TIMES MEDIA GROUP LIMITED - Proposed disposal to a related party

Proposed disposal to a related party

TIMES MEDIA GROUP LIMITED
(Formerly Richtrau No. 229 Proprietary Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2008/009392/06)
Ordinary Share Code: TMG
Ordinary share ISIN: ZAE 000169272
(“TMG” or “the Company”)

PROPOSED DISPOSAL TO A RELATED PARTY

1.     INTRODUCTION

1.1.   Shareholders are advised that the Company, through its
       wholly-owned subsidiary New Holland Publishing (South
       Africa) Proprietary Limited (“NHP”), has entered into an
       agreement in terms of which it will dispose of its 51%
       (fifty one percent) shareholding in MAP Integration
       Technologies Proprietary Limited (“MAPIT”) to TomTom Africa
       Proprietary Limited (“TomTom”) (“the Disposal”).

1.2.   The Disposal is subject to the condition precedent set out
       in paragraph 3.2 below.

2.     RATIONALE FOR THE DISPOSAL

2.1.   As part of TMG’s turnaround strategy, it has specifically
       decided to exit non-core businesses identified within TMG.
       One such business is MAPIT, which falls within the
       Company’s Books division and which forms the subject matter
       of the Disposal.

2.2.   MAPIT provides navigation data and related navigational
       mapping services to navigation device suppliers in the
       South African market and as such MAPIT is not aligned to
       TMG’s core businesses, being media and retail solutions.

3.     DETAILS OF THE DISPOSAL

3.1.   Purchase Consideration

3.1.1.    NHP will dispose of its 51% (fifty one percent)
          shareholding   in  MAPIT   to  TomTom   for   a  purchase
          consideration of R37 490 000 (thirty seven million four
          hundred and ninety thousand rand) payable in cash.

3.1.2.    The proceeds of the Disposal will be used to reduce
          acquisition leverage with respect to future acquisitions
          more aligned to TMG’s core business.
3.2.   Dividend

3.2.1.   MAPIT declared and paid a dividend to its shareholders in
         the sum of R11 000 000 (eleven million rand) prior to the
         effective date of the Disposal.

3.2.2.   The   portion  of   such  dividend,   attributable  and
         accordingly to NHP (and TMG), as a shareholder, is the
         amount of R5 610 000 (five million six hundred thousand
         rand).

3.3.   Effective Date

3.3.1.   The effective date of the Disposal is 1 June 2013.

4.   FINANCIAL EFFECTS OF THE DISPOSAL

     The table below sets out the pro forma financial effects of
     the Disposal on the headline earnings and earnings per shares
     and the net asset value and net tangible asset value per
     share of TMG, and is based on the published unaudited
     condensed consolidated group financial results for the six
     months ended 31 December 2012. The pro forma financial
     effects are the responsibility of the directors of the
     Company and have been prepared for illustrative purposes
     only. Due to their nature, the pro forma financial effects
     may not give a true reflection of the Company`s financial
     position as at 31 December 2012.     The unaudited pro forma
     financial effects    contained   in this announcement     are
     presented in a manner consistent with the format and
     accounting policies adopted by TMG.


                                               Pro forma   Percentage
                                  Before the   After the    Increase/
                         Notes      Disposal    Disposal   (decrease)

Headline earnings       1 and 3           28          26         (7%)
per share (cents)
Earnings per share      1 and 3         (17)        (18)         (6%)
(cents)
Net asset value per           2          891         909           2%
share (cents)
Tangible net asset            2          179         197          10%
value per share
(cents)
Number of shares in                  127 077     127 077            -
issue, excluding
treasury shares
(‘000)
Weighted average                  155 395     155 395            -
number of shares in
issue (‘000)

Notes and assumptions:

1.   The headline earnings and earnings per share in the “Before”
     column have been based on the assumption that the Disposal
     was effective on 1 July 2012.

2.   The net asset value and tangible net asset value per share in
     the “Before” column have been based on the assumption that
     the Disposal was effective on 31 December 2012 and that all
     transaction costs were paid on the effective date.

3.   Shareholders   are  referred   to the  published  unaudited
     condensed consolidated interim group financial results for
     the six months ended 31 December 2012 (specifically notes 1
     and 2 thereto) for a detailed determination of headline
     earnings and earnings per share.

4.   Proceeds for NHP’s 51% interest – R 37.490 million.

5.   Transaction costs based on 3% of proceeds equaling R1.125
     million is viewed as capital expenses and therefore not
     deductible for income tax purposes.

6.   Capital gains tax (per KPMG opinion) of R 3.496 million has
     no impact due to the utilisation of the assessed loss.

7.   Proceeds (net of transaction costs) from the sale used to
     reduce TMG borrowings. Interest saving calculated at the
     average of the 2 interest rates applicable for the 6 months
     to 31 December 2012, ie 8.075% and 8.575%. Tax adjustment for
     interest benefit calculated at 28%.


5.     CATEGORISATION AND RELATED PARTY TRANSACTION

5.1.   TomTom holds 49% of the total issued share capital of MAPIT
       and as such is a material shareholder in MAPIT. TomTom is
       therefore viewed as a related party in terms of the JSE
       Listings Requirements and the Disposal is therefore viewed
       as a related party transaction.
5.2.   Due to the size of the Disposal, the Disposal is
       categorised   as  a   small  related   party  transaction.
       Accordingly, shareholder approval is not required in order
       to implement the Disposal and this announcement is for
       information purposes only.

6.     INDEPENDENT EXPERT VALUATION

6.1.   In terms of section 10.4(f) of the JSE Listing Requirements
       the Company has appointed PSG Capital as the independent
       expert in order to provide an opinion on the fairness of
       the Disposal. Based on opinion provided, the board has
       found the Disposal to be fair to shareholders.

6.2.   The said fairness opinion will lie open for inspection at
       the Company’s registered office for a period of 28 (twenty
       eight) days from the date of this announcement.


By order of the board

7 June 2013
Johannesburg

Sponsor:   PSG Capital Proprietary Limited

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