Executive Summary: November 06, 2009
By Scott Rochfort | smh.com.au | 06 November
Andrew Forrest ... revealed as an art lover.
CBD
Leighton divorce: who got the kids?
Addresses given at annual meetings do not always provide a true account of a company's inner workings.
Take Leighton Holdings, for instance. In describing the abrupt exit of its chief financial officer, Scott Charlton, Leighton's chairman David Mortimer in his address yesterday praised the Texan for his role in helping the company triple in size during his six years as an employee.
"Scott has played a critical role in both contributing to this growth and ensuring that the company's financial position remained strong," Mortimer said.
Leighton boss Wal King in his address said the firm during Charlton's tenure had "navigated the impacts of the global financial crisis".
It was only at press conference afterwards that King strayed off the script. "In some circumstances some things don't work and perhaps it's best that you recognise that and you move on.
In the longer term I think it will be for the benefit of the company," Wal said of Charlton's replacement with the former Qantas chief financial officer Peter Gregg.
"There is no intrigue. We decided to separate, if you like – have a divorce. Like a lot of divorces, that's the end of the story.
We are not going to play it out in public. I don't think that will be of any interest to the public at large, to the shareholders."
"All I am saying to you was that a decision was made for a separation in the interests of the company. Scott has a great record as a merchant banker." Before joining Leighton, Charlton was at Deutsche Bank.
Name the man
The Leighton chairman also got a few laughs when he introduced his fellow director Dr Herbert Lutkestratkotter.
"And I got it right," exclaimed Mortimer to shareholders after managing to properly pronounce the German's last name.
It is unclear if Wal King has managed to learn how to pronounce Lutkestratkotter, in the two years since the German joined the Leighton board.
Or if Wal continues to call him Herbie.
That figures
Phew. The department store group Myer hurried a statement to the market yesterday reassuring its investors that its "prospectus forecast [had been] reaffirmed".
Just minutes after David Jones issued its first-quarter sales figures and three days after its own listing, Myer rushed out its quarterly figures.
"We are pleased to report that we have made a strong start to the year," crowed Myer chief executive Bernie Brookes in a statement to the Australian Securities Exchange.
Myer shares surged minus eight cents on the announcement. It must be a relief Myer reaffirmed its prospectus targets, given the sales figures are until October 24 – more than one week before the company actually listed on the ASX.
However, this week's Myer listing has at least help boost competition between Bernie Brookes and DJs chief, Mark McInnes.
When asked about Myer bringing forward their sales figures, McInnes answered with a diplomatic "Ha, ha, ha, ha". "That probably sums up my response," he said.
McInnes added: "I think that they think that they need to compete. That's fair enough."
Twigging to it
Andrew Forrest and his wife Nicola appear to have given the dog walkers around Bondi something to talk about.
The chatter among the poop-scoopers around the Bondi to Bronte walk yesterday was over who the mystery buyer was of the massive wooden sculpture of eight nude female rowers.
The piece is one of the largest works in this year's Sculpture by the Sea exhibit along the walk. It was rumoured the Forrests paid $75,000 for the four-metre-high sculpture.
A media spokeswoman for the event declined to confirm or deny the rumour. But there are some clues the Fortescue boss and his wife may have an interest in wooden sculptures.
For one, Forrest has the nickname Twiggy. The couple are also, along with the Packers and Belgiorno-Nettises, special patrons of the event.
Nicola, whose mother is a sculptor, is also on the board of the Sculpture by the Sea, which will be holding its next exhibition on Perth's Cottesloe beach next March.
One wonders if they plan to transport the massive piece across the Nullarbor.
The sculpture, The Eight, was carved by Stephen King, the brother of the deposed member for the federal seat of Wentworth, Peter King.
Stephen King was inspired to make the rowing sculpture because his three daughters are rowers.
Horse traders
Macquarie Group 2, Steve Keen 1. Doomsday economist Steve Keen has hit back at the millionaires factory, just days after losing a bet with the Macquarie economist Rory Robertson over the direction of house prices.
And also failing to pick the winner of the Melbourne Cup (as Macquarie's team of quantitative analysts did in a research note).
Keen at least ended up ahead on the day. Despite seeing his first pick scratched, Keen boasted that he still managed to win some money on the big race.
Keen said he ended up placing a $250 each-way bet on Crime Scene with his girlfriend, and came out $30 ahead on the day.
"It paid for an entree at our lovely lunch at the Coast Restaurant," he said. It seems the boys at Macquarie who actually picked the winner Shocking were not so astute.
One of the quant analysts to make it down to Randwick racetrack, John Conomos, said Shocking "was part" of his bet but that he still ended up down on the day.
Normal use
CBD's coverage of Westpac boss Gail Kelly's use of the term the New Normal to describe the current times has received a flood of feedback from readers.
Despite the head of McKinsey's, Ian Davis, writing an essay about the term in March, there are claims the founder of the Pacific Investment Management Company (PIMCO), Bill Gross, was the first to popularise the New Normal term following the Lehman Brothers collapse.
PIMCO's Sydney office noted the term had been used inside the firm for some time before Gross mentioned it in an April newsletter.
Gross, who is well-known for his use of golfing terms in his observations of the market, in a September newsletter said: "An 'even par' scorecard (plus some hard-earned alpha) may be enough to hoist the trophy in a New Normal world.
Holes-in-one? Maybe if you're lucky. But make sure someone's watching, and that their eyes are focused on the New Normal."
Got a tip? email srochfort@smh.com.au.
Insider
By Jamie Freed
A little oxygen for the upmarket crowd
The Myer management team seems to be working overtime on plotting ways to upstage its rival David Jones.
