AMP Limited (AMP):
The banking royal commission has taken aim at key parts of financial services giant AMP’s business model, raising the prospect of a serious conflict of interest because of the way the company calculates how much it will pay to buy client books back from its -advisers. Focus shifted to the scandal-ridden financial planning sector as the commission opened a two-week round of public hearings yesterday — its second, following a session last month dealing with consumer lending. The inquiry also heard Australian Securities & Investments Commissioner Peter Kell roast the entire financial planning trade as unprofessional and blast advice given to set up self-managed super funds, which he said failed to take account of client best interest in 90 per cent of cases. “Conflicts of interest that are not either avoided or appropriately managed” were among the drivers of poor consumer outcomes, he said.
Australian United Investment Company Ltd (AUI):
One of the nation’s largest listed investment companies, the conservatively-run Australian United Investment Co, which is chaired by former ANZ chairman Charles Goode, has appointed leading Australian fund manager Dion Hershan to its board. Mr Hershan launched Yarra Capital Management in 2016 after spearheading a management buyout of the local arm of Goldman Sachs Asset Management with the backing of US private equity firm TA Associates. He now takes his place as a director of Australian United Investment (AUI), which has the Melbourne-based LIC created in 1953 by the late Sir Ian Potter and his foundation, the Ian Potter Foundation, as its largest single shareholder.
Bank of Queensland Limited (BOQ):
Bank of Queensland will sell its St Andrew’s insurance business to Freedom Insurance Group for $65 million, as it booked a solid lift in interim profit. The Brisbane-based bank (BOQ) today announced an interim cash profit increase of 4 per cent to $182m. That was aided by a one basis point lift in the lender’s net interest margin, despite a 20 basis point lift in the bank’s cost base. The St Andrew’s life insurance unit has been on the sale block for some time, and the bank will receive a $35m quote reinsurance deal with a global reinsurer, while the remaining $30m will be paid in cash by Freedom. The ASX-listed Freedom is a specialist life insurance company which has been attempting to disrupt the Australian market. The sale agreement contains a three-year exclusive distribution agreement between Freedom and Bank of Queensland.It follows similar transactions by the major banks, which have been shedding their life insurance and wealth management divisions to focus on mortgage lending.
Blue Sky Alternative Investments Ltd (BLA):
Negative sentiment over its shares in the public market has hurt Blue Sky Alternative Investments’ ability to raise funds from private investors, management conceded yesterday, as they took the knife to guidance for funds under management and profits. But after announcing independent reviews of the company’s valuations for its 90 portfolio companies and the processes for reaching and disclosing those figures, chief executive Robert Shand said he was highly confident that the valuations would affirm existing figures. Shares in the Brisbane-based fund manager slumped another 20 per cent yesterday after Mr Shand and chairman John Kain slashed as much as $750 million from year-end guidance for fee-earning assets under management. Net profit guidance has been slashed by as much as 46 per cent to $20m-$25m, from $34m-$36m. Fee-earning assets are expected to be between $4 billion and $4.25bn, down from previous guidance of $4.25bn-$4.75bn. They have already passed $4bn, up from $3.9bn when previous guidance was given at results in February.
Cimic Group Ltd (CIM):
Construction and engineering contractor Cimic Group said first-quarter profit increased by 7 per cent, reflecting rising revenue, and said it remains upbeat on the business outlook. Cimic (CIM) reported a net profit of $172 million for the three months through March, and reiterated full-year guidance of between $720 million and $780 million. The company, which has in recent years expanded by acquiring companies including engineering services company UGL and mineral processing company Sedgman, said its work in hand totalled $34.6 billion, including new work of $2.6 billion. “Our work in hand remains at a high level, providing assurance of future revenues, and the pipeline of opportunities for our business is strong,” said chief executive Michael Wright. Cimic is majority owned by Germany’s Hochtief, which is controlled by Spain’s Actividades de Construccion y Servicios.
