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ENTERTAININGAUSTRALIASouthernCrossAustereoentertainscombinedaudiencesofupto10millionweeklyacrossitsTelevisionRadioandDigitalnetworks 1RADIOBRANDTODAYNETWORK3.3MLISTENERS1RADIONETWORKFORMENTRIPLEM2.7MLISTENERSTVWEEKLYREGIONALAUDIENCE5MVIEWERS1RADIOGROUPONLINE220000UNIQUEBROWSERSDAILY1RADIOBUSINESSONSOCIAL6.5MFANSSourceGFKRadioRatingsMetroS52014RegionalGoldCoastCanberraNewcastleS12014CentralCoastS12012.TripleMNetworkincludesmix94.5PerthandLocalWorks.SCACATISurveys2014.4AGGSTASRegionalTAMWeek29.Sun-Sat02002600.1minCumeReach.NMRTVAdvisor.Sun-Sat05302400.SGTSurvey12007CentralSurvey12008DarwinSurvey12011.NielsenOnlineRatingsMarketIntelligenceDomesticAverageDailyUniqueBrowsersJune2014.FacebookInsightsTwitterandSCASocialAnalyticsasat1072014.FANSFacebooktotalpagelikesTwitterfollowers. AustraliasMostInnovativeEntertainmentCompany04BigTalentandBrandSolutionsGetResults06PowerfulRadioBrands08EntertainingAudienceswithIntimateScale10EngagingwithRegionalTelevisionAudiences12LeadingDigitalInnovations14CONTENTS GivingBacktoOurCommunities16ChairmanandCEOsReport18BoardofDirectorsandLeadershipTeam20FinancialReport22 Thebusinessdeliversuniqueandabsolutelyengagingcontentacrossitsleadingmetropolitanandregionalradiostationsmultitudeofdigitalassetsandextensiveregionaltelevisionnetworks.Thecompanysawardwinningcontentcreationiseverevolvingthankstoitsaccesstoworldclasslivemusicactsandcelebritiesplusitsincredibledepthofperformersandoff-airtalent.SouthernCrossAustereohasthelargeststableofon-airtalentofanybroadcastcompanyinAustralia.Itspersonalitiesarefamiliarandhugelypopularandmadeevenmoreaccessiblethaneverbeforeviatheinteractivemediumsofliveradioonlinemobileandsocialmedia.SouthernCrossAustereoprovideshighlyinnovativeandeffectivebusinesssolutionsacrossitsmultiplemediachannelsallowingmaximumengagementwithaudiencesanddeliveringexceptionalconnectionsacrossadvertisercampaignsAustraliawide.AUSTRALIASMOSTINNOVATIVEENTERTAINMENTCOMPANYSouthernCrossAustereoisAustraliasmostinnovativeentertainmentcompanyencompassingoneofthelargestmediafootprintsofanybroadcastbusinessinthecountry.SOUTHERNCROSSAUSTEREOANNUALREPORT20144 Deliveringuniqueandabsolutelyengagingcontentacrossitsleadingmetropolitanandregionalradiostationsmultitudeofdigitalassetsandextensiveregionaltelevisionnetworks.Thecompanyentertainsandinformsupto10millionAustralianseachweek.ItexcelsincontentsolutionsacrossitspopularradioshowsleadsdigitalratingsandsocialmediaengagementandhasanexcitingtelevisionportfoliothatentertainsregionalAustralianswithlocallyproducedandafliateprogramming.Allofthesefactorscombinetodeliverengagingandinnovativemediacoverageforadvertisersandaudiencesalike.SOUTHERNCROSSAUSTEREOANNUALREPORT20145 WhenAustraliasmostlovedpersonalitiestalkpeoplelisten.Thatswhyclientschoosetoputtheirbrandinanenvironmentthatgetsresults.SOUTHERNCROSSAUSTEREOANNUALREPORT20146 WhenAustraliasmostlovedpersonalitiestalkpeoplelisten.Thatswhyadvertiserschoosetoputtheirbrandsinenvironmentsthatgetresults.TheincredibledepthofSouthernCrossAustereosradiotalentlineupincludesAndyLeeDanDebufDaveThorntonEddieMcGuireEdKavaleeFiBoxGregMartinGusWorlandHamishBlakeJoeHildebrandJulesLundLukeDarcyMattTilleyMazComptonMerrickWattsMichelleAndersonMickMolloyandSophieMonkandsportsiconssuchasAndrewJohnsBillyBrownlessGarryLyonJamesBrayshawJasonDunstallMarkGeyerMarkRicciutoMattyJohnsPeterSterlingWayneCareyWendellSailorandmore.InadditionSouthernCrossAustereohasthebiggesttalentpoolinregionalAustraliawithlocalpersonalitiessuchasCharlieDelanyPaulGaleSpidaEverittSteveGandStevePriceentertainingpassionateandloyalcommunitiesaroundthenation.Researchprovesthatpeoplelistenandtakeaction.AustraliansareincreasinglylikelytoseekproductsrecommendedbyTodayNetworktalentandmoremenarebuyingwhatTripleMshowcasesandrecommendsaudiencesareparticularlyinuencedbyliveon-airreadsintegratedmessagingandcontentmarketinginvolvingon-airperformers.BrandedsolutionsalsoextendtoregionalTVallowingbrandsacrossthecountrytoalignwithsomeofAustraliasmostanticipatedandsoughtaftershowsandeventprogramming.SouthernCrossAustereoformulateseffectivesolutionsandsponsorshipsthatbuildawarenessandleadtobuyingbehaviour.Thisisallsetagainstabackdropofengagingandentertainingcontentendorsedbymuch-lovedpersonalities.BIGTALENTANDBRANDSOLUTIONSGETRESULTSSouthernCrossAustereogeneratesmorelivecontentthananyothermediacompany.Itsbiggesttalentline-upandbroadestbrandsolutionsensuresuccessfuloutcomesforbrandsacrossAustralia.7SOUTHERNCROSSAUSTEREOANNUALREPORT2014 PutsimplySouthernCrossAustereosradionetworksarethebestinthecountryconsistentlydeliveringthemostengaginglocallymadeentertainmentmusicsportcomedyeventsandup-to-the-minutenewsacrossAustralia24hoursadaysevendaysaweek.THETODAYNETWORKTheTodayNetworkisthebiggestradionetworkinAustraliawithover3.3million2loyallistenersnationallyacrossmetroandregionalmarketswholovethestationshitmusicandpopculture.TodayNetworkpersonalitiesareadoredbyaudiencesfortheirrelatablehonestandhumorousdeliveryofeverythingthatshotrightnow.CombinedwiththelatesthitmusicaccesstotheworldsbiggestartistsandstarsTodayNetworkcontentisupliftingshareableanddownrightaddictiveTRIPLEMTripleMistheiconichomeofrockinSydneyMelbourneandBrisbaneandplaysthewidestvarietyofrockmusicinAdelaidewhereithasrecentlyre-formedasClassicTripleM.ProudlyAussiethelegendaryTripleMNetworkplaysthebestrockmusicleadsthewayinsportingcontentandfeaturesadepthofrespectedtalentfromcomedianstomediagreatsandsportingicons.TripleMisdowntoearthandproudlylocal.Itssolidmixofrocksportnewscomedyandbreakingtherulesiswhatseesthestationconsistentlywintheratingswithmalelisteners.MIX94.5mix94.5isPerthsmost-lovedradiostationwithgenuineenergeticandmuch-lovedpresenterswhohavebeenentertaininglocalswiththewidestvarietyofmusicforover20years.POWERFULRADIOBRANDSSouthernCrossAustereohasthelargestradiofootprintinAustraliaengaging5.2million1listenersacrossitspowerfulradiobrandsweekly.8SOUTHERNCROSSAUSTEREOANNUALREPORT2014 LOCALWORKSTheLocalWorksNetworkcomprises30stationsthatbroadcastregionallyonbothAMandFMchannelsthroughoutAustraliagrowingfromstrengthtostrengthwithsomestationscelebratingaheritageofover80years.AllLocalWorksstationspridethemselvesonbeingconnectedtothecommunityineveryway.Theyarecommittedtotheirvarietymusicformattooplayingthegreatesthitsfromthelast50yearsthatpeopleknowandlovealwaysfamiliarandneverstrayingtoofarfromwhattheirloyallistenershavecometoexpectDIGITALRADIOSouthernCrossAustereocontinuesitscommitmenttothegrowthofDigitalRadiowithextensivereachacrossmetropolitanAustralia.TwoadditionalTripleMDigitalRadioStationshavebeenlaunchedinthepastyearcomplementingtheexistingbrandportfolioTripleMClassicRockDigitalClassicrockfromthe1960sand1970sTripleMPerthDigitalModernrockandAustraliasbestAFLcoverageBuddhaRadioTuneinchilloutLoveLandRadioWherethelovelivesStardustRadioThegreatestsongsofalltimeDigitalRadiocontinuestobuildintermsoflistenersreceiverssoldandplacementinnewvehicles.ThisbringsexcitingnewcontentforAustraliansandadditionaloptionsforadvertisersandaudiences.Source12GFKRadioRatingsS52014RegionalGoldCoastCanberraNewcastleS12014CentralCoastS12012.SCACATISurveys.9SOUTHERNCROSSAUSTEREOANNUALREPORT2014 ENTERTAININGAUDIENCESWITHINTIMATESCALESouthernCrossAustereoisproudlyoneofAustraliasfastestgrowingdigitalpublisherswiththeabilitytoentertainonlineaudienceswithintimatescale.Thepastyearhasbeencharacterisedbyrapidgrowthindigitalaudiencesandcommercialactivity.Thishasenabledthebusinesstoexpanddigitalrevenue.SouthernCrossAustereoisaclearleaderinAustraliasdigitalspacereachingmillionsofindividualswithapersonalisedtouchthankstoitsinteractiveandinnovativeproducts.InadditiontopureaudiencescaleandhighengagementlevelsSouthernCrossAustereohasdelivered17.3growthyear-on-yearindigitalrevenues.SouthernCrossAustereoispassionateaboutleadingedgemediaandisincreasinglylookingbeyondtheAustralianradioandtelevisionindustriestobenchmarkitsdigitalperformanceandtocreateandsustainaworldclassdigitalbusiness.10SOUTHERNCROSSAUSTEREOANNUALREPORT2014 1RADIOGROUPONLINEONLINESTREAMING1SOCIALENGAGEMENTMOBILEThebiggestdigitalaudienceofanyradiogroupinAustralia1Reachingover4millionusersonlineeachmonth2FiandDaveAustraliasmostengagedFacebookchannelClaimingsevenofthetop11mostengagingbrandedFacebookaccounts45.1millionFacebookfansand1.3millionTwitterfollowers517.7milliondigitalvideoviewsannually63millionhoursofaudiostreamedonaverageeachmonth71.3millionaudio-on-demandepisodesstreamedeachmonth8800000uniqueusersstreamliveaudiocontentonaverageeachmonth97thlargesttaggeddailymobilepublisherintheCountry1015thlargesttaggeddailypublisheracrossalldevices11Australiasmostmobileoptimiseddailypublisher122.8millionmonthlymobilebrowsers13187000monthlyactivesmartphoneappusers14Source1NielsenOnlineRatingsMarketIntelligenceDomesticandHybridJune2014.2GoogleAnalyticsUsersJune2013toJune2014.34OnlineCircleAustralianFacebookPerformanceReportJune2014.5FacebookInsightsandTwitterasat1072014.6OoyalaBacklotandYouTubeVideoViewsPeriodJuly2013toJune2014.7SCADigitalServerLogs.8iTunesPodcastSiteManagerAudioBooStreamsandDownloadReportJune2014.9SCADigitalServerLogs.10NielsenOnlineRatingsMarketIntelligenceDomesticJune2014.AverageDailyUniqueBrowsers.11NielsenOnlineRankingReportDomesticJune2014.AverageDailyUniqueBrowsers.12NielsenOnlineRatingsMarketIntelligenceTop30AustralianPublishersrankedbythepercentageoftheirAverageDailyUniqueBrowsersonmobileexc.TabletJuly2014.1314GoogleAnalyticsAustralianUsersmobilewebandtabletwebJune2014.11SOUTHERNCROSSAUSTEREOANNUALREPORT2014 SouthernCrossAustereotelevisionbroadcastingconnectsregionalAustraliawithauniquemixofprogrammingincludinglocalandinternationalentertainmentspecialeventslocalnewsandcommunityserviceinformation.SouthernCrossTenOneandElevenarebroadcasttoscreensinregionalmarketsacrossAustraliaseasternseaboardandSouthernCrossTelevisionbroadcastsChannelSeven7Mateand7TwoprogrammingtoregionalTasmaniaandtheNorthernTerritory.InadditionSouthernCrossAustereobroadcastsafullsuiteofTVprogrammingacrossallchannelsintheSpencerGulf.ThepowerofthesenetworkscombinedputsSouthernCrossAustereointheuniquepositiontoproudlydeliverthebiggestandbesttelevisionprogrammingtoallcornersofthenation.DELIVERINGFREETVTOREMOTEAUSTRALIAWITHVIEWERACCESSSATELLITETELEVISIONVASTEveryoneshouldhaveaccesstogreattelevision.ThereforealongwithbroadcastingawiderangeoftelevisioncontentacrossthecountrySouthernCrossAustereoplaysasignicantroleinhelpingremoteAustraliansstayintouchthroughtheViewerAccessSatelliteTelevisionVASTservice.VASTensuresafullrangeofdigitalcommercialchannelsarebroadcastviasatelliteinremoteareastoanestimated120000householdswhowouldotherwisenotbeprovidedwithfree-to-airtelevision.InadditionunderagreementwiththeFederalGovernmentallregionalfree-to-airtelevisionnetworkssendtheircompleteddailynewsbulletinstoSouthernCrossAustereosCanberraplay-outheadquartersfortransmissiontoVASTviewers.ThisserviceoffersVASTviewersaccesstoover20channelsoflocalregionalnewscoverage.ENGAGINGWITHREGIONALTELEVISIONAUDIENCESSouthernCrossAustereodeliversstrongaudienceshareinkeytelevisiondemographicsengagingwithover5millionregionalviewers1eachweekacrossAustralia.TasmaniasSouthernCrossTelevisionnewsis1witha53.8share.2Source1RegionalTAM.2REGTAMFY14ConsolidatedS-S1800-1830NewsonSCTASCommercialshare.SOUTHERNCROSSAUSTEREOANNUALREPORT201412 13SOUTHERNCROSSAUSTEREOANNUALREPORT2014 Thecurrentmediaenvironmentoffersenormousopportunityforbroadcastersandcontentproducerstoconnectwithaudiencesandconsumersinmorepersonalisedways.SouthernCrossAustereosdigitalstrategycentresonamobilerstphilosophyleveragingthecompanysunrivalledsocialscaleandengagementandtheaudienceintimacyaffordedbyloggedinuserstotargetcontentandadvertisingmoreeffectively.SouthernCrossAustereosapproachtodigitalhasbeenvalidatedbyrapidgrowthinitsonlineadvertisingrevenueswhichoutstripthemarket.Tocapitaliseonitssocialscaleandengagementthebusinesshasdevelopedamarketleadingsuiteofnativeadvertisingsolutions.ThishasallowedSouthernCrossAustereotobuildstrongcommercialmomentuminsocialmonetisationandatthesametimeactivateitssocialcommunitiestofurtherconnectaudiencestoitshighproleshowsandtalent.SouthernCrossAustereohasgrownecommercerevenuewithMyLocalAuction.com.auanonlineplatformdevelopedbythebusiness.Thisinvestmentisexpectedtoseecontinuedgrowththrough2014andbeyond.LEADINGDIGITALINNOVATIONSTheAustraliandigitalmedialandscapeisevolvingrapidlyandSouthernCrossAustereocontinuesitsinvestmentindigitalinnovationtoenhancevalueforshareholders.14SOUTHERNCROSSAUSTEREOANNUALREPORT2014 COLLABORATIONSWhilein-houseproductandtechnicaldevelopmentisakeyfocusofthebusinesspartneringwithgloballeadersincomplementaryeldsisallowingSouthernCrossAustereotoexpediteitsdigitalvisionandreinventthewayconsumersengagewithcontent.OMNYOmnyomnyapp.comisaproductinwhichthebusinessannouncedaninvestmentinearly2014.Omnyhasanexcitingvisionforaudiocontentondemandwhichisincreasinglyimportantinanenvironmentofconnectedconsumersdevicesandvehicles.AstrongcollaborationexistsbetweenSouthernCrossAustereoandOmnyacrosscontentdesigndevelopmentandcommercialoperations.SHAZAMAustraliasrstShazamableradiocampaigninpartnershipwithUniversalMusicencouragedconsumerstoShazamcontenttoincreaseengagementwithUniversalMusicsiconicartistsandincreasetrialofemergingentertainers.TWITTERSouthernCrossAustereowasAustraliasrstTwitterAmplifypartnerfurtherleveragingthecompanyssocialscale.WorkingalongsideTwitterandLOrealParisSouthernCrossAustereocreatedaseriesofbrandedsocialvideoexecutionstoconnectconsumerstoUSawardceremonyredcarpets.ThesuccessofthepartnershiphasseentherelationshipextendtoincludeadditionalcollaborationswithTwitteracrossnumeroussportingcodes.SouthernCrossAustereoiscommittedtoforgingmutuallybenecialdigitalpartnershipsallowingthebusinesstocapitaliseonthegrowingtrendtowardprogrammatictradingleveragingtherichaudienceinformationtocreatenewrevenuestreamsandimprovetheimpactofeachclientsdigitalcampaigns.15SOUTHERNCROSSAUSTEREOANNUALREPORT2014 SOUTHERNCROSSAUSTEREOANNUALREPORT201416 GIVINGBACKTOOURCOMMUNITIESHELPINGAUSSIEKIDSGETBETTERGIVEME5FORKIDSWithanestablished20yearhistorySouthernCrossAustereoisproudofitsGiveMe5forKidsinitiativethatraisesmillionsofdollarsannuallytobenetlocalchildrenshospitalsandwards.Thisdirectlyinuencesthehospitalsabilitytoprovidethelatestandbestcaretosickchildrenandtheirfamilieswhentheyneeditmost.GiveMe5forKidsisanannualfocusacrosstheentireregionalbusinessforthemonthofJuneandbeyond.Withover40radioand21TVstationsacrossregionalAustraliatheSouthernCrossAustraliamediaassetsarededicatedtoraisingthesemuch-neededfundsforlocalcommunityhospitals.HundredsofeventsactivitiesandcampaignsareimplementedacrossthenationtoensurelocalhospitalscanprovideevenbettercareallyearroundtoAussiekids.IBELIEVEINCHRISTMASSouthernCrossAustereobelieveseverychildshouldenjoythefestivitiesofChristmas.EachyearitsmedianetworksfocusonIBelieveinChristmaswiththeaimtodelivergiftstounderprivilegedchildrenacrossregionalAustralia.ToysarecollectedandsenttoTheSalvationArmywhodistributethemtochildrenandfamiliesinneedduringthefestiveseason.LastChristmasover20000toysweredonatedfromacrossthecountry.B105CHRISTMASAPPEALTheB105ChristmasAppealraisesfundsfortheRoyalChildrensHospitalBrisbanetohelppurchaselifesavingmedicalequipmentandfundground-breakingresearchintochildhoodillnessanddisease.Sinceitsinceptionin1995theappealhasraisedover11million.MIX94.5KIDSAPPEALWITHTELETHONPerthsmix94.5KidsAppealinassociationwithTelethonappealedtothecommunityfordonationsforPrincessMargaretHospitalfortwoweeksinJuly.Fromtinshakingthroughtoa24-hourphoneroomthisyearsappealsuccessfullyraisedover580000.MYCOMMUNITYCONNECTMyCommunityConnectprovidesregionalAustralianswithanonlineeventregistrythatisgivenfurtherinuenceviathesupportofSouthernCrossAustereosmediaassets.Thisinitiativehasbeendesignedfornot-for-protorganisationscommunityclubsandlocalcharityeventsandissupportedbysubstantialtelevisionandradioairtime.MyCommunityConnectencourageslocalresidentsandvisitorsaliketosupportcommunitiesbyattendingeventsandactivitiesclosetohome.Italsohelpstoraiseandcontributemillionsofdollarseveryyearforlocalnot-for-protorganisations.SouthernCrossAustereoiscommittedtousingitsvastmediafootprintandabilitytopositivelyinuencethelocalcommunitiesofAustraliatohelpthoseinneed.SouthernCrossAustereoproudlyinvestsbothtimeandresourcesintocharityeffortsallyearround.Usingourchannelstosupportthosewhoneeditmost.SOUTHERNCROSSAUSTEREOANNUALREPORT201417 CHAIRMANANDCEOSREPORTWehavepleasureinprovidingyoutheSouthernCrossAustereoAnnualReportfortheyearended30June2014.RHYSHOLLERANMAXMOORE-WILSONDearShareholdersWehavepleasureinprovidingyoutheSouthernCrossAustereoAnnualReportfortheyearended30June2014.ThisyearhasbeenayearofregenerationforSouthernCrossAustereowiththeTodayNetworkrefreshingbreakfastshowsinkeymarkets.TheTripleMNetworkcontinuestoimproveandgrowmarketsharedominatinginitstargetaudienceanddeliveringsolidyearonyearimprovementsinrevenues.Televisionremainschallengedhoweverrevenueshaveshownsomeimprovement.TheGroupreportedrevenuesof640.8millionafallof0.3onprioryearrevenuesof642.6millionwithreportedEarningsbeforeInterestTaxesDepreciationandAmortisationEBITDAof179.7milliondown14.8onprioryearEBITDAof211.0million.NetProtAfterTaxNPAToftheGroupwasdown408.0toalossof296.0millionduetoimpairmentofintangiblesandinvestmentscomparedtotheprioryearNPATof96.1million.TheGrouphadanumberofsignicantitemsimpactingNPATincludingimpairmentchargesagainstintangibleassetsandinvestmentsprovisionforonerouscontractsthewriteoffofunamortisedborrowingcostsuponrenancingofthedebtfacilitysettlementofthetaxdisputeandtheprioryearsaleoftheSunshineCoastradiobusiness.Excludingsignicantitemsanddiscontinuedoperationsrevenueswereup0.5onprioryearandEBITDAwasdownfrom198.6millionto187.8millionafallof5.4.NPATwasdown5.7from84.4millionto79.6million.Inearly2014theGroupwassaddenedbythepassingofitsChiefFinancialOfcerStephenKelly.StephenwasahighlyrespectedmemberoftheseniorexecutiveteamandwasheldinhighregardbytheBoardandthewiderinvestmentcommunity.NickMcKechniehasbeenappointedtothepositionofCFOcommencing8September2014.JaneSummerhayeswasappointedastheGeneralCounselandCompanySecretaryoftheGroupinMay2014.TheBoardhasembarkedonasignicantperiodofrenewalsincethedepartureofMarinaDarlingandTonyBell.ThreenewdirectorsRobMurrayGlenBorehamandKathyGramphavebeenappointedeffective1September2014.TogethertheywillbringsignicantskillsdiversityandindependencetostrengthentheBoard.ThroughanumberofannualinitiativesSouthernCrossAustereohasfundedmuch-neededtreatmentandlifesavingmedicalequipmentforlocalchildrenshospitalsandseriouslyillAussiekidsensuringtheyreceivetheverybestmedicaltreatment.TheGroupalsocontinuesitsproudtraditionofgivingbacktolocalAustraliancommunitiesandsupportingtheirnot-for-protorganisationscommunityclubsandlocalcauses.TheBoardofDirectorswouldliketothanktheGroupstalentedandcommittedstaffwhocontinuetoproduceexcellenceeverydayandwouldalsoliketothanktheshareholderswhocontinuetoshowsupportfortheGroup.18SOUTHERNCROSSAUSTEREOANNUALREPORT2014 19SOUTHERNCROSSAUSTEREOANNUALREPORT2014 BOARDOFDIRECTORSANDLEADERSHIPTEAMMAXMOORE-WILTONCHAIRMANMaxMoore-WiltonisChairmanoftheBoardandamemberoftheNominationandRemunerationCommittee.PriortohisappointmentMaxhadadistinguishedcareerintheprivateandpublicsectorsandwasSecretarytotheDepartmentofPrimeMinisterandCabinetfromMay1996toDecember2002whereheoversawfundamentalreformoftheCommonwealthPublicService.MaxcurrentlyservesasChairmanofSydneyAirportHoldingsLimitedandSouthernCrossAirportsCorporationHoldingsLimitedtheparentcompanyoftheoperatorofSydneyKingsfordSmithAirport.LEONPASTERNAKDEPUTYCHAIRMANLeonisDeputyChairmanoftheBoardandamemberoftheAuditandRiskCommittee.InJune2014followingtheretirementofTonyBellhewasappointedChairmanoftheNominationandRemunerationCommittee.UntilFebruary2014LeonheldthepositionsofViceChairmanandManagingDirectorwithMerrillLynchMarketsAustraliaPtyLimitedasubsidiaryofBankofAmericawithresponsibilityforthenancialinstitutionsgroupandmergersandacquisitions.LeonwasaseniorcorporatepartneratFreehillsnowHerbertSmithFreehillsspecialisinginmergersandacquisitionspublicnanceandcorporatereorganisations.CHRISDEBOERDIRECTORChrisdeBoerisChairmanoftheAuditandRiskCommitteeandamemberoftheNominationandRemunerationCommittee.ChrisisaCharteredAccountantandhashadvariouscareersininvestmentbankingbusinessconsultingstockbrokinganddirectinvestment.ThishasprovidedChriswithexperienceininitialpublicofferingsmergersandacquisitionscorporatereorganisationsjointventuresbondissuesandnancialadviceacrossLondonHongKongAustraliaandNewZealandinbothdomesticandcross-borderdeals.SOUTHERNCROSSAUSTEREOANNUALREPORT201420 PETERHARVIEDIRECTORPeterHarvieisamemberoftheNominationandRemunerationCommitteeandfromJuly2014theAuditandRiskCommittee.Peterhasmorethan45yearsexperienceintheadvertisingmarketingandmediaindustries.PriortohisappointmentPeterwastheExecutiveChairmanofAustereoGroupLimitedfrom1997untilMay2011ExecutiveChairmanofAustereoPtyLtdManagingDirectoroftheTripleMNetworkandFounderandManagingDirectoroftheClemengerHarvieadvertisingagencyfrom1974to1993.MICHAELCARAPIETDIRECTORMichaelCarapiethasmorethan30yearsexperienceinthenancialsector.HeretiredfromMacquarieGroupin2011whereheheldanumberofseniorrolesincludingExecutiveCommitteemember.MichaelistheChairpersonofSASTrusteeCorporationNSWStateSuperandtheChairpersonofSafetyReturntoWorkandSupportBoardthatcomprisestheWorkCoverAuthorityofNSWtheLifetimeCareandSupportAuthorityandtheMotorAccidentsAuthority.HeisalsoaDirectorofCleanEnergyFinanceCorporationisontheAdvisoryBoardsofNortonRoseAustraliaandTranseldHoldingsandhasrecentlybeenappointedChairmanofbothSmartsalaryCorporationLimitedandAdexumCapitalLimited.RHYSHOLLERANCHIEFEXECUTIVEOFFICERRhysHolleranhasadistinguishedcareerinmediahavingworkedintheindustryfor27years.HehasundertakenavarietyofmanagementrolesincludingGeneralManagerof101.1TTFMandGold104.3FM1992to1997ManagingDirectorofRGCapitalRadio1997to2004andChiefExecutiveOfcerofMacquarieRegionalRadioworksMacquarieSouthernCrossMedia2004to2009.RhyswasappointedChiefExecutiveOfcerofSouthernCrossMediaGroupin2009.RhysisthecurrentChairmanofCommercialRadioAustraliaandaDirectorofFreeTVAustralia.GUYDOBSONCHIEFCONTENTOFFICERGuyDobsonwastheChiefExecutiveOfcerforAustereoGroupLimitedpriortothemergerwithSouthernCrossMediaGroupandbeforethatheldthepositionofNationalHeadofContent.Heisaveteranofcommercialbroadcastinghavingworkedintheindustryinexcessof25years.GuysradioexperienceextendsfromworkingoverseasinUKradioandthroughoutEuropetoVancouverinCanadabothinOn-AirandProgrammingpositions.GuyisalsoontheBoardofDirectorsofCommercialRadioAustralia.SOUTHERNCROSSAUSTEREOANNUALREPORT201421 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE2014FINANCIALREPORT2014 CorporateGovernanceStatement24DirectorsReport33RemunerationReport38AuditorsIndependenceDeclaration57StatementofComprehensiveIncome58StatementofFinancialPosition59StatementofChangesinEquity60StatementofCashFlows61NotestotheFinancialStatements62DirectorsDeclaration99IndependentAuditorsReport100AdditionalStockExchangeInformation102CorporateDirectoryIBCNotestotheFinancialStatements1.SummaryofSignicantAccountingPolicies622.ProtfortheYear703.SignicantItems714.RemunerationofAuditors715.IncomeTaxExpense726.DividendsPaidandProposed737.CurrentAssetsCashandCashEquivalents738.CurrentAssetsReceivables739.Non-CurrentAssetsReceivables7310.Non-CurrentAssetsInvestmentsAccountedforUsingtheEquityMethod7411.Non-CurrentAssetsOtherFinancialAssets7512.Non-CurrentAssetsPropertyPlantandEquipment7613.Non-CurrentAssetsIntangibleAssets7714.DeferredTaxes8115.Subsidiaries8116.CurrentLiabilitiesPayables8217.CurrentLiabilitiesProvisions8218.Borrowings8219.DerivativeFinancialInstruments8420.Non-CurrentLiabilitiesProvisions8521.ContributedEquity8622.ReservesandOtherEquityTransactions8723.AccumulatedLosses8724.EarningsperShare8825.ReconciliationofProtafterIncomeTaxtoNetCashInowfromOperatingActivities8826.FinancialRiskManagement8927.ParentEntityFinancialInformation9228.Share-BasedPayments9329.RelatedPartyDisclosures9530.SegmentInformation9731.Commitments9832.EventsOccurringafterBalanceSheetDate98ThenancialstatementswereauthorisedforissuebytheDirectorson19August2014.TheDirectorshavethepowertoamendandre-issuethenancialstatements.CONTENTS23SOUTHERNCROSSAUSTEREOANNUALREPORT2014 CORPORATEGOVERNANCESTATEMENTFORYEARENDED30JUNE2014ThisstatementoutlinesSouthernCrossMediaGroupLimitedscorporategovernanceframeworkandpracticesintheformofareportagainsttheAustralianStockExchangeASXCorporateGovernancePrinciplesandRecommendations2ndeditionPrinciples.Unlessspeciedotherwisealloftheinformationcontainedinthisstatementiscurrentasat19August2014.TheBoardofSouthernCrossMediaGroupLimitedtheCompanyisresponsibleforthecorporategovernanceofSouthernCrossAustereocomprisingSouthernCrossMediaGroupLimitedanditssubsidiariestheGroup.TheBoardguidesandmonitorsthebusinessandaffairsoftheCompanyandtheGrouponbehalfofshareholdersworkingwithmanagementtoimplementandmaintainaneffectivesystemofcorporategovernance.ASXCorporateGovernancePrinciplesandRecommendationsPrinciple1LaysolidfoundationsformanagementandoversightPage251.1CompaniesshouldestablishthefunctionsreservedtotheBoardandthosedelegatedtoseniorexecutivesanddisclosethosefunctions.1.2Companiesshoulddisclosetheprocessforevaluatingtheperformanceofseniorexecutives.1.3CompaniesshouldprovidetheinformationindicatedintheGuidetoReportingonPrinciple1.Principle2StructuretheBoardtoaddvaluePages25-302.1AmajorityoftheBoardshouldbeIndependentDirectors.12.2ThechairshouldbeanIndependentDirector.2.3TherolesofChairandChiefExecutiveOfcershouldnotbeexercisedbythesameindividual.2.4TheBoardshouldestablishanominationcommittee.2.5CompaniesshoulddisclosetheprocessforevaluatingtheperformanceoftheBoarditscommitteesandindividualdirectors.2.6CompaniesshouldprovidetheinformationindicatedintheGuidetoReportingonPrinciple2.Principle3Promoteethicalandresponsibledecision-makingPages30-313.1Companiesshouldestablishacodeofconductanddisclosethecodeorasummaryofthecodeastothepracticesnecessarytomaintaincondenceinthecompanysintegritythepracticesnecessarytotakeintoaccounttheirlegalobligationsandthereasonableexpectationsoftheirstakeholderstheresponsibilityandaccountabilityofindividualsforreportingandinvestigatingreportsofunethicalpractices.3.2Companiesshouldestablishapolicyconcerningdiversityanddisclosethepolicyorasummaryofthatpolicy.ThepolicyshouldincluderequirementsfortheBoardtoestablishmeasurableobjectivesforachievinggenderdiversityfortheBoardtoassessannuallyboththeobjectivesandprogressinachievingthem.3.3CompaniesshoulddiscloseineachannualreportthemeasurableobjectivesforachievinggenderdiversitysetbytheBoardinaccordancewiththediversitypolicyandprogresstowardsachievingthem.3.4CompaniesshoulddiscloseineachannualreporttheproportionofwomenemployeesinthewholeorganisationwomeninseniorexecutivepositionsandwomenontheBoard.3.5CompaniesshouldprovidetheinformationindicatedintheGuidetoReportingonPrinciple3.Principle4SafeguardintegrityinnancialreportingPage314.1TheBoardshouldestablishanauditcommittee.4.2TheauditcommitteeshouldbestructuredsothatitconsistsonlyofNon-ExecutiveDirectorsconsistsofamajorityofIndependentDirectorsischairedbyanindependentchairwhoisnotchairoftheBoardandhasatleastthreemembers.24.3Theauditcommitteeshouldhaveaformalcharter.4.4CompaniesshouldprovidetheinformationindicatedintheGuidetoReportingonPrinciple4.Principle5MaketimelyandbalanceddisclosurePage315.1CompaniesshouldestablishwrittenpoliciesdesignedtoensurecompliancewithASXListingRuledisclosurerequirementsandtoensureaccountabilityataseniorexecutivelevelforthatcomplianceanddisclosethosepoliciesorasummaryofthosepolicies.5.2CompaniesshouldprovidetheinformationindicatedintheGuidetoReportingonPrinciple5.Principle6RespecttherightsofshareholdersPage326.1Companiesshoulddesignacommunicationspolicyforpromotingeffectivecommunicationwithshareholdersandencouragingtheirparticipationatgeneralmeetingsanddisclosetheirpolicyorasummaryofthatpolicy.6.2CompaniesshouldprovidetheinformationindicatedintheGuidetoReportingonPrinciple6.Principle7RecogniseandmanageriskPage327.1Companiesshouldestablishpoliciesfortheoversightandmanagementofmaterialbusinessrisksanddiscloseasummaryofthosepolicies.7.2TheBoardshouldrequiremanagementtodesignandimplementtheriskmanagementandinternalcontrolsystemtomanagethecompanysmaterialbusinessrisksandreporttoitonwhetherthoserisksarebeingmanagedeffectively.TheBoardshoulddisclosethatmanagementhasreportedtoitastotheeffectivenessofthecompanysmanagementofitsmaterialbusinessrisks.7.3TheBoardshoulddisclosewhetherithasreceivedassurancefromtheCEOorequivalentandtheCFOorequivalentthatthedeclarationprovidedinaccordancewithsection295AoftheCorporationsActisfoundedonasoundsystemofriskmanagementandinternalcontrolandthatthesystemisoperatingeffectivelyinallmaterialrespectsinrelationtonancialreportingrisks.7.4CompaniesshouldprovidetheinformationindicatedintheGuidetoReportingonPrinciple7.24SOUTHERNCROSSAUSTEREOANNUALREPORT2014 