NEWSLETTERNEW LOOK WAdirector Issue 40 | SPRING 2011 companydirectors.com.au

INSIDE 2 State Manager’s corner 3 21st Anniversary Ball photos 4 Regional Roadshow 4 Karratha Sundowner 5 SME Briefing 5 Director Briefings review - member perspective 5 Oil and gas Briefing 6 The importance of employee engagement 6 Leaders Edge Lunch 6 Austcham networking event Preview of 21st Anniversary Ball photos, see page 3 for more… 7 Director profile - Mike Ansell WA Division celebrates and recognises past Presidents 8 Core system replacement Twenty first celebrations are an opportunity achievements at international events contrasted 9 Corporate partners to reflect, recognise and celebrate the past. with the lows of the natural tragedies that faced 10 2011 Rugby World Cup and boards It can cause embarrassment for previous Australia over the past 21 years. fashion faux paus and red faces from looking The WA Division Gold Medal Award is 12 Harmonised safety laws at gawky high school photos, but this was presented annually to an outstanding director not the case at the recent 21st anniversary whose achievements go beyond business. It 14 Farewell to our councillors celebrations for the WA Division at its annual is awarded to one who exemplifies leadership black tie event. values of excellence and integrity and 15 Member milestones The WA Division wanted to recognise and encourages the highest ethical standards. 16 The (r)evolution to equality celebrate the former Presidents, all of whom George Jones AM CitWA FAICD was awarded contributed to the highly successful Division the Institute’s 2011 WA Gold Medal in in equity raising that enjoys strong and ongoing support from recognition of his achievements in the director 19 Indigenous Governance Program its members in 2011. community promoting the highest standards It was an added bonus that all the State of corporate governance and directorship, and 20 Diary dates Managers from the past 21 years were also able for the leadership he demonstrated during the to attend. Sue Pepperell, the longest serving tragic loss of the Board of Sundance. and most recognised State Manager with over Those that joined us for the evening included; 15 year’s service, flew from Geraldton to join Gordon Martin – the original WA Division the celebration along with Anthony Smith, President, Warwick Kent, Ian MacKenzie, and Suzanne Ardagh, the current State Peter Mansell, Terry Budge, Fiona Harris, manager to celebrate the evening. Steven Cole (current State President) It was a fitting night to recognise the It was a wonderful night, made more special NEWSLETTER SPONSORED BY: captains of industry and commerce. The list by the inclusion of our former Presidents and of past Presidents read like a corporate “Who’s State Managers. who” of WA industry. Seven out of the past The entertainment, provided by “Boys ten Presidents joined us for the evening’s in the Band”, the Martini Bar and late-night celebration and a short video presentation jazz band ‘’Milan’s Mischief’’ contributed presented the highlights of each President’s to a stellar night that was a hit with the WA term. The corporate crashes of the early 90s, the members and their guests and a fitting tribute Asian financial crises, the highs of the sporting to celebrate 21 years!

Contact us: WA Division, PO Box 7050 Cloisters Square WA 6850 t: 08 9320 1700 f: 08 9322 6545, e: [email protected]

1 WAdirector | SPRING 2011

STATE MANAGER’S CORNER

Do your current Management Consultants offer you Straight forward Clear thinking Tailored outcomes?

We do! Suzanne Ardagh MAICD WA and International Manager, Australian Institute of Company Directors Business Advisory, Business Change, IT Advisory, Greetings from Singapore. This is a truly vibrant and international city, Enterprise Applications, Software Development but like most expats, I have been on the road since moving up here, covering considerable ground, with visits to Manila, Kuala Lumpur, 10 Countries, 14 Offices, 750+ Staff Bangkok, Mumbai and Jakarta. In Australia: Perth, Sydney, Brisbane, Melbourne What’s been both surprising and rewarding, is the level of engagement of our international members. All of those contacted are keen to Managing Director: Frank Early - 08 09322 2808 offer advice, support and information on our potential international 1 Howard Street Perth WA 6000 activities. Many of our members hold senior international roles, and the www.thebirchmangroup.com opportunity to sit with them and get an insider’s view of the challenges for Boards and Directors in their particular region is invaluable. South East Asia is an interesting and challenging environment to do business, as many of you would know! WA OFFICE WA COUNCIL On the WA front, the team here continue to deliver the numerous Suzanne Ardagh MAICD events, education courses and membership services at the highest WA and International Manager Steven Cole standards that you have all come to expect. They are all doing a FAICD (President) Brad Green great job whilst I am on the road. Member Relations Executive Michael Smith FAICD (Vice President) The regional activities continue to gain momentum with recent events Malini Haran in all four centres, Albany, Bunbury, Geraldton and Kalgoorlie, focussing Member Relations Executive Rick Crabb on the duties and responsibilities of NFP Directors with State President, FAICD Karen Spencer Steven Cole. Events Executive Alison Gaines FAICD We co-hosted an event with regional airline, Karratha Flying Services, Rachel Hogan in the vibrant regional hub of Karratha the North West, a city reflecting Events Coordinator Gaye McMath the energy and pulse that drives the WA economy. We look forward FAICD Erin Timu to engaging more with this diverse and dynamic city in WA with our Education Executive Craig Readhead “Outback Forum” on 7 October which heads to Karratha to view FAICD Rio and Woodside operations. I’d encourage you to book onto this Grace Letizia Education and Board Services Steve Scudamore trip which will be a great chance to get a bird’s eye view of what is FAICD happening in the impressive North West. Executive Elizabeth McLaughlin Gene Tilbrook We had a delightful evening recently, celebrating the WA Division’s Office & Events Administrator FAICD 21st anniversary and you’ll enjoy the photos from this event. We Kellie Benda Amy Matson were very pleased to have seven of the past ten Presidents join us on FAICD the night and the three State mangers. It was a terrific celebration Education Administrator Shirley Int’Veld and a recognition and reflection on how fortunate this Division has Lauren Jackson MAICD been, to have such highly respected Directors taken up the role of Events & Membership Administrator State President. It was a great night with fantastic entertainment, not only from the “Boys in the Band” but also an impromptu performance from one of WA’s highly respected legal fraternity who impressed WA Division, PO Box 7050 Cloisters Square WA 6850 everyone with his stage presence and singing voice! t: 08 9320 1700 f: 08 9322 6545 e: [email protected] Newsletter written by: WA State Office.Editor: Rachel Hogan. For more information or to submit content to us, details above. I look forward to joining you at our end of year Christmas Long Disclaimer: The opinions expressed in NSW Director do not necessarily represent the views of the Australian Lunch this year, which will be something new and yet - not! So stay Institute of Company Directors nor the publication. While every effort has been made to ensure accuracy, no responsibility can be accepted by the publisher for omissions, typographical or printer’s errors, inaccuracies tuned and we look forward to seeing you at our events and course. or changes that may have taken place after the publication. All rights reserved.

2 21st Anniversary Ball photos continued

Guests dressed to impress in their black-tie attire Steven Cole FAICD, Peter Mansell FAICD, Terry Budge FAICD and Fiona Harris FAICD

Warwick Kent AO, Ian Mackenzie FAICD, Gordon Martin, Guests enjoying pre-dinner drinks Steven Cole FAICD

WA Christmas Long Lunch The great corporate Christmas feast

Thursday 1 December 2011 Pan Pacific Hotel 12:00pm - 3:30pm

The WA Division invites you, your colleagues and clients to join us at this year’s great corporate Christmas Feast. This event will focus on bringing back the traditions of Christmas through platters of sumptuous food at your own table, deluxe wines by Voyager Estate, special gifts and prizes and entertainment by resident funny man Andrew Horabin and live funky jazz tunes.

