Wrap Text
Unaudited Condensed Consolidated Group Financial Results for the six months ended 31 December 2013
TIMES MEDIA GROUP LIMITED
Incorporated in the Republic of South Africa
Registration number: 2008/009392/06
JSE Share code: TMG
ISIN: ZAE000169272
("Times Media Group" or "TMG" or "the
Company" or "the Group")
UNAUDITED CONDENSED CONSOLIDATED
GROUP FINANCIAL RESULTS
for the six months ended 31 December 2013
- Acquisition finance reduced to R298 million by January 2014
- Record growth delivered from our digital and broadcast businesses
- R644 million realised on non-core disposals
- R234 million spent on new acquisitions
- B-BBEE level improved from level 4 to level 3
- Interim dividend of 25 cents per share declared
Condensed consolidated statement of profit or loss and other comprehensive
income
Six months Six months
ended ended
31 December 31 December
2013 2012
Rm Rm
CONTINUING OPERATIONS
Revenue 2 142 2 137
Cost of sales (1 551) (1 472)
Gross profit 591 665
Operating expenses (421) (492)
Operating costs (357) (433)
Depreciation (36) (41)
Amortisation (16) (18)
Share-based payments (12) –
Profit from operations before exceptional items 170 173
Exceptional items 155 (110)
Profit from operations 325 63
Net finance costs (21) (29)
Finance income 13 18
Finance costs including interest paid on cash flow hedges (34) (47)
Share of profits (losses) of associates (net of income tax) 6 (26)
Profit before taxation 310 8
Taxation (89) (16)
Profit (loss) from continuing operations 221 (8)
DISCONTINUED OPERATIONS
Profit from discontinued operations 257 9
Profit after taxation before profit on disposals 24 9
Profit on disposals (net of capital gains tax) 233 –
Profit for the period 478 1
Other comprehensive loss
Items that may be reclassified subsequently to profit or loss
Change in fair value of cash flow hedges (net of income tax) (8) (16)
Exchange differences on translation of foreign operations (4) 1
Other comprehensive loss for the period (net of income tax) (12) (15)
Total comprehensive income (loss) for the period 466 (14)
Profit (loss) attributable to:
Owners of the Company 476 (7)
Profit (loss) from continuing operations 218 (11)
Profit from discontinued operations 258 4
Non-controlling interest 2 8
Profit from continuing operations 3 3
(Loss) profit from discontinued operations (1) 5
Profit for the period 478 1
Total comprehensive income (loss) attributable to:
Owners of the Company 464 (22)
Profit (loss) from continuing operations 212 (27)
Profit from discontinued operations 252 5
Non-controlling interest 2 8
Profit from continuing operations 3 3
(Loss) profit from discontinued operations (1) 5
Total comprehensive income (loss) for the period 466 (14)
Earnings (loss) per ordinary share from continuing
operations (cents)
Basic 172 (19)
Diluted 171 (19)
Earnings per ordinary share from discontinued operations (cents)
Basic 203 2
Diluted 202 2
Earnings (loss) per ordinary share from continuing and
discontinued operations (cents)
Basic 375 (17)
Diluted 373 (17)
Condensed consolidated segmental statement
Six months Six months
ended ended
31 December 31 December
2013 2012
Rm Rm
Segmental revenue from external customers
CONTINUING OPERATIONS
Media 1 275 1 161
Retail Solutions 701 725
Entertainment 166 251
2 142 2 137
Segmental profit (loss) from operations before exceptional
items
CONTINUING OPERATIONS
Media 112 100
Retail Solutions 76 93
Entertainment 11 (3)
199 190
Corporate (17) (17)
182 173
Share-based payments (12) –
170 173
Condensed consolidated statement of financial position
As at As at As at
31 December 31 December 30 June
2013 2012 2013
Rm Rm Rm
ASSETS
Non-current assets 1 565 1 733 1 431
Property, plant and equipment 379 569 392
Intangible assets 879 905 831
Interests in associates 174 60 22
Investments 10 – 13
Long-term receivable 8 – –
Cash flow hedges – – 10
Deferred taxation assets 115 199 163
Current assets 1 526 2 127 1 292
Inventories, receivables and other current assets 1 390 1 933 1 189
Bank balances, deposits and cash 136 194 103
Non-current assets classified as held for sale 162 – 893
Total assets 3 253 3 860 3 616
