Caxton reports 13,5% increase in earnings

Media group Caxton and CTP Publishers on Wednesday reported a 13,5% increase in headline earnings per share from 69 cents to 109 cents for the year to the end of June. Turnover for the 12 months grew by 8,2% from R3,2-billion to R3,5-billion.

The group declared a dividend of 45 cents per share compared with 40 cents last year, as well as a preference dividend of 413 cents (2005: 338 cents) per preference share.

Operating profit grew by 12,7% from R650-million to R733-million. Depreciation increased substantially by R33-million to R127-million, which the group said reflects an additional write-off and the start-up of equipment installed during the year.

“Notwithstanding an intensely competitive trading environment and the increased write-off of depreciation, the trading margin reached a record level of 17,5%,” Caxton said.

Net finance income amounted to R109-million and includes the surplus on the disposal of investments considered to be non-core to the company’s ongoing operations.

The share of income from associates before tax increased from R12-million to R19-million and reflects the improved performance of the majority of such associated investments. It also includes, for the first time, the company’s share of profits arising out of the investment in Ramsay Son & Parker.

“After providing for profits attributable to outside shareholders and preference dividends, earnings attributable to shareholders amounted to R520-million. This is 17,5% up on the comparable figure in the previous financial year.”

The year under review saw the finalisation of the capital upgrade programmes on the newspaper plants that were in different phases at the close of the previous financial year. Six regional newspaper factories have been totally re-equipped and major factories in Cape Town and Durban have been built, equipped and successfully commissioned. In addition the Johannesburg factory has been extensively upgraded, according to the group.

“This expenditure places newspaper publishing and printing in an extremely good position to deal with the printing of new national products and the expansion of the company’s own publications,” the media group said.

On its prospects, Caxton said: “The company is entering into a slightly different phase in its history. Substantial capital expenditure has been incurred and, for the first time in many years, capacity to cope with our customer requirements will no longer be an issue. No further large capital investments are anticipated and there will initially be surplus capacity in newspaper and commercial printing.

“We are also now in a position to print newspapers efficiently. With the considerable expenditure on capital goes a commensurate increase in the quantum of depreciation, which factor has already affected this year’s result. The forthcoming year’s results will be further impacted on as all plants and presses become fully operational.

“The economy remains the ‘joker in the pack’, but there is no doubt that the monetary authorities are concerned about rising levels of inflation and the exuberant expenditure of the consumer. As they tighten the economy and increase interest rates there can be no doubt that the level of growth, particularly for retailers and wholesalers, will slow down. In these circumstances, the company expects moderate earnings growth.”—I-Net Bridge

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