2011 AnnuAl RepoRt
II
Seven West Media
is Australia’s leading
multi-platform media group
CONTENTS
From the Chairman
From the Chief Executive Officer and Managing Director
Year in Review
Business Performance: Pro-forma Full Year Results
Broadcast Television
The West
Magazine Publishing
Digital Media
Board of Directors
Corporate Governance
Directors’ Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
2
4
6
7
8
12
16
19
22
26
31
44
45
46
47
48
97
98
Company Information
Investor Information
Shareholder Information
100
101
102
Seven West Media – Annual Report 2011 1
From the Chairman
Welcome to the first annual report for seven West media.
2
This is the first annual report for
Seven West Media.
West Australian Newspapers’ acquisition
of Seven Media Group was a significant
step for the company and its shareholders.
Together we have created the opportunity
to successfully leverage the future of our
company, drawing on the combined
strengths of each of the organisations
across the major mainstream media
of print, television and online.
Our acknowledged strengths
in newspapers in Western Australia,
combined with the Seven Media Group’s
national platforms – including Channel 7
in Perth – are successfully utilising
the combined resources that each
company brings to a larger diversified
audience base. The challenge for our
management team is to take advantage
of the opportunity to develop a responsive
enterprising group. They also have the
opportunity to build our position in new
media through our online Yahoo!7 platform.
The media landscape is constantly
and quickly changing and the current
economic conditions that affect traditional
media and our advertising base have
been well publicised. It is in these
challenging times we see the strength
of the group working as ‘one company’.
The profit growth achieved by Seven
West Media outperformed all other listed
media companies. As promised, we have
paid dividends in line with guidance.
We demonstrated that we can achieve
a sound economic performance even
in difficult times.
We commenced this current financial
year knowing we would face challenges
because of the economy and the
challenging and changing retail market.
We are confident that we will continue
to perform better than any of our peer
groups. Our confidence is based on the
continuing strong performance of Seven
The media landscape is constantly evolving.
Where some media companies see challenges
we see opportunities for growth and development.
The transaction secures the future of two great
media businesses.
Network Australia – the nation’s number
one television network and the positive
changes that have been implemented
in West Australian Newspapers which have
seen us hold circulation and revenue.
In these conditions we will also have
a focus not only on growing our revenue
share but also on reducing costs to ensure
we achieve our objectives despite the
economic conditions. We are fortunate
that all of our companies are the best in
their various categories in Australia .
Two of your company’s major
shareholders, Seven Group Holdings
and Kohlberg Kravis Roberts & Co,
have publicly committed themselves
to participate in the company’s dividend
re-investment plan – an undertaking that
underlines both shareholders’ commitment
to Seven West Media and provides the
opportunity for your company to focus
on the allocation of funds that will further
strengthen the financial performance of the
business.
The formation of Seven West Media has
seen the appointment of David Leckie from
Seven Media Group as Chief Executive
Officer and Managing Director, and Justin
Reizes from Kohlberg Kravis Roberts &
Co, as Directors. They join me and former
Directors of West Australian Newspapers
on the Board of Seven West Media –
Doug Flynn, Don Voelte, Sam Walsh AO,
Graeme John AO and Peter Gammell.
Your board and the management of Seven
West Media are committed to ensuring
that we maximise the future for the
company, build shareholder value through
improving performance and profit growth
and thereby ensure our ability to continue
our dividend payments.
The decision to bring together two great
media companies creates one company
that has Australia’s best performing media
businesses, strong cashflows, great
management and a strong independent
board. The West’s merger with of Seven
Media Group has created a company
that has the scope and scale to build and
invest in its businesses and its people. It is
our people, and their talent, creativity and
commitment that drives your company and
its future. On behalf of your board I thank
you, our shareholders, and the people
of Seven West Media for your commitment
to this company.
Kerry Stokes AC
Chairman
Seven West Media – Annual Report 2011 3
From the
Chief Executive Officer
and Managing Director
By any measure
this has Been an
extraordinary
tWelve months
for your company.
The formation of Seven West Media
brings together some of Australia’s
best-performing media businesses.
Each are well-placed to continue to build
their businesses and take advantage
of improvements in advertising demand
over the coming twelve months.
It is early days in the life of the new
company, however, we are very happy
with our progress over the first few months
as Seven West Media. Much has been
done. More will be done as we create and
develop ‘one company’ which delivers
market leadership across its array of media
platforms.
Our strong financial results over the past
twelve months in a difficult market confirm
the underlying strengths and leadership
of our businesses. On a pro forma basis,
Seven West Media delivered earnings
before interest, taxation, depreciation
and amortisation of $617.5 million and
earnings before interest and taxation
(EBIT) of $550.1 million on revenues
of $1,960.6 million. Total revenue is
up 4 per cent on the pro forma prior
corresponding period contained in the
shareholder transaction documentation
for The West’s acquisition of Seven Media
Group. EBITDA is up 12 per cent on the
prior corresponding period and EBIT
is up 14 per cent.
Our businesses are performing well.
Seven continues to lead the market
in television advertising revenue share.
Recent industry figures put Seven’s
share of the advertising revenue market
at 37.6 per cent. More Australians watch
Seven than any other television network
and we are building audiences in all
key demographics as we expand our
digital broadcast platform. Seven’s new
agreement with the Australian Football
League for broadcast television rights
for the 2012-16 seasons underscores
a commitment to secure key programming
content to drive the network’s leadership
in broadcast television in an increasingly
competitive landscape.
The West Australian is an important part
of the lives of all West Australians. It also
has market-leading margins, manages
its operations and costs effectively,
and has increased its total readership
by 1.3 per cent over the past twelve
months, consolidating its circulation
in a challenging market for newspapers.
Our magazine publishing business, Pacific
Magazines, has delivered a positive
performance in a competitive and
challenging market over the past twelve
months. It has delivered improvements
in margins and secured the largest
circulation share increase of any Australian
magazine publishing company.
Pacific Magazines is the only major
publishing company to increase
advertising share and is acknowledged
as Australia’s most powerful portfolio
of magazines, occupying the largest per
title share of circulation and readership
of all major publishers.
Seven West Media’s online and new
media presence through Yahoo!7, a joint
venture with Yahoo! Inc continues its
strong momentum, delivering strong
margins and diversifying into the fast
growing social commerce category with
the recent acquisition of Spreets, the first
online group buying company in Australia.
4
Our focus over the
coming twelve months
is to build on our
leadership, create great
content, manage our
costs in a challenging
advertising market and
drive greater links and
synergies between and
across our businesses.
A signpost to our future is Yahoo!7’s
PLUS7 catch-up TV which streams almost
three million full episodes of Seven’s most
popular programmes every month – with
300 hours of content across Seven and
7TWO’s primetime programmes.
Our objective over the coming twelve
months is to consolidate and strengthen
our performance and the advertising
revenue shares of our media businesses
in a challenging overall market impacted
by a decline in consumer confidence.
This means we will continue to invest
in our creative content while undertaking
a far-reaching and transformational
‘whole of business’ cost review focused
on synergy creation and integration that
will define the future management of your
company and its media businesses.
of media platforms. We are looking forward
to driving home our leadership and taking
this great media company to the next level.
Our focus over the coming twelve months
is to build on our leadership, create great
content, manage our costs in a challenging
advertising market and drive greater links
and synergies between and across our
businesses.
No media company in Australia has
our depth of management or our great
content. I would like to acknowledge
our management and all of our people.
We have the best people in the business.
No media company has our ability to
deliver great content across a portfolio
David Leckie
Chief Executive Officer
and Managing Director
Seven West Media – Annual Report 2011 5
Year in Review
contained in the shareholder transaction
documentation. EBITDA is up 12 per cent
on the pcp and EBIT is up 14 per cent.
The company has delivered a statutory
profit after taxation of $115.1 million for the
2010-2011 financial year. The result was
underpinned by a 77.6 per cent increase
in total revenue to $725.7 million.
This statutory result includes twelve
months of West Australian Newspapers
Holdings and two and a half months
of Seven Media Group.
Earnings comparisons are difficult due
to West Australian Newspapers Holdings’
acquisition of Seven Media Group from
Seven Group Holdings and Kohlberg
Kravis Roberts & Co.
The company has delivered on the
successful integration of West Australian
Newspapers and Seven Media Group
to create ‘one company’ and the
company’s focus over the coming twelve
months is to build on its leadership
in broadcast television, print media and
online and drive further cost synergies
across the entire business.
these are seven West
media’s first annual
results folloWing
West australian
neWspapers holdings’
acquisition of seven
media group
in april 2011.
This transaction created Australia’s
largest diversified media business with
a leading presence in broadcast television,
radio, newspaper publishing, magazine
publishing and online.
The company’s financial year results
on a pro forma basis (that is as if West
Australian Newspapers and Seven Media
Group had been combined for the entire
2010-2011 financial year) are comparable
to forecasts contained in the shareholder
documentation to approve the creation
of Seven West Media.
The company also delivered at the high
end of its market guidance for EBITDA
issued in May 2011.
On a pro forma basis, Seven West Media
delivered earnings before interest, taxation,
depreciation and amortisation (EBITDA)
of $617.5 million and earnings before
interest and taxation (EBIT) of $550.1
million on revenues of $1,960.6 million.
Total revenue is up 4 per cent on the pro
forma prior corresponding period (pcp)
PRO-FORMA EBITDA EARNINGS 2010/2011
617m
77.6%
INCREASE IN TOTAL STATUTORY REVENUE
The company has delivered a statutory profit after
taxation of $115.1 million for the 2010-2011 financial
year. The result was underpinned by a 77.6 per cent
increase in total revenue to $725.7 million.
6
Business Performance:
Pro-forma Full Year Results
The Seven Network
Seven delivered EBITDA of $376.7 million
– a 23 per cent increase on the 2009-10
financial year on an 8.4 per cent climb
in revenues to $1,229.2 million. EBITDA
margin is 30.6 per cent – up from 27.0
per cent in the corresponding twelve
months on cost growth of 3.0 per cent.
West Australian Newspapers
West Australian Newspapers delivered
EBITDA of $172.9 million – down 0.9 per
cent on the 2009-2010 financial year.
Revenues were $411.5 million – down
0.4 per cent on the previous financial
year. EBITDA margin is 42.0 per cent vs
42.2 per cent in the corresponding twelve
months on flat costs.
Pacific Magazines
Pacific Magazines, has delivered a positive
performance in a competitive and
challenging market over the past twelve
months – with EBITDA of $53.5 million, up
0.9 per cent on the 2009-2010 financial
year. EBITDA margin is 17.5 per cent – up
from 16.6 per cent in the corresponding
twelve months. The company delivered a
5.4 per cent decrease in costs to $251.5
million.
Yahoo!7
Seven West Media’s online and new
media presence through Yahoo!7, a joint
venture with Yahoo! Inc continues its
strong momentum, delivering an EBITDA
margin of 39.2 per cent over the past
twelve months. Revenue is up 22.0
per cent, EBITDA is up 14.0 per cent
on the 2009-2010 financial year.
Financial Year Ended 25 June
2011 Results
Seven West Media delivered a profit
before income tax of $173.5 million
on revenues of $725.7 million. Net profit
after taxation was $115.1 million.
EPS after taxation is 38.6 cents.
Dividend
A final dividend of 26 cents per share (fully
franked) has been declared.
Dividend Re-Investment Plan
Seven West Media is committed
to ensuring the future growth of the
company and building shareholder
value through a focus on enhancing
the performance of its market-leading
media businesses and strengthening the
company’s balance sheet as it confronts
an uncertain and tentative global
economic outlook over the coming
twelve months.
Two of the company’s major shareholders,
Seven Group Holdings and Kohlberg
Kravis Roberts & Co, have committed
to the company’s dividend re-investment
plan – an undertaking that underlines both
shareholders commitment to Seven West
Media and provides the opportunity for
the company to focus on the allocation
of funds that will further strengthen the
financial performance of the business.
Balance Sheet
Seven West Media has net assets
of $2.511 billion and $232.8 million
in available undrawn facilities
at 25 June 2011. The company has
commenced the formal process
of re-financing all existing components
of group debt – which is in line with
expectations and detailed in the
shareholder transaction documents –
into the one facility. The company plans
to complete this process in this current
calendar year following positive initial
indications on pricing and demand.
Strategic Agenda
The company is undertaking a
transformational ‘whole of business’ cost
review focused on synergy creation and
integration. The company’s objective
is to consolidate and strengthen its
advertising revenue shares in television,
newspapers, magazines and online
in a challenging overall market impacted
by a decline in consumer confidence.
Seven West Media – Annual Report 2011 7
Broadcast
Television
more australians
Watch seven
than any other
television netWork.
In a year of major events and the launch
of new digital channels, Seven continues
to dominate the television landscape
in Australia and is building audiences
in all key demographics.
Our broadcast television business has
moved to a new level over the past twelve
months, with our multiple channels on our
digital broadcast platform confirming our
leadership and driving audience growth
across all key audience demographics.
The new digital channels are designed
to leverage and complement the success
of our primary channel.
Seven is number one for total viewers and
in all key audience demographics: 16-39s,
18-49s and 25-54s in the 2011 television
year. 7TWO is the most-watched digital
channel for total viewers and people 25+.
Following its successful launch twelve
months ago, 7mate is number one in its
target men 16-54 audience across the
2011 television season.
Seven’s suite of three television
channels delivers more viewers than
any other network.
This is our eighth consecutive year
of leadership in breakfast television,
our seventh consecutive year
of leadership in news and public affairs,
our fifth consecutive year of leadership
in primetime, our fifth consecutive year
of leadership in morning television and our
sixth consecutive year of leadership overall
across the 6:00am-midnight broadcast
day.
8
Our broadcast television business has moved to a new
level over the past twelve months, with our multiple
channels on our digital broadcast platform confirming
our leadership and driving audience growth across
all key audience demographics.
delivering significant audience growth on its
market-leading 2009 television year.
Seven’s total primetime audience in 2010
was up 7.6 per cent in total viewers, up
5.7 per cent in 16-39s, up 4.7 per cent
in 18-49s and 5.2 per cent in 25-54s
on Seven’s audience delivery in 2009.
This momentum has accelerated in the
2011 television year, with Seven winning
more weeks and primetime nights than any
other network.
Seven, 7TWO and 7mate combine
to deliver Seven’s broadcast platform
market leadership in primetime for total
viewers, 16-39s, 18-49s and 25-54s
across the current television year. Seven’s
total primetime audience in 2011 is up 12.3
per cent in total viewers, up 14.3 per cent
in 16-39s, up 11.3 per cent in 18-49s
and 11.0 per cent in 25-54s on Seven’s
audience delivery in 2010.
That leadership sees Seven securing
a market-leading share of the television
advertising market across the 2010 and
2011 television seasons and the network
is now in its sixth consecutive year
of leadership in securing more advertising
revenue than any other television network
– with a market share of just under 38 per
cent over the past twelve months.
The performance of our digital
broadcast platform and our leadership
in Australian production confirm the
fundamental strengths of our broadcast
television business and its future
in driving the creation and distribution
of our content across an array
of communications technologies.
While we continue to build on our major
presence in newspaper and magazines
publishing and expand our capabilities
in new content distribution technologies,
we acknowledge that the fundamental
strengths of broadcast television will
continue to underpin our company’s
development over the coming decade.
Seven was Australia’s number one
television network in the 2010 television
year, leading in primetime on primary
channels and in the combined audiences
of primary and digital channels and also
Driving our success is a continuing
investment in, and the acknowledged
depth of, our Australian programming –
in particular, programming you see only on
Seven.
The success of My Kitchen Rules,
Australia’s Got Talent, Dancing with the
Stars and The X Factor confirm Seven’s
leadership in event television. The success
of two new Australian drama series
Winners and Losers and Wild Boys
combined with the performance of Home
and Away and Australia’s most-watched
regular programme, Packed to the Rafters,
confirms Seven’s leadership in Australian
drama.
Seven continues to dominate the most-
watched programmes on television.
Packed to the Rafters, Australia’s Got
Talent, My Kitchen Rules, Dancing with
the Stars, Better Homes and Gardens and
two new projects for Seven – The Amazing
Race and Winners and Losers – confirm
Seven’s leadership in primetime across the
2011 television year.
Packed to the Rafters is the most-watched
regular series on television, with a weekly
average audience of 1.953 million.
Winners and Losers, in its first series, has
underlined Seven’s leadership in Australian
drama series and delivered dominating
audience shares in total viewers, 16-39s,
18-49s and 25-54s.
Downton Abbey ranks only behind Packed
to the Rafters as the most-watched series
and set a new benchmark on Sundays
with 1.936 million viewers. Downton Abbey
will return in a new series in 2012.
My Kitchen Rules moved to a new level
in 2011, up 6.0 per cent on its previous
series and sweeping all before it across all
key audience demographics. The Amazing
Race delivered an average weekly
audience of 1.260 million and winning
shares in 16-39s, 18-49s and 25-54s.
Australia’s Got Talent jumped 16.0 per cent
on 2010 and delivered some of 2011’s
biggest television audiences, with the final
scoring 2.98 million viewers. Dancing with
the Stars, delivered a winning 1.527 million
viewers in a competitive and challenging
Sunday night timeslot.
Seven is number one in news and
public affairs.
Seven News is the most-watched nightly
news bulletin, up 16.6 per cent on
Nine News. Today Tonight is up 22.9 per
cent on A Current Affair. Seven News and
Today Tonight continue to build in their
seventh consecutive year of leadership
in nightly news and public affairs.
Sunday Night, our weekly public affairs
programme, continues to impress
with an audience of 1.104 million
in a competitive timeslot in 2011.
Seven is number one in breakfast television.
Sunrise continues to dominate in breakfast
television. In its eighth consecutive year
of leadership, Sunrise is up 10.8 per cent
on Today in total viewers and up 13.8
per cent on Today in all viewers under 55
across 6:00-9:00am.
Our success in broadcast television
will continue to drive our development
as a broad-based media company creating
new content and applications across
multiple delivery platforms, including
multiple channels on our digital platform
that will confirm our future, building on the
strengths of broadcast television and our
leadership in the creation and production
of Australian television.
Seven West Media – Annual Report 2011 9
Broadcast
Television
This core objective for our business drives
our continuing investment in content.
Our new agreement with the Australian
Football League underscores this
commitment to secure Seven’s leadership
in broadcast television in an increasingly
competitive landscape.
The new multi-year partnership with the
Australian Football League builds on the
success of Seven’s coverage over the
past five years and will see Seven as the
only free-to-air broadcast television
platform for the Australian Football League
over the coming five years.
Driving our success
is a continuing investment
in, and the acknowledged
depth of, our Australian
programming –
in particular, programming
you see only on Seven.
Our success with Friday Night Football
and Sunday Afternoon Football over the
past twelve months and our high-definition
and 3D television coverage of the drawn
2010 AFL Grand Final and its re-match
the following week confirms our deep
connection with football and we look
forward to expanding our coverage across
Saturdays.
Sports have played a defining role in our
development. Over the coming decade,
sports will continue to play a key role
in the development of our business as
we build on our leadership as a media
and communications company, delivering
broad sports coverage across an array
of platforms.
10
Packed to the RafteRs is the
most-Watched regular series
on television, With a Weekly
average audience of
1.953m
WEEKLY AVERAGE AUDIENCE
As part of this strategy, a key undertaking
for Seven this year has been our extensive
coverage of The Championships from
Wimbledon. In our first year of a multiple
year broadcast television agreement with
The All England Lawn Tennis and Croquet
Club, Seven delivered broad coverage
of Wimbledon across Seven and 7TWO.
Over the coming twelve months with our
expanding Australian Football League
coverage as its cornerstone, Seven will
confirm its leadership in event sports
television with our coverage of the AFL,
The Melbourne Cup, the V8 Supercar
Championship, the Bathurst 1000 and The
Australian Open.
This strategy delivered significant growth
in television audiences on 2010 – with
timeslot dominating performances
on Seven and 7TWO, including a new
record audience of 737,000 viewers for
a digital channel. 3.387 million viewers
watched all or part of Wimbledon
on Seven and 2.951 million viewers
watched all or part of Wimbledon
on 7TWO. The combined Seven and
7TWO audience reach was 6.244 million
viewers – an 88.8 per cent increase
in reach on 2010.
We have momentum in television and
are well-placed to deliver a competitive
performance over the coming
twelve months.
Our planning for the 2012 television
season is well advanced with a number
of new Australian series in development.
These new projects include a new weekly
drama series complementing this year’s
successful launch of two new drama series
Winners and Losers and Wild Boys and the
continuing strong performances of Packed
to the Rafters and Home and Away.
The coming twelve months will also see
new series for My Kitchen Rules,
The Amazing Race, Dancing with the
Stars, Australia’s Got Talent, The X Factor,
Border Security, The Force and Better
Homes and Gardens.
Through our international programming
partnerships, we have secured a number
of promising new programmes for the
new television season in 2012, including
Revenge, Good Christian Bitches,
Strikeback and Titanic and new series
for Downton Abbey, Body of Proof,
Grey’s Anatomy, The Amazing Race,
Criminal Minds, Bones, Castle and
Desperate Housewives.
Seven West Media – Annual Report 2011 11
The West
this has Been
an extraordinary year
for West australian
neWspapers.
it has gone from Being
a company that is
primarily a neWspaper
Business operating
in Western australia,
alBeit With one of
the Best readership
penetrations in the
country, to part
of the largest
australian-domiciled
national media group.
Chris Wharton’s role as CEO of the leading
media business in Western Australia, the
cornerstone of which is the iconic The
West Australian, has expanded to include
the operations of Seven Perth. Chris was
formerly Managing Director of Seven Perth
for nine years and accordingly, has a
great affinity with Seven Network in Perth
and welcomes the opportunity to be part
of it again.
It is early days, but we have already begun
to see the benefits that can be derived
from combining Western Australia’s
two leading media properties The West
Australian and Seven Perth. Initially these
benefits included cross promotion in the
sales area, marketing, publicity campaigns
and events, news content and online
expertise.
However, we are also identifying
opportunities to enhance the content
of The West Australian with that of Seven
Network and Pacific Magazines and,
in turn, use the award-winning West
Australian content to add to the television
and magazine properties.
The combination of businesses will
also accelerate the digital development
of The West Australian digital properties.
As has been said in previous years, the
digital properties associated with The
West Australian are paramount to the
future development of The West Australian
masthead and they remain so. In July this
year we launched two new websites, both
of which complement the printed products
and offer clients another medium for their
advertising.
These two new sites,
WestRealestate.com.au and
WestAnnouncements.com.au, have
performed very well since their launch.
With the expertise of Yahoo!7 now within
the group, we are confident of continuing
to grow and enhance the online presence
of the West Australian print properties
in a measured and profitable way.
12
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Style LIFTOUT
4000
calls to
police go
unheard
RONAN O’CONNELL
More than 4000 calls for police help
are going unanswered each month,
according to an audit of the call cen-
tre, prompting the WA Police Union
and State Opposition to call yester-
day for a big increase in staff.
The audit of the Police Assis-
tance Centre by accountancy firm
Deloitte, obtained by The West Aus-
tralian, found the number of 131 444
calls which were not answered
more than trebled in the past three
months of last year to about 12,500,
up from about 3650 in the same
period in 2009.
The report, which was commis-
sioned by WA Police, recommended
more staff be employed at the
Midland centre, which handles all
131 444 calls in WA.
The number is for callers who
need non-urgent police attendance,
such as for burglaries, thefts or
minor assaults.
The centre is staffed by civilians
rather than police officers.
Union president Russell Arm-
strong and shadow police minister
Margaret Quirk said the number of
unanswered calls was unaccepta-
ble and there was an urgent need
for more staff.
Mr Armstrong said there needed
to be police officers among the
extra staff.
“Having 4000 calls a month un-
answered is a disgrace,” he said.
“They need to sort that out quick-
ly and get some police officers in
there to oversee the whole thing
and provide some sort of operation-
al front-line experience.”
Ms Quirk said people who could
not get an answer on the 131 444
number could clog the emergency
Barrels of fun as Margs turns it on
Spin-out: Margaret River proved a treat for pro surfers yesterday as
Hawaiian Kai Barger warmed up for this week’s contest.
Picture: Lincoln Baker
PERTH 17-30
Partly cloudy. Tom: Few
showers, 16-21. Yest: 13.1-34.7
Details, P46 WestBusiness 24-PAGE LIFTOUT
INSIDE TODAY
000 line, potentially risking the
lives of people who had an emer-
gency and could not get a quick
response from police.
“The 131 444 number is basically
the public’s first point of contact
with police and it is crucial that
they are able to speak to someone
promptly and that police are then
dispatched to help them or investi-
gate their report,” she said.
Acting Supt Andrew Martin said
the rise in unanswered calls was
the result of an increase in 131 444
calls.
The line received 166,769 phone
calls in the final three months of
last year, compared with 132,653 in
the same period the previous year.
“The unusually long and hot
summer is believed to have contrib-
uted to the increase in calls,” he
said.
Supt Martin said police had
hired six full-time staff in Novem-
ber to work at the centre and were
in the process of hiring three more
full-time staff.
Staff rostering was scheduled to
match peak call times and part-
time staff were offered the chance
to cover for full-time employees
who took unplanned leave.
He said police were “exploring
ways to improve customer service
by examining e-business, online
business, media and marketing and
inter-agency collaboration strate-
gies”.
Police Minister Rob Johnson said
he had discussed the issues related
to the call centre with senior police
and was satisfied they were taking
measures to improve call response
times.
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Schoolteacher accused
of tying boy, 5, to chair
BETHANY HIATT
EDUCATION EDITOR
A teacher is under investigation for
allegedly tying a five-year-old boy
to a chair to punish him for mis-
behaving in class.
Police said they had a report
from Avonvale Primary School in
Northam that a teacher used a skip-
ping rope to restrain the Year 1 stu-
dent on two occasions because he
was disruptive.
The female teacher allegedly
bound the boy’s hands together
behind his back for about one min-
ute before releasing him.
When he continued being disrup-
tive, she allegedly tied the boy to a
chair in the corner for about five
minutes.
The teacher worked part-time
and took the combined Year 1-2
class for science.
Another staff member told police
she witnessed the incidents on
Tuesday last week.
Police have asked the Education
Department to investigate.
The department’s acting execu-
tive director of professional stan-
dards and conduct, Eamon Ryan,
confirmed the department received
an allegation that a teacher used a
skipping rope to tie a student to
a chair.
He said the matter was under
investigation by the department’s
standards and integrity unit.
“On receiving the allegation, the
department took immediate steps
to ensure the teacher would not
have contact with students while
the matter is being investigated,”
Mr Ryan said.
“While the investigation is tak-
ing place, it would not be appro-
priate to jump to conclusions or
make specific comment but allega-
tions of this nature are very
concerning.
“Teachers are in a special posi-
tion of trust and we expect them to
act responsibly and in the best
interests of children at all times.”
WA Council of State School Orga-
nisations president Rob Fry said it
was disappointing to hear of an
allegation of a child being tied up
with rope, particularly after a
Kalgoorlie teacher was disciplined
for sticky-taping shut the mouths of
Year 1 students.
The department found a part-
time teacher had committed mis-
conduct after she was reported in
November for covering nine chil-
dren’s mouths with sticky tape
because they would not stop talk-
ing. It is understood she is still
working in the Goldfields educa-
tion region.
She was counselled about her
conduct and the outcome of the
investigation was placed on her
employment file.
“It’s concerning to hear of more
allegations of inappropriate beha-
viour of teachers towards a stu-
dent,” Mr Fry said.
“You would think there would be
a very clear message to all teachers
as to the appropriate behaviour in
managing children when there has
already been a similar incident.”
Australian
Spitfire ace
laid to rest
in France
Requiem: Air Force
chief Air Marshal
Mark Binskin salutes
RAAF Flight-Lt
Henry ‘Lacy’ Smith
at Ranville cemetery
in Normandy, France,
as his remains are
buried with full
honours 66 years
after his Spitfire
crashed into a French
river shortly after
the D-Day landings.
Report, P17
Picture: Malcolm Quekett
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As the merger concluded in April 2011,
this report will focus on the performance
of the operations of West Australian
Newspapers for this financial year.
The results for the group have been solid
in what has been a well-publicised tough
year in retail. Advertising revenue for the
West Australian Newspaper Group grew
by 1.3 per cent, with particularly pleasing
results in regional newspapers and radio
up 11 per cent.
As we flagged at the half year, the malaise
in retail impacted the metro display
advertising revenue and unfortunately,
the retail environment did not improve
through the second half of the year.
The softness of retail display advertising
throughout the year weighed on the overall
result and particularly on the advertising
revenue for The West Australian.
The sales force, to their credit, took up the
challenge and, through the development
of new innovative sales solutions and
sheer tenacity, limited the overall decline
in advertising revenue to 1.5 per cent,
despite the higher level of decline in the
crucial retail category.
Since the end of the financial year,
the retail sector has continued to struggle
to overcome an apparent lack of consumer
confidence. Despite the obvious strength
of the WA resource sector and its positive
impact on the state’s economic prosperity,
consumer behaviour has been impacted
by economic events in Europe and
the USA.
These events have continued to dampen
consumer confidence, which in turn has
resulted in the continuation of the softness
we experienced in the retail sector during
the 2011 financial year. Although at the
time of preparing this report, retail remains
flat, we have every confidence it will turn
and when it does our operations are well
positioned to reap the rewards.
Total readership for The West Australian
has increased by 1.3 per cent.
Throughout Australia, circulation decline
is common to most of the main newspaper
titles, The West Australian however, has
significant penetration in WA, reaching 28 per
cent of the population during the week and
42 per cent on the weekend. As a proportion
of population it is one of the most widely read
newspapers in
the country.
West Australian Newspapers has always
had a very disciplined approach to cost
management, consistent with the
operations of Seven Media Group, aiming
to spend wisely and effectively. Again this
year costs have been efficiently managed
in our operations and expenses, excluding
one-off merger-related costs, have been
maintained at the same level as the
previous year.
One of the main contributors to the
control of costs were the savings
We are also identifying opportunities to enhance
the content of The West Australian with that of
Seven Network and Pacific Magazines and, in turn,
use the award-winning West Australian content to
add to the television and magazine properties.
delivered through the new newsprint
supply arrangements. In early 2010
West Australian Newspapers made
a strategic decision to break with tradition,
and standard Australian practice, and
source 80 per cent of our newsprint from
suppliers in South Korea and Europe.
Since implementing these new supply
arrangements on 1 July 2010, every
aspect of supply, from the quality of the
product, to the delivery logistics, to the
cost savings has been executed very well.
Consequently we have expanded the
relationship with both the South Korean
and the European suppliers and are
confident that further savings will be
achieved in 2012.
One of the cornerstones of the success
of our West Australian operations,
particularly The West Australian, has been
the ongoing investment in quality by the
group. Investing in and developing the
quality of every aspect of Seven West
Media’s operations will continue to be key
to the ongoing success of the business.
Earlier this year we relaunched the
Saturday edition as The Weekend West.
The relaunch involved considerably more
than a name change, it was a revitalisation
of the product. New fonts were used, new
layouts were employed, and the product
was truly relaunched. The new look and
energy of The Weekend West has been
well received and its weekend penetration
is well above our opposition.
Seven West Media WA employs
about 1,600 people in 25 locations
across Western Australia. We value
our people and recognise their direct
input into the financial success of the
business and ultimately the generation
of shareholder returns.
The acquisition of Seven Media Group
in May 2011, and the appointment of Chris
Wharton as CEO of Seven West Media’s
West Australian assets, has brought
Seven West Media – Annual Report 2011 13
The West
advertising revenue for the West
australian neWspaper group
greW By 1.3%, With particularly
pleasing results in regional
neWspapers and radio up
11%
together these two very successful West
Australian businesses in a way that has,
and will continue to have, a positive
impact on the staff. Nonetheless, we are
conscious that people deal with change
in different ways and Chris and his
management team have worked with our
staff at all levels to ensure the experience
is positive.
While the expansion of the group’s
operations has brought considerable
change to our organisation, The West’s
senior management remains the same and
the core values and work ethic of West
Australian Newspapers will persist, while
absorbing the best aspects of Seven
Media Group’s culture.
We continue to emphasise to all
employees and managers the importance
of sharing a common sense of purpose
within the new company, and aim to create
a diverse workforce that is motivated and
fulfilled in its employment.
14
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TORTURE
‘Disgrace to
human race’
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enchanting
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TRAVEL LIFTOUT WEST WEEKEND MAGAZINE
LIFTOUT INSIDE
SENIOR JUDGE SPEAKS OUT
Violent criminals could
be kept in jail longer
■ Amanda Banks
Legal Affairs Editor
Prisoners who were likely to com-
mit serious violent or property
crimes on release would be held in
jail indefinitely under a proposal
floated by WA’s longest serving
Supreme Court judge and backed
by the Police Commissioner.
Attorney-General Christian Por-
ter revealed yesterday that the
State Government was open to
expanding WA’s indefinite deten-
tion laws, which now only apply to
dangerous sex offenders.
Justice Michael Murray has
highlighted the dangerous sex
offender laws as a precedent that
had demonstrated the idea could
help protect the community.
Under current laws, the Supreme
Court can
impose continuing
detention or community super-
vision orders against rapists and
paedophiles who have served their
jail term but still pose an unaccep-
table risk of reoffending.
In an article in the latest edition
of the Law Society of WA’s publica-
tion Brief, Justice Murray said
there was “no reason” the law
should be limited to serious sexual
offences.
“It is arguable that it should also
be available where there is a pre-
sent, well-established danger of
the commission of serious crimes
of violence or against property,”
he wrote.
“The justification . . . would be
the commission of serious offences
in the past and the demonstrated
danger of
the commission of
further such offences.”
Police
Commissioner Karl
O’Callaghan said he supported
expanding the use of indefinite jail
terms in some circumstances, such
as against serial armed robbers.
“There are a very small number
of people where we ought to have
some indefinite detention because
they don’t respond to anything
else,” he said.
WA Law Society president
Hylton Quail said lawyers were
opposed to expanding indefinite
detention laws.
“There ought to be finality in sen-
tencing,” Mr Quail said.
Mr Porter said sentencing laws
already allowed
for courts to
impose indefinite detention but
whether the powers were being
under-used was being investigated.
