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					  BONUS: EXOTIC                             PROPERTY HOTSPOTS                     ONLY
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   THE MAGAZINE FOR INVESTORS
   AND ENTREPRENEURS


                                                                www.wealthcreator.com.au
FUNNY BUSINESS

The business                                                        Boomers
school making                                                       Bonanza
bacon by                                                               Now is the
hamming it up                                                           best time
                                                                         to buy a
                                                                        business




                                                        TOY
DRINK IT UP

 Toast
 your
success
                                                        STORY
                                                       How Manny Stul
in 2012
                                                     turned a fledgling
                                                    toy company into a
                                                           global force

                 ISSUE 56             THE SECOND COMING               POWER FLOWERS
                 AUS: $8.95 INC GST   From car rentals to             Edible Blooms bites
                 NZ: $9.95 INC GST    residential development         into opportunity
                                                             ISSUE 56 MAR / APR 2012
                                                                                                             Contents




                                                       Cover stories
                                                       26   Manny Stul
                                                            Melbourne toy maker becomes global sensation


                                                       8    Boomers bonanza
                                                            As the Boomer generation nears retirement,
                                                            opportunities are increasing to buy successful
                                                            businesses


                                                       30   Funny Business
                                                            Inside Pete Crofts’ Humourversity


                                                       44   Property Hotspots

                                                       48   Drink it up

                                                       36   The Second Coming

                                                       34   Power Flowers



Inside                     Business                            Invest & trade
                           30   Funny business                 42    An eye on Japan
10   Inside the Storm           Pete Crofts looks to                 The Yen provides a rare
                                share the laughs                     opportunity
15   ASSOB Update
                           22   The Elevator
                                Spotlight on ASX               46    Funds focus
                                microcaps



                           Property
                           38   Patrick Bright

                           44   Property Hotspots
                                                               Look
                                                               48    Toast your success

                                                               50    WIN with
                                                                     Wealth Creator




       EXOTIC INVESTING GUIDE // See page 41

                                                               WEALTHCREATOR.COM.AU             MARCH /APRIL 2012   3
CATHY DOYLE
Group Executive, Equities
Perpetual Investments
                                                                                                        perpetual.com.au/always




              CONSISTENCY.
              IN THE INVESTMENT
              BUSINESS, THAT’S THE
              NAME OF THE GAME.
             Cathy Doyle is Perpetual’s Group Executive                     They’re very self-motivated and they’re very
             of Equities, overseeing a team that looks after                competitive. They talk, eat and sleep stocks.”
             around $20 billion in funds. Yet unusually for
                                                                            As Cathy explains, the focus on promotion
             someone in her position, she doesn’t come
                                                                            from within means Perpetual’s processes
             from a background in managing money.
             A human resources professional with a degree                   and philosophy are deeply ingrained. “Our
             in psychology, she specialises in managing the                 team has a lot of unique people with great
             people who manage the money, so that they                      individuality and initiative, but in the end
             can consistently perform at the highest level.                 we’re all working for the same outcome.
                                                                            And that is using Perpetual’s quality
             “This really is a people business, and I think
                                                                            approach, aiming to beat the market,
              our talent management and succession
                                                                            and delivering a consistency of
              planning is the real difference at Perpetual.
                                                                            returns over time for our investors.
              My role is like a coach I suppose – to make
                                                                            That’s what they expect from us.”
              sure we have the best team in Australia
              and to house them in the right culture and                    The bottom line is that talent begets talent;
              environment for them to continue to deliver                   a phenomenon Perpetual has employed to its
              returns to investors, year after year.                        great advantage for 125 years. The ability to
             “Some of our portfolio managers have been                      consistently attract and keep top performers
              with us for over 20 years. Matt Williams,                     has been vital to Perpetual’s longevity and a
              our Head of Australian Equities, has been                     key to its success as one of Australia’s premier
              here for 18. A lot of these guys started at                   investment houses. Quite simply, when you
              Perpetual in junior roles, and have steadily                  place your investments with Perpetual, you
              risen through the ranks. So they know how                     can rest assured that you’re with a company
              things are done around here, they know                        that invests in the best people in the business.
              the different fund mandates intimately.                       It always has, and it always will.




This advertisement has been prepared by Perpetual Investment Management Limited (PIML) ABN 18 000 866 535, AFSL 234426. It contains
general information only and is not intended to provide financial advice or take into account your objectives, financial situation or needs. You should
consider the relevant PDS (available at www.perpetual.com.au) issued by PIML before deciding whether to acquire or hold units in a Perpetual fund.
EDITOR’S LETTER
                                                                                                 EDITORIAL
    Contact the editor: chris.jackson@wealthcreator.com.au
                                                                                                 Managing Editor / Chris Jackson
                                                                                                 Artist / Gavin Bell

                           Brave new world                                                       ADVERTISING

                           After spending several years working overseas,                        Sales and Research Co-ordinator / Alex Cybulska
                           when I returned to Australia in early 2009 I was                      alex.cybulska@wealthcreator.com.au
                           amazed by the pessimistic attitude I encountered.                     Please direct all advertising related inquiries to us
                           Of course, my views were slightly jaded by the                        at our Melbourne office: 1300 767 975
                           juxtaposition of living in Dubai, a city which gets                   PUBLISHING
                           excited by the mere idea of a big project as much                     Publisher / Peter Stirling
                           as its actual execution. Nevertheless, things were                    Business Manager / Mitzi Mann
                           pretty grim. In May that year, this editor letter began
                           by quoting Entrepreneur’s Amy Cosper: “Fear is not                    Published by EMD Enterprises
                           a growth strategy”.                                                   Suite 5, 214 Bay Street,
                                                                                                 Brighton, VIC 3186
Fast forward three years and the new year has not so much started with a bang but
                                                                                                 ABN 77 151 868 750 ACN 151 868 750
slipped in unnoticed. Pessimism has been replaced by indifference to the latest news of
a crisis or crash – and in many cases this has made the mood worse.                              SUBSCRIPTIONS
  The collapse of the Eurozone, ticking time bomb of Japanese debt, turbulence                   Subscribe to Wealth Creator magazine and
on Australian equities markets and America’s ongoing financial wrangling remain                  receive every issue straight to your door.
fascinating issues individually, but collectively are a potential for panic on a global scale.   Phone: 136 116 Fax: (03) 9591 8660
  In some quarters it seems that the mantra of too big to fail has been replaced with too        www.magshop.com.au/Wealth-Creator-Magazine
hard to fix. It’s certainly going to be an interesting year.
   In Malcolm Gladwell’s book Outliers he explores the reason for a glut of wealth               WEBSITE: www.wealthcreator.com.au
formed around the 1800s. Of the richest people of all time (adjusted for contemporary            Member of the Australian Business and Specialist
figures), the majority come from this 10-15 year window where America was moving into            Publishers Association
the industrial age and new industries such as coal, railways and mechanization were
enough to make several fortunes.                                                                 All material in Wealth Creator magazine is
                                                                                                 protected under the Commonwealth Copyright
   Could we be witnessing another watershed window of opportunity now, where old                 Act 1968. No material may be reproduced in
mantras and accepted norms are challenged by new technology and new ways of                      part or whole without written consent from the
thinking.                                                                                        Publisher. Wealth Creator magazine welcomes
                                                                                                 suggestions, comments and feedback. Please
  Twenty years ago you could not imagine something like Facebook or Twitter would                email the editor, fax (03) 9591 8660 or post to
exist, yet now they are economic powerhouses. Perhaps even more importantly, you                 Suite 5, 214 Bay Street, Brighton 3186.
couldn’t imagine their model of doing business would exist, yet now these models are
seen as scalable templates for a new commerce infrastructure.
   I’m not advocating setting up a new Facebook or Google or trying to be an IT boffin –         IMPORTANT MESSAGE
but I am saying that you should not be afraid of trying to redraw the entire canvas if you       The publisher of Wealth Creator Magazine (WCM),
                                                                                                 EMD Enterprises, is an independent publisher. WCM is
think you can do it differently. Or better.                                                      distributed by Network Services. WCM publishes articles
  What happens in the next 12 months on a global economic scale is likely to be                  and information about people who have successfully
                                                                                                 devised and applied strategies that have proven successful
unprecedented, but there is little you can do to change this. What you can start working         for them. All information contained in WCM is intended to
on is changing the way you think.                                                                inform and illustrate and should not be taken as financial,
                                                                                                 real estate, legal or accounting advice. We do not endorse
  So I will leave you with a passing quote, not from Cosper but from a sticker on the            the views, statements, claims, strategies or ideas put
outside of my guitar case: “Don’t go with the flow – create the turbulance.”                     forward by contributors to the magazine. We are merely
                                                                                                 relaying information. Any strategy in business or investment

Chris Jackson                                                                                    should only be applied after taking into consideration
                                                                                                 your own financial situation and objectives. Investing and
                                                                                                 business can be risky and you should seek independent
Managing Editor                                                                                  professional advice before making any decisions. We are
                                                                                                 not liable for losses you may incur directly or indirectly as a
                                                                                                 result of reading WCM. WCM does not endorse any of the
                                                                                                 advertisers or their products that appear in this magazine,
CONTRIBUTORS                                                                                     nor do we support any representations or claims they may
                                                                                                 make. Readers are encouraged to do their own appropriate
                                                                                                 due diligence when making a purchasing decision as
Daniel Kertcher                Patrick Bright                Charles Leyland                     a result of reading this magazine. Several individuals
CEO                            Director                      Managing director                   associated with advertisers in this edition of WCM have
                                                                                                 also contributed articles. These articles have been
Trading Pursuits               EPS Property Search           Leyland Private Asset
                                                                                                 published because they fit the theme of our magazine.
                                                             Management                          These articles are not advertorials. Publication of these
Kathy Lien                     Gavin Wendt                                                       articles is not in any way dependent on their respective
Director of research                                                                             authors or organisations taking up advertising space in this
                               Senior resource analyst                                           magazine. Where an article or feature has been included
GFT Forex                      MineLife                                                          in this magazine in return for fee, it is identified as an
                                                                                                 “Advertisement.”


6     MARCH /APRIL 2012      WEALTHCREATOR.COM.AU
UP FRONT                     FYI // In the news

OPPORTUNITY

Baby boomer business boom
The Australian business landscape is               strength and will continue as baby boomers         people who can learn how to spot a bargain
set to undergo massive change as the               continue to exit the sector. With 2.1 million      and successfully renovate a business.
baby boomer generation ages, creating              businesses nationally in 2011, we estimate            “The riskiest part of any business is the
opportunities for new businesses and               there will be 280,000 businesses for sale          first three to five years, when most fail. Why
intergenerational change.                          in the next five years, factoring in recent         would you consider starting a business
   This year the first baby boomers turn            succession models.”                                when you can buy one that has survived
65, an age traditionally associated with              “There will also be plenty of bargains          this most volatile period, one that is up and
retirement, although research from BIS             around for keen investors and ordinary             running?”
Shrapnel shows that workers are continuing
to work until they are older.
   Senior economist Tim Hampton said               TREND
there were several key factors in workers
remaining longer: more women in the
workforce; people are healthier; and
                                                   Australia may tyre in 2012
recovering losses from the global financial         The Australian resources sector might              data since before the global financial crisis
crisis.                                            not have such a rosy outlook as some               in 2008.
   Regardless of the reason, businesses            analysts have predicted this year,                    “The index was able to predict how the
need to get ready for a fall in available          according to an innovative index created           sector was affected by the GFC,” Skelton
labour, he argued.                                 by freight-forwarding company Skelton              said. “It showed mining equipment imports
   “Lower growth in the labour supply              Sherborne.                                         slumped in the last half of 2008, as the
is going to have significant effects on                Based on the idiom that the only people         GFC arrived, and the first half of 2009.
businesses and the Australian Government’s         guaranteed to get rich in a gold rush are the      There was a 90% drop in the number of
finances,” Hampton said.                            merchants selling the shovels, director Brad       machines being shipped into Australia. This
   “Businesses will find it increasingly difficult   Skelton has launched an industry index that        represented a decrease of $350 million in
and more expensive to find the staff they           tracks the amount of heavy machinery and           the value of the machinery imported.
need. The Government’s finances will also           tyres imported into Australia.                        “Since that time though there has been a
come under increased pressure as lower                “Our shipping index keeps track of heavy        slow but steady increase and by the middle
growth in the labour supply feeds through          machinery imports. It’s an authoritative           of 2011 the index indicates the number of
to lower growth in tax revenue, at the same        resource that sees the trends before they          imports has surpassed pre-GFC levels.”
time as the ageing population is pushing up        occur. It provides perspective and will               Skelton said the current trading
health-related spending.”                          empower companies to make the most of              conditions were being influenced by the
   “So far, only the retail trade and              an uncertain year ahead,” he said.                 twin issues of the mining and carbon tax.
accommodation and food services                       “We’re also introducing a tyre index. It           “These factors signal an uncertain year
industries have shown a significant                 measures the amount of work currently              ahead,” he said.
movement toward using more part-timers.            underway in the sector and the tyres that             “I believe a conservative approach will be
Other industries, including goods-producing        are worn and need replacing as a result.”          taken by the industry and that could affect
industries, will need to find a way to follow          The company has been collecting this            revenue as well as company profits.”
suit. Businesses will also need to ensure that
they extract all of the relevant institutional
knowledge from their experienced staff

                                                        Money tips for 2012
before they do finally leave the labour force
and put their feet up in retirement.”
   But it’s not all bad news. As the boomers
reach retirement there were opportunities              1. Create a budget to get your money sorted
for others to purchase privately owned small
                                                       2. Start paying off your credit cards (pay the one with the highest interest rate first)
and medium businesses.
   Business strategist and investor Kerwin             3. Set up a direct debit to put money into a savings account each fortnight
Rae said it was “the biggest boom sector               4. Pay extra off your mortgage while interest rates are low
we have seen in some time”.                            5. Switch loans if you can get a better deal
   “Approximately 22% of business owners
                                                       Source: MoneySmart (www.moneysmart.gov.au)
are 60 or over, so the market is gaining

8    MARCH /APRIL 2012         WEALTHCREATOR.COM.AU
                                                                                                                        QUOTE



                                                     “Our problem is that more and more franchisees are getting booked
                                                  out and are unable to take more work. In some areas we’ve completely
                                                  eliminated advertising but there is still too much work coming in.”

