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									          04
LIMITED




          ANNUAL REPORT
VISION and MISSION
  Primedia’s vision is to develop as a WORLD-CLASS
  media group. This vision requires the achievement
  of a number of imperatives:

  • The ownership of leading media types that are responsive and accountable
    to advertisers

  • The ownership, development or licensing of content that will appeal to
    South African and African consumers

  • The effective leverage of this content over as many media platforms as
    possible, whether owned or third party

  • Adapting traditional media businesses to the new electronic economy

  • Leading the media sector in black economic empowerment and
    employment equity

  • Creating strategic insight into our customers to develop loyal relationships
    through the use of knowledge and information

  • Understanding and exploiting the trends impacting on emerging consumers

  • Capturing synergies between the group’s media businesses to grow our
    customer base

  • Ensuring that the group’s capital is allocated in a balanced and growth-
    orientated portfolio of media businesses
PBIT (South African operations) (Rm)


  259,3
            214,9
                       165,0                 156,3
                                  130,8


     2004    2003         2002       2001      2000




Headline earnings (Rm)                                CONTENTS
   146,5
                                                      02      C o r p o ra t e S tr ucture
            50,1
     2004     2003                            1,4     04      P ro f i l e o f D i re c t o rs

                           2002       2001     2000
                                                      06      C h a ir ma n ' s S ta teme nt
                       (103,1)
                                  (106,0)

                                                      08      M a n a g e me nt t ea m


                                                      09      G ro u p C E O ’s R ep or t

Cash generated from operations (Rm)
                                                      15      Divisional Review – Advertising

   353,6
                                                      24      Divisional Review – Filmed
                       226,5
                                             247,6            E n t e r t a in me nt
            195,4
                                  149,8
                                                      30      Financial Review
     2004     2003         2002       2001     2000


                                                      33      Tra n s f o r m a t ion


                                                      36      C o r p o ra t e S o c ia l I nv es tment


                                                      40      C o r p o ra t e G o v e r n a n c e

Return on assets (%)
                                                      46      D e f in it io n s
   35,3
            30,8

                                                      47      A n n u a l F in anc ia l S tate ments
                        18,4       18,2      18,8

                                                      1 0 1 A d m i n i s t ra t i o n
     2004     2003         2002       2001     2000

                                                      1 0 1 S h a re h o l d e rs ’ D i a r y
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PRIMEDIA   REPORT




                    BROADCASTING AND INTERNET
                             94.7 Highveld Stereo
                                              Kfm
                                   702 Talk Radio
                                    567 Cape Talk
                                      iafrica.com

                                  OUT OF HOME




                                                    ADVERTISING
                                Primedia Outdoor
                                 Primedia Instore
                              Primedia Face2Face


                             COMMUTER MEDIA
                                     ComutaNet
                                       Rank TV
                                  Rank Branding


                             CINEMA AND PRINT
                                      CineMARK
                                                                            C O R P O R AT E S T R U C T U R E




                               Primedia @ Home
                             Primedia Publishing
                                                                  LIMITED




                                          SPORT
                              Megapro Marketing
                                    Kaizer Chiefs
                               CINEMA EXHIBITION
                               Ster-Kinekor Theatres




                                FILM DISTRIBUTION
                               Ster-Kinekor Pictures




                            HOME ENTERTAINMENT
                    Ster-Kinekor Home Entertainment                  F I L M E D E N T E R TA I N M E N T



                            DATABASE MARKETING
                                 Knowledge Factory
                                The Database Group
                                          (International)
                                                            MARKETING
                                                            O N E - TO - O N E




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PRIMEDIA   REPORT
4
                  PROFILE OF
                  D I R E C TO R S

                                                                                     PAUL NKUNA 52                    WILLIAM KIRSH 44
                                                                                     Non-Executive Chairman           Chief Executive Officer
                                                                                     [ South African ]                [ South African ]
                                                                                     Appointed 2000                   Appointed 1993
                                                                                                                      BCom, BAcc, CA(SA),
                                                                                                                      HDip Tax Law


                                                                                     Paul is the Chief Executive      From 1988 to 1991, William
                                                                                     Officer of Mineworkers           worked in the United States
                                                                                     Investment Company. He           for investment bankers,
                                                                                     began his career as a teacher    Lehman Brothers, in the
                                                                                     before joining the mining        mergers and acquisitions
                                                                                     industry in 1977. He served as   division and subsequent to
                                                                                     the Treasurer General of the     that founded Primequity in
                                                                                     National Union of                1993, which became Primedia.
                                                                                     Mineworkers for 10 years and     He is the principal founder of
                                                                                     as the Chairman of the           Primedia and has been Chief
                                                                                     Executive Committee of the       Executive Officer since the
                                                                                     Brakpan Transitional Local       group listed on the JSE in
                                                                                     Council. Paul serves as the      April 1995.
                                                                                     Non-Executive Chairman of
                                                                                     Mathomo and is a director of
                                                                                     Decillion, Tracker, The
                                                                                     Councillor Geological Science
                                                                                     and South African Airways.




                    FUNKE IGHODARO 41               FERDI GAZENDAM 46                KUBEN PILLAY 44                  ISSIE KIRSH 70
                    Chief Finance Officer           Executive Director               Executive Director               Non-Executive Director
                    [ Nigerian ]                    [ South African ]                [ South African ]                [ South African ]
                    Appointed 2001                  Appointed 2000                   Appointed 1998                   Appointed 1993
                    BSc(Hons), FCA (England         BCom, BCom(Hons), CA(SA)         BA LLB, MCJ
                    and Wales)
                    Funke joined Primedia in        Previously Chief Operating       Kuben joined Primedia as an      Issie is the founder of
                    September 2001 as Chief         Officer of Primedia, Ferdi was   Executive Director in May        Radio 702, which he
                    Finance Officer. She was        appointed Chief Executive        2000 and was appointed as        established in 1980. Radio 702
                    previously Managing Director    Officer of the filmed            Chief Executive Officer of the   was one of Primedia’s first
                    of Kagiso Ventures Limited,     entertainment division of        advertising division of          acquisitions and the catalyst
                    the private equity fund         Primedia in August 2001. He      Primedia in September 2002.      that spearheaded the group’s
                    management arm of Kagiso        was a director of Deloitte &     He was a managing financial      rapid growth as a media
                    Trust Investment Company of     Touche Consulting in South       partner at attorneys Cheadle     company. He was also the
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                    which she was also Executive    Africa for eight years. Before   Thompson and Haysom before       group’s first Chairman and
                    Director. Prior to this, she    joining Primedia, he spent       joining Mineworkers              held the position until Paul
                    spent two years in the          seven years at Teljoy Limited,   Investment Company in 1996       Nkuna’s appointment as
                    corporate finance division of   the last few years of which he   as a founding Executive          Chairman in June 2001.
                    Standard Corporate and          served as Managing Director      Director. Kuben has previously
PRIMEDIA




                    Merchant Bank and a total       of Teljoy Cellular Services:     served on the board of public
                    of ten years with               Prepaid & Subscriber Services.   companies in which
                    PriceWaterhouse London.                                          Mineworkers Investment
                                                                                     Company had an interest.
                                                                                     Kuben was also a member of
                                                                                     the Financial Services Board’s
                                                                                     Consumer Advisory Panel.
                                                                                                                                         5


TSHIDI MADIMA 41                PETER MAW 43                       MIKE BOSMAN 44                    NOMHLE CANCA 39
Non-Executive Director          Non-Executive Director             Independent Non-Executive         Independent Non-Executive
[ South African ]               [ South African ]                  Director                          Director
Appointed 2002                  Appointed 1993                     [ South African ]                 [ South African ]
BA(Hons), MA (Accounting        BCom, BCom(Hons),                  Appointed 2002                    Appointed 2003
and Financial Economics)        CA(SA), HDip Tax Law               BCom(Hons), LLM, CA(SA), AMP      BA (Political Science
                                                                                                     and Economics)

Prior to joining Mineworkers    Peter was one of the founders      Mike is Group CEO of the          Nomhle was a registered
Investment Company in           of Primedia and has been with      advertising agency group          investment advisor in the USA.
September 2000, Tshidi was      the group from inception.          TBWA/South Africa. He was         Her work experience has been
General Manager of Equal        Prior thereto, Peter was with      previously a strategic            with the US Government;
Access Consulting and held      Standard Merchant Bank in          consultant and worked on a        Merrill Lynch, Atlanta; Smith
various financial positions     Corporate Finance. He was          wide range of business issues.    Barney Harris Upham
with ABSA Asset Management,     responsible for the Primedia       Between 2000 and 2002 Mike        Brokerage House and
RMB Asset Management and        group’s corporate finance          was President and Chief           Oppenheimer & Co, New York
Momentum Life. Tshidi is also   activities from 1992 to 2004.      Operating Officer of FCB          and Atlanta. On her return to
a Non-Executive Director of     Peter is also a Non-Executive      North America, prior to which     South Africa in 1991, she
Primedia Broadcasting, Africa   Director of Massmart and now       he was the Chairman and           worked for Anglo American.
on Air and alternate director   heads the private equity           Chief Executive Officer of        Her entrepreneurial career
of BP Southern Africa.          interests of the Oppenheimer       Lindsay Smithers FCB (now         began in 1994 as a Founder of
                                family in South Africa.            FCB South Africa). Mike is also   Women Investment Portfolio
                                                                   a director of Venfin Limited.     (WPHOLD), which she left after
                                                                                                     ten years to start a private
                                                                                                     equity company, Canca
                                                                                                     Financial Services (Pty) Limited,
                                                                                                     in 2002.




HUMPHREY KHOZA 57               CHRIS SEABROOKE 51                 BHEKI SHONGWE 49                  SINDI ZILWA 37
Independent Non-Executive       Independent Non-Executive          Independent Non-Executive         Independent Non-Executive
Director                        Director                           Director                          Director
[ South African ]               [ South African ]                  [ South African ]                 [ South African ]
Appointed 2002                  Appointed 1993                     Appointed 1999                    Appointed 2002
BSc                             BCom, BAcc, MBA, FCMA              BA (Econ), MBA, ACIS, FCIBM       BCompt(Hons), CA(SA)
Humphrey was previously the     Chris is Chief Executive of        Bheki is currently Deputy         Sindi is the Executive
Chief Executive Officer of      Sabvest Limited – a JSE listed     Managing Director of Fleet        Chairman of Nkonki, one
Uthingo – the licensed          investment group. He is Non-       Africa. He has extensive          of South Africa’s leading
operator of the South African   Executive Chairman of              operational experience at         black accounting firms, which
National Lottery. Prior to      Massmart and MGX, and a            senior management level in a      she co-founded in 1993.
joining Uthingo, Humphrey       director of JSE listed             variety of sectors and was        Sindi is also a director of
worked for Shell Oil            companies Datatec,                 previously an Executive           Woolworths, Discovery Health
International for fourteen      Primeserve and Set Point. He       Director of Primedia. He holds    and Eskom. She is also a
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                                                                                                                                                  REPORT



years and Nestlé South Africa   is also Chairman of the South      Non-Executive Directorships in    member of the SAICA
for eleven years as Director    African State Theatre and          Highveld Steel and Vanadium       Education Committee, a
Corporate Services and          Deputy Chairman of BASA.           Corporation, African Bank,        member of SAICA Banking
Director Human Resources        Internationally he is a director   African Bank Investments          Project Group, PAAB and the
respectively. In 1994           of a number of companies and       Limited and Super Group           GAAP Monitoring Panel. In
                                                                                                                                         PRIMEDIA



Humphrey was seconded to        chairs a financial services        Limited.                          1998, she won the business
the Independent Electoral       group in the UK and Europe.                                          woman of the year award
Commission as Chief Director                                                                         presented by The Executive
of Communication. Humphrey                                                                           Women’s Club.
has also previously served as
the President of the South
African Chamber of Business
for two years as well as
Deputy President of the Black
Management Forum.
6
                  CHAIRMAN’S
                  S TAT E M E N T



                                           On reaching the end     As we celebrate the 10th anniversary of a stable, democratic South
                                                                   Africa, so has the vibrancy and stability of our economy become
                                           of my third year as
                                                                   increasingly evident across the economic landscape. From a sector
                                           Chairman, I am          perspective, the marginal improvement in market conditions
                                           pleased to be able to   experienced in the 2003 fiscal was sustained and strengthened during
                                           report on a very        2004. In parallel with this, very good strategic and operational
                                                                   progress was made across the group and this was reflected in a record
                                           rewarding twelve
                                                                   financial performance. The cash generating capabilities of all our
                                           months for Primedia.    businesses shone through, group debt was significantly reduced and
                                                                   record operating profits were achieved. Through the leadership of the
                                                                   executive   team,    the   strong    culture   of   innovation    and
                                                                   entrepreneurship within Primedia became further entrenched and
                                                                   helped ensure that market share was retained or increased in all
                                                                   the major businesses.


                                                                   Enhancing the breadth of the group’s South African media portfolio,
                                                                   driving synergies across the different businesses and increasing black
                                                                   consumer patronage of the group’s filmed entertainment products lay
                                                                   at the heart of the group’s strategy for the year. Good progress was
                                                                   made on all fronts, although the latter has yet to deliver material
                                                                   results and remains an ongoing strategic priority. Other milestones
                                                                   included the purchase of a 30,5% economic interest in Africa on Air
                                                                   (which holds the 94.7 Highveld Stereo licence), taking the group’s
                  Paul Nkuna
                                                                   stake to 85,8%, and the renewal of the 94.7 Highveld Stereo licence
                  Non-Executive Chairman
                                                                   for a further 6 years. In addition, Mineworkers Investment Company
                                                                   (MIC) successfully increased its stake in Africa on Air from 2,2%
                                                                   to 14,2%.


                                                                   Further to the group’s strategic priority of enhancing the breadth of
                                                                   the group’s South African media portfolio, agreement was reached on
                                                                   the acquisition of Kfm, Cape Town’s leading music radio station,
                                                                   following the change in control of New Africa Investments Limited
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                                                                   (NAIL) to the MIC/Tiso Consortium. This acquisition was successfully
                                                                   concluded in October 2004.
PRIMEDIA




                                                                   Broad-based transformation has continued to be at the centre of
                                                                   the group’s strategic development, enshrined in the successful
                                                                                                                                                  7




partnership that has been in place with MIC for the past eight years.     LOOKING AHEAD
Focused on employment equity, black economic empowerment and              The challenge for the group is to build on its recent successes. I am
skills transfer, the group has successfully continued to improve          confident that we have the right strategies in place, with an
transformation at the operating level within individual businesses, as    experienced and grounded executive management team to deliver on
well as at board level. As a result, 60% of Primedia’s senior executive   the strategies. We will look at entering new media sectors where it
management team are black, with 40% being black female, whilst            makes good strategic sense to do so, as well as examining the
60% of the group’s board of Directors are black, with 30% being           potential for expansion into other African territories – but only in
black female.                                                             areas where the management team are confident of being able to
                                                                          secure growth.
In essence, transformation at Primedia is a model of empowerment
through growth, not substitution. It is based not on the redistribution   In parallel, the group’s improved people management, information
of assets and economic means, but on creating and sustaining a            reporting and sales enhancement systems have set the tone
culture of entrepreneurship and innovative thinking, which creates        for continued operational excellence and delivery, all of which
opportunities and secures growth for the whole group. During the          puts Primedia on a strong footing to create additional value for
year, the group has continued to attract and retain some                  our shareholders.
extraordinary talent, and I am confident that we are well-placed to
meet the requirements of the ICT sector charter when it is published.


TEAM EFFORT
The board is now well-balanced in terms of race, gender and the ratio
of non-executive to executive directors. It has worked efficiently and
effectively throughout the year and I would like to extend my             Paul Nkuna
sincerest thanks to all directors for their wise counsel and thorough     Chairman
scrutiny. In my report last year, I noted that the group is now
substantially compliant with the detailed provisions of the King II       26 November 2004
report on Corporate Governance. I am satisfied that the extended
structure of board sub-committees has ensured that our corporate
governance structures are tight, relevant and effective.


I take my hat off to every employee in the group and thank them for
their staunch efforts in 2004. Each one has played their part in
contributing to the improved financial performance and in enriching
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the progressive spirit and renewed sense of pride which permeates
throughout Primedia today.
                                                                                                                                                  PRIMEDIA
8
ANNUAL
PRIMEDIA REPORT




                  Primedia Executive Committee.
                  From left to right: William Kirsh, Kuben Pillay, Melody Lekota (group human resources executive), Funke Ighodaro and Ferdi Gazendam
GROUP CEO’S                                                                                                                        9
REPORT



  INTRODUCTION                                                                   We can satisfactorily
  The past twelve months have been most gratifying for the Primedia
                                                                                 report on excellent
  group. We can satisfactorily report on excellent strategic progress,
  good implementation on the operational front, as well as positive
                                                                                 strategic progress,
  industry conditions. All of this has culminated in the group producing         good implementation
  record results: headline earnings per share increased by 195,7% to             on the operational
  68 cents, operating income before amortisation, foreign exchange
                                                                                 front as well as
  and exceptional items (PBIT) increased by 30,5% to R259,1 million,
  with operating margins at 14,8% just short of our minimum 15%
                                                                                 positive industry
  target. Significantly, free cash flow (FCF) was up 65,5%                       conditions.
  to R259,1 million (120 cents per share) and translates into a 100%
  free cash flow conversion ratio (FCF/PBIT), the highest in the
  group’s history.


  The group delivered these significantly improved results after a period
  of being negatively impacted by our international businesses. We
  have managed to recover well from this era mainly because of two
  critical factors. Firstly, clearly understanding where our strengths lie
  and formulating a strategy to harness these strengths. Secondly, a
  courageous and committed effort by the group’s employees to deliver
  against this strategy. In respect of the latter, I feel extremely privileged
  to be leading this group and I can say without hesitation that we have
  some of the best operators, sales executives, creative talent,
                                                                                                         William Kirsh
  innovators and entrepreneurs in the industry, all of whom made our
                                                                                                         Chief Executive Officer
  turnaround happen.


  2004 STRATEGY
  At the commencement of the 2004 fiscal, the group codified three
  strategic priorities for the short- to medium-term, namely:


  • Enhancing the breadth of its South African media portfolio;
  • Deriving benefits from group synergy; and
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  • Increasing black consumer patronage of the group’s filmed
    entertainment products.
                                                                                                                                   PRIMEDIA



  The group has made good progress in delivering on this strategy, the
  detail of which is outlined below.
10
                  GROUP CEO’S
                  REPORT



                  Enhancing our media portfolio                                             operations for US$4,5 million, subject to certain conditions. Primedia
                  On 23 April 2004, Primedia announced that it had entered into an          expects to receive 50% of the net proceeds after costs.
                  agreement to acquire the shares in, and claims against New Africa
                  Holdings (Pty) Limited (NAMH), whose sole asset after restructuring is    Synergy
                  an effective 92,2% economic interest in Kfm (Pty) Limited, the licence    Extracting synergies between the group’s businesses is now well
                  holder of Kfm, Cape Town’s leading music radio station. After             engrained in Primedia’s culture. During the year, synergies between the
                  receiving clearance from all relevant regulators, this acquisition was    advertising businesses have yielded very positive early results, with
                  concluded in October 2004 and will significantly reduce the group’s       approximately R25 million of incremental advertising spend being
                  reliance on 94.7 Highveld Stereo’s profit contribution, which in the      generated from the group’s Strategic Advertising Unit. These synergies
                  2004 fiscal year amounted to 47% of total group’s PBIT. Based on          have boosted operating margins in the advertising businesses due to
                  Kfm’s results for the year to 30 June 2004 and assuming the               the high gross margins achieved on incremental turnover.
                  acquisition had been in effect from 1 July 2003, the profit
                  contribution from 94.7 Highveld Stereo would have amounted to 39%         Going forward, the group will also be more focused on exploiting the
                  on a pro forma basis. Notwithstanding Kfm’s outstanding                   opportunities from cross promotion, which to date have been exploited
                  performance to date, we are confident of Primedia’s ability to add        on an ad hoc basis. As far as content leveraging is concerned, the third
                  value to Kfm going forward, both in terms of programming and sales.       form of media synergy, until the group becomes a more pervasive
                                                                                            owner and/or creator of content, no real opportunity exists. A recent
                  The recent purchase of the additional 30,5% economic interest in          initiative, New Frontiers now renamed Primedia Unlimited, referred to
                  Africa on Air (which holds the 94.7 Highveld Stereo licence) was          later in this report, will ensure better exposure to the content world.
                  another strategic milestone. This also resulted in significant wealth
                  creation for our founding empowerment partners whose shareholding         Black consumer market filmed entertainment
                  in the business was financed by Primedia. We acquired the additional      Ster-Kinekor Theatres, South Africa’s leading cinema exhibitor,
                  interest in Africa on Air at an earnings-enhancing price for              currently garners 16% of the patronage at its cinemas from black
                  shareholders. 94.7 Highveld Stereo is a premium radio brand that is       consumers. Furthermore, Ster-Kinekor Home Entertainment, a major
                  much sought by advertisers and one that has a growing share in its        player in the distribution of DVD’s, videos and Sony Playstation, has
                  target market. Going forward, this acquisition will give Primedia         limited black consumer market penetration given traditional video
                  greater access to the significant cashflows generated by the business.    store locations. In 2004, we made it a major focal point to start
                  Primedia has also facilitated MIC’s increased interest in Africa on Air   improving these historical cinema and home entertainment patterns
                  from 2,2% to 14,2% with effect from 1 July 2004, in accordance with       through targeted marketing and competitive pricing strategies for
                  the group’s transformation objectives.                                    Ster-Kinekor Theatres, as well as the commencement of the roll-out of
                                                                                            home entertainment stores in townships. These strategies have not
                  In line with the group’s strategy of disposing of its international       yet delivered material results, although we now have useful
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                  interests, loss-making Wheel Group was disposed of during the year,       intelligence regarding cinema and home entertainment in this market,
                  realising a R12,8 million exceptional profit. Subsequent to the year-     which should position us well going forward.
                  end, Ster Century Middle East has agreed to sell its underlying
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                                                                                                                                                              11




    2005 STRATEGY                                                               Further expansion of our filmed entertainment businesses is also
    Our strategy for 2005 is to focus on growing shareholder value,             anticipated on a similar basis, in addition to Ster-Kinekor Theatres’
    through the group’s five identified growth pillars namely:                  existing operations in Zimbabwe, Namibia and Zambia.


    • Organic growth;                                                           Acquisitions
    • Innovation;                                                               As far as acquisitions are concerned, we are constantly on the look out
    • Geographic expansion into Africa;                                         for bolt-on acquisitions to which we can add tangible value. The Kfm
    • Acquisitions; and                                                         and Africa on Air acquisitions are good examples of this approach.
    • Entry into new growth media sectors.
                                                                                Entry into new growth media sectors
                                                                                Primedia has a unique and unmatched breadth of quality media assets
“We recognise that it is through innovation that                                in South Africa. We intend expanding this network by investing in new
we can truly aspire to being world-class.”                                      and growing sectors of the media through our Primedia Unlimited
                                                                                division. Primedia Unlimited will have two arms, one for advertising and
                                                                                one for entertainment. Through Primedia Unlimited, we intend to
    Organic growth and innovation                                               partner with innovative entrepreneurs and provide our strategic and
    We have a particular focus on organic growth and innovation, as a           financial backing to grow their businesses into major media platforms. As
    means of materially improving operating margins and return on               a general principle, we intend to buy into businesses that are profitable
    capital. Our track record to date in both categories has been good and      and have some track record as opposed to growing businesses from
    we recognise that it is through innovation that we can truly aspire to      grass-roots, which tends to carry a far greater degree of operational and
    being world-class.                                                          financial risk. Currently, we are in the process of acquiring 50% stakes in
                                                                                three advertising businesses, which operate in shopping malls, bank
    Geographic expansion                                                        ATM’s as well as unconventional environments such as the faces of
    In terms of geographic expansion for our advertising businesses, our        construction sites and branding of buildings. Furthermore, whilst
    focus is on Africa for two key reasons. It provides some income             Primedia Unlimited is intended to become a meaningful financial
    diversification away from South Africa, but more importantly many           contributor to Primedia in the medium to long term, we also see this
    South African advertisers are expanding into these regions. Many of         division as being critical to enhancing our human capital and
    these corporates are clients of Primedia and we intend using our            transformation strategy as our staff will have the opportunity to be
    relationships, together with joint venture local partners, to establish a   promoted into these businesses as they grow.
    presence in these markets. We already operate in Namibia, Botswana
    and more recently Mozambique through Primedia Outdoor.                      Following on from the group’s growth and other strategies, the following
                                                                                three areas have been identified as key areas of focus for 2005:
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                                                                                                                                                                       REPORT




    Using these existing operations as a foundation, we intend migrating
    some of our other businesses to these jurisdictions, sharing                • Maximising the group’s free cash flow;
    infrastructure and providing a multi-media approach to clients similar      • Continued enhancements to the group’s media portfolio; and
                                                                                                                                                              PRIMEDIA



    to what we do in South Africa .                                             • Increased penetration into the black consumer market filmed
                                                                                  entertainment.
12
                  GROUP CEO’S
                  REPORT



                  Maximising free cash flow                                                 (currently 39% factoring in the contribution from Kfm). We intend to
                  Following recent strategic acquisitions, the group will now be carrying   achieve this through organic and innovative growth from our non-
                  approximately R300 million of incremental debt. The group is              Highveld media assets. We also anticipate the Primedia Unlimited
                  comfortable with these debt levels given its ability to generate a        division to contribute to this achievement.
                  significant amount of free cash flow, and we are confident that we
                  will expunge this debt within a four year time frame whilst making        Black consumer market filmed entertainment
                  distributions to shareholders, as well as setting aside cash for new      Based on the experience we have gained from 2004, we expect to see
                  investment opportunities. Notwithstanding this healthy position, the      tangible results from our initiatives in this area. In terms of home
                  group is focused on retiring this debt ahead of schedule and              entertainment, we intend having 10 operational home entertainment
                  consequently there is a heightened focus on expense control, working      stores in townships by the end of the 2005 fiscal (currently 5), and 30
                  capital management and capital expenditure as well as unlocking           at the end of 2006. While this is quite an ambitious target, we are
                  capital from any remaining non-core and sterile assets.                   confident that there is sufficient demand for these stores, with the
                                                                                            biggest challenge being the sourcing of appropriate locations.
                  Continued enhancements to the group’s media portfolio
                  In line with the group’s strategy of balancing the earnings from its
                  media assets, it is deemed prudent for 94.7 Highveld Stereo’s
                  proportion of group operating profits to be in the 25% to 30% range


                  Former President Nelson Mandela being interviewed by 94.7 Highveld Stereo
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PRIMEDIA REPORT
                                                                                                                                                      13




TRANSFORMATION                                                             companies complement these activities focusing mainly on the
It was extremely gratifying to be ranked 17th in the recent Financial      communities they serve. Our radio stations, in particular, have become
Mail/Empowerdex Survey, which evaluated listed companies based on          renowned for raising record amounts for worthy causes.
the extent of their transformation. Transformation has been a key
strategy of the group for many years and this recognition has              Primecare’s major areas of focus are the Primedia Skills Development
validated the approach and progress that we have made.                     Centre located in the Motswedi Centre in Alexandra Township, which
                                                                           focuses on vocational training for unskilled previously disadvantaged
Led by the Primedia Transformation Committee, transformation is            youth, a bursary scheme which supports 10 students at Rand
pervasive in all our companies, with a specific focus on employment        Afrikaans University, as well as a range of other charities with a focus
equity, affirmative procurement and black economic ownership. With         on disadvantaged youth.
regards to ownership, our model is centered on entrenching black
ownership and control at the holding company level. It is at this level    The group estimates that it contributed, directly and indirectly,
that the Mineworkers Investment Company (MIC) has joint voting             approximately R15 million to various charities and welfare institutions
control over Primedia (45,8%) while owning a 6,5% economic interest        during the year.
in the company. In order to extend this level of economic ownership,
MIC has increased, and will continue to increase, its interest in the      In line with the group’s improved profitability, the board of Primedia
company, through direct purchases of the company’s shares. However,        has earmarked an unprecedented R7 million to be contributed in cash
given MIC’s resources relative to Primedia’s size, Primedia will           by Primedia for various projects including the building of a high
facilitate. MIC’s increased economic interest in the group. This already   school on behalf of the Nelson Mandela Foundation for over 1 000
has been activated by Primedia through structured deals in Primedia        pupils in the Eastern Cape, the establishment of a drip feeding scheme
Outdoor and more recently in the purchase of the economic interest         which will enable rural communities to become self-sufficient in
in Africa on Air, whereby Primedia gave financial support to MIC to        farming methods, as well as a contribution to The Primedia Cochlea
enable it to acquire significant stakes in these quality companies.        Implant Foundation, whose funds will be used to enable deaf people
These initiatives should result in wealth creation for MIC, which will     from disadvantaged communities to undergo cochlea transplants to
then be converted into Primedia shares at a future point in time.          enable them to hear again.


