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CANCELLATION OF S329514 Unaudited Condensed Consolidated Group Financial Results for the six months ended 31 December 2012
TIMES MEDIA GROUP LIMITED
(formerly Richtrau No. 229 Proprietary Limited)
Incorporated in the Republic of South Africa
Registration number: 2008/009392/06
Share code: TMG
ISIN: ZAE000169272
("Times Media Group" or "TMG" or "the Company")
UNAUDITED CONDENSED CONSOLIDATED
GROUP FINANCIAL RESULTS
for the six months ended 31 December 2012
Condensed consolidated statement of comprehensive income
Unaudited Reviewed
six months six months
ended ended
31 December 31 December
2012 2011
Rm Rm
Revenue 3 154 3 052
Cost of sales (2 018) (1 924)
Gross profit 1 136 1 128
Operating expenses (929) (938)
Operating costs (839) (841)
Depreciation (66) (63)
Amortisation (24) (28)
Share-based payments (6)
Profit from operations before exceptional items 207 190
Exceptional items (130) 1
Profit from operations 77 191
Net finance costs (29) (6)
Finance income 19 15
Finance costs including interest paid on cash flow hedges (48) (21)
Share of (losses) profits of associates (net of income tax) (24) 3
Profit before taxation 24 188
Taxation (23) (66)
Income tax expense (23) (50)
Secondary tax on companies expense (16)
Profit for the period 1 122
Other comprehensive income
Exchange differences on translation of foreign operations 1 5
Change in fair value of cash flow hedges (net of income tax) (16)
Other comprehensive (loss) income for the period (net of income tax) (15) 5
Total comprehensive (loss) income for the period (14) 127
(Loss) profit attributable to:
Owners of the Company (7) 116
Non-controlling interest 8 6
Profit for the period 1 122
Total comprehensive (loss) income attributable to:
Owners of the Company (22) 121
Non-controlling interest 8 6
Total comprehensive (loss) income for the period (14) 127
(Loss) earnings per ordinary share (cents)
Basic (17) 42
Diluted (17) 42
Condensed consolidated segmental statement
Unaudited Reviewed
six months six months
ended ended
31 December 31 December
2012 2011
Rm Rm
Segmental revenue from external customers
Media 1 081 1 067
Retail Solutions 725 664
Books 756 720
Entertainment 592 601
3 154 3 052
Segmental profit (loss) from operations before exceptional items
Media 91 85
Retail Solutions 92 106
Books 36 13
Entertainment 5 10
224 214
Corporate (17) (18)
207 196
Share-based payments (6)
207 190
Segmental exceptional items
Media (15)
Retail Solutions (30)
Books (28) 28
Entertainment (20)
Corporate (51) (21)
Share-based payments 14 (6)
(130) 1
Condensed consolidated statement of financial position
Unaudited Reviewed
31 December 31 December
2012 2011
as at Rm Rm
ASSETS
Non-current assets 1 733 1 779
Property, plant and equipment 569 587
Intangible assets 905 987
Interests in associates 60 65
Investments 2
Deferred taxation assets 199 138
Current assets 2 127 2 303
Inventories, receivables and other current assets 1 933 1 947
Bank balances, deposits and cash 194 356
Total assets 3 860 4 082
EQUITY AND LIABILITIES
Total equity 1 217 2 186
Equity attributable to owners of the Company 1 132 2 085
Non-controlling interest 85 101
Non-current liabilities 1 400 597
Long-term borrowings 979 257
Cash flow hedges 22
Post-retirement benefits liabilities 249 207
Operating leases equalisation liabilities 43 37
Deferred taxation liabilities 107 96
Current liabilities 1 243 1 299
Payables and other current liabilities 1 146 1 098
Short-term borrowings 90 60
Bank overdrafts 7 141
Total equity and liabilities 3 860 4 082
Condensed consolidated statement of cash flows
Unaudited Reviewed
six months six months
ended ended
31 December 31 December
2012 2011
Rm Rm
Net cash flows from operations before working capital changes 238 243
Working capital changes (55) (151)
Net cash flows from operations 183 92
Net finance costs including interest paid on cash flow hedges (29) (6)
Taxation paid (19) (72)
Net cash flows from operating activities 135 14
Net cash flows from investing activities (64) (67)
Net cash flows from financing activities (237) (147)
Net decrease in cash and cash equivalents (166) (200)
Cash and cash equivalents at beginning of the period 354 417
Foreign operations translation adjustment (1) (2)
Cash and cash equivalents at end of the period 187 215
Condensed consolidated statement of changes in equity
Share
capital Non-
