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CAXTON CTP PUBLISHERS & PRINTERS LD - Unaudited Interim Results for the Six Months Ended 31 December 2012

Release Date: 20/02/2013 17:13
Code(s): CAT CATP     PDF:  
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Unaudited Interim Results for the Six Months Ended 31 December 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

UNAUDITED INTERIM GROUP RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2012

CONSOLIDATED INCOME STATEMENTS
                                                                                   Unaudited              Unaudited                   Audited
                                                                        %        6 months to            6 months to           for the year to
R'000                                                              change   31 December 2012       31 December 2011              30 June 2012
Turnover                                                              5,3          2 721 903              2 585 874                 4 819 103
Other operating income                                                                43 471                 37 299                    85 075
                                                                                   2 765 374              2 623 173                 4 904 178
Changes in inventories of finished goods and work in progress                         21 416                  3 435                    35 260
Raw materials and consumables used                                                 1 043 580                985 129                 1 743 398
Staff costs                                                                          526 953                500 260                 1 022 402
Other operating expenses                                                             739 373                735 244                 1 356 490
Total operating expenses                                              4,8          2 331 322              2 224 068                 4 157 550
PROFIT FROM OPERATING ACTIVITIES BEFORE DEPRECIATION                  8,8            434 052                399 105                   746 628
Depreciation                                                                         118 678                112 112                   226 516
PROFIT FROM OPERATING ACTIVITIES AFTER DEPRECIATION                   9,9            315 374                286 993                   520 112
Impairment of plant                                                                                                                  25 072
NET PROFIT FROM OPERATING ACTIVITIES                                  9,9            315 374                286 993                   495 040
Net finance income                                                    4,8             53 013                 50 575                   111 652
   dividends                                                                         26 891                 14 436                    40 364
   interest                                                                          26 122                 36 063                    67 904
   net profit on realisation of investments                                                                    76                         
   loss on currency hedges                                                                                                           3 384
Income from associates                                                1,6             16 300                 16 045                    26 073
PROFIT BEFORE TAXATION                                                8,8            384 687                353 613                   632 765
Income tax expense                                                                   113 482                113 787                   190 640
PROFIT FOR THE PERIOD                                                13,1            271 205                239 826                   442 125
Other comprehensive income:                                                           17 853                 24 078                   102 247
Fair value adjustment  listed investments and preference shares                      17 853                 24 078                   102 247
 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD                                           289 058                263 904                   544 372
PROFIT ATTRIBUTABLE TO:
Non-controlling interests                                                              5 457                  3 822                     5 249
Owners of the company                                                                265 748                236 004                   436 876
                                                                                     271 205                239 826                   442 125
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Non-controlling interests                                                              5 457                  3 822                     5 249
Owners of the company                                                                283 601                260 082                   539 123
                                                                                     289 058                263 904                   544 372
Earnings per share (cents)                                           11,1               62,9                   56,6                     104,8
Headline earnings per share (cents)                                  10,7               62,5                   56,4                     109,8
Preference dividend paid per share (cents)                                               357                    357                       357
Ordinary dividends paid per share (cents)                                                 40                     40                        40
 Shares in issue                                                                 467 127 949            461 648 254               461 648 254
 Treasury shares                                                                 (44 405 861)           (44 534 342)              (44 649 502)
 Earnings per share based on                                                     422 722 088            417 113 912               416 998 752
Reconciliation of headline earnings:
Earnings attributable to owners of company                                           265 748                236 004                   436 876
Adjusted for non-trading items                                                        (1 710)                  (564)                   20 796
Net profit on realisation of investments                                                                       (76)                        9
Net impairment in value of property and plant                                                                                         6 852
Goodwill written off                                                                                                                 18 221
Net profit on disposal of assets                                                      (2 375)                  (693)                   (3 288)
Tax effect on above adjustments                                                          665                    205                      (998)
Headline earnings                                                                    264 038                235 440                   457 672
Abridged segmental analysis                                            %                               %                                    %
Revenue:
Publishing, printing and distribution                 2 502 037       92           2 393 139          92                4 587 597          95
Other                                                   702 768       26             609 343          24                  981 187          20
Inter-group sales                                      (482 902)     (18)           (416 608)        (16)                (749 681)        (15)
                                                      2 721 903      100           2 585 874         100                4 819 103         100
Operating income:
Publishing, printing and distribution                   261 300       83             244 504          85                  418 591          85
Other                                                    54 074       17              42 489          15                   76 449          15
                                                        315 374      100             286 993         100                  495 040         100

