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2013
AnnuAl
RepoRt
CONTENTS
1 ChairmaN ’S a ddrESS
2 ChiEf EXECUTiVE OffiCEr’S rEPOrT
5 dirECTOrS’ rEPOrT
20 COrPO raTE GOVErNaNCE ST aTEmENT
24 fiNaNC iaL STaTEmENTS
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
position
DAte AppointeD
DAte ResigneD
directors
paul Joseph Ramsay Ao
Chairman
Michael Stanley Siddle
Deputy Chairman
17 April 1985
17 April 1985
27 March 1991
2 october 2003
6 June 2008
6 June 2008
Chief executive officer
24 June 2010
27 February 2012
–
–
–
–
–
–
–
–
peter John evans FCA
Alexander Andrew Hamill
Ian patrick Grier AM
Ian Richard neal
Ian Craig Audsley
Company Secretary
emma McDonald
RegisteReD office
363 Antill Street
Watson ACt 2602
(02) 6242 3700
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
Australia and new Zealand Banking Group limited (AnZ)
8/20 Martin place
Sydney nSW 2000
AuDitoRs
ernst & Young
680 George Street
Sydney nSW 2000
CHAIRMAN’S
ADDRESS
On behalf of the directors of
PRIME Media Group I am pleased
to present the Annual Report
for the 2013 financial year.
In what has been a tough operating environment
for many traditional media companies, PRIME
confirmed again that it is the leading regional
broadcaster, having reported 1.8% revenue growth
in a declining advertising market, and a core profit of
$35.4 million, an increase of 6.6% on the prior year.
PRIME’s positive financial performance is testament
to the management team’s focus on strengthening
an already capable advertising sales force, delivering
innovative approaches to new revenue opportunities
and tight cost control across the business. PRIME’s
statutory earnings per share of 5.5 cents was 27%
lower than the prior period due to the non-cash
impairment of radio licences of $15 million.
In the 2013 financial year PRIME7 grew its audience
share to deliver a pleasing 2.3 share point
improvement to lift to a 39.5 share*. In calendar year
2012 PRIME7 once again won the official audience
ratings survey in its three aggregate markets of
northern New South Wales, southern New South
Wales and Victoria (on a combined basis). PRIME’s
Western Australian television division, GWN7,
maintained its dominance in the market.
PRIME is committed to maximising shareholder
value and ensuring debt levels are appropriate. To
this end PRIME completed the sale of its regional
Queensland radio network in August 2013, the
proceeds of which were applied to further reduce
gearing. While PRIME’s net debt of $131.9 million
at 30 June 2013 was up 12.6% on the prior year, the
increase was due to a realignment of payments
as evidenced by a fall in current payables. The
one-off reduction in debt arising from the sale of
the radio network ensures PRIME Media Group’s
balance sheet is best positioned in this tough
advertising spend cycle.
PRIME is now one of the leading media dividend
yield stocks. Your Board of Directors has declared
a full year dividend of 7.3 cents per share, a 10.6%
increase on the prior year, providing shareholders
with a 7.2% fully franked dividend yield. PRIME’s
share price has also demonstrated resilience in
a difficult market, settling at $1.01 at 30 June 2013.
Our association with the Seven Network continues
to drive strong audiences and provide tremendous
opportunity for PRIME’s advertisers. With Australia’s
best television programs in its schedule, we’re
confident that the Seven Network will continue
to improve performance into the future.
I would like to conclude by extending my thanks
and appreciation to PRIME’s staff and commend
their exemplary performance in a challenging
environment. I’d also like to acknowledge and thank
PRIME’s advertising clients and partners for their
continuing support and loyalty. Finally, I would like
to thank the radio team for their efforts and wish
them the best for the future.
Paul Ramsay AO
CHAIRMAN
* Source: Regional TAM Combined Aggregated Market of Northern
NSW, Southern NSW & Victoria; Total People, 0600-2359; Network
Commercial Share, Consolidated Data; FY13 vs FY12
Prime media GrouP AnnuAl REPORt 2013
1
CHIEF EXECUTIVE
OFFICER’S REPORT
The 2012 London Olympic Games set the stage
for what would prove to be a highly competitive
and challenging advertising market in the
reporting period.
Despite the opportunity of the Olympic Games,
total advertising spend in Australia fell 1.6% on
the prior period. However, PRIME’s revenue from
continuing operations grew 1.8% to $257.3 million,
delivering PRIME’s 3rd consecutive year of revenue
performance over and above market growth.
PRIME’s television division performed exceptionally
in this environment, growing its audience share by
2.3 points to a 39.5* share and advertising revenue
by 1.1 share points to a 40.2 share^. While the
regional television advertising market declined
1%, PRIME advertising revenue grew by 1.7% or
$4.35 million.
The revenue result is demonstration of the
continuing work and application of management
to maintaining the performance and capabilities of
PRIME’s sales organisation.
Other television revenues of $3.3 million grew
$857,000 over the prior period, which largely related
to government grants for analogue to digital
transmission switchover. Total television revenue
grew 2.1% to $256.6 million.
A planned increase in PRIME’s program supply
agreement with the Seven Network, along with
CPI increases and PRIME’s share of associated
losses in digital television services for Mildura and
regional Western Australia, were partly mitigated
by management’s tight cost controls across the
business. As a result, expense growth was contained
to 2.9% to finish at $183.7 million. Television EBITDA
of $72.8 million was essentially flat year on year.
PRIME’s radio division experienced difficult trading
conditions due to continuing economic headwinds
in regional Queensland. Advertising revenue
declined $956,000 or 4.8% year on year, however
management maintained the cost containment focus
with expenses growth kept to just 0.6%. EBITDA fell
$867,000 or 20.8% on the prior year.
At the half year PRIME’s Board of Directors wrote
down the value of the radio broadcast licences by
$15 million and later announced the completion of
the sale of the companies to Grant Broadcasters on
30 August for a minimum $24.5 million. The radio
business was held as an asset for sale at 30 June
and reported as a discontinuing operation.
Positioning PRiME foR changE
The television industry is currently going through a
period of change. Technology is driving the creation
of new entertainment platforms and the opportunity
for broadcasters to provide additional free to air
television channels.
PRIME has been managing the conversion of its
analogue broadcast signals to digital to provide
ubiquitous multi-channel services for regional
and rural Australians. In tandem, we have been
planning the migration of up to 170 transmission
sites to new frequencies as part of a Federal
Government Digital Dividend program. Redundant
television frequencies have been auctioned by
government to telecommunications companies for
next generation mobile devices. Both initiatives are
government funded.
The switch-over to purely digital television services
took place in Victoria in May 2011, Southern NSW and
the ACT in June 2012, Northern NSW in November
2012 and in Western Australia in June 2013.
The NSW Central Coast region is the only regional
television service area yet to make the switch to
digital-only services. That change will occur in
December 2013, coinciding with analogue switch off
in the Sydney television service area.
PRIME has participated in a number of government
enquiries and through Free TV, contributed to many
industry submissions in the past year. We have
and will continue to champion the importance of
regional television services in the face of broader
changes to the media landscape. We will continue
this work to ensure that people in regional, rural
and remote communities in Australia can enjoy
the benefits of local free to air television and
local news services.
2
With more content being delivered to consumers
over the internet and becoming readily available
through a range of devices, such as internet
enabled televisions, tablets and the like, there is
both risk and opportunity for PRIME. Management
is monitoring these opportunities to identify and
develop strategies to participate in content delivery
to audiences via these methods.
In the past twelve months a number of significant
reviews into the media industry have been
undertaken by the Federal government and
the ACMA. In particular, the Final Report of the
Convergence Review recommended sweeping
changes to media regulation.
Although the bulk of the recommendations have not
been implemented, PRIME was the beneficiary of a
significant and positive legislative amendment that
saw licence fees reduced by 50%.
We are pleased with the continuing strength of our
television business. We continue to build audiences
across the suite of channels and continue to increase
advertising revenue share beyond audience share.
Much of it is due to strong programming, but much
of it also comes from a dedicated and capable
management and staff and I thank them for their
commitment to delivering another great result.
highLights
$277.0m
RE V EnuE
$66.0m
EBIt DA
$35.4m
CORE n E t PROFI t AF tER tA X
7.3¢
Full Y E AR DI V IDEn D
6.6%
CHAnGE In CORE n E t PROFI t
AF tER tA X
Ian Audsley
CEO
*
Hig hlig ht s were c alc ulated ba sed
on C ontinuing O per ation s and
Discontinuing O per ation s before
s pec ific item s.
* Source: Regional TAM Combined Aggregated Market of Northern NSW,
Southern NSW & Victoria; Total People, 0600-2359; Network Commercial
Share, Consolidated Data; FY13 vs FY12
^ Source: Total Advertising Revenue combines aggregated markets of
Northern NSW, Southern NSW and Victoria – KMPG
Prime media GrouP AnnuAl REPORt 2013
3
DIRECTORS’
rePort
Your directors submit their report for the year ended 30 June 2013.
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 40 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.
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 the
Company 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. Mr Evans
has been a Director of Ramsay Health Care
Limited since 1990 and a Director of Paul
Ramsay Holdings Pty Limited since 1987.
Mr Evans 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.
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. Mr Grier is a member
of the Board of Careers Australia Pty Ltd and
Chairman of Dominion Principle Group.
He is the Chairman of the Remuneration and
Nomination Committee and was appointed to
the Audit and Risk Committee on 19 June 2012.
ian RichaRD nEaL
non-Executive Director
(appointed 6 June 2008)
Mr Neal is a Chairman for the Executive
Connection and consults on business strategy
and implementation from a perspective
of maximising shareholder value. Prior to
establishing Management Abroad, Mr Neal was
co-founder and Managing Director of Nanyang
Ventures Pty Limited from 1993 to 2004.
Mr Neal’s 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.
ian cRaig auDsLEy
chief Executive officer
(appointed 16 June 2010)
Executive Director
(appointed 24 June 2010)
Mr Audsley has had over 30 years’ experience
in the television industry. He has held various
senior roles at the Seven Network, Nine
Network, TV3 New Zealand and Southern
Cross Television.
4
Directors’ report
Directors’ report
DIRECTORS’ INTERESTS
The relevant interest of each director in the shares and performance rights issued by the Company at the date of this report is as follows:
Paul J. Ramsay AO
Michael S. Siddle
Peter J. Evans FCA
Alex A. Hamill
Ian P. Grier AM
Ian R. Neal
Ian C. Audsley
ORDINaRy
ShaRES
109,903,654
984,082
24,286
–
–
–
–
RIghTS OvER
ORDINaRy
ShaRES
–
–
–
–
–
–
1,315,000
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 J. Ramsay AO
Ramsay Health Care Limited (Chairman)
Michael S. Siddle
Ramsay Health Care Limited (Deputy Chairman)
Peter J. Evans FCA
Ramsay Health Care Limited
Ian P. Grier AM
Ian R. Neal
Ramsay Health Care Limited
IntraPower Limited (1)
Dyesol Limited
Pearl Healthcare Limited
(1) IntraPower Limited was delisted from the Australian Securities Exchange on 12 September 2011.
COmpaNy SECRETaRy
pERIOD Of DIRECTORShIp
fROm
TO
May 1975
May 1975
June 1990
June 1997
May 2007
September 2006
Present
Present
Present
Present
August 2011
Present
September 2008
February 2012
mS Emma mCDONaLD
Ms McDonald was appointed as Company Secretary on 27 February 2012. She has been a solicitor for the past 21 years, having worked in a number of
large media companies and for a major law firm, and currently holds the role of General Counsel for Prime Media Group Limited.
EaRNINgS pER ShaRE
Basic earnings per share
Basic earnings per share – continuing operations
Diluted earnings per share
Diluted earnings per share – continuing operations
DIvIDENDS
Final dividend recommended:
- on ordinary shares
Dividends paid in the year:
Interim for the year
- on ordinary shares
Final for 2012 shown as recommended in the 2012 financial report
- on ordinary shares
CENTS
5.5
9.2
5.5
9.2
CENTS
$’000
3.3
12,089
4.0
3.3
14,653
12,089
26,742
Prime media GrouP AnnuAl RepoRt 2013
5
Directors’ report
pRINCIpaL aCTIvITIES
The principal activities of Prime Media Group Limited during the year
were the provision of free to air commercial television broadcasting
services in the following regional areas (excluding capital cities):
• Northern New South Wales and the Gold Coast;
• Southern New South Wales;
• Victoria and Mildura; and
• Western Australia.
The majority of the Group’s television programming is supplied
through an affiliation agreement with the Seven Network and
broadcast in regional areas under the PRIME7 brand on the east coast
and the GWN7 brand in regional Western Australia. During the year,
the Group also operated a network of 10 radio stations in regional
Queensland. These assets are currently held for sale and recorded as
a discontinuing operation.
OpERaTINg aND fINaNCIaL REvIEw
CONSOLIDaTED RESuLTS INCLuSIvE Of CONTINuINg aND
DISCONTINuINg OpERaTIONS
The Company’s audited financial report for the year ended 30 June 2013
has been prepared on the basis that Prime’s radio business was held for
sale at the reporting date resulting in its financial performance being
excluded from continuing operations (and reported as a discontinuing
operation). The Company’s continuing operations primarily consist of
Prime’s television business segment and unallocated corporate segment.
The Group’s consolidated net profit after tax from both continuing
and discontinuing operations attributable to the members of Prime
Media Group Limited for the year ended 30 June 2013 of $20,211,000
(2012: $27,682,000) represents a decrease of $7,470,000 or 27.0% on the
prior comparative period largely due to a write down of radio assets
of $15.0 million.
STaTuTORy RESuLTS fROm CONTINuINg OpERaTIONS
The Company’s statutory consolidated net profit after tax from
continuing operations (excluding Prime’s radio business) attributable to
the members of Prime Media Group Limited for the year ended 30 June
2013 was $33,608,000 (2012: $30,810,000) and represents an increase of
$2,798,000 or 9.1% on the prior comparative period.
The Group’s primary source of revenue from continuing operations
during the year was derived from television advertising that grew 1.8%
during the year in difficult market conditions. The Group’s revenue
growth of 1.9% in its “3 Aggregated Markets” of Northern New South
Wales, Southern New South Wales and Victoria was ahead of market data
published by KPMG, which demonstrated that the 3 Aggregated Markets
declined by 0.98% during the year. The Group also continued to benefit
from incremental revenue earned from its datacasting channel TV4Me
that launched in 2011 and ishoptv that was launched on 1 May 2013.
Prime’s gross profit margin from continuing operations was 47.9%
compared to 49.3% in the previous corresponding period. The decline
in gross profit margin was largely due to increases in program affiliation
costs and other costs.
Prime’s total operating expenses of $60.3M were largely in line with the
previous corresponding period. Savings in marketing and administration
costs of $667,000 were largely offset by an increase in share of
associate losses from the Group’s joint ventures. Prime’s EBITDA from
continuing operations decreased by 0.9% to $62.7M (2012: $63.2M)
due to unallocated corporate head office costs being maintained
to service both continuing and discontinuing operations. Overall
Group EBITDA fell by 2.1% to $66.0M (2012: $67.4M) mainly due to a
reduction in the radio business profitability and an increase in television
programming expenses.
Finance costs of $8.0M were 24.0% less than the previous corresponding
reporting period, largely due to lower interest rates and improved
cash management.
DISCONTINuINg OpERaTIONS
In June 2013, the Board of Directors of the Group, in response to
unsolicited expressions of interest, authorised management to review
the possible sale of the Group’s radio business. As a consequence, the
Group’s radio business has been reclassified as an asset available for
sale and its financial performance reported as a discontinuing operation.
The Group reported in its interim results for the 6 month period ended
31 December 2012 that the radio group was struggling as a result of
the downturn in the Queensland economy, coupled with the overall
downturn in mining activity and the residual effects of the natural
disasters in Queensland over the past 2 years. These factors led to a
fall in earnings and resulted in an impairment charge of $15.0M being
recorded in the current reporting period (2012: $5.32M).
The Group’s revenue from discontinuing operations was $19.7M which
was $1.0M or 4.8% less than the prior corresponding period. The fall in
advertising revenue corresponded to a reduction in Radio EBITDA to
$3.3M (2012: $4.2M). On 12 August 2013, the Group publicly announced
the sale of its Radio business for a minimum $24.5M.
CORE NET pROfIT afTER Tax (INCLuDINg CONTINuINg
aND DISCONTINuINg OpERaTIONS)
Core net profit after tax from both continuing and discontinuing
operations, and before specific items, was $35,423,000 (2012:
$33,220,000), representing an increase of $2,203,000 or 6.6% on the prior
corresponding period. The Group’s final dividend has been declared
based on the core net profit after tax.
BaLaNCE ShEET aND CaShfLOw
Prime’s operating cashflow for the year was $25.8M less than the prior
corresponding period due to a change in the timing of payments.
As a result of the timing of payments, Prime’s syndicated debt facility
increased to $142.0M (2012: $124.0M) and a reduction in Current
Liabilities – Trade and Other Payables to $37.5M.
Cash outflows from investing activities of $10,944,000 (2012: $9,601,000
cash outflow) compares unfavourably to the prior year due to increased
funding requirements to fund Prime’s joint ventures that broadcast
television regionally in Western Australia and Mildura. The Group’s
cash outflow from financing activities of $10,371,000 was applied to pay
increased dividend payments to shareholders and to discharge finance
leases during the period. Prime continues to comfortably operate
within the terms of its $200M syndicated bank facility which matures
in October 2015.
6
Directors’ report
ShaREhOLDER RETuRNS
The Company is pleased to report an improvement in shareholder returns as a result of its current dividend payout ratio and an improvement in most
other financial measures in the current year including the closing share price which was $1.01 at 30 June 2013 (2012: $0.66).
Core Earnings Per Share (cents per share)(i)
Statutory Earnings Per Share (cents per share)
Core Return on Assets (ROA) %(i)
Statutory Return on Assets (ROA) %
Weighted Average Cost of Capital (%)
Core Return on Equity (ROE) (%)(i) (ii)
Statutory Return on Equity (ROE) (%)
Net Debt / Net Debt + Equity Ratio (%)
Share price ($)
Dividends per share (cents)
Total Shareholder Return (%)
2013
9.7
5.5
10.2
5.8
10.3
22.9
13.1
46.1
1.01
7.3
64.1
2012
9.1
7.6
9.2
7.7
10.4
20.8
17.3
42.3
0.66
6.6
5.2
(i) These returns have been calculated using net profit after tax from continuing and discontinuing operations and before the impact of items disclosed as specific non-core
items. (Refer to Note 9 for details of specific non-core items).
(ii) Equity has been normalised for the impact of items disclosed as specific items.
CapITaL STRuCTuRE
Interest-bearing loan and borrowings
Derivative financial instruments
Cash and short term deposits
Net debt
Total equity
Total capital employed
Gearing
The profile of the Group’s debt finance is as follows:
Current
Obligations under finance leases
Derivative financial instruments
Non-current
Obligations under finance leases
Secured bank loan
2013
$’000
142,275
–
(10,326)
131,949
154,380
286,329
46.1%
2013
$’000
252
–
252
918
141,105
142,023
142,275
2012
$’000
125,525
573
(8,916)
117,182
160,027
277,209
42.3%
2012
$’000
1,629
573
2,202
1,170
122,726
123,896
126,098
The Group’s debt level has increased in the current year largely due to the timing of payments to suppliers. The increase in debt levels has been offset
by a corresponding reduction in Trade and Other Payables – Current Liability to $37,474,000 (2012: $61,384,000).
Capital expenditure of $9,200,000 in the current year (2012: $13,195,000) was less than the prior year largely due to completion of the analogue to
digital transmission project. Current year expenditure includes the implementation of a new television sales and traffic software system, which was
commissioned on 1 March 2013.
Prime media GrouP AnnuAl RepoRt 2013
7
Directors’ report
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.
During the year the Group’s Audit and Risk Committee comprehensively
reviewed its risk management objectives and processes. The Committee
worked with management to improve its approach to risk management
having regard for the objectives of Principle 7 of the ASX Corporate
Governance Council principles and recommendations.
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 strategic plans, which encompass the Group’s
•
vision, mission and strategy statements, designed to meet
stakeholders’ needs and manage business risk; and
implementation of Board approved operating plans and budgets
and Board monitoring of progress against these budgets, including
monitoring of financial and non-financial Key Performance
Indicators (‘KPIs’).
