Schweitzer-Mauduit International
Annual Report 2022

Plain-text annual report

Australia’s Number One Annual Report 2022 Contents Our Strategy Who We Are Our Strategic Priorities and Performance Dashboard Executive Letters Letter from the Chairman Letter from the Managing Director and Chief Executive Officer Review of Segments Group Performance – Key Highlights and Summary of Financial Performance Seven The West Risk Management, People and Sustainability Risk Management, Environment and People Sustainability Governance Board of Directors Corporate Governance Overview Directors’ Report Reissued – Remuneration Report Auditor’s Independence Declaration Financial Statements Financial Statements Directors’ Declaration Independent Auditor’s Report Investor Information Shareholder Information Company Information 2 4 6 8 11 16 22 24 30 36 39 46 50 71 72 124 125 131 132 134 The Voice 1 Our strategy Seven West Media Limited Annual Report 2022 Your #1 Your #1 for content, your #1 for audience powered by technology: Seven West Media is the media company of the future. Seven West Media is Australia’s #1 content company. It is home to the country’s largest and #1 total television network, the #1 Broadcast Video on Demand (BVOD) service and the fastest-growing news, print and digital brand in the country. As your #1 for premium news, sport, drama and entertainment, we deliver creative and high-quality content for audiences across all of Australia. We spend every day connecting millions of people to the moments that move the nation and deliver Australia’s most powerful audience data insights. Our wide variety of content across television, newspapers and digital platforms plays a critical role in society. It inspires, informs and entertains Australia while providing trusted, impartial local and national news that is freely available and critical to the health of our democracy. Our people are at the heart of what we do, working with pride and passion to make content that not only reflects but shapes our culture. Seven West Media continues to digitally transform, accelerate our streaming business and invest in the best content, laying the foundations to continue our dominant market position and continue as your #1 well into the future. Broadcast Digital Other 2 3 Our Strategic Priorities and Performance Dashboard We are growing. We are transforming. We are stronger. Seven West Media has an unrivalled ability to deliver the biggest national audience across all demographics for our commercial partners. Over the past year, we have demonstrated continuing success against the following strategic priorities: Content Led Growth Transformation > Revitalise our entertainment programming, creating momentum to engage heartland Australia > Sharpen our focus on being an audience and sales-led organisation > Be the most relevant and exciting offer to advertisers > Explore a meaningful subscription partnership play > Redefine our working practices, becoming more efficient and effective > Explore traditional and non-traditional adjacencies Capital Structure and M&A > Maintain focus to work down debt and improve balance sheet flexibility > Explore M&A opportunities Milestones Achieved > #1 National Audience share across all key demographics > Seven has grown share in prime time audiences across total people, 25 to 54s and 16 to 39s driven by the success of the refreshed entertainment schedule > Ongoing discussions with content partners for streaming opportunities Milestones Achieved > Completing first phase of investment in a dynamic trading platform, second phase underway > Digital earnings now greater than 40 per cent of Group earnings driven by BVOD > 7REDiQ data proposition with registered user growing 107 per cent to 12.5 million registered, verified users and new commercial partnerships > Seven West Ventures rebuild commenced with 5 new investments made driving the period Milestones Achieved > Balance sheet flexibility significantly improved > Net debt at $256 million and leverage ratio at 0.7x > Completed the acquisition of Prime Media Group and integration tracking ahead of plan 4 Our strategy Seven West Media Limited Annual Report 2022Your #1 for growth, we have outperformed the market and delivered increased revenue and earnings as well as significant progress in rebalancing the business with digital earnings, representing greater than 40 per cent of group earnings. In the 2021 calendar year, Seven returned to leadership as the most- watched television network in Australia and was the only network to increase its audience shares in total people, 25 to 54s, 16 to 39s and under 50s. Seven delivered more #1 results than any other network in calendar year 2021, with the most watched shows in Australia and the most watched BVOD service with 7plus. Seven maintained its momentum in the first half of the calendar year 2022, leading the year as the #1 national network in total people, 25 to 54s and 16 to 39s. West Australian Newspapers (WAN) has focused on its strategy to hold the line on print, turbo charge digital growth and reduce costs. The successful execution of this strategy has delivered the highest level of EBIT in over five years. This year also marked the first full year contribution from the Google and Facebook news platform agreements. Having successfully executed our strategy over the past three years – through content-led growth, digital transformation, the acquisition of the assets of Prime Media Group and a strengthened balance sheet – Seven West Media continues to make significant progress in growing and strengthening our business. We are maximising our unrivalled scale, reach and national brand to increase the audience and revenue share from our broadcast, digital and print businesses. Strategic Outlook As outlined, the company has successfully executed on its three year strategy which commenced in August 2019. Management has since developed the next phase of the strategy to position Seven West Media for the future and reflect our journey of digital transformation. The strategic vision for Seven West Media and the initiatives to get there are outlined below. What do we want to be (3–5 years) How do we get there Diversified Leader 1. Diversified media company 2. Audience led and digital first; powered by data and technology 3. Total audience monetisation with material non- advertising revenue 4. Low gearing with capacity for growth and capital management 5. Re-weighting of portfolio to increase allocation to growth Being Unmissable & Easy to Access > Target 40%+ share of ratings and revenue in the Total TV market by FY24 Win on every screen in all genres of news, sport and entertainment across all key demographics > Accelerate the digital transformation with 7plus to improve the user experience and grow consumption Deepening audience relationships with a greater allocation to digital > Establish deeper audience relationships through curated content experiences to drive greater monetisation opportunity > Regulatory engagement for prominence and free access for all Australians Growing through technology and scale > Deliver benefits of Prime Media Group acquisition Driving scale, efficiencies, capability and defensibility > Invest in systems to improve/simplify trading capability and increase revenue M&A with non-media companies, leverage scale to drive total audience monetisation > Pursue value accretive M&A > Scale digital ventures Driving Value Empowering everyone to think and act like an owner; constantly questioning... is there a better way? > Allocate resources and capital and ensure ongoing cost management to maximise return on investment > Maintain economic discipline while securing leading content for broadcast and digital > Hold the line on print earnings while turbo charging digital growth > Explore value accretive capital management options 5 Letter from the Chairman Seven West Media continued to lead the media sector during the last financial year and we are well positioned to grow further in 2023 as the economy emerges from the pandemic. In addition to being Australia’s most watched TV network, our BVOD platform 7plus now has more than 12.5 million registered, verified users and our newspaper business in Western Australia reaches 82 per cent of the state’s population. Our expansion to be a complete free-to-air broadcast and digital platform reached another milestone during the year, with digital well on the way to generating 50 per cent of our earnings over the next couple of years. Our audience is watching TV and video in greater numbers than ever before, with double-digit growth over the last year in our BVOD viewing, 75 per cent of this audience being under 55 years of age. The attraction of video on demand was heightened with continued lockdowns, the very successful Tokyo and Beijing Olympics, and a deep and growing catalogue of “classic” TV shows. We are no longer a traditional media group but a fully-fledged digital platform with a variety of channels to broadcast our own, unique content that can be accessed any time of the day on a wide range of devices. As a result, we are attracting a range of new advertisers that are using both traditional broadcast and digital to reach specific audiences, who we can now identify and address better than ever before through technology. We are encouraging the Federal Government to legislate the prominence and free carriage of our digital services on every device in the market, while continuing to protect the industry’s anti-siphoning rules and sports rights on free-to-air television. Our partnerships with Google and Facebook support Seven West Media investing in new and growing income streams for our group. Meanwhile, our prudent management of capital, debt and costs has not stopped us investing further in our digital offerings and also the acquisition of the assets of Prime Media Group, which has given us direct access to Australia’s largest regional audience and made Seven the undisputed national total television market leader. This expansion of our regional coverage area with Prime has been highlighted with the strong advertiser response to the highly successful 2022 Commonwealth Games and continued success of the AFL. Our general entertainment programs, including The Voice and Home and Away, continue to perform well, while our news and public affairs programs again dominated the ratings during the year. Our print operations, with 32 titles across city and regional areas in Western Australia, further dominate the market, with the expansion of The West’s digital assets attracting a younger audience. “ Our Group’s strategy to focus on content-led growth and market-leading digital assets will play a major role in adapting to the ever-changing viewing and reading habits of people across all demographics.” 6 Executive Letters Seven West Media Limited Annual Report 2022Our Group’s strategy to focus on content-led growth and market-leading digital assets will play a major role in adapting to the ever-changing viewing and reading habits of people across all demographics. This growth will be balanced by an ongoing concentration on continuous improvement and gaining further operational efficiencies, as well as capital management initiatives. The first capital management initiative, a 10 per cent on-market share buyback, will commence in August 2022. The Board will continue to review the mix of capital management initiatives through FY23. On behalf of the Board, I thank you, our shareholders, and our staff for your ongoing support of Seven West Media as we chart an exciting new course in Australia’s media sector. Kerry Stokes AC Chairman 7 Letter from the Managing Director and Chief Executive Officer The past year has seen Seven West Media emerge as one of the best performing and fastest growing companies in the Australian media sector, and we are well placed to continue that growth and build on our leadership position. The diligent execution of our strategy over the past three years, the acquisition of the assets of Prime Media Group on 31 December 2021 and the strong growth of 7plus – coupled with the outstanding success of Seven’s television broadcast business – have made our company the undisputed market leader in the national total television market, that is, across capital city and regional broadcast and BVOD television. The ”Your #1” tagline you see in this year’s annual report is important. Seven is Australia’s #1 total television company, reaching more people nationally and in the capital cities every single day than any of our competitors. Seven is Australia’s #1 choice for news, sport, drama and entertainment content. 7plus is #1 in the booming BVOD market. For advertisers, Seven is their #1 choice to reach and engage with their existing and potential customers. Now that we are back at #1, we are totally focused on increasing our leadership and ensuring that position translates into increased revenue, earnings and shareholder returns. The financial results for 2021-22 clearly demonstrate the dramatic transformation our company has been through since late 2019. The strong revenue and earnings growth we reported for the year reflected the success of our content-led growth strategy and the digital transformation of the company. Our digital businesses, including 7plus, accounted for more than 40 per cent of earnings, compared with just 2 per cent four years ago. That one fact alone speaks volumes about how our company has changed and how it has been restructured and reorientated for the future. Broadcast In the 2021 calendar year we returned to #1 in TV for the first time in three years, while 7plus was #1 in BVOD for the second year in a row. We have retained both those titles in 2022. Seven is the most-watched television network nationally and in the capital cities, and we have achieved strong growth in the key advertiser demographics of people aged 25 to 54 and 16 to 39. From a television content point of view, we started 2022 in a much better position than we have in recent years. Our focus this calendar year is to be more consistent in our entertainment schedule and to win. The results speak for themselves: so far this calendar year we have had our most competitive start to a ratings survey year since 2018. That result has been driven by the ongoing success of our dominant content “spine” – 7NEWS, Sunrise, The Chase Australia, Home and Away, Better Homes and Gardens and The Morning Show – key tentpole programs such as The Voice, Dancing With The Stars: All Stars, Big Brother and SAS Australia, and key sports including the AFL, Olympic Games Tokyo 2020, Paralympic Games Tokyo 2020, Olympic Winter Games Beijing 2022 and Paralympic Winter Games Beijing 2022. Our content line-up for the new financial year is deep and strong. In addition to many returning hit programs across all genres, we have just had the highly successful 2022 Commonwealth Games on Seven and 7plus. The refreshed MKR is on air now and our forward content slate includes AGT, Farmer Wants A Wife, Kitchen Nightmares, This Is Your Life, Australian Idol, Million Dollar Island and other new shows we are yet to announce. “ Seven is Australia’s #1 choice for news, sport, drama and entertainment content. 7plus is #1 in the booming BVOD market. For advertisers, Seven is their #1 choice to reach and engage with their existing and potential customers.” 8 Executive Letters Seven West Media Limited Annual Report 2022Seven’s broadcast content, of course, is a key reason for success on 7plus, but it is far more than a catchup TV service. More than 50 per cent of the content on 7plus is exclusive to the platform, making it a genuine streaming destination. What that tells us is that while big noisy shows such as The Voice, Home and Away and Big Brother initially draw people to 7plus, the depth and breadth of content on the platform keeps them there and creates user loyalty and “stickiness”. We have big plans this year to increase the audience and usage of 7plus. The 12.5 million verified, registered users of 7plus are an incredibly powerful marketing platform. When big data is overlayed – in our case, six billion data points – marketers have a remarkable addressable medium which delivers quality video with big data, all in a brand-safe environment. The success of our content is driving results in terms of our share of the television advertising market. Our 40.3 per cent metropolitan revenue share in the first half of the 2021-22 financial year was our highest revenue share since the December 2016 half. Across the 2021-22 year, our share of the total television advertising market was 39.1 per cent. That included the BVOD market, where we secured a 39.4 per cent share, and the regional television market, where we achieved a 43.3 per cent share. Seven’s share grew more than 2.5 percentage points across the year. Digital These days, television as many people know it – the thing hanging on the wall where you change channels with a remote control – is not television at all. That set on the wall is just a part, albeit an important part, of a video ecosystem we call total television. That total television market is much bigger than you think. It’s growing, it’s digital, it’s mobile and we are tapping into those growth markets at a rapid pace. Our 7plus platform has been a key focus in recent years – and a remarkable success. It is now the #1 BVOD platform in Australia in terms of its share of viewing and it has more than 12.5 million registered, verified users. 9 The West The West continues to perform well, driven by management’s ongoing execution of a strategy to hold the line on print earnings, reduce costs and turbo charge the digital and subscription side of the business. As a result, The West is one of the strongest news brands in Australia, with impressive results across both digital and print. Digital subscriptions and audiences are showing great growth. According to Roy Morgan data, The West was the fastest-growing news print and digital brand in Australia during the 12 months to March 2022. It increased its audience 19.4 per cent to 4.6 million across the weekday newspaper, Saturday’s The West Australian, The Sunday Times and the websites thewest.com.au and PerthNow.com.au One in six West Australians consumes the newspaper, which is the highest market penetration of any brand in the country. On a cross-platform basis that accounts for the newspapers and websites, 82 per cent of the state reads The West. Again, that is the highest market penetration of any news brand in any state. Capital structure and M&A The cost efficiency program we started in 2019 continues, with the simple premise that every dollar we spend must generate a return. We will continue to invest in revenue-generating content and continue to ensure that everything we do makes sense financially. The combination of our two Sydney operations in a refurbished centre in Eveleigh is progressing very well and is on track for completion in early 2023. The improvement in our balance sheet in recent years has enabled the expansion of Seven West Ventures and, more importantly, the acquisition of the assets of Prime Media Group was able to be debt funded during 2021-22. Our balance sheet is in very good shape, with drawn debt at its lowest level for many years. This balance sheet strength means our company is well placed to head into a period of uncertainty and provides flexibility to respond to the challenges and opportunities that are presented during this period. It’s great to have Prime and its people as part of Seven West Media and the union of these two market-leading businesses has created an unrivalled opportunity for us to increase our share of the $2.8 billion national total TV ad market. We are already seeing clear commercial benefits in being able to easily sell combined national/metropolitan advertising packages to marketers. The acquisition of the assets of Prime Media Group has also created a significant opportunity to build a bigger presence for 7plus and 7NEWS.com.au in regional markets. We have started new marketing of 7plus in regional areas, which is already generating new users, increasing consumption and driving new revenue. We continue to explore the establishment of a meaningful streaming partnership. This is not about any opportunity, rather the right opportunity, and we will be patient to ensure we get the right result in an extremely crowded market. As flagged at the February 2022 interim results, the board has assessed options regarding capital management during the second half. The significant improvement in our balance sheet over the last two years has enabled us to announce a share buyback, to commence following the FY22 result. The on-market buyback will be for up to 10 per cent of issued capital and will be highly earnings accretive for Seven West Media shareholders. Outlook Our FY23 first quarter ad bookings are skewed due to the impact of Olympic Games Tokyo 2022 last year, but we estimate the overall total TV market is back 2 per cent, excluding the Olympics and 7 per cent if you were to include it. Visibility into the second quarter is improving, which we believe may be due to the tight inventory market last year and advertisers seeking to secure placement. While still early, current total TV forward bookings for the second quarter are positive year on year. These total TV estimates include BVOD which we expect to maintain robust growth. Seven Digital is on track for another year of strong revenue and earnings growth, and this will include consistent revenue contribution from the digital platform news revenue as in the 2022 financial year. Our FY23 group operating costs will be in the range of $1.2 billion to $1.22 billion. We will provide a further update on the market at our AGM in November this year. Our people Investing in our people has been a key focus over the past three years, with the introduction of a range of new initiatives to help our people learn and grow. In March this year, Seven West Media became the first media company in Australia to be awarded the Workplace Gender Equality Agency’s (WGEA) Employer of Choice for Gender Equality citation. The criterion for the citation is rigorous and we were one of just 12 new companies to receive the highly regarded citation this year, recognising Seven West Media as an employer committed to achieving gender equality in the workplace. Our company has changed a lot in recent years. 48 per cent of all our staff are women and 50 per cent of our management roles are held by women. The WGEA citation builds on our continued responsibility to promote diversity, equality and inclusion across Seven but there is still much more work to do as we build the media company of the future. Let me finish by thanking all our shareholders and staff for your support and belief in our business. The Board and the executive leadership team sincerely appreciate the hard work, enthusiasm and talent of all our staff in all parts of Seven West Media. Without them, Seven would not be Australia’s #1. Thank you and I’m looking forward to working with all of you in the year ahead to make our company even more successful. Our ratings performance is expected to drive a TV ad revenue share of 39 per cent in FY23. James Warburton Managing Director and Chief Executive Officer 10 Executive Letters Seven West Media Limited Annual Report 2022Group Performance Key Highlights Olympic Games Tokyo 2020 broadcasts reach 20.2 million Australians Seven is the only network to grow commercial audience share in FY22 7plus registered users exceed 12.5 million, 107% growth yoy Debt facilities successfully refinanced with significant improvement in terms Net debt at $256m Leverage 0.7x at year end 11 Summary of Financial Performance Revenue Other income Share of net profit 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 Profit before tax Tax expense Profit after tax Less significant items including tax Profit after tax excluding significant items EBITDA margin Basic EPS Basic EPS excluding significant items net of tax Diluted EPS Diluted EPS excluding significant items net of tax FY22 $’000 FY21 $’000 Change3,4 % 21% nm nm 21% 17% 35% 34% 35% (42%) 62% nm (36%) (43%) (34%) nm 60% 1,538,537 1,269,609 1,092 318 1,539,947 (1,197,757) 342,190 (33,197) 308,993 (35,456) 273,537 9,854 283,391 (72,339) 211,052 10,293 200,759 22.2% 13.3 cents 12.7 cents 13.0 cents 12.4 cents 37 6,322 1,275,968 (1,022,077) 253,891 (24,783) 229,108 (60,674) 168,434 277,187 445,621 (127,499) 318,122 192,577 125,545 20.0% 20.7 cents 8.2 cents 20.7 cents 8.2 cents EBITDA relates to profit before significant items, net finance costs, tax, depreciation and amortisation EBIT relates to profit before significant items, net finance costs and tax 1 2 3 Changes in percentages are calculated on whole dollars and not the rounded amounts presented 4 “nm” means “not meaningful” Reconciliation of EBIT to statutory profit before tax EBIT Net finance costs Significant items excluding tax Profit before tax from continuing operations FY22 $m 308,993 (35,456) 9,854 283,391 FY214 $m 229,108 (60,674) 277,187 445,621 Change % 35% (42%) nm (36%) 12 Review of Segments Seven West Media Limited Annual Report 2022 Seven West Media Limited reported a statutory profit from continuing operations before tax of $283.4 million for the year ended 25 June 2022. This compares to a corresponding year statutory profit of $445.6 million. Excluding significant items, the current year profit after tax of $200.8 million is up 60.0 per cent on the previous year equivalent profit of $125.5 million. Seven West Media recorded significant item benefits before tax of $9.9 million in the period, relating to net income received in the Prime Media Group acquisition, disposal of GSTV, reversal of onerous contracts, fair value adjustments and write off of previously capitalised borrowing costs as a result of the debt refinancing. The prior year significant item benefits before tax of $277.2 million included the reversal of prior period impairment of intangibles, reversal of onerous contracts and restructuring provisions recognised in prior periods, and costs associated with the disposal of other assets. The Prime Media Group acquisition, completed in December 2021, contributed EBITDA of $10.8 million in the second half before synergies. The Prime Media Group business integration is well progressed and the scale and reach benefits from this acquisition have positively impacted the 2022 financial year results. This increase is set to continue throughout the 2023 financial year. Profit before significant items, net finance costs and tax (EBIT) of $309.0 million was up 35 per cent on the previous year. The Group delivered revenue including share of equity accounted investees profits of $1.5 billion, up 21 per cent versus the previous year. This included Prime Media Group contribution of $43.8 million. Total Group costs, including depreciation and amortisation, increased $182.1 million representing a 18 per cent increase year on year. Group costs increased during the year due to the investment in programming and broadcast of two Olympic Games, acquisition of Prime Media Group, as well as impact from the high inflationary environment impacting suppliers and salary costs. The FY22 performance and improved balance sheet has enabled the Group to resume capital management initiatives for the first time in 5 years. New ventures Seven West Ventures has expanded during the financial year with the investment in five new growth investments. These ventures are opportunities where we leverage the power of our assets to unlock maximum growth potential and drive long-term value creation. The portfolio is focused on disruptive, scalable businesses with a strong consumer or media proposition. Sevens Paralympic Games Tokyo 2020 commentary team Emma Vosti, Kurt Fearnley, Annabelle Williams and Matt White 13 Review of Segments Seven West Media Limited Annual Report 2022 Under the terms of the agreement, the previous minimum liquidity requirements and EBITDA test were replaced by a total leverage ratio and a total interest cover ratio test. The Group has been in compliance with its financial covenants to date, including the period ended 25 June 2022. SAS Australia – Dean Stott, Ollie Ollerton, Ant Middleton and Clint Emerson Cashflow Balance Sheet Cashflow continues to be roboust with net operating cash inflows of $160.2 million, up $17.0 million on the prior year. Working capital during the year was impacted by the programming line up including the Olympic Games Tokyo 2020 and Olympic Winter Games Beijing 2022. Net cash outflows from other activities of $375.6 million include net debt repayments, payments for own shares, payments for capital expenditure, leases and other investment opportunities. As a result, the net cash outflow for the year was $215.4 million. The above include net cash outflows of $85.6 million relating to the Prime Media Group acquisition made during the year, with the acquisition price adjusted for cash acquired, special dividend and capital returns received from the Group’s equity interest in the previous Prime Media Group parent company, PRT Company Limited. As at 25 June 2022, the Group’s assets exceeded its liabilities by $263.7 million (26 June 2021: $84.3 million). The Group has positive net current assets as at 25 June 2022 of $18.4 million (26 June 2021: $148.3 million). Net Debt As at 25 June 2022, the Group held net debt of $256.5 million (including borrowing costs), compared to $240.0 million in the prior period. In October 2021, the Group refinanced its existing debt facility. A $600 million secured revolving syndicated facility agreement was entered into which matures in October 2024. The new facility funding costs are at 2.25 per cent above BBSY, which is half the funding costs under the previous facility. As the new facility is revolving, less cash will be required to be held on the balance sheet which has also helped reduce interest costs. 14 The Voice The Seven West Ventures portfolio is focused on disruptive, scalable businesses with a strong consumer or media proposition. 15 Review of Segments Seven West Media Limited Annual Report 2022 Review of Segments Seven Dancing With The Stars 16 Seven is Australia’s #1 total television company. The content and transformation strategy accelerated throughout the financial year, with key tentpoles continuing to deliver audience consistency and strength. This programming line-up, coupled with acquisition of the assets of Prime Media Group, has resulted in Seven being the #1 network and 7plus the #1 BVOD service. Seven’s strategy continues to focus on acquiring, engaging and retaining advertising friendly demographics. Our aim is to bring viewers the best entertainment, news and sport content to engage these audiences at scale. The evolving entertainment schedule continues to enrich the demographic profile of the network and enhance our proposition for advertisers. The acquisition of the assets of Prime Media Group in December 2021 has also strengthened our proposition to advertisers. We are pursuing the opportunity created by Prime to increase our presence in regional markets, especially through the 7plus platform. Our linear broadcast now reaches more than 91 per cent of Australians, allowing us the opportunity to increase our share of the $3.8 billion national total TV and advertising market. ThinkTV reported that the metropolitan free to air television advertising market increased by 8.75 per cent to $2.8 billion in the financial year. While COVID-19 continued to affect the first quarter of the financial year, the timing and magnitude of the market recovery experienced during the remainder of the year was ahead of expectations. This recovery has been sustained despite lockdowns and border closures that intermittently impacting key metropolitan markets through the first half of FY22. 7REDiQ continues to enhance our digital audience targeting capabilities, unifying data analytics into tangible insights across the Group. This market leading Audience Intelligence tool supports the growth in the overall BVOD market as well as Seven’s share of that market. The 7REDiQ platform has enabled data overlay on direct bookings to increase by 75 per cent and programmatic activity to grow from zero to 25 per cent with transactions across all addressable targeted segments in 2022. Seven Network Seven was the #1 television network for the calendar year 2021 and has maintained this position in the first half of the calendar year 2022. Seven is the only network to grow audience share, which is testament to the changes made to the programming strategy and the proposition being offered to advertisers. This has only been strengthened by the acquisition of the assets of Prime Media Group. The revitalised entertainment schedule with successful new formats, combined with our market-leading news and sports franchises, has driven these results. The ratings momentum we have seen during the 2022 financial year with our tentpole shows, content spine and sport will be reflected in an improved share of television advertising revenue. The 2022 financial year commenced with the Olympic Games Tokyo 2020 which was a landmark media event reaching 20.2 million Australians across broadcast and 7plus. More than 4.7 billion minutes of content were streamed on 7plus during the Olympics period and 7plus registered users grew to 10 million, which has continued to grow post Olympics, with registered users of 12.5 million at 25 June 2022. Seven is the only network to grow audience share which is testament to the changes made to the programming strategy and the proposition being offered to advertisers. 17 The Olympic Games Tokyo 2020 provided the launch pad for the 2022 financial year content lineup that included the year’s #1 new tentpole The Voice, SAS Australia, and Big Brother as well as the AFL Finals Series (reaching 7.5 million viewers – biggest grand final since 2016), Bathurst 1000, the Ashes Cricket Test Series, and Olympic Winter Games Beijing (reaching 14 million viewers across broadcast and 7plus). to be launched from this event will see the refreshed MKR and AGT, the return of Australian Idol and the introduction of new format Million Dollar Island. In addition, the depth of Seven’s broadcast schedule remains unparalleled. This consistency is led by our market-leading news and public affairs programming, long running Seven productions (Home and Away and Better Homes and Gardens), and Sport. Similarly, the 2022–2023 financial year will commence with the 2022 Birmingham Commonwealth Games which will provide a strong platform to launch programming. The programming Seven’s programming schedule begins each day with Sunrise, which remains Australia’s most-watched breakfast show for a 19th consecutive financial year. The Morning Show celebrated its 15th birthday as the most-watched morning show. Home and Away continues to be the #1 Australian drama on free-to-air. Rounding out Seven’s dominance throughout the day is The Chase that provides the lead- in to Seven’s market leading nightly news service. 7NEWS continued its dominance as the #1 news service in the country. It remains the most trusted source of broadcast news in the country with our evening 6pm news bulletin continuing to average over 1 million capital city viewers viewers in 2022. Seven is also home of Australia’s number one sport in the AFL. Dancing with the Stars - Grand Finalists 18 Review of Segments Seven West Media Limited Annual Report 2022Seven’s revenue grew by 23.6 per cent to $1.37 billion. Costs increased by 19.4 per cent to $1.04 billion, which includes 6 months of costs acquired as a part of the Prime transaction. EBIT increased 39.8 per cent to $295.8 million. Seven Revenue Costs EBITDA EBIT FY22 $m 1,367.9 (1,039.8) 328.0 295.8 FY21 $m 1,106.5 (870.9) 235.6 211.6 Inc/(Dec) % 23.6 19.4 39.2 39.8 Seven was the #1 television network for the calendar year 2021 and has maintained this position in first half of calendar year 2022. Home and Away 19 Review of Segments Seven West Media Limited Annual Report 2022 Digital 20 Seven’s BVOD streaming platform 7plus increased share of total minutes streamed in FY22 to 43.4 per cent, up 3.4 per cent year on year. In the 2022 financial year streaming minutes on 7plus grew by 61.3 per cent, comfortably outperforming commercial FTA market streaming growth of 47.6 per cent. Seven’s major events and tentpole programming supported the continued growth in consumption on 7plus, building on the audiences that the platform’s library content continues to deliver. Registered users on 7plus streaming platform increased 107.0 per cent to 12.5 million year-on-year during FY22. Investment in the 7plus platform on web and mobile has delivered a best in class user experience for the 9.2 million viewers who streamed our coverage of the Olympic Games Tokyo 2020 and for the 1.8 million viewers who streamed our coverage of the Olympic Winter Games Beijing 2022. The launch of audience measurement system VOZ in July 2021 now allows us to highlight the incremental reach of BVOD. During the 2022 financial year, the BVOD market continues to grow rapidly, with advertising revenues from online catch-up and live TV streaming up 46.7 per cent YoY to $369.4 million. Seven outperformed the market, growing its digital gross advertising revenue by 56.3 per cent year-on-year. Digital revenue included within the Seven business increased by 93 per cent during the financial year to $177.1 million. The rapidly growing scale of 7plus’ registered audiences, together with a series of premium second-party data sharing arrangements, continued to grow the 7REDiQ platform. 