Business First Magazine - March/April 2014 by Associated Media Group Pty Ltd

BUSINESSFIRST for Business Leaders

On the Riviera

THE MAKING OF A LUXURY BRAND

March/April 2014

www.businessfirstmagazine.com.au

SPOTLIGHT WE PROFILE 8 TOP BUSINESSES

Marketing Strategy Creating a system for success in Asia

LEADING GEN Y 6 tools to get you started

BUSINESS FIRST MAGAZINE Vol 1 Issue 2

AU$12.95 NZ$13.95

FIGHT AND FLIGHT

How Stephen Byron helped transform Canberra

Simply elegant

The new, improved Mercedes C-Class 9

772203

129000

INSIDE: Investment // Leadership // Lifestyle // Tax // Tech

Power and elegance to ignite the senses. The new Aston Martin Vanquish Volante.

Overseas model shown

The new Vanquish Volante is the very essence of Aston Martin distilled into one beautifully sculpted car. The Vanquishâ&#x20AC;&#x2122;s soaring performance, meticulous craftsmanship and cosseting luxury are clothed in a suit of Carbon-Fibre. The Ultimate Super Grand Tourer has become the Ultimate Volante. Please contact us to arrange a test drive. TRIVETT ASTON MARTIN SYDNEY

02 8338 3993 www.astonmartinsydney.com.au TRIVETT ASTON MARTIN MELBOURNE

03 8866 3111 www.astonmartinmelbourne.com.au SUNSHINE ASTON MARTIN GOLD COAST

07 5509 7108 www.sunshineastonmartin.com.au SOLITAIRE ASTON MARTIN ADELAIDE

1300 439 524 www.solitaire.com.au BARBAGALLO ASTON MARTIN PERTH

08 9231 5999 www.barbagallo.com.au

BF | CONTENTS

BUSINESS FIRST CONTENT 4 6 8

Editor’s Desk News Executive Analysis National Australia Bank CEO Cameron Clyne once made the comment that should banks fail to significantly invest in technology they would struggle to compete over the next decade. The same applies for all organisations and their CEOs.

CONT

COVER STORY 12 Since 1980, Australian-owned Riviera has been building luxury yachts for the pleasure of international seafarers. For much of that time, CEO Wes Moxey has been in charge of operations.

PEER TO PEER 18 The wealthy under the taxman’s scrutiny by Mark Chapman 20 Family business: getting the right structure for success by Bernard Marin 34 Unacceptable losses by Andreas Costi 36 How to flirt with your customers by Mellissah Smith 44 Building your personal brand in the Asian market by Jon Michail 52 6 leadership tools to leading Gen Y by Petar Lackovic 54 Driving better business through digital productivity by Tim Reed 60 Innovation starts with ideation by Con Georgiou 62 Create a financial roadmap by Allan McKeown 68 Rapid times require rapid change by Steven and Chutisa Bowman 70 Unlocking ERP: the past, present and the future by David Jackman

LIFESTYLE 74 Health – To succeed rely on commitment, not motivation writes Lauretta Stace 76 Hideaway – Escape to Hayman Island 78 Extravagance – Each one of Christie’s major sales regions orchestrated auctions of some of the most significant diamonds in the global auction market. 80 Fast lane – Mercedez C-class is one of the best motor vehicles on the road: performance, luxury – this car has it all. The 2011 model was one of the best-received luxury cars of its time, but the 2014 model promises even more.

BUSINESSFIRST MAGAZINE

80 www.businessfirstmagazine.com.au

CONTENTS | BF

ENTS

BUSINESS FIRST LOUNGE 22 Looking down the line – When you run a 24-hour business, it’s important to have all your checks, balances and systems in place. When you run a 24hour business servicing the mining community this is an even greater imperative. 28 Fleet of thought – Dealing with difficult issues creates an empathy that is invaluable when leading teams. If there is one major lesson that Thrifty WA CEO Richard Simons has learnt during his time in business, it is that all the decisions made in life and business has direct impact on all people involved.

72 www.businessfirstmagazine.com.au

38 Life in full flight – Australia’s capital is often derided for not offering too much more than politicking, but there is so much more to Canberra than meets the eye as Bob Forshaw discovered when he spoke with the managing director of Canberra Airport Group, Stephen Byron. 48 Knowledge is the rock of ages – There’s a lot to learn when you work for a company like BHP and there’s even more to learn when you jump from a mining giant to a small company that has only been in existence for 13 years. Yet Ben Hammond has taken it all in his stride and this young gun applies every ounce of knowledge gained from his MBA to his practical experience to create the best opportunities for the companies he has worked for. Now, Centrex Metals is benefiting from his expertise. 56 The family way – Infrastructure is necessary for the growth of any community. According to McIlwain managing director Keith McIlwain it is vital for employing the unemployed, bringing communities into focus and fulfilling social and envirnmental obligations. Under family guidance and a strong cultural identity, McIlwain Civil Engineering is achieving these aims. 64 Acquiring a taste for growth – Stephen Young is one of the most respected names in South Australia. The Executive Chairman of investment company E&A Limited, has not only led them to become one of the State’s most powerful players, he has also served as a director for the Adelaide Crows, ASC, the Adelaide University Council, ETSA and the Premier’s Roundtable. He speaks with Jonathan Jackson about commercial nous and business disciplines. 72 Salt of the Earth – Denise Goldsworthy is somewhat of a trailblazer, starting her career in the male dominated mining industry and building a very successful career with BHP and Rio Tinto before starting her own consultancy, Alternate Futures to help people think outside the box.

BUSINESSFIRST MAGAZINE

BF | EDITOR’S DESK

The candid ones I’ve interviewed CEOs, business leaders and entrepreneurs for the best part of 20 years. For the most part you have been down to earth and forthcoming in the peaks and pitfalls of running a business; open about your lives and the difficulty in balancing commitments. When time is a problem, you find it somewhere to have a chat – which is generous considering there will sometimes be a few tough questions, particularly about finances. Remuneration is a funny thing. We touched on it last issue, but what right does anybody really have to ask what another person owns. I try to avoid those questions myself. If the state of a company’s finances is public record that is fine, and if the packages of the leaders of those companies are made available, then we can gain insight into performance – which is crucial for shareholders. Any other time and it becomes a little invasive. But again, some leaders will give it up in the course of a conversation and the openness is appreciated. We made a great start last issue, our first issue, because the leaders we interviewed and those who offered their expertise were so willing to give their time, sincerity and candidness. This issue is no different. We have some extraordinarily informative interviews for you this issue with some of the country’s leading private and public companies. Stephen Young of E&A explains how to recover from major setbacks and bring your share price back to record levels. Riviera’s Wes Moxey describes what it’s like going from a wholly private owned company to one being run by an investment group. Denise Goldsworthy gives us insight into why it’s important to keep learning, no matter where you sit on the corporate ladder. Denise worked for BHP and Rio before starting her own business and shaped the policy and regulation with regard to women working in these organisations. Keith McIlwain describes the need for a business to seek out emerging trends and why family is so important in a family business, while Ben Hammond explains the intricacies of dealing with China. Finally Stephen Byron, son of famous Australian entrepreneur Terry Snow, reveals how the Canberra Airport Group has transformed Canberra. Meanwhile our regular contributors talk everything from health to doing business in China. This issue was a pleasure to put together because those we interview and those who contribute are so giving. I hope you gain the same insight as we do here at Business First. Happy reading.

Jonathan Jackson Editor, Business First Magazine

BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au PUBLISHER Alan Hyman EDITOR Jonathan Jackson MEDIA DIRECTOR Bob Forshaw SUB-EDITOR Judy Hyman DESIGN Gino Hawkins Head Office: Suite 7, Level 1 174 Willoughby Road St Leonards NSW 2065 Australia Advertising enquiries: Phone: 02 9437 5155 Email: bfadvertising@amgroup.net.au Subscription enquiries: Phone: 02 9437 5155 Email: bfsubscriptions@amgroup.net.au Contributors: Bernard Marin, Mellissah Smith, Lauretta Stace, Tim Reed, Petar Lackovic, Jon Michail, Chutisa & Steven Bowman, Mark Chapman, Andreas Costi, Con Georgiou, Allan McKeown, David Jackman

DISCLAIMER Readers are advised that Business First Magazine and Associated Media Group (AMG) cannot be held responsible for the accuracy of statements made in the advertising. Opinions expressed throughout the publication are the contributors own and do not necessarily reflect views or policy of Business First Magazine or AMG. While every reasonable effort has been taken to ensure the accuracy of the information contained in this publication, AMG takes no responsibility for those relying on the information. AMG and Business First Magazine disclaim all responsibility for any loss or damage suffered by readers of third parties in connection with the information contained in this publication. WARRANTY AND INDEMNITY Advertisers and/or advertising agencies upon and by lodging material with AMG for publication or authorizing or approving of the publication of any material indemnify Business First Magazine and AMG, its servants and agents against all liability claims or proceedings whatsoever arising from the publication and without limiting the generality of the foregoing to indemnify each of them in relation to defamation, slander of title, breach of copyright, infringement of trademark or names of publication titles, unfair competition or trade practices, royalties or violation of rights or privacy regulations and that its publication will not give rise to any rights against or liabilities against AMG, its servants or agents and in particular, that nothing therein is capable of being misleading or deception or otherwise in breach of Part V of the Trade Practices Act 1974.

www.businessfirstmagazine.com.au

NEWS | BF

Global pay slowdown hits in 2014 Pay rises across the world are in decline and Australian wage earners are not immune. The latest pay forecast data from global management consultancy, Hay Group shows that pay in Australia is forecast to grow by 3%, which represents a decline of 1% on last year’s growth rate. This is the slowest growth rate seen since the GFC, showing a sign of cautiousness within the Australian market. Globally pay is set to increase by 5.2% on average but rises for 2014 are expected to average 0.3% less than last year’s forecasts (5.5%). Fast-growth markets will see the biggest salary rises. However, high inflation means real income will fall in many countries. Salaries in Asia are expected to increase by an average of 7%– 0.2% less than the rise in 2013, reflecting slowing but still strong economic forecasts. The highest increases will be seen in Vietnam (11.5%), India (10.9%), Indonesia (10%) and China (8.6%). Hay Group’s research is based on the salary expectations of more than 22,000 organisations in 71 countries worldwide, representing 15 million employees. Steve Paola, senior consultant at Hay Group, comments: “This year’s global forecast highlights a significant slowdown of pay rises into the new year, as GDP growth in many parts of the world remains subdued. “Even where optimistic rises are expected in fast growing markets, high inflation means

the economic recovery won’t be felt in the pay packets of employees in many countries.” Paola adds, “In times of slow-growth, Australian organisations must keep a keen eye on the bottom line to remain competitive – minimising costs and driving productivity. Yet, there is an opportunity for organisations to be creative about how they reward their people – going

beyond cash. It’s about spending smarter, not more, and reviewing return on reward spend. “Securing the commitment of employees by developing clear career management plans, nurturing key talent and creating a buzz around the company’s vision can also play a role in engaging and retaining employees over the long-term.” BF

Mining firms must adapt The industrial commodities supercycle isn’t over: continued demand from China (slower, but from a larger base), ongoing global urbanisation, and structural factors such as higher energy and extraction costs will continue to support prices in the medium term. In the pits? Mining and metals firms and the slowing of the supercycle by the Economist Intelligence Unit and sponsored by National Australia Bank, focuses primarily on iron ore, base metals and coal. The report explains that while cost control has become a new mantra in the industry, driving down capital expenditure overall, some miners are investing counter-cyclically in preparation for an expected upturn. Such expenditure may be necessary as remaining resources are deeper and more costly to extract and will require more investment to prepare firms for the next upsurge in demand. Firms also need to maintain investment in innovation to be competitive. David Line, the editor of the report says, “Companies face investor pressure to return www.businessfirstmagazine.com.au

cash, and with this there’s a risk that spending on innovation will be cut. This would be a mistake. It will hurt long- term profits, since resources are becoming more costly to extract. In short, those that innovate ‘from pit to port’ will be the ones with a competitive advantage.” The report also asserts that the era of the mining megadeal is over, as large-scale consolidation becomes difficult for financial and

political reasons. However, the industry can expect to see deals among junior and mid-cap firms that need to shore up their balance sheets or find partners for projects they are no longer able to finance on their own. Meanwhile, major mining groups are diversifying into ‘mid-cycle’ commodities, demand for which will be driven by urban populations’ insatiable demand for manufactured goods, energy and food. BF

BUSINESSFIRST MAGAZINE

BF | NEWS

MISTRUST OF ADVISORS REMAINS Despite the government’s stated intention to restore public confidence in the finance industry in the aftermath of the global financial crisis, there is still doubt about advisors. Almost 48% of Australian members responding to the Global Market Sentiment Survey 2014 regard mis-selling as the most serious ethical issue facing the local market in the coming year, rising from 36% last year. The survey measured the opinion of 6,561 CFA charterholders and members globally, 1,575 of whom are in Asia Pacific. Interestingly, controversial trading practices such as high frequency trading and dark pools raised less apprehension amongst Australian respondents (12%), although it is the greatest concern for CFA Institute members in the United States. Within Asia, members consider market fraud as the most serious ethical issue facing their local markets. Jason Chesters, president of CFA Society Perth, says, “Our Australian members are showing increasing concern that the Future of Financial Advice (FOFA) reforms have yet to address the issue of mis-selling by financial advisers. This is perhaps exacerbated by indications that the new government will change ‘best interest’ provisions as part of the rollback of FOFA. We acknowledge the government’s desire to reduce red tape but encourage it to implement policy that improves Australians’ access to high quality advice that is in their best interest.” BF

BUSINESSFIRST MAGAZINE

Five investment ideas for 2014 Rapid technological, political and social change will require investors to maintain a more active watch on their portfolios in 2014 in the chase for income, according to Prescott Securities. “The global winds of change will result in the creation and destruction of industry sectors and businesses over the next 12 months,” Prescott Securities Senior Economist Alan Hutchinson said. “There are too many emerging investment opportunities for sitting on your hands to be an option in 2014. More active portfolio oversight and management will be needed. “In most of the major economies the threat of a fall back into recession has passed with the US and many European share markets at record highs. Several quality Australian stocks are also at historic highs although the overall national market is still well below the 2007 peaks. “Smart stock selection is critical in the hunt for income and long-term wealth generation.” Prescott Securities Ten Best Investment Ideas for 2014 are: 1. Embrace change “Baby boomers are spending more on travel, housing, technology and healthcare at levels previously thought to be excessive for retirees. Investors need to be aware of potential investment opportunities aligned with these demographic shifts.” 2. The innovators “Innovation separates the best companies

from the rest of the field. Companies such as CSL pour significant resources into research and development. With the growth of the global middle class, their market is snowballing and innovation is their only competitive advantage.” 3. New political regime “The election of a Liberal National Party Coalition means a more business friendly and less frenetic style of Government is likely. We also expect increased merger and acquisition activity, particularly in the agriculture sector as bids emerge from overseas. One way to tap into this is via managed funds that invest in the smaller companies most likely to be targeted.” 4. Tapping into China’s growing middle class “As incomes in emerging markets improve, so does the demand for products such as wine and fine foods as well as services including travel, higher education and insurance. With the pick-up in overseas travel by Chinese nationals, Sydney Airport and Westfield Group stand to benefit.” 5. Investing offshore “In recent years, Australian investors have been nervous about investing offshore. Given the relatively subdued national economic growth outlook, a higher offshore exposure through managed funds may be worth considering. This approach can provide access to high quality brands such as Apple, Google, Microsoft and Johnson and Johnson.” BF

www.businessfirstmagazine.com.au

NEWS | BF

COMMERCIAL MATTERS

Elections set to shape markets in 2014 Global markets will be buffeted by electoral politics in 2014 as some of the most important economies in the world prepare for critical elections in which the outcome will shape the next phase of the global recovery. Furthermore, tensions are rising between countries across Asia, the Middle East and Europe threatening critical trade routes and heightening the risk of miscalculation leading to conflict. These are the key findings from a report released recently by political risk research and advisory firm Political Monitor arguing politics is one of the big trends that will shape markets in 2014. Key points from the Global political outlook – 2014 report include: • United States: mid-term elections and the battle for the soul of the Republican Party will see politics triumph over policy and signal the beginning of the end for the Obama presidency. Markets should prepare for ‘decision avoidance’ as politics takes charge. • Asia: the absence of a robust regional security structure threatens a further escalation in tensions over disputed islands in the East and South China Seas as the key protagonists continue their arms race. Meanwhile, both China and Japan will be consumed by respective domestic reform agenda while www.businessfirstmagazine.com.au

India and Indonesia will prepare to elect a leadership for the next five years. • Middle East: the shifting balance of power in oil markets will unsettle established relationships in the Middle East and put the region on the path to conflict as America’s attention drifts toward Asia. OPEC will become a forum of discontent as the Gulf States argue over the implications of the return of Iranian oil to the world market. • Europe: right wing parties are on the rise leading into EU elections as high unemployment and austerity have caused a fissure between the electorate and the political elite. To the east Russia will continue its efforts to resist further European encroachment into its traditional sphere of influence. • Latin America: governments’ will have to determine whether they have the appetite to implement the reforms necessary to attract foreign capital or slide into economic nationalism that restricts their ability to reach their full potential. Political Monitor partner Damian Karmelich believes markets should prepare for ongoing volatility as political events dictate the outcome of the next phase of the global recovery. It’s a reminder for markets that the political cycle never rests. BF

Businesses will benefit from the creation of a new ‘rocket docket’ at the Administrative Appeals Tribunal (AAT), the body that reviews certain decisions made by Federal government regulatory bodies. The rocket docket attracts decisions that have significant commercial ramifications, and those relating to the accreditation, licensing or registration of individuals or companies. It is expected to greatly expedite the hearing of those appeals. Sean Robertson, Partner in McCullough Robertson’s Corporate Advisory team, said he was pleased to see the introduction of an expedited appeals process. “My clients often want to appeal regulatory decisions, but the time spent [12 months] getting the decision to an AAT hearing generally makes an appeal pointless from a commercial perspective,” he said. “We are hopeful that the introduction of the rocket docket will change that.” The AAT is a quasi-judicial body charged with responsibility for reviewing certain administrative decisions of organs of the Federal government, and arriving at the “correct and preferable” decision. The Tribunal reviews a wide array of administrative decisions, including those by the Australian Securities and Investment Commission (ASIC), the Australian Prudential Regulation Authority (APRA) and the Australian Taxation Office (ATO). The AAT has sought public comment on the proposed docket, the draft of which can be found on the AAT’s website at www.aat.gov.au. BF

BUSINESSFIRST MAGAZINE

BF | EXECUTIVE ANALYSIS

WHERE CREATIVITY, CONNECTIVITY AND TECHNOLOGY MEET

Back in March last year, National Australia Bank CEO Cameron Clyne made the comment that should banks fail to significantly invest in technology they would struggle to compete over the next decade. The same applies for all organisations and their CEOs.

he National Australia Bank five-year blueprint heralded in technology growth as a major strategy in creating a better business model and $800 million in targeted savings. Mr. Clyne views technology is a integral in his approach to fix problems created by difficult legacy assets within the bank’s British division. “We would go so far as to say a bank that is not dealing to its technology from top to bottom will struggle to be a competitive force in the next decade, so it’s appropriate given the progress we’ve made since 2009 and where we’re at that we do refresh our strategic agenda,” he told analysts in a 2013 conference.

BUSINESSFIRST MAGAZINE

Mr. Clyne’s strategy was to simplify and digitise the business and customer management. “We feel the investment we’re making in technology is essential to banks’ competitiveness over the next decade and failure to do it will not make us competitive,” Mr. Clyne said. “Therefore we think from a strategic perspective the best thing we can do to add value to our shareholders is to continue to pragmatically work out our legacy positions and continue to ensure the Australian and NZ franchise is invested in to get them back to being number one in the market.” A Roy Morgan poll conducted in December last year found different

banks appeal to different Technology Segments. The report suggested that HSBC has the highest proportion of its customers falling into the “Technology Early Adopters” Segment (27.9% of its customers) followed by Citigroup (20.3%), ANZ (19.3%, highest of the majors), Westpac (18.4%), NAB (18.2%), CBA (17.2%) and Building Societies & Credit Unions as a whole (13.7%). At the other end of the spectrum, “Technophobes” and “Technology Traditionalists” who are the laggards of technology adoption should not be ignored entirely as they make up a large proportion of an institution’s banking customers. Building Societwww.businessfirstmagazine.com.au

EXECUTIVE ANALYSIS | BF

‘

Information technology is the foundation for doing business in the digital economy; savvy tech skills are crucial to competitiveness, customer relations, client services and even staff retention.’

ies & Credit Unions as a whole have the highest proportion of “Technophobes” and “Technology Traditionalists” at 50.6% followed by NAB & Westpac (both with 42.4%), CBA (41.7%), ANZ (39.9%), Citigroup (35.3%), and HSBC (27.6%). It has become increasingly evident that institutions must not only design innovative new banking technologies for the tech savvy customer but also cater to the needs of the late majority and laggards who are not so inclined or interested to use new technology. Norman Morris, Industry Communications Director Roy Morgan Research says: “With the rapid increase in mobile technology, financial institutions have long been focusing on introducing mobile banking applications, thus making it easier for customers to do their banking on the go but this raises all sorts of questions such as, ‘is it safe www.businessfirstmagazine.com.au

and secure’? What needs to be done to make sure customers in the later technology adoption segment are ready and willing to take up these technologies? Are there educational and training programs in place for those that are intimidated by and don’t know how to use such technologies? “‘Technology Early Adopters’ are an important segment because they are the first individuals to purchase and use a new technology. They present an opportunity for institutions to tailor their online or mobile offerings to this segment. They are more likely to be young people and mature adults aged between 18 and 40 who are well educated, employed full-time, and earning an above average income. As such, their combination of higher income and risk taking behaviour enables them to readily take up new online banking technologies and mobile apps. It is interesting to note that Early Adopters and Professional Mainstream make up more than 50% of HSBC banking customers. “On the other hand, ‘Technology Traditionalists’ and ‘Technophobes’ hold conservative values, are wary of change and are usually the last to take up new technologies. Technology Traditionalists are not great lovers of technology and really only take it up once it becomes mainstream. Technophobes will only adopt technology when they are forced to; due to disinterest and lack of needing technology in order to fulfil their lives. Technophobes are likely to be aged between 60 and 80, with low education, low income and lower socio-economic status. As such, institutions need to find effective ways to engage with this group so as to demonstrate the value and use technology can bring to their lives. Financial institutions such as Building Societies and Credit Unions need to pay particular attention to engage the late majority as they constitute more than 50% of their customer base.” The banking sector provides an important case study in what CEOs face

in terms of customer engagement as well as the imperative of their technology adoption schemes. The world has changed: mobile devices, social media, data mining, videoconferencing, virtual reality, blogs, tweets... The list of technologies that could offer companies big-time benefits, or lead to big-time disasters, is daunting. Information technology is the foundation for doing business in the digital economy; savvy tech skills are crucial to competitiveness, customer relations, client services and even staff retention. But companies must be brave in its adoption and not jump in too lightly. Where it does become daunting is knowing what technologies best suit your business. In other words, how will you do business in this brave new digital world? An exceptional article in the Wall St Journal written by JEANNE W. ROSS And PETER WEILL listed four key questions that CEOs should ask themselves. Those questions were: 1. Are we using technology to transform our business, or are we just adding bells and whistles to existing processes? 2. Are you ignoring important business differences as you standardise processes across the company? One tenet of the digital economy is that standardising business processes is a no-brainer: It allows a company to operate the same way, everywhere, and creates a reliable, consistent experience for the customer. 3. Who is making sure the company’s digital strategy is being implemented? Somebody needs to own this responsibility. Thus, top executives must name an executive who will be accountable for every enterprise process, and who has the political clout to overcome resistance. A committee is not capable of such oversight. 4. Is electronic data empowering your people or controlling them? For most companies, the great advantage of the digital revolution is the data they can now collect. They know

BUSINESSFIRST MAGAZINE

BF | EXECUTIVE ANALYSIS the minute-by-minute electricity usage and the names and buying patterns of shoppers who buy diapers; they know how much more soup gets sold if theY drop the price by 10 cents, or what arguments work best when a life insurance agent cold-calls a prospective customer. All that data can lead companies down two very different paths. First, it can help push decision-making down to front-line employees. Alternatively, it can be used to centralise decision making and monitor employee performance. Evidence indicates that the former approach offers benefits for both companies and employees. (NB: You can read the full article at http://online.wsj. com/news/articles) An in-depth report from ACCA’s Accountancy Futures Academy (the Association of Chartered Certified Accountant) and IMA (Institute of Management Accountants) called “Digital Darwinism: thriving in the face of technology change” listed 10 top technologies with the potential to reshape the business landscape: mobile; big data; artificial intelligence and robotics; cyber security; educational; cloud; payment systems; virtual and augmented reality; digital service delivery and social. Informed by interviews with global academics and experts in accountancy and technology, alongside a survey of over 2,100 ACCA and IMA members around the world, the report asked respondents to what extent they expect developments in technology to transform the way the finance function do business over the next 10 years. The findings for Australia reveal respondents to be tech savvy and seemingly prepared for the future when compared with other countries and regions around the world. Australian respondents see the future benefits of mobile technology, with 95 percent saying this will be impactful. This was the highest score in the world. When asked about the impact of big data on business, 91 percent of Australians confirm this will be influential. Australia also scores the highest in the world when it comes to recognising the need to develop new skills to deal with the demands of big data and technology changes; 90 percent of respondents say data modelling and analysis skills will be important, with 90 per cent also saying knowledge of data extraction tools to mine business knowledge will be important.