Risk management is further addressed in the Corporate
Governance Statement.
SIgNIfICaNT ChaNgES IN ThE STaTE Of affaIRS
There were no significant changes in the Group’s state of affairs.
SIgNIfICaNT EvENTS afTER ThE BaLaNCE DaTE
On 12 August 2013 the Group announced the sale of the Prime radio
entities, which held four AM and six FM licences in regional Queensland,
for a minimum of $24,525,000 plus surplus cash to be determined at the
date of completion. The sale is expected to be completed on 30 August
2013. As a consequence of the sale, the radio assets and liabilities have
been classified as held for sale and the segment operations reclassified
as discontinuing in the current and prior year Consolidated Statement of
Comprehensive Income.
LIKELy DEvELOpmENTS aND ExpECTED RESuLTS
The Board and Executive consider that the future performance of the
Group will be influenced by changes in legislation specific to the media
industry and changes in media technologies. Notwithstanding these
influences, the Board and Executive will continue to focus on maximising
its yield from the advertising market and to prudently manage debt and
risk generally to optimise returns to shareholders.
pERfORmaNCE RIghTS (EQuITy)
uNISSuED ShaRES
At the date of this report there were 2,546,000 (2012: 1,258,000)
unissued ordinary shares under The Executive Performance Rights Plan
that are yet to vest. Refer to Note 28 of the financial statements for
further information.
Performance rights holders do not have any right, by virtue of the
performance right, to participate in any share issue of the Company
or any related body corporate.
ShaRES ISSuED aS a RESuLT Of ThE ExERCISE Of
pERfORmaNCE RIghTS
During the financial year, employees and executives have not
exercised any performance rights 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, the Company paid premiums
totalling $107,850 (2012: $97,850) 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. During the year, the
Board also authorised the execution of a deed of access, indemnity and
insurance for Directors and Officers in their capacity for the Company, its
subsidiaries and related parties.
INDEmNIfICaTION Of auDITORS
To the extent permitted by law, the Company has agreed to indemnify
its auditors, Ernst & Young, as part of the terms of its audit engagement
agreement against claims by third parties arising from the audit (for an
unspecified amount). No payment has been made to indemnify Ernst &
Young during or since the financial year.
8
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
7
7
7
7
7
7
7
4
7
6
6
7
6
7
–
–
5
–
5
5
–
–
–
5
–
5
5
–
–
–
3
3
–
3
–
–
–
3
3
–
3
–
Paul J. Ramsay AO
Michael S. Siddle
Peter J. Evans FCA
Alex A. Hamill
Ian R. Neal
Ian P. Grier AM
Ian C. Audsley
COmmITTEE mEmBERShIp
Members acting on the committees of the Board during the year were:
Audit and risk
Peter J. Evans FCA (Chairman)
Ian R. Neal
Ian P. Grier AM
remuneration and Nomination
Ian P. Grier AM (Chairman)
Peter J. Evans FCA
Alex 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.
Prime media GrouP AnnuAl RepoRt 2013
9
Directors’ report
REmuNERaTION REpORT (auDITED)
Dear Shareholders
The Board is pleased to present the Remuneration Report for the 2013 financial year.
pERfORmaNCE aND RESuLTINg REmuNERaTION OuTCOmES fOR ThE yEaR
The Company reported another resilient result, having achieving revenue growth of 1.8% in difficult market conditions. The Company also achieved
a power ratio of 1.1 having maintained its revenue share for the 3AGG markets at a percentage greater than its audience share for these markets.
Shareholders ultimately benefited as the Company’s core net profit after tax from continuing and discontinuing operations increased to $35.4 million,
resulting in a full year dividend of 7.3 cents per share (2012: full year dividend 6.6 cents per share).
REmuNERaTION ChaNgES
As reported last year, the Company restructured its executive team in 2012, which resulted in a reduction in the fixed remuneration pool for the 2013
financial year of $133,476 or 4.2%.
The Company’s 2013 short term incentive payment pool has been set at $1,071,000, based on advice from our external remuneration consultant, and is
linked to the Group, business unit and individual measures described in this report. As a result of the pleasing 2013 financial result, 100% of the short
term incentive pool has been provided for in this reporting period.
During the financial year, the Company also issued 1,580,000 performance rights (2012: 1,258,000) including 700,000 performance rights to the Chief
Executive Officer, Mr Ian Audsley. The rights will vest over a 3 year period, and are subject to agreed performance measures including core earnings
per share and achievement of an annual power ratio target (revenue share: audience share). No performance rights vested during this financial year.
NON-ExECuTIvE DIRECTOR REmuNERaTION
The remuneration of the non-executive directors of the Company consists of directors’ fees. Directors’ fees were reduced by $47,400 or 7.9% due to the
departure of a director in the prior year. Finally, in order to comply with ASX CGC Recommendation 2.5, the Company also introduced new measures
to evaluate the performance of directors.
On behalf of the Remuneration and Nomination Committee and the Board, I commend this Remuneration Report to you.
Yours sincerely
I. P. Grier AM
Chairman
Remuneration and Nomination Committee
10
Directors’ report
REmuNERaTION REpORT (auDITED)
This Remuneration Report for the year ended 30 June 2013 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 is presented under the following sections:
1. Introduction
2. Remuneration governance
3. Executive remuneration arrangements
4. Executive remuneration outcomes for 2013 (including link
to performance)
5. Executive contracts
6. Non-executive directors’ remuneration (including statutory
remuneration disclosures)
7. Additional statutory disclosures
INTRODuCTION
1.
The Remuneration Report details the remuneration arrangements for
key management personnel (KMP) of the Company and the Group being
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).
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. The term
‘director’ refers to non-executive directors (NED) only.
2. REmuNERaTION gOvERNaNCE
REmuNERaTION aND NOmINaTION COmmITTEE
The Board has appointed a Remuneration and Nomination Committee
consisting of three non-executive directors (NEDs), including 2
independent NEDs to make recommendations on the remuneration
arrangements for NEDs and executives.
The Remuneration and Nomination Committee meets throughout
the year. The CEO and Company Secretary have attended certain
Remuneration and Nomination Committee meetings by invitation,
where management input is required. The CEO and Company
Secretary are not present during any discussions relating to their own
remuneration arrangements.
Further information on the Remuneration and Nomination
Committee’s role, responsibilities and membership is available at
www.primemedia.com.au.
REmuNERaTION CONSuLTaNTS
To ensure the Board is fully informed when making decisions, the
Remuneration and Nomination Committee has formalised policies
that govern arrangements to engage independent remuneration
consultants to provide independent advice and, where required, to
make remuneration recommendations, free from the undue influence by
members of the KMP.
In the 2013 financial year, CRA Plan Managers Pty Limited (CRA)
was engaged to benchmark KMP remuneration including STIs. The
Committee is satisfied that the advice received from CRA is free
from undue influence from the KMP to whom the remuneration
recommendations apply as CRA was engaged directly by, and reported
directly to, the Chairman of the Committee.
Details of KMP of the Company and Group are set out below:
CRA’s fees in FY 2013 totalled $23,802.
KEy maNagEmENT pERSONNEL
(i) Directors
Paul J. Ramsay AO
Chairman (non-executive)
Michael S. Siddle
Deputy Chairman (non-executive)
Peter J. Evans FCA Director (non-executive)
Alex A. Hamill
Director (non-executive)
Ian P. Grier AM
Director (non-executive)
Ian R. Neal
Director (non-executive)
Ian C. Audsley
Director (Chief Executive Officer)
(ii) executives
Dave Walker
Group General Manager Sales and Marketing
Shane Wood
Group General Manager Operations
Emma McDonald
General Counsel and Company Secretary
Gerard Smith
Chief Technology Officer
John Palisi
Chief Financial Officer (appointed 1 October 2012)
There were no other changes to KMP after the reporting date and before
the date the financial report was authorised for issue.
Prime media GrouP AnnuAl RepoRt 2013
11
Directors’ report
3. ExECuTIvE REmuNERaTION aRRaNgEmENTS
REmuNERaTION pRINCIpLES aND STRaTEgy
The Company’s executive remuneration strategy aims to attract, motivate and retain high performing individuals and align the interests of executives
and shareholders.
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
COmpONENT
vEhICLE
puRpOSE
LINK TO pERfORmaNCE
Fixed remuneration
• Represented by total employment
• To provide competitive fixed
• Company and individual
cost (TEC);
• Comprises base salary,
superannuation contributions
and other discretionary and
non-discretionary benefits.
remuneration set with reference to
role, market and experience.
performance are considered during
the annual review process.
STI component
• Paid in cash.
• Rewards executives for their
LTI component
• Awards are made in the form of
performance rights.
contribution to achievement of
Group and business unit outcomes,
as well as individual Key Performance
Indicators (KPIs).
• Rewards executives for their
contribution to the creation
of shareholder value over the
longer term.
• Core NPAT;
• Power ratio; and
• Customer service, risk management
and leadership.
• Performance rights are subject
to achieving core EPS and power
ratio targets.
appROaCh TO SETTINg REmuNERaTION
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 Remuneration and Nomination Committee reviews TEC annually against the median of its direct industry peers and other Australian listed entities
of a similar size and complexity. KMP remuneration is benchmarked against industry peers and remuneration levels reviewed having regard for market
data, insights into remuneration trends, the performance of the Company and individual, and the broader economic environment.
DETaIL Of INCENTIvE pLaNS
short term incentives (sti)
The Group operates an annual STI program that is available to executives and awards a cash bonus subject to attainment of clearly defined Group,
business unit and individual measures.
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 KPIs covering financial and non-financial, corporate and individual measures of performance. A summary of the
measures and weightings is set out below:
pERfORmaNCE mEaSuRES
CORE NpaT
pOwER RaTIO
NON-fINaNCIaL mEaSuRES:
• Leadership/Team
Contribution
• Risk Management
• Business Development
and Growth Initiatives
• Capital Management
• Business Relationship
Management
CEO
Other functional executives
50%
0–50%
25%
0–25%
25%
0–50%
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 KPIs, the Remuneration and Nomination Committee, in line with their
responsibilities, determine the amount, if any, of the STI 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.
Long term incentives (Lti)
LTI awards will be made annually to executives under the Performance Rights Plan. The allocations in the current year represented less than 0.7% of
the undiluted capital of the Group with a maximum income cost over a 3 year period of $1,515,512 (or $505,170 annualised). The performance rights are
available over a 36 month vesting period subject to continuing service and achieving the following targets:
• 60% of the rights will be subject to achievement of annual core 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.
12
Directors’ report
4.
ExECuTIvE REmuNERaTION OuTCOmES fOR
2013 (INCLuDINg LINK TO pERfORmaNCE)
COmpaNy pERfORmaNCE aND ITS LINK TO ShORT
TERm INCENTIvES
The financial performance measures driving STI payment outcomes are:
• core NPAT (defined as NPAT before specific non-core items); and
• A power ratio greater than 1. The Power Ratio is a measure of the
Company’s share of revenue to the Company’s share of audience.
A power ratio above 1 indicates that the Company is performing
ahead of its audience share.
The following chart shows the Company’s core NPAT over the 5 year
period ended 30 June 2013. Core NPAT is defined as statutory net profit
after tax and before non-core items.
$33.2
$35.4
$26.8
COmpaNy pERfORmaNCE aND ITS LINK TO LONg
TERm INCENTIvES
The Company has adopted the following performance measures for the
vesting of LTI performance rights:
• core EPS (defined as statutory EPS before specific non-core items); and
• maintenance or growth of the power ratio greater than 1.
The following chart shows the Company’s core EPS over the 5 year
period from 1 July 2008 to 30 June 2013. Core EPS is defined as statutory
EPS before non-core items.
earnings per share
(Cents per share)
9.9
7.4
7.3
7.6
9.1
9.7
5.5
4.8
2009
2010
2011
2012
2013
$17.9
$17.1
2009
2010
2011
2012
2013
Core NPAT ($ million)
including discontinued operations
sti awards for 2012 and 2013 financial years
For the 2012 financial year, 100% of the STI cash bonus pool of $1,055,005
as previously accrued in that period vested to executives and was paid in
the 2013 financial year.
The Remuneration and Nomination Committee will consider the STI
payments for the 2013 financial year in the first quarter of the 2014
financial year. The maximum STI cash bonus available for the 2013
financial year is $1,071,496. STI payments have been accrued at 100%
of the maximum cash bonus available for the 2013 financial year
based on individual executive’s actual performance against KPIs. Any
adjustments between the actual amounts to be paid as determined by
the Remuneration and Nomination Committee and the amounts accrued
will be adjusted in the 2014 financial year. The minimum amount of the
STI cash bonus, assuming that no executives meet their respective KPIs
for the 2013 financial year, is nil.
-15.0
-24.5
Fully Diluted EPS
Fully Diluted EPS
(before non-core items)
Lti awards for 2013 financial year
During the year ended 30 June 2013 nil shares (2012: nil shares) were
issued due to the exercise of performance rights. Details of the payments
are disclosed in Table 1 below. The LTI remuneration for each KMP is set
out in within Table 3 and Table 4 of this section.
Senior employees that were considered KMPs in FY 2012 and that
departed the Company in July 2013 were not considered KMPs in FY
2013, as their responsibilities had diminished during the period.
The 2012 LTI plan included loans made to certain executives in 2007. The
loans were interest free and the loan amount repayable by the executive
was reduced on the basis of continued service with the Company.
20% of the original loan balance is forgiven on 1 July of each year if
the executive remains employed with the Company at that date. If the
executive terminated his or her employment during the five year period,
the balance of the loan at the date of termination was repayable by the
executive on the date of termination. No loans have been made under
this plan subsequent to the 2007 financial year and the plan was finalised
on 1 July 2012.
On 26 September 2012 the Board approved payment of $50,000 to Ms
Emma McDonald as an STI for the 2012 Financial Year.
Prime media GrouP AnnuAl RepoRt 2013
13
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Prime media GrouP AnnuAl RepoRt 2013
15
Directors’ report
gRaNTED
TERmS aND CONDITIONS fOR EaCh gRaNT
vESTED
2013
NumBER
gRaNT DaTE
faIR vaLuE pER
pERfORmaNCE
RIghT aT
gRaNT
DaTE ($)
ExERCISE
pRICE pER
pERfORmaNCE
RIghT ($)
ExpIRy DaTE
fIRST
ExERCISE
DaTE
LaST
ExERCISE
DaTE
NumBER
%
Director
Ian Audsley
Executive
Shane Wood
Dave Walker
John Palisi
Emma McDonald
700,000
28/11/2012
$0.6290
200,000
230,000
200,000
100,000
29/10/2012
29/10/2012
29/10/2012
29/10/2012
$0.6236
$0.6236
$0.6236
$0.6236
–
Total
1,430,000
–
–
–
–
–
–
28/11/2015
28/11/2015
29/10/2015
29/10/2015
29/10/2015
29/10/2015
29/10/2015
29/10/2015
29/10/2015
29/10/2015
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2012
NumBER
gRaNT DaTE
faIR vaLuE pER
pERfORmaNCE
RIghT aT
gRaNT
DaTE ($)
ExERCISE
pRICE pER
pERfORmaNCE
RIghT ($)
ExpIRy DaTE
fIRST
ExERCISE
DaTE
LaST
ExERCISE
DaTE
NumBER
%
Director
Ian Audsley
Executive
615,000
23/11/2011
0.5449
Lesley Kennedy*
Shane Wood
Dave Walker
Total
292,000
167,000
184,000
1,258,000
30/09/2011
30/09/2011
30/09/2011
–
0.5451
0.5451
0.5451
–
–
–
–
–
23/12/2014
23/11/2014
30/10/2014
30/09/2014
30/10/2014
30/09/2014
30/10/2014
30/09/2014
–
–
–
–
–
–
–
–
–
–
–
–
* Ms Kennedy departed as Chief Financial Officer on 31 July 2012 at which time her performance rights lapsed.
table 4: Value of performance rights granted, exercised, lapsed or cancelled during the year
vaLuE Of
pERfORmaNCE RIghTS
gRaNTED DuRINg
ThE yEaR
$
vaLuE Of
pERfORmaNCE RIghTS
ExERCISED DuRINg
ThE yEaR
$
vaLuE Of
pERfORmaNCE RIghTS
LapSED DuRINg
ThE yEaR
$
vaLuE Of
pERfORmaNCE RIghTS
CaNCELLED DuRINg
ThE yEaR
$
REmuNERaTION
CONSISTINg Of
pERfORmaNCE RIghTS
fOR ThE yEaR
%
Ian Audsley
Dave Walker
Shane Wood
John Palisi
Emma McDonald
Lesley Kennedy
Total
440,300
143,428
124,720
124,720
62,360
–
$895,528
–
–
–
–
–
–
–
–
–
–
–
–
292,000
292,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
For details on the valuation of the performance rights, including models and assumptions used, please refer to Note 28. There were no alterations to
the terms and conditions of performance rights granted as remuneration since their grant date.
The maximum grant, which was payable assuming that all service and performance criteria were met, was equal to the number of rights granted
multiplied by the fair value at the grant date. The minimum payable assuming that service and performance criteria were not met was nil.
16
Directors’ report
5 ExECuTIvE CONTRaCTS
Remuneration arrangements for KMP are formalised in employment agreements. Details of these contracts are provided below:
ChIEf ExECuTIvE OffICER (‘CEO’)
The CEO, Mr Audsley, is employed under a rolling contract. Under the terms of the present contract:
• The CEO receives fixed remuneration of $725,000 per annum.
• The CEO’s maximum STI opportunity is 33.25% of annual TEC.
• The CEO is eligible to participate in the Company’s LTI performance right plan on terms determined by the Board, subject to receiving the required
or appropriate shareholder approval.
• The CEO is entitled to 6 weeks annual leave.
• The CEO may resign from his position and terminate his contract by giving 6 months written notice.
• The CEO’s employment may be terminated by the Company 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 terminated 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; and
• 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. In these circumstances, the Company must provide
12 months notice or 12 months payment in lieu of notice, or a combination of the two.
OThER KEy maNagEmENT pERSONNEL
All other KMP have rolling contracts with no fixed term except for Mr David Walker, Group General Manager Sales and Marketing, who is employed on
a fixed term contract. Mr Walker is employed under a contract that expires on 30 September 2014 subject to earlier termination by either party giving
no less than 9 months written notice. The parties have agreed that they will enter into negotiations from January 2014 with a view to settling a new
agreement for the period commencing 1 October 2014. In the event of termination (with notice) by the Company, the Company has the discretion to
pay in lieu all or part of the notice period. If the employment is terminated by the Company in the event of summary dismissal, Mr Walker only receives
pay and leave entitlements accrued prior to the date of termination. From 1 July 2013, Mr Walker is entitled to an annual increase of his total salary
package of no less than 5% of his base salary.
All other executive employment may be terminated 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. 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
Mr Douglas Edwards, CEO of Television, received a termination payment of $386,832 provided for in the prior corresponding period. The Board
acknowledges the regulations applying as a result of the termination cap legislation and confirms that all KMP contracts comply with this legislation.
6 NON-ExECuTIvE DIRECTOR’S REmuNERaTION (INCLuDINg STaTuTORy REmuNERaTION DISCLOSuRES)
REmuNERaTION pOLICy
The Board seeks to aggregate remuneration at the 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 the 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 also considers advice from external consultants when undertaking the annual review process.
In accordance with the ASX listing rules, the aggregate fees for NEDs approved at the 2012 Annual General Meeting (AGM) was $600,000.
NED fees will not increase in the 2014 financial year other than by the statutory increase in compulsory employer superannuation contributions
resulting in the aggregate fees for NEDs of $554,000, which is less than the determination made at the AGM held in November 2007 when
shareholders approved an aggregate fee pool of $750,000 per annum (excluding superannuation and retirement benefits arising from the Directors’
remuneration plan).
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. These fees are summarised in Table 1 and 2 under section 4 above.
Prime media GrouP AnnuAl RepoRt 2013
17
Directors’ report
7 aDDITIONaL STaTuTORy DISCLOSuRES
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
Total
$
41,203
78,866
120,069
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 FCA
Director
Sydney, 28 August 2013
18
AuDitor’s iNDepeNDeNce DecLArAtioN
Ernst & Young
680 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Auditor’s Independence Declaration to the Directors of Prime
Media Group Limited
In relation to our audit of the financial report of Prime Media Group Limited for the financial year ended
30 June 2013, to the best of my knowledge and belief, there have been no contraventions of the auditor
independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.
