ABN 91 053 480 845
Leadership in Content
2013 Annual Report
Seven West Media is Australia’s leading integrated multi-platform business.
Our market-leading presence in broadcast television, newspaper and magazine
publishing and online sees us continue to build our businesses. The company
is the home of many of Australia’s best performing media businesses – Seven,
7TWO and 7mate, Pacific Magazines, The West Australian and YAHOO!7 - and
the biggest content brands. Our focus over the coming twelve months is to drive
home this leadership focusing on building our creative content, managing our
costs and driving greater synergies across our media businesses.
Contents
From the Chairman
Operating & Financial Review
Board of Directors
Corporate Governance Statement
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Company Information
Investor Information
Shareholder Information
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ii
Seven West Media
Seven West Media is Australia’s leading integrated multi-platform business.
Our market-leading presence in broadcast television, newspaper and magazine
publishing and online sees us continue to build our businesses. The company
is the home of many of Australia’s best performing media businesses – Seven,
7TWO and 7mate, Pacific Magazines, The West Australian and YAHOO!7 - and
the biggest content brands. Our focus over the coming twelve months is to drive
home this leadership focusing on building our creative content, managing our
costs and driving greater synergies across our media businesses.
Seven West Media (ABN 91 053 480 845)
Seven West Media (ABN 91 053 480 845)
1
1
FROM THE
CHAIRMAN
Welcome to our annual report for shareholders.
The media landscape is changing. It is changing dramatically
and quickly. And these changes are taking place in what has
once again been a tough twelve months for media companies
confronting challenges in consumer confidence and the impact
on advertising demand.
However, our development over the past twelve months and
in particular the strength of our media businesses provides the
framework for the development of your company.
The positive financial performance of the company’s media
businesses in a difficult market provides us with confidence. Our
market-leading presence in broadcast television, newspaper and
magazine publishing and online places the company in a stronger
position.
Beyond our leadership in our media businesses, much has been
undertaken over the past twelve months in changing how we do
business: in particular building our creative content, managing our
costs and driving greater synergies across media businesses.
Leading this change over the past twelve months has been
Don Voelte AO.
Twelve months ago, on behalf of our Board, I asked Don, as one
of our Non-Executive Directors to take on a most challenging role
for our business. As Managing Director & Chief Executive Officer
of Seven West Media, he has made an outstanding contribution,
implementing some fundamental changes to ensure our company
meets the demands of a rapidly changing landscape. He has put
in place the structures and people that will allow the company
to meet the challenges of the future. On behalf of you, our
shareholders, and our Board, I thank Don and look forward to his
continuing role with Seven West Media as Deputy Chairman of
your company.
Taking your company forward is Tim Worner.
In July, Tim was appointed Chief Executive Officer of Seven West
Media. We are delighted Tim has taken on this role, moving up
from his role as Chief Executive Officer, Broadcast Television to
lead Seven West Media’s development across its portfolio of
media businesses. I have known Tim from my first days as a
shareholder in Seven. He has accepted and met every challenge
put to him over the past eighteen years at Seven and his intimate
knowledge of the creation of content provides him with the
experience to ensure your company’s continuing success as it
evolves and builds on its leadership as Australia’s best-performing
integrated media company.
2
Seven West Media
In this annual report, we also welcome to the Board
John Alexander. The Directors of Seven West Media were
delighted John accepted the invitation to join the Board of the
company. His success in media and business speaks for itself.
His appointment adds further depth to the Board of our company
as it continues to develop its businesses. John is the Executive
Deputy Chairman of Crown Limited and continues to have
an outstanding career in media following senior management
and editorial roles at Publishing and Broadcasting, Australian
Consolidated Press and John Fairfax.
During the year, one of your company’s major shareholders,
Kohlberg Kravis Roberts & Co sold its shareholding in Seven West
Media. Kohlberg Kravis Roberts & Co has been a great partner of
Seven for seven years. We understood their decision to sell their
shareholding. We have worked closely together over the years
building Seven Media Group and then working together with West
Australian Newspapers to create Seven West Media. We thank
George Roberts, Justin Reizes and the team at Kohlberg Kravis
Roberts & Co for their commitment to your company. Justin has
been an outstanding Director on the Board of your company.
He retires as a Director of Seven West Media at the time of your
company’s next Annual General Meeting and we acknowledge his
contribution to the company.
It has been a positive year for Seven West Media. The past twelve
months has seen our businesses build on their leadership. Much
has been done to put in place the structures that will allow us to
manage our costs, drive greater efficiencies and drive home our
leadership in the creation of content that Australians are seeking.
More is to be done. But we are well-placed.
Your Board and management are committed to building
shareholder value and ensuring the future growth of the company.
We are looking forward to the coming twelve months as Seven
West Media moves to the next level in its development as a
leading integrated media company across broadcast television,
publishing and online and new forms of content delivery.
On behalf of the Board and our people, I thank you, our
shareholders, for your commitment to the company.
Kerry Stokes AC
Chairman
Seven West Media (ABN 91 053 480 845)
3
OPERATING
& FINANCIAL
REVIEW
Summary Financial Performance
Revenue
Other income
Share of net profit of equity accounted investees
Revenue, other income and equity accounted profits
Operating expenses
EBITDA (1)
Depreciation and amortisation
EBIT (2)
Net finance costs
Profit before significant items and tax
Significant items
Profit before tax
Tax expense
(Loss)/profit after tax
EBITDA margin
Basic EPS
Basic EPS excluding significant items net of tax
(1) EBITDA relates to profit before significant items, net finance costs, tax, depreciation and amortisation.
(2) EBIT relates to profit before significant items, net finance costs and tax.
4
Seven West Media
FY13 ($m)
FY12 ($m)
Change (%)
-3.6%
0.0%
-23.9%
-3.9%
-1.4%
-10.3%
-5.8%
-10.9%
-30.9%
-1.7%
—
-96.6%
-17.6%
-130.7%
1,866.5
1,937.1
0.2
15.3
1,882.0
(1,402.0)
480.0
(58.0)
422.0
(102.4)
319.6
(308.4)
11.2
(81.0)
(69.8)
0.2
20.1
1,957.4
(1,422.4)
535.0
(61.6)
473.4
(148.2)
325.2
—
325.2
(98.3)
226.9
25.5%
27.3%
-7.1 cents
33.3 cents
23.0 cents
33.3 cents
Reconciliation of EBIT to statutory
profit before tax
Significant Items
EBIT
Net finance costs
Significant items
Profit before tax
FY13 ($m)
FY12 ($m)
422.0
(102.4)
(308.4)
11.2
473.4
(148.2)
—
325.2
Seven West Media Limited reports profit before significant items,
net finance costs and tax (EBIT) of $422 million for the 2012-2013
financial year – down 10.9 per cent on the previous financial year.
The Company reports a profit after income tax, excluding
significant items net of tax, of $225 million, on total revenue of
$1,867 million. This is down 0.8 per cent on the previous financial
year on a 3.6 per cent decline in revenue, and slightly above its
market guidance for profit after tax (excluding significant items).
The Company is reporting a statutory net loss of $70 million
following the inclusion of significant items. Significant items
of $295 million after tax includes impairment of the magazine
business intangible assets, the impairment of equity accounted
investees, redundancy and restructure costs and other items.
Impairment of Magazine and other intangible assets
Impairment of Yahoo!7 and other equity accounted
investees
Total impairments
Redundancy and restructure costs
Change in estimate of Television licence fee
Total significant items before tax
Tax benefit
Significant items net of tax
FY13 ($m)
(227.3)
(61.5)
(288.8)
(27.0)
7.4
(308.4)
13.4
(295.0)
Dividend
A final dividend of 6 cents per share (fully franked) has been
declared and will be paid in October 2013. The interim dividend
was paid in April 2013 and takes the total dividend to be paid
by the Company for the 2012-2013 financial year to 12 cents
per share. Continuity of the dividend has been main tained, with
approximately 50 per cent of net profit after tax being returned
to shareholders.
Seven West Media (ABN 91 053 480 845)
5
Total Group Costs
($bn)
1.6
1.4
1.2
1.0
FY11
FY12
FY13
Advertising Market and Revenue
Performance
Our businesses have been operating in subdued conditions over
the past year, with the group’s strong margins being delivered
in a tough and challenging advertising market, which declined
1.7 per cent in total compared to the previous financial year. The
metropolitan television advertising market declined 2.2 per cent,
the newspaper advertising market declined 19.6 per cent and
the magazine advertising market declined 19.8 per cent on the
2011-2012 financial year. There have been some improvements in
market revenue trends in the second half particularly in television
where our market share improved consistently over the year to
40.5 per cent (January to June 2013).
Cost Management
Seven West Media has introduced a phased cost reduction and
revenue improvement programme which delivered an aggregate
of $71 million in improvements in the 2012-2013 financial year.
As a result of this continued focus on cost reduction initiatives,
total group costs are down 1.6 per cent year on year. The first
phase of the cost programme is complete, and exceeded
the targets set as some benefits were delivered earlier than
anticipated. The additional benefits from the next phase of
the programme are anticipated to be delivered in the 2014
financial year. Despite continuing investments in the Company’s
businesses, Seven West Media believes its group cost base in
2013-2014 will be similar in absolute terms to the current financial
year.
Operating Margins
Despite difficulties in the overall advertising market, Seven West
Media delivered an overall EBITDA margin of 25.5 per cent (27.3
per cent in prior year) reflecting the strong performance of the
Company’s management team.
The Company’s key businesses continue to maintain strong
margins with television delivering an EBITDA margin of 25.2 per
cent, newspapers delivering an EBITDA margin of 35.4 per cent
NET PROFIT
EXCLUDING
SIGNIFICANT ITEMS
$225m
6
Seven West Media
TV EBITDA Margin
Newspapers EBITDA Margin
Magazines EBITDA Margin
40%
30%
20%
10%
0%
40%
30%
20%
10%
0%
20%
15%
10%
5%
0%
FY10
FY11
FY12
FY13
FY10
FY11
FY12
FY13
FY10
FY11
FY12
FY13
All EBITDA margins percentages exclude the impact of significant items.
and magazines delivering an EBITDA margin of 14.2 per cent.
remaining, repayable in October 2015 and 2016.
Balance Sheet
Seven West Media has net assets of $2,864 million which
includes $1,241 million in net debt.
On 16 July 2012, the Company announced an underwritten
pro rata one for two accelerated entitlement offer to raise
approximately $440 million. This offer was successfully
completed on 17 August 2012. The proceeds from the equity
raising were used to pay down debt, strengthening the
Company’s balance sheet.
At the formation of Seven West Media two years ago, the
Company’s net debt was approximately $2.1 billion. By 30 June
2012, net debt reduced to $1.85 billion. A successful $440 million
($432 million net of costs) capital raising together with $182
million of net operational cash flows (net of dividends paid) has
reduced net debt by $614.0 million over the past twelve months.
Net debt now stands at $1.24 billion, with the group’s debt
leverage ratio at 2.6x EBITDA. There are two tranches of debt
Review of Businesses
The Company has delivered a strong performance in a
challenging market, demonstrated by healthy EBITDA margins
reported for the year, which were underpinned by reducing
costs while maintaining the quality of our content and enhancing
our distribution platforms. 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 business.
A review of each of the businesses is outlined on the following
pages.
EBIT
NET ASSETS
$422m
$2.864b
Seven West Media (ABN 91 053 480 845)
7
8
Seven West Media
Seven West Media (ABN 91 053 480 845) 9BROADCAST TELEVISIONBroadcast television is our primary focus. It will continue to be the cornerstone of our development as a broad-based media company. Television
Revenue
Advertising
Other
Costs
Revenue variable costs
Depreciation and amortisation
Other costs
EBIT
FY13 ($m)
FY12 ($m)
Change (%)
1,124.7
143.1
1,267.8
83.9
29.2
864.3
977.4
290.4
1,136.1
126.3
1,262.4
82.8
30.7
848.1
961.6
300.8
-1.0%
13.3%
0.4%
1.2%
-4.7%
1.9%
1.7%
-3.5%
Financial Performance
We will continue to build on our acknowledged strengths in the
creation and production of Australian television. This is Seven’s
seventh consecutive year of market leadership in primetime and
builds on Seven’s success in the 2012 television season.
Seven delivered EBITDA of $320 million and EBIT of $290 million,
down 3.6 per cent and 3.5 per cent respectively on the prior year.
This result was delivered on revenue of $1,268 million, up 0.4 per
cent on prior year.
EBITDA margin is 25.2 per cent and EBIT margin is 22.9 per cent
versus prior year margins of 26.3 per cent and 23.8 per cent
respectively.
Seven secured a market-leading 40.4 per cent share of the
television advertising market across the 2013 financial year
– the highest revenue share ever reported by a network not
broadcasting an Olympic Games in an Olympic Games year
– and a record for Seven.
Seven’s overall cost growth of 1.7 per cent reflects the continuing
significant investment in Australian programming that underpins
Seven’s audience delivery in television including the first full year
of the new Australian Football League agreement. These results
also demonstrate the delivery of the cost initiatives in a way that
maintains the strength of our brands and quality of the product
we deliver to advertisers and viewers.
Leadership in Australian Television
Seven is Australia’s most-watched television network in 2013.
Seven is number one on primary channels and the combined
audiences of additional digital channels across primetime. Seven
is the most-watched primary channel for total viewers in the
current television year and our suite of additional channels delivers
more viewers than anyone else. 7TWO is the most-watched
additional channel for total viewers and 7mate is the most-
watched additional channel in its men 16-54 target audience in
the current television year.
Building on this performance and in a competitive television
landscape in 2013, Seven has won more weeks and more
primetime nights than any other network and dominates the
‘most-watched series’ on television.
Underpinning our success is our depth in Australian
programming, with My Kitchen Rules and The X Factor
dominating primetime and the successful launch of two new
major franchises for Seven: House Rules and the Australian
drama series, A Place To Call Home.
Sunrise continues to dominate breakfast television in its tenth
consecutive year of leadership and The Morning Show is now in
its seventh year of leadership in morning television.
We have the programming architecture in place in our primetime.
We have continuing momentum. We are well-placed to deliver
a competitive performance across the coming twelve months.
Planning for the 2014 television year is well-advanced with a
number of new Australian series in development.
40.4%
Seven secured a market-leading 40.4
per cent* share of the commercial
television advertising market across
the 2013 financial year
*Source: Free TV
10
Seven West Media
Future Development
Broadcast television and the creation and development of Australian content will
play a key role in the future of the Company. Television will continue to be the
primary form of mass communication.
We are well advanced in the development of our presence
in Hybrid Broadcast Broadband Television – a new system
that combines the power of broadcast television with the
internet. This will allow us to not only deliver our television
content to mass audiences but also to scale that content and
engage with our audiences one-on-one. Our objective is to
create more content that Australians want to see and want to
engage with and we will distribute that content wherever it is
the most profitable.
Seven is currently trialling live streaming of our channels on
mobile devices. We are advanced in testing Hybrid Broadcast
Broadband Television for launch in 2014. As the audience
changes the way it consumes content we aim to be there
waiting for them. We can take advantage of that delivery
being targeted to the individual, greatly expanding the offering
we can put before our advertising partners. We will have the
option of pursuing revenue in a pay per view model or the
potential to establish subscription based premium services
over the internet, building on our strengths in the creation of
Australian content.
Our primary focus is the creation of our own programmes as
we redefine the operating model for broadcast television to
become leaner and more agile without ever compromising the
quality of our content or the pursuit of audience leadership.
We will be fuelling new growth in a digital world, building
businesses leveraging our skills in content creation and
strengths in marketing and building brands.
Our additional channels and digital assets are forming
an ecosystem that supports a strategy where broadcast
television and our content are at the heart of our effort to
expand and commercialise our content across new platforms.
The way audiences engage with consumer content is
changing but television will continue to be the best way to
engage with mass audiences and will underpin our plans to
further connect with our audiences through smart phones,
laptops or tablets, consoles, boxes and new smart televisions
that will allow us to have 1:1 conversations with them. We
will soon offer catch up, forward, on demand viewing, even
targeted advertising with the arrival of Hybrid Broadcast
Broadband Television or HbbTV.
Our operating model will become much leaner to withstand
the cyclical and structural challenges that come our way
and provide us with the agility to do new and great things
for our audiences. Our objective is to create more options to
deliver our content across new platforms and in new ways.
Broadcast television is not the centre of the business, not the
focus of the business but the heart of the business. In the
future we will be taking our content even further: available
anywhere and on any device and at any time.
Television was once just the one channel for Seven. Now we
have the three digital channels and delivery of more content
on demand through the PLUS 7 catch-up channel and
through Yahoo!7 the chance to interact with all that content.
PLUS 7 is now available on most mobile devices.
Seven West Media (ABN 91 053 480 845) 11
NEWSPAPER
PUBLISHING
The West Australian has world-class
operating margins and now in its
181st year of publishing, The West
Australian is an important part of the
lives of all West Australians.
12
Seven West Media
Seven West Media (ABN 91 053 480 845) 13
Newspapers
Revenue
Advertising
Circulation
Other
Costs
Depreciation and amortisation
Other costs
EBIT
Financial Performance
Besides its market-leading margins, the WAN group has
effectively restructured its operations and costs over the past
year and consolidated its circulation in what is undeniably a
challenging market for newspapers.
The West Australian and regional newspapers delivered EBITDA
of $107.5 million and EBIT of $86.6 million.
This performance was delivered on revenues of $303.1 million,
down 13.0 per cent on the prior year, reflecting the soft
advertising market.
EBITDA margin is 35.4 per cent and EBIT margin is 28.6 per cent.
The West’s strong performance relative to other newspaper
companies confirms the paper’s disciplined approach to
cost management and its focus on the delivery of a product
consumers seek and trust.
FY13 ($m)
FY12 ($m)
Change (%)
222.4
68.2
12.5
303.1
20.9
195.6
216.5
86.6
264.8
68.0
15.6
348.4
21.0
211.2
232.2
116.2
-16.0%
0.3%
-19.9%
-13.0%
-0.5%
-7.4%
-6.8%
-25.5%
The West’s audited circulation is Monday-Friday 178,385 and
Saturday 290,536 (ABC audit three months ended 30 June 2013)
and average readership is Monday-Friday 641,000 and Saturday
692,000 (emmaTM conducted by Ipsos MediaCT, People 14+ for the
12 months ending June 2013, Nielsen Online Ratings June 2013,
People 14+ only) – maintaining its position as one of the strongest
performing newspapers in the country. In print over 1.3 million people
will read The West Australian across the week, and more than two
million people will access the publication either in print or online via
website, tablet and mobile. (Source: emmaTM conducted by Ipsos
MediaCT for the 12 months ending June 2013).
Newspaper advertising revenue is down 16 per cent on the
corresponding year due to softness in the overall advertising
market and challenges confronting publishers, which have been
widely documented. Circulation revenue of $68.2 million grew
0.3 per cent compared to the prior year.
The Group continues to manage its newspaper business in this
challenging environment achieving total cost savings of 6.8 per
cent (a reduction of 7.4 per cent excluding depreciation and
amortisation costs) over the past twelve months helping to offset
the decline in advertising revenues. This was before significant
items which included restructuring and redundancy costs relating
to The West Australian Newspapers business. These restructuring
costs will improve the future cost base.
The Future for The West
The development of The West Australian’s digital presence is a primary focus.
It has successfully launched a number of new websites
complementing the printed product and offering clients another
advertising medium. These new sites, WestRealestate.com.au
and WestAnnouncements.com.au, have performed strongly.
The objective is to manage and protect The West, preserving
print economics while seeking and identifying new
opportunities to utilise existing assets to create or secure scale
in the digital space and develop new products to compensate
for revenue declines within the existing publishing base.
The new circulation and distribution system being implemented
will create significant and far reaching benefits for the business,
both on the print side and as The West builds its digital presence.
Within The West’s editorial department, a new content
management system will allow cost-effective publishing to
multiple platforms in an automated fashion – that is, publish
once on many platforms. People want both print and digital
and they will be given that choice, recognising opportunities
for the ongoing development of the capacity to engage with
audiences beyond print.
The West has developed new products and new revenue
streams that complement the existing publishing base,
which have driven a number of new initiatives including
the development of the events side of the business across
investment seminars, home, lifestyle, health and travel expos to
add to our already successful Leadership Events programme.
One new development is The West’s “Point & Pay” system
taking advantage of consumer use of companion experiences
whilst reading papers.
14
14
Seven West Media
Seven West Media
March 30-31, 2013
CALLING FREO HOME
PACIFIC JEWEL TO CRUISE
FROM OUR PORT CITY
BONNIE BORDERS TOWN
WHY A VISIT TO PEEBLES
IS SUCH A PLEASURE
PACKAGES & UPDATES
NEWS, TOURS AND CRUISES
THAT COVER THE GLOBE
Looking for the
BALI
of old
... and just where
do we find it?
INSIDE JOB
Kitchen tips
from the MKR
contestants. P4-7
DIRTY KITTY
Cheeky Scotsman
opens new bar. P14
GUEST CHEF
Karen Martini gets
grilled. P16
THE WEST AUSTRALIAN WEST MATE
THE WEST AUSTRALIAN FRESH • THURSDAY,APRIL11,2013
FRESH
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5 MINUTES
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Market Leadership
The West Australian drives the news agenda and reflects and
shapes public opinion in Western Australia.
The Company’s leadership is underpinned by investment
in editorial and a commitment to reflect the lives of all West
Australians. The West Australian is the highest selling, best-read
print medium in Western Australia and also delivers the most-read
news site: thewest.com.au.
Beyond The West Australian, the Company also publishes
Western Australia’s strongest portfolio of regional newspapers
– with 23 titles.
The West’s Steve Pennells was awarded the Gold Walkley,
Australia’s most prestigious journalism award. He also received
Walkleys for best scoop of the year and social equity journalism
for his coverage of an asylum seeker boat tragedy and for Gina
Rinehart’s feud with her children. Pennells has previously won
Walkley Awards in 2006 and 2009.
The West is more closely aligning with Seven News in Perth,
working together with Seven to create content across television,
newspapers, magazines and online, and in marketing and cross
promotion that builds audiences and readership across each of
Seven West Media’s platforms across Western Australia.
In the 2012-2013 financial year, the West Australian Newspapers
group provided approximately $2.2 million in advertising
sponsorship to over 100 organisations. The recipients of this
support included business, arts, charitable and sporting bodies,
with which The West Australian has had longstanding relationships.
The West is working
with Seven to create
content across
television, newspapers,
magazines and online.
The West is morphing into a live transactional newspaper
allowing readers to buy products instantly by scanning the
page with their smart phone. The West’s “Point & Pay” was
recognised at this year’s international newspaper publisher
awards, with the INMA prize in the category of Best Marketing
Solutions for Advertising Clients, defeating competition from
many of the world’s biggest publishing companies, including
The New York Times.
These developments are being undertaken while focusing on
the core business, The West. Continued strength of the print
edition of The West Australian is fundamental. While The West’s
disciplined approach to cost management continues to deliver
efficient management of operations and expenses, further
efficiencies are being driven without impacting the content and
quality of the newspaper.
Seven West Media (ABN 91 053 480 845) 15
Seven West Media (ABN 91 053 480 845) 15
16 Seven West Media
Seven West Media (ABN 91 053 480 845) 17Our magazines publishing business, Pacific Magazines, out-performs the overall magazine market, building overall readership and the largest circulation share increase of any magazine publishing company over the past twelve months.MAGAZINESPUBLISHING Seven West Media 18Source: Readership – Roy Morgan Single Source Australia, June 2013 (except the 6.9 million monthly reach figure is based on March 2013 period). Circulation – ABC, June 2013.Financial PerformanceRecent circulation figures confirm Pacific Magazines’ leadership in Australian consumer magazine publishing, as the Company increased circulation and readership share in seven of the eleven categories in which it publishes: women’s weeklies, home and gardening, women’s lifestyle, fashion, teen, parenting, airline and entertaining.Pacific Magazines, has delivered a positive performance in a challenging market – with EBITDA of $36 million and EBIT of $29 million. This was on revenue of $256 million. EBITDA margin is 14.2 per cent (2012: 17.0 per cent) and EBIT margin is 11.4 per cent (2012: 13.9 per cent).Revenue in the magazines division was impacted by weakness in the advertising market with advertising revenue of $78 million down 20.7 per cent, although circulation revenue remains relatively robust, with only a 5.3 per cent decline year on year. Costs are down 8.3 per cent to $226.9 million reflecting savings in almost all operating areas of the business.Due to the sustained weakness in the magazine advertising market an impairment charge of $221 million was recorded in the financial year against the carrying value of magazines’ goodwill, mastheads and licences.Leadership in PublishingPacific Magazines publishes two of the three biggest-selling weekly magazines and three of the top five highest-selling magazines in Australia. Pacific publishes many of the biggest brands in magazines in Australia: New Idea, Better Homes and Gardens, that’s life!, marie claire, InStyle, Men’s Health, Women’s Health, Who and Girlfriend. Pacific Magazines accounts for 33 per cent of magazines and 49 per cent of women’s weekly magazines sold in Australia and our portfolio now reaches 6.9 million Australians aged 14+ every month. We sell approximately one million magazines every week.Pacific Magazines leads a number of key publishing categories, including Better Homes and Gardens in the homes and lifestyle category, that’s life! in the real life category, Who in the celebrity weekly category, marie claire in the fashion category, Men’s Health in the men’s monthly lifestyle category, Practical Parenting in the parenting category, Bride To Be in the bridal category and K-Zone and Total Girl in the tween category.FY13 ($m)FY12 ($m)Change (%)Revenue Circulation168.3177.7-5.3%Advertising 77.597.7-20.7%Other 10.411.8-11.8%256.2287.2-10.8%Costs Depreciation and amortisation7.08.9-20.5%Other costs 219.9238.5-7.8%226.9247.4-8.3%EBIT29.339.8-26.6%Magazines The Future of Magazines
Every year Australians consume and pay for more than 200 million magazines, and
we continue to rank amongst the highest consumers of magazines in the world.
The majority of our revenues come from circulation and not from advertising,
with the major portion of our circulation revenue coming from retail sales and not
subscriptions.
Our objective is to build revenues that are new and
additional to our existing advertising and circulation
revenues across multiple channels - including retail, direct,
digital, and mobile.
To achieve this, our strategy is to transform the business
and set in place a platform that can compete and thrive
in the new media environment. This strategy is not about
transitioning our business from print to digital. It is to
immerse our brands around the interests of our audiences in
order to create new revenue opportunities while maximising
the profits of our existing core business.
These factors are driving the future development of our
magazines business.
Our drive to digital editions allows us to take advantage of
new channels for the delivery of our content, connect with
audiences who may not buy the print edition of a magazine
and create new opportunities to build revenues.
Our magazines are big, powerful, highly-engaged and market-
leading brands. We have been Australia’s best performing
magazine publisher over the past seven years. The Company
focuses on strong customer understanding, product
leadership and operational efficiency, delivering a portfolio of
titles acknowledged as one of the best in the world.
Building on these strengths, our objective is to build our
magazine audiences through print, digital, social media,
events and other media. Our focus has been to create
magazines for key categories of interests, establishing within
those categories, our brands as market leaders and always
with an emphasis on print. This strategy has served us well
and our new strategy builds and takes us to the next stage.
The Company’s flagship title, New Idea, is one of the top two
most widely-read weekly magazines in Australia and over the past
twelve months has secured the largest increase in readership
of any magazine. Better Homes and Gardens is the country’s
leading integrated media brand across television, publishing,
online and events, and is one of the top two most-read
magazines in Australia.
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 and Toyota. Pacific+ has
expanded its presence in publishing with Feast, a co-venture with
SBS, and a cookbook spin-off from Seven’s My Kitchen Rules.
Feast continues to deliver a strong performance in a competitive
category, up in readership over the past twelve months.
