Delivering
world class
content
everywhere
Annual Report 2017
Contents
We are number one in television
We engage with all Australians
We are everywhere
We are defining our future
We are building our future
We are now on every screen
Letter from the Chairman
Letter from the Managing Director
& Chief Executive Officer
Performance of the Business
We are transforming our business
Group Performance
Seven
The West
Pacific
Other Business & New Ventures
Our future is on every screen
Beyond our business
Risk, Environment, People
and Social Responsibility
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
2
4
6
8
10
12
14
16
18
20
26
32
36
40
42
44
46
51
55
66
70
87
88
139
140
146
147
148
We are
number one
in television
We are now in our eleventh
consecutive year of leadership
in broadcast television.
Our commitment to leadership also extends beyond
television, with our market-leading presence in
video on demand with PLUS7 and the market-
leading success of our key publishing brands.
Our business is built on great ideas and a passion
for delivering the best content to all Australians
across every screen.
We are making great strides in connecting with our
audiences across every screen. This leadership and
commitment to great ideas with content we create
will define our future across every communications
platform.
We are focused on the performance of our
business: building the company in a time of ongoing
transformation.
#1
PRIMETIME, NEWS AND
BREAKFAST TELEVISION
We are number one
in television
3
We engage
with all
Australians
How our audiences engage with us
today and into the future will define
our success.
Driving our future will be our leadership across every
screen. Our success is underpinned by creating and
delivering the best content and the biggest events to
all Australians.
Our leadership in television – with key major event
franchises – sees Seven extending its leadership in
breakfast television, morning television, news and
across primetime.
We are focused on building on our leadership and
driving new opportunities for our business using our
market leadership and ability to deliver the biggest
audiences to rapidly grow our presence in new
forms of content delivery.
#1
COMMERCIAL
CATCH-UP TELEVISION APP
We engage with
all Australians
5
We are
everywhere
Our business continues to redefine
itself to meet the changing demands
of an evolving communications
landscape.
Broadcast television drives our business.
Our ability to create compelling and engaging
content underpins our success.
Across our media businesses we deliver
extraordinary and unparalleled reach and
engagement.
But our audiences are changing.
And we are changing.
Our future is now.
Our audiences are engaging with us across all
screens. And we are there with great content
that will engage our audiences on their terms.
Our success today will define our future
development as we focus on creating content
for all screens and building partnerships in the
delivery of that content.
#1
COMMERCIAL TELEVISION
ADVERTISING REVENUE
We are
everywhere
77
We are
defining
our future
Our performance dashboard
tracks the accomplishments
and progress against our
strategic pillars outlined
in 2013.
1. Maintain
Leadership
Milestones achieved
> #1 22nd consecutive half of TV ratings
and revenue leadership
> #1 Highest operating margin of any
Australian FTA TV business
> #1 in all key broadcast TV demographics
> #1 Commercial catch-up TV app in
terms of audience
> #1 Market share of 45 per cent for
advertising revenue from long-form
on-demand and live digital video
> #1 Portfolio of publishing assets in core
markets
one
We are defining
our future
9
2. Redefine the
Operating Model
3. Fuel New
Growth
Milestones achieved
Milestones achieved
> Multiplatform delivery of major premium content
> Group operating costs down $20 million
including AFL (excluding Olympics, licence fees
and 3rd party commissions)
> Implementation of Pacific’s content everywhere
strategy drove 15 per cent cost reduction
> The Sunday Times and PerthNow acquisition
driving greater returns from existing The West
assets
> Re-negotiated Yahoo7 agreement to better
support Total Video strategy
> Largest TV production company in
Australia with 11 per cent growth in
global commissions and program sales
> Digital advertising revenue increased
by > 100 per cent YoY
> Rapid, low-cost deployment of new
digital products
> Achieved 50 per cent payback from
Sunday Times in first 7 months
> Ventures investment portfolio value
increased 107 per cent to $83 million
two three
10
We are
building
our future
Our business is changing. It is evolving rapidly as we meet the demands of
a changing communications landscape.
Four years ago, we defined a strategy for our future
development. It was a strategy that has underpinned our
business and provided us with the framework to build on
our leadership.
We will engage with our audiences. We will develop
new partnerships and driving our future will be our
commitment to deliver the best content and most
engaging connections with our audiences.
We are delivering leadership across our media
businesses in Australia. We are building a significant
presence in international markets with new production
company ventures that are securing commissions.
We have made significant advances in our moves into the
delivery of our content beyond broadcast television and
our publishing businesses. Our publishing businesses are
transforming into media brands and creating their future
across all screens.
Our commitment is to drive home our leadership and
deliver the biggest audiences.
It is a commitment that sees us focus on creating and
owning great content.
It is a commitment that sees us form long-term
partnerships with the Australian Football League, the
International Olympic Committee and Tennis Australia to
deliver the biggest events in sports.
And in delivering the biggest events on television
and securing the largest audiences, we also create
a remarkable platform from which to extend our
leadership across all screens, to engage with our
audiences on their terms.
As well as creating our own future, our media businesses
and our deep connections with our audiences allows us
to build new businesses.
Some of these businesses, such as our rapidly expanding
television production ventures, allow us to increase our
media presence. But beyond these ventures, we are
focusing on investing in businesses that build our digital
presence. We are also investing in new businesses that
connect with our audiences – including SocietyOne and
Airtasker.
Digital content engagement is at the core of the future.
And as we build our businesses, we are transforming how
we do business. We are driving change, we are focused
on doing things smarter, managing our costs and driving
greater efficiencies while maintaining our leadership in
content creation and delivery of audiences.
Underpinning each of these developments is a
commitment to enhance shareholder value.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 We are building
our future
11
Delivering engagement and value through
powerful storytelling
one
CREATE AND OWN
MORE EXCEPTIONAL
CONTENT
two
GROW AND KNOW OUR
AUDIENCES; LEAD IN
TOTAL VIDEO
three
DELIVER INCREASED
PROFITABILITY AND MORE
DIVERSIFIED EARNINGS
> Create, control and produce the
best content for every platform
> Maintain industry leadership in
ratings and circulation
> Grow revenues through
strategic acquisition
> Rapidly extend the content
production and distribution
network
> Acquire premium content rights
> Enhance content offering for key
demographics
> Drive audience growth through:
> Develop transactional capability
– strong social capabilities;
> Continue to build live events business
– strategic partnerships;
> Invest in digital adjacencies
– data capabilities and
consumer insights
> Reduce costs and create a
more scalable cost base
> Accelerate mobile products
> Drive efficiencies and
simplification through technology
ENGAGE SCALE
AUDIENCES
MAXIMISE THE VALUE OF
OUR CONTENT AND IP
GROW THE VALUE OF
OUR AUDIENCES
TRANSFORM THE WAY WE WORK
Our enablers
PEOPLE &
CULTURE
> Affect a one company culture;
collaborative and agile
> Drive change
> Address talent shortages
and create career pathways
INFLUENCE &
REGULATION
> Partner and engage with
others to shape industry
environment
> Influence a fit for purpose
regulatory environment
DISRUPTION
& INNOVATION
> Foster and support innovation
in all areas of the business
> Leverage disruption to identify
growth opportunities
We are
now on
every screen
The coming twelve months sees our
company make a series of bold and
innovative steps that will shape our
future and provide cornerstone for
future development.
We have the biggest events in sports – the AFL
Finals Series, the AFL Grand Final, the Melbourne
Cup, the Rugby League World Cup, the Australian
Open, the Olympic Winter Games and the
Commonwealth Games.
These events provide us with the unparalleled
opportunity to deliver the biggest audiences and
advertising revenue over the coming twelve months.
This portfolio of major events also allows us to
connect with our audiences and define how we will
connect with them in the future.
We are launching a new video streaming service.
We have a new partnership with AOL/Verizon
in Yahoo7 and we are accelerating our plans to
drive home our leadership in “total video” for our
audiences across all screens. We are building our
presence in live events. And we will continue to
invest in growth businesses that will benefit from
the power of our assets.
Torah Bright, Olympic Gold and Silver
Medallist. The Olympic Winter Games
are on Seven in February 2018.
We are now on
every screen
13
14
Letter from
the Chairman
Welcome to our annual report for shareholders.
Despite a challenging environment, our broadcast television business continues to
perform strongly, with leadership in news and public affairs, breakfast television and
primetime throughout the year.
We have also maintained our market-leading presence
in publishing with the ongoing transformation of Pacific
Magazines, the significant redevelopment of The West
across all media platforms and the acquisition of The
Sunday Times and PerthNow – adding further depth to
our market-leading presence in Western Australia.
Our businesses continue to entertain and inform millions
of Australians every day, however we also recognise we
are in a period of rapid change, especially in how we
engage with our audiences.
Our capacity to connect with them across all media and
all screens, particularly mobile devices, will determine
our future for many years to come.
While we are very proud that our group is delivering
record revenue share of above 40 per cent in the free to
air market, we acknowledge the sector is diminishing in
size and we need to adapt with new strategies.
We support the Federal Government’s media reforms,
including licence fees being addressed, to enable local
media groups to remain strong in the face of increasing
competition from various new players.
While we delivered the lower end of our underlying
EBIT guidance, the annual result did include material
adjustments to the carrying values of our intangible
assets and some onerous contract provisions.
These reflect the current market conditions in which we
are operating and resulted in a full year loss after tax.
We continue to work on cutting costs and creating
efficiencies, while investing in compelling content,
including our long-standing associations with the
Olympics, Australian Open Tennis and AFL.
These properties provide strategic relevance and
increase our exposure to millions of viewers across free
to air television and mobile devices. However, some of
these contracts we entered into in the past do not reflect
the current market conditions.
To address this issue, we are developing more of
our own program franchises, with details provided
by Tim Worner in his CEO report.
With every challenge comes opportunities and
we are pursuing them with enthusiasm and focus,
engaging our audiences with content across all screens.
We are also investing in new businesses and new
platforms for the delivery of our digital content, with
this increased investment reflected in our accounts.
To this end the group is advancing the delivery of
our video content across all screens with PLUS7
and other initiatives.
Among the various issues faced during
the year, we were obliged to take legal
action to protect our business from the
release of confidential company
information and defend the reputations
of our people.
As detailed in two separate successful NSW Supreme
Court judgements, our group acted professionally and
appropriately in the handling of this matter, which we
trust is now closed.
On behalf of our directors, I wish to thank all of
our people and shareholders for your continued
commitment to the group during a challenging year
as we work hard to build shareholder value.
Kerry Stokes AC
Chairman
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Letter from
the Chairman
15
Our broadcast television business
delivers leadership in news
and public affairs, breakfast
television and primetime
16
Letter from the
Managing Director and Chief Executive Officer
This has been another year which confirmed our enormous audience reach across all
the businesses that make up Seven West Media.
But it has also been a year in which all media companies
confronted a new constant: that of change.
Our financial results for 2017 reflect that new constant.
Our results reflect a tough market. They also reflect
tough decisions as we reconsider the valuations of key
properties which continue to provide significant benefits
for us but which were signed in a completely different
market, only a few short years ago.
As a company we are transforming. We are building
new businesses. We are expanding our content creation
capabilities and we are now a company connecting with
all Australians across every screen. Driving that is the
strong underlying performance of our media businesses
and brands.
We continue to drive our leadership in broadcast
television. We continue to evolve our publishing brands.
We continue to expand our capability in content creation
and we are developing more opportunities for the delivery
of that content across all screens and platforms. We are
transforming our company as we meet the changing
demands of the communications landscape.
Our strategy and objectives and how we will continue
to use our strengths in content to build our future are
detailed in this annual report.
Our people remain very focused on market leadership.
We are now in our eleventh consecutive year of
leadership in broadcast television, in both ratings and
revenue. We are the leading commercial television
business in catch-up TV. We own and are growing
Australia’s leading digital publishing business. Over
the past twelve months, we have further strengthened
our presence in the West Australian market with the
acquisition of The Sunday Times and Perth Now.
Internationally, we have successfully expanded our
presence in the production of content.
As noted by our Chairman in this report, this has been a
tough and competitive past twelve months. We have, as
a company, made hard but necessary decisions and our
financial results reflect these decisions.
During the last twelve months we have made real
progress toward achieving a regulatory framework that
is better suited to the current operating environment. In
2013, Seven called for a broad reform package to media
ownership. Consequently, we are extremely pleased that
the Government announced reforms addressing this
issue in May 2017, which we believe will go a long way to
achieving the objective.
In particular, we welcome the Government’s move to
reduce television licence fees, which have been the single
biggest regulatory impediment facing this industry for
some time.
Seven supports the proposed changes to the
media ownership rules as part of the Government’s
comprehensive package. We recognise that the changes
we are witnessing in media consumption and delivery
are challenging the traditional sector-based regulations
currently in place. Legislation to deliver these much
needed changes is currently before the Senate and we
urge all parties to support these reforms.
There is more to be done as we transform our company.
Taking our content beyond broadcast television has
moved to a new level with the streaming of our market-
leading video content live or on demand, on any device.
Seven will continue to build on our already market-leading
live and VOD digital advertising revenue, which in FY17
delivered over a 45 per cent revenue share and a 36 per
cent audience share. This was delivered across PLUS7
and our live OTT premium streaming sport.
Later this year we will be launching a new wholly owned
and operated product and platform to accelerate this
growth across every screen. We are also looking forward
to our expanded partnership with AOL/Verizon via
Yahoo7.
We create and own much of what you see on Seven:
Home and Away, My Kitchen Rules, House Rules and
many more highly popular series. We are acknowledged
for our leadership in the production of Australian drama.
We have key major event franchises, including the AFL,
the Olympic Games, the Gold Coast Commonwealth
Games, the Australian Open tennis and the Rugby
League World Cup.
The content we create and these major tentpole events
will define our business. Soon we will unveil plans for
the further delivery of our video and publishing content
across an array of platforms. This will deepen our
connection with our audiences on their terms and on any
device.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Letter from the Managing Director
and Chief Executive Officer
17
We are expanding
our content creation
capabilities and we are
now a company connecting
with all Australians across
every screen
Content, and the delivery of that content to our
audiences, across every screen, is our future. We are
focused on transforming how we work. There is a
relentless focus on our structures and our costs.
It has not been an easy twelve months for media
businesses in Australia. Our financial results reflect that.
But it has been twelve months in which we have built on
our businesses’ market leadership, transformed how we
do business and put in place the architecture that will see
your company build and take advantage of a changing,
dynamic landscape.
We thank you, our shareholders, for your continuing
commitment to our company.
Tim Worner
Managing Director and
Chief Executive Officer
Our focus on content is underpinned by Seven Studios,
the vehicle that is creating and exploiting Seven’s
valuable intellectual property assets. Seven is investing in
exceptional content for Australian and global audiences.
The Emmy Award winning Beat Bugs children’s
program, based on the music of the Beatles, has been
commissioned globally by Netflix. This has been followed
by a major merchandising launch in the US market this
month, with a UK launch in September. Seven’s original
program, My Kitchen Rules, has now been produced in
11 international territories and continues to build global
audiences. We are well placed to significantly expand this
division and build on the success that has been achieved
to date.
We are also using the enormous reach of our audience to
drive growth across the company. In this annual report,
you will see some key partnerships and investments
beyond our core media businesses. These investments
share a common thread: they are opportunities for
growth. They are ventures that are well-managed and
allow us to use our audience delivery and marketing
capabilities to build brands and shareholder value in
Seven West Media.
PERFORMANCE OF THE BUSINESS
We are
transforming
our business
Change is a constant as we meet
the demands of our audiences
and accelerating advances in the
communications landscape.
These developments deliver significant
opportunities for our company as we connect with
all Australians.
We are committed to further extending our
leadership and delivering market-leading margins as
we continue to invest in the future of our business in
a rapidly changing and competitive market.
We are focused on enhancing our performance
as “one company”, creating opportunities to
build our businesses, driving greater efficiencies,
strengthening our balance sheet and delivering
shareholder wealth.
Performance
of the business
19
20
Group
performance
Key outcomes
22
CONSECUTIVE HALVES OF TELEVISION
RATINGS AND REVENUE LEADERSHIP
GROUP OPERATING COSTS DOWN
$20 million
(INCLUDING AFL EXCLUDING OLYMPICS, LICENCE FEES
AND 3RD PARTY COMMISSIONS)
40.2%
40.2%
ADVERTISING REVENUE
MARKET SHARE
METRO FREE-TO-AIR TV ADVERTISING
REVENUE MARKET SHARE
50%
PAYBACK FROM SUNDAY
TIMES IN FIRST 7 MONTHS
4 billion
4 billion
ONLINE VIDEO VIEWS
ONLINE VIDEO VIEWS
PACIFIC CAPTURES
27%
OF ALL MAGAZINES READERSHIP
(EXCLUDES THE IMPACT OF SIGNIFICANT ITEMS AFTER TAX)
UNDERLYING NET PROFIT AFTER TAX OF
PACIFIC CAPTURES
$166.8 million
27 per cent
(EXCLUDES THE IMPACT OF SIGNIFICANT ITEMS AFTER TAX)
OF ALL MAGAZINES READERSHIP
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Performance of the Business:
Review of Operations
21
Summary Financial Performance
Revenue
Other income
Share of net profit (loss) of equity accounted investees
Revenue, other income and equity accounted profits
Operating expenses excluding depreciation and amortisation
EBITDA¹
Depreciation and amortisation
EBIT²
Net finance costs
Profit before significant items and tax
Significant items excluding tax
(Loss) profit before tax
Tax benefit (expense)
(Loss) profit after tax
EBITDA margin
Basic EPS
Basic EPS excluding significant items net of tax
Diluted EPS
Diluted EPS excluding significant items net of tax
FY17
$m
FY16
$m
Change
%³
-2.7%
-11.9%
n/a
-2.0%
1.7%
-15.6%
-0.2%
-17.8%
2.0%
-20.5%
n/a
n/a
n/a
n/a
1,673.6
1,720.5
5.4
0.4
1,679.4
(1,372.7)
306.7
(45.3)
261.4
(38.6)
222.8
(988.8)
(766.0)
21.0
(745.0)
6.1
(12.8)
1,713.8
(1,350.3)
363.5
(45.4)
318.1
(37.8)
280.3
(32.9)
247.4
(63.1)
184.3
18.3%
21.2%
(49.4 cents)
12.2 cents
11.1 cents
13.7 cents
(49.4 cents)
12.2 cents
11.1 cents
13.7 cents
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.
3. Change percentages are calculated on whole dollars and not the rounded amounts presented.
Reconciliation of EBIT to statutory profit before tax
EBIT
Net finance costs
Significant items excluding tax
(Loss) profit before tax
FY17
$m
261.4
(38.6)
(988.8)
(766.0)
FY16
$m
318.1
(37.8)
(32.9)
247.4
Change
%
-17.8%
2.0%
n/a
n/a
22
Review of
Operations
Seven West Media Limited reported a statutory net loss of $745.0 million for the year
ended 24 June 2017. This compares to the previous corresponding year statutory net
profit of $184.3 million. Excluding significant items, the current year profit after tax of
$166.8 million is down 19.5 per cent on the previous year profit of $207.3 million.
Seven West Media recorded significant items of
$988.8 million in the period, including the impairment
of intangibles, equity accounted investees, other assets
including fixed assets, restructuring costs, onerous
contracts and net loss on disposal of investments.
The reduction in the carrying value of the television
assets represented the largest proportion of these write
downs. This has been driven by softer free to air market
conditions and a revision in growth assumptions for
the market outlook impacting the carrying value of the
television licence and certain sports rights. Prior period
significant items of $32.9 million related to restructuring
costs.
The group delivered revenue of $1,679.4 million, down 2.0
per cent versus the previous year. Profit before significant
items, net finance costs and tax (EBIT) of $261.4 million
was down 17.8 per cent on the previous year. A fully
franked final dividend of 2 cents per share has been
declared and will be paid in October 2017
(2016 final dividend: 4 cents per share fully franked).
Advertising Market and Revenue Performance
The Australian advertising market was flat in the financial
year to 30 June 2017, declining by 0.1 per cent for the period
according to SMI data. Seven West Media has continued
to transform its business, growing its online and social
audience while maintaining its lead in the core markets it
competes.
Metropolitan television advertising decreased 3.7 per cent in
the financial year, based on Free TV data. Seven captured
40.2 per cent share of advertising in the metro market,
marking eleven years of revenue leadership. In the 6 months
to June 2017 Seven secured 39.5 per cent share of metro
advertising revenues. The trends in publishing advertising
markets remained challenging. SMI reported a decline of
23.6 per cent in Newspapers. The West titles including
Sunday Times reported a decline of 11.9 per cent. The
magazine advertising market declined 17.5 per cent based
on SMI data. Pacific’s print advertising declined 28.0 per
cent in the period, but 23.4 per cent on a like for like basis,
excluding closures.
Advertising market growth in digital moderated to an
increase of 8.1 per cent. Seven West Media recorded digital
revenue growth of 102 per cent excluding Yahoo7. Yahoo7
experienced growth in video but premium display pressures
remained. Seven West Media continues to develop new
technologies both in the delivery of content and advertising
value to enhance the revenue proposition for future years.
REVENUE ($M)
REVENUE AS A % OF GROUP
2000
2000
1600
1600
1200
1200
800
800
400
400
26.2
26.2
256.2
256.2
331.8
331.8
27.4
27.4
237.5
237.5
291.2
291.2
13.6
13.6
220.1
220.1
260.9
260.9
24.6
24.6
201.2
201.2
228.5
228.5
12.9
12.9
168.0
168.0
217.5
217.5
1267.8
1267.8
1305.7
1305.7
1279.2
1279.2
1259.5
1259.5
1281.0
1281.0
0
0
FY13
FY13
FY14
FY14
FY15
FY15
FY16
FY16
FY17
FY17
Seven
Seven
The West
The West
Pacific
Pacific
Other
Other
Revenues shown in charts above exclude Corporate revenues.
26.2
256.2
331.8
27.4
237.5
291.2
1%
10%
13.6
220.1
13%
260.9
76%
24.6
201.2
228.5
12.9
168.0
217.5
1267.8
1305.7
1279.2
1259.5
1281.0
2000
1600
1200
800
400
Seven
0
The West
Pacific
Other
Seven
FY13
The West
Pacific
Other
FY14
FY15
FY16
FY17
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Performance of the Business:
Review of Operations
23
Seven West Media continues
to develop new technologies
both in the delivery of content
and advertising value to
enhance the revenue
proposition for future years.
24
Group revenue of $1,679.4 million was 2.0 per cent lower
than the prior year with advertising revenue of $1,239.3
million and other revenue of $440.1 million. Television
revenue now represents 76 per cent of group revenue.
Balance Sheet
At 24 June 2017 Seven West Media had net assets of
$418.9 million.
Group net debt at the end of the year was $725.7 million and
the debt leverage ratio was 2.4x EBITDA (Dec 2016: 2.2x).
In October 2016, the Group extended its debt facilities
for a further two years with no changes to covenants or
undertakings, out to an expiry date of October 2020. The
overall facility limit was reduced to $900 million, down from
$1.1 billion.
Review of Businesses
A summary of the performance of Seven West Media’s key
business units for the year ending 24 June 2017 is set out in
the following pages.
Cost Management
Group operating costs including depreciation and
amortisation increased by 1.6 per cent to $1,418.0 million
driven by major one off events, growth in 3rd party
productions and the purchase of The Sunday Times and
PerthNow. On an underlying basis excluding these one-off
expenses, operating costs decreased 6.1 per cent during
the financial year.
EBITDA and Operating Margins
Seven West Media delivered EBITDA of $306.7 million, 15.6
per cent lower than the prior year with an EBITDA margin
of 18.3 per cent. Market-leading EBITDA margins were
retained through Seven’s EBITDA margin of 21.2 per cent
and The West’s EBITDA margin of 21.5 per cent. Pacific’s
EBITDA margin was 3.7 per cent. Seven’s EBITDA, which
includes its production business, now accounts for 84 per
cent of total group EBITDA.
PERCENTAGE OF OPERATING COSTS
OPERATING COSTS ($M)
11.2
226.9
235.9
8.5
217.1
219.7
1%
10.2
12%
199.8
13%
209.2
74%
977.4
993.6
983.2
1500
1200
900
600
300
0
1500
1500
30.2
192.2
1200
1200
189.3
900
900
600
600
967.8
300
300
0
0
FY16
11.2
11.2
14.3
226.9
226.9
164.5
235.9
191.5
235.9
977.4
977.4
1031.3
FY13
FY13
FY17
8.5
8.5
217.1
217.1
219.7
219.7
10.2
10.2
199.8
199.8
209.2
209.2
30.2
30.2
192.2
192.2
189.3
189.3
14.3
14.3
164.5
164.5
191.5
191.5
993.6
993.6
983.2
983.2
967.8
967.8
1031.3
1031.3
FY14
FY14
FY15
FY15
FY16
FY16
FY17
FY17
Seven
The West
FY13
Pacific
Other
Seven
FY14
FY15
The West
Pacific
Other
Seven
Seven
The West
The West
Pacific
Pacific
Other
Other
All costs shown in charts above exclude the impact of significant items and Corporate costs.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Performance of the Business:
Review of Operations
25
PERCENTAGE OF TOTAL EBITDA
EBITDA ($M)
500
400
300
200
100
0
15.5
36.4
117.1
19.4
24.4
92.9
319.6
336.2
0%
2%
4.2
14%
23.5
73.3
84%
321.1
500
500
10.5
400
400
60.5
300
300
200
200
313.8
19.4
19.4
24.4
24.4
92.9
92.9
15.5
15.5
36.4
36.4
117.1
117.1
6.2
46.7
4.2
4.2
23.5
23.5
73.3
73.3
10.5
10.5
60.5
60.5
6.2
6.2
46.7
46.7
319.6
271.2
319.6
336.2
336.2
321.1
321.1
313.8
313.8
271.2
271.2
100
100
0
0
FY14
FY15
FY16
FY13
FY17
FY13
FY14
FY14
FY15
FY15
FY16
FY16
FY17
FY17
The West
Pacific
Other
Seven
Seven
The West
The West
Pacific
Pacific
Other
Other
Seven
The West
Pacific
Other
Seven
FY13
All costs shown in charts above exclude the impact of significant items and Corporate costs.
PERFORMANCE OF THE BUSINESS
Seven
Seven is number one in
primetime. Seven News is
Australia’s number one. Sunrise
continues to dominate breakfast
television. Seven is expanding this
leadership across all screens.
Performance of the Business:
Seven
27
Seven is Australia’s largest premium video content producer and the leading free-to-air
television business in the country.
Building on its success in television, Seven has been
establishing new platforms and distribution models to
monetise its content through video on demand, live
streaming, subscription television and social media. A
major milestone in this digital transformation will be Seven
taking full control of its long form digital content from
December 2017, building on the existing success of the
market-leading Plus7.
Seven’s content production business, Seven Studios,
continues to grow its global footprint with new
international customers and an expanded global
presence. Seven Studios produced over 850 hours in
the period with revenues from its 3rd party productions
and program sales growing 11 per cent on the previous
financial year. The growth in Seven Studios is delivering
material benefits to the core business by maximising
returns on the monetisation of content commissioned by
the Seven Network.
Seven has delivered another strong ratings and revenue
result for the 2017 financial year and once again
retained its leading position across all people and all key
demographics and again securing the largest revenue
share in the metro market. Driving this success has been
the consistency and depth of Seven’s programming
meeting both audience and advertiser demands. This
financial year marked the return of the Olympics to the
Seven Network, the return and resurgence of tentpole
franchises including My Kitchen Rules and House Rules,
the strengthening of Seven’s leadership in Australian
news and the successful launch of several new and
returning programs.
FINANCIAL PERFORMANCE: TELEVISION
Revenue
Advertising
Affiliate fees and other
Program sales and third party productions
Total revenue
Costs
Depreciation and amortisation
Operating costs
Total costs
EBIT
In the period Seven Network welcomed the Government’s
further reduction of licence fees with a one-off relief
measure cutting fees by $35 million in the 2017 financial
year. Under the Government’s proposed media reform
package licence fees will be abolished permanently and a
new annual spectrum charge of approximately $10 million
per annum will be introduced for television broadcasters.
Seven’s revenue increased 1.7 per cent, driven by growth
in advertising through share gains, affiliation fees and
Seven Studios sales. Total costs increased 6.6 per cent
in the period, however on an underlying basis excluding
Olympics and Seven Studios 3rd party productions,
costs declined 3.1 per cent. Seven’s market-leading
EBITDA of $271.2 million was delivered at a 21.2 per cent
margin. EBIT (Profit before significant items, net finance
costs and tax) decreased 14.4 per cent to $249.7 million.
This represents 90 per cent of group EBIT, excluding
corporate costs.
FY17
$m
FY16
$m
Change
%
1,062.0
1,053.1
121.7
97.3
118.8
87.6
1,281.0
1,259.5
21.5
1,009.8
1,031.3
249.7
22.1
945.7
967.8
291.7
0.8%
2.5%
11.0%
1.7%
-2.7%
6.8%
6.6%
-14.4%
28
Total Audience
Entertainment Content
Seven is Australia’s most-watched broadcast television
platform, securing its 11th year of dominance. Key
highlights for the year include:
> Seven captured share from all of its peers, increasing
audience share by 1.2 percentage points across the
financial year, as well as increasing share excluding the
Olympics by 0.5 percentage points.
> Seven won more weeks and more primetime nights
than any other network. For the financial year, Seven
won 33 of 39 weeks and every 2017 ratings week
for the financial year, the longest undefeated winning
streak since 2011.
> Plus7 is again the number 1 app within the entire
commercial broadcast media category based on
unique audience (Nielsen Digital Ratings Monthly,
Unique Audience – Broadcast Media (App) June 2017).
> Seven holds the number 1 share of Long Form Digital
Video Revenue (Live and On-Demand) at 45 per cent
for FY17.
FTA MARKET SHARE
Seven is the largest producer of premium video content
in Australia and continues to extend its capabilities in this
area. Locally, Seven’s leading reality formats My Kitchen
Rules and House Rules continue to be a success with My
Kitchen Rules in its eighth season and still the #1 reality
format in the country as well as House Rules in its fifth
season and growing average audience by 6 per cent YoY.
These successes also extend to the global market with 11
local versions of My Kitchen Rules having been produced,
including in the US, UK, Canada, Belgium, Serbia,
Norway, Denmark, Lithuania, New Zealand and recent
commissions in South Africa. House Rules local formats
have been commissioned in Germany and Netherlands
where the format has been identified as a key channel
brand. Border Security continues to have strong demand
with the US version now sold globally including to Netflix
in the US market.