He said the Government support-
ed the dangerous sex offender
legislation because it recognised
community protection was the
fundamental priority in a special
category of cases.
“The Government is open to con-
sidering Justice Murray’s suggesti-
ons . . . but such a process would
have to be done with great care and
in a way that does not unduly com-
promise the fundamental protec-
tions our legal system accords to
any individual,” Mr Porter said.
Council plan for speed
cameras on back streets
RONAN O’CONNELL
Councils would use speed cameras
on suburban streets under a plan to
reduce dangerous driving on back
streets, the WA Local Government
Association revealed yesterday.
WALGA president Troy Pickard
said the plan would result in coun-
cils buying speed cameras for use
in residential areas.
Councils would work with
police, who would provide the
legal power to operate the cameras
and manage the processing of
speeding infringements.
believed many local roads did not
because they do not fit four criteria
This strategy is to supply local
Police Minister Rob Johnson said
have sufficient speed enforcement
for placement.
area traffic data to police to better
he welcomed WALGA’s interest in
and
council-operated
speed
These are school zones, roads
inform them of where to place
road safety but favoured the cur-
cameras could fill that void.
with high levels of hoon driving,
speed cameras.
rent centrally managed model for
Research by the Curtin Monash
roads where more than 20 per cent
The centre will report by the end
speed camera operations.
Accident Research Centre showed
of drivers speed and in areas and at
of May on the potential to reduce
Shadow police minister Marga-
the WALGA would probably not
the times linked to speed-related
road deaths and injuries, who will
ret Quirk said funding to address
recoup its costs to buy and operate
crashes.
pay for and operate the cameras,
“black spots” on suburban streets
cameras through fines because of
Mr Pickard said councils, road
infringement processing and how
was more important than councils
the low traffic volumes where the
safety authorities and police would
fines revenue will be managed.
buying speed cameras.
cameras would be placed.
be asked for final comment on the
Traffic division Acting Com-
RAC spokesman Matt Brown said
Mr Pickard said this showed the
plan in the coming week.
mander Ron Randall said police
it would support the speed camera
plan was not an attempt at raising
They would also be asked for
were yet to make recommendations
plan if it was proved to be “genuine-
revenue and was “only about road
feedback on a second strategy sug-
on the plans but added that “any
ly about road safety rather than
safety”.
gested by the centre, which has
proposal that seeks to provide grea-
revenue raising”.
Police speed cameras are not
researched the issue for the past
ter road safety outcomes would be
Mr Pickard said the association
used on most suburban streets
year on behalf of WALGA.
considered in due course”.
> EDITORIAL, ALSTON
20
Ponting walks
as captain but
wants to bat on
Ricky Ponting leaves a press conference
in Sydney after announcing he was
stepping down as captain of the
Australian cricket team. He hoped his
decision would kick-start another golden
period of form as a batsman.
Sport BACK PAGE
INSIDE TODAY
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environmental initiatives throughout all
aspects of its business.
PERTH 17-32
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17-31. Yesterday: 18.7-32.9
Details, P40 WestBusiness 20-PAGE LIFTOUT
r e a l e d i t _ 0 1
P a g e :
C o l o r : CKYM
F i r s t
E d i t i o n :
l _ R u n
F u l
Z o n e :
A P R I L
T i m e : 0 4 - 1 5 - 2 0 1 1
i n p
c o l
e r :
1 6 - 0 4 - 2 0 1 1
P u b D a t e :
i a n
1 5 : 2 3
P r o d u c t : T h e _ W e s t _ A u s t r a l
R E A L E S TAT E
Part
P 2
T H E W E E K E N D W E S T
w i t h
I N S I D E D E M A N D F O R E X E C U T I V E
R E N T A L S P E A K I N G ,
Saturday 17-34
Sunday 18-28
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88-PAGES OF
REAL ESTATE
LIFTOUT IN PART 2
As a member of Publishers National
Environment Bureau, the West Australian
P I C T U R E P E R F E C T
Newspaper Group supports recovery
and recycling of newspapers and
annually donates free advertising space
to further the Bureau’s aims. Educational
material on recycling newspapers and
magazines is provided free of charge
to schools and Local Government waste
education officers.
The West Australian Newspaper Group
has historically placed a high level
of importance on our investment in,
and support of, the Western Australian
community, both in metropolitan Perth and
regional WA. Seven West Media (WA) will
continue this fine tradition.
To this end, we have placed increased
emphasis on flexible working arrangements
to support the familial and other needs
WHAT’S INSIDE
PAUL MURRAY
AY
of our employees. This flexibility supports
PIN
CARBON TAX SPIN
OPINION P28
our position as an Equal Employment
Opportunity Employer, a qualification that
is borne out by the approximately 50 per
cent of our workforce who are female,
with 36 per cent of those in managerial
positions.
The West Australian Newspaper Group’s
safety performance targets for the year
were exceeded with a 38 per cent
reduction in Lost Time Injury Frequency
Rate (LTIFR) achieved. The Group’s LTIFR
was approximately 69 per cent lower than
the latest reported industry benchmark
for the Printing, Publishing and Recorded
Media sector.
Seven West Media is committed
to environmental sustainability and
acknowledges the community leadership
role of a newspaper company in integrating
Established 1833
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cancer and her
hottest show ever
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Council plan for speed
cameras on back streets
RONAN O’CONNELL
Councils would use speed cameras
on suburban streets under a plan to
reduce dangerous driving on back
streets, the WA Local Government
Association revealed yesterday.
WALGA president Troy Pickard
said the plan would result in coun-
cils buying speed cameras for use
in residential areas.
Councils would work with
police, who would provide the
legal power to operate the cameras
and manage the processing of
speeding infringements.
Mr Pickard said the association
believed many local roads did not
have sufficient speed enforcement
and
speed
council-operated
cameras could fill that void.
Research by the Curtin Monash
Accident Research Centre showed
the WALGA would probably not
recoup its costs to buy and operate
cameras through fines because of
the low traffic volumes where the
cameras would be placed.
Mr Pickard said this showed the
plan was not an attempt at raising
revenue and was “only about road
safety”.
Police speed cameras are not
used on most suburban streets
because they do not fit four criteria
for placement.
These are school zones, roads
with high levels of hoon driving,
roads where more than 20 per cent
of drivers speed and in areas and at
the times linked to speed-related
crashes.
Mr Pickard said councils, road
safety authorities and police would
be asked for final comment on the
plan in the coming week.
They would also be asked for
feedback on a second strategy sug-
gested by the centre, which has
researched the issue for the past
year on behalf of WALGA.
This strategy is to supply local
area traffic data to police to better
inform them of where to place
speed cameras.
The centre will report by the end
of May on the potential to reduce
road deaths and injuries, who will
pay for and operate the cameras,
infringement processing and how
fines revenue will be managed.
Traffic division Acting Com-
mander Ron Randall said police
were yet to make recommendations
on the plans but added that “any
proposal that seeks to provide grea-
ter road safety outcomes would be
considered in due course”.
Police Minister Rob Johnson said
he welcomed WALGA’s interest in
road safety but favoured the cur-
rent centrally managed model for
speed camera operations.
Shadow police minister Marga-
ret Quirk said funding to address
“black spots” on suburban streets
was more important than councils
buying speed cameras.
RAC spokesman Matt Brown said
it would support the speed camera
plan if it was proved to be “genuine-
ly about road safety rather than
revenue raising”.
> EDITORIAL, ALSTON
20
Ponting walks
as captain but
wants to bat on
Ricky Ponting leaves a press conference
in Sydney after announcing he was
stepping down as captain of the
Australian cricket team. He hoped his
decision would kick-start another golden
period of form as a batsman.
Sport BACK PAGE
Smiles all round: Lucy Couanis, 3, and Tamzyn Aisbett, 4, are
wowed by Chen Wenling’s Red Memory Smile sculpture in
Cottesloe. Report, P12 Picture: Astrid Volzke
WHAT’S INSIDE
COLLEEN EGAN
RETURNING A FAVOUR
OUR
OPINION P28
PERTH 17-32
Sunny. Tomorrow: Sunny,
17-31. Yesterday: 18.7-32.9
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INSIDE TODAY
† †
thewest.com.au
WHAT
MEN
REALLY
THINK OF
WOMEN
WEST WEEKEND
MAGAZINE
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SV6 COMMODORE
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PAGE 18
MOTORING
G
LIFTOUT
WEBSITE REVEALS FINANCES
Parents
pay for
school
basics
donations,
INSIDE P6-7
(cid:31) Your guide to My School website
(cid:31) Parents warned to exercise
caution
■Andrew Tillett, Vivienne Ryan
and Rebecca Trigger
At least 10 Perth State high schools
each raised more than $1 million
from
fundraising
drives, fees and contributions from
parents to supplement government
funding, the revamped My School
website has revealed.
The figures show parents of State
school students are paying thou-
sands of dollars from their own
pocket or fundraising to pay
for school basics such as class-
room materials, computers and
excursions.
The website, which went online
yesterday, includes information on
how much money each school gets
from taxpayers, parents, donations
and fundraising, income from can-
teens and building hire, and from
investments and bank interest.
WA Council of State School Orga-
nisations president Rob Fry said
the big amount of money raised by
some public schools showed why a
more equitable funding approach
was needed.
“I would like the Government to
stop funding rich private and pub-
lic schools,” he said. “If they have
got it, why should they get more
when others are struggling?”
In WA, public schools spend
$13,585 per student, Catholic
schools $10,722 and independent
schools $12,756 in day-to-day run-
ning costs.
The figures, which are based on
2009 financial records, show many
private schools use surplus income
raised by fees to pay for capital
works such as new classrooms and
sporting facilities, resulting in
resources superior to those in State
and Catholic schools.
Special needs schools receive the
highest amount of per-student
funding. The WA Institute for Deaf
Education at Cottesloe gets $152,000
per student.
The lowest per-student amount is
$4200 at Albany’s Australian Chris-
tian College, which teaches about
70 children but has a bigger dis-
tance education program.
Some public schools enjoy a
sporting bodies, most of whom have
healthy income stream from par-
ents, which can add up to 10 per
cent of their budget.
One of the State’s biggest schools,
Willetton Senior High, received
had longstanding relationships with
almost $1.7 million in 2009 in paren-
tal
fees,
contributions and
fundraising.
.................................................................................
The West Australian.
(cid:30)CONTINUED P6
PAUL MURRAY
Part
BARNETT’S LOFTY AIR
R
OPINION P29
Our goal is to maintain our support for
the West Australian community and
to positively touch the lives of as many
people as we are able to throughout
the state through our association with
key events, charities and not-for-profit
organisations.
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The company’s objective
is to consolidate and
strengthen its advertising
revenue shares
in television, newspapers,
magazines and online
in a challenging overall
market impacted by
a decline in consumer
confidence.
In the 2010/11 financial year, The West
Australian Newspaper Group provided
approximately $5 million in advertising
sponsorship to over 100 organisations.
The recipients of this support included
business, arts, charitable and
Finally, it is important to recognise the staff
and West Australian Newspapers’ board
of directors. Through a large part of this
year senior management and the board
devoted an enormous amount of time
to considering, planning and executing
the acquisition of Seven Media Group.
Through a very busy period the staff
of West Australian Newspapers performed
exceptionally well and have greeted the
news of the acquisition with enthusiasm.
Seven West Media – Annual Report 2011 15
Magazine
Publishing
Our presence in magazine publishing
is a key component in our plans for the
development and distribution of our content
across an array of delivery platforms.
We are committed to the future
growth of our strength in publishing.
Magazines add a further dimension
to our media position, driving the
leadership of our brands and our
content as we develop our media and
entertainment company across broadcast
television, newspapers, magazines, online
and new communications technologies.
Over the past twelve months, Pacific
Magazines has secured the largest
circulation share increase of any Australian
magazine publishing company. We are
also the only major publishing company
to increase advertising share.
Pacific Magazines is built on investing
in cornerstone brands and great
content, and strengthening our
successful partnerships with globally
renowned publishers including Groupe
Marie Claire, Time Inc, Meredith and
Rodale. This forms part of a clear and
considered strategy to strengthen and
enhance the performance of our portfolio
in a challenging and competitive market.
It is acknowledged that Pacific is Australia’s
most powerful portfolio of magazines,
occupying the largest per title share of all
major publishers, delivering the company
an overall 30 per cent share of circulation
and a 28 per cent share of readership over
the past 12 months.
We deliver two of the three biggest-
selling weekly magazines and three
of the top five highest-selling magazines
in Australia. Pacific publishes many
of the biggest brands in magazines
in Australia: New Idea, Better Homes and
Gardens, that’s life!, marie claire, InStyle,
16
We have the technology and the partnerships that will
lead our future development in digital and interactive
media building on the underlying strengths of our
television and publishing businesses.
lifestyle category and combines with Better
Homes and Gardens to deliver Pacific
Magazines a market-leading 55 per cent
share of circulations in the category.
Who is Australia’s leading celebrity weekly
magazine, delivering growth in circulations
and out-performing the overall category.
FAMOUS is outpacing the celebrity weekly
category and continues to record growth,
posting its eleventh consecutive circulation
increase.
that’s life! continues to lead the real life
category, while Girlfriend is out-performing
the teen girls category and Total Girl and
K-Zone lead their tween categories.
Our presence in
magazine publishing is
a key component in our
plans for development
and distribution of our
content across an array
of delivery platforms.
Men’s Health, Women’s Health, Who
and Girlfriend.
Pacific Magazines accounts for nearly
one in three (30 per cent) magazines
and almost 1 in 2 (48 per cent) women’s
weekly magazines sold in Australia and our
portfolio now reaches 7 million Australians
every month.
We lead readership share in the celebrity
weekly, real life, home and lifestyle,
women’s fashion, men’s lifestyle,
parenting, bridal and teen categories.
Pacific Magazines dominates in key
publishing categories, including Better
Homes and Gardens in the homes
and lifestyle category, that’s life! in the
real life category, Who in the celebrity
weekly category, marie claire in the
fashion category, Men’s Health in the
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sections, is one of the top two highest-
selling weekly magazines in Australia.
Better Homes and Gardens is the
country’s leading integrated media brand
across television, magazines, online, radio
and live consumer events. Home Beautiful
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PANTONE 2665
Seven West Media – Annual Report 2011 17
Magazine
Publishing
marie claire Which expanded into
Broadcast television With ‘marie claire:
under the cover’ accounts for nearly
30%
OF MAGAzINES SOLD IN THE CATEGORY
18
marie claire and In Style, two of the top
three highest-selling fashion magazines
in Australia, continue to drive the
company’s market-leading 47 per cent
share of circulation in the competitive
fashion category. marie claire – which
expanded into broadcast television with
marie claire Under The Cover – accounts
for nearly one in three (30 per cent)
magazines sold in the category.
In Style continues to deliver a strong
performance, outperforming the overall
category performance over the past
12 months.
Men’s Health and Women’s Health
continue to thrive. Men’s Health leads the
men’s lifestyle category with 69 per cent
circulation share and Women’s Health
has recorded its seventh consecutive
increase in circulation to deliver its best-
ever circulation result and out-perform
the overall women’s lifestyle category.
Pacific+, the custom and corporate
publishing arm of Pacific Magazines,
is one of Australia’s leading branded
content and corporate communications
agencies, producing magazines and
corporate publishing solutions for
many of Australia’s biggest companies,
including Virgin Australia, Lexus and
Weight Watchers. The company has
expanded its presence in publishing
over the past 12 months with the launch
of Feast, a co-venture with SBS, and
the first cookbook spin-off from Seven’s
successful My Kitchen Rules.
Our success in publishing is built
on a commitment to invest in our people,
our brands and our content.
We lead in circulation and readership
in key publishing categories and we are
committed to continuing to grow and
increase market presence as we leverage
our strengths in publishing and across
our broadcast television and online
businesses to drive an increasing media
presence that touches the lives of all
Australians.
Digital Media
digital television
and online and neW
communications
technologies are
changing the Way
all of us engage
With content.
Our creation of programming and
content that Australians want to watch
forms the cornerstone of our plans
for the development of our company
in an expanding digital landscape.
We are recognised as the leader in the
production of Australian television,
we have market leadership in key
magazine publishing categories
and The West Australian’s strengths
in newspaper publishing. We have the
technology and the partnerships that will
lead our future development in digital
and interactive media building on the
underlying strengths of our television and
publishing businesses.
Quite clearly, our strategies for
development focus on extending our
leadership in content creation and
distribution to new delivery platforms and
our future development focuses on multi-
channelling on broadcast television and
broadening our connection with Australians
through evolving communications
platforms and delivery mechanisms.
Online and broadband delivery of our
content and the creation of new digital
content for our audiences will drive
our development. Our success will
be determined by our content, regardless
of how our audiences experience
or interact with our entertainment, news
and information, and sports programming.
This commitment to the rapid development
of our digital platform defines our Yahoo!7
partnership with Yahoo! Inc. Yahoo!7
brings together the online assets of Yahoo!
Inc including search and communications
capabilities and a global internet network
and the content creation and marketing
strengths of Seven West Media.
Yahoo!7 is delivering strong momentum,
out growing the market in audience,
revenue and EBITDA margin. Yahoo!7
revenue increased by 22 per cent and
achieved EBITDA growth of 14 per cent
in the 2010-2011 financial year.
Yahoo!7 provides the group with an
audience platform of 8.2 million users
a month up from 7 million users in
June 2010.
The average time spent by users across
our core media properties of news, sport,
lifestyle, television and entertainment
increased by 61 per cent year on year.
In April 2011, Yahoo!7 acquired 100 per
cent of the Yahoo! Xtra New zealand
business from its partner Telecom
New zealand. Prior to the agreement
Telecom New zealand owned 49 per cent
We bring together the online assets of Yahoo! Inc
including search and communications capabilities and
a global internet network and the content creation and
marketing strengths of Seven West Media.
and Yahoo!7 owned 51 per cent. Following
the acquisition, the Yahoo! Xtra business
rebranded to Yahoo! New zealand and
continues its commercial partnership
for Yahoo!7 to support Telecom New
zealand’s broadband customer base.
Yahoo!7 has diversified its business
by investing in the fast growing social
commerce category including the
acquisition of Spreets, a leading online
group buying company in Australia and
New zealand. Spreets grew its revenue
by 72 per cent between the March and
June quarters of 2011 and it now has 1.18
million members, an increase of 140 per
cent since acquisition.
There have been almost 900,000
deal vouchers purchased since
January 2011. The Yahoo!7 business
delivers a new audience to Spreets and
dramatically expands the offering through
Yahoo! Inc and Seven West Media’s
media businesses.
Yahoo!7 also acquired leading sports
tipping site Oztips and relaunched the
site with enhanced user functionality.
The tipping site has over half a million
Seven West Media – Annual Report 2011 19
Digital
Media
engaged users who visit the site multiple
times each week to place and check their
tips. Oztips enhances Yahoo!7’s market
leading sports offering.
The company has also dramatically
expanded its PLUS7 catch-up TV offering,
creating new content and distribution
partnerships as it leverages the success of
Seven’s primetime programming. PLUS7
streams almost three million full episodes
of Seven’s most popular programmes every
month – with 300 hours of content across
Seven and 7TWO’s primetime programmes.
The Yahoo!7 TV site and PLUS7 now
secure a highly engaged audience
of almost three million users with PLUS7
seeing a 115 per cent increase in the
number of streams since July 2010.
As part of its commitment to distribution
across multiple platforms into the lounge
room, Yahoo!7 has entered into new
partnerships with Sony Pictures Television
and Comcast International Media Group
building on its ventures with Sony
Computer Entertainment and Panasonic
over the past twelve months.
Yahoo!7 has also invested in its mobile
offering building on its existing audience
of over three million Australians a month
accessing its content via mobile devices.
Yahoo!7 launched the Seven News mobile
iPhone and iPad apps with the Seven
News iPhone app reaching over 200,000
downloads in the first month.
Also launched in the past year were the TV
guide app and a Yahoo!7 Sports app with
more launches of apps and mobile sites
planned for the coming months. These
apps are in addition to the mobile optimized
sites already on offer across a range of the
Yahoo!7 content properties.
20
yahoo!7 launched the seven neWs
moBile iphone and ipad apps With
the seven neWs iphone app
reaching over
200k
DOWNLOADS IN THE FIRST MONTH.
Yahoo!7 remains the market leader
in online targeting technology
allowing advertisers to precisely
target their advertising to particular
customer categories across
141 targeting categories.
The wide application of services
through Yahoo!7 allows Seven West
Media to further strengthen its digital
platform connecting broadband users
to the internet and burgeoning multi-
media solutions.
The range of Yahoo!7 targeting products
finds the right audience at the right time
in the purchase cycle providing more
effective and efficient advertising. Yahoo!7
launched a range of new online advertising
formats including new video advertising
formats, new targeting capabilities and
mobile ad units.
Our future sees us
building on our content
creation and delivery
capabilities with multiple
applications across
an array of delivery
platforms, allowing our
audiences to engage
with us across television
magazines, newspapers,
the PC and other forms
of fixed and wireless
technology to experience
and engage with our
content and brands.
Seven West Media – Annual Report 2011 21
Board of
Directors
Kerry StoKeS AC
Chairman – non-exeCutive
direCtor
Mr Stokes, 71, is the Executive Chairman of Seven Group Holdings Limited. Mr Stokes
has approximately four decades of active involvement in the ownership and management
of media companies in Australia. Seven Group Holdings’ assets include WesTrac Holdings
and a portfolio of diverse investments, including a 29.6% holding in Seven West Media
Limited. Seven Group Holdings is a company with a market-leading presence in media
in Australia and the resources services sector in Australia and China.
In addition, he is Chairman of Australian Capital Equity Pty Limited, which has significant
interests in media, entertainment, research and technology development as well as
property and industrial activities.
Mr Stokes’ many board memberships include him being Founder, Council Member and
Chairman of the National Gallery of Australia, a Member of the International Council for
Museum & Television, Council Member for the Australian War Memorial, and Trustee for
the Special Air Service Trust which provides relief to current and former members of the
Special Air Service Regiment and their dependents. Professional recognitions include an
Honorary Fellow from Murdoch University and an Honorary Doctorate in Commerce at
Edith Cowan University.
Mr Stokes was awarded Australia’s highest honour, the Companion in the General Division
in the Order of Australia (AC) in 2008. In 1995, he was recognised as Officer in the
General Division of the Order of Australia (AO).
Doug Flynn
non-exeCutive direCtor
Mr Flynn, 62, graduated in chemical engineering from the University of Newcastle,
New South Wales. He received an MBA with distinction from Melbourne University
in 1979.
Mr Flynn was appointed Chief Executive of newspaper publisher Davies Brothers Limited
in 1987. The company was acquired by News Corporation in 1989.
During his career at News Limited Group, Mr Flynn held positions as Deputy Managing
Director of News International Newspapers Ltd, Director of News International Plc, and
Managing Director of News International Plc.
Mr Flynn then held Chief Executive positions with Aegis Group Plc and Rentokil Initial Plc
in London, before returning to Australia in 2008.
In April 2008 he became a consultant to, and a Director of, Qin Jia Yuan Media Services
Ltd, the leading private television company in China.
22
Peter gAmmell
non-exeCutive direCtor
Mr Gammell, 54, is the Deputy Chairman of Australian Capital Equity Pty Ltd, the holding
company associated with Mr Kerry Stokes AC. He was the Managing Director for the last
20 years. Mr Gammell is the Chief Executive Officer of Seven Group Holdings Limited.
grAeme John Ao
non-exeCutive direCtor
Mr Gammell served as a Director of Seven Network Limited for the last 14 years. He was
Chairman of the Seven Network Limited Finance Committee and was a member of
the Audit Committee. He is the Chairman of Coates Hire, Australia’s largest equipment
hire company.
Mr Gammell is a former Director of Federal Capital Press Pty Ltd, the publisher of the
Canberra Times (1989 to 1998) and is a former Director of the Community Newspaper
Group (1996 to 1998).
Mr Gammell is a member of the Institute of Chartered Accountants of Scotland and holds
a Bachelor of Science degree from the University of Edinburgh.
Mr John, 68, was Managing Director of Australia Post from 1993 to 2009. He is a Fellow
of the Chartered Institute of Transport and a Member of the Australian Institute of
Company Directors. He is a Board member of QR National, Racing Victoria and an
AFL Commissioner.
He is a former Chairman of the Board of the Kahala Posts Group, Board member of the
International Post Corporation (Netherlands), and Vice-Chairman of Sai Cheng Logistics
International (China), a joint venture with China Post.
Mr John was awarded the Officer of the Order of Australia (AO) in 2003, for service to
business and to the community. He is also a recipient of the Centennial Medal and the
Australian Sports Medal.
DAviD leCKie
Group Chief exeCutive
offiCer and manaGinG
direCtor
Mr Leckie, 60, was appointed Chief Executive Officer of Seven Media Group in December
2006; he also joined the Board of Directors of Seven Media Group at that time. He was
on the Board of Seven Group Holdings Limited from April 2010 to August 2011, and is
also a Director of Seven Network (appointed in April 2003), and has been Seven Network’s
Chief Executive Officer for over seven years. He holds a Bachelor of Arts (Macquarie
University), majoring in Economic and Financial Studies and has over 31 years experience
in the media and television industries. Other former board positions include Chairman of
Pacific Magazines and a Director of Free TV Australia Limited. Mr Leckie is a former Chief
Executive Officer of the Nine Network.
Seven West media – annual report 2011 23
Board of
Directors
JuStin reizeS
non-exeCutive direCtor
Justin Reizes, 41, is a Member of Kohlberg Kravis Roberts & Co L.P. (together with its
affiliates, “KKR”) and is the head of its Australian office. He joined KKR’s London office
in 1999, then moved to its Hong Kong office in 2005, Tokyo in 2006 and Sydney in 2008.
Since moving to the Asia/Pacific area , he has been actively involved in developing KKR’s
Asian operations. He is currently on the board of directors of BIS Industries and was a
board member of Seven Media Group from 2006-2011.
Prior to joining KKR, Mr. Reizes was involved in private equity and investment banking
at Morgan Stanley in New York, Houston and London. He holds a B.S. in mechanical
engineering, summa cum laude, and a B.A. in managerial studies, summa cum laude,
from Rice University.
Don voelte
non-exeCutive direCtor
Mr Voelte, 58, has significant experience in the global oil and gas industry and, prior
to his retirement in June 2011, was the Managing Director and Chief Executive Officer
of Woodside Petroleum Limited, a position he had held since joining the company in 2004.
Prior to joining Woodside Petroleum Limited, Mr Voelte held a number of Senior Executive
positions in the oil and gas sector. Mr Voelte was a member of the Board of the University
of Western Australia Business School during his Woodside tenure, and is a member of the
Society of Petroleum Engineers, the American Society of Civil Engineers, the Chi Epsilon
Honor Society, a Foreign Fellow to ATSE (FTSE) and a Fellow of the Australian Institute
of Company Directors (AICD). He is a trustee of the University of Nebraska Foundation
and was awarded the University of Nebraska Engineering Alumni of Year in 2002.
The University of Nebraska recently named their Nanotechnology and Metrology Research
Centre for Mr Voelte and his wife Nancy. He has a degree in Civil Engineering, from the
University of Nebraska.
24
SAm WAlSh Ao
non-exeCutive direCtor
Mr Walsh, 61, was appointed chief executive of Rio Tinto’s Iron Ore group in 2004, with
responsibilities covering operations and projects in Australia, Canada, Guinea and India.
He is an executive director on the boards of Rio Tinto plc and Rio Tinto Limited, and in
November 2009 he was appointed chief executive of Rio Tinto Australia. He is also the
Rio Tinto Executive Committee sponsor for Australia and West Africa. Prior to joining
Rio Tinto, Mr Walsh worked in the automotive industry for more than 20 years in Australia
and the USA.
He has a Bachelor of Commerce from Melbourne University and has completed a
Fellowship Program at Kettering University in Michigan. He was awarded Honorary Doctor
of Commerce by Edith Cowan University in 2010.
Mr Walsh is a Fellow of the Australian Institute of Management, the Australian Institute
of Mining & Metallurgy, the Chartered Institute of Purchasing & Supply and the Australian
Institute of Company Directors, a vice president of the Australia-Japan Business
Co-operation Committee, chair of the WA Chapter of the Australia Business Arts
Foundation, the Black Swan State Theatre Company and the Chamber of Arts and Culture
WA Inc, patron of the State Library of Western Australia Foundation, a patron of the UWA
Hackett Foundation and president of Scouts Australia (WA Branch).
In 2007, Mr Walsh was awarded Australian Export Hero and Western Australian Citizen
of the Year - Industry & Commerce. In 2010, he was awarded an Order of Australia
(AO) for his work in the mining industry and establishing employment programs for
Indigenous Australians.
Peter BryAnt
Company SeCretary
& Chief finanCial
offiCer (Wa)
Mr Bryant, 44, joined the West Australian Newspaper Group in April 2008 as Company
Secretary, and in November 2009 his role was expanded to encompass the position
of Chief Financial Officer. Prior to joining WAN he was the Company Secretary and CFO
of GRD Limited, where he had been employed for eight years. His commercial experience
also includes several financial and management roles within a significant private, Perth
based, entrepreneurial group. He commenced his career with Ernst & Young working for
their offices in Australia, the UK and the US.
Mr Bryant is a Fellow of the Institute of Chartered Accountants in Australia.
Seven West media – annual report 2011 25
Corporate Governance
YEAR ENDED 25 JUNE 2011
This statement outlines the main corporate governance practices that were in place throughout the financial year, unless otherwise stated.
ThE boARD
The board has adopted a board charter* setting out the purpose and role of the board, its responsibilities and powers. The charter also
documents the way the board functions.
The board is assisted in carrying out its responsibilities by the audit and risk committee and the remuneration and nomination committee.
The board has established a framework for the management of the Company which includes a system of internal control, a business risk
management process and the establishment of appropriate ethical standards for directors and employees.
The board currently consists of seven non-executive directors, including the chairman, and one executive director. The majority of
non-executives are independent directors. In determining whether a director is independent, the guidelines contained within Principal 2
of the ASX Corporate Governance Principles and Recommendations are applied. In assessing if a supplier or customer is a material
supplier or customer, the principles of “Materiality”, contained in AASb 1031, are applied.
Mr Stokes AC and Mr Gammell are not regarded as independent within the framework of the guidelines because of their positions within
Seven Group holdings Limited, which is a major shareholder of Seven West Media Limited. both Mr Stokes AC and Mr Gammell have
lodged Standing Notices of Interest, in relation to their positions with Seven Group holdings Limited, with the Company. These notices
have been tabled at a board meeting, in accordance with the requirements of section 192 of the Corporations Legislation.
Mr Reizes is not regarded as independent within the framework of the guidelines because of his position within Kohlberg Kravis Roberts
& Co. L.P. (together with its affiliates, “KKR”), which is a major shareholder of Seven West Media Limited. Mr Reizes has lodged a Standing
Notice of Interest in relation to his position with KKR, with the Company. This notice has been tabled at a board meeting, in accordance
with the requirements of section 192 of the Corporations Legislation.
Procedures have been put in place to ensure observance of both the letter and the spirit of dealing correctly with issues which might
give rise due to a conflict of interest.
The board has adopted a written code of conduct* for directors which establishes guidelines for their conduct in matters such as ethical
standards and conflicts of interests. The code is based on that developed by the Australian Institute of Company Directors. Directors have
the right to seek independent professional advice at the expense of the Company. Directors are permitted to trade in securities of the
Company in accordance with the Company’s Share Trading Policy* and after reference to the company secretary.
The board undertakes reviews of its own performance, with external advice as appropriate.
DIRECToRS
Details regarding the Company’s directors are set out in the directors’ report.
MEETINGS of DIRECToRS
The numbers of meetings of the Company’s board of directors and of each board committee held during the year ended 25 June 2011,
and the numbers of meetings attended by each director are set out in the directors’ report.
REMUNERATIoN AND NoMINATIoN CoMMITTEE
A charter* sets out the role and responsibilities of the committee which comprised the following members, all of whom are independent
directors, except for Mr Stokes AC and Mr Reizes:
• DR Voelte (Chairman)
• KM Stokes AC
• GT John Ao
•
JC Reizes (appointed 3/6/11)
26
Corporate Governance
YEAR ENDED 25 JUNE 2011
The committee reviews remuneration packages and policies applicable to the chief executive officer and senior executives. This includes
share schemes, incentive performance packages, superannuation entitlements, retirement and termination entitlements, fringe benefit
policies and professional indemnity and liability insurance policies. External advice is sought as appropriate.
The committee also directly obtains independent advice on the appropriateness of the level of fees payable to non-executive directors
and makes recommendations to the board.
further details of directors’ and executives’ remuneration, superannuation and retirement payments are set out in the remuneration
report which forms part of the directors’ report and notes 24 and 32 to the financial statements.
The composition of the board is regularly reviewed by the committee to ensure that the board has the appropriate mix of expertise and
experience. When a vacancy exists, through whatever cause, or where it is considered that the board would benefit from the services
of a new director with particular skills, potential candidates are identified by the committee with advice from an external consultant
if deemed appropriate. The board then appoints the most suitable candidate who must stand for election at the next general meeting.
The chief executive officer and managing director is invited to committee meetings, as required, to discuss management performance
and remuneration packages.
AUDIT AND RISK CoMMITTEE
A charter* sets out the role and responsibilities of the committee which during the year comprised the following members, all of whom
are independent directors except for Mr Gammell:
SMC Walsh Ao (Chairman)
•
• DR flynn
•
PJT Gammell
The role of the committee is to advise on the establishment and maintenance of a framework of internal control for the management
of the Company, to ensure that the Company has an effective risk management system in order for risks to be identified and managed
effectively, that accounting policies are appropriately applied and that financial information is fairly and correctly reported. The internal
and external auditors, the chief executive officer and the chief financial officer are invited to meetings at the discretion of the committee.
The Company requires that the external audit firm rotates the engagement partner in accordance with accepted best practice.
INDEPENDENT DIRECToRS CoMMITTEE
During the year the board established a temporary independent directors committee, in relation to the transaction to acquire the Seven
Media Group.