Commonwealth Bank of Australia (CBA):
Commonwealth Bank has pledged to improve its financial advice after it signed an enforceable undertaking with the Australian Securities Investment Commission over its failure to provide annual reviews to about 31,500 customers. “We recognise the fact that we have failed customers in our advice businesses over the past decade,” said chief executive Matt Comyn. “These failures have resulted in a range of regulatory actions including imposition of licence conditions and remediation programs. “This is unacceptable and we owe our customers an apology for letting them down. Providing quality financial advice is critical for our customers.” As part of the arrangement with ASIC, CBA subsidiaries Commonwealth Financial Planning Ltd and BW Financial Advice Ltd will together pay a community benefit of $3 million in total, while CFPL will also provide evidence of material changes to compliance systems.
Downer EDI Limited (DOW):
Downer EDI has secured a $660 million deal with South Australian miner OZ Minerals to provide underground services at one of its copper-gold mines. The 6 1/2-year contract runs from July 1 and tasks the industrial services giant with completing the Carrapateena site set up and ramping up production to full capacity. The deal is Downer’s second at the central SA site after it won a contract in December to provide engineering, procurement and construction services.
Fletcher Building Limited (FBU):
Fletcher Building plans to raise $NZ750 million through an entitlement offer and will sell its Formica and steel roof tile businesses. Fletcher (FBU) says the move aims to strengthen its balance sheet and gain support from its banking syndicate after a breach of lending conditions. The raising, being handled by Macquarie Capital, will see shareholders are offered one share for every 4.46 that they own in a pro-rata accelerated entitlement offer that is fully underwritten. There are 156.3 million shares being sold at $NZ4.80, a 23.4 per cent discount to the last closing price of $NZ6.27. Proceeds from the offer will be used to repay existing debt, the New Zealand-based company said in a statement.
OZ Minerals Limited (OZL):
OZ Minerals recorded weaker copper and gold output on-quarter as it closed the open pit at its flagship Prominent Hill mine, but said it remains on track to reach its full-year production goals. The miner (OZL) today reported copper production of 27,466 tonnes for the three months through March, down from 29,886 tonnes in the quarter immediately prior. Gold output dropped to 30,873 troy ounces from 39,178 ounces. OZ Minerals said it continues to expect to produce 100,000-110,000 tonnes of copper and 120,000-130,000 ounces of gold in 2018. The miner meantime reported a cash balance of $646 million, down from roughly $730 million at the end of 2017 following increased spending on its Carrapateena project, an increase in working capital and annual dividend payouts. OZ Minerals also last month said it plans to purchase Avanco Resources via a 50-50 cashscrip deal. The takeover would boost OZ Minerals’ copper production and give the company several options for expansion in the Carajas copper province and Gurupi gold belt in Brazil.
Perpetual Limited (PPT):
The selloff in Perpetual continues despite recommendation upgrades today. Bell Potter upgraded to Buy and JPMorgan went to Neutral, but the share price has fallen 3.3pc to a 21-month low of $40.70.arget prices were downgraded significantly, but the current share price is undershooting those revised targets today. Citi sees “reasonable value” but notes “momentum is poor with significant outflows” in Q1 and “uncertainty over future direction with a new CEO still to be identified”. On that basis, a new CEO appointment could help support the share price to some extent.
Whitehaven Coal Ltd (WHC):
Whitehaven Coal recorded a 3 per cent rise in quarterly coal output and said demand for the energy commodity remains buoyant. The coal miner (WHC) said saleable coal production increased to 5.2 million tonnes in the three months through March, up from 5.1 million tonnes the quarter immediately prior. Total coal sales, which includes purchased coal, were up 10 per cent at 5.4 million tonnes, Whitehaven said. Whitehaven has invested heavily in new mines and operational improvements at existing pits in recent years, seeking to meet rising Asian demand for coal used by power plants and steel mills. It also recently agreed to buy Rio Tinto’s Winchester South coal development in Australia for $US200 million. The miner said thermal-coal demand was strong last quarter, reflecting a colder-than-typical winter in northern Asia.