and Other Accumulated Owners' controlling Total
premium reserves profits interest interest equity
Rm Rm Rm Rm Rm Rm
Balance at 30 June 2011 1 571 (11) 515 2 075 120 2 195
Profit attributable to owners of the Company 116 116 6 122
Exchange differences arising on translation of foreign operations 5 5 5
Effect of reverse acquisition accounting (867) 867
Effect of acquisitions and disposals of non-controlling interests (6) (6) (2) (8)
Dividends paid by subsidiaries to non-controlling interests (23) (23)
Dividend paid (105) (105) (105)
Balance at 31 December 2011 (reviewed) 704 855 526 2 085 101 2 186
Balance at 30 June 2012 1 571 (11) 568 2 128 79 2 207
(Loss) profit attributable to owners of the Company (7) (7) 8 1
Exchange differences arising on translation of foreign operations 1 1 1
Change in fair value of cash flow hedges (net of income tax) (16) (16) (16)
Shares issued 1 020 1 020 1 020
Effect of reverse acquisition accounting (867) (1 111) (1 978) (1 978)
Equity-settled share incentive plans (16) (16) (16)
Dividends paid by subsidiaries to non-controlling interests (2) (2)
Balance at 31 December 2012 (unaudited) 1 724 (1 153) 561 1 132 85 1 217
Notes
1. Basis of preparation
On 25 September 2012, Times Media Group acquired the entire issued ordinary share capital of Avusa. The application of International Financial
Reporting Standards (IFRS), in particular IFRS 3: Business Combinations, results in Avusa (the legal acquiree) being recognised as the acquirer
for accounting purposes, and in the transaction being accounted for as a reverse acquisition. Accordingly, these condensed consolidated group
interim financial statements for the six months ended 31 December 2012, prepared following the reverse acquisition, are issued in the name of
Times Media Group (the legal parent and accounting acquiree), but are prepared as a continuation of the financial statements of Avusa (the legal
subsidiary and accounting acquirer), with one adjustment, which is the retroactive adjustment of Avusa's legal capital to reflect Times Media
Group's legal capital. The comparative financial information presented in these condensed consolidated group interim financial statements
has also been retroactively adjusted to reflect Times Media Group's legal capital. The calculation of earnings per share is described in note 3
hereunder.
Consequent upon the acquisition, Times Media Group expanded its adopted accounting policies to incorporate those accounting policies of
Avusa that were not accounting policies of Times Media Group. Accordingly, Times Media Group's accounting policies now match Avusa's
accounting policies as set out in Avusa's 2012 integrated annual report.
These financial statements have been prepared using accounting policies compliant with IFRS, information as required by IAS 34: Interim Financial
Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements
as issued by the Financial Reporting Standards Council, the JSE Limited's Listings Requirements and the South African Companies Act. The
accounting policies and their application are consistent, in all material respects, with those detailed in Avusa's 2012 integrated annual report,
including the adoption from 1 April 2012 up to the reporting date of those new and amended IFRS statements and interpretations with effective
dates for the Company of 1 April 2012 up to the reporting date, and including those amendments included in the International Accounting
Standards Board's annual improvements project where such amendments were effective for the Company from 1 April 2012 up to the reporting
date. The adoption of the new and amended IFRS statements and interpretations, and improvements project amendments has not had a material
effect on the Company's financial results.
The preparation of these unaudited condensed consolidated Group interim financial statements was supervised by Times Media Group's
Financial Director, Mr W Marshall-Smith CA(SA).
The comparative financial information, having not previously been presented, has been reviewed by our auditors, Deloitte & Touche, as required
by the JSE Limited. Their review was conducted in accordance with International Standards on Review Engagements 2410 Review of Interim
Financial Information Performed by the Independent Auditor. The auditors' unmodified review opinion is available for inspection at the
Company's registered office.