                                                   Jim Penman explains why Jim’s Group is seeking a $10 million capital
                                                  injection to float as a public company to fund more franchisees and expand
                                                  internationally




DIVERSIFY

Back to the future
Wary investors spooked by warnings of               2006          2007          2008          2009           2010             2011
a second global financial crisis should




                                                                                                                                          Source: Russell Investments
think twice before rushing into single asset                     AUS.           AUS.          AUS.       INT. SHARES       AUS.
                                                   AREITs
classes, a leading investment house has                         SHARES         BONDS         SHARES          HGD          BONDS
                                                    34.1
warned.                                                          16.2           15.0          37.6           13.5          11.4
   Data from Russell Investments shows
that investors are better off following a
                                                   AUS.                       INT.BONDS    INT. SHARES    INT. BONDS    INT. BONDS
diversified strategy over the long term than                       CASH
                                                  SHARES                         HGD           HGD            HGD           HGD
trying to chase last year’s winner.                                6.7
                                                   24.5                           9.2          28.4           9.3           10.5
   Despite many investors flocking to cash
as a safe haven, over the long term this
                                                 INT. SHARES   INT. BONDS                     70/30          AUS.
strategy has returned an average of 8.7%                                        CASH                                          CASH
                                                     HGD           HGD                      BALANCED        BONDS
per year – the worst of the asset classes                                        7.6                                           5.0
                                                      17.6         6.6                         17.3           6.0
available.
   “The research shows there’s no
guaranteed method for picking the winning          70/30       INT. SHARES      70/30
                                                                                              AREITs         CASH         AREITs
asset class, and those that seek to do so        BALANCED          HGD        BALANCED
                                                                                               9.6            4.7          -1.6
                                                    15.9            6.4         -22.5
are playing their own game of investment
bingo,” Russell Investments portfolio
manager Kathy Cave said.                            INT.         70/30           INT.       INT. BONDS      70/30          70/30
   “The prudent approach is to ensure             SHARES       BALANCED        SHARES           HGD       BALANCED       BALANCED
you’re adequately diversified across asset          11.8           6.3           -25.9           8.0          3.7            -2.0
classes to minimise the risk of sometimes
extreme volatility swings from year-to-year
                                                                  AUS.          AUS.                        AUS.        INT. SHARES
   “While one investment may be a hot               CASH                                      CASH
                                                                 BONDS         SHARES                      SHARES           HGD
ticket one year, putting all your eggs in that       6.0                                       3.5
                                                                   3.5          -38.9                        1.9             -2.4
basket may not yield a positive return the
next year, and is less likely to preserve and
                                                 INT. BONDS                  INT. SHARES
grow wealth over the long term.”                               INT. SHARES                 INT. SHARES      AREITs      INT. SHARES
                                                     HGD                          HGD
   Despite recording the worst performance                          -1.9                        2.0          -0.7            -5.7
                                                     4.4                         -39.4
in 2011 of an 11% drop, in the long term
Australian equities have outperformed the
other asset classes the most often and hold         AUS.
                                                                 AREITs        AREITs
                                                                                               AUS.          INT.          AUS.
the highest average return of 13.7% per            BONDS                                      BONDS        SHARES         SHARES
                                                                  -8.4          -55.3
year.                                                3.1                                        1.7          -1.4          -11.0



                                                                                WEALTHCREATOR.COM.AU         MARCH /APRIL 2012        9
UP FRONT                  FYI // Interview   Reviews // WCM recommended reads

NOT A PERFECT                                 poached from a bank that I used to
STORM                                         work for to take on a new job with a
                                              company called Storm Financial,” she
                                              said.
In the UK it was Northern Rock, in               “At the time I did my due diligence      A fter
America it was Lehman Brothers                with Storm – I met clients who had       losing
and AIG. And in Australia, it was the         been with the firm for years. I knew      everythingng
collapse of Storm Financial that has          it was not a fly-by-night company, I                 aid
                                                                                       – Nolan said she is still in her
come to epitomise the tangible fall-out       knew they were really progressive and    house while legal issues are being
of the global financial crisis in 2008         independently owned and there was        settled – it’s easy to understand why
and 2009.                                     not one client I met that did not love   she has become disillusioned with the
  For Jodie Nolan, the collapse was           the company or love the results they     financial planning industry.
particularly painful, as she was an           were getting.                               “I think the average Australian isn’t
employee of the company, a client of             “I had a lot of questions at the      given financial information that they
the company, and her baby girl was            time around their gearing levels,        need to make decisions,” she said.
only six weeks old.                           because I came from a banking               “I think they are blindly led by
  Nolan said the first time she realised       background where you can imagine         planners and although I applaud
something was wrong was when she              that borrowing for an investment was     the way the commission structures
received a letter in the mail.                fine but margining up on your house       are changing, it is still very much a
  “I went on maternity leave for about                                                 sales driven role. These days so many
                                              was considered double gearing. I was
six months when I found a redemption                                                   companies are tied into products, so
                                              wary of all that, but I was shown so
notice which said we had been                                                          they can’t give complete brokerage
                                              many examples [of it working] that it
completely sold down,” she recalled.                                                   information – they don’t give people
                                              was ridiculous.
  Despite having enough cash to                                                        a true indication of what all their
                                                 “My husband and I ended up putting
withstand a margin call, Nolan said                                                    options are with shares, property and
                                              all our own money and investments
she was never given the opportunity to                                                 cash.”
                                              into the Storm model.”
ride out the volatility and found herself                                                 Nolan has written a book detailing
                                                 But it wasn’t just her own finances
in the same situation as many other                                                    her experiences called Surviving the
                                              that were spun into jeopardy, Nolan
Storm clients: losing everything.                                                      Storm, which recounts her personal
                                              had also talked other family and
  But how did she come to be in that                                                   journey and offers basic financial
                                              friends into investing with the
position in the first place?                                                            literacy information aimed at ordinary
                                              company.
  “I had been in the financial planning                                                 readers. She admitted that some
                                                 “It seems to be quite a conundrum
industry for many years, and was                                                       have questioned her ability to hand
                                              and many people have asked me if
                                                                                       out financial advice given her own
                                              I led the lambs to slaughter,” she
                                                                                       situation.
                                              admitted.
                                                                                          “My story brings up a whole heap of
                                                 “In a way, I did. My own family       wounds at the moment, and the odd
                                              became clients on my say so. But         10% of financial press is saying it is
                                              as an employee we didn’t know any        hypocritical to be telling people what
                                              different – it seemed to be all water    to do with their money,” she said.
                                              tight. I saw the markets falling. My        “But who better to learn from? I’d
                                              husband and I had $300,000 in cash       much rather take weight loss advice
                                              at the time, so we could have easily     from someone who had been fat and
                                              withstood margin calls – but we never    then lost weight than someone who
                                              went into a margin call.                 was always thin and never lost weight
                                                 “It is disheartening. Every single    so they don’t understand how hard it
                                              ex-Storm client says the same thing,     is.”
                                              ‘You worked there and you still didn’t      And despite the setback, Nolan
                                              know what was going on’. There might     remains upbeat about the future, not
                                              have been some key players who knew      just for herself but for others who may
                                              more about it than we did. For the       be on various stages of their wealth
                                              most part most of the employees were     creation journey.
                                              just left without jobs and for me most      “People can do it,” she said.
                                              of my investments were tied up with         “Even if they are starting late they
                                              them.”                                   can still do it.”

10 MARCH /APRIL 2012        WEALTHCREATOR.COM.AU
TREND

Angels target techs,
biotechs and green
Angel investors across Australia   on investment exits for the
are excited by biotechnology,      calendar year,” said Bentleys
clean technology and web-          associate director Tim
based software companies as        Bridges.
opportunities for investment in       “Data to hand shows 85.7%
2012.                              of investments had positive
   That’s the verdict from the     returns, with 25% returning
2011 National Angel Survey,        between six and 10 times the
conducted by Bentleys for the      initial investment.”
Australian Association of Angel       AAAI chief executive
Investors.                         Ruth Drinkwater said the
   The results showed              contribution of angel investors
participants invested $5.4         was not limited to capital.
million in angel capital in more      “In addition to financial
than 90 businesses last year.      investment, angels contribute
The most popular sector            their time and expertise to their
was clean technology, which        investments, with the average
attracted $1.23 million.           angel spending 50 hours
   In 2012, participants have      per month on activities like
planned to allocate an average     mentoring, attending pitching
of just over $275,000 of capital   sessions and post investment
to use in angel investment,        management,” she said.
up more than $40,000 on               “The contribution of
their planned investments the      intellectual capital is an
previous year.                     essential element of the angel
   “This year we                                  investment
were able to                                        strategy and
collate data                                        philosophy.”
                g
The Wiley Trading                            Teacher
                                                 her
                                 Millionaire Teacher               Top Stocks 2012                   Bulls, Bears and a
Guide Volume II                  By Andrew Hallam                  By Martin Roth                    Croupier who stopped
Edited by Kristen                                                                                    gambling and made
Hammond                          There seems to be many            Although history is no            millions
                                 books on the market               guarantee of future results,      By Matthew Kidman
When we got the first             professing to teach you the       Roth’s Top Stocks books
volume of the Wiley Trading      things you should have learnt     have become a publishing          There’s normally a worry when the title
Guide we could tell it was       at school, so it is refreshing    phenomenon, entering a            of a book is more than five words – if
something special. It’s such     to find one that has been          remarkable 18th edition this      they couldn’t get to the point in the
an obvious concept that          written by an actual school       year. Those who are already       title, what chance do they have in the
it’s a surprise it hasn’t been   teacher. Sticking with the        familiar with the series can      rest of the writing? Fortunately this
done before – take the best      school theme to give it a         tune out now – it’s likely this   book is an exception to the rule, as
writers and let them loose on    grade, the strong points are      is preaching to the converted.    Kidman draws on his experience as
their area of expertise.         that it is incredibly easy to     For the others, these books       a journalist to deliver a punchy tale
    Volume II picks up where     understand and it covers the      offer a quick, legible insight    with plenty in it for the beginners. In
the first book finishes off,       subject matter well. On the       into more than 100 Australian     some ways this book is an open love
which is to say that it has      negative side, it is extremely    listed companies and provides     letter to the stock market, reminding
a little bit of something for    US-centric and for some           an overview of performance        everyone of the opportunities that
every trader and a lot of        unknown reason there are          and a likely outcome for the      exist despite the global economic
great fodder for improving       lots of internet addresses        year ahead. As Roth himself       woes. Another way to view it is as a
your trading performance.        right in the middle of ordinary   admits, he might not always       love letter to the reader, reassuring
And the best bit? If you find     sentences. Whoever did            get it right. But by providing    them that they have the skills and
a section is too easy or too     this needs to visit www.          analysis on such a scale          ability to navigate their way through
hard, you can just move on       itsveryhardtoread.com before      comparing apples with             the big bad sharemarket – regardless
to the next.                     they edit the next book.          apples, there are few better.     of whether it is a bull or a bear.
UP FRONT                     ASSOB Update // News from the Australian Small Scale Offerings Board

                                                                                            HOPE FLOATS
ASSOB UPDATE                                    “The problem is that we need to find a
                                              way to make the cost more expensive.          FOR NEW WINE
                                                “People say they feel like sitting in the
                                                                                            TECHNOLOGY
   With more than 40 companies currently
   raising equity capital on the Australian
   Small Scale Offerings Board (ASSOB),       front row seat of a concert – they have
   it has been described as the largest       the illusion of actually being there.
   source of new equity capital for fast                                                     Flextank International is making
   growing smaller businesses in Australia.   The audiophiles love it because of the
                                                                                             waves on the global stage as
   Investors interested in reviewing          incredibly natural tone and a natural          winemakers slowly make the switch
   opportunities can register on the ASSOB
   website www.assob.com.au
                                              quality to the sound. You really do            to a new winemaking technology,
                                              think that the person is there. When           challenging almost 500 years of
   Entrepreneurs can obtain information
   about attracting equity capital by
                                              you listen through these speakers you          tradition in the process.
   contacting the ASSOB head office on         will often get up to answer the telephone
   1300 722 954.
                                              or the front door, but it is in the movie
                                                                                               For years high-end wine makers have
                                              or in the recording.
                                                                                            been held over a barrel – pardon the
                                                “I was listening to a live concert on       pun – in their reliance on traditional
                                              the computer and I almost died of fright      oak barrels to mature wine.
                                              because suddenly I heard someone a               But as managing director Peter Seer
                                              metre away clapping their hands – it          explained, the company’s new Flexcube
                                              was so real I actually jumped back            removes the need for expensive
                                              and realised that the microphone in           barrels.
                                              the recording had obviously been right           “There are millions of oak barrels
LISTENING ON                                  next to someone who had clapped their         around the world, and they are all
ANOTHER LEVEL                                 hands.                                        lovely, but they don’t actually work all
                                                “It’s just like the real thing.”            that well – there are lots of drawbacks
 Smaller, cheaper and better. That’s the        The speakers are created using a            to them,” he explained.
 promise from Acoustic3D Holdings             mathematical technique developed                 “They are very difficult to work with,
 managing director Joe Hayes when             by the company, which also has                they’re very expensive and they have a
 he talks about the latest product            applications in other wave-based              very short life. While they were the best
 offerings from the company as it                                                           technology 500 years ago, things have
                                              technology (such as wind power or
 prepares to launch an entry-level                                                          moved on since then.”
                                              solar power).
 $999 speaker system.                                                                          The company has invented two pieces
                                                But for now the focus is on producing
                                                                                            of equipment to replace the barrel.
                                              speakers with incredible performance
                                                                                               “One is a polymer vessel, which
                                              from much smaller electricity and
According to Hayes, the system                                                              allows you to regulate the oxidisation
                                              volume metrics. Hayes said the company
has been compared to a $100,000                                                             in a controlled manner,” he continued.
audiophile stereo system – and if you         was already working with production              “It is a plastic vessel that beautifully
think that sounds like an unrealistic         companies for live music events to            controls the amount of oxygen going
price tag, think again.                       introduce speakers with much lower            into the wine in the way that a barrel
   “These are absolutely unadulterated        OH&S management requirements. The             just can’t match.
audio lovers who would think nothing          company would also look at logical               “The second part, which is a new
of spending $30,000 on the right power        extensions to the speaker technology,         part of our business, is that we have
cable for their speakers,” Hayes said.        such as mobile phone speakers.                introduced top barrel grade oak from
                                                                                            our own joint venture company in
                                                                                            France.
                                                                                               “If you’re going to mature wine in
                                                                                            barrels you need to provide two things:
                                                                                            you need to provide oxygen and you
                                                                                            need to provide the oak.”
                                                                                               With the company’s technology
                                                                                            protected by a series of local and
                                                                                            international patents, Flextank is
                                                                                            rolling out the sales drive to reach the
                                                                                            local market and key international
                                                                                            markets in Europe, the US, South
                                                                                            America and South Africa.