Ernst & Young
David Simmonds
Partner
28 August 2013
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Prime media GrouP AnnuAl RepoRt 2013
19
corporAte GoVerNANce stAteMeNt
corporAte GoVerNANce stAteMeNt
The Board of Directors of the Company 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 the Company and Group 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.
The Company’s corporate governance practices were in place
throughout the year ended 30 June 2013 and were compliant with
the ASX CGC’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 Board is committed to effectively representing and promoting the
Company and thereby adding long-term value to all shareholders. To
assist the Board to discharge its responsibilities the Company has an
established Board Charter that outlines the roles and responsibilities
of the Board and its Committees. The Board 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:
• approval of strategic plans designed to meet stakeholders’ needs
and manage business risk;
• ongoing development of strategic plans 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 through 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.
Whilst at all times the Board retains full responsibility for guiding and
monitoring the Group, it makes use of two sub-committees, being
an Audit and Risk Committee and a Remuneration and Nomination
Committee to discharge its stewardship. Each Committee has adopted
a formal charter setting out matters relevant to the composition,
responsibilities and administration of the Committee.
All new directors are provided with a copy of the Board and Committee
charter documents. The charter documents are available on the
Company website www.primemedia.com.au.
pRINCIpLE 2 – STRuCTuRE ThE BOaRD TO aDD vaLuE
STRuCTuRE Of ThE BOaRD
NamE
pOSITION
Paul J. Ramsay AO Non Executive Chairman (appointed 1985)
Michael S. Siddle
Non Executive Deputy Chairman (appointed 1985)
Peter J. Evans FCA Non Executive Director (appointed 1991)
Alexander A. Hamill Non Executive Director (appointed 2003)
Ian R. Neal
Non Executive Director (appointed 2008)
Ian P. Grier AM
Non Executive Director (appointed 2008)
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 primarily of 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.
ASX Recommendation 2.1 of the CGC 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 three independent
non-executive directors (Alexander A. Hamill, Ian R. Neal and Ian P. Grier
AM), three non-executive directors (Paul J. Ramsay AO, Michael S. Siddle,
and Peter J. Evans FCA) and one executive director (Ian C. Audsley).
Although the Company has not complied with ASX CGC
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
having operated in these industries for up to 35 years.
20
corporAte GoVerNANce stAteMeNt
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 Paul J. Ramsay AO. While Mr Ramsay’s
role as Chairman means that the Company does not satisfy ASX
CGC Recommendation 2.2 (which states that the chair should be an
independent director), the Company believes that Mr Ramsay’s extensive
experience in the television and media industry, and in business
generally, is invaluable 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.
BOaRD COmpOSITION
Directors are appointed and removed in accordance with the Company’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. The
Remuneration and Nomination Committee considers the skills and
experience of nominees as required. 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 introduced new measures to evaluate the performance
of directors and a formal induction process for new directors and key
executives, which includes but is not limited to, new directors being
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, guidelines and procedures.
EThICaL CONDuCT
The Company promotes ethical and responsible behaviours for its
directors and employees through a Code of Conduct, which was
developed in accordance ASX CGC Recommendation 3.1, and a range of
supporting internal policies and guidelines that apply to all companies
within the Group. These guidelines 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 the Code of Conduct and guidelines governing ethical and law
abiding conduct.
The Code of Conduct is available to all staff and directors and is
published on the Company’s website.
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, these policies and
guidelines are published on the Company website.
DIvERSITy
The Group is committed to promoting a workplace that recognises
and embraces the skills, perspectives and experiences that people
bring to the Group through, among other things, their gender, age,
origin, ethnicity, religion, culture, disability, education, life experience,
work experience, personality, area of residence, marital status, carer
responsibilities and sexual orientation.
The Group recognises the many benefits arising from workplace
diversity. Drawing our workforce from a diverse pool allows us to recruit
the best talent to deliver our strategy. The promotion of gender diversity
encourages greater innovation, improves the Group’s corporate image
and reputation, enhances employee engagement and retention, and
creates value for our customers and shareholders.
During the current year the proportion of women in key executive
management positions was 18.0% (2012: 28.0%). As at 30 June 2013,
women represented 53.0% of the Group’s workforce (2012: 50.2%).
In 2012 the Group was assessed as compliant with the Equal Opportunity
for Women in the Workplace Act 2010.
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 performance rights, 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, which is available at
www.primemedia.com.au, outlines the key terms including “Closed
Periods” during which Restricted Persons and their associates are not
permitted to trade in Prime securities.
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 Audit and Risk Committee is responsible for assisting the Board
in discharging its responsibilities to safeguard the integrity of the
Company and the Group’s financial reporting and system of internal
control. A key function of the Audit and Risk Committee is to provide
appropriate advice and recommendations to the Board to assist the
Board to fulfil its corporate governance responsibilities in regard
to financial reporting, the internal control environment and audit
management across the Group. The Committee also provides the Board
with additional assurance regarding the reliability of financial information
for inclusion in the financial reports. 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 endeavours to meet 4 to 5 times each year.
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.
Prime media GrouP AnnuAl RepoRt 2013
21
corporAte GoVerNANce stAteMeNt
The Company has not complied with the ASX CGC Recommendation 4.2
as 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 40 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.
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 by the Company Secretary. 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.
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;
(5) The Company strives to communicate more effectively and has a
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; and
(6) The Board encourages full participation by shareholders at the
Annual General Meeting.
pRINCIpLE 7 – RECOgNISE aND maNagE RISK
The Board oversees the establishment, implementation and review of
the Group’s risk management practices and is responsible for ensuring
that the Group takes a proactive approach to 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.
The Board has established an Audit and Risk Committee, which is
responsible to the Board, for ensuring that the Group maintains
effective risk management and an internal compliance and control
framework. The Chief Executive Officer and the Executive Risk
Management Committee are tasked with implementing the
Company’s risk management framework and continuously improving
the internal control environment. The reporting of risk management
is a standard agenda item at all regular Audit and Risk Committee and
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;
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;
• 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 workplace 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 the Executive Risk Management Committee, 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
believes 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;
• change to the operating, market or regulatory environment as a result
of changes in government media policy;
impact of new media technologies;
the occurrence of force majeure events that may affect our significant
suppliers; and
increasing costs of operations, including labour costs.
•
•
•
22
corporAte GoVerNANce stAteMeNt
CEO aND CfO CERTIfICaTION
In accordance with section 295A of the Corporations Act, 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;
and
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 its charter which is published
on the Company website.
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 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.
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 ASX Listing Rules, performance rights 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 2013
23
coNsoLiDAteD stAteMeNt of coMpreheNsiVe iNcoMe
for the YeAr eNDeD 30 JuNe 2013
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
Sales, marketing and administration expenses
Depreciation, amortisation and impairment expenses
Finance costs
Share of associate losses
profit from continuing operations before income tax
Income tax expense
profit for the year from continuing operations
DISCONTINuINg OpERaTIONS
Loss after tax for the year from discontinued operations
profit for the year
Other comprehensive income
− Net gain on available for sale financial asset
− Income tax relating to the components of other comprehensive income
Other comprehensive income for the year, net of tax
Total comprehensive income for the year, net of tax
profit attributable to:
Owners of the Parent
Total comprehensive income attributable to:
Owners of the Parent
Basic Earnings per share (cents per share)
− profit for the year
− profit from continuing operations
Diluted Earnings per share (cents per share)
− profit for the year
− profit from continuing operations
NOTES
5(a)
5(a)
5(a)
5(b)
14(d)
6(b)
8(b)
9
9
9
CONSOLIDaTED
2013
$’000
2012
$’000
253,241
332
3,688
257,261
(133,979)
123,282
(42,455)
(16,274)
(9,165)
(7,965)
(1,548)
45,875
(12,267)
33,608
248,890
693
3,151
252,734
(128,164)
124,570
(42,521)
(16,942)
(10,378)
(10,486)
(1,198)
43,045
(12,235)
30,810
(13,397)
20,211
(3,128)
27,682
499
–
499
–
–
–
20,710
27,682
20,710
20,710
20,710
20,710
5.5
9.2
5.5
9.2
27,682
27,682
27,682
27,682
7.6
8.4
7.6
8.4
24
coNsoLiDAteD stAteMeNt of fiNANciAL positioN
As At 30 JuNe 2013
aSSETS
CuRRENT aSSETS
Cash and short term deposits
Trade and other receivables
Intangible assets
Other assets
Assets classified as held for sale
Total Current assets
NON-CuRRENT aSSETS
Receivables
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
Liabilities directly associated with assets classified as held for sale
Total Current Liabilities
NON-CuRRENT LIaBILITIES
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
NOTES
CONSOLIDaTED
2013
$’000
2012
$’000
11
12
18
13
12
16
17
6
18
13
19
20
6
21
24
20
21
22
23
23
10,326
57,937
400
1,303
69,966
25,228
95,194
178
2,507
43,595
6,111
196,894
1,183
250,468
345,662
37,474
252
7,210
1,432
–
46,368
2,497
48,865
142,023
394
142,417
191,282
154,380
8,916
61,299
400
2,057
72,672
–
72,672
171
2,007
49,986
7,676
227,015
1,265
288,120
360,792
61,384
1,629
10,235
2,567
573
76,388
–
76,388
123,896
481
124,377
200,765
160,027
310,262
919
(156,801)
154,380
154,380
310,262
35
(150,270)
160,027
160,027
Prime media GrouP AnnuAl RepoRt 2013
25
coNsoLiDAteD stAteMeNt of chANGes iN equitY
As At 30 JuNe 2013
ISSuED
CapITaL
$’000
aCCumuLaTED
LOSSES
$’000
EmpLOyEE
BENEfITS
RESERvE
$’000
gENERaL
RESERvE
$’000
TOTaL paRENT
ENTITy
INTEREST
$’000
NON-
CONTROLLINg
INTEREST
$’000
at 1 July 2012
Profit for the period
Other comprehensive income
Total comprehensive income
and expense for the period
Transactions with equity
holders in their capacity as
equity holders:
Share based payments
Dividends on ordinary shares
310,262
–
–
–
–
–
at 30 June 2013
310,262
As At 30 JuNe 2012
(150,270)
20,211
–
20,211
2,822
(2,787)
–
–
–
–
499
499
160,027
20,211
499
20,710
–
(26,742)
(156,801)
385
–
3,207
–
–
(2,288)
385
(26,742)
154,380
–
–
–
–
–
–
–
ISSuED
CapITaL
$’000
aCCumuLaTED
LOSSES
$’000
EmpLOyEE
BENEfITS
RESERvE
$’000
gENERaL
RESERvE
$’000
TOTaL paRENT
ENTITy
INTEREST
$’000
NON-
CONTROLLINg
INTEREST
$’000
at 1 July 2011
Profit for the period
Other comprehensive income
Total comprehensive income
and expense for the period
Transactions with equity
holders in their capacity as
equity holders:
Share based payments
Dividends on ordinary shares
310,262
–
–
–
–
–
at 30 June 2012
310,262
(157,071)
27,682
–
27,682
–
(20,881)
(150,270)
2,709
(2,787)
–
–
–
113
–
2,822
–
–
–
–
–
(2,787)
153,113
27,682
–
27,682
113
(20,881)
160,027
–
–
–
–
–
–
–
TOTaL
$’000
160,027
20,211
499
20,710
385
(26,742)
154,380
TOTaL
$’000
153,113
27,682
–
27,682
113
(20,881)
160,027
26
coNsoLiDAteD stAteMeNt of cAsh fLows
for the YeAr eNDeD 30 JuNe 2013
NOTES
CONSOLIDaTED
2013
$’000
2012
$’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
11
CaSh fLOwS fROm INvESTINg aCTIvITIES
Proceeds from sale of property, plant and equipment
Purchase of property, plant & equipment and intangible assets
Proceeds from sale of available-for-sale financial assets
Proceeds from sale of business operations – deferred contingent consideration
Proceeds from/Payment of deferred settlement for acquisition of subsidiaries and related
business assets
Loan funds to related entities
NET CaSh fLOwS (uSED IN) INvESTINg aCTIvITIES
CaSh fLOwS fROm fINaNCINg aCTIvITIES
Proceeds from borrowings
Repayments of borrowings
Debt facility establishment fees
Finance lease liability payments
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
11
302,741
(257,356)
341
(8,314)
255
(14,942)
22,725
44
(9,203)
215
352
–
(2,352)
(10,944)
167,500
(149,500)
–
(1,629)
(26,742)
(10,371)
1,410
8,916
–
10,326
295,709
(230,506)
725
(10,960)
735
(7,165)
48,538
50
(13,195)
2,785
–
1,049
(290)
(9,601)
217,000
(243,000)
(1,989)
(582)
(20,881)
(49,452)
(10,515)
19,374
57
8,916
Prime media GrouP AnnuAl RepoRt 2013
27
Notes to the fiNANciAL stAteMeNts
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
for the YeAr eNDeD 30 JuNe 2013
1 CORpORaTE INfORmaTION
The consolidated financial report of Prime Media Group Limited (the
“Company”) for the year ended 30 June 2013 was authorised for issue in
accordance with a resolution of the directors on 28 August 2013.
Prime Media Group Limited is a company limited by shares incorporated
in Australia whose shares are publicly traded on the Australian
Securities Exchange.
(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 nature of the operations and principal activities of the Group are
described in the Directors’ Report.
The financial report is presented in Australian dollars and all values are
rounded to the nearest thousand dollars ($’000) unless otherwise stated.
2
SummaRy Of SIgNIfICaNT
aCCOuNTINg pOLICIES
TaBLE Of CONTENTS
(a) Basis of preparation
(b) Statement of compliance with IFRS
(c) New accounting standards and interpretations
(d) Basis of consolidation
(e) Business combinations and goodwill
(f)
Investments in associates
(g) Foreign currency translation
(h) Revenue recognition
(i) Government grants
(j) Taxes
(k) Non-current assets held for sale and discontinued operations
(l) Property, plant and equipment
(m) Leases
(n) Borrowing costs
(o)
Intangible assets
(p) Financial Instruments – initial recognition and
subsequent measurement
(q) Derivative financial instruments and hedging
(r)
Impairment of non-financial assets
(s) Cash and short term deposits
(t) Provisions
(u) Share-based payments
(v) Trade and other receivables
(w) Trade and other payables
(x) Contributed equity
(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 2012:
• AASB 112 Income Taxes (Amendment) – Deferred Taxes: Recovery of
Underlying Assets; and
Improvements to AASBs (May 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 112 Income Taxes (amendmenT) – deferred
Taxes: recovery of UnderlyIng asseTs
The Amendment clarified the determination of deferred tax on
investment property measured at fair value and introduces a rebuttable
presumption that deferred tax on investment property measured using
the fair value model in AASB 140 should be determined on the basis
that its carrying amount will be recovered through sale. It includes
the requirement that deferred tax on non-depreciable assets that are
measured using the revaluation model in AASB 116 should always be
measured on a sale basis. The amendment is effective for annual periods
beginning on or after 1 January 2012 and has no effect on the Group’s
financial position, performance or disclosures.
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
2013. These are outlined in the table below.
28
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
REfERENCE
TITLE
SummaRy
AASB 10
Consolidated
Financial
Statements
AASB 11
Joint
Arrangements
AASB 12
Disclosure of
Interests in
Other Entities
AASB 13
Fair Value
Measurement
AASB 119
Employee Benefits
AASB 10 establishes a new control model that applies to
all entities. It replaces parts of AASB 127 Consolidated
and Separate Financial Statements dealing with the
accounting for consolidated financial statements and
UIG-112 Consolidation – Special Purpose Entities.
The new control model broadens the situations when an
entity is considered to be controlled by another entity and
includes new guidance for applying the model to specific
situations, including when acting as a manager may give
control, the impact of potential voting rights and when
holding less than a majority voting rights may give control.
Consequential amendments were also made to this and
other standards via AASB 2011-7 and AASB 2012-10.
AASB 11 replaces AASB 131 Interests in Joint Ventures
and UIG-113 Jointly-controlled Entities – Non-monetary
Contributions by Ventures.
AASB 11 uses the principle of control in AASB 10 to define
joint control, and therefore the determination of whether
joint control exists may change. In addition it removes
the option to account for jointly controlled entities (JCEs)
using proportionate consolidation. Instead, accounting
for a joint arrangement is dependent on the nature of the
rights and obligations arising from the arrangement. Joint
operations that give the venturers a right to the underlying
assets and obligations themselves are accounted for by
recognising the share of those assets and obligations.
Joint ventures that give the venturers a right to the net
assets are accounted for using the equity method.
Consequential amendments were also made to this and
other standards via AASB 2011-7, AASB 2010-10 and
amendments to AASB 128.
AASB 12 includes all disclosures relating to an entity’s
interests in subsidiaries, joint arrangements, associates
and structured entities. New disclosures have been
introduced about the judgments made by management
to determine whether control exists, and to require
summarised information about joint arrangements,
associates, structured entities and subsidiaries with non-
controlling interests.
AASB 13 establishes a single source of guidance for
determining the fair value of assets and liabilities. AASB
13 does not change when an entity is required to use fair
value, but rather, provides guidance on how to determine
fair value when fair value is required or permitted.
Application of this definition may result in different fair
values being determined for the relevant assets.
AASB 13 also expands the disclosure requirements for
all assets or liabilities carried at fair value. This includes
information about the assumptions made and the
qualitative impact of those assumptions on the fair
value determined.
Consequential amendments were also made to other
standards via AASB 2011-8.
The main change introduced by this standard is to revise
the accounting for defined benefit plans. The amendment
removes the options for accounting for the liability, and
requires that the liabilities arising from such plans are
recognised in full with actuarial gains and losses being
recognised in other comprehensive income. It also revised
the method of calculating the return on plan assets.
The revised standard changes the definition of short-term
employee benefits. The distinction between short-term
and other long-term employee benefits is now based on
whether the benefits are expected to be settled wholly
within 12 months after the reporting date.
Consequential amendments were also made to other
standards via AASB 2011-10.
appLICaTION
DaTE Of
STaNDaRD
ImpaCT ON gROup
fINaNCIaL REpORT
appLICaTION
DaTE fOR
gROup
1 January 2013 The Group has
1 July 2013
determined that
the amendment
will not have a
material impact.
1 January 2013 The Group has
1 July 2013
determined that
the amendment
will not have a
material impact.
1 January 2013 The Group has not
1 July 2013
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
1 July 2013
determined that
the amendment
will not have a
material impact.
1 January 2013 The Group has
1 July 2013
determined that
the amendment
will not have a
material impact.
Prime media GrouP AnnuAl RepoRt 2013
29
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
2
SummaRy Of SIgNIfICaNT aCCOuNTINg pOLICIES (CONTINUED)
REfERENCE
TITLE
SummaRy
AASB 2012-2 principally amends AASB 7 Financial
Instruments: Disclosures to require disclosure of the effect
or potential effect of netting arrangements. This includes
rights of set-off associated with the entity’s recognised
financial assets and liabilities on the entity’s financial
position, when the offsetting criteria of AASB 132 are
not all met.
AASB 2012-3 adds application guidance to AASB
132 Financial Instruments: Presentation to address
inconsistencies identified in applying some of the
offsetting criteria of AASB 132, including clarifying the
meaning of “currently has a legally enforceable right of
set-off” and that some gross settlement systems may be
considered equivalent to net settlement.
This standard sets out amendments to International
Financial Reporting Standards (IFRSs) and the related
bases for conclusions and guidance made during the
International Accounting Standards Board’s Annual
Improvements process. These amendments have not yet
been adopted by the AASB.
The following items are addressed by this standard:
IFRS 1 First-time Adoption of International Financial
Reporting Standards
• Repeated application of IFRS 1
• Borrowing costs
IAS 1 Presentation of Financial Statements
• Clarification of the requirements for
comparative information
IAS 16 Property, Plant and Equipment
• Classification of servicing equipment
IAS 32 Financial Instruments: Presentation
• Tax effect of distribution to holders of
equity instruments
IAS 34 Interim Financial Reporting
•
Interim financial reporting and segment information
for total assets and liabilities
AASB 2012-3 adds application guidance to AASB
132 Financial Instruments: Presentation to address
inconsistencies identified in applying some of the
offsetting criteria of AASB 132, including clarifying the
meaning of "currently has a legally enforceable right of
set-off" and that some gross settlement systems may be
considered equivalent to net settlement.
