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Queensland, Australia economic performance 2013

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Economic performance of Queensland - what lies ahead after the Coal boom?

Economic performance of Queensland - what lies ahead after the Coal boom?

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  • 1. Deloitte Queensland Index Gala edition – August 2013 A review of Queensland listed companies on the Australian Securities Exchange
  • 2. 1. Executive summary 1 2. The Queensland economy: Current conditions and outlook 3 3. Deloitte Queensland Index: The year in review 5 • Suncorp Group Limited • Flight Centre Limited • Super Retail Group Limited • Cromwell Group Limited • Bank of Queensland Group Limited • Tatts Group Limited 4. Deloitte Queensland Index League Table – FY13 10 5. Australian coal, where to now? 15 6. India and Australia: Driving growth with the Asian Tiger 18 7. The reality of ‘hacking’: What is your response? 21 8. Property and the gas boom: Challenges and opportunities 23 9. Tax structuring: Will you be in the firing line? 25 10. The dichotomy of Australian Agribusiness 28 11. Life sciences in Queensland: An attractive proposition 31 Contents
  • 3. Deloitte Queensland Index | 1 This special edition of the Index showcases the top five performing Queensland listed companies by market capitalisation over the past year. The Gala Edition also includes feature articles that discuss key issues facing Queensland companies. As the growth impetus of the mining boom declines, the Queensland economy faces a transition period. Ian Harper and Claire Lyster discuss the current conditions and outlook for the Sunshine State. Whilst the transition from the investment to export phase of the state’s mining boom and growth in non-resource related sectors is not free of risk, the outlook for the Queensland economy is bright as Queensland is anticipated to capture a growing share of the national economy over time. This transition is nowhere more pronounced than in the coal industry where the intense development phase we have experienced has pulled back. Robin Polson and Andrew Wells look at where to now for coal? Whereas constrained infrastructure, in particular below rail and terminal capacity, has had much of the coal industry headlines over the past decade; with the shift in the outlook for commodities, we have observed a shift from a scramble to secure capacity to an active secondary market for capacity. There has been a change in agenda from growth and more growth to productivity and cost improvement; we are in a fight to retain market share in export coal. The coal story is however by no means over with 1,199 new base load coal generators being proposed globally. It is clearly all still to play for; provided we can achieve and embed a better level of productivity and stay cost competitive. One of the potential opportunities to underpin future growth is trade with India. Reuben Saayman, Harsh Shah and Hitesh Mehta look at driving growth with the Asian Tiger. Over the next few years, Deloitte Access Economics predicts that India’s growth rate will outperform the rest of the world, including China. India is already the third largest export destination for Queensland, which not only underlines the growing importance of India but speaks volumes for the potential of partnering with the Asian Tiger. Further, India is now the largest source of permanent migrants to Australia, overtaking Chinese arrivals. Our connections to India are growing and this will have an increasing impact on the Australian, and more particularly the Queensland business environment. The initial forays by the Asian Tiger into Australia have however not been without challenges and capitalising on the India opportunity is not pre-ordained; we will have to lift our game in competitiveness to be there when it counts. Hacking and cybercrime are growing realities facing corporations worldwide. Queensland companies operating offshore are at an increased risk of being targeted by cybercrime. Chris Noble and Craig Mitchell consider this risk in light of the legislation currently being debated in Parliament that will require companies to publically disclose data breaches each time they occur to the Privacy Commissioner. Residential and commercial properties in regional and urban areas of Queensland have been great beneficiaries of significant spending on coal seam gas and liquefied natural gas projects in recent years. However, with predictions of a peak in capital investment as the projects move into their operational phases, Philip Windus and Damian Winterburn consider how these assets will be impacted going forward. 1. Executive summary Welcome to the 2013 Deloitte Queensland Index – Gala Edition, an annual review of Queensland stocks and indices
  • 4. 2 | 2013 Gala Edition Multinational corporations are under increased public scrutiny for structuring to avoid paying their ‘fair share’ of tax. John Bland, Steve Healey and Evan Last discuss the response from the Organisation for Economic Cooperation and Development, specifically the Base Erosion and Profit Shifting report presented to the G20 as a global tax action plan aimed at tax avoidance. Favourable demographic changes are behind the emerging potential of the Queensland agribusiness industry. However, a large number of farming operations across the nation are facing financial distress. Rob McConnel, Tim Heenan and Jackie White explore what is driving this dichotomy, suggesting solutions for Australia to improve productivity and best reap the benefits of the Asian Century. Tony Belfield and Ryan Parlett discuss the growth of the life sciences industry in Australia that continues to gain momentum with Australia becoming an increasingly attractive location for conducting clinical trials. Despite attractive regulatory ease of undertaking clinical trials the industry is restricted by the limited availability of venture capital funding. Queensland business is currently facing a significant transition period – moving from the intense development of the resources boom to an export phase where we must fight to hold on to and grow market share. This is providing a new landscape of challenges. At Deloitte, we believe this also presents great opportunities for our clients where they can be nimble to embrace this change. We are embracing this changing environment and are committed to taking our clients on this journey with us. John Greig Managing Partner, Queensland Tel: +61 7 3308 7108 jgreig@deloitte.com.au Robin Polson Partner, Corporate Finance Tel: +61 7 3308 7282 rpolson@deloitte.com.au
  • 5. Deloitte Queensland Index | 3 2. The Queensland economy: Current conditions and outlook The Queensland economy, like the Australian economy as a whole, is in transition. As the growth impetus from the investment phase of the mining boom fades, greater reliance will be placed on mining exports and stronger activity in non-resource-related sectors (see Figure 2.1 below). In the short-term, this transition could be bumpy; the non-resource sectors are struggling to throw off the shackles of a high exchange rate, pockets of residential over-building, cautious households unwilling to loosen their purse strings and deep cutbacks to government spending. Figure 2.1: The Australian economy is changing gears However, in the medium term and beyond, many of the foundations for prosperity that have served Queensland well in the past appear to be intact–the natural endowments that attract people to the State to live and work, or as tourists, and that provide raw materials for exports; proximity to the global economy’s engine room in Asia; and macroeconomic trends, including lower interest rates and a lower exchange rate, are also favourable. Growth in Queensland has been strong over the past decade, as the Sunshine State has vied with Western Australia for the title of ‘Australia’s fastest growing state’. Indeed, State Final Demand rose by 3.5% in the year to March 2013, the fastest growth rate of the major States. Expenditure on resource development in Queensland has been, and will continue to be, significant. For the immediate future at least, the resource and resource- related sectors will continue to lead the way in exports and engineering construction. However, the two-speed economy continues to be evident in Queensland (see Figure 2.2). While growth in the resources and resource-related sectors is strong, other sectors have been weak. Construction is concentrated in resource-related sectors. In comparison to other States, residential construction has been weak, despite the demand created by natural-disaster-related construction. In addition, tourism continues to contend with the strength of the Australian dollar, and exports of education services have declined over the past year. Overall, these effects have seen unemployment in Queensland rise above the national average (but still remain below unemployment levels in Victoria, South Australia and Tasmania) and job gains have been modest. While recent cutbacks in government spending in Queensland have been significant – 14,000 public service jobs were eliminated last financial year – the State budget is expected to remain in deficit in the current financial year before returning to surplus in 2014–15. In addition, in the most recent State budget, the Government flagged a further $100m in public sector savings over the next four years. In recent years, business investment in Queensland has been supported by massive engineering construction in LNG projects. Investment in these projects is expected to peak this year. Future investment in more marginal resource projects, including coal, is unlikely to occur. The failure of some engineering construction projects to eventuate and recent developments in commodity prices have raised concerns about the future for oil and gas projects generally. 0% 1% -2% -1% 2% 3% 4% 5% 6% 20122011 2013 2014 2015 2016 2017 2018 2019 2020 2021 Consumption Housing Engineering construction Exports Other GDP Article 2 - Chart 2.1
  • 6. 4 | 2013 Gala Edition Figure 2.2: Queensland industry growth, year to June 2012 While the construction phase of major LNG projects draws to a close, a significant increase in production and exports should follow, which will help to sustain the State’s rate of economic growth. It will still be necessary, however, for investment in other parts of the economy to take up the slack left by sharply lower levels of engineering construction. Queensland’s proximity to the large, dynamic Asian economies is a long-term positive for the economy. In addition to the large export markets, there is huge scope to forge closer ties with the region’s businesses and burgeoning middle-class to create economic links that will be robust at both the peak and trough of the cycle. In all, the outlook for Queensland’s economy is positive. The impact of State budget cutbacks appears to have plateaued and Queensland’s population growth rate has been rising. Recent 457 Visa developments at the Federal level, however, may compromise the outlook for population growth given the State’s reliance on migrant labour. Notwithstanding the high value of the Australian dollar, tourism in Queensland has been growing strongly over the last year, a trend that is expected to continue and perhaps strengthen if the long-anticipated depreciation continues. Combined with the lower interest rates and forecast stronger income growth over the next few years, these developments should support household consumption and housing construction. The trend in dwelling approvals is rising, and although monthly approvals are still well shy of ‘average’ levels, the sector should contribute to growth going forward. This will have a positive impact on jobs growth, which should in turn improve the outlook for the State’s unemployment rate. While these positive developments do not completely eliminate the risk of a short-term slowdown during the transition from the investment to the export phase of the State’s mining boom and while the non-resource-related sectors pick up the pace, the most likely prospect is that the Sunshine State will continue to carve out a growing share of the national economy over time. Other services Transport, postal and storage Mining Construction Other household services Wholesale and retail trade Education Finance and insurance Manufacturing Business Services Health and social assistance Agriculture, forestry and fishing Information, media and technology Utilities -6% -4% -2% 0% 2% 4% 6% 8% 10% 12% Article 2 - Chart 1.2 Ian Harper Partner, Deloitte Access Economics Tel: +61 3 9671 7536 iaharper@deloitte.com.au Claire Lyster Analyst, Deloitte Access Economics Tel: +61 2 9322 7069 clyster@deloitte.com.au