EQUITY AND LIABILITIES
Total equity 1 643 1 217 1 208
Equity attributable to owners of the Company 1 638 1 132 1 162
Non-controlling interest 5 85 46
Non-current liabilities 528 1 400 1 019
Long-term borrowings 385 979 690
Cash flow hedges – 22 –
Post-retirement benefits liabilities 78 249 264
Operating leases equalisation liabilities 22 43 18
Deferred taxation liabilities 43 107 47
Current liabilities 1 041 1 243 972
Payables and other current liabilities 963 1 137 819
Short-term borrowings 66 90 56
Post-retirement benefits liabilities 9 9 10
Bank overdrafts 3 7 87
Liabilities directly associated with
non-current assets classified as held for sale 41 – 417
Total equity and liabilities 3 253 3 860 3 616
Condensed consolidated statement of changes in equity
Non-
Stated Other Accumulated Owners' controlling Total
capital reserves profits interest interest equity
Rm Rm Rm Rm Rm Rm
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 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 1 724 (1 153) 561 1 132 85 1 217
Balance at 30 June 2013 1 724 (1 133) 571 1 162 46 1 208
Profit attributable to owners of the Company – – 476 476 2 478
Exchange differences on translation of foreign operations – (4) – (4) – (4)
Change in fair value of cash flow hedges (net of income tax) – (8) – (8) – (8)
Effect of acquisitions and disposals of non-controlling interests – – – – (37) (37)
Equity-settled share incentive plans – 12 – 12 – 12
Dividends paid by subsidiaries to non-controlling interests – – – – (6) (6)
Balance at 31 December 2013 1 724 (1 133) 1 047 1 638 5 1 643
Condensed consolidated statement of cash flows
Six months Six months
ended ended
31 December 31 December
2013 2012
Rm Rm
Net cash flows from operations 210 183
Net finance costs including interest paid on cash flow hedges (21) (29)
Taxation paid (33) (19)
Net cash flows from operating activities 156 135
Net cash flows from investing activities 233 (64)
Net cash flows from financing activities (267) (237)
Net increase (decrease) in cash and cash equivalents 122 (166)
Cash and cash equivalents at the beginning of the period 59 354
Foreign operations translation adjustment (1) (1)
Cash and cash equivalents at the end of the period 180 187
Notes
1. Basis of preparation
The unaudited condensed consolidated Group financial results for the six months ended
31 December 2013 have been prepared and presented in accordance with the International
Financial Reporting Standard IAS 34: Interim Financial Reporting, the framework concepts and the
measurement and recognition requirements of International Financial Reporting Standards (IFRS),
the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the
Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the
JSE Limited's Listings Requirements, and the requirements of the South African Companies Act
(as amended). The accounting policies are compliant with IFRS, and their application is consistent,
in all material respects, with those detailed in TMG's 2013 integrated annual report, apart from the
adoption, from 1 July 2013 up to the reporting date, of those new and amended IFRS statements
and interpretations with effective dates for the Company of 1 July 2013 up to the reporting date,
and those amendments included in the International Accounting Standards Board's annual
improvements project where such amendments were effective for the Company from 1 July 2013 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.
On 25 September 2012, TMG acquired the entire issued ordinary share capital of Avusa via a scheme
of arrangement. The application of 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, the condensed consolidated
Group financial statements for the six months ended 31 December 2012 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 TMG's
legal capital. The calculation of earnings per share for the six months ended 31 December 2012 is
described in note 4 hereunder.
In order to comply with the presentation requirements of IFRS 5: Non-current Assets Held for Sale
and Discontinued Operations, the relevant comparative financial information has been re-presented.
