Prime Media Group Limited Annual Report 2020

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FY2020 Annual Report · Prime Media Group Limited

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2020 Annual Report

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Chairman’s
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Chief Executive
Officer’s Report

Directors’
Report

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

Peter J. Macourt (Chair)
1 September 2014 – Present

Ian R. Neal
6 June 2008 – Present

Cass O’Connor
21 April 2015 – Present

John K. Hartigan
15 May 2014 – 19 December 2019

Robbie L. Sefton
8 April 2019 – 13 February 2020

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

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Dear Shareholders,

The 2020 financial year has been a turbulent year in which Prime has navigated
regional floods, bushfires and the COVID-19 pandemic, while continuing to face
increased competition from global media and technology companies for regional
audiences and regional advertisers.

Against this backdrop, Prime reported a statutory profit of $6.6 million, which
is a resilient result in what was and remains a challenging advertising environment.
Prime’s revenues declined as advertisers responded to government restrictions to
limit the pandemic with significant revenue declines experienced in the final quarter
of the reporting period. Prime’s second largest market of Regional Victoria has been
in lock down for several months, which has directly affected Prime’s staff and business
operations in Melbourne and regional Victoria. Despite these challenges Prime’s
operating cashflow remained robust, as evidenced by Prime paying down its debt
facility and the resultant net cash at 30 June 2020 of $17.1 million. With an improved
balance sheet, Prime is positioned to explore revenue diversification opportunities.
This strategy is necessary given the significant and unrelenting competition from
digital platforms for regional audiences and advertisers. As part of this strategy,
Prime is also poised to renew its Board over the coming months.

Prime has benefitted over the past 6 months from both the JobKeeper subsidy and
the Public Interest News Gathering Program grant. While these Federal Government
funded initiatives were a welcome response to the unprecedented trading conditions
during the pandemic, regional media companies continue to be impacted by the
dramatic structural change in audiences and advertising revenues, largely the result
of the introduction of the Federal Government funded NBN. It is disappointing that
while the Federal Government funded NBN facilitated the entry of new competitors
into a highly regulated regional media market, it did not comprehensively change
media laws to create a level playing field for regional media companies that now
compete directly with the likes of Google, Facebook, and metropolitan television
networks. Regional media companies will continue to decline while media laws
remain unchanged. This will inevitably lead to a reduction in local news services and
the loss of diversity in regional communities.

An industry developed proposal for a self-funded revitalisation of the regional
television sector is before the Minister for Communications, Cyber Safety and the
Arts, The Hon. Paul Fletcher.

I would like to thank our previous Chairman, John Hartigan who retired at the AGM
after making a tremendous contribution to the company over the past 5 years. My
thanks also to Robbie Sefton for her contribution over the past year. We wish them
both well for the future.

I would like to conclude by extending my most sincere thanks and appreciation
to Prime’s staff who have endured over the course of the pandemic. Their support
of the company and their commitment to our clients, partners and viewers has
been significant and commendable. I’d also like to acknowledge and thank Prime’s
advertising clients and partners for their continuing support and loyalty.

Peter Macourt
CHAIR AND NON-EXECUTIVE DIRECTOR

PRIME MEDIA GROUP | ANNUAL REPORT 2020

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Not in its history has Prime experienced an
event of the magnitude of the COVID-19
pandemic combined with bushfires and
floods across its markets.

As a result Prime’s advertising revenue opportunity was dramatically curbed with
almost immediate effect, falling 7.2% for the half year to December 2019 and rapidly
declining during the pandemic to fall 34.7% in the final quarter of this financial year.
Federal government support in the form of $3.0 million of JobKeeper payments
provided much needed capacity, as did Prime’s decision to repay in full its interest
bearing debt over recent years.

Prime’s 2020 financial year result certainly reflects the disruption to advertising
revenues and so profits, but it does not recognise the tremendous effort and work
carried out at every level of the Company to ensure that the optimal financial result
was achieved. The entire Prime team is deserving of the credit.

The decline in regional television audiences continued unabated due to the
increasing number of digital platforms accessing regional Australia via the NBN.
Notwithstanding the challenges, Prime reported a statutory profit after tax of
$6.6 million and as mentioned previously, having fully paid down its bank facility,
Prime reported net cash of $17.1 million at 30 June 2020. Encouragingly, Prime
maintained a market leading revenue share of 41.0% in key markets despite an
interrupted AFL season and other disruption to the broadcast schedule.

Prime also maintained a disciplined approach to cost management during the year
with operating expenses declining $2.1 million or 4.1% on the prior year before
one-off transaction costs and the impact of the new leases standard. Included
in this result was a reduction in employee benefit expense of $2.6 million or 7.4%
on the prior year. The reduction in employee benefits expense was primarily due
to measures taken as a result of the COVID-19 pandemic including key management
agreeing a temporary reduction in base salary from May to September 2020
and forgoing short and long term incentives in respect of this financial year.
Non-executive directors also agreed a temporary reduction in director fees.
The Company enacted a hiring freeze during the pandemic and reduced work
hours for employees whose duties were curtailed by the pandemic.

Investment in local news
and community programming

Prime7 and GWN7 local news and current affairs bureau played an important role in
keeping regional communities informed during the floods, fires and the pandemic.
Prime7 & GWN7 Local News bulletins are the only truly local half-hour news bulletins
in their respective markets and are the highest rating news programs. Integral to this
success is over 90 full-time and part-time journalists, camera operators and studio
personnel located in regional offices throughout NSW, the ACT and WA.

In recognition of the integral role that regionally based journalists play in
regional communities Prime was also awarded grant funding of $4.7 million
under the Federal Government’s Public Interest News Gathering Program (PING).

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$163.7M

Revenue

$20.3M

EBITDA

The Company executed a PING funding agreement with the Commonwealth
Government on 14 August 2020 and expects the grant funding to be available and
grant obligations to apply over the 12 month period from the date of agreement.

Community service support

Prime made a significant investment in community service announcements during
the 2019-20 Australia bushfire season for the following organisations:

• NSW Rural Bushfire Service;

• Vic Government Summer Bushfire Campaign;

• Gippsland Emergency Campaign;

• Taree Rotary Bushfire Appeal; and

• Adopt a Koala Wildlife Rescue.

Prime also provided community service support for the following charitable
or not-for-profit organisations active in regional communities throughout the year:

• Regional Achievement and Community Awards – NSW/Australian Capital

Territory, VIC and WA;

• Channel 7 Telethon (WA);

• The Smith Family;

• RSPCA;

• Breast Cancer Network Australia;

• Swags For Homeless;

• Ronald McDonald House; and

• The Salvation Army Red Shield Appeal 2020.

$6.6M

Statutory net profit after tax

In closing I extend my thanks to the management and staff of Prime, many of
whom have been working from home during these difficult times. Their collective
contribution has ensured that Prime has maintained a leadership position in the
regional communities that we operate in.

$17.1M

Net cash

Ian Audsley
CHIEF EXECUTIVE OFFICER

PRIME MEDIA GROUP | ANNUAL REPORT 2020t
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Peter J. Macourt
Non-Executive Chair and Director
(appointed 1 September 2014)

Mr Macourt is a former Chair and
non-executive director of Virtus Health
Limited and Sky Network Television
Limited. He is also a former director
of FOXTEL and a former director
and chief operating officer of News
Limited and Independent Newspapers
Limited. Mr Macourt was appointed
Interim Chair of Prime Media Group
Limited on 19 December 2019 and
is a member of the Audit and Risk
Committee and Remuneration and
Nomination Committee.

Ian R. Neal
Non-Executive Director
(appointed 6 June 2008)

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 Chair of the Remuneration and
Nomination Committee and a member
of the Audit and Risk Committee.

Cass A. O’Connor
Non-Executive Director
(appointed 21 April 2015)

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 20 years she
has managed her own corporate advisory
company. Ms O’Connor is currently Chair
of Carriageworks Limited, a shareholder
and director of multi-award winning
independent television and film production
entity Goalpost Pictures; Chair of TRIBE,
a leading influencer marketing and branded
content generation platform; and Chair
of Karista, a curated disability services
provision 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 Chair of the Audit and
Risk Committee and a member of the
Remuneration and Nomination Committee.

Your directors submit their report for the year
ended 30 June 2020. 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.

John K. Hartigan
Non-Executive Chair (appointed 15
May 2014, retired 19 December 2019)

Mr Hartigan headed News Corporation’s
Australian operations as Chair and Chief
Executive Officer of News Limited (now
known as News Corp Australia). He was
also a director of FOXTEL and Chair of
Australian News Channel, which owns and
operates Sky News. 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 was previously
Chair of Destination NSW.

Robbie L. Sefton
Non-Executive Director
(appointed 8 April 2019,
resigned 13 February 2020)

Ms Sefton is a wool, meat and grain
farmer, and managing director of
Seftons, a national strategic marketing
communications company based in
Tamworth, NSW. Ms Sefton has been
a member on the Reserve Bank of
Australia’s Small Business Finance Panel.
She is currently the Deputy Chair of the
National Australia Day Council and a board
member of the newly created Cooperative
Research Centre for High Performing Soils.

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.

PRIME MEDIA GROUP | ANNUAL REPORT 2020Directors’ 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

P.J. Macourt

I.R. Neal

C.A. O’Connor

I.C. Audsley

ORDINARY SHARES

–

40,000

75,000

974,300

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

P.J. Macourt

Sky Network Television Limited (Chair and Non-Executive Director)

Virtus Health Limited (Chair and Non-Executive Director)

I.R. Neal

Greatcell Solar Limited (formerly Dyesol Limited)
(Chair and Non-Executive Director)

PERIOD OF DIRECTORSHIP

FROM

August 2002

June 2013

September 2006

October 2019

November 2019

December 2018

C.A. O’Connor

McGrath Limited (Chair and Non-Executive Director)

December 2015

February 2018

Company Secretary
John Palisi was Company Secretary during the reporting period. 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

CENTS

1.8

1.6

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.

Operating and financial review

Statutory Results
The Company’s consolidated profit after tax attributable to the members
for the year ended 30 June 2020 was $6,611,000, which represents
a decrease of $737,000 or 10.0% on the prior year.

Total revenue of $163,680,000 declined $28,182,000 or 14.7% on the prior
year. Revenue from contracts with customers was materially impacted
by the COVID-19 pandemic, declining $16,705,000 or 34.7% in the final
quarter of this financial year compared to the previous corresponding
period. Revenue declines were recorded across national agency and
local direct advertisers, as consumer sentiment weakened and advertiser
categories such as retail, household furnishings and the motor vehicle
sector declined. Changes to AFL fixtures and the broadcast also
impacted Prime’s advertising revenue opportunity.

During the financial year, the Company maintained its lead revenue
share of 41.0% in the aggregated regional market of New South Wales
and Victoria. Advertising revenue in the aggregated regional market
of New South Wales and Victoria declined by 16.4% on the prior year,
compared to the market, which declined 15.4% in the same period.