To register t: 08 9320 1700 or e: [email protected]

Sponsored by: Charity partner: Paul Berend GAICD, Anna Berend-Sloboda GAICD

3 WAdirector | SPRING 2011

Regional Roadshow

On the week commencing 15 people willing to take up the August the Australian Institute challenge and give of themselves of Company Directors delivered in support of the community. a Not-for-profit regional road I feel very confident that with show featuring WA Division the demonstrable dedication President, Steven Cole. The week of everyone who came to the long road show travelled to our sessions, and with the information four regional areas, Kalgoorlie, we were able to impart, the Geraldton, Bunbury and Albany. governance and performance Steven delivered a keynote outcomes for the organisations Albany-Kelly Hull, Sarah Kalgoorlie-Bruce Harris FAICD, address at each venue on represented by the participants Bowles, Carmen Fasolo Adrian Tingey,Lloyd Morley the topic of ‘’Governance for will be much enhanced.” performance-enhancing the Steven has over 35 years’ prospects of NFP success’’, professional, corporate and which was followed by a very business experience through engaged Q and A session where senior legal consultancy, as the audiences shared their own well as a range of executive experiences and challenges. management and non-executive Steven highlighted the changing appointments including Chairman landscape of the NFP sector of Brightwater Care Group and including the governance the QE2 Medical Centre Trust. inhibitors and enhancers as well Our thanks go to our local Geraldton-Jonathan Haeusler, Bunbury-Mike Ansell GAICD, as how NFP organisations can committees in Kalgoorlie, Tom Maina GAICD Steven Cole FAICD use corporate governance as a Geraldton, Bunbury and means to drive performance. Albany for their contribution Patersons Securities Limited, Total For the first time the In particular Steven spoke to to the success of our regional Telephone and WA Business News. Company Directors Course the need for the not for profit events and courses. We very Without their support, important will be delivered in Geraldton. and charitable sectors to be much value their commitment events such as these would be not The course will be held at mindful of both mission and to Company Directors and be possible. Master Builders Association margin (M&M’s) in order to be our continued and relevant We look forward to sustainable and optimise their engagement with the regions. strengthening our relationship on the 7-11 November 2011. prospect for strategic success. Our special thanks also go to our with all our current and To enrol contact Erin Timu on “I was very impressed by ongoing event sponsors: Williams prospective members in the t: 08 9320 1705 the level of discussion and & Hughes, RSM Bird Cameron, regions and also to delivering more engagement” said Steven. “It is HHG Legal and also to our new events in 2012 on topics which are fabulous to see so many committed sponsors who have come on board: relevant to regional needs.

Karratha Sundowner Networking photos from the sundowner held in conjunction with regional airline: Karratha Flying Services

4 SME Briefing Oil and gas Briefing

and Marc Loveridge, the founder Social media of Adapptor. Chaired by Brett Growing your business Fullarton, Partner of KPMG, the and the board discussion centred around the risk through good governance - and compliance issues in social A topic that is increasingly in the media such as privacy, employee forefront of our members minds, usage, copyright, defamation and The board’s role in strategy the third event in the SME Series company reputation. of Director Briefings was on “Social were covered included: The Guests included; John Borshoff Media and the Board” which forums for discussing strategy, the FAICD, Mark Leaker MAICD and was held at the Old Brewery on delineation between the role of Timothy Brady MAICD. Thursday 4th August 2011. the board and management and A special thanks to our SME Members and guests were series sponsors Allion Legal, the importance of communicating exposed to the do’s and don’ts Bankwest and KPMG for strategy to employees and of social media in the boardroom. their support. The final event shareholders. The discussion The panel for this event in the SME series for 2011 is proved to be informative and was second to none, including on “Strategy versus Operations highly entertaining. Michael Malone FAICD, – the balancing act of the SME Many thanks goes out to our Managing Director of iinet, board” on Thursday 20th series sponsors Gilbert + Tobin, Valerie Davies FAICD, Director October 2011. John Murray, BDO and Shell for their continued of One-2-One Communications Matthew Allen MAICD support. The final event for the Oil and Gas series in 2011 will On the 25 August the second be held on 3 November on the event for the Oil and Gas series topic of: ‘’Petroleum tax and was held at the Kings Park access to finance’’. Function Centre on the topic of: “Growing your business through good governance- the board’s role in strategy’’. The panel comprised of Eric Streitberg FAICD, Executive Chairman, BURU Energy and Erica Smyth FAICD, Chairman, Toro Energy and was chaired by Marc Loveridge, Michael Malone FAICD, Valerie Davies FAICD David Martino, Partner, Gilbert Erica Smyth FAICD, Eric Streitberg and Brett Fullarton FAICD and David Martino + Tobin. The main points that Director Briefings review- member perspective resources company, Edward topical and has included risk and it certainly delivered in spades. George. It is a privilege to be able natural disasters, capital funding for The expert panel all have extremely to share with you some of my SME’s and most recently and perhaps interesting stories and views to observations and learning’s from one of my topical favourites - share on the subject of social a year not yet finished, but ‘Social Media and the Board’. media and were not frightened to already packed with lots of rich Personally I think the challenge each other on differing learning experiences. Company emergence of social media viewpoints. One statement really Directors provides a unique is the most exciting and game stood out for me – “It is no longer opportunity to attend various changing development businesses a question of whether you as events and forums where you get will face in the next 5 years. a company choose to do social to acquire knowledge from some At Edward George we do a lot media, the only question on the of the best Executive and Board of work assisting our clients table is how well you choose to room talent Australia has to offer. with executive recruitment do social media.” I don’t think In the last 6 months I have engagements using social media. you could have come away from particularly enjoyed the Directors In fact the cornerstone of our new that discussion with anything but Simon Stibbs MAICD Toolkit Briefing sessions client growth in the executive an unequivocal commitment to Member since 2011 Company Directors has been recruitment market has largely immerse yourself in the business Edward George Director - Operations running at the old Swan Brewery. been driven on the back of being of intimately understanding this Fabulous location, beautifully recognised as an industry expert social media wave. Joining Company Directors early organised and the speakers and on the effective use of Linkedin. For me, joining Australian this year has been a fantastic panels they put together are always As you can imagine for me Institute of Company Directors journey both professionally and first rate. The myriad of subject ‘Social Media and the Board’ was this year has certainly been an personally for me and my human matter has always been imminently one topic not to be missed, and investment well founded.

5 WAdirector | SPRING 2011

The importance of employee engagement

Zilla Efrat employees the door. “Set them employee was not present or work flexibly and be part of family Editor: Company Director magazine free, let them go and work for focused on the immediate task, life, noting the few companies your competitors!” nor contributing to the goals of who do encourage males to work That was the advice from the organisation. She added that part-time or flexibly have little Naomi Simson, chief experience Gallup study indicated that 24% of uptake of the offer due to the officer of online experience gift disengaged employees intended to perceived negative impressions store RedBalloon, at a Leaders spend their entire career with their it may produce. Edge Lunch in Perth recently. current organisations. But she believed directors could According to the Australian Simson warned against help in changing this culture. Gallup Biannual Australian expecting money to engage “There was a man called Ghandi Engagement Study (2008), up to employees. “If you give them who sat down and didn’t eat until 21% of employees are actively carrots for sales, next year they he changed India,” she said. will want more carrots for the same disengaged across Australia costing level of sales,” she said, noting that businesses up to $42 billion per no amount of money would keep year in lost productivity. employees in a role they were not In contrast, RedBalloon boasts connected to. a 97% employee engagement When asked how she engaged score (by Hewitt Associates 2008) with different generations of staff Naomi Simson MAICD whereas the Australian average especially Gen Y, she highlighted is 54%. RedBalloon is also that the language used in the In September the WA ranked 29th by BRW and The question as a problem in itself, Division held a Leaders’ Edge Great Places to Work Institute explaining she never referred to Luncheon with Naomi Simson, of Australia’s annual list 2011. anyone within the company as Founder of RedBalloon It ranked ninth in 2009 and aims staff. They were RedBallooners, to pip Google for the number one colleagues, the team. Directors and senior management position in the future. Simson also touched on the Simson noted that of all organisations, large or small, culture change that is needed to Michael Smith FAICD should show their disengaged disengagement meant that the allow men, as well as women, to Austcham networking event Leaders Edge Lunch The Australian Institute of Company Directors joined with Austcham Singapore to Tom Albanese, Rio Tinto co-host a member networking event. It was a sold-out event and our members enjoyed the opportunity to meet up with each Rio Tinto Chief other and also to network with the Executive Tom Albanese Australian Business Community. was the main drawcard for the second of the Australian Institute of Company Director’s Another Company Directors Leaders Edge Lunch member event will be held on Tom Albanese series on Tuesday 28 4 October in the Freehills offices in Singapore as part of © West Australian June 2011. the Essential Director Update. Mr Albanese spoke about mining’s future at the Hyatt Regency Perth in front of 360 guests. Members included Deloitte’s managing partner Keith Jones FAICD, Rio Tinto Iron Ore’s CEO, Sam Walsh FAICD, James Komninos FAICD, Managing Partner of RSM Bird Cameron and Nick Bowen FAICD, CEO of McMahon Holdings. International Division Manager, Suzanne Ardagh, took Many thanks to our event sponsors Commonwealth Bank, the opportunity to launch the Deloitte and wine sponsor Voyager Estate for their support. International Company Directors Course for 2012 which will be held at the International Hotel in Hong Kong on the 23rd February.

