| Wed 15 Feb 2006, 17:49 | | Caxton And Ctp Publishers And Printers Limited - I |
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CAT CATP
CAT
Caxton And Ctp Publishers And Printers Limited - Interim Results For The Six
Months Ended 31 December 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")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2005
Turnover up 8.1%
Diluted EPS up 15.8%
Cash resources R749.4 million
Net profit from operations up 11.3%
INCOME STATEMENTS AT 31 DECEMBER 2005
Restated and Restated and
Unaudited unaudited reviewed
6 months to 6 months to for the year to
31 December 31 December 30 June
2005 2004 2005
R000 R000 R000
Turnover 1 863 020 1 722 747 3 204 833
Operating profit 405 885 362 732 653 948
Depreciation (49 317) (42 339) (89 098)
Net profit from operations 356 568 320 393 564 850
Finance income - net 46 847 48 065 75 961
- surplus on realisation
of investments 14 860 - -
- interest received 18 967 28 130 57 936
- dividends received 13 020 19 935 18 025
Income before amortisation
and impairment 403 415 368 458 640 811
Amortisation and impairment (855) (3 100) (6 654)
Income before taxation 402 560 365 358 634 157
Taxation (120 494) (120 731) (195 281)
Income after taxation 282 066 244 627 438 876
Associated companies 4 070 3 922 7 575
Attributable to outside
shareholders (2 831) (3 458) (6 198)
Preference dividend (6) (6) (6)
Earnings attributable
to shareholders 283 299 245 085 440 247
Earnings per share (cents) 62.6 54.2 97.7
Diluted earnings per
share (cents) 62.0 53.5 96.6
Headline earnings
per share (cents) 59.8 54.2 95.0
Diluted headline
earnings per share (cents) 59.2 53.5 93.9
Weighted average number
of shares in issue 460 116 910 460 570 068 453 450 243
Less: Own shares held
by subsidiary (7 875 750) (1 139 960) (2 973 242)
Less: Shares cancelled - (7 119 825) -
Earnings per share
based on 452 241 160 452 310 283 450 477 001
Add: Share options
outstanding 4 821 700 5 690 700 5 176 700
Diluted earnings per
share based on 457 062 860 458 000 983 455 653 701
Net asset value
per share (cents) 632 545 584
Cash and cash equivalents 749 438 889 879 1 053 623
Capital expenditure 270 747 116 369 279 504
Capital commitments 200 000 250 000 297 000
CASH FLOW STATEMENTS AT 31 DECEMBER 2005
Restated and Restated and
Unaudited unaudited reviewed
6 months to 6 months to for the year to
31 December 31 December 30 June
2005 2004 2005
R000 R000 R000
Cash flow from operating
activities 44 526 96 999 455 709
Cash generated by
operations 414 323 415 419 633 956
Changes in working capital (136 171) (66 000) 108 840
Cash generated by
operating activities 278 152 349 419 742 796
Surplus on realisation
of investments 14 860 - -
Less: Taxation (98 868) (139 212) (200 914)
Interest received 18 967 28 130 57 936
Dividends received 13 020 19 935 18 025
Net cash inflow from
operating activities 226 131 258 272 617 843
Dividends paid (181 605) (158 563) (158 205)
Dividends paid minorities - (2 710) (3 929)
Cash outflow from
investing activities (685 937) (138 241) (313 728)
Property plant
and equipment
- additions to maintain
and expand operations (270 747) (116 369) (279 504)
- proceeds from disposals 5 063 2 940 11 764
(265 684) (113 429) (267 740)
Investments and loans (420 253) (24 812) (45 988)
Cash outflow from
financing activities 337 226 (32 337) (51 816)
Own shares acquired (62 774) (32 337) (52 048)
Shares issued 400 000 - -
Proceeds on sale of
shares by trust - - 232
Net (decrease)/increase
in cash and cash
equivalents (304 185) (73 579) 90 165
Cash and cash equivalents
at beginning of period 1 053 623 963 458 963 458
Cash and cash equivalents
at end of period 749 438 889 879 1 053 623
BALANCE SHEETS AT 31 DECEMBER 2005
Restated and Restated and
Unaudited unaudited reviewed
6 months to 6 months to for the year to
31 December 31 December 30 June
2005 2004 2005
R000 R000 R000
Assets
Property, plant, equipment
and intangible assets 1 431 009 1 108 247 1 215 251
Investments and loans 659 621 168 794 220 958
2 090 630 1 277 041 1 436 209
Current assets 1 967 822 1 989 753 1 976 510
Inventories, receivables
and cash 1 538 309 1 678 457 1 675 804
Preference shares:
- Listed 334 513 216 296 205 706
- Unlisted 95 000 95 000 95 000
Total assets 4 058 452 3 266 794 3 412 719
Equity and liabilities
Shareholders" equity 3 103 824 2 458 469 2 631 104
Preference share capital 100 100 100
Minority interest 12 539 8 694 9 709
3 116 463 2 467 263 2 640 913
Non-current liabilities
Deferred taxation 152 621 109 620 136 780
Current liabilities 789 368 689 911 635 026
Total equity and
liabilities 4 058 452 3 266 794 3 412 719
STATEMENTS OF CHANGES IN EQUITY
Balance at beginning
of period 2 631 104 2 332 099 2 332 099
