PRIME MEDIA GROUP LIMITED ACN: HALF YEAR RESULTS

Transcription

1 PRIME MEDIA GROUP LIMITED Monday 25 February 2008 HALF YEAR RESULTS PRIME MEDIA GROUP ANNOUNCES NET PROFIT FROM CONTINUING OPERATIONS (PRE NON-RECURRING ITEMS) UP 17.6% Half Year Ended 31 December $m $m Net profit from continuing operations * (+17.6%) Revenues from continuing operations * (+30.7%) EBITDA from continuing operations * (+21.9%) EBIT from continuing operations * (+20.9%) Significant items (net of tax) Reported net profit for period attributable to members (+14.6%) Earnings per share from continuing operations * (diluted) (+15.0%) Interim dividend per share 8.5c 7.5c (+13.3%) * Before non-recurring and significant items The Directors of Prime Media Group Limited ( Prime ) announced today that for the six months ended 31 December 2007 the company has recorded a net profit after tax from continuing operations (before significant items) of $17.6m which represents an increase of 17.6% over the prior period (before significant items). Adjusting for significant items the reported net profit after tax attributable to members was $18.5m, an increase of 14.6% over the prior period. The result was struck after an increase in revenues from continuing operations of 30.7% to $134.0m. Growth in earnings before interest and tax ( EBIT ) of 20.9% reflects a strong underlying performance in the company s core businesses of regional free to air television and radio. Chief Executive Officer, Mr Warwick Syphers said, This is a strong result for the company reflecting primarily the continued success of Seven Network programming across all our regional television markets, and a continuing strong focus on achieving operating efficiencies in all areas of our businesses. Our broadening portfolio of media assets is driving top line growth and will underpin earnings growth in future periods. The Directors also announced an interim dividend of 8.5 cents per share fully franked, an increase of 13.3% over the prior comparative period. 1/8

2 PRIME MEDIA GROUP LIMITED The following table shows the composition of earnings from continuing operations during the period. Half Year Ended 31 December Continuing Operations $000 $000 % Sales revenues 127,051 97, Other revenues from operations 6,927 5,196 Total revenues from continuing operations before significant items 133, , EBITDA from Continuing Operations 38,483 31, Depreciation (6,282) (4,928) EBIT from Continuing Operations 32,201 26, Interest (Net) 6,710 5,194 Pre-Significant Profit before tax 25,491 21, Tax on Pre-Significant profit 7,871 6,453 Pre-Significant Profit after tax 17,620 14, Significant items (net of tax) (refer page 3) 627 1,126 Profit after tax before minorities 18,247 16, Profit after tax attributable to members of Prime Television Limited 18,464 16, Interim dividend per share (cents) Earnings per share from continuing operations (fully diluted) (cents) /8

3 PRIME MEDIA GROUP LIMITED Other Revenue from Operations Other Revenue from Operations Half Year Ended 31 December $000 $000 ACMA rebates 2,550 2,550 Commercial production revenue 1,181 1,026 Representation fees 1, Site/Studio Rentals, programme sales, other 2, TOTAL 6,927 5,196 Significant Items During the period the company recorded a number of non-recurring and significant items which were not directly related to the company s core operations of free to air regional television and radio in Australia. A summary of these items is provided as follows: Significant Items Half Year Ended 31 December $000 $000 Profit/loss after tax from discontinued Operations (Becker Group) (1,652) - Profit/loss after tax from discontinued Operations (NZ TV ops) Gain from AIFRS adjustment for financial investments (net of tax) 2, TOTAL 627 1,126 3/8

4 PRIME MEDIA GROUP LIMITED Television Advertising revenue growth for the television network during the period was 18.3% which compares strongly with overall growth in the regional television industry of 11.1% in the period and reaffirms that Prime has continued to benefit from the strong national ratings performance of the Seven Network combined with the effectiveness of its local sales platform. In the period under review variable selling expenses increased broadly in line with revenue growth rates, while program charges under the Program Supply agreement with the 7 Network are also related to revenue movements. Increases in the balance of core operating costs were predominately kept in the low to mid single digit range, apart from transmission site expenses related to digital expansion. Public company administration expenses are recorded within television operations. The company also recorded its share of operating losses for the period relating to the operation of a third television service in Mildura by way of a Joint Venture with WIN Television, as well as start up losses associated with investments in on-line ( iprime ) and digital screen signage ( PDM ) businesses. Half Year Ended 31 December $000 $000 % Advertising and sales revenues 109,868 92, Other revenues from Operations 6,095 5,193 Total revenues 115,963 98, EBITDA from Continuing Operations 34,755 30, Depreciation (4,436) (4,787) EBIT from Continuing Operations 30,319 25, /8

