Wrap Text
Reviewed Results for the year ended 30 June 2015
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: ZAE000043352
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2015
PROVISIONAL CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Reviewed Audited
% for the year for the year
change to 30 June to 30 June
R'000 2015 2014
Revenue 16,2 6 261 388 5 389 551
Other operating income 111 906 94 191
6 373 294 5 483 742
Changes in inventories of finished goods and work in progress 83 038 36 440
Raw materials and consumables used 2 614 891 2 181 323
Staff costs 1 407 389 1 227 915
IFRS 2 share-based payment expense – equity settled 43 188 –
Other operating expenses 1 466 873 1 347 889
Total operating expenses 17,1 5 615 379 4 793 567
PROFIT FROM OPERATING ACTIVITIES 9,8 757 915 690 175
Depreciation 280 727 259 728
PROFIT FROM OPERATING ACTIVITIES AFTER DEPRECIATION 10,9 477 188 430 447
Impairment of plant and goodwill 22 175 459 548
NET PROFIT/(LOSS) FROM OPERATING ACTIVITIES 455 013 (29 101)
Net finance income 111 510 574 575
– dividends 63 773 48 899
– interest 50 981 54 178
– IFRS 2 interest on unwinding of transaction 2 200 –
– net (loss)/profit on currency hedges (5 444) 1 431
111 510 104 508
– profit on realisation of investments – 470 067
Net income from associates 30 168 19 500
PROFIT BEFORE TAXATION 596 691 564 974
Income tax expense 162 810 129 115
PROFIT FOR THE YEAR (0,5) 433 881 435 859
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss
Fair value adjustment – investment and preference shares (3 984) (119 122)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 429 897 316 737
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Non-controlling interests 10 608 9 043
Owners of the parent 419 289 307 694
429 897 316 737
PROFIT ATTRIBUTABLE TO:
Non-controlling interests 10 608 9 043
Owners of the parent 423 273 426 816
433 881 435 859
Earnings per share (cents) 1,7 106,8 105,0
Adjusted earnings per share (cents) 11,5 117,1 105,0
Headline earnings per share (cents) 10,6 108,8 98,4
Adjusted headline earnings per share (cents) 21,1 119,1 98,4
Preference dividend paid per share (cents) 490 450
Ordinary dividends paid per share (cents) 60 55
WANOS in issue (weighted avarage number of shares) 391 632 132 406 494 087
WANOS shares allocated not issued 4 830 685 –
Earnings per share based on 396 462 817 406 494 087
Reconciliation of adjusted earnings
Owners of the parent 423 273
Net IFRS 2 share-based payment expense – equity settled 40 988
464 261
Reconciliation of headline earnings:
Earnings attributable to owners of company 423 273 426 816
Adjusted for non-trading items 8 014 (26 989)
Net (profit) on realisation of investments – (470 067)
Impairment of plant and goodwill 22 175 459 548
Net (profit)/loss on disposal of assets (11 045) 1 600
Tax effect on above adjustments (3 116) (18 069)
Headline earnings 431 287 399 827
Reconciliation of adjusted headline earnings:
Headline earnings 431 287
Adjusted for non-recurring items
Net IFRS 2 share-based payment expense – equity settled 40 988
Adjusted headline earnings 472 275
Condensed segmental analysis % %
Revenue:
Publishing, printing and distribution 4 953 458 79 5 003 149 92
Packaging 1 933 608 31 807 646 15
Other 307 109 5 440 167 8
Inter-group sales – publishing, printing and distribution (862 779) (14) (770 357) (14)
Inter-group sales – packaging (61 698) (1) (18 012) –
Inter-group sales – other (8 310) (0) (73 042) (1)
6 261 388 100 5 389 551 100
Profit from operating activities after depreciation
Publishing, printing and distribution 348 622 73 310 921 72
Packaging 165 589 35 50 787 12
Other (37 023) (8) 68 739 16
477 188 100 430 447 100
PROVISIONAL CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Reviewed Audited
for the year for the year
to 30 June to 30 June
R'000 2015 2014
CASH FLOW FROM OPERATING ACTIVITIES 515 149 295 114
Cash generated by operations 766 687 749 510
Changes in working capital 50 847 (52 994)
Cash generated by operating activities 817 534 696 516
Taxation paid (175 547) (264 153)
Net interest received 50 981 54 178
Dividends received 63 773 48 899
Net cash generated from operating activities 756 741 535 440
Dividends paid (241 592) (240 326)
CASH FLOW FROM INVESTING ACTIVITIES (710 567) 564 654
Property, plant and equipment
– additions to expand operations (453 624) (397 651)
– proceeds from disposals 69 570 38 077
(384 054) (359 574)
– subsidiary business (net of cash acquired) (337 342) (63 899)
Associates, other investments and loans 10 829 988 127
