Wrap Text
Unaudited Condensed Consolidated Group Financial Results for the six months ended 31 December 2014
TIMES MEDIA GROUP LIMITED
Incorporated in the Republic of South Africa
Registration number: 2008/009392/06
Share code: TMG ISIN: ZAE000169272
("Times Media Group" or "Times Media" or "TMG" or "the Company" or "the Group")
UNAUDITED
CONDENSED CONSOLIDATED
GROUP FINANCIAL RESULTS
for the six months ended 31 December 2014
HIGHLIGHTS
- TMG now has a footprint in East and West Africa through Kenya and Ghana
- TMG has exposure to 16 radio stations throughout Africa
- Kenya radio achieved a record profit for the 6 month period
- 3 out of 7 newspapers grew circulation
- TMG's Media Division increased market share of advertising spend
- Digital business growing and profitable
- All print newspapers are profitable
- Moved up to a level 2 BEE contributor with value add
Condensed consolidated statement of profit or loss
and other comprehensive income
Six months Six months
ended ended
31 December 3 1 December
2014 2013
Rm Rm
CONTINUING OPERATIONS
Revenue 2 108 2 092
Cost of sales (1 530) (1 530)
Gross profit 578 562
Operating expenses (406) (391)
Operating costs (339) (330)
Depreciation (40) (34)
Amortisation (17) (15)
Share-based payments (10) (12)
Profit from operations before exceptional items 172 171
Exceptional items (28) 155
Profit from operations 144 326
Net finance costs (21) (22)
Finance income 1 12
Finance costs including interest paid
on cash flow hedges (22) (34)
Share of (losses) profits of associates
and joint ventures (net of income tax) (5) 6
Profit before taxation 118 310
Taxation (38) (89)
Profit from continuing operations 80 221
DISCONTINUED OPERATIONS
Profit from discontinued operations 20 257
(Loss) profit after taxation before profit on disposals (25) 24
Profit on disposals (net of capital gains tax) 45 233
Profit for the period 100 478
Other comprehensive income (loss)
Items that may be reclassified subsequently
to profit or loss
Change in fair value of cash flow hedges
(net of income tax) – (8)
Exchange differences on translation of
foreign operations 1 (4)
Other comprehensive income (loss) for the
period (net of income tax) 1 (12)
Total comprehensive income for the period 101 466
Profit (loss) attributable to:
Owners of the Company 104 476
Profit from continuing operations 84 218
Profit from discontinued operations 20 258
Non-controlling interest (4) 2
(Loss) profit from continuing operations (4) 3
(Loss) profit from discontinued operations – (1)
Profit for the period 100 478
Total comprehensive income (loss) attributable to:
Owners of the Company 105 464
Profit from continuing operations 85 212
Profit from discontinued operations 20 252
Non-controlling interest (4) 2
(Loss) profit from continuing operations (4) 3
(Loss) profit from discontinued operations – (1)
Total comprehensive income for the period 101 466
Earnings per ordinary share
from continuing operations
Basic (cents) 66 172
Diluted (cents) 66 171
Earnings per ordinary share
from discontinued operations
Basic (cents) 16 203
Diluted (cents) 15 202
Earnings per ordinary share from
continuing and discontinued operations
Basic (cents) 82 375
Diluted (cents) 81 373
Condensed consolidated statement of financial position
As at As at As at
31 December 31 December 30 June
2014 2013 2014
Rm Rm Rm
ASSETS
Non-current assets 1 740 1 565 1 669
Property, plant and equipment 374 379 380
Intangible assets 865 879 821
Interests in associates and joint
ventures 416 174 376
Investments – 10 2
Long-term receivable – 8 8
Deferred taxation assets 85 115 82