Share-based payments
("IFRS 2") - 9 579 9 579
Restated balance at
beginning of period 2 631 104 2 341 678 2 341 678
Preference dividend paid (163) (120) (126)
Ordinary dividend paid (181 436) (158 437) (158 079)
Share trust consolidation - - 232
Retained income 283 299 245 085 440 247
Foreign currency
translation
reserve adjustment 14 1 057 -
Own shares acquired and
cancelled - (32 337) (32 337)
Own shares acquired
by subsidiary (62 774) - (19 608)
Realisation of land and
buildings revaluation
reserve - (811) -
Fair value adjustments-
investments 5 973 26 093 33 530
- preference shares 28 807 36 261 25 670
Shares issued 400 000 - -
Share issue costs (1 000) - (103)
Balance at end of period 3 103 824 2 458 469 2 631 104
RECONCILIATION OF HEADLINE EARNINGS AT 31 DECEMBER 2005
Restated and Restated and
Unaudited unaudited reviewed
6 months to 6 months to for the year to
31 December 31 December 30 June
2005 2004 2005
R000 R000 R000
Earnings 283 299 245 085 440 247
Adjusted for:
Net impairment in value
of property,
plant and equipment 855 3 100 4 926
Goodwill impairment - - (2 882)
Cost of acquisition
of preference shares 1 364 - -
Surplus on realisation
of investments (14 860) (758) (9 639)
Surplus on disposal
of property,
plant and equipment (246) (2 454) (4 627)
Headline earnings 270 412 244 973 428 025
COMMENTARY
Basis of preparation and restatement of figures
The accounting policies adopted in the preparation of the financial statements
for the six months under review are in accordance with the South African
Statements of Generally Accepted Accounting Practice and the requirements of
International Financial Reporting Standards ("IFRS"). To more correctly
reflect the requirements of share-based payments as defined by IFRS 2, the
results for the six months ended 31 December 2004 and the year ended 30 June
2005 have been restated. Arising from a first time adoption of IFRS 2 the
opening retained earnings has increased by an amount of R9.6 million, the
earnings for the six months ended 31 December 2004 has increased by an amount
of R4.2 million and the earnings for the year ended 30 June 2005, by an amount
of R7.1 million. Accordingly, the diluted and diluted headline earnings for
six months ended 31 December 2004 on a restated basis amounted to 53.5 cents
per share.
Comments
A continuation of the buoyant trading conditions which prevailed in the
previous financial year has led to further good results having been achieved
during the period under review. At the time of the release of the financial
results for the year ended 30 June 2005, it was predicted that, subject to the
economy continuing to grow, results in excess of inflation should be achieved.
This has indeed proved correct as the income before taxation of the Company
increased by 10.2%. As a result of the strength of the South African currency,
raw material inputs in many instances remained the same or decreased which
resulted in the selling prices of the Company"s various products staying
constant or in certain divisions reducing. Cost inputs such as labour have
increased in line with the level of inflation in the country.
Intensified competition, particularly in the Company"s commercial printing
operations, had to be contended with and this resulted in a reduction in
selling prices. In the circumstances, the increase in turnover of 8.1% is
considered satisfactory as it is approximately 4% above overall inflation
which is currently running at about 4%.
The South African economy is at an all time high and the business confidence
level is strong. The results as published by all retailers and wholesalers of
goods across a broad front have been quite extraordinary and retailers in
particular have increased their advertising spend in line with turnover
growth.
With the fiscus being predicted to report the smallest deficit for decades, it
is conceivable that taxes will be reduced and this, coupled with good economic
conditions generally, should result in buoying consumer confidence and a
concomitant further increase in spending.
Financially, South Africa and its consumers have never had it so good and this
is reflected in the price of houses and the level of consumer spending.
Growth, which only a few years ago appeared unattainable, is being achieved
and the expectation is for this to go even higher. Interest rates will, in all
probability, remain unchanged, and with higher growth rates, the possibility
of unemployment reducing is also very encouraging.
It would appear that South Africa has entered a new financial scenario and is
being assisted by the record level of commodity prices in a country which is
fortunate to have an abundance of commodities.