  • 7. Deloitte Queensland Index | 5 During the 2013 financial year (FY13), the Deloitte Queensland Index (the Index) increased by 6.8% to 2,240 points. However, the Index was outperformed by the S&P/ASX All Ordinaries, which increased 15.5% to 4,775 points over the same period. Out of the 188 companies currently listed on the Index, 72 companies posted an increase, 110 companies lost ground, while the remainder were steady. The performance of the Index against relevant indices and commodities can be seen in Table 3.1 below. Table 3.1: Performance of the Deloitte Queensland Index compared to relevant international indices 3. Deloitte Queensland Index: The year in review Index Name Last 12 months Last six months Last month Last two months Last three months Last four months Last five months Since inception Deloitte Queensland Index 6.8% (1.5%) (5.0%) (8.3%) (6.4%) (7.7%) (5.7%) 124.0% Deloitte Queensland E&R Index (27.6%) (26.9%) (10.6%) (10.2%) (16.1%) (24.3%) (27.2%) 407.0% S&P/ASX All Ordinaries 15.5% 2.4% (2.8%) (7.6%) (4.1%) (6.7%) (2.6%) 63.1% E&R indices S&P/ASX 200 Energy 5.1% 0.8% (5.8%) (3.4%) (4.5%) (8.0%) (4.4%) 211.3% S&P/ASX 200 Materials (10.2%) (20.0%) (10.3%) (8.2%) (11.8%) (21.0%) (21.2%) 112.5% Reuters/Jefferies CRB Index (3.0%) (6.6%) (2.2%) (4.3%) (7.0%) (5.9%) (9.3%) 21.7% Baltic Dry Index 14.6% 64.7% 42.3% 32.1% 26.5% 52.0% 51.4% (15.8%) Major international indices Dow Jones IA 15.8% 13.8% (1.4%) 0.5% 2.3% 6.1% 7.6% 96.4% Nikkei 225 51.9% 31.6% (0.7%) (1.3%) 10.3% 18.3% 22.8% 45.8% FTSE 100 11.6% 5.4% (5.6%) (3.3%) (3.1%) (2.3%) (1.0%) 67.0% Hang Seng 7.0% (8.2%) (7.1%) (8.5%) (6.7%) (9.6%) (12.3%) 129.3% Commodities Spot Gold (23.7%) (27.0%) (12.2%) (16.9%) (23.3%) (22.5%) (26.4%) 278.3% LME Nickel (17.0%) (21.5%) (6.5%) (10.0%) (17.3%) (18.1%) (25.6%) 115.0% LME Aluminium (5.7%) (17.3%) (6.8%) (6.3%) (8.0%) (12.2%) (16.5%) 33.6% LME Copper (11.2%) (16.5%) (6.8%) (4.6%) (11.0%) (13.8%) (17.4%) 362.6% NYMEX WTI Crude Oil 13.7% 5.2% 5.0% 3.3% (0.7%) 4.9% (1.0%) 217.1% Source: Capital IQ, ASX The Index increased by 6.8% to 2,240 points during the 2013 Financial Year
  • 8. 6 | 2013 Gala Edition The following graph depicts the progress of the Index against major international indices since inception in September 2002. Figure 3.1: Performance of the Deloitte Queensland Index compared to major international indices (relative to one) Source: Capital IQ, ASX Article 3 - Figue 1 3.0 2.0 1.0 3.5 2.5 1.5 0.5 Sep02 Dec02 Mar03 Jun03 Sep03 Dec03 Mar04 Jun04 Sep04 Dec04 Mar05 Jun05 Sep05 Dec05 Mar06 Jun06 Sep06 Dec06 Mar07 Jun07 Sep07 Dec07 Mar08 Jun08 Sep08 Dec08 Mar09 Jun09 Sep09 Dec09 Mar10 Jun10 Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Jun12 Sep12 Dec12 Mar13 Jun13 Dow Jones IA Nikkei 225 FTSE 100 Hang Seng S&P/ASX All Ordinaries Deloitte Qld Index Table 3.2: Largest increases and decreases in market capitalisation (FY13) Largest Increases $m % Largest decreases $m % 1 Suncorp Group Limited 4,928 47.3% 1 Discovery Metals Limited -555 -89.4% 2 Flight Centre Limited 2,056 108.5% 2 PanAust Limited -529 -32.3% 3 Super Retail Group Limited 941 66.8% 3 Echo Entertainment Group Limited -418 -14.2% 4 Cromwell Group Limited 870 108.5% 4 ALS Limited -371 -10.1% 5 Bank Of Queensland Limited 731 35.9% 5 Billabong International Limited -368 -83.7% 6 Aurizon Holdings Limited 595 7.2% 6 New Hope Corporation Limited -365 -11.0% 7 G8 Education Limited 472 238.7% 7 Maverick Drilling & Exploration Limited -328 -66.8% 8 Energy Developments Limited 345 85.3% 8 Cardno Limited -300 -28.7% 9 Virgin Australia Limited 234 27.4% 9 Brisconnections-Unit Trusts -203 -56.5% 10 Retail Food Group Limited 227 79.1% 10 Ausenco Limited -195 -44.1%
  • 9. Deloitte Queensland Index | 7 Suncorp Group Limited Figure 3.2: Suncorp Group’s share price performance (FY13) Source: Capital IQ Suncorp Group posted the largest increase in market capitalisation on the Index in FY13, increasing by $4,928m, or 47.3%. Suncorp Group provides general insurance, banking, life insurance, superannuation and investment products to retail and commercial clients. At the beginning of FY13, the company reported strong results for FY12, including an increase in net profit after tax (NPAT) of 59.8% to $724m. The result was also highlighted by the continuing improvement in the quality of the company’s capital position. Throughout the period, Suncorp Group has benefitted from positive industry tailwinds including higher equity market levels. In June, Suncorp Group announced the resolution of the non-core banking portfolio with the sale of a $1.6b portfolio of corporate and property assets at a weighted realisation of 60 cents in the dollar. The sale was a significant positive in terms of risk reduction for the bank. Suncorp Group ended the year at number one on the Index. Article 3 - Suncorp $7.00 $8.00 $9.00 $10.00 $11.00 $12.00 $13.00 $14.00 Jun Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Flight Centre Limited Figure 3.3: Flight Centre’s share price performance (FY13) Source: Capital IQ Flight Centre’s market capitalisation increased by $2,056m, or 108.5%, during FY13. Flight Centre is a travel agency service providing a complete travel service for leisure and business travellers. Despite mixed consumer and business confidence, Flight Centre grew strongly, expanding its sales network with sales staff and store numbers growing 5% respectively. The company reported positive half year results, with profit after tax of $91.8m, an increase of 13% on the preceding period. In February, Flight Centre announced plans to expand in Asia and the Middle East as part of the company’s ongoing plan to expand its global footprint by 6–8% annually. The company views the region as a solid growth opportunity and are developing a network of leisure travel shops that will operate alongside its more established corporate travel businesses. The company also recently upgraded its FY13 market guidance on underlying profit before tax (PBT) expectation to between $325–340m, representing a 12–17% growth on PBT achieved in FY12. Flight Centre ended FY13 at number three on the Index. Article 3 - Flight Centre $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 Jun Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Of the 72 companies that posted an increase during FY13, we review the performance of the five largest dollar increases in market capitalisation below. We have also included a company profile on Tatts Group Limited that does not fit the criteria to be included in the FY13 Index, however has recently relocated to Queensland and will be included in the Index going forward.
  • 10. 8 | 2013 Gala Edition Super Retail Group Limited Figure 3.4: Super Retail Group’s share price performance (FY13) Source: Capital IQ Super Retail Group had a considerable increase in market capitalisation, with an increase of $941m, or 66.8% during FY13. Comprising of a number of individual businesses, Super Retail Group operates as a retailer of automotive and leisure products. Super Retail Group started FY13 reporting strong results for FY12 with sales and NPAT increasing by 51% and 50% respectively. The strong result demonstrated the resilience of the company’s business model, delivering earnings growth despite subdued retail conditions. The company’s strong performance continued throughout the year with stellar mid-year results reporting a 74% increase in NPAT on the preceding period. In May, the company announced that comparable sales for its auto, sports and leisure divisions had increased 5.1%, 7.8% and 3.0% respectively for the 43 week period to 27 April. Super Retail Group ended FY13 at number nine on the Index. Cromwell Group Limited Figure 3.5: Cromwell Group’s share price performance (FY13) Source: Capital IQ The market capitalisation of Cromwell Group increased by $870m, or 108.5%, during FY13. Cromwell Group is an Australian Real Estate Investment Trust and Property Fund Manager with over $2.7b assets under management, managing commercial properties throughout Australia. Cromwell Group proceeded with its strategy of providing secure, steady growing distributions to investors through the management of a portfolio of high quality assets to great effect throughout FY13. In May, the company announced the purchase of a portfolio of seven office assets from the New South Wales State Government. The Portfolio comprised of three Sydney CBD assets and four regional NSW assets, valued at $316m and $89m respectively. The company also announced the acquisition of two Brisbane office buildings for a combined purchase price of $65m. During the year, Cromwell Group announced a $250m equity raising to partly fund the acquisition of the portfolio assets from the NSW State Government and to repay existing debt. The raising consisted of a $128m institutional placement and a $122m one for 12 non-renounceable pro- rata entitlement offer to existing eligible security holders. Cromwell Group ended FY13 at number ten on the Index. Article 3 - Cromwell Property Group $0.60 $0.70 $0.80 $0.90 $1.00 $1.10 $1.20 Jun Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Article 3 - Super Retail Group $7.00 $8.00 $6.00 $9.00 $10.00 $11.00 $12.00 $13.00 $14.00 Jun Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