The committee comprised the following members:
• DR flynn (Chairman)
• GT John Ao
• DR Voelte
•
SMC Walsh Ao
The role of the committee was to review, consider and negotiate the transaction to acquire the Seven Media Group.
The committee, through its legal advisors, established a formal board Protocol which provided clear guidance and protocols in relation
to the committee’s dealings with the non-independent directors. The document was signed by all members of the board prior to the
commencement of the process.
Seven West media – annual report 2011 27
Corporate Governance
YEAR ENDED 25 JUNE 2011
INTERNAL CoNTRoL fRAMEWoRK
The board acknowledges that it is responsible for the overall internal control framework, but recognises that no cost effective control
system will preclude all errors and irregularities. To assist in discharging this responsibility, the board has instigated an internal control
framework which includes:
INTERNAL AUDIT
An internal auditor function reports directly to the chairman of the audit and risk committee and to the company secretary, and
is responsible for monitoring, investigating and reporting on the internal control systems.
fINANCIAL REPoRTING
There is a comprehensive budgeting system with an annual budget approved by the directors. Weekly and monthly actual results are
reported against budget and revised forecasts for the year are prepared regularly. The Company reports to the Australian Securities
Exchange (ASX) on a half yearly basis - see “Continuous Disclosure” below.
SPECIAL REPoRTS
The Company has identified a number of key areas which are subject to regular reporting to the board such as environmental, legal and
health and safety matters.
bUSINESS RISKS
The board requires reports on major risks affecting the Company and requires management to develop strategies to mitigate these risks.
To assist the board in this regard, the audit and risk committee of the board established a risk assessment panel to investigate, monitor
and report on all material areas of risk affecting the Group. The panel comprises senior executives with Group wide responsibilities
under the chairmanship of the internal audit manager. External advice is sought as appropriate. During the 2011 financial year the panel
operated in relation to the former West Australian Newspapers Group. The scope of the panel is being expanded to encompass the full
Seven West Media Group.
once a major risk is identified, an action plan is instigated. Corrective action is taken as soon as practicable and the committee informed
of the action taken.
CoNTINUoUS DISCLoSURE
The Company is committed to complying with the continuous disclosure obligations of the Corporations Legislation and the listing rules
of the ASX and has adopted a continuous disclosure policy*.
The Company follows a program of half yearly disclosures to the market on financial and operational results and has established policies
and procedures to ensure that a wide audience of investors has access to information given to ASX for market release. Media releases,
half yearly financial reports and results presentations are lodged with ASX and upon confirmation of receipt by ASX, they are posted
to the Company’s website.
In order to protect against inadvertent disclosure of price sensitive information, the Company imposes communication blackout periods
for financial information between the ends of financial reporting periods and the announcement of results to the market.
CoDE of CoNDUCT
The Company has adopted a code of conduct for employees*. It provides a framework of ethical principles for conducting business and
dealing with customers, employees and other stakeholders. The code sets out the responsibilities of employees to the Company and
requires employees to avoid conflicts of interest, misuse of Company property and accepting or offering inappropriate gifts. Employees
are permitted to trade in securities of the Company in accordance with the Company’s Share Trading Policy* and, if senior executives,
after reference to the company secretary.
ShAREhoLDER CoMMUNICATIoN
The Company recognises the right of shareholders to be informed of matters which affect their investment in the Company and has
adopted a shareholder communication policy*. The Company maintains a website which displays both corporate governance documents
and up to date information released to ASX.
28
Corporate Governance
YEAR ENDED 25 JUNE 2011
CoRPoRATE GoVERNANCE PRINCIPLES AND RECoMMENDATIoNS (2ND EDITIoN)
The Company has adopted the Corporate Governance Principles and Recommendations (2nd Edition).
The Company will adopt the ‘Corporate Governance Principles and Recommendation including 2010 Amendments (2nd Edition)’ from
the next reporting period, which is consistent with the requirements of the updated document.
The extent to which the Company has followed the recommendations of the Corporate Governance Principles and Recommendations
(2nd Edition) is contained in the body of this report and/or are summarised below.
1. LAY SoLID foUNDATIoNS foR MANAGEMENT AND oVERSIGhT
The board has adopted a charter setting out its roles and responsibilities*.
Key terms and conditions relating to the appointment of non-executive directors and senior executives are set out in formal
engagement letters.
The process adopted by the Company to evaluate the performance of senor executives and non-executive directors is documented
within the annual report.
The chief executive officer and chief financial officer are employed pursuant to engagement agreements which include formal
job descriptions.
2. STRUCTURE ThE boARD To ADD VALUE
The majority of non-executive directors are independent.
The roles of the chairman and chief executive officer are separate.
The chairman is not an independent director. however, the board believes the chairman’s experience and skills, coupled with the
existence of a clear and accepted conflict of interest protocol, have delivered a structure which will best achieve the company’s
objectives.
The board has adopted the recommended definition of ‘independent director’ and has addressed the issue of materiality.
The board values diversity in relation to age, gender, cultural background and ethnicity and recognises the benefits it can bring to
the organisation.
The board has established a number of committees to assist in the execution of its duties and to allow detailed consideration of complex
issues. Current committees of the board are the remuneration and nomination and the audit and risk committees. Each committee has its
own written charter, which are reviewed on an annual basis and available on the company website.
The board has adopted a written code of conduct for directors*, which establishes guidelines for their conduct. The code includes
guidelines for the disclosure and management of conflicts of interest.
Inductions are provided to new directors, executives and management, to ensure they have a full understanding of the Company and
its operations.
3. PRoMoTE EThICAL AND RESPoNSIbLE DECISIoN MAKING
The board undertakes reviews of its own performance, with external advice, as appropriate.
The board has adopted a code of conduct for directors and employees* which includes a policy on trading in the Company’s securities.
The board values diversity in relation to age, gender, cultural background and ethnicity and recognises the benefits it can bring to
the organisation.
4. SAfEGUARD INTEGRITY IN fINANCIAL REPoRTING
The company policy is to appoint external auditors who clearly demonstrate quality and independence. The performance of the external
auditor is reviewed annually and applications for tender of external audit services are requested as deemed appropriate, taking into
consideration assessment of performance, existing value and tender costs.
Seven West media – annual report 2011 29
Corporate Governance
YEAR ENDED 25 JUNE 2011
The board requires the chief executive officer and chief financial officer to state in writing to it that the Company’s financial reports
represent a true and fair view, in all material respects, of the Company’s financial condition and operational results in accordance with the
relevant accounting standards.
The board has established an audit and risk committee*. The chairman of the committee is an independent director.
5. MAKE TIMELY AND bALANCED DISCLoSURE
The board has adopted a continuous disclosure policy*.
6. RESPECT ThE RIGhTS of ShAREhoLDERS
The board has adopted a shareholder communication policy*.
Shareholders are given a reasonable opportunity to ask questions of the board at general meetings. The external auditor is available
at such meetings to answer questions from shareholders on matters relating to the audit of the Company’s financial statements.
7. RECoGNISE AND MANAGE RISK
The board has adopted an internal control framework and a risk management policy both of which are discussed earlier in this report.
The chief executive officer and chief financial officer are required to state in writing to the board that the risk management and internal
compliance and control systems are operating effectively and efficiently in all material respects.
8. REMUNERATE fAIRLY AND RESPoNSIbLY
The board’s remuneration policy is discussed in the remuneration report which forms part of the directors’ report.
* These documents can be found on the Company’s website at www.sevenwestmedia.com.au or copies can be requested from the company secretary.
30
Directors’ Report
YEAR ENDED 25 JUNE 2011
Your directors present their report on the Group consisting of Seven West Media Limited and the entities it controlled at the end of, or
during, the year ended 25 June 2011.
boARD
The following persons were board members of Seven West Media Limited during the whole of the financial year and up to the date of this
report, unless otherwise stated:
KM Stokes AC – Chairman
DR flynn
DJ Leckie (appointed 16 May 2011)
PJT Gammell
GT John Ao
JC Reizes (appointed 19 April 2011)
DR Voelte
SMC Walsh Ao
PJ bryant – Company Secretary
RK Stokes and bI McWilliam are alternate directors to KM Stokes AC and PJT Gammell respectively. Subsequent to the end of the
financial year (23 August 2011), Mr E bostock was appointed as an alternate director for JC Reizes. Alternate directors do not receive
any remuneration.
PRINCIPAL ACTIVITIES
The principal continuing activities of the Group consisted of free to air television, newspaper and magazine publishing, online and radio
broadcasting.
DIVIDENDS - SEVEN WEST MEDIA LIMITED
Dividends paid to members during the financial year were as follows:
final ordinary dividend for the year ended 30 June 2010 of 26 cents
(2009 - 10 cents) per share paid on 30 September 2010
Interim ordinary dividend for the year ended 25 June 2011 of 19 cents
(2010 - 19 cents) per share paid on 31 March 2011
2011
$’000
2010
$’000
55,804
21,071
41,503
97,307
40,309
61,380
In addition to the above dividends, since the end of the 2011 financial year the directors have declared the payment of a final ordinary
dividend of $158.4m (26 cents per share) to be paid on 14 october 2011.
REVIEW of oPERATIoNS
A summary of consolidated results is set out below:
Profit before income tax
Income tax expense
Profit attributable to ordinary equity holders of Seven West Media Limited
Profit before income tax expense includes the following specific expenses whose disclosure is relevant in explaining the
financial performance of the Group:
2011
$’000
173,530
(58,408)
115,122
2010
$’000
134,109
(37,886)
96,223
Transaction costs related to the acquisition of SMG (h1) Pty Limited and its subsidiaries
26,380
–
It is important to note that the results for 2011 incorporate the full year results for the former West Australian Newspaper Group and the
results of the former Seven Media Group for the period from acquisition on 12 April 2011 to the end of the reporting period.
A review of operations of the Group is given on pages 6 to 21
Seven West media – annual report 2011 31
Directors’ Report
YEAR ENDED 25 JUNE 2011
SIGNIfICANT ChANGES IN ThE STATE of AffAIRS
Significant changes in the state of affairs of the Group which occurred during the financial year were as follows:
In April 2011, the company acquired the Seven Media Group. The transaction, which included a capital raising, was approved by
shareholders at an Extraordinary General Meeting, held on 11 April 2011. full details of the acquisition and the capital raising were
disclosed in the explanatory memorandum and prospectus, which were issued pertaining to the transaction.
MATTERS SUbSEqUENT To ThE END of ThE fINANCIAL YEAR
There are no matters or circumstances which have arisen since 25 June 2011 that have significantly affected or may significantly affect:
a) the Group’s operations in future financial years; or
b) the results of those operations in future financial years; or
c) the Group’s state of affairs in future financial years.
LIKELY DEVELoPMENTS AND EXPECTED RESULTS of oPERATIoNS
In the opinion of the directors it would prejudice the Company’s interests if any further information on likely developments in the
operations of the Group and the expected results of operations were included in this report, and the omission of such information
is hereby disclosed.
ENVIRoNMENTAL REGULATIoN
The Group’s major production facilities do not require discharge licences under the Environmental Protection Act 1986 and no formal
reporting is required to either the Environmental Protection Authority or the National Pollutant Inventory.
GREENhoUSE GAS AND ENERGY DATA REPoRTING REqUIREMENTS
With the introduction in 2008/09 of a national greenhouse gas emissions and energy reporting framework for businesses through
a combination of new legislation (National Greenhouse and Energy Reporting Act 2007) and existing legislation (Energy Efficiency
Opportunities Act 2006), the Group underwent an initial analysis of emissions from its sites. Collectively, emissions from the Group’s
business, which are reviewed annually, do not meet the thresholds for mandatory reporting, with total consumption well below 87,500
tonnes of greenhouse gas emissions and 350 terajoules of energy.
MEETINGS of DIRECToRS
The numbers of meetings of the Company’s board of directors and of each board committee held during the year ended 25 June 2011,
and the numbers of meetings attended by each director were:
DIRECToRS
KM Stokes AC
DR flynn
PJT Gammell
GT John Ao
DJ Leckie (appointed 16/5/11)
JC Reizes (appointed 19/4/11)
DR Voelte
SMC Walsh Ao
Alternate directors
bI McWilliam (Alternate for PJT Gammell)
RK Stokes (Alternate for KM Stokes AC)
MEETINGS of
DIRECToRS
AUDIT AND RISK
REMUNERATIoN AND
NoMINATIoN
INDEPENDENT
DIRECToRS*
(a)
(b)
(a)
(b)
(a)
(b)
(a)
(b)
6
7
7
7
1
2
7
7
–
1
7
7
7
7
1
2
7
7
–
1
–
4
4
–
–
–
–
4
–
–
–
4
4
–
–
–
–
4
–
–
2
–
–
2
–
1
2
–
–
–
2
–
–
2
–
1
2
–
–
–
–
12
–
11
–
–
12
12
–
–
–
12
–
12
–
–
12
12
–
–
(a) Number of meetings attended.
(b) Number of meetings held during the time the director held office or was a member of the committee during the year.
*
This committee, comprising the independent directors, was established to review, consider and negotiate the transaction to acquire the Seven Media Group.
32
Directors’ Report
YEAR ENDED 25 JUNE 2011
DIRECToRS’ INTERESTS IN ShARES
As at the date of this report the interests of the directors in the shares of the Company were:
KM Stokes AC
DR flynn
PJT Gammell
GT John Ao
DJ Leckie
JC Reizes
DR Voelte
SMC Walsh Ao
bI Williams (Alternate Director)
RK Stokes (Alternate Director)
Number of convertible
preference shares
Number of ordinary shares
2,500
180,720,216
–
–
–
–
–
–
–
–
–
30,843
95,763
44,866
751,252
34,713
19,095
52,312
297,938
39,846
REMUNERATIoN REPoRT
This report describes the remuneration arrangements for the directors and key management personnel of Seven West Media Limited.
As a consequence of the acquisition of the Seven Media Group, on 12 April 2011, the key management personnel of Seven West Media
Limited changed. further, as a consequence of this change, the structure of remuneration packages under which the key management
personnel were employed, varied during the period.
Key management personnel prior to the acquisition of the Seven Media Group were engaged by the West Australian Newspaper Group,
under contract terms and conditions applicable to the West Australian Newspaper Group. Subsequent to the acquisition, the key
management personnel reflect a combination of executives engaged under the West Australian Newspaper Group structure and under
the Seven Media Group structure.
This remuneration report provides details of both structures referred to above.
It is envisaged that, for the year ended 2012, all key management personnel of the Seven Media Group will be engaged on consistent
remuneration package structures.
Remuneration details for the executives who became key management personnel following the acquisition of the Seven Media Group
have been provided for the period from 12 April 2011, the date the new Group was formed, to the end of the reporting period. Where
an executive ceased to be a key management personnel following the acquisition of the Seven Media Group, their remuneration has
been disclosed for the period from 1July 2010 to 12 April 2011.
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.
The board has established a Remuneration & Nomination Committee (the “Committee”). Its role is described in the corporate governance
statement in this annual report, and includes the following :
•
•
•
To recommend to the board the remuneration of non-executive directors, within the aggregate approved by shareholders;
To recommend to the board the remuneration and other conditions of service of the chief executive officer;
To approve the remuneration and other conditions of service for senior executives reporting to the chief executive officer, based on the
recommendations of the chief executive officer;
To design the executive incentive plans and approve payments or awards under such plans; and
To establish the performance hurdles associated with the incentive plans.
•
•
This report is set out under the following main headings:
A Principles used to determine the nature and amount of remuneration
b Details of remuneration
C Service agreements
D Share-based compensation
Seven West media – annual report 2011 33
Directors’ Report
YEAR ENDED 25 JUNE 2011
A. PRINCIPLES USED To DETERMINE ThE NATURE AND AMoUNT of REMUNERATIoN
Directors
fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors.
Non-executive directors’ fees and payments are reviewed by the Committee and, where appropriate, changes are recommended to the
board. The Committee has the discretion to directly seek the advice of independent remuneration consultants to ensure non-executive
directors’ fees are appropriate and in line with the market. The chairman’s fees are determined in the same way.
The aggregate of payments each year to non-executive directors must be no more than the amount approved by shareholders in general
meeting. The current aggregate is $1,500,000, which was approved at the AGM held on 18 November 2010.
The fees paid for the year to 25 June 2011 were $120,000 per annum for non-executive directors and $300,000 per annum for the
chairman. The Company’s statutory superannuation contributions are included in these amounts. Non-executive director fees were last
increased in July 2007.
In order to more closely align the interests of the non-executive directors with shareholder interests in the creation of value for
shareholders as a whole, non-executive directors are obliged to receive at least 25% of their annual fees in shares in the Company. These
shares are purchased on-market at prevailing prices and must be held in trust for ten years unless the director retires or a specified
event occurs.
In addition to the fees described above, Mr flynn received an additional one off payment of $150,000. This payment represents
a reimbursement for time spent, above the normal expectations of a director, as chairman of the independent directors committee,
which was established in relation to the acquisition of Seven Media Group.
Chief executive officer and managing director
Mr Leckie’s remuneration comprises of fixed remuneration and performance linked remuneration.
fixed remuneration
from 12 April 2011, the date the new Group was formed following the acquisition of the Seven Media Group, to the end of the reporting
period, Mr Leckie is entitled to a pro-rata fixed base salary of $510,574.71 inclusive of superannuation.
Performance linked remuneration
Mr Leckie is eligible for performance linked remuneration under the Seven Media Group’s Performance Management Plan. This consists
of a cash incentive which is intended to appropriately align with business objectives and to motivate and reward performance.
An “on-target” assessment shall result in performance-linked remuneration of up to 75% of the chief executive officer and managing
director’s base salary package, comprising a cash incentive which may be subject to vesting restrictions. The cash incentive shall not
be provided in circumstances where individual performance is unsatisfactory. The board approve the level of performance-linked
remuneration paid to Mr Leckie based on a recommendation from the Remuneration and Nomination Committee.
The cash incentive under the Performance Management Plan consists of a lump sum payment following the end of the financial year.
The board has discretion to defer a portion of the incentive to make it subject to time vesting while the executive remains employed by
the Company. Payments under the incentive are not guaranteed as they are dependent upon certain performance targets being reached.
The performance targets comprise two parts – corporate goals and personal goals – and are measured over the relevant financial year.
The corporate goals are based on achievement of the relevant business unit and Seven Media Group Earnings before Interest and Tax
(EbIT). Personal goals are based upon performance against specified and weighted criteria, for example relating to ratings performance,
sales performance and revenue share, budget, leadership and business planning. These performance hurdles were selected by the SMG
board to ensure the ongoing market leadership of the television and magazine businesses.
In certain circumstances a discretionary adjustment within established parameters may also be made to the incentive to reflect individual
performance. The discretion may only be exercised where performance is assessed as exceeding set goals, with greater discretion where
performance is assessed to be outstanding.
Chief executive officer - WA
Mr Wharton was the chief executive officer of the Group for the period up to the appointment of Mr Leckie, following the acquisition
of the Seven Media Group. Concurrent with the appointment of Mr Leckie, Mr Wharton was appointed chief executive officer of Seven
West Media, in Western Australia.
34
Directors’ Report
YEAR ENDED 25 JUNE 2011
The remuneration package of the chief executive officer WA, including performance based incentives, is set by the Committee,
on the recommendation of the chief executive officer and managing director. Where appropriate, the Committee directly seeks
independent advice.
Mr Wharton’s annual remuneration comprises a fixed annual remuneration (fAR) component, which is inclusive of superannuation and
other benefits, a short term cash incentive (STI) and a long term equity incentive (LTI).
Mr Wharton’s STI is assessed annually, based on his performance against a basket of Key Performance Indicators (KPIs), established at
the commencement of each annual review period by the Committee and approved by the board. The KPIs comprise both qualitative
and quantitative targets, with each category given equal rating. Within the qualitative grouping there are six KPIs, which for the year
ended 25 June 2011 focused on the development of the Group’s reputation, engagement with the community, and the development
of the Group’s Regional and online assets. The quantitative grouping comprised five KPIs and focused on revenue generation, circulation
growth, cost management, profitability and health, safety and environment. The maximum STI that can be earned by Mr Wharton
equates to 50% of his fAR. for the year ended 25 June 2011, Mr Wharton achieved an STI payout ratio of 70%.
Mr Wharton’s LTI program, under which equity in the Company can be earned, has two hurdles, or assessment points, which ultimately
determine his LTI entitlement.
The first hurdle provides access to the program, and establishes an unvested number of share rights. The second hurdle determines the
number of shares that vest and thus will be received by Mr Wharton.
Under the first hurdle, which is applied annually on 30 June, Mr Wharton may be granted unvested share rights, in accordance with
the following :
• Where reported EPS growth for the year is equal to CPI + 6%, Mr Wharton is granted an allocation equal in value to 25% of his fAR.
• Where reported EPS growth for the year is equal to CPI + 8%, Mr Wharton is granted an allocation equal in value to 50% of his fAR.
• Where reported EPS growth is between the two thresholds above, the allocation is determined on a pro-rata basis.
once share rights have been granted, a second hurdle is applied to determine the number of shares that will ultimately vest.
The second hurdle is assessed three years after the shares were granted. The second hurdle is based on the Company’s Total Shareholder
Return (TSR).
The TSR performance hurdles are :
•
If TSR is within the 50-75 percentile of a comparative group, then the percentage ranking, multiplied by the available LTI share rights,
will vest.
If TSR is within the 75-100 percentile of a comparative group, then the percentage of available LTI share rights that vest will be from
75% to 150% of the available share rights, calculated on a pro-rata basis.
•
In the event that minimum TSR performance hurdle for year three is not achieved, the share rights granted can be carried forward for two
years, with a re-test performed in each of these years, based on the TSR over four or five years respectively.
The maximum value of shares issued under the LTI program, assuming all hurdles are passed at the highest level, equates to 75% of
Mr Wharton’s fAR.
for the year ended 25 June 2011 no share rights were granted under the terms of Mr Wharton’s LTI program.
The board believes it is in the best interest of the Company to ensure that Mr Wharton’s annual remuneration package is reasonable and
represents an appropriate reward for both the financial and operational results achieved during the period. The board therefore reserves
the right to, in exceptional circumstances, make a discretionary allocation of share rights.
Should the Company terminate Mr Wharton’s contract, other than for serious misconduct, Mr Wharton will be entitled to 3 months
notice. In lieu of such notice, he may be paid an amount determined by reference to his fixed annual remuneration.
Executives – Seven West Media Limited
from 12 April 2011, the date of the acquisition of the Seven Media Group, several executives of the Seven Media Group became key
management personnel of Seven West Media. for the period commencing 12 April 2011 to the end of the reporting period, these Seven
West Media Limited executives had their remuneration set to comprise of fixed and performance linked variable pay.
These executives are eligible for performance linked remuneration under the Seven Media Group Performance Management Plan.
The terms under the plan which apply to the executives are broadly similar to those applying to Mr Leckie.
Seven West media – annual report 2011 35
Directors’ Report
YEAR ENDED 25 JUNE 2011
An “on-target” assessment shall result in performance-linked remuneration of 50% of the base salary package, comprising a cash
incentive which may be subject to vesting restrictions. Personal goals are assessed and weighted against specified criteria, for example
relating to ratings performance, sales budgets, revenue share, budgets, circulation and leadership. The cash incentive shall not be
provided in circumstances where individual performance is unsatisfactory.
The remuneration packages of executives, including performance based incentives, were set by the Seven Media Group Remuneration
Committee, on the recommendation of the chief executive officer. The objective of the Seven Media Group executive reward framework
is to ensure reward for performance is competitive with other employers and appropriate for the results delivered.
Executives – former West Australian Newspaper Group
The former West Australian Newspaper Group executives held office for the full year. Subsequent to the acquisition of the Seven Media
Group, several of these executives are no longer considered to be key management personnel. In these instances their remuneration has
been disclosed for the period that they were considered key management personnel of Seven West Media.
The remuneration packages of executives, including performance based incentives, are set by the Committee, on the recommendation
of the CEo. Where appropriate, the Committee directly seeks independent advice.
The objective of the Company’s executive reward framework is to ensure reward for performance is competitive with other employers
and appropriate for the results delivered.
The reward structure aligns the interests of executives with shareholders’ interests as it has economic profit as a core component
of the plan’s design, coupled with a focus on key non-financial drivers of value. The plan provides a clear structure for earning rewards
and provides recognition for contribution to growth in the Company’s profits and value.
The executive remuneration packages provide a mix of fixed annual remuneration (fAR) and at risk short term cash incentives (STIs).
Executives’ fAR is reviewed annually, or in line with promotion or increased responsibility, to ensure the executive’s remuneration
is competitive with the market.
Executives’ fAR can include non-cash benefits, which may include the use of a motor vehicle.
There are no guaranteed fAR increases included in any executive’s contract.
The executives participate in an STI program. Under the program, should the executives achieve pre-determined targets set by the
Committee then cash incentives are payable to executives. The incentive targets are leveraged for performance above a threshold
to provide an incentive for executive performance.
The maximum STI that can be earned by the executives is between 40% and 75% of the executive’s fAR. Details of the relative
proportions for each executive are contained in section b of this report.
Targets, which are established annually at the commencement of each annual review period, include both a quantitative and qualitative
component, developed with reference to the accountabilities of the role and its impact on organisation or business unit performance.
Although the exact composition of KPIs varies for each executive, broadly speaking each executive has eight KPIs which are given equal
weighting between qualitative and quantitative targets.
Within the qualitative grouping the KPIs, for the year ended 25 June 2011, focused on the development of the Group’s reputation,
engagement with the community, the development of the Group’s Regional and online assets and the maintenance of appropriately
resourced and structured operating divisions. The quantitative KPIs focused on revenue generation, circulation growth, cost
management, profitability and health, safety and environment.
The average STI payout ratio, for the year, was 56%, (last year 85%).
Link between remuneration policy and company performance
Seven West Media Limited
from 12 April 2011, the date the new Group was formed following the acquisition of the Seven Media Group, to the end of the reporting
period, Seven West Media executives, who were formally executives of Seven Media Group, had their remuneration policy linked to the
EbIT performance of the individual business units and the Seven Media Group.
36
Directors’ Report
YEAR ENDED 25 JUNE 2011
Former West Australian Newspaper Group
The Company’s remuneration policy aligns the level of STIs paid to the profit growth of the Company. The theme of linking remuneration
policy directly to company performance for 2011/12 is extended to long term incentives (LTIs) granted to the chief executive officer WA,
who is entitled to receive share rights on the basis outlined above.
The Committee considers that the performance linked remuneration structure adopted by the Company is generating an outcome that
is aligned with the generation of shareholder wealth.
The following table sets out the Company’s performance over the last 5 financial years:
Profit after tax (before significant items*) ($’000’s)
Profit after tax (as reported) ($’000’s)
ordinary dividends per share with respect to year (cents)
Diluted earnings per share
(as reported) (cents)
Diluted earnings per share (before significant items*) (cents)
Growth/(decline) in earnings per share (before significant items*) (%)
Share price as at reporting date ($)
2007
2008
128,437
127,342 (a)
53,968
61.0
25.8
61.4
19.5
13.70
109,935
53.0
52.5
60.9 (a)
13.8 (a)
7.90
2009
97,091
87,244
33.0
41.5
46.2
(24.1)
4.36
2010
96,223
96,223
45.0
45.0
45.0
(2.6)
6.54
2011
140,452
115,122
45.0
37.5
45.8
1.8
4.00
(a) for the purposes of calculating the 2008 percentage EPS movement, the profit after tax (before significant items) for 2007 was restated to $111,885,000
to exclude the discontinued hoyts operations. In 2008, the after-tax profit on the sale of the commercial printing operation’s property of $5,386,000 was
a management KPI and is thus included in the profit after tax.
for details of significant items refer note 7 to the financial statements.
*
b. DETAILS of REMUNERATIoN
Amounts of remuneration
Details of the remuneration of the directors of Seven West Media Limited and key management personnel of the Group, are set out in the
following tables.
The key management personnel of the Group at 25 June 2011 are the directors of Seven West Media Limited (as per page 31 above),
the chief executive officer and managing director, and certain executives that report directly to the chief executive officer. The key
management personnel of the Group changed on 12 April 2011, as a consequence of the acquisition of the Seven Media Group.
The remuneration disclosed for the executives of Seven West Media reflects their remuneration for the period that they were considered
to be key management personnel.
With the exception of Mr Wharton and Mr bryant, whose remuneration has been disclosed for the full year, the remuneration for the
key management personnel of the Group post transaction has been disclosed for the period from 12 April 2011 to the end of the
reporting period.
The remuneration for the West Australian Newspaper Group executives has been disclosed from 1 July 2010 to 12 April 2011, the date
that they ceased to be key management personnel.
Key management personnel, whose remuneration has been disclosed in this report are:
Seven West Media Limited
DJ Leckie
CS Wharton
PJ bryant
KJ burnette
N Chan
PJ Lewis
bI McWilliam
TG Worner
Group Chief Executive officer and Managing Director
Chief Executive officer WA
Company Secretary & Chief financial officer (WA)
Chief Sales & Digital officer
Chief Executive officer Pacific Magazines
Group Chief financial officer
Commercial Director
Director of Programming & Production
Seven West media – annual report 2011 37
Directors’ Report
YEAR ENDED 25 JUNE 2011
Key management personnel prior to the acquisition of Seven Media Group
DM bignold
RA billington
bA McCarthy
LM Roche
2011
Name
Sales Director
General Manager – Marketing and Circulation
Editor, The West Australian
General Manager – Group operations and Information Technology
ShoRT–TERM bENEfITS
PoST–EMPLoYMENT bENEfITS
Cash salary
& fees
$
Cash bonus &
incentives
$
Non-monetary
benefits
$
Super-
annuation
$
Termination
benefits
$
Share-based
payments
$
NoN-EXECUTIVE DIRECToRS of ThE CoMPANY
KM Stokes AC - Chairman
DR flynn
PJT Gammell
GT John Ao
JC Reizes
(appointed 19/4/11)
DR Voelte
SMC Walsh Ao
153,190
81,900
91,326
81,900
26,488
81,900
54,600
–
(ii) 150,000
–
–
–
–
–
–
–
–
–
–
–
–
9,375
10,800
11,648
10,800
3,098
10,800
10,800
EXECUTIVE DIRECToR of ThE CoMPANY
DJ Leckie (appointed
16/5/11) (from 12/4/11)
510,575
205,479
6,452
3,123
KEY MANAGEMENT PERSoNNEL of ThE GRoUP
CS Wharton
PJ bryant
KJ burnette (from 12/4/11)
N Chan (from 12/4/11)
PJ Lewis (from 12/4/11)
bI McWilliam (from 12/4/11)
TG Worner (from 12/4/11)
787,444
(vii) 300,000
(viii) 43,631
(x) 443,355
(iv) 83,600
(viii) 27,510
167,419
142,591
86,407
222,904
200,342
109,038
11,558
34,932
53,682
124,604
–
(viii) 8,396
(viii) 77,960
–
–
15,199
15,199
3,242
3,123
3,123
3,123
5,137
KEY MANAGEMENT PERSoNNEL PRIoR To ThE ACqUISITIoN of SEVEN MEDIA GRoUP
DM bignold (to 12/4/11)
RA billington (to 12/4/11)
bA McCarthy (to 12/4/11)
LM Roche (to 12/4/11)
Totals
211,966
217,580
239,813
(iii) 91,926
(viii) 21,211
(iv) 78,023
(v) 110,252
–
–
224,809
(vi) 146,495
(viii) 20,045
11,297
12,033
12,033
12,033
4,026,509
1,499,589
205,205
165,986
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
$
210,274
270,000
130,274
120,000
35,274
120,000
120,000
(i) 47,709
(i) 27,300
(i) 27,300
(i) 27,300
(i) 5,688
(i) 27,300
(i) 54,600
–
725,629
(ix) 67,784
1,214,058
–
–
–
–
–
–
–
–
–
–
569,664
279,699
165,668
202,422
279,709
330,083
336,400
307,636
362,098
403,382
284,981
6,182,270
(i) Shares in the Company acquired on-market in terms of the Non-Executive Directors Share Plan, approved by shareholders at the annual general
meeting of the Company on 7 November 2002.
(ii) one-off payment in recognition of time spent in relation to the acquisition of Seven Media Group.
(iii) STI being 50% of available STI (50% forfeited).
(iv) STI being 45% of available STI (55% forfeited).
(v) STI being 58% of available STI (42% forfeited).
(vi) STI being 75% of available STI (25% forfeited).
(vii) STI being 70% of available STI (30% forfeited).
(viii) Provision of motor vehicle and other non-monetary benefits.
(ix) Relates to discretionary grant of 41,081 share rights on 3 August 2010 – refer page 40 for further details. No share rights available under Mr Wharton’s
LTI program were granted during the financial year.
Includes $39,183, being the payout of excessive leave entitlement.
(x)
38
Directors’ Report
YEAR ENDED 25 JUNE 2011
The five highest paid executives of the Group during the year ended 25 June 2011 are reflected in the following table.
2011
Name
DJ Leckie (from 12/4/11)
CS Wharton
PJ bryant
bA McCarthy
LM Roche
ShoRT–TERM bENEfITS
PoST–EMPLoYMENT bENEfITS
Cash salary
and fees
$
Cash bonus &
incentives
$
Non-monetary
benefits
$
Super-
annuation
$
Termination
benefits
$
Share-based
payments
$
Total
$
510,575
787,444
443,355
302,922
283,969
205,479
300,000
83,600
139,266
185,046
6,452
43,631
27,510
–
30,239
3,123
15,199
15,199
15,199
15,199
–
–
–
–
–
–
725,629
67,784
1,214,058
–
–
–
569,664
457,387
514,453
Subsequent to the conclusion of the 2011 financial year, the board, on the recommendation of the Remuneration & Nomination
Committee, approved the granting of the following discretionary share rights:
a) 69,986 share rights to Mr Wharton, on 12 August 2011, the rights will vest in accordance with the TSR hurdles, outlined earlier in
this report.
b) 185,519 share rights to Mr Leckie, on 20 September 2011, the rights will vest over three years, with one third vesting each year on the
anniversary of the date the rights were granted, so long as Mr Leckie remains an employee of the Company.
