--Seven Group can't decide on News Corp.'s prospective A$1.97
billion bid for Consolidated Media in absence of proposal
--Group FY12 net profit more than doubles to A$165.9 million
--Company sees strong growth in industrial services
(Adds CEO comments, investor comment, share-price reaction)
By Gavin Lower
MELBOURNE--Seven Group Holdings Ltd. (SVW.AU) can't decide about
selling its stake in Consolidated Media Holdings Ltd. (CMJ.AU) to
News Corp. until News Corp. makes a proposal, Seven Group said
Tuesday as it posted a doubling of net profit for fiscal 2012.
News Corp. has proposed buying Consolidated Media for 1.97
billion Australian dollars (US$2.04 billion). News Corp. owns Dow
Jones & Co., publisher of this newswire and The Wall Street
Journal.
Seven Group has a 25% interest in Consolidated Media. It also
owns heavy-equipment company WesTrac, the sole Caterpillar
dealership in North Eastern China and Western Australia and New
South Wales states. Seven Group has a 33% interest in Seven West
Media Ltd. (SWM.AU) and investments in the Agricultural Bank of
China.
Consolidated Media owns 25% of Australia's pay-TV company
Foxtel, while News Corp. owns 25% and telecommunications giant
Telstra Corp. (TLS.AU) owns the remainder. Consolidated Media also
owns 50% of Premier Media Group, which owns and operates pay-TV
sports channel Fox Sports, while News Corp. owns the other 50%.
Chief Executive Peter Gammell told analysts and reporters during
an earnings conference call Tuesday that the company is yet to
decide whether or not to accept News Corp.'s bid for Consolidated
Media.
"It's hard to make a decision without a proposal. In the
fullness of time I'm sure that News will come forward with some
proposal and we'll give you our reaction at that time," Mr. Gammell
said.
Seven Group has asked competition regulator the Australian
Competition & Consumer Commission to review its own proposal to
acquire all the shares in Consolidated Media it does not already
own. The ACCC proposes to decide on Seven Group's proposal Sep.
13.
"That doesn't mean to say that we are going to buy it; it just
means we want to know whether we can buy it then we'll make that
decision as well," Mr. Gammell said.
Meanwhile, Seven Group Tuesday reported more than doubling its
net profit for the year to June 30. Net profit was A$165.9 million,
up from the previous year's A$70.4 million, helped by strong growth
in its industrial-services division, Seven Group said in a
statement.
Seven Group said underlying net profit excluding significant
items was A$332.4 million, up 39%--which is above guidance in
February that net profit before significant items would grow
20%-30%.
It said significant items included a gain of A$129.8 million
from its sale of vividwireless and adjusting down the value of its
holding in Seven West Media.
The company said its industrial-services division--which
includes WesTrac, AllightSykes and 45% of Coates Hire--saw earnings
before interest, tax, depreciation and amortization grow 65% to
A$514.9 million.
The company said WesTrac's Australian division saw product sales
in fiscal 2012 grow 82% to A$2.24 billion, fueled by expansion in
coal and iron ore mining.
Rhett Kessler, portfolio manager at Pengana Australian Equities
Fund, which holds Seven Group shares, said Seven Group's WesTrac
results "exceeded everybody's expectations, even including most
optimistic forecasts."
"As they sell more machines into the field, their business is
building sustainable profitable growth," he said, noting
after-sales servicing of active machinery provides a significant
earnings stream for the company.
Investors welcomed Seven Group's results, with the company's
shares at 0404 GMT up 4.6% at A$7.95.
Write to Gavin Lower at gavin.lower@wsj.com
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