AASB 2012-5 makes amendments resulting from the 2009-
2011 Annual Improvements Cycle. The standard addresses
a range of improvements, including the following:
• Repeat application of AASB 1 is permitted (AASB 1)
• Clarification of the comparative information
requirements when an entity provides a third balance
sheet (AASB 101 Presentation of Financial Statements).
AASB 2012-9 amends AASB 1048 Interpretation of
Standards to evidence the withdrawal of Australian
Interpretation 1039 Substantive Enactment of Major Tax
Bills in Australia.
AASB 2012-2
AASB 2012-2
Amendments
to Australian
Accounting
Standards –
Disclosures
– Offsetting
Financial Assets
and Financial
Liabilities
Amendments
to Australian
Accounting
Standards –
Offsetting
Financial Assets
and Financial
Liabilities
Annual
Improvements
2009–2011
Cycle
Annual
Improvements to
IFRSs 2009–2011
Cycle
AASB 2012-3
AASB 2012-5
AASB 2012-9
Amendments
to Australian
Accounting
Standards –
Offsetting
Financial Assets
and Financial
Liabilities
Amendments
to Australian
Accounting
Standards arising
from Annual
Improvements
2009–2011 Cycle
Amendment
to AASB 1048
arising from
the withdrawal
of Australian
Interpretation 1039
30
appLICaTION
DaTE Of
STaNDaRD
ImpaCT ON gROup
fINaNCIaL REpORT
appLICaTION
DaTE fOR
gROup
1 January 2013 The Group has not
1 July 2013
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
1 July 2013
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
1 July 2013
determined that
the amendment
will not have a
material impact.
1 January 2014 The Group has not
1 July 2013
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
1 July 2013
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
1 July 2013
yet determined
the full extent of
the impact of the
amendments, but
does not believe
it will have a
material impact
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
REfERENCE
TITLE
SummaRy
appLICaTION
DaTE Of
STaNDaRD
ImpaCT ON gROup
fINaNCIaL REpORT
appLICaTION
DaTE fOR
gROup
AASB 2011-4
AASB 1053
Amendments
to Australian
Accounting
Standards to
Remove Individual
Key Management
Personnel
Disclosure
Requirements
[AASB 124]
Application of
Tiers of Australian
Accounting
Standards
1 July 2013
1 July 2013
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
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
This amendment deletes from AASB 124 individual key
management personnel disclosure requirements for
disclosing entities that are not companies. It also removes
the individual KMP disclosure requirements for all
disclosing entities in relation to equity holdings, loans and
other related party transactions.
1 July 2013
1 July 2013
This standard establishes a differential financial reporting
framework consisting of two tiers of reporting requirements
for preparing general purpose financial statements:
(a) Tier 1: Australian Accounting Standards
(b) Tier 2: Australian Accounting Standards – Reduced
Disclosure Requirements
Tier 2 comprises the recognition, measurement and
presentation requirements of Tier 1 and substantially
reduced disclosures corresponding to those requirements.
The following entities apply Tier 1 requirements in
preparing general purpose financial statements:
(a) For-profit entities in the private sector that have public
accountability (as defined in this standard)
(b) The Australian Government and State, Territory and
Local governments
The following entities apply either Tier 2 or Tier 1
requirements in preparing general purpose financial
statements:
(a) For-profit private sector entities that do not have public
accountability
(b) All not-for-profit private sector entities
(c) Public sector entities other than the Australian
Government and State, Territory and Local
governments.
Consequential amendments to other standards to
implement the regime were introduced by AASB 2010-2,
2011-2, 2011-6, 2011-11, 2012-1, 2012-7 and 2012-11.
Prime media GrouP AnnuAl RepoRt 2013
31
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
2
SummaRy Of SIgNIfICaNT aCCOuNTINg pOLICIES (CONTINUED)
appLICaTION
DaTE Of
STaNDaRD
ImpaCT ON gROup
fINaNCIaL REpORT
appLICaTION
DaTE fOR
gROup
1 January 2015 The Group has not
1 July 2015
yet 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. It was further amended
by AASB 2010-7 to reflect amendments to the accounting
for financial liabilities.
These requirements improve and simplify the approach
for classification and measurement of financial assets
compared with the requirements of AASB 139. The main
changes are described below.
(a) Financial assets that are debt instruments will be
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.
(b) 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.
(c) 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.
(d) Where the fair value option is used for financial liabilities
the change in fair value is to be 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.
Further amendments were made by AASB 2012-6 which
amends the mandatory effective date to annual reporting
periods beginning on or after 1 January 2015. AASB 2012-
6 also modifies the relief from restating prior periods by
amending AASB 7 to require additional disclosures on
transition to AASB 9 in some circumstances.
Consequential amendments were also made to other
standards as a result of AASB 9, introduced by AASB 2009-
11 and superseded by AASB 2010-7 and 2010-10.
32
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
(D) BaSIS Of CONSOLIDaTION
The consolidated financial statements comprise the financial statements
of Prime Media Group Limited and its subsidiaries (as outlined in
Note 31) as at and for the year ended 30 June 2013. Interests in
associates are equity accounted and are not part of the consolidated
Group (see Note 14).
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
obtained by 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 dividend payments
from subsidiaries, the parent will assess whether any indicators of
impairment of the carrying value of the investment in the subsidiary
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)).
The difference between the above items and fair value of the
consideration (including the fair value of any pre-existing investment in
the acquiree) is goodwill or a discount on acquisition.
After 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 that are
expected to benefit from the combination, irrespective of whether other
assets or liabilities of the acquiree are assigned to those units.
Where goodwill forms part of a cash generating unit and part of the
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 circumstance is measured based
on the relative values of the operation disposed of and the portion of the
cash generating unit retained.
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.
Total comprehensive income within a subsidiary is 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; and
reclassifies the parent’s share of components previously recognised
in other comprehensive income to profit or loss, or retained earnings,
as appropriate.
(E) BuSINESS COmBINaTIONS aND gOODwILL
Business combinations are accounted for using the acquisition
method. The cost of acquisition is measured as the aggregate of the
consideration transferred, measured at acquisition date fair value and the
amount of any non-controlling interest in the acquiree. For each business
combination, the Group elects whether it 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 costs incurred are
expensed 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 and
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 that are 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.
Subsequent settlement is accounted for within equity. In instances
where the contingent consideration does not fall within the scope of
AASB 139, it is measured in accordance with the appropriate AASB. If the
contingent consideration is classified as equity, it will not be remeasured
and subsequent settlement is accounted for within equity.
Goodwill is initially measured at cost, being the excess of the aggregate
of the consideration transferred and the amount recognised for non-
controlling interest over the net identifiable assets acquired and liabilities
assumed. If this consideration is lower than the fair value of the net assets
of the subsidiary acquired, the difference is recognised in profit or loss.
After 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 that are
expected to benefit from the combination, irrespective of whether other
assets or liabilities of the acquiree are assigned to those units.
Where goodwill forms part of a cash-generating unit and part of the
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 circumstance is measured based
on the relative values of the operation disposed of and the portion of the
cash-generating unit retained.
(f) INvESTmENTS IN aSSOCIaTES
The Group’s investments in its associates are accounted for using the
equity method. The associates are entities in which the Group has
significant influence.
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 neither amortised nor individually tested
for impairment.
Prime media GrouP AnnuAl RepoRt 2013
33
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
2
SummaRy Of SIgNIfICaNT aCCOuNTINg pOLICIES (CONTINUED)
The income statement reflects the Group’s share of the results of
operations of the associate. When there has been a change recognised
directly in the equity of the associate, the Group recognises its share
of any changes and discloses this, when applicable, in the statement
of changes in equity. Unrealised gains and losses resulting from
transactions between the Group and the associate are eliminated to the
extent of the interest in the associate.
The Group’s share of profit or loss of an associate is shown on the face
of the income statement and represents profit or loss after tax and non
controlling interests in the subsidiaries of the associate. The financial
statements of the associates are prepared for the same reporting period
as the Group. When necessary, adjustments are made to bring the
accounting policies in line with those of the Group.
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. At each reporting date, the Group
determines 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 associate losses” in the income statement.
Upon loss of significant influence over the associate, the Group measures
and recognises any retaining investment at its fair value. Any difference
between the carrying amount of the associate upon loss of significant
influence and the fair value of the retained investment and proceeds
from disposal is recognised in profit or loss.
(g) fOREIgN CuRRENCy TRaNSLaTION
The Group’s consolidated financial statements are presented in
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 Group uses
the direct method of consolidation and has elected to recycle the gain or
loss that arises from using this method.
(i) TRaNSaCTIONS aND BaLaNCES
Transactions in foreign currencies are initially recorded by the Group
entities at their respective functional currency spot rates at the date the
transaction first qualifies for recognition. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the functional
currency spot rate of exchange at the reporting date.
All differences arising on settlement or translation of monetary items are
taken to the income statement.
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 measured at fair value in a
foreign currency are translated using the exchange rate at the date when
the fair value is determined. The gain or loss arising on retranslation
of non-monetary items is treated in line with the recognition of gain or
loss on change in fair value of the item (i.e. translation differences on
items whose fair value gain or loss is recognised in other comprehensive
income or profit or loss are also recognised in other comprehensive
income or profit or loss, respectively).
Any goodwill arising on the acquisition of a foreign operations and any
fair value adjustments to the carrying amounts of assets and liabilities
arising on the acquisition are treated as assets and liabilities of the
foreign operation and translated at the spot rate of exchange at the
reporting date.
(ii) gROup COmpaNIES
On consolidation the assets and liabilities of foreign operations are
translated into the presentation currency of Prime Media Group Limited
at the rate of exchange prevailing at the reporting date and their income
statements are translated at the weighted average exchange rates for the
period. The exchange differences arising on translation for consolidation
are recognised in other comprehensive income. On disposal of a foreign
operation, the component of other comprehensive income relating to
that particular foreign operation is recognised in the income statement.
(h) REvENuE RECOgNITION
Revenue is recognised to the extent it is probable that the economic
benefits will flow to the Group and the revenue can be reliably measured,
regardless of when the payment is being made. Revenue is measured
at the fair value of the consideration received or receivable, taking into
account contractually defined terms of payment and excluding taxes or
duty. The specific recognition criteria described below 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 INCOmE
For all financial instruments measured at amortised cost and interest
bearing financial assets classified as available for sale, interest income
or expense is recorded using the effective interest rate, which is the
rate that exactly discounts the estimated future cash payments or
receipts through the expected life of the financial instrument or a shorter
period, where appropriate, to the net carrying amount of the financial
asset or liability.
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.
(I) gOvERNmENT gRaNTS
Government grants are recognised where there is reasonable assurance
that the grant will be received and all attached conditions have
been complied with.
When the grant relates to an expense item, it is recognised as income on
a systematic basis over the periods that the costs, which it is intended to
compensate, are expensed.
When the grant relates to an asset, it is recognised as deferred income
and released to income in equal amounts over the expected useful life
of the related asset. When the Group receives non-monetary grants, the
assets and the grant are recorded at nominal amounts and released to
profit or loss over the expected useful life in a pattern of consumption of
the benefit of the underlying asset by equal annual instalments.
(J) TaxES
(i) CuRRENT INCOmE Tax
Current tax assets and liabilities for the current period 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.
34
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
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
(ii) DEfERRED INCOmE Tax
Deferred tax is provided using the liability method on temporary
differences at the reporting date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes at
the reporting date.
Deferred income tax liabilities are recognised for all taxable temporary
differences except:
• when the deferred tax liability arises from the initial recognition
of goodwill or of an asset or liability in a transaction that is not a
business combination and that, 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, associates and interests in joint ventures,
when the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not
reverse in the foreseeable future.
•
Deferred tax assets are recognised for all deductible temporary
differences, the carry forward of unused tax credits and any unused
tax losses. Deferred tax assets are recognised to the extent that it
is probable that taxable profit will be available against which the
deductible temporary differences and the carry forward of unused tax
credits and unused tax losses can be utilised, except:
• when the deferred 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
in respect of deductible temporary differences associated with
investments in subsidiaries, associates and interests in joint
ventures, deferred tax assets are recognised only to the extent
that it is probable that the temporary differences will reverse in the
foreseeable future and taxable profit will be available against which
the temporary differences can be utilised.
(K) NON-CuRRENT aSSETS hELD fOR SaLE aND
DISCONTINuED OpERaTIONS
The Group classifies non-current assets and disposal groups as held
for sale if their carrying amounts will be recovered principally through a
sale transaction rather than through continuing use. Non-current assets
and disposal groups classified as held for sale are measured at the lower
of their carrying amount and fair value less costs to sell. The criteria for
held for sale classification is regarded as met only when the sale is highly
probable and the asset or disposal group is available for immediate sale
in its present condition. Management must be committed to the sale,
which should be expected to qualify for recognition as a completed sale
within one year from the date of classification.
Discontinuing operations are excluded from the results of continuing
operations and are presented as a single amount as profit or loss after
tax from discontinued operations in the income statement.
Property, plant and equipment and intangible assets once classified as
held for sale are not depreciated or amortised.
(L) pROpERTy, pLaNT aND EQuIpmENT
Plant and equipment is stated at cost, net of accumulated depreciation
and accumulated impairment losses, if any. Such cost includes the cost
of replacing part of the property, plant and equipment if the recognition
criteria are met. When significant parts of property, plant and equipment
are required to be replaced at intervals, the Group recognises such
parts as individual assets with specific useful lives and depreciates
them accordingly. All other repairs and maintenance are recognised in
profit or loss as incurred. The present value of the expected cost for the
decommissioning of an asset after its use is included in the cost of the
respective asset if the recognition criteria for a provision are met. Refer
to significant accounting judgements, estimates and assumptions (Note
3) and provisions (Note 21) for further information about the recorded
decommissioning provision.
Land and buildings are measured at cost less accumulated
depreciation on buildings.
Depreciation is calculated 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:
– Land:
– Freehold buildings:
– Leasehold improvements:
– Plant and equipment:
– Plant and equipment under lease:
– Motor vehicles:
Not depreciated
40 years
The lease term
3 to 15 years
5 to 15 years
6 years
An item of property, plant and equipment and any significant part initially
recognised is derecognised upon disposal or when no 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
the income statement when the asset is derecognised.
The residual values, useful lives and methods of depreciation of
property, plant and equipment are reviewed at each financial year end
and adjusted prospectively, if appropriate.
(m) 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.
(i) gROup aS a LESSEE
Finance leases that transfer substantially all of the risks and benefits
incidental to ownership of the leased item to the Group, are capitalised
at commencement 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 apportioned 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 the income statement.
A leased asset is depreciated over the useful life of the asset. However, if
there is no reasonable certainty that the Group will obtain ownership by
the end of the lease term, the asset is depreciated over the shorter of the
estimated useful life of the asset and the lease term.
Operating lease payments are recognised as an operating expense in
the income statement on a straight-line basis over the lease term.
(ii) gROup aS a LESSOR
Leases in which the Group does not transfer 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.
(N) BORROwINg COSTS
Borrowing costs directly attributable to the acquisition, construction or
production of 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 the asset. All other borrowing costs are expensed in the periods in
which they occur. Borrowing costs consist of interest and other costs that
an entity incurs in connection with the borrowing of funds.
Prime media GrouP AnnuAl RepoRt 2013
35
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
2
SummaRy Of SIgNIfICaNT aCCOuNTINg pOLICIES (CONTINUED)
(O) INTaNgIBLE aSSETS
Intangible assets acquired separately are measured on initial recognition
at cost. The cost of intangible assets acquired in a business combination
is their fair value as at the date of acquisition. Following initial
recognition, intangible assets are carried at cost less any accumulated
amortisation and accumulated impairment losses.
The useful lives of intangible assets are either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic
life and assessed for impairment whenever there is an indication that
the intangible asset may be impaired. The amortisation period and
the amortisation method for an intangible asset with a finite useful
life is reviewed at least at the end of each reporting period. Changes
in the expected useful life or the expected pattern of consumption
of future economic benefits embodied in the asset are accounted for
by changing the amortisation period or method, as appropriate, and
are treated as changes in accounting estimates. The amortisation
expense on intangible assets with finite lives is recognised in the income
statement in the expense category consistent with the function of the
intangible assets.
Intangible assets with indefinite useful lives are not amortised, but
are tested for impairment annually either individually or at the cash-
generating unit level. The assessment of indefinite life is reviewed
annually to determine whether the indefinite life continues to be
supportable. If not, the change in the useful life from indefinite to finite is
accounted for on a prospective basis.
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 the income statement
when the asset is derecognised.
Business software, development and websites
Business software, development and website costs are capitalised based
on management’s judgement that key milestones for the developments
have been achieved. In determining the amounts to be capitalised,
management makes assumptions regarding the future cash to be
generated from the asset, discount rates to be applied and the expected
period of benefits.
television and radio Broadcast Licences, acquired both
separately and as part of a business combination
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.
A summary of the policies applied to the Group’s intangible
assets is as follows:
TELEvISION aND
RaDIO BROaDCaST
LICENCES
BuSINESS SOfTwaRE,
DEvELOpmENT, wEBSITES,
pROgRam BROaDCaST RIghTS aND
INfRaSTRuCTuRE aCCESS LICENCE
useful lives:
Indefinite
Finite
amortisation
method used:
Not amortised
or revalued
Amortised on a straight-line basis
over the period of the expected
future benefit
Internally
generated or
acquired:
Acquired
Internally generated / Acquired
(p) fINaNCIaL INSTRumENTS – INITIaL
RECOgNITION aND SuBSEQuENT
mEaSuREmENT
(i) fINaNCIaL aSSETS
initial recognition and measurement
Investments and financial assets in the scope of AASB 139 are classified
as 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 Group determines the classification of its
financial assets at initial recognition.
All financial assets are recognised initially at fair value plus transaction
costs, except in the case of financial assets recorded at fair value through
profit or loss.
Purchases or 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.
subsequent Measurement
The subsequent measurement of financial assets depends on their
classification as described below:
financial assets at fair value through profit and loss
Financial assets at fair value through profit or loss includes financial
assets held for trading and financial assets designated upon initial
recognition at fair value through profit or loss. Financial assets are
classified as held for trading if they are acquired for the purpose of
selling or repurchasing in the near term. Derivatives, including separated
embedded derivatives are also classified as held for trading unless they
are designated as effective hedging instruments as defined by AASB139.
Financial assets at fair value through profit and loss are carried in the
statement of financial position at fair value with net changes in fair value
presented as finance costs (negative net changes in fair value) or finance
income (positive net changes in fair value) in the income statement.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed
or determinable payments that are not quoted in an active market.
After initial measurement, such assets are subsequently measured at
amortised cost using the effective interest method, less impairment.
Amortised cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part of the
effective interest rate. The effective interest rate amortisation is included
in finance income in the income statement. The losses arising from
impairment are recognised in the income statement in finance costs for
loans and in cost of sales or other operating expenses for receivables.
Available-for-sale financial investments
Available-for-sale financial investments include equity investments and
debt securities. Equity investments classified as available-for-sale are
those that are neither classified as held for trading nor designated at fair
value through profit or loss. Debt securities in this category are those
that are intended to be held for an indefinite period of time and that may
be sold in response to needs for liquidity or response to changes in the
market conditions.
After initial measurement, available-for-sale financial investments are
subsequently measured at fair value with unrealised gains or losses
recognised as other comprehensive income in reserves until the
investment is derecognised, at which time the cumulative gain or loss is
recognised in other operating income, or the investment is determined
to be impaired, when the cumulative loss is reclassified from reserves
to the income statement in finance costs. Interest earned whilst holding
available-for-sale financial investments is reported as interest income
using the effective interest rate method.
36
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
The Group evaluates whether the ability and intention to sell its
available-for-sale financial assets in the near term is still appropriate.
When, in rare circumstances, the Group is unable to trade these financial
assets due to inactive markets and management’s intention to do so
significantly changes in the foreseeable future, the Group may elect to
reclassify these financial assets. Reclassification to loans and receivables
is permitted when the financial assets meet the definition of loans and
receivables and the Group has the intent and ability to hold these assets
for the foreseeable future or until maturity. Reclassification to the held to
maturity category is permitted only when the entity has the ability and
intention to hold the financial asset accordingly.