Seven West media – annual report 2011 39
Directors’ Report
YEAR ENDED 25 JUNE 2011
2010
Name
ShoRT–TERM bENEfITS
PoST–EMPLoYMENT bENEfITS
Cash salary
and fees
$
Cash bonus &
incentives
$
Non-monetary
benefits
$
Super-
annuation
$
Termination
benefits
$
Share-based
payments
$
NoN–EXECUTIVE DIRECToRS of ThE CoMPANY
KM Stokes AC – Chairman
DR flynn
PJT Gammell
GT John Ao
DR Voelte
SMC Walsh Ao
214,691
81,900
81,900
81,900
81,900
54,600
–
–
–
–
–
–
–
–
–
–
–
–
oThER KEY MANAGEMENT PERSoNNEL of ThE GRoUP
DM bignold (viii)
253,587
(ii) 200,000
(vii) 25,320
RA billington
PJ bryant
bA McCarthy
LM Roche
CS Wharton
TL Garven (retired 6/11/09)
Pf Stevens (retired 30/11/09)
259,255
(iii) 140,304
–
381,704
(iv) 125,339
(vii) 27,510
266,255
(v) 200,000
–
272,490
(vi) 188,004
(vii) 30,239
739,599
(iv) 333,466
128,423
112,916
–
–
–
–
(vii) 10,614
13,745
10,800
10,800
10,800
10,800
10,800
14,461
14,461
14,461
12,983
14,461
14,461
14,461
13,942
–
–
–
–
–
–
–
–
–
–
–
–
(x) 57,054
(x) 154,897
Total
$
300,000
120,000
120,000
120,000
120,000
120,000
493,368
414,020
549,014
479,238
505,194
(i) 71,564
(i) 27,300
(i) 27,300
(i) 27,300
(i) 27,300
(i) 54,600
–
–
–
–
–
(ix) –
1,087,526
–
–
199,938
292,369
Totals
3,011,120
1,187,113
93,683
181,436
211,951
235,364
4,920,667
(i) Shares in the Company acquired on-market in terms of the Non-Executive Directors Share plan, approved by shareholders at the annual general
meeting of the Company on 7 November 2002.
(ii) STI being 89% of available STI (11% forfeited).
(iii) STI being 69% of available STI (31% forfeited).
(iv) STI being 87% of available STI (13% forfeited).
(v) STI being 95% of available STI (5% forfeited).
(vi) STI being 79% of available STI (21% forfeited).
(vii) Provision of motor vehicle.
(viii) Mr bignold commenced with the Group during the previous financial year and was appointed to the position of Sales Director on 1/8/09. Remuneration
disclosed in this report is for the whole of the financial year ended 30/6/10.
(ix) No share rights available under Mr Wharton’s LTI program were granted. Subsequent to the 2010 financial a discretionary granting of share rights was
made to Mr Wharton – refer note below.
(x) Termination benefits are determined by reference to the employee’s contractual entitlement. Amount does not include termination benefits accrued
at 30/6/09 and paid during 2009/10.
Subsequent to the conclusion of the 2010 financial year, the board, on the recommendation of the Remuneration & Nomination
Committee, approved a discretionary granting of 41,081 share rights to Mr Wharton on 3 August 2010. In making this discretionary
allocation, the board considered the following items:
•
•
•
•
•
The Group had been impacted by the Global financial Crisis and had performed very well, under the circumstances.
The Group’s reported net profit after tax was up 18% on internal budgets.
The Company share price was up 50%, compared to the prior year.
The Group had reduced net debt by 18%.
The CEo had successfully delivered significant change and improvement to the Group.
The share rights will vest in accordance with the TSR hurdles, outlined earlier in this report.
further information on remuneration of directors and other key management personnel is set out in the corporate governance
statement and note 24 to the financial statements.
40
Directors’ Report
YEAR ENDED 25 JUNE 2011
The relative proportions of total possible remuneration that are linked to performance and those that are fixed are as follows:
NAME
SEVEN WEST MEDIA LIMITED
DJ Leckie
CS Wharton
PJ bryant
KJ burnette
N Chan
PJ Lewis
bI McWilliam
TG Worner
fIXED REMUNERATIoN
AT RISK – STI
(AT MAX)
AT RISK – LTI
(AT MAX)
2011
2010
2011
2010
2011
2010 *
57%
44%
70%
65%
70%
51%
66%
60%
N/A
44%
75%
N/A
N/A
N/A
N/A
N/A
43%
22%
30%
35%
30%
49%
34%
40%
43%
43%
43%
43%
–
–
N/A
22%
25%
N/A
N/A
N/A
N/A
N/A
43%
43%
43%
43%
–
–
N/A
34%
–
N/A
N/A
N/A
N/A
N/A
–
–
–
–
–
–
N/A
34%
–
N/A
N/A
N/A
N/A
N/A
–
–
–
–
–
–
KEY MANAGEMENT PERSoNNEL PRIoR To ThE ACqUISITIoN of SEVEN MEDIA GRoUP
DM bignold
RA billington
bA McCarthy
LM Roche
TL Garven (retired 6/11/09)
Pf Stevens (retired 30/11/09)
57%
57%
57%
57%
–
–
57%
57%
57%
57%
100%
100%
*
The LTI plan for executives other than the chief executive officer was terminated on 1 July 2009.
further information on remuneration of directors and other key management personnel is set out in the corporate governance
statement and note 24 to the financial statements.
C. SERVICE AGREEMENTS
The terms of employment for the chief executive officer and managing director, and the other key management personnel of the Seven
West Media Group, are formalised in employment contracts, the major provisions of which are set out below.
Chief executive officer and managing director and other key management personnel
Period of Notice Required to Terminate the Contract
Termination Benefits
Name
DJ Leckie
KJ burnette
N Chan
PJ Lewis
bI McWilliam
TG Worner
CS Wharton
PJ bryant
Duration
of Contract
Three years
Three years
Three years
Three years
Three years
Three years
Six months’ notice given by either party after the fixed term.
Three months’ notice given by either party after the fixed term.
Three months’ notice given by either party after the fixed term.
Three months’ notice given by either party after the fixed term.
Three months’ notice given by either party after the fixed term.
No specified period.
open ended
one month’s notice.
open ended
one month’s notice.
{ Remainder
of contract term,
plus notice
period, to a
maximum of
12 months
3 months
9 months
Seven West media – annual report 2011 41
Directors’ Report
YEAR ENDED 25 JUNE 2011
D. ShARE-bASED CoMPENSATIoN
a) Executive and employee share plans
Prior to 2003, the Company offered plans for the purchase of shares in the Company by executives and employees. Details of the
plans are as follows:
i) West Australian Newspapers holdings Limited Executive Share Purchase and Loan Plan
This plan was approved at the annual general meeting of the Company on 9 october 1992. The operation of this plan has been
suspended and no executives have been invited to apply for shares since 2002.
ii) West Australian Newspapers holdings Limited Employee Share Plan
This plan was approved at the annual general meeting of the Company on 22 october 1993. The operation of the plan has been
suspended and no employees have been invited to apply for shares since 2002.
b) Non-executive directors share plan
Information regarding shares issued under the non-executive directors share plan can be found in sections A and b of the
remuneration report on pages 34 to 40 and in note 32 to the financial statements.
Insurance of directors and officers
During the financial year, the Company paid a premium in respect of a contract insuring all directors and officers (including employees)
of the Company and of related bodies corporate against certain liabilities specified in the contract. The contract prohibits disclosure of
the nature of the liabilities insured and the amount of the premium.
Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise
and experience with the Company and/or the Group are important.
The board of directors has considered the position and, in accordance with the advice received from the audit committee, is satisfied that
the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations
Act 2001. The directors are satisfied that the provision of non-audit services by the auditor did not compromise the auditor independence
requirements of the Corporations Act 2001 for the following reasons:
•
all non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the
auditor;
• none of the services undermine the general principles relating to auditor’s independence as set out in APES 110 Code of Ethics for
Professional Accountants.
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 43.
Details of amounts paid or payable to the auditor, PricewaterhouseCoopers, for audit and non-audit services provided during the year are
set out in note 25 to the financial statements.
Rounding of amounts
The Company is of a kind referred to in Class order 98/0100, issued by the Australian Securities and Investments Commission, relating
to the “rounding off” of amounts in the directors’ report. Amounts in the directors’ report have been rounded off in accordance with that
Class order to the nearest thousand dollars, or in certain cases, to the nearest dollar.
This report is made in accordance with a resolution of the directors.
KM Stokes AC
Chairman
Perth, Western Australia
20 September 2011
42
Auditor’s Independence Declaration
YEAR ENDED 25 JUNE 2011
Auditor’s Independence Declaration
As lead auditor for the audit of Seven West Media Limited for the year ended 25 June 2011, I declare
that to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Seven West Media Limited and the entities it controlled during the
period.
DS Wiadrowski
Partner
PricewaterhouseCoopers
20 September 2011
.
PricewaterhouseCoopers, ABN 52 780 433 757
Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Seven West media – annual report 2011 43
Consolidated Statement of Comprehensive Income
foR ThE YEAR ENDED 25 JUNE 2011
Revenue
other income
Depreciation and amortisation (excluding program rights amortisation)
Advertising and marketing expenses
Printing, selling and distribution (including newsprint and paper)
Media content (including program rights amortisation)
Employee benefits expense
Raw materials and consumables used (excluding newsprint and paper)
Repairs and maintenance
Licence fees
Transaction costs
other expenses from ordinary activities
Share of net profit of equity accounted investees
Profit before net finance costs and income tax
finance income
finance costs
Net finance costs
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
Interest rate cash flow hedges
Income tax relating to components of other comprehensive income
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to owners of the Company
Earnings per share for profit attributable to the ordinary equity holders of the Company
Notes
4
4
5
7
13
6
6
8
2011
$’000
2010
$’000
725,691
408,691
73
(30,373)
(16,467)
(88,494)
(105,094)
(173,680)
(9,277)
(7,964)
(13,417)
(26,380)
(44,355)
7,304
468
(20,932)
(5,991)
(75,403)
(6,087)
(111,816)
(9,326)
(5,780)
-
-
(24,129)
3,869
217,567
153,564
6,569
(50,606)
(44,037)
483
(19,938)
(19,455)
173,530
134,109
(58,408)
(37,886)
115,122
96,223
720
(216)
504
3,334
(1,000)
2,334
115,626
98,557
basic earnings per share
Diluted earnings per share
31
31
38.6 cents
37.5 cents
45.4 cents
45.0 cents
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
44
Consolidated Statement of Financial Position
AS AT 25 JUNE 2011
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Program rights and inventories
other assets
Total current assets
Non-current assets
Program rights and inventories
Investments accounted for using the equity method
Available-for-sale financial assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
LIAbILITIES
Current liabilities
Trade and other payables
Provisions
Deferred income
borrowings
Current tax liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Provisions
Deferred income
borrowings
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
EqUITY
Share capital
Reserves
Retained earnings
Total equity
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Notes
2011
$’000
2010
$’000
9
10
11
12
11
13
14
15
16
8
17
18
19
20
17
18
19
20
8
21
22
118,567
315,515
127,697
6,633
568,412
1,544
346,815
777
282,081
3,862,939
25,244
4,519,400
5,087,812
339,952
62,107
19,708
136,000
9,718
567,485
62,073
15,267
5,438
1,926,070
-
2,008,848
2,576,333
2,511,479
12,065
54,452
13,123
3,253
82,893
-
11,228
777
213,523
132,869
-
358,397
441,290
15,278
13,644
1,962
-
6,434
37,318
547
950
-
261,000
10,924
273,421
310,739
130,551
2,489,061
126,520
159
22,259
(413)
4,444
2,511,479
130,551
Seven West media – annual report 2011 45
(Accumulated
deficit)/
retained
earnings
$'000
(30,399)
96,223
-
-
-
Total
equity
$'000
67,803
96,223
3,334
(1,000)
2,334
96,223
98,557
-
-
(61,380)
(61,380)
1,128
24,443
(61,380)
(35,809)
$'000
149
-
-
-
-
-
-
-
-
-
149
4,444
130,551
-
-
-
-
-
-
-
-
-
-
-
-
-
-
115,122
115,122
-
-
-
720
(216)
504
115,122
115,626
-
-
-
-
-
-
-
-
387
24,136
951,063
250,000
1,153,795
(22,986)
1,354
4,792
(97,307)
(97,307)
68
68
217
-
68
(97,307)
2,265,302
22,259
2,511,479
Consolidated Statement of Changes in Equity
foR ThE YEAR ENDED 25 JUNE 2011
Cash flow
Share
capital
hedge
Cash flow
reserve
hedge reserve
Equity
compensation
reserve
Notes
Balance at 1 July 2009
Profit for the year
Cash flow hedge gains taken to equity
Income tax on other comprehensive income
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners
Proceeds relating to shares issued pursuant to the
executive and employee share plan
Dividend reinvestment plan share issues
Dividends paid
Total transactions with owners
Balance at 30 June 2010
Profit for the year
Cash flow hedge gains taken to equity
Income tax on other comprehensive income
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners
Proceeds relating to shares issued pursuant to the
executive and employee share plan
Dividend reinvestment plan share issues
Issue of ordinary shares related to business combination
Issue of convertible notes related to business combination
Proceeds from other issues of ordinary shares
Transaction costs arising on share issues
Current tax recognised directly in equity
Deferred tax recognised directly in equity
Dividends paid
Increase in share option reserve in respect of share
based payment expense
Total transactions with owners
Balance at 25 June 2011
$'000
100,949
-
-
-
-
-
21(a)
21(a)
23
1,128
24,443
-
25,571
126,520
-
-
-
-
-
21(a)
21(a)
21(a)
21(b)
21(a)
21(a)
21(a)
21(a)
23
387
24,136
951,063
250,000
1,153,795
(22,986)
1,354
4,792
-
-
2,362,541
2,489,061
$'000
(2,896)
-
3,334
(1,000)
2,334
2,334
-
-
-
-
(562)
-
720
(216)
504
504
-
-
-
-
-
-
-
-
-
-
-
(58)
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
46
Consolidated Statement of Cash Flows
foR ThE YEAR ENDED 25 JUNE 2011
Notes
2011
$’000
2010
$’000
Cash flows related to operating activities
Receipts from customers
Payments to suppliers and employees
Dividends received from equity accounted investees
Interest and other items of similar nature received
Interest and other costs of finance paid
Income taxes paid
Net operating cash flows
Cash flows related to investing activities
Payments for purchases of property, plant and equipment
Deposit paid for purchase of property
Proceeds from sale of property, plant and equipment
Payments for software
Cash acquired on acquisition of controlled entity
Net investing cash flows
Cash flows related to financing activities
Proceeds from issues of shares
Proceeds relating to shares issued pursuant to the executive and employee share purchase plans
Share issue costs
Proceeds from borrowings
Repayment of borrowings
Dividends paid
Net financing cash flows
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
859,398
(660,327)
6,166
6,098
(40,102)
(30,288)
447,216
(296,080)
4,250
483
(20,227)
(32,207)
140,945
103,435
33
15
16
29
21
(14,710)
(1,000)
246
(4,135)
65,881
46,282
1,153,795
387
(22,986)
73,000
(1,211,750)
(73,171)
(80,725)
106,502
12,065
9
118,567
(8,208)
-
394
(5,738)
-
(13,552)
-
1,128
-
176,000
(233,000)
(36,928)
(92,800)
(2,917)
14,982
12,065
Seven West media – annual report 2011 47
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
1. SUMMARY of SIGNIfICANT ACCoUNTING PoLICIES
1. SUMMARY of SIGNIfICANT ACCoUNTING PoLICIES
The principal accounting policies adopted in the preparation of this consolidated financial report are set out below. These policies have been
The principal accounting policies adopted in the preparation of this consolidated financial report are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated. The financial statements are for the Group consisting of Seven West Media
consistently applied to all the years presented, unless otherwise stated. The financial statements are for the Group consisting of Seven West Media
Limited (the “Company” or “Parent Entity”) and its subsidiaries. Prior to 12 April 2011, the Group consisted of West Australian Newspapers holdings
Limited (the “Company” or “Parent Entity”) and its subsidiaries. Prior to 12 April 2011, the Group consisted of West Australian Newspapers holdings
Limited and its subsidiaries.
Limited and its subsidiaries.
(a) basis of preparation
(A) bASIS of PREPARATIoN
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative
pronouncements of the Australian Accounting Standards board, Urgent Issues Group Interpretations and the Corporations Act 2001.
pronouncements of the Australian Accounting Standards board, Urgent Issues Group Interpretations and the Corporations Act 2001.
Compliance with IFRS
Compliance with IFRS
The consolidated financial statements of the Seven West Media Limited Group also comply with International financial Reporting Standards (IfRS)
The consolidated financial statements of the Seven West Media Limited Group also comply with International financial Reporting Standards (IfRS)
as issued by the International Accounting Standards board (IASb).
as issued by the International Accounting Standards board (IASb).
Historical cost convention
Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of derivative instruments
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of derivative instruments
held at fair value.
held at fair value.
Critical accounting estimates
Critical accounting estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas
judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the financial statements, are disclosed below.
where assumptions and estimates are significant to the financial statements, are disclosed below.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future
events that may have a financial impact on the Group and that are believed to be reasonable under the circumstances.
events that may have a financial impact on the Group and that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related
actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets within
actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets within
the next financial year are discussed below.
the next financial year are discussed below.
Recoverable amounts of intangible assets
Recoverable amounts of intangible assets
The Group tests annually whether goodwill and intangibles with indefinite useful lives have suffered any impairment in accordance with the
The Group tests annually whether goodwill and intangibles with indefinite useful lives have suffered any impairment in accordance with the
accounting policy stated in note 1(j). The recoverable amounts of cash-generating units have been determined based on value in use calculations.
accounting policy stated in note 1(j). The recoverable amounts of cash-generating units have been determined based on value in use calculations.
These calculations require the use of assumptions. Refer to note 16 for details of these assumptions.
These calculations require the use of assumptions. Refer to note 16 for details of these assumptions.
Other assets
Other assets
The Group also tests other assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
The Group also tests other assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable.
recoverable.
Comparatives
Comparatives
Comparative information is reclassified where appropriate to enhance comparability.
Comparative information is reclassified where appropriate to enhance comparability.
(b) PRINCIPLES of CoNSoLIDATIoN
(b) Principles of consolidation
(i) Subsidiaries
(i) Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Seven West Media Limited as at 25 June 2011 and
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Seven West Media Limited as at 25 June 2011 and
the results of all subsidiaries for the year then ended. Seven West Media Limited and its subsidiaries together are referred to in this financial report
the results of all subsidiaries for the year then ended. Seven West Media Limited and its subsidiaries together are referred to in this financial report
as the “Group.”
as the “Group.”
Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies, generally accompanying a
Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies, generally accompanying a
shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or
shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Group controls another entity.
convertible are considered when assessing whether the Group controls another entity.
48
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
1. SUMMARY of SIGNIfICANT ACCoUNTING PoLICIES (CoNTINUED)
1. SUMMARY of SIGNIfICANT ACCoUNTING PoLICIES (CoNTINUED)
(b) Principles of consolidation (continued)
(b) PRINCIPLES of CoNSoLIDATIoN (CoNTINUED)
(i) Subsidiaries (continued)
(i) Subsidiaries (continued)
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control
ceases.
ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group (refer to note 1(i)).
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group (refer to note 1(i)).
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been
eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Group.
changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement, statement of
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement, statement of
comprehensive income, statement of changes in equity and statement of financial position respectively.
comprehensive income, statement of changes in equity and statement of financial position respectively.
(ii) Associates and jointly controlled entities
(ii) Associates and jointly controlled entities
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20
per cent and 50 per cent of the voting rights. Jointly controlled entities are those entities over whose activities the Company has joint control,
per cent and 50 per cent of the voting rights. Jointly controlled entities are those entities over whose activities the Company has joint control,
established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Investments in associates
established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Investments in associates
and jointly controlled entities are accounted for in the consolidated financial statements using the equity method of accounting (equity accounted
and jointly controlled entities are accounted for in the consolidated financial statements using the equity method of accounting (equity accounted
investees), after initially being recognised at cost. The Group’s investment in equity accounted investees includes goodwill (net of any accumulated
investees), after initially being recognised at cost. The Group’s investment in equity accounted investees includes goodwill (net of any accumulated
impairment loss) identified on acquisition.
impairment loss) identified on acquisition.
The Group’s share of its equity accounted investees’ post-acquisition profits or losses is recognised in profit or loss, its share of associates’ post-
The Group’s share of its equity accounted investees’ post-acquisition profits or losses is recognised in profit or loss, its share of associates’ post-
acquisition movements in reserves is recognised in reserves and its share of jointly controlled entities’ post-acquisition movements in reserves is
acquisition movements in reserves is recognised in reserves and its share of jointly controlled entities’ post-acquisition movements in reserves is
recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the
recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the
investment. Dividends receivable from equity accounted investees are recognised in the consolidated financial statements as a reduction in the
investment. Dividends receivable from equity accounted investees are recognised in the consolidated financial statements as a reduction in the
carrying amount of the investment.
carrying amount of the investment.
When the Group's share of losses equals or exceeds its interest in an equity accounted investee, including any other unsecured long-term receivables,
When the Group's share of losses equals or exceeds its interest in an equity accounted investee, including any other unsecured long-term receivables,
the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the investee.
the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the investee.
Unrealised gains on transactions between the Group and its equity accounted investees are eliminated to the extent of the Group’s interest in the
Unrealised gains on transactions between the Group and its equity accounted investees are eliminated to the extent of the Group’s interest in the
investee. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting
investee. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting
policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group.
policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group.
(C) SEGMENT REPoRTING
(c) Segment reporting
operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers. The chief
operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers. The chief
operating decision makers, responsible for allocating resources and assessing performance of the operating segments, have been identified as
operating decision makers, responsible for allocating resources and assessing performance of the operating segments, have been identified as
the chief executive officer, the chief financial officer and other relevant members of the executive team.
the chief executive officer, the chief financial officer and other relevant members of the executive team.
(d) foreign currency translation
(D) foREIGN CURRENCY TRANSLATIoN
(i) Functional and presentation currency
(i) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in
which the entity operates ('the functional currency'). The consolidated financial statements are presented in Australian dollars, which is the Group’s
which the entity operates ('the functional currency'). The consolidated financial statements are presented in Australian dollars, which is the Group’s
presentation currency.
presentation currency.
(ii) Transactions and balances
(ii) Transactions and balances
foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of
foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when they are deferred in equity as
monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when they are deferred in equity as
qualifying cash flow hedges.
qualifying cash flow hedges.
Seven West media – annual report 2011 49
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
1. SUMMARY of SIGNIfICANT ACCoUNTING PoLICIES (CoNTINUED)
(e) Revenue recognition
(E) REVENUE RECoGNITIoN
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of commissions, discounts,
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of commissions, discounts,
rebates, returns, trade allowances and duties and taxes paid. The Group recognises revenue when the amount of revenue can be reliably measured,
rebates, returns, trade allowances and duties and taxes paid. The Group recognises revenue when the amount of revenue can be reliably measured,
it is probable the future economic benefits will flow to the entity and specific criteria have been met for each of the Group's activities as described
it is probable the future economic benefits will flow to the entity and specific criteria have been met for each of the Group's activities as described
below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved.
below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved.
Revenue is recognised for the major business activities as follows:
Revenue is recognised for the major business activities as follows:
(i) Advertising
(i) Advertising
Revenue is recognised when the advertisement has been published or broadcast.
Revenue is recognised when the advertisement has been published or broadcast.
(ii) Circulation and commercial printing
(ii) Circulation and commercial printing
Revenue is recognised when the significant risks and rewards of ownership have passed to the buyer.
Revenue is recognised when the significant risks and rewards of ownership have passed to the buyer.
(iii) Program sales
(iii) Program sales
Program sales revenue is recognised upon delivery of episodes to the buyer. Affiliate revenue is recognised as it is accrued.
Program sales revenue is recognised upon delivery of episodes to the buyer. Affiliate revenue is recognised as it is accrued.
(iv) Government grants
(iv) Government grants
Government grants are recognised initially in the statement of financial position as deferred income when there is reasonable assurance that the
Government grants are recognised initially in the statement of financial position as deferred income when there is reasonable assurance that the
grant will be received and all attaching conditions will be complied with.
grant will be received and all attaching conditions will be complied with.
When the grant relates to the reimbursement of an expense item, it is recognised in profit or loss over the periods necessary to match the costs
When the grant relates to the reimbursement of an expense item, it is recognised in profit or loss over the periods necessary to match the costs
that it is intended to compensate.
that it is intended to compensate.
When the grant relates to the cost of an asset, the amount received is credited to a deferred income account and is released to profit or loss over
When the grant relates to the cost of an asset, the amount received is credited to a deferred income account and is released to profit or loss over
the lifetime of the asset on a systematic basis.
the lifetime of the asset on a systematic basis.
(v) Rendering of services
(v) Rendering of services
Revenue is recognised when the service has been performed.
Revenue is recognised when the service has been performed.
(vi) Rents
(vi) Rents
Rents are recognised on a time proportion basis.
Rents are recognised on a time proportion basis.
(vii) Dividends
(vii) Dividends
Dividends are recognised when the right to receive payment is established.
Dividends are recognised when the right to receive payment is established.
(f) fINANCE INCoME AND CoSTS
(f) finance income and costs
Interest revenue is recognised on a time proportion basis that takes into account the effective yield on the asset.
Interest revenue is recognised on a time proportion basis that takes into account the effective yield on the asset.
borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and
borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and
prepare the asset for its intended use. other borrowing costs are expensed.
prepare the asset for its intended use. other borrowing costs are expensed.
(G) INCoME TAX
(g) Income tax
The income tax expense for the year is the tax payable on the current year’s taxable income based on the national income tax rate adjusted
The income tax expense for the year is the tax payable on the current year’s taxable income based on the national income tax rate adjusted
by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements. however, the deferred income tax is not accounted for if it arises from initial
and their carrying amounts in the consolidated financial statements. however, the deferred income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting
recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting
nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the
nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the
reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
50
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
1. SUMMARY of SIGNIfICANT ACCoUNTING PoLICIES (CoNTINUED)
(g) Income tax (continued)
(G) INCoME TAX (CoNTINUED)
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts
will be available to utilise those temporary differences and losses. Management have determined that deferred tax assets and deferred tax liabilities
will be available to utilise those temporary differences and losses. Management have determined that deferred tax assets and deferred tax liabilities
associated with intangibles that have an indefinite useful life, such as mastheads, should be measured based on the tax consequences that would
associated with intangibles that have an indefinite useful life, such as mastheads, should be measured based on the tax consequences that would
follow from the sale of that asset. Deferred tax assets are only booked where recovery of that asset is probable.
follow from the sale of that asset. Deferred tax assets are only booked where recovery of that asset is probable.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in
controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the
controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the
differences will not reverse in the foreseeable future.
differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current assets and liabilities and when the deferred
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current assets and liabilities and when the deferred
tax balances relate to the same taxation authority. Current tax assets and liabilities are offset where the entity has a legally enforceable right to
tax balances relate to the same taxation authority. Current tax assets and liabilities are offset where the entity has a legally enforceable right to
offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Tax consolidation
Tax consolidation
The Company is a member of the tax consolidated group of which Seven West Media Limited is the head entity. The tax consolidated group includes,
The Company is a member of the tax consolidated group of which Seven West Media Limited is the head entity. The tax consolidated group includes,
among other entities, all the Australian wholly-owned subsidiaries set out in note 30. The Company became a member of the Seven West Media
among other entities, all the Australian wholly-owned subsidiaries set out in note 30. The Company became a member of the Seven West Media
Limited tax consolidated group on 12 April 2011. Prior to 12 April 2011, the Company was a member of a tax consolidated group of which West
Limited tax consolidated group on 12 April 2011. Prior to 12 April 2011, the Company was a member of a tax consolidated group of which West
Australian Newspapers holdings Limited was the head entity.
Australian Newspapers holdings Limited was the head entity.
Current tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated
Current tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated
group are recognised in the separate financial statements of the members of the tax-consolidated group using the group allocation approach by
group are recognised in the separate financial statements of the members of the tax-consolidated group using the group allocation approach by
reference to the carrying amounts of assets and liabilities in the separate financial statements of each entity and the tax values applying under tax
reference to the carrying amounts of assets and liabilities in the separate financial statements of each entity and the tax values applying under tax
consolidation.
consolidation.
Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the Company or its subsidiaries are ultimately assumed
Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the Company or its subsidiaries are ultimately assumed
by the head entity in the tax consolidated group and are recognised as amounts payable/(receivable) to/(from) other entities in the tax consolidated
by the head entity in the tax consolidated group and are recognised as amounts payable/(receivable) to/(from) other entities in the tax consolidated
group in conjunction with any tax funding arrangement amounts (refer below).
group in conjunction with any tax funding arrangement amounts (refer below).
Nature of tax funding arrangements
Nature of tax funding arrangements
The head entity, in conjunction with other members of the tax-consolidated group, has entered into a tax funding arrangement which sets out the
The head entity, in conjunction with other members of the tax-consolidated group, has entered into a tax funding arrangement which sets out the
funding obligations of members of the tax-consolidated group in respect of tax amounts. The tax funding arrangements require payments to the
funding obligations of members of the tax-consolidated group in respect of tax amounts. The tax funding arrangements require payments to the
head entity equal to the current tax liability assumed by the head entity resulting in a related party payable to the head entity equal in amount to
head entity equal to the current tax liability assumed by the head entity resulting in a related party payable to the head entity equal in amount to
the current tax liability assumed. This related party balance is at call.
the current tax liability assumed. This related party balance is at call.
Contributions to fund the current tax liabilities are payable as per the tax funding arrangement and reflect the timing of the head entity’s obligation
Contributions to fund the current tax liabilities are payable as per the tax funding arrangement and reflect the timing of the head entity’s obligation
to make payments for tax liabilities to the relevant tax authorities.
to make payments for tax liabilities to the relevant tax authorities.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a
Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a
contribution to (or distribution from) wholly-owned tax consolidated entities.
contribution to (or distribution from) wholly-owned tax consolidated entities.
(h) Leases
(h) LEASES
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases (note 27).
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases (note 27).
Payments made under operating leases (net of any incentives received from the lessor) are charged to profit and loss on a straight-line basis over
Payments made under operating leases (net of any incentives received from the lessor) are charged to profit and loss on a straight-line basis over
the period of the lease.
the period of the lease.
Lease income from operating leases, where the Group is a lessor, is recognised in income on a straight-line basis over the lease term.
Lease income from operating leases, where the Group is a lessor, is recognised in income on a straight-line basis over the lease term.
(I) ACqUISITIoN of ASSETS AND bUSINESS CoMbINATIoNS
(i) Acquisition of assets and business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are
acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred
acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred
Seven West media – annual report 2011 51
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
1. SUMMARY of SIGNIfICANT ACCoUNTING PoLICIES (CoNTINUED)
(i) Acquisition of assets and business combinations (continued)
(I) ACqUISITIoN of ASSETS AND bUSINESS CoMbINATIoNS (CoNTINUED)
and the equity interests issued by the Group. The consideration transferred also includes the fair value of any asset or liability resulting from a
and the equity interests issued by the Group. The consideration transferred also includes the fair value of any asset or liability resulting from a
contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed
contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed
as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions,
as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions,
measured initially at their fair values at the acquisition date. on an acquisition-by-acquisition basis, the Group recognises any non-controlling
measured initially at their fair values at the acquisition date. on an acquisition-by-acquisition basis, the Group recognises any non-controlling
interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.
interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any
previous equity interest in the acquiree over the fair value of the Group’s share of the net identifiable assets acquired is recorded as goodwill. If
previous equity interest in the acquiree over the fair value of the Group’s share of the net identifiable assets acquired is recorded as goodwill. If
those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been
those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been
reviewed, the difference is recognised directly in profit or loss as a bargain purchase.
reviewed, the difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the
date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained
date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained
from an independent financier under comparable terms and conditions.
from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured
to fair value with changes in fair value recognised in profit or loss.
to fair value with changes in fair value recognised in profit or loss.
(j) Impairment of assets
(J) IMPAIRMENT of ASSETS
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more
frequently if events or changes in circumstances indicate that they might be impaired. other assets are reviewed for impairment whenever events
frequently if events or changes in circumstances indicate that they might be impaired. other assets are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which
or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and
the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and
value in use.
value in use.
for the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are
for the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are
largely independent of the cash inflows from other assets or groups of assets (cash generating units). Non-financial assets other than goodwill
largely independent of the cash inflows from other assets or groups of assets (cash generating units). Non-financial assets other than goodwill
that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
(k) Cash and cash equivalents
(K) CASh AND CASh EqUIVALENTS
for cash flow statement presentation purposes, cash and cash equivalents includes cash on hand and deposits held at call with financial institutions.
for cash flow statement presentation purposes, cash and cash equivalents includes cash on hand and deposits held at call with financial institutions.
(l) Trade receivables
(L) TRADE RECEIVAbLES
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less
provision for impairment. Trade receivables are generally due for settlement within 30-90 days.
provision for impairment. Trade receivables are generally due for settlement within 30-90 days.
The collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the
The collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the
carrying amounts directly. A provision for impairment of trade receivables is used when there is objective evidence that the Group will not be able
carrying amounts directly. A provision for impairment of trade receivables is used when there is objective evidence that the Group will not be able
to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor
to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor
will enter bankruptcy or financial reorganisation, and default or delinquency in payments (not settled within the terms and conditions that have
will enter bankruptcy or financial reorganisation, and default or delinquency in payments (not settled within the terms and conditions that have
been agreed with the relevant customer) are considered indicators that the trade receivable is impaired. The amount of the provision is the
been agreed with the relevant customer) are considered indicators that the trade receivable is impaired. The amount of the provision is the
difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest
difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest
rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.
rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.
The amount of the impairment loss is recognised in profit or loss in other expenses. When a trade receivable for which a provision for impairment
The amount of the impairment loss is recognised in profit or loss in other expenses. When a trade receivable for which a provision for impairment
had been recognised becomes uncollectible in a subsequent period, it is written off against the provision. Subsequent recoveries of amounts
had been recognised becomes uncollectible in a subsequent period, it is written off against the provision. Subsequent recoveries of amounts
previously written off are credited against other expenses in profit or loss.
previously written off are credited against other expenses in profit or loss.
