Prime Media Group Limited

2018 ANNUAL REPORT

PAGE 1 
Chairman’s Report

PAGE 2 
Chief Executive 
Officer’s Report

PAGE 4 
Directors’ Report

PAGE 21 
Financial 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 ($).

DIRECTORS

John K. Hartigan (Chair) 
15 May 2014 – Present

Ian R. Neal  
6 June 2008 – Present

Peter J. Macourt  
1 September 2014 – Present

Cass O’Connor  
21 April 2015 – Present

Ian C. Audsley (Chief Executive Officer)  
24 June 2010 – Present

REGISTERED OFFICE

363 Antill Street 

Watson ACT 2602 

Ph: 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) 

AUDITORS

Ernst & Young

CHAIRMAN’S  
REPORT

On behalf of the directors of Prime 
Media Group I am pleased to present the 
Annual Report for the 2018 financial year.

The company’s financial result for the 2018 financial year 
demonstrates the degree of disruption and change that 
Australia’s traditional media companies are experiencing. 
There is no doubt that market dynamics are moving rapidly 
with both audiences and advertisers now enjoying far greater 
choice of entertainment and information platforms – many 
of which are provided by international tech giants.

It is apparent that regional Australia’s traditional media 
companies have experienced the greatest impact from the 
participation of these international players in the domestic 
market. When viewed through the prism of this dramatic 
change, Prime’s result at the higher end of market guidance 
was a solid result. 

Prime has not been idle in the midst of this disruption, 
announcing to the market in September 2017 that it had 
held discussions with Seven West Media over combining 
the companies. While we saw merit in the possible 
combination, the parties were not able to agree terms. 

Your Board continues to pursue and understand 
opportunities for the company.

In August this calendar year, Prime completed a new program 
supply arrangement with the Seven Network. Prime has 
been the regional affiliate of the Seven Network for 29 years 
and, under this new agreement, will remain so until 2023. 
While the new program supply agreement with Seven 
comes at an increased cost, Prime will continue to broadcast 
Australia’s best performing program schedule that will, 
for the first time, include test cricket and the Big Bash League. 

The difficult decision to suspend our dividend program 
in December 2017 is a matter that has been raised 
by many shareholders. There has been mixed support 
for the suspension and the allocation of funds to reducing 
Prime’s interest bearing debt. Your Board acknowledges 
these challenges for shareholders and will continue 
to review the position at each reporting period. 

The next twelve months might see dramatic changes 
for metropolitan media companies, which may have 
a flow on effect for regional Australia. Prime will continue 
to engage with industry participants to ensure that it is part 
of a consolidated media landscape. Prime led the push for 
media regulation reform to shake up a complacent industry. 
We believe that, in time, a plethora of deals will present 
themselves as media industry economics will dictate so.

Securing this reform and entering into a new program 
supply agreement secures Prime’s medium term prospects. 

I thank the management and staff of Prime for their 
unwavering commitment to industry leadership, my fellow 
board members and also thank our advertising partners 
for their ongoing support.

John Hartigan 
CHAIRMAN

PRIME MEDIA GROUP  |  ANNUAL REPORT 2018

1

CHIEF EXECUTIVE  
OFFICER’S REPORT

OVERVIEW 

Prime’s financial results for the 2018 Financial Year reflects 
an absence of the Olympic Games and persistent headwinds 
in regional television advertising spends at both national 
and local levels. 

Despite the challenges, Prime maintained its lead in audience 
and revenue shares in the 3 aggregated television markets 
of Northern New South Wales, Southern New South Wales 
and Victoria with a 40.5 audience share and a 41.9 share 
of total advertising revenue.

Prime’s 45.4 share of agency revenue share in the 3AGG 
market and Western Australia combined was back 1.9 share 
points on the prior year – caused by the absence of the Rio 
Olympic Games, as well as improved audience and revenue 
performance of direct competitors. 

Prime’s Western Australian television business GWN7 
maintained its tight grip on audience and revenue with 
a 53.2 audience share and a 66.8 agency revenue share. 

COMMONWEALTH GAMES

The Gold Coast Commonwealth Games in April 2018 
provided the company with good audience and revenue 
momentum in the second half of the financial year. However, 
with fewer days of competition than the Olympics, and 
fewer events each day, it could not replace the advertising 
opportunities from Rio.

The Commonwealth Games delivered a 56.7 audience share 
in Prime’s 3 aggregated markets and a 55.9 audience share 
in Western Australia. 

LOCAL NEWS & CURRENT AFFAIRS

PRIME7 Local News services continue to win their respective 
markets across News South Wales and GWN7 continues its 
stranglehold on news audiences in Western Australia with 
a 72.6 share at 5:30pm. 

number of middle-aged males losing their life in road 
accidents across regional Australia.  

The program won its timeslot attracting 55% of the available 
audience and winning every audience demographic. These 
public affairs specials helped to consolidate Prime’s leadership 
in local news television and have contributed to our becoming 
the number one news service on the North Coast of New 
South Wales for the first time.

REGIONAL TELEVISION LEADERSHIP

The business continued its leadership in the regional 
television industry delivering the best revenue shares 
of any television business in Australia along the way. 

Much of that success is due to the strong programming 
Prime acquires from the Seven Network, which we have 
turned into good fortune through a focused and proactive 
service orientation to advertisers and a disciplined approach 
to managing business fundamentals. Tight expenditure 
control included a fifty percent reduction in senior executive 
positions. Positions affected included General Counsel, 
General Manager Operations and General Manager 
Television. I thank Emma McDonald, Shane Wood and Tony 
Hogarth for their exemplary service to the company over the 
term of their respective tenures.

RENEWED AFFILIATION

Prime is a very good business operating in a challenged 
sector. Shoring up our programming supply through an early 
renewal of our arrangements with the Seven Network was the 
single option to securing advertiser support and audience 
continuity into the medium term. 

With the addition to the program schedule of Test Cricket and 
the Big Bash League, Seven’s schedule has greater continuity 
and so greater opportunity across the year and we look 
forward to working with our advertising partners to make the 
cricket coverages a great success.

During the financial year Prime produced its third Ray Martin 
public affairs special to highlight the issue of the growing 

With that deal behind us and our debt reduced to historically 
low levels, the core business is set for the next five years 

2

HIGHLIGHTS
$219.2m

RE VENUE

$45.2m

EBITDA

$25.3m

CORE NE T PROFIT AF TER TA X ^

^  Excludes non-core specific items.

and the company is now well positioned to make decisions 
about its future with certainty; to have done so prior 
to locking in a new program supply agreement may have 
been misdirected.

The media industry has been slow to take advantage of the 
opportunities presented by regulatory reform, but it is fair 
to say that the only panacea to traditional media sector 
challenges is to achieve greater scale through consolidation. 
Accordingly we believe opportunity still exists for Prime 
to participate, but we are not complacent. 

COMMUNITY PARTICIPATION

In the 2018 financial year Prime allocated airtime to promote 
community initiatives across NSW and the Gold Coast, the 
ACT, Victoria and Western Australia including Angel Flight, 
Australian Red Cross and Guide Dogs Australia.

In closing I extend my thanks to the management and staff 
of Prime and GWN for their outstanding effort in maintaining 
the company’s leadership position in the sector, and to 
the Board for its support and stewardship during a period 
of strong headwinds.

Ian Audsley 
CHIEF EXECUTIVE OFFICER

3

PRIME MEDIA GROUP | ANNUAL REPORT 2018DIRECTORS’ REPORT

Your directors submit 
their report for the year 
ended 30 June 2018.

DIRECTORS

JOHN K. HARTIGAN

IAN R. NEAL

The names and details 
of the Company’s 
directors in office during 
the financial year and 
until the date of this 
report are set out below. 
Directors were in office 
for this entire period 
unless otherwise stated.

Non-Executive Chair  
(appointed 15 May 2014)

Non-Executive Director 
(appointed 6 June 2008)

Mr Hartigan headed News 
Corporation’s Australian operations 
as Chairman and Chief Executive 
Officer of News Limited (now known 
as News Corp Australia). He was also 
a director of FOXTEL and Chairman 
of Australian News Channel, which owns 
and operates Sky News. He has worked 
in advisory positions for the American 
Australian Association and the NSW 
Export and Investment Advisory Board. 
Mr Hartigan is a trustee of the Sydney 
Cricket and Sports Ground Trust, 
a Lifetime Member of The Bradman 
Foundation, a director of the 
Australian Paralympic Committee and 
until earlier this year was Chairman 
of Destination NSW.

Mr Neal is a Chair for the Executive 
Connection and consults on business 
strategy and implementation from 
a perspective of maximising shareholder 
value. 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 to various banking 
positions until establishing Nanyang 
Ventures. Mr Neal is a life member 
of the Financial Services Institute of 
Australia, a previous National President 
of The Securities Institute of Australia 
and was a member of the first 
Corporate Governance Council which 
established the Corporate Governance 
Guidelines. Mr Neal is Chairman 
of the Remuneration and Nomination 
Committee and a member of the Audit 
and Risk Committee.

4

 
 
PETER J. MACOURT

CASS A. O’CONNOR

IAN C. 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.

Non-Executive Director 
(appointed 1 September 2014)

Non-Executive Director 
(appointed 21 April 2015)

Mr Macourt is currently Chairman 
of Sky Network Television Limited 
and Virtus Health Limited. He is 
also a current director of FOXTEL 
and a former director and chief 
operating officer of News Limited 
and Independent Newspapers 
Limited. Mr Macourt is Chairman 
of the Audit and Risk Committee 
and a member of the Remuneration 
and Nomination Committee.

Ms O’Connor has over 30 years’ 
experience as a director of ASX 
listed companies, Federal and State 
government and unlisted entities. 
For the past 18 years she has managed 
her own corporate advisory company. 
Ms O’Connor is currently Chair 
of Audit and Risk Committee and 
non-executive director of Carriageworks 
Limited, a shareholder and director 
of multi-award winning independent 
television and film production entity 
Goalpost Pictures and a non-executive 
director of TRIBE, a leading influencer 
marketing and content platform. 
Ms O’Connor has previously worked 
for Bain & Co, Deutsche Bank, Turnbull 
& Partners, Goldman Sachs (Australia) 
and Carnegie, Wylie & Company. 
Ms O’Connor is a member of the 
Remuneration and Nomination 
Committee and the Audit and 
Risk Committee.

5

PRIME MEDIA GROUP | ANNUAL REPORT 2018 
 
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:

NAME

J.K. Hartigan

I.R. Neal

P.J. Macourt

C.A. O’Connor

I.C. Audsley

ORDINARY SHARES

RIGHTS OVER 
ORDINARY SHARES

–

40,000

–

75,000

865,456

–

–

–

–

750,000

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

I.R. Neal

P.J. Macourt

Dyesol Limited (Non-Executive Chair)

Sky Network Television Limited (Non-Executive Chair)

Virtus Health Limited (Non-Executive Chair)

C.A. O’Connor

PS&C Limited (Non-Executive Director)

PERIOD OF DIRECTORSHIP 

FROM

September 2006

August 2002

June 2013

October 2013

TO

Present

Present

Present

May 2017

McGrath Limited (Chair and Non-Executive Director)

December 2015

February 2018

COMPANY SECRETARY
Emma McDonald was Company Secretary during the reporting period up to the date of her resignation on 28 June 2018. She has been 
a solicitor for over 20 years, having worked in a number of large companies and for a major law firm. John Palisi, Prime’s Chief Financial Officer, 
was appointed Company Secretary at that time. He has been a Chartered Accountant for over 20 years and is a graduate of the Australian Institute 
of Company Directors.

EARNINGS PER SHARE

Basic earnings per share – Profit from Statutory earnings

Diluted earnings per share – Profit from Statutory earnings

Basic earnings per share – Profit from Core earnings

Diluted earnings per share – Profit from Core earnings

DIVIDENDS

Final dividend recommended:

 – on ordinary shares

Dividends paid in the year:

Interim for the year

 – on ordinary shares

Final for 2017 shown as recommended in the 2017 financial report

 – on ordinary shares

CENTS

(3.4)

(3.4)

6.9

6.9

CENTS

$’000

–

–

–

–

1.7

6,228

PRINCIPAL ACTIVITIES
The principal activities of Prime Media Group Limited during the year were the broadcast of free-to-air commercial television services in regional 
New South Wales, the Australian Capital Territory, regional Victoria, the Gold Coast area of Southern Queensland and regional Western Australia.

The majority of the Group’s television programming is supplied through a program supply agreement with the Seven Network and broadcast under 
the PRIME7 brand on the east coast and the GWN7 brand in regional Western Australia.

6

OPERATING AND FINANCIAL REVIEW

STATUTORY RESULTS 
The Company’s consolidated loss after tax attributable to the members for 
the year ended 30 June 2018 was $12,275,000, which represents a decrease 
of $48,519,000 or 133.9% on the previous corresponding period. 
Included in the consolidated loss is a non-cash impairment of television 
broadcast licences of $51,690,000 (2017: Nil), of which $20,674,000 was 
recognised in June 2018 and $31,016,000 was recognised in December 
2017. The impairment reflects the ongoing decline of regional free-to-air 
television advertising markets and increasing programming costs.

Revenue of $219,158,000 decreased 8.7% or $20,901,000 on the previous 
corresponding period, in part due to one-off advertising revenue arising 
from the 2016 Olympic Games broadcast being included in the prior 
year result. 

During the financial year, the Company maintained its lead revenue 
share of 41.9% in the aggregated regional market of New South Wales 
and Victoria, which represented a 1.8 share point reduction compared 
to the prior corresponding period. The Company’s television advertising 
revenue in the aggregated regional market of New South Wales and 
Victoria decreased by $15,952,000 or 8.1% on the previous corresponding 
period (noting the prior year included one-off advertising revenue 
associated with the 2016 Olympic Games broadcast), compared to the 
market, which declined 4.1% in the same period.

Other income of $1,044,000 declined 58.1% on the prior corresponding 
period which included a one-off gain on sale of surplus property located 
in Tamworth New South Wales of $1,005,000.

The Company’s gross profit margin declined from 47.5% to 45.8% 
as a result of increased content costs.

Total operating expenses of $55,021,000 were $5,075,000 or 10.2% 
unfavourable to the previous corresponding period, primarily due to the 
introduction of spectrum licensing fees in this financial year. The Federal 
Government waived free-to-air television broadcast licence fees in the 
previous corresponding reporting period.

The Company’s share of associate losses of $43,000 relates to joint 
ventures that broadcast Nine Entertainment programming in regional 
Western Australia and Mildura. 

Earnings before interest, tax and depreciation and amortisation 
of $45,157,000 decreased by $18,903,000 or 29.5%.

Net cash flow from operating activities of $32,113,000 declined 
$11,858,000 or 27.0% compared to the prior corresponding period. 
The decline in operating cash flows is consistent with the decline 
in regional television advertising markets in the period and the 2016 
Olympic Games broadcast revenues being collected in the previous 
corresponding period.

Net interest bearing debt reduced by $22,157,000 during the period 
to $14,793,000 at 30 June 2018. The Company continues to operate 
within bank covenants. Finance costs of $1,584,000 were 37.7% 
favourable to the previous corresponding period due to lower average 
interest bearing debt levels. 