Unaudited Reviewed
six months six months
ended ended
31 December 31 December
2012 2011
Rm Rm
2. Reconciliation between earnings and headline earnings
Earnings (7) 116
Profit on disposal of property, plant and equipment (1) (29)
Impairment of plant and equipment 3
Impairment of tangible assets 57
Impairment of loan 26
Tax effect (16) 4
Attributable to x interest
Headline earnings 62 91
Headline earnings per ordinary share (cents)
Basic 28 28
Diluted 28 28
3. Earnings per ordinary share
The earnings and headline earnings for the period in which the reverse acquisition occurred include a comparative interest charge of R19 million
from the beginning of the period to the acquisition date in respect of the R1,15 billion term loans raised. The weighted average number of
ordinary shares in issue during the period in which the reverse acquisition occurred has been calculated on the basis of the number of ordinary
shares in issue from the beginning of the period to the acquisition date being the weighted average number of ordinary shares of Avusa
(the accounting acquirer) in issue during that period, multiplied by the share exchange ratio in terms of the acquisition, and the number of
ordinary shares in issue from the acquisition date to the end of the period being the actual number of ordinary shares of Times Media Group (the
legal acquirer) in issue during that period.
The earnings and headline earnings for the comparative period include a comparative interest charge of R39 million in respect of the R1,15 billion
term loans raised. The earnings and headline earnings per ordinary share for the comparative period have been calculated by dividing Avusa's
profit or loss attributable to ordinary shareholders (inclusive of the abovementioned comparative interest charge) by Avusa's historical weighted
average number of ordinary shares in issue, multiplied by the share exchange ratio in terms of the acquisition.
Accordingly, the calculation of basic earnings and headline earnings per ordinary share is based on a loss of R26 million (2011: R77 million
earnings) and headline earnings of R43 million (2011: R52 million) respectively, and on a weighted average of 155 395 129 (2011: 182 755 031)
ordinary shares in issue.
Similarly, the calculation of diluted earnings and headline earnings per ordinary share is based on a loss of R26 million (2011: R77 million
earnings) and headline earnings of R43 million (2011: R52 million) respectively, and on a weighted average of 155 395 129 (2011: 183 582 474)
diluted ordinary shares in issue. The dilution arises as a result of equity-settled share incentives that were in issue.
INTRODUCTION
Since the transaction was effected on 25 September 2012, management has focused on three crucial areas within the business:
- a review of all the Group activities and the determination of non-core assets;
- a reduction of the cost base; and
- the development of a clear mandate to ensure that divisional heads drive an agreed strategy and deliver the required returns on capital employed.
All four divisions within TMG (Media, Retail Solutions, Books and Entertainment) face challenging and evolving markets. Our first objective has been to
identify those divisions where we have critical mass, strong market share and solid brands, and successfully position them for the future. It is our view
that we need to focus on those divisions where we have the ability to generate positive returns on the capital invested, and enable a swift turnaround.
The turnaround is being actioned in two distinct phases:
Phase 1 involves:
- reducing the central costs of the Group head office through restructuring, in order to achieve the right cost base across the divisions;
- enhancement of cash generated within the divisions, and the evolution to a more decentralised operating model;
- aligning management decisions with shareholder interests, via an appropriate incentive scheme;
- encouraging a more entrepreneurial culture;
- the restructuring or sale of non-core assets, where the sale proceeds are used to reduce acquisition leverage; and
- enhancing synergies between divisions, where appropriate.
Phase 2 involves positioning the Company for the future. This may involve acquisitions or mergers to enhance TMG's offering, or include partnerships
with key players in order to share risk in a fast-evolving market.
Reducing the cost base
In recent years the Times Media Group has become burdened with overhead costs that are unduly large relative to the size of the Company. Radical
action is required to shed these costs. Our objective is to remove the costs without harming the core offerings of the Company. Head office structures
that currently duplicate the responsibilities of the decentralised divisions are being made redundant, resulting in a more streamlined organisation.
