16 August 2021 Company Announcements Office Australian
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16 August 2021 Company Announcements Office Australian Securities Exchange Limited 20 Bridge Street SYDNEY NSW 2000 2021 FULL YEAR RESULTS – ANNUAL REPORT Seven West Media Limited (ASX: SWM) attaches the Annual Report for the year ended 26 June 2021. This release has been authorised to be given to ASX by the Board of Seven West Media Limited. For further information, please contact: Investors/Analysts Media Alan Stuart Rob Sharpe T: +61 2 8777 7211 T: +61 437 928 884 E: [email protected] E: [email protected] Seven West Media Limited / 50 Hasler Road, Osborne Park WA 6017 Australia / PO Box 7077, Alexandria NSW 2015 Australia T +61 2 8777 7777 / ABN 91 053 480 845 Repositioned for growth. Annual Report 2021 Big Brother Contents Our Strategy Who We Are 2 Our Strategic Priorities and Performance Dashboard 4 Executive Letters Letter from the Chairman 6 Letter from the Managing Director and Chief Executive Officer 8 Review of Operations Group Performance – Key Highlights and Summary of Financial Performance 11 Seven Network 17 The West 20 Corporate Social Responsibility Risk, Environment, People and Social Responsibility 22 Seven in the Community 28 Governance Board of Directors 33 Corporate Governance Statement 36 Directors’ Report 47 Remuneration Report 52 Auditor’s Independence Declaration 73 Financial Statements Financial Statements 74 Directors’ Declaration 132 Independent Auditor’s Report 133 Investor Information 138 Shareholder Information 139 Company Information 141 1 Section 1: Our Strategy Seven West Media Limited Annual Report 2021 Who We Are Transforming to lead Seven West Media is being transformed to drive long-term success. We are an audience-centric business that creates and delivers premium content. We engage with Australian audiences through our news, sport and entertainment content across television, newspapers and our rapidly growing digital platforms. Our people are at the heart of realising our purpose – to bring Australians closer to the moments that move us – by delivering compelling content to inform, inspire and entertain. Our deep connections with advertisers, technology, data and insights are core to our existence and we invest in these accordingly. The transformation of Seven West Media is turning the company into a leaner, stronger business – positioned to win as a media company of the future. 2 Section 1: Our Strategy Seven West Media Limited Annual Report 2021 Broadcast Digital Other 3 Section 1: Our Strategy Seven West Media Limited Annual Report 2021 Our Strategic Priorities and Performance Dashboard In the second half of 2019 we embarked on a new strategy designed to accelerate the transformation of the company and position it as a media company for the future and grow shareholder value. We made strong progress with our strategic objectives during the 2020–21 financial year and are the only commercial free-to-air television network that has grown its audience share in calendar 2021 in total people, people 25 to 54 and people 16 to 39. Through our clear and consistent strategy, we are creating a stronger and more balanced businesses. The COVID-19 pandemic continues to be highly disruptive to the media sector, with productions and sporting events postponed or cancelled. Despite these challenges, we continue to focus on improving the efficiency and performance of the company, with special attention to content and digital as engines of growth. We remain focused on three key pillars to help drive our long-term growth strategy: content-led growth, transformation, and capital structure and M&A. 4 Section 1: Our Strategy Seven West Media Limited Annual Report 2021 Farmer Wants A Wife Content Led Growth Transformation Capital Structure and M&A > Revitalise our entertainment > Sharpen our focus on > Maintain focus to work down programming, creating being an audience and debt and improve balance momentum to engage sales-led organisation sheet flexibility heartland Australia > Redefine our working > Explore M&A opportunities > Be the most relevant and practices, becoming more exciting offer to advertisers efficient and effective > Explore a meaningful > Explore traditional and subscription partnership play non-traditional adjacencies Milestones Achieved Milestones Achieved Milestones Achieved > Only network to grow > $170m cost saving program > Balance sheet flexibility commercial share in both delivered and further $30m significantly improved halves of the financial year saving program actioned > Net debt reduced by 39.6% > Increased Seven’s 25–54 > Digital and data ($397.2m) to $240.0m, and 16–39 commercial transformation accelerated and leverage ratio at 0.9x ratings share by 0.7% pts across the group with > Several M&A opportunities and 2.2% pts respectively 7digital earnings expected have been assessed to double in FY22 > Six new international tent > Actively pursuing poles launched in FY21 > 7REDiQ launched with consolidation in the sector > Landmark deal secured seven partnerships already with Google and Facebooks delivering incremental for news content revenue and