DIVIDEND
The Company has suspended dividend payments until further notice and 
will apply all surplus funds to reduce interest bearing debt. This decision 
has been taken due to the continued decline in regional audiences and 
regional television advertising revenues and increasing content costs.

CORE NET PROFIT AFTER TAX
Core net profit after tax (non-IFRS measure) and before specific items 
was $25,259,000 (2017: $35,592,000), declined $10,333,000 or 29.0% 
on the previous corresponding period.

Reported (loss)/profit after tax 

(12,275)

36,244

2018
$’000

2017
$’000

Impairment of television 
broadcast licences (non-cash)

Release of deferred tax liability 
arising from impairment

Non-recurring legal and 
consulting expenses

Redundancies

Gain on sale of surplus assets

Income tax benefit related 
to specific items

Core net profit after tax and 
before specific items

SHAREHOLDER RETURNS

Core Earnings Per Share 
(cents per share) 1

Statutory Earnings Per Share 
(cents per share)

Core Return on Assets (ROA) 1

Statutory Return on Assets (ROA) 

Weighted Average Cost of Capital 
(pre-tax) 

Core Return on Equity (ROE) (%) 1,2

Statutory Return on Equity (ROE) 

%

%

%

%

Net Debt/Net Debt + Equity Ratio  %

Share price

Dividends per share

Total Shareholder Return 

$

cents

%

51,690

(15,507)

911

1,019

–

–

–

–

504

(1,005)

(579)

(151)

25,259

35,592

6.9

(3.4)

25.1

(12.2)

12.96

52.5

(25.5)

23.5

0.29

1.7

(19.2)

9.7

9.9

22.9

23.3

11.74

53.0

53.9

35.5

0.38

3.4

29.4

1  These returns have been calculated using core net profit after tax as set out 

within the Directors Report. 

2  Equity has been normalised for the impact of items disclosed as specific items.

STATEMENT OF FINANCIAL POSITION AND CASH FLOW
During the reporting period, the Group’s operating cash flows decreased 
by $11,858,000 to $32,113,000 primarily due to the decrease in television 
advertising revenue in the current year and one-off cash inflows in the 
prior year associated with the 2016 Olympic Games broadcast, and the 
timing of payments. 

Net cash flows used in investing activities of $3,120,000 (2017: $2,428,000) 
relate to capital expenditure, mainly for broadcast and computer 
equipment totalling $3,080,000. Net cash flows from investing activities 
in the prior year included the proceeds from the sale of surplus property 
in Tamworth, New South Wales of $1,611,000.

7

PRIME MEDIA GROUP | ANNUAL REPORT 2018CAPITAL STRUCTURE
The Group’s secured bank loan facility decreased to $25,696,000 
as at 30 June 2018 (30 June 2017: $43,540,000). The Group continues 
to operate within the terms of its debt facility, which matures April 2020. 
During the reporting period, the debt facility limit was reduced 
by $20 million to $60 million.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Board and Executive consider that the future performance of the 
Group will be influenced by the outlook for television advertising 
in regional Australia and the increasing cost of content to broadcast 
free-to-air television. 

Interest-bearing loan 

Cash and short term deposits

Net debt 

Total equity

Total capital employed

Gearing

2018
$’000

25,696

(10,903)

14,793

48,153

62,946

23.5%

The profile of the Group’s debt finance is as follows:

Non-current

Secured bank loan facility

Total interest bearing liabilities

2018
$’000

25,696

25,696

2017
$’000

43,540

(6,590)

36,950

67,206

104,156

35.5%

2017
$’000

43,540

43,540

RISK MANAGEMENT
The Group’s approach to risk management is addressed in the Corporate 
Governance Statement, which is available on the Company’s website 
www.primemedia.com.au/investors. The Board is responsible for 
ensuring that risks, and also opportunities, are identified on a timely 
basis and that the Group’s objectives and activities are aligned with 
the risks and opportunities identified by the Board.

The 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 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’).

As part of its risk management framework, the Company has identified 
the following key risks that may affect the Group’s financial performance: 
•  fluctuations in consumer demand that impact advertising revenues, 
which the Company manages by ensuring it continues to maintain 
a strong advertising sales team and strong relationships with 
advertisers and agencies;
the impact on audiences as a result of new media platforms 
and technologies and the resultant impact on television 
advertising revenues; 
the increasing cost of content and continued access to quality 
programming; and
the ability to attract and retain employees with relevant 
media experience.

• 

• 

• 

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the Group’s state of affairs other 
than the significant event after the balance date referred to in this 
Directors’ report.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE
On 20 August 2018 the Company executed an extension to its program 
supply agreement with the Seven Network, effective from 1 July 2018 
for a period of 5 years.

8

PERFORMANCE RIGHTS (EQUITY)

UNISSUED SHARES
At the date of this report there were 1,377,753 (FY17: 3,495,191) performance 
rights over unissued ordinary shares under the Prime Media Group Limited 
Performance Rights Plan that are yet to vest. Refer to Note 26 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.

As reported at the Company’s 2017 Annual General Meeting, the Prime 
Media Group Limited Performance Rights Plan has been suspended, 
with no new issue of performance rights in this reporting period. 
A new cash settled long term incentive plan has been introduced, 
details of which are provided in the Remuneration Report.

SHARES ISSUED OR ACQUIRED AS A RESULT OF THE 
EXERCISE OF PERFORMANCE RIGHTS
During the financial year, 1,211,926 (FY17: 1,142,091) ordinary shares were 
acquired on market by the Trustee of the Prime Media Group Limited 
Performance Rights Plan as a result of the vesting and exercise of rights 
issued in 2014.

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 $276,425 (2017: $164,315) 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. The Company has 
also executed a deed of access, indemnity and insurance with 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.

DIRECTORS’ MEETINGS AND COMMITTEE 
MEMBERSHIP
The number of meetings of directors, including meetings of committees 
of directors, held during the year and the numbers of meetings attended 
by each Director were as follows:

BOARD 
MEETINGS

AUDIT 
AND RISK 
COMMITTEE 
MEETINGS

REMUNERATION 
AND NOMINATION 
COMMITTEE 
MEETINGS

Number of meetings 
held:

Number of meetings 
attended:

J.K. Hartigan

I.R. Neal

P.J. Macourt 

C.A. O’Connor

I.C. Audsley 

13

13

13

12

13

13

2

–

2

2

2

–

2

–

2

2

2

–

DIRECTORS’ REPORT CONTINUEDMESSAGE FROM THE CHAIR OF THE REMUNERATION AND NOMINATION COMMITTEE 

Dear Shareholder

On behalf of the Board of Prime Media Group I am pleased to present the Company’s Remuneration Report 
for the financial year to 30 June 2018 in accordance with section 300A of the Corporations Act, outlining the 
nature and amount of remuneration for non-executive directors and key management personnel.

CHANGES TO KEY MANAGEMENT PERSONNEL (KMP)
The 2018 financial year marked the passing of media ownership laws, which has been a key strategy 
of Prime’s over the past 5 years. Operationally the Company has maintained a lead revenue share in its key 
markets of New South Wales and Victoria while maintaining a tight rein on operating costs. Nevertheless, 
the Company has continued to experience declines in audiences across regional Australia, which has 
resulted in overall revenue declines. During the year, your Board made the difficult decision to suspend 
the dividend program in favour of reducing the Company’s interest bearing debt. Consistent with this 
approach, your Board also made the decision to reduce the size of the Company’s executive management 
team to reduce the total amount of executive remuneration having regard for current industry trends and 
Company performance. This resulted in the departure of three long-serving KMP whom I would personally 
like to thank for their service and valuable contribution over the years. 

REMUNERATION OUTCOMES
This financial year was highlighted by gains from the successful monetisation of the Commonwealth Games 
broadcast in what was otherwise a soft advertising market. As a result the Group did not achieve its core 
net profit target, resulting in STI awards being reduced to between 34% and 60% of short term incentives 
depending on each executive’s individual incentive plan.

As previously reported at Prime’s 2017 Annual General Meeting, the Prime Media Group Performance 
Rights Plan is in run off mode with no new grant of performance rights to KMP in this reporting period. 
During this reporting period, 79.8% of performance rights granted in 2014 vested in November 2017. 
Departing KMP forfeited their remaining unvested performance rights and received termination payments 
in accordance with their employment contracts.

In keeping with this approach, non-executive director fees also remained flat for a third consecutive year.

CHANGES TO REMUNERATION
The Company has introduced a new cash-settled long term incentive plan for key management personnel 
which is directly linked to movements in share price, aligning KMP long term incentives to shareholder 
wealth outcomes. Key management personnel received their first allocation under the new plan this 
financial year, with vesting to occur over the next three financial years.

As Chair of the Remuneration and Nomination Committee, I invite you to review the remuneration report 
and welcome your continued feedback and engagement. 

Yours sincerely

Mr. Ian Neal 
Non-Executive Director and Chair of Remuneration and Nomination Committee

9

PRIME MEDIA GROUP | ANNUAL REPORT 2018REMUNERATION REPORT (AUDITED)

2.  REMUNERATION GOVERNANCE

A.  REMUNERATION AND NOMINATION COMMITTEE
The Board has appointed a Remuneration and Nomination Committee 
consisting of three independent non-executive directors (NEDs) to, 
amongst various responsibilities, review and make recommendations 
to the Board regarding:
•  Executive management remuneration and incentives;
•  Executive management performance against agreed performance 

targets; and

•  The remuneration framework for directors.

During the financial year, the Remuneration and Nomination Committee 
held 2 meetings which were attended by all committee members.

The CEO and Company Secretary also attended the Remuneration and 
Nomination Committee meetings by invitation, where management 
input was required. The CEO and Company Secretary were 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/investors.

3. 

 EXECUTIVE REMUNERATION 
ARRANGEMENTS

A.  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. The Remuneration and Nomination 
Committee reviews total remuneration packages annually.

To this end, key objectives of the Company’s reward framework are 
to ensure that remuneration practices:
•  Are aligned to Prime Media 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 interest of executives and shareholders.

The Company 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. When referencing 
the external market, the Company has regard for media sector wages 
and remuneration offered amongst the pool of candidates for which 
it must compete for talent. KMP remuneration is therefore benchmarked 
against industry peers and with regard for market data, insights into 
remuneration trends, the performance of the Company and individual, 
and the broader economic environment. 

This Remuneration Report for the year ended 30 June 2018 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

a.  Remuneration and Nomination Committee

3.  Executive Remuneration Arrangements

a.  Remuneration Principles and Strategy
b.  Remuneration Mix
4.  Detail of Incentive Plans

a.  Short Term Incentive Entitlements and Outcomes
b.  Long Term Incentives

i.  Prime Media Group Limited Performance Rights Plan approved 

November 2014

ii.  Prime Media Group Limited Cash Settled Performance Plan 

introduced November 2017

c.  Executive Remuneration Outcomes (including link to performance)

5.  Executive Contracts
6.  Non-Executive Director Remuneration

1. 

INTRODUCTION

The Remuneration Report details the remuneration arrangements for key 
management personnel (KMP) who are defined as those persons having 
authority and responsibility for planning, directing and controlling the 
major activities of the 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, and 
secretaries of the Company and the Group. KMP for the year ended 
30 June 2018 were:

KMP

POSITION

TERM AS KMP

Non-Executive Directors

J.K. Hartigan

Chair; Director

I.R. Neal

Director

P.J. Macourt

Director

C.A. O’Connor

Director

Full Year

Full Year

Full Year

Full Year

Executive KMP

I. Audsley

D. Walker

CEO and Executive Director

Full Year

Group General Manager 
Sales and Marketing

Full Year

J. Palisi

Chief Financial Officer

Full Year

E. McDonald

General Counsel & 
Company Secretary

To 29 June 2018

S. Wood

Group General Manager 
Operations

To 16 February 2018 

A. Hogarth

General Manager Television

To 15 December 2017

10

DIRECTORS’ REPORT CONTINUEDB.  REMUNERATION MIX
The following table represents target remuneration at grant assuming that all performance conditions are met. The relative proportions of senior 
executive remuneration are as follows:

NAME

CEO and Executive Director

I. Audsley

Other KMP

D. Walker

J. Palisi

FIXED 
REMUNERATION

AT RISK
STI

AT RISK
LTI

TOTAL

TOTAL 
AT RISK

56%

55%

70%

34%

35%

19%

10%

100%

44%

10%

11%

100%

100%

45%

30%

44% of the CEO’s total remuneration package is ‘at risk’ and therefore subject to the achievement of both short term and long term performance 
requirements that are linked to the Company’s strategy and driving long term shareholder wealth creation. 

REMUNERATION 
COMPONENT

VEHICLE

PURPOSE

LINK TO PERFORMANCE

Fixed remuneration

Represented by total employment cost: 
comprises base salary, superannuation 
contributions and other discretionary 
and non-discretionary benefits.

To provide competitive fixed 
remuneration set with reference 
to the median of comparable external 
market roles.

Company and individual performance 
are considered during the annual 
review process.

STI component

Paid in cash.

Rewards KMP for their contribution 
to achievement of Group and business 
unit outcomes, as well as individual Key 
Performance Indicators (KPIs).

Core NPAT;

Operational performance;

Power ratio linking revenue and 
audience share; and

Risk management including 
commitment to Work Health Safety.

LTI component

Performance rights granted in prior 
years up to 30 June 2016 that vest 
in this reporting period. 

Rewards KMP for their contribution 
to the creation of shareholder value 
over the longer term.

Performance rights vest subject 
to achieving core EPS and power 
ratio targets.

Refer to 4.B.II) of this report for details 
of the cash settled LTI plan that was 
introduced this reporting period.

11

PRIME MEDIA GROUP | ANNUAL REPORT 20184.  DETAIL OF INCENTIVE PLANS

A.  SHORT TERM INCENTIVE ENTITLEMENTS AND OUTCOMES
The Group operates an annual STI program that is available to key management personnel and awards a cash bonus subject to attainment of clearly 
defined Group wide, business unit and individual measures. 

STI PERFORMANCE CRITERIA
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

Chief Executive Officer

Group GM Sales and Marketing

Chief Financial Officer

GROUP FINANCIAL 
PERFORMANCE  

MEASURES:
CORE NPAT

DIVISIONAL FINANCIAL 
PERFORMANCE MEASURES:
POWER RATIO
REVENUE YIELD
EXPENSE MANAGEMENT
REVENUE GENERATION

50%

9%

40%

–%

84%

40%

NON-FINANCIAL MEASURES:
GROUP STRATEGY OPERATIONAL 
PERFORMANCE INCLUDING:
AUDIENCE SHARE 
COMMITMENT TO RISK  
MANAGEMENT AND WORK  

HEALTH SAFETY

50%

7%

20%

KEY PERFORMANCE OBJECTIVES

OUTCOMES

COMMENTARY

Financial results

Not achieved
Not achieved

Statutory net loss after tax of $12,275,000. 
Core net profit after tax of $25,259,000.

Maximising advertising revenue 
share and yield 

Strategic priorities

Risk management culture including 
promotion of work health safety

Partially
achieved

Achieved

Achieved

Prime reported a power ratio of 1.038, which demonstrates that Prime’s revenue 
share significantly exceeded its audience share in the aggregated regional market 
of New South Wales and Victoria.