The preparation of these condensed consolidated Group interim financial statements was
supervised by TMG's financial director, Mr W Marshall-Smith CA(SA).
Six months Six months
ended ended
31 December 31 December
2013 2012
Rm Rm
2. Exceptional items
Media (10) (8)
– Profit on sale of Ponte advertising site 11 –
– Impairment of goodwill (16) –
– Retrenchment costs (5) (8)
Retail Solutions (1) (30)
– Profit on sale of Universal web assets 8 –
– Costs related to closure of Universal web (3) –
– Impairment of intangible assets – (27)
– Impairment of Uniprint plant – (3)
– Retrenchment costs (6) –
Entertainment (2) (20)
– Profit on disposal of property – 2
– Impairment of customised SAP system – (16)
– Impairment of gaming stock – (6)
– Retrenchment costs (2) –
Corporate 168 (52)
– Revaluation of listed investments 1 –
– Profit on disposal of listed investments 1 –
– Post-retirement medical aid 169 (15)
– Costs related to acquisitions (2) –
– Retirement fund surplus – 8
– Scheme of arrangement transaction costs – (59)
– Credit arising on cancellation of Avusa share incentive
plans – 14
– Retrenchment costs (1) –
155 (110)
Six months Six months
ended ended
31 December 31 December
2013 2012
Rm Rm
3. Reconciliation between earnings and headline earnings
CONTINUING OPERATIONS
Earnings (loss) 218 (11)
Profit on disposal of property, plant and equipment (8) (2)
Profit on disposal of intangible assets (10) –
Impairment of goodwill 16 –
Revaluation of listed investments (1) –
Profit on disposal of listed investments (1) –
Impairment of plant and equipment – 3
Impairment of intangible assets – 42
Impairment of loan – 26
Tax effect 6 (12)
Attributable to non-controlling interest – –
Headline earnings 220 46
Headline earnings per ordinary share from continuing
operations (cents)
Basic 173 18
Diluted 172 18
DISCONTINUED OPERATIONS
Earnings 258 4
Profit on disposal of interests in I-Net Bridge, Van Schaik
Bookstore, Exclusive Books, Random House Struik,
Mega Digital and Nu Metro Cinemas (259) –
Loss on disposal of property, plant and equipment 2 1
Profit on disposal of properties (9) –
Impairment of intangible assets 1 15
Tax effect 36 (4)
Attributable to non-controlling interest – –
Headline earnings 29 16
Total headline earnings from continuing and
discontinued operations 249 62
Headline earnings per ordinary share from discontinued
operations (cents)
Basic 23 10
Diluted 23 10
Headline earnings per ordinary share from continuing
and discontinued operations (cents)
Basic 196 28
Diluted 195 28
4. Earnings per ordinary share
The calculation of basic earnings and headline earnings per ordinary share for the six months
ended 31 December 2013 is based on earnings of R476 million and headline earnings of
R249 million, respectively, and on a weighted average of 127 047 179 ordinary shares in issue.
The calculation of diluted earnings and headline earnings per ordinary share for the six months
ended 31 December 2013 is based on earnings of R476 million and headline earnings of
R249 million, respectively, and on a weighted average of 127 526 675 diluted ordinary shares in
issue. The additional diluted ordinary shares arise as a result of equity-settled share incentives
in issue.
The earnings and headline earnings for the six months ended 31 December 2012 include a
comparative interest charge of R19 million from the beginning of the period to the reverse
acquisition date of 25 September 2012 in respect of the R1,15 billion term loans raised.
The weighted average number of ordinary shares in issue during the six months ended
31 December 2012 is 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 weighted average number of ordinary shares
in issue from the acquisition date to the end of the six-month period, being the weighted average
number of ordinary shares of TMG (the legal acquirer) in issue during that period.