5 PRIME MEDIA GROUP LIMITED Radio Half Year Ended 31 December $000 $000 % Advertising revenues 9,636 4, Other revenues from Operations 7 3 Total revenues 9,643 4, EBITDA from Continuing Operations 1,935 1, Depreciation (451) (141) EBIT from Continuing Operations 1, Advertising revenues in the radio operations increased from $4.4m to $9.6m (118%) in relation to the prior comparative period however the current period includes contributions from two AM stations, 4EL Cairns and 4AA Mackay acquired in February 2007, as well as contributions from two FM stations, HOT FM and ZINC 96.1, located on the Queensland Sunshine coast, acquired in August EBITDA for the period was $1.9m, an increase of 74% which while related to top line growth is also reflective of a strengthened management team led by former DMG Regional Radio Chief Executive, Rob Gamble. The Prime radio network now comprises 10 stations in the fast growing Queensland coastal markets of: i. Cairns (4CA FM, Easy Mix AM) ii. Townsville (Sea FM, Mix FM) iii. Mackay (4MK FM, Easy AM) iv. Gladstone/Rockhampton (4CC AM, 4RO AM) v. Sunshine Coast (HOT FM, ZINC FM) 5/8

6 PRIME MEDIA GROUP LIMITED Becker Group Half Year Ended 31 December $000 $000 % Sales revenues 7,547 - Other revenues (excl non-recurring & finance income) Total revenues 8,372 - EBITDA before non-recurring items 1,793 - Depreciation (1,395) - EBIT before non-recurring items Borrowing costs (nett) (184) - Profit before tax Tax Benefit 81 - Profit after tax from continuing operations (Loss) from discontinuing Operations (1,652) - Minority Interests in Controlled Entities Profit after tax attributable to members of Prime Media Group Limited (1,140) - During the period Prime acquired control (76%) of the ASX listed Becker Group Ltd which has operations in cinema exhibition (Dendy Cinemas), film distribution, On Site broadcasting services in Australia and New Zealand and television production services in Australia and Indonesia. On 22 February, 2008 Becker announced that it had entered into an agreement to sell the Dendy Cinema and film distribution businesses to Icon Film Distribution Pty Limited for a cash consideration of $21,005,000. The Prime consolidated results for the period under review include a first time contribution from the continuing businesses within Becker comprising the On Site broadcasting, television production and Moonlight outdoor cinema assets, while also reflecting Prime s share of losses ($1,652,000) in the discontinued operations, adjusted for minority interests. 6/8

7 PRIME MEDIA GROUP LIMITED Dividends In recognition of the continued strong operating performance of the company, the Directors have declared an interim dividend of 8.5 cents per share fully franked, an increase of 13.3% over the prior comparative period. The Company s Dividend Reinvestment Plan will not apply in relation to this dividend. Outlook i) Television Television advertising market conditions were strong in the period under review, buoyed by the Federal election period. However, it is equally clear that the Seven network has now achieved a pre-eminent position in the metropolitan markets and Prime continues to benefit from that success. Prime has a Program Supply agreement with the Seven network running until Advertising demand for the Prime and Seven networks has continued to be firm in the opening months of the current period which included a successful Australian Open Tennis coverage. The deepening strength of the Seven mid week schedule, the second year of V8 supercars and AFL coverage which will include Grand Final coverage in 2008, culminating with the Beijing Olympics coverage in August underpins confidence in Primes outlook for television operations in calendar Notwithstanding a degree of caution regarding the global economic outlook, the Australian economy has continued its resilient growth path, with the rural economy in particular recording strong growth in the period under review. Prime s television operations derive approximately 30% of revenues from advertisers located directly within its regional broadcast footprint, whose local economies do not typically demonstrate a close correlation with global economic trends. The initial period of simulcast transmission in both analog and digital formats was scheduled to complete in late calendar 2008, however the past and current Federal Governments have indicated that the simulcast period is now likely to run forward to around This is a matter currently under review and will also incorporate a review of current levels of assistance provided to regional broadcasters during a simulcast period. ii) Radio The improved performance in the radio division primarily reflects the first time inclusion (relative to the prior comparable period) of contributions from two AM stations, 4EL Cairns and 4AA Mackay acquired in February 2007 and two FM stations HOT 91.1 and ZINC 96.1 operating on the Sunshine coast in south east Queensland, and a significantly strengthened management team. The period under review also saw the commencement of a consolidation phase around Prime s 10 radio stations located on Queensland coastal towns from Maroochydore (Sunshine Coast) to Cairns. Under the leadership of former DMG regional radio chief, Rob Gamble, the network will become more closely integrated around line management functions through a network hub presence in Maroochydore, without compromise to the local presence and output of network stations. 7/8