7REDiQ has enhanced our digital audience targeting capabilities, unifying insights and data analytics across the Group. This data offering secures premium revenue, supporting the growth in the overall BVOD market as well as Seven’s share of that market. The subscriber growth experienced during the financial year allows the REDiQ platform to rapidly scale and improve our premium advertising offering to advertisers. 7NEWS.com.au revenue grew 24.0 per cent year-on-year with total page views (up 4.2 per cent) and an increase in video consumption. Seven’s major events and tentpole programming supported the continued growth in consumption on 7plus, building on the audiences that the platform’s library content continues to deliver. 21 Review of Segments Seven West Media Limited Annual Report 2022 Review of Segments The West Dancing With The Stars 22 West Australian Newspapers is the fastest growing cross-platform brand in Australia. Publications include 2 metro publications The West Australian and The Sunday Times, 19 regional publications, 11 suburban newspapers and the state’s most popular websites thewest.com.au and PerthNow.com.au. The West Australian averages 359,000 print readers every day and 481,000 on the weekend. The Sunday Times has an average of 366,000 readers every weekend. Latest data from Roy Morgan to March 2022 reveals that in the past year these circulation numbers have risen 6 per cent for the daily newspaper and 18 per cent for the Saturday newspaper on the back of award-winning journalism and powerful newspaper presentations. On a combined basis, thewest.com.au and PerthNow.com.au have 3.5 million unique monthly audience, reflecting the engaging and quality content across our digital platforms. In print, The West Australian Monday to Friday edition has the highest market reach of any major metropolitan weekday masthead in the nation, with 16.4 per cent of West Australians on average reading an issue of the weekday edition. Average weekday readership of The West Australian was strong in the 12 months to March 2022, outperforming the broader industry. The West has continued to transform its business with a strong focus on driving a greater share of its revenue from digital subscriptions and circulation, through high quality local editorial. The result of this focus is demonstrated in the leading readership and circulation results across the country, as well as the strong growth in digital subscription revenue. WAN, alongside Seven, continues to benefit from the landmark commercial agreement to provide Google and Facebook news content, supporting The West’s investment in high quality journalism and content. Evidence of this investment includes several new video content series across YouTube (Google) and The West publications including ‘Up late’ with Ben Harvey and the launch of innovative new digital products across our platforms. Economic conditions continue to improve in West Australia, although advertising conditions have been mixed. Strong retail trade and the federal election was a positive contributor for advertising spend, but certain sectors have been faced with demand outstripping supply, such as auto and real estate, which has resulted in reduced advertising spend. Total revenue increased by 4.4 per cent to $169.3 million. Operating costs are an ongoing focus and the West’s costs increased 1.4 per cent in FY22. There were no temporary savings in the current year after more than $9 million of temporary COVID-19 benefits in the previous financial year. WAN Revenue Costs EBITDA EBIT FY22 $m 169.3 FY21 $m 162.2 (135.6) (133.7) 33.7 33.2 28.5 28.2 Inc/(Dec) % 4.4 1.4 18.2 17.7 23 Risk Management and People 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, aligned to its strategy, 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 identify, measure, evaluate, monitor and report on each of them and then control or mitigate them, to the extent possible. For more information on the Company’s risk management framework refer to pages 39 to 45 of this Annual Report for the Corporate Governance Statement. Risk Management Framework – Key Risks and Mitigations Strategic Objective Risk Category Content-led Growth Competition for key sports and entertainment rights The Company recognises the value of premium content to its audiences and advertisers and the importance of the Company securing rights or creating attractive content at a sustainable cost. Structural change and new competitors for audiences The rapid transformation of the media industry due to technological change represents a material economic sustainability risk for the Company. Mitigations The Company ensures a disciplined approach is maintained in acquiring content rights and production resourcing. For these rights acquired, the focus is on maximising the revenue opportunities that these rights present, including by targeting key demographics for advertisers and demonstrating the return on advertising investment through reliable measurement systems. The Company continues to update arrangements to acquire this premium content where possible, to reflect the changing operating environment. The Company is responding to and participating in this change under its current strategic framework, including a continued investment in the rapid digital transformation of the Company. The Company continues to target leadership in the most valuable linear broadcast demographics which, together with our 7plus BVOD service, allows for growth in audiences and greater returns on our investments in content. In addition, the Company’s data product 7REDiQ continues to improve the outcomes for advertisers and viewers through the delivery of better contextualised advertising. 24 Risk Management, People and Sustainability Seven West Media Limited Annual Report 2022Risk Management Framework – Key Risks and Mitigations Strategic Objective Risk Category Transformation Technological Risk There is an ongoing risk that the Company’s technology may not be fit for purpose or that major technology projects may not be delivered to plan, impacting business performance or requiring new investment. There is also the risk that key technology may fail resulting in loss of revenue and audiences. Regulatory Change The television industry is subject to a high degree of regulation including broadcast licence conditions. Changes to these conditions can have a material impact on the costs of operation and the ability of the Company to compete in a global market. Cyber Security Risk Noting the increasing frequency and severity of cyber security attacks globally, there is a risk that the Company’s systems may be subject to such an attack. The Company recognises that such incidents, should they occur, may negatively impact financial and operational performance. This can include the loss of Company and customer data. COVID-19 Impacts on Workforce The impact of COVID-19 has changed the normal working conditions for all staff and continues to contribute to absences and productivity loss for team members. Capital Funding Availability There is a risk to the availability of the capital funding required to meet the Company’s operating and strategic requirements. This risk arises due to some or all of the following factors: > the structural changes in the media industry; and > the success of the Company’s content and audience strategies. Execution of M&A strategy There is a risk that the M&A activity that is entered into does not realise the expected benefits and strategic alignment to the Group’s strategy when it was entered into. Capital Structure and M&A Mitigations The Company has increased its technology capabilities through enhanced staffing expertise, project delivery governance and reporting processes to better manage this risk. The Company continues to manage risks which could give rise to a failure in core operational systems and processes through Business Continuity Planning including system and site redundancy. Management maintains a specialised expertise in regulatory matters and participates in regulatory reviews through direct engagement and via representation on a variety of industry bodies. The Company continues to engage with the Federal Government following the release of the Media Reform Green Paper to participate in the creation of a new regulatory framework for the future of the Australian free-to- air television industry. All Company staff receive ongoing training to ensure that they are aware of the risks that cyber attacks pose and their role in preventing incidents from occurring. The Company also continues to grow its investment in the technical staff and systems required to appropriately manage the potential adverse effects on the Company. The Company has a robust Incident Management framework which has operated throughout the pandemic, seeking to mitigate risks to the safety and wellbeing of all staff regardless of where they are carrying out their duties. The Company refinanced its debt facility in October 2021, for a further three years. The terms of the refinanced facility are a significant improvement to the previous facility and provide the Company greater flexibility to pursue its strategy. This refinance significantly reduces the Company’s exposure to this risk and better positions the business moving forward. The Company completed its acquisition of the assets of Prime Media Group in December 2021 which expanded our national reach and improved our total TV ad market proposition to advertisers. The Company ensures that M&A transactions that are entered into meet stringent hurdles to achieve the best possible outcome for our shareholders. Detailed integration plans accompany any M&A transaction so that any transaction is successfully integrated. 25 People At Seven West Media, we understand that our people ensure our success. In return, we are committed to creating a workplace where employees can fulfil their individual career aspirations and potential and that they are inspired by a high-performance culture. Management works to promote a collaborative and innovative workplace that is safe, flexible, inclusive and that fosters creativity and excellence. This ensures that the Company continues to meet the highest performance standards and serves the evolving needs of our stakeholders, our customers and our audiences. People Policies & Practices We have a comprehensive set of frameworks that support our culture to build a high-performance workplace and drive our focus on results, productivity and safety. Our purpose, strategy and values focus our efforts and determine how we measure our success. The intent of our people policies and practices is to create a workplace where employees are assured that: > Minimum legal requirements are being met; > Employees, as well as the Company are protected from > Best practices appropriate to the Company can be the pressures of expediency; and documented and implemented; > The Company’s values are promoted. > Management decisions and actions are fair, consistent and predictable; Fundamental to building a high-performance culture are the Company’s strategic People pillars: Transformation Wellbeing & Safety The continuity and resilience of our business operations are crucial for serving the needs of our people, audience and customers, upholding community trust and maintaining the Company’s reputation. Our technology infrastructure and platforms require ongoing maintenance and updates to ensure network, software applications and hardware are resilient to ensure we effectively mitigate risk across the business. Business processes are regularly reviewed and, where necessary, are either automated or non-core activities are outsourced. The Company continues to integrate and/or create synergies from M&A activity, driving greater agility and alignment across all relevant business functions. Our flexible work practices include a range of technological measures for those employees who are able to work remotely to maximise their safety and productivity. We continue to implement employee and industrial relations initiatives across the business. New Enterprise Agreements provide our people with simpler and better agreements, while aligning workplace terms and conditions with community standards. Seven West Media recognises the value of effective workplace safety and wellness as an integral part of how we successfully manage our business. We are committed to building a positive health and safety culture, with a focus on personal wellness, injury prevention and the mitigation of risk through maintaining high workplace safety and wellness standards and performance. With a comprehensive mental health framework, strong risk management processes and engaging wellness initiatives, the business continues to strive to improve in its safety outcomes, including the Lost Time Injury Frequency Rate (LTIFR) which continues to remain below the industry benchmark. The Company is also committed to extra safety support to employees during overseas deployments, wherever they might be. The Company provides specific psychological support and 10 days’ paid leave per annum for employees who are victims of domestic and/ or family violence. The Company is involved in the NSW Government’s Corporate Leadership Group advising the Government on further initiatives to eradicate sexual assault and domestic violence in Australia. With an increasing focus on mental health, the Company has taken an active focus on building awareness and support for managing mental health in our workplace. We have developed and implemented a comprehensive framework which includes training, initiatives and events tailored for managers and employees to support positive mental health. Particular emphasis has been placed on delivering programs on resilience across the organisation including burnout and Vicarious Trauma programs for our News and Broadcast Operations teams. The Company’s wellness program provides a range of benefits and initiatives to optimise the physical and mental health and wellness of employees, including: > Confidential counselling services through our Employee Assistance Program; > Educational seminars on a variety of health topics across our five Pillars of Wellbeing – Work, Financial, Physical, Mental and Community; > Practical tools to manage stress and mental health, such as introducing mental health app ‘Calm’; > Discounted offerings with fitness and wellbeing partners; > Flu vaccinations and skin checks; and > Psychological risk training. 26 Risk Management, People and Sustainability Seven West Media Limited Annual Report 2022The continuity and resilience of our business operations are crucial for serving the needs of our people, audience and customers, upholding community trust and maintaining the Company’s reputation. Our annual wellness program calendar includes regular events and initiatives supporting our five Pillars of Wellbeing that are delivered to employees across the various locations in which we operate. The calendar is reviewed regularly to ensure it continues to prioritise key health topics and is aligned to the unique needs of our employees. Further online courses have been completed by employees, including compliance-related training for new and existing employees (focusing on cyber-security and fraud awareness, anti-bribery and anti-money laundering, privacy, mandatory training under the Modern Slavery Act and other compliance matters). Performance & Reward Reward and performance framework and strategies are created to attract and retain talented employees by rewarding high performance and delivering superior long-term results, while adhering to sound risk management and governance principles. We are committed to ensuring that our remuneration and performance approach supports positive, fair and equitable outcomes for our people and delivery of sustainable value for our shareholders. Remuneration is not just the direct amount of money paid to an employee. It also involves non- financial rewards and benefits. The Board monitors our Remuneration Policy and framework on an annual basis to ensure it remains fit for purpose, supports the Company’s strategy, and delivers on the intended design. Talent & Development Our talent and development framework ensures that we create an environment where continuous learning is part of an employee’s development and progression so that they can reach their full potential. This drives leadership capability and is an important channel through which our culture is embedded and reinforced. Over the past year, we continued to invest in the growth, learning and development of our employees, in particular communication skills, managing remote teams and wellness training, support and seminars while working remotely. Mentoring, both internal and external, has become a key feature of our culture. It plays an important role in identifying and supporting leadership development while increasing engagement and productivity. Regular reviews, including setting key performance indicators and ongoing career development, are an important part of performance measurement and management and support the Company’s high-performance ambitions. As well as encouraging regular and ongoing feedback with managers, the Company requires all employees to have at least two formal review sessions with their manager each year. During these reviews, employees are encouraged to raise, discuss and respond to matters relating to performance, training, further education and development of required skills and capabilities. The Company has stepped up its focus on increasing the pool of management capability where key high-potential employees are identified and supported through the Company. A thorough talent and succession planning process has resulted in a deeper review of people and their potential, including opportunities for female talent. A key objective is to further embed gender diversity as an active consideration in succession planning. Executive level succession plans were reviewed by the Board and provide a diverse list of candidates for whom development plans are created to ensure preparedness to take on future opportunities. Culture, Engagement & EVP Engagement and retention are underpinned by the People Experience (Px) which centres on four pillars – Attract, Perform, Grow and Engage. Employee engagement strategies continue to evolve our Px initiatives and programs such as ‘Moments That Move Us’ on reward and recognition, ‘Spark’ mentoring program, ‘SWM School’ learning platform, ‘Leading@ SWM’ leadership development, ‘7Perks’ employee benefits platform, ‘SWM Wellness’ including financial wellness, performance and development, digital onboarding, and intern, graduate and secondment programs. We measure employee engagement regularly through ‘Teamgage’, a real-time employee engagement survey platform based on eight key engagement metrics – Values, Systems & Processes, Strategic Alignment, Communication, Flexible Workplace, Innovation, Feedback and Safety. All our people are provided the opportunity to complete the survey and provide honest feedback. Results are aggregated into a real-time report that is shared and discussed with team members to drive new ideas and improvements and assist in helping shape the future of the Company. Diversity, equity and inclusion (DEI) are integral to our culture and how we live our values. Reflecting the diversity of our people, customers and communities enables us to serve their needs. We have further embedded our DEI and environmental awareness programs to ensure they support our culture and to express these commitments at all levels. Through these policies and practices, we make it clear that discrimination on any basis is not acceptable. 27 Corporate Social Responsibility Diversity, Equity and Inclusion The Company recognises and encourages the social and developmental benefits of skilled volunteering and wider community engagement by employees. The Company also continues to support and encourage 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, the Company encourages employees to work together as a business to help make an impact. It also continues to encourage its employees to make a difference through providing opportunities to participate in community fundraisers. Our community contributions are covered in the Sustainability section of this Report. Seven West Media recognises the benefits of an inclusive and respectful workplace culture that draws on the experiences, diversity and perspectives of our people. This is to ensure that our business remains innovative and sustainable, and continues to meet the needs of our stakeholders and audiences. We view diversity through a broad lens of difference in people across gender, nationality, ethnicity, physical abilities, sexual orientation, body type, gender identity, generation/age, disability, socio-economic status, religious belief, parental status, professional and educational background as well as global and cultural experiences. In March 2022, Seven West Media became the first media company in Australia to be awarded a citation as Employer of Choice for gender equality by the Workplace Gender Equality Agency (WGEA). The criteria for the citation are rigorous and we were one of just 12 companies across Australia to be added this year as an employer having achieved gender equality in the workplace. Seven’s commitment to diversity, equity and inclusion will continue and is demonstrated in our first comprehensive sustainability report. Diversity, Equity and Inclusion Commitments and Initiatives During FY22, the Board reviewed the Company’s DEI Policy which is a key part in its overall talent and culture strategy and guides investment in the areas of recruiting, staffing, account planning, succession planning, promotions and development. The Company supports an inclusive work environment where people have genuine and equitable access to career opportunities, training and benefits. We progressed our commitments during FY22 including: > Including the Prime Media Group transaction, we achieved an overall female gender balance of 48 per cent across our workforce as well as maintained the female representation in management positions of 50 per cent. This result continues to be supported by our equal opportunity recruitment process. The Board recognises the importance of diversity at Board level and aims to achieve a minimum of 30 per cent female representation in the coming years. > Continued advisory role to the NSW Government’s Corporate Leadership Group (CLG) in relation to Domestic and Family Violence and Sexual Assault. > Partnered with UN Women Australia at a national level for the 2022 International Women’s Day (IWD) live and virtual events. We also extended our partnership with UN Women Australia to participate in the ‘Unstereotype Alliance’ which aims to eradicate stereotypes in advertising with regards to gender equality. > Established the David Leckie Seven Scholarship Program in memory of our former Chief Executive Officer, the late David Leckie AM. The annual program offers a 12-month scholarship at Seven West Media for a junior graduate with a passion for sales, programming or news. > Implemented the Company’s inaugural Reconciliation Action Plan (RAP) through the delivery of a 12-month ‘Reflect’ stage program of work. > Developed a company wide sustainability framework and strategy. > Revised our processes and procedures on the casting of contestants with our production partners. 28 Risk Management, People and Sustainability Seven West Media Limited Annual Report 2022We will continue to focus our strategy to achieve a more diverse, equitable and inclusive workplace in other areas of the business by: > Embedding flexibility in the way we work; > Supporting our commitment to diversity, equity and inclusion; > Uncovering and taking steps to mitigate potential bias in our behaviours, systems, policies and processes; and > Ensuring our brand is attractive and caters to a diverse range of people. The Company has posted its Workplace Gender Equality Act Public Report for 2021–2022 on its website, which contains the Company’s Gender Equality Indicators. The Company’s progress against diversity objectives were established in 2018, and our commitments set for the financial year can be found on pages 28 and 29 of this Annual Report. > Revised our leave policy to increase company-funded parental leave for secondary carers and removed the qualifying period for eligibility of gender-neutral paid parental leave. > Continued to celebrate LGBTIQ+ Pride and held team events (virtually and in small groups) across the Company to support our diverse and inclusive culture. > Continued participation in the ‘The Everyone Project’ which is an initiative from the Screen Diversity and Inclusion Network (SDIN) to benchmark and track the diversity of the Australian screen industry. > Implemented our digital onboarding process for new starters. > Launched and implemented ‘Teamgage’, a real-time employee engagement survey platform. > Launched and implemented an employee benefits platform, ‘7Perks’ to support employee engagement and retention. > Continued to build on the Company’s ‘Financial Wellbeing’ programs including Mercer’s ‘Super for Women’. > Continued supporting initiatives in relation to eradicating domestic and family violence and sexual assault, including supporting the ‘Make No Doubt’ campaign. > Partnered with White Ribbon in campaign launches, such as ‘Be the Change’ campaign. > Continued to hold events through Mental Health Month (October) and on ‘R U OK? Day’. > Continued support for the ‘Speak Out - 16 Days of Activism Against Gender Based Violence’ campaign. Female Representation in Management Positions 50% Seven West Media became the first media company in Australia to be awarded a citation as Employer of Choice for gender equality by the Workplace Gender Equality Agency. 29 Risk Management, People and Sustainability Seven West Media Limited Annual Report 2022 Sustainability Seven West Media’s critical role in Australian society is underpinned by our commitment to use the power of our platforms to inspire a better us. Us is all of us. It includes individuals, groups, communities, the nation as a whole, and internally the Seven West Media team. We aim to achieve a positive impact by uniting the people and the communities in which we operate, providing opportunities for future generations, representing Australia by supporting diversity, equity and inclusion internally and externally, and by being environmentally responsible and promoting important environmental causes. Over the last financial year, we used the power of our platforms to bring awareness to important community issues and raise over $100 million dollars in fundraising events and donated $45 million worth of community service hours to more than 150 causes and organisations which are important to Seven and our stakeholders. 30 Representing Australia Our team at Seven West Media encompasses multiple backgrounds and life experiences. We believe a richness in diversity, as well as an inclusive and equitable workplace, leads to better outcomes for our people, partners, audiences and shareholders. Internal diversity and Reconciliation support: Diversity and inclusiveness are at the core of our values and part of our business strategy at all levels. We are focused on improving opportunities for people from diverse backgrounds and increasing the pace of progress in this area. We want our workforce to represent the broader community in which we operate, leveraging differences to achieve better business results and deliver a superior experience for all our stakeholders. We have the structures and programs in place to ensure continuous improvement, with positive steps undertaken across the business this year. These are covered in the people section of this report. Representing Australia’s diversity on-screen Externally, we reflect Australia’s diversity through our news, entertainment and sport coverage, playing a critical role in how Australians perceive themselves and their country. We are constantly evolving our content to be more diverse and inclusive, ensuring our products and services continue to appeal to Australian audiences. Quality Australian content has far- reaching impacts beyond the number of people who watch and engage with it each day. It enriches the social fabric of Australia. It informs voters. It holds the powerful to account. It tells stories. It provides employment. It promotes Australian tourism. Seven West Media is committed to using its power as Australia’s leading broadcaster across television and BVOD to lead positive social change. In 2022, the company joined the Unstereotype Alliance’s Australian chapter to help end unhelpful stereotypes in advertising and media content that hold women back. Seven West Media is a member of the Screen Diversity Inclusion Network (SDIN) and is participating in the ‘The Everyone Project’ together with the SDIN to benchmark and track the diversity of the Australian screen industry. We are also driving representation in our own productions. In 2021 Seven filmed the drama series RFDS, in Broken Hill. The production starred five First Nations Australians, 30 First Nations extras, one First Nations consultant and one First Nations writer/director. Seven’s #1 hit entertainment show, The Voice, has a highly diverse range of contestants, including across heritage, age, ability, sexual orientation and gender. We are also revising our processes and procedures with production partners on the casting of contestants and improving diversity of on-screen talent with production partners. We have a long-term partnership with the AFL on diversity and community initiatives including the AFL Indigenous Round, as well as the AFL ANZAC Round and AFL Sir Doug Nicholls Round. Seven West Media also supports Australia’s Para athletes as the broadcaster for the Paralympic Games Tokyo 2020, the Paralympic Winter Games Beijing 2022 and the Birmingham 2022 Commonwealth Games, which includes a fully integrated para program. The Voice The Voice 31 Opportunities for future generations Contributing to better opportunities for future generations, particularly when it comes to health and social outcomes, means a lot to Seven West Media. That’s why we dedicate major resources to projects and initiatives right across Australia that deliver a better future for younger Australians, especially around children’s health and medical research. Children’s health and medical research Seven West Media, in partnership with the Channel 7 Telethon Trust, runs the Perth Telethon each year to financially support the medical and social welfare of children and young people, and to fund new preventions, treatments and cures for diseases affecting young people across Australia. The Telethon has raised over $400 million since its inception in 1968. Since 2010, each Telethon has set a new record for the total amount raised. In 2021 Telethon raised A$62.1 million. Telethon The Group also supports the Good Friday Appeal in Victoria, a partnership with the Royal Children’s Hospital and The Herald Sun that spans 90 years, which raised $22.3 million to support the hospital in the 2022 appeal. Channel Seven also has a Children’s Research Foundation based in South Australia that awards annual grants and awards to research that support Children’s Medial Research. Last financial year the foundation awarded over $1.2 million in research grants. David Leckie Seven Scholarship Program Further demonstrating the Group’s commitment to future generations, in September 2021 Seven West Media announced the establishment of the David Leckie Seven Scholarship Program in memory of former Chief Executive Officer, the late David Leckie AM. The annual program, set up in conjunction with Skye Leckie and David and Skye’s sons Harry and Ben, offers a 12-month scholarship at Seven West Media for a junior graduate with a passion for sales, programming or news. In March 2022, Madeline McKeown was announced as the inaugural recipient. Supporting sports from grassroots to national level We are proud of our work to support sport from grassroots through to the professional level, given the importance of organised sport for physical and mental health. Media rights are the lifeblood of sport and Seven West Media underpins the AFL competition enabling all Australians to watch it for free. The Group has an existing network of strong partnerships with sporting groups, from a national and professional level through to local community sporting groups. The support we provide includes fundraising, donations and profile-raising. We are also a supporter of the Paralympics including supporting the “Green and Gold virtual seat” campaign raising funds for the Paralympic team and we have used our platform as the broadcaster of the Olympics to encourage Australians to get the COVID-19 vaccinations. Providing opportunities for youth development Seven West Media works with organisations focused on supporting young Australians, including UnLtd, Whitelion, and Australia’s Young Achiever Awards. We also support the NSW and Victoria Schools Spectacular. 