Principle8RemuneratefairlyandresponsiblyPage328.1TheBoardshouldestablisharemunerationcommittee.8.2TheremunerationcommitteeshouldbestructuredsothatitconsistsofamajorityofIndependentDirectorsischairedbyanindependentchairandhasatleastthreemembers.38.3CompaniesshouldclearlydistinguishthestructureofNon-ExecutiveDirectorsremunerationfromthatofexecutivedirectorsandseniorexecutives.8.4CompaniesshouldprovidetheinformationindicatedintheGuidetoReportingonPrinciple8.1From16January2014whenMarinaDarlingresignedasaDirectorto30June2014theBoardcontainedanequalnumberthreeofIndependentDirectorsandnon-IndependentDirectors.2From1July2014afterTonyBellresignedasaDirectorto11July2014whenPeterHarviewasappointedtotheCommitteetheAuditandRiskCommitteehadonlytwomembers.NoAuditandRiskCommitteemeetingswereheldduringthisperiod.3Asat30June2014theNominationandRemunerationCommitteewascomprisedofthreeIndependentDirectorsandtwonon-IndependentDirectorswithanIndependentChair.From1July2014afterTonyBellresignedasaDirectortheNominationandRemunerationCommitteecomprisedtwoIndependentDirectorsandtwonon-IndependentDirectors.Principle1LaySolidFoundationsforManagementandOversightBoardofDirectorsTheBoardofDirectorsisresponsibleforthecorporategovernanceandinternalworkingoftheCompany.TheBoardsrolesandresponsibilitiesareformalisedinaBoardCharterwhichisavailableontheSouthernCrossAustereowebsitewww.southerncrossaustereo.com.au.UndertheBoardChartertheresponsibilitiesoftheBoardareoversightoftheCompanyincludingitscontrolandaccountabilitysystemsreviewingandapprovingthestrategicplansoftheCompanyandmonitoringtheimplementationofthoseplansapprovingandmonitoringtheprogressofmajorcapitalexpenditurecapitalmanagementandacquisitionsanddivesturesdeterminingthedividendpolicyandtheamountnatureandtimingofdividendstobepaidadoptingtheannualbudgetandnancialstatementsandmonitoringnancialperformanceevaluatingtheperformanceofanddevelopingsuccessionplansfortheCEOandCFOappointingdeterminingthetermsofappointmentofandremovingtheCEOCFOandCompanySecretarymonitoringmaterialbusinessrisksreviewingratifyingandmonitoringsystemsofriskmanagementandinternalcontrolreportingsystemsandcomplianceframeworksthathavebeendevelopedandimplementedbymanagementwithguidancefromtheAuditandRiskCommitteereviewingandratifyingcodesofconductcontinuousdisclosurelegalcomplianceandothersignicantcorporatepoliciessettingethicalstandardsandmonitoringtheCompanysrelationshipwithkeystakeholdersanddeterminingdelegationstoBoardcommitteesandmanagement.SeniorExecutivesDaytodaymanagementoftheCompanysaffairsandtheimplementationofthecorporatestrategyandpolicyinitiativesareformallydelegatedbytheBoardtotheCEOandseniorexecutives.Theperformanceofallexecutivesisreviewedatleastannuallybytheirimmediatesupervisors.Performanceisevaluatedagainstpersonalnancialandcorporategoals.TheBoardhasadoptedaSeniorExecutiveEvaluationPolicywhichisavailableontheSouthernCrossAustereowebsite.Principle2StructuretheBoardtoAddValueCompositionandtenureofBoardmembersfortheyearended30June2014NamePositionMaxMoore-WiltonChairmanappointed27February2007Non-ExecutiveDirectorLeonPasternakDeputyChairmanappointed26September2005Non-ExecutiveDirectorLeadIndependentDirectorChrisdeBoerNon-ExecutiveDirectorappointed20September2005IndependentDirectorTonyBellNon-ExecutiveDirectorappointed2April2008resigned30June2014IndependentDirectorMichaelCarapietNon-ExecutiveDirectorappointed10March2010PeterHarvieNon-ExecutiveDirectorappointed1August2011MarinaDarlingNon-ExecutiveDirectorappointed12September2011resigned16January2014IndependentDirector25SOUTHERNCROSSAUSTEREOANNUALREPORT2014 CORPORATEGOVERNANCESTATEMENTFORYEARENDED30JUNE2014ASXCorporateGovernancePrinciplesandRecommendationsDirectorIndependenceCriteriaforassessingtheindependentstatusofadirectorMaxMoore-WiltonLeonPasternakChrisdeBoerTonyBellMichaelCarapietPeterHarvieMarinaDarlingNon-independentIndependentIndependentIndependentNon-independentNon-independent6IndependentThedirectorisnotasubstantialshareholderofthecompanyanofceroforotherwiseassociateddirectlywithasubstantialshareholderofthecompany.23ThedirectorisnotemployedinanexecutivecapacitybythecompanyoranothergroupmemberorifthedirectorhaspreviouslybeenemployedinanexecutivecapacitybythecompanyoranothergroupmembertherehasbeenaperiodofatleastthreeyearsbetweenceasingsuchemploymentandservingontheBoard.1456Thedirectorhasnotbeenaprincipalofamaterialprofessionaladviseroramaterialconsultanttothecompanyoranothergroupmemberoranemployeemateriallyassociatedwiththeserviceprovidedwithinthelastthreeyears.Thedirectorisnotamaterialsupplierorcustomerofthecompanyorothergroupmemberoranofceroforotherwiseassociateddirectlyorindirectlywithamaterialsupplierorcustomer.Thedirectorhasnomaterialcontractualrelationshipwiththecompanyoranothergroupmemberotherthanasadirector.1MaxMoore-WiltonhasbeenaconsultantofMacquarieGroupLimitedandoritssubsidiariesinthelastthreeyears.2LeonPasternakwasinitiallyappointedasanIndependentDirectoroftheCompanyin2005byMacquarieMediaManagementLimitedMMML.LeonwasalsoanIndependentDirectorofMMMLatthattime.Hehassincebeenre-electedtotheBoardbythemembers.AtalltimesLeonhasbeenassessedasanIndependentDirectoroftheCompany.3ChrisdeBoerwasinitiallyappointedasanIndependentDirectoroftheCompanyin2005byMMML.ChriswasalsoaDirectorofMMMLatthattime.Hehassincebeenre-electedtotheBoardbythemembers.AtalltimesChrishasbeenassessedasanIndependentDirectoroftheCompany.4TonyBellresignedfromthepositionofManagingDirectorofSouthernCrossBroadcastingAustraliaLtdin2007followingthatcompanysacquisitionbyMacquarieMediaGroupMMG.HewasappointedaDirectoroftheCompanyin2008.AtalltimesTonyhasbeenassessedasanIndependentDirector.5FormerexecutiveChairmanofMacquarieCapitalandMacquarieSecuritiesuntilJuly2011.6FormerexecutiveChairmanofAustereoGroupLimiteduntilMay2011acquiredbytheCompanyinMay2011.TheBoardconsidersPeterHarvietobeanIndependentDirectorsince1July2014.26SOUTHERNCROSSAUSTEREOANNUALREPORT2014 BoardRenewalOn1July2013theBoardcomprisedamajorityofIndependentDirectors.From16January2014whenMarinaDarlingresignedasaDirectorto30June2014theBoardcontainedanequalnumberthreeofIndependentDirectorsandnon-IndependentDirectors.On30June2014IndependentDirectorTonyBellresignedfromtheBoard.From1July2014theBoardhavingreviewedthestatusofPeterHarvieconsideredhimtobeanIndependentDirectorfromthatdate.Includedonpages28-29isanassessmentofPeterHarviesindependence.AccordinglytheBoardhasengagedwithinstitutionalinvestorproxyadviserstodiscusstheirviewsondirectorindependence.InresponsetotheseeventstheBoardhasalsodevelopedandcommittedtoanorderlyprocessofrenewalfocusedonincreasingthenumberofnon-executiveIndependentDirectorsattractingacross-sectionofexpertiseincludinglistedcompanydirectorshipnancetechnologymarketingandmediaindustryexpertiseinparticularandcontinuityofcorporateknowledgeandexperience.MichaelCarapiethasadvisedthathewillstepdownatthe2014AnnualGeneralMeetingAGMduetohisincreasedcommitmentsoutsidetheCompany.TheChairmanhasalsoadvisedthatheintendstostepdownduringthecourseofthe2015nancialyearfollowingselectionandappointmentofasuccessor.CollectivelythesechangeshaveprovidedtheBoardwithasignicantopportunityforrenewalthroughtheappointmentofthreenewIndependentDirectorswhobringahighlyrelevantanddiverserangeofexpertisetotheBoardtable.On19August2014theBoardappointedRobMurrayKathyGrampandGlenBorehamasNon-ExecutiveIndependentDirectors.Theywillcommencedutiesasof1September2014andstandforelectionattheforthcomingAGMinOctoberthisyear.RobMurraysexperienceacrossmajorinternationalanddomesticfoodandbeverageindustriesandasCEOoftheformerLionNathanbusinessnowLionbringstheinsightsandneedsofmajormarketingandsalesorganisationstotheBoard.KathyGrampisaCharteredAccountantandhasdirectknowledgeofthemediaindustryhavingservedastheCFOoftheAustereoGroupbetween2003and2011.GlenBorehamhasastrongtechnologybackgroundhavinghadanexecutivecareeratIBMwhichculminatedinhisroleasCEOofIBMAustraliaandNewZealandbetween2006and2010.GlenisChairmanoftheAdvisoryBoardsoftheUniversityofTechnologyNSWandthatinstitutionsBusinessSchool.LeonPasternakisDeputyChairmanandLeadIndependentDirector.HefullstheroleofchairwhenevertheChairmanisabsentorconictedduetohisotherrolesassiststheBoardinreviewingtheperformanceoftheChairmanandprovidesaseparatechannelofcommunicationforstakeholders.LeonPasternakChrisdeBoerandPeterHarviewillcontinueintheirrespectiverolestoensureBoardcontinuityandtoprovidesupporttotheincomingBoardmembersandmanagement.ItisimportantthattheCompanyretainsthebenetoftheirknowledgeofthebusinessanditscorporatehistory.ProlesoftheDirectorsincludingdetailsoftheirskillsexperienceandexpertisearesetoutintheDirectorsReport.DelegatedAuthorityTheConstitutionandtheBoardCharterenabletheBoardtodelegatetoCommitteesandmanagement.TherolesandresponsibilitiesarecapturedintheChartersofthetwoestablishedCommittees1.AuditandRiskCommitteeTheCompanysAuditandRiskCommitteeiscomprisedofthreeIndependentDirectors.TheChairmanoftheBoarddoesnotchairtheAuditandRiskCommittee.DetailsofthemembersoftheAuditandRiskCommitteeandtheirattendancesatCommitteemeetingsaresetoutintheDirectorsReport.TheAuditandRiskCommitteeCharterisavailableontheSouthernCrossAustereowebsite.2.NominationandRemunerationCommitteeTheCompanyhasestablishedaNominationandRemunerationCommittee.TheChairmanandthemajorityoftheNominationandRemunerationCommitteearecomposedofIndependentDirectors.MembersoftheCommitteealongwithdetailsofthenumberofmeetingsattendedbythosemembersduringtheyeararesetoutintheDirectorsReport.TheCommitteeisgovernedbyaBoard-approvedCharterwhichisavailableontheSouthernCrossAustereowebsite.IndependenceBoardIndependenceMembersoftheBoardhaveabroadrangeofindustrynancialandotherskillsknowledgeandexperiencetoeffectivelyguidethebusiness.DirectorswitharangeofqualicationsexpertiseandexperienceareappointedtotheBoardtoenableittoeffectivelydischargeitsdutiesandtoaddvaluetoitsdeliberations.TheBoardassessestheindependenceoftheDirectorsonappointmentandannually.Directorsareconsideredindependentiftheyareindependentofmanagementandfreefromanybusinessorotherassociationthatcouldmateriallyinterferewithorreasonablybeperceivedtomateriallyinterferewiththeexerciseoftheirunfetteredandindependentjudgement.Theseconsiderationsincludebothnancialindependenceandademonstratedabilitytoexerciseindependenceofmindandconduct.AllDirectorswhetherclassiedindependentornotarerequiredtobringindependentjudgementtobearonBoarddecisions.MembershipofBoardCommitteesasat30June2014DirectorAuditandRiskCommitteeNominationandRemunerationCommitteeMaxMoore-WiltonMemberLeonPasternakMemberChair1ChrisdeBoerChairMemberMichaelCarapietPeterHarvie2MemberMarinaDarlingresigned16January2014MemberTonyBellresigned30June2014MemberChair11LeonPasternakbecameChairon24June2014followingtheresignationofTonyBell.2PeterHarviehasjoinedtheAuditandRiskCommitteeeffective11July2014.27SOUTHERNCROSSAUSTEREOANNUALREPORT2014 CORPORATEGOVERNANCESTATEMENTFORYEARENDED30JUNE2014ChairmanTheChairmanisresponsibleforleadershipoftheBoardoverseeingtheBoardintheeffectivedischargeofitssupervisoryrolefacilitatingtheworkoftheBoardatitsmeetingsandensuringthattheprinciplesoftheBoardaremaintainedtakingsuchmeasuresasarenecessarytofacilitateaneffectivecontributionbyallDirectorspromotingaconstructiverelationshipbetweentheBoardandmanagementandensuringthatthereisregularandeffectiveevaluationoftheBoardsperformance.TheChairmanoftheBoardisMaxMoore-WiltonwhobecameChairmanon27February2007.MaxisnotconsideredindependentgiventhatinthelastthreeyearshehasbeenaconsultantofMacquariecomprisingMacquarieGroupLimitedanditssubsidiarieswhichistheCompanyslargestinvestor.AssuchtheCompanyhasnotcompliedwiththePrinciples.MaxMoore-Wiltonhasindicatedthatheintendstostepdownduringthecourseofthe2015nancialyearfollowingtheappointmentofasuccessor.TheBoardCharterrequiresthatallfuturechairsbeindependent.CEOTheCompanysCEOisMrRhysHolleran.TheCEOsroleincludesleadershipofthemanagementteamdaytodaymanagementoftheCompanysoperationsandimplementationoftheCompanystrategiesandpolicies.TherolesofChairmanandCEOarenotexercisedbythesameindividual.DeputyChairmanTheDeputyChairmanisresponsibleforchairingBoardmeetingswhentheChairmanisabsentwhererequiredactingasaliaisonbetweenIndependentNon-ExecutiveDirectorsandtheCEOorNon-IndependentDirectors.AsLeadIndependentDirectortheDeputyChairmanisalsoresponsibleforconveningameetingoftheIndependentNon-ExecutiveDirectorsforthepurposeofdiscussinganyissueofinteresttotheIndependentNon-ExecutiveDirectorsandbriengtheCEOonissuesarisingfromsuchmeetingsandconferringonaregularbasiswiththeIndependentNon-ExecutiveDirectorsonissuesrelatingtothebusinessandoperationsoftheCompanyandthedischargebytheBoardandeachCommitteeoftheBoardoftheirrespectivefunctionsandobligations.TheDeputyChairmanoftheBoardisLeonPasternakpreviouslyaViceChairmanandManagingDirectorofBankofAmericaMerrillLynchretiredinFebruary2014.LeonPasternakhasbeenaDirectoroftheCompanysinceitwaspartofthestapledstructureknownastheMacquarieMediaGroupMMG.AtthattimehewasalsoanIndependentDirectorofMacquarieMediaManagementLimitedMMMLthenaMacquarieentitythatwastheresponsibleentitytrusteeofandinvestmentmanagertoMMGentities.LeonwasinitiallyappointedtothesedirectorshipstoprovideindependentleadershipinthemanagementofMMGandwasatthetimeconsideredtobeindependentfromMacquarieandanIndependentDirectoroftheCompany.LeonwasconsideredindependentbecausehehadnotbeenwithinthethreeyearspriortohisappointmenttotheBoardaprincipaloremployeeofaprofessionaladvisertoMMGMacquarieorMacquarie-managedvehicleswhosebillingstoMMGMacquarieorotherMacquarie-managedvehiclesoverthepreviousfullyearinaggregateexceeded5oftheadviserstotalrevenuesoverthatperiod.LeoncontinuesnottohaveanynancialorotherrelationshipwithanysubstantialshareholderthatmayprecludehimfrombeingconsideredindependentbythecurrentBoard.LeonwasinitiallyappointedtotheBoardpursuanttospecialsharerightsheldbyMMMLbuthassincebeenre-electedbytheshareholdersoftheCompanyontwooccasions.TheBoardhasconsideredwhetherthemanneroftheseappointmentsmightinterfereormightreasonablybeseentointerferewiththeDeputyChairmanscapacitytobringindependentjudgementtobearonissuesbeforetheBoardandtoactinthebestinterestsoftheCompanyandsecurityholdersgenerally.TheBoardoftheCompanyalsoconsidersthatLeonhasdemonstratedanindependenceofmindinconstructivelycontributingtoBoarddeliberations.TheBoardhavingassessedhisassociationshisexperienceandhisperformanceontheBoardissatisedthattheDeputyChairmanisanIndependentDirector.DirectorsChrisdeBoerTheBoardnotesthatsimilarlytoLeonPasternakChrisdeBoerwasinitiallyappointedtotheBoardoftheCompanybyMMMLpursuanttotheexerciseofitsspecialsharerightsandatthetimewasalsoanIndependentDirectorofMMML.ChriswasconsideredindependentbecausehehadnotbeenwithinthethreeyearspriortohisappointmenttotheBoardaprincipaloremployeeofaprofessionaladvisertoMMGMacquarieorMacquarie-managedvehicleswhosebillingstoMMGMacquarieorotherMacquarie-managedvehiclesoverthepreviousfullyearinaggregateexceeded5oftheadviserstotalrevenuesoverthatperiod.HecontinuesnottohaveanynancialorotherrelationshipwithanysubstantialshareholderthatmayprecludehimfrombeingconsideredindependentbythecurrentBoard.Chrishassincebeenre-electedbytheshareholdersoftheCompanyontwooccasions.TheBoardhasconsideredwhetherthemanneroftheseappointmentsmightinterfereormightreasonablybeseentointerferewithChriscapacitytobringindependentjudgementtobearonissuesbeforetheBoardandtoactinthebestinterestsoftheCompanyandsecurityholdersgenerally.TheBoardhavingassessedhisassociationsandexperienceissatisedthatChrisisanIndependentDirector.PeterHarvieTheBoardnotesthatpriortohisappointmenttotheBoardinAugust2011PeterHarvieheldthepositionofExecutiveChairmanofAustereoCompanyLimitedfrom1997toMay2011ExecutiveChairmanofAustereoPtyLtdandManagingDirectoroftheTripleMNetwork.TheBoardrecognisesPetersextensiveprofessionalexperienceinmediaadvertisingandmarketingandnoteshispreviousrolesasfounderandManagingDirectoroftheClemengerHarvieadvertisingagencyfrom1974to1993.28SOUTHERNCROSSAUSTEREOANNUALREPORT2014 MorethanthreeyearshavepassedsincePeterheldtheroleofExecutiveChairmanofAustereoCompanyLimited.TheBoardhasassessedthematerialityoftheinterestsassociationsandrelationshipsstemmingfromhistenureasanexecutiveandconsidersthatsufcienttimehaselapsedsincehisretirementfromanexecutiverolethatanysuchinterestsrelationshipsorassociationsdonotinterfereorcouldnotreasonablybeseentointerferewithPeterscapacitytobringindependentjudgementtobearonissuesbeforetheBoardandtoactinthebestinterestsoftheCompanyandsecurityholdersgenerally.TheBoardnotesthatforthesereasonsfrom1July2014theBoardconsidersPetertobeanIndependentDirector.BoardmeetingsFullBoardmeetingsareheldapproximatelytentimesperyearwithothermeetingscalledasrequired.MeetingsattendedbyDirectorsforthenancialyearended30June2014arereportedintheDirectorsReport.DirectorsareprovidedwithBoardreportsinadvanceofBoardmeetingswhichcontainsufcientinformationtoenableinformeddiscussionofallagendaitems.TermsofofceTheCompanysconstitutionspeciesthatallDirectorsmustretirefromofcenolaterthanthethirdAGMfollowingtheirlastelection.WhereeligibleaDirectormaystandforre-election.NominationandRemunerationCommitteeTheNominationandRemunerationCommitteeisresponsibleformakingrecommendationstotheBoardconcerningnominationremunerationanddiversity.NominationTheNominationandRemunerationCommitteeisresponsibleforthesizeandcompositionoftheBoarddevelopmentandimplementationofprocessesfortheselectionappointmentandre-electionofDirectorsselectionandrecommendationofcandidatestotheBoardidentifyingDirectorsqualiedtollvacanciesonBoardCommitteesestablishingandreviewingBoardandseniorexecutivesuccessionplansassessingthecapabilitiesofthosewhomaybeconsideredforsuccessiontotheCEOCFOandseniorexecutivepositionsestablishmentandimplementationofaprocessforevaluationoftheperformanceoftheBoardBoardCommitteesandDirectorsandidentifyingtrainingandeducationprogramsfortheBoard.NewDirectorsreceiveaninductionpackthatincludesaletterofappointmentsettingouttheconditionsandtermoftheirappointmentandremuneration.AprogramfortheinductionofnewDirectorsandtheprovisionofappropriateprofessionaldevelopmentopportunitiestodevelopandmaintaintheskillsandknowledgeneededtoperformtheirroleisalsoavailabletoallDirectors.TheBoardmayappointanewDirectoreithertollacasualvacancyorasanadditiontotheexistingDirectorsprovidedthetotalnumberofDirectorsisnomorethaneight.ADirectorappointedbytheBoardholdsofceonlyuntilthecloseofthenextAGMbutiseligibleforelectionbyshareholdersatthatmeeting.RemunerationTheNominationandRemunerationCommitteeisresponsibleformakingrecommendationstotheBoardontheremunerationframeworkpoliciesandpracticesfortheExecutiveDirectorsandstafftoensurethattheyiattractandmotivateDirectorsseniorexecutivesandemployeestopursuetheCompanyslongtermgrowthiidemonstrateaclearrelationshipbetweenexecutiveperformanceandinvestorvalueandiiiarereasonableandfairhavingregardtobestgovernancepracticesandlegalrequirements.thetotallevelofremunerationofNon-ExecutiveDirectorsandforindividualfeesforNon-ExecutiveDirectorsandtheChairmanincludinganyadditionalfeespayableformembershipofBoardcommitteestheremunerationpackagesoftheCEOCFOandseniorexecutivesincludingbasepayincentivepaymentsequityawardsretirementrightsandservicecontractshavingregardtotheneedtoattractandretainahighlymotivatedandprofessionalstafftheCompanysequitybasedincentiveschemesincludingaconsiderationofperformancethresholdsandregulatoryandmarketrequirementstheCompanyssuperannuationarrangementsandcompliancewithrelevantlawsandregulationsinrelationtosuperannuationarrangementsandtheCompanysremunerationreportinginthenancialstatementsandremunerationreport.TheCommitteewillliaisewiththeAuditandRiskCommitteeinundertakingthisresponsibility.TheBoardacknowledgesthecommentsofvariousproxyadvisersonthestructuredisclosureandexplanationoftheexecutiveremunerationframeworkintheRemunerationReportpresentedinthe2013AnnualReport.Asaresultanumberofchangesandimprovementshavebeenmadeduringthecourseoftheyearunderreview.ThesearedetailedintheRemunerationReport.DiversityTheNominationandRemunerationCommitteeisresponsibleforreviewingandmakingrecommendationstotheBoardongenderdiversityassessingandreportingtotheBoardontheeffectivenessofgenderdiversityobjectivesandmonitoringandreportingtotheBoardontheachievementofdiversitytargetsonanannualbasismakingrecommendationstotheBoardinrelationtotheobjectivesforachievinggenderdiversityandtheinitiativesandstrategiestosupportthoseobjectivesandincludinggenderdiversityobjectivesinBoardrecruitmentBoardperformanceevaluationandsuccessionplanningprocesses.NominationandRemunerationCommitteeCharterTheNominationandRemunerationCommitteehasaBoard-approvedChartersettingoutitsrolesandresponsibilitiescompositionmembershiprequirementsandoperation.CommitteemeetingminutesaretabledatthefollowingBoardmeeting.TonyBellanIndependentDirectorwasChairmanoftheCommitteefrom25October2011to24June2014.LeonPasternakanIndependentDirectorwasappointedChairmanoftheCommitteeon24June2014.MembersoftheNominationandRemunerationCommitteeandtheirattendanceatCommitteemeetingsforthenancialyearended30June2014aresetoutintheDirectorsReport.TheNominationandRemunerationCommitteeCharterisavailableontheSouthernCrossAustereowebsite.29SOUTHERNCROSSAUSTEREOANNUALREPORT2014 CORPORATEGOVERNANCESTATEMENTFORYEARENDED30JUNE2014PerformanceEvaluationTheperformanceofindividualDirectorsCommitteesandtheBoardasawholeisreviewedinaccordancewiththeproceduressetoutintheBoardCharter.Suchevaluationstookplaceinthersthalfof2014.IndependentProfessionalAdviceThereisanagreedprocedureforDirectorsontheBoardandcommitteestoobtainindependentprofessionaladviceattheCompanysexpense.TheseproceduresaresetoutintheBoardAuditandRiskCommitteeandNominationandRemunerationCommitteeCharters.Principle3PromoteEthicalandResponsibleDecisionMakingCodeofConductTheCompanysCodeofConductsetsoutprinciplesandstandardsthatapplytoallDirectorsemployeesandcertaincontractorsandconsultants.TheCompanyiscommittedtoavoidingorappropriatelymanaginganyconictofinterestbetweenthepersonalinterestsofaDirectororstaffmemberandtheirresponsibilitytoservetheinterestsoftheCompanyensuringpropertyinformationandpositionarenotmisusedforpersonalbenetortocompetewiththeCompanyensuringtheCompanysassetsareusedonlyforauthorisedandlegitimatebusinesspurposesmaintainingthecondentialityofinformationandtheprivacyofpersonalinformationentrustedtotheCompanybyitsemployeesandotherstakeholdersexceptwheredisclosureisauthorisedensuringhighstandardsofdisclosureandauditintegrityinrelationtotheCompanysactivitiesandnancialperformanceensuringdealingsbetweentheCompanyandacompetitororsupplierareconductedinalawfulandfairmannersupportingthecommunitiesinwhichtheCompanyoperatesconductingallbusinessinaccordancewithapplicablelawsandregulationsinthejurisdictionsinwhichtheCompanyoperatesandinawaythatenhancesitsreputationinthosemarketsprohibitinganyactivitythatseekstobribecorruptorotherwiseimproperlyinuenceapublicofcialinanycountrytoactoromittoactinawaythatdiffersfromthatofcialsproperdutiesobligationsandstandardsofconductforthebenetoftheCompanyoranyconnectedpersonentityandprotectingapersonwhomakesorassistssomeonetomakeareportconcerningaviolationofthisCodeingoodfaith.TheCodeincludeswhistle-bloweranti-corruptionanddealingwithgovernmentpolicies.InadditiontheCompanyhasformulatedandfosterscommitmenttoitsvaluesoutstandingservicechallengechangecreateandinnovateteamworkrecruitandretainthebestspeakopenly.Listenactivelyempowerandtrustandexceptionalimplementation.TheCompanyiscommittedtomakingapositiveimpactonthelivesofothersbothinAustraliaandoverseasbyconductingnumerousfundraisingactivesdonatingairtimeandengaginginvolunteerwork.SomeofthecharitiestheCompanyworkedwithinthenancialyearended30June2014includeMissionAustraliaHabitatforHumanitySalvationArmyandBeyondBlue.TheCompanysowncharitableTrustGiveMe5forKidshasraisedmillionsofdollarsfortheprovisionofpaediatrichealthservicesinregionalAustralia.TheCompanyconductsitsbusinessdealingswithcontractorsandsuppliersinaresponsiblerespectfulandethicalmanner.TheCodeofConductisunderpinnedbyarangeofadditionalpoliciesincludingtheSecuritiesTradingPolicyWorkplaceHealthandSafetyPolicyCommunicationsandDisclosurePolicyandPrivacyPolicy.TheCodeofConductisavailableontheSouthernCrossAustereowebsite.TradingincompanysecuritiesTheCompanyhasaSecuritiesTradingPolicy.DirectorsandmanagersmustnottradedirectlyorindirectlyinCompanysecuritieswhileinpossessionofpricesensitiveinformation.PricesensitiveinformationisinformationwhichisnotpublicabouttheCompanywhichareasonablepersonwouldexpecttohaveamaterialeffectonthepriceorvalueofCompanysecuritiesorwhichwouldbelikelytoinuenceaninvestmentdecisioninrelationtothesecurities.TheSecuritiesTradingPolicyisavailableontheSouthernCrossAustereowebsite.DiversityTheCompanysobjectiveistoadvanceequalemploymentopportunitiesforitsstaffandtodiversifyanddevelopitsworkforce.FurthermoretheCompanyrecognisesthevalueofattractingandretainingemployeeswithdifferentbackgroundsexperienceknowledgeandabilities.TheDiversityPolicyisavailableontheSouthernCrossAustereowebsite.TheCompanyaimstoensurethatdiversitycontributestoitsbusinesssuccessandbenetsindividualsteamsclientsandthecommunity.TheCompanysDiversityPolicyincludesgenderageethnicityculturalbackgroundimpairmentordisabilitysexualpreferenceandreligion.ItisapprovedbytheBoardandoverseenbytheNominationandRemunerationCommittee.TheCompanyrecognisesthatitsbusinessperformanceproductivityandshareholderreturnisenhancedbyadiverseworkforceseniormanagementteamandBoard.TheCompanyiscommittedtoitspeopleandtoworkplacediversity.TheCompanyvaluesadiverseworkforcewhereallemployeesaretreatedwithrespectandfairnessandhaveequalopportunitiesavailabletothem.StrategicrecruitmentallowstheCompanytolocateandattractthemostsuitablepersonforaposition.ItsupportstheappointmentofstaffwhowillupholdtheCompanysvaluesitscurrentandfuturegoalsinordertogenerateasustainablecompetitiveadvantagefortheorganisation.TheCompanyisanequalopportunityemployerandiscommittedtotheprinciplethatpeopleshouldbeemployeduponthebasisofmerit.TheCompanymakesallreasonableendeavourstoavoidanyformofdiscriminationonthebasisofsexsexualorientationmaritalstatusagereligionracecolourpoliticalopiniondisabilitypregnancyandcarerresponsibilities.30SOUTHERNCROSSAUSTEREOANNUALREPORT2014 TheCompanybelievesthatthepromotionofdiversityatalllevelswithintheorganisationwillenhancecreativityandinnovationandreectthecommunitiesinwhichtheCompanyoperates.In2012theBoardsetthefollowingmeasurableobjectivesforachievinggenderdiversitypercentageofwomeninseniormanagementpositionstobe35by2015percentageofwomeninmiddlemanagementpositionstobe40by2015andatleastonefemaleNon-ExecutiveIndependentDirectoratalltimes.TheCompanyispleasedtoreporttheobjectivesrelatingtoseniorandmiddlemanagementpositionobjectiveshavebeenmet.Howeveritmustensurethatthesestatisticsaremaintainedinfutureyears.GendercompositionwithintheCompanyasat30June2014CategoryFemaleMaleBoard01100Seniormanagementroles3862Middlemanagementroles4060Employees5149112.5aftertheappointmentofKathyGrampasDirectoreffective1September2014.Principle4SafeguardIntegrityinFinancialReportingAuditandRiskCommitteeTheCompanyhasestablishedanAuditandRiskCommittee.TheCommitteeisgovernedbyaBoard-approvedCharterwhichisavailableontheSouthernCrossAustereowebsite.TheAuditandRiskCommitteecomprisedoffourIndependentDirectorsuntiltheresignationofMarinaDarlingon16January2014.TheCommitteeischairedbyChrisdeBoer.PeterHarviewasappointedtotheCommitteeon11July2014followingtheresignationofTonyBellon30June2014.DetailsofthemembersoftheAuditandRiskCommitteeandtheirattendanceatCommitteemeetingsaresetoutintheDirectorsReport.TheAuditandRiskCommitteeisresponsiblefornancialreportingriskmanagementandinternalcontrolexternalauditandreportingtotheBoard.TheChairmanoftheBoarddoesnotchairtheAuditandRiskCommittee.FinancialReportingTheAuditandRiskCommitteeisresponsibleforensuringtheappropriatenessoftheCompanysmaterialaccountingpoliciesandpracticeswhichunderlienancialreportsreviewingthereasonablenessofsignicantestimatesinthenancialreportsbymakinginquiriesofmanagementandtheexternalauditorreviewingtheannualandhalf-yearnancialreportsandmakingrecommendationstotheBoardfortheadoptionofthesereportsandrecommendingtotheBoardandsubsequentlymonitoringtheproceduresinplacetoensurethattheCompanyiscompliantwiththevariouslegislativeandreportingrequirementsfornancialstatementsincludingtheCorporationsActandASXListingRules.RiskManagementandInternalControlTheAuditandRiskCommitteeisresponsibleformonitoringtheestablishmentofanappropriateinternalcontrolframeworkmonitoringandreviewingtheeffectivenessoftheCompanysriskmanagementandcontrolsystemswithmanagementandreportingtotheBoardoninternalcontrolprocessesforidentifyingandmanagingkeyriskareas.ExternalAuditTheAuditandRiskCommitteeisresponsibleforoverseeingtheselectionappointmentrotationandremovaloftheexternalauditorrecommendingtotheBoardtheappointmentoftheexternalauditorandtheirfeereviewingthescopeoftheexternalauditplantheperformanceoftheexternalauditorandoverseeingandappraisingthequalityofauditsconductedbytheexternalauditormeetingseparatelywiththeexternalauditoratleastonceayeartodiscussanymattersthattheCommitteeorauditorbelievesshouldbediscussedprivatelyandreviewingandapprovingmattersrelatingtoauditorindependencehavingparticularregardtotheprovisionofnon-auditservices.ReportingtotheBoardTheAuditandRiskCommitteeisresponsibleforensuringthatallmattersrelevanttotheCommitteesrolesandresponsibilitiesarebroughttotheattentionoftheBoardforitsreview.TheCommitteeisalsoresponsibleformaintainingopenlinesofcommunicationbetweentheBoardmanagementandtheexternalauditorssoastoenableinformationandpointsofviewtobefreelyexchanged.TheauditorattendstheCompanysAGMandisavailabletoanswersecurityholderquestionsontheconductoftheauditandthepreparationandcontentoftheauditorsreport.TheRiskManagementPolicyisavailableontheSouthernCrossAustereowebsite.Principle5MakeTimelyandBalancedDisclosureItistheCompanyspolicytocomplywithASXListingRuleRequirementsandprovidetimelyopenandaccurateinformationtoitsinvestorsregulatorsandthewiderinvestmentcommunity.TheCompanyhasaCommunicationsandDisclosurePolicy.ThepolicysetsoutthepoliciesaccountabilitiesandproceduresthatgoverntheCompanyshandlingofinformationcontinuousdisclosureandcommunicationstoitsinvestorsandregulators.Theproceduresaddresshowtoidentifyprice-sensitiveinformationwhichincludesreferraltotheCEOandCompanySecretaryGeneralCounselforadeterminationastowhetherdisclosureisrequiredandamanagementsign-offprocesstoensurethatASXreleasesareaccurateandcomplete.TheASXliaisonistheSouthernCrossAustereoCompanySecretaryortheCFOintheCompanySecretarysabsence.TheCommunicationsandDisclosurePolicyisavailableontheSouthernCrossAustereowebsite.31SOUTHERNCROSSAUSTEREOANNUALREPORT2014 