                                                                                 WEALTHCREATOR.COM.AU         MARCH /APRIL 2012     15
UP FRONT                 ASSOB Update // News from the Australian Small Scale Offerings Board

  Steer said many winemakers were          THE YOUNG AND THE                              “The primary revenue stream is
greatly interested in the product, but     RESTLESS                                    through the paid broadcasting and
remained wary.                                                                         events system,” Cracknell said. “Any
  “Because it is so radically new, and                                                 events that are run through Kondoot
                                            Kondoot executive director Mark
because wine makers have one chance                                                    with a ticket price, Kondoot takes a
                                            Cracknell is starting to get used to
a year to make their wine, they are very                                               20% cut of the ticket sales. The second
                                            having people talk about his age.
cautious to change anything to make                                                    revenue stream comes from our games.
                                            Then again, there are not many others
sure they don’t ruin their one chance       under 25 who are successfully raising      On the site we have a whole bunch of
for the year,” he explained.                money to fund an Australian-tech           games that make the site fun and easy
  “However, as people become familiar       startup some are comparing – already       to use. All the games are available on
and confident with the technology,           – to Facebook.                             iPhone and Android for a nominal fee.
they don’t look back. There are many                                                      “Our third revenue stream comes
winemakers in Australia who now            And as Cracknell is quick to point out,     from advertising. We are in the process
declare they will never touch another      while there are plenty of experienced       of designing and refining our advertising
barrel in their life. Several wineries     business brains guiding Kondoot’s           platform, which will be pushed out into
have said that they are switching          commercial strategy, part of the buzz       the site at a later date.”
totally to this technology.”               surrounding the company is the                 After launching softly into the
  Despite the caution, sales results       fact that the product it offers is so       Australian market last year, Cracknell
have been strong and the sales have        contemporary.                               and co-founder Nathan Hoad embarked
grown at 33% year on year for the past        “Kondoot is social live video,” he       on a PR blitz in the US before Christmas.
three years.                               explained.                                  Now the site has users in 137 countries
  “We are also rolling out a very                                                      and the company is planning to launch
                                              “We are a social media site geared
interesting range of new products,”                                                    a US office in the near future.
                                           around this whole concept of live video.
Steer added.                                                                              “We are expanding and will be
                                           You can be online and broadcasting
  “The current largest vessel is 1000L,                                                moving a couple of guys over to the
                                           to your friends and family, sharing
and this year we are introducing a
                                           live video with everyone you know, or
2000L version. There are plans for a
                                           you could do a public broadcast where
5000L version, which starts to take
                                           anyone in the world tunes in.”
us into a new, almost industrial,
                                              While the site combines traditional
winemaking territory. This would allow
                                           social media elements such as posting,
us to roll out this technology to larger
                                           messaging and instant messaging with
winemakers, which could be quite
                                           new services such as video calls direct
groundbreaking for us.
                                           from the browser window, it also offers
  “The new products will grow us into
                                           ‘broadcasters’ the opportunity to make
new areas. We’re also playing in the
                                           money for themselves.
spirit industry, which is a huge and
very profitable industry, so we expect         “We have just launched our events
that will open doors which is very         and paid broadcasting system, which
valuable to the company.”                  is the first of its kind in the world,”
                                           Cracknell said.
                                              “It enables someone to jump online to
                                           create an event and if they have fans
                                           and followers who would pay to see the
                                           event, they can set a ticket price of $10
                                           and instantly start broadcasting and
                                           generating revenue online as well.
                                              “There is no hassle, no set-up time
                                           and no set-up costs, it is just there and
                                           it works straight away. It’s perfect for
                                           people like musicians, who might be
                                           able to put on a concert and get their
                                           name out there a bit more. It could work
                                           for things like sporting events as well.”
                                              The business is structured around
                                           three revenue streams.

16 MARCH /APRIL 2012      WEALTHCREATOR.COM.AU
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UP FRONT                   ASSOB Update // News from the Australian Small Scale Offerings Board

states,” Cracknell said. “We are looking          Like most internet businesses, for           months, they had seen a 25% increase
at getting more team members and                Kondoot the sky may indeed be the              in daily page use. Continual innovation
getting a bunch of new features into            limit. “The site will never be ‘finished’ –     will drive your business.
the site – there will be little tweaks and      there will always be something that you          “I was speaking with someone from
improvements around the site. We’re             can improve,” Cracknell said. “Facebook        Groupon and talking about the issues
also looking at getting more audience           is always striving to innovate, which          they faced with scaling and the problems
members using the paid broadcast                is one of the reasons their user base          they had to solve. They had issues that
system, so there will be a sales force          continues to grow. YouTube published           no one else has ever encountered, and
working on that to market it around the         figures recently after they redesigned          we will no doubt face the same thing in
world.”                                         their entire interface. In the last three      the future.”



WOWING THE                                      people sitting watching and the ball           summer cricket campaign were also
CROWDS                                          comes down off the crossbar,” he said.         watershed. While previous campaigns
                                                   “Is it over the line or not? It creates a   received a response rate of 2%, this
                                                lot of anxiety. If we could capture the        particular campaign was closer to
 While most start-ups like to boast
                                                sentiment at that particular moment,           10%.
 about their potential numbers, iPowow
                                                how much power would that have? You               Now, the focus of the company is
 has backed its talk with its walk since
 landing some impressive deals in the           could see the same thing with devices          signing other events and sporting
 past year.                                     such as the worm during the election           organisations, with the company signing
                                                debates.”                                      up media-giants Aegis International
                                                   After patenting the cloud-based             to assist with the international sales
The company offers the technology               application, iPowow started off small          effort.
behind the new wave of interactive              with the American Music Awards show in            “We have now got one of the biggest
television – for example the Vodafone           2010, before joining with NBC Universal        communication companies in the world
Viewer Verdict, where viewers watching          in the US to use the technology for its        bringing clients to the door, and we
the cricket can vote with their phones          Miss USA contest. This lead to a deal          have to deliver: it is that simple,” Fourie
on contentious decisions and even man-          that could be considered the tipping           said.
of-the-match awards.                            point: using the technology in the Miss           “The company will probably grow nine
   Chief executive Ettienne Fourie said         Universe competition where 23.6 million        to 10 times in the next nine months to
it heralded a new breed of television           votes were counted in nine minutes from        what we currently are.
participation        for     broadcasters,      150 countries.                                    “We are in a situation where the
producers and advertisers.                         “That      pretty     much       changed    technology is proven, we have a
   “Never before in the history of television   everything,” Fourie admitted.                  sales team set up, we have an office
has the TV and the audience been able              “It was peaking at 65,000 votes per         established – the real game for people in
to interact in real time,” he said.             second. In order to get to that stage we       our space is speed to market.
   “There are two trains of thought             had already done our time. We had done            “Whatever technology company can
in that sphere at the moment. One is            around a dozen live events, all smaller        get there first and gain market position
called social TV, which is where people         scale but every time we did it we took         is going to be in a strong place.
are sitting at home with their iPhone           the technology and updated it.”                   “We just want to sign up as many
or iPad or laptop and they’re engaging             While the numbers from that                 networks and as many high profi le
with the TV show or something                   competition might have been a tipping          sporting and television assets as we
related to the show through Twitter or          point, Fourie said the results from the        can.”
Facebook.
   “Where we come in is a new area
called participation TV, which really
allows the audience to interact. As you
are sitting there watching they ask you
a question and we are collecting – in
real time – millions of votes and putting
them on the TV screen in point five of a
second.”
   Fourie said the idea for the technology
was based around watching a World
Cup game of soccer. “Imagine a billion

18 MARCH /APRIL 2012         WEALTHCREATOR.COM.AU
IF THE                                          “In fact our team has a fair amount of        “We focused on developing our
SHOE CLICKS                                   footwear experience, and most recently       platform and building something
                                              we were involved with Footlocker, the        that was quite unique and different
                                              international retailer that specialises      to what is out there at the moment.
 Online footwear retailer Shooii is set
 to go live with a focus on unmatched         in the youth retail market. We saw           It has unique features such as a new
 customer service.                            a gap in the market place and also a         way to search the site, a drag and drop
                                              lack of focus from the major retailers       function so you can save shoes as you
                                              looking at online retail in particular.      are browsing.
This is the mindset Shooii managing             “The whole concept was born out               But Shooii is not simply relying on a
director David Prince has applied to          of frustration more than anything,           flashy website, Prince said.
his online footwear retail start-up,          because we couldn’t get our superiors           “The other component of the business
and it’s not just about getting the right     at Footlocker to understand that there       which is really important to us is the
shoes on feet.                                was a huge opportunity to service a          idea that we offer legendary customer
  For Prince, the market is missing           younger market online.”                      service – generally we think customer
something at the moment: a competitive          Prince said the company had spent          service in Australia is slipping and is at
online retailer aimed at the youth            the past year building its website,          a pretty poor standard,” he said.
market and delivering unparalleled            which is expected to launch shortly.            “We were trying to reinvent the way
customer service.                               “We started looking at best practice       that we approached the service side of
  “My background is in footwear retail,       from around the globe, which made us         the business. We wanted to create a
I have been in the industry for 17            realise that online retail in Australia is   delivery system that was truly great as
years,” Prince said.                          still in its infancy,” he explained.         well. I think the standard we should be
                                                                                           trying to achieve as online retailers is
                                                                                           an overnight service to customers – but
                                                                                           then to make it really easy to return
MELTING POINT                                                                              products.
                                                                                              “We’ve got this unique returnable box.
 From an outsiders perspective                                                             Each parcel that goes out to consumers
 welding might not be the most                                                             is packaged in premium packaging, not
 exciting industry generating press                                                        in a satchel like you might normally
 in the financial space, but for those                                                      receive. The box actually serves as a
 on the inside the latest product                                                          return package – it is a simple matter of
 offering from Keyhole TIG Limited is
                                                                                           sliding the drawer out and then sliding
 unprecedented.
                                                                                           it back in reversed and there is a reply
                                                                                           paid already printed.
Chief executive Gordon Kay told Wealth        controlled by a smart controller that           “We get around that issue of returns
Creator that the new form of welding          not only records data for processing on      that may stop customers from buying
technology, which is based on Tungsten        work in progress, but also records the       online because they think it may be too
inert gas welding, was generating rave        data for quality control.                    hard to return if it is the wrong size.”
reviews based on its speed.                      With a number of global and local
  “The predominant difference with            patents, Keyhole TIG has recently
the TIG technology created through the        been in discussions with international
Keyhole TIG is that it does very thick
                                              distributors planning to target the
materials in a single weld very quickly,
                                              UK, Germany and the United Arab
anywhere from 10 to 100 times quicker
                                              Emirates.
than conventional TIG welding metals,”
                                                 “We are also in discussions with one
he said.
                                              of the major distributors of welding
  “Previously it was claimed that it
                                              technology in South Korea as well, in
wasn’t possible to go any quicker. It
certainly has been proven otherwise.”         addition with some smaller players,”
  While traditional TIG welding melts         Kay revealed.
the parent metal with a wire fi ller to join      “Interest is rapidly accelerating now
the gaps, this new form of technology         we are actually making noise about it.
keeps melting the parent metal past           It is really about getting the product out
what was previously thought possible          to market, and we’re well positioned to
through a special tip. The system is also     make it happen.”                                       Shooii managing director David Prince


                                                                                WEALTHCREATOR.COM.AU        MARCH /APRIL 2012          19
UP FRONT                ASSOB Update // News from the Australian Small Scale Offerings Board

GROWTH                                    ago and the first commercial run went          The company would also continue to
INDUSTRY                                  into field two years ago,” Hubbard           focus on innovation, he said.
                                          said.                                         “Research and development never
                                            “The response has been tremendous         stops and we are in the process at the
 The world’s booming population is
 driving demand for more efficient         and it has been supported by the fact       moment of designing some interesting
 agriculture through products such        we have been able to win a couple of        value-add options to the Moisture
 as the Moisture Manager, created by      major awards. We won the Australian         Manager, which will be released in time
 Ross Hubbard.                            Business Award last year for product        for the 2013 season,” Hubbard said.
                                          innovation, and we also won the               “There are two or three of those
                                          NAB/Monash University award for             which will be released next year to
Hubbard, the managing director of         product innovation and excellence last      keep us ahead of the pack in terms of
SustainAg, is working to commercialise    December
                                                                                      innovation and technology.
the trademarked seed planter through        “The recognition of the design
                                                                                        “At the end of the day it is about
the newly formed company.                 excellence and the product quality and
                                                                                      continuing to develop products which
   “The company has grown out of a        innovation has been very encouraging,
                                                                                      improve two things for farmers: their
previous business I have had here         and certainly it’s a product that leading
                                                                                      ability to remain sustainable and their
for 25 years in northern NSW, which       edge farmers can see the benefit of a
                                                                                      ability to remain profitable.
was called Namoi Valley Implements,”      genuinely dual-purpose machine.
                                                                                        “We’re in an industry that has some
Hubbard said.                               “It is a machine that can place seed
                                                                                      tremendously exciting times ahead of
   “I made a decision to sell that        in the soil using different soil opening
                                                                                      us. The agrifood business is the most
business, which was a retail farm         mechanisms, which are required if you
                                                                                      important in the world, because it is
machinery business, and concentrate       have different soil types or different
on a manufacturing/wholesale/retail       amounts of crop residue left on the         pretty obvious what happens if we
business which concentrates on the        surface after the previous harvest.”        don’t eat.
tillage, seeding and spraying side of       Hubbard said the company had been           “It’s exciting when you see the
farming.”                                 vigilant in ensuring its intellectual       demand which will be placed on food
   The company operates a retail and      property has been protected and was         supply. When you have a look at what
support operation in northern NSW to      now looking to springboard its success      is happening in developing parts of
provide a base for innovative design of   into a national distribution network in     the world, where it is estimated that
new equipment, such as the Moisture       Australia, as well as looking to take the   in the next 10 years 50% of China’s
Manager.                                  products offshore to key international      population will be urbanized. Where
   “The first prototype Moisture Manager   markets in North America and Eastern        are 800 million people going to get the
products went into the field three years   Europe.                                     food from?”




