BHP Billiton Limited (BHP):
BHP Billiton chief executive Andrew Mackenzie says the company may try to settle US class actions brought against it over the Samarco tailings dam burst in Brazil in 2015 that killed 19 people as he took a swipe at politicians and lobbyists. Speaking to shareholders at an information session before today’s annual general meeting in Melbourne, Mr Mackenzie said the company (BHP) was making progress on restoration work in the area that was hit by the dam burst at the 50-50 Samarco joint venture with Vale. “There is still litigation of a criminal nature against individuals but also against the company both within Brazil and in the US, class actions we are working through,” he said. “As always we try to see if we can reach settlements without going to court. These processes can take many years to evolve.” The boss of the Big Australian also waded into the ongoing energy policy debate, noting: “Our frustration with politicians who think they know the answers, or lobby groups that know the answers, whether they’re advocating one technology or one energy source, is that you don’t (know the answers),” he said.
Cromwell Property Group (CMW):
The listed Cromwell Property Group has recut the terms of its planned Singaporean float with the vehicle trimmed back to about €1.35 billion ($2.1bn) of assets in advanced economies across Europe. Last night Cromwell lodged updated documents with Singaporean authorities to raise €556 million and confirmed it had cut lower-yielding Polish properties from the vehicle that was originally slated to hold a €1.8bn portfolio of European buildings. It follows soundings with investors and is likely to see the proposed Cromwell European Real Estate Investment Trust reoffered across Asia, with a focus on wealth management groups chasing higher-yielding products. It will be geared around 35 per cent and spin off a sweetened yield of about 8 per cent. Cromwell won the support of the vendors of the float properties — who include some of the world’s largest investors — earlier this week. It controls the assets due to its 2015 acquisition of the Valad Europe platform and it worked to keep the vendors onside after delays to the float and ructions faced by the company locally. The rejigged offer has shifted from an institutional play with exposure to emerging European economies to a fund offering more familiar countries, in keeping with other Singaporean trusts.
Commonwealth Bank of Australia (CBA):
Commonwealth Bank chairman Catherine Livingstone has apologised to shareholders for the Austrac antimoney laundering scandal, adding she is committed to ensuring the bank resolves issues in the best interests of all stakeholders. “As Chairman, and on behalf of the Board, I apologise sincerely for this deficiency and its consequence,” she told shareholders at the company’s annual general meeting in Sydney this morning. “Shareholders, I can assure you that these concerns command the highest priority of the Board, and we are determined to ensure that our risk management systems, including regulatory compliance, are of the high standard which is expected of us; and that we rebuild trust in the Bank.” She assured shareholders that the CBA (CBA) board is treating Austrac allegations against the bank “with the gravity they warrant”. The bank, which is still building its defence against the Austrac claims, is also fighting legal fires on several fronts, with a shareholder class action underway and securities regulator ASIC is also probing the bank. CBA has until mid-December to file its defence to the case launched by Austrac, which will then be given until mid-March to respond to the bank’s defence. A subsequent case management hearing has been scheduled for April 2.
Domain Holding Australia Limited (DHG):
The historic structure of the Fairfax empire will come to an end today when the demerged Domain begins trading as a listed company separate from the struggling publisher. Shares in Domain, trading with the ASX code DHG, will be listed from noon and DataRoom understands the order book will start to be built by stockbrokers about an hour before. Fairfax will keep 60 per cent of the Domain registry and existing shareholders have been given one share in the new company for every 10 shares held in Fairfax. The valuations put on the Domain stock as a stand-alone entity hover about the $3.50 mark and equities traders last night said it was expected the stock should hit the market with those numbers. The performance of Wall Street overnight and the first few hours of trading will be crucial to Domain’s direction once it gets going. But observers said the relatively tight valuation range from analysts — Citi is at $3.50 and Credit Suisse is $3.52 — means there should be no major surprises when trading starts. UBS values Domain at $3.20 and has flagged that the separated company could be a private equity target. The remaining Fairfax stock valuation among the analysts ranges from 63c to 74c and questions remain over the company’s future. With Domain, considered the most valuable asset, spun off, the new-look Fairfax will hold the company’s newspaper, publishing and events assets. There is continuing speculation that Fairfax will be picked up by another media company but action is yet to start on that front. The Domain demerger trading will be the first since South32 was spun out of BHP in 2015. A report two years ago by Credit Suisse found that a new company generally performs well for at least six months after a split.
