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 Times Media Group Ltd HY 2014 results
 

Times Media Group Ltd HY 2014 results

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Times Media Group Ltd HY 2014 results

Times Media Group Ltd HY 2014 results

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     Times Media Group Ltd HY 2014 results Times Media Group Ltd HY 2014 results Document Transcript

    • UNAUDITED CONDENSED CONSOLIDATED GROUP FINANCIAL RESULTS for the six months ended 31 December 2013 Condensed consolidated statement of changes in equity Stated capital Other reserves Accumulated profits Owners’ interest Non- controlling interest Total 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 profit or loss and other comprehensive income Six months Six months ended ended 31 December 2013 31 December 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 2013 31 December 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 2013 31 December 2012 30 June 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 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 2013 31 December 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 2013 31 December 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) 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”) • 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
    • Six months Six months ended ended 31 December 2013 31 December 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. Implementedagroup-widelong-termincentiveandretentionschemetodrivetheGroup’ssuccess. 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. Newspaperrevenuewasflat,butprofitmarginsweremaintainedbyreducingcostofsalesandoverhead 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. Thegrossdividendof25centsperordinarysharehasbeendeclaredfromincomereserves.Thedividend 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