52
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
1. SUMMARY of SIGNIfICANT ACCoUNTING PoLICIES (CoNTINUED)
(m) Program rights
(M) PRoGRAM RIGhTS
Television program rights are carried at the lower of cost less amortisation and net recoverable amount. Cost comprises acquisition of program
Television program rights are carried at the lower of cost less amortisation and net recoverable amount. Cost comprises acquisition of program
rights and, for programs produced using the Group’s facilities, direct labour and materials and directly attributable fixed and variable overheads.
rights and, for programs produced using the Group’s facilities, direct labour and materials and directly attributable fixed and variable overheads.
Recognition
Recognition
Television program assets and program liabilities are recognised from the commencement of the rights period of the contract. Contract payments
Television program assets and program liabilities are recognised from the commencement of the rights period of the contract. Contract payments
made prior to commencement of the rights period are disclosed as a prepayment and included under television program rights and inventories.
made prior to commencement of the rights period are disclosed as a prepayment and included under television program rights and inventories.
Amortisation policy
Amortisation policy
The Group’s amortisation policy requires the amortisation of purchased programs on a straight line basis over a life of one year from commencement
The Group’s amortisation policy requires the amortisation of purchased programs on a straight line basis over a life of one year from commencement
of the rights period or over the rights period of the contract (whichever is the lesser). Produced programs are expensed on telecast or in full on the
of the rights period or over the rights period of the contract (whichever is the lesser). Produced programs are expensed on telecast or in full on the
twelfth month after completion period.
twelfth month after completion period.
(n) Inventories
(N) INVENToRIES
finished goods, raw materials and stores are stated at the lower of cost and net realisable value. Cost comprises expenditure incurred in acquiring
finished goods, raw materials and stores are stated at the lower of cost and net realisable value. Cost comprises expenditure incurred in acquiring
the inventories, direct labour and materials, directly attributable fixed and variable overheads and may also include the transfer from other
the inventories, direct labour and materials, directly attributable fixed and variable overheads and may also include the transfer from other
comprehensive income of any gains or losses on qualifying cash flow hedges relating to foreign currency purchases of inventory. Costs are
comprehensive income of any gains or losses on qualifying cash flow hedges relating to foreign currency purchases of inventory. Costs are
assigned to individual items of inventory, generally on the basis of first-in first-out. Net realisable value is the estimated selling price in the
assigned to individual items of inventory, generally on the basis of first-in first-out. Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
(o) Investments and other financial assets
(o) INVESTMENTS AND oThER fINANCIAL ASSETS
The Group classifies its financial assets in the following categories:
The Group classifies its financial assets in the following categories:
(i) Loans and receivables
(i) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise
when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in current
when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in current
assets, except for those with maturities greater than 12 months after the reporting period which are classified as non-current assets. Loans and
assets, except for those with maturities greater than 12 months after the reporting period which are classified as non-current assets. Loans and
receivables are included in receivables in the statement of financial position. Loans and receivables are carried at amortised cost using the effective
receivables are included in receivables in the statement of financial position. Loans and receivables are carried at amortised cost using the effective
interest method.
interest method.
(ii) Available-for-sale financial assets
(ii) Available-for-sale financial assets
Available-for-sale financial assets are non-derivative assets and include investments in equity securities in which the Group does not have significant
Available-for-sale financial assets are non-derivative assets and include investments in equity securities in which the Group does not have significant
influence or control. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the end
influence or control. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the end
of the reporting period.
of the reporting period.
Regular purchases and sales of financial assets are recognised on trade-date, being the date on which the Group commits to purchase or sell the
Regular purchases and sales of financial assets are recognised on trade-date, being the date on which the Group commits to purchase or sell the
asset. financial assets, other than those at fair value through profit and loss, are initially recognised at fair value plus transaction costs. financial
asset. financial assets, other than those at fair value through profit and loss, are initially recognised at fair value plus transaction costs. financial
assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has
assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership.
transferred substantially all the risks and rewards of ownership.
Available-for-sale financial assets are subsequently carried at fair value or cost if fair value cannot be reliably measured. Unrealised gains and losses
Available-for-sale financial assets are subsequently carried at fair value or cost if fair value cannot be reliably measured. Unrealised gains and losses
arising from changes in their fair value are recognised in other comprehensive income.
arising from changes in their fair value are recognised in other comprehensive income.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in other comprehensive income are
When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in other comprehensive income are
included in profit or loss as gains and losses from investment securities.
included in profit or loss as gains and losses from investment securities.
The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities),
The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities),
the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other
the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other
instruments that are substantially the same, discounted cash flow analysis, and option pricing models making maximum use of market inputs
instruments that are substantially the same, discounted cash flow analysis, and option pricing models making maximum use of market inputs
and relying as little as possible on entity-specific inputs.
and relying as little as possible on entity-specific inputs.
Seven West media – annual report 2011 53
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
1. SUMMARY of SIGNIfICANT ACCoUNTING PoLICIES (CoNTINUED)
(o) Investments and other financial assets (continued)
(o) INVESTMENTS AND oThER fINANCIAL ASSETS (CoNTINUED)
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is
impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its
impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its
cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative
cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative
loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously
loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously
recognised in profit or loss - is reclassified from equity and recognised in profit or loss as a reclassification adjustment. Impairment losses
recognised in profit or loss - is reclassified from equity and recognised in profit or loss as a reclassification adjustment. Impairment losses
recognised in profit or loss on equity instruments classified as available-for-sale are not reversed through profit or loss.
recognised in profit or loss on equity instruments classified as available-for-sale are not reversed through profit or loss.
If there is evidence of impairment for any of the Group's financial assets carried at amortised cost, the loss is measured as the difference between
If there is evidence of impairment for any of the Group's financial assets carried at amortised cost, the loss is measured as the difference between
the asset's carrying amount and the present value of estimated future cash flows, excluding future credit losses that have not been incurred.
the asset's carrying amount and the present value of estimated future cash flows, excluding future credit losses that have not been incurred.
The cash flows are discounted at the financial asset's original effective interest rate. The loss is recognised in profit or loss.
The cash flows are discounted at the financial asset's original effective interest rate. The loss is recognised in profit or loss.
(p) Derivatives and hedging activities
(P) DERIVATIVES AND hEDGING ACTIVITIES
The Group is party to derivative financial instruments on recognised liabilities in the normal course of business in order to hedge exposure to
The Group is party to derivative financial instruments on recognised liabilities in the normal course of business in order to hedge exposure to
fluctuations in interest rates and foreign currency exchange rates. These derivatives are designated as cash flow hedges.
fluctuations in interest rates and foreign currency exchange rates. These derivatives are designated as cash flow hedges.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value
at the end of each reporting period. The Group documents at the inception of the transaction the relationship between hedging instruments and
at the end of each reporting period. The Group documents at the inception of the transaction the relationship between hedging instruments and
hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its
hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its
assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will
assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will
continue to be highly effective in offsetting changes in cash flows of hedged items. The fair values of derivative financial instruments designated
continue to be highly effective in offsetting changes in cash flows of hedged items. The fair values of derivative financial instruments designated
as cash flow hedges are disclosed in note 17. Movements in the hedging reserve in shareholders' equity are shown in the statement of changes in
as cash flow hedges are disclosed in note 17. Movements in the hedging reserve in shareholders' equity are shown in the statement of changes in
equity. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item
equity. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item
(i.e. cash flows) is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than
(i.e. cash flows) is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than
12 months.
12 months.
The gain or loss from re-measuring the hedging instruments to fair value is recognised in other comprehensive income and accumulated in a
The gain or loss from re-measuring the hedging instruments to fair value is recognised in other comprehensive income and accumulated in a
hedging reserve, to the extent that the hedge is effective, and is recognised in profit or loss within finance costs when the hedged interest expense
hedging reserve, to the extent that the hedge is effective, and is recognised in profit or loss within finance costs when the hedged interest expense
is recognised.
is recognised.
The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.
The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative
gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or
gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or
loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately reclassified
loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately reclassified
to profit or loss.
to profit or loss.
(q) financial guarantee contracts
(q) fINANCIAL GUARANTEE CoNTRACTS
financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value
financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value
and subsequently at the higher of the amount determined in accordance with AASb 137 Provisions, Contingent Liabilities and Contingent Assets and
and subsequently at the higher of the amount determined in accordance with AASb 137 Provisions, Contingent Liabilities and Contingent Assets and
the amount initially recognised less cumulative amortisation, where appropriate.
the amount initially recognised less cumulative amortisation, where appropriate.
The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the contractual payments under
The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the contractual payments under
the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third
the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third
party for assuming the obligations.
party for assuming the obligations.
(r) Property, plant and equipment
(R) PRoPERTY, PLANT AND EqUIPMENT
All property, plant and equipment is stated at historical cost to the Group less depreciation. historical cost includes expenditure that is directly
All property, plant and equipment is stated at historical cost to the Group less depreciation. historical cost includes expenditure that is directly
attributable to the acquisition of the items.
attributable to the acquisition of the items.
54
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
1. SUMMARY of SIGNIfICANT ACCoUNTING PoLICIES (CoNTINUED)
(R) PRoPERTY, PLANT AND EqUIPMENT (CoNTINUED)
(r) Property, plant and equipment (continued)
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any
economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any
component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during
component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during
the reporting period in which they are incurred.
the reporting period in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost, net of their residual
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost, net of their residual
values, over their estimated useful lives, as follows:
values, over their estimated useful lives, as follows:
buildings
buildings
Leasehold improvements
Leasehold improvements
Printing presses and publishing equipment
Printing presses and publishing equipment
other plant and equipment
other plant and equipment
40 years
40 years
40 years
40 years
15 years
15 years
3-10 years
3-10 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount
is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount (note 1(j)).
is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount (note 1(j)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.
(s) Intangible assets
(S) INTANGIbLE ASSETS
(i) Goodwill
(i) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired
subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets.
subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets.
Goodwill on acquisitions of associates and jointly controlled entities is included in investments in associates and jointly controlled entities. Goodwill
Goodwill on acquisitions of associates and jointly controlled entities is included in investments in associates and jointly controlled entities. Goodwill
is not amortised. Instead, goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might
is not amortised. Instead, goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might
be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount
be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount
of goodwill relating to the entity sold.
of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or
groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according
groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according
to operating segments (note 3).
to operating segments (note 3).
(ii) Newspaper mastheads and radio licenses
(ii) Newspaper mastheads and radio licenses
The newspaper mastheads and radio licences of the Group are considered by the directors to be identifiable intangible assets. The carrying amounts
The newspaper mastheads and radio licences of the Group are considered by the directors to be identifiable intangible assets. The carrying amounts
of these assets are not amortised as the directors have determined them to have indefinite useful lives. Instead, newspaper mastheads and radio
of these assets are not amortised as the directors have determined them to have indefinite useful lives. Instead, newspaper mastheads and radio
licences are tested for impairment annually, or whenever there is an indication that they may be impaired - refer note 1(j). Newspaper mastheads
licences are tested for impairment annually, or whenever there is an indication that they may be impaired - refer note 1(j). Newspaper mastheads
and radio licences are carried at cost less accumulated impairment losses.
and radio licences are carried at cost less accumulated impairment losses.
(iii) Magazine mastheads
(iii) Magazine mastheads
The magazine mastheads are carried at cost less accumulated impairment losses. No amortisation is provided against the carrying amount as the
The magazine mastheads are carried at cost less accumulated impairment losses. No amortisation is provided against the carrying amount as the
directors believe that the lives of these assets are indefinite. Instead, magazine mastheads are tested for impairment annually, or whenever there
directors believe that the lives of these assets are indefinite. Instead, magazine mastheads are tested for impairment annually, or whenever there
is an indication that they may be impaired - refer note 1(j). Magazines mastheads are carried at cost.
is an indication that they may be impaired - refer note 1(j). Magazines mastheads are carried at cost.
(iv) Magazine licences
(iv) Magazine licences
The magazine licences are carried at the cost of acquisition less accumulated impairment losses and are amortised on a straight-line basis over the
The magazine licences are carried at the cost of acquisition less accumulated impairment losses and are amortised on a straight-line basis over the
period of the licences ranging from eight to 25 years.
period of the licences ranging from eight to 25 years.
(v) Television licences
(v) Television licences
The television licences are renewable every five years under the provisions of the broadcasting Services Act 1992. The directors have no reason to
believe that they will not be renewed. Television licences are considered to have an indefinite useful life and no amortisation is charged. Instead,
The television licences are renewable every five years under the provisions of the broadcasting Services Act 1992. The directors have no reason to
television licences are tested for impairment annually, or whenever there is an indication that they may be impaired - refer note 1(j). Television
believe that they will not be renewed. Television licences are considered to have an indefinite useful life and no amortisation is charged. Instead,
television licences are tested for impairment annually, or whenever there is an indication that they may be impaired - refer note 1(j). Television
Seven West media – annual report 2011 55
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
1. SUMMARY of SIGNIfICANT ACCoUNTING PoLICIES (CoNTINUED)
(S) INTANGIbLE ASSETS (CoNTINUED)
(s) Intangible assets (continued)
(v) Television licences (continued)
(v) Television licences (continued)
licences are carried at cost.
licences are carried at cost.
(vi) Program copyrights
(vi) Program copyrights
Program copyrights are carried at cost less accumulated impairment losses and are amortised on a straight line basis over the period of the rights.
Program copyrights are carried at cost less accumulated impairment losses and are amortised on a straight line basis over the period of the rights.
(vii) Computer software
(vii) Computer software
Costs incurred in developing products or systems and costs incurred in acquiring software and licences that will contribute to future period
Costs incurred in developing products or systems and costs incurred in acquiring software and licences that will contribute to future period
financial benefits through revenue generation and/or cost reduction are capitalised to software and systems. Cost capitalised include external
financial benefits through revenue generation and/or cost reduction are capitalised to software and systems. Cost capitalised include external
direct costs of materials and service. Amortisation is calculated on a straight-line basis over periods generally ranging from three to ten years.
direct costs of materials and service. Amortisation is calculated on a straight-line basis over periods generally ranging from three to ten years.
(T) TRADE AND oThER PAYAbLES
(t) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts
are unsecured and are usually paid within 30-60 days of recognition.
are unsecured and are usually paid within 30-60 days of recognition.
(U) boRRoWINGS
(u) borrowings
borrowings are initially recognised at fair value, net of transaction costs incurred. borrowings are subsequently measured at amortised cost. Any
borrowings are initially recognised at fair value, net of transaction costs incurred. borrowings are subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the
difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the
borrowings using the effective interest method. Any related accrued interest is included in trade creditors and accruals.
borrowings using the effective interest method. Any related accrued interest is included in trade creditors and accruals.
borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months
borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months
after the reporting period.
after the reporting period.
(V) PRoVISIoNS
(v) Provisions
Provisions for libel and legal claims against the Group are recognised when it has a present legal or constructive obligation as a result of past events,
Provisions for libel and legal claims against the Group are recognised when it has a present legal or constructive obligation as a result of past events,
it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions
it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions
are not recognised for future operating losses.
are not recognised for future operating losses.
Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end
Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end
of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time
of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
A make-good provision is recognised for the costs of restoration or removal in relation to property, plant and equipment where there is a legal or
A make-good provision is recognised for the costs of restoration or removal in relation to property, plant and equipment where there is a legal or
constructive obligation. The provision is initially recorded when a reliable estimate can be determined and is discounted to its present value.
constructive obligation. The provision is initially recorded when a reliable estimate can be determined and is discounted to its present value.
The unwinding of the effect of discounting on the provision is recognised as a finance cost.
The unwinding of the effect of discounting on the provision is recognised as a finance cost.
(W) EMPLoYEE bENEfITS
(w) Employee benefits
(i) Short-term obligations
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months after the end of the
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months after the end of the
period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period
period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period
and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave is recognised in the provision
and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave is recognised in the provision
for employee benefits. Sick leave is recognised in profit or loss when the leave is taken and measured at the rates paid.
for employee benefits. Sick leave is recognised in profit or loss when the leave is taken and measured at the rates paid.
(ii) Other long-term employee benefit obligations
(ii) Other long-term employee benefit obligations
The liability for long service leave which is not expected to be settled within 12 months after the end of the period in which the employees render
The liability for long service leave which is not expected to be settled within 12 months after the end of the period in which the employees render
the related service is recognised in the provision for employee benefits and measured as the present value of expected future payments to be
the related service is recognised in the provision for employee benefits and measured as the present value of expected future payments to be
made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration
made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration
is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are
is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are
56
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
1. SUMMARY of SIGNIfICANT ACCoUNTING PoLICIES (CoNTINUED)
(W) EMPLoYEE bENEfITS (CoNTINUED)
(w) Employee benefits (continued)
(ii) Other long-term employee benefit obligations (continued)
(ii) Other long-term employee benefit obligations (continued)
discounted using market yields at the end of the reporting period on national government bonds with terms to maturity and currency that match,
discounted using market yields at the end of the reporting period on national government bonds with terms to maturity and currency that match,
as closely as possible, the estimated future cash outflows.
as closely as possible, the estimated future cash outflows.
(iii) Share-based payments
(iii) Share-based payments
Share-based compensation benefits are provided to executives and employees in accordance with the Company's share purchase and loan
Share-based compensation benefits are provided to executives and employees in accordance with the Company's share purchase and loan
plans and employment agreements. Information relating to these plans is set out in note 32.
plans and employment agreements. Information relating to these plans is set out in note 32.
The fair value of the rights granted is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to
The fair value of the rights granted is recognised as an employee benefits expense with a corresponding increase in equity. The total amount to
be expensed is determined by reference to the fair value of the rights granted, which includes any market performance conditions but excludes
be expensed is determined by reference to the fair value of the rights granted, which includes any market performance conditions but excludes
the impact of any service and non-market performance vesting conditions and the impact of any non-vesting conditions.
the impact of any service and non-market performance vesting conditions and the impact of any non-vesting conditions.
Non-market vesting conditions are included in assumptions about the number of rights that are expected to vest. The total expense is
Non-market vesting conditions are included in assumptions about the number of rights that are expected to vest. The total expense is
recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of
recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of
each period, the entity revises its estimate of the number of rights that are expected to vest based on the non-marketing vesting conditions.
each period, the entity revises its estimate of the number of rights that are expected to vest based on the non-marketing vesting conditions.
It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
(iv) Short term incentives and bonus plans
(iv) Short term incentives and bonus plans
A liability for employee benefits in the form of short term incentives and bonus plans is recognised in the provision for employee benefits when
A liability for employee benefits in the form of short term incentives and bonus plans is recognised in the provision for employee benefits when
there are formal terms in the plan for determining the amount of the benefit
there are formal terms in the plan for determining the amount of the benefit
there is no realistic alternative but to settle the liability and at least one of the following conditions is met:
there is no realistic alternative but to settle the liability and at least one of the following conditions is met:
-
-
-
-
-
-
Liabilities for short term incentives and bonus plans are expected to be settled within 12 months and are measured at the amounts expected
Liabilities for short term incentives and bonus plans are expected to be settled within 12 months and are measured at the amounts expected
the amounts to be paid are determined before the time of completion of the financial report, or
the amounts to be paid are determined before the time of completion of the financial report, or
past practice gives clear evidence of the amount of the obligation.
past practice gives clear evidence of the amount of the obligation.
to be paid when they are settled.
to be paid when they are settled.
(v) Termination benefits
(v) Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary
Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary
redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminating
redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminating
the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as
the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as
a result of an offer made to encourage voluntary redundancy. benefits falling due more then 12 months after the end of the reporting period
a result of an offer made to encourage voluntary redundancy. benefits falling due more then 12 months after the end of the reporting period
are discounted to present value.
are discounted to present value.
(vi) Superannuation
(vi) Superannuation
Contributions made by the Company to defined contribution employee superannuation funds are charged to profit or loss in the period employees'
Contributions made by the Company to defined contribution employee superannuation funds are charged to profit or loss in the period employees'
services are provided.
services are provided.
(x) Share capital
(X) ShARE CAPITAL
ordinary shares and convertible preference shares are classified as equity (for information on ordinary shares and convertible preference shares,
ordinary shares and convertible preference shares are classified as equity (for information on ordinary shares and convertible preference shares,
refer to note 21). Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from
refer to note 21). Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from
the proceeds.
the proceeds.
(y) Dividends
(Y) DIVIDENDS
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or
before the end of the reporting period but not distributed at the end of the reporting period.
before the end of the reporting period but not distributed at the end of the reporting period.
Seven West media – annual report 2011 57
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
1. SUMMARY of SIGNIfICANT ACCoUNTING PoLICIES (CoNTINUED)
(Z) EARNINGS PER ShARE
(z) Earnings per share
(i) Basic earnings per share
(i) Basic earnings per share
basic earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the Company by the weighted average
basic earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the Company by the weighted average
number of ordinary shares outstanding during the financial year.
number of ordinary shares outstanding during the financial year.
(ii) Diluted earnings per share
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax
effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of additional
ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.
effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of additional
ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.
(AA) GooDS AND SERVICES TAX (GST)
(aa) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation
authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense. Receivables and payables are
stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is
authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense. Receivables and payables are
included with other receivables or payables in the balance sheet.
stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is
included with other receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable
from, or payable to the taxation authority, are presented as operating cash flows.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable
from, or payable to the taxation authority, are presented as operating cash flows.
(Ab) RoUNDING of AMoUNTS
(ab) Rounding of amounts
The Company is of a kind referred to in Class order 98/100, issued by the Australian Securities and Investments Commission, relating to the
The Company is of a kind referred to in Class order 98/100, issued by the Australian Securities and Investments Commission, relating to the
"rounding off" of amounts in the financial statements. Amounts in the financial statements have been rounded off in accordance with that
"rounding off" of amounts in the financial statements. Amounts in the financial statements have been rounded off in accordance with that
Class order to the nearest thousand dollars, or in certain cases, the nearest dollar.
Class order to the nearest thousand dollars, or in certain cases, the nearest dollar.
(AC) NEW ACCoUNTING STANDARDS AND INTERPRETATIoNS
(ac) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for the 25 June 2011 reporting period. The
Certain new accounting standards and interpretations have been published that are not mandatory for the 25 June 2011 reporting period. The
Group's assessment of the impact of these new standards and interpretations is set out below.
Group's assessment of the impact of these new standards and interpretations is set out below.
AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and
AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 and
AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) (effective from 1 January 2013).
AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) (effective from 1 January 2013).
AASb 9 financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities. The
AASb 9 financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities. The
standard is not applicable until 1 January 2013 but is available for early adoption. When adopted, the standard will affect in particular the
standard is not applicable until 1 January 2013 but is available for early adoption. When adopted, the standard will affect in particular the
Group’s accounting for its available-for-sale financial assets, since AASb 9 only permits the recognition of fair value gains and losses in
Group’s accounting for its available-for-sale financial assets, since AASb 9 only permits the recognition of fair value gains and losses in
other comprehensive income if they relate to equity investments that are not held for trading. fair value gains and losses on
other comprehensive income if they relate to equity investments that are not held for trading. fair value gains and losses on
available-for-sale debt investments, for example, will therefore have to be recognised directly in profit or loss. No such gains or losses
available-for-sale debt investments, for example, will therefore have to be recognised directly in profit or loss. No such gains or losses
were recorded in other comprehensive income in the current reporting period. There will be no impact on the group’s accounting for
were recorded in other comprehensive income in the current reporting period. There will be no impact on the group’s accounting for
financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through
financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through
profit or loss and the group does not have any such liabilities. The derecognition rules have been transferred from AASB 139 Financial
profit or loss and the group does not have any such liabilities. The derecognition rules have been transferred from AASB 139 Financial
Instruments: Recognition and Measurement and have not been changed. The Group has not yet decided when to adopt AASb 9.
Instruments: Recognition and Measurement and have not been changed. The Group has not yet decided when to adopt AASb 9.
Revised AASB 124 Related Party Disclosures and AASB 2009-12 Amendments to Australian Accounting Standards
Revised AASB 124 Related Party Disclosures and AASB 2009-12 Amendments to Australian Accounting Standards
(effective from 1 January 2011). In December 2009 the AASb issued a revised AASb 124 Related Party Disclosures. It is effective for accounting
(effective from 1 January 2011). In December 2009 the AASb issued a revised AASb 124 Related Party Disclosures. It is effective for accounting
periods beginning on or after 1 January 2011 and must be applied retrospectively. The amendment clarifies and simplifies the definition of a
periods beginning on or after 1 January 2011 and must be applied retrospectively. The amendment clarifies and simplifies the definition of a
related party and removes the requirement for government-related entities to disclose details of all transactions with the government and
related party and removes the requirement for government-related entities to disclose details of all transactions with the government and
other government-related entities. The Group will apply the amended standard from 26 June 2011. When the amendments are applied, the
other government-related entities. The Group will apply the amended standard from 26 June 2011. When the amendments are applied, the
Group will need to disclose any transactions between its subsidiaries and its associates. however, there will be no impact on any of the
Group will need to disclose any transactions between its subsidiaries and its associates. however, there will be no impact on any of the
amounts recognised in the financial statements.
amounts recognised in the financial statements.
(i)
(i)
(ii)
(ii)
58
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
1. SUMMARY of SIGNIfICANT ACCoUNTING PoLICIES (CoNTINUED)
(AC) NEW ACCoUNTING STANDARDS AND INTERPRETATIoNS (CoNTINUED)
(ac) New accounting standards and interpretations (continued)
(iii)
(iii)
AASB 2009-14 Amendments to Australian Interpretation – Prepayments of a Minimum Funding Requirement (effective from 1 January 2011).
AASB 2009-14 Amendments to Australian Interpretation – Prepayments of a Minimum Funding Requirement (effective from 1 January 2011).
In December 2009, the AASb made an amendment to Interpretation 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and
In December 2009, the AASb made an amendment to Interpretation 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and
their Interaction . The amendment removes an unintended consequence of the interpretation related to voluntary prepayments when there
their Interaction . The amendment removes an unintended consequence of the interpretation related to voluntary prepayments when there
is a minimum funding requirement in regard to the entity's defined benefit scheme. It permits entities to recognise an asset for a prepayment
is a minimum funding requirement in regard to the entity's defined benefit scheme. It permits entities to recognise an asset for a prepayment
of contributions made to cover minimum funding requirements. The Group does not make any such prepayments. The amendment is
of contributions made to cover minimum funding requirements. The Group does not make any such prepayments. The amendment is
therefore not expected to have any impact on the Group's financial statements. The Group intends to apply the amendment from 26 June 2011.
therefore not expected to have any impact on the Group's financial statements. The Group intends to apply the amendment from 26 June 2011.
(iv)
(iv)
(v)
(v)
(vi)
(vi)
AASB 1053 Application of Tiers of Australian Accounting Standards and AASB 2010-2 Amendments to Australian Accounting Standards
AASB 1053 Application of Tiers of Australian Accounting Standards and AASB 2010-2 Amendments to Australian Accounting Standards
arising from Reduced Disclosure Requirements (effective from 1 July 2013). on 30 June 2010 the AASb officially introduced a revised
arising from Reduced Disclosure Requirements (effective from 1 July 2013). on 30 June 2010 the AASb officially introduced a revised
differential reporting framework in Australia. Under this framework, a two-tier differential reporting regime applies to all entities that
differential reporting framework in Australia. Under this framework, a two-tier differential reporting regime applies to all entities that
prepare general purpose financial statements. Seven West Media Limited is listed on the ASX and is not eligible to adopt the new Australian
prepare general purpose financial statements. Seven West Media Limited is listed on the ASX and is not eligible to adopt the new Australian
Accounting Standards – Reduced Disclosure Requirements. The two standards will therefore have no impact on the financial statements
Accounting Standards – Reduced Disclosure Requirements. The two standards will therefore have no impact on the financial statements
of the Entity.
of the Entity.
AASB 2010-6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets
AASB 2010-6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets
(effective for annual reporting periods beginning on or after 1 July 2011). Amendments made to AASb 7 financial Instruments: Disclosures
(effective for annual reporting periods beginning on or after 1 July 2011). Amendments made to AASb 7 financial Instruments: Disclosures
in November 2010 introduce additional disclosures in respect of risk exposures arising from transferred financial assets. The amendments
in November 2010 introduce additional disclosures in respect of risk exposures arising from transferred financial assets. The amendments
will affect particularly entities that sell, factor, securitise, lend or otherwise transfer financial assets to other parties. They are not expected
will affect particularly entities that sell, factor, securitise, lend or otherwise transfer financial assets to other parties. They are not expected
to have any significant impact on the Group's disclosures. The Group intends to apply the amendment from 26 June 2011.
to have any significant impact on the Group's disclosures. The Group intends to apply the amendment from 26 June 2011.
AASB 2010-8 Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets (effective from 1 January 2012).
AASB 2010-8 Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets (effective from 1 January 2012).
In December 2010, the AASb amended AASb 112 Income Taxes to provide a practical approach for measuring deferred tax liabilities and
In December 2010, the AASb amended AASb 112 Income Taxes to provide a practical approach for measuring deferred tax liabilities and
deferred tax assets when investment property is measured using the fair value model. AASb 112 requires the measurement of deferred tax
deferred tax assets when investment property is measured using the fair value model. AASb 112 requires the measurement of deferred tax
assets or liabilities to reflect the tax consequences that would follow from the way management expects to recover or settle the carrying
assets or liabilities to reflect the tax consequences that would follow from the way management expects to recover or settle the carrying
amount of the relevant assets or liabilities, that is through use or through sale. The amendment introduces a rebuttable presumption that
amount of the relevant assets or liabilities, that is through use or through sale. The amendment introduces a rebuttable presumption that
investment property which is measured at fair value is recovered entirely by sale. The Group will apply the amendment from 1 July 2012.
investment property which is measured at fair value is recovered entirely by sale. The Group will apply the amendment from 1 July 2012.
It is currently evaluating the impact of the amendment.
It is currently evaluating the impact of the amendment.
(AD) PARENT ENTITY fINANCIAL INfoRMATIoN
(ad) Parent entity financial information
The financial information for the Parent Entity, Seven West Media Limited, disclosed in note 34 has been prepared on the same basis as the
The financial information for the Parent Entity, Seven West Media Limited, disclosed in note 34 has been prepared on the same basis as the
consolidated financial statements, except as set out below.
consolidated financial statements, except as set out below.
Investments in subsidiaries and associates
Investments in subsidiaries and associates
(i)
(i)
Investments in subsidiaries and associates are accounted for at cost in the financial statements of Seven West Media Limited. Dividends received
Investments in subsidiaries and associates are accounted for at cost in the financial statements of Seven West Media Limited. Dividends received
from associates are recognised in the Parent Entity’s profit or loss, rather than being deducted from the carrying amount of these investments.
from associates are recognised in the Parent Entity’s profit or loss, rather than being deducted from the carrying amount of these investments.
Change in accounting policy
Change in accounting policy
The Group has changed its accounting policy for dividends paid out of pre-acquisition profits from 1 July 2009 when the revised AASb 127
The Group has changed its accounting policy for dividends paid out of pre-acquisition profits from 1 July 2009 when the revised AASb 127
Consolidated and Separate Financial Statements became operative. Previously, dividends paid out of pre-acquisition profits were deducted from the
Consolidated and Separate Financial Statements became operative. Previously, dividends paid out of pre-acquisition profits were deducted from the
cost of the investment. In accordance with the transitional provisions, the new accounting policy is applied prospectively. It was therefore not
cost of the investment. In accordance with the transitional provisions, the new accounting policy is applied prospectively. It was therefore not
necessary to make any adjustments to any of the amounts previously recognised in the financial statements.
necessary to make any adjustments to any of the amounts previously recognised in the financial statements.
Financial guarantees
Financial guarantees
(ii)
(ii)
Where the Parent Entity has provided financial guarantees in relation to loans and payables of subsidiaries for no compensation, the fair values of
Where the Parent Entity has provided financial guarantees in relation to loans and payables of subsidiaries for no compensation, the fair values of
these guarantees are accounted for as contributions and recognised as part of the cost of the investment.
these guarantees are accounted for as contributions and recognised as part of the cost of the investment.
Seven West media – annual report 2011 59
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
2. fINANCIAL RISK MANAGEMENT
The Group's activities expose it to a variety of financial risks: market risk (including interest rate risk), credit risk and liquidity risk. The Group's overall
risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial
performance of the Group. The Group uses derivative financial instruments (interest rate caps and swaps) to hedge certain interest rate risk
exposures and forward foreign exchange contracts to hedge certain foreign exchange risk exposures. Derivatives are exclusively used for hedging
purposes, i.e. not as trading or other speculative instruments. The Group uses different methods to measure different types of risk to which it is
exposed. These methods include sensitivity analysis in the case of interest rate and aging analysis for credit risk.
Risk management is carried out by the finance department under policies approved by the board of directors. The policies provide principles for
overall risk management, as well as policies covering specific areas such as interest rate risk.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the fair value or future cash flows
of the Group's financial instruments.
Price risk
(i)
The Group is not exposed to significant price risk.
Cash flow and fair value interest rate risk
(ii)
Interest rate risk refers to the risks that the value of a financial instrument or its associated cash flows will fluctuate in response to changes in market
interest rates.
The Group's main interest rate risk arises from long-term borrowings. borrowings issued at variable rates expose the Group to cash flow interest
rate risk. The Group has mitigated this interest rate risk by entering into derivative transactions, including interest rate swaps and caps. The amount
of interest rate hedging in place from these swaps and caps at financial year end is equal to 53% of Group variable rate borrowings.
borrowings issued at fixed rates expose the Group to fair value interest rate risk.