Our success in publishing is built on our brands and our content.
We lead in circulation and readership in key publishing categories
and we are committed to continuing growth and increasing
market presence as we leverage our strengths in publishing
across multi-media platforms and services that touch the lives
of all Australians.
Pacific Magazines
leads in key publishing
categories and is
building its brands
and content across
multi-media platforms
beyond magazines
Seven West Media (ABN 91 053 480 845) 19
DIGITAL AND OTHER
MEDIA ASSETS
We are recognised as a leader in the creation of content.
Our objective is to build on our strengths in television and
publishing to create new digital platforms that engage our
audiences and build our revenues.
Yahoo!7 brings together the online assets of Yahoo! Inc including
search and communications capabilities, a global internet network
and the content creation and marketing strengths of Seven West
Media. Engagement is strong with over 8 million Australians
visiting Yahoo!7 each month. There were more than 90 million
video streams over the year, and 3 million streamed episodes per
month of Seven content on the PLUS 7 service.
Financial Performance
Digital and other businesses contributed $15.7 million of EBIT
down from $16.6 million in the prior year. The decline related to
the performance of Quokka, Community Newspaper Group and
Yahoo!7 businesses. Impairment charges for Quokka and Yahoo!7
have been recorded in the year and included in significant items.
Performance
Our creation of programming and content that Australians want
to watch, read or engage with 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 also have in place 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.
Digital television, online and new communications technologies
are changing the way all of us engage with content. Quite clearly,
our strategies for development focus on extending our leadership
in content creation and distribution to new delivery platforms and
our future distribution centres on multi-channelling on broadcast
20
Seven West Media
Future Development
Our greatest assets are our brands,
our delivery platforms and our ability
to reach our audience: mass and the
individual. Our greatest strength is
our content. Our future will be built on
digital and our leadership as Australia’s
biggest audience company. While
focusing on our market-leading media
businesses, we will be driving new
growth in a digital world, building
businesses that fuel more audience and
entrench leadership in new categories.
Our digital channels and digital assets form an ecosystem
that supports a strategy where the primary channels remain
the television screen, our market-leading magazines and
The West Australian.
We are building from these strengths to deliver content
across new platforms like Hybrid Broadcast Broadband
Television, video on demand, streaming and new services.
Our plans in digital also focus on a framework to fuel new
growth and invest in and develop businesses that help and
engage our audiences beyond our primary channels and
allow us to take leadership positions in new sectors.
Our first investment as part of this strategy is into e-health,
with HealthEngine, in partnership with Telstra. HealthEngine
is Australia’s leading online consumer health marketplace.
We plan to work closely together with Telstra to build
HealthEngine into Australia’s biggest patient and
practitioner marketplace. HealthEngine already sees
450,000 unique visitors every month and continues to sign
health practitioners nationally making it the leader in the
health appointments space. This platform has the potential
to become the default booking service for anyone wanting
to visit a doctor, dentist and therapist and allows entry into
telehealth and pharmasales and invaluable data as we help
our audiences seek the medical help they need.
Seven West Media (ABN 91 053 480 845) 21
television and broadening our connection with Australians through
evolving communications platforms and delivery mechanisms.
Online 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,
information and sports programming.
Yahoo!7 is also developing a number of market leading mobile
experiences including the Seven News app and companion
experience FANGO. FANGO is a free television check-in app
for iPhone, iPad and Android that provides a way for television
viewers to connect with and participate in television programmes.
FANGO allows viewers to check-in to their favourite primetime
programmes on broadcast television, allows viewers’ friends to
know what they are watching, allows users to chat about shows
and also see what other people are saying about their favourite
programmes. FANGO also includes programme-related trivia
and polls and has the functionality to allow users to customise
their FANGO experience to include Twitter and Facebook while a
programme is being broadcast.
The companion television experience Seven and Yahoo!7 is
offering with FANGO and its success confirms the increasing
influence of social media with Seven planning an increasing focus
on the introduction of more interactive and social elements into its
broadcast television programming.
STRATEGIC
DEVELOPMENT
In May, Seven West Media detailed the implementation of a five
year business plan to drive the Company’s development. This
business plan recognises that we are an audience company,
delivering our content to those audiences across an array of
platforms. It is a plan that recognises our record in the creation
of content across broadcast television, publishing and new
digital platforms.
The framework we put in place is based on 3 fundamental
principles:
(cid:116)(cid:1) Audience is critical and we must maintain leadership in all our
current businesses. We will do this where possible through
content we own or control.
(cid:116)(cid:1) Redefining the operating model so we can be leaner and
more agile but importantly without ever compromising
the first principle of audience leadership or the quality of
our content.
(cid:116)(cid:1)
Fuelling new growth in a digital world, building businesses
that use the promotional power of our media assets and
the audience and readership they attract, and entrench
leadership in new categories.
We have made good progress on each of these elements:
in Western Australia, and is delivering strong operating margins,
and our online and magazine businesses are among the top
domestic players in their respective categories.
Redefine the operating model – We continue to redefine our
operating model to best position our businesses to maintain
and enhance their value for audiences and advertisers. We have
implemented the cost programmes we outlined earlier this year,
which can be seen in the current year financials and underpin
our cost base for FY14. We have completed a review of all
procurement agreements across the group and implemented best
practice expense policies. In addition, work has commenced in
identifying the next phase of the programme which will further
enhance our performance in FY14 and into future years.
Fuel new growth – The third element of our strategy is to
fuel new growth for our business through broader utilisation of
our content, commercialising our audience and making small
investments into adjacent verticals. In May, we announced our
first adjacent vertical investment in HealthEngine – Australia’s
leading health appointments marketplace – which we have
since completed with Telstra. Our review of other suitable
adjacent vertical opportunities that offer incremental revenue
potential is ongoing.
Maintain Leadership – we are the leading TV network by
revenue and audience share and the largest commercial producer
of Australian television content. Our newspaper continues to lead
Across all three of these strategies we are putting digital
delivery and engagement with our audiences at the core of our
thinking, not something on the side. Our additional channels
22
Seven West Media
and digital assets form an ecosystem that supports a strategy of
strengthening our broadcast television network, and magazines
and newspaper publishing.
This strategic framework is designed to address the key risks to
our business:
(cid:116)(cid:1) Approximately 80 per cent of group revenue sourced from
advertising which is subject to cyclical and/or structural
impacts and ratings performance
(cid:116)(cid:1) Decline in circulation revenues due to increasing changes in
the consumption of media
(cid:116)(cid:1) Management of a largely fixed cost base for the television
business
(cid:116)(cid:1) Other changes to technology which may impact our
audience share
Performance Objectives
Our objective over the coming twelve months is to strengthen
our financial performance in a challenging advertising market.
We will continue to invest in our creative content and drive home
the leadership of our media businesses. We are focused on
developing our management and our people.
We are also deeply focused on cost management and developing
greater synergies across our businesses as we manage difficult
trading conditions and put in place the plans for the further
development of Seven West Media Limited. The Company also
intends to bring together technology, IT and technical services to
systematically transition to digital workflows, asset management
and new cloud solutions.
We recognise we need to be much leaner in the new world.
The change we have been driving internally is substantial and
based on a blueprint for the operating model for the future; with
a focus on people and performance, in particular remuneration,
performance management and cultural change.
The third pillar of our strategic framework is to fuel new growth
through the development of our presence in new digital delivery
technologies. Broadcast television, magazines and newspapers
are our core strengths and through the internet, through mobiles,
laptops or tablets, consoles, boxes or even through new smart
televisions allow us to have 1:1 conversations with our audiences.
We are planning to offer catch up, forward, on demand viewing,
even targeted advertising with the arrival of Hbb TV. Barriers to
entry are reducing every day and we plan to drive further access
to our magazine and newspaper content by launching and
promoting electronic versions.
Seven West Media (ABN 91 053 480 845) 23
BOARD OF DIRECTORS
Kerry Stokes AC
Chairman – Non-executive Director
Don Voelte AO
Non-executive Deputy Chairman
Mr Stokes is the Executive Chairman
of Seven Group Holdings Limited, a
company with a market-leading presence
in media in Australia and the resources
services sector in Australia and China. Mr
Stokes has held this position since April
2010. He is also Chairman of Australian
Capital Equity Pty Limited, which
has significant interests in media and
entertainment, as well as property and
industrial activities.
Mr Stokes’ many board memberships
include Council Member for the Paley
Group (formerly the International Council
for Museum & Television); Council Member
for the Australian War Memorial; and a
former Chairman of the National Gallery
of Australia. Mr Stokes holds professional
recognitions which include an Honorary
Doctorate in Commerce at Edith Cowan
University and an Honorary Fellow of
Murdoch University.
Mr Stokes has, throughout his career,
been the recipient of many awards,
including Life Membership of the Returned
Services League of Australia; 1994
Paul Harris Rotary Fellow Award; 1994
Citizen of Western Australia for Industry &
Commerce; 2002 Gold Medal award from
the AIDC for Western Australian Director
of the Year; 2007 Fiona Stanley Award for
outstanding contribution to Child Health
Research; 2009 Richard Pratt Business
Arts Leadership Award from the Australian
Business Arts Foundation; and 2011
Charles Court Inspiring Leadership Award.
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).
Mr Stokes was appointed to the Board on
25 September 2008.
Mr Voelte was appointed Deputy
Chairman of the Board with effect from 1
July 2013 and is also Chairman of Nexus
Energy.
Mr Voelte held the position of Managing
Director & Chief Executive Officer of Seven
West Media Limited from 26 June 2012
to 30 June 2013. Mr Voelte has been a
Director of Seven West Media Limited,
and prior to the formation of Seven
West Media Limited, West Australian
Newspapers Holdings Limited since
December 2008.
Mr Voelte is currently the Managing
Director & Chief Executive Officer of Seven
Group Holdings Limited, a position he
has held since 1 July 2013. He is also
Chairman of Coates Group Holdings Pty
Limited.
Mr Voelte 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 & Metrology Research
Centre for Mr Voelte and his wife Nancy.
He has a degree in Civil Engineering, from
the University of Nebraska.
Mr Voelte was awarded the Officer of
the Order of Australia (AO) in 2012, for
service to the Australian LNG industry and
contribution to education and the arts in
Perth.
Mr Voelte was appointed to the Board on
11 December 2008.
24
Seven West Media
BOARD OF DIRECTORS
John Alexander
Non-executive Director
Mr Alexander was the Executive Chairman
of Consolidated Media Holdings Limited
(CMH) from 2007 to November 2012,
when CMH was acquired by News
Corporation. Prior to 2007, Mr Alexander
was the Chief Executive Officer and
Managing Director of Publishing and
Broadcasting Limited (PBL) from 2004,
the Chief Executive of ACP Magazines
Limited from 1999 and PBL’s group media
division comprising ACP Magazines
Limited and the Nine Network from
2002. Before joining the PBL Group,
Mr Alexander was the Editor-in-Chief,
Publisher & Editor of The Sydney Morning
Herald and Editor-in-Chief of The
Australian Financial Review.
Mr Alexander has previously acted as a
Director of a number of media companies
including Foxtel Management Pty Limited,
Fox Sports Australia Pty Limited, SEEK
Limited, Carsales.com Limited and
Ninemsn Pty Limited. Mr Alexander has
been the Executive Deputy Chairman
of listed company Crown Limited since
December 2007.
Mr Alexander was appointed to the Board
on 2 May 2013.
Dr Michelle Deaker
Non-executive Director
Dr Michelle Deaker is the Managing
Partner of OneVentures, an Australian
venture capital firm recognised for
its leadership and focus on business
operational and entrepreneurial
experience. The firm’s interest is in
technology companies that serve or
disrupt large high growth global markets.
OneVentures manages a $40 million
Innovation Investment Fund and two co-
investment funds.
Dr Deaker has extensive experience in the
development of high growth technology
companies, a strong background
in Australian R&D and expertise in
international business expansion.
Dr Deaker established OneVentures in
2006, coming into the venture capital
industry as a successful IT industry
business owner and entrepreneur. The
company she founded in 1999, E Com
Industries (giftvouchers.com), became
the leading prepaid card and electronic
voucher provider in Australia, servicing
over 100 major retail brands including
Coles Myer and Woolworths, managing
$700m in Australian retail liability and
eventually expanding operations into the
UK, South Africa and New Zealand. E
Com was acquired by UK publicly listed
company, Retail Decisions, in 2005.
Dr Deaker serves on the Board of
NICTA, Australia’s National ICT Centre
of Excellence. Dr Deaker is also a
Non-Executive Director of OneVentures
Innovation Fund portfolio companies,
Smart Sparrow (educational technology)
and Incoming Media (mobile technology),
is a member of the AVCAL Venture
Capital working group and the NSW
Government’s Taskforce for the Digital
Economy.
Dr Deaker has over 10 years’ experience
in research and development with leading
Australian Universities and CSIRO. She
holds a Bachelor of Science (First Class
Honours) (University of Sydney), and
with both Commonwealth and CSIRO
Postgraduate Research Scholarships,
was awarded a Master’s of Science
(University of Sydney) and a PhD in
Applied Science (University of Canberra).
While completing her PhD, Dr Deaker
was the vice-chancellor’s nominee and
subsequently selected as a Queens Trust
Future Perspectives national leader. Dr
Deaker is also a member of the board of
Ravenswood School for Girls.
Dr Deaker was appointed to the Board on
21 August 2012.
David Evans
Non-executive Director
Mr Evans is the Executive Chairman of
Evans and Partners Pty Limited having
established the investment advisory
company in June 2007.
Mr Evans has spent his working life in
the world of investment banking and
stockbroking. Since 1990, he has worked
in a variety of roles within JB Were & Son,
and then the merged entity Goldman
Sachs JBWere Pty Limited. Prior to
establishing Evans and Partners Mr Evans
ran Goldman Sachs JBWere’s Private
Wealth business and the Institutional
Equities business. His most recent role at
GSJBW was as Managing Director and
Chief of Staff.
Mr Evans has lived in Melbourne all his life,
and finished his formal education in 1988
at Monash University. He is a Director
of the Export Finance and Insurance
Corporation (EFIC), The Shane Warne
Foundation, and the Melbourne Stars. Mr
Evans is also a member of the Victorian
Police Corporate Advisory Group and the
State Library of Victoria.
Mr Evans was appointed to the Board on
21 August 2012.
Doug Flynn
Non-executive Director
Mr Flynn 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. Mr Flynn
has been a Director and Chairman of
the Board of Konekt Limited since July
2012. Konekt Limited is the largest private
sector provider of workplace health and
risk management solutions.
Mr Flynn is a former Director of Qin Jia
Yuan Media Services Ltd, the leading
private television company in China.
Mr Flynn was appointed to the Board on
6 August 2008.
Seven West Media (ABN 91 053 480 845) 25
BOARD OF DIRECTORS (continued)
Peter Gammell
Non-executive Director
Mr John was appointed to the Board
on 3 December 2008.
Mr Gammell was the Deputy Chairman of
Australian Capital Equity Pty Limited, the
investment holding company associated
with Mr Kerry Stokes AC, and was on the
Board of Seven Group Holdings Limited
from February 2010 until 28 June 2013
and was Managing Director and Group
Chief Executive Officer from April 2010
until 28 June 2013.
Prior to the formation of Seven West Media
Limited, Mr Gammell served as a Director
of Seven Network Limited for 14 years.
He was Chairman of the Seven Network
Limited Finance Committee and was a
member of the Audit Committee. He was
the Chairman of Coates Hire, Australia’s
largest equipment hire company.
Mr Gammell is a former Director of
Federal Capital Press Pty Limited, the
publisher of the Canberra Times (1989
to 1998) and is a former Director of the
Community Newspaper Group (1996 to
1998). Between 10 September 2009 and
19 November 2012, Mr Gammell was a
Director of Consolidated Media Holdings
Limited.
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 Gammell was appointed to the Board
on 25 September 2008.
Graeme John AO
Non-executive Director
Mr John 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 Racing Victoria and
has been a Director of Aurizon Holdings
Limited since September 2010.
Mr John’s former positions include AFL
Commissioner, Trustee of the Melbourne
Cricket Ground, 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.
26
Seven West Media
Justin Reizes
Non-executive Director
Justin Reizes 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 Asia, he
has been actively involved in developing
KKR’s Asian operations. He is currently on
the Board of Directors of BIS Industries
and Genesis Care Pty Limited 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.
Mr Reizes was appointed to the Board on
19 April 2011 and will remain a Director
until the Company’s 2013 Annual General
Meeting.
Ryan Stokes
Non-executive Director
Mr Ryan Stokes is Chief Executive Officer
of Australian Capital Equity Pty Limited
(ACE) and Chief Operating Officer of
Seven Group Holdings Limited. Mr Stokes
was appointed an Executive Director of
ACE in 2001 and CEO in April 2010. ACE
is a private company with it’s primary
investment being an interest in Seven
Group Holdings (SGH). He has been
an Executive Director of Seven Group
Holdings Limited since February 2010,
and was appointed Chief Operating
Officer in 2012.
Mr Stokes is also a Director of Iron Ore
Holdings Limited (IOH) and WesTrac Pty
Limited and has extensive experience in
China, having developed relationships
with various mining and media companies
over the past 13 years. Mr Stokes was
Executive Director then Chairman of
Pacific Magazines from 2004 until 2008
and previously a Director of Yahoo!7 from
inception in 2006 until 2013.
Between 10 September 2009 and
19 November 2012, Mr Stokes was
a Director of Consolidated Media
Holdings Limited. Chairman of SGH
Communications Pty Limited (formerly
Engin Limited, which was delisted on 8
August 2011); appointed a Director on 31
October 2006.
Mr Stokes is Chairman of the National
Library of Australia, a position he has held
since July 2012 and is a Director of the
Australian Strategic Policy Institute.
Mr Stokes is the former Chair of
Australia’s National Youth Mental Health
Foundation (Headspace), a Federal
Government initiative established in 2006.
Mr Stokes was also a former member of
the International Olympic Committee’s
Radio and Television Commission.
Mr Stokes holds a BComm from Curtin
University and is a Fellow of the Australian
Institute of Management (FAIM).
Mr Stokes was appointed to the Board on
21 August 2012.
Warren Coatsworth
Company Secretary
Mr Coatsworth has been Company
Secretary since 24 April 2013.
Solicitor holding a current practising
certificate with degrees in Arts and Law
(Hons) from the University of Sydney.
Company Secretary of Seven Group
Holdings Limited since April 2010.
Company Secretary of Seven Network
Limited since July 2005. Legal Counsel
with Seven Network Limited for the past
thirteen years, advising broadly across
the Company, and formerly a solicitor
at Clayton Utz. He has completed a
Graduate Diploma in Applied Corporate
Governance and is a qualified Chartered
Company Secretary and a Fellow and
member of Chartered Secretaries
Australia.
Michael Ellis
Company Secretary
Mr Ellis has been Company Secretary
since 11 February 2013.
Mr Ellis is General Manager of Finance
of the Company’s operations in WA. He
joined the West Australian Newspaper
Group, the predecessor to Seven West
Media, in February 2010, as Group
Financial Controller. Prior to joining WAN,
he held various management roles within
a Chartered Accounting firm.
Mr Ellis is a Director of the Community
Newspaper Group and a member of the
Institute of Chartered Accountants in
Australia.
Corporate Governance
Statement
FOR THE YEAR ENDED 29 JUNE 2013
This statement outlines the Company’s main corporate governance practices that were in place throughout the financial year,
unless otherwise stated, and its compliance with the ASX Corporate Governance Council Corporate Governance Principles and
Recommendations 2nd Edition (“ASX Recommendations”).
The documents marked with an * below have been posted on the Company’s website at sevenwestmedia.com.au or copies may
be requested from the Company Secretary. Those policies which are not separately available on the Company’s website are
summarised in this statement. A copy of this statement will be made available on the Company’s website.
PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND
OVERSIGHT
The Board Charter
The Board is empowered to manage the business of the Company subject to the Corporations Act and the Company’s
Constitution*. The Board is responsible for the overall corporate governance of the Company and has adopted a Board Charter*
setting out the role and responsibilities of the Board. The Board Charter provides that the Board’s role includes:
(cid:116)(cid:1) charting the direction, strategies and financial objectives of the Company and ensuring appropriate resources are available;
(cid:116)(cid:1) monitoring the implementation of policies and strategies and the achievement of financial objectives;
(cid:116)(cid:1) monitoring compliance with control and accountability systems, regulatory requirements and ethical standards;
(cid:116)(cid:1) ensuring the preparation of accurate financial reports and statements;
(cid:116)(cid:1)
(cid:116)(cid:1)
reporting to shareholders and the investment community on the performance and state of the Company; and
reviewing on a regular and continuing basis:
o executive succession planning (in particular for the Chief Executive Officer); and
o executive development activities.
The Board Charter provides that matters which are specifically reserved for the Board or its Committees include:
(cid:116)(cid:1) appointment and removal of the Chief Executive Officer;
(cid:116)(cid:1) approval of annual budget;
(cid:116)(cid:1) calling of shareholder meetings;
(cid:116)(cid:1) monitoring capital management and approval of major capital expenditures in excess of authority levels delegated to
management; and
(cid:116)(cid:1) approval of the acquisition, establishment, disposal or cessation of any significant business of the Company.
Board Committees
The Board is assisted in carrying out its responsibilities by the Audit & Risk Committee and the Remuneration & Nomination
Committee. These standing Committees were established by the Board to allow detailed consideration of complex issues. Each
Committee has its own written Charter, which is reviewed on an annual basis and is available on the Company website.
Further details regarding the Audit & Risk Committee and the Remuneration & Nomination Committee are set out later in this
Corporate Governance Statement.
Management of the Company
Subject to oversight by the Board and the exercise by the Board of functions which it is required by law to carry out, it is the role of
management to carry out functions that are delegated to management by the Board as it considers appropriate as well as those
functions not specifically reserved to the Board, including those functions and affairs which pertain to the day-to-day management
of the operations and administration of the Company. Management is responsible for implementing the policies and strategic
objectives approved by the Board. Management must supply the Board with information in a form, timeframe and quality that will
enable the Board to discharge its duties effectively.
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
Company has also implemented a Delegated Authority Policy delegating to management authority to carry out expenditure in
relation to specified areas of the Company’s operations, subject to the Company’s policies and procedures in respect of the
authorisation and signing of Company contracts which includes a system of legal review.
The functions exercised by the Board and those delegated to management, as disclosed herein and set out in the Board Charter,
are subject to ongoing review to ensure that the division of functions remains appropriate.
For information about the process for performance evaluation of senior executives, please see the discussion under “Principle 2 –
Structure the Board to Add Value” and the information below of this Annual Report.
Seven West Media (ABN 91 053 480 845) 27
Corporate Governance
Statement
FOR THE YEAR ENDED 29 JUNE 2013
PRINCIPLE 2 – STRUCTURE THE BOARD TO ADD VALUE
Board composition and independence
The Board currently comprises ten Non-executive Directors, including the Chairman and Non-executive Deputy Chairman.
The Board consists of an equal number of independent and non-independent Directors. The Board acknowledges the ASX
Recommendation that a majority of the Board should be independent directors. However the Directors believe that they are able to
objectively analyse the issues before them in the best interests of all shareholders and in accordance with their duties as Directors.
The Board considers that the individual Directors make highly-skilled decisions in the best interests of the Company, despite the
Board not comprising a majority of independent Directors. Nonetheless, the Board continues to search for appropriately qualified
and experienced individuals to join the board as independent Directors. Accordingly, during the year, the composition of the Board
was reviewed by the Board and an additional independent Director, Mr John Alexander, was appointed. The Board had regard for
Mr Alexander’s experience and expertise across all forms of media in making the appointment.
In determining whether a Director is independent, the guidelines contained within Principle 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, Mr Voelte AO, Mr Gammell and Mr Ryan Stokes are not regarded as independent within the framework of the
guidelines because of their positions, or in the case of Mr Gammell, former position, within Seven Group Holdings Limited, which is
a major shareholder of Seven West Media Limited. In Mr Voelte’s case, his former executive position of Managing Director & Chief
Executive Officer within the Company also prevents him from being regarded as independent within the framework. Mr Stokes
AC, Mr Voelte AO, Mr Gammell and Mr Ryan Stokes 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 Act.
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 was a major shareholder of Seven West Media Limited until 27 May
2013, when its shareholding was sold. 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 Act.
Procedures have been put in place to ensure observance of both the letter and the spirit of the law when dealing with issues which
might give rise to a conflict of interest.
The roles of the Chairman and Chief Executive Officer are separate. Mr Kerry Stokes AC is the Chairman of the Company.
The Board acknowledges the ASX Recommendation that the Chairman should be an independent Director, however the Board
firmly believes that Mr Stokes’ experience and skills, particularly with regard to his long term association with the various media
businesses of the Company, 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.
Each Director brings a range of personal and professional experiences and expertise to the Board. The Board seeks to achieve
an appropriate mix of skills and diversity, including a deep understanding of the media industry across multiple channels, as well
as corporate management and operational, safety and financial matters. Directors devote significant time and resources to the
discharge of their duties.
Directors also have the right to seek independent professional advice at the expense of the Company.
Review of the Board, its Committees and individual Directors
As set out in the Board Charter, the Board undertakes an annual performance evaluation of itself that compares the performance of
the Board with the requirements of its Charter and effects any improvements deemed necessary or desirable.
The Chairman closely monitors the performance and actions of the Board and its Committees and meets with individual Board
members during each financial year to ensure that the Board and its Committees operate effectively and efficiently. The Chairman
and each Board member consider the performance of that Board member in relation to the expectations for that Board member
and consider any opportunities for enhancing future performance. For the purposes of his own performance evaluation, the
Chairman meets with the Non-executive Deputy Chairman and a senior independent Director. Matters which may be taken into
account include the expertise and responsibilities of the Board member and their contribution to the Board and any relevant
Committees and their functions. During a financial year the Chairs of the respective Committees also monitor and evaluate
the performance of the Committee – according to the function and objectives of the Committee, its program of work, and the
contributions of its members – and discuss the Committee’s performance with the Chairman and its members.
28
Seven West Media
Corporate Governance
Statement
FOR THE YEAR ENDED 29 JUNE 2013
During the reporting period, performance evaluations of the Board, its Committees and individual Directors were carried out in
accordance with this process.
Additionally, during the financial year the Board considered succession planning in relation to the position of Chief Executive Officer.
As announced to ASX on 21 May 2013, Mr Tim Worner was appointed Chief Executive Officer of the Company and Mr Don Voelte
AO transitioned from the position of Managing Director & Chief Executive Officer to the role of Non-executive Deputy Chairman of
the Company effective on 1 July 2013.
Since the end of the financial year, the Board has reviewed its Committees and on 21 August 2013 appointed Mr David Evans to
the Audit & Risk Committee and appointed Mr John Alexander to the Remuneration & Nomination Committee as its Chair. As at the
same date, Mr Kerry Stokes AC resigned from the Remuneration & Nomination Committee.
Directors
Details regarding the skills, experience and expertise of the Company’s Directors and the period of office held by each Director in
office are set out in the Directors’ Report on pages 24 to 26.
Meetings of the Board of Directors and Board Committees
The numbers of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended 29 June
2013, and the numbers of Board and Committee meetings held and attended by each Director are set out in the Directors’ Report
on page 38.
Appointment of Directors
The Board has established a Remuneration & Nomination Committee to assist in the appointment of new Directors. Further
information concerning that Committee is set out under “Principle 8 – Remunerate Fairly and Responsibly”.
The Remuneration & Nomination Committee periodically reviews the composition of the Board 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 may be identified by the
Committee. Internal recommendations and advice from external consultants may be sought. Again, in considering any new Board
appointments, the Board is seeking to achieve an appropriate mix of skills and diversity, including a deep understanding of the
media industry, corporate management, and operational, safety and financial matters.