8 PRIME MEDIA GROUP LIMITED Regional radio derives a high proportion, approximately 80% of its revenues from advertisers in these local economies which as previously noted do not tend to be strongly correlated with macro economic conditions. The state of Queensland in particular has continued its robust growth path. Completion of the network integration, closer program format alignment and resource efficiencies will collectively drive synergy benefits and ease of buying to underpin future growth of the network. iii) Digital Media development Prime has continued to develop its presence in digital media primarily through three key investment areas: a) Prime Digitalworks/iPrime IPrime leverages the strength of the Prime brand through the creation of websites targeting hyper localism in regional communities within the Prime broadcast footprint and potentially beyond. The venture was launched in the second quarter of the period under review and has made significant progress in establishing viewer awareness. b) Destra Corporation The ASX listed Destra is Australia s largest independent digital media entertainment company whose vision is to connect consumers with online communities, targeted entertainment and advertisers. c) Prime Digital Media ( PDM ) PDM is a digital content business with a strategic focus on in store retail environments with screen displays at the point of purchase. This business model is currently seeing high growth rates in international markets. PDM s core services include media sales, marketing, content creation and system s management. Key clients currently include Telstra T-Shops, Sigma Pharmaceuticals, Blooms, Retravision and Boost. iv) Becker Group Following the announcement on 22 February 2008 that Becker has agreed to sell its Dendy Cinema and Film Distribution assets, the group will go forward in operating the On Site broadcasting businesses (Australia and New Zealand), television productions (Australia and Indonesia) and Moonlight outdoor cinemas. In the current period Becker will undertake a strategic review to determine appropriate options to generate optimal performance for the remaining assets. For further information please contact Warwick Syphers, Chief Executive Officer on (02) /8

9 PRIME MEDIA GROUP LIMITED HALF YEARLY REPORT 31 DECEMBER 2007 Contents Appendix 4D Condensed Half-Year Financial Report

10 Appendix 4D HALF-YEAR ENDED 31 DECEMBER 2007 PRIME MEDIA GROUP LIMITED HALF YEAR REPORT ACN: Name of entity PRIME MEDIA GROUP LIMITED ABN Financial half year ended ( current period ) December 2007 (Previous corresponding period: half-year ended 31 December 2006) Results for announcement to the market Extracts from this report for announcement to the market. $A'000 Revenues from continuing operations Up 32.5% to $137,852 Net profit after tax from continuing operations Up 26.2% to $19,899 Net profit for the period attributable to members Up 14.6% to $18,464 Dividends Amount per security Franked amount per security Final dividend 2007 paid 16 October 2007 Ordinary Interim dividend 2008 payable 24 April 2008 Ordinary Record date for determining entitlements to the dividend. 31 March 2008 There are no dividend or distribution plans in operation. Earnings per security Current period Previous corresponding period Basic EPS 14.5c 12.9c Basic EPS from continuing operations 15.7c 12.9c Diluted EPS 14.5c 12.9c Diluted EPS from continuing operations 15.6c 12.9c NTA backing Current period Previous corresponding Period Net tangible asset backing per ordinary security (0.96) (0.60) 1

11 Appendix 4D HALF-YEAR ENDED 31 DECEMBER 2007 Comments by directors Explanation of Revenue PRIME MEDIA GROUP LIMITED HALF YEAR REPORT ACN: Group revenues from continuing operations increased by 32.5% over the corresponding period. Operating revenues from television increased by 18.3% while radio revenues increased by 118% reflecting a contribution from two AM stations acquired in the second half of FY07 and two FM stations acquired during the period under review. The result also includes a first time contribution from continuing operations within the majority controlled Becker Group Limited. Explanation of Profit/(Loss) from ordinary activities after tax attributable to members The consolidated profit of the Group attributable to the members of Prime Media Group Limited after providing for income tax for the half-year was $18,464,000 (2006: profit $16,108,000). Current Period Results Continuing operations recorded an increase in after tax earnings of 26.2% reflecting a relatively strong advertising market in the period under review. Explanation of Dividends An interim dividend of 8.5 cents per share on ordinary shares has been declared for payment in April The dividend will be fully franked. It is anticipated that the 2007/2008 final dividend on ordinary shares will also be fully franked. The amount of franking credits available to the company as at balance date is $20,032,000. Details of entities over which control has been gained or lost during the period AMI Radio Pty Limited (Gained control 1 July 2007) Hot 91 Pty Limited (Gained control 1 July 2007) Prime Digitalworks Pty Limited (Ceased control 1 September 2007) (Dormant company until 1 July 2007) 2

12 ACN: PRIME MEDIA GROUP LIMITED CONDENSED FINANCIAL REPORT Half Year Ended 31 DECEMBER 2007

13 Corporate Information PRIME MEDIA GROUP LIMITED HALF YEAR REPORT ACN: ABN This half-year report covers both Prime Media Group Limited as an individual entity and the consolidated entity comprising Prime Media Group Limited and its subsidiaries. The Group s functional and presentation currency is AUD ($). Directors Paul J. Ramsay AO (Chairman) Michael S. Siddle (Deputy Chairman) Peter J. Evans Terry Jackman AM Alex Hamill Warwick Syphers Company Secretaries Andrew Cooper Susan Howie Registered Office 363 Antill Street Watson, ACT 2602 (02) Share Register Link Market Services Limited Level George Street Sydney, NSW, Bank ANZ 8/20 Martin Place Sydney NSW 2000 Auditors Ernst & Young 51 Allara St Canberra ACT