For a financial asset reclassified from the available-for-sale category, the
fair value carrying amount at the date of reclassification becomes its new
amortised cost and any previous gain or loss on the asset that has been
recognised in equity is amortised to profit or loss over the remaining
life of the investment using the effective interest rate. Any difference
between the new amortised cost and the maturity amount is also
amortised over the remaining life of the asset using the effective interest
rate. If the asset is subsequently determined to be impaired, then the
amount recorded in equity is reclassified to the income statement.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of
a group of similar financial assets) is derecognised when:
•
•
the rights to receive cash flows from the asset have expired;
the Group has transferred its rights to receive cash flows from the
asset or has assumed an obligation to pay the received cash flows
in full without material delay to a third party under a ‘pass through’
arrangement; and either (a) the Group has transferred substantially
all the risks and rewards of the asset, or (b) the Group 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 or has entered into a pass-through arrangement, it evaluates if and
to what extent it has retained the risks and rewards of ownership.
When it 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. In that case, the Group also recognises an associated liability. The
transferred asset and the associated liability are measured on a basis
that reflects the rights and obligations that the Group has retained.
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.
(ii) ImpaIRmENT Of fINaNCIaL aSSETS
The Group assesses, at each reporting date, whether there is objective
evidence that a financial asset or group of financial assets is impaired.
A financial asset or group of financial assets is deemed to be impaired
if there is objective evidence of impairment as a result of one or more
events that has occurred after the initial recognition of the asset (an
incurred ‘loss event’) and that loss event has an impact on the estimated
future cash flows of the financial asset or the group of financial assets
that can be reliably estimated. Evidence of impairment may include
indications that the debtors or a group of debtors is experiencing
significant financial difficulty, default or delinquency in interest or
principal payments, the probability that they will enter bankruptcy or
other financial reorganisation and observable data indicating that there
is a measurable decrease in the estimated future cash flows, such as
changes in arrears or economic conditions that correlate with defaults.
financial assets carried at amortised cost
For financial assets carried at amortised cost, the Group first assesses
whether objective evidence of impairment exists individually for financial
assets that are individually significant, and collectively for financial
assets that are not individually significant. If the Group determines that
no objective evidence of impairment exists for an individually assessed
financial asset, whether significant or not, it includes the asset in a group
of financial assets with similar credit risk characteristics and collectively
assesses them 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 there is objective evidence that an impairment loss 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 expected credit losses that have not yet been incurred).
The present value of the estimated future cash flows is discounted at the
financial asset’s original effective interest rate. If a loan has a variable
interest rate, the discount rate for measuring any impairment loss is the
current effective interest rate.
The carrying amount of the asset is reduced through the use of an
allowance account and the amount of the loss is recognised in profit or
loss. Interest income continues to be accrued on the reduced carrying
amount and is accrued using the rate of interest used to discount the
future cash flows for the purpose of measuring the impairment loss.
The interest income is recorded as part of finance income in the income
statement. Loans together with the associated allowance are written off
when there is no realistic prospect of future recovery and all collateral has
been realised or has been transferred to the Group. If, in a subsequent
year, the amount of the estimated impairment loss increases or decreases
because of an event occurring after the impairment was recognised,
the previously recognised impairment loss is increased or reduced by
adjusting the allowance account. If a future write-off is later recovered,
the recovery is credited to finance costs in the income statement.
Available-for-sale financial investments
For available-for-sale financial investments, the Group assesses at each
reporting date whether there is objective evidence that an investment or
a group of investments is impaired.
In the case of equity investments classified as available-for-sale,
objective evidence would include a significant or prolonged decline in
the fair value of the investment below its cost. ‘Significant’ is evaluated
against the original cost of the investment and ‘prolonged’ against the
period in which the fair value has been below its original cost. When
there is evidence of impairment, the cumulative loss – measured as
the difference between the acquisition cost and the current fair value,
less any impairment loss on that investment previously recognised in
the income statement – is removed from other comprehensive income
and recognised in the income statement. Impairment losses on equity
investments are not reversed through the income statement; increases
in their fair value after impairment are recognised directly in other
comprehensive income.
(iii) fINaNCIaL LIaBILITIES
initial recognition and measurement
Investments and financial liabilities within the scope of AASB 139 are
classified as financial liabilities at fair value through profit or loss, loans
and borrowings, or as derivatives designated as hedging instruments
in an effective hedge, as appropriate. The Group determines the
classification of its financial liabilities at initial recognition.
All financial liabilities are recognised initially at fair value and, in the case
of loans and borrowings, net of directly attributable transaction costs.
The Group’s financial liabilities include trade and other payables, loans
and borrowings and derivative financial instruments.
subsequent Measurement
The measurement of financial liabilities depends on their classification,
described as follows:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial
liabilities held for trading and financial liabilities designated upon initial
recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are acquired
for the purpose of selling in the near term. This category includes
derivative financial instruments entered into by the Group that are
not designated as hedging instruments in hedge relationships as
defined by AASB 139.
Prime media GrouP AnnuAl RepoRt 2013
37
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
2
SummaRy Of SIgNIfICaNT aCCOuNTINg pOLICIES (CONTINUED)
Gains or losses on liabilities held for trading are recognised in the
income statement.
Financial liabilities designated upon initial recognition at fair value
through profit and loss are designated at the initial date of recognition,
and only if the criteria in AASB 139 are satisfied. The Group has not
designated any financial liability as at fair value through profit or loss.
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the effective interest
method. Gains and losses are recognised in the income statement when
the liabilities are derecognised as well as through the effective interest
rate amortisation process.
Amortised cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part of the
effective interest rate. The effective interest rate amortisation is included
in finance costs in the income statement.
Derecognition
A financial liability is derecognised when the obligation under the liability
is discharged, 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 the income statement.
(iv) OffSETTINg Of fINaNCIaL INSTRumENTS
Financial assets and financial liabilities are offset and the net amount is
reported in the consolidated statement of financial position if there is a
currently enforceable legal right to offset the recognised amounts and
there is an intention to settle on a net basis, or to realise the assets and
settle the liabilities simultaneously.
(v) faIR vaLuE Of fINaNCIaL INSTRumENTS
The fair value of financial instruments that are traded in active markets at
each reporting date is determined by reference to quoted market prices
or dealer price quotations (bid price for long positions and ask price for
short positions), without any deduction for transaction costs.
For financial instruments not traded in an active market, the fair
value is determined using appropriate valuation techniques. Such
techniques include:
• using recent arm’s length market transactions;
•
reference to the current fair value of another instrument that is
substantially the same; and
• a discounted cash flow analysis or other valuation models.
(Q) DERIvaTIvE fINaNCIaL INSTRumENTS
aND hEDgINg
The Group uses derivative financial instruments, as necessary, such
as interest rate swaps to manage its risks associated with interest rate
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 the income statement.
The fair values of interest rate swap contracts are determined by
reference to market values for similar instruments.
(R) ImpaIRmENT Of NON-fINaNCIaL aSSETS
The Group assesses, at each reporting date, whether there is an
indication that an asset may be impaired. If any indication exists, or when
annual impairment testing for an asset is required, the Group estimates
the asset’s recoverable amount. An asset’s recoverable amount is the
higher of an asset’s or cash-generating units (CGU) fair value less costs
to sell and its value in use. Recoverable amount is determined for an
individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets.
When the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount.
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. In determining fair value less costs to sell, recent market
transactions are taken into account. If no such transactions can be
identified, an appropriate valuation model is used. These calculations
are corroborated by valuation multiples, quoted share prices for publicly
traded companies or other available fair value indicators.
The Group bases its impairment calculation on detailed budgets and
forecast calculations, which are prepared separately for each of the
Group’s CGUs to which the individual assets are allocated. These
budgets and forecast calculations generally cover a period of five years.
For longer periods, a long-term growth rate is calculated and applied to
project future cash flows after the fifth year.
Impairment losses of continuing operations are recognised in the
income statement in expense categories consistent with the function of
the impaired asset, except for a property previously revalued and the
revaluation was taken to other comprehensive income. In this case the
impairment is also recognised in other comprehensive income up to the
amount of any previous revaluation.
For assets excluding goodwill, an assessment is made at each reporting
date to determine whether there is an indication that previously
recognised impairment losses no longer exist or may have decreased.
If such indication exists, the Group estimates the assets or CGUs
recoverable amount. A previously recognised impairment loss is
reversed only if there has been a change in the assumptions used to
determine the asset’s recoverable amount since the last impairment
loss was recognised. The reversal is limited so that the carrying amount
of the asset does not exceed its recoverable amount, nor exceed the
carrying amount that would have been determined, net of depreciation,
had no impairment loss been recognised for the asset in prior years.
Such reversal is recognised in the income statement unless the asset is
carried at a revalued amount, in which case, the reversal is treated as a
revaluation increase.
gOODwILL
Goodwill is tested for impairment annually as at 30 June and when
circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable
amount of each CGU (or group of CGUs) to which the goodwill relates.
When the recoverable amount of the CGU is less than its carrying
amount, an impairment loss is recognised. Impairment losses relating to
goodwill cannot be reversed in future periods.
intangible assets
Intangible assets with indefinite useful lives are tested for impairment
annually as at 30 June either individually or at the CGU level, as
appropriate, and when circumstances indicate that the carrying value
may be impaired.
38
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
(S) CaSh aND ShORT TERm DEpOSITS
Cash and short-term deposits in the statement of financial position
comprise cash at banks and on hand and short-term deposits with a
maturity of three months or less. For the purpose of the consolidated
statement of cash flows, cash and short term deposits consist of
cash and short-term deposits as defined above, net of outstanding
bank overdrafts.
(T) pROvISIONS
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 income
statement net of any reimbursement.
pROvISION fOR aSSET DECOmmISSIONINg
The Group records a provision for decommissioning costs of analogue
transmitters and related assets. Decommissioning costs are provided
at the present value of expected costs to settle the obligation using
estimated cash flows and are recognised as part of the cost of the
particular asset. The cash flows are discounted at a current pre-tax
rate that reflects the risks specific to the decommissioning liability. The
unwinding of the discount is expensed as incurred and recognised in
the income statement as a finance cost. The estimated future costs of
decommissioning are reviewed annually and adjusted as appropriate.
Changes in the estimated future costs or in the discount rate applied are
added to or deducted from the cost of the asset.
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
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.
(u) ShaRE-BaSED paymENTS
Employees (including senior executives) of the Group receive
remuneration in the form of performance rights which are share-
based payment transactions, whereby employees render services as
consideration for equity instruments (equity-settled transactions).
EQuITy-SETTLED TRaNSaCTIONS
The cost of equity-settled transactions is recognised, together with a
corresponding increase in employee benefits reserves in equity, over the
period in which the performance and/or service conditions are fulfilled.
The cumulative expense recognised for equity-settled transactions at
each reporting date until the vesting date reflects the extent to which the
vesting period has expired and the Group’s best estimate of the number
of equity instruments that will ultimately vest. The income statement
expense or credit for a period represents the movement in cumulative
expense recognised as at the beginning and end of that period and is
recognised in employee benefits expense.
No expense is recognised for awards that do not ultimately vest,
except for equity-settled transactions for which vesting is conditional
upon a market or non-vesting condition. These are treated as vesting
irrespective of whether or not the market or non-vesting condition
is satisfied, provided that all other performance and/or service
conditions are satisfied.
When the terms of an equity-settled transaction award are modified,
the minimum expense recognised is the expense as if the terms had not
been modified, if the original terms of the award are met. An additional
expense is recognised for any modification that increases the total fair
value of the share-based payment transaction, or is otherwise beneficial
to the employee, as measured at the date of modification.
When 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. This includes any award
where non-vesting conditions within the control of either the entity
or the employee are not met. 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 of outstanding performance rights is reflected as
additional share dilution in the computation of diluted earnings per
share (see Note 9).
(v) 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 recognised
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.
(w) 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
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.
(x) CONTRIBuTED EQuITy
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or performance rights are shown
in equity as a deduction, net of tax, from the proceeds.
Prime media GrouP AnnuAl RepoRt 2013
39
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
3
SIgNIfICaNT aCCOuNTINg JuDgEmENTS, ESTImaTES aND aSSumpTIONS
The preparation of the Group’s financial statements requires
management to make judgements, estimates and assumptions that
affect the reported amounts of revenue, expenses, assets and liabilities,
and the disclosure of contingent liabilities, at the end of the reporting
period. However, uncertainty about these assumptions and estimates
could result in outcomes that require a material adjustment to the
carrying amount of the asset or liability affected in future periods.
JuDgEmENTS
In the process of applying the Group’s accounting policies,
management has made the following judgements, which have the
most significant effect on the amounts recognised in the consolidated
financial statements:
OpERaTINg LEaSE COmmITmENTS – gROup aS LESSEE
The Group has entered into operating leases that 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.
The Group has determined, based on an evaluation of the terms and
conditions of the arrangements, that it does not retain all the significant
risks and rewards of ownership of these sites and equipment and
accounts for the contracts as operating leases.
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,
based on an evaluation of the terms and conditions of the arrangements,
that it retains all the significant risks and rewards of ownership of these
sites and equipment and accounts for the contracts as operating leases.
DISCONTINuED OpERaTIONS
On 12 August 2013, the board of directors announced its decision to
dispose of the Group’s radio group and therefore, classified the segment
as a disposal group held for sale. The Board considered the subsidiaries
met the criteria to be classified as held for sale at the reporting date for
the following reasons:
•
•
the radio group was available for immediate sale at the reporting
date to a potential buyer in its current condition; and
the Board had a plan to sell the radio group at the reporting date and
had entered into preliminary non-binding discussions with a potential
buyer. The Board has since announced that the sale is expected to be
completed by 30 August 2013.
ESTImaTES aND aSSumpTIONS
The key assumptions concerning the future and other key sources of
estimation uncertainty at the reporting date, that have a significant
risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next year, are described below. The Group
based its assumptions and estimates on parameters available when the
consolidated financial statements were prepared. Existing circumstances
and assumptions about future developments, however, may change due
to market changes or circumstances arising beyond the control of the
Group. Such changes are reflected in the assumptions when they occur.
ImpaIRmENT Of NON-fINaNCIaL aSSETS
An impairment exists when the carrying value of an asset or cash
generating unit exceeds the recoverable value amount which is the
higher of its fair value less costs to sell and its value in use. The fair value
less costs to sell calculation is based on available data from binding arms
length transactions of similar assets or observable market prices less
incremental costs for disposing of the assets. The value in use calculation
is based on a discounted cash flow model. The cash flows are derived
from the budget for the next five years and do not include restructuring
activities that the Group is not yet committed to or significant future
investments that will enhance the assets performance of the CGU being
tested. The recoverable amount is most sensitive to the discount rate
used for the discounted cash flow model as well as the future cash inflows
and the growth rate for extrapolation purposes. The key assumptions
used to determine the recoverable amount for different CGUs, including
a sensitivity analysis, are further explained at Note 18.
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
The Group’s television and radio broadcasting licences consist 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.
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 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 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 18.
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 earnings before interest, tax, depreciation and amortisation
(‘EBITDA’) multiples and compared to similar companies with observable
market sales data.
pROvISION fOR DECOmmISSIONINg COSTS
The Group has recognised a provision for decommissioning obligations
associated with the switch off of analogue transmission. These costs are
recognised as part of the cost of the asset and are depreciated over the
remaining useful life of the asset. Assumptions and estimates are made
in relation to the expected cost to dismantle and remove the analogue
transmission equipment from each site and the timing of those costs.
The carrying amount of the provision as at 30 June 2013 was $944,000
(2012: $492,000).
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.
40
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
faIR vaLuE Of fINaNCIaL DERIvaTIvES
The fair value of interest rate swap contracts is determined by reference to market values for similar instruments.
TaxES
Deferred tax assets are recognised for deductible temporary differences and unused tax losses to the extent management considers 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 together with future tax planning strategies.
4
fINaNCIaL RISK maNagEmENT OBJECTIvES aND pOLICIES
The Group’s principal financial liabilities, other than derivatives, comprise loans and borrowings and trade and other payables. The main purpose of
these financial liabilities is to finance the Group’s operations. The Group has loan and other receivables, trade and other receivables, and cash and
short-term deposits that arrive directly from its operations. The Group also holds available-for-sale investments and enters into derivative transactions.
The Group is exposed to market risk, credit risk and liquidity risk. The Group’s senior management oversees the management of these risks. 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 interest rate swaps. The purpose is to manage the interest rate and currency risks arising
from the Group’s operations and its sources of finance. It is the Group’s policy that no trading in derivatives for speculative purposes 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 Board of directors reviews and agrees policies for managing each of these risks which are summarised below.
maRKET RISK
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices
comprise interest rate risk and currency risk. Financial instruments affected by market risk include loans and borrowings, deposits, available-for-sale
investments and derivative financial instruments.
The sensitivity analyses in the following sections relate to the position as at 30 June 2013 and 2012.
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and
derivatives and the proportion of financial instruments in foreign currencies are all constant.
INTEREST RaTE RISK
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The
Group’s exposure to market interest rates relates primarily to the Group’s long-term debt obligations with floating interest rates as well as derivative
interest rate swap contracts. The level of debt is disclosed in Note 20.
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 short-term deposits
financial Liabilities
Secured bank loans
Derivatives
Net exposure
CONSOLIDaTED
2013
$’000
10,326
10,326
(141,105)
–
(141,105)
(130,779)
2012
$’000
8,916
8,916
(122,726)
(573)
(123,299)
(114,383)
Interest rate swap contracts outlined in Note 24, with a fair value liability of $Nil (2012: Liability $573,000), 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 income statement.
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 2013, 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
+0.5% (50 basis points)
-0.5% (50 basis points)
pOST Tax pROfIT
hIghER/(LOwER)
2013
$’000
(458)
458
2012
$’000
(315)
315
EQuITy
hIghER/(LOwER)
2013
$’000
2012
$’000
–
–
–
–
Prime media GrouP AnnuAl RepoRt 2013
41
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
4
fINaNCIaL RISK maNagEmENT OBJECTIvES aND pOLICIES (CONTINUED)
Significant assumptions used in the interest rate sensitivity analysis include:
• Reasonable movements in interest rates were determined based on the Group’s current credit rating and mix of debt in Australia and foreign
countries, relationships with financial institutions, the level of debt that is expected to be renewed and economic forecaster’s expectations.
• The net exposure at balance date is representative of what the Group was and is expecting to be exposed to in the next twelve months from
balance date.
fOREIgN CuRRENCy RISK
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange
rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or
expense is denominated in different currency from the Group’s functional currency) and the Group’s net investment in foreign subsidiaries.
The Group operates in Australia and New Zealand. The majority of transactions for the Group entities are made in the functional currency of the
relevant entity.
From time to time the Group enters into transactions that give rise to currency exposure risks. Such currency exposures arise from purchases in
currencies other than the Group’s functional currency. The Group reviews the transactional currency risks arising from significant foreign currency
transactions and enters into appropriate forward currency contracts to reduce currency risks. The Group also has foreign currency translation risk
where the operations of the foreign based subsidiaries are translated to the Group’s reporting currency.
At 30 June 2013, the Group had the following exposure to NZ$ foreign currency that is not designated as cash flow hedges:
financial assets
Receivables – Deferred contingent consideration
Net exposure
CONSOLIDaTED
2013
$’000
134
134
2012
$’000
166
166
As at balance date, the Group does not have any forward currency contracts (2012: 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 2013, 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 the income statement.
CREDIT RISK
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The
Group is exposed to credit risk from its operating activities (primarily for trade receivables) and from its financing activities, including deposits with
banks and financial institutions, foreign exchange transactions and other financial instruments.
TRaDE RECEIvaBLES
Customer credit risk is managed by each business unit subject to the Group’s established policies, procedures and control relating to customer credit
risk management.
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 requirement for an impairment is analysed at each reporting date on an individual basis for major clients. Additionally, a large number of minor
receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on actually incurred historical
data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed at Note 12. The Group
does not hold collateral as security.
A small number of media buying agencies account for approximately 75% of Prime’s revenue and no individual agency accounts for more than 15%
of the Group’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.
The Group maintains cash on deposit only with major Australian banks or similar in countries of operation.
LIQuIDITy RISK
The Group manages its liquidity risk by monitoring the total cash inflows and outflows expected on a weekly basis. The Group’s objective is to maintain
a balance between continuity of funding and flexibility through the use of bank overdrafts, debentures, finance leases and hire purchase agreements.