6 Director profile

What do you think are off in their own direction. This from Western Australia is not the foundations of being often leads to a dysfunctional easy as he is always on a plane a good director? board. This is not to say that flying somewhere in the world. Being an accountant by profession having different views are wrong; This comes at a great sacrifice helps lay the foundations to in fact it is quite the contrary to him and his family. being a good director. These as this can lead to healthy Kim is always available if the foundations are based on having discussions. This can then lead need arises and there would good personal and business to better decisions being made not be too many employees ethics. Good accountants learn if approached in the right way. or their partners that he does not to take things for granted What is the best piece of advice not know personally. He calls and have an enquiring mind when you have received over the years a spade a spade but allows you formulating decisions. and by whom? the freedom to get on and run It helps if you know your strengths Some of the best advice I’ve your own office how you want and your weaknesses. That way received is around how you to. This allows a very positive MIKE ANSELL you can call on the right help from cannot just rely solely on natural environment to operate in. Most employees would refer to Kim as GAICD those who are able to guide you talent to get you there. This through the decision making process. applies to sport, business and a friend rather than a boss! Member since 2010 other things in life. Generally if The old saying “that you are What has been your best you are prepared to work hard for never too old to learn” is so true. career decision? something and have a never give DIRECTORSHIPS & BOARDS Business is always changing and There is no one real decision that I up attitude it is surprising how as such you must keep yourself up would call my best decision unless Current: far you can get. This attitude was to date with these changes. If you you say joining the accounting instilled into me from an early age RSM Bird Cameron do not you will soon fall behind profession itself. from my parents. your competition and you could Client Advisory boards One of the better decisions that also get yourself into hot water by Setting goals for yourself and I have made to enable me to reach Chairman of SW Branch breaching changes in legislation. then staying focused is the only the position that I am now in was to way to achieve them. This is not Australian Institute of Taking an active role and doing adopt a continual learning program. easy at times as there are often Company Directors your own research are also key Doing my Chartered Accounting ingredients. There is no point conflicting events that have to professional qualification and be managed. Being well organised Bunbury Chamber of going to a board meeting not Company Directors Course were helps to minimise this. Commerce - Treasurer prepared and then just sitting particularly beneficial. on your hands. If you cannot It is surprising how often people Being prepared to have a go is contribute in a meaningful way look at you with envy and say how Previously on: also important to move up the then you should resign. lucky you are. If only they knew corporate ladder. This involves Bunbury Cathedral Grammar Based on your experiences, what what sacrifices you made along having the confidence to take that Board – Board & Chair of is the best advice you can give to the way to get there! Would they first step and then not stop trying. be prepared to do the same? Finance aspiring directors? I have found it very rewarding If you are a director of a company Who do you admire – either a to give something back to the Bunbury Junior Football Club then you must know the company director or business leader and why? community as this also helps President & Life Member inside and out and the industry RSM Bird Cameron is a Chartered your self confidence and at the same time teaches you how to Bunbury Hospice & Palliative that it is in. This is critical as that Accounting firm that has been is the only to know what makes practicing for nearly 90 years and tackle challenges outside of Care - Chairperson the business tick and also the I have been part of the firm over your work environment. I have parameters the business is working 30 years. The firm has grown contributed over the years within. Having a clear understanding considerably the last 15 years. Our through groups such as Apex, of the key performance indicators, current Chairman Kim Hutchinson Lions, Junior Football, Not-for- the risks and a clear direction as to has been on the executive Profit organisations, a School where the business is heading is throughout this period. He has Board and more recently the most important. been with the firm longer than Chamber of Commerce and Company Directors. Working with a functional and I have, and knows what the culture dynamic team makes the role of the firm is and he has fostered easier as everyone is working it throughout our expansion. together to achieve a common I admire Kim for what he stands goal. There is nothing worse than for and his commitment to the being on a board where everyone firm. Running a national practice has their own priorities and going with an international affiliation

7 WAdirector | SPRING 2011

Board agenda item – core system replacement

John Lynch and Ben Pace converging towards common sets and re-training can be managed simple solution can be adopted to Birchman Group of commoditised processes. without too much extra budget). get processes under control before For crucial processes that • Become nervous when the ERP/Core System replacement The company’s core system or support customer intimacy - or the recommendation for commences. Within a few months ERP is failing to meet today’s processes that enable innovation implementing the system is some of the critical processes are requirements, it is difficult and of products/services and channels described as ‘big bang’ (because automated and under a continuous costly to change - takes too long, to market - operational efficiency it sounds like something nasty is improvement regime. and the only solution on the seems a marginal gain if the price about to happen). Some organisations have table is to get a new one. A new is the loss of agility in responding • Get frustrated with variations to adopted this approach and system will bring radical changes to marketplace pressures. the budget, time-frame or scope appointed a Chief Process Officer; to business processes, information What about risk? • And the executives involved AT&T, Campbell Soup, Investis, flows and underlining technology, quietly make a career decision and Ports America, for example. The one thing that is certain not to mention staff re-training. to never be involved in What next? All these changes will happen about the time-frame, budget, another one! at the same time resulting in and scope for a Core System/ The fact is, these projects are When facing an ERP/Core a high-risk endeavour where ERP replacement is that most will extremely complex for the Systems replacement involving expectations are rarely met. arrive late, at a greater cost, and professionals involved, and tens or hundreds of millions of do less than expected. dollars, a simpler new approach Is there another way? often impossibly difficult, and These projects are ‘risk career-limiting, for the executives is worth exploring. Especially ERPs - Competitive Advantage, magnets’ and to mitigate risk, recruited to oversee them. if it costs less than the planned or Disadvantage? Business Case, and returns organisations typically: What’s the alternative? They certainly used to be a • Appoint an Executive sponsor incremental benefits. point of advantage, but for an and a high-powered Steering Faced with the (daunting) A process management and ERP to provide a competitive Committee. prospect of asking the board optimisation approach will ensure advantage, one of two conditions • Collect requirements through to supply scarce capital funds, an early ROI, by reducing the needs to be present: extended investigation and and to re-allocate keenly sought complexity, costs and risks. There • Your competitors don’t have one consultation. operating expenditure, to invest is an immediate visibility of • Your competitive strategy • Identify (often creatively) in a medium-term high risk improvements and change. is based primarily on the the benefits that will fund initiative, they pause. Expose the processes that operational efficiency of the investment. They review their core make your organisation different, automate them and place them (mainly) back-office processes. • Write a detailed Business processes, and decide which of under a continuous improvement But what if your response to Case to convince others (and them really make a difference, regime using you own people competition has more to do with ourselves) that it can be done. either for competitive positioning to manage the changes. Then customer interaction and channel/ • Add large amounts of or because they are the subject of product/service innovation? impending reform. implement the ERP/Core System governance; a Program Office, in a lower risk environment to get Once a process is embedded in Change Management, external These processes are strong an Core System/ERP, changing candidates for process management, efficiency from those processes reviews, Board approval (or that are transactional in nature. it often requires access to scarce, complicity?), and a hefty sitting above and working with high-cost technical resources and investment in contract the Core System/ERP. They Contact a bountiful budget. The other negotiation that (we hope) have a large impact on customer John Lynch pre-requisite is patience. allows us to sue someone if it interaction, product/service [email protected] There is a strong trend to go goes wrong. innovation, channels to market, with ‘out of the box’ systems, ie and exposure to regulatory reform. Ben Pace minimal changes, on the premise And then they: Your staff have a deep [email protected] that the system incorporates • Discover the ‘requirements’ will understanding of their core Frank Early ‘best practice’. Leaving aside the cost too much and take too long. processes and, coupled with some [email protected] validity of this claim, this means • Decide to go ‘out of the box’ external help that brings a tried that many organisations are (and hope the staff resistance and tested approach, an innovative BOARD ADVICE Recruitment, Composition, Review WA’s leading specialist in the search for Non-Executive Directors and Chairmen. To:- n Find out how Mike can help you find the right director for your organisation n Determine if you should be on his database of suitable candidates

