The Australian Business Executive - Q3 2015 by The Australian Business Executive

Contents 5 6

Publisher’s Note News in Review

MGA Whittles Group

Forty Years On and Stronger Than Ever

Adelaide Crows FC The Pride of South Australia

COVER STORY: BlackBerry Innovate or Die

NEXTDC

Where the Cloud Lives

Mustera Property Group Local and Offshore Investment

Pristine Living Management Understanding Strata

PharmaSynth

Embracing Biopharm

Claw Environmental Plastic Recycling

The Resitech Group Resin Technology

Event Coverage: Preston Manning in Sydney 70 4

An interview at our recent “In Conversation” event AustralianBusinessExecutive.com.au

Publisherâ&#x20AC;&#x2122;s Note

ver my morning coffee on Friday July 3, I heard the news about the murder of Adelaide Crows FC head coach Phil Walsh. In a very unfortunate coincidence this has occurred at the same time we publish our feature with club CEO Andrew Fagan. Our feature was conducted prior to this event. However when something so destructive occurs it is impossible not to acknowledge its damage. Our thoughts are with the club and our sincerest condolences go out to them and those affected by this tragedy. In this same edition we speak with BlackBerry ANZ MD Matthew Ball on the recent troubles the company has faced, and their transition to secure cloud software solutions. Following on from this we profile NEXTDC who are responsible for reliable data delivery with their range of data centres across the country. We also recognise 40 years of success of the MGA Whittles Group and their Chairman John George. As always we include a range of other industries including strata, construction, pharmaceutical, and environmental.

The Australian Business Executive Part of the Romulus Rising Group ABN: 77 601 723 111 W: AustralianBusinessExecutive.com.au E: communications @australianbusinessexecutive.com.au T: (02) 8091 1410

Publisher J. Landry Lead Writer Nicholas Paul Griffin Editorial Contributors Christian Pagaragan Brendan Traya

Hope you enjoy,

Publication Layout Joel Custodio

J. Landry Managing Director and Publisher

Website Raizwan Butt

The Australian Business Executive is published by the Romulus Rising Group reaching a range of professionals including top executives, investors and public servants across Australia. All rights reserved. Reproduction in whole or in part is strictly prohibited without written permission. Opinions expressed in The Australian Business Executive are not necessarily those of the editor or publisher. All reasonable care is taken to ensure truth and accuracy, but neither the editor nor the publisher can be held responsible for errors or omissions in articles, advertising, photographs or illustrations. Unsolicited manuscripts are welcome but cannot be returned without a stamped, self-addressed envelope. The publisher is not responsible for material submitted for consideration.

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News In Review ANZ appoints Mark Hand as MD of Rugby League World Cup CEO Corporate and Commercial Banking announced

NZ today announced the appointment of Mark Hand as Managing Director Corporate & Commercial Banking Australia reporting to CEO Australia Mark Whelan.

Currently Managing Director Retail Distribution in Australia, Mr Hand joined ANZ in 1988 and spent 10 years in senior commercial banking roles across business banking, small business and regional commercial banking. In his new role he will be responsible for growing ANZ’s corporate and commercial business in Australia as well as driving further alignment between ANZ’s retail and commercial businesses. Commenting on the appointment Mr Whelan said: “I’ve worked closely with Mark for many years and I’m confident he is the right person to help us continue our journey in building the leading corporate and commercial bank in Australia.” “It’s pleasing to appoint somebody with Mark’s extensive retail and commercial banking experience to help our customers grow their businesses either here in Australia or by expanding into other markets across the Asia Pacific region.” Mr Hand’s appointment is effective immediately. General Manager Australian Branch Network Paul Presland has been appointed Acting Managing Director Retail Distribution while an extensive search is undertaken. 6

ne of Australia’s leading sporting administrators, Michael Brown has been appointed CEO of the 2017 Rugby League World Cup.

His job will be to help plan and deliver a successful World Cup, which will be hosted jointly by Australia and New Zealand. Michael has more than 20 years experience in the sporting sector, most recently as CEO of the Asian Football Confederation’s 2015 Asian Cup Australia. That event, which involved 32 games in 23 days, attracted more than 650,000 fans – nearly double the anticipated crowd figure. Prior to the Asian Cup, Michael was CEO at the Hawthorn Football Club and General Manager of Cricket at Cricket Australia. NRL CEO, Dave Smith said Michael had the credentials and experience to bring together the best Rugby League nations in the world for a successful World Cup. “There has never been more interest in Rugby League at the international level,” Mr Smith said. “New Zealand has taken the number one spot, Australia is desperate to regain its top ranking, England is always highly competitive and

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the Pacific Islands are set to become powerhouses of the game. “So the scene is set for the best World Cup in recent memory and we are confident Michael is the right person to deliver a successful tournament.” Mr Brown said the Rugby League World Cup would be one of the biggest events on the sporting calendar in 2017. “This is a unique opportunity to showcase the best of Rugby League both domestically and internationally,” Michael said. “The World Cup has not been held in Australia since 2008 so I have no doubt this tournament will attract more people to the game, whether as players or fans. “My aim will be to make an impact in every area of the game… from the grassroots and the culture right through to the elite level.”

Qantas’ Perth-Singapore Service Returns To The Skies

antas customers in Perth and Singapore can once again enjoy direct flights between the two cities with the service returning to the airline’s international network.

Qantas International CEO Gareth Evans said the airline was pleased to again offer its customers in Perth and across Western Australia a direct option with Qantas to Singapore, as well as seamless travel across Asia. “Our customers told us they missed us – so with the right strategy and the right aircraft on the right route, we’ve come back to meet that demand,” said Mr Evans. “There has been a fantastic response since we announced the new services in April, with customers jumping to book great deals to Singapore and beyond. “Many of our codeshare partners have also been attracted to our Perth-Singapore schedule, adding their code to the Qantas flights, with nine carriers now marketing the services to their customers,” added Mr Evans. “This is great news for tourism in Western Australia, with the route being promoted to more international customers than ever before.” Customers travelling between Perth and Singapore will experience seat back in-flight entertainment and new Economy meals. A dedicated 12 seat Business Class cabin features Neil Perry menus and amenity kits from Kate Spade and Jack Spade.

Spending By Business Hits Strongest Rise in Three Years

pending by Australian businesses reached the highest sales growth in three years during May, indicating there are early signs that small businesses have responded to the stimulus contained in the Federal Budget, according to the latest Commonwealth Bank Business Sales Indicator (BSI). The Business Services sector, which includes businesses such as Office Furniture, Commercial Equipment, Electrical Parts and Computers, and Computer Equipment and Software, recorded spending growth of 1.9 per cent in trend terms in May – the biggest rise since May 2012. Overall, the broader BSI grew by 0.8 per cent in trend terms in May after similar gains in March and April. Annual sales growth stood at 7.5 per cent, well above the decade average of 5.3 per cent. “May’s growth in sales will be welcome news for Australian business owners, suggesting businesses and consumers across the country are feeling confident about spending off the back of the Federal Budget,” said Claire Roberts, Executive General Manager, Local Business Banking, Commonwealth Bank.

“The latest sales figures indicate that consumer spending will continue to rise in the year ahead, fuelled by low interest rates, a firmer job market and improving economic outlook,” said Craig James, Chief Economist at CommSec and author of the BSI report. “The growth experienced by a number of industry sectors in May also suggests that businesses are responding to the stimulus measures in the latest Federal Budget, like new tax breaks for small businesses.” Among the strongest sectors in May were Government services (up 3.1 per cent); Amusement & Entertainment (up 2.8 per cent) and Business Services (up by 1.9 per cent). The growth experienced in the Business Services sector was the biggest monthly lift in three years. In annual terms, only the NSW and Northern Territory had sales below a year ago in May (down 6.1 per cent and 6.0 per cent respectively). At the other end of the scale, growth was strongest in ACT (up 15.7 per cent), South Australia (up 8.1 per cent), Western Australia and Queensland (both up 6.2 per cent), Tasmania (up 6.7 per cent) and Victoria (up 1.9 per cent). The BSI is a key measure of economy-wide spending, tracking the value of credit and debit card transactions processed through Commonwealth Bank point-of-sale terminals.

News In Review - AustralianBusinessExecutive.com.au

MGA Whittles Group: Forty Years On and Stronger Than Ever By Nicholas Paul Griffin

MGA Whittles Group Executive Chairman John George.

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ith its three-armed approach to the insurance and Strata businesses, the MGA Whittles Group has been providing quality services to the people of South Australia and beyond for

over forty years. The Australian Business Executive recently secured an exclusive interview with John George, the groupâ&#x20AC;&#x2122;s Executive Chairman, to discuss the success of MGA Insurance Brokers and Whittles Body Corporate in greater detail.

MGA Whittles Group - AustralianBusinessExecutive.com.au

MGA Insurance

he original arm of the business was established in October 1975, placing MGA in its 40th year of existence. The company began after Mr. George left his job at South British United Insurance Company and established his own business, initially known as J.R. George Insurance Services, which was the origin of MGA. During this period there were only a handful of international brokers practicing. At that time, insurers began to recognise the benefits of distributing their products and capacity through brokers rather than the traditional method of employing sales staff. There was no legislation covering the industry at that time, and it remained that way until the introduction of the Insurance Agents and Brokers Act in 1984, followed almost two decades later by the Financial Services Reform Act. “It is very much now a controlled industry,” Mr.

George says. “A major percentage of wholesale products, being those commercial products, are delivered through the medium of insurance brokers.” Insurance brokers offer the client a wide range of services, and MGA acts as the agent for the client rather than the insurer. Not all insurance companies can be all things to all clients, so many of MGA’s accounts have risks spread across a variety of underwriters. “We work for our clients,” Mr. George says, “and we will search the market, that we know extremely well, to come up with the best cover, the most competitive rate for our clients… It extends the reach of the general client, it gives that client access to the entire insurance market.” It is not the broker that pays out on claims; this is the responsibility of the cover holder or underwriter. The broker’s responsibility is to make sure the client receives the correct amount and has secured the best deal on a

MGA Whittles Group - AustralianBusinessExecutive.com.au

particular claim. “It’s been my experience that most clients need that security of somebody that they’re dealing with that they can trust. They are in their own businesses, which maybe has nothing to do with insurance broking, but they dorequire insurance, which is a very important part of their business.” “They are looking to have that responsibility handled by somebody that really knows what they’re doing and can protect their business for them. They pay a fee for that service and it’s up to us as brokers to charge the correct fee, which will pay all of our costs and give us a bottom line.”

superannuation and investment advice. We’re purely involved in property insurance, liability insurance and general insurance products.” But there are particular areas of expertise for MGA. One niche market is in the rural sector, which covers about 15% of the company’s total premiums, where the company has developed a Farm Pack style insurance policy, the broadest in the marketplace. Another specialist policy is in Strata Title buildings, of which the company has about 5,000 insured throughout the country. MGA also handles a lot of individual commercial clients, which range in premiums from $2k per year to $500k per year.

At the end of the day the broker is judged not only on its premiums and fee, but the level of service that is provided for the client. It is often the case of ‘you get what you pay for’, and Mr. George believes prudent clients understand this.

“In terms of retail products—that is retail, house and car: the mums and dads—that still forms an important part of our business and will probably make up about 20% of our total book of business.”

“MGA has always specialized in general insurance products. That’s basically everything but life insurance,

Via its underwriting agency arrangements, the group is also cover holder for the insurance market Lloyd’s of

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London, where it is represented by an agent, meaning it often places business into the London market. Lloyds is the underwriter for MGA’s Landlord Property Protection product, as well as some of its Strata Title insurance. “The majority of our business will be done via the Australian insurance marketplace, but there’s also a reasonable percentage in place on the Lloyds market,” Mr. George says. In 2012, MGA was selected ahead of 130 other brokerages by leading industry publication Insurance Business as Australia’s number one insurance broker.

as employees.” In response to this realisation the company designed the Portfolio Management System, offering some of its long time brokers the chance to own management rights over the portfolios they were managing. The selected brokers established their own Portfolio Management companies and employed their own broker assistants. The company then shared income on the portfolios they were managing.

This is an accolade Mr. George attributes to the decision, as the business started to grow, for the company to embrace a different model to lift it above its competitors, the result being a groundbreaking innovation in the industry.

“They actually became professional contractors,” Mr. George says. “Although in the strictest sense they are not franchisees, there are some elements of franchising. Much of the stresses of having a large staff, and large HR departments to manage those staff, have reduced significantly.”

“I’m a great believer in the power of the individual,” Mr. George says, “and the individuals are out there [as our] representatives, in our branches, in our offices, out on the road. I realised that we needed to do something to harness their power… to bring them closer into the business, rather than working with us

“But importantly, it gave the individuals the opportunity to grow a business. It gave individuals the opportunity to build an asset, because those management rights that we granted them over those portfolios were an asset in their own right and are saleable. And in fact quite a few of them have been sold and changed hands.”

MGA Whittles Group - AustralianBusinessExecutive.com.au

This provided MGA with a far more efficient way of serving its clients, providing its representatives with an opportunity to be in a partnership with the company whilst also running their own businesses.

“The day of the small operator, I think, is coming to an end, because they’ve been costed out of the marketplace. That said there are some excellent small operators out there who are in niche areas, [and] we’re more than happy to embrace those people.”

“I think that was a turning point in our business,” Mr. George adds, “when we produced that, we found productivity of the individuals involved went up by anything from 50-150%. It was quite spectacular. That was the philosophy we adopted, and that’s allowed us to expand as we have over the past 40 years.”

In light of low interest rates, and the capital market as it is globally, there is plenty of money looking for a home and a return. Reinsurance has become an investment place for capital markets, as excess money looks for a home that gives the possibility of a reasonable return.

The insurance market is constantly changing, and having seen plenty of takeovers in recent years, the marketplace is now much smaller than it used to be in terms of underwriters.

“I think we’ll see more and more competition coming into the market,” Mr. George says. “I think we’ll see more and more innovations as far as IT is concerned, which is certainly an area that we’ve focused on within our organisation.”

“Where we had dozens of underwriters in the marketplace twenty years ago,” Mr. George says, “now there are only a handful of majors in Australia, so the marketplace has changed.”

“Our systems, I believe, now are amongst the best available, some of them are fundamental industry systems, but on top of that we’ve built some excellent add-ons.”

MGA has remained flexible, recognising these changes and working to benefit the client. In such a tightly controlled industry, companies need to have strict protocols in place to ensure compliance with government regulations, which is a costly endeavour.

In order to maintain its strength, MGA Insurance has taken measures to keep costs down, maximising not only the services it offers its clients, but also the return that can be expected for shareholders.