20 MARCH /APRIL 2012      WEALTHCREATOR.COM.AU
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the elevator
  ON TRACK TO TARGET TUMOURS                                                             “We have taken a generic drug and
                                                                                       improved it to make a new branded
   ASX: ACL                                                                            product out of that,” Smith said.
                                                                                         “We could work with companies that
Although Alchemia Ltd has made its          chemotherapy but targeting it at the       are developing new drugs to make them
name developing a generic version of        tumour site. This technology has the       work better, or companies that have
blood-clotting drug fondaparinux, it        promise of increasing the potency          drugs which are going off patent to assist
is advances in the company’s cancer         of the chemotherapy drugs towards          with life-cycle management. There are a
portfolio that investors should keep an     the tumour but not change the way it       whole range of different deals we can do
eye on.                                     behaves outside of the tumour.”            with this technology.
  Chief executive Pete Smith said             The company has just commenced             “The dream is that in the future a
the portfolio was acquired after the        phase 3 testing on the products,           lot of different cancer drugs will be
company purchased Meditech about            with phase 2 testing in colorectal         formulated using our technology. We
five years ago.                              cancer showing the technology more         see enormous upside if we get this trial
  “We are taking generic cancer drugs       than doubled the effectiveness of the      working right.”
and making them work more effectively       chemotheraphy without changing the           In other areas of performance,
in targeting a cancer tumour,” he said.     toxicity level.                            Smith told The Elevator that Alchemia
  “We’re using a formulation technology       “We were amazed we saw such a big        was founded on its ability to perform
called HyACT, which is the platform         result,” Smith said.                       complicated chemistry processes.
technology to formulate drugs that            “For a lot of cancers, we haven’t seen     “That complex chemistry has enabled
target the tumour. We have shown very       big gear changes in the effectiveness      us to come up with a synthesis of a
clearly that we can give the same dose      of treatments. Even some of the newer      molecule called fondaparinux,” he
of chemotherapy to the patient, but we      therapies, that people can pay $30,000     explained.
                                                                                         However, the molecule had one flaw
                                                                                       – it was incredibly difficult to make
                                                                                       on a commercial scale. Most synthetic
                                                                                       chemical processes have five to six
                                                                                       steps, but this process had more than
                                                                                       60.
                                                                                         “Every step has a yield – the more
                                                                                       steps you have, the less material you
                                                                                       produce at the end,” Smith said.
                                                                                         “Obviously if you are trying to make
                                                                                       many kilograms of this it becomes an
                                                                                       issue. If you are losing a third or half
                                                                                       the material at every step, you will only
                                                                                       produce a small amount.
                                                                                         “Using our chemistry we came
                                                                                       up with a new way of making it. It is
                                                                                       still quite complicated. The barrier to
                                                                                       entry is just that it is a very difficult
make it work better because more of the     for, are only pushing out patients lives   molecule to make. We think we will be
treatment is targeted at the tumour.        by a matter of weeks or months. I think    the only competitor in the market for a
  “The problem with chemotherapy is         what we have is on a par with the          considerable period of time.”
that it is poisonous to a lot of cells in   incremental improvement of these other       After launching in the US market
the body, including the tumour. Every       drugs, but obviously at a much lower       last year after approval from the
chemotherapy is given at the maximum        price point.”                              FDA, the Alchemia has paired with
dose the patient can tolerate, not the         The company is expecting primary        Indian manufacturer Dr Reddy’s for
optimal dose, which is optimal for          results from this phase 3 study in Q3      distribution, where the latest data
killing the tumour.                         2013, with the option of creating a new    shows sales around $1.4 million weekly.
  “What we are doing is soaking             listed company to handle the cancer        Alchemia receives a 50% share of the
the body in the same amount of              portfolio also being slated.               operating profits.

22 MARCH /APRIL 2012      WEALTHCREATOR.COM.AU
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the elevator
  COPPER HOPES UP FOR CYU’S FRESH EYES
    ASX: CYU

Chinalco Yunnan Copper Resources                “We also keep our eye open for
is celebrating its latest find, with the      any other elements that may come
company announcing its latest drilling       up, particularly heavy rare earth
results – from an area which had             elements,” he said.
already been tested.                            Beckton said the immediate focus
   Managing director Jason Beckton           was to develop two mines in Laos to
said the company had received                production as quickly as possible
promising results from its project in        to generate cash flow to fund other
Elaine in Queensland, after earlier          discoveries.
studies seeking uranium had not                 “The mines in Laos are more
pursued copper sulphides found in the        realistic for short-term production
area.                                        because of their proximity to other
   The company also has projects in          existing mines in our sister company,”
Laos and Chile, where Beckton is based.      he said.
   “The main focus remains Australia,           “We can take advantage of
where we have the discovery of a new         those relationships to bring it into
copper ore body,” Beckton said.              production quicker.”
   “We still need to quantify the quality       The company is also working with
of the discovery. We started releasing       tier one partners Rio Tinto and Xstrata
strong results from Queensland’s Elaine      Copper in Chile on a number of
discovery in July. Obviously it is not the   projects.
best time in the market, but we don’t           According to Beckton, the results of
warehouse the results.”                      these explorations are integral to the
   Beckton said the company, which is        company’s ongoing success.
indirectly backed by China’s Chinalco           “Discovery of new deposits is the key
through its 51% stake in the Yunnan          driver for what we are doing – and we
Copper Industry Group, was mainly            have only just done it,” he explained.
focused on discovering copper and               “It’s an excellent time to have a look
gold deposits through exploration.           at CYU.”



                                                                                         within a specially designed power
                                               THE BROWN                                 plant using the energy within the
                                               REVOLUTION                                coal to burn out the moisture, which
                                                                                         takes away some of the available
                                                ASX: ESI                                 energy, and with whatever is left
                                                                                         over you can produce energy,” chief
                                             Environmental Clean Technologies is         operating officer Ashley Moore said.
                                             heading to the drawing board to design         “Our technology takes the water
                                             a commercial scale plant in the Latrobe     out in a sensible way before you use
                                             Valley.                                     it, so that when you use it you are
                                               The company is looking to capitalise      using the coal far more efficiently.
                                             on its Coldry technology, a technique       This means you can reduce the CO2
                                             that removes the moisture from brown        emissions, but you also make that
                                             coal to increase its efficiency and energy   coal a transportable energy source
                                             output and reduce its CO2 emissions.        because there is less water.
                                               “The traditional way of using high-          “Raw brown coal has around
                                             moisture coals is that you burn them        2000 kcal/kg energy as it is dug

24 MARCH /APRIL 2012      WEALTHCREATOR.COM.AU
out of the mine, and our material              “It’s important to consider the picture      “There isn’t a finite life for Coldry
is between 5500 kcal/kg and 5900            15-20 years from now. In Victoria, the       at brown coal power stations, it is a
kcal/kg. It takes a little over two         energy consumption of coal will diminish     gateway technology to those higher
tonnes of coal to produce one tonne         to the extent that is required to meet our   value operations to utilise that
of the [new] coal using Coldry              CO2 targets. But we can’t leap straight      enormous resource we have in the
technology.”                                there with an entirely sustainable           Latrobe Valley.”
   The company is looking to                solution, the technology is not mature          Davies said the company was also
commission a full-scale plant by            enough and the population can’t cop          working on another technology –
2014, depending on available finance.        the significant price tag associated with     Matmor – to improve the process
options available.                          it. Coldry plays an important bridging       of producing primary iron, which
   “It could be part of the Victorian       role, in that it enables coal to continue    would decrease the cost of raw
solution to significantly reduce its         to be used, but in a much more sensible      materials and also the CO2
CO2 emissions, which on its own has         fashion. In developing the technology you    footprint.
significant economic advantages,”            also open up higher-economic value uses         A pilot plant for Matmor was
Moore added.                                of the brown coal as well.                   being designed, he said.




  TANDOU COTTONS ON TO WATER
  INVESTMENT
   ASX: TAN



A new business model has given               value of water over time. The Murray        recently returned to full production.
traditional farming operation Tandou         and Darling River plans will effectively    “We have just completed a 4000
a refreshing flexibility to cope with         improve the quality of the system,          hectare cotton crop last season, and
Australia’s fluctuating weather               but also reduce the amount of water         we have just planted a 6500 hectare
fortunes.                                    available for consumptive use which         cotton crop for this year, which is
  Chief executive Guy Kingwill said          enables us to believe our investment        the largest cotton crop we have ever
the company had developed a long-            will increase in value.”                    grown,” Kingwill said.
term water investment portfolio to              Founded in 1970, Tandou has been           “In addition to that we are growing
complement its existing significant           listed since 1987 and is a large farming    2400 hectares of cereal. The crops
cropping operations.                         operation with 13,000 hectares of           have already been planted and we’re
  “Tandou has always owned water             cropping area in far western New South      hoping for an average season. We
entitlements for its cropping operations,    Wales.                                      are looking at two years of fl at out
and we were one of the first to do inter-        Kingwill said the new business           cropping [based on current water
valley trades of water,” Kingwill said.      model allowed for two basic modes of        storage levels].”
  “Since the de-regulation of the water      operation. When water is plentiful and        Kingwill said Tandou was using
market and the separation of title           the value of water entitlements is lower,   funds from a capital raising in the first
from water and land beginning around         the company is able to plant crops          half of 2011 to continue to build its
2005, the whole market has been              according to traditional farming cycles     portfolio of water entitlements.
evolving.                                    and operate as a normal production.           “You have to look at it like a property
  “Long-term, we believe water will          However, when water is more scarce the      portfolio,” he said.
continue to increase in scarcity             company is able to sell its entitlements      “There are continuing fluctuations
in terms of more demand and not              to others with permanent crops – such       in the short-term value of your water
necessarily more availability from our       as almond trees or vineyards – at a         entitlements, but over the long-term
current systems.                             much higher value.                          we expect them to increase in value
  “We believe there are significant              While the company employed this          as they have done over the past 15
factors that will continue to drive the      model during 2007-2009, it has              years.”

                                                                             WEALTHCREATOR.COM.AU         MARCH /APRIL 2012        25
Toy Story
Beans and garbage have paved the path to success for
Manny Stul and his innovative toy company Moose Enterprise

 FOCUS // COVER STORY


Let’s be honest. Nearly every kid wanted     things – the company became far more            “Most people have good ideas, but
to work at a toy factory at some point       ethical.                                     very few have the ability to translate
while they were growing up. In fact,            “The staff had a lot to do with it,       them into a commercial reality. That is
until they are old enough to read Charlie    because with a change in staff we            our forte,” he said. “If you ask me what
and the Chocolate Factory and consider       changed the attitude and the whole           our core competency is, that would be
a career change, many children would         way we operated and got into genuinely       it. We can take something from nothing
happily take up Manny Stul’s position        developing innovative products.”             and all we need is that spark and then it
in a heartbeat.                                 After enjoying moderate success           can be turned into a commercial reality
   As the chairman of Moose Enterprise,      with a toy called AquaSand, Moose hit        very quickly.”
Stul oversees a company that is              the big time when it launched Mighty            So what is the latest idea to be turned
making big news in the toy industry          Beanz, a small collectable based on the      into reality? Meet the Trash Pack, a
since the release of Trash Packs – soft      traditional Mexican jumping bean. Stul
rubber collectable characters based on       said the toy was the joint brainchild of
garbage.                                     business partner Jacqui Tobias.
   When Stul is asked if making toys is         “Mighty Beanz established us,” he
as much fun as it sounds, his answer is      said.
simple: “Yes.”
                                                “Mighty Beanz is a collectible based
   But while the job title might seem
                                             on the old Mexican jumping bean, which
like a dream to many, Stul admits that
                                             is the catalyst for the shape, only this
he fell into the position by accident
                                             has a small stainless steel ball inside.
after retiring in 1995 from his giftware
                                                “It has a really weird rocking
company, Scansen, which he founded in
                                             motion. I actually used to play with
1974 and took public in 1993.
                                             the real Mexican jumping beans as a
   “Moose came across my desk as an
                                             kid, and while there have been a lot
investment, and the intent was for my
                                             of people who have had the idea of
investment to be passive but things went
                                             using these beans, no one has been
wrong with the partners I was involved
                                             able to successfully translate it into a
with,” he recalled. “I bought them all out
                                             commercial success.
and stepped in to run the company.”
   Admitting that his due diligence             “We re-launched it two years ago and
wasn’t as strong as it could have been –     it was bigger than the first time. We
he was faxed 400 pages of figures to his      have an established brand now that we
hotel room but he couldn’t read it, so he    can bring back.
relied on the analysis of his brother-in-       “There is no hard and fast rule for
law – Stul said that he stepped into a       what will be successful. Most of the
company in deep turmoil with a messy         ideas early on came from us. All of our
company culture and poor systems.            current successes, and we’ll have four
   “There weren’t too many positives in      product ranges on television in the US
terms of the way the company was being       next year, are all our own ideas.”
run,” he said.                                  Stul also credits fellow director Paul
   “In a very short period of time all the   Solomon, who oversees the company’s
staff changed – it wasn’t pretty. It was     exports, as having a brilliant mind for
a very small organisation that wasn’t        product development. He said this ability
doing big turnover. We changed the           to deliver on products was critical to the
culture, and changed the way we did          company’s impressive performance.