The Group currently has funding through:
• $200 million Debenture Subscription Facility (2012: $200 million), which is currently drawn to 71% of the facility limit (2012: 62%); and
• Long Term finance lease contracts over specific items of plant and equipment.
Currently the Group secures up to 77.5% of the drawn down balance of the Debenture Subscription Facility for 6 monthly periods. In addition to
maintaining sufficient liquid assets to meet short-term payments, at balance date, the Group has available approximately $58 million of undrawn
committed borrowing facilities, subject to continued compliance with the bank loan covenants. The facility is repayable in full on expiry on 28 October
2015. Interest will be charged at a rate of BBSY plus a margin between 1.70% and 2.60%.
At 30 June 2013, 0.2% of the Group’s debt will mature in less than one year.
42
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
The remaining contractual maturities of the Group’s financial assets and liabilities are:
yEaR ENDED 30 JuNE 2013
financial assets
Cash and cash equivalents
Trade and other receivables
Asset classified as held for sale
financial liabilities
Trade and other payables
Liabilities associated with assets classified as held for sale
Interest bearing loans and borrowings
Financial derivatives
Net inflow/(outflow)
yEaR ENDED 30 JuNE 2013
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
10,326
57,937
25,228
93,491
(37,474)
(2,497)
(3,388)
–
(43,359)
50,132
–
–
–
–
–
–
–
178
–
178
–
–
(3,405)
(142,152)
–
(3,405)
(3,405)
–
(142,152)
(141,974)
–
–
–
–
–
–
–
–
–
–
≤ 6 mONThS
$’000
6 – 12 mONThS
$’000
1 – 5 yEaRS
$’000
> 5 yEaRS
$’000
8,916
61,299
70,215
(61,384)
(4,233)
(65,617)
4,598
–
–
–
–
(4,251)
(4,251)
(4,251)
–
171
171
–
(124,110)
(124,110)
(123,939)
–
–
–
–
–
–
–
10,326
58,115
25,228
93,669
(37,474)
(2,497)
(148,945)
–
(188,916)
(95,247)
TOTaL
$’000
8,916
61,470
70,386
(61,384)
(132,594)
(193,978)
(123,592)
Prime media GrouP AnnuAl RepoRt 2013
43
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
5
INCOmE aND ExpENSES
INCOmE aND ExpENSES fROm CONTINuINg OpERaTIONS
(a) INCOmE
Advertising revenue
Finance income
Other revenue
Breakdown of finance income:
Interest received – other persons
Breakdown of other income:
Government grants
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
CONSOLIDaTED
2013
$’000
2012
$’000
253,241
332
3,688
257,261
248,890
693
3,151
252,734
332
332
2,097
1,591
3,688
7,965
–
7,965
34,715
2,639
385
1,112
38,851
238
15,523
693
693
1,429
1,722
3,151
10,496
(10)
10,486
35,334
2,628
113
1,653
39,728
246
15,352
44
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
6
INCOmE Tax
a) INCOmE Tax ExpENSE
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
– Income tax expense on discontinuing operations
Deferred income tax
– Relating to origination and reversal of temporary differences
– Adjustments in respect of deferred income tax of previous years
– Net DTA not previously recognised due to accumulated loss position of subsidiary
– Income tax expense/(benefit) on discontinuing operations
INCOmE Tax ExpENSE
Aggregate income tax expense attributable to:
– Continuing operations
– Discontinuing operations
B) NumERICaL RECONCILIaTION BETwEEN aggREgaTE Tax ExpENSE 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 before income tax
CONSOLIDaTED
2013
$’000
2012
$’000
12,119
(616)
714
2,724
(377)
(1,583)
46
13,027
12,267
760
13,027
13,305
(964)
1,019
97
408
(611)
(14)
13,240
12,235
1,005
13,240
45,875
(12,637)
33,238
43,045
(2,123)
40,922
Prima facie tax expense on accounting profit at the Group’s statutory rate of 30% (2012: 30%)
9,971
12,277
Non temporary differences
– Expenses not deductible for tax
– Impairment expense not deductible for tax
– Income not assessable for tax
– DTA on income tax losses not previously recognised
– Foreign tax rate adjustment
Aggregate income tax expense
Aggregate income tax expense attributable to:
– Continuing operations
– Discontinuing operations
(C) RECOgNISED DEfERRED Tax aSSETS aND LIaBILITIES
Opening balance
Charged to income
Charged to equity
Other payments and utilisation of tax losses
Closing balance
Tax expense in statement of comprehensive income
Amounts recognised in the statement of financial position:
Deferred tax asset
Deferred tax liability
1,267
4,500
(81)
(2,511)
(119)
13,027
12,267
760
13,027
556
1,595
(66)
(1,062)
(60)
13,240
12,235
1,005
13,240
CONSOLIDaTED
2013
$’000
CuRRENT
INCOmE Tax
2013
$’000
DEfERRED
INCOmE Tax
2012
$’000
CuRRENT
INCOmE Tax
2012
$’000
DEfERRED
INCOmE Tax
(10,235)
(12,218)
–
15,243
(7,210)
(3,077)
(13,360)
–
6,202
(10,235)
7,676
(1,091)
–
(474)
6,111
13,027
6,111
–
6,111
8,052
120
–
(496)
7,676
13,240
7,676
–
7,676
Prime media GrouP AnnuAl RepoRt 2013
45
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
6
INCOmE Tax (CONTINUED)
Deferred income tax as at 30 June relates to the following:
DEfERRED Tax LIaBILITIES
Leased assets
Prepaid expenses deductible for tax
Income not yet assessable for tax
Fair value of television licences on acquisition
Set-off of deferred tax assets
Net deferred tax liabilities
Deferred income tax as at 30 June relates to the following:
CONSOLIDaTED
Deferred tax assets
Employee entitlements
Provisions
Expenses not yet deductible for tax
Difference between accounting and tax building write off
Accounting depreciation not yet deductible for tax
Fair value of derivatives
Impairments of investments
Tax losses
Set-off of deferred tax liabilities
Net deferred tax assets
(D) INCOmE Tax LOSSES
STaTEmENT Of fINaNCIaL pOSITION
2013
$’000
2012
$’000
(191)
(526)
(261)
(6,690)
(7,668)
7,668
–
1,584
108
2,316
519
44
–
6,690
2,518
13,779
(7,668)
6,111
(209)
(622)
–
(6,690)
(7,521)
7,521
–
1,922
330
2,474
1,429
269
172
7,200
1,401
15,197
(7,521)
7,676
(a) 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 the Australian Tax Consolidated Group and an entity
outside the Australian Tax Consolidated Group that is making profits.
(b) 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
2,513
12,982
1,396
17,834
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 have
entered into a tax sharing agreement that 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.
46
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
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.
pRImE mEDIa gROup LImITED
2013
$’000
2012
$’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
15,317
18,150
(E) 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 2013 (2012: $Nil).
7 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 PRIME7 and GWN7.
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.
online
In the current reporting period, Online has been absorbed under Television Broadcasting because this operating unit is not independently material
within the Prime Group. In the prior corresponding reporting period, the online segment consisted of 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.
Revenue is sourced mainly from the sale of online advertising.
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
radio Broadcasting
Radio broadcasting consists of 10 radio stations that operate within coastal Queensland stretching from the Sunshine Coast to Cairns. The major
source of revenue is radio advertising.
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. The table on
the following page details revenue and profit for the operating segments for the years ended 30 June 2013 and 30 June 2012.
Prime media GrouP AnnuAl RepoRt 2013
47
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
7 OpERaTINg SEgmENTS (CONTINUED)
As At 30 JuNe 2013
Segment Revenues
External sales and customers
Other income (excluding interest income)
Total segment revenue
Finance income
Total revenue per the statement
of comprehensive income
Result
EBITDA
EBIT
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
TELEvISION
BROaDCaSTINg
$’000
TOTaL
CONTINuINg
SEgmENTS
$’000
uNaLLOCaTED
$’000
TOTaL
CONTINuINg
OpERaTIONS
$’000
RaDIO
BROaDCaSTINg
$’000
TOTaL
OpERaTIONS
$’000
253,241
3,341
256,582
–
253,241
3,341
256,582
–
256,582
256,582
–
347
347
332
679
253,241
3,688
256,929
332
18,999
740
19,739
16
272,240
4,428
276,668
348
257,261
19,755
277,016
72,841
63,884
72,841
63,884
(10,169)
(10,376)
63,694
63,694
(17,819)
62,672
53,508
45,875
(12,267)
33,608
–
3,304
(12,653)
(12,637)(1)
(760)
(13,397)
–
65,976
40,855
33,238
(13,027)
20,211
–
33,608
(13,397)
20,211
(1): Profit / (Loss) before income tax per the statement of comprehensive income includes an impairment charge to reduce the carrying value of Radio Broadcast
Licences by $15.0M.
As At 30 JuNe 2013
assets and liabilities
Segment assets (1)
Investments in associates
Total assets
Segment liabilities (1)
Net assets
Other segment information
Capital expenditure (2)
Depreciation and amortisation
Impairment
Share of associate losses
TELEvISION
BROaDCaSTINg
$’000
uNaLLOCaTED
$’000
TOTaL
CONTINuINg
OpERaTIONS
$’000
RaDIO
BROaDCaSTINg
$’000
TOTaL
OpERaTIONS
$’000
308,573
–
308,573
(188,784)
131,649
8,817
(8,957)
–
(1,548)
11,860
–
11,860
(2,497)
22,731
9
(208)
–
–
320,433
–
320,433
(191,281)
154,380
8,826
(9,165)
–
(1,548)
25,228
–
25,228
345,661
–
345,661
852
(957)
(15,000)
–
9,678
(10,122)
(15,000)
(1,548)
(1) Excludes inter-segment receivables and payables, and investments in subsidiaries.
(2) To comply with the requirements of AASB 8, the Group has included the cost of segment assets acquired by way of business combinations.
48
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
As At 30 JuNe 2012
TELEvISION
BROaDCaSTINg
$’000
TOTaL
CONTINuINg
SEgmENTS
$’000
ONLINE
$’000
uNaLLOCaTED
$’000
TOTaL
CONTINuINg
OpERaTIONS
$’000
RaDIO
BROaDCaSTINg
$’000
TOTaL
OpERaTIONS
$’000
Segment Revenues
External sales and customers
246,727
Other income
(excluding interest income)
Total segment revenue
Finance income
Total revenue per the statement
of comprehensive income
Result
EBITDA
EBIT
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
2,484
249,211
–
249,211
72,898
62,907
2,164
–
2,164
–
2,164
(158)
(341)
248,891
2,484
251,375
–
–
666
666
693
248,891
19,955
268,846
3,150
252,041
693
777
20,732
32
3,927
272,773
725
251,375
1,359
252,734
20,764
273,498
72,740
62,566
(9,523)
(9,728)
63,217
52,838
4,171
(2,156)
67,388
50,682
62,637
(341)
62,296
(19,251)
43,045
(12,235)
30,810
–
(2,123)(1)
(1,005)
(3,128)
–
40,922
(13,240)
27,682
–
30,810
(3,128)
27,682
(1) Profit / (Loss) before income tax per the statement of comprehensive income includes an impairment charge to reduce the carrying value of Radio Broadcast
Licences by $5.3M.
As At 30 JuNe 2012
assets and liabilities
Segment assets (1)
Investments in associates
Total assets
Segment liabilities (1)
Net assets
Other segment information
Capital expenditure (2)
Depreciation and amortisation
Impairment
Share of associate losses
TELEvISION
BROaDCaSTINg
$’000
ONLINE
$’000
uNaLLOCaTED
$’000
TOTaL
CONTINuINg
OpERaTIONS
$’000
RaDIO
BROaDCaSTINg
$’000
TOTaL
OpERaTIONS
$’000
308,150
–
308,150
(198,314)
121,791
11,998
(10,632)
–
(1,198)
447
–
447
(2,451)
38,236
558
(183)
–
–
11,508
–
11,508
(200,765)
160,027
50
(205)
–
–
320,105
–
320,105
40,687
–
40,687
360,792
–
360,792
12,606
(11,020)
–
(1,198)
752
(370)
(5,316)
–
13,358
(11,390)
(5,316)
(1,198)
(1) Excludes inter-segment receivables and payables, and investments in subsidiaries.
(2) To comply with the requirements of AASB 8, the Group has included the cost of segment assets acquired by way of business combinations.
Prime media GrouP AnnuAl RepoRt 2013
49
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
7 OpERaTINg SEgmENTS (CONTINUED)
RECONCILIaTION Of pROfIT
Segment profit before tax (Continuing operations)
Finance costs
Administration expenses
Loss from discontinued operations
Group profit before tax
RECONCILIaTION Of aSSETS
Segment operating assets (Continuing operations)
Assets classified as held for sale
Group operating assets
RECONCILIaTION Of LIaBILITIES
Segment operating assets (Continuing operations)
Liabilities classified as held for sale
Group operating assets
8 DISCONTINuED OpERaTIONS
CONSOLIDaTED
2013
$’000
2012
$’000
63,694
(7,443)
(10,376)
(12,637)
33,238
320,433
25,228
345,661
188,784
2,497
191,281
62,296
(9,523)
(9,728)
(2,123)
40,922
360,792
–
360,792
200,765
–
200,765
(a) DETaILS Of OpERaTIONS DISpOSED aND CLOSED DOwN
On 12 August 2013, the Group publicly announced the decision of its Board of directors to dispose of the Group’s Radio segment which consists of the
following wholly owned subsidiaries:
Prime Radio (Holdings) Pty Limited ACN: 122 696 753
Prime Radio (Townsville) Pty Limited ACN: 113 960 688
Prime Radio (Cairns) Pty Limited ACN: 113 960 722
Prime Radio (Barrier Reef) Pty Limited ACN: 113 960 606
Prime Radio (Mackay) Pty Limited ACN: 113 960 606
Prime Radio (Mackay- AM) Pty Limited ACN: 122 696 842
Prime Radio (Cairns- AM) Pty Limited ACN: 122 960 722
Prime Radio (Rockhampton) Pty Limited ACN: 113 960 624
Prime Radio (Gladstone) Pty Limited ACN: 113 960 642
AMI Radio Pty Limited ACN: 075 044 861
Hot 91 Pty Limited ACN: 101 804 371
At 30 June 2013, the Radio segment was classified as a disposal group held for sale and as a discontinued operation on the basis that final negotiations
had commenced for the sale of the radio group. The disposal of the Radio segment is due to be completed 30 August 2013. The results of the Radio
segment are presented below.
The following operations were discontinued in the previous corresponding period.
ON SITE BROaDCaSTINg
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 2013 the Company revised the fair value of the deferred contingent consideration up by $270,000 (2012: $235,000), on completion of a
detailed review of the forecast profits expected from the contracts transferred as part of the sale.
50
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
(B) fINaNCIaL pERfORmaNCE Of OpERaTIONS DISpOSED, CLOSED DOwN
CONSOLIDaTED
2013
$’000
2012
$’000
OR hELD fOR SaLE
Revenue
Expenses
Loss attributable to discontinued operations before tax
Income tax expense
Loss attributable to discontinued 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
Discontinuing operations includes the Prime Radio Group.
(C) CaSh fLOw INfORmaTION – DISCONTINuED OpERaTIONS
Net cash inflow from operating activities
Net cash (outflow) from investing activities
Net cash (outflow) from financing activities
Net cash generated by discontinued operations
(D) aSSETS aND LIaBILITIES hELD fOR SaLE
Trade and other receivables
Prepayments
Total current assets
Property, plant and equipment
Intangibles – broadcast licences
Deferred tax assets
Total non-current assets
assets classified as held for sale
Trade and other payables
Total current liabilities
Provisions
Total non-current liabilities
Liabilities associated with assets classified as held for sale
20,764
(22,887)
(2,123)
(1,005)
(3,128)
–
(3,128)
(0.9)
(0.9)
3,080
(750)
(2,842)
(512)
19,754
(32,391)
(12,637)
(760)
(13,397)
–
(13,397)
(3.7)
(3.7)
1,964
(638)
(1,082)
244
3,940
139
4,079
4,334
16,533
282
21,149
25,228
2,341
2,341
156
156
2,497
Prime media GrouP AnnuAl RepoRt 2013
51
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
9 EaRNINgS pER ShaRE
Basic Earnings per share (cents per share)
– profit for the year
– profit from continuing operations
Diluted Earnings per share (cents per share)
– profit for the year
– profit from continuing operations
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 outstanding during the year plus the
weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential
ordinary shares into ordinary shares.
The following reflects the income and share data used in the basic and diluted earnings per share computations:
(a) EaRNINgS uSED IN CaLCuLaTINg EaRNINgS pER ShaRE
Net Profit 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 attributable to ordinary equity holders of the parent
Earnings used in calculating basic and diluted earnings per share
(B) wEIghTED avERagE NumBER Of ShaRES
Weighted average number of ordinary shares used in calculating basic earnings per share:
Effect of dilution:
Performance Rights
CONSOLIDaTED
2013
$’000
2012
$’000
5.5
9.2
5.5
9.2
7.6
8.4
7.6
8.4
33,608
(13,397)
20,211
20,211
30,810
(3,128)
27,682
27,682
NumBER Of
ShaRES
NumBER Of
ShaRES
366,330,303
366,330,303
–
–
Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share
366,330,303
366,330,303
All performance rights are anti-dilutive, as service and performance conditions are yet to be met.
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the completion of the
financial statements.
(C) INfORmaTION ON ThE CLaSSIfICaTION Of SECuRITIES
EQuITy SETTLED ShaRE BaSED paymENTS
Equity settled share based payments granted to employees (including KMP) as described in Note 28 are considered to be potential ordinary shares
and will be included in the determination of diluted earnings per share to the extent they are dilutive when the performance rights vest.
Basic Earnings per share (cents per share)
– profit from core earnings
Diluted Earnings per share (cents per share)
– profit from core earnings
CONSOLIDaTED
2013
$’000
2012
$’000
9.7
9.7
9.1
9.1
To calculate earnings per share amounts for the core continuing and discontinuing 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:
52
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
(D) pROfIT fROm CONTINuINg OpERaTIONS ExCLuDINg SpECIfIC ITEmS
Reported profit after tax from continuing operations (refer Statement of comprehensive income)
Reported profit after tax from discontinuing operations (refer Statement of comprehensive income)
– Fair value change in derivatives
– Fair value change in receivable – deferred contingent consideration
– Impairment of radio broadcasting licences
– Loss on sale of investments
– Depreciation of decommissioning costs
– Redundancies
– Income tax expense/(benefit) related to specific items
CONSOLIDaTED
2013
$’000
2012
$’000
33,608
(13,397)
2
(270)
15,000
–
481
–
(1)
30,810
(3,128)
(1,115)
(234)
5,316
345
492
571
163
profit after tax from continuing operations before specific items attributable to members
of prime media group Limited
35,423
33,220
10 DIvIDENDS paID aND pROpOSED
(a) RECOgNISED amOuNTS
Declared and paid during the year
(i) CuRRENT yEaR INTERIm
Franked dividends 4.0 cents per share (2012: 3.3 cents) – ordinary shares
(ii) pREvIOuS yEaR fINaL
Franked dividends 3.3 cents per share (2012: 2.4 cents) – ordinary shares
(B) uNRECOgNISED amOuNTS
(i) CuRRENT yEaR fINaL
Franked dividends 3.3 cents per share (2012: 3.3 cents) – ordinary shares
(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% (2012: 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
CONSOLIDaTED
2013
$’000
2012
$’000
14,653
12,089
12,089
26,742
8,792
20,881
12,089
12,089
ThE gROup
2013
$’000
26,531
7,150
–
33,681
2012
$’000
23,344
9,387
–
32,731
(5,181)
28,500
(5,181)
27,550
(D) Tax RaTES
The tax rate at which paid dividends have been franked is 30% (2012: 30%). Dividends proposed will be franked at the rate of 30% (2012: 30%).
Prime media GrouP AnnuAl RepoRt 2013
53
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
11 CaSh aND ShORT-TERm DEpOSITS
Cash balance comprises:
Cash at bank and on hand
Closing cash balance
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 2013 the Group had available $58 million (2012: $76 million) of undrawn committed borrowing
facilities in respect of which all conditions precedent had been met.