MGA Whittles Group - AustralianBusinessExecutive.com.au

Whittles Strata Management

n 1983, MGA Insurance won an account through its chartered accounts. The new acquisition owned a Strata company called J.S.Whittle & Co., which was managing 270 buildings. When the company went up for sale two years later, MGA decided to buy it. “That business has sat beside our insurance broking business now since that time,” Mr. George says, “and there are a lot of synergies in the business. Although the offering is quite different, culturally there are quite a few synergies.” Whilst Whittles operates primarily in the Northern Territory, Queensland and Victoria, the entire MGA Whittles business in most instances will work out of the same offices, as they share a central computer and admin system. Whittles is a portfolio-based business, meaning one of the Strata managers will handle up to 150 buildings. The manager will be required to arrange the Annual General Meeting and the secretarial and maintenance needs of the body corporate, as well as insurance claims. “Once a year, at the Strata’s Annual General Meeting, Whittles’ appointment is laid on the table and if the people are satisfied with the deal that they’re getting and the job that our body corporate manager is doing, they’ll be appointed for a further term.” This arrangement is based on the timescales of the insurance industry, where a broker will look after a policy for 12 months before a review is done. In that sense alone it’s an ongoing, portfolio-based relationship, creating a synergy between the two arms of the business. Likewise, the Portfolio Management System that was introduced by MGA was replicated in the Whittles arm of the company. “We’ve had the same excellent results with that as we have for the insurance,” Mr. George says. As the population of Australia grows, so does the popularity of Strata,

which represents a far more efficient habitation option for some people, particularly working couples living close to a city. Strata Title homes offer many and varied options for buyers. Some community corporations can produce up to five-bedroom homes, all contained within a corporation setting offering centralized resources. “People are busy these days,” Mr. George says, “usually with two people working in the family, and they like to close the door and walk out and know that all of the maintenance and everything is taken care of for them.” Mr. George expects to see further growth in this area, as has been evident in the European market, where there is often a tremendous amount of high-density living close to major cities, mostly a consequence of a dearth of living space. “I think we’re seeing it here not so much because there isn’t enough space, but because it’s much more efficient and affordable. I believe that will continue.” Older style buildings in the industry remain something of a challenge, especially those intended to have a maximum 40 or so years of life. Over the coming years many of these buildings will be need to be replaced due to escalating maintenance costs. “Ageing infrastructure, and fairly poor construction on some of the older buildings which were put up hurriedly back in the ‘60s, in the boom years, I think it is an issue for body corporate managers and owners, as the cost of maintaining these properties grows and grows.” Dealing with these properties has also become a challenge for legislators, although a small amount of them have now been demolished, with new ones put up in their place. This particularly has an impact on Strata groups, which are likely to have many people as co-owners of these properties.

The Group

“I

n terms of our relationships… there has to be a fundamental confidence between all the parties for this to work effectively and efficiently. We’ve enjoyed a great relationship with most of the major underwriters in Australia, and also the Lloyds market, that’s been very much important to us in growing our business.” The relationship between the three major parties—the client, the broker and the underwriter—is the most important in terms of running a successful business. As broker, MGA needs to be on good terms with the

underwriter, in most cases at a very high level, so that if issues do arise it has access to the businesses to resolve them. MGA Whittles operates with a proud South Australian heritage, and has embraced the area as ideal for the location of its head office. Mr. George tells us how easy a place Adelaide is to get around, and that there is always great staff available. “There was a temptation at one stage for us to move our head office

MGA Whittles Group - AustralianBusinessExecutive.com.au

to Sydney, but I’m delighted that we didn’t do that. I feel now that we’ve made the right decision. We’re very, very happy with the place… We’re not going anywhere.” “Nationally, we do have around about 460 personnel and of those, around about 250 of them are domiciled in South Australia. So we’re providing jobs for 250 South Australians.” The group’s impressive growth has seen it make a move recently into South East Asia, with MGA opening up an office in Phnom Penh within the last 12 months. “We’re now at the stage where our business is growing; we believe

about 60% of our national receipts are coming from outside of South Australia. That part of our business is growing at the most rapid pace.” The third arm of the business is the Millennium Underwriting agency, which began as a project to develop products. It has since developed its own Farm Pack product, Strata Title Management product and a Property Protection product. “[Millennium] very much is a part of our group, [and] develops specialized products. In terms of business placed, there will be more business placed through Millennium than any single underwriter, so it’s very important to us to be able to offer specialist products to our clients.”

Secrets of Success

espite its many years of existence, and the changing nature of the group, Mr. George is proud to say that MGA Whittles still has the same culture to it now as it did all the way back at its beginning. “Whilst employing Public Company Governance, we’re still very much a family organisation, and we have been successful, even through our strong geographical growth, of maintaining that family feeling of all of our people, and that is very evident at the national conferences that we hold.” In fact, Mr. George insists that any member of staff, no matter their position, can walk into the Managing Director’s office or the Chairman’s office at any time for a discussion. Not to mention the fact that each of the three divisions are run by one of the sons of the founding members of the company. “Without that, probably we would be looking at becoming more corporate,” Mr. George says, “I think we would have to, really. But our sons share our vision and so we can see no reason why the business shouldn’t be able to continue on the same growth phase that it has over the last 40 years.” The company has endeavored to maintain a growth of 7.5-10% each year, something it has been able to achieve through most of its life. As the company has grown, that 10% has represented larger profits, helping the company maintain its success. MGA Whittles has also consistently looked for acquisitions to

further strengthen the group. “These people have to be a good fit for us,” Mr. George stresses, “because you’re not buying just a book of business so to speak, you’re usually buying the people who are in that business.” “[There’s] not a year goes past when we haven’t had something to do with an acquisition activity, and we’re finding now with demographics being as they are, that people within their businesses… that may be looking at retirement, they have no succession plan in place.” “We offer an ideal track for them to be able to eventually exit their businesses, and also for us to purchase it, and we pay quite generous prices to those people. That’s a major part of our success strategy” The Strata and General Insurance industries are not that large in Australia, so the group tends to know the companies that are around, and keeps an eye out for those which may be a good fit for acquisition. “It costs nothing to talk to people,” Mr. George says, “you’ve got to keep your ear to the ground. When an opportunity comes, of course you’ve got to do your due diligence, but at that time you’ve got to be ready to go.” “We’re finding we’re being approached these days; we’re becoming a broker and Strata Management Company of choice for people to be associated with.” Some companies will be keen to get under the umbrella of a big organisation, and some will want to sell. Mr. George’s advice to companies looking to be involved with MGA Whittles is to keep communication lines open within the industry and keep an eye on what’s going on.

Order of Australia

he success of the MGA Whittles group has allowed Mr. George to make a difference in the lives of others, as well as earning him the highest recognition in his field.

In 2000 he was introduced to Geraldine Cox, the President of the Australia Cambodia Foundation (ACF), who was experiencing difficulties handling the organisation’s back office. As a result of

MGA Whittles Group - AustralianBusinessExecutive.com.au

this meeting, MGA became involved with the organisation. “I served as treasurer Security and then Chairman of the Australia Cambodia Foundation for a total period of about fourteen years. I’m no longer the Chairman of that association, but I’m a trustee of it still.” As a result of his ongoing work in Cambodia, particularly that of providing education for orphaned and impoverished children, Mr. George was awarded the honour of OAM (Medal of the Order of Australia) in 2013. Mr. George worked primarily with Sunrise Children’s Villages and a charity called AllKids, focusing on the education of impoverished children. There are huge numbers of children in Cambodia who will never have the chance to go to school, with many reaching their teenage years still unable to read or write Khmer. “Those kids have got no hope,” Mr. George says, “and these

are the kinds of people that you see ending up being trafficked and ending up in these dreadful camps. It’s really sad, and education of course changes all that.” Further work included the building of a health centre for children with HIV, which Mr. George oversaw most of the admin work for. For his work on the centre, he was awarded the Cambodian Gold Medal, presented to him by Prime Minister Hun Sen at the centre’s opening. Back at home, 2013 was also a good year, as Mr. George was awarded the Les McKeown trophy, the highest accolade that can be given to an insurance broker in the country, granted by the National Insurance Brokers Association of Australia. “You don’t actually go out to do it because of that,” Mr. George says of his recent accolades, “but at the end of the day it’s nice to have that recognition, and hopefully the recognition encourages others to work harder and do better.”

Thought-Leadership

“I

’d never even heard that word until about a month ago,” Mr. George admits with a laugh, when asked about his opinion of thought-leadership. “But I think the reasons for our success are the empowerment given to our good people. We’re rising to $400 million in gross receipts nationally, that’s 37 branches, so it’s a big business now. “

it is usually a good time to look for the next big idea.

“You’ve got to have some courage to change things. If you believe in what you’re doing, you can do that. It took a fair bit of courage to introduce our Portfolio Management System. We had a system here; we were a conservative, well-run company, but we wanted to do something different, we wanted to be innovative.”

“It is very, very important to value your top people, and to continue to encourage them, because at the end of the day you can’t do it all by yourself. Your good people, they need to have that feeling of family and that feeling of ownership.”

Despite the cost, the risk taken by changing the system paid off with the increase in staff productivity. As a result the group ended up benefiting massively from this, and doing so with significantly less management input.

Much of MGA Whittles’ workforce has been employed for over 25 years, having grown with the company. In that respect, the group tends to have a very low turnover in staff. “People join us,” Mr. George says, “and they tend to stay.”

“It’s important to share with them the knowledge of what you’re doing in the business, so they have a feeling of what you as a manager have got in mind in terms of growing the business, so they’ll then automatically feel a part of that.”

“Don’t be afraid to innovate,” Mr. George adds. “And the time to innovate is when things are going really well, and you’re feeling comfortable. When you’re feeling comfortable and things are going well, don’t sit around and pat yourself on the back and think you’re arrived, because you haven’t.”

But perhaps the true secret of MGA Whittles’ success is that the group’s partners are in it because of their affection for the business, in contrast to some people in other organisations, who might be motivated only by money. The money and success come as side benef its of working in a business you love.

Mr. George believes in any industry there will be new challenges on the horizon, and that laurels should never be rested on. When business is good and there is time to think,

“If you’re determined to succeed, and you have the patience and the will and the persistence to succeed,” Mr. George concludes, “ultimately you’ll get there.”

MGA Whittles Group - AustralianBusinessExecutive.com.au

Adelaide Crows: The Pride of South Australia By Nicholas Paul Griffin

Adelaide Crows FC CEO Andrew Fagan.

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n 2015, the Adelaide Football Club celebrates its 25th season of existence, a centerpiece of which will be its glorious new home at the Adelaide Oval. Less than a year ago, Andrew Fagan replaced long standing incumbent Steven

Trigg as CEO of the club. The Australian Business Executive recently secured an exclusive interview with Mr. Fagan, a man boasting over twenty years experience in Australian sport.

Adelaide Crows FC - AustralianBusinessExecutive.com.au

Undervalued Stock

r. Fagan started working in the sporting sector with the Australian Sports Commission and the Australian Institute of Sport in Canberra in 1993, holding a variety of roles over almost a decade of service within policy development and international relations, as well as acting as a management consultant to national sporting organisations on business improvement. In 2002, he joined Canberra’s Super Rugby team, the ACT Brumbies, taking over initially as General Manager. After a successful stint in the role, he was appointed Brumbies CEO in 2005, remaining in charge until 2013, when he made the move to the governing body of the sport, joining the Australian Rugby Union for the 2014 season as head of national teams, competitions and rugby operations. In September 2014, the opportunity arose for him to join Adelaide FC in his current role, which he commenced the following month. But what made him want to cross codes into football?

“I’d long harboured a desire to work in the AFL,” Mr. Fagan says. “I’m a career sports executive—when you work in the industry like I do, you’re watching all codes closely, not just the ones that you’re working within.” The size of the AFL enterprise, its scale and influence in Australian sport, not to mention the professionalism of its operations, was enough to tempt Mr. Fagan into the change. “For me it was an opportunity for change and challenge and to apply my skills in the same industry but a different code.” On accepting the job, Mr. Fagan believed the Crows had been a good club since its inception in 1991, but had yet to establish itself as a truly great club. Mr Fagan says “I set the benchmark for ‘great’ deliberately high. That’s what our members and our fans expect. And our Board. To be great, we need to regularly compete in finals and win another flag (the last was in 1998) in addition to deepening our connectivity and engagement with our members, corporate partners and the broader community”.

Adelaide Crows FC - AustralianBusinessExecutive.com.au

In addition to these concerns, the club has courted a degree of controversy over the last few seasons. Mr. Fagan says of the club’s potential, “I viewed it as a club with a really strong framework, but in many ways an undervalued stock –

it is one of a select few Clubs that have all the raw ingredients to become a true great within the Australian sporting framework. The potential upside is significant and truly compelling.”

Flying as One

he last two years have seen the Crows go through a process of change as big as any club in the country. Mr Fagan says “we moved our home ground to Adelaide Oval following a $530million upgrade, acquired our own AFL license from the South Australian National Football League, established a second team to play in the State League, bedded down a new constitution, welcomed in a new Chief Executive, appointed a new Senior Coach as well as a number of other staff and program changes”. Off the back of this change, Mr Fagan thought it was the ideal time to also realign the club’s key values and strategic focus. “Coming to Adelaide Football Club,” he tells us, “I thought it

was really important to define what success looked like for us as a club and to draw a figurative line in the sand and say, after all of that change, lets reset our strategic agenda—and that started with a new vision and new values and brought to life with new marketing creative.” “The vision that we created was ‘Bringing people together to achieve great things’. The vision enabled us to apply a variety of measures across the footy club by which we’ll define success and govern behaviour.” The highest profile element of this vision comes on the field, bringing together 45 players and coaching staff with the aim of

Adelaide Crows FC - AustralianBusinessExecutive.com.au

developing a leading football program in the country and once more delivering success by playing in finals and winning flags. But the club’s vision is to also incorporate the bringing together of 50,000 people each week in a sold out Adelaide Oval, delivering leading sporting entertainment experiences of a large scale, as well as ensuring 600,000 fans in the community are part of something remarkable that positively affects their lives. “If you don’t have a clear vision,” Mr. Fagan insists, “then the only thing that your supporters can fall back on is the performances on the field, which won’t always be flag winning, particularly in a heavily capped and equalised competition. It’s also about delivering a profit for the organisation that enables you to continue to reinvest into your football, membership, and commercial and community programs so that you can continue to improve year on year”. This new vision is supported by the core values of courage, authenticity, high performance and team first. All this has been brought to life through the concept of “We Fly As One”, a unifying ethos around which a cohesive PR, advertising and marketing strategy has been developed.

The hallmark of the club’s 25th season presents an excellent opportunity to celebrate the club’s roots, and to strengthen a future bond. Features of this celebration will include a 25th season logo on playing apparel and on the caps of the majority of the Club’s 60,000 members. The Club has also launched a weekly TV show with broadcast partner Channel 7, which will include a regular look back on great players and historic moments. This year has also seen the club’s inaugural Hall of Fame induction, which Mr. Fagan tells us “recognised the players, coaches and administrators who have impacted significantly and positively on the football club over the past 25 years.” “It was an emotional night. Over 700 special guests attended the black tie event and from the speeches delivered, it was clear that although we are only 25 years old, we already have much tradition and heritage running through our blood”. “It’s a really important year for the club,” Mr. Fagan stresses, “given all the change the club has worked through, we are both reflecting fondly on the past and respecting and celebrating the achievements of the club, but also looking to redefine its future—what we stand for, what we wish to achieve and how we intend to get there”.