CORPORATEGOVERNANCESTATEMENTFORYEARENDED30JUNE2014Principle6RespecttheRightsofShareholdersTheCompanysCommunicationsandDisclosurePolicypromotesahighstandardofeffectiveandaccessiblecommunicationwithinvestors.CommunicationwithinvestorsoccursviaASXannouncementstheannualreportandhalf-yearlyupdateinvestorroadshowsandbriengs.AllinformationdisclosedtotheASXispostedontheSouthernCrossAustereowebsite.InvestorsareencouragedtoattendtheAGMwhichwillbeheldinOctober2014.PresentationsbytheChairmanandCEOattheAGMarewebcastontheSouthernCrossAustereowebsite.Forformalmeetingsanexplanatorymemorandumontheresolutionsisincludedwiththenoticeofmeeting.Intheeventthatinvestorscannotattendformalmeetingstheyareabletolodgeproxyformsbypostorfax.TheCommunicationsandDisclosurePolicyisavailableontheSouthernCrossAustereowebsite.Principle7RecogniseandManageRiskTheBoardisresponsibleforoverseeingtheCompanyssystemsofinternalcontrolandriskmanagement.TheBoardhasadoptedaRiskManagementPolicy.ThepolicyaddressestheoverseeingbytheBoardofthemanagementofkeybusinessrisksrelevanttotheCompany.TheAuditandRiskCommitteeassiststheBoardinoverseeingtheriskmanagementframeworkandanymattersofsignicanceaffectingtheCompanysnancialreportingandinternalcontrols.Keybusinessriskcategoriesthatareaddressedbythepolicyincludenancialincludinginvestmentcomplianceliquiditycreditinterestrateriskreputationtechnologyregulatorylegaloperationalpeopleincludingworkplacehealthandsafetyenvironmentalandsocialresponsibilitiesandstrategicrisks.TheCompanysseniormanagementteamhasresponsibilityfortheday-to-dayimplementationoftheriskmanagementframeworkandinternalcontrolswithintheCompany.ManagementalsoreportsregularlytotheBoardthroughtheCEOontheCompanyskeyrisksandtheextenttowhichitbelievestheserisksarebeingadequatelymanaged.TheCompanyhasnotimplementedaninternalauditfunction.TheBoardbelievesthatthenatureoftheCompanysoperationscurrentlydonotrequirethistobeinstigatedasaseparatefunctiontothosefunctionsundertakenbytheexternalauditorsortheAuditandRiskCommittee.AssuranceTheCEOandGroupFinancialControlleractinginthecapacityofCFOunderauthorityoftheBoardhavedeclaredinwritingtotheBoardthatnancialrecordshavebeenproperlymaintainedinthattheycorrectlyrecordandexplainitstransactionsandnancialpositionandperformanceenabletrueandfairnancialstatementstobepreparedandauditedandareretainedforsevenyearsafterthetransactionscoveredbytherecordsarecompletedthenancialstatementsandnotesrequiredbytheaccountingstandardsforthenancialyearcomplywiththeaccountingstandardsthenancialstatementsandnotesforthenancialyeargiveatrueandfairviewoftheCompanysnancialpositionandofitsperformanceanyothermattersthatareprescribedbytheCorporationsActandregulationsastheyrelatetostatementsandnotesforthenancialyeararesatisedandinaccordancewithsection295AoftheCorporationsActintheirviewthenancialstatementsarefoundedonasoundsystemofriskmanagementandinternalcontrolandthatthesystemisoperatingeffectivelyinallmaterialrespectsinrelationtonancialreportingrisks.TheRiskManagementPolicyisavailableontheSouthernCrossAustereowebsite.Principle8RemunerateFairlyandResponsiblyNominationandRemunerationCommitteeTheCompanyhasestablishedaNominationandRemunerationCommittee.TheCommitteeisgovernedbyaBoard-approvedCharterwhichisavailableontheSouthernCrossAustereowebsite.MembersoftheCommitteealongwithdetailsofthenumberofmeetingsattendedbythosemembersduringtheyeararesetoutintheDirectorsReport.TheCommitteereviewstheremunerationpackagesandemploymentconditionsapplicabletotheCEOandCFOandanyExecutiveDirectors.Inmakingthesedeterminationsregardishadtocomparableindustryorprofessionalsalarylevelsandtothespecicperformanceoftheindividualsconcerned.TheCompanyclearlydistinguishesthestructureofNon-ExecutiveDirectorsremunerationpaidintheformofaxedfeeandthatofanyExecutiveDirectorandseniorexecutives.TheremunerationofmanagersandstaffincludingseniorexecutivesotherthantheCFOiswithintheauthorityoftheCEO.TheCEOhasdiscretioninregardtotheremunerationofindividualmanagerssubjecttotherequirementthattheoveralllevelofremunerationiswithinbudgetguidelinesasapprovedbytheBoardpriortopreparationoftheannualbudget.Inthecaseofseniorexecutivesremunerationisappropriatelypositionedhavingregardtocomparableexecutiveremunerationbenchmarking.FurtherdetailontheCompanysremunerationpracticesandremunerationreceivedbyDirectorsandseniorexecutivesandmanagementduringtheyearissetoutintheRemunerationReportwhichcomprisespartoftheDirectorsReport.SeniorexecutiveswereevaluatedthroughouttheyearinaccordancewiththeSeniorExecutiveEvaluationPolicywhichisavailableontheSouthernCrossAustereowebsite.32SOUTHERNCROSSAUSTEREOANNUALREPORT2014 DIRECTORSREPORTFORYEARENDED30JUNE2014TheDirectorsofSouthernCrossMediaGroupLimitedtheCompanysubmitthefollowingreportforSouthernCrossAustereobeingSouthernCrossMediaGroupLimitedanditssubsidiariestheGroupfortheyearended30June2014.InordertocomplywiththeprovisionsoftheCorporationsAct2001thedirectorsreportasfollowsDirectorsThefollowingpersonswereDirectorsoftheCompanyduringthewholeoftheyearunlessotherwisestatedanduptothedateofthisreportMaxMoore-WiltonChairmanLeonPasternakDeputyChairmanChrisdeBoerTonyBellresigned30June2014MichaelCarapietPeterHarvieMarinaDarlingresigned16January2014PrincipalActivitiesTheprincipalactivitiesoftheGroupduringthecourseofthenancialyearwerethecreationandbroadcastingofcontentonFree-to-AircommercialradioFManddigitalTVandonlinemediaplatformsacrossAustralia.Thesemediaassetsaremonetisedviarevenuegeneratedfromthedevelopmentandsaleofadvertisingsolutionsforclients.TherewerenochangesinthenatureoftheGroupduringtheyear.ReviewandResultsofOperationsTheGroupreportedrevenuesof640.8millionafallof0.3onprioryearrevenuesof642.6millionwithreportedEarningsbeforeInterestTaxesDepreciationandAmortisationEBITDAof179.7milliondown14.8onprioryearEBITDAof211.0million.Depreciationandamortisationwereup1.0millionor3.9asthebusinesscontinuestoinvestinsystemsintegrationprojectstoachieveoperationalefciencies.Reductionsininterestexpenseandotherborrowingcostsof24.1andincometaxexpenseof55.8aretheresultoftheGrouphavingfavourablyresolveditstaxdisputewiththeAustralianTaxationOfceATOrefernote5forfurtherdetailsandthesuccessfulrenanceofthesyndicateddebtfacilityrefernote18forfurtherdetails.NetProtAfterTaxNPAToftheGroupwasdown408.0toalossof296.0millionduetoimpairmentofintangiblesandinvestmentscomparedtotheprioryearNPATof96.1million.EBITDAisameasurethatintheopinionoftheDirectorsisausefulsupplementtonetprotinunderstandingthecashowgeneratedfromoperationsandavailableforpaymentofincometaxesdebtservicingandcapitalexpenditure.EBITDAisusefultoinvestorsbecauseanalystsandothermembersoftheinvestmentcommunitylargelyviewEBITDAasawidelyrecognisedmeasureofoperatingperformance.EBITDAdisclosedwithintheDirectorsReportisequivalenttoprotbeforedepreciationamortisationinterestimpairmentfairvaluemovementsonnancialderivativesandincometaxexpensefortheyearfromcontinuingoperationsincludedwithintheStatementofComprehensiveIncomewhichhasbeensubjecttoaudit.SignicantItemsTheGrouphadaprovisionforincometaxinrespectofamendedtaxassessmentsraisedbytheATOinrespectofdisalloweddeductionsonredeemablepreferencesharesbetween2006and2009.TheGroupobjectedagainsttheassessmentsandduringtheperiodreachedasettlementwiththeATOinrelationtoallaspectsofthedispute.Thesettlementof14.0millionpayabletotheATOinprimarytaxresultedinawrite-backduringtheperiodofinterestexpenseof10.9millionandincometaxexpenseof15.5million.Subsequenttoyearendpaymentoftheprimarytaxwasmadeon11August2014andthematterhasnowbeenconcluded.On10December2013theCompanyadvisedithadsuccessfullynegotiatednewtermsforrenancingoftheexisting700millionsyndicateddebtfacility.Thiswasformallycompletedandbecameeffectiveon13January2014.Thenewfacilityconsistsofa5yearrevolving650millionfacilityfullydrawnanda2yearrevolving50millionfacilitycurrentlyundrawnwhichwillprovidethebusinesswithsignicantliquidityandnancialexibility.Therenancingresultedinthebalanceofunamortisedborrowingcostsfromthepreviousfacilitybeingwrittenoffduringtheperiodbeing5.6millionor3.9millionaftertax.TheGrouphasrecognisedimpairmentchargesagainstintangibleassetsandinvestmentsof392.5million.Ofthis375.7millionrelatestotheRegionalFree-to-AirBroadcastingCashGeneratingUnit4.7millionrelatestoexcessdigitalspectrumand12.1millionrelatestoinvestmentsinassociates.RefertoNotes10and13forfurtherinformation.TheGroupalsorecognisedanonerouscontractinrespectofdigitalradioDABcontractsof8.1millionor5.7millionaftertax.InrespectoftheRegionalCGUtheGrouphasreassesseditsmarketshareassumptionsaroundtelevisionrevenuesonthebasisthatratingsfortheChannel10producthavenowbeenconsistentforthepasttwoyearsandwithoutanyrealimprovementoffthebackofspecialeventsduringtheyearbeingtheBigBashLeagueandSochiWinterOlympics.ForthisreasonthetelevisionrevenuegrowthratesovertheforecastperiodandtheterminalgrowthratefortheRegionalCGUreectthismoresubduedposition.Thishasbeencoupledwithcompanyspecicfactorslikeanincreaseinthepretaxdiscountrateprimarilyduetothetargetdebttoenterprisevaluereducingto30from40consistentwithcomparablecompanies.During2013theGroupdivestedofasubsidiarythatheldtwocommercialFMradiobroadcastinglicencesintheSunshineCoastregion.Theprotonsaleof10.4millionwasasignicantitem.In2013theSunshineCoastRadiobusinesshadrevenueof5.0millionEBITDAof1.9millionandNPATof1.2millionthatwasincludedinthestatutoryprot.Theresultswerenotseparatelydisclosedasdiscontinuedoperationsasthenumbersindividuallywerenotmaterial.Refertonote3forfurtherinformation.Excludingsignicantitemsanddiscontinuedoperationsrevenueswereup0.5onprioryearandEBITDAwasdownfrom198.6millionto187.8millionafallof5.4.NPATwasdown5.7from84.4millionto79.6million.ExcludingsignicantitemsnetinterestexpenseandotherborrowingcostsoftheGroupwere44.6millionareductionof12.9onprioryearandthisistheresultofbothreductionsinvariableinterestratesandthemorefavourabletermsachievedduringtherecentrenance.Incometaxwasdown3.0from37.2millionto36.0million.33SOUTHERNCROSSAUSTEREOANNUALREPORT2014 DIRECTORSREPORTFORYEARENDED30JUNE2014ExecutivesInearly2014theGroupannouncedthepassingofitsCFOStephenKelly.StephenwasahighlyrespectedmemberoftheseniorexecutiveteamandwasheldinhighregardbytheBoardandthewiderinvestmentcommunity.TheGroupannouncedon18August2014thatNickMcKechniehasbeenappointedtothepositionofCFOcommencing8September2014.IntheinterimthefunctionsoftheCFOarebeingperformedbytheCEOandotherseniormembersofthenanceteam.JaneSummerhayeswasappointedastheGeneralCounselandCompanySecretaryoftheGroupinMay2014.Janeisaqualiedsolicitorwithmorethan27yearsexperiencecommencinginprivatepracticefollowedby22yearsinmedialawattheAustralianBroadcastingCorporationandNewsCorpAustralia.StrategicUpdateTheGroupcontinuestopursueastrategyofoperationalimprovementwhichincludesacontinualfocusonachievingoperationalefcienciestheregenerationoftheTodayradionetworkareviewofnon-coreassetsandfurtherintegrationandmonetisationoftheGroupssizeabledigitalmediafootprint.Duringthe2014nancialyeartheGroupestablishedinternalworkinggroupstoreviewkeyoperationalareasofthebusinesswiththeresultbeingtheimplementationofinitiativesthatwillresultinannualisedsavingsinexcessof6.0millionsomeofwhichhavebeenrealisedduringtheyear.InadditiontothistherehavebeensomesignicantmilestonesbeingachievedwiththegoliveofthegroupwidetrafcsystemandthecompletionofthenewradioaudiodistributionnetworkbothofwhichwillbringsignicantefcienciesandopportunitiestotheGroupinthefuture.Overthelast12monthstheGrouphasseensignicantdevelopmentindigitalmediawiththeGroupbecomingoneofthelargestonlinepublishersinAustraliathemostsociallyengagingcompanyinAustraliaandachievingtripledigitgrowthinaverageonlineaudiences.UnderthevisionandleadershipofCliveDickenstheGroupsheadofDigitalandInnovationtheGroupcontinuestodeneitsstrategyformonetisationofitsalreadysizeabledigitalfootprintandhasseendigitalrevenuesgrow17.3duringtheyear.TheGroupcontinuestoimproveitsriskmanagementandstriveforbetterthanbestpracticeinthebroadcastofcontent.AcrosstheyeartheGrouprolledoutfurtherimprovementstoitscontentcomplianceincludingadditionaltrainingandestablishmentofaworkingcommitteethatoverseesongoingtrainingandgenerallyacceptedprincipleswithregardtothebroadcastofradiocontent.RegionalFree-to-AirBroadcastingTelevisionrevenueshaveperformedwellinwhatcontinuestobeachallengingratingsenvironmentfortheChannel10product.TheGrouphasmadefurtherinvestmentinTVcontentthroughshowingtheBigBashLeaguecricketandtheSochiWinterOlympicsduringtheyearandwhilsttheseeventshavebeenamoderatesuccessparticularlywithdrivinglocaladvertisingrevenuestheGroupdidnotseeasustainedimprovementinratingstogettheongoingbenetsfromtheseevents.TheGroupcontinuestolookatnewandinnovativewaystoutilisetheTVbroadcastspectrumandhasrecentlysigneddealsfortheprovisionofexcessspectrumtoTVshoppingchannelsandthishasbeenthekeydriverofthemodestgrowthinTVrevenuesacrosstheyear.TakingintoconsiderationthedivestedSunshineCoastRadioin2013regionalradiorevenueshaveimprovedmarginallywithgrowthdrivenbylocalmarketsalesbeingoffsetbyadecreaseinnationalsaleswhichhavebeenimpactedbytheabsenceofspendingfromsomekeyclientsinthesecondhalfoftheyear.AsadvertisingmarketsremainchallengingtheGroupcontinuesitsongoingcommitmenttocostcontrol.MetropolitanFree-to-AirBroadcastingTheGroupisintheprocessofregeneratingtheTodaynetworkandwhilsttheGroupwillcontinuetorenetheofferingithasbeenpleasingthewaythesechangeshavebeenreceivedbyaudiences.ThestrategyofhavingtwostrongmetrostationsineachcapitalcitythatappealtodifferentaudienceshasbeenprovenwithgrowthontheTripleMnetworklargelyoffsettingthenancialimpactsofrebuildingtheTodaynetwork.TheGrouphasmadeastrongcommitmenttoregainingthedominantnumber1ratingspositionacrosstheTodaynetworkandhasmadesignicantinvestmentincontentandmarketingoverthelast12months.AtthesametimetheGrouphasworkedhardtoimprovetheefciencyinotherpartsofthebusinesstooffsetthisinvestment.CommunityTheGroupcontinuesitsproudtraditionofgivingbacktolocalcommunities.ThroughMyCommunityConnectregionalAustraliansareprovidedwithanonlineeventregistrythatisfurthersupportedviaamplicationthroughtheGroupsbroadarrayofmediaassets.GiveMe5ForKidsanannualfundraiserwithanestablished20yearhistoryhasagainraisedmillionsofdollarsforthebenetoflocalchildrenshospitalsandenablesrecipientstoprovidethebestcaretosickchildrenandtheirfamilieswhentheyneeditmost.EveryDecembertheSouthernCrossAustereoIBelieveinChristmasappealdeliversthefestivitiesofChristmastokidsthroughoutregionalAustralia.Thisyeartheannualtoydrivecollectedover20000toysthatweredistributedbytheSalvationArmytofamiliesandchildreninneed.TheBoardofDirectorswouldliketothanktheGroupstalentedandcommittedstaffwhocontinuetoproduceexcellenceeverydayandwouldalsoliketothanktheshareholderswhocontinuetoshowsupportfortheGroup.DistributionsandDividendsTypeCentspershareTotalAmount000DateofPaymentFinal2012Ordinary5.03524319October2012Interim2013Ordinary4.53171926April2013Final2013Ordinary4.53173021October2013Interim2014Ordinary4.53173624April2014SincetheendofthenancialyeartheDirectorshavedeclaredthepaymentofanal2014ordinarydividendof21.2million3.0centsperfullypaidshareoutofretainedearnings2013protreserve.Thisdividendwillbepaidon3November2014bytheCompany.34SOUTHERNCROSSAUSTEREOANNUALREPORT2014 SignicantChangesinStateofAffairsIntheopinionoftheDirectorstherewerenosignicantchangesinthestateofaffairsoftheGroupthatoccurredduringtheyearunderreview.EventsOccurringAfterBalanceDatePeterLewisresignedfromthepositionofCFOeffective30July2014.TheGroupannouncedtheresignationofPeterLewisinanASXannouncementmadeon17July2014.TheGroupannouncedon18August2014thatNickMcKechniehasbeenappointedtothepositionofCFOcommencing8September2014.IntheinterimthefunctionsoftheCFOarebeingperformedbytheCEOandotherseniormembersofthenanceteam.AttheBoardmeetingheldon19August2014theDirectorsresolvedtoappointthreenewDirectorstotheBoardcommencing1September2014.ThenewDirectorsareRobMurrayKathyGrampandGlenBoreham.LikelyDevelopmentsandExpectedResultsofOperationsFurtherinformationonlikelydevelopmentsrelatingtotheoperationsoftheGroupinfutureyearsandtheexpectedresultsofthoseoperationshavenotbeenincludedinthisreportbecausetheDirectorsoftheCompanybelieveitwouldbelikelytoresultinunreasonableprejudicetothecommercialinterestsoftheGroup.IndemnicationandInsuranceofOfcersandAuditorsDuringtheyeartheCompanypaidapremiumof191679toinsureitsofcers.SolongastheofcersoftheCompanyactinaccordancewiththeConstitutionandthelawtheofcersremainindemniedoutoftheassetsoftheCompanyandtheGroupagainstanylossesincurredwhileactingonbehalfoftheCompanyandtheGroup.TheauditorsoftheGroupareinnowayindemniedoutoftheassetsoftheGroup.EnvironmentalRegulationTheoperationsoftheGrouparenotsubjecttoanysignicantenvironmentalregulationsunderAustralianCommonwealthStateorTerritorylaw.TheDirectorsarenotawareofanybreachesofanyenvironmentalregulations.InformationonDirectorsChairmanMaxMoore-WiltonAge71Appointed27February2007MaxMoore-WiltonistheChairmanoftheBoardandacommitteememberoftheNominationandRemunerationCommittee.PriortohisappointmentMaxhashadadistinguishedcareerinboththeprivateandpublicsectorsandwassecretarytotheDepartmentofPrimeMinisterandCabinetfromMay1996toDecember2002whereheoversawfundamentalreformoftheCommonwealthPublicService.OtherCurrentDirectorshipsMaxcurrentlyservesasChairmanoftheboardsofthefollowinglistedcompaniesSydneyAirportHoldingsLimitedSouthernCrossAirportsCorporationHoldingsLimitedFormerDirectorshipsinthelast3yearsMaxhasnotceasedanylistedcompanydirectorshipsinthelast3years.IndependentDirectorLeonPasternakAge59Appointed26September2005LeonPasternakjoinedtheBoardinSeptember2005asanIndependentDirectorandcontinuestoholdthisrole.LeonistheDeputyChairmanoftheBoardandamemberoftheAuditandRiskCommittee.InJune2014followingtheretirementofTonyBellhewasappointedChairmanoftheNominationandRemunerationCommittee.UntilFebruary2014LeonwastheViceChairmanandManagingDirectorwithMerrillLynchMarketsAustraliaPtyLimitedasubsidiaryofBankofAmericawithcrosssectorandproductresponsibilityincludingfornancialinstitutionsandmergersandacquisitions.HewasapartneratFreehillsfor25yearsnowHerbertSmithFreehillsaleadingglobalrmoflawyers.LeonservedontheFreehillsboardandpractisedinthelawofmergersandacquisitionspublicnanceandcorporatereorganisations.HewasaparttimelectureratSydneyandNSWuniversitiesteachingintheirrespectivemastersoflawprogrammes.LeonservedontheCampbellCommitteeInquiryintoAustraliasFinancialSystem.HehasanLLBandBEcHonsmajoringinaccountingfromSydneyUniversity.HeisafellowoftheAustralianInstituteofCompanyDirectors.LeonhasservedonmajorboardsincludingOPSMandCoca-ColaAmatil.TheBoardconsidersLeontobeindependentashehasnotbeenandcontinuesnottobeassociatedwithorholdanybusinessorotherrelationshipswithanysubstantialshareholderandhasdemonstratedanindependenceofmindinconstructivelycontributingtoboarddeliberations.OtherCurrentDirectorshipsLeonhasnoothercurrentdirectorshipsinlistedcompanies.FormerDirectorshipsinthelast3yearsLeonhasnotceasedanylistedcompanydirectorshipsinthelast3years.35SOUTHERNCROSSAUSTEREOANNUALREPORT2014 DIRECTORSREPORTFORYEARENDED30JUNE2014InformationonDirectorscontinuedIndependentDirectorChrisdeBoerAge69Appointed20September2005ChrisdeBoerjoinedtheBoardinSeptember2005asanindependentdirector.HeischairmanoftheAuditandRiskCommitteeandamemberoftheNominationandRemunerationCommittee.ChrisqualiedasacharteredaccountantinLondonandsincethenhashadvariouscareersinstockbrokinginvestmentbankingbusinessconsultinganddirectinvestment.ThroughthemhegainedexperienceininitialpublicofferingsmergersandacquisitionscorporatereorganisationsjointventuresbondissuesandnancialadviceacrossLondonHongKongAustraliaandNewZealandinbothdomesticandcross-borderdeals.HewasontheboardofOptuspriortoitslistingontheASXandwaschairmanoftheNewZealandVentureInvestmentFund.Chrisalsohasextensiveexperienceintakeoverregulation.ChrisspentmorethantwoyearsasanexecutiveattheTakeoverPanelinLondonthreeyearsontheTakeoversCommitteeinHongKongandfouryearsaschairmanoftheTakeoversPanelinHongKong.ChrishasanMAfromCambridgeUniversityandisamemberoftheInstituteofDirectorsinNewZealand.OtherCurrentDirectorshipsChrishasnoothercurrentdirectorshipsinlistedcompanies.FormerDirectorshipsinthelast3yearsChrishasnotceasedanylistedcompanydirectorshipsinthelast3yearsNon-ExecutiveDirectorMichaelCarapietAge55Appointed10March2010.PreviouslyappointedAlternateDirectoron11April2008andresignedon10March2010.MichaelCarapiethasmorethan30yearsexperienceinthenancialsector.HeretiredfromMacquarieGroupin2011whereheheldanumberofseniorrolesincludingthatofanExecutiveCommitteemember.MichaelistheChairpersonofSASTrusteeCorporationNSWStateSuperandtheChairpersonofSafetyReturntoWorkandSupportBoardthatcomprisestheWorkCoverAuthorityofNSWtheLifetimeCareandSupportandMotorAccidentsAuthority.HeisalsoaChairmanofSmartsalaryCorporationLimitedandChairmanofAdexumCapitalLimited.MichaelisadirectorofCleanEnergyFinanceCorporationandisontheAdvisoryBoardsofNortonRoseAustraliaandTranseldHoldings.OtherCurrentDirectorshipsMichaelhasbeenChairmanofSmartsalaryCorporationLimitedsince18February2014listed2July2014.FormerDirectorshipsinthelast3yearsMichaelhasnotceasedanylistedcompanydirectorshipsinthelast3years.Non-ExecutiveDirectorPeterHarvieAge75Appointed1August2011PeterHarvieisacommitteememberofthecompanysNominationandRemunerationCommitteeandbecameamemberoftheAuditandRiskCommitteeon11July2014.Peterhasmorethan45yearsexperienceintheadvertisingmarketingandmediaindustries.PriortohisappointmentPeterwastheExecutiveChairmanofAustereoGroupLimitedfrom1997untilMay2011ManagingDirectoroftheTripleMNetworkandfounderandmanagingdirectoroftheClemengerHarvieadvertisingagencyfrom1974to1993.OtherCurrentDirectorshipsPeterhasbeenadirectorofVillageRoadshowLimitedsince20June2000.PeterhasbeenChairmanofCHEProximityPtyLtdsince2011.FormerDirectorshipsinthelast3yearsPeterceasedbeingadirectorofAustereoGroupLimitedon18July2011.36SOUTHERNCROSSAUSTEREOANNUALREPORT2014 InformationonFormerDirectorsIndependentDirectorMarinaDarlingAge55Appointed12September2011Resigned16January2014MarinaDarlingwasacommitteememberofthecompanysAuditandRiskCommittee.Marinawasanexperiencedcompanydirectorandhadworkedinanexecutivecapacityinthelegalandcorporatenancesectorsandpropertydevelopment.MarinawasalsoaNon-ExecutiveDirectorofTheMirvacGroupandhadpreviouslybeenaNon-ExecutiveDirectorofabroadrangeoflistedcompaniesgovernmentbodiesandotherorganisations.ThesehaveincludedArgoInvestmentsLimitedSouthernCrossBroadcastingLimitedNationalAustraliaTrusteesLimitedGIOHoldingsLimitedDeaconsLawyersandSouthernHydroLimited.OtherCurrentDirectorshipsMarinawasappointedadirectorofTheMirvacGroupthroughthestaplingofsecuritiesofMirvacLimitedandMirvacPropertyTruston23January2012.FormerDirectorshipsinthelast3yearsMarinaceasedbeingadirectorofArgoInvestmentsLimitedon29February2012.IndependentDirectorTonyBellAge60Appointed2April2008Resigned30June2014TonyBellwasChairmanofthecompanysNominationandRemunerationCommitteeuntil24June2014andamemberthereofuntil30June2014andacommitteememberoftheAuditandRiskCommitteeuntilhisresignationon30June2014.TonyisoneofAustraliasmostdistinguishedmediaoperatorswithover30yearsexperienceintheAustralianradioandFree-to-Airtelevisionindustry.AsManagingDirectorofSouthernCrossBroadcastingAustraliaLimitedfrom1993to2007TonygainedextensiveexperienceinregionalandmetropolitanmediaandwasinstrumentalinitsformationasoneofAustraliasleadingmediacompanies.OtherCurrentDirectorshipsTonyhadnoothercurrentdirectorshipsinlistedcompanies.FormerDirectorshipsinthelast3yearsTonyhasnotceasedanylistedcompanydirectorshipsinthelast3years.InformationonCompanySecretaryJaneSummerhayesLLBAppointed29May2014JaneSummerhayesisaqualiedsolicitorwithmorethan27yearsexperiencecommencinginprivatepracticefollowedby22yearsinmedialawattheAustralianBroadcastingCorporationandNewsCorpAustralia.DuringtheyeartheroleofCompanySecretarywasheldbyLouiseBolgerfrom1July2013to19February2014byStephenMeadfrom19February2014to3March2014andJenniferMartinfrom3March2014to29May2014.MeetingsofDirectorsThenumberofmeetingsoftheBoardofDirectorsandofotherCommitteemeetingsheldduringtheyearended30June2014andthenumbersofmeetingsattendedbyeachDirectorwereFullmeetingsofdirectorsMeetingsofcommitteesAuditandRiskNominationandRemunerationIndependentBoardABABABABDirectorMaxMoore-WiltonChairman111155LeonPasternak1111555522ChrisdeBoer1111555522TonyBell1011554522MichaelCarapiet1111PeterHarvie111122MarinaDarling060322ANumberofmeetingsattended.BNumberofmeetingsheldduringthetimethedirectorheldofceorwasamemberofthecommitteeduringtheyear.Notamemberoftherelevantcommitteeduringtheyear.37SOUTHERNCROSSAUSTEREOANNUALREPORT2014 REMUNERATIONREPORTFORYEARENDED30JUNE2014LetterfromNominationandRemunerationCommitteeDearShareholdersOnbehalfoftheBoardIampleasedtopresentSouthernCrossMediaGroupLimitedstheGroups2014RemunerationReport.ThisismyrstreportasChairoftheNominationandRemunerationCommitteetheCommitteefollowingTonyBellsretirementfromtheBoardinJune2014.Inpreparationforthisreportweundertookafullreviewofourremunerationpracticesobtainedfeedbackfromarepresentativegroupofourkeystakeholdersandtookstepstoimproveourremunerationpracticesandqualityofourdisclosures.TheCommitteeistaskedbytheBoardtoestablishappropriatepoliciesandpracticeswhichrepresenttheBoardsphilosophytoremunerationthatofabalancebetweenfairremunerationforskillsandexpertisewithariskandrewardframeworkthatsupportslong-termsustainabilityofourbusiness.Followingavoteagainstadoptionofthe2013RemunerationReportwesoughtfeedbackfromkeystakeholdersandundertookareviewoftheGroupsremunerationpracticesInordertobetterunderstandthereasonsforthenovoteonthe2013RemunerationReporttheChiefExecutiveOfcerCEOandImetwiththeprincipalinstitutionalproxyadvisoryrmsandwecommissionedaninvestorperceptionsurveyobtainingfeedbackfromcurrentandformershareholdersinstitutionalbrokerssellsidebrokersandproxyadvisorsontheexistingremunerationframeworkanddisclosurepractices.WeengagedindependentremunerationadvisorstoreviewourexecutiveincentiveplansaswellasconductmarketremunerationbenchmarkingofexecutiveKeyManagementPersonnelKMPagainstrelevantmarketpeers.OncethiscomprehensivereviewwascompletedweidentiedchangestobetteralignexecutiverewardwithshareholderinterestsanddeliverontheGroupsbusinessstrategyandimprovethequalityofdisclosures.TheprincipalchangesrelatetoImproveddisclosureoftheremunerationframeworkdisclosureinthe2014RemunerationReporthasbeenimprovedtoensureshareholdersarepresentedwithaclearandcomprehensiveanalysisofexecutiveandBoardremuneration.Wehaveexplainedconcernsraisedinrelationtothe2013RemunerationReportexpandedthedisclosureofshort-termincentiveSTIperformancehurdlesprovidingrelativeweightingsanddetailsofeachexecutivesperformanceagainsttargetspublishedretrospectivelyandprovideddetailsoftheTotalShareholderReturnTSRcomparatorgroupforthelong-termincentiveLTIplan.STIplancommencing1July2014BetteralignallexecutiveswiththeGroupsshort-termobjectivesandstrategybyhavingaconsistentframeworkfornancialandnon-nancialmetricsandre-weightingnancialandnon-nancialmetricsfrom7030to8020ChangedtheGroup-widenancialmeasureforexecutivestonetprotaftertaxNPATratherthanearningsbeforeinteresttaxdepreciationandamortisationEBITDALTIplancommencing1July2014OneconsistentplanlimitedtoexecutiveKMPonlywithathree-yearperformanceperiodwithnovestingpossiblebeforetheendoftheperformanceperiodIntroducedanadditionalperformancemeasurewithaTSR50andEarningsPerShareEPS50performancehurdleapplyingtoawardsBoardandexecutiveremunerationwewillconductregularandindependentbenchmarkingtoensureremunerationofthesekeyrolesmeetsshareholderexpectationsandismarketcompetitive.TherewerenochangestoNon-ExecutiveDirectorNEDfeesortheCEOsremunerationpackageinFY14andnochangestothepotentialquantumofremunerationareproposedforFY15.Inrelationtothe2014nancialyeartheGroupachievedover90ofbudgetedEBITDAandlimitedSTIpaymentstocertainKMPtoreectthislevelofperformance.At1July2014noLTItranchesvestedandduringtheyearonlyTranche3oftheFY11LTIplanvestedwith76.2vestingat1July2013.FurtherdetailontheSTIandLTIoutcomesforFY14aresetoutinsection5ofthisRemunerationReport.IwouldliketotakethisopportunitytothankTonyBellandMarinaDarlingfortheircontributionstotheGroupwhichwegratefullyrecognise.AndtorespectourformerCFOthelateStephenKellywhopassedawayinJanuary2014whoseeffortsanddedicationwilllongbearfruitfortheGroupparticularlyfromtherenancingofourdebtfacilitieswhichhesuccessfullynegotiatedinhislastmonthswiththeGroup.TheGroupremainsfocusedondeliveringsustainablevalueforourshareholders.EnsuringwemaintainanexecutiveremunerationframeworkwhichalignswiththisobjectiveandsupportsourbusinessstrategycontinuestobeakeypriorityfortheBoard.TheBoardrecognisesitisourresponsibilitytomaintainshareholdercondenceinourleadershipoftheGroupandourremunerationpracticesandtothisendwevalueyourfeedbackandlookforwardtowelcomingyoutoour2014AnnualGeneralMeetingAGM.YoursfaithfullyLeonPasternakChairmanoftheNominationandRemunerationCommittee38SOUTHERNCROSSAUSTEREOANNUALREPORT2014 