| Wed 14 Feb 2007, 16:38 | | CAT/ CATP - Caxton - Unaudited results: six months |
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CAT CATP
CAT
CAT/ CATP - Caxton - Unaudited results: six months ended 31 December 2006
CAXTON AND CTP PUBLISHERS AND PRINTERS LIMITED
Incorporated in the Republic of South Africa
Registration number 1947/026616/06
Share code: CAT & ISIN code: ZAE000043345
Preference share code: CATP & ISIN code: ZAE000043352
("Caxton" or "the Company")
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2006
HIGHLIGHTS
- Turnover up 11,2%
- Profit after tax up 16%
CONSOLIDATED INCOME STATEMENTS
Unaudited Unaudited Audited
6 months to 6 months to for the year
31 December 31 December to 30 June
R`000 2006 2005 2006
Turnover 2 071 215 1 863 020 3 468 498
Other operating income 32 060 37 259 80 511
2 103 275 1 900 279 3 549 009
Changes in inventories (3 164) 22 419 11 817
Raw materials and 652 356 580 440 1 098 353
consumables used
Staff costs 357 946 326 917 674 929
Other operating 624 313 564 618 1 031 160
expenses
Total operating 1 631 451 1 494 394 2 816 259
expenses
PROFIT FROM OPERATING 471 824 405 885 732 750
ACTIVITIES
Depreciation and 69 496 50 172 126 818
impairment
NET PROFIT FROM 402 328 355 713 605 932
OPERATING ACTIVITIES
Finance income 61 489 46 841 108 970
- dividends 26 180 13 020 48 617
- net surplus on 23 900 14 860 25 037
realisation of
investments
- interest 11 409 18 961 35 316
Income from associates 10 313 5 814 19 032
PROFIT BEFORE TAXATION 474 130 408 368 733 934
Taxation 142 239 122 238 208 136
PROFIT AFTER TAXATION 331 891 286 130 525 798
Attributable to 3 461 2 831 6 277
minority interest
Attributable to 328 430 283 299 519 521
ordinary shareholders
331 891 286 130 525 798
Earnings per share 68,3 62,6 111,8
(cents)
Diluted earnings per 68,2 62,0 111,6
share (cents)
Headline earnings per 64,0 60,3 109,0
share (cents)
Diluted headline 63,9 59,6 108,8
earnings per share
(cents)
Reconciliation of
headline earnings:
Earnings attributable 328 430 283 299 519 521
to ordinary
shareholders
Adjusted for non- (20 972) (10 732) (12 945)
trading items
Cost of acquisition of - 1 364 -
preference shares
Surplus on realisation (23 900) (14 860) (23 373)
of investments
Net impairment in value - 855 8 477
of property, plant and
equipment
Net profit on disposal (538) (246) (515)
of assets
Tax effect on above 3 466 2 155 1 443
adjustments
Loss on disposal of - - 1 023
subsidiaries
Headline earnings 307 458 272 567 506 576
Number of shares in 494 939 628 494 939 628 494 939 628
issue
Weighted average number 494 939 628 460 116 910 477 155 923
of shares
Treasury shares (14 412 326) (7 875 750) (12 422 855)
Earnings per share 480 527 302 452 241 160 464 733 068
based on
Add: Share options 700 000 4 821 700 700 000
outstanding
Diluted earnings per 481 227 302 457 062 860 465 433 068
share based on
Abridged segmental analysis
Unaudited Unaudited Audited
6 months to 6 months for the
to year
31 December 31 to 30 June
December
2006 % 2005 % 2006 %
Revenue
Publishing, 1 603 337 77 1 391 839 75 3 213 592 93
printing and
distribution
Other 882 146 43 801 310 43 979 149 28
Inter-group (414 268) (20) (330 129) (18) (724 243) (21)
sales
2 071 215 100 1 863 020 100 3 468 498 100
Operating
income
Publishing, 220 284 55 199 879 56 462 315 76
printing and
distribution
Other 182 044 45 155 834 44 143 617 24
402 328 100 355 713 100 605 932 100
CONSOLIDATED BALANCE SHEETS
Unaudited Unaudited Audited
31 December 31 December 30 June
R`000 2006 2005 2006
ASSETS
NON-CURRENT ASSETS
PROPERTY, PLANT AND 1 673 962 1 424 294 1 587 766
EQUIPMENT
INTANGIBLE ASSETS 5 649 6 715 6 182
ASSOCIATED COMPANIES 94 161 62 151 94 021
OTHER INVESTMENTS AT FAIR 728 199 597 471 666 845
VALUE
