Wrap Text
Reviewed Results for the year ended 30 June 2016
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
PROVISIONAL CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Reviewed Audited
Reviewed results for the year ended 30 June 2016 for the year for the year
% to 30 June to 30 June
R'000 change 2016 2015
Revenue 2.3% 6 404 995 6 261 388
Other operating income 136 430 111 906
6 541 425 6 373 294
Changes in inventories of finished goods and work in progress 44 276 83 038
Raw materials and consumables used 2 814 092 2 614 891
Staff costs 1 434 239 1 407 389
IFRS 2 share based payment expense - equity settled - 43 188
Other operating expenses 1 486 481 1 466 873
Total operating expenses 2.9% 5 779 088 5 615 379
PROFIT FROM OPERATING ACTIVITIES 0.6% 762 337 757 915
Depreciation 289 150 280 727
PROFIT FROM OPERATING ACTIVITIES AFTER DEPRECIATION -0.8% 473 187 477 188
Impairment of plant and goodwill 27 583 22 174
NET PROFIT FROM OPERATING ACTIVITIES 445 604 455 014
Net finance income 126 899 111 510
- dividends 79 265 63 773
- interest 48 428 50 981
- IFRS 2 interest on unwinding of transaction 3 571 2 200
- net (loss)/profit on currency hedges (4 365) (5 444)
Net income from associates 17 636 30 168
PROFIT BEFORE TAXATION 590 139 596 692
Income tax expense 134 085 162 810
PROFIT FOR THE YEAR 5.1% 456 054 433 882
Other comprehensive income: 93 286 (3 984)
Items that will be not be reclassified subsequently to profit or loss
Fair value adjustment - land & buildings 44 954 -
Items that will be reclassified subsequently to profit or loss
Fair value adjustment - investment & preference shares 48 332 (3 984)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 549 340 429 898
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Non-controlling interests 8 445 10 608
Owners of the parent 540 895 419 290
549 340 429 898
PROFIT ATTRIBUTABLE TO:
Non-controlling interests 8 445 10 608
Owners of the parent 447 609 423 274
456 054 433 882
Earnings per share (cents) 5.3% 112.5 106.8
Headline earnings per share (cents) 7.0% 116.4 108.8
Preference dividend paid per share in respect of the previous year (cents) 530 490
Ordinary dividends paid per share in respect of the previous year (cents) 65 60
WANOS in issue (Weighted average number of shares) 397 982 185 391 632 132
WANOS shares allocated not issued - 4 830 685
Earnings per share based on 397 982 185 396 462 817
Reconciliation of headline earnings:
Earnings attributable to owners of company 447 609 423 274
Adjusted for non-trading items 15 618 8 013
Impairment of plant and goodwill 27 583 22 174
Net profit on disposal of assets (5 892) (11 045)
Tax effect on above adjustments (6 073) (3 116)
Headline earnings 463 227 431 289
Condensed segmental analysis
Revenue:
% %
Publishing, printing and distribution 4 976 694 78 4 953 458 79
Packaging 1 987 843 31 1 933 608 31
Other 281 433 4 307 109 5
Inter-group sales - publishing, printing and distribution (786 572) (12) (862 779) (14)
Inter-group sales - packaging (49 532) (1) (61 698) (1)
Inter-group sales - other (4 871) (0) (8 310) (0)
6 404 995 100 6 261 388 100
Profit from operating activities after depreciation
Publishing, printing and distribution 307 956 65 348 622 73
Packaging 151 492 32 165 589 35
Other 13 739 3 (37 023) (8)
473 187 100 477 188 100
PROVISIONAL CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Reviewed Audited
for the year for the year
to 30 June to 30 June
R'000 2016 2015
CASH FLOW FROM OPERATING ACTIVITIES 399 292 515 149
Cash generated by operations 758 050 766 688
Changes in working capital (111 052) 50 847
Cash generated by operating activities 646 998 817 535
Taxation paid (109 446) (175 547)
Net interest received 48 428 50 981
Dividends received 79 265 63 773
Net cash generated from operating activities 665 245 756 742
Dividends paid (265 953) (241 593)
CASH FLOW FROM INVESTING ACTIVITIES (370 632) (710 567)
Property, plant & equipment
- additions to maintain and expand operations (353 043) (453 624)
- proceeds from disposals 12 334 69 573
(340 709) (384 051)
- minority interest acquired (1 867) -
-subsidiary businesses (net of cash acquired) (19 198) (337 342)
Associates, other investments and loans (8 858) 10 826
CASH FLOWS FROM FINANCING ACTIVITIES 1 114 (32 825)
Shares allocated in prior year now issued 6 000 -
Own shares acquired (4 886) (32 825)
Net increase/(decrease) in cash and cash equivalents 29 774 (228 243)
Cash and cash equivalents at the beginning of the year 2 000 412 2 228 655