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Financial Equalisation

he club’s AFL licensing is another area where change has occurred in the last two years. Since its inception, the Crows’ license has been owned by the SANFL. The club represented the State in the AFL, but did so without true independence. Mr. Fagan says: “That also meant that the state body, the SANFL, had the right to Board representation, profit share and the ability to influence a range of decisions.” That arrangement has now changed, with the AFL providing the license directly to the Club, which changes the operating landscape for Mr Fagan and the Crows. “It provides a greater degree of independence for the Club. Our constitution now provides the ability for the members to elect a couple of individuals to the Board. We had our first member-based election earlier this year, which was another historic moment for the Adelaide Football Club. It also allows for us to retain our profits to invest back into the business of the Club”. “However, it’s important to note that our commitment to state football still remains,” Mr. Fagan is quick to remind us, “we’ve entered into a 15-year agreement with the SANFL that provides for an annual game development grant to be provided to them to support their operations.” The next decade and a half will see the club investing somewhere in the region of $11.2 million to the state’s footballing body, a significant contribution that will aid the development of the sport in the area. “The profitability of professional sporting clubs right across the country is challenged,” Mr. Fagan tells us, when asked to shed some light on the issues around staying financially viable in the business of sport. “I’d probably suggest that in any given year there might be in excess of 70% of clubs across all the major codes that might lose money.” Operating within one of the most competitive sporting markets in the world, and considering the modest size of the Australian economy, it is by no means an easy task for AFL clubs to stay profitable.

“It’s tough at the best of times and the revenue streams for the most part remain traditional right across the industry—sponsorship, corporate hospitality, events, membership, match day ticketing, merchandise, licensing and broadcasting are the predominant revenue streams, and this is the same for the major clubs and codes across the globe.” Many clubs are responding to these challenges by tapping into new revenue streams, with some branching into the gaming market and other related businesses. Mr. Fagan is well aware that clubs need to operate well in order to be profitable and successful, and must then take advantage of that success if and when it comes. “In the AFL, all of this occurs in an environment which is equalised,” Mr. Fagan explains. “As you become stronger and more profitable, then you are required to contribute more into the collective bucket to support the clubs that need it most.” Draft picks on the field and revenue sharing off the field go some way to leveling things for clubs, ensuring there is fairness and equalisation in both the financial and sporting aspects of the game. The Crows rank roughly seventeenth or eighteenth in the AFL for non-football revenue, a fairly typical position for a club that doesn’t enjoy the benefits of gaming revenue. Last year, around $90m was generated from gaming by the 10 Victorian clubs alone. “It’s a significant amount of return that they generate,” Mr. Fagan explains, “and for many it’s the determining factor as to whether they’re profitable or not, or whether they are able to spend to the limits of the football and player payments cap”. The Crows have survived to date on more traditional revenue streams, but the Club needs to keep up with the increasing costs of the industry by looking at alternative means of generating revenue. Whether it is gaming, broader hospitality, facility management, or elsewhere, Mr. Fagan knows the club will need to be open to new ideas going forward that do not rely explicitly on the team’s on-field performances. “It’s an ongoing area of focus for us,” he says.

Community Spirit

n 2014, the Crows enjoyed the highest average attendance in the AFL, clocking in at roughly 48,000 per match, in much part driven by their 60,000 members. Mr. Fagan

attributes this fantastic support to the level of passion for the sport in the state and city, which is also home to Port Adelaide FC.

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“Football is extremely well supported in the state of South Australia,” Mr. Fagan tells us, “and it’s a positive environment in which to operate, compared to the East Coast of the country where the battle for hearts and minds cuts across multiple Clubs and sporting codes”. “We equally have benefited from a move from our traditional home at Footy Park in West Lakes, to the new, revamped Adelaide Oval, following its $530 million upgrade. We’ve got an absolute world class venue in the middle of the city, which would be the envy of Clubs not just in Australia but around the world”. Mr. Fagan is adamant the club will not take this level of support for granted, as the Crows look to invest back into the local community through a range of programs and by ensuring the match day program and membership support reflects the superb backing the club receives going into each game. “We do that in a number of ways,” he explains, “some of it’s through supporting not-for-profit organisations, communi-

ty organisations and charities. A number of years ago the Club established the Crows Foundation, which has since provided over a million dollars in donations to causes right throughout South Australia.” The club’s community engagement team will work with more than 150 schools over the course of the coming year, with the newly developed program ‘Growing with Gratitude’ providing the central platform. Based on the five habits of happiness, the program helps to develop emotional and physical well-being, build resilience and promote positive thoughts and behavioural habits. Within the next 24 months the Club expects more than 100,000 children annually will participate in the program. In addition, the Crows will continue to work with local football clubs, i ncludi ng ju n ior clubs, to suppor t promot ional activities and encourage development. “We’re nothing without the support of the community,” Mr. Fagan says. “We understand that our fans sit at the centre of our universe and we have an obligation to invest back into the community that supports us.”

Game Day

o help support the game day program, Crows fans benefit from a levy paid to the state government that helps provide free transport to those attending football, charged to the club at a cost of $700,000 per year. “The concept of providing free transport to those attending the football is a positive one,” Mr. Fagan says.

an extraordinary depth of passion for the game.

“The event experience doesn’t just start at opening bounce and conclude at the final siren,” he continues, “it’s actually from the moment you leave home. It’s your ease of getting to the venue, the experience itself, both in and around the precinct, in the bars, clubs and restaurants and the engagement activity inside the venue and outside the venue, including live bands and DJs, social media interaction on the multiple big screens, a dedicated Kids zone, Crow Radio and a strong Crows look and feel through dedicated branding and member’s passionately sporting the Club’s colours”.

Equally important is the support offered by corporate partnerships, a vital component in the financial model of any professional sporting club. “It’s no different here,” Mr. Fagan says. “It’s fantastic that the Adelaide Football Club has enjoyed a number of long standing partnerships.”

The scheme helps to ease congestion on game day, and provides a safe environment for fans. Several parties benefit from the new stadium, including the Club, the government and local Adelaide businesses, and Mr. Fagan believes the current arrangement is the ideal solution for all parties: “I think a model where we’re all sharing is an appropriate one, and I’m very comfortable in supporting the government at the current levels to provide free transport.” The club’s loyal, passionate supporter base helps provide numerous opportunities to offer great hospitality, as organisations know they can be part of an experience at an incredible venue where the fans have 24

“Adelaide Oval is world class, a leading venue,” Mr. Fagan says. “In 2014 we ranked number one in the AFL for match day corporate hospitality, and I expect that to be the case again in 2015.”

A 25-year partnership with Toyota, established at the very beginning of the club’s existence, is now recognised as one of the longest standing partnerships in Australian sport. The club has likewise profited greatly from an agreement with Foodland, a great South Australian brand, which has been associated with the club for the same period of time. “What I’m most proud of is that when I’ve met these people over the last six months, they’re not only enjoying business return, but they are genuinely passionate about the footy club and the place that the footy club holds in this community.” Retaining sponsorship is an ongoing challenge for the club, as it continues to foster close relationships within the SA busi ness com mu n it y, whilst also nu r t u r i ng a t r ue

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Great views on offer at the Premiership Club.

national brand. Within this goal, the club is also focused on providi ng oppor t u n it ies for an i ncreasi ng nu mber of national and multi-national brands to associate with it. “We are finding that we are able to present a compelling

proposition, based around an extraordinary venue, a highly engaged membership of 60,000 plus, average attendances of nearly 50,000 enjoying a great match day experience and TV audiences of 600,000 plus per week, peaking at 1.3million”.

As the Crows Fly

n this time of change, a new communication platform has been established to help push the club forward into the future, focusing particularly on the digital space, with the intention of more effectively engaging with its national supporter base.

As our interview concludes, Mr. Fagan is keen to communicate one last key point to us: “Just touching up on the footy,” he says. “We’ve gone about looking to develop a leading football program in the AFL that will deliver the success that we want. It’s a journey, but we’ve started strongly.”

The club no longer looks to merely provide content, but also to produce content. The Crows Show is now aired weekly on Channel 7 in Adelaide, and is already receiving strong ratings. Likewise, the club’s website and social media platforms are all increasing at a rapid rate due to the investment made in video content.

With a brand new senior coach in Phil Walsh appointed in October, just days after the new CEO’s arrival, Mr. Fagan is confident things are looking up for the Crows. The on-field performances are a central platform to all the club does, and a positive start to the new season has put them in a great position to begin working on the next 25 years’ worth of memories.

Adelaide Crows FC - AustralianBusinessExecutive.com.au

Innovate or Die An exclusive with BlackBerry ANZ MD Matthew Ball on product reinvigoration Interview by J. Landry

BlackBerry ANZ MD Matthew Ball

atthew Ball is the Managing Director for BlackBerry in Australia and New Zealand, overseeing sales, marketing, retail, distribution and partner relations.

the Australian technology and telecommunications sector. Prior to joining BlackBerry, Matthew was Group Marketing Manager at Microsoft Australia for the Xbox and Entertainment Division and Head of Mobile Data Business for Vodafone Australia.

Matthew joined BlackBerry ANZ as Marketing Director in 2011, and appointed Managing Director in 2012. He has over 15 yearsâ&#x20AC;&#x2122; experience in marketing, business and commercial roles, principally in

In our cover story, Matthew discusses the revamp BlackBerry has gone through, leading to a new innovative range of products.

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Product demonstration at Connect 2014.

J. Landry: There’s new interest around BlackBerry at the moment with your move away from mobile phone technology towards cloud software. How did this come about? Matthew Ball: Like any business operating in the technology sector, BlackBerry has been through a period of disruption and evolution here in Australia and New Zealand, and around the world. This remains constant, and the lessons we’ve learnt over the past few years have seen us change the way we do business and how we serve our customers in what is a new era of mobility. Just to be clear, BlackBerry is still innovating in hardware. We haven’t moved away from that – just look at the BlackBerry Passport. There is no mobile device more secure than a BlackBerry operated on our network, and our focus is to design devices for people who want to get things done, securely. Just ask President Obama in the USA, German Chancellor, Angela Merkel and the UK Prime Minister, David Cameron. With the mobility landscape constantly changing and

becoming more competitive, we’ve adapted our business model to become software-centric. Today, BlackBerry is a software company that also makes smartphones for people that are super-productive and just want to get stuff done securely in real-time, wherever they are. Sometimes the fact we sell both software and hardware is difficult for people to grasp, but our organisation is geared to help businesses of any size, regardless of mobile platform, use BlackBerry architecture to securely manage their mobility strategy. The foundation for all of this is our enterprise mobility platform, BlackBerry Enterprise Service 12, or BES12. Available on premise or as a cloud service, BES12 enables businesses of any size to achieve their desired levels of secured mobile productivity, regardless of what devices people bring to work, are provided with, or what apps they use. We have also made some strategic acquisitions to take secure communications and collaboration even further. Examples of this are Secusmart, a leader in high security voice and text encryption, and WatchDox, which allows users to protect, share and work with their files on any device.

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JL: Do you think these are the key factors that have kept BlackBerry relevant? MB: BlackBerry has remained relevant because security and productivity are our main strengths and these things continue to be among the top priorities for CIOs and IT professionals. Knowing that corporate data is safe, regardless of where your employees are working, isn’t just about peace-of-mind, it’s about protecting your competitive advantage and in some cases, those individuals responsible for corporate data. When it comes to the question ‘Why BlackBerry’, our customers usually tell us it’s our unique combination of encryption, app wrapping and secure infrastructure which can manage any device through a single console. But most of all, it’s how they can leverage this for optimal workforce productivity in a secured environment. We are also hearing from customers about cost savings and future-proofing and why a comprehensive enterprise mobility platform is better than trying to glue many products together. The Bring-Your-Own-Device (BYOD) trend saw the mobile device management (MDM) market explode and research shows it continues to grow, but it is now starting to commoditise as businesses are consolidating their IT investments. According to our global 2014 study ‘Moving Targets in Risk’, only 35 percent of executives, risk compliance officers and IT managers within large organisations are very confident that their data assets are fully protected from unauthorised access via mobile devices. In fact, more than two-thirds believe mobile devices are the weakest link in their enterprise security framework. That’s alarming given security breaches can happen all too easily. The Australian Federal Police told the ABC that more than 3,500 cyber-attacks on Australia from foreign countries and criminals were reported in April 2015, and the threat is only going to increase. Whether it’s a targeted attack, or an employee using a dating app on a work smartphone and unknowingly downloading malicious content or simply leaving a tablet behind on public transport, the risks to sensitive corporate data are real and growing. That’s particularly important when it comes to customer data – information that is often prized in the eyes of hackers wanting to make a quick buck at the expense of unsuspecting individuals. The easy option would be to lock-down devices and restrict the flow of data but that’s simply not workable in our digital age. The approach to security today must be about enabling people to do more by implementing the right level 28

of control to allow users to access corporate data anywhere, without compromising it. We have transformed our business to enable customers to do just that. While the landscape we play in has evolved and will continue to do so, what is clear is that today’s mobile-first world does not supplant the core capabilities of what governments and businesses really need: secure and private communications, productivity and efficiency gains, and real-time collaboration. These are all competencies that make up BlackBerry’s DNA, so it’s no f luke BlackBerry has remained entrenched in most of the major governments and major enterprises around the world, as well as here in Australia and New Zealand

JL: Considering it wasn’t long ago the company found itself struggling, can you outline the strategy to secure your position in these new market segments? MB: At the beginning of our transformation, BlackBerry introduced a new leadership team under CEO, John Chen, who looked at how to structure the business for a new age of mobility. This meant creating four distinct lines of business that all enable a connected world: Enterprise Services and Security, Devices, Messaging (BBM) and the Internet of Things (IoT). BlackBerry has focused on returning to its roots in business and government, continuing to deliver devices and services designed for individuals and organisations that want maximum output and productivity; with the peace of mind their data over mobile is secured. Most importantly, BlackBerry has put the customer first. This has resulted in changing the way we innovate and go to market, breaking down walls to make enterprise mobility more cost-effective, simpler and easier for customers to manage. We’ve opened up to let customers and partners use our secure network to manage any device, solving BYOD and compliance headaches. We are both competing and partnering, for example, announcing a strategic global partnership in March 2015 with Samsung, where BES12 will manage Samsung Knox devices to deliver defence-grade Android security. Here in Australia, we are seeing a lot of interest in the BlackBerry and Samsung solution. We’ve also invested in partnering with companies to deliver services in vertical industries such as health. A great example is NantHealth which runs a cloud-based clinical operating system in the US that connects the doctor’s office or hospital with the medical network and the payment system. NantHealth and BlackBerry are

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The BlackBerry team at Connect Conference.

combining secure cloud-based and supercomputing services to provide data integration, decision support and analytics, allowing care providers to crunch huge amounts of data to aid in accurate diagnoses. Finally, by introducing cloud-based solutions like BES12 Cloud, even the smallest businesses can have low cost access to all the benefits of BlackBerry security, with no need for in-house IT expertise. The strategy was to bring it all together, not just offer individual components. From hardware, to network, to software and services that secure everything, including IoT end-points, we are well placed to solve our customers’ challenges in a way individual mobile device management vendors simply are not.

