TIMES Media Group (TMG) is not looking to eliminate its debt and is considering paying a maiden dividend‚ a move that could push up the return on equity and help shareholders get a better return on their investment‚ CEO Andrew Bonamour said on Friday following the release of its results for the year ended June.
TMG‚ the owner of Sunday Times‚ Business Day and Financial Mail‚ has cut its debt by R452m to R698m over the past year. The group incurred debt of about R1.1bn following the reverse acquisition of Avusa.
"I am going to keep R300m of debt because it’s good for return on equity. It’s good to have some leverage‚” Mr Bonamour said.
"We have to generate a good return on investments.”
TMG will get some cash from the R115m sale of I-Net Bridge and more than R400m from the disposal of Exclusive Books and Van Schaik. The company‚ which is looking to sell Nu Metro cinemas‚ hoped to close a deal with a preferred bidder in the next few weeks‚ Mr Bonamour said.
Some of the proceeds will be used to reduce the debt from the R698m level and the rest will go towards the company’s war chest.
TMG has ambitions to broaden its broadcast offering in South Africa‚ but making an acquisition could prove difficult. On September 12 the company acquired a 32.26% interest in Ghana radio and television group Multimedia for R144m.
TMG posted a 48% fall in diluted headline earnings per share to 17c in the year‚ due to exceptional charges. The one-off items included the write-offs in its entertainment business‚ which had impairments of more than R100m including gaming stock‚ retrenchment costs and an impairment of a software system.
The media division‚ which includes Sunday Times‚ Sowetan and The Times‚ had retrenchment costs of R8m in the year‚ and BDFM‚ the publisher of Business Day and Financial Mail‚ had retrenchment costs of R10m.
Retail Solutions‚ whose businesses are Uniprint and Hirt & Carter‚ had retrenchment costs of R8m‚ while the entertainment division had retrenchment costs of R19m.
The reverse acquisition and listing of Avusa into TMG cost about R62m.
TMG said it had cut its cost base by about R100m through the reduction of nonessential expenses‚ and would spend R10m strengthening editorial skills and improving the quality of the content in its newsrooms.
In the year the media division was the biggest contributor to profit. Its operating profit rose 58% to R171m.
BDFM‚ the finance news division of TMG‚ remained loss-making‚ with the loss narrowing marginally to R7m from R8m. © BDlive 2013