17 November 2011
Company Announcements Office Australian Stock Exchange Limited Level 6 20 Bridge Street SYDNEY NSW 2000
By electronic lodgement
Total pages : 10 (including covering letter)
ANNUAL GENERAL MEETING ADDRESSES
Please find attached the addresses given by the Chairman and Executives at the 2011 Annual General Meeting.
Yours faithfully
For and on behalf of Seven West Media Limited
Peter Bryant Company Secretary KERRY STOKES AC - CHAIRMAN
It is only a few months since you as shareholders in West Australian Newspapers approved the West’s acquisition of Seven Media Group to create Seven West Media. This has transformed your company which today is Australia’s biggest multiple-platform media company.
Even in these tough economic conditions, we continue to produce strong cash- flows and our businesses continue to flourish.
Of course, like most of our shareholders, I am disappointed with our current share price. It does not reflect the performance of our market-leading businesses. Our share price has been sold down since the merger of The West and Seven Media Group. This largely reflects global uncertainty, market turmoil and the turbulence in advertising demand.
A short while ago we announced that we had successfully completed the refinancing of the company’s debt. We have now put in place longer-term funding, that ensures the security of your company.
As agreed when the merger was submitted, your company’s two largest shareholders – Seven Group Holdings and Kohlberg Kravis Roberts & Co, did take up their full entitlements in Seven West Media’s dividend re-investment plan. In addition Seven Group Holdings recently acquired on-market a further 11.5 million shares in Seven West Media.
This commitment to the dividend re-investment plan and the acquisition of more shares confirms our belief and confidence in the strong long-term value in Seven West Media. It is a company with the scope and scale to build and invest in its first-rate businesses.
Our new agreement with the Australian Football League underlines our commitment to invest in our business and to drive home our leadership. This agreement will see Seven as the only broadcast television platform for the Australian Football League with coverage across Seven and our digital platform over the ensuing five years.
Seven is still further increasing its audiences in this, its fifth year of market dominance across Australia. The West’s delivery in circulations, readership and profitability confirms that it is the best-performing newspaper business in Australia. Pacific Magazines leads the market in the categories in which it publishes its magazines and Yahoo!7 continues its strong momentum, delivering good margins and driving Seven West Media’s presence in new and emerging technology platforms.
Despite the challenging market conditions, Seven West Media delivered 4 per cent growth in revenue, 12 per cent growth in EBITDA and 14 per cent growth in EBIT in 2010-2011 on a pro-forma basis compared to the previous financial year. This performance underlines the health of Seven West Media’s businesses.
Based on the Group’s internal management accounts and on the performance of the Group’s Operating Subsidiaries and Investments so far this financial year, we currently expect the underlying Group EBIT will be in excess of $300 million for the half year ended 31 December 2011. Given the shortness in the advertising bookings at this time, we believe it is too early to be providing guidance in respect of the second half of the financial year but note again the expected increase in investment in programming in the second half due to the new AFL contract.
We have the best-performing media businesses in the country and we have superb management. Your board is rightfully proud of the efforts of management in continuing to deliver the best results for any media company in this current market environment.
Shortly, David Leckie and Chris Wharton will take you through the company’s performance and the outlook for the coming twelve months.
The company’s focus is to continue to build on the successful integration of The West, Seven, Pacific Magazines and Yahoo!7 and strengthen its leadership in broadcast television, print media and online. Our focus remains on staying Number One in our various media forms, on achieving a high revenue share and on ensuring that our profit is passed on to our shareholders through dividends and hopefully through market recognition of a higher share price.
In closing, I, your board and management take great pride in this new company. It remains a company that has been part of the fabric of Western Australia for nearly 180 years and today is a company with a significant market presence in all major media platforms across Australia. Because of this diversity and strength we have a future and our future is sound. It is also a company that is undeniably well-placed to drive home its leadership and take advantage of an improving consumer economy.
I would now like to invite David Leckie, the Chief Executive Officer & Managing Director of Seven West Media Limited to the lectern.
DAVID LECKIE - CHIEF EXECUTIVE OFFICER & MANAGING DIRECTOR
Thank you, Kerry.
I am pleased to speak to you, our shareholders.
As our Chairman has highlighted, this has been an extraordinary twelve months for your company.