  • 11. Deloitte Queensland Index | 9 Bank of Queensland Group Limited Figure 3.6: Bank of Queensland’s share price performance (FY13) Source: Capital IQ Bank of Queensland recorded a $731m, or 35.9%, increase in market capitalisation during FY13. Bank of Queensland is a financial institution offering core banking services, equipment finance, wealth management and insurance. Performance in early FY13 was hindered by the company’s legacy asset quality and funding profile which continued to inhibit net interest margins. However, Bank of Queensland half year results showed a strong improvement with margin growth and an increased dividend. In April, Bank of Queensland acquired Virgin Money Australia for $40m. The acquisition will allow the company to expand its distribution footprint extending its reach to currently untapped, complementary customer and market segments. Going forward, Bank of Queensland’s performance will depend on the funding market and its BBB+ credit rating. Bank of Queensland ended FY13 at number six on the Index. Tatts Group Limited Figure 3.7: Tatts Group’s share price performance (FY13) Source: Capital IQ Tatts Group Limited recorded an $876 million, or 24.5%, increase in market capitalisation during FY13. Tatts Group has a portfolio of gambling businesses providing leisure and entertainment products in lotteries, wagering and gaming in Australia and the United Kingdom. In November, Tatts Group won the right to manage the South Australian Lotteries business. Under the agreement with the South Australian government Tatts Group was exclusively appointed to manage the state owned Lotteries Commission of South Australia for a period of 40 years. During FY13, Tatts Group announced the appointment of Robbie Cooke as Chief Executive and Managing Director, taking effect in January 2013. Mr Cooke succeeded Dick McIlwain. Tatts Group has been excluded from the Queensland Index on the basis that the company relocated to Queensland late in the financial year. The company will be included in the index in FY14. At its current market capitalisation of $4.4b it will enter at number three on the Index. Article 3 - Bank of Qld Group $6.00 $6.50 $7.00 $7.50 $8.00 $8.50 $9.00 $9.50 $10.00 Jun Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Article 3 - Tatts Group $2.00 $2.20 $2.40 $2.60 $2.80 $3.00 $3.20 $3.40 $3.60 Jun Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul For more information on the Deloitte Queensland Index, please contact: Robin Polson Partner, Corporate Finance Tel: +61 7 3308 7282 rpolson@deloitte.com.au
  • 12. 10 | 2013 Gala Edition 4. Deloitte Queensland Index League Table – FY13 Ranking Company Mktcap 30Jun13 $million Mktcap 30Jun12 $million Change $million Change % Last $price year High $price year Low $price year EPS P/E ratio FY13 FY12 1 1 Suncorp Group Limited 15,336.3 10,408.6 4,928 47.3% 11.92 12.98 7.88 0.71 20.13 2 2 Aurizon Holdings Limited 8,891.1 8,296.0 595 7.2% 4.16 4.57 3.07 0.17 31.87 3 8 Flight Centre Limited 3,949.6 1,893.9 2,056 108.5% 39.33 41.88 18.67 2.10 21.28 4 4 ALS Limited 3,291.3 3,662.1 (371) (10.1%) 9.58 12.45 7.23 0.66 16.27 5 5 New Hope Corporation Limited 2,965.1 3,330.0 (365) (11.0%) 3.57 4.82 3.30 0.16 24.17 6 7 Bank Of Queensland Limited 2,767.8 2,036.9 731 35.9% 8.71 10.08 6.47 0.53 15.88 7 6 Echo Entertainment Group Limited 2,526.6 2,944.7 (418) (14.2%) 3.06 4.35 2.75 0.05 63.20 8 3 Whitehaven Coal Limited 2,359.0 4,204.7 (1,846) (43.9%) 2.30 4.34 1.78 (0.01) – 9 10 Super Retail Group Limited 2,351.8 1,410.3 941 66.8% 11.97 13.85 7.08 0.54 25.56 10 15 Cromwell Group Limited 1,670.9 801.2 870 108.5% 0.98 1.12 0.68 0.05 26.88 11 11 Transpacific Industries Group Limited 1,262.9 1,144.2 119 10.4% 0.80 1.10 0.66 0.02 44.77 12 9 PanAust Limited 1,106.9 1,636.1 (529) (32.3%) 1.83 3.53 1.77 0.24 9.69 13 14 Virgin Australia Limited 1,088.4 854.1 234 27.4% 0.43 0.52 0.37 (0.00) 36.90 14 13 Wotif.com Holdings Limited 959.2 891.4 68 7.6% 4.53 6.04 3.84 0.27 19.45 15 17 Domino's Pizza Enterprises Limited 784.1 702.5 82 11.6% 11.17 13.99 8.43 0.41 33.25 16 27 Energy Developments Limited 748.3 403.8 345 85.3% 4.57 4.45 2.22 0.16 17.19 17 12 Cardno Limited 744.5 1,044.5 (300) (28.7%) 5.18 8.64 4.79 0.58 10.62 18 18 GWA International Limited 735.7 634.2 101 16.0% 2.40 2.71 1.58 0.14 22.24 19 21 AP Eagers Limited 718.3 534.0 184 34.5% 4.07 5.65 3.24 0.34 13.89 20 16 Senex Energy Limited 673.1 705.5 (32) (4.6%) 0.59 0.85 0.48 0.03 31.75 21 43 G8 Education Limited 669.5 197.7 472 238.7% 2.46 2.59 0.92 0.09 32.65 22 29 Technology One Limited 549.1 355.2 194 54.6% 1.79 1.92 1.14 0.08 27.62 23 38 Retail Food Group Limited 514.6 287.3 227 79.1% 3.95 4.26 2.52 0.25 17.55 24 32 ERM Power Limited 501.7 333.7 168 50.4% 2.50 2.80 1.70 0.06 48.81 25 40 NEXTDC Limited 462.2 269.6 193 71.4% 2.67 2.79 1.60 (0.02) – 26 31 Linc Energy Limited 427.0 348.9 78 22.4% 0.82 3.05 0.46 (0.12) – 27 20 Cudeco Limited 409.8 599.9 (190) (31.7%) 2.00 4.94 2.21 (0.02) – 28 24 FKP Property Group 408.4 460.6 (52) (11.3%) 1.27 3.01 1.05 (1.22) 9.71 29 34 Carindale Property Trust 383.6 318.5 65 20.4% 5.48 6.05 4.50 1.19 45.11 30 30 Australian Agricultural Company Limited 364.8 350.5 14 4.1% 1.17 1.42 1.06 (0.17) 31 51 Corporate Travel Management Limited 320.1 144.9 175 120.9% 4.10 5.07 1.94 0.17 27.78 32 47 Sunland Group Limited 263.0 180.4 83 45.8% 1.42 1.74 0.76 0.12 22.50 33 25 Ausenco Limited 247.0 442.1 (195) (44.1%) 2.00 4.08 1.76 0.33 7.25 34 35 Austin Engineering Limited 230.5 311.0 (80) (25.9%) 3.15 5.96 3.20 0.49 7.55 35 – Shine Corporate Limited 228.6 -– NA NA 1.48 1.54 1.35 – – 36 36 Primeag Australia Limited 222.4 306.4 (84) (27.4%) 0.84 1.34 0.81 0.03 33.39 37 62 Silver Chef Limited 212.3 89.4 123 137.4% 7.38 8.42 3.32 0.41 13.80 38 41 Wide Bay Australia Limited 190.3 210.0 (20) (9.4%) 5.25 7.25 5.15 0.44 13.34 39 44 Alliance Airlines Limited 190.0 195.3 (5) (2.7%) 1.80 2.33 1.51 0.26 10.61 40 64 Collection House Limited 189.9 86.5 103 119.5% 1.65 1.75 0.78 0.13 14.42
  • 13. Deloitte Queensland Index | 11 Ranking Company Mktcap 30Jun13 $million Mktcap 30Jun12 $million Change $million Change % Last $price year High $price year Low $price year EPS P/E ratio FY13 FY12 41 74 Greencross Limited 177.1 72.8 104 143.3% 4.75 5.55 2.22 0.10 42.31 42 49 Data#3 Limited 165.5 170.9 (5) (3.2%) 1.08 1.42 1.02 0.09 13.93 43 45 Orocobre Limited 163.7 190.4 (27) (14.0%) 1.39 2.42 1.00 0.93 – 44 22 Maverick Drilling & Exploration Limited 163.0 490.5 (328) (66.8%) 0.36 1.49 0.30 0.01 44.58 45 59 Collins Foods Limited 156.2 101.8 54 53.4% 1.68 1.92 1.03 0.18 10.55 46 28 Brisconnections-Unit Trusts 156.1 359.0 (203) (56.5%) 0.40 1.06 0.40 0.32 – 47 – Ivanhoe Australia Limited 143.2 – NA NA 0.20 0.93 0.10 (0.13) – 48 52 1300 Smiles Limited 140.4 141.8 (1) (1.0%) 5.93 6.54 5.00 0.29 22.80 49 57 Reef Casino Trust 129.5 110.1 19 17.6% 2.60 2.79 2.06 0.22 19.04 50 39 Intrepid Mines Limited 125.1 270.8 (146) (53.8%) 0.23 0.63 0.19 (0.12) – 51 – Asia Pacific Data Centre Group Limited 123.1 – NA NA 1.07 1.20 1.08 – – 52 37 Sedgman Limited 116.8 297.9 (181) (60.8%) 0.53 1.65 0.43 0.14 3.84 53 85 GBST Holdings Limited 113.2 53.9 59 109.9% 1.70 1.80 0.73 0.05 37.33 54 42 Norton Gold Fields Limited 112.0 199.7 (88) (43.9%) 0.13 0.27 0.13 0.01 8.68 55 60 Devine Limited 106.3 92.1 14 15.5% 0.67 1.00 0.51 (0.10) – 56 54 Alchemia Limited 103.7 126.3 (23) (17.9%) 0.32 0.62 0.29 (0.05) – 57 58 Watpac Limited 101.4 106.0 (5) (4.3%) 0.55 0.85 0.50 (0.29) – 58 109 Comet Ridge Limited 89.4 32.3 57 177.1% 0.22 0.33 0.11 (0.01) – 59 106 Vita Group Limited 89.1 35.6 53 150.0% 0.63 0.70 0.24 (0.07) 21.29 60 81 Villa World Limited 83.5 59.4 24 40.4% 1.14 1.23 0.71 (0.24) – 61 70 Seymour Whyte Limited 81.7 77.4 4 5.5% 1.05 1.26 0.68 0.05 23.34 62 65 Icon Energy Limited 77.3 84.5 (7) (8.4%) 0.15 0.30 0.13 (0.02) – 63 90 Capral Aluminium Limited 77.0 50.4 27 52.7% 0.20 0.26 0.13 (0.03) – 64 53 Dart Energy Limited 72.9 138.5 (66) (47.3%) 0.08 0.22 0.03 (0.17) – 65 26 Billabong International Limited 71.4 439.2 (368) (83.7%) 0.15 1.47 0.12 (2.11) – 66 66 Armour Energy Limited 67.5 82.5 (15) (18.2%) 0.23 0.42 0.17 (0.01) – 67 99 RungePincockMinarco Limited 66.4 43.4 23 53.0% 0.47 0.68 0.34 (0.02) 39.71 68 126 Titan Energy Services Limited 66.0 19.4 47 241.3% 1.39 2.03 0.42 0.17 8.71 69 63 Cokal Limited 65.8 88.4 (23) (25.6%) 0.16 0.27 0.11 (0.02) – 70 19 Discovery Metals Limited 65.7 621.2 (555) (89.4%) 0.14 1.76 0.12 (0.06) – 71 69 World Titanium Resources Limited 65.6 79.1 (13) (17.0%) 0.22 0.28 0.15 (0.03) – 72 97 Jumbo Interative Limited 65.3 44.5 21 46.7% 1.50 3.28 1.01 0.14 12.71 73 93 Tamawood Limited 62.6 49.2 13 27.3% 2.45 2.92 1.91 0.32 9.30 74 139 Sumatra Copper & Gold Plc 60.7 13.3 47 354.7% 0.17 0.25 0.06 (0.01) – 75 72 Citigold Corporation Limited 59.5 74.3 (15) (19.9%) 0.04 0.08 0.04 (0.00) – 76 75 Ariadne Australia Limited 57.2 70.5 (13) (18.8%) 0.28 0.37 0.25 0.02 31.39 77 48 Bandanna Energy Limited 52.8 179.7 (127) (70.6%) 0.10 0.47 0.10 (0.01) 77.52 78 50 Mastermyne Group Limited 52.8 158.3 (106) (66.7%) 0.70 2.24 0.62 0.20 3.50 79 55 Westside Corporation Limited 50.2 119.2 (69) (57.9%) 0.14 0.45 0.12 (0.04) – 80 110 Zicom Group Limited 49.4 31.9 18 55.0% 0.23 0.29 0.15 0.04 11.17
  • 14. 12 | 2013 Gala Edition Ranking Company Mktcap 30Jun13 $million Mktcap 30Jun12 $million Change $million Change % Last $price year High $price year Low $price year EPS P/E ratio FY13 FY12 81 78 CMI Limited 48.5 64.5 (16) (24.7%) 1.43 2.76 1.42 0.37 4.41 82 77 Blue Energy Limited 47.9 64.8 (17) (26.1%) 0.04 0.06 0.03 (0.01) – 83 83 Anteo Diagnostics Limited 46.2 56.6 (10) (18.4%) 0.06 0.08 0.05 (0.00) – 84 79 Investigator Resources Limited 43.6 63.8 (20) (31.6%) 0.13 0.26 0.09 (0.01) – 85 68 Altura Mining Limited 40.9 79.5 (39) (48.6%) 0.09 0.22 0.08 (0.01) – 86 114 Blue Sky Alternative Investments Limited 40.7 27.3 13 48.8% 1.25 1.25 0.75 0.10 32.22 87 108 Hughes Drilling Limited 40.0 34.1 6 17.3% 0.22 0.52 0.20 0.10 3.85 88 107 Site Group International Limited 39.6 34.4 5 14.9% 0.12 0.19 0.10 (0.03) – 89 104 Lindsay Australia Limited 38.5 37.0 2 4.1% 0.18 0.22 0.14 0.01 24.17 90 91 Trinity Group 37.4 50.3 (13) (25.6%) 0.25 0.31 0.25 0.07 – 91 146 Aeon Metals Limited 36.6 10.4 26 251.7% 0.21 0.34 0.06 (0.00) – 92 96 Geodynamics Limited 35.0 44.7 (10) (21.8%) 0.09 0.20 0.07 (0.03) – 93 102 OnTheHouse Holdings Limited 31.6 37.5 (6) (15.7%) 0.39 0.88 0.33 0.03 16.21 94 125 UCL Resources Limited 31.1 19.5 12 59.3% 0.30 0.32 0.10 (0.03) – 95 179 Macro Corporation Limited 30.9 4.1 27 644.4% 0.34 – – – – 96 80 Orbis Gold Limited 30.4 60.1 (30) (49.5%) 0.14 0.48 0.11 (0.02) – 97 61 Carrabella Resources Limited 28.9 91.4 (62) (68.3%) 0.19 0.65 0.18 (0.05) – 98 117 Brisbane Broncos Limited 28.4 24.5 4 16.0% 0.29 0.31 0.22 0.02 14.35 99 129 Vesture Limited 26.0 18.7 7 39.0% 0.10 0.13 0.09 0.01 22.23 100 – Tlou Energy Limited 25.8 – NA NA 0.25 0.58 0.25 (0.09) – 101 82 Pacific Niugini Limited 25.1 59.1 (34) (57.4%) 0.10 0.25 0.10 (0.01) – 102 67 Tissue Therapies Limited 24.6 80.4 (56) (69.4%) 0.12 0.55 0.11 (0.04) – 103 71 Stanmore Coal Limited 24.0 76.2 (52) (68.6%) 0.12 0.53 0.12 (0.04) – 104 89 Carbon Energy Limited 22.8 51.9 (29) (56.0%) 0.03 0.08 0.02 (0.05) – 105 – Capilano Honey Limited 20.9 – NA NA 2.45 2.90 2.00 0.24 9.75 106 103 Carpentaria Exploration Limited 20.4 37.3 (17) (45.5%) 0.21 0.45 0.17 (0.02) – 107 111 Global Petroleum Limited 19.9 29.9 (10) (33.3%) 0.10 0.18 0.09 (0.00) – 108 123 Galilee Energy Corporation 19.8 20.5 (1) (3.7%) 0.13 0.15 0.10 (0.04) – 109 118 Viento Group Limited 19.2 23.2 (4) (17.5%) 0.24 0.48 0.22 (0.02) – 110 124 Wilson HTM Investment Group Limited 19.0 20.2 (1) (6.2%) 0.19 0.40 0.13 (0.06) – 111 92 Alcyone Resources Limited 18.9 49.8 (31) (62.0%) 0.01 0.06 0.01 (0.00) – 112 140 Queensland Mining Corp Limited 17.4 13.3 4 30.5% 0.02 0.09 0.02 (0.03) – 113 95 Impedimed Limited 16.3 47.1 (31) (65.4%) 0.09 0.29 0.05 (0.07) – 114 94 Chesser Resources Limited 16.1 48.2 (32) (66.7%) 0.11 0.49 0.10 (0.03) – 115 130 Cuesta Coal Limited 15.4 18.4 (3) (16.4%) 0.07 0.17 0.07 (0.02) – 116 135 Invion Limited 14.7 14.3 0 2.5% 0.03 0.09 0.03 (0.01) – 117 112 Metallica Minerals Limited 14.4 29.1 (15) (50.6%) 0.09 0.35 0.11 (0.12) – 118 133 Magontec Limited 14.4 14.5 (0) (0.7%) 0.02 0.04 0.02 (0.01) – 119 105 International Coal Limited 13.7 35.8 (22) (61.7%) 0.10 0.28 0.08 (0.01) – 120 147 Buderim Ginger Limited 13.4 9.9 4 35.4% 0.65 0.76 0.45 0.09 8.60