Following the appointment of non-executive Directors, key terms and conditions relating to the appointment are set out in formal
engagement letters.
Directors appointed as casual vacancies hold office until the next General Meeting and are then eligible for election. The Notice of
Meeting for the Annual General Meeting discloses other key current directorships of Director candidates standing for election, as
well as other appropriate biographical details and qualifications.
To ensure they have a full understanding of the Company and its operations, Board appointees are inducted through a briefing
with the Chairman, discussions of the Company’s corporate governance (including its policies and procedures) with the Company
Secretary, visits to key business sites and meetings with senior Company executives.
The date at which each Director was appointed to the Board is announced to ASX and is provided in the Directors’ Report on
pages 24 to 26.
During the financial year, Mr John Alexander was appointed following consideration by the full Board of the personal and
professional criteria which are required to discharge competently the Board’s duties, having regard to the Company’s performance,
financial position and strategic direction. Mr Alexander’s appointment was announced to ASX on 2 May 2013.
Effective functioning of the Board
The Board, under the terms of appointment of Directors and by virtue of their position, is entitled to access, and is provided with,
information concerning the Company needed to discharge its duties efficiently. Directors are entitled, and encouraged, to request
additional information if they believe that is necessary to support informed decision making.
In addition to an induction process for new Director appointments, Directors variously attend external education seminars and
peer group meetings regarding regulatory and compliance developments. The Company arranges presentations to the Board by
executives to update the Directors on the Company’s business activities, industry and regulatory developments.
The Company Secretary is charged by the Board to support the Board’s effectiveness by monitoring that Company policies and
procedures are followed, and coordinating the timely distribution of Board and Committee agendas and briefing materials.
Seven West Media (ABN 91 053 480 845) 29
Corporate Governance
Statement
FOR THE YEAR ENDED 29 JUNE 2013
The Company Secretary’s appointment and removal is a matter for the Board. The Company Secretary is accountable to the Board
through the Chairman on corporate governance matters. Each of the Directors has access to the Company Secretary.
Performance Evaluation of senior executives
The Chief Executive Officer and the Chief Financial Officer are employed pursuant to engagement agreements which include formal
job descriptions.
Throughout the financial year, the Board commissioned and oversaw the implementation of a Senior Executive development
program, which included assessment of key competencies of the Senior Executive team, as well as training and mentoring of
executives.
The process adopted by the Company to evaluate the performance of senior executives is documented within the Remuneration
Report on page 40. The performance evaluation process is carried out annually and forms part of the determination of appropriate
performance bonus payments. The Chief Executive Officer is invited to Remuneration & Nomination Committee meetings, as
required, to discuss management performance and remuneration packages (although he is not present for discussion relating to his
own performance or remuneration).
A performance evaluation of senior executives in accordance with the process adopted by the Company was carried out during the year.
PRINCIPLE 3 – PROMOTE ETHICAL AND RESPONSIBLE DECISION
MAKING
Code of Conduct and other Company policies
The Board has adopted a Code of Conduct for Directors* which establishes guidelines for their conduct in matters such as ethical
standards and the disclosure and management of conflicts of interests. The Code is based on a Code of Conduct developed by the
Australian Institute of Company Directors.
The Company has adopted a Code of Conduct for Employees* which 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.
The Board has implemented a number of other policies and procedures to promote ethical behaviour and responsible decision
making, including the following:
(cid:116)(cid:1) Continuous disclosure policy*
(cid:116)(cid:1) Share Trading policy*
(cid:116)(cid:1) Group Editorial policy*
(cid:116)(cid:1) Diversity policy*
(cid:116)(cid:1)
Issue Escalation policy (currently an internal policy)
The Company’s Issue Escalation Policy encourages the reporting and investigation of unethical and unlawful practices and matters
of concern which cannot otherwise be adequately dealt with under Company policies. The Policy, including employee contacts as
well as an external auditor contact service, is available on the Company’s intranet site.
The Company requires compliance with Company policies by staff under the terms of their employment and carries out training of
employees in relation to its policies and procedures.
Trading in Company shares by Directors and Employees
The Company has adopted a Share Trading Policy* which establishes the governing principles for trading in Company shares
by Directors and other Key Management Personnel. Directors and other Key Management Personnel may acquire shares in the
Company within the guidelines set in the policy. The policy establishes blackout periods during which shares cannot be traded,
except as outlined in the policy, and raises awareness of the insider trading laws. In addition to the policy, individual Directors are
required to sign a disclosure of interest’s agreement upon their appointment to the Board. This document specifically requires
Directors to advise the Company Secretary of all transactions in the Company’s shares.
Diversity policy
The Board recognises the benefits of a workplace culture that is inclusive and respectful of diversity. The Board values diversity in
relation to age, gender, cultural background and ethnicity and recognises the benefits it can bring to the organisation. In order to
30
Seven West Media
Corporate Governance
Statement
FOR THE YEAR ENDED 29 JUNE 2013
support the culture, the Board has adopted a Diversity Policy* that sets out the Board’s commitment to working towards achieving
an inclusive and respectful environment.
In accordance with the Diversity Policy, diversity within Seven West Media is focused on age, gender and cultural background.
Diversity initiatives are in four key areas, and the Board has set measurable objectives in relation to each:
(cid:116)(cid:1) Career development and performance (CDP);
(cid:116)(cid:1) Flexible work practices (FWP);
(cid:116)(cid:1) Gender diversity (GD); and
(cid:116)(cid:1) Talent and succession planning (TSP).
Measurable objectives
Measurable objective
Link to Diversity Policy
CDP
FWP
GD
TSP
Report on initiatives that facilitate diversity and promote growth for the Company,
and for all employees
Annual succession planning to consider diversity initiatives
(cid:116)
(cid:116)
Determine and report on employee turnover by age and gender and parental leave return rates
Determine and report on the proportion of women in the Company, in senior executive positions,
and on the board
(cid:116)
(cid:116)
(cid:116)
(cid:116)
(cid:116)
Unless otherwise stated, for the purpose of this section of the report employee numbers and statistics have been calculated based
employees who were paid in the final pay periods of June 2013. “Senior executive positions” refer to senior management positions
which are levels one and two below the Chief Executive Officer.
Initiatives that facilitate diversity and promote growth for the Company, and for all employees
Seven West Media continues to develop flexible work practices that assist employees to balance work with family, carer or other
responsibilities.
An executive development program has been trialled with key women in the Group in the 2013 financial year.
Annual succession planning initiatives
In 2013, our succession planning process continued to include a requirement for diversity initiatives to be considered.
Employee turnover and parental leave return statistics
Employee turnover by Gender (as a percentage of total men and as a percentage of total women) and Employee Turnover by Age (as a
percentage of total turnover)
Total
Women
14%
Men
7%
< 25 years
16%
25 years
– 34 years
35 years
– 44 years
45 years
– 54 years
48%
19%
10%
> 55 years
8%
The percentage of employees who returned from parental leave during 2013 (as a percentage of the total number of employees
whose parental leave entitlement ended during 2013) was 66%.
Proportion of women
Group
In the Company
Key Management Personnel executives (as set out
in Section 2a of the remuneration report)
In senior executive positions
On the Board
Number of women
2,636
1
17
1
Total number of
employees/officers
Proportion of women
4,981
9
51
10
53%
11%
33%
10%
Additionally, the Company has posted its Workplace Gender Equality Act Public Report for 2012 – 2013* on its website.
Seven West Media (ABN 91 053 480 845) 31
Corporate Governance
Statement
FOR THE YEAR ENDED 29 JUNE 2013
PRINCIPLE 4 – SAFEGUARD INTEGRITY IN FINANCIAL REPORTING
Audit & Risk Committee
During the financial year, the Committee comprised the following members, all of whom are independent Directors except for Mr Gammell:
(cid:116)(cid:1) SMC Walsh AO (Chairman) (resigned 30 January 2013)
(cid:116)(cid:1) DR Flynn (Acting Chairman subsequent to Mr Walsh’s resignation)
(cid:116)(cid:1) PJT Gammell
(cid:116)(cid:1) Dr ME Deaker
The Board believes the ASX Recommendations are satisfied as regards the composition and technical expertise of the Audit &
Risk Committee and its members. Details of the qualifications of Committee members are set out on pages 24 to 26. The number
of Committee Meetings held during the reporting period, as well as Committee Members’ attendance, is set out in the Directors’
Report at page 38.
Since the end of the financial year, the Board has reviewed its Committees and on 21 August 2013 appointed Mr David Evans to the
Audit & Risk Committee.
The Audit & Risk Committee Charter* sets out that the Committee’s key objectives include:
(cid:116)(cid:1) Assist the Board to discharge its responsibilities to exercise due care, diligence and skill in relation to the Company’s:
o reporting of financial information;
o application of accounting policies;
o financial management;
o internal control systems;
o risk management;
o protection of the Company’s assets; and
o compliance with applicable laws, regulations, licences, standards and best practice guidelines.
(cid:116)(cid:1)
Improving the credibility and objectivity of the accountability process, including financial reporting.
(cid:116)(cid:1) Provide a formal forum for communication between the board and senior financial management.
(cid:116)(cid:1)
Improve the quality of internal and external reporting of financial and non-financial information.
The Charter also provides that it is the Committee’s role includes monitoring, investigating and making recommendations to the
Board with respect to:
(cid:116)(cid:1) Considering the appropriateness of the Company’s accounting policies and principles and any changes, as well as the methods
of applying them, ensuring that they are in accordance with the stated financial reporting framework.
(cid:116)(cid:1) Assessing significant estimates and judgements in financial reports ad well as information from internal and external auditors
that affects the quality of financial reports (including the form of the External Audit opinion).
(cid:116)(cid:1) The review of related-party transactions.
The Internal and External auditors, the Chief Executive Officer and the Chief Financial Officer are invited to meetings of the
Committee.
External Audit function
In relation to the External Audit function, the Audit & Risk Committee is charged under its Charter to:
(cid:116)(cid:1) Make recommendations to the Board on the appointment, remuneration and monitoring of the effectiveness and independence
of the External Auditor.
(cid:116)(cid:1) Together with the External Auditor, review the scope of the external audit (particularly the identified risk areas) and any additional
agreed-upon procedures on a regular and timely basis.
It is the practice of Audit & Risk Committee to meet periodically with the External Auditor without management being present.
The Board has adopted an External Audit Policy* which deals with the appointment of the External Auditor, rotation of engagement
partners and approval of additional assignments to the External Auditor.
32
Seven West Media
Corporate Governance
Statement
FOR THE YEAR ENDED 29 JUNE 2013
The Company’s 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.
The Company requires that the external audit firm rotates the engagement partner in accordance with accepted best practice,
bearing in mind the relationship between rotated audit partners and the need for auditor independence.
The role of the Committee is also 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. The Audit & Risk Committee’s key responsibilities in respect of its risk function are set out below
under “Principle 7 – Recognise and Manage Risk”.
PRINCIPLE 5 – MAKE TIMELY AND BALANCED DISCLOSURE
The Company is committed to complying with the disclosure obligations of the Corporations Act and the Listing Rules of the ASX,
and to ensuring accountability at a senior executive level for that compliance.
To that end, the Company has adopted a Continuous Disclosure Policy*.
The Company also 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.
PRINCIPLE 6 – RESPECT THE RIGHTS OF SHAREHOLDERS
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 Board aims to ensure that shareholders are informed of all major developments affecting the Company’s state of affairs by
promoting effective communication with shareholders principally through ASX announcements, the Company website, the provision
of the Annual Report, including the Financial Statements, and the Annual General Meeting (and any extraordinary meetings held
by the Company) and notices of General Meetings. Information concerning resolutions for consideration at the Company’s General
Meetings is provided in the notice of meeting. Shareholders are encouraged to participate in General Meetings and are invited
to put questions to the Chairman of the Board in that forum. The Board ensures that the Company’s External Auditor attends all
Annual General Meetings and is available to answer shareholders’ questions about the conduct of the audit and the preparation
and content of the Auditor’s report thereon.
The Company’s website provides additional information about the Company, including its Corporate Governance policies. The
Board continues to review its channels of communications with shareholders for cost effectiveness and efficiencies, including using
electronic delivery systems for shareholder communications where appropriate.
On 8 May 2013 senior executives of the Company gave an Investor Day presentation which provided further information concerning
the Company, its operations and strategies. The presentation was webcast live on the Company’s website and archived on the
Company’s website thereafter. The Investor Day presentation slides were lodged with ASX prior to the commencement of the
presentation.
PRINCIPLE 7 – RECOGNISE AND MANAGE RISK
Risk oversight and management
The Board acknowledges that the management of business and economic risk is an integral part of the Company’s operations. The
Company has adopted policies and procedures for the oversight and management of material business risks, including the Board’s
establishment of the Audit & Risk Committee. The Board requires management to design and implement a risk management and
internal control system to manage the entity’s material business risks and report to it on the management of those risks. During the
reporting period, management reported to the Board as to the effectiveness of the Company’s management of its material business
risks. The respective roles of the Board, the Audit & Risk Committee, and Management in relation to the oversight and management
of risk are described in more detail below.
Seven West Media (ABN 91 053 480 845) 33
Corporate Governance
Statement
FOR THE YEAR ENDED 29 JUNE 2013
Risk management function of the Audit & Risk Committee
The Board has established an Audit & Risk Committee. As mentioned under “Principle 4 – Safeguard Integrity in Financial
Reporting” the Committee comprises Mr Doug Flynn (Acting Chairman subsequent to Mr Walsh’s resignation), Mr Peter Gammell
and Dr Michelle Deaker, with Mr David Evans appointed to the Commitee on 21 August 2013.
In relation to the Company’s risk management function, the Committee’s role includes:
(cid:116)(cid:1) Supporting the development of a strong risk culture that promotes the identification of risk and the consistent application of the
risk management process through requiring management to provide regular risk updates and challenging the information put
forward by management as necessary to ensure that risks are being effectively managed.
(cid:116)(cid:1) Conducting detailed review of the risk assessment criteria established for SWM and its entities to ensure alignment with
organisational risk tolerance.
(cid:116)(cid:1)
Assessing whether management has controls in place for unusual types of transactions and/or any potential transactions that
may carry more than an acceptable degree of risk.
(cid:116)(cid:1) Reviewing periodically the debt management strategy in the treasury management of the Company.
Risk Management Policy
The Board has adopted a risk management policy that complies with Australian Standard ISO 31000:2009 and Principle 7 of the
ASX Corporate Governance Council’s Principles and Recommendations.
Under the policy, detailed risk reviews are performed every six months. The criteria of the reviews, together with a comprehensive
list of all risks considered very high and high, and the risk management strategy, are reported to the Audit & Risk Committee and
the Board. The risk reviews are conducted and maintained by senior executives within key business divisions of the Company, as
well as those senior executives with group wide responsibilities, under the management of the Company Secretary. Once a major
risk is identified, management assesses and reports, for the Audit & Risk Committee’s and the Board’s review, the risk controls and
risk treatments that are in place. External advice is obtained as appropriate.
The six monthly risk reviews described above build upon a Strategic Risk Assessment which was commissioned through the Audit
& Risk Committee and facilitated by an external consultant in workshops with senior executives of the Company. The Strategic Risk
Assessment identifies, assesses, ranks and updates the main strategic risks, including material business risks, facing the Company
in respect of which management formulates and records the internal risk controls implemented for those risks.
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
The Company has established an Internal Audit function which reports directly to the Chairman of the Audit & Risk Committee, and
is responsible for monitoring, investigating and reporting on the internal control systems.
In relation to the Company’s Internal Audit function, the Audit & Risk Committee is charged under its Charter to:
(cid:116)(cid:1) Review the Internal Auditor’s mission, charter and resourcing (including qualifications, skills, experience, funding and
equipment).
(cid:116)(cid:1) Review and approve the scope and monitor the progress of the Internal Audit plan and work program.
(cid:116)(cid:1) Monitor and critique management’s responsiveness to Internal Audit’s findings and recommendations.
Throughout the financial year the Audit & Risk Committee fulfilled the responsibilities and the Internal Auditor presented detailed
Internal Audit reviews to the Committee in accordance with the approved Internal Audit plan.
Financial reporting
The Company maintains a comprehensive budgeting system with an annual budget reviewed by the Audit & Risk Committee and
which is then recommended to, and considered and approved by the Board. 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 “Principle 5 – Make Timely and Balanced Disclosure” above.
Special reports
The Company has identified a number of key areas which are subject to regular reporting to the Board or its Committees such as
environmental, diversity, legal and health and safety matters.
34
Seven West Media
Corporate Governance
Statement
FOR THE YEAR ENDED 29 JUNE 2013
Declaration of Chief Executive officer and Chief Financial Officer
The Chief Executive Officer and Chief Financial Officer are required to state in writing to the Board that:
(cid:116)(cid:1)
(cid:116)(cid:1)
the risk management and internal compliance and control systems are operating effectively and efficiently in all material
respects in relation to financial reporting risks; and
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 and in accordance with section 295A of the
Corporations Act.
The Board received these written statements from the Chief Executive Officer and the Chief Financial Officer with respect to the
financial year ending 29 June 2013.
PRINCIPLE 8 – REMUNERATE FAIRLY AND RESPONSIBLY
The objective of the remuneration process is to ensure that remuneration packages properly reflect the duties and responsibilities
of the employees and that the remuneration is at an appropriate but competitive market rate which enables the Company to
attract, retain and motivate people of the highest quality and best skills from the industries in which the Company operates. This
policy provides for the Chief Executive Officer to consider the remuneration packages paid within the industry and the impact that
employees are expected to have on the operational and financial performance of the Company.
The Company conducts annual employee performance reviews, involving a written questionnaire, discussion between employee
and manager of employee competencies and the agreement of performance goals for the employee.
The remuneration of the Non-Executive Directors of the Board is restricted, in aggregate, by the Constitution of the Company and
the requirements of the Corporations Act. Fees for Directors are set out in the Remuneration Report.
In light of the ban on hedging remuneration of Key Management Personnel now found in the Corporations Act, the Company does
not consider it necessary to establish a separate policy in relation to entering into transactions in associated products which limit
the economic risk of participating in unvested entitlements under an equity based remuneration scheme.
Remuneration & Nomination Committee
To assist in the adoption of appropriate remuneration practices, the Board has established a Remuneration & Nomination
Committee. The Committee Charter* sets out the role and responsibilities of the Committee. During the financial year the
Committee comprised the following members, half of whom are independent Non-executive Directors (Dr Deaker, Mr Evans and Mr
John AO):
(cid:116)(cid:1) KM Stokes AC (Chairman)
(cid:116)(cid:1) D Evans
(cid:116)(cid:1) Dr ME Deaker
(cid:116)(cid:1) GT John AO
(cid:116)(cid:1) JC Reizes
(cid:116)(cid:1) RK Stokes
The number of Committee Meetings held during the reporting period, as well as Committee members’ attendance at those
meetings, is set out in the Directors’ Report at page 38.
Mr Kerry Stokes AC acted as Chairman of the Committee during the financial year. The Remuneration & Nomination Committee
Charter provides that the Chairman of the Board may be Chairman of the Committee. The Board acknowledges the ASX
Recommendation that a majority of Committee members, as well as the Chair, of a Remuneration Committee should be
independent. However, the composition of the Remuneration & Nomination Committee, including the Chair, was considered
appropriate in order for the Company to gain the maximum benefit of their experience and expertise in relation to an ambitious
program of human resource-related matters and reviews undertaken by the Committee. These reviews have been integral to driving
efficiencies and reviewing business processes across the Company.
Seven West Media (ABN 91 053 480 845) 35
Corporate Governance
Statement
FOR THE YEAR ENDED 29 JUNE 2013
The Committee recently completed its consideration of and recommendations relating to performance-linked remuneration for the
financial year. With the Committee having completed its primary functions for current reporting period, the Board considered it an
appropriate time to review the composition of the Committee, which from 21 August 2013 comprises:
(cid:116)(cid:1) J Alexander (Chairman)
(cid:116)(cid:1) D Evans
(cid:116)(cid:1) Dr ME Deaker
(cid:116)(cid:1) GT John AO
(cid:116)(cid:1) JC Reizes
(cid:116)(cid:1) RK Stokes
The Board believes the Remuneration & Nomination Committee as currently comprised satisfies the ASX Recommendations that
the Chair of the Committee should be an Independent Director and that the Committee consist of at least three members a majority
of whom are Independent (Mr Alexander, Dr Deaker, Mr Evans and Mr John AO).
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 insurance policies. External advice is sought directly by the Committee, 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.
During the financial year the employment arrangements of the Chief Executive Officer, Mr Tim Worner, was considered in full Board
meeting and was approved and recommended to the Board by the Remuneration & Nomination Committee. The Board considered
that the employment and remuneration arrangements for the Chief Executive Officer are reasonable for the Company to offer in the
circumstances of the Company and having regard to the duties and responsibilities of the Chief Executive Officer. The key terms of
Mr Worner’s employment arrangements as Chief Executive Officer were announced to ASX on 21 May 2013.
The Remuneration & Nomination Committee met after the end of the financial year to review and recommend to the Board
performance-linked remuneration for Key Management Personnel. This process is summarised in the Remuneration Report.
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 26 and 30 to the Financial Statements. The Board’s remuneration policy
and a discussion of the differing structures of non-executive Directors and senior executives’ remuneration are also discussed in the
Remuneration Report throughout sections 1 to 5.
36
Seven West Media
Directors’ Report
FOR THE YEAR ENDED 29 JUNE 2013
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 29 June 2013.
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:
(cid:116)(cid:1) KM Stokes AC – Chairman
(cid:116)(cid:1) DR Voelte AO – Deputy Chairman (appointed 1 July 2013 - formerly Managing Director & Chief Executive Officer to 30 June 2013)
(cid:116)(cid:1) JH Alexander (appointed 2 May 2013)
(cid:116)(cid:1) Dr ME Deaker (appointed 21 August 2012)
(cid:116)(cid:1) D Evans (appointed 21 August 2012)
(cid:116)(cid:1) DR Flynn
(cid:116)(cid:1) PJT Gammell
(cid:116)(cid:1) GT John AO
(cid:116)(cid:1) JC Reizes
(cid:116)(cid:1) RK Stokes (appointed 21 August 2012)
(cid:116)(cid:1) SMC Walsh AO (resigned 30 January 2013)
BI McWilliam and EJM Bostock are Alternate Directors to PJT Gammell and JC Reizes respectively. Alternate Directors do not
receive any additional remuneration for acting as an Alternate Director. WW Coatsworth and MJ Ellis are the current Company
Secretaries.
Principal activities
The principal activities of the Group during the financial year were free to air television broadcasting, newspaper and magazine
publishing, online and radio broadcasting. There were no significant changes in the nature of the Group’s principal activities during
the financial year.
Operations, financial position, business strategies and future prospects
Information on the Company’s operations, financial position, business strategies and prospects for future financial years has been
included in the “Operating and Financial Review” on pages 4 to 23.
Significant changes in the state of affairs
There have been no significant changes in the state of affairs of the Group that have occurred during the financial year.
Matters subsequent to the end of the financial year
Mr Tim Worner was appointed Chief Executive Officer of the Company with effect from 1 July 2013.
Mr Don Voelte AO resigned as Managing Director & Chief Executive Officer of the Company with effect from 30 June 2013.
Mr Voelte accepted the role of Deputy Chairman of the Board from 1 July 2013.
Except for the change of Chief Executive Officer and appointment of Deputy Chairman, there are no other matters or
circumstances which have arisen since 29 June 2013 that have significantly affected or may significantly affect:
(a)
(b)
(c)
the Group’s operations in future financial years; or
the results of those operations in future financial years; or
the Group’s state of affairs in future financial years.
Seven West Media (ABN 91 053 480 845) 37
Directors’ Report
FOR THE YEAR ENDED 29 JUNE 2013
Meetings of directors
The numbers of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended 29 June
2013, and the numbers of meetings attended by each Director were:
Meetings of Directors
Audit and Risk
(a)
(b)
Remuneration
and Nomination
(a)
(b)
Directors
KM Stokes AC
JH Alexander ~
Dr ME Deaker *
D Evans *
DR Flynn
PJT Gammell
GT John AO
JC Reizes
RK Stokes *
DR Voelte AO
SMC Walsh AO #
Alternate directors
EJM Bostock
BI McWilliam
(a)
10
4
9
9
10
10
10
10
10
10
4
–
7
(b)
10
4
9
7
10
10
10
10
10
10
4
–
7
2
–
4
–
5
5
–
–
3
5
2
–
–
2
–
4
–
5
5
–
–
3
5
2
–
–
6
–
5
5
–
–
6
6
5
5
–
–
–
5
–
5
4
–
–
6
6
5
5
–
–
–
(a) Number of meetings held during the year while the person was a Director
(b) Number of meetings attended. Please note Directors may attend meetings of which they are not a formal member, and in these instances, their attendance is also included above
* Appointed a Director on 21 August 2012
~ Appointed a Director on 2 May 2013
# Resigned as a Director on 30 January 2013
Unissued Shares under Options
At the date of this report, the following rights to acquire an equivalent number of ordinary shares in the Company under the various
employee equity schemes are outstanding:
Share Plan
Seven West Media Equity Incentive Plan
Seven West Media Performance Transitional Equity Grant
Rights on Issue
1,749,376
219,206
Expiry Date
22 August 2015
1 October 2014
Long term Incentive Plan – Chief Executive Officer of West Australian Newspapers
111,067
3 August 2015/12 August 2016
For names of the Directors and Key Management Personnel who currently hold options granted through these schemes refer Note
26 and Note 30 of the Financial Statements. Any other executives who hold options under the Seven West Media Performance
Transitional Equity Grant are entered in the Register of Options kept by the Company pursuant to Section 170 of the Corporations Act.
38
Seven West Media
Directors’ Report
FOR THE YEAR ENDED 29 JUNE 2013
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 2012
of 6 cents (2011 - 26 cents) per share paid on 12 October 2012
Interim ordinary dividend for the year ended 29 June 2013
of 6 cents (2012 - 19 cents) per share paid on 2 April 2013
2013
$’000
2012
$’000
59,887
158,389
59,888
119,775
122,490
280,879
In addition to the above dividends, since the end of the 2013 financial year the Directors have declared the payment of a final
ordinary dividend of 6 cents per share, to be paid on 11 October 2013.
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
Seven West Media Limited continues to measure and monitor its Greenhouse emissions under the National Greenhouse and
Energy Reporting Act (2007) and is actively working towards reduction of Scope 1 emissions as well as the Scope 2 and 3
voluntary emissions where possible and practical for the business units.
There are no other particular environmental regulations for the Group.
Directors’ interests in shares
Set out in the table below are particulars of the relevant interests of each Director in shares, rights and options issued by the Company.
Performance
Rights or Options
Number of convertible
preference shares
Number of
ordinary shares
Directors
KM Stokes AC
JH Alexander
Dr ME Deaker
D Evans
D Flynn
PJT Gammell
GT John AO
JC Reizes
RK Stokes
DR Voelte AO
Alternate directors
EJM Bostock
BI McWilliam
–
–
–
–
–
–
–
–
–
–
–
227,272
2,500
353,555,298
–
–
–
–
–
–
–
–
–
–
–
–
14,892
398,660
78,578
187,409
103,804
36,813
136,887
150,638
–
611,044
Seven West Media (ABN 91 053 480 845) 39
Remuneration Report
FOR THE YEAR ENDED 29 JUNE 2013
Message from the Board
Dear Shareholders
Executive remuneration outcomes and key developments
Seven West Media Limited’s revenue in the 2013 financial year (FY13) decreased from $1,937 million to $1,866 million and earnings
per share decreased from 33.3 cents to -7.1 cents. Profit before significant items, net finance costs and tax (EBIT) for the Group
was $422 million which was slightly ahead of market guidance. As such, the Company and Group’s financial performance, which
is the basis for measuring executive performance, fell short of the Company’s original targets and, accordingly, executive variable
remuneration outcomes in FY13 were modest and reflect the Board’s commitment to maintaining the link between executive
remuneration and Company performance.