METRO FREE-TO-AIR TV AD REVENUE
MARKET SHARE
0.5
0.4
0.3
0.2
0.1
0
FY11
FY12
FY13
FY14
FY15
FY16
FY17
Seven
Nine
Ten
Seven
Nine
Ten
Seven
Nine
Ten
40.2%
24.1%
40.2%
24.1%
35.6%
35.6%
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 New formats in the period including Zumbo’s Just
Desserts and Australia’s Cheapest Weddings have seen
strong demand internationally with sales in New Zealand,
UK, Canada, as well as across Asia.
Production is underway for a new series of A Place To
Call Home. 7 Wonder has over seven projects in funded
development and five returning series. 7Beyond is
building on the success of My Lottery Dream Home and
has a developed scripted slate. Platform7, Seven Studios’
digital content producer, has had a positive debut with
strong market demand for its new short form digital
formats.
In Australia, content originated and produced by Seven
(including Seven JVs) this year will be seen on the
following channels: BBC Knowledge, UKTV, Discovery
Kids, Foxtel Movies, The Lifestyle Channel, Showcase,
Boxsets, Style, Universal, E! and National Geographic.
Sport Content
The 2017 financial year marked another huge year for
sport on Seven with the 2016 Rio Olympic Games, the
highest rating Australian Open Men’s Final in over a
decade and the expansion of our AFL content with the
highly successful Women’s AFL, the WAFL, SANFL and
VFL all bolstering our tier 1 AFL coverage.
Seven’s coverage of the Rio Olympics Games reset the
way Australians can watch live sport and also delivered
the 3rd largest revenue result in history, only behind
Sydney and Beijing, both in our time zones.
Live sport is a key pillar in Seven’s content strategy and
the Seven Network has the best sports line up through
to 2020.
Seven is the largest producer
of premium video content in
Australia and continues to extend
its capabilities in this area
Key sports coverage includes:
> Australian Football League Premiership Season rights
deal extending our coverage to 2022;
> Australian Open and the Summer of Tennis
tournaments as well as the Wimbledon
Championships;
> All major Australian horse racing events headlined by
the Melbourne Cup; and
> racing.com, our joint venture with Racing Victoria has
performed strongly and recently acquired the rights to
broadcast world quality horse racing from Hong Kong
adding even more coverage.
In addition, Seven has the rights to the Sydney-Hobart
Yacht Race, the NFL including the Super Bowl, all major
Australian golf tournaments, US Masters, FINA swimming
events, Davis Cup and Federation Cup and the New
South Wales Shute Shield in Rugby. Seven also has
acquired the rights to the 2017 Rugby League World
Cup to be held in Australia, New Zealand and Papua
New Guinea.
Seven has all-encompassing rights for the Summer
and Winter Olympic Games through to 2020 with an
option to extend. Seven also has the rights to the 2018
Commonwealth Games to be held on the Gold Coast.
Major sports events provide not only the benefit of long
term certainty on audience, but also allow the network
to secure long term revenue commitments. These sports
rights will also be critical to future growth in the coming
financial year, providing major launch platforms for future
products and programs.
Technology and Mobile
Seven is the leading media company in delivering Total
Video content across multiple platforms. Seven’s content
is available to its viewers anytime, anywhere and on
any device. Seven Network continued to demonstrate
its dominance in delivering OTT video with acceleration
of live streaming across major sporting events as well
as its market-leading mobile catch up service. Seven
continues to drive innovation and has firmly established
its credentials in the digital space, successfully delivering
a number of new market first initiatives expanding the
availability of content to Australian audiences.
Seven has all-encompassing rights for the
Summer and Winter Olympic Games through
to 2020 with an option to extend
Performance of the Business:
Seven
31
Plus7, our catch up TV AVOD service, is a clear
commercial leader in the industry dominating the top 10
daily catch up shows for the year (OzTam VPM ratings
2017). Seven will relaunch its catch up OTT service in Q4
of 2017 as a 100 per cent owned and operated platform,
delivering the best in class content and customer
experience available, underpinning new Seven’s Total
Video strategy.
Seven’s content amassed a significant 1.8 billion
streaming minutes over FY17 across Live and Catch-up,
which was bolstered by the success of the Rio Olympics
and Summer of 7Tennis 2017 which delivered 390
million minutes alone. Building on this success, Seven’s
coverage of the Rugby League World Cup later in 2017,
as well as the Summer of 7Tennis 2018, the Winter
Olympics and the Commonwealth Games, is expected to
exceed the success of the past 12 months. This will
be driven by Seven’s continued investment in innovation
and transformation to bring consumers the best in class
OTT experience.
We are number 1
Seven's AFL: Grand Final
Hoges
The Secret Daughter
Better Homes & Gardens
Seven News Sunday
MOST WATCHED PROGRAM
DRAMA EVENT
DRAMA
INFOTAINMENT/LIFESTYLE
NEWS
REALITY REGULAR PROGRAM My Kitchen Rules
SPORT – SUMMER
SPORT – WINTER
BREAKFAST TV
MORNING TV
AFL Grand Final
Australian Tennis Open
Sunrise
The Morning Show
PERFORMANCE OF THE BUSINESS
The West
We are building on our deep
connection with the people
of Western Australia with the
integration of The West, The
Sunday Times and Seven
and the delivery of our
content across any device.
Performance of the Business:
The West
33
The last twelve months has seen some of the most significant changes in The West’s
history, with the acquisition and successful integration of The Sunday Times and
PerthNow in November 2016, followed by the relaunch of The West Australian website
and new native app.
In publishing, The West Australian (Monday – Friday
average) has the highest daily market penetration of the
major metro dailies (29.4 per cent) with 589,000 readers
daily, while The Weekend West has 569,000 readers
(emmaTM conducted by Ipsos MediaCT, people 14+
for the 12 months ending March 2017) and a market
reach of 28.4 per cent, the second highest reach among
Australia’s major Saturday mastheads. Monday to
Sunday, The West Australian/The Sunday Times reach
1 million+ (net) readers with a 53 per cent reach, the
highest market reach of any Monday-Sunday metro
print offering.
Seven Days, West Weekend Magazine and STM are
among Australia’s best performing newspaper-inserted
magazines. Seven Days is the best-read magazine in
Western Australia (followed by West Weekend magazine
and STM) compared to all paid mass circulating or
newspaper inserted magazines.
The West relaunched the West Australian website
on December 12, 2016 in a critical milestone of the
company’s digital strategy. This, combined with the
acquisition of PerthNow, has resulted in 53 per cent
YoY increase in digital audience to 1.2 million per month
(Nielsen DRM, June 2017). The West digital revenue also
increased by 65 per cent YoY and continues to scale
rapidly. A number of new digital initiatives have been
completed, including the launch of the iOS and Android
mobile application for The West Australian in May 2017.
The West’s focus on Short Form Video is helping to drive
SWM’s Total Video strategy delivering over 418 million
video views in FY17, including a 100 per cent increase in
streams on owned and operated platforms. The relaunch
of the PerthNow platform in Q4 of 2017 continues The
West mobile first digital roadmap.
FINANCIAL PERFORMANCE: THE WEST
Revenue
Advertising
Circulation
Other
Total revenue
Costs
Depreciation and amortisation
Operating costs
Total costs
EBIT
FY17
$m
127.8
59.4
30.3
217.5
20.6
170.9
191.5
26.0
FY16
$m
144.6
55.9
28.0
228.5
21.3
168.0
189.3
39.2
Change
%
-11.9%
6.3%
8.2%
-4.8%
-3.3%
1.7%
1.2%
-33.6%
34
Significant management change took place during the
period; including the recent appointment of a new CEO
and Director of operations, as well as a restructure of the
sales team. These new changes put the company in a
stronger position to execute on its strategy.
The West revenue declined 4.8 per cent to $217.5 million
while EBIT fell 33.6 per cent to $26.0 million. Cost
management remains an ongoing focus for the business
with all processes under review to achieve greater
efficiencies. Following the acquisition of The Sunday
Times, total costs increased 1.2 per cent in the period.
Excluding the additional cost impact of The Sunday
Times, operating costs have decreased 4.5 per cent
during the financial year. The impact of the acquisition
of The Sunday Times and PerthNow had a positive
contribution to EBIT in its first seven months of operation.
The business delivered an EBITDA margin of 21.5 per
cent achieved during the financial year.
The West continues to drive additional
readership through circulation promotion
initiatives that focus on increasing home delivery
and school news education programs.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Performance of the Business:
The West
35
PERFORMANCE OF THE BUSINESS
Pacific
Pacific now has in place the
architecture for its future as the
home of many of Australia’s best-
known media consumer brands
that connect and engage with our
audiences across any device.
Performance of the Business:
Pacific
37
Pacific has continued to invest in the transformation of its business, while also making
significant moves in the period to meet the challenges confronting traditional media.
The company not only cemented its position as
Australia’s best-performing magazine business but also
became the country’s fastest-growing digital publisher.
Pacific’s strategic repositioning of the brand portfolio
in H1 led to the closure, sale or transition to digital-only
delivery of marginal brands. Pacific delivered on its
cost-out program while also investing in new platforms,
audiences and diversified revenue streams to position
for the future.
The business is growing revenue contributions from
digital advertising, social media, e-commerce, content
marketing and digital video, up 91 per cent YoY, which
now represents 20 per cent of total advertising revenue
in FY17. This has translated to digital advertising revenue
share, with Pacific taking 30 per cent of all agency digital
dollars in the magazine category, just over a year after
assuming control of its digital assets (Standard Media
Index, May 2017).
Pacific remains the best performing magazine publisher
with 27 per cent share of all magazine agency revenues
despite holding just 2 per cent of measured titles. Now
focused solely on the most valuable consumer and
client categories of Food, Fashion & Beauty, Homes
and Health. Pacific’s strategy of optimising the efficiency
of its core publishing to accelerate growth in its digital
operations has allowed the business to deliver a January
to June EBITDA increase.
Pacific’s cost-out programs reduced operating expenses
by $28.9 million YoY (15.2 per cent), addressing in part
the structural declines impacting the print industry.
Investment in new, more efficient publishing systems,
process improvement and the renegotiation of key
supplier contracts means the business can deliver
more premium content across an increasing number
of platforms at a much lower cost. EBIT in the period
reduced to $3.5 million.
Advertising trends in the print market have remained
challenging with Pacific’s advertising revenue down
28 per cent on the prior year and also impacted
by the closure of several titles in the period. On a like
for like basis advertising revenue would have declined
23.4 per cent while circulation revenue declines would
have been 7.8 per cent.
FINANCIAL PERFORMANCE: PACIFIC
Revenue
Advertising
Circulation
Other
Total revenue
Costs
Depreciation and amortisation
Operating costs
Total costs
EBIT
FY17
$m
40.7
110.5
16.8
168.0
2.7
161.8
164.5
3.5
FY16
$m
56.5
131.4
13.3
201.2
1.5
190.7
192.2
9.0
Change
%
-28.0%
-15.9%
26.3%
-16.5%
86.0%
-15.2%
-14.4%
-61.5%
38
Audience
Pacific’s total print audience returned to growth PoP with
a 3.5 per cent increase in the final measured quarter of
the FY (emmaTM, 12 months ending March 17, all people
14+). Pacific maintains the strongest portfolio of print
titles in the country, taking 27 per cent of all readership
with only 11 per cent of titles – the highest share per
title of any publisher. Better Homes & Gardens remains
Australia’s most-read magazine. Pacific also produces
two of the three highest-reaching weekly magazines in
New Idea and That’s Life!, and three of the five highest-
reaching titles in the country.
Pacific has also grown its online Unique Audience
(UA) more than threefold (+188 per cent YoY), making
it Australia’s fastest-growing digital publisher. Pacific’s
monthly UA is 1.733 million (Nielsen DRM, June 2017),
while its Average Daily Unique Browsers have also
increased by 74 per cent YoY to 292,118 (Nielsen
Market Intelligence, ADUBs June 1-30 2017). In both
online metrics, Pacific has overtaken both direct and
broader industry competitors, little more than a year
after regaining control of its digital publications and
bringing editorial control for the digital elements of its
brands back in house. The Pacific brands now reach
a combined audience footprint of approximately 23.8
million consumers per month via print, digital and social
platforms – an increase of 20 per cent YoY. The business
also now has 3 of the 20 most engaged Facebook pages
in the country, along with 7 of the top 10 in the news and
magazine category (The Online Circle Report, January
1 – March 31 2017).
The rapid growth of Pacific’s digital audiences
has been followed by the rise in digital advertising
revenue, which has increased 91 per cent YoY.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Performance of the Business:
Pacific
39
PERFORMANCE OF THE BUSINESS
Other
Business
and New
Ventures
We are creating new
opportunities to enhance
shareholder value
and create deeper
connections with
our audiences.
Performance of the Business:
New Ventures
41
With the completion of the Yahoo Inc sale to Verizon/AOL
in June 2017, Seven West Media management have been
working closely with the new joint venture shareholder,
Oath, surrounding the future strategy of the joint venture.
New Ventures
Seven West Media holds a number of investments in early
stage businesses where it can use the power of its assets
to help grow. The portfolio has delivered strong growth
in value over the last twelve months driven by follow on
investment rounds at higher valuations. Investments
in this portfolio include Airtasker, Health Engine,
SocietyOne, Starts at 60, Draftstars, Nabo, Newzulu,
Money Makeover and Media Beach.
Other Business and New Ventures assets include:
> equity accounted investments in associates
including Yahoo7;
> regional radio licences in Western Australia
as well as West Events and TriEvents; and
> Red Events in FY16 included the very successful
Royal Edinburgh Military Tattoo.
Yahoo7
While conditions in traditional display advertising
have continued to soften further in H2 of FY17,
Yahoo7 continued to progress on its MAVENS
strategy, which now represents over 60 per cent of
the advertising revenue for the business. MAVENS
encompasses mobile, video, native and social, which
are all strong growth areas of the business. Video views
including short and long form increased 33 per cent to
over 275 million streams. After factoring in the impact
of display, total net revenue declined 16 per cent in the
period. Management’s ongoing focus on cost control
reduced operating costs 5.4 per cent YoY. Softer revenue
and cost out, resulted in EBIT of $15.4 million down
41.4 per cent for the financial year.
FINANCIAL PERFORMANCE: OTHER BUSINESS AND NEW VENTURES
Revenue
Radio
Yahoo7 share of NPAT
Early stage investments share of loss
Red Events
Other
Total revenue
Costs
Depreciation and amortisation
Red Events
Operating costs
Total costs
EBIT
FY17
$m
9.4
5.3
(7.0)
0.8
4.4
12.9
0.4
0.9
13.0
14.3
(1.4)
FY16
$m
9.2
8.8
(23.9)
24.2
6.3
24.6
0.5
18.9
10.8
30.2
(5.6)
Change
%
2.2%
-39.8%
70.7%
N/A
-30.2%
-47.5%
-15.3%
-95.3%
20.4%
-52.6%
75.5%
Our future is
on every screen
We are looking forward to the coming
twelve months. We are transforming
our businesses. We are creating new
businesses. Much has been done.
More is to come.
Our future will be determined by great content that
engages our audiences. They are seeking
our content.
Driving our future is the power of our ideas and our
content. We are the company of the best-performing
media businesses in Australia. Our future is already
here. It is seeing us build on those strengths to
create new opportunities that build on our deep
connection with our audiences. And that will be
across every screen and every device.
Beyond our
business
Our business objectives are clear:
drive home market leadership, meet
the challenges of a transforming
communications landscape, build
new businesses and enhance
shareholder wealth.
How we do that through the creation of content
relevant to our audiences drives us every day.
Our success in business is defined by our
connections with audiences.
But beyond these key imperatives, is a broader
underlying commitment to our audiences.
We commit ourselves to an active involvement in
all aspects of life. It is a commitment to the lives
of all Australians through major partnerships and
undertakings in the community.
Emma McKeon, Australia’s most successful
swimmer at the Rio Olympic Games and this
year’s World Swimming Championships.
We will follow her campaign at the
Commonwealth Games on the Gold Coast.
Beyond our
Beyond our
business
business
45
45
credit swimming australia ltd.
46
Risk, Environment, People
and Social Responsibility
Risk Management
Seven West Media maintains sound risk management
systems in order to protect and enhance shareholder
value. The Board acknowledges that the management
of business risk is an integral part of the company’s
operations and that a sound risk management framework
not only helps to protect established value, it can also
assist in identifying and capitalising on opportunities to
create value. The table below sets out the key risks (in no
particular order) which could impact achievement of the
Company’s strategic objectives. These risks are actively
monitored under our risk management framework and
there are processes in place to manage each of them,
to the extent possible. For more information on the
Company’s risk management framework refer to pages
63 to 64 of the Corporate Governance Statement of this
Annual Report.
Risk Management Framework
STRATEGIC
> Structural change
> Media consolidation and competition
> Competition for key program rights
> Strategy execution
OPERATIONAL
> Health and safety
> Talent attraction and retention
> Business interruption
> Technology project delivery
FINANCIAL
> Advertising market conditions
> Broader economic conditions
> Asset impairment
LEGAL & REGULATORY
> Regulatory change
> Compliance with legislation
Environment
Sustainability
Seven West Media monitors and measures the
effectiveness of sustainable business practices across
our businesses and sets internal targets to measure the
impact of the inputs and outputs of our business activities
on the communities and natural systems in which we
operate. These include:
> The Group’s magazine and newspaper businesses
have internal controls in place to ensure that the paper
we use is from sustainable sources and not from
illegally logged timber.
> Pacific purchases all virgin fibre paper as PEFC
C-o-C or FFC certified which assures that forests are
managed in accordance with stringent environmental,
social and economic requirements.
> 94.5 per cent of newsprint used by our newspaper
businesses comes from recycled consumer product
and the remaining 5.5 per cent is sourced from
certified plantation forests.
> A revised printed waste measure was introduced for
this year for the newspaper printing process which
saw a result of 3.15 per cent during the year against
an annual target of 3.25 per cent and all waste was
recycled.
> In our press, waste ink is collected and reprocessed,
aluminium plates used during the printing process are
recycled and plant waste water is processed and used
for reticulation on site. General co-mingled recycling
bins have been introduced throughout the West
Australian Newspapers facility at Osborne Park.
> Greenhouse gas emission reporting is completed by
31 October each year for the prior Financial Year. For
Financial Year 2016:
– Seven West Media recorded a reduction in
greenhouse gas emissions (Scope 1) by 8 per cent
between FY15 and FY16 mainly through a further
reduction in company vehicles.
– Seven West Media has reduced other greenhouse
gas emissions (Scope 2) by 13 per cent between
FY15 and FY16.
– For the third consecutive year SWM has reduced
greenhouse gas emissions (Scope 1 + 2) a total
reduction of 13 per cent from FY14 to FY16.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845
Risk, Environment, People
and Social Responsibility
47
> Seven West Media is actively reviewing its property
portfolio with the aim to consolidate and optimise
usage of space. In FY17 Seven reduced its Media City,
Eveleigh office floor space by 2,000m2 by optimising
space on other floors and returning the unused floor
space to the landlord.
> Overall Net Energy (Consumed minus Produced)
across our entire business has reduced by 11 per cent
whilst maintaining the same operating conditions.
> Seven West Media donates or recycles 94 per cent
of electronic IT assets through certified eCycling
companies which reduces landfill by encouraging
reuse and recycling of equipment. All three suppliers
are certified to AS/NZS 5377:2013.
Community
Throughout the year, Seven voluntarily broadcasts free
of charge community service announcements promoting
sustainability and the environment for organisations such
as Clean Up Australia, Cool Australia and Planet Ark.
This support scheme involves resources throughout the
business from administration and scheduling through to
broadcast.
People
At Seven West Media, the commitment, passion and
creativity of our people underpin who we are and what
we do. Seven West Media understands that our people
ensure our success and therefore promotes workplaces
that are safe, flexible, inclusive and that foster creativity.
Seven West Media continues to operate its journalism
cadet program in Television where cadets throughout
the network across various locations are rotated through
a two-year program including development of core
journalism skills and knowledge.
Seven West Media supports and encourages employees
to contribute to worthy causes through its Workplace
Giving program. Whether it’s helping find a cure for
disease, saving the environment or supporting people in
crisis, Seven West Media encourages employees to work
together as a business to help make an impact.
Seven West Media also encourages its employees to
make a difference through providing opportunities to
participate in community fundraisers. An example of this
has been the involvement with Steptember (Cerebral
Palsy Alliance) where hundreds of employees participated
in the challenge to take 10,000 steps a day for the month
of Steptember for the last three years and will do so again
in 2017.
We have been recognised for achievements in people
management through the 2015 Australian HR Awards
where we were a finalist in two categories: Best Reward
and Recognition Program and Best Change Management
Program. Seven West Media was also recognised in
the top fifteen most attractive employers in Australia in
a survey conducted by a leading recruitment and HR
service specialist company.
Safety and Security
At Seven West Media safety and security is firmly
embedded in our culture, driven by our employees,
and managed by a dedicated Risk, Safety and Security
team. This team provides risk management, safety
resources and security services to the business. It
ensures compliance with all workplace safety legislations.
It also delivers and evaluates Seven West Media’s critical
incident plans. The team prepares our employees for the
challenges they face, with specialised training and well-
being support. Further, it supports staff during overseas
deployments wherever they might be, from war zone
reporting in the Middle East to the 2016 Rio Olympics.
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. To support the Company’s
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
the Company 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:
> Career development and performance (CDP);
> Flexible work practices (FWP);
> Gender diversity (GD); and
> Talent and succession planning (TSP).
The Board has undertaken to review the Diversity
Policy and to develop of the next phase of measurable
objectives during FY18.
48
Measurable objectives
Unless otherwise stated, for the purpose of this section
of the report employee numbers and statistics have been
calculated based on employees who were paid in the final
pay periods of June 2017.
through the development of a revised Performance and
Development Program, focusing on goal setting against
which to evaluate performance, as well as a mechanism
for career planning mid-year.
Annual succession planning initiatives
Initiatives that facilitate diversity and promote growth
for the Company, and for all employees
Investment in building capability and frameworks in talent
and succession planning has been undertaken.
Seven West Media has continued to offer flexible work
practices, regardless of gender, that assist employees to
balance work with family, carer or other responsibilities.
Changes have been made to leave policies to support
greater flexibility and support for employees including
domestic violence leave considerations and improved
paid maternity leave provisions.
Updated training on Diversity and Equality, and
particularly anti-bullying, harassment and discrimination,
has been introduced.
Improvements in performance and development
processes are enabling transparency and fairness
A Talent Manager has been engaged to focus on
recruiting Digital roles and expertise as part of business
transformation. A framework has been introduced where
all sales roles are assessed against critical sales and
leadership capabilities necessary for success in the
changing landscape using an assessment tool. The
succession planning process for critical roles has been
continued to identify potential successors and build
associated development plans.
The Company has posted its Workplace Gender Equality
Act Public Report for 2016–2017 on its website, which
contains the Company’s Gender Equality Indicators.
Link to Diversity Policy
Proportion of women
Measurable objective
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
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
Total
number of
employees/
officers
Number
of women
Proportion
of women
Group
In the Company
2487
5009
50%
Key Management
Personnel executives
(as set out in section
2d of the remuneration
report)
In senior executive
positions
On the Board
2
44
1
7
29%
116
9
38%
11%
“Senior executive positions” refer to senior management positions which are
levels one and two below the Managing Director & Chief Executive Officer.
Employee turnover and parental leave return statistics
PROPORTION OF WOMEN
IN THE COMPANY
EMPLOYEE TURNOVER
BY GENDER
EMPLOYEE TURNOVER
BY AGE
(as a percentage of total number
of employees/officers)
(as a percentage of total men and
as a percentage of total women)
(as a percentage of total turnover)
WOMEN
50%
MEN
50%
WOMEN
24%
MEN
17%
<25 YEARS
13%
45 – 54 YEARS
16%
25 – 34 YEARS
35 – 44 YEARS
36% 20%
> 55 YEARS
15%
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Risk, Environment, People
and Social Responsibility
49
Social Responsibility
A part of Australian life
Our business is underpinned by the creation and delivery of
content relevant to our audiences.
Beyond our objectives of building and transforming our
businesses and increasing shareholder value is a broader,
underlying commitment – one of engaging with our
audiences beyond television, publishing and the delivery of
our content to everyone. It is a commitment that underpins
our businesses today and will define our business into the
future: our business is a part of the lives of all Australians.
We commit ourselves to an active involvement in all aspects
of Australian life. It is not a corporate objective. It is who we
are. It is an involvement which sees our company taking a
leading role in touching the lives of all Australians.
One of our most important partnerships is that with the
Australian War Memorial. Seven West Media is honoured
to be a partner with the Australian War Memorial in
acknowledging those Australians who have served their
country.
We are also a major partner of the National Library
in Canberra and we are now in our 22nd year of our
partnership with Art Exhibitions Australia which this year has
brought to Melbourne a major exhibition on Van Gogh.
These same values that underpin these partnerships drive
our commitment to Telethon in Perth which raised $26.2
million to support the medical and social wellbeing of children
and young people, and to fund research into children’s
diseases, the Good Friday Appeal in Melbourne which
raised $17.6 million to assist the Royal Children’s Hospital in
Melbourne.
In Sydney, we are a major supporter of the Children’s
Hospital at Westmead, Ronald McDonald House at
Westmead, the NSW Schools Spectacular and the Sydney
Swans in the AFL. We are a long-term partner of the Cancer
Council NSW, Surf Lifesaving in Cronulla, Manly and
Narrabeen, the City of Sydney and we commit ourselves to
major events including the Seven Bridges Walk and the City
to Surf. Seven in Sydney is also a partner of NSW Kids in
Need and the Royal Agricultural Society, this year winning
the gold award for best commercial exhibitor at the Sydney
Royal Easter Show.
Our commitment to Melbourne extends beyond the Royal
Children’s Hospital Good Friday Appeal with a long-term
partnership with the Shrine of Remembrance, the City of
Melbourne, the Moomba Parade, the Royal Melbourne
Show, the Melbourne International Flower and Garden
Show, Very Special Kids and our partnership with the
National Gallery of Victoria. We have also partnered
with the Cure for MND Foundation through the highly
successful Freeze at the G campaign, and with the EJ
Whitten Foundation (Legends Game).
Telethon is one of our most important links to the community
in Western Australia, a charity which has raised more than
$230 million for child health research. 2017 marks Telethon’s
50th year, a wonderful achievement. We maintain vibrant
links to the people of WA through our many and varied
events and partnerships, including the Christmas Pageant,
Skyshow, WA Day, the Perth International Arts Festival,
the West Australian Ballet, the West Australian Symphony
Orchestra and support for the West Coast Eagles and the
Fremantle Dockers in the AFL.
In Adelaide, Seven has partnered with major sporting and
community organisations including the Adelaide Crows
Football Club, Port Adelaide Football Club, Surf Life Saving
SA and Tennis South Australia. Seven Adelaide supports
the Royal Adelaide Show, Adelaide Cabaret Festival, OzAsia
Festival, the Art Gallery of South Australia, the Adelaide
Symphony Orchestra and the State Library and the two
largest Fringe Festival venues. Seven Adelaide also supports
The Flinders Medical Centre Foundation, The Advertiser
Foundation, Little Heroes Foundation, Carols by Candlelight
benefiting Novita Children’s Services, St John Ambulance
and the Royal Flying Doctor Service.
In addition, the Channel 7 Children’s Research Foundation
of South Australia Incorporated (CRF) was established in
1976 by Seven Adelaide. The Foundation has facilitated
grants to child health researchers in SA and the NT totaling
in excess of $24 million, with the purpose to encourage and
advance investigation into the cause, prevention, diagnosis
and treatment of any condition which may affect the health of
children.
In Brisbane and across Queensland, we commit ourselves
to major events including the Royal Queensland Show,
the Gold Coast Suns and Brisbane Lions in the AFL, the
Brisbane Racing Club in the Channel 7 Brisbane Racing
Carnival and Ipswich Turf Club in the Channel 7 Ipswich
Cup. Other significant community events include The Paniyiri
Greek Festival, CitySmart Greenheart Fair, Queensland Sport
Awards, Magic Millions and a variety of other community
focused events.
For the past ten years, Pacific has held a partnership with
Ronald McDonald House, a charity attached to major
women’s and children’s hospitals which provides a home
away from home for seriously ill children and their families.
In 2017, New Idea continued its flagship national initiative
‘We Care’ in partnership with charity organisation Anglicare.
The initiative aims to assist women across the country
fleeing domestic violence crisis situations by providing
emergency survival packs filled with everyday essentials.
Pacific also has a leading reputation for honouring Australian
women of achievement. The annual Women’s Health I
Support Women in Sport (WINS) is the only Awards event
50
Brisbane’s Prince Charles Hospital. Pacific has held a
position on the Environmental Advisory Group of The
Newspaper Works since 2013 which endeavours to make
a significant contribution to waste publication paper
recovery, recycling and the environment.
All of these form part of an ongoing program of funding
and the allocation of resources and the involvement
of our people in connecting with and assisting our
communities. Across our array of content creation and
delivery platforms, our objective is to inform, educate,
entertain and connect with our audiences. In reaching
out to our communities, through an involvement in the
staging of major events and the support of charitable and
community groups, the same objective remains: to be
a part of Australian life, to reflect our unique Australian
character and to assist those who need our help.
Think TV
Seven West Media is a founding stakeholder of the
independent industry research and marketing group,
Think TV. Think TV leads a collective effort from television
broadcasters across Seven Network, Nine Network,
Network Ten and Multi Channel Network/Foxtel to
demonstrate how television advertising in broadcast quality
content environments remains profoundly effective and
the clear leader among all media channels in terms of
advertising impact and return on investment. Think TV is a
marketing initiative of the Australian commercial television
broadcasters focused on helping the advertising and
marketing community get the best out of Multi-Platform
TV, emphasising the measurable reach and quality of
emotional engagement of the medium which is essential
for building brands and connecting with target audiences.
of its kind, honouring female sporting talent across ten
categories – from a grassroots through to professional
level. In 2017, Women’s Health introduced a first-of-
its-kind speed mentoring night for athletes whereby
some of Australia’s most regarded sporting identities
(including: Liesel Jones, Bronte and Cate Campbell
and Mark Beretta to name just a few) offered their
valuable time and advice to up-and-coming
sports stars across a variety of different
sporting fields. Now in its ninth year, InStyle’s
Women of Style Awards also recognise
women of achievement in ten broad
categories from business, to charity,
science, arts and entertainment.