Contents1.Introduction2.KeyManagementPersonneldisclosedinthisreport3.Remunerationgovernance4.Executiveremunerationpolicyandframework5.RemunerationandGroupperformance6.Detailsofexecutiveremuneration7.Executiveserviceagreements8.Non-ExecutiveDirectorfeepolicy9.VotingandcommentsmadeattheGroups2013AGM10.Detailsofsharebasedpayments11.DirectorsandExecutivesholdingsofshares12.Otherremunerationinformation13.Non-auditservices14.RoundingofamountsintheDirectorsReportandtheFinancialReport15.Auditorsindependencedeclaration1.IntroductionTheinformationprovidedinthisRemunerationReporthasbeenauditedasrequiredbysection3083CoftheCorporationsAct2001.2.KeymanagementpersonneldisclosedinthisreportTheKMPcoveredinthisRemunerationReportarethosepeoplehavingauthorityandresponsibilityforplanningdirectingandcontrollingtheactivitiesoftheGroupdirectlyorindirectly.ThetablebelowoutlinestheKMPatanytimeduringthenancialyearandunlessotherwiseindicatedwereKMPfortheentireyear.NameRoleNon-ExecutiveDirectorsseepages35-37fordetailsabouteachNEDMaxMoore-WiltonNon-ExecutiveDirectorChairmanLeonPasternakNon-ExecutiveDirectorDeputyChairmanChrisdeBoerNon-ExecutiveDirectorTonyBellNon-ExecutiveDirectorresigned30June2014MichaelCarapietNon-ExecutiveDirectorPeterHarvieNon-ExecutiveDirectorMarinaDarlingNon-ExecutiveDirectorresigned16January2014ExecutivesRhysHolleranChiefExecutiveOfcerCEOPeterLewisChiefFinancialOfcerCFOappointed16June2014StephenKellyChiefFinancialOfcerceased19January2014GuyDobsonChiefContentOfcerCraigBruceHeadofContentAndreaInghamNationalSalesDirectorCliveDickensDirectorofDigitalInnovationChangessincetheendofthereportingperiodPeterLewisresignedfromthepositionofCFOeffective30July2014.TheGroupannouncedtheresignationofPeterLewisinanASXannouncementmadeon17July2014.TheGroupannouncedon18August2014thatNickMcKechniehasbeenappointedtothepositionofCFOcommencing8September2014.IntheinterimthefunctionsoftheCFOarebeingperformedbytheCEOandotherseniormembersofthenanceteam.AttheBoardmeetingheldon19August2014theDirectorsresolvedtoappointthreenewDirectorstotheBoardcommencing1September2014.ThenewDirectorsareRobMurrayKathyGrampandGlenBorehamwhowillbringstrongandrelevantskillstotheBoard.3.RemunerationgovernanceTheBoardhasestablishedaNominationandRemunerationCommitteetheCommittee.ItisresponsibleformakingrecommendationsonremunerationmatterstotheBoardonTheover-archingexecutiveremunerationframeworkOperationoftheincentiveplanswhichapplytotheCEOandCFOincludingthequantumofSTIpaidtotheCEOandCFOforachievementagainstKeyPerformanceIndicatorsKPIsandperformancehurdlesRemunerationlevelsofCEOandCFONEDfeesTheCEOisresponsibleforthemanagementofremunerationlevelsandincentiveplansforseniorexecutives.Refertopage41fordetails.TheCommitteesobjectiveistoensureremunerationpoliciesandstructuresarefaircompetitiveandalignedwiththelong-terminterestsoftheGroup.ErnstYoungEYwasengagedbytheCommitteeasanindependentremunerationadvisortoassistwithremunerationbenchmarkingandanincentiveplanreview.EYstermsofengagementincludespecicmeasuresdesignedtoensuretheindependenceoftheadviceprovided.EYmustmaintainindependencefrommanagementandanyadviceregardingKMPremunerationmustbeprovideddirectlytotheCommittee.TheCommitteerecognisesthattoeffectivelyperformitsroleitisnecessaryforEYtointeractwithmanagementtoobtainrelevantinformationandworkonapprovedmattersfromtime-to-time.ToensureEYremainsindependentmembersofmanagementareprecludedfromrequestingserviceswhichwouldbeconsideredaremunerationrecommendationasdenedbytheCorporationsAmendmentImprovingAccountabilityonDirectorandExecutiveRemunerationAct2011.NoremunerationrecommendationwasprovidedbyEYoranyotherexternaladvisorsduringthe2014nancialyear.InordertoassesstheperformanceoftheGroupsLongTermIncentiveplanstheCommitteehasengagedDeloitteToucheTohmatsuDeloittetoprepareareportateachvestingdatetodeterminetheGroupsTotalShareholderReturnTSRRankingwithinthecomparatorgroupasdenedineachoftheLong-TermIncentivePlans.TheCorporateGovernanceStatementprovidesfurtherinformationontheroleoftheCommittee.39SOUTHERNCROSSAUSTEREOANNUALREPORT2014 REMUNERATIONREPORTFORYEARENDED30JUNE20144.ExecutiveremunerationpolicyandframeworkTheobjectiveoftheGroupsexecutiverewardframeworkistoensureremunerationisreasonableforskillsandexpertiseandrewardforperformanceiscompetitiveandappropriatefortheresults.Theframeworkalignsexecutiverewardwiththeachievementofstrategicobjectivesandthecreationofvalueforshareholdersandisinformedbymarketpracticefordeliveryofreward.TheBoardaimsfortheexecutiverewardframeworktosatisfythefollowingkeycriteriaMarketcompetitiveandreasonableAcceptabletoshareholdersandalignedtoshareholdersinterestsLinkedtoGroupperformanceTransparencyregardingrewardoutcomesTheframeworkprovidesamixofxedandvariableremunerationconsistingofablendofshortandlong-termincentives.Moreseniorrolesintheorganisationhaveagreaterweightingtowardsvariableremunerationcomparedtomorejuniorroles.TheexecutiveremunerationframeworkcurrentlyhasthefollowingcomponentsFixedremunerationcomprisingbasepaybenetsandsuperannuationSTILTIRemunerationmixiExecutiveremunerationmixandpositioningpolicyToensurethatexecutiveremunerationisalignedtoGroupperformanceaportionoftheexecutivestargetremunerationisatrisk.Theapproximatetargetremunerationmixforthe2014nancialyearwasTargetremunerationmixCEOCFORepresentstargetremunerationmixforPeterLewis.TargetremunerationmixforStephenKellyformerCFOwas61xedremuneration23STI16LTI.ThequantumofxedremunerationforPeterLewiswas20lowerthanforStephenKelly.OtherKMPSubsequenttothereviewofexecutiveremunerationconductedbytheCommitteeduringFY14theGroupspolicyremunerationmixforexecutivesisFixedremunerationoftargettotalremunerationSTIoftargettotalremunerationLTIoftargettotalremunerationCEO506020252025CFO607015201520Otherexecutives607020301020InmakingthisdeterminationtheCommitteehadregardtoxedremunerationandtargettotalremunerationcomparedtotwocomparatorgroupsselectedbasedoncompanysizeconsiderationsonecomparatorgroupcomprisedcompanieswithasimilarmarketcapitalisationtotheGroupandtheothercomparatorgroupcomprisedcompanieswithbothasimilarmarketcapitalisationandrevenuetotheGroup.BasedonthendingsofthebenchmarkingexercisetheCommitteebelievestheGroupsremunerationmixpolicyisbroadlyalignedwithcompaniesofsimilarsizeinthemarketwithaslightlyheavierweightingtowardxedremuneration.WhiletheCommitteeintendstomoveovertimetowardsaremunerationmixthatismorecloselyalignedwithmarketpeerscurrentcontractualarrangementspreventimmediateamendmentstoxedremunerationandtheCommitteedoesnotbelieveincreasesinSTIandorLTIwhichwouldcorrespondinglylowertheweightingofxedremunerationarecommerciallyviableatthistimenorinthebestinterestsofshareholders.RemunerationpositioningTheGroupspolicyistopositionxedremunerationatthemedianandtotaltargetremunerationbetweenthe25thpercentileandthemedianoftherelevantcomparatorgroup.TheBoardbelievesthiscurrentpositioningisappropriategiventheneedtoprovidearemunerationrewardframeworkwhichismarketcompetitiveandreasonablewhilstbeingacceptabletoshareholders.iiFixedremunerationFixedremunerationisstructuredasatotalemploymentpackagewhichmaybedeliveredasacombinationofbasepayi.e.cashsuperannuationandprescribednon-nancialbenetsattheexecutivesdiscretion.SuperannuationisinlinewithSuperannuationGuaranteeChargeSGClegislation.Fixedremunerationforexecutivesisreviewedannuallytoensuretheexecutivespayiscompetitivewiththemarket.Aspartofthisreviewprocessexternalremunerationadvisorsareengagedfromtime-to-timetoprovideanalysisandadvicetoensurexedremunerationissettoreectthemarketforacomparablerole.Anexecutivesxedremunerationisalsoreviewedonpromotion.Therearenoguaranteedxedremunerationincreasesincludedinanyexecutivecontracts.0102030405060708090100572320FixedremunerationSTILTI0102030405060708090100681616FixedremunerationSTILTI0102030405060708090100721216FixedremunerationSTILTI40SOUTHERNCROSSAUSTEREOANNUALREPORT2014 ChangesduringtheyearFollowingtheannualreviewinFY14theCommitteeappliedaxedremunerationincreasetoonlyoneexecutiveKMProletheNationalSalesDirector.Theincumbentsxedremunerationwasincreasedfrom350000to417775a19increaseeffective1May2014toreectinternalrelativitiesandcompetitivemarketremunerationforthisrole.ThexedremunerationofthereplacementCFOwas617775reducedfrom775000fromformerCFOrepresentingadecreaseofapproximately20.iiiShort-termincentivesThetablebelowoutlinesdetailsoftheSTIplan.WhatistheSTITheSTIisanannualatriskbonusandisdesignedtorewardexecutivesformeetingorexceedingnancialandnon-nancialobjectives.HowistheSTIdeliveredSTIisawardedincashandisnotsubjecttodeferral.GiventheexecutivesrelativelymodestpotentialSTIquantumtheCommitteedoesnotcurrentlybelieveitisappropriatetointroduceSTIdeferralforexecutiveKMP.ToprovideafairandcompetitiveexecutiveremunerationpackageintroducingSTIdeferralwouldrequireanincreaseinSTIopportunitywithacorrespondingincreaseintargettotalremunerationwhichtheCommitteedoesnotbelievewouldbeappropriateatthistime.WhataretheSTItargetopportunitiesTheCEOhasatargetSTIopportunityof40ofxedremunerationCFOof24ofxedremunerationandotherexecutiveshaveanSTIopportunityofapproximately17ofxedremuneration.WhataretheperformancemeasuresFY14EachyeartheCommitteesetstheKPIsfortheCEOandCFOforthenancialyearwithaviewtodirectlyaligningtheindividualsannualincentiveopportunitytoexecutionoftheGroupsbusinessstrategy.TheCEOdeterminestheKPIsfortheotherseniorexecutiveswhicharealignedtodeliveryofthestrategyandperformanceofthebusiness.PaymentsundertheSTIaredeterminedbyperformanceagainstKPIs.ForFY14STIperformancemeasuresandweightingsvarybyexecutivedependingonindividualaccountabilities.ThemetricsandtheirrationaleforselectionareasfollowsMetricRationaleforselectionFinancialEBITDAEBITcomparedwithbudgetKeynancialmetricfortheGroupthatdrivesnancialresultsandencouragesseniorexecutivestoworktogetherfortheoverallbenetoftheGroupSales-relatedtargetsFocusesseniorexecutivesonachievingsustainablenancialperformancefromgrowingtoplinerevenueRatingstargetsRevenueperformanceoftheGroupislargelydependentonratingsonbothradioandtelevisionanddrivestheabilityfortheGrouptodelivernancialresultsGrowthinnewbusinesslinesFocusesseniorexecutivesondevelopingnewrevenuestreamsthatcomplementexistingbusinessoperationsandleadtogrowthopportunitiesfortheGroupNon-nancialStrategicFocusesseniorexecutivesonstrategicinitiativessuchasnetworkstrategyanddiversicationofrevenuestreamsthatdelivergrowthimprovedbusinessperformanceandshareholdervalueOperationalKeyoperationaldeliverablesalignmanagementtothestrategicinitiativesoftheGroupwithafocusonlongtermsustainabilityofearningsPeopleEffectiveleadershipandtalentdevelopmentandretentionarecriticaltothesuccessofthebusinessandunderpinnancialperformanceExternalrelationsDevelopmentofcloseandconstructiverelationshipswithkeystakeholdersstrengthensourbrandandfosterslong-termrelationshipsthatassistinachievingnancialandnon-nancialobjectivesandenhancingshareholdervalue41SOUTHERNCROSSAUSTEREOANNUALREPORT2014 REMUNERATIONREPORTFORYEARENDED30JUNE2014WhataretheperformancemeasurescontinuedCEOandCFOWeighted70nancialmetricactualEBITDAagainstbudgetand30non-nancialmetricsThepayoutscheduleagainstthenancialmetricisoutlinedinthetablebelowofbudgetedEBITDAachievedPercentageofnancialcomponentpayablei.e.70oftotalSTI OtherfeaturesClawbackTherearecurrentlynoclawbackclausesforSTIpayments.TheGroupisconsideringwhethertointroduceaclawbackpolicyinFY15.ChangeofControlIntheeventofachangeofcontrolbeforetheSTIpaymentdatetheSTIpaymentispro-ratedfortimeandperformancesubjecttoBoarddiscretion.MinimumEmploymentPeriodParticipantsmustbeemployedforatleastthreemonthsintheperformanceperiodtobeentitledtoreceiveanSTIpayment.TerminationForBadLeaversdenedbytheGroupasresignationorterminationforcauseintheeventofresignationtheSTIpaymentisforfeitedunlessotherwisedeterminedbytheCEOortheBoardasappropriate.ForcessationofemploymentforreasonsotherthanthosespeciedforBadLeaverstheSTIpaymentispro-ratedfortimeandperformanceunlessotherwisedeterminedbytheBoard.ivLong-termincentivesWhatistheLTITheBoardapprovedtheintroductionoftheLTIplanwhichcommencedon1July2010whichprovidedfortheCEOandotherexecutivestoreceivegrantsofperformancerightsRightsoverordinarysharesfornilconsideration.TheLTIisdesignedtorewardexecutivesformeetingorexceedingTSRperformancehurdlesoveratmostathreeorfouryearperioddependingontheexecutive.WhatistheperformanceandvestingperiodFY14Theperformanceandvestingperiodvariesdependingontheexecutiveasdetailedinthetablebelow.Year3yearplan14yearplan1stYear13vesting2Nil2ndYear13vesting213vesting23rdYear13vesting213vesting24thYearNA13vesting21The3yearplanwasinaccordancewithStephenKellysemploymentcontract.CraigBrucewasincludedinthe3yearplangiventhexedtermnatureofhisemploymentcontract.AllotherKMPwereonthe4yearplan.2Subjecttoperformancecriteriabeingmet.FY15TheGroupwillintroducearevisedLTIplancommencingon1July2014applyingtoexecutiveKMPonlywhichwillhaveathree-yearperformanceperiodwithasingle-pointvestingschedulei.e.100ofRightsvestattheendoftheperformanceperiodsubjecttoperformancecriteriabeingmet.43SOUTHERNCROSSAUSTEREOANNUALREPORT2014 REMUNERATIONREPORTFORYEARENDED30JUNE2014WhataretheperformancemeasuresandhurdlesFY14PerformanceagainstarelativeTSRhurdledeterminesvesting.TSRwasselectedasitprovidesacomparisonofrelativeshareholderreturnsthatisrelevanttomostoftheGroupsinvestors.TherelativeTSRperformancehurdletakesintoaccountsharepriceappreciationplusreinvesteddividendsexpressedasapercentageofinvestmentandadjustedforchangesintheGroupscapitalstructure.InorderforRightstovestandconverttosharestheGroupsTSRovertheperformanceperiodmustbeatorabovethe51stpercentileagainsttheconstituentsoftheASXConsumerDiscretionaryIndexexcludingNewsCorporationateachgrantdate.Thecomparatorgroupwasselectedasitrepresentsarangeofalternatecompaniesthatshareholderscouldinvestinwhilemaintainingportfoliosectorbalance.NewsCorporationhasbeenexcludedfromeachcomparativegroupgiventheextentofitsinternationalbusinessoperationsandexposuretothedecliningprintbusiness.TSRPerformanceofAllocationthatvestsBelow51stpercentileNil51stpercentile5051stto75thpercentileStraightlinevestingbetween50and100Atorabove75thpercentile100Thereisnore-testingofperformancehurdlesundertheLTIplan.FY15InresponsetoshareholderconcernsregardingtheuseofasingleLTIperformancemeasureandtomoreaccuratelycapturetheGroupsoverallnancialperformancetheGroupwillintroduceanadditionalperformancemeasurebasedongrowthinEPStosupplementtherelativeTSRperformancemeasure.Theweightingofthetwomeasureswillbe50relativeTSRand50EPS.FurtherdetailsregardingtheEPSperformancemeasurei.e.EPSmeasurementapproachandtargetswillbeprovidedinthe2014NoticeofAGM.HowisperformanceassessedTheGroupengagedDeloittetoprepareareporttodeterminetheGroupsTSRRankingwithinthecomparatorgroupbeingtheASXConsumerDiscretionaryIndexexcludingNewsCorporationateachgrantdateasdenedineachoftheLong-TermIncentivePlansateachvestingdate.OtherfeaturesChangeofControlIfaChangeofControleventoccursinrelationtotheGroupthentheRightswhichhavenotbeenexercisedatthetimeoftheannouncementtotheASXoftheChangeofControleventmayvestpro-ratafortimeandperformancesubjecttoBoarddiscretionandanyPlanSharesheldbytheTrustonbehalfofaParticipantwillimmediatelyvestintherelevantparticipantupontheannouncementtoASXoftheChangeofControlevent.TerminationForBadLeaversdenedbytheGroupasresignationorterminationforcauseanyunvestedRightsareforfeitedunlessotherwisedeterminedbytheBoard.ForcessationofemploymentforreasonsotherthanthosespeciedforBadLeaverstheBoardhasdiscretiontovestanyunvestedRightsonapro-ratabasistakingintoaccounttimeandthecurrentlevelofperformanceagainsttheperformancehurdleortoholdtheLTIawardtobetestedagainstperformancehurdlesattheendoftheoriginalvestingperformanceperiod.TreatmentofdividendsTherearenodividendspayabletoparticipantsonunvestedRights.OncetheRightshavevestedtofullypaidordinarysharestheparticipantwillbeentitledtodividendsontheseshares.SourcingofsharesTheBoardhasthediscretiontoeitherpurchasesharesonmarketortoissuenewsharesinrespectofvestingRights.TodatetheBoardhaselectedtoissuenewsharesforvestingRights.44SOUTHERNCROSSAUSTEREOANNUALREPORT2014 vSharetradingpolicyTheGroupsecuritiestradingpolicyappliestoallNEDsandexecutiveswhichisavailableintheSouthernCrossAustereowebsitewww.southerncrossaustereo.com.au.ThepolicyprohibitsemployeesfromdealingintheCompanyssecuritieswhileinpossessionofmaterialnon-publicinformationrelevanttotheentity.ExecutivesmustnotenterintoanyhedgingarrangementsoverunvestedperformancerightsundertheGroupsperformancerightsplan.Thecompanywouldconsiderabreachofthispolicyasgrossmisconductwhichmayleadtodisciplinaryactionandpotentiallydismissal.5.RemunerationandGroupperformanceAkeyobjectiveoftheexecutiveremunerationpolicyistolinkaproportionofexecutiveremunerationtotheperformanceoftheGroupwithanemphasisonthecreationofsustainablevalueforshareholders.iGroupperformanceFinancialperformancefromcontinuingoperationsforthepastveyearsisindicatedbythefollowingtable30June201400030June201300030June2012000Restated30June201100030June2010000Revenue640834653114687313492811406909EBITDA17970521099122578016103082376EBITDA28.032.332.832.720.2Netprotbeforetax2795771332691262828723224185Netprotaftertax29600896111950226406019903NPAT46.214.713.813.04.930June201430June201330June201230June201130June2010Openingshareprice1.431.201.551.641.32Closingshareprice1.071.431.201.551.64DividendDistribution7.5c9.0c10.0c10.0c9.7cRestatementfornalisationofallocationofpurchasepriceforAustereoacquisitioninaccordancewithAccountingStandards.45SOUTHERNCROSSAUSTEREOANNUALREPORT2014 REMUNERATIONREPORTFORYEARENDED30JUNE2014iiSTIoutcomesThetablebelowoutlinestheweightingofnancialandnon-nancialKPIsinrelationtoeachexecutiveKMPforFY14andtheperformanceachieved.ExecutiveFinancialNon-nancialWeightingMeasurePerformanceWeightingMeasuresPerformanceRhysHolleran70EBITDAagainstbudget90.2ofbudgetedEBITDA230MixtureofStrategicOperationalPeopleandExternalRelationsrelevanttotheexecutive38achievementofmeasureCEOsmanagementinthelast12monthsofexternalrelationshipsanddevelopmentofculturalchangeeducationandemployeeengagementwhichiscriticaltothecompanysmanagementofitspeople.StephenKelly70EBITDAagainstbudget96.6ofbudgetedEBITDAtoJanuary2014130MixtureofStrategicOperationalPeopleandExternalRelationsrelevanttotheexecutive58achievementofmeasureCFOsmanagementofinvestorrelationsdevelopmentofstrategicnancialplansandexecutionoftransformationalprojectswascriticaltothesuccessofthecompanyduringtheperiod.GuyDobson100GroupEBITagainstBudgetKPIsrelatingtoratingsgrowthgrowthofconsultancybusinessoverseasandgrowthofintegratedproductofferingsNotachievedasnancialmetricgatewayis100andKPIsnotachieved.0nanaCraigBruce100RatingstargetsforthecalendaryearassessedandpaidonaquarterlybasisRatingstargetsaresetquarterlywith100oftargetsachievedinQ1andQ2and0oftargetsachievedinQ3andQ4.0nanaAndreaIngham80GroupsalesbudgetRadiomarketshareandTVpowerratiotargetsNotachieved20MixtureofStrategicOperationalPeopleandExternalRelationsrelevanttotheexecutiveNotachievedCliveDickens100DigitalandGroupKPIs100ofDigitalandGroupKPIsachieved0nana1StephenKellypassedawayon19January2014.Entitlementtobonuswasdeterminedonaproratabasisto31January2014.2TheCommitteedetermineditwasappropriatetoexcludetheimpactofthesignicantitembeingtherecognitionofaprovisionforonerouscontractrefernote3fromEBITDAastherecognitionoftheprovisionwasnotpartoftheoperationalperformanceofthebusinessduringtheyearitresultedfromindustryspecicfactorsratherthancompanyspecicfactorspredominantlythetakeupofdigitalradioandwasnotbudgetedfor.46SOUTHERNCROSSAUSTEREOANNUALREPORT2014 STIachievedThefollowingtableoutlinesthepercentageoftargetSTIachievedandforfeitedinrelationtonancialandnon-nancialKPIsandthetotalSTIawardedforeachexecutiveKMPforFY14.FinancialNon-nancialTotalSTIOnTargetOpportunityWeightingAchievedForfeitedWeightingAchievedForfeitedSTIawardedRhysHolleran400000705149303862189000StephenKelly1300000704852305842154000PeterLewis21500007030GuyDobson10000010001000nanaCraigBruce6000010050500nana30000AndreaIngham100000800100200100CliveDickens6400010010000nana640001StephenKellypassedawayon19January2014.Entitlementtobonuswasdeterminedonaproratabasisto31January2014.TheCommitteedetermineditwasappropriatetoassessthenancialmetricofhisbonusbasedonthenancialmetricpercentageachievedat31December2013calculatedonaproratabasisto31January2014.2Wasnotemployedbythecompanyforaminimumof3monthsthereforewasnotentitledtoanySTIpayment.DiscretionarybonusOncompletionofthesuccessfulrenancingoftheGroupsdebtfacilityfor5yearsinDecember2013theBoardawardedStephenKellya100000discretionarybonustorecognisethesignicantcontributionmadebyStephenKellyoveranextendedperiodandtherelatedshareholdervaluethattherenancingwoulddeliver.The100000discretionarybonuswaspaidinadditiontothe154000totalSTIawardedshownintheabovetableandwaspaidinJanuary2014priortohispassing.LTIvestingoutcomes1July2014VestingdateThetablebelowdetailsTSRperformanceagainstcompaniesinthecomparatorgroupandtheextenttowhichtheLTIplangrantsvestedon1July2014forthe2014nancialyear.TranchePercentilerankingvestedFY11Tranche447.30FY12Tranche339.10FY13Tranche228.00FY14Tranche113.80LTIvestingoutcomes1July2013VestingdateThetablebelowdetailsTSRperformanceagainstcompaniesinthecomparatorgroupandtheextenttowhichtheLTIplangrantsvestedon1July2014forthe2013nancialyear.TranchePercentilerankingvestedFY11Tranche363.176.2FY12Tranche247.80FY13Tranche140.00Forfurtherinformationrefertopages53-55.TheCFOStephenKellypassedawayinJanuary2014.TheplanrulesstatethatupondeathofaparticipanttheCommitteemaydetermineinitsabsolutediscretiontoeithervestallofthesharesvestpartofthesharesorvestnoshares.TheNominationandRemunerationCommitteedetermineditwasappropriatetoassesstheLTIonthebasisofpro-ratafortimeandthecurrentlevelofperformanceagainsttheperformancehurdle.Thisresultedinatotalof147186outofapossible361308sharesvestingtotheEstateofStephenKelly.Theseshareswereissuedon25March2014.47SOUTHERNCROSSAUSTEREOANNUALREPORT2014 REMUNERATIONREPORTFORYEARENDED30JUNE20146.DetailsofexecutiveremunerationThetablesbelowoutlinestatutoryremunerationofexecutiveswhowereKMPinFY14andFY13inaccordancewithstatutoryrulesandapplicableAccountingStandards.2014Short-termemployeebenetsPost-employmentbenetsLong-termbenetsShare-basedpaymentsNameCashsalaryandfeesCashbonusNon-monetarybenetsSupercontributionOtherlong-termbenets3TerminationPerformancerightsTotalExecutivesRhysHolleran9750001890003593325000628553499651637753StephenKelly1437500254000309714583916677429649995741804PeterLewis221825201923844GuyDobson6335301404217775760090269763216CraigBruce5235303000027391777514019124988713051AndreaIngham34048214042177752413572216468650CliveDickens3575006400014042250004956072216483198Totalexecutive328936753700083895119927326187429675964948315161Remunerationdisclosedisfortheperiod1July2013until19January2014.2Remunerationdisclosedisfortheperiod16June2014to30June2014.3Amountsrepresentmovementsinemployeeleaveentitlementswithanegativebalancerepresentinganoverallreductionintheemployeeleaveprovisionbalancecomparedwithprioryear.2013Short-termemployeebenetsPost-employmentbenetsLong-termbenetsShare-basedpaymentsNameCashsalaryandfeesCashbonusNon-monetarybenetsSupercontributionOtherlong-termbenets3TerminationPerformancerightsTotalExecutivesRhysHolleran76875020550021691250003186343208011660376StephenKelly582250137000520424000750461999801023480GuyDobson824125323921647012452454161802624CraigBruce508530600005144164701274111100702518CathyThomas12470595972114115202259240AndreaIngham21389718000560182351037336108207288Totalexecutive30696854105007600410158627560172215046555261Remunerationdisclosedisfortheperiod1July2012to1February2013whenCathyThomaswasNationalSalesDirector.MrsThomastookthepositionofGeneralManagerMelbourneon1February2013andceasedbeingKeyManagementPersonnel.2Remunerationdisclosedisfortheperiod1February2013to30June2013afterAndreaInghamwasappointedNationalSalesDirector.3Amountsrepresentmovementsinemployeeleaveentitlementswithanegativebalancerepresentinganoverallreductionintheemployeeleaveprovisionbalancecomparedwithprioryear.FixedRemunerationAtriskSTIAtriskLTI201420132014201320142013ExecutivesRhysHolleran676812122120StephenKelly59673413720PeterLewis100na0na0naGuyDobson889300127CraigBruce7876491815AndreaIngham8579041517CliveDickens7210013015048SOUTHERNCROSSAUSTEREOANNUALREPORT2014 7.ExecutiveserviceagreementsRemunerationandothertermsofemploymentfortheCEOandtheotherexecutivesareformalisedinserviceagreements.Eachoftheseagreementsprovidefortheprovisionofbasesalaryperformance-relatedcashbonusesandothernon-monetarybenetswiththekeytermsoutlinedbelow.Name1TypeofagreementBasesalaryincludingsuperannuation000STIontarget000LTIvalue000TerminationnoticeperiodRhysHolleranPermanent100040035012mthseitherpartyGuyDobsonPermanent6501001006mthseitherpartyCraigBruceFixedTermto31December20145416012512mthseitherpartyduringthetermAndreaInghamPermanent41810010012weekseitherpartyCliveDickensPermanent381641006mthseitherparty1Servicecontractsforonlythosekeymanagementpersonnelwhohaveremainedkeymanagementpersonneltothedateofthisreporthavebeendetailedinthistable.8.Non-ExecutiveDirectorfeepolicyiNEDfeepolicyOnappointmenttotheBoardallNEDsenterintoaserviceagreementwiththeGroupintheformofaletterofappointment.ThelettersummarisestheBoardpoliciesandtermsincludingcompensationrelevanttotheofceofdirector.FeesandpaymentstoNEDsreectthedemandswhicharemadeonandtheresponsibilitiesoftheNEDs.NEDfeesarereviewedannuallybytheBoard.TheBoardhasalsoconsideredtheadviceofindependentremunerationadvisorstoensureNEDfeesandpaymentsareappropriateandinlinewiththemarket.TheChairmanandDeputyChairmansfeesaredeterminedindependentlytothefeesofotherNEDsbasedoncomparativerolesinthemarket.NeithertheChairmanorDeputyChairmanispresentatanydiscussionsrelatingtodeterminationoftheirownfees.NEDsdonotreceiveperformance-basedpayandarenotentitledtotheCompanyssharesRightsortoretirementbenetsaspartoftheirfees.ThemaximumannualaggregateNEDfeepoolis1500000andwasapprovedbyshareholdersattheAGMon25October2011.TheNEDfeeswerelastchangedwitheffectfrom1July2011.ChairmanandDeputyChairmanfeesareinclusiveofcommitteefeeswhileotherNEDswhochairoraremembersofacommitteereceiveadditionalcommitteefees.NochangestoNEDfeesortheaggregateNEDfeepoolareproposedforFY15.ThestatutorysuperannuationincreasedoesnotimpactNEDfeesasthisisabsorbedbytheindividual.ThefollowingNEDfeesinclusiveofsuperannuationhaveappliedintheyearsended30June2014and30June2013fortheGroupFY14FY13BasefeesAnnualChairman1250000250000DeputyChairman1161500161500OtherNon-ExecutiveDirectors125000125000CommitteefeesAnnualAuditCommitteeChairman2100021000AuditCommitteemember1400014000NominationandRemunerationCommitteeChairman1500015000NominationandRemunerationCommitteemember10000100001TheChairmanandDeputyChairmandonotreceiveanyadditionalfeesforcommitteework.49SOUTHERNCROSSAUSTEREOANNUALREPORT2014 REMUNERATIONREPORTFORYEARENDED30JUNE2014iiDetailsofNEDfeesThetablesbelowoutlinestatutoryremunerationofNEDsforFY14andFY13inaccordancewithstatutoryrulesandapplicableAccountingStandards.2014Short-termemployeebenetsPost-employmentbenetsNameCashsalaryandfeesSupercontributionsTotalNon-ExecutiveDirectorsMaxMoore-WiltonChairman23222517775250000LeonPasternak14782813672161500ChrisdeBoer14279213208156000TonyBell154000154000MichaelCarapiet125000125000PeterHarvie12356811432135000MarinaDarling1Total925413560879815001MarinaDarlingwasgrantedaleaveofabsencefromtheBoardduetopersonalreasonsfrom1July2013to16January2014.Marinaresignedon16January2014.2013Short-termemployeebenetsPost-employmentbenetsNameCashsalaryandfeesSupercontributionsTotalNon-ExecutiveDirectorsMaxMoore-WiltonChairman2404009600250000LeonPasternak14936412136161500ChrisdeBoer14428011720156000TonyBell154000154000MichaelCarapiet125000125000PeterHarvie135000135000MarinaDarling12752411476139000Total1075568449321120500NEDsdidnotreceivelongtermbenetsorsharebasedpaymentsin2013or2014.9.VotingandcommentsmadeattheCompanys2013AGMAttheCompanysAGMinOctober2013theGroupreceiveditsrststrikeagainstitsRemunerationReport.Therst-strikeoccurswheretheRemunerationReportreceivesanovoteof25ormoreattheAGM.IfthishappenstheGroupsnextsubsequentRemunerationReportmustexplainwhetherandtheextenttowhichshareholderconcernshasbeentakenintoaccount.ConsequentlytheGroupundertookafullreviewofremunerationpracticesobtainedfeedbackfromkeystakeholdersandtookstepstoimproveremunerationpracticesandqualityofourdisclosures.ThestepstakenbytheBoardaresetoutonpage38intheLetterfromtheChairmanoftheNominationandRemunerationCommittee.50SOUTHERNCROSSAUSTEREOANNUALREPORT2014 