Managing Director & Chief Executive Officer Remuneration
Mr Don Voelte AO was appointed to the position of Managing Director & Chief Executive Officer on 26 June 2012 and resigned from
this position on 30 June 2013. In setting Mr Voelte’s remuneration, the Board determined that the duties and responsibilities of his
short term role did not require a variable component of remuneration. Details of remuneration paid to Mr Voelte during the term of
his employment are in section 2.a. of the Remuneration Report. A termination payment was not made to Mr Voelte on cessation of
his Managing Director & Chief Executive Officer role.
Incoming Group Chief Executive Officer Remuneration
We welcome the appointment of the new Group Chief Executive Officer, Tim Worner on 1 July 2013. Remuneration arrangements
for the incoming Group CEO are outlined in section 1.c. of the Remuneration Report.
Executive changes during the year
We also welcome to our executive team Rohan Lund, Group Chief Operating Officer from 1 September 2012, Bridget Fair, Group
Chief – Corporate and Regulatory Affairs, from 1 February 2013 and David Boorman, Company and Group Chief Financial Officer,
from 3 June 2013.
We look forward to continuing to work with Rohan, Bridget and David in their new roles with the Company.
Director changes during the year
New non-executive directors
David Evans, Ryan Stokes and Dr Michelle Deaker were appointed as Non-executive Directors of the Company on 21 August 2012.
Sam Walsh resigned as a Non-executive Director on 30 January 2013. John Alexander was appointed as a Non-executive Director
of the Company on 2 May 2013.
Mr Don Voelte AO was appointed Deputy Chairman from 1 July 2013 following the cessation of his role of Managing Director &
Chief Executive Officer with the Company. Remuneration arrangements for the incoming Deputy Chairman are set out in section
1.a. of the Remuneration Report.
We look forward to the continuing contribution to the Company from our new directors.
Remuneration and Nomination Committee
During the financial year the Remuneration & Nomination Committee comprised the following members:
(cid:116)(cid:1) KM Stokes AC (Chairman)
(cid:116)(cid:1) D Evans
(cid:116)(cid:1) Dr ME Deaker
(cid:116)(cid:1) GT John AO
(cid:116)(cid:1) JC Reizes
(cid:116)(cid:1) RK Stokes
The Remuneration & Nomination Committee recently completed its consideration of and recommendations relating to performance-
linked remuneration for the financial year. With the Committee having completed its primary functions for the current reporting period,
the Board considered it an appropriate time to review the composition of the Committee, which from 21 August 2013 comprises:
(cid:116)(cid:1) J Alexander (Chairman)
(cid:116)(cid:1) D Evans
(cid:116)(cid:1) Dr ME Deaker
(cid:116)(cid:1) GT John AO
(cid:116)(cid:1) JC Reizes
(cid:116)(cid:1) RK Stokes
40
Seven West Media
Remuneration Report
FOR THE YEAR ENDED 29 JUNE 2013
Continuation of executive remuneration alignment
In the 2012 financial year (FY12), the Committee undertook a comprehensive review of executive remuneration, in particular
examining remuneration structures that align with the Company’s business strategies and reflect economic and market conditions.
The revisions to executive remuneration structures represented a necessary step towards the integration and consolidation of our
remuneration practices across the Group.
Significant changes occurred in FY12 with full alignment and integration of executive remuneration across the Group being achieved
in FY13. Further details of the changes are described below and at section 1.b. of the Remuneration Report.
Alignment of the short-term incentive plan
Details of the short term incentive (STI) plan are set out in section 1.b.ii. of the Remuneration Report. This STI structure had been
recommended and implemented in FY12 by the Committee in the television and magazines businesses. FY13 saw alignment of the
newspaper business, replacing the previous short term incentive plan for newspapers with the new Group STI plan.
Key features of the Group STI plan include:
(cid:116)(cid:1) Consideration is given by the Board to Company financial performance in determining the size of the STI pool available for
distribution. Measures considered include profit before significant items, net finance costs and tax (EBIT);
(cid:116)(cid:1) STI awards to executives are based on their performance against individual key performance indicators (KPIs), with achievement
of a minimum individual performance rating required before an executive is eligible for an award;
(cid:116)(cid:1) Subject to the STI pool available, discretionary adjustments to the ‘on-target’ STI award for each executive may be made for
significant outperformance and are limited to a 25% increase in the executive’s overall award. ‘On-target’ refers to the STI award
opportunity for an executive who achieves successful performance against all KPIs. On-target STI awards as a proportion of
total remuneration are set out in section 2.c. of the Remuneration Report;
(cid:116)(cid:1) Deferral of a portion of the STI award into share rights where the STI award amount reaches or exceeds the on-target amount,
with the share rights vesting in three tranches over a period of three years from the end of the STI performance period.
An integrated long-term incentive plan
The initial grant under a new integrated long-term incentive (LTI) plan for executives was made in FY13.
The new LTI plan, outlined in section 1.b.ii. of the Remuneration Report, is designed to encourage sustained long-term performance
and enhance the alignment between executive remuneration outcomes and shareholders’ interests. The LTI plan provides grants of
performance rights to executives. The performance hurdles that determine the extent to which performance rights vest are Diluted
Earnings per Share (DEPS) growth targets and relative Total Shareholder Return (TSR) performance over three years against a pre-
determined group of peer companies. The new LTI plan does not permit re-testing; that is, if threshold targets are not met at the
end of the performance period, the performance rights will lapse.
Non-executive Director remuneration developments
Non-executive director share plan
In FY13 Non-executive Directors received up to 25% of their annual fees in shares in the Company (NED Share Plan). The shares
were purchased on-market at prevailing prices and are held in trust on behalf of the directors. During FY13 the Board determined
to discontinue the NED Share Plan. Consequently, NEDs will receive 100% of their fees in cash in FY14. In making its decision to
discontinue the NED Share Plan the Board considered that, notwithstanding the perceived benefits of the NED Share Plan, the
Plan was complex and inefficient to administer, in particular following changes to the tax legislation relating to equity plans, and that
Directors could instead be encouraged to purchase and hold shares in the Company, subject to compliance with the Company’s
Share Trading Policy.
Further executive remuneration details
Further details on the executive remuneration arrangements and the remuneration for FY13 are set out in this Remuneration Report.
I invite you to read the FY13 Remuneration Report and look forward to answering any questions you may have at our Annual
General Meeting.
Yours faithfully
Mr Kerry Stokes AC
Chairman
Seven West Media (ABN 91 053 480 845) 41
Remuneration Report
FOR THE YEAR ENDED 29 JUNE 2013
Introduction
This report describes the remuneration arrangements for the key management personnel (KMP) of Seven West Media Limited;
KMP being the executives (including executive directors) (hereafter referred to in this report as executives) and the Non-executive
Directors (NEDs) of Seven West Media Limited.
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.
The Committee’s role is described in the corporate governance statement in this annual report, and includes the following:
(cid:116)(cid:1) To recommend to the Board the remuneration of NEDs, within the aggregate approved by shareholders;
(cid:116)(cid:1) To recommend to the Board the remuneration and other conditions of service of the Group Chief Executive officer;
(cid:116)(cid:1) To approve the remuneration and other conditions of service for senior executives reporting to the Group Chief Executive
Officer, based on the recommendations of the Group Chief Executive Officer;
(cid:116)(cid:1) To design the executive incentive plans and approve payments or awards under such plans; and
(cid:116)(cid:1) To establish the performance hurdles associated with the incentive plans.
This report is set out under the following main headings:
1. Remuneration strategy and policy
a. Non-executive director remuneration framework
b. Executive remuneration framework
i. Fixed remuneration
ii. Variable remuneration
o Short-term incentive (STI) plan
o Long-term incentive (LTI) plan
c. Incoming Group Chief Executive Officer remuneration
d. Link between remuneration policy and Company performance
2. Remuneration in detail
a. Amounts of remuneration
b. Share rights granted as compensation
c. Fixed and variable remuneration
3. Service agreements
4. Legacy share-based compensation plans
5. Services from remuneration consultants
1. Remuneration strategy and policy
a. Non-executive Director remuneration framework
Fees and payments to NEDs reflect the demands which are made on, and the responsibilities of, the NEDs. NED 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 NED 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 NEDs must be no more than the amount approved by shareholders in the Annual General
Meeting (AGM). The current aggregate is $1,500,000, which was approved at the 2010 AGM held on 18 November 2010. The
aggregate of payments to NEDs in FY13 did not exceed the approved amount. The Company intends to seek shareholder approval
to increase the NED aggregate fee pool in FY14 as a result of the expansion in the size of the Board since FY12 and does not intend
to increase NED fees during 2014.
The fees for the year to 29 June 2013 were $135,000 per annum for Non-executive Directors and $335,000 per annum to the
Chairman. In addition, a fee of $26,000 per annum is paid to the Chairman of the Audit & Risk Committee and $20,000 is paid to
the Chairman of the Remuneration & Nomination Committee. Members of the Audit & Risk Committee receive an additional fee of
$14,000 per annum and members of the Remuneration & Nomination Committee receive an additional fee of $10,000 per annum.
The Company’s statutory superannuation contributions are included in these amounts.
Deputy Chairman fee
Mr Don Voelte AO was appointed as Deputy Chairman on 1 July 2013. The fee for the Deputy Chairman for the year to 30 June
2014 has been set by the Board at $250,000 per annum. From FY14 the Chairman and Deputy Chairman will not be eligible to
42
Seven West Media
Remuneration Report
FOR THE YEAR ENDED 29 JUNE 2013
receive any additional committee fees. The Board considers the fee for the Deputy Chairman is appropriate given the significantly
greater time commitment expected of the Deputy Chairman than would be expected of other Non-executive Directors. The
Company will have the ability to leverage Mr Voelte’s prior experience as the Managing Director & Chief Executive Officer of the
Company, he will fill a key mentoring role for senior executives within the Group, the position reflects designation of a clear Deputy
for when the Chairman is unavailable and Mr Voelte brings to the Company extensive external business relationships in Australia.
Non-executive director share plan
In FY13 Non-executive Directors received up to 25% of their annual fees in shares in the Company (NED Share Plan). The shares
were purchased on-market at prevailing prices and are held in trust on behalf of the directors. As noted earlier in this report, during
FY13 the Board determined to discontinue the NED Share Plan. Consequently, NEDs will receive 100% of their fees in cash in FY14.
In making its decision to discontinue the NED Share Plan the Board considered that, notwithstanding the perceived benefits of the
NED Share Plan, the Plan was complex and inefficient to administer, in particular following changes to the tax legislation relating to
equity plans, and that Directors could instead be encouraged to purchase and hold shares in the Company, subject to compliance
with the Company’s Share Trading Policy.
b. Executive remuneration framework
We note remuneration arrangements for the Managing Director & Chief Executive Officer detailed in this report relate to Mr Don
Voelte AO who was Managing Director & Chief Executive Officer until 30 June 2013. As noted in last year’s Remuneration Report,
the Board determined that the duties and responsibilities of Mr Voelte’s role did not require a variable component of remuneration.
Revised remuneration arrangements for Mr Tim Worner as the incoming Group Chief Executive Officer are detailed in section 1.c. of
the Remuneration Report.
With the exception of Mr Voelte in his role as Managing Director & Chief Executive Officer, Executive remuneration comprises both
a fixed component and a variable (or “at risk”) component which comprises separate STI and LTI elements. These components are
explained in detail below.
i. Fixed remuneration
Fixed remuneration is determined by the Committee and recommended to the Board for approval with reference to relevant market
comparators. Fixed remuneration includes base pay (which is calculated on a total cost basis and includes any FBT charges related
to employee benefits including motor vehicles) as well as employer contributions to superannuation funds.
ii. Variable remuneration
Variable remuneration comprises two elements:
a) STI – rewards the achievement of pre-determined, individual and Company KPIs over the 12-month performance period which
are aligned to and supportive of the Company’s annual objectives. STI awards are delivered in cash, and subject to specific
thresholds, deferred share rights; and
b) LTI – rewards performance over the longer term and are designed to encourage sustained performance, drive long-term
shareholder value creation and ensure alignment of executive remuneration outcomes to shareholder interests. LTI awards are
delivered in the form of performance rights subject to Company performance hurdles.
Further details of the Company’s STI and LTI plans in which all executives (other than Mr Voelte) participate from FY13 onwards are
set out below.
Short-term incentive plan
The STI plan provides participants with the opportunity to earn an annual cash incentive, based on the achievement of Company
and individual KPIs over the relevant 12-month performance period. To support an ownership culture and drive retention outcomes,
fifty per cent of the STI award may be deferred for up to three years (please refer to the ‘STI deferral’ section below).
The following diagram provides an overview of the STI plan.
EBIT
Measure
STI pool
Minimum
Individual
Performance
Measure
Performance
against KPIs
STI payment
Cash
Deferred
share rights
Seven West Media (ABN 91 053 480 845) 43
Remuneration Report
FOR THE YEAR ENDED 29 JUNE 2013
STI pool
The size of the STI pool available for distribution is based on the achievement of EBIT targets set by the Committee at the start of
the financial year. Where business-unit EBIT targets are not met and no STI pool is accrued, the Committee has the discretion to
consider other factors that may be relevant to determine the level of potential payment for participants.
STI opportunity
Each participant’s STI opportunity for on-target performance is set out in the table below, expressed as a percentage of fixed
remuneration. ‘On-target’ refers to the STI award opportunity for an executive who achieves successful performance against all KPIs.
Managing Director & Chief Executive Officer - Don Voelte
Other executives
On-target STI opportunity
(as a percentage of fixed
remuneration)
Total STI
Not applicable
25-50%
Once the executive reaches or exceeds their on-target STI opportunity, fifty per cent of their award is deferred into share rights. Further
details on the deferral into share rights are set out below.
Minimum Individual performance measure
Prior to the determination of performance levels against targets, in addition to the financial targets that must be achieved for an STI
pool to be available, achievement of a minimum individual performance rating is required for an executive to be eligible for an award
under the STI plan.
Key performance indicators
Prior to the start of each performance year, participants have individual KPIs set, at on-target and stretch levels. The executives’ KPIs
are approved by the Committee.
Financial and non-financial measures are differentially weighted to reflect the different focus for executives in driving the overall
business strategy. Scorecard measures for participants are set out in the table below.
Participant
Scorecard measures and weightings
Individual scorecard measures are grouped into two categories – quantitative and qualitative measures.
Individual measures include:
Executives other
than MD & CEO
(cid:116)(cid:1) divisional EBIT performance,
(cid:116)(cid:1) performance against various budget measures,
(cid:116)(cid:1)
(cid:116)(cid:1)
leadership and staff development,
ratings performance for television executives in key demographics,
(cid:116)(cid:1) performance for launch of new shows in the television business,
(cid:116)(cid:1) circulation performance and market share for the magazine executives,
(cid:116)(cid:1)
revenue and advertising share performance,
(cid:116)(cid:1) cost management and delivery of cost targets.
Each individual measure is allocated a specific weighting such that the sum of the collective measures’
weightings equals the relevant percentage of the participant’s STI opportunity.
Performance measurement
The Managing Director & Chief Executive Officer assesses each executive’s performance at the end of the financial year relative
to agreed business and individual targets. Based on this assessment, the Managing Director & Chief Executive Officer makes a
recommendation to the Committee for approval.
Based on each executive’s individual performance rating, the Managing Director & Chief Executive Officer may apply a discretionary
adjustment during the performance assessment process. Discretionary adjustments are applicable to the overall STI award and are
limited to a 25% increase to the overall award. The level of discretionary adjustment applied is based on the executive’s individual
performance rating and represents the maximum award opportunity for material out-performance.
44
Seven West Media
Remuneration Report
FOR THE YEAR ENDED 29 JUNE 2013
STI deferral
To enhance long-term focus, where the STI award amount reaches or exceeds the on-target amount, fifty per cent of the award
is deferred into share rights. The deferred portion of STI is not subject to further performance conditions (other than continuous
employment such that if the executive’s employment is terminated they do not receive the portion of the unvested deferred share
rights). The share rights vest in three equal tranches, over a period of three years. Executives do not have any entitlements to dividends
until the share rights have vested.
The following diagram is based on the FY13 performance period where a portion of the STI may be deferred into share rights once
the awards amount reaches or exceeds on-target amount. No executive received an on-target STI award in FY13 and therefore no
deferred share rights will be granted in respect of FY13 STI awards.
Payment based on FY13 performance:
A portion paid in cash and a portion
deferred into share rights
FY14
FY13 Performance period
Performance measured against KPIs
FY15
Deferral
FY16
The table below outlines the STI award outcomes for each executive in FY13.
Share rights vest 1/3rd after end of subsequent financial year: FY14, F15 and FY16
Executive
Chief Financial Officer – David Boorman from 3 June 2013
Chief Sales and Digital Officer – Kurt Burnette
Chief Executive Officer Pacific Magazines – Nick Chan
Group Chief – Corporate and Regulatory Affairs – Bridget Fair
Chief Financial Officer – Peter Lewis until 30 April 2013
Group Chief Operating Officer – Rohan Lund from 1 September 2012
Group Chief Legal and Commercial Director – Bruce McWilliam
Managing Director & Chief Executive Officer – Don Voelte AO
Chief Executive Officer WA – Chris Wharton
Chief Executive Officer Broadcast Television – Tim Worner
% of on-target
FY13 STI paid
in cash
% of on-target
FY13 STI
forfeited
Portion of FY13
STI deferred into
share rights
0%
75%
27%
60%
0%
40%
40%
0%
20%
60%
0%
25%
63%
40%
100%
60%
60%
0%
80%
40%
0
0
0
0
0
0
0
0
0
0
The remuneration tables in section 2.a. contain a comparison to FY12 bonus payments.
STI payments of between 20% and 75% of on-target STI awards for FY13 were made to reflect the significant effort and exceptional
performance of executives in delivering an ambitious cost control program, achieving efficiencies across the business and strong
performance as compared to its peer group.
The proportion of on-target STI awarded to Mr Worner for FY13 reflects his performance in delivering the divisional EBIT target
for the Television business and his development and successful execution of strategy, including delivering historic high market
television revenue share.
Long-term incentive plan
In FY13 executives (other than Mr Voelte) were invited by the Board to participate in the LTI plan. The value of the LTI granted in
FY13 to each executive was equivalent to 25% of the executive’s fixed remuneration. The purpose of the LTI plan is to encourage
sustained performance, drive long-term shareholder value creation and ensure alignment of executive remuneration outcomes
to shareholder interests. LTI awards, which are structured as rights to acquire ordinary shares in the Company at no cost to the
executive, will only deliver benefits to participants if certain earnings targets and shareholder returns are achieved and the executive
remains employed by the Company over the three-year performance period.
Shares acquired on vesting of performance rights (to the extent the performance hurdles are achieved) are subject to a minimum
12-month disposal restriction.
Seven West Media (ABN 91 053 480 845) 45
Remuneration Report
FOR THE YEAR ENDED 29 JUNE 2013
Seven West Media long-term incentive plan
What is granted?
How many performance
rights are granted?
The grant is made in the form of performance rights. The performance rights are granted at no
cost and each right entitles the participant to one ordinary share in the Company, subject to the
achievement of the performance hurdles and service conditions outlined below.
The value of LTI granted is allocated annually and is 25% of the participant’s fixed remuneration. The
number of performance rights granted to each executive is equivalent to the face value of the LTI
grant divided by an amount calculated based on the share price in accordance with the terms and
conditions of the plan.
What is the performance hurdle?
The vesting of performance rights granted under the LTI plan is dependent on two independent
performance measures, Diluted Earnings Per Share (DEPS) and TSR.
Why was the DEPS performance
hurdle chosen, and how is
performance measured?
Half of the award is subject to a DEPS hurdle. DEPS provides a direct link between executive
rewards with the creation of wealth driven through the increase in earnings per share received by
shareholders. The DEPS target that was used for the FY13 LTI grant is the sum of three annual
DEPS growth targets each set by the Board for the three years (i.e., FY13, FY14 and FY15). The
Board believes this is the appropriate way to assess the Company’s performance as it reflects the
performance expectations for each coming year, taking into account external market conditions and
projected outlook. The DEPS target will be set and communicated to executives at the beginning of
the financial year and disclosed retrospectively the following financial year.
The actual annual DEPS targets and performance against each target will be disclosed retrospectively
(i.e., in the following financial year). Diluted EPS is calculated by dividing the net profit or loss (for
the reporting period) by the weighted average number of ordinary shares in the Company plus
the potential number of ordinary shares that may be on issue (for example, from conversion of the
Company’s Convertible Preference Shares). EPS will be the audited figure for diluted earnings per
share as reported in the relevant Annual Report. The Board has discretion to make such adjustments
to this figure for abnormal or unusual profit items as it considers appropriate.
The Board believes that setting hurdles based on one-year projections better align to the interests
of shareholders than setting a three-year DEPS target that may become unrealistic or insufficiently
challenging as external market conditions change. For the initial grant of performance rights, the
threshold DEPS target for FY13 will be the budget DEPS for that financial year and the stretch DEPS
hurdle will be 10% growth on actual DEPS in FY12. The percentage of DEPS performance rights that
vest (if any) at the end of the three-year performance period will be based on the following schedule:
Aggregate DEPS over the three years
Equal to or above the aggregate stretch DEPS
Between the aggregate threshold DEPS and the
aggregate stretch DEPS
At the aggregate threshold DEPS
Less than the aggregate threshold DEPS
Proportion of DEPS performance
rights that vest (%)
100%
Straight-line vesting*
50%
Nil
* The proportion of DEPS performance rights that vests increases in a straight line between 50% and
100% for DEPS performance between the aggregate threshold DEPS and aggregate stretch DEPS.
For FY13:
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
the Threshold (budget) DEPS was 27.5 cents;
the Stretch DEPS was 33.77 cents; and
the actual DEPS for the year ending 29 June 2013 was -6.1 cents.
46
Seven West Media
Remuneration Report
FOR THE YEAR ENDED 29 JUNE 2013
Why was the TSR performance
hurdle chosen, and how is
performance measured?
The other half of the LTI award is subject to a relative-TSR hurdle. Relative TSR provides an indicator
of shareholder value creation by comparing the Company’s return to shareholders relative to other
companies of similar size. TSR provides an external, market-based hurdle and creates the alignment
of executive remuneration outcomes to shareholder returns. Participants will not derive any benefit
from this portion of the grant unless the Company’s performance is at least at the median of the
comparator group.
The comparator group chosen for assessing the Company’s relative TSR consists of 15 S&P /
ASX 200 companies above and 15 companies below the Company’s 12-month average market
capitalisation ranking, excluding trusts and companies classified under the Metals and Mining Global
Industry Classification System (GICS). The Board believes the chosen comparator group represents
companies with which Seven West competes for talent / revenue / market share. The comparator
group is defined at the start of the performance period. The composition of the comparator group
may change as a result of corporate events, such as mergers, acquisitions, de-listings etc. The
Remuneration Committee has agreed guidelines for adjusting the comparator group following such
events, and has the discretion to determine any adjustment to the comparator group.
TSR performance is monitored and assessed by an independent advisor. The percentage of TSR
performance rights that vest (if any) at the end of the three-year performance period will be based on
the following schedule:
Company’s TSR ranking in the comparator group
Proportion of performance rights vesting
Below the 51st percentile
At the 51st percentile
Between the 51st and 75th percentiles
Above the 75th percentile
Nil
50%
Between 51% and 100%, increasing
on a straight-line basis
100%
Awards are subject to a three-year performance period. Immediately following the completion of the
performance period, the performance hurdles are tested to determine whether, and to what extent,
awards vest. The LTI Plan does not permit re-testing. Any performance rights that do not vest following
testing of performance hurdles (i.e., at the end of the three-year performance period) will lapse.
The following diagram summarises the timeline for grants made in FY13
When will performance
be tested?
Grant date
Vesting
LTI performance period
Disposal restriction
FY13
FY14
FY15
Performance measured against targets
Disposal restrictions
on vested shares
Do the performance rights carry
dividend or voting rights?
What happens in the event of a
change in control?
What happens if the participant
ceases employment?
As shown in the above diagram, shares acquired on vesting of performance rights (to the extent
the performance hurdles are achieved) are subject to a minimum 12-month disposal restriction.
Participants have the ability to elect for an additional disposal restriction period to apply beyond the
required 12 months.
Performance rights do not carry any dividend or voting rights prior to vesting.
In the event of a change of control of the Company unvested performance rights may vest to the
extent the performance hurdles are considered to have been achieved to the date of the transaction.
The Board will have discretion to determine whether any additional vesting should occur.
If the participant ceases employment before the end of the performance period by reason of death,
disablement, retirement, redundancy or for any other reason approved by the Board, unvested
awards remain on-foot, subject to original performance hurdles, although the Board may determine
that awards should be forfeited. If the participant ceases employment before the end of the
performance period by reasons other than outlined above, unvested awards will lapse.
Seven West Media (ABN 91 053 480 845) 47
Remuneration Report
FOR THE YEAR ENDED 29 JUNE 2013
Under the Seven West Media Equity Plan Rules, executives who are granted share based payments, such as performance rights
under the LTI plan, as part of their remuneration are prohibited from entering into other arrangements that limit their exposure to
losses that would result from share price decreases.
c. Incoming Group Chief Executive Officer Remuneration
Mr Worner was appointed Chief Executive Officer of Seven West Media from 1 July 2013. The key terms of Mr Worner’s employment
arrangements as Chief Executive Officer were announced to ASX on 21 May 2013. He is employed under a 3 year fixed-term contract
however at the end of the first anniversary of the commencement date either the Company or Mr Worner has an option to extend the
term for a further year. If such option is exercised then on the second anniversary of the commencement date either the Company
or Mr Worner has an option to extend the term for a further additional year. The Company may give Mr Worner 12 months’ notice to
terminate and Mr Worner may give the Company 12 months’ notice to terminate after the first two years of his term.
In appointing Mr Worner and setting his remuneration, the Board considered Mr Worner’s extensive experience with the Company
and his exceptional performance, leadership and key strategic contributions in his previous executive roles with the Company. Mr
Worner’s remuneration was set having regard for the remuneration of peers in the industry through review of market remuneration
data from companies in Seven West Media Limited’s market peer group. The Board considered that Mr Worner’s remuneration was
reasonable for the Company to offer in the circumstances of the Company and having regard to his responsibilities as the CEO of
the leading multi-platform media organisation in Australia as well as remuneration of other executives across the Group.
Fixed remuneration
Mr Worner’s total fixed annual remuneration is $2,600,000.
Short term incentive
Mr Worner will participate in the Seven West Media STI Plan with a target opportunity of 50% of fixed remuneration. Mr Worner’s
participation in the STI plan will be on the same terms as described in this report for other executives except for the following:
(cid:116)(cid:1) The CEO’s KPIs are approved by the Board;
(cid:116)(cid:1) The Committee assesses the Chief Executive Officer’s performance and makes a recommendation to the Board for approval; and
(cid:116)(cid:1) The Committee may apply an additional discretionary adjustment based on the Chief Executive Officer’s individual performance
rating that is limited to the same parameters as for other executives.
Participant
Scorecard measures and weightings
Chief Executive
Officer
Individual scorecard measures are grouped into two categories – quantitative and qualitative measures.
Individual measures include:
(cid:116)(cid:1) Group and divisional EBIT performance,
(cid:116)(cid:1) performance against various budget measures,
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1) cost management across the Group,
(cid:116)(cid:1) Company representation.
leadership and executive development,
ratings performance for the television business in key demographics,
relevant circulation performance and market share for the publishing businesses,
revenue and advertising share performance,
Each individual measure is allocated a specific weighting such that the sum of the collective measures’ weightings
equals the relevant percentage of the participant’s STI opportunity. For the CEO, 65% of his STI goals relate to
budget, cost and EBIT measures.
