| Tue 30 Aug 2005, 10:41 | | Primedia - Audited results for the year ended 30 J |
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Primedia - Audited results for the year ended 30 June 05
Primedia Limited
Incorporated in the Republic of South Africa
Registration number 1993/003355/06
Share code PMA ISIN ZAE000035119
Share code PMN ISIN ZAE000035127
(`Primedia` or `the company` or `Primedia Group`)
Audited results for the year ended 30 June 05
HIGHLIGHTS
REVENUE UP 13,0% TO R1,98 BILLION
OPERATING PROFIT BEFORE DEPRECIATION UP 29,0% TO R418,9 MILLION
PBIT UP 34,4% TO R356,2 MILLION
PBIT MARGIN INCREASES FROM 15,1% TO 18,0%
HEADLINE EARNINGS PER SHARE (HEPS) UP BY 39,7% TO 95 CENTS
SHAREHOLDER DISTRIBUTIONS PER SHARE UP BY 40% TO 56 CENTS
CASH GENERATED BY OPERATIONS UP 10,2% TO R389,9 MILLION
FREE CASH FLOW AS PERCENTAGE OF HEADLINE EARNINGS 110% (2004: 178%)
STRATEGIC ACQUISITIONS CONCLUDED
ABRIDGED CONSOLIDATED INCOME STATEMENT
Audited
Audited (restated)
% 2005 2004
change R`000 R`000
Revenue 13,0 1 980 308 1 752 387
Operating profit before depreciation 29,0 418 929 324 700
Depreciation (62 680) (59 662)
Operating profit before
amortisation, foreign
exchange items and
exceptional items (PBIT) 34,4 356 249 265 038
Amortisation of goodwill
and intangibles (4 701) (8 620)
Foreign exchange (losses)/gains (2 101) 1 030
Exceptional items 16 915 23 308
Operating profit 30,5 366 362 280 756
Net finance costs (39 747) (16 462)
Revaluation of interest rate swap (7 518) -
Share of associated companies`
profits/(losses) 457 (331)
Profit before tax 21,1 319 554 263 963
Taxation (86 642) (64 032)
Net profit after tax 16,5 232 912 199 931
Minority interest (17 340) (24 403)
Net profit for the year 22,8 215 572 175 528
Reconciliation of headline earnings
Net profit for the year 215 572 175 528
Goodwill amortisation - 3 874
Net profit on disposal of fixed assets
and investments (206) (8)
Exceptional items: (3 799) (33 236)
- Revaluation/(impairment) of
assets and equity investments 578 (14 203)
- Profit on disposal of
assets and investments (4 057) (9 189)
- Recovery of investments
previously written off (200) (9 844)
- Other costs written back (120) -
Tax effect of non-headline
earnings items 95 1 217
Headline earnings 43,6 211 662 147 375
Number of shares (`000)
- Issued 221 747 216 764
- Weighted average 223 032 216 520
- Diluted weighted average 228 494 225 648
Earnings per share (cents)
- Headline 39,7 95 68
- Basic 19,8 97 81
- Diluted headline 43,1 93 65
- Diluted basic 20,5 94 78
Exceptional items
Headline reconciling items above 3 799 33 236
Revaluation/(impairment) of
assets and investments 19 409 (4 293)
Charitable donations (3 000) -
Other exceptional costs (3 293) (5 635)
Gross exceptional items 16 915 23 308
Change in accounting policy and restatement
The Group has changed its accounting policy with regard to the amortisation of
goodwill in accordance with Statements of Generally Accepted Accounting
Practice. The Group no longer provides amortisation on goodwill, which is now
subject to an annual impairment test. In addition, leases with fixed
determinable escalation clauses are now expensed on a straight-line basis over
the period of the leases as opposed to an incurred basis.
The revised interpretation of the accounting policy with respect to leases has
resulted in a credit to trading income of R3,1 million (2004: R1,2 million),
an increase in taxation of R0,8 million (2004: R0,4 million) and a net
reduction of R17,3 million in the opening retained earnings as at 1 July 2004.
Had this change not taken place, headline earnings per share would have been
94 cents (2004: 68 cents), an increase of 38,2%.