10 BUSINESSFIRST MAGAZINE

‘

The bottom line is we all must embrace technological change and we are all willing to so.’

Chris Gentle, Partner and head of research at Deloitte, and member of ACCA’s Accountancy Futures Academy says: “Professionals must be open to the changes created by big data, cloud, mobile and social platforms, and face up to the demands of cybercrime, digital service delivery and artificial intelligence. The future will not be like the past and we will all need to adapt.” John Winter, head of ACCA Australia says: “What’s clear from this research is that professionals in Australia are tech aware, with an eye on future tech trends. “They are prepared to be influential agents of change – they’re adept at using technology to advance their careers, their client’s prospects and those of their own organisation’s too. This influence works best within the work place with 79 per cent percent saying they could influence the use of technology in their business; persuading their clients is a challenge however, as only 56 percent said they were able to influence decision making about technology.” Looking to the future, the report says there are challenges ahead for the profession. Speaking about finance and accountancy Winter comments: “The profession needs to shape their technological future rather than be shaped by it. The profession needs to be proactive; the changes ahead are an opportunity to redefine roles and the extent to which the profession is involved in short and long-term turn technology related decisions. They need to adapt to survive.”

Concluding, Winter says: “Our report offers many actions the profession needs to take to deal with the challenges of the top 10 technological developments. They need to develop and change management styles, to assess risks and address security issues; they will need to explore further the impact of automation and prepare for changing working patterns. But ultimately, they need to use technology to add value. There lies the real opportunity of technology.” The bottom line is we all must embrace technological change and we are all willing to so. Why then, are companies slow to move. The MYOB Business Monitor Report found that at least one third of small to medium businesses are reducing their performance potential by overlooking significant opportunities offered by the digital economy. A survey of 1,022 Australian SME owners and managers by research firm Colmar Brunton, found less than four in 10 (38%) have a business website – unchanged on six months prior. 12% of these operators also have a business social media site, and a further 8% have a social media site only – a new question for this survey wave. The proportion using social media in some way for business rose to 33% – up on 21%. Only 16% said they use cloud computing in business – also unchanged on six months prior. Accounting software usage was relatively stable at 64% from 67%. Tellingly, business operators who utilise online technologies were more

Australian SMEs

Aug 2013

Feb 2013

% with a business website only

38%

% with a business website & a social media site (included in above %)

12%

n/a

% with a social media site only

n/a

% using social media for business (in some way)

33%

21%

% don’t have an online presence

50%

n/a

% using cloud in the business

16%

% using accounting software

64%

67%

www.businessfirstmagazine.com.au

EXECUTIVE ANALYSIS | BF likely to see a revenue rise in the 12 months to August this year. Those with both a business website and a social media site (12%) were at least 63% more likely to see revenue rise than those who didn’t have one of these sites. This leading edge was followed by SMEs using cloud computing, who were 59% more likely to see an annual revenue rise than noncloud users. Business Division General Manager James Scollay says there is tremendous scope for Australian business operators to boost their financial performance, strengthen customer acquisition and retention, enjoy work environment flexibility and improve business productivity by using online technologies. “Businesses that use online technologies are increasingly outperforming their less tech savvy competitors. That’s why it’s vital for government and business leaders to work together with our business community, sharing knowledge about the benefits of embracing the online world and supporting them on their journey. Even the simplest insights can make the world of difference to a business. “Half our respondents don’t have an online presence. Our research found those using a website and social media in business say these efforts produce more customer enquiries or leads and greater sales conversions. Those using cloud technology say it reduces IT costs, allows access to more technology and enhances their ability to work remotely. That’s why we encourage businesses of all shapes and sizes to make their business life easier by reading up about the benefits of implementing technologies such as a website and social media presence, online accounting software and so on. The Internet has a range of forums, blogs and video tutorials on these topics. “One third of SMEs are missing out on many benefits – a proportion that is way too high in this digital age. They are in danger of being left behind other businesses that have taken the online leap.” Should you take the leap? Yes. Failure to do so, will see your competitors rise above. However, be careful in the way that you adopt, it’s a fine line between success and failure. Perhaps take a leaf out Cameron Clyne’s book: adopt over a five-year plan, monitor what is necessary, make sure your implementation is good for customer as well as company and shareholders, then profit from your forward thinking. BF www.businessfirstmagazine.com.au

BUSINESSFIRST MAGAZINE

BF | COVER STORY

Riding THE SEVENTH WAVE

12 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

COVER STORY| BF

Gliding on shimmering water, in the middle of the ocean surrounded by nothing but the whisper of the sea can be one of the great pleasures in life. Sometimes it’s just you and the ocean, other times friends and family join, but it doesn’t matter what the configuration of people is, there’s nothing that can really match the peace of the ocean and the sway of a motoring yacht. Especially when that yacht is in the luxury category. Interview by Bob Forshaw, words by Jonathan Jackson.

ince 1980, Australian-owned Riviera has been building luxury yachts for the pleasure of international seafarers. For much of that time, CEO Wes Moxey has been in charge of operations. Wes joined Riviera in 1982 as a shipwright, just two years after the company was founded in 1980. He was later promoted to production manager in 1987, general manager in 1989 and then managing director in 1998. Wes oversaw the move to the company’s 14-hectare state-of-the-art Coomera facility in 2000. His extensive marine experience and boat building knowledge fuelled his rise to the challenge of CEO, and in 2002 he led the private equity backed management buyout of the business. In 2008, after 6 years of private equity ownership, he took

www.businessfirstmagazine.com.au

a three-year sabbatical from Riviera during which he developed the Belize Motoryacht line before returning to the helm wiser, refreshed and ready for the next challenge. Wes’s beginnings were as humble as they come. “I grew up in a dairy farm in Newcastle and did an apprenticeship at age 15. I did very well as a shipwright; building steel ships and then moved to Queensland for lifestyle choices. I was 21 and didn’t really know what I was going to do, so I did various jobs when I first arrived on the Gold Coast. I had an uncle in boat building. I had a brother, who was a mechanic, and I mucked around with that for six months and then started working for myself as a boat builder just doing general repairs. I did that for about a year and things got a bit quiet, so I went and saw my uncle and he told me Riviera was looking for people.” In August 1982 Wes started at Riviera. He worked in new product development and quickly found himself with 22 guys working for him in the varnish shop and fitout contracts. They were contract positions but being an ambitious young fellow, Wes was up for the challenge. He was interested in

driving the new product banner and developing his craft in boat building. After the stockmarket crash of 1987, a power struggle ensued at Riviera and Wes found himself in the position of production manager. Not too far down the track, he was appointed general manager and then when the boss left to compete in a race in Europe he asked Wes to take on the managing director role. “Bill the owner said, ‘I want you to be managing director’. I said what for? He said, ‘I’m ‘going to’ race my boat in Europe and if anything happens I want to know that the place is okay’. “We agreed on something that I was happy with and that I would do it my way with my team. Bill always believed that the cream always rises to the top and if you want something badly enough, you will take it. I guess that suited my style and attitude and I just worked hard.” Since then Wes has seen every up and down a business can go through. He was in charge during the 1991 market crash, the rise of interest rates, the recession we had to have and the US luxury tax. In 2000 he led the Coomera facility build and oversaw the construction, while managing what had become an $85 million company.

BUSINESSFIRST MAGAZINE

A LONG-LIVED REVOLUTION The typical IPS properties – the unique marine torque, the excellent fuel efficiency, the first-class maneuverability, and the reduced environmental impact – have made Volvo Penta IPS a revolution for leisure boats all the way up to 100 feet. This exceptional pod system gives you safer and easier boating – with appreciated Volvo Penta functions such as Dynamic Positioning System, Joystick docking and driving, and the new Glass Cockpit System.

ONE LOOK. ONE TOUCH. ONE SYSTEM. By gathering all driver information and displaying it in one place, the new Glass Cockpit system gives you unique overview and complete control of both navigation and driveline. The pinch-to-zoom displays, with touch-buttons and easy customizable views, give you a clean, ergonomic dashboard. The system is integrated in Volvo Penta’s EVC system for optimal reliability and maximum driving pleasure.

THE IPS REVOLUTION LIVES ON.

EASY BOATING

COVER STORY| BF The move to Coomera transformed Riviera. “We were spread across three sites before this; we had to truck a lot of stuff around. Moving here was a huge feat though. First of all I had to build it, and I built everything so it was literally sorting out where every power point went, how it was wired, what the spec was and making sure the builder didn’t rip us off. The challenge was from the owner, he said ‘well, if you want it, you ‘gotta’ build it out of cash flow. I’m not going to borrow any money. So, that’s what we had to do. We had to grow the company and build in cash flow and profits. I was fortunate to have a great team that could drive the business to achieve this goal. We achieved it and went straight from an $85 million turnover to $125 million and that made our export business very strong.” Wes describes Riviera as a big company with a small mind. By that he means Riviera is not a corporate company; it is very hands on in every facet of building a yacht that people can take pleasure in. As such they have won awards for training and innovation. “We just know our craft well, how to build boats and do it efficiently in a high cost area.” Riviera is renowned for its quality craftsmanship and it’s customer service. “We engage with our people. Our customers are wealthy and they are time poor, and the time on their boat is precious, so when that gets disturbed or they have a bad experience they’re not happy. My job is to make sure that they are happy. That’s part of our people strategy, and you know, as we look forward in rebuilding the company that’s very much where my focus is: product the people and the profits. The three Ps.” Another P that Wes had to learn to deal with was private equity. The steepest learning curve Wes has faced is when private equity came into the company in October 2002. Wes wanted to make it clear that before they wrote the cheque, he wasn’t going to be told how to build a boat. “I said we are very, very good boat builders; we are very good at our craft and what we do, where we’re weak is in our financial systems and processes. We need good financial foundations on which to grow if we want to continue to grow. We don’t have a very big or strong financial team on site, that’s the area that needs bolstering not building boats.” Six CFOs in six years didn’t help the www.businessfirstmagazine.com.au

cause. However Wes got a good look at what the CFOs were meant to do and he came to understand the expectations of private equity groups. The similarity to public ownership when you have private equity investment is uncanny. So a balance had to be reached between the corporate governance and financial reporting demands of the incoming private equity owners and the historical way the business had been run from the entrepreneurial mindset of Wes and Riviera’s outgoing owner, both of whom held similar views. “We come from similar backgrounds. You work hand in glove and you can have a fairly short discussion about what you are going to do, and you just get on with it. There’s no papers written or documents, we never had a business plan before 2002. We were a $125 million dollar company with a very strong bottom line and we had no business plan, because we just knew what we were going to do. That’s how it was, but private equity comes in and of course that’s not tolerable; you have to have a business plan, an HR department and you’ve got to have all these other things to be a modern and saleable company, because all they worry about is an exit.” Changing from general manager to managing director didn’t affect Wes, because Riviera still had the same ownership structure. Changing from managing director to CEO with private equity ownership was a defining moment. “It’s fair to say that realistically a

BUSINESSFIRST MAGAZINE

BF | COVER STORY cheque was handed over and the business was born. The way we conducted ourselves from that day forward, for the next six years, before I left in 2008, was far more of a corporate structure, but we also grew the business in that six year period from a $125 million to a $410 million.” Growth was spectacular, but Wes could see a change coming. There was going to be a downturn and he wanted to consolidate the company’s position rather than continue on a growth strategy. “I could see the writing on the wall, that there was a crash coming well before the GFC. I disagreed with the direction and where we were headed and wanted to consolidate our position rather than to keep growing, but that doesn’t sit well with the private equity group.” So Wes left. In that time he had achieved a National Employer of the Year award. He says his greatest achievement was having 180 apprentices on site and their own training facility. “We had 14 high schools feeding us school-based apprentices, and we started that back in 1996 before it became trendy and before government understood it. We probably broke all the rules to get it going, but we started

with four and we ended up with 180. We never put an ad in the paper for apprentices; we got them from school, so I would say that was our greatest achievement. Not just training them as boat builders, engineers, fiber glass technicians, upholsterers, you know we had all of the trades covered, but not just in training them, but two hours a month, we had a program developed for them called Propel and it was talking to them about life skills: buying a house, negotiating with the bank, trading shares, budgeting, planning. Senior management would spend two hours a month going through a set program and talking to these young apprentices about their life skills. Seeing those young people buying houses at 20-21 years of age and seeing them go on to be managers doing MBAs, doing certificates in management, I’m quite happy. People say you train them and then they leave, but as an industry leader I felt a sense of responsibility to train and I do it again now.” In the three years Wes spent outside Riviera he bought a small 100-acre farm in northern New South Wales to give his two boys an understanding of where he grew up and what he did. He was tired and at the time and felt

he had given as much to Riviera as he could. He went back to his roots and spent as much time as he could down on his farm with his wife and kids. His wife had also worked at Riviera. She was there before Wes and has a strong understanding of what it takes here to be successful. So she clearly understood Wes’s need to find other roles.

Wes Moxey

COVER STORY | BF AB Patterson College is where Wes went to school in Queensland and they chased him to be on the Board, where he spent three years. “That was a great thing as a drop off dad to get into. I came out with a broader understanding of education, how complex it is today and how difficult it is to run a private school from the business and the educational side. I enjoyed that a lot. I also joined the Grand Banks Board in Singapore for about a year.” Grand Banks is another famous boating company and it stoked the fires in Wes’s heart to get back into building. “I could see that I couldn’t affect the change in Grand Banks quickly enough, and then my wife said, ‘you’ve got too much knowledge, you’re too young, why don’t you do it yourself ’.” Wes formed a partnership with another veteran shipbuilder Lee Dillon and the pair went about creating a luxury motoryacht brand. “I didn’t want to compete with Riviera because I still had a lot of friends there and I didn’t want to do what a lot of people do and build the same product, so we went out of our way to build a product that didn’t compete with Grand Banks or Riviera, but build something that was totally different to those products.” It was an expression of what Wes and Lee love in a boat: a blend of the old and the new. New being the technology, the finishes and the quality. Old being the retro styling. “If you look at all the car companies like Masseratti, Astin Martin, VW Beetle, all of those companies have gone back to yesteryear for its inspiration today. And we wanted that same sort of thing. We didn’t want to be a cheap product, we wanted it to be an expression of who we are, what we are and what we love.” The Riviera and Belize worlds merged into one when Riviera came out of receivership in 2012 and returned to private ownership under the stewardship of Rodney Longhurst, the managing director of Longhurst Marine Holdings, and Rodney asked Wes to return to Riviera as CEO. Wes returned to Riviera through a sense of responsibility. “It’s a tragedy when you put 26 years, more than half your life of blood, sweat, and tears, into something and you see it fall. To come back and resurrect a great brand, a great company, support great people and again grow and train is why I’m here. My responsibility this time around is very much www.businessfirstmagazine.com.au

“

Having built the company through the 1990s and into the 2000s, I know the formula for success, how to behave, how to operate, the style and how many people can be here.”

around ensuring that the management and the foundations are strong and the succession planning is right.” Wes has gone back to basics. “Having built the company through the 1990s and into the 2000s, I know the formula for success, how to behave, how to operate, the style and how many people can be here. To me it’s just intuitive and easy. Whereas dealing in a private equity world versus a private ownership world, was very, very different. It’s like oil and water, they’ll never mix.” Unfortunately on his the first day back in 2012 he had to let 80 people go. Since the takeover, another 70 have gone. “We have to run lean, we’re in very uncertain and difficult times as the global economy recovers. We need confidence in the economy, we need confidence in the governments, we need confidence in leadership and I think that’s the thing that’s understated by the current government. The change of government brought confidence to the business community and this community generates the wealth for others. And when you haven’t got that

confidence it’s difficult for us to sell boats, because no one needs a boat. So people need confidence to spend. And that’s where we are at the moment.” Despite this, the culture is still strong and people are still committed. They believe in the brand and they believe in Wes, whose vision is to be in excess of $100 million in revenue in the next three years. He also believes they will be employing around 500 people. The company is currently in a growth phase, hiring people again and has reinstated the training and apprenticeship program. “I have no desire to take it back to the boom of $400 million and 1300 people. That’s not my passion to be the biggest. The focus is on building a high quality product. That’s what we did with Belize and that’s where we’ve taken Riviera. Since we’ve been back, we’ve really pushed the quality boundaries rather than the size boundaries. There’s nothing better than having a high quality product that is sought after and people are prepared to wait for it. I think that’s really the driving force for where we will be in the future.” BF

BUSINESSFIRST MAGAZINE

BF | TAX

The wealthy under the taxman’s scrutiny The combination of a new government looking to prune the budget deficit and some key changes in the way the ATO organises itself could spell trouble for the wealthy across Australia writes Mark Chapman.

W Mark Chapman is Head of Tax with Taxpayers Australia.

ith very little fanfare, new Commissioner of Taxation Chris Jordan changed the names of various business lines within the ATO. Included in the change, the former Small and Medium Enterprise’s business line is now called Private Groups and High Wealth Individuals. As part of the change, up to 7000 smaller public companies and foreign owned entities have been moved to another business line but no staff appear to have moved with them. This means that there will be more resources available to target the wealthy. With the Abbott government looking for unpaid taxes as an easy route to filling the hole in the government’s budget, this can only mean more reviews and more audits for the well-off. The ATO categorises a taxpayer as wealthy if they have more than $5m in assets. There are more than 70,000 taxpayers who meet this criteria and the ATO has committed to auditing or reviewing at least 1000 of them in the current year. If you have more than $30m in assets, you would be categorised as highly wealthy. So, if you meet the ATO’s definition of wealthy, what are the factors which will determine whether the ATO will examine your affairs in more detail or whether they will leave you alone? Basically, this is a question of likelihood and consequence. How likely are you to be non-compliant? In determining its priorities, the ATO first of all takes into account the perceived likelihood of non-compliance posed by a taxpayer. In coming to this judgment, the ATO is able to scan a mass of internal and third party data looking for sources of income which have not been fully disclosed (or disclosed at all), sources of income which have been treated incorrectly and tax obligations – around on-time lodgement or payment of tax debts – which have not been met Of particular interest will be transactions such as these:

18 BUSINESSFIRST MAGAZINE

1. Evidence of share or property transactions where tax disclosure does not align with information provided by third parties. 2. Unexplained losses. 3. After tax income which does not appear sufficient to support lifestyle. 4. Evidence of personal use of business assets (including loans from private companies to shareholders either directly or through other structures). 5. Use of personal service companies to channel income of an employment-type character to an individual. 6. Use of complex structures to minimise tax outcomes, particularly where economic and tax outcomes do not align (for example, transactions produce a tax loss but no economic loss). 7. Inflows or outflows of cash from overseas, particularly where there is evidence of tax haven activity or evidence of undisclosed offshore business activity. In establishing the existence of these transactions, the ATO has access to a mine of information. This includes information from other sources within the ATO (for example cross-matching GST disclosures with income tax ones or matching trust distribution records with personal income tax lodgements) and information received from third parties, which might include other government agencies, banks and credit card companies, employers, car registration records and records of share and property transactions. In addition, the ATO receives substantial numbers of community tip-offs from disgruntled employees, neighbours, ex-spouses, etc, many of which ultimately feed into audit or review activity. The ATO also assiduously scans media reports for evidence of transactions involving wealthy individuals. Thanks to the Internet, the amount of local and overseas intelligence about the activities of wealthy individuals has exploded in recent years, to the extent that the ATO often has some level of knowledge about a transaction as soon as it happens and long before any disclosure is made www.businessfirstmagazine.com.au

TAX | BF through a tax return. This makes data matching much easier and has triggered a number of audits of wealthy individuals caused by the failure to disclose a transaction which had previously been picked up by the ATO through a media report, sometimes with an overseas source. What’s the consequence of your non-compliance? The other factor which will influence whether a review or audit will be undertaken, having established the likelihood of a tax risk existing, is to assess the consequence of that non-compliance. So, if a taxpayer triggers one or more risk factors, the ATO will attempt to determine whether the consequence of that taxpayer’s actions warrants further attention. In an ideal world, all instances of non-compliance would be investigated but in the real world, resource constraints mean that some form of prioritisation needs to take place. Typically, this judgment will be driven by the revenue at stake. Quite simply, the larger the dollars at risk, the more likely the ATO is to investigate. The decision isn’t purely driven by dollars however. The ATO will also consider the extent to which either the taxpayer or the transaction in question poses a threat to the integrity of the tax system overall. For this reason, particularly high-profile people (such as wellknown business figures or figures from the world of the media, show business, sport, politics or the judiciary) will be given priority, as will transactions such as potentially mass-marketable schemes or ones which appear to successfully circumvent key pieces of tax law. What the shift in resourcing within the ATO will enable them to do is to set that consequence barrier just a little lower, to take a look at more cases which previously their resourcing wouldn’t have permitted them to examine. Given the state of the public finances, the focus on the wealthy is likely to continue into future years. Looking critically at your tax affairs and, if necessary, seeking professional help to deal with any issues should be a vital step for any wealthy individual not yet contacted by the ATO. How to manage any subsequent challenge from the ATO is the next question and this will be covered in a future article. BF Mark Chapman is Head of Tax with Taxpayers Australia, a not-for-profit organisation committed to a fairer and more transparent taxation system for every Australian taxpayer. www.businessfirstmagazine.com.au

BUSINESSFIRST MAGAZINE

BF | BUSINESS

FAMILY BUSINESSES PART 2:

GETTING THE RIGHT

structure for success 20 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

BUSINESS | BF

In my last article, I talked about how important it is to have the right elements in place to run a successful family business. This article focuses on the details of how to make this happen – namely, adopting the best corporate structure and focus needed to help a family business grow and flourish writes Bernard Marin.