Current assets 1 203 1 526 1 249
Inventories, receivables and
other current assets 1 162 1 390 1 202
Bank balances, deposits and cash 41 136 47
Non-current assets classified
as held for sale 95 162 203
Total assets 3 038 3 253 3 121
EQUITY AND LIABILITIES
Total equity 1 564 1 643 1 528
Equity attributable to owners
of the Company 1 570 1 638 1 528
Non-controlling interest (6) 5 –
Non-current liabilities 506 528 514
Long-term borrowings 352 385 366
Post-retirement benefits liabilities 87 78 85
Operating leases equalisation liabilities 29 22 24
Deferred taxation liabilities 38 43 39
Current liabilities 956 1 041 1 047
Payables and other current liabilities 870 963 947
Short-term borrowings 63 66 48
Post-retirement benefits liabilities 9 9 9
Bank overdrafts 14 3 43
Liabilities directly associated with
non-current assets classified as
held for sale 12 41 32
Total equity and liabilities 3 038 3 253 3 121
Condensed consolidated segmental statement
Six months Six months
ended ended
31 December 31 December
2014 2013
Rm Rm
CONTINUING OPERATIONS
Segmental revenue from external customers
Media 968 1 012
Broadcasting and Content 205 213
Retail Solutions 935 867
2 108 2 092
Segmental profit (loss) from operations before
exceptional items
Media 91 90
Broadcasting and Content 11 24
Retail Solutions 101 86
203 200
Corporate (21) (17)
182 183
Share-based payments (10) (12)
172 171
Condensed consolidated statement of cash flows
Six months Six months
ended ended
31 December 31 December
2014 2013
Rm Rm
Net cash flows from operations 169 210
Net finance costs including interest paid
on cash flow hedges (21) (21)
Taxation paid (33) (33)
Net cash flows from operating activities 115 156
Net cash flows from investing activities (36) 233
Net cash flows from financing activities (52) (267)
Net increase in cash and cash equivalents 27 122
Cash and cash equivalents at the beginning of the period 40 59
Foreign operations translation adjustment – (1)
Cash and cash equivalents at the end of the period 67 180
Condensed consolidated statement of changes in equity
Non-
Share Other Accumulated Owners' controlling Total
capital reserves profits interest interest equity
Rm Rm Rm Rm Rm Rm
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
Change in fair value of cash flow hedges (net of income tax) – (8) – (8) – (8)
Exchange differences on translation of foreign operations – (4) – (4) – (4)
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
Balance at 30 June 2014 1 724 (1 135) 939 1 528 – 1 528
Profit (loss) attributable to owners of the Company – – 104 104 (4) 100
Effect of acquisitions and disposals – (20) – (20) – (20)
Effect of acquisitions and disposals of non-controlling interests – (8) – (8) (2) (10)
Equity-settled share incentive plans – 10 – 10 – 10
Dividends paid – – (44) (44) – (44)
Balance at 31 December 2014 1 724 (1 153) 999 1 570 (6) 1 564
Notes
1. Basis of preparation
The unaudited condensed consolidated Group financial results for the six
months ended 31 December 2014 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
No 71 of 2008 (as amended). The accounting policies are compliant with
IFRS, and their application is consistent, in all material respects, with those
detailed in TMG's 2014 integrated annual report, apart from the adoption,
from 1 July 2014 up to the reporting date, of those new and amended IFRS
statements and interpretations with effective dates for the Company of 1
July 2014 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 2014 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.