The adoption of the new policy with regard to business combinations has
resulted in goodwill amortisation of R27,8 million not being charged against
income in the current year. There is no requirement to restate the comparative
results.
Basis of preparation of financial statements
The Group results as at 30 June 2005 have been prepared in terms of South
African Statements of Generally Accepted Accounting Practice. With effect from
1 July 2005, the Group will adopt International Financial Reporting Standards
and is currently quantifying the impact of this change. The effect of this
transition will be disclosed in the interim results for the six months to 31
December 2005 and the 2006 annual report.
Audit report
The consolidated results and the annual financial statements from which they
were prepared for the year have been audited by Deloitte & Touche and their
unqualified audit reports are available for inspection at the company`s
registered office.
Investor presentation
Details of the presentation to investors will be available on the Primedia
website on 31 August 2005.
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Audited Audited
2005 2004
R`000 R`000
Cash generated from operations 389 850 353 629
Net finance cost (30 845) (14 550)
Dividends paid to minorities - (1 916)
Tax paid (69 365) (63 805)
Net cash inflow from operating activities 289 640 273 358
Net acquisition of subsidiaries and investments (395 893) (17 352)
Loans advanced to associates and minorities (2 288) (9 983)
Net acquisition of fixed assets and software (86 604) (43 227)
Net cash outflow from investing activities (484 785) (70 562)
Distribution to shareholders (103 289) (63 729)
Net proceeds from issue of shares 29 060 -
Share acquisitions and share buy back (29 106) (7 540)
Net borrowings raised/(repaid) 225 008 (52 595)
Net cash inflow/(outflow) from financing activities 121 673 (123 864)
Net (decrease)/increase in cash and cash equivalents (73 472) 78 932
Foreign currency translation 1 064 (287)
Cash and cash equivalents at beginning of year 65 997 (12 648)
Cash and cash equivalents at end of year (6 411) 65 997
ABRIDGED CONSOLIDATED BALANCE SHEET
Audited
Audited (restated)
2005 2004
R`000 R`000
Assets
Non-current assets 911 004 551 554
Property, plant and equipment 279 718 248 919
Goodwill and intangible assets 456 326 115 787
Other investments 23 543 13 586
Deferred tax asset 151 417 173 262
Current assets 463 924 438 898
Inventories 51 767 39 569
Trade and other receivables 407 789 333 332
Bank balances and cash 4 368 65 997
Total assets 1 374 928 990 452
Equity and liabilities
Total shareholders` funds 488 126 333 397
Share capital and reserves 407 199 317 159
Minority interest 80 927 16 238
Non-current liabilities 299 953 104 159
Interest-bearing borrowings 192 745 61 912
Landlord inducement premium 21 384 17 047
Long-term provisions 22 699 24 928
Deferred tax liability 63 125 272
Current liabilities 586 849 552 896
Bank overdrafts and short-term borrowings 10 779 -
Other current liabilities 576 070 552 896
Total equity and liabilities 1 374 928 990 452
Net asset value per share (cents) 184 146
CAPITAL EXPENDITURE, COMMITMENTS
AND CONTINGENCIES
Future capital commitments 96 870 78 802
Financial commitments 42 468 30 288
Operating lease commitments 355 144 301 665
- Due within one year 96 335 77 832
- Thereafter 258 809 223 833
Unindemnified contingent liabilities 87 662 80 274
Contingent liabilities 243 656 222 997
Indemnities received (155 994) (142 723)
ABRIDGED GROUP STATEMENT OF CHANGES IN
SHAREHOLDERS` EQUITY
Audited
Audited (restated)
2005 2004
R`000 R`000
Share capital and premium 274 717 351 362
Opening balance 351 362 411 738
Shares issued during the year, less expenses 29 060 -
Distribution to shareholders (103 289) (62 043)
Movement in treasury shares (2 416) 1 667
Non-distributable reserves 260 805 305 119
Opening balance 305 119 391 989
Minority share of intangibles
previously written off
against share premium (23 734) (32 383)
Increase/(decrease) in tax value of
trademarks previously
written off against share premium (2 756) 1 138
Disposal of subsidiary - (5 946)
Translation reserve movement 1 401 (29 247)
Movement in treasury shares (19 225) (21 281)
Transfer to non-distributable reserves - 849
Accumulated loss (128 323) (339 322)