he key to ensuring family business flourishes revolves around three key structures: a Board of Directors, a Family Council and a Family Constitution. All three structures serve to tie the family business and family members together, alongside their biological, emotional and legal connections and shared values. The Board of Directors deals with the ‘business of the business’ and sets its strategic direction. The Family Council deals with the ‘business of the family’, develops and manages the Family Constitution and liaises with the Board via a Family Council representative. Neither the Board nor the Family Council are involved in the day-to-day activities of the business. It is the role of the chief executive officer, general manager and management to ensure this is implemented. The right Board The Board of Directors deals with the strategy and longer term planning and decision-making of the family business. It should be made up of a majority of ‘outside’ non-executive directors, ideally with no more than, say, two family members as directors. Like a normal business board, directors should be elected for defined terms (three to five years ideally), with the ‘outsiders’ responsible for nominating replacements. Its decision-making should be by consensus, so that even if individual directors disagree with a motion, they are able to agree if it benefits the broader family interests. Alternatively, some Boards choose to make decisions by majority vote. The Board should have procedures to evaluate its own effectiveness and there should be mechanisms in place to exclude people with conflicts, or those claiming directorship purely through inheritance. A director should be nominated and elected on the basis of his or her contribution to the Board, and ratified by the family shareholders at an annual Family Council meeting. The Board should also elect its own Chairman, who should be separate

www.businessfirstmagazine.com.au

from the CEO or GM of the business. This is a critical role; responsible for ensuring the Board operates effectively in conjunction with the other structures around the family and its business. The Chairman therefore needs to have sat on the Board for at least a year before nomination and should have at least 12 months in the role before rotating to the next candidate. The role of the Family Council The Family Council should include all adult family members, to give them a voice and assist them in their personal development, while at the same time keeping family issues separate from business issues. Ideally, the Council’s leadership rotates between its members, with a different leader appointed at each meeting to ensure each member takes ownership of the Council. The Council’s role is three-fold: managing the family’s relationship to the business, making sure the family is represented on the Board by electing a Council representative as director, and developing a family constitution to underpin the family’s interests and workings. Typical Council meetings will see the family Board member reporting on the business and its activities; discussion around the family and its activities (family office, charities and trusts etc); and discussion on matters involving individuals, such as educational matters or family loans to members. The Family Constitution and its importance An effective Family Constitution ensures long term business success and family harmony, while avoiding battles for control, feuds and litigation. It’s best to think of this like a game: participation is a free choice, there are clear rules and the results are not known in advance. The Constitution defines the rules of the game, covering family values, family proposals, expectations of management and the Board, and the mechanisms of control

for managing the family business. These can include: • how we work together • how we make decisions • how we deal with ownership issues such as share ownership and transfer, buy-sell agreements and financing arrangements • how we as family members join and work in the family business. The latter issue can be a tricky one, and needs some decisions made around how family members enter the business, what competence they need to show, how they get paid (and how much), how they are promoted and how and why they should exit the business (on retirement or for other reasons). A Family Constitution should be prepared for future generations, not existing ones – think at least two generations in advance. Families should also consider using a professional facilitator to help them work through the process. This might involve establishing the Family Council, having it meet on a few occasions to bed down immediate processes, and then using the facilitator to help it develop the Constitution over a six or even nine-month timeframe. Governance, clarity, accountability – and regularity As a general rule, these mechanisms will only succeed if they are underpinned by good governance structures and clear decision-making and accountability – Family Council members and the Board must focus on these as critical to success. Both the Board and the Council should also meet regularly to ensure business and family issues are debated, decided on and the results examined to determine success – or the necessary adjustments made if required. BF

Bernard Marin

is the CEO of Marin Accountants.

Bernard Marin is the founder and CEO of Marin Accountants, a firm specialising in advice for individuals, investors and family businesses. For more information, contact Bernard at bernardm@marinaccountants.com.au.

BUSINESSFIRST MAGAZINE

BF | PROFILE

LOOKING down the line When you run a 24-hour business, itâ&#x20AC;&#x2122;s important to have all your checks, balances and systems in place. When you run a 24-hour business servicing the mining community this is an even greater imperative. Bob Forshaw speaks with Goodline owner John Kennedy and general manager Dwayne Finch about system management and company growth.

22 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

PROFILE | BF

f there’s one thing John Kennedy knows it’s construction services. Since 1999, he has been offering a range of services including steel fabrication and erection, demolition, scaffolding, plumbing, electrical, carpentry, civil and mechanical. That list of services has grown over the years as Goodline’s reputation as the go-to guys for service and maintenance has grown throughout the mining communities of Western Australia, Darwin and Queensland. John began the business in Weipa, the site of the world’s largest bauxite mine. His intention was to create a holistic service primarily for Rio Tinto supplying anything from mechanical and structural work to electrical and plumbing services. The key areas of specialisation today include steel fabrication, steel erections, demolitions, scaffolding, plumbing, plastic welding, civil carpentry and electrical data com-

www.businessfirstmagazine.com.au

munications. With a diverse range of services on offer from project conception through to project management and ongoing maintenance. “I bought a business in Weipa that was already supplying services, but on a very small scale,” John says. “They had about eight people and I wanted to expand it from there.” The business as it stood at the time of the buyout was less ambitious than John envisioned. “We had to make a business that was reactive, seven days a week, 24 hours a day,” says John of his vision to not only expand the business, but also change the industry. “I wanted to be available for any requirements to the two mines operating in Weipa. “One bloke had a plumbing business, one had an electrical business and there were metal fabricators and a range of little businesses, so my idea was to combine them. Because of the remoteness

and the shutdown aspect, I felt we could combine all that labour and do the shutdown. When Rio Tinto wants 40 men for a shut, mainly they want boilermakers, riggers and TAs, but electricians can work as TAs. We just get it all done.” Dwayne Finch is the general manager of Goodline. He says John has taken that concept right across every division that operates today and the strength of the business is due to having the right business concept. “John set up the business primarily to serve the bauxite for Rio Tinto, Comalco at the time,” Dwayne says. “John’s plan was to be the main contractor in town and supply a service to the mining operations and a service to the community.” By 2004 Goodline had grown to more than 200 employees. The apprenticeship had been done, the reputation forged. And that’s when the big break came.

BUSINESSFIRST MAGAZINE

BF | PROFILE

THE BIGGEST THING WE MOVE IS TIME

When it comes to lifting, transporting, installing and decommis-

lifting and transport. If you are facing challenges in construction,

sioning large structures, we believe your biggest challenges are

maintenance or decommissioning, give us a call. Time may not

not about size. They are about time. Uptime, turnaround time and

be set in concrete or forged in steel. It isn’t even all that heavy.

time-to-market. While the right equipment is essential, it’s often

And yet, it’s the biggest thing we can move for you.

not enough to get a job done in time. Mammoet brings deadlines forward through careful planning, innovative engineering and

For more information please call Lee Chapman, Business Devel-

safe delivery.

opment Manager at +61 (8) 9472 3515. Or send an e-mail to:

With offices in Asia Pacific and on every other continent,

lee.chapman@mammoet.com.

Mammoet provides tailor-made solutions for engineered heavy

Discover more on www.mammoet.com

PROFILE | BF “In 2004 I went over to Port Hedland and had a look around. I heard that they were looking for a good contractor. I met with BHP Procurement and they wouldn’t promise me any work, but they said if you come over here we’d certainly look at you for any piecemeal work. We didn’t have too much success with BHP in the early days, but we picked up some work with Rio Tinto and Fortescue Metals was just starting off. We did all their steel erection work and things took off from there.” Goodline now service Rio, BHP and FMG in Port Hedland. Initially, in April 2005 John sent a team of five people to the Pilbara. Today there are over 500 people working there (he had 80 in the region by Christmas of 2005). It was a risky move but like any good leader, John is not averse to risk. The move to West Australia is case in point. “I had some good people. Mick Farrell was the key to that move. I could see West Australia had enormous potential and I said to Mick, I wouldn’t go there without him taking leadership in that region. He accepted it, and he’s still over there to today.”

The move to Darwin in 2009 was another big risk. “A simple move to Darwin costs you about $2 million to start off,” John says. “We don’t have the same infrastructure there as we do in Port Hedland, but we went up there with five people and it grew to 80. It’s now settled at about 35 but it fluctuates and you have to be ready to expand or contract as circumstance dictates. The labour force across Goodline is dropping at the moment as the mining industry undergoes some necessary change, but it is unlikely to dip below 600 people. Still, 600 people is a far cry from the eight people Goodline started with. There are three elements both John and Dwayne put Goodline’s success down to: 1. Industry demand. 2. Having the right business concept. 3. Having the right people. Dwayne says to build the clientele the three elements above are critical. “You need to position yourself in the right place, and be reactive to the clients’ needs. You need to take a multi-disciplined approach. Then you need to give them the right culture

and you do that by building the right culture of people. We’ve put a lot of emphasis around safety. We’ve built our systems up to be at a high level. We take that to every job regardless of what the status is for the site to operate at. “The keys to maintaining the ongoing relationships with these companies is to take a good, honest approach. We run a relatively lean, but strong, skilled team. They can manage the works well, and make sure they all have the same culture. They can deliver on time and do it safely.”

John Kennedy

• Crane Hire • Machinery Hire • Labour Hire • Logistic Services HAGO Crane and Machinery Hire offers a unique hire service servicing the North West of Western Australia and can handle all of your equipment needs from small residential projects to large commercial operations all over the Pilbara

• WET + DRY AVAILABLE • 20T + 25T FRANNAS • ALL TERRAINS FROM 100T to 350T

CONTACT

All of our equipment is 100% mine site compliant and meets • BHP • RIO TINTO • FMG requirements.

www.hagohire.com.au

0419 968 711 (24/7)

REGIONAL INSURANCE BROKERS National Strength, Regional Service (Est. 1981)

1300 500 441 | www.ribpl.com.au

When Service Counts…. We offer a wide ranging procurement service to supply and deliver products required for resource projects into remote mining locations throughout WA.

Proud Suppliers to Goodline When Service Counts…. We Make it Happen

26 BUSINESSFIRST MAGAZINE

Our services include: Plate & Wear Plate Structural Steel Tubular steel Merchant Bar Grating & Handrail All steel & non steel products Fabrication General Procurement Service

Phone: 08 9527 5433, Fax: 08 6270 4490 Email: sales@westplate.com.au 6 Arkwright Road, Rockinham, W.A. 6168

www.businessfirstmagazine.com.au

PROFILE | BF Despite much of the work being done in West Australia, Goodline maintains its base of operations in Queensland. “Labour is affordable. The office space is affordable and with technology connecting us, we have a stable workforce.” Another thing that separates Goodline from its competitors is its pre-assembly approach. This came about because the logistics for a job forced John to think outside the box to be able to deliver. “That approach was driven by lack of accommodation. We had to get the steel work done, while FMG were doing the civil foundations in parallel. To meet the schedule we had to take the accommodation constraint away. From there we’ve tried to deliver that concept across the country, and we’ll continue to do that where the opportunity becomes available. Surprisingly enough, on the back end, we’ve seen from a commercial aspect it was viable. It also brought money back into the local economies.”

‘

John is dedicated to the community as well as the businesses he contracts to. He believes that all companies should have strong relationships with the communities in which they work, particularly in remote areas. “We need to maintain that relationship with the community and understand that we don’t just work for the miners, we work for everybody in town. If someone needs something fixed up at their house, or industrial complex, then we’ll go and do that work as well.” As for the future, Goodline is pushing further into Queensland and opening that market up in gas and coal. They are taking a slow approach and waiting for the market to open up so they can direct themselves into maintenance and shutdown services for that industry. “We do it quite well in all our other divisions, and half our revenue is built off that. That’s where we see the future. We become a multi-service company based in strategic positions so that we can offer that service, and then still do the projects as they come along,” John says. BF

Dwayne Finch

www.businessfirstmagazine.com.au

BUSINESSFIRST MAGAZINE

BF | PROFILE

28 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

PROFILE | BF

FLEET

OF THOUGHT Dealing with difficult issues creates an empathy that is invaluable when leading teams. If there is one major lesson that Thrifty WA CEO Richard Simons has learnt during his time in business, it is that all the decisions made in life and business has direct impact on all people involved. Story by Jonathan Jackson.

ife is not all beer and skittles. Difficult decisions, issues and commercial judgements must be made that impact profits, people and businesses as whole entities. When Richard Simons joined Arthur Andersen in 1989 he gained firsthand experience in fundamental business issues from the perspective of organisations that were in trouble. These were businesses of all different sizes; from small family owned to large listed companies, Richard dealt with situations and made decisions based on the best way to recover a business or trade out of a situation to maximise returns to creditors. While each business situation was different, the common denominator was people. “At a relatively young age I learnt that the decisions I made can have a real and significant impact on the lives of individuals that work in these businesses; people that have invested all of their life into working in a particular company,” Richard says. “I learnt quite quickly to have a degree of compas-

www.businessfirstmagazine.com.au

sionate empathy for the people who are directly impacted by the decisions that I was making.” As he stepped into each company with whom he has worked, Richard has taken that empathetic approach. “For me it’s really about trying to be as approachable and accessible as I can be. I try to walk around the site here and visit our branches around the state regularly, listening to the staff on the front counters and the guys that are working on the tools so that they understand I’m as much a human as they are. We talk about their lives, their families, what they got up to on the weekend and I try and develop a level of empathy with them so that they understand me. It helps when I have to make a tough decision that I’m not completely ignorant or blind to the sort of impact that it might have on them.” As a non-executive director and treasurer of Cystic Fibrosis WA Richard has seen many families having to cope with the hardship and consequences of an incurable disease and gained a great deal of perspective.

“It’s a reality check and gives you some perspective, particularly in the corporate world,” Richard says. “I spent a lot of time working in public companies. In public companies people can become quite disconnected from the reality of what’s going on. When you’re sitting in your ivory tower on St Georges Terrace or George Street or Collins Street, you can make decisions very quickly and very swiftly that have a real impact on people at a very personal level and that human dimension can get lost. With Cystic Fibrosis WA I get to interact with people who have a whole magnitude of problems that I can’t even begin to appreciate. It’s incredibly challenging for these families and it just gives you perspective. Whatever trivial stuff is going on in my life pales into insignificance when you consider what people with kids suffering cystic fibrosis are dealing with on a daily basis.” Perspective is a personal thing, but certainly invaluable when running large-scale businesses. Before he joined Thrifty at the beginning of 2013,

BUSINESSFIRST MAGAZINE

BF | PROFILE

Work smarter not harder.

Built tough for the world’s smartest fleet owners, UD Trucks offer the perfect balance between rock solid dependability and industry leading business solutions. Whether you choose from the Condor or the Quon series, every truck is available in a range of power and torque configurations, has Euro 5 rated SCR emissions technology and is equipped with a touch screen multimedia audio system and NAVTEQ satellite navigation. Smart fleet buyers are thinking about far more than just performance stats when it comes to finding the ideal truck for the job. Our customers demand improved truck uptime, fuel economy, whole-of-life costs, driver comfort and fatigue management.

Of course UD Trucks prides itself on giving customers a total packaged solution they can rely on and trust for the long term. Our aftersales services including our unique Value Calculator, Roadside Assist, Driver Training and Telematics fleet support system are industry leading. Add the best finance deals in town and you have an unbeatable package. Buying a UD truck all adds up to real cost reduction and improved profitability so you’re not just buying a truck, you’re buying the complete UD experience.

Medium Duty Range

Think Smart. Think Tough. To find out more, contact your UD Trucks dealer on 1300 885 913 or visit udtrucks.com.au UDT0122

Heavy Duty Range

PROFILE | BF

Richard spent close to three years at Austal, an international defence prime contractor. Austal is an Australian company that specialises in the design and construction of aluminium vessels. Its main products include passenger and freight ferries, luxury yachts and military vessels. He says his time there was an “incredible learning experience”. Richard was in charge of the global finance function, with responsibility for all aspects of financial strategy, financial reporting and compliance, capital strategy, M&A and Investor relations and IT. “When I started there in 2010, Austal was still very heavily focused on the commercial vessel sector and had quite a strong manufacturing base in Australia. It was manufacturing vessels from four locations in Australia and employed close to 1,500 people. Then we won a very large defence contract in our American business and we saw the potential for it to grow very quickly. So what we had to do was really focus on how to set the organisation up so that it could run on a decentralised basis. Historically Austal’s business was centered in Australia and therefore all the systems of control and management were geared around being able to reach out and touch the individuals involved in the decision. As we moved more and more capital into the United States, we had to be ready to make decisions on a completely decentralised basis and really re-invent into a defence company – which is a very different mindset to a commercial operation. A lot of what I did was help the business get its funding structure worked out so that it could take on those projects in the United States. “Once Austal had won its second large contract in the United States, there was an awful lot that the company had to learn about being a prime contractor for the United States Navy … and the way you work for the United States Navy is unlike the way you work for any other client, the protocols, the contract structures, the security aspects are all very different. So we had to spend a lot of time understanding the different type of relationship that we would have with them. A big part of what I had to do was to communicate that to our stakeholders. We had a West Australian mindset or an Australian mindset around how you do business and we assumed it would be the same working for the United States Navy. It wasn’t. I gained experience in terms of how you have to work within those rigwww.businessfirstmagazine.com.au

“

One of the really valuable lessons coming out of my experience at Austal was the importance of knowing your workforce and understanding first hand, the challenges that they are dealing with.”

id structures and had to communicate those lessons learned to our investors. The defence industry was something that we thought we knew, but contracting to the United States Navy in the biggest defence market in the world was taking things to a whole new level. I think we underestimated the degree of the challenge.” For Richard, this position reinforced to him the value of open communication and it was something he took with him to Thrifty WA. “One of the really valuable lessons coming out of my experience at Austal was the importance of knowing your workforce and understanding first hand, the challenges that they are dealing with.” Listening to employees, learning from their experiences, sharing information with them about the business and the market so that everyone is clear about what the business needs to do and the roles that individuals have to play was valuable preparation for tackling the tremendous change that Thrifty was undergoing when he took the reins just over one year ago. Thrifty has an enormous name globally and is one of the world’s largest vehicle rental franchises. However, while still being part of a franchise Thrifty WA is privately owned, which throws up a range of challenges when you are managing a brand, but doing it in a private way. The master franchise is

held by Kingmill, which is a subsidiary of the NRMA. The company Richard works for is a family owned business run by owners Keith and Helen Bedell who started the business 35 years ago. The situation in WA as the construction boom transitioned also posed problems for the business and once again Richard had to look at new ways to grow. “Thrifty WA had been almost exclusively focused on vehicle rental to the resources construction industry and during the mining boom in Western Australia, it grew extremely quickly. The vast majority of income was coming from the Pilbara and most of that was from long-term rentals on the various construction projects that were underway. As you no doubt know the resources construction boom in Western Australia has well and truly ended and it ended very, very quickly. So what was apparent was that we needed to re-invent our business model, cut costs to meet the new market conditions and we needed to do it quickly.” It was about September 2012 when the first shudders in the iron ore price occurred and that was when companies like Fortescue were immediately impacted and they started laying off people. Then Rio Tinto announced it was going to cut $5 billion dollars out of its budget. “That meant we had an immediate drop off in revenues and ended up with a significant number of excess vehicles. During the boom you couldn’t get a rental vehicle for love nor money. Externally we’d seen tsunamis, earthquakes and other international disasters that had affected vehicle production and so the supply of commercial vehicles was under immense pressure. The only organisations other than the major miners who could still access new commercial vehicles in significant numbers were the rental companies and that was because the rental companies were forward ordering large volumes with the manufacturers. Our business alone was buying 1,500-2,000

BUSINESSFIRST MAGAZINE

BF | TAX

TFS236_020_TFMGenPress_BusFirstMag_C2.indd 1

vehicles a year and because of that sort of committed volume our supplies were assured. In hindsight it was a bubble that had allowed the industry and along with it, this business to grow very quickly across the state. All that immediately came to an abrupt halt when the iron ore price crashed.” Shortly after Richard joined Thrifty, on a trip through the Pilbara with the company’s owner, they saw close to 4,000 vehicles belonging to rental companies, construction companies and contractors parked up and left to rust. Richard’s concerns for what was happening were well founded. The organisation had begun to cut its fleet back, but in Richard’s view not quickly enough. He took the board through a comprehensive review of the macro factors: what was going on in China in terms of steel production and demand for Chinese steel and how that flowed on to the demand for iron ore and therefore iron ore pricing and what that meant for the future of construction in Western Australia. The question was how does Thrifty WA sustain its footprint as the largest rental company in Western Australia in terms of fleet size and locations around the state. The fleet would have to reduce, but the company didn’t want to shrink

32 BUSINESSFIRST MAGAZINE

the geographical footprint. “When I looked at the business the thing that was obvious to me was that there was a massive amount of internal capability; there’s a lot more involved in renting a vehicle than simply just handing over the keys at the airport. Over the years the company had built up a tremendous internal capability in terms of procuring its vehicles, equipping them for harsh operating environments, getting them out into the field then supporting them while they’re in the field. The company had built up a strong competency in terms of the skill sets of its people; it had developed exceptionally good facilities right across the state and had the supply chain in place to support all of those vehicles. What was apparent was that we had this capability to support large numbers of vehicles in very remote locations and many of our corporate customers also had big fleets of their own and we saw an opportunity to effectively help them support their fleets. We have invested in the footprint, we have the infrastructure, the people, the supply chain and we are doing it for ourselves anyway. There was the opportunity to start doing it for our clients.” They rebranded the business as Aus Fleet Solutions and now operate five

20/12/13 4:55 PM

www.businessfirstmagazine.com.au

TAX | BF separate but still common brands into the marketplace. Thrifty WA remains the principal masthead as the preeminent vehicle rental business in Western Australia and they now provide mechanical services to external customers at several locations across the state, utilising the Thrifty WA infrastructure, under the name of Aus Mechanical Services. Aus Fleet Solutions also includes a large commercial vehicle panel repair business, Aus Smash Repair, a commercial vehicle sales business, Aus Vehicle Sales and a vehicle leasing business, Aus Vehicle Leasing. This new diversification strategy has allowed the business to unlock hidden value from within its own internal capabilities and it has now opened up a much larger range of market opportunities beyond just vehicle rental – all of which however ultimately support demand for Thrifty WA. The change was a step-by-step process and again Richard was very mindful of who would be impacted. “You have to bring people along on the journey with you and so those points that we were making before about communication and empathy

www.businessfirstmagazine.com.au

are really important in establishing credibility,” Richard says. “I took the view that these are all intelligent people; everyone has their strengths, everyone has their own capabilities and I just talk to them very plainly and very factually about what is going on. I gave them some context around why things were happening and how their workload was being influenced by what was going on in the macro environment. So when I talked to them about the opportunity that I could see in terms of applying their skills and capabilities to a different type of customer and a different type of client they said ‘yeah ok, that makes sense, we can see the logic in doing that’. Once they understood, things changed quickly. No change is easy and we are still working through a lot of it, but they understand the direction that we’re heading in and why we need to do it. We have really re-invented ourselves now from being simply a provider of rental vehicles to being a fleet services group where if you have a large fleet of vehicles there’s a multitude of things we can do to help you support those vehicles in the field.” The extra services certainly set

Toyota Fleet Management is proud to have a long association with Thrifty WA. We are delighted to partner with one of the leading providers of rental vehicles in WA with a broad geographical coverage and wide range of vehicle types.