As a result of revenue declines in the final quarter of this financial
year, the Company was eligible for the JobKeeper Payment subsidy
totalling $2,976,000, which has been disclosed as Other Income in this
financial year.

Cost of sales, including affiliation payments to the Seven Network under
the program supply agreement, declined by $7,871,000 or 7.8% on the
prior year. Affiliation payments made to the Seven Network are based
on a percentage of gross advertising revenue.

Total operating expenses of $49,933,000 decreased by $2,011,000
or 3.9% on the prior period inclusive of one-off non-recurring costs
associated with the proposed scheme of arrangement with the Seven
Network of $1,583,000. Operating expenses were also impacted by the
application of AASB 16 Leases during this reporting period. The change
in accounting standard resulted in a decrease in operating expenses
on the prior period of $1,568,000 and a corresponding increase
in depreciation and interest expense.

Included in total operating expenses was a reduction in employee
benefit expense of $2,572,000 or 7.4% on the prior year. The reduction
in employee benefits expense was primarily due to measures taken
as a result of the COVID-19 pandemic including key management
agreeing a temporary reduction in base salary from May to September
2020 and forgoing short and long term incentives in respect of this
financial year. Non-executive directors also agreed a temporary
reduction in director fees. The Company enacted a hiring freeze during
the pandemic and reduced work hours for employees whose duties
were curtailed by the pandemic.

The Group’s share of associate profits of $194,000 relates to joint
ventures that broadcast Nine Entertainment programming in regional
Western Australia and Mildura.

Earnings before interest, tax, depreciation, and amortisation
of $20,272,000 decreased by $18,196,000 or 47.3% on the prior year.

Dividend
The Company continues to suspend dividend payments.
This decision has been taken due to the significant uncertainty
in regional advertising markets.

Core Net Profit After Tax
Core net profit after tax (non-IFRS measure) and before specific items
of $6,038,000 (2019: $17,161,000), declined $11,123,000 or 64.8% on the
previous corresponding period.

Reported profit after tax

Impairment (non-cash)

Release of deferred tax liability arising from
impairment

JobKeeper subsidy

Non-recurring legal and consulting expenses

Redundancies

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)

Weighted Average Cost of Capital
(post-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

(%)

2020
$’000

6,611

532

2019
$’000

7,348

14,018

–

(4,205)

(2,976)

1,583

245

–

6,038

17,161

1.6

1.8

7.2

7.9

4.7

2.0

19.8

8.5

14.15

12.96

14.15

9.8

10.8

–

0.09

–

(56.7)

12.64

31.3

13.4

14.9

0.21

–

(27.6)

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
Net assets as at the reporting date of $61,352,000 included cash at bank
of $17,148,000.

Net cash flow from operating activities of $28,892,000 improved $6,426,000
or 28.6% compared to the prior year. While revenue declined $28,182,000
or 14.7% on the prior year, receipts from customers declined $20,320,000
or 9.6% for the same period. The material decline in advertising revenues
experienced in the final quarter of this financial year due to the impact
of the COVID-19 pandemic is expected, in part, to reduce receipts from
customers in the first quarter of the 2021 financial year. Receipts from
customers also includes JobKeeper subsidies of $1,989,000.

Payments to suppliers and employees declined by $21,672,000 or 11.9%
on the prior year inclusive of one-off non-recurring costs associated with the
proposed scheme of arrangement with the Seven Network of $1,531,000.
Affiliation fees paid to the Seven Network and payments to employees
declined during the period. Included in the prior reporting period were
one-off transitional spectrum licence fee payments of $6,215,000.

Net cash flows used in investing activities of $953,000 (2019: $2,581,000)
relate to capital expenditure for the purchase of broadcast and
computer equipment. During the reporting period, the Group received
a repayment of loan funds from associates of $750,000 and paid loan
funds to associates of $300,000.

PRIME MEDIA GROUP | ANNUAL REPORT 2020Capital structure
The Group’s secured bank loan facility was undrawn as at 30 June 2020
(30 June 2019: $16,000,000). During the reporting period, the debt facility
limit was reduced to $20 million (2019: $30 million).

Interest-bearing loan

Cash and short term deposits

Net (cash)/debt

Total equity

Total capital employed

Gearing

2020
$’000

–

(17,148)

61,352

44,204

–%

2019
$’000

16,000

(6,443)

9,557

54,784

64,341

14.9%

Risk management
The Group’s approach to risk management is addressed in the
Corporate Governance Statement, which is available on the Group’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 Group has identified
the following key material business risks that may affect the Group’s
financial performance:
• COVID-19 outbreaks may disrupt the broadcast of major sporting

•

events, resulting in further declines in regional advertising revenues;
the impact of the COVID-19 pandemic on employees and operations
and the potential for serious interruption to services;

• a prolonged deterioration in general economic conditions

as a result of the COVID-19 pandemic, resulting in a sustained
downturn in regional advertising markets;
the continued decline in television 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.

Significant events after the balance date
On 30 June 2020 the Minister for Communications, Cyber Safety and the
Arts announced that the Company was eligible under the Public Interest
News Gathering Program (“PING”) for grant funding totalling $4,703,000.
On 14 August 2020 the Company executed a PING funding agreement
with the Commonwealth Government. The Company expects the grant
funding to be available and grant obligations to apply over the 12 month
period from the date of agreement.

Likely developments and expected results
The Board and Executive considers the future performance of the Group
to be highly dependent on conditions in Prime’s advertising markets
in regional New South Wales and Victoria. Advertising revenues declined
34.7% in the final quarter of the 2020 financial year compared to the prior
corresponding period in part due to government restrictions to limit
the spread of the COVID-19 virus. At the time of preparing this report,
the State of Victoria was experiencing Stage 4 restrictions, while New
South Wales was at Stage 2 restrictions, resulting in an uncertain trading
environment. Future trading conditions and advertising revenues are
also expected to remain subdued given the current economic downturn.

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 $904,194 (2019: $563,974) 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:

P.J. Macourt

I.R. Neal

C.A. O’Connor

I.C. Audsley

J.K. Hartigan (retired
19 December 2019) 1

R.L. Sefton (resigned
13 February 2020) 1

–

1 All directors were eligible to attend all meetings held, except J.K. Hartigan and
R.L. Sefton, who were eligible to attend 26 directors’ meetings during the year.

Directors’ Report continuedMessage 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 2020 in accordance with section 300A of the Corporations
Act, outlining the nature and amount of remuneration for non-executive directors and key
management personnel.

The 2020 financial year has been an incredibly difficult and challenging year for the Company and its
senior management. While the Scheme of Arrangement with the Seven Network was not supported
by key shareholders, the senior management team worked tirelessly to complete the Scheme timetable
over a 4 month period, culminating in the shareholders meeting on 19 December 2019.

The second half of the financial year was underlined by the outbreak of the COVID-19 pandemic and
bushfires in regional areas. As reported to you over past months, the COVID-19 pandemic materially
impacted advertising revenues in the final quarter of this financial year. In response to the material
and dramatic declines, senior management agreed to a temporary 20% reduction in base salary from
May to September 2020 and to forgo short and long term incentives in respect of this financial year.
Non-executive directors also agreed a temporary 20% reduction in director fees for the same period.
The temporary reduction will be reviewed in September 2020.

Despite the difficult trading environment and significant disruption caused by the COVID-19 pandemic,
the Company has been able to navigate through this difficult time, having strengthened its balance sheet
by repaying its debt facility. Encouragingly, the Company has maintained a market leading revenue share
of 41.0% in key markets.

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

PRIME MEDIA GROUP | ANNUAL REPORT 2020
REMUNERATION REPORT (AUDITED)

2. REMUNERATION GOVERNANCE

This Remuneration Report for the year ended 30 June 2020 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. Remuneration Report Overview
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
C. Executive Remuneration Outcomes (including link to performance)

5. Executive Contracts
6. Non-Executive Director Remuneration

1. REMUNERATION REPORT OVERVIEW

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 2020 were:

KMP

POSITION

TERM AS KMP

Non-Executive Directors

P.J. Macourt

Chair; Director

I.R. Neal

C.A. O’Connor

Director

J.K. Hartigan

Chair; Director

R.L. Sefton

Director

Executive KMP

Full Year

From 1 July 2019 to
19 December 2019

From 1 July 2019 to
13 February 2020

I. Audsley

CEO and Executive Director

Full Year

D. Walker

J. Palisi

Group General Manager
Sales and Marketing

Chief Financial Officer

Full Year

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 two 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.

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;
• 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.

Directors’ Report continued3.

EXECUTIVE REMUNERATION ARRANGEMENTS (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
%

46%

48%

56%

30%

32%

22%

24%

20%

22%

TOTAL
%

100%

TOTAL
AT RISK
%

54%

52%

44%

The ‘at risk’ component of the CEO package was subject to achievement of both short term and long term performance requirements linked to the
Company’s strategy and 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 Net Profit After Tax (“NPAT”);

Operational performance;

A positive power ratio, which is
a measure of the Company’s share
of revenue to the Company’s share
of audience; and

Risk management including
commitment to Work Health Safety.

LTI component

Prime Media Group Limited Cash
Settled Performance Plan introduced
to replace the performance rights plan.

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

Performance is linked to achievement
of STI targets over three financial years.

PRIME MEDIA GROUP | ANNUAL REPORT 20204. 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

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

40%

20%

84%

60%

20%

KEY PERFORMANCE OBJECTIVES

OUTCOMES

COMMENTARY

Financial results

Not achieved

Statutory net profit after tax of $6,611,000.

Not achieved

Core net profit after tax of $6,038,000.

Maximising advertising revenue
share and yield

Not achieved

Prime reported a power ratio of 0.099, which demonstrates that Prime’s revenue
share of 41.0% fell below its audience share of 41.3% in the aggregated regional
market of New South Wales and Victoria.

Strategic priorities

Risk management culture including
promotion of work health safety

Partially

Achieved

Maintaining efforts for further media reform.

The Executive Risk Management Committee continued to promote a companywide
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. The Board has agreed with KMP that STI payments will not be awarded
this financial year due to the impact of the COVID-19 pandemic on the financial performance of the Group.

Directors’ Report continued4. DETAIL OF INCENTIVE PLANS (CONTINUED)

Long Term Incentives

B.
The Prime Media Group Limited Cash Settled Performance Plan has been designed to reward KMP performance over a three year period by offering
a potential entitlement to cash payments linked to the Group’s share price performance and STI achievement over the same period.