- LISTED 315 785 145 241 252 203
- UNLISTED 412 414 452 230 414 641
CURRENT ASSETS
INVENTORIES 504 650 323 394 461 936
ACCOUNTS RECEIVABLE 957 529 802 862 669 593
CASH 211 489 374 407 307 466
TAXATION 911 2 779 1 281
BANK PREFERENCE SHARES AND 291 996 429 513 551 989
OTHER INSTRUMENTS AT FAIR
VALUE
- LISTED 291 996 334 513 551 989
- UNLISTED - 95 000 -
TOTAL ASSETS 4 468 546 4 023 586 4 347 079
EQUITY AND LIABILITIES
EQUITY 3 441 061 3 116 463 3 296 007
ORDINARY SHAREHOLDERS` 3 426 956 3 103 824 3 284 381
EQUITY
PREFERENCE SHAREHOLDERS 100 100 100
MINORITY INTEREST 14 005 12 539 11 526
NON-CURRENT LIABILITIES
DEFERRED TAXATION 200 249 152 621 178 349
CURRENT LIABILITIES
ACCOUNTS PAYABLE 580 358 544 039 692 852
PROVISIONS 84 163 126 014 106 138
TAXATION 162 715 84 449 73 733
TOTAL EQUITY AND 4 468 546 4 023 586 4 347 079
LIABILITIES
Net asset value per share 695 632 683
(cents)
Directors` valuation of 506 575 514 382 508 662
unlisted investments and
associated companies
Capital expenditure 157 515 270 747 508 399
Capital expenditure 40 000 200 000 70 000
committed
Cash and cash equivalents 503 485 803 920 859 455
at fair value
CONSOLIDATED CASH FLOW STATEMENTS
Unaudited Unaudited Audited
6 months to 6 months to for the year
31 December 31 December to 30 June
R`000 2006 2005 2006
CASH FLOW FROM OPERATING (202 834) 44 526 470 082
ACTIVITIES
Cash generated by operations 449 310 429 183 717 491
Changes in working capital (443 146) (136 171) 16 986
Cash generated by operating 6 164 293 012 734 477
activities
Taxation paid (27 997) (98 868) (164 079)
Net interest received 11 409 18 961 35 316
Dividends received 26 180 13 020 48 617
Net cash inflow from 15 756 226 125 654 331
operating activities
Dividends paid (218 590) (181 599) (184 249)
CASH FLOW FROM INVESTMENT (93 179) (685 937) (1 019 214)
ACTIVITIES
Property, plant and
equipment
- additions to expand (157 514) (270 747) (508 399)
operations
- proceeds from disposals 2 894 5 063 5 127
(154 620) (265 684) (503 272)
Investments
- acquisitions at cost (14 660) (420 253) (515 942)
- proceeds from disposals 76 101 - -
CASH FLOWS FROM FINANCING (34 965) 337 226 278 011
ACTIVITIES
Shares issued - 400 000 405 229
Own shares acquired (34 965) (62 774) (127 218)
Net increase/(decrease) in (330 978) (304 185) (271 121)
cash and cash equivalents
Cash and cash equivalents at 822 502 1 053 623 1 093 623
the beginning of the year
Cash and cash equivalents at 491 524 749 438 822 502
the end of the period
Fair value adjustment of 11 961 54 482 36 953
preference shares and other
instruments
Fair value of cash and cash 503 485 803 920 859 455
equivalents at the end of
the period
Note:
Cash 211 489 374 407 307 466
Preference shares and other 291 996 429 513 551 989
investments at fair value
Fair value of cash and cash 503 485 803 920 859 455
equivalents at the end of
the period
STATEMENTS OF CHANGES IN EQUITY
Unaudited Unaudited Audited
31 December 31 December 30 June
R`000 2006 2005 2006
Balance at beginning of the 3 296 007 2 640 912 2 642 641
year
Attributable earnings 331 891 286 130 525 798
Shares issued - 400 000 406 255
Share trust consolidation - - 1 164
Costs relating to issue of - (1 000) (1 026)
shares
Treasury shares (34 965) (62 760) (127 218)
Fair value adjustments - 91 711 5 973 21 359
listed investments
Fair value adjustments - (24 993) 28 807 11 283
preference shares and
instruments
Dividends paid - ordinary (218 590) (181 599) (179 789)
shareholders
Dividends paid - minority - - (4 460)
shareholders
Balance at end of the year 3 441 061 3 116 463 3 296 007
COMMENTARY
Basis of preparation
The interim financial statements were prepared in accordance with
International Financial Reporting Standards ("IFRS") which is consistent
with the prior year.