Over the years, Primedia’s direct financial support to empowerment         Primedia’s welfare heart is immense. We remain humbled by the many
entities has been significant, including over R300 million of Primedia’s   less fortunate people of our country and are extremely conscious of
own capital invested to enable empowerment companies to acquire            making a difference in our society.
stakes in a number of the group’s businesses, including Ster-Kinekor
and Africa on Air. In addition, Primedia has recently delivered            HUMAN CAPITAL
R180 million of value for empowerment shareholders, following the          Primedia was established ten years ago as a small media company run
                                                                                                                                                      ANNUAL
                                                                                                                                                               REPORT




purchase of the additional economic interest in Africa on Air, which       by spirited entrepreneurs. Today we are significantly larger, and
value was created through the financing structure put in place by          notwithstanding our relative size, have managed to nurture and retain
Primedia when the company was acquired in 1996, as                         our entrepreneurial ethos, a key factor determining our success in this
                                                                                                                                                      PRIMEDIA



well as Highveld’s impressive performance since acquisition.               very dynamic and innovative industry. Over the years we have made
                                                                           significant advances relating to our human capital practices,
CORPORATE SOCIAL RESPONSIBILITY                                            engendering best of breed corporate discipline. Staff turnover, in
Primedia’s efforts are driven centrally through Primecare, our             particular at a senior management level, remains very low, to some
dedicated social responsibility arm which mainly provides unsold           extent endorsing our structured, supportive and empowering
inventory for charities and welfare institutions. Individual group         approach to human capital.
14
                  GROUP CEO’S
                  REPORT



                  We strive to ensure a working environment where HIV positive               CONCLUSION
                  employees are protected from unfair discrimination and all employees       We have completed 2004 on a high note and are proud of what we
                  have access to training, information and counselling services relating     have achieved. I must in particular thank my executive management
                  to HIV/AIDS. In this regard, we have introduced volunteer “peer            team for the support they have given me and for ensuring that we
                  educator” to assist in the education of staff on issues relating to the    deliver an ever-increasing track record of success. Whilst celebrating
                  HIV/AIDS pandemic. These volunteers are drawn from all levels,             our successes, we are extremely mindful of the many challenges we
                  locations and functions within the group to ensure maximum                 faced in the recent past. We will use this wisdom to limit risks and
                  coverage and exposure.                                                     maximise our opportunities going forward. To our board, once again
                                                                                             thank you for assisting and enabling the management team to start
                  As stated earlier in my report, the strength of our group is largely due   delivering the results and returns in line with world-class benchmarks.
                  to the quality, depth and breadth of our management and staff. We          We also thank our stakeholders for your support in building strong
                  have some of the best people in the industry and I am confident that       and mutually beneficial relationships with this group.
                  we will continue to retain and attract this high calibre going forward.


                  PROSPECTS
                  Primedia has a strong management team and the appropriate assets
                  to deliver on its growth strategy going forward. The advertising
                  industry should continue to prosper given the current favourable
                  economic conditions influenced by low interest rates. Filmed content,
                  which primarily drives our cinema exhibition and home entertainment        William Kirsh
                  businesses, is considered to be at least of the same quality as this       Chief Executive Officer
                  fiscal. Given the strength of the rand, our Sony Playstation franchise
                  should also continue to prosper particularly as prices for consumer        26 November 2004
                  reach record lows. Given this backdrop, good organic growth is
                  anticipated for the forthcoming fiscal. The strategic acquisitions
                  concluded in the 2004 fiscal, will further contribute to earnings and
                  free cash flow enhancements.
ANNUAL
PRIMEDIA REPORT
DIVISIONAL                                                                                                                                    15
REVIEW                                                                       ADVERTISING




  OVERVIEW                                                                   Primedia’s culture
  Over the past fiscal, Primedia has benefited from good
                                                                             of innovation and
  macroeconomic fundamentals within the South African economy. The
  improved consumer confidence derived from lower inflation and
                                                                             ability to re-invent its
  interest rates has led to increased advertising-spend by our major         offering has been an
  clients and retail-spend by consumers. In this environment, most           important factor in
  of Primedia’s advertising businesses grew their market share relative
                                                                             driving incremental
  to their peers.
                                                                             advertising-spend
  Turnover for the advertising businesses was up 10,7% to                    across our different
  R759,9 million (2003: R686,4 million) and PBIT was up 28,0% to             media types.
  R212,4 million (2003: R165,9 million). PBIT margins also improved
  from 24,2% to 28,0% through good cost containment and
  improvements in operational efficiencies. This strong performance
  was underpinned by the following factors:


  Human capital
  A highlight of the past year has been our people management
  systems, which have focused on harnessing the diversity in the group,
  and our strong HR team and systems which have been instrumental
  in driving transformation across the businesses and enabling a more
  integrated approach to managing our human capital. We now have a
  more integrated business, populated by motivated, well-supported
  teams that readily share ideas.                                                                              Kuben Pillay
                                                                                                               Divisional CEO – Advertising
  Innovation
  Primedia’s culture of innovation and ability to re-invent its offering
  has been an important factor in driving incremental advertising-
  spend across our different media types. Through our Strategic
                                                                                          DIVISIONAL RESULTS
  Advertising Unit, we are able to provide more relevant and creative
                                                                                          R million            2004       2003   % change
  media products and services and differentiate ourselves from our
  competitors by proving a one-stop media solution.                                       Revenue              759,9     686,4      10,7%
                                                                                                                                              ANNUAL
                                                                                                                                                       REPORT



                                                                                          EBITDA               244,9     199,3      22,9%
  Knowledge sharing                                                                       PBIT                 212,4     165,9      28,0%
  The creation of the Adco forum has played a vital role in driving sales
                                                                                                                                              PRIMEDIA



  strategy and knowledge sharing within the division. This has resulted in
  enhanced internal communication and increased effectiveness in the
  key area of sales across the group.
16
                  DIVISIONAL
                  REVIEW                                                                     ADVERTISING




                  DIVISIONAL PERFORMANCE                                                     choice status as a credible source of current affairs and breaking news
                                                                                             in Gauteng. The recent restructuring of the station’s sales teams has
                  BROADCASTING AND INTERNET
                                                                                             seen an improvement in the quality of billings, which has helped to
                                                                     Contribution to total
                                                                     advertising PBIT *
                                                                                             grow gross revenue by 10% year-on-year. While its audience base has
                  Rm                                                                         remained stable, the station’s pulling power has been underscored
                               230,9
                                                           120,3                             by very positive listeners’ response to community events, such as the
                     195,0
                                                                                             annual Walk the Talk event.
                                                 91,2                         2004 | 55%

                                                                                             567 Cape Talk
                                                                                             567 Cape Talk, a station with currently a small audience base, has
                       2003     2004                                                         risen to the challenge of delivering better results under tough
                                                 2003      2004               2003 | 54%
                                                                                             conditions. Equity-accounted 567 Cape Talk saw a 14% gross sales
                       REVENUE                      PBIT                                     growth. The broadcasting regulator, ICASA, has renewed Cape Talk’s
                                                                                             licence until 2010 and has approved a shareholding amendment to
                  * Before central costs                                                     the licence which has resulted in Primedia Broadcasting increasing its
                                                                                             share from 35% to 44% with effect from May 2004.
                  Broadcasting is a business about people – the talent who work in the
                  stations, the listeners who support the stations and the clients who
                                                                                             iafrica.com
                  reach their chosen target markets at our radio stations. Following the
                                                                                             iafrica.com, one of South Africa’s leading Internet portals, generates
                  previous year’s integration process, much focus was given to these
                                                                                             income from advertising, e-commerce, content syndication, hosting
                  issues internally.
                                                                                             and licencing its proprietary content.

                  In this regard, we successfully launched what we call the Broadcasting     Over the past year, iafrica.com has continued to reduce its losses
                  Formula, a dynamic and objective performance management tool, at           through improved efficiencies and better alignment of its
                  all three stations which we believe contributed significantly to the       operational structure.
                  division’s bottom-line performance during the year.


                  94.7 Highveld Stereo
                  94.7 Highveld Stereo proved once again to be a phenomenal star
                  performer, growing its operating income by 30% year-on-year. The
                  station’s audience reached the 1,4 million mark, maintaining its
ANNUAL
         REPORT




                  position as “Joburg’s No. 1 Hit Music Station”. This growth was very
                  strong in the upper income groups (LSM 9-10) in Gauteng, a segment
                  that is very lucrative to advertisers.
PRIMEDIA




                  702 Talk Radio
                  The re-positioning of 702 Talk Radio as “Joburg’s No. 1 News and
                  Information Station” has paid off, with the station regaining its first
                         17




Top presenters on air:
Jeremy Mansfield
John Robbie
Tim Modise
Mike Mills




                         ANNUAL
                         PRIMEDIA REPORT
18
                  DIVISIONAL
                  REVIEW                                                                     ADVERTISING




                  OUT OF HOME                                                               Primedia Instore
                                                                                            Primedia Instore is the leading provider in South Africa of retail instore
                                                                    Contribution to total
                                                                                            media and promotional solutions ranging from trolley advertising to
                                                                    advertising PBIT *
                  Rm                                                                        the latest “state of art” moving point of sale media. Primedia Instore
                                                         37,7
                               223,1                                                        experienced a record year due to continued growth in the FMCG
                     185,6                                                                  industry and a high level of product innovation. The company grew its
                                              24,4                           2004 | 17%     store representation by more than 11% and enjoys a powerful presence
                                                                                            in “top-end” hypermarkets, supermarkets and pharmacy chains. In
                                                                                            excess of 22 million shoppers are exposed to Primedia Instore's media
                                                                                            services at any given month.
                       2003     2004          2003       2004
                                                                             2003 | 14%

                       REVENUE                    PBIT

                  * Before central costs


                  Primedia Outdoor
                  Primedia Outdoor is a leading South African outdoor advertising media
                  specialist, with a significant presence in five primary sectors namely
                  airports, spectacular sites on major freeways and arterials, street
                  furniture and retail directional signage in metropolitan markets, and
                  both free standing and on-store signage in peri-urban and rural areas.
                  In addition, Primedia Outdoor has operations in Namibia, Botswana,
                  Lesotho, Swaziland, and has recently entered the Mozambique market.
                  The company delivered good results for the year, showing meaningful
                  growth over the prior year. The company’s growth was largely organic,
                  resulting from increased occupancy across the business, and the
                  effective management of costs.

                  Primedia Face2Face
                  Primedia Face2Face focuses on consumers within the LSM 3-6 segment
                  in townships and rural areas through its 10 000 store universe base in
                  these areas. The company offers a number of innovative services that
                  enable marketers to communicate interactively and in the appropriate
                  language and manner with their specific target markets.
ANNUAL
         REPORT




                  During the past year, Primedia Face2Face experienced a significantly
                  improved financial performance largely due to innovation and the
                  prudent management of costs.
PRIMEDIA
                                              19




                                              ANNUAL
                                              PRIMEDIA REPORT




An advertising billboard – Primedia Outdoor
20
                  DIVISIONAL
                  REVIEW                                                                    ADVERTISING




                  CINEMA AND PRINT
                                                                                            In spite of operating in a highly competitive market, Primedia @
                                                                    Contribution to total   Home produced a good set of results, showing an improvement
                                                                    advertising PBIT *
                                                                                            in margins. Key to the success of Primedia @ Home has been
                  Rm                                                                        the drive to secure new business at competitive rates and the
                               176,8
                                                         16,6                               completion of the distribution franchising scheme.
                     151,2

                                               11,5                           2004 | 8%
                                                                                            Primedia Publishing
                                                                                            Primedia Publishing is a specialist magazine publishing business that
                                                                                            owns 11 niche and consumer titles.

                       2003      2004          2003      2004                 2003 | 7%     During the year Primedia Publishing underwent a process of
                                                                                            consolidation with all aspects of the business being scrutinised. This
                       REVENUE                    PBIT
                                                                                            resulted in a number of publications being closed down or sold off,
                  * Before central costs                                                    with only profitable titles being kept.


                  CineMARK                                                                  As a result Primedia Publishing completed the fiscal above
                  CineMARK is an advertising sales company representing the Ster-           expectations with the key consumer titles showing better results in
                  Kinekor and Nu–Metro chains of theatres as well as the majority of        terms of circulation and revenue growth and the remaining niche
                  the independent theatre owners.                                           titles proving their place in the market.


                  The division delivered an excellent performance. This was mainly due
                  to the introduction of the innovative “Golden reel” concept (which
                  entails selling cinema advertising packages nationally) good increases
                  in revenue from digital advertising and excellent returns from the
                  foyer business, Inline, which is now a 100% subsidiary of CineMARK.


                  Primedia @ Home
                  Primedia @ Home is a direct marketing company that specialises in
                  targeted leaflet and consumer promotion distribution.


                  This business distributes products such as leaflets and pamphlets to
ANNUAL
         REPORT




                  over 7 million homes in South Africa on a regular basis and represents
                  the majority of the leading retailers in South Africa, Botswana
                  and Namibia.
PRIMEDIA
                                                                  21




                                                                  ANNUAL
                                                                  PRIMEDIA REPORT




Foyer advertising by Inline Advertising, a division of CineMARK
22
                  DIVISIONAL
                  REVIEW                                                                 ADVERTISING




                  COMMUTER MEDIA                                                         Rank TV
                                                                 Contribution to total   This medium has delivered exceptional results over the past year.
                                                                 advertising PBIT *

                  Rm
                               94,8                                                      Rank TV reaches 1,2 million people every day with ten giant screens
                                                         35,4
                     80,9                                                                located strategically at major taxi ranks and train stations. The screens
                                                                           2004 | 16%    are elevated approximately five metres off the ground offering
                                              24,6
                                                                                         commuters a powerful audio-visual experience and good picture quality.


                                                                                         Research has shown that the medium is well established and developing
                     2003       2004          2003       2004              2003 | 15%    a unique niche. This innovation has also enhanced the taxi ranks where
                                                                                         the screens are located and are fast becoming entertainment venues,
                        REVENUE                   PBIT                                   “Commuter Cinema/Sports Cafés" of the townships.

                  * Before central costs                                                 Rank Branding
                                                                                         Rank Branding experienced significant growth both financially and in
                  The division achieved excellent results driven by the consistently     the acquisition of rights and inventory. The highlight of the year was the
                  strong performance of ComutaNet as well as exceptional                 leveraging of both the GSM and LED technology to enhance the sites.
                  performance from both Rank TV (trading as TVX) and Rank Branding.      Rank Branding offers advertisers an exclusive branding opportunity
                  Operating margins were enhanced due to the increased contribution      and total domination of taxi ranks and train stations throughout
                  from the higher margin Rank TV, Rank Branding and a good sales-mix     South Africa. In securing the rights, brand presence is very significant
                  on higher margin products in ComutaNet.                                through destination boards, lane destination signs, perimeter branded
                                                                                         beading and safety signage and naming rights.
                  ComutaNet
                  ComutaNet reaches in excess of 17 million economically active          Through this innovation we have successfully enhanced the ambience
                  commuters and offers advertisers a bouquet of media platforms          of taxi ranks and communication systems in train stations and this
                  ranging from advertising on taxis, trailers, buses, trains, audio      has translated into good profits for the group.
                  advertising, and interactive promotions.
ANNUAL
PRIMEDIA REPORT
                                                                                                                                                               23




SPORT                                                                                PROSPECTS
                                                             Contribution to total   The acquisition of Kfm, Cape Town’s foremost music radio station
                                                             advertising PBIT *
                                                                                     subsequent to year-end is a positive step forward in enhancing our
Rm                                                                                   media portfolio. Kfm is a prized asset, which has consistently grown
                                      17,6
  73,8
                                                                                     its listenership, profits and free cash flow in recent years and we are
                                                                                     confident of our ability to improve on its performance going forward.
                                                                       2004 | 5%
                                                10,3
              34,3                                                                   Looking forward, we aim to continue building on the positive
                                                                                     momentum achieved over the past year by leveraging our solid
                                                                                     foundation and tapping into the excellent people and initiatives
    2003      2004                    2003      2004                  2003 | 10%
                                                                                     we have in place. We will continue to focus on making great

     REVENUE                             PBIT
                                                                                     sales, leveraging our wide media variety and looking for further
                                                                                     strategic acquisitions.
* Before central costs


Megapro Marketing
Megapro Marketing is the leading sports marketing company in South
Africa and holds exclusive commercial rights to many of the major
sports bodies.


Megapro provides unique marketing solutions with emphasis on the                     Kuben Pillay
sponsorships, stadium advertising, corporate hospitality, sponsorship                Divisional CEO – Advertising
management           and     strategic        marketing.   The   licensing     and
merchandising            operations     are     held   through    a    subsidiary    26 November 2004
company, Signet.


In the financial year under review, Megapro recorded an impressive
20% increase in operating profits, excluding the once-off impact of
the Cricket World Cup in the previous year. This was due to the
success of the SA Rugby commercial programme, the sound
performance of Vision Network, which comprises interactive large TV
screens at key stadia, and sponsorships and the securing of naming
rights as well as the aggressive management of costs.
                                                                                                                                                               ANNUAL
                                                                                                                                                                        REPORT




Kaizer Chiefs
Kaizer Chiefs continues to perform well on the football pitch and
                                                                                                                                                               PRIMEDIA



during the year won the PSL Soccr League. Recent research has
underscored the power of the Kaizer Chiefs brand and the group is
now working at ways of significantly unlocking this value.
24
                  DIVISIONAL
                  REVIEW                                                  F I L M E D E N T E R TA I N M E N T




                                                  Filmed entertainment    OVERVIEW
                                                                          Primedia’s local filmed entertainment businesses comprise cinema
                                                  delivered a strong
                                                                          exhibition, film distribution and home entertainment, including the
                                                  result due to           exclusive distribution of Sony PlayStation in South Africa.
                                                  operational
                                                  efficiencies, strong    Ster-Kinekor Theatres has 46 cinema complexes countrywide, five
                                                                          drive-ins, two cinema complexes in Zimbabwe, one in Windhoek,
                                                  marketing initiatives
                                                                          Namibia and recently opened a new cinema complex in Lusaka,
                                                  and growth in           Zambia totalling 348 screens and over 50 000 seats. Its ‘state-of-the-
                                                  customer loyalty        art’ theatres include features such as dolby digital surround sound
                                                  programmes.             and offer exceptional movie variety, exhibiting both international and
                                                                          locally produced films and bringing to its audience a memorable
                                                                          cinema experience. Ster-Kinekor Pictures and Ster-Kinekor Home
                                                                          Entertainment negotiate and secure rights to distribute film,
                                                                          theatrical and video/DVD content through exclusive agreements with
                                                                          international film producers.


                                                                          The filmed entertainment division achieved a 14,0% increase in
                                                                          turnover to R900,0 million (2003: R789,6 million). PBIT was however
                                                                          marginally behind last year’s R72,7 million with margins declining
                                                                          from 9,2% to 7,8%, largely due to the once-off provisioning for film
                                                                          rights at Ster-Kinekor Pictures, as well as lower levels of revenue from
                                                                          pay TV sales which are priced in US dollars.
                  Ferdi Gazendam
                  Divisional CEO –
                                                                          Piracy of DVDs and games, including Sony PlayStation games, has
                  Filmed Entertainment
                                                                          been escalating at alarming rates worldwide. Through the South
                                                                          African Federation Against Corporate Theft (“SAFACT”), we are taking
                  DIVISIONAL RESULTS                                      the fight to the pirates.
                  R million              2004   2003    % change

                  Revenue              900,0    789,6     14,0%)          In line with the group’s strategy of disposing of all its international
                  EBITDA                 96,9    99,8      (2,9%)         assets, subsequent to year-end, agreement was reached to sell Ster
                                                                          Century Middle East’s underlying operations for $4,5 million. Primedia
ANNUAL
         REPORT




                  PBIT                   69,8    72,7      (4,0%)
                                                                          will receive 50% of the net proceeds after costs.
PRIMEDIA
                                                                  25




                                                                  ANNUAL
                                                                  PRIMEDIA REPORT




Foyer area of the popular Ster-Kinekor Theatres at Sandton City
26
                    DIVISIONAL
                    REVIEW                                                                      F I L M E D E N T E R TA I N M E N T




                      STER-KINEKOR THEATRES                                                     attendances from 13% to 16%. Over the year we have gained
                      Ster-Kinekor Theatres had an excellent year, producing an 11,7%           significant knowledge about what drives this market and have made
                      increase in PBIT notwithstanding a 3% decline in attendances to           good strides in entrenching our position in this growth market
                      16,9 million patrons per year. In spite of this marginal decline, Ster-   going forward.
                      Kinekor Theatres’ market share remained at a very commanding 61%.
                      Ster-Kinekor Theatres’ core strategic focus continues to be on            The major studios have increased their overall annual marketing
                      securing growth in customer attendances with particular focus on          spend by 20%, with a shift in spend towards traditional black
                      the black consumer market.                                                consumer media which is currently at 45% of total spend, up
                                                                                                from 30%.

                  “Ster-Kinekor is actively devising pricing
                                                                                                In conjunction with film distributors and studios, we have started
                  strategies aimed at capturing the middle-income                               price testing at four of our complexes that are situated in residential
                  consumer across South Africa.”                                                areas with a high density of middle class black consumers, gathering
                                                                                                invaluable information about the level of pricing that is both
                                                                                                accessible to the consumer and profitable for the studios and Ster-
                      A key area of success has been derived from operational efficiencies      Kinekor. Based on this research, Ster-Kinekor Theatres is actively
                      especially in relation to catering sales and staff costs. By minimising   devising pricing strategies aimed at capturing the middle-income
                      the time patrons wait in the box office queue, we have enabled Ster-      consumer across South Africa.
                      Kinekor Theatres to increase the number of customers being served at
                      our catering outlets, thus successfully growing the overall average       Ster-Kinekor Theatres opened its first cinema complex in Lusaka,
                      catering spend per customer by 20%.                                       Zambia as part of our rollout into Africa. With cinemas in Namibia,
                                                                                                Zimbabwe and now Zambia, we are well on target with our rollout
                                                                                                plans for Africa. We are currently evaluating numerous opportunities
                      This impressive performance was enhanced by excellent cost control
                                                                                                in Southern African territories.
                      in a low inflation environment which enabled us to maintain our
                      margins. We continued with steady growth in the group’s loyalty
                      clubs, which make up 46% of all customer attendances. Our
                      Movie Club and Vitality memberships are currently in excess of
                      1,2 million members.


                      Continued popularity within our niche Bollywood product is expected
                      to develop further, although the size of the potential market
ANNUAL
         REPORT




                      remains limited.


                      After an extensive media campaign, aimed at increasing black
                      consumer awareness of movie going as an entertainment choice, the
PRIMEDIA




                      group experienced a marginal increase in black consumer cinema
                                                        27




                                                        ANNUAL
                                                        PRIMEDIA REPORT




Home entertainment – the popular PlayStation TV games
28
                  DIVISIONAL
                  REVIEW                                                                    F I L M E D E N T E R TA I N M E N T




                  STER-KINEKOR PICTURES                                                     STER-KINEKOR HOME ENTERTAINMENT
                  Ster-Kinekor Pictures distributes films nationally to cinema exhibitors   Ster-Kinekor Home Entertainment is one of the market leaders in
                  on behalf of film studios, including Columbia Tri-Star, Disney and a      video and DVD distribution and represents the major Hollywood
                  number of independent producers.                                          studios of Columbia Tri-Star, Dreamworks and Universal Pictures as
                                                                                            well as a number of independent producers. Ster-Kinekor Home
                  It has been an average year in terms of movie content. The first half     Entertainment also represents Sony PlayStation in South Africa and is
                  experienced poor content from the studios; however, content in the        the exclusive distributor of PlayStation products for the territory.
                  second half was substantially better with movies such as Spiderman 2
                  helping to improve the performance for the year. The results include
                  a R17,6 million impairment of the group’s investment in theatrical
                                                                                            “Ster-Kinekor Home Entertainment delivered an
                  film rights, arising from a more conservative basis of accounting for     outstanding performance, growing PBIT by 25%
                  the film rights coupled with lower projected revenues due to the
                                                                                            with Sony PlayStation a significant contributor.”
                  stronger rand. R10,6 million of the impairment has been reflected as
                  an exceptional item, being the amount that would have been
                  recognised had the same policy been adopted in prior years. The level     Video and DVD
                  of the overall impairment provision in respect of film rights is not      This strong performance is even more impressive taking into account
                  expected to recur going forward.                                          the impact of piracy, in particular with DVD products.


                  The strengthening of the rand has indicated areas where improved          The continuing shift from video to DVD technology has seen a steady
                  management reporting systems are required, leading to an updated          uptake by consumers in DVD retail sales, driven by DVD quality and
                  buying strategy, the establishment of internal hurdle rates and           lifestyle decisions within the South African market.
                  renegotiated contracts with TV operators that we have output
                  deals with.                                                               In an effort to increase the uptake of DVD and video rental amongst
                                                                                            the black consumer base, we have launched an initiative into the
                                                                                            black consumer market by opening our own home entertainment
                                                                                            stores, trading as Video and DVD City, focusing mainly on DVD
                                                                                            rentals. Franchise opportunities for this store type are currently
                                                                                            being investigated.


                                                                                            Sony PlayStation
                                                                                            The PlayStation division of Ster-Kinekor Home Entertainment is the
                                                                                            market leader in the distribution of interactive games, consoles and
ANNUAL
         REPORT




                                                                                            accessories through its exclusive representation in South Africa of
                                                                                            Sony PlayStation. Sony PlayStation has benefited from the strong
                                                                                            rand as the price of gaming consoles have dropped dramatically,
PRIMEDIA




                                                                                            encouraging further uptake and increased console sales volumes. The
                                                                                            increased uptake has fed through to an increase in the number of
                                                                                            games being sold, further entrenching our strong market position.
                                                                                                                                                     29




We are expecting the launch of PlayStation 3 and the handheld              PROSPECTS
PSX within the current fiscal year, which are anticipated to further       Filmed content at Ster-Kinekor Theatres is considered to be at least of
drive demand.                                                              the same quality as the last fiscal, however, reasonable growth in
                                                                           operating profits is anticipated due to continued improvements and
PIRACY                                                                     further penetration into the black consumer market. At Ster-Kinekor
Fighting piracy remains vital to the success of any company that deals     Home Entertainment, given the vastly improved exchange rate, our
in the distribution of intellectual property. The Ster-Kinekor Group, as   Sony PlayStation franchise should continue to prosper particularly as
a member of SAFACT, is attempting to address these issues on three         the prices to consumers reach record lows, due to the currency
key fronts:                                                                windfall. A good slate of video and DVD content should also result in
                                                                           Ster-Kinekor Home Entertainment producing good results.
• Entering into negotiations with the studios about the pricing gap
  between legal and pirated content;
• Assisting government bodies with the redrafting of all relevant
  legislation, including the Copyright Act and ongoing seminars to
  assist and educate the employees of DTI, Customs, Prosecutors and
  local police in their fight against piracy; and
• We are rolling out an anti-piracy media campaign across all              Ferdi Gazendam
  media owners in an effort to educate the public about piracy in          Divisional CEO – Filmed Entertainment
  South Africa.
                                                                           26 November 2004




                                                                                                                                                     ANNUAL
                                                                                                                                                     PRIMEDIA REPORT
30
                  FINANCIAL
                  REVIEW



                                                         This is the third     INCOME STATEMENT
                                                                               Operating results
                                                         consecutive year of
                                                                               Group turnover of R1,75 billion was marginally lower than in the last
                                                         high double digit     year (2003: R1,77 billion) due to the sale of certain loss-making
                                                         growth from           operations as well as once-off revenues of R38,6 million generated
                                                         the South African     last year from the Cricket World Cup. Excluding the impact of these
                                                                               items, group turnover increased by 14,4% relative to the previous
                                                         operations which
                                                                               year. Importantly, the South African operations increased turnover by
                                                         have delivered a      15,3% to R1,68 billion on a comparable basis, excluding the once-off
                                                         25,6% compound        cricket world cup revenue.
                                                         annual growth rate
                                                         in PBIT since 2001.   Group operating profits before amortisation, foreign exchange and
                                                                               exceptional items (PBIT) increased by 30,5% to R259,1 million, due to
                                                                               a 20,7% increase in PBIT from South African operations as well as the
                                                                               significantly reduced losses from the group’s disposed operations.
                                                                               Excluding the “once-off” R9 million profits earned from last year’s
                                                                               Cricket World Cup, PBIT from South African operations grew by 26%.
                                                                               It is worth highlighting that this is the third consecutive year of
                                                                               significant growth from the South African operations which have
                                                                               delivered a 25,6% compound annual growth rate in PBIT since 2001.


                                                                               Group PBIT margins reached 14,8% (2003: 11,2%), with South African
                                                                               operations achieving 15,5% (2003: 14,4%). The advertising businesses
                  Funke Ighodaro                                               had an outstanding year. Turnover increased by 10,7% to R759,9 million
                  Chief Finance Officer                                        which translated into a 28,0% increase in PBIT to R212,4 million.
                                                                               PBIT margins improved from 24,2% to 28,0%. Excluding the once-off
                  SUMMARISED INCOME STATEMENT                                  2003 Cricket World Cup revenues, turnover and PBIT from the
                  R million          2004               2003     % change      advertising businesses increased by 17,3% and 35,4% year on year.
                  Total revenue           1 752,4     1 773,4       (1,2%)
                                                                               The filmed entertainment division achieved a 14,0% increase in
                  PBIT                       259,1     198,5       30,5%
                  Foreign exchange items       1,0      (10,0)                 turnover to R900,0 million (2003: R789,6 million). PBIT was
                  Amortisation of intangibles (3,9)      (4,4)      11,4%      marginally behind last year’s R72,7 million and PBIT margins declined
ANNUAL
         REPORT




                  Exceptional items           23,3     (13,3)                  from 9,2% to 7,8%. This was largely due to the once-off impairment
                  Net finance costs          (16,5)    (14.6)      13,0%       provision against the group’s investment in film rights referred to
                  Associated company losses (0,3)      (46,5)
                                                                               below, as well as lower levels of revenue from sale of pay TV film
PRIMEDIA




                  Profit before tax         262,7      109,7      139,5%       rights, which are priced in US dollars.
                  Taxation                  (63,6)     (63,9)
                  Profit after tax          199,1        45,8     334,7%       Turnover for the one-to-one division declined by 11,0% to
                  Minority interest         (24,4)      (24,6)                 R67,9 million. PBIT, however, increased from R1,5 million to R4,0
                  Retained earnings         174,7        21,2     724,1%       million, with PBIT margins increasing from 1,9% to 5,9%.

