Wrap Text
Reviewed Results for the year ended 30 June 2012
CAXTON & CTP LIMITED
publishers & printers
Incorporated in the Republic of South Africa
Registration number: 1947/026616/06
Share code: CAT ISIN: ZAE000043345
Preference share code: CATP ISIN:ZAE000043352
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2012
ABRIDGED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Reviewed Audited
for the year for the year
% to 30 June to 30 June
R000 change 2012 2011
Turnover 11,0 4 819 103 4 340 422
Other operating income 85 075 81 390
4 904 178 4 421 812
Changes in inventories of finished goods and
work in progress 35 260 14 091
Raw materials and consumables used 1 743 398 1 530 826
Staff costs 1 022 402 897 599
Other operating expenses 1 356 490 1 244 464
Total operating expenses 12.8 4 157 550 3 686 980
PROFIT FROM OPERATING ACTIVITIES 1.6 746 628 734 833
Depreciation 226 516 188 724
PROFIT FROM OPERATING ACTIVITIES
AFTER DEPRECIATION (4.8) 520 112 546 108
Impairment of plant and goodwill 25 072 23 462
NET PROFIT FROM OPERATING ACTIVITIES (5.3) 495 041 522 646
Net finance income (14.8) 111 650 131 109
dividends 40 363 27 437
interest 67 912 106 000
loss on realisation of investments (9) (157)
net profit/(loss) on currency hedges 3 384 (2 171)
Income from associates 45.2 26 073 17 957
PROFIT BEFORE TAXATION (5.8) 632 763 671 712
Income tax expense 190 640 203 669
PROFIT FOR THE YEAR (5.5) 442 123 468 043
Other comprehensive income: 102 247 (31 972)
Fair value adjustment investments, preference
shares,
land and buildings 102 247 (31 972)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 544 370 436 071
PROFIT ATTRIBUTABLE TO:
Non-controlling interests 5 249 5 042
Owners of the company 436 874 463 001
442 123 468 043
Earnings per share (cents) 3.5 104,77 101,3
Headline earnings per share (cents) 3.3 109,75 106,2
Preference dividend paid per share (cents) 357 357
Ordinary dividends paid per share (cents) 40 40
Shares in issue 461 648 254 495 639 628
Treasury shares (44 649 502) (38 387 235)
Earnings per share based on 416 998 752 457 252 393
Reconciliation of headline earnings:
Earnings attributable to owners of company 436 874 463 001
Adjusted for non-trading items 20 793 22 720
Net loss on realisation of investments 9 157
Impairment of plant and goodwill 25 072 23 462
Net (profit)/loss on disposal of assets (3 288) 2 364
Tax effect on above adjustments (999) (3 263)
Headline earnings 457 668 485 721
Abridged segmental analysis % %
Revenue:
Publishing, printing and distribution 4 587 597 95 4 132 146 95
Other 981 187 20 924 122 21
Inter-group sales publishing,
printing and distribution (694 717) (15) (695 191) (16)
Inter-group sales other (54 964) (20 655)
4 819 103 100 4 340 422 100
Operating income:
Publishing, printing and distribution 418 591 85 392 620 75
Other 76 450 15 130 026 25
495 041 100 522 646 100
ABRIDGED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Reviewed Audited
30 June 30 June
R000 2012 2011
ASSETS
NON-CURRENT ASSETS
PROPERTY, PLANT AND EQUIPMENT 2 385 337 2 287 722
ASSOCIATED COMPANIES 138 986 159 628
OTHER INVESTMENTS AT FAIR VALUE 443 400 743 974
LISTED 9 137 6 651
UNLISTED 434 263 737 323
TOTAL NON-CURRENT ASSETS 2 967 723 3 191 324
CURRENT ASSETS
INVENTORIES 529 529 633 863
ACCOUNTS RECEIVABLE 738 432 707 954
TAXATION 24 675 7 965
CASH 1 130 471 1 519 332
BANK PREFERENCE SHARES AND OTHER INSTRUMENTS
AT FAIR VALUE 678 736 81 371
TOTAL CURRENT ASSETS 3 101 843 2 950 485
TOTAL ASSETS 6 069 566 6 141 809
EQUITY AND LIABILITIES
EQUITY 4 899 039 5 063 879
EQUITY ATTRIBUTABLE TO OWNERS OF COMPANY 4 855 621 5 030 541
PREFERENCE SHAREHOLDERS 100 100
NON-CONTROLLING INTEREST 43 318 33 238
NON-CURRENT LIABILITIES
DEFERRED TAXATION 439 800 390 145
CURRENT LIABILITIES
TRADE AND OTHER PAYABLES 572 907 561 902
PROVISIONS 157 820 125 883
TOTAL CURRENT LIABILITIES 730 727 687 785
TOTAL EQUITY AND LIABILITIES 6 069 566 6 141 809
Net asset value per share (cents) 1 175 1 107
Directors valuation of unlisted investments and
associated companies 573 249 896 952
Capital expenditure 255 026 342 793
Capital expenditure committed 320 000 20 000
ABRIDGED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Audited Audited
30 June 30 June
R000 2012 2011
Balance at beginning of the year 5 063 879 4 941 536
Total comprehensive profit for the year 544 370 436 071
Non-controlling interest acquired 11 251 9 823
Treasury shares (546 962) (131 391)
Dividends paid ordinary and preference shareholders (167 079) (186 480)
Dividends paid minority shareholders (6 420) (5 680)
Balance at end of the year 4 899 039 5 063 879
Note:
Business combination
The group obtained management and operational control of Moneyweb on 1 July 2011. Previously the
group owned 47.3% of Moneyweb and accounted for the investment as an associate. Susequently the
group has acquired an additional 3.3% for R2,6 million.
