Wrap Text
Unaudited Interim Group Results for the six months ended 31 December 2014
CAXTON & CTP publishers & printers LIMITED
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 2014
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
% 6 months to 6 months to for the year to
R'000 change 31 December 2014 31 December 2013 30 June 2014
Revenue 12.4 3 272 788 2 913 009 5 389 551
Other operating income 44 163 50 975 94 191
3 316 951 2 963 984 5 483 742
Changes in inventories of finished goods and work in progress (83 327) (2 975) 36 440
Raw materials and consumables used 1 498 962 1 270 968 2 181 323
Staff costs 700 679 566 836 1 227 915
Other operating expenses 772 260 710 419 1 347 889
Total operating expenses 13.5 2 888 574 2 545 248 4 793 567
PROFIT FROM OPERATING ACTIVITIES 2.3 428 377 418 736 690 175
Depreciation 136 688 125 780 259 728
PROFIT FROM OPERATING ACTIVITIES AFTER DEPRECIATION (0.4) 291 689 292 956 430 447
Impairment of plant – 400 476 459 548
NET PROFIT FROM OPERATING ACTIVITIES 291 689 (107 520) (29 101)
Net finance income 55 304 46 662 104 508
– dividends 30 924 23 651 47 719
– interest 24 380 23 011 55 358
– loss on currency hedges – – 1 431
– net profit on realisation of investment – 391 246 470 067
Income from associates 14 220 22 501 19 500
PROFIT BEFORE TAXATION 361 213 352 889 564 974
Income tax expense 97 158 98 836 129 115
PROFIT FOR THE PERIOD 3.9 264 055 254 053 435 859
Other comprehensive income: (4 876) 111 417 (119 119)
Items that will be reclassified subsequently to profit or loss
Fair value adjustment – investments and preference shares (4 876) 91 489 (119 119)
Fair value adjustment – recycled to profit – 19 928 –
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 259 179 365 470 316 740
PROFIT ATTRIBUTABLE TO:
Non-controlling interests 7 111 5 049 9 043
Owners of the company 256 944 249 004 426 816
264 055 254 053 435 859
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Non-controlling interests 7 111 5 049 9 043
Owners of the company 252 068 360 421 307 697
259 179 365 470 316 740
Earnings per share (cents) 11.3 66 59 105
Headline earnings per share (cents) 10.7 65 59 98
Preference dividend paid per share (cents) 490 450 450
Ordinary dividend paid per share (cents) 60 55 55
Shares in issue/weighted average number of shares in issue 391 827 651 467 052 949 406 494 087
Treasury shares (310 000) (44 604 726) –
Earnings per share based on 391 517 651 422 448 223 406 494 087
Reconciliation of headline earnings:
Earnings attributable to owners of company 256 944 249 004 426 816
Adjusted for non-trading items (779) 626 (26 989)
Net profit on realisation of investment – (391 246) (470 067)
Net impairment in value of property and plant – 400 476 384 674
Goodwill written off – – 74 876
Net (profit)/loss on disposal of assets (1 082) (7 314) 1 600
Tax effect on above adjustments 303 (1 290) (18 072)
Headline earnings 256 165 249 630 399 827
Abridged segmental analysis % % %
Revenue
Publishing, printing and distribution 2 585 598 79 2 600 125 89 4 907 446 91
Packaging 953 470 29 419 454 14 807 645 15
Other 291 089 9 368 102 13 535 871 10
Inter-group sales (557 369) (17) (474 672) (16) (861 411) (16)
3 272 788 100 2 913 009 100 5 389 551 100
Operating income
Publishing, printing and distribution 200 814 69 226 871 77 312 523 73
Packaging 75 006 26 48 747 17 50 788 12
Other 15 869 5 17 338 6 67 136 15
291 689 100 292 956 100 430 447 100
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Unaudited Unaudited Audited
R'000 31 December 2014 31 December 2013 30 June 2014
ASSETS
NON-CURRENT ASSETS
PROPERTY, PLANT AND EQUIPMENT 2 445 044 2 108 760 2 208 608
INTEREST IN ASSOCIATES 236 259 265 496 221 695
OTHER INVESTMENTS 28 363 755 352 28 022
– LISTED 31 192 784 31
– UNLISTED 28 332 562 568 27 991
DEFERRED TAXATION – – 18 527
TOTAL NON-CURRENT ASSETS 2 709 666 3 129 608 2 476 852
CURRENT ASSETS
INVENTORIES 814 006 665 731 638 750
ACCOUNTS RECEIVABLE 1 425 112 1 247 610 982 193
CASH 650 455 847 652 1 306 489