JL: Can you elaborate on the product? MB: BES12 is the latest innovation in enterprise mobility that lets organisations manage all their mobile solutions across iOS, Android, Windows Phone, Samsung KNOX and BlackBerry devices. BlackBerry secures devices with an end-to-end architecture that secures data on the device, through the connection, back to behind the firewall, via BES12. The model enables a unique level of control and security that is trusted by government agencies and regulated industry. All of this is underpinned by BlackBerry’s renowned global, secure network. Encrypted end-to-end, BES12 consolidates and routes all traffic through a single port for ease-of-administration and tight control of mission-critical traffic and data.

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Going far beyond basic mobile device management, it’s available physically (on-premise) or as a virtual cloud solution. BES12 Cloud is best suited for small and medium businesses, as well as large enterprises in non-regulated verticals. It’s geared towards businesses looking to manage a range of mobile devices, protect their corporate data and enable employee productivity. Simple set-up and configuration makes BES12 Cloud easy for small and medium businesses to adopt cross-platform enterprise mobility management and keep costs down. Analyst firm IDC believes the entirely redesigned BES12 is an evolution of enterprise mobility management capabilities that reflect BlackBerry’s deep enterprise mobility experience as well as the company’s keen awareness of the market’s realities now and looking forward. (Source: IDC Technology Spotlight: Future-Proofing Enterprise Mobility with EMM Platforms, November 2014)

For organisations migrating from their existing BES5 solution, BES12 also offers capability to manage older BlackBerry OS devices – such as the BlackBerry Bold. We are helping many customers here in Australia to make that migration and maximise their existing BES infrastr ucture to manage mobility. So, for whatever device used in an organisation, BES12 offers full f lexibility and choice in managing a customer’s mobile solution, all through a simple browser interface and without complicated or expensive server installs.

JL: How do you see this product repositioning the perception of the company?

JL: Why is this needed? MB: According to Gartner, with the increased growth of IoT, there are some major securit y concer ns. W hen you combine a widely distributed f leet of autonomous devices that are capable of making decisions and can directly affect the physical state of people and things, you have a considerable risk to manage. Gartner says security discipline must be built in to the devices, and the networks that they rely upon in order to avoid digital business catastrophes. This includes direct threats to the health and well-being of employees and customers – an area most IT security organisations are not familiar with managing. The era of multi-mobile platform environments and new end-points, such as wearable technology, is predicted to explode. As a result, the heat is on businesses to find affordable solutions that not only address mobile challenges, but can also be scaled for ongoing use. This is where BES12 comes in. Smaller businesses have similar needs but are generally faced with tight budgets and lean IT support, which is why we offered the self-managed BES12 Cloud. BES12 gives users the unprecedented ability to work seamlessly and securely across any device running Android, BlackBerry and Windows Phone operating systems. It also dramatically increases productivity by tailoring BlackBerry’s unique security and collaboration features to any mobile device.

JL: So BES12 is device agnostic? 30

MB: BES12 offers easy management of iOS, Android, Windows Phone and BlackBerry 10 smartphones and tablets, as well as a wide range of Samsung KNOX and Android for Work smartphones and tablets.

MB: Ongoing innovation of BES12, plus the introduction of new services such as BBM Meetings for easy mobile conferencing and BlackBerry WorkLife for split-billing of personal and work mobile use, helps to cement BlackBerry’s repositioning as a sof t ware-cent ric company with securit y, privacy and productivity at its core. BES12 is also helping smaller businesses, not just large enterprises, think strategically and act preventatively when it comes to security, rather than react in hindsight. But we offer more than that. Take Watchdox for example. Major data breaches are mounting and we hear of new ones almost daily. The question is whether we are investing our security resources in the right places because the one asset that is often overlooked is arguably the most important – the data itself. Compared to other file sync and share services out there, Watchdox offers true data-centric security with multiple deployment capabilities both on-premises and in the cloud. Watch Dox securit y t ravels with documents to give organisations full visibility and control over how files are edited, copied, printed or forwarded. The solution also allows users to revoke access or delete files remotely, and gives administrators the ability to remotely lock or remove access to files compromised in a data breach. This is ideal for the financial sector and other regulated industries which need full visibility and control over how files are edited, copied, printed or forwarded. The missing ingredient in most end-to-end security frameworks is digital rights management, or DRM. DRM-protected documents are able to prevent unauthorised users from accessing them, and can be set to self-destruct if they fall into the wrong

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hands. The trick is making DRM seamless because cumbersome and buggy applications become obstructions to business users’ productivity, collaboration and mobility. Security is only effective if it doesn’t get in the way of doing business. Otherwise, it gets circumvented. That is why Watchdox was such a great fit for BlackBerry.

Take for example, Morea Architects, a small but established family business with a team of ten architects and designers who regularly share and present plans and 3D design images to clients on mobile devices when outside the office or on-site. The team relies on the ability to use the latest architectural software on the move; and access to highly confidential client architectural designs from anywhere.

JL: Are you able to discuss a customer who has implemented this?

Morea needed an affordable mobility solution that could be as flexible and reliable as its business. As a business without an IT team, it also needed technology that was easy to deploy. Their mobile fleet includes BlackBerry Passports, as well as iPads and Android devices – which are all managed by BlackBerry.

MB: The Australian National Audit Office (ANAO) is the federal government agency that carries out financial statement audits of government bodies that receive Commonwealth funding. They have incredibly strict security requirements and a need for optimal productivity for its workforce of over 350 employees who constantly work off-site at different agencies. Given that 86 percent of the ANAO’s workforce is mobile, the need for a flexible, secure platform was clear. The ANAO migrated to BES12 to manage a range of mobile devices, including BlackBerry, ioS and Android. By providing a separation between their work and personal space, ANAO employees – who are mostly auditors – have the flexibility to access the network using the device of their choice without sensitive data being compromised. Another customer is AEG Ogden, a company responsible for the management of the largest network of venues in the Asia Pacific region. Dirk Hoffman, their Chief Information Officer for the Middle East, Asia and Pacific provided us with a quote that read, “With a workforce that is always working remotely, on-site or on the move, we needed an agile, scalable and easy-to-manage enterprise mobility platform that could manage any device, and promise both full productivity and security of information. To meet these requirements, we have already deployed BES12 and BlackBerry Passport and BlackBerry Classic devices, and now in the process making BES12 our one-stop solution to manage all mobile devices in our APAC network.”

JL: The benefits for large corporates or Government seem obvious, but are these products applicable to the SME market?

JL: So, in your opinion what should our readers think when they hear BlackBerry? MB: BlackBerry is a next generation mobility platform that will not only enable a whole new ecosystem, but will create opportunities and an ecosystem for everyone around it. What put BlackBerry on the map was our smartphones, but today we are so much more than that. We are ‘The New BlackBerry’ – truly cross-platform. This means you can be an iPhone, Android or Windows 8 customer while being a BlackBerry customer too.

JL: Finally, what does the future hold for BlackBerry? MB: BlackBerry has not just ridden the first wave of mobility disruption; we have re-engineered our business and changed our strategy to successfully and collaboratively ride the second. The first wave of enterprise mobility was all about bringing smartphones into organisations and giving IT the tools to manage them – otherwise known as mobile device management. In the second wave, enterprises not only want to control the devices, but enable their employees to become as productive as possible – all securely and cost-effectively, of course. That’s Enterprise Mobility Management (EMM), and BlackBerry is already the leader.

We’re also set to release new devices this year, including the recently-previewed ‘Slider’ style device, which is exciting for us MB: Absolutely. BES12 Cloud is built for organisations of any and for our customers. size. It’s secure, flexible, simple to deploy and use and cost-effective. Our customers can look forward to a bright future for our BES12 Cloud allows admins to manage mobile device policies via a browser interface without server installations and without business that plays to their needs and has mobility front and centre of our strategy. IT expertise. BlackBerry - AustralianBusinessExecutive.com.au

NEXTDC: Where the Cloud Lives By Nicholas Paul Griffin

NEXTDC CEO Craig Scroggie in the foyer of the S1 data centre in Sydney.

stablished by one of Australia’s most successful information technology entrepreneurs, Mr. Bevan Slattery, NEXTDC is a carrier and vendor neutral data centre operator, providing world class UTI Tier III certified facilities in every major market in Australia. In a recent interview with CEO Craig Scroggie, The Australian Business Executive learned a little more about the growing business of carrier neutral data centres. 32

“The company’s goal is to serve both enterprise and the cloud computing providers, domestic and international, as the home for all of their computer infrastructure,” Mr. Scroggie tells us. “We tend to say, when people think about NEXTDC, it’s where the cloud lives. It’s where people come to house their computing infrastructure, but also connect to their network providers and connect to their cloud computing providers as well.”

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Neutrality

ata centres are not a new phenomenon, but the changing nature of the industry, and the rapid rise of cloud computing, means carrier neutral centres have become a big player in the industry, offering an alternative to in-house or vendor-run facilities. “The data centre is somewhere where people come to do business together in a neutral location,” Mr. Scroggie says, “so enterprises will come to the data centre in order to get access not to just one outsourcing provider, they’re coming to get access to all of them.” Carrier neutral data centres are fast becoming commonplace, both in Australia and across the world. In the emerging cloud computing world, organisations require a different kind of access, due to the bonding of networks together in order to provide pay-asyou-consume computing capacity. “We provide not only the physical aspects of housing all of that computer infrastructure… but importantly a network connectivity, the ability for organisations to be able to connect to a multiplicity of carriers and cloud computing providers.” The company is also soon to release NEXTDC switching fabric, enabling fast, direct connections to cloud services, bypassing the public internet. Technical issues like the amount of power, cooling, security and standards are all highly important to a company like NEXTDC, but neutrality is the crucial component that puts such businesses in high demand. At the enterprise cloud level, big, global public cloud suppliers have changed the way enterprises are consuming computing capability. Organisations can pay for exactly the amount of computing they need, no longer required to spend large amounts of capital on servers and software without an immediate return on the investment. “In the pay-as-you-consume computing world,” Mr. Scroggie explains, “you can spin-up a server, and only pay for the minutes that you use it for. So too it goes for storage, or network, or anything else that is moved into the consumption economic model.”

Mr. Scroggie uses Apple’s iTunes model as a comparison, a platform where users have access to a huge catalogue of content, but only pay for it as and when they use it. “As a consumer,” Mr. Scroggie adds, “those services that you’re eating in the application economy are far more pay-per-use, than they are just a payment for a fixed amount of capacity whether you use it or not.” The switch to more on-demand content means issues such as latency, the speed of the network and the larger consideration of where the information lives, are far more important than they used to be. “A lot of people tend to imagine one big cloud in the sky, one big cloud globally that all the information is delivered from at a very low cost. And that’s not the case.” The reality of the distribution and consumption of content is now actually the opposite, driving content to the edge rather than it being centralised at the core. As a result, anything that is latency or application sensitive needs to be located in closer proximity to the end-user. In Australia, all the data is cached in regional centres, with content going out to almost every major city. “The availability and the scale of the network is important today, and it’s going to continue to become increasingly important,” Mr. Scroggie says. This means the majority of larger U.S and European content providers that come to Australia require local infrastructure service and content, a requirement that is driving a lot of investment from offshore in local hosting of infrastructure. “This is only going to continue to accelerate the rate at which the amount of content continues to grow,” Mr. Scroggie says, “the way that we consume that content from an on-demand perspective is continuing to increase, and consumers wanting pay-per-use, that is increasing.” The way Australian consumers are behaving, and the increase in on-demand type services means going forward, the infrastructure and software services will continue to be placed close to the user.

Network Infrastructure

r. Scroggie’s background in the industry was developed through the best part of ten years’ work with Symantec, as Vice President and Managing Director in the Pacific region. After working in storage and security, he went on to gain

experience in the data centre space. When Mr. Slattery began setting up NEXTDC, Mr. Scroggie was asked to join the board, and spent 18 months as a non-executive

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Like all of NEXTDC’s data centres, the company’s service management centre is available 24/7 to resolve customer issues.

director with the company before being offered the position of CEO, taking the company on the next leg of its journey. When asked about the decision to list the company on the Australian Stock Exchange in December 2010, Mr. Scroggie highlights the huge level of investment needed to establish a company like NEXTDC. “In the data centre industry, you’ve got to build all of your project, or the majority of your project, up front, and that is the base building, and the core infrastructure needs to go in—so it’s hundreds of millions of dollars in order to build out a national network of data centres.” “The only way really in Australia to put that together on such an enormous scale was to list the company very early in its life, and that’s why it was [made an] IPO, pretty much from the

beginning.” The company now works out of multiple locations, in all of the major Australian markets—Brisbane, Sydney, Melbourne, Canberra and Perth. The establishment of such a wide base of operations represents the best part of a few hundred million dollars’ worth of investment. But the current rate of growth in data centres is huge. Considering the way organisations are consuming on-demand, NEXTDC expects the growth to continue, and the investment to be justified. The benefit for the client is there for all to see; the security that comes along with facilitating large-scale deployment is a huge selling point in terms of luring clients into a co-location model.

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From an operational standpoint, one of the most enticing aspects of carrier neutral data centres is that the customer needn’t have ownership of the land, building or any physical assets. “Many organisations would not be able to offer either the physical security or the size of the infrastructure, or the high availability nature of what we do… in a lot of cases they’re more secure and more resilient than what they would have been able to manage inside their own organisations.” For organisations looking to set up infrastructure, the amount of capital needed in order to support the level of computer capability is of paramount consideration. Nowadays organisations needn’t put up that kind of capital, as they can co-locate their infrastructure with public and private computing providers and other enterprises. “One of the most important benefits… is that the ecosystem, the way that companies share information today, has changed, and if you move into a co-location facility, inside that ecosystem, you are doing business not only with other enterprise customers, but with telecommunications providers, with public and private

clouds.” This exchange of information is no longer done via the internet or fibre intercap from city to city, it is happening within the four walls of the data centre, saving companies sometimes tens of thousands of dollars per month on communication costs. NEXTDC’s data centre management portal ONEDC® offers further benefits to the customer. Designed to give customers remote visibility of their data centre service, considerations such as access management and power monitoring, which used to be done at the data centre, can now be done remotely. ONEDC is now being developed into a feature-rich cloud platform for Data Centre Intelligence that will enable end users to manage their data centre assets across multiple locations through a single pane of glass, creating new efficiencies and business insights. “When you think about changing the user’s experience, and what’s unique,” Mr. Scroggie tells us, “ONEDC has been an important enabler for customers when they think about additional value outside of just the data centre.”