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                                                               Unaudited            Unaudited            Audited
R'000                                                                   31 December 2012     31 December 2011       30 June 2012
ASSETS
NON-CURRENT ASSETS
PROPERTY, PLANT AND EQUIPMENT                                                  2 426 916            2 266 610          2 385 337
ASSOCIATED COMPANIES                                                             149 574              132 866            138 986
OTHER INVESTMENTS AT FAIR VALUE                                                  703 016              387 904            443 400
 LISTED                                                                          39 861                6 967              9 137
 UNLISTED                                                                       663 155              380 937            434 263
TOTAL NON-CURRENT ASSETS                                                       3 279 506            2 787 380          2 967 723
CURRENT ASSETS
INVENTORIES                                                                      656 388              501 803            529 531
ACCOUNTS RECEIVABLE                                                            1 130 345            1 147 833            738 432
TAXATION                                                                                                                24 675
CASH                                                                             610 650              855 647          1 130 471
BANK PREFERENCE SHARES AND OTHER INSTRUMENTS AT FAIR VALUE                       670 656              485 461            678 736
TOTAL CURRENT ASSETS                                                           3 068 039            2 990 744          3 101 845
TOTAL ASSETS                                                                   6 347 545            5 778 124          6 069 568
EQUITY AND LIABILITIES
EQUITY                                                                         5 064 351            4 612 242          4 899 040
EQUITY ATTRIBUTABLE TO OWNERS OF COMPANY                                       5 015 477            4 575 081          4 855 623
PREFERENCE SHAREHOLDERS                                                              100                  100                100
NON-CONTROLLING INTEREST                                                          48 774               37 061             43 317
NON-CURRENT LIABILITIES
DEFERRED TAXATION                                                                439 051              393 857            439 801
CURRENT LIABILITIES
TRADE AND OTHER PAYABLES                                                         684 832              658 344            572 907
PROVISIONS                                                                       142 986              111 466            157 820
TAXATION                                                                          16 325                2 215                  
CURRENT LIABILITIES                                                              844 143              772 025            730 727
TOTAL EQUITY AND LIABILITIES                                                   6 347 545            5 778 124          6 069 568
Net asset value per share (cents)                                                  1 198                1 106              1 175
Directors' valuation of unlisted investments and associated companies            812 729              513 803            573 249
Capital expenditure                                                              166 921               86 402            255 026
Capital expenditure committed                                                    150 000               90 000            320 000

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
                                                                               Unaudited            Unaudited            Audited
R'000                                                                   31 December 2012     31 December 2011       30 June 2012
Balance at beginning of the period                                             4 899 040            5 063 879          5 063 879
Total comprehensive profit for the period                                        283 601              260 082            539 123
Minority interest                                                                  5 457                3 822             16 500
Shares issued                                                                    101 760                                      
Treasury shares                                                                  (11 050)            (545 561)          (546 963)
Dividends paid  ordinary and preference shareholders                           (214 457)            (169 979)          (173 499)
Balance at end of the period                                                   5 064 351            4 612 243          4 899 040

CONSOLIDATED CASH FLOW STATEMENTS
                                                                               Unaudited            Unaudited           Audited
                                                                             6 months to          6 months to   for the year to
R'000                                                                   31 December 2012     31 December 2011      30 June 2012
CASH FLOW FROM OPERATING ACTIVITIES                                             (224 094)             (51 425)          603 425
Cash generated by operations                                                     416 598              383 995           787 712
Changes in working capital                                                      (406 602)            (211 377)           75 541
Cash generated by operating activities                                             9 996              172 618           863 253
Less: Taxation paid                                                              (72 646)            (104 563)         (194 606)
Net interest received                                                             26 122               36 063            67 913
Dividends received                                                                26 891               14 436            40 364
Net cash (utilised)/generated from operating activities                           (9 637)             118 554           776 924
Dividends paid                                                                  (214 457)            (169 979)         (173 499)
CASH FLOW FROM INVESTING ACTIVITIES                                             (294 667)            (221 521)         (256 583)
Property, plant and equipment
 additions to expand operations                                                (166 921)             (86 402)         (255 026)
 proceeds from disposals                                                          9 040                  804             8 514
                                                                                (157 881)             (85 598)         (246 512)
Investments
 acquisition of investments                                                    (136 786)            (135 923)          (10 071)
CASH FLOWS FROM FINANCING ACTIVITIES
Own shares acquired                                                              (11 050)              (3 436)         (146 962)
Net (decrease)/increase in cash and cash equivalents                            (529 811)            (276 382)           199 880
Subsidiary cash acquired                                                                              12 790              9 197
Cash and cash equivalents at the beginning of the period                       1 815 256            1 606 179          1 606 179
Cash and cash equivalents at the end of the period                             1 285 445            1 342 587          1 815 256
Fair value adjustment of preference shares and other investments                  (4 139)              (1 479)            (6 049)
Fair value of cash and cash equivalents at the end of the period               1 281 306            1 341 108          1 809 207

COMMENTARY

Basis of preparation
The accounting policies adopted in the preparation of the financial statements for the six months 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 SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the Companies Act
of South Africa.