  • 15. Deloitte Queensland Index | 13 Ranking Company Mktcap 30Jun13 $million Mktcap 30Jun12 $million Change $million Change % Last $price year High $price year Low $price year EPS P/E ratio FY13 FY12 121 161 PTB Group Limited 12.9 7.4 5 73.9% 0.40 0.50 0.20 0.01 58.27 122 186 Progen Pharmaceuticals 12.4 3.5 9 259.6% 0.23 0.30 0.14 (0.12) – 123 143 AHC Limited 11.8 12.4 (1) (4.5%) 2.10 2.20 2.00 (0.06) – 124 145 Cape Alumina Limited 11.7 11.3 0 3.5% 0.06 0.15 0.06 (0.02) – 125 150 Analytica Limited 11.2 9.5 2 17.7% 0.02 0.03 0.02 (0.00) – 126 87 Metrocoal Limited 10.9 52.2 (41) (79.2%) 0.05 0.30 0.06 0.00 – 127 88 Mungana Goldmines Limited 10.4 52.2 (42) (80.0%) 0.07 0.45 0.06 (0.62) – 128 160 Redflow Limited 9.2 7.4 2 23.1% 0.05 0.17 0.04 (0.16) – 129 156 Consolidated Tin Mines Limited 9.1 8.2 1 11.2% 0.05 0.12 0.04 (0.00) – 130 128 Chinalco Yunnan Copper Resources Limited 8.9 19.1 (10) (53.2%) 0.04 0.14 0.04 (0.04) – 131 151 Cellnet Group Limited 8.9 9.2 (0) (2.9%) 0.16 0.20 0.11 (0.01) 15.37 132 113 China Magnesium Corporation Limited 8.7 28.6 (20) (69.7%) 0.06 0.23 0.05 (0.02) – 133 157 Landmark White Limited 8.3 8.0 0 3.4% 0.30 0.41 0.29 0.02 18.73 134 148 Ask Funding Limited 8.2 9.9 (2) (16.7%) 0.13 0.16 0.13 (0.00) – 135 121 DGR Global Limited 7.9 20.7 (13) (61.7%) 0.02 0.10 0.02 0.03 136 154 Techniche Limited 7.4 8.3 (1) (10.8%) 0.03 0.04 0.03 0.00 26.70 137 158 Eumundi Group Limited 7.1 7.8 (1) (9.1%) 0.05 0.06 0.05 0.00 4.65 138 138 Australian Pacific Coal Limited 6.6 13.5 (7) (50.9%) 0.01 0.03 0.01 (0.00) – 139 142 Monto Minerals Limited 6.6 13.1 (6) (49.7%) 0.01 0.02 0.01 (0.00) – 140 131 Rift Valley Resources Limited 6.3 18.2 (12) (65.3%) 0.02 0.11 0.01 (0.01) – 141 141 Diatreme Resources Limited 6.1 13.1 (7) (53.6%) 0.01 0.05 0.01 (0.01) – 142 178 Coppermoly Limited 6.0 4.3 2 38.2% 0.03 0.06 0.02 (0.01) – 143 101 Coalbank Limited 5.9 40.6 (35) (85.4%) 0.01 0.06 0.01 (0.00) – 144 182 Allied Consolidated Limited 5.9 3.6 2 62.8% 0.02 0.03 0.01 (0.00) – 145 167 Metal Storm Limited 5.7 5.6 0 2.5% 0.00 – – – – 146 176 Electrometals Technologies Limited 5.7 4.4 1 27.9% 0.01 0.01 0.01 (0.00) – 147 153 Charter Pacific Corporation Limited 5.6 8.7 (3) (35.2%) 0.05 0.09 0.04 (0.03) – 148 183 Diversa Limited 5.6 3.6 2 54.6% 0.03 0.05 0.01 (0.08) – 149 144 Hill End Gold Limited 5.5 11.7 (6) (52.9%) 0.01 0.02 0.01 (0.00) – 150 100 Exoma Energy Limited 5.4 41.7 (36) (87.0%) 0.01 0.12 0.01 (0.00) – 151 119 Polymetals Mining Limited 5.4 22.2 (17) (75.8%) 0.14 0.70 0.14 0.03 7.11 152 189 ActivEX Limited 5.4 3.2 2 65.7% 0.02 0.03 0.01 (0.00) – 153 171 Byte Power Group Limited 5.2 5.2 0 0.8% 0.00 0.01 0.00 (0.00) – 154 – Talon Petroleum Limited 5.1 – NA NA 0.05 0.13 0.04 (0.43) – 155 162 Eureka Group Holdings Limited 4.9 7.3 (2) (32.7%) 0.07 0.12 0.03 0.01 14.35 156 192 Pacific Environment Limited 4.7 2.9 2 61.0% 0.05 0.07 0.03 (0.00) 130.08 157 137 Orion Metals Limited 4.6 13.5 (9) (65.8%) 0.05 0.16 0.05 (0.02) – 158 172 Krucible Metals Limited 4.6 5.1 (1) (10.5%) 0.06 0.18 0.06 (0.04) – 159 163 Astivita Renewables Limited 4.4 7.1 (3) (38.4%) 0.14 0.44 0.12 (0.08) – 160 168 Pryme Energy Limited 4.1 5.4 (1) (25.5%) 0.01 0.14 0.01 (0.01) –
  • 16. 14 | 2013 Gala Edition Ranking Company Mktcap 30Jun13 $million Mktcap 30Jun12 $million Change $million Change % Last $price year High $price year Low $price year EPS P/E ratio FY13 FY12 161 132 Alligator Energy Limited 4.0 16.3 (12) (75.2%) 0.03 0.13 0.03 (0.01) – 162 166 Renaissance Uranium Limited 4.0 5.9 (2) (32.2%) 0.04 0.09 0.03 (0.00) – 163 149 Gold Anomaly Limited 3.9 9.8 (6) (60.3%) 0.00 0.01 0.00 (0.00) – 164 207 Navaho Gold Limited 3.5 1.4 2 151.7% 0.02 0.06 0.01 (0.02) – 165 193 Reverse Corp Limited 3.4 2.9 1 19.4% 0.04 0.05 0.01 (0.01) – 166 185 Trustees Australia Limited 3.3 3.5 (0) (4.8%) 0.10 0.11 0.08 (0.05) – 167 184 AusNiCo Limited 3.1 3.5 (0) (12.1%) 0.01 0.02 0.01 (0.01) – 168 190 BioProspect Limited 2.9 3.2 (0) (10.9%) 0.00 0.00 0.00 0.00 – 169 159 Hot Rock Limited 2.8 7.7 (5) (63.9%) 0.01 0.04 0.01 (0.01) – 170 120 Frontier Resources Limited 2.7 21.4 (19) (87.2%) 0.01 0.09 0.01 (0.02) – 171 208 Medigard Limited 2.7 1.4 1 100.0% 0.03 0.04 0.01 (0.00) – 172 206 Leaf Energy Limited 2.7 1.4 1 92.2% 0.06 0.07 0.03 (0.06) – 173 169 Platina Resources Limited 2.7 5.4 (3) (51.2%) 0.02 0.08 0.02 0.01 – 174 170 Superior Resources Limited 2.5 5.4 (3) (53.7%) 0.03 0.08 0.03 (0.02) – 175 165 Elementos Limited 2.3 6.5 (4) (64.4%) 0.02 0.09 0.01 (0.07) – 176 197 Gulf Mines Limited 2.3 2.4 (0) (4.3%) 0.01 0.01 0.00 (0.00) – 177 191 Agenix Limited 2.1 3.1 (1) (34.1%) 0.02 0.13 0.01 (0.08) – 178 199 Monteray Mining Group Limited 1.8 1.9 (0) (4.7%) 0.03 0.13 0.03 (0.01) – 179 174 Planet Metals Limited 1.6 4.7 (3) (66.1%) 0.02 0.09 0.02 (0.01) – 180 188 Republic Gold Limited 1.5 3.3 (2) (54.0%) 0.01 0.04 0.00 (0.09) – 181 122 Laneway Resources Limited 1.5 20.6 (19) (92.7%) 0.02 0.30 0.01 (0.07) – 182 202 Excela Limited 1.3 1.7 (0) (23.9%) 0.04 0.10 0.01 (0.24) – 183 187 Global Resources Corporation Limited 1.1 3.4 (2) (67.8%) 0.03 0.09 0.03 (0.09) – 184 204 Lake Resouces NL 1.1 1.6 (1) (34.8%) 0.02 0.03 0.02 (0.00) – 185 196 Metals Finance Corporation 0.7 2.6 (2) (71.4%) 0.01 0.05 0.01 (0.03) – 186 200 Drummond Gold Limited 0.7 1.9 (1) (62.5%) 0.00 0.01 0.00 0.00 – 187 195 Mnet Group Limited 0.4 2.7 (2) (84.6%) 0.00 0.03 0.00 (0.00) – 188 134 Intelligent Solar Limited 0.1 14.4 (14) (99.1%) 0.01 – – 0.01 – Source: Australian Securities Exchange and Capital IQ Companies listed in the Deloitte Queensland Index are determined on the basis of various selection criteria, including their principal place of business for the relevant period. Earnings per Share (EPS) – The portion of a company’s profit allocated to each outstanding share of common stock. EPS is an indicator of the profitability of a company. Calculated as: Net Income – Dividends on Preferred Stock/Average Outstanding Shares Price-Earnings (PE) Ratio – A valuation ratio of a company’s current share price compared to its per-share earnings. In general, a high P/E means high projected earnings in the future. It is mainly used to compare the P/E ratios of companies in the same industry, or to the market in general, or against the company’s own historical P/E. Calculated as: Market Value per Share/Earnings per Share (EPS).
  • 17. Deloitte Queensland Index | 15 5. Australian Coal, where to now? According to an April 2013 Bureau of Resource and Energy Economics (BREE) report, in Australia, there has been a slowing in the rate of progression of projects to the Committed Stage. There is also an emerging trend for ‘mega’ and large projects at the Feasibility Stage to be either cancelled or revert back to the Publicly Announced Stage. BREE estimates that around $150b of projects at the Feasibility Stage have been delayed, cancelled or have had re-assessed development plans in the past twelve months. Furthermore, there have been a number of mining companies, including the majors, that have announced plans to reduce their capital expenditure programs and/or sell assets. Looking at coal, the changes to projects ‘in the pipeline’ stack up as follows: • Publicly announced deferrals: include Xstrata’s Wandoan mine, Rio Tinto’s Mount Pleasant project and Peabody Energy’s Wilkie Creek expansion; all thermal coal and subject to the keenest price pressure and international competition. Two projects, BHP Billiton’s Saraji East and the Monto coal mine, were removed from the major projects list • Feasibility stage: There are 57 projects worth a combined total of $57b, back from 63 projects worth $76b in 2012. The large coal projects located in Queensland’s Galilee Basin remain the largest contributors (59 per cent) to the value of coal projects at the Feasibility Stage: including Adani’s Carmichael Coal Project ($6.8b), GVK-Hancock’s Alpha and Kevin’s Corner coal mines ($10b and $4.2b, respectively), Waratah Coal’s China First Coal Project ($8b) and AMCI/Bandanna Energy’s South Galilee Coal Project ($4.2b) • Committed stage: The 16 coal projects remaining at the Committed Stage have a combined value of $14.2b, of these, 12 projects worth around $12b are scheduled to be completed by the end of 2014. These include BHP Billiton’s Caval Ridge ($1.9b) and Daunia ($1.6b) metallurgical coal mines in Queensland and Anglo American’s Grosvenor Underground hard coking coal project ($1.6b). Caval Ridge will be built with unutilised coal processing capacity. Improving productivity essential to defending market share
  • 18. 16 | 2013 Gala Edition Clearly, the intense development phase we have experienced has pulled back. In Queensland, constrained infrastructure, in particular below rail and terminal capacity, has had much of the coal industry headlines over the past decade. This drive has resulted in an increase in terminal capacity of 25% with the expansion of Abbot Point through T1 and GAP rail and the commitment to WICET Stage 1. Material additional expansion capacity remains at the three current major export hubs. Current activity level is mixed with the recent shortlisting of Anglo American and NorthHub (Aurizon and Lend Lease) as potential developers at APCT (AP-X) offset by a general slowing of activity on other port projects. A feature of new ‘greenfield’ rail and port capacity is the risk and cost of development. WICET Stage 1 is understood to cost $90 per tonne of committed capacity resulting in a Take or Pay charge well in excess of $10 per tonne. The risk to coal miners and developers is also material with capacity secured through binding Take or Pay contracts and the cost of feasibility and associated studies likely to be in the order of $200M to $300M before a decision is made or a tonne is loaded. With the shift in the outlook for commodities, we have observed the scramble to secure capacity disappear and be replaced by an active secondary market for capacity. Australian labour and capital efficiency have materially declined in the last decade, creating cost and competitive pressures for mine developers and operators (see Figure 5.2). The last decade has seen labour productivity levels halve driven by the pursuit of the incremental tonne, the scramble for assets and the dilution of capability. However, steps are being taken to address cost pressures, increase productivity levels and recover operating margins. Producers have reduced output, retrenched workers, cut contractors and reduced overtime shifts. This shift in agenda is clearly demonstrated in the BHP Billiton May 2013 Investor Coal Briefing where they demonstrated a 30 plus percentage drop in unit cash costs index from Q1FY13 to Q3FY13 achieved through ‘temporary closure of high cost metallurgical mines and $0.8b (annualised) controllable cash cost savings.’ Figure 5.1: Queensland Coal Terminals Source: Enable database and various industry sources It is interesting to note that the New South Wales based Illawarra coal business has not seen the same level of fluctuation both up and down as seen by the Queensland based Billiton Mitsubishi Alliance (BMA) and BHP Billiton Metallurgical Coal. BMA see substantial opportunity to further reduce the cost of inputs via contractors and suppliers, reduction of business development and exploration and the implementation of their productivity agenda. A challenge for the industry moving back into this cost focussed world is finding people who were around last time. The duration of the recent up phase and the associated dilution of resources means that many of the current mine management teams have not lived through ‘squeezing the lemon’.