Head in the Clouds

nvestment in overall larger network infrastructure to support consumers and businesses in Australia is critically important. Considering the change in consumption and creation of online content, high-speed network access will only further the productivity and economic leverage that will be gained from these pursuits. There are still a number of companies in Australia, such as Fujitsu and Hewlett Packard, which still have their own facilities, with which they operate carrier or outsourcing data centres. “One of the advantages when we’re working with enterprises,” Mr. Scroggie says, “is that they want choice… they don’t want to be tied to a single carrier. Generally when you go into a carrier-owned data centre, clearly that carrier would prefer that you consume their services rather than a competitor’s.” “We tend to think of ourselves as the Switzerland of the IT and telecommunications industry because of our commitment to neutrality, so you can have access to everybody, 38

rather than having access restricted to only the carrier or a small number of carriers that are available in a non carrier neutral data centre.” The same can be said for cloud computer providers, which are predominantly interested in selling the services they provide. When customers move to NEXTDC, they have the option of over 40 carriers and more than 180 service providers offering a huge range of services. “Within those 40 carriers and 180 service providers, there are many, many different public and private cloud computing services available to our customers, and they can move between them if they want to, they are not locked into having to stay with one particular provider.” Cloud computing offers the ability to consume and pay only for what it used. Providers of public clouds are usually refer red to as offering a ‘multi-tenanted environ ment’, involving sharing the infrastructure with multiple other users. In contrast, a private cloud will likely be made available

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only to the individual user. Sometimes these two cloud services are combined, creating something known as a ‘hybr id cloud ,’ al low i ng compa n ie s t o have a g reat e r degree of control, as well as the ability to customise the platform. A number of enterprises will retain legacy infrastructure, as was the case with Australia Post, a great example of a company which, despite having the capacity to manage its own data centres, chose a more efficient method by using a large, hyper-scale, co-location facility run by NEXTDC. “[It’s] not only the security and the availability that’s afforded to them, but it’s the multiplicity of other service providers that are doing business with them that they get access to. And the combination of all of those brings many economic benefits to an organisation the size of Australia Post.” Australia Post has a traditional or heritage computing infrastructure, but is also an innovative organisation. By using several different public and private service providers, it created a hybrid infrastructure, which it moved to NEXTDC’s Melbourne facility. “Depending on the organisation,” Mr. Scroggie says, “there are many and varied different considerations that they make relating to security, data sovereignty and pay-per-use.”

information has the potential to end up in a different country, there is an obligation for providers to make sure it stays in Australia. “Depending on the type of information, we have different regulatory obligations for protecting information… ever y industry has a different set of regulatory requirements, but then there’s the gover nance requirements, and that is that an organisation might just say: we are not comfortable with our information sitting in a country where another gover nment’s regulations gover n how that information can be accessed.” Any time information is stored outside the countr y, that countr y’s gover nment will be able to decide and enforce the laws regarding how it is used and distributed, and dictate the rights a company has to access that information. “Data sovereignty is a ver y, ver y hotly debated topic for organisations when they’re thinking about leveraging public and private cloud computing providers.” Australia has a number of requirements in relation to data and what should be stored in the countr y. It is therefore down to the organisations to ensure they are complying with the gover nment’s laws to help the system r un smoothly.

Many organisations will embrace public cloud platforms, as they are quick and cost effective to set up, and offer the added benefit of the customer paying only for what they use, but others are more wary of the model.

“Certainly if you’re Microsoft or Amazon and others that have made big investments in Australia, there is no question that those organisations want to sell to federal and state and local gover nment departments, and in order for them to get access to those gover nment dollars they need to have infrastr ucture in Australia.”

“Some organisations might be concerned that if they’re using a public computing service, that the data is not hosted in Australia, [so] they have to choose a provider that has the infrastructure and information that is based in Australia.”

So even the big multinational companies will have some kind of sovereignty in the countr y of origin, meaning user information will not travel halfway across the world to be regulated by another gover nment.

Data sovereignty is currently a hot button issue in the industry. In 2013 NEXTDC sponsored a University of New South Wales whitepaper addressing the issue. When thinking about the use of public and private clouds, concerns about where the information lives are on the top of a company’s agenda.

“If you’re using Microsoft’s services, it is hosted locally in Australia, so the data is resolved here in a geo-cluster and it’s split between Melbour ne and Sydney. Microsoft publicly made that announcement and you can get information about those services and the types of information that are stored locally.”

“A primary decision criteria for any investment in a public or a private cloud is going to be: is the infrastructure hosted in Australia, and does the content stay in Australia?”

In contrast, a company like Apple has its services hosted offshore, and so any details entered by the user may be subject to another countr y’s laws. “Depending on the user and depending on the application,” Mr. Scroggie adds, “whether you’re a consumer or an enter prise, those things matter to var ying degrees.”

If information goes into another geography, it can cause significant problems. For example, if private health

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Mustera Property Group: Local and Offshore Investment By Nicholas Paul Griffin

Jack Spencer-Cotton, Benjamin Young, Nicholas Zborowski, Anthony Ho (Mustera’s Board).

W 40

estern Australia’s Mustera Property Group are an Australian–focused Property Investment and Development Company, with a particular focus on mixed-use and residential developments, as

well as investing in commercial, industrial and retail property. In November 2014 the company was listed on the ASX, and today has a market capitalization of $23 million, with a spread of both local and offshore investors.

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Nicholas Zborowski

s the company’s Executive Director, Nicholas Zborowski has many years of experience in the property sector behind him, both at home and abroad, beginning after a degree in commerce and property at Curtin University.

development and delivery of regional malls throughout the Middle East.

After undertaking a valuation traineeship during his study, he moved into a construction administration and Project Manager role with Australand, working on a number of its Perth projects in the industrial space.

“During my time at Emaar,” Mr. Zborowski explains, “I did see a shift in the property market, where a number of the mooted developments were put on hold. Essentially the focus of the group was then to deliver on a number of projects which were currently under construction, which included the Dubai Mall.”

Soon after, Mr. Zborowski was presented with an opportunity to work in the Middle East, in the Development Management space, for a large government-initiated Property Development Company called Emaar Properties, a company with diversified interests across real estate, including residential, retail, commercial and hospitality.

An opportunity to move to Abu Dhabi soon followed, where he was offered work as a Development Manager with the mixed-use development team, working for the Tourism Development Investment Company (TDIC), a master developer in Abu Dhabi, established to drive investment growth and development of the Emirates tourism sector.

Mr. Zborowski’s role was as Development Manager for the company’s malls division, which included the design,

“This opportunity got me involved in a number of different projects across multiple asset classes, and my primary focus

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was on Saadiyat Island Cultural Canal development, which involved the financing, master planning and design of 2,200 residential apartments, 40,000 m2 of retail, 6,000 m2 of office and two five star hotels.” The Saadiyat Island project stretched along a 1.5km manmade canal and was located amongst world-class tourism developments including the Louvre, the Guggenheim and the Abu Dhabi National Museum.

commenced working for Charter Hall, working as a Development Manager on two of their significant CBD projects.” Mr. Zborowski worked with the development team at Charter Hall for two years, playing a key role in the progression of the two CBD projects at 333 George St and 20 Martin Place through design, approvals, contractor appointment and construction commencement.

After two years with TDIC, working on some impressive projects and with a number of key design architects and consultants throughout Europe and the Middle East, it was time for Mr. Zborowski to return to Australia.

Utilising contacts amassed over the years both locally and abroad, Mr. Zborowski soon began offering his own services in property development to offshore investors looking to enter into the Australian market, particularly in Melbourne, Sydney and Perth.

“[I’d] been working in the Middle East for over four years and thought it was the right time to come home. There was plenty of opportunity back in Australia, especially in the Sydney property market, and shortly after arriving in Sydney I

Within his work as an independent developer, he became involved with the Mutual Street Property Group, going on with the help of the group to create and deliver the vision to form a listed Property Company, which became Mustera Property Group.

Listed Company

ustera’s two areas of focus are key to their business model. Firstly there is the investment base, an Investment Management business focused on generating attractive returns and value through strategic acquisitions. This arm of the company is concerned with the underlying quality of assets, project returns and stability of cash f low, as well as capital growth through the investments. The second area is the company’s development angle, which compliments the investment business through sourcing, managing, developing and refurbishing high quality assets and investments. “What we focus on is understanding and adapting to market conditions,” Mr. Zborowski says, “creating quality product and quality residential developments for the end user.” “Essentially, the company’s key to success, in order to maximise the full potential of the Shareholders value and their returns, is to provide consistent annual growth through commercial investments, to provide attractive profit margins through developments, and also to operate in a sustainable

manner.” The decision to list the company was taken for a number of reasons, but most significantly because it presented an opportunity to have a vehicle capable of facilitating local and foreign investments, especially the Asian investment market entering into the unfamiliar territory of Australian property. “We’ve seen a significant amount of foreign investment in the Australian property market, especially Sydney and Melbourne,” Mr. Zborowski says, “and the majority of the time the foreign investors do tie up with local partners. We identif ied the opportunity to create a public company to facilitate this offshore interest together with local investment, with a particular focus on the Perth market.” By structuring the business as a public company, Mustera is able to offer a diverse range of Australian properties across multiple different investment types, as well as capital structures and different asset classes. “The public company also allows for investors to have a high level of transparency across the deals, and gives us the ability to access offshore capital markets in a very clear and transparent manner.”

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Victoria Quarter Project, Midland (Internal Render) – Quality is a key focus of Mustera. All apartments include quality finishes, designer kitchens, luxury bathrooms and ample built-in storage.

Western Australia

“T

he WA market is currently going through an interesting stage,” Mr. Zborowski admits, “the WA economy, which is predominantly driven by the resource sector, is definitely seeing signs of stress, which has had a ripple effect across all other industries. We have seen a reduction in the overall number of residential sales in Q1 2015, followed by reduced rental returns. “We have also seen office rents diminish as supply outweighs demand. Although a correction is imminent in the property space, we are seeing this as an opportune time for investment and development in certain asset classes and certain price points, especially with the cost of capital being at an all-time low.” The state is currently the focus of a campaign by the

Western Australian Planning Commission (WAPC) to initiate the delivery of growth in the residential, retail and commercial sectors. This campaign looks to spearhead new developments that capitalise on fast-growing rapid population growth, changing economic conditions, a shift in demographics and the evolving needs of industrial community requirements. The WAPC has recently issued a draft planning framework, “Perth and Peel @ 3.5 million”, for public comment, which includes a suite of strategic land use planning documents. This planning framework has brought to light the need for high-density residential developments in and around activity centres and along some of the existing public transport routes in the state.

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Victoria Quarter Project, Midland (External Render) â&#x20AC;&#x201C; High density mixed use development in Midlands fast evolving metropolitan centre. 70 apartments with one and two bedroom options all with large balconies and parking. Construction commencing Q3 2015 and completion date estimated Q4 2016.

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The draft frameworks initiated by the WAPC are to deliver a more compact and connected city, to promote connectivity and development of activity centres, corridors, industrial nodes and station precincts, and to drive employment opportunities outside of the CBD. “Their key objective essentially is to provide employment options where people live, thereby reducing congestion and the need for people to commute long distances for work. What we’re seeing currently is a number of people who are traveling up to and more than one hour every day, just to get to their workplace.” The planning framework outlines an expectation that the Perth population will rise by an extra 1.5 million by the year 2050, and has been put in place to capitalise on this expected increase. 800,000 new homes will be required in and around the city, of which 380,000 will need to be in strategic infill positions.

2051. “Increasing demand for houses in areas with convenient access in a range of services, including health, is also on the focus,” Mr. Zborowski adds. In addition to this change, there is evidence that two-person households will soon outnumber those lived in by couples with children. “Historically the perception of Perth’s population was to live in a large single dwelling home on a larger block, whereas this perception in now changing, and people are acclimatising to apartment living.” As a state, WA still offers plenty of investment opportunities with relatively low land costs and attractive yields, in contrast to some of the investments seen on the East Coast.

“In 2014 the rate of infill developments had reached 28%,” Mr. Zborowski says, “whereas the WA Planning Commission refer to this increase as about 47% by 2050.”

“A significant amount of foreign investment in Australia to date has been focused on the Melbourne and Sydney markets. As a result this has created a very competitive environment, where investors are paying a premium for property, which has resulted in cap rate compression.”

The composition of households in the area is changing, as is demographic diversity. The number of one-person households is projected to increase greatly, as is the makeup of the ageing population—currently there are 13% of people in the region who are over 65, a demographic expected to rise to 22% by

In response, a number of foreign investors have started to look for investment opportunities in the west. By having an existing high yielding investment portfolio, an attractive development pipeline and an existing company platform, there is a clear opportunity for Mustera to tie up some of this offshore capital.

Key Projects

o fulfill the needs of the WA market, the planning framework put into place by the WAPC has identified a number of satellite locations around Perth CBD, hoping to combat traffic congestion and create areas for people to both work and live. One of these key locations is Midland, 16km north east from Perth’s CBD, an area with a population of about 300k residents, which Mustera is contributing to with the rejuvenation and development of its Victoria Quarter Project. Midland benefits from its existing infrastructure, including the Midland railway line, which provides direct access to the CBD in under 30 minutes. “Perth has experienced aggressive urban sprawl in the northern and southern corridors,” Mr. Zborowski says, “up to

150km, but we’re beginning to see a focus now on infill development, particularly in the eastern corridor between Perth CBD, Perth airport and north east along the Swan River, out to Midland.” There is a large population already residing and working in Midland, a town with a rich history, including the Midland Railway Company, which became the Western Australia Government Railway Workshops, and the home of the long-standing Midland Brick. The governing body in charge of overseeing the rejuvenation of the existing shunting yards—the old Midland Railway Workshops— is the Metropolitan Redevelopment Authority (MRA). “Midland to date has only seen a small portion of apartment supply being brought to market. The apartment stock that has been brought to market has been very well received, with high levels of

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interest, especially at the entry level price point.” “We identified an opportunity to work with the MRA through acquiring the site and working together with their planning and design teams to integrate modern apartments whilst complimenting and respecting the rich heritage of the surrounding sites.” The area is seen by many as a ‘gateway to the east’, which itself has a large catchment area. Residents of surrounding suburbs and country towns to the east enjoy the amenity Midland has to offer, especially the Midland Gate Shopping Centre. There are already a number of public and private developments in the pipeline in Midland, including the State Government’s $350 million St. John of God hospital project, due for completion in November 2015. The project is expected to create an additional 1,000 jobs and include 367 beds. In addition, a $150 million expansion of the Midland Gate Shopping Centre has also been proposed. The Midland area also offers access to the Swan River tourist and wine region and a number of local amenities and schools. Victoria Quarter comprises 70 residential apartments, all with secure car parking, flexible free flowing designs, designer kitchens, luxury bathrooms and ample built-in storage. Victoria Quarter offers one and two bedroom apartment options, with prices ranging from $310k up to $485k. The project is 55% pre-sold, and due to this success Mustera is closing out its due diligence on an adjoining lot, where work will commence later in the year.

Another element of the WAPC planning framework is a change in zoning on a number of strategic infill locations in Perth’s CBD fringe suburbs. Potential future zoning changes could allow the company’s property in Rivervale, WA, to be earmarked for a mixed-use development. “We’ve seen a number of high density residential developments being delivered in the Rivervale location in recent years,” Mr. Zborowski says, “especially with its attractive location being close to the Swan River and equal distance to the Perth CBD and the airport.” The Rivervale property currently comprises an office warehouse of 2,309 m2 over 4,029 m2 of land. The property is currently leased on a passing yield of 8%. Another addition to the company’s existing portfolio is the acquisition of Lot 70, Haig Park Circle in East Perth, an investment property 1.5km from the CBD. The property consists of 2,233 m2 of land, including an open-air car park with 50 bays, leased to Wilson Parking Australia for public parking. With a passing yield of 8.25%, the company will retain the property as an investment in the short to mid-term, with a longer view of repositioning the site as a mixed-use development, adding to and complementing the East Perth precinct. As part of the acquisition of Lot 70, Haig Park Circle, the company also secured an option to acquire an adjoining commercial property; the company is currently undertaking due diligence in light of an $8.5 million price agreement.