The calculation of basic and diluted earnings and headline earnings per ordinary share for the
six months ended 31 December 2012 is based on a loss of R26 million and headline earnings of
R43 million, respectively, and on a weighted average of 155 395 129 ordinary shares in issue.
5. Discontinued operations
The following assets comprise TMG's discontinued operations:
Media
- I-Net Bridge (disposed of on 15 November 2013)
- East London properties (disposed of on 10 October 2013)
- Port Elizabeth properties
Books
- Van Schaik Bookstore (disposed of on 2 December 2013)
- Exclusive Books (disposed of on 1 December 2013)
- New Holland Publishing (Random House Struik disposed of on 25 November 2013 and Mega
Digital disposed of on 1 November 2013)
- MapIT (disposed of on 31 May 2013)
Entertainment
- Nu Metro Cinemas (disposed of on 28 November 2013)
- 40% interest in Warner Music Gallo Africa (disposed of on 31 July 2013)
- Monte Cinemas (disposed of on 28 June 2013)
- 50% stake in Suncoast Cinema that was previously equity-accounted (disposed of on
31 May 2013)
Six months Six months
ended ended
31 December 31 December
2013 2012
Rm Rm
Revenue 768 1 017
Cost of sales (404) (546)
Gross profit 364 471
Operating expenses (333) (428)
Operating costs (313) (397)
Depreciation (17) (25)
Amortisation (3) (6)
Profit from operations before exceptional items 31 43
Exceptional items (3) (29)
Profit from operations 28 14
Net finance costs – –
Finance income 1 1
Finance costs (1) (1)
Share of profits of associates (net of income tax) 1 2
Profit before taxation 29 16
Taxation (5) (7)
Profit after taxation before profit on disposals 24 9
Profit on disposals (net of capital gains tax) 233 –
Profit on disposal of I-Net Bridge 85 –
Profit on disposal of Van Schaik Bookstore 116 –
Profit on disposal of Exclusive Books 66 –
Profit on disposal of Random House Struik 7 –
Loss on disposal of Nu Metro Cinemas (15) –
Profit on disposal of properties 9 –
Capital gains tax (35) –
Profit from discontinued operations 257 9
Segmental revenue from external customers
Media 54 54
Books 577 756
Entertainment 137 207
768 1 017
Segmental profit (loss) from operations before
exceptional items
Media (1) 4
Books 31 36
Entertainment 1 3
31 43
Segmental exceptional items
Books
– Impairment of Exclusives.co.za (1) (15)
– Increased provisioning of certain stock and debtors – (13)
– Retrenchment costs (2) (1)
(3) (29)
Assets and liabilities of discontinued operations
classified as held for sale
Non-current assets 6
Current assets 156
Non-current liabilities 9
Current liabilities 32
Cash flow information
Net cash flows from operations 16 73
Taxation paid 3 (1)
Net cash flows from operating activities 19 72
Net cash flows from investing activities (66) (29)
Net cash flows from financing activities 32 2
Foreign operations translation adjustment (1) (1)
Cash flows from discontinued operations (16) 44
COMMENTARY
WHAT WE HAVE ACHIEVED SINCE JANUARY 2013
1. Strengthened core businesses through cost-reduction and strategic, earnings-enhancing
acquisitions.
2. Invested back into the newsrooms, strengthened content, provided training and brought in
new talent.
3. Reduced cost base in order to align it with the size of the business.
4. Reduced head office and refocused it towards capital allocation, performance accountability and
driving the business.
5. Acquired the balance of BDFM we didn't own, integrated it into our media division and brought it
back to profitability.
6. Sold off non-core businesses for fair value.
7. Implemented a group-wide long-term incentive and retention scheme to drive the Group's success.
8. Made inroads into diversifying out of South Africa and into other media including mobile, radio,
television and broadcasting, and creating a variety of platforms to monetise our content (news,
film and music).
9. Reduced acquisition finance by 74% by enhancing cash flow, reducing costs and applying sales
proceeds of non-core businesses.