As at the end of the reporting period, the Group had the following variable and fixed rate financial instruments:
25-Jun-2011
30-Jun-2010
Weighted
average
Weighted
average
interest rate
balance
interest rate
%
$’000
%
balance
$’000
(12,065)
-
261,000
-
4.00%
n/a
5.78%
n/a
6.99%
(150,000)
98,935
4.93%
6.83%
6.66%
7.16%
7.86%
(118,567)
1,531,070
216,000
(550,000)
(370,000)
708,503
11.21%
315,000
n/a
315,000
-
-
Variable rate instruments:
Cash at bank, on hand and at call
bank loans
bills payable
Interest rate caps (notional principal amount)
Interest rate swaps (notional principal amount)
Net exposure to cash flow interest rate risk
Fixed rate instruments:
Secured notes
Net exposure to fair value interest rate risk
An analysis by maturities is provided under liquidity risk below.
60
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
2. fINANCIAL RISK MANAGEMENT (CoNTINUED)
Group sensitivity
based on the Group outstanding floating rate borrowings and interest rate swaps and caps at 25 June 2011, a change in interest rates at year end
of +/- 1% per annum with all other variables remaining constant would impact equity and after tax profit by the amounts shown below.
Net profit
Reserves
2011
$'000
2010
$'000
2011
$'000
2010
$'000
Equity
2011
$'000
2010
$'000
If interest rates were 1% higher with all other variables held constant:
(Decrease)/increase
(9,560)
(777)
2,590
1,050
(6,970)
273
If interest rates were 1% lower with all other variables held constant:
Increase/(decrease)
9,632
777
(2,590)
(1,050)
7,042
(273)
Foreign exchange risk
(iii)
foreign exchange risk refers to the risk that the value of a financial instrument or its associated cash flows will fluctuate due to changes in foreign
currency rates.
The Group has transactional currency risk. Such exposure arises from sales or purchases by an operating unit in currencies other than the unit's
measurement currency. It is the Group's policy not to enter into forward contracts until a firm commitment is in place. The terms of the forward
currency contracts have been negotiated to match the terms of the commitments. The foreign currency contracts are being used to reduce the
exposure to the foreign exchange risk.
As at the end of the reporting period, the Group had the following exposure to foreign exchange risk:
Receivables:
forward foreign exchange contracts
Payables:
forward foreign exchange contracts
Net exposure
Group sensitivity
2011
$'000
2010
$'000
14,182
(14,656)
(474)
-
-
-
based on the Group's financial instruments held at 25 June 2011, had the Australian dollar weakened/strengthened by 10% against the US dollar,
Euro, UK pound and New Zealand dollar, with all other variables held constant, the Group's equity and after tax profit for the year would have
increased/decreased by the amounts shown below.
If the Australian dollar weakens by 10% with all other variables held constant:
Increase/(decrease)
If the Australian dollar strengthens by 10% with all other variables held constant:
(Decrease)/increase
Net profit
Equity
2011
$'000
872
(714)
2010
$'000
-
-
2011
$'000
872
(714)
2010
$'000
-
-
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations,
and arises principally from credit exposures to customers, cash and cash equivalents and derivative financial instruments.
Credit risk is managed on a Group basis. The Group limits its exposure in relation to cash balances and derivative financial instruments by only
dealing with well established financial institutions of high quality credit standing. for other customers, risk control assesses the credit quality,
taking into account financial position, past experience and other factors. The utilisation of credit limits is regularly monitored.
Seven West media – annual report 2011 61
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
2. fINANCIAL RISK MANAGEMENT (CoNTINUED)
The Group's only significant concentration of credit risk is the receivable balance due from its main magazine distributor of $28,510,000
(2010: $nil).
for further information on credit risk refer to note 10.
Liquidity risk
Liquidity risk refers to the risk that the Group is unable to meet its financial commitments as and when they fall due.
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed
credit facilities. The Group manages liquidity risk by continuously monitoring forecast and actual cash flow and monitoring the Group's liquidity
reserve on the basis of these cash flow forecasts.
Financing arrangements
Refer to note 20 for details of the Group's financing arrangements.
Maturities of financial liabilities
The table below analyses the Group's financial liabilities including interest to maturity into relevant groupings based on their contractual maturities.
The amounts disclosed in the table are the contractual undiscounted principal and interest cash flows and therefore may not agree with the
carrying amounts in the statement of financial position. for interest rate swaps the cash flows have been estimated using forward interest
rates applicable at the end of the reporting period.
At 25 June 2011
Non-derivatives
Trade and other payables
bills payable*
Secured loans*
Secured notes*
Total non-derivatives
Derivatives
Less than one
year
$'000
between
1 and 5 years
$'000
Total
contractual
cash flows
$'000
Carrying
amount -
liabilities
$'000
287,962
148,069
106,348
36,383
61,794
80,074
349,756
228,143
395,878
216,000
1,637,418
1,743,766
1,531,070
391,325
427,708
315,000
578,762
2,170,611
2,749,373
2,457,948
Net settled interest rate swaps and caps
4,540
216
4,756
5,674
Gross settled forward foreign exchange contracts - cash flow hedges:
- (inflow)
- outflow
Total derivatives
Total financial liabilities
At 30 June 2010
Non-derivatives
Trade and other payables
bills payable*
Total non-derivatives
Derivative – Net settled interest rate swaps
Total financial liabilities
(14,182)
14,656
5,014
-
-
216
(14,182)
14,656
5,230
-
473
6,147
583,776
2,170,827
2,754,603
2,464,095
15,021
15,083
30,104
1,388
-
282,065
282,065
15,021
297,148
312,169
15,021
261,000
276,021
1,976
3,364
804
31,492
284,041
315,533
276,825
The cash flows associated with the cash flow hedge derivatives are expected to impact profit or loss in the same periods as those disclosed in
the above table.
* Accrued interest on these items is included in trade and other payables at reporting date. The payment of these amounts is included in the cash
flows of the respective debt item.
62
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
2. fINANCIAL RISK MANAGEMENT (CoNTINUED)
2. fINANCIAL RISK MANAGEMENT (CoNTINUED)
fair value measurment
fair value measurment
fair value measurment
The fair value of financial assets and liabilities must be estimated for recognition and measurement or for disclosure purposes.
The fair value of financial assets and liabilities must be estimated for recognition and measurement or for disclosure purposes.
The fair value of financial assets and liabilities must be estimated for recognition and measurement or for disclosure purposes.
The carrying amounts of financial instruments disclosed in the statement of financial position approximate to their fair values.
The carrying amounts of financial instruments disclosed in the statement of financial position approximate to their fair values.
The carrying amounts of financial instruments disclosed in the statement of financial position approximate to their fair values.
AASb 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the following fair value measurement
AASb 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the following fair value measurement
AASb 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the following fair value measurement
hierarchy:
hierarchy:
hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
(b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly
(b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly
(b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly
(derived from prices) (level 2), and
(derived from prices) (level 2), and
(derived from prices) (level 2), and
(c)
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
(c)
(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
The only assets or liabilities measured and recognised at fair value are the liabilities recognised in relation to interest rate cash flow hedges and
The only assets or liabilities measured and recognised at fair value are the liabilities recognised in relation to interest rate cash flow hedges and
The only assets or liabilities measured and recognised at fair value are the liabilities recognised in relation to interest rate cash flow hedges and
foreign exchange cash flow hedges amounting to $6,147,000 (2010 - $804,000). The fair values of these hedges (classified as level 2 in the fair
foreign exchange cash flow hedges amounting to $6,147,000 (2010 - $804,000). The fair values of these hedges (classified as level 2 in the fair
foreign exchange cash flow hedges amounting to $6,147,000 (2010: $804,000). The fair values of these hedges (classified as level 2 in the fair
value measurement hierarchy) are measured with reference to forward interest rates and exchange rates and the present value of the estimated
value measurement hierarchy) are measured with reference to forward interest rates and exchange rates and the present value of the estimated
value measurement hierarchy) are measured with reference to forward interest rates and exchange rates and the present value of the estimated
future cash flows.
future cash flows.
future cash flows.
3. SEGMENT INfoRMATIoN
3. SEGMENT INfoRMATIoN
Description of segments
Description of segments
The chief operating decision makers consider the business from both a product and a geographical perspective and have identified the following
The chief operating decision makers consider the business from both a product and a geographical perspective and have identified the following
reportable segments:
reportable segments:
-
-
-
-
-
-
-
-
The West Australian (The West Australian newspaper and insert magazines)
The West Australian (The West Australian newspaper and insert magazines)
Regionals (the Countryman and other newspapers published in regional areas of Western Australia)
Regionals (the Countryman and other newspapers published in regional areas of Western Australia)
In the current year, other WA includes quokka (classified advertising), Radio (broadcasting in regional areas of Western Australia), Community
In the current year, other WA includes quokka (classified advertising), Radio (broadcasting in regional areas of Western Australia), Community
Newspapers, ColourPress (commercial printing), digital publishing, West Australian Publishers and other minor operating segments
Newspapers, ColourPress (commercial printing), digital publishing, West Australian Publishers and other minor operating segments
Television (operation of commercial television stations)
Television (operation of commercial television stations)
- Magazines (publisher of magazines)
- Magazines (publisher of magazines)
- other SMG (h1) Pty Limited ("SMG") (internet content and pay television content providers)
- other SMG (h1) Pty Limited ("SMG") (internet content and pay television content providers)
The Television, Magazines and other SMG segments were acquired as part of the acquisition of SMG (refer note 29).
The Television, Magazines and other SMG segments were acquired as part of the acquisition of SMG (refer note 29).
Seven West media – annual report 2011 63
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
3. SEGMENT INfoRMATIoN (CoNTINUED)
Information about reportable segments
Year ended 25 June 2011
Total segment revenue
Inter-segment revenue
The West
Australian
$'000
Regionals
other WA
Television
Magazines
other SMG
$'000
$'000
$'000
$'000
$'000
318,376
49,016
-
-
62,143
(22,717)
255,202
63,223
-
-
Total
$'000
748,408
(22,717)
725,691
448
-
448
Revenue from continuing operations
318,376
49,016
39,426
255,202
63,223
Earnings before significant items,
net finance costs, tax,
depreciation and amortisation
Depreciation and amortisation*
Profit before significant items,
net finance costs and tax
Share of net profit of equity
accounted investees
Total segment assets
Total assets includes investments
in associates
Additions to non-current assets (other
than financial assets and deferred tax)
144,780
(18,931)
14,353
(865)
13,787
(1,817)
84,415
(6,771)
14,056
(1,989)
2,929
-
274,320
(30,373)
125,849
13,488
11,970
77,644
12,067
2,929
243,947
-
-
4,627
-
-
2,677
7,304
346,029
29,278
61,100
3,645,695
537,317
443,149
5,062,568
-
-
11,604
-
-
335,211
346,815
11,726
1,059
432
5,438
190
-
18,845
*
Excludes program rights amortisation which is treated consistently with other media content (refer note 5).
Year ended 30 June 2010
Total segment revenue
Inter-segment revenue
The West
Australian
Regionals
$'000
$'000
quokka
$'000
322,912
45,795
12,016
-
-
-
Revenue from continuing operations
322,912
45,795
12,016
All other
Segments
Un-
Allocated
$'000
$'000
Radio
$'000
8,578
-
8,578
3,014
(303)
2,711
43,915
(24,525)
19,390
6,190
(1,435)
4,755
3,869
18,201
Total
$'000
433,216
(24,525)
408,691
-
-
-
(2,088)
-
174,496
(20,932)
(2,088)
153,564
-
845
-
-
3,869
441,290
11,228
14,646
150,003
(18,241)
131,762
12,708
(881)
11,827
4,669
(72)
4,597
-
-
-
-
351,546
29,313
18,165
23,220
-
12,124
-
599
-
66
-
11,228
1,838
19
Earnings before net finance costs, tax,
depreciation and amortisation
Depreciation and amortisation
Profit before net finance costs and tax
Share of net profit of equity
accounted investees
Total segment assets
Total assets includes investment
in associate
Additions to non-current assets (other
than financial assets and deferred tax)
The chief operating decision makers assess the performance of the operating segments based on a measure of earnings before net finance costs
and tax. This measurement basis excludes the effects of non-recurring expenditure from the operating segments such as transaction costs.
finance income and costs are also not allocated to segments.
A reconciliation of earnings before significant items, net finance costs and tax to profit before income tax is provided as follows:
64
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
3. SEGMENT INfoRMATIoN (CoNTINUED)
Reconciliation of profit before significant items, net finance costs and tax
Profit before significant items, net finance costs and tax
finance income
finance costs
Transaction costs
Profit before income tax
Reconciliation of segment assets to total assets is as follows:
Segment assets
Deferred tax benefit
Total assets
4. REVENUE AND oThER INCoME
Sales revenue
Advertising revenue
Circulation revenue
Rendering of services
other revenue
Total revenue
other income
2011
$'000
2010
$'000
243,947
153,564
6,569
(50,606)
(26,380)
483
(19,938)
-
173,530
134,109
5,062,568
441,290
25,244
-
5,087,812
441,290
551,241
111,214
12,971
50,265
725,691
303,825
76,544
11,466
16,856
408,691
Net gain on disposal of property, plant and equipment and computer software
73
468
5. EXPENSES
Profit before income tax includes the following specific expenses:
Depreciation and amortisation
Property, plant and equipment
Intangible assets
Depreciation and amortisation excluding program rights amortisation
Television program rights
Total depreciation and amortisation
Employee benefits expense
Defined contribution superannuation expense
Rental expense relating to operating leases
6. NET fINANCE CoSTS
finance income
Ineffective portion of changes in fair value of cash flow hedges
Total finance income
finance costs
Net finance costs
24,813
5,560
30,373
32,931
63,304
18,046
2,886
20,932
-
20,932
143,891
104,148
29,789
6,242
7,668
1,323
(6,393)
(176)
(6,569)
50,606
44,037
(483)
-
(483)
19,938
19,455
Seven West media – annual report 2011 65
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
7. SIGNIfICANT ITEMS
7. SIGNIfICANT ITEMS
Profit before income tax expense includes the following specific expenses whose disclosure is relevant
Profit before income tax expense includes the following specific expenses whose disclosure is relevant
in explaining the financial performance of the Group:
in explaining the financial performance of the Group:
Transaction costs relating to the acquisition of SMG (h1) Pty Limited and its subsidiaries (refer note 29)
Transaction costs relating to the acquisition of SMG (h1) Pty Limited and its subsidiaries (refer note 29)
26,380
26,380
-
-
2011
2011
$'000
$'000
2010
2010
$'000
$'000
8. INCoME TAX
8. INCoME TAX
Income tax expense recognised in profit or loss
Income tax expense recognised in profit or loss
Current year tax expense
Current year tax expense
Adjustments for current tax of prior periods
Adjustments for current tax of prior periods
Current tax expense
Current tax expense
Deferred tax benefit (expense)
Deferred tax benefit (expense)
Total income tax expense
Total income tax expense
Reconciliation of income tax expense to prima facie tax payable
Reconciliation of income tax expense to prima facie tax payable
Reconciliation of income tax expense to prima facie tax payable
Profit from before income tax
Profit from before income tax
Profit from before income tax
Tax at the Australian tax rate of 30% (2010: 30%)
Tax at the Australian tax rate of 30% (2010: 30%)
Tax at the Australian tax rate of 30% (2010: 30%)
Tax effect of amounts which are not (deductible)/taxable in calculating taxable income:
Tax effect of amounts which are not (deductible)/taxable in calculating taxable income:
Tax effect of amounts which are not (deductible)/taxable in calculating taxable income:
Non deductible acquisition costs
Non deductible acquisition costs
Non deductible acquisition costs
building construction and investment allowances
building construction and investment allowances
building construction and investment allowances
Non-deductible depreciation and amortisation
Non-deductible depreciation and amortisation
Non-deductible depreciation and amortisation
other non-deductible items
other non-deductible items
other non-deductible items
Share of net profit of equity accounted investees
Share of net profit of equity-accounted investees
Share of net profit of equity-accounted investees
Adjustments for current tax of prior periods
Adjustments for current tax of prior periods
Adjustments for current tax of prior periods
Previously unrecognised tax losses now recouped to reduce current tax expense
Previously unrecognised tax losses now recouped to reduce current tax expense
Previously unrecognised tax losses now recouped to reduce current tax expense
Income tax expense
Income tax expense
Income tax expense
Income tax recognised in other comprehensive income
Income tax recognised in other comprehensive income
Interest rate hedges
Interest rate hedges
Income tax recognised directly in equity
Income tax recognised directly in equity
Current tax benefit
Current tax benefit
Deferred tax benefit
Deferred tax benefit
Total income tax recognised directly in equity
Total income tax recognised directly in equity
Tax losses
Tax losses
Unused capital tax losses for which no deferred tax asset has been recognised
Unused capital tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 30% (2010: 30%)
Potential tax benefit @ 30% (2010: 30%)
All unused capital tax losses were incurred by Australian entities.
All unused capital tax losses were incurred by Australian entities.
66
(61,957)
(61,957)
(33,302)
(33,302)
879
879
1,352
1,352
(61,078)
(61,078)
(31,950)
(31,950)
2,670
2,670
(5,936)
(5,936)
(58,408)
(58,408)
(37,886)
(37,886)
173,530
173,530
173,530
134,109
134,109
134,109
(52,059)
(52,059)
(52,059)
(6,864)
(6,864)
(6,864)
684
684
684
(538)
(538)
(538)
(2,701)
(2,701)
(2,701)
2,191
2,191
2,191
(59,287)
(59,287)
(59,287)
879
879
879
-
-
-
(58,408)
(58,408)
(58,408)
(40,233)
(40,233)
(40,233)
-
-
-
736
736
736
(516)
(516)
(516)
(545)
(545)
(545)
1,161
1,161
1,161
(39,397)
(39,397)
(39,397)
1,352
1,352
1,352
159
159
159
(37,886)
(37,886)
(37,886)
(216)
(216)
(1,000)
(1,000)
1,354
1,354
4,792
4,792
6,146
6,146
-
-
-
-
-
-
-
-
-
-
77,827
77,827
23,348
23,348
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
8. INCoME TAX (CoNTINUED)
Deferred tax assets/(liabilities)
Year ended 25 June 2011
The balance comprises temporary differences attributable to:
Receivables
Program rights and inventories
Investments
Intangibles
Property, plant and equipment
Creditors
Provisions
Deferred income
borrowings
Cash flow hedges
Transaction costs
other
balance
1 July
2010
$'000
-
-
-
(1,145)
(14,444)
-
4,591
470
-
241
-
(637)
Recognised in
Recognised other comp-
rehensive
in profit or
income
loss
Recognised
directly in
equity
Acquired in
business
combination
$'000
$'000
$'000
$'000
5,163
76
(664)
468
(864)
(636)
249
(425)
(862)
-
581
(416)
-
-
-
-
-
-
-
-
-
(216)
-
-
-
-
-
-
-
-
-
-
-
-
4,792
-
4,792
10,060
(51,919)
(3,946)
(32)
3,371
45,056
18,803
2,487
3,310
1,063
-
669
28,922
Net deferred tax assets/(liabilities)
(10,924)
2,670
(216)
Net deferred tax assets to be recovered after more than 12 months
Net deferred tax assets to be recovered within 12 months
balance
1 July
2009
$'000
(1,145)
(13,000)
9,157
190
1,241
(431)
(3,988)
Recognised in
Recognised other comp-
rehensive
in profit or
income
loss
Recognised
directly in
equity
Acquired in
business
combination
$'000
$'000
$'000
$'000
-
(1,444)
(4,566)
280
-
(206)
-
-
-
-
(1,000)
-
(5,936)
(1,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Year ended 30 June 2010
The balance comprises temporary differences attributable to:
Intangibles
Property, plant and equipment
Provisions
Deferred income
Cash flow hedges
other
Net deferred tax liabilities
Net deferred tax liabilities to be utilised after more than 12 months
Net deferred tax assets to be recovered within 12 months
9. CASh AND CASh EqUIVALENTS
Current
Cash at bank, on hand and at call
balance
25 June
2011
$'000
15,223
(51,843)
(4,610)
(709)
(11,937)
44,420
23,643
2,532
2,448
1,088
5,373
(384)
25,244
1,807
23,437
25,244
balance
30 June
2010
$'000
(1,145)
(14,444)
4,591
470
241
(637)
(10,924)
(14,992)
4,068
(10,924)
2011
$'000
2010
$'000
118,567
12,065
Cash at bank and deposits at call bear interest at a floating weighted average rate of 4.93% at the reporting date (2010: 4.00%). The maximum
exposure to credit risk at the reporting date is the carrying amount. The exposure to interest rate risk is discussed in note 2.
Seven West media – annual report 2011 67
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
10. TRADE AND oThER RECEIVAbLES
Current
Trade receivables
Provision for impairment of receivables
Provision for sales credits and returns
other receivables
Trade receivables are generally settled within 30-90 days.
The aging of the Group's trade receivables net of provision for sales credits and returns at the reporting date was:
Gross
2011
$'000
284,077
26,485
6,260
407
317,229
Provision for
impairment
2011
$'000
-
4,162
3,076
407
7,645
Not past due
Past due 0-30 days
Past due 31-120 days
Past due 120+ days
Movements in the provision for impairment of receivables are as follows:
balance at the beginning of the financial year
Provision assumed in a business combination
Provision for impairment loss recognised during the year
Receivables written off
balance at the end of the financial year
2011
$'000
342,750
(7,645)
(25,521)
309,584
5,931
2010
$'000
54,670
(218)
-
54,452
-
315,515
54,452
Provision for
impairment
2010
$'000
-
-
26
192
218
2010
$'000
196
-
1,044
(1,022)
218
Gross
2010
$'000
48,768
5,217
493
192
54,670
2011
$'000
218
7,158
470
(201)
7,645
Fair value risk
Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value.
Credit risk
The maximum exposure to credit risk at reporting date is the carrying amount of the assets. The fair value of security collateral held is insignificant.
Interest rate risk
The Group's current receivables generally do not bear interest.
Foreign exchange risk
Information about the Group's exposure to foreign currency risk in relation to trade and other receivables is provided in note 2.
Refer to note 2 for further information on the risk management policy of the Group.
68
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
11. PRoGRAM RIGhTS AND INVENToRIES
Current
Television program rights at cost less accumulated amortisation
Newsprint and paper – at cost
Work in progress – at cost
other raw materials and stores – at net realisable value
finished goods – at cost
Inventory expense
Inventories recognised as expense during the year ended 25 June 2011 amounted to $85,237,000 (2010: $65,741,000).
Non-current
Prepaid television program rights
12. oThER ASSETS
Current
Prepayments
2011
$'000
97,218
16,734
9,203
4,201
341
2010
$'000
-
8,805
-
4,229
89
127,697
13,123
1,544
-
6,633
3,253
13. INVESTMENTS ACCoUNTED foR USING ThE EqUITY METhoD
Non-current
Investments in associates and jointly controlled entities
346,815
11,228
Information relating to associates and jointly controlled entities is set out below.
Name of entity
Community Newspaper Group Limited
bloo (WA) Pty Ltd
Australian News Channel Pty Limited
TX Australia Pty Limited
Principal activities
Newspaper publishing
Reporting date
30 June
online business directory
Pay TV channel operator
30 June
30 June
Transmitter facilities provider
30 June
Yahoo! Australia and New Zealand (holdings) Pty Limited
Internet content provider
31 December
Coventry Street Properties Pty Limited
Property management
30 June
oztam Pty Limited
Perth Translator facility Pty Limited
hybrid Television Services (ANZ) Pty Ltd (i)
Ratings service provider
31 December
Transmitter facilities provider
30 June
TiVo distributor
30 June
The above entities are incorporated in Australia.
ownership interest
2011
%
49.9
27.8
33.3
33.3
50.0
50.0
33.3
33.3
66.7
2010
%
49.9
-
-
-
-
-
-
-
-
(i) Under the shareholder agreement, Seven Network (operations) Limited, a wholly-owned subsidiary, and the other shareholders have equal
voting rights and board representation. As a result, the investment in hybrid Television Services (ANZ) Pty Ltd is equity accounted.
Seven West media – annual report 2011 69
Notes to the Consolidated Financial Statements
Notes to the Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
Seven West Media Limited
FOR THE YEAR ENDED 25 JUNE 2011
13. INVESTMENTS ACCoUNTED foR USING ThE EqUITY METhoD (CoNTINUED)
13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)
Movements in carrying amounts
Movements in carrying amounts
Carrying amount at the beginning of the financial year
Carrying amount at the beginning of the financial year
Acquisitions through business combinations
Acquisitions through business combinations
other acquisitions
Other acquisitions
Share of profit of investee after income tax
Share of profit of investee after income tax
Dividends received
Dividends received
Carrying amount at the end of the financial year
Carrying amount at the end of the financial year
Share of investees' profit
Share of investees' profit
Profit before income tax
Profit before income tax
Income tax expense
Income tax expense
Share of net profit of investees disclosed in the statement of comprehensive income
Share of net profit of investees disclosed in the statement of comprehensive income
Summarised financial information of investees (100%)
Summarised financial information of investees (100%)
Revenues
Revenues
Expenses
Expenses
Profit after income tax as reported by investees
Profit after income tax as reported by investees
Current assets
Current assets
Non-current assets
Non-current assets
Total assets
Total assets
Current liabilities
Current liabilities
Non-current liabilities
Non-current liabilities
Total liabilities
Total liabilities
Share of investees' net assets
Share of investees' net assets
Equity accounted
Equity accounted
14. AVAILABLE-FOR-SALE FINANCIAL ASSETS
14. AVAILAbLE-foR-SALE fINANCIAL ASSETS
Non-current
Unlisted equity securities
Non-current
Unlisted equity securities
The investment in unlisted securities is stated at cost because its fair value cannot be reliably measured.
The investment in unlisted securities is stated at cost because its fair value cannot be reliably measured.
2011
2011
$'000
$'000
11,228
11,228
333,200
333,200
1,249
1,249
7,304
7,304
(6,166)
(6,166)
346,815
346,815
10,530
10,530
(3,226)
(3,226)
7,304
7,304
109,786
109,786
(101,399)
(101,399)
8,387
8,387
86,011
86,011
160,629
160,629
246,640
246,640
62,354
62,354
43,086
43,086
105,440
105,440
2010
2010
$'000
$'000
11,609
11,609
-
-
-
-
3,869
3,869
(4,250)
(4,250)
11,228
11,228
5,687
5,687
(1,818)
(1,818)
3,869
3,869
62,019
62,019
(54,281)
(54,281)
7,738
7,738
13,353
13,353
17,161
17,161
30,514
30,514
8,465
8,465
388
388
8,853
8,853
346,815
346,815
11,228
11,228
2011
$'000
777
777
2010
$'000
777
777
70
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
15. PRoPERTY, PLANT AND EqUIPMENT
Non-current
freehold land and buildings - at cost
Accumulated depreciation
Leasehold improvements - at cost
Accumulated depreciation
Residential properties - at cost
Plant and equipment - at cost
Accumulated depreciation
Total property, plant and equipment - at cost
Accumulated depreciation and amortisation
Consolidated
Year ended 30 June 2010
opening net book amount
Additions
Disposals
Transfers
Depreciation charge
Closing net book amount
Year ended 25 June 2011
opening net book amount
Acquisitions through business combinations
other additions
Disposals
Transfers
Depreciation charge
Closing net book amount
2011
$'000
2010
$'000
100,419
(23,533)
76,886
19,373
(937)
18,436
86,257
(21,700)
64,557
-
-
-
2,940
2,940
307,115
248,718
(123,296)
(102,692)
183,819
146,026
429,847
337,915
(147,766)
(124,392)
282,081
213,523
freehold land
and
buildings
Leasehold
improve-
ments
Residential
properties
Plant and
equipment
$'000
$'000
$'000
$'000
Total
$'000
66,168
170
-
-
(1,781)
64,557
64,557
13,915
208
-
39
(1,833)
76,886
-
-
-
-
-
-
-
23,258
-
-
(3,885)
(937)
18,436
1,857
1,254
(171)
-
-
156,278
224,303
7,484
(450)
(1,021)
8,908
(621)
(1,021)
(16,265)
(18,046)
2,940
146,026
213,523
2,940
146,026
213,523
-
-
-
-
-
41,661
14,502
(173)
3,846
78,834
14,710
(173)
-
(22,043)
(24,813)
2,940
183,819
282,081
Seven West media – annual report 2011 71
Notes to the Financial Statements
Notes to the Consolidated Financial Statements
Seven West Media Limited
foR ThE YEAR ENDED 25 JUNE 2011
FOR THE YEAR ENDED 25 JUNE 2011
16. INTANGIBLE ASSETS
Magazine licences - at cost
Magazine licences - accumulated amortisation
Television licences - at cost
Radio licences - at cost
Total licences
Newspaper mastheads - at cost
Magazine mastheads - at cost
Total mastheads
Television program copyrights - at cost
Accumulated amortisation
Total television program copyrights
Software - at cost
Accumulated amortisation
Total software
Goodwill
Total intangible assets
Consolidated
Year ended 30 June 2010
Opening net book amount
Additions
Disposals
Amortisation charge *
Closing net book amount
Year ended 25 June 2011
Opening net book amount
Acquisitions through business combination
Additions
Amortisation charge *
Closing net book amount
2011
$'000
38,080
(1,294)
2,300,000
17,316
2,354,102
2010
$'000
-
-
-
17,316
17,316
100,558
129,731
230,289
100,558
-
100,558
20,848
(848)
20,000
34,978
(14,389)
20,589
-
-
-
23,482
(10,971)
12,511
1,237,959
2,484
3,862,939
132,869
Licences
$’000
Mastheads
$’000
Program
copyrights
$’000
Computer
software
$’000
Goodwill
$’000
Total
$’000
17,316
-
-
-
17,316
17,316
2,338,080
-
(1,294)
2,354,102
100,558
-
-
-
100,558
100,558
129,731
-
-
230,289
-
-
-
-
-
-
20,848
-
(848)
20,000
9,665
5,738
(6)
(2,886)
12,511
12,511
7,361
4,135
(3,418)
2,484
-
-
-
2,484
130,023
5,738
(6)
(2,886)
132,869
2,484
1,235,475
-
-
132,869
3,731,495
4,135
(5,560)
20,589
1,237,959
3,862,939
* Amortisation of $5,560,000 (2010: $2,886,000) is included in depreciation and amortisation expense in the comprehensive income statement.
Impairment of cash generating units (CGU) including goodwill and indefinite life assets
The fair values of intangible assets acquired through a business combination were determined using values provided by independent experts (refer
note 29). Management reviewed the carrying values of all intangible assets at reporting date to ensure that no amounts were in excess of their
recoverable amounts.
72
Notes to the Financial Statements
Notes to the Consolidated Financial Statements
Seven West Media Limited
foR ThE YEAR ENDED 25 JUNE 2011
FOR THE YEAR ENDED 25 JUNE 2011
16. INTANGIbLE ASSETS (CoNTINUED)
16. INTANGIBLE ASSETS (CONTINUED)
The recoverable amounts of the cash generating units (CGUs) that include intangible assets and goodwill are determined based on their value in use.
The value in use calculations were performed using the following methodologies:
The West Australian, Regionals and Other WA
Discounted cash flow projections over the assets' useful lives based on the following assumptions:
5 year forecast based on financial budgets and forecasts approved by management;
-
- Growth rates between 3% and 6% (2010: between 3% and 6%), being rates no higher than the long term average growth rates for the CGU;
-
Pre-tax discount rate using the weighted average cost of capital for the Group, risk adjusted as applicable, of 13% (2010: 13%).
Television
Discounted cash flow projections over the assets' useful lives based on the following assumptions:
-
-
-
-
5 year forecast based on financial budgets and forecasts approved by management;
Pre-tax discount rates using the weighted average cost of capital for the Group, risk adjusted as applicable, of between 12.8% and 14.3%;
Terminal growth rate of 4%;
Annual revenue growth rates between 3% and 5%, reflecting internal budgets and advertising market size and market share expectations.
Magazines
Relief from Royalty Method (RRM) over magazine mastheads' useful lives based on the following assumptions:
5 year forecast based on financial budgets and forecasts approved by management;
5 year forecast based on financial budgets and forecasts approved by management;
Royalty rates between 1.5% and 10.5%;
Earnings multiples between 8x and 10x.
-
-
-
Multi Period Excess Earnings Methodology (MEEM) over magazine licences' useful lives based on the following assumptions:
-
- Discount rates between 14% and 16%;
-
The recoverable amounts of the CGUs that include goodwill are determined using discounted cash flow projections based on the following assumptions:
-
-
-
5 year forecast based on financial budgets and forecasts approved by management;
Pre-tax discount rate of 13.8%;
Terminal growth rate of 3%.
Terminal growth rate of 2%.
The values assigned to the key assumptions represent management’s assessment of future performance in each CGU based on internal and external
sources. The value in use calculations are sensitive to changes in the estimated size of the advertising market and the Company’s market share
assumptions.
For the purpose of impairment testing, intangible assets with indefinite lives are allocated to the Group’s operating divisions which represent the lowest
level within the Group at which the assets are monitored for internal management purposes. No impairment losses for intangibles have been incurred or
reversed during the year. Intangible assets with indefinite useful lives of $2,300,000,000 relate to the Television operating division, $129,731,000 relate
to the Magazines operating division, $67,428,000 relate to The West Australian operating division, $15,069,000 relate to the Regionals operating
division, $17,316,000 relate to the Radio operating division and $18,061,000 relate to the Other WA operating division.
17. TRADE AND OTHER PAYABLES
Current
Trade payables and other accrued expenses (i)
Derivative financial liabilities
Television program liabilities (ii)
2011
$’000
262,873
5,868
71,211
339,952
2010
$’000
15,021
257
-
15,278
Seven West media – annual report 2011 73
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
17. TRADE AND oThER PAYAbLES (CoNTINUED)
Non-current
Accruals
Derivative financial liabilities
Television program liabilities
2011
$’000
35,275
279
26,519
62,073
2010
$’000
-
547
-
547
Trade and other payables are generally settled within 30-60 days from the end of the month in which they are incurred and are non-interest bearing.
(i) Included in trade payables and accruals is an amount of $8,983,138 related to future minimum purchases of an associate (2010: $nil). These have
been guaranteed by Seven Network (operations) Limited, a wholly-owned subsidiary.
(ii) Included in television program liabilities is an amount of $35,038,000 (current: $14,355,000, non-current: $20,683,000) relating to onerous program
rights contracts recognised in accordance with AASb 137. During the year no amounts were recognised in the comprehensive income statement and
$15,047,000 was used.