The maximum long term incentives under the plan for the following KMP are as follows:

Director

I. Audsley

Executive

D. Walker

J. Palisi

2020

2019

2018

2020

2019

2018

2020

2019

2018

ENTITLEMENT

GRANT DATE

SHARE PRICE
AT GRANT

–

1,204,282

1,000,000

–

281,771

443,926

–

561,998

375,000

–

12/12/2018

23/1/2018

–

12/12/2018

23/1/2018

–

12/12/2018

23/1/2018

–

$0.2242

$0.4200

–

$0.2242

$0.4200

–

$0.2242

$0.4200

MAXIMUM
VALUE AT
GRANT DATE
($)

450,000

420,000

189,000

157,500

VESTING DATE
TRANCHE 1

VESTING DATE
TRANCHE 2

VESTING DATE
TRANCHE 3

–

Aug 2020

Aug 2019

–

Aug 2020

Aug 2019

–

Aug 2020

Aug 2019

–

Aug 2021

Aug 2020

–

Aug 2021

Aug 2020

–

Aug 2021

Aug 2020

–

Aug 2022

Aug 2021

–

Aug 2022

Aug 2021

–

Aug 2022

Aug 2021

Under the 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 the Board at the beginning of each financial year. The entitlement vests in three equal tranches over three years. The value of notional share units
at vesting will be equivalent to the Company’s share price at the date of vesting.

As demonstrated in the table above, KMP have agreed to forgo their 2020 entitlement to a long term benefit under the cash settled plan due to the
impact of the COVID-19 pandemic on the financial performance of the Group.

At the reporting date, $223,000 (2019: $423,000) had been accrued under the cash-settled performance plan in relation to the notional share units
available from prior year entitlements which are yet to vest.

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.

In August 2019 all KMP met the vesting conditions for tranche 1 of the 2018 entitlement. Accordingly 606,308 notional share units from prior year
entitlements vested and were paid to KMP in this reporting period (2019: nil) based on a share price of $0.1837.

PRIME MEDIA GROUP | ANNUAL REPORT 20204. DETAIL OF INCENTIVE PLANS (CONTINUED)

C. Executive remuneration outcomes (including link to performance)

Company performance and its link to Short Term Incentives
As demonstrated in the table below, KMP have agreed to forgo STI payments for the 2020 financial year due to the impact of the COVID-19 pandemic
on the financial performance of the Group. STI payments awarded for 2019 financial performance were paid in full to KMP in the 2020 financial year.

EXECUTIVE

I. Audsley

D. Walker

J. Palisi

Total

FY20 STI
ACCRUED

FY20 STI
AWARD POOL

–

550,000

315,036

160,000

1,027,500

–%

FY19 STI
PAID IN CASH

FY19 STI
AWARD POOL

330,000

106,124

128,000

564,124

550,000

317,500

160,000

1,027,500

PAID
%

60.0%

33.4%

80.0%

54.9%

LTI Awards Under the Former Performance Rights Plan
The Prime Media Group Limited Performance Rights Plan ended in the 2019 financial year. A final tranche of performance rights vested in the 2019
financial year, and as a result the Trustee of the Prime Media Group Limited Performance Rights Plan acquired 826,284 ordinary shares on market
in the 2019 financial year for performance rights that were issued in 2015 and vested in September and November 2018. No performance rights
or awards have been made in this financial year as the Prime Media Group Limited Performance Rights Plan has ended.

The Prime Media Group Limited Performance Rights Plan that ended in the 2019 financial year had 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 one.

Directors’ Report continuedD
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Directors’ Report continuedPRIME MEDIA GROUP | ANNUAL REPORT 2020

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4

Directors’ Report continued

4. DETAIL OF INCENTIVE PLANS (CONTINUED)

Table 3: Prime Media Group Limited Performance Rights Plan Ended in the 2019 Financial Year

The Prime Media Group Limited Performance Rights Plan ended in the 2019 financial year with no performance rights granted during the 2020 or 2019
financial year. The following performance rights vested and/or lapsed during the 2019 financial year:

2019

Director

I. Audsley

Executive

D. Walker

J. Palisi

TOTAL

GRANT DATE

VESTING DATE

VESTED
NUMBER

LAPSED
NUMBER

10/11/2015

10/11/2018

449,800

300,200

21/9/2015

21/09/2018

226,551

149,933

826,284

151,202

100,067

551,469

Table 4: Performance rights holdings of KMP

As demonstrated in the table below, the Prime Media Group Limited Performance Rights Plan ended in the prior reporting period and there are
no outstanding rights to shares at the balance date.

2019

Director

I. Audsley

Executive

D. Walker

J. Palisi

TOTAL

BALANCE
1 JULY 2018

GRANTED AS
REMUNERATION

PERFORMANCE
RIGHTS
EXERCISED

PERFORMANCE
RIGHTS LAPSED

PERFORMANCE
RIGHTS
FORFEITED

BALANCE
30 JUNE 2019

EXERCISABLE

NOT
EXERCISABLE

750,000

377,753

250,000

1,377,753

–

449,800

300,200

226,551

149,933

826,284

151,202

100,067

551,469

–

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

VALUE OF
PERFORMANCE RIGHTS
GRANTED DURING
THE PRIOR YEAR 1
$

VALUE OF
PERFORMANCE RIGHTS
EXERCISED DURING
THE PRIOR YEAR 2
$

VALUE OF
PERFORMANCE RIGHTS
LAPSED DURING
THE PRIOR YEAR 1
$

VALUE OF
PERFORMANCE RIGHTS
CANCELLED DURING
THE PRIOR YEAR
$

–

102,349

36,901

55,757

195,007

124,883

64,377

42,605

231,865

–

I. Audsley

D. Walker

J. Palisi

TOTAL

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

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.

PRIME MEDIA GROUP | ANNUAL REPORT 20204. DETAIL OF INCENTIVE PLANS (CONTINUED)

Table 6: Equity holdings and transactions

Non-Executive Director

P.J Macourt

I.R Neal

C.A O’Connor

J.K Hartigan (retired 19 December 2019)

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

OTHER
MOVEMENTS 1

BALANCE
AT END
OF THE YEAR

–

40,000

75,000

42,750

974,300

–

168,992

–

(42,750)

–

40,000

75,000

–

974,300

–

168,992

1 Other movements relate to the retirement of John Hartigan as Chair and non-executive director of the Company on 19 December 2019.

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.

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 Prime Media 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 2020 financial year were $363,529 (excluding superannuation).

In May 2020 NEDs agreed a temporary 20% reduction in directors’ fees for the period to September 2020 due to the adverse impact of the COVID-19
pandemic on the financial performance of the Group. The temporary reduction will be reviewed in September 2020. As a result NED fees for the 2021
financial year are estimated to be up to $282,939, 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).

Directors’ Report continued6. NON-EXECUTIVE DIRECTOR REMUNERATION (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 2020 financial year is as follows:

BOARD POSITION

Chair

NED Base Fee

Committee Chair

Committee Member

ANNUALISED FEE

$100,000

$95,000

Nil

As set out in Table 1 actual director fees paid during the financial year were less than the annualised fee due to the COVID-19 pandemic.
Non-executive directors have agreed a temporary 20% reduction in annualised fees for the period May to September 2020.

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.

Having undertaken a significant review of KMP remuneration during the 2018 financial year, the Committee did not engage remuneration consultants
in this financial year or the prior year.

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:

Tax compliance services

Assurance services not required by regulation

Total

29,757

222,860

252,617

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.

C. A. O’Connor
Director
Sydney, 27 August 2020

PRIME MEDIA GROUP | ANNUAL REPORT 2020Ernst & 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

Auditor’s Independence Declaration to the Directors of Prime Media
Group Limited

As lead auditor for the audit of the financial report of Prime Media Group Limited for the financial year
ended 30 June 2020, I declare to the best of my knowledge and belief, there have been:

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

relation to the 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

Michael J Wright
Partner
27 August 2020

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

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

NOTES TO THE FINANCIAL STATEMENTS

Summary of significant accounting policies

GROUP PERFORMANCE

Revenue
Expenses

2.
3.
4. Operating segments
5.
6.

Income tax
Earnings per share

OPERATING ASSETS AND LIABILITIES

Intangible assets
Trade and other receivables

7. Cash and short-term deposits
8.
9.
10. Other assets
11. Leases
12. Trade and other payables
13. Provisions
14. Property, plant and equipment

CAPITAL STRUCTURE AND FINANCIAL COSTS

Interest bearing loans and borrowings

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

GROUP STRUCTURE

21. Assets held for sale
22.
23.

Investments in associates
Investments in subsidiaries

UNRECOGNISED ITEMS

24. Commitments
25. Contingent liabilities

OTHER

26. Related party disclosures
27. Parent entity information
28. Subsequent events
29. Auditor’s remuneration
30. Other accounting policies
31. Significant judgments and estimates

FINANCIALS

Directors’ Declaration
Independent Auditor’s Report

ASX INFORMATION

Shareholder information

50
51
52

53
54

55
57
57
58
58
59

61
62

22
23
24
25

30
31
31
32
35

36
37
40
41
41
42
43
43

44
45
48
48
49
50

P R I M E M E D I A G R O U P | A N N U A L R E P O R T 2 0 2 0

Revenue and other income

Revenue from contracts with customers

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 profit

Finance costs

Share of associate profits

Profit before income tax

Income tax expense

Profit for the year

Total comprehensive income for the year

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)

CONSOLIDATED

2020
$’000

2019
$’000

159,850

3,755

163,680

(93,594)

70,086

(40,297)

(9,636)

(10,076)

(532)

9,545

(527)

194

9,212

(2,601)

6,611

1.8

190,674

141

1,047

191,862

(101,465)

90,397

(41,546)

(10,398)

(11,879)

(14,018)

12,556

(1,310)

156

11,402

(4,054)

7,348

2.0

NOTES

8,14

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

Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2020ASSETS

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

Property, plant and equipment

Right-of-use assets

Intangible assets

Deferred tax assets

Other assets

Total Non-Current Assets

Total Assets

LIABILITIES

Current Liabilities

Trade and other payables

Lease liabilities

Provisions

Current tax liabilities

Total Current Liabilities

Non-Current Liabilities

Trade and other payables

Interest-bearing loans and borrowings

Lease liabilities

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

2020
$’000

2019
$’000

17,148

27,256

3,000

–

4,905

52,309

–

52,309

121

18,696

4,689

6,160

871

488

31,025

83,334

9,864

1,606

5,931

17,432

792

–

3,295

463

–

4,550

21,982

61,352

6,443

37,323

3,000

1,594

4,711

53,071

645

53,716

377

22,358

–

9,878

–

501

33,114

86,830

9,898

–

4,601

–

14,499

930

16,000

–

600

17,547

32,046

54,784

310,262

27,180

(276,090)

61,352

310,262

20,785

(276,263)

54,784

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

Consolidated Statement of Financial PositionAs at 30 June 2020PRIME MEDIA GROUP | ANNUAL REPORT 2020At 1 July 2019

Effect of adoption of AASB 16 (refer Note 1)

At 1 July 2019 (restated)

Profit for the period

Profits reserved

Total comprehensive income and expense for the period

ISSUED
CAPITAL
$’000

ACCUMULATED
LOSSES
$’000

310,262

(276,263)

–

(43)

310,262

(276,306)

–

6,611

(6,395)

216

At 30 June 2020

310,262

(276,090)

3,722

EMPLOYEE
BENEFITS
RESERVE
$’000

PROFITS
RESERVE
$’000

TOTAL PARENT
ENTITY
INTEREST
$’000

3,722

–

3,722

–

17,063

–

17,063

–

6,395

23,458

54,784

(43)