Thrifty WA and Aus Fleet Solutions apart from other rental companies and Richard’s first year in the job has been a challenging one. However business models need to evolve and staff members and stakeholders need to understand that change is not made for the sake of it. The best way to get this message across is to be empathetic and understanding and properly communicate the need for change. Richard’s core values are integrity, mutual respect and loyalty and he has managed to bring these to each organisation, through periods of change, because of strong communication. “I’d like to think that the breadth of experience I’ve had has helped us re-shape Thrifty in Western Australia and given us a strong position going forward,” Richard says. BF

BUSINESSFIRST MAGAZINE

BF | SECURITIES

34 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

SECURITIES | BF

Unacceptable losses:

The importance of participation in Securities Class actions Securities class action specialist, Goal Group, has revealed that between 2000 and 2012, investor losses through non-participation in securities class actions rose to over USD 18bn. Just over USD 194 million of this figure can be attributed to Australian investors writes Andreas Costi.

I Andreas Costi

is Director of Sales and Relationship Management Australia and New Zealand for the Goal Group of Companies.

t has long been the case that non-participation in US securities class actions has cost investors and funds dearly. Participation rates for US domiciled investors were typically higher between 2000 and 2007 when compared to those of Australian and other non-US investors. Since 2007, however, it is fair to acknowledge that participation rates of non-US domiciled investors have increased. Goal Group’s analysis of its class actions knowledge base has shown that global non-participation is now between 23% and 24%, with marginal differences between US and non-US eligible investors. Nevertheless, USD 194 million of rightful investor returns is not an amount to be ignored, particularly as, in recent years, it has become clear that fund managers and custodians have a fiduciary duty to identify and ensure that their clients participate in securities class actions. Failure to do so could potentially prompt legal action by investors. Having established this fiduciary duty, however, the task of fulfilling it has become a little more complex due to the increasing globalisation of securities class actions. Securities class actions are moving away from a singular and relatively straightforward jurisdiction – the US – to a multiple and complex series of legal systems throughout the world. This international diversification of class actions can be attributed to a combination of restrictions on jurisdiction definitions in the US Federal courts, along with a growing desire to develop domestic class action procedures in many countries around the globe. As a result of the Morrison v. National Australia Bank securities class action case in 2010, the US Federal courts ruled that f-cubed actions (which involve a non-US shareholder, suing a non-US company, whose stock was purchased on a non-US exchange, bringing a case in a US court) were no

www.businessfirstmagazine.com.au

longer allowed to be brought in the US. As a result, although the US is still the most dominant legislature, plaintiffs are now instigating litigation in more flexible jurisdictions globally. As an example, Australia has been establishing itself as a home for securities class actions in the Asia-Pacific region. The outcome of such developments has meant that international companies listed on multiple exchanges must now defend themselves against securities class actions in multiple jurisdictions. This is further intensified as regulators tighten regulation following the global financial markets crisis and governments institute fiercer enforcement measures. Class action growth outside the US is predicted to mirror the growth of the US class action scene in the early part of the 21st century. It is likely that the volume and international variety of tracking and participation will increase throughout the next decade to become more widely applicable to a greater breadth of portfolio holdings. This, in turn, requires custodians, fund managers and trustees to make sure that they are vigilant when monitoring securities class actions across the world. This activity is applicable to institutional and private investors, but by far the largest proportion of equity investment (and therefore losses subject to a class action) can be attributed to institutional investors. Excuses for failing to monitor and ensure participation in class actions internationally are increasingly unlikely to be tolerated however, as there are a number of services commercially available that minimise the complexity and cost of this activity. Despite an increase in participation rates, the added pressure facing fiduciaries (monitoring and participating in claims internationally) may result in non-participation rates rising again. This is in light of some custodians limiting the scope of their class actions service to a selected group of countries.

A lack of international participation must not be tolerated as analysisii has shown that the typical Australian share portfolio has just under 20% of its stock invested in foreign shares. Goal Group predicts that securities class actions settlements in legislatures outside of the US will rise to USD 8.3 billion annually by 2020, however it is also estimated that USD 2.02 billion of global investors’ rightful returns will be left unreclaimed each year. Conclusion Australian fiduciaries face the threat of legal action should they fail to identify and ensure participation in relevant securities class actions. Responsible parties can no longer ignore the opportunity to claim international damages to which investors are legally entitled. However, as class actions globalise, monitoring becomes challenging as there is a more complex global network of shareholder litigation to consider and respond to. Many fiduciaries have historically struggled to keep track of opportunities to make a claim and the processes required to do so successfully have at times been considered difficult and daunting. Now, in reality, there is little excuse for failing to ensure participation in relevant securities class actions as, although many have an American focus, there are specialist service providers that can automate the process across international legislatures, and at a relatively low cost. The pressure of the process can be dramatically eased as such providers can globally cover class actions in all markets, while managing on-going relationships with various legal firms worldwide and a network of paying agents. BF Andreas is responsible for the development and sales of Goal Group Ltd suite of products and services and the relationship management in Australia and New Zealand. www.goalgroup.com.au

BUSINESSFIRST MAGAZINE

BF | MARKETING

Mellissah Smith is the founder of Marketing Eye.

How to flirt with your customers Marketing automation is more than just a buzzword – it’s a way businesses can flirt with their customers writes Mellissah Smith.

36 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

MARKETING | BF

ou walk into your favourite restaurant and at a glance lock eyes with something beautiful. You muster up all your courage and risk stumbling over your words as you begin the conversation with your breathtaking prospect. I know what you’re thinking, but I’m not speaking of a potential relationship between a man or woman. In fact, the prospect in your sights is possibly your next new customer. There is no denying that in business your approach is everything. Similar to the lives of all single people, we must flirt with our customers, begin the conversation, maintain friendly communication and close the deal. So, just how do we flirt? Marketing automation is the new wooing machine, with every single element of the marketing mix taken into account. It allows you to create chemistry with your potential customer by enticing interaction. Presently, marketing automation software isn’t the easiest tool to navigate, but its features and capabilities are designed to simplify the lives of marketers, reduce headcount in your marketing department and increase your return on investment. It is commonplace in business to weigh heavily on ROI and with new advancements each day, lead-to-revenue management is pivotal in the modern business. The business case for lead-to-revenue management delivers credible improvements in marketing workflow processes and not only affects revenue but, also deepens customer relationships with the brands they buy from. Marketing automation is essential to standardising, automating and scaling practices needed to engage with customers across their lifecycle. One of the key factors that is challenging CMOs with marketing automation is juggling customer data management, organisational structure, content production, and tactics that speak directly to buyers across all touch points in a way that resonates with them. The single biggest factor that is driving marketing automation is a profound change in the way buyers behave in addition to a change in the way marketers need to engage with them. We have moved from a world of information scarcity to abundance. “Not long ago, if you wanted to buy a new car, the main way you were going to get the detailed specifications of that car to evaluate a purchase is to talk to the representative of the car company. A lot of marketers grew up in that the www.businessfirstmagazine.com.au

world,” says Marketo chief marketing officer Jon Miller. With marketing automation software, businesses have the ability to adjust their sales over the course of a sales campaign. With analytics, we can discover the optimal time to send certain messages to a specific demographic increasing the likelihood of converting the prospect into a qualified lead. We can now get any purchasing question we want answered: online – anytime. It is proven that consumers are responding to marketing automation. Buyers are taking advantage of the information accessible to them. Now, they are doing research on their own, searching the cyber world for information, reviews and price competitiveness – all with a click of a button and without having to speak a word to a sales representative. Buyers are now well informed and already have all the information they require prior to speaking to a sales person or making an order. From a business perspective, this creates constant opportunities to capture data and maintain contact with new and prospective customers. “Big data has revolutionised the marketing industry, and marketing automation is not far behind,” says Marketing Eye US president Maikayla Desjardins. “Through the intelligence provided by marketing automation, companies are becoming less reliant on sales personnel and placing more importance on marketing analytics.” Buyers are purchasing much later in the sales process than ever before. What does that mean for marketers? It means that marketing needs to step up and not just generate the lead – but also own it. Sales have always been relationship-driven, but now our focus must be on building the relationship; helping the buyer through the journey, educating them and listening to what they are saying. “It’s like flirting and making sure that you are being relevant. That’s what brings us to marketing automation,” Desjardins says. Marketers now have the capability of analysing both online and offline customer behaviours, building linkages between the two to give a complete picture of the customer, while gathering an abundance of usable data to help build the relationship and drive sales. Through the advanced analytics that marketing automation provides,

‘

With analytics, we can discover the optimal time to send certain messages to a specific demographic increasing the likelihood of converting the prospect into a qualified lead.’

companies are able to utilise this information to better translate insight into profit generating campaigns – ultimately boosting profits and loyalty through more strategic marketing. “Marketers are tired of being seen as cost centres. They want to have an equal share of bonuses as part of the revenue team and to do that they need to show how tactical marketing activities are affecting revenue,” Miller says. “The ability to map a buyer’s journey and experience is seamless from marketing automation through to CRM. “The functionality of marketing automation provides the core building blocks centralising the marketing database and serving as a record for the marketing department and the customer’s digital behaviours. “Every web page a customer visits, tweet, link that they share, email that is opened and marketing event that they participate in, is recorded.” It’s proven that multi-level marketing campaigns deliver the best possible customer experiences and the highest return on investment is the goal for the modern marketer. “Improving targeting, engagement, conversions and analysis by capturing their customers digital body language,” says Desjardins. CMOs need to prepare for marketing automation by having: 1. A lead-to-revenue process model to automate. 2. Content to support the message and responses. 3. A marketing organisation that is ready to support the technology; and. 4. Achieving company-wide buy-in to the use of marketing automation in the business. BF Mellissah Smith is a serial entrepreneur and business leader with more than 20 years’ experience in marketing. She runs an international marketing consultancy firm that provides small businesses with a marketing consultant and in-house team of creative, web development and PR experts. www.marketingeye.com.au

BUSINESSFIRST MAGAZINE

BF | PROFILE

LIFE IN FULL

FLIGHT

38 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

PROFILE | BF

Australia’s capital is often derided for not offering too much more than politicking, but there is so much more to Canberra than meets the eye as Bob Forshaw discovered when he spoke with the managing director of Canberra Airport, Stephen Byron.

here’s a picture circulating on the Internet featuring Canberra Airport supreme-o, Stephen Byron cleaning one of the food court tables. There are no airs and graces about Stephen. When it comes to looking after all aspects of the airport, he is unafraid to get his hands dirty, even if this means taking a washcloth and wiping down a table. It is that attitude to the management and maintenance of the facility that is behind its success. Of course, when you have someone like Terry Snow involved as well, success is assured. Terry is the executive chairman of the Capital Airport Group and according to Forbes is Australia’s 39th richest person. He is also Stephen’s father. The pair’s work on the airport has at times been controversial, with the $480 million development of a new terminal for Canberra Airport, the development of Brindabella Business Park, Fairbairn and Majura Park shopping precinct has come under various criticisms ranging from the cause of congestion to taking away civic jobs. However the work done specifically on Canberra Airport and the precinct where the Capital Airport Group owns the lease for the Commonwealth land was a necessary step forward for Canberra as a link between the major States and as a hub for new business. The buyout of the airport was synchronistic. In 1996 Terry had sold his property and development company; so in 1998 when the airport came on the market the Snow family was well placed to bid. They were long-standing Canberra citizens with the money required to transform the precinct. “We put together a bid with a business plan to run the airport and ultimately we were successful,” Stephen says. The Snow family took over on 29 May, 1998. It was just a country-town airport at that stage. “When our family purchased Canberra Airport almost 15 years ago, what was here was little more than a tin shed in a sheep paddock,” Stephen

www.businessfirstmagazine.com.au

said in March last year at the western concourse terminal’s official opening. “But my father Terry Snow had a clear vision for Canberra Airport to become the best small airport in the world.” At the time of the sale, Ansett and Qantas owned the terminals and had control over the growth of aviation traffic into Canberra Airport. The trick to turn the airport’s fortunes around was to wrest control of the terminals. “We toured a number of cities in Europe, including smaller airports. We came back and were almost in despair about how to gain control of the terminal and therefore the ability to build something impressive,” Stephen says. “The second question was one of affordability: how do we afford to do it when the aviation industry is so volatile? At that time we forged our first fundamental principle. Diversification. We needed to diversify and build a business that was not dependent on the ups and downs of the aviation industry.”

“

We toured a number of cities in Europe, including smaller airports. We came back and were almost in despair about how to gain control of the terminal and therefore the ability to build something impressive.”

BUSINESSFIRST MAGAZINE

BF | PROFILE

After touring Schiphol Airport in Amsterdam, they found that the integration of a business park would mitigate some of the risks they were taking financially. The Group began to develop Brindabella Business Park to secure an income stream to allow them to rebuild the airport. Ansett’s collapse in 2001 also opened the doors to the terminals and allowed the Capital Airport Group the freedom to build a modern airport. “We had a pretty run-down airport, partly because the politics of federal government seats in Canberra meant that they were very safe seats and not marginal seats. So we were well behind the curve. We had 737-strength infrastructure in the apron, the taxiways and the runways, but this really daggy, disjointed terminal facility where there were 42 random levels across two main levels. Ultimately, we knew that we had to demolish and start again. To do that, we had to strike a deal with Qantas.” The Qantas deal proved relatively easy with CEO John Borghetti striking up an arrangement. However, Ansett was problematic.

CPS CONCRETORS PTY LTD & CPS CONCRETE PUMPING CPS Concretors Pty Ltd & CPS Concrete Pumping are proud to have been associated with Construction Control Pty Ltd over the many years on the new Canberra International Airport project. With over 40 years experience in concrete placing and finishing and with four concrete pumps ranging from 28m to 42m booms plus two tower pumps we have successfully and professionally serviced the Canberra and surrounding region. CPS have won Excellence in Building Awards over the years. We have an experienced team and years of expertise offering the highest quality of workmanship. Our unquestionable commitment to excellence ensure we remain one step ahead of our industry competitors.

40 BUSINESSFIRST MAGAZINE

ACT Interiors has been proud to say it has worked with Steve Byron & the Capital Airport Group. As the precinct out at the Canberra Airport has been known for its high standard & innovative buildings. ACT Interiors has had a great working relationship with Canberra Airport Group starting back in 2001 & our latest job the stage 2 of the terminal. We look forward to working with Steve Byron & the Capital Airport Group into the future.

PO Box 2047 Kambah ACT 2902 t 02 6231 8367 f 02 6231 7197 e admin@cpsconcretors.com.au

ACT Interiors

Phone: 02 6251 8188 Facsimile: 02 6251 8588 PO Box 3118 Belconnen ACT 2617

www.businessfirstmagazine.com.au

PROFILE | BF

“

The collapse of Ansett in September 2001 was the pivotal moment. To see your airline revenue collapse and lose 50% overnight was something dramatic, overlaid with security pressures as a consequence of the horrific events of September 11.”

“The collapse of Ansett in September 2001 was the pivotal moment. To see your airline revenue collapse and lose 50% overnight was something dramatic, overlaid with security pressures as a consequence of the horrific events of September 11. It ultimately played out into a very difficult skirmish with the administrators of Ansett. We were able, at the end of that, to buy back the Ansett terminal facility and thereby offer it as a new multi-user facility for any airline that might come for the growth and rebuilding of aviation in Canberra. That was the pivotal point. Through that, Qantas’s market share went from 50% to 75%. That meant that their facility was under stress and under-capacity. They needed to come to the table with us and work out a plan for their growth. It was through that process and John Borghetti’s leadership that we were able to move ahead with a new terminal project.” Substantial economic benefits to Canberra were the result. Many thousands of people have been employed, starting with construction. It has meant long-term jobs in the airport, made possible by growth in the passenger numbers from 1.8 million to three million, the addition of new services to www.businessfirstmagazine.com.au

new cities including Perth, Gold Coast and Newcastle and more frequent journeys to Brisbane and Adelaide. All of that has driven significant growth for the tourism and hotel sector in the city, as well. Construction of this infrastructure was done in two halves. “It had to be staged in two halves because we needed to build a greenfield product on a brownfield site. We’ve gone from four aerobridges to ten. We’ve gone from 1,000 car parks to 4,000 car parks. We’ve gone from 22 check-in desks to 46 check-in desks. The overall size of the terminal has, in some regards, almost quadrupled. It’s got capacity for growth; it’s got flexibility for the future. It’s got capability for international operation, and that’s ready now. It’s ready today. So we can look forward to opportunities to fly not only trans-Tasman, but indeed up into Southeast Asia and across to the Middle East.” The key to getting this done was to maintain solid relations with key contractors. The main contractor Construction Control has been at the forefront of the project from the beginning. However all contractors and sub-contractors have played their part and

they stick around because long-term partnerships create long-term trust. “Our contracts are based on fairness and not having variations. We work to a budget, but ultimately try to deliver the highest quality product. While I think people will be impressed with the design of the facility we have, really, it’s the quality of the build that shines through in the product,” Stephen says. Construction Control is behind the terminals as well as the infrastructure in Brindabella Park, Majura and Fairbairn. “They’ve been our builder all the way through for 15 years...a marvelous partnership.” Another element of success lies in Stephen and Terry’s trust of each other. This has been prominent since Stephen joined Terry in 1994 for a couple of weeks work. Stephen found it stimulating and rewarding and the lawyer stayed. “Terry is one of the great entrepreneurial risk-takers. He imagines the future of how things should be. I suppose I’ve been able to work together with him on how we achieve and deliver that to manage some of the risks. Ultimately, he’s been the driving force for the development of Brindabella

BUSINESSFIRST MAGAZINE

BF | PROFILE

Stephen Byron

Business Park and also the terminal. He is behind the design and artistic flair of the infrastructure. For a businessman, he’s enormously creative and I’ve been able to work with him to shape that creativity into some of the commercial viabilities and manage pressures along the way.” The business is set up over two complementary divisions: property and aviation. Both of those businesses report to Stephen who reports back to Terry. Over the journey the divisions have seen a cut in staff, but there are now 100 staff across the business. Success for Stephen is about nurturing the talent. “We have had a team as small as 18 people and we now have a team of just over 100. It’s been about growing young people along the way. We just had a dinner last night to celebrate 17 staff that have been with us for more than 10 years. There’s enormous loyalty and dedication, but also, we’ve been able to grow a lot of those people into the most senior management positions.” This is due in part to the family

Construction Control were recently the proud recipients of the National Commercial Master Builder of the Year at the 2013 National MBA Awards for the Canberra International Airport Terminal. For Construction Control this Project evolved from a 15 year relationship with the Capital Airport Group. We are very proud to have played such a major part in the Project Management and delivery of the Canberra Airport Terminal in what for Canberra is such a significant piece of infrastructure. It has been a Project that has provided a fitting gateway to the National Capital and in my view as a native Canberran has helped us all mature.

On behalf of Construction Control I would like to particularly thank Terry Snow and Stephen Byron for their trust in us and also their exceptional team including Matthew Brown and Richard Phillips who helped make the delivery of the Project such a success. Our focus and that of our clients on Project Safety was paramount on this Project despite its complexity and the time and cost parameters and this is a facet of the Project that I am also very proud of. From Construction Control we had a very experienced and capable team led by Ross Cleaver. John Pfeiffer, Rob Bell and Richard McCreedy also had significant front end contributions who were ably assisted by our valued and loyal staff on the ground.

We are fortunate to have teamed up with several local subcontractors’ whose skills and dedication to this Project show that they too are the best of the best in Australia. I would also like to thank the Master Builders Association. The MBA play an important role in lobbying Government to give the building industry a respected voice but also they play a significant role in the continual improvement of the Industry which is so important for the Nation and its place in the world market. John Gasson CEO

PROFILE | BF

atmosphere that the Group has created. Stephen says all staff members are part of the Canberra Airport family, which lends itself to a special focus on customer service and a passion for doing things. “It’s something that’s very important to us. It’s come out of that family business heritage,” Stephen says. As bright as the future is, challenges loom. A proposed solar farm to be situated north of the airport could affect the safety of pilots and passengers flying into Canberra. Canberra Airport has raised concern and objection as have Virgin and Qantas. The problem is reflection of solar panels into the pilots’ eyes. “Our view is that there is no locawww.businessfirstmagazine.com.au

tion anywhere in the world identical to this where a solar farm has been built, on the same angle, pointing towards the incoming pilot. Our view is a proper safety approach means you don’t consciously introduce any additional risks.” The hope is the farm is relocated. Meanwhile, Terry and Stephen are working towards introducing international flights. “It’s not just that Canberrans want them. It’s not just that the national capital of Australia deserves such flights. It’s also, in my mind, a reflection of the fact that Australia, as a country, needs its national capital to be connected to Asia directly. We see

significant growth, around 550,000 international passengers over the next three to four years. We see the introduction of low-cost carriers, either Tiger or Jetstar, over the next 12 to 24 months. We also see the development, on site, of an airport hotel. That will start construction early in 2014.” The plans have been grand from the get-go, but Stephen and Terry understand that to remain relevant and to stop Canberra from possessing a fantastic airport that is underutilised, growth is important. It’s a family that has never rested on its laurels and Canberra is the beneficiary of that drive. BF

BUSINESSFIRST MAGAZINE

BF | ASIA TECHFOCUS

Building your personal brand in the Asian market

Most sustainable relationships between Australia and Asia are primarily based on interactions and associations. Therefore it is important to have a credible personal brand for instant impact writes Jon Michail.

here are three components in building a credible personal brand. These are: a. Credibility b. Dependability c. Trustworthiness. Which in turn will deliver you: • Relationships • Respect • Prosperity. To build your brand, you have to create a system that works for you. While talent will get you so far, this is

44 BUSINESSFIRST MAGAZINE

only one aspect of success. The most important component of success is the practical systems you build. No matter how disruptive certain systems seem, they are the key to your growth. Everyone from Richard Branson and Steve Jobs to Lady Gaga created a system that tended to their business growth and brand. They had/have talent, that goes without saying, but they also had a successful system that leveraged their talents by creating personal brand value beyond what the average business lead-

er or entrepreneur is able to create. When considering your systems and brand in Asian countries, the fundamentals are the same, however you have to consider how the brand translates, i.e. names, colours, taglines, styles and cultural nuances that may offend. You must decide who you want to target and how your brand reflects the market or individual that you want to influence, and then adjust to suit. We touched on behaviours in the last issue. In this issue, I want to look at how to www.businessfirstmagazine.com.au

ASIA FOCUS | BF maintain your brand. Put simply, there are two ways you need to look at your brand: A. Offline – visit your market regularly (face to face preferably) and have your people on the ground do the same. B. Online – Create an online platform to regularly communicate with your stakeholders. Let’s look at your team on the ground. It is important for them to understand that business throughout Asia is not always conducted in the same manner. Doing business in Singapore is different to doing business in Indonesia or China. Therefore your team must understand the culture. Recruit a team you can trust, people that also intimately know the culture, language and how business is really conducted there. Any entrepreneur or business leader with hands on experience will give you real-world insights if they are honest with you. Get really picky in finding your team; it can take time but in the long run will give back awesome returns. A good team will ensure that to the best of their ability, the brand will survive and thrive. However as every leader knows, circumstances can conspire to hurt the business. If the brand goes wrong, it’s time to enter into the crisis management phase. It’s time to take a deep breath and contain your losses. You must have a strategy in place before the event. Having a plan in preparedness makes good business sense. Once you have set your crisis management plan in place, you can then work to re-position nearly anything if it falls into the parameters of your well thought out plan or system. No matter whether you are a big or small organisation, you will face similar disruptions particularly in overseas markets. Some industries may find it harder to recover. The food industry is one that has to perform major repairs to its brand when something goes wrong. Remember the milk substitution racket in China. That cost to manufacturers financially and in reputation was disastrous; the cost of human lives was tragic. That’s a disaster that any respectable brand or leader should ever let happen. To mitigate these disasters, your brand values must be congruent with what you claim to be. In the example above it’s clear that these manufacturers did not follow their own mantra – they destroyed trust in the brand through unethical behaviours. www.businessfirstmagazine.com.au

Brand Building – personal or corporate – is not a strategy for short-term profits, it’s a well thought out plan or system with steps in place that need to be followed to maximise brand value for the longer term. Your personal brand is a reflection of your leadership. Trust is one of the most important character traits missing today from our communities. From business leaders to politicians to your local church, people are suspicious of what they are being told as they have been let down too often. Your personal leadership brand is the ultimate tool to build business because you: • Understand yourself better • Increase your confidence • Increase your visibility and presence • Be the go to person in your industry, attract investors, media and powerful connections • Differentiate yourself from your peers • Increase your compensation • Thrive during downturns in the economy. BE SEEN AS A LEADER AND MAKE A REAL DIFFERENCE So when looking at the Asian markets, it’s important to remember the following: 1. Be clear on your values and what you stand for (and what you will not stand for).