Opening balance as previously reported (339 322) (501 035)
Restatement - operating leases - (17 343)
Opening balance as restated (339 322) (518 378)
Net profit for the year 215 572 175 528
Movement in treasury shares (7 465) 4 377
Negative goodwill released 2 892 -
Transfer from non-distributable reserves - (849)
Total share capital and reserves 407 199 317 159
SEGMENT REPORT
Audited
Audited (restated)
2005 2004
R`000 R`000
REVENUE
Advertising 950 288 759 901
Content 933 827 899 522
One to one marketing 62 726 67 850
New media sectors 33 467 506
Disposed entities - 24 608
1 980 308 1 752 387
PBIT
Advertising 296 970 211 746
Content 71 444 69 951
One to one marketing 2 095 4 025
New media sectors 2 782 (114)
Disposed entities - (3 568)
Central (net of operating lease adjustment) (17 042) (17 002)
356 249 265 038
OPERATING PROFIT
Advertising 293 535 205 436
Content 81 434 73 427
One to one marketing 1 658 3 644
New media sectors 2 782 (114)
Disposed entities - 5 776
Central (13 047) (7 413)
366 362 280 756
Directorate
Executive: W Kirsh (CE), O Ighodaro (CFO), FA Gazendam, K Pillay
Non-Executive: AP Nkuna (Chairman), I Kirsh, HM Madima, P Maw, K Motaung
Independent Non-Executive: MJ Bosman, HM Khoza, CS Seabrooke, BJT Shongwe, SV
Zilwa, N Canca
Alternate: Keshan Pillay (alternate to AP Nkuna)
Company secretary: SE Sather
Registered office Transfer secretaries
6th Floor, Primedia Place Computershare Investor
5 Gwen Lane Services 2004 (Pty) Limited
Sandown 2196 70 Marshall Street, Johannesburg 2001
Incorporated in the Republic of South Africa
Registration number 1993/003355/06
Share code PMA ISIN ZAE000035119
Share code PMN ISIN ZAE000035127
(`Primedia` or `the company` or `Primedia Group`)
1. OVERVIEW
The Primedia Group has enjoyed another very satisfactory year. Whilst the
short-term performance of the Group has been stellar, the benefits of its
longer-term strategy have also started to show through. In 2000, the Group
changed its strategic direction to focus on the domestic market and this
strategy, with all its supporting themes, has enabled the Group`s South
African operations to record a 28,4% compound annual growth in PBIT over the
last five years.
2. STRATEGIC REVIEW
2.1 Introduction
The Group`s vision is to become a world-class media group incorporating
advertising and content-based media assets. Achieving this status requires a
continued and disciplined focus on the following principles:
Investing in the right media businesses: This includes owning media assets
that have high rights exclusivity, critical mass and that on balance target
consumers that have greater spending capacity;
Combining the right media assets: This requires owning media assets that will
show long-term growth, can collaborate with one another and have complementary
economic cycles. In relation to the latter, advertising businesses tend to be
more geared to the economy whilst content businesses are mainly `hit` or
`demand` driven;
Innovation: This discipline continually ensures the creation of new income
streams and invariably market leadership; and
Strong culture: A strong corporate culture that balances the need for
structure and rigour with an enabling environment within which individuals can
grow and lead with a high degree of autonomy.
We believe that we measure well against the above principles, and this makes
us confident about our future.
2.2 2005 strategic priorities revisited
At the end of 2004, the Group codified the following strategic priorities for
the 2005 fiscal:
Maximising cash;
Continued enhancement of the Group`s media portfolio, and in particular,
reducing 94.7 Highveld Stereo`s contribution to Group PBIT to closer to the
targeted 25% to 30% range; and
Increasing black consumer patronage of the Group`s cinema and home
entertainment products.
The Group has made excellent progress with the first two strategic priorities.
Cash flow management has been good, allowing the Group greater flexibility to
create shareholder value through distributions, share buy backs and earnings
enhancing acquisitions. In the current year, 94.7 Highveld Stereo`s
contribution to Group PBIT reduced to 40% (from 47% in 2003 and 46% in 2004)
and is expected to decline to approximately 35-30% in 2006 due to the
anticipated growth from existing businesses and the new acquisitions referred
to in 3 below.
