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Prime Media Group Limited2 0 1 1 A n n uAl R e p oR
t
CONTENTS
2 ChairmaN ’S a ddrESS
4 ChiEf EXECUTiVE OffiCEr’S rEPOrT
9 dirECTOrS’ rEPOrT
25 COrPO raTE GOVErNaNCE ST aTEmENT
30 fiNaNC iaL STaTEmENTS
Prime Media Group is an Australian
company committed to bringing the very
best in entertainment and information to
the people of regional Australia.
R ADIO
TELEVISION
CAIRNS
TOWNSVILLE
MACKAY
ROCKHAMPTON
GLADSTONE
SUNSHINE COAST
WA
NSW
VIC
ACT
TOTAL POTENTIAL AUDIENCE
TOTAL POTENTIAL AUDIENCE
1,200,000
5,115,000
AGE DEMOGRAPHIC BREAKDOWN
AGE DEMOGRAPHIC BREAKDOWN
<14 20.5%
15 – 24 13.6%
25 – 39 20.6%
40 – 54 21.4%
> 55 23.9%
<17 23.3%
18 - 24 9.1%
25 - 39 18.6%
40 - 54 20.7%
> 55 28.3%
HIGHLIGHTS
$257m
RE VENUE*
$49.1m
EBIT*
$27.2m
NET PROFIT AF TER TA X*
4.5¢
FULL YE AR
DIVIDEND/SHARE
53.4%
CHANGE IN NET
PROFIT AF TER TA X*
7.7%
ADVERTISING RE VENUE
228
213 208 211
191
18.5 18.3 18.6
19.7
9.2
07
08
09
10
11
07
08
09
10
11
ADVERTISING RE VENUE
TELE VISION (Millions)
ADVERTISING RE VENUE
R ADIO (Millions)
*
f rom C ontinuing o per ation s before Sig nific ant Item s.
Prime media GrouP ANNUAL REPORT 2011
1
2
ChairmaN’S
addrESS
On behalf of the Directors of Prime
Media Group Limited, I am pleased
to present the Annual Report
covering the 2011 financial year.
We’re very pleased with the performance of our
partnership with the Seven network. Its ability to
consistently deliver Australia’s favourite programs provides
for strong audience delivery for advertisers, and over
the course of the financial year pRIMe7 experienced
significant audience growth in all of its viewing regions.
I am very pleased about the improvements made to our
company. the Board and Management continue to work
to optimise returns for shareholders by exploring every
opportunity to extract more opportunity from existing
assets. i’d especially like to thank Prime’s dedicated staff
for their continuing efforts and contribution.
A net profit after tax result of $27.2 million has delivered
an $81.6 million turnaround. earnings per share (from
continuing operations before significant items) increased
by 51% to 7.4 cents per share. A final dividend per share
of 2.4 cents is a 71% improvement on the prior year. the
Directors increased the dividend pay-out ratio from 50% to
75% effective from the final dividend payment for the 2011
financial year.
Clearly prime is back on the right track. I do hope you’re
as pleased with this year’s result as I am.
Paul ramsay aO
ChairmaN
It has been a year of renewal and strong profit growth
for prime Media Group limited. With a new Ceo at the
helm, the Board has moved quickly and purposefully to
reposition the business to focus on its core competency of
regional broadcasting.
We have also acted to strengthen financial and corporate
governance with the appointment of lesley Kennedy
as Chief Financial officer and Company Secretary from
December 2010. lesley has an excellent pedigree as
CFo and Company Secretary and spent many years as a
chartered accountant and auditor with ernst & Young.
I welcome lesley to prime and look forward to her
continuing contribution to the group.
our renewed focus on regional broadcasting, along
with the completion of the non-core asset disposal
program, has delivered a tremendous turn around in the
performance of the business with a 53% lift in net profit
after tax, demonstrating the exceptional effort that has
gone into improving outcomes for prime shareholders.
Strong television revenue growth in the first half saw
the television division off to a terrific start to the year.
Management supported that revenue upswing with a raft
of new initiatives to drive incremental audience growth
and revenue opportunity. A new digital channel, 7mate,
added to the increased pallet of opportunity for the
television business, which delivered year on year eBItDA
growth of 14%.
With a 46% increase in eBItDA, the Queensland radio
division has delivered an exceptional result against a
backdrop of declining tourism, a tropical cyclone and
terrible flooding, all of which greatly impacted local
economies from the Sunshine Coast to Cairns in the
far north.
the losses incurred over past years in prime’s online
division have been substantially improved upon, and
we look forward to the online division playing an
increasing role in revenue generation and earnings
contribution. late in the financial year prime entered
into a partnership with Yahoo!7 to deliver deeper and
richer content opportunities to draw larger audiences
and provide greater opportunities to regional advertisers
wanting integrated advertising solutions, a space we now
dominate in the regional broadcasting sector.
Prime media GrouP ANNUAL REPORT 2011
3
CHIEF EXECUTIVE
OFFICER’S REPORT
I am very pleased to report to you that
Prime Media Group Limited made the
most of its opportunities in the 2011
financial year to deliver an $81.6 million
turn around in profit resulting from the
disposal of non-broadcasting assets,
strong growth in television revenue and
an exceptional improvement in earnings
from the radio division.
this result is the outcome of a company-wide review of operations and
the completion of the disposal of the outside broadcasting Australian
and new Zealand businesses and Moonlight Cinemas.
Revenue from continuing operations increased in the financial year to
$257 million, representing a 9% increase on the prior year. eBItDA of
$59.2 million is 17% above the prior year and reflects improved eBItDA
margins of 23%, up from 21% in the prior year. this resulted in a net profit
after tax of $27.2m from continuing operations, an increase of 53%.
Items disclosed as “significant items” contributed $1 million in net
profit after tax and compared favourably to the prior year net loss
after tax of $20 million.
Discontinuing operations resulted in a loss after tax of $1 million
in the current year, a substantial improvement on the prior year
loss after tax of $52.2 million and reflecting the finalisation of the
restructure of the business.
on 30 June 2011 the Company made the decision to exit the out of
home digital media business. As such the results of the digital media
business have been classified as discontinuing operations.
4
Prime media GrouP ANNUAL REPORT 2011
5
ChiEf EXECUTiVE OffiCEr’S rEPOrT (ContInueD)
Television – sTrong audience,
revenue & eBiTda growTh
prime’s television division went through a metamorphosis
in 2011, rebranding as pRIMe7 on the east coast and
GWn7 in Western Australia, to benefit from the strength
of the Seven network brand and affiliation. We also
enhanced local news bulletins, increased the number of
local weather reports and introduced unique advertising
integration opportunities for advertisers across all
markets, endeavours that have set pRIMe7 apart from
its competitors.
the Seven network launched its second digital
multi-channel, 7mate in east coast markets during the year.
7tWo and 7mate have delivered incremental audience
share to prime, resulting in a corresponding increase
in advertising revenue share. the digital channels were
also recently launched in Western Australia via GWn7.
television advertising revenue grew by 8% to $227.5
million. national advertising revenue grew by 12.9% year
on year, outperforming the market which grew at 8.67%, a
favourable variance of 4.23 percentage points. the national
television advertising market grew strongly in the first half
due to the federal election and mining tax advertising.
pRIMe7’s 3 aggregated market television advertising
revenue growth of 8.77% outperformed market growth
of 7.14% (KpMG data 3Agg markets). television eBItDA
of $63.2 million is a 14% increase on the prior year and
the eBItDA margin increased from 26% to 27%.
pRIMe7’s 3 aggregated market audience share increased
from 35.1% in FY10 to 36.6% in FY11. pRIMe7’s revenue
share increased from 36.29% to 36.84%, an increase of 0.55
percentage points, with agency revenue share increasing
by an impressive 1.5 percentage points to 39.6%.
television operating costs increased 6% with the majority
of the increase related to a contracted rate increase in the
Seven network program supply agreement. Additionally,
savings arising from an increase in the ACMA license fee
rebate have been offset by increases in advertising and
marketing expenses as a result of the re-launch of the
primary channels as pRIMe7 & GWn7, and the launch
of digital multi-channel 7mate.
radio – sTrong growTh
in a difficulT environmenT
prime Radio Group underwent a change process
that introduced a new senior management team and
reductions in operating expenses. Advertising revenue
grew by a modest, but respectable, 3% to $19.7 million
despite difficult trading conditions in the second half
arising from the impact of tropical Cyclone Yasi and wide
spread flooding in regional Queensland. total radio
revenue also grew by 3% to $21.1 million.
online – losses conTained
An eBItDA loss of $0.9 million in FY11 is a significant
improvement on the prior year loss of $3.3 million (100%
of business), reflecting the restructure of the business in
the first half of 2011. the FY11 result consolidates 100%
of the results of the on line business following prime’s
acquisition, on 30 June 2010, of the 66% of the business
it did not already own. the FY10 result includes prime’s
33% investment in the online business.
More recently we executed an agreement for the
provision of content by Yahoo!7 that has enriched the
site and broadened its appeal. We continue working
hard to bring the on line division to an earnings positive
position in the near future.
exiT from Pdm – ouT of home media
At 30 June 2011, we closed prime’s out of home digital
signage business, trading as prime Digital Media. All
costs associated with this exit have been fully provided
for as at 30 June 2011.
imProved deBT & gearing levels
the Group’s debt level (net of cash on hand) has
decreased in the current year by $51.4 million or 27%
to a closing balance of $135.7 million. this is largely
attributable to the sale of the outside broadcasting
business during the current year, which was carrying
debt of $24.1 million, in addition to the receipt, by the
Group, of sale proceeds of $20.5 million from the sale of
this business. the remaining improvement is attributable
to our growth in profitability. Accordingly the Company’s
gearing ratio improved from 58% at 30 June 2010, to
47% at 30 June 2011.
the company’s current bank loan facility for $260 million
expires in July 2012. Management has been working
with the Company’s bankers and secured commitments
for $200 million in bank loan financing repayable in full
in 4 years time. the Company expects to execute the
new facility agreement on 30 September 2011.
It’s been an exciting year at prime Media Group. We’ve
made the tough decisions and taken the necessary steps
to pave the way for stronger performance and improved
returns to shareholders.
I thank the Board for its tremendous support and the
management and staff of all divisions who have worked
tirelessly, but with great creativity and passion, to improve
the performance of the group.
Due to a wide ranging cost review and restructure of
the radio business, eBItDA increased 46% to $4.8 million
with margins increasing year on year from 16% to 23%.
ian audsley
CEO
6
1.
3.
2.
4.
5.
6.
7.
8.
1. Home and Away
2. Winners and losers
3. Downton Abbey
4. packed to the Rafters
5. Australia’s Got talent
6. Sunday night
7. Grey’s Anatomy
8. Better Homes and Gardens
Prime media GrouP ANNUAL REPORT 2011
7
CORPORATE INFORMATION
ABN 97 000 764 867
This annual report covers both Prime Media Group Limited (“the Company”) as an individual entity and the consolidated entity comprising Prime Media
Group Limited and its subsidiaries (“the Group”). The Group’s functional and presentation currency is AUD ($).
NAme
Directors
Paul Joseph Ramsay AO
Michael Stanley Siddle
Lachlan Keith Murdoch
Peter John Evans
Alexander Andrew Hamill
Ian Patrick Grier AM
Ian Richard Neal
Siobhan Louise McKenna
Ian Craig Audsley
Company secretaries
Robert Reeve
Andrew Cooper
Lesley Kennedy
RegisteReD offiCe
363 Antill Street
Watson ACT 2602
(02) 6242 3700
PositioN
DAte APPoiNteD
DAte ResigNeD
Chairman
Deputy Chairman
17 April 1985
17 April 1985
7 October 2010
27 March 1991
2 October 2003
6 June 2008
6 June 2008
20 August 2009
Chief Executive Officer
24 June 2010
–
–
9 November 2010
–
–
–
–
–
–
20 February 2009
16 June 2005
16 December 2010
14 October 2010
–
–
shARe RegisteR
Link Market Services Limited
Level 12
680 George Street
Sydney NSW 2000
Ph: 1300 554 474
Prime Media Group Limited shares are listed on the Australian Securities Exchange (Listing Code PRT).
BANk
ANZ
8/20 Martin Place
Sydney NSW 2000
AuDitoRs
Ernst & Young
680 George Street
Sydney NSW 2000
8
DIRECTORs’ REPORT
Your directors submit their report for the year ended 30 June 2011.
DiReCtoRs
The names and details of the Company’s directors in office during the
financial year and until the date of this report are as follows. Directors
were in office for this entire period unless otherwise stated.
NAmes, quAlifiCAtioNs, exPeRieNCe AND sPeCiAl
ResPoNsiBilities
PAul JosePh RAmsAy Ao
Non-executive Chairman (appointed 17 April 1985)
Mr Ramsay is Chairman of Paul Ramsay Holdings Pty Limited, a major
shareholder of the Company. He is also the Chairman of Ramsay Health
Care Limited, Australia’s largest private hospital owner. Mr Ramsay
has more than 45 years experience in real estate, health care, media
and communications. In 2002, Mr Ramsay was conferred an Officer
of the Order of Australia for services to the community through the
establishment of private health care facilities, expanding regional
television services and as a benefactor to a range of educational, cultural,
artistic and sporting organisations. In 2009, Mr Ramsay was appointed
Chairman of Sydney Football Club.
miChAel stANley siDDle
Non-executive Deputy Chairman (appointed 17 April 1985)
Mr Siddle has been Deputy Chairman of Paul Ramsay Holdings Pty Limited
since 1967. He is also Deputy Chairman of Ramsay Health Care Limited
and has been a Director of Prime Media Group since 1985.
PeteR JohN evANs fCA
Non-executive Director (appointed 27 march 1991)
Mr Evans is a Chartered Accountant, and was in public practice for almost
20 years with predecessor firms of KPMG. He has been a Director of Paul
Ramsay Holdings Pty Limited since 1987.
He is the Chairman of the Audit and Risk Committee and a member of the
Remuneration and Nomination Committee.
AlexANDeR ANDRew hAmill
Non-executive Director (appointed 2 october 2003)
Mr Hamill has worked in marketing and advertising in Australia and
globally for over 45 years. Mr Hamill was the Media Director of the
Australian Olympic Team in Sydney (2000), Athens (2004) and Beijing
(2008). Mr Hamill is a member of the Remuneration and Nomination
Committee and until 20 August 2009, he was also a member of the
Audit and Risk Committee.
iAN PAtRiCk gRieR Am
Non-executive Director (appointed 6 June 2008)
Mr Grier was employed as an executive in the private health care industry
for more than 20 years and held the position of Chief Executive Officer of
Ramsay Health Care Limited for 14 years until retiring in June 2008, when
he continued as a Non-Executive Director of that company. Mr Grier has
served as both President and Chairman of the Australian Private Hospitals
Association and sits on a number of industry committees. He is Chairman
of Relevare Pharmaceuticals and on the Board of Careers Australia Pty Ltd.
He is the Chairman of the Remuneration and Nomination Committee.
iAN RiChARD NeAl
Non-executive Director (appointed 6 June 2008)
Mr Neal is the principal of Management Abroad Pty Limited. He is a
Chairman for the Executive Connection and consults on business strategy
and implementation from a perspective of maximising shareholder value.
Prior to Management Abroad, Mr Neal was co-founder and Managing
Director of Nanyang Ventures Pty Limited from 1993 to 2004.
Mr Neal’s prior professional background is in financial markets,
commencing as an equities analyst and moving through various banking
positions until establishing Nanyang Ventures Pty Limited. Mr Neal is a life
member of the Financial Services Institute of Australia.
He is a member of the Audit and Risk Committee.
sioBhAN louise mCkeNNA
Non-executive Director (appointed 20 August 2009)
Ms McKenna has extensive media and government experience. She is
the Managing Partner of Illyria Pty Limited, a major shareholder of the
Company. Her other directorships include NBNCo, the entity established
by the Australian Government to build and operate its national broadband
network and The Australian Ballet. Ms McKenna is on a leave-of-absence
as a Commissioner of the Productivity Commission. She was previously a
Partner of a leading global management consulting firm, McKinsey and
Company.
Ms McKenna was appointed as a member of the Audit and Risk
Committee on 20 August 2009.
iAN CRAig AuDsley
Chief executive officer (appointed 16 June 2010)
executive Director (appointed 24 June 2010)
Mr Audsley has had over 25 years experience in the television industry.
He has held various senior executive roles at Southern Cross Television,
the Seven Network and the Nine Network.
Prime media GrouP AnnuAl RepoRt 2011
9
DIRECTORs’ REPORT
DiReCtoRs’ iNteRests
The relevant interest of each director in the shares and options issued by the Company at the date of this report is as follows:
P.J.Ramsay AO
M.S.Siddle
P.J.Evans
A.A.Hamill
I.P.Grier AM
I.R.Neal
S.L.McKenna
I.C.Audsley
oRDiNARy
shARes
oPtioNs oveR
oRDiNARy
shARes
109,903,654
984,082
24,286
–
–
–
–
–
–
–
–
–
–
–
–
–
iNteRests iN CoNtRACts oR PRoPoseD CoNtRACts with the ComPANy
No director has any interest in any contract or proposed contract with the Company other than as disclosed elsewhere in this report.
DiReCtoRshiPs iN otheR listeD eNtities
Directorships of other listed entities held by directors of the Company during the three years immediately before the end of the year are as follows:
DiReCtoR
ComPANy
Paul Joseph Ramsay AO
Michael Stanley Siddle
Peter John Evans
Ian Patrick Grier AM
Ian Richard Neal
Ian Craig Audsley
Ramsay Healthcare Limited (Chairman)
Ramsay Healthcare Limited (Deputy Chairman)
Ramsay Healthcare Limited
Broadcast Production Services Limited (Chairman)(1)
destra Corporation Limited(2)
Ramsay Healthcare Limited
Intrapower Limited
Dyesol Limited
Arasor Limited
Pearl Healthcare Limited
destra Corporation Limited(2)
PeRioD of DiReCtoRshiP
fRom
to
May 1975
May 1975
June 1990
July 2007
April 2008
June 1997
May 2007
September 2006
June 2006
September 2008
June 2008
Present
Present
Present
Present
Present
Present
Present
Present
July 2008
Present
Present
(1) Broadcast Production Services Limited was delisted from the Australian Securities Exchange on 07 October 2009.
(2) destra Corporation Limited was delisted from the Australian Securities Exchange on 31 August 2009.
ComPANy seCRetARies
ms lesley keNNeDy
Ms Kennedy was appointed as Company Secretary on 16 December 2010. She has been a Chartered Accountant for the past 17 years and currently holds
the role of Chief Financial Officer of Prime Media Group Limited.
mR ANDRew CooPeR
Mr Cooper was appointed as Company Secretary in June 2005. He has been a Chartered Accountant for the past 15 years and currently holds the role of
Group Financial Controller for Prime Media Group Limited.
eARNiNgs PeR shARe
Basic earnings per share
Basic earnings per share – continuing operations
Basic earnings per share from continuing operations before significant items (Note 7(d))
Diluted earnings per share
Diluted earnings per share – continuing operations
Diluted earnings per share from continuing operations before significant items (Note 7(d))
DiviDeNDs
Final dividend recommended – on ordinary shares
Dividends paid in the year: Interim for the year on ordinary shares
Final for 2010 shown as recommended in the 2010 financial report on ordinary shares
10
CeNts
7.4
7.7
7.4
7.4
7.7
7.4
CeNts
$’000
2.4
2.1
1.4
8,792
7,693
5,129
12,822
DIRECTORs’ REPORT
PRiNCiPAl ACtivities
The principal activities during the financial year of entities within the
consolidated entity were:
regional television broadcasting;
regional radio broadcasting;
•
•
• outside broadcast production; and
• film exhibition under the Moonlight Cinema brand
Other than the discontinuance of the outside broadcast production
segment and the film exhibition operations resulting from the sale of the
Australian and New Zealand outside broadcast production businesses
and the Moonlight Cinema business, there have been no other significant
changes in the nature of these activities during the year.
oPeRAtiNg AND fiNANCiAl Review
gRouP oveRview
During the year the Group disposed of the outside broadcasting businesses
in Australian and New Zealand. The sale of the Australian business was
completed on 28 October 2010 and the sale of the New Zealand business
was completed on 9 July 2010. Both transactions are discussed in further
detail below.
During the year the Group disposed of the Moonlight outdoor cinema
business. The sale was completed on 1 October 2010.
On 30 June 2011, the Group exited the out of home digital media business.
This completes the rationalisation of the group’s operations to its core
operating segments of:
regional television broadcasting;
regional radio broadcasting; and
•
•
• online media
PeRfoRmANCe iNDiCAtoRs
Management and the board monitor the Group’s overall performance,
from its implementation of the mission statement and strategic plan
through to the performance of the Group against operating plans and
financial budgets.
The board, together with management, have identified key performance
indicators (KPIs) that are used to monitor performance monthly. Key
management monitor KPIs on a regular basis. Directors receive the KPIs
for review prior to each board meeting allowing all directors to actively
monitor the Group’s performance.
DyNAmiCs of the BusiNess
The television advertising market remains the primary source of the Group’s
revenue, representing 88% (2010: 88%) of the Group’s total revenue. During
the current year the Group’s television advertising revenues grew by 8%
which exceeded the overall market growth of 7.1% (Per KPMG Market
Revenue reports).
During the year Golden West Network Pty Limited, a wholly owned
subsidiary, entered into a joint venture arrangement with a third party to
contract with the Commonwealth Government for the provision of their
Viewer Access Satellite Television service in Western Australia (“WA VAST”)
providing digital television in remote Western Australia. Under the terms
of the agreement the Commonwealth Government will fund all capital and
operating expenditure associated with the provision of this service up to an
amount of $40 million over a 9 year period to 30 June 2020.
Revenue for the radio business grew 5% on the previous year. The radio
business encountered difficult operating conditions during the current year.
In the first half of the year the division achieved revenue growth of 6% but
second half growth was heavily impacted by the Queensland floods and
Cyclone Yasi, which resulted in no growth in the second half of the year.
During the current year the Group completed the sale of its outside
broadcast production and Moonlight cinema businesses.
The outside broadcasting businesses were sold in two separate
transactions. The sale of the New Zealand operations to Sky Network
Television Limited was completed on 9 July 2010 and the sale of the
Australian operations to Gearhouse Broadcast Pty Limited was completed
on 28 October 2010. The board made the decision to dispose of these
businesses following a strategic review of the capital employed within the
Group. These businesses operated in markets outside of the Company’s
core competencies. Additionally, the level of capital investment required
by these businesses would have diverted valuable resources from the
Group’s more profitable core activities.
Under the terms of the sale agreement for the New Zealand business
the Company has entered into an “earn out” arrangement whereby the
Company is entitled to share in the ongoing profits of the business over
a 4 year period whilst also retaining 100% of the profits generated from
the 2011 Rugby World Cup event held in New Zealand in the following
financial year.
The sale of the Moonlight cinema business was completed on 1 October
2010. This business was not part of the Company’s core activities and its
contribution to the overall group result was minimal.
On 30 June 2011, the Group exited its out of home digital media business.
This business was not part of the Group’s core activities and continued
to report losses, despite the Group taking up, in prior years, significant
provisions against onerous contracts in this business. All costs associated with
the exit from this business have been fully provided for as at 30 June 2011.
The divestments that the Group has made during the current year has
allowed the Group to reduce the level of debt it is carrying whilst also
allowing management to concentrate on its core activities and drive
improved returns in both the television and radio businesses.
oPeRAtiNg Results foR the yeAR
The consolidated net profit after tax of the Group attributable to the
members of Prime Media Group Limited for the full year of $27,166,000
(2010: loss $54,459,000) represents an increase of $81,625,000 from the
prior year.
Excluding the impact of discontinued operations and significant items,
the net profit after tax from continuing operations for the full year
of $27,207,000 (2010: $17,735,000) was $9,472,000 or 53% up on the
previous corresponding period. (Refer to Note 7(d) of the accounts for
a reconciliation of the profit reported in the Consolidated Statement
of Comprehensive Income to profit before the impact of discontinued
operations and significant items).
Review of oPeRAtioNs
Revenue from continuing operations of $256,998,000 represents a growth
of $20,484,000, or 9%, on the prior year and exceeds growth in the
regional television advertising market as quoted by KPMG of 7.1% (AMB,
AMC and AMD). The introduction of Prime’s digital channels 7TWO,
introduced in March 2010 and 7mate, introduced in October 2010, has
contributed to this growth.
Cost of Sales has increased by $9,110,000 or 7.7% to $127,613,000
reflecting an improved Gross Margin % of 50.3% (2010: 49.9%). This is
primarily due to a reduction in ACMA licence fees payable as a result of
the increase in rebate rate to 41.5% in the current year (2010: 16.5%).
Broadcasting and transmission expenses increased by $4,514,000 or 10.1%
to $49,040,000 as a result of the introduction of the new digital channels;
7TWO and 7mate during the current year and increased program
advertising.
Administration expenses decreased by $1,797,000 or 9.3% to $17,573,000
reflecting the benefits of the Group’s cost review program undertaken
during the current year.
Prime media GrouP AnnuAl RepoRt 2011
11
DIRECTORs’ REPORT
oPeRAtiNg AND fiNANCiAl Review (CONTINUED)
shAReholDeR RetuRNs
Whilst the share price has remained relatively static at $0.69 (2010: $0.72) the Company is pleased to report that there has been improvement in returns to
shareholders through increased dividends and significant improvement in most other financial measures in the current year.
Basic Earnings Per Share (cents)(i)
Return on Assets (%)(i)
Weighted Average Cost of Capital (%)
Return on Equity (%)(i)(ii)
Net Debt (Net Debt + Equity) Ratio (%)
Share price ($)
Dividends per share (cents)
Total Shareholder Return (%)
2011
7.3
7.2
11.8
11.9
47
0.69
4.5
2.1
2010
4.8
4.3
10.9
8.3
58
0.72
2.6
49.2
(i) These returns have been calculated using net profit after tax before the impact of items disclosed as significant items. (Refer to Note 34 for details of significant items in
relation to both the continuing and discontinuing operations of the business).
(ii) Equity has been normalised for the impact of items disclosed as significant items.
Review of fiNANCiAl CoNDitioNs
Liquidity and capital resources
The Consolidated Cash Flow Statement illustrates that there was an increase in cash and cash equivalents in the year ended 30 June 2011 of $13,714,000
(2010: decrease $1,116,000). The increase in ash flows in comparison to the prior year is attributable to a number of factors. Operating activities generated
$34,419,000 (2010: $33,166,000) of net cash flows representing an increase of $1,253,000, or +3.8% on the prior year. The inclusion of the discontinued
operations in the cash flow statement is masking the underlying improvement in the cash flows from continuing operating activities. The discontinued
operations incurred a cash outflow of $7,608,000 relating to operating activities largely as a result of payments made under onerous contracts.
Cash inflows from investing activities of $10,160,000 (2010: $27,272,000 cash outflow) compares favourably to the prior year. The current year includes a
cash inflow of $20,508,000 relating to sale proceeds from the sale of businesses whilst the prior year included significant capital expenditure amounts
relating to these same businesses. This favourable variance in cash inflows was offset by cash outflows relating to financing activities of $30,865,000 (2010:
$7,010,000 cash outflow). The increase in cash outflow largely reflects repayment of debt and increased dividend payments to shareholders.
Capital structure
Interest-bearing loan and borrowings
Derivative financial instruments
Cash and short term deposits
Net debt
Total equity
Total capital employed
Gearing
Profile of debt
The profile of the Group’s debt finance is as follows:
Current
Obligations under finance leases
Derivative financial instruments
Liabilities directly associated with assets held for sale.
Non-current
Obligations under finance leases
Secured bank loan
12
CoNsoliDAteD
2011
$’000
153,450
1,687
(19,374)
135,763
153,113
288,876
2010
$’000
189,771
3,020
(5,664)
187,127
137,310
324,437
47%
58%
CoNsoliDAteD
2011
$’000
627
1,687
–
2,314
2,799
150,024
152,823
155,137
2010
$’000
408
3,020
24,162
27,590
3,057
162,144
165,201
192,791
DIRECTORs’ REPORT
The Group’s debt level has decreased in the current year largely as a result
of the sale of the outside broadcasting business during the current year,
which was carrying $24,162,000 of debt. Additionally improved profitability
of the continuing operations and sale proceeds from the businesses
disposed of during the current year have contributed to the reduction in the
level of debt, as reflected in the improved gearing ratio above. The Group
anticipates that its debt will continue to decrease over the coming year.
Subsequent to the financial year end the Company has secured
commitments from its bankers for $200,000,000 in bank loan financing
repayable in full in 4 years. The Company expects to execute the new
facility on 30 September 2011.
Capital expenditure
Capital expenditure of $9,727,000 in the current year (2010: $26,259,000)
is a return to more normal levels. The prior year amount included the
acquisition of two new high definition outside broadcasting vans which have
subsequently been sold as part of the disposal of the outside broadcasting
business. The Group expects capital expenditure requirements for the 2012
financial year will be in line with the current year levels.
Risk mANAgemeNt
The Group takes a proactive approach to risk management. The Board is
responsible for ensuring that risks, and also opportunities, are identified
on a timely basis and that the Group’s objectives and activities are aligned
with the risks and opportunities identified by the Board.
The Group has reviewed its risk management approach during the
current year and identified the need to increase focus in this area. As a
consequence, the Board has reviewed the structure of its sub-committees
and has reinstated the Audit Committee as an Audit and Risk Committee
and published a revised committee charter document.
A comprehensive review of the Group’s risk management objectives and
processes is currently underway, including the development of a risk
register and an appropriate framework to review and monitor risks.
The Board has a number of mechanisms in place to ensure that
management’s objectives and activities are aligned with the risks identified
by the Board. These include the following:
• Board approval of a strategic plan, which encompasses the
•
Group’s vision, mission and strategy statements, designed to meet
stakeholders’ needs and manage business risk.
Implementation of Board approved operating plans and budgets
and Board monitoring of progress against these budgets, including
the establishment and monitoring of KPIs of both a financial and
non-financial nature.
• The establishment of committees to report on specific business risks
such as environmental issues and occupational health and safety.
Risk management is further addressed in the Corporate Governance
Statement.
sigNifiCANt ChANges iN the stAte of AffAiRs
On 1 October 2010, the Moonlight Cinema business was sold.
On 9 July 2010, the New Zealand outside broadcasting business was sold.
On 28 October 2010, the Australian outside broadcasting business was sold.
Effective 30 June 2011, the Group exited the out of home digital media
business.
sigNifiCANt eveNts AfteR the BAlANCe DAte
On 26 August 2011 the Company secured a commitment from its
bankers to provide a $200 million bank loan facility with a term of 4 years,
repayable in full on expiry. Interest will be charged at a rate of BBSY plus a
margin of between 1.70% and 2.60%. Formal documentation is expected
to be executed on 30 September 2011.
likely DeveloPmeNts AND exPeCteD Results
The broad areas of focus for the 2012 financial year will be:
• continue to drive improved returns from the Group’s core operations of
regional broadcasting; and
• continued prudent management of debt and risk generally,
with a view to optimising returns to shareholders.
eNviRoNmeNtAl RegulAtioN AND PeRfoRmANCe
The Group’s operations are subject to various environmental regulations in
the jurisdictions and industry in which it has a presence.
In each of the jurisdictions, the Group has established an environmental
management system, which monitors compliance with existing
environmental regulations and new regulations as they are enacted. The
management system includes procedures to be followed, in conjunction
with actions to be taken by third parties, should an incident occur
which adversely impacts the environment. The Group’s operations hold
all relevant licences and permits and have implemented monitoring
procedures to ensure that it complies with licence conditions.
The Group has established data collection systems and processes to
monitor the Group’s potential reporting requirements under the National
Greenhouse and Energy Reporting Act. For the year ended 30 June 2011
the Group has not exceeded the thresholds that require it to become
registered under the NGER legislation.
The Directors are not aware of any breaches of any legislation during the
financial year, which are material in nature.
shARe oPtioNs
uNissueD shARes
As at the date of this report there were Nil (2010: 5,250,000) unissued
ordinary shares under options. Refer to note 28 of the financial statements
for further information.
Option holders do not have any right, by virtue of the option, to
participate in any share issue of the company or any related body
corporate.
shARes issueD As A Result of the
exeRCise of oPtioNs
During the financial year, employees and executives have not exercised
any options to acquire ordinary shares in Prime Media Group Limited.
iNDemNifiCAtioN AND iNsuRANCe
of DiReCtoRs AND offiCeRs
In accordance with the Corporations Act 2001, the directors disclose
that the Company has a Directors’ and Officers’ Liability policy covering
each of the directors and certain executive officers for liabilities incurred
in the performance of their duties and as specifically allowed under the
Corporations Act 2001. During the year, Prime Media Group Limited paid
premiums totaling $115,382 in relation to the Directors’ and Officers’
Liability policy. The terms of the policy specifically prohibit the disclosure
of any other details relating to the policy and therefore the directors are
not disclosing further particulars relating thereto.
Prime media GrouP AnnuAl RepoRt 2011
13
RemuNeRAtioN At A glANCe
2.
During the current year the Company engaged an external remuneration
consultant to undertake a full review of executive and NED remuneration.