32 Risk Management, People and Sustainability Seven West Media Limited Annual Report 2022Uniting people and communities We are locals in the communities in which we operate. We are part of the glue that unites our communities, creating shared understanding and fostering the spirit of Australia in an authentic and engaging way. Supporting local community groups Giving back to our communities is in our DNA. Several of Seven West Media’s partnerships with community groups, NGOs and charities focus on community engagement, connection and support – including multiple initiatives specifically focused on young people and fostering leadership. This also includes helping to rally support around national crises – such as the Australia Unites: Red Cross Flood Appeal, which raised $25.3 million for people and communities affected by the Queensland and NSW floods in 2022. Supporting vulnerable members of the community Seven West Media also puts a priority on helping those in our community who are most vulnerable. We have initiatives to support and protect the victims of domestic abuse – including partnerships with White Ribbon, Make No Doubt and others. We also provide contact details and links to domestic violence groups in all relevant editorial and support campaigns through on-air CSAs. Seven West Media reports on the actions taken to address modern slavery and human trafficking in its business and supply chain, in line with the Modern Slavery Act 2018. Mental health initiatives Seven West Media is also focused on supporting mental health initiatives, both internally for our people and to raise awareness of mental health issues in the community through sponsorship of initiatives, as well as regular news coverage of relevant issues. Seven West Media also provides profile and awareness during Mental Health Month. Big Freeze 8 The Big Freeze, through events such as the celebrity slide and sale of its iconic blue beanies, raises awareness and funds for Fight Motor Neurone Disease. Big Freeze 8 held on June 10, 2022 raised a record-breaking $19.8 million. Supporting arts and culture As part of Australia’s creative industry, we are proud to support arts and cultural initiatives that unite Australians. Seven West Media invests in arts and culture partnerships, including the National Gallery of Australia, Art Exhibitions Australia, the Melbourne Symphony Orchestra and the Fringe Festival. We have also worked with the Schools Spectacular to create virtual experiences during the pandemic, embodying our purpose of bringing Australians closer to ‘moments that move us’. The Big Freeze 33 Empowering communities through trusted information and providing Australians with impartial news Whether it’s 7NEWS, Sunrise, or The West Australian, we provide our communities with the latest, trusted news and information that helps them interpret what is happening in our nation, their state, territory or local community. By providing fearless and accurate reporting, we contribute to keeping our democracy healthy and functioning. We also work to enable more members of the community have access to this information through accessibility initiatives, including closed captions on most programs and providing coverage of interpreters when they are present. Building community trust with strong data security governance Seven builds trust through strong data security governance, recognising our responsibility to those using and engaging with our platforms, and acting ethically with the collection, use, and disclosure of data according to our policies and industry best practice. Bringing awareness to environmental issues At Seven West Media, we are committed to bringing awareness to environmental issues, while also reducing the environmental impact of our business activities on the communities and environment in which we operate. Reducing our impact Seven West Media is actively working towards reducing Scope 1 and 2 emissions under the National Greenhouse & Energy Reporting Act (2007), as well as Scope 3 voluntary emissions where possible. With the acquisition of the assets of Prime Media Group completed during the financial year, a new baseline of emissions will be calculated for 2022/23 to take into account the increased footprint of the combined entity. We donate or recycle the majority of our redundant electronic IT assets via certified eCycling companies, reducing what goes to the landfill. In FY22, only an immaterial amount was not donated or recycled. This was due to permanent e-waste recycling bins placed at our largest sites. As part of our long term fleet reduction initiative, we will continue to reduce vehicle numbers. The size of our fleet has increased this year on aggregate through the addition of Prime Media Group vehicles; but excluding this the fleet has decreased 27.5 per cent over the past 8 years. Seven West Media operated on 18.6 per cent renewable energy in FY21 and we are currently in the process of assessing our emissions across the business. Seven West Media will make significant energy savings by vacating its Martin Place tenancy in the Sydney CBD during 2023 and relocating the studio and News and Public Affairs operations to its Eveleigh site, a 5-star NABERS building with 4 Star Greenstar Interiors rating. Australia Unites: Red Cross Flood Appeal – James Warburton, Amanda Keller, Ben Fordham, Beverley McGarvey, Natalie Barr and Michael Healy 34 Risk Management, People and Sustainability Seven West Media Limited Annual Report 2022Printed editions of our newspaper are important for accessibility to news in many of the communities in which we operate. We are mindful of the environmental impact that newspaper production has on our environment and aim to reduce the impact of the physical copies of our newspapers. WAN undertake the following sustainability initiatives: > The paper used to print the West Australian, Sunday Times, Regional and Community titles is sourced from a mix of recycled consumer product and certified plantation forests > WAN also ensures any paper used is not from illegally logged timber. Any virgin fibre required is sustainably sourced. > The West Australian and The Sunday Times printed waste measure is < 5 per cent per year and all waste was recycled. > Waste ink produced in Perth is collected and reprocessed and plant wastewater is processed and used for reticulation on site. The production of television content can also have an environmental impact. We are now working in more efficient ways with our production partners to reduce and offset carbon emissions across a range of shows. This includes working with various suppliers including production companies and facility providers to reduce the need for complete turnover of facilities between shows and reduced freighting between seasons. We are also looking for opportunities to consolidate our building space to reduce our environmental impact. Raising Awareness for important environmental issues Seven West Media supports community initiatives to raise awareness of important environmental issues. Over the last year, Seven West Media has supported the BCF OzFish campaign to promote the health of waterways. OzFish Unlimited is a not-for-profit organisation dedicated to the protection and restoration of our waterways. Seven West Media supported Planet Ark’s National Recycling Week with free airtime and has also brought awareness to Planet Ark’s National Tree Day, Australia’s largest community tree planting and nature care event. Free airtime was provided to promote ‘Clean Up The Beaches’ campaign and the Great Barrier Reef Marine Park Authority. For the month of June 2022 support was provided to the Rockhampton Regional Council with their disaster management campaign. For the months of November and December 2021, Seven West Media provided Community Service airtime support for Fraser Coast Regional Council’s annual waste awareness campaign. Seven also provided support for the Waste Monsters’ campaign, raising awareness and engagement on the councils’ new waste and recycling trucks. The West Australia Noongar-English bilingual edition for Reconciliation Week Good Friday Appeal – Rebecca Maddern, Abbey Holmes and Peter Mitchell with Isla 35 Board of Directors Kerry Stokes AC Chairman – Non-Executive Director James Warburton Managing Director and Chief Executive Officer Mr Warburton is Managing Director & Chief Executive Officer of Seven West Media Limited. Prior to his appointment as Managing Director and CEO of Seven West Media, Mr Warburton was Managing Director and Chief Executive Officer of APN Outdoor, from 22 January 2018, where he led a significant transformation and turnaround at the company before departing in late 2018 when APN Outdoor was acquired by JCDecaux for a record valuation. Before his appointment to APN Outdoor, Mr Warburton was the Chief Executive Officer of Supercars for five years. In this position, Mr Warburton drove significant growth in the sport and delivered unprecedented broadcast, sponsorship and funding deals. Mr Warburton has also held senior leadership roles at media buying company Universal McCann. He was Chief Digital and Sales Officer of the Seven Media Group, and he was the Managing Director and Chief Executive Officer of Network 10. Mr Warburton was appointed to the Board on 16 August 2019. Mr Stokes was Executive Chairman of Seven Group Holdings Limited, a company with a market-leading presence in the resources services sector in Australia and formerly in north east China and a significant investment in energy and also in media in Australia through Seven West Media. Mr Stokes held this position from April 2010 until November 2021. 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 is a former Chairman of the Australian War Memorial and a former Chairman of the National Gallery of Australia. Mr Stokes holds professional recognitions which include an Honorary Doctorate in Commerce at Edith Cowan University and an Honorary Fellow of Murdoch University. Mr Stokes has, throughout his career, been the recipient of 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; 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. 36 Governance Seven West Media Limited Annual Report 2022John Alexander Non-Executive Director David Evans 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 Evans is Non-Executive Chairman of E & P Financial Group Limited and was appointed a director of that company in February 2017. Mr Evans established Evans and Partners Pty Ltd, the investment advisory company in June 2007. Since 1990, Mr Evans has worked in a variety of roles within JB Were & Son, and then the merged entity Goldman Sachs JBWere Pty Ltd (GSJBW). 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 Alexander was a director of Crown Resorts Limited from 6 July 2007 to 22 October 2020 and was formerly a director of Foxtel Management Pty Limited, Fox Sports Australia Pty Limited, SEEK Limited, Carsales.com Limited, Ninemsn Pty Limited and CrownBet. Mr Alexander is Chairman of the Remuneration & Nomination Committee. Mr Alexander was appointed to the Board on 2 May 2013. Mr Evans holds a Bachelor of Economics from Monash University. Mr Evans is a member of the Audit & Risk Committee and a member of the Remuneration & Nomination Committee. Mr Evans was appointed to the Board on 21 August 2012. Teresa Dyson Non-Executive Director Colette Garnsey OAM Non-Executive Director Ms Dyson is an experienced company director with a broad range of experience across public and private sectors. Ms Dyson has been closely involved in strategic decision making in business and organisational structuring, covering the financial services, transport, energy and resources sectors, as well as infrastructure projects. Ms Dyson is a director of Energy Queensland, Brighter Super, Gold Coast Hospital and Health Board, Fare Limited, and is a member of the Foreign Investment Review Board and the Takeovers Panel. She has been a Director of Genex Power Limited since May 2018 and Shine Justice Limited since February 2020 and was a Director Consolidated Tin Mines from January 2019 to January 2020. Ms Dyson holds a Masters of Applied Finance from Macquarie University. She graduated with a Bachelor of Laws (Honours), a Bachelor of Arts and Masters of Taxation from the University of Queensland and is a graduate of the Australian Institute of Company Directors. Ms Dyson is Chairman of the Audit and Risk Committee. Ms Dyson was appointed to the Board on 2 November 2017. Ms Garnsey has been a Non-Executive Director of Flight Centre Travel Group since February 2018, Magellan Financial Group since November 2020 and Chairman of Laser Clinics Australia. Ms Garnsey is a former Non-Executive Director and former Chair of Australian Wool Innovation Limited. Ms Garnsey has over 30 years’ executive experience, having held senior management positions at David Jones, Pacific Brands, and Premier Investments, encompassing strategy, operations, marketing, business planning and business transformation. She spent over 20 years with David Jones Limited rising to become Group General Manager. Ms Garnsey has served on the board of the Melbourne Fashion Festival. She has also advised the CSIRO, The Federal Innovation Council, and the business advisory boards of various Federal Trade and Investment Ministers and Australian Fashion Week. Ms Garnsey is a member of the Remuneration & Nomination Committee. Ms Garnsey was appointed to the Board on 12 December 2018. 37 Michael Malone Non-Executive Director Ryan Stokes AO Non-Executive Director Mr Malone founded iiNet in 1993 and continued as CEO for more than 20 years. iiNet listed on the ASX in 1999 and grew to service over a million households and businesses, with revenues and market cap of over $1 billion and 3,000 staff. After leaving iiNet, Mr Malone went on to co-found Diamond Cyber Security. Mr Malone is a Non-Executive Director of NBN Co, a former Director of Axicom Pty Ltd, a former Director of DUG Technology Limited from June 2020 to August 2021, a former Director of SpeedCast International Ltd from May 2014 to July 2022 and a former Director/Chairman of Superloop Ltd from April 2015 to March 2020. He is also a member of the Advisory Committee of the Regional and Small Publishers Innovation Fund. Mr Stokes is Managing Director & Chief Executive Officer of Seven Group Holdings (SGH) and has been a Director of SGH since April 2010. SGH owns approximately 38.9 per cent of SWM. Mr Stokes is Chairman of WesTrac, Chairman of Coates and Chairman of Boral and Director since September 2020. He was appointed a Director of Beach Energy in July 2016 and became an alternate Director of Beach Energy in November 2021. 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 was appointed Chairman of the National Gallery of Australia in July 2018. He is also a member of the IOC Olympic Education Commission. Mr Malone was recognised as the Australian Entrepreneur of the Year, CEO of the Year in the Australian Telecom Awards and National Customer Service CEO of the Year and is a recipient of the Charles Todd Medal. Mr Malone is a member of the Audit & Risk Committee. Mr Malone was appointed to the Board on 24 June 2015. Mr Stokes was Chairman of the National Library of Australia from 2012 to 2018. Mr Stokes was an Executive Director and then Chairman of Pacific Magazines from 2004 to 2008 and a Director of Yahoo7 from 2005 to 2013. Mr Stokes was a member of the Prime Ministerial Advisory Council on Veterans Mental Health from 2014 to 2019. Mr Stokes holds a BComm from Curtin University and is a Fellow of the Australian Institute of Management (FAIM). Mr Stokes was appointed an Officer in the General Division of the Order of Australia in the Queen’s Birthday honours announced on 8 June 2020. Mr Stokes is a member of the Remuneration & Nomination Committee. Mr Stokes was appointed to the Board on 21 August 2012. Michael Ziegelaar Non-Executive Director Mr Ziegelaar is a senior partner of global law firm Herbert Smith Freehills, where he is the Co-Head of the Australian Equity Capital Markets Group. He specialises in corporate, equity capital markets and M&A transactions and has acted for a wide range of clients across various industries. Mr Ziegelaar is also a non-executive director of the Burnet Medical Research Institute. Mr Ziegelaar holds a Bachelor of Laws (Hons), a Bachelor of Economics (majoring in Accounting and Corporate Finance) and a Master of Laws (majoring in Commercial Law) from Monash University. Mr Ziegelaar is a member of the Audit & Risk Committee. Mr Ziegelaar was appointed to the Board on 2 November 2017. 38 Governance Seven West Media Limited Annual Report 2022Corporate Governance Overview This Corporate Governance Overview outlines the Company’s main corporate governance practices that were in place throughout the financial year ended 25 June 2022. The Company’s full 2022 Corporate Governance Statement, which set outs the Company’s compliance with the 4th edition of the ASX Corporate Governance Council Corporate Governance Principles and Recommendations (“ASX Recommendations”), unless otherwise stated, is available in the “Corporate Governance” section of the Company’s website at www.sevenwestmedia.com.au/about-us/ corporate-governance. Board and Committee Charters and a number of the corporate governance policies referred to in the 2022 Corporate Governance Statement are also available at the above link. 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. 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 as well as those functions delegated to Management. 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 law, 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 must supply the Board with information in a form, timeframe and quality that will enable the Board to discharge its duties effectively, including information concerning the Company’s compliance with material legal and regulatory requirements and any conduct that is materially inconsistent with the values or Code of Conduct of the Company. 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 and Chief Executive Officer. The Non-Independent Directors in office are: > Mr Kerry Stokes AC, Chairman > Mr Ryan Stokes AO, Director > Mr James Warburton, Managing Director & Chief Executive Officer The Independent Directors in office are: > Mr John Alexander, Director > Ms Colette Garnsey OAM, Director > Ms Teresa Dyson, Director > Mr David Evans, Director > Mr Michael Malone, Director > Mr Michael Ziegelaar, Director 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 36 to 38. Chairman The roles of the Chairman and Chief Executive Officer are separate. Mr Kerry Stokes AC is the Chairman of the Company. The Chairman is responsible for leading the Board, facilitating the effective contribution of all Directors and promoting constructive and respectful relations between Directors and between the Board and Management. 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 conflict of interest protocol to manage the relationships between the Company and Seven Group Holdings Limited. 39 Board independence The Board comprises a majority of Independent Directors, with three 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, or represents or has been within the last three years an officer or employee of a substantial shareholder of the Company; > receives performance-based remuneration (including options or performance rights) from, or participates in an employee incentive scheme of, the entity; > 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; > has a material contractual relationship with the Company or another group member other than as a Director; or > has been a Director of the entity for such a period that their independence from management and substantial holders may have been compromised. 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 per cent, then a relationship will be considered material. In the Board’s view, the Independent Directors referred to above are free from any interest, position or other relationship that might, or reasonably be perceived to, influence, in material respect the capability to bring an independent judgement to bear on issues before the Board and to act in the best interests of the Company as a whole rather than in the interests of an individual security holder or other party. Mr Michael Ziegelaar is a partner at Herbert Smith Freehills, a law firm which provides certain legal services to the Company. The legal services provided by Herbert Smith Freehills are not considered material having regard to the principles above and Mr Ziegelaar is not involved in providing the services. The Board is satisfied that Mr Ziegelaar’s role with Herbert Smith Freehills does not interfere with the independent exercise of his judgment as a Non-Executive Director of the Company. Mr Kerry Stokes AC and Mr Ryan Stokes AO are not regarded as independent within the framework of the independence guidelines set out above because of their current and/or recent positions 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 James Warburton is not considered to be independent. Appointment of Directors 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 having regard to the Board skills matrix, 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. 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 of the Company since they were last elected. The Notice of Meeting for the Annual General Meeting discloses material information about Directors seeking election or re-election, including appropriate biographical details, qualifications and other key current directorships. The date at which each Director was appointed to the Board is announced to ASX and is provided in this Annual Report on pages 36 to 38. Company’s Purpose and Strategic Objectives The Board has approved the Company’s purpose as “To bring all Australians closer to the moments that move us”. The Company’s purpose is an aspirational reason for being that inspires a call to action for our people and stakeholders. The Board also approved the following areas as strategic objectives for the Company to achieve this purpose and underpin the Company’s economic sustainability: 40 Governance Seven West Media Limited Annual Report 2022What we want to be in three to five years: 1. Diversified media company. 2. Audience-led and digital first; powered by data and technology. 3. Total audience monetisation with material non-advertising revenue. 4. Low gearing with capacity for growth and capital management. 5. Re-weighting of portfolio to increase allocation to growth. How we get there: > Being unmissable & easy to access – Win on every screen in all genres of news, sport and entertainment across all key demographics. – Deepening audience relationships with a greater allocation to digital. > Growing through technology and scale – Driving scale, efficiencies, capability and defensibility. – M&A with non-media companies, leverage scale to drive total audience monetisation. > Driving Value Skills and Experience Media industry leadership Percentage 80% Senior executive or Board level experience in the media industry, including in-depth knowledge of the legislative and regulatory framework governing this industry. Banking, finance, asset and capital management Senior executive or Board level experience and understanding of banking markets and commercial financing arrangements as well as strategic planning and oversight of asset allocation and capital management. Marketing, sales and product distribution, customer and audience insights Senior executive or Board level experience in delivering product offerings to market, including marketing, branding and optimising sales processes, and customer and audience insights and experience in product distribution systems. 90% 80% Investment, mergers and acquisitions, venture capital and entrepreneurship 97% – Empowering everyone to think and act like an owner; constantly questioning... is there a better way? For more information on the Company’s strategic priorities and strategic outlook see pages 4 to 5 of this Annual Report. Senior executive or Board level experience in analysis and identification of business and market opportunities as well as execution in relation to investment, mergers and entrepreneurial activities. Technology, digital media and transformation 77% Senior executive or Board level experience in relation to digital media and transformation, information management, information technology, digital and streaming product technology, and the oversight of implementation of major technology projects. Board Skills Matrix The Board has developed a Board Skills Matrix, which is reviewed each year, reflecting the desired skills and experience required to be able to deliver on the strategic objectives of the Company. The Board believes that these skills and experiences are well-represented by its current composition. The Board Skills Matrix is set out in two parts. The first table outlines the desired industry specific skills and experience, which continues to evolve given the rapid changes in the media industry, and the second table outlines the depth of general corporate, executive and Director experience which are appropriate for the Company. The tables also outline the percentage of current Directors possessing those skills and experience on a weighted average basis. 41 Skills and Experience Percentage Audit & Risk Committee CEO and Board level experience 100% Significant business experience and success at a senior executive level. As at the date of this statement, the Audit & Risk Committee comprises the following members, all of whom are Independent Directors and all of whom are non-executives: Accounting and treasury 73% > Ms Teresa Dyson (Chairman of the Committee) > Mr David Evans > Mr Michael Malone > Mr Michael Ziegelaar 97% The relevant qualifications and experience of the members of the Committee are set out on pages 36 to 38 under the heading Board of Directors. Senior executive or equivalent experience in financial accounting and reporting, corporate finance, internal financial controls and an ability to probe the adequacies of financial risk controls. Corporate governance, regulatory, sustainability and organisation management Commitment to the highest standards of corporate governance (including sustainability and stakeholder relations) and experience within an organisation that is subject to rigorous governance and regulatory standards. Attendance at Committee meetings by management is at the invitation of the Committee. Directors who are non-Committee members may also attend any meeting of the Committee by invitation. The Chairman of the Committee reports to the Board on the Committee’s considerations and recommendations. Remuneration & Nomination Committee The Board has established a Remuneration & Nomination Committee comprised of the following members, all of whom are Independent Directors except for Mr Ryan Stokes AO: > Mr John Alexander (Chairman) > Mr David Evans > Ms Colette Garnsey OAM > Mr Ryan Stokes AO 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 also attend any meeting of the Committee by invitation. The Chairman of the Committee reports to the Board on the Committee’s considerations and recommendations. Board, Committee and Director performance evaluation During the financial year, Directors completed a Board Evaluation questionnaire concerning Board, Committee and Director, including Chairman, performance from which aggregated data and responses were provided to the Chairman and then presented to the Board for discussion and feedback. 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. During the reporting period, performance evaluations of the Board, its Committees and individual Directors were carried out in accordance with this process. Legal, regulation and compliance 83% Senior executive or Board level experience in compliance and knowledge of legal and regulatory requirements. Risk management and audit 87% Senior executive or Board level experience in identification, management and oversight of material corporate risks and audit, including ability to monitor risk and compliance. WHS, human resource management and remuneration 90% Board remuneration committee membership or Senior executive experience relating to workplace health and safety, diversity and inclusion, managing people and remuneration, including incentive arrangements and the legislative framework governing employees and remuneration. Board Committees The Board is assisted in carrying out its responsibilities by the Audit & Risk Committee and the Remuneration & Nomination Committee. Each Committee has its own written Charter*, which is reviewed on an annual basis and is available on the Company’s website. The Directors’ Report at page 47 sets out the number of Board and Committee meetings held during the 2022 financial year under the heading “Meetings of Directors”, as well as the attendance of Directors at those meetings. 42 Governance Seven West Media Limited Annual Report 2022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 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. Core Values In accordance with its Charter, the Board has reviewed and approved the core values of the Company which function as guiding principles and expectations for behaviour and the culture the Board and Management are seeking to embed across all businesses within the Group as follows: > Be Brave > Better Together > Make it Happen Diversity and Inclusion The Board recognises the benefits of a workplace culture that is inclusive and respectful of diversity. The Board values diversity, including 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 Equity and Inclusion Policy* that sets out the Board’s commitment to working towards achieving an inclusive and respectful environment. Please refer to pages 28 to 29 of this Annual Report for reporting on the Diversity Policy and the measurable objectives and initiatives relating thereto. 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 Company has adopted a Code of Conduct for Employees* which provides a framework of ethical principles for conducting business and dealing with customers, employees and other stakeholders. Material breaches of the Codes of Conduct for Directors and Employees are reported to the Board. 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 Equity and Inclusion Policy* > Whistleblower policy* > Fraud, Anti-Bribery and Corruption Policy* > Modern Slavery Statement* Communications with security holders As disclosed in the Shareholder Communication Policy*, the Board aims to ensure that security holders are informed of all major developments affecting the Company’s state of affairs and that there is an effective two-way communication with its security holders facilitated via the Company’s Investor Relations function. Shareholders are encouraged to participate in general meetings and are invited to put questions to the Chairman of the Board in that forum. Security holders are given the option to receive communications from, and to send communications to, the Company electronically to the extent possible. It is the Company’s policy that all substantive resolutions at a meeting of security holders are decided by a poll rather than by a show of hands. The Company’s website www.sevenwestmedia.com.au provides various information about the Company. Risk oversight and management The Board requires Management to design and implement a risk management and internal control system to manage the Group’s material business risks and report to it on the management of those risks. 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. 43 Risk Management Policy Material risks The Board has adopted a Risk Management Policy*. The group-wide risk profile covers the key revenue, content, product/technology and people risks of the Company and is prepared by the Risk Assurance & Internal Audit function in consultation with key executives across the business. Throughout the year, the Audit & Risk Committee reviews with management 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. The key risks identified by Management and mitigation actions in place are regularly updated and reported to the Audit & Risk Committee and periodically to the Board. During the reporting period, Management reported to the Board as to the effectiveness of the Company’s management of its material business risks. The Board satisfied itself the Company’s risk management framework continues to be sound and effectively identifies potential risks. Under the risk framework described above, the Company has identified revenue, content, and product/technology 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, the Company’s economic sustainability risks and how it manages those risks is set out under the headings “Risk Management” and “Risk Management Framework” on pages 24 and 25 of this Annual Report. The Company does not believe it has any material exposure to environmental risks. The Company considers it has material exposure to social risks associated with a pandemic, such as COVID-19. The Company has assessed this exposure and sets out how it manages these risks on pages 24, 25 and 43 of this Annual Report. Commentary on the Company’s environmental and human capital related initiatives as well as its community engagement is provided on pages 26 to 35 of this Annual Report. Internal Control Framework – Risk Assurance & Internal Audit Strategy 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. The Audit & Risk Committee reviews and approves Risk Assurance & Internal Audit plans and resourcing as well as monitors its independence, performance and management’s responsiveness to its findings and recommendations. A specialist external Internal Audit firm has been appointed to conduct the Company’s Internal Audit reviews under in- house oversight. The Board considers that this appointment provides an enhanced level of capability and technical depth, which serves to embed a stronger risk and compliance culture across the organisation whilst drawing on best practice and knowledge across operational and emerging issues. Additionally, efficiencies are gained by the externally resourced Internal Audit function working closely with the Group’s external auditor KPMG, to ensure audit efforts are not duplicated and Internal Audit work can be relied upon. The Company has continued its strategic focus on responding rapidly to the challenges and opportunities in its marketplace. For more information on the Company’s strategic framework which underpins the Company’s economic sustainability please refer to pages 4 and 5 of this Annual Report. 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. The Company is mindful of climate change and managing the environmental impact of its operations. For more information on the Company’s environmental practices and the Company’s efforts to minimise the environmental footprint of its businesses, please refer to pages 34 and 35 of this Annual Report. 44 Governance Seven West Media Limited Annual Report 2022External Audit function Remuneration The Board considers that the attraction, retention and motivation of its Directors and senior executives is of critical importance in securing the future growth of the Company and its shareholder returns. The objective of the remuneration policy for Executive 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 aggregate remuneration for Non-Executive Directors is approved by shareholders. Fees for Directors are set out in the Remuneration Report on pages 50 to 70. Hedging Policy It is the Company’s policy that employees (including Key Management Personnel (“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 KMP are prohibited from entering into arrangements which operate to limit the executives’ economic risk in connection with Seven West Media securities which are unvested or remain subject to a holding lock. This Corporate Governance Overview and the Corporate Governance Statement, which is available in the “Corporate Governance” section of the Company’s website at www. sevenwestmedia.com.au/about-us/corporate-governance, have been approved by the Board and are current as at 16 August 2022. The Audit & Risk Committee meets 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 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 25 December 2021 and the financial year ended 25 June 2022. Verification of Integrity of Periodic Corporate Reports Corporate reports which are not audited or reviewed by the external auditor are prepared by Senior Executive Management by reference to company records and systems, with external professional assistance where appropriate. Such reports, as are included in the non-audited sections of this Annual Report, are submitted to a Committee or the Board for consideration. 45 Directors’ Report For the year ended 25 June 2022 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 25 June 2022 and the auditor’s report thereon. Board The following persons were directors of Seven West Media Limited during the whole of the financial year and up to the date of this report, unless otherwise stated: > Kerry Stokes AC, Chairman & Non-Executive Director > James Warburton, Managing Director & Chief Executive Officer > John Alexander, Non-Executive Director > Teresa Dyson, Non-Executive Director > David Evans, Non-Executive Director > Colette Garnsey OAM, Non-Executive Director > Michael Malone, Non-Executive Director > Ryan Stokes AO, Non-Executive Director > Michael Ziegelaar, Non-Executive Director 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 Overview” on pages 36 to 45 and form part of this report. Warren Coatsworth is the Company Secretary. He was appointed to the role on 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 extensive experience as Legal Counsel at the Seven Network advising broadly across the company and was formerly a solicitor at Clayton Utz. Mr Coatsworth was included on Doyles Guide’s list of Leading In-House Technology, Media & Telecommunications Lawyers in Australia for 2016 and 2017. Principal activities The principal activities of the Group during the financial year were free to air television broadcasting, digital streaming and newspaper publishing. 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 “Group Performance” section starting on page 11. The Group Performance section also refers to likely developments in the Company’s operations in future financial years and the expected results of those operations. Information in the Group Performance 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 In October 2021, the Company refinanced its $600 million secured syndicated debt facility agreement with maturity extended to October 2024. The funding costs are at 2.25 per cent above BBSY, which is half the funding costs under the previous facility. The new facility is also revolving, which will require SWM to hold less cash on balance sheet, further reducing interests costs. Under the terms of the new debt facility agreement, the previous minimum liquidity requirements and minimum EBITDA test were replaced by semi annual total leverage ratio and total interest cover tests. The Group has been in compliance with its financial covenants to date, including the period ended 25 June 2022. In December 2021, the Company completed its acquisition of 100 per cent of the issued share capital of Prime Television (Holdings) Pty Limited and its subsidiaries, and Seven Affiliate Sales Pty Limited (Prime) from PRT Company Limited (formerly Prime Media Group Limited). Consideration of $124.2 million was paid by the Company, and a further $5.6 million of transaction costs have arisen from the acquisition. In the opinion of the Directors, there were no other significant changes in the state of affairs of the Company that occurred during the financial year. 46 Directors’ Report Seven West Media Limited Annual Report 2022Current year performance For the year ended 25 June 2022 the Group recorded Earnings Before Interest and Tax (EBIT) (and before significant items) of $309.0 million. The statutory profit after tax was $211.1 million (including significant items). The FY22 net operating cash inflows were $160.2 million. Further information is provided in the Review of Operations on pages 13 to 23. Matters subsequent to the end of the financial year Subsequent to year end, the Group has announced a 10 per cent on-market share buyback to commence in August 2022. There are no other matters or circumstances which have arisen since the end of the financial year which have significantly affected or may affect: a. the Group’s operations in future financial years; b. the results of those operations in future financial years; or c. the Group’s state of affairs in future financial years. Meetings of Directors The number of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended 25 June 2022, and the numbers of meetings attended by each Director were: Directors Kerry Stokes AC John Alexander Teresa Dyson David Evans Colette Garnsey OAM Michael Malone Ryan Stokes AO James Warburton Michael Ziegelaar Meetings of Directors Audit and Risk (a) (b) (a) 8 8 8 8 8 8 8 8 8 8 8 8 7 8 8 8 8 8 10 10 10 10 (b) 1 10 9 3 9 9 10 10 Remuneration and Nomination (a) (b) 6 6 6 6 6 1 5 6 1 6 5 1 a. Number of meetings held during the year while the person was a Board or Committee member. 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. 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 Seven West Media Equity Incentive Plan (2020 LTI) Seven West Media Equity Incentive Plan (2021 LTI) Seven West Media Equity Incentive Plan (2021 STI) Seven West Media Equity Incentive Plan (2022 LTI) Seven West Media Equity Incentive Plan (2022 STI) Seven West Media Equity Incentive Plan (2023 STI) Rights on Issue Expiry Date 2,543,530 31 August 2023 22,968,748 31 August 2024 51,420,711 31 August 2022 6,588,597 31 August 2025 10,454,959 31 August 2023 10,870,406 31 August 2024 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, 53,964,242 rights vested and 367,685 rights lapsed. There are no other unissued shares or interests under options as at the date of this report. 