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Jun 11 , 2018 / By :

Andrew Wu examines the strengths and weaknesses of the six fast bowling candidates for the third Test in Perth.
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1. PETER SIDDLE

Case for: Victoria’s most famous vegetarian became Michael Clarke’s go-to man in Adelaide when the Test was on the line – and delivered in spades. The whole country saw his heroics on the final day but it’s worth remembering it was his fiery spell two days earlier that turned the game Australia’s way.

 Case against: After bowling 53 overs in Brisbane, Siddle headed into red flag territory with his 64 overs in Adelaide. Australia’s medical staff will be racing against the clock to patch him up for Friday but there must be concerns he could be vulnerable to injury should he back up in Perth.

2. BEN HILFENHAUS

Case for: The Tasmanian made good improvement in Adelaide and he’ll appreciate the WACA even more where the Fremantle Doctor should help his outswinger. The 29-year-old destroyed India in Perth last year and despite his technical troubles remains clearly Australia’s best swing bowler.

 Case against: Hilfenhaus is yet to rediscover the form of 12 months ago and appears to be paying the price for a preparation dominated by Twenty20 cricket. Like Siddle, he’s also bowled plenty of overs this series and the short turnaround between Tests may count against him in any line-ball call.

3. MITCHELL STARC

Case for: He was close to playing in Adelaide so logic says he should come straight in for the injured James Pattinson. A left-armer, Starc provides much-needed variation to the attack and he will also be suited by the Doctor.

 Case against: The youngster is yet to hit his straps since returning from the Champions League and selectors may decide to instead back Johnson’s experience and proven track record in Perth and against South Africa. It’s hard to see the hosts having two left-armers in the XI.

4. MITCHELL JOHNSON

Case for: The mercurial Johnson seems to wear a cape whenever he wears the baggy green cap out west. His career-best 8-61 in Perth four years ago and his devastating spell at the venue in the last Ashes series will be very hard for the selectors to ignore.

 Case against: As difficult as it is to forget Johnson’s outstanding numbers in Perth, his waywardness and inconsistency towards the end of his last stint in the Test side is also hard to overlook. Johnson says he has improved in this area, so too do many in the know. But are the selectors game enough to find out?

5. JOSH HAZLEWOOD

Case for: First-class batsmen around the country have been impressed by the 21-year-old from Tamworth. He hits the deck hard, generates steep bounce with his extra height and will appreciate a lively surface. Former Test quick Stuart Clark is adamant he won’t let Australia down if handed the opportunity.

 Case against: The friendly giant is still finding his feet at Sheffield Shield level and his record of 43 wickets at 32 hardly screams ”pick me”. If Siddle is passed fit to play, Hazlewood will most likely have to wait until Boxing Day at the earliest to make his Test debut.

6. JOHN HASTINGS

Case for: He does not appear the most threatening of bowlers but he keeps taking wickets. On the comeback trail from shoulder surgery, Hastings has collected 22 Shield victims at 19 this summer, including a five-for in his last game. Also a handy lower-order batsman.

  Case against: At around 130km/h Hastings is not overly quick, nor does he produce sharp movement. Can you play Test cricket with such a repertoire? And if you were Graeme Smith, would you rather face Johnson or Hastings?

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Jun 11 , 2018 / By :

UNCERTAINTY in the market about recent manoeuvring around Qantas and its share register reflects the embryonic nature of the shareholder activism asset management class in this country. The emergence of Mark Carnegie and his $130 million Companion Fund on two share registers, Qantas and Washington H. Soul Pattinson, suggests, however, that we are now on a steeper learning curve.
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There’s always been big investors willing to buy into a company and agitate for change. Robert Holmes a Court was a classic example here in the ’80s. Shareholder activists have, however, become very active overseas since the global crisis, as traditional takeovers fail to win financing. A significant investment banking business providing reactive and pre-emptive defence advice to targets has grown up on the other side, dominated as is often the case by Goldman Sachs.