Domain Holding Australia Limited (DHG):
Domain shares have floated on the Australian share market with an opening price of $3.80. Fairfax boss Greg Hywood and Domain chief executive Antony Catalano marked the occasion at a bell ringing ceremony at noon today. By 1.13pm, Domain (DHG) shares were trading at $3.87 after hitting $3.90 at 12.20pm. Fairfax (FXJ) shares slumped more than 30 per cent to 70 cents in early trade this morning, rebounding slightly to 74 cents by 1.14pm after the Domain float. Analysts had valued Fairfax shares at between 63 and 74 cents ahead of the float, while Domain was valued at about $3.50. The separation leaves Fairfax with 60 per cent of the company’s share registry. Fairfax shareholders received one share in Domain for every ten shares held in the media company, which orchestrated the partial spin-off to address a perception within Fairfax that its share price did not properly reflect the value of its prized real estate asset.
MG Unit Trust (MGC):
Dairy processor Murray Goulburn has reached a settlement with Australian Securities Investment Commission following an investigation into the company’s continuous disclosure provisions. The settlement, which is subject to Federal Court approval, stems from the company’s (MGC) failure to disclose market sensitive information to the ASX in a timely manner, over the period prior to an announcement on 27 April last year. Under the settlement, Murray Goulburn will agree to the civil contravention and the penalty determined by the court. ASIC will likely seek a penalty of $650,000, Murray Goulburn said in a statement to shareholders. ASIC did not allege that Murray Goulburn deliberately beached continuous disclosure obligations. “We consider that this settlement is in the best interests of Murray Goulburn as we continue to focus on our objective of supporting our farmer suppliers, including through the proposed Saputo sale process announced on 27 October 2017,” said chairman John Spark. The settlement comes after the company posted a profit loss of $371m for the 2016-17 financial year and announced a major strategic review.
Myob Group Ltd (MYO):
Accounting software MYOB is forking out $180 million to buy a piece of rival Reckon’s portfolio, with CEO Tim Reed saying the move will help push its product far deeper into the small to medium business sector. Buying Reckon’s Accountants Practice Management unit will help MYOB grow its adviser base and Mr Reed said increasing the footprint of the referral network will deliver a creating an opportunity to accelerate online SME growth via a larger referral network. The acquisition, which will be funded by debt, is the biggest acquisition by MYOB in recent years and comes with a hefty price tag. Under the terms of the agreement, MYOB will take over Reckon’s Accountants Practice Management unit which is made up of three operating businesses — Reckon APS, Reckon Elite, and Reckon Docs. The division has a book value of $38m and Reckon’s total market cap is around $136m. The unit serves more than 3000 accounting practices in Australia and New Zealand and according to Mr Reed, will play a key role in MYOB securing its future in the local market.
National Australia Bank Limited (NAB):
National Australia Bank has revealed it is ramping up investment in its anti-money launder-ing program, but denied it has attracted the attention of Austrac over the rollout of its own network of intelligent deposit machines. In a note in this week’s annual report that details its contingent liabilities, NAB said it has identified a number of issues, including certain weaknesses in some anti-money laundering rules. It is understood that NAB has no significant compliance issues with Austrac — the financial intelligence regulator — unlike Commonwealth Bank. NAB said it was strengthening its AML and counterterrorist financing program, with a “significant” investment in systems to improve its compliance. “The group is currently investigating and remediating a number of identified issues, including certain weaknesses with the implementation of ‘Know Your Customer’ requirements and systems and process issues that impacted transaction monitoring and reporting for some specific areas,” the note said.
Quintis Ltd (QIN):
Sandalwood grower Quintis has confirmed it is facing a fresh class action in relation to the termination of a supply contract with pharmaceutical company Galderma and financial losses. The latest legal action has been brought by a shareholder in their own capacity and as a representative of certain other shareholders. It alleges that the company engaged in misleading or deceptive conduct and breached continuous disclosure provisions in relation to the termination of a supply contract with pharmaceutical company Galderma. It also accuses Quintis of misleading conduct in relation to announcements made about its sandalwood sales and projected financial performance in 2016 and 2017. Quintis’ former managing director Frank Wilson has been named as a separate respondent in the action. Quintis (QIN) said in a statement to the ASX that it denies liability in respect of these allegations and will defend the proceedings against it. In September, Quintis was hit with a shareholder class action brought by Sydney-based firm Bannister Law which claims that investors in the company have suffered losses of more than $120 million. The class action claims that shareholders were hit by losses due to inadequate disclosure obligations ahead of the company’s 77.5c share price plunge in May.