                  Headline earnings         146,5        50,1     192,4%
                                                                                                                                                      31




Profit before tax                                                           mainly from a deferred tax benefit recognised in respect of prior-year
Group profit before taxation was up by 139,5%, mainly due to the            assessed losses as well as non-taxable exceptional profit items.
increased group PBIT, the reduction of equity accounted losses from         Minority interests remained at the same levels, notwithstanding
Ster Century Europe following the final disposal of the remaining           94.7 Highveld Stereo’s 30% growth in PBIT, due to the buyback by
territories last year and the exceptional profits earned during the         Primedia of the additional economic interest in Africa on Air referred
financial year. The exceptional profits include a R17 million reversal of   to below.
foreign currency translation reserves relating to the Ster Century Europe
disposal (net of a R16,1 million investment write-off), R12,8 million       Primedia acquired Hosken Consolidated Investments’ 42,5% minority
profit on the disposal of Wheel and doubtful debt recoveries of             interest in Africa on Air on 1 March 2004 and subsequently
R9,8 million relating to investments previously written off.                nominated MIC to acquire 12,0% of this interest with effect from 1
                                                                            July 2004 (the date on which MIC fulfilled its obligations to secure
In addition, the results include a R17,6 million impairment of the          funding for the interest it was nominated to acquire). Consequently,
group’s investment in film rights, arising from a more conservative         for the period between 1 March 2004 and 30 June 2004, Primedia has
basis of accounting for the film rights, coupled with lower projected       accounted for the full 42,5% minority interest as part of its earnings.
revenues from pay TV sales which are priced in US dollars.                  With effect from 1 July 2004, MIC’s minority interest in Africa on Air
R10,6 million of the impairment has been reflected as an exceptional        increased by 12,0% from 2,2% to 14,2%. The effect on Primedia’s
item, being the amount that would have been recognised had the              results of adopting this treatment is R3,3 million. The R129,1 million
same policy been adopted in prior years. R7,0 million of the                purchase consideration for Primedia’s 30,5% increased shareholding
impairment provision has been recognised in operating profits.              in Africa on Air (net of the 12,0% acquired by MIC) was settled on
The level of the overall film rights impairment provision is not            1 July 2004 in cash (R100,0 million) and the placement of shares
expected to recur going forward.                                            (R29,1 million).


The R1,0 million foreign exchange gain earned during the year,              Group earnings per share increased from 10 cents to 81 cents and
compared to last year’s loss of R10,0 million also had a positive effect    headline earnings per share (HEPS) increased by 195,7% to 68 cents.
on earnings growth.                                                         As the group is now essentially South African-based, this
                                                                            performance compares favourably with the 50 cents earned last year
Net finance costs                                                           by the South African operations.
Net interest paid was marginally up on the prior year, due to the
receipt of interest income of R6,5 million from Ster Century Europe in      CASH FLOW STATEMENT
the prior year, which has now been disposed of, as well as interest         The group’s efforts to improve cash generation proved to be very
paid of R4,4 million in respect of capitalised finance leases recognised    successful during the year. Cash generated from operations increased
at the end of the last fiscal year. Excluding these items as well as        by 81,0% to R353,6 million largely due to the 16,7% improvement in
                                                                                                                                                      ANNUAL
                                                                                                                                                               REPORT




AC133 adjustments, the net interest charge for the current year was         group earnings before interest, depreciation and amortisation
39% lower than last year, reflective of the group’s strong cash flow        (EBITDA) to R323,5 million (2003: R277,3 million) as well as a
generation. Interest cover improved from 13,5 times to 15,7 times.          R9,2 million release of working capital. Taxes of R63,8 million,
                                                                                                                                                      PRIMEDIA



                                                                            included a R28,6 million settlement paid to SARS (including interest)
Retained earnings                                                           in respect of the Ster-Kinekor Films and CineMARK trademarks. The
Retained earnings increased from R21,2 million to R174,7 million due        group’s cash generation was also positively affected by the relatively
to the aforementioned items and a lower effective tax rate resulting        low net capital expenditure of R43,2 million (2003: R44,8 million).
32
                  FINANCIAL
                  REVIEW



                  The group’s significant free cash flow was used to enhance                   GOING CONCERN
                  shareholder value through cash distributions out of the share                In terms of their responsibilities, the Directors have assessed the
                  premium of R63,7 million and earnings enhancing acquisitions of              appropriateness of the going concern concept and are satisfied
                  minority interests in Rank TV, Rank Branding, Ster-Kinekor Home              the group has adequate resources to continue in operation for the
                  Entertainment and Inline Media (R21,1 million). In addition, the             foreseeable future.
                  Primedia Trust acquired shares for R7,5 million in terms of the share
                  option scheme.                                                               POST BALANCE SHEET EVENTS
                                                                                               Subsequent to the year-end, in October 2004, Primedia acquired an
                  In order to take advantage of the significant strengthening of the           effective 92,2% interest in Kfm (Pty) Limited at a net purchase price
                  rand against the US dollar, the group also repaid its share of Ster          of R193 million. In terms of the requirements of the new international
                  Century Middle East’s borrowings (R42,6 million) which had                   accounting standard on business combinations, IFRS 3, the trademarks
                  previously been treated as a constructive obligation.                        relating to the acquisition will be fair-valued and amortised through
                                                                                               the income statement in headline earnings. Primedia has also
                  BALANCE SHEET                                                                acquired the remaining minority interests in Rank TV and Rank
                  The group’s total assets grew by 5,6% to R983,6 million following the        Branding with effect from October 2004 for a purchase consideration
                  R129,1 million acquisition of the additional economic interest in Africa     of R40 million which largely relates to goodwill.
                  on Air referred to previously. The resulting increase in intangible assets
                  was offset by the group’s reduced investment in property, plant and          SHAREHOLDER DISTRIBUTIONS AND POLICY
                  equipment due to a higher depreciation charge for the year                   The group’s distribution policy is to pay shareholders 50% of the
                  (R64,4 million) relative to capital additions of R46,2 million. Also the     headline earnings per share attributable to the South African
                  residual R16,1 million investment in Ster Century Europe was witten off.     operations. Given the group’s improved financial position, as well as
                                                                                               very strong free cash flow, the board has this year resolved to alter the
                  Total borrowings net of cash reduced significantly from R105,0 million       distribution policy to facilitate higher payments to shareholders, as
                  last year to R17,5 million. Primedia remains in an extremely strong          well as to conserve cash should the circumstances arise. A deviation
                  financial position and subsequent to the year-end, concluded                 from this policy will be considered by the board from time to time
                  arrangements to increase its total available borrowing facilities to         based on the financial health of the company or to the extent that
                  R490 million, in addition to long-term debt of R79 million existing at       cash is required for expansion.
                  30 June 2004. The additional facilities are by way of short-term
                  borrowing facilities of R190 million and medium-term facilities of           In the current year, the board resolved to pay a total distribution of
                  R300 million. Based on the group’s projections, it is expected that, at      40 cents per share being 54% up on last year. This resulted in
                  its peak borrowing requirement, the group will have unutilised               shareholders receiving a final distribution of 24,3 cents in October
                  headroom of at least R100 million.                                           2004, in addition to the 15,7 cents declared at the interim stage.
ANNUAL
         REPORT




                  Following the significant impairment made during the year, the
                  group’s investment in film rights declined from R92,8 million to
PRIMEDIA




                  R50,7 million.

                                                                                               Funke Ighodaro
                                                                                               Chief Finance Officer

                                                                                               26 November 2004
         T R A N S F O R M AT I O N                                                                                                                        33




                                                        Primedia’s                INTRODUCTION
                                                                                  Given the discriminatory imbalances of the past, Primedia recognises
                                                        transformation
                                                                                  that transformation is a key business imperative, which is necessary
                                                        strategy is focused       to redress the disparities in employment, education and income levels
                                                        on creating a             of historically disadvantaged South Africans. Primedia has
                                                        culture that drives       implemented a programme of action, under the direction of the group
                                                                                  CEO, to redress these imbalances in a fair and equitable manner.
                                                        entrepreneurship and
                                                                                  The programme is integrated into the group’s strategic business goals
                                                        innovative thinking,      and is monitored on an ongoing basis by the group’s transformation
                                                        which in turn creates     committee.
                                                        opportunities and
                                                                                  OBJECTIVES
                                                        ensures growth.
                                                                                  In terms of Primedia’s transformation charter, the group’s trans-
                                                                                  formation objectives are as follows:


                                                                                  • To instill a sense of value, individual dignity and pride within the
                                                                                    group;
                                                                                  • To create opportunities for black economic empowerment, skills
                                                                                    transfer and outsourcing for previously disadvantaged groups;
                                                                                  • To redress past imbalances in the group’s staffing structure and
                                                                                    eliminate all forms of discrimination, whether based on race,
                                                                                    religion or gender; and
                                                                                  • To empower previously disadvantaged individuals through
          Humphrey Khoza                                                            education, training and the recognition of all forms of prior
          Chairman – Transformation                                                 learning and learning from experience.
          Committee
                                                                                  ACHIEVEMENTS
EMPLOYMENT EQUITY PLAN
                                                                                  We are extremely pleased that our transformation efforts have been
                                 30 June 2003                 30 June 2004
                                                                                  publicly recognised in the Financial Mail/Empowerment survey, which
Number of employees           % AIC*          % White       % AIC*    % White
                                                                                  ranked Primedia as the 17th most empowered Top 200 listed
Executive management               23             77           33            67   company, 2nd most empowered company in the media sector, and 3rd
                                                                                  most empowered company in the management category. In addition,
                                                                                                                                                           ANNUAL
                                                                                                                                                                    REPORT



Senior management                  26             74           30            70   Primedia was ranked 14th by the SA Women Inc. Leadership Census in
                                                                                  terms of female representation at managerial level and 13th of the
Middle management                  45             55           51            49
                                                                                  Top 25 empowerment companies in terms of employment equity.
Junior management                  53             47           49            51
                                                                                                                                                           PRIMEDIA



                                                                                  Our progress to date against our transformation objectives has been
                                                                                  as follows:
Staff levels                       80             20           88            12

Total                              70             30           68            32

* AIC – African, Indian and Coloured people
34
                  T R A N S F O R M AT I O N




                   EMPLOYMENT EQUITY                                                        EQUITY OWNERSHIP
                   Primedia has a published employment equity policy, which is a key        The board of Primedia remains committed to its target of ensuring
                   objective of its recruitment strategy and aimed at the ongoing           that at least 25% of its equity is owned by historically disadvantaged
                   development of our staff. The group submits employment equity            individuals as soon as is practically possible. The group has developed
                   plans and reports to the Department of Labour on an annual basis.        a range of strategies to achieve this, including facilitating direct
                   In terms of the group’s operating commitment, black managers have        equity ownership in underlying subsidiaries with the view to
                   been appointed to the boards of several divisions within Primedia to     exchanging these interests for Primedia shares in future. Primedia’s
                                                                                            equity ownership model is centred around entrenching black
                   ensure the maximum transfer of skills and to encourage the
                                                                                            ownership and control at the holding company level. It is here that
                   development of specialist management skills. Primedia’s workforce
                                                                                            the Mineworkers Investment Company (MIC) has joint voting control
                   profile, particularly at executive and senior management levels has
                                                                                            over Primedia (45,8%) whilst owning a 6,5% economic interest in
                   improved over the past year and reflects the combination of careful
                                                                                            the company.
                   recruitment and selection, internal advancement and the nurturing
                   and development of talent from within the group. The group’s             In order to extend the level of its economic ownership in Primedia,
                   management talent at junior management has declined over the year,       MIC will continue to acquire Primedia shares directly in the market.
                   which is testimony to the competitive environment that the group         However, given MIC’s limited resources, it is vital that Primedia
                   operates in. This is being addressed through benchmarked                 facilitates, through shareholder friendly initiatives, MIC’s increased
                   remuneration policies.                                                   economic interest in Primedia. This has already been activated by
                                                                                            Primedia through structured deals in Primedia Outdoor and more
                   SKILLS DEVELOPMENT                                                       recently through the buyback of the Hosken Consolidated
                   It is acknowledged that there is a skills shortage at senior             Investments’ minority interest in Africa on Air (the licence holder of
                   management levels in most industries in South Africa and Primedia        94.7 Highveld Stereo) whereby Primedia has given financial support
                   operates in an environment where this poses difficulties in              to MIC to acquire significant interests in these quality companies.
                   maintaining the desired momentum for transformation. Primedia’s          These initiatives should result in wealth creation for MIC, which will
                   policies and strategy in terms of skills development are in line with    be converted into Primedia shares at a future point in time.
                   the Department of Labour’s employment equity guidelines and
                   supports our ongoing commitment to attract and retain our key black      Over the years, Primedia’s direct financial support of empowerment
                   staff members.                                                           entities has been significant, including over R300 million of Primedia’s
                                                                                            own capital invested to enable empowerment companies to acquire
                   We have embarked on a variety of leadership development                  interests in a number of our business, including Ster-Kinekor and
                   programmes to enhance and develop management capability among            Africa on Air. In addition, Primedia has recently created R180 million
                   our historically disadvantaged employees. In addition, the group         of value for empowerment shareholders, following the disposal of
                   spends in excess of 1,5% of its payroll on skills development, with at   HCI’s minority interest in Africa on Air. This was created through the
ANNUAL
         REPORT




                   least 60% of the spend going directly to training historically           financing structure put in place by Primedia when Africa on Air
                   disadvantaged individuals within the group.                              was acquired in 1996, as well as Highveld’s impressive performance
                                                                                            since acquisition.
PRIMEDIA
                                                                           35




PREFERENTIAL PROCUREMENT
Primedia is committed to broadening our supplier base and using our
economic muscle to support the growth of black empowered
companies and small, medium and micro enterprises. Wherever
possible, Primedia will ensure that such companies are provided with
preferred supplier status. We are in the process of developing a system
that will assist in tracking preferential procurement expenditure and
currently estimate that 12% of Primedia’s total discretionary spend, as
defined in the Department of Trade and Industry guidelines on
preferential procurement expenditure, is directed towards black
empowered suppliers, in accordance with our Procurement Policy.

ENTERPRISE DEVELOPMENT
Primedia has embarked on enterprise development strategies to
outsource certain of its operations to black empowered companies
owned by former employees of the group. Ongoing financial support
is provided through a revenue sharing model which is to the mutual
benefit of Primedia and the companies involved.

CONCLUSION
The culture of Primedia has evolved such that transformation is
fundamental to whatever we do. Led by the Primedia Transformation
Committee, transformation is pervasive in all our companies.
Primedia’s transformation strategy is based not on the redistribution of
assets and economic means, but is focused on creating a culture that
drives entrepreneurship and innovative thinking, which in turn creates
opportunities and drives growth for the group as a whole. In effect, it
is a model of empowerment through growth, not substitution.

Primedia, as a leader in the South African media sector, will be
governed by the ICT Charter which is in the process of being finalised.
                                                                           ANNUAL
                                                                           PRIMEDIA REPORT




Humphrey Khoza
Chairman – Transformation Committee

26 November 2004
36
                  C O R P O R AT E S O C I A L
                  INVESTMENT



                                         Primedia’s corporate   OVERVIEW
                                                                Primedia’s corporate social investment programme is primarily
                                         social investment
                                                                focused on uplifting the historically disadvantaged youth of South
                                         programme is           Africa, who represent the future of our country. The programme is
                                         primarily focused      administered by Primecare, led by Issie Kirsh and comprising of Paul
                                         on uplifting the       Nkuna and representatives from various group companies.

                                         historically
                                                                Primecare aims to fund sustainable and visible charitable projects
                                         disadvantaged youth    primarily through unsold inventory. In addition, individual group
                                         of South Africa, who   companies complement these activities focusing mainly on the
                                         represent the future   communities that they serve. Primecare’s main areas of focus are
                                         of our country.        as follows:


                                                                Primedia Skills Development
                                                                Primedia Skills Development is a community development project,
                                                                which operates from the Alexandra Motswedi Centre in Alexandra
                                                                Township. It was established to assist young and unemployed
                                                                individuals to enter the mainstream of society through the provision
                                                                of vocational training, job placement and career guidance services.
                                                                The centre has trained in excess of 500 people to date, with skills such
                  Issie Kirsh                                   as bricklaying, carpentry, plastering, tiling, painting and plumbing and
                  Chairman – Primecare                          has been successfully accredited by the Construction Education and
                                                                Training Authority (“CETA”) in compliance with the South African
                                                                Qualifications Authority requirements. It is therefore able to provide
                                                                training and related assessment services against a National
                                                                Qualification as registered on the National Qualifications Framework.


                                                                Primedia Skills Development is currently embarking on a new phase of
                                                                training and development with the provision of training services for
                                                                selected learnerships sponsored by CETA. It recently received Public
                                                                Benefit Organisation status and was presented with the Impumelelo
                                                                Star Award for 2003/2004 in recognition of its contribution to poverty
ANNUAL
         REPORT




                                                                reduction and community development in South Africa.


                                                                Primedia Bursary Project
PRIMEDIA




                                                                Bursaries are awarded to a maximum of ten students in any year to
                                                                study communications, marketing and journalism at the Rand
                                                                Afrikaans University (RAU). As part of the project, Primedia is in the
                                                                process of establishing a three-way agreement with MAPP SETA and
                                                                                                                                                     37




RAU to facilitate an internship programme hosting honours students         94.7 Highveld Stereo
who will be selected to work in the group as interns for a period of six   • 94.7’s Annual Spinnathon in aid of the Children’s Haemotology and
months. Bursary projects will be extended to other universities in           Oncology Centre (CHOC) and Hospice Witwatersrand;
2005/2006.                                                                 • Sam’s Baby Shower collected baby products for The Johannesburg
                                                                             Child Welfare;
The Nelson Mandela Foundation School Project                               • “What’s On” is a community service assisting charities with
Primedia has committed finance of approximately R3 million to                promotional spots and public service announcements (PSAs);
establish a new school in the Eastern Cape. Construction of the school     • SAPS Dog “Flack Jacket” Community Project;
is set to commence in the 2005 financial year.                             • Proudly SA “Boerrie” Outside Broadcast in aid of SA Chefs Association
                                                                             charity project, “Heartbeat” and “African Feeding Scheme”;
The CIDA City Campus Project                                               • 94.7 Homeless Talk Charity Collection benefiting the “Homeless Talk
The CIDA City Campus is a non-profit educational institution offering        Pre-school”, a children’s day-care facility for street sellers of
degrees to students from disadvantaged backgrounds. As CIDA’s                Homeless Talk;
media partner, the group has assisted with the establishment of CIDA’s     • 94.7 Rude Awakening Morning Show’s “Christmas Wish List” made
campus radio and fundraising efforts.                                        over 40 wishes come true, raising in excess of R2 million;
                                                                           • 94.7 Carols By Candlelight concert with Spar benefiting the Round
Other ongoing beneficiaries of and organisations associated with             Table organisation; and
Primecare are:                                                             • 94.7 Highveld Stereo initiated a new project called “Hear for Life”,
                                                                             whereby selected children are to receive a cochlear implant that
• Variety Club South Africa, which was established by Primedia and           will enable them to hear. This will be governed under the Primedia
  Ster-Kinekor in October 1998, in partnership with major South              Cochlear Implant Foundation.
  African companies;
• Carol Shaw Memorial Centre, which supports young people                  Talk Radio 702
  affected by drug and alcohol abuse;                                      • Over 1 000 of the Johannesburg’s aged people were treated to a
• Phelang School LSEN, catering for mentally and physically                  Mayoral Breakfast in honour of “October, the month of the aged”;
  handicapped children;                                                    • 702 Blood Drive “Blood-a-thon”;
• The Ackerman/Pick ‘n Pay Foundation Centre operating under               • Various promotional spots and PSAs to assist charities were aired
  the auspices of Primedia Skills Development offers courses in              on Talk Radio 702 in our “What’s On” community service section;
  computer literacy;                                                       • On-air” plea by 702’s Jenny Crwys-Williams urged listeners to
• Duduza Primary School’s Media Centre; and                                  donate unused clothing, blankets, non-perishable foodstuff, etc to
• The Berea Home Crisis Centre.                                              those in need during one of Joburg’s bitterly cold spells; and
                                                                           • Talk Radio 702 and “Habitat for Humanity” embarked on a project
                                                                                                                                                     ANNUAL
                                                                                                                                                              REPORT




PRIMEDIA GROUP COMPANIES                                                     to build three houses in Ivory Park, Johannesburg in just five days.
Primedia also encourages group companies to concentrate on social            All this work was done in time to celebrate “Women's Day” on
responsibility programmes relevant to their specific businesses, to          9 August 2004.
                                                                                                                                                     PRIMEDIA



uplift historically disadvantaged youth. Significant activities
undertaken by group companies during the current year include              567 Cape Talk
the following:                                                             • Cape Talk’s Winter Flood Relief Drive, in partnership with Disaster
                                                                             Management, collected eight tons of clothing, food and blankets
                                                                             for victims of the winter flood disaster;
38
                  C O R P O R AT E S O C I A L
                  INVESTMENT



                   • The Cape Town International Kite Festival – “The Sky Is Not The Limit”   During 2004, ComutaNet raised funds for the Masakhane Feeding
                     – was held in aid of the Cape Mental Health Society;                     Scheme in Alexandra.
                   • Cape Talk, in partnership with Habitat for Humanity, changed the
                     lives of five families in KTC Township by building five houses in        Ster-Kinekor Group
                     five days;                                                               During the year, Ster-Kinekor raised funds in support of the following
                   • Cape Talk’s Festive Season Goodwill Bus Tour supported children          charitable organisations or provided free cinema screenings to the
                     stuck in hospitals over Christmas in the Western Cape;                   beneficiaries of the charities:
                   • Cape Talk mobilised listeners to assist victims of the Joe Slovo
                     Informal Settlement fire disaster, which claimed eight lives and left    • The Heart Foundation;
                     approximately 4 000 people homeless in early 2004; and                   • FAMSA (Family and Marriage Society of South Africa);
                   • The second Cape Talk/Pick ‘n Pay Choice Spinnathon raised funds          • Association for the Aged;
                     for the Tygerberg Children’s Hospital.                                   • Gandhi Walk Committee;
                                                                                              • The Hamlet Foundation for the Intellectually Disabled;
                   CineMARK                                                                   • Zakariyya Park Underprivileged Children;
                   During the past year, CineMARK assisted the following organisations        • Mosiuoa Lekota Children Trust;
                   with fundraising and awareness programmes:                                 • Reach for a Dream Foundation;
                                                                                              • Project Make A Difference (Youth Choir);
                   • VUKA Awards;                                                             • USIZO Round-Raising Organisation;
                   • Love-Life;                                                               • Law Enforcement Friends International;
                   • Cow Parade;                                                              • The Sunflower Fund;
                   • Dogstar Awards; and                                                      • The South African Police Services;
                   • Unite Against Hunger – SA Formula 1.                                     • Mogale City Christmas Tree Fund;
                                                                                              • The Randburg SPCA;
                   ComutaNet                                                                  • CIDA City Campus;
                   Over and above the fees paid for advertising rights to individual taxi     • Love Life;
                   owners, ComutaNet has, since inception, contributed extensively to         • Cansa;
                   the taxi industry for the upliftment of the industry.                      • Famcare, an organisation for the terminally ill;
                                                                                              • Round Table;
                   ComutaNet also provides funding to the Putco Foundation, an                • “Dream Building Course”;
                   organisation that grants bursaries and allocates funding to worthy         • Sunnyside Haven for street children and AIDS orphans;
                   causes, primarily in the field of education.                               • Variety club;
                                                                                              • SOS Children’s Fund;
ANNUAL
         REPORT




                                                                                              • Down Syndrome Association of Gauteng;
                                                                                              • Johannesburg Society for the Blind;
                                                                                              • Field Band Foundation (helping children with HIV/AIDS);
PRIMEDIA




                                                                                              • Krugersdorp SPCA;
                                                                                              • West Rand School Association for Physically Disabled;
                                                                                              • Breaking Barriers, an organisation that facilitates AIDS education,
                                                                                                after care and reforming juvenile delinquents;
                                                                                              • Family and Marriage Society of SA (FAMSA);
                                                                                              • PATHWAYS, a stimulation centre for disabled children;
                                                                                                                                                    39




• The Children’s Christmas Fund in Danville, Pretoria;                  • Supporting PlayFactory, which was established in July 2003 and
• Star Smile Fund;                                                        aims to make golf more accessible to intellectually disabled children
• RAU Club 10 100;                                                        who participate in the Special Olympics.
• Save a Child;
• Pretoria Child and Family Care Society;                               Primedia Outdoor
• Johannesburg Child and Family Care Society;                           Primedia Outdoor provides sponsorship generally in the form of free
• Association for the Seniors; and                                      or greatly reduced advertising space to selected organisations including:
• The staff of Ster-Kinekor supports “Project: Made-a-Difference”
  and contributed food and clothing every quarter for distribution to   • The Masakhane initiative in Khayelitsha;
  various institutions catering for the needs of less privileged        • SA Police Services;
  sections of our society.                                              • Nkosi’s Haven;
• The Johannesburg Children’s Home;                                     • Cotlands Baby Sanctuary;
• CHOC;                                                                 • SPCA;
• Baragwanath Hospital Children’s Unit;                                 • Artists for Human Rights; and
• St Johns Children’s Unit;                                             • HIV/AIDS project.
• “Little Champs Sports Academy;
• Eldorado Park Youth;                                                  In addition, Primedia Outdoor supports the following charities:
• The National Multiple Sclerosis Society;
• The Avril Elizabeth Home/Mandeville Sports Club;                      • Tswelopele project, which focuses on job creation and the
• Luiperdsvlei Old Age Home;                                              empowerment of previously disadvantaged unemployed women;
• San Michelle Home for Mentally Handicapped persons;                   • Door of Hope: A non-profit organisation based in Hillbrow that
• The Tollman Community Centre in Paternoster.                            rescues abandoned, abused and orphaned babies and children;
                                                                        • Johannesburg Arts Alive which supports the growth of the inner
Megapro                                                                   city through the Arts;
• The United Cricket Board and Megapro Bursary Fund sponsors            • Childline;
  12 students playing cricket at South African high schools;            • SPCA;
• Megapro adopted the Doornbosch Farm School in the Magalies-           • Winikhaya; and
  burg, aiming to raise funds for the renovation of the school          • My Dream Park: The campaign in partnership with the
  buildings; and                                                          Johannesburg City Parks (JCP). which aims to inspire primary school
• Megapro funded the purchase of rugby kits for two teams per school      learners to explore and make the most of the social, ecological and
  in the following traditional Eastern Cape rugby playing schools:        economical benefits of their neighbourhood parks.
  KwaNobuhle (Uitenhage), Zwide (Port Elizabeth), Tsholomnqa (East
                                                                                                                                                    ANNUAL
                                                                                                                                                             REPORT




  London) and Tantyi (Grahamstown).                                     Primedia Instore
                                                                        • Partnered with Clover Danone to raise funds for the CHOC
Knowledge Factory                                                         Childhood Cancer Foundation South Africa CSI campaign.
                                                                                                                                                    PRIMEDIA



Knowledge Factory supports the development of the previously
disadvantaged youth of South Africa through:


• Accepting qualifying students from universities to work at            Issie Kirsh
  Knowledge Factory during their July and December vacations; and       Non-Executive Chairman – Primecare

                                                                        26 November 2004
40
                  C O R P O R AT E G O V E R N A N C E




                   CORPORATE GOVERNANCE COMPLIANCE STATEMENT                                    Directors’ attendance at board meetings
                   Primedia’s board is responsible and accountable to shareholders for                                                                          Special
                   ensuring compliance with the highest standard of corporate                                                                             unscheduled
                   governance and for maintaining an effective system of internal                                   29/08/03 21/11/03 27/02/04 11/06/04       28/06/04
                   control. In the past year, the principles and detailed provisions of the
                                                                                                AP Nkuna                  x         √          x         √           √
                   King II Report on Corporate Governance for South Africa have been
                                                                                                Keshan Pillay (1)         √       n/a         √        n/a         n/a
                   complied with.
                                                                                                W Kirsh                   √         √         √          √           √
                                                                                                MJ Bosman                 √         √         √          √           x
                   BOARD OF DIRECTORS
                   The board is responsible to shareholders for setting the direction of        NJM Canca (2)           n/a         √         √          √           x
                   Primedia through the establishment of strategic objectives and key           FA Gazendam               √         √         √          √           x
                   policies. The board meets on a regular basis, at least four times a year.    O Ighodaro                √         √         √          √           √
                   During the 2004 financial year, five board meetings were held.               HM Khoza                  √         √         √          √           √
                   The board considers issues of strategic direction, major acquisitions        I Kirsh                   √         √         √          √           √
                   and disposals, approves major capital expenditure and other                  HM Madima                 √         √         √          √           √
                   matters having a material effect on Primedia.                                P Maw                     √         √          x         √           √
                                                                                                Kuben Pillay              √         √         √          √           √
                   The board consists of four executive directors, four non-executive
                                                                                                CS Seabrooke              √         √         √          √           x
                   directors and six independent non-executive directors in order to
                                                                                                BJT Shongwe               x         √         √          √           √
                   ensure that no one individual has unfettered powers of decision and
                                                                                                SV Zilwa                  √         √         √          x           x
                   authority. A formal charter setting out the board’s responsibilities has
                   been adopted by the board.                                                   (1) Alternate to Paul Nkuna
                                                                                                (2) Appointed on 29 August 2003
                   Primedia’s directors have a wide range of expertise as well as
                   significant experience in financial and commercial activities.
                   All directors have access to management, including the company               EXECUTIVE COMMITTEE
                   secretary, and to such information as is needed to carry out their           The chief executive, William Kirsh, chairs the executive committee,
                   duties and responsibilities fully and effectively. Furthermore, all          which includes all of the executive directors of the company as well
                   directors are entitled to seek independent professional advice               as the group HR executive, Melody Lekota. The committee is
                   concerning the affairs of Primedia, at the company’s expense.                empowered and responsible for implementing the strategies and
                                                                                                policies determined by the board, managing the business and affairs
                   All directors are subject to election by shareholders at the first           of the company, prioritising the allocation of capital and technical and
                   opportunity following their appointment. In addition, directors will         human resources and establishing best management practices. The
                   retire by rotation and stand for re-election by shareholders at least once   committee is also responsible for appointing and monitoring
ANNUAL
         REPORT




                   every three years in accordance with Primedia’s articles of association.     the performance of senior managers.