In compliance with 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
2014 2013
Rm Rm
2. Exceptional items
CONTINUING OPERATIONS
Media
– Retrenchment costs (10) (5)
Broadcasting and Content – (5)
– Gain on disposal of Ponte advertising site – 11
– Impairment of goodwill – (16)
Retail Solutions (11) (3)
– Profit on sale of Universal Web assets – 8
– Costs related to closure of Universal Web (3) (3)
– Costs related to Ferroprint acquisition (1) –
– Costs related to closure of businesses (1) –
– Legacy balances and legal matters (2) –
– Retrenchment costs (4) (8)
Corporate (7) 168
– Revaluation of listed investments – 1
– Profit on disposal of listed investments – 1
– Post-retirement medical aid (6) 169
– Costs related to acquisitions – (2)
– Retrenchment costs (1) (1)
(28) 155
3. Reconciliation between earnings
and headline earnings
CONTINUING OPERATIONS
Earnings 84 218
Profit on disposal of property, plant
and equipment – (8)
Profit on disposal of intangible assets – (10)
Impairment of goodwill – 16
Revaluation of listed investments – (1)
Profit on disposal of listed investments – (1)
Tax effect – 6
Attributable to non-controlling interest – –
Headline earnings 84 220
Headline earnings per ordinary share
from continuing operations
Basic (cents) 66 173
Diluted (cents) 66 172
DISCONTINUED OPERATIONS
Earnings 20 258
Profit on disposal of interests in companies
and businesses – (259)
Loss on disposal of property, plant and equipment – 2
Profit on disposal of properties (51) (9)
Impairment of intangible assets 25 1
Tax effect 7 36
Attributable to non-controlling interest – –
Headline earnings 1 29
Total headline earnings from continuing
and discontinued operations 85 249
Headline earnings per ordinary share
from discontinued operations
Basic (cents) 1 23
Diluted (cents) 1 23
Headline earnings per ordinary share from
continuing and discontinued operations
Basic (cents) 67 196
Diluted (cents) 67 195
4. Earnings per ordinary share
The calculation of basic earnings and headline earnings per ordinary
share for the six months ended 31 December 2014 is based on earnings of
R104 million (2013: R476 million) and headline earnings of R85 million
(2013: R249 million), respectively, and on a weighted average of 126 470 412
ordinary shares in issue (2013: 127 047 179 shares).
The calculation of diluted earnings and headline earnings per ordinary
share for the six months ended 31 December 2014 is based on earnings of
R104 million (2013: R476 million) and headline earnings of R85 million (2013:
R249 million), respectively, and on a weighted average of 128 018 541 diluted
ordinary shares in issue (2013: 127 526 675 shares). The additional diluted
ordinary shares arise as a result of equity-settled share incentives in issue.
5. Discontinued operations
The following assets comprise TMG's discontinued operations:
Media
- Industria property (disposed of on 26 September 2014)
- I-Net Bridge (disposed of on 15 November 2013)
- East London properties (disposed of on 10 October 2013)
- Port Elizabeth property
Broadcasting and Content
- Boo Media (disposed of on 1 May 2014)
- Interactive Junction Holdings (disposed of on 6 January 2015)
Retail Solutions
- Bedfordview property (disposed of on 13 August 2014)
Books
- Van Schaik Bookstore (disposed of on 2 December 2013)
- Exclusive Books (disposed of on 1 December 2013)
- New Holland Publishing (Lovell Johns disposed of on 1 November 2014,
New Holland Publishing Australia and New Zealand disposed of on
1 July 2014, Map Studio disposed of on 30 June 2014, Random House
Struik disposed of on 25 November 2013, Mega Digital disposed of on
1 November 2013 and Struik Christian Media disposed of on 29 July 2013)
Entertainment
- Nu Metro Cinemas including Popcorn Cinema Advertising Sales
(disposed of on 28 November 2013)
- 40% interest in Warner Music Gallo Africa (disposed of on 31 July 2013)
Six months Six months
ended ended
31 December 31 December
2014 2013
Rm Rm
Revenue 62 818
Cost of sales (7) (425)
Gross profit 55 393
Operating expenses (54) (363)
Operating costs (51) (340)
Depreciation (1) (19)
Amortisation (2) (4)
Profit from operations before
exceptional items 1 30
Exceptional items (27) (3)
(Loss) profit from operations (26) 27
Net finance costs – 1
Finance income – 2
Finance costs – (1)
Share of profits of associates (net of income tax) – 1
(Loss) profit before taxation (26) 29
Taxation 1 (5)
(Loss) profit after taxation before
profit on disposals (25) 24
Profit on disposals (net of capital gains tax) 45 233
Profit on disposal of properties 51 9
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
and Popcorn Cinema Advertising Sales – (15)
Capital gains tax (6) (35)
Profit from discontinued operations 20 257