Interest rate cap and swap contracts - cash flow hedges
The Group is party to derivative financial instruments in the normal course of business in order to hedge exposure to fluctuations in interest rates (refer
note 2).
of the Group’s total debt at 25 June 2011 of $2,062,070,000 (2010: $261,000,000), $920,000,000 (2010: $150,000,000) is covered by interest rate caps
and swaps, which fix the rate at a weighted average of 7.44% (including bank margins and caps premiums) (2010: 6.99%).
The Group has entered into interest rate swap contracts, which expire on 16 March 2012 and 16 August 2013. The Group has also entered into interest
rate cap contracts, which expire on 16 March 2012 and 16 June 2012.
The contracts require settlement on net interest receivable or payable each 90-180 days. The settlement dates coincide with the dates on which
interest is payable on the underlying debt. The contracts are settled on a net basis.
The gain or loss from remeasuring the hedging instruments at fair value is recognised in other comprehensive income and accumulated in equity, to the
extent that the hedge is effective, and reclassified to profit or loss when the hedged interest expense is recognised. The ineffective portion, if any, is
recognised in profit or loss immediately. The fair value of interest rate swaps is calculated at the present value of the estimated future cash flows.
At the reporting date, liabilities relating to these contracts amounted to $5,674,000 (2010: $804,000). In the year ended 25 June 2011 there was a gain
from the increase in fair value of interest rate cap and swap contracts of $866,000 (2010: $3,333,000).
Interest rate risk exposure
Refer to note 2 for the Group's exposure to interest rate risk on interest rate caps and swaps.
Credit risk exposure
Refer to note 2 for the Group's exposure to credit risk. The maximum exposure to credit risk at the reporting date is the carrying amount of the asset.
There are no receivables on derivatives at balance date.
Currency risk exposure
Refer to note 2 for the Group's exposure to currency risk on trade and other creditors.
74
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
18. PRoVISIoNS
Current
Employee benefits (a)
Libel expenses (i)
Make good
other
Non-current
Employee benefits
Make good
other
Movements in the provisions are as follows:
Consolidated
Year ended 30 June 2010
Carrying amount at start of year
Amounts provided
Amounts utilised
Provision no longer required
Carrying amount at end of year
Year ended 25 June 2011
Carrying amount at start of year
Assumued in a business combination
Amounts provided
Amounts utilised
Provision no longer required
Unwind of discount
Carrying amount at end of year
2011
$’000
60,503
225
479
900
2010
$’000
13,419
225
-
-
62,107
13,644
7,800
6,956
511
15,267
950
-
-
950
Employee
Make good
$’000
$’000
Libel
$’000
Restructur-
ing
$’000
other
$’000
Total
$’000
15,237
10,524
(11,392)
-
14,369
14,369
52,076
17,003
(15,009)
(136)
-
68,303
-
-
-
-
-
-
7,408
-
-
-
27
7,435
290
14,030
-
-
(65)
225
225
-
-
-
-
-
225
-
(14,030)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,411
-
-
-
-
29,557
10,524
(25,422)
(65)
14,594
14,594
60,895
17,003
(15,009)
(136)
27
1,411
77,374
(i) The amount at the end of the reporting period represents a provision for libel claims against the Group in relation to published material.
(a) Amounts not expected to be settled within the next 12 months
The current provision for long service leave covers all unconditional entitlements where employees have completed the required period of service
and also those where employees are entitled to pro-rata payments in certain circumstances. The entire amount of the provision is presented as
current, since the Group does not have an unconditional right to defer settlement for any of these obligations. however, based on past experience,
the Group does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The amount of
long service leave obligations expected to be settled after 12 months of the reporting date is $20,783,000 (2010: $3,475,000).
Seven West media – annual report 2011 75
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
19. DEfERRED INCoME
Current
Deferred revenue
Non-current
Deferred revenue
20. boRRoWINGS
Current
Current
bills payable – secured (a)
bills payable – secured (a)
Non-current
Non-current
bills payable – secured (a)
bills payable – secured (a)
bank loans – secured (b)
bank loans – secured (b)
Secured notes (c)
Secured notes (c)
2011
$’000
2010
$’000
19,708
1,962
5,438
136,000
136,000
-
-
-
80,000
80,000
261,000
261,000
1,531,070
1,531,070
315,000
315,000
-
-
-
-
1,926,070
1,926,070
261,000
261,000
financial arrangements
financial arrangements
At reporting date, the Group had access to secured syndicated cash advance facilities to a maximum
At reporting date, the Group had access to secured syndicated cash advance facilities to a maximum
of $2,306,069,821 (2010: $280,000,000). The amount of these facililties undrawn at reporting date was:
of $2,306,069,821 (2010: $280,000,000). The amount of these facililties undrawn at reporting date was:
232,815
19,000
$232,814,721 pertains to a general revolving facility that may be utilised at any time for general corporate purposes and to fund working capital
$232,814,721 pertains to a general revolving facility that may be utilised at any time for general corporate purposes and to fund working capital
requirements.
requirements.
(a) Bills payable
(a) Bills payable
bills payable are drawn under various bill facilities for the Group totalling $280,000,000 (2010: $280,000,000) which have an average maturity of
bills payable are drawn under various bill facilities for the Group totalling $280,000,000 (2010: $280,000,000) which have an average maturity of
0.8 years from 25 June 2011 (2010: 2.4 years from 30 June 2010). The facilities are secured by interlocking guarantees and indemnities given by
0.8 years from 25 June 2011 (2010: 2.4 years from 30 June 2010). The facilities are secured by interlocking guarantees and indemnities given by
the Company and subsidiaries.
the Company and subsidiaries.
(b) Bank loans
(b) Bank loans
The bank loans are subject to floating interest rate charges as follows:
The bank loans are subject to floating interest rate charges as follows:
- facility A (term loan) bbR + 1.875% per annum;
- facility A (term loan) bbR + 1.875% per annum;
- facility C (acquisition facility) bbR + 1.075% per annum.
- facility C (acquisition facility) bbR + 1.075% per annum.
These loans will mature in December 2012 and are secured by a fixed and floating charge over all of SMG (h4) Pty Limited, a wholly owned
These loans will mature in December 2012 and are secured by a fixed and floating charge over all of SMG (h4) Pty Limited, a wholly owned
subsidiary, and its subsidiaries.
subsidiary, and its subsidiaries.
(c) Secured notes
(c) Secured notes
The secured notes are subject to a fixed rate of interest, increasing annually from 10.16% to 12.31% per annum and will mature in December 2013.
The secured notes are subject to a fixed rate of interest, increasing annually from 10.16% to 12.31% per annum and will mature in December 2013.
The secured notes are secured by a second ranking fixed and floating charge over the assets of SMG (h4) Pty Limited, a wholly owned subsidiary, and
The secured notes are secured by a second ranking fixed and floating charge over the assets of SMG (h4) Pty Limited, a wholly owned subsidiary, and
its subsidiaries.
its subsidiaries.
Fair value
Fair value
The carrying value and fair value of Group borrowings at the end of the financial year was $2,062,070,000 (2010: $261,000,000).
The carrying value and fair value of Group borrowings at the end of the financial year was $2,062,070,000 (2010: $261,000,000).
Risk exposures
Risk exposures
Information about the Group’s exposure to interest rate changes is provided in note 2.
Information about the Group’s exposure to interest rate changes is provided in note 2.
76
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
21. ShARE CAPITAL
608,792,249 (2010: 214,167,596) ordinary shares fully paid (notes 21(a) and 21(c))
608,792,249 (2010: 214,167,596) ordinary shares fully paid (notes 21(a) and 21(c))
2,500 (2010: nil) Convertible preference shares fully paid (notes 21(b) and 21(d))
2,500 (2010: nil) Convertible preference shares fully paid (notes 21(b) and 21(d))
(A) MoVEMENTS IN oRDINARY ShARE CAPITAL
(a) Movements in ordinary share capital
Date
Date
1/7/09
1/7/09
30/9/09
30/9/09
31/3/10
31/3/10
30/6/10
30/6/10
30/9/10
30/9/10
12/4/11
12/4/11
12/4/11
12/4/11
12/4/11 to
12/4/11 to
18/4/11
18/4/11
15/4/11
15/4/11
Details
Details
opening balance
opening balance
Dividend reinvestment plan share issues (note 21(e))
Dividend reinvestment plan share issues (note 21(e))
Dividend reinvestment plan share issues (note 21(e))
Dividend reinvestment plan share issues (note 21(e))
Proceeds received relating to the executive and employee share purchase
Proceeds received relating to the executive and employee share purchase
plans (note 32)
plans (note 32)
balance
balance
Dividend reinvestment plan share issues (note 21(e))
Dividend reinvestment plan share issues (note 21(e))
Shares issued in respect of a 4 for 7 entitlement offer (i)
Shares issued in respect of a 4 for 7 entitlement offer (i)
Shares issued to Seven Group holdings Limited in relation to
Shares issued to Seven Group holdings Limited in relation to
business combination (refer note 29)
business combination (refer note 29)
Shares issued to other investors (ii)
Shares issued to other investors (ii)
Shares issued in respect of a public offer
Shares issued in respect of a public offer
Transaction costs arising on share issues
Transaction costs arising on share issues
Current tax credit recognised directly in equity
Current tax credit recognised directly in equity
Deferred tax credit recognised directly in equity
Deferred tax credit recognised directly in equity
Proceeds received relating to the executive and employee share purchase
Proceeds received relating to the executive and employee share purchase
plans (note 32)
plans (note 32)
25/6/11
25/6/11
balance
balance
(i) Shares issued on conversion of convertible unsecured loan securities (CULS) in accordance with the prospectus issued by the Company on
(i) Shares issued on conversion of convertible unsecured loan securities (CULS) in accordance with the prospectus issued by the Company on
21 february 2011.
21 february 2011.
(ii) Shares issued to Kohlberg Kravis Roberts & Co, mezzanine investors and members of management relating to Seven Media Group.
(ii) Shares issued to Kohlberg Kravis Roberts & Co, mezzanine investors and members of management relating to Seven Media Group.
(b) Movements in convertible preference share capital
(b) MoVEMENTS IN CoNVERTIbLE PREfERENCE ShARE CAPITAL
Date
Date
1/7/09 and
1/7/09 and
30/6/10
30/6/10
21/4/11
21/4/11
Details
Details
opening balance
opening balance
Shares issued to Seven Group holdings Limited in relation to
Shares issued to Seven Group holdings Limited in relation to
business combination (refer notes 21(d) and 29)
business combination (refer notes 21(d) and 29)
25/6/11
25/6/11
balance
balance
Number of
Number of
shares
shares
Issue
Issue
price
price
-
-
2,500
2,500
2,500
2,500
$100,000
$100,000
$100,000
$100,000
250,000
250,000
250,000
250,000
2011
2011
$’000
$’000
2010
2010
$’000
$’000
2,239,061
2,239,061
126,520
126,520
250,000
250,000
-
-
2,489,061
2,489,061
126,520
126,520
Number of
Number of
shares
shares
210,044,210
210,044,210
1,215,837
1,215,837
2,338,049
2,338,049
569,500
569,500
214,167,596
214,167,596
3,657,424
3,657,424
125,537,572
125,537,572
Issue
Issue
price
price
$6.3200
$6.3200
$7.1680
$7.1680
$6.5994
$6.5994
$5.2000
$5.2000
$’000
$’000
100,949
100,949
7,684
7,684
16,759
16,759
1,128
1,128
126,520
126,520
24,136
24,136
652,795
652,795
180,467,446
180,467,446
$5.2700
$5.2700
951,063
951,063
76,961,603
76,961,603
7,692,308
7,692,308
$5.9900
$5.9900
$5.2000
$5.2000
308,300
308,300
608,792,249
608,792,249
461,000
461,000
40,000
40,000
(22,986)
(22,986)
1,354
1,354
4,792
4,792
387
387
2,239,061
2,239,061
$’000
$’000
-
-
Seven West media – annual report 2011 77
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
21. ShARE CAPITAL (CoNTINUED)
(C) oRDINARY ShARES
(c) ordinary shares
ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and
ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and
amounts paid on the shares held.
amounts paid on the shares held.
on a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is
on a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is
entitled to one vote.
entitled to one vote.
The total number of shares issued by the Company is 610,327,899 (2010: 216,011,546) and differs from the amount disclosed in note 21(a) as shares
The total number of shares issued by the Company is 610,327,899 (2010: 216,011,546) and differs from the amount disclosed in note 21(a) as shares
relating to outstanding loans pursuant to the executive and employee share plans and numbering 1,535,650 shares (2010: 1,843,950) are treated
relating to outstanding loans pursuant to the executive and employee share plans and numbering 1,535,650 shares (2010: 1,843,950) are treated
as options.
as options.
(D) CoNVERTIbLE PREfERENCE ShARES (CPS)
(d) Convertible preference shares (CPS)
The full terms and conditions of the CPS are set out in Appendix C of the Explanatory Memorandum in the Proposal to Acquire Seven Media Group
The full terms and conditions of the CPS are set out in Appendix C of the Explanatory Memorandum in the Proposal to Acquire Seven Media Group
issued by Seven West Media Limited (SWM) on 8 March 2011. A summary of these terms is described below and should be read in conjunction with
issued by Seven West Media Limited (SWM) on 8 March 2011. A summary of these terms is described below and should be read in conjunction with
the full CPS Terms of Issue set out in Appendix C of the Proposal.
the full CPS Terms of Issue set out in Appendix C of the Proposal.
The total of 2,500 CPS were issued to Seven Group holdings (SGh) at an issue price of $100,000 per CPS. These may be converted by SGh into a fixed
The total of 2,500 CPS were issued to Seven Group holdings (SGh) at an issue price of $100,000 per CPS. These may be converted by SGh into a fixed
number of fully paid ordinary shares in SWM (SWM Shares) at any time after the release of SWM's accounts for the half-year ending 31 December 2013.
number of fully paid ordinary shares in SWM (SWM Shares) at any time after the release of SWM's accounts for the half-year ending 31 December 2013.
Earlier conversion by SGh of the CPS into SWM Shares is permitted where:
Earlier conversion by SGh of the CPS into SWM Shares is permitted where:
-
-
-
-
-
-
A third party, other than SGh and its associates, makes a takeover bid for SWM that is unanimously recommended by the SWM Directors, or is
A third party, other than SGh and its associates, makes a takeover bid for SWM that is unanimously recommended by the SWM Directors, or is
to acquire all SWM Shares under a scheme of arrangement that has become effective;
to acquire all SWM Shares under a scheme of arrangement that has become effective;
To enable SGh to maintain a shareholding in SWM of no less than 29.6% (less an adjustment for any SWM Shares sold by SGh) in the event of
To enable SGh to maintain a shareholding in SWM of no less than 29.6% (less an adjustment for any SWM Shares sold by SGh) in the event of
any issue of SWM Shares; and
any issue of SWM Shares; and
To the extent permitted by the SWM board in writing.
To the extent permitted by the SWM board in writing.
At conversion by SGh, SWM may at its discretion elect whether to settle in SWM Shares or in cash. If SWM elects to settle in cash, the number of
At conversion by SGh, SWM may at its discretion elect whether to settle in SWM Shares or in cash. If SWM elects to settle in cash, the number of
SWM Shares into which each CPS will be converted will be calculated by multiplying the number of CPS being converted by the "conversion ratio."
SWM Shares into which each CPS will be converted will be calculated by multiplying the number of CPS being converted by the "conversion ratio."
The conversion ratio is equal to the issue price adjusted by 7.143% per annum (compounded on a semi-annual basis) up to the fifth anniversary of
The conversion ratio is equal to the issue price adjusted by 7.143% per annum (compounded on a semi-annual basis) up to the fifth anniversary of
the date of issue of the CPS and then adjusted by 9.143% per annum (compounded on a semi-annual basis) thereafter (the "adjusted issue price")
the date of issue of the CPS and then adjusted by 9.143% per annum (compounded on a semi-annual basis) thereafter (the "adjusted issue price")
divided by the conversion price of $6.68.
divided by the conversion price of $6.68.
If SWM elects to settle in cash, SWM will pay a cash amount for each CPS equal to the number of SWM Shares into which the CPS would have been
If SWM elects to settle in cash, SWM will pay a cash amount for each CPS equal to the number of SWM Shares into which the CPS would have been
converted multiplied by the average of the daily VWAPs (volume weighted average prices) of the SWM shares over the 10 trading days
converted multiplied by the average of the daily VWAPs (volume weighted average prices) of the SWM shares over the 10 trading days
commencing on the date of service of the conversion notice.
commencing on the date of service of the conversion notice.
The CPS are otherwise redeemable by SWM at the adjusted issue price five years from the date of issue, and on every half-year anniversary thereafter,
The CPS are otherwise redeemable by SWM at the adjusted issue price five years from the date of issue, and on every half-year anniversary thereafter,
at the sole discretion of SWM with the form of settlement also at the discretion of SWM, in either SWM Shares or cash. The CPS are also redeemable
at the sole discretion of SWM with the form of settlement also at the discretion of SWM, in either SWM Shares or cash. The CPS are also redeemable
at any time on the occurrence of standard tax and regulatory events. If SWM elects to settle in SWM Shares, the number of SWM Shares into which
at any time on the occurrence of standard tax and regulatory events. If SWM elects to settle in SWM Shares, the number of SWM Shares into which
each CPS will be converted will be calculated by dividing the adjusted issue price by the average of the daily VWAPs of the SWM shares over five trading
each CPS will be converted will be calculated by dividing the adjusted issue price by the average of the daily VWAPs of the SWM shares over five trading
days prior to the date of conversion (calculated at a 5% discount). If SWM elects to settle in cash, SWM will pay a cash amount for each CPS equal to
days prior to the date of conversion (calculated at a 5% discount). If SWM elects to settle in cash, SWM will pay a cash amount for each CPS equal to
the adjusted issue price. In the case of tax and regulatory events, SWM's obligations to settle in SWM Shares or in cash will be calculated using 103%
the adjusted issue price. In the case of tax and regulatory events, SWM's obligations to settle in SWM Shares or in cash will be calculated using 103%
of the adjusted issue price.
of the adjusted issue price.
The conversion price will be adjusted following any reconstruction, consolidation, division, reclassification, securities issue or rights offer (subject
The conversion price will be adjusted following any reconstruction, consolidation, division, reclassification, securities issue or rights offer (subject
to customary exceptions) to ensure that CPS holders are placed in a similar economic position prior to the occurrence of the event that gave rise to
to customary exceptions) to ensure that CPS holders are placed in a similar economic position prior to the occurrence of the event that gave rise to
the adjustment. The conversion price will also be adjusted downwards for any dividends paid to SWM Shareholders over and above an annual
the adjustment. The conversion price will also be adjusted downwards for any dividends paid to SWM Shareholders over and above an annual
reference dividend yield of 6.5% (excluding franking credits), initially calculated with reference to the first full year of ordinary dividends for
reference dividend yield of 6.5% (excluding franking credits), initially calculated with reference to the first full year of ordinary dividends for
financial year 2012.
financial year 2012.
78
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
21. ShARE CAPITAL (CoNTINUED)
21. ShARE CAPITAL (CoNTINUED)
SWM may not issue any preferred securities ranking ahead of the CPS without consent of the holders of 75% of the CPS. Voting rights are limited
SWM may not issue any preferred securities ranking ahead of the CPS without consent of the holders of 75% of the CPS. Voting rights are limited
SWM may not issue any preferred securities ranking ahead of the CPS without consent of the holders of 75% of the CPS. Voting rights are limited
to those set out in Listing Rule 6.3. The CPS do not confer any dividend rights, although the conversion price may be adjusted as described above.
to those set out in Listing Rule 6.3. The CPS do not confer any dividend rights, although the conversion price may be adjusted as described above.
to those set out in Listing Rule 6.3. The CPS do not confer any dividend rights, although the conversion price may be adjusted as described above.
Unless the CPS are redeemed, repurchased or exchanged by the fifth anniversary of their date of issue, SWM may not pay dividends, return capital
Unless the CPS are redeemed, repurchased or exchanged by the fifth anniversary of their date of issue, SWM may not pay dividends, return capital
Unless the CPS are redeemed, repurchased or exchanged by the fifth anniversary of their date of issue, SWM may not pay dividends, return capital
or otherwise distribute value to any equal or lower ranking securityholders until all CPS have been redeemed, repurchased or exchanged (subject
or otherwise distribute value to any equal or lower ranking securityholders until all CPS have been redeemed, repurchased or exchanged (subject
or otherwise distribute value to any equal or lower ranking securityholders until all CPS have been redeemed, repurchased or exchanged (subject
to certain limited exceptions).
to certain limited exceptions).
to certain limited exceptions).
(E) DIVIDEND REINVESTMENT PLAN
(E) DIVIDEND REINVESTMENT PLAN
(e) Dividend reinvestment plan
The Company has established a dividend reinvestment plan under which holders of ordinary shares may elect to have all or part of their dividend
The Company has established a dividend reinvestment plan under which holders of ordinary shares may elect to have all or part of their dividend
The Company has established a dividend reinvestment plan under which holders of ordinary shares may elect to have all or part of their dividend
entitlements satisfied by the issue of new ordinary shares rather then by being paid in cash. Shares are issued under the plan at a price determined
entitlements satisfied by the issue of new ordinary shares rather then by being paid in cash. Shares are issued under the plan at a price determined
entitlements satisfied by the issue of new ordinary shares rather then by being paid in cash. Shares are issued under the plan at a price determined
by the board. The operation of the dividend reinvestment plan for any dividend is at the descretion of the board.
by the board. The operation of the dividend reinvestment plan for any dividend is at the descretion of the board.
by the board. The operation of the dividend reinvestment plan for any dividend is at the descretion of the board.
(f) ShARE bUY-bACKS
(f) ShARE bUY-bACKS
(f) Share buy-backs
There is no current on-market buy-back.
There is no current on-market buy-back.
There is no current on-market buy-back.
(G) CAPITAL RISK MANAGEMENT
(G) CAPITAL RISK MANAGEMENT
(g) Capital risk management
The Group's and the Parent Entity's objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can
The Group's and the Parent Entity's objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can
The Group's and the Parent Entity's objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can
continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of
continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of
continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of
capital.
capital.
capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders,
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders,
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt.
issue new shares or sell assets to reduce debt.
issue new shares or sell assets to reduce debt.
22. RESERVES
22. RESERVES
Equity compensation reserve
Equity compensation reserve
hedging reserve - cash flow hedges
hedging reserve - cash flow hedges
Nature and purpose of reserves
Nature and purpose of reserves
Equity compensation reserve
Equity compensation reserve
2011
2011
$’000
$’000
217
217
(58)
(58)
159
159
2010
2010
$’000
$’000
149
149
(562)
(562)
(413)
(413)
The equity compensation reserve is used to recognise the fair value of share rights granted as compensation.
The equity compensation reserve is used to recognise the fair value of share rights granted as compensation.
Hedging reserve – cash flow hedges
Hedging reserve – cash flow hedges
The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised directly in other comprehensive
The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised directly in other comprehensive
income, as described in note 1(p). Amounts are recognised in profit or loss when the associated hedged transaction affects profit or loss.
income, as described in note 1(p). Amounts are recognised in profit or loss when the associated hedged transaction affects profit or loss.
for movements in reserves during the year, refer to the statement of changes in equity.
for movements in reserves during the year, refer to the statement of changes in equity.
Seven West media – annual report 2011 79
Notes to the Financial Statements
Notes to the Consolidated Financial Statements
Seven West Media Limited
foR ThE YEAR ENDED 25 JUNE 2011
FOR THE YEAR ENDED 25 JUNE 2011
23. DIVIDENDS
Final ordinary dividend for the year ended 30 June 2010 of 26 cents per share (2009: 10 cents), fully franked
based on tax paid at 30%, paid on 30 September 2010 (2009: 30 September 2009)
55,804
21,071
2011
$’000
2010
$’000
Interim ordinary dividend for the year ended 25 June 2011 of 19 cents per share (2010: 19 cents),
fully franked based on tax paid at 30%, paid on 31 March 2011 (2010: 31 March 2010)
Dividends not recognised at year end
In addition to the above dividends, since year end the directors have declared a final dividend of 26 cents per
ordinary share (2010: 26 cents), fully franked based on tax paid at the rate of 30%. The aggregate amount
of the dividend payable on 14 October 2011, but not recognised as a liability at year end, is
Franked dividends
The franked dividend declared after 25 June 2011 will be franked out of existing franking credits or out of
franking credits arising from the receipt of franked dividends and the payment of income tax
in the year ending 30 June 2012.
41,503
97,307
40,309
61,380
158,380
55,797
Franking credits available for subsequent financial years based on a tax rate of 30% (2010: 30%)
14,978
20,718
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
(a) franking credits that will arise from the payment of the current tax liability;
(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
The impact on the franking account of the dividend declared by the directors since year end, but not recognised as a liability at year end, will be a
reduction in the franking account by $68,008,000 (2010: $24,070,000).
24. KEY MANAGEMENT PERSoNNEL DISCLoSURES
24. KEY MANAGEMENT PERSONNEL DISCLOSURES
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
-
-
Share-based payments
Superannuation
Termination benefits
2011
$
2010
$
5,731,303
4,291,916
165,986
-
284,981
181,436
211,951
235,364
6,182,270
4,920,667
Detailed remuneration disclosures in respect of directors and each key management person are provided in the remuneration report on pages 33 to 42.
Equity instrument disclosures relating to key management personnel
Share rights provided as remuneration and shares issued on exercise of such rights
Share rights provided as remuneration and shares issued on the exercise of such rights, together with the terms and conditions of the rights, can be
found in Section D of the remuneration report on page 42.
80
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
24. KEY MANAGEMENT PERSoNNEL DISCLoSURES (CoNTINUED)
Share right holdings
The numbers of share rights over ordinary shares in the Company held during the financial year by each director of Seven West Media Limited
and other key management personnel of the Group, including their personally-related parties, are set out below. No share rights were granted
as compensation during the previous financial year.
2011
Name
Key management personnel of the Group:
balance at
Granted
the start of
as compen-
balance at
the end of
the year
sation
Exercised
the year
Vested
Unvested
CS Wharton
-
41,081
-
41,081
-
41,081
Shareholdings
The numbers of ordinary shares in the Company held during the financial year by each director of Seven West Media Limited and other key
management personnel of the Group, including their personally-related entities, are set out below.
2011
Name
Directors of Seven West Media Limited:
Ordinary shares
KM Stokes AC
DR flynn
PJT Gammell
GT John Ao
DJ Leckie (appointed 16/5/11)
b McWilliam (alternate)
JC Reizes (appointed 19/4/11)
RK Stokes (alternate)
DR Voelte
SMC Walsh Ao
Convertible preference shares
KM Stokes AC
Other key management personnel of the Group:
Ordinary shares
DM bignold
RA billington
PJ bryant
KJ burnette
N Chan
PJ Lewis
bA McCarthy
LM Roche
CS Wharton
TG Worner
Shares
received
during the
balance at
year as
other
changes
the start of
compen-
during the
the year
sation
year
balance at
the end of
the year
51,634,405
8,206
8,420
7,284
-
-
31,839 (iii)
-
7,054
22,069
-
2,000
9,084
1,720
-
-
-
-
34,500
16,218
-
8,277
4,687
4,686
4,687
-
-
764
-
4,687
9,373
-
-
-
-
-
-
-
-
-
-
-
129,077,534
180,720,216
15,799
6,506
30,785
751,252 (i)
297,938 (ii)
-
39,846
5,141
16,321
28,692
19,612
42,756
751,252
297,938
32,603
39,846
16,882
47,763
2,500
2,500
1,282
250
9,125
5,843 (i)
165,275 (i)
172,788 (i)
1,900
-
24,061
262,938 (i)
3,282
9,334
10,845
5,843
165,275
172,788
1,900
34,500
40,279
262,938
Seven West media – annual report 2011 81
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
24. KEY MANAGEMENT PERSoNNEL DISCLoSURES (CoNTINUED)
Shareholdings (continued)
(i)
These shares are subject to an escrow which expires on the date the Company's results for the 2012 financial year are announced.
262,938 of these shares are subject to an escrow which expires on the date the Company's results for the 2012 financial year are announced.
balance at date of appointment.
(ii)
(iii)
2010
Name
Directors of Seven West Media Limited:
Ordinary shares
KM Stokes AC
DR flynn
PJT Gammell
GT John Ao
DR Voelte
SMC Walsh Ao
Other key management personnel of the Group:
Ordinary shares
DM bignold (appointed 1/8/09)
RA billington
PJ bryant
TL Garven (retired 6/11/09)
LM Roche
Pf Stevens (retired 30/11/09)
CS Wharton
(i)
balance at date of retirement
Shares held under suspended share plans
Shares
received
during the
balance at
year as
other
changes
the start of
compen-
during the
the year
sation
year
balance at
the end of
the year
49,301,667
10,015
2,322,723
51,634,405
4,386
4,322
3,233
3,233
6,466
-
8,943
1,720
197,559
30,200
27,449
10,211
3,820
3,821
3,820
3,821
7,641
-
-
-
-
-
-
-
-
277
231
-
7,962
2,000
141
-
-
4,300
-
6,007
8,206
8,420
7,284
7,054
22,069
2,000
9,084
1,720
197,559 (i)
34,500
27,449 (i)
16,218
The numbers of shares in the Company held under suspended employee and executive share plans during the financial year and treated as options by
each of the key management personnel of the Group, are set out below. All shares held under the plans are vested.
2011
Name
Key management personnel of the Group:
LM Roche
2010
Name
Key management personnel of the Group:
LM Roche
Pf Stevens (retired 30/11/09)
(i)
balance at date of retirement
for further details of shares held under share plans, refer notes 1(w)(iii) and 32.
82
balance at
Changes
balance at
the start of
during the
the end of
the year
year
the year
69,800
-
69,800
balance at
Changes
balance at
the start of
during the
the end of
the year
year
the year
74,100
113,700
(4,300)
69,800
-
113,700 (i)
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
25. REMUNERATIoN of AUDIToRS
PwC Australia
(i) Audit and other assurance services
Audit or review of the financial statements
other audit and assurance services
Total remuneration for audit and other assurance services
(ii) Taxation services
Taxation consultancy services
Taxation compliance services
Total remuneration for taxation services
(iii) Other services
Advisory services
Services relating to the acquisition of SMG
Total remuneration for other services
Total remuneration of PwC Australia
other audit firms
(i) Audit and other assurance services
Audit or review of the financial statements
(ii) Other services
Advisory services
Total remuneration of non-PwC audit firms
26. CoNTINGENT LIAbILITIES
2011
$
2010
$
393,179
36,303
429,482
76,100
52,500
128,600
2,000
3,182,975
3,184,975
264,640
107,236
371,876
129,775
49,150
178,925
7,350
-
7,350
3,743,057
558,151
260,000
18,374
278,374
-
-
-
Participation in media involves particular risks associated with defamation litigation and litigation to protect media rights.
The nature of the Group's activities is such that, from time to time, claims are received or made by the Group. The directors are of the opinion that
there are no material claims that require disclosure of such a contingent liability.
Seven West media – annual report 2011 83
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
27. CoMMITMENTS
Capital expenditure commitments
2011
$'000
2010
$'000
Commitments for the acquisition of property, plant and equipment contracted for at the reporting date but not
recognised as liabilities, payable within one year.
11,507
2,105
operating lease commitments
The Group leases various offices, equipment, sites and residential premises under non-cancellable operating leases expiring within one year to 19
years (2010: 9 years). The leases have varying terms, escalation clauses and renewal rights. on renewal, the terms of the leases are renegotiated.
Commitments for minimum lease payments in relation to non-cancellable operating leases contracted for at the reporting date but not recognised
as liabilities, payable:
Within one year
Later than one year but not later than five years
Later than five years
20,809
69,748
176,920
267,477
1,095
2,148
234
3,477
Contracts for purchase of television programs and sporting broadcast rights
Commitments for minimum payments in relation to non-cancellable purchase contracts of television programs and sporting broadcast rights at the
reporting date but not recognised as liabilities, payable:
Within one year
Later than one year but not later than five years
Later than five years
Contracts for employee services
259,337
694,433
140,048
1,093,818
Commitments for minimum payments in relation to non-cancellable contracts for employee services at the reporting date but not recognised as
liabilities, payable:
Within one year
Later than one year but not later than five years
Contracts for other services
65,838
34,221
100,059
Commitments for minimum payments in relation to non-cancellable contracts for other services at the reporting date but not recognised
as liabilities, payable:
Within one year
Later than one year but not later than five years
Later than five years
84
29,324
38,850
6,435
74,609
-
-
-
-
-
-
-
-
-
-
-
Notes to the Financial Statements
Notes to the Consolidated Financial Statements
Seven West Media Limited
foR ThE YEAR ENDED 25 JUNE 2011
FOR THE YEAR ENDED 25 JUNE 2011
28. RELATED PARTY TRANSACTIONS
Parent entity
Seven West Media Limited is the ultimate Australian parent entity within the Group.
Subsidiaries
Interests in subsidiaries are set out in note 30.
Key management personnel
Disclosures relating to key management personnel are set out in note 24.
Transactions with related parties
The following transactions occurred with related parties:
Sale of goods, advertising and other services
Printing services to associate
Advertising services to associate
Advertising to entities of which directors of the Group are directors
Advertising and other services to entities controlled or jointly controlled by an entity of which the Group
was an associate during the year
Communications services to an entity controlled by an entity of which the Group is an associate
Recharge of utilities and services usage to associates
Recharge of rent and salaries to an entity controlled by an entity of which the Group is an associate
Advertising and other services and recharge of operating expenses to an entity jointly controlled by the Group
Recharge of operating expenses and printing and other services to entities controlled by an entity of which
the Group is an associate
AFL highlights footage to an entity of which a director of the Group is a commissioner
Purchase of goods, advertising and other services
Advertising and other services from entities jointly controlled by an entity of which the Group
was an associate during the year
Ratings reports, broadcast transmission services, sales services and studio facility hire from associates of the Group
Engineering services from an entity jointly controlled by an entity of which the Group was an associate
Transport, facility hire and function management from an entity of which the Group was an associate
Advertising and other services from an entity jointly controlled by the Group
Equipment maintenance services from an entity controlled by an entity of which the Group is an associate
Internet service from an entity controlled by an entity of which the Group is an associate
Rent paid to an entity of which a director of the Group is a director
Equipment hire and printing services from entities of which directors of the Group are directors
AFL free-to-air television rights from an entity of which a director of the Group is a commissioner
Other transactions
A company in the Group has contributed funds of $3,077,057 to an entity which is an associate of the Group.
