Seven might have had a win in court yesterday against former employee Amber Harrison, but, overall, chairman Kerry Stokes and his Seven West Media group are not having a good time of it. As well as the dispute with Harrison, first-half net profit fell 91%, the dividend was cut in half to just 2 cents a share, and yesterday Seven Group Holdings (which holds the Stokes stake in Seven West) cut the value of that holding by $157 million. In Seven West’s lower interim profit a week ago, an impairment charge of $75.5 million against the Yahoo7 joint venture was revealed. This morning, the corporate regulator, ASIC, issued a statement saying that impairment followed an intervention by it with Seven West. ASIC said in the statement:
“ASIC notes the decision by Seven West Media Limited (Seven West) on 15 February 2017 to write down its investment in Yahoo7 by $75.5 million in its financial report for the half-year ended 24 December 2016.”
“ASIC reviewed Seven West’s financial report for the year ended 25 June 2016, as part of its ongoing financial surveillance program. That review led ASIC to raise concerns regarding the carrying amount of the Yahoo7 investment.
“As outlined in ASIC media release 16-428MR (ASIC calls on preparers to focus on useful and meaningful financial reports), impairment testing and asset values remains a focus area of our financial reporting surveillances.”
So what does that actually mean? It’s a warning to Stokes and Seven West Media that the regulator has them on a watch list and will also be closely monitoring the Amber Harrison court case.