Lead role in advocating for the removal of media laws that regulate the ownership 
and control of traditional media companies.

The Executive Risk Management Committee continued to promote a company-wide 
culture of risk management and work health safety.

After consideration of performance against KPIs, the Remuneration and Nomination Committee considers and recommends to the Board, on an annual 
basis, the amount, if any, of STI to be 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.

B.  LONG TERM INCENTIVES 

I)  PRIME MEDIA GROUP LIMITED PERFORMANCE RIGHTS PLAN APPROVED NOVEMBER 2014
The Prime Media Group Limited Performance Rights Plan, as approved by shareholders at the 2014 Annual General Meeting, provided for the annual 
grant of performance rights to key management personnel for the period November 2014 to November 2017. The performance rights are measured 
over a three-year performance period. Vesting is subject to continuous service and achievement of 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).

If the LTI performance targets are met or exceeded at the point of testing, 100% of that portion of the award will vest. The exercise price of the 
performance rights is nil. The rights will lapse 30 days after vesting date. As at 30 June 2018, 1,377,753 performance rights granted in prior years are 
yet to vest. No performance rights were granted in the current reporting period. The cumulative allocation of unvested performance rights represents 
1.0% of the undiluted capital of the Company with a maximum income cost of $579,278 (2017: $1,974,183). 

The EPS targets are disclosed at the point of testing and to the degree that awards vest under this portion of the LTI scheme.

LTI participants are not entitled to dividends on unvested awards. In a change of control event, the Board retains discretion in determining the manner 
in which outstanding equity incentives will be dealt with.

12

DIRECTORS’ REPORT CONTINUEDII)  PRIME MEDIA GROUP LIMITED CASH SETTLED PERFORMANCE PLAN INTRODUCED NOVEMBER 2017
On 3 November 2017, the Company implemented a new Prime Performance Plan for key management personnel. The new plan is a cash-based plan 
which has been designed to reward KMP performance over a 3 year period by offering a potential entitlement to cash payments linked to the Group’s 
share price performance over the same period.

The maximum long term incentives under the plan for the following key management personnel are as follows:

2018

Director

I. Audsley

Executive

D. Walker

J. Palisi

ENTITLEMENT

GRANT DATE

SHARE PRICE 
AT GRANT

MAXIMUM VALUE AT 
GRANT DATE

1,000,000

23/1/2018

450,000

375,000

23/1/2018

23/1/2018

$0.42

$0.42

$0.42

420,000

189,000

157,500

Under the new cash-settled performance plan, eligible KMP will be granted notional share units, the value of which will vary with the Company’s share 
price over a three year vesting period. The amount of notional share units that vest will be linked to the employee’s STI performance measures as set 
by your Board at the beginning of each financial year. The value of notional share units at vesting will be equivalent to the Company’s share price at the 
date of vesting. 

An employee will forfeit their entitlement to unvested notional share units if their employment ends prior to the vesting date.

In the event of a change of control of the Company, an employee’s notional share units will vest on a pro-rata basis at the share price value on the date 
of change of control.

No cash-settled benefits were paid to KMP under the new plan in this reporting period.

C.  EXECUTIVE REMUNERATION OUTCOMES (INCLUDING LINK TO PERFORMANCE)

COMPANY PERFORMANCE AND ITS LINK TO SHORT TERM INCENTIVES 
The financial performance measures driving STI payment outcomes are: 
•  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 

greater than 1 indicates that the Company is performing ahead of its audience share. The Company achieved a power ratio of 1.038. 

The following chart shows the Group’s core NPAT ($million) and EBITDA for the five year period ended 30 June 2018. Core NPAT is defined as statutory 
net profit after tax and before non-core items.

$64.7

$66.9

$55.4

$64.1

$33.4

$33.5

$27.4

$35.6

$45.2

$25.3

2014

2015

2016

2017

2018

Core NPAT ($ million) including discontinued operations

EBITDA

The Remuneration and Nomination Committee will consider the STI payments for the 2018 financial year in the first quarter of the 2019 financial 
year. 100% of the STI cash bonus pool accrued for 2017 financial performance was paid in the 2018 financial year to key management personnel. 
As demonstrated in the table below, STI payments have been accrued at between 33.7% and 60.0% of the maximum cash bonus available to ongoing 
executives for the 2018 financial year. 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 2019 financial year. 

EXECUTIVE

I. Audsley

D. Walker

J. Palisi

E. McDonald

S. Wood

T. Hogarth

Total 

FY18 STI 
ACCRUED

FY18 STI 
AWARD POOL

FY17 STI PAID 
IN CASH

FY17 STI 
AWARD POOL

%

262,500

101,003

66,150

–

–

–

525,000

299,990

110,250

107,835

110,250

115,550

50.0%

33.7%

60.0%

–%

–%

–%

500,000

295,867

102,875

102,700

105,000

107,360

500,000

299,915

105,000

102,700

102,875

110,000

429,653

1,268,875

33.9%

1,213,802

1,220,490

PAID 
%

100.0%

98.7%

100.0%

100.0%

100.0%

97.6%

99.5%

13

PRIME MEDIA GROUP | ANNUAL REPORT 20184.  DETAIL OF INCENTIVE PLANS (CONTINUED)

C.  EXECUTIVE REMUNERATION OUTCOMES (INCLUDING LINK TO PERFORMANCE) (CONTINUED)

COMPANY PERFORMANCE AND ITS LINK TO LONG TERM INCENTIVES 
The 2014 Prime Media Group Limited Performance Rights Plan 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 table shows the Company’s performance over the 4 year period from 1 July 2014 to 30 June 2018. 

CORE EARNINGS PER SHARE (60%)

FY15

FY16

Target

Actual

Percentage Achieved

POWER RATIO (40%)

Total revenue share: 3AGG Market

All People 06:00 to 23:59

Power Ratio

Percentage Achieved

9.1

9.1

100.0%

42.16%

41.70%

1.011

100.0%

9.0

7.5

–%

41.70%

41.80%

0.998

99.8%

FY17

5.6

9.7

100.0%

43.75%

40.60%

1.078

100.0%

FY18

7.2

6.9

–%

41.94%

40.40%

1.038

100.0%

LTI awards under current performance rights plan

During the 2018 financial year 1,211,927 (FY17: 1,142,091) ordinary shares were acquired on market by the Trustee of the 2014 Prime Media Group 
Limited Performance Rights Plan as a result of performance rights that were issued in 2014 and vested under the Plan in November 2017. The LTI 
remuneration for each KMP is set out within Table 1 and 2 of this section. The equity-settled share based payments expense, referenced in Tables 1 
and 2 of this section, represents amounts accrued for performance rights that have not vested and do not represent payments made to any KMP.

14

DIRECTORS’ REPORT CONTINUEDD
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4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 3:  Prime Media Group Limited Performance Rights Plan

No performance rights were granted during the 2018 financial year. The following performance rights vested and/or lapsed during the 2018 
financial year:

2018

Director

I. Audsley

Executive

D. Walker

S. Wood

E. McDonald

J. Palisi

A. Hogarth

TOTAL

GRANT DATE

VESTING DATE

VESTED
NUMBER

LAPSED
NUMBER

20/11/2014

20/11/2017

479,200

120,800

19/9/2014

19/9/2014

19/9/2014

19/9/2014

19/9/2014

27/08/2017

27/08/2017

27/08/2017

27/08/2017

27/08/2017

173,660

159,733

159,733

159,733

79,867

43,778

40,267

40,267

40,267

20,133

1,211,926

305,512

Table 4:  Performance rights holdings of KMP

2018

Director

I. Audsley

Executive

D. Walker

S. Wood

E. McDonald

J. Palisi

A. Hogarth

TOTAL

BALANCE
1 JULY 2017

GRANTED AS 
REMUNERATION

PERFORMANCE 
RIGHTS 
EXERCISED

PERFORMANCE 
RIGHTS LAPSED

PERFORMANCE 
RIGHTS 
FORFEITED

BALANCE
30 JUNE 2018

EXERCISABLE

NOT 
EXERCISABLE

1,350,000

595,191

450,000

450,000

450,000

200,000

3,495,191

–

–

–

–

–

–

–

479,200

120,800

173,660

159,733

159,733

159,733

79,867

43,778

40,267

40,267

40,267

20,133

1,211,926

305,512

–

–

250,000

250,000

750,000

377,753

–

–

–

250,000

100,000

600,000

–

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–

–

–

–

–

–

–

750,000

377,753

–

–

250,000

–

1,377,753

The Prime Media Group Security Trading Policy applies to all NEDs and executives. The policy prohibits officers and employees from dealing 
in Company securities in a way that breaches insider trading laws or would compromise confidence in Prime’s investor practices. This policy is publicly 
disclosed and available at www.primemedia.com.au/investors. 

Table 5:  Value of performance rights granted, exercised, lapsed or cancelled during the year

VALUE OF
PERFORMANCE 
RIGHTS GRANTED 
DURING THE YEAR 1
$

VALUE OF
PERFORMANCE 
RIGHTS EXERCISED
DURING THE YEAR 2
$

VALUE OF
PERFORMANCE 
RIGHTS LAPSED 
DURING THE YEAR 1
$

VALUE OF
PERFORMANCE 
RIGHTS CANCELLED 
DURING THE YEAR
$

I. Audsley

D. Walker

S. Wood

E. McDonald

J. Palisi

A. Hogarth

TOTAL

1  Determined at the time of grant per AASB 2.
2  Determined at the time of exercise.

–

–

–

–

–

–

–

179,390

65,010

59,797

59,797

59,797

29,898

453,689

79,607

35,504

32,656

32,656

32,656

16,328

229,407

For details on the valuation of the performance rights, including models and assumptions used, please refer to Note 26. There were no alterations 
to the terms and conditions of performance rights granted as remuneration since their grant date. The maximum grant 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.

–

–

–

–

–

–

–

17

PRIME MEDIA GROUP | ANNUAL REPORT 2018Table 6:  Equity holdings and transactions

Non-Executive Director

J.K Hartigan

I.R Neal

P.J Macourt

C.A O’Connor

Executive Director

I. Audsley

Key Management Personnel

D. Walker

J. Palisi

BALANCE AT START 
OF THE YEAR

SHARES GRANTED ON 
EXERCISE OF RIGHTS

PURCHASES AND 
OTHER CHANGES 
DURING THE YEAR

BALANCE AT THE END
 OF THE YEAR 

–

40,000

–

75,000

–

–

–

–

–

–

–

–

–

40,000

–

75,000

621,756

479,200

(235,500)

865,456

–

188,542

173,660

159,733

(173,660)

(329,217)

–

19,058

5.  EXECUTIVE CONTRACTS

Remuneration arrangements for KMP are formalised in employment agreements. Details of these contracts are provided below:

NAME

NOTICE PERIOD

TERMINATION PAYMENT

CEO AND EXECUTIVE DIRECTOR

I. Audsley

OTHER KMP

D. Walker

J. Palisi 

12 months

12 months (fixed remuneration)

End of contract

6 months

Maximum of 6 months 

6 months (fixed remuneration)

Under the 2014 Performance Rights Plan where a participant holds performance rights and becomes a good leaver, all unvested performance rights 
will automatically lapse unless the Board determines in its sole and absolute discretion to allow some or all of those performance rights to vest. Under 
other leaver circumstances, such as termination for cause, all unvested performance rights will automatically lapse. 

Under the 2018 cash settled long term incentive plan where a participant leaves before all Notional Share Units vest and becomes a good leaver the 
Board determines in its sole and absolute discretion to allow some or all of those notional share units to vest. Under other leaver circumstances, such 
as termination for cause, all unvested Notional Share Units will lapse and be forfeited. 

6.  NON-EXECUTIVE DIRECTOR REMUNERATION 

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.

All of the current NEDs carry an initial contract duration of three years that remains subject to their re-election by shareholders. The employment 
contracts for NEDs do not carry notice provisions or termination entitlements. Board fees are set with reference to comparable ASX-listed companies. 
The Company does not currently provide securities as part of NED remuneration and shareholder approval would be sought for this form of 
remuneration to be paid. 

The amount of the aggregate remuneration sought to be approved by shareholders and the fee structure is reviewed from time to time against 
fees paid to NEDs of comparable companies. The Board also considers advice from external consultants when undertaking the review process. 
The aggregate fees paid to NEDs in the 2018 financial year were $360,242 (excluding superannuation and retirement benefits).

NED fees in the 2019 financial year are estimated to be $360,242, which is less than the determination made at the Annual General Meeting 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).

18

DIRECTORS’ REPORT CONTINUEDSTRUCTURE
NED remuneration consists of fixed annual directors’ fees only and therefore NED’s are not entitled to receive performance-based remuneration 
or any other entitlements that may be perceived to compromise their independence. 

The rates and fees (inclusive of superannuation contributions) for the NEDs in 2018 financial year are as follows:

BOARD POSITION

Chair

NED Base Fee

Committee Chair

Committee Member

ANNUAL FEE

$100,000

$95,000

Nil

Nil

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. 

Ernst & Young was engaged during the reporting period to provide advice on various remuneration issues arising from the Prime Media Group 
Performance Rights Plan. The Committee is satisfied that the advice received from Ernst & Young is free from undue influence from members of the 
KMP. Ernst & Young’s fees in the current reporting period totalled $12,360 (2017: $20,000).

ADDITIONAL STATUTORY DISCLOSURES

ROUNDING
The amounts contained in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) where noted ($’000) under 
the option available to the Company under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191. The Company 
is an entity to which this legislative instrument applies.

AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
The Directors have received and are satisfied with the ‘Auditor’s Independence Declaration’ provided by the Company’s external auditors, 
Ernst & Young, which is included on page 20.

Non-Audit Services 

The following non-audit services were provided by the Group’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 and indirect tax compliance services

Advisory services

Total

 $

 28,881

384,332

413,213

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 available on the Company website www.primemedia.com.au/investors.

Signed in accordance with a resolution of the directors.

P. J Macourt 
Director

Sydney, 28 August 2018

19

PRIME MEDIA GROUP | ANNUAL REPORT 2018 
Ernst  & Young
200 George St reet
Sydney  NSW  2000 Australia
GPO Box 2646 Sydney  NSW  2001

Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au

Audit or’s Independence Declarat ion t o t he Dir ect ors of Prime Media
Group Limit ed

As lead auditor for the audit of Prime Media Group Limited for the financial year ended 30 June 2018,
I declare to t he best  of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporat ions Act 2001 in

relation to t he audit ; and

b) no contraventions of any applicable code of professional conduct in relation to the audit .

This declaration is in respect of Prime Media Group Limited and the entities it controlled during the
financial year.

Ernst & Young

Christopher George
Part ner
28 August 2018

A member firm of Ernst  & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation

20

AUDITOR’S INDEPENDENCE DECLARATIONFINANCIAL STATEMENTS 
CONTENTS

FINANCIAL STATEMENTS 

Consolidated Statement of Profit or Loss and Other Comprehensive 
Income 
Consolidated Statement of Financial Position 
Consolidated Statement of Changes in Equity 
Consolidated Statement of Cash Flows 

22
23
24
25

NOTES TO THE FINANCIAL STATEMENTS

1. 