Long term incentive
Mr Worner will participate in the Seven West Media LTI Plan with a target opportunity of 50% of fixed remuneration. Mr Worner’s
participation in the LTI plan will otherwise be on the same terms as described in this report for other executives.
Summary of remuneration mix
The relative proportions of total possible remuneration that are linked to performance and those that are fixed for the incoming
Group CEO are as follows:
Fixed remuneration
At risk – STI (on-target)
50%
25%
At risk – LTI
25%
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Seven West Media
Remuneration Report
FOR THE YEAR ENDED 29 JUNE 2013
Link between remuneration policy and Group performance
d.
In FY13, the remuneration policy was linked to profit before significant items, net finance costs and tax (EBIT), diluted earnings per
share (DEPS) and total shareholder return (TSR) performance of the Group. The following table sets out the Group’s performance
over the last 5 financial years:
Profit before significant items, net finance costs and tax (EBIT) ($’000’s)
Net finance costs ($’000’s)
Significant items* ($’000’s)
Profit/(Loss) before tax ($’000’s)
Diluted earnings per share (as reported) (cents) +
Diluted earnings per share (before significant items*) (cents)
Share price as at reporting date ($)
Return on capital employed (%)
2009
2010
2011
2012
2013
156,584
(20,422)
(14,067)
122,095
41.5
46.2
4.36
40.07
153,564
(19,455)
–
134,109
45.0
45.0
6.54
41.06
243,947
(44,037)
(26,380)
173,530
35.2
43.3
4.00
4.81
473,423
422,015
(148,240)
(102,452)
–
(294,933)
325,183
11,189
26.7
26.7
1.75
10.26
–6.1
19.8
1.90
9.54
+ AASB 133: Earnings per Share requires the calculation of basic and diluted earnings per share for all periods presented to be adjusted retrospectively for shares to be issued under a
rights issue. Accordingly, the weighted average number of ordinary shares includes an adjustment for the 1-for-2 entitlement for both the 2011 and 2012 financial years (refer to note 29 in
the financial statements).
*
For details of significant items refer note 5 to the financial statements
Group performance is linked to the STI Plan through EBIT hurdles. Group performance is linked to the LTI plan through the DEPS
and TSR targets.
Seven West Media (ABN 91 053 480 845) 49
Remuneration Report
FOR THE YEAR ENDED 29 JUNE 2013
2. Remuneration in detail
Amounts of remuneration
a.
Details of the remuneration of the Seven West Media Limited and Group KMP are set out in the following tables.
The KMP have authority and responsibility for planning, directing and controlling the activities of the Group. For the year ended 29
June 2013, KMP includes the directors of Seven West Media Limited, the Managing Director & Chief Executive Officer, and certain
executives that report directly to the Managing Director & Chief Executive Officer. The remuneration disclosed for the executives of
Seven West Media reflects their remuneration for the period that they were considered to be KMP.
KMP executives, whose remuneration has been disclosed in this report, are:
(cid:116)(cid:1) DR Voelte AO
Managing Director & Chief Executive Officer (until 30 June 2013)
(cid:116)(cid:1) DJ Boorman
Chief Financial Officer (appointed 3 June 2013)
(cid:116)(cid:1) KJ Burnette
Group Chief Sales & Digital Officer
(cid:116)(cid:1) N Chan
(cid:116)(cid:1) BC Fair
(cid:116)(cid:1) PJ Lewis
(cid:116)(cid:1) RT Lund
Chief Executive Officer Pacific Magazines
Group Chief – Corporate and Regulatory Affairs (appointed 1 February 2013)
Chief Financial Officer (until 30 April 2013)
Group Chief Operating Officer (appointed 1 September 2012)
(cid:116)(cid:1) BI McWilliam
Group Chief Legal and Commercial Director
(cid:116)(cid:1) CS Wharton
Chief Executive Officer WA
(cid:116)(cid:1) TG Worner
Chief Executive Officer Television (until 30 June 2013), Chief Executive Officer (from 1 July 2013)
Directors, whose remuneration has been disclosed in this report are:
(cid:116)(cid:1) KM Stokes AC Chairman
(cid:116)(cid:1) DR Voelte AO
Deputy Chairman (Appointed 1 July 2013)
(cid:116)(cid:1) JH Alexander
Director (Appointed 2 May 2013)
(cid:116)(cid:1) D Evans
Director (Appointed 21 August 2012)
(cid:116)(cid:1) Dr ME Deaker
Director (Appointed 21 August 2012)
(cid:116)(cid:1) DR Flynn
(cid:116)(cid:1) PJT Gammell
(cid:116)(cid:1) GT John AO
(cid:116)(cid:1) JC Reizes
Director
Director
Director
Director
(cid:116)(cid:1) RK Stokes
Director (Appointed 21 August 2012)
(cid:116)(cid:1) SMC Walsh AO Director (Resigned 30 January 2013)
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Seven West Media
Remuneration Report
FOR THE YEAR ENDED 29 JUNE 2013
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Seven West Media (ABN 91 053 480 845) 51
Remuneration Report
FOR THE YEAR ENDED 29 JUNE 2013
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i
Remuneration Report
FOR THE YEAR ENDED 29 JUNE 2013
Share rights granted as compensation
b.
Seven West Media Limited Equity Incentive Plan – 2013 Long Term Incentive Offer
Details of vesting profiles of the share rights granted as remuneration in FY13 to each executive of the Group are detailed below.
Number share
rights
Grant Date
Expiry Date
Fair value per
right at Grant
Date TSR
component
($)
Fair value per
right at Grant
Date DEPS
component
($)
Number of
rights vested
during FY13
% forfeited
in FY13
End of
financial
year in which
grant vests
KJ Burnette
182,231 1 March 2013 1 September 2015
N Chan
PJ Lewis
RT Lund
BI McWilliam
CS Wharton
TG Worner
154,958 1 March 2013 1 September 2015
258,264 1 March 2013 1 September 2015
203,512 1 March 2013 1 September 2015
227,272 1 March 2013 1 September 2015
206,611 1 March 2013 1 September 2015
516,528 1 March 2013 1 September 2015
$0.93
$0.93
$0.93
$0.93
$0.93
$0.93
$0.93
$2.07
$2.07
$2.07
$2.07
$2.07
$2.07
$2.07
–
–
–
–
–
–
–
–
–
30 June 2016
30 June 2016
100
–
–
–
–
–
30 June 2016
30 June 2016
30 June 2016
30 June 2016
Seven West Media Limited Equity Incentive Plan – 2013 Short Term Incentive Offer
No share rights were granted as remuneration in FY13 to executives.
Fixed and variable remuneration
c.
The relative proportions of total possible remuneration that are linked to performance and those that are fixed are as follows:
Name
DR Voelte AO
KJ Burnette
DJ Boorman (i)
N Chan
BC Fair (ii)
PJ Lewis
RT Lund
BI McWilliam
CS Wharton
TG Worner (iii)
Fixed remuneration
At risk – STI (on-target)
At risk – LTI
2013
2012
2013
2012
2013
2012
100%
57%
100%
57%
80%
67%
57%
67%
57%
57%
NA
67%
NA
67%
NA
67%
NA
67%
44%
67%
0%
29%
0%
29%
20%
16.5%
29%
16.5%
29%
29%
NA
33%
NA
33%
NA
33%
NA
33%
22%
33%
0%
14%
0%
14%
0%
16.5%
14%
16.5%
14%
14%
NA
NA
NA
NA
NA
NA
NA
NA
34%
NA
(i) Mr Boorman was appointed on 3 June 2013. His variable remuneration commences from FY14.
(ii) Ms Fair was appointed on 1 February 2013. Her LTI participation commences from FY14.
(iii) Mr Worner was appointed as Group CEO on 1 July 2013. His remuneration mix in his Group CEO role is set out in section 1.c. of the Remuneration Report.
Further information on remuneration of directors and other Key Management Personnel is set out in the Corporate Governance
Statement and note 26 to the Financial Statements.
3. Service agreements
The terms of employment for the Managing Director & Chief Executive Officer, 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.
Managing Director & Chief Executive Officer and other KMP
Mr Voelte was entitled to an annual fixed remuneration of $2,600,000 and was not entitled to any variable remuneration. In setting
Mr Voelte’s remuneration, the Board had determined that the duties and responsibilities of his near term role did not require a
variable component. Mr Voelte’s employment as Managing Director & Chief Executive Officer ceased on 30 June 2013 and as
a result he ceased to be key management personnel from that date. Subsequent to 30 June 2013 Mr Voelte did not receive any
further remuneration other than payment for his accrued statutory entitlements. He has been appointed as the non-executive
Deputy Chairman of Seven West Media Limited from 1 July 2013.
Seven West Media (ABN 91 053 480 845) 53
Remuneration Report
FOR THE YEAR ENDED 29 JUNE 2013
Name
Duration of Contract
DR Voelte AO
Open ended
Period of Notice Required to
Terminate the Contract
Contractual
Termination Benefits
Three months’ notice by Mr Voelte AO
and one months’ notice by the Company
Nil
KJ Burnette
Three years
Three months’ notice given by either
party after the fixed term.
Remainder of contract term,
plus notice period, to a maximum
of 12 months where termination
occurs during the contract term
DJ Boorman
Open ended
Three months’ notice
Nil
N Chan
One year
Three months’ notice given by either
party after the fixed term.
Remainder of contract term,
plus notice period, to a maximum
of 12 months where termination
occurs during the contract term
BC Fair
PJ Lewis
RT Lund
Open ended
Open ended
Open ended
BI McWilliam
Open ended
CS Wharton
Open ended
Three months’ notice
Three months’ notice
Three months’ notice by Mr Lund
and six months’ notice by the Company
Three months’ notice
Three months’ notice
TG Worner (i)
Three years (ii)
Twelve months’ notice (iii)
Nil
Nil
Nil
Nil
Nil
Nil
(i) The terms of the agreement refer to Mr Worner’s role as Chief Executive Officer commencing from 1 July 2013.
(ii)
At the end of the first anniversary of the commencement date either the Company or Mr Worner has an option to extend the term for a further year. If such option is exercised then on the
second anniversary of the commencement date each either the Company or Mr Worner has an option to extend the term for an additional year.
(iii) The Company may give Mr Worner twelve months’ notice to terminate and Mr Worner may give the Company twelve months’ notice to terminate other than during the first two years of the term.
Legacy share-based compensation plans
4.
Legacy 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:
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.
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.
Legacy executive share based compensation plans
Prior to FY13, the Company offered equity plans for executives in which some unvested awards remain on-foot.
The operation of the equity plans has otherwise been discontinued. Details of these plans are as follows:
Seven Media Group Performance Management Plan transitional equity grant
A grant of share rights was provided for selected former Seven Media Group executives during their transitioning onto the Seven
West Media arrangements in lieu of a 2011 financial year (FY11) LTI grant. The grant of equity was consistent with the terms
provided under the former Seven Media Group Performance Management Plan award (SMG PMP).
Details of vesting profiles of the share rights that remain on-foot to each executive of the Group are detailed below.
Number of
share rights
Grant Date
Expiry date
TG Worner
25,374 1 March 2012
1 October 2012
25,374 1 March 2012
1 October 2013
25,374 1 March 2012
1 October 2014
Fair value per
right at grant
date ($)
$3.42
$3.09
$2.79
Number of
rights vested
during FY13
25,374
–
–
% forfeited
in FY13
End of financial
year in which
grant vests
–
–
–
30 June 2013
30 June 2014
30 June 2015
LTI Plan – CEO of WA
An LTI plan was in place for the CEO of WA, Mr CS Wharton, in FY10, FY11 and FY12. No grant was made under the LTI plan in
respect of the FY12 performance period due to business performance during the period. From FY13 Mr Wharton was transitioned
to the Seven West Media LTI plan.
54
Seven West Media
Remuneration Report
FOR THE YEAR ENDED 29 JUNE 2013
Details of vesting profiles of the awards that remain on-foot to Mr Wharton are detailed below.
Number of
performance
rights
Grant Date
Expiry date
Fair value per
right at grant
date ($)
Number of
rights vested
during FY13
% forfeited
in year
End of financial
year in which
grant may
first vest
CS Wharton (i)
41,081 3 August 2010
3 August 2015
CS Wharton (ii)
69,986 12 August 2011
12 August 2016
$4.95
$1.75
–
–
–
–
30 June 2014
30 June 2015
The remaining awards will vest in accordance with the TSR hurdles outlined below. The Company has performed the 3 year test
on Mr Wharton’s 3 August 2010 performance rights as at 3 August 2013 and determined that 0% of the performance rights have
vested. The 3 August 2010 performance rights remain on-foot to Mr Wharton with a further test to be performed at years 4 and 5.
LTI – CEO of WA vesting conditions
The TSR of the Company is measured as a percentile ranking compared to a comparator group of
companies over the performance period (from grant date to test date).
Awards vest based on the ranking against companies in the comparator group, based on the
following schedule:
How is TSR performance
measured?
Company’s TSR ranking
in the comparator group
Below the 50th percentile
At the 50th percentile
Between the 50th and 75th percentiles
At the 75th percentile
Between the 75th and 100th percentiles
At the 100th percentile
Proportion of
performance rights vesting
Nil
50%
Between 50% and 100%,
increasing on a straight-line basis
100%
Between 100% and 150%,
increasing on a straight-line basis
150%
When will performance be tested?
There are three test dates for the performance rights, being 3, 4 and 5 years after the date of grant.
Do the performance rights carry
dividend or voting rights?
What happens in the event of a
change in control?
What happens if the participant
ceases employment?
Performance rights do not carry any dividend or voting rights.
In the event of a change of control of the Company unvested performance rights may vest to the
extent the performance hurdles are considered to have been achieved to the date of the transaction.
The Board will have discretion to determine whether any additional vesting should occur.
If the participant ceases employment before the end of the performance period by reason of death,
disablement, retirement, redundancy or for any other reason approved by the Board, unvested
awards remain on-foot, subject to original performance hurdles, although the Board may determine
that awards should be forfeited. If the participant ceases employment before the end of the
performance period by reasons other than outlined above, unvested awards will lapse.
Are there any disposal restrictions
once the performance rights vest?
There are no disposal restrictions once the performance rights vest.
Non-executive directors share plan
As noted earlier in this Remuneration Report, during FY13 the Board determined to discontinue the NED Share Plan.
5. Services from Remuneration Consultants
The Committee did not engage any remuneration consultants to provide remuneration recommendations in FY13.
During FY13 Mercer Consulting (Australia) Pty Ltd (Mercer) was engaged by the Company to provide market remuneration data on
executive roles, including select KMP roles. In the course of providing this information, the Board is satisfied that Mercer did not
make any remuneration recommendations relating to KMP as defined by the Corporations Act.
During FY13 Ernst and Young (EY) was engaged by the Company to provide market remuneration data on non-executive director
fees. In the course of providing this information, the Board is satisfied that EY did not make any remuneration recommendations
relating to KMP as defined by the Corporations Act.
End of remuneration report
Seven West Media (ABN 91 053 480 845) 55
Directors’ Report
FOR THE YEAR ENDED 29 JUNE 2013
Indemnity and Insurance of directors and officers
The Constitution of the Company provides an indemnity to any current and former Director, Alternate Director and Secretary of the
Company against any liabilities incurred by that person, or arising out of, the discharge of duties as an officer of the Company or
the conduct of the business of the Company, including associated legal costs defending any proceedings relating to that person’s
position with the Company.
As permitted by the Constitution of the Company, the Company has entered into deeds of access, insurance and indemnity with
each Director as at the end of the financial year.
No amounts were paid and no actions were taken pursuant to these indemnities during the year.
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:
(cid:116)(cid:1) all non-audit services have been reviewed by the Audit Committee to ensure they do not impact the impartiality and objectivity
of the auditor;
(cid:116)(cid:1) 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 57.
Details of amounts paid or payable to the auditor, KPMG, for audit and non-audit services provided during the year are set out in
note 23 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.
Mr Kerry Stokes AC
Sydney
22 August 2013
56
Seven West Media
Auditor’s Independence
Declaration
FOR THE YEAR ENDED 29 JUNE 2013
Seven West Media (ABN 91 053 480 845) 57
SEVEN WEST MEDIA – ANNUAL REPORT 2013
FINANCIAL
STATEMENTS
58
Seven West Media
Consolidated Statement of Profit or Loss and Other
Consolidated Statement of Profit or Loss and
Comprehensive Income
Other Comprehensive Income
FOR THE YEAR ENDED 29 JUNE 2013
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
Revenue
Other income
Revenue and other income
Expenses
Share of net profit of equity accounted investees
Impairment of intangible assets
Impairment of equity accounted investees
Profit before net finance costs and tax
Net finance costs
Profit before tax
Tax expense
(Loss) profit for the year
Other comprehensive (expense) income
Items that may be reclassified subsequently to profit or loss:
Effective portion of changes in fair value of cash flow hedges
Tax relating to items that may be reclassified subsequently to profit or loss
Other comprehensive expense for the year, net of tax
Notes
3
3
4
12
5
5
6
7
2013
$’000
2012
$’000
1,866,457
1,937,107
260
227
1,866,717
1,937,334
(1,479,600)
(1,483,995)
15,251
(227,274)
(61,453)
20,084
-
-
113,641
473,423
(102,452)
(148,240)
11,189
325,183
(80,947)
(98,294)
(69,758)
226,889
(1,839)
551
(1,288)
(6,192)
1,858
(4,334)
Total comprehensive (expense) income for the year attributable to owners of the Company
(71,046)
222,555
Earnings per share for (loss) profit attributable to the ordinary equity holders of the Company
Basic earnings per share
Diluted earnings per share
29
29
-7.1 cents
-6.1 cents
33.3 cents
26.7 cents
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
Seven West Media (ABN 91 053 480 845) 59
Consolidated Statement of
Consolidated Statement of Financial Position
Financial Position
Seven West Media Limited
AS AT 29 JUNE 2013
AS AT 29 JUNE 2013
Notes
2013
$’000
2012
$’000
8
9
10
11
10
12
13
14
15
7
11
16
17
18
16
17
18
19
20
21
257,316
278,105
117,508
5,105
658,034
-
304,394
777
75,052
329,865
116,442
7,862
529,221
4,035
351,766
777
241,357
262,410
3,632,015
3,865,545
26,270
3,191
22,040
2,795
4,208,004
4,509,368
4,866,038
5,038,589
321,875
339,281
76,838
20,044
25,308
64,352
19,096
6,230
444,065
428,959
35,937
16,513
7,539
39,557
16,350
4,531
1,498,106
1,929,799
1,558,095
1,990,237
2,002,160
2,419,196
2,863,878
2,619,393
3,090,405
2,656,017
(5,263)
(221,264)
(4,893)
(31,731)
2,863,878
2,619,393
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
Equity accounted investees
Other investments
Property, plant and equipment
Intangible assets
Deferred tax assets
Other assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Deferred income
Current tax liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Provisions
Deferred income
Borrowings
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Accumulated deficit
Total equity
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
60
Seven West Media
Consolidated Statement of
Consolidated Statement of Changes in Equity
Changes in Equity
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
FOR THE YEAR ENDED 29 JUNE 2013
Cash flow
hedge
reserve
Equity
compensation
reserve
Reserve for
own shares
Retained
earnings/
(accumulated
deficit)
Total
equity
$'000
Notes
Share
capital
$'000
2,489,061
Balance at 25 June 2011
Profit for the year
Cash flow hedge losses taken to equity
Tax on other comprehensive expense
Other comprehensive expense for the year, net of tax
Total comprehensive (expense) income for the year
Transactions with owners in their capacity as owners
Shares issued pursuant to executive and employee
share plans
Dividend reinvestment plan share issues
Deferred tax recognised directly in equity
Payments made for own shares
Dividends paid
Share based payment expense
Total transactions with owners
Balance at 30 June 2012
Loss for the year
Cash flow hedge losses taken to equity
Tax on other comprehensive expense
Other comprehensive expense for the year, net of tax
Total comprehensive expense for the year
Transactions with owners in their capacity as owners
Shares issued pursuant to 1-for-2 entitlement offer
Shares issued pursuant to executive and employee
share plans
Transaction costs arising on share issues
Deferred tax recognised directly in equity
Payments made for own shares
Dividends paid
Share based payment expense
Total transactions with owners
Balance at 29 June 2013
$'000
(58)
-
(6,192)
1,858
(4,334)
(4,334)
-
-
-
-
-
-
-
-
-
-
-
-
394
166,203
359
-
-
-
166,956
2,656,017
(4,392)
-
-
-
-
-
-
(1,839)
551
(1,288)
(1,288)
439,633
10
(7,508)
2,253
-
-
-
434,388
-
-
-
-
-
-
-
-
20
20
20
22
20
20
20
20
22
$'000
217
-
-
-
-
-
-
-
-
-
-
582
582
799
-
-
-
-
-
-
-
-
-
-
-
1,135
1,135
$'000
$'000
-
-
-
-
-
-
-
-
-
(1,300)
-
-
(1,300)
(1,300)
-
-
-
-
-
-
-
-
-
(217)
-
-
22,259
2,511,479
226,889
226,889
-
-
-
(6,192)
1,858
(4,334)
226,889
222,555
-
-
-
-
394
166,203
359
(1,300)
(280,879)
(280,879)
-
582
(280,879)
(114,641)
(31,731)
2,619,393
(69,758)
(69,758)
-
-
-
(1,839)
551
(1,288)
(69,758)
(71,046)
-
-
-
-
-
439,633
10
(7,508)
2,253
(217)
(119,775)
(119,775)
-
1,135
(217)
(119,775)
315,531
3,090,405
(5,680)
1,934
(1,517)
(221,264)
2,863,878
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Seven West Media (ABN 91 053 480 845) 61
Consolidated Statement of
Consolidated Statement of Cash Flows
Cash Flows
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
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
Proceeds from sale of property, plant and equipment
Payments for software
Payments for equity accounted investees
Loans issued
Net investing cash flows
Cash flows related to financing activities
Proceeds from shares issued pursuant to 1-for-2 entitlement offer
Proceeds from shares issued pursuant to executive and employee share plans
Payments made for own shares
Payments for transaction costs arising on share issues
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.
FOR THE YEAR ENDED 29 JUNE 2013
Notes
2013
$’000
2012
$’000
12
32
14
15
12
2,115,106
2,083,033
(1,611,068)
(1,588,420)
4,270
9,496
(111,937)
(63,295)
17,333
7,436
(194,965)
(108,452)
342,572
215,965
(19,980)
524
(9,089)
(1,900)
(488)
(25,995)
428
(5,611)
-
(650)
(30,933)
(31,828)
439,633
10
(217)
20
(7,508)
-
394
(1,300)
-
-
1,993,000
(441,518)
(2,105,070)
(119,775)
(114,676)
(129,375)
(227,652)
182,264
75,052
8
257,316
(43,515)
118,567
75,052
62
Seven West Media
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
FOR THE YEAR ENDED 29 JUNE 2013
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
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, all of which are for-profit entities.
The consolidated financial statements were authorised for issue by the Board of Directors on 22 August 2013.
(a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards (AASBs), other authoritative
pronouncements of the Australian Accounting Standards Board (AASB), including Australian Interpretations and the Corporations Act 2001.
Compliance with 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).
New and amended standards adopted by the Group
None of the new standards and amendments to standards that are mandatory for the first time for the financial year beginning 1 July 2012
affected any of the amounts recognised in the financial statements of the Group for current or comparative periods and are not likely to
affect future periods. However, amendments made to AASB 101 Presentation of Financial Statements effective 1 July 2012 now requires the
statement of comprehensive income to show the items of comprehensive income grouped into those that are not permitted to be
reclassified to profit or loss in a future period and those that may have to be reclassified if certain conditions are met.
Early adoption of standards
The Group has not elected to apply any pronouncements before their operative date in the annual reporting period beginning 1 July 2012.
Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of derivative instruments
held at fair value.
Use of estimates and judgements
The preparation of financial statements requires the use of certain accounting estimates and assumptions. 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
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
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
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.
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 group
accounting policy stated in note 1(j). The recoverable amounts of cash-generating units have been determined based on value in use and fair
value less costs to sell approaches. These calculations require the use of assumptions. Refer to note 15 for details of these assumptions.
Tax exposures
In determining the amount of current and deferred tax, the Group takes into account the impact of uncertain tax positions and whether additional
taxes and interest may be due (refer note 7). This assessment relies on estimates and assumptions and may involve a series of judgments about
future events. New information may become available that causes the Group to change its judgment regarding the adequacy of existing tax liabilities.
Such changes to tax liabilities will impact tax expense in the period that such a determination is made.
Seven West Media (ABN 91 053 480 845) 63
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
FOR THE YEAR ENDED 29 JUNE 2013
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Basis of preparation (continued)
Other assets
The Group also tests other assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable.
Comparatives
Comparative information is reclassified where appropriate to enhance comparability.
(b) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Seven West Media Limited as at 29 June 2013 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
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
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.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control
ceases.
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
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.
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.
(ii) Associates and jointly controlled entities (equity-accounted investees)
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,
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, 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.
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
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
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,
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
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.
(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 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.
64
Seven West Media
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
FOR THE YEAR ENDED 29 JUNE 2013
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d) Foreign currency translation
(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
which the entity operates ('the functional currency'). The consolidated financial statements are presented in Australian dollars, which is the Group’s
functional and presentation currency.
(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 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
qualifying cash flow hedges.
(e) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of agency commissions,
discounts, 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 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:
(i) Advertising
Revenue is recognised when the advertisement has been published or broadcast.
Revenue from advertising services provided in exchange for broadcast rights or other goods or services is measured at the fair value of the goods
or services received. When the fair value of the goods or services received cannot be measured reliably, the revenue is measured at the fair
value of the advertising services provided.
Contra advertising and advertorial revenue are recognised at the fair value of the goods or services received or if they cannot be measured
reliably, at the fair value of the advertising services provided.
(ii) Circulation and commercial printing
Revenue is recognised when the significant risks and rewards of ownership have passed to the buyer and control of the right to be compensated
has been obtained.
(iii) Program sales
Program sales revenue is recognised upon delivery of episodes to the buyer. Affiliate revenue is recognised in line with the contract terms and
conditions held with affiliates.
(iv) Government grants
Government grants are recognised initially in the statement of financial position as deferred income when it is highly probable that the
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
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
the lifetime of the asset on a systematic basis.
(v) Rendering of services
Revenue is recognised when the service has been performed, the stage of completion can be measured reliably and the costs to complete can
be measured reliably.
(vi) Rental Income
Rental income is recognised in profit and loss on a straight line basis over the term of the lease.
(vii) Dividends
Dividend income is recorded net of any franking credits. Dividends are recognised when the right to receive payment is established.
Seven West Media (ABN 91 053 480 845) 65
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
FOR THE YEAR ENDED 29 JUNE 2013
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(f) Finance income and costs
Interest income is recognised on a time proportion basis that takes into account the effective yield on the asset. It comprises income on funds
invested and fair value gains on financial assets at fair value through profit or loss.
Finance costs comprise interest expense on borrowings, the ineffective portion of cash flow hedges and fair value losses on financial assets at
fair value through profit or loss.
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.
(g) Tax
The tax expense for the year is the tax payable on the current year’s taxable income based on the national tax rate adjusted by changes in deferred
tax assets and liabilities attributable to temporary differences and to unused tax losses.
Deferred 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 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
nor taxable profit or loss. Deferred 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 tax asset is realised or the deferred tax liability is settled.