                   Subject to specific fundamental, strategic and formal matters reserved       The committee comprises William Kirsh (chairman), Ferdi Gazendam,
                   for its decision, the board delegates certain responsibilities to a          Kuben Pillay, Funke Ighodaro and Melody Lekota.
PRIMEDIA




                   number of standing committees, which operate within defined terms
                   of reference laid down by the board, as referred to below.
                   The composition of all committees is reviewed by the board annually.
                                                                                                                                                41




REMUNERATION AND NOMINATIONS COMMITTEE                                Remuneration philosophy
The remuneration and nominations committee met twice during the       In terms of the group’s remuneration philosophy guaranteed salary
year and comprises four non-executive directors, namely Paul Nkuna    packages are reviewed annually in the context of individual and
(chairman), Mike Bosman, Humphrey Khoza and Christopher               business performance and benchmarked for senior executives at the
Seabrooke. All members, with the exception of Paul Nkuna, are         75% quartile of market trends.
independent non-executive directors. The committee receives advice
from group human resources as well as specialist remuneration         Incentive bonuses are payable to executives based on a combination
consultants from time to time.                                        of individual, divisional and group performance. Incentive criteria are
                                                                      agreed early in the group’s financial year when objectives are set out
Remuneration       committee      members’      attendance      at    in contract form. During the past fiscal, key measures included the
meetings                                                              achievement of financial and strategic objectives, achievement of
                                             17/10/03    08/06/04     growth objectives encompassing organic growth and innovation,
AP Nkuna                                            √            √    demonstration of leadership competency and meeting employment
MJ Bosman (1)                                     n/a            √    equity targets. In the current fiscal, executives were able to earn a
HM Khoza                                            √            √    maximum of 200% of their package as a short-term incentive.
CS Seabrooke                                        √            √
                                                                      In order to align the interests of staff with those of shareholders,
(1) Appointed on 8 June 2004                                          share options are awarded to senior employees under the Primedia
                                                                      Share Scheme. The annual allocation of share options to selected
                                                                      senior employees is based on a percentage of each individual’s annual
The committee is responsible for determining the remuneration         salary package. Share options are granted at market price and no
philosophy for Primedia, including short- and long-term incentive     discounting or re-pricing is allowed. Share options are valid for a
plans and for agreeing the individual remuneration package (salary,   period of four years and vest in three tranches from the second
bonuses and share options) of the group’s top executive management.   anniversary of the date the share options are granted.

The committee provides assistance to the board of directors in        Note 29 of the annual financial statements provides details of
fulfilling its responsibility to shareholders and the investment      remuneration, fees and share options paid and allocated to directors
community and in ensuring that the company’s senior executives are    during the financial year.
compensated in accordance with the company’s total remuneration
goals. The committee also advises and recommends compensations
strategies, policies and salary packages necessary to support group
strategic objectives.

The committee makes recommendations to the board on the
                                                                                                                                                ANNUAL
                                                                                                                                                         REPORT



appointment of new executives and non-executive directors, the
composition of the board generally and the balance between
executive and non-executive directors.
                                                                                                                                                PRIMEDIA



The committee also co-ordinates an annual written review of the
performance of all board committees and the board itself, and
performs an appraisal of the chief executive officer and chairman.
42
                  C O R P O R AT E G O V E R N A N C E




                   AUDIT AND GOVERNANCE COMMITTEE                                              Based on its assessment of the external auditors’ performance and
                   The primary role of the audit committee is to ensure the integrity of       independence, the audit committee has recommended to the board
                   financial reporting and the audit process, and to ensure that a sound       the proposal to shareholders to reappoint Deloitte & Touche as
                   internal control system is maintained.                                      auditors until the conclusion of the AGM in 2006.

                   In fulfilling its responsibility of monitoring the integrity of financial   The internal audit function reports directly to the audit committee
                   reports to shareholders, the audit committee has reviewed the               and is accountable for maintaining group auditing standards. The
                   accounting principles, policies and practices adopted in the                mandate and annual coverage plans of the internal audit function
                   preparation of public financial information and has examined                were approved by the audit committee, which also considered the
                   documentation relating to the annual report, interim report and             results of the internal audit work.
                   preliminary announcement. The clarity of disclosures included in the
                   financial statements was reviewed by the audit committee, as was            The audit committee comprises an equal number of independent
                   the basis for significant estimates and judgements. In assessing the        non-executive and non-executive directors, namely Christopher
                   accounting treatment of major transactions open to different                Seabrooke (chairman), Tshidi Madima, Peter Maw and Sindi Zilwa.
                   approaches, the committee considered written reports by                     The group’s Chief Financial Officer, Funke Ighodaro, and head
                   management and the external auditors.                                       of internal audit, Henry Enslin, attend the audit committee meetings
                                                                                               by invitation.
                   The financial directors of all of the group’s major operations have
                   provided confirmation that financial and accounting control                 As required by its terms of reference, the audit committee met four
                   frameworks operate satisfactorily. The audit committee considered           times during the year to coincide with key dates within the financial
                   summaries of the significant risk and control issues arising from these     reporting and auditing cycle. Two of their meetings were followed by
                   reports as well as the regular reports received from the internal and       discussions, independent of management, with the external audit
                   external auditors.                                                          partners and the head of internal audit.

                   The audit committee approved the external auditors’ terms of                Audit and governance committee members’ attendance
                   engagement, scope of work, the process for the 2004 interim and             at meetings
                   year-end audits and the applicable levels of materiality. Based on                                     22/08/03 14/11/03 20/02/04 28/05/04
                   written reports submitted, the audit committee reviewed with the            CS Seabrooke                      √         √         √         √
                   external auditors, the findings of their work and confirmed that all
                                                                                               HM Madima                         √         √         √         √
                   significant matters were satisfactorily resolved.
                                                                                               P Maw                             √         √         √          x
                                                                                               SV Zilwa                          √         √         √          x
                   For the purpose of reviewing the actual fees for audit and non-audit
                                                                                               O Ighodaro     (1)
                                                                                                                                 √         √         √         √
                   work for the group during 2004, the audit committee considered
                   information pertaining to non-audit work and has concluded that the         (1)
                                                                                                     By invitation
ANNUAL
         REPORT




                   nature and extent of non-audit fees do not present a threat to the
                   external auditors’ independence.
PRIMEDIA
                                                                                                                                                     43




RISK COMMITTEE                                                            In addition, the board receives assurance from the audit committee,
The risk committee was formally constituted as a sub-committee of         which relies on regular internal and external audit reports, on risk and
the main board in November 2002 and comprises Bheki Shongwe               controls throughout the group. During the year, a formal process for
(chairman), Mike Bosman, Ferdi Gazendam, Funke Ighodaro, William          identifying and evaluating key risks was undertaken by each of the
Kirsh, Peter Maw and Kuben Pillay. The committee met twice during         group’s main operations and the overall results were evaluated and
the financial year.                                                       reported on by the group’s executives. The board is satisfied that there
                                                                          is an ongoing process for identifying, evaluating and managing the
Risk committee members’ attendance at meetings                            significant risks faced by the group.
                                                18/07/03     12/02/04
BJT Shongwe                                            √             √    TRANSFORMATION COMMITTEE
MJ Bosman                                              √             x    Details of the role and responsibilities of the transformation
                                                                          committee are set out on pages 33 to 35.
FA Gazendam                                             x            √
O Ighodaro                                             √             √
                                                                          The transformation committee met four times during the year and
W Kirsh                                                √             √
                                                                          comprises Humphrey Khoza (chairman), Ferdi Gazendam, Funke
P Maw                                                   x            √    Ighodaro, William Kirsh, Paul Nkuna, Kuben Pillay and Sindi Zilwa.
Kuben Pillay                                           √             √
                                                                          The group HR executive, Melody Lekota, attends the meetings
                                                                          by invitation.
The board is responsible for the process of risk management and has
mandated the risk committee to ensure that significant risks are
identified, evaluated and managed on an ongoing basis. Management         Transformation committee members’ attendance at
is accountable to the board for designing, implementing and               meetings
monitoring the process of risk management.                                                       15/07/03     17/10/03    12/02/04      21/05/04
                                                                          HM Khoza                       √          √             √            √
The board’s policy on risk management encompasses all significant
                                                                          AP Nkuna                       √          √             √            √
business risks to the group, including financial, operational and
                                                                          W Kirsh                        √          √             √            √
compliance risks which could undermine the achievement of the
                                                                          FA Gazendam                    √          √             √             x
group’s business objectives. Managers are supported in giving effect to
their risk responsibilities through policies and guidelines on risk and   Kuben Pillay                   √          √             √            √
control management. The risk assessment and reporting criteria are        SV Zilwa (1)                 n/a          √             √             x
designed to provide the board with a consistent group-wide                O Ighodaro (2)               n/a         n/a            √            √
perspective of key risks and include an assessment of the likelihood      (1) Appointed on 17 October 2003
and impact of risks materialising, as well as risk mitigation and         (2) Appointed on 12 February 2004
                                                                                                                                                     ANNUAL
                                                                                                                                                              REPORT



the effectiveness thereof.

The system of internal control, which is embedded in all key
operations, provides reasonable assurance that the group’s business
                                                                                                                                                     PRIMEDIA



objectives will be achieved within acceptable risk tolerance levels.
44
                  C O R P O R AT E G O V E R N A N C E




                   RELATIONS WITH SHAREHOLDERS                                              The external auditors provide an independent assessment of internal
                   During the year, there have been regular presentations and meetings      controls and systems through the audit work that they perform.
                   with institutional investors to communicate the strategy and             They complement the work of the internal auditors and review all
                   performance of Primedia. Executive directors attend such presentations   internal audit reports on a regular basis. The external auditors are also
                   and meetings. The company’s website (www.primedia.co.za) provides        responsible for reporting on whether the financial statements are
                   the latest and historical financial and other information on Primedia,   fairly presented and their report is presented on page 49.
                   including such presentations.
                                                                                            Financial reporting
                   Shareholders will have the opportunity at the annual general             There are comprehensive management reporting disciplines that
                   meeting, notice of which is enclosed herewith, to put questions to       include the preparation and adoption of an annual budget against an
                   the board.                                                               approved strategy by all subsidiaries.

                   ACCOUNTABILITY AND INTERNAL CONTROLS                                     Monthly results are reported against approved budget and prior year
                   Company law requires the board to prepare financial statements for       actual results, with updated forecasts to the end of the financial year
                   each year, which fairly present the financial position, the results of   also being presented on a quarterly basis.
                   operations and cash flow information for the group.
                                                                                            The group has a clearly defined framework for capital expenditure,
                   In addition, the board is responsible for maintaining proper             including approved budgets and appropriate authorisation levels,
                   accounting records that disclose, with reasonable accuracy at any        beyond which such expenditure requires the approval of the board of
                   time, the financial position of the companies and of the group and       the subsidiary and, for larger capital projects or acquisitions, the
                   enable the board to ensure that the financial statements comply with     board of Primedia.
                   South African Statements of Generally Accepted Accounting Practice
                   and the Companies Act 61 of 1973, as amended, in South Africa.           The board has reviewed the effectiveness of the systems of internal
                                                                                            financial control for the accounting year and the period to the date
                   The board also has the general responsibility for taking such steps as   of the approval of the accounts. In so doing, it considered the major
                   are reasonably open to it to safeguard the assets of the group and       business risks and the control environment.
                   detect fraud and other irregularities.
                                                                                            Nothing has come to the attention of the directors, nor to the
                   Key procedures that have been established to provide effective           attention of the internal or external auditors, to indicate that any
                   financial control can be described under the following headings:         material breakdown in the functioning of the above-mentioned
                                                                                            controls and systems has occurred during the year under review.
                   Internal controls and accounting records
                   The internal audit department is an independent appraisal function       The board confirms that it is satisfied that the group has adequate
                   which reviews the adequacy and effectiveness of internal controls        resources to continue business for the foreseeable future. For this
ANNUAL
         REPORT




                   and the systems which support them. This includes controls and           reason the company has continued to adopt the going-concern basis
                   systems at the operating entities and in relation to business and        in preparing the financial statements.
                   financial risks which could have an adverse effect on the group.
                   Weaknesses identified by the internal auditors are brought to the
PRIMEDIA




                   attention of the directors and management.
                                                                           45




CODE OF CONDUCT
The group’s directors, management and employees are committed to
maintaining the highest ethical standards in their dealings with each
other and with the group’s stakeholders. All employees in the group
are required to maintain the highest ethical standards in ensuring that
the group’s business practices are conducted in a manner which, in all
circumstances, is above reproach. This is enforced by the uniform Code
of Conduct which has been adopted by the group.

PRICE-SENSITIVE INFORMATION
In accordance with the JSE Securities Exchange South Africa’s
guidelines on price-sensitive information, the company has adopted a
policy with the determination of information as price-sensitive,
confidentiality undertakings and discussions with the press,
institutional investors and analysts. Only the chairman, the chief
executive officer and the chief financial officer may discuss with third
parties matters which may involve price-sensitive information.
The company follows a “closed period” principle, during which
period employees and directors are prohibited from dealing in the
company’s shares.

COMPANY SECRETARY
In terms of section 268A of the Companies Act 61 of 1973, as
amended, the group company secretary is adequately supported by
suitable experienced staff.




                                                                           ANNUAL
                                                                           PRIMEDIA REPORT
46
                  DEFINITIONS




                  Capital employed                                                          Return on shareholders’ equity
                  Total shareholders’ funds and long-term borrowings, including             Earnings divided by shareholders equity.
                  interest-bearing short-term debt.
                                                                                            Return on capital employed
                  Net interest-bearing debt                                                 Operating profit divided by capital employed.
                  Interest-bearing debt less bank balances and cash
                                                                                            Operating margin
                  Market capitalisation                                                     PBIT expressed as a percentage of revenue.
                  Share price multiplied by the number of shares in issue at 30 June.
                                                                                            Interest cover
                  PBIT                                                                      PBIT divided by net finance cost.
                  Operating profit before amortisation, foreign exchange items and
                  exceptional items.                                                        Current ratio
                                                                                            Current assets divided by current liabilities. Current liabilities include
                  Shareholder distributions paid                                            short-term interest-bearing debt and interest-free liabilities.
                  Distributions to shareholders out of share premium and interest paid
                  on debentures held by shareholders.                                       Gearing ratio
                                                                                            Net interest-bearing debt expressed as a percentage of shareholders
                  Free cash flow                                                            equity.
                  Cash generated from operations less net interest paid, less net capital
                  expenditure, less tax paid (excluding the once off settlement in          Net debt to EBITD ratio
                  respect of trademarks).                                                   Net interest-bearing debt divided by operating profit before
                                                                                            depreciation (EBITD).
                  Earnings yield
                  Earnings per share divided by the share price at 30 June.


                  PE ratio
                  Share price divided by earnings per share at 30 June.


                  Return on assets
                  Operating profit before depreciation (EBITD) divided by total assets,
                  excluding bank balances and cash.
ANNUAL
PRIMEDIA REPORT
                                                                             47
ANNUAL




             CONTENTS
FINANCIAL        48     Directors' approval

                 48     Certification by company secretary

STATEMENTS       48     Annual compliance certification

                 49     Report of the independent auditors

                 50     Directors' report

                 52     Accounting policies

                 58     Income statements

                 59     Geographical income statements

                 60     Balance sheets

                 61     Cash flow statements

                 62     Notes to the cash flow statements

                 64     Statements of changes in shareholders' equity

                 66     Segment report

                 67     Notes to the financial statements

                 89     Annexure 1 – Associated companies

                 90     Annexure 2 – Subsidiary companies

                 92     Annexure 3 – Related party transactions

                 93     Annexure 4 – Interests of directors of the company
                                         in share capital
                                                                             ANNUAL
                                                                                      REPORT




                 94     Annexure 5 – Stock exchange performance and
                                         shareholder analysis
                                                                             PRIMEDIA
                  D I R E C TO R S ’                                                           C E R T I F I C AT I O N
48
                  A P P R O VA L                                                               BY C O M PA N Y
                                                                                               S E C R E TA R Y

                   The annual financial statements appearing on pages 50 to 94 are            In terms of section 268G(d) of the Companies Act, 1973, as amended,
                   approved by the board of directors and are signed on its behalf by:        I, Olufunke Ighodaro, certify that for the year ended 30 June 2004,
                                                                                              Primedia Limited has lodged with the Registrar of Companies all such
                                                                                              returns as are required of a public company in terms of the Act.
                                                                                              Further, that such returns are true, correct and up to date.




                   AP Nkuna                              W Kirsh                              O Ighodaro
                   Chairman                              Chief Executive Officer              Company Secretary


                                                                                              Sandton
                                                                                              31 August 2004


                   O Ighodaro
                   Chief Financial Officer


                   Sandton
                   31 August 2004




                  ANNUAL COMPLIANCE CERTIFICATION FOR
                  ISSUERS WITH A PRIMARY LISTING ON THE JSE
                   I, Olufunke Ighodaro, being duly authorised hereto, certify to the JSE Securities Exchange South Africa ("JSE") that Primedia Limited and its
                   directors have, during the year ended 30 June 2004, complied with all the Listings Requirements and disclosure requirements for continued listing
                   on the JSE during this year.
ANNUAL
         REPORT




                   O Ighodaro
                   For and on behalf of the directors of Primedia Limited – duly authorised
PRIMEDIA




                   Sandton
                   31 August 2004
REPORT OF THE
                                                                                                                                                    49
I N D E P E N D E N T A U D I TO R S




 To the members of Primedia Limited

 We have audited the annual financial statements and the group           We believe that our audit provides a reasonable basis for our opinion.
 annual financial statements of Primedia Limited, set out on pages
 50 to 93 for the year ended 30 June 2004. These financial statements    AUDIT OPINION
 are the responsibility of the company's directors. Our responsibility   In our opinion, the financial statements fairly present, in all material
 is to express an opinion on these financial statements based on         respects, the financial position of the company and of the group at
 our audit.                                                              30 June 2004 and the results of their operations and cash flows for
                                                                         the year then ended in accordance with South African Statements of
 SCOPE                                                                   Generally Accepted Accounting Practice and in the manner required
 We conducted our audit in accordance with statements of South           by the Companies Act in South Africa.
 African Auditing Standards. Those standards require that we plan and
 perform the audit to obtain reasonable assurance that the financial
 statements are free of material misstatement.


 An audit includes:                                                      Deloitte & Touche
 – examining, on a test basis, evidence supporting the amounts and       Chartered Accountants (SA)
   disclosures in the financial statements;                              Registered Accountants and Auditors
 – assessing the accounting principles used and significant estimates
   made by management; and                                               Sandton
 – evaluating the overall financial statement presentation.              31 August 2004




                                                                                                                                                    ANNUAL
                                                                                                                                                    PRIMEDIA REPORT
                  D I R E C TO R S ’
50
                  REPORT




                   DIRECTORS’ RESPONSIBILITIES                                               SUBSIDIARIES
                   The directors acknowledge responsibility for                              Details of the company's direct interests in subsidiaries are set out in
                                                                                             Annexure 2 to the financial statements.
                   the integrity and objectivity of the annual
                   financial statements, and all other information                           SHARE CAPITAL
                   contained therein.                                                        Details of the authorised and issued share capital, are included in note
                                                                                             18 to the annual financial statements and in the statement of changes
                   In declaring this responsibility, the group maintains suitable internal   in shareholders' equity.
                   control systems to provide reasonable assurance that all assets are
                   safeguarded and that transactions are executed and recorded in            The unissued shares are under the control of the directors until the
                   accordance with group policies.                                           next annual general meeting, subject to the provisions of Section 221
                                                                                             and 222 of the Companies Act and the requirements of the JSE
                   The directors, supported by the audit committee, are satisfied that the   Securities Exchange South Africa ("JSE").
                   controls, systems and procedures in place minimise the possibility of
                   material loss or misstatement. The directors are responsible for the      DISCLOSURE RELATING TO DIRECTORS
                   systems of internal control. These are designed to provide reasonable,    The requisite disclosure relating to the interests of directors in options
                   but not absolute, assurance as to the reliability of the financial        and shares of the company, as well as directors' remuneration, are
                   statements and to adequately safeguard, verify and maintain               detailed in note 29 and Annexure 4 to the annual financial
                   accountability of assets and to prevent and detect material               statements.
                   misstatement and loss. The systems are implemented and maintained
                   by suitably trained personnel with an appropriate segregation             DISTRIBUTIONS TO SHAREHOLDERS
                   of authority and duties. Nothing has come to the attention of             An interim distribution out of share premium of 15,7 cents per share,
                   the directors to indicate that any material breakdown in the              in lieu of a dividend, was declared on 2 March 2004, awarded to
                   functioning of these controls and systems has occurred during             shareholders recorded in the register of the company on 26 March
                   the year under review.                                                    2004 and paid on 29 March 2004 (2003: 13,0 cents per share). A final
                                                                                             distribution out of share premium of 24,3 cents per share, in lieu of
                   The financial statements have been prepared in accordance with            a dividend, was declared on Tuesday, 31 August 2004, to be awarded
                   South African Statements of Generally Accepted Accounting Practice.       to shareholders recorded in the register of the company on Friday, 1
                                                                                             October 2004 and to be paid on Monday, 4 October 2004
                   NATURE OF BUSINESS                                                        (2003: 13,0 cents per share). In accordance with AC130: “Provisions,
                   Primedia is a South African media group with an established portfolio     Contingent Liabilities and Contingent Assets”, the distribution
ANNUAL
         REPORT




                   of businesses that cover advertising, filmed entertainment and            will be accounted for in the 2004/5 year.
                   one-to-one marketing.
                                                                                             No dividends were declared by the company during the year ended
                   GROUP RESULTS                                                             30 June 2004 (2003: Nil).
PRIMEDIA




                   The results for the year ended 30 June 2004 are reflected in the
                   attached annual financial statements.
                                                                                                                                                   51




SHARES IN PRIMEDIA LIMITED                                                 – approved short-term and medium-term financing, with sufficient
Primedia Limited is funded by means of ordinary shares and "N"               additional borrowing capacity if required;
shares, the summarised terms of which are detailed below:                  – key executive management is in place;
                                                                           – budgets to June 2005 reflect a continuation of the above positive
– Each ordinary share and "N" share is issued at par on the JSE and          trend;
  traded on the JSE.                                                       – the group has no need to undertake a capital restructuring or to
– Each ordinary share entitles the holder thereof to one hundred             dispose of assets, other than those overseas assets planned
  votes and each "N" share entitles the holder thereof to one vote.          for disposal;
– With the exception of the entitlement to votes detailed above, the       – the board is not aware of any material changes that may adversely
  ordinary shares and "N" shares rank pari passu in all respects.            impact the group relative to customers, suppliers, services or
                                                                             geographic markets;
SHARE OPTION SCHEME                                                        – the board is not aware of any material non-compliance with
The rationale for the share option scheme, together with the rights          statutory or regulatory requirements and there are no pending
and options over allocated ordinary and "N" shares outstanding at            legal proceedings, other than in the normal course of business; and
30 June 2004 and a reconciliation of the movement for the year then        – the board is not aware of any pending changes in government
ended, are fully detailed in note 30 to the annual financial statements.     legislation that may adversely affect the group.


EVENTS SUBSEQUENT TO FINANCIAL YEAR-END                                    DIRECTORATE AND SECRETARY
Full details in respect of material events subsequent to financial year-   The current directorate of the company is shown in note 29.
end have been included in note 31 to the annual financial statements.      During the year under review, the following appointments to the
                                                                           board of directors took place:
SPECIAL RESOLUTIONS
Special resolutions which have been adopted by the company or its
                                                                           NJM Canca                              – appointed 29 August 2003
subsidiaries since the date of the last annual general meeting, are
                                                                           Keshan Pillay (alternate to AP Nkuna) – appointed 1 September 2003
detailed in Annexure 2 to the annual financial statements.

                                                                           In accordance with the company's articles of association,
GOING CONCERN
                                                                           FA Gazendam, I Kirsh, W Kirsh, P Maw and BJT Shongwe retire by
The directors are of the opinion that the group will be a going concern
                                                                           rotation at the annual general meeting and, being eligible, offer
in the year ahead. In reaching this opinion, the directors considered
                                                                           themselves for re-election.
the following factors:

                                                                           COMPANY SECRETARY
                                                                                                                                                   ANNUAL
                                                                                                                                                            REPORT


– strong positive cashflows from trading;
                                                                           The company secretary is O Ighodaro, whose business and postal
– no material recurring operating losses;
                                                                           address are: 6th Floor, Primedia House, 5 Gwen Lane, Sandown, 2196
– well controlled working capital;
                                                                           and PO Box 652110, Benmore, 2010.
                                                                                                                                                   PRIMEDIA
                  ACCOUNTING
52
                  POLICIES


                  for the year ended 30 June 2004




                  1 GENERAL                                                                     Where necessary, adjustments are made to the financial statements of
                  Primedia Limited is a limited company incorporated in South Africa.           subsidiaries and associates to bring the accounting policies used into
                  These financial statements are presented in South African Rand since          line with those of the group.
                  that is the currency in which the majority of the group’s transactions
                  are denominated.                                                              All significant inter-company transactions and balances are
                                                                                                eliminated on consolidation.
                  2 BASIS OF PREPARATION
                  The financial statements are prepared in accordance with South                4 INVESTMENTS IN ASSOCIATED COMPANIES
                  African Statements of Generally Accepted Accounting Practice.                 An associated company is an enterprise over which the group is in a
                  They have been prepared on a basis consistent with the prior year.            position to exercise significant influence, but not control, through
                                                                                                participation in its financial and operating policy decisions.
                  The financial statements are prepared under the historical cost
                  convention, modified by the restatement of financial instruments to           The results and assets and liabilities of associates are incorporated in
                  fair value.                                                                   these financial statements using the equity method of accounting.
                                                                                                Interests in associates are carried in the balance sheet at cost as
                  The principal accounting policies adopted, which have been                    adjusted by post-acquisition changes in the group’s share of the net
                  consistently applied, are set out below.                                      assets of the associate, less any impairment in the value of individual
                                                                                                investments. Any excess/(deficit) of the cost of acquisition
                  3 BASIS OF CONSOLIDATION                                                      over/(below) the group’s share of fair values of the identifiable net
                  The consolidated financial statements incorporate the financial               assets of the associate at the date of acquisition is recognised as
                  statements of the company and its subsidiaries, being those entities          goodwill/(negative goodwill).
                  over whose financial and operating policies the group has the power
                  to exercise control, so as to obtain benefits from their activities.          Where a group entity transacts with an associate of the group,
                                                                                                unrealised profits and losses are eliminated to the extent of the
                  On acquisition, the assets and liabilities of the relevant subsidiaries are   group's interest in the relevant associate.
                  measured at their fair values at the date of acquisition. The interest of
                  minority shareholders is stated at the minorities' proportion of the fair     5 GOODWILL AND NEGATIVE GOODWILL
                  value of the assets and liabilities recognised. Any excess/(deficit) of the   Goodwill
                  cost of acquisition over (below) the fair value of the identifiable net       Goodwill arising on consolidation represents the excess of the cost of
ANNUAL
         REPORT




                  assets acquired is recognised as goodwill/(negative goodwill).                acquisition over the group’s interest in fair value of the identifiable
                                                                                                assets and liabilities of a subsidiary, associate or jointly controlled
                  The results of subsidiaries acquired or disposed of during the year are       entity at the date of acquisition. Goodwill is recognised as an asset
PRIMEDIA




                  included in the consolidated income statement from the effective              and amortised on a straight-line basis over its estimated useful life, up
                  date of acquisition or up to the effective date of disposal                   to a maximum of 20 years.
                  as appropriate.
                                                                                                                                                           53




Goodwill arising on the acquisition of an associate is included within       7 PROPERTY, PLANT AND EQUIPMENT
the carrying amount of the associate. Goodwill arising on the                Property, plant and equipment is stated at historical cost less
acquisition of subsidiaries and jointly controlled entities is presented     accumulated depreciation and recognised impairment losses. With the
separately in the balance sheet.                                             exception of land, all property, plant and equipment is depreciated on
                                                                             a straight-line basis estimated to write each asset down to residual
On disposal of a subsidiary, associate or jointly controlled entity, the     value over the term of its useful life at the following rates:
attributable amount or unamortised goodwill is included in the                                                                       % per annum
determination of the profit or loss on disposal.
                                                                             Buildings                                                             2
                                                                             Advertising structures                                               10
Negative goodwill
                                                                             Motor vehicles                                                 20 – 25
Negative goodwill represents the excess of the group’s interest in
                                                                             Plant and equipment                                                 20
the fair value of the identifiable assets and liabilities of a subsidiary,
                                                                             Office furniture,
associate or jointly controlled entity at the date of acquisition over
                                                                             equipment, décor
the cost of acquisition. Negative goodwill is released to income based
                                                                             and computers                                                  10 – 33
on an analysis of the circumstances from which the balance resulted.
To the extent that the negative goodwill is attributable to losses
or expenses anticipated at the date of acquisition, it is released           Costs incurred in the construction of advertising structures are
to income in the period in which those losses or expenses arise. The         capitalised. Such costs include all costs incurred in developing the
remaining negative goodwill is recognised as income on a straight-           structures to the date of commissioning and are subsequently
line basis over the remaining average useful life of the identifiable        depreciated.
acquired depreciable assets. To the extent that such negative goodwill
exceeds the aggregate fair value of the acquired identifiable non-           The gain or loss arising on the disposal or retirement of an asset is
monetary assets, it is recognised in income immediately.                     determined as the difference between the sales proceeds and the
                                                                             carrying amount of the asset and is recognised in income.
Negative goodwill arising on the acquisition of an associate is
deducted from the carrying amount of that associate.                         Assets held under finance leases are depreciated over their expected
                                                                             useful lives on the same basis as owned assets or, where shorter, the
Negative goodwill arising on the acquisition of subsidiaries and jointly     term of the relevant lease.
controlled entities is presented separately in the balance sheet as a
                                                                                                                                                           ANNUAL
                                                                                                                                                                    REPORT



deduction from assets.                                                       8 LEASED ASSETS
                                                                             Leases are classified as finance leases whenever the terms of the lease
6 INTANGIBLE ASSETS                                                          transfer substantially all the risks and rewards of ownership to the
                                                                                                                                                           PRIMEDIA