54,741

6,611

–

6,611

61,352

At 1 July 2018

Profit for the period

Profits reserved

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

At 30 June 2019

ISSUED
CAPITAL
$’000

ACCUMULATED
LOSSES
$’000

EMPLOYEE
BENEFITS
RESERVE
$’000

PROFITS
RESERVE
$’000

TOTAL PARENT
ENTITY
INTEREST
$’000

310,262

(280,813)

4,091

–

7,348

(2,798)

4,550

–

310,262

(276,263)

–

(195)

(174)

3,722

14,265

–

2,798

–

47,805

7,348

–

7,348

(195)

(174)

17,063

54,784

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

Consolidated Statement of Changes in EquityAs at 30 June 2020Operating activities

Receipts from customers (inclusive of GST)

Payments to suppliers and employees (inclusive of GST)

Interest received

Interest paid

Income tax paid

Net cash flows from operating activities

Investing activities

Purchase of property, plant & equipment and intangible assets

Purchase of program rights

Loan funds received from related entities

Loan funds paid to related entities

Net cash flows used in investing activities

Financing activities

Proceeds from borrowings

Repayments of borrowings

Payment of principal portion of lease liabilities

Debt facility establishment fees

Share-based payments – performance rights exercised

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

2020
$’000

2019
$’000

191,752

(160,523)

(514)

(1,905)

28,892

(953)

–

750

(300)

(503)

18,000

(34,000)

(1,564)

(120)

–

(17,684)

10,705

6,443

17,148

212,072

(182,195)

141

(940)

(6,612)

22,466

(2,581)

(15,000)

1,000

(150)

(16,731)

95,000

(105,000)

–

(195)

(10,195)

(4,460)

10,903

6,443

Consolidated Statement of Cash FlowsFor the year ended 30 June 2020PRIME MEDIA GROUP | ANNUAL REPORT 2020Notes to the financial statements
For the year ended 30 June 2020

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial report of Prime Media Group Limited (the “Company”) for the year ended 30 June 2020 was authorised for issue
in accordance with a resolution of the directors on 27 August 2020.

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 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”) 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.

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.

Compliance with Australian Accounting Standards and International Financial Reporting Standards

B.
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 Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

The Group applies, for the first time, AASB 16 Leases and AASB Interpretation 23 Uncertainty Over Income Tax Treatments. The nature and effect
of this change is disclosed below.

Several other amendments and interpretations apply from 1 July 2019, but do not have an impact on the consolidated financial statements of the Group.

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

Conceptual Framework
AASB 2019-1

Conceptual Framework for Financial Reporting Amendments
to Australian Accounting Standards – Reference to the
Conceptual Framework

APPLICATION
DATE OF STANDARD

APPLICATION
DATE FOR GROUP

1 January 2020

1 July 2020

AASB 2018-7

AASB 2019-5

AASB 2020-4

AASB 2020-1

Amendments to Australian Accounting Standards – Definition
of Material

Amendments to Australian Accounting Standards – Disclosure
of the Effect of New IFRS Standards Not Yet Issued in Australia

1 January 2020

1 July 2020

1 January 2020

1 July 2020

Amendments to Australian Accounting Standards – COVID-19-Related
Rent Concessions

1 June 2020

1 July 2020

Amendments to Australian Accounting Standards – Classification
of Liabilities as Current or Non-current

1 January 2022

1 July 2022

The Group has elected not to early adopt any of the new standards or amendments in these financial statements. The Group does not expect the new
standards or amendments will have a significant impact when applied in future periods.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

AASB 16 Leases
AASB 16 Leases supersedes AASB 117 Leases, IFRIC 4 Determining Whether an Arrangement Contains a Lease, SIC-15 Operating Leases-Incentives
and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition,
measurement, presentation and disclosure of leases and requires lessees to recognise most leases on the statement of financial position.

Lessor accounting under AASB 16 Leases is substantially unchanged from AASB 117 Leases. Lessors will continue to classify leases as either operating
or finance leases using similar principles as in AASB 117 Leases. Therefore, AASB 16 Leases does not have a material impact for leases where the Group
is the lessor.

The Group adopted AASB 16 Leases using the modified retrospective method of adoption, with the date of initial application of 1 July 2019. Under
this method, the standard is applied retrospectively with the cumulative effect of initially applying the standard recognised at the date of initial
application. The Group elected to use the transition practical expedient to not reassess whether a contract is, or contains, a lease at 1 July 2019.
Instead, the Group applied the standard only to contracts that were previously identified as leases applying AASB 117 Leases and AASB Interpretation 4
at the date of initial application.

The Group also elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less
and do not contain a purchase option (short-term leases), and lease contracts for which the underlying asset is of low value (low-value assets).

The effect of adoption of AASB 16 Leases as at 1 July 2019 (increase/(decrease)) is as follows:

ASSETS

Right-of-use assets

Prepayments

Total Assets

LIABILITIES

Lease liabilities

Deferred tax liabilities

Trade and other payables

Total Liabilities

Total adjustment on equity:

Accumulated losses

Total Equity

1 JULY 2019
$’000

5,256

(3)

5,253

5,394

(139)

5,296

a) Nature of the effect of adoption of AASB 16 Leases
The Group has lease contracts for various office buildings, transmission sites, motor vehicles and other equipment. Before the adoption of AASB 16 Leases,
the Group classified each of its leases (as lessee) at the inception date as either a finance lease or an operating lease.

Leases previously accounted for as operating leases

The Group recognised right-of-use assets and lease liabilities for those leases previously classified as operating leases, except for short-term leases
and leases of low-value assets. The right-of-use assets for all leases were recognised based on the amount equal to the lease liabilities, adjusted for
any related prepaid and accrued lease payments previously recognised. Lease liabilities were recognised based on the present value of the remaining
lease payments, discounted using the incremental borrowing rate at the date of initial application.

The Group also applied the available practical expedients wherein it:
• Used a single discount rate to a portfolio of leases with reasonably similar characteristics.
• Applied the short-term lease exemption to leases with lease term that ends within 12 months of the date of initial application.
• Used hindsight in determining the lease term where the contract contained options to extend or terminate the lease.

‘Right-of-use assets’ of $5,256,000 were recognised and presented separately in the statement of financial position.

Based on the above, as at 1 July 2019:
•
• Lease liabilities of $5,394,000 were recognised and presented separately in the statement of financial position.
•
•
•

‘Prepayments’ of $3,000 and ‘Trade and other payables’ of $139,000 related to previous operating leases were derecognised.
‘Deferred tax liabilities’ increased by $41,000 as a result of the deferred tax impact of the changes in recognised lease related assets and liabilities.
‘Accumulated losses’ increased due to the net impact of these adjustments.

PRIME MEDIA GROUP | ANNUAL REPORT 20201. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Lease liabilities as at 1 July 2019 can be reconciled to the operating lease commitments as at 30 June 2019, as follows:

Operating lease commitments as at 30 June 2019

Weighted average incremental borrowing rate as at 1 July 2019

Discounted operating lease commitments as at 1 July 2019

Less:

Commitments relating to short-term leases

Commitments relating to agreements that do not satisfy all the requirements of AASB 16 Leases 1

Add:

Lease payments relating to renewal periods not included in operating lease commitments as at 30 June 2019

Lease liabilities as at 1 July 2019

$’000

22,745

2.96%

20,946

(524)

(16,071)

1,043

5,394

1 Represents service arrangements in relation to transmission agreements which were included as commitments in the financial statements at 30 June 2019 that have been

assessed under AASB 16 Leases as not being a lease.

Summary of new accounting policies

b)
Set out below are the new accounting policies of the Group upon adoption of AASB 16 Leases:

Right-of-use assets

The Group recognises right-of-use assets at the commencement date of the lease (the date the underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities.
The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before
the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end
of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease
term. Right-of-use assets are subject to impairment.

Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the
lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the
exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease
term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised
as expense in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest
rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion
of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification,
a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to its short-term leases of plant and equipment (leases that have a lease term
of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition
exemption to leases of office equipment that are considered of low value (below $5,000). Lease payments on short-term leases and leases of low-value
assets are recognised as an expense on a straight-line basis over the lease term.

Notes to the financial statements continuedFor the year ended 30 June 20201. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Set out below are the AASB 117 Leases policies that apply to the comparative period:

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 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.

Group as a Lessor

Leases in which the Group does not transfer substantially all the risks and benefits of ownership of the leased asset are classified as operating leases.
Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised as an expense over
the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

AASB Interpretation 23 Uncertainty over Income Tax Treatment
The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of AASB 112 Income
Taxes. It does not apply to taxes or levies outside the scope of AASB 112 Income Taxes, nor does it specifically include requirements relating to interest
and penalties associated with uncertain tax treatments. The Interpretation specifically addresses the following:
• Whether an entity considers uncertain tax treatments separately;
• The assumptions an entity makes about the examination of tax treatments by taxation authorities;
• How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates; and
• How an entity considers changes in facts and circumstances.

The Group determines whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments and
uses the approach that better predicts the resolution of the uncertainty.

The Group applies significant judgement in identifying uncertainties over income tax treatments.

Upon adoption of the Interpretation, the Group considered whether it has any uncertain tax positions. The Group did not identify any uncertain tax
positions. The Interpretation did not have an impact on the consolidated financial statements of the Group.

PRIME MEDIA GROUP | ANNUAL REPORT 20202. REVENUE

Advertising and other external revenue

Finance income

Other income

Total Revenue

Breakdown of finance income:

Interest received

Total Finance Income

Breakdown of other income:

Government grants including JobKeeper Payment

Other revenues

Total Other Income

2020
$’000

159,850

3,755

163,680

3,114

641

3,755

2019
$’000

190,674

141

1,047

191,862

141

139

908

1,047

During the reporting period the Group recognised Other Income from the JobKeeper Payment subsidy totalling $2,976,000. At the reporting date the
Group is eligible for assistance under the JobKeeper Payment subsidy for the period 31 March to 27 September 2020.

ACCOUNTING POLICY

Revenue from contracts with customers

Revenue from contracts with customers is recognised when control of the goods or services is transferred to the customer at an amount that
reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. As a television broadcaster, the
Group contracts with media buyers and media agencies for the sale of advertising airtime to third party advertisers. Under AASB 15, the Group
determines whether its performance obligation is to provide the good or service to media buyers and media agencies as the Group’s customers,
or whether the Group’s customers are the third party advertisers. The Group’s customers are media buyers and media agencies and accordingly
advertising revenue is recognised net of agency commission since this is treated as a payment made to a customer. The specific recognition
criteria described below must also be met before revenue is recognised:

REVENUE CLASS

RECOGNITION CRITERIA

Advertising revenue

Revenue is recognised when the commercial advertisement has been broadcast. Where the Group
has committed to delivering a specific viewer metric for an advertising campaign, then revenue for
this performance obligation will be recognised when the viewer metric has been achieved.