Summary of significant accounting policies 

GROUP PERFORMANCE

Revenue 
Expenses 

2. 
3. 
4.  Operating segments 
5. 

Earnings per share 

OPERATING ASSETS AND LIABILITIES

Intangible assets 
Receivables 
Prepaid financial assets 

6.  Cash and short-term deposits 
7. 
8. 
9. 
10.  Payables 
11.  Provisions 
12.  Property, plant and equipment 

CAPITAL STRUCTURE AND FINANCIAL COSTS

Interest bearing loans and borrowings 

13. 
14.  Financial risk management objectives and policies 
15.  Contributed equity 
16.  Capital management 
17.  Retained earnings and reserves 
18.  Dividends paid and proposed 

26

27
28
28
29

30
31
34
35
35
36
37

38
39
41
41
42
42

GROUP STRUCTURE

19.  Assets held for sale 
20.  Financial assets 
21. 
22. 

Investments in associates 
Investments in subsidiaries 

UNRECOGNISED ITEMS

23.  Commitments 
24.  Contingent liabilities 

OTHER

Income tax 

25. 
26.  Share-based payments expense 
27.  Related party disclosures 
28.  Parent entity information 
29.  Subsequent events 
30.  Auditor’s remuneration 
31.  Other accounting policies 
32.  Significant judgments and estimates 

FINANCIALS

Directors’ Declaration 
Independent Auditor’s Report 

ASX INFORMATION

Shareholder information 

43
43
45
46

47
49

49
53
55
57
58
58
58
59

60
61

66

PRIME MEDIA GROUP  |  ANNUAL REPORT 2018

21

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

Administration and marketing expenses

Depreciation and amortisation

Impairment expense

Operating (Loss)/Profit

Finance costs

Share of associate (losses)/profit

Profit before income tax

Income tax benefit/(expense)

(Loss)/Profit for the year 

(Loss)/Profit for the year 

Total comprehensive income for the year

(Loss)/Profit attributable to owners of the parent

Total comprehensive income attributable to owners of the parent

Basic Earnings per share (cents per share)

Diluted Earnings per share (cents per share)

NOTES

CONSOLIDATED

2018
$’000

2017
$’000

2

2

2

7

3

21

25

5

5

217,980

134

1,044

219,158

(118,846)

100,312

(42,238)

(12,740)

(9,618)

(51,690)

(15,974)

(1,584)

(43)

(17,601)

5,326

(12,275)

237,426

141

2,492

240,059

(125,912)

114,147

(36,814)

(13,233)

(9,971)

–

54,129

(2,542)

101

51,688

(15,444)

36,244

(12,275)

36,244

(12,275)

36,244

(12,275)

36,244

(12,275)

36,244

(3.4)

(3.4)

9.9

9.9

The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with accompanying notes.

22

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2018ASSETS

Current Assets

Cash and short term deposits

Trade and other receivables

Intangible assets

Current tax asset

Other assets

Assets classified as held for sale

Total Current Assets 

Non-Current Assets

Investment in associates

Non-current financial assets

Property, plant and equipment

Intangible assets

Other assets

Total Non-Current Assets 

Total Assets

LIABILITIES

Current Liabilities

Trade and other payables

Current tax liabilities

Total Current Liabilities

Non-Current Liabilities

Interest-bearing loans and borrowings

Provisions

Deferred income tax Liabilities

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

2018
$’000

2017
$’000

6

8

7

25

9

19

21

20

12

7

9

10

25

13

11

25

15

17

17

10,903

41,179

1,667

690

1,943

56,382

645

57,027

1,071

–

25,301

16,593

646

43,611

100,638

24,489

–

24,489

25,696

479

1,821

27,996

52,485

48,153

6,590

42,908

1,667

–

1,698

52,863

645

53,508

1,071

9

28,390

71,753

801

102,024

155,532

22,007

4,543

26,550

43,540

518

17,718

61,776

88,326

67,206

310,262

4,091

(266,200)

48,153

48,153

310,262

4,641

(247,697)

67,206

67,206

The above Consolidated Statement of Financial Position should be read in conjunction with accompanying notes.

23

CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAS AT 30 JUNE 2018PRIME MEDIA GROUP | ANNUAL REPORT 2018At 1 July 2017

Loss for the period

Other comprehensive income

Total comprehensive income and expense for the period

Transactions with equity holders in their capacity as equity holders:

Exercise of performance rights

Share-based payments (credit)/expense

Dividends on ordinary shares

At 30 June 2018

At 1 July 2016

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:

Exercise of performance rights

Share-based payments expense

Dividends on ordinary shares

At 30 June 2017

ISSUED 
CAPITAL
$’000

ACCUMULATED
 LOSSES
$’000

EMPLOYEE 
BENEFITS 
RESERVE
$’000

TOTAL PARENT
ENTITY 
INTEREST
$’000

310,262

–

–

–

–

–

–

310,262

(247,697)

(12,275)

–

(12,275)

–

–

(6,228)

(266,200)

4,641

–

–

–

(452)

(98)

–

4,091

67,206

(12,275)

–

(12,275)

(452)

(98)

(6,228)

48,153

ISSUED 
CAPITAL
$’000

ACCUMULATED 
LOSSES
$’000

EMPLOYEE 
BENEFITS 
RESERVE
$’000

TOTAL PARENT
ENTITY 
INTEREST
$’000

310,262

–

–

–

–

–

–

310,262

(271,485)

36,244

–

36,244

–

–

(12,456)

(247,697)

4,400

–

–

–

(330)

571

–

4,641

43,177

36,244

–

36,244

(330)

571

(12,456)

67,206

The above Consolidated Statement of Changes in Equity should be read in conjunction with accompanying notes.

24

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYAS AT 30 JUNE 2018OPERATING ACTIVITIES

Receipts from customers (inclusive of GST)

Payments to suppliers and employees (inclusive of GST)

Interest received

Borrowing costs paid

Income tax paid 

NET CASH FLOWS FROM OPERATING ACTIVITIES

INVESTING ACTIVITIES

Proceeds from sale of property, plant and equipment

Purchase of property, plant & equipment and intangible assets

Proceeds from sale of financial assets

Loan funds to related entities

NET CASH FLOWS USED IN INVESTING ACTIVITIES

FINANCING ACTIVITIES

Proceeds from borrowings 

Repayments of borrowings 

Finance lease liability payments

Share-based payments – performance rights exercised

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

CASH AND CASH EQUIVALENTS AT END OF PERIOD

The above Consolidated Statement of Cash Flows should be read in conjunction with accompanying notes.

NOTES

CONSOLIDATED

2018
$’000

2017
$’000

241,908

(192,556)

134

(1,569)

(15,804)

32,113

–

(3,080)

3

(43)

265,799

(205,980)

141

(2,328)

(13,661)

43,971

1,611

(3,996)

–

(43)

(3,120)

(2,428)

114,000

(132,000)

–

(452)

(6,228)

(24,680)

4,313

6,590

10,903

82,000

(112,000)

(402)

(330)

(12,456)

(43,188)

(1,645)

8,235

6,590

6

6

25

CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 30 JUNE 2018PRIME MEDIA GROUP | ANNUAL REPORT 2018NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial report of Prime Media Group Limited (the “Company”) for the year ended 30 June 2018 was authorised for issue 
in accordance with a resolution of the directors on 28 August 2018.

Prime Media Group Limited is a for profit company limited by shares incorporated in Australia whose shares are publicly traded on the Australian 
Securities Exchange.

The nature of the operations and principal activities of the Group are described in the Directors’ Report.

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 available-for-sale investments that have been measured at fair value.

The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000) unless otherwise stated under 
the option available to the Company under the Australian Securities and Investment Commission (ASIC) Legislative Instrument 2016/191. The Company 
is an entity to which this Legislative Instrument applies.

The consolidated financial statements provide comparative information in respect of the previous period.

Significant accounting policies are provided throughout the notes to the financial statements.

B.   COMPLIANCE WITH AUSTRALIAN ACCOUNTING STANDARDS AND INTERNATIONAL FINANCIAL 

REPORTING STANDARDS 

The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS) as issued by the 
International Accounting Standards Board.

C.  CHANGES IN ACCOUNTING POLICIES, DISCLOSURES, STANDARDS AND INTERPRETATIONS

CHANGES IN ACCOUNTING POLICY AND DISCLOSURES
The Group adopted all new and amended Australian Accounting Standards and Interpretations that became applicable during the current financial year. 
The adoption of these Standards and Interpretations did not have a significant impact on the Group’s financial results or statement of financial position. 
All other accounting policies adopted are consistent with those of the previous financial year. 

The following significant Australian Accounting Standards and Interpretations have recently been issued or amended, but are not yet effective: 

REFERENCE

TITLE

AASB 9

AASB 15

AASB 16

AASB 2016-5

AASB 2018-1

Financial Instruments

Revenue from Contracts with Customers

Leases

Amendments to Australian Accounting Standards – Classification 
and Measurement of Share-based Payment Transactions

Amendments to Australian Accounting Standards – Further Annual 
Improvements 2015–2017 cycle

APPLICATION DATE 
OF STANDARD

APPLICATION DATE 
FOR GROUP

1 January 2018

1 January 2018

1 January 2019

1 January 2018

1 July 2018

1 July 2018

1 July 2019

1 July 2018

1 January 2019

1 July 2019

AASB Interpretation 23

Uncertainty over Income Tax Treatments

1 January 2019

1 July 2019

The Group has elected not to early adopt any of the new standards or amendments in these financial statements. The Group has yet to fully assess the 
impact the following accounting standards will have on the financial statements, when applied in future periods:
•  AASB 9 Financial Instruments
•  AASB 15 Revenue from Contracts with Customers
•  AASB 16 Leases

AASB 9 will require the Group to change its basis for determining allowances for doubtful receivables. Currently, allowances for doubtful receivables 
are recognised by assessing each receivable balance for collectability based on an analysis of specific customer and historical factors. Under the 
revised standard, these allowances will be required to reflect current and forecast credit conditions. The Group is in the early stages of assessment 
of the impact of this standard prior to adoption in the 2019 financial year.

AASB 15 Revenue from Contracts with Customers is effective for financial years commencing on or after 1 January 2018. AASB 15 is based on the 
principle that revenue is recognised when control of a good or service transfers to a customer. The notion of control replaces the existing notion 
of risks and rewards. An assessment of the impact on all of the Group’s material revenue streams is at an advanced stage. The impact on the Group’s 
revenues and results is not expected to be material.

While in early stages of assessment, the adoption of AASB 16 Leases in the 2020 financial year is expected to have a significant impact on the 
Group’s balance sheet and income statement, given the volume and maturity profile of the Group’s leases (see Note 23). The Group’s balance sheet 
is expected to be grossed up for future lease payments (both receivable and payable, at their discounted values) and for the unamortised portion 
of right to use assets. Net rental expense in the income statement is expected to be replaced by a ‘front-loaded’ interest expense and a straight-line 
depreciation expense.

Other standards and interpretations that have been issued but are not yet effective are not expected to have any significant impact on the Group’s 
financial statements in the year of their initial application.

26

2.  REVENUE

Advertising and other external revenue

Finance income

Other income

Breakdown of finance income:

Interest received 

Breakdown of other income:

Government grants

Other revenues

CONSOLIDATED

2018
$’000

217,980

134

1,044

219,158

134

134

421

623

1,044

2017
$’000

237,426

141

2,492

240,059

141

141

667

1,825

2,492

ACCOUNTING POLICY
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 received. 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:

REVENUE CLASS

Advertising revenue

RECOGNITION CRITERIA

Revenue is recognised when the commercial advertisement has been broadcast.

Advertising production revenue

Revenue is recognised when the production is complete and the customer invoiced.

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.

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.

i)  Reimbursement of expense

Recognised in profit or loss on a systematic basis over the periods the related costs, which it is intended 
to compensate, are expensed.

ii)  Reimbursement for cost of asset

Rental income

Dividends

Interest income

Recognised in profit or loss over the useful life of the related asset on a systematic basis. When the 
Group receives grants of non-monetary assets, 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.

Rental income is recognised on a straight-line basis over the term of the lease.

Dividend revenue is recognised when the Group’s right to receive the payment is established.

Interest revenue is recognised as it accrues, based on the effective yield of the financial asset.

27

PRIME MEDIA GROUP | ANNUAL REPORT 2018 
3.  EXPENSES

Finance Expenses 

Interest on debt and borrowings

Finance charges payable under finance leases

Employee Benefit Expense 

Wages and salaries

Sales commissions and bonuses

Superannuation expense

Share-based payments (release)/expense

Other employee benefits expense

Other Expenses 

Bad and doubtful debts and credit notes – trade debtors

Minimum lease payments – operating leases

ACCOUNTING POLICY

Borrowing Costs

CONSOLIDATED

2018
$’000

1,584

–

1,584

28,688

3,208

2,469

(98)

1,523

35,790

139

13,290

2017
$’000

2,524

18

2,542

29,468

5,205

2,619

571

1,195

39,058

237

12,113

Borrowing costs are expensed in the period incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with 
the borrowing of funds.

Operating Leases

Operating lease payments are recognised as an operating expense in the statement of profit or loss on a straight-line basis over the lease term.

4.  OPERATING SEGMENTS

ACCOUNTING POLICY
An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses, whose 
operating results are regularly reviewed by the entity’s chief operating decision maker to assess performance, make resource allocation decisions 
and for which discrete financial information is available.

IDENTIFICATION OF REPORTABLE SEGMENTS
The Group operates as a single regional free-to-air television broadcasting segment. The Group holds commercial television licences to broadcast 
in regional New South Wales, the Australian Capital Territory, regional Victoria, the Gold Coast area of Southern Queensland and regional 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 of Australia and the GWN7 brand in regional Western Australia.

The Board and Executive monitor the operating performance of the segment based on internal reports and discrete financial information that 
is reported to the Board on at least a monthly basis.

28

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 20185.  EARNINGS PER SHARE

Basic earnings per share (cents per share)

Diluted earnings per share (cents per share)

ACCOUNTING POLICY

Basic Earnings Per Share

CONSOLIDATED

2018

(3.4)

(3.4)

2017

9.9

9.9

Basic earnings per share (EPS) is 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

Diluted earnings per share is 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:

Earnings used in calculating basic and diluted earnings per share

Weighted average number of ordinary shares used in calculating basic EPS:

Weighted average number of ordinary shares used in calculating diluted EPS:

CONSOLIDATED

2018
$’000

2017
$’000

(12,275)

36,244

2018
NUMBER OF 
SHARES

2017
NUMBER OF 
SHARES

366,330,303

366,330,303

366,330,303

366,330,303

All performance rights are anti-dilutive, as service and performance conditions are not met when tested at 30 June 2018. There have been no other 
transactions involving ordinary shares or potential ordinary shares between the reporting date and the completion of the financial statements.

29

PRIME MEDIA GROUP | ANNUAL REPORT 20186.  CASH AND SHORT-TERM DEPOSITS

Cash balance comprises:

Cash at bank and on hand

Closing cash balance

ACCOUNTING POLICY

Cash and short-term deposits

CONSOLIDATED

2018
$’000

10,903

10,903

2017
$’000

6,590

6,590

Cash and short-term deposits in the statement of financial position comprise cash at bank and on hand. For the purpose of the consolidated 
statement of cash flows, cash and short term deposits consist of cash and short-term deposits.