Cash and cash equivalents at the end of the year 2 030 186 2 000 412
Fair value adjustment of preference shares (11 861) (11 480)
Fair value of cash and cash equivalents at the end of the year 2 018 325 1 988 932
Note :
Cash 908 020 878 247
Bank preference shares at fair value 1 110 305 1 110 685
Fair value of cash and cash equivalents at the end of the year 2 018 325 1 988 932
PROVISIONAL CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Reviewed Audited
30 June 30 June
R'000 2016 2015
Assets
Non-current assets
Property, plant and equipment 2 594 389 2 484 914
Associated companies 272 156 240 030
Other investments at fair value 86 155 29 026
- Listed 34 34
- Unlisted 86 121 28 992
Deferred taxation 19 299 2 142
Loans to directors 74 987 71 416
Total non-current assets 3 046 986 2 827 528
Current assets
Inventories 806 228 811 659
Accounts receivable 1 160 063 1 052 058
Taxation 17 961 10 226
Cash 908 020 878 247
Listed bank preference shares at fair value 60 305 60 685
Unlisted bank preference shares 1 050 000 1 050 000
Total current assets 4 002 577 3 862 875
Total assets 7 049 563 6 690 403
Equity and Liabilities
Equity 5 579 393 5 296 760
Equity attributable to owners of the parent 5 522 682 5 239 661
Preference shareholders 100 100
Non-controlling interest 56 611 56 999
Non-current liabilities
Deferred taxation 354 634 283 431
Current liabilities
Trade and other payables 883 677 885 312
Taxation 5 354 -
Provisions 226 505 224 900
Total current liabilities 1 115 536 1 110 212
Total equity and liabilities 7 049 563 6 690 403
Net asset value per share (cents) 1 406 1 352
Directors' valuation of unlisted investments and associated companies 358 276 269 022
Capital expenditure 353 043 453 624
Capital expenditure committed 90 000 144 000
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Reviewed Audited
30 June 30 June
R'000 2016 2015
Balance at beginning of the year 5 296 760 5 028 876
Total comprehensive profit for the period 549 340 429 897
Share buy backs 1 114 (32 825)
Shares allotted not issued - 112 404
Dividends paid - ordinary & preference shareholders (258 985) (235 341)
Minority interest acquired (1 867) -
Dividends paid - minority shareholders (6 969) (6 251)
Balance at end of the year 5 579 393 5 296 760
Note:
Business combination R'000
The group acquired the following business, which has been accounted for as business combinations, during the year as follows:
Compact Disc Technologies a division of Times Media Group Limited was acquired with an effective date of 1 April 2016 which has
been accounted for as a business combination for the current period.
The acquired business contributed revenue of R9,4 million and a net loss after tax of R2,3 million. Had this business been
acquired for the full reporting period the revenue would have been R40,6 million and the net loss after tax would be R9,2 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 Acquires fair values
Plant and equipment 21 676
Inventory 7 969
Other payables (10 447)
Fair value of net assets acquired 19 198
Total cash purchase consideration 19 198
-
Note: Investments listed - available for sale
Equity price risk refers to the risk that the fair value of the future cash flows of the listed investments will fluctuate because of changes in
the market prices. The Group's available for sale financial assets are valued using the fair market value at 30 June 2016.
Fair value estimation
IFRS 13 requires disclosures of fair value measurements by level of the following fair value measurement hierarchy:
Level 1 - Quoted prices available in active markets for identical assets or liabilities.
Level 2 - Inputs used, other than quoted prices, included within Level 1, that are observable for the asset or liability, either directly or indirectly .
Level 3 - Fair value determined by valuation that uses inputs that are not based on observable market data.
The level of each investment is determined as follows:
- Old Mutual is Level 1
- Thebe Convergent Technology and Stanlib are Level 2
Commentary
Basis of Preparation
The accounting policies adopted in the preparation of the Provisional condensed consolidated financial
statements 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 IAS34 on interim reporting, the
JSE Listings Requirements, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee,
financial reporting pronouncements as issued by the Financial Reporting Standards Council and the Companies
Act of South Africa.