The formation of Seven West Media brings together some of Australia’s best- performing media businesses. And we’ve seen our media businesses deliver over the past twelve months.
And they have delivered in the toughest of economic conditions for all media companies, given the significant softening in advertising demand.
Our businesses are performing well.
Much has been done in the few months since the approval of shareholders on a transaction that led to the formation of Seven West Media.
More will be done as we create and develop ‘one company’ which delivers market leadership across its array of media platforms.
One of the keys to our success is leadership.
We have great management teams driving our performance across each of our major media businesses. Each of these businesses are market-leading. And over the coming twelve months we intend to drive home that leadership.
Our television business is focused on leadership.
Seven is number 1 for total viewers and in all key audience demographics in the current television season.
This is the best-ever result in the network’s history.
7TWO is the most-watched digital channel for total viewers and 7mate is number 1 in its men 16-54 target audience.
Our suite of channels delivers more viewers than anyone else. We are also building audiences in all key demographics with more people watching us this year than last year.
Seven is up 11.7% in total viewers, up 15.0% in 16-39s, up 11.2% in 18-49s and up 10.8% in 25-54s on 2010.
Beyond primetime, we are also number 1 in breakfast television, morning television, nightly news and public affairs and overall across the entire broadcast day.
This success see Seven continue to lead the market in television advertising revenue share.
Our success over the past five television seasons has been built on a clear and defined strategy: the creation of content that you can only see on Seven.
It is a considered commitment to programming that has delivered Packed to the Rafters, The X Factor, Dancing with the Stars, My Kitchen Rules, Australia’s Got Talent.
And despite the current economic climate that is impacting advertising revenue, your company will continue to invest in Australian programming that will define its success over the coming decade.
Seven’s new agreement with the Australian Football League for broadcast television rights for the 2012-16 seasons underscores this commitment to secure key programming content to drive the network’s leadership in broadcast television in an increasingly competitive landscape.
Beyond strengthening primetime and securing our leadership, the Australian Football League delivers more than pure ratings.
It has a ‘halo’ effect across our network – greatly enhancing not only our overall ratings, but also delivering a platform for marketing and promotion for programmes across our network.
The response from advertisers to our plans for 2012 has been outstanding, exceeding our expectations at this point as we market our network’s programming for the new television season.
Our television business the best operating margins compared to its peers and our objective is to continue to deliver the best margins including the company’s increasing commitment to Australian programming.
Our magazine publishing business, Pacific Magazines, has delivered a positive performance in a competitive and challenging market over the past twelve months.
It has delivered improvements in margins and secured the largest circulation share increase of any Australian magazine publishing company.
Pacific Magazines is the only major publishing company to increase advertising share and is acknowledged as Australia’s most powerful portfolio of magazines – with market leadership in the categories in which it publishes.
Seven West Media’s online and new media presence through Yahoo!7, a joint venture with Yahoo! Inc continues its strong momentum, delivering strong margins and diversifying into the fast growing social commerce category. A signpost to our future is Yahoo!7’s PLUS7 catch-up TV offering streams almost three million full episodes of Seven’s most popular programmes every month.
One of our great successes may be surprising for many of those who seem to want to ‘write off’ newspapers.
The West Australian is an important part of the lives of all West Australians. It also has market-leading margins, managed its operations and costs effectively, and increased its total readership by 1.3 per cent over the past twelve months, consolidating its circulation in a challenging market for newspapers.
As our Chairman has highlighted, we regard The West as the best-performing newspaper in Australia and that is a credit to Chris Wharton, Bob Cronin and Brett McCarthy and their people.
Shortly Chris will take you through The West.
I would like to say that the management team here know this city and this state and they know newspapers and they’re delivering a great newspaper and a strong financial performance in the toughest of industries in the most challenging of economic conditions.
Our objective over the coming twelve months is to further strengthen our performance and our advertising revenue shares of our media businesses.
This means we will continue to invest in our creative content while also managing our costs and ensuring we continue to deliver the best operating margins.
It’s a relentless pursuit for our businesses and our people. It is also all about confidence in ourselves, as a company and as a team.
Our focus over the coming twelve months is to build on our leadership, create great content and manage our costs in a challenging advertising market.
This company – Seven West Media – is a great company. We have the best people in the business. No media company has our capabilities to truly deliver that great content across a portfolio of media platforms.