Our
recent
awards
Other community initiatives led by
Pacific include Workplace Giving
(whereby employees give small
regular donations from their
pre-tax pay) supporting a
range of causes including
Children and Youth,
Health and Cancer,
Overseas Aid and
Human Rights,
EMPLOYMENT AWARDS
Employer Brand Research –
powered by Ranstad “Australia’s 25
most attractive employers of 2017”
and an ongoing
commitment
to supply
magazines to
long term
patients at
AACTA AWARDS
Best Leader Actor in a Televison Drama
Best Costume Design in Television
Best Children’s Television Series
LOGIE AWARDS
Gold Logie, Best Actor. Best Drama Program.
Most Outstanding Sports Coverage
AUSTRALIAN DIRECTORS’ GUILD
Best Direction in a TV or SVOD Mini Series
NEWS AWARDS
Los Angeles Press Club Southern California Journalism
Awards. New York Festivals International TV & Film Awards.
Kennedy Awards for Journalism in New South Wales. SA
Media Awards. Quill Awards in Victoria
SPORTS AWARDS
Australian Sports Commission Media Awards for Paralympic Games
coverage. Mumbrella Sports Marketing Awards
INTERNATIONAL AWARDS
Emmy Award for Beat Bugs
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Board of
Directors
51
Board of
Directors
Kerry Stokes AC
Chairman – Non-executive Director
Tim Worner
Managing Director & Chief Executive Officer
Mr Worner is Managing Director & Chief Executive Officer
of Seven West Media Limited. He is a Director of Yahoo7,
racing.com and Free TV Australia.
He was a Director and Chairman of Australian News
Channel, which operates Sky News, until 1 December
2016 when Seven sold out of the company.
Prior to his appointment as CEO of Seven West Media,
Mr Worner was CEO, Broadcast Television, and prior
to that Director of Programming and Production for the
Seven Network.
As CEO of Seven West Media, Australia’s leading listed
national multi-platform media business, he continues to
oversee the television business of the Seven Network
(Seven, 7TWO, 7mate, 7flix and racing.com). In addition,
he is also responsible for the company’s publishing
businesses WA Newspapers and Pacific.
The mastheads include The West Australian, The Sunday
Times, PerthNow and thewest.com.au. Pacific Magazines
is one of Australia’s two biggest magazine publishing
businesses with titles including Better Homes and
Gardens, New Idea, WHO and marie claire.
Also part of Mr Worner’s brief is developing Seven’s
increasing online and new media presence, including
the company’s plans to deliver its long term content on
demand from November 2017.
In 2014 Mr Worner was awarded the MIPTV Médaille
d’Honneur Award for his achievements in the television
industry.
Mr Worner was appointed to the Board on 24 June 2015.
Mr Stokes is the Executive Chairman of Seven Group
Holdings Limited, a company with a market-leading
presence in the resources services sector in Australia
and north east China and a significant investment in
energy and also in media in Australia through Seven
West Media. Mr Stokes has held this position since April
2010. He is also Chairman of Australian Capital Equity
Pty Limited, which has substantial interests in media and
entertainment, resources, energy, property, pastoral and
industrial activities.
Mr Stokes’ board memberships include Council Member
for the Paley Group (formerly the International Council
for Museum & Television); Chairman and Fellow (since
November 2015) for the Australian War Memorial
(previously a Council Member); 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 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; 2013 West Australian of the Year; 2014 Awarded
Keys to the City of Perth and 2014 Awarded Keys to the
City of Melbourne.
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, and became Chairman of Seven West Media
Limited (formerly West Australian Newspaper Holdings
Ltd) on 11 December 2008.
52
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 is the Executive
Chairman of listed company Crown Resorts Limited. He
is also the Chairman of Crown Resorts Melbourne, Crown
Resorts Perth and CrownBet.
Mr Alexander is Chairman of the Remuneration &
Nomination Committee.
Mr Alexander was appointed to the Board on 2 May 2013.
Dr Michelle Deaker
Non-executive Director
Dr Deaker is the founder and Managing Partner
of OneVentures, an Australian venture capital firm
established in 2006. OneVentures invests in technology
companies that serve or disrupt large high growth
global markets. The firm has $320M in funds under
management across three main funds and 8 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. She is a former
successful entrepreneur and business owner with over
20 years experience in information technology, enterprise
businesses targeting finance, retail, media, security
and education. She has served on the Boards of listed
and unlisted companies across media and information
technologies in Australia and North America.
The company Dr Deaker 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.
Prior to E Com, Dr Deaker was Managing Director of
Networks Beyond 2000.
Dr Deaker is a former director of NICTA, Australia’s
National ICT Centre of Excellence (now Data61). Dr
Deaker is also a member of the Investment Committee,
manages the Supervisory Boards of OneVentures
funds and is a Non-Executive Director of OneVentures
portfolio companies, Smart Sparrow (educational
technology), Incoming Media (mobile media technology)
and Employment Hero Holdings (HR technology). She is
a current mentor for the University of Sydney’s Incubate
program and also a past member of the AVCAL Venture
Capital working group and the NSW Government’s
Taskforce for the Digital Economy.
Dr Deaker has over 11 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 Masters 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 a former
member of the board of Ravenswood School for Girls,
and the advisory board of Heads over Heels. Dr Deaker is
a Member of Chief Executive Women and the Australian
Institute of Company Directors.
Dr Deaker is a member of the Audit & Risk Committee
and the Remuneration & Nomination Committee.
Dr Deaker was appointed to the Board on 21 August
2012.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Board of
Directors
53
David Evans
Non-executive Director
The Hon. Jeffrey Kennett AC
Non-executive Director
Mr Evans is the Executive Chairman of the recently
merged Evans Dixon Pty Ltd. Mr Evans established Evans
and Partners Pty Ltd, the investment advisory company
in June 2007.
Since 1990, he has worked in a variety of roles within JB
Were & Son, and then the merged entity Goldman Sachs
JBWere Pty Ltd. 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 is a member of the Victorian Police Corporate
Advisory Group and Chairman of Cricket Australia’s
Investment Committee.
Mr Evans is Chairman of the Audit & Risk Committee and
a member of the Remuneration & Nomination Committee.
Mr Evans was appointed to the Board on 21 August 2012.
Peter Gammell
Non-executive Director
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 Ltd, 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 is a member of the Audit & Risk Committee.
Mr Gammell was appointed to the Board on
25 September 2008.
Mr Kennett AC is the founding Chairman of beyondblue:
the national depression initiative and was Chairman from
2000 until 30 June 2017. He is Chairman of The Torch,
a program assisting incarcerated Indigenous men and
women.
Mr Kennett was an Officer in the Royal Australian
Regiment, serving at home and overseas. He was a
Member of the Victorian Parliament for 23 years, and was
Premier of the State from 1992 to 1999. Prior to that, he
was Leader of the Opposition 1982–1989; 1991–1992.
Mr Kennett is currently a Director of EQT Holdings
Limited, Chairman of Open Windows Australia Proprietary
Limited, Chairman of CT Management Group Pty Ltd,
Chairman of Amtek Corporation Pty Ltd and Chairman of
LEDified Lighting Corporation Pty Ltd.
In 2005 Mr Kennett was awarded the Companion of the
Order of Australia.
Mr Kennett is a member of the Remuneration &
Nomination Committee.
Mr Kennett was appointed to the Board on 24 June 2015.
Michael Malone
Non-executive Director
Mr Malone founded iiNet Limited in 1993 and continued
as CEO until retiring in 2014. During his tenure, iiNet grew
to service one million households and businesses, with
revenues of one billion dollars and a market cap of over
one billion dollars.
Mr Malone has been recognised with a raft of industry
accolades, including 2012 Australian Entrepreneur of the
Year, CEO of the Year in the Australian Telecom Awards
and National Customer Service CEO of the Year in the
CSIA’s Australian Service Excellence Awards.
He presently sits on the boards of NBN Co and ASX listed
SpeedCast Limited, Dreamscape Networks Limited and
Superloop Limited. Mr Malone is a founder of Diamond
Cyber, an IT security firm in Perth.
Director Barristers Chambers Limited.
Mr Malone is a member of the Audit & Risk Committee.
Mr Malone was appointed to the Board on 24 June 2015.
54
Ryan Stokes
Non-executive Director
Warren Coatsworth
Company Secretary
Mr Coatsworth has been Company Secretary of Seven
West Media Limited since 24 April 2013.
Mr Coatsworth is a solicitor holding a current practising
certificate with degrees in Arts and Law (Hons) from
the University of Sydney. He holds a Masters of Law in
Media and Technology Law from the University of New
South Wales as well as a Graduate Diploma in Applied
Corporate Governance. He is a qualified Chartered
Company Secretary and a Fellow and member of the
Governance Institute of Australia.
Mr Coatsworth has been Company Secretary of Seven
Group Holdings Limited since April 2010 and Company
Secretary of Seven Network Limited since July 2005. He
has also held the position of Legal Counsel at the Seven
Network for the past seventeen years, advising broadly
across the company, and was formerly a solicitor at
Clayton Utz.
Mr Stokes is Managing Director & Chief Executive Officer
of Seven Group Holdings Limited (SGH). SGH currently
owns approximately 41% of SWM.
Mr Stokes has been a Director of Seven West Media
Limited (SWM) since 2012 and was an Executive Director
and then Chairman of Pacific Magazines from 2004 to
2008 and a Director of Yahoo7 from 2005 to 2013.
As a Director of WesTrac Pty Limited, a subsidiary of
SGH, Mr Stokes has extensive experience in China,
having developed relationships with various mining and
media companies over the past sixteen years. He is also
a Director of Coates Hire. Mr Stokes was appointed to the
Board of Beach Energy Limited on 20 July 2016.
Mr Stokes is Chief Executive Officer of Australian Capital
Equity Pty Limited (ACE). ACE is a private company with
its primary investment being an interest in SGH.
Mr Stokes is Chairman of the National Library of
Australia. He is also a member of the Prime Ministerial
Advisory Council on Veterans Mental Health established
in 2014. In 2015, he became a Committee member of
innovationXchange (within the Department of Foreign
Affairs and Trade), which provides strategic guidance on
innovation in aid programs. He is also a member of the
IOC Olympic Education Commission.
Mr Stokes holds a BComm from Curtin University and is a
Fellow of the Australian Institute of Management (FAIM).
Mr Stokes is a member of the Remuneration &
Nomination Committee.
Mr Stokes was appointed to the Board on
21 August 2012.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Corporate Governance
Statement
55
Corporate Governance Statement
For the year ended 24 June 2017
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 3rd edition of the ASX Corporate
Governance Council Corporate Governance Principles
and Recommendations (“ASX Recommendations”).
The documents marked with an * below have been
posted in the ‘Corporate Governance’ section on the
Company’s website at www.sevenwestmedia.com.au/
about-us/corporate-governance. 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
Role and responsibilities of the Board
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:
> representing and serving the interests of shareholders
by overseeing, reviewing and appraising the
Company’s strategies, policies and performance in
accordance with any duties and obligations imposed
on the Board by law and the Company’s Constitution;
> contributing to, and approving, management’s
development of corporate strategy and performance
objectives and monitoring management’s performance
and implementation of strategy and policies;
> reviewing and monitoring systems of risk management
and internal control and ethical and legal compliance;
> monitoring and reviewing management processes
aimed at ensuring the integrity of financial and other
reporting;
> developing a Board skills matrix setting out the mix of
skills and diversity that the Board currently has or is
looking to achieve in its membership; and
> on an annual basis, reviewing the effectiveness of the
Company’s Diversity Policy.
The Board Charter provides that matters which are
specifically reserved for the Board or its Committees
include:
> appointment and removal of the Group Chief Executive
Officer;
> approval of dividends;
> approval of annual budget;
> monitoring capital management and approval of major
capital expenditure, acquisitions and divestitures in
excess of authority levels delegated to management;
> the establishment of Board Committees, their
membership and delegated authorities; and
> calling of meetings of shareholders.
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’s website. Further details regarding the Audit
& Risk Committee and the Remuneration & Nomination
Committee are set out under “Principle 4 – Safeguard
Integrity in Corporate Reporting” and “Principle 2 –
Structure the Board to Add Value”, respectively, in this
Corporate Governance Statement.
The Directors’ Report at page 67 sets out the number
of Board and Committee meetings held during the 2017
financial year under the heading “Directors’ Meetings”, as
well as the attendance of Directors at those meetings.
Delegation to Management
Subject to oversight by the Board and the exercise
by the Board of functions which it is required to carry
out under the Company’s Constitution, Board Charter
and the Corporations Act, it is the role of management
to carry out functions that are expressly delegated to
management by the Board, as well as those functions
not specifically reserved to the Board, as it considers
appropriate, 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 Company has
adopted a Delegated Authority Policy, which delegates
to management the authority to carry out expenditure in
relation to specified areas of the Company’s operations,
56
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 explained in this statement
and set out in the Board Charter, are subject to ongoing
review to ensure that the division of functions remains
appropriate.
Employment of executives
Company executives are each employed under written
employment agreements, which set out the terms
of their employment, including role and duties, the
person to whom they report, remuneration, obligations
of confidentiality, and the circumstances in which the
executive’s employment may be terminated.
Appointment of Directors
The Board has established a Remuneration & Nomination
Committee to assist in the appointment of new Directors.
Further information concerning this Committee is set out
under “Principle 2 – Structure the Board to Add Value”
in this statement. The Remuneration & Nomination
Committee periodically review the composition of the
Board to ensure that the Board has an appropriate
mix of expertise and experience. This review includes
considering the appointment of new Directors and the re-
election of incumbent Directors to the Board. An output
of this process is the Board skills matrix set out under
“Principle 2 – Structure the Board to Add Value”.
The policy and procedure for the selection and
appointment of new Directors is set out in an Annexure
to the Board Charter. The factors that will be considered
when reviewing a potential candidate for Board
appointment include:
> the skills, experience, expertise and personal qualities
that will best complement Board effectiveness,
including a deep understanding of the media industry,
corporate management and operational, safety and
financial matters;
> the existing composition of the Board, having regard to
the factors outlined in the Company’s Diversity Policy
and the objective of achieving a Board comprising
Directors from a diverse range of backgrounds;
> the capability of the candidate to devote the necessary
time and commitment to the role (this involves a
consideration of matters such as other board or
executive appointments); and
> potential conflicts of interest and independence.
The Board believes the management of the Company
benefits from, and it is in the interests of shareholders for
Directors on the Board to have, a mix of tenures such that
some Directors have served on the Board for a longer
period and have a deeper understanding of the Company
and its operations, and new Directors bring fresh ideas
and perspectives.
As part of the selection and appointment process:
> the Board, and if so requested the Remuneration &
Nomination Committee, identify potential Director
candidates, with the assistance of external search
organisations as appropriate;
> background information in relation to each potential
candidate is provided to all Directors;
> appropriate background checks are undertaken
before appointing a Director, or putting forward to
shareholders a Director candidate for election;
> an invitation to be appointed as a Director is made
by the Chairman after having consulted all Directors,
with recommendations from the Remuneration &
Nomination Committee (if any) having been circulated
to all Directors.
Appointed Directors receive a formal letter of appointment
which set out terms of their appointment, including
remuneration entitlements and the Company’s Corporate
Governance Policies, including the Company’s Share
Trading Policy, which Directors are to abide by. Under
the letter of appointment, Directors are also provided
with a schedule of Board meetings, Deeds of Indemnity
& Access and a summary of Director insurance
arrangements.
Election and re-election of Directors
Directors appointed to fill casual vacancies hold office
until the next Annual General Meeting and are then
eligible for election by shareholders. In addition, each
Director must stand for re-election at the third Annual
General Meeting since they were last elected. Under
the Company’s Constitution, one-third of the Board
(excluding the Managing Director and any Directors
standing for election for the first time) must retire by
rotation at each Annual General Meeting.
The Notice of Meeting for the Annual General Meeting
discloses material information about Directors seeking
election or re-election, including appropriate biographical
details and qualifications, and other key current
directorships.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Corporate Governance
Statement
57
Company Secretary
The Company Secretary’s role is to support the Board’s
effectiveness by:
> monitoring whether Company policies and procedures
are followed;
> preparing Board and Committee minutes;
> advising the Board and Committees on governance
matters; and
> coordinating the timely distribution of Board and
Committee agendas and briefing materials.
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.
Board, Committee and Director performance
evaluation
The Chairman closely monitors the performance and
actions of the Board and its Committees. During the
financial year Directors completed a Board Evaluation
questionnaire concerning Board, Committee and
Director, including Chairman, performance from which
aggregated data and responses are provided to the
Chairman and then presented to the Board for discussion
and feedback. The Board Evaluation questionnaire
provides an opportunity for the Board to benchmark
results year-on-year and to identify Board performance
priorities, governance framework gaps and improve the
effectiveness of meetings and Company processes.
The aggregated questionnaire results also provide the
basis of individual discussions between Directors and
the Chairman. 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. 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.
Additionally, during the financial year, a report on the
program of work undertaken by the Board and each
of its Committees, assessed against their respective
Charter responsibilities and duties, is provided to the
Board for discussion and for the purposes of reviewing
performance of the Board and the Committees, as
well as their Charters, to ensure that the Board and its
Committees operate effectively and efficiently.
During the reporting period, performance evaluations of
the Board, its Committees and individual Directors were
carried out in accordance with this process.
Assessment of management performance
The performance of the Managing Director & Chief
Executive Officer is formally reviewed by the Board
against the achievement of strategic and budgetary
objectives in respect of the Group’s operations and
investments whilst also having regard for his personal
performance in the leadership of the Group. The Board’s
review is carried out annually in regard to certain goals
against which he is assessed, and throughout the year in
regard to others, and forms the basis of the determination
of the Managing Director & Chief Executive Officer’s
performance-linked remuneration. The Remuneration
Report sets out further details of the performance criteria
against which the Managing Director’s & Chief Executive
Officer’s performance-linked remuneration is assessed on
pages 70 to 77.
The performance of senior executives of the Company is
reviewed on an annual basis in a formal and documented
interview process with either the Managing Director
& Chief Executive Officer or the particular executive’s
immediate superior. Performance is evaluated against
agreed performance goals and assessment criteria in
relation to the senior executive’s duties and material
areas of responsibility, including management of
relevant business units within budget, motivation
and development of staff, and achievement of and
contribution to the Company’s objectives.
A performance evaluation of the Managing Director &
Chief Executive Officer and other senior executives took
place during the year in accordance with this process.
For further information about the performance-related
remuneration of senior executives and staff, please see
the discussion set out under “Principle 8 – Remunerate
Fairly and Responsibly”.
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. The Board has adopted a
Diversity Policy* that sets out the Board’s commitment
to working towards achieving an inclusive and respectful
environment. Please refer to pages 47 to 48 of this Annual
Report for reporting on the Diversity Policy and the
measurable objectives and initiatives relating thereto.
58
Principle 2 – Structure the Board to Add Value
Board composition
The Company’s Constitution provides for a minimum of
three Directors and a maximum of twelve Directors on
the Board. As at the date of this statement, the Board
comprises nine Directors, including eight Non-Executive
Directors and the Managing Director & Chief Executive
Officer.
The Non-Independent Directors in office are:
Mr Kerry Stokes AC
Mr Tim Worner
Chairman
Managing Director &
Chief Executive Officer
Mr Peter Gammell
Mr Ryan Stokes
Director
Director
The Independent Directors in office are:
Mr John Alexander
Mr David Evans
Dr Michelle Deaker
Mr Jeffrey Kennett AC
Mr Michael Malone
Director
Director
Director
Director
Director
Ms Sheila McGregor was a Director throughout the
financial year until her resignation on 2 February 2017.
The qualifications, experience, expertise and period in
office of each Director of the Company at the date of this
Annual Report are disclosed in the Board of Directors
section of this Annual Report on pages 51 to 54.
Board independence
The Board acknowledges the ASX Recommendation that
a majority of the Board should be Independent Directors.
The Board comprises a majority of Independent
Directors, with four Non-Independent Directors and five
Independent Directors. During the period of the financial
year prior to Ms McGregor’s resignation the Board
comprised four Non-Independent Directors and six
Independent Directors.
In determining whether a Director is independent, the
Board conducts regular assessments and has regard to
whether a Director is considered to be one who:
> is a substantial shareholder of the Company or an
officer of, or otherwise associated directly with, a
substantial shareholder of the Company;
> is, or has previously been, employed in an executive
capacity by the Company or another Group member,
and there has not been a period of at least three years
between ceasing such employment and serving on the
Board;
> has within the last three years been a principal of
a material professional advisor of, or a material
consultant to, the Company or another Group
member, or an employee materially associated with the
service provider;
> is a material supplier or customer of the Company
or other group member, or an officer of or otherwise
associated directly or indirectly with a material supplier
or customer; or
> has a material contractual relationship with the
Company or another group member other than as a
Director.
The Board determines the materiality of a relationship on
the basis of fees paid or monies received or paid to either
a Director or an entity which falls within the independence
criteria above. If an amount received or paid may impact
the Earnings Before Interest, Tax, Depreciation and
Amortisation (EBITDA) of the Group in the previous
financial year by more than 5%, then a relationship will be
considered material.
In the Board’s view, the Independent Directors referred
to above are free from any interest and any business or
other relationship which could, or could reasonably be
perceived to, materially interfere with the Directors’ ability
to act with a view to the best interests of the Company.
In terms of longevity of time in office, the Board does
not consider that independence can be assessed with
reference to an arbitrary and set period of time, and the
independence of Directors who have held office for some
time is considered on a case-by-case basis.
Mr Kerry Stokes AC, Mr Peter Gammell and Mr Ryan
Stokes are not regarded as independent within the
framework of the independence guidelines set out above
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. Due to his position as Managing Director & Chief
Executive Officer, Mr Tim Worner is not considered to be
independent.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845
Corporate Governance
Statement
59
Chairman
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 has formed the
view that Mr Stokes is the most appropriate person to
lead the Board as its Chairman given his experience and
skills, particularly with regard to his long term association
with various media businesses of the Group. In addition,
the Company has a clear and accepted conflict of
interest protocol to manage the relationships between the
Company and Seven Group Holdings.
Board skills, experience and expertise
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, tenures and
diversity, including a deep understanding of the media
industry across multiple channels, as well as corporate
management and operational, financial and safety
matters. Directors devote significant time and resources
to the discharge of their duties.
The Board has identified the following areas as strategic
priorities for the Company to drive shareholder value:
The Board has achieved a membership which has regard
to the strategic aims and priorities of the Company,
including the following skills and experience which are
well-represented on the Board:
Skills and Experience
Percentage
Media industry leadership and senior
executive and Board experience in
television broadcasting, publishing and
online businesses
Banking, finance, asset and
capital management
Marketing, sales and product
distribution and servicing
Investment, mergers and acquisitions,
venture capital and entrepreneurship
Technology and telecommunications
89%
89%
89%
89%
79%
In addition to the particular skills and experience of the
Board set out above, the Board’s membership possesses
a depth of general corporate, executive and Director
experience which are appropriate for the Company,
including the following:
Skills and Experience
Percentage
1. Achieving leadership, growing audiences and
CEO and Board level experience
Accounting and treasury
Corporate governance and organisation
management
Legal, regulation and compliance
Risk management and audit
OHS, human resource management
and remuneration
100%
89%
100%
78%
100%
89%
The percentages of Directors assessed to possess each
category of skill and/or experience was determined as
at the date this Corporate Governance Statement was
approved.
maximising profit in the Company’s core business
areas of broadcast television, publishing and online,
targeting leadership in total video through a focus on
the Company’s strengths in content creation as well
as strategic partnerships and investments in content
rights.
2. Transforming the business model by driving
efficiencies and synergies. Maximising the value
extracted from the investment in the production and
ownership of exceptional content through exploitation
across multiple delivery platforms. Develop deeper
data capabilities and consumer insights into our
audiences, available from multiple delivery platforms.
3. Identifying and investing in growth opportunities which
leverage off our Company’s brands and audiences
and diversifying earnings through innovation, strategic
investments and the creation of new businesses.
4. Prudent capital and balance sheet management to
sustain future development of the Company.
5. Enhancing alignment of the Company’s culture to
drive innovation and change through technology and
to continue to reduce the Company’s cost base.
60
Remuneration & Nomination Committee
Effective functioning of the Board
The Board has established a Remuneration &
Nomination Committee comprised of the following
members, all of whom are Independent Directors
except for Mr Ryan Stokes:
> Mr John Alexander (Chairman)
> Mr David Evans
> Dr Michelle Deaker
> Mr Jeffrey Kennett AC
> Mr Ryan Stokes
The Remuneration & Nomination Charter* provides
that the Committee must consist of a minimum of three
members and must have a majority of Independent
Directors, all of whom must be Non-Executive Directors.
Attendance at Committee meetings by management
is at the invitation of the Committee. Directors who are
non-Committee members may attend any meeting of the
Committee. The Committee may request that Directors
who are non-Committee members are not present
for all or any part of a meeting. It is the practice of the
Committee for the Managing Director & Chief Executive
Officer and Senior Group Executive, Human Resources to
attend Committee meetings to present to, or to assist, the
Committee.
The Chairman of the Committee reports to the Board on
the Committee’s considerations and recommendations.
Further details concerning the Remuneration &
Nomination Committee’s role in relation to Board
appointments are set out in this Corporate Governance
Statement under the heading “Principle 1 – Lay Solid
Foundations for Management and Oversight”, and under
“Principle 8 –Remunerate Fairly and Responsibly” in
relation to its role regarding the Company’s remuneration
arrangements.
Director induction and ongoing training
As part of the induction process, Board appointees
attend a briefing with the Chairman, meet with the
Company Secretary about the Company’s corporate
governance (including its policies and procedures), visit
key business sites and meet with Company Executives.
In addition to an induction process for new Director
appointments, from time to time, Directors 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 Group’s business activities,
as well as industry and regulatory developments.
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 Group 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. Directors are able to obtain independent
professional advice to assist them in carrying out their
duties, at the Company’s expense.
Principle 3 – Act Ethically and Responsibly
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 (internal policy) 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 in regard
to the Company’s commitment to workplace safety and
employees’ fulfilment of their work duties and compliance
with Company policies. The Code requires employees
to maintain confidentiality of confidential Company
information, avoid conflicts of interest, not misuse
Company property or accept or offer inappropriate gifts.
The Board has implemented a number of other policies
and procedures to maintain confidence in the Company’s
integrity and promote ethical behaviour and responsible
decision making, including the following:
> Continuous disclosure policy*
> Share Trading policy*
> Group Editorial policy*
> Diversity policy*
> Issue Escalation policy (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, which includes 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.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 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 out in the policy. In
addition to the policy, Directors are required to advise the
Company Secretary of all transactions in the Company’s
shares.
Principle 4 – Safeguard Integrity in Corporate
Reporting
Audit & Risk Committee
As at the date of this statement, the Committee
comprised the following members, all of whom are
Independent Directors except for Mr Peter Gammell and
all of whom are non-executives:
> Mr David Evans (Chairman of the Committee)
> Dr Michelle Deaker
> Mr Peter Gammell
> Mr Michael Malone
Ms Sheila McGregor was a member of the Audit &
Risk Committee throughout the financial year until her
resignation on 2 February 2017.
The Audit & Risk Committee has adopted a formal
Charter* which is available on the Company’s website.
The Committee’s key responsibilities in respect of its
audit function are to assist the Board in fulfilling its
responsibilities in relation to:
> the accounting and financial reporting practices of the
Company and its subsidiaries;
> the consideration of matters relating to the financial
controls and systems of the Company and its
subsidiaries;
> the identification and management of financial risk; and
> the examination of any other matters referred to it by
the Board.
Corporate Governance
Statement
61
The Audit & Risk Committee is also responsible for:
> making recommendations to the Board on the
appointment (including procedures for selection), and
where necessary, the replacement of the External
Auditor;
> evaluating the overall effectiveness of the external audit
function through the assessment of external audit
reports and meetings with the External Auditors;
> reviewing the External Auditor’s fees in relation to the
quality and scope of the audit with a view to ensuring
that an effective, comprehensive and complete audit
can be conducted for the fee; and
> assessing whether non-audit services provided by the
External Auditor are consistent with maintaining the
External Auditor’s independence.
Attendance at Committee meetings by management
is at the invitation of the Committee. Directors who are
non-Committee members may attend any meeting of the
Committee. The Committee may request that Directors
who are non-Committee members are not present
for all or any part of a meeting. It is the practice of the
Committee for the Managing Director & Chief Executive
Officer, Chief Financial Officer and Head of Internal Audit
to attend Committee meetings to present to, or to assist,
the Committee.
The Chairman of the Committee reports to the Board on
the Committee’s considerations and recommendations.
The Audit & Risk Committee’s key responsibilities in
respect of its risk function are set out below under
“Principle 7 – Recognise and Manage Risk”.
External Audit function
It is the policy of the Audit & Risk Committee to
meet periodically with the External Auditors without
management being present.
Each reporting period, the External Auditor provides
an independence declaration in relation to the audit.
Additionally, the Audit & Risk Committee provides advice
to the Board in respect of whether the provision of
non-audit services by the External Auditor are compatible
with the general standard of independence of auditors
imposed by the Corporations Act.
The current practice is for the rotation of the appropriate
External Audit partner(s) to occur every five years (subject
to the requirements of applicable professional standards
and regulatory requirements). If a new auditor is to be
appointed, the selection process involves a formal tender
evaluated by the Audit & Risk Committee. The Chair of
the Committee leads the process, in consultation with the
Chief Financial Officer.
62
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.
Declarations by the Managing Director & Chief
Executive Officer and Chief Financial Officer
Before the Board approves the financial statements for
each of the half year and full year, it receives from the
Managing Director & Chief Executive Officer and the
Chief Financial Officer a written declaration that, in their
opinion, the financial records of the Company have been
properly maintained and the financial statements are
prepared in accordance with the relevant accounting
standards and present a true and fair view of the financial
position and performance of the consolidated group.
These declarations also confirm that these opinions
have been formed on the basis of a sound system of risk
management and internal compliance and control which
is operating effectively.
The required declarations from the Managing Director &
Chief Executive Officer and Chief Financial Officer have
been given for the half year ended 24 December 2016
and the financial year ended 24 June 2017.
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
and 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 and 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 end of financial reporting periods and the
announcement of results to the market.
Principle 6 – Respect the Rights
of Shareholders
Communications with shareholders
As disclosed in the Shareholder Communication Policy*, the
Board aims to ensure that shareholders are informed of all
major developments affecting the Company’s state of affairs
and that there is an effective two-way communication with
its shareholders. The Company adopts a communications
strategy that promotes 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.