The acquired business contributed revenues of R32,3 million and net loss after tax of R2,8 million to the
group for the year 1 July 2011 to 30 June 2012. These amounts have been calculated using the groups
accounting policies.
Details of the net assets acquired and goodwill are as follows:
The goodwill arising is attributed to the benefit of expected synergies and revenue growth.
The assets and liabilities as at 1 July 2011 arising from the acquisition are as follows:
Acquirees
Fair carrying
R000 value amount
Fixed assets 4 477 4 477
Deferred taxation 136 136
Other financial assets 15 329 15 329
Accounts receivable 9 275 9 275
Cash and cash equivalents 9 197 9 197
Accounts payable (8 329) (8 329)
Fair value of net asset value acquired 30 085 30 085
Non-controlling interest (15 854)
Goodwill 18 219
Total purchase consideration 32 450
Purchase consideration 32 450
Less: Acquired in the previous year (32 450)
Cash and cash equivalents in subsidiary acquired 9 197
Cash flow on acquisition 9 197
ABRIDGED CONSOLIDATED STATEMENTS OF CASH FLOWS
Reviewed Audited
for the year for the year
to 30 June to 30 June
R000 2012 2011
CASH FLOW FROM OPERATING ACTIVITIES 603 426 275 751
Cash generated by operations 787 711 748 941
Changes in working capital 75 546 (256 388)
Cash generated by operating activities 863 257 492 553
Taxation paid (194 607) (158 079)
Net interest received 67 912 106 000
Dividends received 40 363 27 437
Net cash generated from operating activities 776 925 467 911
Dividends paid (173 499) (192 160)
CASH FLOW FROM INVESTING ACTIVITIES (256 584) (395 505)
Property, plant and equipment
additions to expand operations (255 026) (342 793)
proceeds from disposals 8 514 27 011
(246 512) (315 782)
subsidiary companies acquired (2 604) (36 242)
acquisition of investments (7 468) (43 481)
CASH FLOWS FROM FINANCING ACTIVITIES (146 962) (131 392)
Own shares acquired (146 962) (131 392)
Net increase/(decrease) in cash and cash equivalents 199 880 (251 146)
Subsidiary company cash acquired 9 197 6 129
Cash and cash equivalents at the
beginning of the year 1 606 179 1 851 196
Cash and cash equivalents
at the end of the year 1 815 256 1 606 179
Fair value adjustment of preference shares (6 049) (5 476)
Fair value of cash and cash equivalents
at the end of the year 1 809 207 1 600 703
Note:
Cash 1 130 471 1 519 332
Preference shares at fair value 678 736 81 371
Fair value of cash and cash equivalents
at the end of the year 1 809 207 1 600 703
COMMENTARY
Basis of preparation
The accounting policies adopted in the preparation of the financial statements for the year
under review are in accordance with the requirements of International Financial Reporting
Standards (IFRS), and are consistent with the prior year and IAS 34 on interim reporting,
the JSE Listings Requirements, the AC 500 standards and the Companies Act of South Africa.
Comments
Negative global financial and economic conditions continue to prevail. Against this
background South Africa has nevertheless managed to achieve an increase in Gross Domestic
Product. This is partly reflected in a steady increase in both retail and wholesale sales. Whilst
total advertising spend has shown growth, Print Advertisings market share has deteriorated,
not only from the migration to digital products but also to television. Inflation continues to be
contained within the band of between 3% and 6% set by the Reserve Bank. Interest rates were
unchanged for the financial year but recently the repo rate was reduced by 50 basis points
to 5% in an endeavour to stimulate growth. Unemployment, especially of the unskilled youth,
presents enormous challenges.