Market Saturation

“W

hat we’re currently experiencing in the Western Australian residential market is localized saturation whereby supply is exceeding demand in certain locations across certain price ranges. As additional stock is delivered in these locations we will see price and rent adjustments.” Concerned by this saturation, Mustera has adjusted its short-term strategy to focus on cash flow stability, and will look for development opportunities with sufficient holding income to offset holding costs and offer options for future development. These concerns have also taken the focus off saturated locations and mid-level price ranges. Focus is now on entry level,

high-density residential developments, located along existing public transport routes, where the Government are investing in public amenity and infrastructure. The group looks for development properties that include a level of holding income, so that if required the company can delay development until the market demand is sufficient to take the project into fruition. “Economics and market knowledge is a key focus when looking at new opportunities. Understanding land costs (based in highest and best use), construction costs, including innovative methodologies and materials, together with market pricing, is fundamental to acquiring feasible sites and ensuring that target returns are met.”

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Pristine Living Management: Understanding Strata By Nicholas Paul Griffin

The Pristine Living Management team taking home an award and joined by MC Karl Stefanovic.

hrough providing “knowledge and experience you can trust” to property owners and developers since 2008, Sydney-based Strata Management firm Pristine Living has developed a reputation as a reliable local supplier of quality Strata Management services, setting it apart from its competitors. As the company points out on its website, “Strata Management 48

can sometimes be complicated and confusing,” and as a result of the contractual nature of the arrangement between the Strata Owners and the Strata Manager, the business requires longer-term business development strategies. Pristine Living believes its unique selling point is its ability to deal with Strata clients in a clear and concise manner, regarding communication and attention to detail as the company’s main areas of focus.

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Pristine by Name

ristine Living’s Managing Director, Danielle Marchand, first became involved with the complicated business of Strata Management in the 1980s. She began by working for Robert Andrews Real Estate, where she was employed for eleven years. After taking a long service leave from the company, Ms. Marchand decided to move out of Strata Management, and returned in search of a new opportunity. At this point she turned to Property Management, and found herself beginning an affiliation with Australia’s largest residential apartment developer, Meriton. “The job I landed was with a company that was doing project marketing exclusively for Meriton,” Ms. Marchand says, “for the first six months that their building came on the market.” Though never working with the company directly, Ms. Marchand established herself in the industry by renting out apartments built by Meriton. In 1996, Ms. Marchand began working for a company called

Grants Strata Management. After a successful period of almost a decade with the company, Ms. Marchand and her daughters— Guylaine Senat and Sandrine Markov—bought the company in 2005. “We thought about how we would change the company, and give the company a much better image, an image that we would like. So effectively it took us about the best [part] of three years to get that together.” For those years, the company continued to run under the name Grants Strata Management. In 2008 the company changed its name to Pristine Living Management, moved premises, and the current incarnation of the business truly began. On the back of such an impressive career in the industry, Ms. Marchand was invited in 2011 to join the board of the Strata Community Australia (SCA) for New South Wales, the leading professional body for the Strata and Community Title sector. The resignation of a former board member meant that no election was

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necessary, and Ms. Marchand quickly took her seat, holding it for the next four years. “It was a good learning curve with them,” Ms. Marchand explains. “I’m not with them anymore, because of a lack of time, with my schedule being very heavy at the moment. So I just resigned from my position last year.” During her time with the SCA, Ms. Marchand worked closely with a group of Strata Managers as part of the Strata Management Chapter, which is now known as the Professionals Chapter.

At the time, the chapter was responsible for liaising with the government in order to see better industry laws passed and implemented. Within the next year or two, the new laws Ms. Marchand had a hand in writing should be coming into effect. “We were very much at the forefront of discussions,” Ms. Marchand says, “and our group was working on better ways to manage and better ways to get our clients to understand what goes on in the industry… it was very interesting, in the sense that you were there at the discussion that would essentially at the end help those laws to be changed.”

Pristine by Nature

fter purchasing and renaming the company, Ms. Marchand and her daughters set about redeveloping the business by targeting more boutique, up market properties around the city fringe, including the North Shore and Inner West suburbs.

After engaging in research on the properties already held by Grants, the new owners found that there was a large demographic divide between many of them. Consequently, it was established that some of the properties in certain areas were not the right fit for the high standards associated with the name Pristine Management.

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The company began to move away from certain types of properties, intending to give the same quality of service to every building on the books. After engaging in a strategy to push the price up in these properties, to raise the level of its management service to be in line with other locations and improve the whole aspect of the building, the company saw several existing clients decide to move on. “Then gradually, what we did was put our name out there and started to look at buildings very close to the Inner West, or within the Inner West, and decided to target those buildings rather than go into areas that we feel did not have the sort of buildings we wanted.” On the flip side of that coin, a number of the company’s clients stayed with them as Pristine developed, some having been there since before 1996. For Ms. Marchand, the reason for this retention is simple, as the high level of service given to these buildings has stayed at the same exemplary standard from day one. “We need to make sure that our philosophy is always on improving the value of [the client’s] property. In doing that we make sure that we have policies and procedures in place; sometimes we double check and triple check things to make sure that they are being done the way we want, and it does take more time.” “We are happy to say that we are not one of the cheapest Strata Management companies, but if we can provide the service to go along with the dollars we are actually charging our clients, then there is no reason for them not to be satisfied. What they’re paying is what they’re getting.” Another key element of the business model is the employment of high quality and trusted suppliers to undertake work on Pristine Living’s behalf. Company policy ensures that suppliers understand from the start that nothing less than their best work will be accepted. “The moment we find that our suppliers are not abiding by what we tell them,” Ms. Marchand says, “then straight away they are spoken to. And if it persists, then we take them off our books… at the end of the day, when we get someone to go and do a job, they are the face of Pristine.” Another example of this close working relationship is the

company’s preference for working with a builder from the very beginning to the very end of a build, ensuring high quality standards are met throughout. Working this way is not always easy, and Ms. Marchand admits that the Strata Manager is almost the last person builders are likely to contact during the lifetime of a project. “The reason I prefer to work with them at the very beginning is so I understand where they want to bring the building. Whether they intend to keep some of the lots for themselves, whether they intend to sell everything, whether they are interested to retain a portion with a view of optimizing their income on that particular property. There are things that we discuss with them; we discuss also the bylaws that they want to have in place, so that makes our job easier in the long run.” In addition to this, arrangements will be made for the division of responsibility between owners and Management Company, especially in terms of the cost and payment of maintenance and safety issues. “If we can capture these things at the very beginning,” Ms. Marchand adds, “then when the plan gets registered, it goes in with all these bits and pieces attached to it.” When, in 2010, the SCA introduced its first industry award, Pristine Living, despite having only 5 years of experience since buying the company, decided to put its name forward for the prize. Ms. Marchand admits it was a good exercise for the company, giving them a valuable opportunity to look within the organisation and assess its achievements since she took over in 2005. “We could see that we actually gave away some management, but we also sustained the income because of the way we were pricing and were putting ourselves in the market. So that was one positive thing. We were able to ensure that all our staff were paid properly, and at the same time we were very much targeting education for our staff as well.” The following year, Ms. Marchand’s daughters both went for the Strata Manager of the Year awards, with Guylaine Senat gaining a nomination to the Young Strata Manager of the Year and Sandrine Markov coming as runner up for Strata Manager of the Year. The company itself won at the Schindler Strata Industry Awards for Excellence in 2010, in the category Small Business of the Year.

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Improvement in Education

ike many Strata Managers at the moment, Ms. Marchand is concerned by the fact that ordinary members of the public do not tend to have a good understanding of the Strata industry, and a lack of communication between owners and managers does not help the cause. When working with the SCA, Ms. Marchand helped put together an easy-to-use website, encouraging clients to register in order to become aware of what it takes to become a member of the Executive Committee (the body which will serve as the voice of the Owners Corporation in overseeing the running of the Strata Scheme), and to learn about the implementing of Strata laws. â&#x20AC;&#x153;This, for us, has been something very good in respect of our Executive Committee members getting education that they need. I still feel that, at the end of the day, those who are on the Executive Committee, they do understand, or they are getting

there. However, there are those who do not, and who will never be interested to get onto the Executive Committee, except if theyâ&#x20AC;&#x2122;ve got their own agenda. They will never learn.â&#x20AC;? The education Strata owners receive is not enough to keep them well informed. Often, for new owners moving into a block of apartments, the only thing they will know from the first day is basic facts about the facilities. Despite paying a huge amount of money for a property, the salesperson or property manager is often interested only in getting them to sign on the dotted line, and will provide no relevant information about what they can or cannot do. This results in people buying properties for up to $2 million, and often not realising they are actually only purchasing the air space. In cases such as these, a company like Pristine Living

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Pristine’s latest building under management located in Botany, has only recently completed construction.

is on hand to help the new owners. “You can start imagining how many jaws drop when we tell that to these people… the education should start with a package that can be given by the solicitor doing the conveyancing at the very least, explaining the pitfalls. However, no-one is prepared to do this, and I can’t see that anybody will.” Ms. Marchand believes further issues are affecting the Strata industry at present, including the lack of parking in urban areas. “The parking has always been an issue,” she says, “and will always continue to be an issue.” In response to the parking shortage, people are now offering spaces in and around the CBD for rent, but Ms. Marchand is certain this will create more problems for the people residing in those buildings. And the problems do not stop there. Another huge stumbling block is the level of training for new Strata Managers, which Ms. Marchand believes is often woefully inadequate, with some new managers only receiving a fortnight’s training to gain a $50k earning. “How do you give

a property that is worth millions of dollars to someone that has only got a background of two weeks in the industry… they don’t have the knowledge.” This has a knock-on effect for small businesses like Pristine Living, which struggles to find staff due to high wage demands, a response to unrealistic contract offers from larger competitors. “Even if I do pay the dollars they’re asking,” Ms. Marchand says, “after three months you start seeing the cracks, and then the turnover of staff is terrible… these people are there with a certification, and even sometimes have a three year license, and some of them don’t know much about [the business].” Despite these issues, Pristine Living Management continues to offer the highest quality management service, valuing its integrity and reputation for professionalism in dealing with all facets of Strata Management. With new laws being developed, the team at Pristine is very optimistic about the future of the Strata industry in Sydney.

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PharmaSynth: Embracing Biopharm By Nicholas Paul Griffin

PharmaSynth offers a number of manufacturing capabilities with a proven track record.

he sourcing of pharmaceutical drugs from biological production systems, known in the industry as Biopharm, is becoming increasingly popular in the field of modern pharmaceuticals. In Queensland, Biopharmaceutical Contract Manufacturing Organisatio PharmaSynth is helping continue the trend of using bacteria, 54

yeast or mammalian cell type culture modification to produce pharmaceutical products. In a recent discussion with PharmaSynth CEO Les Tillack, The Australian Business Executive sought to discover more about the companyâ&#x20AC;&#x2122;s position in this steadily growing industry.

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Progen Pharmaceuticals

r. Tillack’s pharmaceutical background was developed through his study at the University of Queensland, from which he graduated as a chemical engineer, though a double degree in microbiology was originally intended to see him move into a more scientific field. “What I was specifically aiming at when I went through university was to get into biotechnology and in particular fermentation technology,” Mr. Tillack explains, “and I guess I hung around for a few years after I graduated, looking for a job, because the industry is not a huge one in Australia.” Having worked in clinical pathology for a number of years, both during and after university, Mr. Tillack eventually settled in Brisbane, working for a company called Progen Pharmaceuticals, one of the few establishments in Australia undertaking this type of work. “We’ve just had 25 years last year as Progen,” Mr. Tillack

says, “who are our parent company. Progen started 25 years ago as a life sciences and molecular biology reagents company. So they used to make a range of molecular biology kits and chemicals, for use by researchers in universities and research institutes.” At some point within that time the decision was made for Progen to move into drug development. Since there had been a manufacturing group within the company from day one, the switch to pharmaceutical development for internal products was an easy one to make. This change in direction eventually led to the manufacturing of other company’s products. Mr. Tillack had been at Progen for about twelve years when a move away from the life sciences and chemical business meant the requirement for internal manufacturing ended, presenting an opportunity to spin Progen’s manufacturing group out into a separate company called PharmaSynth. This process happened seven years ago, and Mr. Tillack has been running the company ever since.

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Supporting the pharmaceutical industry from bench to clinic to market.

Development Phases

“W

e’re a contract manufacturer,” Mr. Tillack tells us, when asked to expand on his company’s processes, “so we manufacture other people’s products. The vast majority of products we manufacture are for use in clinical trials. So the drugs that we manufacture are new drugs that are under development and going through the process of becoming a registered, approved drug.” The first stage of a lengthy development process is usually performed by the company, institute or university which first developed the drug. This is followed by the establishment of some rudimentary procedures for making the drug, after which the developers will approach a company such as PharmaSynth to begin production, which it ensures is done under GMP (Good Manufacturing Practice) conditions. “We tend to work for the smaller drug development companies,” Mr. Tillack says, “earlier on in a drug development phase. The types of companies we would normally work with are small to middle-sized biotechnology or drug development companies, or in fact research institutes and universities.” Once the drug is deemed fit for use in humans, it will be used in the clinical trials process, passing through three phases of clinical development, before it finally becomes registered. Most companies coming to PharmaSynth at Phase 1 will 56

already have patents in place to protect the product. PharmaSynth tends not to be involved in developing intellectual property, but in the few cases it is involved on that level, the company it is working for retains the IP, not PharmaSynth directly. “Mostly, by the time someone would come to us, they are ready to go into clinical trials. We may have to do further development work for a company before they can get to that point, but in general everything we manufacture will end up in a clinical trial. Whether that drug is eventually successful and becomes a registered drug on the market is an entirely different thing.” “We will manufacture for a company for their Phase 1 trial, and assuming that’s successful, a couple of years later they will be back for Phase 2. Assuming that’s successful again, a couple of years later they will be back for Phase 3 manufacturing.” In between these phases, a company will run its own testing to continue developing the drug, either using an internal team or another service provider to which it has outsourced the job. “A lot of the business we do is word of mouth and ongoing manufacturing, so a lot of the projects we have we will have had for many years. It takes at least 10-15 years to develop a new drug from the start of development, where the drug might be first put into humans, to where it would ultimately be successful and registered.”