All of the aforegoing has encouraged the Company to erect two large gravure
printing facilities, one in Durban, and the other in Isando, at a cost in
excess of R300 million. Both of these plants are due to be commissioned in
June 2006 and both are on track to achieve this commissioning date. Although
the presses are pre-owned they have been completely refurbished to as close as
new condition and will cost approximately 40% of the price of equivalent new
presses.
Earnings
Turnover for the six months was R1 863 million, an improvement of 8.1%.
Operating profit increased from R362.7 million to R405.9 million. This
resulted in the trading margin having increased further, from 17.6% for the
year ended 30 June 2005 to 19.1%. Depreciation increased from R42.3 million to
R49.3 million which increase is reflective of the continuing investments that
have taken place over the past years in fixed assets. This non-cash expense
will increase significantly once the new plants presently being erected are
brought into operation.
The income from interest continued to decline as a consequence of the
reduction in interest rates and the amounts of money having been invested in
capital equipment. An amount of R270.7 million has been spent on capital items
which will increase significantly for the full financial year to approximately
R500 million to provide for the completion of the capital projects previously
referred to. In addition R62.8 million was spent on the repurchase of the
Company"s shares.
The Company generated R414.3 million cash from operating activities and cash
and cash equivalents at the close of the period amounted to R749.4 million.
Income before taxation amounted to R402.6 million which compares to R365.4
million in the previous financial period.
Taxation, including Secondary Tax on Companies, absorbed R120.5 million.
Income from the Company"s associates improved to R4.1 million from R3.9
million and after providing for the minority"s shareholder"s share of income,
net income for the six months attributable to ordinary shareholders amounted
to R283.3 million, which is up 15.6% on the R245.1 million earned in the
previous comparable six months.
In December 2005, forty million shares were issued in terms of the Equity-
Based Incentive Scheme for employees having being implemented after securing
Shareholder approval. As a result, the number of shares in issue has increased
and the weighted average number of shares in issue for the six months under
review and which has been used for calculating earnings per share is
452 241 160 shares.
Earnings per share, applying this increased number of shares in issue,
amounted to 62.6 cents, up 15.6% and diluted earnings per share were 62 cents.
Headline earnings grew 10.4% to 59.8 cents per share and diluted headline
earnings were 59.2 cents per share, up by 10.6%.
Dividends
No interim dividend has been declared.
Divisional performance
The newspaper division continues to produce excellent results and, with the
exception of Academic Publishing, the other activities of the Company have
been impacted by reduced margins and in the packaging and stationery divisions
little growth was achieved.
Newspapers
Excellent results were again produced from a buoyant market where advertising
spend was at record levels. The investment in the Caxton Urban Newspapers was
rolled out and 10 newspapers are currently being published with the intention
of launching further issues in due course. These publications are achieving
their budgets. Further good progress with the free monthly magazine "Get It"
was made.
The Industria printing factory is now complete and the two other newspaper
factories being erected in Cape Town and Durban will be completed prior to the
financial year-end.
Additional market share has been achieved and the new products launched by the
division, which include "Auto Dealer" are doing well.
The Company"s daily newspaper "The Citizen" continues to attract new
advertisers and is performing satisfactorily in a competitive market.
Magazines
There appears to be no end to the launch of new titles and it is doubtful
whether all these titles will survive. Despite the intensification of activity
this division did well to hold its own and no market share losses were
experienced. The new magazine "Woman and Home" continues to be well received
by readers and advertisers alike and is in fact running well ahead of budgets
set for circulation and advertising revenue.
Academic Publishing
Maskew Miller Longman, which is jointly owned with Pearsons, has achieved
further success in the attainment of higher levels of market share for the new
curriculum for schools which is entering the final phases of introduction.
Their financial performance was extremely good. They have firmly cemented
their position of being South Africa"s foremost schools education publisher.
The entire Southern African market is undergoing the implementation of new
curricular for schools and this is placing a burden on investment in these
territories.
Book Printing
Extensive investment in new presses and a new bindery were completed during
the period. These additions will add to the ability of this division to
improve operational efficiencies and will raise quality to an even higher
standard. The division is well-placed to be able to deliver efficiently and
effectively to its many customers an extremely high quality product where
further inroads, particularly into the smaller publications, have taken place.
Web Printing
This is proving to be a most demanding area of the Company"s operations and
the division has to deal with an intensification of new capacity being
installed by competitors. This division, despite several new presses having
been installed over the past number of years, has been unable to fully satisfy
its customers requirements especially during peak periods. Resulting
therefrom, and having regard to the new presses being installed by
competitors, the decision was taken to increase the size of the Durban Gravure
factory and to build a new Gravure factory in Johannesburg. This has entailed
the erection of new buildings in both localities and the Durban facility will
see one new press being installed, with substantially upgraded pre-press and
handling facilities. In Johannesburg a completely new factory is being erected
in which two presses with all the ancillary facilities will be installed.