Shareholders are given the option to receive
communications from, and to send communications
to, the Company electronically, to the extent possible.
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. The Company continues to implement
campaigns to encourage shareholders to elect to
receive all shareholder communications electronically to
help reduce the impact on the environment and costs
associated with printing and sending materials by post.
The Company’s website
The Company’s website www.sevenwestmedia.com.
au provides various information about the Company,
including:
> Overviews of the Company’s operating businesses,
divisions and structure;
> Biographical information for each Director;
> Copies of the following:
– Board and Committee Charters;
– Corporate Governance Policies;
– Annual Reports and Financial Statements; and
– Announcements to ASX;
– Security price information;
– Contact details for the Company’s Share Registry;
– Details concerning the date of the Annual General
Meeting, including the Notice of Meeting, when
available; and
– Access to live webcasts of the Annual General
Meeting.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Corporate Governance
Statement
63
Principle 7 – Recognise And Manage Risk
Risk oversight and management
The Board recognises that the management of business
and economic risk is an integral part of its operations and
has established policies and procedures for the oversight
and management of material business risks, including
the establishment of the Audit & Risk Committee. Details
regarding the Committee are set out under “Principle 4 –
Safeguard Integrity in Corporate Reporting”.
The Board also believes a sound risk management
framework should be aimed at identifying and delivering
improved business processes and procedures across the
Group which are consistent with the Group’s commercial
objectives.
Under the Audit & Risk Committee’s Charter*, the
Committee’s key responsibilities in respect of its risk
function are to:
> Oversee, evaluate and make recommendations to the
Board in relation to the adequacy and effectiveness
of the risk management framework and the risk
management systems and processes in place, and be
assured and in a position to report to the Board that
all material risks have been identified and appropriate
policies and processes are in place to manage them.
> Review and approve management’s annual report on
the effectiveness of the risk management systems.
> Ongoing review of the Company’s risk management
framework to satisfy itself that it continues to be sound
and effectively identifies all areas of potential risk,
and report to the Board regarding any recommended
changes to the Company’s risk management
framework.
> Review, and make recommendations to the Board
in relation to, the Company’s insurance program
and other risk transfer arrangements having regard
to the Company’s business and the insurable risks
associated with it, and be assured that appropriate
coverage is in place.
> Monitor compliance with applicable laws and
regulations, review the procedures the Company has
in place to ensure compliance and be assured that
material compliance risks have been identified.
> Establish procedures for the receipt, retention and
treatment of complaints received by the Company
regarding fraud or non-compliance with applicable
laws and regulations and the confidential, anonymous
submission by employees of the Company of any
concerns regarding business practices.
> Review and make recommendations to the Board
in relation to any incidents involving fraud or other
breakdown of the Company’s internal controls.
The Board requires management to design and
implement a risk management and internal control system
to manage the Company’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.
During the 2017 financial year, the Committee conducted
periodic as well as the annual review of the Company’s
risk management framework and satisfied itself that
the framework continues to be sound and effectively
identifies potential risks.
Risk Management Policy
The Board has adopted a Risk Management Policy
consistent with Australian Standard ISO 31000:2009 and
Principle 7 of the ASX Recommendations.
The group-wide risk profile covers the key strategic,
operational, financial and compliance risks of the
Company and is prepared by the Head of Risk Assurance
& Internal Audit in consultation with key executives
across the business. Throughout the year the Audit &
Risk Committee reviews the group-wide risk profile and
the success of the risk mitigation strategies in order to
satisfy itself that management is operating within the risk
appetite set by the Board. External advice is obtained as
appropriate.
Internal Control Framework – Risk Assurance &
Internal Audit
The Company has established a Risk Assurance &
Internal Audit function to evaluate and improve the
effectiveness of the Company’s governance, risk
management and internal control processes. Functional
responsibility for Risk Assurance & Internal Audit resides
with the Head of Risk Assurance & Internal Audit who
reports to the Chairman of the Audit & Risk Committee
and has access to the Company’s records, information
systems, properties and personnel in order to conduct
its activities. The Audit & Risk Committee reviews
and approves Risk Assurance & Internal Audit’s plans
and resourcing as well as monitors its independence,
performance and management’s responsiveness to its
findings and recommendations.
During the year, the Head of Risk Assurance & Internal
Audit presented detailed Internal Audits and Risk reviews
to the Committee regarding the effectiveness of the
Company’s management of its material business risks, in
accordance with the approved Risk Assurance & Internal
Audit plan. Focus areas of the 2017 Risk Assurance
& Internal Audit plan included controls over payment
systems and enhancing the Company’s anti-fraud
program.
64
Workplace Safety
Material risks
The Company is committed to providing a safe workplace
and maintains comprehensive workplace safety policies
and systems which are overseen by health and safety
specialists within the Company’s human resources
team and dedicated Risk, Safety and Security team.
These polices are promulgated to staff through induction
and training and the availability of information on the
Company’s intranet as well as through Occupational
Health & Safety Committees and representatives at
each business premises. Consultative workplace
safety arrangements, ranging from formal quarterly
health and safety committee meetings to other agreed
arrangements, have been put in place at each key
business premises. Procedures relating to security at the
Company’s business sites are prioritised and are subject
to review and continuous improvement.
Management provides leadership by promoting a culture
of safety and risk awareness and monitors and responds
to incident reporting and provides regular workplace
safety updates to the Board. Additionally, to support
well-being within the workplace, the Company provides
a free and confidential external counselling service for
employees and their immediate families.
Environment
Environmental risks are considered as part of the
Company’s risk assessment processes. Environmental
risks relating to the use and storage of any hazardous
materials are identified and managed through regular
inspections of business premises, reviews of compliance
and emergency procedures, and advice from external
consultants on environmental matters. For more
information on the Company’s environmental practices
please refer to pages 46 to 47 of this Annual Report.
Financial reporting
Under the risk framework described above the Company
has identified strategic, operational, financial, legal and
regulatory risks which it manages and mitigates. Each of
the foregoing material business risks is monitored and
managed by appropriate Senior Management within
the Company. Where appropriate, external advisers
are engaged to assist in managing the risk. More detail
concerning these risks is set out under the headings
“Risk Management” and “Risk Management Framework”
on page 46 of this Annual Report. The Company does not
believe it has any material exposure to environmental or
social sustainability risks. Commentary on the Company’s
environmental and human capital related initiatives as well
as its community engagement is provided on pages 46 to
47 of this Annual Report.
Strategy
The Group continues to transform its strategic focus to
respond rapidly to the challenges and opportunities in
its marketplace. For more information on the Group’s
strategic pillars and revised strategic framework which
underpin the Group’s economic sustainability please refer
to pages 8 to 12 of this Annual Report.
Principle 8 – Remunerate Fairly
and Responsibly
Remuneration policy
The objective of the remuneration policy for employees
is to ensure that remuneration packages properly reflect
the duties and responsibilities of the employees and that
remuneration is at an appropriate but competitive market
rate which enables the Company to attract, retain and
motivate people of the highest quality and with the best
skills from the industries in which the Company operates.
The Company maintains a comprehensive budgeting
system with an annual budget reviewed by the Audit &
Risk Committee, 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.
Remuneration & Nomination Committee
To assist in the adoption of appropriate remuneration
practices, the Board has established a Remuneration &
Nomination Committee. Details regarding the Committee
are set out under “Principle 2 – Structure the Board to
Add Value”.
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 legal and health and safety matters
as well as cyber security and payment systems reviews.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Corporate Governance
Statement
65
The primary responsibilities of the Committee which relate
to remuneration are:
> to review and advise the Board on Directors’ fees and
the remuneration packages, including equity incentive
grants, of the Managing Director & Chief Executive
Officer, Chief Executives and senior executives of the
Group subsidiaries;
> to provide advice and support and serve as a
sounding-board for the Managing Director & Chief
Executive Officer and Board in human resource and
remuneration-related matters; and
> to advise on succession planning and employee
development policies.
It is the practice for the Managing Director & Chief
Executive Officer to attend meetings of the Remuneration
& Nomination Committee to report on, or seek approval
of, senior Group Management’s remuneration, but he
is not present during meetings of the Committee (or the
Board) when his own performance or remuneration are
being discussed or reviewed.
Remuneration of Directors and Senior Executives
The remuneration of the Non-Executive Directors is
restricted, in aggregate, by the Constitution of the
Company and the requirements of the ASX Listing Rules.
Fees for Directors are set out in the Remuneration Report
on pages 80 to 81. During the year, fees received by
Non-Executive Directors were reviewed by Remuneration
& Nomination Committee and, on the Committee’s
recommendation the Board determined that in view of
the considerable time commitment and wide range of
responsibilities that the Audit & Risk Committee Chair
consistently fulfils, the Audit & Risk Committee Chair
fee for FY17 be increased from $26,000 to $40,000.
(Mr Evans did not participate in the Remuneration &
Nomination Committee’s and Board’s review of the Audit
& Risk Committee Chair fee). There has been no other
change to the fees paid to Non-Executive Directors since
their approval in 2011.
The Committee reviews remuneration packages and
policies applicable to the Managing Director & 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 market information on the
appropriateness of the level of fees payable to Non-
Executive Directors and makes recommendations to the
Board.
The Remuneration & Nomination Committee met after
the end of the financial year to review and recommend
to the Board performance-related remuneration for Key
Management Personnel. This process is summarised
in the Remuneration Report on pages 72 to 77. Further
details of Directors’ and executives’ remuneration,
superannuation and retirement payments are set out in
the Remuneration Report. 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.
Hedging
It is the Company’s policy that employees (including
KMP) are prohibited from dealing in Seven West
Media securities if the dealing is prohibited under the
Corporations Act. Therefore, in accordance with this
policy, all Key Management Personnel are prohibited
from entering into arrangements in connection with
Seven West Media securities which operate to limit
the executives’ economic risk under any equity-based
incentive schemes.
This statement has been approved by the Board and is
current as at 16 August 2017.
66
Directors’ Report
For the year ended 24 June 2017
The Directors present their report together with the
consolidated financial statements of the Group consisting
of Seven West Media Limited and the entities it controlled
at the end of, or during, the year ended 24 June 2017 and
the auditor’s report thereon.
Board
The following persons were Board members of Seven
West Media Limited during the whole of the financial year
and up to the date of this report, unless otherwise stated:
KM Stokes AC – Chairman
TG Worner – Managing Director & Chief Executive Officer
JH Alexander
Dr ME Deaker
D Evans
PJT Gammell
JG Kennett AC
M Malone
RK Stokes
SC McGregor (resigned 2 February 2017)
Particulars of their qualifications, experience, special
responsibilities and any directorships of other listed
companies held at any time in the last three years are set
out in this Annual Report under the headings “Board of
Directors” and “Corporate Governance Statement” and
form part of this report.
WW Coatsworth is the Company Secretary. Particulars
of Mr Coatsworth’s qualifications and experience are set
out in this Annual Report under the heading “Company
Secretary”.
Principal activities
The principal activities of the Group during the financial
year were free to air television broadcasting, newspaper
and magazine publishing and online and radio
broadcasting.
On 4 October 2016, it was announced that Foxtel would
be acquiring the Company’s interest in the Presto TV joint
venture, a subscription video on demand service.
Other than the above, there were no significant changes
in the nature of the Group’s principal activities during the
financial year.
Business strategies, prospects and likely
developments
Information on the Company’s operations and the
results of those operations, financial position, business
strategies and prospects for future financial years has
been included in the “Performance of the Business”
section. The Performance of the Business section also
refers to likely developments in the Group’s operations
and the expected results of those operations in future
financial years.
Information in the Performance of the Business section
is provided to enable shareholders to make an informed
assessment about the operations, financial position,
business strategies and prospects for future financial
years of the Group.
Significant changes in the state of affairs
Significant changes in the state of affairs of the Group
during the financial year were as follows:
> On 29 September 2016, the Company announced
the cessation of an on-market buy-back of up to
99.9 million of the Company’s shares, representing
approximately 6.6% of the Company’s ordinary shares.
5.4 million ordinary shares were bought back over the
term of the buy-back at a cost of AUD $3.8million. No
subsequent buy-back was announced.
> On 7 November 2016, the Company announced that it
had signed a purchase contract to acquire The Sunday
Times newspaper and the online site Perth Now from
News Corporation. The acquisition was approved by
the ACCC in September 2016. The first issue of The
Sunday Times under Seven West Media ownership
was on 20 November 2016.
In the opinion of the Directors there were no other
significant changes in the state of affairs of the Group that
occurred during the financial year.
Matters subsequent to the end of the financial year
There are no matters or circumstances which have arisen
since the end of the financial year that have significantly
affected or may significantly affect:
a. the Group’s operations in future financial years; or
b. the results of those operations in future financial
years; or
c. the Group’s state of affairs in future financial years.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Directors’
Report
67
Meetings of directors
The numbers of meetings of the Company’s Board of Directors and of each Board Committee held during the year
ended 24 June 2017, and the numbers of meetings attended by each Director were:
Meetings of Directors
Audit and Risk
Remuneration and Nomination
Directors
KM Stokes AC
T Worner#
JH Alexander
Dr ME Deaker
D Evans
PJT Gammell
JG Kennett AC
M Malone
RK Stokes
SC McGregor^
a
14
8
14
14
14
14
14
14
14
10
b
14
8
14
14
13
14
13
12
14
10
a
4
8
2
8
8
8
6
8
7
4
b
4
8
2
8
7
8
6
7
7
4
a
2
5
8
8
8
1
8
–
8
1
b
2
5
8
8
8
1
8
–
8
1
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 Committees of which they are not a
formal member, and in these instances, their attendance is also included above.
# Not required to attend meetings held for Non-executive Directors only.
^ Resigned as a Director on 2 February 2017.
Performance rights and options
During the financial year, there were not any rights issued over an equivalent number of unissued fully paid ordinary
shares in the Company.
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
Rights on Issue
Expiry Date
Seven West Media Equity Incentive Plan (2015 LTI)
1,328,845
1 September 2017
Seven West Media Equity Incentive Plan (2016 LTI)
3,473,305
1 September 2018
Rights were granted for nil consideration. None of the rights currently on issue entitle the holder to participate in any
share issue.
During the financial year, no rights vested and 2,334,152 rights lapsed.
There are no other unissued shares or interests under options as at the date of this report.
For names of the Directors and Key Management Personnel who currently hold rights through these schemes, refer to
the Remuneration Report.
68
Dividends – Seven West Media Limited
Dividends paid to members during the financial year were as follows:
Final ordinary dividend for the year ended 25 June 2016 of
4 cents (2015 – 4 cents) per share paid on 7 October 2016
Interim ordinary dividend for the year ended 24 June 2017 of
2 cents (2016 – 4 cents) per share paid on 13 April 2017
2017
$’000
2016
$’000
60,283
60,529
30,161
90,444
60,321
120,850
In addition to the above dividends, since the end of
the 2017 financial year the Directors have declared the
payment of a final ordinary dividend of 2 cents per share,
to be paid on 18 October 2017.
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 Gas emissions under the National
Greenhouse and Energy Reporting Act (2007). The
Company is actively working towards reduction of direct
emissions from the consumption of fuels (Scope 1) and
indirect emissions from electricity consumption (Scope
2) reportable under NGER, as well as Scope 3 voluntary
emissions where possible and practical for the business
units.
There are no other particular and significant
environmental regulations for the Group.
Directors’ interests in securities
The relevant interests of each Director in shares and
rights issued by the Company, as notified by the
Directors to the ASX in accordance with S205G(1) of the
Corporations Act 2001, at the date of this report are as
follows:
Directors
KM Stokes AC
T Worner
JH Alexander
Dr ME Deaker
D Evans
PJT Gammell
JG Kennett AC
M Malone
RK Stokes
Performance
Rights
Number of
ordinary
shares
–
619,753,734
2,864,583
293,810
–
–
–
–
–
–
–
55,768
26,161
927,803
329,216
75,000
133,000
240,466
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845
Directors’
Report
69
> all non-audit services were subject to the corporate
governance procedures adopted by the group and
have been reviewed by the Audit and Risk Committee
to ensure they do not impact the integrity and
objectivity of the auditor;
> the non-audit services provided do not undermine the
general principles relating to auditor’s independence
as set out in APES 110 Code of Ethics for Professional
Accountants, as they did not involve reviewing
or auditing the auditor’s own work, acting in a
management decision making capacity for the group,
acting as an advocate of the group or jointly sharing
the risks and rewards.
A copy of the auditor’s independence declaration as
required under section 307C of the Corporations Act
2001 is set out on page 87.
Rounding of amounts
The Company is of a kind referred to in ASIC Instrument
2016/191 and in accordance with that Instrument,
amounts in the consolidated financial statements
and Directors’ Report have been rounded off to the
nearest one thousand dollars unless otherwise stated.
This report is made in accordance with a resolution
of the Directors.
KM Stokes AC
Chairman
Sydney
16 August 2017
Remuneration report
A remuneration report is set out on the pages that follow
(pages 70 to 86) and forms part of this Directors’ Report.
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 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, except where the liability arises out of conduct
involving a lack of good faith.
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.
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 7.1 to the financial statements. The
Board of Directors has considered the position and, in
accordance with the advice received from the Audit and
Risk 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:
70
Remuneration
Report
Message from the Remuneration & Nomination Committee
Dear Shareholder
Seven West Media is pleased to present its Remuneration
Report for the 2017 financial year (FY17), which sets out
remuneration information for Key Management Personnel
and Non-Executive Directors.
This introductory section outlines the key developments
for FY17 and proposed changes for FY18.
Changes to Key Management Personnel
Ms Katie McGrath commenced with the Company as
Group Executive Human Resources on 7 June 2017.
Mr Peter Zavecz, Chief Executive Officer, Pacific,
resigned from the Company on 30 September 2016.
Mrs Melanie Allibon, Group Executive Human Resources,
resigned from the Company on 16 December 2016.
Ms Sheila McGregor, Non-Executive Director,
resigned from the Company on 2 February 2017.
Mr Christopher Wharton, Chief Executive Officer,
SWM WA, retired from the Company on 30 April 2017.
Following the departure of some of the Key Management
Personnel during FY17, the Company re-evaluated the
roles considered to be Key Management Personnel. As
a result of the review, the Company determined that the
role of Chief Executive Officer, Pacific ceased to be Key
Management Personnel on 30 September 2016 and the
role of Chief Executive Officer, SWM WA ceased to be
Key Management Personnel on 30 April 2017.
Remuneration Framework Review
During FY17, the Company commenced a review of
its incentive framework. The review of the Short-Term
Incentive (STI) and Long-Term Incentive (LTI) plans
was undertaken on the basis that there are compelling
opportunities for improvement including:
> Simplification of the STI and the LTI plans.
> Enhanced alignment between the executive and
shareholder interests.
> Driving performance aligned to the updated business
strategy.
Summarised below are the outcomes of the review for
the STI plan and an update on the review for the LTI plan,
which is ongoing.
Short-Term Incentive Plan
During FY17, the Company reviewed the STI plan with a
view to simplifying the plan and further aligning executive
remuneration outcomes with the performance of the
Group. As a result of the review, a key change was made
to the STI deferral component.
Under the previous plan, STI awards were delivered in
cash and 50 per cent of the total award was deferred
in share rights, but only where the STI award reached
or exceeded the on-target amount. As STI awards have
not reached or exceeded the on-target amount in recent
years, deferred share rights have never been granted to
eligible executives under the STI plan.
Applying from FY17 onwards, deferral into Company
equity (in the form of restricted shares) will occur
irrespective of whether the STI award reaches or exceeds
the on-target amount. For executives that were entitled
to a STI award for FY17, 50 per cent of the award will be
deferred into restricted shares for a period of 12 months.
Long-Term Incentive Plan
During FY17, the Company commenced a review of the
LTI plan. The key objective of the review was to ensure
the LTI plan performance measures and targets were
aligned to the updated business strategy, and to therefore
enhance alignment between executive and shareholder
interests.
The review is ongoing with a view to finalising the
preferred LTI approach in early FY18. As a result,
the Board decided not to make LTI grants to eligible
executives in FY17, but will resume annual LTI grants once
the review is complete. There is no intention to make any
retrospective LTI grants or increase the quantum of any
other remuneration component in FY17, or any future
year, as a result of there being no FY17 LTI grant. The
Board is of the view that executives have both sufficient
remuneration quantum for FY17, as well as sufficient
exposure to Company equity, particularly given the
change to STI deferral for FY17, as outlined above.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Remuneration
Report
71
Full details of the revised LTI plan will be disclosed in the
Company’s 2017 Notice of Meeting for the purposes of
obtaining shareholder approval for the Managing Director
& Chief Executive Officer’s FY18 LTI. Details will also be
disclosed in the FY18 Remuneration Report.
We are committed to a remuneration framework that is
aligned to the Company’s strategy, is performance-based
and meets shareholders’ requirements. We value your
feedback as our remuneration strategies continue to
evolve over the coming year.
Executive Remuneration Details for FY17
Yours faithfully
Details concerning FY17 executive remuneration
arrangements and the performance-linked remuneration
outcomes for FY17 are set out in this Remuneration
Report. Full details of the STI and LTI plans are set out in
section 1.a.ii of this Remuneration Report.
Mr John Alexander
Remuneration & Nomination Committee Chairman
Remuneration Report – audited
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:
This report is set out under the following main headings:
1. Executive Remuneration
a. Executive Remuneration Framework
i. Fixed Remuneration
ii. Variable Remuneration
– Short-Term Incentive (STI) plan
–
Long-Term Incentive (LTI) plan
b. Link between Remuneration Policy and Group
Performance
c. FY17 Executive Remuneration Outcomes
d. Total Remuneration Earned by Executives
> To recommend to the Board the remuneration of
(non-statutory disclosures)
NEDs, within the aggregate approved by shareholders;
e. Executive Remuneration in Detail
> To recommend to the Board the remuneration and
(statutory disclosures)
other conditions of service of the Managing Director &
Chief Executive Officer (MD & CEO);
> To approve the remuneration and other conditions
of service for senior executives reporting to the MD
& CEO based on the recommendations of the MD &
CEO;
> To design the executive incentive plans and approve
payments or awards under such plans; and
> To establish the performance hurdles associated with
the incentive plans.
f. Service Agreements
2. Non-Executive Director Remuneration
a. Non-Executive Director Remuneration Framework
b. Non-Executive Remuneration in Detail
3. Key Management Personnel Equity Transactions
and Holdings
a. Equity Incentive Plan Holdings
b. Equity Holdings and Transactions
c. Equity granted as remuneration affecting
future periods
4. Loans and Other Transactions with Key
Management Personnel
5. Services from Remuneration Consultants
72
1. Executive Remuneration
a. Executive Remuneration Framework
Remuneration is determined by the Committee and,
for the Managing Director & Chief Executive Officer, is
recommended to the Board for their approval. 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.
The approach taken to remuneration is to ensure
remuneration packages appropriately reflect executives’
duties, responsibilities and performance against
objectives, as well as ensuring that remuneration
appropriately attracts and motivates people of the highest
quality, having particular regard to the relative scarcity of
suitably qualified executive talent in the Australian media
and entertainment industry and the complexity of the
Seven West Media business relative to its direct media
peers.
The remuneration arrangements for the MD & CEO,
Mr Tim Worner, have not changed since Mr Worner’s
commencement as Chief Executive Officer on 1 July
2013.
i. Fixed Remuneration
Fixed remuneration includes base pay and any ongoing
employee benefits including motor vehicles as well as
employer contributions to superannuation funds.
ii. Variable Remuneration
Variable remuneration comprises two elements:
> Short-Term Incentive (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 restricted shares.
> Long Term Incentive (LTI) – rewards performance
over the longer term and is 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 and
individual service conditions being met.
Short-Term Incentive Plan
The STI plan provides participants with the opportunity
to earn an annual 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, 50 per cent of the STI
award is deferred into restricted shares for 12 months
(please refer to the ‘STI deferral’ section below).
STI Opportunity
Each executive’s STI opportunity for on-target
performance is 50 per cent of fixed remuneration.
‘On-target’ refers to the STI award opportunity for an
executive who achieves successful performance against
all KPIs and where 100 per cent of the Group’s underlying
EBIT target is achieved.
EBIT is defined as the Group’s profit before significant
items, net finance costs and tax.
50 per cent of STI awards are deferred into restricted
share. Further details on the deferral into restricted shares
are set out below.
STI Award
The size of the pool available for distribution as STI
awards is based on the achievement of the Group’s
underlying EBIT target set by the Board at the start of the
financial year and is based on the following table:
% of Group
underlying
EBIT Achieved
< 90
90–94
95–99
100
STI Award Pool Available
(% of On-Target)
0%
25%
50%
100%
The Board retains discretion to not make an STI award
available to executives where such payment is regarded
to be inconsistent with the shareholder experience over
the financial year, even if the gateway requirement is
achieved.
Minimum Individual Performance Measure
In addition to the financial targets that must be achieved
for an STI award 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
Participants have individual KPIs set at both on-target and
stretch levels of achievement. The executives’ KPIs are
approved by the Committee. The KPIs of the MD & CEO
are approved by the Board.
Financial and non-financial measures are proportionally
weighted to reflect the different focus for executives in
driving the overall business strategy. Scorecard measures
for participants are set out below.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Remuneration
Report
73
Participant
Scorecard measures and weightings
MD & CEO
Individual scorecard measures are grouped into two categories – quantitative and qualitative measures.
Individual measures include:
> Company net profit after tax (NPAT) performance,
> Underlying EBITDA performance,
> Communication and execution of business strategy,
> Digital audience growth,
> Content production and distribution growth,
> Ratings performance for the television business in key demographics,
> Relevant circulation performance and market share for the publishing businesses,
> Safety performance,
> Cost and efficiency 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. For the MD & CEO, 80 per
cent of his STI KPIs relate to quantitative measures.
Other Executives
Individual scorecard measures are grouped into two categories – quantitative and qualitative measures.
Individual measures include:
> Revenue and advertising share performance,
> Performance against various budget measures,
> Digital audience growth,
> Content production and distribution growth,
> Cost and efficiency targets,
> Communication and execution of business strategy,
> Safety 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 other executives,
between 40 and 80 per cent of their STI KPIs relate to quantitative measures.
Performance Measurement
The MD & CEO assesses each executive’s performance
at the end of the financial year relative to agreed business
and individual targets. Based on this assessment, the MD
& CEO makes a recommendation to the Committee for
approval.
Based on each executive’s individual performance
rating, the MD & CEO may apply a discretionary
adjustment during the performance assessment process.
Discretionary adjustments are applicable to individual
STI awards and are limited to a 25 per cent increase to
the overall award for each individual, provided the total
awarded remains within the incentive pool available
based on the achievement of group underlying EBIT. The
level of discretionary adjustment applied is based on the
executive’s individual performance rating and represents
the maximum individual award opportunity for significant
out-performance.
The Committee assesses the MD & CEO’s performance
and makes a recommendation to the Board for approval.
The Committee may apply an additional discretionary
adjustment based on the MD & CEO’s individual
performance rating that is limited to the same parameters
as for other executives.
STI Deferral
To enhance long-term focus, 50 per cent of the total
award is deferred into restricted shares. The shares
allocated to each executive will generally be purchased
on market such that the value of shares allocated is
equal to the portion of the STI award being deferred
into restricted shares. The number of restricted shares
allocated to each executive will be determined by dividing
the dollar amount of the STI award deferred into restricted
shares by the average cost per share purchased on
market (rounded down to the nearest whole number
of shares). 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
shares). The restricted shares vest after a period of 12
months. The restricted shares are held on trust on behalf
of each executive and executives have entitlements to
dividends and voting rights in relation to their restricted
shares during the vesting period.
74
Long-term incentive plan
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 long-term incentive plan
Grants were made under the LTI plan in FY13, FY14, FY15
and FY16.
During FY17, the Committee conducted a review of the
LTI plan to increase alignment to the updated business
strategy and shareholder interests. The review has
continued into FY18. As a result, an award to executives
was not made under the LTI plan in FY17.
The review of the LTI plan is intended to be completed
shortly. The revised LTI plan will apply to grants in FY18
and full details will be provided in the Company’s 2017
Notice of Meeting in relation to the MD and CEO’s FY18
LTI, as well as the FY18 Remuneration Report.
What is 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.
How many
performance rights
are granted?
The value of LTI granted is allocated annually and, for the MD & CEO is 50 per cent of the MD & CEO’s fixed
remuneration and for other executives is 25 per cent 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 relative Total Shareholder Return (TSR)
measured against a comparator group.
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 performance
and shareholder wealth creation driven through the increase in diluted earnings per share.
The DEPS target for each grant is the sum of three annual DEPS growth targets set by the Board over
each of the three years of the performance period (i.e. for the FY16 grant, FY16, FY17 and FY18). The
Board believes this is the most 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 is set and communicated to executives at the beginning of the financial
year and disclosed retrospectively the following financial year.
The Board believes that setting hurdles based on one-year projections (that are ultimately measured in
aggregate) better align to the interests of shareholders than setting a three-year DEPS target at the beginning
of each performance period that may become unrealistic or insufficiently challenging as external market
conditions change. The threshold DEPS target for FY17 is the budget DEPS for that financial year and the
stretch DEPS hurdle is 10% growth on actual DEPS in the 2016 financial year (adjusted for significant items).
The actual annual DEPS targets and performance against each target are disclosed retrospectively (i.e. in
the following financial year). Diluted EPS is calculated by dividing the underlying net profit or loss (for the
reporting period) by the weighted average number of total ordinary shares in the Company plus the potential
number of ordinary shares that may be on issue. DEPS is the 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.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Remuneration
Report
75
Seven West Media long-term incentive plan
Why was the DEPS
performance hurdle
chosen, and how
is performance
measured?
(continued)
The percentage of DEPS performance rights that vest (if any) at the end of the three-year performance
period is based on the following schedule:
Aggregate DEPS over the three years
Less than the aggregate threshold DEPS
At the aggregate threshold DEPS
Between the aggregate threshold DEPS
and the aggregate stretch DEPS
Proportion of DEPS performance rights that
vest (%)
Nil
50%
Between 51% and 100%,
increasing on a straight-line basis
Equal to or above the aggregate stretch DEPS
100%
FY17 Targets:
> Threshold (budget) DEPS was 10.01 cents (excluding significant items);
> Stretch DEPS was 15.11 cents (excluding significant items); and
> Actual DEPS for the year ending 24 June 2017 was 11.1 cents (excluding significant items).