In determining the amount of current and deferred tax, the Group takes into account the impact of uncertain tax positions and whether additional
taxes and interest may be due. The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment
of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve
a series of judgments about future events. New information may become available that causes the Group to change its judgment regarding the
adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.
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
associated with intangible assets 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.
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
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
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.
Tax consolidation
The Company and it's wholly owned Australian resident entities are part of a tax consolidated group. As a consequence, all members of the
tax consolidated group are taxed as a single entity. The head entity within the tax consolidated group is Seven West Media Limited.
(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 (refer note 25).
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.
Lease income from operating leases, where the Group is a lessor, is recognised as income on a straight-line basis over the lease term.
66
Seven West Media
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(i) Acquisition of assets and business combinations
FOR THE YEAR ENDED 29 JUNE 2013
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
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
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
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
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
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
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.
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.
(j) Impairment of non-financial assets
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
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
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
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.
Impairment losses are recognised in profit and loss unless the asset has previously been revalued, in which case the impairment is recognised as
a reversal to the extent of that previous revaluation with any excess recognised in the profit and loss.
(k) Cash and cash equivalents
For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand and deposits held at call or with maturities
of three months or less with financial institutions.
(l) Trade and other receivables
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.
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
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
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
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
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.
Other receivables are reviewed on an ongoing basis and are written down to their recoverable amount when this amount is in excess of the
carrying value.
Seven West Media (ABN 91 053 480 845) 67
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
FOR THE YEAR ENDED 29 JUNE 2013
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(m) Program rights
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.
Recognition
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.
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
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.
(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
the inventories, direct labour and materials, directly attributable fixed and variable overheads and also includes 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
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.
(o) Investments and other financial assets
The Group classifies its financial assets in the following categories:
(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
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
receivables are included in receivables in the statement of financial position. Loans and receivables are carried at amortised cost using the effective
interest method.
(ii) Other Investments
These unlisted equity securities are available for sale non-derivative assets 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 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
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
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
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
included in profit or loss as gains and losses from investment securities.
The fair values of quoted investments are based on current bid prices. For financial assets in a market that 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
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.
68
Seven West Media
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(o) Investments and other financial assets (continued)
(ii) Other Investments (continued)
FOR THE YEAR ENDED 29 JUNE 2013
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
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
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.
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 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
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.
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
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
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 16. 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
(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.
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
is recognised.
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
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
to profit or loss.
(q) 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
attributable to the acquisition of the items.
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
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.
Seven West Media (ABN 91 053 480 845) 69
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
FOR THE YEAR ENDED 29 JUNE 2013
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(q) Property, plant and equipment (continued)
Land is not depreciated. Leasehold improvements are depreciated over the shorter of the life of the lease of each property or the life of the asset.
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:
Buildings
Printing presses and publishing equipment
Other plant and equipment
40 years
15 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
is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount (refer
note 1(j)). Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.
(r) Intangible assets
(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
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
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
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
groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according
to operating segments (refer note 2).
(ii) Newspaper mastheads and radio licenses
The newspaper mastheads and radio licences of the Group are carried at cost less accumulated impairment loses. 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
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.
(iii) Magazine mastheads
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
is an indication that they may be impaired (refer note 1(j)). Magazines mastheads are carried at cost less accumulated impairment losses.
(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
period of the licences ranging from 8 to 25 years.
(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,
television licences are tested for impairment annually, or whenever there is an indication that they may be impaired (refer note 1(j)). Television
licences are carried at cost less accumulated impairment losses.
(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 contract.
(vii) Computer software
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. Costs capitalised include external direct costs
of materials and service. Amortisation is calculated on a straight-line basis over periods generally ranging from three to five years.
70
Seven West Media
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
FOR THE YEAR ENDED 29 JUNE 2013
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(s) 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
are unsecured and are usually paid within 30-60 days of recognition.
(t) Borrowings
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
borrowings using the effective interest method. Any related accrued interest is included in trade creditors and accruals.
(u) 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,
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.
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
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
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.
(v) Employee benefits
(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
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
for employee benefits. Sick leave is recognised in profit or loss when the leave is taken and measured at the rates paid.
(ii) 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 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
is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are
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.
(iii) Share-based payments
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 30.
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 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
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.
It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
Seven West Media (ABN 91 053 480 845) 71
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
FOR THE YEAR ENDED 29 JUNE 2013
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(v) Employee benefits (continued)
(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
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:
-
-
-
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
past practice gives clear evidence of the amount of the obligation.
to be paid when they are settled.
(v) Termination benefits
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
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
are discounted to present value.
(vi) Superannuation
Contributions made by the Company to defined contribution employee superannuation funds are charged to profit or loss in the period employees'
services are provided.
(w) Share capital
Ordinary shares and convertible preference shares are classified as equity (for information on ordinary shares and convertible preference shares,
refer to note 20). 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.
(x) 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
before the end of the reporting period but not distributed at the end of the reporting period.
(y) 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
number of ordinary shares outstanding during the financial year.
(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 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.
(iii) Retrospective Adjustments
If the number of ordinary or potential ordinary shares outstanding increases as a result of a capitalisation bonus issue or share split, or decreases as
a result of a reverse share split, the calculation of basic and diluted earnings per share for all periods presented shall be adjusted
retrospectively. In addition, basic and diluted earnings per share of all periods presented shall be adjusted for the effects of errors and adjustments
resulting from changes in accounting policies, accounted for retrospectively.
(z) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised exclusive 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
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.
72
Seven West Media
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
FOR THE YEAR ENDED 29 JUNE 2013
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(aa) 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
"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.
(ab) New accounting standards and interpretations
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 29 June 2013, and have
not been applied in preparing these consolidated financial statements. None of these are expected to have a significant effect on the consolidated
financial statements of the Group however an assessment of the impact of these new standards and interpretations is set out below:
(i) 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) and AASB 2012-6 Amendments to Australian
Accounting Standards - Mandatory Effective Date of AASB 9 and Transition Disclosures (effective from 1 January 2015)
AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities.
The standard is not applicable until 1 January 2015 but is available for early adoption. Under AASB 9, financial assets are classified and measured
based on the business model in which they are held and the characteristics of their contractual cash flows.
There will be no significant impact on the Group's accounting for financial assets or liabilities as the new requirements only affect the accounting for
financial liabilities that are designated at fair value through profit and loss. The Group's current financial instruments measured through
profit and loss will expire in the next financial year before this standard is effective. The Group does not plan to adopt this standard early.
(ii) AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in Other Entities, revised AASB 127
Separate Financial Statements and AASB 128 Investments in Associates and Joint Ventures and AASB 2011-7 Amendments to Australian
Accounting Standards arising from the Consolidation and Joint Arrangements Standards and AASB 2012-10 Amendments to Australian
Accounting Standards - Transition Guidance and Other Amendments (effective 1 January 2013)
In August 2011, the AASB issued a suite of five new and amended standards which address the accounting for joint arrangements, consolidated
financial statements and associated disclosures.
AASB 10 introduces a single control model to determine whether an investee should be consolidated. The Group is in the process of performing
an analysis of the new guidance, however it does not expect the new AASB 10 standard to have a significant impact on it's composition.
The Group has yet to complete an assessment on the impact on it's various investees that may or may not be controlled under the new rules.
AASB 11 introduces a principles based approach to accounting for joint arrangements. The focus is no longer on the legal structure of joint
arrangements, and although this is still an important consideration, the focus is on how rights and obligation are shared by the parties to the
joint arrangement. Based on the assessment of rights and obligations, a joint arrangement will be classified as either a joint operation or a joint venture.
Under AASB 11 new guidelines, the Group's investments in jointly controlled entities will be classified as joint ventures. As the Group already
applied the equity method in accounting for these investments, AASB 11 will not have any impact on the amounts recognised in its financial statements.
Application of the disclosure requirements under AASB 12 will not affect any of the amounts recognised in the financial statements but will
impact the type of information required to be disclosed in relation to the Groups investments. The Group does not expect to adopt the new
standards before their operative date. They would therefore be first applied in the financial statements for the reporting period ending 30 June 2014.
(iii) AASB 13 Fair Value Measurement and AASB 2011 - 8 Amendments to Australian Accounting Standards arising from AASB 13
(effective 1 January 2013)
AASB 13 was released in September 2011. It explains how to measure fair value and aims to enhance fair value disclosures. The Group is currently
in the process of analysis and at this stage it is not possible to determine which, if any, of its current measurement techniques will have to change
as a result of the new guidance. It is therefore not possible to state the impact, if any, of the new rules on any of the amounts recognised in the
financial statements. However application of the new standard will impact the type of information disclosed in the notes to the financial
statements. The Group does not intend to adopt the new standard before its operative date, which means that it would be first applied in the
annual reporting period ending 30 June 2014.
73
Seven West Media (ABN 91 053 480 845) 73
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
FOR THE YEAR ENDED 29 JUNE 2013
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(ab) New accounting standards and interpretations (continued)
(iv) Revised AASB 119 Employee Benefits and AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119
(effective 1 July 2013)
AASB 119 was revised in September 2011. It requires the recognition of all remeasurements of defined benefit liabilities/assets immediately
in other comprehensive income (removal of the so-called 'corridor' method), the immediate recognition of all past service cost in profit and
loss and the calculation of a net interest expense or income by applying the discount rate to the net defined liability or asset. This replaces
the expected return on plan assets that is currently included in profit or loss. The Group does not have any defined benefit plans and
therefore does not intend to adopt the revised standard before its operative date.
There are no other standards that are not yet effective and that are expected to have a material impact on the entity in the current and future
reporting periods and on foreseeable future transactions.
(ac) Parent entity financial information
The financial information for the Parent Entity, Seven West Media Limited, disclosed in note 33 has been prepared on the same basis as the
consolidated financial statements, except as set out below.
Investments in subsidiaries
(i)
Investments in subsidiaries are accounted for at cost less impairment losses in the financial statements of Seven West Media Limited.
Dividends received from subsidiaries are recognised in the parent entity's profit and loss.
(ii) Financial guarantees
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.
74
Seven West Media
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
2. SEGMENT INFORMATION
Description of segments
FOR THE YEAR ENDED 29 JUNE 2013
The chief operating decision makers consider the business from both a product and a geographical perspective and have identified the following
reportable segments:
-
Television (operation of commercial television stations)
- Newspapers (The West Australian newspaper and insert magazines and The Countryman and other newspapers published in regional areas of
Western Australia)
- Magazines (publisher of magazines)
- Other includes Quokka (a weekly classified advertising publication), Radio (radio stations broadcasting in regional areas of Western Australia),
ColourPress (commercial printing operation), digital publishing, West Australian Publishers, equity accounted investees including Yahoo!7
and Community Newspapers, corporate costs and other minor operating segments.
The segment information in the previous year has been restated for a $9,623,000 reallocation of costs between Television and Corporate to
reflect the current operating segments.
Revenue from external sales is predominantly to customers in Australia and total segment assets are predominantly held in Australia.
Total assets and liabilities by segment are not provided regularly to the chief operating decision maker and as such, are not required to be disclosed.
Year ended 29 June 2013
Total segment revenue
Inter-segment revenue
Television Newspapers
$'000
$'000
Magazines
$'000
1,267,788
302,931
256,163
-
-
-
Other
$'000
60,166
(20,591)
Total
$'000
1,887,048
(20,591)
Revenue from continuing operations
1,267,788
302,931
256,163
39,575
1,866,457
Profit before significant items, net finance costs,
tax, depreciation and amortisation
Depreciation and amortisation (i)
Profit before significant items, net finance costs and tax
Year ended 30 June 2012
Total segment revenue
Inter-segment revenue
Revenue from continuing operations
Profit before significant items, net finance costs,
tax, depreciation and amortisation
Depreciation and amortisation (i)
Profit before significant items, net finance costs and tax
319,616
(29,209)
290,407
107,461
(20,845)
86,616
36,306
(7,056)
29,250
16,621
(879)
480,004
(57,989)
15,742
422,015
1,262,305
348,231
287,196
-
-
-
1,262,305
348,231
287,196
61,788
(22,413)
39,375
1,959,520
(22,413)
1,937,107
331,485
(30,656)
137,166
(20,958)
300,829
116,208
48,713
(8,877)
39,836
17,620
(1,070)
534,984
(61,561)
16,550
473,423
(i)
Excludes program rights amortisation which is treated consistently with other media content (refer note 4).
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 significant expenditure from the operating segments.
A reconciliation of profit before significant items, net finance costs and tax to profit before tax is provided as follows:
Reconciliation of profit before significant items, net finance costs and tax
Profit before significant items, net finance costs and tax
Finance income (refer note 6)
Finance costs (refer note 6)
Profit before tax excluding significant items
Significant items before tax (refer note 5)
Profit before tax
2013
$'000
2012
$'000
422,015
13,297
473,423
7,243
(115,749)
(155,483)
319,563
325,183
(308,374)
-
11,189
325,183
Seven West Media (ABN 91 053 480 845) 75
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
3. REVENUE AND OTHER INCOME
Sales revenue
Advertising revenue (i)
Circulation revenue
Rendering of services
Other revenue
Total revenue
Other income
FOR THE YEAR ENDED 29 JUNE 2013
2013
$'000
2012
$'000
1,445,071
1,520,117
240,438
23,085
157,863
250,544
24,038
142,408
1,866,457
1,937,107
Net gain on disposal of property, plant and equipment and computer software
260
227
(i) The current year includes $23,562,000 of contra and advertorial revenue (2012: $23,400,000).
Includes all metro and regional advertising revenue from the placement of advertisements derived under broadcast licence agreements.
4. EXPENSES
Profit before tax includes the following specific expenses:
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 (excluding significant items)
Raw materials and consumables used (excluding newsprint and paper)
Repairs and maintenance
Licence fees (excluding significant items)
Licence fees change in estimate (significant item - refer note 5)
Redundancy and restructure costs (significant item- refer note 5)
Other expenses from ordinary activities
Total expenses (i)
Depreciation and amortisation
Property, plant and equipment
Intangible assets
Depreciation and amortisation excluding program rights amortisation
Television program rights amortisation
Total depreciation and amortisation
Included in the expense above are the following specific items:
Employee benefits expense
Defined contribution superannuation expense
Rental expense relating to operating leases
(i) The current year includes $23,562,000 of contra and advertorial expenses (2012: $23,400,000).
57,989
60,350
131,881
583,776
403,488
9,904
17,383
71,716
(7,386)
27,033
123,466
61,561
63,767
145,854
565,527
414,234
10,354
17,787
71,929
-
-
132,982
1,479,600
1,483,995
40,769
17,220
57,989
132,350
190,339
46,465
15,096
61,561
139,950
201,511
368,900
378,743
34,588
25,451
35,491
24,302
76
Seven West Media
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
FOR THE YEAR ENDED 29 JUNE 2013
5. SIGNIFICANT ITEMS
Profit before tax expense includes the following specific expenses for which disclosure is relevant in explaining the financial performance
of the Group:
Impairment of Magazine mastheads, licences and goodwill (i)
Impairment of other mastheads (ii)
Total Impairment of intangible assets
Impairment of equity accounted investees (iii)
Impairment of intangible assets and equity-accounted investees
Redundancy and restructure costs (iv)
Change in estimate of Television licence fee (v)
Total significant items before tax
Tax benefit
Net significant items after tax
2013
$'000
(220,774)
(6,500)
(227,274)
(61,453)
(288,727)
(27,033)
7,386
(308,374)
13,441
(294,933)
2012
$'000
-
-
-
-
-
-
-
-
-
-
(i)
Impairment losses on Magazine intangible assets were recognised during the year following an assessment of their recoverable amounts.
The impairments largely reflected the continuing subdued nature of the advertising market and structural challenges facing the publishing
industry. The total impairment comprises amounts of $69,783,000 for mastheads, $18,793,000 for licences and $132,198,000 for goodwill.
Refer note 15 for additional information on intangible assets.
(ii) An impairment loss on Quokka masthead (a weekly classified advertising publication) was recognised during the year following an
assessment of its recoverable amount. The impairment largely reflected the difficult advertising market and increasing digital competition.
(iii) An impairment loss of $60,203,000 on SWM's investment in Yahoo!7 was recognised during the year following an assessment of its recoverable
amount. The impairment largely reflected the deterioration in the results of Spreets, its group buying business. An impairment loss of
$1,250,000 was recognised in relation to other equity accounted investees.
(iv) The redundancy and restructure costs are related to the cost reduction programs which are addressing efficiencies in operating procedures
and processes across the Group.
(v)
In March 2013 the Television Licence Fees Amendment Bill 2013 provided for the 50 per cent reduction in the licence fees paid by commercial
television broadcasters to be made permanent in legislation on an ongoing basis. The television licence fee accrual, which is based on estimates,
was reduced in line with the amended legislation.
6. NET FINANCE COSTS
Finance costs
Ineffective portion of changes in fair value of cash flow hedges
Total finance costs
Finance income
Ineffective portion of changes in fair value of cash flow hedges
Total finance income
Net finance costs
(115,749)
(151,964)
-
(3,519)
(115,749)
(155,483)
9,606
3,691
13,297
7,243
-
7,243
(102,452)
(148,240)
Seven West Media (ABN 91 053 480 845) 77
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
FOR THE YEAR ENDED 29 JUNE 2013
7. TAXES
Tax expense recognised in profit or loss
Current year tax expense
Adjustments for current tax of prior periods
Current tax expense
Deferred tax benefit
Total tax expense
Reconciliation of tax expense to prima facie tax payable
Profit before tax
Tax at the Australian tax rate of 30% (2012: 30%)
Tax effect of amounts which are not (deductible)/taxable in calculating taxable income:
Share of net profit of equity-accounted investees
Deferred tax benefit (expense) related to equity accounted investees
Deferred tax assets not recognised in relation to impairment of assets
Other changes in recognition of deferred tax assets and liabilities
Other non-assessable / (non-deductible) items
Adjustments for current tax of prior periods
Tax expense
Tax recognised in other comprehensive income
Cash flow hedges
Tax recognised directly in equity
Deferred tax benefit
Total tax recognised directly in equity
Deferred tax asset not recognised
Deductible temporary differences
2013
$'000
2012
$'000
(84,371)
(105,571)
1,998
607
(82,373)
(104,964)
1,426
6,670
(80,947)
(98,294)
11,189
325,183
(3,357)
(97,555)
4,575
5,902
(86,618)
(1,097)
(2,350)
1,998
6,025
(4,742)
-
(1,655)
(974)
607
(80,947)
(98,294)
551
1,858
2,253
2,253
359
359
193,269
120,843
78
Seven West Media
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
7. TAXES (CONTINUED)
Deferred tax assets/(liabilities)
FOR THE YEAR ENDED 29 JUNE 2013
Year ended 29 June 2013
The balance comprises temporary differences attributable to:
Trade and other receivables
Program rights and inventories
Equity accounted investees
Intangible assets
Property, plant and equipment
Trade and other payables
Provisions
Deferred income
Cash flow hedges
Transaction costs
Other
Net deferred tax assets/(liabilities)
Year ended 30 June 2012
The balance comprises temporary differences attributable to:
Trade and other receivables
Program rights and inventories
Equity accounted investees
Intangible assets
Property, plant and equipment
Trade and other payables
Provisions
Deferred income
Borrowings
Cash flow hedges
Transaction costs
Other
Net deferred tax assets/(liabilities)
Balance
Recognised other comp-
Recognised
Recognised in
1 July
2012
$'000
10,177
(40,407)
(5,902)
(7,530)
(8,228)
38,681
24,530
2,563
1,883
6,754
(481)
22,040
in profit or
rehensive
directly in
loss
$'000
income
$'000
equity
$'000
(2,415)
(2,040)
5,902
472
845
(3,995)
1,565
3,087
742
(2,705)
(32)
1,426
-
-
-
-
-
-
-
-
551
-
-
551
-
-
-
-
-
-
-
-
-
2,253
-
2,253
Recognised in
Balance
Recognised other comp-
Recognised
26 June
in profit or
rehensive
directly in
2011
$'000
loss
$'000
income
$'000
equity
$'000
15,223
(51,843)
(4,610)
(9,041)
(11,937)
40,661
23,643
2,532
2,448
1,088
5,373
(384)
13,153
(5,046)
11,436
(1,292)
1,511
3,709
(1,980)
887
31
(2,448)
(1,063)
1,022
(97)
6,670
-
-
-
-
-
-
-
-
-
1,858
-
-
1,858
-
-
-
-
-
-
-
-
-
-
359
-
359
Balance
29 June
2013
$'000
7,762
(42,447)
-
(7,058)
(7,383)
34,686
26,095
5,650
3,176
6,302
(513)
26,270
Balance
30 June
2012
$'000
10,177
(40,407)
(5,902)
(7,530)
(8,228)
38,681
24,530
2,563
-
1,883
6,754
(481)
22,040
Seven West Media (ABN 91 053 480 845) 79
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
8. CASH AND CASH EQUIVALENTS
Current
Cash at bank, on hand and at call
FOR THE YEAR ENDED 29 JUNE 2013
2013
$'000
2012
$'000
257,316
75,052
Cash at bank and deposits at call bear interest at a floating weighted average rate of 3.57% at the reporting date (2012: 4.07%). The maximum
exposure to credit risk at the reporting date is the carrying amount. The exposure to interest rate risk is discussed in note 31.
9. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Provision for doubtful debts
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:
307,533
360,920
(8,395)
(24,443)
(7,604)
(25,210)
274,695
328,106
3,410
1,759
278,105
329,865
Provision for
doubtful
Provision for
doubtful
Not past due
Past due 0-30 days
Past due 31-120 days
Past due 120+ days
Movements in the provision for doubtful debts are as follows:
Balance at the beginning of the financial year
Provision for doubtful debts recognised during the year
Receivables written off
Balance at the end of the financial year
Gross
2013
$'000
259,215
19,528
4,157
190
283,090
debts
2013
$'000
-
(4,857)
(2,978)
(560)
(8,395)
Gross
2012
$'000
307,232
22,918
4,913
647
335,710
2013
$'000
7,604
423
368
8,395
debts
2012
$'000
-
(4,670)
(2,306)
(628)
(7,604)
2012
$'000
7,645
201
(242)
7,604
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 31.
Refer to note 31 for further information on the risk management policy of the Group.
80
Seven West Media
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
10. 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
Non-current
Prepaid television program rights
Program rights and inventory expense
FOR THE YEAR ENDED 29 JUNE 2013
2013
$'000
2012
$'000
93,026
13,796
5,865
4,524
297
86,482
17,503
7,871
4,275
311
117,508
116,442
-
4,035
Program rights and inventories recognised as an expense during the year ended 29 June 2013 amounted to $132,350,000 (2012: $139,950,000)
and $67,663,000 (2012: $77,341,000) respectively.
11. OTHER ASSETS
Current
Prepayments
Non-Current
Prepayments
Other
12. EQUITY ACCOUNTED INVESTEES
Non-current
Investments in associates and jointly controlled entities
5,105
7,862
1,789
1,402
3,191
1,881
914
2,795
304,394
351,766
Information relating to associates and jointly controlled entities (all of which are incorporated in Australia) is set out in the tables below:
Name of entity
Airline Ratings Pty Limited (i)
Australian News Channel Pty Limited
Bloo (WA) Pty Limited
Community Newspaper Group Limited
Coventry Street Properties Pty Limited
Health Engine Pty Limited (ii)
Principal activities
Reporting date
Ratings service provider
Pay TV channel operator
Online business directory
Newspaper publishing
Property management
Online Health Directory
30 June
30 June
30 June
30 June
30 June
30 June
30 June
30 June
Hybrid Television Services (ANZ) Pty Limited (iii)
Impact Merchandising Pty Limited
TiVo distributor
Visual merchandising services
Oztam Pty Limited
Ratings service provider
31 December
Perth Translator Facility Pty Limited
TX Australia Pty Limited
Transmitter facilities provider
Transmitter facilities provider
30 June
30 June
Yahoo! Australia and New Zealand (Holdings) Pty Limited
Internet content provider
31 December
Ownership interest
2013
%
50.0
33.3
27.8
49.9
50.0
22.3
66.7
50.0
33.3
33.3
33.3
50.0
2012
%
-
33.3
27.8
49.9
50.0
-
66.7
50.0
33.3
33.3
33.3
50.0
Seven West Media (ABN 91 053 480 845) 81
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
12. EQUITY ACCOUNTED INVESTEES (CONTINUED)
FOR THE YEAR ENDED 29 JUNE 2013
(i)
Seven West Media acquired 50% of Airline Ratings Pty Limited during the year for $500,000. $300,000 was paid in cash and $200,000 is
outstanding at 29 June 2013.
(ii) Seven West Media acquired 22.3% of Health Engine Pty Limited during the year for $2,600,000. The consideration consists of $1,600,000
cash and $1,000,000 in support and services. A further $2,600,000 is payable for additional shares if agreed financial targets are met.
(iii) Under the shareholder agreement, Seven West Media and the other shareholders have equal voting rights and Board representation.
As a result, the investment in Hybrid Television Services (ANZ) Pty Limited is equity accounted.
Movements in carrying amounts
Carrying amount at the beginning of the financial year
Impairment of equity accounted investees (refer note 5)
Acquisitions/other movements
Share of profit of investees after tax
Dividends received
Carrying amount at the end of the financial year
Share of equity accounted investees' net profit
Profit before tax
Tax expense
2013
$'000
2012
$'000
351,766
(61,453)
3,100
15,251
(4,270)
304,394
346,815
-
2,200
20,084
(17,333)
351,766
21,661
(6,410)
28,689
(8,605)
Share of net profit of equity accounted investees disclosed in the statement of profit or loss and other comprehensive income
15,251
20,084
Summarised financial information of equity accounted investees (100%)
Revenues
Expenses
Profit after tax as reported by investees
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Share of equity accounted investees' net assets
242,535
261,875
(194,135)
(197,336)
48,400
116,889
116,851
233,740
(49,271)
(53,703)
(102,974)
64,539
95,951
172,926
268,877
(56,988)
(47,068)
(104,056)
304,394
351,766
Share of equity accounted investees' capital commitments
360
2,460
Contingent Liabilities
There were no contingent liabilities in respect of any equity accounted investees at year end.
82
Seven West Media
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
FOR THE YEAR ENDED 29 JUNE 2013
13. OTHER INVESTMENTS
Non-current
Unlisted equity securities
The investment in unlisted securities is stated at cost because its fair value cannot be reliably measured.