‘

Recruit a team you can trust, people that also intimately know the culture, language and how business is really conducted there.’

2. Know your target market and position your brand accordingly. 3. Decide what you need to do for impact. 4. Plan how you will reach them effectively. 5. Back your team / representativeness to be congruent with your personal brand. They must be a reflection of what you represent when you are there physically or not. Remember everyone must speak the same ‘language’… in their own voice; create congruency along all the brand communications channels. “Set a standard for excellence, without distinction there is extinction.” BF Jon is the CEO of Image Group International and has been working with Asian businesses for over 20 years.

$ CASH IN PROMOTE BUILD AN INTEGRATED HOLISTIC APPROACH - OFFLINE / ONLINE

BUSINESSFIRST MAGAZINE

BUSINESSFIRST for Business Leaders

www.businessfirstmagazine.com.au

BBUUSSIN EESSSSFFIR IN T S IRSSTT IR F S S E N SIINESSFIRST U B BUS OOnnth thee for Business Leaders for Business Leaders

Dec/Jan 2014

for Business Leaders

Dec/Jan 2014

azine.com.au www.businessfirstmag

for Business Leaders

March/April 2014

www.businessfirstmagaz ine.com .au2014 March/ April www.businessfirstmagaz ine.com.au

azine.com.au www.businessfirstmag

RRiv ivie iera ra

THE MAKING OF A LUXU RY BRAND THE MAKING OF A LUXU RY BRAND

SYDNEY SYDNEY

22003300

CLEAN VISION ALLAN JONESBOU R CITY FOR THE HAR AN VISION CLE ALLAN JONESBOU R CITY FOR THE HAR

T BUST BOOM NOing ry’s ind STust min y the T BU NO OM k BOWh blea soust notind ry’s outlook ising Why the min bleak is notVolso outlook 1 Issue 1 S FIRST MAGAZINE BUSINES

AU$12.95 NZ$13.95

E BUSINESS FIRST MAGAZIN 95

AU$12.95 NZ$13.

Vol 1 Issue 1 01

772203

SPOTLIGHT WESPOTLIGHT PROFILE 8 TOP WE PROFILE BUSINESSES 8 TOP BUSINESSES

Marketing

Ma rke Str E: ate gyting SURVIV ADAPT ANDESS E ing ate Str Creat IN TH a systegy m BUSIN E:TUR for Creat VIV Y ing succe SUR ss ina Asia CEN AN m ASISS ADAPT AND THE for successsyste in Asia BUSINE INTUR Y ASIAN CEN LEADING

! LEA IT’S A SONY

GEntN YDING ogy !6gia nolNY tech GEtoNgetYyou y the tools AlSO WhIT ’Sstil s the leadgian t way starte d to get you 6 tools Why the technology started still leads the way BUSINESS FIRST MAGAZINE N: LINKEDIOW , KN DIN: KEYOU WHAT IT’S NOTLIN OW

Vol 1 Issue 2

AU$12.95 NZ$13.95

BUSINESS FIRST MAGAZINE

AU$12.95 NZ$13.95

KN YOUW, O KNO YOU IT’S ATWH IT’S NOT WH W IT’S WHO YOU KNO

129000

772203 9

Vol 1 Issue 2 02 02

129000

772203

129000

FIGHT AND FLIGHT FIGHT ANenDByron How Steph FLIGH helped T Howtrans Steph en Byron form helped Canberra transform Canb

Simply eleganterra Sim The new, impr eleC-Cla gan oved ply Mercedes ss t The new, improved Merc edes C-Class

ting rke Lifestyle // Mang INS IDE: Investment // Leadersh Leadership //styl keti INS ip // Lifestyle // Tax // Tech ss // Finance // der IDE: Investment // Leadersh ship // Life e // Mar INSIDE: Busine Lea // nce ip // Lifestyle // Tax // Tech Fina INSIDE: Business // 9

772203

129000

19/11/13 4:45 PM

COVERs.indd 1 COVERs.indd 1

SUBSCRIBE to the magazine for Business Leaders Business First’s purpose is to make it easier for CEOs to make the hard decisions. This is a peerto-peer magazine: written by CEOs and other high level executives, with interviews with some of the country’s best leaders.

The magazine is a window into the minds of the business leaders of Australia and Asia. Business First Magazine provides its readers with informative articles tackling the latest issues in Australia, revealing inside tips on everything from business strategy to emerging trends.

• Business • Finance • Innovation • Investment • Leadership • Lifestyle • Tax • Tech • Wealth

6 Issues

$69.95

Visit: www.businessfirstmagazine.com.au/subscribe

EDUCATION | BF

Minimum learning outcomes in place for economics graduates New academic standards for degrees in economics have been endorsed by the Australian Business Deans Council, establishing minimum learning outcomes for graduates of economics programs in Australia.

he learning standards provide benchmarks that institutions can use in evaluating existing programs and developing new programs. They have been developed by a working party of academic economists, chaired by Griffith University Professor of Economics Ross Guest, under the auspices of a Fellowship with the Australian Government Office of Learning and Teaching. The working party consulted extensively and robustly with academics, professionals and industry leaders. It was advised by an expert advisory group chaired by Professor Allan Layton, University of Southern Queensland and Australian Business Deans Council. The collaborative process also had the support of the Economics Society of Australia and the Australian Government Office for Learning and Teaching which provided the bulk of the funding. “This is the culmination of a 12-month period of consultation with the economics community,” Professor

www.businessfirstmagazine.com.au

Guest said. “We now have a very useful and very important resource for the purposes of benchmarking intended learning outcomes in existing economics programs. “It also sets a standard for academics designing any new economics programs.” Professor Layton said the standards would give employers and industry groups a clear understanding of the learning outcomes they could expect from graduates with Australian economics degrees. Professor Michael Powell, ABDC president and Pro Vice Chancellor (Business), Griffith University, highlighted the key leadership role taken by the ABDC in the academic standards agenda. “The tertiary community should take note of a substantial piece of work which meets the expectations of the Tertiary Education Quality and Standards Agency (TEQSA).” TEQSA evaluates the performance of higher education providers against standards including provider standards, qualifications, teaching and learning, information and research. The new academic standards will require that degree programs demonstrate they meet the specifications of the Australian Qualifications Framework. The publication of the standards has also been welcomed by Professor John Sloman, author of the acclaimed international textbook Economics. “It will make a major contribution to improving the quality and consistency of student learning in economics throughout Australian higher education,” he said. More than a third of Australia’s higher education students graduate with a business degree. Labour market

“

It is important to ensure our students are graduating with a qualified standard of skills.”

demand for qualified economists is projected to almost double in the period to 2017. “It is important to ensure our students are graduating with a qualified standard of skills,” Associate Professor Mark Freeman, ABDC scholar, said. “Economics is the third business discipline after accounting and marketing to develop learning standards. It is crucial that the ABDC provide leadership in this area at this time.” Professor John Sloman, author of the acclaimed international textbook Economics, said the learning standards have drawn on best practice from other countries, as well as from Australia. “They can be used to identify the skills and knowledge of students successfully completing economics programs.” BF

BUSINESSFIRST MAGAZINE

BF | PROFILE

Knowledge is the rock of ages

48 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

PROFILE | BF

There’s a lot to learn when you work for a company like BHP and there’s even more to learn when you jump from a mining giant to a small company that has only been in existence for 13 years. Yet Ben Hammond has taken it all in his stride and this young gun applies every ounce of knowledge gained from his MBA to his practical experience to create the best opportunities for the companies he has worked for. Now, Centrex Metals is benefiting from his expertise. He speaks with Jonathan Jackson.

en Hammond wanted to work in economics, but he found himself studying geology, became a geologist, worked for BHP and is now the CEO of Centrex Metals. The four years he spent at BHP were invaluable, particularly when he moved away from geology and into business improvement. “That was the best thing I ever did, because that allowed to me work across the business,” Ben says. “I worked in ports, rail and maintenance and had little to do with geology for a few years there.” The BHP business improvement program, which allowed its employees to cross all its business sectors, helped Ben to fine tune several skills that go a long way in business management in both big and small companies. “You’re not working full-time in any one area, you’re gaining experience in all areas from long-term planning, through to processing rail ports and dealing with investors and staff at all levels from a whole supply chain point of view.” Ben gained knowledge in a myriad of areas. “It helps to know a bit about a lot of things across the business, especially if you are moving into a smaller company with fewer resources. It’s not like a big company where you have experts in specific areas to lean on. Although you can’t be an expert in all areas it helps to at least be able to ask the right questions particularly in a small company where you’re relying on a lot of external consultants. The actual business improvement side helped me a lot as well: having all those statistics in your head, the various parts of the operations and their expected efficiencies or where the bottlenecks may be, and just knowing which key areas to deal with first. I also had involvement with the technical marketing that aided to understand the customer’s end. So all this as a background coming into Centrex was very handy.” During the first 6 years of his career Ben was also studying his MBA through correspondence as he moved

www.businessfirstmagazine.com.au

from town to town, and state to state. It was an MBA designed for engineers, and related back to mining and petroleum, so held him in good stead. “I could apply it directly back to everything I did. I wouldn’t recommend an MBA to someone who already has a commercial background, but, certainly for a geologist, scientist, or an engineer, I think it’s perfect because it gives you those extra commercial skills you don’t necessarily have.” When Ben moved to Centrex Metals in 2007 as project manager he made an immediate impact, jumping straight into the deep end to help facilitate negotiations with Baotou Iron & Steel on the Bungalow Magnetite Joint Venture located on the northern Eyre Peninsula, South Australia. While a HOA for the joint venture was already in place, technical due diligence was just starting and detailed agreements required drafting, allowing Ben to apply both his technical and commercial skill sets. “What certainly became clear was there was still a long way to go to actually get a joint venture in place and most of that was on the technical, due diligence side. So my first role was to really convince them.” While the negotiations with Baotou were ongoing, in 2008 he commenced marketing the Company’s projects on the southern Eyre Peninsula which lead to negotiations for the Eyre Iron Magnetite Joint Venture with Wuhan Iron & Steel. After protracted negotiations with the two Chinese steel majors and investment approvals processes, both of the joint venture transactions were completed in 2010. The Bungalow joint venture gives Baotou the right to a 50% interest in the Bungalow magnetite project by spending the first $40 million on development. To date Baotou has spent $24 million and the project has defined 338Mt of Mineral Resources. The project is currently the subject of a Prefeasibility Study targeting a 5Mtpa magnetite concentrate operation. For their 60% interest in the Eyre Iron Magnetite Joint Venture, Wuhan

BUSINESSFIRST MAGAZINE

BF | PROFILE paid Centrex $78 million directly plus a further $75 million in development funding. The joint venture’s flagship project at Fusion has 680Mt of Mineral Resources to date and further drilling is underway to expand the resources and complete a Prefeasibility Study for another 5Mtpa magnetite concentrate operation. Both magnetite joint ventures will transport the products between 40km and 100km to Centrex’s Port Spencer development, another joint venture with Wuhan. “The $78 million we got directly into the company as part of the Wuhan deal is really why we’re in such a strong cash position right now. We moved early to a model where we didn’t have to rely on the equity markets over here.” Commencement of the Eyre Iron Magnetite Joint Venture between Centrex and Wuhan saw him seconded at the desire of the Chinese as Chief Operating Officer to Eyre Iron Pty Ltd, the joint venture management company, to oversee its implementation. He spent two years in the role at the same time as he was fulfilling his role as Chief Development Officer at Centrex, before being appointed acting CEO of Centrex

in February 2013 and CEO in July. He remains a Director of Eyre Iron as well as Port Spencer Pty Ltd. Ben could see what needed to be done to move Centrex forward while he was in the role of Chief Development Officer. His goal was to take Centrex back to a company that developed projects rather than another aspiring miner. “The biggest aspect we’ve started

working on, that’s resulted in a supplementary deal with Wuhan recently, is to try to isolate the equity needs of the joint ventures from the parent company, and to free up our cash and allow us to keep repeating the model of developing projects and finding foreign partners.” In 2013 Ben worked on yet another Chinese backed joint venture. The

Delivering Advanced

No port? No problem.

Transhipment

Solutions Worldwide. CSL has an impressive track record of providing customised, efficient, environmentally sound and cost effective transhipment solutions to clients in Australia and around the world. By combining state of the art technology with over 100 years of cargo handling experience, we provide the reliability and productivity you expect from your transhipment operation. Balancing innovation with tried and tested solutions.

Australia +61 2 9432 7500 operations@cslaustralia.com.au Asia +65 6324 0311 info@csltranshipment.com CSLships.com/transhipment

PROFILE | BF

The CSL Group is the world’s largest owner and operator of self-unloading vessels, and specialises in providing fast, reliable and environmentally-responsible shipping and handling services. The company offers customized transhipment and top-off services to iron ore customers around the world.

Goulburn zinc-lead project is located in the Lachlan Fold Belt in New South Wales. Geophysical mapping of the project has shown promising conductor targets located on the edge of a major gravity high adjacent historically defined zinc, lead and copper mineralisation. Shandong 5th Geo-Mineral Prospecting Institute has signed a joint venture agreement to spend $2 million on exploration in 2014 to earn a 35% interest. Shandong have further options to earn up to 80% by funding a project through to production should a deposit be defined. Completion of the joint venture awaits Chinese Government approvals. “A big part of marketing and negotiations has been preparing presentations and learning how the Chinese digest and respond to information. I think that’s the key learning we’ve had in this company is how to present information to the Chinese – it is critical. You have to realise the levels of the organisation you’re presenting to. The right information has to go to the right departments.” The development strategy has the support of shareholders. Ben says the company is very tightly held, with the

www.businessfirstmagazine.com.au

top 20 shareholders owning nearly 80% of the business. This causes liquidity challenges, but at the same time relationships are close and everyone is on board with the direction. As the mining industry has softened, Centrex’s biggest opportunity but also challenge is to look for acquisitions. “We reviewed hundreds of opportunities and it’s finding those next projects that is becoming more difficult, certainly outside of the majors,” Ben says. And there are related problems. “The industry needs more competition. If the country’s going to grow its resources to be able to compete with other resource rich countries, costs need to come down, we’re starting to see that already but it’s got some way to go yet. Land access actually is one of the greatest issues facing the industry at the moment. Many of the remaining exploration opportunities are in higher use land areas.” “So we’re being proactive in terms of land access. We’re not going to shy away from it; we’ll try and find commercial solutions. We’ve had great success on the Eyre Peninsula and NSW to date. We’re the first in 20 years to get on at Goulburn, so we’re trying to build a competitive advantage in that area and I think that’s the next frontier.” The strength of Centrex is that it can leverage between each project; there are great synergies that allow this to happen even though the company operates across two regions. Ben is also looking at new technologies and ways to ease the burdens on the company. Recently he adopted a new style transhipping model for the Port Spencer Joint Venture on the Eyre Peninsula. “Ports have always been a challenge,

particularly for iron ore, but we were certainly watching the developments in transhipping up the coast from us, and after 12 months could see it would be a successful model. It’s a major step change in technology. Traditionally just the operating costs could be prohibitive, but these new ‘mini-ships’ are self-unloading and self-mooring, so they can compete on operating costs, while reducing the port and infrastructure costs dramatically. Our jetty length significantly reduced and we don’t need a full size wharf, we only need a point ship loader as they can move themselves underneath it for loading. We knocked almost half the capital off and yet can still ramp up with multiple or larger transhippers. This kind of solution allows a smaller project to justify its own port.” Ben is looking at autonomous mining and new technologies around non-invasive exploration to aid in the land access issues. He sees his role as seeking out potential opportunities and getting foreign investors on board. It’s been a quick rise, but you feel his skills acquired across a range of projects and large and small business holds Centrex in good stead. BF

BUSINESSFIRST MAGAZINE

BF | LEADERSHIP

6 leadership tools to leading

Gen Y, Gen, Y Gen Y…how many times have you heard people commenting about Gen Y? The New York Times even published a piece labeling them the “Go Nowhere Generation” whilst “lazy, entitled narcissists” is what the Millenials were labeled in an article run by Time Magazine writes Petar Lackovic.

W Petar Lackovic is CEO with The Entourage.

hatever your thoughts, the close to 100 million Gen Y workforce is gaining momentum and even though they say knowledge is power, it is my belief that the implementation of knowledge leads to results, so let’s approach this topic head on and work out the best way for us all to get along and achieve the goal that binds us all together in business… ongoing success. Leading the biggest movement of Entrepreneurs under 40 in Australia, I am on a daily basis immersed with the

52 BUSINESSFIRST MAGAZINE

life and times of Gen Y…and if I don’t mind saying so, loving every minute of it. I was brought up with the understanding that if you work hard for long enough, eventually you would become successful…it’s about the amount of elbow grease you put in. I was also taught that you “speak when you are spoken to” and those in positions of power “knew it all” and because of their seniority (mostly aged based), they knew best and were not to be challenged…you’ll get your time to

voice your opinion and challenge status quo when you get to their position and not before!” I look back now and ask myself, “If I have had of stuck by these opinions and carried theses beliefs, how long would it have taken me to climb the corporate ladder?” How many reading this can remember their eagerness in wanting to ‘get to the top?’ I know I can. Is there a little Gen Y in all of us wanting to come out? Put these Six Leadership Tools to Leading Gen Y into practice and maybe www.businessfirstmagazine.com.au

LEADERSHIP | BF

‘

Gen Y is super-flexible, adaptable and loves change. They don’t see change as risk but as a necessity to growth and further ongoing success.’ It doesn’t mean you have to triple your HR budget and splash out on sleeping pods and gaming rooms, but what’s important to them, now more than ever, is surrounding themselves in an enjoyable Culture. Gen Y understand that not all work is fun, however, they also believe, rather than being in an average environment doing great tasks, they would prefer to be doing average tasks in a great environment. Like it or not there is culture brewing in your business right now…it’s either the culture you are actively building or the one that is building itself through your inaction. When your team can see that there is a conscious effort and plan put in place to create a culture they believe in. (which includes their input) then you will have a loyal Gen Y team.

you’ll see a mini me looking back at you one day.

Walk the walk and talk the talk: Like it or not, respect for time and age doesn’t sit well with Gen Y. However Gen Y will follow you to the ends of the earth and work the hours, (they will utilise their youthful energy) if they have someone they can look up to. Job title is irrelevant. Job performance is everything.

Culture, culture, culture: “Do what you love or don’t do it”… Gen Y have had this line poured down their throats and they believe it, why shouldn’t they? They have been raised in the www./google phase and they know what great companies (like Google) do for their staff and the types of environments these companies create for their teams.

www.businessfirstmagazine.com.au

Involve them, let them challenge and be Ok with their mistakes: They are much more opinionated than previous generations who were told to “speak when spoken to”. Gen Y will often see things differently to others and will often take a different route when completing tasks. I’m not saying it’s alright for Gen Ys to make mistakes and wrap them up in cotton wool when they do make a mistake, but you may need to modify your reactions to those mistakes. Give them permission to challenge and to see that you’re not overprotective of your way of doing things. Do this and you will see a team that is super motivated to exceed targets with the drive and determination to hit their targets twice as fast.

Show them how what they do matters: Wanting to see that their contribution is making a valuable impact to the organisation is one of the best ways to have your Gen Yers go that extra mile. Regular updates on how their work is benefiting the company and those around them, gives them internal bragging rights (within their own mind), that they are progressing. This generates the stimulation to crave this feeling again.

In team meetings, we can associate their duties and how they are impacting with the company’s vision. This group validation process will trigger a higher level of self worth and openness to work at a level you wish everyone did.

Time & reward: It used to be bide your time, work your way up, put in the hard yards and eventually someone will notice and you’ll be rewarded one day. They see it as, ‘I’m delivering so get out of my way, let me at it…and reward me at the same time’. Instant rewards (not just annual reviews) and instant justified feedback means a great deal. Respect is lost if there is no justification. Gen Y love to feel valued and will search for it and be attracted to opportunities that feed this.

Move fast: They love to see that the organisation they spend their working days at, the organisation they tell their family and friends about, post on Facebook and Twitter about, is constantly progressing. Gen Y is super-flexible, adaptable and loves change. They don’t see change as risk but as a necessity to growth and further ongoing success. If you have or are showing little or no interest in 2.0 projects within your organisation, then be ready for your Gen Yer’s to switch off, come across as lazy or be distracted by the next shiny object. To them the 2.0 project is not a shiny object, but an innovative idea they believe in. It is every leader’s responsibility to extract the best from their team. The better you know your team, the easier it will be to create a loyal and resilient army that will succeed in today world. BF Petar Lackovic is a highly sought after international speaker, coach and business adviser, who specialises in implementing successful strategies that produce consistent world class results. He is also the CEO of leading entrepreneur education facility, The Entourage. the-entourage.com.au

BUSINESSFIRST MAGAZINE

BF | TECHNOLOGY

Driving better business

through digital productivity

54 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

TECHNOLOGY | BF

We recently took part in a social movement ‘Shop Small’ to encourage patronage of Australia’s local small businesses. Loving thy neighbour took on a whole new meaning writes Tim Reed.

or the 2.1 million businesses that support our economy, a way to level the playing field is by using online technologies. The latest MYOB Business Monitor Report showed that 63% of business owners using both a website and social media were more likely to see revenue rise than those who didn’t have one of these sites. Going digital offers the opportunity for businesses of all sizes to enjoy work environment flexibility and improve business productivity, among many other benefits. Your staff and customers will thank you for it and it will save you and your business time and money. Keep connected Web-based social technologies like Facebook, Twitter, LinkedIn and tools like Skype have profoundly changed the way users communicate with one another. By using these tools, businesses can take advantage of employees’ growing comfort with social networks to gain a new level of productivity and connectivity with potential customers, suppliers and partners. Efficient service Going digital (think e-commerce, bank feeds, electronic invoicing, live chat and so on) provides faster customer service and more reliable business transactions. So, business owners are able to spend less time producing and chasing paper trails and more time expanding their market and generating revenue. Customers are able to connect with the people they need to contact easily and quickly and access customer support within easy reach at any time of the day. Work/life balance Using online tools or the cloud enhances your ability to work remotely, which helps business owners and their teams better balance their home and work lives. Workers who spend a lot of time

www.businessfirstmagazine.com.au

away from the office can stay productive through easy access to business resources and they save on fuel and the stress of battling peak hour traffic. Effective storage Digital technology offers a viable, eco-friendly and more effective way to store files that does not waste natural resources, clutter up your premises or require expensive storage solutions. Trustworthy, credible cloud storage providers can offer much greater security and reliability above anything you can afford for your business.