Advertising revenue is recognised net of agency commission.

Advertising production revenue

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

Sales representation revenue

The performance obligation is satisfied when the advertising airtime is broadcast.

Other Revenue

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

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

Interest income

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

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

Notes to the financial statements continuedFor the year ended 30 June 20203. EXPENSES

Finance Expenses

Interest on debt and borrowings

Total Finance Expenses

Employee Benefit Expense

Wages and salaries

Sales commissions and incentives

Superannuation expense

Share-based payments release

Other employee benefits expense

Total Employee Benefit Expense

Other Expenses

Bad debts and expected credit losses and credit notes – trade debtors

Minimum lease payments – operating leases

Depreciation and Amortisation Expense

Property, plant and equipment depreciation

Right-of-use assets depreciation

Program rights amortisation

Intangibles amortisation

Total Depreciation and Amortisation Expense

ACCOUNTING POLICY

Borrowing Costs

2020
$’000

527

26,555

1,931

2,360

–

1,236

32,082

299

4,588

1,639

3,000

849

10,076

2019
$’000

1,310

27,211

3,496

2,511

(174)

1,610

34,654

114

8,100

4,975

–

4,667

2,237

11,879

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

Minimum lease payments in the current year are for low value assets and short-term leases that are expected to complete in less than 12 months
and are recognised as an expense. In the prior year 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 a program supply 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.

PRIME MEDIA GROUP | ANNUAL REPORT 20205.

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 expense in the Consolidated Statement of Profit or Loss

2020
$’000

2019
$’000

3,703

(173)

(958)

2,601

5,813

(105)

(1,762)

108

4,054

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 profit before income tax

Prima facie tax expense at 30% (2019: 30%)

Expenses not deductible for tax

Income not assessable for tax

Adjustments in respect of tax of previous years

Derecognition of deferred tax asset

Income tax expense reported in the Statement of Profit or Loss

Effective tax rate

Deferred tax assets and liabilities

Opening balance

Effect of adoption of new standards (Note 1)

Charged to income

Other payments and receipts

Closing balance

Tax expense in statement of profit or loss and other comprehensive income

Amounts recognised in the statement of financial position:

Deferred tax asset

Deferred tax liability

2020
$’000

9,212

2,764

123

(148)

(144)

2,601

28.2%

2019
$’000

11,402

3,421

404

(202)

428

4,054

35.6%

2020
$’000
CURRENT
INCOME TAX

2020
$’000
DEFERRED
INCOME TAX

2019
$’000
CURRENT
INCOME TAX

2019
$’000
DEFERRED
INCOME TAX

1,594

–

(3,530)

1,905

(31)

690

–

(5,708)

6,612

1,594

(17)

(41)

929

–

871

2,601

871

–

871

(1,821)

149

1,655

–

(17)

4,054

–

(17)

Notes to the financial statements continuedFor the year ended 30 June 20205.

INCOME TAX (CONTINUED)

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

Deferred tax liabilities

Accelerated depreciation for tax

Right-of-use assets

Prepaid expenses deductible for tax

Income not yet assessable for tax

Intangible assets – Program Rights deductible for tax

Set-off of deferred tax assets

Net deferred tax liabilities

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

Deferred tax assets

Expenses not yet deductible for tax

Deferred income

Lease liabilities

Difference between accounting and tax write off

Set-off of deferred tax liabilities

Net deferred tax assets

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.

STATEMENT OF
FINANCIAL POSITION

2020
$’000

2019
$’000

(18)

(1,407)

(137)

(242)

(2,700)

(4,504)

4,504

–

2,794

279

1,470

832

5,375

(4,504)

871

(25)

–

(359)

(3)

(3,600)

(3,987)

3,970

(17)

3,119

320

–

531

3,970

(3,970)

–

2020
$’000

2019
$’000

–

Tax consolidation

(i) Members of the tax consolidated group and the tax sharing arrangements
Effective 1 July 2002, for the purposes of income taxation, Prime Media Group Limited and its 100% owned Australian resident subsidiaries formed
a tax consolidated group. Prime Media Group Limited is the head entity of the tax consolidated group. Members of the tax consolidated group
have entered into a tax sharing agreement that provides for the allocation of income tax liabilities between the entities should the head entity
default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement on the basis that
the possibility of default is remote.

(ii)

Tax effect accounting by members of the consolidated group

Measurement method adopted under UIG 1052 Tax Consolidation Accounting

The head entity and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts.
The Group has applied the Group Allocation approach in determining the appropriate amount of current taxes and deferred taxes to allocate
to members of the tax consolidated group. The current and deferred tax amounts are measured in a systematic manner that is consistent with the
broad principles in AASB 112 Income Taxes. The nature of the tax funding agreement is discussed further below.

In addition to its own current and deferred tax amounts, the head entity also recognises current tax liabilities (or assets) and deferred tax assets
arising from unused tax losses and unused tax credits from controlled 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 loan 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 | ANNUAL REPORT 2020
5.

INCOME TAX (CONTINUED)

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

ACCOUNTING POLICY

Current Income Taxes

PRIME MEDIA GROUP LIMITED

2020
$’000

3,763

2019
$’000

19,946

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 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 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 Goods and Services Tax (“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.

Notes to the financial statements continuedFor the year ended 30 June 20206. EARNINGS PER SHARE

Basic earnings per share (cents per share)

Diluted earnings per share (cents per share)

ACCOUNTING POLICY

Basic Earnings Per Share

2020

1.8

2019

2.0

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 EPS

Weighted average number of ordinary shares used in calculating basic EPS

Weighted average number of ordinary shares used in calculating diluted EPS

2020
$’000

6,611

2019
$’000

7,348

2020
NUMBER OF
SHARES

2019
NUMBER OF
SHARES

366,330,303

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the completion of the
financial statements.

PRIME MEDIA GROUP | ANNUAL REPORT 20207. CASH AND SHORT-TERM DEPOSITS

Cash balance comprises:

Cash at bank and on hand

Closing cash balance

ACCOUNTING POLICY

Cash and Short-term Deposits

2020
$’000

17,148

2019
$’000

6,443

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

Profit after tax

Non-cash adjustment for:

Depreciation and amortisation

Amortisation of program rights

Net loss on disposal of property, plant and equipment

Impairment

Share of associate profits

Share based payments benefit

Working capital adjustments

Decrease in trade and other receivables

Increase in prepayments

Increase in provisions

Decrease in trade and other payables

Cash flows from operating activities

Decrease in deferred tax liabilities

Increase/(decrease) in tax provision

Increase in borrowing costs

Net cash flow from operating activities

2020
$’000

6,611

7,076

3,000

532

(194)

–

10,065

(86)

1,194

(66)

28,175

(888)

1,581

28,892

2019
$’000

7,348

7,212

4,667

14,018

(156)

(174)

359

(2,622)

574

(6,365)

24,869

(1,801)

(906)

304

22,466

Notes to the financial statements continuedFor the year ended 30 June 20208.

INTANGIBLE ASSETS

Program rights

Business software, development costs including websites

Television broadcast licences

Infrastructure access licences

Total

2020
$’000

9,000

160

–

2019
$’000

12,000

878

–

9,160

12,878

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

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

Internally generated or acquired:

Acquired

Internally generated/acquired

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.

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. The carrying value of the software and
development costs is cost less accumulated amortisation and impairment losses.

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.

Infrastructure Access Licences
Infrastructure access licenses represent licences acquired to use transmission facilities for initial periods up to 10 years. The licences are amortised
to the profit and loss over the term of the licence.

PRIME MEDIA GROUP | ANNUAL REPORT 20208.

INTANGIBLE ASSETS (CONTINUED)

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

BROADCAST
LICENCES
$’000

PROGRAM
RIGHTS
$’000

INFRASTRUCTURE
ACCESS LICENCE
$’000

182,963

–

182,963

–

14,000

15,000

(14,000)

15,000

–

182,963

15,000

(171,140)

–

(11,823)

–

(182,963)

–

(12,333)

(4,667)

–

14,000

(3,000)

–

4,978

160

–

5,138

266

–

5,404

(4,587)

(551)

–

(5,138)

(266)

–

BUSINESS
SOFTWARE
AND
DEVELOPMENT
COSTS INCL
WEBSITES
$’000

17,923

381

–

18,304

(143)

TOTAL
$’000

219,864

15,541

(14,000)

221,405

272

(143)

18,167

221,534

(13,544)

(201,604)

(1,685)

(2,195)

–

(6,903)

(14,018)

14,000

(17,424)

(208,525)

(583)

(3,849)

–

(182,963)

(6,000)

(5,404)

(18,007)

212,374

–

9,000

3,000

6,000

12,000

3,000

9,000

–

160

–

160

878

–

878

9,160

3,000

6,160

12,878

3,000

9,878

Cost

At 1 July 2018

Additions

Disposals

At 30 June 2019

Additions

Disposals

At 30 June 2020

Amortisation and impairment

At 1 July 2018

Amortisation charges

Impairment charges

Disposals

At 30 June 2019

Amortisation charges

Impairment charges

Disposals

At 30 June 2020

Net Book Value

At 30 June 2020

Total Current

Total Non-Current

At 30 June 2019

Total Current

Total Non-Current

Notes to the financial statements continuedFor the year ended 30 June 20208.

INTANGIBLE ASSETS (CONTINUED)

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.

Key assumptions used in value-in-use calculations and sensitivity to changes in assumptions
The Group is considered to be the sole CGU. In accordance with the Group’s accounting policies, the Group conducted an annual review at the
reporting date and did not identify any impairment.

In the prior year, the Group fully impaired its indefinite life intangible assets being television broadcast licences. In making this assessment,
the Group relied on the following key assumptions:

VALUE-IN-USE CASH FLOWS

APPROACH

Year 1

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.

Years 2–5 cash flows

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 Group 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)

2019

(2.6%)

(3.2%)

12.96%

12.64%

PRIME MEDIA GROUP | ANNUAL REPORT 20208.

INTANGIBLE ASSETS (CONTINUED)

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:

9. TRADE AND OTHER RECEIVABLES

Current

Trade receivables

Other receivables

Related party receivables

Allowance for expected credit losses

Carrying amount of trade and other receivables

ACCOUNTING POLICY

Trade Receivables

SURPLUS/(DEFICIT)
SENSITIVITY
$’000

5,017

(13,121)

(1,282)

1,455

(4,796)

6,024

2020
$’000

2019
$’000

24,374

3,150

512

28,036

(780)

27,256

34,282

3,522

335

38,139

(816)

37,323

Trade receivables are carried at original invoice amount less an allowance charge for expected credit losses (“ECL”). 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.

Having adopted AASB 9 Financial Instruments, the Group applies a forward-looking ECL approach to account for impairment losses for
financial assets, including trade and other receivables. The ECL approach is based on the Group’s historical credit loss experience, adjusted
for forward-looking factors specific to trade and other receivables and the economic environment. An impairment provision equivalent to the
expected credit loss is recorded without regard for evidence of an actual loss event.