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In fact, the entire process is so lengthy and costly that PharmaSynth has not actually been involved directly with any drugs that have become a commercial product since its breakaway from Progen in 2008. “The only commercial product we manufacture is a veterinary product,” Mr. Tillack informs us, “which we were involved in the development of through to approval, and we’ve been manufacturing that product for about fifteen years.” There are trials in progress, however, most notably for Chinese-American company Zensun USA. Zensun is developing a recombinant protein drug used in the treatment of late stage cardiac failure patients, essentially triggering the body to re-grow damaged heart muscle tissue and improve cardiac function. Zensun is currently starting a Phase 3 clinical trial in the U.S., and Mr. Tillack tells us it will likely have another three years of trials ahead before the drug has a chance of getting to market. This highlights the length of time it can take for the development phases to be

completed; PharmaSynth has been working with Zensun since 2008. Another key product in development involves one of Progen’s original drugs, known as PI-88, now licensed to a Taiwanese company, which has since been given the name Muparfostat. The company is still running a Phase 3 clinical trial, but there is hope within PharmaSynth that Muparfostat will eventually become a licensed product. In addition to these products coming towards the end of their testing cycles, there are several Phase 1 products in development, including drugs developed by UK-based Immunobiology Ltd, and Melbourne agricultural biotechnology company, Hexima. “In terms of new clients, a lot of it does come from word of mouth. Particularly in Australia, the industry is not huge and the whole drug development industry is not huge, so word of mouth is very important. But we also market ourselves as well… our largest area of marketing is attendance to scientific and business conferences, in particular we attend one of the largest conferences in the U.S called BIO.”

Regulatory Environment

“I

n Australia the manufacture of human pharmaceutical products is regulated by the Therapeutic Goods Administration (TGA),” Mr. Tillack tells us, “we follow a code of GMP regulations, like everyone else does in the world. Over the last number of years the world has been becoming harmonised on those regulations, through a thing called ICH, the International Conference on Harmonisation.” The ICH had prepared guidelines for Good Manufacturing Practice to be implemented globally, meaning most countries around the world now follow the same code. As a member state, Australia was instrumental in helping set up these rules. “That means the products we manufacture can generally be used almost anywhere in the world,” Mr. Tillack adds, “certainly all through Europe and a lot of Asian countries that are ICH member states.” PharmaSynth does a lot of business in the United States, where companies are regulated by the FDA (Food & Drug Administration), a body with similar practices to the TGA. The guidelines followed in the U.S. are very similar to those in Australia, though there are a few differences. “We ensure that we perform our manufacturing practices to meet both the Australian and the U.S. guidelines,” Mr. Tillack says.

The status of the Australian dollar over the last few years has meant the cost of manufacturing has proved somewhat lower than in other countries. PharmaSynth in particular has benefited from low overheads, due in the most part to the way the business is structured and run compared to those larger Contract Manufacturing firms overseas. “That results in us being able to offer a service at a lower cost than working with a U.S. or European manufacturer, even though we work to the same level of quality and regulatory framework as those areas do.” But around the rest of the world, being fully GMP compliant is not an easy thing, especially for countries that don’t have the same quality of companies and regulatory framework. GMP can often represent an extremely high level of regulatory burden. Despite this, Australian companies like PharmaSynth still face competition from other areas of the world, especially in places such as China and India and increasingly, South Korea. The advantage for Australia is that most of the nation’s clients are extremely risk adverse. The cost of manufacturing pharmaceutical products is therefore very high, with the cost of running clinical trials and other development work even higher. The truth is, it is hugely expensive to develop new drugs. “The risk of using a country where the

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PharmaSynth is one of Australia’s most experienced biopharmaceutical contract manufacturing organisations.

regulatory framework is not quite so certain is high,” Mr. Tillack tells us.

meaning the access to capital in Australia for drug development has not opened up after the GFC in the same way it has overseas.

India in particular has a very large pharmaceutical manufacturing industry, and some companies have recently run into significant issues with products made in India and used in the U.S. “A lot of it is being able to trust the company that one of our clients has been working with, and having a western regulatory framework around that is a big plus.”

“It is a very hard thing to do for smaller companies, and the model in Australia in drug development has always tended to be small companies doing it. Spin outs from universities and startup companies that will take one drug and then try and raise the money to do it. And generally it always has been difficult in Australia to raise enough money to do drug development properly.”

Mr. Tillack understands that the Australian drug development industry has not performed particularly well over the last decade and a half, and this has resulted in the investment market being wary of pharmaceutical developments, particularly in biotechnology,

This results in most companies having just one product in development, with the reality being that only 1 in 10 of the drugs going into Phase 1 will actually be successful and make it to market. It is inevitable then that the failure rate is going to be very high.

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Public Perception

ur interview concludes with a question regarding the image of the drug business, as seen from the outside, since the pharmaceutical industry seems to have garnered a reputation for putting financial gain before the health of the population. “I think the biggest misconception people have outside of the industry,” Mr. Tillack says in response, “in general consumers, is that there is a lack of understanding of how much it costs to develop new pharmaceutical drugs. There’s a lot of perception that pharmaceutical companies are very rich and the money they charge is just to rip everybody off.”

The reality is that it may cost up to two billion USD to develop a single drug, taking into account research and trials in development. This often runs over a ten to twenty year period, and so by the time they are registered, drugs will have at the most another five years of patent life left. “So that money, the two billion dollars that’s been invested by the industry, has got to be made back within a very short period of time, before generic drugs are allowed to come onto the market. That’s the reason why, particularly new drugs, are so expensive.”

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CLAW Environmental: Plastic Recycling By Nicholas Paul Griffin

Owners John & Kate Cameron.

stablished in 2004 by three partners who identified an opportunity in the commercial recycling space for the sustainable recycling of plastics, Perth-based CLAW Environmental is still leading the way in offering a cheaper way of dealing with polystyrene and plastic than taking it to landfill. The companyâ&#x20AC;&#x2122;s business model focuses on the collection and processing of plastic materials of a reasonable quality. 60

With their value increased through processing, the material is then sold on to manufacturers and further processors. CLAW receives plastics from a wide range of industries, with a particular focus on those using crates and drums for storing and transporting material. The company is also involved in a number of large recycling programmes, be it through government initiatives or recycling projects with individual clients.

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Doing the Right Thing

wners John and Kate Cameron purchased the company in 2010, after several years working in their respective fields of computing and metallurgy, as well as running an oil recycling plant in Port Hedland, WA. When an opportunity arose to move to Perth and work in other waste processing, they became involved in a project that looked at plastics as a diesel substitute for vehicles and generators. “As part of this project,” John tells us, “CLAW Environmental was identified as a potential supplier of raw material. As can happen, the company decided that they did not want to pursue this project and offered CLAW to us to purchase.” Today CLAW employs a small team of full-time staff and is based in Welshpool, Perth, with most of its client base made up of businesses. The company also serves some domestic clients with a passion for keeping plastics out of landfill, and is working to widen its current services with government and council bodies.

to all. The polystyrene is first checked for contaminants such as labels or tape, before it is granulated and stored in a hopper. It is then compressed into a high density log for shipping to overseas markets. “As the price of landfill continues to rise,” John adds, “this issue will become more urgent.” Government landfill costs were increased as of January 2015, and Kate believes this increase will only have a positive impact on CLAW’s business. “We offer a cheaper way of dealing with polystyrene and plastic than taking it to landfill. The problem is sorting it into ‘like’ plastics. If this is done at the source there is no problem for recycling.” “Education within the workforce as to the different sorts of plastics and sorting at the source will go a long way to helping. As a domestic recycling bin user we all learnt what to put in and not to put into our yellow recycling bins. It’s not hard, it just takes a bit of effort to do the right thing by the environment.”

“We also provide services on behalf of other major waste management companies, who find our services can compliment their operations and help in providing their customers a complete recycling service. As landfill rates continue to increase, we see more enquiries for our services.” “The balance of our business focuses primarily on the recycling of rigid plastics,” Kate explains, “pots, drums, pipes, crates. We are a primary processor, providing shredding and granulating options for plastics. We provide some materials back in to manufacture, but most will go to further processors in the east of Australia and Asia, for further processing into pellets for manufacture.” The organisation has recently employed a full-time business development manager, in the hope of being able to identify new clients and investigate fresh ways of dealing with plastics that CLAW has not previously been involved with. “We have been existing on work that has come to us and not having the time and the people power to chase up other similar businesses, or to look at expanding into other plastics.” CLAW also recently ran trials of polystyrene collection at two government landfill sites, hoping to persuade the government that this plastic can be diverted from landfill, and that there are other ways of dealing with recycling polystyrene. The company’s recycling plant offers both a collection service and drop-off point, making the recycling of polystyrene accessible CLAW Environmental - AustralianBusinessExecutive.com.au

drumMUSTER

A represents approximately 10% of the recycling volume of Australia. The PACIA (Plastic & Chemical Industries Association) annually survey recycling in Australia and provide a comprehensive overview of the recycling processes in the country. Considering the large distances and lower population of the state, WA struggles somewhat in terms of recycling, but in general

manages to maintain a reasonable level compared to the rest of Australia. CLAW’s role in the state’s recycling needs is significant, as they provide recycling options for a variety of plastics, and are currently the only company recognised by EPSA (Expanded Polystyrene Association of Australia) for the commercial recycling of polystyrene in WA.

drumMuster’s 25 millionth drum was delivered to the Goomalling collection site in Western Australia.

CLAW Environmental - AustralianBusinessExecutive.com.au

CLAW Environmental is also the only company in WA currently servicing drumMUSTER, an industry-funded program aimed at providing rural and metropolitan recycling of used chemical containers.

The program is dependent upon the farming season and whether it’s been a good or bad year. With drumMUSTER recently celebrating its 25-millionth processed drum in Australia, CLAW is delighted to be in on the act.

This federal government initiative ensures a few cents of every pesticide and herbicide sold to farmers is put into a kitty in Canberra, where the program is coordinated.

“We are proud to have been processing since pretty much the beginning and we have a good reputation with both drumMUSTER in Canberra and the shires scattered around the state of WA.”

The farmers then return their empty rinsed containers to shire and council depots all around Australia, where drumMUSTER processors like CLAW use mobile shredders to shred the drums, before shipping them both nationally and internationally.

When the company first started working with the program, it found many ‘rats nests’ of drums on private farms, but has since cleaned a lot of them up and now primarily attends just the shire compounds and some farm sites.

“At present we are the only drumMUSTER processors operating in WA,” John says. “We liaise with the DM inspectors and shires as to how full their compounds are, and when and if they’re having a collection day, so we can empty the compound before then.”

“Knowledge of the program is widespread in the farming community and has been well received as a way for farmers to deal with the problem of disposing non-biodegradable containers. They are constantly looking at ways to deal with problems like this in farming communities. We hope to be around for the 50-millionth drum!”

Key Materials

LAW specialises in the processing of high-density polyethylene (HDPE), polypropylene (PP) and expanded polystyrene (EPS)—a range of plastics stretching from pressure and agricultural pipe to standard shipping packaging found in any household.

oped for new uses.

Other plastics the company deals with include low-density polyethylene (LDPE) such as shopping bags and bubble wrap, and rigid polystyrene (PS), found in coat hangers, picture frames, imitation timber flooring and toys.

On top of this, the recent increase in costs for landfill disposal options has made the recycling of rigid plastics more attractive, and a growing awareness of recycling and the options that are available has likewise been a factor.

Both EPS use and rigid plastic recycling have seen an increase in recent years. With the advent of new technologies in the building industry, EPS is used quite extensively in the second stories of houses that have been added retrospectively, as well as for general construction and extension work.

Kate is adamant that if everybody in the country gets on board with the problem, then the efforts of Australia in recycling plastic could easily be doubled, and it is CLAW’s intention to help push forward this increase.

The bottom layer of the house has not necessarily been built to hold the weight of an original constructed second floor, but the use of polystyrene makes it light and viable. The advance in making patterns in concrete walls is also made easier by using polystyrene as the forms for concrete core walls. Rigid plastics have seen a boost in recycling for a few reasons, mostly because of the increase in population and as a result an increase in consumption generally. In addition, plastics have been, and will continue to be, devel-

“An example is the barrier layer plastic drum,” John explains, “which has almost seen the complete demise of the steel drum for certain chemical and hydrocarbons.”

“When I traveled to Japan, I saw households put their different types of recycling into different bins. A milk bottle was split into two bins, the bottle in one and the lid and ring in another.” The secret to harnessing the potential of this increase is to make sure the population is well educated in the benefits of recycling. This education must come from the government, within the schools, the media, and anywhere else it can be effectively dispersed. “If the information is out there,” Kate concludes, “then I’m sure there are many, many people who wish to do the right thing, if they only knew how.”

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Resitech Industries: Resin Technology By Nicholas Paul Griffin

Resitech Group MD Yinon Trieger at the Home Show.

R 64

esitech Industries, a subsidiary of the Resitech Group, is a company with thirty years experience in the plastics business and a major recycler of post-industrial plastic waste. With its main

manufacturing operation based out of Brisbane, the company specialises in Polyolef in plastic waste, which it both recycles and reuses through its two distinct approaches to the business.

Resitech Industries - AustralianBusinessExecutive.com.au

Yinon Trieger he company’s Managing Director, Yinon Trieger, was born in Israel. A farmer by trade, Mr. Trieger came to Australia just after he had finished studying and soon fell in love with the country.

Mr. Trieger began working for a company called Plastic Recyclers Queensland, the first recycler in Queensland to acquire a local collection company, whereupon he commenced a collection and recycling factory for plastic waste.

In 1980 he started working in the recycling industry, as a partner in a company run by his father-in-law. The company recycled plastic waste in Melbourne, specialising in waste from the manufacturing of master batches, which are colours for plastics, as well as the manufacturing of pipe and film.

In 1984, Plastic Recyclers Queensland became Polymer Corporation, a company that is now a part of the Resitech Group. The Resitech Group is a collection of companies, specializing in the recycling and manufacturing of recycled plastic end products and resins trading under the name of Resitech Industries.

“That’s where I started with the basic knowledge that I picked up in the plastic industry,” Mr. Trieger says. “I then moved into Queensland as we had an opportunity in a market that had no recycling services to start recycling plastic waste.”

“Resitech was created as a company to be able to do recycling and finished product; Resitech is actually a short name for Resin Technology. That’s how we came up with the company name.”