Already, the headcount cost at a senior level has been reduced by R20 million on an annualised basis, through the elimination of non-core roles
and natural attrition. The divisions generated R15 million in combined annualised savings by December 2012, and should produce an additional
R15 million in annualised savings by June 2013.
Shared services
Where possible, services are being shared between businesses in order to reduce infrastructure overheads. We have started the process to properly
integrate the Retail Solutions division (comprising Hirt & Carter and Uniprint) in KwaZulu-Natal. By combining their similar structures, integrating
their regional head office and support functions, and removing duplicated cost operations, we believe the division will realise sizeable cost savings,
alongside enhanced efficiency and cash flow. In addition, Hirt & Carter and Uniprint will consolidate their Gauteng offices and factories to a single
new location from May 2013. In Cape Town, all Times Media operations will be consolidated into a single office park from July 2013. Not only will this
result in reduced rentals for all, but it will also provide the benefits of shared common areas and services. In Johannesburg, various divisions have been
relocated to the main TMG building in Rosebank, again reducing the overall rental costs paid by the Group.
Divisional focus and accountability
Management has been given a clear mandate to implement a strategy that ensures their divisions are structured efficiently, and can deliver the required
returns on capital investment. Accountability will now sit with divisional heads, while the leaner head office will be responsible for capital allocation
and advisory support. Divisional heads are already implementing operational and financial improvements which we expect will benefit the Group.
It is important that management are incentivised in a manner that aligns them with shareholder interests. We have started this incentive process and
a circular has been sent to shareholders in this regard.
Cash flow
We have been strongly focussed on maintaining a positive free cash-flow through the divisions, which has allowed the Group to pay down R250 million
(22%) of the acquisition finance by the end of February 2013. The bulk of this payment is ahead of schedule, and the Group will continue to focus on
reducing its debt as cash becomes available.
The core divisions within TMG are strong cash-flow generators. This is incredibly beneficial in reducing acquisition leverage and enabling the Group to
reposition in a rapidly changing market. Capital will not be invested unless it can generate a suitable return for shareholders.
Core and non-core divisions and companies
Across the Group, all businesses have been reviewed and their non-core assets identified for sale. The sales will be performed in a responsible manner
and will take into account the various stakeholder interests including those of employees, customers and suppliers. All sales will ensure that the Group
receives fair value.
The core divisions of TMG are the Media division (which includes Sunday Times, Sowetan, The Times and TimesLive) and the Retail Solutions
division (which incorporates Hirt & Carter and Uniprint). These divisions occupy strong positions in their respective markets and are profitable cash
generators. Our objective is to grow and develop these divisions through innovation and differentiation, allowing the Group to enhance its market
leadership and generate higher returns for shareholders.
The non-core divisions of TMG are the Book division (which includes Exclusive Books, Van Schaik Bookstore and Random House Struik, amongst
others), and the Entertainment division (which incorporates Nu Metro Cinemas). We have already embarked on the sale of the
various companies that make up these two divisions.
The Book and Entertainment divisions are small and together contribute very little to EBIT. In the case of the Entertainment division, a large capital
investment is required, yet it is likely to deliver little to no return for the Group. The Entertainment division has run at a loss for a number of years and is
therefore not an area we want to remain invested in. Similarly, within the Books division we have noticed insufficient synergies between its businesses
and other TMG divisions to warrant further investment. As such, TMG will endeavour to find appropriate shareholders for what are essentially good
publishing, retail and distribution businesses, in a manner that will maximise TMG shareholder value.
In addition to the Books and Entertainment divisions, there are also a number of smaller companies which do not contribute positively in terms of
earnings, and the Group would be required to make large capital investments in order to make them competitive or allow them to reach critical mass
in the market. In certain cases these companies have external shareholders which hinder the management and implementation of TMG's overarching
strategy. These companies will be sold and the capital either redeployed to TMG's core businesses, or allocated to debt reduction.
OVERVIEW OF THE PAST SIX MONTHS
Since July 2012, Group revenues improved 3% from R3,052 billion to R3,154 billion. Profit from operations before exceptional items increased 9% from
R190 million to R207 million. Strict cost-cutting measures kept operating costs R2 million below those of the comparative period. Various exceptional
items have been separately disclosed to better reflect the trading results of the Group and its divisions.