14 ACN: Directors Report Your directors submit their report for the half-year ended 31 December DIRECTORS The names of the company s directors in office during the half-year and until the date of this report are as below. Directors were in office for this entire period unless otherwise stated. Paul J. Ramsay AO Chairman Michael S. Siddle * Deputy Chairman Peter J. Evans * Terry Jackman AM Alex Hamill* Warwick Syphers * Denotes current member of the Audit Committee CHANGE OF COMPANY NAME In accordance with a shareholders resolution passed at the Annual General Meeting, on 5 Dec 2007 the company changed its name to Prime Media Group Limited. REVIEW AND RESULTS OF OPERATIONS The consolidated profit of the group attributable to the members of Prime Media Group Limited after providing for income tax for the half-year was $18,464,000 (2006: profit $16,108,000). Current Period Results Continuing operations recorded an increase in after tax earnings of 26.2% reflecting a relatively strong advertising market in the period under review. Dividends The directors of the company have declared that a fully franked interim dividend of 8.5 cents per share be paid for the half-year ended 31 December ROUNDING The amounts contained in this report and in the half-year financial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the company under ASIC Class Order 98/0100. The company is an entity to which the Class Order applies. 1

15 ACN: Directors Report AUDITORS INDEPENDENCE DECLARATION We have obtained the following independence declaration from our auditors, Ernst & Young. Signed in accordance with a resolution of the directors. Peter J. Evans Director Sydney, 25 February

16 ACN: Condensed Income Statement HALF-YEAR ENDED 31 DECEMBER 2007 Notes CONSOLIDATED $ 000 $ 000 Continuing operations Income 3(a)(i) 137, ,050 Expenses 3(a)(ii) (100,225) (75,674) Share of associates losses (1,552) (195) PROFIT FROM CONTINUING OPERATIONS BEFORE FINANCE AND INCOME TAX COSTS 36,075 28,181 Finance costs 3(a)(ii) (7,328) (5,616) PROFIT BEFORE INCOME TAX 28,747 22,565 Income tax (expense) (8,848) (6,792) NET PROFIT AFTER TAX FROM CONTINUING OPERATIONS 19,899 15,773 Discontinuing operations Income 9 13, Expenses 9 (13,991) - PROFIT / (LOSS) FROM DISCONTINUING OPERATIONS BEFORE FINANCE AND INCOME TAX COSTS (842) 335 Finance costs 3(a)(ii) (696) - PROFIT / (LOSS) FROM DISCONTINUING OPERATIONS BEFORE INCOME TAX (1,538) 335 Income tax (expense) (114) - NET PROFIT / (LOSS) AFTER TAX FROM DISCONTINUING OPERATIONS (1,652) 335 NET PROFIT AFTER TAX 18,247 16,108 Profits / (losses) attributable to minority equity interests (217) - NET PROFIT AFTER TAX ATTRIBUTABLE TO THE MEMBERS OF PRIME MEDIA GROUP LIMITED 18,464 16,108 Basic Earnings per share (cents per share) - profit for the half year profit from continuing operations Diluted Earnings per share (cents per share) - profit for the half year profit from continuing operations Franked dividends per share (cents per share)

17 Condensed Balance Sheet HALF-YEAR ENDED 31 DECEMBER 2007 ASSETS PRIME MEDIA GROUP LIMITED HALF YEAR REPORT Notes CONSOLIDATED AS AT AS AT 31 DECEMBER 30 JUNE $ 000 $ 000 CURRENT ASSETS Cash and cash equivalents 9,350 31,342 Trade and other receivables 50,540 44,392 Prepayments 3,834 1,424 Intangible assets 4,325 1,300 Derivative financial instruments 8,075 4,818 76,124 83,276 Non-current assets classified as held for sale 7(d) 24,480 37,385 TOTAL CURRENT ASSETS 100, ,661 NON-CURRENT ASSETS Receivables 3,607 1,193 Investments in associates 1,383 2,464 Investments in available for sale financial assets 21,306 12,387 Property, plant and equipment 81,340 72,502 Deferred tax assets 1,872 - Intangible assets and goodwill 287, ,197 Prepayments 296 3,602 TOTAL NON-CURRENT ASSETS 396, ,345 TOTAL ASSETS 497, ,006 LIABILITIES CURRENT LIABILITIES Trade and other payables 34,994 48,246 Interest bearing loans and borrowings 311 1,540 Current tax liabilities 6,103 6,270 Provisions 4,171 3,695 45,579 59,751 Liabilities directly attributable to assets held for sale 7(d) 10,520 20,702 TOTAL CURRENT LIABILITIES 56,099 80,453 NON-CURRENT LIABILITIES Trade and other payables 2,387 4,083 Interest bearing loans and borrowings 262, ,436 Deferred income tax liabilities 11,928 9,404 Provisions TOTAL NON-CURRENT LIABILITIES 277, ,266 TOTAL LIABILITIES 333, ,719 NET ASSETS 164, ,287 EQUITY Issued capital 197, ,499 Other reserves 525 1,981 Accumulated losses (35,144) (42,096) Parent entity interests 162, ,384 Minority interests 1,290 1,903 TOTAL EQUITY 164, ,287 4