The Group`s strategy to increase black consumer patronage at its cinemas,
through its affordable pricing strategy, has not met management`s expectations
in the short term, although black consumer attendances increased by 36% to 3
million representing 19% (2004: 13%) of total attendances. The Group remains
committed to stimulating growth in this market segment, and in this regard,
has continued with its strategy of establishing a network of home
entertainment stores in townships, to stimulate video and DVD consumption
among black consumers. To date, five stores have been launched.
2.3 Growth strategy
The Group`s growth strategy has been focused on the following five areas:
organic growth, growth through innovation, bolt-on acquisitions by existing
businesses, judicious expansion into Africa and investing into new growing
sectors of the media industry. Factoring in the impact of digital technology
on the global media industry as a whole, which will in particular enable
content to be exploited far more widely, the Group has now added convergence
as a sixth area of growth. In South Africa, the proposed Convergence Bill will
open up previously restricted markets and foster greater competition within
existing digital delivery platforms. This will create growth opportunities for
the Group.
Convergence and the impact of digital technology is also important to another
strategic theme of Primedia, which is to focus on the `out of home` media
category. This category is benefiting from audience fragmentation `in the
home`, as audiences are being splintered by the choice created through the new
digital options (namely pay TV, internet and electronic games). Primedia`s
advertising-based `out of home` businesses are industry leaders by a wide
margin, which positions the Group well for the long term.
2.4 2006 strategic priorities
The Group is in the best strategic and financial shape that it has ever been.
Commensurate with this and the positive outlook, the Group has become
increasingly growth-centric. The Group`s 2006 strategic priorities are as
follow:
Black consumer filmed entertainment. As stated above, the Group remains
committed to stimulating patronage by this emerging consumer segment well
above current levels;
Stimulating cinema frequency of the traditional consumer. Research as well as
the results achieved by Ster-Kinekor`s loyalty programmes clearly indicate
that the traditional consumer is sensitive to pricing in deciding to choose the movies. The Ster-Kinekor Junction strategy has also been formulated
around this need and the economic opportunity, as with that of the black
consumer focus, is considered significant;
Critical mass for Primedia Unlimited. The Group`s strategy to enter into new
growing sectors of the media industry has become a reality through Primedia
Unlimited, which has a focus on both the advertising and content sectors. The
Group`s objective in the current year is for Primedia Unlimited Advertising to
achieve annualised PBIT of R20 million. Minimal losses are anticipated from
Primedia Unlimited Content;
Unlocking the value of the Group`s sport assets. This medium to longer-term
strategy is two pronged: Firstly, leveraging the very powerful Kaizer Chiefs
brand (in which the Group has a 40% interest) across a range of consumer
services, and secondly positioning the Group`s leading sports marketing
company, Megapro Marketing, to become the preferred media partner to corporate
South Africa in the run up to the Soccer World Cup 2010; and
Content. As stated earlier, content is considered a growth sector for media
companies, particularly due to the increasing number of digital delivery
platforms, and also, is generally less cyclical than advertising-based media
businesses. The Group currently generates approximately 20% of its PBIT from
its content businesses i.e. Ster-Kinekor Classic and Junction Theatres (cinema
exhibition), Ster-Kinekor Home Entertainment (video and DVD distribution) and
Ster-Kinekor Games (electronic games distribution). It is the Group`s longer-
term strategy to increase this contribution through organic growth and
diversification into new content businesses.
3. STRATEGIC ACQUISITIONS
3.1 Acquisition by existing businesses
In the 2005 fiscal, the Group spent R389,6 million on earnings enhancing
acquisitions. These included the acquisition of a 92,2% economic interest in
KFM, settlement of the acquisition last year of an additional 30,5% economic
interest in 94.7 Highveld Stereo, acquisition of an additional 56% economic
interest in 567 Cape Talk, an additional 34% interest in Rank TV, an
additional 43% stake in Rank Branding and an additional 10% stake in Primedia
Sport.
