DIRECTORS' RESPONSIBILITIES
The directors acknowledge responsibility for the integrity and objectivity of the annual financial statements, and all other information contained therein. In declaring this responsibility, the group maintains suitable internal control systems to provide reasonable assurance that all assets are safeguarded and that transactions are executed and recorded in accordance with group policies.
The directors, supported by the audit committee, are satisfied that the controls, systems and procedures in place minimise the possibility of material loss or misstatement. The directors are responsible for the systems of internal control. These are designed to provide reasonable, but not absolute, assurance as to the reliability of the financial statements and to adequately safeguard, verify and maintain accountability of assets and to prevent and detect material misstatement and loss. The systems are implemented and maintained by suitably trained personnel with an appropriate segregation of authority and duties. Nothing has come to the attention of the directors to indicate that any material breakdown in the functioning of these controls and systems has occurred during the year under review.
The financial statements have been prepared in accordance with South African Statements of Generally Accepted Accounting Practice.
NATURE OF BUSINESS
Primedia is a leading South African media group whose vision is to become a world-class media company. The group has an established portfolio of businesses that cover advertising, content and one to one marketing. These businesses have leading positions in the markets in which they operate.
Primedia's advertising businesses are located principally in South Africa and its broad base of assets spans both the traditional and non-traditional media sectors. This mix strategically positions Primedia well, as advertisers attempt to reach an increasingly fragmented and diverse audience. The businesses enjoy a high degree of exclusivity, derived from regulated rights to various delivery platforms, which contributes to their attractive operating margins.
The group's content businesses, also principally located in South Africa, comprise cinema exhibition, film distribution, video and DVD, and electronic games distribution.
The group recently launched a new division, Primedia Unlimited, which houses advertising and content businesses, in high growth sectors in which Primedia does not currently operate.
The group's one to one marketing businesses comprise a database marketing business in the UK and a similar business in South Africa.
GROUP RESULTS AND REVIEW OF OPERATIONS
The results for the year ended 30 June 2005 are reflected in the attached annual financial statements.
The review of the group's businesses and operations for the year ended 30 June 2005 is contained in the reports set out under the CE's report, Advertising, Content and the Financial review.
SUBSIDIARIES
Details of the company's direct interests in subsidiaries are set out in Annexure 2 to the financial statements.
SHARE CAPITAL
Primedia Limited is funded by means of ordinary shares and "N" shares, the summarised terms of which are detailed as follows:
- Each ordinary share and "N" share is issued at par and is traded on the JSE;
- Each ordinary share entitles the holder thereof to one hundred votes and each "N" share entitles the holder thereof to one vote; and
- With the exception of the entitlement to votes detailed above, the ordinary shares and "N" shares rank pari passu in all respects.
The company's authorised share capital remained unchanged during the year. The following changes to the company's issued share capital took place during the year under review.
- 1 449 580 ordinary shares; and
- 3 174 603 "N" shares were issued on 1 July 2004 in terms of the acquisition of the 30,5% minority interest in Africa on Air.
Details of the authorised and issued share capital are included in note 17 to the annual financial statements and in the statement of changes in shareholders' equity.
The unissued shares are under the control of the directors until the next annual general meeting, subject to the provisions of sections 221 and 222 of the Companies Act and the requirements of the JSE.
DISCLOSURE RELATING TO DIRECTORS
The requisite disclosure relating to the interests of directors in options and shares of the company, as well as directors' remuneration, is detailed in note 34 and Annexure 4 to the annual financial statements.
DISTRIBUTIONS TO SHAREHOLDERS
An interim distribution out of share premium of 22,0 cents per share, in lieu of a dividend, was declared on 1 March 2005, awarded to shareholders recorded in the register of the company on 24 March 2005 and paid on 29 March 2005 (2004: 15,7 cents per share).
A final distribution out of share premium of 34,0 cents per share, in lieu of a dividend, was declared on 26 August 2005, to be awarded to shareholders recorded in the register of the company on 28 October 2005 and to be paid on 31 October 2005 (2004: 24,3 cents per share). In accordance with AC 130 – Provisions, contingent liabilities and contingent assets, the distribution will be accounted for in the 2006 financial year.
No dividends were declared by the company during the year ended 30 June 2005 (2004: Nil).
SHARE OPTION SCHEME
The rationale for the share option scheme, together with the rights and options over allocated ordinary and "N" shares outstanding at 30 June 2005 and a reconciliation of the movement for the year then ended, is fully detailed in note 35 to the annual financial statements.
EVENTS SUBSEQUENT TO FINANCIAL YEAR END
Full details in respect of material events arising subsequent to the financial year end have been included in note 36 to the annual financial statements.
SPECIAL RESOLUTIONS
Special resolutions which have been adopted by the company or its subsidiaries since the date of the last annual general meeting, are detailed in Annexure 2 to the annual financial statements.
GOING CONCERN
The directors are of the opinion that the group will be a going concern in the year ahead. In reaching this opinion, the directors considered the following factors:
- Strong positive cashflows from trading;
- No material recurring operating losses;
- Well controlled working capital;
- Approved short-term and medium-term financing, with sufficient additional borrowing capacity if required;
- Key executive management in place;
- Budgets to June 2006 reflect a continuation of the above positive trends;
- The group has no need to undertake a capital restructuring or to dispose of assets;
- The board is not aware of any material changes that may adversely impact the group, relative to customers, suppliers, services or geographic markets;
- The board is not aware of any material non-compliance with statutory or regulatory requirements and there are no pending legal proceedings, other than in the normal course of business; and
- The board is not aware of any pending changes in government legislation that may adversely affect the group.
DIRECTORATE
The current directorate of the company is shown on pages 6 to 9.
During the year under review, the following appointments to the board of directors took place:
K Motaung – appointed 25 February 2005
In accordance with the company's articles of association, MJ Bosman, O Ighodaro, HM Khoza, HM Madima and SV Zilwa retire by rotation at the annual general meeting and, being eligible, offer themselves for re-election.
In terms of the company's articles of association, newly appointed directors are required to be elected at the next annual general meeting. K Motaung, being eligible, offers himself for election.
COMPANY SECRETARY
O Ighodaro resigned as company secretary and SE Sather was appointed as company secretary on 25 February 2005. His business and postal addresses are: 6th Floor, Primedia Place, 5 Gwen Lane, Sandown 2196 and PO Box 652110, Benmore 2010.