supporting growth in 7plus market share 5 Section 2: Executive Letters Seven West Media Limited Annual Report 2021 Letter from the Chairman Welcome to our 2021 annual report for shareholders. Despite the ongoing challenges we all face from the COVID-19 pandemic, Seven West Media has performed well over the last year, thanks to our dedicated management team and staff who have worked in difficult conditions. Seven West Media continues to be one of Australia’s leading We anticipate the digital revenue associated with our integrated media companies across broadcast, digital and print agreements will flow through over the next year, while we operations – with its 21 publications across a diverse range of will continue our organic revenue growth through the further titles in city and regional areas. expansion of our 7plus and other digital operations. Over the last year your Directors and management have Our management team is also maintaining its focus on our continued to make the necessary decisions to both adjust to capital and cost structure amid the rapidly changing media the challenging market conditions, while setting the group up landscape, with a continued reduction in our net debt for a long term, sustainable and profitable future. during 2021. Our strategy to focus on content-led growth and exploiting We are proud that our TV news programs continue to attract fully our market-leading digital assets is paying off with record audiences, while our sports offerings, including the our broadcast video on demand (BVOD) consumption growing Olympic Games Tokyo 2020, AFL and cricket, will dominate more than 60% and our digital earnings more than doubling the 2021 calendar year ratings. during the year. Despite the naysayers, Seven’s ongoing investment in linear The expansion of our digital earnings has coincided with our and digital content will underpin our long-term prosperity. ground-breaking partnership agreements with both Facebook and Google, underpinning our long-term strategy to adapt to Seven West Media is taking the opportunity to better monetise the changing viewing and reading habits of people. our content on all broadcast and digital platforms to ensure we compete with the foreign-owned groups and will implore The agreements followed the introduction of the Media the Federal Government to remain vigilant in regard to Bargaining Code by the Federal Government and the Australian fair competition. Competition & Consumer Commission and I thank them for accepting our arguments over several years to level the Australia and the rest of the world are slowly but surely emerging playing field for local media companies to compete with from the pandemic and we are already seeing green shoots the global giants. appearing in the economy with a healthy rebound in advertising expenditure – our lifeblood. “ Our strategy to focus on content-led growth and exploiting fully our market-leading digital assets is paying off with our broadcast video on demand (BVOD) consumption growing more than 60% and our digital earnings more than doubling during the year.” 6 Section 2: Executive Letters Seven West Media Limited Annual Report 2021 The media sector is a significant bellwether for the economy and the return of buoyant conditions is a sign that Australia will emerge from the pandemic in better condition than many other countries around the world. The Federal Government’s excellent management of the pandemic and economy has placed Australia in an enviable position and the private sector will benefit from this effort over the next few years. Meanwhile, our combination of investment in content across all of Seven West Media’s platforms, coupled with prudent cost-cutting and operational efficiencies, will be the priorities of your Board and management over the next year. On behalf of the Board, I thank you, our shareholders, and staff for your ongoing support of Seven as we continue to navigate our way out of the pandemic. Kerry Stokes AC Chairman 7 Section 2: Executive Letters Seven West Media Limited Annual Report 2021 Letter from the Managing Director and Chief Executive Officer Our company has seen many changes over the past 12 months, and I am pleased to say that the results have been very encouraging. The improved performance has been driven by the relentless It’s a combination of factors that enable us to land the trifecta. pursuit of the three strategic priorities we introduced in the Over the past year or so, we have seen excellent results from second half of calendar 2019. Those priorities – content-led our reinvigorated line-up of tentpole shows, including Farmer growth, transformation, and capital structure and M&A – Wants A Wife, Big Brother, SAS Australia and Dancing With The sit at the core of our three-year plan. We are almost two Stars: All Stars. The tentpole shows all increased our year-on- years into that plan and we are making excellent progress. year timeslot audiences in younger demographics. By the time you are reading this report another tentpole, The Voice, will be Content-Led Growth running on Seven and 7plus for the first time, with an amazing Seven West Media is unashamedly a content company.