Myer's boss, Bernie Brookes, likes to tell investors that his department store competes just as much against companies like Harvey Norman and JB Hi-Fi, depending on the product.
But coincidentally or not, in September Myer announced its plans to float just before the start of a DJs' fashion show.
And yesterday Myer interrupted Oaks Day at Flemington to unexpectedly release its quarterly sales results on the same day as DJs.
However, DJs managed to maintain the limelight through briefings with investors and the media. So much information about its rival has been released in recent weeks that the market was eager to hear how DJs was trading.
Encouragingly, sales have been rising for the past five months – including a 6.9 per cent like-for-like rise so far this month – although it must be said that DJs is now cycling the depths of the global financial crisis.
If these sales levels remain heading into Christmas, it should easily beat its conservative guidance of a 3 to 5 per cent decline in sales.
DJs was particularly pleased by recent sales increases in the menswear, childrenswear and homeware categories that had suffered the most during the downturn, and that more items were being sold for full price.
Despite the good news, and noticeably more upbeat comments from the DJs boss, Mark McInnes, the company's share price fell 23c to $5.19.
Shares in Myer, which reported higher like-for-like sales growth than DJs, were 8c lower at $3.76. DJs has such a long history of beating its forecasts that the market no longer takes them seriously and assumes actual sales will be higher.
The fact the 1.9 per cent growth in like-for-like sales was lower than many analysts had predicted led to the share price fall.
The official September retail sales figures, which showed a fall in department store sales, were not reflected in the DJs or Myer results.
That means discount department stores like Target, Big W and Kmart are likely to be struggling to increase sales now that the cash stimulus packages have been removed.
Notably, Target had a subdued outlook at a recent presentation, warning of increasing competition from Myer in particular.
Holding out
Canada Pension Plan Investment Board (CPP) and Ontario Teachers' Pension Plan (OTPP) have each brought in their usual Australian advisers – Goldman Sachs JBWere and JP Morgan respectively – to team up for the proposed $6.8 billion move on Transurban Group.
It is fair to say the Canadian groups have been plotting a takeover for some time.
They were not supportive of recent feelers by Transurban to undertake a rights issue, which they thought would be hugely dilutive because the toll-road operator was trading at less than its full asset value.
Between them, the Canadian pension plans control 28 per cent of Transurban. The largest individual shareholder, however, is the CP2 group.
It is understood the Canadians have been in contact with CP2. The proposed bid for Transurban is subject to a minimum take-up of an unlisted scrip rollover and top-up alternative that would comprise 22 per cent of Transurban shares.
The Canadians want to convince CP2 (and others) to take up this alternative rather than the $5.25 cash offer.
CPP and OTPP believe Transurban would be better off as a private company not subject to the dilutive effects of equity funding.
However, they are happy with the current management team and would seek to keep it, and to expand the company.
That means the purchase of the Lane Cove Tunnel would remain an option. In the meantime, some have questioned Transurban's decision to not call a trading halt yesterday morning despite media speculation that an offer had been made.
Transurban shares rose 21c to $4.60 in the first hour of trading, and rocketed much higher after it announced receipt of the proposal.
It closed 85c higher at $5.24. Transurban shares were trading at $4.39 before the Canadians sent their indicative proposal on October 27 and the price has risen steadily since.
The Australian Securities Exchange is examining the trading. CPP and OTPP had not received any response from Transurban to their proposal – beyond that it was being considered by the board – until the company released a carefully worded quasi-rejection yesterday.
For now, most fund managers appear to support Transurban's view that the proposal is not high enough.
Meijin unmasked
China's Meijin Energy has been outed as the mystery third bidder for the coalminer Rocklands Richfield.
The first two proposals – the second of which has been dropped – were made by India's Jindal Steel & Power and Essar respectively.
It is hardly surprising that Rocklands has attracted interest from Meijin, China's largest commercial coke producer, given that its primary asset is a coke plant in China.
Rocklands also owns undeveloped coal tenements in Queensland. Meijin has offered 52c a share, up from Jindal's 42c-a-share bid, and therefore the board has recommended the $200 million Chinese offer.
However, neither is yet a formal offer capable of consideration by shareholders. Meijin has been granted 90 days to conduct due diligence.
It will be interesting to see whether Jindal or another Indian party will return with a higher bid.
One issue for Indian miners on the hunt for Australian coal is that the transport costs from Australia's east coast make the product much more expensive than Indonesian coal.
Briefs
Resources
Gorgon approval The ACCC will allow partners in the Gorgon project to jointly sell their gas into the West Australian market. It said Chevron, Shell and ExxonMobil could sell the gas collectively because this would provide "an important source of new gas supply".
Automotive
Economy revs up Annual new vehicle sales have risen for the first time in 16 months. Sales of passenger cars, sports utility vehicles and commercial vehicles rose 2.2 per cent to 80,813 in October from the same month last year.
New boss
Bibby strikes gold The gold miner OceanaGold, which operates mines in New Zealand and the Philippines, has appointed Paul Bibby as its new chief executive. The former Rio Tinto employee was most recently chief development officer at the London metals business Nyrstar.
Investment
China for Centrex The Federal Government has approved a $271 million investment by China's third largest steelmaker in the iron ore explorer Centrex Metals. The company plans to build a new export port in South Australia with its proposed joint venture partner.
Commodities
Trading halt Shares in GrainCorp have been placed in a trading halt as part of an institutional bookbuild after the company's $600 million capital raising.,/p>
First published by Smh.com.au on November 06 2009
Visit smh.com.au for the latest news updated throughout the day