Comments
A large degree of uncertainty continues to prevail throughout all economies, both internationally and locally. Flowing from the vast amounts
of liquidity that have been injected into the American economy, there appear to be green shoots emerging particularly on the unemployment
and housing fronts, but inflation will have to be tackled in due course. The same cannot be said for Europe where recessionary conditions
remain evident in many countries. South Africa has had a difficult six months characterised by a number of labour issues of a major magnitude.
Furthermore, political positioning was the order of the day in the lead up to the Mangaung event, which fortunately appears to have resulted
in a more positive sentiment going forward.

All of this does not augur well for the confidence of consumers who remain heavily indebted and are suffering from the galloping cost of living
which has risen well above the inflation statistics published from time to time. In addition the value of the South African Rand has deteriorated
over the period by some 10%, further adding to the cost burden.

Whilst retail and wholesale sales have held up well over the period, a large portion of this increase can be attributed to the additional non-
residents who have made South Africa their home. The plight of the average consumer is manifested in the serious increase in unsecured
lending, which has recently been reported on, and is a worrisome trend.

Total advertising spend has again shown growth but unfortunately the trend of Print Media losing out to Television has continued. Digital
advertising has grown but off a small base and does not as yet represent major competition and is unlikely to do so in the short term.

Earnings

It is most pleasing to report that the company produced good results for the period. Turnover increased by 5.3% from R2,586 million to
R2,722 million. The profit from operating activities was up by 9.9% to R315.4 million. Depreciation rose from R112.1 million to R118.7 million.

Net Finance Income increased from R50.6 million to R53.0 million. Cash and cash equivalents remained almost unchanged at R1.281 million
compared to R1,341 million at 31 December 2011.

Associates traded more profitably for the period under review with improved results being achieved by Shumani Mills (Pty) Limited and
Ince (Pty) Limited.

Taxation, at a rate of 29.5%, amounted to R113.5 million and was lower than the rate in the previous period of 32.2% as a result of the initial
and non-recurring conversion of the Secondary Tax on Companies ("STC") into a tax on dividends and which is payable by shareholders and
not the company.

Profit for the period therefore amounted to R271.2 million, an increase of 13.1% on the previous period of R239.8 million.
An additional 6,360,000 shares were issued during the period in exchange for shares which the company purchased in Element One. There
are now, net of Treasury Shares, 422,722,088 shares in issue compared with 417,113,912 at the end of December 2011.
Earnings per share amounted to 62.9 cents compared with 56.6 cents in the comparative six-month period, an improvement of 11.1%.

Headline earnings increased to 62.5 cents per share from 56.4 cents per share.

Capital Expenditure and Investments
New printing presses and post-press equipment have been installed in the Johannesburg newspaper factory and additional storage and
handling facilities have been built and the enlarged factory is in production.

A new gravure printing press for CTP Gravure in Durban is under construction and will be commissioned toward the end of the calendar year.
Further equipment is due to be installed in both the web printing and packaging divisions.

During the period, additional shares were acquired in Element One. These shares, together with the shares purchased as a result of the
exchange of shares in the company for shares in Element One, now constitute a shareholding of just under 17% in that company, which holds
slightly less than 40% of the equity of Caxton.

DIVISIONAL PERFORMANCE
PUBLISHING, PRINTING AND DISTRIBUTION

Newspaper Publishing and Printing
The company's local newspapers continue to perform satisfactorily and further good growth was achieved. Market share continues to increase
mainly as a consequence of the decreases in circulation, which continue unabated, of the daily and Sunday broadsheet newspapers. It is clear
that local papers are playing an even more dominant role in retail advertisers' budgets.

A digital strategy is under development and international professional assistance has been contractually secured to assist in the planning and
roll-out of this exciting development. In the interim a number of improvements have been made to the "Look Local" site which is experiencing
a good uptake from the public at large.