10. Moved from a level 4 BEE rating to a level 3.
INTRODUCTION
The period under review has been an eventful one for TMG. We concluded the disposals of I-Net Bridge,
Random House Struik, Van Schaik Bookstore, Exclusive Books, Mega Digital and Nu Metro Cinemas, while
acquiring several new businesses. We continued our diversification into the broadcast medium, capitalising
on the Group's powerful content base. Notably, we reduced our acquisition debt from R698 million to
R338 million as at the reporting date and to R298 million at the end of January 2014, through increased
cash flow from operational efficiencies and proceeds from the disposal of non-core assets.
The six months to December 2013 has been a difficult trading period across the board for TMG.
The Media division performed above expectations, while the financial results for Retail Solutions were
behind the comparable period due to the closure of the web printing division. Our operating costs have
been reduced, and cash flow enhanced as a result of cost-reduction exercises.
Home Entertainment and Gallo Records were both successfully turned around after being loss-makers
for a number of years.
We have been able to increase our print media business market share by sales innovation and
investment in skills. Although market conditions are difficult, tight cost controls and stable circulation
numbers have enabled our newspapers to maintain last year's profit levels. All our newspapers are
profitable and produce steady cash flow. Newspapers are also very operationally leveraged, and any
pick-up in economic growth in South Africa should benefit newspapers.
Several new sales initiatives have been successful. We believe it is still possible to reduce operating
costs in the Media division further, and we have embarked on several initiatives.
Multimedia Ghana has performed above expectations and we are excited about prospects in
West African markets. TMG has been working closely with the management of Multimedia, and the
relationship is going from strength to strength.
For historical reasons, TMG has faced large contingent liabilities from post-retirement medical aid and
long-term leases from Exclusive Books and Nu Metro Cinemas. We have worked hard to strengthen the
balance sheet of TMG by reducing these liabilities.
During the next six months, we move our broadcast (TV and radio), films, music and certain digital
businesses into a new division, reflecting our increased investment and focus in the broadcast and
content arena. The broader nature of our business compels us to work across various media platforms,
especially for advertising sales.
FINANCIAL REVIEW
Financial highlights include a further sizeable reduction in TMG's term debt to R298 million by January
2014, and our Media division's strong performance, with profit from operations before exceptional
items lifted 12% to R112 million.
Operating costs from continuing operations reduced by 18% on the back of aggressive overhead cuts.
The Company's new share incentive scheme resulted in a R12 million charge to the income statement
for the six months under review.
Finance costs reduced from R47 million to R34 million, benefiting from reduced borrowing levels and
from gains realised from the full unwinding of the Group's cash flow hedges.
The exceptional items are set out in note 2 of the consolidated financial results. Further detail regarding
the post-retirement medical aid gain is provided below.
TMG's share of Multimedia Ghana's profit totals R6 million, and is included in share of profits of
associates.
Discontinued operations contributed R257 million after-tax profit, R233 million from profits on
disposals of non-core assets, and the balance of R24 million from trading.
Net cash flows from operations grew 15% over the comparative period indicating continued tight
management of the Group's cash resources.
BUSINESS REVIEW
MEDIA
This includes our newspapers, Sunday Times, Sowetan, Business Day, The Times, Daily Dispatch,
The Herald, Financial Mail, TM Live (digital platforms: BDLive, Sowetan Live, Times Live, etc), magazine
division, TV channel and production business.
The Media division achieved double-digit EBITDA growth during tough trading conditions and was
ahead of the comparable period.
Star performers were TM Live and the broadcast operations, which enjoyed record growth on the back
of sharply increased revenues. TM Live delivered an EBITDA growth of 236% while Broadcast profits
grew by 580%. Our Magazine operation enjoyed an EBITDA growth of 70%, mainly from new titles
delivered to our vast TMG subscriber base.
Newspaper revenue was flat, but profit margins were maintained by reducing cost of sales and overhead
increases below those of last year. Restructuring our wholly-owned BDFM unit has been difficult, but
we have returned it to profitability. Media's half-year figures include retrenchment costs of R5 million.