The maximum exposure to credit risk is the fair value of receivables (refer to Note 16 regarding information on the Group’s exposure to credit
and market risk).

Refer to Note 26 for details on related parties.

Provision for expected credit loss
Set out below is the movement in the provision for expected credit losses of trade receivables:

At July 1

Effect of adoption of new accounting standards (refer Note 1)

(Recovery)/charge for the year

Amounts written off

At June 30

2020
$’000

816

–

(2)

(34)

780

2019
$’000

323

497

293

(297)

816

In reviewing the provision for expected credit loss of trade receivables the Group had regard for the continued uncertain trading environment due
to the COVID-19 pandemic; the potential for further disruption to the Group’s key regional advertising markets of New South Wales and Victoria; and
the potential disruption to future broadcasts of key sporting events including the AFL and cricket. The forecast prolonged deterioration in general
economic conditions as a result of the COVID-19 pandemic is also expected to impact regional advertising markets and may reduce the earnings
capacity of national and regional advertisers.

Notes to the financial statements continuedFor the year ended 30 June 202010. OTHER ASSETS

Current

Prepayments

Non-current

Prepayments

Total

ACCOUNTING POLICY

Prepayments

2020
$’000

2019
$’000

4,905

4,711

488

5,393

501

5,212

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

11. LEASES

Group as a lessee
The Group has lease contracts for various office buildings, transmission sites, motor vehicles and other equipment used in its operations. Leases
of property and sites generally have remaining lease terms of between three and seven years. The Group’s obligations under its leases are secured
by the lessor’s title to the leased assets. Generally, the Group is restricted from assigning and subleasing the leased assets.

The Group applies the ‘short-term lease’ recognition exemptions for leases with lease terms of 12 months or less.

Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:

Cost

As at 30 June 2019

AASB 16 transition adjustment

As at 1 July 2019

Additions

Disposals

Depreciation

As at 30 June 2020

OFFICE BUILDINGS
$’000

TRANSMISSION SITES
$’000

–

4,472

1,064

–

(1,455)

4,081

–

784

–

(184)

608

TOTAL
$’000

–

5,256

1,072

–

(1,639)

4,689

Set out below are the carrying amounts of lease liabilities (included under interest-bearing loans and borrowings) and the movements during the period:

At 30 June 2019

AASB 16 transition adjustment

As at 1 July 2019

Additions

Accretion of interest

Payments

At 30 June 2020

Total Current

Total Non-Current

–

4,572

1,061

130

(1,519)

4,244

1,426

2,818

–

822

(195)

657

180

477

–

5,394

1,069

152

(1,714)

4,901

1,606

3,295

PRIME MEDIA GROUP | ANNUAL REPORT 202011. LEASES (CONTINUED)

The following are amounts recognised in profit or loss:

Depreciation expense of right-of-use assets

Interest expense on lease liabilities

Expense relating to short-term leases (included in broadcasting and transmission expenses)

Total amount recognised in profit or loss

TOTAL
$’000

1,639

152

299

2,090

The Group has several lease contracts that include extension and termination options. These options are negotiated by management to provide
flexibility in managing the leased asset portfolio and align with the Group’s business needs. Management exercises significant judgement
in determining whether these extension and termination options are reasonably certain to be exercised (refer to Note 31).

Set out below are the undiscounted potential future rental payments relating to periods following the exercise date of extension options that are
not included in the lease term:

Extension options expected not to be exercised

Termination options expected to be exercised

Total

12. TRADE AND OTHER PAYABLES

Current

Trade payables

Accrued expenses

Accrued employee entitlements

Deferred income

Total

Non-current

Deferred income

Total

WITHIN
FIVE YEARS
$’000

MORE THAN
FIVE YEARS
$’000

2,235

–

2,235

1,009

–

1,009

2020
$’000

1,151

5,459

1,156

2,098

9,864

792

TOTAL
$’000

3,244

–

3,244

2019
$’000

380

4,550

2,604

2,364

9,898

930

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 are measured at the amounts expected to be paid when the liabilities are settled.

Notes to the financial statements continuedFor the year ended 30 June 202013. PROVISIONS

Current

Annual leave

Long service leave

Advertising make good provision

Total

Non-current

Long service leave

Total

ACCOUNTING POLICY

Provisions

2020
$’000

2,413

2,785

733

5,931

463

2019
$’000

1,998

2,603

–

4,601

600

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.

14. PROPERTY, PLANT AND EQUIPMENT

Cost or valuation

At 1 July 2018

Additions

Disposals

Classification transfer

At 30 June 2019

Additions

Disposals

Reclassification from available for sale assets

At 30 June 2020

Depreciation and amortisation

At 1 July 2018

Depreciation charges

Disposals

At 30 June 2019

Depreciation charges

Disposals

Reclassification from available for sale assets

Impairment 2

At 30 June 2020

Net Book Value

At 30 June 2020

At 30 June 2019

LAND AND
BUILDINGS 1
$’000

LEASEHOLD
IMPROVEMENTS
$’000

PLANT AND
EQUIPMENT
$’000

TOTAL
$’000

11,857

1,932

86,367

100,156

(1)

–

1,974

(1,912)

(3)

2,035

(1,913)

–

11,905

1,947

86,426

100,278

–

885

12,790

(5,058)

(286)

–

(5,344)

(350)

–

(329)

(492)

–

1,959

(1,213)

(160)

–

(1,373)

(143)

–

834

(756)

1,873

88,377

846

(756)

2,758

103,126

(68,584)

(74,855)

(4,529)

1,910

(4,975)

1,910

(71,203)

(77,920)

(4,095)

723

(1,784)

(40)

(4,588)

723

(2,113)

(532)

(6,515)

(1,516)

(76,399)

(84,430)

6,275

6,561

443

574

11,978

15,223

18,696

22,358

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.

2 Refer to Note 21.

PRIME MEDIA GROUP | ANNUAL REPORT 202014. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

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 and accumulated impairment losses.

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:

Not depreciated

40 years

– Leasehold improvements:

The shorter of useful life and lease term

– Plant and equipment:

– Motor vehicles:

3 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.

15. INTEREST BEARING LOANS AND BORROWINGS

Non-current

$20 million secured bank loan facility (2019: $30 million)

Total

ACCOUNTING POLICY

Borrowing Costs

MATURITY

2020
$’000

2019
$’000

2023

–

16,000

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.

Notes to the financial statements continuedFor the year ended 30 June 202015. INTEREST BEARING LOANS AND BORROWINGS (CONTINUED)

Terms and conditions

Secured Bank Loan Facility
At the reporting date, the Company had access to an undrawn $20 million bank loan facility with the ANZ Bank. The facility limit reduced from
$30 million to $20 million during the period in line with the terms of the Amendment and Restatement Deed executed in the prior year. 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.

Fair values
The carrying amount of the Group’s current and non-current borrowings approximates their fair value.

The parent entity and certain controlled entities have potential financial liabilities which may arise from certain contingencies disclosed in Note 25.
However the directors do not expect those potential financial liabilities to crystallise into obligations. 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 16.

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

16. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial liabilities comprise trade and other payables and lease commitments. The Group also has access to a secured bank
loan facility which was undrawn at the reporting date. 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, cash and short-term deposits that are derived directly from its operations.

The Group is exposed to market risk, credit risk and liquidity risk. The Group’s senior management oversee the management of these risks. 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
Statement which is 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 is negligible while the debt facility with the ANZ remains undrawn.

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

Lease Liabilities

Secured bank loan facility

Net exposure

2020
$’000

17,148

(4,901)

–

(4,901)

12,247

2019
$’000

6,443

–

(16,000)

(9,557)

The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting date. At 30 June 2020, 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)

2020
$’000

2019
$’000

2020
$’000

2019
$’000

(30)

(17)

–

PRIME MEDIA GROUP | ANNUAL REPORT 202016. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

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 and receivable balances are monitored on an ongoing basis. While the Group’s exposure to bad debts is not significant at this time, the risk
of non-payment from trade receivables is heightened as the impact of the COVID-19 pandemic and the forecast prolonged deterioration in general
economic conditions may impair the earnings capacity of national and regional advertisers.

An impairment analysis is performed at each reporting date using a provision matrix to measure lifetime expected credit losses. The provision rates
are based on days past due for groupings of various customer segments with similar loss patterns (i.e. customer type). The calculation reflects the
probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past
events, current conditions and forecasts of future economic conditions. Generally, trade receivables are written-off if past due for more than one year.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 9. The Group does
not hold collateral as security.

A small number of media buying agencies account for approximately 53.1% of Group’s total revenue.

Three media buying agencies individually contribute more than 10% of the Group’s revenue and collectively account for $52,529,000 or 32.1% of the
Group’s total 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.

The main offices for the Australian operations of these agencies are located in Sydney and Melbourne and these agencies represent national
advertisers. These agencies have maintained operations throughout the COVID-19 pandemic and payment for advertising campaigns has remained
within terms.

Set out below is the information about the credit risk exposure on the Group’s receivables using a provision matrix:

YEAR ENDED 30 JUNE 2020

Expected credit loss rate

Estimated total gross carrying amount at default

Expected credit loss

CURRENT
$’000

< 30 DAYS
$’000

30–60 DAYS
$’000

61–90 DAYS
$’000

> 91 DAYS
$’000

TOTAL
$’000

1.6%

16,582

262

1.4%

8,880

128

6.5%

1,946

126

26.5%

199

49.1%

429

211

28,036

780

TRADE RECEIVABLES
DAYS PAST DUE

YEAR ENDED 30 JUNE 2019

Expected credit loss rate

Estimated total gross carrying amount at default

Expected credit loss

CURRENT
$’000

< 30 DAYS
$’000

30–60 DAYS
$’000

61–90 DAYS
$’000

> 91 DAYS
$’000

0.74%

21,955

162

0.95%

15,000

143

26.7%

439

117

46.8%

268

129

56.2%

477

265

TOTAL
$’000

38,139

816

TRADE RECEIVABLES
DAYS PAST DUE

Notes to the financial statements continuedFor the year ended 30 June 202016. 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 loan facilities and other financial arrangements
as required. The Group has access to a $20 million secured bank loan facility (2019: $30 million), which was undrawn at the reporting date. The facility
matures in April 2023 and is subject to the Group complying with ongoing bank covenants. The contractual maturities of the Group’s financial assets
and liabilities are:

YEAR ENDED 30 JUNE 2020

Financial assets

Cash and cash equivalents

Trade and other receivables

Financial liabilities

Trade and other payables

Lease liabilities

Interest bearing loans (refer Note 15)

Interest bearing loans – finance charges

Net inflow/(outflow)

YEAR ENDED 30 JUNE 2019

Financial assets

Cash and cash equivalents

Trade and other receivables

Financial liabilities

Trade and other payables

Interest bearing loans (refer Note 15)

Interest bearing loans – finance charges

Net inflow/(outflow)

≤ 6
MONTHS
$’000

6–12
MONTHS
$’000

1–5
YEARS
$’000

> 5
YEARS
$’000

17,148

27,256

44,404

(11,560)

(921)

–

(91)

(12,572)

31,832

–

(921)

–

(67)

(988)

≤ 6
MONTHS
$’000

6–12
MONTHS
$’000

6,443

37,323

43,766

(10,828)

–

(110)

(10,938)

32,828

–

(3,279)

–

(245)

(3,524)

1–5
YEARS
$’000

–

(16,000)

–

(16,000)

–

(165)

–

(165)

> 5
YEARS
$’000

–

TOTAL
$’000

17,148

27,256

44,404

(11,560)

(5,286)

–

(403)

(17,249)

27,155

TOTAL
$’000

6,443

37,323

43,766

(10,828)

(16,000)

(110)

(26,938)

16,828

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

PRIME MEDIA GROUP | ANNUAL REPORT 202017. CONTRIBUTED EQUITY

Issued and paid up capital

Ordinary shares fully paid
366,330,303 shares (2019: 366,330,303 shares)

ACCOUNTING POLICY

Contributed Equity

2020
$’000

2019
$’000

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

2020

2019

NUMBER
OF SHARES

$’000

NUMBER
OF SHARES

366,330,303

310,262

366,330,303

310,262

366,330,303

$’000

310,262

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.