RECONCILIATION OF THE NET PROFIT AFTER TAX TO THE NET CASH FLOWS FROM OPERATIONS

(Loss)/profit after tax 

Non-cash adjustment for:

Depreciation and amortisation 

Amortisation of program rights

Provision for doubtful debts

Net loss/(gain) on disposal of property, plant and equipment

Gain on sale of financial asset

Impairment of television broadcast licences

Gain on foreign currency translation

Share of associate losses/(profits)

Share based payments (benefit)/expense

Working capital adjustments

Decrease in trade and other receivables

(Increase)/Decrease in prepayments

(Decrease)/Increase in provisions

Increase/(Decrease) in trade and other payables

Cash flows from operating activities

Decrease in deferred tax liabilities

(Decrease)/Increase in tax provision

Increase in borrowing costs

Net cash flow from operating activities

2018
$’000

2017
$’000

(12,275)

36,244

7,951

1,667

(55)

19

2

51,690

17

43

(98)

1,769

(90)

(39)

2,485

53,086

(15,897)

(5,233)

157

32,113

8,304

1,667

197

(891)

–

–

6

(101)

571

4,658

2,380

11

(10,995)

42,051

(275)

2,058

137

43,971

30

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 20187. 

INTANGIBLE ASSETS 

Television broadcast licences

Program rights

Infrastructure access licence

Business software, development costs including websites

Total

CONSOLIDATED

2018
$’000

11,823

1,667

391

4,379

18,260

2017
$’000

63,513

3,333

948

5,626

73,420

ACCOUNTING POLICY
A summary of the policies applied to the Group’s intangible assets is as follows:

TELEVISION BROADCAST LICENCES

PROGRAM RIGHTS, INFRASTRUCTURE ACCESS 
LICENCES, BUSINESS SOFTWARE AND 
DEVELOPMENT COSTS

Useful lives

Indefinite

Finite

Amortisation method used

Not amortised or revalued

Internally generated or acquired

Acquired

Amortised on a straight-line basis over the 
period of the expected future benefit

Internally generated/Acquired

TELEVISION 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 the Australian Communications 
and Media Authority 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 and have not identified any factor that would affect their useful life. These assets are not amortised but are tested for 
impairment annually.

PROGRAM RIGHTS
Consists of television program rights arising from the Group’s program supply agreement with the Seven Network. 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.

INFRASTRUCTURE ACCESS LICENCES
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.

BUSINESS SOFTWARE AND DEVELOPMENT COSTS INCLUDING WEBSITES
Business software and development costs represent the cost to implement a television sales and traffic software system and a newsroom management 
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 software and development costs is cost less accumulated amortisation and impairment losses.

31

PRIME MEDIA GROUP | ANNUAL REPORT 20187. 

INTANGIBLE ASSETS (CONTINUED)

Reconciliation of carrying amounts at the beginning and end of the period.

Cost

At 1 July 2016

Additions

Disposals

At 30 June 2017

Additions

Disposals

Classification transfer

At 30 June 2018 

Amortisation and impairment

At 1 July 2016

Amortisation charges

Impairment charges

Disposals

At 30 June 2017

Amortisation charges

Impairment charges

Disposals

Classification transfer

At 30 June 2018

Net Book Value

At 30 June 2018

Total Current

Total Non-Current

At 30 June 2017

Total Current

Total Non-Current

BROADCAST 
LICENCES
$’000

PROGRAM 
RIGHTS
$’000

INFRA-
STRUCTURE 
ACCESS 
LICENCE
$’000

BUSINESS 
SOFTWARE 
AND 
DEVELOPMENT 
COSTS INCL 
WEBSITES
$’000

TOTAL
$’000

182,963

14,000

–

–

–

–

182,963

14,000

–

–

–

–

–

–

4,245

389

–

4,634

237

(107)

214

16,906

218,114

531

(19)

920

(19)

17,418

219,015

545

(40)

–

782

(147)

214

182,963

14,000

4,978

17,923

219,864

(119,450)

–

–

–

(119,450)

–

(51,690)

–

–

(9,000)

(1,667)

–

–

(10,667)

(1,666)

–

–

–

(171,140)

(12,333)

11,823

–

11,823

63,513

–

63,513

1,667

1,667

–

3,333

1,667

1,666

(2,999)

(687)

–

–

(3,686)

(687)

–

–

(214)

(4,587)

391

–

391

948

–

948

(9,964)

(1,847)

–

19

(11,792)

(1,792)

–

40

–

(141,413)

(4,201)

–

19

(145,595)

(4,145)

(51,690)

40

(214)

(13,544)

(201,604)

4,379

–

4,378

5,626

–

5,626

18,260

1,667

16,593

73,420

1,667

71,753

IMPAIRMENT TESTING OF INTANGIBLE ASSETS WITH INDEFINITE LIVES

ACCOUNTING POLICY

Impairment of non-financial assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried 
at cost less any accumulated amortisation and accumulated impairment losses. The useful lives of intangible assets are assessed as 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 intangible assets with a finite useful life are reviewed 
at the end of each reporting period. Changes in the expected useful life of the expected pattern of consumption of future economic benefits 
embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting 
estimates. The amortisation expense on intangible assets with finite useful lives is recognised in the statement of profit or loss in the expense 
category that is consistent with the function of the intangible asset.

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating 
unit (CGU) level. When an asset is tested for impairment, the Group estimates the assets recoverable amount. An assets recoverable amount 
is the higher of an assets or CGU’s fair value less costs of disposal and its value in use. 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 the markets assessment of the time value 
of money and the risks specific to the asset. 

For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously 
recognised impairment losses should be reversed. A previously recognised impairment loss is reversed only if there has been a change in the 
assumptions used to determine the assets recoverable amount since the last impairment 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 calculated in prior years. A reversal is recognised in the statement of profit or loss unless 
the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.

32

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2018KEY ASSUMPTIONS USED IN VALUE-IN-USE CALCULATIONS AND SENSITIVITY TO CHANGES IN ASSUMPTIONS
In accordance with the Group’s accounting policies, the Group performed its annual impairment tests as at 30 June 2018 and 30 June 2017. 
At 30 June 2018 this resulted in a television broadcast licence impairment charge of $20,674,000. In addition, the Group performed an impairment 
test at 31 December 2017 on the basis that there were indicators of impairment and recorded an impairment of television broadcast licences 
of $31,016,000. The total impairment charge for the period recorded against television broadcast licences was $51,690,000.

In performing the review at 30 June 2018, management identified:
•  The forecast decline in the compound annual growth rate for regional free-to air advertising revenues over 5 financial years was 2.2% at 30 June 2018 

(2017: 2.2%).

•  The long term terminal growth rate is forecast to be negative 3.2% (2017: negative 2.2%). 
•  The cost of content under Prime’s program supply agreement was amended to reflect the rates as agreed in the program supply agreement 

entered into with the Seven Network on 20 August 2018.

The Group also considers the relationship between its market capitalisation and its book value, in addition to other factors, when reviewing for indicators 
of impairment. As at 30 June 2018, the market capitalisation of the Group, based on the volume weighted average share price for the 30 day period 
to the reporting date, was above the book value of its equity, indicating no evidence of impairment. 

The Group is considered to be the sole CGU and includes television broadcasting intangible assets. The Group has completed a value-in-use assessment 
of the carrying value of television broadcast intangible assets, to test for impairment. 

VALUE-IN-USE CASH FLOWS

APPROACH

Year 1

Years 2–5 cash flows 

Based on the annual budget as approved by the Board and as amended for current advertising trading 
conditions and reasonably foreseeable changes to operating conditions. 

Free-to-air television advertising revenue has been assumed to decline consistent with the forecast decline 
in regional television advertising audiences.
Expenses have been forecast to increase in line with long term CPI and/or agreed contractual increases.

Long-term growth rate – terminal

The rate is consistent with industry forecasts specific to the CGU in which the industry operates.

Discount rate

Discount rates represent the current market assessment of the risks specific to the 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 value-in-use assessment is based on the following key assumptions:

VALUE-IN-USE ASSUMPTIONS

5 year compound annual growth rate for free-to-air advertising revenue

Long-term growth rate – terminal 

Discount rate (pre-tax)

Discount rate (post-tax)

2018

(2.2%)

(3.2%)

12.96%

12.64%

2017

(2.2%)

(2.2%)

11.74%

11.14%

The discounted cash flow valuation of the intangibles assets gives a recoverable amount which is less than the current carrying value resulting 
in an impairment charge of $51,690,000 during the period. Following the impairment the recoverable amount is equal to the current carrying value.

Carrying amount of Intangibles allocated to the cash generating units

Television Broadcasting Licences

Television Broadcast Licences

CONSOLIDATED

2018
$’000

11,823

11,823

2017
$’000

63,513

63,513

The Group recognises that the speed of technological change and the impact of new viewing platforms can have a significant impact on growth rate 
assumptions. The value-in-use calculation is most sensitive to changes in the following assumptions, which would result in either a surplus or deficit 
between the recoverable amount and the carrying amount:

VALUE-IN-USE ASSUMPTIONS – SENSITIVITY

5 year compound annual growth rate for free-to-air advertising revenue (‘CAGR’)

An increase in the 5 year CAGR of 0.5% will reduce impairment by:

A decrease in the 5 year CAGR of 0.5% will increase impairment by:

Long-term growth rate – terminal (‘TGR’)

A further decline in the TGR of 1.0% will increase impairment by:

An improvement in the TGR of 1.0% will reduce impairment by:

Discount rate (pre-tax)

An increase in the discount rate (pre-tax) of 2.0% will increase impairment by:

A decrease in the discount rate (pre-tax) of 2.0% will reduce impairment by:

SURPLUS/(DEFICIT)
SENSITIVITY
$’000

6,059

(11,823)

(1,541)

1,773

(7,711)

2,800

33

PRIME MEDIA GROUP | ANNUAL REPORT 20188.  RECEIVABLES

Current

Trade receivables

Allowance for impairment loss

Other receivables

Related party receivables

Carrying amount of trade and other receivables

ACCOUNTING POLICY

Trade Receivables

CONSOLIDATED

2018
$’000

2017
$’000

37,063

(323)

36,740

3,880

559

41,179

39,719

(449)

39,270

2,813

825

42,908

Trade receivables are carried at original invoice amount less an allowance for any uncollectible debts. Trade receivables are generally settled within 
30 to 45 days and are not interest bearing. Due to the short term nature of these receivables, their carrying value is assumed to approximate their 
fair value. The collectability of trade receivables is reviewed on an ongoing basis and bad debts are written off when identified. An allowance for 
impairment loss is made when there is objective evidence that the Group will not be able to collect a debt. The maximum exposure to credit risk 
is the fair value of receivables (refer to Note 14 regarding information on the Group’s exposure to credit and market risk). 

Refer to Note 27 for details on related parties.

ALLOWANCE FOR IMPAIRMENT LOSS
Movement in the provision for impairment loss in relation to trade receivables was as follows:

At July 1

Charge for the year

Amounts written off

At June 30

CONSOLIDATED

2018
$’000

449

67

(193)

323

2017
$’000

248

237

(36)

449

At 30 June, the ageing analysis of trade receivables is as follows:

2018

2017

TOTAL

37,063

39,719

0–30
DAYS

19,622

20,696

31–60
DAYS

61–90
DAYS PDNI 1

61–90
DAYS CI 1

+91
DAYS PDNI 1

+91
DAYS CI 1

16,382

18,141

668

383

–

–

68

50

323

449

1  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.

Other balances within trade and other receivables do not contain impaired assets. It is expected that these other balances will be received.

34

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 20189.  PREPAID FINANCIAL ASSETS

Current

Prepayments

Non-current

Prepayments

Total

ACCOUNTING POLICY

Prepayments

CONSOLIDATED

2018
$’000

2017
$’000

1,943

1,698

646

2,589

801

2,499

Prepayments are recognised when a payment is made for goods or services the company expects to receive or consume in future periods. 
Prepayments are expensed to profit or loss as they are received or consumed.

10.  PAYABLES 

Current

Trade payables

Accrued expenses

Accrued employee entitlements

Total

CONSOLIDATED

2018
$’000

2017
$’000

916

17,380

6,193

24,489

2,375

12,364

7,268

22,007

ACCOUNTING POLICY

Trade Payables and Other Accrued Expenses

Liabilities for trade creditors and other amounts are carried at amortised cost, which is the fair value of the consideration to be paid in the future 
for goods and services received. Trade payables are non-interest bearing and are normally settled on 30 day terms. Due to the short term nature 
of these payables, their carrying value is considered to approximate their fair value.

Accrued employee entitlements

Liabilities for wages and salaries, including non-monetary benefits and 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.

35

PRIME MEDIA GROUP | ANNUAL REPORT 201811.  PROVISIONS

Non-current
Long service leave
Total

ACCOUNTING POLICY

Provisions

CONSOLIDATED

2018
$’000

479
479

2017
$’000

518
518

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 the reimbursement is recognised as a separate 
asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit or loss 
net of any reimbursement.

NATURE AND TIMING OF THE PROVISIONS

LONG SERVICE LEAVE PROVISION

At 1 July 
Arising during the year
Utilised
At 30 June 

2018
$’000

518
76
(115)
479

2017
$’000

507
119
(108)
518

The Group does not expect its long service leave benefits to be settled wholly within 12 months of each reporting date. 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 corporate 
bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

36

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 201812.  PROPERTY, PLANT AND EQUIPMENT

Cost or valuation
At 1 July 2016
Additions
Disposals
Classification transfer
Reclassification to asset held for sale
At 30 June 2017
Additions
Disposals
At 30 June 2018

Depreciation and amortisation
At 1 July 2016
Depreciation charges
Amortisation charges
Disposals
Classification transfer
Reclassification to asset held for sale
At 30 June 2017
Depreciation charges
Disposals
At 30 June 2018

Net Book Value
At 30 June 2018
At 30 June 2017

LAND AND 
BUILDINGS 1
$’000

LEASEHOLD 
IMPROVEMENTS
$’000

PLANT AND 
EQUIPMENT
$’000

LEASED
PLANT AND 
EQUIPMENT
$’000

12,396
304
–
–
(885)
11,815
42
–
11,857

(4,780)
(323)
–
–
–
329
(4,774)
(284)
–
(5,058)

6,799
7,041

1,522
215
(11)
–
–
1,726
206
–
1,932

(880)
(173)
–
11
–
–
(1,042)
(171)
–
(1,213)

719
684

83,563
2,839
(2,045)
2,242
(1,873)
84,726
2,139
(498)
86,367

(60,678)
(5,190)
–
1,638
(1,615)
1,784
(64,061)
(5,019)
496
(68,584)

17,783
20,665

2,242
–
–
(2,242)
–
–
–
–
–

(1,519)
–
(96)
–
1,615
–
–
–
–
–

–
–

TOTAL
$’000

99,723
3,358
(2,056)
–
(2,758)
98,267
2,387
(498)
100,156

(67,857)
(5,686)
(96)
1,649
–
2,113
(69,877)
(5,474)
496
(74,855)

25,301
28,390

1 

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.