This review included:
• A benchmarking review of existing executive and NED remuneration
arrangements against comparable positions in comparable companies;
• A review of existing short term incentive (STI) arrangements currently in
place and design of a new uniform STI plan to be implemented in the
financial year ending 30 June 2012; and
• A review of existing long term incentive (LTI) arrangements currently in
place and design of a new uniform LTI plan to be implemented in the
financial year ending 30 June 2012.
This report details the remuneration arrangements in place during
the current year and the remuneration arrangements the company is
transitioning to in the following financial year, as a result of the above
mentioned review.
The Company’s remuneration strategy involves management of 3
complimentary components of executive reward, namely total fixed
remuneration (TFR), short term incentives (STI) and long term incentives (LTI).
As part of the review of the Company’s remuneration strategy it is the
Company’s intention to pay total fixed remuneration in the 55th to 62.5th
percentile of its defined talent market to ensure a competitive offering
and to ensure outperformance is rewarded through variable remuneration
components only.
There have been no material changes to the short term incentive bonus
plan for the 2011 financial year. For 2011 performance period, 100% of the
STI bonus pool has been accrued and expected to be paid in September
2011. The total STI pool for 2011 was $774,453.
Long term incentive arrangements in 2011 include a loan forgiveness
plan and a share option plan. Benefits under the loan forgiveness plan
are received on achievement of service conditions. The share options
vest based on attainment of a predetermined share price in addition to
achievement of service conditions.
Following a review of the LTI arrangements currently in place, on 30 June
2011 the company cancelled the options on issue under the share option
plan and intend to issue to select executives performance rights under
a new LTI plan with predetermined performance conditions linked to
the earnings per share (EPS) of the Company and the Company’s power
ratio (revenue share: audience share), with service conditions of 3 years
applying. The loan forgiveness plan is in run off mode and will cease with
effect from 30 June 2012.
The remuneration of non-executive directors of the Company consists only
of directors’ fees. NED fees have reduced in the current year reflecting the
reduction in scope of certain director’s responsibilities on rationalisation of
the group.
DIRECTORs’ REPORT
RemuNeRAtioN RePoRt (AuDiteD)
This remuneration report for the year ended 30 June 2011 outlines the
remuneration arrangements of the Company and the Group in accordance
with the requirements of the Corporations Act 2001 (the Act) and its
regulations. This information has been audited as required by section
308(3C) of the Act.
The remuneration report details the remuneration arrangements for Key
Management Personnel (KMP) of the Company and the Group. For the
purposes of this report Key Management Personnel (KMP) of the Group
are defined as those persons having authority and responsibility for
planning, directing and controlling the major activities of the Company
and Group, directly or indirectly, including any director (whether executive
or otherwise) of the Company, and includes the five executives in the
Company and the Group receiving the highest remuneration.
For the purposes of this report, the term ‘executive’ includes the Chief
Executive Officer (CEO), executive directors, senior executives, general
managers and secretaries of the Company and the Group and the term
‘director’ refers to non-executive directors (NED) only.
The remuneration report is presented under the following sections:
1. Individual key management personnel disclosures
2. Remuneration at a glance
3. Board oversight of remuneration
4. Non-executive director remuneration arrangements
5. Executive remuneration arrangements
6. Company performance and the link to remuneration
7. Executive contractual arrangements
8. Equity Instrument disclosures
1.
iNDiviDuAl key mANAgemeNt
PeRsoNNel DisClosuRes
Details of KMP including the top five remunerated executives of the Parent
and Group are set out below.
Key management personnel
(i) Directors
P.J.Ramsay AO Chairman (non-executive)
M.S.Siddle
Deputy Chairman (non-executive)
L.K.Murdoch
Director (non-executive)
– appointed 7 Oct 2010,
resigned 9 Nov 2010
P.J.Evans
Director (non-executive)
A.A.Hamill
Director (non-executive)
I.P.Grier AM
Director (non-executive)
I.R.Neal
Director (non-executive)
S.L.McKenna
Director (non-executive)
I.C.Audsley
Director (Chief Executive Officer)
(ii) executives
D.Edwards
Chief Executive Officer – Television
G.Smith
Chief Technology Officer
L.Kennedy
Chief Financial Officer (appointed 6 Dec 2010)
D.Walker
S.Wood
R.Gamble
R.Reeve
National Sales Manager (appointed 27 Sept 2010)
Director – Integration and Digital Media
Chief Executive Officer – Radio and Digital Media
(resigned 5 Nov 2010)
Group General Counsel (resigned 29 Sept 2010) and
Company Secretary (resigned 14 Oct 2010)
P.Stubbings
Chief Financial Officer (resigned 8 Dec 2010)
There have been no changes to KMP after reporting date and before the
date this financial report was authorised for issue.
14
DIRECTORs’ REPORT
3.
BoARD oveRsight of RemuNeRAtioN
Remuneration and Nomination Committee
The Remuneration and Nomination Committee is responsible for making
recommendations to the board on the remuneration arrangements for
non-executive directors (NEDs) and executives.
The Remuneration and Nomination Committee assesses the
appropriateness of the nature and amount of remuneration of NEDs
and executives on a periodic basis by reference to relevant employment
market conditions, with the overall objective of ensuring maximum
shareholder benefit from the retention of a high performing director and
executive team. In determining the level and composition of executive
remuneration, the Remuneration and Nomination Committee also
engages external consultants to provide independent advice.
The Remuneration and Nomination Committee comprises 3 non-executive
directors including 2 independent non-executive directors. Further
information on the committee’s role, responsibilities and membership can
be seen at www.primemedia.com.au.
Remuneration approval process
The board approves the remuneration arrangements of the CEO and
executives and all awards made under the long-term incentive (LTI) plan,
following recommendations from the Remuneration and Nomination
Committee. The board also sets the aggregate remuneration of NEDs
which is then subject to shareholder approval.
The Remuneration and Nomination Committee approves, having regard
to the recommendations made by the CEO, the level of the Group short
term incentive (STI) pool.
Remuneration strategy
The Company’s remuneration strategy is designed to attract, motivate and
retain employees and NEDs by identifying and rewarding high performers
and recognising the contributions of each employee in achieving
continued growth of the Group.
To this end, key objectives of the Company’s reward framework are to
ensure that remuneration practices:
• Are aligned to the Group’s business strategy;
• Offer competitive remuneration benchmarked against the external
market;
• Provide strong linkage between individual and Group performance
and rewards; and
• Align the interests of executives and shareholders.
Remuneration structure
In accordance with best practice corporate governance, the structure
of non-executive director and executive remuneration is separate and
distinct.
4.
NoN-exeCutive DiReCtoR
RemuNeRAtioN ARRANgemeNts
Remuneration policy
The board seeks to set aggregate remuneration at a level that provides
the Company with the ability to attract and retain directors of the highest
calibre, whilst incurring a cost that is acceptable to shareholders.
The amount of aggregate remuneration sought to be approved by
shareholders and the fee structure is reviewed annually against fees paid
to NEDs of comparable companies. The board considers advice from
external consultants when undertaking the annual review process.
The Company’s Constitution and the ASX Listing rules specify that
the NED fee pool shall be determined from time to time by a general
meeting. The latest determination was at the annual general meeting
(AGM) held in November 2007 when shareholders approved an aggregate
fee pool of $750,000 per annum (excluding superannuation and retirement
benefits arising under the Directors’ Retirement Plan).
The board will not seek any increase for the NED pool at the 2011 AGM.
structure
The remuneration of NEDs consists of directors’ fees. Each director
receives a fixed annual fee. One NED is currently entitled to benefits under
the Directors Retirement Plan, approved by shareholders in November
1997. The board agreed to discontinue the Directors Retirement Plan in
the 2008 financial year for all new directors appointed after that date.
The NED fees in 2011 are $132,238 or 22% lower than the NED fees in
the prior year reflecting the reduced scope of responsibilities of certain
directors on rationalisation of the group. During the current financial year
the company engaged an external consultant to perform an independent
review of NED fees. As a result of this review with effect from 1 July 2011,
NED fees will increase by $132,600 to $600,000 per annum to align with
market rates.
The remuneration of NEDs for the year ended 30 June 2011 and 30 June
2010 is detailed in table 1 and 2 in section 7.
Prime media GrouP AnnuAl RepoRt 2011
15
DIRECTORs’ REPORT
RemuNeRAtioN RePoRt (AuDiteD) (CONTINUED)
5.
exeCutive RemuNeRAtioN ARRANgemeNts
Remuneration levels and mix
The Group aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the Group and
aligned with market practice.
The recently updated remuneration policy of the Company is to aim to pay total fixed remuneration (TFR) in the 55th to 62.5th percentile of its defined
talent market to ensure a competitive offering and to ensure outperformance is rewarded through variable remuneration components only.
In the current financial year:
• The CEO’s target remuneration mix comprises 51% TFR, 20% target STI opportunity and 29% LTI. The LTI value includes the current year accounting
expense associated with previous grants of share based payments as disclosed in table 1 and 2 in section 7.
• Other Executive’s target remuneration mix comprises 68% TFR, 19% target STI opportunity and 13% LTI.
The remuneration strategy was recently updated on conclusion of a detailed review of executive remuneration and adopted by the board. It outlines the
following targets which the Company aims to transition to:
• The CEO’s target remuneration mix comprises 40-50% TFR, 25-30% target STI opportunity and 25-30% LTI.
• Other executive’s target remuneration mix comprises 50-60% TFR, 20-25% target STI opportunity and 20-25% LTI.
The implementation of a new executive LTI plan in FY 2012 will assist in the transition to the above remuneration mix targets.
structure
In the 2011 financial year, the executive remuneration framework consisted of the following components:
• Fixed remuneration; and
• Variable remuneration.
The table below illustrates the structure of the Company’s executive remuneration arrangements:
RemuNeRAtioN
ComPoNeNt
vehiCle
PuRPose
liNk to PeRfoRmANCe
Fixed remuneration
• Represented by total employment
• Set with reference to role, market
• No link to Company performance
cost (TEC)
and experience
• Comprises base salary,
• Executives are given the
superannuation contributions
and other benefits
STI component
• Paid in cash
opportunity to receive their fixed
remuneration in a variety of
forms including cash and fringe
benefits such as motor vehicles.
It is intended that the manner of
payment chosen will be optimal
for the recipient without creating
undue cost to the Group
• Rewards executives for their
contribution to achievement
of Group and business unit
outcomes, as well as individual
key performance indicators (KPIs)
LTI component
• Awards are made in the form of
share options
• From FY 12 onwards, awards
will be made in the form of
performance rights
• Rewards executives for their
contribution to the creation
of shareholder value over the
longer term
• EBITDA, Revenue and EPS are the key
financial metrics in FY 11 (new STI plan
implemented in FY 12: Earnings per
share (EPS) is the key financial metric);
• Linked to other internal financial
measures, market share, power ratio,
customer service, risk management
and leadership
• Vesting of awards is dependent on
the achievement of pre determined
share price targets. (new LTI plan
implemented in FY 12: vesting of
awards dependent on the achievement
of EPS and power ratio targets)
Fixed remuneration
Executive contracts of employment do not include any guaranteed base pay increases.
TEC is reviewed annually by the Remuneration and Nomination Committee. The process consists of a review of Company, business unit and individual
performance, relevant comparative remuneration internally and externally and, where appropriate, external advice independent of management.
The fixed component of executive remuneration is detailed in Table 1 and Table 2 in section 7.
Variable remuneration – short Term Incentives (sTI)
The Group operates an annual STI program that is available to executives and awards a cash bonus subject to the attainment of clearly defined Group,
business unit and individual measures.
The total potential STI available is set at a level so as to provide sufficient incentive to executives to achieve the operational targets and such that the cost
to the Group is reasonable in the circumstances.
The actual STI payments awarded to each executive depend on the extent to which specific targets set at the beginning of the financial year are met. The
targets consist of a number of key performance indicators (KPIs) covering financial and non-financial, corporate and individual measures of performance.
16
DIRECTORs’ REPORT
PeRfoRmANCe meAsuRes
Financial measures:
• Divisional EBITDA
• Group EBITDA
• Earnings per share
• Product yield management
Non-financial measures:
• Market shares
• Customer relations
•
Implementation of strategic
organisational plans
• Risk management
• Leadership contributions
PRoPoRtioN of sti AwARD
meAsuRe APPlies to
50% – 100%
0% – 50%
These measures were chosen as they represent the key drivers for the
short-term success of the business and provide a framework for delivering
long term value. The STI opportunity linked to financial measures covers
a range from 50% to 100% and varies depending upon each individual
executive’s ability to influence results at a group level and/or divisional level.
In relation to the new STI plan implemented in FY 2012, financial measures
more strongly aligned with shareholders interests have been adopted.
Group EBITDA and Divisional EBITDA are no longer included as financial
measures and all executives have 25% – 50% of their STI opportunity
linked to EPS targets.
The aggregate of the annual STI payments available for executives across
the Group is subject to the approval of the Remuneration and Nomination
Committee. On an annual basis, after consideration of performance
against KPI’s, the Remuneration and Nomination Committee, in line with
their responsibilities, determine the amount, if any, of the short term
incentive paid to each executive. This process usually occurs within three
months after the reporting date. Payments made are delivered as a cash
bonus in the following reporting period.
sTI awards for 2010 and 2011 financial years
For the 2010 financial year, 79% of the STI cash bonus pool of $446,213 as
previously accrued in that period vested to executives and was paid in the
2011 financial year. There were no forfeitures.
The Remuneration and Nomination Committee will consider the STI
payments for the 2011 financial year in September 2011. The maximum
STI cash bonus available for the 2011 financial year is $774,453. STI
payments have been accrued at 91% of the maximum cash bonus available
for the 2011 financial year based on individual executive’s performance
against KPI’s. Any adjustments between the actual amounts to be paid
in September 2011 as determined by the Remuneration and Nomination
Committee and the amounts accrued will be adjusted in the 2012 financial
year. The minimum amount of the STI cash bonus assuming that no
executives meet their respective KPI’s for the 2011 financial year is nil.
There was no alteration to the STI bonus plan for the year however as
noted above a new plan has been implemented in FY 2012 which more
strongly aligns executive remuneration with shareholder returns.
The STI component of executives’ remuneration is outlined in Table 1 and
Table 2 in section 7.
Variable remuneration – Long Term Incentives (LTI)
LTI awards are made to executives in order to align remuneration with
the creation of shareholder value over the long term. As such, LTI awards
are only made to executives and other key talent who have an impact on
the Group’s performance against the relevant long-term performance
measure.
During the year the company had in place the following LTI plans:
• Share Option plan
• Loan Forgiveness plan
A recommendation from the executive remuneration review project
undertaken during the current financial year was to cease any future
awards under these plans and to transition to a new LTI plan in the form of
awards of Performance Rights with performance conditions more closely
aligned to shareholder returns and minimum 3 year service conditions
more aligned with contemporary corporate governance requirements.
As such, the options on issue under the share option plan were cancelled
on 30 June 2011 and the loan forgiveness plan will be wound up effective
30 June 2012.
At 30 June 2011 there are currently no options on issue under any LTI plan.
It is the Boards intention to issue performance rights to certain executives
in September 2011, and for those executives currently receiving benefit
under the loan forgiveness plan, consideration will be given to awarding
those executives with performance rights when the loan forgiveness plan
is wound up on 1 July 2012.
The report below outlines the plans in place during the current financial
year and the new plans introduced in the 2012 financial year.
LTI – share option plan (ceased effective 30 June 2011)
Structure
LTI awards to executives are made under the employee share option plan
and are delivered in the form of share options. Each option entitles the
holder to one fully paid ordinary share in the company. In FY 2011 and
FY 2010 the CEO was the only executive with options on issue under the
plan. The options vest 1/3rd after 1 year (tranche 1) 1/3rd after 2 years
(tranche 2) and 1/3rd after 3 years (tranche 3) from the grant date subject
to meeting share price targets, with no opportunity to retest. The exercise
price of the options is set at 120% of the market price at the date of grant.
The options can be exercised up to 5 years from the date of grant.
Performance measure to determine vesting
The Group uses growth in share price as the performance measure for the
share option plan.
The share options will only vest should the volume weighted average
price of the Company’s ordinary shares sold on the ASX in the 10 days
preceding the vesting date, exceed preset targets established on the
grant date of the options. The share price targets for the options on issue
during the current year are $1.10 for tranche 1, $1.25 for tranche 2 and
$1.40 for tranche 3 and represent a premium on the share price at grant
date of 47%, 67% and 87% respectively.
Termination and change of control provisions
Where a participant ceases employment prior to the vesting of their
award, the options are forfeited unless the board applies its discretion
to allow vesting at or post cessation of employment in appropriate
circumstances.
In the event of a change of control of the Group, the performance period
end date will generally be brought forward to the date of the change of
control and awards will vest subject to performance over this shortened
period, subject to ultimate board discretion.
LTI awards for 2011 financial year
No options were granted under the employee share option plan during
the current financial year. The options on issue under the plan were
cancelled on 30 June 2011.
Hedging of equity awards
The Company prohibits executives from entering into arrangements
to protect the value of unvested LTI awards. The prohibition includes
entering into contracts to hedge their exposure to options awarded as
part of their remuneration package.
Adherence to this policy is monitored on an annual basis and involves
each executive signing an annual declaration of compliance with the
hedging policy.
Margin loans
In relation to margin loans, it is the Company’s policy that where there is
(or the director or executive reasonably believes there will be) an unmet
margin call, an event of default or another similar occurrence, the director
or executive must immediately disclose to the company secretary or chief
financial officer the necessary information so the Company can comply
with its continuous disclosure obligations under the ASX Listing Rules.
Table 3 in section 8 provides details of options awarded and vested during
the year and table 4 in section 8 provides details of the value of options
awarded, exercised and lapsed during the year.
Prime media GrouP AnnuAl RepoRt 2011
17
DIRECTORs’ REPORT
RemuNeRAtioN RePoRt (AuDiteD) (CONTINUED)
5.
exeCutive RemuNeRAtioN
ARRANgemeNts (CONTINUED)
LTI – Loan Forgiveness Plan (inactive)
During the 2007 financial year loans were granted to certain executives.
The loans are interest free and the loan amount repayable by the
executive is reduced on the basis of continued service with the Company.
20% of the original loan balance is forgiven on the 1 July of each year if
the executive remains employed with the Company at that date. If the
executive terminates his or her employment during the five year period
the balance of the loan at the date of termination is repayable by the
executive on the date of termination. No loans have been made under
this plan subsequent to the 2007 financial year and it is the intention of the
board to wind up this plan on 1 July 2012.
LTI – Performance Rights Plan (to be implemented in FY 2012)
Structure
In FY 2012 the Company’s intention is to provide LTI awards to certain
executives under a new Employee Performance Rights Plan. Each right
entitles the holder to one fully paid ordinary share in the Company subject
to the achievement of certain pre determined performance and service
conditions. The rights will vest over a period of 3 years subject to meeting
performance measures, with no opportunity to retest. In relation to
performance conditions, 60% of the rights will be subject to achievement
of annual earnings per share (EPS) targets and 40% of the rights will be
subject to achievement of annual Power Ratio targets (revenue share:
audience share). The exercise price of the performance rights is nil. The
rights will lapse 30 days after vesting date.
Performance measure to determine vesting
The Company has selected EPS and Power Ratio targets as performance
measures as management can influence EPS and the Power Ratio which
the board believe are fundamental drivers of the financial performance
which drives returns to shareholders.
Termination and change of control provisions
Where a participant ceases employment prior to the vesting of their
award, the performance rights are forfeited unless the board applies
its discretion to allow vesting at or post cessation of employment in
appropriate circumstances.
In the event of a change of control of the Group, all unvested performance
rights will vest on a pro rata basis, unless otherwise determined by the board.
6.
ComPANy PeRfoRmANCe AND the liNk to
RemuNeRAtioN
Company performance and its link to short-term incentives
(i)
The key financial performance measures that determine STI payment
outcomes for Group executives in the current year are:
• Earnings per share (EPS); and
• EBITDA
Both EPS and EBITDA are normalised for any items disclosed as
“significant items” when determining STI entitlements.
The following tables outline Prime Media Group Limited’s EPS and EBITDA
(normalised) over the five year period from 1 July 2006 to 30 June 2011.
EARNINGs PER sHARE
(Cents per share)
25.9
24.3
24.9
10.9
9.9
7.4 7.3
4.8
2007
2008
2009
2010
2011
Fully Diluted EPS
Fully Diluted EPS
(normalised)
-15.0
-24.5
EBITDA FROM CONTINUING OPERATIONs
(A$, Million)
76.3
61.4
58.4
55.9
58.8
2007
2008
2009
2010
2011
Both EPS and EBITDA performance were strong in the current year relative
to the prior year. EPS (normalised) grew 52% when compared to the prior
year. As a result, the board anticipates that executives will receive close
to 100% of the STI award accrued in the 2011 financial year.
It should be noted that the Company issued 229 million shares in 2009
as part of a capital raising. This should be considered when reviewing
the EPS data disclosed in the above table.
18
Other Executives
All other KMP’s have rolling contracts with no fixed term.
The Company may terminate an executive’s employment by providing
6 months written notice or providing payment in lieu of the notice
period (based on the fixed component of the executive’s remuneration).
Executives may terminate their employment agreements by providing
3-6 months written notice depending on the terms of their agreement.
The Company may terminate the contract at any time without notice if
serious misconduct has occurred. Where termination with cause occurs the
executive is only entitled to that portion of remuneration that is fixed, and
only up to the date of termination.
Payment to outgoing executives
The following arrangements applied to outgoing executives in office
during the 2011 financial year:
• Mr. Robert Gamble, CEO of Radio, was paid a termination payment
of $266,158 in accordance with the terms of his contract.
• Mr. Robert Reeve, legal counsel, was paid a termination payment
of $157,241 in accordance with the terms of his contract.
• Mr. Paul Stubbings, Chief Financial Officer, was paid a termination
payment of $100,484 in accordance with the terms of his contract and
a further discretionary payment of $188,800 in recognition of his service
and significant contribution on a number of transactions undertaken
to rationalise the group operations.
The following arrangements applied to outgoing executives in office
during the 2010 financial year:
Mr Syphers resigned as Chief Executive Officer on 31 March 2010.
The following termination arrangements applied:
• Mr Syphers was entitled to a termination payment of 1.25 times his
annual salary by virtue of his length of service which totaled $613,750.
Provision for this payment of $150,000 per year had been made and
disclosed in the remuneration reports for the year ended 30 June
2009 and 30 June 2008. The remaining balance of $313,750 has been
disclosed under termination benefits in the remuneration report of 30
June 2010; and
• Mr Syphers also received a benefit of $746,088 arising from the
forgiveness, on termination, of an outstanding loan balance of $399,147.
Mr Syphers contract of employment pre-dates the effective date of the
new executive terminations benefits cap legislation and as such the
restrictions applying to this legislation did not apply to this termination.
The board acknowledges the regulations applying as a result of the
termination cap legislation and confirms that all KMP contracts comply
with this new legislation.
DIRECTORs’ REPORT
(ii) Company performance and its link to long-term incentives
The key measure that drives the vesting of long term incentives in the
current year is the Company share price.
The following tables outline the company’s share price over the five year
period from 1 July 2006 to 30 June 2011.
CLOsING sHARE PRICE AT THE END OF EACH FINANCIAL YEAR
$3.72
$2.60
$0.50
$0.72
$0.69
2007
2008
2009
2010
2011
The share price has been relatively static over the last 2 years. The
Company has reviewed the current LTI offering of premium priced options
and in light of the Company’s particular circumstances, has ceased further
awards under this plan and introduced a new performance rights plan
considered more appropriate to the Company’s circumstances.
7.
exeCutive CoNtRACtuAl ARRANgemeNts
Remuneration arrangements for KMP are formalised in employment
agreements. Details of these contracts are provided below:
Chief Executive Officer
The CEO, Mr Audsley, is employed under a rolling contract.
Under the terms of the present contract:
• The CEO receives fixed remuneration of $650,000 per annum
• The CEO’s maximum STI opportunity is 40% of annual TEC
• The CEO is eligible to participate in the company’s LTI share option
plan on terms determined by the board, subject to receiving the
required or appropriate shareholder approval
• The CEO may resign from his position and thus terminate this contract
by giving 6 months written notice.
• The CEO’s employment may be terminated by the company by
providing 6 months written notice. The Company may elect to provide
6 months payment in lieu of the notice period, or a combination of
notice and payment in lieu of notice. Payment in lieu of notice will be
based on fixed remuneration and any short term incentive amounts for
the prior year.
• The CEO’s employment contract may be terminate by the company
at any time without notice if serious misconduct has occurred. Where
termination with cause occurs the CEO is only entitled to that portion
of his remuneration contract that is fixed, and only to the date of
termination.
• The Company or the CEO may terminate the contract within 6
months of the Company ceasing to be listed on the official list of the
Australian Securities Exchange (ASX) or a material diminution in the
CEO’s functions, status or duties occurring. In these circumstances, the
Company must provide 12 months notice or 12 months payment in lieu
of notice, or a combination of the two.
The remuneration of the key management personnel are set out in Tables
1 and 2 in section 7.
Prime media GrouP AnnuAl RepoRt 2011
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*
Prime media GrouP AnnuAl RepoRt 2011
21
DIRECTORs’ REPORT
RemuNeRAtioN RePoRt (AuDiteD) (CONTINUED)
8.
equity iNstRumeNts
Table 3: Compensation options: Granted and vested during the year (Consolidated)
gRANteD
teRms AND CoNDitioNs foR eACh gRANt
vesteD
NumBeR
gRANt
DAte
fAiR
vAlue PeR
oPtioN
At gRANt
DAte ($)
exeRCise
PRiCe PeR
oPtioN ($)
exPiRy
DAte
fiRst
exeRCise
DAte
lAst
exeRCise
DAte
NumBeR
2011 NIL
–
–
–
–
–
–
–
2010
Director Ian Audsley
5,250,000
16/06/10
$0.13
$0.90
15/06/15
16/06/11
15/06/15
total
5,250,000
–
–
–
%
–
–
Table 4: Value of options granted, exercised, lapsed or cancelled during the year
vAlue of oPtioNs
gRANteD DuRiNg
the yeAR
$
vAlue of oPtioNs
exeRCiseD DuRiNg
the yeAR
$
vAlue of oPtioNs
lAPseD DuRiNg
the yeAR
$
vAlue of oPtioNs
CANCelleD DuRiNg
the yeAR
$
RemuNeRAtioN
CoNsistiNg of
oPtioNs foR
the yeAR
%
Ian Audsley
–
–
166,250
202,704
28.8
For details on the valuation of the options, including models and assumptions used, please refer to note 28. There were no alterations to the terms and
conditions of options granted as remuneration since their grant date. At 30 June 2011, 3,500,000 options were cancelled, by mutual agreement, between
Mr. Audsley and the Company.
The maximum grant, which was payable assuming that all service and performance criteria were met, was equal to the number of options or rights
granted multiplied by the fair value at the grant date. The minimum payable assuming that service and performance criteria were not met was zero.
shares issued on exercise of remuneration options
During the year ended 30 June 2011 Nil shares (2010: Nil shares) have been issued due to the exercise of options.
22
DIRECTORs’ REPORT
DiReCtoRs’ meetiNgs
The number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings attended by each
director were as follows:
DiReCtoRs’ meetiNgs
meetiNgs of Committees
AuDit AND Risk
RemuNeRAtioN
AND NomiNAtioN
No of
meetiNgs
helD*
No of
meetiNgs
AtteNDeD
No of
meetiNgs
helD*
No of
meetiNgs
AtteNDeD
No of
meetiNgs
helD*
No of
meetiNgs
AtteNDeD
9
9
1
9
9
9
9
9
9
9
9
1
9
9
9
8
9
9
–
–
–
3
–
3
–
3
–
–
–
–
3
–
3
–
2
–
–
–
–
3
3
–
3
–
–
–
–
–
3
3
–
3
–
–
P.J.Ramsay AO
M.S.Siddle
L.K.Murdoch*
P.J.Evans
A.A.Hamill
I.R.Neal
I.P.Grier AM
S.L.McKenna
I.C.Audsley
*
Indicates the maximum number of meetings the director was eligible to attend during the period.
Committee memBeRshiP
Members acting on the committees of the Board during the year were:
Audit and Risk
P.J.Evans (Chairman)
I.R.Neal
S.L.McKenna
Remuneration and Nomination
I.P.Grier AO (Chairman)
P.J.Evans
A.A.Hamill
RouNDiNg
The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option
available to the Company under ASIC Class Order 98/0100. The Company is an entity to which the Class Order applies.
AuDitoR iNDePeNDeNCe AND NoN-AuDit seRviCes
The Directors have received and are satisfied with the ‘Audit Independence Declaration’ provided by Prime Media Group Limited’s external auditors,
Ernst & Young. The Audit Independence Declaration has been attached to the Directors’ Report on the following page.
NoN-AuDit seRviCes
The following non-audit services were provided by the entity’s auditor, Ernst & Young. The directors are satisfied that the provision of the non-audit
services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of each type
of non-audit service provided means that the auditor’s independence was not compromised.
Ernst & Young received or are due to receive the following amounts for the provision of non-audit services:
Income Tax Return & GST compliance services
Advisory Services
46,683
67,635
CoRPoRAte goveRNANCe
In recognising the need for the highest standards of corporate behaviour and accountability, the directors of Prime Media Group Limited support and
have, unless otherwise disclosed in the corporate governance statement, adhered to the principles of corporate governance. The Company’s corporate
governance statement is contained in the following section of this report.
Signed in accordance with a resolution of the directors.
P. J. Evans
Director
Sydney, 28 September 2011
Prime media GrouP AnnuAl RepoRt 2011
23
AUDITOR’s INDEPENDENCE DECLARATION
24
CORPORATE GOVERNANCE sTATEMENT
The Board of Directors of Prime Media Group Limited is responsible for
the corporate governance framework of the Group having regard to the
ASX Corporate Governance Council (CGC) published guidelines as well
as its corporate governance principles and recommendations. The Board
guides and monitors the business and affairs of Prime Media Group
Limited on behalf of the shareholders by whom they are elected and to
whom they are accountable.
Management recognise their responsibility in the implementation and
maintenance of an effective system of corporate governance.
Prime Media Group Limited’s corporate governance practices were in
place throughout the year ended 30 June 2011 and were compliant with
the Corporate Governance Council’s principles and recommendations
except as noted in this statement.
For further information on corporate governance policies adopted by
Prime Media Group Limited, refer to our website www.primemedia.com.au
PRiNCiPle 1 – lAy soliD fouNDAtioNs
foR mANAgemeNt AND oveRsight
BoARD ResPoNsiBilities
The relationship between the board and senior executives is critical
to the Group’s long term success. The directors are responsible to the
shareholders for the performance of the Group in both the short and long
term and seek to balance sometimes competing objectives in the best
interests of the Group as a whole. The focus of the board is to enhance
the interest of shareholders and other key stakeholders and to ensure the
Group is properly managed.
The Company has an established Board charter that outlines the roles and
responsibilities of the Board and its Committees. The charter also outlines
the operational structure that the Company is to follow.
The board is responsible for ensuring that management’s objectives and
activities are aligned with the expectations and risks identified by the
board. The board has a number of mechanisms in place to ensure this is
achieved including:
• board approval of a strategic plan designed to meet stakeholders’
needs and manage business risk;
• ongoing development of the strategic plan and approving initiatives
and strategies designed to ensure the continued growth and success
of the entity; and
implementation of budgets by management and monitoring progress
against budget – via the establishment and reporting of both financial
and non-financial key performance indicators.
•
Other functions reserved to the board include:
• approval of the annual and half-yearly financial reports;
• approving and monitoring the progress of major capital expenditure,
capital management, and acquisitions and divestures;
• ensuring that any significant risks that arise are identified, assessed,
appropriately managed and monitored; and
reporting to shareholders.
•
The board meets regularly and intends to meet at least six times each year.
A director may at any time request the Company Secretary to convene a
meeting of the board. On at least an annual basis the board sets aside a
day for detailed discussions on the Group’s business strategies at which
presentations are received from executives.
Whilst at all times the board retains full responsibility for guiding and
monitoring the Group, it makes use of sub-committees to discharge its
stewardship. Each Committee has adopted a formal charter setting out
matters relevant to the composition, responsibilities and administration of
the Committee.
The board has established the following committees:
• Audit and Risk Committee; and
• Remuneration and Nomination Committee.
All new directors are provided with a copy of the board and
sub-committee charter documents. The charter documents are available
on the Company website.
PeRfoRmANCe Review
The performance of executives is reviewed regularly against measurable
and qualitative indicators. Whilst such reviews are included within the
responsibilities of the Remuneration and Nomination Committee, the
Board also monitors the performance of executives as part of its review
of the performance of the Group’s business segments at each meeting
of the board. During the reporting period, the board has conducted
performance evaluations of key executives. The performance indicators
against which the executives are assessed are aligned with the financial
and non-financial objectives of the Company. Subject to applicable laws,
the employment of executives whose performance is considered to be
unsatisfactory may be terminated.