LISTED BANK PREFERENCE SHARES 59 588 69 969 65 582
UNLISTED BANK PREFERENCE SHARES 850 000 850 000 850 000
TOTAL CURRENT ASSETS 3 799 161 3 680 962 3 843 014
TOTAL ASSETS 6 508 827 6 810 570 6 319 866
EQUITY AND LIABILITIES
EQUITY 5 044 740 5 522 513 5 028 876
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT 4 988 198 5 471 347 4 976 134
PREFERENCE SHAREHOLDERS 100 100 100
NON-CONTROLLING INTEREST 56 442 51 066 52 642
NON-CURRENT LIABILITIES
DEFERRED TAXATION 270 456 307 446 281 305
CURRENT LIABILITIES
TRADE AND OTHER PAYABLES 909 492 733 350 739 031
PROVISIONS 272 837 187 768 248 719
TAXATION 11 302 59 493 21 935
TOTAL CURRENT LIABILITIES 1 193 631 980 611 1 009 685
TOTAL EQUITY AND LIABILITIES 6 508 827 6 810 570 6 319 866
Net asset value per share (cents) 1 289 1 307 1 237
Directors' valuation of unlisted investments and associated companies 264 591 828 064 249 686
Capital expenditure 207 101 154 006 397 651
Capital expenditure committed 182 000 250 000 150 000
ABRIDGED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Unaudited Unaudited Audited
R'000 31 December 2014 31 December 2013 30 June 2013
Balance at beginning of the year 5 028 876 5 396 969 5 396 969
Total comprehensive profit for the period 259 179 365 470 316 737
Treasury shares and share buy backs (4 660) (3 716) (444 504)
Dividends paid – ordinary and preference shareholders (238 655) (236 210) (240 326)
Balance at end of the year 5 044 740 5 522 513 5 028 876
Note:
Business combination
The group acquired the Nampak Cartons and Labels division on 1 August 2014 which has been accounted for as a business combination for the current period.
The acquired business contributed revenue of R475,4 million and a net profit after tax of R12,4 million. Had this business been acquired for the full reporting period the revenue
would have been R570,4 million and the net profit after tax would be R14,8 million.
These amounts have been calculated using the group's accounting policies.
Details of the assets and liabilities from the acquisition are as follows:
R'000 Acquirees fair values
Plant and equipment 175 748
Inventory 243 252
Trade and other receivables 214 617
Trade and other payables (142 635)
Provisions (110 618)
Retrenchment provisions (51 916)
Fair value of net assets acquired 328 448
Total cash purchase consideration 328 448
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited Unaudited Audited
6 months to 6 months to for the year
R'000 31 December 2014 31 December 2013 to 30 June 2014
CASH FLOW FROM OPERATING ACTIVITIES (125 947) (239 064) 295 114
Cash generated by operations 366 073 392 114 749 510
Changes in working capital (209 674) (356 568) (52 994)
Cash generated by operating activities 156 398 35 546 696 516
Less: Taxation paid (98 994) (85 062) (264 153)
Net interest received 24 380 23 011 54 178
Dividends received 30 924 23 651 48 899
Net cash generated/(utilised) from operating activities 112 708 (2 854) 535 440
Dividends paid (238 655) (236 210) (240 326)
CASH FLOW FROM INVESTING ACTIVITIES (525 427) 590 108 564 654
Property, plant and equipment
– additions to expand operations (207 101) (154 006) (397 651)
– proceeds from disposals 10 808 12 274 38 077
(196 293) (141 732) (359 574)
Investments
– subsidiary businesses acquired (net of cash) (328 447) – (63 899)
– Associates, other investments and loans (net of taxation) (687) 731 840 988 127
(329 134) 731 840 924 228
CASH FLOWS FROM FINANCING ACTIVITIES (4 660) (3 710) (56 096)
Own shares acquired (4 660) (3 710) (56 096)
Net (decrease)/increase in cash and cash equivalents (656 034) 347 334 803 672
Cash and cash equivalents at the beginning of the year 2 228 655 1 424 983 1 424 983
Cash and cash equivalents at the end of the period 1 572 621 1 772 317 2 228 655
Fair value adjustment of preference shares (12 578) (4 695) (6 584)
Fair value of cash and cash equivalents at the end of the period 1 560 043 1 767 622 2 222 071
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 Board and the
Companies Act of South Africa.
