate not to mention the contribution made by the main
newspaper factory situated in Industria in Johannesburg.
Over the last three years substantial investments have been made in new presses
and in the mail room equipment. Without these investments it would not have
been possible to handle the enormous increases in volume which have occurred
and the efficiency of this factory is commendable. Further investments in state
of the art handling equipment and a new press has been budgeted for and will be
installed in the forthcoming year. A new newspaper factory is presently being
erected in Cape Town and should commence operations early in the new year.
Citizen
The company`s daily newspaper `The Citizen` improved its performance despite a
drop in circulation due to the launch of a number of competitive products.
Magazines
The latest Audit Bureau of Circulation figures show that more magazines are
being purchased by consumers. This gain has however to be seen against a
literal `avalanche` of new titles that has taken place, and which is making the
market even more competitive. Despite this, the division did well and improved
its profitability. A number of changes in the formats and the frequency of
publishing of certain magazines yielded good results. `Woman and Home` - a
title under licence to I.P.C in the United Kingdom was launched with good
success in April 2005. Further launches are being considered and should take
place shortly. The magazine advertising market is however not growing in line
with the additional titles being published which means that publishers will in
future become more reliant on higher selling prices of their publications to
maintain profits.
Academic Publishing
The thrust to maintain market share by Maskew Miller Longman, which company is
owned jointly with Pearsons, has yielded good results and it is notable that a
small improvement has in fact taken place in the share of the South African
schools curriculum, despite the level of competition having risen appreciably.
This however, has come at a cost and increased marketing expenditures have had
the effect of slightly reducing profitability. Longmans, which division trades
in Southern Africa, showed disappointing results in certain countries whilst in
others, market share gains were made. Pearson Education, the higher education
and trade division traded well throughout the year and has embarked upon local
publishing for higher education which should show good results in the future.
Book Printing
Extensive changes have been made to this division`s factory situated in Parow
in Cape Town and new presses, a state of the art bindery and ancillary
equipment have been installed. Volumes fell during the year which resulted in
profits remaining very much in line with those of the previous year. It is
however, anticipated that with the efficiencies that will flow from the new
investments, and provided volumes are at similar levels, an improvement in
profitability can be anticipated. Book printing is heavily dependant on the
level of activity in the publishing of books for schools and it is therefore
interesting to read recent articles which refer to the Government spending
large additional sums on Education, with some monies being earmarked for
textbooks.
Web Printing
Flowing from volume growth, this division did well to maintain profitability in
what can only be described as the company`s most competitive business activity.
Margin pressure continued unabated, but the installation of new equipment at
the factory in Durban produced excellent results. All the factories were
equipped with the latest digital equipment for the transmission of material and
data which will further improve efficiencies. Shareholders have been previously
advised of the large capital programme that is currently being undertaken. A
total of some R200 million is being invested in the purchase and installation
of equipment to expand the Durban Gravure printing facility and to create a new
Gravure printing factory in Isando. All these projects will be completed during
the new financial year. This expansion will substantially improve this
division`s ability to cater for the ever growing requirements of its customers
in a cost efficient manner.
Packaging
The steps that were needed to reduce the operational cost base of this
division, have been completed and good production and efficiencies are now
being achieved. In Gauteng, operations are to be consolidated at the
Elandsfontein factory, which will place this division in an excellent position
to increase market share. Good results have been achieved by SA Litho in the
Cape, where a number of new presses were installed to cater for the migration
to self adhesive labels that is taking place in the label industry.
Stationery
This division continues to deal with intense competition and the selling price
of their products continues to decrease. Nevertheless, due to improved volumes
and better efficiencies, profits grew.
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 considerable financial resources and access to
additional financial resources if required, the directors deemed it prudent to
double the authorised share capital of the company. This was approved by the
shareholders of the company on 10 January 2005.
New Equity Based Incentive Scheme
A detailed announcement was made on 14 April 2005 regarding the new equity based
incentive scheme for employees, which the directors of the company on 25 January
2005 resolved to implement. Documentation in this regard is in the process of
being finalised and will be posted to shareholders in due course.
Prospects
It has been one of the longest continuous periods during which South African
retailers have prospered from the substantially improved levels of consumer
spending. The climate appears to be destined for further growth albeit not at
the levels seen over the past year. The economy is however being pressurised
from the large increase in the price of oil and the number of strikes which
have recently taken place. South Africa cannot be an island of prosperity in a
world in turmoil. Future growth and development is largely dependant on what
takes place in the world`s major economies. The Company has spent aggressively
on new equipment and is in a good position to process its customer`s increasing
requirements which are anticipated to become more demanding.
Subject to the economy remaining on track for continued growth, results for the
forthcoming year should show further growth slightly ahead of inflation.
Review by the Independent Auditors
The company`s auditors, PKF (Jhb) Incorporated, have reviewed these results.
Their unqualified review is available for inspection at the registered offices
of the company.
Dividends
The board has declared a dividend of 40 cents (2004 - 35 cents) per share to
ordinary shareholders, and a preference dividend of 338 cents (2004 -
264 cents) per preference share to all preference shareholders. To comply with
the procedures of STRATE the following dates are applicable:
Date dividend declared Tuesday, 30 August 2005
Last date to trade `cum` dividend Friday, 16 September 2005
Date to commence trading `ex` dividend Monday, 19 September 2005
Record date Friday, 23 September 2005
Date of payment Monday, 26 September 2005
Share certificates may not be dematerialised or rematerialised between Monday,
19 September 2005 and Friday, 23 September 2005, 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)
SPONSOR
Sasfin Corporate Finance
A Division of Sasfin Bank Limited
Date: 30/08/2005 05:15:14 PM
Produced by the JSE SENS Department