This addition to capacity will enable this division to produce far more
efficiently than it has in the past and, through this improvement, cater for
its customers" requirements far more cost effectively.
Web printing has always been a division where margins have been pressurised
and this pressure grew during the period. In the circumstances, especially
bearing in mind that selling prices have been stable or decreased, this
division operated satisfactorily and saw volumes increasing but profits
decreasing.
Packaging
A small investment in the folded carton division has been made which, in terms
of regulations, has had to be forwarded to the Competition Commission for
approval. It is anticipated, in view of the Company"s minor position in the
overall packaging industry, that this acquisition will be approved. Market
conditions remain extremely tight and volumes have in fact marginally reduced.
The metalising of material has been discontinued and the plant disposed of.
The flexible plastic packaging operation in Cape Town has however produced
good results.
Stationery
The position of this division is unchanged and whilst volumes were maintained
and raw material inputs remained stable, opposition activity has resulted in
earnings being very similar to previous periods.
Acquisitions
The acquisition of a folded carton manufacturer, as referred to above, has
been completed. In addition a 30% investment was announced in January in one
of South Africa"s foremost publishing companies, namely Ramsay Son & Parker.
This is a long and well-established publisher that has been in existence for
over 70 years. Their publications are the well-known household brands of Car,
Getaway, Popular Mechanics, Compleat Golfer, Wine and Hotel and Restaurant.
This association will have a pivotal bearing on magazine publishing within the
Company and a number of exciting co-operative opportunities are present.
Directors
As a result of Mr M W D Short and Dr J M Buitendag having reached retirement
age, it is announced with regret that they have resigned from the Board of the
Company. Mr Short is one of the founders of the Company and has played a
critical role in the development of what Caxton is today, particularly in the
formulation, implementation and management of the Company"s IT systems where
he personally developed and installed systems well ahead of what was taking
place in the IT industry at the relevant time. He has agreed to continue to
assist the Company wherever possible in the many areas in which he operated.
Dr Buitendag will be remembered as the head of the Perskor Group with which
CTP Holdings Ltd merged in July 1998. We are indebted to him for assisting to
create the merger and, from which date, in its present form, the Company has
prospered.
Our most sincere thanks go to these two very special gentlemen for the immense
contribution which they have made, not only to the Company but to the industry
as a whole. Their wise counsel and guidance will be missed and we take this
opportunity of wishing them continued good health and success.
The Company is in the process of reviewing its retirement age policies in
respect of directors.
The directors are pleased to announce that Mr T Holden has been appointed to
the Board of directors with immediate effect.
Prospects
There is very little doubt that South Africa will continue to prosper over the
short term. The Company has spent extensively on new equipment over many years
with commensurate success. The capital programme which is now nearing
completion has been extensive and relative to the size of the Company has been
material.
It has positioned the Company to efficiently cater for the ever increasing
demands of its customers in a business where volume growth is being
experienced. Furthermore, on completion, there will be for the first time
sufficient capacity available during peak seasonal periods.
Not only have the commercial printing plants been upgraded but, in addition,
all the newspaper printing facilities, not only in the major metropolitan
areas but also in all the smaller outlying areas have been extensively
modernised. This augurs well for the future as the Company will be able to
cater for the present market and be in a position to take on large
publications as the opportunities presents themselves.
Further major capital expenditure for the next two to three years will
therefore not be necessary subject however to the requirements of our
customers.
With the large investment having been made it is inevitable that depreciation
will substantially increase in future years. This is however a non-cash cost
and the investments made into new presses is of the type that the assets will
last for many years.
Initially these investments will impact on the Company"s profitability but the
directors are confident that these investments will improve profitability in
the medium term.
Subject to this caveat, with an economy booming and advertising spend
increasing, the Company will continue to prosper and earnings growth above
inflation should continue to be achieved.
By order of the Board
Dr F van Zyl Slabbert (Chairman)
G M Utian (Managing Director)
T D Moolman (Chief Executive Officer)
Johannesburg
15 February 2006
Dr.F.van Zyl Slabbert*(Chairman), T.D.Moolman (Chief Executive Officer),
G.M.Utian (Managing Director), Dr.J.M.Buitendag*, P.C.Desai*, F.T.Gatefield*,
P.G.Greyling, P.M.Jenkins*, A.C.G.Molusi*, M.D.W.Short, P.Vallet*
(* Non-executive directors)
Registered office: 16 Wright Street, Industria West, Johannesburg, 2093
Sponsor
Sasfin Capital
A Division of Sasfin Bank Limited
Date: 15/02/2006 05:49:24 PM Produced by the JSE SENS Department