We strive for success. We have a track record for delivery on performance. We have a strong and cohesive and determined board and a great team of people.
Personally, I would like to acknowledge our Chairman and the board of Directors for their support of your company in these toughest of times. We are looking forward to driving home our leadership and taking this great media company to the next level as we take advantage of our leadership in an improving advertising market.
I would now like to invite Chris Wharton, Chief Executive Officer of Seven West Media Limited in WA, to the lectern.
CHRIS WHARTON – CHIEF EXECUTIVE OFFICER, WA
Thanks David
Can I start by echoing Kerry’s opening comments and welcoming you to this year’s annual general meeting.
As the CEO of Seven West Media in WA it is great to see so many of our Western Australian shareholders taking an active interest in the company.
I look forward to catching up with some of you after the meeting, for your feedback.
As stated in our annual report, this has been an extraordinary year for West Australian Newspapers. We’ve gone from being a company that was primarily a newspaper business operating only in Western Australia, to being part of the largest Australian-domiciled national media group.
The results for the group have been solid in what has been a well-publicised tough year in retail. Advertising revenue for the West Australian Newspaper Group grew by 1.3%, with particularly pleasing results in Regional Newspapers up 14% and our regional radio networks are also thriving.
It is early days, but we have already begun to see the benefits that can be derived from combining Western Australia’s two leading media properties The West Australian and Seven Perth. Initially these benefits included cross promotion in the sales area, marketing, publicity campaigns and events, news content and online expertise.
We are well ahead of schedule in implementing our synergy targets in Western Australia and are turning up new synergies all the time that will allow us to streamline our costs and at the same time improve the quality and output in the group.
This year’s Seven Perth Telethon was a magnificent event and raised $13.4 million, an increase of just over 40% on last year. Nowhere else in the world does the local community provide this level of support.
The softness of retail display advertising throughout the year weighed on the overall result and particularly on the advertising revenue for The West Australian.
In recent weeks we have seen some improvements with some major retailers increasing their advertising spend, but this might just be seasonal. These positive signs are heartening, but I think it’s too early to say consumer confidence is back.
I can assure you however, that when it does turn our operations are well positioned to reap the rewards.
The combination of the businesses will also accelerate the digital development of the West Australian Newspaper properties. As has been said in previous years, the digital properties associated with The West Australian are paramount to the future development of The West Australian masthead and they remain so. In July this year The West launched two new websites, both of which complement the printed products and offer clients another medium for their advertising.
These two new sites, WestRealestate.com.au and West Announcements.com.au, have performed very well since their launch. The new sites join thewest.com.au and wjobs in our suite of digital offerings.
We expect circulation for The West Australian, Monday to Friday, to reflect an increase in the upcoming audit. While circulation decline is common to most of the main titles in Australia, The West Australian has significant penetration in Western Australia reaching 28% of the WA population during the week and 42% on the weekend.
Again this year costs have been efficiently managed in our operations. Expenses, excluding one-off merger-related costs, have been maintained at the same level as in the previous year.
Investing and developing quality in every aspect of Seven West Media’s operations will continue to be key to the ongoing success of the business. Earlier this year we relaunched the Saturday edition as The Weekend West.
Seven West Media WA employs about 1,600 people in 25 locations across Western Australia. We value our people and recognise their direct input into the financial success of the business and ultimately the generation of shareholder returns.
While the expansion of the group’s operations has brought considerable change to our organisation, The West’s senior management remains the same and the core values and work ethic of West Australian Newspapers will persist, while absorbing the best aspects of the Seven Media Group’s culture.
We continue to emphasise to all employees and managers the importance of sharing a common sense of purpose within the new company, and aim to create a diverse workforce that is motivated and fulfilled in its employment.
One major goal is to maintain our support for the West Australian community and to positively touch the lives of as many people as we are able to throughout the state through our association with key events, charities and not for profit organisations.
Finally, it is important to recognise the staff and the Seven West Media board of directors. Through a large part of this year senior management and the board devoted an enormous amount of time to considering, planning and executing the acquisition of Seven Media Group. Through a very busy period the staff of West Australian Newspapers performed exceptionally well and has greeted the news of the acquisition with enthusiasm.
Thank you.