18 Condensed Cash Flow Statement HALF-YEAR ENDED 31 DECEMBER 2007 CASH FLOWS FROM OPERATING ACTIVITIES CONSOLIDATED Notes $ 000 $ 000 Receipts from customers 151, ,013 Payments to suppliers and employees (130,728) (84,231) Interest received Finance costs paid (8,575) (2,920) Income tax paid (8,921) (5,408) NET CASH FLOWS FROM OPERATING ACTIVITIES 4,240 21,980 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment (12,058) (5,865) Proceeds from sale of property, plant and equipment 1 67 Proceeds from sale of available for sale financial assets 4 - Acquisition of business assets (3,819) - Acquisition of subsidiaries and related business assets (23,845) - Loan to related entity (3,604) (741) Purchase of available for sale investments (10,232) (2,571) NET CASH FLOWS (USED IN) INVESTING ACTIVITIES (53,553) (9,110) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from share issue - 78 Proceeds from borrowings 48,610 - Repayment of borrowings (9,958) (1,935) Finance lease payments (318) (198) Equity dividends paid (11,512) (9,998) NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES 26,822 (12,053) NET INCREASE IN CASH AND CASH EQUIVALENTS (22,491) 817 Cash and cash equivalents at beginning of period 31,897 20,168 Net foreign exchange difference 70 (16) CASH AND CASH EQUIVALENTS AT END OF PERIOD 9 9,476 20,969 5

19 Condensed Statement of Changes in Equity HALF-YEAR ENDED 31 DECEMBER 2007 PRIME MEDIA GROUP LIMITED HALF YEAR REPORT CONSOLIDATED Issued Capital Accumulated Losses Employee Benefits Reserve Foreign Currency Translation Reserve Total $ 000 $ 000 $ 000 $ 000 $ 000 At 1 July ,421 (55,196) ,405 Fair value revaluation of available-for-sale financial assets (net of applicable tax) Currency translation differences for the period recognised directly in equity (37) (37) Total income and expense for the period recognised directly in equity (37) (37) Profit for the period attributable to the members of the parent entity - 16, ,108 Profit / (losses) for the period attributable to minority shareholders Total income and expense for the period - 16,108 - (37) 16,071 Minority interests in controlled entities acquired Exercise of options Cost of share-based payments Equity dividends - (9,998) - - (9,998) At 31 December ,499 (49,086) 351 (37) 138,727 6

20 Condensed Statement of Changes in Equity HALF-YEAR ENDED 31 DECEMBER 2007 CONSOLIDATED Issued Capital Accumulated Losses Employee Benefits Reserve Foreign Currency Translation Reserve Net Unrealised Gains Reserve Total Parent Entity Interest Minority Equity Interest Total $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 At 1 July ,499 (42,096) , ,384 1, ,287 Fair value revaluation of available-for-sale financial assets (net of applicable tax) (1,335) (1,335) - (1,335) Currency translation differences for the period recognised directly in equity (364) - (364) - (364) Total income and expense for the period recognised directly in equity (364) (1,335) (1,699) - (1,699) Profit for the period attributable to the members of the parent entity - 18, ,464-18,464 Profit / (losses) for the period attributable to minority shareholders (217) (217) Total income and expense for the period - 18, ,464 (217) 18,247 Minority interests (331) (331) Shares issued as consideration of equity settled transaction 10, ,036-10,036 Cost of share-based payments Dividends of controlled entities paid to minority interests (65) (65) Equity dividends - (11,512) (11,512) - (11,512) At 31 December ,535 (35,144) 867 (344) 2 162,916 1, ,206 7

21 Notes to the Condensed Financial Statements FOR THE HALF-YEAR ENDED 31 DECEMBER CORPORATE INFORMATION The financial report of Prime Media Group Limited (the Group) for the half-year ended 31 December 2007 was authorised for issue in accordance with a resolution of the directors on 25 February Prime Media Group Limited is a company incorporated in Australia and limited by shares, which are publicly traded on the Australian Stock Exchange. The nature of the operations and principal activities of the Group are described in note BASIS OF PREPARATION AND ACCOUNTING POLICIES The half-year financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, applicable Accounting Standards including AASB 134 Interim Financial Reporting and other mandatory professional reporting requirements. The half-year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report. It is recommended that the half-year financial report should be read in conjunction with the annual financial report of Prime Media Group Limited as at 30 June 2007 and considered together with any public announcements made by Prime Media Group Limited and its controlled entities during the half-year ended 31 December 2007 in accordance with the continuous disclosure obligations of the ASX listing rules. Apart from the changes in accounting policy noted below, the accounting policies and methods of computation are the same as those adopted in the most recent annual financial report. Changes in Accounting Policies Except for the adoption of AASB 7 Financial Instruments: Disclosures: a) the accounting policies adopted in the preparation of the half year report are consistent with those applied and disclosed in the 2007 annual financial report; and b) the Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Group for the half-year reporting period ending 31 December Adoption of new accounting standard The Group has adopted AASB 7 Financial Instruments: Disclosures and all consequential amendments which became applicable to the Group from 1 July The application of this standard did not affect any of the amounts recognised in the financial statements, but will affect the type of information disclosed in the Group s financial report for the year ending 30 June 2008 and subsequent years. Basis of consolidation The consolidated financial statements comprise the financial statements of Prime Media Group Limited (the parent company) and all entities that Prime Media Group Limited controlled from time to time during the half year and at reporting date. The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist. All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Unrealised losses are eliminated unless costs cannot be recovered. Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Where there is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting period during which the parent company has control. 8