Thetablebelowprovidesasummaryofthekeyareasofconcerninrelationtothe2013nancialyearandthechangesmadebytheGrouptoaddressshareholderconcerns.AreaofconcernChangesandadditionaldisclosuresmadebytheGroupFixedremunerationIncreaseinexecutivexedremunerationwithoutadequateexplanationofthereasonforsuchincreasesChangestoexecutivexedremunerationforFY14havebeendisclosedonpages40-41.DuringtheyearonlyoneincreaseinxedremunerationforexecutiveKMPoccurred.Inreviewingexecutiveservicecontractsin2014basesalarylevelsare2.6downon2013levelsontargetSTIis15.6downon2013levelsandLTIvalue5.7downon2013levels.ThisexcludesCliveDickenswhobecameaKMPon1July2013bringingtheKMPto6in2014from5in2013.Hisremunerationpackagedidnotchangefromtheprioryear.IncreaseinCEOandCFOremunerationinFY13InFY13xedremunerationforRhysHolleranCEOincreasedfrom725000to1millionandxedremunerationforStephenKellyCFOincreasedfrom550000to775000.TheBoarddeterminedtheseincreasestobereasonablewhenconsideringthemedianxedremunerationoflistedcompaniesofasimilarsizetotheGroup.TheBoardalsodeterminedtheincreasestobeappropriateinlightofsignicantstructuralchangesinthemediaindustryandtoaddresstheneedtoretaintheCEOandCFOinlightofthirdpartyoffers.RemunerationincreaseswereappropriateasremunerationwasbelowthemedianofthecomparatorgroupusedforremunerationbenchmarkingandtorecognisetheadditionalworkloadbroughtonindealingwithregulatorscustomersandstaffinlightofachallengingyearfortheGroupsoperations.STIIncreaseinSTIforCEOandCFOwithoutadequateexplanationofthereasonforsuchincreasesInFY13theSTIentitlementfortheCEOandCFOincreasedasaresultofxedremunerationincreases.NoincreaseinCEOorCFOtargetSTIopportunityoccurredforFY14orwasproposedforFY15.STIawardoutcomesfortheCEOinFY13ToaddressshareholderconcernsregardingdisclosureofSTIoutcomesthisyearsRemunerationReportprovidesdetailonpages46-47.TherationalefortheFY13STIawardtotheCEOisasfollowsFinancialthenancialgateway90oftheagreedbudgetwasmetinFY13.AccordinglytheCEOachievedaportionofthenancialcomponent.Non-nancialassessmentofthenon-nancialcomponentisbasedontheexecutivescontributiontostrategyoperationalmanagementmanagingpeopleexternalrelationsandpromotingafavourablecultureforachievement.TheCEOdevelopedandsuccessfullyimplementedadetailedmanagementplantorespondtocontinuingadvertisingtalentregulatoryandlegalchallengesarisingfromthepreviousyear.TheCEOprofessionallyefcientlyandwhereappropriatecompassionatelyexecutedtheplanandhasensuredtheGrouphasnowaddressedandrecoveredfromalladvertisingtalentregulatoryandlegalchallenges.ForthesereasonstheBoardawardedtheCEOthefullcomponentofthenon-nancialSTIawardinFY13.Weightingofnancialvsnon-nancialmetricsFrom1July2014STIwillbere-weightedto80nancialand20non-nancialforallexecutives.TheSTInancialmeasureEBITDAdoesnotreectshareholderoutcomesFrom1July2014STInancialmetricwillbeNPATfortheGroupwidemetricreplacingtheEBITDAmeasuretobetteralignexecutiveswithshareholderoutcomes.LTILTIvestingperiodallowsvestingpriortothreeyearsFrom1July2014theperformanceperiodwillbethree-yearswithnovestingpossiblebeforetheendofthethree-yearperiod.SingleperformancemeasureonLTIplanFrom1July2014newLTIawardswillbesubjecttoanadditionalperformancemeasuresuchthatbothrelativeTSR50andEPS50willapplytodeterminevesting.51SOUTHERNCROSSAUSTEREOANNUALREPORT2014 REMUNERATIONREPORTFORYEARENDED30JUNE2014AreaofconcernChangesandadditionaldisclosuresmadebytheGroupDisclosureSTIplanperformancemeasuresandhurdlesDetailsdisclosedofPerformancemeasurementapproachpages41-43Actualhurdlesonaretrospectivebasispages41-43Degreeofachievementofbothnancialandnon-nancialmetricspages46-47STIachievedforfeitedpage47LTITSRcomparatorgroupnotidentiedThecomparatorgroupistheASXConsumerDiscretionaryIndexexcludingNewsCorporationateachgrantdate.NewsCorporationhasbeenexcludedfromeachcomparatorgroupgivenitslevelofinternationaldealingsandexposuretothedecliningprintbusiness.Thecomparatorgroupwasselectedasitrepresentsarangeofalternatecompaniesthatshareholderscouldinvestinwhilemaintainingportfoliosectorbalance.Disclosedonpage44.TreatmentofLTIawardsundercessationofemploymentandchangeofcontrolcircumstancesDisclosedonpage44.TreatmentofdividendsonunvestedawardsinLTIplanTherearenodividendspayabletoparticipantsonunvestedRights.OncetheRightshavevestedtofullypaidordinarysharestheparticipantwillbeentitledtodividendsontheseshares.Disclosedonpage44.ShareholdingguidelinesforexecutivesTheGroupdoesnothaveanexecutiveshareholdingrequirement.GroupperformanceversusKMPremunerationoutcomesDisclosedonpages45-47.NEDsNEDfeepolicyissethigherthancomparablecompaniesbasedonsectorandmarketcapitalisationNoNEDfeeswereincreasedforFY14orareproposedforFY15.IndependenceofdirectorsAdditionaldisclosureshavebeenincludedonpages24and26-29oftheCorporateGovernanceStatement.52SOUTHERNCROSSAUSTEREOANNUALREPORT2014 10.DetailsofsharebasedpaymentsiSharebasedpaymentsDuringtheyearthefollowingshare-basedpaymentarrangementswereinexistence.Unvestedperformancerightsgrantedundertheplancarrynodividendorvotingrights.EligibilityandproportionofperformancerightsthatvestisdependentontheGroupsTSRperformanceincomparisontoitsperformancehurdleswhichisoutlinedbelow.ForeachplantheComparatorGroupistheASXConsumerDiscretionaryIndexexcludingNewsCorporationatthegrantdate.WherenecessaryDeloittehavemadeadjustmentstothehistoricaldatatoreectallcorporateactionsduringtheperiodincludingbutnotlimitedtodividendsrightsissuessplitsconsolidationscapitalreturnsandsharebuybacks.Theseadjustmentsaremadetoensurethatthehistoricalpriceandthecurrentpricereectthesameproportionofthecompany.FY14TSRperformanceResultsFY14RightsGrantdateExpirydateFairvalueatgrantdateVestingdatePercentilevestedFY14Tranche110012014na1.0001072014nanaFY14Tranche210012014na1.0201072015nanaFY14Tranche310012014na1.0301072016nanaFY14Tranche410012014na1.0301072017nanaOn1July20142013Tranche1performancerightswereassessedanddeterminedtobeatthe13.8thpercentilewith0sharesvesting.FY13TSRperformanceResultsTheGroupsTSRiscomparedtothe25eligiblecomparatorcompaniesovertheperiod1July2012to30June2013withaTSRof21.87ranksatthe40.0thpercentileand16thoverall.FY13RightsGrantdateExpirydateFairvalueatgrantdateVestingdatePercentilevestedFY13Tranche125102012na0.400107201340.00FY13Tranche225102012na0.4901072014nanaFY13Tranche325102012na0.5301072015nanaFY13Tranche425102012na0.5401072016nanaOn1July20142012Tranche2performancerightswereassessedanddeterminedtobeatthe28.0thpercentilewith0sharesvesting.FY12TSRperformanceResultsTheGroupsTSRiscomparedtothe23eligiblecomparatorcompaniesovertheperiod1July2011to30June2013withaTSRof7.12ranksatthe47.8thpercentileand13thoverall.FY12RightsGrantdateExpirydateFairvalueatgrantdateVestingdatePercentilevestedFY12Tranche125102011na0.510107201249.00FY12Tranche225102011na0.620107201347.80FY12Tranche325102011na0.6701072014nanaFY12Tranche425102011na0.6801072015nanaOn1July20142011Tranche3performancerightswereassessedanddeterminedtobeatthe39.1stpercentilewith0sharesvesting.FY11TSRperformanceResultsTheGroupsTSRiscomparedtothe19eligiblecomparatorcompaniesovertheperiod26July2010to30June2013withaTSRof5.48ranksatthe63.1stpercentileand8thoverall.FY11RightsGrantdateExpirydateFairvalueatgrantdateVestingdatePercentilevestedFY11Tranche126072010na0.860107201160.070.0FY11Tranche226072010na0.880107201263.176.2FY11Tranche326072010na0.900107201363.176.2FY11Tranche426072010na0.9001072014nanaOn1July20142010Tranche4performancerightswereassessedanddeterminedtobeatthe47.3rdpercentilewith0sharesvesting.53SOUTHERNCROSSAUSTEREOANNUALREPORT2014 REMUNERATIONREPORTFORYEARENDED30JUNE2014Share-basedpaymentsgrantedtoKMPareasfollowsNameYearofGrantVestingDateNo.ofPerformanceRightsGrantedValueofPerformanceRightsatGrantDateNo.ofPerformanceRightsVestedandExercisedDuringtheYearVestedandExercisedNo.ofPerformanceRightsForfeitedDuringtheYearValueatDateofForfeitureForfeitedNo.ofPerformanceRightsRemainingatYearEndRhysHolleranFY14Plan010720151143681166551143680107201611325711665511325701072017113257116655113257FY13Plan010720142380711166552380710107201522010411665522010401072016216028116655216028FY12Plan010720131881531166550.0188153116655100.00107201417411211665517411201072015171551116655171551FY11Plan010720131296171166559876876.2308492776423.801072014129617116655129617StephenKellyFY13Plan01072013166650666600.016665066660100.001072014136041666606325946.5727823566353.501072015125773666603899131.0867844599569.0FY12Plan01072013107516666600.010751566660100.00107201499493666604493645.2545573655354.8FY11Plan0107201374066666605643976.2176261586523.8GuyDobsonFY14Plan010720153267633330326760107201632359333303235901072017323593333032359FY13Plan01072014102031499951020310107201594330499959433001072016925834999592583CraigBruceFY14Plan010720144166341663416630107201540846416634084601072016404494166340449FY13Plan01072013104156416630.010415641663100.00107201485026416638502601072015786084166378608FY12Plan0107201367198416630.06719841663100.001072014621834166362183AndreaInghamFY14Plan010720153267633330326760107201632359333303235901072017323593333032359FY13Plan010720146802033330680200107201562887333306288701072016617223333061722CliveDickensFY14Plan010720153267633330326760107201632359333303235901072017323593333032359FY13Plan01072014680203333068020010720156288733330628870107201661722333306172254SOUTHERNCROSSAUSTEREOANNUALREPORT2014 iiRightsholdingsBalanceatStartofYearGrantedascompensationForfeitedExercisedBalanceatendofYearVestedandexercisableUnvestedExecutivesRhysHolleran14672533408822190029876814903651490365StephenKelly709539505914203625PeterLewisGuyDobson28894497394386338386338CraigBruce397171122958171354348775348775AndreaIngham19262997394290023290023CliveDickens19262997394290023290023iiiRightsexercisedDateofexerciserightsNumberofordinarysharesissuedonexerciseofrightsduringtheyearValueatexercisedateExecutivesRhysHolleran13August201398768144822StephenKelly13August20135643982756StephenKelly25March201414718619789611.DirectorsandExecutivesholdingsofsharesTheaggregatenumberofCompanyshareshelddirectlyindirectlyorbeneciallybyDirectorsoftheCompanyortheirrelatedentitiesasat30June2014areBalanceatstartofyearReceivedduringtheyearonexerciseofrightsOtherchangesduringtheyearBalanceatendofyearNon-ExecutiveDirectorsMaxMoore-Wilton10000001000000LeonPasternak10642161064216ChrisdeBoer148571148571MichaelCarapiet13479001347900PeterHarvieMacquarieGroupLimitedandcontrolledentities179513906179513906183074593183074593ExecutivesRhysHolleran355055987686857460680PeterLewisGuyDobsonCraigBruceAndreaInghamCliveDickens355055987686857460680FormerNon-ExecutiveDirectorsandExecutivesTonyBell172767nananaMarinaDarling100000nananaStephenKelly142170203625nana414937203625nana55SOUTHERNCROSSAUSTEREOANNUALREPORT2014 REMUNERATIONREPORTFORYEARENDED30JUNE201412.OtherremunerationinformationLoanstoDirectorsandexecutivesTherewerenoloanstoKMPandtheirrelatedpartiesduringtheyearended30June2014.OthertransactionsandbalanceswithKMPandtheirrelatedpartiesDuringtheyeartherewerenoothertransactionswithKeyManagementPersonnelortheirrelatedparties.13.Non-auditservicesTheGroupmaydecidetoemploytheauditoronassignmentsadditionaltotheirstatutoryauditdutieswheretheauditorsexpertiseandexperiencewiththeCompanyandortheGroupareimportant.DetailsoftheamountspaidorpayabletotheauditorsPricewaterhouseCoopersforauditandnon-auditservicesprovidedduringtheyeararedetailedinnote4tothenancialstatements.TheBoardofDirectorshasconsideredthepositionandinaccordancewiththeadvicereceivedfromtheAuditandRiskCommitteeissatisedthattheprovisionofthenon-auditservicesiscompatiblewiththegeneralstandardofindependenceforauditorsimposedbytheCorporationsAct2001.TheDirectorsaresatisedthattheprovisionofnon-auditservicesbytheauditordidnotcompromisetheauditorindependencerequirementsoftheCorporationsAct2001forthefollowingreasonsallnon-auditserviceshavebeenreviewedbytheAuditandRiskCommitteetoensuretheydonotimpacttheimpartialityandobjectivityoftheauditorandnoneoftheservicesunderminethegeneralprinciplesrelatingtoauditorindependenceassetoutinAPES110CodeofEthicsforProfessionalAccountantsincludingreviewingorauditingtheauditorsownworkactinginamanagementoradecision-makingcapacityfortheCompanyactingasadvocatefortheCompanyorjointlysharingeconomicriskandrewards.14.RoundingofamountsintheDirectorsReportandtheFinancialReportTheGroupandtheCompanyareofakindreferredtoinClassOrder98100issuedbytheAustralianSecuritiesandInvestmentsCommissionrelatingtotheroundingoffofamountsintheDirectorsReportandFinancialReport.AmountsintheDirectorsReportandtheFinancialReporthavebeenroundedoffinaccordancewiththatClassOrdertothenearestthousanddollarsunlessotherwiseindicated.15.AuditorsindependencedeclarationAcopyoftheAuditorsIndependenceDeclarationasrequiredunders307CoftheCorporationsAct2001issetoutonpage57.ThisreportissignedinaccordancewithresolutionsofthedirectorsofSouthernCrossMediaGroupLimited.MaxMoore-WiltonLeonPasternakChairmanDeputyChairmanSouthernCrossMediaGroupLimitedSouthernCrossMediaGroupLimitedSydneyAustraliaSydneyAustralia19August201419August201456SOUTHERNCROSSAUSTEREOANNUALREPORT2014 AUDITORSINDEPENDENCEDECLARATIONFORYEARENDED30JUNE201457SOUTHERNCROSSAUSTEREOANNUALREPORT2014 STATEMENTOFCOMPREHENSIVEINCOMEFORYEARENDED30JUNE2014ConsolidatedNote20140002013000Revenuefromcontinuingoperations2640834642631Otherincome210483Broadcastandproductioncosts120440104311Employeeexpenses169084174505Sellingcosts6983567683Occupancycosts3055529310Promotionsandmarketing1830713679Administrationcosts5289751967Shareofnetlossesofinvestmentsaccountedforusingtheequitymethod1011668Protbeforedepreciationamortisationinterestimpairmentfairvaluemovementsonnancialderivativesandincometaxexpensesfortheyearfromcontinuingoperations179705210991Depreciationandamortisationexpense22751126476Impairmentofintangiblesandinvestments13392467Interestexpenseandotherborrowingcosts24171954977Interestrevenue224153731LossProtbeforeincometaxexpensefortheyearfromcontinuingoperations279577133269Incometaxexpensefromcontinuingoperations51643137158LossProtfromcontinuingoperationsafterincometaxexpensefortheyear29600896111OthercomprehensiveincomethatmaybereclassiedtoprotorlossChangestofairvalueofcashowhedgesnetoftax57692264Totalcomprehensivelossprotfortheyearattributabletoshareholders29023998375EarningspershareattributabletotheordinaryequityholdersoftheCompanyBasicearningspersharecents2441.9813.64Dilutedearningspersharecents2441.9813.59TheaboveStatementofComprehensiveIncomeshouldbereadinconjunctionwiththeaccompanyingnotes.58SOUTHERNCROSSAUSTEREOANNUALREPORT2014 STATEMENTOFFINANCIALPOSITIONFORYEARENDED30JUNE2014ConsolidatedNote20140002013000CurrentassetsCashandcashequivalents762090102906Receivables8115498129638Totalcurrentassets177588232544Non-currentassetsReceivables958436221Investmentsaccountedforusingtheequitymethod10288013677Othernancialassets11110Propertyplantandequipment12171343170595Intangibleassets1316506122030882Deferredtaxassets1453969003Totalnon-currentassets18360742230488Totalassets20136622463032CurrentliabilitiesPayables1685087105895Provisions172064319817Borrowings188419194Currenttaxliabilities2295646223Derivativenancialinstruments1989464207Totalcurrentliabilities137716195336Non-currentliabilitiesBorrowings18646472676175Derivativenancialinstruments1914863Provisions201586410522Totalnon-currentliabilities662336701560Totalliabilities800052896896Netassets12136101566136EquityContributedequity2116868781686878Reserves2219938941Otherequitytransaction227740677406Accumulatedlosses2339416734693Equityattributabletoequityholders12133121565838Non-controllinginterest298298Totalequity12136101566136TheaboveStatementofFinancialPositionshouldbereadinconjunctionwiththeaccompanyingnotes.59SOUTHERNCROSSAUSTEREOANNUALREPORT2014 STATEMENTOFCHANGESINEQUITYFORYEARENDED30JUNE2014Consolidated2014Contributedequity000Reserves000Otherequitytransaction000Accumlosses000Total000Non-controllinginterest000Totalequity000Restatedtotalequityat1July201316868788941774063469315658382981566136Protfortheyear296008296008296008Othercomprehensiveincome576957695769Totalcomprehensiveincome5769296008290239290239TransactionswithequityholdersintheircapacityasequityholdersEmployeeshareentitlements117911791179Dividendsprovidedfororpaid6346663466634661179634666228762287Totalequityat30June2014168687819937740639416712133122981213610TheaboveStatementofChangesinEquityshouldbereadinconjunctionwiththeaccompanyingnotes.Consolidated2013Contributedequity000Reserves000Otherequitytransaction000Accumlosses000Total000Non-controllinginterest000Totalequity000Restatedtotalequityat1July2012168687812336774066384215332942981533592Protfortheyear961119611196111Othercomprehensiveincome226422642264Totalcomprehensiveincome2264961119837598375TransactionswithequityholdersintheircapacityasequityholdersEmployeeshareentitlements113111311131Dividendsprovidedfororpaid6696266962669621131669626583165831Totalequityat30June201316868788941774063469315658382981566136TheaboveStatementofChangesinEquityshouldbereadinconjunctionwiththeaccompanyingnotes.60SOUTHERNCROSSAUSTEREOANNUALREPORT2014 STATEMENTOFCASHFLOWSFORYEARENDED30JUNE2014ConsolidatedNote20140002013000CashowsfromoperatingactivitiesReceiptsfromcustomers714393705402Paymentstosuppliersemployees519538517144Interestreceivedfromexternalparties24153729Taxpaid3831238746Netcashinowsfromoperatingactivities25158958153241CashowsfrominvestingactivitiesPaymentsforpurchaseofpropertyplantandequipment2730925065Paymentsforpurchaseofintangibles53141Proceedsfromsaleofpropertyplantandequipment1341878Proceedsfromsaleofsubsidiary17651Paymentsforpurchaseofinvestments1165Netcashowsusedininvestingactivities272286842CashowsfromnancingactivitiesDividendspaidtosecurityholders6346666962Repaymentofborrowingsfromexternalparties5300016000Interestpaidtoexternalparties5131956977Paymentsfordebtrenancing4140Movementinnanceleaseliabilities621729Netcashowsusedinnancingactivities172546140668Netdecreaseincreaseincashandcashequivalents408165731Cashassetsatthebeginningoftheyear10290697175Cashassetsattheendoftheyear762090102906TheaboveStatementofCashFlowsshouldbereadinconjunctionwiththeaccompanyingnotes.61SOUTHERNCROSSAUSTEREOANNUALREPORT2014 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE20141.SummaryofSignicantAccountingPoliciesTheprincipalaccountingpoliciesadoptedinthepreparationoftheseconsolidatednancialstatementsaresetoutbelow.Thesepolicieshavebeenconsistentlyappliedtoalltheyearspresentedunlessotherwisestated.ThenancialstatementsarefortheconsolidatedentityconsistingofSouthernCrossMediaGroupLimitedtheCompanyanditssubsidiariestheGroup.aBasisofpreparationThisgeneralpurposenancialreporthasbeenpreparedinaccordancewithAustralianAccountingStandardsandtheCorporationsAct2001whereapplicable.TheGroupisafor-protentityforthepurposeofpreparingthenancialstatements.InformationinrespectoftheparententityinthisnancialreportrelatestoSouthernCrossMediaGroupLimited.iCompliancewithIFRSCompliancewithAustralianAccountingStandardsensuresthatthenancialstatementsandnotesoftheGroupcomplywithInternationalFinancialReportingStandardsIFRSasissuedbytheInternationalAccountingStandardsBoardIASB.ConsequentlythisnancialreporthasalsobeenpreparedinaccordancewithandcomplieswithIFRSasissuedbytheIASB.iiHistoricalcostconventionThesenancialstatementshavebeenpreparedunderthehistoricalcostconventionasmodiedbytherevaluationofcertainnancialassetsandliabilitiesincludingderivativeinstrumentsatfairvaluethroughprotorloss.AllamountsarepresentedinAustraliandollarsunlessotherwisenoted.iiiComparativeguresWherenecessarycomparativegureshavebeenadjustedtoconformtochangesinpresentationinthecurrentyear.bPrinciplesofconsolidationTheconsolidatednancialstatementsincorporatetheassetsandliabilitiesofallsubsidiariesoftheCompanyasat30June2014andtheresultsofallsubsidiariesfortheyearthenended.TheeffectsofalltransactionsbetweenentitiesintheGroupareeliminatedinfull.ThepurchasemethodofaccountingisusedtoaccountfortheacquisitionofsubsidiariesbytheGroupexceptasfollowsAtthetimeofInitialPublicOfferingIPOSouthernCrossMediaAustraliaHoldingsPtyLimitedSCMAHLwasdeemedtobetheaccountingacquirerofbothSouthernCrossMediaGroupLimitedSCMGLandSouthernCrossMediaTrustSCMTwhichwasneitherthelegalparentnorlegalacquirerandThisreectstherequirementsofAASB3thatinsituationswhereanexistingentitySCMAHLarrangestobeacquiredbyasmallerentitySCMGLforthepurposesofastockexchangelistingtheexistingentitySCMAHLshouldbedeemedtobetheacquirersubjecttoconsiderationofotherfactorssuchasmanagementoftheentitiesinvolvedinthetransactionandrelativefairvaluesoftheentitiesinvolvedinthetransaction.Thisiscommonlyreferredtoasareverseacquisition.AtthetimeofIPOinNovember2005thereverseacquisitionguidanceofAASB3wasappliedtotheGroupandthecostoftheBusinessCombinationwasdeemedtobepaidbySCMAHLtoacquireSCMGLandSCMT.ThecostwasdeterminedbyreferencetothefairvalueofthenetassetsofSCMGLandSCMTimmediatelypriortotheBusinessCombination.TheinvestmentmadebythelegalparentSCMGLinSCMAHLtolegallyacquiretheexistingradioassetsiseliminatedonconsolidation.InapplyingtheguidanceofAASB3thiseliminationresultsinadebitof77.4milliontootherequitytransactions.ThisdoesnotaffecttheGroupsdistributableprots.iSubsidiariesSubsidiariesarethoseentitiesoverwhichtheGrouphasthepowertogovernthenancialandoperatingpoliciesgenerallyaccompanyingashareholdingofmorethanone-halfofvotingrights.SubsidiariesarefullyconsolidatedfromthedateonwhichcontrolistransferredtotheGroup.TheexistenceandeffectofpotentialvotingrightsthatarecurrentlyexercisableorconvertibleareconsideredwhenassessingwhethertheGroupcontrolsanotherentity.ThepurchasemethodofaccountingisusedtoaccountfortheacquisitionofsubsidiariesbytheGroup.WherecontrolofanentityisobtainedduringanancialyearitsresultsareincludedintheStatementofComprehensiveIncomefromthedateonwhichcontrolcommences.Wherecontrolofanentityceasesduringanancialyearitsresultsareincludedforthatpartoftheyearduringwhichcontrolexisted.IntercompanytransactionsbalancesandunrealisedgainsontransactionsbetweenGroupcompaniesareeliminated.Non-controllinginterestsintheresultsandequityofsubsidiariesareshownseparatelyintheconsolidatedStatementsofComprehensiveIncomeandStatementsofFinancialPositionrespectively.iiAssociatesAssociatesareentitiesoverwhichtheGrouphassignicantinuencebutnotcontrolorjointcontrolgenerallyaccompanyingashareholdingofbetween20and50ofthevotingrights.InvestmentsinassociatesareaccountedforintheCompanynancialstatementsusingthecostmethodandintheconsolidatednancialstatementsusingtheequitymethodofaccountingafterinitiallybeingrecognisedatcost.TheGroupsinvestmentinassociatesincludesthefairvalueofgoodwillnetofanyaccumulatedimpairmentlossidentiedonacquisition.TheGroupsshareofitsassociatespost-acquisitionprotsorlossesisrecognisedinprotorlossanditsshareofpost-acquisitionmovementsinreservesisrecognisedinothercomprehensiveincome.Thecumulativepost-acquisitionmovementsareadjustedagainstthecarryingamountoftheinvestment.DividendsreceivablefromassociatesarerecognisedintheCompanysprotorlosswhileintheconsolidatednancialstatementstheyreducethecarryingamountoftheinvestment.WhentheGroupsshareoflossesinanassociateequalsorexceedsitsinterestintheassociateincludinganyotherunsecuredreceivablestheGroupdoesnotrecognisefurtherlossesunlessithasincurredobligationsormadepaymentsonbehalfoftheassociate.UnrealisedgainsontransactionsbetweentheGroupanditsassociatesareeliminatedtotheextentoftheGroupsinterestintheassociates.Unrealisedlossesarealsoeliminatedunlessthetransactionprovidesevidenceofanimpairmentoftheassettransferred.AccountingpoliciesofassociateshavebeenchangedwherenecessarytoensureconsistencywiththepoliciesadoptedbytheGroup.iiiJointVenturesInterestinjointventureentitiesareaccountedforintheconsolidatednancialstatementsusingtheequitymethodandarecarriedatcostbytheCompany.ivTransactionswithnon-controllingpartiesEquitytransactionswithnon-controllingentitiesarerecognisedintheGroupnancialstatementsusingtheeconomicentitymethodwherebytransactionswithnon-controllingpartiesaretreatedastransactionswithequityparticipants.62SOUTHERNCROSSAUSTEREOANNUALREPORT2014 cForeigncurrencyTransactionsandbalancesForeigncurrencytransactionsaretranslatedintothefunctionalcurrencyusingtheexchangeratesprevailingatthedatesofthetransactions.Foreignexchangegainsandlossesresultingfromthesettlementofsuchtransactionsandfromthetranslationatyear-endexchangeratesofmonetaryassetsandliabilitiesdenominatedinforeigncurrenciesarerecognisedinprotorlossexceptwhendeferredinequityfromapplyingcashowhedgeaccountingornetfundingofaforeignoperation.dCashandcashequivalentsForthepurposeoftheStatementsofCashFlowscashandcashequivalentsincludescashonhanddepositsheldatcallwithnancialinstitutionsothershort-termhighlyliquidinvestmentswithoriginalmaturitiesofthreemonthsorlessthatarereadilyconvertibletocashandwhicharesubjecttoaninsignicantriskofchangesinvalue.eInvestmentsandothernancialassetsTheGroupclassiesitsnancialassetsinthefollowingcategoryloansandreceivables.InvestmentsinsubsidiariesareclassiedseparatelyandareheldatcostintheCompany.Theclassicationdependsonthepurposeforwhichtheinvestmentswereacquired.TheclassicationoftheGroupsinvestmentsisdeterminedatinitialrecognition.AtbalancedatetheGrouphadthefollowingnancialassetsLoansreceivablesandtradereceivablesLoansandreceivablesarenon-derivativenancialassetswithxedordeterminablepaymentsthatarenotquotedinanactivemarket.TheyarisewhenanyentitywithintheGroupprovidesmoneyordeferspaymentonordinaryequitytoanexternalpartywithnointentionofsellingthereceivableimmediatelyorinthenearfutureorarisewithintheGrouponasingleentitybasiswhenoneentityprovidesmoneytoanothermemberoftheGroup.Loansandreceivableswithmaturitylessthan12monthsareincludedincurrentassetsandthosewithgreaterthan12monthsmaturityareincludedinnon-currentassets.Loansandreceivablesareinitiallyrecordedatfairvalueandthensubsequentlyatamortisedcostusingtheeffectiveinterestratemethod.Tradereceivablesarerecognisedatfairvaluebeingtheoriginalinvoiceamountandsubsequentlymeasuredatamortisedcostlessprovisionfordoubtfuldebts.AprovisionfordoubtfuldebtsisestablishedwhenthereisobjectiveevidencethattheGroupwillnotbeabletocollectallamountsdueaccordingtotheoriginaltermsofthereceivable.Theamountoftheprovisionisrecognisedinprotorloss.Whereadebtisknowntobeuncollectibleitisconsideredabaddebtandwrittenoff.fPropertyplantandequipmentCostPropertyplantandequipmentisrecordedatcostlessaccumulateddepreciationandcumulativeimpairmentcharges.Costincludesthosecostsdirectlyattributabletobringingtheassetsintothelocationandworkingconditionnecessaryfortheassettobecapableofoperatinginthemannerintendedbymanagement.TheestimatedcostofdismantlingandremovinginfrastructureitemsandrestoringthesiteonwhichtheassetsarelocatedisonlyincludedinthecostoftheassettotheextentthattheGrouphasanobligationtorestorethesiteandthecostofrestorationisnotrecoverablefromthirdparties.Additionsrenewalsandimprovementsarecapitalisedwhilemaintenanceandrepairsareexpensed.Thecarryingvaluesofpropertyplantandequipmentarereviewedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountsmaynotberecoverablerefertonote1i.Anassetscarryingamountiswrittendownimmediatelytoitsrecoverableamountiftheassetscarryingamountisgreaterthanitsestimatedrecoverableamount.DepreciationLandisnotdepreciated.Depreciationonotherassetsiscalculatedonastraight-linebasistowriteoffthecostofpropertyplantandequipmentoveritsestimatedusefullife.Estimatesofremainingusefullifearemadeonaregularbasisforallassetswithannualreassessmentsformajoritems.TheexpectedusefullifeofpropertyplantandequipmentisasfollowsBuildings550yearsLeaseholdimprovements316yearsNetworkequipment210yearsCommunicationequipment35yearsOtherplantandequipment220yearsLeasedplantandequipment220yearsgLeasesLeasesofpropertyplantandequipmentwheretheGroupaslesseehassubstantiallyalltherisksandrewardsofownershipareclassiedasnanceleases.Financeleasesarecapitalisedattheleasesinceptionatthelowerofthefairvalueoftheleasedpropertyandthepresentvalueoftheminimumleasepayments.Thecorrespondingrentalobligationsnetofnancechargesareincludedinotherlong-termpayables.Eachleasepaymentisallocatedbetweentheliabilityandnancechargessoastoachieveaconstantrateonthenancebalanceoutstanding.Theinterestelementofthenancecostischargedtoprotorlossovertheleaseperiodsoastoproduceaconstantperiodicrateofinterestontheremainingbalanceoftheliabilityforeachperiod.ThepropertyplantandequipmentacquiredundernanceleasesaredepreciatedovertheshorteroftheassetsusefullifeandtheleasetermifthereisnoreasonablecertaintythattheGroupwillobtainownershipattheendoftheleaseterm.Leasesinwhichasignicantportionoftherisksandrewardsofownershipareretainedbythelessorareclassiedasoperatingleases.Paymentsmadeunderoperatingleasesnetofanyincentivesreceivedfromthelessorarechargedtoprotorlossonastraightlinebasisovertheperiodofthelease.TheGroupsub-leasesbuildingsunderanoperatingleaseandrentrevenueisrecordedasincomeintheprotorlossonastraight-linebasis.hIntangibleassetsFree-to-AircommercialtelevisionandradiobroadcastinglicencesTelevisionandradiolicencesareinitiallyrecognisedatcost.AnaloguelicencesarerenewableforaminimalcosteveryveyearsunderprovisionswithintheBroadcastingServicesAct.Digitallicencesattachtotheanaloguelicencesandrenewautomatically.TheDirectorsunderstandthattherevocationofacommercialtelevisionorradiolicencehasneveroccurredinAustraliaandhavenoreasontobelievethelicenceshaveanitelife.AsaresulttheFree-to-Aircommercialtelevisionandradiobroadcastinglicenceshavebeenassessedtohaveindeniteusefullives.Accordinglytheyarenotamortisedandaretestedforimpairmentannuallyorwheneverthereisanindicationthatthecarryingvaluemaybeimpairedandarecarriedatcostlessaccumulatedimpairmentlosses.63SOUTHERNCROSSAUSTEREOANNUALREPORT2014 