Comments
Notwithstanding the considerable investment in new plant and equipment in
the latter part of the previous financial year and the costs incurred in
the commissioning of these plants, it is pleasing to report that the
company has produced satisfactory results. Whilst it had been anticipated
that the economy would react to the increase in interest rates and rising
inflation, this did not eventuate and retailers and wholesalers continued
to trade at record levels. This is reflected in the growth in turnover of
11% which is somewhat higher than what has been achieved in the recent
past.
Consumer confidence remains strong and is expected to continue for some
time to come, as a result of the considerable amount of money being
expended on infrastructural development, regardless of the further
increases in interest rates which can be expected as a consequence of an
overheated economy.
Market share in all the categories in which the company operates has been
increased, this in spite of a highly competitive environment particularly
in the web printing division.
The decline in the value of the currency will have a major impact on
future results. Fortunately the capital expenditure programme has been
completed during a time when the currency was, with hindsight, at a
favourable conversion rate, especially to the Euro, as the majority of
the plant is sourced from Europe. The same does not hold true for our
material inputs, which are continuously purchased from overseas
suppliers. Therefore the selling prices of all products which are
produced will have to increase, and in certain instances by a large
percentage.
The additional equipment now installed for both newspaper and commercial
printing, will place the company in a far better position to cater for
the growing requirements of its customer base. Commissioning of the
Johannesburg Gravure Printing facilities has been successfully completed
and the factory is fully operational. The Durban Gravure Printing
facilities have been extensively upgraded, by not only the purchase and
installation of a new press, but in addition by the installation of a
binding machine and various other items of equipment. This will allow a
larger degree of flexibility and innovativeness in meeting customer
requirements. Extensive warehouses have been erected to accommodate
storage of the company`s raw material requirements. These new facilities
are scheduled for completion in April 2007.
Earnings
As indicated above, turnover increased from R1,863 million to R2,071
million which is equivalent to a growth of 11,2%. Depreciation increased
to an all time high, by virtue of the new equipment coming on stream, and
amounted to R69,5 million - an increase of R19,3 million on the
corresponding six months last year.
Net finance income, which includes the surplus on the realisation of
investments, rose to R61,5 million and Associated Companies contributed
R10,3 million.
Profit before taxation increased to R474,1 million from R408,4 million,
which is a 16,1% improvement. Taxation, which includes Secondary Tax on
Companies, amounted to R142,2 million and is inclusive of deferred tax.
Minority shareholders absorbed R3,4 million. Earnings attributable to
shareholders amounted to R328,4 million which compares favourably with
R283,3 million earned in the comparative period.
Earnings per share were 68,3 cents which is an improvement of 9,2% and
diluted earnings per share came to 68,2 cents. After making the necessary
adjustments, headline earnings amounted to 64,0 cents per share which is
a growth of 6,1% over the six months to 31 December 2006.
The shares in issue during the period include the 40 million which were
issued in the previous financial year. Furthermore 1 989 471 shares in
the capital of the company were repurchased and are held as Treasury
Stock. Therefore the number of shares in issue at year end for purpose of
the calculation amounted to 480 527 302.
Cash flow
Cash and cash equivalents at 31 December 2006 amounted to R491,5 million.
This reduction compared to the position at the end of December 2005 of
R749,4 million is due to the major capital expenditure programme which is
now complete, to the increase in certain investments which were made and
the repurchasing of a number of ordinary shares in the share capital of
the company. In addition, working capital has increased substantially due
to the increased level of business generated particularly over October to
December 2006 and to stock holdings that were increased to cope with the
additional turnover. Cash generated by operations amounted to R449,3
million and the changes in working capital were R443,1 million, leaving
only R6,2 million of cash generated by operating activities.
Dividends
No interim dividend has been declared.
Divisional performance
The various publishing divisions of the company were primarily
responsible for the improvement in the company`s results whilst the
manufacturing divisions continue to be affected by increased levels of
competition and reduced margins.
PUBLISHING, PRINTING AND DISTRIBUTION
Newspaper publishing and printing
This division continues to produce excellent results resulting in the
main from the continuation in higher levels of advertising spend which
remained buoyant throughout the six months under review.
All products experienced good growth and additional circulation was
experienced.
The roll out of the "Get It" monthly community magazine continued and
there are now 19 versions of this highly acclaimed publication. Caxton
Urban newspapers remains on track and advertising support for this
publication, which predominantly covers Soweto, has grown.
Auto Dealer has further consolidated its position in the Motoring market
and continues to go from strength to strength.
With the finalisation of the installation of new printing presses in all
the regional factories, improved productivity has been achieved and
capacity has been substantially increased. This investment also allows
for greater flexibility of printing which augurs well for expansion in
these areas which have seen considerable growth over the past few years.