Contact Mike:- BOARD ADVICE Principal, Mike Horabin FAICD Email: [email protected] | Mobile 0417 344 388 | Phone(fax) (08) 9245 1551 Principal, Mike Horabin FAICD

8 Corporate partners - Thank you to our 2011/2012 Corporate Partners

Allens Arthur Robinson Clayton Utz iiNet Limited PricewaterhouseCoopers Allion Legal Clifford Chance Iluka Resources Limited Rio Tinto Ltd Australia and New Zealand Commonwealth Bank Jackson McDonald RSM Bird Cameron Banking Group Limited of Australia Jardine Lloyd Thompson St John of God Health Care AustralianSuper Conducive Pty Ltd Pty Ltd Westscheme Division Synergy Corrs Chambers Westgarth KPMG Automotive Holdings Shell Development Group Limited Coventry Group Ltd LandCorp (Australia) Pty Ltd Azure Capital Curtin University of Technology Lavan Legal The Royal Automobile Club of WA (Inc) Bankwest Deloitte Link Market Services Limited The University Barrick DORIC Macmahon Holdings Limited of Western Australia Barrington Consulting Group Edith Cowan University Mallesons Stephen Jaques Verve Energy Pty Limited Ernst & Young Middletons Water Corporation BDO Freehills Murdoch University Wesfarmers Limited Blake Dawson Gerard Daniels Nido Petroleum Ltd Woodside Burswood Entertainment Complex GESB Patersons Securities Limited WorkCover WA Cedar Wood Properties Limited Gilbert + Tobin Lawyers Pitcher Partners Cooperative Bulk Handling Ltd HBF Health Limited Plan B Wealth Management

WA community update

Malini Haran and saw a crowd of almost 42,000 Community Representative/Member people who were all in support Relations Executive of the charity ‘’Activ’’ which is WA’s leading community benefits The WA Division is a strong organization. The participants supporter of community included people of all ages and involvement with the team many organizations. The WA participating in charity events division represented the institute including: The Afternoon tea wearing the infamous bright event, with all donations going purple shirts and completed the to Ovarian Cancer Australia, Red 12km walk in under 2 hours. Nose Day, with all donations going Watch this space for the next to Sids and Kids charity and the community update from the WA recent City to Surf. The WA City division and check out the photo to Surf was held on August 28th below from the City to Surf event. Greg Constantine MAICD, Larrakia Development Corporation – attendee of the Cairns Company Directors Conference 2009

Save the date Company Directors Conference Directorship:12 Darwin: 9-12 May 2012

For conference enquiries contact Hanna Bloomfield t: 02 8248 6600 e: [email protected] WA Division representatives

9 WAdirector | SPRING 2011

2011 Rugby World Cup and boards

the Wallabies success and the Bringing investment upfront will pay dividends, increase shareholder wealth and brand value. bill to the Enough, I hear. We get the picture! What I really want to do is ask boardroom some well qualified directors and players what their views are on the RWC. I have the privilege of asking a few questions of several people with a large amount of Wallaby experience between them, and one with a wealth of board experience and a confessed fellow rugby “tragic” - Tony Howarth, Phil Kearns, Nathan Sharpe, Dave Pocock and John Welborn. So Gents, a few easy questions… starting with Tony. Which Australian player is going to have the greatest impact on the 2011 RWC and why? Tony Howarth (TH) – Rocky Elsom. At his Tony Adcock FAICD best he can Member since 2003 provide fantastic Company Director and Consultant “go forward” and can lift the On some of the Australian team. On the other hand, if he Institute of Company Directors doesn’t make the transition from Courses that I facilitate I often captain he could weaken the side. ask the question, “why would Cup) for the third time, but on strategy and assess the risk Phil Kearns you want to be a director”? i.e. the other attributes mentioned attached to each component (PK) – Will with the personal liability, Centro above, roles, governance, player of strategy, looking to either Genia, as he can etc. as a background. And, of representation, communication, mitigate it or accept it. It’s a game unite two parts course, there are good answers team values would be clearly plan by any other name. It needs of the team , the to the question. articulated in the Wallaby plans. to be clear, unambiguous and forwards to do If I asked the question It is a business campaign as much executable, whilst recognising what they have “why would you want to be a as it is a sports campaign. things change. to do and the backs to do want Wallaby?” I would expect every Successful boards require a As the RWC in NZ is in full they want to do. past and current player and every cohesive, functional team that is swing, there appears to be an fan would say, “because it is collegiate and respectful to each inverse relationship between the John Welborn the highest pinnacle of a rugby other. It does not mean they number of days between now (JW) - Quade dream”. How close to rugby cannot disagree. In fact, open, and the RWC and the number of Cooper has heaven can you get? honest challenging discussion board meetings or strategic off- the potential There are many similarities is important, but when they sites being arranged around the to be a once in between a board and a Rugby have that, it is done with mutual same time and coincidently in NZ. a generation World Cup campaign. The board respect, trust and the right One early lesson in governance is playmaker. The has to establish the compelling endgame in mind. A successful to arrange a board calendar such RWC is a stage for actors to rise vision, mission and values of a sports team, like the Wallabies that directors and executives know to the occasion. Remember Lomu, company, set the cultural tone or any other high performing when to be in the same place at Campese, and Wilkinson over and provide the governance team needs to conduct itself in a the same time! different World Cups. framework. Directors have to similar manner. The analogy continues. To be Nathan Sharpe understand the role and functions Members of a fully functional a fit, cohesive sports or business (NS) - I would of a board, its duties and board understand their roles team, there is no doubt that say Will Genia responsibilities, the relationship and responsibilities in the same preparation and training is key, will be the between board and management, way a successful rugby team whether it is “on the paddock”, linchpin for and of course, the liabilities and understands the roles and reading and understanding the world consequences of being a director responsibilities of individual the board papers or attending cup. Quality and , dare I say it, occasionally players and the overall team. To a Company Directors board playmakers are critical for success getting it wrong. borrow a phrase from a friend of training course. High performing at any world cup. He is thoughtful, Within the Wallaby camp mine, “there is an “I” in team”. teams need to be prepared composed and understands the there can only be one mission And then there is strategy and and train. Sound preparation game. Probably the best 9 in the – win “Bill” (the Web Ellis risk. Boards guide the business is the secret to a board and world at the moment.

