Caxton profits down on previous year
The company – which owns The Citizen newspaper amongst others – said earnings per share were 76 cents compared with 196,4 cents previously.
Headline earnings per share amounted to 76,1 cents – a decline of 25 percent on the previous year. Trading conditions continued to be difficult but it appeared that the underlying trend was improving which was evident during the last quarter of the financial year, Caxton said.
The pressure on advertising revenue however continued unabated and was exacerbated during the run up to the Fifa World Cup, as additional investments were made by marketers in television advertising, which received major exposure over this period, “to the detriment of the print industry as a whole.”
Caxton said that while wholesale and retail sales figures confirmed the improving trend, unemployment was growing and remained the number one problem with which the country had to deal. The strength of the Rand was not anticipated and currency hedges taken out during the year resulted in a loss of R157,2 million being incurred.
“Notwithstanding this loss the company traded reasonably, given the circumstances, and operating profits grew.”
Caxton said its financial position remained extremely strong and cash equivalents were R1,845 million at the year-end, having increased from R1,532 million at the close of the previous year with cash from operations generating R711,9 million.
“Worldwide, certain sections of the newspaper industry are facing difficult times. In South Africa this trend is being seen mainly in the daily and Sunday newspapers,” Caxton said.
Falling circulations had been seen in the broadsheet dailies and the broadsheet Sunday newspapers but the paid local weeklies in the Caxton stable had been unaffected and were showing remarkable growth.
“With regard to the free newspaper market, the company has maintained its strong position.”
Caxton said efficiencies in newspaper printing had improved and would improve even further when the new plants presently under installation were commissioned, which was anticipated to occur in the first quarter of 2011.
Turning to its investment in Moneyweb, the company said this was in line with its view that it was necessary to support and complement its various publications with digital platforms.
“It has been decided to form a partnership with Moneyweb Holdings who have the necessary experience and competence to deliver these services.”
Concomitantly the company had, after the year end, invested some R20 million in acquiring slightly over 30 percent of the equity of Moneyweb by subscribing for new shares in that company.
Turning to its prospects, Caxton said it continued to be dependent on advertising and discretionary consumer spending.
“Provided that the upward trend, which is currently evident, is maintained, a return to growth more or less in line with inflation is predicted.”
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