PRiNCiPle 2 – stRuCtuRe the BoARD to ADD vAlue
ComPositioN of the BoARD At the DAte of this RePoRt
NAme
PositioN
Paul J Ramsay AO
Non-Executive Chairman (appointed 1985)
Michael S Siddle
Non-Executive Deputy Chairman (appointed 1985)
Peter J Evans
Alex A Hamill
Ian R Neal
Non-Executive Director (appointed 1991)
Non-Executive Director (appointed 2003)
Non-Executive Director (appointed 2008)
Ian Patrick S Grier AM Non-Executive Director (appointed 2008)
Siobhan L McKenna Non-Executive Director (appointed 20 August 2009)
Ian C Audsley
Chief Executive Officer (appointed 16 June 2010)
Executive Director (appointed 24 June 2010)
Details of the skills, experience and expertise relevant to the position of
director held by each director are set out in the Directors’ Report.
In order to achieve the objectives of the board as stated above, the
composition of the board is determined by applying the following
principles:
• The number of board members will be a minimum of 3 members and
a maximum of 12 members;
• The board consists of primarily non-executive directors;
• The Chairman of the board should be a non-executive director; and
• The directors should possess a broad range of skills, qualifications
and experience.
BoARD iNDePeNDeNCe
The directors of the Company have an overriding duty to perform their
duties in the best interests of the Company. Directors are required
to declare potential conflicts of interest, interests in contracts, other
directorships or offices held, potential related party transactions and the
acquisition or disposal of Company shares.
Under the Board Charter, where a conflict of interest arises or a perceived
conflict of interest exists, the director concerned declares the potential or
perceived conflict of interest. The director is then excluded from all board
discussions relating to the issue around which the conflict of interest has arisen.
Prime media GrouP AnnuAl RepoRt 2011
25
CORPORATE GOVERNANCE sTATEMENT
PRiNCiPle 2 – stRuCtuRe the BoARD to ADD vAlue
(CONTINUED)
BoARD iNDePeNDeNCe (CONTINUED)
Recommendation 2.1 of the ASX Corporate Governance Council’s
Recommendations recommends that a majority of the board should be
independent directors.
The board considers an independent director to be a non-executive
director who is not a member of management and is free of any business
or other relationship that could materially interfere with, or reasonably be
perceived to materially interfere with, the independent exercise of their
judgement. The board considers the independence of its non-executive
directors on an annual basis.
As at the date of this report, the board consists of four independent
non-executive directors (Alexander Hamill, Ian Neal, Siobhan McKenna
and Patrick Grier), three non-executive directors (Paul Ramsay, Michael
Siddle, and Peter Evans) and one executive director (Ian Audsley).
Although the Company has not complied with Recommendation 2.1, the
board considers that the non-executive directors, who do not meet the
definition of independent director, have the management, corporate,
financial and operational expertise and skills which are of particular
relevance to their duties and functions as directors of the Company.
Each of the non-independent non-executive directors have extensive
experience in television and radio broadcasting industries having
operated in these industries for up to 35 years.
ChAiRmAN iNDePeNDeNCe
The Board Charter sets out that the roles of Chairman and Chief Executive
Officer are strictly separate positions and must not be exercised by the
same individual.
The Chairman of the board is Mr Paul Ramsay AO. The board recognises
the ASX Corporate Governance Council’s Recommendation 2.2 that
the Chairman of the board should be an independent director. The
board further recognises that, as Mr Ramsay is a director of a substantial
shareholder of the Company, he does not meet the definition of
independence. The Company has not complied with Recommendation
2.2 because the board believes that Mr Ramsay is the most appropriate
person to lead the board and that he brings to the board quality and
independent judgement to all relevant issues falling within the scope
of the role of Chairman and that the Group as a whole benefits from his
knowledge, experience and leadership.
Mr Ramsay has over 35 years experience in the television and media industry,
as well as extensive experience as a director and Chairman of two Australian
publicly listed entities, which he founded. This experience is considered to
be invaluable to the Company in terms of industry expertise as well as the
management and review of growth opportunities for the Company.
BoARD ComPositioN
The Company has not complied with the ASX Corporate Governance
Council’s Recommendation 2.4 relating to the establishment of a
Nomination Committee for the full financial year. Although the ongoing
composition of the board is a regular discussion item at most board
meetings, the board has acknowledged the need for a more structured
approach towards succession planning and ongoing review of the board
composition. In August 2011 the board reinstated the Remuneration
committee as the ”Remuneration and Nomination Committee” and
published on its website the revised committee charter document. The
Company’s size does not warrant a separate nomination committee. The
board and sub-committee make consistent and regular use of industry
experts in the fields of new business opportunity. The skills and industry
experience of the board as a whole is regularly reviewed and where there
is a need for additional experience or knowledge to supplement the
existing board, the appointment of additional board members will be
considered.
The appointment and removal of directors is governed by Articles 82-94 of
the parent entity’s Constitution. Directors appointed to fill casual vacancies
must offer themselves for re-election, and be elected, at the next following
Annual General Meeting of the Company in order to continue in office.
Also, at each Annual General Meeting, one third of the directors must
resign and, in order to continue in office, must offer themselves for
re-election and be elected at the meeting. No director shall serve more
than three years without being a candidate for re-election.
PeRfoRmANCe evAluAtioN
The Company has not complied with the ASX Corporate Governance
Council’s Recommendation 2.5 that it should disclose the process for
evaluating the performance of the board, its committees and individual
directors in the following respects:
(1) whilst the board regularly evaluates its performance and the
performance of its committees and the individual directors, it has not
established formal processes for those purposes, other than review of
the executive director’s remuneration and of non-executive directors
fees and benefits by the Remuneration and Nomination Committee
as appropriate. During the year there have been no appointments to
the board other then the Company Secretary position. As part of the
recruitment process the board nominated four board members to
oversee the process;
(2) it has not established or implemented formal induction procedures
for new board appointees or new key executives because it has a
practice that new board appointees and new key executives are given
a comprehensive briefing on the Group’s activities and operations by
the Chief Executive Officer and Chief Financial Officer.
iNDePeNDeNt PRofessioNAl ADviCe
Each director has full access to the Company Secretary and the right of
access to all relevant Company information. Any director who requires
legal advice in relation to the performance of his or her duties as a director
of the Company is permitted to seek advice, on approval of the Chairman
and all costs reasonably incurred are reimbursable by the Company. When
the advice is received, it is made available to the full board.
PRiNCiPle 3 – PRomote ethiCAl
AND ResPoNsiBle DeCisioN mAkiNg
The Company strives to act with honesty and integrity and to be a
respected and valued operator in the media sector and the communities
in which it operates. The Board and the Company’s commitment to ethical
and responsible decision making is reflected in the internal policies and
procedures of the Company.
ethiCAl CoNDuCt
The Company promotes ethical and responsible behaviours for its
directors and employees through the implementation of a Code of
Conduct and a range of supporting internal policies and procedures that
apply to all companies within the Group. These policies and procedures
outline the standards of honest, ethical and law abiding behaviour
expected by the Company.
All parties are encouraged to address problems to the attention of
management or the board, where there may be non-compliance with
policies and procedures governing ethical and law abiding conduct.
26
CORPORATE GOVERNANCE sTATEMENT
The Company has recently adopted the ASX Corporate Governance
Council’s Recommendation 3.1 with the establishment of a formal Code
of Conduct, which essentially provides documentation of a range of
policies and procedures currently in place. The Code of Conduct is
available to all staff and directors and is published on the Company’s
website. The detailed policies and procedures relating to ethical and law
abiding conduct are currently included in the employee handbook which
is available to all employees and directors on the Company Intranet. All
new employees are provided with a copy of the employee handbook upon
commencement of employment and they are required to confirm that they
have reviewed and acknowledge their understanding of the guidelines
and policies outlined in this handbook. The employee handbook forms
part of a policy library that addresses required conduct in relation to:
• Personal Behaviour;
• Security;
• Privacy;
• Discrimination;
• Workplace Safety;
• Conflict of Interests; and
• Others.
The Company also requires all employees to undertake regular online
training covering topics that promote their understanding of ethical and
safe work practices and conduct. As part of its ongoing commitment to
improved corporate governance disclosure, the board has reviewed all
policy and charter documents and subsequently published them on the
Company website.
seCuRities tRADiNg PoliCy
Under the Company’s Securities Trading policy, a director, executive or
staff member must not trade in any securities of the Company at any time
when they are in possession of unpublished, price sensitive information
(‘inside information’) in relation to those securities.
Before undertaking any trading of securities in the Company, including the
exercise of executive share options, an executive must first obtain approval
of the Company Secretary and a director must first obtain approval of the
Chairman.
The Group’s Securities Trading policy outlines the following “Closed
Periods” during which Restricted Persons and their associates are not
permitted to trade in Prime Securities:
• The period from 31 December to the day on which the half year results
are announced to the Australian Securities Exchange;
• The period from 30 June to the day on which the full year results are
announced to the Australian Securities Exchange; and
• 28 days immediately leading up to and including the day of the Annual
General Meeting.
As required by the ASX Listing Rules, the Company notifies the ASX of any
transaction conducted by directors in the securities of the Company.
PRiNCiPle 4 – sAfeguARD iNtegRity
iN fiNANCiAl RePoRtiNg
AuDit AND Risk Committee
The board has established an Audit and Risk Committee whose conduct
is governed by a formal charter of responsibilities. This charter is
published on the Company’s website. It is the board’s responsibility to
ensure that an effective internal control framework exists within the entity.
This includes internal controls to deal with both the effectiveness and
efficiency of significant business processes, the safeguarding of assets,
the maintenance of proper accounting records, and the reliability of
financial information as well as non-financial considerations such as the
benchmarking of operational key performance indicators. The board has
delegated responsibility for establishing and maintaining a framework of
internal control and ethical standards to the Audit and Risk Committee.
The Committee also provides the board with additional assurance
regarding the reliability of financial information for inclusion in the financial
reports. All members of the Audit and Risk Committee are non-executive
directors.
For details regarding the Audit and Risk Committee’s responsibilities to
recognise and manage risk refer to principle 7.
The Audit and Risk Committee must meet at least two times each year but is
recommended that the committee meets between 4 and 5 times each year.
Members of the Audit and Risk Committee as at the date of this report are
as follows:
• Mr P.J.Evans FCA (Chairman)
• Ms S.L.McKenna
• Mr I.R.Neal
Members of the Audit and Risk Committee must be a minimum of 3
non-executive directors and at least two members of the committee
must be independent. Details of the qualifications of the members of
the Audit and Risk Committee, the number of meetings of the Audit and
Risk Committee held during the current year and the attendees at those
meetings are set out in the Directors’ Report.
The Group’s Auditor attended the Audit and Risk Committee meetings
and reported to the Committee at those meetings. In addition, the
directors considered and discussed numerous audit related matters during
the course of directors’ meetings held throughout the year and were
in regular communication with the Company’s Auditors to discuss and
seek advice on specific matters concerning the Company’s financial and
reporting obligations.
The Company has not complied with the ASX Corporate Governance
Council’s Recommendation 4.2 in the following respects:
•
the Chairman of the Audit and Risk Committee, Mr Peter Evans, is not
an independent director. The board, having considered the functions
and responsibilities of the Chairman of the Audit and Risk Committee
and the qualifications and experience of Mr Evans, believe that Mr
Evans is the most appropriate of the directors to be the Chairman of
the Audit and Risk Committee. Mr Evans is a Fellow of the Institute of
Chartered Accountants, with 20 years experience in the accounting
field, and a board member on many of the subsidiaries’ boards, giving
him a comprehensive oversight of the risks facing the Group as whole.
Details of the qualifications of Audit and Risk Committee members are set
out in the Directors’ Report.
Prime media GrouP AnnuAl RepoRt 2011
27
CORPORATE GOVERNANCE sTATEMENT
PRiNCiPle 5 – mAke timely AND
BAlANCeD DisClosuRe
The board has established policies and procedures to ensure that the
disclosure requirements of the ASX Listing Rules are adhered to. These
policies are outlined in the Continuous Disclosure policy published on the
Company website.
Established processes require that all disclosures relating to the release to
the market of potentially price sensitive information must be reviewed by
the board and approved for release. The Chairman and Chief Executive
Officer are the only parties approved to make public comment in relation
to the financial disclosures of the Company.
The board has an established practice whereby all proposed ASX releases
are circulated to the Board for review and sign off prior to the release
being made. The board has also established a reporting process requiring
the Company Secretary to report to the board at each board meeting of
all disclosures made to the ASX under the Listing Rules.
The Company Secretary is responsible for all communications with the
ASX and for educating senior management in relation to the Company’s
continuous disclosure obligations.
PRiNCiPle 6 – ResPeCt the Rights of shAReholDeRs
The Company acknowledges the importance of effective investor relations
through providing clear communications and information channels for
all shareholders. The board aims to ensure that the shareholders are
informed of all major developments affecting the Group’s state of affairs.
Communication of information to shareholders includes the following:
(1) The annual report is available to all shareholders. The Board ensures
that the annual report includes relevant information about the
operations of the Group during the year, changes in the state of affairs
of the Group and details of future developments, in addition to the
other disclosures required by the Corporations Act 2001;
(2) The half-yearly report contains summarised financial information and
a review of the operations of the Group during the period. Half-year
financial statements prepared in accordance with the requirements of
the Accounting Standards and the Corporations Act 2001 are lodged
with the Australian Securities and Investments Commission and
the ASX. The financial statements are sent to any shareholder who
requests them;
(3) The Company ensures that all price sensitive information is disclosed
to the ASX in accordance with the continuous disclosure requirements
of the Corporations Act 2001 and the ASX Listing Rules;
(4) Notices of all general meetings are sent to all shareholders; and
(5) The Company is constantly looking at ways of making its
communications more effective and has been undergoing an active
review of the information it publishes on its website. The Company has
developed a separate corporate website, www.primemedia.com.au.
The Company aims to ensure that all material releases to the ASX are
also published on the Company’s website in a timely manner after the
release to the ASX has been confirmed.
ANNuAl geNeRAl meetiNgs
The board encourages full participation of shareholders at the Annual
General Meeting to ensure a high level of accountability and identification
with the Group’s strategy and goals.
The shareholders are requested to vote on the appointment of directors,
the Remuneration Report, the granting of securities to directors and
changes to the Constitution. A copy of the Constitution is available to any
shareholder who requests it.
In accordance with the Corporations Act 2001, the Company provides
its Auditors with a notice of its Annual General Meeting and makes time
available within this meeting for the Auditor to address the meeting
if required and for members of the Company to ask questions of the
Auditors in this forum.
PRiNCiPle 7 – ReCogNise AND mANAge Risk
The board oversees the establishment, implementation and review
of the Group’s risk management practices. The Group has continued
its approach to proactive risk management. The identification and
effective management of risk, including calculated risk-taking is viewed
as an essential part of the Company’s approach to creating long-term
shareholder value. To facilitate the execution of the board’s responsibilities
to manage risk, a separate Audit and Risk subcommittee of the board has
been established.
The Audit and Risk Committee is charged with the responsibility of
overseeing an annual assessment of the effectiveness of risk management
and internal compliance and control. The tasks of undertaking and
assessing risk management and internal control effectiveness are
delegated to management through the Chief Executive Officer, including
responsibility for the day to day implementation of the Company’s risk
management and internal control systems. Management reports to the
Audit and Risk Committee and the board on the Company’s key risks and
the extent to which it believes these risks are being adequately managed.
The reporting on risk management is a standard agenda item at all regular
board meetings.
Risk management focuses on strategic, financial, operational and legal/
compliance risks through the following compliance and control systems:
•
•
•
requiring management to supply comprehensive financial and
operational reports, which specifically highlight variances and areas of
potential exposure. Regular reports to the board include reports from
the heads of the Group’s business segments;
requiring actual results to be reported against budgets approved
by the directors and revised forecasts for the year to be prepared
regularly. The Company has a comprehensive budgeting system with
an annual budget approved by the directors. Actual results against
budget and revised forecasts for the year are prepared and supplied to
the Board at least monthly;
requiring board approval for significant capital expenditure and
expenditure on revenue account. Procedures adopted in this regard
include annual budgets, detailed appraisal and review prior to major
expenditure or commitments, and comprehensive due diligence
requirements where businesses are being acquired or strategic
alliances are being entered into;
28
CORPORATE GOVERNANCE sTATEMENT
• monitoring and reviewing continuous disclosure (refer to comments
•
•
under Principle 5 relating to disclosure);
instigating an action plan or policy as soon as a risk is identified and
monitoring its implementation;
implementing occupational health and safety strategies and
management systems (including monitoring and review procedures) in
all business segments to achieve high standards of performance and
compliance with regulations;
• promoting risk identification and management within the Group as a
•
significant obligation of every employee; and
including in the responsibilities of the roles of Chief Executive Officer
and Company Secretary, identification of risks affecting each business
segment and the development of strategies to minimise those risks.
The Company does not have an internal audit function. The board believe
that the size and nature of the Company’s operations currently do not
warrant a separate internal audit function.
For the purposes of assisting investors to understand better the nature
of the risks faced by the Company, the board has prepared a list of
operational risks as part of the Principle 7 disclosures. The board notes
however that this does not necessarily represent an exhaustive list and that
it may be subject to change based on underlying market events:
• fluctuations in consumer demand that impact advertising market
•
•
revenues;
impact of new media technologies;
the occurrence of force majeure events that may affect our significant
suppliers;
increasing costs of operations, including labour costs;
•
• changed operating, market or regulatory environment as a result of
changes in government media policy.
Underpinning these efforts is a comprehensive set of policies and
procedures directed towards achieving the following objectives in relation
to the requirements of Principle 7:
• effectiveness and efficiency in the use of the Company’s resources;
• compliance with applicable laws and regulations;
• preparation of reliable published financial information.
Ceo AND Cfo CeRtifiCAtioN
In accordance with section 295A of the Corporations Act 2001, the Chief
Executive Officer and the Chief Financial Officer have provided a written
statement to the board that :
• Their view provided on the Company’s financial report is founded on a
sound system of risk management and internal compliance and control
which implements the financial policies adopted by the board;
• The Company’s risk management and internal compliance and control
system is operating effectively in all material respects.
The board agrees with the views of the ASX on this matter and notes that
due to its nature, internal control assurance from the CEO and CFO can
only be reasonable rather than absolute. This is due to such factors as the
need for judgement, the use of testing on a sample basis, the inherent
limitations in internal control and because much of the evidence available
is persuasive rather than conclusive and therefore is not and cannot be
designed to detect all weaknesses in control procedures.
PRiNCiPle 8 – RemuNeRAte fAiRly
AND ResPoNsiBly
RemuNeRAtioN AND NomiNAtioN Committee
The Company has established a Remuneration and Nomination
Committee. The Committee is governed by an established charter that is
published on the Company website.
Members of the Remuneration and Nomination Committee as at the date
of this report are as follows:
• Mr I.P.Grier (Chairman)
• Mr P.J.Evans
• Mr A.A.Hamill
Details of the number of meetings of the Remuneration and Nomination
Committee held during the year and the attendees at those meetings are
set out in the Directors’ Report.
The Remuneration and Nomination Committee reviews the remuneration
arrangements and employment conditions applicable to executives
and any executive directors. In making these determinations, regard
is had to comparable industry or professional salary levels, and to the
specific performance of the individuals concerned. The Company clearly
distinguishes the structure of non-executive directors’ remuneration
(paid in the form of a fixed fee) and that of any executive director and
executives.
The remuneration of managers and staff other than executives and
executive directors is within the authority of the Chief Executive Officer.
The Chief Executive Officer has discretion in regard to the remuneration
of individual managers subject to the proviso that the overall level of
remuneration is within budget guidelines as approved by the board prior
to preparation of the annual budget.
The Remuneration and Nomination Committee regularly reviews the
effectiveness of the long term incentive schemes to ensure that the
structure remains effective. Recommendations in respect of the granting
of incentives under any long term incentive schemes are made by the
Remuneration and Nomination Committee to the board. In accordance
with the Listing Rules of the Australian Securities Exchange, options issued
to executive directors are required to be approved by shareholders in
general meeting.
A full discussion of the Company’s remuneration philosophy and
framework and the remuneration received by directors and executives
during the year is set out in the Remuneration Report, which comprises
part of the Directors’ Report.
Prime media GrouP AnnuAl RepoRt 2011
29
CONsOLIDATED sTATEMENT OF COMPREHENsIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2011
CoNtiNuiNg oPeRAtioNs
Revenue and other income
Revenue from services
Interest income
Other income
total revenue and other income
Cost of sales
gross profit
Broadcasting and transmission expenses
Marketing expenses
Administration expenses
Depreciation and amortisation expenses
Finance Costs
Share of associate losses
Profit from continuing operations before specific items and income tax
Specific items
Gain from MtM derivative financial instruments
Fair value movement in receivable – deferred contingent consideration
Transfer of foreign currency translation reserve to profit and loss
Gain from disposal of available for sale financial assets
Impairment expense – intangible assets (radio broadcast licences)
Impairment expense – loan to associates
Impairment expense – television program rights
Restructuring expense
CEO termination expenses
One off increase to employee entitlements resulting from award change
destra administration costs
Redundancies
PRofit fRom CoNtiNuiNg oPeRAtioNs BefoRe iNCome tAx
Income tax expense
PRofit/(loss) fRom CoNtiNuiNg oPeRAtioNs AfteR tAx
DisCoNtiNuiNg oPeRAtioNs
loss fRom DisCoNtiNuiNg oPeRAtioNs AfteR tAx
Net PRofit/(loss) AfteR tAx
Notes
4(A)
4(A)
4(A)
4(B)
5(C)
6(B)
CoNsoliDAteD
2011
$’000
2010
$’000
250,030
231,365
420
6,548
256,998
(127,613)
129,385
(49,040)
(2,529)
(17,573)
(10,175)
(11,548)
(586)
37,934
1,333
1,181
(995)
–
–
–
–
–
–
–
–
(198)
39,255
(11,067)
28,188
330
4,819
236,514
(118,503)
118,011
(44,526)
(1,742)
(19,370)
(10,224)
(11,242)
(1,601)
29,306
1,518
–
–
921
(12,529)
(4,384)
(1,302)
(2,207)
(1,871)
(626)
(226)
(718)
7,882
(10,218)
(2,336)
(1,022)
27,166
(52,208)
(54,544)
30
CONsOLIDATED sTATEMENT OF COMPREHENsIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2011
other comprehensive income
Transfer of foreign currency translation reserve to profit and loss
Foreign currency translation differences for the period recognised directly in equity
otheR ComPReheNsive iNCome foR the PeRioD AfteR tAx
totAl ComPReheNsive iNCome/(loss) AfteR tAx
Net Profit/(loss) for the period is attributable to:
Non-controlling interest
Owners of the Parent
total comprehensive income/(loss) for the period is attributable to:
Non-controlling interest
Owners of the Parent
Basic earnings per share (cents per share)
profit/(loss) for the year
profit/(loss) from continuing operations
profit from continuing operations before significant items
Diluted earnings per share (cents per share)
profit/(loss) for the year
Notes
CoNsoliDAteD
2011
$’000
995
(201)
794
2010
$’000
1,032
218
1,250
27,960
(53,294)
–
27,166
27,166
–
27,960
27,960
7.4
7.7
7.4
7.4
(85)
(54,459)
(54,544)
(85)
(53,209)
(53,294)
(15.0)
(0.6)
4.9
(15.0)
7
7
7
7
Prime media GrouP AnnuAl RepoRt 2011
31
CONsOLIDATED sTATEMENT OF FINANCIAL POsITION
As AT 30 JUNE 2011
Notes
CoNsoliDAteD
2011
$’000
2010
$’000
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Intangible assets
Other assets
Current tax assets
Assets of disposal group classified as held for sale
total Current Assets
Non-Current Assets
Receivables
Investments in associates
Investment in Available-for-sale financial assets
Property, plant and equipment
Deferred tax assets
Intangible assets and goodwill
Other assets
total Non-Current Assets
totAl Assets
liABilities
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Current tax liabilities
Provisions
Derivative financial instruments
9
10
16
11
5
6(C)
10
12
14
15
5
16
11
17
18
5
19
24
Liabilities directly associated with assets classified as held for sale
6(C)
17
18
19
20
21
21
total Current liabilities
Non-Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Provisions
total Non-Current liabilities
totAl liABilities
Net Assets
equity
equity attributable to equity holders of the parent interest
Contributed equity
Reserves
Accumulated losses
Parent interests
totAl equity
32
19,374
54,387
616
2,001
–
76,378
–
76,378
672
–
5,138
54,334
8,052
224,694
2,332
295,222
371,600
5,664
51,514
832
2,462
57
60,529
39,888
100,417
317
80
3,137
56,308
12,093
225,284
1,561
298,780
399,197
57,584
60,406
627
3,077
2,255
1,687
65,230
–
65,230
–
152,823
434
153,257
218,487
153,113
408
–
8,102
3,020
71,936
24,162
96,098
68
165,201
520
165,789
261,887
137,310
310,262
(78)
(157,071)
153,113
153,113
310,262
(1,537)
(171,415)
137,310
137,310
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Prime media GrouP AnnuAl RepoRt 2011
33
I
Y
T
U
q
E
N
I
s
E
G
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H
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F
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C
CONsOLIDATED sTATEMENT OF CAsH FLOws
FOR THE YEAR ENDED 30 JUNE 2011
Notes
CoNsoliDAteD
2011
$’000
2010
$’000
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Borrowing costs paid
Income tax refunds received
Income tax paid
Net cash flows from operating activities
9(A)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Proceeds from sale of available-for-sale financial assets
Proceeds from sale of business operations
Payment of deferred settlement for acquisition of subsidiaries and related business assets
290,607
(239,315)
504
(13,659)
1,170
(4,888)
34,419
1,049
(9,727)
34
20,508
(1,250)
(154)
(300)
10,160
–
76,000
(1,110)
(92,933)
(12,822)
(30,865)
13,714
5,664
(4)
301,726
(254,349)
355
(12,842)
4,577
(6,301)
33,166
45
(26,259)
1,998
–
(1,339)
–
(1,717)
(27,272)
(159)
92,000
(1,998)
(88,838)
(8,015)
(7,010)
(1,116)
6,669
111
5,664
9
19,374
Loan funds to other parties
Loan funds to related entities
Net cash flows from/(used in) investing activities
Cash flows from financing activities
Cost of issue of ordinary shares
Proceeds from borrowings
Finance lease liability payments
Repayments of borrowings
Dividends paid
Net cash flows used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Net foreign exchange differences
Cash and cash equivalents at end of period
34
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
1 CoRPoRAte iNfoRmAtioN
The consolidated financial report of Prime Media Group Limited (the
“Company”) for the year ended 30 June 2011 was authorised for issue in
accordance with a resolution of the directors on 28 September 2011.
Prime Media Group Limited is a company limited by shares incorporated
in Australia whose shares are publicly traded on the Australian Securities
Exchange.
The nature of the operations and principal activities of the Group are
described in the Directors’ Report.
2
summARy of sigNifiCANt
ACCouNtiNg PoliCies
Basis of consolidation
Business combinations
Significant accounting judgements, estimates and assumptions
Basis of preparation
Statement of Compliance with IFRS
tABle of CoNteNts
(A)
(B)
(C) New Accounting Standards and Interpretations
(D)
(E)
(F)
(G) Operating segments
Foreign currency translation
(H)
Cash and cash equivalents
(I)
Trade and other receivables
(J)
Property, plant and equipment
(K)
Goodwill and intangible assets
(L)
Investments and other financial assets
(M)
Investment in associates
(N)
Trade and other payables
(O)
Interest-bearing loans and borrowings
(P)
Provisions and employee leave benefits
(Q)
Share-based payment transactions
(R)
Leases
(S)
Revenue recognition
(T)
Government grants
(U)
Income tax
(V)
(W) Other taxes
(X)
(Y)
(Z)
(AA)
Derivative financial instruments and hedging
Derecognition of financial assets and financial liabilities
Impairment of financial assets
Impairment of non-financial assets other than goodwill and
indefinite life intangibles
(BB) Contributed equity
(CC) Earnings per share
(DD) Non-current assets and disposal groups held for resale and
discontinued operations
(A) BAsis of PRePARAtioN
The financial report is a general-purpose financial report, which has been
prepared in accordance with the requirements of the Corporations Act 2001,
Australian Accounting Standards and other authoritative pronouncements
from the Australian Accounting Standards Board. The financial report has
been prepared on a historical cost basis, except for derivative financial
instruments, land and buildings, available-for-sale investments, and
investments in associates that have been measured at fair value.
The financial report is presented in Australian dollars and all values are
rounded to the nearest thousand dollars ($’000) unless otherwise stated
under the option available to the Company under ASIC Class order
98/0100. The Company is an entity to which the class order applies.
(B) stAtemeNt of ComPliANCe with ifRs
The financial report complies with Australian Accounting Standards
and International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
(C)
New ACCouNtiNg stANDARDs AND
iNteRPRetAtioNs
ChANges iN ACCouNtiNg PoliCy AND DisClosuRes.
The accounting policies adopted are consistent with those of the previous
financial year except as follows: The Group has adopted the following new
and amended Australian Accounting Standards and AASB interpretations
as of 1 July 2010:
• AASB 2009-8 Amendments to Australian Accounting Standards
– Group Cash-settled Share-based Payment Transactions [AASB 2]
effective 1 July 2010
• AASB 2009-5 Further Amendments to Australian Accounting Standards
arising from the Annual Improvements Project [AASB 5, 8, 101, 107,
117, 118, 136 & 139] effective 1 July 2010
• AASB 2010-3 Amendments to Australian Accounting Standards arising
from the Annual Improvements Project effective 1 July 2010
When the adoption of the Standard or Interpretation is deemed to have
an impact on the financial statements or performance of the Group, its
impact is described below:
AAsB 2009-8 Amendments to Australian Accounting standards
– group Cash-settled share-based Payment transactions
The amendments clarify the scope of AASB 2 Share-based Payment
by requiring an entity that receives goods or services in a share-based
payment arrangement to account for those goods or services no matter
which entity in the group settles the transaction, and no matter whether the
transaction is settled in shares or cash. The amendments incorporate the
requirements previously included in Interpretation 8 Scope of AASB 2 and
Interpretation 11 AASB 2 – Group and Treasury Share Transactions. It did
not have an impact on the financial position or performance of the Group.
ANNuAl imPRovemeNts PRoJeCt
In May 2009 and June 2010 the AASB issued omnibus or amendments
to its Standards as part of the Annual Improvements Project, primarily
with a view to removing inconsistencies and clarifying wording. There
are separate transitional provisions and application dates for each
amendment. The adoption of the following amendments resulted in
changes to accounting policies but did not have any impact on the
financial position or performance of the Group.
• AASB 5 Non-current Assets Held for Sale and Discontinued
Operations: clarifies that the disclosures required in respect of
non-current assets and disposal groups classified as held for sale
or discontinued operations are only those set out in AASB 5. The
disclosure requirements of other Accounting Standards only apply
if specifically required for such non-current assets or discontinued
operations. As a result of this amendment, the Group amended its
disclosures in note 6.
• AASB 8 Operating Segments: clarifies that segment assets and
liabilities need only be reported when those assets and liabilities are
included in measures that are used by the chief operating decision
maker. The Group has disclosed segment assets by operating segment
as this information is reviewed by the chief operation decision maker.
The Group does not allocate its liabilities by operating segment for
the chief operating decision maker and has therefore not allocated
these liabilities to operating segments in the disclosures in Note 34
Operating Segments.
• AASB 107 Statement of Cash Flows: states that only expenditure that
results in recognising an asset can be classified as a cash flow from
investing activities. The amendment will not have any impact on the
presentation of the statement of cash flows.
• AASB 136 Impairment of Assets: the amendment also clarified that the
largest unit permitted for allocating goodwill, acquired in a business
combination, is the operating segment as defined in AASB 8 before
aggregation for reporting purposes. The amendment has no impact
on the Group as all goodwill held by the Group is allocated with the
operating segments as defined in AASB 8.
• AASB Interpretation 17 Distribution of Non-cash Assets to Owners:
this interpretation provides guidance on accounting for arrangements
whereby an entity distributes non-cash assets to shareholders either
as a distribution of reserves or as dividends. The interpretation has no
effect on either the financial position or performance of the Group.
Prime media GrouP AnnuAl RepoRt 2011
35
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
2
summARy of sigNifiCANt ACCouNtiNg PoliCies (CONTINUED)
Australian Accounting Standards and Interpretations that have recently been issued or amended, but are not yet effective, have not been adopted by the
Group for the annual reporting period ended 30 June 2011. These are outlined in the table below.
APPliCAtioN
DAte of
stANDARD
imPACt oN gRouP
fiNANCiAl RePoRt
APPliCAtioN
DAte foR
gRouP
1 January 2013 The Group has not yet
1 July 2013
determined the full
extent of the impact of
the amendments, but
does not believe it will
have a material impact
RefeReNCe
title
summARy
AASB 9
Financial
Instruments
AASB 9 includes requirements for the
classification and measurement of financial
assets resulting from the first part of
Phase 1 of the IASB’s project to replace
IAS 39 Financial Instruments: Recognition
and Measurement (AASB 139 Financial
Instruments: Recognition and Measurement).
These requirements improve and simplify the
approach for classification and measurement
of financial assets compared with the
requirements of AASB 139. The main changes
from AASB 139 are described below.
(a) Financial assets are classified based on
(1) the objective of the entity’s business
model for managing the financial assets;
(2) the characteristics of the contractual
cash flows. This replaces the numerous
categories of financial assets in AASB 139,
each of which had its own classification
criteria.