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 recorded 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 is appropriate as it provides a comparison
of relative shareholder returns that is relevant to the majority of investors. 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 Committee has agreed guidelines
for adjusting the comparator group following such events, and retains discretion to determine any potential
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
Nil
50%
Between 51% and 100%,
increasing on a straight-line basis
Above the 75th percentile
100%
When will
performance
be tested?
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.
Disposal restrictions
on vested shares
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.
Do the performance
rights carry dividend
or voting rights?
Performance rights do not carry any dividend or voting rights prior to vesting.
What happens
in the event of a
change in control?
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.
76
Seven West Media long-term incentive plan
What happens if the
participant ceases
employment?
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 some or all
of the 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 automatically lapse.
Are participants
allowed to hedge
their LTI award?
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.
b. Link between Remuneration Policy and Group Performance
In FY17, the remuneration policy was linked to profit before significant items, net finance costs and tax (EBIT), diluted
earnings per share (DEPS) (excluding significant items) 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 items1, net finance
costs and tax (EBIT) ($’000’s)
Statutory NPAT ($’000’s)
NPAT (excluding significant items)1,2 ($’000’s)
Diluted earnings per share
(as reported) (cents)
Diluted earnings per share
(excluding significant items)1 (cents)
Dividend per share (cents)
Share price as at reporting date ($)
Return on capital employed (%)
2013
2014
2015
2016
2017
422,015
(69,758)
225,175
408,177
149,188
236,228
356,333
(1,887,377)
209,145
318,126
184,289
207,343
261,385
(742,299)
166,809
(7.1)
19.6
45.0
1.90
9.54
12.6
19.9
12.0
1.89
9.70
(181.1)
16.0
12.0
1.05
16.20
12.2
13.7
8.0
1.08
14.44
(49.4)
11.1
6.0
0.70
18.58
1 Significant items is a non-IFRS measure. For details of significant items refer note 1.4 to the financial statements.
2 NPAT (excluding significant items) is a non-IFRS measure. This measure is applied consistently year on year and used internally by management to
assess the performance of the business and hence is provided to enable an assessment of remuneration compared to Group performance. Refer
to the Operating and Financial Review for reconciliation to statutory net profit after tax.
Group performance is linked to the STI Plan through underlying EBIT hurdles. Group performance is linked to the LTI
plan through the DEPS and TSR targets.
The Group continues to operate in intensively competitive markets. Executive variable remuneration outcomes are
dependent on the Company and Group’s financial performance and were below target level in FY17, reflecting the
Board’s commitment to maintaining the link between executive remuneration and Company performance.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Remuneration
Report
77
c. FY17 Executive remuneration outcomes
Under the design of the STI plan, a pool may be available
for distribution where the Group’s underlying EBIT
threshold target is met as set out in section 1.a of the
Remuneration Report.
Following achievement of 94 per cent of the Group’s
underlying EBIT target for FY17, a pool of 25 per cent of the
on-target amount may be paid as STI awards to executives.
The pool awarded to executives for FY17 amounts
to 12 per cent of the on-target entitlement.
Individual STI award outcomes
The MD & CEO’s performance was assessed by the
Chairman and the Committee based on his individual
performance against KPIs. Information on KPIs for the
MD & CEO is set out in section 1.a.ii. An STI award may
have been made to the MD & CEO under the terms and
conditions of the STI plan and based on the strength of
his individual performance against KPIs including relating
to broadcast ratings performance, digital audience
growth, employee safety and achievement of cost
efficiencies and transformation targets. However, the MD
& CEO asked not to be considered for an STI award. The
Board determined that it would not be appropriate for an
STI award to be made to the MD & CEO.
In determining individual awards and the proportion of
on-target award made to each executive, the MD & CEO
and the Committee had regard to the achievement of
executives against their KPIs, which were determined on
an individual basis consistent with key operational and
strategic objectives of the Company, as determined by
the Board.
STI awards were made to executives who delivered
against particular significant KPIs. These include
delivering the 22nd consecutive half of TV ratings and
revenue leadership, multiplatform delivery of major
premium content – including Rio 2016 Olympics, AFL,
Australian Open Tennis and key owned programming,
rapid, low-cost deployment of new digital products,
significant increases in ventures investment portfolio
value, continued strong growth in global commissions
and program sales and delivery of focused cost reduction
and transformation initiatives to meet market demands.
The table below outlines the STI award outcomes for each executive in FY17.
Executive
MD & CEO – Tim Worner
Group Executive, Human Resources – Melanie Allibon1
Chief Revenue Officer – Kurt Burnette
Chief Digital Officer – Clive Dickens
Group Chief – Corporate and Regulatory Affairs – Bridget Fair
Chief Financial Officer – Warwick Lynch
Group Executive Human Resources – Katie McGrath2
Commercial Director – Bruce McWilliam
Chief Executive Officer WA – Chris Wharton1
Chief Executive Officer, Pacific Magazines – Peter Zavecz1
% of
% of
on-target FY17
STI paid in cash
FY17 STI
deferred into
restricted shares
% of
on-target FY17
STI forfeited
0
0
6
11.5
14
12
NA
11
0
0
0
0
6
11.5
14
12
NA
11
0
0
100
100
88
77
72
76
NA
78
100
100
1 Resigned or retired during the year and as a result was not eligible for and STI award in FY17.
2 KA McGrath’s participation in the STI plan commences from FY18.
The remuneration in detail table in section 1.d contains a comparison to FY16 incentive payments.
78
d. Total Remuneration Earned by Executives (non-statutory disclosures)
The following table sets out the actual remuneration
earned by the Group’s executives in FY17. The value
of remuneration includes the equity grants where the
executive received control of the shares in FY17.
The purpose of this table is to provide a summary of the
actual remuneration outcomes received in either cash or
vested equity.
Due to this, the values in this table will not reconcile with
those provided in the statutory disclosures in table 1.e.
For example, table 1.e. discloses the value of LTI grants
which may or may not vest in future years, whereas this
table discloses the value of LTI grants from previous years
which vested in FY17.
KMP
TG Worner
Cash
salary
and fees
Other
remun-
eration1
Cash
bonus
(STI)
Year
$
$
2017
2,580,384
160,451
$
–
2016
2,580,692
114,323
500,000
MJ Allibon4
(resigned 16 December 2016)
2017
2016
173,393
27,989
–
374,442
34,124
40,000
KJ Burnette
2017
1,230,384
38,865
37,500
2016
1,230,692
164,960
75,000
CR Dickens
BC Fair
WO Lynch5
KA McGrath
BI McWilliam
CS Wharton
(retired 30 April 2017)
P Zavecz6
(resigned 30 September 2016)
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
530,384
33,419
31,797
530,692
62,604
150,000
530,384
17,215
38,672
530,692
36,485
50,000
705,384
28,899
43,047
655,692
53,155
29,344
5,667
–
–
–
–
–
805,384
91,438
46,407
805,692
69,631
125,000
804,031
102,107
918,667
17,542
145,058
4,237
580,692
33,997
–
–
–
–
Total Executives
2017
7,534,130
510,287
197,423
Total Executives
2016
8,207,953
586,821
940,000
Deferred
STI vested
in the
year2
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
LTI
vested in
the year2
Termin-
ation
benefits
Remuneration
“earned” for
20173
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
58,856
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
150,000
–
$
2,740,835
3,195,015
260,238
448,566
1,306,749
1,470,652
595,600
743,296
586,271
617,177
777,330
708,847
35,011
–
943,229
1,000,323
906,138
936,209
299,295
614,689
208,856
8,450,696
–
9,734,774
1. Other remuneration includes the cash value of non-monetary
benefits, superannuation, annual leave and long service leave
entitlements and any fringe benefits tax payable on non-monetary
benefits. The elements of other remuneration are valued consistently
with the equivalent benefits included in the statutory disclosure table
below.
2. Refers to equity based plans from prior years that have vested in the
current year. The value is calculated using the 5 day Volume Weighted
Average Price (VWAP) of Company shares on the vesting date.
3. Refers to the total value of remuneration earned during FY17, being
the sum of the prior columns.
4. Termination benefits for MJ Allibon are comprised of remuneration
paid to MJ Allibon in lieu of notice.
5. WO Lynch was appointed Chief Financial Officer on 1 March 2016.
Prior to his appointment, he was Acting Chief Financial Officer from
5 January 2015. His fixed remuneration was reviewed and increased
on 1 March 2016 following his appointment to the role.
6. Termination benefits for P Zavecz are comprised of 47 week non-
compete payment.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Remuneration
Report
79
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80
f. Service Agreements
The terms of employment for the MD & CEO, 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.
Name
TG Worner
KJ Burnette
CR Dickens
BC Fair
WO Lynch
KA McGrath
BI McWilliam
Duration of Contract
Period of Notice Required to
Terminate the Contract
Contractual
Termination Benefits
Three years1
Open ended
Open ended
Open ended
Open ended
Open ended
Open ended
Twelve months’ notice
Three months’ notice
Six months’ notice
Three months’ notice
Six months’ notice
Three months’ notice
Three months’ notice
Nil
Nil
Nil
Nil
Nil
Nil
Nil
1. At the end of the first anniversary of the commencement date either the Company or TG Worner had an option to extend the term for a further year.
If such option was exercised then on the second anniversary of the commencement date either the Company or TG Worner had an option to extend
the term for an additional year. The first and second options to extend TG Worner’s contract by one year have each been exercised.
2. Non-Executive Director Remuneration
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 $1,900,000, which was approved at the 2013 AGM
held on 13 November 2013. The aggregate of payments
to NEDs in FY17 did not exceed the approved amount.
The fees for the year to 24 June 2017 were $135,000 per
annum for Non-Executive Directors and $335,000 per
annum to the Chairman. In addition, a fee of $40,000
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 Chairman is not eligible to
receive Committee fees. The Company’s statutory
superannuation contributions are included in these
amounts.
During FY17, Non- Executive Director fees were reviewed
by Remuneration & Nomination Committee. On the
Committee’s recommendation, the Board determined
that, in view of the considerable time commitment and
wide range of responsibilities that the Audit & Risk
Committee Chair consistently fulfils, the Audit & Risk
Committee Chair fee be increased from $26,000 to
$40,000 from 1 July 2016. All other Non-Executive
director fees have remained unchanged since 1 July
2011.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Remuneration
Report
81
b. Non-Executive Remuneration in Detail
Details of the remuneration of the Company’s Non-Executive Directors for the year ended 24 June 2017 are set out in
the following table.
Short–term benefits
Cash salary
and fees
Cash bonus
& incentives
Non–Executive directors of the Company
KM Stokes AC – Chairman
JH Alexander
Dr ME Deaker
D Evans
PJT Gammell
JG Kennett AC
SC McGregor
(resigned 2 February 2017)
M Malone
RK Stokes
Total Non-Executive Directors
Total Non-Executive Directors
Year
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
$
315,384
315,692
141,553
141,553
159,000
159,000
168,950
156,165
136,073
136,073
132,420
126,281
80,510
126,281
136,073
125,426
132,420
132,420
1,402,383
1,418,891
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Post–
employment
benefits
Non–
monetary
benefits
Super–
annuation
$
$
27,129
12,510
–
–
–
–
–
–
–
–
–
–
–
–
–
–
19,616
19,308
13,447
13,447
–
–
16,050
14,836
12,927
12,927
12,580
11,997
7,648
11,997
12,927
11,915
Total
$
362,129
347,510
155,000
155,000
159,000
159,000
185,000
171,001
149,000
149,000
145,000
138,278
88,158
138,278
149,000
137,341
–
4,529
27,129
17,039
12,580
12,580
107,775
109,007
145,000
149,529
1,537,287
1,544,937
3. Key Management Personnel Equity Transactions and Holdings
a. Equity Incentive Plan Holdings
FY17 grants
Long-Term Incentive Plan
As described above, the Company operates an LTI
plan and an STI plan for executives. Under the LTI plan,
executives may be granted performance rights. Under
the STI plan a portion of the award may be granted to
executives as restricted shares. Equity grants under the
LTI plan and the STI plan are made in accordance with
the Seven West Media Equity Incentive Plan rules.
During FY17, the Committee conducted a review of the
LTI plan, which will be ongoing in FY18. As a result, an
award to executives was not made under the LTI plan
in FY17.
Prior year grants
Details of the performance rights that remain unvested
and on-foot, granted to executives under the LTI plan in
prior years, are below.
82
Executive
Number of
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
FY17
TG Worner
2,031,250
4 April 2016
1 September 2018
$0.47
MJ Allibon
205,078
4 April 2016
1 September 2018
$0.47
KJ Burnette
488,281
4 April 2016
1 September 2018
$0.47
CR Dickens
214,843
4 April 2016
1 September 2018
$0.47
BC Fair
214,843
4 April 2016
1 September 2018
$0.47
WO Lynch
94,401
4 April 2016
1 September 2018
$0.47
BI McWilliam 429,687
4 April 2016
1 September 2018
$0.47
CS Wharton
390,625
4 April 2016
1 September 2018
$0.47
P Zavecz
234,375
4 April 2016
1 September 2018
$0.47
TG Worner
833,333
15 June 2015
1 September 2017
$0.11
MJ Allibon
84,134
15 June 2015
1 September 2017
$0.11
KJ Burnette
192,307
15 June 2015
1 September 2017
$0.11
CR Dickens
38,782
15 June 2015
1 September 2017
$0.11
BC Fair
88,141
15 June 2015
1 September 2017
$0.11
BI McWilliam 176,282
15 June 2015
1 September 2017
$0.11
CS Wharton
160,256
15 June 2015
1 September 2017
$0.11
P Zavecz
55,769
15 June 2015
1 September 2017
$0.11
TG Worner
619,048
2 June 2014
1 September 2016
$0.60
MJ Allibon
62,500
2 June 2014
1 September 2016
$0.60
KJ Burnette
142,857
2 June 2014
1 September 2016
$0.60
BC Fair
59,524
2 June 2014
1 September 2016
$0.60
BI McWilliam 130,952
2 June 2014
1 September 2016
$0.60
CS Wharton
119,048
2 June 2014
1 September 2016
$0.60
$0.86
$0.86
$0.86
$0.86
$0.86
$0.86
$0.86
$0.86
$0.86
$0.88
$0.88
$0.88
$0.88
$0.88
$0.88
$0.88
$0.88
$1.62
$1.62
$1.62
$1.62
$1.62
$1.62
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
% for-
feited in
FY17
–
100
–
–
–
–
–
100
100
–
100
–
–
–
–
100
100
100
100
100
100
100
100
Financial
year in
which grant
may vest
June 2019
NA
June 2019
June 2019
June 2019
June 2019
June 2019
NA
NA
June 2018
NA
June 2018
June 2018
June 2018
June 2018
NA
NA
NA
NA
NA
NA
NA
NA
The maximum possible total value of each grant assuming all vesting conditions are met is calculated as the number of
performance rights (split 50:50 between TSR and DEPS) times the fair value. If all vesting conditions are met, this will be received
by each executive in the year of vesting. The minimum possible total value is nil where the vesting conditions are not met.
Short–Term Incentive Plan
No equity was granted as remuneration in prior years to executives under the STI plan. 50 per cent of FY17 STI awards
will be granted as restricted shares to executives under the STI plan on or about 1 October 2017. The estimated
number and fair value of the restricted shares at 24 June 2017 is based on 50 per cent of the STI awards.
Executive
Estimated number of
shares
Estimated fair value
per share at Grant Date
TSR component ($)
Number of shares
vested during FY17
% forfeited in FY17
Financial year in which
grant may vest
KJ Burnette
53,571
CR Dickens
45,424
BC Fair
WO Lynch
55,245
61,495
BI McWilliam 66,294
$0.70
$0.70
$0.70
$0.70
$0.70
–
–
–
–
–
–
–
–
–
–
June 2019
June 2019
June 2019
June 2019
June 2019
The maximum possible total value of each grant assuming all vesting conditions are met is the number of shares times
the fair value based on the share price as at 24 June 2017. If all vesting conditions are met, this will be received by each
executive in the year of vesting. The minimum possible total value is nil where the vesting conditions are not met.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Remuneration
Report
83
Legacy Incentive Plan
An LTI plan was in place for CS Wharton in the 2010, 2011 and 2012 financial years. No grant was made under the LTI
plan in respect of the 2012 financial year due to business performance during the period. The grant made under the
LTI plan in respect of the 2010 financial year did not vest and was forfeited in the 2016 financial year. The operation of
this LTI plan has otherwise been discontinued. From the 2013 financial year CS Wharton was transitioned to the Seven
West Media LTI plan.
Details of the vesting profile of the award that was on-foot during FY17 to CS Wharton is detailed below.
Executive
Number of
share rights
Grant Date
Expiry Date
Fair value per
right at grant
date ($)
Number of
rights vested
during
FY17
CS Wharton1
69,986
12 August 2011 12 August 2016
$1.75
–
1 Granted in the 2012 financial year in relation to performance in the 2011 financial year.
%
forfeited
in FY17
100
Financial year
in which grant
may vest
NA
The Company performed the five year TSR test on CS Wharton’s 12 August 2011 performance rights as at 11 August
2016 in accordance with the TSR hurdles outlines below and determined that 0% of the performance rights vested. The
five year test was the final test and as a result CS Wharton’s 12 August 2011 performance rights were forfeited.
CS Wharton LTI vesting conditions
How is TSR
performance
measured?
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:
Aggregate DEPS over the three years
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 DEPS performance rights that
vest (%)
Nil
50%
Between 50% and 100%,
increasing on a straight-line basis
100%
Between 100% and 150%,
increasing on a straight-line basis
150%
There are three test dates for the performance rights, being 3, 4 and 5 years after the date of grant.
Performance rights do not carry any dividend or voting rights.
When will
performance be
tested?
Do the performance
rights carry dividend
or voting rights?
What happens
in the event of a
change in control?
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.
What happens if the
participant ceases
employment?
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.
There are no disposal restrictions once the performance rights vest.
Are there any
disposal
restrictions once the
performance rights
vest?
84
Total Performance Rights Holdings
The total number of performance rights in the Company held during the financial year by each Director of Seven West
Media Limited and other Key Management Personnel of the Group are set out in the table below. Performance rights
do not carry any dividends or voting rights prior to vesting.
2017
TG Worner
MJ Allibon2
KJ Burnette
CR Dickens
BC Fair
WO Lynch
BI McWilliam
CS Wharton2
P Zavecz2
Balance
at start of
the year
3,483,631
351,712
823,445
253,625
362,508
94,401
736,921
739,915
290,144
Rights granted
as remuneration
Exercised
Expired or
Forfeited
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(619,048)
(351,712)
(142,857)
–
(59,524)
–
(130,952)
(739,915)
(290,144)
Balance
at the end
of the year1
2,864,583
–
680,588
253,625
302,984
94,401
605,969
–
–
1 The balance of performance rights at the end of the year are unvested rights.
2 Closing details are as at date of cessation as KMP.
b. Equity Holdings and Transactions
The fair value of equity granted as remuneration is amortised over the service period and therefore remuneration in
respect of equity grants may be reported in future years. The following table summarises the maximum value of these
grants that will be reported in the remuneration tables in future years, assuming all vesting conditions are met. The
minimum value of the grant is nil should vesting conditions not be satisfied.
Executive
KJ Burnette
CR Dickens
BC Fair
WO Lynch
Award
Restricted Shares (FY17 STI Deferred Component)
Restricted Shares (FY17 STI Deferred Component)
Restricted Shares (FY17 STI Deferred Component)
Restricted Shares (FY17 STI Deferred Component)
BI McWilliam
Restricted Shares (FY17 STI Deferred Component)
2018
$
18,750
15,898
19,336
21,523
23,203
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Remuneration
Report
85
c. Equity Holdings and Transactions
The number 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 held directly, indirectly, beneficially and including their
personally-related entities are set out in the table below.
2017
Directors of the Company
KM Stokes AC
JH Alexander
Dr ME Deaker
D Evans
PJT Gammell
JG Kennett AC
M Malone
SC McGregor1
RK Stokes
Executive director of the Company
TG Worner
Key Management Personnel of the Group
MJ Allibon1
KJ Burnette
CR Dickens
BC Fair
WO Lynch
KA McGrath2
BI McWilliam
CS Wharton1
P Zavecz1
Balance at start
of the year
Shares granted
as compensation
Purchases and
other changes
during the year
Balance at the
end of the year
619,753,734
55,768
26,161
927,803
329,216
75,000
133,000
29,821
240,466
293,810
13,201
8,765
4,000
–
–
–
611,044
99,411
30,363
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(61,127)
–
619,753,734
55,768
26,161
927,803
329,216
75,000
133,000
29,821
240,466
293,810
13,201
8,765
4,000
–
–
–
611,044
38,284
30,363
1 Closing details are as at date of cessation as KMP.
2 Opening details are as at date of commencement as KMP.
86
4. Loans and Other Transactions with Key
Management Personnel
During FY17, a company associated with a Director, Mr
Jeffrey Kennett AC, was party to a consulting agreement
with the Group. The consulting agreement provides for
the services of Mr Jeffrey Kennett AC to be supplied
to Seven West Media to perform the role of political
commentator, independent of his duties as a non-
executive director with Seven West Media. Total fees paid
during the year in relation to this consulting agreement
were $200,000 (2016: $200,000). There were no other
transactions with Key Management Personnel during
FY17.
There were no loans provided to Key Management
Personnel during FY17.
5. Services from Remuneration Consultants
During FY17 Mercer Consulting (Australia) Pty Ltd
(Mercer) was engaged by the Company to provide
information on market remuneration practices and Ernst
and Young (EY) was engaged by the Company to assess
TSR performance for the Company’s Long Term Incentive
plan and Legacy Long Term Incentive Plan. In the course
of providing this information, the Board is satisfied
that neither Mercer nor EY made any remuneration
recommendations relating to KMP as defined by the
Corporations Act.
End of remuneration report.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Auditor’s Independence
Declaration
87
Auditor’s Independence
Declaration
Lead Auditor’s Independence Declaration under Section 307C
of the Corporations Act 2001
To the Directors of Seven West Media Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Seven
West Media Limited for the financial year ended 24 June 2017 there have been:
i. no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
ii. no contraventions of any applicable code of professional conduct in relation
to the audit.
KPMG
Tracey Driver
Partner
Sydney
16 August 2017
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
88
Financial
statements
Seven West Media Limited
For the year ended 24 June 2017
Seven West Media (SWM) is a for-profit company
limited by shares and incorporated in Australia whose
shares are publicly traded on the Australian Securities
Exchange. 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 general purpose financial report has
been prepared in accordance with the requirements
of the Corporations Act 2001 and the Australian
Accounting Standards and other authoritative
pronouncements of The Australian Accounting
Standards Board and International Financial Reporting
Standards (IFRS).
All new and amended Accounting Standards and
Interpretations issued by the AASB that are relevant
to the Group and effective for the current reporting
period have been adopted. Refer to Note 7.4 for
further details.
The consolidated financial statements were authorised
for issue by the Board of Directors on 16 August 2017.
The financial statements have been prepared using
the historical cost basis except for derivative financial
instruments which have been measured at fair value
and share rights which have been valued using option
pricing models.
The financial statements are presented in Australian
dollars (AUD) and all values are rounded to the nearest
$1,000 unless otherwise stated under the option
available to the Company under Australian Securities
and Investments Commission (ASIC) Corporations
Instrument 2016/191.
The Group presents reclassified comparative
information where required for consistency with the
current year’s presentation.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Financial
statements
89
90
91
92
93
94
139
140
146
147
148
Table of Contents
Financial Statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Director’s Declaration
Independent Auditor’s Report
ASX Information
Company Information
Investor Information
Shareholder Information
Note Index
1. Group Performance
3. Other Key Balance Sheet Items
6. Group Structure
1.1 Segment Information
3.1
Intangible Assets
6.1 Equity Accounted Investees
1.2 Revenue and
Other Income
1.3 Expenses
1.4 Significant Items
1.5 Earnings Per Share
3.2 Property, Plant
and Equipment
3.3 Provisions
4. Taxation
4.1 Taxes
2. Working Capital
2.1 Cash and Cash Equivalents
4.2 Deferred Tax Assets
and Liabilities
2.2 Trade and Other
Receivables
2.3 Program Rights and
Inventories
2.4 Trade and Other Payables
2.5 Commitments
5. Capital Management
5.1 Borrowings
5.2 Share Capital
5.3 Dividends
6.2 Investments in
Controlled Entities
6.3 Parent Entity Financial
Information
6.4 Business Combinations
6.5 Related Party
Transactions
7. Other
7.1 Remuneration of Auditors
7.2 Contingent Liabilities
7.3 Events Occurring after
the Reporting Date
5.4 Share-Based Payments
7.4 Summary of
5.5 Capital and Financial Risk
Management
Other Significant
Accounting Policies
90
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 24 June 2017
Revenue
Other income
Revenue and other income
Expenses
Impairment of intangible assets
Impairment of investments and other assets
Redundancy and restructure costs
Onerous contracts
Net loss on disposal of investments
Share of net profit (loss) of equity accounted investees
(Loss) profit before net finance costs and tax
Finance costs
Finance income
(Loss) profit before tax
Tax benefit (expense)
(Loss) profit for the year
Other comprehensive income (expense)
Items that may be reclassified subsequently to profit or loss:
Effective portion of changes in fair value of cash flow hedges
Exchange differences on translation of foreign operations
Tax relating to items that may be reclassified subsequently to profit or loss
Other comprehensive income (expense) for the year, net of tax
Notes
1.2
1.2
1.3
1.4
1.4
1.4
1.4
1.4
6.1
2017
$’000
2016
$’000
1,673,575
1,720,541
5,409
6,142
1,678,984
1,726,683
(1,418,048)
(1,395,746)
(558,768)
(276,424)
–
–
(6,881)
(32,933)
(139,582)
(7,138)
–
–
449
(12,811)
(727,408)
285,193
(40,044)
1,490
(41,707)
3,927
(765,962)
247,413
4.1
20,966
(63,124)
(744,996)
184,289
5,011
(810)
(1,504)
2,697
(2,640)
(41)
792
(1,889)
Total comprehensive (expense) income is attributable to:
(742,299)
182,400
Total comprehensive (expense) income attributable to:
Owners of the Company
Non–controlling interests
Total comprehensive (expense) income for the year
Earnings per share for (loss) profit attributable to the ordinary
equity holders of the Company
(741,629)
182,400
(670)
–
(742,299)
182,400
Basic earnings per share
Diluted earnings per share
1.5
1.5
(49.4 cents)
12.2 cents
(49.4 cents)
12.2 cents
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 91
Consolidated Statement of Financial Position
As at 24 June 2017
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Current tax receivable
Program rights and inventories
Other assets
Total current assets
Non–current assets
Program rights
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
Deferred tax liabilities
Borrowings
Total non–current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Non–controlling interests
Accumulated deficit
Total equity
Notes
2.1
2.2
2017
$’000
2016
$’000
69,490
94,788
276,074
295,592
3,972
–
2.3
186,255
234,285
4,359
6,718
540,150
631,383
2.3
6.1
3.2
3.1
4.2
2.4
3.3
2.4
3.3
4.2
5.1
2,559
51,362
21,384
29,205
216,010
23,147
159,559
209,097
1,019,902
1,552,962
8,653
4,181
–
3,873
1,267,600
2,034,294
1,807,750
2,665,677
279,488
322,555
84,929
36,357
–
98,295
34,231
4,900
400,774
459,981
24,053
164,399
4,456
–
39,324
32,727
8,474
61,878
795,159
810,752
988,067
953,155
1,388,841
1,413,136
418,909
1,252,541
5.2
3,393,546
3,393,145
(2,526)
(1,758)
(5,021)
–
(2,970,353)
(2,135,583)
418,909
1,252,541
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Financial statements 92
Consolidated Statement of Changes in Equity
For the year ended 24 June 2017
Cash
flow
hedge
reserve
Equity
compen-
sation
reserve
Reserve
for own
shares
Foreign
currency
translation
reserve
Share
capital
Accum-
ulated
deficit
Non-
cont-
rolling
Interests
Total
Total
Equity
Notes
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Balance at 27 June 2015
3,396,847
(5,182)
3,771
(1,517)
95
(2,199,022)
1,194,992
– 1,194,992
Balance at 25 June 2016
3,393,145
(7,030)
3,472
(1,517)
54
(2,135,583)
1,252,541
–
1,252,541
–
–
–
–
–
–
–
–
–
(299)
(299)
–
–
–
–
–
–
–
–
–
–
–
–
–
(41)
–
(41)
184,289
184,289
–
(2,640)
–
–
–
(41)
792
(1,889)
–
–
–
–
–
184,289
(2,640)
(41)
792
(1,889)
(41)
184,289
182,400
–
182,400
–
–
–
–
–
–
–
(3,805)
103
(120,850)
(120,850)
–
(299)
(120,850)
(124,851)
–
–
–
–
–
(3,805)
103
(120,850)
(299)
(124,851)
–
–
–
–
–
–
–
–
–
–
–
–
–
(810)
–
(810)
(744,326)
(744,326)
(670)
(744,996)
–
–
–
–
5,011
(810)
(1,504)
2,697
–
–
–
–
5,011
(810)
(1,504)
2,697
–
(810)
(744,326)
(741,629)
(670)
(742,299)
Profit for the year
Cash flow hedge losses taken
to equity
Foreign currency translation
differences
–
–
–
(2,640)
–
–
Tax on other comprehensive
–
792
income
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 bought back on market
Shares issued pursuant to
executive and employee share
buy back
Dividends paid
Share based payment expense
–
(1,848)
–
(1,848)
5.2
5.2
5.3
(3,805)
103
–
–
–
–
–
–
–
Total transactions with owners
(3,702)
Loss for the year
Cash flow hedge gains taken to
equity
Foreign currency translation
differences
–
–
–
–
5,011
–
Tax on other comprehensive
–
(1,504)
–
3,507
–
3,507
5.2
401
income
Other comprehensive (expense)
income for the year, net of tax
Total comprehensive (expense)
income for the year
Transactions with owners in
their capacity as owners
Shares sold pursuant to
cancellation of loan plan
Shares transferred from treasury
pursuant to vesting of share
buy back
Dividends paid
5.3
Share based payment expense
Acquisition of NCI
–
–
–
–
–
–
–
–
–
–
–
–
(920)
920
–
(202)
–
–
–
–
(1,122)
920
–
–
–
–
–
–
–
–
401
–
(90,444)
(90,444)
(202)
–
–
–
–
–
–
401
–
(90,444)
(202)
–
(1,088)
(1,088)
Total transactions with owners
401
(90,444)
(90,245)
(1,088)
(91,333)
Balance at 24 June 2017
3,393,546
(3,523)
2,350
(597)
(756)
(2,970,353)
420,667
(1,758)
418,909
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Consolidated Statement of Cash Flows
For the year ended 24 June 2017
93
Notes
2017
$’000
2016
$’000
Cash flows related to operating activities
Receipts from customers
Payments to suppliers and employees
Dividends received from equity accounted investees
6.1
Dividends received other
Interest and other items of similar nature received
Interest and other costs of finance paid
Income taxes paid, net of refunds
Net operating cash flows
Cash flows related to investing activities
Proceeds from sale of property, plant and equipment
Payments for intangibles
Payments for equity accounted investees
Proceeds from sale of equity accounted investees
Payments for other investments
Payment for purchase of controlled entities, net of cash acquired
Loans issued to investees
Net investing cash flows
Cash flows related to financing activities
Payment for share buy back
Proceeds from shares sold pursuant to cancellation of loan plan
Payments for transaction costs arising on share issues
Proceeds from shares issued pursuant to executive and employee share plans
Proceeds from borrowings
Repayment of borrowings
Dividends paid
Net financing cash flows
Net 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
2.1
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
1,840,818
1,872,818
(1,614,036)
(1,611,229)
6,280
206
1,059
12,375
1,479
3,469
(37,648)
(36,905)
(56,437)
(40,419)
2.1
140,242
201,588
1,807
(11,939)
(3,165)
6,500
(3,014)
(18,839)
(9,804)
(58,458)
–
566
–
–
183
(9,705)
(2,544)
–
(11,369)
(301)
(10,973)
(56,911)
(3,805)
–
(1,822)
103
346,000
91,563
(363,204)
(156,923)
5.3
(90,444)
(120,850)
(107,082)
(191,734)
(25,298)
(47,057)
94,788
69,490
141,845
94,788
Payments for purchases of property, plant and equipment
(20,004)
(22,202)
Financial statements 94
SECTION 1
Group Structure
1.1. Segment Information
1.1A. Description of Segments
Accounting policy
For management purposes, the Group is organised into business segments based on its products and services and has four
reportable segments, as follows:
Reportable Segment Description of Activities
Television
The West
Production and operation of commercial television programming and stations.