Segmental revenue from external customers
Media – 54
Broadcasting and Content 29 50
Books 33 577
Entertainment – 137
62 818
Segmental profit (loss) from operations
before exceptional items
Media – (1)
Broadcasting and Content – (1)
Books 1 31
Entertainment – 1
1 30
Segmental exceptional items
Broadcasting and Content (27) –
– Impairment of goodwill (25) –
– Costs relating to disposal of businesses (1) –
– Retrenchment costs (1) –
Books – (3)
– Impairment of Exclusives.co.za – (1)
– Retrenchment costs – (2)
(27) (3)
Assets and liabilities of discontinued
operations classified as held for sale
Non-current assets 20 6
Current assets 75 156
Non-current liabilities 3 9
Current liabilities 9 32
Cash flow information
Net cash flows from operations 4 19
Interest received – 1
Taxation refunded – 3
Net cash flows from operating activities 4 23
Net cash flows from investing activities 75 (71)
Net cash flows from financing activities (10) 35
Foreign operations translation adjustment – (1)
Cash flows from discontinued operations 69 (14)
Commentary
INTRODUCTION
The trading conditions for the six months ended December 2014 were challenging
across our Group's divisions. Despite this, TMG managed to hold operating profit
steady. We have done a lot of work across divisions and companies to align our cost
base with revenue as well as invest in areas where we believe we can generate good
returns on our capital. Last year we began cleaning up some legacy issues in our Media
Division and during this period we continued with these initiatives. Our intention is to
take unnecessary expenses and costs out of Media so that we can strengthen our core
operations which are good at content generation. We are reticent to follow the herd
in a digital strategy that has no possibility of generating a return on investment. Our
approach is measured and commercially driven.
Our investment in Kenya has surpassed our expectations and has had a record six
months driven by a strong management team and a robust radio advertising market,
while Ghana's tough macroeconomic environment has affected the consumer and had
a knock on effect on our investment. Television operations continue to struggle in the
country but radio remains less affected by the downturn. The Cedi has devalued by
some 19% against the Rand over calendar 2014 which hasn't helped.
Group turnover from continuing operations was R2,108 billion and operating profit
before exceptional items from continuing operations was R172 million.
We have begun looking at our businesses' processes, cash flow generation, general
efficiencies and other pertinent areas across the Group which is already yielding
results.
MEDIA
Profits from our Media Division remained steady despite revenue falling by 4%.
(Advertising in the corresponding six months was unusually high because it included
spend associated with the death of Nelson Mandela). Despite the decline we continued
to grow our advertising market share at the expense of our main competitors. In total
we have grown market share by three percentage points over the past three years.
EBITDA for the period was R102 million (2013: R100 million), despite R10 million in
retrenchment costs and a decline in turnover for the period under review. Depreciation
was higher than usual due to increased investment in IT.
Three of our titles (The Times, the Sowetan and Daily Dispatch) were amongst the
five dailies to grow circulation while most other competitors' titles suffered steep
declines. The Times in particular has cemented its position as the biggest quality daily
paper in the all-important Johannesburg market. The circulation of the rest of the titles
was steady. All TMG newspaper individual titles were profitable for the period and
continue to be. We have also maintained margins for all the newspaper titles. We also
managed to turn Financial Mail around which registered a profit for the six month
period and continues to trade profitably. Since TMG has owned 100% of Business Day
we have seen a remarkable recovery and the title now trades very profitably.
Our magazine division continued to enjoy robust profit growth primarily due to the
launch of new titles targeted at our existing newspaper subscribers. As a result of
the success achieved by Wanted (Business Day) and Business Class (Sunday Times)
we plan to launch a series of new titles in the next six months. The first of these, a
fashion magazine (The Edit) which will be inserted into the Sunday Times is attracting
strong support from advertisers seeking a new home following the collapse in sales of
women's consumer magazines. SA Homeowner grew its sales by 4,5% at a time when
consumer magazines as a whole experienced a 4% decline.