US investor Carl Icahn is the activist movement’s whale. He still mounts outright takeovers, but also deploys and recycles more than $US10 billion ($A9.5 billion) of gearable capital on shareholder activist strategies at a host of companies. Other prominent activist shareholders are Nelson Pelz, who has taken on groups including Heinz and

Cadbury-Schweppes, Third Point’s Daniel Loeb, who bought into and now sits on the board of Yahoo, Relational Investors’ Ralph Whitworth, and London-based Children’s Investment Fund, a 6 per cent shareholder in Australia’s QR National rail freight group.

Campaigns by aggressive players such as Icahn for break-ups, spin-outs, board changes and buybacks place shareholder activists broadly in the mergers and acquisitions business, but there are key differences between them and the takeover merchants that were active ahead of the global crisis.

Shareholder activism very rarely involves a full bid, and in that respect questions about the funding resources Carnegie’s group has behind it are wide of the mark: activism is a ”capital-light”, medium-term strategy that involves the acquisition of a seed holding, often using derivatives, and then an attempt to recruit other shareholders in what is, in essence, a political campaign for strategic change. Activist fund operators raise money from wealthy investors and institutions in much the same way other ”alternative investment” vehicles including hedge funds and private equity funds do, and charge similar fees, with bonus fees applying to above-market returns.

Their backers understand that successful plays will be outnumbered by ones that fail to gain traction, and invest in the belief that the average return will beat the market. They can fund specific corporate plays or a portfolio of activist positions, and the roll call of those reporting to be backing Carnegie’s tilt at Qantas reflects the mix, ranging from former chief executive Geoff Dixon and former Qantas chief financial officer Peter Gregg to more generally focused investors including Harvey Norman founder Gerry Harvey and advertising guru John Singleton.

In two of about half a dozen developing plays that have entered the public domain, Carnegie has used an equity swap with Credit Suisse to put his foot on about 1.5 per cent of Qantas, and has written an option with the Perpetual funds management group over a $30 million stake in Soul Pattinson and its stablemate, Brickworks. The option covers about 5 per cent of Perpetual’s total holding in those two companies, which are linked by cross-holdings. It will be exercised if the shares rise to undisclosed targets, perhaps as a result of Carnegie easing or unlocking the cross-holding structure.

Carnegie is telling institutions that they are heavily exposed to large Australian companies that are 30 per cent behind the rest of the world in capital productivity, and that they can close the gap by supporting activist strategies.

The task for him and any activist manager is not to pay the cheapest price for control, but to successfully lobby for structural change, usually initially behind closed doors and then, if the target resists, in public.

Retail shareholders can be recruited in campaigns, either through direct appeals (activists such as Loeb routinely publicise correspondence with target companies) or in Australia using shareholder meetings that actually see the target company financially subsidising the activist campaign.

Index funds are a less important vote catchment than their wholesale fund manager clients, who retain voting rights, quantitative funds that invest mathematically are difficult to sway and proxy advisers are important gatekeepers to traditional institutional investors.

Talks with Qantas shareholders appear to have led the Carnegie group to believe for example that the owners of about 14 per cent of the company including Capital of the US might be prepared back a campaign for board changes and asset disposals including the sale of half of Qantas’ lucrative Frequent Flyer program.

The unwritten rule of activist campaigns is that uncommitted shares will break two-thirds in favour of the incumbent board, however, and that means that Carnegie’s activist group needs to be backed by at least 26 per cent of the register to hope to carry a majority vote. Taking its own stake into account it needs another 10 per cent, and funds that might get it over the line including industry funds that own more than 10 per cent of Qantas all rely on proxy advisers.

Talks with Qantas shareholders and their own advisers do not appear to have accelerated, leaving the situation unresolved, and it may well stay that way in the run up to the Christmas break. Carnegie’s progress on the Qantas project in the New Year would depend on how much of register he gets onside, and also, perhaps on whether Qantas responds with initiatives of its own. A board shuffle is a standard defensive response to activism in the US market.

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Jun 11 , 2018 / By :

SHARES in the region rallied and the dollar shifted higher after Greece reached a landmark deal to restructure its faltering debt bailout program.
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The eurozone and the International Monetary Fund thrashed out a series of compromises in Brussels, unlocking a long-delayed €43.7 billion ($A54.2 billion) payment and granting significant debt relief for decades to come.