47 For names of the Directors and Key Management Personnel who currently hold rights through these schemes, refer to the Remuneration Report. Dividends – Seven West Media Limited Dividends paid to members during the financial year were as follows: Final ordinary dividend for the year ended 26 June 2021: nil cents (2020: nil cents) Interim ordinary dividend for the year ended 25 June 2022: nil cents (2021: nil cents) 2022 $ – – 2021 $ – – In addition to the above dividends, since the end of the 2022 financial year, the Directors have declared the payment of a final ordinary dividend of nil cents per share. 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 The Group continues to measure and monitor its Greenhouse Gas emissions under the National Greenhouse and Energy Reporting Act (2007). The Group 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 under the law of the Commonwealth or of a State or Territory 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: Kerry Stokes AC James Warburton John Alexander Teresa Dyson David Evans Colette Garnsey OAM Michael Malone Ryan Stokes AO Michael Ziegelaar Performance Rights Number of ordinary shares – 621,453,734 16,463,179* 11,250,000 – – – – – – – 55,768 117,720 1,397,803 425,000 233,000 240,466 10,000 * Performance Rights for Mr Warburton includes 2,165,775 rights granted to Mr Warburton under the FY22 STI Plan based on his out-performance during FY22. FY22 STI was approved by shareholders at the 2021 Annual General Meeting. 48 Directors’ Report Seven West Media Limited Annual Report 2022Remuneration Report A Remuneration Report is set out on the pages that follow (pages 50 to 70) 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. > 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. The Lead auditor’s independence declaration is set out on page 71 and forms part of the Directors’ Report for the financial year ended 25 June 2022. Rounding of amounts The Group 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. 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. Kerry Stokes AC Chairman Sydney 16 August 2022 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. Amounts paid or payable by the Group to the auditor, KPMG, for non-audit services provided during the year were $823,418. 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: > 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; 49 Reissued – Remuneration Report Message from the Remuneration & Nomination Committee Chairman Dear Shareholder On behalf of the Seven West Media Board, we present the Remuneration Report for the 2022 financial year (FY22) for the year ended 25 June 2022. This report is a reissuance of the report approved on 16 August 2022 and included in the lodged 2022 Annual Report. The report is being reissued as it has been identified that the information provided by external specialist consultants, Ernst & Young, and relied upon by the Group in determining the vesting of the FY20 LTI Grant was incorrect. The corrected FY20 LTI TSR testing data has determined that the performance hurdle was not achieved and therefore, no performance rights will vest. Updates to the Remuneration Report for this change have been highlighted in yellow for ease of reference for users. FY22 was a standout year for Seven West Media with significant ratings achievements and earnings growth. Seven is Australia’s #1 total television company, strengthened by our acquisition of the assets of Prime Media Group in December 2021. Our strategy of investing in premium content continues to deliver audience consistency and strength. Seven was the only network to grow audience share during the financial year and 7plus has maintained its place as the #1 BVOD service. Our ongoing success as an organisation and ability to deliver positive outcomes for all our stakeholders relies on the commitment and excellence of our people to identify new opportunities and manage risk. As such, it is critical that we attract, motivate and retain exceptional people. In March 2022, Seven West Media became the first media company in Australia to be awarded a citation as Employer of Choice for gender equality by the Workplace Gender Equality Agency (WGEA). The criteria for the citation are rigorous and we were one of just 12 companies across Australia to be added this year as an employer having achieved gender equality in the workplace. Seven’s commitment to diversity, equity and inclusion will continue and is demonstrated in our first comprehensive Sustainability Report. We remain guided by our core values and purpose, “To bring all Australians closer to the moments that move us”. This is demonstrated through our best-in-class coverage of metro and regional news, public affairs, sport and our leading entertainment tentpole programs. Overview of Performance Outcomes FY22 was another exceptional year for Seven West Media with strong financial results: > EBIT was $309.0 million and earnings before interest, tax, depreciation and amortisation (EBITDA) was $342.2 million, up from $253.9 million in FY21 and $123.4 million in FY20; > Statutory operating cash inflow increased to $160.2 million, compared to FY21 of $143.2 million; > Statutory net profit after tax (NPAT) was down by 33.7 per cent compared to FY21 as a result of FY21 significant items. Significant item benefits including tax of $10.3 million compares to FY21 significant item benefits including tax of $192.6 million; > Revenue of $1.5 billion was 21.2 per cent higher compared to FY21 (in an advertising market up 8.7%); > Earnings per share (EPS) of 13.3 cents per share was down by 35.7 per cent compared to the prior year; and > Return on capital employed was 31.5 per cent up 38.5 percentage points from FY21. Our three strategic pillars established in FY20 to deliver our long-term strategy continued to be relevant and critical to the ever-changing external environment. 1. Content-Led Growth – During the year: > We reclaimed ratings leadership in 2021 and have grown audience share in 2022 to maintain this leadership. > 7plus was #1 in BVOD for the second year in a row. BVOD consumption continued to grow strongly with over 12.5 million registered, verified users on 7plus and an 61.3 per cent increase to total minutes streamed. > Our partnerships with Google and Facebook are supporting our investment in innovation and digital capabilities for our Group. The partnerships are a significant step forward for Australian news media and are a clear acknowledgement by all parties of the value and importance of original news and content. > Our newspaper operations, with 32 titles and market- leading digital sites across city and regional areas in Western Australia, further dominate the market. The expansion of The West’s digital assets continues to attract a younger audience. 2. Transformation – The continued push to maintain costs has been critical in delivering a sustainable business over the long term. > We continued our digital focus with the relaunch of 7NEWS.com.au and new digital priorities have been set for FY23. > The acquisition of the assets of Prime Media Group created a significant opportunity to operate the combined business more efficiently and extend our digital presence in regional markets, particularly for 7plus and 7NEWS.com.au. Both have already started generating new registered users and are driving new revenue. > Costs have come in below target at $1.2 billion including second half impact of the Prime Media Group transaction. 50 Reissued – Remuneration Report Seven West Media Limited Annual Report 20223. Capital Structure and M&A –Seven’s strong recent – Pro-rata vesting between 50 per cent and performance has resulted in a significant improvement in financial results and its debt position. 85 per cent where ATSR CAGR is greater than 10 per cent but less than 15 per cent; > The Group’s debt facility was refinanced in October – 85 per cent for ATSR CAGR performance of 2021 for a further three years, at a significant improvement in cost of funding and on more flexible terms. This refinanced facility will allow the Group flexibility to achieve its strategic objectives. > The acquisition of Prime Media Group in December 2021 has given us direct access to Australia’s largest regional audience reaching over 91 per cent of Australians. As a result, Seven is the undisputed national total television market leader, that is, in metro, regional and BVOD markets. > The improved balance sheet has enabled the Company to resume capital management initiatives for the first time since 2017. Overview of FY22 Executive Remuneration and Performance Outcomes > Fixed Remuneration – There were no remuneration increases to Executive Key Management Personnel (KMP) and Non-Executive Directors during the year. > Short-Term Incentive (STI) Plan – The Company’s underlying EBIT result exceeded the 100 per cent target range set by the Board at the commencement of FY22, and the STI gateway opened fully. Participants received 50 per cent of their potential award granted as performance rights on a prospective basis at the commencement of the performance year. Following assessment at the end of the performance year, 50 per cent of the final award is payable as cash (in Q1 of FY23) and the remaining 50 per cent as shares (reflecting the moderated percentage of performance rights that vested for each participant based on their performance in FY22). Vested shares are subject to a 12-month deferral period. Further details of the FY22 STI Plan are provided in Section 6 of the Report. > Long-Term Incentive (LTI) Plan – The FY20 grant reached the end of its three-year performance period on 25 June 2022. The Award was tested against relative TSR performance which did not meet the performance hurdle and therefore, did not vest. All performance rights lapsed. Following the AGM in November 2021, Performance Rights under the FY22 LTI Plan were granted to the MD & CEO and other Executive KMP with the key features being: a. An Absolute Total Shareholder Return Compound Annual Growth Rate (ATSR CAGR) performance hurdle over a three-year vesting period with a further 12-month deferral period; and b. A performance-based vesting schedule of: – 50 per cent for ATSR CAGR performance of 10 per cent; 15 per cent; – Pro-rata vesting between 85 per cent and 100 per cent where ATSR CAGR is greater than 15 per cent but less than 20 per cent; and – 100 per cent for ATSR CAGR performance equal to or greater than 20 per cent. Further details of the FY22 LTI Plan are provided in Section 6 of the Report. There were no other material changes to the remuneration framework or terms and conditions of KMP during 2022. Managing Director & Chief Executive Officer (MD & CEO) Remuneration > Fixed Remuneration – Mr Warburton’s base remuneration has remained unchanged since his appointment in August 2019. > FY22 STI Outcome – Mr Warburton’s leadership has led to another strong set of financial and non-financial results, with the MD & CEO meeting and exceeding the stretch targets set by the Board at the commencement of the financial year. After careful consideration, the Board determined in its absolute discretion to grant Mr Warburton an STI award of 150 per cent of Maximum (100 per cent of Target) for FY22. 50 per cent of this award is delivered as cash and 50 per cent as shares (converted from prospectively granted performance rights) and is subject to a 12-month deferral period. > FY20 LTI Outcome – With shareholder approval at the AGM in November 2021, Mr Warburton’s participation in this Plan was cancelled and he subsequently received no outcome under this Plan. > FY21 and FY22 LTI Grants – Mr Warburton was granted Performance Rights equivalent to 100 per cent of his Total Employment Remuneration (TER) pursuant to his contract and subject to performance hurdles set by the Board and the conditions specified within the Plan Rules. At the 2021 Annual General Meeting, the Company sought shareholder approval in accordance with ASX Listing Rule 10.14 for the issue of securities to Mr Warburton under the FY21 STI Grant. For the FY22 STI Grant, it is currently intended that securities will be acquired on market to satisfy any Performance Rights that vest. Mr. Warburton’s FY21 and FY22 remuneration is tabled at Sections 5 and 7 of the Report. 51 Outlook and Changes for 2023 Our Group’s strategy to focus on content-led growth and market-leading digital assets will play a major role in adapting to the ever-changing content consumption habits of people across all demographics. This growth will be balanced by an ongoing focus on cost management and operational efficiencies, as well as capital management initiatives. During the year, the Board considered and resolved to introduce a Non-Executive Director Share Plan effective 1 July 2022. This provides Non-Executive Directors with the opportunity to sacrifice up to 50 per cent of their annual Board and Committee fees towards the purchase of Company shares. The introduction of this Plan will establish a governed and transparent process for new and existing Non-Executive Directors to meet their obligations under the Minimum Shareholding Policy. When considered alongside the deferred equity component of our STI and LTI plans, and the Share Purchase Plans offered to employees, the Board believes there is a strong sense of engagement and advocacy within the Company and a continued positive alignment between the interests of shareholders and our people. The Board will seek approval of the Non-Executive Director Share Plan at the 2022 Annual General Meeting (AGM). While we are generally satisfied that the current remuneration framework is still aligned to our business strategy and is delivering the desired result in terms of remuneration levels, the Board will commence its review of LTI arrangements for the FY2024 performance year. Thank you for your ongoing support of Seven West Media. I look forward to receiving your views and support at the 2022 AGM. Yours faithfully John Alexander Remuneration & Nomination Committee Chairman Table of Contents Remuneration Report 2022 – Audited 1 Introduction 2 FY22 Key Management Personnel Covered by this Report 3 Executive Remuneration at a Glance 4 Remuneration Governance 4.1 Role of the Remuneration and Nomination Committee 4.2 Members of the Remuneration and Nomination Committee During FY22 4.3 Services from External Remuneration Consultants 4.4 Security Trading Policy Headging Prohibition 5 Executive Remuneration Outcomes During the FY22 Performance Year 5.1 Executive Remuneration Earned and Vested (Voluntary Disclosure) 5.2 Summary of STI Outcomes 5.3 Deferred Remuneration Granted to the MD and CEO and Executive KMP 5.4 Summary of LTI Outcomes 53 53 53 55 56 6 Executive Remuneration Details: Composition of Executive Remuneration and Application of Remuneration Principles 6.1 Executive Remuneration Framework 6.2 Link Between Remuneration Policy and Company Performance 6.3 Executive Service Agreements 6.4 Non-Executive Director Remuneration Framework 7 Statutory Remuneration Disclosures for Key Management Personnel 7.1 Executive Remuneration in Detail (Statutory Disclosures) 7.2 Non-Executive Remuneration in Detail 7.3 Key Management Personnel Equity Transactions and Holdings 8 Loans and Other Transactions with Key Management Personnel 59 66 70 52 Reissued – Remuneration Report Seven West Media Limited Annual Report 2022 1. Introduction This Report describes the remuneration arrangements for the Key Management Personnel (KMP) of Seven West Media Limited as defined in AASB 124 Related Party Disclosures, including Non-Executive Directors, the Managing Director and Chief Executive Officer (MD and CEO), and other Executives (including Executive Directors) (hereafter referred to in this Report as Executive KMP) who have authority for planning, directing and controlling the activities of the Group. The KMP for the financial year are set out below. The information provided in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act 2001 (Cth). It forms part of the Directors’ Report. 2. FY22 Key Management Personnel Covered by this Report The KMP whose remuneration is disclosed in this year’s Report are: KMP Non-Executive Directors (NEDs) KM Stokes AC JH Alexander T Dyson D Evans C Garnsey OAM M Malone RK Stokes AO M Ziegelaar Position Chairman Director Director Director Director Director Director Director Managing Director and Chief Executive Officer (MD and CEO) and Executive KMP J Warburton KJ Burnette J Howard KA McGrath BI McWilliam MD and CEO Chief Revenue Officer Chief Financial Officer Chief People and Culture Officer Commercial Director 3. Executive Remuneration at a Glance Key Features Details of Seven West Media’s Approach Term as KMP Full Year Full Year Full Year Full Year Full Year Full Year Full Year Full Year Full Year Full Year Full Year Full Year Full Year Executive Remuneration in FY22 1. How is Seven West Media’s performance reflected in this year’s remuneration outcomes? 2. What changes have been made to the remuneration framework in FY22? Seven’s remuneration outcomes are strongly linked to the delivery of sustainable shareholder value over the short and long-term. > Short-Term Incentive (STI): The Company’s underlying Earnings Before Interest and Tax (EBIT) result for FY22 exceeded the 100 per cent range of budget and the STI gateway opened. > Long-Term Incentive (LTI): The FY20 LTI Plan reached the end of its three-year performance period on 25 June 2022. Based on the Company’s relative Total Shareholder Return (RTSR) performance not exceeding the nominated index, 0% of the performance rights vested. Fixed remuneration levels for Executive KMP remain unchanged and there were no changes to the overall remuneration framework for Executive KMP. A Minimum Shareholding Policy was introduced effective 1 July 2021, with Non-Executive Directors and Executive KMP given 5 years from the date of inception (or their appointment) to achieve the prescribed shareholding level. Also, the Board reviewed and adjusted the threshold, target and stretch performance levels applicable to both STI and LTI Plan granted during the year to ensure continued alignment to Company strategy and to set objectives that, if achieved, represent significant value creation for investors and stakeholders. 3. Are any changes planned for FY23? Yes. A new Non-Executive Director Share Plan will be introduced effective 1 July 2022, providing Directors with the opportunity to sacrifice up to 50 per cent of their annual Board and Committee fees towards the acquisition of Company shares. The Board will undertake a review of the future LTI grants in respect of appropriate performance measures. Further Information Section 5 Pages 56–59 Section 6 Page 59–65 Section 6 Pages 59–65 Section 6 Pages 59–65 53 Key Features Details of Seven West Media’s Approach Executive Remuneration Framework 4. What is Seven West Media’s remuneration strategy relative to the market? Fixed and variable remuneration strategy is aimed at the median of the market, with remuneration opportunities for outstanding performance extending to the upper quartile of the market. 5. What proportion of remuneration is “at risk”? 6. Are there any claw-back provisions for incentives? Short-Term Incentives (STI) 7. Are any STI payments deferred? Executive KMP remuneration is broadly evenly distributed between fixed remuneration and on performance which is therefore ‘at risk’ > MD and CEO: 66.7 to 71.4 per cent at risk. > Executive KMP: Remuneration package range between 43 to 60 per cent at risk. Yes. If there is a material financial misstatement, any unvested LTI or deferred STI awards can be clawed back. Yes. 50 per cent of annual STI potential for Executive KMP is prospectively granted as Performance Rights. Upon assessment at the end of the performance year, a percentage of the Performance Rights may vest and convert to shares. Performance Rights that do not vest are forfeited. Vested shares are then subject to a deferral period of 12 months during which time they cannot be traded. However, shares are deemed to be released unless the Board determines that a different treatment applies. Further Information Section 6 Page 60 Section 6 Page 60 Section 6 Page 63 Section 6 Page 61 8. Are STI payments capped? Yes. STI opportunity is capped as follows: > MD and CEO: STI is capped at 150 per cent of fixed remuneration Section 6 Page 61 (maximum opportunity). > Executive KMP: STI is capped at the STI target (at 100 per cent), achievable only in circumstances of both exceptional individual and Company performance. Long-Term Incentives (LTI) 9. What are the performance measures for the LTI? For both the FY21 and FY22 LTI Plans, 100 per cent is subject to an Absolute Total Shareholder Return Compound Annual Growth Rate (ATSR CAGR) performance hurdle set by the Board for the three-year period from commencement date. The Board retains discretion to ensure vesting outcomes are appropriately aligned to performance. Section 6 Pages 62–63 10. Are there any restrictions imposed on disposal of LTI awards? Yes. There is a restriction imposed on the sale and use of shares after vesting until the earliest of the following: > The date the holder ceases employment with Seven West Media Section 6 Page 63 (subject to approval by the Board); > The one-year anniversary of the vesting date (or subsequent anniversaries if elected by the award holder); or > The Board determines that the holding lock should be released. The Board has ultimate discretion to determine otherwise. 11. Does the LTI have re-testing? No. There is no re-testing. 12. Are dividends paid on unvested LTI awards? No. Dividends are not paid on unvested LTI awards. This ensures that Executives are only rewarded when performance hurdles have been achieved at the end of the performance period. 13. Is the size of LTI grants increased No. There is no adjustment to reflect the performance conditions. in light of performance conditions? The grant price for allocation purposes is not reduced based on performance conditions. Seven uses a ‘face value methodology’ for allocating Performance Rights to each Executive KMP, being the volume weighted average price (VWAP) of shares for the month leading up to grant. 14. Can LTI participants hedge their unvested LTI? No. Consistent with the Corporations Act 2001 (Cth), participants are prohibited from hedging their unvested Performance Rights. Section 6 Page 63 Section 6 Page 63 Section 6 Pages 62–63 Section 7 Pages 66–69 Section 4 Page 56 Section 6 Page 63 15. Does Seven West Media buy shares or issue new shares for share-based awards? For both the deferred component of STI awards and LTI awards, the Board has discretion to issue new shares or buy shares on-market. However, it is currently the Board’s intention to settle share awards via on-market purchase. Section 6 Pages 60–61 16. Does Seven West Media issue share options? No. Seven typically uses Performance Rights for the deferred component of STI and LTI awards. Section 6 Pages 61–63 Executive Service Agreements 17. What is the maximum an Executive can receive on termination? The Executive KMP termination entitlements are limited to six (6) months’ fixed remuneration. Section 6 Page 64 54 Reissued – Remuneration Report Seven West Media Limited Annual Report 20224. Remuneration Governance 4.1 Role of the Remuneration and Nomination Committee The primary objective of the Remuneration and Nomination Committee (the Committee) is to assist the Board to fulfil its corporate governance and oversight responsibilities to ensure that remuneration policies and structures are fair, competitive and are aligned with the long-term interests of the Company. These include our people strategy, remuneration components, performance measurements and accountability frameworks, recruitment, engagement, retention, talent management and succession planning. The table below outlines the roles and responsibilities of the Board, the Committee and management in relation to Board and Executive KMP remuneration. Board Remuneration and Nomination Committee Management > Approves remuneration arrangements and conditions of service for the MD and CEO, Executive KMP and Non-Executive Directors. > Monitors the performance of Executive management. > Recommends remuneration and incentive policies, structures and practices. > Recommends remuneration arrangements for the MD and CEO and Executive KMP. > Retains discretion in determining the > Undertakes an annual review of the overall outcome of the incentive awards or adjust remuneration to ensure it is consistent with, and appropriately reflects the Group performance and of the individual Executive experience over the relevant performance period. Company’s remuneration strategy and Remuneration Policy. > Reviews executive remuneration arrangements or Executive KMP and Non-Executive Directors on an annual basis against the Remuneration Policy, obtaining independent external remuneration advice where appropriate. > Reviews and recommends the Remuneration Report and any other report required to be produced for shareholders to meet statutory requirements. > Prepares recommendations and provides supporting information for the Committee’s consideration. > Implements approved remuneration- related policies and practices. > The MD and 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 and CEO makes a recommendation to the Committee for approval. The Committee has a strong focus on the relationship between business performance, risk management and remuneration. During the year, the Committee met on six occasions and reviewed, approved or made recommendations to the Board on matters including: > Remuneration review for the MD and CEO and other senior Executives (broader than those disclosed in the Remuneration Report) covered by the Company’s Remuneration Policy; > Review of the STI Plan, LTI Plan and Employee Share Plans; > The Company’s performance framework (objectives setting and assessment) and annual variable remuneration spend; > Performance and remuneration outcomes for senior Executives; > Approval of Executive KMP and other senior Executive appointments and terminations; > The effectiveness of the Company’s Remuneration Policy; > The introduction of the Non-Executive Director Share Plan; > Succession plans for senior Executives; and > Diversity, equity and inclusion, employee engagement, and health, safety and wellbeing. The Committee reviews its Charter every financial year. The Corporate Governance Statement on pages 39 to 45 provides further information on the role of the Committee. 55 5. Executive Remuneration Outcomes During the FY22 Performance Year 5.1 Executive Remuneration Earned and Vested (Voluntary Disclosure) The purpose of this table is to provide shareholders with a summary of the actual remuneration which has been received by Executive KMP during FY22, and to show remuneration received during FY21 for comparative purposes. The table below has been prepared to supplement the statutory requirements in Section 7 of the Report and shows: > Fixed remuneration and the value of cash incentives earned in respect of FY22 and FY21; and > ‘At risk’ equity-based remuneration granted to Executive KMP in prior years that vested during 2022 and 2021. The final column shows the value of prior equity awards which lapsed in 2022 (these awards reflect the FY20 LTI grant of Performance Rights which did not meet the performance hurdles when tested in July 2022). > ‘At-risk’ STI award related to and vested in the FY22 performance year. Both the cash and deferred components of the FY22 award appear in this table, which have vested subject to a service condition. Unlike the Statutory Disclosure table in Section 7, which has been prepared in accordance with Australian Accounting Standards and discloses the value of STI and LTI grants which may or may not vest in future years (i.e. reported on an accounting basis), this table discloses the value of equity awards from previous years which vested in FY22. 4.2 Members of the Remuneration and Nomination Committee During FY22 During FY22, the members of the Remuneration and Nomination Committee were: > Mr JH Alexander, Chairman > Mr D Evans > Ms C Garnsey OAM > Mr RK Stokes AO 4.3 Services from External Remuneration Consultants External consultants and advisors are engaged as needed to provide independent advice. The requirements for external consultants’ services are assessed annually in the context of remuneration matters that the Committee requires to address. Recommendations provided by external consultants are used as a guide. During FY22, the Committee retained Ernst & Young (“EY”) to provide an independent valuation for the 2022 LTI Award, and to assess TSR performance for the Company’s FY20 LTI Plan. In the course of providing this information, the Board is satisfied that EY did not make any remuneration recommendations relating to KMP as defined by the Corporations Act. The Company employs in-house remuneration professionals who provide recommendations to the Committee and the Board. The Board made its decisions independently, using the information provided and with careful regard to the Company’s strategic objectives, risk appetite and the Seven West Media Remuneration Policy and principles. 4.4 Security Trading Policy Hedging Prohibition All deferred equity must remain ‘at risk’ until it has fully vested. Accordingly, Executives and their associated persons must not enter into any schemes that specifically protect the unvested value of equity allocated. If they do so, then they forfeit the relevant equity. These restrictions satisfy the requirements of the Corporations Act which prohibits hedging of unvested awards. 56 Reissued – Remuneration Report Seven West Media Limited Annual Report 20227 $ r a e y / d e s p a L d e t i e f r o F s i h t g n i r u d r a e Y r o i r P s d r a w A y t i u q E r a e Y r o i r P s d r a w A y t i u q E g n i r u d d e t s e V l a t o T I T S d e r r e f e D 7 $ r a e y e h t $ n o i t a r e n u m e R 6 $ h t w o r G e r a h S 5 $ s t h g R i I T S d e r r e f e D e c n a m r o f r e P h s a C l a t o T 4 $ s t n e m y a P h s a C I T S 3 $ t n e m y a P r e h t O d e x i F 2 $ n o i t a r e n u m e R 1 $ n o i t a r e n u m e R r a e Y l i a c n a n i F – 0 0 5 , 2 1 0 , 1 7 3 3 , 2 0 4 , 3 – 0 0 5 , 2 1 0 , 1 7 3 8 , 9 8 3 , 2 0 0 5 , 2 1 0 , 1 ) 7 2 0 , 2 0 6 ( – 7 5 1 , 3 2 6 , 7 0 0 0 , 5 7 2 , 4 0 0 5 , 2 1 0 , 1 7 5 6 , 5 3 3 , 2 0 0 5 , 2 1 0 , 1 – ) 7 0 0 , 8 3 ( ) 3 9 0 , 0 7 ( ) 4 0 6 , 7 1 ( ) 3 6 9 , 5 1 ( ) 4 3 2 , 5 2 ( ) 4 8 0 , 5 2 ( ) 2 6 2 , 6 4 ( ) 8 5 6 , 6 9 ( 0 0 5 , 2 1 3 6 5 7 , 5 9 8 , 1 – – 7 3 4 , 9 9 1 , 3 4 4 4 , 9 1 3 , 1 0 0 0 , 5 7 2 6 6 2 , 8 6 6 , 1 – 0 5 2 , 1 3 1 8 1 2 , 6 9 7 – 0 0 5 , 2 6 1 3 9 9 , 6 7 2 , 1 – – 2 8 2 , 8 6 6 , 1 1 1 1 , 6 8 6 – 0 7 5 , 3 5 3 , 1 7 6 1 , 4 5 5 – 9 9 8 , 6 5 8 , 2 1 1 1 , 1 6 1 , 1 0 0 5 , 2 1 3 0 0 5 , 2 1 3 0 0 1 , 8 0 3 0 0 5 , 2 6 1 0 5 2 , 1 3 1 0 5 2 , 1 3 1 0 0 0 , 5 7 2 0 0 0 , 5 7 2 6 5 2 , 3 8 5 , 1 3 9 4 , 7 6 5 , 1 3 9 8 , 8 6 9 1 7 6 , 9 1 8 8 6 9 , 4 6 6 3 5 1 , 8 6 6 6 6 2 , 3 9 3 , 1 8 8 7 , 0 2 4 , 1 0 0 5 , 2 1 3 0 0 5 , 2 1 3 0 0 1 , 8 0 3 0 0 5 , 2 6 1 0 5 2 , 1 3 1 0 5 2 , 1 3 1 0 0 0 , 5 7 2 0 0 0 , 5 7 2 0 5 7 , 3 9 8 , 1 0 7 5 , 9 3 0 , 9 – 0 5 3 , 9 3 0 , 2 0 2 2 , 0 0 0 , 7 0 5 3 , 9 3 0 , 2 ) 6 1 6 , 3 4 7 ( – 5 4 3 , 1 0 7 , 6 1 3 3 8 , 5 9 9 , 7 0 5 7 , 3 9 8 , 1 2 6 7 , 1 1 8 , 6 0 5 7 , 3 9 8 , 1 5 0 9 , 0 5 9 5 3 , 8 4 4 2 3 , 4 4 6 6 3 , 7 4 1 6 3 , 4 3 4 8 9 , 1 3 6 8 2 , 2 3 5 0 0 , 0 3 4 3 8 , 1 4 7 0 1 , 9 3 0 1 7 , 3 0 2 1 2 8 , 6 9 1 2 3 4 , 6 2 3 , 1 8 9 7 , 4 7 2 , 1 2 3 4 , 6 2 2 , 1 7 2 6 , 7 0 2 , 1 2 3 4 , 6 2 6 7 8 1 , 5 2 6 2 3 4 , 1 0 5 8 9 8 , 6 0 5 2 3 4 , 6 7 0 , 1 1 8 6 , 6 0 1 , 1 0 6 1 , 7 5 7 , 4 1 9 1 , 1 2 7 , 4 2 2 0 2 1 2 0 2 2 2 0 2 1 2 0 2 2 2 0 2 1 2 0 2 2 2 0 2 1 2 0 2 2 2 0 2 1 2 0 2 2 2 0 2 1 2 0 2 O E C d n a D M n o t r u b r a W J e m a N P M K e v i t u c e x E e t t e n r u B J K 8 d r a w o H J h t a r G c M A K m a i l l i W c M I B l a t o T r e v o e c i r p e r a h s a d e M i t s e W n e v e S e h t n i e s a e r c n i e h t y b d e i l p i t l u m d e t s e v s t h g i r e c n a m r o f r e p f o r e b m u n e h t o t l a u q e s i h t w o r G I T S d e r r e f e D 1 2 Y F e h T . s t h g i r e c n a m r o f r e p I T S d e r r e f e D 1 2 Y F e h t o t s e t a e R l . r a e y e c n a m r o f r e p e h t r o f d e u s s i s t h g i r e c n a m r o f r e p I T S d e r r e f e D l f o e u a v e h t s t n e s e r p e R . 1 2 0 2 e n u J 6 2 n o d e d n e d o i r e p e c n a m r o f r e p 1 2 Y F e h t . r a e y t n e r r u c e h t n i d e t i e f r o f / d e s p a l n e e b r o d e t s e v e v a h t a h t s r a e y r o i r p m o r f l s n a p d e s a b - y t i u q e o t s r e f e R s a h d e d r a w a I T S y r a n o i t e r c s i D . t r o p e R s i h t f o 8 5 e g a p n o d e n i l t u o s a d r a c e r o c s I T S e h t f o e c n a m r o f r e p % 4 . 6 2 f o I T S y r a n o i t e r c s i d l a n o i t i d d a n a d r a w o H J d e d r a w a d n a n o i t e r c s i d s t i d e s i c r e x e d r a o B e h T t u o l i a c n a n i f s ’ p u o r G e h t n o d e s a b ) % 4 . 6 2 1 f o d e d r a w a I T S l a t o t ( r a e y 2 2 Y F e h t r o f d r a w a I T S s i h f o 5 6 7 8 l i i s t i f e n e b e g n i r f d e t a c o s s a g n d u c n i ( s t i f e n e b d e c i f i r c a s - y r a a s , y r a a s f o t s o c l l l a t o t e h t s i n o i t a r e n u m e r d e x i F 1 s ’ e v i t u c e x E n a e r e h w e v i t a g e n e b y a m e u a v e h T l . s t n e m e l t i t n e e v a e l l a u n n a r o f l a u r c c a n a d n a ) ) T B F ( x a t . r a e y e h t g n i r u d d e u r c c a e v a e l e h t n a h t e r o m g n i k a t f o t l u s e r a s a s e s a e r c e d e c n a a b e v a e l l l a u n n a r e h t o f o s t n e m e l e e h T . s t i f e n e b y r a t e n o m - n o n n o e b a y a p x a t l s t i f e n e b e g n i r f y n a d n a s t n e m e l t i t n e e v a e l l e r u s o c s i d y r o t u t a t s e h t n i d e d u l c n i s t i f e n e b t n e a v i l u q e e h t h t i w y l l t n e t s i s n o c d e u a v e r a n o i t a r e n u m e r e c i v r e s g n o l , n o i t a u n n a r e p u s , s t i f e n e b y r a t e n o m - n o n f o e u a v h s a c e h t l s e d u l c n i n o i t a r e n u m e r r e h t O 2 . r a e y e c n a m r o f r e p e h t r o f d e d r a w a I T S h s a c s t n e s e r p e R . t r o p e R e h t f o 7 n o i t c e S n i l e b a t f o t n e c r e p 0 5 e v i e c e r l l i w d r a w o H J , e r o f e r e h T . t r o p e R s i h t n i i l d e n a p x e s n a P l I T S s a s n o i t i d n o c e m a s e h t r o i r p e h t i f o m u s e h t g n e b , r a e y e c n a m r o f r e p e h t g n i r u d d e n r a e n o i t a r e n u m e r f o e u a v l l a t o t e h t o t s r e f e R . s e r a h S d e t c i r t s e R s a t n e c r e p 0 5 d n a h s a c n i l e b a y a p I T S s i h t . s n m u o c l 3 4 57 5.2 Summary of STI Outcomes How the Group’s Performance was assessed for the 2022 Financial Year 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 6.1.2 of the Report. The framework provides a set of Key Performance Indicators (KPIs) which are used to assess the quality of the outcomes delivered against the Group’s financial and non-financial strategic goals. For FY22, the Company’s EBIT result of $309.0 million opened the STI financial gateway. The individual KPIs and FY22 achievements as determined by the Remuneration and Nomination Committee for the MD and CEO are provided in the following table. Strategic Pillar & Measure Strategic > Deliver on content and cost agenda > Accelerate 7plus, driving data platform, rebuild and scale ventures > Lead industry consolidation with continued M&A to better position Seven Weight Performance Against Scorecard Targets 20% > Won ratings for Total People in CY2021, the first time in three years due to Seven’s underlying programming as well as The Ashes, Tokyo Olympics and improvement to tentpole programs. > 7plus has maintained its place as the #1 BVOD service for the second year in a row. > #1 ratings in Total People and BVOD to CY22 year-to-date; the only network to grow share. > Successful execution of the Company’s strategy, including the acquisition of assets of Prime Media Group and multiple new venture investments completed. Prime Media Group integration has been completed. > Successful implementation of Google and Facebook deals. Financial > Deliver Company EBITDA/EBIT 50% > FY22 EBIT was $309.0 million and EBITDA was $342.2 million ($297 million and $326 million respectively, excluding Prime Media Group). targets > Generate net-free cash outflow at or better than forecast > Target asset sales completed or well advanced > Improve net debt > Net cash outflow ~ $15 million, $9 million lower than budget; absorbing Prime Media Group acquistion (net ~ $86 million in 2H22). > Television revenue (including Prime) up 23.6 per cent year-on-year / 10 per cent v budget; 39.1 per cent share for FY22 (Metro 38 per cent, BVOD 40 per cent, Prime 43.6 per cent and 7Qld 46.2 per cent). > All Olympics objectives (i.e., audience, incremental revenue and net contribution) met/exceeded; Beijing also delivered ahead of revenue expectations. > Company cost control maintained with full year costs below target (adjusted for Prime Media Group acquisition). > Net debt at $256 million during the year, including Prime Media Group acquisition costs (-0.7 x EBITDA). > Refinancing completed with optimised terms and pricing. Outcome Achievement Significant Over- Achievement Audience & Content > Continue to implement ‘Audience 20% > Returned to ratings leadership. > 7REDiQ launched with Seven partnerships delivering incremental Achievement First Content’ approach > Deliver greater year-round profitable audience strength and consistency, and competitive ratings in tentpole strategy > Maintain audience share for 7plus > WAN digital audience metrics at or above target People, Operations & Compliance > Achieve value-enhancing outcomes from relevant regulatory reviews > Refresh risk management framework and approach > Effective management and reporting of all risk and compliance matters > Improve safety of our workforce > Drive high performing culture and engagement revenue and supporting growth in 7plus market share. > 7plus revenue and audience outcomes ahead of target and ahead of the market for the year. > Revenue share to 39.1 per cent and growth in key advertiser demographic in total people 25 to 54s and 16 to 39s. > Seven is the most watched television nationally and in capital cities. > 7News is the highest rating news service. > AFL is the highest rating sport in FY22. > WAN digital audience metrics continued to improve. (Neilsen DMR combined audience for The West and Perth Now was 3.0 million, ranked 9th nationally). 