(b) AASB 9 allows an irrevocable election
on initial recognition to present gains
and losses on investments in equity
instruments that are not held for trading in
other comprehensive income. Dividends
in respect of these investments that are a
return on investment can be recognised in
profit or loss and there is no impairment or
recycling on disposal of the instrument.
Financial assets can be designated and
measured at fair value through profit or loss
at initial recognition if doing so eliminates
or significantly reduces a measurement
or recognition inconsistency that would
arise from measuring assets or liabilities, or
recognising the gains and losses on them, on
different bases.
AASB 2009-11 Amendments
to Australian
Accounting
Standards arising
from AASB 9
[AASB 1, 3, 4, 5, 7,
101, 102, 108, 112,
118, 121, 127, 128,
131, 132, 136, 139,
1023 & 1038 and
Interpretations 10
& 12]
• These amendments arise from the
1 January 2013 The Group has not yet
1 July 2013
issuance of AASB 9 Financial Instruments
that sets out requirements for the
classification and measurement of financial
assets. The requirements in AASB 9 form
part of the first phase of the International
Accounting Standards Board’s project
to replace IAS 39 Financial Instruments:
Recognition and Measurement.
• This Standard shall be applied when AASB
9 is applied.
determined the full
extent of the impact of
the amendments, but
does not believe it will
have a material impact
36
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
RefeReNCe
title
summARy
AASB 124
(Revised)
Related Party
Disclosures
(December 2009)
AASB 2009-12 Amendments
to Australian
Accounting
Standards
[AASBs 5, 8, 108,
110, 112, 119,
133, 137, 139,
1023 & 1031 and
Interpretations 2, 4,
16, 1039 & 1052]
AASB 1054
Australian
Additional
Disclosures
The revised AASB 124 simplifies the definition
of a related party, clarifying its intended
meaning and eliminating inconsistencies from
the definition, including:
(a) The definition now identifies a subsidiary
and an associate with the same investor as
related parties of each other
(b) Entities significantly influenced by one
person and entities significantly influenced
by a close member of the family of that
person are no longer related parties of
each other
(c) The definition now identifies that,
whenever a person or entity has both joint
control over a second entity and joint
control or significant influence over a third
party, the second and third entities are
related to each other
A partial exemption is also provided from
the disclosure requirements for government-
related entities. Entities that are related
by virtue of being controlled by the same
government can provide reduced related
party disclosures.
This amendment makes numerous editorial
changes to a range of Australian Accounting
Standards and Interpretations.
In particular, it amends AASB 8 Operating
Segments to require an entity to exercise
judgement in assessing whether a
government and entities known to be
under the control of that government
are considered a single customer for the
purposes of certain operating segment
disclosures. It also makes numerous editorial
amendments to a range of Australian
Accounting Standards and Interpretations,
including amendments to reflect changes
made to the text of IFRS by the IASB.
This standard is as a consequence of phase
1 of the joint Trans-Tasman Convergence
project of the AASB and FRSB.
This standard relocates all Australian specific
disclosures from other standards to one place
and revises disclosures in the following areas:
(a) Compliance with Australian Accounting
Standards
(b) The statutory basis or reporting framework
for financial statements
(c) Whether the financial statements are
general purpose or special purpose
(d) Audit fees
(e) Imputation credits
APPliCAtioN
DAte of
stANDARD
imPACt oN gRouP
fiNANCiAl RePoRt
APPliCAtioN
DAte foR
gRouP
1 January 2011 The Group has not yet
1 July 2011
determined the full
extent of the impact of
the amendments, but
does not believe it will
have a material impact
1 January 2011 The Group has not yet
1 July 2011
determined the full
extent of the impact of
the amendments, but
does not believe it will
have a material impact
1 July 2011
1 July 2011
The Group has not yet
determined the full
extent of the impact of
the amendments, but
does not believe it will
have a material impact
Prime media GrouP AnnuAl RepoRt 2011
37
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
2
summARy of sigNifiCANt ACCouNtiNg PoliCies (CONTINUED)
APPliCAtioN
DAte of
stANDARD
imPACt oN gRouP
fiNANCiAl RePoRt
APPliCAtioN
DAte foR
gRouP
1 January 2011 The Group has not yet
1 July 2011
determined the full
extent of the impact of
the amendments, but
does not believe it will
have a material impact
1 January 2011 The Group has not yet
1 July 2011
determined the full
extent of the impact of
the amendments, but
does not believe it will
have a material impact
1 July 2011
1 July 2011
The Group has not yet
determined the full
extent of the impact of
the amendments, but
does not believe it will
have a material impact
1 January 2013 The Group has not yet
1 July 2013
determined the full
extent of the impact of
the amendments, but
does not believe it will
have a material impact
RefeReNCe
title
summARy
AASB 2010-4
Further
Amendments
to Australian
Accounting
Standards arising
from the Annual
Improvements
Project [AASB 1,
AASB 7, AASB
101, AASB 134 and
Interpretation 13]
AASB 2010-5
AASB 2010-6
AASB 2010-7
Amendments
to Australian
Accounting
Standards
[AASB 1, 3, 4, 5,
101, 107, 112, 118,
119, 121, 132, 133,
134, 137, 139, 140,
1023 & 1038 and
Interpretations 112,
115, 127, 132 &
1042]
Amendments
to Australian
Accounting
Standards –
Disclosures on
Transfers of Financial
Assets [AASB 1 &
AASB 7]
Amendments
to Australian
Accounting
Standards arising
from AASB 9
(December 2010)
[AASB 1, 3, 4, 5,
7, 101, 102, 108,
112, 118, 120, 121,
127, 128, 131, 132,
136, 137, 139,
1023, & 1038 and
interpretations 2, 5,
10, 12, 19 & 127]
Emphasises the interaction between
quantitative and qualitative AASB 7
disclosures and the nature and extent of risks
associated with financial instruments.
Clarifies that an entity will present an analysis
of other comprehensive income for each
component of equity, either in the statement
of changes in equity or in the notes to the
financial statements.
Provides guidance to illustrate how to
apply disclosure principles in AASB 134 for
significant events and transactions.
Clarifies that when the fair value of award
credits is measured based on the value of the
awards for which they could be redeemed,
the amount of discounts or incentives
otherwise granted to customers not
participating in the award credit scheme, is to
be taken into account.
This Standard makes numerous editorial
amendments to a range of Australian
Accounting Standards and Interpretations,
including amendments to reflect changes
made to the text of IFRS by the IASB.
These amendments have no major impact
on the requirements of the amended
pronouncements.
The amendments increase the disclosure
requirements for transactions involving
transfers of financial assets. Disclosures
require enhancements to the existing
disclosures in IFRS 7 where an asset is
transferred but is not derecognised and
introduce new disclosures for assets that are
derecognised but the entity continues to
have a continuing exposure to the asset after
the sale.
The requirements for classifying and
measuring financial liabilities were added to
AASB 9. The existing requirements for the
classification of financial liabilities and the
ability to use the fair value option have been
retained. However, where the fair value option
is used for financial liabilities the change in
fair value is accounted for as follows:
• The change attributable to changes
in credit risk are presented in other
comprehensive income (OCI)
• The remaining change is presented in
profit or loss
If this approach creates or enlarges an
accounting mismatch in the profit or loss, the
effect of the changes in credit risk are also
presented in profit or loss.
38
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
RefeReNCe
title
summARy
APPliCAtioN
DAte of
stANDARD
imPACt oN gRouP
fiNANCiAl RePoRt
APPliCAtioN
DAte foR
gRouP
1 January 2012 The Group has not yet
1 July 2012
determined the full
extent of the impact of
the amendments, but
does not believe it will
have a material impact
These amendments address the
determination of deferred tax on investment
property measured at fair value and introduce
a rebuttable presumption that deferred tax
on investment property measured at fair value
should be determined on the basis that the
carrying amount will be recoverable through
sale. The amendments also incorporate
SIC-21 Income Taxes – Recovery of Revalued
Non-Depreciable Assets into AASB 112.
This Standard makes amendments to many
Australian Accounting Standards, removing
the disclosures which have been relocated to
AASB 1054.
1 July 2011
1 July 2011
The Group has not yet
determined the full
extent of the impact of
the amendments, but
does not believe it will
have a material impact
AASB 2010-8
AASB 2011-1
Amendments
to Australian
Accounting
Standards –
Deferred Tax:
Recovery of
Underlying Assets
[AASB 112]
Amendments
to Australian
Accounting
Standards
arising from the
Trans-Tasman
Convergence
project
[AASB 1, AASB
5, AASB 101,
AASB 107, AASB
108, AASB 121,
AASB 128, AASB
132, AASB 134,
Interpretation 2,
Interpretation 112,
Interpretation 113]
* designates the beginning of the applicable annual reporting period unless otherwise stated
Prime media GrouP AnnuAl RepoRt 2011
39
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
2
summARy of sigNifiCANt
ACCouNtiNg PoliCies (CONTINUED)
(D) BAsis of CoNsoliDAtioN
suBsequeNt to 1 July 2010
The consolidated financial statements comprise the financial statements
of Prime Media Group Limited (the parent company) and all entities that
Prime Media Group Limited controlled from time to time during the year
and at reporting date. Interests in associates are equity accounted and are
not part of the consolidated Group (see note (n) below).
Subsidiaries are all those entities over which the Group has the power to
govern the financial and operating policies so as to obtain benefits from
their activities. The existence and effect of potential voting rights that
are currently exercisable or convertible are considered when assessing
whether a group controls another entity.
The financial statements of subsidiaries are prepared for the same
reporting period as the parent company, using consistent accounting
policies. In preparing the consolidated financial statements, all
intercompany balances and transactions, income and expenses and profit
and losses resulting from intra-group transactions have been eliminated in
full. Unrealised losses are eliminated unless costs cannot be recovered.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group and cease to be consolidated from the date on
which control is transferred out of the Group.
Investments in subsidiaries held by Prime Media Group Limited are
accounted for at cost in the financial statements of the parent entity
less any impairment charges. Dividends received from subsidiaries
are recorded as a component of the reserves in the statement of
comprehensive income of the parent entity, and do not impact the
recorded cost of the investment. Upon receipt of dividends payments from
subsidiaries, the parent will assess whether any indicators of impairment
of the carrying value of the investment exist. Where such indicators
exist to the extent that the carrying value of the investment exceeds its
recoverable amount, an impairment loss is recognised.
The acquisition of subsidiaries is accounted for using the acquisition
method of accounting. The acquisition method of accounting involves
recognising at acquisition date, separately from goodwill, the identifiable
intangible assets acquired, the liabilities assumed and non-controlling
interest in the acquiree. The identifiable assets acquired and the liabilities
assumed are measured at their acquisition date fair values (see note (e)).
Non-controlling interests are allocated their share of net profit after tax in
the statement of comprehensive income and are presented within equity
in the consolidated statement of financial position, separately from the
equity of the owners of the parent.
Losses are attributed to the non-controlling interest even if that results in a
deficit balance.
A change in the ownership interest of a subsidiary that does not result in a
loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it:
• Derecognises the assets (including goodwill) and liabilities of the
subsidiary.
• Derecognises the carrying amount of any non-controlling interest.
• Derecognises the cumulative translation differences, recorded in
equity.
• Recognises the fair value of the consideration received.
• Recognises the fair value of any investment retained.
• Recognises any surplus or deficit in profit or loss.
• Reclassifies the parent’s share of components previously recognised in
other comprehensive income to profit or loss, or retained earnings, as
appropriate.
PRioR to 1 July 2010
Certain of the above mentioned requirements were applied on a
prospective basis. The following differences, however, are carried forward
in certain instances from the previous basis of consolidation:
• Acquisitions of non-controlling interests were accounted for using
the parent entity extension method, whereby, the difference between
the consideration and the book value of the share of the net assets
acquired was recognised in goodwill.
• Losses incurred by the Group were attributed to the non-controlling
interest until the balance was reduced to nil. Any further excess losses
were attributed to the parent, unless the non-controlling interest had
a binding obligation to cover these. Losses prior to 1 July 2010 were
not reallocated between NCI and the parent shareholders.
• Upon loss of control, the Group accounted for the investment retained at
its proportionate share of net asset value at the date control was lost. The
carrying value of such investments at 1 July 2010 has not been restated.
(e) BusiNess ComBiNAtioNs
suBsequeNt to 1 July 2010
Business combinations are accounted for using the acquisition method.
The consideration transferred in a business combination shall be measured
at fair value, which shall be calculated as the sum of the acquisition-date
fair values of the assets transferred by the acquirer, the liabilities incurred
by the acquirer to former owners of the acquiree and equity issued by the
acquirer, and the amount of any non-controlling interest in the acquiree.
For each business combination, the acquirer measures the non-controlling
interest in the acquiree. For each business combination, the acquirer
measures the non-controlling interest in the acquiree either at fair value
or at the proportionate share of the acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred, and included in
administrative expenses.
When the Group acquires a business, it assesses the financial assets
and liabilities assumed for appropriate classification and designation in
accordance with the contractual terms, economic conditions, the Group’s
operating or accounting policies and other pertinent conditions as at the
acquisition date.
If the business combination is achieved in stages, the acquisition date fair
value of the acquirer’s previously held equity interest in the acquiree is
remeasured to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the acquirer will be
recognised at fair value at the acquisition date. Subsequent changes to the
fair value of the contingent consideration which is deemed to be an asset
or liability will be recognised in accordance with AASB 139 either in profit
or loss or as a change to other comprehensive income. If the contingent
consideration is classified as equity, it shall not be remeasured until it is
finally settled within equity.
PRioR to 1 July 2010
In comparison to the above-mentioned requirements, the following
difference applied:
Business combinations were accounted for using the purchase method.
Transaction costs directly attributable to the acquisition formed part of the
acquisition costs. The non-controlling interest (formerly known as minority
interest) was measured at the proportionate share of the acquiree’s
identifiable net assets.
Business combinations achieved in stages were accounted for in separate
steps. Any additional interest in the acquiree acquired does not affect
previously recognised goodwill. The goodwill amounts calculated at each
step of the acquisition were accumulated.
When the Group acquired a business, embedded derivatives from the
host contract by the acquiree were not reassessed on acquisition unless
the business combination resulted in a change in the terms of the contract
that significantly modified the cash flows that otherwise would have been
required under the contract.
Contingent consideration was recognised if, and only if, the Group had
a present obligation, the economic outflow was more likely than not and
a reliable estimate was determinable. Subsequent adjustments to the
contingent consideration were adjusted against goodwill.
(f)
sigNifiCANt ACCouNtiNg JuDgemeNts,
estimAtes AND AssumPtioNs
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the reported amounts in
the financial statements. Management continually evaluates its judgements
and estimates in relation to assets, liabilities, contingent liabilities, revenue
and expenses. Management bases its judgements and estimates on
historical experience and on other factors it believes to be reasonable under
the circumstances, the result of which forms the basis of the carrying values
of assets and liabilities that are not readily apparent from other sources.
40
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
Management has identified the following critical accounting policies
for which significant judgements, estimates and assumptions are made.
Actual results may differ from these estimates under different assumptions
and may materially affect financial results or the financial position reported
in future periods.
Further details of the nature of these assumptions and conditions may be
found in the relevant notes to the financial statements.
sigNifiCANt ACCouNtiNg JuDgemeNts
(i)
In the process of applying the Group’s accounting policies, management
has made the following judgements, apart from those involving
estimations, which have the most significant effect on the amounts
recognised in the financial statements:
Operating lease commitments – Group as lessor
The Group has entered into site sharing agreements in relation to
transmission sites and equipment it owns. The Group has determined that
it retains substantially all the significant risks and rewards of ownership of
these properties and has thus classified the leases as operating leases.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences,
where management considers that it is probable that future taxable profits
will be available to utilise those temporary differences.
Significant management judgement is required to determine the amount
of deferred tax assets that can be recognised, based upon the likely timing
and the level of future taxable profits over the next two years together with
future tax planning strategies.
Impairment of non-financial assets other than goodwill
The Group assesses impairment of all assets at each reporting date by
evaluating conditions specific to the Group and to the particular asset
that may lead to impairment. These include product and manufacturing
performance, technology, economic and political environment and future
product expectations. If an impairment trigger exists the recoverable
amount of the asset is determined.
Classification of assets and liabilities as held for sale
The Group classifies assets and liabilities as held for sale when the
carrying amount will be recovered through a sale transaction. The assets
and liabilities must be available for immediate sale and the Group must
be committed to selling the asset either through the entering into a
contractual sale agreement or the activation and commitment to a
program to locate a buyer and dispose of the assets and liabilities.
Impairment of investments in financial assets
(including associates)
The Group assesses impairment of investments in financial assets including
associates at each reporting date in accordance with the measurement
rules established in the accounting standards.
For financial assets determined to be associates, the Group assesses
at each balance date the circumstances and conditions specific to
that associate. These include operating performance, market and
environmental factors. If management believes that an impairment trigger
exists then the recoverable value of the investment in the associate is
determined.
Renewal of Broadcasting Licences – refer 2(L)
The Group’s television and radio broadcasting licences consists of
the right to broadcast television and radio services to specific market
areas. These licences are issued by the relevant broadcasting authority
for periods of 5 years. The ownership and renewal processes of these
licences is such that in the absence of major breaches of licensing and
broadcasting regulations, licence renewal is virtually guaranteed for the
existing licence holders.
Taxation
The Group’s accounting policy for taxation requires management’s
judgement as to the types of arrangements considered to be a tax on
income in contrast to an operating cost. Judgement is also required
in assessing whether deferred tax assets and certain deferred tax
liabilities are recognised on the balance sheet. Deferred tax assets,
including those arising from unrecouped tax losses, capital losses and
temporary differences, are recognised only where it is considered more
likely than not that they will be recovered, which is dependent on the
generation of sufficient future taxable profits. Deferred tax liabilities
arising from temporary differences in investments, caused principally by
retained earnings held in foreign tax jurisdictions, are recognised unless
repatriation of retained earnings can be controlled and are not expected
to occur in the foreseeable future.
Assumptions about the generation of future taxable profits and repatriation
of retained earnings depend on management’s estimates of future cash
flows. These depend on estimates of future production and sales volumes,
operating costs, restoration costs, capital expenditure, dividends and other
capital management transactions. Judgements are also required about the
application of income tax legislation. These judgements and assumptions
are subject to risk and uncertainty, hence there is a possibility that changes
in circumstances will alter expectations, which may impact the amount of
deferred tax assets and deferred tax liabilities recognised on the statement
of financial position and the amount of other tax losses and temporary
differences not yet recognised. In such circumstances, some or all of the
carrying amounts of recognised deferred tax assets and liabilities may
require adjustment, resulting in a corresponding credit or charge to the
statement of comprehensive income.
(ii)
sigNifiCANt ACCouNtiNg estimAtes
AND AssumPtioNs
The carrying amounts of certain assets and liabilities are often determined
based on estimates and assumptions of future events. The key estimates
and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of certain assets and liabilities within
the next annual reporting period are:
Valuation of investments
The Group has decided to classify investments in listed and unlisted
securities as “available-for-sale” investments and movements in fair value
are recognised directly in equity. The fair value of listed shares has been
determined by reference to published price quotations in an active market.
The fair values of unlisted securities not traded in an active market are
determined using valuation assumptions that are not observable market
prices or rates. Future likely cash flows are determined to most likely arise
from the disposal of the securities. Disposal cash flows are determined
using EBITDA multiples and compared to similar companies with
observable market sales data.
Impairment of goodwill and intangibles with indefinite useful lives
The Group determines whether goodwill and intangibles with indefinite
useful lives are impaired at least on an annual basis. This requires an
estimation of the recoverable amount of the cash generating units
to which the goodwill and intangibles with indefinite useful lives are
allocated. The assumptions used in this estimation of recoverable amount
and the carrying amount of goodwill and intangibles with indefinite useful
lives are discussed in note 16.
share-based payment transactions
The Group measures the cost of equity-settled transactions with
employees by reference to the fair value of the equity instruments at the
date at which they are granted. The fair value is determined by an external
valuer using a binomial model, using the assumptions detailed in note 28.
Fair value of Financial Derivatives
The fair value of interest rate swap contracts is determined by reference to
market values for similar instruments.
Estimation of useful lives of assets
The estimation of the useful lives of assets has been based on historical
experience as well as external evidence such as warranties, lease terms and
general renewal policies of the Group. The condition of assets is assessed
regularly, at least annually, and considered against the remaining useful life.
If the useful lives of assets were shortened by 20% for each asset, the
financial effect on consolidated depreciation expense for the current
financial year and the next three years would be:
yeAR
2011
2012
2013
2014
$’000
2,335
1,815
1,499
1,200
Depreciation charges are included in note 15.
Prime media GrouP AnnuAl RepoRt 2011
41
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
2
summARy of sigNifiCANt
ACCouNtiNg PoliCies (CONTINUED)
(g) oPeRAtiNg segmeNts
An operating segment is a component of an entity that engages in
business activities from which it may earn revenues and incur expenses
(including revenues and expenses relating to transactions with other
components of the same entity), whose operating results are regularly
reviewed by the entity’s chief operating decision maker to make
decisions about resources to be allocated to the segment and assess its
performance and for which discrete financial information is available. This
includes start up operations which are yet to earn revenues. Management
will also consider other factors in determining operating segments such
as the existence of a line manager and the level of segment information
presented to the board of directors.
Operating segments have been identified based on the information
provided to the chief operating decision makers – being the executive
management team.
The group aggregates two or more operating segments when they have
similar economic characteristics, and the segments are similar in each of
the following respects:
• Nature of the products and services
• Nature of the production processes
• Type or class of customer for the products and services
• Methods used to distribute the products or provide the services, and if
applicable
• Nature of the regulatory environment
Operating segments that meet the quantitative criteria as prescribed by
AASB 8 are reported separately. However, an operating segment that
does not meet the quantitative criteria is still reported separately where
information about the segment would be useful to users of the financial
statement.
Information about other business activities and operating segments
that are below the quantitative criteria are combined and disclosed in a
separate category, “Unallocated”.
(h) foReigN CuRReNCy tRANslAtioN
fuNCtioNAl AND PReseNtAtioN CuRReNCy
(i)
Both the functional and presentation currency of Prime Media Group
Limited and its Australian subsidiaries is Australian dollars (A$). Each
overseas entity in the Group determines its own functional currency and
items included in the financial statements of each entity are measured
using that functional currency. The financial statements of each foreign
entity within the Group are translated to the Group’s presentation currency
of $AUD (refer point ii & iii).
tRANsACtioNs AND BAlANCes
(ii)
Transactions in foreign currencies are initially recorded in the functional
currency at the rate of exchange ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at the reporting date.
Non-monetary items that are measured in terms of historical cost in a
foreign currency are translated using the exchange rate as at the date of
the initial transaction. Non-monetary items that are measured at fair value
in a foreign currency are translated using the exchange rate at the date
when the fair value was determined.
(iii)
tRANslAtioN of gRouP ComPANies’ fuNCtioNAl
CuRReNCy to PReseNtAtioN CuRReNCy
The functional currencies of the Group’s overseas subsidiaries are as follows:
• Prime Television New Zealand Limited, New Zealand dollars (NZ$)
• Prime Ventures New Zealand Limited, New Zealand dollars (NZ$)
• Producer Representatives Organization Inc, United States dollars (US$)
• Producer Representatives Organization International Inc., United States
dollars (US$)
• Family Bloom Productions Inc, United States dollars (US$)
• Prime Resources One Limited, New Zealand dollars (NZ$)
• Prime Resources Two Limited, New Zealand dollars (NZ$)
• Prime Media Singapore Pte Ltd, Singapore dollars (S$)
As at the reporting date the assets and liabilities of these overseas
subsidiaries are translated into the presentation currency of Prime Media
Group Limited at the rate of exchange ruling at the reporting date and the
statement of comprehensive income is translated at the weighted average
exchange rates for the period.
The exchange differences arising on the translation are recognised in the
foreign currency translation reserve in equity.
The exchange differences arising on the translation of foreign currency
denominated intercompany balances held by the parent entity are
recognised in the statement of comprehensive income of the parent entity
but on consolidation they are taken directly to a separate component of
equity.
On disposal of a foreign entity, the deferred cumulative amount
recognised in equity relating to that particular foreign operation is
recognised in the statement of comprehensive income.
(i) CAsh AND CAsh equivAleNts
Cash and cash equivalents in the statement of financial position comprise
cash at bank and on hand and short-term deposits with an original
maturity of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes
in value.
For the purposes of the statement of cash flows, cash and cash equivalents
consist of cash and cash equivalents as defined above, net of outstanding
bank overdrafts. Bank overdrafts are included within interest-bearing loans
and borrowings in current liabilities on the statement of financial position.
(J) tRADe AND otheR ReCeivABles
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method less
an allowance for impairment. Credit terms, generally 30 – 45 days, may
be extended based upon an assessment of the credit standing of each
customer.
Collectability of trade receivables is reviewed on an ongoing basis at an
operating unit level. Individual debts that are known to be uncollectible
are written off when identified. An impairment provision is recognized
when there is objective evidence that the Group will not be able to collect
the receivable. Objective evidence may be in the form of, but not limited
to, legal rulings and determinations, defaults on agreed payment plans
and age of debtors.
(k) PRoPeRty, PlANt AND equiPmeNt
Plant and equipment is stated at historical cost less accumulated
depreciation and any accumulated impairment losses. Such cost includes
the cost of replacing parts that are eligible for capitalisation when the cost
of replacing the part is incurred. All other repairs and maintenance are
recognised in the profit and loss as incurred.
Land and buildings are measured at cost less accumulated depreciation
on buildings.
Depreciation is provided on a straight-line basis on all property, plant and
equipment, other than freehold and leasehold land, over the estimated
useful life of the assets as follows:
mAJoR DePReCiAtioN PeRioDs ARe:
2011
2010
– Land
Not depreciated Not depreciated
– Freehold buildings:
40 years
40 years
– Leasehold improvements:
The lease term
The lease term
– Plant and equipment:
3 to 15 years
3 to 15 years
– Plant and equipment under lease: 5 to 15 years
5 to 15 years
– Motor vehicles
6 years
6 years
The assets’ residual values, useful lives and amortisation methods are
reviewed, and adjusted if appropriate, at each financial year end.
imPAiRmeNt
The carrying values of plant and equipment are reviewed for impairment
when events or changes in circumstances indicate the carrying value may
not be recoverable.
42
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
The recoverable amount of plant and equipment is the greater of fair value
less costs to sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, the
recoverable amount is determined for the cash-generating unit to which
the asset belongs.
Impairment exists when the carrying value of an asset or cash-generating
unit exceeds its estimated recoverable amount. The asset or cash-
generating unit is then written down to its recoverable amount.
DeReCogNitioN AND DisPosAl
An item of property, plant and equipment is derecognised upon disposal
or when no further future economic benefits are expected from its use or
disposal.
Any gain or loss arising on derecognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of
the asset) is included in profit or loss in the year the asset is derecognised.
(l) gooDwill AND iNtANgiBle Assets
gooDwill
Goodwill acquired in a business combination is initially measured at
cost of the business combination being the excess of the consideration
transferred over the fair value of the Group’s net identifiable assets,
liabilities and contingent liabilities. Goodwill on acquisition of subsidiaries
is included in intangible assets. Goodwill on acquisition of associates is
included in investments in associates.
Following initial recognition, goodwill is measured at cost less any
accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a business
combination is, from the acquisition date, allocated to each of the Group’s
cash-generating units, or groups of cash-generating units, that are
expected to benefit from the synergies of the combination, irrespective
of whether other assets or liabilities of the Group are assigned to those
units or groups of units. Each unit or group of units to which the goodwill
is so allocated, represents the lowest level within the Group at which
the goodwill is monitored for internal management purposes; and is not
larger than a segment based on either the Group’s primary or the Group’s
secondary reporting format determined in accordance with AASB 8
Operating Segments and includes: (see Note 16)
• Television Broadcasting
• Radio Broadcasting
• Online media
Impairment is determined by assessing the recoverable amount of the
cash-generating unit (group of cash-generating units), to which the
goodwill relates. Prime Media Group Limited performs its impairment
testing as at 31 May each year using the value in use methodology for
each cash generating unit to which goodwill and indefinite life intangibles
have been allocated. Further details on the methodology and assumptions
used are outlined in Note 16. When the recoverable amount of the cash-
generating unit (group of cash generating units) is less than the carrying
amount, an impairment loss is recognised. When goodwill forms part of
a cash-generating unit (group of cash-generating units) and an operation
within that unit is disposed of, the goodwill associated with the operation
disposed of is included in the carrying amount of the operation when
determining the gain or loss on disposal of the operation. Goodwill
disposed of in this manner is measured based on the relative values of
the operation disposed of and the portion of the cash-generating unit
retained.
Impairment losses recognised for goodwill are not subsequently reversed.
televisioN AND RADio BRoADCAst liCeNCes,
ACquiReD Both sePARAtely AND As PARt of A
BusiNess ComBiNAtioN
Intangible assets, television and radio licences, acquired separately or
in a business combination are initially measured at cost. The cost of an
intangible asset acquired in a business combination is its fair value as at
the date of acquisition. Following initial recognition, the intangible assets
are carried at cost less any accumulated amortisation and any accumulated
impairment losses.
Television and Radio broadcast licences consist of the right to broadcast
television and radio services to specific market areas. The licences are
subject to renewal by the Australian Communications and Media Authority
(ACMA). The directors have no reason to believe the licences will not
be renewed at the end of their legal terms and have not identified any
factor that would affect their useful life. Therefore, the television and radio
licences are deemed to have indefinite useful lives.
Intangible assets with indefinite useful lives are tested for impairment
annually either individually or at the cash-generating unit level. Such
intangibles are not amortised. The useful life of an intangible asset with
an indefinite life is reviewed each reporting period to determine whether
indefinite life assessment continues to be supportable. If not, the change
in the useful life assessment from indefinite to finite is accounted for
as a change in an accounting estimate and is thus accounted for on a
prospective basis.
A summary of the policies applied to the Group’s intangible assets is as
follows:
televisioN AND RADio BRoADCAst liCeNCes
– Useful lives:
– Method used:
Indefinite
Not depreciated or revalued
– Internally generated/Acquired:
Acquired
– Impairment test/Recoverable
amount testing:
Annually and where an indicator of
impairment exists
DeReCogNitioN
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognised in profit or loss when the
asset is derecognised.
(m) iNvestmeNts AND otheR fiNANCiAl Assets
Investments and financial assets in the scope of AASB 139 Financial
Instruments: Recognition and Measurement are categorised as either
financial assets at fair value through profit or loss, loans and receivables,
held-to-maturity investments, or available-for-sale financial assets as
appropriate. The classification depends on the purpose for which the
investments were acquired. Designation is re-evaluated at each financial
year end, but there are restrictions on reclassifying to other categories.
When financial assets are recognised initially, they are measured at fair
value, plus, in the case of financial assets not at fair value through profit or
loss, directly attributable transaction costs.
ReCogNitioN AND DeReCogNitioN
All regular purchases and sales of financial assets are recognised on the
trade date i.e. the date that the Group commits to purchase or sell the
asset. Regular way purchases or sales are purchases or sales of financial
assets under contracts that require delivery of the assets within the period
established generally by regulation or convention in the market place.
Financial assets are derecognised when the right to receive cash flows
from the financial assets has expired or been transferred.
suBsequeNt meAsuRemeNt
(i)
Financial assets at fair value through profit and loss
Financial assets classified as held for trading are included in the category
‘financial assets at fair value through profit or loss’. Financial assets are
classified as held for trading if they are acquired for the purpose of selling
in the near term with the intention of making a profit. Derivatives are
also classified as held for trading unless they are designated as effective
hedging instruments. Gains or losses on investments held for trading are
recognised in profit or loss and the related assets are classified as current
assets in the statement of financial position.
Loans and receivables
(ii)
Loans and receivables including loan notes and loans to key management
personnel are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. Such assets are
carried at amortised cost using the effective interest method. Gains and
losses are recognised in profit or loss when the loans and receivables are
derecognised or impaired, as well as through the amortisation process.
These are included in current assets, except for those with maturities greater
than 12 months after balance date, which are classified as non-current.
Prime media GrouP AnnuAl RepoRt 2011
43
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
2
summARy of sigNifiCANt
ACCouNtiNg PoliCies (CONTINUED)
becomes obliged to make future payments in respect of the purchase of
these goods and services. The amounts are unsecured and are usually
settled within 30 days of recognition.
(m) iNvestmeNts AND otheR fiNANCiAl Assets
(CONTINUED)
(iii) Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets,
principally equity securities that are designated as available-for-sale or
are not classified as any of the two preceding categories. After initial
recognition available-for-sale investments are measured at fair value with
gains or losses being recognised as a separate component of equity until
the investment is derecognised or until the investment is determined to
be impaired, at which time the cumulative gain or loss previously reported
in equity is recognised in profit or loss.
The fair value of investments that are actively traded in organised
financial markets is determined by reference to quoted market bid prices
at the close of business on the reporting date. For investments with
no active market, fair value is determined using valuation techniques.
Such techniques include using recent arm’s length market transactions;
reference to the current market value of another instrument that is
substantially the same; discounted cash flow analysis and option pricing
models making as much use of available and supportable market data as
possible and keeping judgemental inputs to a minimum.