26 MARCH /APRIL 2012       WEALTHCREATOR.COM.AU
collection of “gross” creatures that come     television offering to support each         you have something hot, they will find
in their very own trash can.                  product.                                    you.”
   “Out of the box this has been a bigger       “Everything we produce we go to             So what are the challenges of
hit than Mighty Beanz was,” Stul said.        television with in-house, which works       overseeing a company delivering
   “We gave Toys R Us an exclusive in         out to roughly 30-40 TV productions         thousands of toys worldwide? Finding
America for Christmas 2011 and next           per year,” Stul said.                       the right people, Stul said.
year we have all the retail chains on           “With the overseas customers it has         “The growth that we have experienced
board – WalMart, Walgreen, Target and         taken a while to develop the right sort     is unsustainable without the right
Kmart. It is a phenomenon over there –        of relationships with them, which is        people,” he said.
it’s already one of the top 15 toys with      again based on credibility and ethics.        “One of the problems of finding
Toys R Us                                     Because we go to television with every      the right people is ensuring they are
   “What surprised us was when we             product we deliver, we have to go to the    engendered with the right culture. I say
started having a look at the people           bigger companies which can afford the       this to everyone who joins us: as much
blogging, there was a tremendous              quantity to justify the TV expenditure      as we may look very relaxed and casual
number of girls. With Mighty Beanz we         in those countries.”                        and colourful, and there is a lot of
knew it was around 30% girls collecting         Stul said that this process was           laughing and joking, we are very good at
them, but the Mighty Beanz weren’t as         becoming easier.                            what we do. We have to be. As much as
gross.”                                         “We don’t have to find them, they          we give the impression of sitting around
   With a distribution network across 75      come to us,” he said.                       the office in casual clothes, you have to
countries, Moose not only designs and           “I don’t say that in an arrogant way:     be exceptional at what you do and you
delivers toys, it also runs a sophisticated   in this industry the product is king – if   need to be able to deal with pressure.




                                                                                                     AT A GLANCE:
                                                                                                   Name: Manny Stul
                                                                                                   Position: Chairman
                                                                                                   Moose Enterprise
                                                                                                   Headquarters: Melbourne
                                                                                                   Revenue: $100 million plus
                                                                                                   in 2010/11
                                                                                                   Growth: 60% year on year
We have a very low tolerance for      wanted them to catch me out –        the company has sold 10 million
incompetence or ineptitude. That      once you have lost someone’s         and expects 2012 sales figures
intolerance doesn’t necessarily       trust you have lost them forever.    to top 100 million, contributing
come from us as the owners, it is     Your integrity and your word         to revenues of more than $100
often from the co-workers.            mean everything, because people      million last year – there are moves
   “We have a fantastic team          know that if you say something       into new products which Stul
and it is a pleasure to come to       they can believe you.”               predicts will be even bigger. And
work. I make sure these days I           This adherence to ethics          the competition is watching.
interview everyone, not so much       has paid off for Moose, which           “We have got to the stage
for their ability but for their       recently secured a strong deal       where we are being watched very
personality, to ensure they fit        for an upcoming product launch       closely, and I am reluctant to
in with the culture. We have          on the strength of its word.         talk about some things because
had some incredibly qualified             After founding one company        we will be knocked off – even by
people come to work for us with       and turning another around           some of the bigger companies,
great references and impeccable       dramatically,       what     words   which is a disgrace,” he said.
backgrounds and they were a           of advice does Stul have for            “We have another girls program
nightmare to work with. Culture       others on their entrepreneurial      which we believe will be bigger
is very important.”                   journey?                             than anything we have ever
   Moose employs 70 people               “Crawl before you walk,” he       done – every single person we
in Australia, with another 75         said. “Do your research, do your
                                                                           have shown it to has fallen over
based offshore in Hong Kong and       homework and don’t assume
                                                                           backwards for it. It’s called Stika
China. Together with a strong         anything.
                                                                           Lulu – it’s going to be massive.”
understanding of the company             “Listen and learn from people
                                                                              While Moose makes “99.99%”
culture, Moose staff are also         who you intuitively trust. I would
                                                                           of its money from toy sales, Stul
fully versed in the company’s         also say don’t go spending up
                                                                           says the company has previously
unofficial rule: don’t lie.            big on grandiose ideas. It’s so
                                                                           been involved with licensing for
   “Honesty and integrity are very    easy to do a spreadsheet and
                                                                           the Mighty Beanz range – and
important,” Stul explained.           business plan and do all these
                                                                           Trash Packs is already starting
   “I try to ensure that whoever      projections. These spreadsheets
                                                                           to generate a buzz, despite its
is in my organisation doesn’t         are like an accordion – you can
                                                                           recent launch.
lie to whoever they are dealing       have them as wide or as narrow
                                                                              But Stul maintains that the
with. You don’t want to be trying     as you want and you can juggle
                                                                           key to the company’s ongoing
to remember who you said what         the figures to say whatever you
                                                                           success will be the products
to – it’s such an easy trap to fall   like. But you need to dip your
                                                                           that it develops, and looking
into. In the cut and thrust of the    toe in the water before you go in
                                                                           around the company’s offices in
business world there is a lot of      boots and all – going boots and
pushing and shoving that goes         all is a recipe for going broke.     Melbourne it is easy to see why.
on to achieve a certain end – I          “You need to really know             There     are      toys   literally
try to make sure that everything      your market. We have done            everywhere,        and     computer
we do from top to bottom is done      some research for some things        screens       fl icker    with     fun
on an ethical basis.                  where we were all going in           animations and scary-looking
   “I’m originally from Perth.        different ways, and we thought       monsters just waiting to be
When I started my gift company        we should test it to see which       turned into the next collectable,
I had no knowledge. I worked          path to take, but overall we just    TV commercial or website. But
on a rig for seven months to          rely on ourselves to do our own      it’s downstairs in the company’s
earn enough money to start            research.                            show rooms that the real fun is
the business. When I started             “When we develop a product it     to be found. As the team from
the business there was no one         costs us hundreds of thousands       Wealth Creator walks around the
to show me what to do, I had to       of dollars, so we would all have     room we take the time to play
do everything myself. I had to        to agree wholeheartedly before       with each toy – often spending a
understand selling, accounting,       getting to that stage. At that       little bit too long in front of each
packing – I did my own packing        point, we believe it is going to     display.
for three years. One thing I learnt   work.”                                  It turns out that it’s not just
very quickly as I was setting            But while the figures for Moose    children who would love to work
this up was never to lie. I never     and Trash Packs are exciting –       in a toy factory.

28 MARCH /APRIL 2012       WEALTHCREATOR.COM.AU
Laughing all the
way to the bank
Pete Crofts has found a way to convert chuckles into
cash – now he’s looking for others to share the laughs



Have you heard the one about
the class clown and apprentice
butcher who became a comedian
and started a business school
based on humour?
   It’s no joke that Pete Crofts has
developed his lifetime passion for
humour into a business model
with plans for growth, despite the
fact that some parts of his story
sound like absurdist sketches.
   Here’s how he became a
comedian:
   “I became the class clown
because I wouldn’t accept the rigid
views that I was being taught,”
Crofts recalled.
   “I found myself on a train one
morning, going from Chelsea to
Mentone, and something funny
happened. When I got to work I told
the butchers what happened, and
they laughed, then I told ladies
in the shop what had happened,
and they laughed and I get home
that night – this is 1956 – and
mum and dad have bought the
first television in the street. The
lounge room was full of people. As       “I couldn’t afford nails to build                            “My big breakthrough was
I walked into the lounge room, I       the building, so I took the nails      AT A GLANCE:         when I realised that I had
got to the front and stood there       out of the fence to build the shed,”   Name: Pete Crofts    developed a sense of comedy
watching this little box, and this     Crofts said.                           Position:            where I could make others
                                                                              Humourversity
comedian came on and told a              “On the day I opened the first        creator              laugh, but I turned 30 and
story very similar to the one I had    Humourversity there was a              Age: 68              realised that I couldn’t laugh at
just told.                             big storm which blew the fence         Goal: launch         myself,” he said.
   “I thought to myself, ‘I can do     down, but the Humourversity            Humourversity           “I was working for an
that! I don’t have to be a butcher,    survived.”                             studios in each      audience, surrounded by guys
                                                                              major capital city
I can just tell stories’.”               Crofts said he made the                                   on leave from Vietnam who
   Or about when he opened his         leap from touring comedian to                               don’t know if they are going to
first Humourversity, in Bonbeach        founding the Humourversity after                            live when they go back or not,
in Victoria.                           having an epiphany on stage.                                and I am on stage entertaining

30 MARCH /APRIL 2012       WEALTHCREATOR.COM.AU
them they’re laughing their heads
off and I caught sight of myself in
the mirror and I wasn’t happy. I
realised then that I took myself
too seriously. I gave up comedy
that night and moved back home
to Melbourne.”
   At a loss with the next steps
to take, Crofts put together a
large collage mural to record his
experiences in the entertainment
industry, painstakingly cutting
out pictures over 16 weeks to
overcome the impediment of his
dyslexia.
   “As I was putting this together I
realised that you didn’t need booze
or drugs, you needed a passion
for something and a meaning to
life,” he said.
   “I decided to work hard. I
put my heart into what I saw. I
opened the world’s first bookshop
specialising in humour, comedy
and laughter. I borrowed some
money and bought 3000 books
at 10 cents a book. I borrowed 50
bucks from dad, and bought some
bricks and chipboard to open up
the boomerang book exchange.”
   While operating the book shop       with some speakers. One of                        I started doing the same thing.
and researching the books and          the guys was handling Dale                        Instead of operating one on one, I
authors available, Crofts became       Carnegie, and I began marketing                   started operating for small groups
a student of the art of comedy –       Dale Carnegie. He was one of                      and hit the speaking circuit.
and eventually a teacher.              the first who understood the                         “At the same time I started
   “I got caught up in the academic    value of intellectual property. He                putting together the various
aspect of it, the history and          made a lot of mistakes along the                  training programs we do now –
community benefit side of it,” he       way and it took him a long time                   selling with a sense of humour,
said. “At that time I was doing        to get his property out there. By                 public speaking with humour
some work with an advertising          understanding what he was doing                   – there are 17 programs all
agency, and knocking around            when his content was concerned,                   together.”

                                                                            WEALTHCREATOR.COM.AU    MARCH /APRIL 2012   31
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   According to Crofts, humour         going to see owning your own
and laughter are often the missing     business as being Australian.
ingredients for companies looking      That’s the bottom line. By owning
to boost their success.                your own intellectual property
                                                                                              “If business is not fun,
   “If business is not fun, what is    and understanding how you can                          what is the purpose of
the purpose of doing business? Life    turn that into an income, that is                      doing business?
has to be fun and we have to do        the future. It’s not off the sheep’s
business with people who are fun       back anymore, it is off the top of
to do business with,” he argues.       your mind.”
   “Humour, comedy and laughter           Crofts said this paradigm shift
spin into fun, play and happiness,     could eventually lead to a shift in
which spin off into creativity,        the work-life balance equation so                       With a pitch aimed at sales
imagination      and     innovation,   often cited in textbooks.                             managers,       small     business
and they spin of into people,             “People will live for a living,” he                entrepreneurs, teachers, trainers
productivity, and peace.               said.                                                 and performers, Crofts said
   “The bigger picture is a more          “Within 30 years’ time business                    there was already interest in the
peaceful and happy life, because if    is going to be replaced by liveness.                  franchise program.
you’re feeling good then you tend      People want to live a life, they don’t                  In the meantime, there was
to do good. If a sense of humour       want to be shackled. [Sigmund]                        still a lot of work to be done to
could be taught in the classroom       Freud said most people go to work                     spread the word about the ability
the way politics or economics is,      all day doing jobs they don’t like                    of comedy to successfully lift
then the kids are going to come        and do hardly any work and they                       business performance.
out of school with a comic sense.      come home and they’re tired. Why                        “Humour, comedy and laughter
They’re going to have a perspective    are they tired if they’re not doing                   is a higher consciousness – you
which allows them to discuss what      any work? It’s because they are                       think a story is going one way and
they believe fervently, but not lose   using all their energy suppressing                    then the punchline comes from a
themselves in it. They’re going to     who they really are.                                  completely different direction and
have a sense of perspective.”             “The old days are gone. Standing                   forces you to think another way,”
   For those who may dismiss the       at a podium demanding people                          Crofts explained.
addition of show business as a key     listen is over. Even education is                       “The formulas that go into
skill set needed for businesses in     becoming edutainment trying to                        making a joke are also ways
the 21st Century, Crofts points to     keep kids interest alive.”                            of solving a problem, making
the rise of social networking sites       With protégées including Tim                       a decision and creating an
such as Facebook.                      Smith and Elliott Goblet, in                          opportunity. We teach people
   “There’s no longer a ‘business’     addition to hundreds of others who                    these processes. We train people
world and a ‘show business’ world      have taken the business course,                       to be able to think creatively, to
anymore, they have married and         Crofts said the time was right to                     put aside their prejudice and to
their eldest child is humour. It       launch further Humourversity                          re-evaluate their values.
means being fun to do business         studios across Australian capital                       “Kids need to be encouraged
with, and having a friendly and        cities and regional centres in a                      to laugh. Children need to be
flexible corporate identity and         franchise model.                                      encouraged to laugh, play and be
culture. One of the new programs          “The system is set up now – the                    happy and encouraged to share
I’m designing covers hosting your      procedure manuals, legals and                         laughter and to bring out their
own streaming video website,           marketing are all in place,” he                       creative side. When you laugh,
which is what everyone is going to     said.                                                 you’re liberated from dogma,
have to do,” he predicts.                 “Anybody who signs up to open                      restrictions and control and freed
   “There won’t be photos on           their own Humourversity studio                        up to let loose your creativity,
websites in five years time. Who        will get all the training that is                     imagination and innovation.”
you are when you are running           necessary.                                              And the effects were tangible
the business is going to have to be       “Not only will they be trained                     to a company’s bottom line as
presenting themselves down the         up in running the programs, but                       well, argued Crofts. Increased
screen.                                also to work as humour coaches,                       creativity and productivity, plus
   “In another 15 years, where the     business show cases and public                        an improved attitude to enjoying
tradition of owning your own home      speakers so there will be other                       work? Ultimately, that’s no
is Australian, I believe people are    revenue streams.”                                     laughing matter.