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE20141.SummaryofSignicantAccountingPoliciescontinuedhIntangibleassetscontinuedTradenamesTradenamesareinitiallyrecognisedatcost.Thetradenameshavebeenassessedtohaveindeniteusefullives.Accordinglytheyarenotamortisedandaretestedforimpairmentannuallyorwheneverthereisanindicationthatthecarryingvaluemaybeimpairedandarecarriedatcostlessaccumulatedimpairmentlosses.TheGroupstradenamesoperateinestablishedmarketswithlimitedrestrictionsandareexpectedtocontinuetocomplementtheGroupsmediainitiatives.OnthisbasistheDirectorshavedeterminedthattradenameshaveindenitelivesasthereisnoforeseeablelimittotheperiodoverwhichtheassetsareexpectedtogeneratenetcashinows.BrandsBrandsareinitiallyrecognisedatcost.Thebrandshavebeenassessedtohaveindeniteusefullives.Accordinglytheyarenotamortisedandaretestedforimpairmentannuallyorwheneverthereisanindicationthatthecarryingvaluemaybeimpairedandarecarriedatcostlessaccumulatedimpairmentlosses.TheGroupsbrandsoperateinestablishedmarketswithlimitedrestrictionsandareexpectedtocontinuetocomplementtheGroupsmediainitiatives.OnthisbasistheDirectorshavedeterminedthatbrandshaveindenitelivesasthereisnoforeseeablelimittotheperiodoverwhichtheassetsareexpectedtogeneratenetcashinows.GoodwillAllbusinesscombinationsareaccountedforbyapplyingthepurchasemethod.Whereanentityoroperationisacquiredtheidentiablenetassetsacquiredaremeasuredatfairvalue.Theexcessofthefairvalueofthecostofacquisitionoverthefairvalueoftheidentiablenetassetsacquiredisbroughttoaccountasgoodwill.Transactioncostsareexpensedintheperiodincurred.Goodwillisstatedatcostlessanyimpairmentlosses.Goodwillisallocatedtocash-generatingunitsandisnotamortisedbutistestedatleastannuallyforimpairment.Inrespectofassociatesthecarryingamountofgoodwillisincludedinthecarryingamountoftheinvestmentintheassociate.Negativegoodwillarisingonanacquisitionisrecogniseddirectlyinprotorlossafterreassessmentoftheidenticationandmeasurementofthenetassetsacquired.iImpairmentofassetsAssetsthathaveanindeniteusefullifearenotsubjecttoamortisationandaretestedannuallyforimpairment.Assetsthataresubjecttoamortisationarereviewedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable.Animpairmentlossisrecognisedfortheamountbywhichtheassetscarryingamountexceedsitsrecoverableamount.Therecoverableamountisthehigherofanassetsfairvaluelesscoststosellandvalueinuse.Forthepurposesofassessingimpairmentassetsaregroupedatthelowestlevelsforwhichthereareseparatelyidentiablecashowscashgeneratingunits.jDerivativenancialinstrumentsTheGroupentersintointerestrateswapagreementstomanageitsnancialrisks.Derivativesareinitiallyrecognisedatfairvalueatthedateaderivativecontractisenteredintoandaresubsequentlyremeasuredtotheirfairvalue.Themethodofrecognisingtheresultinggainorlossdependsonwhetherthederivativeisdesignatedasahedginginstrumentandifsothenatureoftheitembeinghedged.TheGroupmayhavederivativenancialinstrumentswhichareeconomichedgesbutdonotsatisfytherequirementsofhedgeaccounting.Gainsorlossesfromchangesinfairvalueoftheseeconomichedgesaretakenthroughprotorloss.IfthederivativenancialinstrumentmeetsthehedgeaccountingrequirementstheGroupdesignatesthederivativesaseither1hedgesofthefairvalueofrecognisedassetsorliabilitiesorarmcommitmentfairvaluehedgeor2hedgesofhighlyprobableforecasttransactionscashowhedge.TheGroupdocumentsattheinceptionofthetransactiontherelationshipbetweenhedginginstrumentsandhedgeditemsaswellasitsriskmanagementobjectiveandstrategyforundertakingvarioushedgetransactions.TheGroupalsodocumentsitsassessmentsbothathedgeinceptionandonanongoingbasisofwhetherthederivativesthatareusedinhedgingtransactionshavebeenandwillcontinuetobehighlyeffectiveinoffsettingchangesinfairvaluesorcashowsofhedgeditems.Thefairvaluesofvariousderivativenancialinstrumentsheldaredisclosedinnote19.kTradeandotherPayablesTheseamountsrepresentliabilitiesforgoodsandservicesprovidedtotheGrouppriortotheendofthenancialyearandwhichareunpaid.Theamountsareunsecuredandareusuallypaidwithin60daysofrecognition.lGoodsandServicesTaxGSTRevenuesexpensesandassetsarerecognisednetoftheamountofGSTexceptwheretheamountofGSTincurredisnotrecoverablefromthetaxationauthority.InthesecircumstancestheGSTisrecognisedaspartofthecostofacquisitionoftheassetoraspartoftheexpense.ReceivablesandpayablesarestatedwiththeamountofGSTincluded.ThenetamountofGSTrecoverablefromorpayabletotheATOisincludedwithotherreceivablesorpayablesinthebalancesheet.Cashowsarepresentedonagrossbasis.TheGSTcomponentsofcashowsarisingfrominvestingandnancingactivitieswhicharerecoverablefromorpayabletotheATOareclassiedasoperatingcashows.mEmployeebenetsiWagesandsalariesleaveandotherentitlementsLiabilitiesforunpaidsalariessalaryrelatedcostsandprovisionsforannualleavearerecordedintheStatementofFinancialPositionatthesalaryrateswhichareexpectedtobepaidwhentheliabilityissettled.Provisionsforlongserviceleaveandotherlong-termbenetsarerecognisedatthepresentvalueofexpectedfuturepaymentstobemade.Indeterminingthisamountconsiderationisgiventoexpectedfuturesalarylevelsandemployeeservicehistories.ExpectedfuturepaymentsarediscountedtotheirnetpresentvalueusingratesonCommonwealthGovernmentsecuritieswithtermsthatmatchascloselyaspossibletotheexpectedfuturecashows.iiShare-basedpaymentsShare-basedcompensationbenetsareprovidedtoemployeesviacertainEmployeeAgreements.InformationrelatingtotheseAgreementsissetoutintheRemunerationReport.ThefairvalueofentitlementsgrantedundercertainEmployeeAgreementsarerecognisedasanemployeebenetexpensewithacorrespondingincreaseinequity.Thefairvalueismeasuredatgrantdateandrecognisedasanexpenseovertheperiodduringwhichtheemployeesbecomeunconditionallyentitledtotheshares.64SOUTHERNCROSSAUSTEREOANNUALREPORT2014 ThefairvalueatgrantdateisdeterminedusingaMonte-Carlopricingmodelthattakesintoaccountthesharepriceatgrantdateandtheexpecteddividendyieldsharepricevolatilityandtheriskfreeinterestrateforthetermoftheentitlement.Volatilityisameasureoftheunderlyingmovementintheshareprice.Asharesvolatilitymeasurecapturesthecharacteristicsofuctuationsintheshareprice.Thefairvalueatgrantdateofthesecuritiesgrantedisadjustedtoreectmarketvestingconditionsbutexcludestheimpactofanynon-marketvestingconditionsforexampleprotabilityandsalesgrowthtargets.Non-marketvestingconditionsareincludedinassumptionsaboutthenumberofsharesthatareexpectedtobeissued.Ateachbalancesheetdatetheentityrevisesitsestimateofthenumberofsharesthatareexpectedtobeissued.Theemployeebenetexpenserecognisedeachperiodtakesintoaccountthemostrecentestimate.Theimpactoftherevisiontooriginalestimatesifanyisrecognisedinprotorlosswithacorrespondingadjustmenttoequity.Wherethetermsoftheshare-basedpaymententitlementaremodiedinthefavouroftheemployeethechangesarereectedwhendeterminingtheimpactonprotorloss.nRetirementbenetobligationsTheGroupoperatesadenedcontributionscheme.DenedcontributionschemeThedenedcontributionschemecomprisesxedcontributionsmadebytheGroupwiththeGroupslegalorconstructiveobligationbeinglimitedtothesecontributions.Contributionstothedenedcontributionschemearerecognisedasanexpenseastheybecomepayable.PrepaidcontributionsarerecognisedintheStatementofFinancialPositionasanassettotheextentthatacashrefundorareductioninthefuturepaymentsisavailable.oBorrowingsBorrowingsareinitiallyrecognisedatfairvaluenetoftransactioncostsincurred.Transactioncoststhathavebeenpaidoraccruedforpriortothedrawdownofdebtareclassiedasprepayments.Borrowingsaresubsequentlymeasuredatamortisedcost.Anydifferencebetweentheproceedsnetoftransactioncostsandtheredemptionamountisrecognisedinprotorlossovertheperiodoftheborrowingsusingtheeffectiveinterestmethod.BorrowingsareclassiedascurrentliabilitiesunlesstheGrouphasanunconditionalrighttodefersettlementoftheliabilityforatleast12monthsafterthebalancesheetdate.pBorrowingcostsBorrowingcostsincurredfortheconstructionofanyqualifyingassetarecapitalisedduringtheperiodoftimethatisrequiredtocompleteandpreparetheassetforitsintendeduseorsale.Otherborrowingcostsareexpensed.qContributedequitySharesintheCompanyareclassiedasequity.Incrementalcostsdirectlyattributedtotheissueofnewsharesareshowninequityasadeductionnetoftaxfromtheproceeds.rRevenuerecognitionRevenuesarerecognisedatfairvalueoftheconsiderationreceivedorreceivablenetoftheamountofGSTpayabletotherelevanttaxationauthority.Free-to-AirCommercialRadioandTelevisionBroadcastingRevenuerepresentsrevenueearnedprimarilyfromthesaleofadvertisingairtimeandrelatedactivitiesincludingsponsorshipandpromotions.Revenueisrecordedwhentheserviceisprovidedbeingprimarilywhentheadvertisementisaired.Commissionspayabletomediaagenciesarerecognisedassellingcosts.Otherregularsourcesofoperatingrevenuearederivedfromcommercialproductionforadvertisersincludingfacilitysharingrevenueandprogramsharingrevenue.Revenuefromcommercialproductionisrecognisedoninvoiceatthetimeofcompletionofthecommercial.InterestrevenueInterestrevenueonloansandreceivablesisrecognisedusingtheeffectiveinterestratemethod.OtherservicerevenueOtherservicerevenueisrecognisedwhentheservicehasbeenprovided.RentalrevenueRentalrevenueisrecognisedonastraightlinebasis.sGovernmentgrantsGrantsfromthegovernmentfortheintroductionofregionaldigitaltelevisionbroadcastingarerecognisedattheirfairvalueonentitlementandreceipt.Governmentgrantsrelatingtocostsaredeferredandrecognisedinprotorlossovertheperiodnecessarytomatchthemwiththecoststhattheyareintendedtocompensate.Governmentgrantsrelatingtothepurchaseofpropertyplantandequipmentaredeferredandrecognisedinprotorlossonastraightlinebasisovertheexpectedusefullivesoftherelatedassets.tIncometaxIncometaxamountsrecognisedintheGroupsnancialstatementsrelatetotaxpayingentitieswithintheGroupandhavebeenrecognisedinaccordancewithGrouppolicy.IncometaxisnotbroughttoaccountinrespectofSCMTaspursuanttotheIncomeTaxAssessmentActtheTrustisnotliableforincometaxprovidedthatitstaxableincomeincludinganyassessablerealisedcapitalgainsisfullydistributedtounitholderseachyear.Theincometaxexpenseorrevenuefortheyearisthetaxpayableonthecurrentyearstaxableincomebasedontheapplicabletaxrateforeachjurisdictionadjustedbychangesindeferredtaxassetsandliabilitiesattributabletotemporarydifferencesbetweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsinthenancialstatementsandtounusedtaxlosses.Indeterminingtheextentoftemporarydifferencesofassetsthecarryingamountofassetsisgenerallyassumedtoberecoveredthroughuseexceptfornon-amortisingidentiableintangibleassetssuchasFree-to-Aircommercialtelevisionandradiobroadcastinglicencesbrandsandtradenameswherethecarryingamountsareassumedtoberecoveredthroughsaleunlessthereisevidenceofrecoverythroughuse.Deferredtaxassetsandliabilitiesarerecognisedfortemporarydifferencesatthetaxratesexpectedtoapplywhentheassetsarerecoveredorliabilitiesaresettledbasedonthosetaxrateswhichareenactedorsubstantivelyenactedforeachjurisdiction.Therelevanttaxratesareappliedtothecumulativeamountsofdeductibleandtaxabletemporarydifferencestomeasurethedeferredtaxassetorliability.Deferredtaxassetsarerecognisedfordeductibletemporarydifferencesandunusedtaxlossesonlyifitisprobablethatfuturetaxableamountswillbeavailabletoutilisethosetemporarydifferencesandlosses.65SOUTHERNCROSSAUSTEREOANNUALREPORT2014 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE20141.SummaryofSignicantAccountingPoliciescontinueduFairvalueestimationThefairvalueofnancialassetsandnancialliabilitiesmustbeestimatedforrecognitionandmeasurementorfordisclosurepurposes.Thefairvalueofnancialinstrumentsthatarenottradedinanactivemarketforexampleunlistedconvertiblenotesisdeterminedusingvaluationtechniques.TheGroupusesavarietyofmethodsandmakesassumptionsthatarebasedonmarketconditionsexistingateachbalancedate.Othertechniquessuchasestimateddiscountedcashowsareusedtodeterminefairvaluefortheremainingnancialinstruments.Thefairvalueofinterestrateswapsiscalculatedasthepresentvalueoftheestimatedfuturecashows.Thenominalvaluelessestimatedcreditadjustmentsoftradereceivablesandpayablesareassumedtoapproximatetheirfairvalues.ThefairvalueofnancialliabilitiesfordisclosurepurposesisestimatedbydiscountingthefuturecontractualcashowsatthecurrentmarketinterestratethatisavailabletotheGroupforsimilarnancialinstruments.vDividendsProvisionismadefortheamountofanydividenddeclaredbeingappropriatelyauthorisedandnolongeratthediscretionoftheCompanyonorbeforetheendofthenancialyearbutnotdistributedattheendofthereportingperiod.wEarningspershareiBasicearningspershareBasicearningspershareiscalculatedbydividingtheprotorlossattributabletoequityholdersoftheCompanyexcludinganycostsofservicingequityotherthanordinarysharesbytheweightedaveragenumberofsharesoutstandingduringthenancialyear.iiDilutedearningspershareDilutedearningspershareadjuststheguresusedinthedeterminationofbasicearningspersharetotakeintoaccounttheafterincometaxeffectofinterestandothernancingcostsassociatedwithdilutivepotentialsharesandtheweightedaveragenumberofsharesassumedtohavebeenissuedfornoconsiderationinrelationtodilutivepotentialshares.xProvisionsAprovisionisrecognisedwhenthereisalegalequitableorconstructiveobligationasaresultofapasteventanditisprobablethatafuturesacriceofeconomicbenetswillberequiredtosettletheobligationthetimingoramountofwhichisuncertain.Wherethereareanumberofsimilarobligationsthelikelihoodthatanoutowwillberequiredinsettlementisdeterminedbyconsideringtheclassofobligationsasawhole.Aprovisionisrecognisedevenifthelikelihoodofanoutowwithrespecttoanyoneitemincludedinthesameclassofobligationsmaybesmall.Provisionsaremeasuredatthepresentvalueofmanagementsbestestimateoftheexpenditurerequiredtosettlethepresentobligationatthebalancesheetdate.Thediscountrateusedtodeterminethepresentvaluereectscurrentmarketestimatesofthetimevalueofmoneyandtherisksspecictotheliability.Theincreaseintheprovisionduetothepassageoftimeisrecognisedasinterestexpense.yRoundingofamountsTheGroupandtheCompanyareofakindreferredtoinClassOrder98100issuedbytheAustralianSecuritiesandInvestmentsCommissionrelatingtotheroundingoffofamountsinthenancialreport.AmountsinthenancialreporthavebeenroundedoffinaccordancewiththatClassOrdertothenearestthousanddollarsunlessotherwiseindicated.zImpactofnewaccountingpoliciesThegrouphasappliedthefollowingstandardsandamendmentsforrsttimefortheirannualreportingperiodcommencing1July2013iAASB10ConsolidatedFinancialStatementsAASB11JointArrangementsAASB12DisclosureofInterestsinOtherEntitiesAASB128InvestmentsinAssociatesandJointVenturesAASB127SeparateFinancialStatementsandAASB2011-7AmendmentstoAustralianAccountingStandardsarisingfromtheConsolidationandJointArrangementsStandardsAASB10ConsolidatedFinancialStatementswasissuedinAugust2011andreplacestheguidanceoncontrolandconsolidationinAASB127ConsolidatedandSeparateFinancialStatementsandinInterpretation112ConsolidationSpecialPurposeEntities.ThegrouphasrevieweditsinvestmentsinotherentitiestoassesswhethertheconclusiontoconsolidateisdifferentunderAASB10thanunderAASB127.NodifferenceswerefoundandthereforenoadjustmentstoanyofthecarryingamountsinthenancialstatementsarerequiredasaresultoftheadoptionofAASB10.UnderAASB11JointArrangementsinvestmentsinjointarrangementsareclassiedaseitherjointoperationsorjointventuresdependingonthecontractualrightsandobligationsofeachinvestor.Thegroupsaccountingforitsinterestsinjointarrangementswasnotaffectedbytheadoptionofthenewstandard.AASB12setsouttherequireddisclosuresforentitiesreportingunderAASB10andAASB11.ItreplacesthedisclosurerequirementscurrentlyfoundinAASB127AASB128andAASB131.iiAASB2012-10AmendmentstoAustralianAccountingStandardsTransitionGuidanceandotherAmendmentswhichprovidesanexemptionfromtherequirementtodisclosetheimpactofthechangeinaccountingpolicyonthecurrentperiod.iiiAASB13FairValueMeasurementandAASB2011-8AmendmentstoAustralianAccountingStandardsarisingfromAASB13AASB13explainshowtomeasurefairvalueandaimstoenhancefairvaluedisclosuresitdoesnotchangewhenanentityisrequiredtousefairvaluetomeasureanassetorliability.TheGroupdoesnotusefairvaluemeasurementsextensively.Seenote19formoreinformation.ivAASB2012-5AmendmentstoAustralianAccountingStandardsarisingfromAnnualImprovements2009-2011CycleAASB2012-5AmendmentsareunlikelytohaveasignicantimpacttotheGroup.vAASB2012-2AmendmentstoAustralianAccountingStandardsDisclosuresOffsettingFinancialAssetsandFinancialLiabilitiesAASB2012-2amendmentsdonotchangethecurrentoffsettingrulesinAASB132buttheyclarifythattherightofset-offmustbeavailabletodayienotcontingentonafutureeventandmustbelegallyenforceableinthenormalcourseofbusinessaswellasintheeventofdefaultinsolvencyorbankruptcy.Therearemoreextensivedisclosureswhichfocusonquantitativeinformationaboutrecognisednancialinstrumentsthatareoffsetinthestatementofnancialpositionaswellasthoserecognisednancialinstrumentsthataresubjecttomasternettingorsimilararrangementsirrespectiveofwhethertheyareoffset.TheamendmentsareunlikelytohaveasignicantimpacttotheGroup.viAASB2011-4AmendmentstoAustralianAccountingStandardstoRemoveIndividualKeyManagementPersonnelDisclosureRequirementsRevisedCorporationsRegulations2M.3.03AASB2011-4amendmentsremovetheindividualkeymanagementpersonneldisclosurerequirementsfromAASB124RelatedPartyDisclosurestoachieveconsistencywiththeinternationalequivalent66SOUTHERNCROSSAUSTEREOANNUALREPORT2014 standard.FollowingthereleaseofrevisedCorporationsRegulationsallofthedetaileddisclosureswillhavetobeincludedintheremunerationreportfornancialyearscommencingonorafter1July2013.Aggregatedisclosureswillstillberequiredforthenotestothenancialstatements.aaImpactofstandardsissuedbutnotyetappliedCertainnewaccountingstandardsandinterpretationshavebeenpublishedthatarenotmandatoryfor30June2014reportingperiodsandhavenotbeenearlyadoptedbythegroup.ThegroupsassessmentoftheimpactofthesenewstandardsandinterpretationsissetoutbelowTitleofstandardNatureofchangeImpactMandatoryapplicationdateDateofadoptionbygroupAASB9FinancialInstrumentsAASB9addressestheclassicationmeasurementandderecognitionofnancialassetsandnancialliabilities.SinceDecember2013italsosetsoutnewrulesforhedgeaccounting.Therewillbenoimpactonthegroupsaccountingfornancialassetsandnancialliabilitiesasthenewrequirementsonlyaffecttheaccountingfornancialassetsandliabilitiesthataredesignatedatfairvaluethroughprotorlossandthegroupdoesnothaveanysuchassetsorliabilities.Thenewhedgingrulesalignhedgeaccountingmorecloselywiththegroupsriskmanagementpractices.Asageneralruleitwillbeeasiertoapplyhedgeaccountinggoingforward.Thenewstandardalsointroducesexpandeddisclosurerequirementsandchangesinpresentation.Mustbeappliedfornancialyearscommencingonorafter1January2017ThegrouphasnotyetassessedhowitsownhedgingarrangementswouldbeaffectedbythenewrulesandithasnotyetdecidedwhethertoadoptanypartsofAASB9early.InordertoapplythenewhedgingrulesthegroupwouldhavetoadoptAASB9andtheconsequentialamendmentstoAASB7andAASB139intheirentirety.ThemandatoryapplicationofthisstandardmaybefurtherdeferredoncetheIASBhasagreedonamandatorydatefortheequivalentinternationalstandard.AASB2014-1AmendmentstoAustralianAccountingStandardsPartAAnnualImprovements2010-2012and2011-2013cyclesInJune2014theAASBapprovedanumberofamendmentstoAustralianAccountingStandardsasaresultoftheannualimprovementsproject.TheseincludeAASB2Share-basedpaymentTheamendmentclariesthedenitionofavestingconditionandseparatelydenesperformanceconditionandservicecondition.Theamendmentiseffectiveforshare-basedpaymenttransactionsforwhichthegrantdateisonorafter1July2014.AASB8OperatingsegmentsThestandardisamendedtorequiredisclosureofthejudgementsmadebymanagementinaggregatingoperatingsegments.Thisincludesadescriptionofthesegmentswhichhavebeenaggregatedandtheeconomicindicatorswhichhavebeenassessedindeterminingthattheaggregatedsegmentssharesimilareconomiccharacteristics.Thegrouphasnotyetconsideredtheimpactofthenewamendments.Itwillundertakeadetailedassessmentinthenearfuture.Mandatoryfornancialyearscommencingonorafter1July2014.Thegroupintendstoapplytheamendmentsfornancialyearscommencing1July2014.67SOUTHERNCROSSAUSTEREOANNUALREPORT2014 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE20141.SummaryofSignicantAccountingPoliciescontinuedaaImpactofstandardsissuedbutnotyetappliedcontinuedTitleofstandardNatureofchangeImpactMandatoryapplicationdateDateofadoptionbygroupAASB2014-1AmendmentstoAustralianAccountingStandardsPartAAnnualImprovements2010-2012and2011-2013cyclescontinuedThestandardisfurtheramendedtorequireareconciliationofsegmentassetstotheentitysassetswhensegmentassetsarereported.AASB13FairvaluemeasurementWhenIFRS13waspublishedparagraphsB5.4.12ofIFRS9andAG79ofIAS39weredeletedasconsequentialamendments.Thisledtoaconcernthatentitiesnolongerhadtheabilitytomeasureshort-termreceivablesandpayablesatinvoiceamountswheretheimpactofnotdiscountingisimmaterial.TheIASBhasamendedthebasisforconclusionsofIFRS13toclarifythatitdidnotintendtoremovetheabilitytomeasureshort-termreceivablesandpayablesatinvoiceamountsinsuchcases.RevenuefromcontractswithcustomersTheIASBhasissuedanewstandardfortherecognitionofrevenue.ThiswillreplaceIAS18whichcoverscontractsforgoodsandservicesandIAS11whichcoversconstructioncontracts.Thenewstandardisbasedontheprinciplethatrevenueisrecognisedwhencontrolofagoodorservicetransferstoacustomersothenotionofcontrolreplacestheexistingnotionofrisksandrewards.WhiletheAASBhasnotyetissuedanequivalentstandardtheyareexpectedtodosointhesecondhalfof2014.Thegrouphasnotyetconsideredtheimpactofthenewrulesonitsrevenuerecognitionpolicies.Itwillundertakeadetailedassessmentinthenearfuture.Mandatoryfornancialyearscommencingonorafter1January2017.Expecteddateofadoptionbythegroup1July2017.bbCriticalAccountingEstimatesandJudgementThepreparationofthenancialreportinaccordancewithAustralianAccountingStandardsrequirestheuseofcertaincriticalaccountingestimates.Italsorequiresmanagementtoexercisejudgementintheprocessofapplyingtheaccountingpolicies.Estimatesandjudgementsarecontinuallyevaluatedandarebasedonhistoricalexperienceandotherfactorsincludingexpectationsoffutureeventsthatmayhaveanancialimpactontheentityandthatarebelievedtobereasonableunderthecircumstances.Managementbelievestheestimatesusedinthepreparationofthenancialreportarereasonable.Actualresultsinthefuturemaydifferfromthosereported.TheestimatesandassumptionsthathaveariskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenextnancialyeararediscussedbelowiImpairmentGoodwillandintangibleassetswithindeniteusefullivesInaccordancewiththeaccountingpolicystatedinnotes1hand1itheGrouptestsatleastannuallywhethergoodwillandintangibleassetswithindeniteusefulliveshavesufferedanyimpairmentandwhenthereisanindicationofimpairment.Thetestsincorporateassumptionsregardingfutureeventswhichmayormaynotoccurresultingintheneedforfuturerevisionsofestimates.Therearealsojudgementsinvolvedindeterminationofcashgeneratingunits.Refertonote13fordetailsoftheseassumptions.ParentcompanyinvestmentinsubsidiaryWhengoodwillonconsolidationiswrittendownasaresultofimpairmentthecarryingvalueoftheparententitysinvestmentintherelevantsubsidiariesshouldalsobereviewedforimpairment.Thisisbecauseanimpairmentofgoodwillonconsolidationmaymeanthecarryingamountoftheunderlyinginvestmentmayalsobeimpaired.TheGroupcomparesthecarryingamountoftheinvestmentinsubsidiarieswiththeforecastcashowsoftheunderlyingbusinesses.Thecalculationusedisconsistentwiththemethodologyandassumptionsfortestingforimpairmentofgoodwillandintangibleswithindenitelives.iiIncometaxesTheGroupissubjecttoincometaxesinAustraliaandinsomeofitsforeignoperations.TheGrouphadraisedaprovisionforincometaxinrespectofamendedtaxassessmentsraisedbytheATOinrespectofdisalloweddeductionsonredeemablepreferencesharesbetween2006and2009.TheGroupobjectedagainsttheassessmentsandduringtheperiodreachedasettlementwiththeATO.Thesettlementof14millionprimarytaxresultedinwrite-backsduringtheperiodofinterestexpense10.9millionandincometaxexpense15.5millionthathadpreviouslybeenrecognised.Refertonote5.68SOUTHERNCROSSAUSTEREOANNUALREPORT2014 ccDerivativenancialinstrumentsThefairvaluesofover-the-counterderivativesaredeterminedusingvaluationtechniquesadoptedbytheDirectorswithassumptionsthatarebasedonmarketconditionsexistingateachbalancesheetdate.Thefairvaluesofinterestrateswapsarecalculatedasthepresentvaluesoftheestimatedfuturecashows.ddHedgeAccountingTheGroupdesignatedinterestratesswapsheldasat1July2011ascashowhedgesandhasappliedhedgeaccountingfromthisdate.TheGroupdocumentstherelationshipbetweenhedginginstrumentsandhedgeditemsaswellasitsriskmanagementobjectiveandstrategyforundertakingthehedgetransactions.TheGroupalsodocumentsitsassessmentbothathedgeinceptionandonanongoingbasisofwhetherthederivativesthatareusedinhedgingtransactionshavebeenandwillcontinuetobehighlyeffectiveinoffsettingchangesincashowsofhedgeditems.Thefairvaluesofderivativenancialinstrumentsusedforhedgingpurposesarepresentedwithinthebalancesheet.MovementsinthehedgingreserveareshownwithintheStatementofChangesinEquity.Thefullfairvalueofahedgingderivativeisclassiedasanon-currentassetorliabilitywhentheremainingmaturityofthehedgeditemismorethan12monthsitisclassiedasacurrentassetorliabilitywhentheremainingmaturityofthehedgeditemislessthan12months.eeCashowhedgeTheeffectiveportionofchangesinthefairvalueofderivativesthataredesignatedandqualifyascashowhedgesisrecognisedinothercomprehensiveincomeandaccumulatedinreservesinequity.Thegainorlossrelatingtotheineffectiveportionisrecognisedimmediatelyinprotorloss.Amountsaccumulatedinequityarereclassiedtoprotorlossintheperiodswhenthehedgeditemaffectsprotorlossforinstancewhentheforecastsalethatishedgedtakesplace.Thegainorlossrelatingtotheeffectiveportionofinterestrateswapshedgingvariablerateborrowingsisrecognisedinprotorlosswithininterestexpenseandotherborrowingcosts.Whenahedginginstrumentexpiresorissoldorterminatedorwhenahedgenolongermeetsthecriteriaforhedgeaccountinganycumulativegainorlossexistinginequityatthattimeremainsinequityandisrecognisedwhentheforecasttransactionisultimatelyrecognisedinprotorloss.Whenaforecasttransactionisnolongerexpectedtooccurthecumulativegainorlossthatwasreportedinequityisimmediatelyreclassiedtoprotorloss.ffParententitynancialinformationThenancialinformationfortheparententitySouthernCrossMediaGroupLimitedtheCompanydisclosedinnote27hasbeenpreparedonthesamebasisastheconsolidatednancialstatementsexceptassetoutbelow.iInvestmentsinsubsidiariesassociatesandjointventureentitiesInvestmentsinsubsidiariesareaccountedforatcostinthenancialstatementsoftheCompanylessanyimpairmentcharges.iiTaxconsolidationlegislationTheCompanyanditswholly-ownedAustraliancontrolledentitieshaveimplementedthetaxconsolidationlegislationasof23November2005.TheheadentitybeingtheCompanyandthecontrolledentitiesinthetaxconsolidatedgroupaccountfortheirowncurrentanddeferredtaxamounts.Thesetaxamountsaremeasuredasifeachentityinthetaxconsolidatedgroupcontinuestobeastand-alonetaxpayerinitsownright.InadditiontoitsowncurrentanddeferredtaxamountstheCompanyalsorecognisesthecurrenttaxliabilitiesorassetsandthedeferredtaxassetsarisingfromunusedtaxlossesandunusedtaxcreditsassumedfromcontrolledentitiesinthetaxconsolidatedgroup.Theentitieshavealsoenteredintoataxfundingagreementunderwhichthewholly-ownedentitiesfullycompensatetheCompanyforanycurrenttaxpayableassumedandarecompensatedbytheCompanyforanycurrenttaxreceivableanddeferredtaxassetsrelatingtounusedtaxlossesorunusedtaxcreditsthataretransferredtotheCompanyunderthetaxconsolidationlegislation.Thefundingamountsaredeterminedbyreferencetotheamountsrecognisedinthewholly-ownedentitiesnancialstatements.Theamountsreceivablepayableunderthetaxfundingagreementaredueuponreceiptofthefundingadvicefromtheheadentitywhichisissuedassoonaspracticableaftertheendofeachnancialyear.Theheadentitymayalsorequirepaymentofinterimfundingamountstoassistwithitsobligationstopaytaxinstalments.Assetsorliabilitiesarisingundertaxfundingagreementswiththetaxconsolidatedentitiesarerecognisedascurrentamountsreceivablefromorpayabletootherentitiesinthegroup.Anydifferencebetweentheamountsassumedandamountsreceivableorpayableunderthetaxfundingagreementarerecognisedasacontributiontoordistributionfromwholly-ownedtaxconsolidatedentities.iiiFinancialguaranteesWheretheparententityhasprovidednancialguaranteesinrelationtoloansandpayablesofsubsidiariesfornocompensationthefairvaluesoftheseguaranteesareaccountedforascontributionsandrecognisedaspartofthecostoftheinvestment.69SOUTHERNCROSSAUSTEREOANNUALREPORT2014 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE20142.ProtfortheYearTheprotbeforeincometaxfromcontinuingoperationsincludedthefollowingspecicitemsofrevenueotherincomeandexpensesConsolidated20140002013000RevenuefromcontinuingoperationsSalesrevenue635457636993Rentalrevenue54015508Netprotondisposalofpropertyplantandequipment24130Totalrevenuefromcontinuingoperations640834642631Netprotonsaleoflnvestments110483InterestrevenueExternalbanks24153731ImpairmentImpairmentofintangiblesandinvestments392467Totalimpairmentexpense392467DepreciationexpenseLandandbuildings1014981Plantandequipment2439822979Leaseholdimprovements20332005Plantandequipmentundernanceleases6666Totaldepreciationexpense2751126031AmortisationexpenseProgrammingservicesagreement445Totalamortisationexpense445Totaldepreciationamortisationandimpairmentexpense41997826476InterestexpenseandotherborrowingcostsExternalbanks4402150037Reversalofinterestaccruedonamendedtaxassessments10889Amortisationofborrowingcosts85054910Financechargesoncapitalisedleases8230Totalinterestexpenseandotherborrowingcosts4171954977Rentalexpenserelatingtooperatingleasesincludedinoccupancycosts2509923065Denedcontributionplanexpenseincludedinemployeeexpenses12193125271During2013theGroupdivestedofasubsidiarythatheldtwocommercialFMradiobroadcastinglicencesintheSunshineCoastregion.70SOUTHERNCROSSAUSTEREOANNUALREPORT2014 3.SignicantItemsThenetprotaftertaxincludesthefollowingitemswhosedisclosureisrelevantinexplainingthenancialperformanceoftheconsolidatedentity.Signicantitemsarethoseitemsofsuchanatureorsizethatseparatedisclosurewillassistuserstounderstandthenancialstatements.Consolidated20140002013000Impairmentofintangiblesandinvestmentsrefernotes10and13392467Onerouscontractsrefernotes17and205670Writeoffofunamortisedborrowingcostsonpreviousdebtfacilityrefernote183900Resolutionoftaxdisputerefernote526400ProtonSaleofSunshineCoastRadio110400TotalSignicantItemsincludedinNPAT375637104001During2013theGroupdivestedofasubsidiarythatheldtwocommercialFMradiobroadcastinglicencesintheSunshineCoastregion.In2013theSunshineCoastRadiobusinesshadrevenueof5.0mEBITDAof1.9mandNPATof1.2mthatwasincludedinthestatutoryprot.Theresultswerenotseparatelydisclosedasdiscontinuedoperationsasthenumbersindividuallywerenotmaterial.4.RemunerationofAuditorsConsolidated20142013aAuditandotherassuranceservicesPricewaterhouseCoopersAustralianrmStatutoryauditandreviewofnancialreports580000525000Regulatoryreturns800010000Totalremunerationforauditandotherassuranceservices588000535000bTaxationservicesPricewaterhouseCoopersAustralianrmTaxservices10148212050Totalremunerationfortaxationservices10148212050cOtherservicesPricewaterhouseCoopersAustralianrmDebtadvisory475000Remunerationconsultingservices12000Otherconsultingservices10200069690Totalremunerationforotherservices58900069690Total127848261674071SOUTHERNCROSSAUSTEREOANNUALREPORT2014 