(iv)
Investments in controlled entities
Investments in controlled entities are recorded at cost.
iNvestmeNts iN AssoCiAtes
(N)
The Group’s investments in its associates are accounted for using the
equity method of accounting in the consolidated financial statements.
The associates are entities in which the Group has significant influence
and which are neither a subsidiary nor a joint venture.
The Group generally deems they have significant influence if they have
over 20% of the voting rights.
Under the equity method, the investment in the associate is carried
in the consolidated statement of financial position at cost plus post-
acquisition changes in the Group’s share of net assets of the associate.
Goodwill relating to an associate is included in the carrying amount of the
investment and is not amortised. After application of the equity method,
the Group determines whether it is necessary to recognise any impairment
loss with respect to the Group’s net investment in the associate.
Goodwill included in the carrying amount of the investment in the
associate is not tested separately, rather the entire carrying amount of the
investment is tested for impairment as a single asset. If an impairment is
recognised the amount is not allocated to the goodwill of the associate.
The Group’s share of its associates’ post-acquisition profits or losses is
recognised in the statement of comprehensive income, and its share of
post-acquisition movements in reserves is recognised in reserves. The
cumulative post-acquisition movements are adjusted against the carrying
amount of the investment. Associates are recognised in the parent entity’s
statement of income as a component of other income.
After application of the equity method, the Group determines whether
it is necessary to recognise an additional impairment loss on the Group’s
investment in its associate. The Group determines at each reporting
date whether there is any objective evidence that the investment in the
associate is impaired. If this is the case the Group calculates the amount
of impairment as the difference between the recoverable amount of the
associate and its carrying value and recognises the amount in the “share
of profit of an associate” in the income statement.
When the Group’s share of losses in an associate equals or exceeds its
interest in the associate, including any unsecured long-term receivables
and loans, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the associate.
The reporting dates of the associate and the Group are identical and the
associate’s accounting policies conform to those used by the Group for
like transactions and events in similar circumstances.
(o) tRADe AND otheR PAyABles
Trade payables and other payables are carried at amortised cost. They
represent liabilities for goods and services provided to the Group prior
to the end of the financial year that are unpaid and arise when the Group
iNteRest-BeARiNg loANs AND BoRRowiNgs
(P)
All loans and borrowings are initially recognised at the fair value of the
consideration received less directly attributable transaction costs.
After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the effective interest method.
Fees paid on the establishment of loan facilities that are yield related are
included as part of the carrying amount of the loans and borrowings.
Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at least 12
months after the reporting date.
BoRRowiNg Costs
Borrowing costs attributable to the acquisition, construction or production
of a qualifying asset (i.e. an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale) are capitalised as
part of the cost of that asset. All other borrowing costs are expensed in
the periods they occur. Borrowing costs consist of interest and other costs
that an entity incurs in connection with the borrowing of funds. The Group
does not currently hold qualifying assets but, if it did, the borrowing costs
directly associated with this asset would be capitalised (including any other
associated costs directly attributable to the borrowing and temporary
investment income earned on the borrowing).
(q) PRovisioNs AND emPloyee leAve BeNefits
Provisions are recognised when the Group has a present obligation (legal
or constructive) as a result of a past event, it is probable that an outflow
of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
When the Group expects some or all of a provision to be reimbursed, for
example under an insurance contract, the reimbursement is recognised
as a separate asset but only when the reimbursement is virtually certain.
The expense relating to any provision is presented in the statement of
comprehensive income net of any reimbursement.
Provisions are measured at the present value of management’s best
estimate of the expenditure required to settle the present obligation at
the reporting date using a discounted cash flow methodology. The risks
specific to the provision are factored into the cash flows and as such a risk-
free government bond rate relative to the expected life of the provision is
used as a discount rate. If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate that reflects the
time value of money and, where appropriate, the risks specific to the
liability. The increase in the provision resulting from the passage of time is
recognised in finance costs.
emPloyee leAve BeNefits
(i) wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual
leave and accumulating sick leave expected to be settled within 12
months of the reporting date are recognised in other payables in respect
of employees’ services up to the reporting date. They are measured at the
amounts expected to be paid when the liabilities are settled. Expenses for
non-accumulating sick leave are recognised when the leave is taken and
are measured at the rates paid or payable.
Long service leave
(ii)
The liability for long service leave is recognised and measured as the
present value of expected future payments to be made in respect of services
provided by employees up to the reporting date using the projected unit
credit method. Consideration is given to expected future wage and salary
levels, experience of employee departures, and periods of service. Expected
future payments are discounted using market yields at the reporting date on
national government bonds with terms to maturity and currencies that match,
as closely as possible, the estimated future cash outflows.
(R) shARe-BAseD PAymeNt tRANsACtioNs
The Group provides benefits to its employees (including directors) in the
form of share-based payments, whereby employees render services in
exchange for shares or rights over shares (‘equity-settled transactions’).
During the current year there was one scheme in place to provide
these benefits:
44
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
• The Prime Employee Share Option Plan, which provides benefits to
(i) gRouP As A lessee
directors and executives.
Subsequent to the reporting date this plan has ceased and the Company
has implemented a new plan called the Prime Media Group Performance
Rights Plan.
The cost of these equity-settled transactions with employees is measured
by reference to the fair value of the equity instruments at the date at which
they are granted. The fair value is determined by an external valuer using a
binomial model, further details of which are given in note 28.
In valuing equity-settled transactions, no account is taken of any vesting
conditions, other than conditions linked to the price of the shares of Prime
Media Group Limited (‘market conditions’) if applicable.
The cost of equity–settled transactions is recognised, together with
a corresponding increase in equity, over the period in which the
performance conditions are fulfilled (the vesting period), ending on the
date on which the relevant employees become fully-entitled to the award
(the vesting date).
At each subsequent reporting date until vesting, the cumulative charge to
the statement of comprehensive income is the product of:
(i) the grant date fair value of the award;
(ii) the current best estimate of awards that, in the opinion of the directors
of the Group, will ultimately vest. This opinion is formed based on the
best available information at balance date. No adjustment is made
for the likelihood of market performance conditions being met as the
effect of these conditions is included in the determination of fair value
at grant date; and
(iii) the expired portion of the vesting period.
The charge to the statement of comprehensive income for the period
is the cumulative amount as calculated above less the amounts already
charged in previous periods. There is a corresponding credit to equity.
Equity settled awards granted by Prime Media Group Limited to employees
of subsidiaries are recognised in the parents’ separate financial statements
as an additional investment in the subsidiary with a corresponding credit to
equity. As a result, the expense recognised by Prime Media Group Limited
in relation to equity-settled awards only represents the expense associated
with employees of the parent. The expense recognised by the Group is the
total expense associated with such awards.
Until an award has vested, any amounts recorded are contingent and will
be adjusted if more or fewer awards vest than were originally anticipated
to do so. Any award subject to a market condition is considered to vest
irrespective of whether or not that market condition is fulfilled, provided
that all other conditions are satisfied.
If a non-vesting condition is within the control of the Group, Company
or the employee, the failure to satisfy the condition is treated as a
cancellation. If a non-vesting condition within the control of neither the
Group, Company nor employee is not satisfied during the vesting period,
any expense for the award not previously recognised is recognised over
the remaining vesting period, unless the award is forfeited.
If the terms of an equity-settled award are modified, as a minimum
an expense is recognised as if the terms had not been modified. An
additional expense is recognised for any modification that increases the
total fair value of the share-based payment arrangement, or is otherwise
beneficial to the employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on
the date of cancellation, and any expense not yet recognised for the award
is recognised immediately. However, if a new award is substituted for the
cancelled award and designated as a replacement award on the date that
it is granted, the cancelled and new award are treated as if they were a
modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional
share dilution in the computation of diluted earnings per share (see note 7).
(s) leAses
The determination of whether an arrangement is or contains a lease is
based on the substance of the arrangement at inception date, whether
fulfilment of the arrangement is dependent on the use of a specific asset
or assets or the arrangement conveys a right to use the asset, even if that
right is not explicitly specified in an arrangement.
Leases are classified at their inception as either operating or finance leases
based on the economic substance of the agreement so as to reflect the
risks and benefits incidental to ownership.
Operating leases
Operating lease payments are recognised as an expense in the statement
of comprehensive income on a straight-line basis over the lease term.
Operating lease incentives are recognised as a liability when received
and subsequently reduced by allocating lease payments between rental
expense and reduction of the liability.
Leasehold Improvements
The cost of improvements to or on leasehold property are capitalised,
disclosed as leasehold improvements, and amortised over the unexpired
period of the lease or the estimated useful lives of the improvements,
whichever is the shorter.
Finance leases
Finance leases, which effectively transfer substantially all of the risks and
benefits incidental to ownership of the leased item, are capitalised at
inception of the lease at the fair value of the leased property or, if lower,
at present value of the minimum lease payments. Lease payments are
allocated between finance charges and reduction of the lease liability so
as to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are recognised in finance costs in profit or loss.
Capitalised lease assets are depreciated over the shorter of the estimated
useful life of the assets and the lease term if there is no reasonable certainty
that the Group will obtain ownership by the end of the lease term.
(ii) gRouP As A lessoR
Leases in which the Group retains substantially all the risks and benefits
of ownership of the leased asset are classified as operating leases. Initial
direct costs incurred in negotiating an operating lease are added to the
carrying amount of the leased asset and recognised as an expense over
the lease term on the same basis as rental income. Contingent rents are
recognised as revenue in the period in which they are earned.
(t) ReveNue ReCogNitioN
Revenue is recognised and measured at the fair value of the consideration
received or receivable to the extent it is probable that the economic
benefits will flow to the Group and the revenue can be reliably measured.
The following specific recognition criteria must also be met before
revenue is recognised:
ADveRtisiNg ReveNue
Broadcasting operations derive revenue primarily from the sale of
advertising time, to local, regional and national advertisers. Revenue is
recognised when the commercial advertisements are broadcast.
CommeRCiAl ADveRtisemeNt PRoDuCtioN ReveNue
Revenue is recognised at the time of invoicing the customers, which is on
completion of the production.
ReNDeRiNg of seRviCes
Revenue from the provision of production facilities is brought to account
after services have been rendered and the fee is receivable.
sAles RePReseNtAtioN ReveNue
Sales Representation revenue is brought to account as the service is provided.
iNteRest
Interest revenue is recognised as interest accrues using the effective
interest method. This is a method of calculating the amortised cost of a
financial asset and allocating the interest income over the relevant period
using the effective interest rate, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial
asset to the net carrying amount of the financial asset.
DiviDeNDs
Dividend revenue is recognised when the Group’s right to receive the
payment is established.
ReNtAl iNCome
Rental income is derived from the sub-letting of the Group’s property,
plant and equipment. This rental income is recognised on a straight
line basis over the lease term. Contingent rental income is recognised
as income in the periods in which it is earned. Lease incentives are
recognised as an integral part of the total rental income.
Prime media GrouP AnnuAl RepoRt 2011
45
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
2
summARy of sigNifiCANt
ACCouNtiNg PoliCies (CONTINUED)
(u) goveRNmeNt gRANts
Government grants are recognised at their fair value where there is
reasonable assurance that the grant will be recovered and all attaching
conditions will be complied with.
When the grant relates to an expense item, it is recognised as income
over the periods necessary to match the grant on a systematic basis to the
costs that it is intended to compensate.
Where the grant relates to an asset, the fair value is credited to a deferred
income account and is released to the statement of comprehensive income
over the expected useful life of the relevant asset by equal annual instalments.
iNCome tAx
(v)
Current tax assets and liabilities for the current and prior periods are
measured at the amount expected to be recovered from or paid to the
taxation authorities based on the current period’s taxable income. The tax
rates and tax laws used to compute the amount are those that are enacted
or substantively enacted at the reporting date.
Current income tax relating to items recognised directly in equity is
recognised in equity and not in the income statement. Management
periodically evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to interpretation
and establishes provisions where appropriate.
Deferred income tax is provided on all temporary differences at the
balance sheet date between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary
differences:
• except where the deferred tax liability arises from the initial
•
recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with
investments in subsidiaries, except where the timing of the reversal on
the temporary differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all taxable temporary
differences, carried forward unused tax credits and unused tax losses, to
the extent that it is probable that taxable profit will be available against
which the deductible temporary and the carry forward of unused tax
credits and unused tax losses can be utilised, except:
• when the deferred income tax asset relating to the deductible
temporary difference arises from the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the
time of the transaction, affects neither the accounting profit nor taxable
profit or loss; or
• when the deductible temporary difference is associated with
investments in subsidiaries, associates or joint ventures, in which case
a deferred tax asset is only recognised to the extent that it is probable
that the temporary difference will reverse in the foreseeable future and
taxable profit will be available against which the temporary difference
can be utilised.
The carrying amount of deferred income tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the deferred
income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each reporting
date and are recognised to the extent that it has become probable that future
tax profit will be available to allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates
that are expected to apply to the year when the asset is realised or the
liability is settled, based on tax rates (and tax laws) that have been enacted
or substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset only if a legally
enforceable right exists to set off current tax assets against current tax
liabilities and the deferred tax assets and liabilities relate to the same
taxable entity and the same taxation authority.
tAx CoNsoliDAtioN
Effective 1 July 2002, for the purposes of income taxation, Prime Media
Group Limited and its 100% owned Australian resident subsidiaries formed
a tax consolidated group. Prime Media Group Limited is the head entity
of the tax consolidated group. Members of the group entered into a
tax sharing arrangement in order to allocate income tax expense to the
wholly owned subsidiaries on a pro-rata basis. In addition, the agreement
provides for the allocation of income tax liabilities between the entities
should the head entity default on its tax payment obligations. At the
reporting date, the possibility of default is remote.
Prime Media Group Limited formally notified the Australian Tax Office of
its adoption of the tax consolidation regime when it lodged its 30 June
2003 consolidated tax return.
tAx effeCt ACCouNtiNg By memBeRs of the
CoNsoliDAteD gRouP
Members of the tax consolidated group have entered into a tax funding
agreement. The tax funding agreement provides for the allocation of
current taxes to members of the tax consolidated group in accordance
with their taxable income for the period, while deferred taxes are allocated
to members of the tax consolidated group in accordance with the
principles of AASB 112 Income Taxes. Allocations under the tax funding
agreement are made at the end of each half year.
The allocation of taxes under the tax funding agreement is recognised as
an increase/decrease in the subsidiaries’ intercompany accounts with the
tax consolidated group head company, Prime Media Group Limited. In
accordance with UIG 1052: Tax Consolidation Accounting, the Group has
applied the “separate Taxpayer within group” approach in determining
the appropriate amount of current taxes to allocate to members of the tax
consolidated group.
(w) otheR tAxes
Revenues, expenses and assets are recognised net of the amount
of GST except:
• where the GST incurred on a purchase of goods and services is not
recoverable from the taxation authority, in which case the GST is
recognised as part of the cost of acquisition of the asset or as part of
the expense item as applicable; and
receivables and payables are stated with the amount of GST included.
•
The net amount of GST recoverable from, or payable to, the taxation
authority is included as part of receivables or payables in the statement of
financial position.
Cash flows are included in the statement of cash flows on a gross basis
and the GST component of cash flows arising from investing and financing
activities, which is recoverable from, or payable to, the taxation authority,
is classified as part of operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST
recoverable from, or payable to, the taxation authority.
(x)
DeRivAtive fiNANCiAl iNstRumeNts
AND heDgiNg
The Group uses derivative financial instruments such as forward currency
contracts and interest rate swaps to manage its risks associated with
interest rate and foreign currency fluctuations. Such derivative financial
instruments are initially recognised at fair value on the date on which a
derivative contract is entered into and are subsequently remeasured to fair
value. Derivatives are carried as assets when their fair value is positive and
as liabilities when their fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are
taken directly to net profit or loss for the year.
The fair values of forward currency contracts are calculated by reference to
current forward exchange rates for contracts with similar maturity profiles.
The fair values of interest rate swap contracts are determined by reference
to market values for similar instruments.
(y)
DeReCogNitioN of fiNANCiAl
Assets AND fiNANCiAl liABilities
fiNANCiAl Assets
A financial asset (or, where applicable, a part of a financial asset or part of
a group of similar financial assets) is derecognised when:
46
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
•
•
•
the rights to receive cash flows from the asset have expired;
the Group retains the right to receive cash flows from the asset, but has
assumed an obligation to pay them in full without material delay to a
third party under a ‘pass-through’ arrangement; or
the Group has transferred its rights to receive cash flows from the asset
and either (a) has transferred substantially all the risks and rewards of
the asset, or (b) has neither transferred nor retained substantially all the
risks and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an
asset and has neither transferred nor retained substantially all the risks
and rewards of the asset nor transferred control of the asset, the asset is
recognised to the extent of the Group’s continuing involvement in the
asset. Continuing involvement that takes the form of a guarantee over the
transferred asset is measured at the lower of the original carrying amount
of the asset and the maximum amount of consideration received that the
Group could be required to repay.
When continuing involvement takes the form of a written and/or
purchased option (including a cash-settled option or similar provision) on
the transferred asset, the extent of the Group’s continuing involvement is
the amount of the transferred asset that the Group may repurchase, except
that in the case of a written put option (including a cash-settled option
or similar provision) on an asset measured at fair value, the extent of the
Group’s continuing involvement is limited to the lower of the fair value of
the transferred asset and the option exercise price.
fiNANCiAl liABilities
A financial liability is derecognised when the obligation under the liability
is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as a
derecognition of the original liability and the recognition of a new liability,
and the difference in the respective carrying amounts is recognised in
profit or loss.
imPAiRmeNt of fiNANCiAl Assets
(z)
The Group assesses at each balance sheet date whether a financial asset
or group of financial assets is impaired.
fiNANCiAl Assets CARRieD At AmoRtiseD Cost
If there is objective evidence that an impairment loss on loans and
receivables carried at amortised cost has been incurred, the amount of the
loss is measured as the difference between the asset’s carrying amount and
the present value of estimated future cash flows (excluding future credit
losses that have not been incurred) discounted at the financial asset’s
original effective interest rate (i.e. the effective interest rate computed
at initial recognition). The carrying amount of the asset is reduced either
directly or through use of an allowance account. The amount of the loss is
recognised in profit or loss.
The Group first assesses whether objective evidence of impairment
exists individually for financial assets that are individually significant, and
individually or collectively for financial assets that are not individually
significant. If it is determined that no objective evidence of impairment
exists for an individually assessed financial asset, whether significant or not,
the asset is included in a group of financial assets with similar credit risk
characteristics and that group of financial assets is collectively assessed for
impairment. Assets that are individually assessed for impairment and for
which an impairment loss is or continues to be recognised are not included
in a collective assessment of impairment.
If, in a subsequent period, the amount of the impairment loss decreases
and the decrease can be related objectively to an event occurring after the
impairment was recognised, the previously recognised impairment loss is
reversed. Any subsequent reversal of an impairment loss is recognised in
profit or loss, to the extent that the carrying value of the asset does not
exceed its amortised cost at the reversal date.
fiNANCiAl Assets CARRieD At Cost
If there is objective evidence that an impairment loss has been incurred on
an unquoted equity instrument that is not carried at fair value (because its
fair value cannot be reliably measured), or on a derivative asset that is linked
to and must be settled by delivery of such an unquoted equity instrument,
the amount of the loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows,
discounted at the current market rate of return for a similar financial asset.
(AA) imPAiRmeNt of NoN-fiNANCiAl Assets
otheR thAN gooDwill AND iNDefiNite
life iNtANgiBles
Intangible assets, non-financial assets other than goodwill and indefinite
life intangibles are tested annually for impairment or more frequently if
events or changes in circumstances indicate that they might be impaired.
The Group conducts an annual internal review of asset values, which is
used as a source of information to assess for any indicators of impairment.
External factors, such as changes in expected future processes, technology
and economic conditions, are also monitored to assess for indicators
of impairment. If any indication of impairment exists, an estimate of the
asset’s recoverable amount is calculated.
An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount. Recoverable amount is
the higher of an asset’s fair value less cost to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash inflows that are largely
independent of the cash inflows from other assets or groups of assets (cash
generating units). Non-financial assets other than goodwill that suffered an
impairment, are tested for possible reversal of the impairment whenever
events or changes in circumstances indicate that the impairment may have
reversed.
(BB) CoNtRiButeD equity
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
(CC) eARNiNgs PeR shARe
Basic earnings per share is calculated as net profit attributable to members
of the parent, adjusted to exclude any costs of servicing equity (other
than dividends) and preference share dividends, divided by the weighted
average number of ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit attributable to
members of the parent, adjusted for:
• costs of servicing equity (other than dividends) and preference share
•
dividends;
the after-tax effect of dividends and interest associated with dilutive
potential ordinary shares that have been recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the
period that would result from the dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive
potential ordinary shares, adjusted for any bonus element.
(DD) NoN-CuRReNt Assets AND DisPosAl
gRouPs helD foR sAle AND
DisCoNtiNueD oPeRAtioNs
Non-current assets and disposal groups are classified as held for sale and
measured at the lower of their carrying amount and fair value less costs
to sell if their carrying amount will be recovered principally through a sale
transaction. They are not depreciated or amortised. For an asset or disposal
group to be classified as held for sale it must be available for immediate
sale in its present condition and its sale must be highly probable.
An impairment loss is recognised for any initial or subsequent write-down
of the asset (or disposal group) to fair value less costs to sell. A gain is
recognised for any subsequent increases in fair value less costs to sell of an
asset (or disposal group), but not in excess of any cumulative impairment
loss previously recognised. A gain or loss not previously recognised by the
date of the sale of the non-current asset (or disposal group) is recognised
at the date of derecognition.
A discontinued operation is a component of the entity that has been
disposed of or is classified as held for sale and that represents a separate
major line of business or geographical area of operations, is part of a
single coordinated plan to dispose of such a line of business or area of
operations, or is a subsidiary acquired exclusively with a view to resale. The
results of discontinued operations are presented separately on the face of
the statement of comprehensive income and the assets and liabilities are
presented separately on the face of the statement of financial position.
Prime media GrouP AnnuAl RepoRt 2011
47
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
3
fiNANCiAl Risk mANAgemeNt oBJeCtives AND PoliCies
The Group’s principal financial instruments comprise receivables, payables, bank loans, bank overdrafts, available-for-sale investments, finance lease
contracts, cash, short-term deposits and derivatives.
Risk exPosuRes AND ResPoNses
The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities
such as trade receivables and trade payables, which arise directly from its operations. The Group manages its exposure to key financial risks including
interest rate and currency risk in accordance with the Group’s financial risk management policy. The objective of the policy is to support the delivery of the
Group’s financial targets while protecting future financial security.
The Group also enters into derivative transactions, including principally interest rate swaps and forward currency contracts. The purpose is to manage the
interest rate and currency risks arising from the Group’s operations and its sources of finance. It is, and has been throughout the period under review, the
Group’s policy that no trading of financial instruments shall be undertaken. The main risks arising from the Group’s financial instruments are cash flow risk,
interest rate risk, liquidity risk, foreign currency risk and credit risk.
The Group uses different methods to measure and manage different types of risks to which it is exposed. These include monitoring levels of exposure to
interest rate and foreign exchange risk and assessments of market forecasts for interest rate, foreign exchange and commodity prices. Ageing analyses
and monitoring of specific credit allowances are undertaken to manage credit risk. Liquidity risk is monitored through the development of future rolling
cash flow forecasts.
The Board reviews and agrees policies for managing each of these risks as summarised below.
Primary responsibility for identification and control of financial risks rests with the Chief Executive Officer and the Audit and Risk Committee under the
authority of the Board. The Board reviews and agrees policies for managing each of the risks identified below, including the setting of limits for hedging
cover of foreign currency and interest rate risk, credit allowances, and future cash flow forecast projections.
Interest rate risk
(i)
The Group’s exposure to market interest rates relates primarily to the Group’s long-term debt obligations as well as derivative interest rate swap contracts.
The level of debt is disclosed in note 18.
At balance date, the Group had the following mix of financial assets and liabilities exposed to Australian variable interest rate risk that are not designated
as cash flow hedges:
financial Assets
Cash and cash equivalents
financial liabilities
Secured Bank Loans
Derivatives
Net exposure
CoNsoliDAteD
2011
$’000
19,374
19,374
(150,024)
(1,687)
(151,711)
(132,337)
2010
$’000
5,664
5,664
(169,077)
(3,020)
(172,097)
(166,433)
Interest rate swap contracts outlined in note 24, with a fair value liability of $1,687,000 (2010: Liability $3,020,000), are exposed to fair value movements
if interest rates change. All derivative financial instruments are stated at fair value with any gains or losses arising from changes in fair value being taken
directly to the profit and loss for the year.
The Group’s policy is to manage its finance costs using a mix of fixed and variable rate debt. The Group’s policy is to keep at least 50% of its borrowings
at fixed rates of interest. To manage this mix in a cost-efficient manner, the Group enters into interest rate swaps, in which the Group agrees to exchange,
at specified intervals, the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount. At
30 June 2011, after taking into account the effect of interest rate swaps, approximately 63% of the Group’s borrowings are at a fixed rate of interest (2010:
56%).
The Group constantly analyses its interest rate exposure. Within this analysis consideration is given to potential renewals of existing positions, alternative
financing, alternative hedging positions and the mix of fixed and variable interest rates.
The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting date:
At 30 June 2011, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post tax profit and equity would have
been affected as follows:
JuDgemeNts of ReAsoNABly PossiBle movemeNts:
Consolidated
+1% (100 basis points)
-1% (100 basis points)
Post tAx PRofit
higheR/(loweR)
2011
$’000
(105)
105
2010
$’000
274
(274)
equity
higheR/(loweR)
2011
$’000
2010
$’000
–
–
–
–
The movements in profit are due to higher/lower interest costs from variable rate debt and cash balances. The sensitivity is lower in 2011 than 2010
because the interest rate swap contracts are twelve months closer to expiry which reduces the fair value movement arising from changes in interest rates
and net borrowings are approximately 19% lower than the prior year closing balance.
48
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
Significant assumptions used in the interest rate sensitivity analysis include:
• Reasonable movements in interest rates were determined based on the Group’s current credit rating and mix of debt in Australia and foreign
countries, relationships with financial institutions, the level of debt that is expected to be renewed and economic forecaster’s expectations;
• The net exposure at balance date is representative of what the Group was and is expecting to be exposed to in the next twelve months from
balance date.
Foreign currency risk
(ii)
The Group operates in two countries – Australia and New Zealand. The majority of transactions for the Group entities are made in the functional currency
of the relevant entity.
From time to time the Group enters into transactions that give rise to currency exposure risks. Such currency exposures arise from purchases in currencies
other than the Group’s functional currency.
The Group reviews the transactional currency risks arising from significant foreign currency transactions and enters into appropriate forward currency
contracts to reduce currency risks.
The Group also has foreign currency translation risk where the operations of the foreign based subsidiaries are translated to the Group’s reporting currency.
At 30 June 2011, the Group had the following exposure to NZ$ foreign currency that is not designated as cash flow hedges:
financial Assets
Receivables – Deferred contingent consideration
Net exposure
CoNsoliDAteD
2011
$’000
1,773
1,773
2010
$’000
–
–
As at balance date, the Group does not have any forward currency contracts (2010: Nil) designated as cash flow hedges that are subject to fair value
movements through equity and profit and loss respectively as foreign exchange rates move.
As at 30 June 2011, apart from the foreign currency translation risks within the Group, there were no other exposures to currency fluctuations.
The foreign currency exposures within the Group relate to the translation to the Group presentation currency of AUD. These translation differences are
taken to profit or loss.
Management believes the balance date risk exposures are representative of the risk exposure inherent in the financial instruments.
(iii) Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade and other receivables, available-for-sale financial
assets and derivative instruments. The Group’s exposure to credit risk arises from potential default of the counterparty, with a maximum exposure equal to
the carrying amount of these instruments. Exposure at balance date is addressed in each applicable note.
The Group does not hold any credit derivatives to offset its credit exposure.
The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Group’s policy to securitise its trade
and other receivables.
It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures including an assessment of their
independent credit rating, financial position, past experience and industry reputation. Risk limits are set for each individual customer in accordance with
parameters set by the Board. These risk limits are regularly monitored.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.
The Group maintains cash on deposit only with major Australian banks or similar in countries of operation. Excess cash reserves of foreign subsidiaries are
used to repay intercompany borrowings. Limited cash reserves are held outside Australia.
Prime media GrouP AnnuAl RepoRt 2011
49
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
3
fiNANCiAl Risk mANAgemeNt oBJeCtives AND PoliCies (CONTINUED)
Risk exPosuRes AND ResPoNses (CONTINUED)
(iii) Credit risk (continued)
Credit quality of financial assets
yeAR eNDeD 30 JuNe 2011
Current financial assets
Cash and cash equivalents
Trade and other receivables
Non-current financial assets
Trade and other receivables
yeAR eNDeD 30 JuNe 2010
Current financial assets
Cash and cash equivalents
Trade and other receivables
Non-current financial assets
Trade and other receivables
equivAleNt
s&P RAtiNg*
iNteRNAlly RAteD**
A+ AND
ABove
New
CustomeRs
Closely
moNitoReD
CustomeRs
No DefAult
CustomeRs
totAl
19,374
–
19,374
–
–
5,664
–
5,664
–
–
–
8,717
8,717
–
–
–
3,043
3,043
–
–
–
539
539
–
–
–
4,209
4,209
–
–
–
45,131
45,131
672
672
–
44,262
44,262
317
317
19,374
54,387
73,761
672
672
5,664
51,514
57,178
317
317
* The equivalent S&P rating of the financial assets represents that rating of the counterparty with whom the financial asset is held rather than the rating of the financial asset itself.
** New customers are counterparties with whom the Group has traded for less than one year. No default customers are customers with whom the Group has traded for greater
than one year and have no history of default, late payments, renegotiated terms or breach of their credit terms within the past two years. Closely monitored customers are
customers with whom the Group has traded for greater than one year and do not qualify as no default customers.
A small number of media buying agencies account for approximately 60% of the Company’s revenue and no individual agency accounts for more than
15% of the Company’s revenue. Agency clients operate with strict credit terms of 45 days and are required to provide detailed financial information as
part of their credit approval process. Late payments are closely monitored and followed up if the 45 day terms are not met.
Liquidity risk
(iv)
Liquidity risk arises from the financial liabilities of the Group and the Group’s subsequent ability to meet their obligations to repay their financial liabilities
as and when they fall due.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans and finance leases.
The Group currently has funding through:
• $260 million Debenture Subscription Facility (2010: $260 million), which is currently drawn to 58% of the facility limit (2010: 62%); and
• Long Term finance lease contracts over specific items of plant and equipment.
The Group manages its liquidity risk by monitoring the total cash inflows and outflows expected on a weekly basis. The Company has established
comprehensive risk reporting covering its business units that reflects expectations of management of the expected settlement of financial assets and
liabilities.
It is the Group’s policy that renegotiation of existing funding facilities are commenced at least twelve months prior to the maturity date of the existing facilities.
On 26 August 2011 the Company secured a commitment from its bankers to provide a $200 million bank loan facility with a term of 4 years, repayable in
full on expiry. Interest will be charged at a rate of BBSY plus a margin between 1.70% and 2.60%. Formal documentation is expected to be executed on 30
September 2011.
At 30 June 2011, 0.4% of the Group’s debt will mature in less than one year (2010: 4.2%).
(a) Non-derivative financial liabilities
The following liquidity risk disclosures reflect all contractually fixed pay-offs, repayments and interest resulting from recognised financial liabilities as at 30
June 2011. For the other obligations the respective undiscounted cash flows for the respective upcoming fiscal years are presented. The timing of cash
flows for liabilities is based on the contractual terms of the underlying contract.
However, where the counterparty has a choice of when the amount is paid, the liability is allocated to the earliest period in which the Group can now be
required to pay. When the Group is committed to make amounts available in instalments, each instalment is allocated to the earliest period in which the
Group is required to pay.
The risk implied from the values shown in the table below, reflects a balanced view of cash inflows and outflows of non-derivative financial instruments.
Leasing obligations, trade payables and other financial liabilities mainly originate from the financing of assets used in the Group’s ongoing operations
such as property, plant, equipment and investments in working capital (e.g. inventories and trade receivables).
Liquid non-derivative assets comprising cash and receivables are considered in the Group’s overall liquidity risk. The Group ensures that sufficient liquid
assets are available to meet all the required short-term cash payments.