Reconciliation of the net profit after tax to the net cash flows from operations
Profit after tax from continuing operations
(Loss) after tax from discontinuing operations
Net profit after income tax
Non-cash adjustment for:
Depreciation and amortisation
Amortisation of program rights
Provision for doubtful debts
Net loss on disposal of property, plant and equipment
(Gain)/loss on sale of financial asset
(Gain)/loss on foreign currency translation
Net gain MTM derivatives
Impairment of intangibles and goodwill
Impairment of investments
Share of losses of associates
Share based payments expense
Changes in assets and liabilities
(Increase) in trade and other receivables
Decrease/(increase) in deferred tax assets
Decrease/(Increase) in prepayments
Increase/(Decrease) in trade and other payables
Increase/(Decrease) in tax provision
Increase/(Decrease) in borrowing costs
(Decrease) in provisions
Net cash flow from operating activities
12 TRaDE aND OThER RECEIvaBLES
Current
Trade receivables
Allowance for impairment loss
Deferred contingent consideration
Other receivables
Related party receivables
Carrying amount of trade and other receivables
CONSOLIDaTED
2013
$’000
10,326
10,326
2012
$’000
8,916
8,916
33,608
(13,397)
20,211
30,810
(3,128)
27,682
9,722
10,771
400
(115)
35
(11)
(206)
2
15,000
–
1,548
385
(815)
1,329
549
(21,784)
(3,025)
(196)
(304)
22,725
616
367
78
345
367
(1,115)
5,316
2
1,198
113
(8,135)
415
(223)
3,656
7,333
647
(895)
48,538
CONSOLIDaTED
2013
$’000
2012
$’000
49,547
(650)
48,897
134
6,812
2,094
57,937
52,849
(701)
52,148
165
7,845
1,141
61,299
(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.
54
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
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
Less provision for impairment loss in relation to assets held for sale
At June 30
At 30 June, the ageing analysis of trade receivables is as follows:
CONSOLIDaTED
2013
$’000
701
495
(432)
(114)
650
2012
$’000
652
310
(261)
–
701
TOTaL
0-30 DayS
31-60 DayS
61-90 DayS pDNI*
61-90 DayS CI*
+91 DayS pDNI*
+91 DayS CI*
2013
2012
49,547
52,849
25,688
26,211
21,332
23,740
1,060
1,030
–
–
817
1,167
650
701
* 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. It is expected that these other balances will be received.
(B) RELaTED paRTy RECEIvaBLES
For terms and conditions of related party receivables refer to Notes 31 and 32.
(C) INTEREST RaTE RISK
Detail regarding foreign exchange and interest rate risk exposure is disclosed in Note 4.
Non-current
Sundry receivables
Related party receivables
Carrying amount of non-current receivables
(D) faIR vaLuE aND CREDIT RISK
The fair values of non-current receivables approximate their carrying value.
(E) fOREIgN ExChaNgE aND INTEREST RaTE RISK
Detail regarding foreign exchange and interest rate risk exposure is disclosed in Note 4.
CONSOLIDaTED
2013
$’000
133
45
178
2012
$’000
126
45
171
(f) 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.
13 OThER aSSETS
Current
Prepayments
Non-current
Prepayments
CONSOLIDaTED
2013
$’000
1,303
1,183
2012
$’000
2,057
1,265
Prime media GrouP AnnuAl RepoRt 2013
55
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
14 INvESTmENTS IN aSSOCIaTES
(a) INvESTmENT DETaILS
unlisted
Mildura Digital Television Pty Limited (refer to Note 21)
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
2013
$’000
2012
$’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(B) ThE CONSOLIDaTED ENTITy haS a maTERIaL INTEREST IN ThE fOLLOwINg ENTITIES:
unlisted
Mildura Digital Television Pty Limited
destra Corporation Limited (In Liquidation) (1)
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
2013
%
50%
44%
50%
50%
50%
50%
50%
33%
2012
%
50%
44%
50%
50%
50%
50%
50%
33%
2013
$’000
(1,012)
–
(536)
–
–
–
–
–
2012
$’000
(604)
–
(594)
–
–
–
–
–
(1,548)
(1,198)
(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.
(C) mOvEmENTS IN ThE CaRRyINg amOuNT Of ThE gROup’S INvESTmENT IN aSSOCIaTES
At July 1
Contributions made (1)
Share of losses after income tax
Provision for loan funds still to be paid to associate (refer to Note 21)
At June 30
CONSOLIDaTED
2013
$’000
–
2,971
(1,548)
(1,423)
–
2012
$’000
–
325
(1,198)
873
–
(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.
56
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
(D) 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 liabilities
Share of the associates’ net liabilities accounted for using the equity method:
Net liabilities
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
15 INvESTmENTS IN SuBSIDIaRIES aND fINaNCIaL aSSETS
CLOSED gROup CLaSS ORDER DISCLOSuRES
CONSOLIDaTED
2013
$’000
2012
$’000
4,488
257
4,745
(5,349)
(9,456)
(14,805)
(10,060)
3,674
354
4,028
(7,240)
(4,743)
(11,983)
(7,955)
(5,030)
(3,977)
2,062
(2,527)
(1,548)
–
(1,548)
1,154
(2,395)
(1,198)
–
(1,198)
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.
EQuITy INTEREST
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
COuNTRy Of
INCORpORaTION
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
2013
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
2012
%
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 2013
57
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
15 INvESTmENTS IN SuBSIDIaRIES aND fINaNCIaL aSSETS (CONTINUED)
NamE
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
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
Prime New Media Investments Pty Limited
Seven Affiliate Sales Pty Limited
EQuITy INTEREST
COuNTRy Of
INCORpORaTION
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
2013
%
100
100
100
100
100
100
100
100
100
100
100
100
2012
%
100
100
100
100
100
100
100
100
100
100
100
100
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 before income tax – continuing operations
Income tax expense attributable to operating profit
Operating profit after tax from continuing operations
Loss after tax from discontinued operations
Operating profit after tax
Retained losses at beginning of the financial year
Dividends provided for or paid
Retained losses at end of the financial period
(B) CONSOLIDaTED BaLaNCE ShEET
Current assets
Cash and cash equivalents
Trade and other receivables
Intangible assets
Prepayments
Assets classified as held for sale
Total current assets
Non-current assets
Receivables
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
Liabilities associated with assets classified as held for sale
Total current liabilities
58
CLOSED gROup
2013
$’000
2012
$’000
39,421
(11,851)
27,570
(13,397)
14,173
(61,871)
(26,762)
(74,460)
9,059
57,520
400
1,303
68,282
25,228
93,510
34,542
4
114,806
43,588
196,895
3,625
1,183
394,643
488,153
37,446
252
7,150
1,432
–
46,280
2,497
48,777
39,124
(11,548)
27,576
(3,162)
24,414
(65,404)
(20,881)
(61,871)
8,210
60,652
400
2,055
71,317
–
71,317
35,615
6
114,964
49,971
226,840
4,071
1,265
432,732
504,049
60,820
1,629
9,387
2,567
573
74,976
–
74,976
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
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
16 INvESTmENTS – avaILaBLE-fOR-SaLE fINaNCIaL aSSETS
Investments at fair value:
Available for sale financial assets:
Shares in uncontrolled entities (quoted) (i)
Investments at cost:
Shares in uncontrolled entities (unquoted) (ii)
Investments at fair value:
Shares in uncontrolled entities (unquoted) (iii)
CLOSED gROup
2013
$’000
59,276
142,023
394
201,693
250,470
237,683
310,262
1,880
(74,459)
237,683
2012
$’000
54,809
123,896
480
179,185
254,161
249,888
310,262
1,497
(61,871)
249,888
CONSOLIDaTED
2013
$’000
2012
$’000
4
3
2,500
2,507
3
3
2,001
2,007
Available-for-sale investments consist of investments in ordinary shares, and therefore have no fixed maturity date or coupon rate.
(i) quoted equity shares
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) unquoted equity 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.
On 30 November 2011, the Group sold its interest in TransACT Communications Pty Limited. Proceeds received from this sale were $2,785,000,
resulting in a loss on sale of $345,000.
(iii) unlisted shares at fair value
The fair value of the unquoted available-for-sale investments has been estimated using valuation techniques based on assumptions, which are outlined
in Note 3, that are not supported by observable market information. 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
Additions – as consideration received on business disposal
Increase in fair value
Closing balance
CONSOLIDaTED
2013
$’000
2,001
–
499
2,500
2012
$’000
2,001
–
–
2,001
Prime media GrouP AnnuAl RepoRt 2013
59
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
16 INvESTmENTS – avaILaBLE-fOR-SaLE fINaNCIaL aSSETS (CONTINUED)
(iv) Valuation sensitivity
Management has estimated the potential effect of using reasonably possible alternatives as inputs to the valuation and has quantified this as a
reduction in fair value of approximately $664,000 using less favourable assumptions and an increase in fair value of approximately $664,000 using more
favourable assumptions, i.e. change in Enterprise Value (EV) / EBITDA multiples of 0.5 in either direction.
impairment on available-for-sale financial investments
For available-for-sale financial investments, the Group assesses at each reporting date whether there is objective evidence that an investment or a
group of investments is impaired (refer to Note 2(p)).
17 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 Land and Buildings
Leasehold Improvements – at cost
Less: Accumulated amortisation
Plant and Equipment – at cost
Less: Accumulated depreciation and impairment
Plant and Equipment under lease – at cost
Less: Accumulated amortisation
Motor Vehicles – at cost
Less: Accumulated depreciation
Total written down amount
CONSOLIDaTED
2013
$’000
722
197
919
2,078
(1,258)
820
10,325
(3,567)
6,758
2,112
(651)
1,461
9,958
2,051
(1,250)
801
127,595
(96,565)
31,030
2,886
(1,080)
1,806
–
–
–
2012
$’000
916
197
1,113
2,049
(1,209)
840
10,286
(3,308)
6,978
2,112
(596)
1,516
10,447
3,954
(1,884)
2,070
139,252
(105,304)
33,948
4,907
(1,411)
3,496
71
(46)
25
43,595
49,986
(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.
60
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
(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
Additions
Disposals
Reclassification to asset held for sale
Leasehold land
Buildings on freehold land
Carrying amount at beginning
Additions
Disposals
Depreciation expense
Reclassification to asset held for sale
Buildings on leasehold land
Carrying amount at beginning
Additions
Depreciation expense
Total Buildings
Leasehold improvements
Carrying amount at beginning
Additions
Classification transfer
Disposals
Depreciation expense
Reclassification to asset held for sale
plant and equipment
Carrying amount at beginning
Additions
Classification transfer
Disposals
Depreciation expense
Reclassification to asset held for sale
plant and equipment under lease
Carrying amount at beginning
Additions
Classification transfer
Disposals
Amortisation expense
Total plant and equipment
motor vehicles
Carrying amount at beginning
Additions
Disposals
Depreciation expense
Reclassification to asset held for sale
2013
$’000
916
51
–
(245)
722
197
919
2,356
22
–
(94)
(3)
2,281
6,978
49
(269)
6,758
9,041
2,070
32
–
–
(316)
(985)
801
33,948
6,279
1,474
(28)
(7,558)
(3,085)
31,030
3,496
–
(1,314)
–
(376)
1,806
32,836
25
–
–
(9)
(16)
–
2012
$’000
916
–
–
–
916
197
1,113
2,460
–
–
(104)
–
2,356
7,235
–
(257)
6,978
9,334
2,293
71
7
(1)
(300)
–
2,070
34,299
7,885
(7)
(94)
(8,135)
–
33,948
3,833
–
–
(10)
(327)
3,496
37,444
25
10
–
(10)
–
25
(B) aSSETS pLEDgED aS SECuRITy
All plant and equipment under lease is pledged as security for the associated lease liabilities.
Prime media GrouP AnnuAl RepoRt 2013
61
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
18 gOODwILL aND INTaNgIBLE aSSETS
CONSOLIDaTED
Program Rights – at cost
Less Accumulated amortisation
Total program Rights
Total current program Rights
Total non-current program Rights
Goodwill – at cost
Less Accumulated impairment losses
Total goodwill
Broadcast Licences and Associated Rights – at cost
Less Accumulated impairment losses
Total Broadcast Licences and associated Rights
Infrastructure Access Licence – at cost
Less Accumulated amortisation
Total Infrastructure access Licence
Business Software and Development Costs – at cost
Less Accumulated amortisation
Total Business Software and Development Costs
Website Development Costs – at cost
Less Accumulated amortisation
Total website Development Costs
Total written down amount
Total current
Total non-current
RECONCILIaTIONS
goodwill on acquisition
Carrying amount at beginning
Impairment expense
Broadcast licences
Carrying amount at beginning
Disposals
Impairment expense
Asset reclassified as held for sale
program Rights
Carrying amount at beginning
Amortisation expense
Infrastructure access Licence
Carrying amount at beginning
Additions
Amortisation expense
Business Software and Development Costs
Carrying amount at beginning
Additions
Amortisation expense
web Site Development Costs
Carrying amount at beginning
Additions
Amortisation expense
Disposals
62
2013
$’000
4,000
(3,200)
800
400
400
18,530
(15,048)
3,482
182,963
–
182,963
3,771
(938)
2,833
16,194
(9,191)
7,003
550
(337)
213
197,294
400
196,894
3,482
–
3,482
214,669
(175)
(15,000)
(16,531)
182,963
1,200
(400)
800
2,627
830
(624)
2,833
5,041
2,253
(291)
7,003
396
–
(183)
–
213
197,294
2012
$’000
4,000
(2,800)
1,200
400
800
18,530
(15,048)
3,482
250,100
(35,431)
214,669
2,941
(314)
2,627
13,684
(8,643)
5,041
550
(154)
396
227,415
400
227,015
3,657
(175)
3,482
219,810
–
(5,141)
214,669
1,816
(616)
1,200
1,232
1,709
(314)
2,627
3,077
3,133
(1,169)
5,041
27
550
(157)
(24)
396
227,415
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
(a) DESCRIpTION Of ThE gROup’S INTaNgIBLE aSSETS aND gOODwILL
(i) BROaDCaST LICENCES
Television broadcast licences have been acquired through business combinations and consist of the right to broadcast television 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.
(ii) pROgRam RIghTS
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).
(iv) INfRaSTRuCTuRE aCCESS LICENCE
Infrastructure access licenses represent licences acquired to use transmission facilities for periods up to 10 years. The licences are amortised to the
profit and loss over the term of the licence.
(v) BuSINESS SOfTwaRE aND DEvELOpmENT COSTS
Business software and development costs represent the cost to implement a new television sales and traffic software system. Amortisation of the asset
begins when the development is complete and the asset is available for use. It will be amortised over the period of the expected future benefit. The
carrying value of the rights is cost less accumulated amortisation and impairment losses.
(vi) wEB SITE DEvELOpmENT COSTS
Website development costs represent the costs to integrate the PRIME7 and GWN7 broadcast footprint to deliver localised content online and are
being amortised over a three year period
(B) ImpaIRmENT TESTINg Of gOODwILL aND INTaNgIBLE aSSETS wITh INDEfINITE LIvES
(i) TELEvISION BROaDCaSTINg
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 30 June 2013 based on financial budgets approved by management covering a 5 year period. The long term forecasts
are generated using a terminal growth rate of 3.0% (2012: 4.0%). The discount rate applied to the cash flow projections is 10.25% (2012: 10.4%). The
Discounted Cashflow (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 December 2012. This valuation supported the carrying values of the television unit’s intangible assets.
Carrying amount of Intangibles allocated to each of the cash generating units
Television Broadcasting Licences
Broadcast Licences
Television broadcasting
goodwill on acquisition
CONSOLIDaTED
2013
$’000
2012
$’000
182,963
182,963
3,482
3,482
182,963
182,963
3,482
3,482
(C) KEy aSSumpTIONS uSED IN vaLuE IN uSE CaLCuLaTIONS
The calculation of value in use for the television broadcasting licences are most sensitive to the following assumptions:
• Discount rates; and
• Growth rate used to extrapolate cash flows.
Discount rates – Discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of
money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based
on the specific circumstances of the Group and each operating segment. Segment-specific risk is incorporated by applying individual beta factors. The
beta factors are evaluated annually based on publicly available market data.
Growth rate estimates – Rates are based on published industry research, which is obtained on a regular basis throughout the reporting period.
(D) SENSITIvITy Of aSSumpTIONS
Television broadcasting is largely fixed cost business, 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.
Television broadcasting is closely regulated in Australia and as such new competitors can only enter the market on issue of new licences by the national
government after extensive reviews. The economic conditions are monitored closely for indicators that could influence the overall level of advertising
spending to change significantly.
Prime media GrouP AnnuAl RepoRt 2013
63
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
19 TRaDE aND OThER payaBLES
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.
There are no key assumptions that could reasonably vary and result in recoverable amounts below carrying value.
CONSOLIDaTED
2013
$’000
4,455
28,349
4,670
37,474
2012
$’000
23,313
32,862
5,209
61,384
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 4.
20 INTEREST-BEaRINg LOaNS aND BORROwINgS
Current
Obligations under finance lease contracts (Note 25(e))
Non-current
Obligations under finance lease contracts (Note 25(e))
$200 million secured bank loan (2012: $200 million)
TERmS aND CONDITIONS
maTuRITy
2014
252
2015 – 2021
2015
CONSOLIDaTED
2013
$’000
252
1,629
918
141,105
142,023
2012
$’000
1,629
1,170
122,726
123,896
Bank loan facility
The Company executed a $200 million bank loan facility with a term of 4 years, repayable in full on expiry on 28 October 2015. 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 a rate of BBSY plus a margin of between 1.70% and 2.60%.
(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 4.6% to 5.5% (2012: 5.5% to 6.5%), 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.
(B) INTEREST RaTE, fOREIgN ExChaNgE aND LIQuIDITy RISK
Details regarding interest rate, foreign exchange and liquidity risk are disclosed in Note 4.
(C) DEfauLTS aND BREaChES
During the current and prior years, there were no defaults or breaches on any of the loans.
64
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
21 pROvISIONS
Current
Provision for asset decommissioning
Directors’ retiring provision
Provision for losses on associates
Redundancy provision
Onerous contracts
Non-current
Long service leave
CONSOLIDaTED
2013
$’000
944
218
270
–
–
1,432
394
394
(a) mOvEmENTS IN pROvISIONS
Movements in each class of provisions during the financial year are set out below:
At 1 July 2012
Arising during the year
Utilised
Provisions associated with
assets held for sale
At 30 June 2013
Current 2013
Non-current 2013
Current 2012
Non-current 2012
REDuNDaNCy
pROvISION
$’000
DIRECTORS
RETIRINg
pROvISION
$’000
ONEROuS
CONTRaCTS
$’000
pROvISION fOR
LOSSES ON
aSSOCIaTES
$’000
pROvISION fOR
aSSET DECOm-
mISSIONINg
$’000
LONg
SERvICE
LEavE
$’000
417
–
(417)
–
–
–
–
–
417
–
417
206
12
–
–
218
218
–
218
206
–
206
372
–
(372)
–
–
–
–
–
372
–
372
1080
1,548
(2,358)
–
270
270
–
270
1080
–
1080
492
481
(29)
–
944
944
–
944
492
–
492
481
69
–
(156)
394
–
394
394
–
481
481
2012
$’000
492
206
1,080
417
372
2,567
481
481
TOTaL
$’000
3,048
2,110
(3,176)
(156)
1,826
1,432
394
1,826
2,567
481
3,048
(B) NaTuRE aND TImINg Of ThE pROvISIONS
(i) 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 2013.
(ii) pROvISION fOR aSSET DECOmmISSIONINg
The Group has recognised a provision for decommissioning costs for the removal of analogue transmission equipment. The increase in provision is
due to the analogue signal being switched off earlier than anticipated in Western Australia.
(iii) DIRECTOR’S RETIRINg pROvISION
Refer to Remuneration Report. The Directors’ Retiring provision was approved by shareholders in November 1997.
(iv) 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 had exited the Prime Digital Media business. The provision was settled in 2013.
(v) REDuNDaNCy pROvISION
In 2012 the Group recognised a provision for redundancy in relation to restructuring its Television operations. This provision balance was
settled in July 2012.