  • 19. Deloitte Queensland Index | 17 Figure 5.2: Labour productivity in the Queensland coal industry Source: Department of Natural Resource and Mines, Coal Industry Review 2011-2012 statistical tables, Queensland coal industry 5 year summary In addition to the short term impact of putting the brakes on outgoings, we believe continual material cost improvement can be realised through: • Focussing on systematic productivity improvement over cost cutting which incorporates initiatives like: better mine planning, budgetary and risk management, strategic workforce planning and system enabled transformation. Simply, the re-concentration of capability to ensure trucks are available and utilised at previously achieved levels, equipment and labour deliver their full potential • Expanding low cost production where the opportunity presents • Closing loss making operations. BHP Billiton has already closed the 1Mtpa Gregory open cut mine and the 4Mtpa Norwich Park open cut mine • Re-setting portfolios of assets to owners best suited to optimising the productivity of coal measures through opportunities from operational experience, efficiencies of scale, logistical rationalisation. This can also be aided by a more moderate AUD/USD exchange rate which is unfolding at the moment and some ‘fair wind’ on the labour relations and weather front. The strong Australian dollar, wet weather and industrial action were significant players in the loss of competitive advantage over recent years. The competition most relevant for Queensland, and the optimisation of our resources, is ultimately the Australian versus Indonesian, Mongolian, African etc. coal story rather than the competition between local owners and producers. This picture of slowing new development and the necessary drive to improved productivity in Queensland does not mean that our coal story is over. A November 2012 World Resources Institute report estimates 1,199 new coal fired power generation plants (1,401 Gigawatts) are being proposed globally, spread across 59 countries. China and India together account for 76 percent of this capacity, two major new investors in Australian and Queensland coal. There are also a further 10 developing countries with limited if any domestic coal production proposing new coal fired plants; suggesting further future demand for export thermal coal. We may be in a challenging period at the moment, but it is clearly all still to play for; provided we can plan for, achieve and embed a better level of productivity and stay cost competitive. Article 6 - Labour productivity in Qld Coal 0 4 2 6 8 10 12 14 13.7 9.5 12.8 2006–2007 8.1 12.5 8.7 2010–2011 11.6 11.0 11.4 2009–2010 11.8 10.6 11.6 2008–2009 12.3 10.8 12.0 2007–2008 coalperemployee(tonnes) Averageyearlyoutputofraw Open-cut Underground Overall Robin Polson Partner, Corporate Finance Tel: +61 7 3308 7282 rpolson@deloitte.com.au Andrew Wells Partner, Enable Advisory Tel: +61 7 3229 4000 andrew.wells@enableadvisory.com
  • 20. 18 | 2013 Gala Edition A consistently high rate of growth in India’s GDP since the introduction of the economic reforms in the 1990s has made India one of the fastest growing economies of the world. Figure 6.1: Share of population living in urban areas Source: United Nations Department of Economic and Social Affairs India is the largest democracy in the world and has a burgeoning middle class and large working age population, which has resulted in unprecedented urbanisation and fuelled a spurt of growth in domestic consumption, making it a strong economic and political force in the global arena. Figure 6.2: Projected average annual GDP growth 2014 – 2018 Source: International Monetary Fund 6. India and Australia: Driving growth with the Asian Tiger 0 20 40 60 80 100 Forecast 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 %ofpopulationlivinginurbanareas United StatesAustralia India ProjectedaverageannualGDPgrowth2014–2018 0% 2% 4% 5%3%1% 6% 7% 8% 9% Australia China France Germany India Italy Japan Korea New Zealand Philippines Singapore United Kingdom Thailand United States
  • 21. Deloitte Queensland Index | 19 Despite the recent slowdown in India’s growth rate to 5.0%, from 9.3% a couple of years back, the International Monetary Fund still predicts that India’s growth rates will remain comparable to China’s over the next five years. Deloitte Access Economics predicts that there is still plenty of growth left in the tank and over time India’s growth rate will outperform the rest of the world, including China. India needs to continue to drive its fiscal policies to keep feeding the ever growing demand for energy, good quality infrastructure, aged care, education and tourism from the ever growing middle class of India. Basic elements required to support this growth are ‘Energy’ and ‘Infrastructure’. Energy is one of the most important catalysts for the development and growth of the Indian economy. According to International Energy Agency, the per capita consumption of power in countries like the United States and China stands at 11,919 KwH and 2,559 KwH. However, in India with a population of 1.2b people, 300m are without power. Of the 900m people with power, the per capita consumption stands at 778.71 KwH, with a majority of this power generated through coal fired power stations. As outlined in India’s Central Electricity Authority’s estimates for Coal Demand for the power sector in India, while India is increasingly exploring more innovative ways, in addition to conventional methods, to meet the growing energy demand and energy security needs of India, coal is expected to continue its dominant position as the primary source of energy for India in the near future. In terms of infrastructure, India is struggling to keep pace and needs the support of developed nations to achieve the ambitious goals it has set for itself. Table 6.1: Coal demand for power sector Source: Central Electricity Authority Australia, and in particular Queensland, is beginning to see the impact as the Asian Tiger starts looking towards our great continent to help achieve its ambitious growth targets. Recent years have seen Indian businesses investing significantly in Australia to secure the supply of thermal and coking coal for their power and steel plants. Foreign investment in Australia by Indian companies grew from NIL in 2001 to $11b in 2011. In addition, Australian exports to India were approximately $13b in 2011. India is already the third largest export destination for Queensland, which not only underlines the growing importance of India but speaks volumes for the potential of partnering with the Asian Tiger. This has received a significant boost with multi-billion dollar investments committed by India’s Adani Group and GVK (in partnership with Hancock Coal) over the last couple of years, which will also have a significant impact on Queensland communities, as the conglomerates look to set up some of the largest projects in the world, right here in our State. The opportunities for Queensland exporters include a broad range of products and services, including gas, bio-fuels, mining equipment, technology and services, building and construction, health and medical, clean technologies including water and waste water management, transport infrastructure (road, rail and ports), sustainable tourism, tropical rainforest management, and niche food and beverages. In addition, while India has large coal deposits of their own, it has faced significant issues in trying to develop these reserves. These challenges include lack of political willpower and lack of adequate infrastructure. However, as India looks to step-up development of these deposits, there may be significant opportunities for Australian companies in and around the coal industry. Year In Mt 2012–13 637.21 2013–14 729.38 2014–15 829.73 2015–16 877.44 2016–17 913.22
  • 22. 20 | 2013 Gala Edition Further, India is now the largest source of permanent migrants to Australia, overtaking Chinese arrivals. Our connections to India are growing and this will have an increasing impact on the Australian, and more particularly, the Queensland business environment. While Australia has started to take notice of the Asian Tiger, capitalising on the opportunities it presents is not pre-ordained. We need to set the competitiveness of our assets and our economy against a number of other economies which can compete in the areas of India’s growing demand and we also need to be persistent in driving to understand the Indian market better. The initial forays by the Asian Tiger into Australia have not been without challenges. While the procedures for environmental and other approvals is well laid out and transparent, it is still very slow, resulting in significant delays in federal and state approval for projects. Besides, high costs of labour and low productivity of Australian mines, the high Australian dollar and a changing labour relations environment are some of the other factors that make it more difficult for Australia to compete with other destinations like Indonesia and Mozambique. And while the Australian business case stands out when the comparison is made in terms of the quality of its reserves, the technological advancement, a stable political climate, availability of skilled labour and matured industry practices; it is questionable whether this is sufficient in and of itself. The tiger is crouching, ready to pounce – where will Australia be when it counts? Reuben Saayman Partner, Assurance & Advisory Mining & Resources Tel: +61 3308 7147 rgsaayman@deloitte.com.au Harsh Shah Director, Assurance & Advisory Mining & Resources Tel: +61 7 3308 7374 harshnshah@deloitte.com.au Hitesh Mehta Manager, Financial Advisory Services Mining & Resources Tel: +61 7 3308 7107 hitmehta@deloitte.com.au
  • 23. Deloitte Queensland Index | 21 7. The reality of ‘hacking’: What is your response? It’s not a matter of ‘if’ you’ll be hacked, but ‘when’ or for ‘how long’ you have been hacked and ‘what’ you have already lost: • Iran: Nuclear program hacked and critical infrastructure damaged • Japan: Yahoo was hacked; usernames and passwords of email accounts stolen • South Africa: Police whistle-blower hotline hacked; names, email addresses and phone numbers of whistle-blowers stolen • USA: Recent survey shows energy and resources companies are under daily attack. In 2012, the US Department of Homeland Security reported that a US power plant was impacted for three weeks following a malware introduction • Saudi Arabia: Saudi Aramco was impacted by a malware in 2012 that affected 30,000 computers • Australia: There are claims that Codan (Australian provider of military communications equipment technology), Bluescope Steel and ASIO are amongst Australian organisations to be the recent victims of cyber-espionage, supposedly from China • The list goes on and increases every day. There are no borders in cyberspace. An investigation by ABC’s Four Corners program revealed that one of ASIO’s contractors had been hacked, leaking the blueprints to the building that hosts some of Australia’s most sensitive information. The nature of cyber-espionage is such that if an attacker can’t get into your network, they will try to obtain access through something close to you: your own personal computer/s, your suppliers that you share commercially sensitive information with, the law firm you outsource your legal work to, etc. It’s not just government agencies under attack; corporations are increasingly being targeted. Data relating to your customers, intellectual property, future expansion plans, supplier agreements, and merger and acquisition proposals are all highly sought after ‘commodities’ in the global market. Queensland companies operating offshore are at an increased risk of being targeted by cybercrime. Deloitte consults to organisations on the subject in many sectors, including energy and resources, construction and law firms. Brisbane will be hosting the G20 summit at the end of 2014 which could see an increase in cyber probing by hacktivists from around the world.