10% > Delivered strong regulatory outcomes, including progress on prominence. > Achieved outcome of the Media Reform Green Paper. > Ongoing improvement in risk and compliance matters. > Seven’s ESG strategy, framework and standalone public report is Achievement currently in development. > Expanded our People Experience programs, driving a high- performance culture and engagement. > Ongoing improvement in safety performance. > Achieved diversity, equity and inclusion targets including recognition by WGEA as an Employer of Choice for gender equality. > Launched the Company’s Reconciliation Action Plan (RAP) ahead of schedule. Total 100% 58 Over- achievement Reissued – Remuneration Report Seven West Media Limited Annual Report 20225.3 Deferred Remuneration Granted to the MD and CEO and Executive KMP The table below presents the dollar value of equity granted under the STI and LTI Plans to the Executive KMP with respect to FY22. Name J Warburton KJ Burnette J Howard KA McGrath BI McWilliam FY22 Deferred STI1 $ FY22 LTI2 $ Total $ Financial Year in which Grant Vests 1,012,500 1,350,000 2,362,500 2023, 2024 312,500 308,100 131,250 275,000 312,500 487,500 131,250 275,000 625,000 795,600 262,500 550,000 2023, 2024 2023, 2024 2023, 2024 2023, 2024 1 100 per cent of the deferred award is recognised in the current performance year. Deferred equity under the STI Plan is not subject to any further performance conditions except continued employment. 2 Subject to performance conditions and due to vest on 1 July 2024. 5.4 Summary of LTI Outcomes The table below shows the vesting outcomes for the FY20 LTI grant to Executive KMP that reached the completion of the performance period during FY22 based on the assessment conducted by EY (refer to section 4.3) in line with requirements of the plan. Performance Range Performance Measure Performance Start Date Test Date Threshold Maximum Outcome % Vested % Lapsed Relative TSR (100% of Award) 1 July 2019 30 June 2022 Greater than Index Outperform index by at least 10% or more TSR of 10.15% (ranked at 3.58% below the Comparator Index1) 0% 100% 1 S&P/ASX 200 Communication Services Accumulation Index. Further details on the performance hurdles under the 2020 LTI Plan are found in the 2020 Remuneration Report. 6. Executive Remuneration Details Composition of Executive Remuneration and Application of Remuneration Principles Executive remuneration is determined by the Remuneration and Nomination Committee and, for the MD and CEO, is recommended to the Board for its approval. Executive remuneration comprises both a fixed component and a variable (or “at risk”) component which contains separate STI and LTI elements. These components are explained in detail below. 6.1 Executive Remuneration Framework In structuring remuneration, the Board aims to find a balance between fixed remuneration and ‘at risk’ variable remuneration; cash and deferred equity; and short-, medium-, and long-term rewards in line with the Company’s performance cycle. 59 The Remuneration Framework is outlined in the table below and explained in detail in this section of the Report. Content Led Growth Strategic Priorities Transformation Remuneration Strategy Capital Structure and M&A Attract and retain high-performing employees with market competitive and flexible reward. Align reward to our business strategy, helping to create sustainable shareholder value, while adhering to good governance principles. Seven West Media’s remuneration framework is reinforced by the following principles: Remuneration Principles Align remuneration with shareholder interests Provide market competitive and responsible remuneration Enable attraction and retention of high-performing employees Support an appropriate culture and employee conduct Be simple, flexible and transparent Differentiate pay for performance and behaviour in line with our vision and strategy Executive Remuneration Structure Fixed Total Employment Remuneration (TER) At Risk Short-Term Incentive (STI) Long-Term Incentive (LTI) Component Determination Fixed remuneration is set with reference to the median of our peer groups, reflecting: > Size and complexity of the role; > Individual responsibilities and performance; and > Skills and experience. Delivery Fixed remuneration comprises: > Cash salary; > Superannuation; and any > Prescribed non-financial benefits at the Executives’ discretion on a salary sacrifice basis. Strategic Intent & Market Positioning Our peer groups are the Australian media and entertainment industry as well as more broadly across appropriate ASX-listed companies. STI rewards financial and non- financial performance consistent with the Company’s strategy over the short to medium term with reference to: > Group EBIT and revenue; > Strategic programs, content and product; > Audience and customers; > Transformation, operational risk and compliance; > People and leadership; and > Individual performance targets relevant to the specific position. STI is delivered as: > 50 per cent cash; and > 50 per cent in Performance Rights, subject to service conditions. LTI ensures alignment of Executive accountability and remuneration outcomes for sustainable long-term growth and shareholder return. For both the FY21 & FY22 LTI Grants, targets are linked to: > Absolute TSR (ATSR) performance > Compound Annual Growth Rate (CAGR) of ATSR over a three-year vesting period with an additional 12-month holding lock. LTI is delivered as: > 100 per cent in Performance Rights subject to performance and service conditions > Performance is tested once at the end of the vesting period. Performance incentive is directed to achieving Board approved targets, reflective of market circumstances. Combined, fixed remuneration and target STI is intended to be positioned towards the 3rd quartile of the relevant benchmark comparisons. LTI is intended to reward Executive KMP for sustainable long-term growth aligned to shareholders’ interests. LTI allocation values are intended to be positioned around the 3rd quartile of the relevant benchmark comparisons. Target Remuneration Mix > MD & CEO: > CFO: > Other Executive KMP: 33.3% 40% 57% 33.3% 30% 29% 33.3% 30% 14% Total Target Remuneration (TTR) TTR is positioned to achieve the remuneration objectives outlined above. Out-performance generates higher reward. The remuneration structure is designed to ensure top quartile Executive KMP remuneration is only achieved if the Company out-performs against stated targets. 60 Reissued – Remuneration Report Seven West Media Limited Annual Report 20226.1.1 Fixed Remuneration Fixed remuneration is expressed as a total dollar amount which is delivered as cash salary and employer contributions to superannuation funds as well as any ongoing employee benefits on a salary-sacrificed basis. It provides a fixed level of income commensurate with the Executive’s role, responsibilities, qualifications and experience, and is set by considering peer market data. 6.1.2 Short-Term Incentive (STI) 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 strategic objectives. STI awards are delivered in cash and deferred shares. For FY22, Performance Rights were issued at the beginning of the performance period. Short-Term Incentive Plan The STI Plan is an award used to provide clear motivation to focus on strategically aligned metrics and goals that can be measured annually. The award reflects the achievement of specific objectives that are based on a top down and rigorous bottom-up budget process. Further details on the key design features of the FY22 STI Plan are set out below. Seven West Media STI Plan STI Opportunity Eligibility Delivery of Awards For the MD and CEO, the ‘at target’ STI opportunity is 100 per cent of fixed remuneration up to a maximum of 150 per cent and determined subject to the Board’s discretion. For the CFO, allocation is based on 75 per cent of fixed remuneration and for each other Executive, the 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. The STI Plan covers employees in executive and senior management positions, subject to having more than three months’ active service during the financial year and remaining employed on, or not having provided notice of termination before the award date. 50 per cent is paid in cash at the end of the annual Performance and Remuneration Review (usually in the pay cycle after results have been released in August). To support an ownership culture and drive retention outcomes, 50 per cent of the STI award was delivered in Performance Rights allocated early in the performance period. The number of Performance Rights allocated to each participant will be determined by dividing the dollar amount of the STI award deferred component by the 5-trading day volume weighted average price (VWAP) of the Company’s Share price leading into and including 25 June 2021 (the “Market Price”), rounded down to the nearest whole number. Executives have entitlements to dividends and voting rights in relation to their Restricted Shares during the restriction period (in the event that dividends are reinstated). Following assessment at the end of the performance year, the vested award will be converted to Restricted Shares and will be subject to a 12-month deferral. Target Opportunity Determination of the STI Gateway STI targets are set by the Committee and approved by the Board at the start of each performance year, based on a range of factors including market competitiveness and the responsibilities of each role. At Company level, the STI pool is based on performance. 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 beginning of the financial year as shown in the table below. Percentage of Group Underlying EBIT Achieved (%) STI Award Pool Available (% of On-Target) <90% 90–94% 95–99% 100% 0% 25% 50% 100% The Board retains discretion to not make an STI award available to participants where such payment is regarded to be inconsistent with shareholders’ interests over the financial year, even if the gateway requirement is achieved. 61 Seven West Media STI Plan Performance Conditions Performance is measured against risk-adjusted financial targets and non-financial targets which support the Company’s strategy. Performance measures are based on performance at Group, divisional and individual level. The deferred STI awards recognise past performance and are not subject to further performance hurdles (other than continued service). Refer Section 5 on the MD and CEO’s balanced scorecard. Assessment of Performance Outcomes STI outcomes are subject to both a quantitative and qualitative assessment. The Board has the capacity to adjust STI outcomes (and reduce STI outcomes to zero if appropriate) in the assessment process. STI Treatment on Cessation of Employment Participants must be employed on the award payment date and not be in a period of termination notice. The deferred component of an STI award will be forfeited if the participant resigns or the employment is terminated for cause, prior to the vesting date. The Board has discretion to determine whether the participant retains any unvested deferred awards relating to prior years’ STI performance outcomes if the participant leaves due to any other circumstances, having regard to prior years’ STI performance and time elapsed to the date of cessation. Determination of STI at an Individual Level At an individual level, STI is designed to focus Executive KMP on key performance measures supporting the Company’s business strategy and encourage the delivery of value for shareholders. Beginning of Performance Period r a e Y l i a c n a n i F a d e M i t s e W n e v e S End of Performance Period Performance Objectives Set > Individual objectives are agreed for Executive KMP, using a balanced scorecard approach under the four categories of (i) Strategic; (ii) Financial; (iii) Audience and Content; and (iv) People, Operations and Compliance. > The weighting of measures varies to reflect the responsibilities of an individual’s role. > Many of these measures relate to the contribution towards short to medium term performance outcomes aligned to the Company’s strategic objectives. > This methodology is replicated across the Company for all employees reflecting the individual’s responsibilities. Performance Assessed Against Objectives > The performance of each Executive KMP is assessed against their objectives and compliance standards. > The Remuneration & Nomination Committee seeks input from the MD and CEO and CFO (on financial performance, internal audit and compliance matters). > The Committee reviews (and the Board reviews and approves) the performance outcomes for the MD and CEO. Determination of Remuneration Outcomes > The Committee considers the performance of the Group, division and individual to determine remuneration recommendations for Executive KMP respectively. > Where Executive KMP deliver on-target performance at a Group, divisional and individual level (taking into consideration the Company’s values and compliance standards), then incentive award recommendations are likely to be around target opportunity. Recommendations will be adjusted up or down in line with performance. > The Committee’s recommendations for the MD and CEO are then reviewed and ultimately approved by the Board. 6.1.3 Long-Term Incentive (LTI) 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. Long-Term Incentive Plan The LTI Plan is a means to align incentive pay with specific corporate results measured over three years. LTI Plan metrics are approved by the Board for the beginning of the three-year performance period and are performance-granted with vesting following the end of the performance period. Key Terms of FY22 LTI Awards The key features of the FY22 LTI Plan are provided in the following table. 62 Reissued – Remuneration Report Seven West Media Limited Annual Report 2022 Seven West Media Long-Term Incentive Plan LTI Plan Vehicle Number of Performance Rights 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. As Performance Rights are automatically exercised at vesting, no expiry date applies. The value of LTI granted is allocated annually at 100 per cent of the MD and CEO’s fixed remuneration. For the CFO, allocation is based on 75 per cent of fixed remuneration, and for other Executive KMP, allocation is based on 25 per cent of 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. Performance Hurdle Performance Rights are subject to continued employment with Seven West Media and an absolute Total Shareholder Return compound annual growth rate (ATSR CAGR) performance hurdle, measured over a three-year period (1 July 2021 to 30 June 2024). ATSR CAGR and Vesting Schedule ATSR CAGR is a metric where the Company’s performance is measured against a predefined target. That is, it focuses on the growth of SWM and value to shareholders, regardless of the broader market and other companies’ movements. It provides executives with a more direct line of sight to the level of shareholder return to be achieved. It also provides a tighter correlation between the executives’ rewards and the shareholders’ financial outcomes. The proportion of Performance Rights available to vest following testing of ATSR CAGR performance period is summarised in the following table: Company’s ATSR CAGR over the Performance Period Proportion of Performance Rights available to vest % Less than 10% 10% Nil 50% Greater than 10% but less than 15% On a straight-line pro-rata basis between 50% to 85% 15% 85% Greater than 15% but less than 20% On a straight-line pro-rata basis between 85% to 100% Equal to or greater than 20% 100% Testing of Performance Hurdle Awards are subject to a three-year performance period. Shortly after the completion of the performance period, the performance hurdles are tested to determine whether, and to what extent, awards vest. In assessing performance against the performance hurdles, the Remuneration & Nomination Committee, in its absolute discretion, may make any adjustments having regard to any matters that it considers relevant, including adjusting for abnormal or unusual factors that are outside of management’s control. 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 There is a restriction imposed on the sale of shares acquired after vesting (to the extent the performance hurdles are achieved) until the earliest of the following: > The date the Executive ceases employment with Seven West Media (subject to approval by the Board); > The one-year anniversary of the vesting date (or subsequent anniversaries (if elected by the Executive)); or > The Board determines that the restriction should be released. Dividends and Voting Rights Performance Rights do not carry any dividend or voting rights prior to vesting. Change of 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. Cessation of Employment Hedging 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. Under the Seven West Media Equity Incentive 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. 63 6.2 Link Between Remuneration Policy and Company Performance MD and CEO Performance Objectives and Key Highlights The Committee reviews and makes recommendations to the Board on performance objectives for the MD and CEO. These objectives are intended to provide a clear link between remuneration outcomes and the key drivers of long-term shareholder value. The STI objectives are set in the form of a balanced scorecard with targets and measures aligned to the Company’s strategic priorities cascaded from the MD and CEO scorecard to the relevant Executive KMP scorecard. The key financial and non-financial objectives for the MD and CEO in the 2022 financial year, with commentary on key highlights, are provided in Section 5 of the Report. Company Financial Performance – Five Year Perspective In FY22, the Remuneration Policy was linked to profit before significant items, net finance costs and tax (EBIT), and TSR performance of the Group. The following table sets out the Group’s performance over the last five financial years: Profit before significant items1, net finance costs 308,993 2022 20215 229,108 20204,5 94,985 20194,5 212,812 and tax (EBIT) ($’000’s) Statutory NPAT ($’000’s) NPAT (excluding significant items)1,2 ($’000’s) 211,052 200,759 318,122 (201,181) (324,294) 125,545 36,896 249,451 20184,5 235,636 132,789 140,357 Revenue ($'000's) 1,539,629 1,269,646 1,227,047 1,427,003 1,621,092 Profit before depreciation, amortisation, 342,190 253,891 123,427 263,468 270,886 significant items1, net finance costs and tax (EBITDA) ($’000’s) Diluted earnings per share (as reported) (cents) Diluted earnings per share (excluding significant items)1 (cents) Dividend per share (cents) Share price as at reporting date3 ($) Return on capital employed (%) 13.0 12.4 – 0.38 31.50 20.7 8.2 – 0.47 22.75 (13.2) 2.5 – 0.09 9.55 (21.5) 16.5 – 0.47 21.03 8.8 9.3 – 0.84 15.91 1 Significant Items is a non-IFRS measure. For details of significant items, refer to Note 2.4 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. The opening share price on the first day of trading in FY18 was $0.685. 2020, 2019 and 2018 figures have been restated in the past. Excludes discontinued operations. 3 4 5 Company performance is linked to the STI Plan through the underlying EBIT hurdle, and for the LTI Plan, Company performance is linked through the ATSR CAGR target. The Company continues to operate in intensely competitive markets. Executive ‘at risk’ remuneration outcomes are dependent on the Company and Group’s financial performance reflecting the Board’s commitment to maintaining the link between executive remuneration and Company performance. 6.3 Executive Service Agreements The terms of employment for Executive KMP of the Seven West Media Group are formalised in their employment agreements, the major provisions of which are set out below. Name J Warburton KJ Burnette J Howard KA McGrath BI McWilliam Duration of Contract Period of Notice Required to Terminate the Contract Contractual Termination Benefits Open-ended Open-ended Open-ended Open-ended Open-ended Six months’ notice Six months’ notice Six months’ notice Three months’ notice Three months’ notice Nil Nil Nil Nil Nil 64 Reissued – Remuneration Report Seven West Media Limited Annual Report 20226.4 Non-Executive Director Remuneration Framework Fees and payments to Non-Executive Directors reflect the demands which are made on, and the responsibilities of, the Non- Executive Directors. Seven West Media’s Non-Executive Director remuneration framework is designed to attract and retain experienced, qualified Board members and remunerate them appropriately for their time and expertise. The table below sets out the components of Non-Executive Director remuneration: > Base Fee – This fee is paid as cash and is for service as a Non-Executive Director of the Seven West Media Board. The base fee for the Chairman of the Board covers all responsibilities, including all Board Committees. > Committee Fees – These additional fees are also paid as cash to other Non-Executive Directors for chairing or participating in Board Committees. > Employer Superannuation Contributions – This component reflects statutory superannuation contributions which are capped at the superannuation maximum contributions base as prescribed under the Superannuation Guarantee legislation. To maintain independence and impartiality, Non-Executive Director fees are not linked to the Company’s performance or short-term results. Likewise, Non-Executive Directors are not eligible to participate in any of the Company’s performance- based remuneration arrangements. 6.4.1 Fee Pool The aggregate of payments each year to Non-Executive Directors must be no more than the amount approved by shareholders in the Annual General Meeting (AGM). The current aggregate fee pool is $1.9 million which is inclusive of employer superannuation contributions, was approved at the 2013 AGM held on 13 November 2013. The aggregate of payments to Non-Executive Directors in FY22 did not exceed the approved amount. For the year ended 25 June 2022, $1.412 million (74 per cent) of this fee pool was used. 6.4.2 Non-Executive Director Remuneration in FY22 The fees for the year to 25 June 2022 are provided in the table below: Annual Remuneration Board Audit and Risk Committee Chairman Member $335,000 $135,000 $40,000 $20,000 Remuneration and Nomination Committee $20,000 $10,000 6.4.3 Changes to Board and Committee Composition There were no changes made to Board and Committee composition during the 2022 financial year. 6.4.4 Non-Executive Director Share Plan A Non-Executive Director Share Plan (the Plan) will be introduced commencing 1 July 2022 to further encourage and facilitate share ownership for Board members. As a result of changes to Australian tax laws, which came into effect on 1 July 2015, and in line with market practice, this Plan allows greater flexibility for Non-Executive Directors to acquire equity in a tax effective manner through a pre-tax fee sacrifice plan. The Plan provides an automated mechanism for participants to acquire shares, recognising that Non-Executive Directors can often be limited in their ability to purchase shares as a result of the Australian insider trading laws. Subject to shareholder approval and compliance with the Company’s Share Trading Policy, Share Rights will be granted to participants twice a year, shortly following the announcement of the Company’s half year and full year results in February and August respectively. On vesting, the Share Rights will convert into fully paid ordinary shares subject to a disposal restriction (a Restricted Share). The Plan supports the minimum shareholding requirement for Board members as it allows Non-Executive Directors to reach the minimum shareholding requirements more quickly, as shares are acquired on a pre-tax basis. The Board will seek approval of the Non-Executive Director Share Plan at the 2022 AGM. 65 d e s a B - e r a h S s t n e m y a P s t i f e n e B t n e m y o p m E - t s o P l s t i f e n e B m r e T - t r o h S h t i w e c n a d r o c c a n i l l d e t a u c a c , e b a t g n w o l i l l o f e h t n i t u o t e s e r a 2 2 0 2 e n u J 5 2 d e d n e r a e y e h t r o f P M K e v i t u c e x E d n a O E C d n a D M s ’ y n a p m o C e h t f o n o i t a r e n u m e r d e t i d u a e h t f o s l i a t e D . s t n e m e r i u q e r g n i t n u o c c a y r o t u t a t s l e n n o s r e P t n e m e g a n a M y e K r o f s e r u s o c s i D n o i t a r e n u m e R y r o t u t a t S l . 7 l ) s e r u s o c s i D y r o t u t a t S ( l i a t e D n i n o i t a r e n u m e R e v i t u c e x E 1 . 7 66 d e t a e R l - e c n a m r o f r e P n % o i t a r e n u m e R l $ a t o T 6 $ s t h g R i e c n a m r o f r e P e c i v r e S g n o L n o i t a u n n a - r e p u S % 0 7 % 1 7 % 0 4 % 0 4 % 9 5 % 4 4 % 0 4 % 0 4 % 0 4 % 9 3 6 5 8 , 6 7 5 , 4 9 1 0 , 7 8 1 , 2 4 7 5 , 1 7 5 , 4 7 1 9 , 5 3 2 , 2 7 7 1 , 8 0 1 , 2 9 8 5 , 9 9 0 , 2 1 2 9 , 4 2 5 6 9 0 , 2 3 5 4 8 7 , 9 0 6 , 1 1 9 8 , 0 4 6 0 6 6 , 6 7 1 , 1 9 3 4 , 9 8 8 0 8 0 , 0 9 8 8 7 2 , 8 6 8 , 1 8 7 4 , 1 8 8 , 1 9 8 9 , 6 5 3 1 7 4 , 4 2 2 7 2 9 , 1 2 2 2 1 0 , 5 7 4 0 9 6 , 0 6 4 4 3 5 , 2 5 0 , 1 1 4 1 3 , 2 5 0 , 4 1 8 3 , 9 1 6 , 0 1 9 1 6 , 7 0 8 , 3 5 $ e v a e L 7 1 4 , 2 2 1 7 3 , 1 2 6 5 7 , 0 2 7 8 7 , 9 1 3 9 7 , 0 1 0 9 2 , 0 1 8 1 7 , 8 1 1 3 , 8 6 6 2 , 8 1 3 1 4 , 7 1 0 5 9 , 0 8 2 7 1 , 7 7 4 $ s t i f e n e B 8 6 5 , 3 2 4 9 6 , 1 2 8 6 5 , 3 2 4 9 6 , 1 2 8 6 5 , 3 2 4 9 6 , 1 2 8 6 5 , 3 2 4 9 6 , 1 2 8 6 5 , 3 2 4 9 6 , 1 2 0 4 8 , 7 1 1 0 7 4 , 8 0 1 0 2 9 , 4 4 9 2 , 5 – 5 8 8 , 5 – – – – – – 0 0 5 , 2 1 0 , 1 2 3 4 , 6 2 3 , 1 0 0 5 , 2 1 0 , 1 8 9 7 , 4 7 2 , 1 0 0 5 , 2 1 3 0 0 5 , 2 1 3 0 0 1 , 8 0 3 0 0 5 , 2 6 1 0 5 2 , 1 3 1 0 5 2 , 1 3 1 0 0 0 , 5 7 2 0 0 0 , 5 7 2 2 3 4 , 6 2 2 , 1 7 2 6 , 7 0 2 , 1 2 3 4 , 6 2 6 7 8 1 , 5 2 6 2 3 4 , 1 0 5 8 9 8 , 6 0 5 2 3 4 , 6 7 0 , 1 1 8 6 , 6 0 1 , 1 0 2 9 , 4 9 7 1 , 1 1 0 5 3 , 9 3 0 , 2 0 6 1 , 7 5 7 , 4 0 5 7 , 3 9 8 , 1 1 9 1 , 1 2 7 , 4 2 2 0 2 1 2 0 2 2 2 0 2 1 2 0 2 2 2 0 2 1 2 0 2 2 2 0 2 1 2 0 2 2 2 0 2 1 2 0 2 2 2 0 2 1 2 0 2 - n o N y r a t e n o M 3 $ s t i f e n e B 2 $ s e v i t n e c n I 1 $ n o i t a r e & I T S h s a C - n u m e R d e x i F r a e Y l i a c n a n i F r e c i f f O e v i i t u c e x E f e h C d n a r o t c e r i D g n g a n a M i e m a N r e c i f f O e u n e v e R i f e h C , e t t e n r u B J K 7 r e c i f f O l i a c n a n i F f e h C i , d r a w o H J P M K e v i t u c e x E n o t r u b r a W J e r u t l l u C d n a e p o e P f e h C i , h t a r G c M A K r e c i f f O r o t c e r i D l i a c r e m m o C , m a i l l i W c M I B n o i t a r e n u m e R e v i t u c e x E l a t o T s a h d e d r a w a I T S y r a n o i t e r c s i D . t r o p e R s i h t f o 8 5 e g a p n o d e n i l t u o s a d r a c e r o c s I T S e h t f o e c n a m r o f r e p % 4 . 6 2 f o I T S y r a n o i t e r c s i d l a n o i t i d d a n a d r a w o H J d e d r a w a d n a n o i t e r c s i d s t i d e s i c r e x e d r a o B e h T t u o l i a c n a n i f s ’ p u o r G e h t n o d e s a b ) % 4 . 6 2 1 f o d e d r a w a I T S l a t o t ( r a e y 2 2 Y F e h t r o f d r a w a I T S s i h f o f o t n e c r e p 0 5 e v i e c e r l l i w d r a w o H J , e r o f e r e h T . t r o p e R s i h t n i l i d e n a p x e s n a P l I T S s a s n o i t i d n o c e m a s e h t . s e r a h S d e t c i r t s e R s a t n e c r e p 0 5 d n a h s a c n i l e b a y a p I T S s i h t . s t n a r G I T L d n a I T S o t n o i t a e r n l i y n a p m o C e h t y b d e s n e p x e s t h g R e c n a m r o f r e P f o e u a v i l r i a f e h t s t n e s e r p e R . s t n e m e l t i t n e e v a e l e c i v r e s g n o l s ’ e v i t u c e x E r o f l a u r c c a r a e y t n e r r u c e h t o t s e t a e R l l . s t i f e n e B e e y o p m E 9 1 1 B S A A h t i w l l t n e t s i s n o c d e t a u c a c n e e b e v a h s t i f e n e b n o i t a u n n a r e p u S 4 5 6 7 l . ) e b a c i l p p a e r e h w l i , T B F g n d u c n i ( y n a p m o C e h t o t t s o c e h t i f o s i s a b e h t n o d e n m r e t e d e r a s t i f e n e b y r a t e n o m - n o N . r a e y e c n a m r o f r e p e h t r o f d e d r a w a I T S h s a c s t n e s e r p e R e g n i i r f d e t a c o s s a g n d u i l c n i ( s t i f e n e b d e c i f i r c a s - y r a a s l , y r a a s l f o t s o c l a t o t e h t s i n o i t a r e n u m e r d e x i F . s t n e m e l t i t n e e v a e l l a u n n a r o f l a u r c c a n a d n a ) ) T B F ( x a t s t i f e n e b 1 2 3 Reissued – Remuneration Report Seven West Media Limited Annual Report 2022 7.2 Non-Executive Remuneration in Detail Details of the remuneration of the Company’s Non-Executive Directors for the year ended 25 June 2022 are set out the following table. Name Non-Executive Directors KM Stokes AC, Chairman JH Alexander T Dyson D Evans C Garnsey OAM M Malone RK Stokes AO M Ziegelaar Total Non–Executive Director Fees Short-Term Benefits Post-Employment Benefits Seven West Media Board Fees1 $ Non-Monetary Benefits $ Financial Year Superannuation $ Total $ 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 311,432 309,289 140,909 139,738 159,091 157,768 144,545 143,344 131,818 130,722 135,455 134,329 145,000 143,141 135,455 134,329 1,303,705 1,292,660 – – – – – – – – – – – – – – – – – – 23,568 335,000 21,694 330,983 14,091 155,000 13,275 153,013 15,909 175,000 14,988 172,756 14,455 159,000 13,618 156,962 13,182 12,419 13,545 12,761 – – 13,545 12,761 145,000 143,141 149,000 147,090 145,000 143,141 149,000 147,090 108,295 1,412,000 101,516 1,394,176 1 Includes fees paid to the Chairman and members of Board Committees. 7.3 Key Management Personnel Equity Transactions and Holdings 7.3.1 Equity Incentive Plan Holdings Equity grants under the LTI Plan and the STI Plan are made in accordance with the Seven West Media Equity Incentive Plan Rules. 67 FY22 LTI Grant and Prior Years’ LTI Grants Details of vesting profiles of the Performance Rights granted as remuneration in FY22 to each Executive KMP of the Company under its LTI Plan, including prior years’ Performance Rights that remain unvested and on-foot, are provided below. Name Number of Performance Rights Grant Date Fair Value Per Right at Grant Date Number of Rights Vested During FY22 Percentage of Rights Forfeited, Lapsed or Cancelled in FY22 Financial Year in which Grant may Vest J Warburton 3,047,404 26–Nov–21 KJ Burnette J Howard K McGrath 705,417 26–Nov–21 1,100,451 26–Nov–21 296,275 26–Nov–21 BI McWilliam 620,767 26–Nov–21 J Warburton KJ Burnette J Howard K McGrath 11,250,000 01–Dec–20 2,604,166 01–Dec–20 2,708,333 01–Dec–20 1,093,750 01–Dec–20 BI McWilliam 2,291,666 01–Dec–20 J Warburton J Warburton KJ Burnette J Howard K McGrath BI McWilliam 5,472,972 31–Jan–20 5,472,973 31–Jan–20 844,594 391,190 354,729 557,432 31–Jan–20 31–Jan–20 31–Jan–20 31–Jan–20 $0.405 $0.405 $0.405 $0.405 $0.405 $0.220 $0.220 $0.220 $0.220 $0.220 $0.045 $0.065 $0.045 $0.045 $0.045 $0.045 – – – – – – – – – – – – – – – – – – – – – – – – – – 100%1 100%1 100% 100% 100% 100% 2025 2025 2025 2025 2025 2024 2024 2024 2024 2024 – – – – – – 1 10,945,945 Performance Rights were cancelled in relation to J Warburton’s FY20 LTI Grant as approved by shareholders at the Company’s 2020 AGM. With respect to the FY22 LTI grant, the maximum possible total value of the grant assuming all vesting conditions are met is calculated as the number of Performance Rights times the fair value. This maximum value, measured under applicable accounting standards, will be recognised as statutory remuneration on a straight-line basis equally over the three financial years 2022, 2023 and 2024. 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. 7.3.2 Total Performance Rights Holdings The total number of Performance Rights in the Company held during the financial year by each Executive KMP of the Group are set out in the table below: Performance Rights Granted as Remuneration Performance Rights Vested Name Financial Year Opening Balance Number Granted1 Managing Director and Chief Executive Officer Value Granted1 $ Number Vested Value Vested2 $ Number of Rights Forfeited, Lapsed or Cancelled Closing Balance J Warburton 2022 22,500,000 5,213,179 2,362,500 (11,250,000) 5,568,750 – 16,463,179 2021 10,945,945 22,500,000 3,918,750 – – (10,945,945) 22,500,000 Executive KMP KJ Burnette 2022 6,920,982 1,373,866 625,000 (3,472,222) 1,718,750 (844,594) 3,978,032 2021 1,136,650 6,076,388 625,000 – – (292,056) 6,920,982 J Howard 2022 4,905,079 1,759,488 795,600 (1,805,555) 893,750 (391,190) 4,467,822 2021 391,190 4,513,889 487,500 – – – 4,905,079 KA McGrath 2022 2,906,812 577,023 262,500 (1,458,333) 721,875 (354,729) 1,670,773 2021 459,869 2,552,083 262,500 – – (105,140) 2,906,812 BI McWilliam 2022 5,904,654 1,209,002 550,000 (3,055,555) 1,512,500 (557,432) 3,500,669 2021 750,189 5,347,222 550,000 – – (192,757) 5,904,654 Total 2022 43,137,527 10,132,558 4,595,600 (21,041,665) 10,415,625 (2,147,945) 30,080,475 2021 13,683,843 40,989,582 5,843,750 – – (11,535,898) 43,137,527 1 Includes both FY22 STI and FY22 LTI awards granted as Performance Rights. The FY22 STI Performance Rights are based on the 5-Day VWAP at grant date of $0.4675, and the FY22 LTI Performance Rights are based on the 5-Day VWAP at grant date of $0.443. In the prior year, FY21 STI Performance Rights are based on the 5-Day VWAP at grant date of $0.09. 2 Based on the closing share price of Seven West Media on 31 August 2021 of $0.4950. 68 Reissued – Remuneration Report Seven West Media Limited Annual Report 2022 7.3.3 Equity Holdings and Transactions of Executive Key Management Personnel The table below provides details of equity granted as remuneration and the number of ordinary shares in the Company held during the financial year by Executive KMP of the Company held directly, indirectly, beneficially and including their personally-related entities. Executive KMP Equity Granted, Vested, Exercised and Lapsed Number Held at Start of the Year Number Granted During the Year as Remuneration1 Number Received on Exercise and/or Exercised During the Year2 Number Lapsed During the Year Other Changes During the Year Number Held at End of the Year Number Vested and Exercisable at End of the Year2 Name Type of Equity- Based Instrument Managing Director and Chief Executive Officer J Warburton Restricted Shares Ordinary Shares – – 11,250,000 – – – Performance Rights 22,500,000 5,213,179 (11,250,000) Executive KMP KJ Burnette Restricted Shares – 3,472,222 Ordinary Shares 230,364 – – – – – – – – Performance Rights 6,920,982 1,373,866 (3,472,222) (844,594) J Howard Restricted Shares – 1,805,555 Ordinary Shares 195,630 – – – – – Performance Rights 4,905,079 1,759,488 (1,805,555) (391,190) KA McGrath Restricted Shares Ordinary Shares 197,530 44,940 1,458,333 (197,530) – 197,530 – – Performance Rights 2,906,812 577,023 (1,458,333) (354,729) BI McWilliam Restricted Shares – 3,055,555 Ordinary Shares 391,387 – – – – – – 11,250,000 – – – 16,463,179 – – – – – – – – – – 3,472,222 230,364 3,978,032 1,805,555 195,630 4,467,822 1,458,333 242,470 1,670,773 3,055,555 241,221 632,608 Performance Rights 5,904,654 1,209,002 (3,055,555) (557,432) – 3,500,669 – – – – – – – – – – – – – – – 1 2 Includes both FY22 STI and FY22 LTI awards granted as Performance Rights. The balance of Performance Rights at the end of the year are unvested rights. Performance Rights granted in 2020 vested in July 2022 as assessed against the RTSR performance and subject to an individual performance condition. Restricted shares include vested Performance Rights that are subject to the 12-month holding lock. This includes the conversion of Restricted Shares to ordinary shares at the completion of the 12-month holding block. Non-Executive Directors The number of ordinary shares in the Company held during the financial year by each Non-Executive Director of Seven West Media Limited held directly, indirectly, beneficially, and including their personally related entities are set out in the tables below. Name Chairman of the Seven West Media Board KM Stokes AC Non-Executive Directors JH Alexander T Dyson D Evans C Garnsey OAM M Malone RK Stokes AO M Ziegelaar Type of Equity-Based Instrument Number Held at Start of the Year Changes During the Year Number Held at End of the Year Ordinary Shares 619,753,734 1,700,000 621,453,734 Ordinary Shares Ordinary Shares Ordinary Shares Ordinary Shares Ordinary Shares Ordinary Shares Ordinary Shares 55,768 38,218 927,803 250,000 233,000 240,466 10,000 – 79,502 470,000 175,000 – – – 55,768 117,720 1,397,803 425,000 233,000 240,466 10,000 69 8. Loans and Other Transactions with Key Management Personnel Transactions involving the Non-Executive Directors and Executive KMP and their related parties are conducted on normal commercial terms and conditions that are no more favourable than those given to other employees or customers. Any that are on-foot, are trivial or domestic in nature. There were no loans provided to KMP during FY22. 