CASH FLOWS FROM FINANCING ACTIVITIES (32 825) (56 096)
Own shares acquired (32 825) (56 096)
Net (decrease)/increase in cash and cash equivalents (228 243) 803 672
Cash and cash equivalents at the beginning of the year 2 228 655 1 424 983
Cash and cash equivalents at the end of the year 2 000 412 2 228 655
Fair value adjustment of preference shares (11 480) (6 584)
Fair value of cash and cash equivalents at the end of the year 1 988 932 2 222 071
Note:
Cash 878 247 1 306 489
Bank preference shares at fair value 1 110 685 915 582
Fair value of cash and cash equivalents at the end of the year 1 988 932 2 222 071
PROVISIONAL CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Reviewed Audited
30 June 30 June
R'000 2015 2014
Assets
Non-current assets
Property, plant and equipment 2 484 914 2 208 608
Associated companies 240 030 221 695
Other investments at fair value 29 026 28 022
– Listed 34 31
– Unlisted 28 992 27 991
Total non-current assets 2 753 970 2 458 325
Current assets
Inventories 811 659 638 750
Accounts receivable 1 123 474 982 193
Taxation 10 226 –
Cash 878 247 1 306 489
Listed bank preference shares at fair value 60 685 65 582
Unlisted bank preference shares 1 050 000 850 000
Total current assets 3 934 291 3 843 014
Total assets 6 688 262 6 301 339
Equity and liabilities
Equity 5 296 760 5 028 876
Equity attributable to owners of the parent 5 239 661 4 976 134
Preference shareholders 100 100
Non-controlling interest 56 999 52 642
Non-current liabilities
Deferred taxation 281 288 262 778
Current liabilities
Trade and other payables 885 313 739 031
Taxation – 21 935
Provisions 224 901 248 719
Total current liabilities 1 110 214 1 009 685
Total equity and liabilities 6 688 262 6 301 339
Net asset value per share (cents) 1 352 1 237
Directors' valuation of unlisted investments and associated companies 269 022 249 685
Capital expenditure 453 624 397 651
Capital expenditure committed 144 000 150 000
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Reviewed Audited
30 June 30 June
R'000 2015 2014
Balance at beginning of the year 5 028 876 5 396 969
Total comprehensive profit for the period 429 897 316 737
Share buy backs (32 825) (444 504)
Shares allotted not issued 112 404 –
Dividends paid – ordinary and preference shareholders (235 341) (234 386)
Dividends paid – minority shareholders (6 251) (5 940)
Balance at end of the year 5 296 760 5 028 876
Note:
Business combination
Nampak Cartons & Labels division which was acquired on the 1 August 2014 has been accounted for as a business combination for the current period.
The acquired business contributed revenue of R1 074 million and a net profit after tax of R39,9 million. Had this business been acquired for the full reporting
period the revenue would have been R1 172 million and the net profit after tax would be R43,3 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 (193 235)
Provisions (60 018)
Retrenchment provisions (51 916)
Fair value of net assets acquired 328 448
Total cash purchase consideration 328 448
–
Hozi Holdings (Pty) Ltd which was acquired on the 1 July 2014 has been accounted for as a business combination for the current period.
The acquired business contributed revenue of R0,894 million and a net loss after tax of R0,190 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
Intangible assets 8 597
Trade and other receivables 497
Trade and other payables (200)
Cash 239
Fair value of net liability acquired 2 017
Total cash purchase consideration – related party loan 9 133
–
Commentary
Basis of preparation
The accounting policies adopted in the preparation of the financial statement for the twelve 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.
Earnings
Despite a difficult economic environment characterised by sluggish economic growth, the group has performed well – a
testament to the actions taken in the past year. These included the restructure of the commercial printing divisions,
closure of the non-performing stationery business in Ladysmith and further diversification into the packaging market
through the acquisition of the Nampak Cartons and Labels business.
Revenue for the period grew by 16,2% to R6,261 billion. This includes revenue from the acquisitions made during the
year. On a comparable basis revenue declined by 3% which is similar to that achieved for the first six months of the
financial year. The decline was mostly felt in the newspaper printing operations, where there is a decline in daily
newspaper volumes and in the book printing division, as a result of reduced demand for educational text books.