Intangible assets, which consist primarily of copyrights and                 lessee. All other leases are classified as operating leases.
trademarks, are measured initially at cost and amortised on a straight-
line basis over their estimated useful lives, which is on average 10 years   Assets held under finance leases are recognised as assets of the group
.                                                                            at their fair value at the date of acquisition or, if lower, at the present
                  ACCOUNTING
54
                  P O L I C I E S (continued)




                   value of the minimum lease payments. The corresponding liability to       carrying amount does not exceed the carrying amount that would
                   the lessor is included in the balance sheet as a finance lease            have been determined had no impairment loss been recognised in
                   obligation. Lease payments are apportioned between finance charges        prior years. A reversal of an impairment loss is recognised as income
                   and reduction of the lease obligation, so as to achieve a constant rate   immediately and treated as an exceptional item.
                   of interest on the remaining balance of the liability. Finance charges
                   are charged directly against income.                                      10 TAXATION
                                                                                             The charge for current tax is the amount of income taxes payable in
                   Rentals payable under operating leases are charged to income on a         respect of the taxable profit for the current period. It is calculated
                   straight-line basis over the term of the relevant lease.                  using tax rates that have been enacted or substantially enacted by the
                                                                                             balance sheet date.
                   9 IMPAIRMENT OF ASSETS
                   At each balance sheet date, the group reviews the carrying amounts        Deferred tax is accounted for using the balance sheet liability method
                   of its tangible and intangible assets to determine whether there is any   in respect of temporary differences arising between the carrying
                   indication that those assets may be impaired. If any such indication      amount of assets and liabilities in the financial statements and the
                   exists, the recoverable amount of the asset is estimated in order to      corresponding tax basis used in the computation of taxable profit.
                   determine the extent of the impairment loss, if any. Where it is not      In principle, deferred tax liabilities are recognised for all taxable
                   possible to estimate the recoverable amount of an individual asset, the   temporary differences and deferred tax assets are recognised to the
                   group estimates the recoverable amount of the cash-generating unit        extent that it is probable that taxable profits will be available against
                   to which the asset belongs.                                               which deductible temporary differences can be utilised. Such assets
                                                                                             and liabilities are not recognised if the temporary difference arises
                   Recoverable amount is the greater of net selling price and value in       from goodwill, negative goodwill or the acquisition of an asset which
                   use. In assessing value in use, the estimated future cash flows are       does not affect either taxable or accounting income.
                   discounted to their present value using a pre-tax discount rate that
                   reflects the current market assessment of the value of money and the      Deferred tax liabilities are recognised for taxable temporary
                   risk specific to the asset.                                               differences arising on investments in subsidiaries and associates,
                                                                                             except where the group is able to control the reversal of the
                   If the recoverable amount of an asset (or cash-generating unit) is        temporary difference and it is probable that the temporary difference
                   estimated to be less than its carrying amount, its carrying amount is     will not reverse in the foreseeable future.
                   reduced to its recoverable amount. An impairment loss is recognised
ANNUAL
         REPORT




                   as an expense immediately and treated as an exceptional item.             Deferred tax is calculated at the tax rates that are expected to apply
                                                                                             to the period when the asset is realised or the liability is settled.
                   Where an impairment loss subsequently reverses, the carrying amount       Deferred tax is charged or credited in the income statement, except
PRIMEDIA




                   of the asset (or cash-generating unit) is increased to the revised        when it relates to items credited or charged directly to equity, in
                   estimate of its recoverable amount. This is done so that the increased    which case the deferred tax is also dealt with in equity.
                                                                                                                                                        55




The carrying amount of a deferred tax asset is reviewed at each              13 FINANCIAL INSTRUMENTS
balance sheet date and reduced to the extent that it is no longer            Financial assets and financial liabilities are recognised on the group's
probable that sufficient taxable profits will be available to allow all or   balance sheet when the group becomes a party to the contractual
part of the asset to be recovered.                                           provisions of the instrument.


Notwithstanding the foregoing, the group’s policy is to raise deferred       Financial assets
tax, at the statutory rate, on 50% of the cost of trademarks that have       The group’s principal financial assets are bank balances and cash, trade
not yet been assessed by and are in dispute with the South African           and other receivables and equity investments. Trade and other
Revenue Service. Where a group company has been assessed, deferred           receivables are stated at their nominal value as reduced by
tax is raised on 100% of the cost of trademarks.                             appropriate allowances for estimated irrecoverable amounts based on
                                                                             estimated future cash flows discounted at appropriate rates.
11 PROVISIONS
Provisions are recognised when the group has a present or                    Investments in securities are recognised on a trade date basis and are
constructive obligation, as a result of past events, for which it is         initially measured at cost. At subsequent reporting dates where the
probable that an outflow of economic benefits will be required to            group has the intention and ability to hold the investments to
settle the obligation, and a reliable estimate can be made for the           maturity, the investments are measured at amortised cost less any
amount of the obligation. Where the effect of the discounting to             provision for impairment.
present value is material, provisions are adjusted to reflect the time
value of money.                                                              Cash and cash equivalents are measured at fair value, based on the
                                                                             relevant exchange rates at balance sheet date.
12 INVENTORIES
Inventories are valued at the lower of cost, determined on the first-in      Financial liabilities and equity instruments
first-out basis, and net realisable value. All damaged or sub-standard       Financial liabilities and equity instruments are classified according to
materials and obsolete, redundant or slow moving inventories are             the substance of the contractual arrangements entered into. Equity
written down to their net realisable value. Finished goods and work in       instruments issued by the company are recorded at the proceeds
progress include an appropriate proportion of overheads.                     received, net of direct issue costs.


Net realisable value represents the estimated selling price, less all
estimated costs to be incurred in marketing, selling and distribution.
                                                                                                                                                        ANNUAL
                                                                                                                                                        PRIMEDIA REPORT
                  ACCOUNTING
56
                  P O L I C I E S (continued)




                   Significant financial liabilities include finance lease and other secured   15 FOREIGN CURRENCY TRANSACTIONS
                   and unsecured obligations, interest-bearing bank loans and overdrafts       The income statements of foreign subsidiaries and associates are
                   and trade and other payables. Financial liabilities are recognised          translated at the weighted average exchange rates for the period,
                   at amortised cost, comprising original debt less principal payments         other than material exceptional items, which are translated at the rate
                   and amortisations.                                                          on the date of the transaction. Assets and liabilities are translated at
                                                                                               the exchange rate prevailing at the balance sheet date.
                   Long-term borrowings and interest-bearing bank loans and overdrafts
                   are recorded at the amount of the proceeds received. Finance charges        Exchange differences on the translation of the net assets of
                   are accounted for on an accrual basis and added to the carrying             subsidiaries, less offsetting exchange differences on foreign currency
                   amount of the instrument to the extent that they are not settled in         loans financing these assets, are dealt with as a movement of reserves.
                   the period in which they arise.                                             All other exchange gains or losses on settlement of foreign currency
                                                                                               transactions retranslated at the rate prevailing at the date of the
                   Trade payables and other payables are stated at their nominal value.        transactions or the translation of monetary assets and liabilities at
                                                                                               year-end exchange rates are recorded in the income statement.
                   Derivative financial instruments
                   Derivative financial instruments are initially recorded at cost and are     The group used the following exchange rates for financial
                   remeasured to fair value at subsequent reporting dates. Gains and           reporting purposes:
                   losses from changes in the fair value are included in net profit or loss
                   in the period in which the change arises.

                                                                                               Closing exchange rate:                30 June              30 June
                   14 REVENUE RECOGNITION
                                                                                                                                         2004                2003
                   Revenue represents the net invoice value of goods and services
                   provided to third parties after deducting sales and value added taxes.      ZAR to USD1                               6.221               7.485
                                                                                               ZAR to GBP1                              11.278              12.372
                   Revenue arising from services, commission, royalties and rebates is
                                                                                               ZAR to EUR1                               7.579                8.610
                   recognised on the accrual basis in accordance with the substance of
                   the relevant agreements. Sales of goods are recognised when goods
                   are delivered and title has passed.                                         Average annual rate:

                                                                                               ZAR to USD1                               6.853               9.027
                   Interest income is accrued on a time basis, by reference to the             ZAR to GBP1                              11.894              14.277
ANNUAL
         REPORT




                   principal outstanding and at the effective interest rate applicable.        ZAR to EUR1                               8.161               9.390
                   Dividend income is recognised when the shareholders’ rights to
                   receive payment have been established.
PRIMEDIA
                                                                                                                                                     57




Where appropriate, in order to hedge its exposure to foreign exchange      18 POST-RETIREMENT MEDICAL BENEFITS
risks, the group enters into forward exchange contracts. See note 13       The group policy is not to provide post-retirement medical benefits
above for details in respect of the group's accounting policy in respect   for any employees. The obligation in respect of pensioner and
of such derivative financial instruments.                                  future post-retirement medical benefits to persons employed at
                                                                           certain subsidiary companies before the change in policy is accounted
16 BORROWING COSTS                                                         for as a defined benefit.
Borrowing costs are dealt with in the income statement in the period
in which they are incurred.                                                19 SHARE PURCHASES
                                                                           Own shares purchased by the company are cancelled. Shares held by
17 RETIREMENT BENEFITS COSTS                                               group entities are treated as treasury shares and are presented as a
Various employee retirement funds exist within the group to meet the       reduction of equity. Gains or losses on disposal of treasury shares are
requirements of individual operating companies. Contributions to           accounted for directly in equity.
defined contribution plans in respect of service during a particular
period are recognised as an expense in the relevant period. Past           The Primedia Trust is consolidated and, accordingly, the number of
service costs, experience adjustments, the effects of changes in           shares held by The Primedia Trust are deducted from the total shares
actuarial assumptions and plan amendments in respect of existing           in issue as per note 18.1.
employees in defined benefit plans are recognised as an expense or
income over the expected remaining working lives of those
employees. The effects of plan amendments in respect of retired
employees in defined benefit plans are measured at the present value
of the effect of the amendments and recognised as an expense or
income in the period in which the plan amendment is made. To the
extent that there is uncertainty as to the entitlement of the group to
the surplus, no asset is recorded.



                                                                                                                                                     ANNUAL
                                                                                                                                                     PRIMEDIA REPORT
58                INCOME STATEMENTS

                  for the year ended 30 June 2004


                                                                                              GROUP                     COMPANY

                                                                                     2004               2003       2004           2003
                                                                         Notes       R’000              R’000      R’000          R’000

                  Revenue
                  – Continued                                                    1 727 779       1 647 990             –               –
                  – Disposed entities                                              24 608             125 440          –               –

                                                                            1    1 752 387       1 773 430             –               –
                  Cost of sales                                                   (783 238)       (823 483)            –               –

                  Gross profit                                                    969 149             949 947          –               –
                  Other operating income                                           19 308              20 778     3 349           2 351
                  Other operating expenses                                        (665 003)       (693 398)       (7 556)         (8 645)

                  Operating profit/(loss) before depreciation               2     323 454             277 327     (4 207)         (6 294)

                  – Continued                                                     326 142             277 798     (4 207)         (6 294)
                  – Disposed entities                                               (2 688)              (471)         –               –

                  Depreciation                                                     (64 395)           (78 796)         –               –

                  Operating profit/(loss) before amortisation, foreign
                  exchange items and exceptional items                            259 059             198 531     (4 207)         (6 294)
                  Amortisation of goodwill and intangibles                          (3 887)            (4 393)         –               –
                  Foreign exchange gains/(losses)                                    1 030             (9 978)         –               –
                  Exceptional items                                         3      23 308             (13 357)   (50 616)     (41 360)

                  Operating profit/(loss)                                         279 510             170 803    (54 823)     (47 654)
                  Finance costs                                             4      (32 042)           (39 132)    (6 412)         (8 046)
                  Investment income                                         5      15 580              24 473    118 511      18 360

                  Profit/(loss) after interest                                    263 048             156 144    57 276       (37 340)
                  Share of associated company losses                        6         (331)           (46 464)

                  Profit/(loss) before tax                                        262 717             109 680    57 276       (37 340)
                  Taxation                                                  7      (63 619)           (63 889)   10 432           1 013

                  Profit/(loss) after tax                                         199 098              45 791    67 708       (36 327)
                  Minority interest                                         8      (24 403)           (24 587)

                  Net profit/(loss) for the year                                  174 695              21 204    67 708       (36 327)
ANNUAL
         REPORT




                  Number of shares ('000)
                  – Issued                                                  9     216 764             216 364
                  – Weighted average                                        9     216 520             218 229
                  – Diluted weighted average                                9     225 648             218 724
PRIMEDIA




                  Earnings per share (cents)
                  – Headline                                                9          68                 23
                  – Basic                                                   9           81                 10
                  – Diluted headline                                        9          65                 23
                  – Diluted basic                                           9          77                  10
GEOGRAPHICAL INCOME STATEMENTS                                                                                                                  59
for the year ended 30 June 2004

                                                   South African                   International                          Total
                                                     operations                      operations                           Group
                                               2004             2003           2004             2003             2004              2003
                                               R’000            R’000          R’000            R’000            R’000             R’000

Revenue                                    1 676 944       1 496 562         75 443           276 868       1 752 387         1 773 430

Operating profit/(loss)
before depreciation                         321 114          277 786           2 340              (459)       323 454           277 327
Depreciation                                 (61 766)        (62 921)         (2 629)          (15 875)        (64 395)           (78 796)

Operating profit/(loss) before
amortisation, foreign exchange
items and exceptional items                 259 348          214 865            (289)          (16 334)       259 059           198 531
Amortisation of goodwill and intangibles      (3 887)          (4 393)              –                –          (3 887)            (4 393)
Foreign exchange gains/(losses)               1 030            (9 978)              –                –           1 030             (9 978)
Exceptional items                            13 533            (4 295)         9 775            (9 062)        23 308             (13 357)

Operating profit/(loss)                     270 024          196 199           9 486           (25 396)       279 510           170 803
Finance costs                                (32 028)        (37 851)            (14)           (1 281)        (32 042)           (39 132)
Investment income                            15 393           22 965             187            1 508          15 580             24 473

Profit/(loss) after interest                253 389          181 313           9 659           (25 169)       263 048           156 144
Share of associated company losses *            (331)           (306)               –          (46 158)           (331)           (46 464)

Profit/(loss) before tax                    253 058          181 007           9 659           (71 327)       262 717           109 680
Taxation                                     (62 179)        (48 614)         (1 440)          (15 275)        (63 619)           (63 889)

Profit/(loss) after tax                     190 879          132 393           8 219           (86 602)       199 098             45 791
Minority interest                            (25 501)        (28 228)          1 098             3 641         (24 403)           (24 587)

Net profit/(loss) for the year              165 378          104 165           9 317           (82 961)       174 695             21 204

Number of shares (’000)
– Issued                                    216 764          216 364        216 764           216 364         216 764           216 364
– Weighted average                          216 520          218 229        216 520           218 229         216 520           218 229
– Diluted weighted average                  225 648          218 724        225 648           218 724         225 648           218 724
Earnings/(loss) per share (cents)
– Headline                                        67              50                1              (27)             68                23
– Basic                                           77              48                4              (38)             81                 10
– Diluted headline                                64              50                1              (27)             65                23
– Diluted basic                                   73              48                4              (38)             77                 10
                                                                                                                                                ANNUAL
                                                                                                                                                         REPORT



* The share of associated company losses reflected in the South African and International operations' income statements above are included in
  the advertising and filmed entertainment primary segments respectively.
                                                                                                                                                PRIMEDIA
60                BALANCE SHEETS

                  at 30 June


                                                                                  GROUP                    COMPANY

                                                                         2004               2003      2004           2003
                                                              Notes      R’000              R’000     R’000          R’000

                  ASSETS
                  Non-current assets
                  Property, plant and equipment                 10    259 150             284 381         –             –
                  Goodwill                                       11   105 446               6 042         –             –
                  Intangible assets                              11        110                119         –             –
                  Investments in subsidiary companies           12                                  418 088     370 947
                  Investments in associated companies           13      8 062              24 217         –             –
                  Other investments                             14      5 524              12 122    82 159      115 148
                  Deferred tax asset                            15    166 438             179 736    12 026             –

                                                                      544 730             506 617   512 273     486 095
                  Current assets
                  Inventories                                   16     39 569              38 446         –             –
                  Trade and other receivables                   17    333 332             355 856      176            698
                  Bank balances and cash                               65 997              30 712         –             –

                                                                      438 898             425 014      176            698

                  TOTAL ASSETS                                        983 628             931 631   512 449     486 793


                  EQUITY AND LIABILITIES
                  Share capital and premium                     18    351 362             411 738   368 910     433 200
                  Non-distributable reserves                    19    305 119             391 989    89 648      47 536
                  Accumulated loss                                    (322 812)       (501 035)     (24 446)     (92 154)

                                                                      333 669             302 692   434 112     388 582
                  Minority interest                                    16 238              20 246

                  Total shareholders' funds                           349 907             322 938   434 112     388 582
                  Non-current liabilities
                  Long-term borrowings                          20     61 912              68 350         –             –
                  Landlord inducement premium                   21     17 047              19 512         –             –
                  Long-term provisions                          22     24 928              76 477         –             –
                  Deferred tax liability                        15        272                  –          –             7

                                                                      104 159             164 339         –             7
ANNUAL
         REPORT




                  Current liabilities
                  Bank overdrafts and short–term borrowings     23           –             43 360    70 573      92 616
                  Other current liabilities                     24    529 562             400 994     7 764          5 588
PRIMEDIA




                                                                      529 562             444 354    78 337      98 204

                  Total equity and liabilities                        983 628             931 631   512 449     486 793

                  Net asset value per share (cents)                       154                140
CASH FLOW STATEMENTS                                                                                                             61
for the year ended 30 June 2004


                                                                               GROUP                           COMPANY

                                                                            2004           2003        2004              2003
                                                              Notes         R’000          R’000       R’000             R’000

OPERATING ACTIVITIES
Cash receipts from customers                                            1 798 241       1 717 581      3 370           1 370
Cash paid to suppliers and employees                                   (1 444 612)     (1 522 195)    (7 103)         (9 395)

Cash generated from/(utilised in) operations                      A      353 629         195 386      (3 733)         (8 025)
Interest received                                                          12 528         23 264      22 225         15 905
Interest paid                                                             (27 078)       (36 356)     (6 412)        (8 046)
Dividends (paid to minorities)/received                                    (1 916)          (863)     96 286           1 245
Tax (paid)/refunded                                               B      (63 805)         11 014           –           3 867

Net cash inflow from operating activities                                273 358         192 445     108 366             4 946

INVESTING ACTIVITIES
Subsidiary companies/businesses disposed                           C       (1 151)          6 304
Subsidiary companies/businesses acquired                           D       (4 334)         (5 068)
Dilution in subsidiary company                                                  –           1 563
Minority interests acquired                                               (16 723)              –       (200)              –
Loans advanced and investments in associated companies                     (4 235)        (10 615)         –               –
Amounts realised on disposal of interest in associate                       5 580               –          –               –
Other investments acquired                                                   (724)         (6 736)         –          (9 628)
Loans (repaid to)/received from minorities                                 (5 748)            333
Additions to intangible assets                                                  –            (810)         –                –
Additions to property, plant and equipment – to maintain operations       (31 044)        (48 546)         –                –
Additions to property, plant and equipment – to expand operations         (15 181)        (11 877)         –                –
Proceeds on disposal of property, plant and equipment                       2 998          15 670          –                –

Net cash outflow from investing activities                                (70 562)        (59 782)      (200)         (9 628)

FINANCING ACTIVITIES
Distribution to shareholders                                              (63 729)        (28 336)   (64 290)        (29 029)
(Decrease)/increase in inter–group loans                                                             (21 833)         55 842
Net proceeds from issue of shares                                               –             (34)         –             (34)
Share buy back                                                                  –          (7 347)         –          (7 347)
Share acquisitions by The Primedia Trust                                   (7 540)        (12 801)
Decrease in amounts owed to vendors                                        (1 083)         (2 598)         –          (3 598)
Long-term borrowings repaid                                               (51 512)           (372)         –               –

Net cash (outflow)/inflow from financing activities                     (123 864)         (51 488)   (86 123)         15 834
Net increase in cash and cash equivalents                                 78 932           81 175     22 043          11 152
Foreign currency translation                                                (287)           1 964          –               –
Cash and cash equivalents at beginning of year                           (12 648)         (95 787)   (92 616)       (103 768)
                                                                                                                                 ANNUAL
                                                                                                                                          REPORT



Cash and cash equivalents at end of year                                  65 997          (12 648)   (70 573)        (92 616)

Analysis of closing balance:
Bank balances and cash                                                    65 997           30 712          –               –
                                                                                                                                 PRIMEDIA



Bank overdrafts and short–term borrowings                                      –          (43 360)   (70 573)        (92 616)

                                                                          65 997          (12 648)   (70 573)        (92 616)
62                NOTES TO THE CASH FLOW STATEMENTS

                  for the year ended 30 June 2004


                                                                                                  GROUP                       COMPANY

                                                                                         2004              2003     2004            2003
                                                                                         R’000             R’000    R’000           R’000
                  A   Reconciliation of operating profit/(loss) before depreciation
                      to cash generated from/(utilised in) operations
                      Operating profit/(loss) before depreciation                      323 454        277 327       (4 207)         (6 294)
                      Realised foreign exchange profits/(losses)                         3 766            (4 091)        –               –
                      Cash flows relating to exceptional items                           8 585            (3 582)   2 272           (4 465)

                                                                                       335 805        269 654       (1 935)        (10 759)
                      Adjustments for:
                      (Profit)/loss on disposal on assets and investments                   (8)             (448)        –              74
                      Provisions charged to the income statement                        55 912            31 555         –               –
                      Payments against provisions                                      (40 523)       (36 840)           –               –
                      Bad debts written off                                              2 261             1 960         –               –
                      Impairment of assets and investments                                   –               94          –               –
                      Accruals and other non cash flow items                            (9 062)            1 621       (73)              –

                      Operating profit/(loss) before working capital changes           344 385        267 596       (2 008)        (10 685)
                      Decrease/(increase) in trade and other receivables                20 814        (59 873)         21               802
                      (Decrease)/increase in other current liabilities                  (9 564)           (3 939)   (1 746)         1 858
                      Increase in inventories                                           (2 006)           (8 398)        –               –

                      Cash generated from/(utilised in) operations                     353 629        195 386       (3 733)         (8 025)

                      Reconciliation of comparatives:
                      The following comparatives have been reclassified in following
                      revised disclosure:
                      Provisions charged to the income statement                                          31 555
                      Payments against provisions                                                     (36 840)
                      Bad debts written off                                                                1 960
                      Accruals and other non cash flow items                                               1 621

                      Operating profit/(loss) before working capital changes                              (1 704)
                      Increase in trade and other receivables                                             (1 960)
                      Increase in other current liabilities                                                3 664

                      Cash generated from/(utilised in) operations                                             –


                  B   Tax (paid)/refunded
                      Amounts (unpaid)/overpaid at beginning of year                   (64 827)           (8 362)        –          1 954
ANNUAL
         REPORT




                      Prior year (under)/over provided                                  (1 169)       (18 288)           –          1 913
                      Provision for South African current tax                          (37 247)       (19 651)      (1 601)              –
                      Provision for STC                                                 (8 723)           (6 679)        –               –
                      Provision for foreign tax                                         (1 620)             421
PRIMEDIA




                      Subsidiary companies/businesses acquired/disposed                   (174)           (1 024)
                      Foreign exchange translation adjustment                             218               (230)
                      Amounts unpaid at end of year                                     49 737            64 827    1 601                –

                      Taxation (paid)/refunded                                         (63 805)           11 014         –          3 867
NOTES TO THE CASH FLOW STATEMENTS                                                                                                    63
(continued)

for the year ended 30 June 2004


                                                                                           GROUP                   COMPANY

                                                                                   2004            2003    2004              2003
                                                                                   R’000           R’000   R’000             R’000
C   Subsidiary companies/businesses disposed
    During November 2003 the group disposed of the Wheel
    Group (UK) in continuance of its policy to dispose of loss–
    making, non–core operations and during July 2003 it disposed
    of Cinevation (Pty) Ltd. The details of the disposals are as follows:

    Property, plant and equipment                                             3 971           13 007
    Trade and other receivables                                              20 915           33 155
    Inventories                                                                 880            1 373
    Deferred tax asset                                                            5              658
    Tax asset                                                                     –            1 024
    Long–term borrowings                                                          –           (1 223)
    Long–term provisions                                                     (3 860)               –
    Trade and other payables                                                (27 815)         (31 350)
    Short–term borrowings                                                        (2)          (2 934)
    Short–term provisions                                                      (646)            (200)
    Net cash balances                                                         2 241           (8 563)

    Net asset (deficit)/value disposed                                       (4 311)           4 947
    Loans disposed                                                                –           (6 735)
    Costs of disposal                                                          (323)            (749)
    Minority interest                                                        (1 081)           1 660
    Non–distributable reserve realised                                       (5 946)          (3 867)
    Reversal of provision for onerous lease                                   3 562                –
    Net cash balances above                                                  (2 241)           8 563

                                                                            (10 340)          3 819
    Profit on disposal of business                                            9 189           2 485

    Net cash (deficit)/proceeds                                              (1 151)          6 304

D   Subsidiary companies/businesses acquired
    During July 2003 the group acquired 50% of Inline Advertising
    (Pty) Ltd thereby increasing its holding to 100%.
    Previously 50% of assets and liabilities were consolidated on a
    line by line basis. The details of the acquisition are as follows:

    Property, plant and equipment                                              (227)          (1 650)
    Goodwill and intangibles                                                   (110)          (3 218)
    Deferred tax asset                                                         (117)               –
    Trade and other receivables                                              (1 442)               –
    Inventories                                                                 (82)            (200)
    Bank balances and cash                                                     (291)               –
    Long–term borrowings                                                         29                –
                                                                                                                                     ANNUAL
                                                                                                                                              REPORT


    Long–term provisions                                                          6                –
    Short–term provisions                                                        54                –
    Trade and other payables                                                  1 086                –
    Short–term borrowings                                                        10                –
    Tax liability                                                               174                –
                                                                                                                                     PRIMEDIA



    Net asset value acquired                                                   (910)          (5 068)
    Goodwill on acquisition                                                  (3 715)               –
    Net cash balances above                                                     291                –
    Net cash outflow on acquisition                                          (4 334)          (5 068)
64                STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

                  for the year ended 30 June 2004




                                                                                                          Non-
                                                                                 Share capital    distributable    Accumulated
                                                                                 and premium           reserves            loss        Total
                                                                                        R’000            R’000          R’000         R’000

                  GROUP
                  Balance at 1 July 2002                                             449 427          487 742         (519 656)    417 513

                  Shares issued
                  – Issue of shares during the year                                    10 813                                       10 813
                  – Share issue expenses                                                   (34)                                         (34)
                  Share buy back                                                        (7 347)                                      (7 347)
                  Shares held in The Primedia Trust                                    (12 801)                                     (12 801)
                  Distribution to shareholders                                         (29 029)                                     (29 029)
                  Distribution received by The Primedia Trust                             693                                          693
                  Minority share of intangibles previously written-off against
                  share premium                                                                        127 011                     127 011
                  Reduction in tax value of trademarks previously written–off
                  against share premium                                                               (165 086)                    (165 086)
                  Disposal of subsidiary                                                                (3 867)                      (3 867)
                  Translation reserve movement                                                         (58 984)                     (58 984)
                  Movement in treasury shares                                              16            5 278           (3 094)      2 200
                  Transfer from NDR                                                                        (511)            511           –
                  Net profit for the year                                                                                21 204     21 204
                  Other movements                                                                          406                         406

                  Balance at 30 June 2003                                            411 738          391 989         (501 035)    302 692

                  Shares held in The Primedia Trust                                     1 664                                         1 664
                  Distribution to shareholders                                         (64 290)                                     (64 290)
                  Distribution received by The Primedia Trust                           2 247                                         2 247
                  Minority share of intangibles previously written–off against
                  share premium now written back                                                       (32 383)                     (32 383)
                  Increase in tax value of trademarks previously written–off
                  against share premium                                                                  1 138                        1 138
                  Disposal of subsidiary                                                                (5 946)                      (5 946)
                  Translation reserve movement                                                         (29 247)                     (29 247)
                  Movement in treasury shares                                                3         (21 281)           4 377     (16 901)
ANNUAL
         REPORT




                  Transfer to NDR                                                                          849             (849)          –
                  Net profit for the year                                                                              174 695     174 695

                  Balance at 30 June 2004                                            351 362          305 119         (322 812)    333 669
PRIMEDIA
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY                                                                     65
(continued)

for the year ended 30 June 2004




                                                                               Non-
                                                      Share capital    distributable   Accumulated
                                                      and premium           reserves           loss       Total
                                                             R’000            R’000         R’000        R’000

COMPANY
Balance at 1 July 2002                                    458 797           33 067         (59 970)    431 894

Shares issued
– Issue of shares during the year                           10 813                                      10 813
– Share issue expenses                                          (34)                                       (34)
Share buy back                                               (7 347)                                    (7 347)
Distribution to shareholders                                (29 029)                                   (29 029)
Transfer to NDR                                                              18 612                     18 612
Transfer from NDR                                                            (4 143)          4 143          –
Net loss for the year                                                                       (36 327)   (36 327)

Balance at 30 June 2003                                   433 200           47 536         (92 154)    388 582

Distribution to shareholders                                (64 290)                                   (64 290)
Write–down of investments and loans to subsidiaries                          42 112                     42 112
Net profit for the year                                                                      67 708     67 708

Balance at 30 June 2004                                   368 910           89 648         (24 446)    434 112




                                                                                                                  ANNUAL
                                                                                                                  PRIMEDIA REPORT
66                SEGMENT REPORT

                  for the year ended 30 June 2004




                  BUSINESS SEGMENTS

                  For management purposes, the group is organised into three operating divisions – advertising, filmed entertainment and one-to-one
                  marketing. These divisions are the basis on which the group reports its primary segment information.