70 Reissued – Remuneration Report Seven West Media Limited Annual Report 2022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 25 June 2022 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 Sydney 16 August 2022 Duncan McLennan Partner KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. 71 Financial Statements For the year ended 25 June 2022 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 Directors’ Declaration Independent Auditor’s Report ASX Information Investor Information Shareholder Information Company Information 74 75 76 77 78 124 125 131 132 134 72 Financial Statements Seven West Media Limited Annual Report 20224. Other Key Balance Sheet Items 7. Group Structure 4.1 Intangible Assets 7.1 Equity Accounted Investees 4.2 Property, Plant and Equipment 7.2 Investments in Controlled Notes Index 1. Introduction and basis of preparation 1.1 Basis of preparation 2. Group Performance 2.1 Segment Information 4.3 Leases 4.4 Provisions 2.2 Revenue and Other Income 4.5 Other Financial Assets 2.3 Expenses 2.4 Significant Items 2.5 Earnings Per Share 3. Working Capital 3.1 Cash and Cash Equivalents 3.2 Trade and Other Receivables 3.3 Program Rights and Inventories 3.4 Trade and Other Payables 3.5 Commitments 3.6 Contract Assets and Liabilities 5. Taxation 5.1 Taxes 5.2 Deferred Tax Assets and Liabilities 6. Capital Management 6.1 Borrowings 6.2 Share Capital 6.3 Reserves 6.4 Dividends 6.5 Share-Based Payments 6.6 Capital and Financial Risk Management Entities 7.3 Parent Entity Financial Information 7.4 Business Combinations 7.5 Related Party Transactions 8. Other 8.1 Remuneration of Auditor 8.2 Contingent Liabilities 8.3 Events Occurring After The Reporting Date 8.4 Summary of Other Significant Accounting Policies 8.5 Changes in Accounting Policies and Disclosures 73 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 25 June 2022 Continuing Operations Revenue Other income Revenue and other income Expenses Reversal of intangible assets Reversal of investments and other assets Net income related to investments Net gain on disposal of investments Redundancy and restructure reversal Onerous Contracts provisioning Reversal of onerous provisioning Other Share of net profit of equity accounted investees Profit before net finance costs and tax from continuing operations Finance income Finance costs Write off of unamortised original refinancing cost Profit before tax from continuing operations Tax expense Profit for the year from continuing operations Discontinued operations Loss after tax for the year from discontinued operations 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 Items that will not be reclassified to profit or loss: Net change in fair value of financial assets (net of tax) Other comprehensive income (expense) for the year, net of tax Total comprehensive income (expense) for the year Total comprehensive income (expense) attributable to: Owners of the Company Non–controlling interests Total comprehensive income (expense) for the year Earnings per share for profit attributable to the ordinary equity holders of the Company Notes 2022 $’000 2021 $’000 2.2 2.2 2.3 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 7.1 2.4 5.1 6.3 6.3 6.3 6.3 1,538,537 1,269,609 1,092 37 1,539,629 1,269,646 (1,230,954) (1,046,860) – – 3,728 2,590 – – 8,351 – 318 323,662 1,385 (36,841) (4,815) 283,391 (72,339) 211,052 – 211,052 – 503 – (20,940) (20,437) 190,615 190,602 13 190,615 207,480 1,249 470 3,445 4,863 (7,588) 66,728 1,230 6,322 506,985 1,501 (62,175) (690) 445,621 (127,499) 318,122 (34) 318,088 4,420 (25) (1,326) (49) 3,020 321,108 321,035 73 321,108 Basic earnings per share Diluted earnings per share 2.5 2.5 13.3 cents 13.0 cents 20.7 cents 20.7 cents The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 74 Financial Statements Seven West Media Limited Annual Report 2022Consolidated Statement of Financial Position As at 25 June 2022 ASSETS Current assets Cash and cash equivalents Trade and other receivables Program rights and inventories Contract assets Other assets Total current assets Non-current assets Program rights Equity accounted investees Other financial assets Property, plant and equipment Intangible assets Right of use assets Other assets Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Lease liabilities Provisions Deferred income Contract liabilities Current tax liabilities Total current liabilities Non-current liabilities Trade and other payables Lease liabilities Provisions Deferred income Contract liabilities Deferred tax liabilities Borrowings Total non-current liabilities Total liabilities Net assets EQUITY Share capital Reserves Non-controlling interests Accumulated deficit Total equity Notes 2022 $’000 2021 $’000 3.1 3.2 3.3 3.6 3.3 7.1 4.5 4.2 4.1 4.3 3.4 4.3 4.4 3.6 3.4 4.3 4.4 3.6 6.1 6.2 6.3 37,938 220,123 147,212 – 19,571 424,844 – 16,153 39,571 113,829 720,277 68,101 1,561 959,492 253,332 211,965 184,325 2,468 12,803 664,893 34 15,835 37,355 49,453 680,280 72,089 3,698 858,744 1,384,336 1,523,637 176,824 12,141 105,249 29,552 19,478 63,230 406,474 3,665 186,239 84,578 – – 145,260 294,429 714,171 256,967 10,524 151,990 25,217 27,105 44,809 516,612 7,014 193,801 97,459 1,200 5,042 124,864 493,310 922,690 1,120,645 1,439,302 263,691 84,335 3,432,966 3,405,666 (35,537) – 22,766 1,075 (3,133,738) (3,345,172) 263,691 84,335 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. 75 Consolidated Statement of Changes in Equity For the year ended 25 June 2022 Share capital $’000 Reserves $’000 Notes Accum- ulated deficit $’000 Non- controlling Interests $’000 Total $’000 Total Equity $’000 Balance at 27 June 2020 3,405,666 11,970 (3,663,187) (245,551) 3,522 (242,029) Profit for the year Cash flow hedge gains taken to equity Foreign currency translation differences Tax on other comprehensive income Net change in fair value of financial assets (net of tax) Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with owners in their capacity as owners Share based payment expense Disposal of NCI Total transactions with owners – – – – – – – – – – – 318,015 318,015 73 318,088 4,420 (25) (1,326) (49) 3,020 – – – – – 4,420 (25) (1,326) (49) 3,020 – – – – – 4,420 (25) (1,326) (49) 3,020 3,020 318,015 321,035 73 321,108 7,776 – 7,776 – – – 7,776 – 7,776 – (2,520) (2,520) 7,776 (2,520) 5,256 Balance at 26 June 2021 3,405,666 22,766 (3,345,172) 83,260 1,075 84,335 Profit for the year Foreign currency translation differences Net change in fair value of financial assets (net of tax) Other comprehensive income (expense) for the year, net of tax Total comprehensive income (expense) for the year – – – – 503 (20,940) 211,039 211,039 – – 503 (20,940) 13 – – 211,052 503 (20,940) – (20,437) – (20,437) – (20,437) – (20,437) 211,039 190,602 13 190,615 Transactions with owners in their capacity as owners Share based payment expense – 6,758 Shares issued pursuant to vesting of executive employee share plan Transactions with non-controlling interests Disposal of NCI 27,300 (44,624) – – – – Total transactions with owners 27,300 (37,866) – – 395 – 395 6,758 (17,324) 395 – – – (395) (693) 6,758 (17,324) – (693) (10,171) (1,088) (11,259) Balance at 25 June 2022 3,432,966 (35,537) (3,133,738) 263,691 – 263,691 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 76 Financial Statements Seven West Media Limited Annual Report 2022Consolidated Statement of Cash Flows For the year ended 25 June 2022 Cash flows related to operating activities Receipts from customers Payments to suppliers and employees Dividends received from other investments Interest and other items of similar nature received Interest and other costs of finance paid Interest paid on lease liability Receipt of Government Grants Income taxes paid, net of tax refunds Net operating cash flows Cash flows related to investing activities Payments for purchases of property, plant and equipment Payments for intangibles Proceeds from sale of other assets Payments for other financial assets (net of capital return) Acquisition of subsidiaries, net of cash acquired Proceeds from sale of investments Proceeds on sale of subsidiaries (net of cash disposed) Receipt of previously impaired loans from investees Loans paid to investees Net investing cash flows Cash flows related to financing activities Payments made for own shares Proceeds from borrowings Repayment of borrowings Payment of refinancing costs Payment of lease liabilities Net financing cash flows Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 3.1 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. Notes 2022 $’000 2021 $’000 1,710,728 1,348,330 (1,502,707) (1,188,808) 3.1 7.4 15,287 688 (19,464) (16,714) – (27,586) 160,232 (24,911) (2,465) 218 (11,141) (100,874) – (1,758) 162 (400) (141,169) (17,324) 516,000 – 1,501 (30,142) (17,714) 35,888 (5,844) 143,211 (13,815) (1,876) 32 – – 44,610 (3,430) 3,645 (1,000) 28,166 – – (716,000) (250,000) (7,124) (10,009) (11,600) (8,466) (234,457) (270,066) (215,394) 253,332 37,938 (98,689) 352,021 253,332 77 Section 1: Introduction and basis of preparation 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 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. 1.1 Basis of preparation 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. The consolidated financial statements were authorised for issue by the Board of Directors on 16 August 2022. The financial statements have been prepared using the historical cost basis except for assets described in Note 6.6B. 78 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 2022Section 2: Group Performance 2.1. Segment Information 2.1A. Description of Segments Accounting policy For management purposes, the Group is organised into business segments based on its products and services and has three reportable segments, as follows: Reportable segment Description of Activities Television The West Other Business and New Ventures Production and operation of commercial television programming and stations as well as distribution of programming content across platforms in Australia and around the world. The results of Prime Media Group have been included in the Television segment since acquistion. Publishers of newspapers and insert magazines in Western Australia; Colourpress; Digital publishing, West Australian Publishers and Community Newspaper Group. Made up of equity accounted investees and other ventures investments. 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. 2.1B. Segment information Year ended 25 June 2022 REF Advertising revenue Circulation revenue Licencing of content and programming Affiliate fees Rendering of services Other revenue Television $’000 1,212,189 – 73,143 65,164 – 17,367 The West $’000 89,654 54,213 13,022 – 9,337 3,096 Revenue from continuing operations 1,367,863 169,322 Other income Share of net profit of equity accounted investees Revenue, other income and share of net profit of equity accounted investees Expenses Profit (loss) before significant items, net finance costs, tax, depreciation and amortisation Depreciation and amortisation [A] Profit (loss) before significant items, net finance costs and tax – – – – 1,367,863 169,322 (1,039,837) (135,605) 328,026 (32,261) 33,717 (491) Other Business and New Ventures $’000 Corporate [B] $’000 Total $’000 1,301,843 54,213 86,165 65,164 9,337 21,815 1,538,537 1,092 318 1,539,947 – – – – – – – – – – (21,033) (1,197,757) (21,033) 342,190 (12) (33,197) – – – – – 1,352 1,352 1,092 318 2,762 (1,282) 1,480 (433) 295,765 33,226 1,047 (21,045) 308,993 79 Notes to the Financial Statements for the year ended 25 June 20222.1. Segment Information (continued) Year ended 26 June 2021 REF Advertising revenue Circulation revenue Licencing of content and programming Affiliate fees Rendering of services Other revenue Television $’000 922,071 – 76,360 96,769 – 11,268 The West $’000 91,092 55,605 – – 11,573 3,887 Revenue from continuing operations 1,106,468 162,157 Other income Share of net profit of equity accounted investees Revenue, other income and share of net profit of equity accounted investees Expenses Profit (loss) before significant items, net finance costs, tax, depreciation and amortisation Depreciation and amortisation [A] Profit (loss) before significant items, net finance costs and tax 23 – 14 – 1,106,491 162,171 (870,915) (133,652) 235,576 (23,994) 28,519 (304) Other Business and New Ventures $’000 Corporate [B] $’000 Total $’000 1,013,163 55,605 76,360 96,769 11,573 16,139 1,269,609 37 6,322 1,275,968 – – – – – – – – – – (17,013) (1,022,077) (17,013) 253,891 (51) (24,783) – – – – – 984 984 – 6,322 7,306 (497) 6,809 (434) 211,582 28,215 6,375 (17,064) 229,108 [A] Excludes program rights amortisation which is included in media content expenses (refer Note 2.3). [B] Corporate is not an operating segment. The amounts presented are unallocated costs. 2.1C. Other segment information Reconciliation of profit (loss) before significant items, net finance costs and tax Profit before significant items, net finance costs and tax Finance income Finance costs Profit before tax excluding significant items Significant items before tax (refer Note 2.4) Profit before tax 2022 $’000 2021 $’000 308,993 1,385 (36,841) 273,537 9,854 283,391 229,108 1,501 (62,175) 168,434 277,187 445,621 80 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 20222.2. Revenue And Other Income Accounting policy Revenue recognition and measurement The Group derives revenue from the transfer of goods and services. Revenue recognition is based on the delivery of performance obligations and an assessment of when control is transferred to the customer. Revenue is recognised either when the performance obligation in the contract has been performed (‘point in time’ recognition) or ‘over time’ as control of the performance obligation is transferred to the customer. Customer contracts can have a wide variety of performance obligations, from production contracts to format licences and distribution activities. For these contracts, each performance obligation is identified and evaluated. The Group needs to evaluate if a distribution right is a right to access the content (revenue recognised over time) or represents a right to use the content (revenue recognised at a point in time). The Group has determined that most distribution revenues are satisfied at a point in time due to their being limited ongoing involvement in the use of the rights following its transfer to the customer. The transaction price, being the amount to which the Group expects to be entitled and has rights to under the contract is allocated to the identified performance obligations. The transaction price will also include an estimate of any variable consideration where the Group’s performance may result in additional revenues based on the achievement of agreed targets such as audience targets. Variable consideration is not recognised until the performance obligations are met. Revenue is stated exclusive of GST and equivalent sales taxes. Revenue recognition criteria for the Group’s key classes of revenue are as follows: Class of revenue Recognition criteria [A] Advertising > Television Advertising is generated from selling spot airtime and is recognised at the point of transmission. > Newspapers Advertising is generated from selling space in the newspaper and is recognised at the point of publication. [B] Circulation > Circulation revenue is generated through the distribution and sale of newspapers to third party consumers. Recognised on delivery of the newspaper to the customer and the right to be compensated has been obtained. [C] Licencing of content and programming includes: (i) Programme production > Revenue generated from the programmes produced for broadcasters in Australia and internationally and is recognised at the point of delivery of an episode and acceptance by the customer. (ii) Distribution rights > A licence is granted for the transmission of a programme in a stated territory, media and period and revenue is recognised at the point when the contract is signed, the content is available for download and the licence period has started. [D] Affiliate fees > Affiliate fees earned through the transmission of network channels in a stated territory. Recognised in the period of the broadcast feed to the affiliates in line with the contract terms and conditions. [E] Rendering of services > The revenue is recognised when the service has been performed. These services mainly relate to printing and are generally delivered over a period of time. [F] Other revenue includes: Timing of recognition At the point in time when the advertisement is broadcast or published At the time the newspapers are distributed At the point in time when obligations have been accepted by the customers Recognised on delivery of rights to the customer Recognised over time as conditions are met over the contract life At the point in time the services are delivered Rental income > Rental income is derived through the leasing of assets and the benefits are to be transferred over time. Dividends > Dividend revenue is recognised when the right to receive payment is established. Revenue is recognised over the life of the lease At the point in time the dividend is declared 81 Notes to the Financial Statements for the year ended 25 June 2022 2.2. Revenue and Other Income (continued) Sales revenue Advertising revenue Circulation revenue Licencing of content and programming 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 investments Total other income Timing of Revenue Recognition REF [A] [B] [C] [D] [E] [F] 2022 $’000 2021 $’000 1,301,843 1,013,163 54,213 86,165 65,164 9,337 21,815 55,605 76,360 96,769 11,573 16,139 1,538,537 1,269,609 1,092 – – 1,092 – 32 5 37 The following table includes revenue from contracts per above that have been disaggregated by the timing of recognition: Products or services transferred at a point in time Products or services transferred over time Total External Revenue 2022 $’000 2021 $’000 1,473,373 1,172,840 65,164 96,769 1,538,537 1,269,609 82 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 20222.3. Expenses Profit (loss) 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 leases2 Other expenses from ordinary activities Total expenses Included in the expenses above are the specific items [A] to [B] from continuing operations: [A] Property, plant and equipment Right of use assets Amortisation of intangible assets Total depreciation and amortisation Television program rights amortisation REF [A] [A] [B] 2022 $’000 (33,197) (22,677) (26,641) 2021 $’000 (24,783) (21,844) (27,647) (637,436) (544,026) (320,644) (277,115) (5,400) (32,778) (26,159) (1,849) (6,551) (22,668) (15,694) (1,236) (124,173) (105,296) (1,230,954) (1,046,860) (14,507) (8,781) (9,909) (33,197) (100,375) (10,796) (9,930) (4,057) (24,783) (91,819) Total depreciation and amortisation (including program rights and amortisation) (133,572) (116,602) [B] Employee benefits expense1 Defined contribution superannuation expense Total employee benefits expense (292,109) (256,300) (28,535) (320,644) (20,815) (277,115) 1 2 The Group did not receive any federal government JobKeeper subsidies during the current period (2021: $25.7 million). In May 2020 the International Accounting Standards Board issued amendments to IFRS16 for COVID-19 Related Rent Concessions permitting lessees, as a practical expedient, not to assesses whether a particular rent concession occurring as a direct consequence of the COVID-19 pandemic are lease modifications and instead to account for the rent concessions as if they are not lease modifications. The Group was not provided with any rent concessions during the year (2021:$0.7 million). 83 Notes to the Financial Statements for the year ended 25 June 20222.4. Significant Items Profit before tax expense includes the following specific items for which disclosure is relevant in explaining the financial performance of the Group: Impairment of other intangible assets Reversal of previously impaired Television licences Total reversal of impairment of intangible assets Impairment of fixed assets Impairment of right of use assets Reversal of previously impaired right of use assets Gain on lease modifications Total reversal of impairment of investments and other assets Net income related to investments Net gain on disposal of subsidiaries Redundancy and restructure costs reversal Onerous Contracts provisioning Reversal of onerous provisioning Write off of unamortised original refinancing cost Other Total significant items before tax Tax benefit/(expense) on significant items Net significant items after tax REF 2022 $’000 – – – – – – – – 3,728 2,590 – – 8,351 (4,815) – 9,854 439 [A] [B] [C] [D] 2021 $’000 (1,018) 208,498 207,480 (4,719) (6,896) 11,333 1,531 1,249 470 3,445 4,863 (7,588) 66,728 (690) 1,230 277,187 (84,610) 10,293 192,577 [A] Net income from investments relates to the dividend received from PRT Company Limited (PRT) in February 2022, this is offset by costs incurred by the Group on acquisition of Prime Media Group and other fair value movements. [B] During the year the Group disposed of its subsidary Great Southern Television (GSTV). [C] During the year, the Group recorded reversals to onerous provisions of $8.4 million as a result of changes to the onerous contract review procedures. Refer to Note 4.4 for disclosure of the assumptions included in the calculation of the provision. [D] The amount relates to previously unamortised borrowing costs written off following the October 2021 refinance. 84 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 20222.5. Earnings Per Share Accounting policy Basic earnings per share Basic earnings per share is calculated by dividing the net profit (loss) 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. Basic earnings per share Profit (loss) attributable to the ordinary equity holders of the Company 13.3 cents 20.7 cents Diluted earnings per share Profit (loss) attributable to the ordinary equity holders of the Company 13.0 cents 20.7 cents 2022 2021 The above EPS includes the impact of significant items on profit. Refer to Note 2.4. Earnings used in calculating earnings per share Profit attributable to the ordinary equity holders of the Company used in calculating basic and diluted earnings per share. Weighted average number of shares used as the denominator Weighted average number of ordinary shares outstanding during the half year used in the calculation of basic earnings per share. Weighted average number of ordinary shares outstanding during the year used in the calculation of diluted earnings per share. 2022 $’000 2021 $’000 211,039 318,015 2022 Number 2021 Number 1,584,458,865 1,537,982,583 1,623,799,141 1,538,045,684 85 Notes to the Financial Statements for the year ended 25 June 2022Section 3: Working Capital 3.1. 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 Cash at banks earns interest at floating rates based on daily bank deposit rates. 2022 $’000 2021 $’000 37,938 253,332 The maximum exposure to credit risk at the reporting date is the carrying amount. The exposure to interest rate risk is discussed in note 6.6. Reconciliation of operating profit (loss) after tax to net cash provided by operating activities Profit for the year from continuing operations: Loss for the year from discontinued operations: Non-cash items: Depreciation and amortisation of property, plant and equipment and intangible assets Amortisation of Right of use assets Amortisation of television program rights Impairment of intangible assets and equity accounted investees Reversal of previously Impaired right of use assets less impairment of right of use assets Impairment of tangible assets (Reversal) of intangible assets impairment Share based payment expense Dividend received from equity accounted investees less share of profit of equity accounted investees Movement in unamortised finance costs Restructuring & redundancy costs Onerous contract costs Other non-cash items Changes in operating assets and liabilities, net of effect from acquisitions: (Increase) decrease in: Trade and other receivables Program rights Other assets Increase (decrease) in: Trade and other payables Program liabilities Provisions Other liabilities Tax balances Net cash inflow from operating activities 211,052 – 24,415 8,781 100,375 – – – – 6,758 (318) 8,243 – (12,847) 7,963 28,143 (69,955) (1,294) (27,138) (61,737) (79,808) (26,040) 43,639 160,232 318,122 (34) 14,853 9,930 91,819 1,018 (4,437) 4,719 (208,498) 7,776 (6,322) 5,642 (4,863) (55,842) 53,633 (55,592) (103,218) 5,462 44,292 (1,673) (75,283) (18,766) 120,473 143,211 86 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 20223.1. Cash and Cash Equivalents (continued) Significant non-cash transactions The Group engaged in the following significant non-cash investing and financing activities during the year: Non-cash investing (outflow) inflow Acquisition of other financial assets Conversion of Financial Assets for Ordinary Shares Acquisition of Ordinary Shares in exchange for Financial Asset Total non cash investing (outflow) inflow Non-cash financing (outflow) inflow Repayment of unsecured bilateral revolving credit facilities Drawdown of secured syndicated facility Total non cash investing (outflow) inflow [A] The Group invested in financial assets and issued contra revenue to investees. 3.2. Trade and Other Receivables 2022 $’000 2021 $’000 [A] (25,000) 5,000 (5,000) (25,000) – – – – – – – (750,000) 750,000 – Accounting policy Trade receivables Trade receivables are recognised initially at the value of the invoice sent to the customer and subsequently at the amounts considered recoverable (amortised costs), less provision for impairment. Trade receivables are generally settled within 30-90 days and are non-interest bearing. The Group provides goods and services to substantially all of its customers on credit terms. The collectability of trade receivables is reviewed on an ongoing basis. The Group has applied the expected credit loss model to determine the provision for doubtful debts. A provision for impairment of trade receivables is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. Debtors 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 third party. 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 and are reviewed for impairment on an annual basis. Current Trade receivables Provision for doubtful debts Provision for sales credits and returns Loans and other receivables Total trade and other receivables Movements in the provision for doubtful debts are as follows: Balance at the beginning of the financial year Acquired on business combination Net movement in provision recognised during the year Amount utilised Balance at the end of the financial year 2022 $’000 2021 $’000 233,760 (6,285) (21,711) 205,764 14,359 220,123 4,976 654 1,336 (681) 6,285 222,163 (4,976) (20,832) 196,355 15,610 211,965 6,212 – (804) (432) 4,976 Refer to Note 6.6 regarding information on the Group’s exposure to credit and market risks, and impairment losses for trade and other receivables. Refer to Note 7.5 regarding receivables from related parties. 87 Notes to the Financial Statements for the year ended 25 June 20223.2. Trade and Other Receivables (continued) 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. Estimates are used in determining the level of receivables that will not be collected. These estimates include factors such as historical experience, the current state of the Australian economy and industry factors. Refer to Note 6.6C for assessment of impact of COVID-19 on credit risk. 3.3. Program Rights and Inventories Accounting policy Program rights Program rights includes both purchased rights and produced programs. 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 or 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. Revenue is derived from the broadcast of advertisement on Seven channels and digital assets, net of agency commissions, discounts and rebates. 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. 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. Current Television program rights – cost less accumulated amortisation and impairment Newsprint and paper – at cost Non-current Prepaid Television program rights 2022 $’000 2021 $’000 140,392 6,820 147,212 – – 176,557 7,768 184,325 34 34 Program rights and inventory expense Program rights and inventories recognised as an expense during the year ended 25 June 2022 amounted to $100,375,022 (2021: $91,819,161) and $5,399,615 (2021: $6,551,348) respectively. Key judgements, estimates and assumptions The Group recognises program rights which are available for use. 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. 88 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 20223.4. 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 may be interest bearing. 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 included in television program rights and inventories as prepaid program rights. Current Trade payables and accruals Television program liabilities Non-current Derivative financial liabilities Television program liabilities 3.5. Commitments Year ended 25 June 2022 Capital expenditure commitments Operating lease commitments Contracts for purchase of television programs and sporting broadcast rights Contracts for employee services Contracts for other services Year ended 26 June 2021 Capital expenditure commitments Operating lease commitments Contracts for purchase of television programs and sporting broadcast rights Contracts for employee services Contracts for other services 2022 $’000 2021 $’000 127,972 48,852 176,824 – 3,665 3,665 < 1 year $’000 1–5 years $’000 > 5 Years $’000 1,140 7,212 307,065 52,997 37,978 406,392 – 22,989 486,187 20,047 60,571 589,794 – 5,944 – – 1,873 7,817 147,846 109,121 256,967 1,881 5,133 7,014 Total $’000 1,140 36,145 793,252 73,044 100,422 1,004,003 112 2,210 – 8,002 – – 112 10,212 405,381 716,907 12,635 1,134,923 36,884 25,380 12,320 32,228 – – 49,204 57,608 469,967 769,457 12,635 1,252,059 89 Notes to the Financial Statements for the year ended 25 June 20223.5. Commitments (continued) 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. These leases are low value and are not required to be accounted for under AASB16 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. 3.6. Contract Assets and Liabilities Accounting policy 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. Contract assets and liabilities Contract assets primarily relate to the Groups rights to consideration for work completed but not billed on programs commissioned for third party customers. The contract assets are transferred to receivables at the point of delivery of an episode and acceptance by the customer. This usually occurs when the Group issues an invoice to the customer. The contract liabilities primarily relate to the advance consideration received from customers for sponsorships, for which revenue is recognised over time. The following table provides information about the contract assets and contract liabilities from contracts with customers. Current Television Program Sales Contract assets Television Program Sales Revenue received in advance Contract liabilities Non-current Revenue received in advance – affiliation fees Contract liabilities 2022 $’000 – – – 19,478 19,478 – – 2021 $’000 2,468 2,468 9,788 17,317 27,105 5,042 5,042 Forward Bookings The following table includes revenue from contracts signed before the reporting date that is to be recognised post the reporting period (i.e. the performance obligations remain unsatisfied at the reporting date): Revenue received in advance Total 2023 $’000 19,478 19,478 2024 $’000 Beyond 2024 $’000 – – – – The Group recognised $27.1m in revenue during year ended 25 June 2022 that was previously accounted for as a contract liability. 90 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 2022 Section 4: Other Key Balance Sheet Items 4.1. 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 4.1.1 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. Costs incurred for internally developed software and websites are capitalised and amortised over the estimated useful life of the software or website. Costs that relate to the design and ongoing maintenance of the internally developed software and websites are expensed as incurred. Software-as-a-Service (SaaS) arrangements are service contracts providing the Group with the right to access the cloud provider’s application software over the contract period. As such, the Group does not receive a software intangible asset at the contract commencement date. For SaaS arrangements, the Group assesses if the contract will provide a resource that it can ‘control’ to determine whether an intangible asset is present. If the Group cannot determine control of the software, the arrangement is deemed a service contract and any implementation costs including costs to configure or customise the cloud provider’s application software are recognised as operating expenses when incurred. 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. A summary of the policies applied to the Group’s intangible assets is as follows: Goodwill Useful life Indefinite No amortisation Television licences Indefinite No amortisation The West mastheads Indefinite No amortisation Acquired Acquired Acquired Amortisation method used Internally generated or acquired Required Rights Finite (1-2 years) Amortised on a straight line basis over its useful life Acquired Customer Relationships Finite (2-9 years) Amortised on a straight line basis over its useful life Acquired Computer software Finite (3–15 years) Amortised on a straight line basis over its useful life Internally developed and acquired 91 Notes to the Financial Statements for the year ended 25 June 20224.1. Intangible Assets (continued) Licences $’000 Mastheads $’000 REF Computer software $’000 Goodwill $’000 Re-acquired Rights and Customer relationships $’000 Total $’000 Year ended 25 June 2022 Opening net book amount Additions Additions through Business Combinations [A] Disposals Amortisation charge 670,277 – – – – Closing net book amount 670,277 – – – – – – 10,003 2,470 946 (222) (5,034) – – – – 680,280 2,470 27,398 19,314 47,658 – – – (222) (4,875) (9,909) 8,163 27,398 14,439 720,277 2,300,000 119,555 99,185 1,263,481 19,314 3,801,535 (1,629,723) (119,555) (91,022) (1,236,083) (4,875) (3,081,258) Comprised of: Cost Accumulated amortisation and impairment Year ended 26 June 2021 Opening net book amount Additions Disposals Amortisation charge Reversal/(impairment) [B] 208,498 Closing net book amount 670,277 461,779 – – – – – – – – – 13,234 1,876 (32) (4,057) (1,018) 10,003 – – – – – – – – – – – – 475,013 1,876 (32) (4,057) 207,480 680,280 Comprised of: Cost Accumulated amortisation and impairment 2,300,000 119,555 95,991 1,236,083 – 3,751,629 (1,629,723) (119,555) (85,988) (1,236,083) – (3,071,349) [A] During the period the Group acquired intangible assets through acquisition of Prime Media Group. Refer to Note 7.4 for further details. [B] The Group has performed an assessment of the recoverable amount for each of the Cash Generating Units (‘CGUs’) and groups of CGUs being Television and The West (Metro and Regional). Refer to Note 4.1.1A for further details. The reversals and impairments recognised during the prior year are a result of the following changes to key assumptions in the Group’s cash flow forecasts: Television – Improved market conditions for the traditional Free to Air television metro advertising market. – Regulatory changes in the media industry. Refer to Note 4.1.1B for further details The West – Further declines in circulation and advertising revenue in print publishing businesses. 