Borrowing lessons from a torrid year
The Age
Thursday July 2, 2009
AS ONE financial year rolled into another, the nation's business leaders returned to their desks yesterday morning and had a chance to ponder the road ahead.After six solid months of fighting financial fires, a few took time out from their busy schedules to share their thoughts with Full Disclosure.Myer chief Bernie Brookes thinks that some important lessons about risk and borrowing have sunk in and will shape management decisions in years to come."There has been a great amount of learning regarding leverage and cash flow, and that will set the platform for future decisions made in business," Brookes said."What's been demonstrated this year in my industry is the importance of good cost control and strong inventory management."The past six months have been tough on the retail sector, even with the Federal Government's stimulus cash, but Brookes believes we will all see a "slow burn" back to recovery over the next 18 months."It will be slow, and it will take from now until Christmas 2010. It will be a gradual recovery, as there has been a fair amount of damage done."Like Brookes, Mercedes-Benz Australia boss Horst von Sanden has benefited from the Government's stimulus incentives - in particular the 50 per cent tax break on new car purchases for small businesses - but he knows the good times will soon end. That tax deal expires on December 31."We've had a tough year," Von Sanden said. "If you look at the last two or three months, we saw the benefits of the tax incentives and we've put up some of our best numbers ever. But the tax break expires in December and will only help sales for the rest of this calendar year."Beyond Christmas, even with a new E-Class sedan launched next month, Von Sanden has concerns. "We are very cautious. No one knows what the economy will do, so we will watch carefully in the new year."One who does see light at the end of the tunnel is the national chairman of KPMG in Australia, Michael Andrew.Andrew started the financial year by escaping the country - he was at a meeting of KPMG's Asian region board in Singapore when we tracked him down. "Just a nice, relaxing 100 per cent humidity outside," he said. Perfect weather to discuss a financial meltdown.Andrew said he was surprised at how quickly the financial climate changed. "Last financial year was a tale of two halves, and this year will be another tale of two halves. It was all pretty good until Christmas last year, and the economy fell off a cliff. I think we'll see more bad news up until Christmas this year, and then, hopefully, a turnaround after that."Bad news, Andrew said, was likely to come from write-downs of asset values at listed companies. "I think you'll find there are some fairly heavy discussions happening between auditors and companies right now, and we'll see that pain come through in the next reporting season at the end of the year."But it's not all bleak. There's still good appetite for deals in the private sector, and resource projects are providing tremendous stimulus to the economy, especially around the North-West Shelf and coal seam gas projects."Pressed for answersCOVERAGE of the legal battle between Berndale Securities and David Waterhouse has caused grumpiness among the Thundering Herd. Counsel for Merrill Lynch subsidiary Berndale Securities, Paul Anastassiou, SC, touched on the subject while cross-examining Waterhouse yesterday. In the interests of full disclosure, here's what was said."You will also recall there was a prominent article in The Age newspaper; I think it was indeed even on the front page of The Age, in which matters that are the subject of your witness statement were referred to?" Anastassiou asked."Yes," replied Waterhouse."Did you provide or cause to be provided your witness statement to any journalist?""Yes.""Could you just explain to his honour why it was you considered it appropriate to furnish a copy of your witness statement to the press in the way you did?""I received a call from Michael West who works at The Sydney Morning Herald, who I had known, not close friends, but known for 10 years. He said 'Can I have a copy?' And I sent him a copy.""Did you provide to The Age a copy of the written opening of your case?""I gave it to Mark Hawthorne. He asked could he have a copy of the opening. Like, it was already in the court, it was already read in court.""No, I suggest to you, Mr Waterhouse, you are mistaken about that. The details of that written opening were published in The Age newspaper before Don Grieve, QC, opened your case.""Yes, all right.""You just thought it was a good idea to give the press the opening? At the day?"Before Waterhouse could answer, Justice James Judd, presiding, raised a rather salient point. "I take it that Merrill Lynch had never been involved in providing any information to the media, through media minders, or other such matters?" he asked"Your honour, I can't respond to that," Anastassiou said."No, I don't think you can," said Justice Judd.Neither, in the interests of protecting sources, can we.Screening applicantsGOOD to see Fairfax Media's former gaffer David Kirk land on his feet, taking up the role as chairman of Hoyts cinema group yesterday morning.Hopefully he picked up a thing or two about spelling while with us - so he can go through the company's website and fix sentences such as this one: "We employ 100's of new staff every year for all manor of positions." Or did the thought of a company manor attract Kirk to the job?The Hoyts website also states: "The best way to gain employment at Hoyts is to visit the cinema you wish to work at and ask for an employment application form." Is that how Kirk got the chairman's gig?
© 2009 The Age
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