                                                                       Revenue                      EBITDA                Depreciation          Segment result
                                                                2004            2003        2004          2003         2004         2003       2004          2003
                                                                R’000           R’000       R’000         R’000        R’000        R’000      R’000         R’000

                  Advertising                                759 901         686 449     244 895       199 329        32 495      33 453     181 656      154 775
                  Filmed entertainment                       900 028         789 552      96 943        99 812        27 107      27 146      43 369        61 757
                  One to one marketing(1)                     67 850         171 288       6 453             540       2 428        8 222      5 199       (17 019)
                  Disposed entities                           24 608         125 440       (2 688)           (471)      880         8 852     11 691        13 289
                  Central                                            –            701     (22 149)      (21 883)       1 485        1 123     37 595       (41 999)

                                                           1 752 387        1 773 430    323 454       277 327        64 395      78 796     279 510      170 803

                  Reconciliation of segment result to net profit for the year:
                  – Finance cost                                                                                                             (32 042)      (39 132)
                  – Investment income                                                                                                         15 580        24 473
                  – Share of associated company losses                                                                                          (331)      (46 464)
                  – Taxation                                                                                                                 (63 619)      (63 889)
                  – Minority interest                                                                                                        (24 403)      (24 587)

                  Net profit for the year                                                                                                    174 695        21 204

                                                                       Capital               Other non-cash                 Segment                Segment
                                                                      additions             expenses/(income)                assets(2)            liabilities(2)
                                                                2004            2003        2004          2003         2004         2003       2004          2003
                                                                R’000           R’000       R’000         R’000        R’000        R’000      R’000         R’000

                  Advertising                                 23 105           29 117     28 805        16 321       397 119     294 212     183 834      141 441
                  Filmed entertainment                        20 695           20 010     12 882          9 910      336 873     335 516     241 540      215 671
                  One to one marketing(1)                       1 769         10 789       3 279        24 721        21 291       46 718     12 506        42 589
                  Disposed entities                               425              –          (67)       (2 769)           –             –          –              –
                  Central(3)                                      231         28 550       6 940         (7 608)      54 212      28 291     132 653        89 854

                                                              46 225          88 466      51 839        40 575       809 495     704 737     570 533      489 555

                                                                                               South Africa              International(1)        Total Group
                                                                                            2004          2003         2004         2003       2004          2003
                                                                                            R’000         R’000        R’000        R’000      R’000         R’000
ANNUAL
         REPORT




                  GEOGRAPHICAL SEGMENTS

                  Distribution of geographical sales                                    1 676 944     1 496 562       75 443     276 868 1 752 387 1 773 430
                  Carrying amount of segment assets by location       (2)
                                                                                         769 200       642 004        40 295      62 733     809 495      704 737
PRIMEDIA




                  Additions to property, plant and equipment by location                  44 561        77 859         1 664       10 607     46 225        88 466

                  (1)
                        The one-to-one marketing division primarily conducts its operations in the United Kingdom, which is where the majority of its operating assets
                        and liabilities are located.
                  (2)
                        Excludes deferred tax, tax, goodwill and intangible assets, investments, associated companies and amounts due to vendors.
                  (3)
                        Includes capitalised land and buildings of R28 million leased by the group.
NOTES TO THE FINANCIAL STATEMENTS                                                                                             67
for the year ended 30 June 2004


                                                                                  GROUP                     COMPANY

                                                                          2004              2003    2004              2003
                                                                          R’000             R’000   R’000             R’000

1   REVENUE
    An analysis of the group’s revenue is as follows:
    – Sale of goods                                                    587 125            479 549      –                 –
    – Services rendered                                               1 165 262       1 293 881        –                 –

                                                                      1 752 387       1 773 430        –                 –


2   OPERATING PROFIT/(LOSS) BEFORE DEPRECIATION
    Operating profit/(loss) before depreciation is arrived at after
    taking into account the items detailed below:
    Income
    Foreign exchange gain – realised                                     3 874              2 394      –                 –
    Foreign exchange gain – unrealised                                   1 638               163       –                 –
    Profit on disposal of investments                                       31               781       –                 –
    Profit on disposal of property, plant and equipment                  1 612               909       –                 –
    Management fee received                                                396               771       –                 –

    Expenses
    Auditors' remuneration
    – current year                                                       5 187              6 025    901               840
    – prior year                                                           335              1 106    156               326
    – other services                                                       851               796     207                47

                                                                         6 373              7 927   1 264             1 213

    Fees paid to consultants                                             9 808             12 207    285               301
    Foreign exchange loss – realised                                       108              6 485      –                 –
    Foreign exchange loss – unrealised                                   4 374              6 050      –                 –
    Loss on disposal of investments                                          –                74       –                74
    Loss on disposal of property, plant and equipment                    1 635              1 168      –                 –
    Impairment of assets and investments                                     –                94       –                 –
    Operating lease rentals
    – premises                                                          72 179             84 767      –                 –
    – plant and equipment                                                2 349              6 642      –                 –
    Research and development costs                                       2 453              1 708      –                 –
                                                                                                                              ANNUAL
                                                                                                                                       REPORT



    Royalties paid                                                       3 291              7 675      –                 –
    Staff costs (including retirement benefits)                        283 276            285 064      –                 –
                                                                                                                              PRIMEDIA
68                NOTES TO THE FINANCIAL STATEMENTS
                  (continued)

                  for the year ended 30 June 2004


                                                                                           GROUP                        COMPANY

                                                                                  2004             2003        2004           2003
                                                                                  R’000            R’000       R’000          R’000

                  2   OPERATING PROFIT/(LOSS) BEFORE DEPRECIATION (continued)
                      Directors' emoluments – executive directors
                      – current year                                                                         13 233          14 343
                      – prior year                                                                                 –              100

                                                                                                             13 233          14 443
                      – less: paid by subsidiary companies                                                   (13 233)        (12 443)

                                                                                                                   –          2 000

                      Directors' emoluments – non–executive directors
                      – board and committee fees                                                              3 120           1 942
                      – other services as directors                                                             987               655
                      – benefit in respect of share options                                                   1 360                 –
                      – prior year                                                                               75               59

                                                                                                              5 542           2 656
                      – less: paid by subsidiary companies                                                    (5 542)         (1 068)

                                                                                                                   –          1 588

                      Number of employees: 2 618 (2003: 2 816)


                  3   EXCEPTIONAL ITEMS
                      Provision for legal and other costs                        (5 635)            (398)     (3 086)              –
                      Reversal of onerous lease provision                        4 249                  –          –               –
                      Recovery of debt previously written off                    9 844                  –     3 058                –
                      Impairment and write-down of assets, goodwill and
                      equity investments                                         5 661         (18 909)            –         (36 895)
                      Profit on disposal of subsidiary companies                 9 189             2 485
                      Write–down of investments and loans to subsidiaries                                    (50 588)              –
                      Profit/(loss) on disposal of assets and investments             –            5 898           –          (4 465)
                      Release of post–retirement medical benefit provision            –            9 035           –               –
                      Interest due to Receiver of Revenue                             –        (11 468)            –               –

                      Gross exceptional items                                   23 308         (13 357)      (50 616)        (41 360)
                      Taxation (included in note 7)                                690             (2 965)         –               –
ANNUAL
         REPORT




                      Net exceptional items                                     23 998         (16 322)      (50 616)        (41 360)


                  4   FINANCE COSTS
                      Bank overdrafts and borrowings                            (15 123)       (25 520)       (6 384)         (8 046)
PRIMEDIA




                      Long–term borrowings                                      (12 612)           (9 670)         –               –
                      Fair value adjustments                                          –            (2 776)         –               –
                      Receiver of Revenue                                        (3 609)             (316)       (28)              –
                      Amounts owed to vendors                                      (107)            (136)          –               –
                      Other loans                                                  (591)             (714)         –               –

                                                                                (32 042)       (39 132)       (6 412)         (8 046)
NOTES TO THE FINANCIAL STATEMENTS                                                                                        69
(continued)

for the year ended 30 June 2004


                                                                       GROUP                         COMPANY

                                                              2004              2003        2004                2003
                                                              R’000             R’000       R’000               R’000

5   INVESTMENT INCOME
    Interest received from subsidiary companies                                           22 200               14 281
    Interest received from bankers                            9 907            11 369           –                   –
    Interest received from associated companies                   –             6 522           –                   –
    Receiver of Revenue                                      1 014              1 339           –               1 172
    Fair value adjustments                                   2 903              1 963           –                   –
    Other interest received                                  1 756              3 280         25                1 662
    Dividends received from subsidiary companies                                          96 286                1 245

                                                            15 580             24 473     118 511              18 360


6   SHARE OF ASSOCIATED COMPANY LOSSES
    Unlisted investments                                       (331)           (46 464)


7   TAXATION
    South African normal taxation
    – Current year                                          (37 247)           (19 651)    (1 601)                  –
    – Prior year                                             (1 169)           (18 288)         –               1 913
    Foreign taxation
    – Current year                                           (1 620)            (1 223)
    – Prior year                                                  –             1 644
    Secondary taxation on companies                          (8 723)            (6 679)         –                   –
    Deferred taxation
    – Current year                                          (18 298)           (35 356)    9 925                 (900)
    – Prior year                                             3 438             15 702      2 108                    –

                                                            (63 619)           (63 851)   10 432                1 013
    Taxation charge against associated companies' profits         –                (38)         –                   –

                                                            (63 619)           (63 889)   10 432                1 013


                                                                                                                         ANNUAL
                                                                                                                         PRIMEDIA REPORT
70                NOTES TO THE FINANCIAL STATEMENTS
                  (continued)

                  for the year ended 30 June 2004


                                                                                                       GROUP                       COMPANY

                                                                                             2004               2003      2004               2003
                                                                                               %                  %         %                  %

                  7    TAXATION (continued)
                       Reconciliation of rate of taxation
                       South African normal tax rate                                           30,0              30,0      30,0              (30,0)
                       Dividends received                                                                                 (50,4)                –
                       Exceptional items – capital                                             (2,9)              3,1      26,5              33,2
                       Permanent differences – associates                                         –              12,7         –                 –
                       Amortisation of intangibles                                              0,4               1,2         –                 –
                       Prior year                                                              (0,9)              0,9         –               (5,1)
                       Deferred tax not raised on assessed losses                               0,5               9,0         –                 –
                       Deferred tax asset raised on prior year assessed losses                 (4,4)             (0,5)     (3,7)                –
                       Other permanent differences                                             (0,9)              3,9       0,4               (0,8)
                       Secondary tax on companies and other taxes                               2,4              (2,0)    (21,0)                –

                       South African normal taxation rate                                      24,2              58,3     (18,2)              (2,7)

                       Tax as a percentage of profit/(loss) before exceptional items and
                       share of associated company losses and excluding prior year tax         27,5              37,1      (7,7)             22,4


                                                                                              R’000             R’000    R’000           R’000

                       Tax losses at end of year
                       – South African                                                     331 861         359 817       7 063                 38
                       – Foreign                                                             2 867             47 249
                       Utilised to raise deferred tax asset                                (200 108)      (197 358)      (7 063)              (38)

                       Available to reduce future taxable income                           134 620         209 708            –                 –


                  8   MINORITY INTEREST
                       Interest paid to minorities                                             (808)           (1 340)
                       Share of profits                                                     (23 595)       (23 247)

                                                                                            (24 403)       (24 587)
ANNUAL
PRIMEDIA REPORT
NOTES TO THE FINANCIAL STATEMENTS                                                                                                                 71
(continued)

for the year ended 30 June 2004


                                                                                   GROUP                                  COMPANY

                                                                          2004                2003                2004                 2003
                                                                          R’000               R’000               R’000                R’000

9 EARNINGS PER SHARE
9.1 Number of shares (’000)
    Number of shares in issue                                          216 764              216 364

     Weighted average number of shares                                 216 520              218 229
     Unexercised share options                                           4 504                  495
     Shares issued subsequent to year-end                                4 624                    –

     Fully diluted weighted average number of shares                   225 648              218 724

9.2 Earnings per share
    Net profit for the year                                            174 695               21 204
    Weighted average number of shares                   ’000           216 520              218 229
    Earnings per share (basic)                         cents                81                   10

     Diluted weighted average number of shares          ’000           225 648              218 724
     Fully diluted earnings per share                  cents                77                   10

9.3 Headline earnings per share
    Net profit for the year                                            174 695               21 204
    Adjusted for:
    Goodwill amortisation                                                 3 874               4 380
    Net profit on disposal of fixed assets and investments                   (8)               (427)
    Exceptional items:
    – Impairment and write–down of goodwill and equity investments     (14 203)              32 361
    – Profit on disposal of assets and investments                           –               (5 898)
    – Profit on disposal of subsidiary companies                        (9 189)              (2 485)
    – Recovery of debt previously written off                           (9 844)                   –
    – Other                                                                  –                  685

                                                                       145 325               49 820
     Tax effect of non–headline earnings items                           1 217                  306

     Headline earnings                                                 146 542               50 126

     Weighted average number of shares                  ’000           216 520              218 229
     Headline earnings per share (basic)               cents                68                   23

     Diluted weighted average number of shares          ’000           225 648              218 724
     Fully diluted headline earnings per share         cents                65                   23

     Basic earnings per share is calculated by dividing the earnings for the year by the weighted average number of shares in issue during the
     period, net of those shares held by The Primedia Trust.
                                                                                                                                                  ANNUAL
                                                                                                                                                           REPORT




     Diluted earnings per share is calculated by adjusting the weighted average number of shares in issue by the number of shares that would
     have been issued at fair value in respect of options granted but not exercised, as well as shares issued subsequent to year-end.
                                                                                                                                                  PRIMEDIA



     Headline earnings per share is calculated by dividing the headline earnings attributable to shareholders by the weighted average number of
     shares in issue during the period, net of those shares held by The Primedia Trust.

     Diluted headline earnings per share is calculated by adjusting the weighted average number of shares in issue by the number of shares that
     would have been issued at fair value in respect of options granted but not exercised, as well as shares issued subsequent to year-end.
72                NOTES TO THE FINANCIAL STATEMENTS
                  (continued)

                  for the year ended 30 June 2004




                                                                                                 Leased                              Office
                                                                                             assets and            Motor          furniture,
                                                                                              leasehold          vehicles,       equipment
                                                            Land and       Advertising         improve-         plant and         décor and
                                                            buildings       structures            ments        equipment         computers               Total
                                                               R’000            R’000             R’000             R’000             R’000             R’000

                  10 PROPERTY, PLANT AND EQUIPMENT
                      GROUP – at 30 June 2004
                      Cost                                       13 445        147 049            51 495          100 673           276 632          589 294
                      Accumulated depreciation                   (4 059)       (68 660)            (5 910)         (68 596)        (182 919)        (330 144)

                      Net carrying value                          9 386         78 389            45 585            32 077           93 713          259 150

                      Movement summary
                      Opening net carrying value                 11 858         84 734            46 903           34 427           106 459          284 381
                      Additions                                     30          11 109               242             9 579           25 265           46 225
                      Acquisition of subsidiary companies          348                –             (317)              179                17              227
                      Disposal of subsidiary companies           (1 223)              –                 –                –            (2 748)          (3 971)
                      Disposals – at cost                           (65)         (1 201)                –          (11 900)          (12 857)        (26 023)
                      Disposals – accumulated depreciation          43             847                  –           10 192           11 920           23 002
                      Depreciation                               (1 141)       (16 864)           (1 655)          (10 761)         (33 974)         (64 395)
                      Exchange rate adjustments                     36             (236)              (26)             264              (334)            (296)
                      Reclassifications                            (500)              –              438                97               (35)                –

                      Closing net carrying value                  9 386         78 389            45 585            32 077           93 713          259 150

                      GROUP – at 30 June 2003
                      Cost                                       24 706        137 674            52 346          103 684           314 833          633 243
                      Accumulated depreciation                (12 848)         (52 940)           (5 443)          (69 257)        (208 374)        (348 862)

                      Net carrying value                         11 858         84 734            46 903           34 427           106 459          284 381

                      Movement summary
                      Opening net carrying value                 27 865         88 175            10 028           43 276           128 712          298 056
                      Additions                                   1 605         11 458            35 185             6 083           34 135           88 466
                      Acquisition of subsidiary companies             –          1 650                  –                –                 –            1 650
                      Disposal of subsidiary companies           (2 434)              –           (3 757)             (724)           (6 092)        (13 007)
                      Disposals – at cost                        (1 214)         (1 367)                –           (9 158)          (23 696)        (35 435)
                      Disposals – accumulated depreciation          29             771                  –            7 234           22 422           30 456
                      Depreciation                               (2 777)       (16 394)           (3 165)          (12 089)          (44 371)        (78 796)
                      Exchange rate adjustments                    567               93           (2 451)             (195)           (4 209)          (6 195)
ANNUAL
         REPORT




                      Impairments                                  (720)            (21)                –                –               (73)            (814)
                      Reclassifications                       (11 063)             369            11 063                 –              (369)                –

                      Closing net carrying value                 11 858         84 734            46 903           34 427           106 459          284 381
PRIMEDIA




                      Leased assets comprise buildings, leasehold improvements, motor vehicles and equipment. Assets are encumbered as detailed in notes 20 and 21.


                      A register containing the information required by paragraph 22 (3) of the 4th schedule to the Companies Act is available for inspection
                      at the registered office of the company.
NOTES TO THE FINANCIAL STATEMENTS                                                                                        73
(continued)

for the year ended 30 June 2004




                                                                                      Trademarks
                                                                                             and
                                                                          Goodwill     copyrights                Total
                                                                            R’000          R’000                R’000

11   GOODWILL AND INTANGIBLE ASSETS
     GROUP – at 30 June 2004
     Cost                                                                  116 901           186           117 087
     Accumulated amortisation                                              (11 455)           (76)          (11 531)

     Net carrying value                                                    105 446           110           105 556

     Movement summary
     Opening net carrying value                                              6 042           119                6 161
     Additions                                                             102 413             4           102 417
     Acquisition of subsidiary company                                       3 825             –                3 825
     Amortisation                                                           (3 874)           (13)             (3 887)
     Impairment                                                             (2 960)            –               (2 960)

     Closing net carrying value                                            105 446           110           105 556

     GROUP – at 30 June 2003
     Cost                                                                   13 623           182               13 805
     Accumulated amortisation                                               (7 581)           (63)             (7 644)

     Net carrying value                                                      6 042           119                6 161

     Movement summary
     Opening net carrying value                                             20 745             –               20 745
     Additions                                                                830            132                  962
     Acquisition of subsidiary companies                                     3 218             –                3 218
     Amortisation                                                           (4 380)           (13)             (4 393)
     Exchange rate adjustments                                                   3             –                    3
     Reversal of goodwill                                                   (4 591)            –               (4 591)
     Impairment                                                             (9 783)            –               (9 783)

     Closing net carrying value                                              6 042           119                6 161

                                                                                                     COMPANY
                                                                                           2004                  2003
                                                                                           R’000                 R’000
                                                                                                                         ANNUAL
                                                                                                                                  REPORT



12 INVESTMENTS IN SUBSIDIARY COMPANIES (Annexure 2)
     Shares at cost                                                                     485 013                485 013
     Loans to subsidiary companies                                                    2 290 041           2 300 855
                                                                                                                         PRIMEDIA



     Loans from subsidiary companies                                                    (187 589)          (203 435)

                                                                                      2 587 465           2 582 433
     Write–down of investments against share premium                                  (2 292 656)         (2 292 656)
     Recoupment of amounts previously written–off against share premium                 123 279                 81 170

                                                                                        418 088                370 947
74                NOTES TO THE FINANCIAL STATEMENTS
                  (continued)

                  for the year ended 30 June 2004


                                                                                                           GROUP                       COMPANY

                                                                                                  2004              2003      2004            2003
                                                                                                  R’000             R’000     R’000           R’000

                  13 INVESTMENTS IN ASSOCIATED COMPANIES (Annexure 1)
                      Balance at beginning of year                                              24 217           149 527          –           2 193
                      Share of associated company losses                                           (331)          (46 464)
                      Foreign exchange translation movements                                           –          (57 815)
                      Dilution of equity interest                                                      –           (1 433)
                      Impairment and write–down of investments                                 (14 479)           (20 425)        –               –
                      Interest in associated company acquired                                       323                  –        –               –
                      Interest in associated company disposed                                       (84)                 –        –               –
                      Loans advanced                                                              3 996             4 827         –               –
                      Amounts realised on disposal of interest in associate                      (5 580)                 –        –               –
                      Reclassification to other investments                                            –           (4 000)        –          (2 193)

                      Balance at end of year                                                      8 062            24 217         –               –

                      Analysis of closing balance:
                      Unlisted investments
                      – Shares at cost (net of goodwill amortised)                             420 616           426 680          –               –
                      – Share of reserves                                                     (257 410)          (257 079)
                      Loans owing by associated companies                                      131 581           132 926          –               –
                      Impairment and write–down of investments                                (286 725)          (278 310)        –               –

                                                                                                  8 062            24 217         –               –


                  14 OTHER INVESTMENTS
                      The Primedia Trust and other loans                                          5 524            12 122      800               800
                      Reclassification from investments in associated companies                   4 000             4 000     2 193           2 193
                      Write–down of investments to fair value                                    (4 000)           (4 000)   (2 193)         (2 193)
                      Loan to The Primedia Trust, less provisions                                                                 –         32 989
                      Funding provided to empowerment partner for investment
                      in subsidiary company – preference shares                                                              81 359          81 359

                                                                                                  5 524            12 122    82 159         115 148

                      The preference shares bear cumulative dividends at variable rates linked to the prime bank rate.
                      The directors value the unlisted investments at cost.
ANNUAL
PRIMEDIA REPORT
NOTES TO THE FINANCIAL STATEMENTS                                                                                                  75
(continued)

for the year ended 30 June 2004


                                                                                    GROUP                       COMPANY

                                                                           2004              2003      2004               2003
                                                                           R’000             R’000     R’000              R’000

15 DEFERRED TAX
    Balance at beginning of year                                         179 736        363 842           (7)              893
    Change in accounting policy                                                –             1 561        –                   –
    Charge to income statement                                           (14 860)       (19 654)      12 033               (900)
    Adjustment to equity arising on changes to tax value of trademarks     1 138       (165 086)          –                   –
    Foreign exchange translation differences                                 40               (269)       –                   –
    Disposal of subsidiary companies                                          (5)             (658)       –                   –
    Acquisition of subsidiary companies                                     117                  –        –

    Balance at end of year                                               166 166        179 736       12 026                 (7)

    Deferred tax asset                                                   166 438        179 736       12 026                  –
    Deferred tax liability                                                  (272)                –        –                  (7)

    Analysis of closing balance:
    – Capital allowances                                                  (7 952)           (7 307)       –                   –
    – Prepayments                                                         (4 838)       (31 668)         (10)               (19)
    – Provisions                                                          15 399            36 387        –                   –
    – Effect of tax losses                                                60 188            66 212        –                 12
    – Trademarks                                                          85 529        102 607           –                   –
    – STC credits                                                         17 840            13 505    12 036                  –

                                                                         166 166        179 736       12 026                 (7)

    Tax losses not raised as a deferred tax asset                        134 620        209 708           –                   –

    Deferred tax not raised due to the uncertainty of future
    income streams against which the asset can be realised.               40 386            62 912        –                   –




                                                                                                                                   ANNUAL
                                                                                                                                   PRIMEDIA REPORT
76                NOTES TO THE FINANCIAL STATEMENTS
                  (continued)

                  for the year ended 30 June 2004


                                                                                                        GROUP                    COMPANY

                                                                                               2004              2003    2004          2003
                                                                                               R’000             R’000   R’000         R’000

                  16 INVENTORIES
                      Finished goods *                                                        23 474            23 897      –                –
                      Merchandise                                                              9 923             9 907      –                –
                      Raw materials and components                                             4 603             3 055      –                –
                      Work in progress                                                             –              224       –                –
                      Consumables and maintenance spares                                       1 569             1 363      –                –

                                                                                              39 569            38 446      –               –

                      * Including inventories of R6,8 million (2003: R8,5 million)
                        carried at net realisable value.


                  17 TRADE AND OTHER RECEIVABLES
                      Trade receivables                                                      234 104        207 773         –                –
                      Prepaid film royalties                                                  50 727            92 830      –                –
                      Prepayments                                                             16 878            17 677     66               63
                      Tax overpaid                                                              652              4 658      –                –
                      Other *                                                                 30 971            32 918    110              635

                                                                                             333 332        355 856       176              698

                      * Included in receivables are loans to directors, with the following
                         movements during the year:
                         Opening balance                                                           –                –
                         Loans advanced                                                         715                 –
                         Loans repaid                                                           (697)               –

                         Closing balance                                                         18                 –
ANNUAL
PRIMEDIA REPORT
NOTES TO THE FINANCIAL STATEMENTS                                                                                                 77
(continued)

for the year ended 30 June 2004


                                                                                GROUP                        COMPANY

                                                                       2004              2003       2004                2003
                                                                       R’000             R’000      R’000               R’000

18 SHARE CAPITAL AND PREMIUM
18.1 Share capital
    Authorised share capital
    100 000 000 ordinary shares of 2 cents each                        2 000             2 000      2 000               2 000
    200 000 000 "N" shares of 0,02 cents each                            40                40         40                   40

                                                                       2 040             2 040      2 040               2 040

    Issued share capital
    50 636 696 (2003: 50 636 696) ordinary shares
    of 2 cents each                                                    1 013             1 013      1 013               1 013
    173 366 966 (2003: 173 366 966) "N" shares of
    0,02 cents each                                                      35                35         35                   35

                                                                       1 048             1 048      1 048               1 048
    Less: shares held in The Primedia Trust
    1 123 741 (2003: 1 276 699) ordinary shares of 2 cents each          (23)              (26)
    6 115 634 (2003: 6 363 163) "N" shares of 0,02 cents each             (1)               (1)

    Total share capital                                                1 024             1 021      1 048               1 048

18.2 Share premium
    Gross premium, less issue expenses and intangibles written off   477 657        477 657       477 657          477 657
    Premium on share buy-back                                        (16 476)       (16 476)      (16 476)             (16 476)
    Distribution to shareholders                                     (93 319)       (29 029)      (93 319)             (29 029)
    Premium on shares held in The Primedia Trust                     (20 464)       (22 128)
    Distribution received by The Primedia Trust                        2 940              693

    Total share premium                                              350 338        410 717       367 862          432 152

    Total share capital and premium                                  351 362        411 738       368 910          433 200


19 NON-DISTRIBUTABLE RESERVES
    Reserve arising from tax relief on intangible assets             238 631        237 493
    Foreign currency translation reserve                               9 338            44 531
    Shares held in The Primedia Trust                                (43 831)       (22 550)
                                                                                                                                  ANNUAL



    Goodwill and trademarks disposed by subsidiary companies
                                                                                                                                           REPORT



    previously written off against share premium                       5 291             4 442
    Minority share of intangibles previously written-off against
    share premium                                                     94 628        127 011
                                                                                                                                  PRIMEDIA



    Recoupment of investments and loans to subsidiaries
    previously written off                                                                         81 638              39 526
    Other                                                              1 062             1 062      8 010                8 010

                                                                     305 119        391 989        89 648              47 536
78                NOTES TO THE FINANCIAL STATEMENTS
                  (continued)

                  for the year ended 30 June 2004


                                                                                                             GROUP                               COMPANY

                                                                                                    2004              2003              2004              2003
                                                                                                    R’000             R’000             R’000             R’000

                  20 LONG-TERM BORROWINGS
                      Secured borrowings:
                      – Finance leases                                                            65 170             68 951                  –                 –
                      – Mortgage loans                                                                   –            3 484                  –                 –
                      – Instalment sale agreements                                                     56               261                  –                 –

                      Total secured borrowings                                                    65 226             72 696                  –                 –
                      Less: short–term portion included in other current liabilities               (3 314)           (4 346)                 –                 –

                                                                                                  61 912             68 350                  –                 –

                      Repayment terms:
                      – Within one year                                                            3 314              4 346                  –                 –
                      – Two to five years                                                         24 395             38 176                  –                 –
                      – Five years and longer                                                     37 517             30 174                  –                 –

                                                                                                  65 226             72 696                  –                 –

                      Finance lease liabilities are secured over vehicles and equipment with a book value of R6,1 million (2003: R7,2 million) and land and buildings
                      with a book value of R38,9 million (2003: R39,6 million). The finance leases bear interest at various rates linked to the bank prime rate and
                      are repayable in various monthly instalments over a period of one to twelve years.
                      Instalment sale liabilities are secured over vehicles and equipment with a book value of R0,7 million (2003: R1,2 million), bear interest
                      at varying rates linked to the bank prime rate and are repayable in monthly instalments over a period of one to two years.


