News Corp columnist Terry McCrann went a bit troppo in his weekend column in The Australian in which he wondered what to do with Peter Costello — McCrann concluded that because Malcolm Turnbull was a dud, Peter Costello “is the only sensible alternative”. He wrote:
“In the good old vernacular, it is now a case of ‘Costello or the bush’. Not just for the party and the coalition, but for the country.”
Well, judging by his performance on his only public company board — Nine Entertainment Co, where he is chairman — Costello should be given an F. Two female directors quit — one to become the CFO of Fortescue Metals, the other, Holly Kramer (a well-regarded a director), stepped down to rationalise her portfolio (i.e. flick the weakest board with insufficient prestige — Nine).
But Costello’s biggest failing is that he and his board had to be told by the corporate regulator ASIC to impair the value of the company’s TV broadcasting licences by $260 million for the December half year. As ASIC said on its website where it revealed on February 27 the instruction to the Nine board:
“ASIC notes the decision by Nine Entertainment Co. Holdings Limited (Nine) to write down goodwill relating to the Nine Network by $260 million in its financial report for the half-year ended 31 December 2016.
“ASIC reviewed Nine’s 30 June 2016 financial report as part of its ongoing financial surveillance program. ASIC raised concerns regarding the value of the goodwill relating to the Nine Network.”
Costello was in the same boat as Kerry Stokes, whose 41% owned associate, Seven West Media, had to be reminded by ASIC to impair the value of its Yahoo7 joint venture by US$75.5 million in the December half.
Good company, but for someone of Costello’s standing (and according to McCrann, prime ministerial material) to be chairing the board of a company and not be aware of the requirements so far as the valuation of assets (called cash generating units for the purpose of impairment testing) is quite telling. What ASIC was really saying to Nine, Seven and the others is that the asset values were out of whack at June 30, 2016, and we are reminding you to check their values and impair if you have to. Was regular impairment testing s carried out?
Equally weak was the explanation trotted out by Nine (not a mention of ASIC):
“Impairment testing on Nine Network determined that an impairment loss in Nine Network’s goodwill of $260 million was required and this has been recognised in the period. The recent decline in market activity and resulting fall in EBITDA has led to this impairment of the Nine Network CGU during the period.”
Prime ministerial material? — Glenn Dyer