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PRIMEDIA IN A FIGHT

Primedia is in a second dispute with the South African Revenue Service over trademarks. Last year’s dispute related to the valuation of the Ster-Kinekor and Cinemark trademarks, which Primedia had valued at R587,5m, to be written off over 10 years. It agreed to adjust this to R326,4m, to be written off over 15 years.
This year a new issue has arisen: valuation of the 94.7 Highveld Stereo trademark. SARS wants to disallow fully its tax amortisation for all periods after January 31, 1997, and an objection has been raised.
Primedia CEO William Kirsh says Primedia values this trademark at R320m. But the circumstances are not the same as in Ster-Kinekor/Cinemark’s valuation, where there were technical factors that do not apply here. Also, Highveld has substantially improved its profitability since 1997.
If the objection failed and no value was attached to the Highveld trademark, which Primedia considered unlikely, the effect would be about R64m in additional income tax, excluding interest and penalties.
Primedia could recover some amounts from co-shareholder Hosken Consolidated Investments, and the effect would be reflected on Primedia’s non-distributable reserves, not its income statement.

Source: Business Day