A number of new products and innovations are in the pipeline with some having been successfully launched. New partnerships have also been
formed and are going according to plan.

"The Citizen", the company's regional daily newspaper, has maintained circulation against the trend experienced by other daily newspapers
and advertising has improved. Distribution efficiencies have been effected with the anticipated savings having been realised.
Once again, the Johannesburg newspaper factory has produced acceptable results in line with budget, notwithstanding the disruptions that took
place during the six months under review. Substantial installations to press and post-press equipment occurred and the printing of the majority of
the Gauteng publications of the Independent and Times Media Group were absorbed. During the change-over their old Johannesburg facility
was operational but inefficient and duplicate costs were incurred.

The quality of the printing is exceptionally good and has been well received by readers.

Magazine Publishing and Distribution
Magazine circulation has been negatively affected by the pressure on consumer's disposable income and circulations have decreased, but
not to the same extent as "paid for" newspapers where, in addition, the migration of erstwhile readers to the Internet has taken place. These
phenomena are emphasised in the reduction of subscriptions to both newspapers and magazines.

Advertising revenues have only marginally improved and the company's magazines have done well to retain market share. Profits have
however been below budget expectation mainly as a result of the increase in printing and other costs.

The company's magazine distribution business, RNA, has also been affected by rising costs, particularly on transport, which plays a major role
in its cost base, and falling circulations. Profits are marginally lower than those achieved in the previous period. This has had no impact on the
efficiency of their distribution capabilities and, with the continued focus on service, backed up with excellent administration control, they remain
the pre-eminent distributor of magazines in South Africa.

COMMERCIAL PRINTING

Web, Gravure Printing and Book Printing
The volume of Commercial Printing remained static during the six months under review. Margins continued to be under pressure and have
decreased. The exchange rate deterioration is impacting on this division as their major cost inputs being paper and ink, have increased by
some 10% and difficulties have been encountered with customers accepting higher prices, which of course is inevitable. This division has
however had a major benefit flowing from the increase in the printing of education material.

The Limpopo textbook debacle created a situation where Government materially increased the country's spend on textbooks which resulted in
educational publishers requiring vastly increased volumes and improvements in service deliveries to meet deadlines. The company's facilities
are highly efficient and, against the odds, were able to cope with the additional work load and met all delivery dates.

This has helped this division to improve its profits. Early indications are that a similar amount will be spent by Government in 2013, which is
the final year of the introduction of the new curriculum.

A new gravure press is under construction for the Durban factory and two further presses will shortly be purchased and installed, one in
Johannesburg and the other in Cape Town, to cater for increases in volumes and also to take advantage of technological advancements in
press performance.

OTHER

Packaging
The various divisions comprising the Packaging Division had an excellent year and substantially increased profits. A number of additions to
equipment in the recent past has enabled improvements in the quality of products and new customers have been secured. Further presses
have been ordered and will be installed during the latter half of 2013. The company continues to be focused on niche areas in the Packaging
Industry, such as labels for the Beer, Wine and Spirit producers, labels and containers for the Tobacco Industry and folded cartons and flexible
plastic packaging for a variety of users. This area of activity will be expanded in the foreseeable future despite the continuing pressure on
margins.

Stationery
Stationery manufacture remains a difficult but small area of the company's overall operations and competition is fierce with the result that
profits continue to be under pressure and budgets were not achieved. Steps have been taken to rationalise production and further plans are in
progress to improve profitability.

PROSPECTS

The company has, in a difficult period in South Africa and Internationally, produced earnings ahead of its expectation and its competitors
for the six months under review. Significant improvements in the global economy are not foreseen at this juncture. The Exchange Rate is an
aggravating factor as most commentators appear to be bearish on the Rand going forward and a number of downgrades by the rating
agencies have occurred. The company imports most of its raw materials, equipment and spares from European countries and a deteriorating
currency influences profitability.

However, a number of initiatives undertaken in the past, and the finalisation of the installation of plant in the Johannesburg newspaper factory,
should help to achieve a similar improvement in earnings for the second half of the financial year.

The preparation of the group's consolidated results was supervised by the Financial Director, Mr TJW Holden, BCom, CA(SA).

Executive Directors: TD Moolman, GM Utian, PG Greyling, TJW Holden                                     Date: 20 February 2013

Non-Executive Directors: PM Jenkins, ACG Molusi, NA Nemukula, T Slabbert, P Vallet

Transfer Secretaries: Computershare Investor Services (Pty) Limited

Registered office: 28 Wright Street, Industria West, Johannesburg

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: 20/02/2013 05:13:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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