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE20145.IncomeTaxExpenseTheincometaxexpenseforthenancialyeardiffersfromtheamountcalculatedonthenetresultfromcontinuingoperations.ThedifferencesarereconciledasfollowsConsolidated20140002013000IncometaxexpensebenetCurrenttax1282427017Deferredtax3607101411643137158DeferredincometaxexpensebenetincludedinincometaxexpensecomprisesIncreaseinnetdeferredtaxassets65717503Adjustmentforprioryears29642638360710141ReconciliationofincometaxexpensetoprimafacietaxpayableProtbeforeincometaxexpense279577133269TaxattheAustraliantaxrateof308387339981TaxeffectofamountswhicharenotdeductibletaxableincalculatingtaxableincomeDeferredtaxassetnotrecognisedonimpairmentofnon-currentassets117750Reversaloftaxpreviouslyrecognisedonamendedassessments18873Shareofnetlossesofassociates3200Othernon-deductibleexpensesdeductibleexpensesnon-assessableincome43945661Adjustmentsrecognisedinthecurrentyearinrelationtodeferredtaxofprioryears29642638Incometaxexpense1643137158Fortheyearended30June2014theCompanyhad2.5millionofincometaxexpense20131.0millionexpenserecogniseddirectlyinequityinrelationtocashowhedgeswithacorrespondingdeferredtaxliability2013liabilitybeingrecognised.Therearenounusedtaxlossesforwhichnodeferredtaxassethasbeenrecognised.TaxAuditTheCompanywasthesubjectofaspecicissuetaxauditbytheAustralianTaxationOfceATOinrelationtotheincomeyearsended30June2006to30June2009.AspartoftheauditconsistentwiththeATOsspecicfocusontheapplicationofspecicdebtequityrulestostapledgroupsunderitsComplianceProgramforthe20102011yearthetaxdeductibilityofpaymentsoncertainredeemablepreferencesharesRPSissuedbytheCompanywasconsidered.AttheconclusionoftheaudittheATOraisedamendedassessmentsinrelationtotheincomeyearsended30June2006to30June2009foranamountofprimarytaxof32.8millionandShortfallInterestChargeSICof10.9million.TheCompanylodgedobjectionsagainsteachoftheamendedassessmentsandtheSICimposedandreachedasettlementwiththeATOduringtheperiodforacashpaymentof14millionwithnoSICorpenaltiestobeappliedtothenewassessments.Assuch10.9millionininterestand15.5millioninincometaxexpensehasbeenreversedinthecurrentyear.Subsequenttoyearendpaymentoftheprimarytaxwasmadeon11August2014andthematterhasnowbeenconcluded.72SOUTHERNCROSSAUSTEREOANNUALREPORT2014 6.DividendsPaidandProposedThedividendswerepaidandpayableasfollowsConsolidated20140002013000ThedividendswerepaidpayableasfollowsInterimdividendpaidforthehalfyearended31Decemberfullyfrankedatthetaxrateof303173631719Finaldividendpaidfortheyearended30Junefullyfrankedatthetaxrateof3031730352436346666962DividendspaidincashorsatisedbytheissueofsharesunderthedividendreinvestmentplanwereasfollowsPaidincash63466669626346666962CentspershareCentspershareInterimdividendpaidforthehalfyear31December4.54.5Finaldividendpaidfortheyearended30June4.55.09.09.5TheGrouphas106.0millionoffrankingcreditsat30June2014201391.7million.7.CurrentAssetsCashandCashEquivalentsConsolidated20140002013000Cashatbank620901029068.CurrentAssetsReceivablesConsolidated20140002013000CurrentTradereceivables108668123124Provisionfordoubtfuldebtsa527601Prepayments49265143Other24311972115498129638aImpairedtradereceivablesTheGrouphasrecognisedexpensesinrespectofbadanddoubtfultradereceivablesduringtheyearended30June2014of7093702013incomeof27882.Thisprovisionisbasedonknownbaddebtsandpastexperienceforreceiptoftradereceivables.9.Non-CurrentAssetsReceivablesConsolidated20140002013000Non-currentRefundabledeposits538539Relatedparties900942Other4405474058436221Thecarryingamountsofthenon-currentreceivablesapproximatetheirfairvalue.73SOUTHERNCROSSAUSTEREOANNUALREPORT2014 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE201410.Non-CurrentAssetsInvestmentsAccountedforUsingtheEquityMethodConsolidated20140002013000Sharesinassociatesandjointventuresequitymethod288013677aCarryingamountsInformationrelatingtoassociatesandjointventuresissetoutbelowOwnershipinterestConsolidatedNameofcompanyCountryoforiginPrincipalactivity2014201320140002013000GoldCoastTranslatorPtyLtdAustraliaRentalofatransmissionfacility25.025.09494RegionalTamPtyLtdAustraliaAcquisitionanddistributionofTVratings36.036.099TasmanianDigitalTelevisionPtyLtdAustraliaOperationofaTVstationTasmania50.050.08927745DarwinDigitalTelevisionPtyLtdAustraliaOperationofaTVstationDarwin50.050.0251CentralDigitalTelevisionPtyLimitedAustraliaOperationofaTVstationCentral50.050.0EasternAustraliaSatelliteBroadcastersPtyLtdAustraliaBuildingofdigitalregionalassets50.050.0BlackMountainBroadcastersPtyLtdAustraliaDormantentity50.050.0SydneyFMFacilitiesPtyLtdAustraliaRentalofatransmissionfacility50.050.0615615MelbourneFMFacilitiesPtyLtdAustraliaRentalofatransmissionfacility50.050.0PerthFMFacilitiesPtyLtdAustraliaRentalofatransmissionfacility66.7166.71272279DigitalRadioBroadcastingSydneyPtyLtdAustraliaDigitalradiobroadcasting22.622.6834834DigitalRadioBroadcastingMelbournePtyLtdAustraliaDigitalradiobroadcasting18.2218.221414DigitalRadioBroadcastingBrisbanePtyLtdAustraliaDigitalradiobroadcasting25.025.02020DigitalRadioBroadcastingAdelaidePtyLtdAustraliaDigitalradiobroadcasting33.333.32626DigitalRadioBroadcastingPerthPtyLtdAustraliaDigitalradiobroadcasting33.333.32626DigitalRadioBroadcastingHobartPtyLtdAustraliaDigitalradiobroadcasting66.766.7RBAHoldingsPtyLtdAustraliaRentalofatransmissionfacility35.735.7DigitalMusicDistributionPtyLtdAustraliaDigitalMusicDistribution33.333.33754GetOutsideGroupPtyLtdAustraliaMediaEntertainmentBusiness50.050.078102880136771Whilstmorethan50ofPerthFMFacilitiesPtyLtdisownedbytheGroupitdoesnotcontrolthevotingrightsasallshareholdersarerequiredtoagreeonmaterialoperatingmatters.2DuetothenatureandtreatmentoftheDigitalRadioBroadcastingoperationsthe18.2investmentinDigitalRadioBroadcastingMelbournePtyLtdhasbeenrecognisedasanassociate.74SOUTHERNCROSSAUSTEREOANNUALREPORT2014 bMovementsincarryingamountsConsolidated20140002013000Carryingamountatthebeginningofthenancialyear1367710581Shareoflossesafterincometax11668Impairmentofassociatesandjointventures12096Acquisitionsofassociatesandjointventures3764Contributionstoassociatesandjointventures1310Carryingamountattheendofthenancialyear288013677ImpairmentAt30June2014animpairmentlossof7.0millionwasrecordedagainstthecarryingvalueofTasmanianDigitalTelevisionPtyLtdTDT.TheestimatedrecoverableamountofTDTbasedonvalueinuseequalsitscarryingamount.TheimpairmentreectslowertelevisionadvertisingrevenuegrowthratesovertheforecastperiodandanexpectedlowpointofmarketsharewithrespecttotheChannelTenadvertisingmarketwithnoimprovementinthemarketshareinfutureyears.Theprioryearvalueinusemodelassumedanimprovementinmarketshareinfutureyears.InadditiontherehasbeenareductionofthelongtermterminalgrowthrateofTDTto2.5from3.0inprioryearreectingalowerlongtermgrowthrateforregionaltelevisionrevenues.Thepre-taxdiscountrateutilisedisconsistentwiththatoftheRegionalCGU.Refernote13fordetails.At30June2014animpairmentlossof5.1millionwasrecordedagainstthecarryingvalueofDigitalMusicDistributionPtyLtdduetolimitedcashowsovertheforecastperiod.TheestimatedrecoverableamountofDMDisnil.cSummarisednancialinformationforindividuallyimmaterialassociatesandjointventuresConsolidated20140002013000ShareofassociatesandjointventuresassetsandliabilitiesCurrentassets26323795Non-currentassets413017795Totalassets676221590Currentliabilities4862248Non-currentliabilities33965665Totalliabilities38827913Netassets288013677ShareofassociatesandjointventuresrevenueexpensesandresultsRevenue30833273Expenses30173941Protbeforeincometax66668Incometaxexpense77Netlossaccountedforusingtheequitymethod11668ShareofassociatesandjointventurescontingentliabilitiesShareofcontingentliabilitiesincurredjointlywithotherinvestorsContingentliabilitiesrelatingtoliabilitiesofassociatesandjointventuresforwhichtheCompanyisseverallyliable11.Non-CurrentAssetsOtherFinancialAssetsConsolidated20140002013000Availableforsaleinvestmentsatfairvalue11075SOUTHERNCROSSAUSTEREOANNUALREPORT2014 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE201412.Non-CurrentAssetsPropertyPlantandEquipmentConsolidated20140002013000Landandbuildingsatcost5237749910LessAccumulateddepreciation1330312466Totallandandbuildingsnet3907437444Leaseholdimprovementsatcost3502934881LessAccumulateddepreciation1749216269Totalleaseholdimprovementsnet1753718612Plantandequipmentatcost386221387525LessAccumulateddepreciation281964280365Totalplantandequipmentnet104257107160Leasedplantandequipmentatcost455612LessAccumulateddepreciation186370Totalleasedplantandequipmentnet269242Assetsunderconstructionatcost102067137Totalpropertyplantandequipmentatcost484288480065LessTotalaccumulateddepreciation312945309470Totalpropertyplantandequipmentnet171343170595ReconciliationsofthecarryingamountsofpropertyplantandequipmentatthebeginningandendofeachyeararesetoutbelowConsolidated20140002013000LandandbuildingsCarryingamountatthebeginningofthenancialyear3744437519Additions2644479DisposalsDepreciationexpense1014981Transfers427Carryingamountattheendofthenancialyear3907437444LeaseholdimprovementsCarryingamountatthebeginningofthenancialyear1861219223Additions9801364Disposals547Depreciationexpense20332005Transfers22577Carryingamountattheendofthenancialyear1753718612PlantandequipmentCarryingamountatthebeginningofthenancialyear107160108807Additions1716518548Disposals99914Depreciationexpense2439822979Transfers44293698Carryingamountattheendofthenancialyear10425710716076SOUTHERNCROSSAUSTEREOANNUALREPORT2014 Consolidated20140002013000LeasedplantandequipmentCarryingamountatthebeginningofthenancialyear242401Additions227Disposals13493Depreciationexpense6666Carryingamountattheendofthenancialyear269242AssetsunderconstructionCarryingamountatthebeginningofthenancialyear71376567Transfers44074832Additions74765402Carryingamountattheendofthenancialyear102067137Totalpropertyplantandequipmentnet17134317059513.Non-CurrentAssetsIntangibleAssetsConsolidated20140002013000CommercialradioTVbroadcastlicencesatcost15895741589574Lessimpairmentexpense63968Totallicencesnet15256061589574Tradenamesatcost373279LessimpairmentexpenseTotalTradenamesnet373279Brandsatcost8890088900LessimpairmentexpenseTotalbrandsnet8890088900Programmingservicesagreementatcost10001000Lessaccumulatedamortisation10001000TotalprogrammingservicesagreementnetGoodwillatcost352129352129Lessimpairmentexpense316396Totalgoodwillnet35733352129Totalintangiblesatcost20319762031882Lesstotalaccumulatedamortisationandimpairmentexpense3813641000Totalintangiblesnet1650612203088277SOUTHERNCROSSAUSTEREOANNUALREPORT2014 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE201413.Non-CurrentAssetsIntangibleAssetscontinuedConsolidated20140002013000CommercialradioTVbroadcastlicencesCarryingamountatthebeginningofthenancialyear15895741595282Impairmentexpense63968Disposalofsubsidiaries5708Carryingamountattheendofthenancialperiod15256061589574TradenamesCarryingamountatthebeginningofthenancialyear279139Additions94140Carryingamountattheendofthenancialyear373279BrandsCarryingamountatthebeginningofthenancialyear8890088900Carryingamountattheendofthenancialperiod8890088900ProgrammingservicesagreementCarryingamountatthebeginningofthenancialyear445AcquisitionofsubsidiariesAmortisationexpense445CarryingamountattheendofthenancialperiodGoodwillCarryingamountatthebeginningofthenancialyear352129352124Impairmentexpense316396Additions5Carryingamountattheendofthenancialyear35733352129Totalintangiblesnet16506122030882aImpairmenttestsforlicencestradenamesbrandsandgoodwillThevalueoflicencestradenamesbrandsandgoodwillisallocatedtotheGroupscashgeneratingunitsCGUsidentiedasregionalFree-to-AircommercialradioandtelevisionbroadcastingRegionalFree-to-AirbroadcastingandmetropolitanFree-to-AircommercialradiobroadcastingMetroFree-to-Airbroadcasting.TherecoverableamountoftheRegionalFree-to-AirbroadcastingCGUat30June2014and30June2013andtheMetroFree-to-AirbroadcastingCGUat30June2014and30June2013wasdeterminedbasedonavalueinusediscountedcashowDCFmodel.78SOUTHERNCROSSAUSTEREOANNUALREPORT2014 Allocationofgoodwillandotherintangibleassets2014RegionalFree-to-AirBroadcastingCGU000MetroFreetoAirBroadcastingCGU000Total000GoodwillallocatedtoCGU3573335733IndenitelivedintangibleassetsallocatedtoCGU7581858566941614879Totalgoodwillandindenitelivedintangibleassets7581858924271650612ValueinuseassumptionsseepartbRevenuegrowthForecastPeriod1.84.1CostgrowthForecastPeriod2.22.7Long-termgrowthrateterminalvalue2.53.0Discountratepre-tax12.612.32013RegionalFree-to-AirBroadcastingCGU000MetroFreetoAirBroadcastingCGU000Total000GoodwillallocatedtoCGU31639635733352129IndenitelivedintangibleassetsallocatedtoCGU8174538613001678753Totalgoodwillandindenitelivedintangibleassets11338498970332030882ValueinuseassumptionsseepartbRevenuegrowthForecastPeriod5.03.9CostgrowthForecastPeriod4.02.9Long-termgrowthrateterminalvalue3.03.0Discountratepre-tax11.311.5bKeyassumptionsusedforvalueinusecalculationsThevalueinusecalculationsusecashowprojectionsbasedonthe2015nancialbudgetsextendedoverthesubsequentfouryearperiodForecastPeriodandappliesaterminalvaluecalculationusingestimatedgrowthratesapprovedbytheBoardforthebusinessrelevanttoeachCGU.IndeterminingappropriategrowthratestoapplytotheForecastPeriodandtotheterminalcalculationtheCompanyconsideredindependentmediaexpertsforecastreportsaswellasinternalcompanydataandassumptions.InrespecttoeachCGUthemarketgrowthratesdidnotexceedtheindependentforecastreports.Thediscountrateusedreectsspecicrisksrelatingtotherelevantsegmentsandtheeconomiesinwhichtheyoperaterefertothetableabove.79SOUTHERNCROSSAUSTEREOANNUALREPORT2014 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE201413.Non-CurrentAssetsIntangibleAssetscontinuedcImpactofareasonablypossiblechangeinkeyassumptionsRegionalFree-to-AirbroadcastingImpairmentAt30June2014animpairmentlossof375.7millionwasrecordedagainstgoodwillandlicencesintheRegionalCGU.TheestimatedrecoverableamountoftheRegionalCGUbasedonvalueinuseequalsitscarryingamount.TheimpairmentreectslowertelevisionadvertisingrevenuegrowthratesovertheforecastperiodandanexpectedlowpointofmarketsharewithrespecttotheChannelTenadvertisingmarketwithnoimprovementinthemarketshareinfutureyearstheprioryearvalueinusemodelassumedanimprovementinmarketshareinfutureyears.InadditiontherehasbeenareductionofthelongtermterminalgrowthrateoftheRegionalCGUto2.5from3.0inprioryearreectingalowerlongtermgrowthrateforregionaltelevisionrevenues.Thepre-taxdiscountratehasalsoincreasedfrom11.3to12.6predominantlyreectingachangeinthetargetdebtenterprisevaluefrom40to30whichisalignedwithindustrystandard.SensitivityAnyvariationinthekeyassumptionsusedtodeterminethevalue-in-usewouldresultonachangeoftherecoverableamountoftheRegionalCGU.Negativevariancesmaycauseafurtherimpairmentinfutureperiods.ItisestimatedthatchangesinkeyassumptionswouldhavethefollowingapproximateimpactontherecoverableamountSensitivityChangeinvariableinperpetuityImpactofchangeonRegionalCGUcarryingvalue000Revenue156.7156.7Expenses141.3141.3Posttaxdiscountrate0.557.70.566.5Terminalgrowthrate0.552.70.545.7MetroFree-to-AirbroadcastingImpairmentAt30June2014animpairmentlossof4.7millionwasrecordedagainstexcessspecicdigitalspectrumlicencesattributedtotheMetroCGU.Theimpairmentreectsthelongergestationperiodtoderiverevenuefromtheselicencesagainsthighercommittedcoststoservicethelicences.Theestimatedrecoverableamountoftheseexcessdigitalspectrumlicencesbasedonvalueinuseequalsitscarryingamountofnil.TherewasnootherimpairmentrecognisedforthevalueoftheMetroCGUgoodwillorlicenceshowevertheamountbywhichtherecoverableamountexceededthecarryingvalueoftheassetsallocatedtotheMetroFree-to-AirbroadcastingCGUhasdecreasedfromtheprioryearto45.9millionfrom243.6million.Thisdecreaseiscausedbyanincreaseinthepre-taxdiscountratefrom11.5to12.3predominantlyreectingachangeinthetargetdebtenterprisevaluefrom40to30.InadditionYear1ofthevalueinusemodelreectsalowermarketsharewithmarketsharesteadilyincreasingfromYear2returningtoalongtermaveragemarketsharebyYear5.TheprioryearvalueinusemodelreectedahighermarketshareinYear1withalowergrowthoverthe5yearperiod.Inthecurrentyearvalueinusemodelmanagementhasbudgetedforanincreasedspendontalentmarketingandproductionsupporttounderpinthereturntolongtermaveragemarketshare.SensitivityAnyvariationinthekeyassumptionsusedtodeterminethevalue-in-usewouldresultinachangeoftherecoverableamountoftheMetroCGU.Negativevariancesmaycauseimpairmentinfutureperiods.Thefollowingreasonableshiftsinkeyassumptionswouldresultinarecoverableamountequaltothecarryingamount.SensitivityChangeinvariableinperpetuityRevenue1.0Expenses1.5Posttaxdiscountrate0.3Terminalgrowthrate0.480SOUTHERNCROSSAUSTEREOANNUALREPORT2014 14.DeferredTaxesConsolidated20140002013000ThebalancecomprisestemporarydifferencesattributabletoDoubtfuldebts158180Propertyplantandequipment894863Licences1406014060Brand874874Acquisitioncosts10014911Creditorsandaccruals15522030Unearnedrevenue226255Employeebenets59636383Provisions48662827Interestrateswaps26845721Other950967Netbalance53969003DisclosedasDeferredtaxassets5396900353969003MovementsBalanceatthebeginningofthenancialyear900319143Adjustmentrelatingtoprioryears28752638Chargedtoincomestatement65717503Otheradjustment891Balanceattheendofthenancialyear53969003Deferredtaxestoberecoveredaftermorethan12months111213439Deferredtaxestoberecoveredwithin12months16517124425396900315.SubsidiariesTheconsolidatednancialstatementsincorporatetheassetsliabilitiesandresultsofthefollowingsubsidiariesinaccordancewiththeaccountingpolicydescribedinnote1bNameofentityCountryofincorporationClassofsharesunitsEffectiveownershipinterest2014Effectiveownershipinterest2013SouthernCrossMediaTrustSCMTAustraliaOrdinary100100SCMNo5LimitedSCM5AustraliaOrdinary100100SCMNo1LimitedSCM1AustraliaOrdinary100100SouthernCrossMediaInternationalLimitedSCMILandcontrolledentitiesBermudaOrdinary100100SouthernCrossMediaAustraliaHoldingsPtyLimitedSCMAHLAustraliaOrdinary100100SouthernCrossAustereoCommunityFoundationLimitedSCACFAustraliaOrdinary100100SouthernCrossMediaGroupInvestmentsPtyLtdAustraliaOrdinary100100SouthernCrossAustereoPtyLimitedSCAPLandcontrolledentitiesAustraliaOrdinary100100Theproportionofownershipinterestisequaltotheproportionofvotingpowerheldunlessotherwiseindicated.81SOUTHERNCROSSAUSTEREOANNUALREPORT2014 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE201416.CurrentLiabilitiesPayablesConsolidated20140002013000Tradecreditors101547753GSTpayable41183886Otherpayablesincludingaccruedexpenses6237382182Deferredincome8442120748508710589517.CurrentLiabilitiesProvisionsConsolidated20140002013000Employeebenets1799318677Onerouscontracts1740Leasestraightline339553Leaseincentives571587206431981718.BorrowingsaTotalinterestbearingliabilitiesCurrentborrowingsConsolidated20140002013000SecuredBankfacilitiesb19000Leaseliabilitiesb84194Totalsecuredcurrentinterestbearingliabilities8419194Non-currentborrowingsConsolidated20140002013000SecuredBankfacilitiesb650000684000Borrowingcosts37537900Leaseliabilitiesb22575Totalsecurednon-currentinterestbearingliabilities646472676175Totalcurrentandnon-currentborrowings64655669536982SOUTHERNCROSSAUSTEREOANNUALREPORT2014 bBankfacilitiesandassetspledgedassecurityOn10December2013theCompanyadvisedithadsuccessfullynegotiatednewtermsforrenancingoftheexisting700millionsyndicateddebtfacility.Thiswasformallycompletedandbecameeffectiveon13January2014.Thenewfacilityconsistsofa5yearrevolving650millionfacilityfullydrawnanda2yearrevolving50millionfacilitycurrentlyundrawnwhichwillprovidethebusinesswithsignicantliquidityandnancialexibility.ThebanktermfacilitiesofSCAPLaresecuredbyaxedandoatingchargeovertheassetsandundertakingsofSCAPLanditswholly-ownedsubsidiariesandalsobyamortgageoversharesinSCAPL.Thesefacilitiesmatureon12January2019andhaveanaveragevariableinterestrateof5.1120135.44.ThesefacilitiesaredenominatedinAustraliandollars.Therearecertainnancialandnon-nancialcovenantswhicharerequiredtobemetbysubsidiariesintheGroup.OneofthesecovenantsisanundertakingthatthesubsidiaryisincompliancewiththerequirementsofthefacilitybeforeanyamountmaybedistributedtothebenetoftheultimateparententitySouthernCrossMediaGroupLimited.Therstcovenanttestingdateonthenewfacilitywas30June2014withtestingdatesfallingat30Juneand31Decembereachyearuntilthefacilitymaturitydate.Leaseliabilitiesareeffectivelysecuredastherightstotheleasedassetsrecognisedinthenancialstatementsreverttothelessorintheeventofdefault.ThecarryingamountsofassetspledgedassecuritybySCAPLforcurrentandnon-currentborrowingsareSCAPL20140002013000CurrentassetsFloatingchargeCashandcashequivalents5562396498Receivables114977129038Totalcurrentassetspledgedassecurity170600225536Non-currentassetsFloatingchargeReceivables53044047Investmentsaccountedforusingtheequitymethod79449912Othernancialassets110Propertyplantandequipment171343170595Intangibleassets16506122040809Totalnon-currentassetspledgedassecurity18352032225473Totalassetspledgedassecurity2005803245100983SOUTHERNCROSSAUSTEREOANNUALREPORT2014 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE201418.BorrowingscontinuedcFinancingarrangementsUnrestrictedaccesswasavailableatbalancedatetothefollowinglinesofcreditConsolidated20140002013000Bankfacilities650000703000Usedatbalancedate650000703000UnusedatbalancedateWorkingcapitalfacility30000UsedatbalancedateUnusedatbalancedate30000Workingcapitalfacilitybankguaranteesleasescreditcardsmerchantfacilities10000Usedatbalancedate3340Unusedatbalancedate6660Revolvingfacility50000UsedatbalancedateUnusedatbalancedate50000Totalfacilities700000743000Totalusedatbalancedate650000706340Totalunusedatbalancedate5000036660ThebankfacilitiesfortheGroupmatureon12January2019.TheGroupsbankfacilitiesaredenominatedinAustraliandollarsasat30June2014and30June2013.19.DerivativeFinancialInstrumentsConsolidated20140002013000CurrentliabilitiesInterestrateswapcontractsa89464207Totalcurrentliabilitiesderivativenancialinstruments89464207Non-currentliabilitiesInterestrateswapcontractsa14863Totalnon-currentliabilitiesderivativenancialinstruments14863FairvaluemeasurementofnancialinstrumentsaFairvaluehierarchyAASB13requiresdisclosureoffairvaluemeasurementsbylevelofthefollowingfairvaluemeasurementhierarchyiquotedpricesunadjustedinactivemarketsforidenticalassetsorliabilitieslevel1iiinputsotherthanquotedpricesincludedwithinlevel1thatareobservablefortheassetorliabilityeitherdirectlyorindirectlylevel2andiiiinputsfortheassetorliabilitythatarenotbasedonobservablemarketdataunobservableinputslevel3.Thegroupsnancialassetsandnancialliabilitiesmeasuredandrecognisedatfairvalueat30June2014consistofderivativesusedforhedgingvariableinterestratesontheborrowings.Thefairvaluemeasurementisbasedonlevel2inputsusingquotedinterestrates.Thefairvalueat30June2014is894600030June201319070000.bValuationtechniquesusedtoderivelevel2fairvaluesThefairvalueofnancialinstrumentsthatarenottradedinanactivemarketforexampleover-the-counterderivativesisdeterminedusingvaluationtechniques.Thesevaluationtechniquesmaximisetheuseofobservablemarketdatawhereitisavailableandrelyaslittleaspossibleonentityspecicestimates.Ifallsignicantinputsrequiredtofairvalueaninstrumentareobservabletheinstrumentisincludedinlevel2.Thefairvalueofinterestrateswapsiscalculatedasthepresentvalueoftheestimatedfuturecashowsbasedonobservableyieldcurves.84SOUTHERNCROSSAUSTEREOANNUALREPORT2014 cFairvaluesofothernancialinstrumentsDuetotheirshort-termnaturethecarryingamountsofthecurrentreceivablescurrentpayablesandcurrentborrowingsisassumedtoapproximatetheirfairvalue.Thegroupalsohas646472000ofnon-currentborrowingsat30June201430June2013676175000forwhichthecarryingamountapproximatesfairvalueinthebalancesheet.TheGroupispartytoderivativenancialinstrumentsinthenormalcourseofbusinessinordertohedgeexposuretouctuationsininterestratesinaccordancewiththeGroupsnancialriskmanagementpoliciesrefertonote26.dInterestrateswapcontractsExternalborrowingsoftheGroupcurrentlybearanaveragevariableinterestrateof5.1120135.44.Itispolicytoprotectpartoftheloansfromexposuretoincreasinginterestrates.TheGrouphaspreviouslyenteredintointerestrateswapcontractsunderwhichitisobligedtoreceiveinterestatvariableratesandtopayinterestatxedratesthelastofwhichexpiresinthenext12months.ThenotionalprincipalamountsandperiodsofexpiryoftheinterestrateswapcontractsareasfollowsConsolidated20140002013000Lessthan1year35000020000012years35000023years34yearsThecontractsrequiresettlementofnetinterestreceivableorpayableandaretimedtocoincidewiththeapproximatedatesonwhichinterestispayableontheunderlyingdebt.Theseinterestrateswapsarecashowhedgesastheysatisfytherequirementsforhedgeaccounting.Anychangeinfairvalueoftheinterestrateswapsistakentothehedgereserveinequity.20.Non-CurrentLiabilitiesProvisionsConsolidated20140002013000Employeebenets20622239Onerouscontracts6392Leaseincentives12331551Makegood32003423Leasestraightline297733091586410522Movementsincurrentandnon-currentprovisionsotherthanprovisionsforemployeebenetsaresetoutbelowConsolidated20140002013000Balanceatthebeginningofthenancialyear82849690Movementsintheyear55181406Balanceattheendofthenancialyear13802828485SOUTHERNCROSSAUSTEREOANNUALREPORT2014 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE201421.ContributedEquityConsolidated20140002013000Ordinaryshares16868781686878Contributedequity16868781686878Consolidated20140002013000Onissueatthebeginningofthenancialyear16868781686878Onissueattheendofthenancialyear16868781686878Consolidated20140002013000NumberofsecuritiesOnissueatthebeginningofthenancialyear704858704594Issuingsharesforemployeeshareentitlements389264Onissueattheendofthenancialyear705247704858aSecuritiesonissueOrdinarysharesinSouthernCrossMediaGroupLimitedOrdinarysharesentitletheholdertoparticipateindistributionsandtheproceedsonwindingupoftheCompanyinproportiontothenumberofandamountspaidonthesharesheld.Onashowofhandseachshareholderpresentinpersonandeachotherpersonpresentasaproxyhasonevoteanduponapolleachshareisentitledtoonevote.Ordinaryshareshavenoparvalueandthecompanydoesnothavealimitedamountofauthorisedcapital.bDividendreinvestmentplanDRPOn3September2010theGroupannouncedthattheDRPwasreopened.UndertheDRPshareholdersmayelecttohaveallorpartoftheirdividendentitlementssatisedbytheissueofnewsharesratherthanbeingpaidincash.SharesareissuedundertheDRPattheweightedaveragemarketpricecalculatedoverapricingperiod.Adiscountofnotmorethan10asdeterminedbytheDirectorscanbeappliedtotheDRPprice.Nodiscounthasbeenappliedtodate.cEmployeeshareentitlementsIn2010theCompanyintroducedaLongTermIncentivePlanLTIPforitsseniorexecutives.Informationrelatingtotheemployeeshareentitlementsincludingdetailsofsharesissuedundertheschemeissetoutinnote28.dCapitalriskmanagementTheGroupsobjectiveswhenmanagingcapitalaretosafeguardtheGroupsabilitytocontinueasagoingconcernsothatitcancontinuetoprovidereturnsforshareholdersandbenetsforotherstakeholdersandtomaintainanoptimalcapitalstructuretoreducethecostofcapital.InordertomaintainoradjustthecapitalstructuretheGroupmayadjusttheamountofdividendspaidtoshareholdersreturncapitaltoshareholdersissuenewsharesbuybackexistingsharesorsellassetstoreducedebt.86SOUTHERNCROSSAUSTEREOANNUALREPORT2014 22.ReservesandOtherEquityTransactionsaReservesConsolidated20140002013000BalanceofreservesShare-basedpaymentsreservei35032324Hedgereserveii54961126519938941iShare-basedpaymentsreserveBalanceatthebeginningofthenancialyear23241193Employeeshareentitlement11791131Balanceattheendofthenancialyear35032324iiHedgereserveBalanceatthebeginningofthenancialyear1126513529RecognitionofhedgereservenetoftaxFairvaluemovementininterestrateswapsnetoftax57692264Balanceattheendofthenancialyear549611265NatureandpurposeofreservesiShare-basedpaymentsreserveTheshare-basedpaymentsreserveisusedtorecognisethefairvalueoffuturepotentialsharestobeissuedtoemployeesfornoconsiderationinrespectofperformancerightsofferedundertheLongTermIncentivePlan.Duringtheyear3884622013264076rightshavevestedand119917120132921124shareshavebeengranted.Inthecurrentyear117900020131132000hasbeenrecognisedasanexpenseintheprotorlossasthefairvalueofpotentialsharestobeissued.Refertonote28forfurtherinformationonthecurrentLongTermIncentivePlan.iiHedgereserveThehedgingreserveisusedtorecordgainsorlossesonahedginginstrumentinacashowhedgethatarerecognisedinothercomprehensiveincomeasdescribedinnote1ee.Amountsarereclassiedtoprotorlosswhentheassociatedhedgedtransactionaffectsprotorloss.bOtherequitytransactionsConsolidated20140002013000OtherequitytransactionsReverseacquisition7740677406On23November2005inconnectionwiththeinitialpublicofferingoftheGrouptheCompanybecamethelegalownerofalltheissuedsharesofSouthernCrossMediaAustraliaHoldingPtyLimitedSCMAHL.SCMAHLwastheholdingcompanyfortheSouthernCrossMediagroupofcompaniesoperatingatthattimecommercialradiobroadcastingstationsthroughoutAustralia.Assetoutinnote1binaccordancewiththerequirementsofAASB3BusinessCombinationsthistransactionwasaccountedforasareverseacquisition.SCMAHLwasthedeemedaccountingacquireroftheGroupandtheCompany.UnderthetermsofthearrangementwiththevendortheCompanywasrequiredtopay77.4millionforthetransferoftheshares.23.AccumulatedLossesConsolidated20140002013000Balanceatthebeginningofthenancialyear3469363064Restatementofcomparativesmovementinassociates778LossProtattributabletosecurityholders29600896111Dividendsprovidedfororpaid6346666962Balanceattheendofthenancialyear3941673469387SOUTHERNCROSSAUSTEREOANNUALREPORT2014 