The R1,15 billion term debt raised in September 2012 was reduced by R152 million to R998 million as at the reporting date. A further R100 million was
repaid in February 2013. This has reduced Group debt to below R900 million, which is a 22% reduction within five months.
Media
Media includes the Group's interests in newspapers, magazines, out-of-home advertising and the digital businesses of I-Net Bridge, Interactive Junction
Holdings and Amorphous.
All our newspapers recorded strong profit growth on the back of above-inflation increases in advertising revenue, coupled with sweeping cost-control
measures. The circulation of all our titles has remained relatively steady at a time of steep declines amongst our competitors. This has translated in the
newspaper division's increased market share in advertising. We have also experienced significant savings in print-production costs as a result of an
outsource agreement with a plant in Johannesburg. These savings ballooned dramatically when the printing of the Sunday Times was outsourced to
the same plant at the end of December 2012. With TMG now outsourcing the vast majority of its newspaper printing requirements, the Group realises
the benefits of having no major capital expenditure invested in printing presses or plants. This enables TMG to generate good returns on the capital
invested in the Media division. Importantly, this also allows the Media division to operate with greater flexibility and remain a leader in the face of a
continuously evolving media landscape. Consequent upon the outsourcing of printing from The Newspaper Printing Company ("TNPC"), a R26 million
impairment of a loan to TNPC is recognised in share of profits of associates.
There have been a number of editorial changes at various TMG newspapers. In order to keep our publications fresh and relevant, editorial changes are
necessary. Editorial excellence is essential for profitability, and profits sustain excellence. It is our intention to invest in editorial content of our various
publications and the training of journalists.
Magazines performed well over the six-month period. The magazine business continues to enjoy circulation growth following a change in distribution
partner. The business has also improved its gross profit margin as a result of cost-cutting initiatives.
Times Media LIVE (TimesLive, SowetanLive, Sunday WorldLive, SportLive) is the country's second largest media-owned online network and the
strongest performing, relative to size. The business leverages publishing advertising to over 2,2 million local users monthly, up from 1,4 million, due
to acquisition and audience growth among products. Revenue from advertising has grown over 70% and the operation is currently 80% ahead of the
previous year for the same period. The network strategy is designed to extract value from the users at all contact points and provide a strategic role in
the migration of print readers to platform-agnostic customers of the business over the next decade.
The outdoor advertising businesses, namely Airport Media and Boo Media, are viewed to be non-core to the business and we have initiated a sale
process.
Divisional results include a R6 million cost arising from voluntary retrenchments at BDFM, of which TMG owns 50%.
Retail Solutions
Retail Solutions comprises Hirt & Carter and Uniprint.
Trading results for the six months to December 2012 reflect the generally challenging economic environment in South Africa. Turnover increased
9% on the same period for the previous year, but profit from operations before exceptional items is down 13%. The major causes of this margin
squeeze were the weakening of the Rand, and the once-off restructuring costs that resulted from the integration of the Uniprint point-of-sale unit into
Hirt & Carter. The loss of the Trudon contract (the printing of the white and yellow telephone directories for South Africa) will impact on Uniprint
from January this year, but the division is implementing a number of initiatives to replace the lost turnover. Hirt & Carter is investing in new digital
technology that will allow it to offer further innovation to its market, as well as improve internal efficiencies. The unit will also be releasing new
software products and solutions this year, to further enhance its offering to its key account client base.
We are currently looking at a few potential acquisitions that will bolster Retail Solutions and give it scale where it is currently lacking.
Books
Books consists of book retailers (Van Schaik Bookstore and Exclusive Books), book and map publishers (Random House Struik, Struik Christian Media,
New Holland Publishers and Map Studio), digital mapping (MapIT) and book logistics companies (Booksite Afrika and Mega Digital).