Our digital division grew revenue by 30% on the back of a 59% growth in unique
browsers across our network. TMG now attracts over 6 million unique browsers. Our
premier site, TimesLive, grew by more than 300% year-on-year and in the period
under review became the second largest news website in SA fast closing in on the top
news site. We are in the process of upgrading our editorial system to enable our staff to
work seamlessly between print, mobile and internet.
During the period we also launched Rand Daily Mail online which has quickly become
very popular with audiences having grown to over 219 000 unique browsers in
February 2015, a growth of 472% over the previous month. Rand Daily Mail has quickly
become a leader in the opinion segment of journalism. Further Times Media digital
properties are in the pipeline. Our digital is run on strictly commercial considerations,
which means we only invest capital if we can generate an adequate return. As a result,
our digital division is profitable and growing.
We are constantly reviewing our operations and in the period under review had one-
off retrenchment costs of R10 million.
BROADCASTING AND CONTENT
Our Broadcast and Content Division ("B&C") is our newest division, and in its growth
phase where we have invested capital and time in order to achieve our objectives. B&C
comprises businesses in South Africa and across the African continent. Profitability in
South Africa is lower overall as a result of investment in certain early stage businesses
such as radio and reinvestment in our TV assets, but core divisional revenues were
steady despite soft advertising markets. As a result of investment costs the division
reported an EBIT decline from continuing operations of R13 million to R11 million.
Revenues were steady or up across all businesses with the exception of TV production,
which is by nature highly cyclical, and our non-core outdoor assets. Whilst in its early
stages, the division represents TMG's core medium to long term growth opportunity.
Our businesses outside of South Africa and joint ventures are reported under share of
associates and joint ventures and not in the B&C segmental income statement.
The division comprises:
- Radio Africa Group (Kenya)
- MultiMedia (Ghana)
- One Africa (formerly ABC)
- Ochre Moving Pictures
- Vuma FM and Rise FM
- Times Media Films
- Music (Gallo, Bula and Sheer)
- Digital
Rest of Africa
Radio Africa Group ("RAG") in Kenya is the leading independent radio business in
Kenya and owns three of the top five radio stations in Nairobi: Jambo, Classic and Kiss.
RAG also owns the Star newspaper and TV platform, Bamba TV. RAG delivered record
earnings for the first half performance driven by radio (RAG EBITDA was R32 million
for the 6 month period, being a growth of 14%). The Star newspaper is relatively small
but profitable. Bamba TV is a free-to-air Digital Terrestrial Television ("DTT") platform
that launched in December 2014 as Kenya switched over to a new DTT broadcast
environment. TMG owns 49% of RAG.
In Ghana, 32% held MultiMedia Group has a strong pedigree as the leading
independent broadcaster in the country. Multimedia's leading radio stations Joy and
Adom command significant audience and advertising market share and its TV platform
Multi TV has over 2 million boxes in homes in Ghana and more across the rest of west
Africa. The business has been hampered by weak macro-economic and advertising
markets but radio has been resilient and boasts a strong established team and loyal
audience. Multi TV remains under pressure in terms of establishing a solid advertising
base and has recently consolidated its positioning to focus on key TV channels where
it has dominant market positions in terms of programming. As an advertising led
business it will rely on an improvement in economic performance in the country.
We are in the final stages of purchasing a significant minority stake in two Ugandan
radio stations and in two separate deals, majority shareholdings in a Namibian
TV station and a radio business. These acquisitions will extend our footprint in Africa
and enhance our radio sales ability across our various stations. TMG now has equity
exposure to 16 radio stations throughout Africa, from none two years ago.
South Africa
Content
Our content businesses are showing growth as increased focus on all rights
ownership and their commercialisation yields results. The films distribution
business, which owns rights to various international and local films which are then
sold into platforms such as theatres, TV and video on demand (VOD), operates in a
fast changing market and has good short to medium term prospects. The business
is committed to investing in local and international production and distribution
to ensure its future sustainability. Our physical home entertainment business is
in managed decline in line with the reduced consumption of DVDs in the market.
The independent film distribution market has become highly competitive with large
dominant players entering the content acquisition market.