ASSETS PLEDGED AS SECURITY
All plant and equipment under lease is pledged as security for the associated lease liabilities.

ACCOUNTING POLICY

Property, plant and equipment

Plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. 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. 

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 de-recognition of the asset (calculated as the difference between the 
net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss 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.

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. Costs to sell are the incremental costs directly attributable to the sale, excluding the 
finance costs and income tax expense. 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 within one year from 
the date of classification. 

Property, plant and equipment is not depreciated or amortised once classified as held for sale. Assets and liabilities classified as held for sale are 
presented separately as current items in the statement of financial position.

37

PRIME MEDIA GROUP | ANNUAL REPORT 201813.  INTEREST BEARING LOANS AND BORROWINGS

Non-current

$60 million secured bank loan facility (2017: $80 million)

ACCOUNTING POLICY

Borrowing Costs

MATURITY

2020

CONSOLIDATED

2018
$’000

25,696

25,696

2017
$’000

43,540

43,540

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Subsequent Measurement

Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate 
method. Gains and losses are recognised in the statement of profit or loss 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 statement of profit or loss.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires. When an existing financial 
liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, 
such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference 
in the respective carrying amounts is recognised in the statement of profit or loss.

TERMS AND CONDITIONS

SECURED BANK LOAN FACILITY
During the reporting period the Company entered into a Third Amendment and Restatement Deed to reduce the facility limit from $80 million 
to $60 million. The facility is secured by a charge over the assets of the borrower group comprising all wholly owned entities, but excluding Broadcast 
Production Services Pty Limited and its subsidiaries. Interest is charged at the BBSW rate plus a margin of between 1.50% and 1.80% (Level 2).

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 3.2% to 3.9% (2017: 3.2% to 3.6%), depending 
on the type of borrowing (Level 2).

The parent entity and certain controlled entities have potential financial liabilities which may arise from certain contingencies disclosed in Note 24. 
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.

Details regarding interest rate risk are disclosed in Note 14.

DEFAULTS AND BREACHES
During the current and prior years, there were no defaults or breaches on any of the loans.

38

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 201814.  FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial liabilities 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’s principal financial assets include trade and other receivables, and cash and short-term deposits that 
are derived directly from its operations. The Group also holds available-for-sale investments.

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 risks 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 Board of directors reviews risks in accordance with its approach to risk management as set out in the Directors’ Report and the Group’s Corporate 
Governance Statements which are displayed on the Company’s website www.primemedia.com.au/investors.

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. The level 
of interest bearing debt is disclosed in Note 13.

At balance date, the Group had the following mix of financial assets and liabilities exposed to interest rate risk:

Financial Assets

Cash and short-term deposits

Financial Liabilities

Secured bank loan facility

Net exposure

CONSOLIDATED

2018
$’000

10,903

10,903

(25,696)

(25,696)

(14,793)

2017
$’000

6,590

6,590

(43,540)

(43,540)

(36,950)

The Group analyses its interest rate exposure from time to time. 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 2018, 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

+0.25% (25 basis points)

-0.25% (25 basis points)

POST TAX PROFIT
HIGHER/(LOWER)

EQUITY
HIGHER/(LOWER)

2018
$’000

2017
$’000

2018
$’000

2017
$’000

(26)

26

(65)

65

–

–

–

–

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.

It is the Group’s policy that all customers who 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 and 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.

An impairment analysis is performed 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 8. The Group does 
not hold collateral as security.

A small number of media buying agencies account for approximately 55.7% of Prime’s revenue. Three media buying agencies individually contribute 
more than 10% of the Group’s revenue and collectively account for $77,335,122 or 35.3% of the Group’s revenue and are in compliance with agreed 
payment terms. 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.

39

PRIME MEDIA GROUP | ANNUAL REPORT 201814.  FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

LIQUIDITY RISK
The Group manages its liquidity risk by monitoring the total cash inflows and outflows expected on a daily or weekly basis. The Group’s objective 
is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, finance leases and hire purchase agreements. 
The Group currently has funding through a $60 million secured bank loan facility (2017: $80 million), which is currently drawn to 43% of the facility limit 
(2017: 55%); and

In addition to maintaining sufficient liquid assets to meet short-term payments, at balance date, the Group has available approximately $34 million 
of undrawn committed borrowing facilities, subject to continued compliance with the bank loan covenants. The facility is repayable on expiry in April 2020. 
Interest will be charged at a rate of BBSW plus a margin between 1.50% and 1.80%. At 30 June 2018, 0.0% of the Group’s debt will mature in less than 
one year. The remaining contractual maturities of the Group’s financial assets and liabilities are:

YEAR ENDED 30 JUNE 2018

Financial assets

Cash and cash equivalents

Trade and other receivables

Financial liabilities

Trade and other payables

Interest bearing loans (refer note 13)

Interest bearing loans – finance charges

Net inflow/(outflow)

YEAR ENDED 30 JUNE 2017

Financial assets

Cash and cash equivalents

Trade and other receivables

Financial liabilities

Trade and other payables

Interest bearing loans (refer note 13)

Interest bearing loans – finance charges

Net inflow/(outflow)

≤ 6
MONTHS
$’000

6–12
MONTHS
$’000

1–5
YEARS
$’000

> 5
YEARS
$’000

10,903

41,179

52,082

(24,489)

–

(88)

(24,577)

27,505

–

–

–

–

–

–

–

–

–

–

–

–

(25,696)

–

(25,696)

(25,696)

–

–

–

–

–

–

–

≤ 6
MONTHS
$’000

6–12
MONTHS
$’000

1–5
YEARS
$’000

> 5
YEARS
$’000

6,590

42,908

49,498

(22,007)

–

(437)

(22,444)

27,054

–

–

–

–

–

–

–

–

–

–

–

–

(43,540)

–

(43,540)

(43,540)

–

–

–

–

–

–

–

–

TOTAL
$’000

10,903

41,179

52,082

(24,489)

(25,696)

(88)

(50,273)

1,809

TOTAL
$’000

6,590

42,908

49,498

(22,007)

(43,540)

(437)

(65,984)

(16,486)

FAIR VALUES
The carrying amount of the Group’s current and non-current financial assets approximates their fair value. 

40

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 201815.  CONTRIBUTED EQUITY

ISSUED AND PAID UP CAPITAL

Ordinary shares fully paid

366,330,303 shares (2017: 366,330,303 shares)

ACCOUNTING POLICY

Contributed Equity

CONSOLIDATED 

2018
$’000

2017
$’000

310,262

310,262

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.

MOVEMENTS IN SHARES ON ISSUE

ORDINARY

Beginning of the financial year

End of the financial year

EQUITY SETTLED SHARE-BASED PAYMENTS

2018

2017

NUMBER OF 
SHARES

$’000

NUMBER OF 
SHARES

  366,330,303  

310,262  

366,330,303  

366,330,303

310,262  

366,330,303  

$’000

310,262

310,262

PRIME MEDIA GROUP LIMITED PERFORMANCE RIGHTS PLAN
During the financial year nil performance rights (2017: Nil) were granted over ordinary shares. The Trustee of the Prime Media Group Limited 
Performance Rights Plan purchases shares on-market when the performance rights are exercised. Nil performance rights were cancelled by the 
Company during the year (2017: Nil). KMP that ended their employment forfeited 600,000 performance rights during the period.

At the end of the year there were 1,377,753 (2017: 3,495,191) un-issued ordinary shares in respect of which performance rights were outstanding. 
The performance rights over ordinary shares are non-dilutive.

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.

16.  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 2018, the Company paid dividends of $6,228,000 (2017: $12,456,000). As disclosed in the Company’s half-year financial report for the period 
ended 31 December 2017 the Company suspended dividend payments until further notice and will apply all surplus funds to reduce interest 
bearing debt. 

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:

Total Debt to EBITDA

Interest Cover to EBITDA

TARGET

< 2.5 times

> 3.0 times

AT  
BALANCE  

DATE

0.6

28.0

As a result of the reduction in the debt facility limit made under the Third Amendment and Restatement Deed executed during the reporting period, 
the total asset covenant was removed as a requirement under the facility.

41

PRIME MEDIA GROUP | ANNUAL REPORT 201817.  RETAINED EARNINGS AND RESERVES 

Employee benefits equity reserve

Accumulated losses

EMPLOYEE BENEFITS EQUITY RESERVE

MOVEMENTS IN RESERVE

Balance at beginning of year

Exercise of performance rights

Share based payment (release)/expense

Balance at end of year

ACCUMULATED LOSSES

Balance at the beginning of year

Net (loss)/profit attributable to members of Prime Media Group Limited

Total accumulated losses

Dividends provided for or paid

Balance at end of year

ACCOUNTING POLICY

Employee Benefits Reserve

CONSOLIDATED

2018
$’000

4,091  

2017
$’000

4,641

(266,200)  

(247,697)

4,641

(452)

(98)

4,091 

(247,697)

(12,275)

(259,972)

(6,228)

(266,200)

4,400

(330)

571

4,641

(271,485)

36,244

(235,241)

(12,456)

(247,697)

The employee benefits reserve is used to record the value of benefits provided to employees and directors as part of their remuneration under 
the Prime Media Group Limited Performance Rights Plan. 

18.  DIVIDENDS PAID AND PROPOSED

RECOGNISED AMOUNTS

DECLARED AND PAID DURING THE YEAR

Current year interim franked dividends – Nil cents per share (2017: 1.7 cents)

Previous year final franked dividends 1.7 cents per share (2017: 1.7 cents)

CONSOLIDATED

2018
$’000

–

6,228

6,228

2017
$’000

6,228

6,228

12,456

PROPOSED DIVIDENDS ON ORDINARY SHARES NOT RECOGNISED AS A LIABILITY

Final cash dividend fully franked for 2018: Nil cents per share (2017: 1.7 cents) 

–

6,228

FRANKING CREDIT BALANCE

Franking account balance as at the end of the financial year at 30% (2017: 30%)

Franking credits that will arise from the payment of income tax (refundable)/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 

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

THE GROUP

2018
$’000

60,460

(690)

–

59,770

–

59,770

2017
$’000

47,324

4,543

–

51,867

(2,669)

49,198

TAX RATES
The tax rate at which paid dividends have been franked is 30% (2017: 30%).

42

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 201819.  ASSETS HELD FOR SALE

Total current assets held for sale

Property, plant and equipment

Total non-current assets held for sale

Assets classified as held for sale

CONSOLIDATED

2018
$’000

–

645

645

645

2017
$’000

–

645

645

645

During the period the Board resolved to continue to market for sale the property located in Bunbury, Western Australia, as it was considered surplus 
to requirements and the funds received would be applied to pay down interest bearing debt. A third party agent has been engaged to sell the 
surplus property, with the intention to complete the sale within the next 6 to 12 months. The carrying value has been reclassified as held for sale. 
As at 30 June 2018 there have been no gains or losses recognised.

ACCOUNTING POLICY

Non-current assets held for sale

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. Costs to sell are the incremental costs directly attributable to the sale, excluding the 
finance costs and income tax expense. 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 within one year from 
the date of classification. 

Property, plant and equipment are not depreciated or amortised once classified as held for sale. Assets and liabilities classified as held for sale 
are presented separately as current items in the statement of financial position.

20.  FINANCIAL ASSETS 

Investments at fair value:

Shares in uncontrolled entities (Level 1) (i)

Investments at cost:

Shares in uncontrolled entities (Level 3) (ii)

CONSOLIDATED

2018
$’000

2017
$’000

–

–

–

6

3

9

Financial assets consist of investments in ordinary shares which do not have a fixed maturity date or coupon rate.

(i)  QUOTED EQUITY SHARES (LEVEL 1)
The fair value of listed financial assets has been determined directly by reference to published price quotations in an active market. These investments 
were sold during the period.

(ii)  UNQUOTED EQUITY SHARES AT COST (LEVEL 3)
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. These shares are held 
in private entities and are unable to be transferred.

43

PRIME MEDIA GROUP | ANNUAL REPORT 201820.  FINANCIAL ASSETS (CONTINUED)

ACCOUNTING POLICY

Financial assets

Initial recognition and measurement

Financial assets are recognised initially at fair value plus, in the case of financial assets not subsequently measured at fair value through profit 
or loss, transaction costs that are attributable to the acquisition of the financial asset.

All assets (and liabilities) for which fair value is measured or disclosed are characterised within the fair value hierarchy, described below, based 
on the lowest level input that is significant to the fair value measurement as a whole:
•  Level 1: quoted (unadjusted) market prices in active markets for identical assets (and liabilities).
•  Level 2: valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly 

observable.

•  Level 3: valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

Subsequent Measurement

The subsequent measurement of financial assets depends on their classification as described below:

Financial assets at fair value through profit or loss or other comprehensive income

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition 
at fair value through profit or loss. The Group has not designated any financial assets at fair value through profit or loss. 

Available-for-sale financial assets

Available-for-sale financial assets include equity investments. 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. 

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 statement of profit or loss in finance costs. 

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 statement of profit or loss.

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 the Group has transferred substantially all the risks and 
rewards of the asset, or the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred 
control of the asset.

44

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 201821.  INVESTMENTS IN ASSOCIATES

UNLISTED

Mildura Digital Television 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 Investment in Associates

ACCOUNTING POLICY

Investments in Associates

CONSOLIDATED

2018
$’000

–

1,071

–

–

–

–

–

2017
$’000

–

1,071

–

–

–

–

–

1,071

1,071

The Group’s investments in its associates are accounted for using the equity method. An associate is an entity over which the Group has 
significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee.

Under the equity method, the investment in an associate is initially recognised at cost. The carrying amount of the investment is adjusted 
to recognise changes in the Group’s share of net assets of the associate since the acquisition date. Goodwill relating to an associate is included 
in the carrying amount of the investment and is neither amortised nor individually tested for impairment.

The statement of profit or loss 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, 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 aggregate of the Group’s share of profit or loss of an associate is shown on the face of the statement of profit or loss outside operating 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 statement of profit or loss.

THE CONSOLIDATED ENTITY HAS A MATERIAL INTEREST IN THE FOLLOWING ENTITIES

OWNERSHIP INTEREST

CONTRIBUTION TO NET PROFIT/
(LOSS)

UNLISTED

Mildura Digital Television 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

2018
%

50%

50%

50%

50%

50%

50%

33%

2017
%

50%

50%

50%

50%

50%

50%

33%

MOVEMENTS IN THE CARRYING AMOUNT OF THE GROUP’S INVESTMENT IN ASSOCIATES

At July 1

Contributions made

Share of profits after income tax

Provision for impairment of investment

At June 30

2018
$’000

(43)

–

–

–

–

–

–

2017
$’000

(129)

230

–

–

–

–

–

(43)

101

CONSOLIDATED

2018
$’000

1,071

43

400

(443)

1,071

2017
$’000

927

43

280

(179)

1,071

Contributions made reflect 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.