                  21 LANDLORD INDUCEMENT PREMIUM
                      Total premium                                                               18 280             19 704                  –                 –
                      Less: short-term portion included in other current liabilities               (1 233)             (192)                 –                 –

                                                                                                  17 047             19 512                  –                 –

                      A subsidiary company has entered into an agreement with the landlord of a cinema complex, in terms of which the landlord has provided
                      an equipped cinema complex. The monthly lease payments in terms of the agreement are based on the level of customer attendances
                      experienced by the complex and extend for a period of 8 years to 2012. This amount approximates the value of the assets to the amount of
                      R19,3 million provided by the landlord in the complex. The landlord has encumbered rights to the finance lease assets. An imputed interest
                      cost on this amount is charged to finance costs.
ANNUAL
PRIMEDIA REPORT
NOTES TO THE FINANCIAL STATEMENTS                                                                             79
(continued)

for the year ended 30 June 2004




                                                 Post-     Onerous
                                           retirement    leases and            SCME
                                              medical        cinema     constructive
                                              benefits      closures      obligation     Other        Total
                                                R’000          R’000           R’000     R’000       R’000

22 LONG-TERM PROVISIONS
    GROUP – at 30 June 2004
    Balance at beginning of year               15 638         9 299          48 653     11 156      84 746
    Additional provisions raised                    –         7 546                –      4 110     11 656
    Provisions reversed                          (268)       (1 443)               –       (721)    (2 432)
    Payments against provisions                     –              –         (42 589)    (2 198)   (44 787)
    Disposal of subsidiary companies                –        (3 562)               –       (298)    (3 860)
    Acquisition of subsidiary companies             –              –               –          6          6
    Foreign exchange rate adjustment                –          (149)          (6 064)       (80)    (6 293)
    Reclassifications                            (345)       (7 546)               –       224      (7 667)

    Balance at end of year                     15 025         4 145                –    12 199      31 369
    Short-term portion included in other
    current liabilities                        (1 599)       (4 145)               –       (697)    (6 441)

                                               13 426              –               –    11 502      24 928

    GROUP – at 30 June 2003
    Balance at beginning of year               24 673         5 494          67 764     28 875     126 806
    Additional provisions raised                    –           541                –        85        626
    Provisions reversed                        (9 035)             –               –       (838)    (9 873)
    Payments against provisions                     –          (478)               –     (1 524)    (2 002)
    Foreign exchange rate adjustment                –         (1 113)        (19 111)      (169)   (20 393)
    Reclassifications                               –         4 855                –    (15 273)   (10 418)

    Balance at end of year                     15 638         9 299          48 653     11 156      84 746
    Short-term portion included in other
    current liabilities                        (1 944)       (4 855)               –     (1 470)    (8 269)

                                               13 694         4 444          48 653      9 686      76 477
                                                                                                              ANNUAL
                                                                                                              PRIMEDIA REPORT
80                NOTES TO THE FINANCIAL STATEMENTS
                  (continued)

                  for the year ended 30 June 2004


                                                                                                             GROUP                                COMPANY

                                                                                                    2004               2003               2004             2003
                                                                                                    R’000              R’000              R’000            R’000

                  23 BANK OVERDRAFTS AND SHORT-TERM BORROWINGS
                      Bank overdrafts and borrowings
                      – South Africa                                                                     –           27 895            70 573             92 616
                      – United Kingdom                                                                   –           15 465                  –                  –

                                                                                                         –           43 360            70 573             92 616


                  24 OTHER CURRENT LIABILITIES
                      Trade payables and accruals                                                317 251            288 887               6 163            5 588
                      Deferred income                                                             16 424             18 193                  –                  –
                      Amounts owed to vendors *                                                  129 132               1 000                 –                  –
                      Tax liabilities                                                             50 389             69 485               1 601                 –
                      Current portion of long–term borrowings (note 20)                             3 314              4 346                 –                  –
                      Current portion of landlord inducement premium (note 21)                      1 233                192                 –                  –
                      Current portion of long–term provisions (note 22)                             6 441              8 269                 –                  –
                      Financial instruments liability **                                            5 378             10 622                 –                  –

                                                                                                 529 562            400 994               7 764            5 588

                      * The amount owing to vendors has been settled subsequent to year-end.
                      ** The financial instruments liability relates to the unrealised loss on open foreign exchange contracts in respect of purchased currency (refer
                        note 28.2) and the liability arising as a result of the valuation of the embedded derivative (refer note 28.3).


                  25 RETIREMENT BENEFIT FUNDS
                      It is the policy of the group to encourage, facilitate and contribute to the provision of retirement benefits for all permanent employees. The
                      majority of the group's employees belong to 14 defined contribution and three defined benefit funds, one of which is located outside South
                      Africa and is accordingly not subject to the Pension Funds Act, 1956. All South African funds are governed by the Pension Funds Act, 1956.


                      The total cost charged to income of R17,2 million (2003: R17,1 million) represents the contributions payable to these schemes by the group
                      at rates specified in the rules of the schemes. All funds, with the exception of the Database Group Pension Fund, were confirmed as being
                      financially sound as at their last valuation.


                      During the prior year, the United Kingdom-based Database Group Pension Fund, a defined benefit fund, was discontinued. Based on the
                      latest actuarial valuation conducted as at 30 June 2004, the fund had a GBP 1 043 000 deficit, being the differential between the market
ANNUAL
         REPORT




                      value of plan assets of GBP 3 407 000 and the present value of plan liabilities of GBP 4 450 000. In accordance with the accounting
                      treatment detailed in AC116 Retirement Benefits, an amount of GBP 84 000 has been raised as a liability, with the balance of GBP 959 000
                      representing unrecognised actuarial losses to be amortised over the remaining working lives of the participating employees.
PRIMEDIA
NOTES TO THE FINANCIAL STATEMENTS                                                                                                                 81
(continued)

for the year ended 30 June 2004




25   RETIREMENT BENEFIT FUNDS (continued)
     The key assumptions used in valuing the Database Group Pension Fund were as follows:
                                                                                   2004             2003
                                                                                     %                %

     Discount rate                                                                 6,00              5,75
     Expected rate of salary increases *                                               –                –
     Expected rate of inflation                                                    3,00              2,50
     Expected rate of return on plan assets
     – equities                                                                    8,50              8,25
     – bonds                                                                       5,50              4,75
     – cash                                                                        4,50              3,75
     Future pension increases                                                      3,00              2,25

     * The fund was discontinued in the prior year and accordingly salary increases do not apply.
       The other two defined benefit funds have been valued by independent actuaries as follows:
                                                                              Valuation                              Latest
                                                                                interval                     valuation date
     Primovie Pension Fund                                                       3 years                       30 June 2001
     Alexander Forbes Pension Fund No 2                                          3 years                    28 February 2002

     The assets of the South African defined benefit funds are held mainly in cash and interest bearing stocks and currently show a surplus of
     R28 million, which was to have been distributed to scheme members and the company in terms of a distribution proposal submitted to the
     Financial Services Board for approval in terms of the Pension Funds Act, 1956, in November 2001. The distribution proposal was rejected by
     the Financial Services Board when new legislation dealing with retirement fund surpluses was promulgated. The apportionment of
     retirement fund surpluses is now regulated in terms of the Pension Funds Second Amendment Act, 2001 and a surplus apportionment
     implementation process, expecting to take at least 18 months, has been instituted for the Primovie retirement funds. Due to uncertainties
     regarding the effect of the Pension Funds Second Amendment Act, the group has adopted a prudent view in recognising none of the surplus
     to the company.


     The key assumptions used in valuing the group's South African defined benefit funds were as follows:
                                                                                   2004             2003
                                                                                     %                %

     Discount rate                                                                12,00             12,00
     Expected rate of salary increases                                            11,00             11,00
     Expected rate of return on plan assets                                       12,00             12,00
     Future pension increases **                                                     n/a              n/a
                                                                                                                                                  ANNUAL
                                                                                                                                                           REPORT



     ** The fund's pension increases are determined by Sanlam. In light of proposed legislation, the funds will be required to set an increase
        policy targeting a percentage of CPI, but this will be limited to the actual increases declared by Sanlam.
                                                                                                                                                  PRIMEDIA
82                NOTES TO THE FINANCIAL STATEMENTS
                  (continued)

                  for the year ended 30 June 2004


                                                                                                          GROUP                             COMPANY

                                                                                                 2004              2003             2004                2003
                                                                                                 R’000             R’000            R’000               R’000

                  26   COMMITMENTS
                  26.1 Capital commitments
                       Capital expenditure
                       Contracted                                                                     –                –                –                   –
                       Authorised, but not yet contracted                                      78 802             61 971                –                   –

                                                                                               78 802             61 971                –                   –

                       To be expended:
                       Within one year                                                         76 572             61 871                –                   –
                       Two to five years                                                         2 230               100                –                   –

                                                                                               78 802             61 971                –                   –

                  26.2 Financial commitments
                       Film rights                                                             38 434             48 496                –                   –
                       Less: amounts recoverable from third party                              (8 193)            (8 898)               –                   –

                                                                                               30 241             39 598                –                   –
                       Other commitments                                                            47               530                –                   –

                                                                                               30 288             40 128                –                   –

                  26.3 Operating lease commitments
                       Premises and site rentals
                       Future lease payments expiring within:
                       One year                                                                74 764             86 721                –                   –
                       Two to five years                                                      184 357           197 356                 –                   –
                       After five years                                                        33 458             91 613                –                   –

                                                                                              292 579           375 690                 –                   –

                       Office equipment
                       Future lease payments expiring within:
                       One year                                                                  3 068             2 877                –                   –
                       Two to five years                                                         6 018             4 786                –                   –
                       After five years                                                               –                –                –                   –
ANNUAL
         REPORT




                                                                                                 9 086             7 663                –                   –

                       The commitments will be financed by cash flows from operations and the utilisation of cash and borrowings of the group. The above include
                       the group's share of associated companies' commitments.
PRIMEDIA
NOTES TO THE FINANCIAL STATEMENTS                                                                                                                  83
(continued)

for the year ended 30 June 2004


                                                                                     GROUP                                 COMPANY

                                                                          2004                 2003               2004                  2003
                                                                          R’000                R’000              R’000                 R’000

27 CONTINGENT LIABILITIES
    27.1 Bank guarantees and other contingent liabilities                55 000              17 276                    –                    –

    27.2 Parent company guarantees:
            – Ster Century Middle East (over four years)                 25 274              32 972              25 274                32 972
            – Ster Century Europe (over four to nine years)
            – Bank guarantees                                             4 410                4 798              4 410                 4 798
            – Lease guarantees                                         138 313              137 348            138 313               137 348

            Total guarantees                                           167 997              175 118            167 997                175 118
            Less: Indemnities obtained from purchasers *              (142 723)            (142 146)          (142 723)              (142 146)

            Unindemnified parent company guarantees                      25 274              32 972              25 274                32 972

            * Indemnities have been received from the purchasers of the various cinema interests of Ster Century Europe.


28 FINANCIAL RISK MANAGEMENT
    The group’s financial instruments consist mainly of cash and deposits with banks, bank loans and overdrafts, trade and other receivables and
    payables, investments and secured, unsecured and other borrowings. In respect of all financial instruments mentioned above, book value
    approximates fair value. Derivative instruments, such as forward exchange contracts and fixed interest rate agreements, are used by the
    group. The group does not speculate in the trading of derivative instruments.

28.1 Treasury risk management
    A treasury committee, consisting of the senior executives of the group, meets to analyse currency and interest rate exposure and to
    re-evaluate treasury management strategies.


    The group’s central treasury function provides the group with access to local money markets and provides group subsidiaries with the benefit
    of bulk financing and depositing.

28.2 Foreign currency risk management
    The group’s policy is to cover forward all foreign trade commitments. Each subsidiary manages its own trade exposure. In this regard,
    the group has entered into certain forward exchange contracts, which do not relate to specific items appearing on the balance sheet,
    but which were entered into to cover foreign commitments not yet due and will be utilised during the next twelve months.


    The following open foreign exchange contracts relating to purchased currency, maturing from 1 July 2004 to 30 November 2004, existed at
    year-end:
                                                                                                                                                   ANNUAL
                                                                                                                                                            REPORT



                                            Foreign amount         Average rate       Rand amount             Fair value      Loss expensed
                                                           ’000                               R’000               R’000                R’000
    Euros                                                  3 451            7,93             27 368               26 450                 (918)
                                                                                                                                                   PRIMEDIA



    US$                                                    3 730            6,57             24 514               23 254               (1 260)
    GBP                                                       2            11,43                  23                  23                    –

    The resultant loss detailed above has been expensed in the income statement.
84                NOTES TO THE FINANCIAL STATEMENTS
                  (continued)

                  for the year ended 30 June 2004




                  28   FINANCIAL RISK MANAGEMENT (continued)
                  28.3 Embedded derivative
                       The group is entitled to receive payments for certain film rights which are determined and billed in US$, which is neither the reporting
                       currency of the group nor of the third party. This gives rise to an embedded derivative in terms of AC133: Financial Instruments Recognition
                       and Measurement. This embedded derivative has been fair valued and the resultant adjustment of R1,4 million (2003: R1,8 million) has been
                       expensed in the income statement.

                  28.4 Credit risk management
                       Potential areas of credit risk consist of trade accounts receivable, cash deposits and investments. Trade accounts receivable consist mainly
                       of a large widespread customer base. Group companies monitor the financial position of their customers on an ongoing basis and, where
                       appropriate, use is made of credit guarantee insurance. The granting of credit is controlled by application and account limits.


                       Provision is made for both specific and general bad debts and at the year-end management did not consider there to be any material credit
                       risk exposure that was not already covered by the bad debt provision or credit guarantee insurance.


                       It is group policy to deposit short-term cash investments with major banks.

                  28.5 Liquidity risk management
                       The group manages liquidity risk by managing forecast cash flows and ensuring that adequate unutilised borrowing facilities
                       are maintained.


                       There are no restrictions on the company’s borrowing capacity imposed by the Articles of Association or any other covenant.
                       Total borrowings comprise:
                                                                                                                                                  GROUP
                                                                                                                                        2004              2003
                                                                                                                                        R’000             R’000

                       Short-term                                                                                                      4 547             47 898
                       Long-term                                                                                                      78 959             87 862
                       Unindemnified guarantees given (note 27)                                                                       35 794             50 248

                       The group has unutilised short-term borrowing facilities of R190,0 million (2003: R137,6 million). These facilities are secured as detailed in
                       Annexure 2.

                  28.6 Interest rate management
                       As part of the process of managing the group's fixed and floating rate borrowings mix, the interest rate characteristics of new borrowings
                       and the refinancing of existing borrowings are positioned according to expected movements in interest rates.
ANNUAL
PRIMEDIA REPORT
NOTES TO THE FINANCIAL STATEMENTS                                                                                                       85
(continued)

for the year ended 30 June 2004




29   DIRECTORS' REMUNERATION AND INTERESTS
29.1 Directors' remuneration
     Directors' remuneration, including direct and indirect benefits, for the year ended 30 June 2004 were as follows:

                                                                                             Benefit in
                                                            Retirement                       respect of
                                                           and medical                            share             2004       2003
                                                Salary    contributions        Bonus            options             Total      Total
     Executive directors                        R’000             R’000         R’000            R’000             R’000      R’000

     FA Gazendam                                1 297               203           689             2 309            4 498       2 590
     O Ighodaro                                 1 085               200         1 981                 –            3 266       2 200
     W Kirsh                                    1 646               174         2 357               992            5 169       4 520
     I Kirsh (executive to 31 December 2002)        –                 –             –                 –                –       2 510
     P Maw (executive to 31 December 2002)          –                 –             –                 –                –       1 123
     K Pillay                                   1 150               250         2 201             1 141            4 742       2 520

                                                5 178               827         7 228             4 442          17 675       15 463

     Less: expensed in 2004
     Prior year underprovision                                                                                           –      100
     Benefit in respect of share options exercised
     not charged to the income statement                                                                          (4 442)     (1 120)

     Charge to the income statement                                                                              13 233       14 443

     All the above amounts were approved by the Remuneration Committee in the 2003/2004 year.

                                                                                             Benefit in
                                                             Board and       Other           respect of
                                                             committee services as                share             2004       2003
                                                                   fees directors *             options             Total      Total
     Non-executive directors                                      R’000         R’000            R’000             R’000      R’000

     MJ Bosman                                                      270             –                 –              270        113
     NJM Canca (appointed 29 August 2003)                           130             –                 –              130          –
     BP Dibate (resigned 30 June 2003)                                –             –                 –                –         75
     I Kirsh (non–executive from 1 January 2003)                    460           592                 –            1 052        465
     HM Khoza (appointed 20 September 2002)                         330             –                 –              330        188
     HM Madima (appointed 20 September 2002)                        200             –                 –              200        113
     P Maw (non–executive from 1 January 2003)                      270           225             1 360            1 855        300
     AP Nkuna                                                       600             –                 –              600        500
     CS Seabrooke                                                   330           170                 –              500        530
     BJT Shongwe                                                    260             –                 –              260        200
                                                                                                                                        ANNUAL
                                                                                                                                                 REPORT



     SV Zilwa (appointed 20 September 2002)                         270             –                 –              270        113
     Keshan Pillay (alternate)                                        –             –                 –                –          –

                                                                  3 120           987             1 360            5 467       2 597
                                                                                                                                        PRIMEDIA



     Prior year underprovision                                                                                           75      59

     Charge to the income statement                                                                                5 542       2 656

     * Fees paid for time spent on group affairs as directors but outside of board or committee forums.
       None of the directors have service agreements with Primedia Limited extending beyond 1 July 2006.
86                NOTES TO THE FINANCIAL STATEMENTS
                  (continued)

                  for the year ended 30 June 2004




                  29   DIRECTORS' REMUNERATION AND INTERESTS (continued)
                  29.2 Interests of directors in contracts
                       The directors have certified that, during the year and up to the date of approval of these financial statements, they were not materially
                       interested in any transaction of any significance with the company and any of its subsidiaries. Accordingly, a conflict of interest with regard
                       to directors' interests in contracts does not exist.

                  29.3 Interests of directors in share options
                                                      Number of            Options           Options
                                                      options at           granted relinquished/       Number of            Option    Date from
                                                        30 June          during the exercised during    options at            price       which           Expiry
                       Name                      Type      2003                year         the year 30 June 2004            (cents) exercisable           date

                       FA Gazendam                   N      200 000                –         200 000                –           425       01/02/02      31/01/05
                                                     N      387 812                –                –       387 812             361       02/12/04      01/12/07
                                                     N              –         173 840               –       173 840             604       01/12/05      30/11/08
                                             Ordinary       200 000                –         133 200         66 800             600       01/07/02      30/06/05
                                             Ordinary       500 000                –         333 000        167 000             600       01/01/03      31/12/05

                       O Ighodaro                    N      250 000                –                –       250 000             411       30/08/03      29/08/06
                                                     N      304 709                –                –       304 709             361       02/12/04      01/12/07
                                                     N              –         159 561               –       159 561             604       01/12/05      30/11/08

                       I Kirsh               Ordinary       500 000                –                –       500 000             600       01/07/02      30/06/05

                       W Kirsh                       N      158 632                –                –       158 632             585       01/07/02      30/06/05
                                                     N        33 334               –                –        33 334             425       01/07/02      30/06/05
                                                     N      100 000                –          88 800          11 200            425       01/07/02      30/06/05
                                                     N       470 914               –                –       470 914             361       02/12/04      01/12/07
                                                     N              –         301 325               –       301 325             604       01/12/05      30/11/08
                                             Ordinary          8 334               –                –          8 334            425       01/07/02      30/06/05
                                             Ordinary         25 000               –          22 200           2 800            425       01/07/02      30/06/05
                                             Ordinary       238 333                –         158 728         79 605             613       18/09/02      17/09/05

                       P Maw                         N      100 000                –         100 000                –           425       01/07/01      30/06/04
                                                     N      136 581                –                –       136 581             585       01/07/02      30/06/05
                                                     N      130 000                –          86 580         43 420             425       01/07/02      30/06/05
                                             Ordinary       400 000                –                –       400 000             400       01/05/02      30/04/05
                                             Ordinary         50 000               –          33 300          16 700            425       01/07/02      30/06/05
                                             Ordinary       179 667                –         119 658         60 009             613       18/09/02      17/09/05
ANNUAL
         REPORT




                       K Pillay                      N      200 000                –         200 000                –           425       01/04/02      31/03/05
                                                     N       332 410               –                –       332 410             361       02/12/04      01/12/07
                                                     N              –         173 841               –       173 841             604       01/12/05      03/11/08
PRIMEDIA




                                             Ordinary       146 667                –          97 680         48 987             613       18/09/02      17/09/05
NOTES TO THE FINANCIAL STATEMENTS                                                                                                                     87
(continued)

for the year ended 30 June 2004




30   SHARE OPTION SCHEME
     The company has a share option scheme, of which allocations to executive directors and staff enable them to participate in the growth of
     the company. As at 30 June 2004, the number of ordinary shares and "N" shares on hand, and thus available to the scheme, was 7 239 375
     (2003: 7 639 862). The Primedia Trust was approved at a general meeting of the company held on 25 August 1995.

     The following rights and options over allocated ordinary shares and "N" shares have been granted and were outstanding in terms of
     The Primedia Trust at 30 June 2004:

     Share options:
     Date of grant                      Expiry date      Subscription price (cents)               Ordinary shares                  "N" shares

     01/05/2000                         30/04/2005                              400                        400 000                           –
     01/07/2000                         30/06/2005                              425                         54 322                    274 212
     01/07/2000                         30/06/2005                              585                               –                1 445 783
     01/07/2000                         30/06/2005                              600                        566 800                           –
     18/09/2000                         17/09/2005                              613                        211 647                           –
     18/09/2000                         17/09/2005                              580                               –                 1 019 014
     01/01/2001                         31/12/2005                              600                        167 000                           –
     14/05/2001                         13/05/2006                              600                               –                    32 247
     30/08/2001                         29/08/2006                              411                               –                   250 000
     02/12/2002                          01/12/2007                             361                               –                8 752 859
     01/12/2003                          29/11/2008                             604                               –                3 825 362

                                                                                                         1 399 769                15 599 477

     Movement during the year
     Balance at beginning of year                                                                        2 393 337                17 703 213
     New options granted                                                                                          –                4 159 663
     Options relinquished                                                                                   (5 000)                (2 178 333)
     Options exercised                                                                                    (988 568)                (4 085 066)

     Balance at end of year                                                                              1 399 769                15 599 477


31   EVENTS SUBSEQUENT TO FINANCIAL YEAR-END
     Other than mentioned below, the directors are not aware of any other matters or circumstances arising since the end of the financial year
     not otherwise dealt with in this report or these annual financial statements, that would materially affect the operations of the group.

     Minority interest in Africa on Air
     With effect from 1 March 2004, Primedia acquired an effective 42,5% indirect economic interest in Africa on Air from Hosken Consolidated
                                                                                                                                                      ANNUAL
                                                                                                                                                               REPORT



     Investments Limited (HCI). In line with its transformation objectives, Primedia nominated Mineworkers Investment Company (Proprietary)
     Limited (MIC), to acquire 12,01% of this interest with effect from 1 July 2004, which was the date on which MIC fulfilled its obligations to
     secure the necessary funding for the acquisition. Accordingly, with effect from 1 July 2004, MIC increased its effective interest in Africa on
                                                                                                                                                      PRIMEDIA



     Air from 2,2% to 14,2%.
88                NOTES TO THE FINANCIAL STATEMENTS
                  (continued)

                  for the year ended 30 June 2004




                  31   EVENTS SUBSEQUENT TO FINANCIAL YEAR-END (continued)
                       Disallowance of trademark amortisation and objection
                       Subsequent to the year-end, Africa on Air (Proprietary) Limited received notification from the South African Revenue Service (SARS) of its
                       intention to disallow in full, the amortisation for tax purposes of the 94.7 Highveld trademark for all periods subsequent to 31 January
                       1997. The trademark was acquired for R317,9 million in 1996. Africa on Air intends to object against assessments raised in respect of the
                       disallowance of the trademark amortisation.

                       In the unlikely event that the objection is completely unsuccessful and no value at all is attached to the 94.7 Highveld trademark, then:
                       – Africa On Air will be obliged to pay approximately R64 million in additional income tax for all periods up to 30 June 2004, before interest
                         and penalties, if any;
                       – In terms of the acquisition of an additional 30,5% economic interest in Africa on Air from HCI, Primedia will recover 30,5% of any
                         additional amounts assessed as payable in respect of the trademarks; and
                       – Any additional income tax payable (other than interest and penalties, if any) will not impact on Primedia’s earnings, but will reduce the
                         deferred tax asset previously raised at acquisition in respect of the anticipated amortisation of the trademark, with a corresponding
                         reduction in non-distributable reserves.

                       Acquisition of KFM
                       On 23 April 2004, Primedia announced that it had entered into an agreement to acquire the shares in and claims against New Africa Media
                       Holdings (Proprietary) Limited, whose sole asset after restructuring will be the shares in and shareholder claims against KFM (Proprietary)
                       Limited. The acquisition is subject to regulatory approval by the Independent Communications Authority of South Africa (ICASA) and
                       approval by the shareholders of New Africa Investments Limited (NAIL). NAIL shareholders holding in excess of 90% of the voting rights in
                       NAIL have undertaken to vote in favour of the transaction.
ANNUAL
PRIMEDIA REPORT
ANNEXURE 1 – ASSOCIATED COMPANIES                                                                                                                   89
for the year ended 30 June 2004




                                                            Effective holding            Group carrying value         Company carrying value
                                                          2004            2003           2004            2003            2004           2003
Name                         Nature of business             %               %            R’000           R’000           R’000          R’000

Unlisted
VWV Interactive (Pty) Ltd    Website developments          24,5            24,5               –               –               –              –
VWV Productions (Pty) Ltd    Corporate videos
                             and films                     49,0            49,0               –               –               –              –
VWV Events (Pty) Ltd         High-level product
                             launches                      49,0            49,0               –               –               –              –
Kaizer Chiefs (Pty) Ltd      Soccer club                   40,0            40,0               –               –               –              –
Cape Talk (Pty) Ltd          Radio broadcasting            43,8            35,0          8 062           8 054                –              –
Ster Century Europe Ltd      Cinema exhibition             37,5            37,5               –         16 062                –              –
Ster Century Middle East
Holdings Ltd                 Cinema exhibition             50,0            50,0               –               –               –              –
Consumer Motivation          Merchandise and licen-
(Pty) Ltd                    sing of toiletries            37,5            37,5               –               –               –              –
Comutanet Tanzania Ltd       Taxi advertising              51,0            51,0               –            101                –              –

Total investment in associated companies (note13)                                        8 062          24 217                –              –
Loans included above                                                                    (8 062)        (24 217)               –              –

Book value of associated companies' equity                                                    –               –               –              –

Directors' valuation of unlisted associated companies including loan                     8 062          24 217                –              –

All of the above are incorporated in South Africa, with the exception of Ster Century Europe Ltd which is incorporated in Jersey, Channel Islands
and Ster Century Middle East Holdings Ltd, incorporated in Mauritius.