Recycling Landscape

he company has two approaches to the business: one is the recycling of resin from plastic waste, and the second is the creating and selling of products made from that recycled resin. “It has changed a lot,” Mr. Trieger says, when asked about the shifts in the industry since Resitech’s inception. “In the beginning we were absolutely clutching at straws to be able to recycle, because at that stage there wasn’t any machinery.” During the 1980s there were several other Australian companies starting in recycling, mostly in Sydney and Melbourne, but Resitech credits itself as one of the first to be working with recycling in the country. “At that stage it was very primitive. What we were recycling then, which was very basic and hard for us to recycle, now is very easy to recycle because there is a lot of development in the demand for recycling and the huge development in the equipment and the market opportunities available.” Even though the scale of manufacturing in Australia is dropping, the advances made in plastic recycling over the last few decades means the industry is bigger than ever. During the early years, the majority of waste was produced by companies in the plastic industry, which

created plenty of excess plastic from the manufacturing of new products. “Mainly [it came] from film extrusion—companies that were making plastic bags, or wrappings and packaging and generally what we call soft plastics, a product which is normally between fifty to five hundred micron in thickness. That’s fairly thin.” Resitech would then buy the plastic waste for recycling, a process known as post-industrial recycling. But the landscape soon shifted from this traditional method, due in the most part to advances in technology. “Although the machinery became better and more efficient,” Mr. Trieger tells us, “and with less waste, there was still more waste because more plastic had been consumed and demand for recycling has increased.” Perhaps the most significant industry change came in the late ‘80s, when Resitech started to work on post-consumer recycling. This began with the collection and recycling of milk bottles creating a whole new challenge for the company. During that period various councils experimented with this method of post-consumer recycling, and the trend soon became fashionable. Now almost every council in Australia

Resitech Industries - AustralianBusinessExecutive.com.au

Resitech Group Head Office in Wacol, Queensland.

has some recycling program of this kind in place, either running it in-house or employing contractors to do the job. Resitech Industries services clients all over Australia with much of its business originating from the east coast, Victoria and Queensland. The plastic waste suppliers with which it works are mainly in New South Wales and Queensland. A large area of the company’s business now comes from collecting waste from the mining industry. All aspects of the mining industry—sand, coal and even gas—are seeing increases in the use of plastic, mostly in the transport of water or effluent and are now required to remove the plastic waste off-site for recycling. “When they finish with a particular project,” Mr. Trieger says, “they need to get the used pipes out of the ground and recycled, or sometimes they just change them after so many years and upgrade; they go bigger normally.” Gas mining activity in Queensland especially requires more piping in order to accommodate the amount of transportation needed and this has become a large source of business for Resitech. 66

“There are various stages in the operation; you start with a smaller pipe, then going to a bigger pipe, going through pumping stations, [where] they’re actually cleaning the gas, then they send the water for recycling, the gas going into compressors.” Some of the gas is now being used straight from the ground, cleaned and separated from water and used for power mostly in smaller power stations employing more efficient technologies and therefore operating solely from gas. “As part of the by-product of using, storing and moving the gas and the water, there is plastic pipe,” Mr. Trieger says. As a result of large networks of piping, off-cuts are created. The company then takes these off-cuts as plastic waste for recycling. “That’s something that we will grow, because obviously there are a lot more wells that need to be drilled. However, because of the resources sector slowdown, prices have gone down and the f low-on effect in the sector has impacted on the growth to service the industry with removal of this off-cut waste, however we believe it will continue to develop.”

Resitech Industries - AustralianBusinessExecutive.com.au

The Resitech Group offers a range of innovative products.

Recycled Products

he company’s supply comes from various producers of plastic waste, mostly from the plastics industr y in the form of packaging. It has now become a lot more viable for companies to use plastic in their operations because of the wealth of recycli ng opt ions that are available. The second arm of Resitech’s business is the design and creation of products from the waste supplied by these companies. The company has a special technology to treat recycled resin ensuring the product is of a higher quality than its original form. “It’s ver y important,” says Mr. Trieger, “that when we get the plastic waste, we grade it, quarantining contaminated waste so it is not used. The grading of the various waste is paramount to the success of the business as r ubbish in- r ubbish out. The utmost QA procedure is conducted to ensure the waste cleanliness and labeling prior to the recycling process. Then we allocate the graded resin to meet the specs of particular products to ensure the quality will meet Australian standards.” One such product is poly Damp Course for the building industr y. When a house is built, a plastic Damp Course is used to stop water rising through the walls, the bottom of the house and the windows.

Another key product is the Slip Sheet, which is made for the export industry for companies selling food and drink product overseas. Instead of putting the product in a container with a pallet, they are now using plastic recyclable Slip Sheets. “What you do is stack that on the pallet then there is a special attachment on a forklift – called a push-pull attachment and you actually lift it off the pallet and move it into the container, eliminating the use of a wooden pallet and saving on fumigation.” When wood is shipped globally, the container it is shipped in needs to be fumigated to protect from bacteria which can be a problem for companies receiving foodstuffs. The use of a Slip Sheet prevents this fumigation from being necessary. Another of Resitech’s creations is a garden product called Root-Gard, a root barrier sold mostly to councils and landscapers to prevent roots from growing into areas of the house and garden that might be detrimental to the property. Resitech sells these products through distributors, very rarely going direct to the client. Products are also sold to other businesses such as window companies, and can be found on the shelves of major hardware chains.

Staying Competitive

espite industry concerns such as low margins, high power and labour costs and the issues created by the government’s recent carbon tax, Resitech endeavours to stay competitive, currently hitting an annual turnover of around $6 million. The carbon tax in particular has created a significant financial strain due to the electricity needed to aid production. “We are high users of power,” Mr. Trieger says, “as we require high temperature to melt the plastic and then recycle it.” Plastic is by no means perfect, and there are still

significant problems with the material, especially in terms of its difficulty to break down which has created a surplus of plastic in the ocean. “Plastic is like a computer—so if you put garbage in, you get garbage out. However it is a clever material and it came to replace wood, glass, steel and paper and has succeeded very effectively.” But plastic’s strength has made its use far more common in the modern day. For instance, polyester piping will have a greater chance of staying intact during a small earthquake than most other materials, meaning it has become the preferred option.

Resitech Industries - AustralianBusinessExecutive.com.au

Specialists in providing recycling solutions for a greener cleaner environment.

Mr. Trieger agrees that there is room in the industry for new technologies and more advanced recycling processes, especially in terms of producing the same recycling output whilst using less power. “That’s what we’ve done and are constantly striving to do into the future including being successful in getting a grant from the government to be able to get machinery which is more energy efficient and able to produce basically more kilos for less power/hour.” The grant has allowed the company to be more innovative in its business, working with machinery that will be capable of dealing with a variety of products, increasing the scope and efficiency of Resitech’s operations whilst providing a monitoring system of power auditing to constantly manage the power usage. “We offer a service in a complete form, ” Mr. Trieger concludes. “We now have our own collection service with skip bins, some smaller bins, larger bins and we can give that service to our suppliers to further expand the recycling opportunities that the market is requiring whilst remaining cost effective in the delivery of the service.”

Resitech Industries - AustralianBusinessExecutive.com.au

Event Coverage: Preston Manning in Sydney Interview by J. Landry

Former Canadian Leader of the Opposition Preston Manning, speaking at The Australian Business Executive’s recent “In Conversation” evening.

legend of Canadian politics, Preston Manning became known as the man who gave a voice to Western Canada through grassroots campaigning and a message of balanced budgets at all government levels. A member of the Canadian Parliament from 1993 to 2001, he founded two new political parties – the Reform Party of Canada and the Canadian Reform Conservative Alliance. Both parties went on to become the official Opposition, where Preston served as Leader of the Opposition from 1997 to 2000. Today his influence is felt through his political protégé - Prime Minister of Canada, Stephen Harper. Since his political retirement he has founded and presides over the Manning Centre for Building Democracy, one of Canada’s most extensive organisations dedicated to training political campaigners, strategists and politicians. His annual event Manning Conference is Canada’s largest conservative conference which has been host to

former Prime Minister John Howard, Ron Paul and Nigel Farage among many others. On Thursday, April 9 2015, The Australian Business Executive hosted Preston as part of our “In Conversation” series at the Occidental Hotel in Sydney. J. Landry had the opportunity to speak with Preston prior to the event about life after politics and what conservatism means today.

J. Landry: Where did the idea come from to open up the Manning Centre? Preston Manning: My family has been involved in politics for a long time. My father was involved in provincial politics in Alberta, he was Premier there for 25 years. I was involved in starting a couple of political parties at the federal level, both of which became the official

Preston Manning in Sydney - AustralianBusinessExecutive.com.au

opposition and laid the ground work for the current Conservative Party of Canada which is the governing party. In my experience, the old idea was that elected people and constituency people could learn on the job. Today because it’s so fast paced and there’s so much more immediate exposure, you better arrive with a little bit more intellectual capital and a little bit more skill. So when I got out of the act of politics we started this organization to see if it could do something on that front to make sure that people who do decide to participate in whatever level - grass roots level, organization level, interest group level, political level, would be better equipped to perform.

JL: What are your thoughts on Australia and Canada with our similar populations, economies and resources? PM: I think our countries have a lot in common. We’re both big countries - big enough to have regions that have very distinctive characteristics, so the national politics involve being able to balance regional interests. In Canada the question becomes can you devise a speech as a federal politician that you can give in Atlantic Canada, in Quebec, in Ontario, in the West, in British Columbia that somehow resonates with people in each of those regions. That’s a real big challenge. If you tailor it to particular regions people accuse you of saying one thing about one part of the country and another thing in another part, so we both have the challenge of size and regionalism. On the economy side Canada is a resource producing country, particularly the region I come from (Alberta) is Canada’s oil producing region. This makes us very much subject to fluctuations of prices over which we have no control and learning to live with the ups and downs of commodity prices and commodity markets is a challenge to both countries. I think we both have security concerns but of a different kind. Australia being close to China needs to be aware of that, where Canada is closer to the United States and the US has an enormous influence over our politics and our economy. So how to live with a friendly brother and how to live with someone who may not be so friendly are issues, but you still have to give attention to your biggest neighbor.

JL: In Australia there’s an undercurrent of Republicanism and our role within the Commonwealth. Do you have an opinion on the value of being part of th Commonwealth in the new millennium? PM: Not particularly. The Commonwealth as a practical workable entity is diminishing as a formal concept. But I do think the English speaking world and a particularly countries that draw on

a tradition of British common law and British conceptions of democracy think there is something that’s worth preserving. In Canada there’s not much Republican sentiment so I think it’s more of why stir it up? You’d cause more controversy than agreement and to what benefit? Canada has had constitutional debates somewhat different than Australia because we have one region (Quebec) that tends to march to a different drum; unity has always been a worry at the national level. Periodically there have been attempts to strength the unity through constitutional changes. Most of which have created more division and controversy than unity.

JL: Both our countries are familiar with nationalised public utilities. Over the last 20 years we’ve seen a lot of them become privatised. What are your thoughts on this occurring, and can government continue to be responsible for nationalised services moving forward? PM: On privatization you can approach that issue ideologically believing the private sector can do things better and more efficiently than the public sector can. Or you can approach the issue on a very pragmatic basis. Whoever can do the best job most cost-effectively should get the chance to do it. Now I happen to believe if you had that open competition on most things like utilities, by and large the private sector would prove it could do things more cost-effectively. I think that’s one way to approach that issue that’s not ideological. Let’s just figure out who could do the best job and put those services up for review periodically. Historically in Canada the big electric utilities were provincially and government owned, particularly in Central Canada. Ontario Hydro and Quebec Hydro were the largest energy companies in Canada and provincially owned. Alberta particularly under my father (former Alberta Premier Ernest Manning), used to argue ‘why would you tie up billions of dollars of provincial capital when that money is actually more needed in social areas like hospitals and schools where you’re not going to get as much private capital interest?’ In the end most of the rest of the country has come around to that decision.

JL: Now on the political spectrum, there’s libertarianism, neoconservatism, flag wavers for free market economics, the religious - what is a modern day conservative? PM: I think conservatism is a coalition and it is a coalition of those elements that you mentioned. Hopefully it’s a principled coalition and not just a bunch of people getting together to push

Preston Manning in Sydney - AustralianBusinessExecutive.com.au

the other guys out, and get themselves in. The task of leadership is how you reconcile these positions without watering them down to the point where they are meaningless. I think that’s the challenge for some leaders. The political incentive to do so is you can say to each of these factions ‘you can have your factional purity, but you’ll never form a majority government; you’ll never be able to do what you say you want to do.’ You’ve got to join with others and try to find the common ground. There are lessons to be learned there. The American political culture polarises over everything, and they like to polarise. Until very recently that clarified positions as they would go to opposite ends and then come together. Recently they haven’t done that though. In Britain the social conservatives will say to the libertarians, ‘what values do you have to hold in order to be libertarian’? Well you have to value freedom, property, sacredness of contracts, and then they ask ‘who is going to inculcate those values?’ A libertarian can’t say the state, so the answers tend to be the family, the community, maybe even the religious institutions – so they find some common ground. I see this dialogue in Britain a lot more civilised and productive than in the U.S. and to some extent Canada where they get into opposite camps.

JL: In America there’s been a surge of youth voters that are not traditionally conservative, identifying with the libertarian positions of politicians like Ron and Rand Paul. Have you noticed a similar trend in Canada? PM: Fiscal and economic conservatism is the element of the philosophy that is doing the best. It’s got elements of libertarianism, but it’s not exclusively that. People just believe that the role of the government is to facilitate activities by other economic actions that will maximize productivity and wealth creation. We do polling in Canada and consistently Canadians say conservatives are strongest on the economic front. That’s expressed in different ways though - some people say poverty, some taxes, some debt, but they’re all economic factors.

JL: Can you discuss your support for green c onservatism through taxation? There’s been some comments that the support you show for this initiative would be in contrast to the Preston Manning of the 90’s. PM: Economists use the word tax to refer to a mechanism for internalising an externality. My point is that the public doesn’t understand tax to mean that at all. To the public it means the government is sticking its hands in their pocket and collecting a 72

bunch of money to spend on whatever. So don’t use the word tax to refer to something like a carbon levy. We have to pay more attention to the environment, because there’s a lot of activity going on that affects it negatively. And whether one likes it or not, or agrees with it, it’s one of the issues young people will actually engage in. Conservatives have got to address this. They can’t just say ‘we don’t go there’, or ‘that’s not our issue’, or ‘the other guys have got the high ground’. Nobody owns the high ground on this. I try to get conservatives in Canada more positive on the issue, especially since the belief is in markets and the use of pricing mechanisms as a way to address these problems. We ought to be at the forefront of trying to figure out how to do it. I don’t think this is inconsistent with anything I’ve said in the past.

JL: How are politics changing in your view? PM: One of the disturbing things we’re wrestling with is a recent survey we did on ‘How important is it that your political representatives be knowledgeable on the issues?’ How important is it that they have character attributes like honesty or integrating? What we found is more people place more emphasis on character than on skill or knowledge. This has an impact when you’re trying to prepare people for political life or select candidates. There’s unwillingness from the public to trust anybody or what they say on the issues - or even to trust that they have these skills. It comes back to an assessment of character and what can parties do to strengthen these issues of mistrust.

JL: Having come from a different era of politics do you think the onset of the 24 hour news cycle has made potential candidates hesitant to engage in politics? PM: I’ve been involved in candidate recruitment for a long time. The biggest single reason being given for a competent person not getting involved in the political arena is that they won’t subject themselves and their family, and I stress their family, to the attacks by the media. The media is mentioned all the time. This also means social media more and more these days. It’s just a huge deterrent. We do national and sectoral surveys and we did one with 150 female executives. These are people who if they wanted to, have the connections, ability, and resources to go into public life. There are no barriers to their entrance. Over 75% of them said they would never touch the political field. It came back to this character thing. It’s perceived as a sleazy business with unprincipled people. At some point the media have to accept some responsibility for how they treat the political class. It’s just becoming harder and harder to recruit people to run for office.

Preston Manning in Sydney - AustralianBusinessExecutive.com.au

AustralianBusinessExecutive.com.au

Preston Manning in Sydney - AustralianBusinessExecutive.com.au

AustralianBusinessExecutive.com.au