50
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
The remaining contractual maturities of the Group’s financial assets and liabilities are:
yeAR eNDeD 30 JuNe 2011
financial assets
Cash and cash equivalents
Trade and other receivables
financial liabilities
Trade and other payables
Interest bearing loans and borrowings
Net inflow/(outflow)
≤ 6
moNths
$’000
6 – 12
moNths
$’000
1 – 5
yeARs
$’000
> 5
yeARs
$’000
totAl
$’000
19,374
54,387
73,761
(57,584)
(4,748)
(62,332)
11,429
–
–
–
–
–
672
672
–
(4,690)
(4,690)
(4,690)
(153,646)
(153,646)
(152,974)
–
–
–
–
(420)
(420)
(420)
19,374
55,059
74,433
(57,584)
(163,504)
(221,088)
(146,655)
In addition to maintaining sufficient liquid assets to meet short-term payments, at balance date, the Group has available approximately $110 million of
unused bank loan facilities available for its immediate use, subject to continued compliance with the bank loan covenants.
yeAR eNDeD 30 JuNe 2010
financial assets
Cash and cash equivalents
Trade and other receivables
financial liabilities
Trade and other payables
Interest bearing loans and borrowings
Net inflow/(outflow)
≤ 6
moNths
$’000
6 – 12
moNths
$’000
1 – 5
yeARs
$’000
> 5
yeARs
$’000
totAl
$’000
5,664
51,514
57,178
(60,406)
(37,838)
(98,244)
(41,066)
–
–
–
–
–
317
317
–
(5,995)
(5,995)
(5,995)
(185,554)
(185,554)
(185,237)
–
–
–
–
(734)
(734)
(734)
5,664
51,831
57,495
(60,406)
(230,121)
(290,527)
(233,032)
Fair value
The methods for estimating fair value are outlined in the relevant notes to the financial statements.
(b) Derivative financial liabilities
Due to the unique characteristics and risks inherent to derivative instruments, the Group separately monitors the liquidity risk arising from transacting in
derivative instruments.
The table below details the liquidity risk arising from the derivative liabilities held by the Group at balance date. Net settled derivative liabilities comprise
forward interest rate contracts that are used as economic hedges of interest rate risks.
yeAR eNDeD 30 JuNe 2011
Derivative liabilities – net settled
Net inflow/(outflow)
yeAR eNDeD 30 JuNe 2010
Derivative liabilities – net settled
Net inflow/(outflow)
≤ 6
moNths
$’000
6 – 12
moNths
$’000
1 – 5
yeARs
$’000
> 5
yeARs
$’000
(670)
(670)
(726)
(726)
(1,017)
(1,017)
–
–
(697)
(697)
(1,597)
(1,597)
–
–
–
–
totAl
$’000
(1,687)
(1,687)
(3,020)
(3,020)
Prime media GrouP AnnuAl RepoRt 2011
51
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
3
fiNANCiAl Risk mANAgemeNt oBJeCtives AND PoliCies (CONTINUED)
Risk exPosuRes AND ResPoNses (CONTINUED)
(v) Fair Value
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
Level 1 – the fair value is calculated using quoted prices in active markets.
Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices).
Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised in the table below.
quoteD mARket PRiCe
(level 1)
$’000
vAluAtioN teChNique
– mARket oBseRvABle
iNPuts (level 2)
$’000
vAluAtioN teChNique
– NoN mARket
oBseRvABle iNPuts (level 3)
$’000
yeAR eNDeD 30 JuNe 2011
financial assets
Listed investments
Unlisted investments
financial liabilities
Derivative instruments:
Interest rate swaps
yeAR eNDeD 30 JuNe 2010
financial assets
Listed investments
Unlisted investments
financial liabilities
Derivative instruments:
Interest rate swaps
4
–
4
–
–
4
–
4
–
–
–
–
–
(1,687)
(1,687)
–
–
–
(3,020)
(3,020)
–
2,001
2,001
–
–
–
–
–
–
–
totAl
$’000
4
2,001
2,005
(1,687)
(1,687)
4
–
4
(3,020)
(3,020)
A sensitivity analysis of the valuation inputs for Level 3 balances has been provided in Note 14(iv).
Quoted market price represents the fair value determined based on quoted prices on active markets as at the reporting date without any deduction for
transaction costs. The fair value of the listed equity investments are based on quoted market prices.
For financial instruments not quoted in active markets, the Group uses valuation techniques such as present value techniques, comparison to similar
instruments for which market observable prices exist and other relevant models used by market participants. These valuation techniques use both
observable and unobservable market inputs.
Financial instruments that use valuation techniques with only observable market inputs or unobservable inputs that are not significant to the overall
valuation include interest rate swaps, forward commodity contracts and foreign exchange contracts not traded on a recognised exchange.
Reconciliation of Level 3 fair value movements:
Opening balance
Additions – as consideration received on business disposal
Closing balance
CoNsoliDAteD
2011
$’000
–
2,001
2,001
2010
$’000
–
–
–
52
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
4
iNCome AND exPeNses
iNCome AND exPeNses fRom CoNtiNuiNg oPeRAtioNs
iNCome
(A)
Advertising revenue
Finance income
Other income
Breakdown of finance income:
Interest received – other persons
Breakdown of other income:
Government grants
Production revenue
Sales representation services
Rental income
Dividend income
Other revenues
(B) fiNANCe exPeNses
Interest expense – other persons
Effective interest rate adjustments
(C) emPloyee BeNefit exPeNse
Wages and salaries
Superannuation expense
Share based payments expense
Other employee benefits expense
(D) otheR exPeNses
Bad and doubtful debts – trade debtors
Minimum lease payments – operating leases
Realised Foreign Exchange Losses
CoNsoliDAteD
2011
$’000
2010
$’000
250,030
231,365
420
6,548
330
4,819
256,998
236,514
420
420
1,310
488
1,294
2,338
–
1,118
6,548
11,566
(18)
11,548
41,065
3,210
665
734
45,674
311
16,942
–
330
330
543
271
1,172
1,813
25
995
4,819
11,322
(80)
11,242
39,350
3,115
16
3,285
45,766
400
17,138
7
Prime media GrouP AnnuAl RepoRt 2011
53
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
5
iNCome tAx
iNCome tAx exPeNse
(A)
The major components of income tax expense are:
statement of comprehensive income
Current income tax
Current income tax charge
Adjustments in respect of current income tax of previous years
Losses not recognised
Deferred income tax
Relating to origination and reversal of temporary differences
Adjustments in respect of deferred income tax of previous years
De-recognition of DTA
Net DTA not previously recognised due to accumulated loss position of subsidiary
Income tax expense/(benefit) on discontinuing operations
income tax expense reported in the statement of comprehensive income
(B) AmouNts ChARgeD oR CReDiteD DiReCtly to equity
Deferred income tax related to items charged or credited directly to equity
Foreign currency translation
(C)
NumeRiCAl ReCoNCiliAtioN BetweeN AggRegAte tAx exPeNse ReCogNiseD iN
the stAtemeNt of ComPReheNsive iNCome AND tAx exPeNse CAlCulAteD PeR
the stAtutoRy iNCome tAx RAte.
A reconciliation between tax expense and the product of accounting profit before income tax multiplied by the
Group’s appropriate income tax rate is as follows:
Profit before tax from continuing operations
(Loss) before tax from discontinuing operations
total accounting profit/(loss) before income tax
CoNsoliDAteD
2011
$’000
2010
$’000
7,760
(933)
13
4,656
215
–
(581)
(63)
11,067
5,530
1,465
52
(3,713)
(1,025)
3,851
(1,692)
5,750
10,218
(237)
(237)
(103)
(103)
39,255
(959)
38,296
7,882
(57,958)
(50,076)
Prima facie tax expense/(benefit) on accounting profit at the Group’s statutory rate of 30% (2010: 30%)
11,489
(15,023)
Non temporary differences
Expenses not deductible for tax
Impairment expense not deductible for tax
DTA not recognised on current year tax losses
Adjustments in respect of current income tax of previous years
Income not assessable for tax
DTA on timing differences not previously recognised now brought to account
De-recognition of DTA on capital losses
DTA on income tax losses not previously recognised
Aggregate income tax expense
Aggregate income tax expense attributable to:
Continuing operations
Discontinuing operations
1,213
–
–
(719)
(354)
–
69
(568)
11,130
11,067
63
11,130
1,264
15,550
410
440
51
(1,692)
3,851
(383)
4,468
10,218
(5,750)
4,468
54
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
CoNsoliDAteD
2011
$’000
CuRReNt
iNCome tAx
2011
$’000
DefeRReD
iNCome tAx
2010
$’000
Current
InCome tax
2010
$’000
DeferreD
InCome tax
(D) ReCogNiseD DefeRReD tAx Assets AND liABilities
Opening balance
Charged to income
Charged to equity
Other payments
Closing balance
Tax expense in statement of comprehensive income
Amounts recognised in the statement of financial position:
Deferred tax asset
Deferred tax liability
57
(6,841)
(11)
3,718
(3,077)
12,093
(4,289)
248
–
8,052
11,130
8,052
–
8,052
Deferred income tax as at 30 June relates to the following:
Deferred tax liabilities
Accelerated depreciation for tax purposes
Leased assets
Prepaid expenses deductible for tax
Fair value of television licences on acquisition
Gross deferred tax liabilities
Set-off of deferred tax assets
Net deferred tax liabilities
Deferred tax assets
Employee entitlements
Provisions
Expenses not yet deductible for tax
Lease liabilities
Difference between accounting and tax building write off
Accounting depreciation not yet deductible for tax
Fair value of derivatives
Impairments of investments
Tax losses
Gross deferred tax assets
Set-off of deferred tax liabilities
Net deferred tax assets
5,286
(7,046)
91
1,726
57
9,503
2,578
12
–
12,093
4,468
12,093
–
12,093
CoNsoliDAteD
2011
$’000
2010
$’000
–
(75)
(887)
(6,690)
(7,652)
7,652
–
1,712
195
3,070
56
1,486
191
506
7,200
1,288
15,704
(7,652)
8,052
(268)
(38)
(651)
(6,690)
(7,647)
7,647
–
1,816
2,418
3,323
–
2,401
–
906
7,384
1,492
19,740
(7,647)
12,093
(e)
(i)
iNCome tAx losses
Deferred tax assets arising from tax losses of a controlled entity which at balance date are recognised as being
highly probable of recovery. These losses relate to an entity outside the Australian Tax Consolidated Group that
is making profits.
1,288
1,492
(ii)
Deferred tax assets arising from tax losses of controlled entities not recognised at reporting date as realisation
of the benefit is not regarded as highly probable.
19,305
21,969
Prime media GrouP AnnuAl RepoRt 2011
55
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
5
iNCome tAx (CONTINUED)
(f)
tAx CoNsoliDAtioN
(i) Members of the tax consolidated group and the tax sharing arrangements
Effective 1 July 2002, for the purposes of income taxation, Prime Media Group Limited and its 100% owned Australian resident subsidiaries formed a
tax consolidated group. Prime Media Group Limited is the head entity of the tax consolidated group. Members of the tax consolidated group entered
into a tax sharing arrangement in order to allocate income tax expense to the wholly owned subsidiaries on a pro-rata basis. In addition, the agreement
provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. No amounts have
been recognised in the financial statements in respect of this agreement on the basis that the possibility of default is remote.
(ii)
Tax effect accounting by members of the consolidated group
Measurement method adopted under UIG 1052 Tax Consolidation Accounting
The head entity and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. The Group
has applied the Group Allocation approach in determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax
consolidated group. The current and deferred tax amounts are measured in a systematic manner that is consistent with the broad principles in AASB 112
Income Taxes. The nature of the tax funding agreement is discussed further below.
In addition to its own current and deferred tax amounts, the head entity also recognises current tax liabilities (or assets) and deferred tax assets arising
from unused tax losses and unused tax credits from controlled extras in the tax consolidated group.
Nature of the tax funding agreement
Members of the tax consolidated group have entered into a tax funding agreement. The tax funding agreement provides for the allocation of current
taxes to members of the tax consolidated group in accordance with their taxable income for the period, while deferred taxes are allocated to members
of the tax consolidated group in accordance with the principles of AASB 112 Income Taxes. Allocations under the tax funding agreement are made at
the end of each half year.
The allocation of taxes under the tax funding agreement is recognised as an increase/decrease in the subsidiaries’ intercompany accounts with the tax
consolidated group head company, Prime Media Group Limited. In accordance with UIG 1052: Tax Consolidation Accounting, the group has applied the
“separate taxpayer within group” approach in determining the appropriate amount of current taxes to allocate to members of the tax consolidated group.
Tax effect accounting by members of the consolidated group
PRime meDiA gRouP limiteD
2011
$’000
2010
$’000
Prime Media Group Limited has recognised the following amounts as tax-consolidation contribution adjustments:
Total increase to inter-company assets of Prime Media Group Limited
12,483
5,907
(g) tAxAtioN of fiNANCiAl ARRANgemeNts (tofA)
Legislation is in place which changes the tax treatment of financial arrangements, including the tax treatment of hedging transactions. The Group has
assessed the potential impact of these changes on the Group tax position. No impact has been recognised and no adjustments have been made to the
deferred tax and income tax balances at 30 June 2011 (2010: $Nil).
56
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
6 DisCoNtiNuiNg oPeRAtioNs
(A) DetAils of oPeRAtioNs DisPoseD, CloseD DowN AND helD foR sAle
mooNlight CiNemA
On 1 October 2010, the Group completed the sale of Moonlight Cinema, its Australian outdoor cinema operation, to Amalgamated Holdings Limited for
a disposal sale consideration of $1,627,877, net of selling costs.
oN site BRoADCAstiNg
(1) On 9 July 2010, the Group completed the sale of its On Site Broadcasting business in New Zealand to Sky Network Television Limited for total
consideration of A$11,130,375, net of selling costs. The deferred consideration is receivable over a period of 4 years to 30 June 2014 and the amount
earned is contingent upon the amount of profit earned under various contracts transferred as part of the sale.
The consideration comprised of the following:
Cash consideration
Deferred contingent consideration, at fair value
total consideration
10,565,375
565,000
$11,130,375
As at 30 June 2011 the Company revised the fair value of the deferred contingent consideration up by $1,181,000, on completion of a detailed review of
the forecast profits expected from the contracts transferred as part of the sale.
(2) On 28 October 2010, the Group completed the sale of its On Site Broadcasting business in Australia to Gearhouse Broadcast Pty Ltd for a total
consideration of $10,314,993, net of selling costs.
The consideration comprised of the following:
Cash consideration
Shares issued in Gearhouse Broadcast Pty Limited (unlisted) at fair value
Deferred contingent consideration, at fair value
total consideration
8,314,993
2,000,000
–
$10,314,993
A component of the sale consideration is a $3,000,000 subordinated loan advanced by the Company to the purchaser and repayable between 31
December 2012 and 31 December 2014. The loan repayment amount is contingent upon the financial performance of the business from the date of
the sale to 31 December 2014. As at 30 June 2011 the loan repayment amount had been formally reduced to $1,187,005. The company is carrying this
deferred contingent consideration receivable at a fair value of nil.
PRime DigitAl meDiA
Effective 30 June 2011, the Company exited the Prime Digital Media business and has disclosed the results of the Prime Digital Media business as
discontinuing operations.
televisioN PRoDuCtioN
On 20 November 2009, the board of directors entered an agreement to transfer the existing production rights for current developments to Beyond
International. The television production operations were wound up following the transfer to Beyond International, which was completed on 18 January 2010.
(B)
fiNANCiAl PeRfoRmANCe of oPeRAtioNs DisPoseD,
CloseD DowN oR helD foR sAle
Revenue
Expenses
loss attributable to discontinuing operations before tax
Income tax (expense)/benefit
loss attributable to discontinuing operations after tax
Minority interest in discontinued operations
Loss from discontinuing operations attributable to members of parent entity
loss per share (cents per share)
Basic from discontinued operations
Diluted from discontinued operations
2011
$’000
2010
$’000
7,098
(8,057)
(959)
(63)
(1,022)
–
(1,022)
(0.3)
(0.3)
39,062
(97,020)
(57,958)
5,750
(52,208)
85
(52,123)
(14.3)
(14.3)
Discontinuing operations includes Broadcast Production Services, On Site Broadcasting, Moonlight Cinema, Prime Media Singapore and Prime Digital Media.
Prime media GrouP AnnuAl RepoRt 2011
57
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
6 DisCoNtiNuiNg oPeRAtioNs (CONTINUED)
(C) Assets AND liABilities – helD foR sAle oPeRAtioNs
Non-current assets
Property, plant & equipment
Intangibles – goodwill
total non-current assets
total assets
Current liabilities
Interest bearing liabilities
total Current liabilities
Net assets held for sale
(D) CAsh flow iNfoRmAtioN – DisCoNtiNueD oPeRAtioNs
Net cash (outflow) from operating activities
Net cash inflow/(outflow) from investing activities
Net cash (outflow)/inflow from financing activities
Net cash generated by discontinued operations
(e) loss oN DisPosAl
Cash
Shares received at fair value
Fair value of deferred consideration
total disposal consideration
Less net assets disposed of
loss on disposal before income tax
Income tax expense
loss on disposal after income tax
(f) Net CAsh iNflow fRom DisPosAl
Cash and cash equivalents consideration
Less cash and cash equivalents balance disposed of
Reflected in the consolidated statement of cash flows
7 eARNiNgs PeR shARe
2011
$’000
2010
$’000
37,791
2,097
39,888
39,888
(24,162)
(24,162)
15,726
(2,491)
(10,529)
13,488
468
–
–
–
–
–
–
–
(7,608)
18,256
(7,309)
3,339
2011
$’000
20,508
2,000
565
23,073
(23,656)
(583)
240
(343)
20,508
–
20,508
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted
average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares that would be on issue on the conversion of all the potentially dilutive ordinary shares into ordinary shares.
The following reflects the income and share data used in the calculations of basic and diluted earnings per share:
(A) eARNiNgs useD iN CAlCulAtiNg eARNiNgs PeR shARe
Net Profit/(loss) attributable to ordinary equity holders of the parent from continuing operations
Net loss attributable to ordinary equity holders of the parent from discontinuing operations
Net Profit/(loss) attributable to ordinary equity holders of the parent
earnings/(losses) used in calculating basic and diluted earnings per share
CoNsoliDAteD
2011
$’000
2010
$’000
28,188
(1,022)
27,166
27,166
(2,336)
(52,208)
(54,544)
(54,544)
58
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
(B) weighteD AveRAge NumBeR of shARes
Weighted average number of ordinary shares used in calculating basic earnings per share:
Effect of dilution:
Share options
NumBeR of
shARes
2011
number of
shares
2010
366,330,303
363,522,662
–
–
Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share
366,330,303
363,522,662
There are nil share options (2010: 5,250,000) excluded from the calculations of diluted earnings per share that could potentially dilute basic earnings per
share in the future because they are anti-dilutive.
There have been no transactions involving ordinary shares or potential ordinary shares that would significantly change the number of ordinary shares or
potential ordinary shares outstanding between the reporting date and the completion of the financial statements.
(C)
iNfoRmAtioN oN the ClAssifiCAtioN of seCuRities
(i) oPtioNs
No options granted in year.
To calculate earnings per share amounts for the core continuing operations, the weighted average number of ordinary shares for both basic and diluted
amounts is as per the table above. The following table provides the profit figure used as the numerator:
(D) PRofit fRom CoNtiNuiNg oPeRAtioNs BefoRe sigNifiCANt items
Reported profit/(loss) after tax from continuing operations (refer statement of comprehensive income)
Fair value change in derivatives
Fair value change in receivable – deferred contingent consideration
Transfer of foreign currency translation reserve to profit and loss
Impairment of radio broadcasting licences
Gain on sale of investments
Impairment of television program rights
Staff redundancies
CEO termination expenses
destra administration costs
Impairment on loan to associate
Restructuring
Once off increase to employee entitlements resulting from award change
Income tax expense/(benefit) related to significant items
Profit after tax from continuing operations before significant items attributable
to members of Prime media group limited
8 DiviDeNDs PAiD AND PRoPoseD
Current year interim
(A) ReCogNiseD AmouNts
Declared and paid during the year
(i)
Franked dividends 2.1 cents per share (2010: 1.2 cents) – ordinary shares
(ii)
Franked dividends 1.4 cents per share (2010: 1.0 cents) – ordinary shares
Previous year final
(B) uNReCogNiseD AmouNts
(i)
Franked dividends 2.4 cent per share (2010: 1.4 cents) – ordinary shares
Current year final
CoNsoliDAteD
2011
$’000
2010
$’000
28,188
(1,333)
(1,181)
995
–
–
–
198
–
–
–
–
–
(2,336)
(1,518)
–
–
12,529
(921)
1,302
718
1,871
226
4,384
2,207
626
340
(1,353)
27,207
17,735
CoNsoliDAteD
2011
$’000
2010
$’000
7,693
5,129
12,822
4,382
3,633
8,015
8,792
5,129
Prime media GrouP AnnuAl RepoRt 2011
59
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
8 DiviDeNDs PAiD AND PRoPoseD (CONTINUED)
(C) fRANkiNg CReDit BAlANCe
the amount of franking credits available for the subsequent financial year are:
Franking account balance as at the end of the financial year at 30% (2010: 30%)
Franking credits that will arise from the payment of income tax payable as at the end of the financial year
Franking debits that will arise from the payment of dividends as at the end of the financial year
the amount of franking credits available for future reporting periods:
Impact on the franking account of dividends proposed or declared before the financial report
was authorised for issue but not recognised as a distribution to equity holders during the period
PAReNt
2011
$’000
2010
$’000
26,685
2,608
–
29,293
(3,768)
25,525
27,823
(393)
–
27,430
(2,198)
25,232
(D) tAx RAtes
The tax rate at which paid dividends have been franked is 30% (2010: 30%). Dividends proposed will be franked at the rate of 30% (2010: 30%).
9 CAsh AND CAsh equivAleNts
Cash balance comprises:
Cash at bank and on hand
Closing cash balance
CoNsoliDAteD
2011
$’000
19,374
19,374
2010
$’000
5,664
5,664
Cash at bank earns interest at floating rates based on daily bank deposit rates. The carrying amounts of cash and cash equivalents represent fair value.
At 30 June 2011 the Group had available $110 million (2010: $100 million) of un-drawn committed borrowing facilities in respect of which all conditions
precedent had been met.
(A)
ReCoNCiliAtioN of the Net PRofit AfteR tAx
to the Net CAsh flows fRom oPeRAtioNs
Net profit/(loss) after income tax
Adjustment for:
Depreciation and amortisation
Amortisation of program rights
Effective interest rate adjustments
Provision for doubtful debts
Net loss on disposal of property, plant and equipment
Gain on sale of financial asset
Transfer of foreign currency translation reserve to profit and loss
Net gain MTM derivatives
Impairment of intangibles and goodwill
Impairment of property, plant & equipment
Impairment of investments in associates
Share of losses of associates
Share based payments expense
Changes in assets and liabilities
(Increase) in receivables
Decrease/(increase) in deferred tax assets
(Increase) in prepayments
(Decrease) in creditors
Increase in tax provision
(Decrease) in deferred tax liability
(Decrease) in interest bearing liabilities
(Decrease)/increase in other provisions
Net cash flow from operating activities
60
CoNsoliDAteD
2011
$’000
2010
$’000
27,166
(54,544)
10,190
832
–
314
656
(34)
995
(1,333)
–
–
–
586
665
(2,034)
3,849
(310)
(2,259)
3,564
–
(2,070)
(6,358)
34,419
18,330
3,442
84
542
225
(922)
1,032
(1,517)
52,461
7,863
4,384
1,601
16
(174)
(2,425)
(1,465)
(1,563)
5,332
(163)
–
627
33,166
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
10 tRADe AND otheR ReCeivABles
CuRReNt
Trade receivables
Allowance for impairment loss
Deferred contingent consideration
Other receivables
Related party receivables
Loans to executives
Other related parties
Carrying amount of trade and other receivables
CoNsoliDAteD
2011
$’000
2010
$’000
47,944
(652)
47,292
1,285
4,446
130
1,234
54,387
48,843
(875)
47,968
–
3,424
122
–
51,514
(A) AllowANCe foR imPAiRmeNt loss
Trade receivables are carried at original invoice amount less an allowance for any uncollectible debts. Credit terms for advertisers, generally 30 – 45 days, are
extended based upon an assessment of the credit standing of each customer. An allowance for impairment loss is made when there is objective evidence that
the Group will not be able to collect the debt. Bad debts are written off when identified. No individual amount within the impairment allowance is material.
Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value.
The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security, nor is it the Group’s policy to transfer (on-sell)
receivables to special purpose entities.
Movement in the provision for impairment loss in relation to trade receivables was as follows:
At July 1
Charge for the year
Amounts written off
At June 30
CoNsoliDAteD
2011
$’000
875
20
(243)
652
2010
$’000
629
686
(440)
875
At 30 June, the ageing analysis of trade receivables is as follows:
2011
2010
totAl
47,944
48,843
0–30
DAys
24,281
25,367
31–60
DAys
21,422
21,172
61–90
DAys PDNi*
61–90
DAys Ci*
+91
DAys PDNi*
+91
DAys Ci*
999
1,013
13
56
733
416
496
819
* Considered impaired (‘CI’), Past due not impaired (‘PDNI’)
Receivables past due but not considered impaired incorporate those customers on payment plans or those with a good payment history for which we
expect payment in the short term. For each client, credit has been stopped until full payment is made. Each operating unit has been in direct contact with
the relevant debtor and is satisfied that payment will be received in full.
Other balances within trade and other receivables do not contain impaired assets and are not past due. It is expected that these other balances will be
received when due.
(B) RelAteD PARty ReCeivABles
For terms and conditions of related party receivables refer to notes 31 and 32.
(C) foReigN exChANge AND iNteRest RAte Risk
Detail regarding foreign exchange and interest rate risk exposure is disclosed in note 3.
NoN-CuRReNt
Deferred contingent consideration
Related party receivables
Loans to executives
Other related parties
Carrying amount of non-current receivables
CoNsoliDAteD
2011
$’000
2010
$’000
487
140
45
672
–
270
47
317
Related parties receivables are interest bearing and have no fixed repayment terms. The directors of the parent entity review the interest rates applicable
to these receivables on an annual basis, based on the prevailing cost of debt incurred by the parent entity.
Prime media GrouP AnnuAl RepoRt 2011
61
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
10 tRADe AND otheR ReCeivABles (CONTINUED)
All amounts are receivable in Australian dollars and are not considered past due or impaired.
For the terms and conditions relating to KMP refer to note 32.
(A) fAiR vAlue AND CReDit Risk
The fair values of non-current receivables approximate their carrying value.
(B) foReigN exChANge AND iNteRest RAte Risk
Detail regarding foreign exchange and interest rate risk exposure is disclosed in note 3.
(C) CReDit Risk
The maximum exposure to credit risk at the reporting date is the higher of the carrying value and fair value of each class of receivables.
No collateral is held as security.
11 otheR Assets
CuRReNt
Work in progress
Prepayments
NoN-CuRReNt
Prepayments
12 iNvestmeNts iN AssoCiAtes
iNvestmeNt DetAils
(A)
unlisted
Mildura Digital Television Pty Limited (refer to note 19)
Prime Digitalworks Pty Limited
West Digital Television Pty Limited
West Digital Television No2 Pty Limited
West Digital Television No3 Pty Limited
West Digital Television No4 Pty Limited
WA SatCo Pty Limited
Broadcast Transmission Services Pty Limited
total investments in Associates
CoNsoliDAteD
2011
$’000
–
2,001
2,001
2010
$’000
65
2,397
2,462
2,332
1,561
CoNsoliDAteD
2011
$’000
2010
$’000
–
–
–
–
–
–
–
–
–
80
–
–
–
–
–
–
–
80
(B)
the CoNsoliDAteD eNtity hAs A mAteRiAl
iNteRest iN the followiNg eNtities:
unlisted
Mildura Digital Television Pty Limited
destra Corporation Limited(1)
Prime Digitalworks Pty Limited(2)
West Digital Television Pty Limited
West Digital Television No2 Pty Limited
West Digital Television No3 Pty Limited
West Digital Television No4 Pty Limited
WA SatCo Pty Limited
Broadcast Transmission Services Pty Limited
owNeRshiP iNteRest
CoNtRiButioN to Net PRofit
2011
%
2010
%
2011
$’000
2010
$’000
50%
44%
100%
50%
50%
50%
50%
50%
33%
50%
44%
100%
50%
50%
50%
50%
–
33%
(586)
–
–
–
–
–
–
–
–
(586)
(425)
–
(1,176)
–
–
–
–
–
–
(1,601)
(1) The group’s investment in destra Corporation Limited was impaired to Nil during 2009. As such no further share of losses are taken up in the Group accounts.
(2) On 30 June 2010 Prime Digitalworks Pty Limited became a wholly owned subsidiary. Prior to this date the ownership interest was 33% and this investment was classified as an
investment in associate.
62
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
(C)
movemeNts iN the CARRyiNg AmouNt of the gRouP’s
iNvestmeNt iN AssoCiAtes
At July 1
Loan funds advanced(1)
Share of losses after income tax
Provision for impairment losses
Provision for loan funds still to be paid to associate (refer to note 19)
At June 30
CoNsoliDAteD
2011
$’000
2010
$’000
80
299
(586)
–
207
–
4,299
1,766
(1,601)
(4,384)
–
80
(1) Reflects loan funds advanced to associates under short term loan arrangement or in accordance with requirements of shareholder agreements. These payments are deemed
to be part of the Investment in Associates for the purposes of equity accounting.
imPAiRmeNt
(D)
In 2010 a provision for impairment loss was recognised to the extent as disclosed above. Due to the ongoing losses being incurred by Prime Digitalworks
Pty Limited, management of Prime Media Group Limited reviewed the recoverability of the loan to this associate. The assessment of the fair value of the
loans to the associate was $Nil which gave rise to an impairment of $4,384,000.
(e) summARiseD fiNANCiAl iNfoRmAtioN
The following table illustrates summarised financial information relating to the Group’s associates:
extracts from associates’ balance sheets:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
share of the associates net assets accounted for using the equity method:
Net assets
extracts from associates’ statements of comprehensive income:
Revenue
Net losses
share of the associates profits or losses accounted for using the equity method:
Loss before income tax
Income tax expense
Loss after income tax
2011
$’000
2010
$’000
460
483
943
(2,345)
–
(2,345)
(1,402)
109
490
599
(1,457)
–
(1,457)
(858)
(701)
(429)
936
(1,172)
(586)
–
(586)
1,878
(4,388)
(1,601)
–
(1,601)
Prime media GrouP AnnuAl RepoRt 2011
63
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
13 iNvestmeNts iN suBsiDiARies AND fiNANCiAl Assets
CloseD gRouP ClAss oRDeR DisClosuRes
eNtities suBJeCt to ClAss oRDeR Relief
Pursuant to Class Order 98/1418, relief has been granted to Prime Television (Holdings) Pty Limited, Prime Television (Southern) Pty Limited, Prime
Television (Victoria) Pty Limited, Prime Television (Northern) Pty Limited, Golden West Network Pty Limited, Prime Television Investments Pty Limited and
Prime Radio (Holdings) Pty Limited from the Corporations Act 2001 requirements for preparation, audit and lodgement of their financial reports.
As a condition of the Class Order, Prime Media Group Limited and its 100% owned Australian resident subsidiaries entered into a Deed of Cross
Guarantee on 17 October 2006 (the “Closed Group”). The effect of the deed is that Prime Media Group Limited has guaranteed to pay any deficiency in
the event of winding up of any of the controlled entities within the Closed Group. The controlled entities within the Closed Group, listed below, have also
given a similar guarantee in the event that Prime Media Group Limited is wound up.
CouNtRy of
iNCoRPoRAtioN
equity iNteRest
2011
%
2010
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
NAme
Prime Television (Holdings) Pty Limited
Zamojill Pty Limited
Prime Television (Southern) Pty Limited
Prime Television (Northern) Pty Limited
Prime Television (Victoria) Pty Limited
Prime Properties (Albury) Pty Limited
Prime Television Digital Media Pty Limited
Prime Television (Investments) Pty Limited
Golden West Network Pty Limited
Mining Television Network Pty Limited
Telepro Pty Limited
Golden West Satellite Communications Pty Limited
135 Nominees Pty Limited
Mid-Western Television Pty Limited
Geraldton Telecasters Pty Limited
Prime Radio (Cairns) Pty Limited
Prime Radio (Townsville) Pty Limited
Prime Radio (Barrier Reef) Pty Limited
Prime Radio (Rockhampton) Pty Limited
Prime Radio (Gladstone) Pty Limited
Prime Radio (Mackay) Pty Limited
Prime Radio (Holdings) Pty Limited
Prime Radio (Cairns-AM) Pty Limited
Prime Radio (Mackay-AM) Pty Limited
AMI Radio Pty Limited
Hot 91 Pty Limited
Prime Digital Media Pty Limited
Fireback Digital Pty Limited
Prime Media Developments Pty Limited
Prime Digitalworks Pty Limited
Prime Media Broadcasting Pty Limited
Prime Media Communications Pty Limited
Prime Growth Media Pty Limited
Prime Media Group Services Pty Limited
POP Digital Media Pty Limited
64
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
The consolidated statement of comprehensive income and statement of financial position of the entities which are members of the “Closed Group’
are as follows:
(A) CoNsoliDAteD stAtemeNt of ComPReheNsive iNCome
Operating profit/(loss) before income tax
Income tax expense attributable to operating profit/(loss)
Operating profit/(loss) after tax
Accumulated losses at beginning of the financial year
Dividends provided for or paid
Accumulated losses at end of the financial period
(B) CoNsoliDAteD stAtemeNt of fiNANCiAl PositioN
Current assets
Cash and cash equivalents
Trade and other receivables
Intangible assets
Prepayments
Current tax assets
total current assets
Non-current assets
Receivables
Investments in associates
Investments in available-for-sale financial assets
Other financial assets and subsidiaries
Property, plant and equipment
Intangible assets
Deferred tax assets
Other assets
total non-current assets
totAl Assets
Current liabilities
Trade and other payables
Interest bearing loans and borrowings
Current tax liabilities
Provisions
Derivative financial instruments
total current liabilities
Non-current liabilities
Trade and other payables
Interest bearing loans and borrowings
Provisions
total non-current liabilities
totAl liABilities
Net Assets
equity
Parent entity interest
Contributed equity
Reserves
Accumulated losses
totAl equity
CloseD gRouP
2011
$’000
37,870
(12,041)
25,829
(78,786)
(12,822)
(65,779)
2010
$’000
(17,304)
(7,402)
(24,706)
(46,065)
(8,015)
(78,786)
CloseD gRouP
2011
$’000
18,749
52,107
616
1,909
–
73,381
2010
$’000
3,821
48,665
832
2,124
396
55,838
36,585
37,057
–
7
118,093
54,328
224,519
4,308
2,332
440,172
513,553
80
7
117,933
56,053
225,284
7,448
1,560
445,422
501,260
56,640
52,997
627
3,495
2,255
1,687
64,704
49,729
152,823
433
202,985
267,689
245,864
310,262
1,381
(65,779)
245,864
381
–
9,023
3,020
65,421
35,960
165,228
496
201,684
267,105
234,155
310,262
2,679
(78,786)
234,155
Prime media GrouP AnnuAl RepoRt 2011
65
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
14 iNvestmeNts – AvAilABle-foR-sAle fiNANCiAl Assets
investments at fair value:
Available for sale financial assets:
Shares in uncontrolled entities (listed) (i)
investments at cost:
Shares in uncontrolled entities (unlisted) (ii)
investments at fair value:
Shares in uncontrolled entities (unlisted) (iii)
CoNsoliDAteD
2011
$’000
2010
$’000
4
3,133
2,001
5,138
4
3,133
–
3,137
Available-for-sale investments consist of investments in ordinary shares, and therefore have no fixed maturity date or coupon rate.
listeD shARes
(i)
The fair value of the listed available-for-sale investments has been determined directly by reference to published price quotations in an active market.