(vi) LONg SERvICE LEavE
Refer to Note 2(t) 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 2013
65
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
22 CONTRIBuTED EQuITy
(a) ISSuED aND paID up CapITaL
Ordinary shares fully paid
366,330,303 shares (2012: 366,330,303 shares)
(B) mOvEmENTS IN ShaRES ON ISSuE
ORDINaRy
Beginning of the financial year
Issued during the year
CONSOLIDaTED
2013
$’000
2012
$’000
310,262
310,262
2013
2012
NumBER Of
ShaRES
$’000
NumBER Of
ShaRES
$’000
366,330,303
310,262
366,330,303
310,262
Shares issued as consideration for equity settled transaction
–
–
–
End of the financial year
366,330,303
310,262
366,330,303
–
310,262
(C) EQuITy SETTLED ShaRE BaSED paymENTS
pERfORmaNCE RIghTS OvER ORDINaRy ShaRES
executive performance rights plan
During the financial year 1,580,000 performance rights (2012: 1,258,000) were issued over ordinary shares. During the financial year 292,000
performance rights lapsed (2012: Nil), nil performance rights were forfeited (2012: Nil) and nil performance rights were cancelled by the
Company (2012: Nil).
At the end of the year there were 2,546,000 (2012: 1,258,000) un-issued ordinary shares in respect of which performance rights 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
Capital includes equity attributable to the equity holders of the parent.
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios to support its
business and maximise shareholder value.
The Group manages its capital structure and has regard for changes in economic conditions. To maintain or adjust the capital structure, the Group
may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares or sell assets to reduce debt.
During 2013, the Company paid dividends of $26,742,000 (2012: $20,881,000). The Board’s target for dividend payments is 75% of core earnings per
share. The Board reviews the dividend target as necessary.
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 an ongoing basis are:
Shareholder funds (Net Assets) (1)
Net Debt to EBITDA
Interest Cover to EBITDA
TaRgET
aT BaLaNCE DaTE
> $135,000,000
$268,844,000
< 3.5 times
> 3.0 times
2.1
8.8
(1) Shareholder Funds have been adjusted to reflect the value of the Licences, as set out in the most recent independent valuation obtained December 2012.
66
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
23 RETaINED EaRNINgS aND RESERvES
general reserve
Foreign currency translation
Employee benefits equity reserve
Accumulated losses
(a) 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 28 for further details of these plans.
(ii) mOvEmENTS IN RESERvE
Balance at beginning of year
Share based payment
Balance at end of year
(B) 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
Fair value increase in available for sale financial assets
Balance at end of year
(C) (aCCumuLaTED LOSSES)/RETaINED pROfITS
Balance at the beginning of year
Net profit attributable to members of Prime Media Group Limited
Total accumulated losses
Dividends provided for or paid
Balance at end of year
24 DERIvaTIvE fINaNCIaL INSTRumENTS
Current Liabilities
Interest rate swap contracts
(a) INSTRumENTS uSED By ThE gROup
CONSOLIDaTED
2013
$’000
(2,288)
–
3,207
919
2012
$’000
(2,787)
–
2,822
35
(156,801)
(150,270)
2,822
385
3,207
2,709
113
2,822
(2,787)
499
(2,288)
(150,270)
20,211
(130,059)
(26,742)
(156,801)
(2,787)
–
(2,787)
(157,071)
27,682
(129,389)
(20,881)
(150,270)
CONSOLIDaTED
2013
$’000
2012
$’000
–
573
INTEREST RaTE Swap agREEmENTS
The Company’s Swap agreements expired in August 2012. The Company reviews its hedging requirements on an ongoing basis.
(B) INTEREST RaTE RISK
Information regarding interest rate risk exposure is set out in Note 4.
(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 creditworthy third parties.
Prime media GrouP AnnuAl RepoRt 2013
67
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
25 ExpENDITuRE COmmITmENTS
CONSOLIDaTED
2013
$’000
2012
$’000
(a) CapITaL ExpENDITuRE COmmITmENTS
Estimated capital expenditure contracted for at reporting date, but not provided for, payable:
– not later than one year
843
3,619
Included in the above disclosed capital commitments at 30 June 2013 is approximately $100,000 (2012: Approximately $1 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 up to a pre-determined cap. The amounts disclosed above are the gross amounts before taking into consideration this
government funding.
(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
6,767
16,540
12,244
35,551
6,769
17,396
12,244
36,409
Operating leases have an average lease term of 3 years for Motor Vehicles, 3 years (+ 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
1,642
4,303
1,665
7,610
1,611
3,468
793
5,872
(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
(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
68
7,326
9,459
–
16,785
337
1,047
–
1,384
(214)
1,170
252
918
1,170
7,113
16,716
–
23,829
1,820
1,384
–
3,204
(405)
2,799
1,629
1,170
2,799
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
(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
CONSOLIDaTED
2013
$’000
324
846
–
1,170
2012
$’000
1,720
1,079
–
2,799
(g) OThER COmmITmENTS COvERINg TRaNSmISSION maINTENaNCE, SITE INSTaLLaTION aND
maNagEmENT SERvICES
The Company entered into a contract with Broadcast Transmission Services Pty Limited (refer to Note 31) on 1 April 2008, for the provision of site
maintenance services over a 10 year period at an annual cost of $1,200,000 per annum.
– not later than one year
– later than one year and not later than five years
– later than five years
1,200
4,500
–
5,700
1,200
4,800
900
6,900
26 CONTINgENT LIaBILITIES aND CONTINgENT aSSETS
The Group has issued the following guarantee at 30 June 2013:
(a) 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 8 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 SatCo 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
2013
$’000
2,346
9,384
4,692
16,422
As noted above this entire amount in maximum potential contingent commitment is offset in entirety by government funding.
27 EmpLOyEE BENEfIT LIaBILITy
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
19
21
CONSOLIDaTED
2013
$’000
4,670
394
5,064
2012
$’000
2,346
9,384
7,038
18,768
2012
$’000
5,209
481
5,690
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 2013
69
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
28 ShaRE BaSED paymENTS
(a) RECOgNISED ShaRE BaSED paymENT ExpENSES
The expense recognised for employee services received during the year is shown in the table below:
Expense arising from equity-settled share-based payment transactions
CONSOLIDaTED
2013
$’000
385
2012
$’000
113
The share-based payment plan is described below. During the financial year, nil performance rights (2012: Nil) lapsed, nil performance rights (2012: Nil)
were forfeited and nil performance rights (2012: Nil) were cancelled.
(B) pRImE mEDIa ExECuTIvE pERfORmaNCE RIghTS pLaN
An Executive Performance Rights Plan was established by the Company in 2012, whereby the Company grants rights over the ordinary shares of Prime
Media Group Limited to Executives of the consolidated entity. The rights are issued for nil consideration and are granted in accordance with the
plan’s guidelines established by the Directors of Prime Media Group Limited. The rights vest over a 36 month period subject to continuing service and
achieving the following targets:
• 60% of the rights will be subject to achievement of annual core 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 rights cannot be transferred and will lapse 30 days after vesting date.
(C) SummaRIES Of RIghTS gRaNTED uNDER pRImE mEDIa pERfORmaNCE RIghTS aND OpTION pLaN
The following table outlines the number (No.) and weighted average exercise price (WAEP) of, and movements in, performance rights on issue
during the year.
Balance at beginning of year
– granted
– exercised
– lapsed
– cancelled
– forfeited
Balance at end of year
Exercisable at end of year
2013
NO.
1,258,000
1,580,000
–
292,000
–
–
2,546,000
–
waEp
–
$0.00
–
–
–
–
2012
NO.
–
1,258,000
–
–
–
–
$0.00
–
1,258,000
–
waEp
–
$0.00
–
–
–
–
$0.00
–
(D) pERfORmaNCE RIghTS pRICINg mODEL
pRImE mEDIa pERfORmaNCE RIghTS
Employees must remain in service for period of three years from date of grant. The fair value of performance rights granted is estimated at the date of
the grant using a Monte-Carlo simulation model, taking into account the terms and conditions upon which the performance rights were granted.
The fair value of performance rights granted during the year were estimated on the date of grant using the following inputs to the model:
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of performance rights (years)
Performance rights exercise price ($)
Share price at grant date ($)
2013
2012
OCTOBER 2012
NOvEmBER 2012 SEpTEmBER 2011 NOvEmBER 2011
8.23
33.65
2.56
3
$0.00
$0.80
8.23
35.02
2.64
3
$0.00
$0.81
6.33
26.57
3.62
3
$0.00
$0.66
6.33
27.24
3.05
3
$0.00
$0.66
The dividend yield reflects the assumption that the current dividend payout will continue. The expected life of the performance rights 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.
(E) wEIghTED avERagE REmaININg CONTRaCTuaL LIfE.
The weighted average remaining contractual life of performance rights outstanding as at 30 June 2013 is 2.0 years (2012: 3 years).
(f) RaNgE Of ExERCISE pRICE
The range of exercise price for performance rights outstanding at the end of the year was $0.00 (2012: $0.00).
(g) wEIghTED avERagE fOR vaLuE
The weighted average fair value of performance rights granted during the year was $0.63 (2012: $0.55).
70
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
29 EvENTS afTER ThE REpORTINg pERIOD
On 12 August 2013 the Group announced the sale of the Prime radio entities that held four AM and six FM licences in regional Queensland, for a
minimum of $24,525,000 plus surplus cash to be determined at the date of completion. The sale is expected to be completed on 30 August 2013. As a
consequence of the sale, the radio assets and liabilities have been classified as held for sale and the segment operations reclassified as discontinuing
in the current and prior year Consolidated Statement of Comprehensive Income.
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
2013
$’000
2012
$’000
281,200
121,444
402,644
11,203
26,327
37,530
440,174
290,713
106,099
396,812
18,623
23,059
41,682
438,494
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
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
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
Seven Affiliate Sales Pty Limited
Prime Media Broadcasting Services Pty Limited
Prime Media Group Services Pty Limited
COuNTRy Of
INCORpORaTION
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
EQuITy INTEREST
2013
%
2012
%
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
Prime media GrouP AnnuAl RepoRt 2013
71
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
32 KEy maNagEmENT pERSONNEL
NamE
AMI Radio Pty Limited
Hot 91 Pty Limited
Prime Digital Media Pty Limited
Broadcast Production Services Pty Limited
Production Strategies Pty Limited as trustee for Production Strategies Discretionary Trust
Wastar International Pty Ltd
Screenworld Pty Ltd
OSB Holdings Pty Ltd as trustee for the OSB Unit Trust
On Site Broadcasting Pty Limited
OSB Australia Pty Ltd
OSB Corporation Pty Limited
On Corporation Pty Limited
Broadcast Rentals Pty Limited
COuNTRy Of
INCORpORaTION
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
EQuITy INTEREST
2013
%
100
100
100
100
100
100
100
100
100
100
100
100
100
2012
%
100
100
100
100
100
100
100
100
100
100
100
100
100
(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.
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 licence. 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 20 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.
72
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
(a) DETaILS Of KEy maNagEmENT pERSONNEL
(i) DIRECTORS
P.J. Ramsay AO
M.S. Siddle
P.J. Evans FCA
A.A. Hamill
I.P. Grier AM
I.R. Neal
I.C. Audsley
Chairman (non-executive)
Deputy Chairman (non-executive)
Director (non-executive)
Director (non-executive)
Director (non-executive)
Director (non-executive)
Director (Chief Executive Officer)
(ii) ExECuTIvES
D. Walker
S. Wood
E. McDonald
G. Smith
J. Palisi
Group General Manager Sales and Marketing
Group General Manager Operations
General Counsel and Company Secretary
Chief Technology Officer
Chief Financial Officer (appointed 1 October 2012)
There were no other changes to KMP after the reporting date and before the date the financial report was authorised for issue.
(B) COmpENSaTION Of KEy maNagEmENT pERSONNEL
Short term employee benefits
Post-employment benefits
Long term benefits
Termination benefits
Share based payments
CONSOLIDaTED
2013
$’000
4,340
120
96
–
364
4,920
2012
$’000
4,331
127
573
387
116
5,534
Details of remuneration amounts paid to individual KMP are disclosed in tables 1 and 2 of section 4 of the Remuneration Report.
(C) EQuITy SETTLED ShaRE BaSED paymENTS Of KEy maNagEmENT pERSONNEL
BaLaNCE aT
BEgINNINg
Of pERIOD
1 JuLy 2012
gRaNTED aS
REmuNERaTION
pERfORmaNCE
RIghTS
ExERCISED
NET ChaNgE
OThER
BaLaNCE aT
END Of pERIOD
30 JuNE 2013
NOT
ExERCISaBLE
ExERCISaBLE
vESTED aT 30 JuNE 2013
615,000
700,000
200,000
230,000
200,000
100,000
–
1,430,000
167,000
184,000
–
–
292,000
1,258,000
BaLaNCE aT
BEgINNINg
Of pERIOD
1 JuLy 2011
2013
Directors
Ian Audsley
Other Executives
Shane Wood
Dave Walker
John Palisi
Emma McDonald
Lesley Kennedy
2012
Directors
Ian Audsley
Other Executives
Lesley Kennedy
Shane Wood
Dave Walker
–
–
–
–
–
–
–
–
–
–
200,000
1,315,000
367,000
414,000
–
–
100,000
(292,000)
(292,000)
–
2,396,000
–
–
–
–
–
–
–
–
–
–
–
–
–
gRaNTED aS
REmuNERaTION
pERfORmaNCE
RIghTS
ExERCISED
NET ChaNgE
OThER
BaLaNCE aT
END Of pERIOD
30 JuNE 2012
NOT
ExERCISaBLE
ExERCISaBLE
vESTED aT 30 JuNE 2012
–
–
–
–
–
615,000
292,000
167,000
184,000
1,258,000
–
–
–
–
–
–
–
–
–
–
615,000
292,000
167,000
184,000
1,258,000
–
–
–
–
–
–
–
–
–
–
Prime media GrouP AnnuAl RepoRt 2013
73
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
32 KEy maNagEmENT pERSONNEL (CONTINUED)
(D) ShaREhOLDINgS Of KEy maNagEmENT pERSONNEL
ShaRES hELD IN pRImE mEDIa gROup LImITED (NumBER)
OpENINg
BaLaNCE
ORD.
gRaNTED aS
REmuNERaTION
ORD.
ON ExERCISE
Of RIghTS
ORD.
NET ChaNgE
OThER
ORD.
CLOSINg
BaLaNCE
ORD.
30 June 2013
Directors
P.J.Ramsay AO
M.S.Siddle
P.J.Evans FCA
Total
30 June 2012
Directors
P.J.Ramsay AO
M.S.Siddle
P.J.Evans FCA
Executives
D.Edwards
Total
109,903,654
984,082
24,286
110,912,022
109,903,654
984,082
24,286
56,572
110,968,594
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
109,903,654
984,082
24,286
110,912,022
109,903,654
984,082
24,286
56,572
110,968,594
All equity transactions with specified directors and specified executives other than those arising from the exercise of remuneration rights 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 KEy maNagEmENT pERSONNEL wITh LOaNS IN ThE REpORTINg pERIOD 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
hIghEST LOaN
BaLaNCE
DuRINg yEaR
$’000
30 June 2013
Executives
D. Edwards
G. Smith
Total
30 June 2012
Executives
D. Edwards
G. Smith
Total
100
40
140
200
80
280
–
–
–
–
–
–
100
40
140
100
40
140
–
–
–
–
–
–
–
–
–
100
40
140
–
–
–
10
4
14
100
40
140
200
80
280
(ii) TERmS aND CONDITIONS Of LOaNS
The Company wound up its Executive Loan Scheme effective 1 July 2012 and a provision for the loan balance as at 30 June 2012 was raised. The loans
to executives were interest free and forgiven on the basis of continued services with the company. 20% of the original loan balance was forgiven on
1 July of each year if the executive remained employed with the company at that date. If the executive terminated their employment during the 5 year
period the balance of the loan at the date of termination was repayable by the executive on the date of termination. Executives had 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 amount waived by the company was 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 2013.
74
Notes to the fiNANciAL stAteMeNts
for the YeAr eNDeD 30 JuNe 2013
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
2013
$’000
2012
$’000
92
896,018
8,317
631,598
310,262
(49,675)
3,833
264,420
(7,361)
(7,361)
84
929,157
10,068
630,404
310,262
(14,959)
3,450
298,753
(9,883)
(9,883)
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 that a controlled entity within the Closed Group is wound up. 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 15).
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 on behalf 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
8 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 SatCo 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 8 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 (2012: nil).
Prime media GrouP AnnuAl RepoRt 2013
75
Directors’ DecLArAtioN
for the YeAr eNDeD 30 JuNe 2013
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 the consolidated entity are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and of its performance for the year ended on
that date; and
(ii) complying with Accounting Standards and the Corporations Regulations 2001;
(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; and
(d) as at the date of this declaration, there are reasonable grounds to believe the members of the Closed Group identified in Note 15 will be able to
meet any obligations or liabilities to which they are or may become subject, by virtue of the Deed of Cross Guarantee.
(2) This declaration has been made after receiving the declarations required to be made to the Directors from the Chief Executive Officer and Chief
Financial Officer in accordance with section 295A of the Corporations Act 2001 for the financial year ending 30 June 2013.
On behalf of the Board
P. J. Evans FCA
Director
Sydney, 28 August 2013
76
iNDepeNDeNt AuDit report
for the YeAr eNDeD 30 JuNe 2013
Ernst & Young
680 George
Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW
2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent auditor's report to the members of Prime
Media Group Limited
Report on the financial report
We have audited the accompanying financial report of Prime Media Group Limited, which
comprises the consolidated statement of financial position as at 30 June 2013, the
consolidated statement of comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, notes comprising
a summary of significant accounting policies and other explanatory information, and the
directors' declaration of the consolidated entity comprising the company and the entities it
controlled at the year's end or from time to time during the financial year.
Directors' responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal controls as the directors determine are necessary
to enable the preparation of the financial report that is free from material misstatement,
whether due to fraud or error. In Note 2, the directors also state, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial
statements comply with International Financial Reporting Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit.
We conducted our audit in accordance with Australian Auditing Standards. Those standards
require that we comply with relevant ethical requirements relating to audit engagements and
plan and perform the audit to obtain reasonable assurance about whether the financial report
is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor's judgment,
including the assessment of the risks of material misstatement of the financial report, whether
due to fraud or error. In making those risk assessments, the auditor considers internal controls
relevant to the entity's preparation and fair presentation of the financial report in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity's internal controls. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the directors, as well as evaluating the overall presentation of
the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the
Corporations Act 2001. We have given to the directors of the company a written Auditor’s
Independence Declaration, a copy of which is included in the directors’ report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards
Legislation
Prime media GrouP AnnuAl RepoRt 2013
77
iNDepeNDeNt AuDit report
for the YeAr eNDeD 30 JuNe 2013
Opinion
In our opinion:
a. the financial report of Prime Media Group Limited is in accordance with the
Corporations Act 2001, including:
i
giving a true and fair view of the consolidated entity's financial position as at
30 June 2013 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations
Regulations 2001; and
ii
b. the financial report also complies with International Financial Reporting Standards
as disclosed in Note 2.
Report on the remuneration report
We have audited the Remuneration Report included in the directors' report for the year ended
30 June 2013. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations
Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our
audit conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Prime Media Group Limited for the year ended
30 June 2013, complies with section 300A of the Corporations Act 2001.
Ernst & Young
David Simmonds
Partner
Sydney
28 August 2013
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards
Legislation
78
Asx ADDitioNAL iNforMAtioN
for the YeAr eNDeD 30 JuNe 2013
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 27 September 2013.
(a) DISTRIBuTION Of EQuITy SECuRITIES
ORDINaRy ShaRES
As at 27 September 2013, 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:
(B) TwENTy LaRgEST REgISTERED ShaREhOLDERS
The names of the twenty largest registered holders of quoted shares at 27 September 2013 are:
1. Paul Ramsay Holdings Pty Limited
2. RBC Dexia Investor Services Australia Nominees Pty Limited
3. National Nominees Limited
4. Network Investment Holdings Pty Limited
5. BNP Paribas Noms Pty Limited
6. Citicorp Nominees Pty Limited
7. JP Morgan Nominees Australia Limited
8. HSBC Custody Nominees (Australia) Limited
9. Birketu Pty Limited
10. Mr George Walter Mooratoff
11. AMP Life Limited
12. UBS Nominees Pty Limited
13. Equity Trustees Limited
14. Paul Ramsay Foundation Pty Limited
15. Sandhurst Trustees Ltd
16. Mr Michael Siddle & Mrs Lee Siddle ATF Siddle Family
17. WIN Corporation Pty Limited
18. Mr Jan Sinclair and Mrs Anne Sinclair
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