The circulation of all our newspaper titles has been steady, with The Times again bucking the downward
trend currently experienced by our competitors. The Times is recording consistent circulation growth,
firmly establishing itself as the largest quality daily newspaper in the country.
Our journalists have also distinguished themselves by winning numerous awards. Most prominent
among these was the Sunday Times investigations unit which claimed the prestigious international
Global Shining Light award for its investigation into the Cato Manor death squads. The same team
of journalists won the overall Vodacom Journalism award for an exposé that led to the dismissal of
communications minister Dina Pule. Our Eastern Cape title, Daily Dispatch, brought home some
silverware by winning the CNN African Journalist of the Year award.
The media sales department received the 2013 MOST award for the best newspaper sales team.
Digital
With the shift to digital, one must bear in mind that there is no silver bullet. What works in one market
may not work in another, but it is easier to build a good digital offering off a well-developed brand and
readership base. At TMG, we have successful, profitable newspapers. An established print audience
is not easily converted to digital. Internationally, newspapers still make most of their profits from
physical newspapers as opposed to their digital offering. However, at TMG, we recognise the shift and
we are investing in digital to build our core sites for the future and tailoring our offering to fit the wants
and needs of the consumer base.
BROADCASTING AND CONTENT
Broadcasting and Content will become a separate division, housing the following operations: Rise
FM (formerly M-Power), Vuma FM, African Business Channel (Home Channel, Business Day TV, Ignition),
Ochre Moving Pictures, Multimedia Ghana, content (music, films and TV shows) and Times Media Mobile.
Our South African television businesses, Ochre and African Business Channel ("ABC"), both produced
strong revenue gains in the six-month period, delivering 90% year-on-year revenue growth and a
580% increase in EBITDA, to R10 million.
ABC, which owns Business Day TV, Home Channel and Ignition, profited on the back of strong
advertising sales growth – the result of investing in relevant content and the support of a strong sales
team. ABC is uniquely positioned as the largest independent television channel owner in the country
and recently expanded its offering to provide three hours a day of prime-time programming on Soweto
TV in a slot called "Hola".
Ochre, a leading television production company, benefited from a steady stream of contracted
production and the inclusion of certain new shows, including Takalani Sesame.
TMG is investing in new studios and production facilities in Rosebank to cater for the increased
programming and throughput at ABC and Ochre. Both businesses are well positioned to benefit from the
expanding and rapidly changing television broadcast market. Coupled with TMG's Ghanaian television
investment, Multi TV, they offer a strong base from which to develop our television interests further.
TMG's 32,3% investment in Ghana's Multimedia Group ("MGL") has performed exceptionally well since
it was acquired for R144 million in September 2013.
Founded in 1995, the firm owns six radio stations, a multi-channel satellite television service, three
online media sites, and a marketing and events company. While Ghana's economy was hampered in
2013 by a drawn-out challenge to presidential election results, it still produced GDP growth of 8%,
which is expected to be at least matched in 2014.
MGL produced 32% growth in revenue in the local currency (Ghana cedi) in 2013, driven by a 21%
growth in radio and a 113% increase in television revenues. Total 2013 revenues in rand terms were
R146 million. The strong operational performance was supported by TMG's investment, which was
used to eliminate crippling debt in the business. MGL produced a R36 million turnaround in EBIT,
before exceptionals, to post full-year profits of R23 million.
Costs associated with the acquisition and interest expenses reduced this to a marginal profit for the
year, but these will not carry forward into the new financial year. Radio posted earnings of R43 million,
and TV a loss of R20 million despite recording a maiden profit in December 2013.
Prospects for the business remain good, driven by the strong positioning of MGL's radio business and
the on-going turnaround in TV. The country also shows strong growth in media spend on the whole.
In December 2013, we acquired 65% of M-Power FM, based in Mpumalanga. We rebranded it Rise FM
and re-launched the station on 3 March 2014.