The measures include reducing interest rates on Greece’s bailout loans to levels so low that other eurozone countries will likely incur losses on them, but will allow Athens significant breathing space to reduce its debt levels below current projections.

The agreement provided the Australian market with a shot of confidence, pushing shares to a two-week high, while the Australian dollar shifted closer to $US1.05, reaching a two-month high of $US1.0492.

Economist Stephen Koukoulas said the Australian dollar could continue to rise to $US1.08 in the next few months.

“Certainly we’ve had commodity prices no longer falling, particularly iron ore and others have actually moved well above the lows that we saw in October,” he said. ”We are getting job creation and unemployment is still below 5.5 per cent. There is evidence that housing construction is turning up.”

But Commonwealth Bank analyst Alex Stanley said the deal was just the latest of many and Greece had a long way to go before reaching sustainable debt levels.

”[The] forecast numbers appear to imply austerity, a significant surplus and a significant growth in GDP all at the same time – a combination which has proved very difficult to achieve up until now,” he said.

Mr Stanley said the deal did provide meaningful aid to Greece, mostly in the form of reduced and deferred interest costs. And while the deal falls just short of a direct debt write-down, parts of the plan ”seemed to be a write-down in disguise”.

”The European leaders continue to duck the question of what happens if [more realistically, when] Greece needs to default on some of the money it owes to the European Official sector,” he said.

The original bailout rewrite agreed for Greece in March was meant to reduce Greece’s debt to 120 per cent of gross domestic product by 2020.

The IMF is pushing for a so-called ”haircut” or write-down of debt by eurozone governments in the way banks wrote off most of the loans due to them earlier this year, but Germany has come out against this ahead of a general election next year.

Other AAA-rated states, though, have said they would ”not exclude” the possibility of a write-down of debt from 2015 onwards.

Greece has been waiting since June for a loan instalment of €31.2 billion, part of a €130-billion rescue granted earlier this year.

In exchange, Athens has pledged to implement a new series of radical austerity measures to cut its annual overspending.

“It’s been hard work,” said IMF chief Christine Lagarde of the negotiations.

Greece, where the eurozone’s debt crisis erupted in late 2009, is the currency area’s most heavily indebted country, despite a big ”haircut” this year on privately-held bonds.

Its economy has shrunk by nearly 25 per cent in five years.

The key question remains whether Greek debt can become sustainable without eurozone governments having to write off some of the loans they have made to Athens.

Jean-Claude Juncker, who chaired the meeting as head of the group of eurozone finance ministers, said: “This has been a very difficult deal.”

With AGENCIES

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Jun 11 , 2018 / By :

Gerry Harvey… retailers are feeling the pinch.HARVEY Norman executive chairman Gerry Harvey says industry conditions remain dire and he expects more retailers will go bust next year after the Christmas sales are over.
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”There are more retailers currently under pressure than I’ve ever seen … I’ve been in retail 50 years,” he told reporters after the company’s annual meeting on Tuesday.

His prediction comes less than a month after the collapse of discount chain operator Retail Adventures, which announced that 32 stores will close and 650 jobs go by the end of this month.

Mr Harvey warned that despite the wave of failures over the past two years, ”there’s plenty more to go because I have them all coming to see me [saying] ‘Will you take us over, will you buy a share in the company’ etc etc.”

He said many of these businesses were hanging on for the Christmas sales but they know the first half of next year will be ”extremely difficult”.

Many of these companies just needed a little push and they would be gone, he said.

”You’ve got so many companies out there in that situation.”

He told investors the long-term plan for Harvey Norman – which is the only retailer backed by a

multibillion-dollar property portfolio – was to outlast the competition.

”If anyone is going to be the last man standing it’s Harvey Norman,” Mr Harvey said.

Looking ahead to Christmas, Mr Harvey expected sales to be up on last year if the hot weather holds.

”If we have a really hot period across Australia and we sell a lot of airconditioners, then we’ll definitely beat last year,” he said. ”If it’s cold … then we’ll battle because airconditioners are a big part of our business in December.”

He defended the amount of financial support the retailer was giving its franchisees to maintain service levels in the lead-up to the crucial Christmas sales.

”Losing staff at this point in time … going into Christmas and going into the new year, is just unacceptable,” he said.