14. PROPERTY, PLANT AND EQUIPMENT
2013
$'000
2012
$'000
777
777
107,231
106,687
(28,216)
79,015
(25,841)
80,846
19,501
(10,363)
9,138
19,511
(5,393)
14,118
2,940
2,940
340,906
325,782
(190,642)
(161,276)
150,264
164,506
470,578
454,920
(229,221)
(192,510)
241,357
262,410
Total
$'000
282,081
26,995
(201)
-
183,819
20,679
(201)
(87)
Freehold land
and
buildings
$'000
Leasehold
improve-
ments
$'000
Residential
properties
$'000
Plant and
equipment
$'000
18,436
2,940
76,886
6,267
-
-
(2,307)
80,846
49
-
87
(4,454)
14,118
545
-
(2,376)
79,015
-
-
(4,980)
9,138
80,846
14,118
2,940
-
-
-
-
-
-
-
(39,704)
(46,465)
2,940
164,506
262,410
164,506
19,435
(264)
(33,413)
262,410
19,980
(264)
(40,769)
2,940
150,264
241,357
Seven West Media (ABN 91 053 480 845) 83
Non-current assets
Freehold land and buildings - at cost
Accumulated depreciation
Leasehold improvements - at cost
Accumulated depreciation
Residential properties (land) - at cost
Plant and equipment - at cost
Accumulated depreciation
Total property, plant and equipment - at cost
Accumulated depreciation
Year ended 30 June 2012
Opening net book amount
Additions
Disposals
Transfers
Depreciation charge
Closing net book amount
Year ended 29 June 2013
Opening net book amount
Additions
Disposals
Depreciation charge
Closing net book amount
FOR THE YEAR ENDED 29 JUNE 2013
2013
$'000
2012
$'000
2,300,000
2,300,000
38,080
(29,602)
17,316
38,080
(6,811)
17,316
2,325,794
2,348,585
129,731
(69,783)
82,497
18,061
(6,500)
129,731
-
82,497
18,061
-
154,006
230,289
20,848
(8,848)
12,000
41,314
(18,951)
22,363
20,848
(4,848)
16,000
40,589
(19,968)
20,621
1,250,050
1,250,050
(132,198)
-
1,117,852
1,250,050
3,632,015
3,865,545
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
15. INTANGIBLE ASSETS
Television licences - at cost
Magazine licences - at cost
Magazine licences - accumulated amortisation and impairment losses
Radio licences - at cost
Total licences
Magazine mastheads - at cost
Magazine mastheads-impairment losses
Newspaper mastheads - at cost
Other mastheads- at cost
Other mastheads- impairment losses
Total mastheads
Television program copyrights - at cost
Accumulated amortisation
Total television program copyrights
Software - at cost
Accumulated amortisation
Total software
Goodwill
Impairment losses
Total goodwill
Total intangible assets
Year ended 30 June 2012
Opening net book amount
Additions
Amortisation charge (ii)
Closing net book amount
Year ended 29 June 2013
Opening net book amount
Additions
Amortisation charge (ii)
Impairment loss (iii)
Closing net book amount
Licences
Mastheads
copyrights
software (i)
Goodwill
$’000
$’000
$’000
$’000
$’000
Total
$’000
Program
Computer
2,354,102
230,289
20,000
-
(5,517)
-
-
2,348,585
230,289
-
(4,000)
16,000
20,589
5,611
(5,579)
1,250,050
3,875,030
-
-
5,611
(15,096)
20,621
1,250,050
3,865,545
2,348,585
230,289
16,000
-
(3,998)
(18,793)
2,325,794
-
-
(76,283)
154,006
-
(4,000)
-
20,621
10,964
(9,222)
1,250,050
3,865,545
-
-
10,964
(17,220)
-
(132,198)
(227,274)
12,000
22,363
1,117,852
3,632,015
(i) Software additions for the year include $10,638,000 (2012: $4,110,000) which were acquired separately and $326,000 (2012: $1,501,000)
which were internally generated. Software additions include $1,875,000 for which cash payments have not yet been made.
(ii) Amortisation of $17,220,000 (2012: $15,096,000) is included in depreciation and amortisation expense in the comprehensive income
statement (refer note 4).
(iii) Impairment of $220,774,000 for Magazine intangible assets and $6,500,000 for other intangible assets were recognised during the year
(refer note 5).
84
Seven West Media
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
15. INTANGIBLE ASSETS (CONTINUED)
FOR THE YEAR ENDED 29 JUNE 2013
Impairment of cash generating units (CGU) including goodwill and indefinite life assets
Management and the Directors reviewed the carrying values of all intangible assets at reporting date to ensure that no amounts were in
excess of their recoverable amounts.
Total impairments of $227,274,000, as detailed above, were recognised during the current year (refer note 5).
No other impairment losses for intangible assets have been incurred or reversed during the current or prior years.
The estimated recoverable amounts of the cash generating units (CGUs) were performed using the following methodologies:
Television
Discounted cash flow projections over the assets' useful lives based on the following assumptions:
-
-
-
-
Five year forecast based on financial budgets and forecasts approved by management which are in line with the announced cost management
programs;
Average annual revenue growth rate over the 5 year forecast period of 3.4% (June 2012: 4.0%);
Pre-tax discount rate of 13.56% (June 2012: 13.5%);
Terminal growth rate of 3.0% (June 2012: 4.0%).
Newspapers and Other WA
Discounted cash flow projections over the assets' useful lives based on the following assumptions:
-
-
-
Five year forecast based on financial budgets and forecasts approved by management;
Pre-tax discount rate of 17.0% (June 2012: 14.0%);
Terminal growth rate of 1.0% (June 2012: 2.0%).
Magazines
Relief from Royalty Method over magazine mastheads' useful lives based on the following assumptions:
-
-
-
Future maintainable revenue forecasts which are based on historical actual results as well as financial budgets and forecasts approved by
management;
Royalty rates between 1.5% and 11.0% (June 2012: 1.5% and 11.0%);
Earnings multiples between 4x and 6x (June 2012: 8x and 10x).
Multi Period Excess Earnings Methodology over magazine licences' useful lives based on the following assumptions:
-
Five year forecast based on financial budgets and forecasts approved by management;
- Discount rates between 14.0% and 16.0% (June 2012: 14.0% and 16.0%);
Terminal growth rate of 2.0% (June 2012: 2.0%).
-
The recoverable amount of the overall Magazine CGU that includes goodwill is determined based on value in use and using discounted cash flow
projections based on the following assumptions:
-
Five year forecast based on financial budgets and forecasts approved by management;
-
-
Pre-tax discount rate of 15.0% (June 2012: 15.2%);
Terminal growth rate of 2.0% (June 2012: 2.5%).
The values assigned to the key assumptions represent management’s assessment of future performance in each CGU based on historical experience
and internal and external sources. The estimated recoverable amounts are highly sensitive to key assumptions.
Sensitivities to key assumptions
The estimated recoverable amount of the Television CGU, based on value in use, exceeds its carrying amount by approximately $2,400,000
Accordingly, currently no impairment is required. Any adverse movements in key assumptions would lead to further impairments
The recoverable amount for Newspapers and Other WA overall business is significantly higher than the carrying value, and as such, is not sensitive
to reasonably foreseeable changes in key assumptions.
Following impairments to the individual and overall Magazine CGUs, the recoverable amounts are equal to the carrying amounts. Therefore any
adverse movements in key assumptions would lead to further impairments.
Seven West Media does not consider that there are any reasonably possible changes to key assumptions of other significant intangible assets with
indefinite useful lives and goodwill which would cause the carrying amounts to exceed recoverable amounts.
85
Seven West Media (ABN 91 053 480 845) 85
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
15. INTANGIBLE ASSETS (CONTINUED)
FOR THE YEAR ENDED 29 JUNE 2013
For the purpose of impairment testing, intangible assets with indefinite lives, including goodwill, 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. Intangible assets with
indefinite useful lives of $3,260,875,000, including $960,875,000 goodwill, relate to the Television operating division, $84,055,000, including
$1,558,000 goodwill, relate to the Newspapers operating division, $214,441,000, including $154,493,000 goodwill, (June 2012: $416,422,000,
including $286,691,000 goodwill), relate to the Magazines operating division and $29,803,000, including $926,000 goodwill
(June 2012: $36,303,000, including $926,000 goodwill), relate to the Other WA intangible assets.
16. TRADE AND OTHER PAYABLES
Current
Trade payables and other accrued expenses (i)
Derivative financial liabilities
Television program liabilities (ii)
Non-current
Accruals
Derivative financial liabilities
Television program liabilities
2013
$’000
218,351
1,908
101,616
321,875
15,207
8,679
12,051
35,937
2012
$’000
240,109
672
98,500
339,281
18,887
10,709
9,961
39,557
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 $7,874,130 related to future minimum purchases of an associate (2012: $8,983,138).
These have been guaranteed by Seven Network (Operations) Limited, a wholly-owned subsidiary.
(ii) Included in television program liabilities is an amount of $4,381,000 (current: $4,381,000, non-current: $Nil) relating to onerous program
rights contracts recognised in accordance with AASB 137. During the year no amounts were recognised in the statement of comprehensive income
and $16,923,000 was utilised.
In the prior year, $19,359,000 related to onerous program rights contracts (current: $13,758,000, non-current: $5,601,000), no amounts were
recognised in the income statement and $15,680,000 was utilised.
Interest rate swap and collar contract- 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 31).
Of the Group’s total debt, excluding unamortised refinancing costs, at 29 June 2013 of $1,508,482,000, (2012: $1,950,000,000), $400,000,000
(2012: $800,000,000) is covered by interest rate swaps, designated as cash flow hedges. $400,000,000 of the swaps expired on 16 March 2013.
The remainder of the swaps expire on 16 March 2014 and 16 March 2015. The current swaps fix the interest rate at a weighted average of 3.80%
(2012: 3.62%). The Group also has interest rate collars of $600,000,000 (2012: $600,000,000) which include an interest rate cap at 5% and a
floor at a weighted average of 3.13%. These collars expire on 16 March 2015.
Interest rate swaps-fair valued through profit and loss
Of the Group’s total debt, excluding unamortised refinancing costs, at 29 June 2013 of $1,508,482,000, (2012: $1,950,000,000), $45,000,000
(2012: $80,000,000) is covered by interest rate swaps measured at fair value through profit and loss and not designated as cash flow hedges.
These interest rate swap contracts expire on16 August 2013.
The current swaps have an interest rate at a weighted average of 5.24% (2012: 5.24%).
The contracts require settlement on net interest receivable or payable on a quarterly basis. For the majority of swaps the settlement dates
coincide with the dates on which interest is payable on the underlying debt. The contracts are settled on a net basis.
86
Seven West Media
86
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
16. TRADE AND OTHER PAYABLES (CONTINUED)
FOR THE YEAR ENDED 29 JUNE 2013
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 sum of the net present value of the each
of the expected future cash flows.
At the reporting date, liabilities relating to these contracts amounted to $10,587,000 (2012: $11,381,000). In the year ended 29 June 2013
there was a net loss from the decrease in fair value of interest rate swap and collar contracts of $1,379,000 (2012: loss of $3,284,000).
Interest rate, credit and currency risk exposure
Refer to note 31 for the Group's exposure to interest rate risk on interest rate swaps and collars and foreign currency risk on trade and other
payables. Refer also to note 31 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.
17. PROVISIONS
Current
Employee benefits
Redundancy and restructuring
Libel expenses
Make good
Other
Non-current
Employee benefits
Make good
Other
2013
$’000
59,131
16,103
225
479
900
2012
$’000
62,297
451
225
479
900
76,838
64,352
8,683
7,319
511
8,661
7,178
511
16,513
16,350
Movements in the provisions during the reporting period are as follows:
Year ended 29 June 2013
Carrying amount at 1 July 2012
Amounts provided
Amounts utilised
Unwind of discount
Carrying amount at 29 June 2013
Employee
Redundancy &
Libel Make Good
Benefits (i) Restructuring (ii)
$’000
$’000
(iii)
$’000
(iv)
$’000
Other
$’000
Total
$’000
70,958
39,342
(42,486)
-
67,814
451
27,033
(11,381)
-
16,103
225
7,657
1,411
-
-
-
225
-
-
141
7,798
-
-
-
1,411
80,702
66,375
(53,867)
141
93,351
(i) Employee Benefits
The provision for employees relates to annual leave, long service leave and short term incentives.
It is expected that the majority of annual leave will be paid out in the next 12 months.
(ii) Redundancy and restructuring
During the year the Group recognised $27,033,000 of redundancy and restructure costs in relation to cost programs across the group (refer note 5).
The provision of $16,102,761 mainly relates to termination benefits and is based on a committed detailed plan.
87
Seven West Media (ABN 91 053 480 845) 87
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
FOR THE YEAR ENDED 29 JUNE 2013
17. PROVISIONS (CONTINUED)
(iii) Libel
The amount at the end of the reporting period represents a provision for libel claims against the Group in relation to published material.
(iv) Make Good
The Group is required to restore the leased premises of its offices, studios and other premises to their original condition at the end of the
respective lease terms. A provision has been recognised for the present value of the estimated expenditure required to remove any leasehold
improvements.
18. DEFERRED INCOME
Current
Deferred revenue (i)
Non-current
Deferred revenue
(i) Includes $11,820,000 (2012: $12,270,000) of pre-charged magazine sales and subscriptions
19. BORROWINGS
Non-current
Bank loans – unsecured
Financial arrangements
2013
$’000
2012
$’000
20,044
19,096
7,539
4,531
1,498,106
1,929,799
1,498,106
1,929,799
In November 2011 the Group obtained unsecured syndicated credit facilities consisting of 3, 4 and 5 year tranches totalling $2,075,000,000.
This included a $125,000,000 working capital facility.
During the year, the 3 year $400,000,000 tranche was repaid in full along with $41,518,000 of the 4 year tranche. These repayments were funded
out of the proceeds from the issue of new shares (refer note 20). At reporting date, the Group had access to unsecured syndicated credit
facilities to a maximum of $1,508,482,000 (2012: $2,075,000,000).
The facilities are subject to a weighted average interest rate of 4.86% at 29 June 2013 (2012: 6.24%).
In addition, the $125,000,000 revolving working capital facility provided by the syndicate lenders was cancelled, and the Group obtained access to a
$20,000,000 multi option facility with Australia and New Zealand Banking Group Limited (ANZ). As at year end, $11,900,000 of this facility was
utilised for the provision of bank guarantees.
The amount of these facilities undrawn at reporting date was $8,100,000 (2012: $113,600,000).
The unsecured bank loans are net of $10,376,000 (June 12: $20,201,000) unamortised refinancing costs.
The syndicated facilities are subject to certain covenants being:
(i) Total Interest Cover ratio: the Total Interest Cover Ratio should exceed 3.00 times the interest expense on the Facilities and other financial
indebtedness, net of interest income, adjusted for any hedging payments;
(ii) Total Leverage Ratio: the Total Leverage Ratio should not exceed 4.00 times the debt under the Facilities and other financial indebtedness of
the Group, net of group cash and cash equivalents.
Fair value
The carrying amount and fair value of Group borrowings at the end of the financial year was $1,498,106,000 (2012: $1,929,799,000).
Risk exposures
Information about the Group’s exposure to interest rate changes is provided in note 31.
88
Seven West Media
88
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
20. SHARE CAPITAL
997,832,422 (2012: 664,733,554) Ordinary shares fully paid (notes 20(a) and 20(c))
2,500 (2012: 2,500) Convertible preference shares fully paid (notes 20(b) and 20(d))
FOR THE YEAR ENDED 29 JUNE 2013
2013
$’000
2012
$’000
2,840,405
2,406,017
250,000
250,000
3,090,405
2,656,017
(a) Movements in ordinary share capital
Ordinary shares
Balance at the beginning of the year
Movements during the year:
2013
Shares
2012
Shares
2013
$’000
2012
$’000
664,733,554
608,792,249
2,406,017
2,239,061
Shares issued pursuant to 1-for-2 entitlement offer (i)
Shares issued pursuant to the executive and employee share plans
333,055,818
43,050
-
439,633
164,150
55,777,155
-
-
10
-
(7,508)
2,253
-
394
166,203
-
359
-
-
-
333,098,868
55,941,305
434,388
166,956
997,832,422
664,733,554
2,840,405
2,406,017
Dividend reinvestment plan share issues
Transaction costs arising on share issues
Deferred tax recognised directly in equity
Movement in ordinary shares
Balance at the end of the year
The total number of shares issued by the Company is 999,160,872
and differs from the amount included in share capital as follows:
Total shares issued by the Company
Executive and employee share plans treated as options (ii)
Balance included in share capital
999,160,872
666,105,054
(1,328,450)
(1,371,500)
997,832,422
664,733,554
(i) Seven West Media Limited completed a fully underwritten 1-for-2 accelerated renounceable entitlement offer of new Seven West Media Limited
shares to raise $439,633,000 in August 2012. 333,055,818 shares were issued at a price of $1.32. The net proceeds, after transaction costs, of
$432,125,000, together with existing funds were used to repay debt. The total amount of debt repaid was $441,518,000.
(ii) Outstanding loans pursuant to the executive and employee share plans are treated as options.
(b) Movements in convertible preference shares
Convertible preference shares (CPS)
Balance at the end of the year
There were no movements during the year.
2013
Shares
2012
Shares
2013
$'000
2012
$'000
2,500
2,500
250,000
250,000
(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
amounts paid on the shares held.
Ordinary shares have no par value and the Group does not have a limited amount of authorised capital.
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.
Seven West Media (ABN 91 053 480 845) 89
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
20. SHARE CAPITAL (CONTINUED)
(d) Convertible preference shares (CPS)
FOR THE YEAR ENDED 29 JUNE 2013
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
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
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:
-
-
-
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 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
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 shares, 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."
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")
divided by the fixed conversion price of $6.68.
The conversion price is 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
the adjustment. Following the 1-for-2 rights issue the fixed conversion price was adjusted from $6.68 to $6.31.
The conversion price will also be adjusted downwards for any dividends paid to SWM Shareholders over and above an annual reference yield of 6.5%
(excluding franking credits), initially calculated with reference to the first full year of ordinary dividends for the 2012 financial year. The final dividend
for the 2012 financial year was paid in October 2012 (refer note 22) at which time the fixed conversion price was adjusted to $5.59.
There have been no further adjustments to the fixed conversion price during the financial year.
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
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,
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
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
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.
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.
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 security holders until all CPS have been redeemed, repurchased or exchanged (subject
to certain limited exceptions).
(e) Dividend reinvestment plan
For details relating to the dividend reinvestment plan see note 22.
(f) Share buy-backs
During the year Seven west Media Limited purchased 164,406 shares on market. The shares were purchased by the Seven West Media Employee
Share Plan Trust for the purpose of issuing shares under the Group employee share scheme. Refer note 21.
(g) Capital risk management
Information about the Group’s exposure to capital risk is provided in note 31.
90
90
Seven West Media
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
FOR THE YEAR ENDED 29 JUNE 2013
21. RESERVES
Equity compensation reserve
Reserve for own shares
Cash flow hedge reserve
Nature and purpose of reserves
Equity compensation reserve
2013
$’000
1,934
(1,517)
(5,680)
(5,263)
2012
$’000
799
(1,300)
(4,392)
(4,893)
The equity compensation reserve is used to recognise the fair value of share rights granted as compensation.
Cash flow hedge reserve
The cash flow hedge 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.
Reserve for own shares
Treasury shares are shares in Seven West Media Limited that are held by the Seven West Media Employee Share Plan Trust for the purpose of
issuing shares under the group employee share scheme. At 29 June 2013 the Trust held 493,217 of the group's shares (2012: 328,811).
For movements in reserves during the year, refer to the statement of changes in equity.
22. DIVIDENDS
Final ordinary dividend for the year ended 30 June 2012 of 6 cents per share (25 June 2011: 26 cents),
fully franked based on tax paid at 30%, paid on 12 October 2012 (2011: 14 October 2011)
59,887
158,389
Interim ordinary dividend for the year ended 29 June 2013 of 6 cents per share (30 June 2012: 19 cents),
fully franked based on tax paid at 30%, paid on 2 April 2013 (2012: 2 April 2012)
59,888
119,775
122,490
280,879
Dividends not recognised at year end
In addition to the above dividends, since year end the directors have declared a 2013 final dividend of 6 cents per
ordinary share (2012: 6 cents), fully franked based on tax paid at the rate of 30%. The aggregate amount
of the dividend payable on 11 October 2013, but not recognised as a liability at year end, is estimated at
59,889
59,826
Franked dividends
The franked dividend declared after 29 June 2013 will be franked out of existing franking credits or out of franking credits arising from the
receipt of franked dividends and the payment of tax in the year ending 28 June 2014.
Franking credits available for subsequent financial years based on a tax rate of 30% (2012: 30%)
32,813
6,678
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.
Dividend reinvestment plan
The Company had established a plan under which holders of ordinary shares could have elected to have all or part of their dividend entitlements
satisfied by the issue of new ordinary shares rather than being paid in cash. The operation of the dividend reinvestment plan for any dividends
was at the discretion of the board. Upon completion of the Entitlement Offer in July 2012, the Dividend reinvestment plan was suspended.
Seven West Media (ABN 91 053 480 845) 91
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
FOR THE YEAR ENDED 29 JUNE 2013
23. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the auditor of the parent entity and it's related practices.
Auditors of the Company - KPMG
(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) Other services
Advisory services
Total remuneration of KPMG Australia
24. CONTINGENCIES
Contingent liabilities
2013
$
2012
$
367,500
103,933
471,433
297,500
148,066
445,566
805,789
551,437
1,277,222
997,003
Seven West Media's tax liabilities have been calculated based on currently enacted legislation. Any changes to the tax law or interpretations
(including proposed changes already announced) may require changes to the calculation of the tax balances shown in the financial statements.
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.
92
Seven West Media
92
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
25. COMMITMENTS
Capital expenditure commitments
Commitments for the acquisition of property, plant and equipment 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
Operating lease commitments
FOR THE YEAR ENDED 29 JUNE 2013
2013
$'000
2012
$'000
6,866
2,856
9,722
3,379
-
3,379
The Group leases various offices, equipment, sites and residential premises under non-cancellable operating leases expiring within one year
to 17 years (2012: 18 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
20,261
73,108
142,743
236,112
18,475
68,405
159,904
246,784
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
253,938
575,195
50,335
879,468
259,119
516,354
45,050
820,523
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
Later than five years
Contracts for other services
56,348
22,315
63
78,726
56,965
26,887
-
83,852
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
24,929
43,562
10,414
78,905
33,143
36,577
16,919
86,639
93
Seven West Media (ABN 91 053 480 845) 93
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
26. KEY MANAGEMENT PERSONNEL DISCLOSURES
Key management personnel compensation
FOR THE YEAR ENDED 29 JUNE 2013
In addition to their salaries, the Group also provides non-cash benefits to directors and executive officers, and contributes to a post-employment
superannuation fund on their behalf (refer to the remuneration report-section 2a).
Executive officers also participate in the Group's Equity Incentive Plan 2013 (refer note 30).
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
-
-
Superannuation
Termination benefits
Share-based payments
2013
$
2012
$
13,599,090
10,969,035
221,568
974,585
1,326,821
232,560
1,898,111
621,137
16,122,064
13,720,843
Detailed remuneration disclosures in respect of directors and each member of key management personnel are provided in the remuneration
report in section 2a.
Equity instrument disclosures relating to key management personnel
Performance Right holdings
The numbers of performance 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.
The rights granted during the year have been offered under the Seven West Media Equity Incentive Plan 2013. Performance rights do not carry any
dividend or voting rights prior to vesting (refer note 30).
2013
Balance at
Granted
the start of
as compen-
Balance at
Expired or
the end of
the year
sation
Exercised
forfeited
the year
Vested
Unvested
Key management personnel of the Group:
TG Worner
CS Wharton (ii)
KJ Burnette
N Chan
PJ Lewis (i)
RT Lund
BI McWilliam
2012
Key management personnel of the Group:
DJ Leckie (i)
TG Worner
CS Wharton (ii)
76,122
111,067
-
-
-
-
-
-
-
41,081
516,528
206,611
182,231
154,958
258,264
203,512
227,272
126,871
76,122
69,986
-
-
-
-
-
-
-
-
-
-
-
-
-
-
592,650
317,678
182,231
154,958
(258,264)
-
-
-
-
-
-
203,512
227,272
126,871
76,122
111,067
25,374
-
-
-
-
-
-
-
-
-
567,276
317,678
182,231
154,958
-
203,512
227,272
126,871
76,122
111,067
(i) DJ Leckie and PJ Lewis resigned on 26 June 2012 and 30 April 2013 respectively and are no longer Key Management Personnel of the Group.
(ii) 111,067 performance rights were granted to CS Wharton under the legacy executive LTI Plan for the Chief Executive Officer for West Australian
Newspapers Holdings Limited. The operation of this plan has been suspended and no employees have been invited to apply for shares since 2002 and
Mr Wharton has been transitioned to the Seven West Media LTI plan in FY13. The performance rights will vest (subject to performance criteria) in August
2013 and August 2014.
94
Seven West Media
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
26. KEY MANAGEMENT PERSONNEL DISCLOSURES (CONTINUED)
Shareholdings
FOR THE YEAR ENDED 29 JUNE 2013
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.
2013
Name
Directors of Seven West Media Limited:
Ordinary shares
KM Stokes AC
Dr ME Deaker (appointed 21 August 2012)
D Evans (appointed 21 August 2012) (i)
DR Flynn
PJT Gammell
GT John AO
BI McWilliam (alternate)
JC Reizes
RK Stokes (appointed 21 August 2012) (ii)
DR Voelte AO (appointed 26 June 2012 to 30 June 2013) (iv)
SMC Walsh AO (until 30 January 2013)
Convertible preference shares
KM Stokes AC
Other key management personnel of the Group:
Ordinary shares
KJ Burnette
N Chan
B Fair (appointed 1 February 2013)
PJ Lewis (until 30 April 2013)
RT Lund (from 1 September 2012)
CS Wharton
TG Worner (iii)
Shares
received
Purchases and
Received as
during the
Balance at
part of retail
year as
other
changes
the start of
entitlement
compen-
during the
the year
1 for 2 offer
sation
year
Balance at
the end of
the year
221,219,452
166,471
-
115,000
38,886
111,440
56,065
416,417
44,949
81,330
42,462
78,467
-
57,500
19,443
55,720
28,033
194,627
27,408
40,665
21,231
39,234
2,500
-
5,843
165,275
7,484
199,887
54,921
54,335
262,938
2,922
82,638
-
-
-
12,091
136,470
93,801
14,892
14,892
20,249
20,249
19,706
-
19,704
14,892
1,945
31,409
-
-
-
-
-
-
-
-
132,075,574
353,555,298
-
211,268
-
-
-
-
(55,248)
-
85,000
(127,852)
-
-
(50,000)
-
(199,887)
-
-
(286,720)
14,892
398,660
78,578
187,409
103,804
611,044
36,813
136,887
150,638
21,258
2,500
8,765
197,913
7,484
-
54,921
66,426
112,688
(i)
Opening number of shares were held under Zonda Capital Pty Ltd, of which Mr Evans is a Director and were acquired prior to Mr Evans being
appointed as a Non-executive Director of the Group.
(ii)
(iii)
Opening number of shares were held under Point Resolution Pty Ltd, of which Mr R Stokes is a Director and were acquired prior to Mr R Stokes
being appointed as a Non-executive Director of the Group.
TG Worner has been included as key management personnel for his role as Chief Executive Officer Television. He was appointed as Chief
Executive Officer of Seven West Media Limited from 1 July 2013.
(iv)
DR Voelte AO was appointed as Managing Director and Chief Executive Officer on 26 June 2012 until 30 June 2013. He was then appointed as
Deputy Chairman of the Board of Directors on 1 July 2013.
(v)
JH Alexander was appointed as a Non-executive Director on 2 May 2013 and had not received any shares as at 29 June 2013.
95
Seven West Media (ABN 91 053 480 845) 95
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
26. KEY MANAGEMENT PERSONNEL DISCLOSURES (CONTINUED)
FOR THE YEAR ENDED 29 JUNE 2013
2012
Name
Directors of Seven West Media Limited:
Ordinary shares
KM Stokes AC
DR Flynn
PJT Gammell
GT John AO
DJ Leckie (until 26 June 2012) (i)
BI McWilliam (alternate)
JC Reizes
RK Stokes (alternate)
DR Voelte AO (Executive Director from 26 June 2012)
SMC Walsh AO
Convertible preference shares
KM Stokes AC
Other key management personnel of the Group:
Ordinary shares
PJ Bryant
KJ Burnette
N Chan
PJ Lewis
CS Wharton
TG Worner
Shares
received
Purchases and
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
180,720,216
28,692
19,612
42,756
751,252
297,938 (iii)
32,603
39,846
16,882
47,763
2,500
10,845
5,843
165,275
172,788
40,279
262,938
39,240
10,194
10,192
9,936
-
-
9,936
-
10,580
21,929
-
-
-
-
-
-
-
40,459,996
221,219,452
-
81,636
3,373
38,886
111,440
56,065
-
751,252 (ii)
118,482
416,420 (iii), (iv)
2,410
41,484
15,000
8,775
44,949
81,330
42,462
78,467
-
2,500
1,700
-
-
12,545
5,843 (ii)
165,275 (ii)
27,099
199,887 (ii), (iv)
14,056
54,335
-
262,938 (ii)
(i)
(ii)
(iii)
(iv)
DJ Leckie resigned on 26 June 2012 and is not Key Management Personnel of the Group in 2013.
