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CHAIRMAN'S STATEMENT
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 Paul
Nkuna
Non-Executive
Chairman
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On
reaching the end of my third year as Chairman, I am pleased to
be able to report on a very rewarding twelve months for Primedia.
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As
we celebrate the 10th anniversary of a stable, democratic South
Africa, so has the vibrancy and stability of our economy become
increasingly evident across the economic landscape. From a sector
perspective, the marginal improvement in market conditions experienced
in the 2003 fiscal was sustained and strengthened during 2004.
In parallel with this, very good strategic and operational progress
was made across the group and this was reflected in a record financial
performance. The cash generating capabilities of all our businesses
shone through, group debt was significantly reduced and record
operating profits were achieved. Through the leadership of the
executive team, the strong
culture of innovation and entrepreneurship within Primedia
became further entrenched and helped ensure that market share
was retained or increased in all the major businesses.
Enhancing
the breadth of the group's South African media portfolio, driving
synergies across the different businesses and increasing black
consumer patronage of the group's filmed entertainment products
lay at the heart of the group's strategy for the year. Good progress
was made on all fronts, although the latter has yet to deliver
material results and remains an ongoing strategic priority. Other
milestones included the purchase of a 30,5% economic interest
in Africa on Air (which holds the 94.7 Highveld Stereo licence),
taking the group's stake to 85,8%, and the renewal of the 94.7
Highveld Stereo licence for a further 6 years. In addition, Mineworkers
Investment Company (MIC) successfully increased its stake in Africa
on Air from 2,2% to 14,2%.
Further
to the group's strategic priority of enhancing the breadth of
the group's South African media portfolio, agreement was reached
on the acquisition of Kfm, Cape Town's leading music radio station,
following the change in control of New Africa Investments Limited
(NAIL) to the MIC/Tiso Consortium. This acquisition was successfully
concluded in October 2004.
Broad-based
transformation has continued to be at the centre of the group's
strategic development, enshrined in the successful
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partnership
that has been in place with MIC for the past eight years. Focused
on employment equity, black economic empowerment and skills transfer,
the group has successfully continued to improve transformation
at the operating level within individual businesses, as well as
at board level. As a result, 60% of Primedia's senior executive
management team are black, with 40% being black female, whilst
60% of the group's board of Directors are black, with 30% being
black female.
In
essence, transformation at Primedia is a model of empowerment
through growth, not substitution. It is based not on the redistribution
of assets and economic means, but on creating and sustaining a
culture of entrepreneurship and innovative thinking, which creates
opportunities and secures growth for the whole group. During the
year, the group has continued
to attract and retain some extraordinary talent, and I
am confident that we are well-placed to meet the requirements
of the ICT sector charter when it is published.
TEAM
EFFORT
The
board is now well-balanced in terms of race, gender and the ratio
of non-executive to executive directors. It has worked efficiently
and effectively throughout the year and I would like to extend
my sincerest thanks to all directors for their wise counsel and
thorough scrutiny. In my report last year, I noted that the group
is now substantially compliant with the detailed provisions of
the King II report on Corporate Governance. I am satisfied that
the extended structure of board sub-committees has ensured that
our corporate governance structures are tight, relevant and effective.
I take my hat off to every employee in the group and thank them for their staunch efforts in 2004. Each one has played their part in contributing to the improved financial performance and in enriching the progressive spirit and renewed sense of pride which permeates throughout Primedia today.
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LOOKING
AHEAD
The
challenge for the group is to build on its recent successes. I
am confident that we have the right strategies in place, with
an experienced and grounded executive management team to deliver
on the strategies. We will look at entering new media sectors
where it makes good strategic sense to do so, as well as examining
the potential for expansion into other African territories - but
only in areas where the management team are confident of being
able to secure growth.
In
parallel, the group's improved people management, information
reporting and sales enhancement
systems have set the tone for continued operational excellence
and delivery, all of which puts Primedia on a strong footing to
create additional value for our shareholders.
 Paul
Nkuna
Chairman
26
November 2004
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