Harvey Norman chief executive Katie Page, who is Mr Harvey’s wife, said: ”We cannot have consumers going into our stores and not getting the best customer service.”

Mr Harvey confirmed that he was a ”passive” investor in Qantas but would not comment on whether he was part of a high-profile group of investors seeking to challenge the strategic direction of the airline.

”I’m not saying anything for, or against, the Qantas organisation,” he said. ”The Qantas share price at the moment is about half its asset backing, and if it’s half its asset backing I look at that and think, that’s a good buy, it could double in price. It’s like Harvey Norman, it’s 20 per cent below its asset backing. That’s a good buy.”

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Jun 11 , 2018 / By :

AN OFFICIAL review has found Australia is ”underperforming” in its bid to prevent foreign companies from selling their goods below cost on the domestic market, and has urged the government to set up a specialist ”anti-dumping” agency.
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Dumping involves foreign firms selling their goods to Australians below cost. Manufacturers say the practice is increasingly common, as the high dollar allows foreign suppliers to slash their prices to unsustainable levels.

With the number of complaints over dumping tripling in the past year, a review by former Victorian premier John Brumby has found there is a strong case for a dedicated agency to deal with the problem.

Australia’s efforts to combat the practice – currently led by the Customs Department – were ”under-resourced and underperforming” and this threatened to erode confidence in an open trade regime, Mr Brumby said.

Dumping was only likely to increase, he said, as the weak global economy meant a growing surplus of goods on international markets.

”The low profile and limited resources at a time of intense international competition has undermined public confidence in the system, especially from a manufacturer perspective,” Mr Brumby wrote in the report.

The formation of a specialised agency, if adopted by Canberra, would be welcome news to manufacturers, who have complained that alleged dumping incidents are being ignored by Customs.

The chief executive of Australian Industry Group, Innes Willox, said the recommendations were ”sensible”, as they would make it easier to resolve complaints, more quickly and cheaply. The national secretary of the Australian Workers Union, Paul Howes, said a dedicated anti-dumping agency would be ”major step forward” in giving the sector an opportunity to compete.

”We’ve seen examples of overseas companies backed by government subsidies who have dumped large quantities of goods or commodities on the Australian market at prices below the cost of production,” Mr Howes said.

But some economists are sceptical, saying that measures to combat dumping could end up being a form of protection for inefficient industries.

The chairman of the Productivity Commission, Gary Banks, said this month that governments should limit ”anti-dumping” policies because they could prop up less competitive firms at the expense of Australian consumers.

The government is expected to respond to Mr Brumby’s recommendations in the coming weeks.

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Jun 11 , 2018 / By :

SHARES in global vaccine maker CSL reached a record high on Tuesday after the company upgraded its profit forecast to 20 per cent, helped by a rise in Gardasil royalties.
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The Melbourne-based company, which makes the cervical cancer vaccine as well as other life-saving blood treatments, had originally anticipated profit to grow by just 12 per cent.

Its shares jumped almost $3 on the news, to a record $50.17.

The company reported a net profit of $US1 billion last financial year. Its new outlook has been adjusted to remove the impact of exchange rate movements, after it started reporting in US dollars this year.

Chief executive Brian McNamee said the increased outlook was underpinned by the performance of CSL Behring, its large-scale plasma branch. ”A number of factors have contributed including a higher level of sales, a better sales mix and improved efficiencies across the supply chain,” he said.

”Also contributing to the better outlook is higher than anticipated royalty income from sales of Gardasil.”

In 2007, the Australian government introduced Gardasil as part of a mass vaccination program against the human papilloma virus, which was offered to women and girls aged up to 26.

CSL also manufactures vaccines for influenza, tetanus, measles, mumps and hepatitis A and B.

Macquarie Group analyst Craig Collie said the positive outlook suggested the company was benefiting from its current position in the healthcare market.

”It’s clearly a strong upgrade and confirms just how positive market conditions are right now and how strong their competitive position is right now.”

Last month, CSL announced it would buy back another $900 million worth of shares, or 4 per cent of issued capital, over the next 12 months.

UBS analyst Andrew Goodsall said the higher-than-expected outlook showed CSL was benefiting from its competitor, Baxter, undergoing a plant refurbishment that had cut its production by about 20 per cent.