The company remains in a very strong financial position with cash and cash equivalents at the
close of the financial year amounting to R1,809 billion, notwithstanding the outflow of funds
during the year as reflected in the Cash Flow Statement.
Earnings
Despite a difficult trading year it is pleasing to report that the company managed to achieve
earnings of 104.8 cents per share which is better than that earned last year of
101.3 cents per share. Turnover grew 11% to R4,819 billion. Profit from operating activities
rose to R746.6 million from R734.8 million. Resulting from the substantial capital expenditure
over the past few years and an acceleration in the write off of plant and equipment over
its remaining useful life, depreciation increased substantially from R188.7 million to
R226.5 million. Impairment of plant and goodwill amounted to R25.1 million compared to
R23.5 million in the prior year.
Net Finance Income decreased from R131.1 million to R111.7 million, due to the lower
interest rates prevailing throughout the year.
Income from associates increased from R17.9 million to R26.1 million with a number of the
companys associates having achieved satisfactory earnings growth.
Taxation was at a similar rate of 30% to the previous year and amounted to R190.6 million.
Profit for the year amounted to R442.1 million which is slightly lower than that achieved last
year, of R468 million.
However, during the year the company acquired the entire issued share capital of Caxton Share
Investments (Pty) Limited, which company held 40 million ordinary shares in the company, and
which shares are now held as Treasury Shares. Accordingly, net of treasury shares, there are
now only 416 998 752 shares in issue compared with 457 252 393 shares at 30 June 2011.
Calculated on the shares in issue at the close of the financial year, headline earnings per
share amounted to 109.8 cents, an increase of 3.3% over the previous year, and earnings per
share as previously stated were 104.8 cents.
Capital expenditure
New printing presses and vastly upgraded post-press equipment is currently being installed in
the Johannesburg newspaper factory. In addition, extentions to storage and handling facilities
are being made to accommodate the substantial increase in capacity to cater for the additional
printing for customers which has been secured by long-term contracts.
CTP Gravure in Durban has purchased a technically-advanced new gravure printing press
which is currently under construction and which will be installed in the forthcoming year. This
new press replaces outdated and inefficient equipment.
DIVISIONAL PERFORMANCE
PUBLISHING, PRINTING AND DISTRIBUTION
Newspaper Publishing and Printing
Local newspapers have remained buoyant, notwithstanding the inroads being made by
digital products on print media. Circulations of the daily and Sunday broadsheet newspapers
continue to fall as does their share of the advertising market. As time passes by it is becoming
increasingly evident that the viability of these papers is being eroded.
The Newspaper division predominantly publishes local newspapers which serve the
communities to whom they are directed and where digital products can complement such
publications, but not replace them.
By and large these newspapers improved profitability and increased market share.
A number of projects are in progress in an attempt to secure new advertisers who have not in
the past advertised in local newspapers. These advertisers are beginning to realise the
reach and importance of local newspapers, but have hitherto relied extensively on television
advertising or have used alternative inefficient distribution methods for their printed catalogues.
With the recognition of the importance of digital and social media, a new digital strategy
is presently under development with a number of innovative products and methods under
consideration.
Good progress has been made with the launch of the Look Local web-based sites and the roll
out is almost complete. There has been an excellent acceptance of this product which forms the
nucleus of the new strategy and which will focus on the development of communities of various
description. This digital initiative is being undertaken to complement and add platforms to
the large number of papers published by the division. Easily accessible and speedier data
transmission is vital for this development and it is fundamental that South Africa catches up
with the developed world in having better electronic data transmission and easier and cheaper
possibilities for users.
New products and publications have been developed with good success and partnerships,
particularly in rural areas, where a large number of new shopping centres have either been
erected or are in the planning stage, are underway.
Steady progress has again been made by The Citizen, the companys regional daily
newspaper which, against the trend, continues to hold circulation and has improved advertising
revenues.
The Johannesburg newspaper factory has produced very good results and recently entered
into long-term printing contracts with the Independent and Avusa groups. In terms of these
arrangements, all of the Gauteng newspaper publications of these two groups will in future be
printed at this facility. Printing has already commenced for a number of their publications and,
over a period of months, the remainder will be printed. This has necessitated the investment in
the new equipment referred to under Capital Expenditure, and which will be in production by
the end of the calendar year.
The readers of a number of the publications of the aforementioned groups are already
benefiting from the substantial improvement in the quality of the printing.
The Cape Town factory has been in production for over a year and is operating efficiently and
contributing to profits.
Magazine Publishing and Distribution
Time has now proven that printed magazines have not and should not be as badly affected
as newspapers as a result of the migration to digital offerings. Circulations are continuing to
reflect that magazines occupy a different role in the minds of readers compared to newspapers
and have held up remarkably well. Similarly the revenue from advertising has remained stable.