Assets, liabilities and losses of material                Operating assets               Operating liabilities            Accumulated loss
associated companies                                     2004             2003           2004            2003            2004            2003
                                                         R’000            R’000          R’000           R’000           R’000           R’000

Kaizer Chiefs (Pty) Ltd                                 10 464            5 650          9 277           7 203                –              –
Ster Century Europe Ltd                                       –         143 795               –         57 824        (39 327)        (353 115)
Ster Century Middle East Holdings Ltd                   68 169           90 323        59 179           76 169          (5 451)        (26 591)
                                                                                                                                                    ANNUAL
                                                                                                                                                    PRIMEDIA REPORT
90                ANNEXURE 2 – SUBSIDIARY COMPANIES

                  for the year ended 30 June 2004




                                                                            Effective holding     Shares at cost ****   Amounts owing by/(to) ****
                                                                          2004          2003     2004          2003           2004        2003
                  Name                           Nature of business         %             %      R’000         R’000          R’000       R’000

                  Primedia Direct (Pty) Ltd      Deregistered in 2004        –          100,0        –              –             –            –

                  Spatial Decisions (Pty) Ltd    Voluntary liquidation       –          100,0        –              –             –            –
                                                 in 2004

                  Primedia On Line (Pty) Ltd     Voluntary liquidation       –          100,0        –              –             –            –
                                                 in 2004

                  Primedia Sport (Pty) Ltd       Sports marketing          70,0          70,0   2 615           2 615       51 483        52 822

                  Primovie (Pty) Ltd [formerly Investment holding          87,5          87,5   11 912         11 912    1 777 009     1 766 137
                  Primovie Management            company
                  (Pty) Ltd] *

                  Primedia Pictures (Pty) Ltd    Development, financing   100,0         100,0        –              –       28 603        28 602
                                                 and worldwide
                                                 distribution of film,
                                                 television and video
                                                 content

                  Primedia Outdoor (Pty) Ltd * Outdoor advertising         75,0         100,0   4 060           4 060      190 918       213 295

                  Primedia Broadcasting          Radio broadcasting       100,0         100,0   6 474           6 474      100 428        91 891
                  (Pty) Ltd ** *

                  Primedia @ Home (Pty) Ltd Direct marketing              100,0         100,0   11 744         11 744         6 879       11 673

                  Primedia Cinema & Print        Specialist publishing    100,0         100,0     207             207       29 767        29 850
                  (Pty) Ltd [formerly Primedia
                  Publishing (Pty) Ltd] *

                  Primedia Face2Face             Specialist marketing     100,0          91,0   1 738           1 738         7 994        7 384
                  (Pty) Ltd                      and promotions

                  Intact Solutions (Pty) Ltd     Database management      100,0         100,0        8              8            (4)          (4)

                  Currie Motors Property         Property owning          100,0         100,0     202             202          (173)        (169)
                  Investments (Pty) Ltd
ANNUAL
         REPORT




                  Northridge Country Club        Property development     100,0         100,0     327             327          (502)        (599)
                  (Pty) Ltd

                  Fincor Leasing (Pty) Ltd       Management company       100,0         100,0    1 701          1 701         9 859        1 326
PRIMEDIA




                  South African Property         Voluntary liquidation       –          100,0        –              –             –            –
                  Transfer Guide (Pty) Ltd       in 2004

                  Comutanet (Pty) Ltd            Commuter advertising     100,0         100,0   11 412         11 412       61 351        60 457
ANNEXURE 2 – SUBSIDIARY COMPANIES (continued)                                                                                                             91
for the year ended 30 June 2004




                                                                 Effective holding               Shares at cost ****    Amounts owing by/(to) ****
                                                               2004            2003            2004            2003            2004           2003
Name                           Nature of business                %               %             R’000           R’000           R’000          R’000

Cartad In-Store Media          Advertising                     100,0           100,0              63               63         24 228         33 452
(Pty) Ltd, trading as
Primedia Instore

Primedia Communications        Investment holding              100,0           100,0       432 403           432 403       (186 906)       (202 659)
Ltd (Jersey) ***               company

Knowledge Factory (Pty) Ltd Database management                100,0           100,0             147              147          1 522           3 966
Itransi (Pty) Ltd              Music assets                    100,0           100,0                –               –               (4)            (4)

Metropolis Transactive         Investment holding               71,4            71,4                –               –                –             –
Holdings Ltd                   company

                                                                                           485 013           485 013      2 102 452       2 097 420

Amounts owing by subsidiary companies (note 12) *****                                                                     2 290 041       2 300 855
Amounts owing to subsidiary companies (note 12)                                                                            (187 589)       (203 435)

                                                                                                                          2 102 452       2 097 420

Holding company's interest in profit/(loss) after tax:
– Aggregate profits                                                                                                          339 076        336 380
– Aggregate losses                                                                                                         (135 500)       (447 662)

                                                                                                                            203 576         (111 282)


*      The company's shares and loans in Primovie Management (Pty) Ltd, Primedia Broadcasting (Pty) Ltd and Primedia Outdoor (Pty) Ltd have
       been pledged to Standard Bank as security for the group's bank facilities
**     Includes 97,84% effective economic interest in Africa on Air (Pty) Ltd (AOA). With effect from 1 July 2004, the minority interest in AOA
       increased from 2,16% to 14,17%
***    Incorporated in Jersey, Channel Islands. All other companies are incorporated in South Africa
****   The amounts are before the write off of share premium of R2 292 656 000 and reversal of the write off of R123 279 000 and after
       the impairment of certain investments in, and loans to subsidiary companies of R1 850 000
***** The company has subordinated certain of these loans to subsidiaries until the assets of the subsidiaries, fairly valued, exceed their liabilities
In respect of the group entities in which the Primedia group does not own 100% of the issued share capital, the Primedia group has the
pre-emptive right to acquire the external shareholders' equity in the event they elect to sell their shareholding at prices which represent
                                                                                                                                                          ANNUAL
                                                                                                                                                                   REPORT



the market value at the date the option is due for election.
Special resolutions
Special resolutions which have been adopted since the date of the last annual report are as follows:
                                                                                                                                                          PRIMEDIA



Primedia Outdoor (Pty) Limited                increase in the authorised share capital
Ster–Kinekor Films (Pty) Limited              changed the name to Ster-Kinekor (Pty) Limited
Primedia Publishing (Pty) Limited             changed the name to Primedia Cinema & Print (Pty) Limited
Primovie Management (Pty) Limited             changed the name to Primovie (Pty) Limited
92                ANNEXURE 3 – RELATED PARTY TRANSACTIONS

                  for the year ended 30 June 2004




                  RELATED PARTY TRANSACTIONS
                  Shareholders, directors and employees of all group companies and any company or entity associated with them are considered to be related
                  parties. Various transactions are entered into by the company and its subsidiaries during the year with related parties. Unless specifically disclosed,
                  these transactions occurred under terms that are no less favourable than those entered into with third parties. Intra-group transactions are
                  eliminated on consolidation.

                  MATERIAL RELATED PARTY RELATIONSHIP
                  Mineworkers Investment Company (Pty) Ltd ("MIC") holds 16,6% of Primedia Ltd's ordinary shares and 0,9% of the "N" shares. MIC has effective
                  interests in entities holding an effective 50% of the shares and shareholders' loans in Africa on Air (Pty) Ltd (which interests were partially funded
                  by Primedia by way of loan account and preference shares), 22,5% of the shares and shareholders' loans in Cape Talk (Pty) Ltd and 25% of the
                  shares in Primedia Outdoor (Pty) Ltd. Arrangements were entered into with MIC in respect of the acquisition by MIC of an effective 12,01%
                  economic interest in AOA (see note 31). The group paid MIC a service fee of R2,1 million (net of directors fees) for the year ended 30 June 2004.

                  Other than the loans between the group and its associated companies which are recorded in Annexure 1, there are no material transactions
                  between the group and its associated companies.
ANNUAL
PRIMEDIA REPORT
ANNEXURE 4 – INTERESTS OF DIRECTORS OF THE                                                                                                        93
             COMPANY IN SHARE CAPITAL
for the year ended 30 June 2004




The aggregate direct and indirect, beneficial and non-beneficial holdings as at 30 June 2004 of the directors of the company and their
immediate families in the issued share capital of the company are detailed below.
                                                                Ordinary shares          “N” shares    Ordinary shares            “N” shares
                                                                           2004                2004               2003                    2003
Executive directors
W Kirsh                                                              4 676 468           2 935 337            4 459 971            3 111 889
K Pillay                                                                    770             36 504                  770                  36 504
Non–executive directors
I Kirsh                                                              6 340 210           5 570 113            6 134 847            5 844 290
P Maw                                                                  667 582             543 575              514 624              696 532
AP Nkuna/HM Madima                                                   9 876 350             443 350            9 876 350              443 032

                                                                   21 561 380            9 528 879           20 986 562           10 132 247


The above holding for 2004                            Direct            Indirect        Direct non-       Indirect non-
is broken down as follows:                         beneficial         beneficial          beneficial          beneficial                  Total
                                                      R’000               R’000               R’000               R’000                  R’000

Ordinary shares
I Kirsh                                                     –                  –                   –          6 340 210           6 340 210
W Kirsh                                                11 071                  –                   –          4 565 397          4 676 468
P Maw                                                 15 288                   –                   –            652 294             667 582
AP Nkuna/HM Madima                                          –                  –                   –          9 876 350          9 876 350
K Pillay                                                    –               770                    –                   –                   770

                                                      26 359                770                    –         21 534 251         21 561 380

"N" shares
I Kirsh                                                     –                  –                   –          5 570 113           5 570 113
W Kirsh                                                11 077                  –                   –          2 924 260          2 935 337
P Maw                                                       –                  –                   –            543 575             543 575
AP Nkuna/HM Madima                                          –                  –                   –            443 350             443 350
K Pillay                                                    –            36 504                    –                   –             36 504

                                                       11 077            36 504                    –          9 481 298          9 528 879
                                                                                                                                                  ANNUAL
                                                                                                                                                  PRIMEDIA REPORT
94                ANNEXURE 5 – STOCK EXCHANGE PERFORMANCE
                               AND SHAREHOLDER ANALYSIS
                  for the year ended 30 June 2004




                  Listed below are analyses of holdings from the register of ordinary and "N" shareholders at 30 June 2004.

                                                                                      Ordinary shares       “N” shares       Ordinary shares        “N” shares
                                                                                                2004             2004                  2003               2003

                  Stock exchange performance
                  Total number of shares traded (’000)                                         2 248           48 598                  8 417             56 249
                  Total number of shares traded as a percentage of total shares (%)             4,44             28,03                 16,62              32,45
                  Total value of shares traded (R million)                                    17 183          301 733                38 792            215 848

                  Prices (cents)
                  Closing                                                                        940               865                  440                 400
                  High                                                                           950             1 000                  580                 460
                  Low                                                                            400               400                  390                 320

                  Percentage of shares held by non-public shareholders (%)                     76,66             17,71                 74,29              21,57
                  Percentage of shares held by public shareholders (%)                         23,34             82,19                 25,71              78,43

                  The following are the principal shareholders whose holding, directly or indirectly, including asset managers' investment funds, in the company
                  total more than 5% of the issued share capital as at 30 June 2004:

                  Active Value Advisors Limited                                          17 115 242        21 278 220             17 115 242        21 278 220
                  Coltell Investments Limited                                             4 913 851         4 920 719              4 913 851          4 920 719
                  Mineworkers Investment Company (Pty) Limited                            9 876 350           443 350             9 876 350            443 032
                  William Kirsh Family Trust                                              4 051 303           984 057             3 034 806          1 160 609

                                                         No. of shareholders                     No. of shareholders
                                                             in South Africa                 other than in South Africa                   Total shareholders
                                                     Nominal                                Nominal                                Nominal
                                                      number                    %            number                    %            number                     %

                  Ordinary shares
                  Public                                 2 410                 97,5               54                   2,2            2 464                99,7
                  Directors                                    6                0,2                –                    –                 6                  0,2
                  Other – The Primedia Trust                   2                0,1                –                    –                 2                  0,1

                                                         2 418                 97,8               54                   2,2            2 472               100,0

                  "N" shares
                  Public                                 3 610                 97,8               74                   2,0            3 684                99,8
ANNUAL
         REPORT




                  Directors                                    6                0,1                –                    –                 6                  0,1
                  Other – The Primedia Trust                   2                0,1                –                    –                 2                  0,1

                                                         3 618                 98,0               74                   2,0            3 692               100,0
PRIMEDIA
N OT I C E O F A N N U A L                                                                                                                          95
GENERAL MEETING



 Notice is hereby given that the eleventh annual general meeting           A profile of the aforesaid directors can be found on pages 4 to 5 of
 of members of Primedia Limited (“the company”) will be held on            the Annual Report.
 the First Floor, Primedia Place, 5 Gwen Lane (Corner Fredman
 Drive), Sandown on Wednesday, 26 January 2005 at 09:00 to                 Ordinary Resolution Number 7
 consider and, if deemed fit, to pass, with or without modification, the   “RESOLVED THAT the non-executive directors’ fees for the 2004/2005
 following resolutions:                                                    financial year be hereby approved as follows:


 ORDINARY BUSINESS                                                         Chairman                 R400 000
 Ordinary Resolution Number 1                                              Directors                R130 000
 “RESOLVED THAT the consolidated audited annual financial                  Committee chairman       R130 000
 statements of the company and its subsidiaries, incorporating the         Committee member           R70 000
 auditor’s and directors’ reports for the year ended 30 June 2004, be
 received and adopted.”                                                    Ordinary Resolution Number 8
                                                                           “RESOLVED THAT the re-appointment of Deloitte & Touche as auditors
 Ordinary Resolution Number 2                                              of the company is hereby approved.”
 “RESOLVED THAT the re-appointment of FA Gazendam for a further
 term of office in terms of Article 13 of the Articles of Association of   SPECIAL BUSINESS
 the company be hereby approved.”                                          Ordinary Resolution Number 9
                                                                           “RESOLVED THAT the directors be granted a general authority to allot
 Ordinary Resolution Number 3                                              and issue the authorised but unissued ordinary and “N” shares of the
 “RESOLVED THAT the re-appointment of I Kirsh for a further term of        company after providing for the allotment and issue of ordinary and
 office in terms of Article 13 of the Articles of Association of the       ”N” shares in terms of the company’s share scheme, which shares are
 company be hereby approved.”                                              hereby placed under the control of the directors, upon such terms and
                                                                           conditions as they in their sole discretion may determine subject to
 Ordinary Resolution Number 4                                              the provisions of the Companies Act, 61 of 1973, as amended (“the
 “RESOLVED THAT the re-appointment of W Kirsh for a further term of        Act”), and the Listings Requirements of the JSE Securities Exchange
 office in terms of Article 13 of the Articles of Association of the       South Africa (“the JSE”) and any other stock exchange upon which the
 company be hereby approved.”                                              shares of the company may be quoted or listed.”


 Ordinary Resolution Number 5                                              Ordinary Resolution Number 10
 “RESOLVED THAT the re-appointment of P Maw for a further term of          “RESOLVED THAT, subject to the provisions of the Act and the prior
                                                                                                                                                    ANNUAL
                                                                                                                                                             REPORT


 office in terms of Article 13 of the Articles of Association of the       approval of the JSE, the directors of the company shall be entitled to
 company be hereby approved.”                                              pay pro rata to all shareholders, by way of a pro rata reduction of
                                                                           share capital or share premium, in lieu of a dividend, an amount up to
 Ordinary Resolution Number 6                                              the amount which the directors of the company would have declared
                                                                                                                                                    PRIMEDIA



 “RESOLVED THAT the re-appointment of BJT Shongwe for a further            and paid as a dividend, subject to the following limitations:
 term of office in terms of Article 13 of the Articles of Association of
 the company be hereby approved.”
96
                  N OT I C E O F A N N U A L
                  GENERAL MEETING



                   • That this authority shall be valid only until the next annual general     of hands. On a poll, each member entitled to vote, whether present
                     meeting or for 15 months from the date of the passing of this             in person or by proxy, or by representation, is entitled to vote for each
                     resolution, whichever period is shorter;                                  ordinary and/or “N” share held.
                   • Any such payment(s) may not exceed 20% of the company’s issued
                     share capital, including reserves but excluding minority interests, and   A member who is entitled to attend and vote at the meeting may
                     revaluations of assets and intangible assets that are not supported by    appoint a proxy or proxies to attend, speak and vote in their stead.
                     a valuation by an independent professional expert acceptable to the       The proxy need not be a member of the company.
                     JSE prepared within the last six months, in any one financial year,
                     measured as at the beginning of such financial year.                      A form of proxy is attached for use by members who are unable to
                                                                                               attend the annual general meeting in person. Duly completed forms
                   At the time of any such payment an announcement will be published           of proxy must be returned to the company secretary, at the registered
                   containing, inter alia, the terms of the payment, the date of the           address of the company, by not later than 09:00 on Monday,
                   general meeting at which the authority was obtained, the date on            24 January 2005. The completion of the proxy form will not preclude
                   which the payment is to be made, and the effect on earnings per             a member from attending the meeting.
                   share, headline earnings per share, net asset value per share and
                   tangible net asset value per share.”                                        If you have dematerialised your shares with a Central Securities
                                                                                               Depository Participant (“CSDP”) or broker you must arrange with them
                   The directors intend to use the authority herein sought to make             to provide you with the necessary authorisation to attend the annual
                   distributions to shareholders, in lieu of dividends, subject to the         general meeting or you must instruct them as to how you wish to
                   provisions of the Act and the directors being of the opinion that after     vote in this regard. This must be done in terms of the agreement
                   considering the effect of such distribution:                                entered into between you and the CSDP or broker.


                   • The company and its subsidiaries will be able in the ordinary course      BY ORDER OF THE BOARD
                     of business to pay its debts for a period of 12 months after the date
                     of the notice of this annual general meeting;
                   • The consolidated assets of the company will be in excess of the
                     consolidated liabilities of the company for a period of 12 months
                     after the date of the notice of this annual general meeting;              O Ighodaro
                   • The share capital and reserves of the company and its subsidiaries will   Company Secretary
                     be adequate for ordinary business purposes for a period of 12 months
                     after the date of notice of this annual general meeting; and              Sandton
ANNUAL
         REPORT




                   • The consolidated working capital of the company will be adequate          31 August 2004
                     for ordinary business purposes for a period of 12 months after the
                     date of the notice of this annual general meeting.                        6th Floor                                     PO Box 652110
                                                                                               Primedia Place                                Benmore
PRIMEDIA




                   Each member who, being a natural person, is present in person, by           5 Gwen Lane                                   2010
                   proxy or agent, or being a company, is present by representative proxy      Sandown
                   or agent at the annual general meeting, is entitled to vote on a show       2196
FORM OF PROXY                                                                                                                                        97

                                                                                                                           PRIMEDIA LIMITED
                                                                                                   (Incorporated in the Republic of South Africa)
                                                                                                          (Registration number 1993/003355/06)
                                                                                                            Share code PMA ISIN ZAE000035119
                                                                                                           Share code PMN ISIN ZAE000035127


                                                                                                                    (“Primedia” or “the company”)

FORM OF PROXY FOR PRIMEDIA “N” SHAREHOLDERS
This form of proxy is only to be completed by those Primedia shareholders who are holding “N” shares in certificated form or recorded on sub-
registered electronic form in “own name”. Primedia shareholders who are holding dematerialised “N” shares are requested to refer to paragraph
1 and 2 of the “Notes” for further instructions.

For use by all Primedia “N” shareholders at the annual general meeting of members to be held on the First Floor, Primedia Place, 5 Gwen Lane
(Cnr Fredman Drive), Sandown on Wednesday, 26 January 2005 at 09:00 (“the general meeting”).

I/We                                                                                                                              (PLEASE PRINT)

of

being a holder of                                                              “N” shares in Primedia hereby appoint (see note 3):


1                                                                                                                              or failing him/her*

2                                                                                                                              or failing him/her*

3 the chairman of the general meeting

as my/our* proxy to act for me/us* at the annual general meeting for the purpose of considering and, if deemed fit, passing, with or without
modification, the resolutions to be proposed thereat and at each adjournment or postponement thereof, and to vote for and/or* against such
resolutions and/or* abstain from voting in respect of the “N” shares in the issued capital of Primedia registered in my/our* name (see note 5)
as follows:


                                           NUMBER OF VOTES                                                       NUMBER OF VOTES

                                     FOR        AGAINST       ABSTAIN                                         FOR        AGAINST      ABSTAIN
Ordinary Resolution Number 1                                             Ordinary Resolution Number 7

Ordinary Resolution Number 2                                             Ordinary Resolution Number 8
Ordinary Resolution Number 3                                             Ordinary Resolution Number 9
Ordinary Resolution Number 4                                             Ordinary Resolution Number 10

Ordinary Resolution Number 5
                                                                                                                                                     ANNUAL
                                                                                                                                                              REPORT


Ordinary Resolution Number 6
and generally to act as my/our* proxy at the general meeting. (If no directions are given, the proxy holder will be entitled to vote or to abstain
from voting as that proxy holder deems fit.)
                                                                                                                                                     PRIMEDIA



Signed at                                                                                 on                                                2004

Signature

Assisted by me (where applicable)                                                                            (state capacity and full name)
Each member is entitled to appoint one or more proxies (who need not be a member/s of Primedia) to attend, speak and vote in place of that
member at the annual general meeting.
Please read the notes on the reverse hereof.
* Delete where applicable
98
                  N OT E S TO
                  FORM OF PROXY



                  1 A form of proxy is only to be completed by those “N” shareholders      7   The Chairman of the annual general meeting shall be entitled to
                    who are:                                                                   decline to accept the authority of the signatory under a power of
                    • holding “N” shares in certificated form; or                              attorney, or on behalf of a company, unless the original power of
                    • recorded on sub-register electronic form in “own name”.                  attorney or authority or a notarially certified copy thereof is
                                                                                               produced or has been registered.
                  2 If you have already dematerialised your “N” shares through a
                    Central Securities Depository Participant (“CSDP”) or broker and       8   The signatory may insert the name of any person/s whom the
                    wish to attend the general meeting, you must request your CSDP             signatory wishes to appoint as his/her proxy, in the blank space/s
                    or broker to provide you with a Letter of Representation or you            provided for that purpose.
                    must instruct your CSDP or broker to vote by proxy on your behalf
                    in terms of the agreement entered into between yourself and the        9   When there are joint holders of “N” shares and if more than one
                    CSDP or broker.                                                            such joint holder be present or represented, then the person
                                                                                               whose name stands first in the register in respect of such “N”
                  3 A member entitled to attend and vote at the meeting is entitled to         shares or his/her proxy, as the case may be, shall alone be entitled
                    appoint a proxy to attend, speak and vote in his/her stead. A proxy        to vote in respect thereof.
                    need not be a member of the company.
                                                                                           10 A minor should be assisted by his parent or legal guardian unless
                  4 Every person present and entitled to vote at the meeting as a              the relevant documents establishing his legal capacity are
                    member or as a proxy or as a representative of a body corporate            produced or have been registered.
                    shall, on a show of hands, have one vote only, irrespective of the
                    number of “N” shares such person holds or represents but, in the       11 The completion and lodging of this proxy form will not prejudice
                    event of a poll, a member shall be entitled to that proportion of          the signatory from attending the general meeting and speaking
                    the total votes in the company which the aggregate amount of the           and voting in person thereat to the exclusion of any proxy
                    nominal value of the “N” shares held by him/her bears to the               appointed in terms hereof should such signatory wish to do so.
                    aggregate of the nominal value of all the “N” shares issued by
                    the company.                                                           12 If the shareholding is not indicated on the proxy form, the
                                                                                               proxy will be deemed to be authorised to vote the total
                  5 Please insert the relevant number of “N” shares/votes and indicate         “N” shareholding.
                    with an X in the appropriate spaces on the face hereof, how you
                    wish your votes to be cast. If you return this form duly signed        13 The Chairman of the annual general meeting may reject or accept
                    without any specific directions, the proxy will vote or abstain from       any proxy form which is completed other than in accordance
ANNUAL
         REPORT




                    voting at his/her discretion.                                              with these instructions, provided that he is satisfied as to the
                                                                                               manner in which a shareholder wishes to vote.
                  6 A deletion of any printed details and the completion of any blank
                    space/s need not be signed or initialled. Any alteration must          14 Forms of proxy will not be accepted unless they have been
PRIMEDIA




                    be initialled.                                                             returned by the shareholders concerned to the company’s
                                                                                               registered office, 6th Floor, Primedia Place, 5 Gwen Lane,
                                                                                               Sandown, 2196 (PO Box 652110, Benmore, 2010), so as to
                                                                                               be received by no later than 09:00 on Monday, 24 January 2005.
FORM OF PROXY                                                                                                                                        99

                                                                                                                           PRIMEDIA LIMITED
                                                                                                   (Incorporated in the Republic of South Africa)
                                                                                                          (Registration number 1993/003355/06)
                                                                                                            Share code PMA ISIN ZAE000035119
                                                                                                           Share code PMN ISIN ZAE000035127


                                                                                                                    (“Primedia” or “the company”)

FORM OF PROXY FOR PRIMEDIA ORDINARY SHAREHOLDERS
This form of proxy is only to be completed by those Primedia shareholders who are holding ordinary shares in certificated form or recorded on
sub-registered electronic form in “own name”. Primedia shareholders who are holding dematerialised ordinary shares are requested to refer to
paragraph 1 and 2 of the “Notes” for further instructions.

For use by all Primedia ordinary shareholders at the annual general meeting of members to be held on the First Floor, Primedia Place, 5 Gwen
Lane (Cnr Fredman Drive), Sandown on Wednesday, 26 January 2005 at 09:00 (“the general meeting”).

I/We                                                                                                                              (PLEASE PRINT)

of

being a holder of                                                              “ordinary shares in Primedia hereby appoint (see note 3):


1                                                                                                                              or failing him/her*

2                                                                                                                              or failing him/her*

3 the chairman of the general meeting

as my/our* proxy to act for me/us* at the annual general meeting for the purpose of considering and, if deemed fit, passing, with or without
modification, the resolutions to be proposed thereat and at each adjournment or postponement thereof, and to vote for and/or* against such
resolutions and/or* abstain from voting in respect of the “N” shares in the issued capital of Primedia registered in my/our* name (see note 5)
as follows:


                                           NUMBER OF VOTES                                                       NUMBER OF VOTES

                                     FOR        AGAINST       ABSTAIN                                         FOR        AGAINST      ABSTAIN
Ordinary Resolution Number 1                                             Ordinary Resolution Number 7
Ordinary Resolution Number 2                                             Ordinary Resolution Number 8

Ordinary Resolution Number 3                                             Ordinary Resolution Number 9
Ordinary Resolution Number 4                                             Ordinary Resolution Number 10
Ordinary Resolution Number 5
                                                                                                                                                     ANNUAL
                                                                                                                                                              REPORT


Ordinary Resolution Number 6
and generally to act as my/our* proxy at the general meeting. (If no directions are given, the proxy holder will be entitled to vote or to abstain
from voting as that proxy holder deems fit.)
                                                                                                                                                     PRIMEDIA



Signed at                                                                                 on                                                2004

Signature

Assisted by me (where applicable)                                                                            (state capacity and full name)
Each member is entitled to appoint one or more proxies (who need not be a member/s of Primedia) to attend, speak and vote in place of that
member at the annual general meeting.
Please read the notes on the reverse hereof.
* Delete where applicable
100
                  N OT E S TO
                  FORM OF PROXY



                  1 A form of proxy is only to be completed by those ordinary             7   The Chairman of the annual general meeting shall be entitled to
                    shareholders who are:                                                     decline to accept the authority of the signatory under a power of
                    • holding ordinary shares in certificated form; or                        attorney, or on behalf of a company, unless the original power of
                    • recorded on sub-register electronic form in “own name”.                 attorney or authority or a notarially certified copy thereof is
                                                                                              produced or has been registered.
                  2 If you have already dematerialised your ordinary shares through a
                    Central Securities Depository Participant (“CSDP”) or broker and      8   The signatory may insert the name of any person/s whom the
                    wish to attend the general meeting, you must request your CSDP            signatory wishes to appoint as his/her proxy, in the blank space/s
                    or broker to provide you with a Letter of Representation or you           provided for that purpose.
                    must instruct your CSDP or broker to vote by proxy on your behalf
                    in terms of the agreement entered into between yourself and the       9   When there are joint holders of ordinary shares and if more than
                    CSDP or broker.                                                           one such joint holder be present or represented, then the person
                                                                                              whose name stands first in the register in respect of such ordinary
                  3 A member entitled to attend and vote at the meeting is entitled to        shares or his/her proxy, as the case may be, shall alone be entitled
                    appoint a proxy to attend, speak and vote in his/her stead. A proxy       to vote in respect thereof.
                    need not be a member of the company.
                                                                                          10 A minor should be assisted by his parent or legal guardian unless
                  4 Every person present and entitled to vote at the meeting as a             the relevant documents establishing his legal capacity are
                    member or as a proxy or as a representative of a body corporate           produced or have been registered.
                    shall, on a show of hands, have one vote only, irrespective of the
                    number of ordinary shares such person holds or represents but, in     11 The completion and lodging of this proxy form will not prejudice
                    the event of a poll, a member shall be entitled to that proportion        the signatory from attending the general meeting and speaking
                    of the total votes in the company which the aggregate amount of           and voting in person thereat to the exclusion of any proxy
                    the nominal value of the ordinary shares held by him/her bears to         appointed in terms hereof should such signatory wish to do so.
                    the aggregate of the nominal value of all the ordinary shares
                    issued by the company.                                                12 If the shareholding is not indicated on the proxy form, the
                                                                                              proxy will be deemed to be authorised to vote the total
                  5 Please insert the relevant number of ordinary shares/votes and            ordinary shareholding.
                    indicate with an X in the appropriate spaces on the face hereof,
                    how you wish your votes to be cast. If you return this form duly      13 The Chairman of the annual general meeting may reject or accept
                    signed without any specific directions, the proxy will vote or            any proxy form which is completed other than in accordance
ANNUAL
         REPORT




                    abstain from voting at his/her discretion.                                with these instructions, provided that he is satisfied as to the
                                                                                              manner in which a shareholder wishes to vote.
                  6 A deletion of any printed details and the completion of any
                    blank space/s need not be signed or initialled. Any alteration        14 Forms of proxy will not be accepted unless they have been
PRIMEDIA




                    must be initialled.                                                       returned by the shareholders concerned to the company’s
                                                                                              registered office, 6th Floor, Primedia Place, 5 Gwen Lane,
                                                                                              Sandown, 2196 (PO Box 652110, Benmore, 2010), so as to
                                                                                              be received by no later than 09:00 on Monday, 24 January 2005.
A D M I N I S T R AT I O N                                                                                                    101




 PRIMEDIA LIMITED                             Internet address              Transfer secretaries
 Registration number 1993/003355/06           www.primedia.co.za            Computershare Investor Services 2004
                                                                            (Pty) Ltd
 Group secretary                              Bankers                       70 Marshall Street
 O Ighodaro                                   First Rand Bank Limited       Johannesburg 2001
 Bsc (Hons) FCA (England and Wales)           Investec Bank Limited         PO Box 61051
                                              Standard Bank of SA Limited   Marshalltown 2107
 Postal address                                                             Tel (011) 370 5320
 PO Box 652110                                Auditors
 Benmore 2010                                 Deloitte & Touche


 Business address and                         Sponsor
 Registered office                            Investec Bank Limited
 6th Floor
 Primedia Place
 5 Gwen Lane
 Sandton 2196
 Fax (011) 506 3000
 Tel (011) 506 3185




SHAREHOLDERS’ DIARY
 Reports



 Interim half-year to December                                                                      Published February

 Preliminary announcement of annual results                                                          Published August
                                                                                                                              ANNUAL
                                                                                                                                       REPORT



 Annual financial statements                                                                        Published October

 Dividend payments
                                                                                                                              PRIMEDIA



 Interim                                                                                                            April

 Final                                                                                                          October

 Annual General Meeting                                                                              26 January 2005

                                                                                           DESIGN     Visual Ignition 1488
                                                                                              DTP                 DTPAlign
                                                                                            PRINT                 L&K Print
www.primedia.co.za

								
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