Publishers of newspapers and insert magazines in Western Australia; Quokka (weekly classified
advertising publication); Colourpress, Digital publishing and West Australian Publishers.
Pacific
Publisher of magazines in print and digital editions.
Other Business
and New Ventures
Made up of equity accounted investees including Yahoo7, Draftstars, Community Newspapers,
Starts at 60, New You, TX Australia, Radio (radio stations broadcasting in regional areas of Western
Australia), RED Live as well as Presto and Australian News Channel (until disposal).
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, Business Segment Chief Executive
Officers and other relevant members of the executive team.
Segment performance is evaluated based on a measure of profit / (loss) before significant items, net finance costs and tax.
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 makers and as such, are not
required to be disclosed.
1.1B. Segment Information
Year ended 24 June 2017
REF
$’000
$’000
Television
The West
Other
Business
and New
Ventures
Corporate
[B]
$’000
$’000
Pacific
$’000
Revenue from continuing operations
1,275,871
217,242
167,991
12,471
Other revenue
Share of net profit of equity
accounted investees
Revenue, other income and share
of net profit of equity accounted
investees
5,109
300
–
–
–
–
–
449
1,280,980
217,542
167,991
12,920
–
1,679,433
Expenses
(1,009,845)
(170,877)
(161,808)
(13,907)
(16,336)
(1,372,773)
Profit (loss) before significant items,
net finance costs, tax, depreciation
and amortisation
271,135
46,665
Depreciation and amortisation
[A]
(21,476)
(20,633)
6,183
(2,707)
(987)
(390)
(16,336)
306,660
(69)
(45,275)
Profit (loss) before significant items,
net finance costs and tax
249,659
26,032
3,476
(1,377)
(16,405)
261,385
Total
$’000
1,673,575
5,409
449
–
–
–
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845
95
Total
$’000
1,720,541
6,142
(12,811)
Year ended 25 June 2016
REF
$’000
$’000
Television
The West
Other
Business
and New
Ventures
Corporate
[B]
$’000
$’000
Pacific
$’000
Revenue from continuing operations
1,256,114
226,994
201,224
36,209
Other revenue
Share of net loss of equity
accounted investees
Revenue, other income and share of
3,386
1,535
–
1,221
–
–
–
(12,811)
–
–
–
net loss of equity accounted investees
1,259,500
228,529
201,224
24,619
–
1,713,872
Expenses
(945,723)
(168,033)
(190,749)
(29,780)
(16,083)
(1,350,368)
Profit (loss) before significant items,
net finance costs, tax, depreciation
and amortisation
313,777
60,496
10,475
(5,161)
(16,083)
363,504
Depreciation and amortisation
[A]
(22,080)
(21,295)
(1,455)
(461)
(87)
(45,378)
Profit (loss) before significant items,
net finance costs and tax
291,697
39,201
9,020
(5,622)
(16,170)
318,126
A. Excludes program rights amortisation which is included in media content expenses (refer note 1.3).
B. Corporate is not an operating segment. The amounts presented are unallocated costs and revenue.
1.1C. Other segment information
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 items from the operating segments.
Reconciliation of profit before significant items, net finance costs and tax
Profit before significant items, net finance costs and tax
Finance costs
Finance income
Profit before tax excluding significant items
Significant items before tax (refer note 1.4)
(Loss) profit before tax
2017
$’000
2016
$’000
261,385
318,126
(40,044)
1,490
(41,707)
3,927
222,831
280,346
(988,793)
(765,962)
(32,933)
247,413
Financial statements
96
1.2. Revenue and Other Income
Accounting policy
Revenue recognition and measurement
The Group recognises revenue when:
> the 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.
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.
Revenue is recognised for the major business activities as follows:
Description of Activities
[A] Advertising
[B] Circulation
Recognised when the advertisement has been published or broadcast.
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.
[C] Program sales and affiliate fees
Program sales and affiliate revenue is recognised in line with the contract terms
and conditions.
[D] Rendering of services
[E] Other revenue includes:
Government grants
Mostly relating to printing services. The revenue is recognised when the service
has been performed.
Recognised initially as deferred income when it is highly probable that the grant
will be received. This may include the following:
(i) cash grants or funding
Recognised when all attaching conditions will be complied with.
(ii) reimbursement of expense
Recognised over the periods necessary to match the costs that it is intended to
compensate.
(iii) reimbursement for
Recognised over the lifetime of the asset on a systematic basis.
cost of asset
Rental income
Dividends
Recognised on a straight line basis over the term of the lease.
Recognised when the right to receive payment is established.
Sales revenue
Advertising revenue
Circulation revenue
Program sales and affiliate fees
Rendering of services
Other revenue
Total sales revenue
Other income
Dividends received
Sundry income
Net gain on disposal of property, plant and equipment and computer software
Gain on investment at fair value
Total other income
REF
[A]
[B]
[C]
[D]
[E]
2017
$’000
2016
$’000
1,239,275
1,262,424
169,868
187,231
203,185
189,305
26,634
34,613
22,970
58,611
1,673,575
1,720,541
206
2,472
2,731
–
5,409
1,479
3,328
116
1,219
6,142
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 97
1.3. Expenses
(Loss) 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
Rental expense relating to operating leases
Other expenses from ordinary activities
Total expenses
Included in the expenses above are the specific items [A] to [B] from continuing operations:
[A] Depreciation of property, plant and equipment
Amortisation of intangible assets
Television program rights amortisation
Total depreciation and amortisation
[B] Employee benefits expense
Defined contribution superannuation expense
Total employee benefits expense
REF
[A]
[A]
[B]
2017
$’000
2016
$’000
(45,275)
(45,378)
(44,599)
(51,169)
(93,070)
(103,318)
(661,865)
(562,719)
(399,765)
(409,954)
(9,611)
(9,190)
(18,501)
(18,653)
(17,566)
(57,516)
(24,214)
(23,673)
(103,582)
(114,176)
(1,418,048)
(1,395,746)
(34,890)
(37,039)
(10,385)
(8,339)
(114,909)
(131,811)
(160,184)
(177,189)
(362,986)
(375,573)
(36,779)
(34,381)
(399,765)
(409,954)
Financial statements
98
1.4. Significant Items
(Loss) profit before tax expense includes the following specific expenses for which disclosure is relevant in explaining the financial
performance of the Group:
Impairment of Television goodwill
Impairment of Television licences
Impairment of Pacific and The West goodwill
Impairment of Pacific and The West mastheads
Impairment of other intangible assets
Total impairment of intangible assets
Impairment of equity accounted investees
Impairment of fixed assets
Impairment of other assets
Total impairment of investments and other assets
Redundancy and restructure costs
Onerous contracts
Net loss on disposal of investments
Total significant items before tax
Tax benefit
Net significant items after tax
REF
[A]
[A]
[A]
[A]
[A]
[B]
[A]
[C]
[D]
[E]
[F]
2017
$’000
(3,450)
(432,388)
(28,879)
(80,463)
(13,588)
(558,768)
(179,493)
(34,165)
(62,766)
(276,424)
2016
$’000
–
–
–
–
–
–
–
–
–
–
(6,881)
(32,933)
(139,582)
(7,138)
–
–
(988,793)
(32,933)
76,988
9,880
(911,805)
(23,053)
A. The impairments were recognised as a result of changes to key
B. An impairment review of the Group’s equity accounted investees and
assumptions in the Group’s cash flow forecasts, these include:
its loans was performed, resulting in an impairment of $179.5m.
Television
> Medium and long term growth rates for traditional Free to Air
television metro advertising market
C. The recoverable amount of program rights, inventories and other
assets were lower than the carrying value, resulting in an impairment
of $62.8m.
D. The redundancy and restructure costs relate to transformation
The West and Pacific
programs across the Group.
> Further declines in circulation and advertising revenue in print
publishing businesses.
Refer note 3.1 for details.
E. The Group has recognised an onerous contract provision in relation
to its television legacy output deals, US content, one-off sporting
events rights and other service contracts. Refer to note 3.3 for
disclosure of the assumptions included in the calculation of the
provision.
F. Net loss on disposal of Presto TV Pty Limited and Australian News
Channel Pty Limited investments.
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 99
1.5. Earnings Per Share
Accounting policy
Basic earnings per share
Basic earnings per share is calculated by dividing the net
profit attributable to ordinary equity holders of the Company
by the weighted average number of ordinary shares
outstanding during the financial year.
Diluted earnings per share
Diluted earnings per share is calculated by adjusting 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.
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.
REF
2017
$’000
2016
$’000
Basic earnings per share
(Loss) profit attributable to the ordinary equity holders of the Company
(49.4 cents)
12.2 cents
Diluted earnings per share
(Loss) profit attributable to the ordinary equity holders of the Company
(49.4 cents)
12.2 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.
REF
2017
$’000
2016
$’000
(744,996)
184,289
2017
2016
REF
Number
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
1,507,250,149
1,508,916,001
Adjustments for calculation of diluted earnings per share:
> 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
–
–
896,950
111,067
Weighted average number of ordinary shares and potential ordinary shares used as
the denominator in calculating diluted earnings per share
1,507,250,149
1,509,924,018
Financial statements
100
SECTION 2
Working Capital
2.1. Cash and Cash Equivalents
Accounting policy
Cash and cash equivalents in the statement of financial position and statement of cash flows includes cash on hand and
deposits held at call or with maturities of three months or less with financial institutions.
Cash at bank and on hand
2017
$’000
2016
$’000
69,490
94,788
Cash at banks earns interest at floating rates based on daily bank deposit rates.
The maximum exposure to credit risk at the reporting date is the carrying amount. The exposure to interest rate risk is discussed in
note 5.5.
Reconciliation of operating (loss) profit after tax to net cash provided by operating activities
(Loss) profit for the year:
Non-cash items:
(744,996)
184,289
Depreciation and amortisation of property, plant and equipment and intangible assets
45,275
45,378
Amortisation of television program rights
114,909
131,811
Impairment of intangible assets and equity accounted investees
Impairment of tangible assets
Net gain on disposal of property, plant and equipment, computer software and
equity accounted investees
Share based payment expense
Dividend received from equity accounted investees less share of profit of equity
accounted investees
Movement in unamortised finance costs
Other non-cash items
Changes in operating assets and liabilities, net of effect from acquisitions:
(Increase) decrease in:
Trade and other receivables
Inventories
Program rights
Other assets
Increase (decrease) in:
Trade and other payables
Program liabilities
Provisions
Other liabilities
Tax balances
Net cash inflow from operating activities
738,261
34,165
(6,057)
(202)
5,831
(592)
4,890
–
–
(116)
(299)
25,186
1,087
(14,519)
16,327
(23,196)
1,643
(435)
(41,876)
(207,217)
947
(402)
(42,458)
(12,803)
110,999
(8,358)
(75,663)
(413)
39,696
12,818
(12,992)
20,912
140,242
201,588
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 101
2.2. Trade and Other Receivables
Accounting policy
Trade 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 settled within 30-90 days
and are non-interest bearing.
The collectability of trade receivables is reviewed on an
ongoing basis. A provision for doubtful debts 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. Debts which are known to be uncollectable are
written off by reducing the carrying amounts directly.
The amount of the impairment loss of receivables is
recognised in profit or loss in other expenses. Subsequent
recoveries of amounts previously written off are credited
against other expenses in profit or loss.
Loans and other 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. 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 carried at
estimated future cash flow.
2017
$’000
2016
$’000
Current
Trade receivables
263,968
282,669
Provision for doubtful debts
(3,961)
(4,569)
Provision for sales credits and
(32,773)
(31,092)
returns
227,234
247,008
Loans and other receivables
48,840
48,584
Total trade and other
receivables
276,074
295,592
Movements in the provision for doubtful debts are as follows:
Balance at the beginning of
4,569
6,743
the financial year
Net movement in provision
recognised during the year
Amount utilised
Balance at the end of the
financial year
122
328
(730)
3,961
(2,502)
4,569
Refer to note 5.5 regarding information on the Group’s exposure to credit
and market risks, and impairment losses for trade and other receivables.
Refer to note 6.5 regarding receivables from related parties.
Key judgements, estimates and assumptions
Impairment of receivables
The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision is
assessed by taking into account the recent sales experience, the ageing of receivables, historical collection rates and specific
knowledge of the individual debtor’s financial position.
Financial statements 102
2.2. Trade and Other Receivables (continued)
The ageing of the Group’s trade receivables net of provision for sales credits and returns at the reporting date was:
$'000
Not past due
< 30 days
31 – 120 days
> 120 days
Total
Past due but not impaired
Year ended 24 June 2017
Net receivables
Provision for doubtful debts
Year ended 25 June 2016
Net receivables
Provision for doubtful debts
224,522
–
224,522
234,853
–
234,853
2.3. Program Rights and Inventories
Accounting policy
Program rights
Television program rights are recognised at the
earlier of when cash payments are made or from the
commencement of the rights period of the contract.
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.
The Group’s amortisation policy requires the amortisation
of purchased programs on a straight line basis over the
expected useful life.
The useful life of purchased programs is assessed
at least annually. Produced programs are expensed
when broadcast or in full on the twelfth month after the
completion period.
Inventories
Inventories, which includes newsprint, paper, finished
goods, raw material and work in progress, are measured
at acquisition cost, cost of manufacturing or net realisable
value. The net realisable value is the estimated achievable
selling price in the ordinary course of business less the
estimated costs through to completion and the estimated
necessary selling costs.
3,985
(2,976)
1,009
11,181
(3,867)
7,314
Current
2,353
(902)
1,451
3,293
(463)
2,830
335
(83)
252
2,250
(239)
2,011
231,195
(3,961)
227,234
251,577
(4,569)
247,008
2017
$’000
2016
$’000
Television program rights – cost less
accumulated amortisation and impairment
165,875
212,262
Newsprint and paper – at cost
Work in progress – at cost
Other raw materials –
at net realisable value
Non-current
Prepaid Television program rights
12,083
11,925
4,993
5,307
3,304
4,791
186,255 234,285
2,559
29,205
2,559
29,205
Program rights and inventory expense
Program rights and inventories recognised as an expense
during the year ended 24 June 2017 amounted to $114,909,000
(2016: $131,811,000) and $44,068,000 (2016: $47,238,000)
respectively.
Key judgements, estimates and assumptions
The Group recognises program rights at the earlier of when cash payments are made or from the commencement of the
rights period of the contract. These are capitalised and amortised over the useful life of the content. The assessment of the
appropriate carrying value of these rights requires estimation by management of the forecast future cash flows which will be
derived from that content. This estimate is based on a combination of market conditions and the value generated from the
broadcast of comparable programs.
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845
103
2.4. Trade and Other Payables
Accounting policy
Trade payables and accruals
Trade and other payables 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 from the end of the month in which they are incurred and
are non-interest bearing.
Derivative financial liabilities
Derivative financial instruments on recognised liabilities are
used 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
below. 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 any 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.
Television program liabilities
Television 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.
Current
Trade payables and accruals
Derivative financial liabilities
Television program liabilities
Non-current
Trade payables and accruals
Derivative financial liabilities
Television program liabilities
2017
$’000
2016
$’000
173,643
205,940
44
2,942
105,801
113,673
279,488
322,555
4,512
5,712
13,829
24,053
13,725
6,978
18,621
39,324
Financial statements 104
2.5. Commitments
Year ended 24 June 2017
Capital expenditure commitments
Operating lease commitments
<1 year
$’000
1–5
years
$’000
> 5 Years
$’000
Total
$’000
3,246
–
–
3,246
21,133
71,857
92,228
185,218
Contracts for purchase of television programs and sporting broadcast rights
311,003
849,453
90,705
1,251,161
Contracts for employee services
Contracts for other services
Year ended 25 June 2016
Capital expenditure commitments
Operating lease commitments
56,779
24,252
–
81,031
46,125
31,811
23,085
101,021
438,286
977,373
206,018 1,621,677
4,438
–
–
4,438
21,492
71,942
111,646
205,080
Contracts for purchase of television programs and sporting broadcast rights
261,391
807,105
234,062
1,302,558
Contracts for employee services
Contracts for other services
53,593
28,522
–
82,115
37,483
59,390
23,247
120,120
378,397
966,959
368,955
1,714,311
Types of Commitments
Capital expenditure commitments
Commitments for the acquisition of property, plant and
equipment contracted for at the reporting date but not
recognised as liabilities.
Operating lease commitments
Operating lease commitments relate to minimum lease
payments on non-cancellable leases contracted for at the
reporting date but not recognised as liabilities.
Leases in which a significant portion of the risks and rewards
of ownership are retained by the lessor are classified as
operating leases.
Payments made under operating leases (net of any incentives
received from the lessor) are charged to profit and loss on a
straight line basis over the period of the lease.
The Group leases various offices, equipment, sites and
residential premises under non-cancellable operating leases
expiring within 1 to 13 years (2016: 1 to 14 years).
The leases have varying terms, escalation clauses and
renewal rights. On renewal, the terms of the leases are
renegotiated.
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.
Contracts for employee services
Commitments for minimum payments in relation to non-
cancellable contracts for employee services at the reporting
date but not recognised as liabilities.
Contracts for other services
Commitments for minimum payments in relation to non-
cancellable contracts for other services at the reporting date
but not recognised as liabilities.
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845
105
SECTION 3
Other Key Balance Sheet Items
3.1. Intangible Assets
Accounting policy
Goodwill
Goodwill acquired in a business combination is initially
measured at cost. Cost is measured as the consideration and
transaction cost of the business combination minus the net
fair value of the acquired and identifiable assets, liabilities and
contingent liabilities. Following initial recognition, goodwill is
measured at cost less any accumulated impairment losses.
Refer to Note 3.1.1 for further details on impairment.
Intangible Assets
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired
in a business combination is their fair value at the date of
acquisition.
Following initial recognition, intangible assets are carried
at cost less amortisation and any impairment losses. The
useful lives of intangible assets are assessed as either finite
or indefinite. Intangible assets with finite lives are amortised
on a straight line basis over their useful life and tested for
impairment whenever there is an indication that they may be
impaired. Intangible assets with indefinite lives are tested for
impairment annually. The amortisation period and method is
reviewed at least annually.
A summary of the policies applied to the Group’s intangible
assets is as follows:
Useful life
Amortisation method used
Goodwill
Television licences
Indefinite
Indefinite
The West mastheads
Indefinite
Radio licences
Pacific mastheads
Indefinite
Indefinite
No amortisation
No amortisation
No amortisation
No amortisation
No amortisation
Trademark
Finite (10–15 years)
Amortised on a straight line basis over its useful life
Internally
generated
or acquired
Acquired
Acquired
Acquired
Acquired
Acquired
Acquired
Pacific licences
Finite (8–25 years)
Amortised on a straight line basis over the period of the licence
Acquired
Program copyrights
Finite
(length of contract)
Amortised on a straight line basis over the period
of the copyright
Acquired
Computer software
Finite (3–5 years)
Amortised on a straight line basis over its useful life
Acquired
Licences
Mastheads
[A]
Program
copyrights
Computer
software
Goodwill
[B]
Trade-
mark
REF
$’000
$’000
$’000
$’000
$’000
$’000
Total
$’000
Year ended 24 June 2017
Opening net book amount
1,388,048
97,542
Additions
Amortisation charge
Acquisition of controlled entity
–
–
–
–
–
20,834
Impairment
[C]
(432,388)
(80,463)
–
–
–
–
–
37,385
29,946
41
1,552,962
11,938
(10,381)
–
–
–
3,309
(13,588)
(32,329)
12
(4)
–
–
11,950
(10,385)
24,143
(558,768)
Closing net book amount
955,660
37,913
–
25,354
926
49
1,019,902
Comprised of:
Cost
2,355,396
251,124
20,848
91,866
1,253,765
61
3,973,060
Accumulated amortisation and impairment
(1,399,736)
(213,211)
(20,848)
(66,512)
(1,252,839)
(12)
(2,953,158)
Financial statements 106
3.1. Intangible Assets (continued)
Licences
Mastheads
Program
copyrights
Computer
software
Goodwill
Trade-
mark
$’000
$’000
$’000
$’000
$’000
$’000
Total
$’000
Year ended 25 June 2016
Opening net book amount
1,388,048
97,542
4,000
35,928
29,680
–
1,555,198
Additions
Amortisation charge
Acquisition of controlled entity
–
–
–
–
–
–
Closing net book amount
1,388,048
97,542
–
5,788
(4,000)
(4,331)
–
–
–
266
49
(8)
–
5,837
(8,339)
266
37,385
29,946
41
1,552,962
–
–
Comprised of:
Cost
2,355,396
230,289
20,848
79,928
1,250,457
49
3,936,967
Accumulated amortisation and impairment
(967,348)
(132,747)
(20,848)
(42,543)
(1,220,511)
(8)
(2,384,005)
A. Masthead additions for the year relate to acquired business assets
from Nationwide News Pty Limited, a subsidiary of News Corporation.
The business assets acquired include the Sunday Times masthead and
its digital edition, the Perth Now Website.
B. Goodwill additions for the year relate to the acquisition of Slim Film &
Television Pty Limited on 28th July 2016 which has been subsequently
impaired.
C. The Group assessed the recoverable amount for each of the Cash
Generating Units (‘CGUs’) and groups of CGUs being Television, The
West (Metro and Regional) and Pacific businesses.
A CGU is the group of assets at the lowest level for which there are
separately identifiable cash inflows. CGU groups are an aggregation of
CGUs which have similar characteristics.
The impairments were recognised as a result of changes to key
assumptions in the Group’s cash flow forecasts, these include:
Television
> Medium and long term growth rates for traditional Free to Air
television metro advertising market.
The West and Pacific
> Further declines in circulation and advertising revenue in print
publishing businesses.
3.1.1 Impairment of non-financial assets
Accounting policy
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. 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 or CGUs). 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 its value in use.
In calculating the value-in-use, the cash flows include projections of cash inflows and outflows from continuing use of the CGU’s
assets. The cash flows are estimated for the assets of the CGU in their current condition and discounted to their present value
using a pre-tax discount rate that reflects the current market assessments of the risks specific to the CGU. The Group uses a
5 year discounted cash flow model based on board approved budgets and forecasts with a terminal growth rate for cash flows
beyond the 5 year period.
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.
Key judgements, estimates and assumptions
Goodwill and intangibles with indefinite useful lives are tested annually to determine if they have suffered any impairment in
accordance with the Group accounting policy. 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 estimates and assumptions.
Refer to 3.1.1B for details of assumptions used.
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845
107
3.1. Intangible Assets (continued)
3.1.1A Allocation of goodwill and indefinite life assets
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.
The table below outlines the allocation of goodwill and indefinite life assets:
Allocation of CGU Groups
Year ended 24 June 2017
Television
The West (Metro and Regional)
Pacific
Radio
Total goodwill and indefinite life assets
Year ended 25 June 2016
Television
The West (Metro and Regional)
Pacific
Radio
Goodwill
$’000
Licences,
mastheads
$’000
Total
$’000
–
–
–
926
926
141
266
28,613
926
938,344
938,344
37,913
37,913
–
–
17,316
18,242
993,573
994,499
1,370,732
1,370,873
68,629
28,913
17,316
68,895
57,526
18,242
Total goodwill and indefinite life assets
29,946
1,485,590
1,515,536
3.1.1B Impairment review of cash generating units (‘CGUs’)
including goodwill and indefinite life assets
In accordance with the Group’s accounting policies, the Group
has evaluated whether the carrying amount of a CGU or group
of CGUs exceeds its recoverable amount as at 24 June 2017.
The Group has determined the CGUs to be Television, The West
(Metro and Regional) and Pacific businesses. The recoverable
amount is determined using a value-in-use model.
The West (Metro and Regional) and Pacific
• Publishing revenue has been assumed to decline in line
with past performance and management’s expectations
of market development.
• Digital revenue assumptions are in line with industry trends
and management’s expectations of market development.
• Expenses are expected to decrease based on committed
cost reduction initiatives and volume assumptions.
Key components of the calculation and the basis for each CGU
are detailed below:
(ii) Terminal growth factor
(i) Cash flows
Year 1 cash flows are based upon budgets and forecasts for
the next 12 months. Year 2 to 5 cash flows are based on the
following assumptions:
Television
• The advertising market growth rates are assumed to be
consistent with industry market participant expectations and
long-term industry growth rates.
• The Company’s share of Metro Free to Air advertising market
is assumed to remain stable.
• Expenses are assumed to increase by CPI and known fixed
increases for specific program rights.
A terminal growth factor that estimates the long term growth
for that CGU is applied to the year 5 cash flows into perpetuity.
These terminal growth rates do not exceed long term expected
industry growth rates. The terminal growth factor for each CGU
is detailed below.
(iii) Discount rate
The discount rate is an estimate of the pre-tax rate that reflects
current market assessment of the time value of money and the
risks specific to the CGU.
The pre-tax and post-tax discount rates applied to the CGU’s
cash flows projections are detailed below.
Financial statements 108
3.1. Intangible Assets (continued)
Television
The West – Metro
The West – Regional
Pacific
Terminal growth factor
Discount rate (pre-tax)
Discount rate (post-tax)
Jun-17
Jun-16
0.5%
0.0%
0.0%
0.0%
1.5%
0.5%
0.5%
0.0%
Jun-17
13.9%
12.0%
15.5%
14.0%
Jun-16
13.9%
13.5%
17.7%
16.7%
Jun-17
9.3%
10.3%
10.3%
10.5%
Jun-16
9.8%
11.0%
11.0%
12.0%
3.1.1C Impairment review of Pacific mastheads
3.1.1D Impact of possible changes in key assumptions
In 2017, Pacific mastheads were fully written down to nil.
The useful lives was based on the following assumptions:
• Future maintainable revenue forecasts which are
based on financial budgets and forecasts approved
by management;
• Royalty rates used: New Idea 8.5% and
That’s Life of 7.5% (June 2016: 10.0% and 10.5%);
• Earnings multiples between 2.0x and 4x (June 2016: 3x and 5x).
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.
Following the impairment charges taken in the current financial
year, the recoverable amounts for Television, The West (Regional
and Metro) and Pacific CGUs are equal to the carrying amounts.
Therefore any adverse movements in key assumptions would
lead to changes in carrying amount.
3.2. Property, Plant and Equipment
Accounting policy
Measurement of cost
All property, plant and equipment is stated at historical cost less
accumulated 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.
Depreciation
Asset class
Land
Buildings
Useful Life
Depreciation method used
Indefinite
Not depreciated
40 years
Straight line basis
Leasehold Improvements
Finite
Shorter of the life of the lease of each property or the life of
the asset
Plant and equipment
Printing presses and publishing equipment
15 years
Other plant and equipment
3–10 years
Impairment of assets
Straight line basis to allocate their cost, net of their residual
values, over their estimated useful lives
Straight line basis to allocate their cost, net of their residual
values, over their estimated useful lives
The asset’s 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. Gains and losses on disposals are determined by comparing proceeds with carrying amount
and these are included in profit or loss.
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845
109
3.2. Property, Plant and Equipment (continued)
Year ended 24 June 2017
Opening net book value
Additions
Disposals
Depreciation charge
Impairment
Change due to movements in FX rates
Closing net book amount
Comprised of:
Cost
Accumulated depreciation
Year ended 25 June 2016
Opening net book value
Additions
Disposals
Depreciation charge
Additions through acquisition of controlled entity
Change due to movements in FX rates
Closing net book amount
Comprised of:
Cost
Accumulated depreciation
Freehold land
and buildings
Leasehold
improvements
Plant and
equipment
$’000
$’000
$’000
82,689
1,278
–
(3,056)
(281)
–
4,650
–
–
(251)
(531)
–
121,758
18,467
(183)
(31,583)
(33,353)
(45)
Total
$’000
209,097
19,745
(183)
(34,890)
(34,165)
(45)
80,630
3,868
75,061
159,559
122,029
(41,399)
19,249
(15,381)
308,171
449,449
(233,110)
(289,890)
84,955
1,033
–
(3,299)
–
–
4,899
129,453
–
–
25,770
(67)
219,307
26,803
(67)
(249)
(33,491)
(37,039)
–
–
116
(23)
116
(23)
82,689
4,650
121,758
209,097
121,032
(38,343)
19,780
(15,130)
323,240
464,052
(201,482)
(254,955)
Key judgements, estimates and assumptions
The estimation of useful life, residual value and depreciation methods require some judgement and are reviewed at least
annually. 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. Gains and losses on disposals are determined by comparing the proceeds with
carrying amount. These are included in the income statement.