There are no individually material investments.
(ii) uNlisteD shARes At Cost
Investments in shares of unlisted entities are carried at cost where fair value cannot be reliably measured. The financial instruments held are shares of an
entity that has a small shareholder base and a relatively stable share register with few exchanges of shareholdings
Management has reviewed the current trading performance and future projections of the entity. Based on these projections and other external factors
likely to affect the ongoing performance of the entity management are of the belief that the carrying value of the investment is fair value. Based on the
current expectations management believe the downturn in performance would have to be greater than 50% of current levels before impairment of the
investment would occur.
(iii) uNlisteD shARes At fAiR vAlue
The fair value of the unlisted available-for-sale investments has been estimated using valuation techniques based on assumptions, which are outlined
in note 2(F), that are not supported by observable market prices or rates. Management believes the estimated fair value resulting from the valuation
techniques and recorded in the statement of financial position and the related changes in fair value recorded in other comprehensive income are
reasonable and the most appropriate at the reporting date. A reconciliation of the movement during the year is as follows:
Investments at fair value:
Opening balance
Net valuation gains
Additions – as consideration received on business disposal
Disposals
Closing balance
CoNsoliDAteD
2011
$’000
–
–
2,001
–
2,001
2010
$’000
–
–
–
–
–
(iv) vAluAtioN seNsitivity
Management has estimated the potential effect of using reasonably possible alternatives as inputs to the valuation models and has quantified this as a
reduction in fair value of approximately $689,000 using less favourable assumptions and an increase in fair value of approximately $742,000 using more
favourable assumptions.
66
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
15 PRoPeRty, PlANt AND equiPmeNt
Freehold land – at cost
Leasehold land – at cost(i)
total land
Buildings on freehold land – at cost
Less: Accumulated depreciation
Buildings on leasehold land – at cost(i)
Less Accumulated amortisation
Buildings on freehold land – at recoverable value
Less: Accumulated depreciation
total Buildings
Leasehold Improvements – at cost
Less: Accumulated amortisation
total leasehold improvements
Plant and Equipment – at cost
Less: Accumulated depreciation and impairment
total Plant and equipment
Plant and Equipment under lease - at cost
Less: Accumulated amortisation
total Plant and equipment under lease
Motor Vehicles – at cost
Less: Accumulated depreciation
total motor vehicles
totAl wRitteN DowN AmouNt
CoNsoliDAteD
2011
$’000
916
197
1,113
2,049
(1,159)
890
10,286
(3,051)
7,235
2,112
(542)
1,570
9,695
3,877
(1,584)
2,293
2010
$’000
1,147
197
1,344
3,324
(1,716)
1,608
10,146
(2,794)
7,352
2,162
(488)
1,674
10,634
3,593
(1,321)
2,272
143,726
(106,351)
37,375
152,218
(113,781)
38,437
4,935
(1,102)
3,833
61
(36)
25
4,451
(861)
3,590
79
(48)
31
54,334
56,308
(i)
Includes land located in the Australian Capital Territory, under the ACT legislation, the land has a 99 year lease period, and also includes Leasehold Strata Units located in
Sydney, which are held under a 99 year lease.
Prime media GrouP AnnuAl RepoRt 2011
67
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
15 PRoPeRty, PlANt AND equiPmeNt (CONTINUED)
(A) ReCoNCiliAtioNs
Reconciliations of the carrying amounts of property, plant and equipment at the beginning and end of the current financial year.
CoNsoliDAteD
freehold land
Carrying amount at beginning
Disposals
Classification transfer
leasehold land
total land
Buildings on freehold land
Carrying amount at beginning
Additions
Classification transfer
Disposals
Depreciation expense
Buildings on leasehold land
Carrying amount at beginning
Additions
Classification transfer
Disposals
Depreciation expense
total Buildings
leasehold improvements
Carrying amount at beginning
Additions
Classification transfer
Disposals
Depreciation expense
Reclassification to assets held for sale
total leasehold improvements
Plant and equipment
Carrying amount at beginning
Additions
Classification transfer(1)
Disposals
Depreciation expense
Impairment expense(2)
Reclassification to assets held for sale(2)
Foreign currency movements
total Plant and equipment
Plant and equipment under lease
Carrying amount at beginning
Additions
Disposals
Amortisation expense
Foreign currency movements
Reclassification to assets held for sale(2)
total Plant and equipment under lease
total Plant and equipment
motor vehicles
Carrying amount at beginning
Additions
Classification transfer
Disposals
Depreciation expense
total motor vehicles
2011
$’000
1,147
(231)
–
916
197
1,113
3,282
–
–
(710)
(112)
2,460
7,352
140
–
–
(257)
7,235
9,695
2,272
296
5
(11)
(269)
–
2,293
38,437
9,281
(81)
(1,054)
(9,208)
–
–
–
37,375
3,590
645
(98)
(304)
–
–
3,833
41,208
31
9
–
(9)
(6)
25
2010
$’000
1,142
–
5
1,147
197
1,344
3,397
79
(33)
(17)
(144)
3,282
7,683
4
(85)
–
(250)
7,352
10,634
2,529
64
11
–
(276)
(56)
2,272
55,737
26,660
68
(252)
(15,199)
(7,863)
(21,151)
437
38,437
22,749
194
34
(2,358)
(445)
(16,584)
3,590
42,027
150
6
(1)
–
(124)
31
(1) The majority of the current year classification transfer balance has been reclassified as intangibles (refer to note 16).
(2) During 2010 management assessed the recoverability of assets owned by the Group used in the operation of the digital out of home advertising networks operated by Prime
Digital Media Pty Limited. The board made the decision during the reporting period to close down the ‘Retravision Network’. As a result of this decision the assets relating
to this network were impaired to $Nil. The total impairment expense arising from this event was $3,815,000. As at 30 June 2010 the assets of On Site Broadcasting and
Moonlight Cinemas were reclassified as held for sale. Management undertook an impairment assessment of these assets based on fair value less cost to sell. This gave rise to
an impairment of the On Site Broadcasting plant and equipment totalling $4,048,000.
68
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
(B) Assets PleDgeD As seCuRity
All plant and equipment under lease is pledged as security for the associated lease liabilities.
(C) Assets helD foR sAle
As at 30 June 2010 all assets of the Broadcast Production Services Group were re-classified as held for sale. This comprised:
Leasehold Improvements
Plant and equipment
Plant and equipment under lease
Motor vehicles
Total property, plant and equipment re-classified as held for sale
As at 30 June 2010 the following lease liabilities were directly associated with assets classified as held for sale (refer to note 25):
Liabilities directly associated with assets classified as held for sale
16 gooDwill AND iNtANgiBle Assets
2010
$’000
56
21,151
16,584
–
37,791
24,162
CuRReNt
Program rights – At cost
NoN-CuRReNt
Goodwill on acquisition
Broadcast licences and associated rights – At cost
Program rights – At cost
Web site development costs – At amortised cost
CoNsoliDAteD
2011
$’000
616
616
3,657
219,810
1,200
27
2010
$’000
832
832
3,657
219,810
1,817
–
224,694
225,284
Prime media GrouP AnnuAl RepoRt 2011
69
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
16 gooDwill AND iNtANgiBle Assets (CONTINUED)
ReCoNCiliAtioNs
goodwill on Acquisition
Carrying amount at beginning
Additions
Assets classified as held for sale
Impairment losses(i)
Broadcast licences
Carrying amount at beginning
Impairment losses
Program Rights
Carrying amount at beginning
Amortisation expense
Impairment charge
television format Rights
Carrying amount at beginning
Additions
Disposals
Impairment charge
web site Development Costs
Carrying amount at beginning
Classification transfer
Amortisation expense
Disposals
(i) These impairment losses relate to the following CGU’s:
On Site Broadcasting
Moonlight Cinema
Prime Digital Media Pty Limited
Prime Digitalworks Pty Limited
CoNsoliDAteD
2011
$’000
2010
$’000
3,657
–
–
–
3,657
219,810
–
219,810
2,649
(833)
–
1,816
–
–
–
–
–
–
79
(32)
(20)
27
44,286
1,400
(2,097)
(39,932)
3,657
232,339
(12,529)
219,810
5,650
(1,699)
(1,302)
2,649
440
–
–
(440)
–
–
–
–
–
–
225,310
226,116
–
–
–
–
–
24,376
562
13,593
1,401
39,932
(A) DesCRiPtioN of the gRouP’s iNtANgiBle Assets AND gooDwill
BRoADCAst liCeNCes
(i)
Television and Radio broadcast licences have been acquired through business combinations and consist of the right to broadcast television and radio
services to specific market areas. The licences are carried at cost less accumulated impairment losses. The licences are subject to renewal by broadcasting
authorities in Australia at no significant cost to the Company. The directors have no reason to believe the licences will not be renewed at the end of their
current legal terms.
PRogRAm Rights
(ii)
Program Rights represent the purchased rights to broadcast certain programs at some time in the future. These program rights are amortised to the profit
and loss over the term of the contract to which the rights relate. The carrying value of the rights is cost less accumulated amortisation and impairment
losses.
(iii) gooDwill
After initial recognition, goodwill acquired in a business combination is measured at cost less any accumulated impairment losses. Goodwill is not
amortised but is subject to impairment testing on an annual basis or whenever there is indication of impairment (refer to section (B) of this note).
70
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
imPAiRmeNt testiNg of gooDwill AND iNtANgiBle Assets with iNDefiNite lives
(B)
Broadcast licences acquired through business combinations have been allocated to the following cash-generating units for impairment testing as follows:
• Television broadcasting unit; and
• Radio broadcasting unit.
Goodwill acquired through business combinations has been allocated to the following cash–generating units for impairment testing as follows:
• Television broadcasting unit; and
• Radio broadcasting unit.
televisioN BRoADCAstiNg uNit
(i)
On an annual basis management undertakes an assessment of the carrying value of its television broadcasting unit’s intangible assets, which consist of
both television broadcast licences and goodwill, to test for impairment. On an annual basis management undertakes a value in use calculation using
cashflow projections as at 31 May 2011 based on financial budgets approved by management covering a 5 year period. The long term forecasts are
generated using a terminal growth rate of 4%. The discount rate applied to the cash flow projections is 11.75% (14.96% pre tax). The DCF valuation of the
intangibles assets gives a recoverable amount in excess of the current carrying value.
On a bi-annual basis the Group engages an independent valuer to assess the recoverable amount of its television broadcast licences. The most recent
valuation was undertaken in September 2010. This valuation supported the carrying values of the television unit’s intangible assets.
(ii) RADio BRoADCAstiNg uNit
On an annual basis management undertakes an assessment of the carrying value of its radio broadcasting unit’s intangible assets, which consist of both
radio broadcast licences and goodwill, to test for impairment. On an annual basis management undertakes a value in use calculation using cash flow
projections as at 31 May 2011 based on financial budgets approved by management covering a 5 year period. The long term forecasts are generated
using a terminal growth rate of 4%.
The discount rate applied to the cash flow projections is 11.75% (14.87% pre tax). The DCF valuation of the intangibles assets gives a recoverable amount
in excess of the current carrying value.
On a bi-annual basis the Group engages an independent valuer to assess the recoverable amount of its radio broadcast licences. The most recent
valuation was undertaken in September 2010. This valuation supported the carrying values of the radio unit’s intangible assets.
(iii) televisioN PRogRAm Rights
During the current reporting period the group has reviewed the carrying value of the television program rights it holds. These rights were assessed
against the likely future revenues earned from their use over the remaining life of the rights period. The forecast cash flows arising from the exploitation of
these rights have been estimated using historical experience and established patterns over the life of the contract.
Carrying amount of intangibles allocated to each of the cash generating units
Television Broadcasting Licences
Radio Broadcasting Licences
Broadcast licences
Radio broadcasting
Television broadcasting
goodwill on Acquisition
CoNsoliDAteD
2011
$’000
2010
$’000
182,963
36,847
219,810
175
3,482
3,657
182,963
36,847
219,810
175
3,482
3,657
(C) seNsitivity of AssumPtioNs
Television and radio broadcasting are largely fixed cost businesses, so variations in the financial performance are driven by changes in revenue. The entity
has sophisticated revenue tracking systems that allow management to track current and future revenues on a daily basis which allows actions to be taken
to combat downward trends in revenues early.
Both television and radio broadcasting is closely regulated in Australia and as such new competitors can only enter the market space on issue of new
licences by the national government after extensive reviews. Audience habits tend to change relatively slowly so viewing and listening shares and
advertising revenue shares can be budgeted with a reasonable degree of accuracy. The economic conditions are monitored closely for indicators that
could influence the overall level of advertising spending to change significantly.
The most significant area of risk for the economic entity and its cash generating units are those that affect the broadcasting industry as a whole. These
risks are monitored closely by management.
televisioN BRoADCAstiNg
(i)
For the television broadcasting CGU, the current recoverable value exceeds its current carrying value by more than $250,000,000.
There are no key assumptions that could reasonably vary and result in recoverable amounts below carrying value.
(ii) RADio BRoADCAstiNg
For the radio broadcasting CGU, the current recoverable value approximates carrying value. The valuation of the radio broadcasting is very sensitive
to any negative movements of the assumptions used in this valuation model. Any negative movements in the assumption are likely to give rise to
impairment charges.
Prime media GrouP AnnuAl RepoRt 2011
71
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
17 tRADe AND otheR PAyABles
CuRReNt
Trade payables(i)
Accrued expenses
Accrued employee leave entitlements
(i) Trade payables are non-interest bearing and are normally settled on 30 day terms.
(A) fAiR vAlues
Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value.
(B) iNteRest RAte, foReigN exChANge AND liquiDity Risk
Information regarding interest rate, foreign exchange and liquidity risk exposure is set out in note 3.
CoNsoliDAteD
2011
$’000
19,995
32,512
5,077
57,584
2010
$’000
16,206
38,464
5,736
60,406
NoN-CuRReNt
Accrued expenses
18 iNteRest-BeARiNg loANs AND BoRRowiNgs
CuRReNt
Obligations under finance lease contracts (note 25(F))
NoN-CuRReNt
Obligations under finance lease contracts (note 25(F))
$260 million secured bank loan
(i)
teRms AND CoNDitioNs
–
–
68
68
CoNsoliDAteD
mAtuRity
2012
2011
$’000
627
627
2013 – 2021
2013
2,799
150,024
152,823
2010
$’000
408
408
3,057
162,144
165,201
BANk loAN fACility
The bank loan has been drawn down under a $260 million Debenture Subscription Facility with a term of 5 years. The facility is secured by a charge over
the assets of the borrower group comprising all wholly owned entities in Australia and New Zealand, but excluding Broadcast Production Services Pty
Limited and its subsidiaries. Interest is charged at BBSY plus a margin between 0.5% and 0.9%. The loan is repayable in full on expiry on 26 July 2012.
The Company has been working with its bankers to secure a longer term financing arrangement. On 26 August 2011 the Company secured a commitment
from its bankers to provide a $200 million bank loan facility with a term of 4 years, repayable in full on expiry. Interest will be charged at a rate of BBSY
plus a margin of between 1.70% and 2.60%. Formal documentation is expected to be executed on 30 September 2011.
(A) fAiR vAlues
The carrying amount of the Group’s current and non-current borrowings approximates their fair value. The fair values have been calculated by discounting
the expected future cash flows at prevailing market interest rates varying from 5.5% to 8.0% (2009: 5.5% to 8.0%), depending on the type of borrowing.
The parent entity and certain controlled entities have potential financial liabilities which may arise from certain contingencies disclosed in Note 26.
However the directors do not expect those potential financial liabilities to crystallise into obligations and therefore financial liabilities disclosed in the
above table are the directors’ estimate of amounts that will be payable by the Group. No material losses are expected and as such, the fair values
disclosed are the directors’ estimate of amounts that will be payable by the Group.
iNteRest RAte, foReigN exChANge AND liquiDity Risk
(B)
Details regarding interest rate, foreign exchange and liquidity risk are disclosed in note 3.
(C) DefAults AND BReAChes
During the current and prior years, there were no defaults or breaches on any of the loans.
72
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
19 PRovisioNs
CuRReNt
Restructuring
Directors’ retiring provision
Onerous contracts
Provision for loan to associate
NoN-CuRReNt
Long service leave
CoNsoliDAteD
2011
$’000
603
196
1,249
207
2,255
434
434
2010
$’000
1,454
196
6,452
–
8,102
520
520
totAl
$’000
8,622
852
(86)
(6,573)
(126)
2,689
2,255
434
2,689
8,102
520
8,622
(A) movemeNts iN PRovisioNs
Movements in each class of provisions during the financial year are set out below
At 1 July 2010
Arising during the year
Unused amounts reversed
Utilised
Discount Rate Adjustment
At 30 June 2011
Current 2011
Non-current 2011
Current 2010
Non-current 2010
ReDuNDANCy
PRovisioN
$’000
DiReCtoRs
RetiRiNg
PRovisioN
$’000
oNeRous
CoNtRACts
$’000
PRovisioN
foR loAN to
AssoCiAte
$’000
loNg
seRviCe
leAve
$’000
1,454
352
–
(1,203)
–
603
603
–
603
1,454
–
1,454
196
–
–
–
–
196
196
–
196
196
–
196
6,452
293
–
(5,370)
(126)
1,249
1,249
–
1,249
6,452
–
6,452
–
207
–
–
–
207
207
–
207
–
–
–
520
–
(86)
–
–
434
–
434
434
–
520
520
(B) NAtuRe AND timiNg of the PRovisioNs
ReDuNDANCy PRovisioN
(i)
The Group has recognised a provision for redundancy in relation to restructuring within the Prime Media Group operations. The majority of this provision
balance at 30 June 2011 will be settled by November 2011.
(ii) DiReCtoR’s RetiRiNg PRovisioN
Refer to Remuneration Report. The Directors’ Retiring provision was approved by shareholders in November 1997.
(iii) oNeRous CoNtRACts PRovisioN
Upon acquisition of Prime Digital Media Pty Limited management identified numerous unavoidable contractual obligations where the value of the
obligation exceeded the likely economic benefit that will arise from these obligations. As a result management raised a provision for the losses expected
under these contracts.
As at 30 June 2011 the Group has exited the Prime Digital Media business. The balance of the provision is expected to be settled within the next 12 to 24 months.
(iv) PRovisioN foR loAN to AssoCiAte
Under the shareholders agreement for Mildura Digital Television Pty Limited the shareholders are required to provide funding to meet the losses of
the company in proportion to their shareholding. The balance of the provision represents funding owed by the Group to Mildura Digital Television Pty
Limited as at 30 June 2011.
loNg seRviCe leAve
(v)
Refer to note 2(Q) for the relevant accounting policy and a discussion of the significant estimations and assumptions applied in the measurement
of this provision.
Prime media GrouP AnnuAl RepoRt 2011
73
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
20 CoNtRiButeD equity
issueD AND PAiD uP CAPitAl
(A)
Ordinary shares fully paid
366,330,303 shares (2010: 366,330,303 shares)
(B) movemeNts iN shARes oN issue
ordinary
Beginning of the financial year
Issued during the year
CoNsoliDAteD
2011
$’000
2010
$’000
310,262
310,262
2011
2010
NumBeR of
shARes
$’000
number of
shares
$’000
366,330,303
310,262
358,422,021
305,643
– shares issued as consideration for equity settled transaction
End of the financial year
–
–
7,908,282
366,330,303
310,262
366,330,303
4,619
310,262
(C) shARe oPtioNs
Options over ordinary shares:
emPloyee shARe oPtioN sCheme
During the financial year, nil (2010: 5,250,000) options were issued over ordinary shares.
During the financial year, 1,750,000 (2010: Nil) options lapsed, Nil (2010: Nil) were forfeited and 3,500,000 (2010: Nil) options were surrendered
by executives and subsequently cancelled by the Company.
At the end of the year there were nil (2010: 5,250,000) un-issued ordinary shares in respect of which options were outstanding.
(D) teRms AND CoNDitioNs of CoNtRiButeD equity
oRDiNARy shARes
Holders of ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to participate in the proceeds
from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
(e) CAPitAl mANAgemeNt
When managing capital, the board’s objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders
and benefits for other stakeholders. The board also aims to maintain a capital structure that ensures the lowest costs of capital available to the entity.
The board and management are constantly reviewing the capital structure to take advantage of favourable costs of capital or high returns on assets. As
the market is constantly changing, the board may change the amount of dividends to be paid to shareholders, return capital to shareholders, issue new
shares or sell assets to reduce debt.
During 2011, the Company paid dividends of $12,822,000 (2010: $8,015,000). The board’s target for dividend payments has historically been to pay
approximately 50% of the normalised earnings per share. The payout rate was increased to 75% of earnings per share as reflected in the 2011 final
dividend declared.
The board and management monitor capital requirements with regard to its banking covenant requirements as well as comparative guidance to
companies of similar size and nature of operations.
The key capital management measures that the company reviews on a ongoing basis are:
Net Debt/(Net Debt + Equity)
Net Debt to Normalised EBITDA(1)
Interest Cover to Normalised EBITDA(1)
tARget
55% – 65%
2.5 – 3.5
> 3.5
At BAlANCe
DAte
47%
2.3
5.3
(1) Normalise EBITDA is calculated as EBITDA before significant items. This is the same definition of EBITDA that is used for assessment of the above measures for compliance
with banking covenants.
74
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
21 RetAiNeD eARNiNgs AND ReseRves
General reserve
Foreign currency translation
Employee benefits equity reserve
Accumulated losses
(A) foReigN CuRReNCy tRANslAtioN
(i) NAtuRe AND PuRPose of ReseRve
The foreign currency translation reserve is used to record exchange differences arising from the translation
of the financial statements of foreign controlled operations.
(ii) movemeNts iN ReseRve
Balance at beginning of year
Transfer of foreign currency translation reserve relating to assets held for resale to the statement
of comprehensive income
Gain/(loss) on translation of overseas controlled entities
Balance at end of year
(B) emPloyee BeNefits equity ReseRve
(i) NAtuRe AND PuRPose of ReseRve
The employee benefits equity reserve is used to record the value of equity benefits provided to employees
and directors as part of their remuneration. Refer to note 27 for further details of these plans.
(ii) movemeNts iN ReseRve
Balance at beginning of year
Share Based Payment
Balance at end of year
(C) geNeRAl ReseRve
(i) NAtuRe AND PuRPose of ReseRve
This reserve account reflects the value of acquired non-controlling interests in controlled entities
after the initial control transaction has occurred.
(ii) movemeNts iN ReseRve
Balance at beginning of year
Acquisition of non-controlling interest in controlled entities
Balance at end of year
(ACCumulAteD losses)/RetAiNeD PRofits
(D)
Balance at the beginning of year
Net profit/(loss) attributable to members of Prime Media Group Limited
Total accumulated losses
Dividends provided for or paid
Balance at end of year
CoNsoliDAteD
2011
$’000
(2,787)
–
2,709
(78)
2010
$’000
(2,787)
(794)
2,044
(1,537)
(157,071)
(171,415)
(794)
995
(201)
–
(2,044)
1,032
218
(794)
2,044
665
2,709
2,028
16
2,044
(2,787)
–
(2,787)
(171,415)
27,166
(144,249)
(12,822)
(157,071)
–
(2,787)
(2,787)
(108,941)
(54,459)
(163,400)
(8,015)
(171,415)
Prime media GrouP AnnuAl RepoRt 2011
75
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
22 NoN-CoNtRolliNg iNteRests
ACquisitioN of BRoADCAst PRoDuCtioN seRviCes limiteD AND CoNtRolleD eNtities
On 6 November 2009, Prime Media Broadcasting Services Pty Limited (“Prime”), a controlled entity of Prime Media Group Limited, completed the
acquisition of the non-controlling interest in Broadcast Production Services Limited (“BPSL”) a listed company based in Australia.
This acquisition was completed in a number of steps. On 21 September 2009, Prime acquired 21.52% of the shares in BPSL, at which time the Company
proceeded to compulsorily acquire all of the outstanding shares of BPSL. Upon completion of the compulsory acquisition, BPSL was delisted from the
Australian Securities Exchange.
The consideration for the acquisition is as follows:
Shares issued as consideration less costs
total Purchase Consideration
23 BusiNess ComBiNAtioN
2010
$’000
2,787
2,787
ACquisitioN of PRime DigitAlwoRks Pty limiteD
On 30 June 2010, Prime New Media Investments Pty Limited, a controlled entity of Prime Media Group Limited, acquired 67% of the shares in Prime
Digitalworks Pty Limited. This acquisition took the groups’ shareholding to 100%.
The final fair value and book value of the identifiable assets purchased are:
Cash
Prepayments
Property, plant & equipment
Trade payables
Provision for employee benefits
Net Assets
Total purchase consideration
total goodwill recognised
Goodwill impairment expense
total goodwill
24 DeRivAtives
Current liabilities
Interest rate swap contracts
CARRyiNg
AmouNt
$’000
ReCogNiseD
fAiR vAlue oN
ACquisitioN
$’000
3
79
148
(1,576)
(55)
(1,401)
3
79
148
(1,576)
(55)
(1,401)
–
1,401
(1,401)
–
CoNsoliDAteD
2011
$’000
2010
$’000
1,687
3,020
(A)
iNstRumeNts useD By the gRouP
iNteRest RAte swAP AgReemeNts
At balance date, the Company had interest rate swap agreements with a notional amount of $95 million, (2010: $95 million) on which it pays a fixed rate of
6.38% or 6.39% and receives a floating rate of the Bank Bill Swap Rate. The interest rate swap instruments are used to protect part of the Borrowings from
exposure to floating interest rates. The swaps in place cover 63% (2010: 56%) of the borrowings outstanding at balance date. Swap agreements expire in
July 2012 and October 2012. The interest rate swaps require settlement of net interest receivable or payable each 90 days. The swaps are measured at fair
value and all gains and losses are taken to the profit and loss.
iNteRest RAte Risk
(B)
Information regarding interest rate risk exposure is set out in note 3.
(C) CReDit Risk
Credit risk arises from the potential failure of counterparties to meet their obligations at maturity of contracts. This arises on derivative financial
instruments with unrealised gains. Management has arranged to share counterparty risks of contracts across numerous blue chip parties.
76
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
25 exPeNDituRe CommitmeNts
(A) CAPitAl exPeNDituRe CommitmeNts
Estimated capital expenditure contracted for at reporting date, but not provided for, payable:
– not later than one year
8,242
7,012
Included in the above disclosed capital commitments at 30 June 2011 is approximately $6 million in expenditure relating to the roll out of digital
transmission in Western Australia. The Company is entitled to claim government grant income to fund 50% of this expenditure. The amounts
disclosed above are the gross amounts before taking into consideration this government funding.
CoNsoliDAteD
2011
$’000
2010
$’000
(B) leAse exPeNDituRe CommitmeNts
operating leases (Continuing operations group as lessee):
Minimum lease payments
– not later than one year
–
–
later than one year and not later than five years
later than five years
Aggregate lease expenditure contracted for at reporting date
8,524
21,157
13,724
43,405
8,748
23,729
15,524
48,001
Operating leases have an average lease term of 3 years for Motor Vehicles, 3 year (+ 3 year options) for building leases, and 5-15 years for
transmission site access agreements. Motor Vehicle leases are fixed monthly rentals for the term of the lease. Building leases are generally fixed for
the initial lease term, then subject to CPI adjustments if options are taken up. The majority of the transmission sites leases are rentals that are subject
to annual CPI adjustment. There are no restrictions placed upon the lessee by entering into these leases.
(C) leAse exPeNDituRe CommitmeNts
Certain assets owned or under operating leases with excess capacity have been sub-let to third parties. These non-cancellable leases have
remaining terms of between 1 to 15 years. All leases include clauses to enable upward revision of the rental charges on an annual basis according
to increases in the Consumer Price Index.
operating leases (non-cancellable group as lessor):
Minimum lease payments receivable
– not later than one year
–
–
later than one year and not later than five years
later than five years
Aggregate lease income contracted for at reporting date
1,340
2,773
767
4,880
912
2,818
1,098
4,828
(D)
otheR CommitmeNts CoveRiNg the ReNtAl of teChNiCAl
equiPmeNt uNDeR A loNg teRm AgReemeNt
The technical communications equipment that is fundamental to the distribution of the Group TV programming and data communications are
leased through long term operating leases between 7 and 15 years.
– not later than one year
–
–
later than one year and not later than five years
later than five years
6,048
24,194
1,529
31,771
6,039
24,155
1,510
31,704
Prime media GrouP AnnuAl RepoRt 2011
77
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
25 exPeNDituRe CommitmeNts (CONTINUED)
(e) fiNANCe leAse CommitmeNts:
– not later than one year
–
–
later than one year and not later than five years
later than five years
Total Minimum lease payments
–
future finance charges
Lease Liability
– current liability
– non-current liability
(f) fiNANCe leAse CommitmeNts At PReseNt vAlue:
– not later than one year
–
–
later than one year and not later than five years
later than five years
Present Value of Minimum lease payments
The finance lease commitments in 2010 include amounts relating to assets held for resale and, as such
these liabilities are disclosed as liabilities directly associated with assets classified as held for resale.
The abovementioned finance lease commitments are disclosed in the financial statement as follows:
Current liabilities directly associated with assets classified as held for sale
Current interest-bearing loans and borrowings (note 18)
Non-current interest-bearing loans and borrowings (note 18)
Total included in statement of financial position
(g) RemuNeRAtioN CommitmeNts:
Commitments for the payment of salaries and other remuneration under long-term employment contracts in existence
at the reporting date but not recognised as liabilities, payable
– not later than one year
–
–
later than one year and not later than five years
later than five years
CoNsoliDAteD
2011
$’000
2010
$’000
897
2,785
420
4,102
(676)
3,426
627
2,799
3,426
857
2,302
267
3,426
857
2,302
267
3,426
–
–
–
–
23,384
2,961
735
27,080
(6,386)
20,694
17,637
3,057
20,694
17,889
2,358
447
20,694
17,889
2,358
447
20,694
380
570
–
950
Amounts disclosed as remuneration commitments include commitments arising from the fixed term service contracts of directors and executives referred
to in the remuneration report of the directors’ report that are not recognised as liabilities and are not included in the compensation of KMP. Due to the
departure of Rob Gamble on 5 November 2010, the Group has no fixed term commitments for the payment of salaries and other remuneration under
long-term employment contracts, which have not been recognised as liabilities or payables at reporting date.
78
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
26 CoNtiNgeNt liABilities AND CoNtiNgeNt Assets
The details and estimated maximum amounts of contingent liabilities are set out below. The directors are not aware of any circumstance or information which
would lead them to believe that these liabilities will crystallise and consequently no provisions are provided in the accounts in respect of these matters.
litigAtioN
In 2005 a group member, Wastar International Pty limited (“WI”), entered into an agreement with Marigold Production (Canada) Inc (“MPCI”) under which
WI was granted the North American distribution rights to a film under an arrangement which provided for a minimum guaranteed distribution fee of US
$2 million payable by WI to MPCI, subject to certain contractual conditions being met. WI did not believe those contractual conditions were met and
therefore did not make payment on receipt of a demand for payment. The directors do not believe the liability exists. There has been no further action
concerning this unresolved matter over the last 4 years.