Earnings
The previously predicted difficult trading conditions prevailed in the second half of the financial year, led by
declining economic growth and increasing raw material costs on the back of a deteriorating exchange rate. The
group has managed to limit the impact of these factors on profitability, resulting in net profit from operating
activities declining by 2, 1 % to R 445, 6 million from R 455, 0 million.
Revenue growth continues to be hampered by the prevailing low growth environment and showed a marginal
growth of 2, 3% to R 6, 405 billion. The newspaper division has shown resilience and has reflected encouraging
revenue growth which is a reversal of the trend in the national newspaper environment. This, however, was offset
by continued decline in magazine revenue both from declining circulations and advertising revenue.
Raw material input costs, as predicted, increased in the second half of the financial year as a result of the
significant depreciating rand exchange rate. This put pressure on margins in a number of our divisions as there is
typically a lag period to recover such large cost movements from the customer base.
Staff costs and other operating expenses continue to be well controlled, increasing marginally year on year.
Profit from operating activities amounted to R 762, 3 million similar to that achieved in the prior period. However
if the once off IFRS 2 share based expense of R 43, 2 million reflected in the prior period is excluded then profit
from operating activities would have declined by 4,8%. Depreciation increased from R 280, 7 million to
R 289, 2 million while impairment of plant accounted for R 27, 6 million which included the impact from the reorganization
of the Gauteng packaging operations that is currently underway.
Net finance income increased by 13, 8% to R 126, 9 million reflective of the increasing interest rate environment.
Net income from associates has declined from R 30, 2 million to R 17, 6 million as a result of a once off profit from
a property sale in the prior period and declining performance from Cognition Holdings.
Profit before taxation of R 590, 1 million is similar to that of the prior year. Taxation at an effective rate of 22,7%
absorbed R134,1 million which resulted in profit after taxation of R 456,1 million , an increase of 5,1%.
The weighted number of shares in issue of 397 982 185 resulted in earnings per share of 112,5 cents , an increase
of 5,3% and headline earnings per share of 116,4 cents , an increase of 7,0%. Excluding non-recurring items, being
the once off IFRS 2 share based expense and business interruption insurance claim, adjusted earnings per share
declined by 6, 8% and adjusted headline earnings per share declined by 5, 1%.
Cash Flow
Fair value of cash and cash equivalents amounted to R 2, 018 billion, an increase of R 29,4 million over the prior
year. Cash generated by operations of R 758, 0 million is similar to that achieved in the prior year and is reflective
of the resilience of the group's cash generating ability. Working capital absorbed R 111,1 million mainly as a result
of extended settlement terms given to certain large blue chip customers to combat offers by competitors and a
certain large customer paid late over the financial year. In addition the group increased its dividend payment by
10% to R 266, 0 million.
Capital expenditure amounted to R 353,0 million and was mainly applied to the packaging operations to replace
and upgrade old technology and also investment in infrastructure to facilitate the reorganization of the Gauteng
packaging operations. The benefits of this investment will be felt once the restructure is completed and significant
cost savings realized. This also includes the expenditure made on the new web offset press in the book printing
division that is showing large improvements in efficiencies. Capital expenditure for the forthcoming financial year
is expected to show a marked decrease as all facilities have reached the end of their investment program.
A limited amount of investments were made in the financial year and include the following:
- The purchase of Times Media's CD/DVD replication business for R 19, 2 million.
- The acquisition of a 25% stake in Octotel (Pty) Ltd, a fibre to home operation.
DIVISIONAL PERFORMANCE
Publishing, printing and distribution
Newspaper Publishing and Printing
The group's local newspaper business performed admirably in difficult trading conditions and is testament to
the resilience of local media and the solution these media products present to advertisers. National
advertising revenue performed exceptionally well and this has meant that profitability has been maintained. If
it were not for the weak economies in some regions, profitability would have improved.
The pleasing factor of this performance is that the key Gauteng local newspapers grew turnover and
profitability, which is a turnaround from the performance reported on in the last financial year. However in
contrast, our regional papers were impacted by the declining local economies especially in those areas
dominated by mining and steel manufacture. As these economies stabilise, we expect a reversal of this
performance.
The previously reported digital developments have been formally launched across all of the local media
platforms with the focus now shifting to develop the sales strategies that complement both the physical and
digital format. There is an expectation that in the next financial year, the monetising of these digital platforms
will show some growth.