The impairment charge of $34.2m was a result of an overall CGU impairment assessment. Refer to note 3.1.1 for details of
assumptions used.
Financial statements 110
3.3. Provisions
Accounting policy
Provisions are:
•
recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an
outflow of resource will be required to settle the obligation and the amount can be estimated reliably.
• 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.
Provision
Description and measurement of provision
[A]
Employee
benefits
Provision for employee benefits includes annual leave, long service leave and short term incentives.
Short-term
employee benefits
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be
settled within 12 months after the end of the reporting period in which the employee renders the service.
It is measured at the amounts expected to be paid when the liabilities are settled.
Long-term
employee benefits
Liability for long service leave which is not expected to be settled within 12 months after the end of the
period.
It is 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.
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 corporate bond rates with terms to maturity and currency that match, as closely as possible, the
estimated future cash flows.
A liability is recognised when there is an obligation to settle the liability and at least one of the following
conditions is met:
> there are formal terms in the plan for determining the amount of the benefit or,
> past practice gives clear evidence of the amount of the obligation.
Short term
incentives and
bonus plans
[B]
Redundancy and
restructuring
Redundancy and restructuring provision is recognised 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.
It is payable when employment is terminated before the normal retirement date, or when an employee
accepts voluntary redundancy in exchange for these benefits.
Provision for onerous contracts represents contracts where, due to changes in market conditions, the
expected benefit is lower than the cost for which the Group is currently committed under the terms of the
contract. The minimum net obligation under the contract is provided for. The provision is calculated as
the net of the estimated economic benefit and the estimate of the committed cost discounted to present
values.
[C]
Onerous
Contracts
[D]
Other
Libel Claims
Provision for libel claims against the Group in relation to published material.
Make Good
Provision
Make good provision 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.
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 111
Other
[D]
$’000
Total
$’000
Employee
Benefits
[A]
Redundancy &
Restructuring
[B]
Onerous
Contracts
[C]
REF
$’000
$’000
$’000
67,389
40,127
(42,137)
–
29,821
24,061
9,751
131,022
6,881
143,226
–
190,234
(20,009)
(10,083)
(1,500)
(73,729)
–
1,663
138
1,801
3.3. Provisions (continued)
Carrying amount at 25 June 2016
Amounts provided
Amounts utilised
Unwind of discount
Balance as at 24 June 2017
65,379
16,693
158,867
8,389
249,328
Represented by:
Current
Non-current
58,747
6,632
65,379
16,693
9,101
388
84,929
–
149,766
8,001
164,399
16,693
158,867
8,389
249,328
Key judgements, estimates and assumptions
The provision for restructuring and redundancy is in respect of amounts payable in connection with restructuring and
redundancies, including termination benefits, on-costs, outplacement and consultancy services.
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.
The Group has recognised an onerous contract provision in relation to a number of specific non-cancellable purchase contracts
for television programs and sporting broadcast rights. The majority of the provision relates to legacy output deals for US content
and the Tokyo Olympics. The onerous losses arise over the next six years aligned with the expected broadcast date of the
programs and events.
Key assumptions made concerning future events are:
• The economic benefits expected to be received under the contracts is based on the historical benefits received on
similar television programming and sports rights, adjusted to reflect the Group’s expectation of future growth rates for the
advertising market;
• The costs of fulfilling the contract are estimated with reference to contractual rates and historical incremental costs of similar
programming assumed to increase by CPI; and
• The expected term of the legacy output deals is estimated based on current US market ratings performance and historical
series life of similar programming.
Financial statements
112
SECTION 4
Taxation
4.1. Taxes
Accounting policy
Current taxes
Current tax assets and liabilities are measured at the amount
expected to be recovered from or paid to taxation authorities
at the tax rates and tax laws enacted or substantively
enacted by the balance sheet date.
Deferred taxes
Deferred income tax liabilities are recognised for all taxable
temporary differences. Deferred income tax assets are
recognised for all deductible temporary differences, carried
forward unused tax assets are unused tax losses, to the
extent it is probable that taxable profit will be available to
utilise them.
The carrying amount of deferred income tax assets is
reviewed at balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable profit will
be available to utilise them.
The measurement of deferred tax reflects the tax
consequences that would follow from the manner in which
the Group expects, at the reporting date, to recover or settle
the carrying amount of its assets and liabilities. In making
this assessment, the Group considers the tax consequences
of recovering assets and liabilities through sale, use and
subsequent sale or through use and then abandonment or
scrapping of the asset.
Deferred income tax assets and liabilities are measured at
the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based on tax
rates and tax laws that have been enacted or substantively
enacted at the balance sheet date.
Deferred income tax is provided on temporary differences at
balance sheet date between accounting carrying amounts
and the tax bases of assets and liabilities, other than for the
following:
• Where they arise from the initial recognition of an asset or
liability in a transaction that is not a business combination
and at the time of the transaction affects neither the
accounting profit nor taxable profit or loss.
• Where taxable temporary differences relate to
investments in subsidiaries, associates and interests in
joint ventures:
i. Deferred tax liabilities are not recognised if the timing
of the reversal of the temporary differences can
be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
ii. Deferred tax assets are not recognised if it is not
probable that the temporary differences will reverse
in the foreseeable future and taxable profit will not be
available to utilise the temporary differences.
Deferred tax liabilities are also not recognised on recognition
of goodwill.
Income taxes relating to items recognised directly in equity
are recognised in equity and not in the income statement.
Offsetting deferred tax balances
Deferred tax assets and deferred tax liabilities are offset only
if a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred tax assets
and liabilities relate to the same taxable entity and the same
taxation authority.
Tax consolidation
The Company and its 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.
Current tax expense/income, deferred tax liabilities and
deferred tax assets arising from temporary differences of
the members of the tax-consolidated group are recognised
in the separate financial statements of the members of the
tax-consolidated group using the group allocation approach
by reference to the carrying amounts of assets and liabilities
in the separate financial statements of each entity and the tax
values applying under tax consolidation.
Any current tax liabilities (or assets) and deferred tax
assets arising from unused tax losses of the Company
or its subsidiaries are ultimately assumed by the head
entity in the tax consolidated group and are recognised as
amounts payable/(receivable) to/(from) other entities in the
tax consolidated group in conjunction with any tax funding
arrangement amounts (refer below).
Nature of tax funding arrangements
The head entity, in conjunction with other members of the
tax-consolidated group, has entered into a tax funding
arrangement which sets out the funding obligations of
members of the tax-consolidated group in respect of tax
amounts. The tax funding arrangements require payments to
the head entity equal to the current tax liability assumed by
the head entity resulting in a related party payable to the head
entity equal in amount to the current tax liability assumed.
This related party balance is at call.
Contributions to fund the current tax liabilities are payable as
per the tax funding arrangement and reflect the timing of the
head entity’s obligation to make payments for tax liabilities to
the relevant tax authorities.
Any difference between the amounts assumed and amounts
receivable or payable under the tax funding agreement are
recognised as a contribution to (or distribution from) wholly-
owned tax consolidated entities.
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 113
4.1. Taxes (continued)
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 within 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.
Tax expense recognised in profit or loss
Current year tax expense
Adjustments for current tax of prior periods
Current tax expense
Deferred tax benefit (expense)
Adjustment for deferred tax of prior periods
Total tax benefit (expense)
2017
$’000
2016
$’000
(44,137)
(50,723)
(5,057)
(49,194)
63,056
7,104
1,386
(49,337)
(13,769)
(18)
20,966
(63,124)
Reconciliation of tax expense to prima facie tax payable
(Loss) profit before tax
(765,962)
247,413
Tax at the Australian tax rate of 30% (2016: 30%)
229,789
(74,224)
Tax effect of amounts which are not (deductible)/taxable in calculating taxable income:
Share of net profit (loss) of equity accounted investees
135
(3,843)
Deferred tax assets not recognised in relation to impairment of equity accounted investees
Deferred tax assets not recognised in relation to impairment of assets
Other changes in recognition of deferred tax assets and liabilities
Non-assessable income
Other non-assessable items
Adjustments for tax of prior periods
Tax benefit (expense)
Tax recognised in other comprehensive income
Cash flow hedges
Deferred tax asset not recognised
Deductible temporary differences
(52,586)
(164,595)
1,501
4,063
611
2,048
20,966
–
–
–
13,575
1,368
(63,124)
(1,504)
792
1,047,437
846,263
Financial statements 114
4.2. Deferred Tax Assets and Liabilities
Year ended 24 June 2017
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 (liabilities) assets
Year ended 25 June 2016
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
Balance
25 June
2016
$’000
5,799
(137,180)
(604)
153
3,988
18,613
39,307
5,113
(1,274)
3,013
458
736
(61,878)
Balance
27 June
2015
$’000
3,970
(127,163)
(595)
(405)
3,572
28,070
34,561
6,485
(1,601)
2,221
2,396
(394)
Net deferred tax (liabilities) assets
(48,883)
(13,787)
Recognised
in profit
or loss
Recognised
in other
compre-
hensive
income
Increase
due to
acquisition
of controlled
entity
$’000
$’000
$’000
Balance
24 June
2017
$’000
1,594
10,877
164
3,792
15,382
530
37,012
844
1,155
-
232
(1,422)
70,160
–
–
–
–
–
–
–
–
–
(1,504)
–
–
–
–
–
–
–
–
7,393
(126,303)
(440)
3,945
19,370
19,143
1,875
78,194
–
–
–
–
–
5,957
(119)
1,509
690
(686)
(1,504)
1,875
8,653
Recognised
in profit
or loss
Recognised
in other
compre-
hensive
income
Increase
due to
acquisition
of controlled
entity
$’000
$’000
$’000
Balance
25 June
2016
$’000
5,799
(137,180)
(604)
153
3,988
18,613
39,307
5,113
(1,274)
3,013
458
736
(61,878)
1,829
(10,017)
(9)
558
416
(9,457)
4,746
(1,372)
327
–
(1,938)
1,130
–
–
–
–
–
–
–
–
–
792
–
–
792
–
–
–
–
–
–
–
–
–
–
–
–
–
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 115
SECTION 5
Capital Management
5.1. Borrowings
Accounting policy
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. Any related accrued interest is included in trade creditors and accruals.
2017
$’000
2016
$’000
Non-current
Bank loans – unsecured, net of unamortised refinancing costs
795,159
810,752
5.1A Financial arrangements
As at 24 June 2017, the Group had access to unsecured bilateral revolving credit facilities to a maximum of $900,000,000 (2016:
$1,100,000,000). The amount of these facilities undrawn at reporting date was $100,000,000 (2016: $285,000,000).
During the year, the Group completed a refinance of its existing syndicated debt facilities. All facilities are currently set to expire in
October 2020.
In addition, the Group continues to have access to a $20,000,000 (2016: $20,000,000) multi-option facility with Australia and New
Zealand Banking Group Limited. As at reporting date, $8,900,000 of this facility (2016: $8,100,000) was utilised for the provision of
bank guarantees.
The unsecured bank loans are net of $4,840,000 refinancing costs (2016: $4,248,000).
The facilities are subject to a weighted average interest rate of 3.56% at 24 June 2017 (2016: 3.34%).
As part of the bilateral facilities, the Group is subject to certain financial covenants measured on a six monthly basis. The Group has
been in compliance with its financial covenant requirements to date including the period ending 24 June 2017.
Fair value
The carrying amount and fair value of Group borrowings at the end of the financial year was $795,159,000 (2016: $810,752,000).
Risk exposures
Information about the Group’s exposure to interest rate changes is provided in note 5.5.
Financial statements 116
5.2. Share Capital
Accounting policy
Ordinary shares are classified as equity.
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.
Ordinary shares are fully-paid and have no par value. They carry one vote per share and the right to dividends. They bear no special
terms or conditions affecting income or capital entitlements of the shareholders.
2017
$’000
2016
$’000
1,508,034,368 (2016: 1,507,137,418) Ordinary shares fully paid (refer note 5.2A)
3,393,546
3,393,145
5.2A Movements in ordinary share capital
REF
2017
Shares
2016
Shares
2017
$’000
2016
$’000
Ordinary shares
Balance at the beginning of the year
1,507,137,418
1,512,536,488
3,393,145
3,396,847
Movements during the year:
Shares sold pursuant to cancellation of loan plan
896,950
–
401
–
Shares issued pursuant to the executive and
employee share plans
Shares bought back on market
Movement in ordinary shares
Balance at the end of the year
–
–
30,900
(5,429,970)
896,950
(5,399,070)
–
–
401
103
(3,805)
(3,702)
1,508,034,368
1,507,137,418
3,393,546
3,393,145
Total shares issued by the Company
1,508,034,368
1,508,034,368
Executive and employee share plans
treated as options
[A]
–
(896,950)
Balance included in share capital
1,508,034,368
1,507,137,418
A. There are no outstanding loans pursuant to the executive and employee share plans treated as options as these were cancelled during the year and
the shares have been sold.
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up the company in proportion to the
number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person
or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 117
5.3. Dividends
Accounting policy
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.
5.3A Dividends paid during the financial year
2017
$’000
2016
$’000
Final ordinary dividend for the year ended 25 June 2016 of 4 cents per share (27 June 2015: 4 cents),
fully franked based on tax paid at 30%, paid on 7 October 2016 (27 June 2015: 9 October 2015)
60,283
60,529
Interim ordinary dividend for the year ended 24 June 2017 of 2 cents per share (2016 interim: 4 cents),
fully franked based on tax paid at 30%, paid on 13 April 2017 (2016 interim: 11 April 2016)
30,161
60,321
90,444
120,850
5.3B Dividends not recognised at year end
In addition to the above dividends, since year end the directors have declared a 2017 final dividend
of 2 cents per ordinary share (2016: 4 cents), fully franked based on tax paid at the rate of 30%.
The aggregate amount of the dividend payable on 18 October 2017, but not recognised as a
liability at year end, is estimated at:
30,161
60,283
5.3C Franked dividends
The franked dividend declared after 24 June 2017 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 24 June 2017.
Franking credits available for subsequent financial years based on a tax rate of 30% (2016: 30%)
20,945
12,444
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 or receivable;
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.
2017
$’000
2016
$’000
Financial statements 118
5.4. Share-Based Payments
Accounting policy
Employees of the Group receive remuneration in the form of share based payments, whereby employees render services as
consideration for equity instruments.
Share-based compensation benefits are provided to executives and employees in accordance with the Company’s share
purchase and loan plans and employment agreements.
Equity-settled transactions
The fair value of the rights granted is recognised as an employee benefit 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-market vesting conditions.
It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
5.4A Performance and share rights granted as compensation
The total expense recognised for share-based payments for
all plans during the financial year for the Group was -$202,034
(2016: -$681,988).
The accounting value of share-based payments may be negative
where an executive’s share-based expense includes cumulative
adjustments for changes in non-market vesting conditions.
Long Term Incentive Plans
At 24 June 2017, performance and share rights that remain
outstanding are from the 2016 and 2015 Long Term Incentive Plans.
No executives were granted share-based payments rights
during the 2017 year.
Short Term Incentive Plans
The Group established a 2017 short term incentive plan that
entitles key management personnel to shares based on 50 per
cent of the FY17 STI awards. The restricted shares are subject
to the condition that the executive remains employed by the
Company at the vesting date (as detailed below).
An estimated 282,029 restricted shares will be granted on or
about 1 October 2017. The estimated number and fair value of
the restricted shares at at 24 June 2017 is based on 50 per cent
of the STI pool awarded. The performance period commenced
on 26 June 2016 and ends on 30 June 2018.
Key judgements, estimates and assumptions
The Group measures the cost of equity transactions with employees by reference to the fair value of equity instruments at the
date at which they are granted. The fair value is determined by an external valuer using a valuation model. The most appropriate
valuation model used is dependent on the terms and conditions of the grant. The estimate also requires determination of the
most appropriate inputs into the valuation model including the expected life of the share options, volatility and dividend yield and
making assumptions about them.
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 119
5.5. 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 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.
5.5A Market risk
Market risk is defined as possible changes in market prices, such
as foreign exchange rates and interest rates that will affect the fair
value or future cash flows of the Group’s financial instruments.
The key components of market risks are:
(i) Price risk
Price risk refers to the risk of a decline in the value of a security
or a portfolio. The Group is not exposed to significant price
risk.
(ii) Interest rate risk
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 is party to
derivative financial instruments in the normal course of business
in order to hedge exposure to fluctuations in 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.
As at the end of the reporting period the Group had the following
instruments:
Variable rate instruments
[A] Cash at bank, on hand and at call
Weighted average interest rate
[B] External borrowing facilities
Weighted average interest rate
[C] Interest Rate Swaps
Total Hedged
% of debt hedged
Weighted average interest rate
Expiry date
Total amount of debt hedged
Net exposure to cash flow interest rate risk
2017
$’000
69,490
2.06%
2016
$’000
94,788
2.49%
800,000
815,000
3.56%
3.34%
200,000
500,000
25%
2.78%
June 2021
61%
2.98%
Various to
June 2019
25%
61%
530,510
220,212
The changes in fair value of cash flow hedges during the year amounts to a pre-tax increase in equity of $5,011,000 (2016: pre-tax
reduction in equity of $2,640,000).
There are no receivables on derivatives at balance date and the Group’s current receivables generally do not bear interest.
There are no fixed rate instruments in place as at 24 June 2017.
Financial statements
120
5.5. Capital and Financial Risk Management (continued)
Group sensitivity
Based on the Group’s outstanding floating rate borrowings and interest rate swaps at 24 June 2017, a change in interest rates 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
Net Equity
2017
$’000
2016
$’000
2017
$’000
2016
$’000
2017
$’000
2016
$’000
If interest rates were 1% higher with all other variables held constant:
(Decrease)/increase
(4,200)
(2,205)
4,874
4,960
674
2,755
If interest rates were 1% lower with all other variables held constant:
Increase/(decrease)
4,200
2,205
(5,106)
(5,090)
(906)
(2,885)
(iii) Foreign exchange risk
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
3,710
24,032
2017
$’000
2016
$’000
Payables:
Foreign exchange payables and forward contracts
Net exposure
Group sensitivity
Based on the Group’s financial instruments held at 24 June
2017, 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
(2016: no significant impact). The analysis was performed on the
same basis as 2016 and ignores any impact of forecasted sales
and purchases.
5.5B Credit risk
Credit risk is the risk of financial loss to the Group if a customer
or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from credit
exposures to customers, cash and cash equivalents and
derivative financial instruments.
Credit risk is managed on a Group basis. The Group limits its
exposure in relation to cash balances and derivative financial
instruments by only dealing with well-established financial
institutions of high quality credit standing. For other customers,
risk control assesses the credit quality, taking into account
financial position, past experience and other factors. The
utilisation of credit limits are regularly monitored.
(3,610)
(24,554)
100
(522)
5.5C Liquidity risk
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. In addition, the Group had access to total
debt funding under its bilateral facilities equal to $900,000,000
of which only $800,000,000 is drawn at reporting date.
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845
121
5.5. Capital and Financial Risk Management (continued)
Maturities of financial liabilities
The table analyses the Group’s financial liabilities including
interest to maturity into relevant groupings based on their
contractual maturities.
At 24 June 2017
Non-derivative financial liabilities
Trade and other payables
Unsecured loans
Total non-derivatives
Derivative financial liabilities
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.
Less than
one year
Between
1 and 5 years
Total
contractual
cash flows
$’000
$’000
$’000
Carrying
amount –
liabilities
$’000
166,348
4,512
28,954
865,478
170,860
894,432
297,785
795,159
195,302
869,990
1,065,292
1,092,944
Net settled interest rate swaps and collar
2,165
6,314
8,479
5,872
Gross settled forward foreign exchange contracts –
cash flow hedges:
•
(inflow)
• outflow
Total derivatives
(3,710)
3,610
2,065
–
–
6,314
(3,710)
3,610
8,379
(116)
–
5,756
Total financial liabilities
197,367
876,304
1,073,671
1,098,700
At 25 June 2016
Non-derivative financial liabilities
Trade and other payables
Unsecured loans
Total non-derivatives
Derivative financial liabilities
Less than
one year
Between
1 and 5 years
Total
contractual
cash flows
$’000
$’000
$’000
Carrying
amount –
liabilities
$’000
199,845
13,725
27,169
850,752
213,570
877,921
357,228
810,752
227,014
864,477
1,091,491
1,167,980
Net settled interest rate swaps and collar
4,887
4,747
9,634
9,920
Gross settled forward foreign exchange contracts –
cash flow hedges:
•
(inflow)
• outflow
Total derivatives
(24,032)
24,554
5,409
–
–
4,747
(24,032)
24,554
10,156
–
–
9,920
Total financial liabilities
232,423
869,224
1,101,647
1,177,900
Financial statements 122
5.5. Capital and Financial Risk Management (continued)
5.5D 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)
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.
Investments of some equity accounted investees are measured
at fair value (level 3) refer note 6.1.
5.5E Capital Management
The Group’s policy is to maintain a strong capital base so as to
maintain investor, creditor and market confidence and to sustain
future development of the business.
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
Capital consists of ordinary 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.
c. inputs for the asset or liability that are not based on
observable market data (unobservable inputs) (level 3).
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 $5,756,000 (2016: $9,920,000).
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:
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
2017
$’000
2016
$’000
800,000
815,000
(4,840)
(4,248)
(69,490)
(94,788)
725,670
715,964
418,909
1,252,541
3,523
7,030
422,432
1,259,571
172%
57%
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 123
SECTION 6
Group Structure
6.1. Equity Accounted Investees
Non-current
Investments in associates and jointly controlled entities
51,362
216,010
2017
$’000
2016
$’000
Accounting policy
An associate is an entity, other than a subsidiary, over which
the Group has significant influence but not control. Significant
influence is the power to participate in the financial and
operating decisions of the entity with shareholding generally
being between 20 per cent and 50 per cent of the voting rights.
A jointly controlled entity is an entity in which the Group holds
an interest under a contractual arrangement where the Group
and one or more other parties undertake an economic activity
that is subject to joint control.
Measurement
Interests in associates and jointly controlled entities are
accounted for using the equity method. They are initially
recognised at cost plus the investor’s share of retained
post-acquisition profits, impairment and other changes in net
assets, until significant influence or joint control ceases.
Dividends received or 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 arising from transactions with equity
accounted investees are eliminated against the investment to
the extent of the Group’s interest in the investee. Unrealised
losses are eliminated in the same way as unrealised gains, but
only to the extent that there is no evidence of impairment.
Financial statements 124
6.1. Equity Accounted Investees (continued)
Information relating to associates and jointly controlled entities is set out in the tables below:
Name of entity
Airline Ratings Pty Limited
REF Principal activities
Ratings service provider
Australian News Channel Pty Limited
[A]
Pay TV channel operator
7Beyond Media Rights Limited
Television production
Ownership
interest
2017
2016
%
%
50.0
50.0
–
33.3
50.0
50.0
Reporting
date
30 June
30 June
30 June
Bulls N' Bears Holdings Pty Ltd
[B]
Public company news provider
30 June
50.0
–
Community Newspaper Group Limited
Draftstars Pty Ltd
Epicfrog Pty Limited (trading as Nabo)
Evolink Pty Ltd (trading as Muzz Buzz Express)
Health Engine Pty Limited
New You Group Pty Limited
(trading as Kochie Money Makeover)
Newzulu Limited
Oscar Winter Pty Limited
Oztam Pty Limited
Presto TV Pty Limited
Starts at 60 Pty Limited
TX Australia Pty Limited
[C]
[D]
[E]
[F]
[G]
[H]
[I]
[J]
Newspaper publishing
Fantasy sports platform
Online social network
Drive-through coffee franchise
Online health directory
30 June
30 June
30 June
30 June
30 June
49.9
49.9
33.3
–
29.6
25.2
50.0
–
16.3
24.0
Provider of general financial advice 30 June
50.0
50.0
Online news provider
Online retail jewellery business
30 June
30 June
21.9
33.3
–
–
Ratings service provider
31 December
33.3
33.3
SVOD service provider
30 June
–
50.0
Online social network for seniors
30 June
35.3
35.3
Transmitter facilities provider
30 June
33.3
33.3
Yahoo Australia & New Zealand (Holdings) Pty Limited
Internet content provider
31 December
50.0
50.0
A. Investment in Australian News Channel Pty Limited was disposed of in December 2016.
B. Seven West Media acquired 50.0% shareholding in Bulls N’ Bears Holdings Pty Ltd.
C. Seven West Media acquired 33.3% shareholding in Draftstars Pty Ltd on 12 September 2016.
D. Following a capital raising by Epicfrog Pty Limited, the shareholding in this investment increased from 25.2% to 29.6%.
E. Seven West Media acquired 50.0% shareholding in Evolink Pty Ltd.
F. Following a capital raising by Health Engine Pty Limited, the shareholding in this investment was diluted from 24.0% to 16.3%.
G. Following a capital raising by Newzulu Limited, the shareholding in this investment increased from 19.9% to 21.9% and has been equity accounted
from that date.
H. Seven West Media acquired 33.3% shareholding in Oscar Winter Pty Limited on 8 December 2016.
I.
Investment in Presto TV Pty Limited was disposed of on 4 October 2016.
J. Seven West Media acquired 35.3% shareholding in Starts at 60 Pty Limited on 8 February 2016.
6.1A Significant Equity Accounted Investees
Yahoo Australia and New Zealand (Holdings) Pty Limited
Investment
A jointly controlled entity with Yahoo Inc of which the Group has a 50% interest
shareholding.
Yahoo7 is a web portal providing e-mail, online news, lifestyle content, catch up TV
services as well as weather, travel and retail comparison services.
Principal place of business/
Country of incorporation
Australia
Accounting treatment
Equity method
The following is summarised financial information of the investment, and reconciliation with the carrying amount of the investment
in the consolidated financial statements. All amounts shown are 100% unless otherwise stated. There is no other comprehensive
income recognised in the below numbers.
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 125
6.1. Equity Accounted Investees (continued)
Revenue
Net profit for the year (continuing operations)
Group's 50% share of profit for the year
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
REF
[A]
[B]
2017
$’000
77,138
10,591
5,295
36,045
76,247
(16,792)
(19,552)
75,948
2016
$’000
91,627
17,553
8,777
34,566
75,386
(15,383)
(2,570)
91,999
A. Includes depreciation and amortisation of $4,233,000 (2016: $4,515,000 ) and income tax expense of $4,889,000 (2016: $8,585,000). Interest
expense and income for both reporting periods is not significant.
B. Includes cash and cash equivalents of $19,292,000 (2016: $12,488,000).
There are no current or non-current financial liabilities (excluding trade and other payables and provisions).
Movements in carrying amount of the investment in Yahoo7
Carrying amount at the beginning of the financial year
Impairment of equity accounted investees (refer note 1.4)
Share of profit of investees after tax
Dividends received
Carrying amount of the investment at the end of the financial year
2017
$’000
2016
$’000
200,779
200,002
(154,695)
5,295
(5,000)
–
8,777
(8,000)
46,379
200,779
The carrying amount of the investment is based on the fair value of investees at acquisition date adjusted for equity accounted profits,
dividends, impairments and any other movement since acquisition.
In accordance with the Group’s accounting policies, the Group performs its impairment testing at least annually at June for its
investments or when indicators of impairment exist.
Following a formal impairment assessment at December 2016 and June 2017, the Group recorded a total impairment charge of
$154.7 million ($75.5 million in December 2016 and $79.2 million in June 2017). The impairment charge was a result of the following
factors:
• Change in contractual arrangements between Seven and Yahoo7 relating to long form catch up television service following Verizon
Inc’s acquisition of Yahoo Inc.
• Acceleration in the decline of the premium display market.
The recoverable amount was calculated using a 5 year cash flow value-in-use model based upon budgets and forecasts using a
pre-tax discount rate of 11.6% and a terminal value growth rate of 3.0%. In the prior year, valuation of this investment was performed
using an EBITDA multiple approach, based on approved budgets and a multiple which was assessed against a range of comparable
companies. This was a level 3 approach under the accounting standard AASB 13 Fair Value Measurement.
The investment has been impaired to its recoverable value and any changes in assumptions will result in further impairment.
Group's share of net assets (50%)
Fair value adjustment of acquisition and subsequent impairment
Carrying amount of the investment at end of the financial year
2017
$’000
37,974
8,405
2016
$’000
46,000
154,779
46,379
200,779
There are no significant capital commitments or contingent liabilities held by or owed by this equity accounted investee as at reporting date.
Financial statements
126
6.1. Equity Accounted Investees (continued)
6.1B Other Equity Accounted Investees
Below is the summarised financial information for the Group’s remaining associates and jointly controlled investments. All amounts
shown are 100% unless otherwise stated.
Net loss for the year (continuing operations)
Group's share of loss for the year
REF
[A]
2017
$’000
(15,229)
(4,846)
2016
$’000
(29,185)
(21,588)
A. Share of profit is based on ownership percentage ranging from 16.3% to 50% for each equity accounted investee.
Movements in carrying amount of other equity accounted investees
Carrying amount at the beginning of the financial year
Impairment of equity accounted investees (refer note 1.4)
Share of loss of investees after tax
Dividends received
Acquisitions and other movements
Carrying amount of the investments at the end of the financial year
2017
$’000
2016
$’000
15,231
(21,340)
(4,846)
(1,280)
17,218
4,983
14,319
–
(21,588)
(4,375)
26,875
15,231
The carrying amount of each investment is based on the fair value of investments at acquisition date adjusted for equity accounted
profits, dividends, impairments and any other movement since acquisition.
6.2. Investments in Controlled Entities
Accounting policy
The consolidated financial statements incorporate the
assets and liabilities of all subsidiaries of Seven West Media
Limited as at 24 June 2017 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.”
The consolidated entity controls an entity when it is exposed
to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its
power over the 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.
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.