10 Dave Pocock sustained pressure against sense of “team” and the interests me as I enjoy (DP) – Stephen anyone can do. competitiveness. Celebrating learning about the dynamics Moore. He DP – I think Argentina will really victory and learning lessons. of business across all was impressive miss a player like Hernandez We can over rationalise industries. As I learn more during the super who was so key for them in these things. about a particular industry season and Tri 2007. Samoa are my pick – And “Do you see any other I feel my contribution will Nations this they have an enthusiastic similarities between rugby be well rounded having come from such a unique year and I think forward play is and physical squad with a lot and being a board member”? background in professional going to be so key at the world of skills – as they displayed If so what? sport which has seen many cup in New Zealand. I think against the Wallabies in Stephen will emerge from the PK – Yes, taking Responsibility. challenges in its time Sydney this year. If this is not done it all falls tournament as one of the best DP – Yes, I can see myself helping apart. If the hooker gives hookers in world rugby. It wouldn’t be fair to ask in this way in the future. a bad throw to the line Sharpie and Dave who will It’s not something I have Thanks and secondly, Which out, we don’t get the ball win, but to the others…The thought about too much overseas player do you think and can’t do the job for winning team will be? though and is a big time will do likewise and why? which we are responsible, TH – Australia – you have to commitment so I’d have to TH – I am a great fan of Ma’a back them! so everyone has to play see how I can fit it all in Nonu. NZ always has their individual role well. and what I could add to the powerful centres. PK – Australia. We’re playing It is the same at the board. good rugby and are peeking company or organisation. PK – Dan Carter of New Zealand, Stakeholders will not get Finally, we wish you both all the “best player in the at the right time. increased value if the board the best for a successful RWC world.” JW – New Zealand. does not play it’s role. campaign. Phil we are looking JW - Alexis Palisson of France, a Phil, I know you will be JW – Yes, the necessary collective forward to your insight, wit full back, and I don’t usually commentating, but are you direction of the team and repartee. Tony and John, pick the “princesses” ie planning any other business in around one goal when there enjoy every minute of the backs. Another, could be NZ during the RWC? are so many individual games and Thank you all for Heinrich Brussow, the South PK – I will be in and out of the elements at play and your time. Go the Wallabies ! African flanker. secondly, how you handle country to commentate and NB – For the record. Dave defeats and challenges NS - Dan Carter will no doubt not doing much more. In Pocock for sheer consistency rather than victories. have a similar influence on on a Saturday and out early and reading of the game, Nonu i.e. how you apply the the cup, his composure and Sunday morning to spend for being brilliant at speed, learnings. direction is key to NZ being some time with the family. France (depending on which successful at the cup. And Phil, John and Tony, TH – It is the collegiate nature Team turns up on the day), DP - There’s always a player that “what was the single most required. There are many Australia to win and in the sets the tournament on fire learning from the sports world learning experiences from board room – communication with individual brilliance you have consciously taken the high cross fertilisation and common sense! (eg Rupeni Caucau’s long into the boardroom”? of sport and senior business. range tries in the 2003 And for Tony and John, “are Phil Kearns is Australias most PK – Sports teams head for capped hooker, an investment tournament or Takudzwa the same goals in broadly you going to the RWC and if so, Ngwenyas’s try for the banker with Investec, and a Director the same way, whereas in any board meetings or business of a small private company as well USA in 2007 (and try of business it might seem that being planned at this time?” as the Children’s Cancer Institute the tournament when he way, but it is rarely reality. TH – Yes. Although I will be of Australia. Phil is a well known ran round Bryan Habana Often board members/ meeting lots of people I Foxsports commentator and has 67 to score) so I’m looking wallaby caps, 10 as Captain. business people have other intend to have no business forward to witnessing some agendas. meetings. Tony Howarth is a Company Director of that brilliance in NZ. Just of Wesfarmers and several Boards and hopefully not against us! JW – Before I joined a board JW – No plans at the present. In former CEO of Challenge Bank. I would have said “goal my rugby career I visited NZ Nathan Sharpe and Dave Pocock have If I asked you to pick an outside 31 times, BUT, if Australia team to do well i.e. get to the setting”, but now I am 65 and 19 Wallaby caps respectively were to be in the final, I (at the time of writing). finals…who could make it? building a mining company (Equatorial Resources), would be very surprised if John Welborn is the CEO and Director TH – Never underestimate France I would say it is “focus I didn’t find my way there, of Equatorial Resources , inaugural and South Africa know how on excellence”. Examine although my focus is very Western Force player and a former to win RWCs. successes and do better. much Equatorial Resources. wallaby with 6 caps. PK – Argentina, because they Too many companies do Sharpie and Dave, I know Tony Adcock FAICD is a Director of the Birchman Group, Discovery play boring, risk free rugby not have that single focus. you are both on NFP boards which is what you need to Resources, SIRCA (Securities Industry The learning is how to and give much back to the Research Centre for Asia Pac) , get to the tournament finals. focus on excellence without community – do you see Red Pill Performance Consultants JW – France. impacting the morale in the yourselves joining other and the FORCE 15 Foundation. His background is finance, risk, NS – Definitely Argentina. business through driving boards over time? And why”? too hard. strategy and executive coaching/ Again, their rugby suits NS – Definitely. In a broad high performing teams and he is a self world cup style and they TH – Characters are forged on sense, being on boards confessed rugby tragic with a complete proved at the last cup what a sporting field. It is the is something that really bias towards the Western Force!

11 WAdirector | SPRING 2011

Harmonised safety laws

by the federal Government to primary duty imposed is to do Remember the widespread A new consider harmonising health what is “reasonably practicable”. obligations and the criminal and safety laws following the That definition reflects that element discussed earlier in approach to Productivity Commission report explained in various dictionaries this article? which identified unnecessary red – namely something which, at But there is more. work health tape for business in the current first blush, is able to be done Not only do individual workers legislative framework. and then, taking into account have an obligation to exercise and safety Since that time, Safe Work a variety of predetermined reasonable care for their own Australia has developed, published factors (including the nature of health and safety and not and recommended to the federal the harm; the degree of harm; endanger the health and safety Government a model harmonised current knowledge of health and of colleagues or others as a result health and safety bill, known as safety matters; availability and of any act or omission on their the Model Work Health and Safety suitability of means to minimise part (obligations existing for (WHS) Bill. if not remove the risk and the employees under current laws) This new primary duty of care cost of those means) and using but there are fresh obligations is placed on persons (natural and them to decide on what would placed on corporate officers. be reasonable to do given all the corporate) who are conducting a In essence, this new duty is circumstances. business or undertaking (PCBU). a pro-active duty on officers At this point it is salutary to The duty is to ensure the health to extend their usual corporate remember that breaches of the and safety of workers and other governance duties to work health WHS Bill will be dealt with in persons in the course of the work and safety matters. being done by that PCBU. the criminal justice system and This extends the duty of care the penalties able to be imposed Why have the legislators beyond those businesses who vary from large penalties to jail considered this necessary Maria Saraceni MAICD were previously defined or time. As in all criminal matters, Member since 2011 given that in Western deemed to be “employers” who it will be for the prosecution to Australia the current health Partner establish each element of the Norton Rose Lawyers Australia owed that duty to employees (or and safety regime places those in a like relationship). offence – including what would have been reasonably practicable only accessorial liability on The word is spreading – businesses The first question to ask is to do but was not done at the corporate officers? have prepared for harmonised whether your business or time. Although the cases say that The simple answer is that a safety laws scheduled to come undertaking is a PCBU for this exercise should not be done corporation which has no brains, into operation Australia wide on the purposes of the Model from a viewpoint of hindsight no arms or legs, cannot of 1 January 2012. Or is it? – once a critical (or even fatal) itself do anything other than The legislative calendar of the WHS Bill? incident has taken place, and via natural persons who are Western Australian Parliament Next, a grasp on the breadth with a cool head looking at all the controlling minds of that does not yet appear to have come of the words “health and safety” the available facts, then the corporation. But its corporate to terms with what Western needs to be firmed up. Safety human condition is such that officers can so act and will be Australia signed up to in the (the more commonly used of amazing clarity can be brought required to post 1 January 2012. Intergovernmental Agreement the words) refers to injury to ascertain what “would have As to what constitutes “due signed in July 2008. This is or to disease inflicted upon been” reasonably practicable to diligence”, the Model Act sets out evidenced by no bill(s) having persons (sometimes a fatal have been done but which was that a corporate officer is to have: been introduced into the Western infliction) whereas health is the not. It is almost the CSI-effect on • Knowledge of work health and Australian Parliament as at the “softer” areas of emotional and work health and safety matters! date of drafting this article. This psychological health; physical safety matters. is in light of the looming agreed wellbeing and the like. • Understand the nature of the scheduled start date of 1 January As a PCBU, your business will “If you believe that because operations of the business and 2012 – which date may be less have a duty to ensure the health you work in a white collar hazards and risks associated with those operations. foreboding for other citizens in and safety of not just your environment, the health • Ensure appropriate resources some States and territories that workers (including employees; and safety regime does not contractors; independent and processes are available and have already passed their version of really impact upon your the model harmonised safety laws. contractors; apprentices; used to minimise the risk. business – then you may But what is all the fuss about? students; student placements; • Ensure that appropriate What, if any, impact, will the volunteers and the like) but also care to reflect on what processes exist for receiving, proposed changes have on others who could reasonably be most people now recognise considering and disseminating business? In any event, what expected to be impacted by the as significant risks such as information regarding changes are we talking about? work of your business. September 11 (if you work incidents, hazards and risks The new approach to health You may question whether in a high rise building) or (and responding to them in and safety laws was initially the obligation imposed is one of bullying/ sexual harassment a timely manner). put on the legislative agenda strict liability or a lesser standard. a la Brodie Panlock.” • Legal compliance. by the Reports released by the Although the requirement “to • Verify the provision and use three panel team commissioned ensure” connotes a guarantee, the of the resources and processes.