The market for national newspaper publications continues to decline and shows no sign of stabilisation. The
group is fortunate that in its stable of media assets there is only one national newspaper, The Citizen. Having
said this, The Citizen performed in line with expectations. The decline in daily and weekly newspapers is
however felt at our newspaper printing division where significant reductions in copies and paginations is
evident. This decline in volumes would have had a more pronounced effect on profitability had the division
not done well to partly substitute the lost revenue with other commercial work, albeit at lower margins.
Magazine Publishing and Distribution
The magazine division continues to face challenges with the lack of growth in the general economy.
Consumers have less disposable income for discretionary items like magazines and are more selective in the
number of copies bought, whether in physical or digital format. At the same time advertising budgets remain
constrained resulting in advertising revenue decline and the outlook remains unchanged.
In these conditions, the focus is on providing strong, relevant editorial content while containing costs and
ensuring we can offer our audience and advertisers, multiple platforms to ensure any revenue opportunities
are effectively capitalised on.
The group's distribution business, RNA, has had a successful year in further diversifying its revenue stream.
The business is now the leading distribution partner for CD's and DVD's, as a result of the increase in its
customer base. In addition, it has created a merchandising capability to provide merchandising services to its
growing customer base. The continued success of this business will be determined by its ability to grow alternative
revenue streams that can leverage off its current infrastructure. Currently, the division has started with book
distribution and has other opportunities that are being evaluated.
Commercial Printing
Web and Gravure
There has been an extremely pleasing improvement in profitability, where the benefits of the restructured
operations were felt in the first half of the financial year while the second half faced a tougher environment.
Increasing raw material input costs and a lag period to pass those on, combined with subdued demand from
key customers, meant that the second half of the year showed no growth.
Book Printing
This division performed well and produced an improved financial result compared to the previous year, even
though revenue declined as the uncertainty in the educational market and reduced text book expenditure by
Government continues. Education publishers face enormous challenges as a result of the reduction in spend
and the unpredictable purchasing from Government. The commissioning of the new web offset press has
contributed to this improved performance by improving efficiencies, reducing waste and creating a more
flexible print environment in which this division can capitalise on in the short run book market and magazine
market.
Packaging
The second half of the financial year proved to be a difficult period which resulted in an annual decline in
earnings, a reversal of the position at the half year reporting period. This period was characterised by declining
demand as well as margin pressure as a result of increasing raw material input costs.
The group's gravure packaging divisions have performed well, benefiting from increased demand from our
major customers. However, this was offset by the performance of the other divisions that felt the full impact of
the declining demand in those markets, lost business due to competitor activity and margin pressure.
The necessary investments in plant and infrastructure have been made to facilitate the restructure of the
Gauteng packaging operations that is currently underway, with a proposed completion date towards the end
of June 2017. This restructure will streamline operations, and will remove excess capacity and significant
costs as the process unfolds.
Other
The stationery business has performed well, growing revenue and profitability. During the year, the group
concluded the purchase of the Times Media CD/DVD replication plant and is in the process of integrating the
operation with our facility, which will be concluded by the end of January 2017. This will create the only long
run replication facility in the country and the necessary economies of scale to ensure sustainability in the
medium term.
Prospects
The current low growth economic environment is expected to continue for the next reporting period and will
hamper any meaningful growth in revenue for the group .The focus will therefore continue to be cost
containment, improving underperforming divisions and taking advantage of any acquisitions.
Review by 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. The auditor's report does not necessarily report on all
of the information contained in this announcement/financial results. Shareholders are therefore advised that
in order to obtain a full understanding of the nature of the auditor's engagement they should obtain a copy of
the auditor's report together with the accompanying financial information from the issuer's registered office.
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 70,0 cents (2015: 65,0 cents) per ordinary share (gross) and a
preference dividend of 570,0 cents per share (gross) for the year ending 30 June 2016.
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 70,0 cents per ordinary share and 570,0 cents per preference
share for shareholders exempt from Dividends Tax
- the nett dividend amount is 59,5 cents per ordinary share and 484,5 cents per preference
- for shareholders liable for Dividend Tax
- the company has 397 678 122 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 Tuesday 15th November 2016.
Shares will be traded ex-dividend from Wednesday 16th November 2016.
The record date will be Friday 18th November 2016 and payment will be made on Monday 21st November 2016
Share Certificates may not be dematerialised or materialised between Wednesday 16th November and
Friday 18th November 2016, both days inclusive.
31 August 2016
Date: 31/08/2016 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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