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Chairman's Statement
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I am happy to report to all our stakeholders that Primedia delivered a record set of results in the year under review and made substantial progress across all operations against the strategic objectives set out at the start of the year. The year has been characterised by strong organic growth, with a number of exciting, new earnings-enhancing acquisitions concluded; all carefully thought through and designed to deliver on our strategy of being a world-class media group in the new age of digital media, able to produce above-average returns for shareholders. Looking back over the last six years, the group has delivered an annual compound growth rate of 29% in South African operating profit before interest and tax. During the year, free cash flow continued its strong growth trajectory, up 32% to 135 cents per share, with shareholders benefiting from a 52% increase in distributions. The content division made great strides in addressing the challenges within the cinema business, with the new Ster-Kinekor Junction format assisting the division’s continued growth. In addition, good progress was made in increasing black consumer patronage at our cinemas. The advertising division had a very strong year with each of the division’s core businesses within the broadcasting and nonbroadcasting segments producing excellent increases in revenue and operating profit. Some important steps were taken towards unlocking the value of the group’s sports assets. In particular, the recent acquisition of majority stakes in Powerview (renamed Megaview) and Warwick Sport and Media are illustrative of the considerable on-going efforts of the executive team in positioning Primedia as the media partner of choice for the FIFA 2010 World Cup. The group has continued to build on its successful transformation strategy of empowerment through growth, not substitution, and further tangible progress has been made within operations and at senior executive level. As a result of the group’s bold empowerment initiatives, which include the issue of 8 million Primedia N ordinary shares at par value and the acquisition of the remaining minority interest in Africa on Air, MIC’s economic interest in the group has increased from 6% to 18% (including additional shares acquired directly in the market by MIC). Once again, the board of Primedia would like to thank the group’s existing shareholders for their continued support, and welcome new shareholders who have chosen to invest in the group during the course of the year. As reported last year, the group is fully compliant with the provisions of the King II Report. During the year, Mr Kaizer Motaung resigned from the board with just over one year’s service as a non-executive director. On behalf of the board, I would like to thank Mr Motaung for his valuable insight and contribution during his tenure. I would also like to welcome Ms Melody Lekota, group human resources executive, who was appointed as an executive director with effect from 9 June 2006. I am grateful to all members of the board for their objective, analytical rigour and remain satisfied that the composition of the board continues to reflect a highly appropriate mix of skills and experience. The infectious enthusiasm and energy for the business that one feels when dealing with executives at every level within Primedia is tremendous. It is reflective of the absolute commitment shown by all our people, which in turn has resulted in a truly commendable financial performance. It also mirrors the great sense of innovation and entrepreneurship, which lies at the core of all our operations. This energy and momentum instils a great sense of confidence as we commit to the next phase of the group’s development – to maintain the strong momentum, to further entrench established market positions as well as to enter new media sectors. My sincere thanks to all stakeholders including everyone within the group for their continued dedication.  AP Nkuna |