2011
$
2010
$
4,878,293
4,472,376
592,467
272,080
-
-
1,142,512
65,109
47,011
337,531
488,831
626,712
79,664
-
-
-
101,408
6,540
-
-
401,494
2,114,175
-
-
271,105
1,317
22,473
657,088
14,037
8,844,749
719,311
-
49,180
163,330
-
-
-
-
-
-
Some employees were previously part of the SMG Pty Limited Management Equity Plan (MEP). This plan was cancelled prior to the transaction
between WAN and SMG and its controlled entities. A condition of the cancellation of the 2010 MEP was that employees remained employed by
SWM up until the 2011 SWM results release date being 24 August 2011. The total value under the MEP that relates to the period from 12 April
2011 to 25 June 2011 was estimated at $565,000.
Seven West media – annual report 2011 85
Notes to the Financial Statements
Notes to the Consolidated Financial Statements
Seven West Media Limited
foR ThE YEAR ENDED 25 JUNE 2011
FOR THE YEAR ENDED 25 JUNE 2011
28. RELATED PARTY TRANSACTIoNS (CoNTINUED)
28. RELATED PARTY TRANSACTIONS (CONTINUED)
Website arrangement
The Company has entered into an arrangement with an entity jointly controlled by the Group. The arrangement provides for the sharing of costs
and revenue in relation to the Group's website. The terms of the arrangement were commercially negotiated on an arms length basis.
Outstanding balances arising from sales/purchases of goods, advertising and other services
The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:
Current receivables (sales of goods, advertising and other services)
Associates
Jointly controlled entity
Entities controlled or jointly controlled by an entity of which the Group is an associate
Entities of which directors of the Group are directors
Entity of which a director of the Group is a commissioner
Current payables (purchase of goods, advertising and other services)
Associates
Jointly controlled entity
Entities controlled or jointly controlled by an entity of which the Group is an associate
2011
$
2010
$
413,091
341,588
261,377
287,642
8,300
6,540
-
80,259
-
-
658,543
-
684,809
738
-
209,633
There is no allowance account for impaired receivables in relation to any outstanding balances, and no expense has been recognised in respect
of impaired receivables due from related parties.
Terms and conditions
Transactions were made on normal commercial terms and conditions.
86
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
29. ACqUISITIoN of SUbSIDIARY
on 12 April 2011 the Group acquired 100% of the share capital of SMG (h1) Pty Limited ("SMG"), an unlisted Australian media company, to become a
on 12 April 2011 the Group acquired 100% of the share capital of SMG (h1) Pty Limited ("SMG"), an unlisted Australian media company, to become a
major Australian diversified media group. SMG owns Seven Network (Australia's leading free-to-air television network), Pacific Magazines (Australia's
major Australian diversified media group. SMG owns Seven Network (Australia's leading free-to-air television network), Pacific Magazines (Australia's
second largest magazine business) and has a 50% interest in Yahoo!7, one of Australia's largest online platforms.
second largest magazine business) and has a 50% interest in Yahoo!7, one of Australia's largest online platforms.
During the period from 12 April 2011 to 25 June 2011 SMG contributed $318,873,000 of revenue and $60,948,000 of net profit before tax to the
During the period from 12 April 2011 to 25 June 2011 SMG contributed $318,873,000 of revenue and $60,948,000 of net profit before tax to the
Group's results. If the acquisition had occurred on 1 July 2010, management estimates that consolidated revenue would have been $1,941,476,000
Group's results. If the acquisition had occurred on 1 July 2010, management estimates that consolidated revenue would have been $1,941,476,000
and consolidated profit before tax would have been $349,733,000.
and consolidated profit before tax would have been $349,733,000.
The accounting for the acquisition of SMG includes provisional amounts based on the best information available as at the reporting date.
The accounting for the acquisition of SMG includes provisional amounts based on the best information available as at the reporting date.
Details of the acquisition are as follows:
Details of the acquisition are as follows:
Consideration
Consideration
ordinary shares issued (180,467,446 shares @ $5.27) (a)
ordinary shares issued (180,467,446 shares @ $5.27) (a)
Convertible preference shares (CPS) issued (refer note 21)
Convertible preference shares (CPS) issued (refer note 21)
Total consideration
Total consideration
(a) The fair value of the ordinary shares was based on the listed share price of the Company on 12 April 2011.
(a) The fair value of the ordinary shares was based on the listed share price of the Company on 12 April 2011.
Identifiable assets acquired and liabilities assumed
Identifiable assets acquired and liabilities assumed
Cash and cash equivalents
Cash and cash equivalents
Trade and other receivables
Trade and other receivables
Program rights and inventories
Program rights and inventories
Current tax assets
Current tax assets
other
other
Investments in equity accounted investees
Investments in equity-accounted investees
Property, plant and equipment
Property, plant and equipment
Intangible assets
Intangible assets
Deferred tax assets
Deferred tax assets
Trade and other payables
Trade and other payables
Provisions
Provisions
Deferred income
Deferred income
borrowings
borrowings
Fair value of net identifiable assets (b)
Fair value of net identifiable assets (b)
(b) The fair value of assets acquired were based on valuations provided by independent experts.
(b) The fair value of assets acquired were based on valuations provided by independent experts.
Goodwill on acquisition
Goodwill on acquisition
Total consideration
Total consideration
Less fair value of net identifiable assets
Less fair value of net identifiable assets
Goodwill
Goodwill
The goodwill is mainly attributable to the skills and experience of the workforce within the television and magazine businesses. None of
The goodwill is mainly attributable to the skills and experience of the workforce within the television and magazine businesses. None of
the goodwill recognised is expected to be deductible for tax purposes.
the goodwill recognised is expected to be deductible for tax purposes.
Cash inflow on acquisition
Cash inflow on acquisition
Cash acquired on acquisition
Cash acquired on acquisition
Net consolidated cash inflow on acquisition
Net consolidated cash inflow on acquisition
2011
2011
$’000
$’000
951,063
951,063
250,000
250,000
1,201,063
1,201,063
65,881
65,881
278,941
278,941
104,295
104,295
26,152
26,152
4,603
4,603
333,200
333,200
78,834
78,834
2,496,020
2,496,020
28,922
28,922
(415,864)
(415,864)
(60,895)
(60,895)
(34,681)
(34,681)
(2,939,820)
(2,939,820)
(34,412)
(34,412)
1,201,063
1,201,063
34,412
34,412
1,235,475
1,235,475
(65,881)
(65,881)
(65,881)
(65,881)
Seven West media – annual report 2011 87
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
29. ACqUISITIoN of SUbSIDIARY (CoNTINUED)
Acquisition costs
The Group incurred acquisition-related costs of $26,380,000 related to legal fees and due diligence costs. These have been included separately in the
Group's consolidated statement of comprehensive income.
30. INVESTMENTS IN CoNTRoLLED ENTITIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting
policy described in note 1(b).
harlesden Investments Pty Ltd
Western Mail operations Pty Ltd
West Australian Newspapers Limited
Albany Advertiser Pty Ltd
ComsNet Pty Ltd
Colorpress Australia Pty Ltd
ColourPress Pty Ltd
Geraldton Newspapers Pty Ltd
Geraldton fM Pty Ltd
Great Northern broadcasters Pty Ltd
herdsman Print Centre Pty Ltd
herdspress Leasing Pty Ltd
hocking & Co. Pty Ltd
quokka West Pty Ltd
Redwave Media Pty Ltd
North West Radio Pty Ltd
Australian Regional broadcasters Pty Ltd
Spirit Radio Network Pty Ltd
South West Printing and Publishing Company Limited
W.A. broadcasters Pty Ltd
quokka Press Pty Ltd
Dansted and McCabe holdings Pty Ltd
Riverlaw holdings Pty Limited
West Australian Entertainment Pty Ltd
WAN Cinemas Pty Limited
Western Mail Pty Ltd
Westroyal Pty Ltd
Australian National Television Pty Limited
Australian Television International Pty Limited
Australian Television Network Limited
Channel Seven Adelaide Pty Limited
Channel Seven brisbane Pty Limited
Channel Seven MelbournePty Limited
Channel Seven Perth Pty Limited
Channel Seven queensland Pty Limited
Channel Seven Sydney Pty Limited
Cobbittee Publications Pty Limited
Dodds Street Properties Pty Limited
faxcast Australia Pty Limited
88
ownership interest
Notes
Country of
incorporation
2011
%
2010
%
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
-
-
-
-
-
-
-
-
-
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
30. INVESTMENTS IN CoNTRoLLED ENTITIES (CoNTINUED)
Impact Merchandising Pty Limited
Jupelly Pty Limited
Kenjins Pty Limited
Pacific MM Pty Limited
Pacific Magazines Pty Limited
Pacific Magazines Trust
Pacific Magazines (No. 2) Pty Limited
Pacific Magazines NZ Limited
Pacific Magazines (PP) Pty Ltd
Pacific Magazines (PP) holdings Pty Ltd
Pacific Magazines (Who) Pty Ltd
Red Publishing Pty Limited
Seven Magazines Pty Limited
Seven Network Programming Pty Limited
Seven Network (operations) Limited
Seven Regional operations Pty Limited
Seven Satellite Pty Limited
Seven Television Australia Limited
SMG Executives Pty Limited
SMG h1 Pty Limited
SMG h2 Pty Limited
SMG h3 Pty Limited
SMG h4 Pty Limited
SMG h5 Pty Limited
SMG h2 (Victoria) Pty Limited
Southdown Publications Pty Limited
Sunshine broadcasting Network Limited
The Pacific Plus Company Pty Limited
West Central Seven Limited
Wide bay - burnett Television Limited
Zangerside Pty Limited
Zed holdings Pty Limited
ownership interest
Notes
Country of
incorporation
2011
%
2010
%
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(b)
(b)
(b)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(i) All subsidiaries are wholly-owned and, except for 100,000 preference shares held in West Australian Newspapers Limited (2010: 100,000), the class
(i) All subsidiaries are wholly-owned and, except for 100,000 preference shares held in West Australian Newspapers Limited (2010: 100,000), the class
of shares is ordinary.
of shares is ordinary.
(a)
(a)
(b)
(b)
(c)
(c)
These controlled entities entered into a Deed of Cross Guarantee with Seven West Media Limited under ASIC Class order 98/1418 (as amended)
These controlled entities entered into a Deed of Cross Guarantee with Seven West Media Limited under ASIC Class order 98/1418 (as amended)
dated 8 April 2004 on 8 April 2004 or by Assumption Deeds prior to 30 June 2009.
dated 8 April 2004 on 8 April 2004 or by Assumption Deeds prior to 30 June 2009.
These controlled entities joined Seven West Media Limited's Deed of Cross Guarantee under ASIC Class order 98/1418 (as amended) dated
These controlled entities joined Seven West Media Limited's Deed of Cross Guarantee under ASIC Class order 98/1418 (as amended) dated
8 April 2004 on 20 June 2011 by Assumption Deed.
8 April 2004 on 20 June 2011 by Assumption Deed.
These controlled entities entered into a Deed of Cross Guarantee with SMG (h4) Pty Limited, a wholly owned subsidiary of Seven West Media
These controlled entities entered into a Deed of Cross Guarantee with SMG h4 Pty Limited, a wholly owned subsidiary of Seven West Media
Limited, under ASIC Class order 98/1418 (as amended) dated 13 August 1998 on 22 June 2007 or by Assumption Deeds on 23 June 2008 and
Limited, under ASIC Class order 98/1418 (as amended) dated 13 August 1998 on 22 June 2007 or by Assumption Deeds on 23 June 2008 and
25 May 2011.
25 May 2011.
Seven West media – annual report 2011 89
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
30. INVESTMENTS IN CoNTRoLLED ENTITIES (CoNTINUED)
Pursuant to ASIC Class order 98/1418 (as amended) certain wholly-owned subsidiaries, as noted above, are relieved from the Corporations Act 2001
requirements for preparation, audit and lodgement of financial reports and directors’ reports.
It is a condition of the Class order that the 'holding Entity' and each of the wholly-owned subsidiaries enter into a Deed of Cross Guarantee under
which each company guarantees the debts of the others.
Seven West Media Limited and its subsidiaries represent a 'Closed Group' for the purposes of the Seven West Media Limited Class order, and as there
are no other parties to its Deed of Cross Guarantee that are controlled by Seven West Media Limited, they also represent the 'Extended Closed Group.'
The consolidated statement of comprehensive income and summary of movements in consolidated retained earnings for the year ended 25 June 2011
of the Seven West Media Limited Closed Group is presented below according to the Seven West Media Limited Class order:
Statement of comprehensive income
Revenue
other income
Depreciation and amortisation (excluding program rights amortisation)
Advertising and marketing expenses
Printing, selling and distribution (including newsprint and paper)
Media content (including program rights amortisation)
Employee benefits expense
Raw materials and consumables used (excluding newsprint and paper)
Repairs and maintenance
Licence fees
Transaction costs
other expenses from ordinary activities
Share of net profit of equity accounted investees
Profit before net finance costs and income tax
finance income
finance costs
Net finance costs
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
Interest rate cash flow hedges
Income tax relating to components of other comprehensive income
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to owners of the Company
Summary of movements in consolidated retained earnings
Retained earnings at the beginning of the year
Profit for the year
Dividends provided for or paid
Retained earnings at the end of the year
90
2011
$'000
2010
$'000
406,818
408,691
73
(21,613)
(5,820)
(68,799)
(6,949)
468
(20,932)
(5,991)
(75,403)
(6,087)
(117,034)
(111,816)
(9,277)
(6,351)
(554)
(26,380)
(23,814)
4,627
(9,326)
(5,780)
-
-
(24,129)
3,869
124,927
153,564
9,905
(17,801)
(7,896)
483
(19,938)
(19,455)
117,031
134,109
(40,057)
(37,886)
76,974
96,223
280
(84)
196
3,334
(1,000)
2,334
77,170
98,557
4,444
76,974
(97,307)
(15,889)
(30,399)
96,223
(61,380)
4,444
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
30. INVESTMENTS IN CoNTRoLLED ENTITIES (CoNTINUED)
The consolidated statement of financial position for the year ended 25 June 2011 of the Seven West Media Limited Closed Group is presented below
according to the Seven West Media Limited Class order:
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Program rights and inventories
other assets
Total current assets
Non-current assets
other receivables
Investments accounted for using the equity method
Investments in controlled entities
Available-for-sale financial assets
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
LIAbILITIES
Current liabilities
Trade and other payables
borrowings
Current tax liabilities
Provisions
Deferred income
Total current liabilities
Non-current liabilities
Trade and other payables
borrowings
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EqUITY
Share capital
Reserves
Non-controlling interests
Retained earnings
Total equity
2011
$’000
2010
$’000
114,261
166,056
15,302
1,903
297,522
222,574
11,604
217,945
777
203,739
134,097
790,736
1,088,258
17,027
136,000
9,718
13,592
-
176,337
279
80,000
6,250
933
87,462
263,799
824,459
12,065
54,452
13,123
3,253
82,893
-
11,228
-
777
213,523
132,869
358,397
441,290
15,278
-
6,434
13,644
1,962
37,318
547
261,000
10,924
950
273,421
310,739
130,551
2,489,061
126,520
(149)
(1,648,564)
(15,889)
(413)
-
4,444
824,459
130,551
Seven West media – annual report 2011 91
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
31. EARNINGS PER ShARE
basic earnings per share
Profit attributable to the ordinary equity holders of the Company.
Diluted earnings per share
Profit attributable to the ordinary equity holders of the Company.
Earnings used in calculating earnings per share
Profit attributable to the ordinary equity holders of the Company used in calculating basic and diluted
earnings per share.
2011
2010
38.6 cents
45.4 cents
37.5 cents
45.0 cents
2011
$’000
2010
$’000
115,122
96,223
2011
Number
2010
Number
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares outstanding during the year used in the calculation of basic
earnings per share.
298,132,960
211,825,350
Adjustments for calculation of diluted earnings per share:
-
-
Convertible Preference Shares (CPS)
6,861,277
-
Shares issued pursuant to the suspended executive and employee share plans treated as options
deemed to have been converted into ordinary shares at the beginning of the financial year
1,689,801
2,128,700
Weighted average number of ordinary shares and potential ordinary shares used as the denominator
in calculating diluted earnings per share
306,684,038
213,954,050
92
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
32. ShARE-bASED PAYMENTS
The total expense recognised for share-based payments for all plans during the financial year for the Group was $284,981 (2010: $235,364).
Details of share-based plans in operation are as follows:
Share rights granted as compensation
(i) Long term incentive (LTI) program – chief executive officer (CEO)
The theme of linking remuneration policy directly to company performance for 2010/11 is extended to LTIs granted to the CEo, who is entitled to
receive share rights on the basis outlined below.
The CEo’s LTI program, under which equity in the Company can be earned, has two hurdles, or assessment points, which ultimately determine his
LTI entitlement.
The first hurdle provides access to the program, and establishes an unvested number of share rights. The second hurdle determines the number of
shares that vest and thus will be received by the CEo.
Under the first hurdle, which is applied annually on 30 June, the CEo may be granted unvested share rights, in accordance with the following:
- Where reported EPS growth for the year is equal to CPI + 6%, the CEo is granted an allocation equal in value to 25% of his fixed annual
remuneration (fAR).
- Where reported EPS growth for the year is equal to CPI + 8%, the CEo is granted an allocation equal in value to 50% of his fAR.
- Where reported EPS growth is between the two thresholds above, the allocation is determined on a pro-rata basis.
once share rights have been granted, a second hurdle is applied to determine the number of shares that will ultimately vest.
The second hurdle is assessed three years after the shares were granted. The second hurdle is based on the Company’s Total Shareholder Return (TSR).
The TSR performance hurdles are:
-
-
If TSR is within the 50-75 percentile of a comparative group, then the percentage ranking, multiplied by the available LTI share rights, will vest.
If TSR is within the 75-100 percentile of a comparative group, then the percentage of available LTI share rights that vest will be from 75% to 150%
of the available share rights, calculated on a pro-rata basis.
In the event that minimum TSR performance hurdle for year three is not achieved, the share rights granted can be carried forward for two years, with a
re-test performed in each of these years, based on the TSR over four or five years respectively.
The maximum value of shares issued under the LTI program, assuming all hurdles are passed at the highest level, equates to 75% of the CEo’s fAR.
Details of discretionary share rights granted as compensation to Mr CS Wharton, the CEo, during the financial year are as follows (no share rights
were granted during the previous financial year):
Vesting conditions
Number of rights granted
Class of equity right
Grant date
first test date
Expiry date
fair value at grant date
Valuation methodology
Expected vesting date
Expensed in 2010/11
Total value of grant
Percentage/forfeited in 2010/11
Total Shareholder Return (TSR)
41,081
ordinary
3 August 2010
3 August 2013
3 August 2015
$4.95
Monte Carlo simulation
3 August 2013
$67,784
$203,351
0%
Seven West media – annual report 2011 93
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
32. ShARE-bASED PAYMENTS (CoNTINUED)
The board believes it is in the best interest of the Company to ensure that the CEo’s annual remuneration package is reasonable and represents an
appropriate reward for both the financial and operational results achieved during the period. The board therefore reserves the right to, in exceptional
circumstances, make a discretionary allocation of share rights to the CEo.
Non-executive directors share plan
In order to more closely align the interests of the non-executive directors with shareholder interests in the creation of value for shareholders as a
whole, non-executive directors are obliged to receive at least 25% of their annual fees as shares in the Company. These shares are purchased on-
market at prevailing prices and must be held for ten years unless the director retires or a specified event occurs, such as if a takeover bid is made
for the Company.
The total number of shares received by directors of the Company during the financial year in accordance with the plan was 37,161 (2010: 32,938). The
total value of shares received by directors during the financial year in accordance with the plan was $217,197 (2010: $235,364), as determined by the
observed market price.
Executive and employee share plans
Plans for the purchase of shares in the Company by executives and employees have been suspended and have not been used since 2002. Details of
the plans are as follows:
The issue price of shares allotted under the plans was the average sale price of all shares sold on the ASX during the five days preceding allotment.
Under the plans West Australian Newspapers Limited (a subsidiary), lent the full issue price to employees/executives on an interest-free basis. Loans
were secured by share mortgages/liens over shares issued in accordance with the plans and during employment are repaid from net dividends (after
taxation). While shares are subject to these restrictions, they are not permitted to be hedged or in any other way dealt with.
In the event of cessation of employment of employees/executives, loans are repayable but West Australian Newspapers Limited cannot claim or
demand outstanding moneys other than to the extent of proceeds realised from the disposal of shares secured under the plans.
The total number of shares issued under the plans in the previous five years must not exceed 5% of the total number of shares on issue. No shares have
been issued in the previous five years under the plans.
(i) West Australian Newspapers Holdings Limited Executive Share Purchase and Loan Plan
This plan was approved at the annual general meeting of the Company on 9 october 1992. The operation of this plan has been suspended and no
executives have been invited to apply for shares since 2002. Senior executives of the Group were from time to time invited to apply for shares as
determined by the board of directors.
Shares issued under the plan were not able to be sold until the expiry of three years from date of issue. Up to half the shares could have been sold
during the fourth and fifth year and there were no restrictions on sale after five years from the date of issue. The loans are repayable immediately
upon termination of employment except in cases of termination due to death, total and permanent disablement, retirement or other circumstances
approved by the directors, where two years are allowed for repayment of the loan.
In all other respects the shares previously issued in accordance with the plan rank equally with other fully-paid ordinary shares on issue.
(ii) West Australian Newspapers Holdings Limited Employee Share Plan
This plan was approved at the annual general meeting of the Company on 22 october, 1993. The operation of the plan has been suspended and no
employees have been invited to apply for shares since 2002.
Where an allocation of shares was made under the plan, eligible employees were invited to participate. Eligible employees were those who:
- were permanent employees of the Group on either a full-time or part-time (minimum 20 hours per week) basis;
- were 18 years of age or over;
-
had completed 12 months continuous employment.
94
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
32. ShARE-bASED PAYMENTS (CoNTINUED)
The total number of shares for which employees were invited to apply was determined by the board of directors with allocations to individual
employees being based on salary levels.
Shares under the plan were not able to be sold until the earlier of two years after issue or cessation of employment with the Group. In all other
respects the shares rank equally with other fully-paid ordinary shares on issue.
Under AASb 2 Share-based Payment , the plans are deemed as equity settled, share-based remuneration and treated as an in-substance grant of options.
The Group has taken advantage of the exemption in AASb 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards
not to apply AASb 2 to shares issued under these plans.
Refer note 1(w)(iii) for accounting policy relating to share-based payments.
33. RECoNCILIATIoN of PRofIT AfTER INCoME TAX To NET CASh PRoVIDED
bY oPERATING ACTIVITIES
Profit for the year after tax
Profit for the year after tax
Non-cash items
Non-cash items
Depreciation and amortisation
Depreciation and amortisation
Net gain on sale of non-current assets
Net gain on sale of non-current assets
Employee benefits expense – share-based payments
Employee benefits expense – share-based payments
Dividend received from equity-accounted investees less share of profit of equity-accounted investees
Dividend received from equity accounted investees less share of profit of equity accounted investees
Transfers from plant and equipment to inventories
Transfers from plant and equipment to inventories
Non-cash investment in associated entity
Non-cash investment in associated entity
Movement in:
Movement in:
Receivables
Receivables
Inventories
Inventories
Program rights
Program rights
other operating assets
other operating assets
Payables
Payables
Program liabilities
Program liabilities
Provisions
Provisions
other operating liabilities
other operating liabilities
Tax balances
Tax balances
Net cash inflow from operating activities
Net cash inflow from operating activities
2011
2011
$'000
$'000
2010
2010
$'000
$'000
115,122
115,122
96,223
96,223
63,304
63,304
(73)
(73)
68
68
(1,138)
(1,138)
-
-
(1,249)
(1,249)
20,932
20,932
(468)
(468)
-
-
381
381
1,021
1,021
-
-
18,878
18,878
(3,917)
(3,917)
(40,837)
(40,837)
1,223
1,223
(28,537)
(28,537)
(413)
(413)
1,858
1,858
(11,464)
(11,464)
28,120
28,120
(2,597)
(2,597)
(853)
(853)
-
-
(1,516)
(1,516)
(1,541)
(1,541)
-
-
(14,963)
(14,963)
1,137
1,137
5,679
5,679
140,945
140,945
103,435
103,435
Seven West media – annual report 2011 95
Notes to the Consolidated Financial Statements
foR ThE YEAR ENDED 25 JUNE 2011
34. PARENT ENTITY fINANCIAL INfoRMATIoN
Summary of financial information
The individual financial statements for the Parent Entity show the following aggregate amounts:
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Share capital
Reserves
Asset revaluation reserve
Equity compensation reserve
Retained earnings
Profit for the year
Total comprehensive income
Parent entity
2011
$'000
2010
$'000
40,882
39,515
2,538,901
187,186
14,816
6,627
21,618
39,664
2,489,061
126,520
8,352
8,352
(86)
(86)
19,956
12,736
2,517,283
147,522
104,528
60,989
104,528
60,989
Guarantees entered into by the Parent Entity
The Parent Entity has provided financial guarantees in respect of borrowings of a subsidiary amounting to $216,000,000 (2010: $261,000,000).
No liability was recognised by the Parent Entity in relation to these guarantees, as the fair value of the guarantees is immaterial.
In addition, there are cross guarantees given by Seven West Media Limited and its subsidiaries described in note 30.
Contingent liabilities of the Parent Entity
The Parent Entity did not have any contingent liabilities as at 25 June 2011 or 30 June 2010. for information about guarantees given by the
Parent Entity refer above.
35. EVENTS oCCURRING AfTER ThE REPoRTING DATE
There are no matters or circumstances which have arisen since 25 June 2011 that have significantly affected or may significantly affect the operations
There are no matters or circumstances which have arisen since 25 June 2011 that have significantly affected or may significantly affect the operations
of the Group, the results of those operations, or the state of affairs of the Group in financial years subsequent to 25 June 2011.
of the Group, the results of those operations, or the state of affairs of the Group in financial years subsequent to 25 June 2011.
96
Directors’ Declaration
YEAR ENDED 25 JUNE 2011
In the directors’ opinion:
(a) the financial statements and notes set out on pages 44 to 96 are in accordance with the Corporations Act 2001 , including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
(ii) giving a true and fair view of the Group’s financial position as at 25 June 2011 and of its performance for the
financial year ended on that date; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable; and
(c) at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group
identified in note 30 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of
the deed of cross guarantee described in note 30.
Note 1(a) confirms that the financial statements also comply with International financial Reporting Standards as issued by the
International Accounting Standards board.
The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of
the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
KM Stokes AC
Chairman
Perth, Western Australia
20 September 2011
Seven West media – annual report 2011 97
Independent Auditor’s Report
To ThE MEMbERS of SEVEN WEST MEDIA LIMITED
Independent auditor’s report to the members of
Seven West Media Limited
Report on the financial report
We have audited the accompanying financial report of Seven West Media Limited (the company),
which comprises the balance sheet as at 25 June 2011, the statement of comprehensive income,
statement of changes in equity and statement of cash flows for the year ended on that date, a summary
of significant accounting policies, other explanatory notes and the directors’ declaration for the Seven
West Media Limited Group (the consolidated entity). The consolidated entity comprises the company
and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the
directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we
comply with relevant ethical requirements relating to audit engagements and plan and perform the
audit to obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial report in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.
Our procedures include reading the other information in the Annual Report to determine whether it
contains any material inconsistencies with the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
98
PricewaterhouseCoopers, ABN 52 780 433 757
Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
98
Independent Auditor’s Report
To ThE MEMbERS of SEVEN WEST MEDIA LIMITED
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
Auditor’s opinion
In our opinion:
(a)
the financial report of Seven West Media Limited is in accordance with the Corporations Act
2001, including:
(i)
(ii)
giving a true and fair view of the consolidated entity’s financial position as at 25 June
2011 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Regulations 2001; and
(b)
the financial report and notes also comply with International Financial Reporting Standards
as disclosed in Note 1.
Report on the Remuneration Report
We have audited the remuneration report included in pages 33 to 42 of the directors’ report for the
year ended 25 June 2011. The directors of the company are responsible for the preparation and
presentation of the remuneration report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the remuneration report, based on our audit
conducted in accordance with Australian Auditing Standards.
Auditor’s opinion
In our opinion, the remuneration report of Seven West Media Limited for the year ended 25 June
2011, complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
DS Wiadrowski
Partner
20 September 2011
99
Seven West media – annual report 2011 99
Company Information
DIRECToRS
KM Stokes AC - Chairman
DR flynn
DJ Leckie - Chief Executive officer & Managing Director
PJT Gammell
GT John Ao
JC Reizes
DR Voelte
SMC Walsh Ao
CoMPANY SECRETARY
PJ bryant
REGISTERED offICE
Newspaper house
50 hasler Road
osborne Park WA 6017
ShARE REGISTRY
Computershare Investor Services Pty Ltd
45 St Georges Terrace
Perth WA 6000
Telephone (08) 9323 2000
fax (08) 9323 2033
AUDIToRS
PricewaterhouseCoopers
201 Sussex Street
Sydney NSW 2000
LEGAL ADVISoRS
Addisons
60 Carrington St
Sydney NSW 2000
Allens Arthur Robinson
Deutsche bank Place
Sydney NSW 2000
Clayton Utz
1 o’Connell Street
Sydney NSW 2000
freehills
MLC Centre
Martin Place
Sydney NSW 2000
Johnson Winter & Slattery
20 bond Street
Sydney NSW 2000
100
Investor Information
ShAREhoLDER INqUIRIES
Investors seeking information regarding their shareholding or dividends or wishing to advise of a change of address should contact the
Share Registry at:
Computershare Investor Services Pty Ltd
45 St Georges Terrace
Perth WA 6000
Telephone: (08) 9323 2000
facsimile: (08) 9323 2033 or
Visit the online service at www.computershare.com.au
Computershare has an online service which enables investors to make online changes, view balances and transaction history, as
well as obtain information about recent dividend payments, download various forms and update shareholder details to assist in the
management of their holding. To use this service, simply visit the Computershare website.
other general inquiries may be directed to Mr Peter bryant, Company Secretary on (08) 9482 3138 or visit the website at
www.sevenwestmedia.com.au
TAX fILE NUMbER INfoRMATIoN
The company is obliged to record Tax file Numbers or exemption details provided by shareholders. While it is not compulsory for
shareholders to provide a Tax file Number or exemption details, Seven West Media Limited is obliged to deduct tax from unfranked
dividends paid to investors resident in Australia who have not supplied such information. forms are available upon request from the
Share Registry or shareholders can submit their Tax file Number via the Registries’ website.
ThE ChESS SYSTEM
Seven West Media Limited operates under ChESS – Clearing house Electronic Subregister System – an Australian Securities Exchange
system which permits the electronic transfer and registration of shares. Under ChESS, the company issues a Statement of holdings to
investors, instead of share certificates, and the statement will quote the holder Identification Number (hIN ). The hIN number should be
quoted on any correspondence investors have with the Share Registry.
The company will maintain investors’ holdings in an Issuer Sponsored facility, which enables investors to maintain their holding without
the need to be tied to any particular stockbroker.
Seven West media – annual report 2011 101
Shareholder Information
YEAR ENDED 25 JUNE 2011
The shareholder information set out below was applicable at 20 September 2011.
A. DISTRIbUTIoN of EqUITY SECURITIES
a) Analysis of numbers of equity security holders by size of holding:
Size of holding
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
b) There were 191 holders of less than a marketable parcel of ordinary shares.
b. EqUITY SECURITY hoLDERS
The names of the twenty largest holders of equity securities are listed below:
Name
Seven Media Group Pty Ltd
National Nominees Limited
The Trust Company (Australia) Limited
J P Morgan Nominees Australia Limited
hSbC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
Cogent Nominees Pty Limited
Citicorp Nominees Pty Limited
Australian foundation Investment Company Limited
AMP Life Limited
Australian foundation Investment Company Limited
Australian Reward Investment Alliance
Citicorp Nominees Pty Limited
Citicorp Nominees Pty Limited
Neweconomy Com Au Nominees Pty Limited <900 Account>
UbS Wealth Management Australia Nominees Pty Ltd
TCW Crescent Mezzanine Partners IV/IVb (Ireland) Ltd
Djerriwarrh Investments Limited
Milton Corporation Limited
Citicorp Nominees Pty Limited
Number of shareholders
7,320
15,032
3,695
2,268
110
28,425
Number of
ordinary shares held
Percentage of
issued shares
180,467,446
68,755,613
68,227,286
38,789,012
34,504,001
11,873,781
11,544,900
7,672,115
6,565,950
5,286,970
4,597,846
4,356,639
3,401,542
2,770,461
2,763,417
2,691,565
2,002,370
1,736,064
1,715,264
1,447,290
29.57
11.27
11.18
6.36
5.65
1.95
1.89
1.26
1.08
0.87
0.75
0.71
0.56
0.45
0.45
0.44
0.33
0.28
0.28
0.24
461,169,532
75.57
102
Shareholder Information
Year ended 25 June 2011
C. SubStantial ShareholderS
Substantial shareholders in the Company are set out below:
Name
Seven Media Group Pty ltd
the trust Company (australia) limited as trustee of the KKr australia iii trust
ausbil dexia limited
Number of
ordinary shares held
Percentage of
issued shares
180,467,446
69,288,792
34,814,584
29.57
11.35
5.70
the above percentages include the relevant interests held pursuant to the Corporations act 2001 and accordingly may differ from that
disclosed in note b.
d. VotinG riGhtS
on a show of hands every member present in person or by proxy shall have one vote and upon a poll each share shall have one vote.
Seven West Media – Annual Report 2011 103
ThIS PAGE hAS bEEN LEfT bLANK INTENTIoNALLY
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