22 Notes to the Condensed Financial Statements FOR THE HALF-YEAR ENDED 31 DECEMBER REVENUE, INCOME AND EXPENSES (a) Revenue, Income and Expenses from Continuing Operations CONSOLIDATED $ 000 $ 000 (i) Income Advertising revenue 119,504 97,302 Broadcasting revenue 5,239 - Film Exhibition and Distribution revenue 2,308 - Government Grants 2,550 2,550 Production Revenue 1,181 1,026 Representation Fees 1, Other income 2, , ,497 Interest received Gain from MtM Interest Rate Swaps 3,256 1,130 Gain on disposal of property, plant and equipment 2 1 3,876 1,553 Total revenues 137, ,050 (ii) Expenses Broadcasting and transmission expenses 59,859 46,625 Sales, marketing and administration expenses 33,131 24,121 Film Exhibition and Distribution expenses Depreciation and amortisation 6,282 4,928 Total expenses and losses from continuing activities before finance costs 100,225 75,674 Finance costs expensed - Interest expense other persons 7,328 5,616 Total finance costs expensed 7,328 5,616 Bad and doubtful debts trade debtors - 48 Operating lease expenditure 7,658 6,750 Superannuation contributions 1,621 1,238 Expense of share-based payments

23 Notes to the Condensed Financial Statements FOR THE HALF-YEAR ENDED 31 DECEMBER REVENUE, INCOME AND EXPENSES (continued) CONSOLIDATED $ 000 $ 000 (b) Revenue, Income and Expenses from Discontinuing Operations (i) Income Film Exhibition and Distribution revenue 12,843 - Other revenue ,134 - Interest received 15 - Gain on disposal of New Zealand TV business Total revenues 13, (ii) Expenses Film Exhibition and Distribution expenses 13,882 - Depreciation and amortisation Total expenses and losses from discontinuing activities before finance costs 13,991 - Finance costs expensed - Interest expense other persons Total finance costs expensed Operating lease expenditure 1,290 - Superannuation contributions DIVIDENDS PAID AND PROPOSED Equity dividends on ordinary shares (a) Dividends paid during the half-year Final franked dividend for financial year ended 30 June 2007: 9.0 cents (2006: 8.0 cents) 11,512 8,704 (b) Dividends proposed and not recognised as a liability Interim franked dividend for financial year ended 30 June 2008: 8.5 cents (2006: 7.5 cents) 10,872 8,083 10

24 Notes to the Condensed Financial Statements FOR THE HALF-YEAR ENDED 31 DECEMBER 2007 NOTE AS AT 31 DECEMBER 5. CONTRIBUTED EQUITY AS AT 30 JUNE $ 000 $ 000 Ordinary shares Issued and fully paid 127,905,896 (June 2007: 124,997,225) 197, ,499 Number of shares $ 000 Movements in ordinary shares on issue At July 1, ,997, ,499 Shares issued as consideration for equity settled transaction 8 2,908,671 10,036 Issued and fully paid 127,905, , SEGMENT INFORMATION The primary reporting format for the group is business segments. Business Segment The following table presents revenue and profit information for business segments for the half years ended 31 December 2007 and 31 December Half Year ended 31 December 2007 Continuing Operations Discontinuing Operations Total Operations Media Broadcasting Becker Group Total Film Exhibition and Distribution $ 000 $ 000 $ 000 $ 000 $ 000 Revenues Sales to external customers 119,504 7, ,051 12, ,894 Finance income 3, , ,889 Other income 6, , ,218 Total segment revenue 129,441 8, ,852 13, ,001 Segment result 28, ,747 (1,538) 27,209 Income tax expense (8,929) 81 (8,848) (114) (8,962) Net Profit / (Loss) after tax 19, ,899 (1,652) 18,247 Minority interests (217) Net Profit after tax attributable to members of Prime Media Group Limited 18,464 11

25 Notes to the Condensed Financial Statements FOR THE HALF-YEAR ENDED 31 DECEMBER SEGMENT INFORMATION (continued) Half Year ended 31 December 2006 Continuing Operations Discontinuing Operations Total Operations Media Broadcasting Becker Group Total NZ Television Business $ 000 $ 000 $ 000 $ 000 $ 000 Revenues Sales to external customers 97,302-97,302-97,302 Finance income 1,552-1,552-1,552 Other income 5,196-5, ,531 Total segment revenue 104, , ,385 Segment result 22,563-22, ,898 Income tax expense (6,792) - (6,792) - (6,792) Net Profit / (Loss) after tax 15,771-15, ,106 Minority interests - Net Profit after tax attributable to members of Prime Media Group Limited 16,106 12