18. 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 its credit rating and 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 dividend payments to shareholders, return capital to shareholders or issue new shares or sell assets.

The Company suspended its dividend payments in December 2017.

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

AT BALANCE
DATE

< 1.5 times

> 3.0 times

–

44.5

Notes to the financial statements continuedFor the year ended 30 June 202019. RETAINED EARNINGS AND RESERVES

Employee benefits equity reserve

Profits reserve

Accumulated losses

Employee benefits equity reserve

Movements in reserve

Balance at beginning of year

Exercise of performance rights

Share based payment release

Balance at end of year

Profits reserve

Movements in reserve

Balance at beginning of year

Profits reserved

Balance at end of year

Accumulated losses

Balance at beginning of year

Effect of adoption of new accounting standards (refer Note 1)

Balance at beginning of year (restated)

Net profit attributable to members of Prime Media Group Limited

Total accumulated losses

Profits reserved

Dividends provided for or paid

Balance at end of year

ACCOUNTING POLICY

Employee Benefits Reserve

2020
$’000

3,722

23,458

2019
$’000

3,722

17,063

(276,090)

(276,263)

3,722

–

3,722

4,091

(195)

(174)

3,722

17,063

6,395

23,458

14,265

2,798

17,063

(276,263)

(280,813)

(43)

–

(276,306)

(280,813)

6,611

(269,695)

(6,395)

–

7,348

(273,465)

(2,798)

–

(276,090)

(276,263)

The employee benefits reserve was used to record the value of benefits provided to executive directors and KMP as part of their remuneration
under the Prime Media Group Limited Performance Rights Plan. This plan ended in the 2019 financial year.

Profits Reserve

Current year profits have been reserved for future distributions to shareholders, as and when approved by the board.

PRIME MEDIA GROUP | ANNUAL REPORT 202020. DIVIDENDS PAID AND PROPOSED

Recognised amounts

DECLARED AND PAID DURING THE YEAR

Current year interim franked dividends – Nil cents per share (2019: Nil)

Previous year final franked dividends – Nil cents per share (2019: Nil)

Total

Franking credit balance

Franking account balance as at the end of the financial year at 30% (2019: 30%)

Franking credits that will arise from the payment of income tax payable/(refundable) as at the end of the financial year

Total

Tax rates
The tax rate at which paid dividends have been franked is 30% (2019: 30%).

21. 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

2020
$’000

2019
$’000

–

THE GROUP

2020
$’000

68,977

69,008

2019
$’000

67,072

(1,594)

65,478

2020
$’000

–

2019
$’000

–

645

Property, plant and equipment located in Bunbury, Western Australia, is considered surplus to requirements. The property was available for sale
during the 2020 financial year, but was removed from sale due to the COVID-19 pandemic. The Board proposes to relist the property at a future point
when the prospects for sale have improved. As a result the property has been reclassified to property, plant and equipment and catch up depreciation
of $113,000 has been recognised. The balance has been impaired and a loss of $532,000 recognised (refer to Note 14).

ACCOUNTING POLICY

Non-current Assets Held For Sale

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.

Notes to the financial statements continuedFor the year ended 30 June 2020
22. 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

2020
$’000

–

121

–

2019
$’000

–

377

–

121

377

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

Total

2020
%

50%

33%

2019
%

50%

33%

Movements in the carrying amount of the Group’s investment in associates

At July 1

Loan contributions paid

Loan repayment received

Share of (losses)/profits after income tax (excl. impairment and reversals)

Decrease/(increase) in provision for impairment of investment

At June 30

2020
$’000

(300)

494

–

2019
$’000

(150)

306

–

194

156

2020
$’000

377

300

(750)

(82)

276

121

2019
$’000

1,071

150

(1,000)

594

(438)

377

Contributions paid 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.

PRIME MEDIA GROUP | ANNUAL REPORT 202023. INVESTMENTS IN SUBSIDIARIES

Closed Group Class Order disclosures

Entities subject to class order relief
Pursuant to 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 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 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 Digitalworks Pty Limited

Prime Media Broadcasting Services Pty Limited

Prime Media Group Services Pty Limited

Prime New Media Investments Pty Limited

Geraldton Telecasters Pty Limited

EQUITY INTEREST

COUNTRY OF
INCORPORATION

2020
%

2019
%

Australia

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

2020
$’000

9,210

(1,739)

7,471

2019
$’000

14,565

(4,316)

10,249

(275,360)

(282,811)

(7,802)

–

(2,798)

–

(275,648)

(275,360)

Operating profit before income tax

Income tax expense attributable to operating profit

Operating profit after tax

Accumulated losses at beginning of the financial year

Effect of adoption of new standards (Note 1)

Transfer to reserves

Dividends provided for or paid

Accumulated losses at end of the financial period

Notes to the financial statements continuedFor the year ended 30 June 202023. INVESTMENTS IN SUBSIDIARIES (CONTINUED)

Consolidated statement of financial position

Assets

Current assets

Non-current assets

Total assets

Liabilities

Current liabilities

Non-current liabilities

Total liabilities

Equity

24. COMMITMENTS

Capital expenditure commitments

Estimated capital expenditure contracted for at reporting date, but not provided for payable not later than one year

CLOSED GROUP

2020
$’000

2019
$’000

52,084

31,161

83,245

18,223

3,759

21,982

61,263

51,900

41,440

93,340

13,835

25,668

39,503

53,837

2020
$’000

1,080

2019
$’000

250

The following commitments are commercially considered as leases, however did not meet the definition of a lease under AASB 16. Therefore,
they have been disclosed based on their characteristics.

Expenditure commitments – payments

Minimum payments

– not later than one year

– later than one year and not later than five years

– later than five years

Aggregate expenditure contracted for at reporting date

2020
$’000

3,705

7,391

1,709

12,805

2019
$’000

6,133

13,402

3,210

22,745

Operating leases in the current year have an average lease term of 6-12 months for motor vehicles. Transmission site access agreements have average
expenditure commitments up to 10 years. The comparative period includes building leases, which have an average lease term of three to five years.
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.

Expenditure commitments – payments receivable
Certain assets with excess capacity have been sub-let to third parties. These non-cancellable contracts have remaining terms up to 10 years.
All contracts include clauses to enable upward revision of the contract charges on an annual basis according to increases in the CPI.

Minimum payments receivable

– not later than one year

– later than one year and not later than five years

– later than five years

Aggregate income contracted for at reporting date

2020
$’000

911

1,371

289

2,571

2019
$’000

1,175

1,994

410

3,579

PRIME MEDIA GROUP | ANNUAL REPORT 202024. COMMITMENTS (CONTINUED)

Other commitments covering the use of technical equipment under a long term agreement
Other commitments relate to technical communications equipment that is fundamental to the distribution of the television programming and
data communications.

– not later than one year

– later than one year and not later than five years

– later than five years

Aggregate expenditure contracted for at reporting date

2020
$’000

4,200

1,050

–

5,250

2019
$’000

4,200

5,250

–

9,450

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 26) for the provision of site maintenance services
over a five year period at an annual cost of $1,200,000 per annum. The Company also entered into a contract with MediaHub Australia Pty Limited for
the provision of playout services over a five year period.

– not later than one year

– later than one year and not later than five years

– later than five years

Aggregate expenditure contracted for at reporting date

ACCOUNTING POLICY

Group as a Lessor

2020
$’000

4,678

3,606

–

8,284

2019
$’000

4,626

8,210

–

12,836

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.

25. CONTINGENT LIABILITIES

The Group has provided a guarantee to an unrelated third party to pay the contractual commitment of WA SatCo Pty Limited, an associate company
of the Group (refer Note 22). WA SatCo Pty Limited has entered into a non-cancellable contract for the purchase of satellite services in WA until
30 June 2021. In the event that WA SatCo Pty Limited defaults on any payments under this contract, the Group may be liable for $2,346,192 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 2021. 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.

2020
$’000

2,346

–

2,346

2019
$’000

2,346

–

2,.346

Notes to the financial statements continuedFor the year ended 30 June 2020100

100

2020
$’000

2,218

119

–

(89)

100

2019
$’000

2,767

126

280

2,337

3,320

26. 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:

COUNTRY OF
INCORPORATION

EQUITY INTEREST

2020
%

2019
%

NAME

Prime Television (Holdings) Pty Limited

Prime Media Group Services Pty Limited

Prime New Media Investments 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

Prime Digitalworks Pty Limited

Broadcast Production Services Pty Limited

Screenworld Pty Limited

Australia

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

C. Key Management Personnel (“KMP”)

Short-term employee benefits

Post-employment benefits

Long-term benefits

Share based expense – Discontinued Performance Rights Plan

Cash settled (benefit)/expense – Current Performance Plan

Total

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.

PRIME MEDIA GROUP | ANNUAL REPORT 202026. RELATED PARTY DISCLOSURES (CONTINUED)

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 in the current financial year was $331,000 (2019: $621,000). These agreements do not
constitute a lease under AASB 16 and no right-of-use assets have been recognised.

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
$1,735,000 (2019: $1,700,000). 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 2021. The shareholders of the company provide services to WA SatCo to enable its operations. In the current financial
year services of $528,000 (2019: $673,000) were recovered from WA SatCo Pty Limited on a cost recovery basis.

Broadcast Transmission Services Pty Limited (“BTS”)
The Company has a 33% shareholding in BTS. BTS provides transmission maintenance, site installation and management services to regional
broadcasters and other third party customers. The Company entered into a contract with BTS for the provision of site maintenance services for the
period to 2023 at an annualised cost of up to $1,200,000 per annum.

Mildura Digital Television Pty Limited (“MDT”)
The Company has a 50% shareholding in MDT. MDT holds the television broadcast licence to broadcast Nine Entertainment programming
in Mildura, Victoria.

