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Packaging comes through for Caxton

As traditional print media business continues to face difficult conditions.

CAPE TOWN – Despite profit for the year staying flat, print and media group Caxton & CTP Publishers and Printers on Thursday announced a 10.6% growth in headline earnings per share for the year ended 30 June. The group noted that despite difficult conditions it was pleased with the performance on the back of a number of changes introduced last year.

The group restructured its commercial printing operations, closed its non-performing stationery business and strengthened its packaging division through the acquisition of Nampak Cartons and Labels, which became effective on 1 August last year.

Overall, group revenue including the contribution from new acquisitions increased by 16.2% to R6.3 billion. On a comparable basis, however, revenues declined by 3%.

Profit for the year was R433.9 million, down slightly from R435.9 million last year. Cash generated by operating activities grew by 17.4% from R696.5 million to R817.5 million.

The fair value of Caxton’s cash and cash equivalents on hand at the end of the year was R2 billion. It therefore remains in a strong position to take advantage of further acquisition opportunities.

The highlight of the results came from the packaging division, which showed a huge improvement in both sales and profits due to the boost received from the acquisition of Nampak Cartons and Labels. Revenues grew from R807.7 million in 2014 to R1.9 billion this year, while profit after depreciation jumped from R50.8 million to R165.6 million.

The packaging division contributed 31% of group revenues and 35% of profits after depreciation, up from 15% and 12% respectively in 2014. These operations will become increasingly important for the group as its traditional media businesses continue to face headwinds.

Revenues in its publishing, printing and distribution division were flat, although profit after depreciation showed a 12.1% improvement. Significantly though, from contributing 92% of group revenues last year, the division delivered 79% of revenues in 2015.

“The challenges facing newspapers worldwide continue,” the group said in a statement. “Monetising online audiences is still elusive with digital advertising growth not compensating for the loss of print advertising and the decline in circulations.”

The growing demand for quality news on digital platforms in particular, saw the group continue to invest in the digital space.

“We are strongly focused on improving our multi-media offering and the progress we are making on this front is also very encouraging,” Caxton noted. “The challenge is to manage the established print business efficiently while simultaneously developing digital start-ups.”

Caxton announced a dividend of 65 cents per ordinary share, up from 60 cents per share last year. It also announced a preference dividend of 530 cents per share.

The share has performed well so far in 2015, up over 30% in the year to date.

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