Gallo Music is the largest independent music catalogue in South Africa and has been
bolstered by the acquisition of additional music catalogues namely, Bula Music and
Sheer Sound. The acquisitions bring increased scale in terms of music and artists, in
the face of declining physical markets. Digital income continues to build but growth
has yet to match the decline in physical markets. Our music business is in the process
of transforming into a 360 degree offering including events and artist management
with a broad market-wide offering. Our objective is to supply our music content to a
number of different platforms. We believe the music business holds significant value in
the long term if it invests prudently and is commercially focused.
Our TV production business, Ochre Moving Pictures, has built a steady base of
productions from which to grow including Scandal, Takalani Sesame and Eksê.
Ochre has succeeded in pitches for certain new South African shows and continues to
develop innovative programming in a competitive market. Ochre works closely with
our TV channels business, One Africa.
Broadcast
Our local broadcast businesses are either in development phase or are being reinvested
in to deliver a sustainable local broadcast platform. As advertising driven businesses
they are subject to cyclical changes.
One Africa, renamed from ABC, houses three satellite TV channels, namely Business
Day TV, Home Channel and Ignition. It has recently invested in new studios and
extending the Ignition channel to a 24 hour offering. It remains profitable and has good
scope for further growth.
Our radio, Vuma FM and Rise FM, are long term investments as it takes time to
establish listenership and build market share from an audience and revenue
perspective. The unit is an early stage development business with two start up regional
radio stations still establishing a footprint in their markets. Both Durban based Vuma
and Mpumulanga's Rise FM are producing good listenership growth with advertising
revenues beginning to pick up. The radio business has also invested in sales capacity
to service other stations such as 99fm in Namibia and North West FM in Rustenburg
as well as Rise and Vuma.
Digital
50%-owned Smartcall Technology Services ("STS") is showing strong revenue growth
in mobile services, providing products across sub-Saharan Africa. For the 11 months
ended January 2015, STS increased turnover by 36% and EBIT by 58%. The STS
business holds and manages video-on-demand platform VIDI, which remains in early
investment stage. The offering has been well received by the market, but will require
further development of South Africa's broadband infrastructure to reach acceptable
operating levels. VOD services require a depth of content which is expensive to
procure in order to attract and maintain sufficient subscribers. The South African
market is unaccustomed to the VOD model and therefore a consistent customer
education campaign is required to boost take up. VOD has many benefits to consumers
compared to pay and linear TV and is growing in leaps and bounds globally. VIDI is in
effect a movie rental store in your home.
TMG sold its Interactive Junction business to Saon Group in January 2015 as part of the
strategy to dispose of non-core assets. Further smaller sales remain to be finalised but
the balance of the division now forms the core of the Group's growth strategy going
forward.
RETAIL SOLUTIONS
Hirt and Carter ("H&C")
The trading environment for the 6 months to December 2014 for H&C proved
challenging with continued pressure on pricing and margin.
The effect of overall macro-economic influences in the economy has had a specific
bearing on disposable income per capita from a consumer perspective in the retail
sector which is where H&C operates in.
Despite difficult trading conditions H&C grew turnover by 6% with a focus on growth
and development of new accounts whilst delivering service excellence to existing
customers.
For the period EBITDA grew 24% to R90 million from R73 million in the comparative
period partly due to T&R and Bates Printing not being reflected for the full comparative
period. Bates Printing has proved to be an excellent acquisition which has brought a
first class management team into H&C. Initiatives are currently underway to merge
H&C and Bates Printing in Cape Town into a single service operation. The merging of
the two operations will enhance efficiencies and improve earnings in the Cape region.
National focus was placed on the H&C cost base by initiating operating expenses
reviews to align expenditure to the ever changing market conditions and to avoid an
inverted value curve in relation to the revenue base. We were successful in reducing
expenditure by 9% over the period. Much of the savings were derived from re-
structuring initiatives in the Gauteng region. The revised business is geared for growth
and expansion.
A key area of focus has been to improve H&C's return on capital.