Tim Reed

is the CEO of MYOB.

Accessibility Technology supports information sharing, which makes it easier to collaborate between different partners. Think cloud accounting, where a business owner, their staff and their accountant can all work on the same accounts in real-time, without having to travel somewhere to ensure they’re in the same location. Also, companies can enable customers to track goods, access a record of services or the history of products – ensuring an improved service experience. Monitoring When it comes to tracking your success, there are tools that enable you to measure the effectiveness of your online presence and your online marketing campaigns. By using them you can tell what works and what doesn’t – and make sure every marketing dollar is well spent. Global customer base You can reach a wide but targeted audience through online technologies. You get the opportunity to attract clients that not only come from within your immediate market or neighbourhood but those that reside far beyond, helping to encourage national and international success. Going digital truly makes the world your market. BF Tim Reed is the CEO of MYOB. He develops and drives the business’ strategic development, including its expansion into online business management solutions. www.myob.com.au

BUSINESSFIRST MAGAZINE

BF | PROFILE

THE FAMILY WAY Infrastructure is necessary for the growth of any community. According to McIlwain managing director Keith McIlwain it is vital for bringing local communities into focus and fulfilling social and environmental obligations. Under family guidance and a strong cultural identity, McIlwain Civil Engineering is achieving these aims. Story by Jonathan Jackson.

he McIlwain business has a long history. It began in 1928 at Urunga on the mid north coast of NSW, when seven-year-old Arthur, his family, three horses and a dray joined Arthur’s grandfather building roads at Yarrawich. Arthur served in the army during World War 2, but once the war was over, he resumed with the family business. He bought his first truck in 1946 and recommenced road work with his father in the Gold Coast Hinterland and Numinbah Valley. By 1961, he had several trucks and purchased his first bulldozer to augment the contract cartage business. The company grew during the 1960s and 1970s and comprised a plant hire fleet of four bulldozers and drotts, trucks, rollers and a grader. Arthur’s son Neal joined in 1974 and worked his way up through the company to the position of construction manager, meanwhile Keith, who had forged his own career as an engineer decided to get his hands dirty and in 1984 joined the business as general manager. From there the company refocused from plant hire to civil contracting. Keith has been guiding the direction

56 BUSINESSFIRST MAGAZINE

of the business ever since, with one major milestone occurring in 1991 when Arhtur retired and McIlwain Civil Engineering Pty Ltd was formed. McIlwain is now in the hands of a fourth generation of family member with Neal’s son Tim taking on a directorship in 2009 after serving for 10 years as a project manager and engineer. Family is important to the McIlwains and Keith believes it is one of the major strengths of the company and a large part of McIlwain Civil’s success. He says that all members of staff are treated as if they were members of the family. “I think what drives me personally is seeing and hopefully assisting people to fulfil their potential,” Keith says. “I was very fortunate to have been mentored by some very clever and very committed engineers at a very young age and that experience is always at the forefront of my approach to how we skill and develop people.” Keith has over 35 years experience in the Civil Engineering and Construction Industry in Design, Supervision and Construction of civil engineering

projects ranging from residential, commercial and industrial developments to major road infrastructure projects. His knowledge base is vast and he can lead by example. Though, in his own humble way, he questions his leadership abilities. “As a leader I have some shortcomings that I find frustrating at times. I think one has to at all times be prepared to acknowledge that you are not always www.businessfirstmagazine.com.au

PROFILE | BF

right, but you can direct people in a wise way, or at least bring forward cases or experiences that align with the journey you want to take a person on. That certainly has been my approach. If one is well read across a lot of industry issues, you can bring that conversation to the table because you are not only asking someone to complete a task, you are shaping the way they do things based on robust evidence and good practise.” www.businessfirstmagazine.com.au

Keith gained experience in Australia and overseas as a civil and geotechnical engineer. He spent 10 years with McWilliam & Partners Consulting Engineers as a design engineer progressing to Associate Director and Geotechnical Manager. In 1984 he founded Keith McIlwain and Associates specialising in geotechnical investigation/reporting and contract management of civil construction projects. He

was consulting to McIlwain during that time, then commenced full time with the family business in 1991. As he states, despite his experience he is always open to advice. You have to be when you work in an industry in which compliance and regulation have vital importance and change often. It’s Keith’s job to understand that change and then lead his team to that same understanding. “I am very well served by internal

BUSINESSFIRST MAGAZINE

BF | PROFILE and external advice,” Keith says. “I think one has to rely upon the combination of it. My work within McIlwain and with the industry associations with which I have been involved has served to bring that mix of experiences. We use a term here, ‘beyond compliance’ and we want to be a leader in the safety and regulatory space. What I keep saying to my people is that ‘beyond compliance’ is not about more paperwork, it is an attitude and a behaviour; it’s not about ticking boxes or having to comply because someone wants you to. It’s around having an appreciation that the attitude and the culture that you have is critical to achievement in that space.” Culture is everything in a successful business. McIlwain is no exception. In fact, Keith holds a lot of stock in the value of culture to organisational achievement. “We talk a lot about a family culture and what that means. The simplest definition of culture I have heard is that its how you behave when no one’s looking. It’s how you work when someone else isn’t around. It’s an inbred culture of working hard and achieving things that

McIlwain Civil have been operating in the Queensland environment for many years and Boral have been associated with their growth into the substantial operation they are today. This growth has principally been driven by Keith in his desire to ensure long term sustainability of the business and provide a broad portfolio offering to his clients. There are many personal relationships in place between the two businesses and this has provided the platform to support ongoing operational improvements. Boral is a major player in the Queensland construction materials market and highly values a relationship based approach to conducting business. Congratulations to Keith on his achievements so far and we look forward to our continuing relationship. For further information on Boral please contact Nathan Barrell on Tel: (07) 3867 7648 or Mob: 0401 892 040.

can be related back to the client as regularly as possible.” McIlwain has evolved immeasurably during Keith’s time and he has overseen a number of transitions. He says it’s important to have an eye for emerging trends. McIlwain has transitioned from plant hire, to sub-contractual work, to public sector road infrstaructure and finally into engineering structures and bridges. “You have to have an appreciation of emerging trends within the industry and also what you are passionate at doing. As we mature in the business, we find the things that excite us and make the creative juices flow.” Creativity is important, but in a family business, the drivers are also financial. There is a lack of access to finance that some public companies have and the burden is on the owners to make the business work. “People always talk about having skin in the game and you can’t have anymore skin in the game than your hands and your assets and personal possessions,” Keith says. “That’s a pretty intense drive, it’s not the only

one but it’s up there with the important considerations that any director of a private company has.” Therefore the risks associated with evolution are crucial to the bottom line. McIlwain has been blessed in that Arthur, Keith, Neil and now Tim have all had their own vision. There is a strong family bond and a set of complementary skills and personalities that fill proficiency gaps. Keith says while he went down the tertiary path, Neal is very practical and on the ground, while Tim has come into the business and taken it in a completely different direction again. “Tim’s generation has a whole new set of characteristics and capabilities that I had never engaged with,” Keith says. The company now works across a range of divisions with 62 staff in tow. Keeping abreast of what is occuring throughout the various divisions is becoming increasingly difficult. However, the hard working culture has been positively instilled. “We work very hard at trying to maintain a culture; and most importantly a cultural majority on any of our projects. There has to be culturally aligned people

Right: Keith McIlwain

PROFILE | BF

at all levels. So we work very hard at the outset of our projects to make sure that people have the skills and capabilities to do what we are asking them to do and that they are true believers in what we do. Alternatively when inappropriateness is around in a personal and work context, someone will stand up to correct it. We have behaviours that we think are acceptable. We believe that standards are important and we don’t like to see any project where there is a drift into a misaligned space.” Culturally McIlwain is in a strong place, but they still must navigate a torrid time ahead. Growth has slowed, governments are spending less on infrastructure projects and competition for business is tight.

www.businessfirstmagazine.com.au

Keith doesn’t paint a rosy picture. He would rather governments join forces with the private sector to fund the necessary infrastructure projects that will not only improve Queensland facilities, but facilities around the country. Keith understands times are difficult at the moment. Fortunatey, the McIlwain business model has held them in good stead, but Keith would like to see more support to kickstart the infrastructure spend. “We are fortunate that the projects that we were able to price and win have sustained us through this period. The level of competitiveness at the moment is aggressive. There’s certainly a lot more people trying to cross over into markets they haven’t been in for a cou-

ple of years. With the mining industry tailing off there are a lot more players at the tenderbox. We are going from five at the tenderbox a couple of months ago to twenty. That’s just not sustainable for any sector of our industry.” Current circumstances mean McIlwain has to set itself apart from its competitors. In Keith’s opinion this is about achieving and maintaining excellence. “We talk about commitment to continuous improvement. We talk about investing in relationships. I think there are a number of boxes that we continuously want to tick. Importantly, we have to maintain our productivity and maintain our competitiveness. We are competitive and we will continue to be so and we would like to think that we tick the quality box just a bit better than most.” As population growth increases, infrastructure programs will always be necessary and in the end it is the strong that will survive. McIlwain has several things going for it in this department: the ties that bind a family business, the culture that is brought and bought into that and their willingness to do better than most. They have won several awards, including the 2013 National Earth Award for construction and environmental excellence, and they wish to continue that excellence while evolving under the business development nous of Tim and the expertise of Neal and Keith. BF

BUSINESSFIRST MAGAZINE

BF | INNOVATION MANAGEMENT

Innovation starts with Ideation More than ever, corporate executives consider product innovation to be a competitive necessity and a key factor in driving business growth through increased revenue, lowered costs and reduced time to market. This is reflected in the fact that even during times of economic crisis, R&D spending has continued to grow writes Con Georgiou.

C Con Georgiou

is the co-founder of One Million Acts of Innovation.

ritical to any innovation is the practice of ideation. Ideation is the process of generating, developing and communicating new ideas. Now more than ever innovation cannot be a part time project. It requires an ongoing commitment to certain practices to ensure that a business can out innovate its competition. However, few organisations invest in the practice of Ideation, which requires a commitment to a culture of safety

60 BUSINESSFIRST MAGAZINE

and inclusion. In Velteo, an Innovation Consultancy I co-founded, we ideated on a daily basis by fostering a culture that democratised the creation of ideas and further developed them through robust ideation practices and processes. In one example we developed a Mobility application for the FMCG industry, after crowdsourcing the name, the logo and the functionality with every member of the team. Nomad was born. It was developed on the

Apple iOS platform and integrated into Salesforce.comâ&#x20AC;&#x2122;s Force.com platform for back office integration with product data, sales call activity and client data. Our ideation process was simple: crowd source all ideas, filter them through a robust Fail Fast model where feasibility was tested and commit to building and testing whilst providing feedback to all contributors. Not all innovation needs to be about efficiency though, in the case of Nomad www.businessfirstmagazine.com.au

INNOVATION | BF

it was also about inspiration. Nomad provided leadership with lead indicators that helped the business further innovate through access to real time business intelligence. This enabled customers to tune their businesses in a much more agile fashion and meet customer demands with faster turn around times. Managing innovation is a critical success factor for decision-making in product development. It focuses explicitly on the front-end of the operational phase of business innovation, namely idea generation and concept development. A dearth of ideas is not the main challenge that many companies experience, on the contrary, they have too many of them, with no clear way of extracting and nurturing the potentially great ideas that will drive true market success. Simple web-enabled ‘idea boxes’ that anyone can access have generally www.businessfirstmagazine.com.au

proven ineffective. That is because they merely act as collection points, with no provision for helping to identify and develop those ideas with real potential. The most successful ideation solutions support targeted ‘idea events’ and idea development, while also ensuring that the ideation process is linked to strategy. Successful idea development is in fact frequently based on campaigns about a specific strategic topic and aimed at a particular, relevant community of innovators. In our case it was to meet the needs of the FMCG market for a field force application. An effective idea development solution is based on a set of proven best practices. In our view, adherence to the following principles will spell the difference between a portfolio of average ideas and a portfolio of great ideas that have the potential to become great products. They are as follows: • Support idea development via campaigns that reflect your corporate strategy • Automatically connect submitters to other knowledge sources and leverage those connections to develop ideas through structured discussions and links to existing ideas • Enable cultures and communities to participate in innovation (having the ability to model these groups) • Enable an appropriate workflow of ideas (not the traditional stage- and phase-based processes, which will be applied later during product development). An innovation management solution enables the assessment of ideas by diverse people inside the company, facilitates the analysis of several ideas at once, and incorporates benchmarking comparisons and input from third-party industry experts. When exploring a potential strategic market or technology, it is often useful to search the landscape for potentially competitive intellectual property (IP). This helps a company determine whether it is free to operate in particular identified areas of opportunity. Questions that should be considered include: 1. What is the relative strength of our IP position against existing and potential competitors in this field? 2. What new patent filings, if any, have our competitors placed recently? What is the content of those patents? Do they infringe on any areas our company has been contemplating? 3. Are there freedom-to-operate

‘

Managing innovation is a critical success factor for decision-making in product development.’

‘white spaces’ that could be of value to our organisation and/or should be investigated further? Are there areas that we should invest in now to protect our freedom to operate against future competition? A growing number of companies have begun to use software to mine patent intelligence as a way of uncovering new product and market opportunities. These efforts help to fuel their idea development efforts. An idea development solution will make it easy to push high-value ideas to the execution stages of product development. A comprehensive, strategically oriented solution seamlessly integrates innovation management into the rest of the product development process, increasing the chances of monetising on the right ideas. Business Innovation recognises that while product innovation depends on the actions of creative individuals within the organisation, improving the business benefits of product innovation is about increasing an organisation’s capacity to make effective decisions at all points of the product innovation process. Effective decision-making offers numerous benefits: • Process execution is aligned with strategies for growing value and increasing market share • Those involved in product innovation are able to select and prioritise ‘winners’ Management can avoid wasting precious creative resources on product ideas that are destined for failure; and Innovators are able to follow innovation processes efficiently, which improves time to market. In order to achieve these benefits, decision-making needs to be supported by efficient, structured processes, which generate the necessary data without hindering the creativity of those engaged in product innovation. BF

BUSINESSFIRST MAGAZINE

BF | WEALTH

Create

a financial roadmap I was honoured recently by the Institute of Chartered Accountants for 25 years service as a Chartered Accountant in practice. Having passed this milestone and grown our advisory firm over that time from a handful of clients to over 2,000 across Australia, it caused me to reflect on the key strategies that clients use to build and manage their personal wealth writes Allan McKeown.

S Allan McKeown

is the CEO and Founder of Prosperity Advisers

enior executives and business owner operators have complicated lives pressured by the demands of growing their businesses, advancing their careers and being keenly involved in family activities. Working to accelerate their personal financial success and gaining clarity and simplicity to their financial life usually becomes an after thought. From my experience there are five key pillars for creating and maintaining a successful financial roadmap. 1. Taxation is your biggest expense Cost control is a critical component of business hygiene and it should be no different on a personal level. Two people in almost identical circumstances can generate substantially different wealth, simply through small incremental tax wise decisions, they make or fail to make over their careers. I do not advocate flouting the tax laws. While there are few legal large scale tax minimisation opportunities these days, there are a range of avenues available to boost after tax income. Personal deductions have been reduced to a minimum however reasonable salary packaging savings are still available predominantly through the packaging of motor vehicles that may produce a better after tax result of around $5 to $10k per annum. Using an ‘associate lease’ to package a vehicle for a spouse or family member can potentially double the benefit. Optimise your investment structure A major thrust of tax planning is to ensure that income is earned by the lowest tax paying individual or entity in a family group. There is little opportunity to divert employment or ‘personal exertion income’ for these purposes, however structuring your

62 BUSINESSFIRST MAGAZINE

wealth producing assets to provide asset protection and estate planning benefits through the use of family, unit or hybrid trusts, sometimes including corporate beneficiaries should be considered. In the last 15 years, Government legislation and ambiguous court decisions have progressively marginalised the effectiveness of traditional structures to invest and protect passive wealth at an appropriate tax rate. Traditional structures are increasingly ineffective in the 21st century and a review may facilitate more tax effective outcomes and establish next generation investment structures. Understand the tax benefits of capital gains The second big-ticket taxation item is to look for opportunities to build capital appreciating assets as opposed to generating income. The benefits of capital gains tax (CGT) discounting effectively halves the tax rate applicable to top marginal rate income and can be reduced further in certain circumstances. The CGT is also only paid when the asset is realised rather than each year as it is in respect of ordinary income. The assets you choose to generate your capital gain are more important than minimising the tax on sale, however refer point three below. 2. Good debt vs bad debt Careful management of your borrowings can result in very significant tax savings over a long period of time. Savvy wealth creators work hard to reduce non tax-deductible debt as quickly as possible while building a tax- deductible line of credit. The line of credit, assuming a top marginal tax rate effectively halves the interest cost, a significant saving over a 10- or 20-year period.

The biggest trap for the unwary is that once you repay a debt established to acquire an income-producing asset, a redraw will not be classed as tax deductible borrowings unless it is used for income producing purposes. Many people erroneously believe they can ‘redraw’ the loan against a rental property for example and retain its tax-deductible character. Paying down a loan for an investment property while you still have a home loan is a good example of missing an ideal opportunity. A further useful strategy for your own home is to rather than pay down the non tax deductible mortgage, build up funds in an ‘offset’ account. This reduces the non tax-deductible debt while it is your principal base of residence. If you choose to move out to a new principal residence as the debt has not been paid down but offset you can remove the offset funds clearing the way for the original mortgage to now become tax deductible. 3. Understand risk vs return You don’t need to have qualifications in free market theory to appreciate the maxim that the greater the return the greater the risk of an investment. This is the balance between seeking to enhance wealth and preserving it. It is often a feature of bull runs or rising markets; and exuberance and over confidence can result in some pain when markets correct. Low return, whilst normally meaning there is less likelihood of a loss of capital, may instead mean there are lazy assets that need to be more effectively put to work. As you succeed in generating wealth a portfolio approach to investment provides a level of protection from factors that may affect certain asset classes. Concentration of your assets in one www.businessfirstmagazine.com.au

WEALTH | BF

‘big project’ subjects you to the risk of loss if the project or investment fails for whatever reason. A financial adviser can professionally profile your risk tolerance so that you properly understand your likely attitude to various forms of investment and market cycles. Your major asset that is often overlooked is your ability to earn income. Whatever asset position you are in your circumstances can change dramatically and the compounding effect of inadequately insured loss of income though illness or accident could be devastating. Opportunity assets While staying true to my comments about risk management and the importance of understanding your risk profile, to the right person there can be an opportunity to boost outcomes from your investment choices. While avoiding the temptation to ‘bet the farm’ there can be some contrarian investments that might give a higher return for acceptable risk. Whether it’s an investment manager that looks for ‘empty rooms’ or unloved stocks that haven’t yet been discovered or that investment property that is something different in size, location or alternate uses, there may be an opportunity to outperform. 4. Super strategies Smart wealth creators maximise their super every year and stay abreast of the tactical opportunities that present www.businessfirstmagazine.com.au

themselves as their age profile changes and successive Governments fine-tune the area. Salary sacrificing to the aged based limits is a must. The compounding impact of effectively getting a tax deduction to invest your income in a low tax environment is enormous. The ability to gain CGT exemption when your fund is in pension mode is another substantial benefit. Further strategies around ‘transition to retirement’ (TTRs) involving the creation of concessional income streams and ‘contribution splitting’ with your spouse are also potentially available. Self-managed super funds are a growing and popular alternative to traditional super funds. They are now the favoured choice for around one million Australians, advantages include greater control, flexibility to acquire certain assets like direct property, tax deductions for life insurance premiums and estate planning flexibility. 5. Get the right advice There is no area where it is more important to concede that you ‘don’t know what you don’t know’ than financial advice. The strategies outlined above whilst important are high level only and are representative of the multitude of tactics that are available to minimise taxation, invest wisely and grow your wealth. Harmonising these opportunities in a fashion that gives you a 360 degree

WEALTH CREATION CHECKLIST • • • • • • • • • • • •

Packaged vehicle Associate lease Is your asset structure ‘next generation’ Build capital appreciating assets Establish a tax deductible line of credit Use an offset account for your home loan Understand the risk you are taking for the return you are expecting Properly insure your largest asset Maximise your super Keep a keen eye for opportunity Establish a SMSF Get proactive advice

view of your financial landscape will not only assist with your understanding of the concepts but will increase the likelihood that you will take the important steps necessary to improve your own personal financial position while you focus on succeeding in corporate and family life. BF Allan McKeown is the CEO and Founder of Prosperity Advisers and has over 25 years experience providing taxation and wealth advice to a range of executive and high net wealth clients. Prosperity Advisers is a Chartered Accounting and Financial Planning Advisory firm with 120 staff and offices in Sydney, Newcastle and Brisbane. www.prosperityadvisers.com.au

BUSINESSFIRST MAGAZINE

BF | PROFILE

Acquiring

a taste for growth Stephen Young is one of the most respected names in South Australia. The Executive Chairman of investment company E&A Limited, has not only led them to become one of the State’s most powerful players, he has also served as a director for the Adelaide Crows, ASC, the Adelaide University Council, ETSA and the Premier’s Roundtable. He speaks with Jonathan Jackson about commercial nous and business disciplines.

n the year Gough Whitlam came to power, a fledgling yet very astute Stephen Young was enjoying a Commonwealth scholarship at the University of Adelaide. Looking to cut costs, a rarity for most spend-happy Labor governments, scholarships became means tested and in his first year of university, Stephen lost his funding. It didn’t detract from his ambition though. As he would do later in life, he negotiated options to achieve his ends. “I decided that I would work for an accountant over Christmas,” Stephen says. “I was studying Economics and I’d written up the family books. As I was already working for an Accounting firm when I lost the scholarship, I asked them if they would mind me working part time to pay my fees while studying full time. They accommodated that and this really gave me a head start.” Stephen completed his degree and went straight into his professional year, a necessary component to becoming a Chartered Accountant. The other thing you need is three years’ experience. “As a result of that part time job, I became a Chartered Accountant 18 months quicker than any of my mates and that gave me, for want of a better word, an edge. It meant that I was able to do more interesting work.” Similarly to anyone with a competitive streak, when you take the lead, you want to stay in front. To do that, you have to consistently challenge yourself. Stephen isn’t someone to back away from the challenge, though he will

64 BUSINESSFIRST MAGAZINE

take a seemingly sensible and straightforward approach to it. That is probably one of his strengths. His rise up the corporate ladder was swift. When he was working in the Tax area writing up books and completing simple tax returns one of the partners in the Accounting firm he worked for was appointed receiver and manager to a relatively large business. He needed someone to help run that business and Stephen had his first taste of being a corporate recovery practitioner. “It was a chalk and cheese choice between writing books, or being involved in business management. I was just dead lucky that I ended up helping this partner on a corporate recovery assignment,” Stephen says. The business that required recovery was a foundry. It was in serious financial trouble and Stephen was able to cut his teeth by applying what he’d learnt in management accounting at University, and by default he worked out exactly what he wanted to do with his life by age 19. After completing University he went onto Peat Marwick (now KPMG). Stephen approached Rick Allert who at that time was Adelaide’s leading Corporate Recovery Practitioner and while there was no job at that time, he joined Peat Marwick’s audit division until Rick won his next big Insolvency assignment, which fortunately occurred soon thereafter. The next big break came in 1979 when Rick Allert and John Heard who had been with Peat Marwick for a number of years decided to open

their own boutique corporate recovery practice. Stephen joined Allert Heard and Co and was promoted to partner in 1982, just six years after graduating University. In Stephen’s words, “It was a really exciting time.” Allert Heard was a trailblazer in the corporate recovery sector in South Australia. They began a trend towards specialist Corporate Recovery firms that continues to this day and as a result the business quickly grew. Stephen became a partner age 26 and was an equal equity partner by the time he had reached his early-30s. In 1989, when Arthur Andersen came knocking on the door with a merger in mind, the game changed again. “They said ‘we want to expand our operations in South Australia and we’d like to buy your firm’. I had been negotiating to buy the remaining equity in the firm myself, as Rick and John wanted to focus on their public and private directorships. As a consequence I went from buying Rick and John out to selling all of our interests – which was terrific for me. It cashed me up and in addition, gave me a leadership role in a global Accounting Firm.” Stephen became a Managing Partner of Arthur Andersen; a firm that grew from 40 people to in excess of 120 people .The firm which had a large Corporate Recovery business which prospered in the early 1990s following the collapse of the State Bank. As he had overseen the entire transition and delivered strong profits during the recession he was invited to serve two www.businessfirstmagazine.com.au