SALES
As TMG enters a new era with multiple new-media acquisitions, fundamental changes need to be made
in how we interact with the advertising industry and our clients, from a sales perspective.
Cross-media selling will be essential. Advertisers are looking for cleverly packaged solutions that
reach consumers across diverse media platforms, at competitive rates. This is particularly relevant for
advertisers that target specific audiences and require access to the business market, or the emerging
or mass markets through our TV, radio, print and digital media footprints through a single solution
provider like TMG.
Our sales teams will be trained on the various media platforms, and in-house product champions will
be appointed to assist within each media type, ensuring advertisers receive optimised services, costing
and insights.
To co-ordinate this process, a group sales director has been appointed to drive business across all
the platforms, maximising co-evolution, and ensuring clients receive benefits aligned to their strategic
requirements.
RETAIL SOLUTIONS
Retail Solutions comprises Uniprint and Hirt and Carter.
The results of Retail Solutions are not comparable to the prior period due to the closure of the web
printing division that, in the six months to December 2012, contributed R26 million to operating profit
based on the Trudon white and yellow pages printing contract. Hirt and Carter was slightly ahead
of 2012 and Uniprint's remaining operations performed very well. During the period, we concluded
two acquisitions for Hirt and Carter, namely Bates Printing in Cape Town and Typesetting and Repro
Services in Johannesburg. Both acquisitions add critical mass to the respective regions and will be
earnings-enhancing for the Group.
Uniprint
Uniprint has undergone certain changes with the closure of the web printing division and disposal of
its assets, after the loss of the contract for the printing of the white and yellow pages directories for
Trudon. The web printing division was closed in August 2013 and, therefore, this commentary only
covers the activities of the remaining operating divisions of Uniprint, namely:
- Forms and Direct Mail
- Labels
- Packaging.
These divisions performed extremely well and achieved a turnover of R223 million compared to last
year of R192 million, representing an increase of 16%.
Uniprint's turnover was boosted by its success in the export market, where it secured election work
in Guinea, Mozambique and Bangladesh. These export contracts contributed R39 million to turnover.
In the previous year, Uniprint recorded no turnover from the export market. In addition, Uniprint
successfully executed a high-profile project for Coca-Cola, printing personalised labels for the 500ml
Coke bottle.
Margins remained under pressure due to the depreciation of the rand and depressed state of the
economy, making it difficult to pass on cost increases to customers. The focus within Uniprint was
therefore to manage costs more effectively and boost productivity and efficiency in the factory.
As a result, Uniprint's remaining divisions achieved an EBITDA of R27 million compared to R19 million
for the previous year.
Efforts are being made to increase the scale of Uniprint through select acquisitions as well as organic
growth. Uniprint recently acquired, subject to certain conditions, a small labels business, which we
believe will be earnings-enhancing, and will increase the scale and profitability of our labels business.
Hirt and Carter
The six months to December 2013 delivered top-line turnover of R502 million, 11% above the prior
year. The depreciation of the Rand against major currencies reduced margins by a percentage point as
we were not able to pass these cost increases on to our customers.
Overhead cost reduction remains an ongoing focus. Overheads grew by 5,3% for the period, including
once-off restructuring costs and relocation expenses from the moves of the Gauteng and Cape Town
operations. We continue to drive efficiencies throughout the business to reduce costs and mitigate
margin pressure.
At EBITDA level, Hirt and Carter delivered R73 million for the six-month period, which is in line with
the prior year. During the period, Hirt and Carter also concluded two acquisitions. These did not
contribute meaningfully to results over the period, but we expect them to have a positive effect over
the next six months.
Hirt and Carter, at its core, is a software business as opposed to a pure print-centric company. It is
our intention to grow and develop the software solutions side of the business. To achieve this we
have created a separate software company under the Hirt and Carter brand, with a revenue model
for software as a stand-alone entity. This will ensure that the investment, development and focus on
software continues, as a separate company away from the print mindset. Software solutions remain
the core driver of Hirt and Carter, and will underpin the unique offering that the business brings to
the market.