(Source: AIMS)
The banking royal commission has taken aim at key parts of financial services giant AMP’s business model, raising the prospect of a serious conflict of interest because of the way the company calculates how much it will pay to buy client books back from its -advisers. Focus shifted to the scandal-ridden financial planning sector as the commission opened a two-week round of public hearings yesterday — its second, following a session last month dealing with consumer lending. The inquiry also heard Australian Securities & Investments Commissioner Peter Kell roast the entire financial planning trade as unprofessional and blast advice given to set up self-managed super funds, which he said failed to take account of client best interest in 90 per cent of cases. “Conflicts of interest that are not either avoided or appropriately managed” were among the drivers of poor consumer outcomes, he said.
Australian United Investment Company Ltd (AUI):
One of the nation’s largest listed investment companies, the conservatively-run Australian United Investment Co, which is chaired by former ANZ chairman Charles Goode, has appointed leading Australian fund manager Dion Hershan to its board. Mr Hershan launched Yarra Capital Management in 2016 after spearheading a management buyout of the local arm of Goldman Sachs Asset Management with the backing of US private equity firm TA Associates. He now takes his place as a director of Australian United Investment (AUI), which has the Melbourne-based LIC created in 1953 by the late Sir Ian Potter and his foundation, the Ian Potter Foundation, as its largest single shareholder.
Bank of Queensland Limited (BOQ):
Bank of Queensland will sell its St Andrew’s insurance business to Freedom Insurance Group for $65 million, as it booked a solid lift in interim profit. The Brisbane-based bank (BOQ) today announced an interim cash profit increase of 4 per cent to $182m. That was aided by a one basis point lift in the lender’s net interest margin, despite a 20 basis point lift in the bank’s cost base. The St Andrew’s life insurance unit has been on the sale block for some time, and the bank will receive a $35m quote reinsurance deal with a global reinsurer, while the remaining $30m will be paid in cash by Freedom. The ASX-listed Freedom is a specialist life insurance company which has been attempting to disrupt the Australian market. The sale agreement contains a three-year exclusive distribution agreement between Freedom and Bank of Queensland.It follows similar transactions by the major banks, which have been shedding their life insurance and wealth management divisions to focus on mortgage lending.
Blue Sky Alternative Investments Ltd (BLA):
Negative sentiment over its shares in the public market has hurt Blue Sky Alternative Investments’ ability to raise funds from private investors, management conceded yesterday, as they took the knife to guidance for funds under management and profits. But after announcing independent reviews of the company’s valuations for its 90 portfolio companies and the processes for reaching and disclosing those figures, chief executive Robert Shand said he was highly confident that the valuations would affirm existing figures. Shares in the Brisbane-based fund manager slumped another 20 per cent yesterday after Mr Shand and chairman John Kain slashed as much as $750 million from year-end guidance for fee-earning assets under management. Net profit guidance has been slashed by as much as 46 per cent to $20m-$25m, from $34m-$36m. Fee-earning assets are expected to be between $4 billion and $4.25bn, down from previous guidance of $4.25bn-$4.75bn. They have already passed $4bn, up from $3.9bn when previous guidance was given at results in February.
Cimic Group Ltd (CIM):
Construction and engineering contractor Cimic Group said first-quarter profit increased by 7 per cent, reflecting rising revenue, and said it remains upbeat on the business outlook. Cimic (CIM) reported a net profit of $172 million for the three months through March, and reiterated full-year guidance of between $720 million and $780 million. The company, which has in recent years expanded by acquiring companies including engineering services company UGL and mineral processing company Sedgman, said its work in hand totalled $34.6 billion, including new work of $2.6 billion. “Our work in hand remains at a high level, providing assurance of future revenues, and the pipeline of opportunities for our business is strong,” said chief executive Michael Wright. Cimic is majority owned by Germany’s Hochtief, which is controlled by Spain’s Actividades de Construccion y Servicios.