PROFILE | BF years on Arthur Andersen’s Worldwide Advisory Board. “I ended up by managing the Adelaide Practice, a number of service lines throughout Australia, and from a personal growth perspective was on their Worldwide Advisory Board. At that time Arthur Andersen and Andersen Consulting had 360 offices in 60 different countries around the world. “I spent a week out of every six weeks overseas somewhere being involved in the governance of Arthur Andersen. It was very good for me. I was a country kid; the son of a soldier settler and it gave me a global perspective. I achieved most of my early goals but my personal ambitions grew constantly because of what I saw and learned globally.” Life has been a big growth curve for Stephen. His business credentials are some of the most impressive in Australia, but he is a man of his roots and he knows where he first developed his leadership skills. It was on the farm with his father. “As a country kid I was sent to Boarding School to further my education. We worked on the land with my father and brothers each holiday break: May was shearing; September was lamb marking and during the Christmas break we’d harvest the crops. Each holiday my brothers and I had work to do. We worked with two or three jackaroos on our property who generally went straight from school to working on our property for twelve or eighteen months. As I grew older, maybe about 13 years of age, when these jackeroos would have been 18, I discovered I knew more about what they had to do than they did. “That was good early experience for me and I gained leadership skills. In my last year at school I was also head of my boarding school and was able to build on that experience as I learned more about the responsibility and the benefits of leadership.” Stephen says those early leadership experiences helped him when he first was called upon to lead older men when he took on the Insolvency job in the metal foundry for his first accounting firm. He was young and working with tough blue collar tradesmen who had great foundry skills but no financial skills. “My accounting knowledge made a difference to the profitability of the financially troubled business. I found I was making a contribution which was recognised by far older and experiwww.businessfirstmagazine.com.au

enced men as being valuable. I was able to help them plan and cost their work. Their acceptance of me gave me confidence to lead where I thought my knowledge could add value. Respect is earned and it is really what leadership is about – the ability to add value to a group of people working together.” Adding value is what motivates Stephen to this day, that and working with great people. It was the motivation behind the creation of Equity and Advisory Ltd in 1997. E&A was also the culmination of all of Stephen’s experience, from financial transactions to running distressed businesses, dealing with engineering, manufacturing, or operating problems, buying and selling businesses, acquisitions and the cut and thrust of negotiations that he is still so fond of now. The Arthur Andersen merger allowed him to see how to bring two organisations together successfully, and how to run global professional firms. He learnt that mergers and acquisitions are about combining businesses with different cultures to work together in a constructive and positive manner. When he initially formed Equity and Advisory Ltd the focus was on investing private equity in businesses with

turnaround or expansion opportunities ‘equity’ and providing strategy and mergers and acquisitions advice ‘advisory’. Since 1997 Equity and Advisory has advised on deals with a transaction value in excess of $5 billion. The parent company of Equity and Advisory, E&A Ltd listed on the ASX in 2007 after completing six successful acquisitions and now comprises eight businesses who employ over 850 people and have a turnover in excess of $200 million per annum. Each of the eight subsidiaries, have structures and management systems in place to ensure the smooth running of all businesses. This management framework is called the ‘E&A Way’. “When we acquire a business one of the characteristics we look for is an outstanding operating team and their capacity to expand a business from an operational perspective. Often the business doesn’t have the financial or management resources to handle further growth and that is what we try to bring to the table when we decide to acquire the business. The combination of great operating talent with strong financial and business management often creates a great business.” For instance Fabtech, whose ma-

Stephen Young

BUSINESSFIRST MAGAZINE

BF | PROFILE

jor activities include the design, installation and project management of geomembrane dam liners, dam covers and tanks has a strong technical niche. When E&A acquired the company they put in place an investor representative who plays a similar role to a CFO. “They are part of the management team with a direct line to the managing director, who is usually the best operator within the business. The managing director has a direct line to both Mark Vartuli who is an executive director of E&A Ltd and myself. As executive chairman I meet with the MD once a week and we go through a standard agenda of issues including a financial management report. We look at the state of the business, what has been achieved in the last week and what will be achieved in the next week. We have a monthly board meeting and a six monthly strategy meeting. We now are moving a number of businesses to a rolling 24 month budget, which looks at the month you’re in and compares that to the same month 12 months ago while also forecasting 12 months ahead.”

Stephen ensures that whilst the businesses are independent, there are routine business disciplines across all organisations. The E&A Way helps with the oversight of major projects that are occurring throughout the businesses. These projects generate half of the company’s turnover. Early last year, E&A Contractors, another subsidiary, received a $2 million grant towards building a wind tower business. The $10 million project involved upgrading a large facility to produce approximately 100 full-time jobs over four years for wind tower fabrication at the Whyalla workshop. The first contract won in November 2012 to manufacture wind towers for the Snowtown II wind farm project was secured before the facility was completed. In March last year another subsidiary Ottoway Engineering locked in a $14.5 million site installation works contract for Santos’ Gladstone LNG Upstream Project – in Roma. The scope of the works include plate pile cap installation and welding, remote wellhead pipe spooling installation and

‘

Stephen ensures that whilst the businesses are independent, there are routine business disciplines across all organisations.

welding, and installation and welding of the pipe spooling for the main hub. At peak construction, Ottoway employed 50 personnel onsite. “We have a number of major projects,” Stephen says. “Increasingly as much of half of the turnover is generated through these major projects; the rest is generated through recurrent or routine work, which requires a lower level of management from myself. Half our turnover is generated over a dozen major projects and they are all important to us.”

CONTRACT ENGINEERING S.A. PTY LTD Est.1978. Australian owned and operated.

At Contract Engineering we cater for all aspects of the engineering industry including: • Coded pipe work to all standards and specifications • Food and pharmaceutical grade tube work • Specialising in stainless steel fabrication • Plant and equipment relocation and reconditioning • Platforms stairs and walkways to Australian Standards

Ph: 08 8293 1099 Fax: 08 8371 0988 cesa@internode.on.net www.contractengineering.com.au Contract Engineering SA Pty Ltd 159-163 Caulfield Ave Clarence Gardens SA 5039

PROFILE | BF

E&A is sensible about what they take on. “We try to make sure that we have the competence to do the work. We try to eliminate tendering for any project we know we don’t have the ability to complete successfully. We are not entrepreneurial when it comes to selection of work. We expand incrementally rather than by way of taking ambitious steps like a frontiersman. We then analyse project risks to determine whether the risks are ones we are confident we can manage. We also look for opportunities to do the work differently. If there are innovations we think we can bring to the client, then we make a decision as to when we discuss those opportunities: during tender, after tender, or whilst undertaking the contract works. In some cases it is better to keep opportunities up your sleeve until we’re on the job and say we can do this better or differently and would you mind allowing us to do it that way.” It hasn’t all been roses. BHP’s Olympic Dam project fell through and cost E&A a lot of money. As did a relationship with Lihir Gold. Newcrest

www.businessfirstmagazine.com.au

acquired Lihir after E&A Contracting subsidiary Louminco had signed a procurement contract. Louminco was no longer required as Newcrest had its own procurement team and Louminco forced to negotiate deferred payment terms with suppliers. “We talk to our people about resilience and persistence being a virtue,” Stephen says of how the company manages crises. “Our management team understands that not every aspect of each acquisition will go our way, nor will every major contract be successful. I think how we manage an adversity is one of our strengths, we roll up our sleeves and deal with the issue. That is what I do and what I expect. When there is a problem we make it easier by sharing it and working on it until it is fixed. That’s what we have always done. We are not passive about our management style. My management team and I are all over each major issue because that is where I think we can add value.” It takes a degree of commercial nous to be able to work across a number of businesses disciplines, in different

geographies and with clients and that’s where E&A seeks to add value. Combine that with the capacity to convince financiers to provide debt funding and our capacity to raise equity is what E&A brings to businesses it acquires. “We are increasingly finding that businesses that want to grow, need those skills,” Stephen says. As for the future, it is a steady as she goes approach. E&A will do more of the same, but in doing so the expectations are the company will double in size in the next five years. “It follows somewhat logically that if we continue to grow the top line, we will continue to grow the bottom line. That is a specific focus of ours. We are in business to increase return to shareholders and we have a strong focus on delivering increased shareholder value. We want to pay significant dividends and to do that we have to generate a profit and turn profit into cash. We are comfortable reinvesting in our businesses and we like to invest to make money and create shareholder wealth. That will generate respect. And it is the hallmark of the E&A business. BF

BUSINESSFIRST MAGAZINE

BF | LEADERSHIP

Rapid times require rapid change Are the leaders of your organisations up to the challenges of change asks Steven and Chutisa Bowman?

I Steven & Chustisa Bowman

are global business advisors.

n the current environment, making decisions and taking action have become more complex for business leaders in all industries and in all markets. Clearly leaders need different skills to take their businesses into the future. To make decisions efficiently, quickly, and strategically leaders must unlock their leadership superpower by developing the ability of a Pragmatic Futurist. When leaders develop their pragmatic futurist capacity they increase their power to shape their futures, even in the most turbulent of times. They will be equipped to take advantage of all the new opportunities that rapid social and technological progresses are creating. Business leaders can incorporate the pragmatic futurist’s power into their everyday operational practices, and begin to lead from the edge of possibilities. In the 21st century, the boundaries of business are not precisely defined, and the rules of the game are vague, ambiguous, and often fleeting. The pace of change and advancement is now so quick that entire professions, industries and occupations are changing faster than ever before. Everything is transient! The speed, complexity, and unpredictable nature of change in the global business environment can make people baffled and overwhelmed. These external changes are massive, sudden, rapid, and full of contradictory signals. Dealing with these changes requires nimbleness, agility, flexibility, the willingness to look at all possibilities and ability to respond in real time to shifting demand. Are the leaders of your organisations up to the challenges? It’s undeniable that rapid times

68 BUSINESSFIRST MAGAZINE

require rapid change. In a world in which things are changing so incredibly rapidly, leaders need to expand and strengthen their awareness to recognise what is really going on. They must keep up with fast-paced trends. They must cultivate an ability to be aware of future trends and how these trends may affect their business, rather than closing their eyes to forewarning indications and hoping that things don’t change too much. Organisations that fail to acknowledge this unstoppable force of change will fail to thrive in the future environment. Failure to recognise trends or opportunities beyond an organisation’s primary area of business will result in missed opportunities and an ever-decreasing longevity of survival. These new times bring with them an array of opportunities and different possibilities. To thrive in the future environment, and to seize these new opportunities and possibilities, leaders must be willing to challenge traditional perceptions. Leaders need to be open to playing an entirely new game. To accomplish this, leaders must expand their awareness and formulate generative strategies for their business. They need to break out of business-as-usual models that dictate how they are supposed to function. They must let go of the old business boundaries that define how they operate. Are you willing to see that there may be a way to generate something totally different in your business if you are willing to change the way you view things? To cultivate an ability to be aware of future trends, and how these trends

may affect your business, you must expand your awareness to be more perceptive to impending change and new opportunities. You can develop this ability by: Cultivate an insatiable curiosity to life by starting to ask new questions about the world, and start to see bigger implications of events and choices. Be genuinely inquisitive and sincerely curious. Avoid desperately seeking the answer. Question everything. Never come to a conclusion. Answer every question with another question.

www.businessfirstmagazine.com.au

LEADERSHIP | BF

Be willing to challenge the convention of today. Look at your current situation and ask these empowering questions: What is happening currently? Could a current situation be changed or done differently? What else is possible? What if…?(fill in the blank). Practice looking at common situations and common problems in novel ways. Constantly expose yourself to new experiences. Broaden the way that you scan your environment to look beyond industry and consider what is happening with resource availability,

www.businessfirstmagazine.com.au

technology, demography and governments. Ask yourself… What is this, what does it mean to me, what do I do with it? Place yourself in unfamiliar surroundings or in the midst of unusual or exotic experiences. Let go of your habitual mental routines. Learn to think differently about everyday things. Be flexible, adaptable and spontaneous. Embrace change and be willing to step outside your comfort zone and preconceptions. Choose to be ever aware and mindful, ready to shift strategy and tactics as the situation requires.

Be willing to look at what you can do that will generate different possibilities. Be open to all possibility. Remain open to the new, the unfamiliar, and the unknown all around you. Become an avid reader of a broad range of information, news and updates from multiple disciplines. Always think global instead of local when thinking about the future. Look at the big picture and think long-term (go out 10, 20 even 50 years) and ask yourself: “What do I put in place now so if this was to occur, we are in good shape. How can I turn this to my advantage?”. BF

BUSINESSFIRST MAGAZINE

BF | TECH

UNLOCKING ERP: the past, the present and the future

Today, business directors need to work hand in hand with their CIOs and IT teams to develop business-focused strategies that embrace technology that delivers competitive advantage. All too often, I come across business leaders who lack understanding in the software and IT infrastructure being utilised or available to their organisations, leaving this part of the business for CFOs, CIOs and IT managers to lead the charge writes David Jackman.

David Jackman is the managing director of Pronto Software

core technology for businesses across industry sectors is Enterprise Resource Planning (ERP) software, one that has been facilitating organisations for decades and undergone significant transformation in recent years. ERP has evolved from being viewed as a purely back office application to now operating as a strategic business management platform that encompasses all areas of an organisation.

70 BUSINESSFIRST MAGAZINE

In this piece, Iâ&#x20AC;&#x2122;ll pull back the curtain often draped over ERP and break down the bones of its core functionality, as well as explore its transformation over time, and predict where this remarkable platform is heading. Breaking down ERP In order to best understand how ERP solutions can benefit and enhance a business, an understanding of how ERP

works is crucial. First of all, step back and think about all the various processes that make up the tapestry of your business operations and what information you need to make decisions. Daily processes are varied pending industry focus, for instance, from payroll, purchase orders and inventory management to point of sale, CRM, and forecasting. Broadly speaking, ERP software ties various business www.businessfirstmagazine.com.au

TECH | BF to integrate with and extend any other web-enabled software.

functions and applications into a seamless system that helps foster more effectiveness by streamlining operations and enhancing efficiency across the entire organisation. In essence, I see three clear business benefits when it comes to implementing modern business management software: Productivity gains through automation: By automating processes that are commonly time intensive and repetitive, and do not require mandatory manual labour, ERP allows staff to be more efficient, accurate and spend their time on tasks that truly require their expertise. It also eliminates any double-handling of tasks, driving more effective use of resources across the entire organisation. Real-time visibility into the business: A superior ERP system moves beyond just the internal operations of a business, but extends outside an organisation to integrate with supplier and customer systems and reveal real-time insights. Enabling third party integration: Seamless connectivity between business applications has become critical, especially for organisations with a mobile workforce. There is strong demand for core business management software www.businessfirstmagazine.com.au

Increasing transparency into operations The transformation of ERP has been dramatic and now deeply intertwined with Business Intelligence (BI). We are seeing our clients experience significant gains by increasing transparency into operations through their business management solution. ERP integrated with BI means that the reams of data being accumulated daily from all corners of an organisation, can be digested into something meaningful for people to take action. Traditionally, BI has only been made available to a few people in a business, with only senior managers and key people at higher levels of an enterprise able to access and analyse the data. At Pronto Software we are seeing demand from many businesses to provide staff at all levels with full access to BI and to be able to extract and analyse information to help them make smart decisions, maximising business success. For instance, if you’re a retailer and can see the real-time daily sales, you can better predict and ensure the appropriate stock is in each store. Alternatively, if a particular item is prompting a high number of repair requirements, senior management can make an informed decision as to whether the item should be taken from shelves, to avoid further customer complaints. As powerful as BI is for delivering immediate insight into business performance, it relies on the level of integration of the BI and ERP systems. Some systems, like Pronto Xi, come with the ERP data for BI usage, out-of-the-box. This means that you can start building your reports, dashboards and analytics instantly without having to understand the ERP database structure. This is an enormous time and money saver as the highest cost in a BI implementation is the mapping of the data, usually done by consultants, and the ongoing cost of interfacing two systems with different upgrade cycles. Mobile access, anywhere Most individuals have become accustomed to consuming information such as email, news and social networks on their mobile devices. Now, decision makers are demanding their business applications and data sets are just as accessible. Recent research by IDC found 74% of companies are increasing their spend on mobile application deployments, platforms and application lifecycle strategies

in 2014. It’s a trend that transcends industries, from the travelling salesperson accessing orders and sales data from the road, to warehouse managers updating inventory numbers on the floor. The key is providing instant access to critical information no matter the location. Cloud business management Central to operating in a mobile business world is a reliance on Cloud technology. Cloud has been a technology buzzword for several years now, and while it’s not a new term, its impact on the world of ERP is significant. Most companies own and manage their ERP implementation on-premise but ERP can also be delivered via the cloud for those looking for a lower upfront investment. Cloud ERP lets the vendor manage the software and infrastructure remotely, which is a huge benefit to those without an in-house IT team. By selecting a solution that offers flexibility in delivery, including on-premise, cloud or hosted, users have the opportunity to implement and access information on the platform of their choice. The future of ERP The integration of ERP and BI has evolved to become an intuitive platform that enables real-time access to foster faster, informed decision-making. Through flexible and tailored solutions such as Pronto, businesses can now create a bespoke system, customised to the specific needs of the organisation. With the rise of mobility, born from a reliance on smartphones and tablet devices, and an increasing focus on cost-saving and efficiency, the future of ERP is dynamic and exciting. After all, gone are the days of rigid systems where the business was forced to comply with the way a solution was built. Today, the consumerisation of technology has changed the way employees engage with IT in the workplace and our clients are demanding flexible, agile solutions to meet these needs. Increasingly, mobile devices and cloud technology will be frontier platforms for the way businesses access and interact with ERP and BI systems. BF David has more than 30 years business and technology experience spanning C-level roles, recognised as an expert in generating business value from IT investments. Since joining Pronto Software in 2000, David has doubled the company’s profits and expanded the business into new, international markets including the US, Canada and PNG. www.pronto.net.

BUSINESSFIRST MAGAZINE

BF | PROFILE

Salt of the earth Denise Goldsworthy is somewhat of a trailblazer, starting her career in the male dominated mining industry and building a very successful career with BHP and Rio Tinto before starting her own consultancy, Alternate Futures to help people think outside the box. She speaks with Jonathan Jackson about holding your own and taking risks.

hen Denise Goldsworthy began her working career in 1982 with BHP Steel, she could have been mistaken for the raw prawn. At 17, Denise had moved away from home, out of Sydney to Newcastle and was making the transition from school culture to having to know what to do in the employ of a mining giant. However, if you ever have the pleasure of speaking with Denise, you quickly learn that it would be quite difficult to come the raw prawn with her. She is a quick adopter, a quicker adapter and is constantly learning. The other advantage enjoyed when she began with BHP was the small, surprisingly supportive environment she found herself in. “They were very supportive and gave me additional training – that was a constant for all of my time there. During the time I spent at BHP, I did something like 14 jobs in 16 years. I was just continually learning.” Denise wasn’t just learning on the job, she was also putting herself

72 BUSINESSFIRST MAGAZINE

through university. “The part-time arrangement where you can make some connections between why you’re learning the stuff at University with what you’re doing at work, helps support the idea of continuing to learn and ask questions and finding out why something makes sense. I think that is lacking with some students today.” She learnt that working for BHP was all about deliverables and committing to the task at hand. “If you took on something, you were committed to do it. Moving through the company and having a presence is about asking the right questions. I was constantly trying to stretch myself and looking for the next opportunities, which was part of why I finished up doing so many different roles in the time that I was there. If I was in a technical role, I wanted to know if I could I do a live supervisory role.” Denise was constantly asking to do more and more challenging tasks. She was a part of BHP’s standard rotation policy, but after 12 months they took her off that rotation and gave her more useful things to do. By the time Denise found herself at Rio, she was already a senior manager. At BHP she had undertaken various ironmaking and technical roles as well as steelmaking operational and technical leadership positions. She left BHP as a superintendent and joined Rio Tinto as a manager for technical marketing at the Hammersley Iron division in Perth. She learnt a lot about her management style as well as leadership capabilities during these years. “At BHP we would regularly make presentations to the line management about what we’d been doing over the last three to six months. I went into this session with this whole vision about how senior managers are able to walk on water and that they know everything. The most senior person in the room asked me a question about

some of the tasks that I was doing and I thought why doesn’t he know this stuff. So, it then made me start to look at the knowledge and capabilities of the people that are actually making decisions. Then I thought well if I make the effort to go and ask questions and understand what’s going on, I could be a really good manager and show these people how good a manager could be. That became my philosophy to any work that I was doing. It was a matter of how could this be done differently, how could it be done better.” Denise says this approach has helped her build trust and respect. Her willingness to continue to learn is one of the tenets Alternate Futures is based on. She sees herself as a puzzle master, dealing with risk management and area planning and everything else an MD has to deal with and then seeing how the pieces fit together. “You need to know enough to be able to ask the right questions of your experts and be comfortable taking advice from them. You need to recognise if there is an issue that needs to be explored further. I applied those principles through BHP and Rio and I suppose in a way that ultimately lead to why I’m now running my own company. I become frustrated with big business in Australia because a lot of people are not asking questions, especially when there are huge opportunities to improve business, including those two very large and successful companies.” Denise seems to lament the idea that few people are striving for excellence anymore. She says fear is a major factor. “I’ve been exploring this question, because it’s an important question for me. And a lot of it is around personal fears, which are being aggravated by high governance and the high legislative environment that business is working in at the moment. There is an awful lot of pain and punishment if you try something and it goes wrong. So it is just a lot safer for middle to senior managers to maintain the status quo. If www.businessfirstmagazine.com.au

PROFILE | BF

something out of the ordinary occurs, then those managers have a scapegoat.” Alternate Futures is about helping people change the status quo; encouraging people to step away from their comfort zones and face their fears. To do this you have to get your culture and systems right. “You need to have systems change around risk management processes to allow you to make the best decision that you can with the information that’s available at the time. And while you may not be able to create a 100% guaranteed system, you can use risk type processes to make them as strong as possible.” Organisational psychologists work with Denise as well as some extremely competent, very specialised technical people. They go into companies to understand where the organisations need to make change and guide them so that they are comfortable managing that change themselves. “We’re not about going in and making the decisions for them. We are about helping them learn how to www.businessfirstmagazine.com.au

be different. And, we work from both the industry and the research side. It’s interesting at the moment that most of our work is actually within the research side. The only work that we’re currently doing with industry is with start-ups, where they’ve been a smart entrepreneur with a great idea but are wondering what the next step is.” Alternate Futures is investing in some very good research. They are finding that there are not only cultural and systems gaps, but there is actually a huge language barrier. The ‘technoboffins’ running the research labs are failing to communicate properly with business and vice versa. “They’re all using English, but they haven’t got the faintest idea what each other is saying,” Denise says. “So they are not getting the point or understanding whether their problem and a particular solution works together. They’re not building trust.” Alternate Futures facilitates the trust. They are working on systems to help business and technical experts understand each other.