Ramsay Health Care Limited (RHC):
Ramsay Health Care chairman Michael Siddle has defended the company's move into France to shareholders at the annual meeting in Sydney despite the hospitals operator indicating it remains a tough operating market in the near term. Mr Siddle announced the appointment of former Telstra boss David Thodey to the board. Several shareholders asked about moves overseas to countries like France and China, which has proven to be difficult for Ramsay. Mr Siddle said Ramsay was prevented from buying more Australian hospitals several years ago by the regulator and had to look offshore, and the opportunity to buy the biggest hospital in France at a reasonable price came up. Chief executive Craig McNally also defended the move saying it was a good acquisition although he admitted the pricing pressure has been greater than he anticipated. Mr McNally said back home, affordability of health care remains a challenge for Australia, but recently announced reforms to private health insurance will drive lower premium rises next year. "A strong growth in Aust business is expected to continue and and we do anticipate operational difficulties in Europe in the near term," he said. He also reaffirmed core EPS growth of between 8 per cent and 10 per cent this year.
Santos Limited (STO):
A reported looming $11 billion takeover bid for Santos from a heavyweight US private equity firm has taken the market by surprise and immediately drawn reaction that it undervalues the local oil and gas player, which is in recovery mode after the oil price crash. US player Harbour Energy, backed by EIG Global Partners and run by experienced petroleum executive Linda Cook, has approached Santos with a takeover proposal and is set to firm up a circa $5.30 a share offer within weeks. Santos is yet to comment but is expected to release a statement shortly. It placed its shares in a pre-open halt, advising the ASX a statement is pending. The shares will not trade before the statement is released, according to an ASX source. But analysts have cast doubt that the price, a 21 per cent premium to Wednesday's close of $4.38 would attract the interest of Santos's board, led by chairman Peter Coates, which rejected gave a $7.1 billion approach from a separate private equity outfit short shrift in October 2015. Such an offer price would assume crude oil prices of $US61-$US62 a barrel, around current levels, making it likely unattractive for the board to consider, one analyst said.
Ten Networking Holdings Limited (TEN):
Ten’s takeover by CBS looks to be imminent as the company applied yesterday to be delisted from the Australian Securities Exchange. In a notice to the market, Ten Network Holdings, through its administrators, requested that it be removed from the official list of the ASX “subject to, and effective following, the transfer of all shares in Ten to CBS” — which would occur “shortly”. The takeover of the embattled freeto-air broadcaster was delayed by a legal challenge mounted by a trio of disaffected shareholders, but the NSW Supreme Court finally gave it the green light on Friday. Ten’s deal with the US giant was inked on September 19 under a deed of arrangement that provides for all of its shares to be transferred to CBS, subject to approval, making the network its wholly-owned subsidiary. “In these circumstances, there are no consequential implications for Ten or its security holders,” Ten said in a statement to the ASX.
Westpac Banking Corporation (WBC):
Westpac’s New Zealand subsidiary has been slapped with increased capital penalties after the bank used noncompliant risk models and “materially failed” to meet governance standards set by the Kiwi central bank. Greater minimum regulatory capital requirements will now be forced on Westpac New Zealand after “serious shortcomings and noncompliance” failures were found in its approach to regulations regarding its status as an “internal models bank” — a system that measures risks faced by a bank that relied on the lender’s own estimates. The Reserve Bank of New Zealand accredits banks to use approved risk models to calculate how much capital they need to hold. However, Westpac used several models “that had not been approved by the Reserve Bank, and materially failed to meet requirements around model governance, processes, and documentation”, the central bank said yesterday. An independent audit of the Westpac subsidiary’s compliance with internal model rules found the bank used 17 of the 35 unapproved capital models and used an additional 21 of 32 unapproved capital models since it was accredited in 2008. The audit also found the bank failed to put in place systems and controls accredited banks were required to have.
Westpac Banking Corporation (WBC):
Westpac treasurer Curt Zuber has admitted traders breached Chinese walls during discussions about the benchmark bank bill swap rate, which the corporate regulator accuses the bank of rigging. Mr Zuber, who is responsible for funding Westpac’s $850 billion balance sheet and reports directly to chief financial officer Peter King, gave evidence in the Federal Court yesterday as part of the bank’s defence against the Australian Securities & Investments Commission. ASIC accuses the bank of market manipulation and unconscionable conduct by rigging or attempting to rig the BBSW 16 times between April 6, 2010, and June 6, 2012. Under cross-examination by Philip Crutchfield QC, representing ASIC, Mr Zuber said Westpac had Chinese walls to separate treasury positions from financial market staff, although the two were allowed to “talk about general themes in the marketplace”. “We didn’t share positions, information on clients and things like that,” he said. Much of Mr Crutchfield’s cross-examination dealt with the actions of Westpac’s star trader, Col “The Rat” Roden, a longtime friend of Mr Zuber’s who is due to give evidence over the next two days.
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