26 Notes to the Condensed Financial Statements FOR THE HALF-YEAR ENDED 31 DECEMBER ASSETS HELD FOR SALE WITH ASSOCIATED LIABILITIES (a) Details of assets held for sale Becker Group Limited film and cinema businesses The 2007 Annual Report advised shareholders that Becker Group Limited was in the process of preparing documentation relating to the sale of the Group s Film and Cinema Assets with the expectation that the sale of assets would be finalised prior to 30 th June The 2007 Annual Report stated that the proposed sale of Film and Cinema Assets included the following: All the Company s shares and other equity interests in the subsidiaries and other entities that conduct the businesses of Becker Group Limited and its subsidiaries, excluding the Outside Broadcasting and TV Production Businesses, but including the businesses of: o Cinema exhibition in Australia and New Zealand ( Dendy Cinemas ); o Film distribution in Australia and New Zealand ( Dendy Films and Becker Entertainment ); o International film sales agency ( Becker International ); o International and domestic television sales and distribution for television production; o DVD and video distribution; o Film marketing and research services ( Globe Group and Movie Measure ); o Moonlight Cinema outdoor cinema; o Moonlight premium cinema advertising; o o Personnel management ( On Corporation ); and All the other assets of the Company and its subsidiaries that are not exclusively used in the Outside Broadcasting and TV Production Businesses (other than cash, security deposits and certain corporate records and insurance policies). On 22 nd February 2008, the Becker Group Limited announced that it had entered into a contract to sell the Dendy Cinema and Film Distribution businesses to Icon Film Distribution Pty Limited for a cash consideration of AUD$21,005,000. The sale is a conclusion to the competitive bid process commissioned by the Becker Group Limited board which evaluated interests from various trade and financial parties. Icon Film Distribution Pty Limited was selected based on various parameters, including value, timing and transaction certainty. The sale is subject to certain counterparty consents and is expected to be completed by 31 st March The sale contract to Icon Film Distribution Pty Limited includes all of the proposed sale businesses as outlined in the 2007 Annual Report other than the Moonlight and Personnel management businesses. During the sale process, negative feedback from prospective purchasers of the film and cinema businesses concerning the inclusion of the Moonlight group of businesses as part of the sale (and a consequent under valuing of those assets by the prospective purchasers) led to the decision to withdraw the Moonlight assets from the sale to facilitate the negotiation process, with a view to disposing of the Moonlight business as a going concern at a later date. The Moonlight businesses were classified as Held for Sale at 30 th June 2007 and have now been re-classified to Continuing Operations at 31 st December The Moonlight businesses contributed a net loss before tax of $42,632 to the Group during the December 2007 half year. (b) Financial Performance of operations held for sale The financial performance of the discontinuing operations which is included in the income statement is as follows: BECKER GROUP LTD Film and Cinema Incomes 13,149 Expenses (14,687) Loss before income tax from discontinuing operations (1,538) Income tax (expense) (114) Loss after income tax from discontinuing operations (1,652) Minority Interests 346 Loss after income tax from discounting operations attributable to the members of Prime Media Group Limited (1,306) 2007 $

27 Notes to the Condensed Financial Statements FOR THE HALF-YEAR ENDED 31 DECEMBER ASSETS HELD FOR SALE WITH ASSOCIATED LIABILITIES (continued) (c) Cash flow information held for sale operations The net cash flows of the film and cinema divisions during the half year ended 31 December 2007: 2007 $ 000 Net cash inflow / (outflow) from operating activities (1,305) Net cash inflow / (outflow) from investing activities (40) Net cash inflow / (outflow) from financing activities (507) Net cash outflow (1,852) 14

28 Notes to the Condensed Financial Statements FOR THE HALF-YEAR ENDED 31 DECEMBER ASSETS HELD FOR SALE WITH ASSOCIATED LIABILITIES (continued) (d) Summary of assets held for sale with associated liabilities as at 31 December AS AT AS AT 31 DECEMBER 30 JUNE $ 000 $ 000 Current assets Cash Receivables 3,861 9,347 Inventories 3,450 4,336 Other 1,791 1,878 Total Current Assets 9,228 16,116 Non-current assets Receivables 672 1,226 Investments (equity accounted) Inventories 2,752 3,284 Property, plant & equipment 11,006 11,347 Intangibles - 3,588 Deferred tax assets - 1,574 Other Total non-current assets 15,252 21,269 Total assets 24,480 37,385 Current liabilities Payables 8,568 14,180 Interest bearing liabilities 25 - Provisions Total Current liabilities 8,766 14,502 Non-current liabilities Payables 1,663 3,610 Deferred tax liabilities - 2,137 Provisions Other Total non-current liabilities 1,754 6,200 Total liabilities 10,520 20,702 Net assets 13,961 16,683 15