“There is some brilliant research happening right across this country, but industry is still scared to engage with it even though some of them are going broke. They’re actually less scared of their companies going broke, than having to personally change and engage with a new technology that they don’t understand.” Most executives have a track record of success and are reluctant to go down different paths. Denise’s job is to help them understand that just because they may have been successful with one tool in their kit, doesn’t mean that they’re going to be successful for the next 10 years. She comes from her own successful place to do this. There was a point in time with Rio where she was looking after 3,000 people and several billion dollars worth of capital. She spent two years as vice president operations of Asia Pacific, as managing director of Dampier Salt and HISmelt, and as the chief commercial officer of Autonomous Haul Trucks. She learnt a lot at Rio Tinto just heading up these divisions. Does she feel she needs to be mentored? “Not mentored, but I do think I need to continuously learn. So that whole philosophy that I’ve talked about where every person that I meet, I assume that there’s something I can learn off them. I see that today.” It is a philosophy that has stood Denise well. It has won her a Telstra Business Woman of the Year award. She admits to entering the award to gain publicity for some of the things Rio Tinto was doing. However it became fantastic recognition around what she had been doing in terms of best practice. The award opened doors for public speaking and gave her the confidence to start Alternate Futures. The aim for Alternate futures is to grow enough of a client base and respect across the research institutions, that they trust Denise to create win-win successes. As she has stated previously, part of taking research in Australia to the next level is going to be around more collaboration. “The only way Australian Industry, manufacturing and mining in particular are going to survive, is if they do things differently. There are some major changes that need to happen to accept that, so one line of vision for my company is to make Australia a better place. And, I’m doing whatever I can to facilitate this with a bunch of very enthusiastic, very smart people who also have the same vision.” BF

BUSINESSFIRST MAGAZINE

BF | HEALTH

TO SUCCEED,

74 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

HEALTH | BF

RELY ON COMMITMENT, NOT MOTIVATION With the New Year in full swing, ask yourself: did you make New Year’s resolutions? How is that working for you? A quick Google search of the most popular New Year’s Resolutions indicates that the majority of people are really feeling the pressures of a hectic lifestyle, so are now trying to focus on making more time for themselves, their friends and family writes Lauretta Stace.

T Lauretta Stace is Chief Executive Officer of Fitness Australia.

he usual suspects are on the list – lose weight, get fit, cut down on alcohol or give up smoking. So why do so many people make these resolutions and fail to achieve them? Here are a few thoughts on what usually happens when people make resolutions and then, how to avoid these traps to achieve lasting change. Motivation versus Commitment When people make New Year’s resolutions, they are usually relying on motivation. Something occurs to trigger an emotion and all of a sudden, you’re motivated to do something in response. Check out these words of wisdom from health coach Craig Harper (www. craigharper.com.au) and see if they ring true: The trap is that motivation is a shortterm emotion. Sometimes you are motivated and sometimes you are not. Commitment, on the other hand, is a constant state. Commitment means consistent behaviours, maintaining standards and a non-negotiable mindset. Unlike motivation, commitment is not fleeting, wavering or unpredictable. People who rely solely on the heightened emotional state of motivation to produce long-term positive change rarely succeed because their choices, actions and results are invariably determined by their ever-changing level of motivation. That is, their level of excitement, enthusiasm and focus on a given day. Some people will spend their lives at the mercy of their unreliable emotions rather than exploring their potential and possibilities via their strength, courage and conviction. Stopping and starting but rarely getting the job done over the long term. Thinking, planning and intending their way to nowhere in particular. When you are totally committed to

www.businessfirstmagazine.com.au

your dreams, goals and values, your day-to-day level of motivation will be irrelevant and unimportant. Here are some typical ‘resolutions’ that are made by many people every year: I’m going on a diet I’m going to get fit I’m going to cut down on alcohol I’m going to give up smoking I’m going to lose weight. When people make these resolutions they usually vigorously launch themselves into some sort of ‘program’ such as a detox diet or six week exercise program, seeking a quick fix to solve their perceived problems. In time, the program ends, the shortterm emotion of motivation begins to wane, life gets in the way and the goal is not achieved. This makes you feel as though you have failed and you quickly return to your old habits and any changes made are lost or do not occur at all. If you are unhappy with your physical health, it has probably taken quite a long time for you to get into this situation. So when you decide to make a change, why should you expect or demand a quick fix or instant results? You must be realistic and patient. You have to make a commitment – and this takes effort and time. Transformation starts with our thinking, choices, behaviours and habits. If you want improved physical health, you need to consistently make healthy choices and behaviours part of your normal lifestyle. Once these become automatic and habitual, you have started the process of lasting transformation. Here are some simple tips on healthy choices and behaviours when thinking about improving your physical health and fitness: 1. Explore your potential and describe

what success looks like in a way that is meaningful to you. 2. Write down why and what you want to change about yourself and how you will do this. 3. Make a commitment to yourself and include some non-negotiables. 4. Start with small, achievable and sustainable changes, but apply these changes consistently and keep progressively adding to them over time. 5. Keep track of your progress and be accountable to yourself and/or someone else. 6. Seek out and talk to people who can help you to start embracing healthy habits as being normal and lifelong, rather than unusual, short-term or program based. Improved physical health and fitness is achievable if you are prepared to do what is required. The question is ‘when’? “What is best for people is what they do for themselves.” Benjamin Franklin. BF

‘

When people make New Year’s resolutions, they are usually relying on motivation. Something occurs to trigger an emotion and all of a sudden, you’re motivated to do something in response.’ BUSINESSFIRST MAGAZINE

BF | HIDEAWAY

My island home While some executives head to the South of France, others to London or New York, for their holiday. There’s a great deal of luxury and relaxation to be had right in our own backyard. Hayman Island offers a peaceful idyll, family relaxation or a business retreat. It’s the perfect luxury getaway, that’s right at home.

he Great Barrier Reef is a landmark. Famed for its coral and its beauty, it laps Queensland’s Whitsunday islands. And within that group of islands is Hayman, named in honour of Thomas Hayman, the sea navigator who charted the island’s waters in 1866. Since the 1950s, Australians have flocked to Hayman’s 726 acres; surrounded by natural Australian bushland and bordered by pristine beaches and the Coral Sea. A lot has changed since the 1950s, the most recent change occurring with the recent agreement between Mulpha Australia and Kerzner International Holdings Limited, a leading international developer and operator of destination resorts, casinos and luxury resorts. Kerzner is to assume management of the luxury island resort Hayman, Great Barrier Reef. Hayman will push over a multi-million dollar renovation and be re-launched as One&Only Hayman Island in April 2014. This will be One&Only’s first resort in Australia, however Mulpha will retain full ownership of the island and the resort. “Hayman has long been acclaimed as an iconic Australian resort and Kerzner is the perfect partner to herald in a new era for the resort under their One&Only brand,” said Mulpha Australia’s executive chairman Seng Huang Lee. “The transformational refurbishment combined with innovation and commitment to delivering an extraordinary level of service will redefine resort luxury in Australia.” Positioned in the most beautiful locales in the world, One&Only offers luxury holiday experiences, catering to

76 BUSINESSFIRST MAGAZINE

the most discerning travellers around the globe. Each award-winning resort offers memorable experiences through a distinctive style and personality borne of its local culture, genuine hospitality and vivid energy. Due to Hayman’s natural beauty, it provided the ideal location for a luxury makeover. Situated in the very heart of Australia’s Great Barrier Reef, the island is surrounded by an amazing natural ecosystem of pristine coral reef formations and diverse marine life. One&Only will present a number of unique guest experiences, enhanced accommodations, new culinary options and signature service throughout the resort. A renewed sense of vitality to the island will be underpinned by a strong sense of place through design and ambiance. DBI Design, in partnership with the Kerzner International Development Team, has been engaged for the interior design and landscape architecture for the resort’s rebirth. “I am thrilled to introduce One&Only to Hayman Island. It is the perfect destination for the first One&Only in Australia and I know the resort will be well received by our many loyal One&Only guests, as well as guests that have been enjoying Hayman for years,” said Alan Leibman, CEO, Kerzner In-

ternational. “My personal commitment is to make One&Only Hayman Island a ‘must stay’ for the well-travelled to explore the wonders of this magnificent destination.” The Pool Wing will be redeveloped and feature new all-suite living spaces offering either one or two bedrooms. New Hayman rooms and Hayman suites, featuring ocean and lagoon views, will be introduced with reimagined interiors and amenities. The iconic pool will offer a renewed life and energy, complete with cabanas and day beds. Some suites will provide direct access to the pool, allowing guests to enjoy the water straight from their private terrace. The exclusive Beach Villas, with secluded second bedroom Retreat rooms, as well as the one, two and three-bedroom Penthouses, including the Owner’s Penthouse, will continue to offer the ultimate in exclusivity, privacy, personalised service and experience. Hayman Island will offer a variety of world-class cuisines overseen by internationally acclaimed chefs. The resort will also house an indulgent Health Spa incorporating the incredible natural environment by utilising elements that are represented in the surrounding botanical gardens in addition to offering the latest in health and beauty. A new www.businessfirstmagazine.com.au

HIDEAWAY | BF

‘

Beauty Salon concept will be introduced adjacent to the Spa. In keeping with the latest fitness advancements, a state-of-the-art fitness centre with expert personal training will be added for a comprehensive health and wellbeing offering. As with all One&Only properties, Hayman Island will cater to couples and families alike – preserving privacy and serenity for those who seek it whilst also providing engaging activities for all ages. Innovative offerings for families include the KidsOnly Club and Teens Club, plus a separate family pool and children’s beach area. In addition, a new adult-only pool and chill-out lounge area will be introduced. Guests will be able to enjoy a host of unique sporting facilities to discover the island and the Great Barrier Reef – one of the most complex natural ecosystems in the world with over 33,000 species found off the coastline. Guests will have the opportunity to explore the reef and all the wonders around it through special programmes led by dive experts and marine biologists, as well as hiking and private island exploration. Private weddings, events and conferences will be catered for in style with ample space for both intimate and larger groups. www.businessfirstmagazine.com.au

As part of the ongoing development and investment programme, Mulpha Australia will continue a staged rollout of the ultra-luxury Hayman Private Residences and Hayman Marina Residences offering private ownership opportunities for select clients and guests.

Guests will be able to enjoy a host of unique sporting facilities to discover the island and the Great Barrier Reef.’

The makeover will give Australia a rival to the brand’s other luxury resorts in the Mauritius, the Maldives, the Bahamas, Los Cabos, Mexico and Dubai. So why travel outside Australia to an island paradise, when luxury is right at your fingertips. BF

BUSINESSFIRST MAGAZINE

BF | EXTRAVAGANCE

A RECORD BREAKING YEAR A

s part of its year-end figures announcement, Christie’s recently reported a record-breaking result for global jewellery sales in 2013, with US$678.3 million ($AU779.30 million) – the highest annual result ever achieved for jewellery in the auction house. The tally represents an 18% increase

78 BUSINESSFIRST MAGAZINE

over Christie’s 2012 total, and beats its previous highest annual record of US$600 million, set in 2011, which included The Collection of Elizabeth Taylor – the most valuable sale of jewellery in auction history. Upon executing the sale of The Winston Legacy in May and The Orange in November, Christie’s Geneva led

the company’s jewellery sales with US$228.4 million total. Each one of Christie’s major sales regions orchestrated auctions of some of the most significant diamonds in the global auction market, holding six of the year’s top ten jewels sold at auction in 2013. Over 120 jewels sold in excess of US$1 million, fourteen lots sold above US$5 million, and five above US$10 million. Coloured and colourless diamonds, natural pearls, distinguished private collections, and three successful online-only jewellery auctions all contributed to this leap in Christie’s results. With many new buyers in Europe, the US and Asia actively participating at a high level, competition has become more intense than ever for rare jewels and gems of only the highest quality. François Curiel, International Head of Jewelry and President of Christie’s Asia, notes: “In 1994, Christie’s worldwide jewellery sales totaled US$190 million, with Geneva, London, and New York as our most important centres, where top-quality gemstones traded at US$80,000 per carat. In November 2013, at Christie’s Geneva, we sold The Orange for a world record price of US$35.5 million at US$2.4 million per carat and achieved US$125.3 million in one sale. Last year, the prices achieved and the records set soared above all previous records and raised the jewellery auction market to an entirely new level. The top ten jewels sold at Christie’s demonstrate jewelry as art – gemstones of such quality they will perhaps only be seen once in a lifetime.” COLOURED DIAMONDS The 16 April sale of Magnificent Jewels at Christie’s New York flagship Rockefeller Center saleroom led the year in coloured diamonds with the historic sale of The Princie Diamond. The cushion-cut Fancy Intense Pink Golconda diamond of 34.65 carats achieved a price of US$39,323,750 (US$1.1 million per carat) – establishing a new world auction record for a Golconda diamond and as the most expensive diamond every sold at Christie’s and in the United States. Christie’s Geneva began their spring auction season with an exceedingly rare 1.92 carat rectangular-cut Fancy Red, VS2 diamond fetching US$3,252,675 million (US$ 1.6 million per carat) and setting a new world auction record for a red diamond. The Orange, a pearshaped Fancy Vivid Orange diamond of 14.82 carats, was the superb finale to www.businessfirstmagazine.com.au

EXTRAVAGANCE | BF the Geneva jewelry auction season realizing US$35,540,612 (US$2.4 million per carat) and establishing a new world auction record an orange diamond. Similarly, in Hong Kong, a Fancy Vivid Orangy Pink, VVS1 diamond of 12.85 carats achieved US$4,951,285 (US$385,000 per carat) and setting a new world auction record for an orange-pink diamond in the November auction. COLOURLESS DIAMONDS From start to finish, 2013 saw exceptional results achieved for colourless diamonds at Christie’s. A rare treat occurred in the May auction at Christie’s Geneva when Harry Winston acquired the highlight of the sale: a pearshaped D-colour Flawless diamond of 101.73 carats, named The Winston Legacy, which sold for US$26,737,913 (US$254,400 per carat). In Hong Kong,

after their 28 May auction of Magnificent Jewels, Ms. Tiffany Chen, vice chairman of China Star Entertainment Limited, named the star lot of the auction The Star of China. The D-colour Internally Flawless Briolette diamond of 75.36 carats fetched a price of US$11,151,245 (US$148,000 per carat) and set a new world auction record for a briolette diamond. Lastly, on December 10 in New York, a rectangular-cut D-colour Internally Flawless Golconda diamond of 52.58 carats realised US$10,917,000 (US$207,600 per carat). RECORD-SETTING PEARLS The rarity, quality, and provenance of the natural pearls offered at Christie’s in 2013 led to feverish bidding from private collectors and trade clients from all over the world. In Geneva, a single-strand natural pearl necklace, measuring from 13.7 to 10.4 mm, realised

US$8,457,945 (estimate: US$2,000,000 – 3,000,000) and set a new world auction record for a single strand natural pearl necklace. In addition, in Hong Kong, a pair of natural pearl and diamond ear pendants achieved US$3,354,431 and established a new world auction record for a pair of natural pearl and diamond ear pendants. In total, Christie’s achieved two of the top three prices for jewels at auction in 2013. Private sales were also an important factor in Christie’s success in 2013 – a trend that is expected to continue in the New Year. This facility, led by International Director Julien-Vincent Brunie, is tailored to clients who prefer to buy or sell outside the fixed auction calendar, and to those seeking the rarest of gemstones and jewels. Christie’s hosts 24 jewelry auctions a year in Geneva, Hong Kong, London, New York, and Paris. BF

CHRISTIE’S TOP FIVE JEWELS OF 2013 (BY USD$)

WORLD AUCTION RECORD FOR A GOLCONDA DIAMOND MOST EXPENSIVE DIAMOND EVER SOLD AT CHRISTIE’S AND IN THE UNITED STATES

WORLD AUCTION RECORD PRICE PER CARAT FOR A DIAMOND WORLD AUCTION RECORD FOR AN ORANGE DIAMOND

Christie’s Geneva, November 2013

THE PRINCIE DIAMOND A cushion-cut Fancy Intense Pink Golconda diamond of 34.65 carats, VS2, Type IIA US$1,135,000 per ct

Christie’s New York, April 2013

THE ORANGE A pear-shaped Fancy Vivid Orange diamond of 14.82 carats US$2,400,000 per ct

WINSTON LEGACY A pear-shaped D-color Flawless diamond of 101.73 carats US$254,400 per ct

THE STAR OF CHINA A D-color Internally Flawless briolette diamond of 75.36 carats US$148,000 per ct WORLD AUCTION RECORD FOR A BRIOLETTE DIAMOND

RECTANGULAR-CUT D-COLOR Internally Flawless Golconda diamond US$207,600 Christie’s New York, December 2013

Christie’s Hong Kong, November 2013

Christie’s Geneva, November 2013

ESTIMATE Estimate Upon Request

ESTIMATE SFr.16,000,000 – 19,000,000

ESTIMATE Estimate Upon Request

ESTIMATE HK$66,800,000 – 98,000,000

ESTIMATE US$9,500,000 – 12,500,000

PURCHASE PRICE US$39,323,750 £25,560,438 €29,886,050

PURCHASE PRICE SFr.32,645,000 US$35,540,612 €26,533,856

PURCHASE PRICE SFr.25,883,750 US$ 26,737,913 €20,707,000

PURCHASE PRICE HK$86,110,000 US$11,151,245 £7,431,293 €8,688,499

PURCHASE PRICE US$10,917,000 £6,659,370 €7,969,410

BUYER Anonymous

BUYER Harry Winston

BUYER Asian Private

BUYER Anonymous

(Global List Including All International Sales) [All sold lots include Buyer’s Premium]

www.businessfirstmagazine.com.au

BUSINESSFIRST MAGAZINE

BF | FAST LANE

C for Class Mercedez C-class is one of the best motor vehicles on the road: performance, luxury – this car has it all. The 2011 model was one of the best-received luxury cars of its time, but the 2014 model promises even more.

he 2014 C-Class sets new benchmarks in safety, efficiency, comfort and wellbeing. Just eight months after the launch of the new SClass, the new C-Class is the very first car in its segment worldwide to come to market with high-tech features from the luxury class, including a chassis with air suspension (AIRMATIC) and the Stop&Go Pilot for partially autonomous driving. “With the brand-new C-Class, we are continuing to accelerate our rate of innovation,” says Dr Dieter Zetsche, chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars. “For instance, it’s the only car in its segment to enable partially autonomous driving. The intelligent application of lightweight materials is also groundbreaking. This makes the new model up to 100 kilograms lighter than its predecessor and therefore also the most agile and efficient C-Class ever.”

Together with best-in-class aerodynamics (cd 0.24) and new, fuel-efficient engines, the new C-Class delivers on efficiency. “The new model consumes up to 20 percent less fuel than its predecessor,” says Prof Dr Thomas Weber, Member of the Board of Management of Daimler AG and responsible for Group Research and Mercedes-Benz Car Development. “And we will increase its efficiency even further. We will soon offer two model variants that emit just 99 and 98 grams of CO2 – appearing initially in Europe. In addition to that, we also have a hybrid version with plug-in technology in the pipeline.” The crossover from the luxury S-Class is welcome. It means a raft of intelligent assistance systems will be

brought together under the heading ‘Mercedes-Benz Intelligent Drive’ to offer the very highest levels of safety. The new C-Class joins the latest generations of the E and S-Class to create the youngest and most wide-ranging saloon line-up of any automaker worldwide. Simply elegant The new C-Class also sets accents with its clear and emotional design language. The exterior design harmonises perfectly with the modern interior. “Like the S and E-Class, the C-Class, too, conveys that ‘welcome home feeling’ that is so typical of Mercedes-Benz – but with a very specifically C-Class feel about it,”

Mercedes-Benz C63 AMG Edition 507

Mercedes-Benz at the North American International Autoshow 2014 in Detroit: Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars, Professor Dr. Thomas Weber, Member of the Board of Daimler AG, responsible for Group Research and Mercedes-Benz Cars Development, and Ola Källenius, Executive Vice President, Sales and Marketing Mercedes-Benz Cars, at the world premiere of the new C-Class in Detroit.

80 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

FAST LANE | BF

says Ola Källenius, executive vice president Sales & Marketing Mercedes-Benz Cars. “The new C-Class rounds off our saloon line-up. And it’s a line-up that– each in its own distinctive way – embodies the very highest level of modern luxury,” continues Källenius. The highlights The new C-Class can brake at up to 200km/h to avoid a collision, use just 3.9L/100km of fuel, and display Google StreetView. The body achieves an aerodynamic score of 0.24 Cd, and is constructed of around 50 per cent aluminium, compared with 10 percent for pervious models. Fuel consumption reductions of 20 per cent seem impressive, especially if there is no loss of performance. The new model features a seven-speed torque converter automatic transmission, and a six-speed manual on select models. Engines will include a C180 with a 1.6-litre turbocharged direct injection

www.businessfirstmagazine.com.au

four-cylinder petrol delivering 115kW of power, 250Nm of torque, and 8.2 second 0-100km/h and 5.0L/100km claims. A C200 with 2.0-litre turbo direct injection four-cylinder petrol makes 135kW, 300Nm, and posts 7.5 second 0-100km/h and 5.3L/100km claims. The C220 Bluetec features a 2.2-litre turbo-diesel four-cylinder with 125kW, 400Nm, and 8.1 second 0-100km/h and 4.1L/100km claims. An entry-level 1.6-litre diesel with either 85-100kW and 280-320Nm of torque depending on the state of tune is also available. For those who like a hybrid, the C300 Bluetec Hybrid uses provides 150kW and a claimed 3.9L/100km. We won’t go through all the engine variants here, but you get the idea. Meanwhile, rear-wheel drive remains standard. This will be the first C-Class available in all-wheel drive for righthand-drive markets, paving the way for a future C63 AMG 4MATIC. The C-Class now features the optional Airmatic suspension last seen in the

luxury models. The technology is impressive. Distronic Plus adaptive cruise control and Enhanced Lane Keep Assist keeps the C-Class at a safe distance from the car in front when cruising and autonomously steer the C-Class to follow cars in front in addition to lane marking. BAS Plus reversing cross-traffic alert will automatically apply extra brake pressure to avoid rear collisions. Other features include Active Parking Assist, a 360° camera, Traffic Sign Assist with Wrong-Way Alert, and Adaptive Highbeam Assist Plus that blocks out a strand of highbeam if oncoming cars are detected. The new C-Class is not available until mid-year in Australia, so it will be interesting to see what options are available. However expect the safety features to be included. If lucky, we’ll see three lines in Australia: Avantgarde, Exclusive and AMG Line. With the extra bit of luxury, the C-Class should maintain its dominance in this class of car. BF

BUSINESSFIRST MAGAZINE

How can the world’s smallest continent feed the world’s biggest one? In the next half century, Australia’s agribusiness industry will face more critical moments than ever before. With Asia’s rise creating unprecedented demand for food, but squeezed profit margins and ageing infrastructure posing challenges to supply, the industry will rely on exceptional thinkers to compete internationally. Chartered Accountants are equipped with the in-depth knowledge, best training and analytical thinking to find the smart solutions. They see the bigger picture and understand what’s needed to help industries succeed. That’s why Chartered Accountants are the number 1 choice. To find out how a Chartered Accountant can help grow your business, and to hear from exceptional leaders,

ICAA10008_AG_BFM

visit thinkingthatcounts.com.au

Thinking that counts