The book retail businesses of Van Schaik Bookstore and Exclusive Books performed well in a tough market. Van Schaik Bookstore, the academic book
retail business, recorded good growth. This can be attributed to increased student numbers at public higher education institutions, increased product
lines with a focus on schools, further education and training ("FET") institutions, and private higher education customers. Management's focus on
reducing costs and improving efficiencies at Exclusive Books (the consumer book retail business) materially improved this unit's profitability as well.
We have, however, begun the sale process for Van Schaik and Exclusive Books.
The book publishing businesses continued to operate in difficult trading environments both locally and internationally, with all component businesses
maintaining a strong focus on cost controls. Sales of digital products, both e-books and mobile apps, performed well and recorded significant year-on-
year growth. This was driven by an increasing number of digital devices in use, additional international e-book retailers entering the South African
market, and an expanding catalogue of digital products.
Entertainment
Entertainment comprises Nu Metro (Films, Cinemas, Home Entertainment and Popcorn Cinema Advertising), Gallo Music, Compact Disc Technologies
("CDT"), Entertainment Logistics Services ("ELS") and Associated Musical Distributors ("AMD").
During the six-month period, trading was mixed in respect of results and performance, with the business environment remaining volatile. The outlook
for the full year ahead is negative and we expect to report a loss for the period. The entertainment environment is changing rapidly and the companies
housed within the Entertainment division are struggling to remain relevant. This division has been a dilemma for the Group for a number of years as it
has absorbed both working capital and capital expenditure, without showing return.
Entertainment Platform Businesses (CDT, ELS and AMD)
These businesses are involved in the manufacture and distribution of CDs and DVDs and are in decline as a result of the emergence of digital delivery
technologies. In addition, they face multiple challenges ranging from reduced retail volumes as a result of constrained consumer disposable income,
reduced unit prices, a large fixed-cost structure and the increasing consumer adoption of digital delivery technologies. The business has been scaled
back considerably in terms of cost base. It is ultimately a sunset business with a finite lifespan.
We are currently exploring a transaction whereby TMG will merge its CD and DVD manufacturing and distribution businesses (CDT, ELS and AMD)
with a competitor. This will result in TMG holding 50% of the merged company and receiving a cash payment. The joint venture will create a more
sustainable business, where the opportunity exists to realise significant cost savings and implement operational changes to address the largely fixed-
cost structure of the different operating businesses.
Nu Metro
Nu Metro Cinemas is a potentially very valuable business. Nu Metro Cinemas has attractive locations and good market opportunities that deliver appeal
to the developing middle-class in South Africa. The key variable to the success of Nu Metro Cinemas is the quality of the leases in its various locations.
Our granular analysis of the Nu Metro group and its individual cinemas has indicated that certain leases required renegotiation as they represent the
greatest liability and cost to the business. We have already succeeded in renegotiating certain key site leases, which represent a large saving.
Nu Metro Cinemas is a combination of top cinema sites that are profitable and highly frequented, as well as marginal sites that break even or lose
money. We are at a junction where the industry is moving away from the traditional 35mm film towards digital projection. The upgrade to digital
projection would involve a once-off capital expenditure charge to the business. Given the slow decline in cinema attendance, we will be closing down
the marginal sites that are neither sustainable, nor able to provide a return on the capital which is necessary to digitise or upgrade these cinemas.
Times Media Entertainment: Content or Nu Metro Films operates as a separate business and occupies a unique niche in the market. Nu Metro Films
is a profitable business and is the leading film distribution company in the South African market. The division specialises in licensing and distributing
content through various platforms within the South African market. Through the representation of Hollywood Studios, independently acquired
content, local content, and niche and specialist content, the division extracts value from both the in-home and out-of-home environment within South
Africa, as well as key territories on the African content. It is our intention to retain the Films division as part of TMG's core.
Home Entertainment
Home Entertainment continues to operate in a challenging environment and is in fast decline. A large number of video rental stores have closed in
the past financial year, resulting in a significant decrease in rental sales. Retail sales continue to experience pricing and margin pressures. This has
culminated in an overall drop in turnover, a shortfall in studio minimum guarantee recoupment, and increases in stock write-off provisions. Home
Entertainment is responsible for the largest losses within the Entertainment division and is in the process of being drastically scaled back.