Subsequent to the year-end, the following acquisitions were made:
Primedia Broadcasting reached agreement, subject to regulatory approvals, to
acquire the remaining minority interest in Africa on Air from Mineworkers`
Investment Company for a total consideration of R77,4 million which will be
settled by cash of R7,1 million and the issue of 5 962 385 Primedia N shares.
Given that the transaction is between related parties, Deloitte & Touche have
issued an opinion that, in their view, the transaction is fair and reasonable.
Comutanet acquired 100% of GMR (a division of Altmedia (Pty) Limited
(`Altmedia`)), a leader in commuter advertising. The acquisition should result
in high levels of efficiencies given their similar operating footprints; and
Primedia Outdoor has acquired Altmedia`s strategic holding of outdoor
advertising sites at the important airports.
3.2 Acquisitions by Primedia Unlimited
Primedia Unlimited Advertising has acquired stakes in various high growth
media companies including Wide Open Platform (50,1%), Primall Media formerly
A+D Media (50,1%), Forecourt Media, formerly Forecourt Television Network
(100%), in conjunction with Comutanet, and Primestars Marketing (50,1%).
The aforementioned acquisitions by Primedia Unlimited Advertising cost R6,0
million, with further payments of R11,3 million to be made in the first
quarter of the 2006 fiscal due to the earn-out of profit warranties.
Subsequent to year-end, Primedia Unlimited Advertising has made the following
acquisitions:
-90% of The Letter Corporation (a division of Altmedia), which dominates the
washroom advertising space in South Africa; and
-80% of XProcure, the leading electronic ordering system provider to the
pharmaceutical industry, handling R3 billion of the R11 billion of merchandise
purchased by pharmacies from pharmaceutical manufacturers and distributors.
Whilst XProcure earns a small commission on facilitating transactions, the
bulk of its revenue is made from advertising. Due to advertising restrictions
placed on pharmaceutical manufacturers by the Department of Health in respect
of scheduled drugs, the channel to pharmacies that XProcure provides is highly
sought after by pharmaceutical manufacturers and distributors. XProcure
together with Primedia also intends to launch other services to this targeted
sector.
TLC and XProcure will cost R28,6 million in the current year, with a further
R11,1 million payable in future years based on the achievement of profit
warranties.
In addition to the new home entertainment stores targeted at the black
consumer market in the townships, Primedia Unlimited Content made the
following small acquisitions subsequent to year end, costing R10 million:
Book4Golf (50,1%), a new business that facilitates the seamless booking of
golfing times and other activities over the web, through highly sophisticated
and exclusive software, and call centres. This venture has both domestic and
international (tourists to South Africa) appeal; and
Airgames (Pty) Limited (50,1%), an emerging mobile entertainment company,
which will open up the opportunity to participate in the fast growing mobile
content business. (Agreement in principle reached).
4. FINANCIAL RESULTS
The Group increased turnover by 13,0% to R1 980 million (2004: R1 752 million).
Group operating profit before depreciation rose by 29,0% to R418,9 million
(2004: R324,7 million) which resulted mainly from an improvement in gross
margins, organic growth, growth from innovations and acquisitions.
Group PBIT before amortisation, foreign exchange items and exceptional items
was up 34,4% to R356,2 million (2004: R265,0 million). KFM and the small
contribution (R3,9 million) from the Primedia Unlimited acquisitions
contributed R49,4 million to the results. Operating margins increased from
15,1% to 18,0% mainly due to the growth in the higher margin advertising
businesses as well as the acquisitions.
Operating profit grew by 30,5% to R366,3 million (2004: R280,8 million) which
was after foreign exchange losses of R2,1 million (2004: profit of R1,0
million) and amortisation of intangibles of R4,7 million (2004: R8,6 million).
Profit before taxation rose 21,1% to R319,6 million (2004: R264,0 million)
which was positively influenced by exceptional items of R16,9 million (2004:
R23,3 million) but was reduced by the Group`s increased net interest bill of
R39,7 million (2004: R16,5 million) as well as a non-cash fair value
adjustment of R7,5 million (2004: RNil) relating to an interest rate swap. The
interest cover remains a very high 9,0 times (2004: 16,0 times).
