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Telstra chairman John Mullen has reassured investors chief executive Andy Penn has the complete support of the board, in an attempt to dampen speculation about his future plans as the telco’s T22 restructure program nears its end.
Mr Mullen told investors at the company’s annual general meeting on Tuesday while there was no shortage of executives to succeed Mr Penn at the appropriate time, Telstra’s board was grateful for the way he had led the company over the past six years.
“Andy can speak for himself, but I would say that he continues to do a fantastic job and enjoys not just the 100% support of the board, but also the board’s appreciation, and thanks for the way that he has managed Telstra through some of the most difficult times of its existence,” Mr Mullen said.
“Andy has also built a very strong team around him with no shortage of talented and capable executives ready to succeed him at the appropriate time.”
Rising energy and material prices were not enough to push the ASX into positive territory on Tuesday. The benchmark S&P/ASX200 struggled to find a footing and slid 0.3 per cent to a close of 7280.7 points, declining for a second day in a row.
The banking sector was weighed down by news Westpac would write off $1.3 billion in costs and provisions with shares ending the day 1.7 per cent lower. Commonwealth Bank and NAB closed 0.2 per cent higher, but Westpac fell by 1.7 per cent.
Information technology also slid lower with Afterpay falling 2.7 per cent, Appen down 3.9 per cent, Tyro Payments down 2.6 per cent and Megaport down 1.9 per cent.
Investment strategist at GSFM, Stephen Miller, said higher energy prices and a lack of job-seeker mobility were feeding into concerns about inflation.
Westpac boss Peter King could be dubbed ‘White King’ given the clean up job that has fallen to him over the past couple of years - with the mop now being applied to the bank’s institutional division. That’s the business responsible for the lion’s share of the $1.3 billion earnings hit the bank will take in the current half.
Whether this is the last of the earnings shocks that Westpac shareholders will need to endure remains to be seen.
The good news is that given this revision relates mostly to non-cash items and shaves only 15 basis points off its capital, Westpac still has the potential to make good on shareholder expectations that it will announce a share buyback.
The bad news is that these one-off negatives are becoming too familiar.
CSL boss Paul Perreault says the local biotech giant will launch trials of an mRNA flu vaccine in Australia from next year, but the technology will not be used to develop a homegrown COVID-19 vaccine.
The company, which is the only domestic source of a COVID vaccine in Australia, told investors at its annual general meeting on Tuesday that it was committed to finishing its 50 million dose production run of AstraZeneca’s treatment at its Melbourne facilities. Production would wind up at the end of that contract, unless the federal government asks CSL to extend its work.
Mr Perreault told The Age and The Sydney Morning Herald that the company was “pretty busy” making its core blood plasma products even before the pandemic struck, and it would not make sense to develop a mRNA coronavirus vaccine of its own at this stage, with billions of Pfizer and Moderna doses already flowing into Australia.
“The need for a COVID vaccine by the time we develop it and get it approved is probably not what the need is today,” he said. However, Mr Perreault added the company was working out how it could protect Australians during future pandemics.
“I think we need to look to the future - is there a platform for mRNA that CSL can develop for other reasons? There will be other pandemics, we just don’t know when.”
The corporate regulator says it has cancelled the Australian financial service (AFS) licence of Vanda Russell Gould, the high-flying Sydney accountant with some very wealthy clients and the subject of long-running legal battles involving the Tax Office.
Last year he was sentenced three years and four months in prison for attempting to pervert the course of justice which he has appealed.
However, the Australian Securities and Investments Commission (ASIC) today said it cancelled his licence because Mr Gould failed to maintain external dispute resolution membership with the Australian Financial Complaints Authority (AFCA), and had failed to lodge profit and loss statements and balance sheets for financial years ended 30 June 2019 and 30 June 2020.
In 2016, a series of companies associated with Mr Gould had been found to have avoided paying tax by the High Court, in a case that the tax office has described as ‘blatant tax evasion’.
The chief executive of digital bank 86 400, Robert Bell, is leaving the job, to be replaced by Philippa Watson, the chief executive National Australia Bank’s UBank.
NAB on Tuesday said Mr Bell would finish up in the CEO role to coincide with the planned transfer of 86 400’s business onto NAB’s licence, after a takeover was announced earlier this year.
Ms Watson, who has led UBank since the middle of last year, now has the significant job of leading the integration of the two businesses, as NAB looks to increase its share among younger customers.
NAB’s UBank is also expected to launch an updated brand in the new year and revamp its technology for customers.
Mr Bell, the founding CEO of 86 400, announced his departure on LinkedIn, saying he would step down in early 2022.
NAB’s business confidence has come out better than expected, jumping to 13 points rather than an expected -2. Business confidence was at -8 points in July and -6 points in August. However, business conditions fell from 14 points to 5 points, or just below average.
Forward orders also turned negative.
“Business confidence rebounded strongly in September to be well above its long-run average, after falling well into negative territory in prior months, ” the bank’s Australian Economics team wrote in a note to clients.
“The improvement was driven by large shifts in confidence in NSW and Victoria following the announcement of reopening road maps in these states as well as rising vaccination rates across the country.”
That they were able to convince 136 countries to agree to a global minimum tax deal late last week is a triumph for the OECD and Mathias Cormann. Its implementation and the raising of the $US150 billion ($204.4 billion) of extra tax revenue the deal envisages, however, will be as complex and challenging as the 40-year effort and near-decade and a half of negotiations to get to this point.
In particular, the US – which created the breakthrough when the Biden administration joined enthusiastically in the attempt to end, or at least moderate, the revenue-destroying international competition on tax rates – will face stern opposition from Republicans who see it as undermining the competitiveness of America’s giant technology companies to enable the Democrats to pursue an ambitious tax-and-spend agenda.
As it is a win for multilateralism, it will also offend the hardcore Trumpists because it is the antithesis of the populist eco-nationalism and anti-multilateralism at the core of Trump’s economic policies.
It’s not just the US where implementation of the highly complex agreement might face obstacles.
Getting 136 individual countries with different tax regimes to pass roughly identical legislation to give effect to an agreement that is more template than fully developed detail – and doing that by the effective implementation date in 2023 – will be akin to herding stray cats.
The nature of the deal means that within the 136 countries that have signed up to the new regime there will be winners – mainly the wealthier economies and higher-tax regimes where the big tech companies are most active – and the tax havens and those, like Ireland, that have used low tax rates (in Ireland’s case, 12.5 per cent) to attract their international offices and the earnings they stream through them.
Morgan Stanley remains a fan of Ampol following the more favourable deal to acquire Z Energy for $NZ2 billion which will not require a significant capital raise after all.
The broker has a $35 price target on a stock currently trading just above $30.
“Were main Overweight Ampol. Sentiment appears to be improving as the share price has recovered since initially selling off in August. Investors were initially fearful of an equity raise and hoping for more off-market share buy-backs,” Morgan Stanley’s Adam Martin says.
He also welcomed the extra detail on synergies and earnings accretion and upside from the economy re-opening.
“Ampol remains leveraged to the re-opening as global mobility begins to increase. There is risk to retail fuel margins with rising oil, but the recovery in refining could outweigh this,” he says.
Morgan Stanley says catalysts to watch include third quarter updates on refining margins, mobility trends and aviation trends related to jet fuel.