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE201424.EarningsperShareConsolidated2014Cents2013CentsaBasicearningspershareFromcontinuingoperationsattributabletoshareholders41.9813.64Totalbasicearningspershareattributabletoshareholders41.9813.64bDilutedearningspershareFromcontinuingoperationsattributabletoshareholders41.9813.59Totaldilutedearningspershareattributabletoshareholders41.9813.59cReconciliationofearningsusedincalculatingbasicdilutedearningspershareConsolidated20140002013000BasicandDilutedearningspershareLossProtattributabletoshareholdersFromcontinuingoperations2960089611129600896111dWeightedaveragenumberofsharesusedasthedenominatorConsolidated2014Number2013NumberWeightedaveragenumberofsharesusedasthedenominatorincalculatingbasicearningspershare705134874704825243Adjustmentforsharesdeemedtobeissuedatnilconsiderationinrespectofemployeeshareentitlements2417205Weightedaveragenumberofordinarysharesandpotentialordinarysharesusedasthedenominatorincalculatingdilutedearningspershare70513487470724244825.ReconciliationofProtafterIncomeTaxtoNetCashInowfromOperatingActivitiesConsolidated20140002013000Lossprotafterincometax29600896111Impairmentofinvestmentsandnon-currentassets392467Depreciationandamortisation2751126476Protondisposalofassets118912485Shareofassociatesloss11668Non-cashrevenue12471790DividendsreceivedfrominvestmentsInterestexpenseandotherborrowingcostsincludedinnancingactivities4171954977Sharebasedpayments11791131ChangeinoperatingassetsandliabilitiesDecreaseinreceivables145202105Decreaseindeferredtaxesnetoftaxmovementinhedgereserve11359132Decreaseinpayables43439766Decreaseinprovisionforincometax2326610720IncreaseDecreaseinprovisions64692598Netcashinowsfromoperatingactivities15895815324188SOUTHERNCROSSAUSTEREOANNUALREPORT2014 26.FinancialRiskManagementTheGroupsactivitiesexposeittoavarietyofnancialrisksmarketriskfairvalueinterestrateriskcreditriskliquidityriskandcashowinterestraterisk.TheGroupsoverallriskmanagementprogramfocusesontheunpredictabilityofnancialmarketsandseekstominimisepotentialadverseeffectsonthenancialperformanceoftheGroup.TheGroupusesderivativenancialinstrumentssuchasinterestrateswapstohedgecertainriskexposures.TheRiskManagementPolicyandFrameworkiscarriedoutbymanagementunderpoliciesapprovedbytheBoard.SeniormanagementoftheGroupidentifyquantifyandqualifynancialrisksaspartofdevelopingandimplementingtheriskmanagementprocess.TheRiskManagementPolicyandFrameworkisawrittendocumentapprovedbytheBoardthatoutlinesthenancialriskmanagementprocesstobeadoptedbymanagement.SpecicnancialrisksthathavebeenidentiedbytheGroupareaMarketriskMarketriskistheexposuretoadversechangesinthevalueoftradingportfoliosasaresultofchangesinmarketpricesorvolatilityiCashowandfairvalueriskchangesininterestrates.TheGroupsinterestrateriskarisesfromlong-termborrowingswhicharetakenoutatvariableinterestratesandthereforeexposetheGrouptoacashowrisk.TheGroupdoesnothaveaformalpolicytoxratesonitsborrowingsbutmanagesitscashowinterestrateriskbyusingvariabletoxedinterestrateswaps.Suchinterestrateswapshavetheeconomiceffectofconvertingborrowingsfromvariableratestoxedrates.GenerallytheGroupraiseslong-termborrowingsatvariableratesandswapsthemintoxedratesthatarelowerthanthoseavailableiftheGroupborrowedatxedratesdirectly.UndertheinterestrateswapstheGroupagreeswithotherpartiestoexchangeatspeciedintervalsmainlyquarterlythedifferencebetweenxedcontractratesandvariablerateinterestamountscalculatedbyreferencetotheagreednotionalprincipalamounts.Refertonote19forfurtherdisclosureinrelationtotheseinterestrateswapsandtheexposuretounhedgedborrowings.Inassessinginterestrateriskmanagementhasassumeda25basispointsmovement201325basispointsintherelevantinterestratesat30June2014fornancialassetsandliabilitiesdenominatedinAustralianDollarsAUD.ThefollowingtableillustratestheimpactonprotorlosswithnoimpactdirectlyonequityfortheGroup.ConsolidatedAUDexposuresCarryingvalueImpactonpost-taxprotsIncreasedecrease30June2014ImpactonreservesIncreasedecrease30June201430June201425basispoints25basispoints000000000000000FinancialassetsCashatbank62090155155Interestrateswaps8946439440Borrowings650000ConsolidatedAUDexposuresCarryingvalueImpactonpost-taxprotsIncreasedecrease30June2013ImpactonreservesIncreasedecrease30June201330June201325basispoints25basispoints000000000000000FinancialassetsCashatbank102906257257Interestrateswaps1907013871392Borrowings703000FordetailsoftheGroupsinterestrateswapsrefertonote19.89SOUTHERNCROSSAUSTEREOANNUALREPORT2014 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE201426.FinancialRiskManagementcontinuedbCreditriskCreditriskistheriskofacounterpartyfailingtocompleteitscontractualobligationswhentheyfalldue.TheGrouphaspoliciesinplacetoensurethatcashdepositsareappropriatelyspreadbetweencounterpartieswithacceptablecreditratings.Potentialareasofcreditriskconsistofcashandcashequivalentsderivativenancialinstrumentsanddepositswithbanksandnancialinstitutionsaswellascreditexposurestotradeandotherreceivables.TheGrouplimitsitsexposureinrelationtocashbalancesbyonlydealingwithwellestablishednancialinstitutionsofhighqualitycreditstandingandinvestingininvestmentgradecommercialpaper.TheGrouponlyacceptsindependentlyratedpartieswithminimumratings.Theboardfromtimetotimesetsexposurelimitstonancialinstitutionsandthesearemonitoredonanon-goingbasis.AginganalysisofassetspastduebutnotimpairedandimpairedassetsThetablesbelowsummarisetheaginganalysisofassetspastduebutnotimpairedandimpairedassetsasat30June.ConsolidatedAsat30June2014Current030days000Pastdue3060days000Pastdue6090days000Pastdue90days000Total000Tradereceivables584184466822273355108668Provisionfordoubtfuldebts527527ConsolidatedAsat30June2013Current030days000Pastdue3060days000Pastdue6090days000Pastdue90days000Total000Tradereceivables627205327825044622123124Provisionfordoubtfuldebts601601DuetothelargenumberoflowvaluereceivablesintheGroupentitiesthereisnosignicantconcentrationofcreditriskbycounterpartyorindustrygrouping.cLiquidityriskLiquidityriskistheriskofanentityencounteringdifcultyinmeetingobligationsassociatedwithnancialliabilities.Prudentliquidityriskmanagementimpliesmaintainingsufcientcashtheavailabilityoffundingthroughanadequateamountofcommittedcreditfacilitiesandtheabilitytocloseoutmarketpositions.TheGroupandCompanyhaveaprudentliquiditymanagementpolicywhichmanagesliquidityriskbymonitoringthestabilityoffundingsurpluscashornearcashassetsanticipatedcashinandoutowsandexposuretoconnectedparties.90SOUTHERNCROSSAUSTEREOANNUALREPORT2014 UndiscountedfuturecashowsThetablesbelowsummarisethematurityproleofthenancialliabilitiesasat30Junebasedoncontractualundiscountedrepaymentobligations.Repaymentswhicharesubjecttonoticearetreatedasifnoticeweregivenimmediately.ConsolidatedAsat30June2014Lessthan1year00012years00023years00035years000Greaterthan5years000ConsolidatedLeaseliabilities861595634BorrowingsPrincipal650000Interestcashows40108320793207949305Derivativenancialinstruments8946Payables85086calculatedusingaweightedaveragevariableinterestrateConsolidatedAsat30June2013Lessthan1year00012years00023years00035years000Greaterthan5years000ConsolidatedLeaseliabilities190432934BorrowingsPrincipal19000684000Interestcashows3938551634Derivativenancialinstruments112899042Payables105535calculatedusingaweightedaveragevariableinterestrateFairvalueestimationThefairvalueofnancialassetsandnancialliabilitiesmustbeestimatedforrecognitionandmeasurementorfordisclosurepurposes.Asof1July2009theGrouphasadoptedtheamendmenttoAASB7FinancialInstrumentsDisclosureswhichrequiresdisclosureoffairvaluemeasurementsbylevelofthefollowingfairvaluemeasurementhierarchyLevel1quotedpricesunadjustedinactivemarketsforidenticalassetsorliabilitiesLevel2inputsotherthanquotedpricesincludedwithinlevel1thatareobservablefortheassetorliabilityeitherdirectlyaspricesorindirectlyderivedfrompricesandLevel3inputsfortheassetorliabilitythatarenotbasedonobservablemarketdataunobservableinputs.ThefollowingtablespresenttheGroupsassetsandliabilitiesmeasuredandrecognisedatfairvalueat30June2014and30June2013.ConsolidatedAsat30June2014Level1000Level2000Level3000Total000LiabilitiesDerivativesusedforhedging89468946TotalLiabilities89468946ConsolidatedAsat30June2013Level1000Level2000Level3000Total000LiabilitiesDerivativesusedforhedging1907019070TotalLiabilities1907019070Thefairvalueofnancialinstrumentsthatarenottradedinanactivemarketisdeterminedusingvaluationtechniques.TheGroupusesavarietyofmethodsandmakesassumptionsthatarebasedonmarketconditionsexistingattheendofeachreportingperiod.Thefairvalueofinterestrateswapsarecalculatedasthepresentvalueoftheestimatedfuturecashowsandareincludedinlevel2underderivativenancialinstruments.91SOUTHERNCROSSAUSTEREOANNUALREPORT2014 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE201427.ParentEntityFinancialInformationaSummarynancialinformationThefollowingaggregateamountsaredisclosedinrespectoftheparententitySCMGLSCMGLStatementofFinancialPosition20140002013000Currentassets67266752Non-currentassets12348001739285Totalassets12415261746037Currentliabilities2452465391Non-currentliabilities198227Totalliabilities2472265618Netassets12168041680419Issuedcapital15892901589290Reserves35032324Retainedprots2013reserve8880588805Accumulatedlosses2014reserve464794Totalequity12168041680419Protlossfortheyear40132854112Totalcomprehensiveincome40132854112AsaresultoftheimpairmentoftheRegionalCGUthecarryingvalueoftheparententitysinvestmentintherelevantsubsidiarieshasbeenreviewedforimpairment.Thecarryingamountoftheinvestmentwascomparedwiththerecoverableamountofthesubsidiariesandresultedinanimpairmentof481.6million.bGuaranteesenteredintobytheparententity20140002013000CarryingamountincludedincurrentliabilitiesTheparententityhasnotprovidedanynancialguaranteesinrespectofbankoverdraftsandloansofsubsidiariesasat30June201430June2013nil.Theparententityhasnotgivenanyunsecuredguaranteesat30June201430June2013nil.cContingentliabilitiesoftheparententityTheparententitydidnothaveanycontingentliabilitiesasat30June201430June2013nil.dContractualcommitmentsfortheacquisitionofpropertyplantorequipmentAsat30June2014theparententityhadnocontractualcommitments30June2013nil.92SOUTHERNCROSSAUSTEREOANNUALREPORT2014 28.Share-BasedPaymentsInJune2010theBoardapprovedtheintroductionofanexecutivelong-termincentiveplantocommenceon1July2010whichprovidedfortheCEOandseniorexecutivestoreceivegrantsofperformancerightsoverordinarysharesfornilconsideration.Thegrantofrightsareexercisablesubjecttoathreeorfouryearperformanceperiodandthesatisfactionofsetperformancecriteriaduringtheperiod.TheperformancecriteriatakeintoaccountsharepriceappreciationplusreinvesteddividendsexpressedasapercentageofinvestmentandadjustedforchangesintheCompanyscapitalstructure.InorderforperformancerightstovestandconverttosharestheCompanysTSRovertheperformanceperiodmustbeatorabovethe51stpercentileagainstacomparativegroupofselectedmediaandrelatedlistedcompanies.Betweenthe51stand75thpercentileperformancerightswillvestonalinearbasisfrom50ofawardto100ofawardconsequently100ofperformancerightswillvestatthe75thpercentileorhigher.Forthethreeyearperformanceperiodperformancerightsvestprogressivelyoverthethreeyearperformanceperiodwith13rdvestingatyear113rdatyear2and13rdatyear3subjecttoperformancecriteriabeingmet.Forthefouryearperformanceperiodperformancerightsvestprogressivelyoverthefouryearperformanceperiodwith13rdvestingatyear213rdatyear3and13rdatyear4forthefouryearperformanceperiodsubjecttoperformancecriteriabeingmet.TheBoardhasthediscretiontoeitherpurchasesharesonmarketortoissuenewsharesinrespectofvestingperformancerights.TodatetheBoardhaselectedtoissuenewsharesforvestingperformancerights.ThefollowingreconcilesthesharerightsoutstandingatthebeginningandendoftheyearNumberofrights20142013Balanceatbeginningoftheyear49834872615908Grantedduringtheyear11991712921124Exercisedduringtheyear388462264076Forfeitedduringtheyear1146251289469Balanceatendofyear46479454983487ExercisableatendoftheyearRightswerepricedusingaMonte-Carlosimulation-basedvaluationmodelusingthefollowinginputs2013Tranche12013Tranche22013Tranche32013Tranche4Grantdateshareprice1.611.611.611.61Fairvalueatgrantdate1.001.021.031.03ExercisepriceNilNilNilNilDividendyield5.795.795.795.79Riskfreeinterestrate2.602.742.993.29SharepriceTSRvolatility37.9937.9937.9937.99PeergroupTSRvolatilitynanananaPeergroupTSRspreadnanananaCorrelationnanananaDuetochangesintheMonte-Carlosimulation-basedvaluationmodelTSRvolatilityandspreadisnowassessedonanindividualcomparatorcompanybasisratherapeergroupcomparatorbasis.2012Tranche12012Tranche22012Tranche32012Tranche4Grantdateshareprice1.051.051.051.05Fairvalueatgrantdate0.400.490.530.54ExercisepriceNilNilNilNilDividendyield9.769.769.769.76Riskfreeinterestrate3.032.953.053.16SharepriceTSRvolatility38.7638.7638.7638.76PeergroupTSRvolatilitynanananaPeergroupTSRspreadnanananaCorrelationnanananaDuetochangesintheMonte-Carlosimulation-basedvaluationmodelTSRvolatilityandspreadisnowassessedonanindividualcomparatorcompanybasisratherapeergroupcomparatorbasis.93SOUTHERNCROSSAUSTEREOANNUALREPORT2014 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE201428.Share-BasedPaymentscontinued2011Tranche12011Tranche22011Tranche32011Tranche4Grantdateshareprice1.051.051.051.05Fairvalueatgrantdate0.510.620.670.68ExercisepriceNilNilNilNilDividendyield11.8211.8211.8211.82Riskfreeinterestrate4.544.424.474.67SharepriceTSRvolatility54.3654.3654.3654.36PeergroupTSRvolatility17.2417.2417.2417.24PeergroupTSRspread30.8830.8830.8830.88Correlation44.2144.2144.2144.212010Tranche12010Tranche22010Tranche32010Tranche4Grantdateshareprice1.661.661.661.66Fairvalueatgrantdate0.860.880.900.90ExercisepriceNilNilNilNilDividendyield3.493.493.493.49Riskfreeinterestrate4.734.784.774.90SharepriceTSRvolatility47.6247.6247.6247.62PeergroupTSRvolatility22.1522.1522.1522.15PeergroupTSRspread34.9034.9034.9034.90Correlation40.4240.4240.4240.42Thefollowingoutlinessharerightsgrantedtokeymanagementpersonnel.2014BalanceatstartofyearNo.AdditionalKMPaddedfor2014GrantedascompensationNo.ForfeitedNo.VestedExercisedNo.BalanceatendofyearNo.DirectorsMaxMoore-WiltonLeonPasternakChrisdeBoerTonyBellMichaelCarapietPeterHarvieMarinaDarlingExecutivesRhysHolleran1467253340882219002987681490365StephenKelly709539505914203625PeterLewisGuyDobson28894497394386338CraigBruce397171122958171354348775AndreaIngham19262997394290023CliveDickensna1926299739429002330555361926297560228962703023932805524NoteNoperformancerightsvestedat1July2014.94SOUTHERNCROSSAUSTEREOANNUALREPORT2014 2013BalanceatstartofyearNo.GrantedascompensationNo.ForfeitedNo.VestedExercisedNo.BalanceatendofyearNo.DirectorsMaxMoore-WiltonLeonPasternakChrisdeBoerTonyBellMichaelCarapietPeterHarvieMarinaDarlingExecutivesRhysHolleran925613674203315501010131467253StephenKelly48753242846414873557722709539GuyDobson288944288944CraigBruce21107226779081691397171AndreaIngham19262919262916242171852030261976158735305553629.RelatedPartyDisclosuresBalancesandtransactionsbetweentheCompanyanditssubsidiarieswhicharerelatedpartiesoftheCompanyhavebeeneliminatedonconsolidationandarenotdisclosedinthisnote.DetailsoftransactionsbetweentheGroupandotherrelatedpartiesaredisclosedbelow.KeyManagementPersonnelThefollowingpersonswereKeyManagementPersonneloftheCompanyortheGroupduringthewholeoftheyearunlessotherwisestatedanduptothedateofthisreportDirectorsMaxMoore-WiltonChairmanLeonPasternakChrisdeBoerTonyBellresigned30June2014MichaelCarapietPeterHarvieMarinaDarlingresigned16January2014ExecutivesRhysHolleranCEOPeterLewisCFOappointed16June2014until17July2014StephenKellyCFOuntil19January2014GuyDobsonChiefContentOfcerCraigBruceHeadofContentAndreaInghamNationalSalesDirectorCliveDickensDirectorofDigitalStrategyandInnovationDuringtheyearnoKeyManagementPersonneloftheCompanyortheGrouphasreceivedorbecomeentitledtoreceiveanybenetbecauseofacontractmadebytheGroupwithaKeyManagementPersonnelorwitharmofwhichaKeyManagementPersonnelisamemberorwithanentityinwhichtheKeyManagementPersonnelhasasubstantialinterestexceptontermssetoutinthegoverningdocumentsoftheGrouporasdisclosedinthisnancialreport.95SOUTHERNCROSSAUSTEREOANNUALREPORT2014 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE201429.RelatedPartyDisclosurescontinuedaKeyManagementPersonnelcompensationTheaggregatecompensationofKeyManagementPersonneloftheGroupissetoutbelowConsolidated20140002013000Short-termemployeebenets48356754631757Post-employmentbenets176014146518Otherlong-termbenets32618275601Terminationpayments74296Share-basedpayments75964972215058130165776026CliveDickenswasaddedasKeyManagementPersonnelin2014.TherehasonlybeenaCFOforpartoftheyear.ThefunctionsoftheCFOarecurrentlybeingperformedbytheCEOandotherseniormembersofthenanceteam.bKeyManagementPersonnelequityholdingsThenumberofordinarysharesintheCompanyheldduringthenancialyearbyKeyManagementPersonneloftheCompanyandGroupincludingtheirpersonallyrelatedpartiesaresetoutbelow.2014BalanceatstartofyearChangesduringyearBalanceatendofyearDirectorsMaxMoore-Wilton10000001000000LeonPasternak10642161064216ChrisdeBoer148571148571TonyBell172767nanaMichaelCarapiet13479001347900PeterHarvieMarinaDarling100000nanaExecutivesRhysHolleran355055105625460680PeterLewisStephenKelly142170nanaGuyDobsonCraigBruceAndreaInghamCliveDickens4330679105625402136796SOUTHERNCROSSAUSTEREOANNUALREPORT2014 2013BalanceatstartofyearChangesduringyearBalanceatendofyearDirectorsMaxMoore-Wilton18571438571431000000LeonPasternak10642161064216ChrisdeBoer148571148571TonyBell16011812649172767MichaelCarapiet13479001347900PeterHarvieMarinaDarling100000100000ExecutivesRhysHolleran25589999156355055StephenKelly8444857722142170GuyDobsonCraigBruceCathyThomasAndreaIngham49182955876164330679Performancerightsissuedtokeymanagementpersonnelhavebeendisclosedinnote28.cLoanstoKeyManagementPersonnelTherewerenoloansmadetoKeyManagementPersonnel2013nil.dOthertransactionswithKeyManagementPersonnelDuringtheyeartherewerenoothertransactionswithKeyManagementPersonnel.eSubsidiariesandAssociatesOwnershipinterestsinsubsidiariesaresetoutinnote15.Detailsofinterestsinassociatesanddistributionsreceivedfromassociatesaredisclosedinnote10.Detailsofloansduefromassociatesaredisclosedinnote9.fOtherrelatedpartytransactionsDuringtheyearMacquariereceivedorwasentitledtoreceive16156252201317053821asdividendsonsecuritiesheld.At30June2014theGrouphadfundstotalling64669962013407809ondepositwithMacquarie.TheGroupearnsinterestondepositsatcommercialrates.InterestincomefromdepositswithMacquarieincludedinthedeterminationofthenetresultfromordinaryactivitiesfortheyearfortheGroupwas78862013110139.30.SegmentInformationaDescriptionofsegmentsTheGrouphasadoptedAASB8OperatingSegmentswitheffectfrom1July2009.AASB8requiresoperatingsegmentstobeidentiedonthebasisofinternalreportsaboutcomponentsoftheGroupthatareregularlyreviewedbythechiefoperatingdecisionmakerinordertoallocateresourcestothesegmentsandtoassesstheirperformance.ManagementhasdeterminedoperatingsegmentsbasedontheinformationreportedtotheGroupCEOandtheCompanyBoardofDirectors.ManagementhasdeterminedthattheGrouphastwooperatingsegmentsbeingtheregionalFree-to-AircommercialradioandtelevisionbroadcastingsegmentandthemetropolitanFree-to-Airradiobroadcastingsegment.AsthesegmentshavesimilareconomiccharacteristicsthetwooperatingsegmentshavebeenaggregatedaspermittedunderAASB8toformonereportablesegmentbeingFree-to-Airbroadcasting.Free-to-AirbroadcastingFree-to-AirbroadcastingconsistsofthecommercialradioandtelevisionbroadcastlicencesheldthroughoutAustralia.WithFree-to-AirbroadcastingastheonlyremainingsegmentinboththecurrentandpriornancialyearstheinformationrequiredtobedisclosedperAASB8iscontainedonthefaceoftheStatementofComprehensiveIncomeandtheStatementofFinancialPosition.97SOUTHERNCROSSAUSTEREOANNUALREPORT2014 NOTESTOTHEFINANCIALSTATEMENTSFORYEARENDED30JUNE201431.CommitmentsConsolidated20140002013000CapitalcommitmentsCommitmentsfortheacquisitionofplantandequipmentcontractedforatthereportingdatebutnotrecognisedasliabilitiesarepayableasfollowsWithinoneyear12582259Laterthanoneyearbutnotlaterthan5years12582259OperatingleasesCommitmentsforminimumleasepaymentsinrelationtonon-cancellableoperatingleasesarepayableasfollowsWithinoneyear2183622556Laterthanoneyearbutnotlaterthan5years5614061032Laterthan5years4758758438125563142026FinanceleasepaymentcommitmentsFinanceleasecommitmentsarepayableasfollowsWithinoneyear106205Laterthanoneyearbutnotlaterthan5years24579Greaterthanveyears4355284LessFutureleasenancecharges4615309269LeaseliabilitiesprovidedforinthenancialstatementsCurrent84194Non-current22575Totalleaseliability30926932.EventsOccurringafterBalanceSheetDatePeterLewisresignedfromthepositionofCFOeffective30July2014.TheGroupannouncedtheresignationofPeterLewisinanASXannouncementmadeon17July2014.TheGroupannouncedon18August2014thatNickMcKechniehasbeenappointedtothepositionofCFOcommencing8September2014.IntheinterimthefunctionsoftheCFOarebeingperformedbytheCEOandotherseniormembersofthenanceteam.On19August2014theBoardannouncedtheappointmentofRobMurrayKathyGrampandGlenBorehamasNon-ExecutiveIndependentDirectors.Theywillcommencedutiesasof1September2014andstandforelectionattheforthcomingAGMinOctoberthisyear.98SOUTHERNCROSSAUSTEREOANNUALREPORT2014 DirectorsDeclarationTheDirectorsoftheCompanydeclarethat1.intheDirectorsopiniontherearereasonablegroundstobelievethatthecompanywillbeabletopayitsdebtsasandwhentheybecomedueandpayable2.intheDirectorsopinionthenancialstatementsandnotesassetoutonpages58to98areinaccordancewiththeCorporationsAct2001includingcompliancewithaccountingstandardsandgivingatrueandfairviewofthenancialpositionandperformanceofthecompanyandtheconsolidatedentityand3.theDirectorshavebeengiventhedeclarationsrequiredbysection295AoftheCorporationsAct2001.4.Note1aconrmsthatthenancialstatementsalsocomplywithInternationalFinancialReportingStandardsasissuedbytheInternationalAccountingStandardsBoard.SignedinaccordancewitharesolutionoftheDirectorsmadepursuanttosection2955oftheCorporationsAct.OnbehalfoftheDirectorsMaxMoore-WiltonLeonPasternakChairmanDeputyChairmanSydneyAustraliaSydneyAustralia19August201419August2014DIRECTORSDECLARATIONFORYEARENDED30JUNE201499SOUTHERNCROSSAUSTEREOANNUALREPORT2014 PricewaterhouseCoopersABN52780433757FreshwaterPlace2SouthbankBoulevardSOUTHBANKVIC3006GPOBox1331MELBOURNEVIC3001T61386031000F61386031999www.pwc.com.auLiabilitylimitedbyaschemeapprovedunderProfessionalStandardsLegislation.IndependentauditorsreporttothemembersofSouthernCrossMediaGroupLimitedReportonthefinancialreportWehaveauditedtheaccompanyingfinancialreportofSouthernCrossMediaGroupLimitedthecompanywhichcomprisesthestatementoffinancialpositionasat30June2014thestatementofcomprehensiveincomestatementofchangesinequityandstatementofcashflowsfortheyearendedonthatdateasummaryofsignificantaccountingpoliciesotherexplanatorynotesandthedirectorsdeclarationforSouthernCrossAustereotheconsolidatedentity.Theconsolidatedentitycomprisesthecompanyandtheentitiesitcontrolledatyearsendorfromtimetotimeduringthefinancialyear.DirectorsresponsibilityforthefinancialreportThedirectorsofthecompanyareresponsibleforthepreparationofthefinancialreportthatgivesatrueandfairviewinaccordancewithAustralianAccountingStandardsandtheCorporationsAct2001andforsuchinternalcontrolasthedirectorsdetermineisnecessarytoenablethepreparationofthefinancialreportthatisfreefrommaterialmisstatementwhetherduetofraudorerror.InNote1thedirectorsalsostateinaccordancewithAccountingStandardAASB101PresentationofFinancialStatementsthatthefinancialstatementscomplywithInternationalFinancialReportingStandards.AuditorsresponsibilityOurresponsibilityistoexpressanopiniononthefinancialreportbasedonouraudit.WeconductedourauditinaccordancewithAustralianAuditingStandards.Thosestandardsrequirethatwecomplywithrelevantethicalrequirementsrelatingtoauditengagementsandplanandperformtheaudittoobtainreasonableassurancewhetherthefinancialreportisfreefrommaterialmisstatement.Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialreport.Theproceduresselecteddependontheauditorsjudgementincludingtheassessmentoftherisksofmaterialmisstatementofthefinancialreportwhetherduetofraudorerror.Inmakingthoseriskassessmentstheauditorconsidersinternalcontrolrelevanttotheconsolidatedentityspreparationandfairpresentationofthefinancialreportinordertodesignauditproceduresthatareappropriateinthecircumstancesbutnotforthepurposeofexpressinganopinionontheeffectivenessoftheentitysinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebythedirectorsaswellasevaluatingtheoverallpresentationofthefinancialreport.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.IndependenceInconductingourauditwehavecompliedwiththeindependencerequirementsoftheCorporationsAct2001.INDEPENDENTAUDITORSREPORTTOTHEMEMBERSOFSOUTHERNCROSSMEDIAGROUPLIMITED100SOUTHERNCROSSAUSTEREOANNUALREPORT2014 AuditorsopinionInouropinionathefinancialreportofSouthernCrossMediaGroupLimitedisinaccordancewiththeCorporationsAct2001includingigivingatrueandfairviewoftheconsolidatedentitysfinancialpositionasat30June2014andofitsperformancefortheyearendedonthatdateandiicomplyingwithAustralianAccountingStandardsincludingtheAustralianAccountingInterpretationsandtheCorporationsRegulations2001.bthefinancialreportandnotesalsocomplywithInternationalFinancialReportingStandardsasdisclosedinNote1.ReportontheRemunerationReportWehaveauditedtheremunerationreportincludedinpages38to56ofthedirectorsreportfortheyearended30June2014.Thedirectorsofthecompanyareresponsibleforthepreparationandpresentationoftheremunerationreportinaccordancewithsection300AoftheCorporationsAct2001.OurresponsibilityistoexpressanopinionontheremunerationreportbasedonourauditconductedinaccordancewithAustralianAuditingStandards.AuditorsopinionInouropiniontheremunerationreportofSouthernCrossMediaGroupLimitedfortheyearended30June2014complieswithsection300AoftheCorporationsAct2001.MattersrelatingtotheelectronicpresentationoftheauditedfinancialreportThisauditorsreportrelatestothefinancialreportandremunerationreportofSouthernCrossMediaGroupLimitedthecompanyfortheyearended30June2014includedonSouthernCrossMediaGroupLimitedswebsite.ThecompanysdirectorsareresponsiblefortheintegrityofSouthernCrossMediaGroupLimitedswebsite.Wehavenotbeenengagedtoreportontheintegrityofthiswebsite.Theauditorsreportrefersonlytothefinancialreportandremunerationreportnamedabove.Itdoesnotprovideanopiniononanyotherinformationwhichmayhavebeenhyperlinkedtofromthefinancialreportortheremunerationreport.Ifusersofthisreportareconcernedwiththeinherentrisksarisingfromelectronicdatacommunicationstheyareadvisedtorefertothehardcopyoftheauditedfinancialreportandremunerationreporttoconfirmtheinformationincludedintheauditedfinancialreportandremunerationreportpresentedonthiswebsite.PricewaterhouseCoopersChrisDoddMelbournePartner19August2014101SOUTHERNCROSSAUSTEREOANNUALREPORT2014 ADDITIONALSTOCKEXCHANGEINFORMATIONThecompanyonlyhasoneclassofsharesfullypaidordinarysharesthereforeallholderslistedholdfullypaidordinarysharesandeachholderhasthesamevotingrights.Therearenounlistedsecuritiesandthereiscurrentlynoon-marketbuyback.TwentyLargestShareholdersat2September2014FullypaidordinarysharesofissuedcapitalMacquarieDiversifedAssetAdvisoryPtyLimited17371925324.63JPMorganNomineesAustraliaLimited12337564617.49NationalNomineesLimited8344518211.83CiticorpNomineesPtyLimited7947694411.27HSBCCustodyNomineesAustraliaLimited7506841910.64BNPParibasNomsPtyLimited176372972.50RBCInvestorServicesAustraliaNomineesPtyLimitedPIPooledAC127942881.81RBCInvestorServicesAustraliaNomineesPtyLimitedBKCUSTAC100358931.42ArgoInvestmentsLimited73907841.05CladelaPtyLimitedMooreFamilyAC67206720.95MacquarieCapitalGroupLtd57946530.82UCAGrowthFundLimited53000000.75AMPLieLimited45288310.64AvanteosInvestmentsLimited2477966DNRAC27483100.39QICLimited24857290.35MrNicholasMoore19757590.28CladelaPtyLimitedMooreSuperannuationAC19489980.28AotearoaInvestmentCompanyPtyLimitedRobertsInvestmentno2AC18571430.26WaratahCapitalPartnersPtyLimited12400000.18VenamayPtyLimited10750000.1561861880187.72DistributionofShareholdingsat2September2014RangeNo.ofshareholdersNo.ofshares1100085835232010015000190156748095001100001083852440810001100000163143173359100001andover1306475220905603705246986Holdinglessthanamarketableparcel47841545SubstantialShareholdersat2September2014FullypaidordinarysharesMacquarieGroupLimited186629464AllanGrayAustraliaPtyLtdanditsrelatedbodiescorporate106953118DimensionalEntities35293487328876069102SOUTHERNCROSSAUSTEREOANNUALREPORT2014 Thispagehasbeenleftblankintentionally103SOUTHERNCROSSAUSTEREOANNUALREPORT2014 Thispagehasbeenleftblankintentionally104SOUTHERNCROSSAUSTEREOANNUALREPORT2014 CORPORATEDIRECTORYCompanySecretaryMs.JaneSummerhayesRegisteredOfceLevel2257ClarendonStreetSouthMelbourneVIC320561392521019ShareRegistryComputershareInvestorServicesPtyLimitedYarraFalls452JohnstonStreetAbbotsfordVIC3067TheSouthernCrossAustereoAnnualReport2014isprintedonecoStarwhichisanenvironmentallyresponsiblepapermadeCarbonNeutral.ThegreenhousegasemissionsofthemanufacturingprocessincludingtransportationofthenishedproducttoBJBallPapersWarehouseshasbeenmeasuredbytheEdinburghCentreforCarbonManagementECCMandoffsetbytheCarbonNeutralCompanyandthebresourcehasbeenindependentlycertiedbytheForestStewardshipCouncilFSC.ecoStarismanufacturedfrom100PostConsumerRecycledpaperinaProcessChlorineFreeenvironmentundertheISO14001environmentalmanagementsystem. SOUTHERNCROSSAUSTEREOANNUALREPORT2014