Earnings
Trading conditions in our industries remain difficult. The newspaper and book printing divisions faced declining volumes that impacted
the group performance, but this was compensated for by the restructure of the commercial printing divisions, the closure of the
stationery business in Ladysmith and the positive contribution of the newly acquired Nampak Cartons and Labels business.
Revenue for the six-month period grew by 12,4% to R3,273 billion as a result of the Nampak Cartons and Labels acquisition; however, on
a like-for-like basis compared to the six-month period to December 2013, turnover declined by 4% to R2,797 billion. This decline can be
attributed to declining print volumes in the Johannesburg newspaper factory, reduced educational print demand in the book printing division
and the closure of the Ladysmith stationery business.
Raw material input costs have remained fairly stable, helped by less volatile currency fluctuations which have been well managed.
Staff costs and other operating expenses have been well controlled, where some of the benefit of the restructuring has started to filter
through and the full impact is expected to be realised in the second half of the financial year. On a comparable basis these costs have
decreased by 3,2%.
Profit from operating activities has increased slightly from R418,7 million to R428,4 million. Depreciation increased from R125,8 million
to R136,7 million. Net finance income, at R55,3 million shows a comparable increase of 18,5% mainly due to increased dividends.
Income from associates has declined to R14,2 million from R22,5 million due to the change of Ramsay Media from an associate to
a subsidiary in a prior year.
Profit before taxation increased from R352,9 million to R361,2 million. Taxation at a rate of 28% absorbed R97,2 million which
resulted in a profit after tax for the period of R264,0 million, an increase of 3,9%.
The number of shares in issue declined to 391 517 651 with a resultant earnings per share of 65,6 cents per share, an increase of
11,3% and headline earnings per share of 65,4 cents, an increase of 10,7%.
Capital expenditure and investments
The acquisition of the Nampak Cartons and Labels division for R328,4 million became effective on 1 August 2014 and a variety of
equipment purchases have been made in the packaging division to facilitate the integration of the acquisition over the next year and
also to enter new markets.
In the period under review, the installation of the new gravure press in Durban was completed.
DIVISIONAL PERFORMANCE
PUBLISHING, PRINTING AND DISTRIBUTION
Newspaper Publishing and Printing
The continuing decline in the circulation of newspapers, especially in the paid for daily market, is having a serious effect on the trading
of all newspaper publishing companies as they struggle to compensate for declining print revenues, and with revenues from digital
activities not matching the decline from traditional business. However, substantial increases in digital audiences surpassing the loss
of print readers underscore the important role that news brands continue to play in the markets for readers and advertisers. Finding
sustainable multi-media business models remains a challenge.
The headwinds which prevailed during the second half of the previous financial year to June 2014 continued into the first six months
of the current financial year to December 2014, though their intensity varied across the country. Trading conditions were relatively
buoyant in some markets but really tough in others, especially in the core Gauteng metro area, where the malaise affecting mainstream
papers permeated the broader market.
Overall turnover decreased marginally and even though most costs were well controlled, a significant increase in the costs associated
with the development of our new digital media platforms led to profits dipping below that of the comparable previous period. The
noteworthy increase in unique visitors and page-views on our digital platforms in the six months under review was most encouraging
and we are hard at work developing and implementing the multi-media revenue models vital for the future.
Magazine Publishing and Distribution
The magazine industry continues to face tough commercial challenges – both print sales and advertising revenue are under pressure.