Gallo Records
Our music division comprises Gallo Records, Gallo Publishing and the Warner Music Gallo Africa joint venture. The music division has lost money for a
number of years and is not a business we want to be invested in. Given the changes currently taking place in the music industry, coupled with declines
and margin pressure, the Group is currently evaluating its music strategy in conjunction with our joint venture partners with a view to exiting Gallo
Records whilst retaining the Gallo Publishing catalogue. The Gallo catalogue has one of South Africa's largest music libraries and we are of the view
that it is potentially very valuable. Gallo has been a witness to South Africa's music history, with its catalogue representing a fair part of South Africa's
cultural heritage. We need to find creative ways to leverage the catalogue.
BDFM
BDFM is a separate joint venture with UK publisher, Pearson Overseas Holdings Limited. BDFM consists of Business Day, Financial Mail, Summit TV,
Ignition and the Home Channel. TMG owns 50% of BDFM with Pearson Overseas Holdings Limited owning the balance.
BDFM has struggled over the last number of years and in the past six months has continued along the same vein. Business Day recently lost a large
source of revenue as a result of the JSE rules governing financial notices. The business has undergone a voluntary retrenchment program and cost
review.
BDLive, however, has proved a big success, becoming one of South Africa's leading business websites over a short period of time. BDFM's business
channel, Summit TV, will shortly be renamed Business Day Television or BDTV.
EXCEPTIONAL ITEMS
Following the implementation of the transaction in September 2012, management reviewed all financials and looked at provisions across the Group.
The following actions were taken:
- Media increased its post-retirement medical aid provisioning by R15 million;
- a review of the carrying value of certain of Retail Solutions's intangibles, as well as its plant, indicated impairments of R30 million;
- the Exclusives.co.za operating platform was fully impaired in the amount of R15 million following a review of the online business model. The book
publishing business increased its provisioning against certain stock and debtors by R13 million;
- Entertainment sold a non-core property at a R2 million profit. A review of the customised SAP system developed for ELS and AMD signalled that its
sub-par performance required its carrying value of R16 million to be impaired in full. The Home Entertainment business wrote down the balance
of its gaming stock assessed as being unrecoverable;
- transaction costs of R59 million incurred by Avusa and Times Media in connection with the scheme of arrangement were expensed as exceptional
items. An R8 million credit was recognised in respect of a Group retirement fund that is being wound down; and
- following implementation of the scheme of arrangement, cancellation of Avusa's share incentive plans resulted in an accounting gain of
R14 million.
Apart from the property sale proceeds and scheme of arrangement costs, the exceptional items had no cash impact.
DIRECTORATE
Mr Kuseni Dlamini was appointed as the permanent chairman of the Company in November 2012. Accordingly, his status changed from independent
non-executive interim chairman to independent non-executive chairman. Mr Mark Basel was appointed as a non-executive director in November 2012,
and resigned on 1 March 2013.
With the departure of Mr Colin Cary in January 2013, Mr Andrew Bonamour assumed day-to-day management of the Company as Chief Executive Officer.
OUTLOOK
Although the turnaround is already in process, management believes it will take time to complete given the number of smaller companies and
complexities involved in the various businesses. Debt reduction remains a key area of management focus, with significant success already achieved to
date and we envisage further pre-payments during the course of this year from cash flow generation and asset sales. TMG is a leverage opportunity,
which means that, as the acquisition finance is repaid, the equity value of the Group will increase.
K D Dlamini A D Bonamour
Chairman Chief Executive Officer
For and on behalf of the board
Rosebank
13 March 2013
Directors: KD Dlamini (Chairman), AD Bonamour* (Chief Executive Officer), W Marshall-Smith* (Financial Director), J Hawinkels, HK Mehta, R Naidoo,
MSM Xayiya *Executive
Company secretary: J R Matisonn Email: matisonnj@timesmedia.co.za Address: 4 Biermann Avenue, Rosebank, 2196, Johannesburg
PO Box 1746, Saxonwold, 2132
Sponsor: PSG Capital
These results may be viewed on the internet at www.timesmedia.co.za
www.timesmedia.co.za
Date: 13/03/2013 02:52:59 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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