Liabilities not recognised in the balance sheet are:
guARANtees
The Group has issued the following guarantee at 30 June 2011:
CoNsoliDAteD
2011
$’000
1,862
1,862
2010
$’000
2,347
2,347
It has guaranteed to an unrelated third party the payment of a contractual commitment of WA SatCo Pty Limited, an associate company in which the
Group holds 50% of the share capital. WA SatCo Pty Limited has entered into a non cancellable contract for the purchase of satellite services in WA
for a period of 9 years until 30 June 2020 at the rate of $2,346,192 per annum. In the event that WA SatCo Pty Limited defaults on any payments under
this contract, the Group may be liable for full payment under the guarantee it has provided. WA Sat Co Pty Limited has simultaneously entered into an
agreement with the Commonwealth Government which provides for 100% funding of this satellite service for a period of 9 years until 30 June 2020. This
agreement can be terminated without notice by the Commonwealth Government.
Maximum potential contingent commitment arising from the above mentioned guarantee:
– Not later than one year
– Later than one year and not later than five years
– Later than five years
Maximum Contingent Commitments
CoNsoliDAteD
2011
$’000
2010
$’000
2,346
9,384
9,384
21,114
–
–
–
–
As noted above this entire amount in maximum potential contingent commitment is offset in entirety by government funding.
27 emPloyee BeNefits AND suPeRANNuAtioN CommitmeNts
emPloyee BeNefits
The aggregate employee benefit liability is comprised of:
Accrued annual leave and long service leave (current)
Accrued long service leave (non-current)
Notes
17
19
CoNsoliDAteD
2011
$’000
2010
$’000
5,077
434
5,511
5,736
520
6,256
suPeRANNuAtioN BeNefits
A superannuation plan has been established by the economic entity for the provision of benefits to Australian employees of the economic entity on
retirement, death or disability. Benefits provided under this plan are based on contributions for each employee and at retirement are equivalent to
accumulated contributions and earnings. All death and disability benefits are insured with various life assurance companies. Employees contribute various
percentages of their gross income and the company also contributes at varying rates. The company’s contributions under the Superannuation Guarantee
Levy are legally enforceable.
Prime media GrouP AnnuAl RepoRt 2011
79
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
28 shARe BAseD PAymeNt PlAN
(A) ReCogNiseD shARe BAseD PAymeNt exPeNses
The expense recognised for employee services received during the year is shown below:
Expense arising from equity-settled share-based payment transactions
CoNsoliDAteD
2011
$’000
665
2010
$’000
16
The share-based payment plan is described below. During the financial year, 1,750,000 (2010: Nil) options lapsed, Nil (2010: Nil) were forfeited and
3,500,000 (2010: Nil) options were cancelled.
(B) tyPes of shARe-BAseD PAymeNt PlANs
emPloyee shARe oPtioN sCheme (esos)
The group has in place an Employee Share Option Scheme. At two Annual General Meetings (1992 and 1995), shareholders have given approval of the
terms of the Prime Media Group Employee Share Option Scheme presented at these meetings. Participation in the Scheme is available to any director of
the parent entity and any person who is in the employment of the Group. Recommendations in respect of allocations of share options under the Scheme
are made by the Remuneration Committee, for approval by the board. The total number of Options on issue by the parent entity shall not at any time
exceed five per cent (5%) of the parent entity’s total number of ordinary shares on issue of which the total number of Options on issue by the parent entity
to directors of the parent entity shall not exceed 2.5% of the total number of ordinary shares on issue.
As at 30 June 2011, all 3,500,000 options outstanding under the ESOS were cancelled. The Remuneration Committee reviewed the long-term incentive
plan and, on recommendation from an external remuneration consultant, introduced a new Performance Rights Plan in the 2012 financial year. Details are
outlined in the Remuneration Report.
(C) summARies of oPtioNs gRANteD uNDeR esos
The following table outlines the number (no.) and weighted average exercise price (WAEP) of, and movements in, share options on issue during the year.
2011
2010
No.
wAeP
no.
WaeP
Balance at beginning of year
5,250,000
$0.90
– granted
– exercised
–
lapsed
– cancelled(1)
–
forfeited
Balance at end of year
Exercisable at end of year
–
–
(1,750,000)
(3,500,000)
–
–
–
–
–
$0.90
$0.90
–
–
–
–
5,250,000
–
–
–
–
5,250,000
–
–
$0.90
–
–
–
–
$0.90
–
The outstanding balance as at 30 June 2011 is nil.
(1) On 30 June 2011, 3,500,000 options issued to that had not vested or lapsed at balance date were surrendered by executives and subsequently cancelled by the Company
(D) oPtioN PRiCiNg moDel
The fair value of the equity settled share options granted under the ESOS is estimated as at the date of grant using a binomial model taking into account
the terms and conditions upon which the options were granted.
There were no options granted during the current year. The fair value of options granted in the prior year were estimated on the date of grant using the
following inputs to the model:
Dividend yield (%)
Expected volatility (%)
Historical volatility (%)
Risk-free interest rate (%)
Expected life of options (years)
Option exercise price ($)
Weighted average share price at measurement date ($)
2011
–
–
–
–
–
–
–
2010
4.7%
50%
50%
4.79%
5
$0.90
$0.75
The dividend yield reflects the assumption that the current dividend payout will continue with no anticipated increases. The expected life of the options
is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the
historical volatility is indicative of future trends, which may also not necessarily be the actual outcome.
80
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
(e) weighteD AveRAge RemAiNiNg CoNtRACtuAl life.
The weighted average contractual life of share options outstanding as at 30 June 2011 is nil years (2010: 4.95 years).
(f) RANge of exeRCise PRiCe
The range of exercise price for options outstanding at the end of the year was nil (2010: $0.90).
(g) weighteD AveRAge foR vAlue
The weighted average fair value of options granted during the year was nil (2010: $0.13).
29 eveNts AfteR the BAlANCe sheet DAte
On 26 August 2011 the Company secured a commitment from its bankers to provide a $200 million bank loan facility with a term of 4 years, repayable in
full on expiry. Interest will be charged at a rate of BBSY plus a margin of between 1.70% and 2.60%. Formal documentation is expected to be executed on
30 September 2011.
30 AuDitoR’s RemuNeRAtioN
Amounts received or due and receivable by
Ernst & Young Australia for:
– an audit or review of the financial report of the entity and any other entity in the consolidated entity
– other services in relation to the entity and any other entity in the consolidated entity
Amounts received or due and receivable by related practices of Ernst & Young (Australia) for:
– Taxation services provided by Ernst & Young New Zealand
– other services provided by Ernst & Young New Zealand
CoNsoliDAteD
2011
$
2010
$
257,500
102,510
360,010
1,683
10,125
11,808
531,359
380,029
911,388
33,670
112,343
146,013
371,818
1,057,401
31 RelAteD PARty DisClosuRes
(A) suBsiDiARies
The consolidated financial statements include the financial statements of Prime Media Group Limited and the subsidiaries listed in the following table.
NAme
CouNtRy of iNCoRPoRAtioN
equity iNteRest
2011
%
2010
%
Prime Television (Holdings) Pty Limited
Zamojill Pty Limited
Prime Television (Southern) Pty Limited
Prime Television (Northern) Pty Limited
Prime Television (Victoria) Pty Limited
Prime Properties (Albury) Pty Limited
Prime Television New Zealand Limited
Prime Ventures New Zealand Limited
Prime Television Digital Media Pty Limited
Prime Television (Investments) Pty Limited
Golden West Network Pty Limited
Mining Television Network Pty Limited
Telepro Pty Limited
Golden West Satellite Communications Pty Limited
135 Nominees Pty Limited
Mid-Western Television Pty Limited
Geraldton Telecasters Pty Limited
Prime Radio (Cairns) Pty Limited
Prime Radio (Townsville) Pty Limited
Prime Radio (Barrier Reef) Pty Limited
Prime Radio (Rockhampton) Pty Limited
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Prime media GrouP AnnuAl RepoRt 2011
81
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
31 RelAteD PARty DisClosuRes (CONTINUED)
(A) suBsiDiARies (CONTINUED)
NAme
CouNtRy of iNCoRPoRAtioN
equity iNteRest
2011
%
2010
%
Prime Radio (Gladstone) Pty Limited
Prime Radio (Mackay) Pty Limited
Prime Radio Holdings Pty Limited
Prime Radio (Cairns-AM) Pty Ltd
Prime Radio (Mackay-AM) Pty Ltd
Prime Media Communications Pty Limited
Prime New Media Investments Pty Limited
Prime Media Developments Pty Limited
Seven Affiliate Sales Pty Limited
Prime Media Broadcasting Services Pty Limited
Prime Media Singapore Pte Ltd
Prime Media Group Services Pty Limited
AMI Radio Pty Limited
Hot 91 Pty Limited
Prime Digital Media Pty Limited
Fireback Digital Pty Limited
POP Digital Media Pty Limited
Prime National Radio Sales Pty Limited
Broadcast Production Services Pty Limited
Production Strategies Pty Limited
Production Strategies Discretionary Trust
P.R.O. Television Unit Trust
Producer Representatives Organization Inc.
Producer Representatives Organization International Inc.
Wastar International Pty Ltd
Screenworld Pty Ltd
Family Bloom Productions Inc
OSB Holdings Pty Ltd
OSB Unit Trust
On Site Broadcasting Pty Limited
OSB Australia Pty Ltd
Prime Resources One Limited
Prime Resources Two Limited
OSB Corporation Pty Limited
Becker Entertainment (Singapore) Pte Ltd
On Corporation Pty Limited
Moonlight Premium Cinema Pty Limited
MMJT Productions Pty Limited
Moonlight Cinema Management Pty Limited
Moonlight Projects Pty Limited
Broadcast Rentals Pty Limited
Zero1Zero HD Pty Limited(1)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
USA
Australia
Australia
USA
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Singapore
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(1) The disposal of Zero1Zero HD Pty Limited was completed on 28 October 2010 as part of the sale of the Australian On Site Broadcasting business to Gearhouse Broadcast Pty
Ltd – see Note 6
(B) ultimAte PAReNt
Prime Media Group Limited is the ultimate Australian entity and the ultimate parent entity of the Group.
(C) key mANAgemeNt PeRsoNNel (kmP)
Details relating to KMP, including remuneration paid, are included in the Remuneration Report and note 32.
(D) tRANsACtioNs with RelAteD PARties
wholly owNeD gRouP tRANsACtioNs
Sales and purchases are made within the wholly owned group in arm’s length transactions both at normal market prices and on normal commercial terms.
Outstanding balances at year end are unsecured, interest free and settled through intercompany accounts.
82
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
RegioNAl BRoADCAstiNg AustRAliA limiteD
This company is owned by regional television operators to represent the interest of its shareholders to government, industry groups and major
advertisers. The company operates on a not-for-profit basis and Prime Media Group contributes funding to the company on a cost recovery basis in line
with its relative shareholding.
RBA holDiNgs Pty limiteD
This company is owned by regional television operators. This company operates as a provider of transmission facilities under the Digital Black Spots
Infill Program. The Company has entered into agreements under normal commercial terms and conditions with this company to use these transmission
facilities for periods up to 10 years.
RegioNAl tAm Pty limiteD
This company is owned by regional television operators to facilitate and manage the audience metering services for the regional television markets.
The Company is party to a commercial agreement in which it purchases ratings services from Regional TAM Pty Limited. This agreement is under normal
commercial terms and conditions.
wA sAtCo Pty limiteD
WA SatCo Pty Limited is owned by the Company and WIN Television Pty Limited and has been engaged by the Commonwealth Government to provide
the WA Vast Service for a period of 10 years. The shareholders of the company provide services to WA SatCo to enable its operations. These services are
recovered from WA SatCo on a cost recovery basis.
BRoADCAst tRANsmissioN seRviCes Pty limiteD (Bts)
The Company has a 33% shareholding in BTS. BTS provides transmission maintenance, site installation and management services to regional
broadcasters and other third party customers. The Company entered into a contract with BTS for the provision of site maintenance services over a 10 year
period at an annual cost of $1,200,000 per annum under normal commercial terms and conditions.
ChANNel seveN queeNslAND Pty limiteD
The Company provides sales representation services to Seven Queensland Pty Limited, an entity associated with one of the Company’s major
shareholders. The fees payable by Seven Queensland Pty Limited are based on normal commercial terms and conditions applicable to this type of
service.
32 key mANAgemeNt PeRsoNNel
(A) DetAils of key mANAgemeNt PeRsoNNel
DiReCtoRs
(i)
P.J.Ramsay AO
M.S.Siddle
L.K.Murdoch
P.J.Evans
A.Hamill
I.P.Grier AM
I.R.Neal
S.L.McKenna
I.C.Audsley
(ii)
D.Edwards
R.Gamble
R.Reeve
G.Smith
P.Stubbings
L.Kennedy
S.Wood
exeCutives
Chairman (non-executive)
Deputy Chairman (non-executive)
Director (non-executive) – appointed 7 October 2010, resigned 9 November 2010
Director (non-executive)
Director (non-executive)
Director (non-executive)
Director (non-executive)
Director (non-executive)
Director (Chief Executive Officer)
Chief Executive Officer – Television
Chief Executive Officer – Radio and Digital Media (resigned 5 November 2010)
Group General Counsel and Company Secretary (resigned 30 September 2010)
Chief Technology Officer
Chief Financial Officer (resigned 8 December 2010)
Chief Financial Officer (appointed 6 December 2010)
Director – Integration and Digital Media
(B) ComPeNsAtioN of key mANAgemeNt PeRsoNNel
Short term employee benefits
Post-employment benefits
Long Term Benefits
Termination benefits
Share based payments
CoNsoliDAteD
2011
$’000
3,517
113
351
713
369
5,063
2010
$’000
3,030
110
725
1,060
16
4,941
Details of remuneration amounts paid to individual KMP are disclosed in tables 1 and 2 of section 7 of the Remuneration Report.
Prime media GrouP AnnuAl RepoRt 2011
83
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
32 key mANAgemeNt PeRsoNNel (CONTINUED)
(C) oPtioN holDiNgs of key mANAgemeNt PeRsoNNel
2011
Directors
I.Audsley
2010
Directors
I.Audsley
BAlANCe At
BegiNNiNg
of PeRioD
1 July 2010
5,250,000
5,250,000
BAlANCe At
BegiNNiNg
of PeRioD
1 July 2009
gRANteD As
RemuNeRAtioN
oPtioNs
exeRCiseD
Net ChANge
otheR
BAlANCe
At eND of
PeRioD
30 JuNe 2011
totAl
Not
exeRCisABle
exeRCisABle
vesteD At 30 JuNe 2011
–
–
–
–
(5,250,000)
(5,250,000)
–
–
–
–
–
–
–
gRANteD As
RemuNeRAtioN
oPtioNs
exeRCiseD
Net ChANge
otheR
BAlANCe
At eND of
PeRioD
30 JuNe 2010
totAl
Not
exeRCisABle
exeRCisABle
vesteD At 30 JuNe 2010
–
–
5,250,000
5,250,000
–
–
–
–
5,250,000
5,250,000
–
–
–
–
–
(D) shAReholDiNgs of key mANAgemeNt PeRsoNNel
Shares held in Prime Media Group Limited (number)
oPeNiNg
BAlANCe
oRD.
gRANteD As
RemuNeRAtioN
oRD.
oN exeRCise of
oPtioNs oRD.
Net ChANge
otheR oRD.
ClosiNg BAlANCe
oRD.
30 June 2011
Directors
P.J.Ramsay AO
M.S.Siddle
P.J.Evans
executives
D.Edwards
R.Gamble(2)
P.Stubbings(3)
total
30 June 2010
Directors
P.J.Ramsay AO
M.S.Siddle
P.J.Evans
W.Syphers(1)
executives
D.Edwards
R.Gamble
P.Stubbings
total
107,993,654
984,082
24,286
48,572
199,588
43,073
109,293,255
107,993,654
984,082
24,286
201,000
48,572
98,551
43,073
109,393,218
–
–
–
–
–
–
–
–
–
–
–
–
101,037
–
101,037
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,910,000
109,903,654
–
–
8,000
(199,588)
(43,073)
984,082
24,286
56,572
–
–
1,675,339
110,968,594
–
–
–
(201,000)
–
–
–
107,993,654
984,082
24,286
–
48,572
199,588
43,073
(201,000)
109,293,255
(1) Mr Syphers resigned from the Group on 31 March 2010. The net change noted in the above table is solely to reflect Mr Syphers departure as KMP.
(2) Mr Gamble resigned from the Group on 5 November 2010. The net change noted in the above table is solely to reflect Mr Gamble’s departure as KMP.
(3) Mr Stubbings resigned from the Group on 8 December 2010. The net change noted in the above table is solely to reflect Mr Stubbings’ departure as KMP.
84
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
All equity transactions with specified directors and specified executives other than those arising from the exercise of remuneration options have been
entered into under terms and conditions no more favourable than those the entity would have adopted if dealing at arm’s length.
(e) loANs to key mANAgemeNt PeRsoNNel
(i)
DetAils of AggRegAtes of loANs to sPeCifieD DiReCtoRs AND sPeCifieD exeCutives ARe As follows:
BAlANCe
At BegiNNiNg
of PeRioD
$’000
iNteRest
ChARgeD
$’000
loAN
BAlANCe
wAiveD
$’000
loAN
RePAymeNts
$’000
BAlANCe
At eND of
PeRioD
$’000
iNteRest
Not
ChARgeD
$’000
NumBeR iN
gRouP
At BAlANCe
DAte
2011
2010
420
1,106
–
–
140
686
–
–
280
420
28
45
2
2
DetAils of key mANAgemeNt PeRsoNNel with loANs iN the RePoRtiNg PeRioD ARe As follows:
(ii)
30 June 2011
executives
D.Edwards
G.Smith
total
30 June 2010
Directors
W.Syphers
executives
D.Edwards
G.Smith
Total
300
120
420
546
400
160
1,106
–
–
–
–
–
–
–
100
40
140
546
100
40
686
–
–
–
–
–
–
–
200
80
280
–
300
120
420
highest loAN
BAlANCe
DuRiNg yeAR
20
8
28
18
19
8
45
300
120
420
–
400
160
560
(iii) teRms AND CoNDitioNs of loANs
The loans to executives are interest free and will be forgiven on the basis of continued services with the company. 20% of the original loan balance will be
forgiven on 1 July of each year if the executive remains employed with the company at that date. If the executive terminates his employment during the
5 year period the balance of the loan at the date of termination is repayable by the executive on the date of termination. The executives have the option
of making repayments during the course of the loan or having further amounts waived from these loan balances by taking reductions in salary or forgoing
the payment of entitlements such as bonuses. Any loan amounts waived by the company are subject to fringe benefits tax at the cost of the company.
(f) otheR tRANsACtioNs AND BAlANCes with key mANAgemeNt PeRsoNNel AND RelAteD PARties
There were no other transactions and balances with key management personnel other than those disclosed in this note during the year ended 30 June 2011.
33 PAReNt eNtity iNfoRmAtioN
iNfoRmAtioN RelAtiNg to PRime meDiA gRouP limiteD
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Retained earnings
Employee benefits equity reserve
Total shareholders’ equity
Profit or loss of the parent entity
Total comprehensive income of the parent entity
PRime meDiA gRouP limiteD
2011
$’000
2010
$’000
106
910,339
5,763
580,938
310,262
15,805
3,334
329,401
(8,104)
(8,104)
462
894,207
3,630
544,545
310,262
36,746
2,653
349,661
26,961
26,961
Prime media GrouP AnnuAl RepoRt 2011
85
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
33 PAReNt eNtity iNfoRmAtioN (CONTINUED)
guARANtees eNteReD iNto By PRime meDiA gRouP limiteD iN RelAtioN to the DeBts of its suBsiDiARies
As a condition of the Class Order, Prime Media Group Limited and its 100% owned Australian resident subsidiaries (the “Closed” Group) entered into
a Deed of Cross Guarantee on 17 October 2006. The effect of the deed is that Prime Media Group Limited has guaranteed to pay any deficiency in the
event of winding up any of the controlled entities within the Closed Group. The controlled entities within the Closed Group have also given a similar
guarantee in the event that Prime Media Group Limited is wound up. (Refer Note 13)
CoNtiNgeNt liABilities of PRime meDiA gRouP limiteD
By virtue of being a member of the Deed of Cross Guarantee mentioned above, the Company has guaranteed to pay any deficiency in the event of
winding up Golden West Networks Pty Limited (GWN), a wholly owned subsidiary and party to the Deed of Cross Guarantee. GWN has guaranteed to
an unrelated third party the payment of a contractual commitment of WA SatCo Pty Limited, an associate company in which GWN holds 50% of the share
capital. WA SatCo Pty Limited has entered into a non cancellable contract for the purchase of satellite services in WA for a period of 9 years until 30 June
2020 at the rate of $2,346,192 per annum. In the event that WA SatCo Pty Limited defaults on any payments under this contract, GWN may be liable
for full payment under the guarantee it has provided. WA Sat Co Pty Limited has simultaneously entered into an agreement with the Commonwealth
Government which provides for 100% funding of this satellite service for a period of 9 years until 30 June 2020. This agreement can be terminated without
notice by the Commonwealth Government.
CoNtRACtuAl CommitmeNts foR the ACquisitioN By PRime meDiA gRouP limiteD of PRoPeRty,
PlANt AND equiPmeNt
The Company has no contractual commitments for the acquisition of property, plant and equipment (2010: nil)
34 oPeRAtiNg segmeNts
iDeNtifiCAtioN of RePoRtABle segmeNts
The Group has identified its operating segments based on internal reports that are reviewed and used by the Board (the chief operating decision makers)
in assessing performance and in determining the allocation of resources.
The operating segments are identified by management based on the manner in which the product is delivered, and the nature of services provided.
Discrete financial information about each of these operating businesses is reported to the Board on at least a monthly basis.
DesCRiPtioN of segmeNts
CoNtiNuiNg oPeRAtioNs
Television Broadcasting
Television Broadcasting comprises “free to air” television broadcasting through Prime and the Golden West Network (GWN).
The PRIME7 television broadcast signal services the regional locations of Northern and Southern New South Wales, Canberra, Victoria, and the Gold
Coast area while regional Western Australia is serviced by the GWN7 television broadcast signal. The majority of revenue is sourced from television
advertising in Australia.
Radio Broadcasting
Radio Broadcasting consists of 10 radio stations which operate within coastal Queensland stretching from the Sunshine Coast to Cairns. The major source
of revenue is radio advertising.
Online
Local websites, integrating with the PRIME7 and GWN7 broadcast footprint, to deliver localised content across the categories of news, weather, sport, TV
shows, local jobs and community events.
Corporate and Other
Includes administrative and financial support operations of the Group as a whole. These services are provided across the Group, mainly in its capacity as a
public company, and are therefore not attributable to any of the operating units. These activities are reported separately to the Board.
DisCoNtiNuiNg oPeRAtioNs
Broadcast Production services
Broadcast Production Services comprised outside broadcast facilities and services in Australia and New Zealand, as well as Moonlight outdoor cinemas.
Each of these businesses was sold during the year ended 30 June 2011.
Prime Digital Media
Prime Digital Media produce and deliver digital content via out-of-home digital display in major retail outlets. The majority of revenue is sourced via sale
of visual advertising content and production of content. A decision to formally exit this business, effective 30 June 2011, was made
ACCouNtiNg PoliCies AND iNteR-segmeNt tRANsACtioNs
The accounting policies used by the Group in reporting segments internally are the same as those contained in Note 2 to the accounts.
86
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
yeAR eNDeD 30 JuNe 2011
segment Revenues
External sales and customers
Other income (excluding interest income)
total segment revenue
Finance income
CoNtiNuiNg oPeRAtioNs
televisioN
BRoAD-
CAstiNg
$’000
RADio
BRoAD-
CAstiNg
$’000
oNliNe
$’000
uN-
AlloCAteD
$’000
totAl
CoN-
tiNuiNg
$’000
DisCoN-
tiNuiNg
oPeRAtioNs
totAl
DisCoN-
tiNuiNg(1)
$’000
totAl
oPeRAtioNs
$’000
231,374
2,419
20,293
848
233,793
21,141
–
23
1,661
36
1,697
–
(144)
253,184
91
3,394
6,878
137
260,062
3,531
(53)
256,578
7,015
263,593
397
344
420
83
503
256,998
7,098
264,096
total revenue per the statement of comprehensive income 233,793
21,164
1,697
Result
EBITDA
EBIT
Segment result (pre-significant items)
Fair value change in derivatives
Fair value change in receivable – deferred contingent consideration
Transfer of foreign currency translation reserve to profit and loss
Redundancies
Loss on disposal of assets held for sale
Net Profit/(loss) before income tax per the statement
of comprehensive income
Income tax (expense)/benefit
Net Profit/(loss) after tax
Non-controlling interests
Net Profit after tax attributable to members
of Prime media group limited
63,206
54,591
54,278
4,803
3,638
3,645
(881)
(1,074)
(1,074)
(7,892)
(8,094)
(18,915)
59,236
49,061
37,934
1,333
1,181
(995)
(198)
–
39,255
(11,067)
28,188
(408)
(422)
(376)
–
–
–
–
(583)
(959)
(63)
58,828
48,639
37,558
1,333
1,181
(995)
(198)
(583)
38,296
(11,130)
(1,022)
27,166
–
27,166
(1) Discontinuing operations include Broadcast Production Services, On-Site Broadcasting, Moonlight Cinema, Prime Media Singapore and Prime Digital Media.
As At 30 JuNe 2011
Assets and liabilities
Segment assets(2)
Investments in associates
total assets
Segment liabilities(2)
Net assets
other segment information
Capital expenditure(3)
Depreciation and amortisation
Share of associate losses
CoNtiNuiNg oPeRAtioNs
televisioN
BRoAD-
CAstiNg
$’000
RADio
BRoAD-
CAstiNg
$’000
oNliNe
$’000
uN-
AlloCAteD
$’000
totAl
CoN-
tiNuiNg
$’000
DisCoN-
tiNuiNg
oPeRAtioNs
totAl
DisCoN-
tiNuiNg(1)
$’000
totAl
oPeRAtioNs
$’000
306,261
46,996
–
–
306,261
46,996
425
–
425
17,917
371,599
–
–
17,917
371,599
(218,486)
153,113
8,825
170
278
1,099
10,372
(8,616)
(586)
(1,164)
–
(161)
–
(216)
(10,157)
–
(586)
–
–
–
–
–
–
–
–
371,599
–
371,599
(218,486)
153,113
10,372
(10,157)
(586)
(1) Discontinuing operations include Broadcast Production Services, On-Site Broadcasting, Moonlight Cinema, Prime Media Singapore and Prime Digital Media.
(2) Excludes inter-segment receivables and payables, and investments in subsidiaries.
(3) To comply with the requirements of AASB 114.57, the Group has included the cost of segment assets acquired by way of business combinations.
Prime media GrouP AnnuAl RepoRt 2011
87
NOTEs TO THE FINANCIAL sTATEMENTs
FOR THE YEAR ENDED 30 JUNE 2011
34 oPeRAtiNg segmeNts (CONTINUED)
total revenue per the statement of comprehensive income
215,949
20,542
yeAR eNDeD 30 JuNe 2010
segment Revenues
External sales and customers
Other income (excluding interest income)
total segment revenue
Finance income
Result
EBITDA
EBIT
Segment result (pre-significant items)
Fair value change in derivatives
Gain on disposal of investment in available-for-sale financial assets
Impairment expense – intangible assets, radio broadcast licences
Impairment expense – goodwill
Impairment expense – loan to associate
Impairment expense – television program rights
Impairment expense – television production rights
Impairment expense – property, plant and equipment
Restructuring
CEO termination costs
Once off increase to employee entitlements resulting from award change
Make Good provision
destra administration costs
Transfer of foreign currency translation reserve relating to assets held for
resale to statement of comprehensive income
Redundancies
Net Profit/(loss) before income tax per the statement of comprehensive income
Income tax (expense)/benefit
Net Profit/(loss) after tax
Non-controlling interests
Net Profit after tax attributable to members of Prime media group limited
CoNtiNuiNg oPeRAtioNs
televisioN
BRoAD-
CAstiNg
$’000
RADio
BRoAD-
CAstiNg
$’000
uN-
AlloCAteD
$’000
totAl
CoNt-
iNuiNg
$’000
DisCoN-
tiNuiNg
oPeRAtioNs
totAl
DisCoN-
tiNuiNg(1)
$’000
totAl
oPeRAtioNs
$’000
212,181
3,768
19,184
1,347
215,949
20,531
–
11
–
231,365
38,187
269,552
(296)
(296)
319
23
4,819
850
5,669
236,184
39,037
275,221
330
25
355
236,514
39,062
275,576
55,449
47,283
46,977
3,294
2,073
2,073
(8,301)
(9,138)
(19,744)
50,442
40,218
29,306
1,518
921
(12,529)
5,408
(2,699)
(5,139)
–
–
–
–
(39,932)
55,850
37,519
24,167
1,518
921
(12,529)
(39,932)
(4,384)
(1,302)
(440)
(7,863)
(4,281)
(1,871)
(626)
(150)
(226)
(1,032)
(2,046)
–
–
(440)
(7,863)
(2,074)
–
–
(150)
–
(1,032)
(1,328)
(4,384)
(1,302)
–
–
(2,207)
(1,871)
(626)
–
(226)
–
(718)
7,882
(10,218)
(2,336)
(57,958)
(50,076)
5,750
(4,468)
(52,208)
(54,544)
85
(54,459)
(1) Discontinuing operations include Broadcast Production Services, On-Site Broadcasting, Moonlight Cinema, Prime Media Singapore and Prime Digital Media.
As At 30 JuNe 2010
Assets and liabilities
Segment assets(2)
Investments in associates
total assets
Segment liabilities(2)
Net assets
other segment information
Capital expenditure(3)
Depreciation and amortisation
Share of associate losses
CoNtiNuiNg oPeRAtioNs
televisioN
BRoAD-
CAstiNg
$’000
RADio
BRoAD-
CAstiNg
$’000
uN-
AlloCAteD
$’000
totAl
CoN-
tiNuiNg
$’000
DisCoN-
tiNuiNg
oPeRAtioNs
totAl
DisCoN-
tiNuiNg(1)
$’000
totAl
oPeRAtioNs
$’000
279,882
46,705
29,941
356,528
42,589
399,117
80
–
–
80
–
80
279,962
46,705
29,941
356,608
42,589
399,197
(237,725)
118,883
(24,162)
(261,887)
18,427
137,310
8,221
741
68
9,030
17,229
26,259
(8,166)
(425)
(1,220)
–
(838)
(1,176)
(10,224)
(1,601)
(8,106)
–
(18,330)
(1,601)
(1) Discontinuing operations include Broadcast Production Services, On-Site Broadcasting, Moonlight Cinema, Prime Media Singapore and Prime Digital Media
(2) Excludes inter-segment receivables and payables, and investments in subsidiaries.
(3) To comply with the requirements of AASB 114.57, the Group has included the cost of segment assets acquired by way of business combinations.
88
DIRECTORs’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2011
In accordance with a resolution of the directors of Prime Media Group Limited, I state that:
(1) In the opinion of the directors:
(a) the financial statements and notes of Prime Media Group Limited for the financial year ended 30 June 2011 are in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of its financial position as at 30 June 2011 and performance; and
(ii) complying with Accounting Standards (including the Australian Accounting Interpretations) and Corporations Regulations 2001; and
(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 2b
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
(2) This declaration has been made after receiving the declarations required to be made to the directors in accordance with s295A of the Corporations
Act 2001 for the financial year ending 30 June 2011.
On behalf of the Board
P. J. Evans
Director
Sydney, 28 September 2011
Prime media GrouP AnnuAl RepoRt 2011
89
INDEPENDENT AUDIT REPORT
FOR THE YEAR ENDED 30 JUNE 2011
90
INDEPENDENT AUDIT REPORT
FOR THE YEAR ENDED 30 JUNE 2011
Prime media GrouP AnnuAl RepoRt 2011
91
AsX ADDITIONAL INFORMATION
FOR THE YEAR ENDED 30 JUNE 2011
Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows. The information is current
as at 19 September 2011.
(A) DistRiButioN of equity seCuRities
oRDiNARy shARes
As at 19 September 2011, total number of fully paid up shares on issue is 366,330,303.
The number of shareholders, by size of holding, in each class of share are:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
The number of shareholders holding less than a marketable parcel of shares are:
(B) tweNty lARgest RegisteReD shAReholDeRs
The names of the twenty largest registered holders of quoted shares at 19 September 2011 are:
1 Paul Ramsay Holdings Pty Limited
2 RBC Dexia Investor Services Australia Nominees Limited
3 Network Investment Holdings Pty Limited
4 Bell Potter Nominees Limited
8 National Nominees Limited
JP Morgan Nominees Australia Pty Limited
6
7 HSBC Custody Nominees (Australia) Pty Limited
8 Citicorp Nominees Pty Limited
9 Birketu Pty Limited
10 Cogent Nominees Pty Limited
11 George Walter Mooratoff
12 UBS Nominees Pty Limited
13 Reading Entertainment Australia Pty Limited
14 Effie Holdings Pty Limited
15
Sandhurst Trustees Ltd
16 Paul Ramsay Foundation Pty Limited
17 RW & SJ Holdings Pty Limited
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