12 And what if these and corporate officers particularly perhaps the impact that a critical answer questions even if to do obligations are not satisfied? when coupled with a criminal incident or fatality may have on so may incriminate them and the record that will haunt people a business (remember the stock power to exclude persons (even As previously mentioned, a – albeit in a less emotive way market “hammering” suffered lawyers) from such a compelled breach of requirements imposed than the employee who has been by those involved in the Deep interview. by the Model WHS Bill may maimed or killed – accidentally Water Horizon Gulf of Mexico oil Is your business ready for it result in a criminal prosecution in the course of their work – spill) or on individuals (remember (and its Regulations and Codes of with fines up to $3 million for a but will nonetheless result in a Beaconsfield) should be kept in Practice) to take effect 1 January corporation and up to $650,000 decisive “hit”. the forefront of one’s mind. 2012? Are you as a corporate and/or five years jail for a officer comfortable that you could In addition to these penalties, Would you like to know corporate officer. Although the pass the due diligence requirement other proposed enforcement more about the increased Western Australian government matters open to the regulators if the need arose? If you want has indicated it will not increase (e.g. WorkSafe or Resource Safe) powers of the Inspectors some tips or gap analysis work, its penalties to that proposed include “name and shame orders”; who work for the please consult with an expert (such by the Model WHS Bill, it has injunctive relief and training regulators who will enforce as a lawyer practicing in health and suggested it will likely only orders. How will your business the Model WHS Bill? safety law) before it is too late. increase penalties to about half deal with such penalties? This is in addition to their current of that proposed. Even this But if that is not enough to powers to require a person to more limited penalty will be get businesses to improve their participate in an interview; a burdensome on many businesses work health and safety record, requirement for such a person to

Directors’ Sentiment Index Forum The Directors’ Sentiment Index is Australia’s only measure of director views and sentiments on business, Eavesdrop regulation, governance and public policy. This forum is a not-to-be missed opportunity to gain the inside view on the results of our second Directors’ Sentiment Index. on the Come along and be part of an open and animated panel debate with some of Australia’s most influential decision- makers and commentators, as they explore what directors nation's see as the key issues facing Australian business. Moderator Tony Featherstone boardrooms former Managing Editor of BRW Panellists Fiona Harris FAICD Chairman, Barrington Consulting Group Diane Smith-Gander FAICD Director, Wesfarmers Ltd Sean Aylmer Deputy Managing Editor, The Old Brewery, Perth Wednesday 16 November 2011 Australian Financial Review John Macfarlane Register now to attend at Executive Chairman, Deutsche Bank Peter Mansell FAICD companydirectors.com.au/sentimentindex Director, Bunnings

13 WAdirector | SPRING 2011

Farewell to our councillors

An era concluded recently for the WA Division when three of our long-standing councillors retired from council in 2011. Harvey Collins, Valerie Davies and Steven Cole all announced their retirement in 2011 and Council bid them farewell at a dinner held in September. Harvey Collins FAICD

Those at the gala ball Harvey Collins FAICD heard from State Manager, Harvey Collins joined the Suzanne Ardagh who spoke Division in 2006 and is well known to many of you. He had of the contribution of the an outstanding career in banking three Councillors and the and finance , before moving into Valerie Davies FAICD with Thomas Herzfeld, Michael Smith FAICD and Alison Gaines FAICD incredible energy they professional directorships with an impressive portfolio including brought to their roles. the Chairmanship of Navitas and Valerie Davies FAICD and emerging directors to reach HBF, Deputy Chairman of Verve their goals. She has always been a Here is a snippet of Valerie Davies joined council and Director of Brierty Limited in 2005 and became the Vice strong supporter of diversity in the the heartfelt tribute by and GESB. President in 2008. Boardroom and she has personally Harvey was described by one demonstrated just how important Suzanne on the departure Valerie will be missed by all of his peers on council as “the of us - , by Council, by the WA and necessary to board success of our WA councillors. wise sage”. He was one of those team and by our members. Not that diversity can be. So Valerie, on behalf of the councillors that you could call only for her lovely velvet tones members, the council, the WA on at last minute to sit on a that you have heard at our gold team and all of us here tonight – panel, and whatever the topic, medal videos but because of her thank you for what you have angle or discussion – Harvey generosity of spirit. She has given given to this division. would add thoughtful, insightful a great deal of time and attention and intelligent comments. to the WA division and we are Harvey’s amazing travel schedule indebted to her for that. was the envy of many of us as Valerie has had - and still has he would often contribute to - a stellar director career and discussions via email from Turkey, her directorships have included the canals of Europe or some HBF, Youth Focus, Illuka, Tourism exotic Asian location! Australia, Integrated Group, Gold Corporation , Screen West to name a few. Today she is on the board of Miner’s Promise and AHL. She has always been available to help the team and contribute to Council. She chaired and participated in many of our panel discussions, hosted “Director on Tour” trips to the outback, gave speeches and presentations, wrote, produced and directed many of our videos, performed in our council plays, provided wise counsel to the state managers and contributed to the policy and advocacy of the Institute through her role on council. One of Valerie’s peers described her as “such an accomplished person. The complete professional”. Valerie has also been a leader Harvey Collins FAICD with Mike Horabin FAICD and Andrew in the boardroom counselling Edwards MAICD Valerie Davies FAICD and supporting many aspiring

14 We have been privileged to have “The highlight has been in had a State President of Steven’s Congratulations the indefatigable torrent calibre. This organisation has The WA Division Council takes of enthusiasm of Company benefitted enormously from his pleasure in acknowledging engagement not only in WA but Directors in every respect: those who have achieved the from a National perspective. He milestones of continuous events; meetings; ideas… leaves an indelible footprint on this membership. and of course not forgetting organisation. the writing, producing, Personally, I am very fortunate 15 years directing and leading role in to have worked with Steven – he has been a wonderful mentor, Peter Bamford MAICD the board simulation. What General Manager Devlopment & guide, supporter and friend and it Operations more can you say?” has been lots of fun as well. Dominion Mining Ltd Dale Calhoun MAICD Director Tower Human Capital Pty Ltd Steven is indefatigable! Honourable Harry Gayfer Steven Cole FAICD This adjective was made for AM FAICD Steven. It means untiring. Gerard Kaczmarek MAICD Steven Cole FAICD Other descriptors include Financial Controller / Company active, determined, energetic, Secretary Finally I wanted to say a few words industrious, inexhaustible, Troy Resources NL about our current – but soon to tireless, unfaltering, unflagging, Luke Martino MAICD retire - President Steven Cole. unwearying and vigorous ! And Director that is our State President! Indian Ocean Group Steven embraced his role with Kenneth Perry MAICD “I always admire Stevens’ incredible vigour and he was Non-Executive Director Coventry Group Ltd unrelenting energy. His incredibly generous with his time. We took him all over the Michael Price FAICD dedication to Company Director State representing the Company Directors is infectious, Epicure Group Directors Council at events, he Caroline Rainsford GAICD and you get the genuine hosted Outback and Rottnest Director sense he cares deeply for Forums. He wrote books, articles Shannon Investments Pty Ltd the organisation and its and delivered programs for the members. Stevens energy, Institute nationally. We sent him 20 years to Singapore and countless times enthusiasm and guidance to Sydney. He was the face of the Bruce Cameron FAICD will be greatly missed by the Institute at lunches and briefings Partner Camco Engineering Company Directors team.” on diversity forums and ASX panels. He always spoke Steven Cole FAICD William Cowan FAICD beautifully at whatever event Leslie Farrant MAICD he attended. Director Farrant Consultancy Pty Ltd “I don’t think he ever kept James Gill AO FAICD to his allocated speaking Chancellor time as he always had Curtin University Anthony Grist FAICD so much to say. He Chairman certainly had the gift of Amcom Telecommunications the gab and would often Clifford Kyle FAICD Chairman successfully manage to Swanwall Holdings Pty Ltd include historical facts or Robert Muirhead FAICD recite a piece of poetry Managing Director Remote Control Technologies in each of his deliveries.” Pty Ltd Peter Pynes FAICD Director New Opportunity Limited So to our three councillors, we Gemey Visscher MAICD say thank you. The contribution, Partner encouragement, engagement and Freehills leadership that all three have David Young FAICD shown during their time on council Stephen Zurhaar FAICD was greatly appreciated by all of Managing Director us, in the WA office, on council Z Corp Property Group and by the national board. We will keep them fully engaged 25 years with us, so whilst we bid them David Chalmers FAICD farewell from council, you will Director Steven Cole FAICD presents award to Warwick Kent AO certainly be seeing them at future Multi Metal Consultants Pty Ltd activities of the WA division.