The H&C Software Division continues to invest in software development and bespoke
retail system solutions to provide value added services to our customers and to
enhance and assist the communication strategy to customers.
The 30% acquisition in Capacity Holdings provides a platform for an integrated market
solution to enhance digital library content management to our existing and future
customer base. Further investment on software development will grow and expand
the business.
Uniprint
All Uniprint divisions performed well during the six months under review and
achieved a turnover of R306 million compared with the corresponding period last year
of R242 million which represents an increase in turnover of 26%.
Uniprint achieved an EBITDA of R49 million for the period under review compared
with an EBITDA of R31 million for the corresponding period last year, representing an
increase of 58% over the previous year.
Uniprint's increase in operating profit is going to be difficult to maintain at this level
due to the state of the South African economy which has resulted in lower demand
from consumers with the consequence that there is excess capacity in the market. As a
result margins have declined as it has become increasingly difficult to recover cost
increases in a depressed market as a result of a volatile South African Rand against the
US$ and the EURO.
Labels
It has been a very active six months for Uniprint. Uniprint acquired labels business
Ferroprint with effect from 1 June 2014 and the particular focus during the first
6 months was the integration and rationalisation of Ferroprint into Uniprint labels.
Although we still have a way to go we believe we have made good progress in settling
the acquisition and the immediate plans are now to upgrade and improve the
equipment that we acquired.
The Labels Division also secured and commenced execution of the Coke "Connect"
names project for certain east and central African countries in addition to undertaking
the project for the second year in South Africa. This project runs until the end of March
2015.
Exports
During the period under review Uniprint's Export Division was successful in acquiring
an election project for Mozambique which was once off in nature and highly profitable
for Uniprint.
Forms and Direct Mail
The Forms Division has been significantly impacted by the five month strike at the
S A Post Office resulting in several of our major retailers and telcom customers opting
to avoid the use of the post office for delivery of their statements and direct mail to
their customers. This has resulted in Uniprint losing turnover of approximately
R60 million per annum which we perceive to be of a permanent nature. Uniprint will
therefore have to refocus its Forms business to replace the lost turnover. Unfortunately
this will require time and could result in investing in additional capital equipment and
making strategic acquisitions.
Packaging
The Packaging Division was relocated to new premises which offer improved workflow
as well as rationalisation benefits with the Forms Division finished goods warehouse.
Management's focus for the immediate future is as follows:
1. Extract the benefits of the Ferroprint acquisition;
2. Increase our market share in the packaging sector; and
3. Refocus and re-engineer the Forms Division to replace lost turnover due to the
non-functioning of the S A Post Office and consequential rapid migration to digital
technology.
BEE
TMG recently moved up to a level 2 BEE contributor with value add supplier status.
A lot of work has been done in the company on transformation and meeting our
empowerment objectives. TMG remains the original media empowerment transaction
where the National Empowerment Consortium acquired control of Johnnic Holdings
from Anglo American in August 1996.
SCHEME OF ARRANGMENT
Shareholders are reminded of the Blackstar led TMG scheme of arrangement in process as
detailed in the February 2015 circular.
For and on behalf of the board
KD Dlamini AD Bonamour
Chairman Chief Executive Officer
Rosebank
30 March 2015
Directors: KD Dlamini (Chairman), AD Bonamour* (Chief Executive Officer),
W Marshall-Smith* (Financial Director), JHW Hawinkels, HK Mehta, R Naidoo,
MM Nhlanhla *Executive MSM Xayiya resigned with effect from 7 October 2014
Company secretary: JR Matisonn
Email: matisonnj@timesmedia.co.za
Address: 4 Biermann Avenue, Rosebank, 2196, Johannesburg, PO Box 1746,
Saxonwold, 2132
Sponsor: PSG Capital
TIMES MEDIA GROUP LIMITED
Incorporated in the Republic of South Africa
Registration number: 2008/009392/06
Share code: TMG ISIN: ZAE000169272
("Times Media Group" or "Times Media" or "TMG" or "the Company" or "the Group")
These results may be viewed on the internet at www.timesmedia.co.za
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