However, magazines are managing to remain relevant through digital online growth and also because of the growth in the lifestyle
interests of our target markets. The ongoing investment in digital platforms and different distribution channels available on the internet
continue to create more opportunities to connect with our readers. The challenges include moving towards the production of multiple-
media formats, finding new ways to better integrate with social media and translating this growing digital readership into advertising
revenue. The digital operations have seen growth in this regard, albeit off a low base.
While there is a strong focus on digital and on-going investment in digital platforms, the picture is upbeat for our printed format
magazines. The print editions remain the flagships of the division and through innovative advertising strategies and targeted editorial
content, we have ensured that the print editions remain relevant. In ABC figures, released in November 2014, Woman and Home
retained its position as South Africa's most bought English glossy magazine. Woman and Home and Rooi Rose were the top two
monthly glossies, with Bona also making it into the top 10.
The group's magazine distribution division continues to contend with declining magazine volumes. However, in the period under
review this division has managed to curtail costs and improve margins in the imported magazine portfolio. This combined with
improved profitability in the CD and DVD distribution business has meant that there has been a pleasing improvement in performance.
COMMERCIAL PRINTING
Web and Gravure
The rationalisation of our commercial print facilities as reported at year-end was completed during the six months under review and all
costs associated with the process have been incurred. The resultant substantial reduction in overheads should have a positive impact
on the operating results for the first half of 2015.
An improved pre-Christmas trading environment compared to the last year helped the division achieve operating profits on par with
the first six months of last year notwithstanding the substantial rationalisation costs incurred.
A stable and improving rand exchange rate, stable raw material costs and an improving outlook for retail sales coupled with
the reduced overheads and better capacity utilisation created by the rationalisation, all bode well for this division's outlook for
the remainder of the financial year.
Book Printing
The division continues to perform well. However, a significant reduction in the volume of orders from the education book publishing
sector, compared with the same period in 2013, and which is directly linked to Government spend on text books, has impacted on
the comparative year on year profitability of the division.
The reduction in volumes historically placed by education publishers in this period has had a significant impact on the book printing
industry, creating over capacity and unpredictable and fluctuating demand, which has resulted in margin reduction.
Investment commitments will see the installation and commissioning of new printing equipment, both sheet fed and web offset, during
2015. These investments will ensure that the division continues to position itself as a leader in book production and enable it to expand
its capacity for magazine and diary production, with the resultant cost-efficiencies that new technology will bring.
Packaging
The Nampak Cartons and Labels acquisition was concluded with an effective date of 1 August 2014 and the trading for five months
has been included in this period's results.
The packaging divisions delivered solid results and the above acquisition has impacted positively on these results, as all the acquired
operations are trading profitably and generating cash, although still not at optimum levels.
In the period under review, the focus has been on settling down the acquisition and addressing an unsustainable cost base. A voluntary
retrenchment process has been instituted and completed that will realise savings in employment costs once fully integrated.
The focus for the next period is to commence with the capital expenditure plan to upgrade technology and consolidate capacities with
the desired impact on better efficiencies.
The group's existing packaging divisions have also performed well and have improved profitability over the period. A combination of
increased market share and improved production efficiencies has contributed to this performance.
These businesses continue to operate in a competitive market which necessitates continued focus on new technology, production
efficiencies and a competitive cost base.
OTHER
Stationery
In the period under review this division improved profitability mainly as a result of the closure of the Ladysmith operation.
PROSPECTS
The business climate is not expected to improve in the second half of the financial year. However, the actions taken over the last year
should result in an improvement in earnings.
Statement of responsibility
The preparation of the group's consolidated results was supervised by the Managing and Financial Director, Mr TJW Holden, BCom,
CA (SA).
26 February 2015
Executive Directors: TD Moolman, PG Greyling, TJW Holden
Non-Executive Directors: PM Jenkins, ACG Molusi, NA Nemukula, T Slabbert, GM Utian, J Phalane
Transfer Secretaries: Computershare Investor Services Proprietary Limited
Sponsor
ARBOR CAPITAL SPONSORS
Date: 26/02/2015 04:59:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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