  • 24. 22 | 2013 Gala Edition • How prepared are you to withstand an attack? • How secure is your data that is currently kept by your suppliers? • Are you currently collecting the right type of information to allow you to respond to and investigate an attack? • Are you only stopping people getting into your network, or are you also preventing information from getting out? There is legislation currently being debated in Parliament that will require companies to publically disclose data breaches each time they occur to the Privacy Commissioner, any customers impacted and the media. Now, more than ever, it’s important to be able to answer questions such as the above, with confidence. Deloitte has a team of cyber security and cyber forensic specialists available around the clock and adopts a fully collaborative methodology supporting clients impacted by cybercrime: • Prepare: Anticipate, assess and plan for a cyber-attack • Aware: Interpret and monitor real-time, tailored cyber threat intelligence • Defend: Execute a step-change in the structure, governance and approach to cyber security • Respond: Prevent, investigate and limit damage from a cyber-attack. With the ability to draw upon an international team of specialists across industries, Deloitte is consistently recognised as a world leader in relation to information security, privacy and risk controls. DELOITTE CYBER SECURITY PREPARE AW AR E RESPOND TRANSFORM GOVERN Chris Noble National Forensic Lead Tel: +61 7 3308 7065 cnoble@deloitte.com.au Craig Mitchell Partner, Risk Services Tel: +61 3308 7400 cmitchell@deloitte.com.au
  • 25. Deloitte Queensland Index | 23 Some $65b is being spent between the Surat Basin and Curtis Island across the three approved coal seam gas (CSG) to liquefied natural gas (LNG) projects in Queensland, with billions also spent or earmarked on additional infrastructure required to support these projects. Residential and commercial properties in regional and urban areas of Queensland have been great beneficiaries in recent years; but, with predictions of a peak in capital investment as the projects move into their operational phases, how will these assets be impacted going forward? How will metropolitan areas respond in the office sector? If we do see growth in infrastructure investment over the next few years, predicted potentially in the support of production predominantly in the gas and coal space, how will Queensland’s property market be impacted? In the country The sheer scale of the CSG to LNG projects requires an enormous construction workforce and the projects, as well as all related contractors and subcontractors, have had to supplement their domestic personnel with thousands of interstate and international workers to cater for the construction requirements. From 2009, residential and commercial rents in regional towns impacted by these projects have been driven up as a tsunami of inbound workers have scrambled for housing and office accommodation from the Surat Basin to Gladstone. Gladstone Over the last few years, available residential, office and retail space in Gladstone has been absorbed as soon as accessible. As project teams and contractors moved into Gladstone, residential accommodation was predominantly provided via existing housing and hotels/motels – local retailers, cafes and restaurants boomed as a result. Speculative investment surged with news that thousands of workers would be coming to these areas, and house and land prices responded accordingly as competing dollars chased limited supply. Bidding wars between occupiers and speculative investors meant office, retail and industrial rents for existing properties increased dramatically. As available space became increasingly scarce, prices offered for vacant land rose to accommodate an expanding economy. Many tenants undertook significant capital expenditure projects within leased properties to ensure the power, cooling and electrical services were capable of handling advanced IT and communication requirement to report back to head office in Brisbane and beyond. As the projects have advanced, massive, temporary accommodation camps have been completed further out of town or on Curtis Island, and the resultant demand for housing, food and services in town has reduced dramatically. In addition, office and industrial requirements are now being met by new purpose-built facilities owned by the CSG companies and associated contractors in both Gladstone and Curtis Island. Although a retail presence will be required for public interaction, larger office requirements will be relocated from the spine of downtown Gladstone, being Goondoon, Tank and Toolooa Streets. It is expected that effective rents for office and retail will remain stagnant or reduce in the medium term as demand in town softens and vacancies rise. In addition, new commercial developments in town may stall as developers fail to attract pre-commitments due to the timeframe within which construction works need to be completed. The impact to the residential market has already been felt, with additional supply continuing to enter the market, whilst demand retracts. Recent stock releases within active land estates demonstrate evidence of price discounting across all product offerings, as developers seek to meet falling buyer demand in the region and maintain moderate volumes of sale. 8. Property and the gas boom: Challenges and opportunities
  • 26. 24 | 2013 Gala Edition Philip Windus Director, Deloitte Capland Real Estate Advisory Tel: +61 7 3308 7345 pwindus@deloitte.com.au Damian Winterburn Partner, Deloitte Capland Real Estate Advisory Tel: +61 3034 0401 dwinterburn@deloitte.com.au The sales volume for residential land has decreased by approximately 51% from the third to the fourth quarter of 2012. This appears to have continued from the quarter previous where sale volumes have fallen by approximately 59%. Agents are also reporting increasing instances of contract fall-overs for new residential stock (house/land/ units) as a result of a lack of valuation support for current contract pricing levels. Although median pricing has yet to reflect the dramatic fall demonstrated in sales volumes, we anticipate the reduction in sales volumes will place further downward pressure on median pricing. In addition, new housing estates are experiencing minimal local buyer demand, with most enquiries via investors from southern states that are late to the party. As prices reduce, local buyers may re-enter the market and create a floor in pricing again as they did after the last mining pull back. Surat Basin Over 500 kilometres west of Gladstone, the Surat Basin covers 27,000 square kilometres and extends from northern New South Wales to central Queensland. The majority of resource-related activity lies within Western Downs Regional Council, which encompasses the towns of Dalby, Chinchilla, Roma, Miles, Jandowae, Wandoan and Tara. While many of these towns had grown in early to mid–2000 due to resource exploration and energy generation, most are now seeing unprecedented fiscal and population growth over the last few years which bucks the trend of rural Australia as a whole. The residential housing market in the Surat Basin is continuing to remain fairly strong, underpinned by limited new supply versus the increased demand from the region. Although sale volumes and median pricing for vacant land and housing contracted from the end of 2012, local agents are generally reporting solid enquiry for residential accommodation underpinned by the mining and energy activity in the region. Although sale volumes and median pricing for existing housing have contracted from the September to the December quarter, vacant land transactions continue to grow in both number and median price. Due to the constricted nature of developable residential land in both Miles and Wandoan, there is insufficient data to report any shifts in those particular property markets. Despite contractions in housing market indicators, median weekly rental records for three and four bed housing continue to demonstrate strong quarterly growth as mining-based businesses continue to seek additional accommodation to house their workforce. While we expect this to stabilise, we don’t expect the same level of residential downturn in pricing compared to Gladstone, due to the lower level of speculative development of new accommodation in the Surat. For many of the CSG companies and their contractors, the logistics required to immediately accommodate workers in office space had not been fully considered. As a result, aging office and retail space in Chinchilla, Dalby, Miles, and Wandoan was swept up, with little concern for the rental terms agreed to. Our outlook for office and retail space in towns occupied by the three projects is generally positive in the short to medium term, particularly given that operators of the projects will require an office to accommodate public reception as well as back office support, although careful monitoring is required. In the city Closer to the Brisbane CBD, the optimistic leasing activity experienced over the last four years has slowly begun to unravel. Subleasing space has entered the market as contractors that expanded rapidly to meet immediate contracting requirements are reducing staff as projects wind down or outlooks for extensions become uncertain. As office space is released to the market, prospective sub lessors and landlords are reducing effective rents to entice incoming tenants and to reduce holding costs. The majority of subleased space being offered is fitted out to a high standard, reducing the amount of total occupancy costs required for an incoming sublessee and offering some attractive opportunities. This will be magnified as refurbished stock is released to the market from 2014, and vacant space within 1 William Street, 480 Queen Street, and 180 Brisbane comprising over 150,000 square metres reaches completion in 2016. Now more than ever, active participants in the office market require objective due diligence to understand how their business can identify trends and their associated opportunities, whilst reducing costs and exposure to uncertain times. For companies with leases expiring within the next 24 months, it is an opportune time to start exploring future office needs and potentially reduce occupancy costs due to the counter-cyclical timing.
  • 27. Deloitte Queensland Index | 25 9. Tax structuring: Will you be in the firing line? We find ourselves living in a world where multinational corporations are regularly being lambasted for not paying their ‘fair share’ of tax and being accused of deliberately structuring to shift profits to lower taxing jurisdictions with the object of minimising their tax liability. This issue is receiving ever increasing public scrutiny, with recent government statements around the world and the global media consistently placing multinational corporations, and their tax affairs, in the spotlight. The Organisation for Economic Cooperation and Development (OECD) released its first report on Base Erosion and Profit Shifting (BEPS) on 12 February 2013, in response to a growing perception that governments of OECD countries lose substantial corporate tax revenue because profits are shifted to favourable tax locations. The report concludes that BEPS is a significant global problem as international rules have not kept pace with the changing business environment and the evolution of the digital economy. The BEPS report was presented to the G20 in February 2013. Following a request by the G20, the OECD is developing a global tax action plan to target transfer pricing aimed at tax avoidance. This plan was due to be completed by July 2013. In the current economic environment it is not surprising that the Australian Government has similarly turned its attention to the global debate around profit shifting and the threat to the Australian tax base, with the Federal Treasury (Treasury) releasing an issues paper, ‘Implications of the Modern Global Economy for the Taxation of Multinational Enterprises’ on 3 May 2013. The paper discusses the broad issue of BEPS in the context of the Australian economy and considers the tax challenges posed by a changing and very rapidly evolving global economy. Subsequent to the release of this paper, Treasury called for comments from stakeholders, including the wider business community to ensure that the key issues concerning BEPS are addressed. The outcomes of the consultation process formed the basis of a Scoping Paper, released mid–2013, which examines the risks to the sustainability of Australia’s corporate tax base from the way current international tax rules are capable of being legitimately applied to minimise or escape the impost of taxation. In relation to the practical management of the tax base, Australia has recently reformed its transfer pricing legislation to modernise the transfer pricing regime, aligning the domestic law with international best practice (including the OECD Transfer Pricing Guidelines). Combined with the new extended International Dealings Schedule, and the additional disclosures required by taxpayers, the Australian Government expects that these measures will improve the integrity and efficiency of the tax system and assist in protecting the Australian tax base. Additional control measures are also being introduced to limit the far reaching effect of BEPS. For example, on 24 April 2013, the Australian Taxation Office (ATO) released a controversial draft tax determination which expresses the ATO’s preliminary view that support payments made by a parent to its subsidiary are capital in nature and not deductible. Further, in the 2013–14 Federal Budget, the Treasurer announced that the Government will provide $109.1m over four years to the ATO to increase compliance activity targeted at business restructuring that facilitates international profit shifting. In addition, Mr Swan (then Treasurer) announced in June that the Government would use its leadership of the G20 next year to drive a crackdown on tax loopholes and evasion by multinational companies. It is clear that both the Australian Government and foreign governments have recognised BEPS to be an increasing concern which requires urgent and global attention. Government discussions, through platforms such as the OECD and G20, conclude that a global plan is necessary to deal with BEPS going forward.
  • 28. 26 | 2013 Gala Edition The OECD regards the application of Controlled Foreign Company (CFC) rules as an integral part of tackling global BEPS. Broadly, such rules seek to tax profits sheltered in offshore holding structures on an attribution rather than realisation basis. Australia currently has a comprehensive and many would say, highly complex, CFC regime. In the 2009–2010 Federal Budget, the Treasurer announced a long awaited and welcome review of the Australian CFC regime. The reasons behind this review, on modernising the existing provisions, are based on the Board of Taxation’s September 2008 ‘Review of the foreign source income anti-tax-deferral regimes’ report, which concluded the existing rules were unable to effectively target modern business transactions. Four years on and we now have a deferral of those reforms being announced in the 2013–14 Federal Budget. Specifically, the Treasurer announced that the CFC reforms would be put on hold by the Government pending the completion of the OECD’s review of BEPS by multinationals. It is worth remembering that the proposed CFC reforms were endorsed by the Board of Taxation and were expected to enhance the global competitiveness of Australian multinationals operating in foreign markets. The subsequent BEPS debate has clearly shifted the focus and it is now unclear whether the reforms will proceed in their current (proposed) form or whether any aspects will be changed in light of the OECD BEPS project. This creates significant uncertainty for Queensland listed companies currently operating in or planning to operate in foreign jurisdictions. In addition to these measures, the 2013–14 Federal Budget contained other measures described as ‘protect(ing) the corporate tax base from erosion and loopholes’. These measures include: • The reduction of the thin capitalisation safe harbour debt amount from 75% to 60% debt funding for general entities (non bank financial entities reduced from 95.24% to 93.75% and the safe harbour capital limit for banks being increased from 4% to 6% of risk weighted Australian assets) • The removal of section 25–90 of the Income Tax Assessment Act 1997 which allows deductions for interest expense on debt used to fund investments in foreign subsidiaries and other non-portfolio equity investments • The amendment of the foreign non-portfolio dividend exemption to align with the debt-equity rules with the objective of counteracting the use of certain hybrid instruments that are treated as in substance debt for thin capitalisation and interest deductibility purposes, but qualify for the dividend exemption as they are equity in legal form. An interesting observation is that the policy intent of the above measures when introduced was to encourage foreign investment into Australia and to position Australia as a favourable investment holding jurisdiction. Following this, it is worth asking the question – Do these changes signify a genuine attempt by the Australian Government to play its part in the global fight by governments to tackle BEPS or are they more accurately described as short term revenue raising measures? In any event, does the increased short term corporate tax revenue from these changes really outweigh the foregone longer term economic benefits of encouraging foreign investment and the associated tax revenues (and other benefits) that are generated for the Australian economy. The BEPS agenda will no doubt have a very significant impact on Queensland listed companies, as they increase their involvement in international trade and investment. Due to the nature of its economy and its geographic location, Queensland has been able to derive substantial benefits from the increasing wealth of Asia. Queensland is also increasing trade with developed countries, including the US and the UK. As the Queensland economy relies so heavily on exports and overseas investment to sustain growth in its major sectors, the risks associated with the BEPS agenda are emerging as more relevant than ever for our economy. According to the Queensland Government’s ‘Strengthening the Queensland economy through global markets – Queensland trade and investment strategy 2011–2016’ report, India and China have emerged as Queensland’s main trading partners. The Indian and Chinese Governments have also turned their attention to BEPS by supporting the OECD’s work on addressing the issue of BEPS by multinational corporations.