92 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 2022 4.1. Intangible Assets (continued) 4.1.1 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 cost to sell and its value in use. In calculating the recoverable value, the cash flows include projections of cash inflows and outflows from continuing use of the CGU’s assets. For value-in-use models, 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. For fair value less cost to sell models, the recoverable amount is calculated by using discounted cash flow projections based on financial budgets and forecasts covering a five-year period with a terminal growth rate applied thereafter. Non-financial assets other than goodwill that have been impaired 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 intangible assets with indefinite useful lives are tested at least annually to determine if they have been impaired in accordance with the Group accounting policy. The recoverable amounts of cash-generating units have been determined based on a value-in-use approach. These calculations require the use of estimates and assumptions. Refer to 4.1.1B for details on assumptions used. 4.1.1A 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 segments 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 25 June 2022 Television The West (Metro and Regional) Other Business and New Ventures Total goodwill and indefinite life assets Year ended 26 June 2021 Television The West (Metro and Regional) Other Business and New Ventures Total goodwill and indefinite life assets Goodwill $’000 Licences, mastheads $’000 Total $’000 27,398 670,277 697,675 – – – – – – 27,398 670,277 697,675 – – – – 670,277 670,277 – – – – 670,277 670,277 93 Notes to the Financial Statements for the year ended 25 June 20224.1. Intangible Assets (continued) 4.1.1B Impairment review of 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 25 June 2022. The Group has determined the CGUs to be Television and The West (Metro and Regional). Valuation Methods (i) Model The recoverable amount was determined using a value-in-use model by discounting the future cash flows expected to be generated from the continuing use of the CGU. Key components of the recoverable value calculations and the basis for each CGU are detailed below: (ii) Cash flows Year 1 cash flows are based upon budgets for the next 12 months. Future 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 Group’s share of Metro Free to Air advertising takes into account historical share performance and management’s expectation of share in forward periods, taking into consideration the impact of programming across the schedule. > Expenses are assumed to increase by CPI and known fixed increases for specific program rights. The West > Publishing revenue forecasts are management’s best estimates using: current market data, industry forecasts and historical actual rates. > Digital revenue assumptions are in line with industry forecasts and managements expectations of market development. > Expenses are expected to decrease based on committed cost reduction initiatives and volume assumptions. (iii) Terminal growth factor 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. (iv) 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 terminal growth factor, pre-tax and post-tax discount rate applied to the CGU’s cash flow projections are detailed below: Terminal growth factor Discount rate (pre-tax) Discount rate (post-tax) Jun-22 Jun-21 Jun-22 Jun-21 Jun-22 Jun-21 Television The West – Metro The West – Regional 0.0% -0.5% -0.5% 0.0% -0.5% -0.5% 14.4% 14.5% 14.2% 16.5% 13.5% 13.7% 9.7% 10.5% 10.5% 9.6% 10.5% 10.5% (v) Allocation of impairment for The West In prior periods, The West mastheads, licences and goodwill have been fully written down. In allocating the impairment to individual non- current assets within the CGUs, their recoverable amount was not reduced below their fair value less cost of disposal; notably for property related assets. Management’s assessment has shown no indicators of impairment reversal in the current period. 4.1.1C Impact of possible changes in key assumptions 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. The key assumptions in the value in use calculations (disclosed in Note 4.1.1B) include metropolitan free to air (Metro FTA) market growth rates, Metro FTA market share, BVOD, discount rate and terminal growth rate. These assumptions are based on past experience and the Group’s forecast operating and financial performance for the Television CGU taking into account current market and economic conditions, risks and uncertainties. The group has assessed the impact on recoverable value of the CGU of the following changes in key assumptions as part of its sensitivity analysis (all other assumptions) held constant: Key cashflow assumption Change Metro FTA market growth rate1 Metro FTA market share BVOD market growth rate1 BVOD market share Discount rate Terminal growth rate +/- 1% +/- 1% +/- 1% +/- 1% +/- 1% +/- 1% Impact on recovable value $m +/- 253 +/- 145 +/- 62 +/- 45 +/- 186 +/- 131 No sensitivity is presented for The West as all intangible and tangible assets have been fully written down nil or their respective stand- alone fair value. 1 Based on the model performed, the impact of the sensitivities have a compounding effect on the recoverable value. 94 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 20224.1. Intangible Assets (continued) 4.1.1D Prior Year reversal of prior period impairment charges In FY21, the operating results of the Television CGU, combined with realised cost savings from the Group’s cost out initiatives and a revision of assumptions for the broader advertising market resulted in increased headroom when compared to most recent impairment testing models from December 2020 and June 2020. In addition to improved market conditions, regulatory changes in the Media Industry arising from the Treasury Laws Amendment (News Media 4.2. Property, Plant and Equipment Accounting policy Measurement of cost All property, plant and equipment is stated at historical cost less accumulated depreciation and provision of impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. and Digital Platforms Bargaining Code) Bill 2021 has meant that future segment revenue assumptions now include the revenue streams arising from negotiations with other third parties impacted by the Code. These regulatory changes represented a structural shift in the Industry and as a result contributed to the increased headroom and reversal of prior period impairment in June 2021 of $208,498,000 in the Television CGU. There have been no further impairment reversals in the current period. 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 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 Impairment of assets 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. 95 Notes to the Financial Statements for the year ended 25 June 20224.2. Property, Plant and Equipment (continued) Year ended 25 June 2022 Opening net book value Additions Net additions through Business Combinations [A] [B] Disposals Depreciation charge Change due to movement in FX rates Closing net book amount Comprised of: Cost Freehold land and buildings $’000 Leasehold improvements $’000 Plant and equipment $’000 Total $’000 49,453 49,874 28,990 (18) 8,311 25,555 307 (5) 23,680 24,239 16,538 (13) 17,462 80 12,145 – (819) – (1,866) (11,822) (14,507) – 37 37 28,868 32,302 52,659 113,829 43,704 73,426 645,838 762,968 Accumulated depreciation and impairment (14,836) (41,124) (593,179) (649,139) Year ended 26 June 2021 Opening net book value Additions Disposals Depreciation charge Impairment Change due to movement in FX rates Transferred in business disposal Closing net book amount Comprised of: Cost Accumulated depreciation and impairment [C] 18,106 9,207 – – (644) – – – 343 – (925) (314) – – 24,143 13,472 (31) (9,227) (4,405) (238) (34) 51,456 13,815 (31) (10,796) (4,719) (238) (34) 17,462 8,311 23,680 49,453 31,450 (13,988) 47,405 564,547 643,402 (39,094) (540,867) (593,949) [A] Additions during the year include non-cash increases to make-good provisions. Refer to Note 4.4. [B] During the period the Group acquired Property Plant and Equipment through acquisition of Prime Media Group. Refer to Note 7.4 for further details. Additions from Prime Media Group have been presented net of GSTV assets disposed. [C] Refer to Note 2.4 for details on prior year impairment. 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. 96 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 2022 4.3. Leases 4.3A Right of use assets The Group leases many assets including offices, equipment, transmission towers and satellites. The recognised right of use assets relate to the following types of assets: Building $’000 Plant & Equipment $’000 Comm- unications $’000 Year ended 25 June 2022 Opening net book amount Additions Net additions through Business Combinations [A] Disposals Depreciation charge Adjustment to cost Effects of movement in exchange rates Closing net book amount Year ended 26 June 2021 Opening net book amount Additions Disposals Depreciation charge Impairment reversal/(expense) Adjustment to cost Effects of movement in exchange rates Closing net book amount 68,141 1,000 1,775 (87) (6,475) (951) 39 63,442 80,940 355 – (7,460) 4,597 (10,597) 306 68,141 Total $’000 72,089 4,015 1,775 (87) (8,781) (951) 41 220 – – – 3,728 3,015 – – (156) (2,150) – (2) – 4 68 703 – (77) (246) (160) – – 4,591 68,101 5,884 87,527 68 – (2,224) – – – 423 (77) (9,930) 4,437 (10,597) 306 220 3,728 72,089 [A] During the period the Group acquired Leases through acquisition of Prime Media Group. Refer to Note 7.4 for further details. 4.3B Lease liabilities The following tables show the discounted lease liabilities included in the Group statement of financial position and a maturity analysis of the contractual undiscounted lease payments: Lease liabilities Current Non-current Total lease liabilities Maturity analysis – contractual undiscounted lease payments Less than one year One to five years More than five years Total undiscounted lease payments 2022 $’000 12,141 186,239 198,380 27,455 100,847 223,431 351,733 2021 $’000 10,524 193,801 204,325 25,562 100,669 246,965 373,196 4.3C Lease liabilities – Rent Concessions During the year the Group did not receive any rent concessions for lease payments as a result of COVID-19. COVID-19-Related Rent Concessions was issued in May 2020 and permits lessees, as a practical expedient, not to assess whether particular rent concessions occurring as a direct consequence of the COVID-19 pandemic are lease modifications and instead to account for those rent concessions as if they are not lease modifications. The Group was not provided with any rent concessions in 2022 (2021: $736,000). 97 Notes to the Financial Statements for the year ended 25 June 20224.4. 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. Short term incentives and bonus plans 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. [B] Redundancy and restructuring [C] Onerous Contracts [D] Make Good Provision 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. Make good provision to restore the leased premises of its offices, studios and other premises 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. Carrying amount at 26 June 2021 Additions through Business Combinations Amounts provided/(reversed) Amounts utilised Unwind of discount Balance as at 25 June 2022 Represented by: Current Non-current Balance as at 25 June 2022 Employee Benefits [A] $’000 Redundancy & Restructuring [B] $’000 Onerous Contracts [C] $’000 Make Good Provision [D] $’000 59,833 5,524 28,727 (23,453) – 70,631 63,200 7,431 70,631 4,672 174,570 310 44 (2,444) – 2,582 2,582 – 2,582 – (8,351) (88,280) 1,419 79,358 38,961 40,397 79,358 10,374 496 26,495 (464) 355 37,256 506 36,750 37,256 Total $’000 249,449 6,330 46,915 (114,641) 1,774 189,827 105,249 84,578 189,827 98 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 2022 4.4. Provisions (continued) 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. For onerous provision, 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/ decline rates for the advertising market; 4.5. Other Financial Assets Accounting policy The Group classifies its investments in the following categories: financial assets at fair value through profit or loss (FVTPL), financial assets at fair value through other comprehensive income (FVTOCI) and amortised cost financial assets. The classification depends on the Group’s business model for managing the financial asset as well as its contractual cash flow characteristics. Movements in carrying amounts of other financial assets Carrying amount at the beginning of the period Contractual rights converted to Equity Return of capital Net change in fair value of financial assets at fair value Acquisitions (disposals) Foreign Currency revaluation Carrying amount at the end of the year > 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. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. 2022 $’000 37,355 – (5,459) (33,996) 41,600 71 39,571 2021 $’000 79,135 4,500 – 506 (46,786) – 37,355 Other financial assets represent equity investments in listed and unlisted entities comprising of View Media Group, RAIZ Invest Limited, Money Me Limited, Open Money Group Pty Limited and a portfolio of other SWM Ventures. During the year, the Group completed its acquisition of 100 per cent of the issued share capital of Prime Television (Holdings) Pty Limited and its subsidiaries, and Seven Affiliate Sales from PRT Company Limited (formerly Prime Media Group Limited). On 4 February 2022 PRT Company Limited made a payment of a fully franked dividend and a return of capital. Following the receipt of the dividend and return of capital from PRT Company Limited, the fair value of the PRT Company Limited Shares were reduced to zero. A fair value loss of $19.1 million was recognised in Other Comprehensive Income (reserves). During the year, as a result of the Money Me Limited and Society One Merger, the Group disposed of its financial assets in Society One for shares in the listed company Money Me Limited. Acquisitions during the period were made using a mix of cash and contra advertising agreements. Refer to Note 3.1. Key judgements, estimates and assumptions The fair value of other financial assets that are measured through a Level 3 (significant unobservable inputs) approach under the accounting standard AASB 13 Fair Value Measurement. The valuation technique used was based on the equity price established in the most recent round of equity financing and consideration of any other key changes in the investment which requires a level of judgement. 99 Notes to the Financial Statements for the year ended 25 June 2022Section 5: Taxation 5.1. 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. 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. 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 losses, to the extent it is probable that taxable profit will be available to utilise them. 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. 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. 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). Prime Media Group joined the tax consolidated Group of Seven West Media Limited effective 31 December 2021. 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. 100 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 20225.1 Taxes (continued) Accounting policy (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. 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 expense Reconciliation of tax expense to prima facie tax payable Profit before tax from continuing operations Loss before tax from discontinued operations Total profit before tax Tax expense at the Australian tax rate of 30% (2021: 30%) 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. 2022 $’000 (71,941) 5,010 (66,931) (7,485) 2,077 2021 $’000 (51,432) (120) (51,552) (76,556) 609 (72,339) (127,499) 283,391 445,621 – 283,391 (85,017) (34) 445,587 (133,676) 88 – 4,586 (1,688) 777 2,954 (1,126) 7,087 300 4,690 – – – 1,883 (1,185) 489 Tax effect of amounts which are not (deductible)/taxable in calculating taxable income: Share of net profit of equity accounted investees, net of dividends received Capital tax losses utilised for which no deferred tax asset was previously recognised Dividend received Transaction costs Accounting gain on sale of assets Non-assessable income Other non-assessable items Adjustments for tax of prior periods Tax (expense) at the Australian tax rate of 30% (2021: 30%) (72,339) (127,499) Tax recognised in other comprehensive income Cash flow hedges Financial assets at fair value Trade and other payables Deferred tax asset not recognised – 10,216 (1,638) (1,326) (555) – Capital losses and deductible temporary differences 1,175,054 1,193,718 Key judgements, estimates and assumptions In determining the amount of current and deferred tax, the Group takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities. Such changes to tax liabilities will impact tax expense in the period that such a determination is made. 101 Notes to the Financial Statements for the year ended 25 June 20225.2. Deferred Tax Assets and Liabilities Deferred tax assets (liabilities) Year ended 25 June 2022 Deferred tax balances transferred from Business Combinations $’000 27 June 2021 $’000 Recognised in profit or loss $’000 Recognised in other comprehensive income $’000 The balance comprises temporary differences attributable to: Trade and other receivables Program rights and inventories Investments Intangible assets Property, plant and equipment Leases Deferred expenses and prepayments Trade and other payables Provisions Deferred income Borrowings Transaction costs Other Year ended 26 June 2021 The balance comprises temporary differences attributable to: Trade and other receivables Program rights and inventories Investments Intangible assets Property, plant and equipment Leases Deferred expenditure and prepayments Trade and other payables Provisions Deferred income Borrowings Cash flow hedges Transaction costs Other 4,099 (92,337)1 (3,858) 499 – – (201,387) (5,487) 21,921 40,255 1,793 16,109 58,580 3,147 1,697 42 3,775 – – – 443 1,898 217 – – 164 (2,266) 27 June 2020 $’000 4,482 (96,070) (7,993) (136,345) 26,885 41,146 (252) 8,284 549 17,387 1,635 8,828 (10,003) (2,176) (1,793) 3,014 (3,830) (8,999) (1,697) 7 (8,330) (5,408) (383) 25,033 4,690 (65,042) (4,964) (891) 2,045 7,825 103,824 (45,244) 5,688 – 1,326 145 1,844 (2,541) 1,697 – (103) 1,931 25 June 2022 $’000 5,147 (74,950) 7,993 (198,046) 11,918 38,079 - 17,928 56,648 (5,635) – 49 (4,391) 26 June 2021 $’000 4,099 (71,037) (3,858) (201,387) 21,921 40,255 1,793 16,109 58,580 3,147 1,697 – 42 3,775 – – 10,216 – – – – (1,638) – – – – – – – (555) – – – – – – – – (1,326) – – Net deferred tax assets/(liabilities) (146,164) 8,578 (145,260) 1 The opening balance has been updated to reflect the impact of an amended prior period tax return. Recognised in profit or loss $’000 Recognised in other comprehensive income $’000 Net deferred tax (liabilities) assets (47,036) (75,947) (1,881) (124,864) 102 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 2022Section 6: Capital Management 6.1. 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 payables and accruals. Non-current Borrowings – secured Unamortised refinancing costs Borrowings net of unamortised refinancing costs 2022 $’000 2021 $’000 300,000 (5,571) 500,000 (6,690) 294,429 493,310 6.1A Financial arrangements As at 25 June 2022, the Group had access to secured revolving syndicated facilities to a maximum of $600,000,000 (2021 secured syndicated facilities: $500,000,000). The amount of these facilities undrawn at reporting date was $300,000,000 (2021: $nil). In addition, the Group continues to have access to a $13,400,000 (2021: $13,400,000) multi-option facility with Australia and New Zealand Banking Group Limited. As at reporting date, $12,169,614 of this facility (2021: $11,646,470) was utilised for the provision of bank guarantees. In October 2021, the Group entered into a secured revolving syndicated facility agreement with an October 2024 maturity. The lenders hold a first ranking general security over the Group’s assets and a mortgage over the freehold properties in Broome and Mt Coot-tha. Under the terms of the new debt facility agreement, the previous minimum liquidity requirements and minimum EBITDA test were replaced by semi annual total leverage ratio and total interest cover tests. The Group’s has been in compliance with its financial covenants to date, including the period ended 25 June 2022. The facilities are subject to a weighted average interest rate of 3.54% at 25 June 2022 (2021: 4.58%). Fair value The carrying amount and fair value of Group borrowings at the end of the financial year was $300,000,000 (2021: $500,000,000). Risk exposures Information about the Group’s exposure to interest rate changes is provided in Note 6.6. 6.2. 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. 1,590,118,239 (June 2021: 1,538,034,368) Ordinary shares fully paid [A] 3,432,966 3,405,666 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. [A] The Group issued 40,833,871 ordinary shares at $0.495 per share on 1 September 2021 and 11,250,000 ordinary shares at $0.63 per share on 25 November 2021 as part of the Seven West Media’s Employees and Executives Short Term Incentive Plan. As at 25 June 2022, the Group held 80,277,577 (June 2021: 193,706) of the Company’s own shares which is disclosed in reserve for own shares in Note 6.3. 2022 $’000 2021 $’000 103 Notes to the Financial Statements for the year ended 25 June 20226.3. Reserves Accounting policy (i) Cash flow hedge reserve The cash flow hedge reserve is used to recognise the effective portion of gains or losses on derivatives that are designated and qualify as cash flow hedges. (iv) Foreign currency translation reserve Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive income in a separate reserve within equity. (ii) Reserve for own shares Treasury shares are shares in Seven West Media Limited that are held by the SWM Equity Incentive Plan Trust that are to be transferred to employees under the Group’s employee share scheme. (iii) Equity compensation reserve The share based payments reserve is used to recognise the grant date fair value of incentive shares issued to eligible employees with performance related conditions. Once the vesting conditions of the respective share schemes are met and the shares are exercised, the accumulated amount of the share based payment reserve relating to the vested shares is transferred to share capital. The cumulative amount is reclassified to profit or loss when the net investment is disposed of. (v) Fair value reserve Fair value reserve is used to recognise the valuation of the Group’s accounting for other investments as fair value through other comprehensive income. Equity compensation reserve Reserve for own shares Foreign currency translation reserve Fair value reserve Total Reserves 2022 $’000 17,407 (45,221) 446 (8,169) (35,537) 2021 $’000 10,649 (597) (57) 12,771 22,766 6.3A Movements in reserves Movements in each class of reserve during the current and previous financial year are set out below: Balance at 28 June 2020 Cash flow hedge gain(losses) taken to equity Foreign currency translation differences Tax on other comprehensive income Net change in fair value of financial assets (net of tax) Share based payment expense Balance at 26 June 2021 Balance as at 27 June 2021 Foreign currency translation differences Net change in fair value of financial assets (net of tax) Share based payment expense Shares bought on market Shares issued pursuant to vesting of executive and employee share plans Balance at 25 June 2022 Cash flow hedge reserve $’000 Equity compensation reserve $’000 Reserve for own shares $’000 Foreign currency translation reserve $’000 Fair value reserve $’000 Total $’000 (3,094) 4,420 – (1,326) – – – – – – – – – – 2,873 (597) (32) 12,820 11,970 – – – – 7,776 10,649 10,649 – – 6,758 – – – – – – – (597) (597) – – – (17,324) (27,300) – (25) – – – (57) (57) 503 – – – – – – – (49) – 4,420 (25) (1,326) (49) 7,776 12,771 22,766 12,771 22,766 – 503 (20,940) (20,940) – – – 6,758 (17,324) (27,300) 17,407 (45,221) 446 (8,169) (35,537) 104 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 20226.4. 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. 6.4A Dividends There were no dividends paid during the financial year (2021:nil) or subsequent to year end (2021: nil). 6.4B Dividends not recognised at year end No final dividend has been declared in the current or prior year. 6.4C Franked dividends Franked dividends declared 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 25 June 2022. Franking credits available for subsequent financial years based on a tax rate of 30% (2021: 30%) 2022 102,165 2021 62,650 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. 6.5. 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. conditions but excludes the impact of any service and non-market performance vesting conditions and the impact of any non-vesting conditions. 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 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. 105 Notes to the Financial Statements for the year ended 25 June 20226.5. Share-Based Payments (continued) 6.5A Performance and share rights granted as compensation The total expense recognised for the LTI share-based payments for all plans during the financial year for the Group was $2.3 million (2021: $2.1 million). The total expense for the STI share-based payments for all the plans during the financial year for the Group was $4.3 million (2021: $4.8 million). 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 25 June 2022, performance rights that remain outstanding are from 2020, 2021 and 2022 Long Term Incentive Plans. The Group issued one tranche in 2022 for the long term incentive plan that entitles key management personnel to performance rights. Holders of vested rights are entitled to fully paid ordinary shares in the Company. A total of 6,588,597 (2021: 22,968,748) performance rights were granted on 26 November 2021 (2021: 1 December 2020) and will be awarded when the performance conditions are met. The performance period commenced on 1 July 2021 and ends on 30 June 2024 (2021: 1 July 2020 to 30 June 2023). The performance rights are subject to a total shareholder return (TSR) hurdle as well as an individual performance condition. Performance rights do not carry any dividend or voting rights prior to vesting and are all equity settled. Vesting of the rights are subject to the condition that the executive remains employed by the Company at the vesting date. During the year 53,964,242 rights for LTI and STI vested and 367,685 rights lapsed. 6.5B Valuation models and key assumptions used Grant date Award type Vesting Conditions Performance period Vesting Date Share price at grant date Number of rights granted Fair value at grant date Volatility – Seven West Media Risk free interest rate Dividend yield Valuation methodology 2022 Long Term Incentive Plan 26 November 2021 Performance Rights Absolute TSR 1 July 2021 to 30 June 2024 20 August 2024 $0.600 6,588,597 $0.405 64% 0.86% 0.0% Monte-Carlo simulation Short Term Incentive Plans In FY22, the Company’s underlying EBIT result of $309.0 million opened the financial gateway. Refer to the Remuneration Report on pages 50 to 70 for further details. The estimated number and fair value of the restricted shares as at 25 June 2022 is based on 50 per cent of the pool awarded. The performance period commenced on 27 June 2021 and ends on 25 June 2022. 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. 106 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 20226.6. Capital and Financial Risk Management 6.6A Accounting classifications and fair values The following table shows the carrying amounts and fair values of financial assets and financial liabilities. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. Financial assets (liabilities) measured at fair value Other financial assets Financial assets (liabilities) measured at amortised cost Trade and other receivables Cash and cash equivalents Borrowings Trade payables and accruals 6.6B Measurement of fair values Valuation techniques and significant unobservable inputs 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: Note 4.5 3.2 3.1 6.1 3.4 2022 $’000 39,571 39,571 220,123 37,938 (294,429) (127,972) (164,340) 2021 $’000 37,355 37,355 211,965 253,332 (493,310) (147,846) (175,859) (a) quoted prices (unadjusted) in active markets for identical assets (b) (c) or liabilities (level 1). 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 inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3). The following table shows the valuation techniques and measurement level inputs used to assess the fair value of financial assets and financial liabilities at 25 June 2022. Type Valuation Technique Other Financial Assets – Listed Entities The fair value is based on quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the measurement date. Other Financial Assets – Unlisted Entities The fair value is based on the equity price established in the most recent round of equity financing and consideration of any other key changes in the investment which requires a level of judgement. Measurement Level Amount Level 1 $10,762,082 Level 3 $28,808,838 Assessment of fair value of Other (unlisted) investments The fair value of other financial assets is measured through a Level 3 (significant unobservable inputs) approach under AASB 9. This methodology included using > The issue prices in the most recent round of equity raising conducted by each company assuming this was in the last 12 months; and > Comparison of issue price movements to listed peers over the same period; and > Consideration of the investment method and the Group’s current and forecasted valuation date. 107 Notes to the Financial Statements for the year ended 25 June 20226.6C Risk management framework 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 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 the 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. 6.6C(i) 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. The carrying amounts of financial assets and contract assets represent the maximum credit exposure. Trade receivables and contract assets The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry in which customers operate. Each new customer is analysed individually for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. The Group’s review includes external ratings, if they are available, financial statements, credit agency information and industry information. Sale limits are established for each customer and reviewed on a regular basis. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or a legal entity, their industry, trading history with the Group and existence of previous financial difficulties. An impairment analysis is performed at each reporting date using a provision range matrix to measure expected credit losses. The percentage used will depend on the risk profile of the debtors at the time and may vary year on year. The provision rates are based on days past due for groupings of various customer segments. The calculation reflects the probability-weighted outcome and reasonable and supportable information that is available at the reporting date about past events, current conditions, and forecasts of future economic conditions. Set out below is the information about the credit risk exposure on the Group’s trade receivables and contracts assets using a provision range matrix. Year ended 25 June 2022 Expected credit loss rate Estimated total gross carrying amount Expected credit loss Year ended 26 June 2021 Expected credit loss rate Estimated total gross carrying amount Expected credit loss Past due but not impaired Not past due < 30 days 31–90 days > 90 days 2.1% 224,323 (4,745) 1.6% 212,441 (3,416) 3.5% 6,598 (232) 4.3% 7,648 (332) 37.3% 2,353 (878) 55.5% 1,593 (884) 88.5% 486 (430) 71.5% 481 (344) Total $'000 233,760 (6,285) 222,163 (4,976) > review of standard payment terms for all customers; > negotiation of payment terms for aged amounts, stop on overdue accounts; and > where increased risk was identified the Group moved to tighten credit policy, ensure payments were received per current trading terms, seek additional director guarantees in some circumstances, and moved some debtors to full or partial prepayment terms or reduced credit limits. The above procedures and ongoing COVID-19 impact has not resulted in recognition of additional credit loss provisions (2021: nil) during the year. Impact of COVID-19 on assessment of Credit Risk The Group’s exposure to credit risk is influenced by the individual characteristics of each customer. Despite the continued advertising market recovery in FY22, ongoing COVID-19 related business closures, restrictions to trade resulting from state-wide lockdowns and border closures in the first half of FY22, as well as significant delay in international imports the Group has continued its review of key factors impacting the credit risk of its customer base throughout the financial year and again at balance date. The Group also noted the Trade Credit Insurance industry restricting the level of cover in high risk categories. The group’s reassessment of credit risk for existing and new customers included the following procedures in addition to those already described in Note 6.6C(i) of this financial report: > re-assessment of already approved trade credit terms of customers trading in perceived high risk and high COVID-19 impacted industries, specifically those characterised by high consumer discretionary spend patters such as travel & tourism, automotive, property, construction and retail and consumer goods businesses; 108 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 20226.6. Capital and Financial Risk Management (continued) 6.6C(ii) 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 At 25 June 2022 Financial liabilities Trade and other payables Unsecured loans Total financial liabilities At 26 June 2021 Non-derivative financial liabilities Trade and other payables Unsecured loans Total non-derivatives Derivative financial liabilities Net settled interest rate swaps and collars Total derivatives Total financial liabilities cash flow forecasts. In addition, the Group had access to total debt funding under its revolving syndicated debt facility equal to $600,000,000, refer to Note 6.1 for additional details on the Group’s borrowing activities for the year. Maturities of financial liabilities The table analyses the Group’s financial liabilities including interest to maturity into relevant groupings based on their contractual maturities. The amounts disclosed in the table are the contractual undiscounted principal and interest cash flows and therefore may not agree with the carrying amounts in the statement of financial position. For interest rate swaps, the cash flows have been estimated using forward interest rates applicable at the end of the reporting period. Less than one year $’000 Between 1 and 5 years $’000 Total contractual cash flows $’000 Carrying amount – liabilities $’000 174,720 21,356 196,076 3,665 308,845 312,510 Less than one year $’000 Between 1 and 5 years $’000 178,385 330,201 508,586 Total contractual cash flows $’000 257,712 22,826 280,538 5,133 507,152 512,285 262,845 529,978 792,823 – – – – – – 180,489 294,429 474,918 Carrying amount – liabilities $’000 262,100 493,310 755,410 1,881 1,881 280,538 512,285 792,823 757,291 109 Notes to the Financial Statements for the year ended 25 June 20226.6. Capital and Financial Risk Management (continued) 6.6C(iii) 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: (a) 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. (b) 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’s main interest rate risk arises from long-term borrowings. As at the end of the reporting period the Group had the following instruments: Variable rate instruments Cash at bank, on hand and at call Weighted average interest rate External borrowing facilities Weighted average interest rate Net exposure to cash flow interest rate risk The Group’s current receivables generally do not bear interest. 2022 $’000 37,938 1.50% 300,000 3.54% 262,062 2021 $’000 253,332 1.50% 500,000 4.58% 246,668 Group sensitivity Based on the Group’s outstanding floating rate borrowings at 25 June 2022, 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) Net Equity 2022 $’000 2021 $’000 2022 $’000 2021 $’000 If interest rates were 1% higher with all other variables held constant: (Decrease) (2,100) (3,500) (2,100) (3,500) If interest rates were 1% lower with all other variables held constant: Increase 2,100 3,500 2,100 3,500 (c) 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. Foreign currency contracts are used to reduce the exposure to the foreign exchange risk. As at 25 June 2022, the Group does not have any cross-currency hedges. As at the end of the reporting period, the Group did not have any material exposures to foreign exchange risk. Based on the Group’s financial instruments held at 25 June 2022, 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. The analysis was performed on the same basis as 2021 and ignores any impact of forecasted sales and purchases. 110 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 2022Section 7: Group Structure 7.1. Equity Accounted Investees Non-current Investments in associates and jointly controlled entities 16,153 15,835 2022 $’000 2021 $’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 up to 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. Impairment Equity accounted investees are tested for impairment annually or when indicators of impairments exist. Information relating to associates and jointly controlled entities is set out in the tables below: Name of entity REF Principal activities HealthEngine Limited NPC Media Pty Limited Oztam Pty Limited Starts at 60 Pty Limited TX Australia Pty Limited Mildura Digital Television Pty Limited West Digital Television Pty Limited West Digital Television No.2 Pty Limited West Digital Television No.3 Pty Limited West Digital Television No.4 Pty Limited WA SatCo Pty Limited Broadcast Transmission Services Pty Limited Reporting date 30 June Online health directory Playout and content managements services 30 June Ratings service provider 31 December Online social network for seniors Transmitter facilities provider [A] [A] [A] Television licence holder Television licence holder Television licence holder [A] Television licence holder [A] Television licence holder [A] [A] Television licence holder Broadcast support service 30 June 30 June 30 June 30 June 30 June 30 June 30 June 30 June 30 June Ownership interest 2022 % 16.3 50.0 33.3 35.3 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 2021 % 16.3 50.0 33.3 35.3 50.0 – – – – – – – [A] Acquired as part of the acquisition of Prime Media Group, refer to Note 7.4 for further disclosure. These entities hold TV licences which have not been valued as part of the acquisition. 