15 WAdirector | SPRING 2011

The (r)evolution to equality in equity raisings

Start of Australian Corporate Credit Spreads widened during the GFC the Global 500 GFC Period 450 Financial 400 350 300 Crisis Bear Stearns sold to JP Morgan 250 Mike Neal 200 Executive Manager Equity Capital 150 Markets Origination 100 Commonwealth Bank Lehman’s Brothers collapse 50 Todd Roberts MAICD Head of Institutional Banking 0 Jun 2007 Mar 2008 Dec 2008 Sep 2009 Jun 2010 Mar 2011 & Markets, WA & SA Commonwealth Bank Note: Aussie iTraxx is an index of 25 of the most actively traded Australian corporate 5 year Credit Default Swap contracts Source: Bloomberg, Markit The Global Financial Crisis (GFC) is generally regarded as having Equity Capital Market issuance vs. Syndicated Loan volumes ($Abn) commenced on the day Lehman Brothers collapsed. However, credit 113 markets tightened significantly in Record level of equity the six months prior with domestic Secondary Equity Issuance issuance banks being very selective to Loan market volume during GFC whom they lent and foreign banks 79 dramatically reducing exposure 71 65 and in some cases, exiting the 60 Australian market. 50 53 50 Australian equity markets 49 became extremely focused on 36 outstanding debt refinancings, 22 whether those liabilities were 17 current or non-current, which resulted in severe downward 2005 2006 2007 2008 2009 2010 pressure on share prices of companies that were perceived Note: Secondary equity issuance includes placements, entitlement offers and DRP’s over $10m Source: CBA Equities Analysis to be highly leveraged or had upcoming debt maturities. placement and second non- The offers were sub- shareholders as non participating With the effective closure of renounceable rights offer. Both underwritten by institutional shareholders receive value for the the credit markets, Australian were typically proposed to be clients of the investment banks so rights they do not take up. This is corporates were forced to go conducted at deep discounts. when the retail offer delivered a particularly relevant where market to the equity capital markets Sometimes company boards shortfall, the stock was subscribed conditions are such that they are to plug the gap, which resulted pushed back against the by the institutional investors. unlikely to subscribe in an offer in significant deleveraging of investment banks but often they When this was combined with an irrespective of how attractive the corporate Australia’s balance sheets. did not, particularly as pressure on institutional placement offered offer might be. In the 12 months following boards to fix their debt refinancing at the same price as the heavily Investment banks will September 2008, Australian grew through equity analyst discounted rights offer, there was typically assert, however that corporates issued over $77 renounceable offers are harder to commentary, press speculation a massive value transfer from billion of equity primarily used underwrite and therefore harder and deteriorating share prices. retail investors to institutions. to recapitalise balance sheets. to sell. However, the evidence is At this time, retail investors Commonwealth Bank estimates Indeed, 52 per cent of the Top 200 not supportive. were economically paralysed. the value transfer from retail listed companies raised equity, investors to institutions during Where the offer is heavily some twice and some three times Their share portfolios had discounted, institutions will take reduced in value by around the 12 months after Lehman’s representing approximately 93 collapsed was approximately $4.7 up their entitlement whether 50%, the value of their houses per cent of total equity raisings. billion. Boards were criticised the offer is renounceable or had declined and unemployment Company boards were looking extensively by the press and non-renounceable. On average, was being tipped by market to investment banks for pricing smaller shareholders. during the GFC, the institutional certainty for equity raisings. To commentators to hit 8.5% take-up rate for accelerated deliver that certainty, investment by late 2010. So, even when The renounceable renounceable offers was nearly banks turned to offer structures presented with a heavily rights offer 93% while the take-up rate for that had the lowest possible discounted rights offer, what did A renounceable offer structure non-renounceable offers was market risk exposure. First, the they do? Typically nothing. is considerably fairer to retail slightly higher.

16 pressure on the stock price over Share markets depressed House prices lower the offer period. So while the AREO structure is 7000 450 ostensibly fair in that it realises Share price fell 53% from peak 6500 House prices fell 4.6% vs 7 year value for renounced rights, the 400 CAGR growth of 12.3% market dynamic it creates suggests 6000 that retail investors do poorly out 350 5500 of the renouncing process relative to institutional shareholders. 5000 300 Way forward 4500 250 The most simple solution is to revert to the old trusted traditional 4000 rights offer structure that is used 200 3500 in the UK, and which treats all shareholders absolutely equally. 3000 150 It involves trading of the rights 2007 2008 2009 2010 2000 2002 2004 2006 2008 2010 on the ASX to allow renouncing Source: Bloomberg Source: Rismark International shareholders to realise value for their rights. The problem with this is that it takes about five weeks for Unemployment expectations escalated Consumer sentiment depressed the offer proceeds to be received and exposes the issuer to the underwriter’s termination events 6.0 Unemployment escalates during GFC 50% for an extended period of time. 40% The offer structure recently 5.5 30% employed by Origin Energy seems to be the silver bullet. It allows the 20% institutional offer to be accelerated 5.0 10% to enable settlement of the 0% institutional offer to occur within 4.5 10 days of launch. However, as -10% there is also rights trading for the -20% Dramatically falling retail offer, retail investors have 4.0 the opportunity to sell their rights -30% consumer sentiment for value into the market shortly 3.5 -40% after the offer is launched and 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 before the factors described above properly come into play, forcing Source: ABS Source: Westpac Consumer Sentiment Survey the share price down. The Origin offer proceeded To underwrite the retail offer, settlement can be achieved inside ASX200 index) over the offer smoothly with a 79% take-up rate investment banks will seek sub- 10 days from launch. period. for the retail offer and an active underwriters. It is arguably easier While this structure is clearly Why? market in trading of the rights. if the sub-underwriter is shown fairer than the non-renounceable Company boards now have a “path to stock” at the heavily structures, Commonwealth There are principally two reasons: • Institutional investors will a precedent offer structure they discounted offer price – i.e. under Bank research indicates that can look to use which would a non-renounceable offer. Where the structure does not typically typically follow their money in rights offers even if they preclude any suggestion that retail the offer is renounceable will deliver an outcome which is has not been treated fairly. a sub-underwriter still provide fair to retail shareholders. On increase their exposure to the company in excess of their Commonwealth Bank Equity a commitment? Typically yes, average, for all Accelerated Capital Markets expect that because they are committing to Renounceable Entitlement Offers target level. They will then lighten their exposure on their other issuers will follow the buy whatever stock is available (AREOs) executed between lead of Origin and utilise the 2007 and 2010, institutional own terms and timetable by at the discounted offer price and new structure. they are being paid a larger fee to shareholders received a value for selling into the market in the provide the commitment. their renounced rights which was period following close of the approximately twice the value institutional offer. This puts The state of play today that retail investors received when downward pressure on the Fast forward post GFC and, in they came to sell their rights. stock price; and theory, global capital markets Indeed, on average, the share • where sub-underwriters have have stabilised. Australian boards price of companies executing been appointed to the retail have reverted to typically making AREOs fell 4.2% (relative to the offer, there is some incentive large offers through accelerated ASX200 index) over the offer for the retail offer to be renounceable structures which period as compared to traditional unsuccessful and therefore have the benefit of accelerating renounceable structures which some incentive for the sub- the institutional offer such that outperformed 2.9% (relative to the underwriters to put downward

17 WAdirector | SPRING 2011

WeW can help you transform your business

It takes the right tools and people to make your business successful. If you’re a small to medium sized business it can be hard to focus on the growth of your company which could mean you miss out on important opportunities. Enterprise Connect is an Australian Government initiative in the Department of Innovation, Industry, Science and Research and in partnership with CCI, can help you to identify ways to grow your business by providing business reviews, industry intelligence, networking opportunities and a comprehensive advisory service. We can provide business improvement services to industries such as manufacturing, clean technology, resources, defence and the creative sector. Over 400 companies around WA have accessed the program and all our services are available to businesses whether they are located in metropolitan areas, country centres or remote Australia. Wallis Drilling When Managing Director, Graeme Wallis, heard about the Enterprise Connect Business Review, he thought it would be a good opportunity to get an outsider’s perspective on how the business was tracking. “We were doing well and weren’t looking for a magic solution,” says Graeme. “Among other things, we’d been working on developing a strategic plan, but it fell into the too- hard, too-frustrating basket! Enterprise Connect’s Business Review appealed because it offered an independent expert at no cost to our business.” The process of the Business Review has been invaluable in getting a lot of people in the business thinking constructively about our business and changing our thinking.”

