No one could ever accuse Terry Moolman of not running a tight ship. Moolman, who has overseen media group Caxton & CTP since he co-founded it with fellow entrepreneur Noel Coburn in 1980, has a well-earned reputation for frugalness and maintaining a strong balance sheet.
But his ability to keep costs under control couldn’t offset the difficult media environment Caxton and other media companies are experiencing. Rival Tiso Blackstar, for instance, saw net profit fall from R136 million to R95 million for the half-year to December 2018, while Naspers’s media division incurred a $14 million trading loss for the year to March 2019.
The difficulty Caxton experienced can be seen in revenue standing still at R6.32 billion and profit falling 12% to R355.2 million in the year to end-June.
Cash up … yet down
Even though Caxton managed to boost cash and cash equivalents from R1.53 billion to R1.67 billion, cash generated from operating profit dropped R498 million to R353 million. The rise in cash and cash equivalents is a result of it not spending as much on its large capital expenditure programme as it did the previous financial year.
Its Sens announcement shows that Caxton is responding to the difficult market in the way it knows best.
“The group continues to manage its businesses in as tight a manner as possible in an uncompromising trading environment that is unlikely to change in the medium term.”
It notes however that having R1.97 billion in the kitty helps it not only to cope with tough trading conditions but also to effectively buy growth. “As previously indicated, we are most fortunate to have a strong balance sheet that can be effectively used to acquire businesses that can drive some growth and diversification.”
With “the decline in printing and print/magazine publications”, for instance, it has “diversified into new packaging businesses and into the digital economy”.
This strategy can be seen in the group increasing its stake in Cognition Holdings from 34.5% to 63% and taking control of housing website Private Property. It also has a holding in Octotel, Cape Town’s largest open-access fibre network.
Since the end of its financial year, Caxton has gone on to buy the remaining 33% it did not yet hold in Highway Mail – the “leading source of community news in the suburb of Pinetown” in KwaZulu-Natal – for R21.3 million.
It also took a further 25% interest in community newspaper group Capital Media for R17 million. New acquisitions include a 50.1% stake in Response24 (a mobile app that allows users to summon armed response and medical emergency services), and a 50% stake in online accommodation bookings platform Afristay.