Raw material input costs have remained stable and any currency fluctuation has been well managed.
Staff costs excluding acquisitions and the once-off IFRS 2 Share-Based Payment on the executive directors facility, have
been contained and the restructuring and closure of operations have had a positive impact. On a comparable basis, staff
costs have declined by 1% and operating expenses have declined by 1,7% for the same reasons.
The company provided financial assistance to family trusts of two executive directors to enable them to subscribe for
shares in the company. The financial results include a once-off equity settled IFRS 2 charge that represents the
difference between the present value of the benefit arising from the interest free loans and share subscription price.
This charge will be reversed over the duration of the loan.
Profit from operating activities amounted to R757,9 million an increase of 9,8% but on a comparable basis excluding the
IFRS 2 adjustment, profit from operating activities would have increased by 16,2% to R801,1 million. Depreciation
increased from R259,7 million to R280,7 million while the impairment of plant accounted for R22,2 million. This included
the review of the useful life of the assets purchased from Nampak. We will continue to review this aspect on an ongoing
basis as the reorganisation activities take place.
Net finance income of R111,5 million includes interest received of R2,2 million due to the unwinding of the IFRS 2
charge. Excluding the said adjustment, the net finance income was similar to that achieved last year, if the profit on
realisation of investments is excluded.
Net income from associates has increased to R30,2 million from R19,5 million – mainly due to a turnaround in the
printing associates and a strong performance from the regional newspaper associates.
Profit before taxation increased from R565,0 million to R596,7 million, an increase of 5,6%.Taxation at a rate of 27,3%
absorbed R162,8 million which resulted in profit after taxation of R433,9 million, similar to that achieved in the prior
year. Excluding the once-off share-based payment of R43,2 million and the interest received due to the unwinding of IFRS
2 charge of R2,2 million, profit before taxation would have increased by 12,9% and profit after taxation by 8,9%.
The weighted number of shares in issue declined to 391 632 132 while the impact of the executive directors, share
allocation added a further weighted number of shares of 4 830 685. This resulted in an earnings per share of 106,8
cents, an increase of 1,7%, and headline earnings per share of 108,8 cents, an increase of 10,6%. Excluding the once-off
impact of the IFRS share-based payment, adjusted earnings per share of 117,1 cents and adjusted headline earnings per
share of 119,1 cents was achieved. This is an increase over the previous year of 11,5% and 21,1% respectively.
Cash flow
Cash and cash equivalents at 30 June 2015 amounted to R1,989 billion. The ability of the group to generate cash remains
strong with cash generated by operating activities of R817,5 million, an increase of 17,4% over the prior year.
Capital expenditure of R453,6 million was incurred and included the following:
- acquisition of properties and plant to facilitate the integration of the acquired Nampak operations
- expenditure to upgrade technology in existing packaging operations
- completion of the gravure press installation in Durban
- expenditure to upgrade technology and improve efficiencies at the book printing operation.
The following investments were made during the year:
- acquisition of the Nampak Carton and Labels division for R328,4 million, effective 1 August 2014
- acquisition of digital media assets for property and vehicle verticals
DIVISIONAL PERFORMANCE
PUBLISHING, PRINTING AND DISTRIBUTION
Newspaper Publishing and Printing
The challenges facing newspapers worldwide continue. Monetising online audiences is still elusive with digital
advertising growth not compensating for the loss of advertising print income and the decline in circulations.
South African newspaper publishers face the same problems. On the upside the demand for quality news, particularly on
mobile platforms, is greater than ever. The challenge is to manage the established print business efficiently while
simultaneously developing digital start-ups.
We are satisfied we are achieving the former and are optimistic our newspapers still have legs and plenty of stamina
which means publishing quality and relevant news remains a very high priority. It is encouraging that even though there
was a slight drop in operating profit, our newspapers outperformed the rest of the market.
Our investment in digital continued apace, being almost double what it was in 2014 and this trend will continue. We are
strongly focused on improving our multi-media offering and the progress we are making on this front is also very
encouraging.
The trend of declining circulations and advertising revenues led to lower page impressions in the newspaper print
factories. The knock-on was a drop in operating profits albeit not commensurate with the decline in throughput, thanks
to very strict cost management and improved efficiencies.
