TRANSFORMATION AT PRIMEDIA REMAINS A MODEL OF EMPOWERMENT THROUGH GROWTH, NOT SUBSTITUTION, BASED ON CREATING AND SUSTAINING A CULTURE OF MOTIVATED AND INSPIRED EMPLOYEES
It is once again pleasing to report that Primedia has delivered another splendid set of results for the period under review. Since revising the group's strategic direction in 2000, the executive management team has worked diligently, leading the group's local operations to a 28,4% compound annual growth in PBIT over the last five years. I would like to congratulate the Primedia management team for an exceptional performance in implementing the group's codified strategic intentions for 2005, under the able leadership of the group's chief executive.
Excellent progress was made in maximising the group's free cash flow and in improving its media portfolio. The efforts to increase black consumer patronage of the group's cinema and home entertainment products have yet to deliver tangible financial results; however, this remains a key focus and an ongoing strategic priority.
During the period under review, the group spent R395,6 million on excellent, earnings-enhancing acquisitions. Subsequent to year-end, the group has acquired Altmedia, XProcure, Airgames and, subject to regulatory approvals, the remaining minority interest in Africa on Air (the 94.7 Highveld licence holder).
Primedia is a company with a strong corporate culture, that balances the need for structure with an enabling environment, allowing talented individuals to grow and lead with a high degree of autonomy. Through the ongoing leadership of the executive team, we continue to reap the benefits of innovation and entrepreneurship across the group, further entrenching our market share and ensuring the creation of new income streams. I am very appreciative of the commitment shown by Primedia's employees in responding to the challenges laid down by the management team.
The board would like to express its gratitude to Primedia's shareholders for their full and ongoing support. Many shareholders have shown loyalty during difficult and challenging periods in the group's history, demonstrating both trust and understanding that the board and management team would engineer a successful turnaround.
ONGOING TRANSFORMATION
Transformation at Primedia remains a model of empowerment through growth, not substitution, based on creating and sustaining a culture of motivated and inspired employees who thrive on entrepreneurship and innovative thinking, thereby securing growth and opportunities for the whole group.
I would like to thank the chief executive and his management team for their ongoing delivery on transformation. The group has continued to successfully improve on operational transformation at its individual business units, and has made senior appointments at executive and board level. It continues to develop, attract and retain extraordinarily talented individuals and is well placed to meet the requirements of the soon to be published ICT sector charter.
I am proud to report that Primedia has developed many of its talented senior staffers, and its nurturing culture, focused on employment equity and skills transfer, has resulted in employees who are willing and able to consistently perform at the highest levels of the organisation. It is a testament to this focus that Primedia has won various transformation awards throughout the year, honouring the group in terms of its leadership in industry transformation and employment equity in the areas of race and gender.
TEAM EFFORT
The group is now compliant with the detailed provisions of the King II report on Corporate Governance and the extended structure of its board sub-committees has ensured that our corporate governance structures are tight, relevant and effective. I would like to thank board members for their constructive contribution in delivering on the group's strategy during the period under review. The board has worked efficiently and effectively throughout the year and remains, in my view, well constituted in terms of its depth of skills, wisdom and business acumen and is also well balanced in terms of race, gender and the ratio of non-executive to executive directors.
LOOKING AHEAD
Primedia is a dynamic and driven organisation with the ability to deliver financial results in a changing business and economic environment. The board is confident that the executive management team will continue to deliver on the group's strategies into 2006. With the appropriate strategies, an experienced and grounded executive management team and committed and talented employees, Primedia will rise to the challenge of building on its recent successes and delivering another impressive performance going forward.
The group has exciting opportunities, not least of which is the recent announcement of the proposal to increase the economic interest of the BEE shareholders in Primedia. As broad-based transformation remains at the centre of our strategic development, with the help of shareholders, it is important that our successful partnership and ongoing relationship with Mineworkers Investment Company is balanced, in terms of both their economic interest and voting rights. Shareholders are referred to a circular to be issued on or around 3 November 2005 for details of the proposed BEE transaction, which is being tabled for approval by shareholders at a meeting to be held on 18 November 2005.
P Nkuna
Non-executive chairman
21 October 2005