"The Citizen", the company`s daily newspaper, also did well and achieved
better results driven mainly by additional advertising spend. A new
management team has responded well to challenges and further improvements
are anticipated.
Magazine publishing
Despite the large number of new titles which have been launched, this
division improved its performance and grew its market share of magazine
advertising. Circulations, directly as a result of the additional titles
available, have been under pressure and it is pleasing to report that
increases of circulation for a large number of the important titles that
are published were achieved. Resulting from the increase in printing
costs as a consequence of the fall in value of the currency, cover prices
of magazines will have to be increased. This could have an adverse effect
on circulations as consumers will already be under a degree of pressure
to meet their commitments as interest rates have increased over the past
months, and magazines are in many instances an impulse purchase.
A new magazine is in the planning process and is due to be launched
within the next six months.
RNA, the company`s magazine distribution has continued to make changes to
systems to cater for an ever increasing number of magazines being
distributed.
Whilst performance was in line with expectations and a number of new
important titles were secured it is evident that a saturation level in
the number of titles being handled has been reached and for this
important division to be able to do justice to its existing customer
base, having regard to the difficulties presented by the South African
retail environment, only those titles which can be efficiently handled
will be distributed in future.
Commercial printing
Web printing
This area of the company`s operations is where the majority of the
capital expenditure has occurred. Substantial changes to buildings and
plant have been made and this disruption has naturally resulted in
operational difficulties over the period. The Web Printing market,
resulting from additional capacity having been installed not only by the
company but in addition by competitors, has remained competitive and
margins have been negatively affected. The completion of the various
installations will place this division in a far better position to print
more efficiently and improvements are now anticipated. To put into
context, what has taken place over the last few years is that capacity
has been more than doubled with all ancillary equipment having been
reassessed and upgraded and facilities built to accommodate this vast
investment.
Despite turnovers having increased, which was due to retail advertisers
having expended more over the buoyant seasonal period, profitability was
lower than in the six months ended December 2005.
Book printing
Volume growth was achieved and good profitability was recorded.
Publishers of educational material have experienced good volumes and this
translated into a busy period for this very efficient Cape based quality
facility.
OTHER
Academic publishing
Maskew Miller Longman, in which company 50% of the equity is owned,
continued to report excellent profits. Further gains have been
experienced in market share of the South African Schools curriculum. This
extremely well managed organisation continues to perform above
expectations, not only in the area of educational publishing for schools,
but in all areas in which it operates. Pearson Education, its higher
education division has had notable gains in its achievements and has
become a major participant in the new curriculum for FET publishing
(Further Education and Training) which is currently in the process of
introduction. This is a government led initiative which is being
introduced to cater for the lack of technical skills in a number of skill
bases evident in the country.
Packaging
This is another business unit which has not only been subject to
competitive pressures but where severe disruptions also took place from a
manufacturing view point. During the period the CTP Packaging operation,
manufacturing folded cartons, was moved from Industria to Elandsfontein
and concomitantly the operations of a newly acquired packaging company
operating in a similar field, were moved to Elandsfontein. Various
difficulties were encountered which has led to a diminution in
profitability. It is however predicted, now that all physical moves have
been completed, that with better capacity and planning, operational
efficiencies will be achieved.
The other Packaging divisions, which are those producing labels and
flexible packaging, performed reasonably regardless of a competitive
environment.
Stationery
Stability has been maintained by the stationery divisions and increases
in volumes in a number of categories were for the first time in a while
achieved. Overall profitability therefore improved notwithstanding margin
pressures which continue unabated.
Prospects
The results for the period are very much in line with expectations and
budgets. A worrying factor at present is to what extent the Reserve Bank
will further increase interest rates and what effect this will have on
consumer spending. Business confidence appears to be waning and despite
the large infrastructural spending by Government, overall economic
activity could reduce. It is however anticipated that earnings growth
will continue to be moderate and similar to that being reported upon.
By order of the Board
Dr F van Zyl Slabbert (Chairman)
G M Utian (Managing Director)
T D Moolman (Chief Executive Officer)
Johannesburg
14 February 2007
Dr F van Zyl Slabbert* (Chairman), T D Moolman (Chief Executive Officer),
G M Utian (Managing Director),
P C Desai*, F T Gatefield*, P G Greyling, T J W Holden, P M Jenkins*, P
Vallet*
(* Non-executive directors)
Registered office:
16 Wright Street, Industria West Johannesburg, 2093
Sponsor
Sasfin Capital
A Division of Sasfin Bank Limited
Date: 14/02/2007 16:38:03 Produced by the JSE SENS Department.