111 Notes to the Financial Statements for the year ended 25 June 20227.1. Equity Accounted Investees (continued) Below is the summarised financial information for the Group’s remaining associates and jointly controlled investments. Net loss for the year Group's share of profit for the year REF [B] [B] Share of profit (loss) is based on ownership percentage up to 50% for each equity accounted investee. Movements in carrying amount of equity accounted investees Carrying amount at the beginning of the financial year Share of profit of investees after tax Acquisitions and other movements [A] 2022 $’000 (368) 318 2022 $’000 15,835 318 – 2021 $’000 (84) 6,322 2021 $’000 9,513 6,322 – Carrying amount at the end of the financial year 16,153 15,835 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. The Group has not recognised losses in relation to its interests in equity accounted investees as the Group has no obligation in respect of these losses. 7.2. 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 25 June 2022 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. The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described above. 135 Nominees Pty Ltd Albany Advertiser Pty Ltd Another Story Productions Pty Limited Australian National Television Pty Limited Australian Television International Pty Limited Australian Television Network Limited Broadcast Production Services Pty Ltd BTTR Production Pty Limited BTW Productions Pty Limited Channel Seven Adelaide Pty Limited Channel Seven Brisbane Pty Limited 112 Notes Country of incorporation [P] [A] [O] [C] [C] [C] [P] [N] [K] [C] [C] Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Ownership interest 2022 % 100 100 100 100 100 100 100 100 100 100 100 2021 % – 100 100 100 100 100 – 100 100 100 100 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 20227.2. Investments in Controlled Entities (continued) Notes Country of incorporation Ownership interest 2022 % 2021 % Channel Seven Melbourne Pty Limited Channel Seven Perth Pty Limited Channel Seven Queensland Pty Limited Channel Seven Sydney Pty Limited Coast Australia Production Pty Limited1 Cobbittee Publications Pty Limited Colorpress Australia Pty Ltd ColourPress Pty Ltd Community Newspaper Group Limited ComsNet Pty Ltd Dansted and McCabe Holdings Pty Ltd Dodds Street Properties Pty Limited Edinburgh Military Tattoo Sydney Production Pty Ltd Endurance Media Limited1 Fam Time Productions Pty Limited Faxcast Australia Pty Limited Geraldton Newspapers Pty Ltd Geraldton Telecasters Pty Ltd Golden West Network Pty Ltd Golden West Satellite Communications Pty Ltd Great Southern Film and Television Pty Limited1 Great Southern Television Limited1 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 Mid West Television Pty Ltd Mining Television Network Pty Ltd Pacific Magazines Trust Prime Digitalworks Pty Ltd Prime Media Broadcasting Services Pty Ltd Prime Media Group Services Pty Ltd Prime New Media Investments Pty Ltd Prime Properties (Albury) Pty Ltd Prime Television (Holdings) Pty Ltd Prime Television (Northern) Pty Ltd Prime Television (Southern) Pty Ltd Prime Television (Victoria) Pty Ltd [C] [C] [C] [C] [C] [A] [A] [L] [A] [A] [C] [M] [C] [A] [P] [P] [P] [A] [A] [A] [A] [I] [E] [C] [C] [P] [P] [P] [P] [P] [P] [P] [P] [P] [P] [P] Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia New Zealand Australia Australia Australia Australia Australia Australia Australia New Zealand Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia 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 70 100 100 100 100 100 100 100 100 70 100 100 100 – – – 70 70 100 100 100 100 100 100 100 100 – – 100 – – – – – – – – – 113 Notes to the Financial Statements for the year ended 25 June 20227.2. Investments in Controlled Entities (continued) Notes Country of incorporation Ownership interest 2022 % 2021 % Prime Television Investments Pty Ltd Quokka Press Pty Ltd Quokka West Pty Ltd Red Music Publishing Pty Limited Red Publishing Pty Limited Riverlaw Holdings Pty Limited SBB Productions Pty Limited Screenworld Pty Ltd Seven Affiliate Sales Pty Ltd Seven DS Holdings Pty Ltd Seven Facilities Pty Ltd Seven Investment Holding Pty Limited Seven Investment Holding USA LLC Seven Magazines Pty Limited Seven Network (Operations) Limited Seven Network Programming Pty Limited Seven Productions NZ Limited Seven Publishing (No 1) Pty Limited Seven Publishing (No 2) Pty Limited Seven Publishing (PP) Holdings Pty Limited Seven Publishing (PP) Pty Limited Seven Publishing MM Pty Limited Seven Publishing NZ Limited Seven Publishing NZ Merchant Company Limited Seven Publishing Pty 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 Seven Television Australia Limited Seven Ventures Pty Limited Seven West Media Investments Pty Limited SMG H1 Pty Limited SMG H2 Pty Limited SMG H4 Pty Limited SMG H5 Pty Limited South West Printing and Publishing Company Ltd Southdown Publications Pty Limited 114 [P] [A] [A] [D] [C] [A] [K] [P] [P] [I] [H] [C] [C] [C] [C] [C] [C] [C] [C] [C] [J] [G] [C] [J] [I] [F] Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia United States of America Australia Australia Australia New Zealand Australia Australia Australia Australia Australia New Zealand New Zealand Australia Australia Australia Australia Australia Australia Australia Australia [C] Australia Australia Australia Australia Australia Australia Australia Australia Australia [C] [B] [B] [C] [C] [A] [C] 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 100 100 100 100 100 – – 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 20227.2. Investments in Controlled Entities (continued) Notes Country of incorporation Ownership interest 2022 % 2021 % Sunshine Broadcasting Network Limited SWM Finance Pty Limited SWM Media Holdings Pty Ltd Telepro Pty Ltd The Seven Publishing Plus Company Pty Limited W.A. Broadcasters Pty Ltd WAN Cinemas Pty Limited West Australian Entertainment Pty Ltd West Australian Newspapers Limited West Central Seven Limited Western Mail Operations Pty Ltd Western Mail Pty Ltd Westroyal Pty Ltd Wide Bay - Burnett Television Limited Zamojill Pty Ltd Zangerside Pty Limited Zed Holdings Pty Limited 1 Disposed of during the year, refer to Note 2.4. [C] [B] [I] [P] [C] [A] [A] [A] [A] [C] [A] [A] [A] [C] [P] [C] [C] Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 100 100 100 100 100 100 100 100 100 – 100 100 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 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. [K] 5 February 2019. [L] 24 June 2019. [M] 24 April 2019. [N] 25 November 2019. [O] 17 May 2021. [P] 25 January 2022. 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.’ 115 Notes to the Financial Statements for the year ended 25 June 20227.2. Investments in Controlled Entities (continued) 7.2. Investments in Controlled Entities (continued) The consolidated statement of profit or loss and other comprehensive income for the year ended 25 June 2022 of the Seven West Media Limited Closed Group is presented below according to the Class Order: 2022 $’000 2021 $’000 1,530,053 1,254,814 1,092 37 1,531,145 1,254,851 (1,220,697) (1,034,530) – – 3,728 2,590 – – 8,351 – 318 325,435 1,385 (36,837) (4,815) 285,168 (72,824) 212,344 – 212,344 – 503 – (20,940) (20,437) 191,907 207,480 1,249 470 3,445 4,863 (7,588) 66,728 1,230 6,322 504,520 1,501 (62,175) (690) 443,156 (126,968) 316,188 2,683 318,871 4,420 (25) (1,326) (49) 3,020 321,891 Statement of profit or loss and other comprehensive income Continuing Operations Revenue Other income Revenue and other income Expenses Reversal of Intangible assets impairment Reversal of investments and other assets impairment Net income related to investments Net gain on disposal of investments Redundancy and restructure reversal (expense) Onerous contracts Reversal of onerous contracts Other Share of net profit of equity accounted investees Profit (loss) before net finance costs and tax Finance income Finance costs Write off of unamortised refinancing cost Profit (loss) before tax from continuing operations Tax expense Profit (loss) for the year from continuing operations Discontinued operations Profit/(loss) after tax for the year from discontinued operations Profit (loss) 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 Items that will not be reclassified to profit or loss: Net change in fair value of financial assets (net of tax) Other comprehensive income for the year, net of tax Total comprehensive income (expense) for the year 116 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 20227.2. Investments in Controlled Entities (continued) The consolidated statement of financial position for the year ended 25 June 2022 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 Contract assets Program rights and inventories Other assets Total current assets Non-current assets Program rights Equity accounted investees Other financial assets Property, plant and equipment Intangible assets Right of use assets Other assets Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Lease Liabilities Provisions Deferred Income Contract liabilities Current tax liabilities Total current liabilities Non-current liabilities Trade and other payables Lease Liabilities Provisions Deferred Income Contract liabilities Deferred tax liabilities Borrowings Total non-current liabilities Total liabilities Net assets EQUITY Share capital Reserves Non-controlling interest Accumulated deficit Total equity 2022 $’000 2021 $’000 37,938 219,974 – 147,212 19,571 424,695 – 16,153 21,300 113,829 720,277 68,101 1,561 941,221 1,365,916 161,863 12,141 105,249 29,552 19,478 63,681 391,964 3,665 186,239 84,578 – – 145,260 294,429 714,171 1,106,135 259,781 251,586 211,149 2,468 182,190 12,803 660,196 34 15,835 36,406 49,363 680,280 72,063 3,698 857,679 1,517,875 257,994 10,403 151,990 23,322 27,105 45,106 515,920 7,013 193,851 97,459 1,200 5,042 124,870 493,310 922,745 1,438,665 79,210 3,362,514 3,352,538 (67,149) – (26,097) 576 (3,035,584) (3,247,807) 259,781 79,210 117 Notes to the Financial Statements for the year ended 25 June 20227.3. 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: (ii) Dividends received Dividends received from subsidiaries are recognised in profit and loss. (i) Investments in subsidiaries Investments in subsidiaries are accounted for at cost less impairment losses in the financial statements. (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. 7.3A. Summary of financial information The individual financial statements for the Parent Entity show the following aggregate amounts: Financial position of parent entity at year end Current assets Total assets Current liabilities Total liabilities Total equity of the parent entity comprising of; Share capital Reserves Asset revaluation reserve Equity compensation reserve Accumulated deficit Profits reserve Result of parent entity Profit (loss) for the year Total comprehensive income (expense) for the year Parent entity 2022 $’000 155,611 192,537 99,846 100,170 2021 $’000 68,640 71,386 1,147 3,997 3,432,966 3,405,666 8,352 10,878 8,352 7,422 (3,960,553) (3,954,775) 600,724 92,367 600,724 67,389 (5,778) (5,778) 62,413 62,413 7.3B. Guarantees entered into by the parent entity The Parent Entity has provided financial guarantees in respect of borrowings of a subsidiary amounting to $nil (2021: $nil). There are cross guarantees given by Seven West Media Limited and its subsidiaries described in Note 7.2. 7.3C. Contingent liabilities of the parent entity The Parent Entity did not have any contingent liabilities as at 25 June 2022 or 26 June 2021. 7.3D. 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 25 June 2022 or 26 June 2021. 118 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 20227.4. Business Combinations 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. 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. 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, 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. Seven Network (Operations) Limited, a wholly owned subsidiary of Seven West Media Limited, completed its acquisition of 100% of the issued share capital of Prime Television (Holdings) Pty Limited and its subsidiaries, and Seven Affiliate Sales Pty Limited (Prime) from PRT Company Limited (formerly Prime Media Group Limited) on 31 December 2021. The acquisition of Prime has expanded the Group’s audience reach to more then 91% of Australia’s population each month, and is expected to generate cost synergies as a result of the consolidation. Prime Media Group was consolidated from 23 December 2021, the date of effective control. Subsequent to the half year accounts, acquisition accounting has been performed and adjustments made to the carrying value of the Prime assets and liabilities acquired. Aggregate details of the net assets acquired and consolidated are as follows: Provisional1 2022 $’000 REF Adjustment Provisional 2022 $’000 Carrying value of net assets acquired Cash and bank balances Trade receivables and other assets Program rights and Inventories Property Plant and Equipment Intangible assets Re-acquired Rights Customer Relationships Right-of-use assets Deferred tax assets (liabilities) Trade payables and other liabilities Provisions Lease liabilities Total carrying value of net assets recognised Consideration payable Difference between consideration and net assets recognised as Goodwill Net Cash Flow Payments for the acquisition of subsidiaries Cash and cash equivalents acquired Net cash inflow/(outflow) 1 Disclosed in the December 2021 Half Year financial report 23,367 37,662 4,515 16,486 18 – – 2,658 1,607 (6,911) (5,961) (2,667) 70,774 124,241 53,467 – (617) (4,515) 12,630 928 12,971 6,343 (883) (3,873) (498) (369) 1,002 23,119 (2,950) (26,069) 23,367 37,045 – 29,116 946 12,971 6,343 1,775 (2,266) (7,409) (6,330) (1,665) 93,893 121,291 27,398 – (124,421) 23,367 23,367 – (124,421) (124,421) 23,367 (100,874) 119 Notes to the Financial Statements for the year ended 25 June 2022 7.4. Business Changes (continued) Prior to acquisition, an affiliation agreement existed between the Group and Prime Media Group which was effectively settled as part of the acquisition. Included in the Group’s balance sheet prior to acquisition, was deferred revenue in connection with an upfront payment under this agreement. This amount, net of associated deferred tax asset, has been included as consideration in the acquisition accounting performed. The goodwill arising on acquisition is primarily attributable to the synergies expected to be achieved from integrating Prime Media Group into the Group’s operations. For the year ended 25 June 2022, Prime Media Group contributed standalone revenue of $83.7 million and profit after tax of $6.3 million to the Group’s results. Management estimates that if Prime Media Group had been owned by the Group for the full twelve month period, it would have contributed revenue of $167.4 million and profit after tax of $12.6 million to the Group’s results. During the period, the Group incurred transaction costs of $5.6 million related to the acquisition of Prime Media Group. These costs have been included in significant items in the Consolidated Statement of Profit or Loss and Other Comprehensive Income. Under accounting standards, the Group has 12 months from the date of acquisition in which to complete its assessment of the fair value of assets and liabilities acquired. As at reporting date this assessment is ongoing. 7.5. Related Party Transactions Accounting policy Key management personnel transactions Transactions were entered into during the financial year with Equity Accounted Investments and Director Related Entities of Seven West Media Limited and its controlled 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. 7.5A 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 Entities2 Purchase of goods, advertising and other services Equity accounted investees Other Related Entities Shareholder contribution Equity accounted investees3 2022 $’000 1,067 651 24,037 12 Restated1 2021 $’000 735 1,132 20,702 10 400 1,000 1 As part of the Group’s review of related party relationships, it was identified that changes were required to the list of Related entities that were included in the prior year comparatives. 2 The current year amount disclosed includes reimbursement from a related party, Australian Capital Equity Pty Ltd in relation to invoices that were addressed to and paid for by Seven Network (Operations) Limited. These invoices were meant for Australian Capital Equity Pty Ltd and once identified, they were promptly reimbursed. The decision to incur these costs was taken to defend a senior manager who was the subject of negative reporting by other media outlets. 3 During the period the Group issued interest bearing loans to Equity accounted investees of $400,000 (2021: $1,000,000).For the year ended 25 June 2022, the Group has made an allowance for expected credit losses relating to the amounts owed by related parties of $400,000 (2021: nil). An impairment assessment is undertaken each financial year by examining the financial position of the related party and the market in which the related party operates to determine whether there is objective evidence that a related party receivable is impaired. When such evidence exists, the Group recognises an allowance for impairment loss. 120 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 20227.5. Related Party Transactions (continued) 7.5B 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 2022 $’000 96 8 374 – Restated1 2021 $’000 25 – 402 42 7.5C 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. 7.5D Subsidiaries Interests in subsidiaries are set out in Note 7.2. 7.5E 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. Executive officers also participate in the Group’s Equity Incentive Plan for 2020, 2021 and 2022 (refer Note 6.5). Key management personnel compensation Short-term employee benefits Post-employment benefits Superannuation Share-based payments Other long term benefits 2022 $’000 2021 $’000 8,105 7,919 226 4,052 81 12,464 210 3,808 77 12,014 Detailed remuneration disclosures in respect of Directors and each member of key management personnel are provided in the Remuneration Report on pages 50 to 70. Other transactions with 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 the 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 the Group and these corporations. 121 Notes to the Financial Statements for the year ended 25 June 2022Section 8: Other 8.1. Remuneration of Auditor 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 Audit or review of the financial statements (i) Assurance services Other assurance services Total remuneration for audit and other assurance services (ii) Other services Taxation advice and compliance services Transaction services Total other services Total remuneration of KPMG Australia 8.2. Contingent Liabilities 2022 $ 2021 $ 644,472 527,544 8,433 652,905 286,879 536,539 823,418 1,476,323 11,791 539,335 177,118 142,415 319,533 858,868 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. 8.3. Events Occurring After The Reporting Date Subsequent to year end, the Group has announced a 10 per cent on-market buyback to commence in August 2022. Other than described above, 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 financail periods. 122 Financial Statements Seven West Media Limited Annual Report 2022Notes to the Financial Statements for the year ended 25 June 2022 8.4. Summary of Other Significant Accounting Policies Foreign currency translation (i) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars (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. Financial guarantee contracts Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value 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. 8.5. Changes in Accounting Policies and Disclosures 8.5.1 New and amended standards and interpretations issued but not yet effective The Group has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective. 8.5.2 Tentative agenda decisions that if issued will impact the Group in the current and prior period There are no tentative agenda decisions issued at year end that are expected to have a material impact on the Group in the current and prior period. 8.5.3 New and amended standards and interpretations The following accounting standards and interpretations have been issued and are effective for the Group for the period beginning 26 June 2022. AASB 2020-3 Amendments to AASB 137 Onerous Contracts – Cost of Fulfilling a Contract (effective date 26 June 2022) AASB 137 defines an Onerous Contract as a contact in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it. The amendments to AASB 137 clarifies that the direct costs of fulfilling a contract include both the incremental costs of fulfilling the contract and an allocation of other costs directly related to fulfilling contracts. Before recognising a separate provision for an onerous contract, the entity recognises any impairment loss that has occurred on assets used in fulfilling the contract. The Group has assessed the impact of these adjustments and expects that an opening balance sheet adjustment to increase the provision will be recognised in the range of $5.0 to $10.0 million. 123 Notes to the Financial Statements for the year ended 25 June 2022Directors’ Declaration For the Year Ended 25 June 2022 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 72 to 123 and the Remuneration Report on pages 50 to 70 in the Directors’ Report are in accordance with the Corporations Act 2001, including: i. giving a true and fair view of the Group’s financial position as at 25 June 2022 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. As at the date of this declaration, there are reasonable grounds to believe that the Company and the members of the Extended Closed Group identified in Note 7.2 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 7.2, 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 25 June 2022. 4. The Directors draw attention to page 78 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 2022 124 Financial Statements Seven West Media Limited Annual Report 2022Independent Auditor’s Report To the shareholders of Seven West Media Limited Report on the audit of the Financial Report Basis for opinion Opinion We have audited the Financial Report of Seven West Media Limited (the Company). 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. In our opinion, the accompanying Financial Report of the Company is in accordance with the Corporations Act 2001, including: Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. > Giving a true and fair view of the Group’s financial position as at 25 June 2022 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 25 June 2022; > 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; > Notes including a summary of significant accounting policies; and > 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. 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 (including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with these requirements. Key Audit Matters The Key Audit Matters we identified are: > Valuation of Television Licences > Provision for onerous contracts > Acquisition of Prime Television (Holdings) Pty Limited and its subsidiaries, and Seven Affiliate Sales Pty Limited (together, ‘Prime’) Key Audit Matters are those matters that, in our professional judgement, 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 global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. 125 Independent Auditor’s Report Valuation of Television Licences ($670,277k) Refer to Note 4.1 to the Financial Report The key audit matter How the matter was addressed in our audit Valuation of the Television Licences is a Key Audit Matter due to: Our procedures included: > Considering the appropriateness of the Group’s assessment of impairment and impairment reversal indicators and the value in use method applied by the Group to test the Television Licenses for impairment against the requirements of the accounting standards. > Challenging the short, medium and long-term forecasts for television advertising market growth rates and the Group’s share of the advertising market, particularly considering the expected market conditions. We compared the market share and growth rate assumptions against historical actuals and published industry outlook reports. This procedure was performed with assistance from our valuation specialist. > Challenging the discount rate against publicly available data of a group of comparable entities. This procedure was performed with assistance from our valuation specialist. > Assessing disclosures in relation to the valuation of the television licenses by comparing these disclosures to our understanding obtained from our testing and accounting standards requirements. > The size of the asset, being the largest asset of the Group, noting there have been impairments and partial impairment reversals in prior years; and > The level of judgement required by us in evaluating the assumptions determined by the Group for forecast Television cash generating unit (“CGU”) revenues. The level of judgement required by us in evaluating the Group’s forecast Television CGU revenues was impacted by the following conditions existing at 25 June 2022: > The continued recovery from COVID-19 of television advertising revenue markets compared to previous impairment estimates; and > The longer-term growth in advertising revenue for commercial television networks continuing to be challenged by changes in consumer viewing habits and use of alternative viewing platforms. The above factors create uncertainty in the key assumptions used in the Television Licences value in use model increasing the risk of inaccurate forecasts or a wider range of possible outcomes for us to consider, specifically: > Television advertising growth rates in free to air and digital markets – short, medium and long term; > The Group’s share of the Television advertising in free to air and digital markets; and > The discount rate – this is complicated in nature and varies according to the above specific conditions. 126 Financial Statements Seven West Media Limited Annual Report 2022Independent Auditor’s Report Provision for Onerous Contracts ($79,358k) Refer to Note 4.4 to the Financial Report The key audit matter How the matter was addressed in our audit The Group’s policy is to routinely enter noncancellable purchase contracts for television programs and sporting broadcast rights. Where there are changes in market conditions or contractual terms the Group’s policy is to estimate the unavoidable minimum net obligation under these contracts to determine which are onerous and, where relevant, recognise or adjust the provision for onerous contracts. Provision for onerous contracts is a Key Audit Matter due to: > The level of judgement required by us in evaluating the assumptions determined by the Group for forecast economic benefits from each onerous contract including future television advertising revenues; and > The $8,351,000 reversal of the provision in the current year. The judgements required by us in evaluating the Group’s estimation of the unavoidable minimum net obligations for onerous contracts include assessing: > The economic benefits expected to be received under the onerous contracts including future advertising revenues (determined with growth rate assumptions consistent with those used in the Valuation of Television Licences key audit matter); > The costs of fulfilling the onerous contract; and > The tenure and timing of the obligation where the contract period is contingent on factors outside of the Group’s control. These estimation uncertainties increase the risk of inaccurate forecasting or a wider range of possible outcomes for us to consider which gives rise to greater audit complexity. For significant purchase contracts for television programs and sporting broadcast rights, our procedures included: > Evaluating the basis for recognition of the onerous contract provision against the Group’s accounting policy and the accounting standards. > Assessing the Group’s determination of economic benefits expected to be received under each contract. We compared the forecast benefits to historical results on similar television programs, checking the impact of expected market conditions and advertising revenue outlook were consistent with the assumptions set out and tested by us in the Valuation of Television Licences key audit matter. > Comparing the costs of fulfilling the obligation against the onerous contract, historical costs on similar television programs and sporting broadcast rights adjusted for published expectations for cost growth. > Checking changes to the tenure of onerous contracts, including changes that release the Group from their non- cancellable obligations, to the Group’s recorded reversal of the onerous provision. > Challenging the Group’s estimated tenure and timing of the obligation based on the factors that influence contractual tenure outside of the Group’s control, such as historical series life of similar programming. > Assessing quantitative and qualitative disclosures in relation to the impact to the Group of the upcoming changes to AASB 137 Provisions, Contingent Liabilities and Contingent Assets. 127 Independent Auditor’s Report Acquisition of Prime (Goodwill $27,398k and fair value of net identifiable assets acquired $93,893k) Refer to Note 7.4 to the Financial Report The key audit matter How the matter was addressed in our audit On 23 December 2021 the Group acquired 100% of the issued share capital of Prime. This transaction has been treated as a business combination, with the Group recognising the fair value of the assets acquired and liabilities assumed on that date. Accounting for the purchase of Prime is a key audit matter due to the: > Significant value of the acquisition; > High level of judgement required in determining: – When control was obtained; – Identification of acquired intangible assets, such as reacquired program supply rights, customer relationships and software; – The assumptions and estimates used when performing intangible asset valuations, which included the use of an independent valuation specialist engaged by the Group; – Fair value adjustments to tangible assets acquired and liabilities assumed; and – Whether the acquisition accounting remains provisional at year end. This increases the possible range of outcomes for the auditor to consider and is impacted by the reduced precision of audit evidence. Our procedures included: > Reading the share sale agreement to understand key terms and conditions and evaluate the Group’s assessment of when control was obtained of the acquired business; > Assessing the scope of work, objectivity, capability and competence of the independent valuation specialist engaged by the Group; > Working with our valuation specialists to assess the Group’s valuation of identifiable intangible assets by: – Evaluating the Group’s assessment of identified acquired intangible assets against accounting standard requirements and similar business acquisitions; and – Challenging key assumptions in the Group’s intangible valuation models by comparing them to the past performance of the acquired business and our knowledge of industry trends; and > Assessing the adequacy of the Group’s disclosures in respect of the acquisition against the requirements of accounting standards and our knowledge of the transactions. 128 Financial Statements Seven West Media Limited Annual Report 2022Independent Auditor’s Report 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 an audit opinion or 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. 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; and > Assessing the Group and Company’s ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. 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 and Company or to cease operations, or have no realistic alternative but to do so. 129 Independent Auditor’s Report 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. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/ admin/file/content102/c3/ar1_2020.pdf. This description forms part of our Auditor’s Report. 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. KPMG 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 the Financial Report. Duncan McLennan Partner Sydney 16 August 2022 Reissued Report on the Remuneration Report Opinion Directors’ responsibilities In our opinion, the Reissued Remuneration Report of Seven West Media Limited for the year ended 25 June 2022 complies with Section 300A of the Corporations Act 2001. Emphasis of matter We draw attention to page 50 of the Reissued Remuneration Report which contains the Message from the Remuneration & Nominations Committee Chairman including describing the correction of errors in the previously issued Directors Report including Remuneration Report for the financial year ended 25 June 2022 and that the Directors have chosen to amend and reissue the Remuneration Report. As a consequence, this audit report specific to the Reissued Remuneration Report supersedes our previous opinion specifically relating to the Report on the Remuneration Report to the shareholders of Seven West Media Limited (dated 16 August 2022) for the financial year ended 25 June 2022 signed and approved by the directors on 16 August 2022. Our opinion is not modified in respect of this matter. The Directors of the Company are responsible for the preparation and presentation of the Reissued Remuneration Report in accordance with Section 300A of the Corporations Act 2001. Our responsibilities We have audited the Reissued Remuneration Report attached and marked as pages 50 to 70 for the year ended 25 June 2022. Our responsibility is to express an opinion on the Reissued Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. KPMG Duncan McLennan Partner Sydney 26 October 2022 130 Financial Statements Seven West Media Limited Annual Report 2022 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. Investor Relations enquiries may be directed to swminvestorrelations@seven.com.au 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. 131 Shareholder Information The shareholder information set out below was applicable at 31 July 2022. 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 3,979 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 LTD CITICORP NOMINEES PTY LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED CERTANE CT PTY LTD 3RD WAVE INVESTORS PTY LTD BNP PARIBAS NOMS PTY LTD NATIONAL NOMINEES LIMITED CERTANE CT PTY LTD MR GRAHAM WALLACE RAY SOJOURN SERVICES PTY LTD JAMPLAT PTY LTD BNP PARIBAS NOMINEES PTY LTD LAUREN INVESTMENTS PTY LTD MR JOHN ALEX RUMBLE & MRS SONJA RUMBLE RUZ PTY LIMITED BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD SOUTHERN STEEL INVESTMENTS PTY LIMITED MRS ELIZABETH ANNE FOGARTY & MRS CAITLYN ELIZABETH EMBLEY HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED Number of shareholders 3,784 6,122 2,082 3,027 598 15,559 Percentage of issued shares 38.91% 9.89% 8.81% 4.57% 3.39% 2.89% 2.62% 2.24% 1.84% 0.68% 0.60% 0.57% 0.36% 0.31% 0.31% 0.25% 0.24% 0.22% 0.20% 0.16% Number of ordinary shares held 618,711,654 157,180,968 140,056,440 72,695,129 53,973,699 46,000,000 41,638,067 35,540,342 29,295,292 10,746,162 9,483,369 9,072,749 5,696,570 5,000,000 4,893,000 4,000,000 3,824,209 3,447,705 3,200,000 2,472,051 1,256,927,406 79.05% 132 Financial Statements Seven West Media Limited Annual Report 2022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 Spheria Asset Management Pty Ltd Substantial holding** 38.98% 38.91% 38.91% 5.62% Number of ordinary shares in substantial holding*** 621,453,734 618,711,654 618,711,654 89,339,826 See Appendix 3Y for Mr Kerry Matthew Stokes AC lodged on 11 November 2021. * ** Based on the number of ordinary shares on issue at 31 July 2022. *** Based on the number of shares disclosed in the relevant Notice of Change of Interests of Substantial Holder. 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. 133 Company Information Directors Registered Office Stock Exchange Listing Australian Stock Exchange ASX code: SWM Legal Advisors Herbert Smith Freehills ANZ Tower 161 Castlereagh Street Sydney NSW 2000 K Stokes AC – Chairman J Warburton – Managing Director & Chief Executive Officer Newspaper House 50 Hasler Road Osborne Park WA 6017 J Alexander T Dyson D Evans C Garnsey OAM M Malone R Stokes AO M Ziegelaar Share Registry Boardroom Pty Limited Level 12 Grosvenor Place 225 George Street Sydney NSW 2000 Company Secretary W Coatsworth Auditor KPMG Tower Three International Towers Sydney 300 Barangaroo Avenue Sydney NSW 2000 134 Financial Statements Seven West Media Limited Annual Report 2022 Seven West Media cares about the environment. This Annual Report is printed on environmentally responsible paper. Designed by north branding & design Seven West Media ABN: 91 053 480 845 Newspaper House 50 Hasler Road Osborne Park Perth WA 6017 T +61 8 9482 3111 F +61 8 9482 9080 sevenwestmedia.com.au 

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