                                                                                WEALTHCREATOR.COM.AU    MARCH /APRIL 2012   33
Good enough to eat
A constant pursuit of innovation has driven healthy
growth for Kelly Baker-Jamieson’s Edible Blooms


While some women would consider             age. But despite the business plan and          Creator spoke to Baker-Jamieson she
receiving flowers or chocolates a            careful thinking, she decided to forgo          was keeping an eye on each store’s sales
welcome gift, a bouquet from Edible         the red tape of organising a bank loan          around the country from her laptop on a
Blooms offers the best of both worlds.      to start the business and instead put           farm an hour outside of Adelaide.
  Founder      Kelly    Baker-Jamieson      her life savings on the line to start the          “It’s really different to those early
created the business in Brisbane six        company.                                        days,” she admitted. “Now I am able
years ago.                                     “I ended up putting the money I was          to look at the bigger-picture stuff like
  “We are just like a florist, but you get   saving to buy my first house on the              marketing and business development.”
to eat our bouquets when they arrive        line to get the business started,” she             So why has Edible Blooms defied the
because they are made from edible           recalled.                                       gloomy performance of the retail sector?
chocolate, cookies, fresh fruit – we even      “Everything I worked for went on             Baker-Jamieson credits the company’s
do champagne for the girls and beers        the line to start Edible Blooms, and            strong bricks and mortar infrastructure
for the guys to make a unique gift,” she    we’re still self-funded today. A lot of         supporting the ecommerce elements of
explained.                                  businesses that grow quickly like ours          the business.
  “It’s a change from the traditional       aren’t like that – they have to have some          “More than 70% of sales comes
flowers or hamper gifts. I started the       form of loans or finance behind them. I          through our online channel,” she said.
business in Brisbane six years ago with     have had to run the business on a really           “The actual stores are almost like
nine fresh-fruit bouquets. The business     tight budget, and it took me a while to         production centres. They are all on city
started quite small, but now those nine     draw a proper salary out of the business,       fringe locations – in Sydney we are in
bouquets have grown into a range of         as it does for most people who start up         Surrey Hills and in Melbourne we are
more than 100 things to choose from.”       a new venture.                                  in Port Melbourne – which allows us
  Baker-Jamieson said the concept              “Because I self-funded to start with I       to do quick turnarounds. If someone
for the company came from a range of        juggled two jobs for the first eight months.     remembers it is mum’s birthday on the
sources – her love of cooking and eating    I juggled 30 hours of consultancy               day of her actual birthday then they
combined with a passion for sending         for a large law firm with running the            can ring us up and so long as it is in
flowers.                                     business. By the time I had quit my day         a metropolitan area we can get it there
                                            job I already had three stores up and           that day.
                                            running around the country.                        “We have set up as an online
                                               “It was a pretty intense period. The         company with the bricks and mortar
By the time I had quit my                   following full financial year we hit a           infrastructure to offer great customer
day job I already had three                 million dollars in sales, so it was off to      service. A lot of online companies are
                                            a strong start and it has continued to          easy to order from, but it might take a
stores up and running                       grow. Growth rate has averaged 35%              week to get there. We have a much more
around the country.                         year on year for the past three years.”         significant bricks and mortar set-up
                                               For Baker-Jamieson, the experience           behind our ecommerce shopfront.”
                                            of strong growth has created a strong              Now that the infrastructure is
                                            learning curve, particularly in time            bedded down, Baker-Jamieson is
  “It’s hard to get a consistent gift       management.                                     looking to expand operations offshore –
offering for flowers because if you are         “In those early days I wore a lot of hats,   international global economic conditions
ordering from a website you don’t always    as most business owners do, but as the          permitting, of course.
know what is going to arrive at the other   business has grown I have been able to             “It’s a really exciting time for our
end,” she said.                             employ more people to assist with the           business, because there are so many
  With a background in marketing            business and today I don’t work in the          opportunities available,” she said.
and business development, Baker-            business, I work on it,” she said.                 “We are just going through the
Jamieson said she had wanted to have           After investing in a strong IT system        process of setting up our infrastructure
her own business from a very young          based on cloud computing, when Wealth           and back-end systems to be able to

34 MARCH /APRIL 2012      WEALTHCREATOR.COM.AU
handle multiple currencies. We use a
fairly high-end cloud-based system,
which allows me to sit at home and see
minute-to-minute how each geographic
business is doing.
  “New Zealand is the first country that
will go online. We have been selling in
New Zealand for three years. My first
full-time employee was a Kiwi, and three
years ago she went back to Auckland
and set up a store, which has been
doing really well. We will be using that
as a pilot to see how the system copes. If
you have the right systems it gives you
an enormous amount of control.”
  But while 2012 has been described
as “a year of international expansion”
for Edible Blooms, Baker-Jamieson is
quick to point out that it won’t go ahead
as planned if global economic conditions
continue to deteriorate.
  “We have all the systems ready
to go, but we’re also watching the
developments overseas with a very keen
eye,” she said.
  “While we are set up for international
expansion, at the moment it is a matter
of ‘watch this space’ because I don’t
think anyone is silly enough to plough
ahead with an expansion plan without
seeing what happens on a global level.
We are doing it in a careful way, because
you don’t want to jeopardise a successful
Australian business by expanding
internationally at the wrong time.”
  In addition to the expansion plans, the
company is also launching new product
ranges, including an eco-friendly line
which will launch in March.
  “This is really relevant at the moment,
green gift-giving,” Baker- Jamieson
said.
  “One of the things we have been really
passionate about from the beginning is
continuous product development. We           something new to send. There are lots      “If you are going to go into business, do
have an official product development          of new things happening with Edible      something you love. It’s going to be hard
pipeline so that we can continuously         Blooms, so we’re confident we are going   work but if you love what you do then it
offer customers new ideas. Edible            to continue to see growth this year.”    won’t seem like hard work. Don’t start a
Blooms was a fresh concept when it             And her advice for others starting     widget factory if you are not happy with
launched, but you have to keep giving        their own entrepreneurial venture?       the widget you are producing – you’ll
customers fresh offers to keep them          Take a break.                            find that whole process very difficult to
excited about your company.                    “Have a holiday before you start,      get excited about. We spend too much
  “We have a new range launching             because you’ll be working really hard    time at work to do something we don’t
early in 2012, which gives customers         for the first few years,” she said.       enjoy.”

                                                                           WEALTHCREATOR.COM.AU         MARCH /APRIL 2012     35
Another Salvo
Most people dream of starting one great company, but
for Mario Salvo doing it the second time around has
been double the fun

For years, the name Mario Salvo          back or spoken to anybody. It’s just a
was associated with the car rental       chapter that has now closed.”
business.                                   So what do you do with yourself
   Building     on     his   mechanic    after you sell out of a multi-million
background, Salvo created a car          company? For Salvo, who took
dealership with his brother which        a small team with him, it was a
he ran for a decade before the           matter of looking around for new
opportunity to purchase the fledgling     opportunities.
Delta rental business came up.              “I had a site on the corner
   At that point, the business had 200   of Clarendon Street in South
‘bombs’ and revenue of $1.2 million,     Melbourne,” he said.
but Salvo saw an opportunity and            “I bought that in 1992 during the
pounced. He pounced again when           recession for peanuts, it was around
Budget Rent a Car collapsed in 1990,     $300,000. It was formerly a Europcar
seizing parts of the fleet from the       site, a very prominent site.”
liquidators. And he pounced again           Not only was the site prominent,
when he took over the Europcar           but it was also blessed by a series
franchise in 2000.                       of unforeseen events. Salvo said he
   When he eventually sold the           was approached by a developer to
business in 2004 it was the largest      purchase the site, which he agreed
privately owned car rental business,     to, but then the buyer’s finance fell
with annual revenue in excess of         through and he handed the site back
$120 million.                            to Salvo – with a permit for a 25-level
   “When I did the farewell speech I     building now included.
was very emotional and teary saying         Several years later the same
goodbye to the staff,” Salvo recalled.   process happened again – only this
   “It’s emotional because of all the    time the buyer altered the permit to
people and remembering the things        include more stories before the deal
you have done and created and            fell through.
you walk out the door with a little         “Now I had a vacant block of land,
piece of paper [a cheque] – it’s not a   a permit, and no job. I said ‘How
celebration.”                            hard could it be?’,” laughed Salvo.
   Complicating the decision was            “And it hasn’t been hard at all. I
the family that Salvo had working        was new to the act of doing it myself.
with him in the business, with two       So I got architects to review the
daughters working for the company        designs, and worked out the design
                                                                                   AT A GLANCE:
and his son in a part-time position.     wasn’t as efficient as it could have
                                                                                   Name: Mario Salvo
   “They lived and breathed it and       been.”
                                                                                   Position: Executive
that was what they were going to do,        While working on a design to set       chairman Salvo
so they were upset,” Salvo said.         the development apart from the pack,      Property Group
   “I did what was in their best         Salvo approached several agents to        Advice: Know your
interests, but they weren’t happy.       assist with selling the apartments.       competitors, then
                                                                                   offer something better
I wasn’t happy either, but I knew I         “They looked at it and said it would   for the same price or
made the right decision. Two weeks       never sell, giving me ridiculous          something the same
later I moved on – I have never gone     negative feedback. I went to a number     for a lower price


36 MARCH /APRIL 2012       WEALTHCREATOR.COM.AU
of them – but they were all the same,”      them so they have to feel good about
he said.                                    what they purchase and it has to meet
   “So I thought bugger it, I will do it    the requirements it has been purchased
myself. We set up a display suite and       for.
within three months we had sold the lot        “We design our products around
– and all at top dollar, around 30-40%      affordability and intelligence. We use
more than what they told us would be        great architects to engineer the buildings
possible. Obviously we were very excited    to be very efficient and look good. And
so we put it out to tender and built it.    then you also need to take advantage
Then we looked around and thought,          of the economies of scale. In our latest
‘what do we do now?’.”
                                            development we have a concierge, yet
   The answer for Salvo was to keep
                                            our body corporate fees are lower than
going, and the Salvo Property Group
                                            anyone else around.”
has certainly continued to do that
                                               And his advice for others starting on
with further developments in South
                                            their entrepreneurial journey? Know
Melbourne and another in Richmond –
                                            your market.
the latest with 460 apartments.
                                               “You have to know your product
   “You can’t stop, you just have to keep
going,” he said.                            and know what your strengths and
   “There are a lot of risks involved. I    weaknesses are,” he said.
made it sound easy, but it’s like making       “It’s no use selling steaks for $40
a cake – if you get someone who knows       if everyone else is selling the same
what they are doing then it is easy but     thing for $30. You need to know what
if you try it yourself and you don’t know   your competitors are doing and how it
then it will taste very ordinary.           measures up against what you are doing.
   “We believe that we know what we are     If you want to go to the marketplace you
doing. We believe in not cutting back all   either have to do it better for the same
the way to the bone. We want to make        price or as good for less.
money, of course, but we want to leave         “People often ask me the secret to
behind a fantastic quality building that    my success. I tell them it is about
everybody can be proud of.                  finding a good balance of brains, balls
   “You can’t be in business for too long   and determination. Brains means you
if you only get a customer once. You        evaluate something, you look at it and
have to be able to get a customer to        work it out. You could have all the balls
come back. It costs you so much to get a    in the world but you’d be just as good
customer, you want them to come back        putting it all on two-up or on black or red
again. In property development, if you      on the roulette table without the brains.
can get a customer to walk through and
                                            Once you have worked it out then you
love the quality then they will get more
                                            have to put a sufficient amount of your
comfortable with you, the banks will
                                            capital at risk. Then you have to work
get more comfortable, the builders will
                                            your bloody arse off to make sure that
be more comfortable. Then people will
                                            you work hard to achieve your goals.
buy a second property and a third.”
                                               “It is hard to get ahead if you don’t
   Salvo said the key to his success in
                                            have the risk of losing something. I
business was remaining true to the
principle of “ do unto others as you        employ a lot of people that are much
would do unto yourself”.                    more talented than me. But they are
   “You don’t want to get ripped off,” he   not prepared or able to gamble – so
said.                                       they have to have a job. I’m not saying
   “I look at it from the perspective of    that’s wrong, you have to put the kids
the customer all the time. When you         through school and there are a lot of
are in car sales, car rental, property      risks. But for me, I’m confident in my
development – you have to cater to what     ability to deliver. Because hey, if you’re
people can afford. Even if it isn’t a lot   not prepared to lose your money, then
of money to you, it is a lot of money to    don’t go into business.”

                                  WEALTHCREATOR.COM.AU        MARCH /APRIL 2012     37
What is a




“renovator’s delight”
Although the phrase is
more often associated
with run-down dumps,
there are some
                                      Properties with profit
                                      potential
                                      When undertaking a renovation
                                                                            totally transformed taking them
                                                                            to the next level and unlocking
                                                                            superior profits.
                                                                                                  ?
                                                                              Roughly speaking there are
                                      project, obviously what you’re        four types of properties that tend
properties that earn                  looking for is potential. Your first   to attract renovators:
the title of renovator’s              consideration is the condition          The patch ‘n’ paint is a
delight, as Patrick                   of the property. Ask yourself are     solid property, in good nick
Bright explains.                      you searching for something a         structurally but the décor is tired
                                      bit rundown, or a property that       and/or dated. It needs fresh paint,
                                      requires a serious amount of          carpet, fittings and fi xtures, and
                                      work?                                 the garden needs tidying up.
                                        You must also consider the            The fi xer-upper is usually older
You want to make sure that you        needs and wants of the local          and rougher than the patch ‘n’
end up with a solid return on         market, and whether the property      paint. The décor needs updating,
investment if you’re embarking on     could meet them with the optimal      but it also needs a kitchen and
a renovation project this year. So,   value-adding improvements.            bathroom makeover.
how do you select an appropriate        Finally, you need to consider         The     problem      child   has
project when properties that          how far you can take the property     structural issues. It might have
just require paint and carpet         as you don’t want to over or          cracks in the walls or need a
through to those that need serious    under-capitalise. Some properties     new roof. Perhaps the wiring or
structural work are advertised as a   just need a facelift to gain a tidy   plumbing is shot and needs to
‘renovator’s delight’?                profit. Other properties can be        be replaced. These defects can