Profit after tax rose 16,5% to R232,9 million (2004: R199,9 million). The tax
rate was at a more normalised rate of 27,1% (2004: 24,3%).
Net profit for the year increased by 22,8% to R215,6 million (2004: R175,5
million), partly as a result of the lower minority interest, following the
purchase of an additional economic interest in 94.7 Highveld Stereo.
Group HEPS increased from 68 cents to 95 cents (up 39,7%).
Cash generated by operations increased by 10,2% to R389,9 million (2004:
R353,6 million). Free cash flow exceeded headline earnings by 10% despite the
following:
-Increased replacement net capital expenditure from R28,0 million to R62,2
million, mainly due to two-year programme to upgrade Ster-Kinekor Theatre`s IT
infrastructure, which was outdated and incapable of enabling new operational
efficiencies to be achieved; and
-A higher investment in working capital of R18,0 million relating to Ster-
Kinekor`s investment in film rights. Given the strengthening of the Rand
against the US dollar, a strategic decision was taken to prepay film rights
amounting to US$3,0 million when the exchange rate to the dollar was R6,00.
This decision has turned out to be the correct one with the subsequent
weakening of the Rand.
As at 30 June 2005, the Group`s net interest-bearing debt was R322,0 million
(2004: R17,5 million). The increase was due mainly to the strategic
acquisitions referred to earlier. The Group`s financial health remains very
good and the Group is operating well within its debt covenants.
5. DIVISIONAL REVIEW
The Group`s divisional reporting format has been slightly revised to better
reflect the financial outcomes of its strategy.
5.1 Advertising
Turnover was up 25,1% to R950,3 million (2004: R759,9 million). PBIT was up
40,2% to R297,0 million (2004: R211,7 million), with operating margins
increasing from 27,9% to 31,3%. KFM generated R77,6 million of turnover and
R45,5 million of PBIT to the above results (2004: RNil).
Notable divisional performances were achieved as follows:
-Broadcasting and Internet`s PBIT was up by 61,7% to R194,4 million (2004:
R120,3 million) on the back of a 55% increase in turnover to R357,9 million
(2004: R230,9 million). Excluding KFM and Cape Talk, organic growth in PBIT
was a very good 22,5%. All radio stations performed well and are benefiting
from the integration of key disciplines. iafrica.com`s very small loss was a
significant improvement on the prior year;
-Out of Home`s PBIT was up 17,5% to R44,3 million (2004: R37,7 million) on a
turnover increase of 10,5% to R246,6 million (2004: R223,1 million), fuelled
by good performances by Primedia Outdoor and Primedia Instore on the back of
good innovations;
-Cinema and Print`s turnover was up 13,6% to R200,3 million (2004: R176,4
million) which resulted in PBIT being up 10,5% to R17,6 million. (2004: R15,9
million);
-Sport`s turnover increased 44,1% to R49,4 million (2004: R34,3 million) with
PBIT being up 32,4% to R13,7 million (2004: R10,3 million), due to the growing
recognition by advertisers of the value of sport, as well as the entry by
Megapro into the fast growing sport sponsorship consulting business.
5.2 Content (formerly Filmed Entertainment)
Turnover was up 3,8% to R933,8 million (2004: R899,5 million). PBIT was up
2,1% to R71,4 million (2004: R70,0 million), with operating margins decreasing
fractionally from 7,8% to 7,7%.
The following results were achieved:
-Ster-Kinekor Classic and Junction Theatres together with Ster-Kinekor
Pictures recorded a 36,5% decline in PBIT to R31,3 million (2004: R49,3
million), on the back of a 7,5% decline in turnover to R462,8 million (2004:
R500,2 million). The decline year on year was mainly attributable to the lower
than expected attendances. Ster-Kinekor intends to establish an industry
forum, together with all participants, to address the challenges facing the
industry, including the impact of ongoing changes in digital technology; and
-Ster-Kinekor Home Entertainment fared very well with PBIT increasing by 64,1%
to R48,0 million (2004: R29,3 million) on the back of turnover increasing by
16,7% to R471,0 million (2004: R403,7 million). Both the video and DVD, as
well as the electronic games divisions had a very good year. Going forward,
the latter will be called Ster-Kinekor Games, in order to focus on the wider,
fast growing electronic games industry.