”There has been robust demand as well,” he said. ”We think there is still growth in healthcare, but there are obviously things going on that are peculiar to this [plasma] industry.”

Dr McNamee, who is credited for building the company up from a local government enterprise to a global business, will end his 23-year tenure as chief executive in the middle of the year. In 2000, he led the takeover of Swiss counterpart ZLB Bioplasma when he was fighting testicular cancer. Four years later the company acquired a second big target, US-based Aventis Behring.

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Jun 11 , 2018 / By :

‘SHOVE them up your arse.” That’s how outgoing Cabcharge director Sharon Doyle responded to efforts to get the taxi payments system operator to participate in a survey of corporate carbon emissions.
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She also told the chief executive of the Investor Group on Climate Change, Nathan Fabian, that he was ”completely brain dead”, a halfwit and an idiot.

After less than a year at the boardroom table, Doyle is retiring as a director of Cabcharge at its annual meeting on Wednesday.

But the stoush took place in 2010, when she was Cabcharge’s company secretary. Back then, the IGCC, which provides research on the effects of climate change to institutional members including CBUS, Perpetual and UBS, was questioning companies on behalf of the Carbon Disclosure Project, a survey of the carbon emissions of about 3000 companies around the world. (The CDP has since taken over the Australian survey.)

On June 5, 2010, the CDP team at the IGCC sent an email to Cabcharge reminding the company that it hadn’t responded to the survey, sent out in February.

The team pointed out it was acting on behalf of many large instos, ”likely to own a significant proportion of your company and have asked for the information request to be completed”.

While the deadline for responses had passed, Cabcharge was offered an extension to June 30. By return email Doyle asked for details of the investors represented by the IGCC.

”It seems very strange that they would request the information form [sic] you when in fact we have a very open line of communication here with investors,” she wrote.

Fabian responded on June 9, referring Doyle to the list of members on the IGCC website.

”We are not in the habit of providing contact details, but we will certainly relay your written communication and advise these investors of your decision regarding participation,” he said.

Mild words, perhaps, but Doyle was unimpressed.

”For the record I would appreciate a copy of the email to which you claim I sent but I suspect there isn’t one and this just part of your tactics to try and make me regret not filling in your self-serving and no doubt time-consuming survey so the company you work for can gain some credibility and somehow make money,” she said in a June 10 email.

She said Cabcharge’s ”dedication to the environment is second to none. Of particular annoyance to me however is the attitude of organisations like the one you are employed by that try and wring as much money out of the topic as possible by providing information to investors about how each company deals with it.

”I would almost place a bet on the fact that the organisation that you work for couldn’t give a collective rats clacker about the effect of the environment, although I suspect that your company should be replanting a forest in South America on a daily basis to make up for the global warming from the hot air you all produce over there.

”I do not appreciate your tactics Nathan and would ask that you cease and desist from any further attempts to bully Cabcharge into providing you information so that you can on sell it.”

Email ire

FABIAN responded on June 28 with a note pointing out the email Doyle doubted was to be found at the bottom of the email chain in which she was participating. Cabcharge would be recorded as having declined to participate in the survey, he said.

It was this missive that provoked the allegations of brain death, half-wittedness and idiocy.

”I have absolutely no problem with you including my correspondence in whatever publication that surprisingly somehow allows you to be gainfully employed,” Doyle wrote back that day. ”In fact Nathan, subject to you being comfortable with everyone realising that you are in fact as I suspected completely brain dead I would be more than delighted for you [to] share that fact with the world.

”I do not usually provide gratuitous legal advice to idiots incapable of independent thought but if you do publish the emails Nathan it is you who has published them so when the jokes about you start circulating please do not think that I will in any way be liable for the outcome to your reputation (if you have one).”

She told Fabian that ”attempted blackmail isn’t really the best way to go about luring potential clients but I must say Nathan that I would not have expected anything less from you. Now take your publication and your threats Nathan and shove them up your arse.”

Fabian confirmed the email chain was genuine but declined to comment on its content.

”IGCC never charged anyone to participate in the CDP,” he told CBD. He said the organisation did not charge for its reports, which are available on its website. Doyle has yet to return CBD’s call.