45

PRIME MEDIA GROUP | ANNUAL REPORT 201822.  INVESTMENTS IN SUBSIDIARIES 

CLOSED GROUP CLASS ORDER DISCLOSURES

ENTITIES SUBJECT TO CLASS ORDER RELIEF
Pursuant to by ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 (previously 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, and Prime Television Investments 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”) as amended from time to time by assumption deed for the addition and removal of controlled 
entities. 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.

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

Seven Affiliate Sales Pty Limited

Prime Digital Media Pty Limited

Prime Digitalworks Pty Limited

Prime Media Broadcasting Services Pty Limited

Prime Media Communications Pty Limited

Prime Growth Media Pty Limited

Prime Media Group Services Pty Limited

Prime New Media Investments Pty Limited

Geraldton Telecasters Pty Limited

EQUITY INTEREST

COUNTRY OF 
INCORPORATION

2018
%

2017
%

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

The consolidated statement of comprehensive income and statement of financial position of the entities which are members of the ‘Closed Group’ are 
as follows:

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CLOSED GROUP

2018
$’000

(69,124)

5,328

(63,796)

(198,174)

(6,228)

(268,198)

2017
$’000

51,684

(15,443)

36,241

(221,959)

(12,456)

(198,174)

Operating (loss)/profit before income tax

Income tax benefit/(expense) attributable to operating profit

Operating (loss)/profit after tax

Retained losses at beginning of the financial year

Dividends provided for or paid

Retained losses at end of the financial period

46

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2018CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Assets

Current assets

Non-current assets

Total assets

Liabilities

Current liabilities

Non-current liabilities

Total liabilities

Equity

23.  COMMITMENTS

CAPITAL EXPENDITURE COMMITMENTS

Estimated capital expenditure contracted for at reporting date, but not provided for, payable:

 – not later than one year

LEASE EXPENDITURE COMMITMENTS – GROUP AS LESSEE

Operating leases (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

CLOSED GROUP

2018
$’000

2017
$’000

56,117

47,669

103,786

23,799

35,683

59,482

44,304

53,294

157,079

210,373

26,549

68,945

95,494

114,879

CONSOLIDATED

2018
$’000

2017
$’000

1,204

738

6,579

15,680

3,000

25,259

5,513

15,774

4,149

25,436

ACCOUNTING POLICY

Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception of the lease. 
The arrangement is, or contains, a lease if 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.

Group as a Lessee 

A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards 
incidental to ownership to the Group is classified as a finance lease. An operating lease is a lease other than a finance lease.

Finance leases are capitalised at the lease’s inception at the lower of fair value of the leased property or the estimated present value of the 
minimum lease payments. Lease payments are apportioned between finance charges and reduction of 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 statement of profit or loss.

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 statement of profit or loss on a straight-line basis over the lease term.

Operating leases have an average lease term of 3 years for motor vehicles, 3 to 5 years for building leases, and 5 to 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 Consumer Price Index (CPI) adjustments if options are taken up. The majority of the transmission site leases are rentals that are subject 
to annual CPI adjustment. There are no restrictions placed upon the lessee by entering into these leases.

47

PRIME MEDIA GROUP | ANNUAL REPORT 201823.  COMMITMENTS (CONTINUED)

LEASE EXPENDITURE COMMITMENTS – GROUP AS LESSOR
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

CONSOLIDATED

2018
$’000

2017
$’000

1,290

2,685

591

4,566

1,334

3,219

572

5,125

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 television programming and data communications is leased 
through long term operating leases between 5 and 15 years.

 – not later than one year

 – later than one year and not later than five years

 – later than five years

4,200

9,450

–

13,650

4,456

15,439

–

19,895

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 27) 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. This agreement was extended a further 5 years at an annual 
cost of $1,200,000 at the end of the initial 10 year term. The Company also entered into a contract with MediaHub Australia Pty Limited for the 
provision of playout services over a 5 year period.

 – not later than one year

 – later than one year and not later than five years

 – later than five years

ACCOUNTING POLICY

Group as a Lessor

CONSOLIDATED

2018
$’000

4,566

12,690

–

17,256

2017
$’000

4,199

11,556

–

15,755

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. 

48

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 201824.  CONTINGENT LIABILITIES

The Group has guaranteed 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 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 to 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

Maximum contingent commitments

As noted above the entire maximum potential contingent commitment is offset by government funding.

25.  INCOME TAX

The major components of income tax expense are:

Consolidated Statement of Profit or Loss

Current income tax

 – Current income tax charge

 – Adjustments in respect of current income tax of previous years

Deferred income tax

 – Relating to origination and reversal of temporary differences

 – Adjustments in respect of deferred income tax of previous years

Income tax (benefit)/expense in the Consolidated Statement of Profit or Loss

CONSOLIDATED

2018
$’000

2,346

2,346

4,692

2017
$’000

2,346

4,692

7,038

CONSOLIDATED

2018
$’000

2017
$’000

10,738

(166)

(16,074)

176

(5,326)

16,426

(591)

(1,027)

636

15,444

A reconciliation between tax expense and the product of accounting profit before income tax multiplied by Australia’s domestic income tax rate 
is as follows:

Accounting (loss)/profit before income tax

Prima facie tax (benefit)/expense at 30% (2017: 30%)

 – Expenses not deductible for tax

 – Income not assessable for tax

 – Adjustments in respect of current tax of previous years

Income tax (benefit)/expense reported in the Statement of Profit or Loss

Effective tax rate

CONSOLIDATED

2018
$’000

(17,601)

(5,280)

107

(163)

10

(5,326)

30.3%

2017
$’000

51,688

15,507

276

(384)

45

15,444

29.9%

49

PRIME MEDIA GROUP | ANNUAL REPORT 201825.  INCOME TAX (CONTINUED)

DEFERRED TAX ASSETS AND LIABILITIES

Opening balance

Charged to income

Other payments and utilisation of tax losses

Closing balance

Tax (benefit)/expense in statement of comprehensive income

Amounts recognised in the statement of financial position:

Deferred tax asset

Deferred tax liability

Deferred income tax as at 30 June relates to the following:

Deferred tax liabilities

Accelerated depreciation for tax

Leased assets

Prepaid expenses deductible for tax

Income not yet assessable for tax

Intangible assets

Set-off of deferred tax assets

Net deferred tax liabilities

Deferred income tax as at 30 June relates to the following:

Deferred tax assets

Employee entitlements

Provisions

Expenses not yet deductible for tax

Difference between accounting and tax building write off

Tax losses

Set-off of deferred tax liabilities

Net deferred tax assets

CONSOLIDATED

2018
$’000
CURRENT
INCOME TAX

2018
$’000
DEFERRED
INCOME TAX

2017
$’000
CURRENT
INCOME TAX

2017
$’000
DEFERRED
INCOME TAX

(4,543)

(10,571)

15,804

690

(2,485)

(15,835)

13,777

(4,543)

(17,718)

15,897

–

(1,821)

(5,326)

–

(1,821)

(1,821)

(17,992)

390

(116)

(17,718)

15,444

–

(17,718)

(17,718)

CONSOLIDATED
STATEMENT OF FINANCIAL 
POSITION

2018
$’000

2017
$’000

(963)

–

(859)

(4)

(3,547)

(5,373)

3,552

(1,821)

1,388

85

1,549

449

81

3,552

(3,552)

–

(1,332)

(4)

(1,359)

(2)

(19,054)

(21,751)

4,033

(17,718)

1,492

101

1,897

298

245

4,033

(4,033)

–

50

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 2018INCOME TAX LOSSES 

 Deferred tax assets arising from tax losses of a controlled entity which at balance date are recognised 
as being highly probable of recovery. These losses relate to the Australian Tax Consolidated Group.

TAX CONSOLIDATION

2018
$’000

2017
$’000

81

245

(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 entities in the tax consolidated group.

Nature of the tax funding agreement

Members of the tax consolidated group have entered into a tax funding agreement. The tax funding agreement provides for the allocation of current 
taxes to members of the tax consolidated group in accordance with their taxable income for the period, while deferred taxes are allocated to members 
of the tax consolidated group in accordance with the principles of AASB 112 Income Taxes. Allocations under the tax funding agreement are made 
at the end of each half year.

The allocation of taxes under the tax funding agreement is recognised as an increase/decrease in the subsidiaries’ intercompany accounts with the 
tax consolidated group head company, Prime Media Group Limited. In accordance with UIG 1052: Tax Consolidation Accounting, the Group has 
applied the “separate taxpayer within group” approach in determining the appropriate amount of current taxes to allocate to members of the tax 
consolidated group.

PRIME MEDIA GROUP LIMITED

2018
$’000

2017
$’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

11,460

17,186

51

PRIME MEDIA GROUP | ANNUAL REPORT 201825.  INCOME TAX (CONTINUED)

ACCOUNTING POLICY

Current Income Taxes

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. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.

Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit or loss. Management 
periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation 
and establishes provisions where appropriate.

Deferred Income Taxes

Deferred tax is provided using the liability method on temporary differences 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.
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.
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.

The carrying value of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient 
taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability 
settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax assets and deferred 
tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes 
relate to the same taxable entity and the same taxation authority.

Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of GST. The net amount of GST recoverable from, or payable to, the taxation 
authority is included as part of receivables or payables in the statement of financial position. Commitments and contingencies are disclosed 
net of the amount of GST recoverable from, or favourable to, the taxation authority. Cash flows are included in the statement of cash flows 
on a gross basis and the GST component of the cash flows arising from investing and financing activities, which is recoverable from, or payable to, 
the taxation authority is classified as part of operating cash flows. 

52

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 201826.  SHARE-BASED PAYMENTS EXPENSE

(Credit)/expense arising from equity-settled share-based payment transactions

ACCOUNTING POLICY

Share-based payments

CONSOLIDATED

2018
$’000

(98) 

2017
$’000

571

Key management personnel 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 determined by the fair value at the date when the grant is being made using an appropriate valuation 
model. 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 statement of profit or loss 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 share-based payment plan is described below. During the financial year 305,512 performance rights lapsed (2017: 287,909), 600,000 performance 
rights were forfeited (2017: Nil) and nil performance rights were cancelled (2017: Nil).

PRIME MEDIA GROUP LIMITED PERFORMANCE RIGHTS PLAN
At the 2014 Annual General Meeting, shareholders approved the Prime Media Group Limited Performance Rights Plan for Key Management Personnel. 
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.

As highlighted in the Remuneration Report this plan was superseded. No performance rights were granted in the 2018 financial year. 

SUMMARY OF RIGHTS GRANTED UNDER PRIME MEDIA GROUP LIMITED PERFORMANCE RIGHTS 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

3,495,191

$0.00

4,925,191

2018

2017

NO.

WAEP

NO.

 – granted

 – exercised

 – lapsed

 – cancelled

 – forfeited

Balance at end of year

Exercisable at end of year

–

(1,211,926)

(305,512)

–

(600,000)

1,377,753

–

–

–

–

–

–

(1,142,091)

(287,909)

–

–

$0.00

3,495,191

–

–

–

WAEP

$0.00

–

–

–

–

–

$0.00

–

53

PRIME MEDIA GROUP | ANNUAL REPORT 201826.  SHARE-BASED PAYMENTS EXPENSE (CONTINUED)

PERFORMANCE RIGHTS PRICING MODEL 

PRIME MEDIA GROUP PERFORMANCE RIGHTS PLAN
Employees must remain in service for a period of three years from date of grant. The fair value of performance rights granted was estimated at the 
date of the grant using a Black-Scholes methodology, taking into account the terms and conditions upon which the performance rights were granted.

No performance rights were granted during the period. The fair value of performance rights granted in previous years was estimated on the date 
of grant using the following inputs to the model:

Expected annual dividends

Expected volatility (%)

Expected life (years)

Exercise price ($)

Share price at grant date ($)

2016

2015

NOV 15

SEP 15

NOV 14

AUG 14

6.80

30.60

3

0.00

0.62

7.30

30.60

3

0.00

0.63

6.80

26.94

3

0.00

0.86

7.30

27.45

3

0.00

1.03

The dividend yield reflects the assumed dividend payout at the date of issue. 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. 

WEIGHTED AVERAGE REMAINING CONTRACTUAL LIFE
The weighted average remaining contractual life of performance rights outstanding as at 30 June 2018 is 0.3 years (2017: 0.6 years).

RANGE OF EXERCISE PRICE
The range of exercise price for performance rights outstanding at the end of the year was $0.00 (2017: $0.00).

WEIGHTED AVERAGE FAIR VALUE
The weighted average fair value of performance rights granted during the year was nil (2017: nil).

54

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 201827.  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

Prime Television Digital Media Pty Limited

Prime Digital Media Pty Limited

Prime Media Group Services Pty Limited

Prime Media Communications Pty Limited

Prime New Media Investments Pty Limited

Prime Growth Media Pty Limited

Prime Television (Victoria) Pty Limited

Prime Properties (Albury) Pty Limited

Prime Television (Southern) Pty Limited

Prime Television (Northern) Pty Limited

Prime Television Investments Pty Limited

Golden West Network Pty Limited

Mining Television Network Pty Limited

Telepro Pty Limited

135 Nominees Pty Limited

Golden West Satellite Communications Pty Limited

Mid-Western Television Pty Limited

Geraldton Telecasters Pty Limited

Zamojill Pty Limited

Seven Affiliate Sales Pty Limited

Prime Media Broadcasting Services Pty Limited

Broadcast Production Services Pty Limited

Production Strategies Pty Limited as trustee for Production Strategies Discretionary Trust

Wastar International Pty Limited

Screenworld Pty Limited

OSB Holdings Pty Limited as trustee for the OSB Unit Trust

On Site Broadcasting Pty Limited

OSB Australia Pty Limited

OSB Corporation Pty Limited

On Corporation Pty Limited

Prime Digitalworks Pty Limited

Broadcast Rentals Pty Limited

B.  ULTIMATE PARENT
Prime Media Group Limited is the ultimate Australian entity and the ultimate parent entity of the Group.

EQUITY INTEREST

COUNTRY OF 
INCORPORATION

2018
%

2017
%

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

55

PRIME MEDIA GROUP | ANNUAL REPORT 201827.  RELATED PARTY DISCLOSURES (CONTINUED)

C.  KEY MANAGEMENT PERSONNEL (KMP)

Short-term employee benefits

Post-employment benefits

Long-term benefits

Share based expense – 2014 Performance Rights Plan

Cash settled expense – 2017 Performance Plan

Termination payments

TOTAL

CONSOLIDATED

2018
$’000

3,434

129

163

(98)

144

888

2017
$’000

4,916

145

59

571

–

–

4,660

5,691

The amounts disclosed in the table are the amounts recognised as an expense during the reporting period that related to KMP. Details of remuneration 
amounts paid to individual KMP are disclosed in tables 1 and 2 of section 4 of the Remuneration Report.

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. The cost of these services was $748,000 in the 2018 financial year.

WIN CORPORATION PTY LIMITED AND ASSOCIATED ENTITIES
This company is a subsidiary of Birketu Pty Limited, a substantial shareholder of the Group. The Company has entered into transmission facility 
sharing agreements under normal commercial terms and conditions with this company 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 at an annualised cost 
of $1,557,000. 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 until 30 June 2020. The shareholders of the company provide services to WA SatCo Pty Limited to enable its 
operations. Services of $367,000 were recovered from WA SatCo Pty Limited on a cost recovery basis in the 2018 financial year.