  • 29. Deloitte Queensland Index | 27 Steve Healey Brisbane Lead Tax Partner Tel: +61 7 3308 7226 sthealey@deloitte.com.au John Bland Global Transfer Pricing Partner Tel: +61 7 3308 7275 jbland@deloitte.com.au Evan Last Tax Partner – Energy & Resources Tel: +61 7 3308 7161 elast@deloitte.com.au India has undertaken significant amendments to its transfer pricing legislation with respect to stricter transfer pricing standards and overall tax compliance. Likewise, China is committed to developing its transfer pricing regime. Interestingly, the OECD’s ‘Addressing Base Erosion and Profit Shifting’ report revealed that the British Virgin Islands was the second largest investor into China (14%) after Hong Kong (45%) in 2010. Queensland companies need to weigh up the consequences of their international tax structures. A ‘tug-of-war’ has emerged between legitimately achieving a lower global tax rate and providing shareholders with franked dividends. Foreign profits may be subject to lower tax rates with the result that profits may be higher than had those profits been derived in Australia. However, earning Australian income will allow companies to provide their shareholders with desired franked dividends. Queensland multinational corporations should have international tax structures that best reflect their global operations. The allocation of profit should be in line with the functions, assets and risks of each entity of the global group. Consideration should be given to the current media attention given to BEPS and the potential impact on their brand. The tax affairs of multinational corporations continue to be exposed and scrutinised in the media and with the current global debate raging around BEPS this level of scrutiny is expected to increase even further. Public perception of a corporate’s tax affairs can potentially decrease the credibility of the business in the community and for shareholders. A recent example, which clearly demonstrates the effect of public opinion on BEPS, is Starbucks in the UK. It has been reported widely in the UK press that Starbucks has decided to voluntarily pay £20m in taxes in an attempt to win back customers following revelations that no corporations tax has been paid in the UK in the past three years even though it appears that Starbucks was compliant with the UK tax laws. The perceived issue around transparency has also been a focus of the Australian government. Legislation has recently been introduced that will require the ATO to publish the reported total income, taxable income and income tax paid by corporate Australia where total income exceeds $100m or the company pays MRRT/PRRT. Deloitte understands that businesses need to maximise profits in order to fulfil the responsibility they have towards their shareholders. Given the current economic climate, the ability to derive profit has become harder. Businesses are required to take additional measures to reduce costs in an effort to increase profitability. This has been achieved, in part, through legitimately reducing the taxes businesses are required to pay on a global scale. Multinational corporations have not breached the law in order to reduce costs in this way. A reduction in taxes is possible because inconsistent tax rules exist between different jurisdictions and because the traditional international tax framework was designed around the old ‘bricks and mortar’ economy and does not easily accommodate the new digital economy. By reducing the impost of global tax rates, or providing tax holidays, countries are seeking to increase foreign investment. However this competition for investment also leads to tax arbitrage opportunities that produce BEPS particularly where the application of ‘source’ and ‘residency’ rules are not easy to apply in a ‘digital global economy’ where a business doesn’t always require a physical presence in a country to operate. Unilateral action by any country to stop this is doomed to failure and the G20 and other governments must act together if they hope to reduce opportunities for BEPS. To say the very least, the next few years are going to be an interesting time for all multinational corporations as this issue evolves across the world. For further information, to receive any of the mentioned documents, or our media releases please contact the below:
  • 30. 28 | 2013 Gala Edition 10. The dichotomy of Australian Agribusiness A lot has been said and written about the prospects for Queensland Agribusiness in light of a growing global population and changing dietary habits of the emerging Asian middle class, both of which are on our doorstep. We have what the world needs now and will need more of in the future, so it is no wonder it is seen as an attractive proposition. This is already being played out in the market with $7.7bn of the total $10.2bn in Agribusiness transactions in the period since 1 Jul 2010 being acquired by foreign parties.1 However, this brings to light an interesting dichotomy in one of Queensland’s most important industries. Why, when the global community sees so much opportunity in the sector they see fit to invest $7.7bn nationally, is there so much financial distress in the sector? A recent survey of the nation’s top seven major insolvency specialists undertaken by the Australian Financial Review showed more than 80 farming operations worth more than $1m each across the nation are either in receivership or some kind of financial distress.2 Agriculture accounted for 23% of all receiver/mortgagee property listings across Australia in the March quarter.3 There are a number of forces at work here, most significantly including: • International groups recognise the importance of securing food supply on one hand, but also as a financial hedge on the other. For example, as the price of protein commodities such as beef increases, investors will be able to use the return on Australian acquisitions to fund the purchase of these commodities elsewhere • Existing local farmers are under pressure through decreasing profit margins, volatile commodity prices, seasonal conditions, political intervention (e.g. the ban on Indonesian live export), a strong Australian dollar and, most critically, unsustainable debt levels. These are linked. Aside from the unsustainable debt levels, any international entrant will be subject to the same pressures as the local farmer. However, international groups bring with them advantages such as different investment return requirements, access to markets and capacity to invest to increase efficiencies and improve productivity to make the sector more cost competitive. Foreign interest The drivers of foreign interest in our agricultural land are well documented. Food supply is projected to be one of the most significant issues facing the global economy in the coming decades. First, there’s the question of simply producing enough food to satisfy demand. The United Nations forecasts that the world’s population will increase by a third by 2050.4 To meet demand food production will need to increase by 70%. Food demand in Asia alone is forecast to double by 2050 due to population growth, changing diets and increasing affluence. Australia is ideally placed to supply the food required by a changing Asian population. Despite there being significant public sentiment against foreign investment, there is not a great deal of appetite from Australian investors to offer an alternative. Agribusiness is generally capital intensive, susceptible to seasonal conditions and has not recently generated the returns of other investment classes in the short term. Further, it does not favour the short term return expectations of many local investors and requires a longer term outlook that foreign parties seem more naturally comfortable with matching their investment horizons. 1 Source: Merger Market, Capital IQ and Australian Financial Review. 2 Source: Australian Financial Review, Farmers nationwide in serious trouble, 29 April 2013. 3 Source: Landmark White research. 4 Source: United Nations, World Population Prospects: the 2012 Revision.
  • 31. Deloitte Queensland Index | 29 With demand increasing, why the distress? Land prices have been increasing since 2002 and have only come off the peak in recent years. Much of this capital invested has been debt. In contrast, farm receipts have remained flat as input costs have continued to increase as farmers have had to compete with the burgeoning resource sector for logistics and labour resources, as well as meet rising fuel and other costs. Profit margins have continued to be eroded to the point where, in many cases, the farming enterprises are not viable. Figure 10.1: Land prices and receipts – broadacre farms and total Australian rural debt Source: ABARES, Australian farm survey results, 2010–11 to 2012–13, Australian Bureau of Statistics Table D9 As a result of these pressures, a large number of Queensland farms did not generate positive cash income during the period from FY10 to FY12, and an even larger number failed to generate a positive business profit. The stress on farmers is increasing as land values fall and leverage covenants with banks are being tested. Figure 10.2: Queensland – Share of farms generating positive business profit/cash flow Source: ABARES, Australian farm survey results, 2010–11 to 2012–13, Deloitte analysis Article 5 - Land Prices 225 269 557 482 12 29 60 66 0 10 20 30 40 50 60 70 80 90 100 0 100 200 300 400 500 600 Totalruraldebt,$bn Landvalueandreceipts,$/ha(Broadacrefarms) Land value per hectacre Total Australian rural debt Receipts per hectare 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Article 5 - Share of farm 71 44 49 22 88 59 75 38 86 50 0 20 40 60 80 100 Positive Cash Income Positive Business Profit %Farms Average for FY 10/11 – 12/13 by industry Wheat and other crops Mixed livestock – crops Sheep – beef Beef Dairy
  • 32. 30 | 2013 Gala Edition The news does not improve in the longer term outlook either. With the prospects of escalating food demand out of Asia, you would expect prices to increase accordingly. Not so, according to ABARES forecasting. ABARES project world food demand to increase by over 75% between 2007 and 2050 and world food prices are, on average, projected to be around 11.5% higher by 2050 in real terms compared with 2007. 10.8% of this increase had already occurred by 2012, which used as a guide indicates world food prices are projected to be just slightly higher than their average in 2012.5 While this may seem conservative, there are good reasons for this. If we take beef as an example, over the past decade there has been strong export growth from nations such as Brazil. While they do not presently compete in many of our key markets, in the future this can change and production is expected to increase to meet this demand, keeping prices stable. This is a dampener on hopes that escalating demand will improve the top line performance of Queensland farms, offsetting the escalating cost pressures. However, it should be noted that other economic modelling paints a much rosier picture on the future price front. The key for Australian producers, however, is not to take this for granted with the cost side of the equation, as always, critical in the mix with top line considerations. There are some good signs, with recent data suggesting debt levels are beginning to decline as farmers recognise the need to deleverage their businesses, although there is a long way to go. Where to next? Farmers generally need to deleverage their businesses in order to survive. This may mean more pain as refinancing is often simply shifting the debt burden from one bank to the other, and cash flow does not appear as though it will improve enough in the short term to enable rapid debt reduction. Most farms are not of a scale to attract the attention of foreign investors, therefore expect more distressed sales in the market over the coming 12 months. This is not an appetising prospect; however this does enable a return to a more appropriate capital structure quickly. The need to improve productivity and manage an increasing cost base is paramount for Queensland farmers to remain globally competitive and take advantage of the coming food boom. If we fail to do this, lower cost international competitors will pass us by. Our farmers have, however, proven in the past an ability to increase productivity through innovation and investment. However, help is required and Government has a part to play. Innovative solutions to improve productivity require investment, and aside from a spike in in 2001, Australia has had little growth in real R&D investment since the mid–1970s6 and it takes some time for investment to improve productivity. This, together with improving international trade relations, industrial relations regulation, balancing environmental and business viability concerns and meaningful incentives to attract people to the sector are all areas where Government has a critical role to play. Failing this, Australian Agribusiness may fall behind in the race to reap the rewards of the Asian Century. Rob McConnel National Industry Leader, Agribusiness Tel: +61 7 3308 7300 robmcconnel@deloitte.com.au Tim Heenan Partner, Restructuring Services Tel: +61 7 3308 7281 tiheenan@deloitte.com.au Jackie White Manager, Agribusiness Advisory Tel: +61 7 3308 7151 jacquwhite@deloitte.com.au 5 Source: Jammie Penm, ABARES, Outlook 2013 Conference. 6 Source: Sheng, Mullen & Zhao, 2011. “I think agriculture has been appallingly treated by governments over a period of time. There is a presumption that there is always going to be someone out there willing and able to grow the food, without looking to see whether government policies can assist or hinder that.” Don Taylor, Chairman, Graincorp, Australian Financial Review, 6 May 2013
  • 33. Deloitte Queensland Index | 31 11. Life sciences in Queensland: An attractive proposition The growth of the life sciences industry in Australia continues to gain momentum with Australia becoming an increasingly attractive location for conducting clinical trials. The comparative regulatory ease of undertaking clinical trials within Australia, coupled with its diverse population group, educated workforce and proximity to Asia, has created an appealing environment in which to undertake R&D. Queensland has the third largest life sciences business community in Australia, following New South Wales and Victoria, with numerous research centres and industry associations supporting its growth. The life sciences industry in Queensland employs over 14,000 people, invests $650m in research and development, and has an estimated combined income of $4.4b. Queensland’s capabilities in the life sciences are further evidenced by the opening of Australia’s largest mammalian biopharmaceutical contract manufacturing facility located in Brisbane later this year, which will be operated by DSM Biologics. This will coincide with the start of the AusBiotech National Conference also located in Brisbane, to be held from 29 October to 1 November 2013. DSM Biologics’ facilities also complement PharmaSynth’s existing capabilities in Brisbane providing bacterial biopharmaceutical contract manufacturing. These two facilities are the only dedicated contract manufacturing facilities located in Australia which can produce large scale GMP biopharmaceuticals for clinical trials and other market demands. There are a number of important considerations in establishing any life sciences business, including: • The industry sector landscape, be it agribiotech, animal health, environmental biotechnology, human health (including biotechnology, pharmaceutical, medical devices and diagnostics), industrial or marine biotechnology, and the need to consider both the product lifecycle from pre-clinical development and clinical trials to product design, manufacturing and distribution. In the human health sector, this extends to consideration of the disease lifecycle, and the current requirement for a continuity of treatment encompassing prevention, identification, and treatment • Emerging trends within the market place, such as the need to consider targeted patient populations, differentiating products, streamlining operations to target inefficiencies, and the need to respond to the ever increasing demands of the more informed consumer • The regulatory framework and ease of doing business in Queensland • Funding mechanisms to support the undertaking of R&D activities. Queensland does well in respect of the regulatory framework with increasing State Government and industry association support (including AusBiotech and Life Sciences Queensland Ltd), there are many facilities available to aid the development of a life science business. In addition, there are advantageous funding mechanisms to support R&D which we discuss briefly below. Funding R&D This has the ability to sway the establishment or continuance of a life sciences organisation. Access to capital to build these businesses has been challenging. With limited venture capital funding available, life sciences organisations have continued to search for alternative sources of funding to support their research and development programs. The R&D Tax Incentive, introduced in 2011 is a key program which is providing significant financial support for life sciences companies. The program provides support for locally established corporations and in addition, opportunities for foreign companies to undertake government assisted R&D activities within Australia. The new provisions represent a reshaping of tax-based support for eligible R&D activities and have specifically broadened the definition of eligible entities to include foreign companies in certain circumstances. Eligibility for a 45% refundable tax credit for corporations with an aggregate annual turnover of <$20m, or a 40% non-refundable tax credit for larger businesses, can build cash flow and allow for greater cumulative investment in a business, stimulating the potential for further R&D expenditure and growth.