29 Notes to the Condensed Financial Statements FOR THE HALF-YEAR ENDED 31 DECEMBER BUSINESS COMBINATION Summary of Acquisitions Acquisition of AMI Radio Pty Limited and controlled entity On 20 August 2007, the Group completed the acquisition of all the issued shares in AMI Radio Pty Limited and its controlled entity Hot 91 Pty Limited. These companies own two (2) FM Radio Broadcast licences in the Sunshine Coast region of Queensland. The consideration paid for the acquisition of these companies, including acquisition costs, was $32,100,000. The Group established management control of the two companies from 1 July 2007 and the businesses contributed revenues of $3,784,000 and profits of $145,000 to the Group for the period from 01 July 2007 to 31 December The purchase consideration for this transaction consisted of cash and the issue of Prime Media Group Limited shares to the value of $10,036,000 (refer note 5). As at the date of this report the acquisition accounting for acquisition remains provisional and no purchase price allocation has been done. The provisional fair value and book value of the identifiable assets purchased are: CONSOLIDATED Recognised fair value on Carrying Amount acquisition $A'000 $A'000 Cash Receivables Inventories Investments Intangible assets radio broadcast licences 8,953 32,982 Prepayments Property, plant & equipment 3,183 3,183 Deferred tax assets Trade payables (888) (888) Current tax liabilities (251) (251) Interest bearing liabilities (4,934) (4,934) Provision for employee benefits (247) (247) Deferred tax liability (4) (4) Total Purchase Consideration 8,071 32,100 The consideration for the acquisition is as follows: Note: 2007 $ 000 Cash paid and direct costs relating to the acquisition 22,064 Shares issued as consideration 5 10,036 Consideration 32,100 The split of the consideration between cash and shares was determined in accordance with the Sale & Purchase Agreement which allowed the buyer to settle a set portion of the purchase consideration in Prime Media Group Limited shares. The number of shares issued to the vendor under this clause was determined based on the volume weighted average trading price of Prime Media Group shares at the completion date of the transaction which gave rise to the issue of 2,908,671 shares. 16

30 Notes to the Condensed Financial Statements FOR THE HALF-YEAR ENDED 31 DECEMBER BUSINESS COMBINATION (continued) The cash outflow on acquisition is as follows: 2007 $ 000 Cash paid and direct costs relating to the acquisition (22,064) Balances acquired Cash at bank and on hand 823 Net consolidated cash outflow (21,241) Acquisition of additional shares In Becker Group Limited During July 2007, pursuant to its takeover bid dated 18 May 2007, Prime Media Broadcasting Services Pty Limited (subsidiary) acquired additional issued shares of Becker Group Limited. As at the date of this report the acquisition accounting for the Becker Group Limited remains provisional and no purchase price allocation has been done. This allocation will be finalised following the completion of the disposal of the Dendy Cinema and Film Distribution businesses as outlined in Note 7 above. 9. CASH AND CASH EQUIVALENTS For the purpose of the half-year condensed cash flow statement, cash and cash equivalents comprise the following at 31 December 2007: CONSOLIDATED AS AT AS AT 31 DECEMBER 30 JUNE $ 000 $ 000 Cash at bank and in hand 9,350 31,342 Cash balances held in Assets held for resale Cash at bank and in hand 9,476 31,897 Cash at bank earns interest at floating rates based on daily bank deposit rates. 10. EVENTS SUBSEQUENT TO BALANCE SHEET DATE On 21 February 2008, the directors of Prime Media Group Limited declared an interim dividend in respect of the December 2007 half-year. The total amount of the dividend is $10,872,001 which represents a fully franked dividend of 8.5 cents per share. The dividend has not been provided for in the 31 December 2007 half-year financial statements. On 22 February 2008, The Becker Group Limited announced that it had entered into a contract to sell the Dendy Cinema and Film Distribution businesses (Refer Note 7). These financial statements do not reflect the results of this transaction. 11. COMMITMENTS AND CONTINGENCIES The only changes to the commitments and contingencies disclosed in the most recent annual financial report are specified below. Capital Commitments At 31 December 2007 the Group has capital commitments of $90,077 (June 2007: $1,606,000) primarily for the purchase of operational equipment as per normal requirements. 17

31 Notes to the Condensed Financial Statements FOR THE HALF-YEAR ENDED 31 DECEMBER RELATED PARTY DISCLOSURES Terms and conditions of transactions with related parties Seven Affiliate Sales sells national airtime on behalf of Prime Media Group and Seven Queensland. Costs are re-imbursed on the basis of percentage share of revenue. During the half year Prime Media Group paid approximately 73.41% of the expenses of Seven Affiliate Sales amounting to $2,364,000 (2006: $1,972,000). As Seven Affiliate Sales is a controlled entity all of the results of its operations have been consolidated into the Prime Media Group Limited financial report. 13. FINANCIAL INSTRUMENTS Interest Rate Swaps At 31 December 2007, the Group has interest rate swap agreements in place with notional values of $215,000,000 (June 2007 $150,000,000), whereby it pays an average fixed rate of interest of 7.127% and receives a variable rate equal to the BBSW on the notional amount. The swaps are being used to hedge the exposure to changes in the interest rates on the Group s bank loan facility. 18

32 Directors Declaration FOR THE HALF-YEAR ENDED 31 DECEMBER 2007 PRIME MEDIA GROUP LIMITED HALF YEAR REPORT In accordance with a resolution of the directors of Prime Media Group Limited, I state that: In the opinion of the directors: (a) the condensed financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including: (i) (ii) giving a true and fair view of the financial position as at 31 December 2007 and the performance for the half-year ended on that date of the consolidated entity; and comply with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. On behalf of the Board Peter J. Evans Director Sydney, 25 February

33 Independent Review Report FOR THE HALF-YEAR ENDED 31 DECEMBER

34 Independent Review Report FOR THE HALF-YEAR ENDED 31 DECEMBER