West Digital Television Pty Limited (“WDT”)
The Company has a 50% shareholding in WDT. WDT holds the television broadcast licence to broadcast Nine Entertainment programming
in regional Western Australia.

Notes to the financial statements continuedFor the year ended 30 June 202027. PARENT ENTITY INFORMATION

Current assets

Total assets

Current liabilities

Total liabilities

Issued capital

Employee benefits reserve

Accumulated losses

Retained profits reserve

Total shareholders’ equity

Profit of the parent entity

Total comprehensive profit of the parent entity

PRIME MEDIA GROUP LIMITED

2020
$’000

105

60,324

310,262

3,722

(277,217)

23,458

60,225

6,395

2019
$’000

1,705

157,233

103,404

310,262

3,722

(277,218)

17,063

53,829

2,798

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 23).

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 2021.
In the event that WA SatCo Pty Limited defaults on any payments under this contract, GWN may be liable for $2,346,192 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 2021. This agreement can be terminated without notice by the Commonwealth Government.

28. SUBSEQUENT EVENTS

On 30 June 2020 the Minister for Communications, Cyber Safety and the Arts announced that the Company was eligible under the Public Interest
News Gathering Program (“PING”) for grant funding totalling $4,703,000. On 14 August 2020 the Company executed a PING funding agreement with
the Commonwealth Government. The Company expects the grant funding to be available and grant obligations to apply over the 12 month period
from the date of agreement.

PRIME MEDIA GROUP | ANNUAL REPORT 202029. AUDITOR’S REMUNERATION

Fees to Ernst & Young (Australia)

– Fees for auditing the statutory financial report of the parent covering the group and auditing the statutory financial

reports of any controlled entities

– Fees for assurance services that are required by legislation to be provided by the auditor

– Fees for other assurance and agreed-upon-procedures services under other legislation or contractual

2020
$

2019
$

379,280

392,764

–

arrangements where there is discretion as to whether the service is provided by the auditor or another firm

222,860

9,880

– Fees for other services:

Tax compliance

Total fees to Ernst & Young (Australia)

Fees to other overseas member firms of Ernst & Young (Australia)

– Fees for auditing the financial report of any controlled entities

– Fees for assurance services that are required by legislation to be provided by the auditor

– Fees for other assurance and agreed-upon-procedures services under other legislation or contractual

arrangements where there is discretion as to whether the service is provided by the auditor or another firm

– Fees for other services:

Tax compliance

Total fees to overseas member firms of Ernst & Young (Australia)

Total auditor’s remuneration

30. OTHER ACCOUNTING POLICIES

29,757

631,897

34,607

437,251

–

631,897

437,251

A. Basis of consolidation
The consolidated financial statements comprise the financial statements of Prime Media Group Limited and its subsidiaries (as outlined in Note 26)
as at and for the year ended 30 June 2020. Interests in associates are equity accounted and are not part of the consolidated Group (see Note 22).

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.

Notes to the financial statements continuedFor the year ended 30 June 202031. 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:

Determining the lease term of contracts with renewal and termination options – Group as lessee
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease
if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Group has several lease contracts that include extension and termination options. The Group applies judgement in evaluating whether
it is reasonably certain or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic
incentive for it to exercise either the renewal or termination. After the commencement date, the Group reassesses the lease term if there is a significant
event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate
(e.g. construction of significant leasehold improvements or significant customisation to the leased asset).

Expenditure commitments – Payments
The Group has entered into operating leases that have an average lease term of up to 10 years for transmission site access agreements. The Group has
determined, based on an evaluation of the terms and conditions of the arrangements, that these agreements do not qualify as leases under AASB 16
and accounts for the contracts as service agreements.

Expenditure commitments – Payments receivable
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.

Revenue from contracts with customers
The Group contracts with media buyers and media agencies for the sale of advertising airtime to third party advertisers. Under the five-step model,
based on an evaluation of the terms and conditions of the contracts, the Group’s relationship has been determined to be with media buyers and
media agencies and accordingly advertising revenue is to be recognised net of agency commission since this is to be treated as a payment made
to a customer.

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 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.

Provision for expected credit losses of trade receivables and contract assets
The Group uses a provision matrix to calculate ECLs for trade receivables and contract assets. The provision rates are based on days past due for
groupings of various customer segments that have similar loss patterns (i.e. customer type).

The provision matrix is initially based on the Group’s historical observed default rates. The Group will calibrate the matrix to adjust the historical
credit loss experience with forward-looking information. At every reporting date, the historical observed default rates are updated and changes
in the forward-looking estimates are analysed.

The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate.
The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions.

The disruption to advertising markets and economic downturn resulting from the COVID-19 pandemic has created significant uncertainty when
forecasting credit losses. The magnitude of future credit losses will be significantly influenced by the duration and extent of the COVID-19 pandemic
in regional advertising markets and the steps taken by State and Federal governments to contain the pandemic. The Group’s historical credit loss
experience and forecast of economic conditions may also not be representative of customer’s actual default in the future.

PRIME MEDIA GROUP | ANNUAL REPORT 202031. SIGNIFICANT JUDGEMENTS AND ESTIMATES (CONTINUED)

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 five 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.

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.

Notes to the financial statements continuedFor the year ended 30 June 2020In 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 2020 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 2020 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 23
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 2020.

On behalf of the Board

C. A. O’Connor
Director
Sydney, 27 August 2020

Directors’ DeclarationFor the year ended 30 June 2020PRIME MEDIA GROUP | ANNUAL REPORT 2020Ernst & 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
2020, the consolidated statement of profit or loss and other 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:

giving a true and fair view of the consolidated financial position of the Group as at 30 June 2020
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
(including Independence Standards) (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 each matter below, our description of how our audit addressed the matter
is provided in that context.

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

Independent Auditor’s Report

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 matters below, provide the basis for our audit opinion on the accompanying
financial report.

Revenue Recognition

Why significant

How our audit addressed the key audit matter

The Group has the following revenue and other
income streams:

Our audit procedures included the following:

► Advertising revenue

► Site rental

► Sales representation income

► Confirmed our understanding of the processes

and tested the controls over advertising revenue,
including examination of campaign contracts and
approvals.

► Government grants

► Compared revenue recognised to evidence of

As outlined in Note 2 of the Financial Statements
Advertising revenue is recognised when the
commercial advertisement has been broadcast.
Where the Company has committed to delivering
a specific viewer metric for an advertising
campaign, then revenue for this performance
obligation will be recognised when the viewer
metric has been achieved. Advertising revenue is
recognised net of agency commission.

Advertising revenue is a key audit matter due to
the manual process for determining whether the
advertisement has been broadcast and viewer
metrics have been achieved and due to the
potential risk of manual override of controls by
management to manipulate revenue.

broadcast.

► Used data analysis techniques to analyse the
relationship between revenue, accounts
receivable and cash collections for advertising
revenue. This included testing revenue recognised
post broadcast by agreeing a sample to
transmission and subsequent cash receipt.

► Tested manual journal entries for revenue

recorded at period end.

► Challenged the completeness of deferred revenue

where viewer metrics have not been met.

► Assessed the adequacy of the financial report

disclosures included in the financial statements

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 2020 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.

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

Independent Auditor’s ReportPRIME MEDIA GROUP | ANNUAL REPORT 2020

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:

•

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.

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

Independent Auditor’s Report

•

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, actions taken to eliminate
threats or safeguards applied.

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.

Report on the Audit of the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 11 to 23 of the directors' report for the year
ended 30 June 2020.

In our opinion, the Remuneration Report of Prime Media Group Limited for the year ended 30 June 2020,
complies with section 300A of the Corporations Act 2001.

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

Independent Auditor’s ReportPRIME MEDIA GROUP | ANNUAL REPORT 2020

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

Michael J Wright
Partner
Sydney
27 August 2020

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

Independent Auditor’s Report

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 25 August 2020.

A. Distribution of Equity Securities

Ordinary shares
As at 25 August 2020, 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 25 August 2020 are:

Seven Network (Operations) Limited

WA Chess Investments Pty Ltd

J P Morgan Nominees Australia Pty Limited

Buttonwood Nominees Pty Ltd

HSBC Custody Nominees (Australia) Limited

Brispot Nominees Pty Ltd

UBS Nominees Pty Ltd

BNP Paribas Nominees Pty Ltd

CS Fourth Nominees Pty Limited

HSBC Custody Nominees (Australia) Limited

Morgan Stanley Australia Securities (Nominee) Pty Limited

Jamplat Pty Ltd

Keybridge Capital Limited

Mr George Walter Mooratoff

Citicorp Nominees Pty Limited

Merrill Lynch (Australia) Nominees Pty Limited

Sojourn Services Pty Ltd

Neweconomy Com Au Nominees Pty Limited

Mr John Alex Rumble & Mrs Sonja Rumble

Warbont Nominees Pty Ltd

NUMBER OF HOLDERS

501

634

391

741

162

2,429

1,145

LISTED ORDINARY SHARES

NUMBER OF SHARES

PERCENTAGE OF
ORDINARY SHARES

54,594,367

54,362,273

44,420,483

29,050,000

21,389,901

9,264,829

7,500,000

6,981,599

6,721,824

6,511,527

6,462,317

5,700,000

5,421,585

5,000,000

4,908,894

4,545,552

3,597,000

2,990,537

2,900,000

2,591,648

14.90

14.84

12.13

7.93

5.84

2.53

2.05

1.91

1.83

1.78

1.76

1.56

1.48

1.36

1.34

1.24

0.98

0.82

0.79

0.71

284,914,336

77.78

ASX Additional InformationFor the year ended 30 June 2020PRIME MEDIA GROUP | ANNUAL REPORT 2020C. 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

PERCENTAGE OF
ORDINARY SHARES

Seven West Media Limited and its related interests including Seven Network (Operations) Limited
Seven Group Holdings Limited and its related interest

Australian Capital Equity Limited, Wroxby Pty Limited, North Aston Pty Limited, Ashblue Holdings Pty
Limited, Tiberius Pty Limited, Tiberius (Seven investments) Pty Limited, Mr Kerry Matthew Stokes AC

WA Chess Investments Pty Limited

Bruce Gordon, Judith Gordon, Birketu Pty Ltd, WIN Corporation Pty Limited and associates of WIN

Macquarie Group Limited

54,594,367

53,362,273

42,444,289

29,244,151

14.90%

14.57%

11.59%

7.98%

On 28 November 2019 Birketu Pty Limited disclosed to the market that on 21 November 2019, Birketu Pty Limited entered into a cash settled equity
swap transaction with Macquarie Bank Limited in relation to 29,050,000 PRT shares at a price of $0.200 per PRT share.

As a result of the transaction, WIN Group voting power in PRT remained at 11.59% and the aggregate economic interest of the WIN Group in PRT
was 19.52%.

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

ASX Additional InformationFor the year ended 30 June 2020Designed and produced by ArmstrongQ – www.armstrongQ.com.au

primemedia.com.au