5.3 New media sectors (Primedia Unlimited)
Most of Primedia Unlimited`s Advertising businesses were owned for a six month
period and contributed PBIT of R3,9 million whereas the content side of
Primedia Unlimited recorded a small loss of R1,1 million due to the start up
nature of the fledgling home entertainment chain (DVD City) in the townships.
5.4 One to one
The one to one business experienced a 7,5% decline in turnover to R62,7
million (2004: R67,8 million). PBIT also declined by 47,5% to R2,1 million
(2004: R4,0 million). The SA-based Knowledge Factory performed very well. The
UK-based Database Group, however, disappointed but corrective measures have
been taken to improve performance. The Database Group remains profitable and
cash flow positive.
6. Acknowledgements
During the year, the Group was honoured to have been nominated as `The Most
Transformed Media Company` as rated by the Financial Mail/Empowerdex and `The
Media Owner of the Year` by the Financial Mail/Adfocus, in recognition of the
great progress the Group has made in recent times. The turnaround the Group
has experienced and the current positive momentum is due to the unwavering
efforts of the Group`s spirited employees and continued support from our major
stakeholders, specifically our customers, shareholders and professional
advisers.
7. PROSPECTS AND CONCLUSION
The Group`s focus on the principles of building a world class media group
should continue to build shareholder value over the short, medium and long
term. Over the next 12 months, the following specific issues should help
confirm a good set of results for the 2006 fiscal, namely:
-Expected continued favourable economic conditions;
-Annualisation effect of the KFM acquisition (included only for nine months in
2005) as well as Primedia Unlimited Advertising acquisitions (included only
for six months in 2005);
-Benefits from the recent earnings enhancing acquisitions, such as the Africa
on Air minority interests, Altmedia, and XProcure; and
-Benefits from the execution of the Group`s five key strategic priorities for
2006 as well as its growth strategy.
8. DISTRIBUTIONS OUT OF SHARE PREMIUM
In line with the Group`s policy of maintaining a cover of 2 times (subject to
the circumstances of the Group), the Board has, in terms of the general
authority granted to directors at the annual general meeting held on 26
January 2005, resolved to pay a total distribution of 56 cents per share which
is 40% higher than in the previous year. This will result in shareholders
receiving a final distribution of 34 cents in addition to 22 cents declared at
the interim stage. The distribution cover is in line with last year`s 1,7 times.
Accordingly, notice is hereby given that a final cash distribution out of
share premium of 34 cents, in lieu of a dividend, has been awarded to
shareholders recorded in the register of the company at the close of business
on Friday, 28 October 2005. Shareholders are advised that the last day to
trade `cum` the distribution will be on Friday, 21 October 2005 and the shares
will trade `ex` the distribution from Monday, 24 October 2005. Payment will be
made on Monday, 31 October 2005. Share certificates may not be rematerialised
or dematerialised during the period Monday, 24 October 2005 to Friday, 28
October 2005, both days inclusive.
In terms of the requirements of the Companies Act 1973, the directors confirm
that after the payment of the distribution, the company will be able to pay
its debts as they become due in the ordinary course of business and its
consolidated assets, fairly valued, will exceed its consolidated liabilities.
9. CAUTIONARY
Primedia shareholders are advised that the company has entered into
negotiations regarding the potential increase of the Black Economic
Empowerment shareholding in Primedia and accordingly, shareholders should
continue to exercise caution in dealing in the company`s shares until a
further announcement in this regard is made.
AP NKUNA W KIRSH O IGHODARO
Chairman Chief Executive Chief Financial Officer
Johannesburg
30 August 2005
www.primedia.co.za
94.7
Kfm
702 Talk Radio
567 Cape Talk
iafrica.com
Ster Kinekor
Megapro
Kaizer Chiefs
Primedia Outdoor
Primedia Instore
Primedia Face to Face
ComutanetTVX
Cinemark
Primedia Home
Primedia Publishing
Wide Open Platform
Forecourt Media
Primestars Marketing
Knowledge Factory
The Database Group
Date: 30/08/2005 07:54:29 AM
Produced by the JSE SENS Department