Groundhog day

NO SIGNS of board evolution at Genesis, where angry shareholders led by interim Ivanhoe CEO Ines Scotland sacked all but two directors at the gold explorer’s annual meeting on Monday. Instead, one big shareholder proposes a judgment day at which the sacked board would rise from the earth to be remade flesh and blood.

In a notice lodged on Monday, Lim Kim Heng told the ASX that the 18.1 per cent of Genesis shares held by his company, S Active Holding, was not voted at the meeting ”due to a technical error in completing the proxy form”.

Lim said he was aware that seven of eight resolutions put to the meeting had failed but believed they would have passed ”if S Active had been permitted to exercise its substantial voting power”. He called for an extraordinary general meeting to reappoint the four directors sacked on Monday and increase the director remuneration pool to $300,000.

Genesis told the exchange that it will hold a meeting within 21 days, and use the ”opportune moment” to resubmit a motion that was the subject of some confusion on Monday.

The motion, to ratify the issue of 11.8 million shares at 12¢ each, was on the notice paper as a special resolution, requiring a 75 per cent majority, but barely scraped home at the meeting when it was voted on as an ordinary resolution, requiring 50 per cent. And the name of the company to whom the shares were issued? S Active Holding.

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Jun 11 , 2018 / By :

Clydesdale Bank has been a problem for NAB.IN THE mid-1980s, three big Australian banks – ANZ, Westpac and National Australia Bank – embarked on a dramatic overseas expansion.
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We had just won the America’s Cup and we weren’t going to sit around and allow new foreign entrants into our home market without first marching into theirs.

The banks argued that the Australian market was of a finite size and deregulation had stripped away protection from global players wanting to enter the Australian market.

No other bank embarked on a more enthusiastic period of deregulation than Westpac, with its desire to become Australia’s world bank.

Westpac, then the country’s biggest bank, showed a willingness to expand beyond traditional banking overseas. It bought a sizeable bullion trading business in Britain in 1986, beating 40 international rivals, and in 1987 bought US bond dealer William E. Pollock Government Securities.

”The only way for real growth is to go outside Australia,” said Bob White, Westpac’s managing director at the time.

Between 1984 and 1986, Westpac’s assets more than doubled. White referred to it as ”judicious but vigorous lending”.

ANZ also had international ambitions. In 1984, it bought Grindlays, a British bank, but with most of its assets sourced overseas. It had been established in the first half of the 19th century and had operations in 40 countries, including India, the Gulf states and East Africa – exotic banking markets, far from our time zone and where often little English was spoken.

NAB then joined in. In 1987, it bought Clydesdale Bank (Scotland) and Northern Bank (Northern Ireland and Republic of Ireland) from a distressed Midland Bank.

More acquisitions and expansion followed. In 1975, Australian banks had a presence in 16 countries, but by 1987 this had risen to 50. The aggregate value of offshore assets rose from less than $3 billion to nearly $81 billion over the same period. The proportion of these assets of total assets doubled to 31 per cent.

Fast forward 25 years and the landscape is very different. Commonwealth Bank is the biggest bank by market capitalisation, having evaded the overseas drive of its peers because it was not fully privatised until the mid-1990s.

ANZ is back on the Asian expansion path, having sold the last of its Grindlays business in 2000. Westpac is tentatively expanding in Asia, having divested much of its international business in the early 1990s.

National Australia Bank is looking to end the pain from its operations in Britain once and for all. From having the biggest market capitalisation in the 1990s, it now has the smallest of the majors. The lesson for all companies, big and small, and financial and non-financial, might be that measured rather than rapid expansion is best when heading offshore, and closer to home might be preferable to far away, especially when the globe’s fastest-growing region is on our doorstep.

A bank’s board has to ensure it has sufficient management expertise and systems to match its ambitions.

So far, Australian banks have shown little ability to persevere with an overseas strategy through multiple economic cycles, picking up assets when they are cheap in their targeted markets. Right now is definitely not the best time to be expanding via mergers and acquisitions in Asia and each of the big banks knows that.

In hindsight, the best time to have expanded in Asia would have been during the Asian crisis more than a decade ago, but hindsight is easy for companies wanting to grow.