  • 34. 32 | 2013 Gala Edition To illustrate this, where an Australian incorporated life sciences company with an aggregate turnover of <$20m undertakes eligible R&D activities within Australia to the value of $1m, the 45% refundable tax credit will provide a cash refund of $450,000 in those circumstances where the company is not in a tax paying position. This refund can be further invested in R&D in a subsequent year creating additional refunds on this subsequent investment. Over a three year period by reinvesting the refund from year to year, the original $1m may lead to aggregate refunds of over $700,000 which can be applied to the R&D activities of the business, aiding with cash flow and further investment. Although a larger life science corporation is unable to access cash refunds, it still has the benefit of obtaining tax credits at the rate of 40% of eligible R&D spend. This can have a dramatic impact on cash flow, allowing for the release of immediate cash flow resources which can be directed back into R&D or other activities. Where the company is in a tax loss position, it presents a deferred cash flow benefit through the carrying forward of the tax credit to the year/s ahead. There is no cap on the amount of eligible R&D expenditure which can be incurred and claimed under the R&D Tax Incentive program, which means that the value of the related tax offset or credit can be significant and can provide further funding to sponsor your ongoing R&D activities within Australia. Who can make a claim? The key corporate structures eligible for the program in their own right include a body corporate: • Incorporated under an Australian law • Incorporated under foreign law, but an Australian resident for income tax purpose • Incorporated under foreign law: – A tax resident of a country with which Australia has a double tax agreement (DTA) including a definition of ‘permanent establishment’ (PE) – Carrying on business in Australia through a PE as defined in the DTA. In addition, a foreign-owned subsidiary company or an Australian PE can undertake R&D activities in Australia on behalf of the foreign parent or foreign body corporate where certain conditions are satisfied. It is also possible for the foreign entity to own the resulting IP as well as reimburse the R&D entity for its expenditure subject to the R&D Tax Incentive, making this an attractive proposition for foreign companies. Overall, this program provides greater accessibility to the Australian R&D Tax Incentive by foreign-owned R&D entities, which faced greater legislative restrictions under the former R&D provisions. In pursuing these opportunities, claimants need to be mindful of the compliance requirements, including the completion of a written evidence or a binding agreement between the R&D entity and the foreign resident (where done on behalf of a foreign entity) in relation to the R&D activities, as well as the registration of an R&D claim each year. What can be claimed? All activities undertaken by eligible R&D entities will need to be assessed for eligibility as either core or supporting R&D activities. Eligible projects must have at least one core R&D activity. A core R&D activity is defined as an experimental activity whose outcome cannot be known or determined in advance based on current knowledge, information and experience and is conducted for the purpose of generating new knowledge. The outcome can only be determined by: applying a systematic progression of work that is based on established principles of science; proceeds from hypothesis to experiment, observation and evaluation; and leads to logical conclusions. The new knowledge generated can be in the form of new or improved products, processes, devices, materials or service. Typically a life sciences claimant may be able to include its costs associated with contract manufacturing, clinical trials and aspects of regulatory affairs within its R&D claims. Tony Belfield R&D and Government Incentives Tax Director Tel: +61 7 3308 7037 tbelfield@deloitte.com.au Ryan Parlett R&D and Government Incentives Tax Manager Tel: +61 7 3308 7358 rparlett@deloitte.com.au Details of the categories of activities and expenditure that can be claimed, as well as further program information can be obtained via the following Deloitte R&D contacts:
  • 35. Deloitte Queensland Index | 33 What is the long-term outlook for Australia? How can business and government shape that future and ensure we retain our economic prosperity, political stability and social cohesion? These questions lie at the heart of Deloitte’s Building the Lucky Country thought leadership program – a series of seminal reports focusing on the big issues confronting Australia. The Building the Lucky Country series commenced in 2011 with ‘Where is your next worker?’ As the title suggests, this focused on jobs and the prediction that our biggest challenge will not be in creating jobs but in finding workers to fill them. The report recommended 12 potential alternative sources of talent which included: enhancing education; creating opportunities for women, older workers and people with disabilities; reforming the visa system; automating and streamlining business processes; improving staff engagement; offshoring tasks; and using the Internet to crowdsource talent. In 2012, the focus was on the biggest force reshaping the Australian economy – digital technology. The ‘Digital disruption – Short fuse, big bang?’ report analysed how quickly and to what extent digital technologies such as online commerce, mobile devices and cloud computing are impacting the sectors that make up our GDP. It found that 32% of the economy – including ICT, media, finance and retail – was already heavily affected by digital and that all sectors would follow to varying extents. The report also invited business and government leaders to focus on ways their organisations can recalibrate costs, replenish revenue streams and reshape their strategies. We’re now working on the next instalment and asking where Australia will find its future sources of income growth, whether export-led or internally generated. If we got lucky in the past with gold, natural resources and some areas of services, what’s next? To answer that question, we’re investigating where global growth trends and Australia’s advantages will coincide in the next 20 years – and what we can do capitalise on those nexuses. These results are scheduled to be released in early 2014. Building the Lucky Country David Redhill Deloitte Chief Marketing Officer Tel: +61 2 9322 7891 djredhill@deloitte.com.au
  • 36. 34 | 2013 Gala Edition Ten facts you didn’t know about Deloitte Australia 1. Currently has more than 530 partners, over 6000 people nationally and has announced annual revenues of just under $1.1b for the year ending 31 May 2013. In Queensland, the firm has more than 500 people, including 42 partners, and has just appointed eight new partners with deep expertise in property, oil and gas, financial services, middle market, agribusiness and health sectors 2. Was awarded the prestigious Accounting Firm of the Year in the Financial Review Capital CFO Awards 2012 as well as ‘Inclusive Workplace of the Year’ by AHRI Diversity Awards 2012 3. As economic volatility and digital disruption force organisations to review their business models, Deloitte Access Economics, working with Deloitte’s Digital and Restructuring specialists, are at the forefront of helping to create the innovative, low cost organisations of the future 4. Meeting its own disruption challenge, Deloitte has developed Deloitte Private Connect challenging traditional compliance services by providing low-cost, shared single ledger accounting in a secure cloud environment, with a real-time view of the business, accessible via mobile devices 5. In a first for professional services, Deloitte was recognised in 2013 with an Australian International Design AwardTM for the redesign of its audit services 6. Deloitte Capland Real Estate Advisory, headquartered in Queensland, now covers the entire lifecycle of real estate assets, complementing our existing restructuring, corporate advisory, audit, accounting, insolvency and tax structuring services in this sector 7. Australian-based Indirect Tax Partners Gary Funston, Jon Graham and John Koutsogiannis were recently recognised by their clients in the prestigious International Tax Review’s Indirect Tax Leaders guide 8. Analyst firm Kennedy named Deloitte a global leader and fastest growing in Information Management and Analytics 2010 – 2013 9. Deloitte’s global network was recognised as a global leader in finance transformation consulting services (Gartner), ranked number #1 globally in Security Consulting (Gartner), #1 in Global Financial Services Consulting (Kennedy) as well as #1 in the 2013 World’s Best Outsourcing Advisors List (IAOP) 10. In 2013 was recognised as the global leader for Human Capital Strategy Consulting by analyst firm Kennedy, highlighting its human capital analytics and a heavy investment in predictive analytics tools for scenario modelling, strategic workforce planning and talent management. Deloitte’s professionals are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in their communities
  • 37. Deloitte Queensland Index | 35 Continuously grow and improve We have an environment that respects the individual, rewards achievements, welcomes change and encourages a lifetime of learning – with ourselves and our clients. Have fun and celebrate There is never a wrong time to celebrate and have fun – recognising, appreciating, acknowledging and learning from the experiences and success shared between our client and Deloitte teams. Aim to be famous We aim to reach for the stars – and beyond. To be thought leaders, showcasing our clients and our team’s talent and expertise. Play to win-think globally Winning is our stated objective. It is also our state of mind. Talk straight When we talk, it’s open, regular, honest, constructive two-way communication between our people and our clients. Empower and trust We encourage a sense of ownership and pride by giving responsibility and delegating authority. Recruit and retain the best Our people are talented, enthusiastic, self-starters, team players who are bursting with potential. They are people with whom we have a lifetime association. Our Signals Our culture – Our essence Our seven Signals embody these values. Our passion for teamwork and exceptional client service is our point of difference. At Deloitte, we live and breathe our culture. Our internationally experienced professionals strive to deliver seamless, consistent services wherever our clients operate. Our mission is to help our clients and our people excel. Culture at Deloitte does not just happen – we work at it. It’s the sum total of the actions of our people, it’s the way we treat others – it’s the way we behave
  • 38. 36 | 2013 Gala Edition
  • 39. Deloitte Queensland Index | 37 As the growth impetus of the mining boom declines, the Queensland economy faces a transition period
  • 40. This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively the ‘Deloitte Network’) is, by means of this publication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this publication. About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte has in the region of 200,000 professionals, all committed to becoming the standard of excellence. About Deloitte Australia In Australia, the member firm is the Australian partnership of Deloitte Touche Tohmatsu. As one of Australia’s leading professional services firms, Deloitte Touche Tohmatsu and its affiliates provide audit, tax, consulting, and financial advisory services through approximately 6,000 people across the country. Focused on the creation of value and growth, and known as an employer of choice for innovative human resources programs, we are dedicated to helping our clients and our people excel. For more information, please visit Deloitte’s web site at www. deloitte.com.au. Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited © 2013 Deloitte Touche Tohmatsu. MCBD_SYD_07/13_048778 For information regarding the Deloitte Queensland Index, please contact: Robin Polson Partner, Corporate Finance Tel: +61 7 3308 7282 rpolson@deloitte.com.au www.deloitte.com.au