POSTRETIREMENT MEDICAL AID
TMG accounted for a post-retirement medical aid liability of R273 million at 30 June 2013. Subsequent
to its 2013 year-end, the Company offered a voluntary buyout to relevant Group employees and retirees.
In addition, the Company's post-retirement medical aid subsidy was not increased on 1 January 2014.
The assumptions used for the 31 December 2013 actuarial valuation of the post-retirement medical
aid liability were reviewed and the resultant liability at 31 December 2013 was actuarially valued at
R87 million. It is our intention to reduce this liability further over time.
TRANSFORMATION
TMG was the first broad-based transformative empowerment deal in the media sector where the
National Empowerment Consortium acquired 35% and management control of TMG in 1996. While
much has been reported about transformation in the media industry, TMG remains committed to
transformation, as evidenced by our B-BBEE recognition level that we have improved from a level four
to a level three contributor.
EVENTS AFTER THE REPORTING DATE
On 30 January 2014, TMG acquired a 60% interest in Vuma FM, a gospel and inspirational format
commercial radio broadcaster based in Umhlanga, KwaZulu-Natal.
On 20 February 2014, TMG acquired 50% of Smartcall Technology Solutions ("STS"). STS is a mobile
wireless application service provider founded and run by a well-known telecoms entrepreneur. STS is
very profitable and will be renamed Times Media Mobile. STS was acquired to give TMG access to
mobile development and marketing skills as well as the mobile platform and various licences it holds.
DIVIDEND
Notice is hereby given that a maiden interim dividend of 25 cents per ordinary share has been declared
by the directors for the six months ended 31 December 2013, and is payable to shareholders recorded
in the register of members of the Company at the close of business on Friday, 11 April 2014.
In compliance with the requirements of Strate, the electronic settlement and custody system used by
the JSE Limited, the following salient dates are applicable for the payment of the dividend:
Last day to trade cum dividend Friday, 4 April 2014
Shares commence trading ex dividend Monday, 7 April 2014
Record date Friday, 11 April 2014
Payment date Monday, 14 April 2014
Share certificates may not be dematerialised or rematerialised between Monday, 7 April 2014 and
Friday, 11 April 2014, both days inclusive.
The gross dividend of 25 cents per ordinary share has been declared from income reserves. The dividend
withholding tax rate is 15%. No secondary tax on companies credits have been used. The net dividend
amount payable to shareholders not exempt from dividend withholding tax is 21,25 cents per ordinary
share. TMG currently has 127 077 145 ordinary shares in issue. TMG's income tax reference number is
9010/105/19/6. Deloitte & Touche is the Company's independent external auditor and Mr JAR Welch
is the designated audit partner.
OUTLOOK
TMG has been a business in transition. We have now achieved a lot of our repositioning and refocus in a
project that we began in 2013. We have gone from owning no radio stations at the beginning of 2013 to
now having exposure to over 8 stations throughout Africa. We are similarly building a strong television
presence across the continent. TMG has a strong balance sheet and we are in the process of concluding
further acquisitions in Africa which will provide the building blocks for our future growth ambitions
and will give us reach throughout Africa's fast growing regions. The business environment in South
Africa remains difficult but continues to provide selected opportunities. The broader African market
offers exciting opportunities in broadcast sectors showing double-digit growth.
THANK YOU
Thank you to our fellow board members for their support, and to the management team and all TMG
staff for their hard work and commitment to building and growing our Group.
For and on behalf of the board
KD Dlamini AD Bonamour
Chairman Chief Executive Officer
Rosebank
19 March 2014
Directors
KD Dlamini (Chairman)
AD Bonamour* (Chief Executive Officer)
W Marshall-Smith* (Financial Director)
JHW Hawinkels
HK Mehta
R Naidoo
MM Nhlanhla
MSM Xayiya
*Executive
Company secretary
JR 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
Date: 19/03/2014 12:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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