Commonwealth Bank of Australia (CBA):
Commonwealth Bank has pledged to improve its financial advice after it signed an enforceable undertaking with the Australian Securities Investment Commission over its failure to provide annual reviews to about 31,500 customers. “We recognise the fact that we have failed customers in our advice businesses over the past decade,” said chief executive Matt Comyn. “These failures have resulted in a range of regulatory actions including imposition of licence conditions and remediation programs. “This is unacceptable and we owe our customers an apology for letting them down. Providing quality financial advice is critical for our customers.” As part of the arrangement with ASIC, CBA subsidiaries Commonwealth Financial Planning Ltd and BW Financial Advice Ltd will together pay a community benefit of $3 million in total, while CFPL will also provide evidence of material changes to compliance systems.
Downer EDI Limited (DOW):
Downer EDI has secured a $660 million deal with South Australian miner OZ Minerals to provide underground services at one of its copper-gold mines. The 6 1/2-year contract runs from July 1 and tasks the industrial services giant with completing the Carrapateena site set up and ramping up production to full capacity. The deal is Downer’s second at the central SA site after it won a contract in December to provide engineering, procurement and construction services.
Fletcher Building Limited (FBU):
Fletcher Building plans to raise $NZ750 million through an entitlement offer and will sell its Formica and steel roof tile businesses. Fletcher (FBU) says the move aims to strengthen its balance sheet and gain support from its banking syndicate after a breach of lending conditions. The raising, being handled by Macquarie Capital, will see shareholders are offered one share for every 4.46 that they own in a pro-rata accelerated entitlement offer that is fully underwritten. There are 156.3 million shares being sold at $NZ4.80, a 23.4 per cent discount to the last closing price of $NZ6.27. Proceeds from the offer will be used to repay existing debt, the New Zealand-based company said in a statement.
OZ Minerals Limited (OZL):
OZ Minerals recorded weaker copper and gold output on-quarter as it closed the open pit at its flagship Prominent Hill mine, but said it remains on track to reach its full-year production goals. The miner (OZL) today reported copper production of 27,466 tonnes for the three months through March, down from 29,886 tonnes in the quarter immediately prior. Gold output dropped to 30,873 troy ounces from 39,178 ounces. OZ Minerals said it continues to expect to produce 100,000-110,000 tonnes of copper and 120,000-130,000 ounces of gold in 2018. The miner meantime reported a cash balance of $646 million, down from roughly $730 million at the end of 2017 following increased spending on its Carrapateena project, an increase in working capital and annual dividend payouts. OZ Minerals also last month said it plans to purchase Avanco Resources via a 50-50 cashscrip deal. The takeover would boost OZ Minerals’ copper production and give the company several options for expansion in the Carajas copper province and Gurupi gold belt in Brazil.
Perpetual Limited (PPT):
The selloff in Perpetual continues despite recommendation upgrades today. Bell Potter upgraded to Buy and JPMorgan went to Neutral, but the share price has fallen 3.3pc to a 21-month low of $40.70.arget prices were downgraded significantly, but the current share price is undershooting those revised targets today. Citi sees “reasonable value” but notes “momentum is poor with significant outflows” in Q1 and “uncertainty over future direction with a new CEO still to be identified”. On that basis, a new CEO appointment could help support the share price to some extent.
Whitehaven Coal Ltd (WHC):
Whitehaven Coal recorded a 3 per cent rise in quarterly coal output and said demand for the energy commodity remains buoyant. The coal miner (WHC) said saleable coal production increased to 5.2 million tonnes in the three months through March, up from 5.1 million tonnes the quarter immediately prior. Total coal sales, which includes purchased coal, were up 10 per cent at 5.4 million tonnes, Whitehaven said. Whitehaven has invested heavily in new mines and operational improvements at existing pits in recent years, seeking to meet rising Asian demand for coal used by power plants and steel mills. It also recently agreed to buy Rio Tinto’s Winchester South coal development in Australia for $US200 million. The miner said thermal-coal demand was strong last quarter, reflecting a colder-than-typical winter in northern Asia.
(Source: AIMS)
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