Magazine Publishing and Distribution
Magazines have gone through a rough patch in the last year with advertising budgets and traditional reading habits
severely affected. With the ever-increasing choice of reading platforms, capturing audiences' sustained attention is
challenging. Consumers remain under pressure with the weak economy and this continues to negatively affect the outlook
for printed magazines. The magazine division continues to invest in new revenue opportunities and the strategy is to
create more touch points to engage and grow audiences across many platforms.
The group's magazine distribution business, RNA has performed admirably in difficult circumstances with improved
profitability through a combination of strict cost control and correcting the margin decline in imported magazines. The
acquisition of new customers in the distribution of CDs and DVDs has also had a positive impact.
COMMERCIAL PRINTING
Web and Gravure
We are glad to report that the rationalisation of print facilities and factories, completed in December 2014 as
envisaged in last year‘s report, has been hugely successful and has led to a complete turnaround in profitability of
this division during the second six months of the financial year. This turnaround was further assisted by stable prices
of raw materials as well as a fairly stable exchange rate. Even though the number of factories and presses were reduced
we were able to maintain and even increase volume throughput. This coupled with reduced costs led to improved
profitability.
Although the market remains tough due to the continued weak economy we are optimistic that the trend of improving
profitability will continue into the coming year where the benefits of the rationalisation will be felt for the first
six months to December in comparison to last year.
Book Printing
The performance of the division has shown a significant decline in the last six months of the financial period. This was
characterised by a dramatic decline in the volume of orders placed by education publishers and margin erosion due to
overcapacity. Concern amongst publishers over Government's single textbook strategy, together with the lack of
predictability of order volumes has created an uncertain outlook.
Our investment strategy will ensure the most cost-efficient production facility with the commissioning of a new 10
colour sheet fed press early in 2015 together with a unique web offset press, which will be commissioned later this
year. These investments will yield significant improvements in productivity, efficiency, quality and waste reduction.
Packaging
The packaging divisions have been an area of growth, both from our existing operations and as a result of the
acquisition of the Nampak Cartons and Labels business effective 1 August 2014.
The group's existing operations continue to grow profitability in a competitive market as a result of providing
excellent service and quality while driving production efficiencies.
The Nampak acquisition has settled quickly and the focus has been on addressing the unsustainable cost base and
formulating the plan for the next 18 months. This plan has included the acquisition of equipment and properties to
improve efficiencies and streamline operations. The full impact of these plans on profitability will only be realised
once completed.
Other
The stationery divisions were positively impacted with the closure of the loss-making operation in Ladysmith.
Prospects
Trading conditions are expected to continue to be difficult especially against the background of limited economic
growth. The group will continue to implement efficiency plans to compensate for the limited growth environment and also
explore further avenues of growth through acquisitions. The current decline in the Rand will result in increases in raw
material prices, which will put margins under pressure.
Review of the Independent Auditors
The company's auditors, Grant Thornton, have reviewed these results. Their unqualified review is available for
inspection at the registered office of the company.
Statement of responsibility
The preparation of the group's consolidated results was supervised by the Acting Financial Director, Mr TJW Holden,
BCom, CA(SA).
Dividends
The board has declared a dividend of 65,0 cents (2014: 60,0 cents) per ordinary share (gross) and a preference dividend
of 530,0 cents per share (gross) for the year ending 30 June 2015.
The dividends are subject to the Dividends Withholding Tax. 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 Dividend Tax rate is 15%
- the gross dividend amount is 65,0 cents per ordinary share and 530,0 cents per preference share for shareholders
exempt from Dividends Tax
- the net dividend amount is 55,25000 cents per ordinary share and 450,5000 cents per preference share for
shareholders liable for Dividends Tax
- the company has 391 517 651 ordinary shares in issue
- the company has 50,000 preference shares in issue
- the company's income tax reference number is: 9175/167/71/8
The following dates are applicable to the dividends.
The last date to trade in order to be eligible for the dividend will be Friday 13 November 2015.
Shares will be traded ex-dividend from Monday 16 November 2015.
The record date will be Friday 20 November 2015 and payment will be made on Monday 23 November 2015.
Share certificates may not be dematerialised or materialised between Monday 16 November and Friday 20 November 2015,
both days inclusive.
02 September 2015
Executive Directors: TD Moolman, PG Greyling, TJW Holden
Non-Executive Directors: PM Jenkins, ACG Molusi, NA Nemukula, T Slabbert, GM Utian, P Vallet
Transfer Secretaries: Computershare Investor Services (Pty) Limited
Registered office: 28 Wright Street, Industria West, Johannesburg
Sponsor
ARBOR CAPITAL
Date: 03/09/2015 07:59:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