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 for 
the period to 2023 at an annualised cost of up to $1,200,000 per annum.

56

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 201828.  PARENT ENTITY INFORMATION

Current assets 

Total assets

Current liabilities

Total liabilities

Issued capital

Retained earnings

Employee benefits reserve

Total shareholders’ equity

Profit/(Loss) of the parent entity

Total comprehensive profit/(loss) of the parent entity

PRIME MEDIA GROUP LIMITED

2018
$’000

113

86,805

677

35,405

310,262

(263,953)

4,091

51,400

14,265

14,265

2017
$’000

103

220,424

4,877

176,209

310,262

(270,688)

4,641

44,215

(1,966)

(1,966)

Subsequent to 30 June 2017 the Directors of certain subsidiary companies within the Group resolved to pay dividends totalling $282,000,000 to the 
Parent entity, Prime Media Group Limited. This action was taken to remit profits earned by subsidiaries in the year ended 30 June 2017 and prior 
periods, which were reflected in the consolidated results of the Group in 2017 and those prior periods and from which the Group paid dividends 
in 2017 and in those prior periods. 

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 as amended from time to time by assumption deed for the addition and removal of controlled entities. 
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 22).

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 Network Pty Limited (GWN), a wholly owned subsidiary and party to the Deed of Cross Guarantee. GWN has guaranteed 
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 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 to 30 June 2020. This agreement can be terminated without notice by the 
Commonwealth Government. 

57

PRIME MEDIA GROUP | ANNUAL REPORT 201829.  SUBSEQUENT EVENTS

On 20 August 2018 the Company executed an extension to its program supply agreement with the Seven Network, effective from 1 July 2018 for 
a period of 5 years.

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

CONSOLIDATED

2018
$

2017
$

312,684

413,213

–

260,590

73,983

–

725,897

334,573

31.  OTHER ACCOUNTING POLICIES

A.  BASIS OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of Prime Media Group Limited and its subsidiaries (as outlined in Note 27) 
as at and for the year ended 30 June 2018. Interests in associates are equity accounted and are not part of the consolidated Group (see Note 21).

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect 
those returns through its power over the investee. The Group controls an investee if and only if the Group has:
•  power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
•  exposure, or rights, to variable returns from its involvement with the trustee;
• 

the ability to use its power over the investee to affect its returns.

Generally, there is a presumption that a majority of voting rights results in control. To support this presumption, and when the Group has less than 
a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power 
over an investee including: 
• 
• 
• 

the contractual arrangement(s) with the other vote holders of the investee;
rights arising from other contractual arrangements; and
the Group’s voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three 
elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control 
of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated 
financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the equity holders of the parent of the Group and to the 
non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra group assets and liabilities, equity, 
income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. 

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 related assets (including goodwill), liabilities, non-controlling interest and any other 
component of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value. 

B.  CURRENT VERSUS NON-CURRENT CLASSIFICATION
The Group presents assets and liabilities in the statement of financial position based on current and non-current classification. An asset is current when 
it is:
•  Expected to be realised or intended to be sold or consumed in the normal operating cycle;
•  Held primarily for the purpose of trading;
•  Expected to be realised within 12 months after the reporting date; or
•  Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.

All other assets are classified as non-current. A liability is current when:
• 
• 
• 
•  There is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.

It is expected to be settled in the normal operating cycle;
It is held primarily for the purpose of trading;
It is due to be settled within 12 months after the reporting date; or

The Group classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and liabilities.

58

NOTES TO THE FINANCIAL STATEMENTS CONTINUEDFOR THE YEAR ENDED 30 JUNE 201832.  SIGNIFICANT JUDGEMENTS AND ESTIMATES

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. 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 to 5 years for building leases, and 5 to 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.

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
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 value in use calculation is based on a discounted cash flow model. The cash flows are derived from 
the budget for next year, plus growth assumptions 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 7. 

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 broadcasting licences consist of the right to broadcast television 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.

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 Black-Scholes model, using the assumptions detailed in Note 26.

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.

59

PRIME MEDIA GROUP | ANNUAL REPORT 2018DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2018

In accordance with a resolution of the directors of Prime Media Group Limited, I state that:

1.  In the opinion of the directors:

a.  the financial statements and notes of Prime Media Group Limited for the financial year ended 30 June 2018 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 2018 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 1(b);

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 that the members of the Closed Group identified in Note 22 
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 by 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 2018.

On behalf of the Board

P.J Macourt 
Director

Sydney, 28 August 2018

60

Ernst & Young 
200 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 Audit of the Financial Report 

Opinion 

We have audited the financial report of Prime Media Group Limited (the Company) and its subsidiaries 
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June 
2018, the consolidated statement of comprehensive income, consolidated statement of changes in equity 
and consolidated statement of cash flows for the year then ended, notes to the financial statements, 
including a summary of significant accounting policies, and the directors declaration. 

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 
2001, including: 

a) 

b) 

giving a true and fair view of the consolidated financial position of the Group as at 30 June 2018 
and of its consolidated financial performance for the year ended on that date; and 

complying with Australian Accounting Standards and the Corporations Regulations 2001. 

Basis for Opinion 

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under 
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial 
Report section of our report. We are independent of the Group in accordance with the auditor 
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting 
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the 
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other 
ethical responsibilities in accordance with the Code.  

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for 
our opinion. 

Key Audit Matters 

Key audit matters are those matters that, in our professional judgment, were of most significance in our 
audit of the financial report of the current year. These matters were addressed in the context of our audit 
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate 
opinion on these matters. For the matter below, our description of how our audit addressed the matter is 
provided in that context. 

We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the 
Financial Report section of our report, including in relation to these matters. Accordingly, our audit 
included the performance of procedures designed to respond to our assessment of the risks of material 
misstatement of the financial report. The results of our audit procedures, including the procedures 
performed to address the matter below, provide the basis for our audit opinion on the accompanying 
financial report. 

A member firm of Ernst & Young Global Limited 
Liability limited by a scheme approved under Professional Standards Legislation 

61

INDEPENDENT AUDITOR’S REPORTPRIME MEDIA GROUP | ANNUAL REPORT 2018   
   
   
   
 
 
 
 
 
 
 
 
 
Recoverability of Property, Plant and Equipment, Intangible Assets and Goodwill   

Why Significant to the Audit 

How our Audit Addressed the Matter 

At 30 June 2018, Property, Plant and 
Equipment and Intangible Assets and Goodwill 
have a net book value of $25.3 million, and 
$16.6 million respectively and represent 42% of 
total assets of the Group.  

The Group recorded an impairment charge of 
$51.7 million during the year against the 
carrying value of its Television Broadcast 
Licenses, a component of Intangible Assets and 
Goodwill. 

Our procedures included the following: 

►  Assessed whether the methodology and model 

used by the Group to test for impairment met the 
requirements of Australian Accounting Standards. 

►  Tested whether the model used was 

mathematically accurate. 

►  Assessed whether the cash flows used in the 

impairment testing model accurately reflected the 
Board approved 2019 budget. 

As disclosed in Note 7 to the financial report, the 
Group’s assessment of the recoverability of 
these assets involves critical accounting 
estimates and assumptions. 

►  Considered the historical reliability of the Group’s 

cash flow forecasting process and financial 
performance subsequent to year end relative to 
budget.  

These estimates and assumptions relate to 
future performance, market, regulatory and 
economic conditions. In particular, the decline in 
advertising revenues being experienced in the 
free to air television industry is forecast to 
continue. 

Given these factors, we considered this to be a 
key audit matter.  

►  Evaluated the external inputs and assumptions 
within the cash flow forecasting model, in 
particular growth rates and discount rates by 
comparing them to assumptions and estimates 
used elsewhere in the preparation of the financial 
report and benchmarked them against market 
observable external data. In addition, we assessed 
the impact of the Group’s renewed programming 
arrangements and associated costs on the 
impairment model. 

►  Considered the impact of a range of assumption 

sensitivities to the model.  

►  Considered the adequacy of the financial report 
disclosures contained in Note 7, in particular 
those regarding the impairment charges taken 
during the year and the assumptions to which the 
outcome of the impairment test is most sensitive. 

As impairment testing relies upon business valuation 
principles we involved our valuation specialists to 
assist in the work outlined above where we 
considered such expertise was required. 

A member firm of Ernst & Young Global Limited 
Liability limited by a scheme approved under Professional Standards Legislation 

62

INDEPENDENT AUDITOR’S REPORT 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
Information Other than the Financial Report and Auditor’s Report Thereon 

The directors are responsible for the other information. The other information comprises the information 
included in the Company’s 2018 Annual Report other than the financial report and our auditor’s report 
thereon. We obtained the Directors’ Report that is to be included in the Annual Report, prior to the date 
of this auditor’s report, and we expect to obtain the remaining sections of the Annual Report after the 
date of this auditor’s report.  

Our opinion on the financial report does not cover the other information and we do not and will not 
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and 
our related assurance opinion.  

In connection with our audit of the financial report, our responsibility is to read the other information and, 
in doing so, consider whether the other information is materially inconsistent with the financial report or 
our knowledge obtained in the audit or otherwise appears to be materially misstated.  

If, based on the work we have performed on the other information obtained prior to the date of this 
auditor’s report, we conclude that there is a material misstatement of this other information, we are 
required to report that fact. We have nothing to report in this regard. 

Responsibilities of the Directors 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 control as the directors determine is necessary to enable the preparation of the financial 
report that gives a true and fair view and is free from material misstatement, whether due to fraud or 
error. 

In preparing the financial report, the directors are responsible for assessing the Group’s ability to 
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the 
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease 
operations, or have no realistic alternative but to do so. 

Auditor's Responsibilities for the Audit of the Financial Report 

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free 
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes 
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit 
conducted in accordance with the Australian Auditing Standards will always detect a material 
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, 
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of 
users taken on the basis of this financial report. 

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional 
judgment and maintain professional scepticism throughout the audit. We also: 

A member firm of Ernst & Young Global Limited 
Liability limited by a scheme approved under Professional Standards Legislation 

63

INDEPENDENT AUDITOR’S REPORTPRIME MEDIA GROUP | ANNUAL REPORT 2018 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
• 

• 

• 

• 

• 

• 

Identify and assess the risks of material misstatement of the financial report, whether due to fraud 
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence 
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a 
material misstatement resulting from fraud is higher than for one resulting from error, as fraud 
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of 
internal control. 

Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.  

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting 
estimates and related disclosures made by the directors. 

Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, 
based on the audit evidence obtained, whether a material uncertainty exists related to events or 
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If 
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s 
report to the related disclosures in the financial report or, if such disclosures are inadequate, to 
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our 
auditor’s report. However, future events or conditions may cause the Group to cease to continue as 
a going concern.  

Evaluate the overall presentation, structure and content of the financial report, including the 
disclosures, and whether the financial report represents the underlying transactions and events in a 
manner that achieves fair presentation. 

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or 
business activities within the Group to express an opinion on the financial report. We are 
responsible for the direction, supervision and performance of the Group audit. We remain solely 
responsible for our audit opinion. 

We communicate with the directors regarding, among other matters, the planned scope and timing of the 
audit and significant audit findings, including any significant deficiencies in internal control that we 
identify during our audit. 

We also provide the directors with a statement that we have complied with relevant ethical requirements 
regarding independence, and to communicate with them all relationships and other matters that may 
reasonably be thought to bear on our independence, and where applicable, related safeguards. 

From the matters communicated to the directors, we determine those matters that were of most 
significance in the audit of the financial report of the current year and are therefore the key audit 
matters. We describe these matters in our auditor’s report unless law or regulation precludes public 
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should 
not be communicated in our report because the adverse consequences of doing so would reasonably be 
expected to outweigh the public interest benefits of such communication. 

A member firm of Ernst & Young Global Limited 
Liability limited by a scheme approved under Professional Standards Legislation 

64

INDEPENDENT AUDITOR’S REPORT 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
Report on the Audit of the Remuneration Report 

Opinion on the Remuneration Report 

We have audited the Remuneration Report included in pages 10 to 19 of the directors' report for the year 
ended 30 June 2018. 

In our opinion, the Remuneration Report of Prime Media Group Limited for the year ended 30 June 2018, 
complies with section 300A of the Corporations Act 2001. 

Responsibilities 

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. 

Ernst & Young 

Christopher George 
Partner 
Sydney 
28 August 2018 

A member firm of Ernst & Young Global Limited 
Liability limited by a scheme approved under Professional Standards Legislation 

65

INDEPENDENT AUDITOR’S REPORTPRIME MEDIA GROUP | ANNUAL REPORT 2018 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 23 August 2018.

A.  DISTRIBUTION OF EQUITY SECURITIES 

ORDINARY SHARES
As at 23 August 2018, 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 is:

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 23 August 2018 are:

LISTED ORDINARY SHARES

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

BIRKETU PTY LTD

CITICORP NOMINEES PTY LIMITED

BNP PARIBAS NOMINEES PTY LTD

J P MORGAN NOMINEES AUSTRALIA LIMITED

CVC LIMITED

NATIONAL NOMINEES LIMITED

MR GEORGE WALTER MOORATOFF

SOJOURN SERVICES PTY LTD

BUTTONWOOD NOMINEES PTY LTD

NEWECONOMY COM AU NOMINEES PTY LIMITED

BT PORTFOLIO SERVICES LIMITED

MORGAN STANLEY AUSTRALIA SECURITIES (NOMINEE) PTY LIMITED

S M & R W BROWN PTY LTD

MISS KATE IMOGEN LEAVER

MR DEREK TIN TAK CHU

MRS SARAH CAMERON

MR JOHN ALEX RUMBLE & MRS SONJA RUMBLE

KILCARE HOLDINGS PTY LIMITED

B F A PTY LTD

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

NUMBER OF HOLDERS

529

831

538

1,084

198

3,180

705

NUMBER OF 
SHARES

PERCENTAGE 
OF ORDINARY 
SHARES

76,889,276

54,906,553

45,006,375

28,623,396

19,647,642

12,457,338

8,645,353

5,000,000

5,097,000

3,700,000

2,964,195

1,800,000

1,711,600

1,500,000

1,300,000

1,060,000

1,050,000

1,003,000

1,000,000

1,000,000

20.99

14.99

12.29

7.81

5.36

3.40

2.36

1.36

1.39

1.01

0.81

0.49

0.47

0.41

0.35

0.29

0.29

0.27

0.27

0.27

274,361,728

74.88

C.  SUBSTANTIAL SHAREHOLDERS
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 are:

NUMBER OF 
SHARES

54,906,553

48,530,406

48,530,406

18,328,162

PERCENTAGE 
OF ORDINARY 
SHARES

14.99%

13.25%

13.25%

5.00%

Birketu Pty Ltd

Spheria Asset Management Pty Limited 1

Pinnacle Investment Management Group Limited 1

Commonwealth Bank of Australia

1  These substantial shareholdings relate to the same parcel of shares.

D.  VOTING RIGHTS
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.

66

ASX ADDITIONAL INFORMATIONFOR THE YEAR ENDED 30 JUNE 2018Designed and produced by ArmstrongQ – www.armstrongQ.com.au

www.primemedia.com.au