These shares were subject to an escrow which expired on the date the Company's results for the 2012 financial year were announced.
290,103 of these shares were subject to an escrow which expired on the date the Company's results for the 2012 financial year are announced.
Prior year amounts have been restated to include all shares received during the year.
Other transactions with key management personnel
Apart from the details disclosed in this note, no Director has entered into a material contract with the Group since the end of the previous
financial year and there were no material contracts involving directors' interests existing at year end.
96
Seven West Media
96
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
27. 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 28.
Transactions with related parties
The following transactions occurred with related parties during the financial year:
Sale of goods, advertising and other services
Equity accounted investees
Director related entities
Other related entities
Purchase of goods, advertising and other services
Equity accounted investees
Director related entities - AFL free-to-air television rights
Director related entities - Other
Other related entities
Shareholder contribution
Equity accounted investees
FOR THE YEAR ENDED 29 JUNE 2013
2013
$
2012
$
10,823,512
11,881,603
494,777
1,585,417
2,036,566
2,841,940
8,082,240
8,747,312
81,250,750
44,027,500
3,932,038
4,817,794
1,827,598
2,509,330
1,364,051
637,239
1,100,895
1,246,954
72,979
73,316
1,527,673
1,041,314
2,689,672
1,011,549
-
2,569
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)
Equity accounted investees
Director related entities
Other related entities
Current payables (purchase of goods, advertising and other services)
Equity accounted investees
Director related entities
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.
Key management personnel
The following transactions occurred with KMP related parties:
Revenues (TV production charges)
Expenses (Funding contribution)
Terms and conditions
Transactions were made on normal commercial terms and conditions.
2013
$
2012
$
86,820
63,652
345,512
426,734
97
Seven West Media (ABN 91 053 480 845) 97
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
28. INVESTMENTS IN CONTROLLED ENTITIES
FOR THE YEAR ENDED 29 JUNE 2013
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
Quokka Press Pty Ltd
W.A. Broadcasters 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
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
98
Seven West Media
Notes
(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)
(c)
(c)
(c)
(c)
(c)
(c)
Country of
incorporation
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
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Ownership interest
2013
%
100
2012
%
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
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
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
28. INVESTMENTS IN CONTROLLED ENTITIES (CONTINUED)
Pacific Magazines (PP) Holdings Pty Ltd
Pacific Magazines (WHO) Pty Ltd
Red Music Publishing Pty Limited
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 West Media Investments Pty Limited
Seven Television Australia Limited
SMG Executives Pty Limited
SMG H1 Pty Limited
SMG H2 Pty Limited
SWM Finance Pty Limited
SMG H4 Pty Limited
SMG H5 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
All subsidiaries are wholly-owned.
FOR THE YEAR ENDED 29 JUNE 2013
Ownership interest
Notes
Country of
incorporation
2013
%
2012
%
(c)
(c)
(d)
(c)
(c)
(c)
(c)
(c)
(c)
(c), (e)
(c)
(b)
(b)
(b)
(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
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
The class of all shares is ordinary except for 100,000 preference shares held in West Australian Newspapers Limited (2012: 100,000).
(a)
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.
(b)
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.
(c)
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 26 June 2012 by Assumption Deed.
(d)
This controlled entity joined Seven West Media Limited's Deed of Cross Guarantee under ASIC Class Order 98/1418 (as amended) dated
8 April 2004 on 18 April 2013 by Assumption Deed.
(e)
This entity was renamed on 16 April 2013 from SMG H2 (Victoria) Pty Limited to Seven West Media Investments Pty Limited.
99
Seven West Media (ABN 91 053 480 845) 99
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
28. INVESTMENTS IN CONTROLLED ENTITIES (CONTINUED)
FOR THE YEAR ENDED 29 JUNE 2013
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 profit or loss and other comprehensive income for the year ended 29 June 2013 of the Seven West Media Limited
Closed Group is presented below according to the Seven West Media Limited Class Order:
Statement of profit or loss and other comprehensive income
Revenue
Other income
Revenue and other income
Expenses
Share of net profit of equity accounted investees
Impairment of intangible assets
Impairment of equity accounted investees
Profit before net finance costs and tax
Net finance costs
Profit before tax
Tax expense
(Loss) profit for the year
Other comprehensive (expense) income
Items that may be reclassified subsequently to profit or loss:
Effective portion of changes in fair value of cash flow hedges
Tax relating to items that may be reclassified subsequently to profit or loss
Other comprehensive (expense) for the year, net of tax
2013
$'000
2012
$'000
1,866,457
1,937,091
260
227
1,866,717
1,937,318
(1,479,508)
(1,483,989)
15,251
(227,274)
(61,453)
20,084
-
-
113,733
473,413
(102,589)
(148,488)
11,144
324,925
(80,888)
(98,217)
(69,744)
226,708
(1,839)
551
(1,288)
(6,192)
1,858
(4,334)
Total comprehensive (expense) income for the year attributable to owners of the Company
(71,032)
222,374
100
Seven West Media
100
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
28. INVESTMENTS IN CONTROLLED ENTITIES (CONTINUED)
FOR THE YEAR ENDED 29 JUNE 2013
The consolidated statement of financial position for the year ended 29 June 2013 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
Program rights and inventories
Equity accounted investees
Other investments
Property, plant and equipment
Intangible assets
Deferred tax assets
Other assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Deferred income
Current tax liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Provisions
Deferred income
Borrowings
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Accumulated deficit
Total equity
2013
$'000
2012
$’000
257,307
274,903
117,508
5,105
654,823
-
302,813
777
74,996
326,643
116,435
7,850
525,924
4,035
350,402
777
241,357
262,399
3,632,015
3,865,545
26,270
3,191
22,036
2,795
4,206,423
4,507,990
4,861,246
5,033,914
320,434
338,017
76,838
20,044
25,308
64,341
19,084
6,207
442,624
427,649
35,937
16,513
7,539
39,557
16,350
4,531
1,498,106
1,929,799
1,558,095
1,990,237
2,000,719
2,417,886
2,860,527
2,616,028
3,087,924
2,653,753
(3,708)
(223,689)
(3,555)
(34,170)
2,860,527
2,616,028
Seven West Media (ABN 91 053 480 845) 101
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
29. EARNINGS PER SHARE
Basic earnings per share
FOR THE YEAR ENDED 29 JUNE 2013
2013
2012
(Loss) profit attributable to the ordinary equity holders of the Company (i)
-7.1 cents
33.3 cents
Diluted earnings per share
(Loss) profit attributable to the ordinary equity holders of the Company (i)
-6.1 cents
26.7 cents
Earnings used in calculating earnings per share
(Loss) profit attributable to the ordinary equity holders of the Company used in calculating basic and diluted
earnings per share.
2013
$’000
2012
$’000
(69,758)
226,889
2013
Number
2012
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 (i)
977,492,423
680,493,816
Adjustments for calculation of diluted earnings per share:
-
-
-
Convertible Preference Shares (CPS) (ii)
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
Share rights issued pursuant to equity incentive plan
159,614,658
167,618,838
1,349,975
1,017,068
1,548,648
113,310
Weighted average number of ordinary shares and potential ordinary shares used as the denominator
in calculating diluted earnings per share
1,139,474,124
849,774,612
(i) AASB 133: Earnings per Share requires the calculation of basic and diluted earnings per share for all periods presented to be adjusted retrospectively
for shares issued under a rights issue. Accordingly, the weighted average number of ordinary shares includes an adjustment relating to the shares
issued pursuant to the 1-for-2 entitlement offer completed in August 2012, for the period from 1 July 2012 to the dates when the shares were
issued. The June 2012 calculations also included the appropriate adjustments for the entitlement offer.
(ii) For the purpose of calculating diluted earnings per share, a notional CPS amount has been calculated. At 29 June 2013 the notional CPS amount is
$291,670,000. This is divided by the conversion price to calculate the notional number of shares. Under the terms of the CPS there is more than
one basis of conversion. For the calculation of diluted EPS the "Redemption Conversion Price" based on an average weighted share price has been
used as the conversion price since this results in the most advantageous position for the holder of the CPS. This is in line with requirements of
AASB 133: Earnings per Share. Refer note 20 for further details relating to the CPS.
102
Seven West Media
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
FOR THE YEAR ENDED 29 JUNE 2013
30. SHARE-BASED PAYMENTS
The total expense recognised for share-based payments for all plans during the financial year for the Group was $1,558,369 (2012: $940,176).
At 29 June 2013 the Group had the following share-based payment arrangements:
Performance and share rights granted as compensation
Seven West Media Equity Incentive Plan- 2013 Long Term Incentive
The Group established a 2013 long term incentive plan that entitles key management personnel to performance rights. Holders of vested rights
are entitled to acquire fully paid ordinary shares in the Company.
A total of 1,749,376 performance rights were granted on 1 March 2013 and are awarded when the performances conditions are met. The
performance period commenced on 1 July 2012 and ends on 30 June 2015.
50% of the performance rights are subject to a total shareholder return (TSR) hurdle which compares the TSR performance of the Company
with the TSR performance of each of the entities in a comparator group of peer companies. The remaining 50% is subject to a diluted
earnings per share (DEPS) hurdle.
Performance rights do not carry any dividend or voting rights prior to vesting and are all equity settled. Vesting of the rights are subject to the
condition that the executive remains employed by SWM at the vesting date. None of the performance rights have vested however 258,264 were
forfeited or exercised during the year.
Prior to the introduction of the 2013 Long Term Incentive Plan in March 2013 there were other equity plans in place which continue to have
some unvested awards at 29 June 2013.
Seven Media Group Performance Transitional Equity Grant
On 1 March 2012 the board approved the grant of 328,811 share rights to certain key management personnel and other senior executives in lieu
of a bonus payment for the 2011 financial year performance under the Seven Media Group Performance Management Plan 2011. This has
subsequently been renamed the Seven Media Group Performance Transitional Equity Grant.
The size of the award granted was dependent on Seven Media Group’s EBIT performance in the 2011 financial year.
The share rights were granted over three separate tranches, each vesting on 1 October from 2012 to 2014.
All of the share rights are equity settled.
The share rights under the Seven Media Group Performance Transitional Equity Grant are subject to the same vesting conditions, as set out in
the table on the following page. Prior to vesting, the share rights allocated represent a conditional entitlement to shares and do not attract the
payment of dividends and do not entitle the executive to vote on the shares. Vesting of the share rights is subject to the condition that the
executive remains employed by SWM at the relevant vesting date.
During the year, a total of 109,605 share rights have vested under the Seven Media Group Performance Transitional Equity Grant (2012: Nil).
No further share rights under this scheme were exercised during the year.
Long Term Incentive Plan (LTI)- Chief Executive Officer
The CEO of West Australian Newspapers, Mr CS Wharton is entitled to receive share rights under the LTI plan. This plan has two hurdles, or
assessment points, which ultimately determine the 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.
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
fixed annual remuneration. All of the rights are equity settled.
No grant was made under this plan in respect of the 2012 financial year due to the Newspaper business performance during the period.
There were no rights which were forfeited or exercised during the year under this plan. No rights have yet expired and none have vested in
2013 or in 2012. From the 2013 financial year Mr Wharton was transitioned to the Seven West Media Equity Incentive Plan.
Refer note 1(v)(iii) for accounting policy relating to share-based payments.
Seven West Media (ABN 91 053 480 845) 103
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
30. SHARE-BASED PAYMENTS (CONTINUED)
2013
FOR THE YEAR ENDED 29 JUNE 2013
Grant date
Expiry date
Award type
Vesting Conditions
End of performance period
First Vesting Date
Share price at grant date
Number of rights granted
Fair value at grant date
Exercise price
Volatility
Risk free interest rate
Dividend yield
Valuation methodology
2012
Grant date
Expiry date
Award type
Vesting Conditions
End of performance period
First Vesting Date
Share price at grant date
Number of rights granted
Fair value at grant date
Exercise price
Volatility
Risk free interest rate
Dividend yield
Valuation methodology
2013 Long
Term Incentive Plan
1 March 2013
22 August 2015
Performance Rights
Service condition and TSR hurdle (50%)
Service condition and DEPS hurdle (50%)
30 June 2015
22 August 2015
$2.32
1,749,376
TSR $0.93
DEPS $2.07
$0.00
50%
2.67%
4.6%
TSR Monte Carlo simulation
DEPS Binomial Tree
LTI Program-CEO of WA
1st Grant
2nd Grant
Transitional Equity Grant
Initial Grant
3 August 2010
3 August 2015
Performance rights
Relative TSR
3 August 2015
3 August 2013
$7.02
41,081
$4.95
12 August 2011
12 August 2016
Performance rights
Relative TSR
12 August 2016
12 August 2014
$2.77
69,986
$1.75
$0.00
37%
4.58%
6.0%
Monte Carlo simulation
$0.00
37%
3.76%
10.0%
Monte Carlo simulation
1 March 2012
1 October 2014
Share rights
Service condition
Not applicable
1 October 2012
$3.96
328,811
Tranche 1 $3.42
Tranche 2 $3.09
Tranche 3 $2.79
$0.00
40%
3.68 - 4.01%
10.0%
Binomial Tree
Shares granted as compensation
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 are held in trust on behalf of the Directors.
The total number of shares received by Directors of the Company during the financial year in accordance with the plan was 251,739
(2012: 112,007). The total value of shares received by directors during the financial year in accordance with the plan was $423,601
(2012: $379,464), as determined by the observed market price.
During the year the Board determined to discontinue the NED Share Plan. Consequently, NEDs will receive 100% of their fees in cash in the following
financial year. In making its decision to discontinue the NED Share Plan the Board considered that, notwithstanding the perceived benefits of the NED
Share Plan, the Plan was complex and inefficient to administer, in particular following changes to the tax legislation relating to equity plans, and that
Directors could instead be encouraged to purchase and hold shares in the Company, subject to compliance with the Company’s Share Trading Policy.
104
Seven West Media
104
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
FOR THE YEAR ENDED 29 JUNE 2013
31. CAPITAL AND FINANCIAL RISK MANAGEMENT
The Group's activities expose it to a variety of financial risks: market risk (including interest rate risk), credit risk, capital 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 swaps, caps and collars) 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 foreign exchange 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 sourced 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.
The amount of interest rate hedging in place from these swaps at financial year end is equal to 29% (2012: 45%) of the Groups' variable rate borrowings.
The Group also has additional hedging in the form of zero-cost collars. At 29 June 2013 the interest rate floors on these instruments were activated.
The total amount of interest rate hedging in place from the swaps and collars at financial year end is equal to 69% (2012: 76%).
The effective portion of changes in fair value of cash flow hedges amounts to a loss of $1,839,000 (2012: loss of $6,192,000).
As at the end of the reporting period, the Group had the following variable and fixed rate financial instruments:
29-Jun-2013
Weighted
average
interest rate
%
3.57%
4.86%
3.94%
3.13%
Balance
$’000
(257,316)
1,508,482
(445,000)
(600,000)
206,166
30-Jun-2012
Weighted
average
interest rate
%
4.07%
6.24%
3.77%
-
Balance
$’000
(75,052)
1,950,000
(880,000)
(600,000)
394,948
Variable rate instruments:
Cash at bank, on hand and at call
Bank loans
Interest rate swaps (notional principal amount)
Interest rate collars (notional principal amount)
Net exposure to cash flow interest rate risk
There are no fixed rate instruments in place at 29 June 2013 or at 30 June 2012.
An analysis by maturities is provided under liquidity risk on the following pages.
105
Seven West Media (ABN 91 053 480 845) 105
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
31. CAPITAL AND FINANCIAL RISK MANAGEMENT (CONTINUED)
Group sensitivity
FOR THE YEAR ENDED 29 JUNE 2013
Based on the Group outstanding floating rate borrowings, interest rate swaps and collars at 29 June 2013, 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.
This analysis assumes that all other variables remain constant.
Net Profit/(Loss)
Reserves
2013
$'000
2012
$'000
2013
$'000
2012
$'000
Equity
2013
$'000
2012
$'000
If interest rates were 1% higher with all other variables held constant:
(Decrease)/increase
(6,683)
(2,473)
480
7,121
(6,203)
4,648
If interest rates were 1% lower with all other variables held constant:
Increase/(decrease)
8,230
8,851
3,426
(15,453)
11,656
(6,602)
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:
Foreign exchange receivables and forward contracts
Payables:
Foreign exchange payables and forward contracts
Net exposure
Group sensitivity
2013
$'000
2012
$'000
12,444
12,382
(11,466)
(12,512)
978
(130)
Based on the Group's financial instruments held at 29 June 2013, 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 not have changed
significantly (2012: no significant impact). The analysis was performed on the same basis as 2012 and ignores any impact of forecasted sales and purchases.
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 are regularly monitored.
The Group's only significant concentration of credit risk is the receivable balance due from its main magazine distributor of $14,976,000
(2012: $21,297,000). The debtor has no history of bad debt and adheres to credit terms on a monthly basis.
For further information on credit risk refer to note 9.
106
Seven West Media
106
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
31. CAPITAL AND FINANCIAL RISK MANAGEMENT (CONTINUED)
Liquidity risk
FOR THE YEAR ENDED 29 JUNE 2013
Liquidity risk refers to the risk that the Group is unable to meet its financial commitments as and when they fall due.
The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when
due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.
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
As disclosed in note 19, the Group has syndicated bank facilities which contains debt covenants. A breach in covenants may require the loan
to be repaid earlier than indicated in the below table.
At the end of the reporting period the Group held short dated deposits of $120,000,000 (2012: $50,000,000) that are readily available to generate
cash inflows for managing liquidity risk.
Maturities of financial liabilities
The table 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 29 June 2013
Non-derivative financial liabilities
Trade and other payables
Unsecured loans
Total non-derivatives
Derivative financial liabilities
Less than
one year
$'000
Between
1 and 5 years
$'000
Total contractual
cash flows
$'000
Carrying
amount -
liabilities
$'000
309,219
73,283
382,502
27,258
1,652,591
1,679,849
336,477
347,225
1,725,874
1,498,106
2,062,351
1,845,331
Net settled interest rate swaps and collars
2,773
1,765
4,538
11,363
Gross settled forward foreign exchange contracts - cash flow hedges:
- (inflow)
- outflow
Total derivatives
Total financial liabilities
(12,444)
11,466
1,795
-
-
1,765
(12,444)
11,466
3,560
(776)
-
10,587
384,297
1,681,614
2,065,911
1,855,918
107
Seven West Media (ABN 91 053 480 845) 107
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
31. CAPITAL AND FINANCIAL RISK MANAGEMENT (CONTINUED)
FOR THE YEAR ENDED 29 JUNE 2013
At 30 June 2012
Non-derivative financial liabilities
Trade and other payables
Unsecured loans
Total non-derivatives
Derivative financial liabilities
Net settled interest rate swaps and caps
Gross settled forward foreign exchange contracts - cash flow hedges:
- (inflow)
- outflow
Total derivatives
Total financial liabilities
Less than
one year
Between
1 and 5 years
Total contractual
cash flows
Carrying
amount -
liabilities
$'000
$'000
$'000
$'000
305,637
122,996
428,633
1,931
(12,382)
12,512
2,061
430,694
32,849
2,279,546
2,312,395
338,486
2,402,542
367,457
1,929,799
2,741,028
2,297,256
1,585
-
-
1,585
3,516
11,250
(12,382)
12,512
3,646
-
131
11,381
2,313,980
2,744,674
2,308,637
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.
Fair value measurement
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.
AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the following fair value measurement
hierarchy:
(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
(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).
The only assets or liabilities measured and recognised at fair value through profit and loss are the assets/liabilities recognised in relation to interest rate
cash flow hedges and foreign exchange cash flow hedges amounting to $10,587,000 (2012: $11,381,000). The fair values of these derivatives (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 future cash flows.
Capital Management
The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain the future development of
the business.
Capital consists of ordinary shares , convertible preference shares and retained earnings of the Group. The Board of Directors monitors the return on
capital as well as the level of dividends to ordinary 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.
The Group's net debt to adjusted equity ratio at the reporting date was as follows:
108
Seven West Media
108
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
31. CAPITAL AND FINANCIAL RISK MANAGEMENT (CONTINUED)
Total unsecured bank facility
Less: unamortised refinancing costs
Less: cash and cash equivalents
Net Debt
Total Equity
Add back; Amounts accumulated in equity relating to cash flow hedges
Adjusted equity
Net debt to adjusted equity ratio
There were no changes in the Group's approach to capital management during the year.
FOR THE YEAR ENDED 29 JUNE 2013
2013
$'000
2012
$'000
1,508,482
1,950,000
(10,376)
(257,316)
(20,201)
(75,052)
1,240,790
1,854,747
2,863,878
5,680
2,869,558
2,619,393
4,392
2,623,785
43%
71%
32. RECONCILIATION OF PROFIT AFTER TAX TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Reconciliation of cash at the end of the year (as shown in the consolidated statement of cash flows)
comprises:
Cash at bank, on hand and at call
Total cash and cash equivalents at the end of year
Reconciliation of operating profit after tax to net cash provided by operating activities
(Loss)/profit for the year
Non-cash items
Depreciation and amortisation of property, plant and equipment and intangible assets
Amortisation of television program rights
Impairment of intangible assets and equity accounted investees
Net gain on disposal of property, plant and equipment and computer software
Share based payment expense
Dividend received from equity accounted investees less share of profit of equity accounted investees
Movement in unamortised finance costs
Movement in:
Receivables
Inventories
Program rights
Other operating assets
Payables
Program liabilities
Provisions
Other operating liabilities
Tax balances
Net cash inflow from operating activities
2013
$'000
2012
$'000
257,316
75,052
257,316
75,052
(69,758)
226,889
57,989
61,561
132,350
139,950
288,727
-
(260)
(227)
1,135
582
(10,981)
(2,751)
9,825
(20,201)
49,215
(14,700)
5,478
519
(134,859)
(125,205)
2,361
(4,024)
(27,113)
(42,310)
5,206
4,231
12,649
3,328
2,956
(1,519)
17,652
(10,158)
342,572
215,965
Seven West Media (ABN 91 053 480 845) 109
Notes to the
Notes to the Financial Statements
Financial Statements
Seven West Media Limited
FOR THE YEAR ENDED 29 JUNE 2013
33. PARENT ENTITY FINANCIAL INFORMATION
Summary of financial information
The individual financial statements for the Parent Entity show the following aggregate amounts:
FOR THE YEAR ENDED 29 JUNE 2013
Financial position of parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising of:
Share capital
Reserves
Asset revaluation reserve
Equity compensation reserve
Accumulated deficit
Profits reserve
Result of parent entity
(Loss) profit for the year
Total comprehensive (expense) income for the year
Parent entity
2013
$'000
2012
$'000
447
98,324
3,193,841
3,502,875
25,589
363
25,589
65,700
3,090,405
2,656,017
8,352
8,352
1,410
384
(584,562)
-
652,647
772,422
3,168,252
3,437,175
(584,562)
1,033,345
(584,562)
1,033,345
Guarantees entered into by the parent entity
The Parent Entity has provided financial guarantees in respect of borrowings of a subsidiary amounting to $Nil (2012: $Nil).
There are cross guarantees given by Seven West Media Limited and its subsidiaries described in note 28.
Contingent liabilities of the parent entity
The Parent Entity did not have any contingent liabilities as at 29 June 2013 or 30 June 2012. For information about guarantees given by the
Parent Entity refer above.
Contractual commitments for the acquisition of property, plant or equipment
The Parent Entity had no contractual commitments for the acquisition of property, plant or equipment as at 29 June 2013 or 30 June 2012.
34. EVENTS OCCURRING AFTER THE REPORTING DATE
In the interval between the end of the financial year and the date of this report there has not arisen any item, transaction or event of a
material or unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Group, the
results of these operations, or the state of affairs of the Group, currently or in future financial years.
110
Seven West Media
(cid:3)
Directors’ Declaration
FOR THE YEAR ENDED 29 JUNE 2013
Seven West Media (ABN 91 053 480 845) 111
Independent
Auditor’s Report
TO THE MEMBERS OF SEVEN WEST MEDIA LIMITED
112
Seven West Media
Independent
Auditor’s Report
TO THE MEMBERS OF SEVEN WEST MEDIA LIMITED
Seven West Media (ABN 91 053 480 845) 113
Legal Advisors
Herbert Smith Freehills
ANZ Tower
161 Castlereagh Street
Sydney NSW 2000
Clayton Utz
Level 15
1 Bligh Street
Sydney NSW 2000
Addisons
60 Carrington Street
Sydney NSW 2000
Company Information
Directors
KM Stokes AC – Chairman
DR Voelte AO – Deputy Chairman
JH Alexander
Dr ME Deaker
D Evans
DR Flynn
PJT Gammell
GT John AO
JC Reizes
RK Stokes
BI McWilliam – Alternate Director
EJM Bostock – Alternate Director
Company Secretaries
WW Coatsworth
MJ Ellis
Registered Office
Newspaper House
50 Hasler Road
Osborne Park WA 6017
Share Registry
Computershare Investor Services Pty Limited
45 St Georges Terrace
Perth WA 6000
Telephone: (08) 9323 2000
Fax: (08) 9323 2033
Auditor
KPMG
10 Shelley Street
Sydney NSW 2000
Stock Exchange Listing
Australian Stock Exchange
ASX code: SWM
114
Seven West Media
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 Limited
45 St Georges Terrace
Perth WA 6000
Telephone: (08) 9323 2000
Fax: (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 W. Coatsworth, Company Secretary on (02) 8777 7777 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 Registry’s 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 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 (ABN 91 053 480 845) 115
Shareholder Information
FOR THE YEAR ENDED 29 JUNE 2013
The shareholder information set out below was applicable at 28 August 2013.
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 1,019 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 Limited
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
BNP Paribas Nominees Pty Limited
JP Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
Neweconomy Com Au Nominees Pty Limited
AMP Life Limited
CS Fourth Nominees Pty Limited
UBS Nominees Pty Limited
BNP Paribas Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
QIC Limited
3rd Wave Investors Limited
HSBC Custody Nominees (Australia) Limited
Sandhurst Trustees Limited
Bond Street Custodians Limited
TCW Crescent Mezzanine Partners IV / IVB (Ireland) Limited
Number of shareholders
5,820
12,375
3,996
3,437
191
25,819
Number of
ordinary shares held
Percentage of
issued shares
334,788,846
130,046,758
93,150,232
68,282,065
39,645,771
29,564,472
20,326,622
16,327,840
11,061,971
7,714,649
7,485,145
7,111,267
7,100,000
5,903,881
4,924,218
3,500,000
2,948,424
2,423,750
2,203,369
2,002,370
33.51
13.02
9.32
6.83
3.97
2.96
2.03
1.63
1.11
0.77
0.75
0.71
0.71
0.59
0.49
0.35
0.30
0.24
0.22
0.21
796,511,650
79.72
116
Seven West Media
Shareholder Information
FOR THE YEAR ENDED 29 JUNE 2013
c. Substantial shareholders
Substantial shareholders in the Company are set out below:
Name
Mr Kerry Matthew Stokes AC
Australian Capital Equity Pty Limited
Seven Group Holdings Limited
Ausbil Dexia Limited
* Based on issued capital at date of notification.
Substantial holding*
Number of ordinary
shares in substantial
holding
35.27%
35.22%
35.22%
5.87%
352,419,944
351,876,932
351,876,932
34,814,584
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.
e. On-Market Buy Back
There is no current on-market buy-back.