The magazine division had a good year where it improved profitability and market share in a
competitive environment. Further progress was made on the various digital offerings that are
being introduced to complement the printed product.
RNA, the companys distribution arm, also had a good year and continues to provide excellent
service to its many and varied customers. As has been mentioned in the past, the intricacies
and efficiencies of this type of distribution cannot be over estimated and it is gratifying to report
that they have continued to improve their overall performance levels. This, notwithstanding the
large number of additional outlets, many if them in country towns, that have been opened.
Accordingly, additional routes have had to be operated and transport costs, which are tied
to fuel costs, increased dramatically during the year and are becoming a major cost item for
publishers.
COMMERCIAL PRINTING
Web, Gravure and Book Printing
The many items of plant that have been installed over the past have resulted in a substantial
improvement in the efficiencies of this division. This has enabled reasonable results to be
achieved, notwithstanding the continuing pressure on margins. Market share has been
maintained and good cost control has assisted in improving profitability.
Educational Book Publishers have had an exceedingly difficult year to contend with. Not only
is the curriculum for education being changed, but in addition, most provinces have either
not ordered their full requirements of text books or, in certain instances, no funds have been
available to order books. This is having disastrous consequences for schools and learners alike
and it is patently obvious that the entire system for the provision of learner support materials
is in need of investigation and a thorough overhaul. The role that the recently introduced
workbooks should play in education is also uncertain. All printers have experienced the
pressure from the lack of volume and unrealistic deadlines being imposed as and when funds
become available.
OTHER
Packaging
The activities of the company in this area remain focused on niche packaging. Whilst wholesale
and retail sales remained positive throughout the year, a large portion of these products
are being imported, at competitive prices and in addition, packaging for products locally
manufactured, is also being imported. This has had the effect of curtailing volume growth in
an industry which is already overtraded. Profits nevertheless improved and the newly acquired
business of CTP Digital Services added to its customer base and had a good year.
Stationery
It has unfortunately been an extremely difficult year for all the components of the stationery
division and budgets were not achieved. Steps to rationalise certain production facilities have
been taken which should improve the position. A joint venture for the direct supply of stationery
products to schools has been entered into.
Review by Independent Auditors
The companys auditors, PKF (JHB) Inc., have reviewed these results. Their unqualified review
is available for inspection at the registered office of the company.
DECLARATION OF DIVIDEND
The board has declared a dividend of 50.0 cents per ordinary share (gross) and a preference
dividend of 410.0 cents per share (gross) for the year ended 30 June 2012.
The dividends are subject to the Dividends Withholding Tax that was introduced with effect
from 1 April 2012. In accordance with the provisions of the JSE Listings Requirements, the
following additional information is disclosed:
the dividend has been declared out of current profits available for distribution
the local Dividends Tax rate is 15%
the gross dividend amount is 50.0 cents per ordinary share and 410.0 cents per preference
share for shareholders exempt from Dividends Tax
Secondary Tax on Companies (STC) credits available amount to 7.63216 cents per ordinary and preference share
the net dividend amount is 43.64482 cents per ordinary share and 349.64482 cents per preference share for
shareholders liable for Dividends Tax
the company has 461 648 254 ordinary shares in issue
the company has 50 000 preference shares in issue
the companys income tax reference number is 9175/167/71/8
The following dates are applicable to the dividend:
The last date to trade in order to be eligible for the dividend will be Friday, 19 October 2012.
Shares will trade ex-dividend from Monday, 22 October 2012.
The record date will be Friday, 26 October 2012 and payment will be made on Monday,
29 October 2012.
Share certificates may not be dematerialised/rematerialised between Monday, 22 October 2012
and Friday, 26 October 2012, both days inclusive.
PROSPECTS
The uncertain direction of global economies will undoubtedly continue to affect South Africa.
The investment being made into digital products, together with the new printing contracts
entered into, presents the company with a number of opportunities and challenges. A modest
improvement in earnings in the forthcoming year should nevertheless be achievable.
P M Jenkins* (Chairman), T D Moolman (Chief Executive Officer)
G M Utian (Managing Director), A C G Molusi*, P G Greyling
T J W Holden, P Vallet*, N A Nemukula*, T Slabbert*
*Non-executive directors
Registered office: 28 Wright Street, Industria West, Johannesburg, 2093
Incorporated in the Republic of South Africa
Registration number: 1947/026616/06
Share code: CAT ISIN: ZAE000043345
Preference share code: CATP ISIN:ZAE000043352
Sponsor
ARCAY Moela Sponsors
Date: 29/08/2012 02:22:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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