38 MARCH /APRIL 2012      WEALTHCREATOR.COM.AU
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be expensive to fi x but don’t                                                as the location and aspect, etc. –
necessary add any value.                                                     are fi xed. You can do a first-class
  The     knock-down      requires                                           renovation, but if the property
a top to bottom restoration or                                               backs onto a rail line you’ll have
demolition.    These    properties                                           trouble renting and selling it.
often catch the eye of developers,                                           That’s why property selection is
especially if they’re in a great                                             so critical.
location, on a large block or have                                              If you follow the above steps the
fantastic views.                                                             experience should be a renovator’s
                                                                             delight, instead of a renovator’s
                                                                             nightmare as many renovations
                                                                             projects turn out to be. As I always
You want to spend                                                            say, you can always improve a
your renovation budget                                                       property, but you can’t improve
                                                                             its location so select not only the
on improvements that                                                         property but the location wisely.
tenants and buyers can                                                          This is an edited extract from
see because that’s how                                                       Patrick Bright’s latest book ‘The
                                                                             Insider’s Guide to Renovating
you add value.                          If you intend to hold the            for     Profit’     available    from
                                      renovated property then you need       epspropertysearch.com.au or any
                                      to research your target tenants        good book store.
  The amount of renovation work       for the suburb. When you match
you should attempt depends on         a property to the target tenants
your knowledge, skills, experience    you’re less likely to have vacancies
and contacts. In general I would      or need to discount the rent to get
avoid the problem child properties    someone in.
that need structural work. You          Talk to property managers and
want to spend your renovation         find out what type of properties
budget on improvements that           are most sought after in the
tenants and buyers can see            suburb. Tell them you’re looking
because that’s how you add value.     at buying an investment property
Spending money on fi xing defects      in the area, and ask them what
that nobody can see doesn’t           tenants prefer. What sort of
add value, but eats into your         property is in short supply? What
renovation budget and profits.         rents the quickest?
                                        In this suburb do tenants
Meeting market                        prefer houses or apartments?
demand                                Do they want one, two, three or
                                      more bedrooms? Do they require
I believe renovating for profit is a   parking or not? You need to know
people business, not a property       these facts before you can make
business. That’s because the          an informed decision on what to
tenants or buyers of your             buy.
renovated property are the source       If you intend to sell the property
of the money – from either the        once you’ve renovated it, the
rent you receive for the renovated    same principle applies but now
property or the profit you make        you must consider the wants
when you sell it.                     and needs of buyers rather than
  So to maximise your return          tenants. While there are a lot of
you must create a property that       similarities there are differences
tenants want to rent and buyers       you should cater for.
want to buy. That’s the golden          Some features of the property
rule of renovating if you want to     you can improve to meet market
make a profit.                         demand, but some features – such

40 MARCH /APRIL 2012      WEALTHCREATOR.COM.AU
Hidden treasure
Steven Dooley examines the market for exotic investments

Ever watched Antiques Roadshow and             But some investors look even more         that confirms storage. If you own exotic
dreamed of striking it rich? Of course      left-of-centre, and buy assets including     investments such as art in your super
you have. But how do you do it?             rare boats, classic cars or even             fund, and have them hanging in your
   One the one hand, investing in exotics   memberships to elite sporting or social      house, there’s no need to panic. There
can be one of the most enjoyable ways       clubs. And don’t forget thoroughbred         is a five-year transition period for you
of investing. If it is an area in which     horses, an asset class in which you can      to ensure your SMSF meets its legal
you have an abiding interest, then you      quite literally ‘hit the jackpot’.           obligations.
can find your time spent researching            One thing to be aware of: don’t bother
through art galleries and wineries are      with the sporting memorabilia that is        Neither fish nor fowl
some of the best moments of your life.      offered on the TV during the footy or the
Especially if you have someone to share     cricket. There’s a legion of disappointed    While exotic investments offer some
it with. At the very least, it certainly    sporting fans that discover that their       great benefits, there are some serious
puts time spent sifting through the         $3000 signed cricket bat is one of 1000      drawbacks when it comes to this asset
share pages of the Australian Financial     and unlikely to return even a percentage     class.
Review to shame.                            of the outlay, let along providing a juicy      First, unlike traditional investments,
   Secondly, many investors have            profit.                                       exotic investments tend not to pay
used Self Managed Superannuation               Some experts will say that investing      income such as dividends.
Funds (SMSF) as vehicles to pursue          in gold, oil and other commodities              For many experts, the major
their interests in exotic investments.      might also be classified as exotic            component of any investment is the
However, since the release of the Federal   investments. However, investing in           income, so this is the reason why
Government’s Cooper Review in 2010,         more speculative companies, or even          non-income paying investments are
this area has become more problematic.      private equity investments including         classified as “exotic investments”.
   A third, more troublesome, means         start-up companies, is usually seen as          Second, the markets for exotic
of exotic investing is focused mainly       traditional investing.                       investments are nowhere near as liquid
on reducing tax. This can become an                                                      as that for traditional markets. If you
obsession and there are numerous            A super investment?                          need to sell urgently, you might find
stories of investors that have been left                                                 that you need to deeply reduce the price
holding deep losses on schemes centred      Until recently, many SMSF investors          you are willing to pay.
on olive farms, tree plantations or         would look to hold artwork or other             Finally, exotic investments are even
ostrich farms.                              exotic assets in their super fund. This      more exposed to the cyclical nature
                                            seemed like the perfect arrangement          of markets than more traditional
Good times, great picks                     – buy great art, hang it in the lounge       investments. When times are tough for
                                            room, fund it with your super and enjoy      markets, they are especially tough for
There’s a very wide range of investments    its beauty.                                  those millionaires that are the lifeblood
that can be included under the heading         But the superannuation regime has         of the exotic investment market.
of “exotic investments”. You won’t be       recently changed. As a result of the            If you think it is tough holding
surprised to hear that the most common      Cooper Review, introduced in 2010,           Australian shares during a bear
exotic investments tend to be artwork,      the rules for collectables that are held     market, think about the market for art,
antiques, stamps and rare coins.            in your super fund have changed              wine or jewellery when oil, commodities
  However, there is a veritable             significantly.                                and financial markets are at their lows
smorgasbord of options when it comes           As a general rule, if you hold exotic     and demand from Russian or Saudi oil
to your investment choices.                 investments in your super fund, you          tycoons, or New York-based hedge fund
  So what else can you invest in? Rare      are unable to keep them at your house        managers, has totally dried up.
archaeological artefacts, first editions     or at a friend or family member’s house.        But if you are choosy about what you
of famous books, celebrity memorabilia      Exotic investments need to be stored at      buy and sell, and you enjoy the process
and good quality wine or spirits can all    a purpose-build storage facility (such       as well as the rewards, you could find
make you money if you are choosy and        as a bank or similar storage group)          that it brings you a lot more than just
buy and sell wisely.                        and there must be clear documentation        significant cash returns.

                                                                              WEALTHCREATOR.COM.AU        MARCH /APRIL 2012    41
The Asymmetric Trade
of the Decade
The timing may be right for a controversial trade,
argues Trading Pursuits founder Daniel Kertcher




While everyone is still preoccupied
with Europe, I thought now might
be a good time to focus on a longer-      “Even if they never got anything for it, it was cheap at that
term investment theme whose               price. Without malice aforethought I had given them the best
time has finally come; shorting
the Japanese Government.
                                          show that was ever staged in their territory since the landing
  What do you do when an                  of the Pilgrims! It was easily worth fifteen million bucks to
investment is no longer attractive        watch me put the thing over.”- Charles Ponzi
on its own merits? Simple answer,
you start to market it more
aggressively. Japanese government
debt no longer offers the type of
yields that would attract any          in taxis recommending the                campaign with a sex appeal focus.
risk/reward conscious investor.        buying of JGBs. They relied on           The ads targeted men, and took the
Yet, Japan has to consistently sell    celebrities to make their point.         approach that Japanese women
an ever increasing amount of this      Actors, famous news anchors,             prefer men who own JGBs. Yep,
debt, and to make matters worse,       and models have all touted JGBs          playboys are boring, bondholders
cannot afford to offer higher          over the past decade.                    are what women want.
returns. So what to do?                  But eventually celebrities don’t         Yet, at some point even all
  Hire a good ad agency.               do the trick. You need to get            these ads are not enough to sell
  Over the past few years Japan        more creative. Last year Japan’s         something that offers virtually
turned to running advertisements       Ministry of Finance rolled out a         no return. You need to get more




42 JANUARY/FEBRUARY 2012          WEALTHCREATOR.COM.AU
creative. So, lately Japan’s          revenue would barely cover debt                   would work. See, Japan dumping
Ministry has turned to gold to        service and borrowing needs                       treasuries would strengthen the
help move JGBs. Yes, gold. Buy        would increase.                                   yen, which would then reduce
$100,000 or more in JGBs and            Now where is all this money                     the value of remaining dollar
you get a commemorative gold          going? Can’t they drastically cut                 assets in Japan’s portfolio. The
coin. Well, to be clear you get the   spending? Given 57% of Japan’s                    value of their treasuries if they
coin only if you hold the bond for    budgeted revenue is being spent                   were to try to exit would be lower
three years, but you get the point.   on social security, and the country               than the current exchange rate
And just to make you feel better,     has the fastest aging population                  value because the yen would
elected officials are buying. Oh,      on the planet that leaves little                  start to significantly appreciate.
and if this isn’t enough, I forgot    wiggle room for austerity.                        But knowing the Japanese, they
to throw in that you will get a         But why would Japan need                        would never let this happen.
thank-you letter from the finance      to worry about bond vigilantes                    If the yen was to appreciate
minister.                             and austerity, isn’t their debt                   significantly from here it would
  For those of you not familiar       almost 95% internally owned?                      cause a major problem for their
with the matter, you may be           Yes, Japan’s debt is almost all                   export-driven     economy,     and
wondering why is the Ministry of      held domestically, mostly by the                  would thus just exacerbate the
Finance so desperate to market        pension funds. Up until now that                  situation.
JGBs. Well, let’s look at some        has worked great, but because of                     So, what to do? Well, the
numbers. Last year the Japanese       Japan’s ageing population these                   Japanese have to know this day
Government generated just under       funds have become net-sellers of                  is coming, and I am sure while
50 trillion yen in actual revenue.    debt and no longer net buyers.                    the Europe saga has unfolded
At the same time they paid a little   That means Japan will need to                     they have been doing even more
over 20 trillion yen in interest      find external investors to plug the                contingency planning. My view
on outstanding debt. That’s 40%       hole.                                             is that there is no way around
of non-debt issuance revenue            But Japan is a creditor nation                  this problem that doesn’t involve
going to debt service with rates      with plenty of foreign reserves,                  significantly depreciating the
where they are at today. Now,         they can manage, right? Japan                     yen. The BOJ is already holding
last year Japan’s government          does have over $1.2 trillion in                   10% of JGBs and my guess is
spent more than 90 trillion yen       foreign reserves, of which more                   that number will only go up.
on expenditures. So, they needed      than $900 billion is sitting in US                Short yen going forward makes
to borrow another 40 trillion plus    Treasuries.                                       the most sense to me. You can
yen to cover the shortfall.             Could     they     dump     these               do this by buying out of the
  As you can see this math does       treasuries if need be, to plug                    money put options on the yen.
not add up. If rates were to rise     some of the hole?        In theory                You can also short JGBs at
to more than 2%, Japan’s current      yes, but in practice I doubt this                 these levels.




                                                                     WEALTHCREATOR.COM.AU   JANUARY/FEBRUARY 2012 43
One up,
one across
In 2011 the housing market was spooked, but how
long it takes to get over its jitters remains to be seen
as focus shifts to Brisbane and Perth

After a year of sliding sideways        “Values were down 4% over the
and down real estate investors       year to October across the combined
may still have to wait for the       capital cities, the number of homes
housing market to recover, with      available for sale is close to record
many analysts predicting a slow      levels and transaction volumes are
recovery to the end of 2012.         running well below the historic
   Data from RP Data-Rismark         average,” he said.
Home Value Index showed capital         Real Estate Institute of Australia
cities home values declined by       president Pamela Bennett agreed
0.5% (seasonally adjusted) for the   there was a general softening
December quarter last year, with     across the market, with the
values dropping around 3.5% in       exception of the outer suburbs of
capital cities for the year and 3%   Hobart and the Palmerston region
in regional areas.                   of Darwin.
   RP Data director of research         “That last quarter still reflects a
Tim Lawless said the year was        lack of confidence out there in the
one of the weakest on records.       market,” she said.




Outlook                              units). Has it hit rock bottom and      to soften in 2012. Volumes in
                                     is now starting to rebound?             September last year were 18%
                                                                             below the five-year average.
Sydney: One of the best to take      Adelaide: Should hold steady this
advantage of conditions in 2012.     year, perhaps with a slight drop.       Darwin: After a decade of strong
Undersupply remains a factor         Still the most affordable mainland      performance, Darwin is expected
and rents increased 5.4% for         capital city, but rents were flat at     to move sideways in 2012, unless
houses and 6.4% for units in         0.3% growth in houses and 0.1%          rents start to grow substantially,
2011.                                growth in units in 2011.                in which case buyers may be
                                                                             attracted back to the market.
Melbourne: Likely to have a weak     Perth: After a bumper run pre-GFC,
year in 2012, perhaps finishing       Perth has been underperforming          Canberra: After a strong 2011,
lower again. Although rent for       for five years now. The value gap is     Canberra remains the country’s
houses increased 6.2% for the        widened compared with Melbourne         second most expensive capital
year, rent for units was flat at      and Sydney and rent is surging (as      city. With low unemployment,
0.7% growth.                         much as 13.1% for houses). There        a tight rental market and high
                                     is a potential for recovery after       wages it should continue to
Brisbane: May have turned the        long-term underperformance.             perform well in 2012.
corner after the worst year of
any capital city in 2011 (down       Hobart: With weak rental demand
8.8% for houses and 2.4% for         in 2011, Hobart is expected             Source: RP Data