Stewart Oldfield is a research analyst at Investorfirst Securities.

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Jun 11 , 2018 / By :

Industry insiders are predicting a rental spike.A SQUEEZE in future supply of premium new office space will lead to a rental spike and keep the market afloat over the next two years, industry insiders say.
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Two property heavyweights have dismissed recent gloomy reports about the outlook for Melbourne’s office market, saying economic factors, tightening supply and demand will boost industry prospects.

A Colliers International projection of the amount of premium office space available in new CBD buildings shows supply constricting in 2015, where only one major project with a significant amount of available space is due to be completed.

At the same time, several new buildings have created a surplus of approximately 39,000 square metres of office space this year and next, Colliers’ projections show.

But Savills Australia head of research Tony Crabb said recent reports that ”virtually junked the CBD market’s prospects” over concerns about the volume of available space reflected a poor understanding of the demand that drives Melbourne’s office market.

Leasing inquiries tracked by Savills for 2012 were similar to previous years with nearly 450 inquiries recorded in the year to date, Mr Crabb said.

On average, 480 inquiries were recorded each year over the past 10 years.

As well, there were 250 active office requirements in the market seeking the equivalent of 390,000 square metres of office space, Savills research shows.

”In 2012, businesses remain cautious and this has been reflected in the amount of time it has taken for decisions to be made. Nevertheless, inquiry has remained as strong as it has ever been,” Mr Crabb said.

”Add to this the fact that Melbourne’s full-floor vacancy rate has been trending downward for four consecutive months and you have rather a different picture than that which has been painted in recent market commentary,” he said.

The flush of new space has seen incentives offered by landlords to prospective tenants rise to between 20 and 25 per cent net for premium space, according to industry insiders.

Incentives offered this year were up at least 5 per cent on those given in 2011.

The economic climate is prompting businesses to be ”cautious and prudent”, Colliers’ national office leasing director Andrew Tracey said. Some, though, were recognising the value of negotiating new leases and locking in a lower fixed cost base for the next 10 years, he said.

”After pricing in of all these factors, it’s now at the stage where there are good propositions for people. They can move up, pay no more and probably get themselves a fitout along the way,” he said.

”Without some unforeseen event, I can’t see it getting into the really negative territory people are talking about,” Mr Tracey said. In 2015, the market was likely to be under-supplied, with most new buildings already having enough prospective tenants in place.

”When confidence comes back in 12 to 18 months and the market is under-supplied, there will be a significant rental spike,” he said.

Melbourne’s tenant diversity shielded the sector from dramatic swings and had helped maintain a low vacancy level that was the envy of other markets, Mr Crabb said.

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Jun 11 , 2018 / By :

The group now runs lotteries in every state and territory except Western Australia.TATTS has won the operating rights for South Australia’s lottery and keno service for the next 40 years at a cost of $427 million, giving it an almost clean sweep of the lotteries business in Australia.
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Tatts said the deal would lift lottery earnings before interest, tax, depreciation and amortisation to more than $300 million in the year to June 2014, up from $224 million last year, and would immediately lift earnings per share.

“It continues our track record of securing higher-margin lottery franchises with longer-term arrangements,” said departing chief executive Dick McIlwain.

The lotteries business will be the company’s biggest earner after the loss of its poker machine duopoly in Victoria in August. Tatts now operates every state and territory lottery apart from Western Australia, which is still run by the state government.

Tatts said the Queensland and New South Wales lotteries would double its EBITDA within four years of taking over these businesses, and expects the acquisition of the South Australian lottery to ”produce broadly similar outcomes”.

”The company’s strategy of consolidating state-owned and Tatts’ lottery operations continues to drive significant operating efficiencies and benefits from a single lottery operating system,” said chairman Harry Boon.

South Australian Treasurer Jack Snelling said the Tatts group had paid substantially more than the government’s $400 million reserve price for the licence to run lottery and keno services from December 10, 2012.

Mr Snelling said while the government would forgo the annual $20 million dividend paid by Lotteries SA, it would still get about $60 million in gambling taxes each year from the sale of lottery products.

Mr McIlwain steps down at the end of the year and will be replaced by Wotif chief Robbie Cooke.

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