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 127
Ownership interest
2017
2016
%
50
100
100
100
100
100
80
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
%
50
100
100
100
100
100
80
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
6.2. Investments in Controlled Entities (continued)
Name of entity
7Wonder Productions Limited
Albany Advertiser Pty Ltd
Australian National Television Pty Limited
Australian Regional Broadcasters Pty Ltd
Australian Television International Pty Limited
Australian Television Network Limited
Bluegem Holdings Pty Ltd (Trading as TriEvents)
Channel Seven Adelaide Pty Limited
Channel Seven Brisbane Pty Limited
Channel Seven Melbourne Pty Limited
Channel Seven Perth Pty Limited
Channel Seven Queensland Pty Limited
Channel Seven Sydney Pty Limited
Cobbittee Publications Pty Limited
Colorpress Australia Pty Ltd
ColourPress Pty Ltd
ComsNet Pty Ltd
Dansted and McCabe Holdings Pty Ltd
Dodds Street Properties Pty Limited
Faxcast Australia Pty Limited
Geraldton FM Pty Ltd
Geraldton Newspapers Pty Ltd
Great Northern Broadcasters Pty Ltd
Harlesden Investments Pty Ltd
Herdsman Print Centre Pty Ltd
Herdspress Leasing Pty Ltd
Hocking & Co. Pty Ltd
Hybrid Television Services (ANZ) Pty Limited
Impact Merchandising Pty Limited
Jupelly Pty Limited
Kenjins Pty Limited
Media Beach Pte. Limited
North West Radio Pty Ltd
Pacific MM Pty Limited
Pacific Magazines Pty Limited
Pacific Magazines Trust
Notes
Country of incorporation
United Kingdom
[A]
[C]
[A]
[C]
[C]
[C]
[C]
[C]
[C]
[C]
[C]
[C]
[A]
[A]
[A]
[A]
[C]
[C]
[A]
[A]
[A]
[A]
[A]
[A]
[A]
[I]
[E]
[C]
[C]
[A]
[C]
[C]
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Australia
Australia
Australia
Australia
Pacific Magazines (No. 2) Pty Limited
[C]
Australia
Pacific Magazines NZ Limited
Pacific Magazines NZ Merchant Company Limited
New Zealand
New Zealand
Pacific Magazines (PP) Pty Ltd
[C]
Australia
Financial statements 128
6.2. Investments in Controlled Entities (continued)
Name of entity
Notes
Country of incorporation
Pacific Magazines (PP) Holdings Pty Ltd
[C]
Australia
Pacific Magazines (WHO) Pty Ltd
Quokka Press Pty Ltd
Quokka West Pty Ltd
Red Music Publishing Pty Limited
Red Publishing Pty Limited
Redwave Media Pty Ltd
Riverlaw Holdings Pty Limited
Seven DS Holdings Pty Ltd
Seven Facilities Pty Ltd
Seven Magazines Pty Limited
Seven Network (Operations) Limited
Seven Network Programming Pty Limited
Seven Productions NZ Limited
Seven Regional Operations Pty Limited
Seven Rights Pty Ltd
Seven Satellite Operations Pty Limited
Seven Satellite Pty Limited
Seven Studios Distribution Pty Ltd
Seven Studios Holdings Pty Ltd
Seven Studios Pty Limited (formerly known as Seven
Productions Pty Ltd)
Seven Television Australia Limited
Seven West Media Investments Pty Limited
Slim Film & TV Limited
SMG H1 Pty Limited
SMG H2 Pty Limited
SWM Finance Pty Limited
SWM Media Holdings Pty Ltd
SMG H4 Pty Limited
SMG H5 Pty Limited
South West Printing and Publishing Company Ltd
Southdown Publications Pty Limited
Spirit Radio Network Pty Ltd
Sunshine Broadcasting Network Limited
The Pacific Plus Company Pty Limited
W.A. Broadcasters Pty Ltd
WAN Cinemas Pty Limited
West Australian Entertainment Pty Ltd
West Australian Newspapers Limited
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United Kingdom
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
[A]
[A]
[D]
[C]
[A]
[A]
[I]
[H]
[C]
[C]
[C]
[C]
[J]
[G]
[C]
[J]
[I]
[F]
[C]
[C]
[B]
[B]
[B]
[I]
[C]
[C]
[A]
[C]
[A]
[C]
[C]
[A]
[A]
[A]
[A]
Ownership interest
2017
%
2016
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
25
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 Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 129
Ownership interest
2017
%
100
100
100
100
100
100
100
2016
%
100
100
100
100
100
100
100
6.2. Investments in Controlled Entities (continued)
Name of entity
West Central Seven Limited
Western Mail Pty Ltd
Western Mail Operations Pty Ltd
Westroyal Pty Ltd
Wide Bay – Burnett Television Limited
Zangerside Pty Limited
Zed Holdings Pty Limited
Notes
Country of incorporation
[C]
[A]
[A]
[A]
[C]
[C]
[C]
Australia
Australia
Australia
Australia
Australia
Australia
Australia
The class of all shares is ordinary and the entities entered into the Deed of Cross Guarantee with Seven West Media Limited under ASIC
Corporations (wholly-owned companies) instrument 2016/785 by Assumption Deed was on 8 April 2004. The dates below show when
the deed was amended:
A. Prior to 30 June 2009.
B. 20 June 2011.
C. 26 June 2012.
D. 18 April 2013.
E. 30 September 2013.
F. 1 May 2015.
G. 16 June 2015.
H. 31 March 2016.
I. 1 December 2016.
J. 12 May 2017.
Pursuant to ASIC Corporations (wholly-owned companies) instrument 2016/785, 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.’
Financial statements
130
6.2. Investments in Controlled Entities (continued)
The consolidated statement of profit or loss and other comprehensive income for the year ended 24 June 2017 of the Seven West
Media Limited Closed Group is presented below according to the Class Order:
Statement of profit or loss and other comprehensive income
Revenue
Other income
Revenue and other income
Expenses
Impairment of intangible assets
Impairment of investments and other assets
Redundancy and restructure costs
Onerous contracts
Net loss on disposal of investments
Share of net profit (loss) of equity accounted investees
(Loss) profit before net finance costs and tax
Finance costs
Finance income
(Loss) profit before tax
Tax benefit (expense)
Loss (profit) for the year
Other comprehensive income (expense)
Items that may be reclassified subsequently to profit or loss:
Effective portion of changes in fair value of cash flow hedges
Exchange differences on translation of foreign operations
Tax relating to items that may be reclassified subsequently to profit or loss
Other comprehensive income (expense) for the year, net of tax
Total comprehensive (expense) income for the year attributable
to owners of the Company
2017
$’000
2016
$’000
1,653,542
1,703,163
5,415
6,142
1,658,957
1,709,305
(1,390,351)
(1,410,820)
(558,768)
(276,435)
(6,881)
(139,582)
(7,138)
449
–
–
–
–
–
(12,811)
(719,749)
285,674
(40,367)
1,488
(41,707)
3,927
(758,628)
247,894
19,488
(62,773)
(739,140)
185,121
5,011
(810)
(1,504)
2,697
(2,640)
(41)
792
(1,889)
(736,443)
183,232
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845
131
6.2. Investments in Controlled Entities (continued)
The consolidated statement of financial position for the year ended 24 June 2017 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
Current tax receivable
Program rights and inventories
Other assets
Total current assets
Non-current assets
Program rights
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
Deferred tax liability
Borrowings
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Non-controlling interest
Accumulated deficit
Total equity
2017
$’000
2016
$’000
66,053
94,775
278,703
289,677
3,542
–
186,224
234,254
3,809
6,447
538,331
625,153
2,559
29,205
51,362
20,436
214,429
23,147
159,216
208,691
1,019,833
1,552,902
8,476
4,181
–
3,873
1,266,063
2,032,247
1,804,394
2,657,400
273,479
318,147
84,802
36,329
–
98,295
34,224
4,886
394,610
455,552
24,053
164,399
4,456
–
39,324
32,727
8,474
61,866
795,159
810,752
988,067
953,143
1,382,677
1,408,695
421,717
1,248,705
3,335,811
3,387,900
(51,016)
(1,088)
(3,502)
–
(2,861,990)
(2,135,693)
421,717
1,248,705
Financial statements 132
6.3. Parent Entity Financial Information
Accounting policy
The financial information for the Parent Entity, Seven West
Media Limited, has been prepared on the same basis as the
consolidated financial statements, except for:
(i) Investments in subsidiaries
Investments in subsidiaries are accounted for at cost less
impairment losses in the financial statements.
(ii) Dividends received
Dividends received from subsidiaries are recognised in profit
and loss.
(iii) 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.
6.3A. Summary of financial information
6.3B. Guarantees entered into by the parent entity
The individual financial statements for the Parent Entity show the
following aggregate amounts:
The Parent Entity has provided financial guarantees in respect of
borrowings of a subsidiary amounting to $nil (2016: $nil).
Parent entity
2017
$’000
2016
$’000
3,976
–
421,300
1,318,352
1,261
1,261
6,105
6,105
There are cross guarantees given by Seven West Media Limited
and its subsidiaries described in note 6.2.
6.3C. Contingent liabilities of the parent entity
The Parent Entity did not have any contingent liabilities as at 24
June 2017 or 25 June 2016.
6.3D. 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 24 June 2017
or 25 June 2016.
3,393,546
3,393,145
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
8,352
8,352
Equity compensation
reserve
3,270
3,472
Accumulated deficit
(3,455,601)
(2,593,355)
Profits reserve
470,472
500,633
420,039
1,312,247
Result of parent entity
(Loss) profit for the year
(801,963)
210,006
Total comprehensive
(expense) income
for the year
(801,963)
210,006
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 133
6.4. Business Combination
Accounting policy
Accounting for acquisitions and business combinations
The acquisition method of accounting is used to account
for all business combinations, regardless of whether equity
instruments or other assets are 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.
Acquisitions in 2017
Acquisition of Businesses from Nationwide News Pty Limited
Seven West Media Limited acquired the Businesses from
Nationwide News Pty Limited, a subsidiary of News.
The acquired Businesses include the Sunday Times newspaper
and its digital edition and the Perth Now website. The acquired
business assets include the mastheads, domain names,
websites and certain key personnel required to operate the
Sunday Times and Perth Now publications.
SWM acquired the Businesses with completion occurring on 16
November 2016.
Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities as at the
date of acquisition were:
Assets
Intangibles
Deferred Tax Assets
Total Assets
Liabilities
Provisions
Deferred Income
Total Liabilities
REF
[A]
[B]
[C]
Total identifiable net assets at fair value
Purchase consideration transferred
2017
$’000
19,432
1,811
21,243
6,058
192
6,250
14,993
14,993
A. The intangibles acquired include the Sunday Times masthead and its
digital edition, the PerthNow Website.
B. The deferred tax asset mainly comprises the tax effect of onerous
provision.
C. Provisions relate to employee and onerous contract on content
sharing agreement.
Financial statements 134
6.5. Related Party Transactions
6.5A 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
Other related entities
Purchase of goods, advertising and other services
Equity accounted investees
Other related entities
Shareholder contribution
Equity accounted investees
Other related entities
2017
$’000
2016
$’000
12,658
1,681
13,039
769
10,710
2,349
8,393
1,606
9,610
153
11,990
199
6.5B 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 (sale of goods, advertising and other services)
Equity accounted investees
Other related entities
Current payables (purchase of goods, advertising and other services)
Equity accounted investees
Other related entities
2017
$’000
2016
$’000
1,939
1,625
6
–
1,218
214
1,808
119
(i) 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.
6.5C Parent entity
Seven West Media Limited is the ultimate Australian parent entity
within the Group. There are no financial guarantees in respect
of borrowings of a subsidiary, no contingent liabilities and no
contractual commitments.
6.5D Subsidiaries
Interests in subsidiaries are set out in note 6.2.
6.5E Key management personnel
A number of Directors of Seven West Media Limited also hold
directorships with other corporations which provide and receive
goods or services to and from Seven West Media Group in the
ordinary course of business on normal terms and conditions.
None of these Directors derive any direct personal benefit from
the transactions between Seven West Media Group and these
corporations.
Transactions were entered into during the financial year with the
Directors of Seven West Media Limited and its controlled entities
or with Director-related entities, which:
i. occurred within a normal customer or supplier relationship on
terms and conditions no more favourable than those which it
is reasonable to expect would have been adopted if dealing
with the Director or Director-related entity at arm’s length in
the same circumstances;
ii. do not have the potential to adversely affect decisions
about the allocation of scarce resources or discharge the
responsibility of the Directors; or
iii. are minor or domestic in nature.
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845
135
6.5. Related Party Transactions (continued)
The following transactions occurred with Key Management Personnel (KMP) related parties:
Revenues
Expenses
There were no receivable or payable balances at 24 June 2017
relating to transactions with KMP related parties that have not
already been disclosed in the prior tables.
Terms and conditions
Transactions were made on normal commercial terms and
conditions.
2017
$’000
15
1,410
2016
$’000
–
1,681
Key management personnel compensation
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 on pages 70 to 86).
Executive officers also participate in the Group’s Equity Incentive
Plan for 2015 and 2016 (refer note 5.4).
No executives were granted share-based payments rights
during 2017.
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Superannuation
Termination benefits
Share-based payments
Other long term benefits
2017
$’000
2016
$’000
9,366
10,822
267
210
(103)
145
283
–
(682)
175
9,885
10,598
Detailed remuneration disclosures in respect of Directors and
each member of key management personnel are provided in the
remuneration report on pages 70 to 86.
Other transactions with key management personnel
Apart from the details disclosed in this note, no Director or KMP
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’ or KMP interests existing at year
end.
Financial statements 136
SECTION 7
Other
7.1. Remuneration of Auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent entity and its 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
Other advisory services
Total remuneration of KPMG Australia
2017
$
2016
$
575,875
429,000
90,529
165,177
666,404
594,177
13,764
12,755
680,168
606,932
7.2. Contingent Liabilities
7.3. Events Occurring After The Reporting Date
Contingent liabilities
The Group’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.
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 and 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.
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 137
7.4. Summary of Other Significant Accounting Policies
Other significant accounting policies
Foreign currency translation
Other investments and other financial assets
(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 (AUD), 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.
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.
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.
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 or profit and loss.
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 value 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.
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.
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.
Financial statements 138
7.4. Summary of Other Significant Accounting Policies (continued)
Other significant accounting policies (continued)
Financial guarantee contracts
AASB 9 Financial Instruments
This standard addresses the classification, measurement
and de-recognition of financial assets and financial liabilities,
introduces new rules for hedge accounting and a new
impairment model for financial assets. The new standard also
introduces expanded disclosure requirements and changes in
presentation. This standard must be applied for financial years
commencing on or after 1 January 2018.
The Group believes AASB 9 will not have a material impact to
its financial statement.
The Group has yet to fully assess the impact of the following
accounting standards and amendments to accounting
standard will have on the financial statements, when applied
in future periods:
•
•
IFRS 16 Leases (effective for annual reporting periods
beginning on or after 1 January 2019).
IAS 12 Income Taxes (effective for annual reporting periods
beginning on or after 1 January 2019).
Other standards and interpretations that have been issued but
are not yet effective are not expected to have any significant
impact on the Group’s financial statements in the year of their
initial application.
Financial guarantee contracts are recognised as a financial
liability at the time the guarantee is issued. The liability is
initially measured at fair value and subsequently at the higher
of the amount determined in accordance with AASB 137
Provisions, Contingent Liabilities and Contingent Assets and
the amount initially recognised less cumulative amortisation,
where appropriate.
The fair value of financial guarantees is determined as the
present value of the difference in net cash flows between
the contractual payments under the debt instrument and the
payments that would be required without the guarantee, or
the estimated amount that would be payable to a third party
for assuming the obligations.
New accounting standards and interpretations
A number of new accounting standards have been issued
or amended but were not effective during the year ended
24 June 2017. The Group has elected not to early adopt any
of these new standards or amendments in these financial
statements.
AASB 15 Revenue from Contracts with Customers
This Standard is based on the principle that revenue is
recognised when control of a good or service transfers to
a customer. The standard is mandatory for financial years
commencing on or after 1 January 2018. At this stage, the
group does not intend to adopt the standard before its
effective date.
The impact of AASB 15 Revenue from Contracts with
Customers is not expected to be significant given current
assessments by management, however it is expected that
it will require some minor development of current reporting
systems and processes. Market developments and any
further guidance issued with respect to this standard will
continue to be monitored.
Notes to the Financial StatementsFor the year ended 24 June 2017Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845
139
Directors’ Declaration
To the members of Seven West Media Limited
For the Year Ended 24 June 2017
1. In the opinion of the Directors of Seven West Media Limited (the Company):
a. the consolidated financial statements and notes that are set out on pages 88 to 138 are in accordance with the
Corporations Act 2001, including:
i. giving a true and fair view of the Group’s financial position as at 24 June 2017 and of its performance for the
financial year ended on that date; and
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
2. There are reasonable grounds to believe that the members of the Extended Closed Group identified in Note 6.2
will be able to meet any obligations or liabilities to which they are or may become subject by virtue of the Deed of
Cross Guarantee, described in Note 6.2, between the Company and those group entities pursuant to the ASIC
Corporations (Wholly-owned Companies) Instrument 2016/785.
3. The Directors have been given the declarations required by section 295A of the Corporations Act 2001 from the
Chief Executive Officer and the Chief Financial Officer for the financial year ended 24 June 2017.
4. The Directors draw attention to page 88 of the consolidated financial statements, which includes a statement of
compliance with International Financial Reporting Standards.
Signed in accordance with a resolution of the Directors.
KM Stokes AC
Chairman
Sydney
16 August 2017
140
Independent Auditor’s Report
To the shareholders of Seven West Media Limited
Report on the audit of the Financial Report
Opinion
Basis for opinion
We have audited the Financial Report of Seven West
Media Limited (the Company).
In our opinion, the accompanying Financial Report of the
Company is in accordance with the Corporations Act
2001, including:
> giving a true and fair view of the Group’s financial
position as at 24 June 2017 and of its financial
performance for the year ended on that date; and
> complying with Australian Accounting Standards and
the Corporations Regulations 2001.
The Financial Report comprises:
> Consolidated Statement of financial position as at
24 June 2017
> Consolidated Statement of profit or loss and other
comprehensive income, Consolidated Statement of
changes in equity, and Consolidated Statement of
cash flows for the year then ended
We conducted our audit in accordance with Australian
Auditing Standards. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of
the Financial Report section of our report.
We are independent of the Group in accordance with
the Corporations Act 2001 and the ethical requirements
of the Accounting Professional and Ethical Standards
Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of
the Financial Report in Australia. We have fulfilled our
other ethical responsibilities in accordance with the Code.
Key Audit Matters
The Key Audit Matters we identified are:
> Valuation of Television Licences
> Notes including a summary of significant accounting
> Valuation of Yahoo7 Equity accounted Investments
policies
> Directors’ Declaration.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during the
financial year.
> Valuation of Metro Newspapers and Pacific Cash
Generating Units (CGUs)
> Provision for Onerous Contracts
Key Audit Matters are those matters that, in our
professional judgment, were of most significance in our
audit of the Financial Report of the current period.
These matters were addressed in the context of our
audit of the Financial Report as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.
.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Independent
Auditor’s Report
141
Valuation of Television Licences
Refer to Note 3.1 Intangible Assets to the Financial Report
The key audit matter
How the matter was addressed in our audit
Our procedures included:
> Challenging the short, medium and long term forecast
for FTA television advertising market growth rates and
the Group’s share of the metro FTA advertising market
by evaluating the assumptions against published
growth rates. This procedure was performed with
assistance from our valuation specialist;
> Evaluating the key inputs to the discount rate,
including the risk free rate, cost of debt, market
participant gearing levels and industry beta, against
publicly available data of a group of comparable
entities. This procedure was performed with
assistance from our valuation specialist;
> Recalculating the impairment charge against the
recorded amount disclosed;
> Assessing quantitative and qualitative disclosures
in relation to the valuation by comparing these
disclosures to our understanding of the valuation, the
business and accounting standards requirements.
Valuation of the Television Licences is a Key Audit
Matter due to:
> The size of the asset, being the largest asset
of the Group;
> The level of judgement required by us in evaluating
the estimates determined by the Group and their
external valuation expert for forecast television
advertising revenues and associated costs; and
> The $432,388 thousand current period impairment
charge resulting from the recent advertising market
declines as well as the Group’s reassessment of
longer term market growth.
The level of growth in advertising revenue for
commercial television networks continues to be
threatened by changes in consumer viewing habits.
This is driven by the increased use of alternative digital
viewing platforms.
These ongoing changes create uncertainty in the key
estimates used in the Television Licence value in use
model, specifically:
> Free To Air (FTA) television advertising market
growth rates – short, medium and long term
(terminal growth factor);
> The Group’s share of the Metro FTA advertising
market; and
> The discount rate.
142
Valuation of Yahoo7 Equity Accounted Investment
Refer to Note 6.1 Equity Accounted Investees to the Financial Report
The key audit matter
How the matter was addressed in our audit
Valuation of the Yahoo7 investment is a Key Audit
Matter due to the high level of judgment required by us
in evaluating the estimates determined by the Group
and their external valuation expert for forecast digital
advertising revenues and associated costs. These
are the significant drivers in the value in use model. In
addition, the Group recorded an impairment charge of
$154,695 thousand against the carrying value of the
investment in the current period.
The Yahoo7 cash flow forecasts are underpinned by
growth in mobile, video and native advertising revenue
to offset declines in the traditional premium display
advertising revenue. There is uncertainty in estimating
mobile, video and native advertising revenue growth
rates and the associated discount rate for Yahoo7
given:
> Continual market changes in digital advertising
trends; and
> A limited number of companies providing a
comparable portfolio of products to Yahoo7.
These conditions give rise to a wider range of
outcomes in the value in use model increasing audit
complexity.
Our procedures included:
> Challenging the Group’s short, medium and long term
forecast’s for Yahoo7 digital revenue growth rates by
comparing those assumptions with the most recent
published mobile, video and native industry growth
rates. This procedure was performed with assistance
from our valuation specialist;
> Evaluating the key inputs to the discount rate,
including the risk free rate, cost of debt, market
participant gearing levels and industry beta, against
publicly available data of a group of the most
comparable entities that operate within one or more
product areas offered by Yahoo7. This procedure
was performed with assistance from our valuation
specialist;
> Assessing the accuracy of previous forecasting
of revenue and costs to inform our evaluation of
forecasts included in the Yahoo7 value in use model;
> Recalculating the impairment charge against the
recorded amount disclosed.
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Independent
Auditor’s Report
143
Valuation of Metro Newspapers and Pacific Cash Generating Units (CGUs)
• Metro Newspaper Mastheads and PPE
• Pacific Mastheads and Goodwill
Refer to Note 3.1 Intangible Assets to the Financial Report
The key audit matter
How the matter was addressed in our audit
Valuation of the Group’s Metro Newspapers and
Pacific Cash Generating Units (CGUs) is a Key Audit
Matter due to the high level of judgement required
by us in evaluating the estimates determined by the
Group and their external valuation expert for forecast
advertising and circulation revenues and associated
costs.
The Newspaper and Magazine sectors face
uncertainty as the demand for print media continues
to be downwardly impacted by real time digitalisation
of content. This creates significant uncertainty in the
following key estimates underpinning the value in use
impairment models:
> Future print advertising and circulation revenue
growth rates in the short, medium and long term;
> Future revenue growth of associated and recently
launched digital businesses;
> Costs and the impact of changes in print volumes;
and
> The discount rate.
The Group’s reassessment of these estimates during
the current year resulted in impairments of Goodwill
($28,879 thousand), Mastheads ($80,463 thousand),
PPE ($34,165 thousand) and other intangibles
($13,588 thousand), increasing our audit effort.
Our procedures included:
> Challenging management’s short, medium and
long term forecast’s for print and digital revenue by
comparing those assumptions with published industry
growth rates and industry reports. This procedure
was performed with assistance from our valuation
specialist;
> Evaluating the key inputs to the discount rate,
including the risk free rate, cost of debt, market
participant gearing levels and industry beta, against
publicly available data of a group of comparable
entities. This procedure was performed with
assistance from our valuation specialist;
> Assessing the accuracy of previous forecasting
of revenue and costs and their correlation to print
volumes, to inform our evaluation of forecasts included
in the value in use impairment models;
> Evaluating the status of print related committed cost
reduction initiatives included in the forecast cash
flows against business plans and communications to
employees;
> Recalculating the impairment charge against the
recorded amount disclosed.
144
Provision for Onerous Contracts
Refer to Note 3.3 Provisions to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group routinely enters non-cancellable purchase
contracts for television programs and sporting
broadcast rights. Where there are changes in market
conditions, the accounting standards require the Group
to estimate the unavoidable minimum net obligation
under these contracts to determine those (if any) that
are onerous and recognise an associated provision.
Assessing the Group’s provision for onerous contracts
is a Key Audit Matter given the continual changes in
consumer television viewing habits and the impact on
forecast FTA advertising revenue growth. This is due to
the high level of judgement required by us in evaluating
the Group’s estimation of the unavoidable minimum net
obligations for onerous contracts due to the uncertainty
in estimating the following for each contract:
> The economic benefits expected to be received
under the contract, including the impact of short
and medium term FTA television advertising market
growth rates;
> The incremental costs of fulfilling the contract; and
> The term of the obligation where the contract period
is contingent on factors outside of the Group’s
control (e.g. US television ratings).
These estimation uncertainties increase the risk of
inaccurate forecasting which gives rise to greater audit
complexity.
Other Information
Other Information is financial and non-financial information
in Seven West Media Limited’s annual reporting which
is provided in addition to the Financial Report and the
Auditor’s Report. The Directors are responsible for the
Other Information.
Our opinion on the Financial Report does not cover the
Other Information and, accordingly, we do not express
any form of assurance conclusion thereon, with the
exception of the Remuneration Report and our related
assurance opinion.
In connection with our audit of the Financial Report,
our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is
materially inconsistent with the Financial Report or our
knowledge obtained in the audit, or otherwise appears to
be materially misstated.
Our procedures included the following for significant
purchase contracts for television programs and sporting
broadcast rights:
> Assessing the Group’s determination of economic
benefits expected to be received under the contract
and incremental costs of fulfilling the contract against
the historical results on similar television programs and
sporting broadcast rights and published expectations
of future revenue and cost growth;
> Challenging the estimated term of the obligation based
on the current and expected performance of the
metrics that influence contractual tenure;
> Comparing the contractual costs of the television
programs and sporting broadcast rights to the
underlying contracts.
We are required to report if we conclude that there is
a material misstatement of this Other Information, and
based on the work we have performed on the Other
Information that we obtained prior to the date of this
Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial
Report
The Directors are responsible for:
> preparing the Financial Report that gives a true and
fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001
> implementing necessary internal control to enable
the preparation of a Financial Report that gives a true
and fair view and is free from material misstatement,
whether due to fraud or error
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Independent
Auditor’s Report
145
Report on the Remuneration Report
Opinion
In our opinion, the Remuneration Report of Seven
West Media Limited for the year ended 24 June 2017,
complies with Section 300A of the Corporations
Act 2001.
Directors’ responsibilities
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration Report
in accordance with Section 300A of the Corporations
Act 2001.
Our responsibilities
We have audited the Remuneration Report included in
pages 71 to 86 of the Directors’ report for the year ended
24 June 2017.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
> assessing the Group’s ability to continue as a going
concern. This includes disclosing, as applicable,
matters related to going concern and using the going
concern basis of accounting unless they either intend
to liquidate the Group or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of
the Financial Report
Our objective is:
> to obtain reasonable assurance about whether the
Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
> to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with Australian Auditing Standards will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error. They are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of this
Financial Report.
A further description of our responsibilities for the audit
of the Financial Report is located at the Auditing and
Assurance Standards Board website at: http://www.
auasb.gov.au/auditors_files/ar2.pdf. This description
forms part of our Auditor’s Report.
KPMG
Tracey Driver
Partner
Sydney
16 August 2017
146
Company Information
Directors
KM Stokes AC – Chairman
TG Worner – Managing Director & Chief Executive Officer
JH Alexander
Dr ME Deaker
D Evans
PJT Gammell
JG Kennett AC
M Malone
RK Stokes
Company Secretary
WW Coatsworth
Registered Office
Newspaper House
50 Hasler Road
Osborne Park WA 6017
Share Registry
Boardroom Pty Limited
Level 12
Grosvenor Place
225 George Street
Sydney NSW 2000
Auditor
KPMG
Tower Three
International Towers Sydney
300 Barangaroo Avenue
Sydney NSW 2000
Stock Exchange Listing
Australian Stock Exchange
ASX code: SWM
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
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845
Company and Investor
Information
147
Investor Information
Shareholder Inquiries
Tax File Number Information
Investors seeking information regarding their shareholding
or dividends or wishing to advise of a change of address
should contact the Share Registry at:
Boardroom Pty Limited
Level 12
Grosvenor Place
225 George Street
Sydney NSW 2000
Telephone: (02) 9290 9600
Facsimile: (02) 9279 0664 or
Visit the online service at boardroomlimited.com.au
Boardroom Pty Limited has an online service for investors
called InvestorServe. This enables investors to make
online changes, view balances and transaction history,
as well as obtain information about recent dividend
payments and download various forms to assist in the
management of their holding. To use this service visit the
Boardroom Pty Limited 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.
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.
148
Shareholder Information
The shareholder information set out below was applicable at 17 July 2017.
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 2,717 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
Network Investment Holdings Pty Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
JP Morgan Nominees Australia Limited
BNP Paribas Nominees Pty Limited
National Nominees Limited
BNP Paribas Nominees Pty Limited
Merrill Lynch (Australia) Nominees Pty Limited
UBS Nominees Pty Limited
3RD Wave Investors Limited
Citicorp Nominees Pty Limited
UBS Nominees Pty Limited
Brispot Nominees Pty Limited
RBC Investor Services Australia Nominees Pty Limited
BNP Paribas Nominees (NZ) Limited
Waratah Capital Partners Pty Limited
Warbont Nominees Pty Limited
Mr P A Cochrane
T S Rai 2 Pty Limited
HSBC Custody Nominees (Australia) Limited
Number of shareholders
4,766
8,715
3,225
4,019
307
21,032
Number
of ordinary
shares held
611,600,387
218,942,242
168,265,884
128,335,309
38,947,239
28,875,120
24,877,471
8,177,782
7,111,267
6,000,000
5,996,210
4,419,941
3,758,238
2,385,658
2,275,712
2,100,000
2,089,880
1,400,000
1,386,000
1,321,001
Percentage of
issued shares
40.55
14.52
11.16
8.52
2.59
1.92
1.66
0.55
0.47
0.39
0.39
0.29
0.25
0.16
0.15
0.13
0.13
0.09
0.09
0.09
1,268,265,341
84.10
Delivering world class content everywhere.Seven West Media Limited Annual Report 2017 ABN 91 053 480 845 Shareholder
Information
149
Number of
ordinary shares
in substantial
holding
619,753,734
618,711,654
618,711,654
77,495,046
Substantial
holding*
40.94%
40.88%
40.88%
5.14%
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
Schroder Investment Management Australia Limited
* Based on issued capital at date of notification.
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.
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