44 MARCH /APRIL 2012      WEALTHCREATOR.COM.AU
                                       on and even though the effect                        values decline by 7.7% from the
                                       may not be to the degree that will                   market peak and Brisbane has
                                       effect household buyers generally,                   returned a lower 9.5% fall from
                                       there will be hesitation.                            the market peak.”
                                          “As soon as people think                            While     the    best     buying
                                       there may be change or there                         opportunities      have       been
                                       is uncertainty over the current                      highlighted as being detached
                                       or future governments, they                          houses within 10km of the CBD,
                                       wait. A certain percentage of the                    Lawless said those seeking
                                       population will wait until that                      immediate capital gains should
                                       uncertainty is resolved, and                         look to the resource driven
                                       you need those people at the                         regional markets.
                                       margins.                                               “The coal fields and natural
                                          “This year will be a measured                     gas projects around Queensland’s
                                       improvement, which reflects that                      Bowen Basin, Surat Basin and
                                       people are still generally cautious,                 Galilee Basin are prime examples
                                       but in 2011 we did hit the bottom                    of markets where demand for
                                       and from there it will be a gradual                  labour and housing is likely to
                                       improvement.”                                        drive property prices upwards,”
                                          Lawless agreed with the modest                    he said.
                                       forecast.                                              “The major service centres
                                          “While there should be some                       around these regions such as
                                       improvement in market conditions                     Mackay and Gladstone are likely to
                                       over 2012 we don’t expect capital                    see an a further uplift in investor
                                       gains to improve dramatically;                       demand as rents continue to rise
                                       a macro-level performance in                         and capital gains outperform the
                                       line with growth in disposable                       broader market.
                                       incomes is probably the best-case                      “In New South Wales a similar
                                       scenario,” he said.                                  example may be seen in Newcastle,
                                          “Of course there are always                       which acts as the major service
                                       areas that show a better result                      centre for the Hunter and Upper
                                       than others.          The weaker                     Hunter coal fields and natural
   “Even though we have had two        performing capital cities (Perth                     gas projects. In fact, the Port of
interest rate cuts together, I don’t   and Brisbane) over the past five                      Newcastle is the world’s largest
think that quarter has shown the       years may be the ones to watch                       coal-handling facility.
effects of that.”                      over the coming year. This is                          “Of course, investing on the
   Both expect to see modest           partly because these two cities are                  back of commodity markets can
improvement this year.                 further into their correction cycle,                 be a risky move. A downturn in
   “I read the market as a very        but also the market fundamentals                     coal or gas prices could affect
measured improvement – I think         are showing some green shoots.                       labour demand and consequently
it will take until the second half     Perth, for example, has seen home                    housing prices.”
of 2012 [before we see further
improvement],” Bennett said.
   “Householders, whether they          A tale of two cities
are buying houses or not, are
being very careful in their buying      Affordable suburbs within 10km of the CBD
decisions and I think that will be
                                        PERTH                                            BRISBANE
the trend in 2012.”
   Buyers’ confidence was spooked        Osborne Park              $355,000                Keperra                  $413,000
by reports of Europe’s economic
                                        Queens Park               $393,000                Salisbury                $441,000
woes and other meltdowns on the
global stage, she said.                 Tuart Hill                $411,000                Chermside                $446,000
   “Even though we are financially       Westminster               $414,000                Murarrie                 $448,000
stable compared with other
                                        Ashfield                   $419,000                Chermside West           $449,000
countries, there will be some flow

                                                                              WEALTHCREATOR.COM.AU     MARCH /APRIL 2012    45
SNAPSHOT                                  Managed Funds // Morningstar Funds Focus

                                                                                                                       TOP FIVE STOCKS -
 MORNINGSTAR FUNDS FOCUS – BT ASIAN SHARE                                                                              BT ASIAN SHARE
                                                                                                                       6
WHAT IT INVESTS IN                                                 HOW IT’S PERFORMED
                                                                                                                                                                         Data at 31-Aug-11
                                                                                                                               5.87

BT Asian Share offers investors a solid                            BT Asian Share now has a                                                  5.12
                                                                                                                                                             4.93
                                                                                                                       5
route into the region. Investment manager                          five-year track record under                                                                              4.69


MFS invests in what it considers high-                             MFS’ management. After an
quality companies with above-average                               inauspicious start, particularly                    4


growth and reasonable valuations.                                  in 2007 when it lagged the                                                                                             3.34



Analysts assess factors including the                              index materially, the strategy                      3



quality of a company’s products and                                has come back to deliver index-
                                                                   and peer-beating results. It                        2
services, management quality, financial
                                                                   has tended to outperform in
strength, and the regulatory environment.
                                                                   falling markets such as 2008                        1
The reasonably stable and experienced
                                                                   and the majority of 2011. Stock
team coupled with a high-conviction
                                                                   selection has been the key
approach are positive factors. Team
                                                                                                                       0
                                                                   driver of returns. MFS’ most                            China Unicom   Samsung          Taiwan          Sands           AIA

members are not afraid to back their
                                                                                                                            (Hong Kong)   Electronics   Semiconductor      China          Group
                                                                   successful stockpicks over                                                            Manufacturing

ideas with high-conviction positions,                              the past three years included                       STOCK NAME                                         % OF PORTFOLIO
although this adds stock-specific risk.                             Hengan International, LS                            China Unicom (Hong Kong)                                    5.87
However, portfolio turnover is relatively                          Industrial Systems, and LG
                                                                                                                       Samsung Electronics                                         5.12
high, ranging from 77.0 - 90.0 percent per                         Chem. Satyam Computer
                                                                                                                       Taiwan Semiconductor
annum. BT Asian Share has the potential                            Services (the subject of a major
                                                                                                                       Manufacturing                                               4.93
to continue to deliver, and this is by no                          accounting fraud), China
means an unwise choice, although we’re                             Unicom Hong Kong, and Acer                          Sands China                                                 4.69

not convinced it’s the finished article yet.                        were the greatest detractors.                       AIA Group                                                   3.34


TOP FIVE RETAIL AUSTRALIAN SHARE FUNDS RANKED BY THREE-YEAR PERFORMANCE
Fund Name                                   Status   Start Date   Min. Inv. $   Size $m   Return 1 yr %   Return 3 yr %pa             Return 5 yr %pa            Fee %pa           Star Rating
Clime Australian Value                        O      25-Aug-06    10,000.00      15.20        2.88             19.46                       5.84                     1.31
Perpetual WFIA Perpetual Ethical SRI          O      10-Nov-08     2,000.00      2.98         -1.99            17.77                       NAv                      2.25
Perpetual WFIF Perpetual Ethical SRI          O      29-Oct-03     2,000.00      8.58         -1.99            17.41                       0.79                     2.25
Greencape Wholesale Broadcap                  O      11-Sep-06    10,000.00      44.60        -4.21            12.93                       3.17                     1.50
Macquarie High Conviction Incentives          O      16-Feb-07    20,000.00      2.18         -8.33            12.64                       NAv                      1.58

BOTTOM FIVE RETAIL AUSTRALIAN SHARE FUNDS RANKED BY THREE-YEAR PERFORMANCE
Fund Name                                   Status   Start Date   Min. Inv. $   Size $m   Return 1 yr %   Return 3 yr %pa             Return 5 yr %pa            Fee %pa           Star Rating
EQT SGH Absolute Return                       O      12-Oct-01     5,000.00      2.34        -17.44            -9.63                      -10.41                    2.02
Naos Long Short Equity                        O      24-Jan-05    25,000.00      3.22        -33.75            -2.85                       -5.93                    1.18
Navra Blue Chip Aus Share Retail              O      28-Apr-03     1,000.00      16.22        -5.47            0.87                        -3.47                    1.78
Advance Concentrated Aus Shares               C      01-Sep-05     1,500.00      1.61        -12.38            1.38                        -6.37                    1.99
Mercer Australian Shares                      O      30-Nov-04    100,000.00    337.70        -9.12            1.97                        -4.25                    0.90

TOP FIVE RETAIL INTERNATIONAL SHARE FUNDS RANKED BY THREE-YEAR PERFORMANCE
Fund Name                                   Status   Start Date   Min. Inv. $   Size $m   Return 1 yr %   Return 3 yr %pa             Return 5 yr %pa            Fee %pa           Star Rating
Macquarie Sharemarket Fund - Int'l Share      O      23-Mar-94     5,000.00      10.19        0.06             15.82                       3.72                     2.03
Platinum International Brands                 O      18-May-00    20,000.00     628.88        -6.27            14.20                       4.45                     1.54
Peters MacGregor Global                       O      12-Jul-04    10,000.00      61.61        -0.97            13.28                       1.34                     1.67
Platinum Unhedged                             O      05-Mar-07    20,000.00     156.13       -10.02            9.22                        NAv                      1.54
Alpha Global Opportunities                    O      02-Apr-07    25,000.00      48.98        -2.51            5.77                        NAv                      1.32

BOTTOM FIVE RETAIL INTERNATIONAL SHARE FUNDS RANKED BY THREE-YEAR PERFORMANCE
Fund Name                                   Status   Start Date   Min. Inv. $   Size $m   Return 1 yr %   Return 3 yr %pa             Return 5 yr %pa            Fee %pa           Star Rating
Australian Ethical International Equity       O      13-Jun-07    20,000.00      5.44        -21.53            -9.80                       NAv                      1.52
ANZ OA Inv Pfolio-AXA Glo Eq Val NEF          O      31-May-03     1,000.00      8.49        -16.47            -8.98                      -15.62                    2.89
OnePath OA IP-AXA Gl Bal Eq Val NE            O      19-Aug-02     1,000.00      2.51        -16.46            -8.96                      -15.57                    2.89
Perpetual WFIF AXA Global Eq Value            O      29-Oct-03     2,000.00      5.42        -14.78            -8.85                      -14.83                    2.15
Access AXA Global Equity Value                O      01-Aug-05     3,000.00      2.89        -14.66            -8.77                      -14.83                    2.20

                                                                                                                                                                        Source: Morningstar
46 MARCH /APRIL 2012                      WEALTHCREATOR.COM.AU                                                                                                Performance data to 30-Nov-11
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tion and educational content only. This is not personal advice and no individual needs
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LOOK

A TOAST TO YOUR
BUSINESS
Creating and running a successful business means nothing if you don’t step back to enjoy
it with your co-workers and loved ones. Here is a quick guide to the perfect drink (with
thanks to thebar.com for the recipes) for those major business milestones…




GETTING THE                                    Mojito:
BUSINESS STARTED                               45ml spiced rum
You’ve had a good idea for a                   12 mint leaves
business, and more importantly                 1 teaspoon sugar
you have actually taken steps to               15ml lime juice
get it started. This needs a drink             60ml soda water                             for
to celebrate, right? Absolutely. But           Combine mint, crushed ice, rum,             margaritas,
unfortunately for you it’s going to be         sugar, and lime juice in glass.             from different
something non-alcoholic, like the              Muddle. Top up with soda water              fruits infusions
freshness of an Iced Green Mint Tea,           and garnish with extra mint leaves.         to presentation
because you need a totally clear               As an alternative, add whole lime           methods. Feel free
head for the challenges ahead.                 cut into quarters instead of                to experiment but don’t
                                               lime juice.                                 mess with the basics:
Iced Green Mint Tea:
                                                                                           use high quality tequila and
90ml sugar syrup
1l fresh brewed green tea
                                               DEALING WITH                                always serve in a rimmed

3 mint leaves
                                               SUCCESS                                     glass.
                                               First things first. By all means, pop
Combine ingredients in a jug
and chill in the fridge until cold.
                                               a cork on a bottle of champagne.            DEALING WITH
Serve quickly and get back
                                               Yes, it may be traditional and clichéd,     SETBACKS
                                               but sometimes such traditions are           Your office floods on deadline day.
to work…                                       born from the fact that they simply         Your best salesperson leaves in the
                                               make sense. If, however, you want           middle of a deal. Your photocopier
HAPPY HOUR                                     to take your celebration of success         explodes while you are putting
Depending on the time of year,                 and turn it into something more party       together presentation packs.
celebrating a hard week of work                like, then start making Margaritas.         Setbacks are a normal part of every
with a shared drink needs a different          And we’re not talking about the             business, but the important thing is
focus. In the winter, for example, a           colourful creations found in Mexican        to quickly clear your head and get
heart-warming mug of Irish Coffee              fast food chains, we’re talking about       back in the game. While this drink
is a pleasant way to wind down from            a concoction which will have you            may have made its name as a drink
the week’s toils while in summer a             seeking more success.                       de rigueur on Sex and the City, its
classic Mojito is sure to have you                                                         origins are based in the upscale
                                               Margarita:
refreshed and charging the batteries                                                       bars of New York where executives
                                               30ml tequila
up for the weekend.                                                                        quickly closed off on the day’s
                                               15ml orange liqueur
                                                                                           business.
Irish Coffee:                                  120ml margarita mix
60ml Baileys Original Irish Cream              Combine ingredients over ice in             Cosmopolitan:
120ml hot coffee                               shaker and shake well. Pour into            45ml vodka
Put the ingredients in a mug and               rimmed glass with a fresh fruit             5ml triple sec
stir then drink. One of the easier             garnish – most citrus fruits work           30ml cranberry
ones.                                          well. There are plenty of options           juice


48 MARCH /APRIL 2012           WEALTHCREATOR.COM.AU
                                                                                                     LOOK




                                           Toasting Tips
                                           While you may hate public speaking, getting up in front of your
                       Lemon               team to give a presentation is a key business skill that needs
                     twist                 to be mastered.
                  Pour vodka, triple          But you don’t necessarily need to rush out and buy a copy
                sec and cranberry          of Powerpoint just yet – a short, well-delivered toast could
             juice over ice in a shaker.   provide the same level of public engagement in just a fraction
          Mix well then pour into          of the time.
        glass, finishing with a twist of       Toasts can be used for almost any occasion, for celebrating
      lemon.                               the end of a trying quarter to welcoming the newest member
                                           of the team.
THE RETIREMENT                               So what is the secret to giving a good toast?
PARTY                                        Firstly, remember to make eye contact. The point of the
Whether it is the old guy in accounts
                                           toast is to deliver a shared message to the group, so ensure
or the managing director who’s pulling
                                           you have everyone’s attention and engagement by looking into
up stumps, getting to the end of your
                                           their eyes. It doesn’t have to be a long stare, mind you, just
professional life is something to be
                                           enough to show that you care.
celebrated with something a little bit
                                              Second, don’t overthink it. You won’t need an A4 sheet of
classy, and a little bit refined. Meet
                                           notes or presentation slides or a laser pointer – well, you can
the Citrus Sunset, a classy mix of
                                           keep the laser pointer if you like – but the key here is to be
classic summer flavours with a hint
                                           spontaneous and genuine. This means using no notes and
of sophistication.
                                           speaking from the heart. If the thought of speaking without
Citrus Sunset:                             notes terrifies you, consider this – the whole point of the toast
30ml citrus flavoured vodka                 is to deliver one message. That’s all you have to remember.
15ml coconut rum                              Thirdly, speed is the essence here. You’re trying to get
60ml cranberry juice                       across a simple message, so limit yourself to one story, or
60ml pineapple juice                       one feeling. For example, if we are toasting David in sales for
1 lime wedge                               his successful up-selling of a key client we simply need to
 Fill a tall glass with ice. Add           mention how he clinched the deal and why he is appreciated
               ingredients, stir           for it.
                   well and garnish
                                            Finally, raise your glass and drink in their honour. That’s it –
                      with lime
                                           message delivered and, no doubt, received.
                       wedge.



                                                      WEALTHCREATOR.COM.AU              MARCH /APRIL 2012      49
GIVEAWAYS



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50 MARCH /APRIL 2012        WEALTHCREATOR.COM.AU
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