Mrs Mac’s Pty Ltd Mrs Mac’s Pty Ltd was a company that found Enterprise Connect at the right time to provide a solution for one of their productivity issues. Mrs Mac’s chief general manager Murray Beros explained that the company implemented a restructure following consultation that coincided with a signifi cant re-equipping through the factory. Getting in touch with Enterprise Connect at this time proved to be a wise move as the company became aware of funding for productivity improvement following a business analysis.

Park Engineering Welshpool structural steel fabricator Park Engineers worked with the Enterprise Connect program, fi nding a benchmark and then developing a plan that would see them improve. Park Engineers business development manager Malcolm Swaddle said the company was a bit stuck where they were, with a strategic plan that was old and not being implemented. The company took advantage of a free business review from Enterprise Connect. “We’re in good company, BHP and Rio do it, but it is something a small organisation can do as well,” Mr Swaddle said. “We’re now a more wide awake business that can manage its own affairs and be a lot more fl exible in the marketplace to change.”

For further information visit www.enterpriseconnect.gov.au or call 1300 4 CCIWA to speak to a business advisor. 0597

18 Indigenous Governance Program

Company learned that the to this aspect and had selected emotions, such as a little bit of Australian Institute of Company two outstanding facilitators fear when considering a directors Directors had developed a who had a wealth of experience responsibilities and the potential program specifically to address in working with Indigenous penalties for not carrying these an anticipated demand for Australians, were patient, out in accordance with the law governance training for articulate and well qualified in through to confidence in their these burgeoning Indigenous a professional sense. knowledge when discussing the organisations. Following some Having sat through the course Martu Strategic plan. Finally all initial communication the Martu to evaluate and assist where of the Martu who completed Trustee engaged Company required I can honestly say the course left with the baseline Directors to facilitate the that I was impressed with the knowledge that provided them presentation of their Indigenous facilitators. On several occasions with the assurance that they Governance Program. The core I have to admit to being sceptical would be better governors for intention was to bring this in the least that the facilitator having attended. Without reservation I would Nick Preece program to as many Martu could articulate a complex recommend undertaking this Chief Executive Officer as possible who were either concept in such a way that the Martu People Ltd currently engaged some form of audience would not simply turn program to any Indigenous governance role or to provide off (I recall my first exposure to organisation. Recent press has bought some insight to those who were accounting formats and ratios attention to the subject of considering such a role i.e. youth and admit to having difficulty in Australian Institute of Indigenous groups receiving participants. not falling asleep). Nevertheless Company Directors is millions of dollars in mining Though the intentions of the the combination of course pleased to announce we royalties and compensation, project couldn’t be faulted there content which was specifically will be holding a residential particularly in the Pilbara Region. was some trepidation when it was designed for indigenous groups, Company Directors Course Martu People Limited is considered that for the majority such as case studies that the for Indigenous Business Leaders, 31 October – 7 a Trustee Company which of Martu, English is a second audience could empathise with, November 2011. We are keen administers two Trusts funded or third language. This was a and excellent delivery produced to ensure that Australia’s by one such compensation significant issue for management consistent engagement and saw next level of business and agreement in 2009. The Benefit and one which, if handled 10 people complete the course. community leaders are given Management Structure (BMS) poorly, could serve to put further The success of this project access to this highly regarded was one of the first developed distance between the Traditional for Martu has lead the board to education. This course will in the Pilbara and was designed Owners and an understanding of seriously consider running such be offered exclusively to to provide opportunity for self mainstream governance practices; a program annually. The benefit indigenous business leaders. determination, development management needn’t have worried. of the program will likely be For further information on and management for the Martu As with any training seen for years to come however this course, contact Erin people of the Western Desert. environment audience engagement from the outset the personal Timu, Education Executive When considering and successful delivery relies growth was what captured on 08 9320 1700. organisational success and heavily upon the facilitator as my attention. As individuals sustainability an organisations well as course content. Company assimilated the course content capacity to provide good Directors paid particular attention they went through an array of governance is of paramount significance, particularly, but certainly not being limited to the establishment phase. The constitutional model of the Martu Trustee Company provided for a board composition which combined three Traditional Owners with two independent professional directors. This grouping enabled the board to function immediately with the balanced perspective of essential professional experience and stakeholder knowledge and aspiration. Whilst this model provides for knowledge transfer between directors it does not address the need for succession planning, particularly for traditional owner directors. left to right; Fred Wilridge, Brett Derschow and Gordon Mandajalu In late 2010 the Trustee

19 WAdirector | SPRING 2011

Diary dates Sponsors 2011

For all enquiries t:08 9320 1700 The WA Division would like to thank our sponsors for their Events: e:[email protected] generous support of the Australian Institute of Company Courses: e:[email protected] Directors in 2011. Courses October 2011 November 2011

Company Directors Course Leaders Edge Luncheon 10 Oct 2011 – 14 Oct 2011 with Jean Stephens Finance for New Directors 7 Nov 2011 18 Oct 2011 Emerging Director briefing Company Directors Course NFP Issues and challenges 24 Aug 2011 to 30 Aug 2011 8 Nov 2011 November 2011 Director Sentiment Index Director briefing Capital Raising 16 Nov 2011 9 Nov 2011 Bunbury Port visit Strategy and Risk for and sundowner New Directors 17 Nov 2011 16 Nov 2011 Regional Series Lunch Company Directors Course in Albany 21 Nov 2011 – 25 Nov 2011 21 Nov 2011

Directors Toolkit Briefing Events Putting cash surplus to work October 2011 23 Nov 2011 SME Briefing Direct Connect Strategy Vs Operations Networking evening 20th Oct 2011 29 Nov 2011

November 2011 December 2011

Oil & Gas briefing The Great Corporate Petroleum tax and access Christmas Feast to finance 1 Dec 2011 3 Nov 2011

Company Directors Course graduates

Christopher Furtado GAICD Andrew Paterson GAICD Colin Ross GAICD Wana Yang GAICD Lorica Storey GAICD Alan Marshall GAICD Renu Burr GAICD Glenn Morrison GAICD Suzanne Taylor GAICD Christopher Parkinson GAICD Christopher Stevens GAICD Fiona McKenzie GAICD Shane Mauger GAICD Matthew Roberts GAICD Russell Clark GAICD Marina Vergone GAICD Carole Bain GAICD Brad Jolly GAICD Mark Murphy GAICD Sonya Girdler GAICD Sheilah Cummins GAICD Todd Mairs GAICD Peter Best GAICD Evan Nunn GAICD Don Punch GAICD Renu Sharma GAICD Jodie Wallace GAICD Phillip Vergone GAICD Rodney Stead GAICD Gary Allomes GAICD Colin Campbell GAICD David Moroney GAICD Roslyn Elmes GAICD Jon Landau GAICD Warrick Long GAICD Jani Surjan GAICD Jane Bennett GAICD Antonino Favazzo GAICD Paul Harrison GAICD Julie Anderson GAICD Richard Atkins GAICD Anne Hill GAICD Jason Berry GAICD Marjory Smales GAICD Stephen Buckley GAICD David Cochrane GAICD Greg Watkinson MAICD Karen Horne GAICD Robert Franklyn GAICD Michael Geaney MAICD 01941_11 20